TOKYO, May 20 (Reuters) - Japan's Mitsubishi UFJ Financial Group Inc (MUFG) said on Wednesday it would shutter up to 40% of its domestic branches by fiscal 2023 as the lender plans to adopt more cost-cutting measures in response to the coronavirus crisis.
MUFG, the country's largest lender by assets, had initially planned to reduce its local branches by 35%. The pandemic forced the Japanese company to widen the number of branch closures to keep a tab on their costs.
Banks have largely been excluded from government-mandated shutdowns across the country because they are considered an essential industry, meaning most bank branches, call centers and trading floors have stayed open even as many firms sent their employees home.
The global economy is bracing for the worst slump since the Great Depression due to the pandemic and the world's third-largest economy, in particular, is facing severe downturn in demand.
MUFG, which owns 24% of Wall Street investment bank Morgan Stanley, had pledged in 2018 to review the number of branches as the lender recognized that customers were drastically shifting to the internet banking mode.
While almost 45% of 93 million transfer transactions was made through the smartphone app in fiscal 2019, only 2% was conducted at retail branches, MUFG said in a statement on Wednesday.
Three major banks - MUFG, Sumitomo Mitsui Financial Group Inc and Mizuho Financial Group Inc - have estimated a collective 1.1 trillion yen ($10.2 billion) in credit costs for the current financial year.
Given the shift in foot traffic and market dynamics, MUFG said it will try to strengthen its online banking presence.
The lender also said it expects 6,000 job losses through attrition by fiscal 2023, highlighting its struggle to maintain profits amid ultra-low interest rates.
$1 = 107.7600 yen Reporting by Takashi Umekawa, Editing by Sherry Jacob-Phillips