MUFG’s next CEO Hanzawa seeks growth to close gap with global rivals
While widely seen as a safe choice, whether he can further elevate the group with 400 trillion yen in assets will be closely watched
[TOKYO] Junichi Hanzawa, the next chief executive officer of Mitsubishi UFJ Financial Group (MUFG), will take the reins of Japan’s largest bank as it rakes in record profits. His challenge will be sustaining that growth beyond the windfall of rising interest rates.
Hanzawa, 60, who is currently head of the main banking unit, will succeed Hironori Kamezawa on Apr 1, MUFG said in a statement on Tuesday (Dec 16). Kamezawa, 64, who has been CEO since 2020, will become chairman.
Long considered the heir apparent, Hanzawa is typical of a traditional bank leader in Japan: a lifelong insider who built his career as a corporate staffer, playing a key role in strategic planning and regulatory affairs. While widely seen as a safe choice, whether he can further elevate the group with 400 trillion yen (S$3.3 trillion) in assets will be closely watched.
“Not only in Japan, where the business environment is improving due to rising rates, we want to close the gap with global financial institutions,” Hanzawa said at a briefing. “For that, having a growth strategy in Asia and the US is important.”
In the reshuffle, Masakazu Osawa, senior managing corporate executive, will succeed Hanzawa as chief of lending arm MUFG Bank. Hiroyuki Seki, head of global markets business, will become president of brokerage unit Mitsubishi UFJ Securities Holdings.
Like its rivals, MUFG is projecting profit will reach new heights, last month raising its net income forecast to 2.1 trillion yen for the fiscal year ending Mar 31.
Its key banking business has been buoyed by higher domestic interest rates, which are expected to rise further as the Bank of Japan addresses emerging inflation. Earnings have also been boosted from gains on the sale of cross-shareholdings as part of the country’s corporate governance drive.
Shares of MUFG have been on a tear under Kamezawa, climbing more than six times since he took the reins in April 2020. That outpaces the roughly 365 per cent gain in the Topix Banks Index over the same period.
Still, the Tokyo-based bank is under pressure to keep expanding. Chief financial officer Jun Togawa has said the lender needs to constantly make growth investments, and catch up with overseas rivals on key metrics such as return on equity (ROE) and price-to-book ratio.
MUFG’s ROE – a measure of how well a company generates profit from its equity – was 12.5 per cent in the first half ended September, a level that analyst Toyoki Sameshima said puts the firm among the “second tier” of global banks.
“To be in the top tier, it needs to have 15 per cent,” said Sameshima, who covers Japanese banks at SBI Securities. “For that, MUFG needs to boost domestic, Asia and global corporate and investment banking businesses as well as continue cultural changes led by Kamezawa.”
Together with its domestic competitors, MUFG has been expanding abroad in markets including India. It has announced about US$8 billion of acquisitions over the past five years, according to data compiled by Bloomberg.
The bank is nearing a deal to buy a minority stake in Mumbai-based Shriram Finance, and may invest more than 500 billion yen in the non-bank lender, people familiar with the matter said this week.
Unlike his predecessor, Hanzawa does not have much experience working overseas or on the bank’s digitalisation efforts, two areas that are considered key growth drivers.
Also important for the new CEO is to foster the relationship with Morgan Stanley, where MUFG is the biggest shareholder. Kamezawa is known to have built strong ties with Morgan Stanley CEO Ted Pick, and Hanzawa will be watched for how he deepens the collaboration with the Wall Street powerhouse. BLOOMBERG
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