President & CEO, MUFG Bank, Mitsubishi UFJ Financial Group, Inc.
MUFG CEO Masakazu Osawa says bank bullish on China, Asia-Pacific
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Japan’s MUFG Bank and its corporate clients are bullish on China despite the current economic slowdown, according to Asia-Pacific CEO Masakazu Osawa. MUFG’s parent company is the largest financial firm in Japan. Osawa said the bank is also upbeat on the long-term growth outlook of the Asia-Pacific region and Hong Kong's role in trade and green finance. He spoke with the Post while in Hong Kong to join about 300 financiers who attended the Global Financial Leaders’ Investment Summit from November 6 to 8, 2023.
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Transcript (12 segments)
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Interviewer0:00
Thank you very much for taking time for the interview. Thank you. Um, maybe first question: what do you think about this Summit?
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Masakazu Osawa0:06
I found this opportunity is quite precious because I can have an opportunity to meet a lot of leaders across the globe.
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Interviewer0:20
Can you tell us what is your expansion plan in Asia as a whole in coming years?
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Masakazu Osawa0:26
MUFG has slightly more than 40 branches and offices in the Asia-Pacific region, and we have business in 19 markets including Hong Kong and Mainland China. We have approximately 30% revenue and profit coming from this region. As for MUFG Bank, it's really growing, and Asia-Pacific itself has big potential for us. We see this region as the second mother market for the bank. Furthermore, the younger generations especially in ASEAN and India region will be the power of domestic consumption in the region. So as a whole, I believe that Asia-Pacific has great growth potential. In this market, MUFG has a lot of footprints and our partner banks including CIMB and Danamon in India, VietinBank in Vietnam, and Security Bank in the Philippines. I think we can leverage our unique franchise in the region to support our clients as much as possible.
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Interviewer1:58
Your bank has invested $16 billion US dollars in Asia-Pacific as a whole. You conduct a lot of M&A. So do you plan to continue to expand by mergers and acquisition?
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Masakazu Osawa2:13
Yes, in the past 10 years especially from 2013, we invested approximately $16 billion US dollars in the region, especially around the commercial banking and consumer finance space, and we will continue exploring that sector. We have been in Hong Kong for a long time, for about 70 years.
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Interviewer2:41
So what is your major business segment in Hong Kong? Do you think this city is still a good gateway for you to expand in China and Asia as a whole?
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Masakazu Osawa2:53
We established our branch in Hong Kong back in 1953, so we celebrated our 70th anniversary just recently. Yes, there is a kind of China-U.S. tension, but there are advantages and disadvantages from those geopolitical risks because we see a lot of new trade flows coming from not just Hong Kong and Mainland China, but also other East Asian countries like Korea or Japan, towards a lot of Asian countries and maybe India as well. From those new trade flows, we can capture a lot of new opportunities from that trend. I would say Hong Kong will be the epicenter of those new trends, new supply chains, and new business models going forward, and I believe we can do more business in Hong Kong and Mainland China.
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Interviewer4:08
You have conducted a lot of deals on sustainable finance. So will that be one of your focus in coming years?
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Masakazu Osawa4:18
Yes, exactly. I would say Asia is very unique in terms of the energy transition. For instance, the average age of coal-fired power plants, especially in Asia, is relatively young, around 10 to 15 years, which is quite different from that in Europe or in the U.S. So the approach we should take towards the energy transition going forward including carbon neutrality is quite different in Asia. So I think as one of the largest financial institutions in Asia, we definitely wish to take the lead in that space.
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Interviewer5:10
We are closing the end of 2023. So looking ahead in 2024, what do you think will be the major challenge for your company? And if you like to use one word for the investor, do you think the year of 2024 is a year of growth, risk mitigation, or preservation?
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Masakazu Osawa5:29
Yes, there are a lot of uncertainties, and many countries in Asia are fighting with rising inflation, and the banking industry could have a negative effect due to those rising interest rates and sluggish economy. But at the same time, I think we really should continue business with patience, and still the level of GDP growth will not be as bad even in 2024. So I would say resilience and optimism would be the key words for MUFG in 2024.