Mitsubishi UFJ Financial Group releases full-year results for FY3/2024

FY2023 Performance Highlights

• Record-High Profits: MUFG achieved record-high profits in FY2023, exceeding its target of ¥1,300 billion. Profits attributable to owners of parent reached ¥1,490.7 billion, driven by a significant increase in net operating profits (NOP) of ¥1,843.7 billion, a change in the closing date of Morgan Stanley’s financial results, and the impact of JPY depreciation.
• Successful Medium-Term Business Plan (MTBP): MUFG successfully achieved its previous MTBP financial target of ROE 7.5%, demonstrating its ability to manage profit drivers effectively.
• Strong Earnings Power: The increase in NOP was primarily driven by enhanced earnings power in customer segments, showcasing MUFG’s strong customer relationships and market positioning.
• Expense Control: Despite revenue decline due to the sale of MUFG Union Bank (MUB), MUFG successfully controlled expenses below FY20 levels, excluding performance-linked expenses and FX impact.
• RWA Management: MUFG managed RWA at approximately the FY20 level, excluding FX impact, through effective resource management considering risk-return, highlighting its disciplined approach to capital allocation.

Previous MTBP (FY2021–2023) Review

MUFG’s previous MTBP focused on three key strategies to achieve its financial targets:

• Growth Strategies: MUFG implemented initiatives for growth across various business areas, including investments in open innovation, strengthening Asia business, and building a robust asset management industry in Japan.
• Structural Reforms: MUFG underwent corporate transformation, selling MUB to U.S. Bancorp and reviewing its business portfolio. It also focused on digital transformation, simplifying procedures and rules, and reviewing decision-making processes.
• Cost and RWA Control: MUFG effectively managed expenses and RWA to achieve its targeted ROE.

New MTBP (FY2024–2026) Overview

The new MTBP is themed “Three years to pursue and produce growth,” reflecting MUFG’s commitment to capitalizing on evolving market opportunities. The MTBP outlines three key pillars:

• Expand & Refine Growth Strategies: MUFG aims to increase domestic business profits and expand overseas business in areas of strength. It has formulated seven growth strategies categorized by Product x Channel quadrants, targeting a 30% increase in NOP to over ¥2.1 trillion by FY26.
• Drive Social & Environmental Progress: MUFG will accelerate initiatives to improve social and economic value, aligning its operations with sustainable development goals. It will set new KPIs for social and environmental progress, leveraging its “Integrity and Responsibility” and “Agility” values.
• Accelerate Transformation & Innovation: MUFG will continue to enhance agility and further strengthen its corporate infrastructure to support its MTBP strategy. This includes developing corporate culture, human capital, strategic system development, and AI and data infrastructure.

Financial Targets for FY2024–2026

• ROE: Approximately 9%, with a mid to long-term target of 9%–10%
• CET1 Ratio: 9.5%–10.5%, reflecting a commitment to maintaining a strong capital position.
• NOP: Over ¥2.1 trillion
• Net Profits: Over ¥1.6 trillion
• RWA: Reduction of low-profitability RWA by ¥5 trillion and increase of high-profitability RWA by ¥12 trillion.
• Expense Ratio: Approximately 60%

FY2024 Financial Targets and Shareholder Returns

• Profits Attributable to Owners of Parent: ¥1,500 billion, aiming for YoY growth driven by an increase in NOP.
• Dividend per Common Stock: ¥50, an increase of ¥9 from FY23.
• Share Repurchase: Up to ¥100 billion.

Key Income Statement Highlights

• Net Interest Income: Decreased due to the sale of MUB, but interest income on loans and deposits increased.
• Net Fees and Commissions: Increased, driven by growth in fees related to foreign loans, AM/IS business, wealth management, and other businesses.
• Net Trading Profits + Net Other Operating Profits: Increased mainly due to a decrease in net losses on debt securities, reflecting portfolio rebalancing.
• G&A Expenses: Decreased due to the sale of MUB, leading to an improved expense ratio of 61.0%.
• Total Credit Costs: Improved due to the absence of valuation losses on loans held by MUB, partially offset by an increase in allowance for credit losses.
• Other Non-Recurring Gains (Losses): Increased due to the absence of valuation losses on bonds held by MUB.
• Net Extraordinary Gains (Losses): Decreased due to the absence of gains on the sale of MUB.
• Profits Attributable to Owners of Parent: Up by ¥374.2 billion YoY, marking the highest profits in MUFG history.

Key Balance Sheet Highlights

• Loans: Increased overall, driven by growth in overseas loans and domestic corporate loans.
• Deposits: Increased due to higher interest rates and growth in overseas deposits.
• Investment Securities: Showed a balanced portfolio, with a slight decrease in domestic bonds and an increase in foreign bonds.
• Non-Performing Loans (NPLs): Improved, reflecting the absence of valuation losses on loans held by MUB.
• Capital Adequacy: MUFG maintained strong capital ratios, with a CET1 ratio of 10.1% (excluding net unrealized gains on AFS securities), exceeding its target range.

Overall Assessment

MUFG’s FY2023 results demonstrate strong financial performance and a strategic focus on achieving sustainable growth. The new MTBP provides a roadmap for navigating evolving market conditions and driving social and environmental progress while strengthening its corporate infrastructure. MUFG’s commitment to innovation, customer-centricity, and responsible business practices positions it well to capitalize on future opportunities and continue delivering value to shareholders.

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