TOKYO -- Leading Japanese bank Mitsubishi UFJ Financial Group will book about 100 billion yen ($893 million) in write-downs and other charges on its credit card business as it abandons a time-consuming system overhaul amid rising cashless payment competition.
Tokyo-based subsidiary Mitsubishi UFJ Nicos was developing a new system to merge now-separate management of the wholly owned unit's three credit card brands.
The project began in 2016, and about 75 billion yen had already been invested out of a total of 150 billion yen in planned spending through the year ending March 2022.
But competition in cashless payments has escalated over the past year as rivals introduce new mobile services, including ones that use scannable codes rather than credit cards. The system upgrade cannot accommodate such changes in payment technology.
MUFG decided that the project risked wasting time needed to keep up with innovation. Besides the write-down, MUFG will also book related restructuring charges for the year ended March 31.
MUFG appears likely to maintain its target of a 4% decline in net profit to 950 billion yen for the year ended March 31 despite the charge at Nicos. The group has made better-than-expected progress on cutting fixed costs by improving efficiency.