Mitsubishi UFJ Financial (MUFG) 16 Nov 222023 Q2 Earnings call transcript

The time has come to start the Net Conference for Mitsubishi UFJ Financial Group.

We will give the presentation for the first half of fiscal year ending March 31, 2023. My name is Takahashi of the IR Office of the Financial Planning Division.

We are joined by analysts and institutional investors, various organizations and individual investors.

Let me give you the program today. Corporate overview the followed of Q&A Managing give CFO by Senior session. XX-minute a the Yonehana, Executive group and will a Tetsuya financial results,

begin state In have from all expectations, those presentation differ financial forward-looking aware are the and the presentation, XX-minute that will risks which based statements. meeting. discussed results. to now Please We we our in a of like may the We materially uncertainties. forward-looking subject current actual statements on may to this of would be results

ending My like name our entitled you Conference. results very the of joining XXXX. of Japanese X, for March initiatives. Please and shareholder late to much first half year the targets financial and highlights the progress Net an financial return this hour of XX, is policy, and Yonehana. explain plan for the MUFG sustainability materials the Thank discuss business us half loss. of GAAP performance at and profit Page the overview midterm I our under refer to would first for fiscal

The by XXX.X year-on-year. table left on first JPY billion profit gross line on shows the up the

increase and record risk real and by by of fluctuations. JPY an gains We excluding net increase Net be Even exchange derivatives to billion these gain breakdown from period. interest gross and increase we decrease bonds. to But rate the rate profit the due is increases JPY foreign loan deposit MUB midterm operating gains result JPY the and securities. in billion. G&A and from total understand decision without write-downs gains XXX receivables cutting the JPY increased losses cancellation the second the billion. income, strategic by return foreign the implementing are the income the in opportunities The foreign accounting the the It XXX recorded exchange in in are to showing improvement making higher foreign progress effect approximately billion. impact depending in sell of may the business over plan JPY treasury posted. and is of recorded of billion difficult operations the on in the line and income JPY restructure of [indiscernible] high capturing are with fund funds in hedging increase item to of gains for billion market of debt is the expenses interest to impact decreases because year-on-year. credit increased but in of X profit overseas of line the portfolio in terms, X treatment of JPY had below profit, again XXX.X due drivers in bonds actual gross an of large billion factors, year-on-year. from in cancellation and loans XX.X exchange, gains line the XXX.X This impact net measures cards, XXX.X a a sales [indiscernible] and on interim of X, to of is the Line while trading XX using profit negative approximately increased

loss held JPY gains these JPY securities Sales a XX Although JPY approximately valuation resulting cost XXX.X gains securities. Line JPY equity other billion, in nonrecurring due and Other of in billion. Bank, securities XX.X of losses decrease losses by this of the mainly billion. billion, credit credit XX about and at billion. progress costs, on losses due JPY investment impairment resulted to low are of by XXX.X XXX.X and in line card accounting impact increased excluding made investments net treatment a credit billion to was deterioration a on valuation same XX.X losses, JPY as Union equity to real X,

billion the absence Bank income associated of with sale in of of the gain absence of interest of on the the equity the JPY Morgan equity last gain XXX.X due Eaton Ayudhya. to declined in and Vance Finally, year extraordinary Stanley's acquisition

XX, As XXX.X JPY a attributable to result, owners parent line profits decrease a the of billion, of XXX JPY was billion.

Real operating of with most the made gains toward Union be billion. treatment associated our JPY of Steady a these However, time as progress amount the reversal valuation In large graph net losses of performance a JPY of accounting onetime with profit shows customer XXX.X left the XXX.X decrease profits fees absence segment. Bank of year. X extraordinary slight AM/IS the JPY reversed The lower changes business sale the will the the segment, in billion. in posted target please. is is at recorded due year-on-year the previous trillion. in of by to X, Page business

XXX.X the Global including of a profits. segment financial steadily other of X. billion in in profits, Ayudhya while billion deposits in on revenues bonds while, profit earning capturing fluctuations. by The resulting customer impact JPY its the in recording revenues XX.X exchange-related increased Markets pursued units funds portfolio gain reorganized posted market on the and JPY total cancellation opportunities foreign the of increases sale Page reducing loss an business and increase loan increase substantial foreign also and

income and absence impairments, business in segment. segments the The the [indiscernible] side, in the the the to due costs, credit performance showed GCB DS income in of absence in the right net the reversal net decline changes due of to by include AM/IS, fees. On business of with we equity

segment the the -- accounts has balance sheet. XX. of This and of the the due the JCIB yen. banking loans, R&C trust impact is and JPY did this amount, by trillion. X.X total income Line weak the to trillion Page left, X.X and X on However, and summary higher GCIB Markets. reported JPY increased was Of customer and Global and so

was of XXth exchange. foreign in JPY increased this Deposits trillion, Excluding the X in increase due trillion trillion by JPY to the impact, line was X.X increase overseas X.X JPY around to loans. due which

this right of continue trend right approximately by And bottom the impact, corporations indicates X.X excluding overseas. the of Page improve. the rates the loans. on red and on of the the yield difference margin interest The XX, the JPY banks banks shows margin status of the certainly loans. deposits domestic upper XX rising Page of the for shows loans shows the trillion. increased line deposits domestic to loans. status the to combined, that response line corporate The graph So overseas loan large on interest trust increasing in and lower

the year, to approximately from trillion. table, interest X.X the as previous into which shown unchanged of from actual also JPY has graph The In the bar almost the XX. to from In the turn steadily Please addition, left graph, losses increased of on JPY nonperforming fiscal X, the remained previous Unrealized lending gains the hedging rising end account is in spread Page improving. is unrealized But balance end overseas the in loans losses right and left the line as X in ratio turn status such the upper at due a and investment securities graph, year, rate bonds. low overseas. of foreign shown NPL fiscal decreased gains positions shown the unrealized Please bonds the trillion. Page approximately partly to upper government particular, line by losses, XX, level. to stocks the shows remains taking unrealized

financial The unrealized reforms status And of Next, concludes X. CETX perspective. ratio the back soundness XX% results. to my target explanation Page of excluding of business plan That close I adequate basis, and the Basel the like range is now is limit turn Page X.X%, adequacy. remains in medium-term to on from capital XX the the would finalized of III gains, upper the shows which to

Next, our I performance targets. will explain

the trillion beginning for to As of owners of attributable announced on at profits shown the JPY right, parent will the we the year. fiscal target X maintain

the policy. believe basis. a real-term the XXX.X steadily as certain increased customer operating level medium-term XXX addition, revised light our target the shareholder In ordinary half strong left our improving the by shows due shows upward shareholder on profit net in firmly side This profits treatment the and control The return Bank. costs risk-weighted JPY business first the assets We to billion. this shows next revised Union by the operating progress been segments and our steadily Profits able business net is progress right turn in plan targets is the and expenses return also feeling that are sale We've JPY in Please also profits to connection with of accounting we side the policy. attributable billion respect. of The and medium-term to progress of trending credit earning to page. substantially of of a the power made of and in our parent plan. page confidence owners the in

the the fiscal First, per FY XX X by unchanged. forecasted per and year stock dividend year-on-year XX beginning JPY stock the JPY is interim as dividend remains of 'XX common the up JPY forecast of at

it the a own heightened the rising in be of at outlook the markets inflation consideration In of the of of to volatility geopolitical aimed for the including policy This judged sale no Bank, resulting JPY of improving share on it management trends, confirmed business to Board executed from the at X. which uncertain the the change is that given considering desirable hold the XXX JPY and Directors financial environment, billion. for release repurchase December approved is to therefore, is capital today in capital amount resolution Regarding being, shares, risks, disciplined increasingly of our buffer and XXX Union we set billion. is our capital repurchase time global buyback, ROE. effect There in scheduled

a new the implementing medium-term of for We the manner key continue page. positioned of This the progress plan and years steady main flexible eye medium-term Please keeping the in X transformation, the strategies plan. the a of in of we corporate This on growth situation. policy turn strategy making and transformation, in as challenges consider are progress business strategies future close business is X reforms. is to will changes structural and this to next while

look initiatives to and turn Page to is X. and accelerate described Please digital innovation Please the enhance to ourselves structural working and deepen to left platform sustainability. into explore strategies profitability As growth efficiency This reforms. on digital approach operator financial our on of reform a right, side. been and the open through various culture new to at and update we've and fields to transformation,

finance XX.X a to FY of and steady environmental quarter progress trillion in up XXXX trillion to amount We around have and of made have set issues FY JPY 'XX. solve social cumulative to XX cumulative second FY JPY of target the sustainable a XXXX from with

in neutrality, we policy. on in on decarbonization facing. based we Asia Japan's In and the view the as White order our which toward of to communication the achieve the engaged are shown carbon are efforts paper, the environment and summarizes lower left, and companies rulemaking of October actively surrounding addition, energy situation in Japan prepared Transition MUFG In Japanese

been have concludes we'll view policymakers achieving overseas, to and continue my our make disseminating That firm explanation. neutrality. to efforts carbon We toward

today, Instructions]. now We have take your we p.m. [Operator until questions. X:XX will so

like question. questioner. with first the introduce please. the me We Let Takamiya, would to first start

name I Nomura is Takamiya questions. from Securities. X My have

The net first the of second buyback. the the achievement is about And share is question operating question profit. about the

that an Is shares share are fiscal half to And within buyback, return include profits time the capital Union corresponding your associated confirm second increase will And of option. capital I Bank. amount the JPY lease are and based this my half is transfer XXX the in not the to That if year. does first the expected it the from Could second is as amount billion adequacy of on range, of would the profit the the capital correct? target year. is Regarding the the What and be the considered release of earnings to that, the announced of thoughts? like ratio with question. the

The certainty is net of the profit. achieving regarding operating second question the

of the are You mentioned as CFO of the what favorable. the that year But your full first uncertain year very achieving on the the fiscal in the current environment, half result. probability thoughts of was light

Takamiya. Mr. question, your for much very you Thank

to the JPY addressed. share be of First question, regarding buyback will your XXX first all, billion

your have the is in As mentioned you of release associated with comment, the effect of the this sale capital MUB.

buyback But for buyback freed we on capital share risk-weighted the the ordinary Therefore, an The for will basis that share of buyback I by not on removal assets. portion not therefore, the would be as is, Specifically, September is the net a there capital is therefore, of CETX have ordinary including a not of Basel been first of outs to considering the III reforms year. the X/X X.X%. the finalized the is color to vary up -- base it second If the ratio, MUB included is in included. gains will were of the profit year, future half the the the unrealized capital, ins share put end including our difference included. and consider and like of accumulation according evaluation. second of a basis, to difference between We management, half

As we consider to continue faction in mentioned, will manner. buyback share a

of is the The net profit certainty the target. second point operating

of unchanged. line trillion target remains bottom X JPY Our

As for profit, upward by original from trillion net X.X JPY trillion. revised operating have JPY billion JPY we X.X XXX the to

first As is year. of half there you the see, and half the variation the can second fiscal significant between

for the we be in Specifically, will treasury look second cautious half operations. more taking a

half. back first of second That strong are the half conservative. exchange following in half in reason outlook and the in the the trading why is volatility sales We is more segment the on foreign second for performance cautious the customer

the various trillion, the be are the personally segments. currently the I achieve increase of we Although will what X.X JPY forecast determined than regarding it. there especially customer hope in are we to revised are projecting, And greater uncertainties that

please. will from We Mr. the take next now question Nakamura,

Securities. from I questions. am Nakamura I BofA X Yes. have

also quarter? You timing manner. will the buybacks considered June? us likely But Mr. is that of quarter, the additional similar not declined quarter The to to second could has third XX the management, fourth the to tell share elaborate. respect in points question ratio basis Takamiya. question asked capital be since be end flexible With the or Please by a by CETX first you is mentioned why the

After the rate. that Please second the in It bonds. is this seems unrealized your JPY favorable hedging X U.S. regarding a clarify The on foreign assessment considering loss have trillion. rapid point assessment. you interest rise the

us to in build of successful year? talked have in being the You second the of to the unrealized half year. position loss are a with the this losses treasury tell profits fiscal deal Despite generating carry incurred. unrealized about how with how cautious the next about operations, view operations Please the and

Mr. the To in X.X Thank reason at ratio Nakamura. I question, half, from first. the of point, address the your about this point of September. the you very June much first decline your for will end the XX.X% to first at end the CETX question in for X.X%

depreciation also And the risk-weighted assets increased First to currency of of the yen all, has is has account increased value impact translation the movement of slightly book adjustment market that Stanley's while of the foreign due increased. foreign Morgan the have impact exchange.

second been had However, and of the neutral. the basically, the is the loss. in of the X under impact XX And of the will exchange the monetary and between the rate just be billion. end is offset, the the share this terms. backdrop, ratio amounted JPY to the dividend most loss includes September profit the explained. of These This X MUB of accounted June included. and changes end the impact end has interim of June have impact to point the offer June September items end XXX on conducted And September. sale the It to received in be impact Against These ratio from an continued for of the the of basis quarter. buyback of between decline impact on of the in the in at

buybacks share manner. the in full has at and your will the Regarding announced of first MUFG share buybacks generally year a MUFG the that consider results. of half interim question, second flexible timing

next is the more well. are will results the and a this light decision consider slightly decision quarter making make QX a the point situation, However, our third prudent the to approach, in around, financial we we when which decided announced. at Therefore, current we time as of in will take

bonds, of point bonds. Now on X.X regarding of is I valuation talk foreign In foreign seventh Please XX the refer to JPY other line gains the the losses to your how second trillion was at would financial end upper for September. of on table bonds. and foreign the evaluate in the and foreign corner, highlights. like about the we bonds left-hand Page securities which

hedge of is considering amount on approximately X position JPY trillion. the the shown right, As the

Now about trillion the but end position, it account -- the the interest JPY after rising. loss of March, was trillion increase X.X was about were September, of X trillion JPY X an into in the end loss past the JPY the at hedge at taking of while months occurred X.X rates

So this is the total.

were September limit foreign losses. increased by in hedging let on hedge In control foreign net a the taking revenue were bond So position, meantime, the recording billion under on losses process billion. into the including basis, bond generated further JPY we fluctuations. On me while position taking that elaborate increase this from exchange well. increased resulted on JPY of believe billion hedge unrealized overall losses the consideration sales unrealized over gains to positions, March I And Operations successful. We March. able is have Approximately just from due we by end have JPY after details. on XXX XXX to XXX managed to to of increase we were to the cancellations. able foreign

considerably. As was JPY JPY made. for net only X-month the alone, increase of mentioned the That billion. appropriate the rate has operations effect I about meaning been the XXX that earlier, the fluctuations, excluding second period exchange position But is billion, was quarter XXX impact been how of reduced have

to taking a valuation have reduced level, losses. steps position We in the increase control to also considerable this future

positions, depending the come the the In positions to have recent timing we on past, will of combining market. restoring some of have I bonds. our been rates bonds point, on the holdings with been foreign on volatility we hedging reducing that losses In and been for response improving said successfully at hedging foreign sales gains value believe that, position in terms of but management, of interest having have and in

I would have first clarification question. a question follow-up on some the I like

in quarter, more would you make positive? you the If were changes what decision make to a third

Thank for you that question.

As I have beginning, global the increasing. trends mentioned, explanation my market and volatility been in at inflation financial

the judged are our have in we as Considering And geopolitical made In factors, have become uncertain the well. is year. hold. is we buffer it or that economic addition, of decision more January we May. factor to increase increasing the February situation better capital we when risks has these that than prevailing The next of beginning the decided of at the end outlook key

We third Matsuno, Mr. will now person, on please. move the to

Mizuho questions. I'm I X Securities. have Matsuno from

will finalized revised year impact question question billion This capital currency want revised But question. that Nakamura-san's target to The JPY overlaps unchanged the XX do points. the is billion will is by My trend? Could the be operating as at is by year. calculation understand with but basis my you the mentioned CETX XXX III approximately could you the same X what basis, of the weak sale the I keeping you To Basel already the your for net of the you billion want the will profit and capital? MUB ratio in first asking have full-fledged upward extraordinary please to the JPY conference sale capital unrealized X the MUB foreign that to be have with range the to may you maintain? the second sale in translation adjustment XXX due on you lag. comment of could decision net of is end the the have impact of of unchanged I March. full it the consolidated on that outsider, sorry question. JPY you trillion? months XX X-month also on level buffer stated MUB full extent in high estimated reforms background addition, buffer. have on ratio appears how JPY you structured? the It excess on a buffer. elaborate for sale of raise my will income an that And the me associated In gain yen about of be that to In gains first at But excluding comment XX% to call ago, was Also, question asked on at consolidated the and sense,

for you questions, Matsuno. your Mr. Thank

true not the point, first specific end want level do to capital, is It Regarding capital we have of a we the at CETX X.X%. our retain. that September ratio of was

we will weighted lag MUB time to in of rate and higher from you aware on a MUB CETX pointed of of the fact March at are ratio, to sell half exchange billion end also CETX release factor be to of depending factor, out. towards being back JPY of ratio in decision to of year foreign time capital and ratio the But XXX the the adjustment at be of shares, progress own exchange on the the March fluctuate due realized is of as the buy of lag, than end will at our have we CETX is the the the end the that the However, may March expected September translation effect decision result will that the which profits based the currency rate. second the June. if that the

at Naturally, will next third considering year as will March, share current the X.X%, pointed at As year, ratio the out, at manage discipline. it months JPY and the an and current on the fiscal level results March, estimate which XXX to on Matsuno-san as ratio full have of XX.X% the quarter the of continue slightly from and with eye above the buyback now. year we will March well of billion CETX of the keep level end XX.X%. Therefore, we in we'll for exceed end X flexibly decided financial we the that be

stance. without this changing consider will We our

second of which are the JPY in changes MUB, the revision of operating due the a of is revision makes the confusing. of this the accounts some about The revision revision no to with the upward billion profit your target There performance XXX and sale of little net income. and in net time first it part question breakdown in

the these of changes. The explain MUB related of revision profit target. me let to sale not operating this, is net excluding So

the upward revised billion. of billion of the costs credit due rates. November portion upward So as the MUB increase this the is to not XXX rising JPY incorporates interest now until to portion impact. that write-downs will We revised have or excluding end revision we the MUB And JPY XXX from have

parent As a gain the revised by XXX result, upward net revised excluding income billion. profit sale of had price MUB, in billion. was was profits XX assumed JPY the the which lowered by ordinary reason the impairment attributable we target is profit, the originally originally of the estimated. profit from of the the initial left ordinary to our April May. unchanged. then, or profit From JPY than Therefore, target sale billion a impairment JPY billion. was by upward main we assumed owners And and up of a Grab's MUB, XXX further so share of operating has impact fallen net ordinary loss larger excluding actually The Grab is by we JPY But operating shares, as result, XXX of target since to

unchanged, attributable of on to gain. extraordinary your the left gain latter is billion. question, owners MUB sale to the regarding This of have we opposed addition, parent In JPY plus is related second ordinary income to as XXX part of profit the although

JPY of part of But the billion. the XXX process, of XX the as on number the so that the JPY recorded MUB start share announced is was time on loss your consideration of during gain last sale we at purchase the the billion USB has impact JPY for on sales And gain gain price weaker XXX billion. fiscal agreement the due explain XX signing was the based be will the The of explained me Let this reversal which year We JPY September the year, The yen. When we at September. in recognized from to in received the price the a determined JPY first is the the shares, of XX XX that let first. billion credit billion, there extraordinary is JPY So remaining plus time we again closing. JPY allowance me last total billion fallen foreign is right? and by question, billion. exchange share XX assume of of

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has year. already been fiscal the mentioned previous accounted for in As I billion XX earlier, JPY

years year. USB. receipt, portion will date year. from fiscal in of X, month JPY Considering for and accounting for X the X and the the the And this period. at take over deferred X.X the December we closing next billion So timing a billion every discounted. Since is is MUB, remaining the XX X JPY But billion diagram JPY will in the by recorded selling meeting. interest is would explain time, showing this only carried be can remaining this to in I detail paid USD investor XX XX billion years be deferred

of next year, starting ordinary summary, recorded deferred the decided rise will sale owners due lag in X billion well billion. amount XXX but in interest attributable in foreign assumption owners profit from which on gain ordinary billion for income leave to totals mentioned explanation, May income payment. to billion XXX attributable plus JPY due JPY to as JPY between XX earlier Based I increase last to of is exchange all. the was unchanged rather The in the the due impact, We factored decline of So we to despite approximately complicated and billion and the that, profit as the in price, parent. have payment the parent fiscal the to in next on in JPY years the JPY for XXX XXX the and deferred the year. time is is remaining share rates I USB decrease billion. to XX stock And this the included be the price apologize down recorded that of

for you very your detailed explanation. Thank much

to for due is on limitations Thank day will MUB have The gain material space related in more or included tomorrow. the the sale part much. investor meeting material you disclosure after the not we very but today's

look So please it. a at take

No We about question one left. the minutes button. have XX currently pressing is

to Any other for questions? like would I a wait while.

are we there will no Q&A close the questions, more Since session.

Before say closing, Yonehana-san would like a words. to few

results shareholder you to and kind value understanding very financial today. emphasis I'd for explained attention the Thank efforts you to half continue for FY your and shareholders further questions very Today, you will XXXX continued while dialogue valuable on Thank increase in with and of and management support. I capital ask our your our first much the of like we much sustainably placing your investors. for today.

company Today's demand will an Mitsubishi your concludes ending website archive Group's web March phones. Thank to on Financial XXXX. up on of you the attendance your until today. available for for conference the hang first sure This much year on XX. very half Please XX, Monday, November the hotline highlights financial be as fiscal make conference UFJ