TOKYO (Reuters) - Mitsubishi UFJ Financial Group (MUFG) (8306.T) plans to book a charge of 50 billion yen ($470 million) for the year ended March, as it closes or merges unprofitable domestic branches to cut costs, two people with knowledge of the matter told Reuters.
The sources did not want to be named as they were not authorized to discuss the matter publicly.
A spokesman for Japan’s largest lender declined to comment.
MUFG, which has 500 branches in the country, is scheduled to announce its annual results in May. At the end of the first nine months, it had already earned 90 percent of a projected full-year profit of 950 billion yen.
MUFG and rival Japanese banks have been reviewing their domestic operations as they battle diminishing profits due to ultra-low interest rates amid the Bank of Japan’s massive monetary stimulus measures.
Their nationwide branch networks have become costly to maintain, but banks have been reluctant to close even unprofitable ones out of fear for customer complaints.
But as the tough environment drags on, banks are now under pressure to take drastic action to cut costs and are resorting to measures such as offering services on smartphones and tablets to reduce their reliance on bank branches.
“Important thing is, customers do not have to visit physical branches, then we can smoothly reduce branches,” said an MUFG official on condition of anonymity.
The bank has launched a drive to become more efficient both at home and overseas, including setting up a back-office center in the Philippines and targeting headcount reduction of 6,000 by the year starting in April 2023.
Rival Mizuho Financial Group (8411.T) has plans to reduce 100 domestic locations out of its total 500 by the end of the year ending March 2025. Japan’s No.3 lender also said it was looking to cut 19,000 employees or about a quarter of the total workforce in 10 years.
Reporting by Taro Fuse, Writing by Taiga Uranaka; Editing by Himani Sarkar