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Euromoney, January 2019

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). However, profits attributable to the owners of the parent were up 4% year on year to ¥650.7 billion, thanks to an improvement in credit costs and an increase in profits from the bank’s stake in Morgan Stanley. In fact, the result was enough to increase the full-year target to ¥950 billion.

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Chris Wright
Chris Wright
Chris is a journalist specialising in business and financial journalism across Asia, Australia and the Middle East. He is Asia editor for Euromoney magazine and has written for publications including the Financial Times, Institutional Investor, Forbes, Asiamoney, the Australian Financial Review, Discovery Channel Magazine, Qantas: The Australian Way and BRW. He is the author of No More Worlds to Conquer, published by HarperCollins.

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