TOKYO (June 1): Resona Holdings Inc, Japan's fourth-largest bank, aims to reduce costs at its branch network by at least 20%, its company president said, adding that not all big branches would remain in the same form.

Japanese lenders, which have long struggled with an ultra-low interest-rate environment that has depressed earnings, now also have to grapple with a likely rise in bad loans due to the Covid-19 pandemic.

President Masahiro Minami said the reduction in branch costs would take place over the "medium term". He declined to disclose how much the 20% cost reduction would equate to in value terms.

"One way to reduce costs is downsizing. All branches don't have to provide full banking services and there is no need to remain the same," he said in a interview in May that was embargoed until today.

Presentation materials provided by the bank showed Resona plans to keep its large number of branches at roughly 800.

Resona, which is mainly focused on the domestic market, has some 830 branches nationwide. By comparison, Mitsubishi UFJ Financial Group Inc has 470 branches and Sumitomo Mitsui Financial Group Inc (SMFG) has 440 while Mizuho Financial Group Inc has 460.

While Resona has seen downloads for the bank's smartphone app climb to 2.2 million as of end-March, more than double figures from a year earlier, Minami said face-to-face consultations remain important for big banking decisions.

"People just click and buy things from Amazon but they don't do that when it comes to financial products such as a home loan," he said.

Resona has forecast net profit will slide 21% to ¥120 billion in the year to end-March, factoring in some ¥50 billion in provisions for bad loans. The expected profit decline is, however, less steep than some of its rivals with SMFG expecting a 43% drop and Mizuho forecasting a 29% fall.