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Banking

MUFG: A long-term plan, but long-term challenges too

Here is a firm looking to make opportunities out of some tough trials.

Euromoney’s 2018 interviews with chief executive Nobuyuki Hirano* and CFO Aki Tokunari shed light on an institution that is acutely aware of the problems facing Japanese banking and has a clearly articulated strategy to deal with them, both domestically and internationally.

The problem is that those domestic challenges are not getting any easier, and developing momentum at home will take years. It is no surprise that Hirano’s restructuring plan for MUFG did not opt for the classic three-year cycle commonplace in plans like these in Japan. Instead, he went for a six-year path. It is also telling that, despite the intended transformation, he does not expect either net operating profit or return on equity to improve in the next three years, even if targets are met.

The interim results reported on November 13, marking the halfway point of a fiscal year that will end on March 31, illustrate the problem.

Net operating profits dropped by 19% year on year to ¥568.1 billion ($5 billion), in large part because of a decrease in net gains on debt securities (a year earlier MUFG had booked large gains from selling Japanese government bond holdings).

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