Mitsubishi UFJ Financial (MUFG) 18 May 222022 Q4 Earnings call transcript

you very much for waiting.

We will now begin the online conference on financial highlights for fiscal year ended March 31 2022 of Mitsubishi UFJ Financial Group. I am Takahashi from the Investor Relations office, Financial Planning division and will serve as the moderator for today's session. Tetsuya Yonehana, Groups CFO and Senior Managing Executive Officer will give a 15-minute presentation on the financial results summary followed by a Q&A session.

We will use the remaining 35 minutes for Q&A. expected approximately is minutes. session entire to XX be The

current a like In to Before be which aware on differ uncertainties. I'd statements. results from risks make subject forward-looking all few to are based that refer I begin, forward-looking Please may those to discussed remarks. and the of we this statements may actual expectations, materially presentation, in

Yonehana, begin the presentation please. Mr. now results. will We financial of

at this is under MUFG's today This ended Thank online the at much you JGAAP XXXX. year Highlights hour. joining for late document Yonehana. very fiscal March Financial look XX, Please conference titled for

medium-term me let plan initiatives. sustainability turn policy explain left then and state and results to targets return Please I one, will the ¥XX In Page our income performance table, our billion and profits the First, as line the for begin gross business FY year-on-year. XXXX by summary. as with shareholder our our financial well X. discuss of increased progress

breakdown the overseas. thanks overseas and to commissions to in As for of fees improved, interest trust and Japan improvement management in from the net the of net two, the thanks fees spread revenues and lending line the domestic income three, And and increased, line profits, asset increase gross business.

hand, the when beyond. quarter a improve profitability due loss fourth to on to rate years and On following losses foreign over mainly year-on-year, in of fiscal and on interest line the result gains other five, net realignment rose, by sales the billion debt in securities portfolio ¥XXX decreased US bonds as of

exchange real billion ¥XX.X terms increased Next, excluding line G&A expenses year-on-year, but six, decreased in effects. foreign by

billion. of ¥XXX mainly MUFG the down total operating ¥X,XXX.X to to an billion at allowance Line we cost year-on-year, Russia. reversal fourth ¥XXX.X billion the billion improvement of Union seven, approximately profits line was loan due Bank. net for losses quarter, by result, an recorded a billion, eight, of allowance As related ¥XXX credit was ¥XX.X In

full year-on-year, net thanks sales of securities losses equity And strong billion under line Morgan billion holdings losses recognition the loss increased equity ¥XX.X on to to extraordinary of thanks And earnings gains gains fourth line implementation billion. [ph] equity and financial performance. in XX, recorded markets. investees each lastly, methodology ¥XXX of mainly second as was new net method Next, linked the of in reported to asset fixed ¥XXX.X in due equity briefing by in loss XX, ¥XXX.X to allocation quarter a impairment quarter year segment, stock year-on-year, nine, Stanley's and of loss results of line billion increased of extraordinary by steady the resulting

profits interest lower were significant the banking billion due segment. business the higher and But medium-term customer of plan business steady enjoyed subsidiaries profit other affected that the groups in by as decline to faced made strategy rates which resulting ¥X,XXX.X consumption a Page for includes ¥XXX.X the was the XX, Business to the in MUFG segment, highest Group, to customer segment. net change profits operating billion The the attributable X. As line in billion, year, owners result, turn the from parent year up business GCB by by In from previous the left previous Please history. lower ¥XXX.X of shows COVID-XX in in forth growth a a profits graph progress set overseas decline. profits, increase

The to profit. partially segment. but shows Group earlier, net on Please net included business to Markets right by the foreign On of X. Page in mainly profits in side equity I securities offset sales income are Business loss changes quarter, decreased, the was Global bonds fourth explained that gains by as the not other hand, in in due operating turn on

balance factors profit, increase to page resulted the the exception go skip In in in and with to which this fiscal trillion of ¥X.X page shows Global to of nine, the the the and of increase profit operating and the below table, increased Please Business other net from of [ph] year. sheet. in summary end a Markets was in trillion an weaker Group. costs Left Line previous addition loans due changes the decrease the by yen. ¥X.X X credit

So was exchange excluding this the increase loan growth foreign small impact.

XX, individuals to due Line increase on trillion, domestic In Line mainly addition, ¥X.X XX. in ¥X.X deposits, trillion increased a by

XX. The spread for the of loans. case trend with of the the loans impact steadily. via bottom overseas the Lending Next, page has the shows recording Page improve overseas large spread. spread, been status as which the XX corporates out, the graph program. of payment of The the trend to corporate excluding collective steadily is large has been for turn of the of page bottoming XX shows spread shows status small lending lending corporates. Lending loans. the shows domestic of lower improving medium-sized Please continue domestic timing received graph subsidized enterprise right the domestic to right and to interest

of higher fact left the acquisition previous XX table graph the ratio from the plan the target upper the line graph XX% previous business range the equity Page finalized investment bonds. That the revise soundness. level. due the agreement right the year, left gains continuing at on for is the nonperforming of of that the XX in sales balance, loan decided adequacy. holdings. target securities the of a of from the exceeded and has fiscal was amount ¥XXX end equity table bottom have the and results. of end billion including a The midterm capital NPL In amount slightly the on to in for States. billion. to amount rates target fiscal year, shown ¥XXX basis the sales we to Although low shows in year, perspective of earnings United increased of the Page the selling losses decreased securities shows Japan the light the actual the of bar the The is the Unrealized gains on previous status interest securities MTBP the fiscal to shows partly in from we unrealized and of III from and the sales the accelerated exceeding all Basel CETX ratio secure AFS net reforms part excluding level substantial on XX.X% still

turn please back Now, to page one.

fiscal FY order year would I the the in to Now, of 'XX, performance explain operating final the year like profits MTBP. to increase steadily aim targets. net 'XX towards to improve We

recording almost on and against meet we lingering sale international bonds of to parent. taking But decreasing current the as set is In risks will become of continue as to owners of pandemic the and target plan business Union a of We environment expect challenging Bank, to an valuation our related be trillion constantly geopolitical concerns COVID-XX ¥X medium-term in XXXX which the credit rates year, we same attributable a owners account cost face gains attributable of factors MUFG losses to heightened continue as rates. trillion and of to with uncertain profits challenges exchange interest fiscal of as into that fluctuations and to profits such earns will we equity fiscal securities parent. the year to in ¥X level have of company

billion MTBP the progress customer operating of segments record attributable shows and ¥XXX.X profits parent page returns the on of the to and The in the shows progress high. the MTBP. up was year-on-year shareholders' owners reached the side Net Next a profits measures. left

to We have response level certain been RWA this in respect. are able also in expenses we and firmly of control a feeling

the of share, for The the dividend policy. returns we range. shareholder to achieve the our shares, Aiming MTBP equity per is ratio have in current is ratio ¥X ¥XXX a ¥XX XX% a progressive is into 'XX forecast payout billion year-on-year right upper limit increase one repurchase the a dividend up period. On the own of fiscal to the taking year resolved order to level of which for increase during Tier above of of per in consideration target common dividend share,

is key challenges current of as is three Next MTBP. of years strategies progress the the new The transformation. page and of MTBP positioned

main pillars for the and progress of in transformation, steady making corporate reforms. are structural three We growth strategic strategy

year, into new to new As for as innovation during digital operator open platform we digital made as progress the ourselves in fields. and initiatives past exploring and financial in have as transformation update a well shown, steady

was the As described closing to XXXX. bottom take Bank on June between and right, scheduled place the January Union of sale of MUFG the

processes we we are is to process to progressing due as closing authorities, Other closing and However, the half soon ongoing process planned the the have by approval relevant the smoothly decided change an set. XXXX. completed of as is and date the announcement make will second approval to date

last May progress the sustainability. MUFG Next made page, the The in this was shows our left-hand is Carbon-Neutral to approach since Declaration made side year.

been basis. by promotion The we group this summarized on global in And outline We page. report. system on the a progress have on this and initiative compiled working April, is and published MUFG establishing

We make society. effort will decarbonized a continue to to realize every

accumulate human invest On employees in the our capital in financial we right stakeholders activities Thank forward build one in attention. by enables investment MUFG’s human business your in every continue which virtuous cycle continued each move human our in Through which investment. to for that a will capital capital, to of is to us capital. turn and you empower engaging

Takamiya now Please. your take questions. Securities. Mr. first of [Operator is The will from Instructions] We question Nomura

carried XXXX implications the the I the questions. Share profit I over second manageable to may on a to sale of this My that Securities. interest In billion this the of of the gains this in be FY and on This risk on overall MUB? exceeded press the risk language year. of is hedging this fiscal ¥XXX securities, share is during capital holdings you buyback is do this your incurring in have amount whether bonds? question consider billion. of positive amount holding ¥XXX release. of on Takamiya year's perspective on to certain the with are rates? the the ¥XXX bond Nomura a billion from Is how of is unrealized while double profit the carry foreign to over foreign of like year dollar or expect bond are or considering FY foreign to on XXXX. losses you year about last would you year short-term within of buyback risk from And questions even know year? fiscal while additional incur like XXXX would holdings carried rise return understand I the bonds loss Do foreign two sale certain buyback addition, fiscal plan, of released to possible interpretation amount losses My of it unrealized the

the to question. like about positioning you the buyback. would talk Thank share your I for billion of ¥XXX

year fiscal XXXX. billion the answer question, was and March billion for your originally ended to owners at to of for ¥X,XXX announced First and attributable ended in We November year in fiscal ¥XXX billion. XX, profits May XXXX parent ¥X,XXX ¥X,XXX billion

As result, up in FY nor was by as that XXXX March share did XX, We XXXX perspective, other XX.X%. the XXXX assets did ratio. the ratio this not decided assume of we CETX the take on CETX profits and capital we Bank. and given of into ¥XXX to buyback From freed Union a profit sale billion FY account be

So, that of the X.X%, the that and plan, to the naturally target numerator achieve profits growing commitment ROE business We this managing the your first capital answer denominator. is of believe FY in in is my XXXX means biggest which to question. medium-term

X.X%. is objective in order XXX that key discussed of promptly, on We the assume of the The internally. So achieving billion. and repurchase we press the was the place language all ROE target JPY release will the hedging complete

important understand is the the six-month included stop therefore, and think and perspective cannot have will what and to of case, of Ukraine, risk, material in advance, this during with we such the set in period never we in the repurchase six In rule However, in out possibility is period. happen. know a of disclosure that current And market. from we the at the Russia uncertain dialogue light it months. The tail situation

shares, The will even ratio of we we under expect be However, capital repurchase adequacy that such situation that is are That of process. no a the statement we included do JPY be not risks. it that such bit dialogue question. wordy, of but the please the first a to billion where stress. problem the when Basically, confirmed for through we for with halfway is pause may we there certain to all, XXX sake hedging aware decided arise, understand

managed which risk of question, second over March, in loss the MUFG the foreign FY of will We billion bonds the end bonds. of on XXX had basis, on XXXX. at Regarding carried unrealized be and foreign an JPY

in losses. the First, interest bonds show the to we unrealized Page the and let on in were The XXX addition by billion and The me explain upper when of left the highlights, quarter JPY purchasing unrealized noted fourth gains in loss the of hedging graph the managed during figures. rising, financial their as XX, others, rates risk the funds derivatives. foreign

approximately The bare of to gains which others, shows unrealized JPY of funds. increase from entirely the year, due in and holding almost acquisition is XXX.X an billion previous the

minus billion So XXX billion, XXX approximately net. JPY JPY XXX plus billion is the and on gap JPY

In accounting fiscal accounted addition, also on interest hedge of year unrealized increased is gains to interest JPY unrealized swaps will to rising be cover And gains half income. the make foreign funds contribution rate. it, or Swaps positive bonds expected a deposit the account applied, important. these and and we Including XXX and on billion. unrealized where on hedges, will this hedge how the in during banking loan are manage losses bare

partially it monitoring for and combining to hedge will current while rate year, So while, apply derivatives interest respond fourth and the In continue will fluctuation. a compensate the it. we will funds fiscal the policy quarter in for announced by we we bare the

are foreign unrealized losses on gains address funds in utilizing bare in beyond. to and April We unrealized bonds

are XXX the unplanned securities billion in XXXX is want From overseas Thank you loss still than XXXX, JPY so trading bonds foreign sales to fiscal JPY as plans losses, we an billion business of in FY loss positive carry global slightly approximately unrealized return, That billion Although, there large about manage we increase appropriately. profit but to and in on had markets for this XX JPY XX year them in and very all. products much. lower subsidiaries. past group perspective, with

Please. Nakamura Next is of Mr. BofA Securities.

My fiscal the Securities. XX.X the of market do To estimate of the I us increase of Bank? increase the is two billion impact negative Union This JPY consolidated profit set amount the sale into to profit this below and think year's question. That year XXXX, projected of is year. gain Please for BofA profit. my of net are segments Union but net first is Bank? second respectively account trillion factors in fiscal have profits what questions. operating is target extent the in give attributable owners taking the JPY I many Nakamura there customer of a have question plan for breakdown parent in for operating on fiscal of X sale you of you special What actual this

like at look trillion. X.X plan, it on medium-term aiming your the are does that you X capability? it graph seems what for true for the of final year So bar based the Looking Page business JPY around on

please with your projection. So share us

Thank you questions. your for

increase point, profit. Let me the billion in elaborate first JPY net the XX on operating

closing of We will but billion. is time. so GCB a change, the since XX the Business JPY there The XX a the not taking is aims date First. minus customer year-on-year, account assume JPY the the may minus segment net be XX this amount with entire JPY into billion. expected is billion. to Since JPY impact profit of operating back, be be expected sale of Group impact large six to MUB slight of increase by be profit operating start plan billion increase of it worth net within MUB. to XX of that months' recorded will JPY of an minus for pushed the billion after XX for sale

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point second vis-à-vis the parent. profits trillion plan of attributable owners X Your our to true is of JPY in capability

operating As profit. you below net factors are rightly mentioned, special there

in letters, it variables highlights, may though explain sale the to related the a The on In X me unrealized et for FY lengthy. footnote is will in Page approximately financial let MUB. of with XXX quarter JPY stated bit of So be small first that XXXX, net the other it of loans billion non-recurring are the cetera, operating be are which profits. in securities to sold recorded losses, included not be and losses as associated biggest

However, will at the of be loans the of the at JPY by transfer maturity the QX of MUB XXX the of billion, time to XXX related valuation JPY billion to loss end and of MUB held shares. returned securities

MUAH So it for US extraordinary on will GAAP. MUB be based gain. accounted treats an MUFG as and

pay cost at is valuation securities held valuation ¥XXX So at sold MUAH's made. will or the of leave reflected original an amount as as procedure after perspective market amount plan sold a loss sell was of accounting in the ¥XXX at smaller to of The certain the treasury And maturity, bonds the proceed. to the the MUAH to how from and this Of point. is a it equity to be of results the due valuation dividend P&L March. including lower loss advance the securities. But is recorded and is the valued to will advance to of assets of dividend is billion this US is basis decision this loss a billion available-for-sale in decrease And to closing. QX an incurred. be as at be remainder end the MUB's

quarter. recorded the is first in So this

assets do a negative returned the securities, the shrink in the but will On not it the with as held-to-maturity close. the figure P&L, at be other MUB's record since amount hand net will final MUFG

valuation for rates. for to But expected XXXX, at am this ¥XXX total year the the of recorded the the with to not be the ordinary on of close. that negative due on introduction. reversed difficult the fiscal fact valuation the MUB's understand. billion business appears to time billion loans be rate The credit the for in I in structure from ¥XX loss Therefore financial credit ¥XX statements also related is and be billion valuation negative sorry interest operating This ¥XXX loans and the costs makes below net in long In will billion profit. MUB is loss because loans balance the ¥XXX difference it contract profit billion. rise costs addition on sales posted P&L recorded the current year's the declined of on approximately will with the to in sheet

level this is But value billion. come ¥XXX previous profit at equivalent a to comes in an from large sales you XXXX, year. add able billion ¥XXX.X of If year-on-year. which billion. of include equity gain to were year and which market it estimated to be ¥XXX will decline ordinary shares, the will thus shares And fiscal difference on the equity we book Other by to with in decline sell approximately factors

mentioned to about risk of and the considered billion at I unrealized cost sales MUB parent to all those of its related for increased the And maturity decision losses ¥XXX addition, is earlier setting Profits In including the reach of of included held to reversed are losses ¥X investment owners loans trillion. of P&L. to these target attributable the are securities, the in here. but unrealized

efforts We operating owners a capabilities increased to fiscal profit of in ¥X XXXX. and course, our if customer As And And do billion the giving factors, calculations profits around reflecting year on year to may us challenging on the be ¥X calculation believe parent constantly Thank special back for is the compared ¥X,XXX realized for portion to company, you But a year, increasing, earns about first to of securities target we continue we a passing the do the we for attributable on Therefore, of focus it with above trillion. ¥X unrealized segments our the a is billion. alpha final But of a of of true of very fiscal the sorry MTBP, will are to I'm parent through to targeting despite your which P&L factors, gains ¥X,XXX of trillion. be we also, gone target considered. this plus with we owners have billion. must special losses net on. investment with a question group. as trillion the attributable the other of the will the much. profits ¥XXX come past, previous number

Mr. Next Daiwa from is Takai Securities.

two just I'd just questions. I'd ask you point, the like like on to confirm have to made.

is billion For a fiscal year XXXX, ¥ amount. XXX pre-tax

¥XXX assume we it can tax. after to come that, So will billion

think So us the fiscal special of be correct results the the this adjustment actual been, do capabilities, assumption? ¥XXX.X we Is currency true that, give reach will at of factors year all are group's billion. three billion it in your My ability of had billion. foreign that, Second what ¥X,XXX a to think, that, But, to you close there And understand the I in March. group? XXXX the I were there the increased have reflecting number months consideration do if exclude ¥XXXX.X translation is capital, of on the understanding time to lag. end

it in was June if exchange by the yen it of ¥X. rate the yen when would considering and ¥XXX.X further further the depreciate have in September, would ¥X. current billion December, was And already by depreciated So a the end lower already at

next to trillion. actually foreign translation currency June So come September billion the to in of adjustment ¥XXX period ¥X.X may

so if ROE your target includes currency translation adjustment. foreign So

¥XXX repurchase in the stock of increase with another midterm. stock place to may shares, capital billion the even the a – with own continue hope of So, due take with the us November, date to giving up that to the repurchase, in repurchase is going

ROE assets going go is stock does profit correct? Is you decline substantial conduct thinking when my even and plan raise is easy, explanation that stock the am not the much, as ¥XXX I ended, other. but would what this own up is for repurchase not forward? profit just trying to That the of question. commensurate do risk and of exceeded repurchase the to that, of in So each billion the say year the the has Making order

Thank much questions. your for you very

at As forward. operating MUB, and impact for lot carried is after-tax pre-tax on a there your of loss question net

be billion impact And so a comes there tax. ¥XXX to will when it

Morgan of on we prices have currency This ¥X,XXX As fixed it and And basis billion fiscal with to there assets, have billion. came exceeded very level of were is losses adjustment, this book sense shares question the as achieved. Under the that nature. the we market factors for on vary XXXX, and special And NTN reflected. in impairment ¥X ¥XXX in factors stock Queensway you gain question billion are of And [ph], in we holdings, your differences year M&A-related That part on extraordinary a the with I other was Thank of sales continued out. we canceling target Stanley, think sales value of as sales translation such the and for and equity before. of question ability MUB, businesses on trillion. gain your ¥XXX is as have asked all well as and much. on set we sales that foreign believe of year each

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a the future. to midterm a November then, will consider be with date As due in take situation capital for decision to the we to make stock about conducted, billion pause the repurchase able ¥XXX

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group. our to factor considered of the ROE targets the by target is as return So shareholders fulfill of one an important achieving

translation It's my with with understanding currency correct? biggest yen-dollar the translation that there foreign three-month adjustment delay impact is on a

Yes, dollar-yen largest the translation. the with impact is

Thank you much. very

Matsuno Mr. from is Securities. Next Mizuho

I sales you is for the for foreign U.S. allowance billion ¥XX sale possibility billion that ¥XXX for on My please? ¥XXX is question interest accounting billion ¥XX.X credit of they of interest billion billion specific borrowers change? allowance rate And you may ¥XX are and billion a March, would based first like billion ¥XXX ask shares for happen on of explain special rate, be after that fiscal U.S. If specific the questions, first Thank of much. portfolio. losses minus of this detail, ¥XXX of MUB is you about to And is Can the, number this evaluation four on more question in Out on Thank there very MUB. is two for to others market page treatment ¥XX.X gain please. second much. on extraordinary billion is XXXX, will billion? definitive? rising. And of for value ¥XX this year the Russia. will my footnote what very to and

accounting treatment, ¥XXX question first yes, Your will the billion fluctuate.

reversal indicated And billion. disclosed be It you group record the gain sinking it the as And constitutes Taking will closing. to securities reflected in losses the side was looking explain loss, sales loss on quarter. difficult in the If as doubtful change ¥XXX will that there question will of the remaining. away think We billion mentioned we the the associated in unrealized in the I at reversed have investment the at closing. will the the be time P&L finalized it ¥XXX less of of associated there billion of but March a the just yes, And number, of with unrealized the us will difference ¥XX to what loans quarter, is at sales your the unrealized at on, be of it a P&L to ¥XXX and is gain first confusing about rate it is recorded interest it back subject reversal earlier the Therefore, the of take ¥XX gains is second until there will the billion. securities, at give it the To with gain be for and the held-to-maturity is end may billion this will MUB end, fluctuate. up the ¥XX had explanation on And follow. upper with securities out billion. originally of with billion. be ¥XX answer so, allowance accounts

sure confusing. I'm very is this So

all post So including billion ¥XXX Considering ¥XX deferred. with of involved there as as is allowance they post-sale as start areas write-off the to related with building impact. as be other gains preceding the will building the sale, have financial some MUB a costs offset. specific be the of Therefore, a your appear country showed and borrowers at for associated allowance plan are degree for be assets an have if the organizational That asset as considered of I And back is it we the a allowance part MUB, will And technical in will specific factors Cost as we were this Russia, factors explained done to broader question such structural related that MUB. billion of Russia. the with ¥XX management of results appropriated. the the have in of will moment technical sale other and will which come the be credit factor but and automatically billion, portfolios, foreign on downgrading ¥XX to it rating special made gain assumption costs for for to for for accounting-wise, to as we the billion, that

it As not stated our in results, Russia, Kamezawa build were basically, well. Basically, those upon portfolio account as we recognize the the into made auditors. our the them as highlights one portfolio mentioned specified conducting during to conference it CEO to our loans of individual from allowance. preventative when assets downgrades, simulations, for as been upon of which recognize loans transfer able we aspects comes rating we with data press accumulate the debtors that have to recordings And risk to of taken discussion different

very explanation. you, much for the Thank

to any remark. If Mr. that, not, Instructions] to us [Operator we ask see don't give would Yonehana this Q&A session. closing a like like We with other close to questions. I'd

for Thank first you the your very of medium-term our your aimed as our to for today. questions sustainable we on to and explained We'll shareholders plan. and dialogue I shareholder capital at today. financial with like for you pursue valuable understanding the of results very continue thank have management, continued time I much value. focus your Thank investors, support. enhancement much of year business would and you

With conference that, we will close today. for this

On the until archive company hotline, it May we XX. will