As filed with the Securities and Exchange Commission on July 9, 2021
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 20-F
‘ REGISTRATION STATEMENT PURSUANT TO SECTION 12(b) OR (g) OF
THE SECURITIES EXCHANGE ACT OF 1934
OR
È ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended March 31, 2021
OR
‘ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from
to
OR
‘ SHELL COMPANY REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
Date of event requiring this shell company report
Commission file number 000-54189
KABUSHIKI KAISHA MITSUBISHI UFJ FINANCIAL GROUP
(Exact name of Registrant as specified in its charter)
MITSUBISHI UFJ FINANCIAL GROUP, INC.
(Translation of Registrant’s name into English)
Japan
(Jurisdiction of incorporation or organization)
7-1, Marunouchi 2-chome
Chiyoda-ku, Tokyo 100-8330
Japan
(Address of principal executive offices)
Masahisa Takahashi, +81-3-3240-8111, +81-3-5218-8666, 4-5, Marunouchi 1-chome, Chiyoda-ku, Tokyo 100-8212, Japan
(Name, Telephone, Facsimile number and Address of Company Contact Person)
Securities registered or to be registered pursuant to Section 12(b) of the Act:
Title of each class
Trading
symbol(s) Name of each exchange on which registered
Common stock, without par value . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
American depositary shares, each of which represents one share of common stock . . . . . . . . . . . . . . . . . . . . .
MUFG
New York Stock Exchange(1)
New York Stock Exchange
(1) The listing of the registrant’s common stock on the New York Stock Exchange is for technical purposes only and without trading privileges.
Securities registered or to be registered pursuant to Section 12(g) of the Act: None
Securities for which there is a reporting obligation pursuant to Section 15(d) of the Act: None
Indicate the number of outstanding shares of each of the issuer’s classes of capital or common stock as of the close of the period covered by the annual report:
As of March 31, 2021, 13,581,995,120 shares of common stock (including 737,282,154 shares of common stock held by the registrant and its consolidated subsidiaries as
treasury stock)
Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act.
Yes È No ‘
If this report is an annual or transition report, indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934.
Yes ‘ No È
Note—Checking the box above will not relieve any registrant required to file reports pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 from their
obligations under those Sections.
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the
preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.
Yes È No ‘
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T
(§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).
Yes È No ‘
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or an emerging growth company. See definition of
“large accelerated filer,” “accelerated filer,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
Large accelerated filer
È
Accelerated filer
‘
Non-accelerated filer
‘
Emerging growth company
‘
If an emerging growth company that prepares its financial statements in accordance with U.S. GAAP, indicate by check mark if the registrant has elected not to use the
extended transition period for complying with any new or revised financial accounting standards† provided pursuant to Section 13(a) of the Exchange Act.
‘
† The term “new or revised financial accounting standard” refers to any update issued by the Financial Accounting Standards Board to its Accounting Standards
Codification after April 5, 2012.
Indicate by check mark whether the registrant has filed a report on and attestation to its management’s assessment of the effectiveness of its internal control over financial
reporting under Section 404(b) of the Sarbanes-Oxley Act (15 U.S.C. 7262(b)) by the registered public accounting firm that prepared or issued its audit report.
Yes È No ‘
U.S. GAAP
Indicate by check mark which basis of accounting the registrant has used to prepare the financial statements included in this filing:
‘
International Financial Reporting Standards as issued
by the International Accounting Standards Board ‘
If “Other” has been checked in response to the previous question, indicate by check mark which financial statement item the registrant has elected to follow.
Other
È
Item 17 ‘ Item 18 ‘
If this is an annual report, indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).
Yes ‘ No È
TABLE OF CONTENTS
Page
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Forward-Looking Statements
Identity of Directors, Senior Management and Advisers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Item 1.
Offer Statistics and Expected Timetable . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Item 2.
Key Information . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Item 3.
Information on the Company . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Item 4.
Unresolved Staff Comments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Item 4A.
Operating and Financial Review and Prospects . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Item 5.
Directors, Senior Management and Employees . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Item 6.
Major Shareholders and Related Party Transactions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Item 7.
Financial Information . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Item 8.
The Offer and Listing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Item 9.
Additional Information . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Item 10.
Quantitative and Qualitative Disclosures about Credit, Market and Other Risk . . . . . . . . . . . . .
Item 11.
Description of Securities Other than Equity Securities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Item 12.
Item 13.
Defaults, Dividend Arrearages and Delinquencies . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Item 14. Material Modifications to the Rights of Security Holders and Use of Proceeds . . . . . . . . . . . . .
Item 15.
Controls and Procedures . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Item 16A. Audit Committee Financial Expert . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Item 16B. Code of Ethics . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Item 16C. Principal Accountant Fees and Services . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Item 16D. Exemptions from the Listing Standards for Audit Committees . . . . . . . . . . . . . . . . . . . . . . . . . .
Item 16E. Purchases of Equity Securities by the Issuer and Affiliated Purchasers . . . . . . . . . . . . . . . . . . .
Item 16F. Change in Registrant’s Certifying Accountant
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Item 16G. Corporate Governance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Item 16H. Mine Safety Disclosure . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Financial Statements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Item 17.
Financial Statements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Item 18.
Item 19.
Exhibits . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Selected Statistical Data
Consolidated Financial Statements
3
5
5
5
25
61
62
108
131
132
133
134
143
168
170
170
170
173
173
173
174
174
175
175
176
177
177
177
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . A-1
F-1
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
For purposes of this Annual Report, we have presented our consolidated financial statements in accordance
with accounting principles generally accepted in the United States, or U.S. GAAP, except for risk-adjusted
capital ratios, capital components, risk-weighted assets, business segment financial information and some other
specifically identified information.
In this Annual Report, unless otherwise indicated or the context otherwise requires, all figures are rounded
to the figures shown except for the capital ratios, capital components, risk-weighted assets, leverage ratios and
liquidity coverage ratios of MUFG and its domestic subsidiaries, which are rounded down and truncated to the
figures shown. In some cases, figures presented in tables are adjusted to match the sum of the figures with the
total amount, and such figures are also referred to in the related text.
When we refer in this Annual Report to “MUFG,” “we,” “us,” “our” and the “Group,” we generally mean
Mitsubishi UFJ Financial Group, Inc. and its consolidated subsidiaries, but from time to time as the context
requires, we mean Mitsubishi UFJ Financial Group, Inc. as an individual legal entity. In addition, our
“commercial banking subsidiaries” refers to MUFG Bank, Ltd. and, as the context requires, its consolidated
subsidiaries engaged in the commercial banking business. Our “trust banking subsidiaries” refers to Mitsubishi
UFJ Trust and Banking Corporation and, as the context requires, its consolidated subsidiaries engaged in the trust
banking business. Our “banking subsidiaries” refers to MUFG Bank and Mitsubishi UFJ Trust and Banking and,
as the context requires, their respective consolidated subsidiaries engaged in the banking business. Our
“securities subsidiaries” refers to Mitsubishi UFJ Securities Holdings Co., Ltd., and as the context requires, its
consolidated subsidiaries engaged in the securities business.
1
References to “MUAH” are to MUFG Americas Holdings Corporation, as a single entity, as well as to
MUFG Americas Holdings and its consolidated subsidiaries, as the context requires.
References to “Krungsri” are to Bank of Ayudhya Public Company Limited, as a single entity, as well as to
Bank of Ayudhya Public Company Limited and its consolidated subsidiaries, as the context requires.
References to “Bank Danamon” are to PT Bank Danamon Indonesia, Tbk., as a single entity, as well as to
PT Bank Danamon Indonesia, Tbk. and its consolidated subsidiaries, as the context requires.
References to “First Sentier Investors” are to First Sentier Investors Holdings Pty Ltd., as a single entity, as
well as to First Sentier Investors Holdings Pty Ltd. and its consolidated subsidiaries, as the context requires.
References to the “FSA” are to the Financial Services Agency, an agency of the Cabinet Office of Japan.
Our fiscal year ends on March 31 of each year. References to years not specified as being fiscal years are to
calendar years.
2
Forward-Looking Statements
We may from time to time make written or oral forward-looking statements. Written forward-looking
statements may appear in documents filed with, or submitted to, the U.S. Securities and Exchange Commission,
or SEC, including this Annual Report, and other reports to shareholders and other communications.
The U.S. Private Securities Litigation Reform Act of 1995 provides a “safe harbor” for forward-looking
information to encourage companies to provide prospective information about themselves. We rely on this safe
harbor in making these forward-looking statements.
Forward-looking statements appear in a number of places in this Annual Report and include statements
regarding our current intent, business plan, targets, belief or expectations or the current belief or current
expectations of our management with respect to our results of operations and financial condition, including,
among other matters, our problem loans and loan losses. In many, but not all cases, we use words such as
“anticipate,” “aim,” “believe,” “estimate,” “expect,” “intend,” “plan,” “probability,” “risk,” “will,” “may” and
similar expressions, as they relate to us or our management, to identify forward-looking statements. These
statements reflect our current views with respect to future events and are subject to risks, uncertainties and
assumptions. Should one or more of these risks or uncertainties materialize or should underlying assumptions
prove incorrect, actual results may vary materially from those which are aimed, anticipated, believed, estimated,
expected, intended or planned, or otherwise stated.
Our forward-looking statements are not guarantees of future performance and involve risks and
uncertainties. Actual results may differ from those in the forward-looking statements as a result of various
factors. Important factors that could cause such differences include, without limitation,
‰
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‰
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deterioration in economic conditions in Japan and around the world,
external events, such as natural disasters, COVID-19 and other health pandemics or epidemics,
terrorism, and other political and social conflicts,
reforms of London Interbank Offered Rate and other interest rate benchmarks,
climate change and resulting physical damages and changes in the business environment,
competitive pressures resulting from regulatory and market changes,
failure to implement our business expansion strategy as planned and to manage new or expanded risks
that entail such strategy, as well as incurrence of impairment or valuation losses on our acquired assets,
negative developments relating to our strategic alliance with Morgan Stanley,
failure to maintain our capital ratios and other regulatory ratios above minimum required levels,
significant unexpected increases in credit costs,
financial difficulties of other financial institutions that affect the overall banking environment and their
borrowers,
fluctuations in interest rates, foreign currency exchange rates and stock prices,
reduction in foreign currency funding liquidity,
failure to address regulatory or public concerns or to meet market or industry rules or standards,
customer protection requirements, or corporate behavior expectations,
cyber-attacks and other information security threats,
problems with the proper functioning and development of information, communications and transaction
management systems,
3
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transactions with counterparties in countries designated by the U.S. Department of State as state
sponsors of terrorism,
changes in laws, regulations, rules, policies, accounting standards or methods, voluntary codes of
practices, and interpretations,
changes in the business and regulatory environment for consumer finance companies,
damage to our reputation resulting from our failure to prevent or properly address negative perceptions
held by customers, investors, regulators and the general public regarding us and our operations, and
other risks and uncertainties discussed in “Item 3.D. Key Information—Risk Factors,” “Item 4.B.
Information on the Company—Business Overview,” “Item 5. Operating and Financial Review and
Prospects” and elsewhere in this Annual Report.
Given these and other risks and uncertainties, you are cautioned not to place undue reliance on forward-
looking statements, which speak only as of the date of the filing of this Annual Report. We are under no
obligation, and disclaim any obligation, to update or alter our forward-looking statements, whether as a result of
new information, future events or otherwise unless required by law.
4
PART I
Item 1.
Identity of Directors, Senior Management and Advisers.
Not applicable.
Item 2. Offer Statistics and Expected Timetable.
Not applicable.
Item 3. Key Information.
A. Selected Financial Data
The selected statement of income data and selected balance sheet data set forth below has been derived from
our audited consolidated financial statements.
Except for risk-adjusted capital ratios, which are calculated in accordance with Japanese banking regulations
based on information derived from our consolidated financial statements prepared in accordance with accounting
principles generally accepted in Japan, or Japanese GAAP, the selected financial data set forth below are derived
from our consolidated financial statements prepared in accordance with U.S. GAAP.
You should read the selected financial data set forth below in conjunction with “Item 5. Operating and
Financial Review and Prospects,” “Selected Statistical Data” and our consolidated financial statements and other
financial data included elsewhere in this Annual Report. These data are qualified in their entirety by reference to
all of that information.
5
Statement of income data:
Interest income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Interest expense . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
¥
Net interest income . . . . . . . . . . . . . . . . . . . . . . . . . .
Provision for (reversal of) credit losses . . . . . . . . . . .
Net interest income after provision for (reversal of)
credit losses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Non-interest income . . . . . . . . . . . . . . . . . . . . . . . . . .
Non-interest expense . . . . . . . . . . . . . . . . . . . . . . . . .
Income before income tax expense . . . . . . . . . . . . . .
Income tax expense . . . . . . . . . . . . . . . . . . . . . . . . . .
Net income before attribution of noncontrolling
2017
2018
2019
2020
2021
(in millions, except per share data and number of shares)
2,990,767
769,639
2,221,128
253,688
1,967,440
1,196,706
2,891,603
272,543
94,453
¥
3,259,016
1,028,755
¥
2,230,261
(240,847)
2,471,108
1,935,091
2,744,380
1,661,819
407,823
3,813,379
1,517,981
2,295,398
34,330
¥
3,927,143
1,684,344
2,242,799
321,713
¥
2,751,996
747,902
2,004,094
484,210
2,261,068
1,595,244
2,985,470
870,842
133,237
1,921,086
1,875,695
3,363,561
433,220
114,505
1,519,884
3,157,787
3,069,329
1,608,342
444,948
interests . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
178,090
1,253,996
737,605
318,715
1,163,394
Net income (loss) attributable to noncontrolling
interests . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
(24,590)
25,836
18,960
12,760
46,096
Net income attributable to Mitsubishi UFJ Financial
Group . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Earnings applicable to common shareholders of
Mitsubishi UFJ Financial Group . . . . . . . . . . . . . .
Amounts per share:
Basic earnings per common share—Earnings
applicable to common shareholders of Mitsubishi
UFJ Financial Group . . . . . . . . . . . . . . . . . . . . . . .
Diluted earnings per common share—Earnings
applicable to common shareholders of Mitsubishi
UFJ Financial Group . . . . . . . . . . . . . . . . . . . . . . .
Number of shares used to calculate basic earnings
¥
¥
¥
202,680
¥
1,228,160
202,680
¥
1,228,160
¥
¥
718,645
718,645
¥
¥
305,955
1,117,298
305,955
1,117,298
14.93
¥
92.40
¥
55.03
¥
23.69
¥
86.88
14.68
92.10
54.74
23.47
86.56
per common share (in thousands)
. . . . . . . . . . . . .
13,574,314
13,291,842
13,058,698
12,912,790
12,859,737
Number of shares used to calculate diluted earnings
per common share (in thousands)(1) . . . . . . . . . . . .
Cash dividends per share paid during the fiscal year:
—Common stock . . . . . . . . . . . . . . . . . . . . . . . . . . . .
13,584,885
13,293,492
13,059,182
12,912,956
12,859,737
¥
$
18.00
0.17
¥
$
18.00
0.16
¥
$
21.00
0.19
¥
$
23.50
0.22
¥
$
25.00
0.24
2017
2018
2019
2020
2021
Balance sheet data:
Total assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Loans, net of allowance for credit losses . . . . . . . . . .
Total liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Deposits . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Long-term debt(2)
. . . . . . . . . . . . . . . . . . . . . . . . . . . .
Total equity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Capital stock . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
¥297,185,019
117,032,784
282,420,311
190,401,623
26,131,527
14,764,708
2,090,270
¥300,570,312
116,271,771
284,924,497
195,674,593
27,069,556
15,645,815
2,090,270
(in millions)
¥305,228,899
116,225,757
289,244,151
199,280,789
27,990,543
15,984,748
2,090,270
¥331,753,283
117,377,199
316,008,767
203,954,528
27,926,763
15,744,516
2,090,270
¥353,824,625
114,370,472
337,580,071
229,206,936
35,157,651
16,244,554
2,090,270
6
2017
2018
2019
2020
2021
(in millions, except percentages)
Other financial data:
Average balances:
Interest-earning assets . . . . . . . . . . . . . . . . . . . . . . . .
Interest-bearing liabilities . . . . . . . . . . . . . . . . . . . . .
Total assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Total equity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
¥239,192,449
223,522,296
307,938,699
15,010,829
¥239,048,981
233,857,052
320,589,932
15,423,078
¥241,407,356
234,643,197
321,292,847
16,076,679
¥246,283,676
238,861,520
325,500,449
15,417,885
¥268,916,481
265,912,928
355,992,571
15,681,527
Return on equity and assets:
Earnings applicable to common shareholders as a
percentage of average total assets . . . . . . . . . . . . .
Earnings applicable to common shareholders as a
percentage of average total equity . . . . . . . . . . . . .
Dividends per common share as a percentage of
0.07%
1.35%
0.38%
7.96%
0.22%
4.47%
0.09%
1.98%
0.31%
7.12%
basic earnings per common share . . . . . . . . . . . . .
120.56%
19.48%
38.16%
99.20%
28.78%
Average total equity as a percentage of average
total assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Net interest income as a percentage of average total
interest-earning assets . . . . . . . . . . . . . . . . . . . . . .
Credit quality data:
Allowance for credit losses(4) . . . . . . . . . . . . . . . . . . .
Allowance for credit losses as a percentage of
loans . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Net loan charge-offs . . . . . . . . . . . . . . . . . . . . . . . . . .
Net loan charge-offs as a percentage of average
loans . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Average interest rate spread . . . . . . . . . . . . . . . . . . . .
Risk-adjusted capital ratio calculated under Japanese
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
GAAP(3)
4.87%
0.93%
4.81%
0.93%
5.00%
0.95%
4.74%
0.91%
4.41%
0.75%
¥
1,182,188
¥
764,124
¥
658,184
¥
809,540
¥
1,348,391
1.00%
0.65%
0.56%
0.68%
1.17%
¥
169,809
¥
180,999
¥
129,924
¥
179,277
¥
245,424
0.14%
0.91%
0.15%
0.92%
0.11%
0.93%
0.15%
0.88%
0.21%
0.74%
15.85%
16.56%
16.03%
15.87%
16.31%
Notes:
(1)
Includes the common shares that were potentially issuable upon exercise of stock acquisition rights. See “ Item 6.B. Directors, Senior
Management and Employees—Compensation.”
(2) Reflects the changes in presentation adopted in the fiscal year ended March 31, 2018, where long-term payables under repurchase
agreements are no longer included in long-term debt but are aggregated with short-term payables under repurchase agreements in
payables under repurchase agreements, and applied to the fiscal year ended March 31, 2017.
(3) Risk-adjusted capital ratios have been calculated in accordance with Japanese banking regulations as applicable on the relevant
calculation date, based on information derived from our consolidated financial statements prepared in accordance with Japanese GAAP.
For a description of the applicable capital ratio calculation and other requirements applicable, see “Item 4.B. Information on the
Company—Business Overview—Supervision and Regulation—Japan—Capital adequacy” and “Item 5.B. Operating and Financial
Review and Prospects—Liquidity and Capital Resources—Capital Adequacy.”
(4) Adopted the new guidance on measurement of credit losses on financial instruments as of April 1, 2020, which resulted in an increase of
allowance for credit losses as of the beginning of the fiscal year ended March 31, 2021. See Note 1 (Accounting Changes) to our
consolidated financial statements for more information.
B. Capitalization and Indebtedness
Not applicable.
C. Reasons for the Offer and Use of Proceeds
Not applicable.
7
D. Risk Factors
Investing in our securities involves a high degree of risk. You should carefully consider the risks described
in this section, which is intended to disclose all of the risks that we consider material based on the information
currently available to us, as well as all the other information in this Annual Report, including our consolidated
financial statements and related notes, “Item 5. Operating and Financial Review and Prospects,”
“Item 11. Quantitative and Qualitative Disclosures about Credit, Market and Other Risk” and “Selected
Statistical Data.”
Our business, operating results and financial condition could be materially and adversely affected by any of
the factors discussed below. The trading price of our securities could decline due to any of these factors. This
Annual Report also contains forward-looking statements that involve risks and uncertainties. Our actual results
could differ materially from those anticipated in these forward-looking statements as a result of various factors,
including those described in this section and elsewhere in this Annual Report. See “Forward-Looking
Statements.”
SUMMARY
The principal risks that could adversely affect our business, operating results, financial condition or capital
position include:
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deterioration in economic conditions in Japan because a large portion of our assets as well as our
business operations are in Japan,
deterioration in economic conditions in Japan and around the world given our global operations,
natural disasters, terrorism, pandemics and other disruptions caused by external events,
reforms of London Interbank Offered Rate and other interest rate benchmarks,
climate change risks such as physical damage caused by extreme weather conditions and natural
disasters as well as governments’ measures to strengthen climate-related regulations and the transition
to a decarbonized society,
competitive pressures, which have partly increased due to regulatory changes and recent market changes
in the financial industry domestically and globally,
new or expanded risks, if and to the extent we are unable to anticipate or manage, that entail our global
expansion strategy because of political and social instability, stagnation of the economy, fluctuations of
the financial market, inability to obtain regulatory approvals, changes in the laws, regulations or
accounting standards changes in the strategies or financial condition of our acquirees, investees or
alliance partners that are inconsistent with our interests, unanticipated changes in the local market,
industry or business environment affecting our acquirees, investees or alliance partners,
synergies and other benefits expected from our strategic alliance with Morgan Stanley not being
achieved,
failure to maintain our capital ratios and other regulatory ratios above minimum required levels,
fluctuations in foreign currency exchange rates,
credit-related losses,
financial difficulties relating to other financial institutions resulting in losses on our transactions with
such financial institutions or systemic problems adversely affecting the financial market and the wider
economy,
declines in the Japanese stock market or other global markets,
8
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fluctuations in interest rates, foreign currency exchange rates and stock prices,
a downgrade of our credit ratings adversely affecting our liquidity,
regulatory actions or other legal proceedings,
failure to safeguard personal and other confidential information resulting in liability, reputational
damage or financial losses,
cyber-attacks and other information security threats and improper functioning or development of our
information, communications and transaction management systems,
transactions with counterparties in countries designated by the U.S. Department of State as state
sponsors of terrorism,
legal and regulatory changes,
changes in the business or regulatory environment for consumer finance companies in Japan,
damage to our reputation,
restrictions on U.S. investors to ability to effect service of process on us or to enforce U.S. court
judgments against us,
limitations on rights of holders of our American depositary shares as shareholders.
Risks Related to Our Business Environment
Because a large portion of our assets as well as our business operations are in Japan, we may incur
losses if economic conditions in Japan worsen.
Our performance is particularly affected by the general economic conditions of Japan where we are
headquartered and conduct a significant amount of our business. As of March 31, 2021, 68.0% of our total assets
were related to Japanese domestic assets, including Japanese national government and Japanese government
agency bonds, which accounted for 63.5% of our total investment securities portfolio and 10.3% of our total
assets, respectively. Interest and non-interest income in Japan represented 56.7% of our total interest and
non-interest income for the fiscal year ended March 31, 2021. Furthermore, as of March 31, 2021, our loans in
Japan accounted for 59.0% of our total loans outstanding.
There is significant uncertainty surrounding Japan’s economy. For example, Japan’s fiscal health and
sovereign creditworthiness may deteriorate if the Japanese government’s economic measures and the Bank of
Japan’s monetary policies prove ineffective or result in negative consequences. If the prices of Japanese
government bonds decline rapidly, resulting in an unexpectedly sudden increase in interest rates, our investment
securities portfolio as well as our lending, borrowing, trading and other operations may be negatively impacted.
In addition, interest rates may suddenly increase as a result of a decision made by the Bank of Japan to end or
modify its current interest rate policy, including the negative interest rate of minus 0.1% applied to certain
current account amounts that financial institutions hold at the Bank of Japan and the Japanese government bond
purchase program with an aim to keep the yield of 10-year Japanese government bonds around zero percent, or
market expectations relating to any such decision.
Instability in the Japanese stock market and foreign currency exchange rates may also have an adverse
impact on our asset and liability management as well as our results of operations. Various other factors, including
the COVID-19 pandemic and measures being implemented in response to the pandemic such as restrictions on
travel, store operations and other economic activities, the decreasing and aging demographics in Japan,
stagnation or deterioration of economic and market conditions in other countries, growing global competition and
trade conflicts, may also have a material negative impact on the Japanese economy. For a detailed discussion on
the business environment in Japan and abroad, see “Item 5. Operating and Financial Review and Prospects—
Business Environment.”
Since our domestic loans in Japan accounted for a significant portion of our loan portfolio, deteriorating or
stagnant economic conditions in Japan may cause adverse effects on our financial results, such as increases in
9
credit costs, as the credit quality of some borrowers could deteriorate, particularly borrowers in industries that are
adversely affected by the COVID-19 pandemic. Our domestic loan portfolio may also be adversely affected by
interest rate fluctuations in Japan. For example, as a result of the Bank of Japan’s interest rate policy and
measures to purchase Japanese government bonds in the market, the yield on many financial instruments and
other market interest rates in Japan have declined to low or negative levels. If the Bank of Japan’s policy and
measures are maintained for an extended period, or if the Bank of Japan’s negative interest rate is lowered from
the current level, market interest rates may decline further, and our interest rate spread on our domestic loan
portfolio may narrow further, reducing our net interest income.
Our results of operations may be materially affected by deterioration of economic conditions in Japan
and around the world.
Economic conditions in Japan and around the world may deteriorate due to various factors such as the
COVID-19 pandemic and measures being implemented in response to the pandemic, including restrictions on
travel, store operations and other economic activities, in Japan and other countries and regions. Uncertainty over
the Japanese and global economies still remain not only because of the unpredictability of the timing of
containment of COVID-19 but also because of such other factors as concerns over political developments in the
United States, the possible negative impact on international trade resulting from shifts in the trade policies of
various countries and regions, concerns over the U.S.-China conflict, changes in the European economy after the
United Kingdom’s withdrawal from the European Union, and economic stagnation and political turmoil in
various regions around the world. In addition, external events, such as earthquakes, typhoons, floods and other
natural disasters, terrorism and other political and social conflicts, abduction, and health pandemics or epidemics,
may cause deterioration in economic conditions and market instability in affected areas. As of March 31, 2021,
based principally on the domicile of the obligors, assets related to the United States accounted for approximately
14.0% of our total assets, assets related to Asia and Oceania excluding Japan accounted for approximately 8.9%
of our total assets, and assets related to Europe accounted for approximately 6.0% of our total assets.
Worsening economic conditions in Japan and around the world may result in, among other things,
impairment or valuation losses on securities and other assets that we hold due to declines in the market value of
such assets, an increase in our non-performing loans and credit costs due to deterioration in borrowers’ business
performance, a decrease in our profits due to deterioration in the creditworthiness of counterparties in market
transactions, a reduction in foreign currency funding liquidity, an increase in our foreign currency funding costs,
and an increase in the level of risk in the risk assets that we hold. Our profitability may be adversely affected by
various other factors, including a decline in our net interest income caused by such factors as changes in the
monetary policies of central banks in various jurisdictions. In addition, an economic downturn may result in a
decline in new investments and business transactions by customers due to stagnation in economic activity, weak
consumer spending, diminished investor appetite for making investments in uncertain financial markets, and a
decrease in our assets under custody or management.
Our business operations are exposed to risks of natural disasters, terrorism and other disruptions caused
by external events.
As a major financial institution incorporated in Japan and operating in major international financial markets,
our business operations, ATMs and other information technology systems, personnel, and facilities and other
physical assets are subject to the risks of earthquakes, typhoons, floods and other natural disasters, terrorism and
other political and social conflicts, abduction, health pandemics or epidemics, and other disruptions caused by
external events, which are beyond our control. Such external events may result in loss of facility and human and
other resources, suspension or delay in all or part of our operations, inability to implement business strategic
measures or respond to changes in the market or regulatory environment as planned, and other disruptions to our
operations. In addition, we may be required to incur significant costs and expenses, including those incurred for
preventive or remedial measures, to deal with the consequences of such external events. As a result, our business,
operating results and financial condition may be materially and adversely affected.
10
For example, the COVID-19 pandemic has required us to temporarily close some of our business locations,
resulted in reduction in our and our vendors’ operational capacity due to restrictions on mobility, and had other
negative impact on us. Although we have taken various measures designed to ensure the safety of our employees
and vendors as well as the continuity of our operations, if a large number or concentrated groups of employees of
us and our vendors become infected of the virus or if the pandemic continues to expand or is not sufficiently
controlled, we may be further adversely affected.
As with other Japanese companies, we are exposed to heightened risks of large-scale natural disasters,
particularly earthquakes. In particular, a large-scale earthquake occurring in the Tokyo metropolitan area and
other areas where we have our important business functions may have a material adverse effect on our business,
operating results and financial condition.
Our risk management policies and procedures may be insufficient to address the consequences of these
external events, resulting in our inability to continue to operate a part or the whole of our business. In addition,
our redundancy and backup measures may not be sufficient to avoid a material disruption in our operations, and
our contingency and business continuity plans may not address all eventualities that may occur in the event of a
material disruption caused by a large-scale natural disaster.
Reforms of London Interbank Offered Rate and other interest rate benchmarks could adversely affect
our business, financial condition and results of operations.
We have various transactions, including derivatives, loans, bonds, and securitized products, that reference
London Interbank Offered Rate, or LIBOR, and other interest rate benchmarks. On March 5, 2021, the U.K.
Financial Conduct Authority announced its intention to cease the publication of LIBOR settings, including (a) in
the case of all sterling, euro, Swiss franc and Japanese yen settings and the 1-week and 2-month U.S. dollar
settings, immediately after December 31, 2021, and (b) in the case of the remaining U.S. dollar settings,
immediately after June 30, 2023.
In anticipation of the discontinuation of the publication of LIBOR after the end of calendar year 2021, we
are taking measures to deal with the reform of LIBOR and other interest rate benchmarks and the transition to
alternative reference rates. However, such transition from LIBOR and other interest rate benchmarks to
alternative reference rates is complex and entails uncertainty and may have various adverse impacts on our
business, financial position and operating results. In particular, among other things,
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such transition may adversely affect the price, liquidity, profitability, and tradability of a wide range of
financial instruments, such as loans and derivatives, included in our financial assets and liabilities that
reference LIBOR and other interest rate benchmarks;
‰ we may be unable to modify contracts with our counterparties to replace the reference rate for existing
contracts based on or linked to LIBOR and other interest rate benchmarks with alternative reference
rates by the dates set for cessation of LIBOR and other interest rate benchmarks;
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such transition may result in disputes with customers and counterparties concerning the interpretation of
affected contracts or economic adjustments to the alternative reference rate adopted in connection with
the reform of LIBOR and other interest rate benchmarks and the transition to alternative reference rates,
or disputes concerning inappropriate trade practices or abuse of a dominant bargaining position in
transactions with customers;
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such transition may require us to respond to regulatory authorities in connection with the reform of
LIBOR and other interest rate benchmarks and the transition to alternative reference rates; and
‰ we may be unable to sufficiently develop or enhance systems needed for risk management and other
operations to effectively deal with the reform of LIBOR and other interest rate benchmarks and the
transition to alternative reference rates and may incur additional system investment and other costs in
connection with such reform and transition
11
Climate change could have a material adverse impact on us and our clients.
Physical damage caused by extreme weather conditions and natural disasters resulting from climate change,
as well as governments’ measures to strengthen climate-related regulations and the transition to a decarbonized
society, may adversely affect the business and financial condition of us and our clients, including our credit
portfolio. We recognize the importance of appropriately understanding, evaluating and disclosing climate
change-related risks, and we intend to support the recommendations of the Climate Financial Disclosure Task
Force, or TCFD, which has been established by the Financial Stability Board. To be in line with the TCFD, we
intend to make a continued effort to improve our understanding and evaluation of the relevant risks and to
enhance our related disclosure. However, if our effort to address climate change-related risks or to make
appropriate disclosure proves or is deemed inappropriate and, as a result, we are considered to fail to fulfill our
responsibility to society, our corporate value may be impaired and our business and results of operations may be
adversely affected.
Risks Related to Our Strategies and Our Major Investees
Our business may be adversely affected by competitive pressures, which have partly increased due to
regulatory changes and recent market changes in the financial industry domestically and globally.
Competition in the financial services industry may further intensify due to the increase in the number of
non-financial institutions entering the financial services industry with alternative services such as electronic
settlement services as a result of development of new technologies such as artificial intelligence, or AI, and
blockchain as well as significant changes in regulatory barriers. Competition may also further increase as other
global financial institutions enhance their competitive strength through development or adoption of such new
technologies as well as mergers, acquisitions, strategic alliances, and profit enhancement and other measures.
Under such circumstances, although we have been implementing various business strategies on a global
basis designed to strengthen our competitive position and profitability, our business, financial condition and
results of operations may be adversely affected if these strategies fail to produce the results we expect or if we
are required to delay or otherwise change these strategies and result in the decline in our competitiveness because
of various factors, including where:
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the volume of loans made to borrowers cannot be maintained or does not increase as anticipated;
our income from interest spreads on the existing loans does not improve as anticipated;
our loan interest spread further narrows as a result of the “quantitative and qualitative monetary easing
with yield curve control” program being maintained in Japan for an extended period or the negative
interest rate being lowered from the current level;
our fee income does not increase as much or quickly as we aim to do;
our strategy to build a business infrastructure for new services and products through digital
transformation or otherwise does not proceed as planned;
clients and business opportunities are lost, or costs and expenses significantly exceed our expectations,
as a result of the ongoing or planned strategies to streamline our business portfolio, to integrate our
systems, or to improve financial and operational efficiency not being achieved as expected;
‰ we are unable to hire or retain sufficient human resources;
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our foreign currency funding becomes limited or unavailable; and
‰ we are restricted in agility or flexibility in investing in non-financial institutions under applicable laws
and regulations in and outside of Japan.
12
Our strategy to expand the range of our financial products and services and the geographic scope of our
business globally may fail if we are unable to anticipate or manage new or expanded risks that entail such
global expansion.
As we expand our business operations and operate our business as a global financial institution, we may
become exposed to new and increasingly complex risks associated therewith. We may not be able to establish
appropriate internal controls or risk management systems or to hire or retain necessary human resources to
effectively deal with compliance, regulatory, market and other risks entailing the expanded scope of our
operations, products and services in all cases and, as a consequence, our financial condition and results of
operations may be adversely affected.
As a strategic measure implemented in an effort to become the world’s most trusted financial group, we
acquire businesses, make investments and enter into capital alliances globally. We may continue to pursue
opportunities to acquire businesses, make investments and enter into capital alliances. Our major overseas
subsidiaries include MUFG Americas Holdings, a wholly owned subsidiary in the United States, Krungsri, a
subsidiary in Thailand, and Bank Danamon, a subsidiary in Indonesia. Our acquisition, investments and capital
alliances may not proceed as planned or may be changed or dissolved, we may not achieve the synergies or other
results that we expected, or we may incur impairment or valuation losses on securities acquired or intangible
assets, including goodwill, recorded in connection with such business acquisitions, investments or business
alliances, because of among other things, political and social instability, stagnation of the economy, fluctuations
of the financial market, inability to obtain regulatory approvals, changes in the laws, regulations or accounting
standards, changes in the strategies or financial condition of our acquirees, investees or alliance partners that are
inconsistent with our interests, unanticipated changes in the local market, industry or business environment
affecting our acquirees, investees or alliance partners. These and other similar circumstances may adversely
affect our business strategies, financial condition and results of operations. In addition, we may be unable to
achieve the benefits expected from our efforts to expand business operations if our expansion strategy does not
proceed as planned.
If the goodwill recorded in connection with our acquisitions becomes impaired, we may be required to
record impairment losses, which may adversely affect our financial results. We record the excess of the purchase
price over the fair value of the assets and liabilities of the acquired companies as goodwill. As of March 31,
2021, the total balance of goodwill was ¥ 370.9 billion. U.S. GAAP requires us to test goodwill for impairment at
least annually, or more frequently if events or changes in circumstances indicate that goodwill may be impaired.
For further information, see Note 6 to our audited consolidated financial statements.
Our efforts to offer new products and services or penetrate new markets may not succeed due to any of the
foregoing reasons or other reasons, including if product or market opportunities develop more slowly than
expected, if our new products and services are not well accepted among customers, if the profitability of
opportunities is undermined by competitive pressures, regulatory limitations or changes in our business
environment, if our planned acquisitions, investments or capital alliances are not approved by regulators or do
not proceed as planned, or if our acquisitions, investments or capital alliances fail to achieve the synergies or
other results that we expect.
If our strategic alliance with Morgan Stanley fails, we could suffer financial or reputational loss.
We have a global strategic alliance with Morgan Stanley, under which we operate two joint venture
securities companies in Japan, engage in joint corporate finance operations in the United States and pursue other
cooperative opportunities. We hold approximately 20.2% of the voting rights in Morgan Stanley as of March 31,
2021 and continue to hold approximately $521.4 million of perpetual non-cumulative non-convertible preferred
stock with a 10% dividend. In addition, we currently have two representatives on Morgan Stanley’s board of
directors. We maintain this strategic alliance with a view towards long-term cooperation with Morgan Stanley,
and plan to deepen the strategic alliance. However, due to any unexpected changes in social, economic or
financial conditions, changes in the regulatory environment, or any failure to integrate or share staff, products or
13
services, or to operate, manage or implement the business strategy of the securities joint venture companies or
other cooperative opportunities as planned, we may be unable to achieve the expected synergies from this
alliance.
If our strategic alliance with Morgan Stanley is terminated, it could have a material negative impact on our
business strategy, financial condition, and results of operations. For example, because we conduct our securities
operations in Japan through the joint venture companies we have with Morgan Stanley, such termination may
result in our inability to attain the planned growth in this line of business.
In addition, with our current investment in Morgan Stanley, we have neither a controlling interest in, nor
control over the business operations of, Morgan Stanley. If Morgan Stanley makes any business decisions that
are inconsistent with our interests, we may be unable to achieve the goals initially set out for the strategic
alliance. Furthermore, although we do not control Morgan Stanley, given the magnitude of our investment, if
Morgan Stanley encounters financial or other business difficulties due to adverse changes in the economy,
regulatory environment or other factors, we may suffer a financial loss on our investment or damage to our
reputation.
We apply equity method accounting to our investment in Morgan Stanley in our consolidated financial
statements. As a result, Morgan Stanley’s performance affects our results of operations, and Morgan Stanley has
contributed to a significant portion of our net income in recent periods. Rule 3-09 of Regulation S-X requires
Morgan Stanley’s financial statements to be included in this Annual Report. In addition, fluctuations in Morgan
Stanley’s stock price or in our equity ownership interest in Morgan Stanley may cause us to recognize losses on
our investment in Morgan Stanley.
Risks Related to Our Ability to Meet Regulatory Capital Requirements
We may not be able to maintain our capital ratios and other regulatory ratios above minimum required
levels, which could result in various regulatory actions, including the suspension of some or all of our
operations.
We, as a holding company, and our Japanese banking subsidiaries are required to maintain risk-weighted
capital ratios and leverage ratios above the levels specified in the guidelines adopted by the FSA to implement
the Basel III framework. As of March 31, 2021, our total risk-adjusted capital ratio was 16.31% compared to the
minimum risk-adjusted capital ratio required of 12.00%, our Tier 1 capital ratio was 13.96% compared to the
minimum Tier 1 capital ratio required of 10.00%, and our Common Equity Tier 1 capital ratio was 12.33%
compared to the minimum Common Equity Tier 1 capital ratio required of 8.50%, each including a capital
conservation buffer of 2.50%, a G-SIB surcharge of 1.50% and a countercyclical buffer of 0.00%. As of the same
date, our leverage ratio was 5.45% compared to the minimum leverage ratio required of 3.00%. Basel III risk
measurement reforms are expected to be phased in from 2023. Our capital and leverage ratios are calculated in
accordance with Japanese banking regulations based on information derived from our financial statements
prepared in accordance with Japanese GAAP.
The Financial Stability Board has identified us as one of G-SIBs. The banks that are included in the list of
G-SIBs are subject to a capital surcharge to varying degrees depending on the bucket to which each bank is
allocated. As the list of G-SIBs is expected to be updated annually, we may be required to meet stricter capital
ratio requirements. G-SIBs are currently expected to become subject to a leverage ratio surcharge in 2023.
If our or our Japanese banking subsidiaries’ capital ratios or leverage ratios fall below the required levels,
including various capital buffers, the FSA may require us to take a variety of corrective actions, including
abstention from making capital distributions and suspension of our business operations. In addition, some of our
banking subsidiaries are subject to the local capital adequacy ratio and other regulatory ratio requirements of
various foreign countries, including the United States, and if their ratios fall below the required levels, the local
regulators will require them to take a variety of corrective actions.
14
Factors that will affect our and our bank subsidiaries’ capital ratios or leverage ratios include:
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fluctuations in our or our banking subsidiaries’ portfolios due to deterioration in the creditworthiness of
borrowers and the issuers of equity and debt securities;
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difficulty in refinancing or issuing instruments upon redemption or at maturity of such instruments to
raise capital under terms and conditions similar to prior financings or issuances;
declines in the value of our or our banking subsidiaries’ securities portfolios;
adverse changes in foreign currency exchange rates;
adverse revisions to the capital ratio and other regulatory ratio requirements;
reductions in the value of our or our banking subsidiaries’ deferred tax assets; and
other adverse developments.
In March 2019, we became subject to the FSA’s new regulations requiring G-SIBs in Japan to maintain
certain minimum levels of capital and liabilities that are deemed to have loss-absorbing and recapitalization
capacity, or External TLAC, and allocate a certain minimum level of External TLAC to any material subsidiary
within their respective groups of companies, or Internal TLAC. As of March 31, 2021, we maintained 18.94% of
External TLAC on a risk-weighted assets basis compared to the required minimum ratio of 16.00% and 8.96% of
External TLAC on a leverage exposure basis compared to the required minimum ratio of 6.00%. The applicable
minimum ratio requirements are expected to be raised to 18.00% on a risk-weighted assets basis and 6.75% on a
leverage exposure basis on March 31, 2022. Within the MUFG Group, MUFG Bank, Mitsubishi UFJ Trust and
Banking, Mitsubishi UFJ Morgan Stanley Securities Co., Ltd. and MUFG Americas Holdings are designated as
our material subsidiaries. We may become subject to various regulatory actions, including restrictions on capital
distributions, if we are unable to maintain our External TLAC ratios or the amount of Internal TLAC allocated to
any of our material subsidiaries in Japan above the minimum levels required by the standards imposed by the
FSA, or if the capital buffers are used and reduced below the required level to make up for our required External
TLAC ratio on a risk-weighted assets basis. Our External TLAC ratios and the amount of our Internal TLAC are
affected by various factors that affect our capital ratios and leverage ratios described above. Although we plan to
issue TLAC-qualified debt in an effort to meet the minimum required levels of External TLAC ratios and
Internal TLAC amounts, we may fail to do so if we are unable to issue or refinance TLAC-qualified debt as
planned.
For a discussion of the applicable regulatory guidelines and our capital ratios, see “Item 4.B. Information on
the Company—Business Overview—Supervision and Regulation” and “Item 5.B. Operating and Financial
Review and Prospects—Liquidity and Capital Resources—Capital Adequacy.”
Fluctuations in foreign currency exchange rates may result in transaction losses on translation of
monetary assets and liabilities denominated in foreign currencies as well as foreign currency translation
losses with respect to our foreign subsidiaries and equity method investees.
Fluctuations in foreign currency exchange rates against the Japanese yen create transaction gains or losses
on the translation into Japanese yen of monetary assets and liabilities denominated in foreign currencies. To the
extent that our foreign currency-denominated assets and liabilities are not matched in the same currency or
appropriately hedged, we could incur losses due to future foreign exchange rate fluctuations. During the fiscal
year ended March 31, 2021, the average balance of our foreign interest-earning assets was ¥100,027.7 billion and
the average balance of our foreign interest-bearing liabilities was ¥66,934.7 billion, representing 37.2% of our
average total interest-earning assets and 25.2% of our average total interest-bearing liabilities during the same
period. Due to foreign currency exchange rate fluctuations, we may incur losses attributable to net transaction
losses on the translation into Japanese yen of monetary assets and liabilities denominated in foreign currencies,
net losses on currency derivative instruments entered into for trading purposes, and net losses on translation into
Japanese yen of securities accounted for under the fair value option. In addition, we may incur foreign currency
translation losses with respect to our foreign subsidiaries and equity method investees due to fluctuations in
foreign currency exchange rates.
15
Credit Risk
We may suffer additional credit-related losses in the future if our borrowers are unable to repay their
loans as expected or if the measures we take in reaction to, or in anticipation of, our borrowers’ deteriorating
repayment abilities prove inappropriate or insufficient.
If the economic conditions in Japan or other parts of the world, including emerging countries, or in
particular industries, including the energy and real estate industries, to which we have significant credit risk
exposure, or the air transportation and other industries that may be adversely affected by the COVID-19
pandemic, worsen, or if emerging market currencies depreciate against major currencies, our problem loans and
credit-related expenses and losses may increase. An increase in problem loans and credit-related expenses and
losses would adversely affect our results of operations, weaken our financial condition and erode our capital
base. The effect of the pandemic on our credit portfolio has been significant, resulting in increases in our problem
loans and credit-related expenses and losses. The full extent of the impact of the pandemic on our credit portfolio
remains uncertain though more than a year has passed since the COVID-19 pandemic. For example, we have
provided small and medium-sized entities adversely affected by the pandemic with loans to support their
business and liquidity needs under government financial assistance programs. The loan losses related to such
borrowers have been relatively small due to the credit support provided by the government. However, such loans
provided in Japan mature during the fiscal year ending March 31, 2022, and we may recognize significant losses
on loans outstanding after the government support expires.
We may provide additional loans, equity capital or other forms of support to troubled borrowers in order to
facilitate their restructuring and revitalization efforts. We may also forbear from exercising some or all of our
rights as a creditor against them, and we may forgive loans to them in conjunction with their debt restructurings.
We may take these steps even when such steps might not be warranted from the perspective of our short-term or
narrow economic interests or a technical analysis of our legal rights against those borrowers, in light of other
factors such as our longer-term economic interests and our commitment to supporting the Japanese economy.
These practices may substantially increase our exposure to troubled borrowers and increase our losses. Credit
losses may also increase if we elect, or are forced by economic or other considerations, to sell or write off our
problem loans at a larger discount, in a larger amount or in a different time or manner, than we may otherwise
want.
Our loan losses could prove to be materially different from our estimates and could materially exceed our
current allowance for credit losses, in which case we may need to provide for additional allowance for credit
losses and may also record credit losses beyond our allowance. Our allowance for credit losses in our loan
portfolio is based on evaluations of customers’ creditworthiness and the value of collateral we hold. While we
closely observe conditions of our individual borrowers and industry trends, we may need to provide for
additional allowance for credit losses due to deterioration in domestic and global economic conditions as well as
commodity price fluctuations or other conditions specific to certain borrowers.
Also, the regulatory standards or guidance on establishing allowances may also change, causing us to
change some of the evaluations used in determining the allowances. As a result, we may need to provide for
additional allowance for credit losses. For example, as a result of our adoption on April 1, 2020 of an accounting
methodology that reflects expected credit losses and requires consideration of a broader range of reasonable and
supportable information to inform credit loss estimates, we estimated that our allowance for credit losses and our
allowance for off-balance sheet credit instruments increased by an aggregate of approximately ¥380 billion to
¥450 billion as of the opening balance sheet date. See Note 1 to our consolidated financial statements.
Our efforts to diversify our portfolio to avoid any concentration of credit risk exposures to particular
industries or counterparties may prove insufficient. For example, our credit exposures to the energy and real
estate industries are relatively high in comparison to other industries. The credit quality of borrowers in this
sector do not necessarily correspond to general economic conditions in Japan or other parts of the world, and
adverse fluctuations in oil and other commodity prices or adverse developments in the real estate market may
disproportionately increase our credit losses.
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We may incur further losses as a result of financial difficulties relating to other financial institutions,
both directly and through the effect they may have on the overall banking environment and on their
borrowers.
Declining asset quality and other financial problems may exist, arise or worsen at some domestic and
foreign financial institutions, including banks, non-bank lending and credit institutions, securities companies and
insurance companies. Financial difficulties relating to financial institutions may not only lead to liquidity and
insolvency problems for such financial institutions but also result in systemic problems adversely affecting the
financial market and the wider economy. Financial difficulties relating to financial institutions could adversely
affect us because we have extended loans, some of which may need to be classified as impaired loans, to banks,
securities companies, insurance companies and other financial institutions that are not our consolidated
subsidiaries. Our loans to banks and other financial institutions have been more than 10% of our total loans as of
each year-end in the three fiscal years ended March 31, 2021, with the percentage being 14.8% as of March 31,
2021. We may also be adversely affected because we enter into transactions, such as derivative transactions, in
the ordinary course of business, with other banks and financial institutions as counterparties. For example, we
enter into credit derivatives with banks, broker-dealers, insurance companies and other financial institutions for
managing credit risk exposures, for facilitating client transactions, and for proprietary trading purposes. In
addition, we may be adversely affected because:
‰ we are shareholders of financial institutions;
‰
financial institutions that face difficulties may terminate or reduce financial support to borrowers,
putting such borrowers under financial stress and causing our loans to such borrowers to be impaired;
‰ we may be requested to participate in providing support to distressed financial institutions;
‰
‰
‰
‰
the government may elect to provide regulatory, tax, funding or other benefits to financial institutions
under its supervision or control to strengthen their capital or increase their profitability or for other
purposes, causing our competitiveness against such financial institutions to weaken;
our deposit insurance premiums may rise if deposit insurance funds prove to be inadequate;
bankruptcies or government control or other intervention of financial institutions may generally
undermine the confidence of depositors in, or adversely affect the overall business environment for,
financial institutions; and
negative media coverage of the financial industry or system, regardless of its accuracy and applicability
to us, may harm our reputation as well as market confidence in the financial industry and system.
Risk Relating to Our Strategic Equity Portfolio
If the Japanese stock market or other global markets decline in the future, we may incur losses on our
securities portfolio and our capital ratios will be adversely affected.
Our strategic equity investments in Japan accounted for a vast majority of our total domestic marketable
equity securities of ¥5.72 trillion as of March 31, 2021. A decline in stock prices may also reduce our regulatory
capital ratios because unrealized gains and losses on the equity securities we hold are reflected in the calculation
of such ratios. Weakening or stagnant economic conditions in Japan, the United States, China, the Eurozone and
Asian countries may have a significant negative impact on Japanese companies, which in turn will cause their
stock prices to decline. Japanese stock prices may fluctuate significantly and negatively in future periods, as the
global economy remains volatile and investors continue to observe the changes in economic, monetary and trade
policies mainly in these countries and regions. Concerns over the impact of geopolitical tensions and conflicts in
various parts of the world on Japanese companies may also adversely affect stock prices in Japan. In addition, the
global trend towards further reduction in risk assets could result in lower stock prices.
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Market Risk
Fluctuations in interest rates, foreign currency exchange rates and stock prices could adversely affect the
value or the yield of our portfolio.
We undertake extensive financial market operations involving a variety of financial instruments, including
derivatives, and hold large volumes of such financial instruments. As a result, our financial condition and results
of operations are subject to the risks relating to these operations and holdings. The primary risks are fluctuations
in interest rates, foreign currency exchange rates and stock prices in and outside of Japan. As of March 31, 2021,
approximately 27.8% of our total assets were financial instruments which we measure at fair value. The
aggregate carrying amount of the Japanese government and corporate bonds and foreign bonds, including U.S.
Treasury bonds, that we held as of March 31, 2021 was 11.5% of our total assets. In particular, the Japanese
national government and Japanese government agency bonds accounted for 10.3% of our total assets as of
March 31, 2021. If market interest rates decline due to such factors as changes in the monetary policies of central
banks in various jurisdictions, the yield on the Japanese government bonds and foreign government bonds that
we hold may also decline. Furthermore, if short-term interest rates rise to a larger extent than long-term interest
rates, our interest income may be adversely affected. If interest rates in and outside of Japan rise, we may incur
significant losses on sales of, and valuation losses on, our bond portfolio.
Appreciation of the Japanese yen against the U.S. dollar and other major currencies causes the
yen-converted value of our foreign currency-denominated investments to decline and may cause us to recognize
significant losses on sales of, or valuation losses on, such investments in our financial statements. Furthermore, if
stock prices decline, the value of marketable equity securities and trading account securities that we hold also
declines, we may incur significant losses on sales of, and valuation losses on, our equity securities and trading
account securities portfolios. In addition, the derivative financial instruments in our trading portfolio may cause
us to record significant gains or losses, when sold or marked to market, and may fluctuate from period to period
due to numerous factors that are beyond our control, including interest rate levels, foreign currency exchange
rates, stock price fluctuations, the credit risk of our counterparties, and general market volatility. Our assessment
and management of market risks, including those related to fluctuations in interest rates, foreign currency
exchange rates and securities prices, may prove insufficient and, as a result, our actual losses in the future may
exceed our estimated market risk exposure.
Funding Liquidity Risk
A downgrade of our credit ratings could adversely affect our ability to access and maintain liquidity.
Any downgrade of the credit ratings assigned to us or our debt securities by Moody’s, Fitch, Standard &
Poor’s or any other credit rating agency could increase the cost, or decrease the availability, of our funding,
particularly in U.S. dollars and other foreign currencies, adversely affect our liquidity position or net interest
margin, trigger additional collateral or funding obligations, and result in losses of depositors, investors and
counterparties willing or permitted to transact with us, thereby reducing our ability to generate income and
weakening our financial position. Assuming all of the relevant credit rating agencies downgraded the credit
ratings of MUFG, MUFG Bank, Mitsubishi UFJ Trust and Banking and Mitsubishi UFJ Securities Holdings as of
March 31, 2021 by one-notch on the same date, we estimate that MUFG and its three main subsidiaries would
have been required to provide of approximately ¥100.2 billion of additional collateral under their derivative
contracts. Assuming a two-notch downgrade by all of the same credit rating agencies occurring on the same date,
we estimate that the additional collateral requirements for the same MUFG group companies under their
derivative contracts would have been approximately ¥134.2 billion.
Rating agencies regularly evaluate us and our major subsidiaries as well as our and their respective debt
securities. Their ratings are based on a number of factors, including their assessment of the relative financial
strength of MUFG or of the relevant subsidiary, as well as conditions generally affecting the financial services
industry in Japan or on a global basis, some of which are not entirely within our control. As a result of changes in
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their evaluation of these factors or in their rating methodologies, rating agencies may downgrade our ratings or
our subsidiaries’ ratings. In April 2020, Fitch downgraded the long-term credit ratings of MUFG, MUFG Bank,
Mitsubishi UFJ Trust and Banking by one-notch from A to A-. In addition, in April 2020, Standard and Poor’s
changed the credit rating outlook for MUFG, MUFG Bank and Mitsubishi UFJ Trust and Banking from
“Positive” to “Stable”. Fitch changed the credit rating outlook for MUFG, MUFG Bank, Mitsubishi UFJ Trust
and Banking and Mitsubishi UFJ Morgan Stanley Securities from “stable” to “negative” in August 2020,
although Fitch changed the outlook for the same companies from “negative” back to “stable” in September 2020.
Operational Risk
We may become subject to regulatory actions or other legal proceedings relating to our transactions or
other aspects of our operations, which could result in significant financial losses, restrictions on our
operations and damage to our reputation.
We conduct our business subject to ongoing regulation and associated regulatory and legal risks. Global
financial institutions, including us, currently face heightened regulatory scrutiny as a result of the concerns
developing in the global financial sector, and growing public pressure to demand even greater regulatory
surveillance following several high-profile scandals and risk management failures in the financial industry. In the
current regulatory environment, we are subject to various regulatory inquiries or investigations from time to time
in connection with various aspects of our business and operations. In addition, multiple government authorities
with overlapping jurisdiction more frequently conduct investigations and take other regulatory actions in
coordination with one another or separately on the same or related matters. Our controls may be found
insufficient in addressing regulatory or public concerns relating to money laundering, economic sanctions,
bribery, corruption, financial crimes, or unfair or inappropriate business practices, or in meeting market or
industry rules or standards, customer protection requirements, or corporate behavior expectations.
In November 2017, MUFG Bank agreed to the entry by the U.S. Office of the Comptroller of the Currency,
or OCC, of a consent order that includes remedial terms and conditions that are substantively the same as those
included in the consent agreements that MUFG Bank had reached with the New York Department of Financial
Services in 2013 and 2014 pertaining to compliance with OFAC sanctions requirements. The consent order was a
condition for the conversion of MUFG Bank’s branches and agencies in the United States from state-licensed
branches and agencies under the supervision of state regulatory agencies to federally licensed branches and
agencies under the supervision of the OCC. In February 2019, MUFG Bank entered into a consent order with the
OCC, relating to deficiencies identified by the OCC in the Bank Secrecy Act/Anti-Money Laundering
compliance program of MUFG Bank’s U.S. branches in New York, Los Angeles, and Chicago. The consent
order requires MUFG Bank and its U.S. branches to implement various remedial measures to address the
deficiencies found in the OCC examination, including a comprehensive action plan satisfactory to the OCC,
implementation of measures to ensure effective compliance management and qualified staffing, the adoption of
comprehensive Bank Secrecy Act/Anti-Money Laundering risk assessment policies and procedures, and other
remedial actions. MUFG Bank is undertaking necessary actions relating to the consent orders. We have received
requests and subpoenas for information from government agencies in some jurisdictions that are conducting
investigations into past submissions made by panel members, including us, to the bodies that set various
interbank benchmark rates as well as investigations into foreign exchange related practices of global financial
institutions. Some of the investigations into foreign exchange related practices resulted in our payment of
monetary penalties to the relevant government agencies. We are cooperating with the ongoing investigations and
have been conducting an internal investigation, among other things. In connection with these matters, we and
other financial institutions are involved as defendants in a number of civil lawsuits, including putative class
actions, in the United States.
These developments or other similar matters may result in additional regulatory actions against us or
agreements to make significant additional settlement payments. These developments or other matters to which
we are subject from time to time may also expose us to substantial monetary damages, legal defense costs,
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criminal and civil liability, and restrictions on our business operations as well as damage to our reputation. Our
ability to obtain regulatory approvals for future strategic initiatives may also be adversely affected. The outcome
of such matters, including the extent of the potential impact of any unfavorable outcome on our financial results,
however, is inherently uncertain and difficult to predict. The extent of financial, human and other resources
required to conduct any investigations or to implement any corrective or preventive measures is similarly
uncertain and could be significant. Such resources may also be difficult for us to secure in a timely manner.
Failure to safeguard personal and other confidential information may result in liability, reputational
damage or financial losses.
As our operations expand in volume, complexity and geographic scope, we are exposed to increased risk of
confidential information in our possession being lost, leaked, altered or falsified as a result of human or system
error, misconduct, unlawful behavior or scheme, unauthorized access or natural or human-caused disasters. Our
information systems and information management policies and procedures may not be sufficient to safeguard
confidential information against such risks. As a financial institution in possession of customer information, we
are obligated to treat personal and other confidential information as required by the Act on the Protection of
Personal Information, the Act on the Use of Personal Identification Numbers in the Administration of
Government Affairs, the Banking Law and the Financial Instruments and Exchange Act of Japan, as well as other
similar laws and regulations of other jurisdictions in which we operate. In the event that personal information in
our possession about our customers or employees is leaked or improperly accessed and subsequently misused, we
may be subject to liability and regulatory action. We may have to provide compensation for economic loss and
emotional distress arising out of a failure to protect such information. In addition, such incidents could create a
negative public perception of our operations, systems or brand, which may in turn decrease customer and market
confidence and materially and adversely affect our business, operating results and financial condition. Moreover,
any loss, leakage, alteration or falsification of confidential information, or any malfunction or failure of our
information systems, may result in significant disruptions to our business operations or plans or may require us to
incur significant financial, human and other resources to implement corrective measures or enhance our
information systems and information management policies and procedures.
Our operations are highly dependent on our information, communications and transaction management
systems and are subject to an increasing risk of cyber-attacks and other information security threats and to
changes in the business and regulatory environment.
Our information, communications and transaction management systems, which include not only our own
proprietary systems but also those third-party systems that are provided for our use or to which our systems are
connected, constitute a core infrastructure for our operations. The proper functioning of our information,
communications and transaction management systems is critical to our ability to efficiently and accurately
process a large volume of transactions, ensure adequate internal controls, appropriately manage various risks, and
otherwise service our clients and customers, particularly in the current business environment with increasing
dependence on remote or online networks and our strategy to promote digitization.
Cyber-attacks, unauthorized access and computer viruses are becoming increasingly more sophisticated and
more difficult to predict, detect and prevent. For instance, bank internal financial transaction systems or
automatic teller machines may become the target of cyber-attacks for monetary gain, and bank internal
information systems may become the target of confidential information theft. In addition, banks’ websites or
customer internet banking systems may become the target of cyber-attacks for political and other purposes. These
cyber threats, as well as our failure to appropriately and timely anticipate and deal with changes associated with
technological advances and new systems and tools introduced in response to industry, regulatory and other
developments, could cause disruptions to, and malfunctions of, information, communications and transaction
management systems and result in fraud or other misconduct, unintended releases of confidential and proprietary
information stored in or transmitted through the systems, interruptions in the operations of our clients, customers,
counterparties and service providers, and deterioration in our ability to service our clients and customers. In
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addition, our banking and other transaction management systems may not meet all applicable business and
regulatory requirements in an environment where such requirements are becoming increasingly sophisticated and
complicated. Furthermore, our system development or improvement projects, many of which are critical to our
ability to operate in accordance with market and regulatory standards, may not be completed as planned due to
the complexity and other difficulty relating to such projects. These consequences could result in financial losses,
including costs and expenses incurred in connection with countermeasures and improvements as well as
compensation to affected parties, lead to regulatory actions, diminish our clients’ and customers’ satisfaction
with and confidence in us, and harm our reputation in the market, which could in turn adversely affect our
business, financial condition and results of operations. Moreover, significant financial, human and other
resources may be required to design, implement and enhance measures to manage cyber and information security
risks and comply with regulatory requirements.
Transactions with counterparties in countries designated by the U.S. Department of State as state
sponsors of terrorism may lead some potential customers and investors in the United States and other
countries to avoid doing business with us or investing in our shares.
We, through our subsidiaries, engage in limited business activities with entities in or affiliated with Iran,
including transactions with counterparties owned or controlled by the Iranian government, and our commercial
banking subsidiary has a representative office in Iran for information gathering purposes only. The
U.S. Department of State has designated Iran and other countries as “state sponsors of terrorism,” and U.S. law
generally prohibits U.S. persons from doing business with such countries. We currently have limited business
activities conducted with entities in or affiliated with such countries. Such business activities are conducted in
accordance with our policies and procedures designed to ensure compliance with regulations applicable in the
jurisdictions in which we operate and with exemptions and general licenses available under U.S. law. We have
transactions with counterparties in or affiliated with countries designated as state sponsors of terrorism which
consist of receiving deposits or holding assets on behalf of individuals residing in Japan who are citizens of
countries designated as state sponsors of terrorism and processing payments to or from entities in or affiliated
with these countries on behalf of our customers. These transactions do not have a material impact on our business
or financial condition. For a further discussion of transactions required to be disclosed under the U.S. Iran Threat
Reduction and Syria Human Rights Act of 2012, see “Item 4.B. Information on the Company—Business
Overview—Supervision and Regulation—United States—Disclosure pursuant to Section 13(r) of the Securities
Exchange Act of 1934.”
We are aware of initiatives by U.S. governmental entities and non-government entities, including
institutional investors such as pension funds, to adopt or consider adopting laws, regulations or policies
prohibiting transactions with or investment in, or requiring divestment from, entities doing business with Iran and
other countries identified as state sponsors of terrorism. It is possible that such initiatives may result in our being
unable to gain or retain entities subject to such prohibitions as customers, counter-parties or investors in our
shares. In addition, depending on socio-political developments, our reputation may suffer due to our transactions
with counterparties in or affiliated with these countries. The above circumstances could have an adverse effect on
our business and financial condition.
Global financial institutions, including us, have become subject to an increasingly complex set of sanctions
laws and regulations in recent years, and this regulatory environment is expected to continue. Moreover, the
measures proposed or adopted vary across the major jurisdictions, increasing the cost and resources necessary to
design and implement an appropriate global compliance program. The U.S. federal government and some state
governments in the United States have enacted legislation designed to limit economic and financial transactions
with Iran by limiting the ability of financial institutions that may have engaged in any one of a broad range of
activities related to Iran to conduct various transactions in the relevant jurisdictions. In addition, in May 2018, the
United States withdrew from participation in the Joint Comprehensive Plan of Action. Under subsequently issued
executive orders, the United States may impose secondary sanctions against non-U.S. persons who engage in or
facilitate a broad range of transactions and activities involving Iran. The Japanese government has also
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implemented a series of measures under the Foreign Exchange and Foreign Trade Act, such as freezing the assets
of persons involved in Iran’s sensitive nuclear activities and development of nuclear weapon delivery systems,
and our most recently modified policies and procedures take into account the current Japanese regulatory
requirements. We continue to implement measures to enhance our policies and procedures to comply with such
legislative and regulatory requirements. There remains a risk of potential regulatory action against us, however, if
regulators perceive the modified policies and procedures not to be in compliance with applicable legislation and
regulations.
Legal and regulatory changes could have a negative impact on our business, financial condition and
results of operations.
As a global financial services provider, our business is subject to ongoing changes in laws, regulations,
rules, policies, accounting standards or methods, voluntary codes of practice and interpretations in Japan and
other markets where we operate. Major global financial institutions currently face an increasingly stricter set of
laws, regulations and standards as a result of the concerns enveloping the global financial sector. There is also
growing political pressure to demand even greater internal compliance and risk management systems following
several high-profile scandals and risk management failures in the financial industry. See “Item 4.B. Information
on the Company—Business Overview—Supervision and Regulation.” Future developments or changes in laws,
regulations, rules, policies, accounting standards or methods, voluntary codes of practice and their effects are
expected to require greater capital, human and technological resources as well as significant management
attention, and may require us to modify our business strategies and plans. We may be unable to enhance our
compliance management programs and systems, which, in some cases, are supported by third-party service
providers, as required or planned. Our failure or inability to comply fully with applicable laws and regulations
may lead to penalties, fines, public reprimands, damage to reputation, issuance of business improvement and
other administrative orders, enforced suspension of operations, our ability to obtain regulatory approvals for
future strategic initiatives or, in extreme cases, withdrawal of authorization to operate, adversely affecting our
business and results of operations.
Because of our loans to consumers and our shareholdings in companies engaged in consumer lending,
changes in the business or regulatory environment for consumer finance companies in Japan may further
adversely affect our financial results.
We have a large loan portfolio in the consumer lending industry as well as large shareholdings in
subsidiaries and equity method investees in the consumer finance industry. Our domestic loans to consumers
amount to approximately one-seventh of our total outstanding loans. Of this amount, the consumer loans
provided by Mitsubishi UFJ NICOS, Co., Ltd., which is our primary consumer financing subsidiary, were
¥502.2 billion as of March 31, 2021, compared to ¥565.6 billion as of March 31, 2020.
Mitsubishi UFJ NICOS’s consumer loan portfolio has been adversely affected by a series of regulatory
reforms that were introduced in Japan between 2006 and 2010, which have negatively affected the domestic
consumer lending industry. In December 2006, the Japanese Diet passed legislation to reform the regulations
relating to the consumer lending business, including amendments to the Act Regulating the Receipt of
Contributions, the Receipt of Deposits, and Interest Rates, which, effective June 18, 2010, reduced the maximum
permissible interest rate from 29.2% per annum to 20% per annum. The regulatory reforms also included
amendments to the Money Lending Business Act, which, effective June 18, 2010, abolished the so-called “gray-
zone interest.” Gray-zone interest refers to interest rates exceeding the limits stipulated by the Interest Rate
Restriction Act (between 15% per annum to 20% per annum depending on the amount of principal). Prior to
June 18, 2010, gray-zone interest was permitted under certain conditions set forth in the Money Lending
Business Act. As a result of the regulatory reforms, all interest rates are now subject to the lower limits imposed
by the Interest Rate Restriction Act, compelling lending institutions, including our consumer finance subsidiaries
and equity method investees, to lower the interest rates they charge borrowers.
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In addition, as a result of decisions by the Supreme Court of Japan prior to June 18, 2010 imposing stringent
requirements under the Money Lending Business Act for charging gray-zone interest rates, consumer finance
companies have experienced a significant increase in borrowers’ claims for reimbursement of previously
collected interest payments in excess of the limits stipulated by the Interest Rate Restriction Act.
Following the various legal developments in June 2010 and other industry developments, Mitsubishi UFJ
NICOS revised its estimate of allowance for repayment of excess interest by updating management’s future
forecast to reflect new reimbursement claims information and other data. As of March 31, 2019, 2020 and 2021,
we had ¥25.0 billion, ¥29.4 billion and ¥24.9 billion of allowance for repayment of excess interest, respectively.
These developments have adversely affected, and these and any future developments may further adversely
affect, the operations and financial condition of our subsidiaries, equity method investees and borrowers which
are engaged in consumer lending, which in turn may affect the value of our related shareholdings and loan
portfolio.
Damage to our reputation could harm our businesses.
We are one of the leading financial institutions in Japan and one of the handful G-SIBs in the world, and we
aim to be the world’s most trusted financial group. Our ability to conduct business is indispensably dependent on
the trust and confidence of our customers, as well as regional and global communities. Our reputation is critical
in maintaining our relationships with customers, investors, regulators and the general public. Our reputation may
be damaged by their negative perceptions of us and our operations in light of their concerns over human rights,
the environment, public health and safety, or other corporate social responsibilities, or by our transactions or
operations if they are deemed repugnant to the intent and policy underlying applicable laws and regulations such
as anti-money laundering, economic sanctions and competition laws as well as the prohibition on dealing with
anti-social forces. Failure to prevent or properly address these issues may result in impairment of our corporate
brand, loss of our existing or prospective customers or investors, or increased public or regulatory scrutiny, and
may adversely affect our business, financial condition and results of operations.
Risks Related to Owning Our Shares
It may not be possible for investors to effect service of process within the United States upon us or our
directors or management members, or to enforce against us or those persons judgments obtained in
U.S. courts predicated upon the civil liability provisions of the U.S. federal or state securities laws.
We are a joint stock company incorporated under the laws of Japan. Almost all of our directors or
management members reside outside the United States. Many of our assets and the assets of these persons are
located in Japan and elsewhere outside the United States. It may not be possible, therefore, for U.S. investors to
effect service of process within the United States upon us or these persons or to enforce, against us or these
persons, judgments obtained in the U.S. courts predicated upon the civil liability provisions of the U.S. federal or
state securities laws. We believe there is doubt as to the enforceability in Japan, in original actions or in actions
brought in Japanese courts to enforce judgments of U.S. courts, of claims predicated solely upon the U.S. federal
or state securities laws mainly because the Civil Execution Act of Japan requires Japanese courts to deny
requests for the enforcement of judgments of foreign courts if foreign judgments fail to satisfy the requirements
prescribed by the Civil Execution Act, including:
‰
‰
‰
the jurisdiction of the foreign court be recognized under laws, regulations, treaties or conventions;
proper service of process be made on relevant defendants, or relevant defendants be given appropriate
protection if such service is not received;
the judgment and proceedings of the foreign court not be repugnant to public policy as applied in Japan;
and
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‰
there exist reciprocity as to the recognition by a court of the relevant foreign jurisdiction of a final
judgment of a Japanese court.
Judgments obtained in the U.S. courts predicated upon the civil liability provisions of the U.S. federal or
state securities laws may not satisfy these requirements.
Risks Related to Owning Our American Depositary Shares
As a holder of American Depositary Shares, you have fewer rights than a shareholder of record in our
shareholder register since you must act through the depositary to exercise these rights.
The rights of our shareholders under Japanese law to take actions such as voting, receiving dividends and
distributions, bringing derivative actions, examining our accounting books and records and exercising appraisal
rights are available only to shareholders of record. Because the depositary, through its custodian, is the record
holder of the shares underlying the American Depositary Shares, or ADSs, only the depositary can exercise
shareholder rights relating to the deposited shares. ADS holders, in their capacity, will not be able to directly
bring a derivative action, examine our accounting books and records and exercise appraisal rights. We have
appointed The Bank of New York Mellon as depositary, and we have the authority to replace the depositary.
Pursuant to the deposit agreement among us, the depositary and a holder of ADSs, the depositary will make
efforts to exercise voting or any other rights associated with shares underlying ADSs in accordance with the
instructions given by ADS holders, and to pay to ADS holders dividends and distributions collected from us.
However, the depositary can exercise reasonable discretion in carrying out the instructions or making
distributions, and is not liable for failure to do so as long as it has acted in good faith. Therefore, ADS holders
may not be able to exercise voting or any other rights in the manner that they had intended, or may lose some or
all of the value of the dividends or the distributions. Moreover, the depositary agreement that governs the
obligations of the depositary may be amended or terminated by us and the depositary without ADS holders’
consent, notice, or any reason. As a result, ADS holders may be prevented from having the rights in connection
with the deposited shares exercised in the way ADS holders had wished or at all.
ADS holders are dependent on the depositary to receive our communications. We send to the depositary all
of our communications to ADS holders, including annual reports, notices and voting materials, in Japanese.
ADS holders may not receive all of our communications with shareholders of record in our shareholder register
in the same manner or on an equal basis. In addition, ADS holders may not be able to exercise their rights as
ADS holders due to delays in the depositary transmitting our shareholder communications to ADS holders. For a
detailed discussion of the rights of ADS holders and the terms of the deposit agreement, see Exhibit 2(c) to this
Annual Report.
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Item 4.
Information on the Company.
A. History and Development of the Company
MUFG is a bank holding company incorporated as a joint stock company (kabushiki kaisha) under the
Companies Act of Japan. We are the holding company for MUFG Bank, Ltd. (formerly, The Bank of Tokyo-
Mitsubishi UFJ, Ltd.), Mitsubishi UFJ Trust and Banking Corporation, Mitsubishi UFJ Securities Holdings Co.,
Ltd., Mitsubishi UFJ Morgan Stanley Securities Co., Ltd., Mitsubishi UFJ NICOS Co., Ltd., and other companies
engaged in a wide range of financial businesses.
On April 2, 2001, The Bank of Tokyo-Mitsubishi, Ltd., Mitsubishi Trust and Banking Corporation, or
Mitsubishi Trust Bank, and Nippon Trust and Banking Co., Ltd. established Mitsubishi Tokyo Financial Group,
Inc., or MTFG, to be a holding company for the three entities. Before that, each of the banks had been a publicly
traded company. On April 2, 2001, through a stock-for-stock exchange, they became wholly-owned subsidiaries
of MTFG, and the former shareholders of the three banks became shareholders of MTFG. Nippon Trust and
Banking was later merged into Mitsubishi Trust Bank.
On June 29, 2005, the merger agreement between MTFG and UFJ Holdings, Inc. was approved at the
general shareholders meetings of MTFG and UFJ Holdings. As the surviving entity, MTFG was renamed
“Mitsubishi UFJ Financial Group, Inc.” The merger of the two bank holding companies was completed on
October 1, 2005.
On September 30, 2007, Mitsubishi UFJ Securities Holdings, which was then called “Mitsubishi UFJ
Securities Co., Ltd.,” or MUS, became our wholly-owned subsidiary through a share exchange transaction.
On October 13, 2008, we formed a global strategic alliance with Morgan Stanley and, as part of the alliance,
made an equity investment in Morgan Stanley in the form of convertible and non-convertible preferred stock, and
subsequently appointed a representative to Morgan Stanley’s board of directors.
On October 21, 2008, we completed a tender offer for outstanding shares of ACOM CO., LTD. common
stock, raising our ownership in ACOM to approximately 40%.
On November 4, 2008, Bank of Tokyo-Mitsubishi UFJ completed the acquisition of all of the shares of
common stock of UnionBanCal Corporation, or UNBC, not previously owned by Bank of Tokyo-Mitsubishi UFJ
and, as a result, UNBC became a wholly-owned indirect subsidiary of MUFG.
On May 1, 2010, we and Morgan Stanley integrated our securities and investment banking businesses in
Japan into two joint venture securities companies, one of which is Mitsubishi UFJ Morgan Stanley Securities.
Mitsubishi UFJ Morgan Stanley Securities was created by spinning off the wholesale and retail securities
businesses conducted in Japan from Mitsubishi UFJ Securities Holdings and subsequently assuming certain
operations in Japan from a subsidiary of Morgan Stanley.
On June 30, 2011, we converted all of our Morgan Stanley’s convertible preferred stock into Morgan
Stanley’s common stock, resulting in our holding approximately 22.4% of the voting rights in Morgan Stanley.
Further, we appointed a second representative to Morgan Stanley’s board of directors on July 20, 2011.
Following the conversion on June 30, 2011, Morgan Stanley became our equity-method affiliate. As of
March 31, 2021, we held approximately 20.2% of the voting rights in Morgan Stanley and had two
representatives appointed to Morgan Stanley’s board of directors. We and Morgan Stanley continue to pursue a
variety of business opportunities in Japan and abroad in accordance with the global strategic alliance.
On December 18, 2013, we acquired approximately 72.0% of the total outstanding shares of Krungsri
through Bank of Tokyo-Mitsubishi UFJ. As a result of the transaction, Krungsri has become a consolidated
subsidiary of Bank of Tokyo-Mitsubishi UFJ.
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On July 1, 2014, we integrated Bank of Tokyo-Mitsubishi UFJ’s operations in the Americas region with
UNBC’s operations and changed UNBC’s corporate name to “MUFG Americas Holdings Corporation.” On the
same day, Union Bank, N.A., which is MUFG Americas Holdings’ principal subsidiary and our primary
operating subsidiary in the United States, was also renamed “MUFG Union Bank, N.A..” On July 1, 2016,
MUFG Americas Holdings was designated as our U.S. intermediate holding company to comply with the FRB’s
enhanced prudential standards.
On January 5, 2015, Bank of Tokyo-Mitsubishi UFJ integrated its Bangkok branch with Krungsri through a
contribution in kind of the Bank of Tokyo-Mitsubishi UFJ Bangkok branch business to Krungsri, and Bank of
Tokyo-Mitsubishi UFJ received newly issued shares of Krungsri common stock. As a result of this transaction,
Bank of Tokyo-Mitsubishi UFJ’s ownership interest in Krungsri increased to 76.9%.
On October 1, 2017, we acquired all of the shares of common stock of Mitsubishi UFJ NICOS which we did
not previously own and, as a result, Mitsubishi UFJ NICOS became a wholly-owned subsidiary of MUFG.
On December 29, 2017, Bank of Tokyo-Mitsubishi UFJ initially acquired 19.9% of the shares of common
stock of PT Bank Danamon Indonesia, Tbk. On May 1, 2019, MUFG Bank, Ltd. completed a series of
transactions to increase its ownership interest in Bank Danamon to 94.1%, as a result of which Bank Danamon
became MUFG Bank’s consolidated subsidiary.
On April 1, 2018, we changed Bank of Tokyo-Mitsubishi UFJ’s corporate name to “MUFG Bank, Ltd.”
On August 2, 2019, Mitsubishi UFJ Trust and Banking completed its acquisition of 100% of the shares in
each of nine subsidiaries of Colonial First State Group Limited which collectively represent the global asset
management business known as Colonial First State Global Asset Management, or CFSGAM, from Australian
financial group Commonwealth Bank of Australia and its wholly-owned subsidiary Colonial First State Group
Limited. As a result of the acquisition, the nine subsidiaries became our consolidated subsidiaries. In September
2019, CFSGAM was rebranded as First Sentier Investors.
On April 2, 2021, Mitsubishi UFJ NICOS announced a plan to integrate its credit card settlement systems
that have been maintained separately for various credit card brands. Specifically, Mitsubishi UFJ NICOS plans to
integrate the systems currently used for the DC credit card brand and the NICOS credit card brand into the
system currently used for the MUFG card brand. The plan has an estimated budget of approximately ¥140 billion
through the end of calendar year 2030. The plan may be modified to flexibly respond to changes in the business
environment.
Our registered address is 7-1, Marunouchi 2-chome, Chiyoda-ku, Tokyo 100-8330, Japan, and our telephone
number is 81-3-3240-8111.
For a discussion of recent developments, see “Item 5. Operating and Financial Review and Prospects—
Recent Developments.”
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B. Business Overview
We are one of the world’s largest and most diversified financial groups with total assets of ¥353.82 trillion
as of March 31, 2021. The Group is comprised of MUFG Bank, Mitsubishi UFJ Trust and Banking, Mitsubishi
UFJ Morgan Stanley Securities (through Mitsubishi UFJ Securities Holdings), Mitsubishi UFJ NICOS and other
subsidiaries and affiliates, for which we are the holding company. As a bank holding company, we are regulated
under the Banking Law of Japan. Our services include commercial banking, trust banking, securities, credit
cards, consumer finance, asset management, leasing and many more fields of financial services. In Japan, we
operate through over 500 business locations as of March 31, 2021. In addition, as of the same date, the Group
had the largest overseas network among Japanese banks, consisting of approximately 2,500 business locations in
more than 50 countries, including MUFG Union Bank in the United States, Krungsri in Thailand and Bank
Danamon in Indonesia. MUFG’s role as the holding company is to strategically manage and coordinate the
activities of our business groups. Group-wide strategies are determined by the holding company and executed by
our subsidiaries.
Medium-Term Business Plan
We believe Japan faces challenges such as a declining birth rate, an aging society and a shrinking
population, while low economic growth has become the norm throughout the world. More recently, the
environment we operate in has been affected by issues including the COVID-19 pandemic, growing awareness of
environmental and social issues, and advances in digital technologies that enable the entry of new competitors
into the financial sector. These developments are changing our business environment in significant ways and
with unprecedented speed.
MUFG seeks to meet these changes with clear visions and to make the most of these challenges as
opportunities for growth to become a leading force in the new era. It is with this goal that we have defined our
purpose: “Empowering a brighter future.” Our plan for the three years starting in the fiscal year ending March 31,
2022, outlining how we intend to leverage our financial and digital strengths to help our stakeholders around the
world, is set out in the new Medium-term Business Plan.
We are positioning the three-year term of this new Medium-term Business Plan as the “Three Years of New
Challenges and Transformation.” We will strive to meet the expectations of all our stakeholders—including
customers, shareholders and employees—by structuring our business model to suit the changes in our
environment and seeking to achieve higher profitability and improved return on equity.
Basic Company Policy
In our Medium-term Business Plan, our goal at the end of its three-year span is to leverage our financial and
digital capabilities to be the leading business partner that pioneers the future. We set this goal with a desire to
help all our stakeholders take the next step forward in a time of constant change. The key words for the
transformative changes we will be pursuing are (1) Digital Transformation, (2) Sustainability Management, and
(3) New Challenges/Speed. We seek to address issues that confront our customers and wider society, working to
provide optimal financial solutions.
Under the Medium-term Business Plan, we will continue with our initiatives to secure business stability
(focusing on business resilience) and maintain our management policy that is attractive to employees and fosters
greater motivation for employee participation (engagement-focused management)
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Group Business Strategy
In order to attain our vision for the next three years to leverage our financial and digital capabilities to be the
leading business partner that pioneers the future, we have identified three strategic pillars of “Corporate
Transformation,” “Strategy for Growth,” and “Structural Reforms.”
Under our “Corporate Transformation” strategy, we will seek to change how we operate and execute. While
focusing on “Digital transformation” and “Contribution to addressing environmental and social issues,” we will
also aim to “Transform our corporate culture” in order to accelerate decision making.
Under our “Strategy for Growth” strategy, in order to strengthen profitability, we will seek to promote our
“Wealth Management Business,” “Approach of proposing solutions to issues faced by our corporate customers,”
“Asia Business,” “GCIB and Global Markets” and “Global Asset Management / Investor Services.”
Under our “Structural Reforms” strategy, to ensure resilience, we will seek to promote “Cost and risk asset
control,” “Transformation of platforms and our business base,” and a “Review of our business portfolios” by
reconsidering businesses that do not meet our profitability expectations and undertaking to find new business
opportunities.
Progress on some of our strategic measures may be delayed due to the impact of policies implemented to
deal with the current COVID-19 situation, and we will carefully identify the extent of the impact on our
measures.
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Key Strategies
(1) Corporate Transformation
Main strategies
Digital transformation
Contribution to addressing
environmental and social issues
Transform our corporate culture
(Speed / Challenge)
(2) Strategy for Growth
Main strategies
Main initiatives
•
•
•
Strengthen digital service contact points with all customers and
promote the digitalization of products and services. Use digital
technologies to reduce operation volume.
Prioritize issues of “climate change,” “the aging population and low
birth rate,” and “inclusion & diversity,” while implementing business
strategies, risk management, and social contribution measures.
Promote activities based on our Purpose, cultivate a free and natural
corporate culture, accelerate strategies, and encourage employees to
actively take on new challenges on their own.
Main initiatives
Wealth Management Business
• Develop infrastructure and assign personnel to support
comprehensive asset management. Strengthen business by providing
solutions to corporate owners.
Approach of proposing solutions
to issues faced by our corporate
customers
• Take on management issues of our corporate customers, enhance our
risk-taking capabilities, and work as a united Group to solve
problems.
Asia Business
• Achieve growth through Asia as a whole and promote digital
GCIB and Global Markets
transformation, focusing primarily on our consolidated subsidiaries
of Krungsri (Bank of Ayudhya) and Bank Danamon.
• Enhance asset velocity and flow business (O&D/O to D* and cross-
selling) by increasing transactions with institutional investors.
Global Asset Management/Investor
Services
•
Promote contract business by leveraging our strengths in overseas
asset operation and management fields with potential for industry
growth.
(3) Structural Reforms
Main strategies
Main initiatives
Cost and risk asset control
• Make necessary growth investments, while thoroughly cutting base
Transformation of our platforms
and business base
Review of our business portfolios
costs.
• Control risk-weighted assets by switching to highly profitable
investments.
•
•
Implement effective and efficient investments necessary for digital
shifts.
Streamline procedures and rules necessary for transformation and
review decision-making processes.
•
Improve ROE by reconsidering low-profitable businesses.
• Enhance business capabilities through collaborations with other
companies, including companies in other industries.
* Abbreviation for “Origination & Distribution/Origination to Distribution,” which is a business strategy
involving structuring financing and sales of receivables to investors. While “O&D” is a general term for all
such business strategy, “O to D” refers specifically to efforts to structure deals based on investor needs.
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Establishment of New Business Group
A new Digital Service Business Group was established on April 1, 2021, joining the Retail & Commercial
Banking Business Group, the Japanese Corporate & Investment Banking Business Group, the Global
Corporate & Investment Banking Business Group, the Global Commercial Banking Business Group, the Asset
Management & Investor Services Business Group, and the Global Markets Business Group. With our seven
business groups, we will implement our newly formulated Medium-term Business Plan.
Business Groups
Under the current Medium-term Business Plan, our business groups are reorganized as follows in an effort
to further integrate the expertise and capabilities of our subsidiaries to respond to the needs of our customers
more effectively and efficiently.
Digital Service Business Group
In light of the societal digital shift, the Digital Service Business Group, which was newly established on
April 1, 2021, will take the lead on and advance the digital transformation described above. The business group
focuses on providing digital-based financial services to “mass-segment” customers (i.e., retail customers and
small and medium–sized enterprise customers) and on introducing digital technologies into MUFG.
Establishment of the new business group
The digital transformation is one of our most important strategies. Particularly in the current mass-segment
customers market, user interface and user experience (UI/UX) enhancement and cost structure reform are quite
significant. In order to ensure thorough implementation of strategies and speed of decision-making, MUFG
determined that it was essential to organize a new business group under the integrated leadership of the existing
business groups and Digital Transformation Division, which would enable MUFG to accelerate the digital
transformation by upgrading its mass-segment strategies and sharing knowledge and expertise with the other
business groups.
The primary mission of the business group is to strengthen the competitiveness and customer base of the
mass-segment customer business by creating “new customer experiences that are integrated into everyday life”
through a variety of flexible channels. In order to achieve this mission, this business group aims to thoroughly
refine our channels, products, services, and marketing by using digital technology, and provides the most
advanced and optimal financial services for our customers. By freeing customers and employees from
complicated flows of actions by simplifying workflow and utilizing digital technology, this business group seeks
to provide our customers with convenience and high-value-added services. In addition, the business group
continues leading the company-wide digital transformation to become a financial digital platformer.
Grab Holdings Inc.
In February 2020, we entered into a strategic alliance agreement with Grab Holdings Inc., or Grab, which is
headquartered in Singapore and provides on-demand transport services, food and package delivery services,
digital payments and financial services in Southeast Asia. Under the agreement, we have invested a total of
$706 million in Grab to jointly develop next-generation financial services in Southeast Asia to promote financial
inclusion in the region. While Grab is not our subsidiary or equity method investee, Grab will confer “First
Choice Bank” status on us and our Southeast Asian partner banks, including Krungsri, Bank Danamon,
VietinBank and Security Bank. MUFG and Grab are collaborating to co-develop innovative financial products
and services by bringing together customer insights and digital expertise to better cater to the financial needs of
Grab’s users, driver-partners and merchant-partners as well as our customers.
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For instance, Krungsri and Grab launched new loan products in Thailand to Grab drivers in September 2020
and to Grab food merchants in October 2020. As of March 2021, the number of loans disbursed to such drivers
and merchants reached more than 53,000 and more than 5,000, respectively, enabling Krungsri to obtain
opportunities to meet the financial needs from the underserved segment and to acquire insights to develop digital
financial products. Specifically, those insights include transactional lending processing powered by behavioral
data and auto-collection on an application, seamless UI/UX that allows target customers with pre-approved loan
amounts to complete loan disbursements with a few taps on an application, and the use of sophisticated AI
technologies for credit decisions. We aim to utilize those insights and experience to accelerate MUFG’s digital
transformation.
Retail & Commercial Banking Business Group
The Retail & Commercial Banking Business Group integrates the domestic retail and commercial banking
businesses of MUFG Bank, Mitsubishi UFJ Trust and Banking, Mitsubishi UFJ Securities Holdings and other
group companies of MUFG. This business group offers retail customers (with a strategic focus on high net-worth
individuals) and small and medium–sized enterprise customers in Japan an extensive array of commercial
banking, trust banking and securities products and services.
Business Environment and Strategy
In the domestic market in which we operate, unfavorable conditions remain such as the negative impact of
the Bank of Japan’s negative interest rate policy on the financial market and intensified competition. In addition,
demographic changes, including Japan’s aging population with a declining birthrate, further acceleration of
digital transformation and promotion of work style reforms resulting from the COVID-19 pandemic can change
the way banking and other financial services are used in Japan. With the goals of “being Japan’s leading financial
professional group” and “contributing to the development of the Japanese economy and the people’s livelihood
and wealth,” we seek to enhance and integrate the capabilities of our group companies to deliver value that
exceeds customer expectations and improve customer satisfaction.
In the wealth management business, which is one of our key strategic focus areas, we are implementing
measures to improve our group company structure for offering wealth management solutions, including asset
management, asset and business succession transfer, and real estate services. For example, with an aim to
strengthen our wealth management business, we merged Mitsubishi UFJ Morgan Stanley Securities and
Mitsubishi UFJ Morgan Stanley PB Securities.
For customers affected by the COVID-19 pandemic, the business group seeks to provide flexible and
prompt financing support through a dedicated lending program and to focus on continuing to provide services
through its branches and back-office centers while implementing measures designed to ensure the safety of our
customers and employees.
Japanese Corporate & Investment Banking Business Group
The Japanese Corporate & Investment Banking Business Group provides services to help large Japanese
corporate customers seeking global expansion achieve growth in their corporate value. We are engaged in the
lending, fund settlement, and foreign exchange businesses and also provide comprehensive solutions for M&As
and real estate-related services, fully employing the expertise of each group entity.
We seek to provide speedy financial support amid the COVID-19 pandemic, and our commercial banking
and securities subsidiaries have worked together to provide various solutions that meet customers’ needs for
capital reinforcement. By establishing a structure of integrated operations of these subsidiaries, the business
group has made further progress on measures for solving issues faced by our customers, and has strengthened its
real estate-related business and support for our customers’ dialogue with investors such as shareholder relations
and investor relations activities.
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We also seek to enhance our efforts for solving environmental and social issues. We have expanded our
efforts for financing that aims to realize a sustainable society, such as our Sustainability Linked Loans, which are
designed to provide financial support for the attainment of targets in line with ESG strategies of customers.
Asset Management & Investor Services Business Group
The Asset Management & Investor Services Business Group covers the asset management and asset
administration businesses of Mitsubishi UFJ Trust and Banking and MUFG Bank. By integrating the trust
banking expertise of Mitsubishi UFJ Trust and Banking and the global strengths of MUFG Bank, the business
group offers a full range of asset management and administration services for corporations and pension funds,
including pension fund management and administration, advice on pension structures, and payments to
beneficiaries, and also offers investment trusts for retail customers.
We aim to expand our asset management and asset administration services business by enhancing the
quality of our products and services, effectively utilizing the broad customer base of the MUFG Group and
improving our operational efficiency through IT technology.
Global Corporate & Investment Banking Business Group
The Global Corporate & Investment Banking Business Group covers the corporate, investment and
transaction banking businesses of MUFG Bank and Mitsubishi UFJ Securities Holdings. Through a global
network of offices and branches, we provide non-Japanese large corporate and financial institution customers
with a comprehensive set of solutions that meet their increasingly diverse and sophisticated financing needs.
Through the integrated business management structure between the Global Corporate & Investment
Banking Business Group and the Global Markets Business Group, we aim to offer a wide range of financial
services to meet the diverse needs of both corporate and institutional investor customers.
The expansion of the global corporate and investment banking and global markets businesses has been an
important pillar of the MUFG Group’s growth strategy. We continue to work to strengthen the strategic
alignment and collaboration among our group companies and across global geographies in order to best deploy
our comprehensive expertise to provide our customers with value-added solutions and services.
Corporate Banking
Through our global network of offices and branches, we provide a full range of corporate banking solutions,
such as project finance, export credit agency finance, and financing through asset-backed commercial paper. Our
primary customers include large corporations, financial institutions, sovereign and multinational organizations,
and institutional investors that are headquartered outside of Japan.
Investment Banking
We provide investment banking services such as debt and equity issuance and M&A-related services, to
help our customers develop their financial strategies and realize their business goals. In order to meet customers’
various financing needs, we have established a customer-oriented coverage model through which our product
experts coordinate with one another to offer innovative financing services globally. We have further integrated
the management of the operations of our commercial banking and securities subsidiaries to enhance
collaboration. We are one of the world’s top providers of project finance, one of the core businesses of the Global
Corporate & Investment Banking Business Group. We provide sophisticated professional services in arranging
limited-recourse finance and offering financial advice in various sectors, including natural resources, power, and
infrastructure, backed by our experience, expertise, knowledge, and global network.
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Transaction Banking
We provide commercial banking products and services for large corporations and financial institutions in
managing and processing domestic and cross-border payments, mitigating risks in international trade, and
providing working capital optimization. We provide customers with support for their domestic, regional and
global trade finance and cash management programs through our extensive global network.
Global Commercial Banking Business Group
The Global Commercial Banking Business Group provides a comprehensive array of financial products and
services such as loans, deposits, fund transfers, investments and asset management services for local retail, small
and medium-sized enterprise, and corporate customers across the Asia-Pacific region through our major local
commercial banking subsidiaries and affiliates outside of Japan referred to as “Partner Banks.” Our Partner
Banks include MUFG Union Bank in the United States, Krungsri in Thailand, Bank Danamon in Indonesia,
VietinBank in Vietnam and Security Bank in the Philippines.
The network among the Partner Banks covers a vast market, consisting of five countries with population
totaling approximately 847 million. The market is expected to expand further in the medium to long term as the
GDP growth rates are relatively high in these countries and financial needs are expected to increase as average
income rise in the ASEAN countries. We believe that our network, which combines the global reach of the
MUFG Group companies with strong regional presence of the Partner Banks each carrying an established brand,
provides us with unique competitive advantages. Through sharing and integration of the expertise and
capabilities of the Partner Banks, we seek to achieve synergy effects and capture the business opportunities
arising from the economic growth of the region.
MUFG Union Bank, N.A.
MUFG Union Bank is the primary subsidiary of MUFG Americas Holdings, which is our wholly owned
subsidiary and which is our intermediate holding company in the United States. MUFG Union Bank is the
primary operating entity of MUFG Bank in the United States. MUFG Union Bank provides a comprehensive
range of banking, consumer finance, investment, asset management, and other financial products and services to
individual consumers, small and medium-sized enterprises, and large corporations primarily in California,
Oregon, Washington, and Texas as well as nationally and internationally through 302 branches.
Bank of Ayudhya Public Company Limited (Krungsri)
Krungsri is a strategic subsidiary of MUFG Bank in Thailand. Krungsri provides a comprehensive range of
banking, consumer finance, investment, asset management, and other financial products and services to retail
consumers, small and medium-sized enterprises, and large corporations mainly in Thailand through 665 branches
(consisting 626 banking branches, 39 automobile finance business branches and two overseas branches) and
other service outlets nationwide. In addition, Krungsri’s consolidated subsidiaries include the largest credit card
issuer in Thailand with a total of 9.5 million credit card, sales finance and personal loan accounts in its portfolio,
a major auto finance provider, a fast growing asset management company and a leading microfinance service
provider in Thailand.
MUFG owns a 76.88% ownership interest in Krungsri through MUFG Bank as of March 31, 2021. By
combining Krungsri’s local franchise with competitive presence in the retail and small and medium-sized
enterprise banking markets in Thailand with MUFG Bank’s global financial expertise, we seek to offer a wider
range of high-value financial products and services to a more diverse and larger customer base.
PT Bank Danamon Indonesia, Tbk. (“Bank Danamon”)
Bank Danamon is a strategic subsidiary of MUFG Bank in Indonesia. Bank Danamon provides a
comprehensive range of banking and other financial products and services to retail consumers, small and
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medium-sized enterprises, and large corporations in Indonesia. It operates an extensive distribution network
spread out from Aceh to Papua, with more than 810 branches and service outlets. In addition, Bank Danamon
provides financing for automotive and consumer goods through PT Adira Dinamika Multi Finance Tbk, a
subsidiary of Bank Danamon.
MUFG made an initial investment in December 2017 and currently owns a 92.47% ownership interest in
Bank Danamon through MUFG Bank as of March 31, 2021. This investment in Bank Danamon represents
another milestone for our growth strategy in Indonesia and Southeast Asia. We aim to offer a unique and
unparalleled retail and small and medium-sized enterprise banking business model based on the established local
networks of our Partner Banks and MUFG’s global network to provide holistic financial services to a wider range
of customers.
Other Activities in Southeast Asia
We have been expanding our operations in Southeast Asia with an effort to further develop our businesses
abroad. In addition to MUFG Union Bank, Krungsri and Bank Danamon, we have strategic business and capital
alliances with other banks in Southeast Asia, including VietinBank in Vietnam and Security Bank in the
Philippines, as our Partner Banks.
VietinBank provides a wide range of financial services to consumers, small businesses, middle-market and
large companies through its branch network predominantly in Vietnam. We own a 19.73% equity interest in
VietinBank.
Security Bank provides a wide range of financial services to consumers, small businesses, middle-market
and large companies through its branch network in the Philippines. We own a 20% equity interest in Security
Bank.
See “Item 5. Operating and Financial Review and Prospects—Recent Developments” and “Item 3.D. Key
Information—Risk Factors—Risks Related to Our Strategies and Our Major Investees—Our strategy to expand
the range of our financial products and services and the geographic scope of our business globally may fail if we
are unable to anticipate or manage new or expanded risks that entail such expansion.”
Global Markets Business Group
The Global Markets Business Group covers the customer business and the treasury operations of MUFG
Bank, Mitsubishi UFJ Trust and Banking and Mitsubishi UFJ Securities Holdings. The customer business
includes sales and trading in fixed income instruments, currencies and equities as well as other investment
products, and origination and distribution of financial products. The treasury operations include asset and liability
management as well as global investments for the MUFG Group. In the fiscal year ending 2022, we seek to start
a new investment business in the Global Markets Business Group involving long-term diversified investments as
a new sustainable revenue source.
Customer Business
Sales and Trading in Fixed Income Instruments, Currencies and Equities. We provide financing, hedging,
and investment solutions to our retail, corporate, institutional, and governmental customers through sales and
trading in financial market products such as fixed income instruments, currencies, and equities.
Investment Products for Non-Institutional Customers in Japan. We provide investment products such as
mutual funds, and structured bonds, notes and deposits to non-institutional customers in Japan. We offer
solutions using these investment products to help customers better manage their assets and liabilities. This
business is conducted through the integrated operations management structure among the Global Markets
Business Group, the Asset Management & Investor Service Business Group, the Retail & Commercial Banking
Business Group, and the Japanese Corporate and Investment Banking Business Group.
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Origination and Distribution. We provide financing solutions to institutional customers through
origination and distribution of financial products such as syndicated loans and securities issuances. This business
is conducted through the integrated operations management structure between the Global Markets Business
Group and the Global Corporate and Investment Banking Business Group.
Treasury Operations
Asset and Liability Management. Through our treasury operations, we seek to manage interest rate and
liquidity risks residing in our balance sheets through, among other things, transactions designed to manage the
profit and loss impact attributable to market movements based on our balance sheet analyses and forecasts. Such
transactions include investments in high quality liquid securities such as Japanese government bonds and U.S.
Treasury bonds and trading in other financial products such as interest rate swaps and cross currency swaps.
Global Investment. Through our treasury operations, we also seek to enhance our profitability by
diversifying our portfolio and strategically investing in financial products including corporate bonds and funds.
Global Strategic Alliance with Morgan Stanley
As of March 31, 2021, we held approximately 377 million shares of Morgan Stanley’s common stock
representing approximately 20.2% of the voting rights in Morgan Stanley and Series C Preferred Stock with a
face value of approximately $521.4 million and 10% dividend. As of the same date, we had two representatives
appointed to Morgan Stanley’s board of directors. We adopted the equity method of accounting for our
investment in Morgan Stanley beginning with the fiscal year ended March 31, 2012.
In conjunction with Morgan Stanley, we formed two securities joint venture companies in May 2010 to
integrate our respective Japanese securities companies. We converted the wholesale and retail securities
businesses conducted in Japan by Mitsubishi UFJ Securities into Mitsubishi UFJ Morgan Stanley Securities.
Morgan Stanley contributed the investment banking operations conducted in Japan by its former wholly-owned
subsidiary, Morgan Stanley Japan, to Mitsubishi UFJ Morgan Stanley Securities, and converted the sales and
trading and capital markets businesses conducted in Japan by Morgan Stanley Japan into an entity called Morgan
Stanley MUFG Securities, Co., Ltd. We hold a 60% economic interest in Mitsubishi UFJ Morgan Stanley
Securities and Morgan Stanley MUFG Securities, and Morgan Stanley holds a 40% economic interest in
Mitsubishi UFJ Morgan Stanley Securities and Morgan Stanley MUFG Securities. We hold a 60% voting interest
and Morgan Stanley holds a 40% voting interest in Mitsubishi UFJ Morgan Stanley Securities, and we hold a
49% voting interest and Morgan Stanley holds a 51% voting interest in Morgan Stanley MUFG Securities.
Morgan Stanley’s and our economic and voting interests in the securities joint venture companies are held
through intermediate holding companies. We have retained control of Mitsubishi UFJ Morgan Stanley Securities
and we account for our interest in Morgan Stanley MUFG Securities under the equity method due to our
significant influence over Morgan Stanley MUFG Securities. The board of directors of Mitsubishi UFJ Morgan
Stanley Securities has fifteen members, nine of whom are designated by us and six of whom are designated by
Morgan Stanley. The board of directors of Morgan Stanley MUFG Securities has ten members, six of whom are
designated by Morgan Stanley and four of whom are designated by us. The CEO of Mitsubishi UFJ Morgan
Stanley Securities is designated by us and the CEO of Morgan Stanley MUFG Securities is designated by
Morgan Stanley.
We have also expanded the scope of our global strategic alliance with Morgan Stanley into other
geographies and businesses, including (1) a loan marketing joint venture that provides clients in the United States
with access to the world-class lending and capital markets services from both companies, (2) business referral
arrangements in Asia, Europe, the Middle East and Africa, covering capital markets, loans, fixed income sales
and other businesses, (3) global commodities referral arrangements whereby MUFG Bank and its affiliates refer
clients in need of commodities-related hedging solutions to certain affiliates of Morgan Stanley, and (4) an
employee secondment program to share best practices and expertise in a wide range of business areas.
35
See “Item 3.D. Key Information—Risk Factors—Risks Related to Our Strategies and Our Major
Investees—If our strategic alliance with Morgan Stanley fails, we could suffer financial or reputational loss.”
Competition
We face strong competition in all of our principal areas of operation. The structural reforms in financial
industry regulations and recent developments in financial markets have resulted in some significant changes in
the Japanese financial system and prompted banks to merge or reorganize their operations. In addition,
development of new technologies such as artificial intelligence and blockchain has also allowed non-financial
institutions to enter the financial services industry with alternative services, thus changing the nature of
competition from other financial institutions as well as from other types of businesses. See “Item 3.D. Key
Information—Risk Factors—Risks Related to Our Strategies and Our Major Investees—Our business may be
adversely affected by competitive pressures, which have partly increased due to regulatory changes and recent
market changes in the financial industry domestically and globally.”
Japan
Our major competitors in Japan include:
‰
Japan’s other major banking groups: Mizuho Financial Group and Sumitomo Mitsui Financial Group;
‰ Government financial institutions: Japan Finance Corporation, Japan Post Bank, Development Bank of
Japan and Japan Bank for International Cooperation;
‰ Other commercial banking institutions: Resona Bank, Shinsei Bank, regional banks, credit associations
(shinkin banks);
‰
Securities companies and investment banks: Nomura group and Daiwa group; and
‰ Asset management companies.
Foreign
In foreign markets, we face competition from local and global commercial banks, money center banks,
regional banks, thrift institutions, asset management companies, investment advisory companies, credit unions
and other similar financial institutions.
The Japanese Financial System
Japanese financial institutions may be categorized into three types:
‰
the central bank, namely the Bank of Japan;
‰
‰
private banking institutions; and
government financial institutions.
The Bank of Japan
The Bank of Japan’s role is to maintain price stability and the stability of the financial system to ensure a
solid foundation for sound economic development.
Private Banking Institutions
Private banking institutions in Japan are commonly classified into two categories (the following numbers
are based on information published by the FSA available as of April 5, 2021):
‰
‰
ordinary banks (121 ordinary banks and 55 foreign commercial banks with ordinary banking
operations); and
trust banks (13 trust banks, including two Japanese subsidiaries of foreign financial institutions).
36
Ordinary banks in turn are classified as city banks, of which there are four, including MUFG Bank, and
regional banks, of which there are 103 and other banks, of which there are 15. In general, the operations of
ordinary banks correspond to commercial banking operations in the United States. City banks and regional banks
are distinguished based on head office location as well as the size and scope of their operations.
The city banks are generally considered to constitute the largest and most influential group of banks in
Japan. Generally, these banks are based in large cities, such as Tokyo and Osaka, and operate nationally through
networks of branch offices. The city banks provide a wide variety of banking and other financial products and
services to large corporate customers, including the major industrial companies in Japan, as well as small and
medium-sized companies and retail customers.
With some exceptions, the regional banks tend to be much smaller in terms of total assets than the city
banks. Historically, each of the regional banks has been based in one of the Japanese prefectures and has
extended its operations into neighboring prefectures. Their customers are mostly regional enterprises and local
public utilities. Trust banks, including Mitsubishi UFJ Trust and Banking, provide various trust services relating
to money trusts, pension trusts and investment trusts and offer other services relating to real estate, stock transfer
agency and testamentary services, as well as banking services.
Government Financial Institutions
There are a number of government financial institutions in Japan, which are corporations wholly owned or
majority-owned by the government and operate under the government’s supervision. Their funds are provided
mainly from government sources. Certain types of operations undertaken by these institutions have been or are
planned to be assumed by, or integrated with the operations of, private corporations through privatizations and
other measures.
Among them are the following:
‰
‰
‰
‰
The Development Bank of Japan, which was established for the purpose of contributing to the economic
development of Japan by extending long-term loans, mainly to primary and secondary sector industries,
and which was reorganized as a joint stock company in October 2008 as part of its ongoing privatization
process, with the government being required by law to continue to hold 50% or more of the shares in the
bank until the completion of certain specified investment operations, which the bank is required to
endeavor to achieve by March 2026, and more than one-third for an unspecified period thereafter;
Japan Finance Corporation, which was formed in October 2008, through the merger of the international
financial operations of the former Japan Bank for International Cooperation, National Life Finance
Corporation, Agriculture, Forestry and Fisheries Finance Corporation, and Japan Finance Corporation
for Small and Medium Enterprise, for the primary purposes of supplementing and encouraging the
private financing of exports, imports, overseas investments and overseas economic cooperation, and
supplementing private financing to the general public, small and medium-sized enterprises and those
engaged in agriculture, forestry and fishery. In April 2012, Japan Finance Corporation spun off its
international operations to create Japan Bank for International Cooperation as a separate government-
owned entity;
Japan Housing Finance Agency, which was originally established in June 1950 as the Government
Housing Loan Corporation for the purpose of providing housing loans to the general public, and which
was reorganized as an incorporated administrative agency and started to specialize in securitization of
housing loans in April 2007; and
The Japan Post Group companies, a group of joint stock companies including Japan Post Bank, which
were formed in October 2007 as part of the Japanese government’s privatization plan for the former
Japan Post, a government-run public services corporation, which had been the Postal Service Agency
until March 2003. In November 2015, approximately 11% of the outstanding shares of each of Japan
37
Post Bank, Japan Post Insurance and Japan Post Holdings were sold to the public, and these companies
are currently listed on the Tokyo Stock Exchange. In September 2017, an additional 22% of the
outstanding shares of Japan Post Holdings were sold to the public.
Supervision and Regulation
Japan
Supervision. The FSA is responsible for supervising and overseeing financial institutions, making policy
for the overall Japanese financial system and conducting insolvency proceedings with respect to financial
institutions. The Bank of Japan, as the central bank for financial institutions, also has supervisory authority over
banks in Japan, based primarily on its contractual agreements and transactions with the banks.
The Banking Law. Among the various laws that regulate financial institutions, the Banking Law and its
subordinated orders and ordinances are regarded as the fundamental law for ordinary banks and other private
financial institutions. The Banking Law addresses capital adequacy, inspections and reporting of banks and bank
holding companies, as well as the scope of business activities, disclosure, accounting, limitation on granting
credit and standards for arm’s length transactions for them. Bank holding companies, banks and other financial
institutions are required to establish an appropriate system to better cope with conflicts of interest that may arise
from their business operations.
The Banking Law and various other financial regulation related laws have recently been amended, including
certain deregulations on restrictions for shareholdings by banks. For example, although a bank is generally
prohibited from holding more than 5% of the outstanding shares of another company (other than certain financial
businesses) under the Banking Law, an amendment to the Banking Law which took effect in April 2017 allows
banks to acquire and hold more than 5% of the voting rights in certain financial technology companies if
approved by the FSA. An additional amendment to the Banking Law which took effect in June 2018 introduced a
framework for affiliation and cooperation between financial institutions and financial technology companies
while adding measures designed to ensure customer protection. A further amendment to the Banking Law which
took effect in May 2020 allows banks to engage in certain information provision services relating to customer
and other information. In addition, an amendment to the Banking Law, which was enacted in May 2021 and
which will take effect by the end of November 2021, will allow banks to engage in certain services contributory
to the construction of a sustainable society such as regional revitalization or productivity enhancement and will
allow banks, with the FSA’s approval, to acquire and hold more than 5% of the voting rights in companies which
engage in certain services contributory to the construction of a sustainable society such as regional revitalization
or productivity enhancement.
Bank holding company regulations. A bank holding company is prohibited from carrying out any business
other than the management of its subsidiaries and other incidental businesses. A bank holding company may have
any of the following as a subsidiary: a bank, a securities company, an insurance company, a foreign subsidiary
that is engaged in the banking, securities or insurance business and any company that is engaged in a finance-
related business, such as a credit card company, a leasing company, investment advisory company, or financial
technology company as permitted by the April 1, 2017 amendments to the Banking Law. Certain companies that
are designated by a ministerial ordinance as those that cultivate new business fields may also become the
subsidiaries of a bank holding company.
In addition, under the April 1, 2017 amendments to the Banking Law, a bank holding company (i) is
required to perform certain specified functions as a bank holding company to ensure effective management of its
subsidiaries and (ii) is allowed to engage in certain specified common operations of its subsidiaries so as to
improve the efficiency of the operations of its group companies.
Capital adequacy. The capital adequacy guidelines adopted by the FSA that are applicable to Japanese
bank holding companies and banks with international operations closely follow the risk-weighted approach
introduced by the Basel Committee on Banking Supervision of the Bank for International Settlements.
38
Basel II, as adopted by the FSA, has been applied to Japanese banks since March 31, 2007. Basel III, as
adopted by the FSA, has been applied to Japanese banking institutions with international operations conducted
through their foreign offices since March 31, 2013. Basel III is built on “three pillars”: (1) minimum capital
requirements, (2) the self-regulation of financial institutions based on supervisory review process, and (3) market
discipline through the disclosure of information.
The Group of Central Bank Governors and Heads of Supervision reached an agreement on the new global
regulatory framework, which has been referred to as “Basel III,” in July and September 2010. In December 2010,
the Basel Committee agreed on the details of the Basel III rules. The agreement on Basel III includes the
following: (1) raising the quality of capital to ensure banks are able to better absorb losses both on a going
concern basis and on a gone concern basis, (2) increasing the risk coverage of the capital framework, in particular
for trading activities, securitizations, exposures to off-balance sheet vehicles and counterparty credit exposures
arising from derivatives, (3) raising the level of minimum capital requirements, including an increase in the
minimum common equity requirement from 2% to 4.5%, which was phased in between January 1, 2013 and the
end of the calendar year 2014, and a capital conservation buffer of 2.5%, which was phased in between
January 1, 2016 and the end of the calendar year 2018, bringing the total common equity requirement to 7%,
(4) introducing an internationally harmonized leverage ratio to serve as a backstop to the risk-based capital
measure and to contain the build-up of excessive leverage in the system, (5) raising standards for the supervisory
review process (Pillar 2) and public disclosures (Pillar 3), together with additional guidance in the areas of
valuation practices, stress testing, liquidity risk management, corporate governance and compensation,
(6) introducing minimum global liquidity standards consisting of both a short term liquidity coverage ratio and a
longer term structural net stable funding ratio, and (7) promoting the build-up of capital buffers that can be drawn
down in periods of stress, including both a capital conservation buffer and a countercyclical buffer to protect the
banking sector from periods of excess credit growth.
Under Basel III, Common Equity Tier 1, Tier 1 and total capital ratios are used to assess capital adequacy,
which ratios are determined by dividing applicable capital components by risk-weighted assets. Total capital is
defined as the sum of Tier 1 and Tier 2 capital.
Under Basel III, Tier 1 capital is defined to include Common Equity Tier 1 and Additional Tier 1 capital.
Common Equity Tier 1 capital is a new category of capital primarily consisting of:
‰
‰
‰
‰
common stock,
capital surplus,
retained earnings, and
accumulated other comprehensive income.
Regulatory adjustments including certain intangible fixed assets, such as goodwill, and defined benefit
pension fund net assets (prepaid pension costs) will be deducted from Common Equity Tier 1 capital.
Additional Tier 1 capital generally consists of Basel III compliant preferred securities and, during the
transition period, other capital that meets Tier I requirements under the former Basel II standards, net of
regulatory adjustments.
Tier 2 capital generally consists of:
‰ Basel III compliant subordinated obligations,
‰
during the transition period, capital that meets Tier II requirements under the former Basel II standards,
‰
‰
allowances for credit losses, and
non-controlling interests in subsidiaries’ Tier 2 capital instruments.
39
In order to qualify as Tier 1 or Tier 2 capital under Basel III, applicable instruments such as preferred shares
and subordinated debt must have a clause in their terms and conditions that requires them to be written-off or
forced to be converted into common stock upon the occurrence of certain trigger events.
Risk-weighted assets are the sum of risk-weighted assets compiled for credit risk purposes, quotient of
dividing the amount equivalent to market risk by 8%, and quotient of dividing the amount equivalent to
operational risk by 8%, and also include any amount to be added due to transitional measures as well as floor
adjustments, if necessary. Risk-weighted assets include the capital charge of the credit valuation adjustment, or
CVA, the credit risk related to asset value correlation multiplier for large financial institutions, the 250% risk-
weighted threshold items not deducted from Common Equity Tier 1 capital, and certain Basel II capital
deductions that were converted to risk-weighted assets under Basel III, such as securitizations and significant
investments in commercial entities. Certain Basel III provisions were adopted by the FSA with transitional
measures and became effective March 31, 2013.
The capital ratio standards applicable to us are as follows:
‰
‰
‰
a minimum total capital ratio of 8.0%,
a minimum Tier 1 capital ratio of 6.0%, and
a minimum Common Equity Tier 1 capital ratio of 4.5%.
These minimum capital ratios are applicable to MUFG on a consolidated basis and to MUFG Bank and
Mitsubishi UFJ Trust and Banking on a consolidated as well as stand-alone basis.
We have been granted an approval by the FSA to exclude the majority of our investment in Morgan Stanley
from being subject to double gearing adjustments. The approval was granted for a 10-year period, but the
approval amount will be phased out by 20% each year starting from March 31, 2019. As of March 31, 2021, a
full application of double gearing adjustments with respect to our investment in Morgan Stanley would have
reduced our Common Equity Tier 1 capital ratio by approximately 0.4 percentage points.
The Financial Stability Board identified us as a global systematically important bank, or G-SIB, in its most
recent annual report published in November 2020, and is expected to update the list of G-SIB annually. In
December 2015, the FSA also designated us as a G-SIB as well as a domestic systemically important bank
generally referred to as a “D-SIB.”
Effective March 31, 2016, the FSA’s capital conservation buffer, countercyclical buffer and G-SIB
surcharge requirements became applicable to Japanese banking institutions with international operations
conducted through foreign offices, including us. The requirements as of March 31, 2021 consist of a capital
conservation buffer of 2.5%, a G-SIB surcharge of 1.5% and a countercyclical buffer of 0.00% in addition to the
4.50% minimum Common Equity Tier 1 capital ratio.
In December 2017, the Group of Central Bank Governors and Heads of Supervision released final Basel III
reforms. The reforms are designed, among other things, to help reduce excessive variability in risk-weighted
assets among banks and improve the comparability and transparency of banks’ risk-based capital ratios. The
reforms endorsed by the Group of Central Bank Governors and Heads of Supervision include the following
elements:
‰
‰
‰
a revised standardized approach for credit risk, which is designed to improve the robustness and risk
sensitivity of the existing approach;
revisions to the internal ratings-based approach for credit risk, where the use of the most advanced
internally modelled approaches for low-default portfolios will be limited;
revisions to CVA framework, including the removal of the internally modelled approach and the
introduction of a revised standardized approach;
40
‰
‰
‰
a revised standardized approach for operational risk, which will replace the existing standardized
approaches and the advanced measurement approaches;
revisions to the measurement of the leverage ratio and a leverage ratio buffer for G-SIBs, which will
take the form of a Tier 1 capital buffer set at 50% of a G-SIB’s risk-weighted capital buffer; and
an aggregate output floor, which is designed to ensure that banks’ risk-weighted assets generated by
internal models are no lower than 72.5% of risk-weighted assets as calculated by the Basel III
framework’s standardized approaches. Banks will also be required to disclose their risk-weighted assets
based on these standardized approaches.
Most of the reforms was scheduled to become effective on January 1, 2022, subject to implementation
through legislation and regulation in each of the relevant jurisdictions, including Japan. In March 2020, the
implementation date was deferred by one year to January 1, 2023 in light of the COVID-19 pandemic.
In January 2019, the Group of Central Bank Governors and Heads of Supervision approved the Basel
Committee on Banking Supervision’s finalized market risk capital framework. The approved market risk
framework was scheduled to become effective on January 1, 2022, subject to implementation through legislation
and regulation in each of the relevant jurisdictions, including Japan. In March 2020, the implementation date was
deferred by one year to January 1, 2023 in light of the COVID-19 pandemic.
For a discussion on our capital ratios, see “Item 5.B. Operating and Financial Review and Prospects—
Liquidity and Capital Resources—Capital Adequacy.”
Leverage ratio.
Japanese banks and bank holding companies with international operations are required to
disclose their leverage ratios calculated in accordance with the methodology prescribed in the FSA guidance that
has been adopted to implement the relevant Basel III standard. The leverage ratio is designed for monitoring and
preventing the build-up of excessive leverage in the banking sector and is expressed as the ratio of Tier 1 capital
to total balance sheet assets adjusted in accordance with the FSA guidance. In December 2017, the Group of
Central Bank Governors and Heads of Supervision announced final Basel III reforms. The announced reforms
include the revisions to the measurement of the leverage ratio and a 3.00% minimum leverage ratio requirement,
plus a G-SIB leverage ratio buffer equal to 50% of the applicable G-SIB capital surcharge. The announcement
sets forth implementation dates of January 1, 2018 for the minimum leverage ratio requirement and January 1,
2022 for the G-SIB leverage ratio buffer requirement. In Japan, the FSA adopted the minimum leverage ratio
requirement effective March 31, 2019, and the minimum leverage ratio requirement as of March 31, 2020 is
3.00%. In March 2020, the implementation date for the G-SIB leverage ratio buffer requirement was deferred by
one year to January 1, 2023 in light of the COVID-19 pandemic. On June 30, 2020, in coordination with the
Bank of Japan in implementing its monetary policy in response to the COVID-19 pandemic, the FSA published
amendments to the leverage ratio regulations, effective June 30, 2020. Under the amendments, deposits with the
Bank of Japan are excluded from the calculation of the leverage ratio during the period from June 30, 2020 to
March 31, 2021. On March 31, 2021, the FSA announced an extension of the effective period of such
amendments until March 31, 2022.
Total loss-absorbing capacity.
In November 2015, the Financial Stability Board issued the final Total
Loss-Absorbing Capacity, or TLAC, standard for G-SIBs, including us. The Financial Stability Board’s TLAC
standard is designed to ensure that if a G-SIB fails, it has sufficient loss-absorbing and recapitalization capacity
available in resolution to implement an orderly resolution that minimizes impacts on financial stability, ensures
the continuity of critical functions, and avoids exposing public funds to loss. The Financial Stability Board’s
TLAC standard defines a minimum requirement for the instruments and liabilities that should be readily
available to absorb losses in resolution.
The TLAC standard which was set forth in the regulatory notices and related materials for the
implementation of the Financial Stability Board’s TLAC standard in Japan published by the FSA in March 2019
41
and which became applicable to (i) G-SIBs in Japan and (ii) a domestic systemically important bank designated
by the FSA, or D-SIB, in Japan deemed to be in particular need for a cross-border resolution arrangement and of
particular systemic significance to the Japanese financial system if it fails (such G-SIBs and D-SIB, collectively,
“Covered SIBs”) on March 31, 2019, and March 31, 2021, respectively, or the Japanese TLAC Standard, requires
entities designated by the FSA as Domestic Resolution Entities for Covered-SIBs to meet certain minimum
external total loss-absorbing capacity, or External TLAC, requirements. The Japanese TLAC Standard and the
Financial Stability Board’s TLAC standard also require the Domestic Resolution Entities to cause any of their
material subsidiaries in Japan designated as systemically important by the FSA or their foreign subsidiaries
subject to TLAC or similar requirements in the relevant jurisdictions to maintain certain minimum level of
capital and debt having internal total loss-absorbing and recapitalization capacity, or Internal TLAC.
In the Japanese TLAC Standard, the FSA has designated the relevant ultimate holding companies in Japan
as Domestic Resolution Entities for the Covered SIBs and, in our case, MUFG as the Domestic Resolution Entity
for our Group, making MUFG subject to the External TLAC requirements in Japan. The FSA has also designated
MUFG Bank, Mitsubishi UFJ Trust and Banking and Mitsubishi UFJ Morgan Stanley Securities as MUFG’s
material subsidiaries in Japan, which are subject to the Internal TLAC requirements applicable to MUFG.
External TLAC debt generally consists of Basel III compliant regulatory capital, including, during the
transition period, capital that meets the applicable regulatory capital requirements under the former Basel II
standards, and the Japanese TLAC Standard compliant obligations, net of regulatory adjustments. Internal TLAC
debt generally consists of Basel III compliant regulatory capital, including, during the transition period, capital
that meets the applicable regulatory capital requirements under the former Basel II standards, and the Japanese
TLAC Standard compliant subordinated obligations, net of regulatory adjustments. The Japanese TLAC Standard
does not require that, in order for unsecured senior debt issued by the Domestic Resolution Entity of a Japanese
G-SIB to qualify as External TLAC debt, such debt be subject to any contractual write-down, write-off or
conversion provisions or to any subordination provisions so long as its creditors are recognized as structurally
subordinated to the creditors of its subsidiaries and affiliates by the FSA on the ground that the amount of
excluded liabilities of such Domestic Resolution Entity ranking pari passu with, or junior to, its unsecured senior
liabilities does not, in principle, exceed 5% of the aggregate amount of its External TLAC. In contrast, Internal
TLAC debt incurred by a material subsidiary of a Japanese G-SIB is required to be subject to contractual loss
absorption provisions and to be subordinated to such subsidiary’s excluded liabilities.
The Japanese TLAC Standard requires a Japanese G-SIB, including us, to issue and maintain TLAC debt in
an amount not less than 16% of its consolidated risk-weighted assets and 6% of the applicable Basel III leverage
ratio denominator on and after March 31, 2019, and not less than 18% of its consolidated risk-weighted assets
and 6.75% of the applicable Basel III leverage ratio denominator on and after March 31, 2022. In addition, under
the Japanese TLAC Standard, Japanese G-SIBs are or will be allowed to count the Japanese Deposit Insurance
Fund Reserves in an amount equivalent to 2.5% of their consolidated risk-weighted assets from March 31, 2019
and 3.5% of their consolidated risk-weighted assets from March 31, 2022 as external TLAC.
On June 30, 2020, in coordination with the Bank of Japan in implementing its monetary policy in response
to the COVID-19 pandemic, the FSA published amendments to the Japanese TLAC Standard, together with
amendments to the leverage ratio regulations, effective June 30, 2020. Under the amendments, deposits with the
Bank of Japan are excluded from the calculation of External TLAC ratio and Internal TLAC amounts on a total
exposure basis as well as the leverage ratio during the period from June 30, 2020 to March 31, 2021 as temporary
measures. On March 31, 2021, the FSA announced an extension of the effective period of such temporary
measures until March 31, 2022.
Under the Japanese TLAC Standard, the FSA may order the Domestic Resolution Entity of a Covered SIB
to submit a report outlining an improvement plan if the External TLAC ratio of the Domestic Resolution Entity
or the Internal TLAC of its material subsidiaries in Japan falls below the minimum requirements. If the FSA
further deems it necessary to ensure improvement, the FSA may issue a business improvement order to such
Domestic Resolution Entity.
42
The Domestic Resolution Entity may also be subject to a capital distribution constraints plan if the capital
buffers are used and reduced below the required level to make up for its required External TLAC on a risk-
weighted assets basis.
See “Item 3.D Key Information—Risk Factors—Risks Related to Our Ability to Meet Regulatory Capital
Requirements—We may not be able to maintain our capital ratios and other regulatory ratios above minimum
required levels, which could result in various regulatory actions, including the suspension of some or all of our
operations.”
Prompt corrective action system. Under the prompt corrective action system, the FSA may take corrective
action, if a bank or a bank holding company fails to meet the minimum capital adequacy ratio or leverage ratio.
These actions include requiring such bank or bank holding company to formulate and implement capital
improvement measures, requiring it to reduce assets or the bank’s business operations or take other specific
actions, and issuing an order to dispose of shares of its subsidiaries or suspend all or part of the bank’s business
operations.
Capital distribution constraints system. Under the capital distribution constraints system, the FSA may
order a bank or a bank holding company to submit and carry out a capital distribution constraints plan, if the
bank or the bank holding company fails to maintain Common Equity Tier 1 capital required as applicable capital
buffers. A capital distribution plan must be determined to be reasonably designed to restore the required capital
buffers by restricting capital distributions, such as dividends, share buybacks and bonus payments, up to a certain
amount depending on the level of the deficit in the required capital buffers of the bank or the bank holding
company.
Prompt warning system. Under the prompt warning system, the FSA may take precautionary measures to
maintain and promote the sound operations of financial institutions, even before those financial institutions
become subject to prompt corrective actions. These measures require a financial institution to enhance
profitability, credit risk management, stability and cash flows.
Deposit insurance system and government measures for troubled financial institutions. The Deposit
Insurance Act is intended to protect depositors if a financial institution fails to meet its obligations. The Deposit
Insurance Corporation was established in accordance with the Deposit Insurance Act.
City banks, including MUFG Bank, regional banks, trust banks, including Mitsubishi UFJ Trust and
Banking, and various other credit institutions participate in the deposit insurance system on a compulsory basis.
Under the Deposit Insurance Act, the maximum amount of protection is ¥10 million per customer within
one bank. The ¥10 million maximum applies to all deposits except for non-interest bearing deposits, which are
non-interest bearing deposits redeemable on demand and maintained by depositors primarily in settlement
accounts for payment and settlement purposes. Deposits in settlement accounts are fully protected without a
maximum amount limitation. Certain types of deposits are not covered by the deposit insurance system, such as
foreign currency deposits and negotiable certificates of deposit. As of April 1, 2021, the Deposit Insurance
Corporation charged an insurance premium equal to 0.042% per year on the deposits in the settlement accounts,
and a premium equal to 0.029% per year on the deposits in other accounts.
Under the Deposit Insurance Act, a Financial Reorganization Administrator can be appointed by the Prime
Minister if a bank’s liabilities exceed its obligations or has suspended, or is likely to suspend, repayment of
deposits. The Financial Reorganization Administrator will take control of the assets of the troubled bank, dispose
of the assets and search for another institution willing to take over the troubled bank’s business. The troubled
bank’s business may also be transferred to a “bridge bank” established by the Deposit Insurance Corporation to
enable the troubled bank’s operations to be maintained and continue temporarily, and the bridge bank will seek to
transfer the troubled bank’s assets to another financial institution or dissolve the troubled bank. The Deposit
43
Insurance Corporation protects deposits, as described above, either by providing financial aid for costs incurred
by the financial institution succeeding the insolvent bank or by paying insurance money directly to depositors.
The financial aid provided by the Deposit Insurance Corporation may take the form of a monetary grant, loan or
deposit of funds, purchase of assets, guarantee or assumption of debt, subscription for preferred stock, or loss
sharing.
The Deposit Insurance Act also provides for exceptional measures to cope with systemic risk in the financial
industry. Where the Prime Minister recognizes that the failure of a bank which falls into any of (i) through
(iii) below may cause an extremely grave problem to the maintenance of the financial order in Japan or the
region where such bank is operating, or systemic risk, if none of the measures described in (i) through (iii) below
is implemented, the Prime Minister may, following deliberation by the Financial Crisis Response Council,
confirm (nintei) the need to take any of the following measures: (i) if the bank does not fall into either of the
categories described in (ii) or (iii) below, the Deposit Insurance Corporation may subscribe for shares or
subordinated bonds of, or extend subordinated loans to the bank, or subscribe for shares of the bank holding
company of the bank, in order to enhance the bank’s regulatory capital (“Item 1 measures” (dai ichigo sochi));
(ii) if the bank has suspended, or is likely to suspend, repayment of deposits, or its liabilities exceed its assets,
financial aid exceeding the pay-off cost may be made available to such bank (“Item 2 measures” (dai nigo
sochi)); and (iii) if the bank has suspended, or is likely suspend, repayment of deposits, and its liabilities exceed
its assets, and the systemic risk cannot be avoided by the measures mentioned in (ii) above, the Deposit Insurance
Corporation may acquire all of the bank’s shares (“Item 3 measures” (dai sango sochi)). The expenses for the
implementation of the above measures will be borne by the banking industry, with an exception under which the
Japanese government may provide partial subsidies for such expenses.
Under the new orderly resolution regime established by amendments to the Deposit Insurance Act that were
promulgated in June 2013 and became effective on March 6, 2014, financial institutions, including banks,
insurance companies and securities companies and their holding companies, are subject to the regime. Further,
where the Prime Minister recognizes that the failure of a financial institution which falls into either of (a) or
(b) below may cause a significant disruption to the Japanese financial market or system in Japan if measures
described in (a) or measures described in (b) are not taken, the Prime Minister may, following deliberation by the
Financial Response Crisis Council, confirm (nintei) that any of the following measures need to be applied to the
financial institution:
(a)
(b)
if the financial institution is not a financial institution whose liabilities exceed its assets, the financial
institution shall be placed under the special supervision by the Deposit Insurance Corporation over the
financial institution’s business operations and management and the disposal of the financial
institution’s assets, and the Deposit Insurance Corporation may provide the financial institution with
loans or guarantees necessary to avoid the risk of significant disruption to the financial system in
Japan, or subscribe for shares or subordinated bonds of, or extend subordinated loans to, the financial
institution, taking into consideration the financial condition of the financial institution (“Specified Item
1 measures” (tokutei dai ichigo sochi) under Article 126-2, Paragraph 1, Item 1 of the Deposit
Insurance Act); or
if the financial institution is a financial institution whose liabilities exceed, or are likely to exceed, its
assets or which has suspended, or is likely to suspend, payments on its obligations, the financial
institution shall be placed under the special supervision by the Deposit Insurance Corporation over the
financial institution’s business operations and management and the disposal of the financial
institution’s assets, and the Deposit Insurance Corporation may provide financial aid necessary to assist
a merger, business transfer, corporate split or other reorganization in respect of such failed financial
institution (“Specified Item 2 measures” (tokutei dai nigo sochi) under Article 126-2, Paragraph 1, Item
2 of the Deposit Insurance Act).
If the Prime Minister confirms that any of the measures set out in (b) above needs to be applied to a failed
financial institution, the Prime Minister may order that the failed financial institution’s business operations and
44
management and the disposal of the failed financial institution’s assets be placed under the special control of the
Deposit Insurance Corporation. The business or liabilities of the financial institution subject to the special
supervision or the special control of the Deposit Insurance Corporation as set forth above may also be transferred
to a “bridge financial institution” established by the Deposit Insurance Corporation to enable the financial
institution’s operations to be maintained and continue temporarily, or the financial institution’s liabilities to be
repaid, and the bridge financial institution will seek to transfer the financial institution’s business or liabilities to
another financial institution or dissolve the financial institution. The financial aid provided by the Deposit
Insurance Corporation to assist a merger, business transfer, corporate split or other reorganization in respect of
the failed financial institution set out in (b) above may take the form of a monetary grant, loan or deposit of
funds, purchase of assets, guarantee or assumption of debts, subscription for preferred stock or subordinated
bonds, subordinated loan, or loss sharing. If the Deposit Insurance Corporation has provided such financial
assistance, the Prime Minister may designate the movable assets and claims of the failed financial institution as
not subject to attachment, and such merger, business transfer, corporate split or other reorganization may be
conducted outside of the court-administrated insolvency proceedings. If the financial institution subject to the
special supervision or the special control by the Deposit Insurance Corporation as set forth above has liabilities
that exceed, or are likely to exceed, its assets, or has suspended, or is likely to suspend, payments on its
obligations, the financial institution may transfer all or a material portion of its business or all or a material
portion of shares of its subsidiaries or implement corporate split or certain other corporate actions with court
permission in lieu of any shareholder resolutions. In addition, the Deposit Insurance Corporation must request
other financial institution creditors of the failed financial institution to refrain from exercising their rights against
the failed financial institution until measures necessary to avoid the risk of significant disruption to the financial
system in Japan have been taken, if it is recognized that such exercise of their rights is likely to make the orderly
resolution of the failed financial institution difficult.
The expenses for implementation of the measures under this regime will be borne by the financial industry,
with an exception under which the Japanese government may provide partial subsidies for such expenses within
the limit to be specified in the government budget in cases where it is likely to cause extremely serious hindrance
to the maintenance of the credit system in Japan or significant turmoil in the Japanese financial market or system
if such expenses are to be borne only by the financial industry.
According to the announcement made by the FSA in March 2014, (i) Additional Tier 1 instruments and
Tier 2 instruments under Basel III issued by a bank must be written down or converted into common shares when
the Prime Minister confirms (nintei) that Item 2 measures (dai nigo sochi), Item 3 measures (dai sango sochi), or
Specified Item 2 measures (tokutei dai nigo sochi) need to be applied to the bank and (ii) Additional Tier 1
instruments and Tier 2 instruments under Basel III issued by a bank holding company must be written down or
converted into common shares when the Prime Minister confirms (nintei) that Specified Item 2 measures (tokutei
dai nigo sochi) need to be applied to the bank holding company.
Further, in an explanatory paper outlining the FSA’s approach for the introduction of the TLAC framework
in Japan published by the FSA in April 2016 and revisions to the paper published by the FSA in April 2018,
collectively the FSA TLAC Approach, as well as in the Japanese TLAC Standard, the FSA expressed its view
that single point of entry, or SPE, resolution, in which a single national resolution authority applies its resolution
tools to the ultimate holding company in Japan of a financial group, would be the preferred strategy for
resolution of the Covered SIBs. However, it is uncertain which measure is to be taken in a given case, including
whether or not the SPE resolution strategy will actually be elected and implemented in a given case, and the
actual measures to be taken will be determined on a case-by-case basis considering the actual condition of the
relevant Japanese G-SIB in distress. Under a possible model of resolution of a Japanese G-SIB based on the SPE
resolution strategy as described in the Japanese TLAC Standard, if the FSA determines that a material subsidiary
in Japan of a financial institution that is a Japanese G-SIB is non-viable due to material deterioration in its
financial condition and issues an order concerning restoration of financial soundness, including recapitalization
and restoration of liquidity of such material subsidiary, to the ultimate holding company in Japan designated by
the FSA as Domestic Resolution Entity for the financial institution under the Banking Act of Japan (Act No. 59
45
of 1981), the material subsidiary’s Internal TLAC instruments will be written off or, if applicable, converted into
equity in accordance with the applicable contractual loss absorption provisions of such Internal TLAC
instruments. Following the write-off or conversion of Internal TLAC instruments, if the Prime Minister
recognizes that the financial institution’s liabilities exceed, or are likely to exceed, its assets, or that it has
suspended, or is likely to suspend, payments on its obligations, as a result of the financial institution’s loans to, or
other investment in, the material subsidiary becoming subject to loss absorption or otherwise, and further
recognizes that the failure of such financial institution is likely to cause a significant disruption to the Japanese
financial market or system, the Prime Minister may, following deliberation by the Financial Crisis Response
Council, confirm that Specified Item 2 Measures (tokutei dai nigo sochi) need to be applied to the financial
institution for its orderly resolution. Any such confirmation by the Prime Minister also triggers the point of
non-viability clauses of Additional Tier 1 and Tier 2 instruments issued by the financial institution, causing such
instruments to be written off or, if applicable, converted into equity, as described above.
Upon the application of Specified Item 2 Measures (tokutei dai nigo sochi), a financial institution will be
placed under the special supervision by, or if the Prime Minister so orders, under the special control of, the
Deposit Insurance Corporation. In an orderly resolution, the Deposit Insurance Corporation would control the
operation and management of a financial institution’s business, assets and liabilities, including the potential
transfer to a bridge financial institution established by the Deposit Insurance Corporation as its subsidiary, or
such other financial institution as the Deposit Insurance Corporation may determine, of the financial institution’s
systemically important assets and liabilities, which we expect in the case of MUFG would include the shares of
our material subsidiaries based on the Japanese TLAC Standard. The Prime Minister may prohibit creditors of
the financial institution from attaching any of our assets and claims which are to be transferred to a bridge
financial institution or another financial institution. Based on the Japanese TLAC Standard, it is currently
expected that the External TLAC eligible senior notes issued by the financial institution will not be transferred to
a bridge financial institution or other transferee in the orderly resolution process but will remain as such financial
institution’s liabilities subject to court-administered insolvency proceedings. On the other hand, in an orderly
resolution process, the shares of material subsidiaries of such financial institution may be transferred to a bridge
financial institution or other transferee, and such financial institution would only be entitled to receive
consideration representing the fair value of such shares, which could be significantly less than the book value of
such shares. Following such business transfer, the recoverable value of such financial institution’s residual assets
in court-administered insolvency proceedings may not be sufficient to fully satisfy any payment obligations that
such financial institution may have under its liabilities, including the External TLAC eligible senior notes.
Recovery and resolution plan.
In November 2020, the Financial Stability Board published the latest list of
G-SIBs, which includes us. The list is annually updated by the Financial Stability Board. A recovery and
resolution plan must be put in place for each G-SIB, and the plans must be regularly reviewed and updated. In
Japan, under the Banking Law and the Comprehensive Guidelines for Supervision of Major Banks, etc., financial
institutions identified as G-SIBs must, as part of their crisis management, prepare and submit a recovery plan,
including triggers for the recovery plan and an analysis of recovery options, to the FSA. The Comprehensive
Guidelines also provide that resolution plans for such financial institutions are prepared by the FSA. We have
submitted our most recent recovery plan to the FSA in a timely manner.
Liquidity Coverage Ratio.
Japanese banks and bank holding companies with international operations are
required to disclose their LCRs calculated in accordance with the methodology prescribed in the FSA guidance
that has been adopted to implement the relevant Basel III standard. The LCR is a measure to determine whether a
bank has a sufficient amount of high-quality liquid assets, which are assets that can be converted easily and
immediately into cash in private markets in order to meet the bank’s liquidity needs, to survive in a 30-day
financial stress scenario, including sizable deposit outflows, inability to issue new bonds or access the interbank
market, stoppage of the collateralized funding market, need for additional collateral in connection with derivative
transactions, and significant outflows of cash under commitment lines to customers. Once a bank or bank holding
company fails to meet the minimum LCR of 100%, it is required to immediately report such failure to the FSA. If
46
the FSA deems the financial condition of the bank or bank holding company to be serious, the FSA may issue a
business improvement order. A minimum LCR of 100% is currently required.
Net Stable Funding Ratio. The NSFR is a measure to determine whether a bank has sustainable and long-
term liabilities and capital for its assets and activities. The Basel Committee on Banking Supervision issued the
final standard of NSFR in October 2014. In Japan, the FSA promulgated its NSFR standard on March 31, 2021,
which is expected to become applicable on September 30, 2021, requiring a minimum NSFR of 100%.
Inspection and reporting. The FSA has the authority to order reporting from, and inspect, banks and
banking holding companies in Japan. Based on its “Principles and Approaches of Inspection and Supervision,”
the FSA seeks to evaluate the effectiveness of the operations and functions of financial institutions, supervise
financial institutions based on proactive and forward-looking analyses, facilitate best practices among financial
institutions, focus monitoring on high-priority issues, and integrate on- and off-site monitoring. The FSA
abolished the Financial Institutions Inspection Manual which had traditionally been understood to set forth the
minimum standard for the operations of financial institutions in Japan in December 2019.
Furthermore, the Securities and Exchange Surveillance Commission of Japan, or SESC, inspects banks in
connection with their securities business as well as financial instruments business operators, such as securities
firms. The Bank of Japan also conducts inspections of banks. The Bank of Japan Law provides that the Bank of
Japan and financial institutions may agree as to the form of inspection to be conducted by the Bank of Japan.
Laws limiting shareholdings of banks. The provisions of the Antimonopoly Act that generally prohibit a
bank from holding more than 5% of another company’s voting rights do not apply to a bank holding company.
However, the Banking Law prohibits a bank holding company and its subsidiaries from holding, on an
aggregated basis, more than 15% of the voting rights of companies other than those which can legally become
subsidiaries of bank holding companies. There have recently been amendments to various financial regulation
related laws, including the Banking Law, which includes certain deregulations on restrictions for shareholdings
by banks, as described above.
In addition, a bank is prohibited from holding shares in other companies exceeding the aggregate of its
Common Equity Tier 1 capital amount and Additional Tier 1 capital amount.
Restrictions on exposures to single large counterparties. The Banking Law prohibits banks and bank
holding companies (on a consolidated basis with their subsidiaries and affiliates) from having large exposure
exceeding 25% of their Tier 1 capital to a single counterparty and also prohibits a G-SIB’s exposure to another
G-SIB exceeding 15% of its Tier 1 capital.
Financial Instruments and Exchange Act. The Financial Instruments and Exchange Act provides
protection for investors and also regulates sales of a wide range of financial instruments and services, requiring
financial institutions to improve their sales rules and strengthen compliance frameworks and procedures. Among
the instruments that the Japanese banks deal in, derivatives, foreign currency-denominated deposits, and variable
insurance and annuity products are subject to regulations covered by the sales-related rules of conduct under the
law.
Article 33 of the Financial Instruments and Exchange Act generally prohibits banks from engaging in
securities transactions. However, bank holding companies and banks may, through a domestic or overseas
securities subsidiary, conduct all types of securities businesses, with appropriate approval from the FSA.
Similarly, registered banks are permitted to provide securities intermediation services and engage in certain other
similar types of securities related transactions, including retail sales of investment funds and government and
municipal bonds.
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Subsidiaries of bank holding companies engaging in the securities business are subject to the supervision of
the FSA as financial instruments business operators. The Prime Minister has the authority to regulate the
securities industry and securities companies, which authority is delegated to the Commissioner of the FSA under
the Financial Instruments and Exchange Act. In addition, the SESC, an external agency of the FSA, is
independent from the FSA’s other bureaus and is vested with the authority to conduct day-to-day monitoring of
the securities markets and to investigate irregular activities that hinder fair trading of securities, including
inspections of securities companies as well as banks in connection with their securities business. Furthermore,
the Commissioner of the FSA delegates certain authority to the Director General of the Local Finance Bureau to
inspect local securities companies and their branches. A violation of applicable laws and ordinances may result in
various administrative sanctions, including revocation of registration, suspension of business, administrative
monetary penalty or an order to discharge any director or executive officer who has failed to comply with
applicable laws and ordinances. Securities companies are also subject to the rules and regulations of the Japanese
stock exchanges and the Japan Securities Dealers Association, a self-regulatory organization of securities
companies.
Act on Sales, etc. of Financial Instruments. The Act on Sales, etc. of Financial Instruments was enacted to
protect customers from incurring unexpected losses as a result of purchasing financial instruments. Under this
act, sellers of financial instruments have a duty to their potential customers to explain important matters such as
the nature and magnitude of risks involved regarding the financial instruments that they intend to sell. If a seller
fails to comply with the duty, there is a rebuttable presumption that the loss suffered by the customer due to the
seller’s failure to explain is equal to the amount of decrease in the value of the purchased financial instruments.
In June 2020, certain amendments to the act were promulgated, and will become effective within one and a
half years from the date of promulgation, by which amendments the name of the act will be changed to “the Act
of Provision of Financial Services” and the “financial services intermediary business” will be newly introduced.
Under a single registration for financial services intermediary business, registrants will become able to provide
intermediary services of each of banking, securities and insurance. The amendments to the act will not require
any provider of financial services intermediary business to belong to a specific financial institution, but will
impose certain regulations to protect customers, including limitations on the type of services that they may
provide, prohibitions on the acceptance of assets of customers and the lodging of a security deposit.
Anti-money laundering laws. Under the Act on Prevention of Transfer of Criminal Proceeds, specified
business operators, including financial institutions, are required to verify customer identification data, preserve
transaction records, and file suspicions transaction reports with the FSA or other regulatory authorities in cases
where any asset received through their business operations is suspected of being criminal proceeds.
Based on “Guidelines on Anti-Money Laundering and Terrorist Financing”, the FSA requires financial
institutions to strengthen their management of anti-money laundering and terrorist financing functions and their
risk-based approach used in such functions.
Recent amendments to the Enforcement Ordinance of the Act introduced requirements relating to online
KYC processes in November 2018 and strengthened the requirements for KYC processes for customers residing
in remote areas in April 2020.
Acts concerning trust business conducted by financial institutions. Under the Trust Business Act, joint
stock companies that are licensed by the Prime Minister as trust companies, including non-financial companies,
are allowed to conduct trust business. In addition, under the Act on Provision, etc. of Trust Business by Financial
Institutions, banks and other financial institutions, as permitted by the Prime Minister, are able to conduct trust
business. The Trust Business Act provides for a separate type of registration for trustees who conduct only
administration type trust business. The Trust Business Act also provides for various duties imposed on the trustee
in accordance with and in addition to the Trust Act.
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Act on the Protection of Personal Information. With regard to protection of personal information, the Act
on the Protection of Personal Information requires, among other things, Japanese banking institutions to limit the
use of personal information to the stated purposes and to properly manage the personal information in their
possession, and forbids them from providing personal information to third parties without consent. If a bank
violates certain provisions of the act, the Personal Information Protection Commission of Japan may advise or
order the bank to take proper action. In addition, the Banking Law and the Financial Instruments and Exchange
Act contain certain provisions with respect to appropriate handling of customer information.
Act on the Use of Personal Identification Numbers in the Administration of Government Affairs. Pursuant
to the Act on the Use of Personal Identification Numbers in the Administration of Government Affairs, which
became effective in October 2015, the Japanese government has adopted a Social Security and Tax Number
System, which is designed to (1) improve social security services, (2) enhance public convenience in obtaining
government services, and (3) increase the efficiency of the administration of government affairs. Under this
system, a 12-digit unique number is assigned to each resident of Japan to identify and manage information
relating to the resident for government service and tax purposes. Financial institutions are required to implement
measures to ensure that such customer information will be protected from inappropriate disclosure and other
unauthorized use.
Act Concerning Protection of Depositors from Illegal Withdrawals Made by Counterfeit or Stolen
Cards. The Act on Protection, etc. of Depositors and Postal Saving Holders from Unauthorized Automated
Withdrawal, etc. Using Counterfeit Cards, etc. and Stolen Cards, etc. requires financial institutions to establish
internal systems to prevent illegal withdrawals of deposits made using counterfeit or stolen bank cards. The act
also requires a financial institution to compensate depositors for any amount illegally withdrawn using stolen
bank cards except in certain cases, including those where the financial institution can verify that it acted in good
faith without negligence and there was gross negligence on the part of the relevant depositor. In addition, the act
provides that illegal withdrawals with counterfeit bank cards are invalid unless the financial institution acted in
good faith without negligence and there was gross negligence on the part of the relevant account holder.
Government reforms to restrict maximum interest rates on consumer lending business.
In December 2006,
the Diet passed legislation to reform the regulations relating to the consumer lending business, including
amendments to the Act Regulating the Receipt of Contributions, Receipt of Deposits and Interest Rates which,
effective June 18, 2010, reduced the maximum permissible interest rate from 29.2% per annum to
20% per annum. The regulatory reforms also included amendments to Money Lending Business Act which,
effective June 18, 2010, abolished the so-called “gray-zone interest.” Gray-zone interest refers to interest rates
exceeding the limits stipulated by the Interest Rate Restriction Act (between 15% per annum to 20% per annum
depending on the amount of principal). Prior to June 18, 2010, gray-zone interests were permitted under certain
conditions set forth in the Money Lending Business Act. As a result of the regulatory reforms, all interest rates
are now subject to the lower limits imposed by the Interest Rate Restriction Act, compelling lending institutions,
including our consumer finance subsidiaries and equity method investees, to lower the interest rates they charge
borrowers. Furthermore, the new regulations, which became effective on June 18, 2010, require, among other
things, consumer finance companies to limit their lending to a single customer to a maximum of one third of the
customer’s annual income regardless of the customer’s repayment capability.
In addition, as a result of decisions made by the Supreme Court of Japan prior to June 18, 2010, imposing
stringent requirements for charging such gray-zone interest rates, consumer finance companies have been
responding to borrowers’ claims for reimbursement of previously collected interest payments in excess of the
limits stipulated by the Interest Rate Restriction Act. See “Item 3.D. Key Information—Risk Factors—
Operational Risk—Because of our loans to consumers and our shareholdings in companies engaged in consumer
lending, changes in the business or regulatory environment for consumer finance companies in Japan may further
adversely affect our financial results.”
Act on Special Provisions of the Income Tax Act, the Corporation Tax Act and the Local Tax Act Incidental
to Enforcement of Tax Treaties. Pursuant to the Amendments to the Act on Special Provisions of the Income
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Tax Act, the Corporation Tax Act and the Local Tax Act Incidental to Enforcement of Tax Treaties, which
became effective in January 2017, financial institutions are required to collect certain information from their
accountholders, including jurisdictions of tax residence, and report such information to the National Tax Agency
in accordance with the Common Reporting Standard as developed by the Organization for Economic
Co-operation and Development.
United States
As a result of our operations in the United States, we are subject to extensive U.S. federal and state
supervision and regulation.
Overall supervision and regulation. We are subject to supervision, regulation and examination with
respect to our U.S. operations by the FRB pursuant to the U.S. Bank Holding Company Act of 1956, as amended,
or the BHCA, and the International Banking Act of 1978, as amended, or the IBA, because we and MUFG Bank
are bank holding companies and foreign banking organizations, as defined pursuant to those statutes. The FRB
functions as our “umbrella” supervisor under amendments to the BHCA effected by the Gramm-Leach-Bliley
Act of 1999, which among other things:
‰
‰
prohibited further expansion of the types of activities in which bank holding companies, acting directly
or through non-bank subsidiaries, may engage;
authorized qualifying bank holding companies to opt to become “financial holding companies,” and
thereby acquire the authority to engage in an expanded list of activities; and
‰ modified the role of the FRB by specifying new relationships between the FRB and the functional
regulators of non-bank subsidiaries of both bank holding companies and financial holding companies.
The BHCA generally prohibits each of a bank holding company and a foreign banking organization that
maintains branches or agencies in the United States from, directly or indirectly, acquiring more than 5% of the
voting shares of any company engaged in non-banking activities in the United States unless the bank holding
company or foreign banking organization has elected to become a financial holding company, as discussed
above, or the FRB has determined, by order or regulation, that such activities are so closely related to banking as
to be a proper incident thereto and has granted its approval to the bank holding company or foreign banking
organization for such an acquisition. The BHCA also requires a bank holding company or foreign banking
organization that maintains branches or agencies in the United States to obtain the prior approval of an
appropriate federal banking authority before acquiring, directly or indirectly, the ownership of more than 5% of
the voting shares or control of any U.S. bank or bank holding company. In addition, under the BHCA, a
U.S. bank or a U.S. branch or agency of a foreign bank is prohibited from engaging in various tying
arrangements involving it or its affiliates in connection with any extension of credit, sale or lease of any property
or provision of any services.
In October 2008, we, MUFG Bank, Mitsubishi UFJ Trust and Banking and MUFG Americas Holdings
initially attained financial holding company status. In August 2016, Mitsubishi UFJ Trust and Banking
relinquished its financial holding company status. Financial holding company status is subject to periodic
regulatory review. A financial holding company is authorized to engage in an expanded list of activities deemed
to be financial in nature or incidental to such financial activity as well as certain specified non-banking activities
deemed to be closely related to banking. In order to maintain the status as a financial holding company, a bank
holding company must continue to meet certain standards established by the FRB. Those standards require that a
financial holding company exceed the minimum standards applicable to bank holding companies that have not
elected to become financial holding companies. These higher standards include meeting the “well capitalized”
and “well managed” standards for financial holding companies as defined in the regulations of the FRB. Failure
to meet these standards, due to inadequate capital management or shortcomings in operations, results in
restrictions on the ability to engage in expanded activities as a financial holding company. In addition, a financial
holding company must ensure that its U.S. banking subsidiaries meet certain minimum standards under the
Community Reinvestment Act of 1977.
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U.S. branches and agencies of subsidiary Japanese banks. Under the authority of the IBA, our banking
subsidiaries, MUFG Bank and Mitsubishi UFJ Trust and Banking, operate five branches, two agencies and seven
representative offices in the United States. MUFG Bank operates branches in Los Angeles, California; Chicago,
Illinois; and two branches in New York, New York; agencies in Houston and Dallas, Texas; and representative
offices in Washington, D.C; San Francisco, California; Seattle, Washington; Atlanta, Georgia; Minnetonka,
Minnesota; Jersey City, New Jersey; and Florence, Kentucky. Mitsubishi UFJ Trust and Banking operates a
branch in New York, New York.
The IBA provides, among other things, that the FRB may examine U.S. branches and agencies of foreign
banks, and each branch and agency shall be subject to on-site examination by the appropriate federal or state
bank supervisor as frequently as would a U.S. bank. The IBA also provides that if the FRB determines that a
foreign bank is not subject to comprehensive supervision or regulation on a consolidated basis by the appropriate
authorities in its home country, or if there is reasonable cause to believe that the foreign bank or its affiliate has
committed a violation of law or engaged in an unsafe or unsound banking practice in the United States, the FRB
may order the foreign bank to terminate activities conducted at a branch or agency in the United States.
U.S. branches and agencies of foreign banks must be licensed, and are also supervised and regulated, by a
state or by the Office of the Comptroller of the Currency, or the OCC, the federal regulator of U.S. national
banks. The OCC is an independent bureau of the U.S. Department of the Treasury. Effective November 7, 2017,
all of the branches and agencies of MUFG Bank and Mitsubishi UFJ Trust and Banking in the United States
converted from state-licensed branches and agencies to federally-licensed branches and agencies supervised and
regulated by the OCC.
When opening a federal branch or agency, a foreign bank must establish and maintain a deposit account
with an FRB member bank of at least (1) the amount of capital that would be required of a national bank being
organized at the same location or (2) five percent of the total liabilities of the federal branch or agency, including
acceptances but excluding (i) accrued expenses and (ii) amounts due and other liabilities to offices, branches, and
subsidiaries of the foreign bank, whichever is greater. Federally-licensed branches and agencies must also submit
written reports concerning their assets and liabilities and other matters, to the extent required by the OCC or the
FRB, and are examined at periodic intervals by the OCC and the FRB.
U.S. banking subsidiaries. We indirectly own and control one U.S. bank, MUFG Union Bank, N.A.
(known prior to July 1, 2014 as Union Bank, N.A.), through MUFG Bank and its subsidiary, MUFG Americas
Holdings, a registered bank holding company.
MUFG Union Bank is a national bank subject to the supervision, examination and regulatory authority of
the OCC pursuant to the National Bank Act.
In regulating national banks such as MUFG Union Bank, the OCC has the power to examine those banks;
approve or deny applications for new charters, branches, capital, or other changes in corporate or banking
structure; take supervisory actions against national banks that do not comply with laws and regulations or that
otherwise engage in unsound practices; remove officers and directors, negotiate agreements to change banking
practices, and issue cease and desist orders as well as civil money penalties; and issue rules and regulations, legal
interpretations, and corporate decisions governing investments, lending, and other practices. The OCC’s staff of
bank examiners conducts on-site reviews and provides sustained supervision of national banks. Examiners
analyze loan and investment portfolios, funds management, capital, earnings, liquidity, and sensitivity to market
risk for national banks. Examiners also review internal controls, internal and external audit, and compliance with
law, and evaluate management’s ability to identify and control risk.
In addition, the FDIC insures the deposits of MUFG Union Bank up to legally specified maximum amounts.
In the event of a failure of an FDIC-insured bank, the FDIC is virtually certain to be appointed as receiver and
would resolve the failure under provisions of the Federal Deposit Insurance Act. In the liquidation or other
resolution of a failed FDIC-insured depository institution, deposits in its U.S. offices and other claims for
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administrative expenses and employee compensation are afforded priority over other general unsecured claims,
including deposits in offices outside the United States, non-deposit claims in all offices and claims of a parent
company. Moreover, under longstanding FRB policy, a bank holding company is expected to act as a source of
financial strength for its banking subsidiaries and to commit resources to support such banks.
Bank capital requirements and capital distributions. MUFG Union Bank is subject to applicable risk-
based and leverage capital guidelines issued by U.S. regulators for banks, bank holding companies and
intermediate holding companies. In addition, MUFG Bank and Mitsubishi UFJ Trust and Banking, as foreign
banking organizations that have U.S. branches and agencies and that are controlled by us, are subject to the
FRB’s requirements that they be “well-capitalized” based on Japan’s risk based capital standards. MUFG Union
Bank, MUFG Bank, Mitsubishi UFJ Trust and Banking, and MUFG Americas Holdings are all “well capitalized”
as defined under, and otherwise comply with, all U.S. regulatory capital requirements applicable to them. The
Federal Deposit Insurance Corporation Improvement Act of 1991, or FDICIA, provides, among other things, for
expanded regulation of insured depository institutions, including banks, and their parent holding companies.
As required by FDICIA, the federal banking agencies have established five capital tiers ranging from “well
capitalized” to “critically undercapitalized” for insured depository institutions. As an institution’s capital position
deteriorates, the federal banking regulators may take progressively stronger actions, such as further restricting
affiliate transactions, activities, asset growth or interest payments. In addition, FDICIA generally prohibits an
insured depository institution from making capital distributions, including the payment of dividends, or the
payment of any management fee to its holding company, if the insured depository institution would be
undercapitalized after making such distribution or paying such dividend or fee.
The availability of dividends from insured depository institutions in the United States is limited by various
other statutes and regulations. The National Bank Act and other federal laws prohibit the payment of dividends
by a national bank under various circumstances and limit the amount a national bank can pay without the prior
approval of the OCC. In addition, state-chartered banking institutions are subject to dividend limitations imposed
by applicable federal and state laws.
Other regulated U.S. subsidiaries. Our non-bank subsidiaries that engage in securities-related activities in
the United States are regulated by appropriate functional regulators, such as the SEC, any self-regulatory
organizations of which they are members, and the appropriate state regulatory agencies. These non-bank
subsidiaries are required to meet separate minimum capital standards as imposed by those regulatory authorities.
Anti-Money Laundering Initiatives, the Bank Secrecy Act, the USA PATRIOT Act. A major focus of U.S.
governmental policy relating to financial institutions in recent years has been, and continues to be, aimed at
preventing money laundering and terrorist financing. The USA PATRIOT Act of 2001, as incorporated into the
Bank Secrecy Act, substantially broadened the scope of U.S. anti-money laundering laws and regulations by
imposing significant new compliance and due diligence obligations, creating new crimes and penalties and
expanding the extra-territorial jurisdiction of the United States. The U.S. Department of the Treasury has issued a
number of regulations that impose obligations on financial institutions to maintain appropriate policies,
procedures and controls to detect, prevent and report potential money laundering and terrorist financing,
including the collection of beneficial ownership information. The bank regulatory agencies carefully scrutinize
the adequacy of an institution’s compliance with these regulations and, as a result, there have been an increased
number of regulatory enforcement actions. A financial institution’s failure to maintain and implement adequate
policies, procedures and controls to prevent and detect money laundering and terrorist financing could have
serious legal and reputational consequences for the institution, including the incurrence of expenses to enhance
the relevant programs, the imposition of limitations on the scope of its operations and the imposition of fines and
other monetary penalties. See “Item 3.D. Key Information—Risk Factors—Operational Risk—We may become
subject to regulatory actions or other legal proceedings relating to our transactions or other aspects of our
operations, which could result in significant financial losses, restrictions on our operations and damage to our
reputation.”
52
Foreign Corrupt Practices Act.
In recent years, U.S. regulatory and enforcement agencies including the
SEC and the U.S. Department of Justice have significantly increased their enforcement efforts of the Foreign
Corrupt Practices Act, or the FCPA. The FCPA prohibits U.S. securities issuers, U.S. domestic entities, and
parties doing substantial business within the United States (including their shareholders, directors, agents,
officers, and employees) from giving, offering, or promising anything of value to foreign public officials in order
to obtain or retain any business advantage. The FCPA also requires U.S. securities issuers to maintain adequate
books and records in such a way that they fairly reflect all transactions and dispositions of assets. Enforcement
efforts have targeted a wide range of U.S. and foreign-based entities and have been based on a broad variety of
alleged fact patterns, and in a number of cases have resulted in the imposition of substantial criminal and civil
penalties or in agreed payments in settlement of alleged violations. Failure to maintain adequate anti-bribery
policies, procedures, internal controls, and books and records globally could have serious legal and reputational
consequences for the institution, including the incurrence of expenses to enhance the relevant programs, as well
as the imposition of civil and criminal penalties.
Regulatory Reform Legislation.
In response to the global financial crisis and the perception that lax
supervision of the financial industry in the United States may have been a contributing cause, legislation
designed to reform the system for supervision and regulation of financial firms doing business in the
United States, the so-called Dodd-Frank Act, was signed into law on July 21, 2010. The Dodd-Frank Act is
complex and extensive in its coverage and contains a wide range of provisions that affect financial institutions
operating in the United States, including our U.S. operations. Included among these provisions are sweeping
reforms designed to reduce systemic risk presented by very large financial firms, promote enhanced supervision,
regulation, and prudential standards for financial firms, establish comprehensive supervision of financial
markets, impose new limitations on permissible financial institution activities and investments, expand regulation
of the derivatives markets, protect consumers and investors from financial abuse, and provide the government
with the tools needed to manage a financial crisis. Key provisions that impact our operations are summarized
below. However, certain regulatory rules under the Dodd-Frank Act are not yet finalized, require further
interpretive guidance by the relevant supervisory agencies, or do not yet require us to fully implement
compliance procedures. Accordingly, while the legislation has an impact on our operations, including the
imposition of significant compliance costs, we are unable to assess with certainty the full degree of impact of the
Dodd-Frank Act on our operations at this time.
Among the components of the Dodd-Frank Act that have impacted or may impact our operations are the
provisions relating to enhanced prudential standards, including capital, liquidity and structural requirements, the
“Volcker Rule,” derivatives regulation, credit reporting, resolution plans, incentive-based compensation, the
establishment of the Consumer Financial Protection Bureau, and debit interchange fees. Although certain of the
regulatory rules regarding the foregoing components are still pending, as noted above, based on information
currently available to us, other than the Volcker Rule and derivatives regulations as discussed below, the impact
of these components is expected to be mainly limited to our U.S. operations and not to be material to us on a
consolidated basis. We intend to continue to monitor developments relating to the Dodd-Frank Act and the
potential impact on our activities inside and outside of the United States.
With respect to the Dodd-Frank Act provisions related to enhanced prudential standards, in February 2014
the FRB issued final rules that established enhanced prudential standards for the U.S. operations of foreign
banking organizations such as MUFG. These rules required us to organize by July 1, 2016 all of our U.S. bank
and non-bank subsidiaries, with certain limited exceptions, under a U.S. IHC that is subject to U.S. capital
requirements and enhanced prudential standards comparable to those applicable to top-tier U.S. bank holding
companies of the same size. Under these rules, we were required to change the structure of our U.S. operations,
including the manner in which we oversee and manage those operations, and may be required to inject additional
capital into our U.S. operations. We have designated MUFG Americas Holdings as our IHC.
MUFG Americas Holdings is subject to various U.S. prudential requirements and has become subject to
others with the designation of MUFG Americas Holdings as our IHC as of July 1, 2016. MUFG Americas
53
Holdings was previously subject to risk-based and leverage capital requirements, liquidity requirements, and
other enhanced prudential standards applicable to large U.S. bank holding companies. MUFG Americas Holdings
was also subject to capital planning and stress testing requirements. MUFG Americas Holdings is now
additionally subject to the capital planning and stress testing requirements and certain enhanced prudential
standards applicable to IHCs. In calendar year 2020, MUFG Americas Holdings was subject to two FRB
supervisory Dodd-Frank Act stress testing cycles, the results of which were initially released on June 25, 2020
and updated on July 27, 2020 (no change to MUFG Americas Holdings reported results for the first cycle) and on
December 18, 2020 for the second cycle associated with industry-wide required capital plan resubmissions.
Under both supervisory stress testing cycles, the FRB’s released results found that under severely adverse, and an
alternative severely adverse scenario as applicable, MUFG Americas Holdings would maintain capital ratios well
above regulatory baseline required minimums. Under tailoring of regulations applicable to domestic and foreign
banks to more closely match their risk profiles which became effective December 31, 2019, MUFG Americas
Holdings is classified as a Category IV firm under which it is minimally subject to biennial supervisory stress
testing every other year; however as afforded under regulations, MUFG Americas Holdings voluntarily elected to
participate in FRB supervisory stress testing in 2021. On June 24, 2021, the FRB released the results of the 2021
Dodd-Frank Act supervisory stress tests for the 23 participating firms, finding that each firm, including MUFG
Americas Holdings, would remain “well above” risk-based and leverage capital minimums under the FRB’s
“severely adverse” economic scenario. Accordingly, consistent with the FRB’s March 2021 announcement, all
industry additional temporary capital distribution restrictions imposed under COVID-19 expired on June 30,
2021. Afterwards, firms with $100 billion or more in total assets will remain subject to the normal restrictions
imposed by the FRB’s regulatory capital framework, inclusive of the stress capital buffer (“SCB”).
The FRB has the authority to examine an IHC and any of its subsidiaries. U.S. leverage requirements
applicable to the IHC took effect beginning in January 2018. Our combined U.S. operations, including MUFG
Bank’s and Mitsubishi UFJ Trust and Banking’s branches, are also subject to certain requirements related to
liquidity and risk management.
The Volcker Rule was issued in final form by the Federal Reserve originally in December 2013, and
substantive portions were subsequently amended in November 2019. Under the Volcker Rule, we are required to
cease conducting certain proprietary trading activities, which means trading in securities and financial
instruments for our own account, subject to certain exceptions, including market-making, hedging, and
underwriting activities if such activities are conducted within a rigorous compliance framework. We are also
restricted from engaging in certain activities regarding hedge funds and private equity funds known as covered
funds. While the Volcker Rule excludes restrictions on such activities conducted solely outside of the United
States, the regulatory definition of such exempted activities is narrow and complex. Our proprietary trading and
covered funds activities are generally executed outside of the United States, but certain activities are conducted
within the United States, and, therefore, we have undertaken steps that we believe are appropriate to bring our
activities and investments into compliance with the Rule. Given the limited amount of restricted activities in
which we engage within the United States, we believe the final changes to the Volcker Rule do not have a
material negative impact on our operations.
U.S. regulators continue to issue final regulations and regulatory determinations governing swaps and
derivatives markets as contemplated by the Dodd-Frank Act. To date, MUFG Bank and MUFG Securities EMEA
plc, have registered as swap dealers with the U.S. Commodity Futures Trading Commission, or CFTC.
Depending on the finalization of regulations and regulatory determinations governing swaps and derivatives
markets under the Dodd-Frank Act, as well as the activities of our other subsidiaries located inside and outside of
the United States, our other subsidiaries may have to register as swap dealers with, or be subject to the
regulations of, the CFTC and/or SEC. Regulation of swap dealers by the CFTC and security-based swap dealers
by the SEC imposes numerous corporate governance, business conduct, capital, margin, reporting, clearing,
execution, and other regulatory requirements on our operations, which may adversely impact our derivatives
businesses and make us less competitive than those competitors that are not subject to the same regulations. On
December 18, 2019, the CFTC proposed rules that would modify and codify the cross-border application of
54
certain of its Title VII swap rules to both U.S. and non-U.S. registered swap dealers. Similarly, in December
2019, the SEC adopted a package of rule amendments, guidance, and a related order designed to expand and
clarify the framework for regulating cross-border security-based swaps, including single-name credit default
swaps. We are continuing to consider the effects of these proposed and final regulatory changes.
On June 14, 2018, the FRB approved a final rule regarding single counterparty credit limits, or SCCL, for
large banking organizations. The SCCL final rule is considered the last major piece of regulatory action needed
to implement Section 165(e) of the Dodd-Frank Act. Section 165(e) was a response to the concern that failure or
financial distress of one large, interconnected financial institution could cascade through the U.S. financial
system and impair the financial condition of that firm’s counterparties, including other large, interconnected
firms. Section 165(e) generally, and the SCCL final rule specifically, seek to mitigate this risk by limiting the
aggregate exposure among such financial institutions and their counterparties.
The final rule establishes separate SCCLs, one applicable to the combined U.S. operations, or CUSO, of
MUFG and another to MUAH, as MUFG’s U.S. intermediate holding company, or IHC. Originally, MUFG
CUSO was required to comply with its SCCL beginning on January 1, 2020, while IHC compliance was
scheduled to begin on July 1, 2020, unless that time is extended by the FRB in writing. The SCCL final rule
allows FBOs to satisfy its CUSO-level requirements by certifying as to home-country compliance with Basel
Committee standards in lieu of complying with the final U.S. SCCL rule. The FRB extended the initial
compliance dates of its SCCL rule as it applies to the CUSO of FBOs by 18 months to July 1, 2021, in order to
provide additional time for foreign jurisdictions’ implementation of the Basel standard to become effective.
Separately, based on the preliminary categorization of MUAH as a Category IV entity under the final rules
tailoring prudential standards for large banking organization (“Tailoring Final Rules”), SCCL will no longer
apply to MUAH. The following paragraphs discuss the Tailoring Final Rules in greater detail.
On October 10, 2019, the FRB issued two final rules that (1) tailor the framework for application of
enhanced prudential standards to U.S. and foreign banking organizations and (2) modify the application of capital
and liquidity requirements to the operations of U.S. banking organizations and the U.S. operations of foreign
banking organizations. The final rules apply the same framework as to the U.S. and foreign BHCs but use a
differing calibration for foreign BHCs. The final rules became effective on December 31, 2019.
The final rule, promulgated solely by the FRB, determined the applicability of certain enhanced prudential
standards requirements, including liquidity stress testing and management, capital planning and stress testing,
risk management, single counterparty credit limits requirements, and related regulatory reporting by categorizing
all foreign banking organizations with $100 billion or more in combined U.S. assets into three categories. The
second final rule was issued jointly by the FRB, the OCC, and the FDIC, and similarly categorized foreign
banking organizations and tailored the application of the agencies’ regulatory capital and standardized liquidity
requirements on that basis. Under the framework of the final rules, MUFG’s U.S. operations are subject to a split
category treatment: (i) the combined U.S. operations are classified as Category II, subject to the most stringent
requirements other than those applicable to U.S. G-SIBs; and (ii) MUAH, the U.S. BHC and IHC, is classified as
Category IV, a classification that provides certain capital and liquidity relief from prior requirements, taking into
account the size and other risk characteristics of MUFG’s U.S. subsidiary operations.
On October 10, 2019, the FRB jointly issued with the FDIC final rule amendments revising their joint
resolution planning requirements of Section 165(d) of the Dodd-Frank Act. Resolution plans, also known as
living wills, describe a firm’s strategy for orderly resolution under bankruptcy in the event of material financial
distress or failure of the firm. The final rule tailors the rule’s requirements for firms that do not pose the same
systemic risk as the largest institutions, requiring resolution plans to be submitted on a three-year cycle. MUFG
is classified as a triennial full filer as applicable to large foreign and domestic banks classified within Category II
and III, and MUFG is subject to alternating between submitting full and targeted resolution plans every three
years. On May 6, 2020, the agencies, in recognition of immediate challenges of the COVID-19 pandemic,
55
extended the next submission date by 90 days to September 29, 2021, and subsequently extended the next
submission date again to December 17, 2021 as a Targeted Information Request was added to industry required
submissions. Pursuant to sections 243.6(c) and 381.6(c) of the Resolution Plan Rule, firms must be provided with
no less than 12 months’ notice prior to the date by which a covered company must submit a targeted resolution
plan should a targeted information request be made. The agencies’ Targeted Information Request for 2021
focuses on a covered company’s actions in response to events surrounding the coronavirus. The agencies intend
to use the covered company’s response to the stress caused by the coronavirus to inform their assessment of the
covered company’s resolution-related capabilities and infrastructure.
On January 30, 2020 the Federal Reserve adopted a final rule revising the “controlling influence” prong of
its “control” rules under the Bank Holding Company Act of 1956, as amended. The final rule largely adopts the
proposed rule issued by the FRB in April 2019, reaffirms the Federal Reserve’s conceptual framework for
analyzing “controlling influence,” and rejects a number of banking industry recommendations for liberalization
of the “control” rules. The issue of “control” is a central concept under the Bank Holding Company Act. Among
other things, control determines whether an investor in a banking organization is subject to the requirements and
restrictions of the Bank Holding Company Act, whether a bank holding company’s investment in a company is
permissible and/or subjects the investee company to the requirements and restrictions of the Bank Holding
Company Act, and whether an investor in any depository organization is subject to the Volcker Rule. As a result,
a determination of whether or not an investment constitutes “control” is often determinative of whether an
investment can be made (or, at least, must be restructured to avoid control). The final rule was effective as of
September 30, 2020.
Foreign Account Tax Compliance Act. The Hiring Incentives to Restore Employment Act was enacted in
March 2010 and contains provisions commonly referred to as the Foreign Account Tax Compliance Act, or
FATCA. The U.S. Treasury, acting through the Internal Revenue Service, or the IRS, issued final FATCA
regulations in January 2013. FATCA created a new reporting and withholding regime for U.S. and foreign
financial institutions, or FFIs, and certain non-financial foreign entities, or NFFEs.
In addition, the FATCA framework has been expanded with the introduction of Intergovernmental
Agreements between the U.S. Treasury and foreign governments, which pursue a framework for
intergovernmental cooperation to facilitate the implementation of FATCA. The United States has entered into
various Intergovernmental Agreements with non-U.S. jurisdictions including Japan. FATCA and the
Intergovernmental Agreements became effective from July 1, 2014.
In connection with FATCA, we have assessed and determined if our group entities are U.S. withholding
agents, FFIs, or NFFEs. Each identified U.S. withholding agent and FFI has also evaluated pre-existing and new
entity accounts to the extent required to determine their respective FATCA classifications. We have continuously
developed internal procedures and processes that we believe address the regulatory requirements under FATCA.
However, FATCA compliance has required us to develop extensive systems capabilities and internal
processes to identify and report U.S. account holders who are subject to FATCA requirements, which has been a
complex and costly process requiring significant internal resources. If our procedures and processes are
determined not to be adequate to meet the requirements of FATCA, we could potentially be subject to serious
legal and reputational consequences, including the imposition of withholding taxes on certain amounts payable to
us from U.S. sources, and could be required to expend additional resources to enhance our systems, procedures
and processes and take other measures in response to such consequences.
Capital Adequacy. MUFG Americas Holdings and MUFG Union Bank are required to maintain minimum
capital ratios in accordance with rules issued by the U.S. Federal banking agencies. In July 2013, the U.S.
Federal banking agencies issued final rules to implement the Basel Committee on Banking Supervision’s capital
guidance for U.S. banking organizations, or U.S. Basel III. These rules establish more restrictive capital
definitions, create additional categories and higher risk weightings for certain asset classes and off-balance sheet
56
exposures, higher minimum capital and leverage ratios and capital conservation buffers that will be added to the
minimum capital requirements. These rules supersede the U.S. federal banking agencies’ general risk-based
capital rules generally referred to as Basel I, the advanced approaches rules generally referred to as Basel II,
which are applicable to firms classified as Category II under the tailoring rules issued October 10, 2019, and
leverage rules. MUFG Americas Holdings and MUFG Union Bank continue to be subject to the U.S. Basel III
capital rules which were substantially phased in by January 1, 2019. In addition, on July 22, 2019, U.S. federal
banking agencies jointly issued a final rule which became effective on October 1, 2019. The final rule simplifies
certain aspects of the Basel III capital rules that mostly apply to banking organizations that are not subject to the
advanced approached rules.
The Federal Reserve issued amendments to the Regulatory Capital, Capital Plan, and Stress Test Rules
which became effective on October 1, 2020. Under the amended rules, the Federal Reserve uses the results of its
supervisory stress test to establish the size of a firm’s stress capital buffer requirement, which replaces the static
2.5% of risk-weighted assets component of a firm’s capital conservation buffer requirement. MUFG Americas
Holdings is currently subject to a firm specific stress capital buffer (SCB) of 4.4%. A firm that does not maintain
capital ratios above risk-based regulatory minimums plus its specified SCB requirements faces restrictions on its
capital distributions and discretionary bonus payments. With the application of the specified SCB, MUFG
Americas Holdings capital distributions and discretionary bonus payments are subject to the following regulatory
minimum risk-based capital ratios: (1) 8.9% Common Equity Tier 1 capital ratio, (2) 10.4% Tier 1 capital ratio
and (3) 12.4% total capital ratio. As MUFG Americas Holdings opted into Federal Reserve supervisory stress
testing in 2021, it will receive an amended SCB to take effect on October 1, 2021 which will be informed by its
firm specific 2021 supervisory stress testing results. MUFG Union Bank currently remains subject to the static
2.5% capital conservation buffer requirement. In addition, failure by MUFG Americas Holdings or MUFG Union
Bank to meet minimum risk-based capital ratios of: (1) 4.5% Common Equity Tier 1 capital ratio, (2) 6.0% Tier
1 capital ratio and (3) 8.0% total capital ratio, or to a Tier 1 leverage ratio regulatory minimum requirement of
4% and a well-capitalized prompt corrective action standard of 5%, can result in additional certain mandatory,
and possibly additional discretionary, actions by regulators that, if undertaken, could have a material effect on
MUFG Americas Holdings’ consolidated financial statements.
In October 2015, the FRB proposed long-term debt and TLAC requirements for U.S. globally systemically
important bank holding companies and U.S. IHCs of non-U.S. globally systemically important banks, including
MUFG Americas Holdings. In December 2016, the FRB finalized rules imposing such requirements. Under the
final rules, a covered IHC such as MUFG Americas Holdings is required to maintain a minimum amount of
eligible long-term debt issued to a non-U.S. parent entity that could be cancelled or converted to equity in order
to absorb losses and recapitalize the IHC’s operating subsidiaries at or near the point of resolution. A covered
IHC is also required to maintain a minimum level of eligible TLAC issued to a non-U.S. parent entity consisting
of regulatory capital and eligible long-term debt and maintain related buffers consisting of Common Equity
Tier 1 capital. In addition, an IHC is restricted from issuing short-term debt and certain other types of liabilities
that are structurally senior to eligible long-term debt. MUFG Americas Holdings became subject to these rules on
January 1, 2019. Pursuant to 12 CFR § 252.164(a), we have certified to the FRB that MUFG plans to follow an
SPE resolution strategy, and that MUFG Americas Holdings would therefore be considered a “non-resolution
covered IHC.” MUFG Americas Holdings met applicable TLAC long-term debt and associated additional TLAC
requirements by the initial implementation date of January 1, 2019.
For more information, see “Item 5.B. Operating and Financial Review and Prospects—Liquidity and Capital
Resources—Capital Adequacy” and Note 21 to our audited consolidated financial statements.
Disclosure pursuant to Section 13(r) of the US Securities Exchange Act of 1934
We are disclosing the following information pursuant to Section 13(r) of the Securities Exchange Act of
1934 (Exchange Act), which requires an issuer to disclose whether it or any of its affiliates knowingly engaged in
certain activities, transactions or dealings relating to Iran or with natural persons or entities designated by the
57
U.S. government under specified Executive Orders. The scope of activities that must be reported includes
activities not prohibited by U.S. law and conducted outside the United States in compliance with applicable local
law.
During the fiscal year ended March 31, 2021, our non-U.S. subsidiary, MUFG Bank, engaged in certain
limited business activities with entities in, or affiliated with, Iran, including counterparties owned or controlled
by the Iranian government. Specifically, our non-U.S. banking subsidiary, MUFG Bank, issued letters of credit
and guarantees and provided remittance and other settlement services mainly in connection with customer
transactions related to the purchase and exportation of Iranian crude oil to Japan prior to the expiration of the
Significant Reduction Exception granted to Japan, and in some cases, in connection with other petroleum-related
transactions with Iran by its customers that were exempt from applicable Iran-related sanctions or otherwise
permitted by OFAC. These transactions did not involve U.S. dollars or clearing services of U.S. banks for the
settlement of payments. For the fiscal year ended March 31, 2021, the aggregate fee income relating to these
transactions was less than ¥5 million, representing less than 0.001 percent of our total fee income. In addition,
some Iranian financial institutions and other entities in, or affiliated with, Iran maintained non-U.S. dollar
correspondent accounts and other similar settlement accounts with MUFG Bank outside the United States. In
addition to such accounts, MUFG Bank received deposits in Japan from, and provided settlement services in
Japan to, fewer than 10 Iranian government-related entities and fewer than 100 Iranian government-related
individuals such as Iranian diplomats, and maintains settlement accounts outside the United States for certain
other financial institutions specified in Executive Order 13382, which settlement accounts were frozen in
accordance with applicable laws and regulations. For the fiscal year ended March 31, 2021, the average
aggregate balance of deposits held in these accounts represented less than 0.05 percent of the average balance of
our total deposits. The fee income from the transactions attributable to these account holders was less than
¥5 million, representing less than 0.001 percent of our total fee income.
MUFG Bank recognizes that following the withdrawal in May 2018 by the United States from the Joint
Comprehensive Plan of Action, the United States has imposed secondary sanctions against non-U.S. persons who
engage in or facilitate a broad range of transactions and activities involving Iran. MUFG Bank has taken the
recent sanctions related developments into account and will continue to monitor transactions relating to Iran in
order to comply with applicable U.S. and Japanese regulations as well as U.S., Japanese and other international
sanctions.
58
C. Organizational Structure
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Domestic
MUFG Bank, Ltd.
Overseas
MUFG Americas Holdings Corporation
Bank of Ayudhya Public Company Limited
PT Bank Danamon Indonesia, Tbk.
Domestic
Mitsubishi UFJ Trust and Banking Corporation
Mitsubishi UFJ Real Estate Services Co., Ltd.
Japan Shareholder Services Ltd.
The Master Trust Bank of Japan, Ltd.
MU Investments Co., Ltd.
Mitsubishi UFJ Kokusai Asset Management Co., Ltd.
Mitsubishi UFJ Alternative Investments Co., Ltd.
Overseas
Mitsubishi UFJ Baillie Gifford Asset Management Limited
Mitsubishi UFJ Investor Services & Banking (Luxembourg) S.A.
MUFG Lux Management Company S.A.
Mitsubishi UFJ Asset Management (UK) Ltd.
MUFG Investor Services Holdings Limited
First Sentier Investors Holdings Pty Ltd
Mitsubishi UFJ Trust International Limited
Domestic
Mitsubishi UFJ Securities Holdings Co., Ltd.
Mitsubishi UFJ Morgan Stanley Securities Co., Ltd.
au Kabucom Securities Co., Ltd.
Overseas
MUFG Securities EMEA plc
MUFG Securities Asia Limited
MUFG Securities (Canada), Ltd.
Domestic
Mitsubishi UFJ NICOS Co., Ltd.
Japan Digital Design, Inc.
MUMEC Visionary Design, Ltd.
Global Open Network, Inc.
MUFG Innovation Partners Co., Ltd.
59
Set forth below is a list of our principal consolidated subsidiaries as of March 31, 2021:
Name
Country of
Incorporation
Proportion of
Ownership
Interest
(%)
Proportion of
Voting
Interest
(%)
Japan
Japan
Japan
Japan
Japan
Japan
Japan
Japan
Japan
Japan
Japan
Japan
Japan
Japan
Japan
Japan
Japan
Japan
Japan
USA
Thailand
Indonesia
China
MUFG Bank, Ltd.
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Mitsubishi UFJ Home Loan CREDIT CO., LTD. . . . . . . . . . . . . . . . . .
Mitsubishi UFJ Information Technology, Ltd. . . . . . . . . . . . . . . . . . . .
The Mitsubishi UFJ Factors Limited . . . . . . . . . . . . . . . . . . . . . . . . . . .
Mitsubishi UFJ Trust and Banking Corporation . . . . . . . . . . . . . . . . . .
Mitsubishi UFJ Real Estate Services Co., Ltd. . . . . . . . . . . . . . . . . . . .
Japan Shareholder Services Ltd. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
The Master Trust Bank of Japan, Ltd. . . . . . . . . . . . . . . . . . . . . . . . . . .
MU Investments Co., Ltd. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Mitsubishi UFJ Kokusai Asset Management Co., Ltd. . . . . . . . . . . . . .
Mitsubishi UFJ Alternative Investments Co., Ltd.
. . . . . . . . . . . . . . . .
Mitsubishi UFJ Securities Holdings Co., Ltd. . . . . . . . . . . . . . . . . . . . .
. . . . . . . . . . . . . .
Mitsubishi UFJ Morgan Stanley Securities Co., Ltd.
au Kabucom Securities Co., Ltd. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Mitsubishi UFJ NICOS Co., Ltd.
. . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Japan Digital Design, Inc. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
MUMEC Visionary Design, Ltd.
. . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Global Open Network, Inc. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
MUFG Innovation Partners Co., Ltd.
. . . . . . . . . . . . . . . . . . . . . . . . . .
MUFG Americas Holdings Corporation . . . . . . . . . . . . . . . . . . . . . . . .
Bank of Ayudhya Public Company Limited . . . . . . . . . . . . . . . . . . . . .
. . . . . . . . . . . . . . . . . . . . . . . . . . .
PT Bank Danamon Indonesia, Tbk.
MUFG Bank (China), Ltd.
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
MUFG Bank (Malaysia) Berhad . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Malaysia
Mitsubishi UFJ Baillie Gifford Asset Management Limited . . . . . . . .
Mitsubishi UFJ Investor Services & Banking (Luxembourg) S.A.
MUFG Lux Management Company S.A.
Mitsubishi UFJ Asset Management (UK) Ltd. . . . . . . . . . . . . . . . . . . .
MUFG Investor Services Holdings Limited . . . . . . . . . . . . . . . . . . . . .
First Sentier Investors Holdings Pty Ltd . . . . . . . . . . . . . . . . . . . . . . . .
Mitsubishi UFJ Trust International Limited . . . . . . . . . . . . . . . . . . . . .
MUFG Securities EMEA plc . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
MUFG Securities Asia Limited . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
MUFG Securities (Canada), Ltd. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
UK
Bermuda
Australia
UK
UK
China
Canada
. . . Luxembourg
. . . . . . . . . . . . . . . . . . . . . . . Luxembourg
UK
D. Property, Plant and Equipment
100.00%
99.85%
100.00%
100.00%
100.00%
100.00%
100.00%
46.50%
100.00%
100.00%
100.00%
100.00%
60.00%
51.00%
100.00%
86.11%
60.00%
80.00%
100.00%
100.00%
76.88%
92.47%
100.00%
100.00%
51.00%
100.00%
100.00%
100.00%
100.00%
100.00%
100.00%
100.00%
100.00%
100.00%
100.00%
99.85%
100.00%
100.00%
100.00%
100.00%
100.00%
46.50%
100.00%
100.00%
100.00%
100.00%
60.00%
51.00%
100.00%
86.11%
60.00%
80.00%
100.00%
100.00%
76.88%
92.47%
100.00%
100.00%
51.00%
100.00%
100.00%
100.00%
100.00%
100.00%
100.00%
100.00%
100.00%
100.00%
As of March 31,
2020
2021
(in millions)
Land . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Buildings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Equipment and furniture . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Leasehold improvements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Construction in progress . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
¥ 380,477
782,367
623,676
310,957
35,594
¥ 379,560
765,341
564,273
303,164
46,513
Total
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Less accumulated depreciation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
2,133,071
1,203,542
2,058,851
1,183,859
Premises and equipment—net . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
¥ 929,529
¥ 874,992
60
Our registered address is 7-1, Marunouchi 2-chome, Chiyoda-ku, Tokyo 100-8330, Japan. As of March 31,
2021, we and our subsidiaries conducted our operations either in premises we owned or in properties we leased.
The following table presents the book values of our material offices and other properties as of March 31,
2021:
Owned land . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Owned buildings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Book Value
(in millions)
¥379,560
236,003
The buildings and land we own are primarily used by us and our subsidiaries as offices and branches. Most
of the buildings and land we own are free from material encumbrances.
During the fiscal year ended March 31, 2021, we invested approximately ¥116,707 million in premises and
equipment, primarily for office renovations and relocation.
Item 4A. Unresolved Staff Comments.
None.
61
Item 5. Operating and Financial Review and Prospects.
The following discussion and analysis should be read in conjunction with “Item 3.A. Key Information—
Selected Financial Data,” “Selected Statistical Data” and our consolidated financial statements and related
notes.
Business Environment
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Recent Developments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Critical Accounting Estimates . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Accounting Changes and Recently Issued Accounting Pronouncements . . . . . . . . . . . . . . . . . . . . . . . . . . . .
A. Operating Results . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Results of Operations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Business Segment Analysis . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Geographic Segment Analysis . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Effect of Change in Exchange Rates on Foreign Currency Translation . . . . . . . . . . . . . . . . . . . . . . .
Page
63
67
68
71
72
72
81
86
87
B. Liquidity and Capital Resources . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Financial Condition . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Capital Adequacy . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Non-exchange Traded Contracts Accounted for at Fair Value . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
87
87
100
105
C. Research and Development, Patents and Licenses, etc.
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
106
D. Trend Information . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
106
E. Off-Balance Sheet Arrangements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
106
F. Tabular Disclosure of Contractual Obligations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
107
G. Safe Harbor . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
107
62
Business Environment
Through our subsidiaries and affiliated companies, we engage in a broad range of financial businesses and
services, including commercial banking, investment banking, trust assets and asset management services,
securities businesses and credit card businesses, and provide related services to individuals primarily in Japan,
the United States, Thailand and Indonesia and to corporate customers around the world. Our results of operations
and financial condition are exposed to changes in various external economic factors, including:
‰
‰
‰
‰
general economic conditions,
interest rates,
foreign currency exchange rates, and
stock prices.
Recent Developments and Prospects
In the fiscal year ended March 31, 2021, our credit-related expenses increased as we provided for credit
losses in light of economic uncertainty created by the COVID-19 pandemic, and our net interest income
decreased as the central banks of major economies lowered interest rates as a measure to counter the negative
impact of the COVID-19 pandemic. Despite these and other impacts of the pandemic, our results of operations
improved, mainly reflecting higher stock prices at the end of March 2021 in Japan and the United States.
However the COVID-19 pandemic may have a further adverse impact on our business and results of
operations as economic and corporate activity deteriorates in Japan and around the world and financial markets
remain volatile. More specifically, we currently expect that the COVID-19 pandemic may have a further adverse
impact on, among other things,
‰
‰
‰
‰
‰
‰
net interest income, primarily due to lower interest rates in Japan or fluctuations in various markets,
fees and commissions income mainly due to decreases in the value of assets under custody or
management, declines in customer investments or other transactions, or changes in consumer spending
trends, as any of these negative factors may be exacerbated by, among other things, weakened appetite
for investments or other transaction under uncertain or volatile market conditions or governmental
restrictions on business activities,
net investment securities losses primarily due to losses on sales of securities or a decline in the value of
our securities portfolio,
net equity in earnings of equity method affiliates if the financial performance of our equity method
affiliates deteriorates,
other income and expenses, including impairment losses on goodwill or other intangible assets, due to
weaker business prospects and other factors causing deterioration in the business environment, and
regulatory capital ratios due to, among other factors, an increase in risk-weighted assets such as loans
and a decrease in the value of our equity securities portfolio.
In addition, there is a risk that we will have to recognize credit losses if there is a further deterioration in the
credit quality of our borrowers, including small and medium-sized enterprises to which we provided loans under
temporary government financial assistance programs particularly after such programs expire.
While significant uncertainty remains as to the full extent of the impact of the COVID-19 pandemic, we
currently expect the economy to be generally on a gradual recovering trend as economic activity resumes with
the implementation of various preventive and remedial measures such as vaccination, restrictions on activity, and
economic measures. However, as economic activity continues to be affected by the implementation and
63
effectiveness of measures to prevent the expansion of the pandemic, we expect the pace of economic recovery
will be moderate and may be different from region to region. Under these uncertain circumstances, our current
expectations may be significantly different from actual results. We intend to continue to closely monitor, and
endeavor to effectively deal with, further developments relating to the pandemic. For more information, see
“Item 3.D. Key Information—Risk Factors.” As well as “Forward-Looking Statements.
General Economic Conditions
The global economy suffered a significant downturn in the first half of the fiscal year ended March 31, 2021
as a result of the introduction of strict public health measures to restrict economic activities, with the priority
given to the prevention of the spread of the COVID-19 in each country and region. Following the first wave of
economic downturns, public health measures were eased, and economic activities resumed. Shortly after the
resumption, the economy began to rebound in many countries and regions. However, amid the remaining
downward pressure on the economy due to concerns over the pandemic, the pace of economic recovery generally
slowed down while the infection rate fluctuated to varying degrees depending on the country or region.
Japan’s economy generally followed the global economic trends, showing a mixture of negative and positive
trends, during the fiscal year ended March 31, 2021. Japan’s real gross domestic product, or GDP, contracted by
8.3% for the quarter ended June 30, 2020, grew by 5.3% for the quarter ended September 30, 2020 and 2.8% for
the quarter ended December 31, 2020, and contracted by 1.3% for the quarter ended March 31, 2021 on a
quarter-on-quarter basis. These fluctuations mainly reflected a significant decrease in private consumption under
the state of emergency declared by the national government during April 2020 and May 2020 due to the
COVID-19 pandemic, a partial rebound under various private consumption stimulus measures implemented by
the national and local governments during the subsequent months, and the national state of emergency reinstated
during January 2021 and March 2021 following another wave of infection . On a year-on-year basis, Japan’s real
GDP contracted by 10.1% for the quarter ended June 30, 2020, 5.6% for the quarter ended September 30, 2020,
1.1% for the quarter ended December 31, 2021, and 1.9% for the quarter ended March 31, 2021. Japan’s
Consumer Price Index, or CPI, fluctuated between negative 0.5% and positive 0.5% on a month-on-month basis
and between negative 1.2% and positive 0.4% on a year-over-year basis during the fiscal year ended March 31,
2021. The unemployment rate in Japan remained low while slightly increasing to 3.1% in October and
subsequently decreasing to 2.7% in March 2021. According to Teikoku Databank, a Japanese research
institution, the number of companies that filed for legal bankruptcy in Japan between April 2020 and March 2021
was 7,314, a 13.8% decrease from the same period of the previous year. The total liabilities of companies that
filed for legal bankruptcy during the fiscal year ended March 31, 2021 were ¥1,217 billion, a decrease of 0.1%
from the previous fiscal year. The Japanese economy remains subject to the impact of the COVID-19 pandemic,
continuing deflationary pressure, increasing public debt, intensifying trade conflicts and global competition,
declining domestic population, downward pressure on private consumption, and various other factors that could
adversely affect economic conditions in Japan.
The U.S. economy underwent similar downward and upward trends but to larger degrees in some measures
during the fiscal year ended March 31, 2021, with U.S. real GDP contracting by 31.4% for the quarter ended
June 30, 2020 and growing by 33.4% for the quarter ended September 30, 2020, 4.3% for the quarter ended
December 31, 2020, and 6.4% for the quarter ended March 31, 2021, on a quarter-on-quarter annualized basis.
On a year-on-year basis, U.S. real GDP contracted by 9.0% for the quarter ended June 30, 2020, 2.8% for the
quarter ended September 30, 2020 and 2.4% for the quarter ended December 31, 2020 and grew by 0.4% for the
quarter ended March 31, 2021. The unemployment rate rose significantly to 14.8% in April 2020 due to the
COVID-19 pandemic and subsequently improved but still remained relatively high at 6.0% in March 2021,
particularly compared to 4.4% in March 2020. The long-term prospects of the U.S. economy remain uncertain in
light of the impact of the COVID-19 pandemic, changes in the political leadership and the government’s
economic, monetary, trade and foreign relations policies, and various other factors.
64
The Eurozone economy also contracted and then exhibited signs of expansion during the fiscal year ended
March 31, 2021, with Eurozone real GDP contracting by 11.6% for the quarter ended June 30, 2020, growing by
12.5% for the quarter ended September 30, 2020, and contracting by 0.7% for the quarter ended December 31,
2021, and 0.6% for the quarter ended March 31, 2021, on a quarter-on-quarter basis. On a year-over-year basis,
Eurozone real GDP contracted by 14.6% for the quarter ended June 30, 2020, 4.1% for the quarter ended
September 30, 2020, 4.9% for the quarter ended December 31, 2021, and 1.8% for the quarter ended March 31,
2021. The unemployment rate in the Eurozone increased to 8.7% in September 2020 and subsequently improved
but still remained relatively high at 8.1% in March 2021, particularly compared to 7.1% in March 2020. The
Eurozone economy remains subject to various uncertainties, including the impact of the COVID-19 pandemic,
the process and ramifications of the United Kingdom’s withdrawal from the European Union, concerns over
Italy’s fiscal policy and health, and other factors.
In Asia excluding Japan, economic conditions in ASEAN (Association of Southeast Asian Nations) and
NIEs (Newly Industrializing Economies) generally improved but the economic growth remained relatively
modest during the fiscal year ended March 31, 2021. The economic conditions of these regions remain subject to
various uncertainties, including the impact of the COVID-19 pandemic and fluctuations in the global and local
economies as well as geopolitical developments.
Interest Rates
Interest rates remained at historical low levels in Japan under the Bank of Japan’s monetary policy. The
yield on 10-year Japanese government bonds fluctuated between negative 0.045% and positive 0.168% during
the fiscal year ended March 31, 2021. In March 2020, the Bank of Japan introduced a package of COVID-19
emergency measures, including those designed to facilitate corporate financing through lending up to ¥8.0 trillion
yen against corporate debt collateral at a 0% interest rate with maturities up to one year and to increase the limit
on purchases of commercial paper and corporate bonds by ¥2.0 trillion to ¥7.4 trillion. In April 2020, the Bank of
Japan expanded the emergency measure package by raising the lending limit to ¥23.0 trillion while adding
household debt as eligible collateral, increasing the limit on purchases of commercial paper and corporate bonds
by ¥13.0 trillion to ¥20.4 trillion, and eliminating the limit on purchases of Japanese government bonds.
In the United States, following the Federal Open Market Committee meeting in June 2020, most of the FRB
members indicated their willingness to maintain the rate at the current level until the end of the calendar year
2022 in light of increasing uncertainty in the economic outlook. The 10-year U.S. Treasury bond yield increased
from 0.670% at the end of March 2020 to 1.742% at the end of March 2021, while fluctuating between 0.508%
and 1.742% during the period. The yield currently fluctuates around 1.631%.
Foreign Currency Exchange Rates
The Japanese yen depreciated against the U.S. dollar from ¥108.83 to the U.S. dollar as of March 31, 2020
to ¥110.71 to the U.S. dollar as of March 31, 2021. The Japanese yen has since been fluctuating around ¥109 to
the U.S. dollar since April 2021.
The Japanese yen was on a generally depreciating trend against the euro during the fiscal year ended
March 31, 2021, with the exchange rate being ¥129.80 to the euro as of March 31, 2021 compared to ¥119.55 to
the euro as of March 31, 2020. The Japanese yen has been fluctuating around ¥133 to the euro since April 2021.
The Japanese yen was on a generally depreciating trend against the Thai baht during the fiscal year ended
March 31, 2021, with the exchange rate being ¥3.54 to the Thai baht as of March 31, 2021 compared to ¥3.34 to
the Thai baht as of March 31, 2020. The Japanese yen has been fluctuating around ¥3.47 to the Thai baht since
April 2021.
65
Stock Prices
The closing price of the Nikkei Stock Average, which is the average of 225 blue chip stocks listed on the
Tokyo Stock Exchange, increased from ¥18,917.01 on March 31, 2020 to ¥29,178.80 on March 31, 2021. The
closing price of the Nikkei Stock Average reached ¥30,467.75, the highest closing price since August 1990, on
February 16, 2021. The closing price of the Nikkei Stock Average has since risen and has been fluctuating
around ¥28,300.
66
Recent Developments
During the fiscal year ended March 31, 2021, we engaged in transactions to ensure adequate capital base
and structure, while pursuing strategies to improve our capital management and streamline our group companies.
Japan faces some challenges such as a declining birth rate, an aging society and a shrinking population, while
low growth has become normalized throughout the world. The environment we operate in has been affected by
issues including the COVID-19 pandemic, growing awareness of environmental and social issues, and advances
in digital technologies that enable the entry of new competitors in the financial sector. These developments are
changing the business environment in significant ways and with unprecedented speed. MUFG seeks to meet
these changes with clear visions and to make the most of these challenges as opportunities for growth. Under our
medium-term business plan for the three years starting in the fiscal year ending March 31, 2022, we aim to
leverage our financial and digital strengths to provide value to our stakeholders around the world.
Issuances and Repurchases of TLAC Eligible Senior Debt Securities
During and after the fiscal year ended March 31, 2021, we issued $4.5 billion, or ¥498.2 billion, and
€0.5 billion, or ¥64.9 billion, aggregate principal amount of external TLAC eligible senior debt securities. As of
March 31, 2021, our external TLAC ratios were 18.94% on a risk-weighted assets basis and 8.96% on a leverage
exposure basis. We are required to maintain external TLAC ratios of 16% on a risk-weighted assets basis and 6%
on a leverage exposure basis as of March 31, 2021 and 18% on a risk-weighted assets basis and 6.75% on a
leverage exposure basis from March 31, 2022. See “Capital Adequacy” below and “Item 4.B. Information on the
Company—Business Overview—Supervision and Regulation—Japan—Total loss-absorbing capacity.”
In June 2021, we issued €0.5 billion, or ¥66.9 billion aggregate principal amount of external TLAC eligible
senior debt securities under our medium term note programme.
Issuances of Basel III-Compliant Domestic Subordinated Bonds
In October 2020, we issued, in a public offering in Japan, ¥60.0 billion aggregate principal amount of
unsecured perpetual subordinated Additional Tier 1 notes. These notes are subject to our discretion to cease
interest payments and a write-down of the principal upon the occurrence of certain events, including when our
Common Equity Tier 1 capital ratio declines below 5.125%, when we are deemed to be at risk of becoming
non-viable or when we become subject to bankruptcy proceedings, but, following any write-down, the principal
may be reinstated to the extent permitted by the Japanese banking regulator.
In May 2021, we issued, in a public offering in Japan, ¥20.0 billion aggregate principal amount of unsecured
subordinated term Tier 2 notes. We can be exempted from the obligation to pay principal and interest on the
notes upon reaching the point of non-viability (PONV). According to the FSA’s approach, PONV will be deemed
to have been reached when the Prime Minister of Japan, following deliberation by Japan’s Financial Response
Crisis Council pursuant to the Deposit Insurance Act of Japan (“DIA”), confirms that Specified Item 2 Measures
need to be applied to MUFG under circumstances where its liabilities exceed or are likely to exceed its assets, or
it has suspended or is likely to suspend payment of its obligations.
Sale of Shares in AMP Capital Holdings
In September 2020, Mitsubishi UFJ Trust and Banking sold all of the ordinary shares it held in AMP Capital
Holdings Limited, an Australia-based asset manager, for approximately AU$460 million, or approximately
¥35.9 billion. The sale was part of our strategy to improve our capital management in light of recent changes in
international financial regulations and the business environment.
67
Merger between Mitsubishi UFJ Morgan Stanley Securities and Mitsubishi UFJ Morgan Stanley PB
Securities
In August 2020, Mitsubishi UFJ Morgan Stanley Securities and its subsidiary, Mitsubishi UFJ Morgan
Stanley PB Securities Co., Ltd., completed their merger whereby Mitsubishi UFJ Morgan Stanley Securities was
the surviving company. Through the merger, Mitsubishi UFJ Morgan Stanley Securities aims to enhance its
wealth management business.
Mitsubishi UFJ NICOS System Integration Plan
In April 2021, Mitsubishi UFJ NICOS announced a plan to integrate its credit card settlement systems that
have been maintained separately for various credit card brands. Based on a fundamental review of its system
integration plan in March 2019, Mitsubishi UFJ NICOS plans to integrate the systems currently used for the DC
credit card brand and the NICOS credit card brand into the system currently used for the MUFG card brand. The
plan has an estimated budget of approximately ¥140 billion through the end of calendar year 2030. The plan may
be modified to flexibly respond to changes in the business environment.
Critical Accounting Estimates
Our consolidated financial statements are prepared in accordance with U.S. GAAP. Certain accounting
policies require management to make difficult, complex or subjective judgments regarding the valuation of assets
and liabilities. The accounting policies are fundamental to understanding our operating and financial review and
prospects. The notes to our consolidated financial statements provide a summary of our significant accounting
policies. The following is a summary of the critical accounting estimates:
Allowance for Credit Losses
The allowance for credit losses represents an estimate of the credit losses that are expected over the life of
the financial instrument or exposure and has three components: the allowance for loans measured on a collective
basis, when similar risk characteristics exist, the allowance for loans measured on an individual basis, for loans
that do not share similar risk characteristics, and the allowance for losses on unfunded credit commitments,
which is included in other liabilities.
The methodology for estimating credit losses uses relevant available information relating to past events,
current conditions, and reasonable and supportable forecasts. Historical credit loss experience provides the basis
for the estimation of expected credit losses. Adjustments to historical loss information are made over a forecast
period to account for differences between current and expected future conditions and those reflected in historical
loss information. Beyond the forecast period, estimated expected credit losses revert to average historical loss
experience. The allowance for credit losses involves significant judgment on a number of assumptions including
the assessment of risk characteristics, assignment of borrowers’ internal credit ratings, valuation of collateral,
expectations of future economic conditions and the development of qualitative adjustments. We divide our loan
portfolio into the following segments—Commercial, Residential, Card, MUFG Americas Holdings, Krungsri,
and Other—based on the segments used to determine the allowance for credit losses.
At March 31, 2021, we had ¥85,925.5 billion, ¥8,495.8 billion and ¥6,604.6 billion of loans in the
Commercial segment, the MUFG Americas Holdings and the Krungsri segments respectively, and recorded an
allowance for credit losses against these loans of ¥734.6 billion, ¥131.8 billion and ¥293.4 billion respectively.
The determination of the allowance for credit losses for the Commercial segment required management to
make significant judgements, due to the subjectivity and uncertainty associated with the determination of
borrowers’ internal credit ratings, which were highly dependent on the estimation of borrower performance and
business sustainability, particularly in cases in which the borrowers were experiencing weaknesses in their
68
business performance. Particularly significant judgment was required to be made when these borrower’s
performance and business sustainability were affected by changes in the borrowers’ external and internal
business environment, including the COVID-19 pandemic impacts on certain industries. Key elements relating to
the policies and discipline used in determining the allowance for credit losses for the Commercial segment are
our credit classification and the related borrower categorization process. Each of these components is determined
based on estimates subject to change when actual events occur. The categorization is based on conditions that
may affect the ability of borrowers to service their debt, taking into consideration current financial information,
historical payment experience, credit documentation, public information, analyses of relevant industry segments
and current trends. In determining the appropriate level of allowance, we evaluate the probable loss by category
of the loan based on its type and characteristics.
The allowance for credit losses is estimated using quantitative models that incorporate economic forecast
scenarios through the use of macroeconomic variables. These variables include, but are not limited to,
unemployment rates and gross domestic product, which have been correlated with historical credit losses. The
scenarios that are chosen, and the weightings given to each scenario, depend on a variety of factors including
recent economic conditions and views of internal as well as third-party economists. The determination of the
allowance for credit losses for the Commercial, the MUFG Americas Holdings and the Krungsri segments
required management to make significant judgements due to the subjectivity and uncertainty associated with
expectations of future economic conditions. Particularly significant judgment was required to be made to develop
certain key macroeconomic variables in selected economic forecast scenarios and weightings given to each
scenario, to capture the heightened volatility and uncertainty in future economic conditions including the
duration and severity of the economic downturn caused by the COVID-19 pandemic.
The allowance for credit losses includes qualitative adjustments to cover losses that are expected but were
not be reflected in the modeled allowance. The determination of the allowance for credit losses for the MUFG
Americas Holdings and the Krungsri segment required management to make significant judgements due to the
subjectivity and uncertainty associated with the development of qualitative adjustments, including model input
adjustments and overlays implemented as a result of COVID-19. Particularly significant judgment was required
to be made to develop certain qualitative adjustments to capture the heightened volatility and uncertainty in the
economy and events due to the COVID-19 pandemic.
Determining the adequacy of the allowance for credit losses requires the exercise of considerable judgment
and the use of estimates, such as those discussed above. Our actual losses could be more or less than the
estimates. To the extent that actual losses differ from management’s estimates, additional provisions for credit
losses may be required that would adversely impact our operating results and financial condition in future
periods. For further information regarding our methodologies used in establishing the allowance for credit losses
by portfolio segments and allowance for credit losses policies, see Note 1 to our consolidated financial
statements and “—B. Liquidity and Capital Resources—Financial Condition—Loan Portfolio.” For more
information on our credit and borrower ratings, see “Item 11. Quantitative and Qualitative Disclosures about
Credit, Market and Other Risk—Credit Risk Management.”
Allowance for Repayment of Excess Interest
We maintain an allowance for repayment of excess interest based on our estimate of the potential liability
exposure. Our estimate of the potential liability exposure represents the estimated amount of claims for
repayment of excess interest to be received in the future. We expect that any such claim will be made on the basis
of a 2006 ruling of the Japanese Supreme Court, or the Ruling. Under the Ruling, lenders are generally required
to reimburse borrowers for interest payments made in excess of the limits stipulated by the Interest Rate
Restriction Act upon receiving claims for reimbursement, despite the then-effective provisions of the Law
Concerning Lending Business that exempted a lender from this requirement if the lender provided required
notices to the borrower and met other specified requirements, and the borrower voluntarily made the interest
payment.
69
While we have not entered into any consumer loan agreement after April 2007 that imposes an interest rate
exceeding the limits stipulated by the Interest Rate Restriction Act, we need to estimate the number of possible
claims for reimbursement of excess interest payments. To determine the allowance for repayment of excess
interest, we analyze the historical number of repayment claims we have received, the amount of such claims,
borrowers’ profiles, the actual amount of reimbursements we have made, management’s future forecasts, and
other events that are expected to possibly affect the repayment claim trends in order to arrive at our best estimate
of the potential liability. We believe that the provision for repayment of excess interest is adequate and the
allowance is at the appropriate amount to absorb probable losses, so that the impact of future claims for
reimbursement of excess interest will not have a material adverse effect on our financial position and results of
operations. The allowance is recorded as a liability in Other liabilities.
For further information, see Note 26 to our consolidated financial statements and “Item 3.D. Key
Information—Risk Factors—Operational Risk—Because of our loans to consumers and our shareholdings in
companies engaged in consumer lending, changes in the business or regulatory environment for consumer
finance companies in Japan may further adversely affect our financial results.”
Impairment on Goodwill
As part of our global strategies, we have executed multiple large-scale acquisitions, investments and capital
alliances, and recorded goodwill resulting from these business combinations. U.S. GAAP requires us to test
goodwill for impairment at least annually, or more frequently if events or changes in circumstances indicate that
goodwill may be impaired, using a process that compares the carrying amount of a reporting unit with its fair
value. An impairment loss is recognized to the extent that the carrying amount of a reporting exceeds its fair
value, but not exceeding the total amount of goodwill allocated to that reporting unit. A reporting unit is an
operating segment or component of an operating segment that constitutes a business for which discrete financial
information is available and is regularly reviewed by management. The fair value of a reporting unit is defined as
the amount at which the unit as a whole could be bought or sold in a current transaction between willing parties.
Our consolidated goodwill balance was ¥370.9 billion at March 31, 2021, which was allocated to our reporting
units. We determined the fair values of the MUFG Americas Holdings Corporation (“MUAH”) reporting units
within the Global Commercial Banking Business Group segment and Global Corporate & Investment Banking
Business Group segment (“MUAH reporting units”) using a combination of the income and the market
approaches. The income approach determined the fair value of the reporting units by discounting management’s
projections of each reporting unit’s cash flows, including a terminal value to estimate the fair value of cash flows
beyond the final year of projected results, using a discount rate derived from the Capital Asset Pricing Model.
The market approach incorporates comparable public company price to tangible book value and price to earnings
multiples. The principal factors used in the discounted cash flow analysis requiring judgment are the projected
future operating cash flows based on forecasted future income. We determined that the carrying values of MUAH
reporting units exceeded the fair values as of the measurement date, resulting in the impairment loss on goodwill
of ¥147.6 billion for the fiscal year ended March 31, 2021.
The determination of the fair value of these reporting units requires management to make significant
judgments related to significant assumptions due to the subjectively and uncertainty associated with the
assumptions. The significant assumptions included projected future operating cash flows based on forecasted
future income in the income approach for MUAH reporting units, specifically the Commercial Banking and Real
Estate Industries business unit and the Global Corporate & Investment Banking – U.S. business unit.
Valuation of Financial Instruments
We measure certain financial assets and liabilities at fair value. The majority of such assets and liabilities
are measured at fair value on a recurring basis, including trading securities, trading derivatives and investment
securities. In addition, certain other assets and liabilities are measured at fair value on a non-recurring basis,
including held for sale loans which are carried at the lower of cost or fair value, collateral dependent loans and
nonmarketable equity securities subject to impairment.
70
We have elected the fair value option for certain foreign securities classified as available-for-sale debt
securities, whose unrealized gains and losses are reported in income, and marketable equity securities.
The guidance on the measurement of fair value defines fair value as the price that would be received to sell
an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement
date. We have an established and documented process for determining fair value in accordance with the
guidance. To determine the fair value, we use quoted prices which include those provided from pricing vendors,
where available. We generally obtain one price or quote per instrument and do not adjust it to determine the fair
value of the instrument. We perform internal price verification procedures to ensure that the prices and quotes
provided from the independent pricing vendors are reasonable. Such verification procedures include a
comparison of pricing sources and analysis of variances among pricing sources. These verification procedures
are periodically performed by independent risk management departments. For collateralized loan obligations, or
CLOs, backed by general corporate loans, the fair value is determined by weighting the internal model valuation
and the non-binding broker-dealer quotes. If quoted prices are not available to determine the fair value of
derivatives, the fair value is based upon valuation techniques that use, where possible, current market-based or
independently sourced parameters, such as interest rates, yield curves, foreign exchange rates, volatilities and
credit curves. The fair values of trading liabilities are determined by discounting future cash flows at a rate which
incorporates our own creditworthiness. In addition, valuation adjustments may be made to ensure that the
financial instruments are recorded at fair value. These adjustments include, but are not limited to, amounts that
reflect counterparty credit quality, funding cost, liquidity risk, and model risk. Our financial models are validated
and periodically reviewed by risk management departments independent of divisions that created the models.
For a further discussion of the valuation techniques applied to the material assets or liabilities, see Note 31
to our consolidated financial statements.
Accounting Changes and Recently Issued Accounting Pronouncements
See “Accounting Changes” and “Recently Issued Accounting Pronouncements” in Note 1 to our
consolidated financial statements.
71
A. Operating Results
The following discussion relates to our operating results for the fiscal years ended March 31, 2021 compared to
our operating results for the fiscal year ended March 31, 2020, unless otherwise noted. For the discussion on our
operating results for the fiscal year ended March 31, 2019, including certain comparative discussion on our
operating results for the fiscal years ended March 31, 2019 and 2020, please refer to “Item 5. Operating and
Financial Review and Prospectus—5.A. Operating Results” in our annual report on Form 20-F for the fiscal
year ended March 31, 2020, filed with the SEC on July 10, 2020.
Results of Operations
Fiscal years ended March 31,
2020
2021
% Change
(in billions, except percentages)
Interest income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Interest expense . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
¥3,927.1
1,684.3
¥2,752.0
747.9
(29.9)%
(55.6)
Net interest income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Provision for credit losses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Non-interest income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Non-interest expense . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Income before income tax expense . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Income tax expense . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
2,242.8
321.7
1,875.8
3,363.6
433.3
114.6
Net income before attribution of noncontrolling interests . . . . . . . . . . .
Net income attributable to noncontrolling interests . . . . . . . . . . . . . . . .
¥ 318.7
12.7
Net income attributable to Mitsubishi UFJ Financial Group . . . . . . . . .
¥ 306.0
2,004.1
484.2
3,157.7
3,069.3
1,608.3
444.9
¥1,163.4
46.1
¥1,117.3
(10.6)
50.5
68.3
(8.7)
271.3
288.6
265.0%
261.3
265.2%
Net income attributable to Mitsubishi UFJ Financial Group increased to over ¥1.0 trillion mainly due to an
increase in non-interest income reflecting the higher fair value of marketable equity securities and a decrease in
non-interest expense reflecting smaller goodwill impairment loss. The full-year consolidation of Bank Danamon
and First Sentier Investors also contributed to the increase in net income.
Net interest income decreased 10.6% mainly due to declines in interest rates on loans and deposits in other
banks. Average interest rate on total interest-earning assets declined 0.57 percentage points. Especially on
foreign interest-earning assets, average interest rate declined 0.98 percentage point. In addition, average balance
of foreign interest-earning assets decreased 1.0%.
Provision for credit losses increased 50.5% due to the effect of adopting new accounting guidance under
which provisioning reflects credit losses that are expected over the life of financial instruments, including loans,
with adjustments for macroeconomic variables and other factors. For the fiscal year ended March 31, 2021, such
adjustments reflected increased volatility and uncertainty in the economy under the COVID-19 pandemic.
Non-interest income increased 68.3% while non-interest expense decreased 8.7% primarily for reasons
discussed above.
72
Net Interest Income
Fiscal years ended March 31,
2020
2021
% Change
Average
balance(2)
Interest
income
(expense)
Average
rate
Average
balance(2)
Interest
income
(expense)
Average
rate
Average
balance(2)
Interest
income
(expense)
(in billions, except percentages)
Average
rate 2021
minus
2020
(percentage
points)
Interest-earning assets:
Domestic . . . . . . . . . . . ¥145,258.9 ¥
Foreign . . . . . . . . . . . .
101,024.8
998.4
2,928.7
0.69% ¥168,888.8 ¥ 829.1
1,922.9
100,027.7
2.90
0.49% 16.3% (17.0)% (0.20)
(0.98)
1.92
(34.3)
(1.0)
Total . . . . . . . . . . ¥246,283.7 ¥ 3,927.1
1.59% ¥268,916.5 ¥2,752.0
1.02%
9.2% (29.9)% (0.57)
Financed by:
Interest-bearing liabilities:
Domestic . . . . . . . . . . . ¥172,878.9 ¥ (473.4) 0.27% ¥198,978.3 ¥ (283.2) 0.14% 15.1% (40.2)% (0.13)
(1.15)
Foreign . . . . . . . . . . . .
(1,210.9) 1.84
(464.7) 0.69
66,934.7
65,982.7
(61.6)
1.4
Total . . . . . . . . . .
238,861.6
(1,684.3) 0.71
265,913.0
(747.9) 0.28
11.3
(55.6)
(0.43)
Non-interest-bearing
liabilities . . . . . . . . . . . . .
7,422.1
—
3,003.5
—
(59.5)
Total . . . . . . . . . . ¥246,283.7
0.68% ¥268,916.5
0.28%
9.2%
—
(0.41)
Net interest income and
interest rate spread . . . . .
Net interest income as a
percentage of total
interest-earning assets . . .
¥ 2,242.8
0.88%
¥2,004.1
0.74%
(10.6)% (0.14)
0.91%
0.75%
(0.16)
Effect of Volume and Rate Changes on Net Interest Income
Fiscal Year Ended March 31, 2020
versus
Fiscal Year Ended March 31, 2021
Increase (decrease)
due to changes in
Volume(1)
Rate(1)
Net change
Domestic . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Foreign . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
¥ 36,673
(86,895)
(in millions)
¥ (15,848) ¥ 20,825
(259,530)
(172,635)
Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
¥(50,222) ¥(188,483) ¥(238,705)
Notes:
(1) Volume/rate variance is allocated based on the percentage relationship of changes in volume and changes in rate to the total “net
change.”
(2) Average balances are generally based on a daily average while a month-end average is used for certain average balances when it is not
practicable to obtain applicable daily averages.
73
Net interest income decreased 10.6% primarily due to lower average interest rates on interest-earning assets.
Our average interest rate spread (which is the average interest rate on interest-earning assets less the average
interest rate on interest-bearing liabilities) decreased 0.14 percentage points.
The central banks of major economies, including the FRB, lowered interest rates as a monetary policy
measure in response to the COVID-19 pandemic. As a result, average interest rates on foreign interest-bearing
assets decreased 0.98 percentage points, and foreign interest income on interest-earning assets decreased 34.3%.
Foreign interest expense decreased 61.6% primarily as a result of a 1.15 percentage point decrease in average
interest rates on foreign interest-bearing liabilities. However, the impact of the interest rate decrease on foreign
interest income was larger than the impact of the interest rate decrease on foreign interest expense because the
average balance of foreign interest-earning assets was approximately 1.5 times the average balance of foreign
interest-bearing liabilities. The average balance of foreign interest-bearing liabilities increased 1.4%, while the
average balance of foreign interest-earning assets decreased 1.0% mainly due to lower volumes of loans.
Domestic interest income decreased 17.0% due to lower average interest rates, despite a 16.3% increase in
the average balance of domestic interest-earning assets, including short-term Japanese government bonds.
Domestic interest expense decreased 40.2% due to lower short-term interest rates.
Provision for (reversal of) credit losses
We recorded ¥484.2 billion of provision for credit losses for the fiscal year ended March 31, 2021,
compared to ¥321.7 billion of provision for credit losses for the previous fiscal year. Provision for credit losses
increased by ¥162.5 billion mainly due to increases in the Commercial segment, the MUFG Americas Holdings
segment and the Krungsri segment. The provision for credit losses for the fiscal year ended March 31, 2021 was
recorded based on management’s current estimate of expected credit losses on loans by considering a broader
range of reasonable and supportable information, including macroeconomic variables such as GDP growth and
unemployment rates, under new accounting guidance which we adopted on April 1, 2021. The increase in
provision for credit losses was substantially driven by the impact of the COVID-19 pandemic and the expected
deterioration in the economic environment. In the Commercial segment, we recorded provision for credit losses
particularly for borrowers in industry sectors that are susceptible to the impact of the COVID-19 pandemic such
as the retail services, aircraft finance, and oil and gas sectors. In addition, with a decline in car demand, we
recorded provision for credit losses for large auto-related companies in Japan. In the MUFG Americas Holdings
segment, provision for credit losses increased due to deterioration in the credit quality of borrowers in the
residential real estate sector and other industry sectors adversely affected by the COVID-19 pandemic including
the commercial real estate sector. In the Krungsri segment, provision for credit losses increased due to
deterioration in the credit quality of retail customers such as borrowers of automobile loans and mortgage loans.
74
Non-Interest Income
Fees and commissions income:
Fiscal years ended March 31,
2020
2021
% Change
(in billions, except percentages)
Fees and commissions on deposits . . . . . . . . . . . . . . . . . . . . . . . . . .
Fees and commissions on remittances and transfers . . . . . . . . . . . .
Fees and commissions on foreign trading business . . . . . . . . . . . . .
Fees and commissions on credit card business . . . . . . . . . . . . . . . . .
Fees and commissions on security-related services . . . . . . . . . . . . .
Fees and commissions on administration and management services
for investment funds . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Trust fees . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Guarantee fees . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Insurance commissions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Fees and commissions on real estate business . . . . . . . . . . . . . . . . .
Other fees and commissions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
¥
53.7
169.4
66.0
238.1
221.5
184.6
119.9
46.3
44.4
49.8
308.4
¥
50.1
165.3
79.4
199.6
244.0
235.5
125.7
43.9
42.1
48.1
293.6
(6.7)%
(2.4)
20.3
(16.2)
10.2
27.6
4.8
(5.2)
(5.2)
(3.4)
(4.8)
Total
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
. . . . . . . . . . . . . . . . . . . . . . . . . . .
Foreign exchange gains (losses)—net
Trading account profits (losses)—net:
Net losses on interest rate and other derivative contracts . . . . . . . . .
Net profits on trading account securities, excluding derivatives . . .
Total
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Investment securities gains (losses)—net:
Net gains (losses) on sales of available-for-sale debt securities . . . .
Impairment losses on available-for-sale debt securities . . . . . . . . . .
Net gains (losses) from marketable equity securities . . . . . . . . . . . .
Other . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Total
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Equity in earnings of equity method investees—net
. . . . . . . . . . . . . . . .
Gains on sales of loans . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Gain on remeasurement of previously held equity method
investment(1)
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Other non-interest income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
1,502.1
(281.8)
1,527.3
99.3
1.7
135.3
(159.0)
924.4
765.4
106.4
(1.6)
(646.0)
9.0
(532.2)
282.7
10.0
41.2
88.4
(429.6)
19.2
(410.4)
(6.5)
(0.6)
1,454.9
10.5
1,458.3
355.7
17.9
—
109.6
(170.1)
(97.9)
(153.6)
(106.1)
63.0
325.2
16.0
374.0
25.8
80.1
(100.0)
24.0
Total non-interest income . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
¥1,875.8
¥3,157.7
68.4%
Note:
(1) Represents profits recognized in connection with our acquisition of Bank Danamon. See Note 2 to our consolidated financial statements.
Non-interest income increased mainly due to an increase in investment securities gains, partially offset by
net trading account losses.
Fees and commissions income
Fees and commissions income increased slightly due to an increase in fees and commissions on
administration and management services for investment funds, reflecting the full-year consolidation of First
Sentier Investors as well as improved performance of the pension fund management business at our trust banking
subsidiaries. This increase was partially off-set by a decrease in fees and commissions on credit card business of
our commercial banking subsidiaries and Mitsubishi UFJ NICOS due to a decrease in consumer credit card use.
75
Net foreign exchange gains (losses)
Fiscal years ended March 31,
2020
2021
% Change
(in billions, except percentages)
Foreign exchange gains (losses)—net:
Net foreign exchange losses on derivative contracts . . . . . . . . . . . .
Net foreign exchange gains (losses) on other than derivative
¥(434.1)
¥ (79.6)
81.7%
contracts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
748.3
(544.6)
(172.8)
Net foreign exchange gains (losses) related to the fair value
option . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
(596.0)
723.5
221.4
Total
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
¥(281.8)
¥ 99.3
135.3%
Net foreign exchange gains (losses) consists of the following:
‰ Net foreign exchange gains (losses) on derivative contracts are net gains (losses) primarily on currency
derivative instruments entered into for trading purposes.
‰ Net foreign exchange gains (losses) on other than derivative contracts include foreign exchange trading
gains (losses) as well as transaction gains (losses) on the translation into Japanese yen of monetary
assets and liabilities denominated in foreign currencies. The transaction gains (losses) on the translation
into Japanese yen fluctuate from period to period depending upon the spot rates at the end of each fiscal
year. In principle, all transaction gains (losses) on translation of monetary assets and liabilities
denominated in foreign currencies are included in current earnings.
‰ Net foreign exchange gains (losses) related to the fair value option include transaction gains (losses) on
the translation into Japanese yen of securities under the fair value option. See Note 31 to the
consolidated financial statements.
Net foreign gains for the fiscal year ended March 31, 2021 mainly reflected net foreign exchange gains
related to the fair value option applied to foreign currency-denominated trading account securities such as U.S.
Treasury bonds as the Japanese yen depreciated against the U.S. dollar from ¥108.83 to the U.S. dollar as of
March 31, 2020 to ¥110.71 to the U.S. dollar as of March 31, 2021, while the Japanese yen appreciated against
the U.S. dollar during the previous fiscal year resulting in net foreign exchange losses on U.S. dollar-
denominated trading account securities under the fair value option. The gains on such securities for the fiscal
year ended March 31, 2021 were substantially offset by larger net foreign exchange losses on other than
derivative contracts reflecting the negative impact of fluctuations in the foreign currency exchange rates on the
Japanese yen translated amounts of assets and liabilities of our commercial banking subsidiaries as the Japanese
yen depreciated against other major currencies on a spot rate basis between March 31, 2020 and March 31, 2021.
76
Net trading account profits (losses)
Fiscal years ended March 31,
2020
2021
% Change
(in billions, except percentages)
Trading account profits (losses)—net:
Net profits (losses) on interest rate and other derivative contracts
Interest rate contracts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Equity contracts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Credit derivatives . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Other . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
¥(173.2)
29.8
14.9
(30.5)
¥ 70.1
(269.4)
(52.7)
(177.6)
140.5%
N/M
(454.4)
(482.4)
Total
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
¥(159.0)
¥(429.6)
(170.1)%
Net profits (losses) on trading account securities, excluding
derivatives
Trading account securities . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Trading account securities under the fair value option . . . . . . .
¥ 86.6
837.8
Total
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
¥ 924.4
¥ 389.4
(370.2)
¥ 19.2
349.8%
(144.2)
(97.9)%
Total
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
¥ 765.4
¥(410.4)
(153.6)%
Trading account assets and liabilities are carried at fair value and changes in the value of trading account
assets and liabilities are recorded in net trading account profits (losses). Activities reported in our net trading
account profits (losses) can generally be classified into two categories:
‰
‰
trading purpose activities, which are conducted mainly for the purpose of generating profits either
through transaction fees or arbitrage gains and involve frequent and short-term selling and buying of
securities, commodities or others; and
trading account assets relating to the application of certain accounting rules, which are generally not
related to trading purpose activities, but simply classified as trading accounts due to the application of
certain accounting rules.
Of the two categories, trading account assets relating to the application of certain accounting rules represent
a larger portion of our trading account profits for the fiscal year ended March 31, 2021.
We generally do not separate, for financial reporting purposes, customer originated trading activities from
non-customer related, proprietary trading activities. When an order for a financial product is placed by a
customer, a dealer offers a price which includes certain transaction fees, often referred to as the “margin” to the
market price. The margin is determined by considering factors such as administrative costs, transaction amount
and liquidity of the applicable financial product. Once the customer agrees to the offered price, the deal is
completed, and the position is recorded in our ledger as a single entry without any separation of components. To
manage the risk relating to the customer side position, we often enter into an offsetting transaction with the
market. Unrealized gains and losses as of the period-end for both the customer side position and the market side
position are recorded within the same trading account profits and losses.
Net trading account profits (losses) consist of net profits (losses) on interest rate and other derivative
contracts and net profits (losses) on trading account securities, excluding derivatives.
Net profits (losses) on interest rate and other derivative contracts are reported for net profits (losses) on
derivative instruments which primarily relate to trading purpose activities and include:
‰
Interest rate contracts: Interest rate contracts are mainly utilized to manage interest rate risks which
could arise from mismatches between assets and liabilities resulting from customer originated trading
activities;
77
‰
Equity contracts: Equity contracts are mainly utilized to manage the risk that would arise from price
fluctuations of stocks held in connection with customer transactions; and
‰ Credit derivatives: Credit derivatives are mainly utilized as a part of our credit portfolio risk
management.
Derivative instruments for trading purposes also include those used as hedges of net exposures rather than
for specifically identified assets or liabilities, which do not meet the specific criteria for hedge accounting.
Net profits (losses) on trading account securities, excluding derivatives, consist of:
‰ Net profits (losses) on trading account securities, which primarily consist of gains and losses on trading
and valuation of trading securities which relate to trading purpose activities. Net profits (losses) on
investment securities held by certain consolidated variable interest entities, or VIEs, are included in
accordance with the applicable accounting rules.
‰ Net profits (losses) on trading account securities under the fair value option, which are classified into
trading accounts profits (losses) in accordance with certain accounting rules.
Net trading account losses for the fiscal year ended March 31, 2021 mainly reflected net losses on trading
account securities under the fair value option. Between the beginning of the fiscal year and September 2020, U.S.
interest rates were lower, but during the latter half of the fiscal year, long-term U.S. interest rates gradually
increased, and the fair value of trading account securities under the fair value option decreased at the end of
March 2021. Net losses on equity contracts were mainly due to losses on equity swap contracts for hedging
purposes at our commercial banking subsidiaries. These losses were partially offset by net gains on trading
account securities which reflected higher and relatively stable prices on domestic and U.S. stock markets.
Net investment securities gains (losses)
Net investment securities gains (losses) include net gains (losses) on sales of available-for-sale debt
securities, impairment losses on available-for-sale debt securities, and net gains (losses) from marketable equity
securities. Impairment loss on an available-for-sale debt security is recognized as part of investment securities
losses if the fair value of such security is below its amortized cost basis and (1) such debt security is held by us
with the intent to sell or (2) it is more likely than not that we will be required to sell such debt security before
recovering its amortized cost basis. In other circumstances where the fair value of available-for-sale debt
securities is less than the amortized cost basis, we recognize the credit component of the impairment loss as part
of investment securities losses, and record an allowance for credit losses to the same extent, while recording the
noncredit component of the impairment loss in accumulated other comprehensive losses. Net gains (losses) from
marketable equity securities include net gains (losses) on sales of marketable equity securities as well as
unrealized gains (losses) on such securities.
Net investment securities gains were ¥1,458.3 billion for the fiscal year ended March 31, 2021, compared to
net losses of ¥532.2 billion for the fiscal year ended March 31, 2020. This was mainly due to ¥1,454.9 billion of
net gains from marketable equity securities, reflecting higher stock prices towards March 31, 2021 in Japan and
the United States.
Net equity in earnings of equity method investees
Net equity in earnings of equity method investees for the fiscal year ended March 31, 2021 was
¥355.7 billion, compared to ¥282.7 billion for the previous fiscal year, reflecting higher earnings of our equity
method investees, including Morgan Stanley.
78
Non-Interest Expense
Fiscal years ended March 31,
2020
2021
% Change
(in billions, except percentages)
Salaries and employee benefits . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Occupancy expenses—net
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Fees and commissions expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Outsourcing expenses, including data processing . . . . . . . . . . . . . . . . . . . .
. . . . . . . . . . . . . . . . . . . . . . . . . .
Depreciation of premises and equipment
Amortization of intangible assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Impairment of intangible assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Insurance premiums, including deposit insurance . . . . . . . . . . . . . . . . . . .
Communications . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Taxes and public charges . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Impairment of goodwill . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Reversal of off-balance sheet credit instruments . . . . . . . . . . . . . . . . . . . .
Other non-interest expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
¥1,242.6
182.9
332.0
303.6
113.5
237.3
3.7
98.4
60.0
100.2
383.8
(62.3)
367.9
¥1,253.5
178.1
318.8
298.8
87.3
250.1
21.7
90.5
59.8
97.8
147.6
(56.7)
322.0
0.9%
(2.6)
(4.0)
(1.6)
(23.1)
5.4
480.9
(8.0)
(0.3)
(2.4)
(61.6)
8.9
(12.4)
Total non-interest expense . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
¥3,363.6
¥3,069.3
(8.7)%
Non-interest expense decreased 8.7% mainly due to decreases in impairment of goodwill and depreciation
of premises and equipment.
Impairment of goodwill
We recognized ¥147.6 billion of impairment loss on goodwill relating to MUFG Americas Holdings for the
fiscal year ended March 31, 2021. The impairment loss mainly reflected decreases in the fair value of reporting
units belonging to MUFG Americas Holdings below their carrying amounts in light of increases in observed
market discount rates. The impairment loss also included the impact of an intervening event due to negative
changes in the economic environment triggered by COVID-19 for the three months ended March 31, 2020. We
recognized ¥383.8 billion of impairment loss on goodwill for the year ended March 31, 2020. The impairment
loss was recognized on the goodwill recorded in connection with our acquisition of Bank Danamon. See Note 6
to our audited consolidated financial statements for further information.
Given the three-month difference between our consolidated reporting period and the reporting period of
some of our subsidiaries, including MUFG Americas Holdings, our fair value assessment with respect to such
subsidiaries after December 31 of each year is reflected in our consolidated financial statements for a period
ending after March 31 of each year. See Note 1 to our consolidated financial statements.
Depreciation of premises and equipment
Premises and equipment are stated at cost less accumulated depreciation and amortization. Depreciation is
charged to operations over the estimated useful lives of the related assets. Depreciation of premises and
equipment decreased 23.1% mainly due to one-time leasehold improvement adjustments that were recorded for
the fiscal year ended March 31, 2020.
79
Income Tax Expense
Income before income tax expense . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Income tax expense . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Effective income tax rate . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Combined normal effective statutory tax rate . . . . . . . . . . . . . . . . . . . .
Fiscal years ended March 31,
2020
2021
% Change
(in billions, except percentages)
¥433.2
114.5
26.4%
30.6%
¥1,608.3
444.9
27.7%
30.6%
271.3%
288.6%
—
—
Reconciliation of Combined Normal Effective Statutory Tax Rate to Effective Income Tax Rate
Combined normal effective statutory tax rate . . . . . . . . . . . . . . . . . . . .
Increase (decrease) in taxes resulting from:
Nondeductible expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Impairment of goodwill . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Foreign tax credit and payments . . . . . . . . . . . . . . . . . . . . . . . . . .
Lower tax rates applicable to income of subsidiaries . . . . . . . . . .
Change in valuation allowance . . . . . . . . . . . . . . . . . . . . . . . . . . .
Realization of previously unrecognized tax effects of
subsidiaries . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Nontaxable dividends received . . . . . . . . . . . . . . . . . . . . . . . . . . .
Undistributed earnings of subsidiaries . . . . . . . . . . . . . . . . . . . . . .
Tax and interest expense for uncertainty in income taxes . . . . . . .
Noncontrolling interest income (loss) . . . . . . . . . . . . . . . . . . . . . .
Effect of changes in tax laws . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Expiration of loss carryforward . . . . . . . . . . . . . . . . . . . . . . . . . . .
Other—net . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Fiscal years ended March 31,
2020
30.6%
2021
30.6%
1.2
26.1
(9.2)
(3.2)
7.9
(19.8)
(15.6)
3.6
0.0
(0.1)
—
1.9
3.0
0.3
2.4
(0.9)
(1.0)
(0.9)
0.0
(1.9)
0.0
(0.1)
0.1
(0.1)
0.1
(0.9)
Effective income tax rate . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
26.4%
27.7%
Net Change
(percentage
points)
—
(0.9)
(23.7)
8.3
2.2
(8.8)
19.8
13.7
(3.6)
(0.1)
0.2
(0.1)
(1.8)
(3.9)
1.3
Income taxes applicable to us in Japan are imposed by the national, prefectural and municipal governments,
and the aggregate of these taxes resulted in a combined normal effective statutory tax rate of 30.6% for each of
the fiscal years ended March 31, 2020 and 2021. Foreign subsidiaries are subject to income taxes of the
jurisdictions in which they operate. These taxes are reflected in the effective income tax rate.
Fiscal Year Ended March 31, 2021
The effective income tax rate for the fiscal year ended March 31, 2021 was 27.7%, which was 2.9
percentage points lower than the combined normal effective statutory rate of 30.6%. This lower effective income
tax rate was primarily due to our receipt of nontaxable dividends, which resulted in a decrease of ¥30.6 billion in
income tax expense and a decrease of 1.9 percentage points in the effective income tax rate for the fiscal year
ended March 31, 2021. Under Japanese tax law, a certain percentage of dividends received is considered
nontaxable and excluded from gross revenue in computing taxable income. This creates a permanent difference
between our taxable income for Japanese tax purposes and our income before income tax expense reported under
U.S. GAAP. Another factor contributing to the lower effective income tax rate was due to lower tax rates
applicable to income of subsidiaries, which resulted in a decrease of ¥15.4 billion in income tax expense and a
decrease of 1.0 percentage points in the effective income tax rate for the fiscal year ended March 31, 2021. These
impacts were partially offset by an increase of 2.4 percentage points in the effective income tax rate resulting
80
from recognition of the goodwill impairment loss discussed above, which had the effect of decreasing our
income before income tax expense under U.S. GAAP by ¥38.7 billion for the fiscal year ended March 31, 2021,
since such loss was not deductible in computing our taxable income under Japanese tax law.
Fiscal Year Ended March 31, 2020
The effective income tax rate for the fiscal year ended March 31, 2020 was 26.4%, which was 4.2
percentage points lower than the combined normal effective statutory rate of 30.6%. This was primarily due to
the sale of a wholly owned subsidiary, as a result of which we recognized tax benefits from temporary
differences not previously recognized as part of deferred tax assets, decreasing our income tax expense by
¥85.6 billion and our effective income tax rate by 19.8 percentage points for the fiscal year ended March 31,
2020. Another factor contributing to the lower effective income tax rate was our receipt of nontaxable dividends,
which resulted in a decrease of ¥67.6 billion in income tax expense and a decrease of 15.6 percentage points in
the effective income tax rate for the fiscal year ended March 31, 2020. Under Japanese tax law, a certain
percentage of dividends received is considered nontaxable and excluded from gross revenue in computing
taxable income. This creates a permanent difference between our taxable income for Japanese tax purposes and
our income before income tax expense reported under U.S. GAAP. These impact were partially offset by an
increase of 26.1 percentage points in the effective income tax rate resulting from recognition of the goodwill
impairment loss discussed above, which had the effect of decreasing our income before income tax expense
under U.S. GAAP by ¥113.1 billion for the fiscal year ended March 31, 2020, since such loss was not deductible
in computing our taxable income under Japanese tax law.
Net income (loss) attributable to noncontrolling interests
We recorded ¥46.1 billion of net income attributable to noncontrolling interests for the fiscal year ended
March 31, 2021, compared to ¥12.7 billion of net income attributable to noncontrolling interests for the previous
fiscal year. This mainly reflected an increase in net income of Mitsubishi UFJ Morgan Stanley Securities.
Business Segment Analysis
We measure the performance of each of our business segments primarily in terms of “operating profit.”
Operating profit and other segment information in this Annual Report are based on the financial information
prepared in accordance with Japanese GAAP as adjusted in accordance with internal management accounting
rules and practices. Accordingly, the format and information are not consistent with our consolidated financial
statements prepared in accordance with U.S. GAAP. For example, operating profit does not reflect items such as
a component of the provision for (reversal of) credit losses (primarily equivalent to the formula allowance under
U.S. GAAP), foreign exchange gains (losses) and investment securities gains (losses). For a reconciliation of
operating profit under the internal management reporting system to income before income tax expense shown on
the consolidated statements of income, see Note 29 to our consolidated financial statements. We do not use
information on the segments’ total assets to allocate our resources and assess performance. Accordingly, business
segment information on total assets is not presented.
81
Customer Business
Retail &
Commercial
Banking
Business
Group
Japanese
Corporate &
Investment
Banking
Business
Group
Global
Corporate &
Investment
Banking
Business
Group
Global
Commercial
Banking
Business
Group
Asset
Management
& Investor
Services
Business
Group
Global
Markets
Business
Group
Total
Other
Total
Fiscal year ended March 31, 2019
Net revenue . . . . . . . . . . . . . . ¥1,502.5
718.9
BK and TB(1): . . . . . . . . .
¥569.6
436.9
¥417.4
279.2
Net interest
income . . . . . . . .
Net fees . . . . . . . . .
Other . . . . . . . . . . . .
458.2
229.8
30.9
Other than BK and
783.6
TB . . . . . . . . . . . . . . . .
Operating expenses . . . . . . . . 1,220.9
175.8
202.9
58.2
132.7
319.5
120.6
158.0
0.6
138.2
254.9
(in billions)
¥682.0
(1.3)
¥203.0
93.2
¥3,374.5 ¥436.0 ¥ (11.4) ¥3,799.1
1,861.0
1,526.9 259.8
74.3
(1.3)
—
—
—
93.2
—
753.3 201.1
(16.6)
683.9
75.3
89.7
190.8
(46.4)
(70.1)
1,145.2
620.9
94.9
683.3
477.8
109.8
124.6
1,847.6 176.2
2,397.7 226.0
(85.7) 1,938.1
2,726.8
103.1
Operating profit (loss) . . . . . . ¥ 281.6
¥250.1
¥162.5
¥204.2
¥ 78.4
¥ 976.8 ¥210.0 ¥(114.5) ¥1,072.3
Note:
(1) “BK and TB” is a sum of MUFG Bank on a stand-alone basis and Mitsubishi UFJ Trust and Banking on a stand-alone basis.
Customer Business
Retail &
Commercial
Banking
Business
Group
Japanese
Corporate &
Investment
Banking
Business
Group
Global
Corporate &
Investment
Banking
Business
Group
Global
Commercial
Banking
Business
Group
Asset
Management
& Investor
Services
Business
Group
Global
Markets
Business
Group
Total
Other
Total
Fiscal year ended March 31, 2020
Net revenue . . . . . . . . . . . . . . ¥1,485.5
706.6
BK and TB(1): . . . . . . . . .
¥572.7
439.1
¥402.2
287.1
Net interest
income . . . . . . . .
Net fees . . . . . . . . .
Other . . . . . . . . . . . .
444.4
231.8
30.4
Other than BK and
778.9
TB . . . . . . . . . . . . . . . .
Operating expenses . . . . . . . . 1,195.9
185.7
203.2
50.2
133.6
324.4
121.4
148.1
17.6
115.1
260.8
(in billions)
¥795.4
(0.4)
¥243.0
94.6
¥3,498.8 ¥536.0 ¥ 19.8 ¥4,054.6
1,878.2
1,527.0 319.3
31.9
0.4
—
(0.8)
2.5
92.2
(0.1)
754.4 129.5
675.3
(14.8)
97.3 204.6
46.4
(55.1)
40.6
930.3
605.4
342.5
795.8
564.3
148.4
171.7
1,971.8 216.7
2,517.1 233.2
(12.1) 2,176.4
2,879.6
129.3
Operating profit (loss) . . . . . . ¥ 289.6
¥248.3
¥141.4
¥231.1
¥ 71.3
¥ 981.7 ¥302.8 ¥(109.5) ¥1,175.0
Note:
(1) “BK and TB” is a sum of MUFG Bank on a stand-alone basis and Mitsubishi UFJ Trust and Banking on a stand-alone basis.
Fiscal year ended March 31, 2021
Customer Business
Retail &
Commercial
Banking
Business
Group
Japanese
Corporate &
Investment
Banking
Business
Group
Global
Corporate &
Investment
Banking
Business
Group
Global
Commercial
Banking
Business
Group
Asset
Management
& Investor
Services
Business
Group
Global
Markets
Business
Group
Total
Other
Total
(in billions)
Net revenue . . . . . . . . . . . . . . ¥1,389.4
645.1
BK and TB(1): . . . . . . . . .
¥559.9
448.8
¥426.3
269.3
¥783.2
0.8
¥293.5
99.4
¥3,452.3 ¥634.8 ¥
1,463.4 389.0
(4.8) ¥4,082.3
1,882.8
30.4
Net interest
income . . . . . . . .
Net fees . . . . . . . . .
Other . . . . . . . . . . . .
405.2
216.4
23.5
Other than BK and
744.3
TB . . . . . . . . . . . . . . . .
Operating expenses . . . . . . . . 1,130.4
183.8
216.8
48.2
111.1
319.3
133.2
150.2
(14.1)
157.0
269.8
1.5
—
(0.7)
5.5
94.0
(0.1)
729.2 213.1
677.4
(4.3)
56.8 180.2
34.1
(66.8)
63.1
976.4
606.3
300.1
782.4
509.0
194.1
210.1
1,988.9 245.8
2,438.6 234.0
(35.2) 2,199.5
2,833.7
161.1
Operating profit (loss) . . . . . . ¥ 259.0
¥240.6
¥156.5
¥274.2
¥ 83.4
¥1,013.7 ¥400.8 ¥(165.9) ¥1,248.6
Note:
(1) “BK and TB” is a sum of MUFG Bank on a stand-alone basis and Mitsubishi UFJ Trust and Banking on a stand-alone basis.
82
We made modifications to our internal management accounting rules and practices to clarify the
responsibility for profits of each business segment, effective April 1, 2020. Major rule changes are (i) allocation
of adjustments related to the derivative counterparty risk previously included in Other to the Global Markets
Business Group, which holds the derivative assets, and (ii) reorganization of functions between the Retail &
Commercial Banking Business Group, the Japanese Corporate & Investment Banking Business Group, the
Global Corporate & Investment Banking Business Group and Other. These modifications had the following
impact on our previously reported business segment information for the fiscal years ended March 31, 2019 and
2020:
‰
‰
‰
‰
increasing the operating profits of Other, the Global Corporate & Investment Banking Business Group
and the Japanese Corporate & Investment Banking Business Group by ¥33.8billion, ¥20.2billion and
¥14.2billion, respectively, for the fiscal year ended March 31, 2019,
reducing the operating profits of the Global Markets Business Group, the Retail & Commercial Banking
Business Group and the Global Commercial Banking Business Group by ¥46.3billion, ¥19.1billion and
¥2.8billion, respectively, for the fiscal year ended March 31, 2019,
increasing the operating profits of Other, the Japanese Corporate & Investment Banking Business Group
and the Global Corporate & Investment Banking Business Group by ¥25.5billion, ¥13.0billion and
¥12.4billion, respectively, for the fiscal year ended March 31, 2020, and
reducing the operating profits of the Global Markets Business Group, the Retail & Commercial Banking
Business Group and the Global Commercial Banking Business Group by ¥40.2billion, ¥9.0billion and
¥1.7billion, respectively, for the fiscal year ended March 31, 2020.
Prior period business segment information has been restated to enable comparison between the relevant
amounts for the fiscal years ended March 31, 2019, 2020 and 2021.
For further information, see Note 29 to our consolidated financial statements.
Fiscal Year Ended March 31, 2021 Compared to Fiscal Year Ended March 31, 2020
Retail & Commercial Banking Business Group—Covers the domestic retail and commercial banking
businesses. This business group offers retail and small and medium-sized enterprise customers in Japan an
extensive array of commercial banking, trust banking and securities products and services. Its net revenue mainly
consists of interest income from lending and deposit-taking operations and fees relating to credit card settlement,
consumer financing, real estate and stock transfer services for Japanese domestic individual and small to
medium-sized corporate customers.
Net revenue decreased mainly due to a decrease in revenue generated from deposited funds caused by
declines in U.S. interest rates and Japanese short-term interest rates as well as a decrease in the volume of
business, including the credit card, foreign exchange and consumer finance businesses. The decrease in operating
expenses primarily resulted from our cost reduction measures under the “Channel Strategy and Business Process
Re-engineering” project pursuant to our previous medium-term business plan and a decrease in performance-
linked expenses of Mitsubishi UFJ NICOS.
Japanese Corporate & Investment Banking Business Group—Covers the large Japanese corporate
businesses. This business group offers large Japanese corporations advanced financial solutions designed to
respond to their diversified and globalized needs and to contribute to their business and financial strategies
through the global network of our group companies. Its net revenue mainly consists of interest income from
lending and deposit-taking operations and fees relating to financing, investment banking, real estate and stock
transfer services for large Japanese corporate customers.
83
Net revenue decreased mainly due to a decrease in revenue generated from deposited funds caused by
declines in U.S. interest rates and Japanese short-term interest rates while loan revenue increased following an
increase in the loan balance especially in Japan. Overseas non-interest revenue declined, reflecting a decline in
foreign exchange revenue due to the slowdown in trade transactions due to the COVID-19 pandemic. The
decrease in operating expenses primarily resulted from our cost reduction measures and a decrease in overseas
system development expenses.
Global Corporate & Investment Banking Business Group—Covers the global corporate, investment and
transaction banking businesses of MUFG Bank and Mitsubishi UFJ Securities Holdings. Through a global
network of offices and branches, this business group provides non-Japanese large corporate and financial
institution customers outside Japan with a comprehensive set of solutions that meet their increasingly diverse and
sophisticated financing needs. Its net revenue mainly consists of interest income from lending and deposit-taking
operations and fees and commissions from investment banking services and foreign exchange and derivatives
transactions for large non-Japanese corporate and institutional customers outside Japan.
Net revenue increased mainly due to an increase in debt capital markets revenue as the funding requirements
of our customers increased, while revenue generated from deposited funds decreased due to declines in U.S.
interest rates. The increase in operating expense was mainly attributable to increases in overseas business
acquisition cost and system infrastructure development cost.
Global Commercial Banking Business Group—Covers the retail and commercial banking businesses of
MUFG Union Bank and Krungsri. Starting in the quarter ended September 30, 2020, this business group also
covers Bank Danamon. This business group offers a comprehensive array of financial products and services such
as loans, deposits, fund transfers, investments and asset management services for local retail, small and
medium-sized enterprise, and corporate customers across the Asia-Pacific region. Its revenue mainly consists of
interest income from lending and deposit-taking operations and fees from remittances and transfers, consumer
finance and wealth-related services for individual and small to medium-sized corporate customers of MUFG
Union Bank, Krungsri and Bank Danamon.
Net revenue decreased mainly due to the lower net interest income in MUFG Union Bank reflecting
declines in interest rates in the United States, partially offset by an increase in net revenue due to the full-year
consolidation of Bank Danamon. The decrease in operating expense was mainly due to our cost reduction
measures and a decrease in advertising fees.
Asset Management & Investor Services Business Group—Covers the asset management and asset
administration businesses of Mitsubishi UFJ Trust and Banking, MUFG Bank. Starting in the quarter ended
December 31, 2020, this business group also covers First Sentier Investors. By integrating the trust banking
expertise of Mitsubishi UFJ Trust and Banking and the global strengths of MUFG Bank, the business group
offers a full range of asset management and administration services for corporations and pension funds, including
pension fund management and administration, advice on pension structures, and payments to beneficiaries, and
also offer investment trusts for retail customers. Its net revenue mainly consists of fees from asset management
and administration services for products, such as pension trusts and mutual funds.
Net revenue increased primarily due to the full-year consolidation of First Sentier Investors as well as an
increase in the balance of investment products sold to domestic institutional investors, partially offset by the
impact of reductions in our asset management fee rates. The increase in operating expense was mainly
attributable to full-year consolidation of First Sentier Investors as well as higher personnel cost and system
investments commensurate with business volume growth.
Global Markets Business Group—Covers the customer business and the treasury operations of MUFG
Bank, Mitsubishi UFJ Trust and Banking and Mitsubishi UFJ Securities Holdings. The customer business
includes sales and trading in fixed income instruments, currencies, equities and other investment products as well
84
as origination and distribution of financial products. The treasury operations include asset and liability
management as well as global investments for the MUFG Group.
Net revenue increased mainly due to higher net revenue from trading for institutional investors as we
profited from market volatility. Net revenue from the treasury operations increased as a result of our portfolio
operations under volatile market conditions. The increase in operating expense primarily reflected increases in
performance-linked expenses and compliance cost to meet regulation changes, substantially offset by the impact
of our cost reduction measures, including overseas personnel cost reductions.
Other—Consists mainly of the corporate centers of MUFG, MUFG Bank, Mitsubishi UFJ Trust and
Banking and Mitsubishi UFJ Morgan Stanley Securities. The elimination of duplicated amounts of net revenues
among business segments is also reflected in Other.
Fiscal Year Ended March 31, 2020 Compared to Fiscal Year Ended March 31, 2019
Retail & Commercial Banking Business Group
Net revenue decreased mainly due to a decrease in net interest income due to lower interest rate spreads on
domestic loans due to competitive downward pressure on interest rates on such loans in the continued low
interest rate environment in Japan. Operating expenses decreased primarily resulted from our cost reduction
measures under the “Channel Strategy and Business Process Re-engineering” project pursuant to our previous
medium-term business plan.
Japanese Corporate & Investment Banking Business Group
Net revenue increased mainly due to higher net interest income from both Japanese yen-dominated loans
and foreign currency-denominated loans to large corporate customers. Operating expenses increased primarily
due to higher expenses for financial regulatory compliance purposes in Europe and our investment to enhance the
information system platform in the Asia and Oceania region
Global Corporate & Investment Banking Business Group
Net revenue decreased mainly due to a decrease in the translated Japanese yen value of foreign currency-
denominated revenues reflecting the negative impact of the appreciation of the Japanese yen against other major
currencies on a spot rate basis between March 31, 2019 and 2020 as well as losses on sales of high yield bonds in
our securities business. Operating expenses increased primarily due to the cost for our acquisition from DVB
Bank SE in Germany of DVB Bank’s aviation finance lending portfolio.
Global Commercial Banking Business Group
Net revenue increased mainly due to the consolidation of Bank Danamon and higher net interest income
reflecting an increase in Krungsri’s loan portfolio. Operating expenses increased primarily due to the
consolidation of Bank Danamon and an increase in expenses in Krungsri primarily reflecting larger volumes of
business. The increase in operating expenses was also attributable to an increase in expenses for IT system
development projects in the United States.
Asset Management & Investor Services Business Group
Net revenue increased mainly due to higher fees from asset management services reflecting the
consolidation of First Sentier Investors as well as an increase in investment products sales to domestic corporate
investors. The increase in operating expenses was primarily attributable to the one-time cost for our acquisition
of First Sentier Investors as well as higher cost commensurate with business volume growth.
85
Global Markets Business Group
Net revenue increased mainly due to higher net revenue from our overseas sales and trading business as we
continued to work to improve our business model to better capture customer business opportunities abroad to
increase volume as well as higher net revenue from our asset and liability management operations particularly
reflecting our effort to deal with the declining interest rate environment. Operating expenses increased primarily
due to the amortization cost for IT system development projects and the cost for our business model
improvement measures.
Geographic Segment Analysis
Assets, income and expenses attributable to foreign operations are allocated to geographical areas based on
the domicile of the debtors and customers. In general, we have allocated all direct expenses and a proportionate
share of general and administrative expenses to income derived from foreign loans and other transactions by our
foreign operations to the relevant foreign geographical areas. Certain charges, such as most impairment charges
on goodwill, are recognized as domestic expenses. For further information, see Note 30 to our consolidated
financial statements.
Fiscal years ended March 31,
2020
2021
% Change
(in billions)
Total revenue (interest income and non-interest income):
Domestic . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
¥ 1,596.8
¥3,348.7
109.7%
Foreign:
United States of America . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Europe . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Asia/Oceania excluding Japan . . . . . . . . . . . . . . . . . . . . . . . . . . .
Other areas(1) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Total foreign . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
2,224.0
89.4
1,326.4
566.2
4,206.0
741.1
356.1
1,134.3
329.6
2,561.1
(66.7)
298.3
(14.5)
(41.8)
(39.1)
Total
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
¥ 5,802.8
¥5,909.8
1.8%
Income (loss) before income tax expense (benefit):
Domestic . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
¥ (969.1)
¥1,032.4
206.5%
Foreign:
United States of America . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Europe . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Asia/Oceania excluding Japan . . . . . . . . . . . . . . . . . . . . . . . . . . .
Other areas(1) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
1,172.8
(129.2)
152.2
206.6
27.7
92.4
244.7
211.1
Total foreign . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Total
1,402.4
433.3
¥
575.9
¥1,608.3
(97.6)
171.6
60.8
2.3
(58.9)
271.3%
Net income (loss) attributable to Mitsubishi UFJ Financial Group
Domestic . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
¥(1,001.5)
¥ 627.1
162.6%
Foreign:
United States of America . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Europe . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Asia/Oceania excluding Japan . . . . . . . . . . . . . . . . . . . . . . . . . . .
Other areas(1) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Total foreign . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
1,114.0
(140.4)
142.6
191.3
1,307.5
(231.1)
74.2
366.9
280.2
490.2
(120.7)
152.9
157.3
46.4
(62.5)
Total
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
¥
306.0
¥1,117.3
265.2%
Note:
(1) Other areas primarily include Canada, Latin America, the Caribbean and the Middle East.
86
Domestic revenue (interest income and non-interest income) increased primarily due to foreign exchange
gains and gains on net trading account securities. In addition to the increase in domestic revenue, the
improvements in domestic income before income tax expense and domestic net income attributable to Mitsubishi
UFJ Financial Group reflected a decrease in goodwill impairment losses. Domestic net loss for the fiscal year
ended March 31, 2020 was mainly attributable to investment securities losses and the impairment losses on
goodwill relating to Bank Danamon, MUFG Americas Holdings and Krungsri.
Foreign net income before income tax expense decreased mainly due to trading account losses, reflecting
net losses from trading account securities under the fair value option in the United States. During the latter half of
the fiscal year, long-term U.S. interest rates gradually increased, and the fair value of trading account securities
under the fair value option decreased at the end of March 2021.
Effect of Change in Exchange Rates on Foreign Currency Translation
The average exchange rate for the fiscal year ended March 31, 2021 was ¥106.06 per U.S.$1.00, compared
to the average exchange rate of ¥108.74 per U.S.$1.00 for the previous fiscal year. The average exchange rate for
the conversion of the U.S. dollar financial statements of some of our foreign subsidiaries for the fiscal year ended
December 31, 2020 was ¥106.82 per U.S.$1.00, compared to the average exchange rate for the fiscal year ended
December 31, 2019 of ¥109.05 per U.S.$1.00.
The change in the average exchange rate of the Japanese yen against the U.S. dollar and other foreign
currencies had the effect of decreasing total revenue by ¥62.1 billion, net interest income by ¥38.0 billion and
income before income tax expense by ¥11.3 billion, respectively, for the fiscal year ended March 31, 2021.
B. Liquidity and Capital Resources
Financial Condition
Total Assets
Our total assets as of March 31, 2021 were ¥353,824.6 billion, an increase of ¥22,071.3 billion from
¥331,753.3 billion as of March 31, 2020. The increase in domestic total assets was mainly due to a
¥16,575.8 billion increase in cash and due from banks and a ¥13,839.6 billion increase in investment securities in
Japan. The decrease in total foreign assets was mainly due to a ¥3,522.4 billion decrease in loans, net of unearned
income, unamortized premiums and deferred loan fees in United States.
As of March 31,
2020
2021
% Change
Japan . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Foreign(1):
(in billions, except percentages)
¥240.603.9
¥207,532.3
15.9%
United States . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Europe . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Asia/Oceania excluding Japan . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Other areas(2) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
60,587.9
19,099.4
30,845.9
13,687.8
49,478.9
21,126.6
31,368.4
11,246.8
Total foreign . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
124,221.0
113,220.7
(18.3)
10.6
1.7
(17.8)
(8.9)
Total
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
¥331,753.3
¥353,824.6
6.7%
Note:
(1) Foreign assets are denominated primarily in the U.S. dollar. Geographic regions are based principally on the domicile of the obligors.
(2) Other areas primarily include Canada, Latin America, the Caribbean and the Middle East.
87
Loan Portfolio
The following table sets forth our loans outstanding, before deduction of allowance for credit losses, based
on the industry segment loan classifications as defined by the Bank of Japan for regulatory reporting purposes,
which is not necessarily based on the use of proceeds:
As of March 31,
2020
2021
% Change
(in billions, except percentages)
Domestic:
Manufacturing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Construction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Real estate . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Services . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Wholesale and retail . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Banks and other financial institutions(1) . . . . . . . . . . . . . . . . . . . . . . . .
Communication and information services . . . . . . . . . . . . . . . . . . . . . .
Other industries . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Consumer . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
¥ 11,448.8
733.2
12,054.7
2,585.1
7,504.6
5,161.1
1,572.3
8,673.9
15,319.7
¥ 13,133.4
764.0
11,997.3
2,909.0
7,766.1
6,443.3
1,407.7
8,838.7
15,066.9
14.7%
4.2
(0.5)
12.5
3.5
24.8
(10.5)
1.9
(1.6)
Total domestic . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
65,053.4
68,326.4
5.0
Foreign:
Governments and official institutions . . . . . . . . . . . . . . . . . . . . . . . . . .
Banks and other financial institutions(1) . . . . . . . . . . . . . . . . . . . . . . . .
Commercial and industrial . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Other . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
726.3
11,788.2
32,565.0
8,404.1
655.4
10,649.0
29,574.1
6,822.8
Total foreign . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
53,483.6
47,701.3
(9.8)
(9.7)
(9.2)
(18.8)
(10.8)
Unearned income, unamortized premium—net and deferred loan fees—
net
(350.3)
(308.8)
11.8
Total(2) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
¥118,186.7
¥115,718.9
(2.1)%
Notes:
(1) Loans to so-called “non-bank finance companies” are generally included in the “Banks and other financial institutions” category.
Non-bank finance companies are primarily engaged in consumer lending, factoring and credit card businesses.
(2) The above table includes loans held for sale of ¥344.8 billion and ¥353.1 billion as of March 31, 2020 and 2021, respectively, which are
carried at the lower of cost or fair value.
Our total loan balance decreased 2.1%. As of March 31, 2021, our total loans accounted for 32.7% of total
assets, compared to 35.6% of total assets as of March 31, 2020. Our domestic loan balance increased mainly due
to the increased funding needs of customers that were adversely affected by the COVID-19 pandemic. Our
foreign loan balance decreased mainly due to decreases in mortgage loans and automobile loans. As a percentage
of total loans before unearned income, net unamortized premiums and net deferred loan fees, between March 31,
2020 and March 31, 2021, domestic loans increased from 54.9% to 58.9%, while foreign loans decreased from
45.1% to 41.1%.
We classify our loan portfolio into the following portfolio segments—Commercial, Residential, Card,
MUFG Americas Holdings, Krungsri, and Other based on the grouping to determine the allowance for credit
losses. The Other segment consists primarily of Bank Danamon. We further classify the Commercial segment
into Domestic and Foreign classes based on initial measurement attributes, risk characteristics, and method of
monitoring and assessing credit risk. Effective as of April 1, 2020, all of the domestic classes within the
Commercial segment were combined into one Domestic class. Prior period domestic classes have been combined
into one Domestic class to conform to the current presentation.
88
Credit quality indicator
As of March 31, 2020:
Commercial
Normal
Close
Watch
Likely to become
Bankrupt or
Legally/
Virtually
Bankrupt
(in billions)
Domestic . . . . . . . . . . . . . . . . . . . . . . . . . .
. . . . . . . . . . . . . . . . . . . . . . . . . .
Foreign(2)
Loans acquired with deteriorated credit
quality . . . . . . . . . . . . . . . . . . . . . . . . . . .
¥49,695.9
34,719.1
¥1,186.1
636.5
8.2
9.7
Total . . . . . . . . . . . . . . . . . . . . . . . . . .
¥84,423.2
¥1,832.3
¥220.2
128.1
19.0
¥367.3
Total(1)
¥51,102.2
35,483.7
36.9
¥86,622.8
Residential
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Card . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
¥13,256.8
504.3
¥
(in billions)
¥61.7
¥61.3
¥13,318.5
565.6
¥
Accrual
Nonaccrual
Total(1)
Credit Quality Based on
the Number of Delinquencies
Credit Quality Based on
Internal Credit Ratings
Accrual
Nonaccrual
Pass
Special
Mention Classified
Total(1)(3)
MUFG Americas Holdings . . . . . . . . . . .
¥4,590.8
¥15.1
(in billions)
¥4,877.9
¥87.6
¥84.0
¥9,655.4
Performing
Under-
Performing
Non-
Performing
Total(1)
(in billions)
Krungsri . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
¥6,241.7
¥508.9
¥161.0
¥6,911.6
Other . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
¥1,086.5
(in billions)
¥31.4
¥1,117.9
Accrual
Nonaccrual
Total(1)
As of March 31, 2021:
Commercial
Normal
Close
Watch
Likely to become
Bankrupt or
Legally/
Virtually
Bankrupt
(in billions)
Domestic . . . . . . . . . . . . . . . . . . . . . . . . . .
. . . . . . . . . . . . . . . . . . . . . . . . . .
Foreign(2)
¥52,580.4
30,249.2
Total . . . . . . . . . . . . . . . . . . . . . . . . . .
¥82,829.6
¥1,806.7
788,9
¥2,595.6
¥246.1
254.2
¥500.3
Total(1)
¥54,633.2
31,292.3
¥85,925.5
Residential
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Card . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
¥13,116.6
419.1
¥
(in billions)
¥66.2
¥60.2
¥13,182.8
479.3
¥
Accrual
Nonaccrual
Total(1)
Credit Quality Based on
the Number of Delinquencies
Credit Quality Based on
Internal Credit Ratings
Accrual
Nonaccrual
Pass
Special
Mention Classified
Total(1)(3)
MUFG Americas Holdings . . . . . . . . . . .
¥3,260.9
¥19.0
(in billions)
¥4,807.7
¥216.9
¥191.3
¥8,495.8
89
Performing
Under-
Performing
Non-
Performing
Total(1)
(in billions)
Krungsri . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
¥5,939.4
¥503.9
¥161.3
¥6,604.6
Other . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
¥960.1
(in billions)
¥26.6
¥986.7
Accrual Nonaccrual
Total(1)
Notes:
(1) Total loans in the above table do not include loans held for sale, and represent balances without adjustments in relation to unearned
income, unamortized premiums and deferred loan fees.
(2) Excludes the loans held by MUFG Americas Holdings, Krungsri and Other.
(3) Total loans of MUFG Americas Holdings do not include FDIC covered loans and small business loans which are not individually rated
totaling ¥0.4 billion and nil as of March 31, 2020 and 2021, respectively. We will be reimbursed for a substantial portion of any future
losses on FDIC covered loans under the terms of the FDIC loss share agreements.
We classify loans into risk categories based on relevant information about the ability of borrowers to service
their debt, including, but not limited to, historical and current financial information, historical and current
payment experience, credit documentation, public and non-public information about borrowers and current
economic trends as deemed appropriate to each segment.
The primary credit quality indicator for loans within all classes of the Commercial segment is the internal
credit rating assigned to each borrower based on our internal borrower ratings of 1 through 15 with the rating of
1 assigned to a borrower with the highest quality of credit. When assigning a credit rating to a borrower, we
evaluate the borrower’s expected debt-service capability based on various information, including financial and
operating information of the borrower as well as information on the industry in which the borrower operates, and
the borrower’s business profile, management and compliance system. In evaluating a borrower’s debt-service
capability, we also conduct an assessment of the level of earnings and an analysis of the borrower’s net worth.
Based on the internal borrower rating, loans within the Commercial segment are categorized as Normal (internal
borrower ratings of 1 through 9), Close Watch (internal borrower ratings of 10 through 12), and Likely to
become Bankrupt or Legally/Virtually Bankrupt (internal borrower ratings of 13 through 15).
Loans to borrowers categorized as Normal represent those that are not deemed to have collectability issues.
Loans to borrowers categorized as Close Watch represent those that require close monitoring as the borrower has
begun to exhibit elements of potential concern with respect to its business performance and financial condition,
the borrower has begun to exhibit elements of serious concern with respect to its business performance and
financial condition, including business problems requiring long-term solutions, or the borrower’s loans are TDRs
or loans contractually past due 90 days or more for special reasons. Loans to borrowers categorized as Likely to
become Bankrupt or Legally/Virtually Bankrupt represent those that have a higher probability of default than
those categorized as Close Watch due to serious debt repayment problems with poor progress in achieving
restructuring plans, the borrower being considered virtually bankrupt with no prospects for an improvement in
business operations, or the borrower being legally bankrupt with no prospects for continued business operations
because of non-payment, suspension of business, voluntary liquidation or filing for legal liquidation.
For more information on our credit and borrower ratings, see “Item 11. Quantitative and Qualitative
Disclosures about Credit, Market and Other Risk—Credit Risk Management.”
The accrual status is a primary credit quality indicator for loans within the Residential segment and the Card
segment as well as consumer loans within the MUFG Americas Holdings segment. The accrual status of these
loans is determined based on the number of delinquent payments.
Commercial loans within the MUFG Americas Holdings segment are categorized as either pass or criticized
based on the internal credit rating assigned to each borrower. Criticized credits are those that are internally risk
graded as Special Mention, Substandard or Doubtful. Special Mention credits are potentially weak, as the
90
borrower has begun to exhibit deteriorating trends, which, if not corrected, may jeopardize repayment of the loan
and result in a further downgrade. Classified credits are those that are internally risk graded as Substandard or
Doubtful. Substandard credits have well-defined weaknesses, which, if not corrected, could jeopardize the full
satisfaction of the debt. A credit classified as Doubtful has critical weaknesses that make full collection
improbable on the basis of currently existing facts and conditions.
Loans within the Krungsri segment are categorized based on their delinquency status. Effective April 1,
2020, the categories of credit quality indicators for the Krungsri segment were modified, with the new categories
of Performing, Under-Performing, and Non-Performing replacing the previous categories of Normal, Special
Mention, and Substandard, which was further divided into Substandard, Doubtful and Doubtful of Loss. Loans
categorized as Under-Performing generally represent those that have significant increases in credit risk since
origination, including, among other things, loans contractually past due 30 days or more. Loans categorized as
Non-Performing generally represent those that are contractually past due 90 days or more. The above table
showing the loans within the Krungsri segment by credit indicator category as of March 31, 2020 has been
restated based on the new categories.
For the Commercial, Residential and Card segments, credit quality indicators are based on information as of
March 31. For the MUFG Americas Holdings, Krungsri and Other segments, credit quality indicators are
generally based on information as of December 31.
Allowance for credit losses
Fiscal year ended March 31, 2020:
Commercial Residential Card
MUFG
Americas
Holdings Krungsri
(in billions)
Other
Total
Allowance for credit losses:
Balance at beginning of fiscal year . . . .
Provision for (reversal of) credit
losses . . . . . . . . . . . . . . . . . . . . . . . . .
Charge-offs . . . . . . . . . . . . . . . . . . . . . .
Recoveries collected . . . . . . . . . . . . . . .
Net charge-offs . . . . . . . . . . . . . . . . . . .
Other(1) . . . . . . . . . . . . . . . . . . . . . . . . . .
¥389.6
¥38.6
¥32.6
¥52.6
¥144.8
¥ —
¥658.2
153.8
85.3
26.4
58.9
(2.2)
(1.0)
3.3
0.4
2.9
—
26.5
25.1
1.2
23.9
—
30.9
27.9
4.1
23.8
(0.7)
70.0
77.9
23.2
54.7
9.5
41.5
23.6
8.5
15.1
2.3
321.7
243.1
63.8
179.3
8.9
Balance at end of fiscal year . . . . . . . . .
¥482.3
¥34.7
¥35.2
¥59.0
¥169.6
¥28.7
¥809.5
Fiscal year ended March 31, 2021:
Commercial Residential Card
MUFG
Americas
Holdings Krungsri
(in billions)
Other
Total
Allowance for credit losses:
Balance at beginning of fiscal year . . . .
Effect of adopting new guidance on
measurement of credit losses on
financial instruments(2)
. . . . . . . . . . .
Provision for credit losses . . . . . . . . . . .
Charge-offs . . . . . . . . . . . . . . . . . . . . . .
Recoveries collected . . . . . . . . . . . . . . .
Net charge-offs . . . . . . . . . . . . . . . . . . .
Other(1) . . . . . . . . . . . . . . . . . . . . . . . . . .
¥482.3
¥34.7
¥35.2
¥ 59.0
¥169.6
¥28.7
¥ 809.5
83.8
235.6
77.9
9.3
68.6
1.5
49.5
1.4
2.7
0.0
2.7
—
14.2
17.9
24.6
1.5
23.1
—
25.0
90.1
40.4
4.4
36.0
(6.3)
118.4
90.1
93.2
23.4
69.8
(14.9)
32.8
49.1
51.7
6.5
45.2
(3.9)
323.7
484.2
290.5
45.1
245.4
(23.6)
Balance at end of fiscal year . . . . . . . . .
¥734.6
¥82.9
¥44.2
¥131.8
¥293.4
¥61.5
¥1,348.4
91
Notes:
(1) Other is principally comprised of gains or losses from foreign exchange translation.
(2) See Note 1 (Accounting Changes) to our consolidated financial statements for more information.
In the above table, the effect of adopting the new guidance on measurement of credit losses on financial
instruments represents the effect of application of the new guidance to our loan portfolio as of April 1, 2020, and
the provision for credit losses for the fiscal year ended March 31, 2021 represents the amount of provision for, or
reversal of, credit losses recorded under the new guidance for the same fiscal year. The provision for (reversal of)
credit losses for the fiscal year ended March 31, 2020 represents the amount of provision for (reversal of) credit
losses recorded under the prior guidance for the same fiscal year.
We recorded ¥484.2 billion of provision for credit losses for the fiscal year ended March 31, 2021,
compared to ¥321.7 billion of provision for credit losses for the previous fiscal year. Our total allowance for
credit losses as of March 31, 2021 was ¥1,348.4 billion, an increase of ¥538.9 billion from ¥809.5 billion as of
March 31, 2020. The total allowance for credit losses represented 1.17% of the total loan balance as of March 31,
2021, compared to 0.68% as of March 31, 2020.
Between March 31, 2020 and March 31, 2021, the balance of allowance for credit losses increased in all of
the segments due to the estimated impact of the COVID-19 pandemic on our loan portfolio. The increase was
also due to our adoption of the new guidance on measurement of credit losses on financial instruments on
April 1, 2020. New guidance requires us to estimate allowance for credit losses based on an expected credit loss
model and record more allowance for credit losses as of the beginning of the fiscal year ended March 31, 2021.
Provision for credit losses for the fiscal year ended March 31, 2021 increased by ¥162.5 billion compared to the
previous fiscal year, mainly reflecting the increases in provision for credit losses in the Commercial segment, the
MUFG Americas Holdings segment and the Krungsri segment. Significant trends in our portfolio segments are
discussed below.
Commercial segment—We recorded ¥235.6 billion of provision for credit losses for the fiscal year ended
March 31, 2021, compared to ¥153.8 billion of provision for credit losses for the previous fiscal year. The
increase in provision for credit losses was substantially driven by the impact of the COVID-19 pandemic and the
expected deterioration in the economic environment, particularly in the industry sectors that are susceptible to the
impact of the pandemic such as the retail services, aircraft finance, and oil and gas sectors. With a decline in car
demand, we also recorded provision for credit losses for large auto-related companies in Japan. In addition, the
effect of adopting new guidance on measurement of credit losses on financial instruments was ¥83.8 billion. The
ratio of loans classified as Close Watch to total loans increased to 3.02% as of March 31, 2021 from 2.12% as of
March 31, 2020. The ratio of loans classified as Likely to become Bankrupt or Legally/Virtually Bankrupt to
total loans in the segment increased to 0.58% as of March 31, 2021 from 0.42% as of March 31, 2020. The ratio
of total allowance for credit losses to the total loan balance in this segment increased to 0.85% as of March 31,
2021 from 0.56% as of March 31, 2020.
MUFG Americas Holdings segment—We recorded ¥90.1 billion of provision for credit losses for the fiscal
year ended March 31, 2021, compared to ¥30.9 billion of provision for credit losses for the previous fiscal year.
The provision for credit losses for the fiscal year ended March 31, 2021 was substantially driven by the impact of
the COVID-19 pandemic and the expected deterioration in the economic environment. In particular, the
COVID-19 pandemic adversely affected the residential real estate sector. In addition, we recorded provision for
credit losses for other industry sectors adversely affected by the COVID-19 pandemic including the commercial
real estate sector. The effect of adopting new guidance on measurement of credit losses on financial instruments
was ¥25.0 billion. The ratio of loans classified as Special Mention or below and Nonaccrual to total loans in the
segment increased to 5.03% as of March 31, 2021 from 1.93% as of March 31, 2020. The ratio of total allowance
for credit losses to the total loan balance in this segment increased to 1.55% as of March 31, 2021 from 0.61% as
of March 31, 2020.
92
Krungsri segment—We recorded ¥90.1 billion of provision for credit losses for the fiscal year ended
March 31, 2021, compared to ¥70.0 billion of provision for credit losses for the same period of the previous
fiscal year. The larger provision for credit losses mainly reflected the negative impact of the COVID-19
pandemic on the credit quality of borrowers of mortgage and automobile loans. The effect of adopting new
guidance on measurement of credit losses on financial instruments was ¥118.4 billion. As Krungsri revised its
internal borrower rating method as of April 1, 2020, the provision for credit losses for the fiscal year ended
March 31, 2021 also reflected the impact of such revision. The ratio of loans classified as Under-Performing or
below to total loans in the segment increased to 10.07% as of March 31, 2021 from 9.69% as of March 31, 2020.
The ratio of total allowance for credit losses to the total loan balance in this segment increased to 4.44% as of
March 31, 2021 from 2.45% as of March 31, 2020.
We adopted the new guidance on measurement of credit losses on financial instruments on April 1, 2020.
The new guidance replaces the incurred losses impairment methodology applied under the previous standard with
a current expected credit loss model where adjustments are made to our allowance for credit losses based on
management’s current estimate of expected credit losses on loans by considering a broader range of reasonable
and supportable information, including macroeconomic variables such as GDP growth and unemployment rates,
to estimate credit losses. Our adoption of this new guidance resulted in an increase of ¥408.1 billion in the total
beginning balance of allowance for credit losses and the allowance for off-balance sheet credit instruments as of
April 1, 2020. Provision for credit losses for the fiscal year ended March 31, 2021 mainly reflected
management’s consideration of, among other information, the expected impact of the COVID-19 pandemic on
our loan portfolio as well as the impact of extensions of measurement periods used in our loss-forecasting models
under the new guidance. For more information on the new guidance, see Notes 1 and 4 to our consolidated
financial statements. See also “—Business Environment—Recent Developments and Prospects.”
When there is an improvement in asset quality, reversal of credit losses is recorded in our consolidated
statements of income to maintain the allowance for credit losses at a level management deems appropriate.
Although we reversed allowance for credit losses for certain loan portfolio segments in recent periods, we have
historically provided for credit losses, and in future periods we may need to recognize a provision for credit
losses. See “Item 3.D. Key Information—Risk Factors—Credit Risk—We may suffer additional credit-related
losses in the future if our borrowers are unable to repay their loans as expected or if the measures we take in
reaction to, or in anticipation of, our borrowers’ deteriorating repayment abilities prove inappropriate or
insufficient.”
Allowance policy
On April 1, 2020, we adopted Accounting Standards Update 2016-13, Measurement of Credit Losses on
Financial Instruments. The new guidance replaces the incurred loss impairment methodology in current U.S.
GAAP with the current expected credit loss model that reflects expected credit losses and requires consideration
of a broader range of reasonable and supportable information to estimate credit losses. The adoption of the
guidance resulted in an increase in the beginning balance of the allowance for credit losses and the allowance for
off-balance sheet credit instruments of ¥408.1 billion and a decrease in retained earnings of ¥285.8 billion. For
more information on this guidance, see Note 1 to our consolidated financial statements.
We maintain an allowance for credit losses to absorb probable losses inherent in the loan portfolio. We have
divided our allowance for credit losses into six portfolio segments—Commercial, Residential, Card, MUFG
Americas Holdings, Krungsri and Other. Our allowance policy for the major portfolio segments—Commercial,
Residential, Card, MUFG Americas Holdings and Krungsri—is summarized below.
For all portfolio segments, key elements relating to the policies and discipline used in determining the
allowance for credit losses are our credit classification and related borrower categorization process, which are
closely linked to the risk grading standards set by the Japanese regulatory authorities for asset evaluation and
assessment, and are used as a basis for establishing the allowance for credit losses and charge-offs. The
93
categorization is based on conditions that may affect the ability of borrowers to service their debt, such as current
financial condition and results of operations, historical payment experience, credit documentation, other public
information and current trends.
For more information on our credit and borrower ratings, see “Item 11. Quantitative and Qualitative
Disclosures about Credit, Market and Other Risk—Credit Risk Management.”
For the Commercial, MUFG Americas Holdings and Krungsri segments, our allowance for credit losses
primarily consists of allocated allowances. The allocated allowances consist of (1) an allowance for loans
individually evaluated for impairment, (2) an allowance for large groups of smaller-balance homogeneous loans,
and (3) a formula allowance. The allocated allowance within the Commercial segment also includes an allowance
for country risk exposure. The allowance for credit losses within the MUFG Americas Holdings segment also
includes an unallocated allowance which captures losses that are attributable to economic events in various
industry or geographic sectors whose impact on our loan portfolios in these segments have occurred but have yet
to be recognized in the allocated allowance. For the Residential and Card segments, the loans are smaller-balance
homogeneous loans that are pooled by the risk ratings based on the number of delinquencies.
For more information on our methodologies used to estimate the allowance for each portfolio segment, see
“Summary of Significant Accounting Policies” in Note 1 to our consolidated financial statements and “—Critical
Accounting Estimates—Allowance for Credit Losses” above.
Allowance for off-balance sheet credit instruments
We maintain an allowance for credit losses on off-balance sheet credit instruments, including commitments
to extend credit, guarantees, standby letters of credit and other financial instruments. The allowance is included
in other liabilities. We have adopted for such instruments the same methodology as that which is used in
determining the allowance for credit losses on loans.
The allowance for credit losses on off-balance sheet credit instruments was ¥83.6 billion as of March 31,
2021, an increase of ¥26.6 billion from ¥57.0 billion as of March 31, 2020.
Nonaccrual loans
We consider a loan to be a nonaccrual loan when substantial doubt exists as to the full and timely payment
of interest on, or repayment of, the principal of the loan, which is a borrower condition that generally
corresponds to borrowers in categories 13 and below in our internal rating system (which corresponds to “Likely
to become Bankrupt,” “Virtually Bankrupt” and “Bankrupt or de facto Bankrupt” status under Japanese banking
regulations). Loans are also placed in nonaccrual status when principal or interest is contractually past due one
month or more with respect to loans within all classes of the Commercial segment, three months or more with
respect to loans within the Card, MUFG Americas Holdings, Krungsri and Other segments, and six months or
more with respect to loans within the Residential segment.
For more information on our credit and borrower ratings, see “Item 11. Quantitative and Qualitative
Disclosures about Credit, Market and Other Risk—Credit Risk Management.”
94
Commercial
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Domestic . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Foreign(1)
Residential
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Card . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
MUFG Americas Holdings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Krungsri . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Other . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
As of March 31,
2020
2021
% Change
(in billions, except percentages)
¥ 824.0
565.6
258.4
68.0
60.2
73.7
161.3
26.6
87.3%
80.7
103.5
6.2
(1.6)
105.7
7.8
(4.3)
¥440.0
313.0
127.0
64.0
61.2
35.8
149.7
27.8
Total(2) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
¥778.5
¥1,213.8
55.9%
Notes:
(1) Excludes the loans held by MUFG Americas Holdings, Krungsri and Other.
(2) The above table does not include loans held for sale of ¥0.3 billion and ¥8.6 billion as of March 31, 2020 and 2021, respectively, and
loans acquired with deteriorated credit quality of ¥25.4 billion as of March 31, 2020.
Total nonaccrual loans increased ¥435.3 billion between March 31, 2020 and March 31, 2021, mainly due to
increases in the Commercial segment and the MUFG Americas Holdings segment. These increases mainly
reflected the deterioration in the economic environment due to the impact of the COVID-19 pandemic. In the
Commercial segment, nonaccrual loans increased in industry sectors adversely affected by the COVID-19
pandemic such as the retail services, aircraft finance, and oil and gas sectors. In addition, this increase reflected
borrower credit deterioration of in the domestic automobile parts manufacturing sector. In addition, the
COVID-19 pandemic adversely impacted the MUFG Americas Holdings segment’s portfolio of loans to
borrowers in the real estate sector primarily due to weaker demand for residential real estate.
Investment Portfolio
Our investment securities primarily consist of Japanese government bonds and marketable equity securities.
Japanese government bonds are mostly classified as available-for-sale debt securities. Our investment in Japanese
government bonds is a part of our asset and liability management policy with respect to investing the amount of
Japanese yen-denominated funds exceeding our net loans. The percentage of our holding of available-for-sale
Japanese government bonds to the total investment securities was 61.6% as of March 31, 2021, compared to
53.6% as of March 31, 2020 primarily due to an increase in our holding of short-term Japanese government bonds
provided as collateral for the Bank of Japan’s funds-supplying operations. Primarily for the same reason,
investment securities increased 30.8% as of March 31, 2021, compared to March 31, 2020. We also hold Japanese
government bonds that are classified as held-to-maturity debt securities, which accounted for 1.9% of the total
investment securities as of March 31, 2021.
Historically, we have held equity securities of some of our customers primarily for strategic purposes, in
particular to maintain long-term relationships with these customers. We continue to focus on reducing our
investment in equity securities for such purposes in order to reduce the price fluctuation risk in our equity
portfolio from a risk management perspective and to respond to applicable regulatory requirements as well as
increasing market expectations for us to reduce our equity portfolio. As of March 31, 2020 and 2021, the
aggregate book value of our marketable equity securities under Japanese GAAP satisfied the requirements of the
legislation prohibiting banks from holding equity securities in excess of their Tier 1 capital. In May 2021, we
announced that we would aim to reduce the balance of equity securities held for strategic purposes valued under
Japanese GAAP by approximately ¥300.0 billion within three years. During the fiscal year ended March 31,
2021, we sold down ¥267.0 billion of equity securities held in our strategic equity investment portfolio valued
under Japanese GAAP. As of March 31, 2021, the balance of such securities valued under Japanese GAAP
represented 11.6% of our Tier 1 capital. However, various factors, including market conditions and changes in
our Tier 1 capital ratio, may affect the amount of equity securities we should sell and our ability to achieve the
target as planned.
95
Debt Securities
As of March 31,
2020
2021
% Change
Amortized
cost
Fair
value
Net
unrealized
gains
(losses)
Amortized
cost
Fair
value
Net
unrealized
gains
(losses)
Amortized
cost
Fair
value
Net
unrealized
gains
(losses)
(in billions, except percentages)
Available-for-sale debt securities:
Japanese government and
Japanese government
agency bonds . . . . . . . . . . ¥23,308.5 ¥23,462.9
Japanese prefectural and
¥154.4
¥35,166.2 ¥35,273.2
¥107.0
50.9% 50.3% (30.7)%
municipal bonds . . . . . . . .
2,938.7
2,952.8
14.1
3,719.2
3,731.5
12.3
26.6
26.4
(12.6)
Foreign government and
official institution
bonds . . . . . . . . . . . . . . . .
Corporate bonds . . . . . . . . .
Mortgage-backed
securities . . . . . . . . . . . . .
Asset-backed securities . . . .
Commercial paper . . . . . . . .
Other debt securities . . . . . .
Total available-for-sale debt
2,936.1
1,261.6
3,037.5
1,272.8
101.4
11.2
2,854.0
1,123.3
2,927.0
1,134.3
1,840.0
1,461.1
—
161.8
1,841.6
1,469.5
—
163.1
1.6
8.4
—
1.3
1,895.0
1,373.5
564.1
168.5
1,931.6
1,384.5
564.1
171.6
73.0
11.0
36.6
11.0
0.0
3.1
(2.8)
(11.0)
(3.6)
(10.9)
(28.1)
(2.1)
3.0
(6.0)
N/M
4.1
4.9
(5.8)
N/M
5.2
N/M
31.5
N/M
147.2
securities . . . . . . . . . . . . . . . . . ¥33,907.8 ¥34,200.2
¥292.4
¥46,863.8 ¥47,117.8
¥254.0
38.2% 37.8% (13.2)%
Held-to-maturity debt
securities(1) . . . . . . . . . . . . . . . . ¥ 4,165.8 ¥ 4,177.9
¥ 12.1
¥ 3,903.8 ¥ 3,939.1
¥ 35.3
(6.3)% (5.7)% 192.1%
Note:
(1) See Note 3 to our consolidated financial statements for more details.
Net unrealized gains on available-for-sale debt securities decreased 13.2% primarily due to a decrease in net
unrealized gains on Japanese government and Japanese government agency bonds. We increased our holding of
short-term Japanese government bonds as we provided such bonds as collateral for the Bank of Japan’s
funds-supplying operations. Because the fair value of short-term Japanese government bonds fluctuates less than
the fair value of long-term Japanese government bonds, and because interest rates on long-term Japanese
government bonds were slightly higher at the end of March 2021 compared to the end of March 2020, net
unrealized gains on Japanese government bonds decreased. Net unrealized gains on mortgage-backed securities
in MUFG Americas Holdings increased largely since U.S. interest rates declined at the end of December 2020
compared to the end of December 2019. Net unrealized gains on foreign government and official institution
bonds decreased mainly due to the gradual increase in long-term U.S. interest rates towards the end of
March 2021.
The amortized cost of available-for-sale debt securities increased 38.2% mainly due to a 50.9% increase in
Japanese government and Japanese government agency bonds. This increase was partially offset by decreases in
our holding of corporate bonds and asset-backed securities.
96
Equity Securities
As of March 31,
2020
2021
% Change
Marketable equity securities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Nonmarketable equity securities:
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Unlisted preferred securities(1)
Other(2)
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Investment securities held by investment companies and brokers and
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
dealers(3)
(in billions, except percentages)
¥5,759.5
¥4,768.3
20.8%
350.0
226.9
159.3
258.5
(54.5)
13.9
40.0
45.6
14.0
Total
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
¥5,385.2
¥6,222.9
15.6%
Notes:
(1) These securities are mainly issued by public companies, including preferred stocks issued by Morgan Stanley, and other unlisted
preferred securities issued by several public companies. Those securities are primarily carried at cost.
(2) These securities are equity securities issued by unlisted companies other than unlisted preferred securities. Those securities are primarily
carried at cost.
(3) These investment securities are held by certain subsidiaries subject to specialized industry accounting principles for investment
companies and brokers and dealers, and are measured at fair value.
Equity securities increased 15.6% mainly because marketable equity securities increased as the stock prices
in Japan and the United States increased towards March 31, 2021. Marketable equity securities largely consist of
exchange-traded funds listed on the Tokyo Stock Exchange. The decrease in unlisted preferred securities was
primarily attributable to the reclassification of certain securities at MUFG Bank.
Cash and Due from Banks, and Interest-earning Deposits in Other Banks
Cash and due from banks increased ¥16,694.5 billion to ¥49,977.5 billion as of March 31, 2021 from
¥33,283.0 billion as of March 31, 2020. This increase was primarily because of an increase in deposits with the
Bank of Japan.
Interest-earning deposits in other banks increased ¥8,080.0 billion to ¥53,346.7 billion as of March 31, 2021
from ¥45,266.7 billion as of March 31, 2020. This increase was mainly because of an increase in deposits with
the Bank of Japan.
Receivables under Resale Agreements
Receivables under resale agreements decreased ¥10,216.2 billion to ¥13,779.8 billion as of March 31, 2021
from ¥23,996.0 billion as of March 31, 2020. This decrease was mainly because of a decrease in short-term
funding transactions following the rapid and significant increase in funding needs in the market shortly after the
outbreak of the COVID-19 pandemic in the fourth quarter of the previous fiscal year.
Receivables under Securities Borrowing Transactions
Receivables under securities borrowing transactions decreased ¥74.1 billion to ¥ 3,369.9 billion as of
March 31, 2021 from ¥3,444.0 billion as of March 31, 2020. This decrease was mainly due to a decrease in
collateral deposited for funding in domestic banking and securities subsidiaries.
Trading Account Assets
Trading account assets decreased ¥3,059.7 billion to ¥44,444.4 billion as of March 31, 2021 from
¥47,504.1 billion as of March 31, 2020. Trading account assets consist of trading account securities and trading
97
derivative assets. Trading account securities decreased ¥83.5 billion to ¥32,463.0 billion as of March 31, 2021
from ¥32,546.5 billion as of March 31, 2020. Trading derivative assets decreased ¥2,976.2 billion to
¥11,981.4 billion as of March 31, 2021 from ¥14,957.6 billion as of March 31, 2020 mainly due to long-term
interest rate fluctuations in Japan.
Total Liabilities
As of March 31, 2021, total liabilities were ¥337,580.1 billion, an increase of ¥21,571.3 billion from
¥316,008.8 billion as of March 31, 2020. This was primarily due to an increase of ¥25,252.4 billion in total
deposits and an increase of ¥7,230.9 billion in long-term debt, partially offset by a decrease of ¥7,282.0 billion in
payables under repurchase agreements.
Deposits
Deposits are our primary source of funds. The balance of deposits increased ¥25,252.4 billion to
¥229,206.9 billion as of March 31, 2021 from ¥203,954.5 billion as of March 31, 2020. The increase was mainly
attributable to an increase in domestic deposits.
The total average balance of interest-bearing deposits increased ¥13,244.1 billion to ¥182,755.3 billion for
the fiscal year ended March 31, 2021 from ¥169,511.2 billion for the fiscal year ended March 31, 2020, mainly
due to an increase in domestic deposits.
Payables under Repurchase Agreements
Payables under repurchase agreements decreased ¥7,282.0 billion to ¥24,567.9 billion as of March 31, 2021
from ¥31,849.9 billion as of March 31, 2020. This decrease was mainly because of a decrease in short-term
funding transactions following the rapid and significant increase in funding needs in the market shortly after the
outbreak of the COVID-19 pandemic in the fourth quarter of the previous fiscal year.
Other Short-Term Borrowings
Other short-term borrowings decreased ¥1,867.8 billion to ¥14,187.7 billion as of March 31, 2021 from
¥16,055.5 billion as of March 31, 2020. This decrease was mainly due to our repayment of borrowings from the
Bank of Japan, which were accumulated to meet the rapidly and significantly increasing funding needs in the
market shortly after the outbreak of the COVID-19 pandemic in the fourth quarter of the previous fiscal year.
Long-term Debt
Long-term debt increased ¥7,230.9 billion to ¥35,157.7 billion as of March 31, 2021 from ¥27,926.8 billion
as of March 31, 2020. This increase was mainly because we increased long-term borrowings from the Bank of
Japan in response to the COVID-19 pandemic. The average balance of long-term debt for the fiscal year ended
March 31, 2021 was ¥31,837.7 billion, an increase of ¥3,803.7 billion from ¥28,034.0 billion for the previous
fiscal year.
Sources of Funding and Liquidity
Our primary source of liquidity is from a large balance of deposits, mainly ordinary deposits, certificates of
deposit and time deposits. Time deposits have historically shown a high rollover rate among our corporate
customers and individual depositors. The average deposit balance increased to ¥217,941.0 billion for the fiscal
year ended March 31, 2021 from ¥199,791.8 billion for the fiscal year ended March 31, 2020. These deposits
provide us with a sizable source of stable and low-cost funds. Our average deposits, combined with our average
total equity of ¥15,681.5 billion, funded 65.6% of our average total assets of ¥355,992.6 billion during the fiscal
year ended March 31, 2021. Our deposits exceeded our loans before allowance for credit losses by ¥113,488.0
98
billion as of March 31, 2021 compared to ¥85,767.8 billion as of March 31, 2020. As part of our asset and
liability management policy, a significant portion of the amount of Japanese yen-denominated funds exceeding
our loans has been deposited with the Bank of Japan or invested in Japanese government bonds in recent periods.
The remaining funding was primarily provided by short-term borrowings and long-term senior and
subordinated debt. Short-term borrowings consist of call money, funds purchased, payables under repurchase
agreements, payables under securities lending transactions, due to trust account, and other short-term borrowings.
From time to time, we have issued long-term instruments, including various fixed and floating interest rate senior
and subordinated bonds with and without maturities. The average balance of short-term borrowings for the fiscal
year ended March 31, 2021 was ¥45,671.8 billion. The average balance of long-term debt for the fiscal year
ended March 31, 2021 was ¥31,837.7 billion. Liquidity may also be provided by the sale of financial assets,
including available-for-sale debt securities, marketable equity securities, trading account securities and loans.
Additional liquidity may be provided by the maturity of loans.
Any downgrade of the credit ratings assigned to us or our major subsidiaries could increase the cost, or
decrease the availability, of our funding, particularly in U.S. dollars and other foreign currencies. See “Item 3.D.
Key Information—Risk Factors—Funding Liquidity Risk—A downgrade of our credit ratings could adversely
affect our ability to access and maintain liquidity.”
We manage our group-wide liquidity on a consolidated basis based on the tests and analyses conducted at
the subsidiary level. Our major banking subsidiaries, MUFG Bank and Mitsubishi UFJ Trust and Banking, set
liquidity and funding limits designed to maintain their respective requirements for funding from market sources
below pre-determined levels for certain periods (e.g., one-day, two-week and one-month). They also monitor the
balance of buffer assets they respectively hold, including Japanese government bonds and U.S. Treasury bonds,
which can be used for cash funding even in periods of stress. In addition, they regularly perform liquidity stress
testing designed to evaluate the impact of systemic market stress conditions and institution-specific stress events,
including credit rating downgrades, on their liquidity positions.
We collect and evaluate the results of the stress tests individually performed by our major subsidiaries to
ensure our ability to meet our liquidity requirements on a consolidated basis in stress scenarios.
We manage our funding sources by setting limits on, or targets for, our holdings of buffer assets, primarily
Japanese government bonds. We also regard deposits with the Bank of Japan as buffer assets. In addition, our
commercial banking subsidiaries manage their funding sources through liquidity-supplying products such as
commitment lines and through a liquidity gap, or the excess of cash inflows over cash outflows.
Liquidity Requirements for Banking Institutions in Japan
We are required to calculate and disclose our LCR calculated in accordance with the methodology
prescribed in the FSA guidance that has been adopted to implement the relevant Basel III standard. Starting in
the calendar year 2019, we are required to maintain a minimum LCR of 100%. See “Item 4.B. Information on the
Company—Business Overview—Supervision and Regulation—Japan—Liquidity Coverage Ratio” and
“—B. Liquidity and Capital Resources—Capital Adequacy—Liquidity Coverage Ratios of MUFG and Major
Banking Subsidiaries in Japan.”
99
Total Equity
As of March 31,
2020
2021
% Change
Capital stock . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Capital surplus . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Retained earnings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Retained earnings appropriated for legal reserve . . . . . . . . . . . . . . . . . . .
Unappropriated retained earnings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Accumulated other comprehensive losses, net of taxes . . . . . . . . . . . . . . . . . .
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Treasury stock, at cost
(in billions, except percentages)
¥ 2,090.3
5,533.8
8,829.5
239.6
8,589.9
(289.5)
(503.2)
¥ 2,090.3
5,533.5
8,319.1
239.6
8,079.5
(420.4)
(506.0)
0.0%
0.0
6.1
0.0
6.3
31.1
0.6
Total Mitsubishi UFJ Financial Group shareholders’ equity . . . . . . . . . .
Noncontrolling interests . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
¥15,016.5
728.0
¥15,660.9
583.6
Total equity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
¥15,744.5
¥16,244.5
4.3%
(19.8)
3.2%
Ratio of total equity to total assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
4.75%
4.59%
Capital Adequacy
We are subject to various regulatory capital requirements promulgated by the regulatory authorities of the
countries in which we operate. Failure to meet minimum capital requirements can result in mandatory actions
being taken by regulators that could have a direct material effect on our consolidated financial statements.
Moreover, if our capital ratios are perceived to be low, our counterparties may avoid entering into transactions
with us, which in turn could negatively affect our business and operations. For further information, see
“Item 3.D. Key Information—Risk Factors—Risks Related to Our Ability to Meet Regulatory Capital
Requirements—We may not be able to maintain our capital ratios and other regulatory ratios above minimum
required levels, which could result in various regulatory actions, including the suspension of some or all of our
operations.”
We continually monitor our risk-adjusted capital ratios, leverage ratio and TLAC ratios closely, and manage
our operations in consideration of the capital requirements. Factors that affect some or all of these ratios include
fluctuations in the value of our assets, including our credit risk assets such as loans and equity securities, the risk
weights of which depend on the borrowers’ or issuers’ internal ratings, and marketable securities, and
fluctuations in the value of the Japanese yen against the U.S. dollar and other foreign currencies, as well as
general price levels of Japanese equity securities.
Capital Requirements for Banking Institutions in Japan
Under Japanese regulatory capital requirements, our consolidated capital components, including Common
Equity Tier 1, Tier 1, and Tier 2 capital and risk-weighted assets, are calculated based on our consolidated
financial statements prepared under Japanese GAAP. Each of the consolidated and stand-alone capital
components and risk-weighted assets of our banking subsidiaries in Japan is also calculated based on
consolidated and non-consolidated financial statements prepared under Japanese GAAP.
As of March 31, 2021, we were required to maintain a capital conservation buffer of 2.5%, a G-SIB
surcharge of 1.5% and a countercyclical buffer of 0.00% in addition to the 4.5% minimum Common Equity Tier
1 capital ratio. See “Item 4.B. Information on the Company—Business Overview—Supervision and
Regulation—Japan—Capital adequacy.”
We have been granted approval by the FSA to exclude the majority of our investment in Morgan Stanley
from being subject to double gearing adjustments. The approval was granted for a 10-year period, but the
approval amount will be phased out by 20% each year starting from March 31, 2019. As of March 31, 2021, a
100
full application of double gearing adjustments with respect to our investment in Morgan Stanley would have
reduced our Common Equity Tier 1 capital ratio by approximately 0.4 percentage points.
Leverage Requirements for Banking Institutions in Japan
Our consolidated leverage ratio is calculated in accordance with the methodology prescribed in the FSA guidance
that has been adopted to implement the relevant Basel III standard. The leverage ratio is designed for monitoring
and preventing the build-up of excessive leverage in the banking sector and is expressed as the ratio of Tier 1
capital to total balance sheet assets adjusted in accordance with the FSA guidance. As of March 31, 2021, we
were required to maintain a minimum leverage ratio of 3.00%. A G-SIB leverage ratio buffer equal to 50% of the
applicable G-SIB capital surcharge is expected to be applied to us in 2023. See “Item 4.B. Information on the
Company—Business Overview—Supervision and Regulation—Japan—Leverage Ratio.”
TLAC Requirements for Banking Institutions in Japan
Our external TLAC ratios are calculated in accordance with the methodology prescribed in the FSA
guidance that has been adopted to implement the TLAC Principle published by the FSB in November 2015.
External TLAC ratios are expressed as the ratio of external TLAC amount to risk-weighted assets or leverage
exposure in accordance with the FSA guidance. We are required to maintain external TLAC ratios of 16% on a
risk-weighted assets basis and 6% on a leverage exposure basis from March 31, 2019 and 18% on a risk-
weighted assets basis and 6.75% on a leverage exposure basis from March 31, 2022. See “Item 4.B. Information
on the Company—Business Overview—Supervision and Regulation—Japan—Total loss-absorbing capacity.”
For information on the issuances of TLAC-qualified securities, see also “Recent Developments—Issuances of
Senior Debt Securities for TLAC Purposes.”
Capital Ratios, Leverage Ratio and External TLAC Ratios of MUFG
The figures underlying the amounts and ratios in the table below are calculated in accordance with Japanese
banking regulations based on information derived from our consolidated financial statements prepared in
accordance with Japanese GAAP, as required by the FSA. The amounts and ratios below are rounded down.
Capital components:
Common Equity Tier 1 . . . . . . . . . . .
Additional Tier 1 . . . . . . . . . . . . . . . .
. . . . . . . . . . . . . . . . . . . . . . .
Tier 1 capital
Tier 2 capital
. . . . . . . . . . . . . . . . . . . . . . .
Total capital . . . . . . . . . . . . . . . . . . . . . . . .
Risk-weighted assets . . . . . . . . . . . . . . . . . . . . .
Capital ratios:
Common Equity Tier 1 capital
. . . . . . . . .
. . . . . . . . . . . . . . . . . . . . . . .
Tier 1 capital
Total capital . . . . . . . . . . . . . . . . . . . . . . . .
Leverage ratio(2) . . . . . . . . . . . . . . . . . . . . . . . . .
External TLAC ratios
. . . . . . . . . . .
Risk-weighted assets basis(3)
Leverage exposure basis . . . . . . . . . . . . . .
As of March 31,
2020
Minimum
ratios required(1)
As of March 31,
2021
Minimum
ratios required(1)
(in billions, except percentages)
¥ 13,708.3
1,914.9
15,623.3
2,656.2
¥ 18,279.5
¥115,135.6
¥ 14,113.7
1,869.0
15,982.7
2,686.7
¥ 18,669.5
¥114,419.3
11.90%
13.56
15.87
4.42
18.62
7.38
8.51%
10.01
12.01
3.00
16.00
6.00
12.33%
13.96
16.31
5.45
18.94
8.96
8.50%
10.00
12.00
3.00
16.00
6.00
Notes:
(1) The minimum capital ratios required as of March 31, 2020 include a capital conservation buffer of 2.5%, a G-SIB surcharge of 1.5% and
a countercyclical buffer of 0.01%. The minimum capital ratios required as of March 31, 2021 include a capital conservation buffer of
2.5%, a G-SIB surcharge of 1.5% and a countercyclical buffer of 0.00%.
101
(2) Deposits with the Bank of Japan are excluded from the leverage exposure as of March 31, 2021, based on notification issued by the FSA.
(3) The TLAC ratio on a risk-weighted assets basis and the required minimum ratios as of March 31, 2020 do not include the regulatory
capital buffers consisting of a capital conservation buffer of 2.5%, a G-SIB surcharge of 1.5% and a countercyclical buffer of 0.01%. The
TLAC ratio on a risk-weighted assets basis and the required minimum ratios as of March 31, 2021 do not include the regulatory capital
buffers consisting of a capital conservation buffer of 2.5%, a G-SIB surcharge of 1.5% and a countercyclical buffer of 0.00%.
Management believes that, as of March 31, 2021, we were in compliance with all capital adequacy
requirements to which we were subject.
Our Common Equity Tier 1 capital ratio as of March 31, 2021 was higher compared to the ratio as of
March 31, 2020 due to an increase in Common Equity Tier 1 capital and a decrease in risk-weighted assets. The
increase in Common Equity Tier 1 capital was mainly due to increases in retained earnings and unrealized gains
on available-for-sale securities. The decrease in risk-weighted assets mainly reflected smaller floor adjustments,
which were adjustments made in accordance with prescribed formulae for the differences in exposures calculated
under Basel I and Basel III, more than offsetting the impact of higher credit and market risk-weighted assets
caused by the higher stock value.
Capital Ratios and Leverage Ratios of Major Banking Subsidiaries in Japan
The figures underlying the rations in the table below are calculated in accordance with Japanese banking
regulations based on information derived from each bank’s consolidated and non-consolidated financial
statements prepared in accordance with Japanese GAAP, as required by the FSA. The ratios below are rounded
down
As of
March 31,
2020
Minimum capital
ratios required
As of
March 31,
2021
Minimum capital
ratios required
Consolidated:
MUFG Bank
Common Equity Tier 1 capital ratio . . . . . . . .
Tier 1 capital ratio . . . . . . . . . . . . . . . . . . . . .
Total capital ratio . . . . . . . . . . . . . . . . . . . . . .
. . . . . . . . . . . . . . . . . . . . . . .
Leverage ratio(1)
10.70%
12.29
14.43
4.21
4.50%
6.00
8.00
3.00
11.17%
12.76
15.04
5.22
4.50%
6.00
8.00
3.00
Mitsubishi UFJ Trust and Banking
Common Equity Tier 1 capital ratio . . . . . . . .
Tier 1 capital ratio . . . . . . . . . . . . . . . . . . . . .
Total capital ratio . . . . . . . . . . . . . . . . . . . . . .
. . . . . . . . . . . . . . . . . . . . . . .
Leverage ratio(1)
Stand-alone:
MUFG Bank
Common Equity Tier 1 capital ratio . . . . . . . .
Tier 1 capital ratio . . . . . . . . . . . . . . . . . . . . .
Total capital ratio . . . . . . . . . . . . . . . . . . . . . .
. . . . . . . . . . . . . . . . . . . . . . .
Leverage ratio(1)
Mitsubishi UFJ Trust and Banking
Common Equity Tier 1 capital ratio . . . . . . . .
Tier 1 capital ratio . . . . . . . . . . . . . . . . . . . . .
Total capital ratio . . . . . . . . . . . . . . . . . . . . . .
. . . . . . . . . . . . . . . . . . . . . . .
Leverage ratio(1)
19.46
21.90
25.46
4.51
10.67
12.52
14.76
4.02
20.11
22.27
25.42
5.87
4.50
6.00
8.00
3.00
4.50
6.00
8.00
3.00
4.50
6.00
8.00
3.00
17.99
20.02
22.47
7.53
10.66
12.42
14.60
5.14
17.92
19.73
21.91
8.95
4.50
6.00
8.00
3.00
4.50
6.00
8.00
3.00
4.50
6.00
8.00
3.00
Note:
(1) Deposits with the Bank of Japan are excluded from the leverage exposure as of March 31, 2021, based on notification issued by the FSA.
102
Management believes that, as of March 31, 2021, our banking subsidiaries were in compliance with all
capital adequacy requirements to which they were subject.
Liquidity Coverage Ratios of MUFG and Major Banking Subsidiaries in Japan
The LCRs in the table below are calculated in accordance with Basel III as adopted by the FSA for the
periods indicated. The figures underlying the ratios are calculated in accordance with Japanese banking
regulations. The percentages below are rounded down.
Three months ended
March 31,
2020(1),(6)
June 30,
2020(2),(6)
September 30,
2020(3),(6)
December 31,
2020(4),(6)
March 31,
2021(5),(6)
MUFG (consolidated) . . . . . . . . . . . . . . . . . . . . . . . .
MUFG Bank (consolidated) . . . . . . . . . . . . . . . . . . .
MUFG Bank (stand-alone) . . . . . . . . . . . . . . . . . . . .
Mitsubishi UFJ Trust and Banking
154.6% 151.0%
165.9
179.2
160.0
170.8
160.8%
172.2
184.5
(consolidated) . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Mitsubishi UFJ Trust and Banking (stand-alone) . . .
114.1
130.0
113.7
127.6
118.9
137.2
166.4%
177.6
189.7
122.7
144.1
168.4%
181.2
193.3
121.3
140.9
Notes:
(1) Each of the ratios is calculated as the average balance of High-Quality Liquid Assets on the business days between January 6, 2020 and
March 31 2020 divided by the average amount of net cash outflows for the same fifty-eight business days.
(2) Each of the ratios is calculated as the average balance of High-Quality Liquid Assets on the business days between April 1, 2020 and
June 30, 2020 divided by the average amount of net cash outflows for the same sixty-one business days.
(3) Each of the ratios is calculated as the average balance of High-Quality Liquid Assets on the business days between July 1, 2020 and
September 30, 2020 divided by the average amount of net cash outflows for the same sixty-one business days.
(4) Each of the ratios is calculated as the average balance of High-Quality Liquid Assets on the business days between October 1, 2020 and
December 30, 2020 divided by the average amount of net cash outflows for the same 63 business days.
(5) Each of the ratios is calculated as the average balance of High-Quality Liquid Assets on the business days between January 4, 2021 and
March 31, 2021 divided by the average amount of net cash outflows for the same 60 business days.
(6) The LCR is to be calculated as an average based on daily values in accordance with the Japanese banking regulations.
See “—B. Liquidity and Capital Resources—Sources of Funding and Liquidity.”
Capital Requirements for Banking Institutions in the United States
In the United States, MUFG Americas Holdings and MUFG Union Bank are subject to various regulatory
capital requirements administered by the U.S. Federal banking agencies. Failure to meet the applicable minimum
capital requirements can initiate certain mandatory, and possibly additional discretionary, actions by regulators
that, if undertaken, could have a material effect on MUFG Americas Holdings’ consolidated financial statements.
For a more detailed discussion of the applicable capital requirements, see “Item 4.B. Information on the
Company—Business Overview—Supervision and Regulation—United States.” See also Note 21 to our
consolidated financial statements.
In addition, as foreign banking organizations that have U.S. branches and agencies and also as entities that
are controlled by MUFG, MUFG Bank and Mitsubishi UFJ Trust and Banking are subject to the FRB’s
requirements.
103
Capital Ratios of Banking Subsidiaries in the United States
The table below presents the risk-adjusted capital ratios of MUFG Americas Holdings and MUFG Union
Bank, both subsidiaries of MUFG Bank, calculated in accordance with applicable U.S. banking regulations as of
December 31, 2019 and 2020:
As of
December 31,
2019
Minimum capital
ratios required
as of
December 31,
2019(1)
As of
December 31,
2020
Minimum capital
ratios required
as of
December 31,
2020(2)
Ratio OCC
requires to be
“well capitalized”
as of
December 2020
MUFG Americas Holdings:
Common Equity Tier I
Capital (to risk-
weighted assets) . . . . . .
Tier I capital (to risk-
14.10%
7.00%
15.28%
8.90%
weighted assets) . . . . . .
14.10
Total capital (to risk-
weighted assets) . . . . . .
Tier I capital (to quarterly
. . . . .
average assets)(3)
14.73
8.88
8.50
10.50
4.00
15.28
16.29
9.56
10.40
12.40
4.00
—
—
—
—
MUFG Union Bank:
Common Equity Tier I
Capital (to risk-
weighted assets) . . . . . .
Tier I capital (to risk-
14.47%
7.00%
15.62%
7.00%
6.50%
weighted assets) . . . . . .
14.47
Total capital (to risk-
weighted assets) . . . . . .
Tier I capital (to quarterly
. . . . .
average assets)(3)
15.11
10.65
8.50
10.50
4.00
15.62
16.68
11.12
8.50
10.50
4.00
8.00
10.00
5.00
Notes:
(1) As of December 31, 2019, the minimum capital requirement for MUFG Americas Holdings and MUFG Union Bank includes a capital
conservation buffer of 2.50%.
(2) As of December 31, 2020, the minimum capital requirement for MUFG Americas Holdings includes its standardized capital conservation
buffer of 4.40%, and the requirement for MUFG Union Bank includes a capital conservation buffer of 2.50%.
(3) Excludes certain deductions.
Management believes that, as of December 31, 2020, MUFG Americas Holdings and MUFG Union Bank
were in compliance with all capital adequacy requirements to which they were subject.
As of December 31, 2019 and 2020, the OCC categorized MUFG Union Bank as “well-capitalized.” To be
categorized as “well-capitalized,” MUFG Union Bank must maintain minimum ratios of Common Equity Tier I
capital to risk-weighted assets, Tier 1 capital to risk-weighted assets, Total capital to risk-weighted assets and of
Tier I capital to quarterly average assets (leverage ratio) as set forth in the table.
For further information, see Note 21 to our consolidated financial statements.
Capital Requirements for Securities Firms in Japan and Overseas
We have securities subsidiaries in Japan and overseas, which are also subject to regulatory capital
requirements. In Japan, the Financial Instruments and Exchange Act of Japan and related ordinances require
financial instruments firms to maintain a minimum capital ratio of 120% calculated as a percentage of capital
accounts less certain fixed assets, as determined in accordance with Japanese GAAP, against amounts equivalent
104
to market, counterparty credit and operational risks. Specific guidelines are issued as a ministerial ordinance
which details the definition of essential components of the capital ratios, including capital, deductible fixed asset
items and risks, and related measures. Failure to maintain a minimum capital ratio will trigger mandatory
regulatory actions. A capital ratio of less than 140% will call for additional regulatory reporting, a capital ratio of
less than 120% may result in an order to change the method of business, and a capital ratio of less than 100%
may lead to a suspension of all or part of the business for a period of time and cancellation of a registration.
Overseas securities subsidiaries are subject to the relevant regulatory capital requirements of the countries or
jurisdictions in which they operate.
Capital Ratio of Mitsubishi UFJ Morgan Stanley Securities
As of March 31, 2021, Mitsubishi UFJ Morgan Stanley Securities’ capital accounts less certain fixed assets
of ¥475.3 billion on a stand-alone basis represented 275.4% of the total amounts equivalent to market,
counterparty credit and operational risks. Capital ratio information of Mitsubishi UFJ Morgan Stanley Securities
on a consolidated basis as of March 31, 2021 is no longer disclosed following its merger with Mitsubishi UFJ
Morgan Stanley PB Securities, which was the only consolidated subsidiary of Mitsubishi UFJ Morgan Stanley
Securities, in August 2020. As of March 31, 2020, Mitsubishi UFJ Morgan Stanley Securities’ capital accounts
less certain fixed assets of ¥440.5 billion on a stand-alone basis represented 313.0% of the total amounts
equivalent to market, counterparty credit and operational risks. As of the same date, Mitsubishi UFJ Morgan
Stanley Securities’ capital accounts less certain fixed assets of ¥465.3 billion on a consolidated basis represented
316.2% of the total amounts equivalent to market, counterparty credit and operational risks. These figures are
calculated in accordance with Japanese GAAP, pursuant to the Financial Instruments and Exchange Act of Japan.
For further information, see Note 21 to our consolidated financial statements.
Non-exchange Traded Contracts Accounted for at Fair Value
The use of non-exchange traded or over-the-counter contracts provides us with the ability to adapt to the
varied requirements of a wide customer base while mitigating market risks. Non-exchange traded contracts are
accounted for at fair value, which is generally based on pricing models or quoted prices for instruments with
similar characteristics. Gains or losses on non-exchange traded contracts are included in “Trading account profits
(losses)—net” in our consolidated statements of income.
Fiscal years ended March 31,
2020
2021
(in millions)
¥ 990
¥ 653
(706)
719
—
(350)
20
359
1
(353)
¥ 680
Net fair value of contracts outstanding at beginning of fiscal year
Changes attributable to contracts realized or otherwise settled during the fiscal
. . . . . . . . . . . . . . . .
year . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
. . . . . . . . . . . . . . . . . . .
Fair value of new contracts entered into during the fiscal year
Changes in fair values attributable to changes in valuation techniques and
assumptions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
. . . . . . . . . . .
Other changes in fair value, principally revaluation at end of fiscal year
Net fair value of contracts outstanding at end of fiscal year . . . . . . . . . . . . . . . . . . . . . .
¥ 653
105
Maturities of Non-exchange Traded Contracts
As of March 31, 2021
Net fair value of contracts—unrealized gains
Prices provided by
other external sources
Prices based on models and
other valuation methods
(in millions)
Maturity less than 1 year . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Maturity less than 3 years . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Maturity less than 5 years . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Maturity 5 years or more . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Total fair value . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
¥—
—
—
—
¥—
¥ 15
728
—
(63)
¥680
C. Research and Development, Patents and Licenses, etc.
Not applicable.
D. Trend Information
See the discussions in “—Business Environment,” “—Recent Developments,” “—A. Operating Results”
and “—B. Liquidity and Capital Resources.”
E. Off-Balance Sheet Arrangements
As of March 31, 2021
Amount of commitment by expiration period
1 year
or less
1-5
years
Over
5 years
Total
(in billions)
Guarantees:
Standby letters of credit and financial guarantees . . . . . . . . . . . . . .
Performance guarantees . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Derivative instruments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Liabilities of trust accounts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Other . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
¥ 3,174
2,315
15,534
5,667
6
¥
698
755
15,104
718
34
¥
183
123
7,861
4,271
—
¥ 4,055
3,193
38,499
10,656
40
Total guarantees . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
26,696
17,309
12,438
56,443
Other off-balance sheet instruments:
. . . . . . . . . . . . . . . . . . . . . . . . . . . .
Commitments to extend credit
Commercial letters of credit
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Commitments to make investments . . . . . . . . . . . . . . . . . . . . . . . .
56,298
790
25
25,801
44
110
2,515
1
146
84,614
835
281
Total other off-balance sheet instruments . . . . . . . . . . . . . . . .
¥57,113
¥25,955
¥ 2,662
¥85,730
See Note 24 to our consolidated financial statements for a description of the nature of our guarantees and
other off-balance sheet instruments.
The contractual amounts of these guarantees and other off-balance sheet instruments represent the amounts
at risk if the contracts were to be fully drawn upon as a result of a subsequent default by our customer and a
decline in the value of the underlying collateral. Since many of these commitments expire without being drawn
upon, the total contractual or notional amounts of these commitments do not necessarily represent our future cash
requirements. As of March 31, 2021, approximately 59% of these commitments have an expiration date within
106
one year, 30% have an expiration date from one year to five years, and 11% have an expiration date after five
years. Risks relating to off-balance sheet instruments are monitored and managed as a part of our risk
management system as set forth in “Item 11. Quantitative and Qualitative Disclosures about Credit, Market and
Other Risk.” We evaluate off-balance sheet arrangements in the manner described in Note 1 to our consolidated
financial statements.
The fees generated specifically from off-balance sheet arrangements are not a dominant source of our
overall fees and commissions.
Some of our off-balance sheet arrangements are related to activities of special purpose entities, most of
which are VIEs. For further information, see Note 25 to our consolidated financial statements.
F. Tabular Disclosure of Contractual Obligations
Contractual obligations:
As of March 31, 2021
Payments due by period
Less than
1 year
1-3
years
3-5
years
Over
5 years
Total
(in billions)
Time deposit obligations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ¥56,683 ¥ 7,464 ¥ 1,420 ¥ 826 ¥ 66,393
110
. . . .
Estimated interest expense on time deposit obligations(1)
35,149
Long-term debt obligations . . . . . . . . . . . . . . . . . . . . . . . . . . .
22
Financing lease obligations . . . . . . . . . . . . . . . . . . . . . . . . . . .
504
Operating lease obligations . . . . . . . . . . . . . . . . . . . . . . . . . . .
375
Purchase obligations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
2
18,670
2
92
123
95
3,864
8
106
90
1
7,673
2
163
45
12
4,942
10
143
117
Total(2)(3) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ¥60,846 ¥12,688 ¥20,309 ¥8,710 ¥102,553
Notes:
(1) Contractual obligations related to estimated interest expense on time deposit obligations are calculated by applying the March 31, 2021
weighted-average interest rate on outstanding time deposits.
(2) The total amount of expected future pension payments is not included in the above table or the total amount of commitments outstanding
as of March 31, 2021. We expect to contribute approximately ¥23.3 billion for pension and other benefits for our employees for the fiscal
year ending March 31, 2022. For further information, see Note 13 to our consolidated financial statements.
(3) The above table does not include unrecognized tax benefits and interest and penalties related to income tax associated with the guidance
on accounting for uncertainty in income taxes as we cannot estimate reasonably the timing of cash settlement of the liabilities for
unrecognized tax benefits. The total amount of the liabilities for unrecognized tax benefits is ¥13.8 billion as of March 31, 2021. Among
the liabilities for unrecognized tax benefits, it is reasonably possible that the unrecognized tax benefits will not increase or decrease
during the next twelve months. For further information, see Note 8 to our consolidated financial statements.
Purchase obligations include any legally binding contractual obligations that require us to spend more than
¥100 million annually under the contract. Purchase obligations in the table primarily include commitments to
make investments into corporate recovery or private equity investment funds.
G. Safe Harbor
See the discussion under “Forward-Looking Statements.”
107
Item 6.
Directors, Senior Management and Employees.
A. Directors and Senior Management
Members of the Board of Directors
The following table sets forth the members of our board of directors as of June 29, 2021, together with their
respective dates of birth, positions and experience:
Name
(Date of Birth)
Mariko Fujii
(March 9, 1955)
Position in MUFG
Business Experience
Member of the Board
of Directors
(Outside Director)
April 1977
July 1997
Joined Ministry of Finance of Japan
Director, International Affairs and Research
Division, Customs and Tariff Bureau,
Ministry of Finance
April 1999
Associate Professor, Research Center for
Advanced Science and Technology, The
University of Tokyo
March 2001
Professor, Research Center for Advanced
April 2004
Economic Engineering, The University of
Tokyo
Professor, Research Center for Advanced
Science and Technology, National
University Corporation, The University of
Tokyo
June 2014
Outside Director of Electric Power
Development Co., Ltd.
October 2015
Resigned from Professor of The University of
Tokyo
Resigned from an Outside Director of Electric
Power Development Co., Ltd.
Ambassador Extraordinary and Plenipotentiary
of Japan to the Republic of Latvia
Emeritus Professor of The University of
Tokyo (incumbent)
Retired from Ambassador Extraordinary and
Plenipotentiary of Japan to the Republic of
Latvia
June 2016
January 2019
June 2019
Outside Director of NTT DATA
CORPORATION (incumbent)
Member of the Board of Directors (Outside
Director) of MUFG (incumbent)
Keiko Honda
(September 27, 1961)
Member of the Board
of Directors
(Outside Director)
April 1984
May 1986
Joined Bain & Company Japan, Incorporated
Joined Shearson Lehman Brothers Securities
Co., Ltd.
July 1989
July 1999
July 2007
Joined McKinsey & Company, Inc. Japan
Partner of McKinsey & Company, Inc. Japan
Director (Senior Partner) of McKinsey &
July 2013
Executive Vice President & CEO of
Company, Inc. Japan
Multilateral Investment Guarantee Agency
(World Bank Group)
108
Name
(Date of Birth)
Position in MUFG
Business Experience
October 2019
Retired from Multilateral Investment
January 2020
Joined Columbia University School of
Guarantee Agency (World Bank Group)
International and Public Affairs as Adjunct
Professor and Adjunct Senior Research
Scholar (incumbent)
March 2020
June 2020
Outside Director of AGC Inc. (incumbent)
Member of the Board of Directors (Outside
Director) of MUFG (incumbent)
Kaoru Kato
(May 20, 1951)
Member of the Board
April 1977
Joined Nippon Telegraph and Telephone
of Directors
(Outside Director)
July 1999
Public Corporation (NTT)
General Manager of Plant Department of NTT
Kansai Mobile Communications Network,
Inc.
April 2000
General Manager of Plant Department of NTT
June 2002
General Manager of Corporate Strategy and
DoCoMo Kansai, Inc.
July 2005
Planning Department, Member of the Board
of Directors of NTT DoCoMo Kansai, Inc.
Representative Director and Senior Corporate
Executive Officer of Sumitomo Mitsui Card
Co., Ltd.
July 2007
Executive Vice President, General Manager of
June 2008
June 2012
Corporate Strategy and Planning
Department, Member of the Board of
Directors of NTT DoCoMo Kansai, Inc.
Executive Vice President, General Manager of
Corporate Strategy and Planning
Department, Member of the Board of
Directors of NTT DOCOMO, INC.
President and Chief Executive Officer,
Member of the Board of Directors of NTT
DOCOMO, INC.
June 2016
Corporate Advisor, Member of the Board of
Directors of NTT DOCOMO, INC.
June 2018
Corporate Advisor of NTT DOCOMO, INC.
(incumbent)
June 2019
Member of the Board of Directors (Outside
March 2021
Non-executive Director of Kirin Holdings
Director) of MUFG (incumbent)
Company, Limited (incumbent)
Satoko Kuwabara
Member of the Board
April 1990
Registered as an attorney at law, Member of
(November 1, 1964)
of Directors
(Outside Director)
the Daini Tokyo Bar Association
Joined Mori Sogo (currently Mori Hamada &
Matsumoto)
January 1998
June 2016
Partner of Mori Hamada & Matsumoto
Outside Director of BANDAI NAMCO
Holdings Inc. (incumbent)
March 2020
Outside Auditor of Unicafe Inc. (incumbent)
109
Name
(Date of Birth)
Position in MUFG
Business Experience
April 2020
June 2020
Partner of Gaien Partners (incumbent)
Outside Audit and Supervisory Board Member
of Nippon Yusen Kabushiki Kaisha
(incumbent)
June 2021
Member of the Board of Director (Outside
Director) of MUFG (incumbent)
Toby S. Myerson
(July 20, 1949)
Member of the Board
of Directors
(Outside Director)
September 1977 Registered as an attorney at law, admitted in
States of New York and California in the
United States
October 1981
Joined Paul, Weiss, Rifkind, Wharton &
June 1983
Partner of Paul, Weiss, Rifkind, Wharton &
Garrison LLP
Garrison LLP
April 1989
Managing Director of Wasserstein Perella &
Co. Inc.
November 1990 Partner of Paul, Weiss, Rifkind, Wharton &
Garrison LLP
June 2014
December 2016 Retired from Paul, Weiss, Rifkind, Wharton &
Outside Director of BK(US) (incumbent)
Garrison LLP
January 2017
Chairman & CEO of Longsight Strategic
Advisors LLC (incumbent)
February 2017 Outside Director of MUAH (incumbent)
June 2017
Member of the Board of Directors (Outside
Hirofumi Nomoto
Member of the Board
(September 27, 1947)
of Directors
(Outside Director)
April 1971
April 2003
Director) of MUFG (incumbent)
Joined TOKYU CORPORATION
Executive General Manager of Media
Business Headquarters of TOKYU
CORPORATION
April 2004
President & Representative Director of its
June 2007
communications Inc.
Director of TOKYU CORPORATION
Executive Officer of Real Estate Development
Business Unit of TOKYU CORPORATION
January 2008 Managing Director of TOKYU
CORPORATION
June 2008
Senior Managing Director of TOKYU
April 2010
June 2010
CORPORATION
Executive Officer & Senior Executive General
Manager of Urban Life Produce Business
Unit of TOKYU CORPORATION
Senior Managing Director & Representative
Director of TOKYU CORPORATION
April 2011
President & Representative Director of
TOKYU CORPORATION
April 2018
Chairman & Representative Director of
TOKYU CORPORATION (incumbent)
President & CEO of THREE HUNDRED
CLUB CO., LTD. (incumbent)
Member of the Board of Directors (Outside
Director) of MUFG (incumbent)
June 2019
110
Name
(Date of Birth)
Position in MUFG
Business Experience
Yasushi Shingai
Member of the Board
April 1980
Joined Japan Tobacco and Salt Public
(January 11, 1956)
of Directors
(Outside Director)
July 2001
Corporation (current Japan Tobacco Inc.)
Vice President of Financial Planning Division
of Japan Tobacco Inc.
June 2004
Senior Vice President, Head of Finance Group
of Japan Tobacco Inc.
July 2004
Senior Vice President, Chief Financial Officer
June 2005
Member of the Board, Senior Vice President,
of Japan Tobacco Inc.
and Chief Financial Officer of Japan
Tobacco Inc.
June 2006
Member of the Board of Japan Tobacco Inc.,
Executive Vice President and Deputy CEO of
JT International S.A.
June 2011
Representative Director and Executive Vice
President of Japan Tobacco Inc.
June 2014
External Board Director of Recruit Holdings
Co., Ltd.
January 2018 Member of the Board of Japan Tobacco Inc.
Outside Director of Asahi Group Holdings,
March 2018
Ltd. (incumbent)
June 2018
Member of the Board of Directors (Outside
Director) of MUFG (incumbent)
June 2019
Outside Director of Dai-ichi Life Holdings,
Inc. (incumbent)
October 1984
September 1988 Registered as Certified Public Accountant in
Joined Peat Marwick Mitchell & Company
Japan
February 1989 Resident Representative, Zurich, Switzerland
Senior Partner of Ernst & Young ShinNihon
July 2004
LLC
February 2016 Chairman and CEO of Ernst & Young
ShinNihon LLC
July 2019
Chairman & CEO of EY Japan Godo Kaisha
Member of the Board of Directors, EY Japan
Co., Ltd.
June 2021
Member of the Board of Directors (Outside
Director) of MUFG (incumbent)
June 1975
January 1988
Joined the Bank of Thailand
Economist, International Monetary Fund (On
the Secondment)
Koichi Tsuji
(April 10, 1957)
Member of the Board
of Directors
(Outside Director)
Tarisa Watanagase
Member of the Board
(November 30, 1949)
of Directors
(Outside Director)
Deputy Governor of the Bank of Thailand
October 2002
November 2006 Governor of the Bank of Thailand
September 2010 Retired from the Bank of Thailand
March 2013
Outside Director of the Siam Cement Public
Company Limited (incumbent)
June 2017
Member of the Board of Directors (Outside
Director) of MUFG (incumbent)
111
Name
(Date of Birth)
Ritsuo Ogura
Position in MUFG
Member of the Board
(January 21, 1964)
of Directors
April 1986
June 2012
May 2016
May 2017
April 2019
April 2020
June 2020
Business Experience
Joined The Sanwa Bank, Limited
Executive Officer of BK
Executive Officer of MUFG
Managing Executive Officer of BK
Managing Executive Officer of MUFG
Managing Corporate Executive of MUFG
Managing Executive Officer of MUFG
Member of the Board of Directors of MUFG
(incumbent)
Kenichi Miyanaga
Member of the Board
April 1982
Joined The Toyo Trust and Banking Company,
(February 25, 1960)
of Directors
Limited
June 2009
June 2013
June 2016
June 2017
June 2021
Kanetsugu Mike
Member of the Board
(November 4, 1956)
of Directors
April 1979
June 2005
Chairman
(Corporate
Executive)
Executive Officer of TB
Director and Managing Executive Officer of
TB
Senior Managing Executive Officer of TB
Director, Deputy President, and Executive
Officer of TB
Managing Executive Officer of MUFG
Member of the Board of Directors of MUFG
(incumbent)
Joined The Mitsubishi Bank, Limited
Executive Officer of Bank of
Tokyo-Mitsubishi, Ltd.
Executive Officer of Mitsubishi Tokyo
Financial Group, Inc.
May 2009
May 2011
June 2011
Managing Executive Officer of BK
Managing Executive Officer of MUFG
Member of the Board of Directors, Managing
May 2013
October 2015
May 2016
Executive Officer of BK
Senior Managing Executive Officer of BK
Executive Chairman of MUAH
Executive Chairman of BK(US)
Deputy President and Executive Officer of BK
Senior Managing Corporate Executive of
MUFG
June 2016
Member of the Board of Directors, Deputy
President of BK
June 2017
President & CEO of BK
Member of the Board of Directors, Deputy
Chairman of MUFG
April 2019
Member of the Board of Directors,
President & Group CEO of MUFG
April 2020
Member of the Board of Directors, Deputy
Chairman of MUFG
April 2021
Member of the Board of Directors, Chairman
of MUFG (incumbent)
112
Name
(Date of Birth)
Saburo Araki
(August 6, 1957)
Position in MUFG
Member of the Board
of Directors
Deputy Chairman
(Representative
Corporate
Executive)
April 1981
June 2007
May 2009
May 2011
June 2012
June 2014
May 2015
June 2015
Business Experience
Joined The Mitsubishi Bank, Limited
Executive Officer of BK
Executive Officer of MUFG
Managing Executive Officer of BK
Managing Executive Officer of MUFG
Member of the Board of Directors, Managing
Executive Officer of BK
Member of the Board of Directors of MUFG
Managing Executive Officer of MUFG
Member of the Board of Directors, Senior
Managing Executive Officer of BK
Senior Managing Corporate Executive of
MUFG
May 2016
Member of the Board of Directors, Deputy
April 2018
June 2018
President of BK
President & CEO of SCHD (incumbent)
President & CEO of MUMSS (incumbent)
Deputy Chairman of MUFG
Member of the Board of Directors, Deputy
Chairman of MUFG (incumbent)
Iwao Nagashima
Member of the Board
April 1985
Joined The Mitsubishi Trust and Banking
(March 15, 1963)
of Directors
Deputy Chairman
(Representative
Corporate
Executive)
June 2011
June 2013
June 2015
June 2016
Corporation
Executive Officer of TB
Managing Executive Officer of TB
Executive Officer of MUFG
Director and Managing Executive Officer of
TB
Managing Executive Officer of TB
Director and Senior Managing Executive
Officer of TB
April 2019
Director, Deputy President, and Executive
Junichi Hanzawa
Member of the Board
(January 19, 1965)
of Directors
Deputy Chairman
(Representative
Corporate
Executive)
Officer of TB
Senior Managing Corporate Executive of
MUFG
President & CEO of MU Trust Apple Planning
Company, Ltd.
President & CEO of TB (incumbent)
Deputy Chairman of MUFG
Member of the Board of Directors, Deputy
Chairman of MUFG (incumbent)
Joined The Mitsubishi Bank, Limited
Executive Officer of BK
Executive Officer of MUFG
Managing Executive Officer of BK
Managing Corporate Executive of MUFG
Member of the Board of Directors, Managing
Executive Officer of BK
President & CEO of BK (incumbent)
Deputy Chairman of MUFG
April 2020
June 2020
April 1988
June 2014
May 2018
April 2019
June 2019
April 2021
113
Name
(Date of Birth)
Position in MUFG
Business Experience
Hironori Kamezawa
Member of the Board
(November 18, 1961)
of Directors
President & Group
CEO
(Representative
Corporate
Executive)
June 2021
Member of the Board of Directors, Deputy
Chairman of MUFG (incumbent)
April 1986
June 2010
May 2014
July 2014
May 2017
June 2017
May 2018
Joined The Mitsubishi Bank, Limited
Executive Officer of BK
Executive Officer of MUFG
Managing Executive Officer of BK
Managing Executive Officer of MUFG
Deputy CEO of Americas at BK(US)
Managing Corporate Executive of MUFG
Member of the Board of Directors, Managing
Executive Officer of BK
Member of the Board of Directors, Senior
Managing Executive Officer of BK
Senior Managing Corporate Executive of
MUFG
December 2018 CEO and Representative of the Board of
April 2019
Directors of Global Open Network, Inc.
Deputy President of MUFG
Member of the Board of Directors, Deputy
President of BK
CEO and Representative of the Board of
Directors of Global Open Network Japan,
Inc.
June 2019
Member of the Board of Directors, Deputy
President of MUFG
August 2019
April 2020
Chairman of Global Open Network Japan, Inc.
Member of the Board of Directors of BK
(incumbent)
Member of the Board of Directors,
President & Group CEO of MUFG
(incumbent)
May 2021
Director of Morgan Stanley (incumbent)
Note: The following abbreviations are used in the table above:
“BK” refers to MUFG Bank, Ltd. or its former name The Bank of Tokyo-Mitsubishi UFJ, Ltd.
“TB” refers to Mitsubishi UFJ Trust and Banking Corporation.
“SCHD” refers to Mitsubishi UFJ Securities Holdings Co., Ltd.
“BK(US)”refers to MUFG Union Bank, N.A.
“MUAH” refers to MUFG Americas Holdings Corporation.
114
Corporate Executives
The following table sets forth our corporate executives as of June 29, 2021, together with their respective
dates of birth, positions and experience:
Name
(Date of Birth)
Kanetsugu Mike
(November 4, 1956)
Saburo Araki
(August 6, 1957)
Iwao Nagashima
(March 15, 1963)
Junichi Hanzawa
(January 19, 1965)
Hironori Kamezawa
(November 18, 1961)
Masato Miyachi
(June 14, 1960)
Position in MUFG
See “Members of the
Board of Directors”
under this Item 6.A.
See “Members of the
Board of Directors”
under this Item 6.A.
See “Members of the
Board of Directors”
under this Item 6.A.
See “Members of the
Board of Directors”
under this Item 6.A.
See “Members of the
Board of Directors”
under this Item 6.A.
See “Members of the Board of Directors” under this Item 6.A.
Business Experience
See “Members of the Board of Directors” under this Item 6.A.
See “Members of the Board of Directors” under this Item 6.A.
See “Members of the Board of Directors” under this Item 6.A.
See “Members of the Board of Directors” under this Item 6.A.
Senior Managing
Corporate Executive
(Group Head, Global
Corporate &
Investment Banking
Business Group)
April 1984
June 2010
May 2014
October 2014
May 2017
May 2018
June 2018
July 2018
Joined The Bank of Tokyo, Ltd.
Executive Officer of BK
Managing Executive Officer of BK
Managing Executive Officer of MUFG
Chairman of MUAH
Chairman of BK(US)
Senior Managing Executive Officer of BK
Member of the Board of Directors, Senior
Managing Executive Officer of BK
Senior Managing Corporate Executive of
MUFG (incumbent)
April 2019
Member of the Board of Directors, Deputy
President of BK (incumbent)
Takayoshi Futae
Senior Managing
(January 16, 1961)
Corporate Executive
(Group Head, Global
Commercial
Banking Business
Group
Group Chief
Operational Officer-
International, or
Group COO-I in
charge of Overseas
Business
Transformation)
April 1983
June 2010
May 2014
May 2016
May 2017
April 2019
June 2019
April 2021
115
Joined The Sanwa Bank, Limited
Executive Officer of BK
Managing Executive Officer of BK
Managing Executive Officer of MUFG
Senior Managing Executive Officer of BK
Senior Managing Corporate Executive of
MUFG
Senior Managing Executive Officer of
SCHD (incumbent)
Member of the Board of Directors, Senior
Managing Executive Officer of BK
Member of the Board of Directors, Deputy
President of BK (incumbent)
Name
(Date of Birth)
Masahiro Kuwahara
(November 11,
1962)
Position in MUFG
Business Experience
Senior Managing
Corporate Executive
April 1986
June 2012
(Group Chief Risk
Officer, or CRO)
May 2016
May 2019
June 2019
April 2020
Joined The Mitsubishi Bank, Limited
Executive Officer of BK
Executive Officer of MUFG
Managing Executive Officer of BK
Managing Executive Officer of MUFG
Managing Corporate Executive of MUFG
Member of the Board of Directors,
Managing Executive Officer of BK
Member of the Board of Directors, Senior
Managing Executive Officer of BK
(incumbent)
Senior Managing Corporate Executive of
MUFG (incumbent)
Yoshitaka Shiba
(July 25, 1961)
Senior Managing
Corporate Executive
(Group Chief Audit
Officer, or CAO)
Managing Director,
Head of Internal
Audit Division
April 2021
Member of the Board of Directors of SCHD
April 1986
June 2012
July 2015
May 2016
April 2020
(incumbent)
Joined The Tokai Bank, Ltd.
Executive Officer of BK
Executive Officer of MUFG
Managing Executive Officer of BK
Senior Managing Corporate Executive of
MUFG (incumbent)
Tetsuya Yonehana
Senior Managing
April 1986
Joined The Mitsubishi Trust and Banking
(February 10, 1964)
Corporate Executive
(Group Chief Financial
Officer, or CFO)
June 2012
June 2015
June 2016
April 2019
April 2020
June 2020
Naomi Hayashi
(March 16, 1965)
Senior Managing
Corporate Executive
(Group Head, Japanese
April 1987
June 2013
Corporate &
Investment Banking
Business Group in
charge of
Research &
Advisory Planning
Division )
January 2017
May 2018
June 2018
April 2021
116
Corporation
Executive Officer of TB
Executive Officer of MUFG
Managing Executive Officer of TB
Director and Managing Executive Officer
of TB
Managing Executive Officer of MUFG
Director and Senior Managing Executive
Officer of TB
Senior Managing Executive Officer of BK
Senior Managing Corporate Executive of
MUFG (incumbent)
Member of the Board of Directors, Senior
Managing Executive Officer of BK
(incumbent)
Joined The Mitsubishi Bank, Limited
Executive Officer of BK
Executive Officer of MUFG
Managing Executive Officer of BK
Managing Corporate Executive of MUFG
Member of the Board of Directors,
Managing Executive Officer of BK
Member of the Board of Directors of
SCHD
Member of the Board of Directors, Senior
Managing Executive Officer of BK
(incumbent)
Senior Managing Corporate Executive of
MUFG (incumbent)
Name
(Date of Birth)
Position in MUFG
Business Experience
Atsushi Miyata
Senior Managing
(March 29,1964)
Corporate Executive
(Group Head, Retail &
Commercial
Banking Business
Group, Head of
Wealth Management
Unit)
April 1987
June 2013
May 2015
May 2017
July 2018
April 2021
June 2021
Joined The Sanwa Bank, Limited
Executive Officer of BK
Executive Officer of MUFG
Managing Executive Officer of BK
Managing Executive Officer of MUFG
Senior Managing Executive Officer of BK
Senior Managing Corporate Executive of
MUFG (incumbent)
Member of the Board of Directors, Senior
Managing Executive Officer of BK
(incumbent)
Senior Managing
April 1987
Joined The Mitsubishi Trust and Banking
Takayuki Yasuda
(June 19, 1963)
Corporate Executive
(Group Head, Asset
Management &
Investor Services
Business Group)
June 2013
February 2015
June 2017
April 2021
Corporation
Executive Officer of TB
Executive Officer of MUFG
Managing Executive Officer of TB
Director and Senior Managing Executive
Officer of TB (incumbent)
Senior Managing Corporate Executive of
MUFG (incumbent)
Joined The Mitsubishi Bank, Limited
Executive Officer of BK
Executive Officer of MUFG
Managing Corporate Executive of MUFG
Managing Executive Officer of BK
Managing Executive Officer of MUFG
Member of the Board of Directors,
Managing Executive Officer of BK
Member of the Board of Directors, Senior
Managing Executive Officer of BK
(incumbent)
Yoshifuji Shigeru
(June 29, 1962)
Senior Managing
Corporate Executive
April 1987
June 2012
(Group Head, Global
Markets Business
Group)
May 2016
April 2019
June 2019
April 2020
April 2021
Senior Managing Corporate Executive of
Hiroki Kameda
(May 17, 1965)
Managing Corporate
Executive
(Group Chief
Information Officer,
or CIO)
April 1988
June 2014
June 2018
MUFG (incumbent)
Joined The Mitsubishi Bank, Limited
Executive Officer of BK
Executive Officer of MUFG
President & CEO of Mitsubishi UFJ
Information Technology, Ltd.
(incumbent)
April 2019
Managing Executive Officer of BK
Managing Corporate Executive of MUFG
June 2019
Member of the Board of Directors,
(incumbent)
Managing Executive Officer of BK
(incumbent)
President & CEO of MU Business
Engineering, Ltd. (incumbent)
June 2021
117
Name
(Date of Birth)
Hiroshi Mori
Position in MUFG
Business Experience
Managing Corporate
April 1989
Joined Development Bank of Japan
(February 21,1965)
Executive
(Group Chief Legal
Officer, or CLO)
(currently Development Bank of Japan,
Inc.)
April 1993
Seconded to Finance Bureau of Ministry of
June 2003
Seconded to Tesac Corporation, a
Home Affairs
Company under reorganization Trustee
representative, Manager of Corporate
Planning Department
October 2006
November 2010
January 2012
June 2013
Registered as attorney at law
Joined Nishimura & Asahi
Outside Director, USEN Corporation
Partner at Nishimura & Asahi
Substitute Auditor of KAGOME CO.,
LTD.
March 2016
Outside Director, Audit & Supervisory
Committee Member of KAGOME CO.,
LTD.
June 2016
Outside Director, Audit & Supervisory
June 2019
Committee Member of SCHD
Member of the Board of Directors,
Managing Executive Officer of
BK(incumbent)
Managing Corporate Executive of MUFG
(incumbent)
Managing Corporate
April 1990
Joined The Mitsubishi Trust and Banking
Tomohiro Kimura
(June 7, 1967)
Masakazu Osawa
(June 20, 1968)
Executive
(Group Chief Human
June 2017
April 2020
Resource Officer, or
Group CHRO
Group Deputy Chief
Digital
Transformation
Officer, or Group
Deputy CDTO
Group Deputy Chief
Information Officer
or Group Deputy
CIO)
Managing Corporate
Executive
(Group Head, Digital
Service Business
Group
Group Chief Digital
Transformation
Officer, or Group
CDTO)
Corporation
Executive Officer of TB
Executive Officer of MUFG
Director and Managing Executive Officer
of TB (incumbent)
Managing Corporate Executive of MUFG
(incumbent)
President & CEO of MU Trust Apple
Planning Company, Ltd. (incumbent)
President & CEO of M.U.Trust Sougou
Kanri Co., Ltd.
April 2021
President & CEO of Mitsubishi UFJ Trust
Systems Co., Ltd.(incumbent)
Joined The Mitsubishi Bank, Limited
Executive Officer of BK
Executive Officer of MUFG
Managing Executive Officer of BK
Managing Corporate Executive of MUFG
(incumbent)
CEO and Representative of the Board of
Directors of Global Open Network, Inc.
(incumbent)
Chairman and Representative of the Board
of Directors of Global Open Network
Japan, Inc. (incumbent)
April 1991
June 2017
April 2020
118
Name
(Date of Birth)
Position in MUFG
Business Experience
Yutaka Miyashita
Managing Corporate
April 1990
Joined The Sanwa Bank, Limited
(October 11, 1967)
Executive
June 2020
Member of the Board of Directors,
Managing Executive Officer of BK
(incumbent)
(Group Chief Strategy
Officer or Group
CSO (Corporate
Planning Division
excluding
Finances &
Resources
Management and
Global Business) in
charge of Corporate
Administration
Division)
June 2016
April 2020
June 2020
Executive Officer of BK
Executive Officer of MUFG
Managing Executive Officer of BK
Managing Executive Officer of MUFG
Member of the Board of Directors,
Managing Executive Officer of BK
(incumbent)
April 2021
Managing Corporate Executive of MUFG
(incumbent)
Keitaro Tsukiyama
Managing Corporate
(December 7,1967)
Executive
(Group Chief
Compliance Officer,
or Group CCO)
April 1991
June 2018
April 2021
Joined The Mitsubishi Bank, Limited
Executive Officer of BK
Executive Officer of MUFG
Managing Executive Officer of BK
Managing Corporate Executive of MUFG
(incumbent)
June 2021
Member of the Board of Directors,
Managing Executive Officer of BK
(incumbent)
Note: The following abbreviations are used in the table above:
“BK” refers to MUFG Bank, Ltd. or its former name The Bank of Tokyo-Mitsubishi UFJ, Ltd.
“TB” refers to Mitsubishi UFJ Trust and Banking Corporation.
“SCHD” refers to Mitsubishi UFJ Securities Holdings Co., Ltd.
“BK(US)” refers to MUFG Union Bank, N.A.
“MUAH” refers to MUFG Americas Holdings Corporation.
The board of directors and corporate executives may be contacted through our headquarters at Mitsubishi
UFJ Financial Group, Inc., 7-1, Marunouchi 2-chome, Chiyoda-ku, Tokyo 100-8330, Japan.
No family relationship exists among any of our directors or corporate executives.
B. Compensation
The aggregate amount of compensation paid, including benefits in kind granted and any contingent and
deferred compensation, by MUFG and its subsidiaries during the fiscal year ended March 31, 2021 to our
directors (excluding outside directors), to corporate executives and to outside directors, was ¥178 million,
¥2,439 million and ¥233 million, respectively.
The compensation paid by MUFG and its subsidiaries during the fiscal year ended March 31, 2021 to our
directors and corporate executives consisted of annual base salaries, performance-based stock compensation,
cash bonuses and other benefits. MUFG’s compensation committee determines the compensation paid to our
directors and corporate executives.
119
The following table sets forth details of the aggregate compensation paid by MUFG and its subsidiaries
during the fiscal year ended March 31, 2021 to our directors (excluding outside directors) and corporate
executives:
Non-Adjustable Compensation
Adjustable Compensation
Number of
Directors and
Corporate
Executives(1)
Aggregate
Compensation
Annual
Base
Salary
Performance-
based Stock
Compensation
24 . . . . . . . . . .
¥2,617
¥1,352
¥426
Cash Bonuses
(in millions)
¥540
Performance-
based Stock
Compensation
Retirement
Allowances(2) Other
¥172
¥127
¥0
Notes:
(1)
Includes the current directors and corporate executives as well as those who retired during the fiscal year ended March 31, 2021 but
excludes the outside directors.
(2) Represents the aggregate amount of retirement allowances paid in cash during the fiscal year ended March 31, 2021, pursuant to a
one-time shareholders’ approval in June 2007 for the retirement allowances to be paid to the directors and corporate auditors who were
elected prior to that date at the time of their retirement. A reserve in the total amount of such retirement allowances was set aside as of
September 30, 2007. For more information, see “—Retirement Allowances” below.
The following table sets forth the details of individual compensation paid, including benefits in kind granted
by MUFG and its subsidiaries in an amount equal to or exceeding ¥100 million during the fiscal year ended
March 31, 2021:
Directors
Aggregate
Compensation Paid by
Annual
Base
Salary
Performance-
based Stock
Compensation
Cash
Bonuses
Performance-
based Stock
Compensation
Retirement
Allowances(2)
Non-Adjustable Compensation Adjustable Compensation
Nobuyuki Hirano . . . . . . . .
¥237
Kanetsugu Mike . . . . . . . . .
¥169
Saburo Araki . . . . . . . . . . .
¥146
Iwao Nagashima . . . . . . . .
¥183
Hironori Kamezawa . . . . . .
¥224
Kenji Yabuta . . . . . . . . . . .
¥125
Naoki Hori . . . . . . . . . . . . .
¥123
Masato Miyachi . . . . . . . . .
¥127
Sunao Yokokawa . . . . . . . .
¥114
Masahiro Kuwahara . . . . . .
¥111
Yoshitaka Shiba . . . . . . . . .
¥113
MUFG
BK
MUFG
BK
MUFG
SCHD
MUMSS
MUFG
TB
MUFG
BK
MUFG
BK
MUFG
BK
ACOM
MUFG
BK
MUFG
TB
MUFG
BK
TB
MUFG
BK
¥48
—
¥41
41
¥25
13
13
¥35
35
¥65
18
¥45
26
¥41
23
6
¥47
27
¥38
21
¥33
19
10
¥61
—
(in millions)
¥11
—
¥11
18
¥ 5
2
2
¥ 7
22
¥43
5
¥ 9
14
¥ 9
12
—
¥ 8
10
¥ 7
19
¥ 7
24
—
¥28
—
¥27
—
¥17
23
¥16
27
27
¥31
33
¥69
—
¥17
9
¥17
10
—
¥17
10
¥14
10
¥ 9
6
—
¥16
—
¥22
2
¥ 8
10
¥ 8
4
4
¥10
10
¥24
—
¥ 3
2
¥ 3
2
—
¥ 5
3
¥ 3
2
¥ 2
1
—
¥ 6
2
—
127
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
Notes: (1) The following abbreviations are used in the table above:
“BK” refers to MUFG Bank, Ltd. (or its former name The Bank of Tokyo-Mitsubishi UFJ, Ltd.)
“TB” refers to Mitsubishi UFJ Trust and Banking Corporation. .
“SCHD” refers to Mitsubishi UFJ Securities Holdings Co., Ltd.
“MUMSS” refers to Mitsubishi UFJ Morgan Stanley Securities Co., Ltd.
“ACOM” refers to ACOM Co., Ltd.
120
(2) Represents the amount of retirement allowances paid in cash during the fiscal year ended March 31, 2021, pursuant to a one-time
shareholders’ approval in June 2007 for the retirement allowances to be paid to the directors and corporate auditors who were
elected prior to that date at the time of their retirement. A reserve in the total amount of such retirement allowances was set aside
as of September 30, 2007. For more information, see “—Retirement Allowances” below.
Annual Base Salary
Annual base salaries were paid to our directors (including outside directors) and corporate executives in the
form of monthly cash installment payments. The aggregate annual base salary paid to our directors (excluding
outside directors) and corporate executives for the fiscal year ended March 31, 2021 was ¥1,352 million. The
aggregate annual base salary paid to our outside directors for the same period was ¥233 million.
Performance-based Stock Compensation Plans
Under our performance-based stock compensation plans, qualified directors (excluding outside directors and
directors serving as audit committee members), corporate executives and others of MUFG and its major domestic
subsidiaries are assigned, on a monthly basis, (1) points based on their job responsibilities, or non-adjustable
points, and (2) additional points based on their job responsibilities which are adjusted at the end of each fiscal
year and at the end of each plan period to reflect the extent to which a financial performance target determined by
the compensation committee is attained, or adjustable points. Each plan period corresponds to the period covered
by the three-year medium-term business plan of MUFG. Each accumulated point represents a right to receive one
share of MUFG common stock from a trust established in Japan to administer the plan grants as determined by
the compensation committee.
The right to receive shares of MUFG common stock in exchange for non-adjustable points becomes vested
and nonforfeitable, and the shares are delivered, upon the grantee’s departure from his or her job responsibilities
based on which the right was granted. The right to receive shares of MUFG common stock in exchange for
adjustable points becomes vested and nonforfeitable, and the shares are delivered, at the end of each plan period.
The vesting in either case is subject to conditions imposed by the compensation committee, including
non-engagement in misconduct. A portion of the shares subject to a grantee’s vested right may be delivered in
cash.
The grantees are entitled to “dividend equivalent credits” on their granted but unvested rights under the plan
when MUFG pays dividends to its shareholders. The credit is equal to the dividends that the grantees would have
received on the shares had the shares been issued to the grantees in exchange for their granted but unvested rights
under the plan, less expenses relating to the administration of the plan. Accumulated dividend equivalents are
paid to grantees at the time of the delivery of the shares.
The shares to be delivered to grantees are purchased on the open market by the trustee of the trust pursuant
to a trust agreement among MUFG, the trustee and the independent caretaker of the trust. Each plan is funded in
cash up to a maximum aggregate amount determined by our compensation committee.
The initial performance-based stock compensation plan commenced on July 1, 2016. The grants under the
plan were tied to MUFG’s previous medium-term business plan for the three-year period ended March 31, 2018.
The trust for the plan was funded with ¥9.8 billion in cash, and 18,785,400 shares of MUFG common stock were
purchased by the trustee of the plan trust in May 2016. The plan was adopted after our compensation committee
decided in May 2016 to cease to provide any additional stock acquisition rights under our previous stock-based
compensation structure and to introduce the performance-based stock compensation plan.
The second performance-based stock compensation plan commenced on December 1, 2016. The trust for
the plan was funded with 8.8 billion in cash, and an aggregate of 13,004,300 shares of MUFG common stock
were purchased by the trustee of the plan trust in November 2016 and May 2017. The plan was adopted to
121
replace the outstanding stock acquisition rights under our previous stock-based compensation structure. Upon the
adoption of the plan, the stock acquisition rights that had been allotted to grantees but remained unexercised
under the then-outstanding stock-based compensation plans were exchanged for points under the performance-
based stock compensation plan, and the rights to receive shares of MUFG common stock represented by these
points were vested. The outstanding stock acquisition rights of grantees who were on overseas assignments at the
time of the adoption of the plan were exchanged for points under the performance-based stock compensation plan
upon their return to Japan.
On May 15, 2018, the compensation committee approved additional grants under the initial performance-
based stock compensation plan, which was amended in connection with the launch of MUFG’s previous
medium-term business plan for the three-year period ending March 31, 2021. The trust period of the plan trust
was extended until August 31, 2021, and the maximum amount of funds to be contributed to the plan trust was
reset at ¥26.3 billion. The formula for determining adjustable points under the plan was also revised. In May
2018, the plan trust was funded with ¥9.6 billion in cash, and 13,049,600 shares of MUFG common stock were
purchased by the trustee of the plan trust.
On May 17, 2021, the compensation committee approved new grants under the initial performance-based
stock compensation plan, which was amended in connection with the launch of MUFG’s current medium-term
business plan for the three-year period ending March 31, 2024. The trust period of the plan trust was extended
until August 31, 2024, and the maximum amount of funds to be contributed to the plan trust was reset at
¥26.6 billion. The formula for determining adjustable points under the plan was also revised. In May 2021, the
plan trust was funded with ¥8.3 billion in cash, and 13,381,500 shares of MUFG common stock were purchased
by the trustee of the plan trust.
For more information on the Performance-based Stock Compensation Plans, see “Item 16E. Purchases of
Equity Securities by the Issuer and Affiliated Purchasers.”
Cash Bonuses
We from time to time pay cash bonuses to our directors and corporate executives to further motivate them to
contribute to the improvement of our stock prices and profits if such bonuses are deemed appropriate based on a
balanced scorecard approach taking into account the results of operations of the MUFG Group and each
director’s or corporate executive’s individual performance of his or her duties as a director or corporate executive
in light of both quantitative and qualitative criteria, including our medium-term strategy for improving our
corporate value. None of the outside directors is eligible to receive a cash bonus. The compensation committee
determines the cash bonus for each director and corporate executive based on our financial results and his or her
job performance for the preceding fiscal year as well as his or her seniority and experience. The aggregate cash
bonus paid to our directors and corporate executives for the fiscal year ended March 31, 2021 was ¥540 million.
Retirement Allowances
Prior to June 28, 2007, in accordance with customary Japanese practice, when a director or corporate auditor
retired, a proposal to pay a retirement allowance was submitted at the annual ordinary general meeting of
shareholders for approval. The retirement allowance consisted of a one-time payment of a portion of the
allowance paid at the time of retirement and periodic payments of the remaining amount for a prescribed number
of years. After the shareholders’ approval was obtained, the retirement allowance for a director or corporate
auditor was fixed by the board of directors or by consultation among the corporate auditors in accordance with
our internal regulations and practice and generally reflected the position of the director or corporate auditor at the
time of retirement, the length of his service as a director or corporate auditor and his contribution to our
performance. Historically, MUFG did not set aside reserves for any retirement payments for directors and
corporate auditors made under this practice.
122
Pursuant to a one-time shareholders’ approval in June 2007, retirement allowances are paid in cash to the
directors and corporate auditors who were elected prior to that date at the time of their retirement. A reserve in
the total amount of such retirement allowances was set aside as of September 30, 2007. The aggregate amount of
retirement allowances paid in cash by MUFG and its subsidiaries pursuant to the one-time shareholder approval
during the fiscal year ended March 31, 2021 to our directors (excluding outside directors), to corporate auditors
(excluding outside corporate auditors) and to outside directors and corporate auditors, who have retired from
their respective positions held at MUFG or, if such directors and corporate auditors concurrently held positions at
MUFG’s subsidiaries, who have retired from such positions, was ¥127 million, nil and nil, respectively.
MUFG Americas Holdings Corporation Stock Bonus Plan
Under the MUFG Americas Holdings Corporation Stock Bonus Plan, qualified key employees of MUFG
Americas Holdings are granted Restricted Share Units, or RSUs, representing a right to receive American
Depositary Receipts, or ADRs, evidencing ADSs, each exchangeable for one share of MUFG common stock,
from an independent trust established to administer the plan grants, upon the satisfaction of vesting conditions, to
be determined pursuant to the plan as well as a Restricted Share Unit Agreement between MUFG Americas
Holdings and the grantees.
Unless otherwise provided in the relevant Restricted Share Unit Agreement, RSUs become vested and
nonforfeitable as follows: one-third (33 1/3%) of a grantee’s RSUs vests on May 20 of each of the three years
following the date of the grant such that all of the RSUs become fully vested after three years from the grant date
so long as the grantee satisfies the specified continuous service requirements and any other conditions under the
applicable plan documents, subject to certain clawback and notice period provisions.
Under the plan, the grantees are entitled to “dividend equivalent credits” on their granted but unvested RSUs
when MUFG pays dividends to its shareholders. The credit is equal to the dividends that the grantees would have
received on the shares had the shares been issued to the grantees in exchange for their granted but unvested
RSUs. Accumulated dividend equivalents are paid to grantees in whole shares on an annual basis. Any fractional
share will be paid to the participants in cash.
Grants made under the plan are not entitled to any dividend rights, voting rights, or other stockholder rights
unless and until RSUs are vested and ADSs are delivered to grantees.
The ADSs to be delivered to grantees will be purchased on the open market by the trustee of the
independent trust pursuant to a trust agreement between MUFG Americas Holdings and the trustee. As of
June 30, 2021, 108,220,888 RSUs have been granted under the plan, of which 43,554,160 RSUs were
outstanding as of June 30, 2021.
For more information on the plan, see “Item 16E. Purchases of Equity Securities by the Issuer and Affiliated
Purchasers.”
123
Share Ownership
As of July 1, 2021, our directors and corporate executives held the following numbers of shares of our
common stock:
Directors
Number of Shares
Registered
Mariko Fujii . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Keiko Honda . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Kaoru Kato . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Satoko Kuwabara . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Toby S. Myerson . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Hirofumi Nomoto . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Yasushi Shingai
Koichi Tsuji
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Tarisa Watanagase . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Ritsuo Ogura . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Kenichi Miyanaga . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
—
—
—
—
368*
25,000
—
—
—
95,534
55,478
Corporate Executives
Kanetsugu Mike . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Saburo Araki . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Iwao Nagashima . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Junichi Hanzawa . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Hironori Kamezawa . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Masato Miyachi
Takayoshi Futae . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Masahiro Kuwahara . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Yoshitaka Shiba . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Tetsuya Yonehana . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Naomi Hayashi . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Atsushi Miyata . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Takayuki Yasuda . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Shigeru Yoshifuji . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Hiroki Kameda . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Hiroshi Mori . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Tomohiro Kimura . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Masakazu Osawa . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Yutaka Miyashita . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Keitaro Tsukiyama . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
*
Held in the form of ADRs.
Number of Shares
Registered
118,862
278,180
129,081
58,900
69,639
17,959
19,684
28,000
129,403
89,922
14,210
45,297
30,500
128,500
56,583
8,285
19,500
15,200
26,400
26,769
None of the shares of our common stock held by our directors and corporate executives have voting rights
that are different from shares of our common stock held by any other shareholder.
For information on the performance-based stock compensation for our directors and corporate executives,
see “—Performance-based Stock Compensation Plans.”
C. Board Practices
Our articles of incorporation provide for a board of directors with statutorily mandated nominating and
governance committee, audit committee and compensation committee, each consisting of members of the board
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of directors. We have also elected, though not statutorily mandated under the Companies Act of Japan, to
establish a risk committee consisting of directors and external experts. In May 2016, we established a U.S. risk
committee pursuant to the U.S. Enhanced Prudential Standards for foreign banking organizations. Our corporate
executives are responsible for executing and managing our business operations based on a delegation of authority
by the board of directors, and our directors set our key management policies and oversee the execution of duties
by these corporate executives.
In June 2015, our shareholders approved an amendment to our articles of incorporation to adopt our current
governance framework with a board of directors and board committees. We previously had a governance
framework with a board of directors and a board of corporate auditors. The Companies Act permits three types of
governance system for large companies such as MUFG: (1) a company with a nominating committee, an audit
committee and a compensation committee, (2) a company with a board of corporate auditors, and (3) a company
with an audit and supervisory committee. Our previous governance framework was based on the second system,
and our newly adopted governance system is based on the first system.
With respect to companies adopting the first system, including MUFG, each of the nominating, audit and
compensation committees must consist of members of the board of directors, and the majority of each committee
must be outside directors as defined by the Companies Act. In addition, the board of directors must appoint
corporate executives (shikkoyaku) to execute and manage the business operations of the company under the
authority delegated by the board of directors. Based on this system, our current governance framework is
designed to facilitate more flexible and swifter decision-making and increase transparency in our management
processes.
An “outside director” is defined by the Companies Act as a person who meets all of the following
conditions:
‰
‰
‰
‰
‰
the person is not currently, and has not been in the ten years prior to his or her assumption of office as
outside director, an executive director, who is a director concurrently performing an executive role
(gyomu shikko torishimariyaku), a corporate executive, a manager (shihainin), or any other type of
employee of the company or any of its subsidiaries;
if the person has been a non-executive director, a corporate auditor, or an accounting adviser (kaikei
sanyo) of the company or any of its subsidiaries within the ten years prior to his or her assumption of
office as outside director, the person was not an executive director, a corporate executive, a manager or
any other type of employee of the company or any of its subsidiary in the ten years prior to his or her
assumption of office as such;
the person is not a director, a corporate executive officer, a manager or any other type of employee of
the company’s parent company, or a person who controls the company;
the person is not an executive director, a corporate executive officer, a manager or any other type of
employee of another subsidiary of the company’s parent company; and
the person is not the spouse or a family member within the second degree of kinship of a director, a
corporate executive, a manager, or any other type of important employee of the company or a person
who controls the company.
Board of Directors
Our board of directors consists of directors who are elected at a general meeting of shareholders. Under our
articles of incorporation, the number of directors may not exceed 20. We currently have 16 directors, nine of
whom are outside directors and two of whom are internal non-executive directors.
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The regular term of office of a director is one year from the date of election, and directors may serve their
terms until the close of the annual general meeting of shareholders held for the following year after their election.
Directors may serve any number of consecutive terms.
Under the Companies Act, the board of directors has the authority to determine our basic management
policy, make decisions on the execution and management of our business operations, and oversee the execution
by the corporate executives of their duties. The board of directors may delegate, to the extent permitted by the
Companies Act, the authority to make decisions on the execution and management of our business operations.
Our board of directors has delegated most of this authority to the corporate executives.
The board of directors elects the Chairman and the Deputy Chairman from among its members and appoints
key management members based on recommendations submitted to it by the nominating committee.
Under the Companies Act, a resolution of the board of directors is required if any director wishes to engage
in any business that is in competition with us or any transaction with us. Additionally, no director may vote on a
proposal, arrangement or contract in which that director is deemed to be particularly interested.
Neither the Companies Act nor our articles of incorporation contain special provisions as to the borrowing
power exercisable by a director, the retirement age of our directors, or a requirement of our directors to hold any
shares of our capital stock.
Under the Companies Act and our articles of incorporation, we may exempt, by resolution of the board of
directors, our directors from liabilities to MUFG arising in connection with their failure to execute their duties in
good faith and without gross negligence within the limits stipulated by applicable laws and regulations. In
addition, we have entered into a liability limitation agreement with each outside director and non-executive
director which limits the maximum amount of their liability to MUFG arising in connection with a failure to
execute their duties in good faith and without gross negligence to the greater of either ¥10 million or the
aggregate sum of the amounts prescribed in Paragraph 1 of Article 425 of the Companies Act and Articles 113
and 114 of the Companies Act Enforcement Regulations.
None of our directors is party to a service contract with MUFG or any of its subsidiaries that provides for
benefits upon end of their director term.
Nominating Committee
Our nominating committee, which we call the nominating and governance committee, determines the
contents of proposals regarding the election and removal of director candidates to be submitted to general
meetings of shareholders. The committee also considers and makes recommendations to the board of directors
regarding the appointment and removal of the Chairman and the Deputy Chairman of the board of directors and
the President & Group CEO of MUFG as well as the chairman and the deputy chairman of the board of directors,
the president and others of each of our major subsidiaries. In addition, the committee discusses and makes
recommendations to the board of directors on matters pertaining to our governance policy and framework.
Under the Companies Act, the nominating committee must consist of at least three directors, and the
majority of its members must be outside directors. Our nominating and governance committee currently consists
of five directors. The chairman of the committee is Hirofumi Nomoto, an outside director. The other members of
this committee are Mariko Fujii, Kaoru Kato and Satoko Kuwabara, who are outside directors, and Hironori
Kamezawa, Director, President & Group CEO. Between April 2020 and March 2021, the nominating and
governance committee met 12 times.
Audit Committee
The audit committee determines the contents of proposals pertaining to the election, termination and
non-appointment of our independent auditor to be submitted to general meetings of shareholders. The committee
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also monitors and audits the execution by the directors and the corporate executives of their duties and prepares
audit reports to the board of directors. In order to effectively perform its duties, the committee reviews, inspects
and investigates, as necessary, the management of the operations of MUFG and its subsidiaries, including
financial reporting and internal controls. In addition, the committee has the power to consent to decisions on the
compensation to be paid to our independent auditor.
Under the Companies Act, the audit committee must consist of at least three non-executive directors, and
the majority of its members must be outside directors. Our committee currently has six members. The chairman
of the committee is Koichi Tsuji, an outside director. The other members of the committee are Keiko Honda,
Kaoru Kato and Yasushi Shingai, who are outside directors, and Ritsuo Ogura and Kenichi Miyanaga, who are
non-executive directors. Between April 2020 and March 2021, the audit committee met 16 times.
Compensation Committee
The compensation committee establishes our policy regarding the determination of the compensation of
MUFG’s directors, corporate executives, executive officers (shikko yakuin) and others and also determines the
details of individual compensation based on the policy. The committee discusses and makes recommendations to
the board of directors regarding the establishment, revision and abolition of compensation systems for the
chairman, the deputy chairman, the president and others of each of our major subsidiaries.
Under the Companies Act, the compensation committee must consist of at least three directors, and the
majority of its members must be outside directors. Our compensation committee currently consist of five
directors. The chairman of the committee is Satoko Kuwabara, an outside director. The other members of this
committee are Mariko Fujii, Kaoru Kato and Hirofumi Nomoto, who are outside directors, and Hironori
Kamezawa, Director, President & Group CEO. Between April 2020 and March 2021, the compensation
committee met 6 times.
Risk Committee
In addition to the foregoing three committees, which are mandated by the Companies Act, we have a risk
committee, which was initially established under our previous governance framework and which we continue to
have under our current governance framework on a voluntary basis. The risk committee deliberates and makes
recommendations to the board of directors on matters regarding group-wide risk management as well as top risk
matters.
MUFG Corporate Governance Policies provide that the committee shall consist of directors and external
experts. External experts are professionals with no prior employment relationship with any of the MUFG group
companies. The committee currently has eight members. The chairperson of the committee is Mariko Fujii, an
outside director. The other members of this committee are Toby S. Myerson, Yasushi Shingai and Tarisa
Watanagase, who are outside directors, Yutaka Miyashita, Managing Corporate Executive and Group CSO, and
Shinichi Koide, Atsushi Miyanoya and Kazuhiko Ohashi, who are external experts. Between April 2020 and
March 2021, the risk committee met five times.
U.S. Risk Committee
The U.S. risk committee oversees the risk management function for our combined U.S. operations. Its
oversight role includes, but is not limited to, all roles and responsibilities required under the FRB’s final rules for
Enhanced Prudential Standards for foreign banking organizations. The committee monitors liquidity and all other
types of risk exposures, reviews the risk management policies and procedures, and oversees compliance with
such policies and procedures for our combined U.S. operations. The committee is a subcommittee of the board of
directors of MUFG, and reports and makes recommendations to MUFG’s board of directors and MUFG’s risk
committee.
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The members of the U.S. risk committee are appointed by MUFG’s board of directors after consideration of
member candidates reviewed and recommended by MUFG’s risk committee and nominating and governance
committee. The committee shall consist of five to eight members including members of the MUFG Americas
Holdings Risk Committee, delegates from MUFG, the Chairman of the MUFG Americas Holdings Board and
MUFG Americas Holdings’ CEO, with the chairperson of the committee being an outside director of MUFG
Americas Holdings.
Corporate Executives
Our corporate executives are responsible for executing and managing our business operations within the
scope of the authority delegated to them by the board of directors.
Under the Companies Act, at least one corporate executive must be appointed by a resolution of the board of
directors. We currently have 20 corporate executives. Under our articles of incorporation, the board of directors
shall appoint a president and a deputy president, who, as representative corporate executives, may represent us
severally. The term of office of each corporate executive expires at the conclusion of the first meeting of the
board of directors convened after the ordinary general meeting of shareholders for the last fiscal year that ends
within one year following the corporate executive’s assumption of office.
Under the Companies Act, a resolution of the board of directors is required if any corporate executive
wishes to engage in any business that is in competition with us or any transaction with us.
Under the Companies Act and our articles of incorporation, we may exempt, by resolution of the board of
directors, our corporate executives from liabilities to MUFG arising in connection with their failure to execute
their duties in good faith and without gross negligence within the limits stipulated by applicable laws and
regulations. We, however, currently have no such arrangements with any of our corporate executives.
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D. Employees
As of March 31, 2021, we had approximately 132,700 employees, a decrease of approximately 500
employees compared with the number of employees as of March 31,2020. In addition, as of March 31, 2021, we
had approximately 30,800 part-time and temporary employees. The following tables show the percentages of our
employees across our different business units and in different locations as of March 31, 2021:
Business unit
MUFG Bank:
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Retail & Commercial Banking Business Unit
Japanese Corporate & Investment Banking Business Unit . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Global Corporate & Investment Banking Business Unit
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Global Commercial Banking Business Unit . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Global Markets Business Unit . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Corporate Center/Corporate Staff . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
16%
3
2
41
1
17
Mitsubishi UFJ Trust and Banking:
Trust-Banking . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Trust Assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Real Estate . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Global Markets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Administration and subsidiaries . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Mitsubishi UFJ Securities Holdings:
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Retail & Commercial Banking Business Unit
Japanese Corporate & Investment Banking Business Unit . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Global Corporate & Investment Banking Business Unit
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Global Markets Business Unit . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Corporate Center/Corporate Staff . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Mitsubishi UFJ NICOS:
Business Marketing Division . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Credit Risk Management & Risk Assets Administration Division . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Operations Division . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Systems & Systems Integration Division . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Corporate Division . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Others . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Others . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
3
4
1
0
2
3
0
0
1
1
1
1
1
0
0
0
2
100%
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Location
MUFG Bank:
Japan . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
United States . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Europe . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Asia/Oceania excluding Japan . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Other areas . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
25%
10
2
43
0
Mitsubishi UFJ Trust and Banking:
Japan . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
United States . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Europe . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Asia/Oceania excluding Japan . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Mitsubishi UFJ Securities Holdings:
Japan . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
United States . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Europe . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Asia/Oceania excluding Japan . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Mitsubishi UFJ NICOS:
Japan . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
United States . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Europe . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Asia/Oceania excluding Japan . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Others . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
8
1
1
0
5
0
0
0
3
0
0
0
2
100%
Most of our employees are members of an employees’ union, which negotiates on behalf of employees in
relation to remuneration and working conditions. We believe our labor relations to be good.
E. Share Ownership
The information required by this item is set forth in “—B. Compensation.”
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Item 7. Major Shareholders and Related Party Transactions.
A. Major Shareholders
Common Stock
As of March 31, 2021, we had 929,965 registered shareholders of our common stock. The ten largest
holders of our common stock appearing on the register of shareholders as of March 31, 2021, and the number and
the percentage of such shares held by each of them, were as follows:
Name
Number of shares
held
Percentage of
total shares in issue(3)
The Master Trust Bank of Japan, Ltd. (Trust account)(1) . . . . . . . . . . . . . . . .
Custody Bank of Japan, Ltd. (Trust account)(1) . . . . . . . . . . . . . . . . . . . . . . .
SSBTC CLIENT OMNIBUS ACCOUNT . . . . . . . . . . . . . . . . . . . . . . . . . . .
. . . . . . . . . . . . . . . . . . . . .
Custody Bank of Japan, Ltd. (Trust account 5)(1)
The Bank of New York Mellon as Depositary Bank for DR Holders(2)
. . . .
State Street Bank West Client-Treaty 505234 . . . . . . . . . . . . . . . . . . . . . . . .
. . . . . . . . . . . . . . . . . . . . .
Custody Bank of Japan, Ltd. (Trust account 6)(1)
The Master Trust Bank of Japan, Ltd. (Meiji Yasuda Life Insurance
Company retirement benefit trust account) . . . . . . . . . . . . . . . . . . . . . . . .
Custody Bank of Japan, Ltd. (Trust account7)(1) . . . . . . . . . . . . . . . . . . . . . .
. . . . . . . . . . . . . . . . . . . . .
Custody Bank of Japan, Ltd. (Trust account 1) (1)
1,065,551,700
706,354,200
324,487,406
206,901,600
191,299,292
187,167,291
183,391,100
175,000,000
169,184,900
164,611,100
Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
3,373,948,589
7.84%
5.20%
2.38%
1.52%
1.40%
1.37%
1.35%
1.28%
1.24%
1.21%
24.84%
Includes the shares held in trust accounts, which do not disclose the names of beneficiaries.
Notes:
(1)
(2) An owner of record for our ADSs.
(3) Numbers are truncated after two decimal points.
(4) According to a beneficial ownership report on Schedule 13G filed with the SEC by BlackRock Inc. on January 29, 2021, BlackRock and
its consolidated subsidiaries beneficially owned an aggregate of 5.3% of the outstanding shares of our common stock as of December 31,
2020. Other than as described in the table above, we have not independently confirmed this beneficial ownership information. According
to a beneficial ownership report on Schedule 13G filed with the SEC by Sumitomo Mitsui Trust Holdings, Inc. on February 5, 2021,
Sumitomo Mitsui Trust Holdings and its consolidated subsidiaries beneficially owned an aggregate of 5.6% of the outstanding shares of
our common stock as of December 31, 2020. Other than as described in the table above, we have not independently confirmed this
beneficial ownership information.
As of March 31, 2021, 1,564,272 shares, representing approximately 0.01% of our outstanding common
stock, were held by our directors and corporate executives.
As of March 31, 2021, 1,659,689,893 shares, representing 12.21% of our outstanding common stock, were
owned by 375 U.S. shareholders of record who are resident in the United States, one of whom is the ADR
depository’s nominee holding 191,299,292 shares, or 1.40%, of our total issued shares of common stock.
Our major shareholders do not have different voting rights.
B. Related Party Transactions
As of March 31, 2021, we held approximately 20.2% of the voting rights in Morgan Stanley and Series C
Preferred Stock with a face value of approximately $521.4 million and 10% dividend. We also have two
representatives appointed to Morgan Stanley’s board of directors. We adopted the equity method of accounting for
our investment in Morgan Stanley beginning with the fiscal year ended March 31, 2012. In April 2018, we entered
into a sales plan with Morgan Stanley and Morgan Stanley & Co. LLC, pursuant to which we will sell portions of
the shares of Morgan Stanley common stock that we hold to Morgan Stanley through Morgan Stanley & Co. LLC
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acting as agent for Morgan Stanley to the extent necessary to ensure that our beneficial ownership will remain
below 24. 9%. In December 2020, this sales plan was suspended upon notice by Morgan Stanley to us in accordance
with the terms of the plan.
We and Morgan Stanley have two securities joint venture companies, namely, Mitsubishi UFJ Morgan
Stanley Securities and Morgan Stanley MUFG Securities, in Japan. We hold a 60% economic interest in
Mitsubishi UFJ Morgan Stanley Securities and Morgan Stanley MUFG Securities, and Morgan Stanley holds a
40% economic interest in Mitsubishi UFJ Morgan Stanley Securities and Morgan Stanley MUFG Securities. We
hold a 60% voting interest and Morgan Stanley holds a 40% voting interest in Mitsubishi UFJ Morgan Stanley
Securities, and we hold a 49% voting interest and Morgan Stanley holds a 51% voting interest in Morgan Stanley
MUFG Securities.
We and Morgan Stanley continue to pursue a variety of business opportunities in Japan and abroad in
accordance with the global strategic alliance. For a detailed discussion of our global alliance with Morgan
Stanley, see “Item 4.B. Information on the Company—Business Overview—Global Strategic Alliance with
Morgan Stanley.”
We and our banking subsidiaries had, and expect to have in the future, banking transactions and other
transactions in the ordinary course of business with our related parties. Although for the fiscal year ended
March 31, 2021, such transactions included, but were not limited to, call money, loans, electronic data
processing, leases and management of properties, those transactions were immaterial and were made at
prevailing market rates, terms and conditions and do not involve more than the normal risk of collectability or
present other unfavorable features.
None of our directors or corporate executives, nor any of the close members of their respective families, has
had any transactions or has any presently proposed transactions that are material or any transactions that are
unusual in their nature or conditions, involving goods, services or tangible or intangible assets, to which we were,
are or will be a party.
No loans have been made to our directors or corporate executives other than in the normal course of
business, on substantially the same terms, including interest rates and collateral, as those prevailing at the time
for comparable transactions with other persons, involving no more than the normal risk of collectability and
presenting no other unfavorable features. In addition, no loans have been made to our directors or corporate
executives other than as permitted under Section 13(k) of the U.S. Securities Exchange Act and Rule 13k-1
promulgated thereunder.
No family relationship exists among any of our directors or corporate executives. No arrangement or
understanding exists between any of our directors or corporate executives and any other person pursuant to which
any director or corporate executive was elected to their position at MUFG.
As part of our compensation structure, we have granted performance-based stock compensation rights to our
directors and corporate executives. For a detailed discussion of the stock acquisition rights, see “Item 6.B.
Directors, Senior Management and Employees—Compensation.”
C.
Interests of Experts and Counsel
Not applicable.
Item 8.
Financial Information.
A. Consolidated Statements and Other Financial Information
The information required by this item is set forth in our consolidated financial statements starting on
page F-1 of this Annual Report and in “Selected Statistical Data” starting on page A-1 of this Annual Report.
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Pursuant to Rule 3-09 of Regulation S-X, the financial statements and supplementary data of Morgan
Stanley, our equity method investee, as of December 31, 2019 and 2020 and for the fiscal years ended
December 31, 2018, 2019 and 2020, are incorporated in this Annual Report as Exhibit 99(c) by reference to
Morgan Stanley’s annual report on Form 10-K filed on February 26, 2021.
Legal Proceedings
From time to time, we are involved in various litigation matters and other legal proceedings, including
regulatory actions. Although the final resolution of any such matters and proceedings could have a material effect
on our consolidated operating results for a particular reporting period, based on our current knowledge and
consultation with legal counsel, we believe the current litigation matters and other legal proceedings, when
ultimately determined, will not materially affect our results of operations or financial position. For more
information, see “Item 3.D. Key Information—Risk Factors—Operational Risk—We may become subject to
regulatory actions or other legal proceedings relating to our transactions or other aspects of our operations, which
could result in significant financial losses, restrictions on our operations and damage to our reputation.” and
Note 26 to our consolidated financial statements.
Distributions
Our board of directors submits a recommendation for a year-end dividend for our shareholders’ approval at
the ordinary general meeting of shareholders customarily held in June of each year. The year-end dividend is
usually distributed immediately following shareholders’ approval to holders of record at the end of the preceding
fiscal year. In addition to year-end dividends, we may make cash distributions by way of interim dividends to
shareholders of record as of September 30 of each year as distribution of surplus by resolution of our board of
directors. Year-end dividends in the amount of ¥12.5 per share of our common stock (in addition to interim
dividends of ¥12.5 per share of our common stock) for the fiscal year ended March 31, 2021 were approved by
shareholders at the ordinary general meeting of shareholders held on June 29, 2021.
See Exhibit 2(c) to this Annual Report for additional information on our dividends policy.
Under the Japanese foreign exchange regulations currently in effect, dividends paid on shares held by
non-residents of Japan may be converted into any foreign currency and repatriated abroad. Under the terms of the
deposit agreement pursuant to which ADSs are issued, the depositary is required, to the extent that in its
judgment it can convert Japanese yen on a reasonable basis into U.S. dollars and transfer the resulting
U.S. dollars to the United States, to convert all cash dividends that it receives in respect of deposited shares into
U.S. dollars and to distribute the amount received, after deduction of any applicable withholding taxes, to the
holders of ADSs. See “Item 10.D. Additional Information—Exchange Controls” and Exhibit 2(c) to this Annual
Report.
B. Significant Changes
Other than as described in this Annual Report, no significant changes have occurred since the date of our
consolidated financial statements included in this Annual Report.
Item 9.
The Offer and Listing.
A. Offer and Listing Details
The principal market for our common stock is the Tokyo Stock Exchange in Japan. Our common stock is
also listed on the Nagoya Stock Exchange in Japan. The listing code assigned to our common stock in Japan is
8306.
In the United States, ADSs, each representing one share of common stock, are quoted on the New York
Stock Exchange under the symbol, “MUFG.”
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B. Plan of Distribution
Not applicable.
C. Markets
The information required by this item is set forth in “—A. Offer and Listing Details.”
D. Selling Shareholders
Not applicable.
E. Dilution
Not applicable.
F. Expenses of the Issue
Not applicable.
Item 10. Additional Information.
A. Share Capital
Not applicable.
B. Memorandum and Articles of Association
Our Corporate Purpose
Article 2 of our Articles of Incorporation provides that our corporate purpose is to carry on the following
businesses:
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administration of management of banks, trust banks, specialized securities companies, insurance
companies or other companies which we may own as our subsidiaries under the Banking Law;
any businesses incidental to the foregoing businesses mentioned in the preceding item; and
any other businesses in which bank holding companies are permitted to engage under the Banking Law
in addition to the foregoing businesses mentioned in the preceding two items.
Board of Directors
For discussion of the provisions of our Articles of Incorporation as they apply to our directors, see
“Item 6.C. Directors, Senior Management and Employees—Board Practices.”
Common Stock
As of March 31, 2021, a total of 13,581,995,120 shares of common stock (including 737,282,154 shares of
common stock held by us and our consolidated subsidiaries as treasury stock) had been issued. Each of the shares
issued and outstanding was fully paid and non-assessable.
For a description of our common stock, see Exhibit 2(c) to this Annual Report.
Preferred Stock
We currently have no shares of preferred stock issued.
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For a description of preferred stock we are authorized to issue under our Articles of Incorporation, see
Exhibit 2(c) to this Annual Report.
C. Material Contracts
Except as described elsewhere in this Annual Report, all material contracts entered into by us in the past two
years preceding the filing of this Annual Report were entered into in the ordinary course of business.
D. Exchange Controls
Foreign Exchange and Foreign Trade Law
The Foreign Exchange and Foreign Trade Law of Japan and the cabinet orders and ministerial ordinances
incidental thereto, collectively known as the Foreign Exchange Law, set forth, among other matters, regulations
relating to the receipt by non-residents of Japan of payment with respect to shares to be issued by us and the
acquisition and holding of shares by non-residents of Japan and foreign investors, both as defined below. It also
applies in some cases to the acquisition and holding of ADSs representing such shares acquired and held by
non-residents of Japan and foreign investors.
“Non-residents of Japan” are defined as individuals who are not resident in Japan and corporations whose
principal offices are located outside Japan. Generally, the branches and offices of non-resident corporations
which are located in Japan are regarded as residents of Japan while the branches and offices of Japanese
corporations located outside Japan are regarded as non-residents of Japan.
“Foreign investors” are defined as:
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natural persons who are non-resident of Japan;
corporations which are organized under the laws of foreign countries or whose principal offices are
located outside Japan;
corporations of which 50% or more of the shares are directly or indirectly held by individuals not
resident of Japan and corporations which are organized under the laws of foreign countries or whose
principal offices are located outside Japan;
(A) partnerships 50% or more of whose contributions are made by (1) natural persons who are
non-residents of Japan, (2) corporations which are organized under the laws of foreign countries or
whose principal offices are located outside Japan, (3) corporations of which 50% or more of the shares
are directly or indirectly held by individuals not resident of Japan and corporations which are organized
under the laws of foreign countries or whose principal offices are located outside Japan,
(4) corporations, a majority of the officers (or a majority of the officers having the power to represent
the corporation) of which are non-resident individuals, or (5) other partnerships a majority of whose
operating partners fall under any of (1) through (4), or (B) partnerships a majority of whose operating
partners are (i) any of (1) through (5) above, (ii) other partnerships 50% or more of whose contributions
are made by non-residents of Japan or partnerships that are any of (1) through (5) above, or (iii) certain
limited liability partnerships under the Limited Liability Partnership Act; and
corporations, a majority of officers (or a majority of officers having the power of representation) of
which are non-resident individuals.
Dividends and Proceeds of Sales
Under the Foreign Exchange Law, dividends paid on, and the proceeds of sales in Japan of, shares held by
non-residents of Japan may in general be converted into any foreign currency and repatriated abroad. The
acquisition of our shares by non-residents of Japan by way of a stock split is not subject to any notification or
reporting requirements.
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Acquisition of Shares
In general, a non-resident of Japan who acquires shares from a resident of Japan is not subject to any prior
filing requirement, although the Foreign Exchange Law empowers the Minister of Finance of Japan to require a
prior approval for any such acquisition in certain limited circumstances.
If a foreign investor acquires our shares, and, together with parties who have a special relationship with that
foreign investor, holds ten percent or more of our issued shares as a result of such acquisition, the foreign
investor must file a report of such acquisition with the Minister of Finance and any other competent Minister
within 45 days from such acquisition. Further, if a foreign investor acquires the right to instruct voting on shares
through acquisition of ADSs or otherwise and holds, together with parties who have a special relationship with
that foreign investor, the right to instruct voting on shares representing ten percent or more of the voting rights in
us, the foreign investor is subject to a reporting requirement. In certain limited circumstances, however, a prior
notification of such acquisition must be filed with the Minister of Finance and any other competent Minister, who
may modify or prohibit the proposed acquisition.
Deposit and Withdrawal under American Depositary Facility
The deposit of shares with us, in our capacity as custodian and agent for the depositary, in Tokyo, the
issuance of ADSs by the depositary to a non-resident of Japan in respect of the deposit and the withdrawal of the
underlying shares upon the surrender of the ADSs are not subject to any of the formalities or restrictions referred
to above. However, where as a result of a deposit or withdrawal the aggregate number of shares held by the
depositary, including shares deposited with us as custodian for the depositary, or the holder surrendering ADSs,
as the case may be, would be 10% or more of the total outstanding shares, a report will be required, and in
specified circumstances, a prior notification may be required, as noted above.
Reporting of Substantial Shareholdings
The Financial Instruments and Exchange Act of Japan requires any person who has become, beneficially
and solely or jointly, a holder of more than 5% of the total issued shares of capital stock of a company listed on
any Japanese financial instruments exchange or whose shares are traded on the over-the-counter market in Japan
to file with the director of a competent finance bureau within five business days a report concerning such
shareholdings.
A similar report must also be filed in respect of any subsequent change of 1% or more in any such holding
ratio or any change in material matters set out in reports previously filed, with certain exceptions. For this
purpose, shares issuable to such person upon exchange of exchangeable securities, conversion of convertible
securities or exercise of share subscription warrants or stock acquisition rights (including those incorporated in
bonds with stock acquisition rights) are taken into account in determining both the number of shares held by such
holder and the issuer’s total issued shares of capital stock.
E. Taxation
Japanese Taxation
The following sets forth the material Japanese tax consequences to owners of shares of our common stock or
ADSs who are non-resident individuals or non-Japanese corporations without a permanent establishment in Japan
to which the relevant income is attributable, which we refer to as “non-resident holders” in this section. The
statements regarding Japanese tax laws below are based on the laws in force and as interpreted by the Japanese
taxation authorities as at the date of this Annual Report and are subject to changes in the applicable Japanese
laws, double taxation treaties, conventions or agreements or interpretations thereof occurring after that date. This
summary is not exhaustive of all possible tax considerations that may apply to a particular investor, and potential
investors are advised to satisfy themselves as to the overall tax consequences of the acquisition, ownership and
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disposition of shares of our common stock or ADSs, including specifically the tax consequences under Japanese
law, the laws of the jurisdiction of which they are resident and any tax treaty between Japan and their country of
residence, by consulting their own tax advisers.
For the purpose of Japanese tax law and the Convention between the Government of the United States of
America and Japan for the Avoidance of Double Taxation and the Prevention of Fiscal Evasion with Respect to
Taxes on Income, or the Tax Convention, a U.S. holder of ADSs will be treated as the owner of the shares of our
common stock underlying the ADSs evidenced by the ADRs.
Generally, a non-resident holder of shares of our common stock or ADSs is subject to Japanese withholding
tax on dividends paid by us. In the absence of any applicable tax treaty, convention or agreement reducing the
rate of withholding tax, the rate of Japanese withholding tax applicable to dividends paid by us to non-resident
holders is (i) 15.315% for dividends to be paid on or before December 31, 2037 and (ii) 15% for dividends to be
paid thereafter, except for dividends paid to any individual non-resident holder who holds 3% or more of our
issued shares for which the applicable rate is (a) 20.42% for dividends to be paid on or before December 31,
2037 and (b) 20% for dividends to be paid thereafter, pursuant to Japanese tax law.
The Tax Convention establishes the maximum rate of Japanese withholding tax which may be imposed on
dividends paid to a U.S. resident not having a permanent establishment in Japan. Under the Tax Convention, the
maximum withholding rate for U.S. holders (as defined below) is generally set at 10% of the gross amount
distributed. However, the maximum rate is 5% of the gross amount distributed if the recipient is a corporation
and owns directly or indirectly, on the date on which entitlement to the dividends is determined, at least 10% of
the voting shares of the paying corporation. Furthermore, the amount distributed shall not be taxed if the
recipient is (i) a pension fund which is a U.S. resident, provided that such dividends are not derived from the
carrying on of a business, directly or indirectly, by such pension fund or (ii) a company with a 50% or more
interest in the paying company and satisfies certain other requirements. U.S. holders (as defined below) are urged
to consult their own tax advisors with respect to their eligibility for benefits under the Tax Convention.
Japanese tax law provides in general that if the Japanese statutory rate is lower than the maximum rate
applicable under tax treaties, conventions or agreements, the Japanese statutory rate as stated above shall be
applicable.
Non-resident holders of shares who are entitled to a reduced rate of Japanese withholding tax on payments
of dividends on the shares of our common stock or ADSs by us are required to submit an Application Form for
the Income Tax Convention regarding Relief from Japanese Income Tax on Dividends, or an Application Form
for the Income Tax Convention, in advance through a paying handling agent to the relevant tax authority before
the payment of dividends. A standing proxy for non-resident holders may provide this application service for the
non-resident holders. In this regard, a certain simplified special filing procedure is available for non-resident
holders to claim treaty benefits of exemption from or reduction of Japanese withholding tax with respect to
dividends to be paid on or after January 1, 2014, by submitting a Special Application Form for Income Tax
Convention regarding Relief from Japanese Income Tax and Special Income Tax for Reconstruction on
Dividends of Listed Stocks (together with any other required forms and documents). With respect to ADSs, this
reduced rate or exemption will be applicable to non-resident holders of ADSs if the depositary or its agent
submits two Application Forms (one before payment of dividends and the other within eight months after the
record date concerning such payment of dividends), together with certain other documents. To claim this reduced
rate or exemption, non-resident holders of ADSs will be required to file a proof of taxpayer status, residence and
beneficial ownership, as applicable, and to provide other information or documents as may be required by the
depositary. Non-resident holders who are entitled, under any applicable tax treaty, to a reduced rate of Japanese
withholding tax below the rate otherwise applicable under Japanese tax law, or exemption therefrom, as the case
may be, but fail to submit the required application in advance may nevertheless be entitled to claim a refund from
the relevant Japanese tax authority of withholding taxes withheld in excess of the rate under an applicable tax
treaty (if such non-resident holders are entitled to a reduced treaty rate under the applicable tax treaty) or the full
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amount of tax withheld (if such non-resident holders are entitled to an exemption under the applicable tax treaty),
as the case may be, by complying with a certain subsequent filing procedure. We do not assume any
responsibility to ensure withholding at the reduced rate, or an exemption therefrom, for non-resident holders who
would be so eligible under an applicable tax treaty but where the required procedures as stated above are not
followed.
Gains derived from the sale or other disposition of shares of our common stock or ADSs by a non-resident
holder are not, in general, subject to Japanese income or corporation taxes or other Japanese taxes.
Any deposits or withdrawals of shares of our common stock by a non-resident holder in exchange for ADSs
are not subject to Japanese income or corporation tax.
Japanese inheritance and gift taxes, at progressive rates, may be payable by an individual who has acquired
shares of our common stock or ADSs as legatee, heir or donee, even if none of the individual, the decedent or the
donor is a Japanese resident.
U.S. Taxation
The following sets forth the material U.S. federal income tax consequences of the ownership of shares and
ADSs by a U.S. holder, as defined below. This summary is based on U.S. federal income tax laws, including the
U.S. Internal Revenue Code of 1986, or the Code, its legislative history, existing and proposed Treasury
regulations thereunder, published rulings and court decisions, and the Tax Convention (as defined above), all of
which are subject to change, possibly with retroactive effect.
The following summary is not a complete analysis or description of all potential U.S. federal income tax
consequences to a particular U.S. holder. It does not address all U.S. federal income tax considerations that may
be relevant to all categories of potential purchasers, certain of which (such as banks or other financial
institutions, insurance companies, dealers in securities, tax-exempt entities, non-U.S. persons, persons holding a
share or an ADS as part of a “straddle,” “hedge,” conversion or integrated transaction, holders whose “functional
currency” is not the U.S. dollar, holders liable for alternative minimum tax, holders required to report income no
later than when such income is reported on an “applicable financial statement,” and holders of 10% or more of
our shares by vote or value) are subject to special tax treatment. This summary does not address any foreign,
state, local or other tax consequences of investments in our shares or ADSs.
This summary addresses only shares or ADSs that are held as capital assets within the meaning of
Section 1221 of the Code.
As used herein, a “U.S. holder” is a beneficial owner of shares or ADSs, as the case may be, that is:
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a citizen or resident of the United States as determined for U.S. federal income tax purposes;
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a corporation or other entity taxable as a corporation created or organized under the laws of the
United States, any state thereof or the District of Columbia;
an estate, the income of which is subject to U.S. federal income tax regardless of its source; or
a trust
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the administration of which is subject to (1) the supervision of a court within the United States and
(2) the control of one or more U.S. persons as described in Section 7701(a)(30) of the Code; or
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that has a valid election in effect under applicable U.S. Treasury regulations to be treated as a U.S.
person.
If a partnership holds shares or ADSs, the tax treatment of a partner will generally depend on the status of
the partner and the activities of the partnership. If you are a partner of a partnership holding shares or ADSs, you
should consult your tax advisor.
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We urge U.S. holders to consult their own tax advisors concerning the U.S. federal, state and local and
other tax consequences to them of the purchase, ownership and disposition of shares or ADSs.
This summary is based in part on the assumption that each obligation under the deposit agreement and any
related agreement will be performed in accordance with its respective terms. Subject to the discussion in the next
paragraph, for U.S. federal income tax purposes, holders of ADSs will be treated as the owners of the shares
represented by the ADSs. Accordingly, withdrawals or deposits of shares in exchange for ADSs generally will
not be subject to U.S. federal income tax.
The U.S. Treasury has expressed concerns that intermediaries in the chain of ownership between the holder
of an ADS and the issuer of the security underlying the ADS may be taking actions that are inconsistent with the
beneficial ownership of the underlying shares (for example, pre-releasing ADSs to persons who do not have
beneficial ownership of the securities underlying the ADSs). Accordingly, the discussion on the creditability of
Japanese taxes and the availability of the reduced rate of tax for dividends received by certain non-corporate
U.S. holders, each as described below, could be affected by actions taken by intermediaries in the chain of
ownership between the holder of ADSs and us if, as a result of such actions, the holders of ADSs are not properly
treated as beneficial owners of the underlying shares. We are not aware of any intention to take any such actions,
and accordingly, the remainder of this discussion assumes that holders of ADSs will be properly treated as
beneficial owners of the underlying shares.
Special adverse U.S. federal income tax rules apply if a U.S. holder holds shares or ADSs of a company that
is treated as a “passive foreign investment company” (a “PFIC”) for any taxable year during which the
U.S. holder held shares or ADSs, as discussed in more detail below. U.S. holders should consult their own tax
advisors as to the potential application of the PFIC rules to their ownership and disposition of shares or ADSs.
Taxation of Dividends
Subject to the application of the PFIC rules discussed below, U.S. holders will include the gross amount of
any distribution received with respect to shares or ADSs (before reduction for Japanese withholding taxes), to the
extent paid out of our current or accumulated earnings and profits (as determined for U.S. federal income tax
purposes), as ordinary income in their gross income. As discussed below, for certain U.S. holders, dividends may
be eligible for a reduced rate of taxation. The amount of distribution of property other than cash will be the fair
market value of such property on the date of the distribution. Dividends received by a U.S. holder will not be
eligible for the “dividends-received deduction” allowed to U.S. corporations in respect of dividends received
from other U.S. corporations. To the extent that an amount received by a U.S. holder exceeds such holder’s
allocable share of our current earnings and profits, such excess will be applied first to reduce such holder’s tax
basis in its shares or ADSs, thereby increasing the amount of gain or decreasing the amount of loss recognized on
a subsequent disposition of the shares or ADSs. Then, to the extent such distribution exceeds such U.S. holder’s
tax basis, such excess will be treated as capital gain. However, we do not maintain calculations of our earnings
and profits in accordance with U.S. federal income tax principles, and U.S. holders should therefore assume that
any distribution by us with respect to shares or ADSs will constitute ordinary dividend income. The amount of
the dividend will be the U.S. dollar value of the Japanese yen payments received. This value will be determined
at the spot Japanese yen/U.S. dollar rate on the date the dividend is received by the depositary in the case of
U.S. holders of ADSs, or by the shareholder in the case of U.S. holders of shares, regardless of whether the
dividend payment is in fact converted into U.S. dollars at that time. If the Japanese yen received as a dividend are
not converted into U.S. dollars on the date of receipt, a U.S. holder will have basis in such Japanese yen equal to
their U.S. dollar value on the date of receipt, and any foreign currency gains or losses resulting from the
conversion of the Japanese yen will generally be treated as U.S. source ordinary income or loss. If the Japanese
yen received as a dividend are converted into U.S. dollars on the date of receipt, a U.S. holder will generally not
be required to recognize foreign currency gain or loss in respect of the dividend income.
If a U.S. holder is eligible for benefits under the Tax Convention, the holder may be able to claim a reduced
rate of Japanese withholding tax. All U.S. holders should consult their tax advisors about their eligibility for
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reduction of Japanese withholding tax. A U.S. holder may claim a deduction or a foreign tax credit, subject to
other applicable limitations, only for tax withheld at the appropriate rate. A U.S. holder would be allowed a
foreign tax credit for withholding tax for any portion of the tax that could have been avoided by claiming benefits
under the Tax Convention. For foreign tax credit limitation purposes, the dividend will be income from sources
outside the United States. The limitation on foreign taxes eligible for credit is calculated separately with respect
to specific classes of income. For this purpose, dividends we pay will constitute “passive income” or, in the case
of certain U.S. holders, “financial services income.” The rules governing U.S. foreign tax credits are very
complex and U.S. holders should consult their tax advisors regarding the availability of foreign tax credits under
their particular circumstances.
Subject to applicable exceptions with respect to short-term and hedged positions, qualified dividends
received by non-corporate U.S. holders from a qualified corporation may be eligible for reduced rates of taxation.
Qualified corporations include those foreign corporations eligible for the benefits of a comprehensive income tax
treaty with the United States that the U.S. Treasury Department determines to be satisfactory for these purposes
and that includes an exchange of information provision. The Tax Convention meets these requirements. Subject
to the PFIC discussion below, we believe that we are a qualified foreign corporation and that dividends received
by U.S. investors with respect to our shares or ADSs will be qualified dividends. Dividends received by U.S.
investors from a foreign corporation that was a PFIC in either the taxable year of the distribution or the preceding
taxable year are not qualified dividends.
Passive Foreign Investment Company Considerations
Special adverse U.S. federal income tax rules apply if a U.S. holder holds shares or ADSs of a company that
is treated as a PFIC, for any taxable year during which the U.S. holder held shares or ADSs. A foreign
corporation will be considered a PFIC for any taxable year in which (i) 75% or more of its gross income is
passive income (the “income test”), or (ii) 50% or more of the average fair market value of its assets (determined
quarterly) is attributable to assets that produce or are held for the production of passive income (the “asset test”).
For this purpose, passive income generally includes dividends, interest, royalties, rents and certain gains from the
sale of stock and securities. If a foreign corporation owns at least 25% (by value) of the stock of another
corporation, the corporation will be treated, for purposes of the PFIC tests, as owning a proportionate share of the
other corporation’s assets and receiving its proportionate share of the other corporation’s income. The
determination of whether a foreign corporation is a PFIC is made annually.
Multiple sets of proposed Treasury regulations and an earlier IRS notice would convert what would
otherwise be passive income into non-passive income when such income is banking income earned by an active
bank. The various proposed Treasury regulations and IRS notice have different (and in some respects
inconsistent) requirements for qualifying as an active bank, and for determining the banking income that may be
excluded from passive income under this special rule for active banks. Moreover, the proposed Treasury
regulations (some of which have been outstanding since 1994, and others of which were recently issued in 2021)
will not be effective unless finalized. There can be no assurance that the proposed Treasury regulations will be
finalized in their current form. Because final regulations have not been issued, the definition of banking income
for purposes of the active bank exception is unclear under both the proposed Treasury regulations and the notice.
Based upon certain management estimates and assumptions, we do not believe that we were a PFIC for the year
ended March 31, 2021. The determination of whether we are a PFIC must be made annually and involves a fact-
intensive analysis based upon, among other things, the composition of our income and assets and the value of our
assets from time to time. It is possible that we may become a PFIC in the fiscal year ending March 31, 2022 or
any future taxable year due to changes in our income or asset composition or changes to applicable Treasury and
IRS guidance (including as a result of the final regulations). In addition, a decrease in the price of our shares may
also result in our becoming a PFIC. If we were classified as a PFIC in any year during which a U.S. holder owns
shares or ADSs and the U.S. holder does not make a “mark-to-market” election, as discussed below, we generally
would continue to be treated as a PFIC as to such U.S. holder in all succeeding years, regardless of whether we
continue to meet the income or asset test discussed above. U.S. Holders are urged to consult their own tax
advisors with respect to the tax consequences to them if we were to become a PFIC for any taxable year in which
they own our shares or ADSs.
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If we were classified as a PFIC for any taxable year during which a U.S. holder holds our shares or ADSs,
the U.S. holder would generally not receive capital gains treatment upon the sale of the shares or ADSs and
would be subject to increased tax liability (generally including an interest charge) upon the sale or other
disposition of the shares or ADSs or upon the receipt of certain distributions treated as “excess distributions,”
unless the U.S. holder makes the mark-to-market election described below. An excess distribution generally
would be any distribution to a U.S. holder with respect to shares or ADSs during a single taxable year that is
greater than 125% of the average annual distributions received by a U.S. holder with respect to shares or ADSs
during the three preceding taxable years or, if shorter, during the U.S. holder’s holding period for the shares or
ADSs.
Mark-to-Market Election.
If the shares or ADSs are regularly traded on a registered national securities
exchange or certain other exchanges or markets, then such shares or ADSs would constitute “marketable stock”
for purposes of the PFIC rules, and a U.S. holder would not be subject to the foregoing PFIC rules if such holder
made a mark-to-market election. After making such an election, the U.S. holder generally would include as
ordinary income each year during which the election is in effect and during which we are a PFIC the excess, if
any, of the fair market value of our shares or ADSs at the end of the taxable year over such holder’s adjusted
basis in such shares or ADSs. These amounts of ordinary income would not be eligible for the favorable tax rates
applicable to qualified dividend income or long-term capital gains. A U.S. holder also would be allowed to take
an ordinary loss in respect of the excess, if any, of the holder’s adjusted basis in our shares or ADSs over their
fair market value at the end of the taxable year (but only to the extent of the net amount of income that was
previously included as a result of the mark-to-market election). A U.S. holder’s tax basis in our shares or ADSs
would be adjusted to reflect any income or loss amounts resulting from a mark-to-market election. If made, a
mark-to-market election would be effective for the taxable year for which the election was made and for all
subsequent taxable years unless the shares or ADSs cease to qualify as “marketable stock” for purposes of the
PFIC rules or the IRS consented to the revocation of the election. In the event that we are classified as a PFIC,
U.S. holders are urged to consult their tax advisors regarding the availability of the mark-to-market election, and
whether the election would be advisable in the holder’s particular circumstances.
QEF Election. The PFIC rules outlined above also would not apply to a U.S. holder if such holder
alternatively elected to treat us as a “qualified electing fund” or “QEF.” An election to treat us as a QEF will not
be available, however, if we do not provide the information necessary to make such an election. We will not
provide U.S. holders with the information necessary to make a QEF election, and thus, the QEF election will not
be available with respect to our shares.
Notwithstanding any election made with respect to our shares, dividends received with respect to our shares
will not constitute “qualified dividend income” if we are a PFIC in either the year of the distribution or the
preceding taxable year. Dividends that do not constitute qualified dividend income are not eligible for taxation at
the reduced tax rate described above in “—Taxation of Dividends.” Instead, such dividends would be subject to
tax at ordinary income rates.
If a U.S. holder owns shares or ADSs during any year in which we are a PFIC, the U.S. holder must also file
IRS Form 8621 regarding distributions received on the shares or ADSs, any gain realized on the shares or ADSs,
and any “reportable election” in accordance with the instructions to such form. In addition, each U.S. holder is
required to file a separate IRS Form 8621 if such U.S. holder owns shares or ADSs during any year in which we
are a PFIC whether or not such U.S. holder received distributions on the shares or ADSs, realized a gain on the
shares or ADSs or made a “reportable election” during such year. U.S. holders are urged to consult their own tax
advisors concerning the U.S. federal income tax consequences of holding shares or ADSs if the Company were
considered a PFIC in any taxable year.
Taxation of Capital Gains
Subject to the application of the PFIC rules discussed above, upon a sale or other disposition of shares or
ADSs, a U.S. holder will recognize a gain or loss in an amount equal to the difference between the U.S. dollar
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value of the amount realized and the U.S. holder’s tax basis, determined in U.S. dollars, in such shares or ADSs.
Such gains or losses will be capital gains or losses and will be long-term capital gains or losses if the U.S.
holder’s holding period for such shares or ADSs exceeds one year. Long-term capital gains of non-corporate
U.S. holders (including individuals) are generally eligible for reduced rates of taxation. A U.S. holder’s adjusted
tax basis in its shares or ADSs will generally be the cost to the holder of such shares or ADSs. Any such gains or
losses realized by a U.S. holder upon disposal of the shares or ADSs will generally be income or loss from
sources within the United States for foreign tax credit limitation purposes. The deductibility of capital losses is
subject to limitations under the Code.
Information Reporting and Backup Withholding
Dividends paid on shares or ADSs to a U.S. holder, or proceeds from a U.S. holder’s sale or other
disposition of shares or ADSs, may be subject to information reporting requirements. Those dividends or
proceeds from sale or disposition may also be subject to backup withholding unless the U.S. holder:
‰
‰
is a corporation or other exempt recipient, and, when required, demonstrates this fact; or
provides a correct taxpayer identification number on a properly completed U.S. IRS Form W-9 or other
appropriate form which certifies that the U.S. holder is not subject to backup withholding and otherwise
complies with applicable requirements of the backup withholding rules.
Backup withholding is not an additional tax. Any amount withheld under these rules will be creditable
against the U.S. holder’s U.S. federal income tax liability or refundable to the extent that it exceeds such liability
if the U.S. holder provides the required information to the IRS. If a U.S. holder is required to and does not
provide a correct taxpayer identification number, the U.S. holder may be subject to penalties imposed by the IRS.
All holders should consult their tax advisors as to their qualification for the exemption from backup withholding
and the procedure for obtaining an exemption.
In addition, certain U.S. holders who are individuals that hold certain foreign financial assets (which may
include our shares or ADSs) are required to report information relating to such assets, subject to certain
exceptions. U.S. holders should consult their tax advisors regarding the effect, if any, of this requirement on their
ownership and disposition of our shares and ADSs.
Additional Tax on Investment Income
U.S. holders that are individuals, estates or trusts and whose income exceeds certain thresholds will be
subject to an additional 3.8% tax on unearned income, including, among other things, dividends on, and capital
gains from the sale or other taxable disposition of, shares or ADSs, subject to certain limitations and exceptions.
F. Dividends and Paying Agents
Not applicable.
G. Statement by Experts
Not applicable.
H. Documents on Display
We file periodic reports and other information with the SEC pursuant to the rules and regulations of the SEC
that apply to foreign private issuers. The SEC maintains a web site (http://www.sec.gov) that contains periodic
reports and other information regarding registrants, including us, electronically filed with the SEC. Except
otherwise specified in this Annual Report, no information is incorporated by reference in this Annual Report
(including, without limitation, information on our website at https://www.mufg.jp/).
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I.
Subsidiary Information
Please refer to the discussion under “Item 4.C. Information on the Company—Organizational Structure.”
Item 11. Quantitative and Qualitative Disclosures about Credit, Market and Other Risk.
In the current market and regulatory environment, financial groups such as us are expected to ensure
increasingly more sophisticated and comprehensive risk management. Risk management plays an increasingly
important role in our operations as a financial group operating globally through various subsidiaries.
We identify various risks arising from businesses based on group-wide uniform criteria and implement
integrated risk management to ensure a stronger financial condition and to maximize shareholder value. Based on
this approach, we identify, measure, control and monitor a wide variety of risks so as to achieve a stable balance
between earnings and risks. We undertake risk management to create an appropriate capital structure and to
achieve optimal allocation of resources. However, our risk management measures may not be fully effective in
identifying all risks or mitigating the impact of any materialized risk on us.
Risk Classification
At the holding company level, we broadly classify and define risk categories faced by the Group, including
those that are summarized below. Group companies perform more detailed risk management based on their
respective operations.
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Type of Risk
Credit Risk
Market Risk
Funding Liquidity Risk
Operational Risk
‰ Operations Risk
Information Risk
IT Risk
Tangible Asset Risk
Personnel Risk
‰
‰
‰
‰
‰
‰
Legal Risk
Reputation Risk
Model Risk
Risk Management System
Definition
The risk of financial loss in credit assets (including off-balance sheet
instruments) caused by deterioration in the credit conditions of
counterparties. This category includes country risk.
The risk of financial loss where the value of our assets and liabilities could
be adversely affected by changes in market variables such as interest rates,
securities prices and foreign exchange rates. Market liquidity risk is the risk
of financial loss caused by the inability to secure market transactions at the
required volume or price levels as a result of market turbulence or lack of
trading liquidity.
The risk of incurring loss if a poor financial position at a group company
hampers the ability to meet funding requirements or necessitates fund
procurement at interest rates markedly higher than normal.
The risk of loss resulting from inadequate or failed internal processes,
people or systems, or from external events.
The risk of incurring losses arising from negligence of correct operational
processing, incidents or misconduct involving officers or staff, as well as
risks similar to this risk.
The risk of loss caused by loss, alteration, falsification or leakage of
personal or other confidential information, as well as risks similar to these
risks.
The risk of loss arising from destruction, suspension, malfunction or misuse
of IT, or unauthorized alteration and leakage of electronic data caused by
insufficient IT systems planning, development or operations or by
vulnerabilities of or external threats to IT system security, including
cybersecurity, as well as risks similar to these risks.
The risk of loss due to damage to tangible assets or deterioration in the
operational environment caused by disasters or inadequate asset
maintenance, as well as risks similar to this risk. Tangible assets include
movable and immovable property, including owned or leased land and
buildings, facilities incidental to buildings, and fixtures and fittings.
The risk of loss due to an outflow or loss of human resources or
deterioration in employee morale, as well as risks similar to this risk.
The risk of a loss due to failure to identify or address legal issues relating to
contracts and other business operations or insufficient handling of lawsuits, as
well as risks similar to these risks.
The risk of harm to our corporate value arising from perceptions of our
customers, shareholders, investors or other stakeholders and in the market
or society that we deviate from their expectations or confidence.
The risk of loss due to decision-making based on information provided by
an inaccurate model or the misuse of a model.
Incompliance with Laws
and Regulations Risk
The risk of loss due to failure to comply with laws and regulations, as well
as risks similar to these risks.
We have adopted an integrated risk management system to promote close cooperation among the holding
company and group companies. The holding company and our banking and securities subsidiaries each appoint a
chief risk officer and establish an independent risk management division. The board of directors of the holding
company determines risk management policies for various types of risks based on the discussions at, and reports
and recommendations from, committees established specially for risk management purposes. The holding
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company has established committees to oversee management in managing risks relevant to the Group. Following
the fundamental risk management policies determined by the board of directors, each group company establishes
its own systems and procedures for identifying, analyzing and managing various types of risks from both
quantitative and qualitative perspectives. The holding company seeks to enhance group-wide risk identification,
to integrate and improve the Group’s risk management system and related methods, to maintain asset quality, and
to eliminate concentrations of specific risks.
The following diagram summarizes our integrated risk management framework:
Risk Management System
MUFG
Risk Committee
Board of Directors
U.S. Risk Committee
Executive Committee
Risk Management Committee
Operational Risk
Working Group
Crisis Management
Working Group
Loan and Investment
Committee
Management Planning
Committee (including ALM)
Market Risk,
Funding Liquidity Risk,
Operational Risk,
Operations Risk
Reputation Risk,
Model Risk
Corporate Risk Management
Division
(cordinates risk management
divisions)
Credit Policy & Planning Division
Credit Risk
Global Compliance Division
Information Risk
Group-wide Credit Committee
Global Financial Crimes Division
Incompliance with Laws and
Regulations Risk
Information Systems Planning
Division
IT Risk
Corporate Administration Division
Tangible Asset Risk
Human Resources Division
Personnel Risk
Legal Division
Legal Risk
Setting of basic
policies/guidance/
advice, etc.
Consultation/
reporting, etc.
MUFG Group Companies
Risk Management
Committee
Operational Risk
Working Group
Crisis Management
Working Group
Loan and Investment
Committee
Credit Committee
CPM Committee
MUFG BANK
Board of Directors
Executive Committee
Corporate Risk
Management Division
(cordinates risk
management divisions)
Credit Policy &
Planning Division
Transaction Banking
Division
Operations Planning
Division
Information Systems
Planning Division
Global Compliance
Division
Corporate Planning Meeting
ALM Committee
Market Risk,
Funding Liquidity Risk,
Operational Risk,
Reputation Risk,
Model Risk
Credit Risk
Settlement Risk
Operations Risk
IT Risk
Information Risk
Global Financial
Crimes Division
Incompliance with Laws
and Regulations Risk
Corporate Administration
Division
Tangible Asset Risk
Human Resources
Division
Personnel Risk
Legal Division
Legal Risk
Risk Management
Committee
(including crisis
management)
Capital Management
Committee
Credit Committee
MUTB
Board of Directors
Executive Committee
Corporate Risk
Management Division
(cordinates risk
management divisions)
Credit Supervisory
Division
Business Process and
IT Planning Division
ALM Committee
Market Risk,
Funding Liquidity Risk,
Operational Risk,
Reputation Risk,
Model Risk,
Operations Risk,
Credit Risk
IT Risk
Global Compliance
Division
Information Risk,
Incompliance with Laws
and Regulations Risk
Corporate
Administration Division
Tangible Asset Risk
Personnel Division
Personnel Risk
Legal Division
Legal Risk
M
U
S
H
D
O
t
h
e
r
C
o
m
p
a
n
i
e
s
Crisis Management Framework
In order to have a clear critical response rationale and associated decision-making criteria, we have
developed systems designed to ensure that our operations are not interrupted or can be restored to normal quickly
in the event of a crisis such as a natural disaster, a pandemic of an infectious disease or system failure so as to
145
minimize any disruption to customers and markets. A crisis management team within the holding company is the
central coordinating body in the event of any emergency. Based on information collected from crisis
management personnel at the major subsidiaries, this central body would assess the overall impact of a crisis on
the Group’s business and establish task forces that could implement all countermeasures to restore full
operations. We have business continuity plans to maintain continuous operational viability in the event of natural
disasters, system failures and other types of emergencies. Regular training drills are conducted to upgrade the
practical effectiveness of these systems. In addition, in order to effectively deal with the COVID-19 pandemic,
the Group Crisis Event Control Headquarter established by the holding company deliberates, formulates and
implements basic policies and countermeasures designed to ensure that our business operations are properly
maintained and we remain well positioned to respond to the needs of our customers.
We conduct a comprehensive review of our existing business continuity plan to more effectively respond to
such extreme scenarios, and contemplate and implement measures to augment our current business continuity
management framework, including enhancing our off-site back-up data storage and other information technology
systems.
Implementation of Basel Standards
In determining capital ratios under the FSA guidelines implementing Basel III, we and our major banking
subsidiaries used the Advanced Internal Ratings-Based approach, or the AIRB approach, to calculate capital
requirements for credit risk as of March 31, 2021. The Standardized Approach is used for some subsidiaries that
are considered to be immaterial to the overall MUFG capital requirements, and MUFG Americas Holdings has
adopted a phased rollout of the Internal Ratings-Based Approach. We reflect market risk in our risk-weighted
assets by applying the Internal Models Approach to calculate general market risk and the Standardized
Measurement Method to calculate specific risk. Under the Internal Models Approach, we principally use a
historical simulation model to calculate value-at-risk, or VaR, amounts by estimating the profit and loss on our
portfolio by applying actual fluctuations in historical market rates and prices over a fixed period. Under the FSA
guidelines implementing Basel III, we reflect operational risk in our risk-weighted assets by using the
Standardized Approach and the Advanced Measurement Approach.
Based on the Basel III framework, the Japanese capital ratio framework has been revised to implement the
more stringent requirements, which are being implemented in phases beginning on March 31, 2013. Likewise,
local banking regulators outside of Japan, such as those in the United States, have begun, or are expected, to
revise the capital and liquidity requirements imposed on our subsidiaries and operations in those countries to
implement the more stringent requirements of Basel III as adopted in those countries. We intend to carefully
monitor further developments with an aim to enhance our corporate value and maximize shareholder value by
integrating the various strengths within the Group. For more information on the Basel regulatory framework and
requirements, see “Item 4.B. Information on the Company—Business Overview—Supervision and Regulation.”
Credit Risk Management
We have established risk management systems to maintain asset quality, manage credit risk exposure and
achieve earnings commensurate with risk.
MUFG and its major banking subsidiaries apply a uniform credit rating system for asset evaluation and
assessment, loan pricing, and quantitative measurement of credit risk. This system also underpins the calculation
of capital requirements and the management of credit portfolios. We continually seek to upgrade our credit
portfolio management, or CPM, expertise to achieve an improved risk-adjusted return based on the Group’s
credit portfolio status and flexible response capability to economic and other external changes.
Credit Risk Management System
The credit portfolios of our banking and securities subsidiaries are monitored and assessed on a regular basis
by the holding company to maintain and improve asset quality. A uniform credit rating and asset evaluation and
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assessment system is used to ensure timely and proper evaluation of all credit risks. Under our credit risk
management system, each of our subsidiaries in the banking, securities, consumer finance, and leasing
businesses, manages its respective credit risk on a consolidated basis based on the attributes of the risk, while the
holding company oversees and manages credit risk on an overall group-wide basis. The holding company also
convenes regular committee meetings to monitor credit risk management at banking subsidiaries and to issue
guidance where necessary.
Each major banking subsidiary has in place a system of checks and balances in which a credit administration
section that is independent of the business promotion sections screens individual transactions and manages the
extension of credit. At the management level, regular meetings of the Credit & Investment Management
Committee and related deliberative bodies ensure full discussion of important matters related to credit risk
management. Besides such checks and balances and internal oversight systems, credit examination sections also
undertake credit testing and evaluation to ensure appropriate credit risk management.
The following diagram summarizes the credit risk management framework for our major banking
subsidiaries:
Board of Directors/Executive Committee
Credit & Investment Management Committee/
related deliberative bodies
Monitoring by MUFG
Credit & Investment
Management Committee
Credit Committee
(cid:129)Decisions regarding important matters
(cid:129)Delegation of authority
Credit administration
sections
Credit screening
and management
Business promotion
sections
Regular report
(cid:129)Discussion of important matters
(cid:129)Transaction report
Quantitative risk
monitoring
Credit risk management
sections
Credit testing and evaluation
Internal audit sections
Credit Rating System
MUFG and its major banking subsidiaries use an integrated credit rating system to evaluate credit risk. The
credit rating system consists primarily of borrower rating, facility risk rating, structured finance rating and asset
securitization rating.
Country risk is also rated on a uniform group-wide basis. Our country risk rating is reviewed periodically to
take into account relevant political and economic factors, including foreign currency availability.
Risk exposure for small retail loans, such as residential mortgage loans, is managed by grouping loans into
various pools and assigning ratings at the pool level.
Borrower rating
Our borrower rating classifies borrowers into 15 grades based on evaluations of their expected debt-service
capability over the next three to five years.
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The following table sets forth our borrower grades:
Definition of MUFG Borrower Rating
MUFG
Borrower
Rating
MUFG Borrower Rating Definition
1
2
3
4
5
6
7
8
9
10 through 12
10
11
12
13
14
15
The capacity to meet financial commitments is extremely certain, and the borrower has the highest level
of creditworthiness.
The capacity to meet financial commitments is highly certain, but there are some elements that may result
in lower creditworthiness in the future.
The capacity to meet financial commitments is sufficiently certain, but there is the possibility that
creditworthiness may fall in the long run.
There are no problems concerning the capacity to meet financial commitments, but there is the possibility
that creditworthiness may fall in the long run.
There are no problems concerning the capacity to meet financial commitments, and creditworthiness is in
the middle range.
There are no problems concerning the capacity to meet financial commitments presently, but there are
elements that require attention if the situation changes.
There are no problems concerning the capacity to meet financial commitments presently, but long-term
stability is poor.
There are no problems concerning the capacity to meet financial commitments presently, but long-term
stability is poor, and creditworthiness is relatively low.
The capacity to meet financial commitments is somewhat poor, and creditworthiness is the lowest among
“Normal” customers.
Borrowers who must be closely monitored because of the following business performance and financial
conditions:
(1)
(2)
(3)
Borrowers who have problematic business performance, such as virtually delinquent principal
repayment or interest payment;
Borrowers whose business performance is unsteady, or who have unfavorable financial conditions;
Borrowers who have problems with loan conditions and for whom interest rates have been reduced
or shelved.
Although business problems are not serious or their improvement is seen to be remarkable, there are elements
of potential concern with respect to the borrower’s management, and close monitoring is required.
Business problems are serious, or require long-term solutions. Serious elements concerning business
administration of the borrower have emerged, and subsequent debt repayment needs to be monitored closely.
Borrowers who fall under the criteria of Rating 10 or 11 and have a loan concession granted. Borrowers
who have “Loans contractually past due 90 days or more.” (As a rule, delinquent borrowers are
categorized as “Likely to Become Bankrupt,” but the definition here applies to borrowers delinquent for
90 days or more because of inheritance and other special reasons.)
Borrowers who pose a serious risk with respect to debt repayment and with whom loss is likely to occur in
the course of transactions. While still not bankrupt, these borrowers are in financial difficulty, with poor
progress in achieving restructuring plans, and are likely to become bankrupt in the future.
While not legally bankrupt, borrowers who are considered to be virtually bankrupt because they are in
serious financial difficulty and have no prospects for an improvement in their business operations.
Borrowers who are legally bankrupt (i.e., who have no prospects for continued business operations
because of non-payment, suspension of business, voluntary liquidation, or filing for legal liquidation).
Japanese banks were historically required to use the following categories of borrowers under the then
applicable FSA inspection manual, which was abolished in December 2019, and are currently expected to use
them as a basis for their borrower categorization with appropriate adjustments under the FSA’s discussion paper:
‰ Normal borrowers (generally corresponding to borrowers in categories 1 through 9 in our ratings),
which are borrowers that are performing well, with no significant financial concerns,
‰ Borrowers requiring close watch (generally corresponding to borrowers in categories 10 through 12 in
our ratings), which include loans that have been amended to allow for delays or forgiveness of interest
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payments, borrowers experiencing difficulty in complying with loan terms and conditions and borrowers
that are recording losses or performing badly,
‰ Borrowers likely to become bankrupt (generally corresponding to borrowers in category 13 in our
ratings), which relate to borrowers who pose a serious risk with respect to debt repayment and with
whom loss is likely to occur in the course of transactions. While still not bankrupt, these borrowers are
in financial difficulty, with poor progress in achieving restructuring plans, and are likely to become
bankrupt in the future,
‰ Virtually bankrupt borrowers (generally corresponding to borrowers in category 14 in our ratings),
which are not legally bankrupt, but borrowers who are considered to be virtually bankrupt because they
are in serious financial difficulty and have no prospects for an improvement in their business operations,
and
‰ Bankrupt borrowers or de facto bankrupt borrowers (generally corresponding to borrowers in
category 15 in our ratings), which are borrowers who are legally bankrupt (i.e., who have no prospects
for continued business operations because of non-payment, suspension of business, voluntary
liquidation, or filing for legal liquidation proceedings).
The primary data utilized in our assessment of borrowers include the borrower’s financial statements and
notes thereto as well as other public disclosure made by the borrower. In addition, when appropriate and possible,
we obtain non-public financial and operating information from borrowers, such as the borrower’s business plan,
borrower’s self-evaluation of its operating assets and other borrower information about its business and products.
Based on the borrower and industry information, we assign borrower ratings mainly by applying financial
scoring models—either developed internally or by third-party vendors, depending on the borrower’s attributes,
whether the borrower is domestic or foreign, whether the borrower is a large corporation or a small and
medium-sized corporation, and whether the borrower is a corporate entity or another type of legal entity (such as
a school, hospital or fund).
For example, for domestic small and medium-sized corporations, which constitute the largest borrower
attribute in our current loan portfolio in terms of number of borrowers, we have adopted an internally developed
financial scoring model, exclusively designed and developed for such attribute. We have selected various
financial ratios that we believe to be useful and meaningful to quantitatively measure and assess the borrowers’
financial standing and repayment capability. Such financial ratios represent, among other things, borrowers’
growth, profitability, stability, cash flow, company size and capital efficiency. The model is periodically tested
against historical results. The following is an illustration of some of the financial ratios we utilize as part of our
financial scoring model:
‰
‰
‰
To measure growth: Sales growth, and growth in total assets,
To measure profitability: Current profit to sales, and profit before tax to sales, and
To measure stability: Equity ratio and current ratio.
The financial score obtained through the models is reviewed and, when necessary, adjusted downward to
reflect our qualitative assessment of the borrower’s financial strength and other factors that could affect the
borrower’s ability to service the debt. For example, we take into account: capability of turning around the
business (in case of borrowers with losses) or recovering positive net worth (in case of borrowers with negative
net worth), industry risk, management risk, legal risk, as well as our assessment of the probability of receiving
support from parent companies (if the borrower is a subsidiary of a large listed company).
When adjusting the results of primary financial scoring assigned to borrowers with losses, we consider the
severity of losses and the possibility of improving operating results. We analyze and assess whether the loss is
temporary, the trend in operating results is improving, or the loss is expected to continue for an extended period.
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When adjusting the results of primary financial scoring assigned to borrowers with losses or borrowers with
negative net worth, we also analyze whether the borrower can return to a positive net worth, and the time period
needed to achieve such recovery (one to two years, three to five years, or five years or more).
In addition, adjustments based on industry risk are based on future prospects, applicable laws and
regulations, and other factors surrounding the industry. Adjustments for management risk reflect our assessment
of management’s track record, the composition of the management team including the board of directors, any
management succession plan as well as the risk management and compliance framework of the borrower.
Adjustments for legal risk are made when the borrower is facing a lawsuit and when there is a possibility of a
significant claim payment related to product liability, intellectual property, environmental problems, building
standard law, and other legal issues.
When assessing the probability of receiving support from parent companies, various factors are examined,
such as the parent company’s credit standings, whether key management personnel are sent by the parent,
whether the borrower is consolidated by the parent, and the proportion of the borrower in consolidated sales and
profits of the parent.
In addition, we consider outside ratings, and our internal borrower ratings may be adjusted when deemed
appropriate.
Facility risk rating
Facility risk rating is used to evaluate and classify the quality of individual credit facilities, including
guarantees and collateral. Ratings are assigned by quantitatively measuring the estimated loss rate of a facility in
the event of a default.
Structured finance rating and asset securitization rating
Structured finance rating and asset securitization rating are used to evaluate and classify the quality of
individual credit facilities, including guarantees and collateral, and focus on the structure, including the
applicable credit period, of each credit facility. In evaluating the debt service potential of a credit facility, we
scrutinize its underlying structure to determine the likelihood of the planned future cash flows being achieved.
Pool assignment
Each major banking subsidiary has its own system for pooling and rating small retail loans designed to
reflect the risk profile of its loan portfolios.
Asset evaluation and assessment system
The asset evaluation and assessment system is used to classify assets held by us according to the probability
of collection and the risk of any impairment in value based on borrower classifications consistent with the
borrower ratings and the status of collateral, guarantees, and other factors.
The system is used to conduct write-offs and allocate allowances against credit risk in a timely and adequate
manner.
Quantitative Analysis of Credit Risk
MUFG and its major banking subsidiaries manage credit risk by monitoring credit amount and expected
losses, and run simulations based on internal models to estimate the maximum amount of credit risk. These
models are used for internal management purposes, including loan pricing and measuring economic capital.
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When quantifying credit risk amounts using the internal models, MUFG and its major banking subsidiaries
consider various parameters, including the probability of default, loss given default, and exposure at default used
in their borrower ratings, facility risk ratings and pool assignments as well as any credit concentration risk in
particular borrower groups or industry sectors. MUFG and its major banking subsidiaries also share credit
portfolio data in appropriate cases.
Loan Portfolio Management
We aim to achieve and maintain levels of earnings commensurate with credit risk exposure. Products are
priced to take into account expected losses, based on the internal credit ratings.
We assess and monitor loan amounts and credit exposure by credit rating, industry and region. Portfolios are
managed to limit concentrations of risk in specific categories in accordance with our Large Credit Guidelines.
To manage country risk, we have established specific credit ceilings by country. These ceilings are reviewed
when there is a material change in a country’s credit standing, in addition to being subject to a regular periodic
review.
Continuous CPM Improvement
With the prevalence of securitized products and credit derivatives in global markets, we seek to supplement
conventional CPM techniques with advanced methods based on the use of such market-based instruments.
Through credit risk quantification and portfolio management, we aim to improve the risk return profile of
the Group’s credit portfolio, using financial markets to rebalance credit portfolios in a dynamic and active
manner based on an accurate assessment of credit risk.
Risk Management of Strategic Equity Portfolio
We hold shares of various corporate clients for strategic purposes, in particular to maintain long-term
relationships with these clients. These investments have the potential to increase business revenue and appreciate
in value. At the same time, we are exposed to the risk of price fluctuation in the Japanese stock market. For that
reason, in recent years, it has been a high priority for us to reduce our equity portfolio to limit the risks associated
with holding a large equity portfolio, but also to respond to applicable regulatory requirements as well as
increasing market expectations and demands for us to reduce our equity portfolio. We are required to comply
with a regulatory framework that prohibits Japanese banks from holding an amount of shares in excess of their
adjusted Tier 1 capital. See “Item 5.B. Operating and Financial Review and Prospects—Liquidity and Capital
Resources—Financial Condition—Investment Portfolio.”
We use quantitative analysis to manage the risks associated with the portfolio of equities held for strategic
purposes. According to internal calculations, the market value of our strategically held (Tokyo Stock Exchange-
listed) stocks (excluding foreign stock exchange-listed stocks) as of March 31, 2021 was subject to a variation of
approximately ¥3.0 billion when TOPIX index moves one point in either direction.
We seek to manage and reduce strategic equity portfolio risk based on quantitative analysis such as the
sensitivity analysis described above. The aim is to keep this risk at appropriate levels compared with Tier 1
capital while generating returns commensurate with the degree of risk exposure.
Market Risk Management
Management of market risk at MUFG aims to control our risk exposure to fluctuations in market variables
across the Group while ensuring that earnings are commensurate with levels of risk.
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Market Risk Management System
We have adopted an integrated system to manage market risk from our trading and non-trading activities.
The holding company monitors group-wide market risk, while each of the major subsidiaries manages its market
risks on a consolidated and global basis.
At each of the major subsidiaries, checks and balances are maintained through a system in which back and
middle offices operate independently from front offices. In addition, separate Asset-Liability Management, or
ALM, Committee and Risk Management Meetings are held at each of the major subsidiaries every month to
deliberate important matters related to market risk and control.
The holding company and the major subsidiaries allocate economic capital commensurate with levels of
market risk and determined within the scope of their capital bases. The major subsidiaries have established
quantitative limits relating to market risk based on their allocated economic capital. In addition, in order to keep
losses within predetermined limits, the major subsidiaries have also set limits for the maximum amount of losses
arising from market activities. The following diagram summarizes the market risk management system of each
major subsidiary:
Market Risk Management System of Our Major Subsidiaries
Board of Directors / Executive Committee
ALM Committie / Risk Management Meeting
Trading result report
Report
Quantitaive risk monitoring
Delegation of
authority
Front Office
Confirmation of contracts and agreements
Back Office
Middle Office
(Market risk management
departments)
Market Risk Management and Control
At the holding company and the major subsidiaries, market risk exposure is reported to the Chief Risk
Officers on a daily basis. At the holding company, the Chief Risk Officer monitors market risk exposure across
the Group as well as the major subsidiaries’ control over their quantitative limits for market risk and losses.
Meanwhile, the Chief Risk Officers at the major subsidiaries monitor their own market risk exposure and their
control over their quantitative limits for market risk and losses. In addition, various analyses on risk profiles,
including stress testing, are conducted and reported to the Executive Committees and the Corporate Risk
Management Committees on a regular basis. At the business unit levels in the major subsidiaries, the market
risks on their marketable assets and liabilities, such as interest rate risk and foreign exchange rate risk, are
controlled by entering into various hedging transactions using marketable securities and derivatives.
As part of our market risk management activities, we use certain derivative financial instruments to manage
our interest rate and currency exposures. We maintain an overall interest rate risk management strategy that
incorporates the use of interest rate contracts to minimize significant unplanned fluctuations in earnings that are
caused by interest rate volatility. We enter into interest rate swaps and other contracts as part of our interest rate
risk management strategy primarily to alter the interest rate sensitivity of our loans, investment securities and
deposit liabilities. Our principal objectives in risk management include asset and liability management. Asset and
liability management is viewed as one of the methods for us to manage our interest rate exposures on interest-
152
earning assets and interest-bearing liabilities. Interest rate contracts, which are generally non-leveraged generic
interest rate and basis swaps, options and futures, allow us to effectively manage our interest rate risk position.
Option contracts primarily consist of caps, floors, swaptions and options on index futures. Futures contracts used
for asset and liability management activities are primarily index futures providing for cash payments based upon
the movement of an underlying rate index. We enter into forward exchange contracts, currency swaps and other
contracts in response to currency exposures resulting from on-balance sheet assets and liabilities denominated in
foreign currencies in order to limit the net foreign exchange position by currency to an appropriate level.
These market risk management activities are performed in accordance with the predetermined rules and
procedures. The internal auditors regularly verify the appropriateness of the management controls over these
activities and the risk evaluation models adopted.
Market Risk Measurement Model
Market risks consist of general risks and specific risks. General market risks result from changes in entire
markets, while specific risks relate to changes in the prices of individual financial instruments which are
independent of the overall direction of the market.
To measure market risks, MUFG uses the VaR method which estimates changes in the market value of
portfolios within a certain period by statistically analyzing past market data. Since the daily variation in market
risk is significantly greater than that in other types of risk, MUFG measures and manages market risk using VaR
on a daily basis.
Market risk for trading and non-trading activities is measured using a market risk measurement model. The
principal model used for these activities is a historical simulation, or HS, model (Trading activities: holding
period, one business day; confidence interval, 95%; and observation period, 250 business days. Non-trading
activities: holding period, 10 business days; confidence interval, 99%; and observation period, 701 business
days). To adapt our risk measurement more appropriately to the nature of our trading business, parameters used
in our VaR measurement model for trading activities have been updated as of April 1, 2020. The HS model
calculates VaR amounts by estimating the profit and loss on the current portfolio by applying actual fluctuations
in market rates and prices over a fixed period in the past. This method is designed to capture certain statistically
infrequent movements, such as a fat tail, and accounts for the characteristics of financial instruments with
non-linear behavior. The holding company and the major banking subsidiaries also use the HS model as part of
the calculation of their Basel III regulatory capital adequacy ratios.
In calculating VaR using the HS method, we have implemented an integrated market risk measurement
system throughout the Group. Our major subsidiaries calculate their VaR based on the risk and market data
prepared by the information systems of their front offices and other departments. The major subsidiaries provide
this risk data to the holding company, which calculates overall VaR, taking into account the diversification effect
among all portfolios of the major subsidiaries.
For the purpose of internally evaluating capital adequacy on an economic capital basis in terms of market
risk, we use this market risk measurement model to calculate risk amounts based on a holding period of one year
and a confidence interval of 99.9%.
Monitoring and managing our sensitivity to interest rate fluctuations is the key to managing market risk in
MUFG’s non-trading activities. The major banking subsidiaries take the following approach to measuring risks
concerning core deposits, loan prepayments and early deposit withdrawals.
To measure interest rate risk relating to deposits without contract-based fixed maturities, the amount of
“core deposits” is calculated through a statistical analysis based on deposit balance trend data and the outlook for
interest rates on deposits, business decisions, and other factors. The amount of “core deposit” is categorized into
various groups of maturity terms of up to ten years to recognize interest rate risk. The calculation assumptions
and methods to determine the amount of core deposits and maturity term categorization are regularly reviewed.
153
Meanwhile, deposits and loans with contract-based maturities are sometimes cancelled or repaid before their
maturity dates. To measure interest rate risk for these deposits and loans, we reflect these early termination
events mainly by applying early termination rates calculated based on a statistical analysis of historical
repayment and cancellation data together with historical market interest rate data.
Summaries of Market Risks
Trading activities
The aggregate VaR for our total trading activities as of March 31, 2021 was ¥ 1.39billion, comprising
interest rate risk exposure of ¥1.33 billion, foreign exchange risk exposure of ¥0.60 billion, and equity-related
risk exposure of ¥0.44 billion. Our average daily VaR for the fiscal year ended March 31, 2021 was ¥1.64 billion.
Due to the nature of trading operations which involves frequent changes in trading positions, market risk
may vary substantially during and between measurement periods, depending on our trading positions.
The following tables set forth the VaR related to our trading activities using the updated parameters by risk
category for the fiscal year ended March 31, 2021:
April 1, 2020—March 31, 2021
Average Maximum(1) Minimum(1) March 31, 2021
MUFG . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Interest rate . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Yen . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
U.S. Dollars . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Foreign exchange . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Equities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Commodities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
. . . . . . . . . . . . . . . . . . . . . . . . .
Less diversification effect
¥ 1.64
1.34
0.94
0.77
0.71
0.63
0.00
(1.04)
¥2.71
2.67
1.96
2.05
1.02
2.14
0.00
—
(in billions)
¥0.92
0.80
0.54
0.47
0.32
0.12
0.00
—
¥ 1.39
1.33
0.89
2.05
0.60
0.44
0.00
(0.98)
Assumptions for VaR calculations:
Historical simulation method
Holding period: 1 business day
Confidence interval: 95%
Observation period: 250 business days
Note:
(1) The maximum and minimum VaR overall and for various risk categories were taken from different days. A simple summation of VaR by
risk category is not equal to total VaR due to the effect of diversification.
The average daily VaR by quarter using the updated parameters in the fiscal year ended March 31, 2021 was
as follows:
Quarter
April—June 2020 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
July—September 2020 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
October—December 2020 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
January—March 2021 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Daily average VaR
(in billions)
¥1.61
1.70
1.65
1.59
The quantitative market risk figures from trading activities tend to fluctuate widely due to the market
sensitive nature of the trading business. During the fiscal year ended March 31, 2021, the revenue from our
trading activities has been relatively stable, keeping positive numbers in 249 days out of 260 trading days in the
period. During the same period, there were 121 days with positive revenue exceeding ¥1 billion and one day with
negative revenue exceeding minus ¥1 billion.
154
The following tables set forth the VaR related to our trading activities using the previous parameters by risk
category to enable comparison between the periods indicated:
April 1, 2019—March 31, 2020
Average Maximum(1) Minimum(1) March 31, 2020
MUFG . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Interest rate . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Yen . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
U.S. Dollars . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Foreign exchange . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Equities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Commodities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
. . . . . . . . . . . . . . . . . . . . . . . . .
Less diversification effect
¥19.11
18.56
6.07
7.23
4.58
1.73
0.00
(5.76)
¥35.78
35.03
11.67
11.06
7.23
7.21
0.07
—
(in billions)
¥15.64
14.21
4.10
4.78
2.28
0.60
0.00
—
¥24.81
24.31
9.35
7.20
5.34
2.15
0.00
(6.99)
April 1, 2020—March 31, 2021
Average Maximum(1) Minimum(1) March 31, 2021
MUFG . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Interest rate . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Yen . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
U.S. Dollars . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Foreign exchange . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Equities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Commodities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
. . . . . . . . . . . . . . . . . . . . . . . . .
Less diversification effect
¥26.18
24.91
9.20
9.97
4.68
2.79
0.00
(6.20)
¥33.86
33.01
15.64
13.59
6.86
11.49
0.06
—
(in billions)
¥21.97
20.26
5.85
7.57
3.58
0.82
0.00
—
¥26.55
26.25
8.40
12.74
5.36
2.71
0.00
(7.77)
Assumptions for VaR calculations:
Historical simulation method
Holding period: 10 business day
Confidence interval: 99%
Observation period: 701 business day
Note:
(1) The maximum and minimum VaR overall and for various risk categories were taken from different days. A simple summation of VaR by
risk category is not equal to total VaR due to the effect of diversification.
Non-trading Activities
The aggregate VaR for our total non-trading activities as of March 31, 2021, excluding market risks related
to our strategic equity portfolio, was ¥614.0 billion. Market risk related to interest rates equaled ¥468.1 billion
and equities-related risk equaled ¥311.3 billion. Compared with the VaR as of March 31, 2020, we experienced a
decrease in market risk during the fiscal year ended March 31, 2021, primarily due to a decrease in interest rate
sensitivity, while equity related risk increased under volatile market conditions.
Based on a simple sum of figures across market risk categories, interest rate risks accounted for
approximately 60% of our total non-trading activity market risks as of March 31, 2021. Looking at a breakdown
of interest rate related risk by currency, as of March 31, 2021, the yen accounted for approximately 35% while
the U.S. dollar accounted for approximately 60%, and the euro approximately 5%.
For a description of our strategic equity investment risk management, see “—Risk Management of Strategic
Equity Portfolio.”
155
The following tables set forth the VaR related to our non-trading activities by risk category for the periods
indicated:
April 1, 2019—March 31, 2020
Average Maximum(1) Minimum(1) March 31, 2020
Interest rate . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Yen . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
U.S. Dollars . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Foreign exchange . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Equities(2)
Less diversification effect . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Total
¥ 328.9
157.0
187.5
4.5
174.8
(157.1)
351.1
¥711.5
216.1
502.8
6.4
214.2
—
765.2
(in billions)
¥252.9
128.0
109.6
3.5
112.0
—
284.9
¥ 613.4
207.5
412.3
6.4
156.9
(104.0)
672.7
April 1, 2020—March 31, 2021
Average Maximum(1) Minimum(1) March 31, 2021
Interest rate . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Yen . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
U.S. Dollars . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Foreign exchange . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Equities(2)
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Less diversification effect . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Total
¥ 442.3
183.4
300.2
3.1
250.9
(148.6)
547.7
¥577.0
212.4
392.5
4.2
365.2
—
646.1
(in billions)
¥364.6
158.8
233.9
2.6
138.2
—
474.0
¥ 468.1
201.4
346.2
3.0
311.3
(168.4)
614.0
Assumptions for VaR calculations:
Historical simulation method
Holding period: 10 business days
Confidence interval: 99%
Observation period: 701 business days
Notes:
(1) The maximum and minimum VaR overall for each category and in total were taken from different days. A simple summation of VaR by
risk category is not equal to total VaR due to the effect of diversification.
(2) The equities-related risk figures do not include market risk exposure from our strategic equity portfolio.
The average daily interest rate VaR by quarter in the fiscal year ended March 31, 2021 was as follows.
Quarter
April—June 2020 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
July—September 2020 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
October—December 2020 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
January—March 2021 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Daily average VaR
(in billions)
¥471.44
418.62
423.76
456.55
Comparing the proportion of each currency’s interest rate VaR to the total interest rate VaR as of March 31,
2021 against that as of March 31, 2020, there was a 6 percentage point increase in the Japanese yen from 29% to
35%, a 2 percentage point increase in the U.S. dollar from 58% to 60%, and a 8 percentage point decrease in the
euro from 13% to 5%.
Backtesting
We conduct backtesting in which a VaR is compared with hypothetical profits and losses on a daily basis to
verify the accuracy of our VaR measurement model. We also conduct additional backtesting using other
methods, including testing VaR against actual realized and unrealized losses and testing VaR by various
changing parameters such as confidence intervals and observation periods used in the model.
156
Hypothetical losses never exceeded the VaR amount in the fiscal year ended March 31, 2021. This means
that our VaR model provided reasonably accurate measurements of market risk during the fiscal year.
The following graph shows daily VaR of trading activities and the distribution of corresponding
hypothetical profits and losses for the fiscal year ended March 31, 2021:
The following graph shows VaR of trading activities and hypothetical profits and losses on a daily basis for
the fiscal year ended March 31, 2021:
Stress Testing
Actual losses may exceed the value at risk obtained by the application of an HS VaR model in the event, for
example, that the market fluctuates to a degree not accounted for in the observation period, or that the
157
correlations among various risk factors, including interest rates and foreign currency exchange rates, deviate
from those assumed in the model. In order to complement these weaknesses of the HS-VaR model and measure
potential losses that the model is not designed to capture, we conduct stress testing as appropriate, on our
HS-VaR model for our non-trading activities by applying various stress scenarios, including those which take
into account estimates regarding future market volatility, in order to better identify risks and manage our
portfolio in a more stable and appropriate manner. In addition, MUFG and its major subsidiaries measure
stressed VaR for their trading activities and non-trading activities relating to foreign exchange and commodities
on an aggregate basis based on a one-year observation period with the highest VaR at least in the immediately
preceding ten years.
Funding Liquidity Risk Management
Our major subsidiaries seek to maintain appropriate liquidity in both Japanese yen and foreign currencies by
managing their funding sources and mechanisms, such as deposits, short-term borrowings and long-term debt,
liquidity gap, liquidity-supplying products such as commitment lines, and buffer assets, primarily government
bonds.
We have established a group-wide system for managing liquidity risk by categorizing the risk in the
following three stages: normal, concern and crisis. The front offices and risk management offices of the major
subsidiaries and the holding company exchange information and data on liquidity risk even at the normal stage.
At higher alert stages, we centralize information about liquidity risk and discuss issues relating to group-wide
liquidity control actions, including formulating contingency plans, among Group companies, if necessary. We
have also established a system for liaison and consultation on funding in preparation for contingency, such as
natural disasters, wars and terrorist attacks. The holding company and the major subsidiaries conduct group-wide
contingency preparedness drills on a regular basis to ensure smooth implementation in the event of an
emergency.
In addition, we have established a group-wide system for ensuring compliance with the minimum regulatory
liquidity coverage ratio requirements by categorizing the risk in the following three stages: sufficient, concern
and insufficient. The holding company and the major subsidiaries exchange information and data on LCR even at
the sufficient stage. At higher alert stages, we hold group-wide LCR liaison meetings to discuss issues relating to
LCR and, based on the discussion as well as the information and data that have been shared, take
countermeasures to improve LCR as necessary.
For more information, see “Item 5.B. Operating and Financial Review and Prospects—Liquidity and Capital
Resources—Financial Condition—Sources of Funding and Liquidity.”
158
Operational Risk Management
The holding company has established, based on its Executive Committee’s determination, the MUFG
Operational Risk Management Policy as a group-wide policy for managing operational risk. This policy sets
forth the core principles regarding operational risk management, including the definition of operational risk, and
the risk management system and processes. Under the policy, the board of directors and the Executive
Committee formulate fundamental principles of operational risk management and establish and maintain an
appropriate risk management system. The Chief Risk Officer is responsible for recognizing, evaluating, and
appropriately managing operational risk in accordance with the fundamental principles formulated by the board
of directors and the Executive Committee. A division in charge of operational risk management has been
established that is independent of business promotion sections to manage overall operational risk in a
comprehensive manner. These fundamental principles have also been approved by the boards of directors of the
major subsidiaries, providing a consistent framework for operational risk management of the Group. The diagram
below sets forth the operational risk management system of each major banking subsidiary:
Operational Risk Management System of Our Major Banking Subsidiaries
Board of Directors/Execu(cid:2)ve Commi(cid:3)ee
commi(cid:3)ees regarding risk management
Audit Commi(cid:3)ee
(Repor(cid:2)ng to
Board of Directors)
Repor(cid:2)ng on risk profile
Instruc(cid:2)on
Repor(cid:2)ng
Instruc(cid:2)on
Head office/
domes(cid:2)c and
overseas units etc.
Instruc(cid:2)on
Control oprera(cid:2)on
divisions of the
sub-category risks
Review and
Challenge
Opera(cid:2)onal risk
management
divisions
Repor(cid:2)ng
Repor(cid:2)ng
Audit
Audit divisions
As set forth in the following diagram, we have established a risk management framework for loss data
collection, control self-assessment, and measurement of operational risk in order to appropriately identify,
recognize, evaluate, measure, control, monitor and report operational risk.
We have also established group-wide reporting guidelines with respect to loss data collection and its
monitoring. We focus our efforts on ensuring accurate assessment of the status of operational risk losses and the
implementation of appropriate countermeasures, while maintaining databases of internal and external loss events.
159
The following diagram summarizes our operational risk management framework:
Operational Risk Management Framework
identify and recognize
evaluate and measure
control
monitor and report
incident
occured
causal analysis
implement preventive
measures
monitoring
record
record
major incidents and misconduct
create potential loss
create potential loss
scenario
scenario
internal loss
internal loss
data
external
external loss
data
prompt reporting to
prompt reporting to
management and
management and
relevant supervisors
relevant supervisers
risk measurement
risk measurement
allocate economic
allocate economic
capital to
capital to
business units
business units
/subsidiaries
/subsidiaries
monitoring of
monitoring of
economic capital
risk evaluation and management through Control Self-Assessment
risk evaluation and management through Control Self-Assessment
Operations Risk Management
The Group companies offer a wide range of financial services, ranging from commercial banking products
such as deposits, exchange services and loans to trust and related services covering pensions, securities, real
estate and securitization, as well as transfer agent services. Cognizant of the potentially significant impact that
operations risk-related events could have in terms of both economic losses and damage to our reputation, our
major subsidiaries continue to work on improving their management systems to create and apply appropriate
operations risk-related controls.
Specific ongoing measures to reduce operations risk include the development of databases to manage,
analyze and prevent the recurrence of related loss events; efforts to tighten controls over administrative
procedures and related operating authority, while striving to improve human resources management, investments
in systems to improve the efficiency of administrative operations, and programs to expand and upgrade internal
auditing and operational guidance systems.
Senior management receives regular reports on the status of our businesses from an operations risk
management perspective. We work to promote the sharing within the Group of information and expertise
concerning any operational incidents and the measures implemented to prevent any recurrence.
Efforts to upgrade the management of operations risk continue with the aim of providing our customers with
a variety of high-quality services.
Information Risk Management
Complying with laws and regulations requiring proper handling of customer information, we implement
information security management measures, including the establishment of an information risk management
framework, enhancement of our internal operational procedures, and training courses mandatory for all officers
and staff.
160
We have also formulated our Personal Information Protection Policy as the basis for our ongoing programs
designed to protect the confidentiality of personal information.
With the aim of preventing any recurrence and minimizing risk or loss, we also work to promote sharing on
a group-wide basis of experience, knowledge and expertise related to information risk incidents.
IT Risk Management
IT risk refers to the risk of loss arising from destruction, suspension, malfunction or misuse of IT, or
unauthorized alteration and leakage of electronic data caused by insufficient IT systems planning, development
or operations or by vulnerabilities of or external threats to IT system security, including cybersecurity, as well as
risks similar to these risks.
Systems planning, development and operations include appropriate design and extensive testing phases to
ensure that systems are designed to help prevent failures while providing sufficient safeguards for the security of
electronic data including personal information.
System development projects are managed and overseen by a team dedicated to perform such management
and oversight functions, and the development status of any mission-critical IT systems is reported regularly to
senior management.
We have developed disaster countermeasures systems and have also been investing in duplication of the
Group’s IT infrastructure to minimize damage in the event of any system failure. Emergency drills are conducted
to help increase staff preparedness.
With the aim of preventing any recurrence and minimizing risk or loss, we also work to promote sharing on
a group-wide basis of experience, knowledge and expertise related to system failures.
In addition, the risk of increasingly sophisticated cyber-attacks is a significant focus of the Board of
Directors, and the Board regularly receives reports on our cybersecurity program. We continue to work to
strengthen measures designed to address and mitigate the risk, including the establishment of MUFG-CERT, our
Computer Security Incident Response Team, implementation of multi-layered defense and detection measures,
enhancement of monitoring systems through our Security Operation Centers, and cooperation with global
organizations with relevant expertise. MUFG-CERT is charged with the responsibility of taking, coordinating
and managing prompt action in response to cyber security incidents to mitigate their impact.
We aim to flexibly adapt our IT risk management measures to changes in the business environment,
including the rapidly growing need for remote work solutions. We also continue to develop our risk management
capabilities for emerging technologies, such as artificial intelligence (AI), robotic process automation (RPA) and
blockchain, considering, among other things, the maturity and usage of such technologies.
Tangible Asset Risk Management
Tangible assets include movable physical properties and immovable properties, owned or leased, such as
land, buildings, equipment attached to buildings, fixtures and furniture. We recognize the potentially significant
impact tangible asset risk-related events can have on the management and execution of the Group’s businesses,
which in turn can result in economic losses to, or diminished market confidence in, the Group. Accordingly, we
continue to improve our risk control framework designed to appropriately manage such risk.
Personnel Risk Management
We recognize the potentially significant impact personnel risk-related events can have on the management
and execution of the Group’s businesses, which in turn can result in economic losses to, or diminished market
confidence in, the Group. Accordingly, we continue to work on improving our risk control framework designed
to appropriately manage such risk.
161
Incompliance with Laws and Regulations Risk Management
We recognize the potentially significant impact compliance risk-related events can have on the management
and execution of the Group’s businesses, which in turn can result in economic, reputation and other losses to, or
diminished market confidence in, the Group. Accordingly, we continue to work on improving our compliance
risk control framework designed to appropriately manage such risk.
Specifically, we have established our MUFG Group Code of Conduct as the basic guideline for the Group’s
directors and employees. In addition, a compliance management division has been established at each of the
holding company and the major subsidiaries. See “—Compliance” below.
Legal Risk Management
The legal division at each of the holding company and the major subsidiaries centrally and uniformly
evaluates legal issues prior to entering into contracts or commencing new business operations, deals with legal
disputes and manages other legal matters. With the aim of effectively managing our legal risk arising from our
globally expanding business operations, we have established a global and group-wide legal risk management
framework and promote sharing of experience, knowledge and practices relating to legal risk issues on a global
and group-wide basis.
Regulatory Capital Requirements for Operational Risk
(1) Adoption of the Advanced Measurement Approach (AMA)
We have employed the AMA since March 31, 2012, in place of the Standardized Approach that we had been
using previously, for calculation of the operational risk equivalent amount in connection with measuring capital
adequacy ratios based on the Basel Standards. On the other hand, we use the Basic Indicator Approach, or BIA,
for entities that are deemed to be less important in the calculation of the operational risk equivalent amount and
for entities that are still preparing to implement the AMA.
(2) Outline of AMA
We have established a measurement model designed to account for four data elements—internal loss data,
external loss data, scenario analysis, and business environment and internal control factors, or BEICFs—and
calculate the operational risk equivalent amount by estimating the maximum loss using a 99.9th percentile
one-tailed confidence interval and a one-year holding period.
In calculating the operational risk equivalent amount, we exclude expected losses relating to the amount of
allowance for repayment of excess interest associated with the consumer finance business of a subsidiary. We do
not exclude any other expected losses and do not reflect the risk mitigating impact of insurance. In addition, we
take into account credit risk-related events that are not reflected in the measurement of the credit risk equivalent
amount.
(3) Outline of Measurement Model
Our operational risk equivalent amount measured under the AMA is a simple sum of the amounts calculated
separately for (1) MUFG Bank on a consolidated basis, (2) Mitsubishi UFJ Trust and Banking on a consolidated
basis, and (3) the holding company and other principal consolidated subsidiaries, in accordance with applicable
FSA rules. For each of MUFG Bank and Mitsubishi UFJ Trust and Banking on a consolidated basis, the
operational risk equivalent amount is a simple sum of the amounts calculated based on the seven loss event types
defined by the Basel Standards. For other Group companies, the operational risk equivalent amount is a simple
sum of the amounts calculated based on eight loss event types consisting of the seven loss event types defined by
the Basel Standards and an additional loss event type representing losses relating to repayment of excess interest
associated with the consumer finance business of a subsidiary. We do not reflect the correlation effects among
the loss event types in the calculation of our operational risk equivalent amount.
162
Outline of Measurement Model
Internal Loss Data
Litigation Data
External Loss Data
Business Environment and
Internal Control Factors
Scenario Analysis
Frequency Distribution
Internal Loss Data
Scenario Data
Occurrence
Frequency
Occurrence
Frequency
Loss Amount
Loss Amount
Loss Severity Distribution
Loss Distribution
l
i
n
o
i
t
a
u
m
S
o
l
r
a
C
e
t
n
o
M
Basel Loss Event Types
Internal Fraud
Risk Equivalent Amount
External Fraud
Risk Equivalent Amount
Employment Practices and Workplace Safety
Risk Equivalent Amount
Clients, Products, and Business Practices
Risk Equivalent Amount
Damage to Physical Assets
Risk Equivalent Amount
Business Disruption and System Failures
Risk Equivalent Amount
Execution, Delivery, and Process Management
Risk Equivalent Amount
Repayment of Excess Interest
Risk Equivalent Amount
The risk equivalent amount for each loss event type represents the amount of maximum loss estimated with
a 99.9th percentile one-tailed confidence interval and a one-year holding period based on the distribution of
losses arising from all relevant risk events for a one-year period (Loss Distribution). A Loss Distribution
combines a Frequency Distribution (through which the frequency of occurrence of risk events is expressed) and a
Loss Severity Distribution (through which the amounts of losses resulting from risk events are expressed)
through Monte Carlo simulations. The data used for this purpose include internal loss data and scenario data.
Scenario data are generated through a scenario analysis. External data and BEICFs are taken into account in the
scenario analysis and reflected in scenario data. The Frequency Distribution is derived from the occurrence
frequency information in internal loss data and scenario data expressed through a Poisson Distribution. The Loss
Severity Distribution is derived from the amount information in internal loss data and scenario data expressed in
a non-parametric manner (where no underlying distribution is assumed).
With respect to the risk of losses relating to repayment of excess interest associated with the consumer
finance business of a subsidiary, the risk equivalent amount represents the amount of maximum loss estimated
with a 99.9th percentile one-tailed confidence interval and a one-year holding period based on a normal
distribution assumed by applying data on losses that arose in a given period, excluding any related expected
losses.
We confirm the appropriateness of the measurement models by periodic verification and back testing.
(4) Outline of Scenario Analysis
As an initial step of our scenario analysis, we identify potential severe loss events that we have not
experienced but may potentially experience in the future. In this identification process, we seek to ensure
exhaustive coverage of potential severe loss events by comprehensively examining our experience relating to loss
events and legal proceedings, external loss data, the control self-assessment results and other relevant
information.
In the next step, we prepare scenario data for each identified severe loss event by quantifying the values
depending on its occurrence frequency and loss severity, taking into account relevant transaction amounts and
restructuring costs as well as BEICFs. In preparing scenario data, we apply an analysis method we deem
appropriate for the type and nature of the operational risk involved.
In order to obtain an operational risk equivalent amount that is commensurate with, and appropriate for, our
risk profile, we assess the need for an additional scenario or modification to our existing scenarios semi-annually.
163
We then reflect, as necessary, new risks arising as a result of changes in the business environment and the
results of the implementation of measures to enhance our internal controls in response to newly identified risks in
our scenario data.
Reputation Risk Management
Reputation risk refers to the risk of harm to our corporate value arising from perceptions of our customers,
shareholders, investors or other stakeholders and in the market or society that we deviate from their expectations
or confidence. We recognize that such risk, if materialized, can have a material negative impact on our business
and continue to work on enhancing our framework designed to appropriately manage the risk based on MUFG
Way, MUFG Group Code of Conduct, and other rules and codes of the Group.
Specifically, in order to manage our reputation risk effectively on a group-wide basis, we have established a
risk management system designed to ensure mutual consultation and reporting if a reputation risk-related event
occurs or is anticipated and, through this system, share relevant information within the Group.
Through the risk control framework and risk management system, we seek to prevent reputation risk-related
events and minimize damage to the corporate value of the Group by promptly obtaining an accurate
understanding of relevant facts relating to risk events and disclosing information concerning such events and the
measures we take in response to such events in an appropriate and timely manner.
Model Risk Management
We recognize the potentially significant impact model risk-related events can have on the management and
execution of the Group’s businesses, which in turn can result in economic losses to, or diminished market
confidence in, the Group. Models are used for increasingly wider and more important purposes, including
valuing exposures, instruments and positions, measuring risks, and determining capital adequacy. Accordingly,
we continue to work on improving our risk control framework.
Compliance
Basic Policy
In April 2021, MUFG renamed its Corporate Vision as “MUFG Way” and newly defined its social
purpose—the purpose of its existence, along with its shared values and medium- to long-term goal. MUFG Way
serves as the group’s basic policy in conducting its business activities and provides guidelines for all group
activities. Furthermore, we have established MUFG Group Code of Conduct as the guidelines for how the
Group’s directors and employees act to realize the Corporate Vision, in which we have expressed our
commitment to complying with laws and regulations, to acting with honesty and integrity, and to behaving in a
manner that supports and strengthens the trust and confidence of society.
In addition, as we expand the geographic scope of our business globally, we are committed to keeping
abreast of developments in laws and regulations of the jurisdictions in which we operate including anti-money
laundering and anti-bribery, as well as paying attention to trends in financial crimes.
See “Item 3.D. Key Information—Risk Factors—Operational Risk—Legal and regulatory changes could
have a negative impact on our business, financial condition and results of operations.” and “Item 3.D. Key
Information—Risk Factors—Operational Risk—We may become subject to regulatory actions or other legal
proceedings relating to our transactions or other aspects of our operations, which could result in significant
financial losses, restrictions on our operations and damage to our reputation.” See also “Item 4.B. Information on
the Company—Business Overview—Supervision and Regulation.”
164
Compliance Framework
Management and coordination of compliance-related matters are the responsibility of separate compliance
management divisions established at the holding company and the major subsidiaries. Each compliance
management division formulates compliance programs and organizes training courses to promote compliance,
and regularly reports to each company’s board of directors and Executive Committee on the status of compliance
activities.
The holding company has established a Group Compliance Committee and each major subsidiary has
established a Compliance Committee for deliberating key issues related to compliance. Additionally, the holding
company has a Group Chief Compliance Officer, or CCO, Committee, which consists of the CCO of the holding
company acting as committee chairman and the CCOs of the major subsidiaries. The Group CCO Committee
deliberates important matters related to compliance and compliance-related issues for which the Group should
share a common understanding.
The following diagram summarizes our compliance framework:
Compliance Framework
Holding Company (MUFG)
Board of Directors
Audit Committee
Executive Committee
Group Compliance Committee
CCO (Chief Compliance Officer)
Group CCO Committee
Global Compliance Division/Global Financial Crimes Division
(Coordinate compliance issues)
Consultation
and report
Guidance, advice
and instruction
MUFG Bank
Mitsubishi UFJ Trust and Banking
Mitsubishi UFJ Securities
Holdings
Other Subsidiaries
Group Companies
Internal Reporting System and Accounting Auditing Hotline
The major subsidiaries have established internal reporting systems that aim to identify compliance issues
early so that any problems can be quickly rectified. This system includes an independent external compliance
hotline. Furthermore, the holding company has set up an MUFG Group Compliance Helpline that acts in parallel
with group-company internal reporting systems and provides a reporting channel for directors and employees of
165
Group companies. In the holding company, the contents of the reported cases as well as the result of surveys is
reported to the audit committee on a regular basis or whenever necessary.
In addition to these internal reporting systems, the holding company has also established an accounting
auditing hotline that provides a means to report any problems related to MUFG accounting.
MUFG Accounting Auditing Hotline
MUFG has set up an accounting auditing hotline to be used to make reports related to instances of improper
practices (violations of laws and regulations) and inappropriate practices, or of practices raising questions about
such impropriety or inappropriateness, regarding accounting and internal control or audits related to accounting
in Group companies. The audit committee oversees the reporting process to ensure the appropriateness and
effectiveness of the reporting process and monitors the reports received through the hotline. The reporting
process works as follows, and may be carried out via letter or e-mail:
Hokusei Law Office, P.C.
Address: Sanshikaikan Bldg. 8th Floor 1-9-4 Yurakucho, Chiyoda-ku, Tokyo
e-mail: MUFG-accounting-audit-hotline@hokusei-law.com
When reporting information please pay attention to the following:
‰ Matters subject to reporting are limited to instances regarding the Group companies.
‰
Please provide detailed information with respect to the matter. Without detailed factual information
there is a limit to how much our investigations can achieve.
‰ Anonymous information will be accepted.
‰ No information regarding the identity of the informant will be passed on to third parties without the
approval of the informant him- or herself. However, this excludes instances where disclosure is legally
mandated, or to the extent that the information is necessary for surveys or reports, when data may be
passed on following the removal of the informant’s name.
‰
‰
Please submit reports in either Japanese or English.
If the informant wishes, we will endeavor to report back to the informant on the response taken within a
reasonable period of time following the receipt of specific information, but cannot promise to do so in
all instances.
Internal Audit
Role of Internal Audit
Internal Audit aims to evaluate and assist in the improvement of the effectiveness of governance, risk
management and control processes with high proficiency and independence, thereby contributing to the
enhancement of the corporate value of the MUFG Group and to the achievement of MUFG Way. Internal Audit
covers all aspects of the Group’s business activities and discusses and evaluates the management and operational
frameworks and the implementation of business operations from legal compliance, rationality and efficiency
perspectives, beyond checking compliance with defined procedures.
In addition, Internal Audit provides instructions and recommendations for operational improvement to
audited divisions and reports to senior management on such instructions and recommendations, thereby
contributing to safeguarding and development of the Group’s assets.
Three Lines of Defense Framework
Risk management is conducted at multiple levels within a business organization, including front-office
divisions in charge of managing specific categories of risk, a compliance division, and an internal audit division.
166
As for financial institutions, including the MUFG Group, based on the experience of past financial crises,
the traditional risk management structure that was heavily dependent on front-office divisions has been under
close scrutiny. As a result, there is an increasing expectation for financial institutions to achieve more effective
risk management through, for example, appropriate allocation of risk management roles and responsibilities
among various divisions.
Cognizant of the importance of these developments, we have adopted the concept of “Three Lines of
Defense” where the roles and responsibilities of each division in risk management are defined, classifying
divisions within a financial institution into “the 1st Line of Defense”, “the 2nd Line of Defense” and “the 3rd
Line of Defense”.
Line
Divisions
Roles
The 1st Line of Defense
Business divisions and
client-facing divisions
• Undertake risks within the extent of risk exposure
assigned
The 2nd Line of Defense
Risk management
division, compliance
division, etc.
• Responsible and accountable for identifying, evaluating
and controlling business risks
• Ensure that risks are appropriately identified and
managed by the 1st Line of Defense
The 3rd Line of Defense
Internal audit division
•
Independently evaluate the effectiveness of the
governance, risk management, and control processes
implemented by the 1st and 2nd Lines of Defense
Internal Audit plays an essential role in the Group’s risk management through ongoing communications
with the 1st and 2nd Lines of Defense, while maintaining independence.
Group Internal Audit Framework
The MUFG Group has internal audit functions at the holding company level as well as at the subsidiary
level, which are designed to ensure proficiency and independence through effective collaboration.
The internal audit division of the holding company receives reports from the internal audit divisions of
subsidiaries on the status and results of their internal audits and provides them with instructions and evaluations
as needed.
Reports to the Audit Committee
The holding company has an audit committee within its board of directors as required by the Companies Act
of Japan, and each of the major subsidiaries has established an audit and supervisory committee. Within each of
the holding company and the major subsidiaries, the internal audit division reports to the committee on important
matters, including governing principles for internal audit plans and the status and results of internal audits.
MUFG Internal Audit Activity Charter
In April 2019, we adopted “MUFG Internal Audit Activity Charter”, which defines our basic policies for
Internal Audit, including its mission, purposes, responsibilities, and roles.
This charter is designed to encourage Internal Audit staff to conduct internal audits in accordance with the
global standards set by the Institute of Internal Auditors, an international organization established for, among
other purposes, formulating practical internal audit standards.
167
Item 12. Description of Securities Other than Equity Securities.
A. Debt Securities
Not applicable.
B. Warrants and Rights
Not applicable.
C. Other Securities
Not applicable.
D. American Depositary Shares
For a description of ADSs, each representing one share of our common stock, see Exhibit 2(c) to this
Annual Report.
Fees, charges and other payments relating to ADSs
As a holder of our ADSs, you will be required to pay to The Bank of New York Mellon, as depositary for
the ADRs, or the Depositary, either directly or indirectly, the following fees or charges. The Depositary collects
its fees for delivery and surrender of ADRs directly from investors depositing shares or surrendering ADRs for
the purpose of withdrawal or from intermediaries acting for them. The Depositary collects fees for making
distributions to investors by deducting those fees from the amounts distributed or by selling a portion of
distributable property to pay the fees.
ADS holders must pay:
For:
$5.00 (or less) per 100 ADSs (or portion thereof)
$0.02 (or less) per ADS
Each issuance of an ADR, including as a result of a
distribution of shares or rights or other property
Each cancellation of an ADR, including if the
agreement terminates
Any cash distribution, to the extent permitted by any
securities exchange on which the ADSs may be listed
for trading
A fee equivalent to the fee that would be payable if
securities distributed to the ADS holder had been shares
and the shares had been deposited for issuance of ADRs
Distribution of securities distributed to holders of
deposited securities which are distributed by the
Depositary to registered ADS holders
Registration or transfer fees
Expenses of The Bank of New York Mellon
Taxes and other governmental charges The Bank of
New York Mellon or MUFG Bank, as custodian, have to
pay on any ADS or share underlying an ADS, for
example, stock transfer taxes, stamp duty or withholding
taxes
168
Transfer and registration of shares on the share
register from your name to the name of The Bank of
New York Mellon or its agent and vice versa when
you deposit or withdraw shares
Conversion of foreign currency to U.S. dollars, as
well as cable, telex and facsimile transmission
expenses
As necessary
Fees Waived or Paid by the Depositary
The Depositary has agreed to waive the standard out-of-pocket administrative, maintenance and other
expenses for providing services to the registered holders of our ADSs, which include the expenses relating to the
delivery of annual reports, dividend fund remittances, stationery, postage and photocopying. For the fiscal year
ended March 31, 2021, the Depositary waived $131,101.14 of standard out-of-pocket expenses.
The Depositary has also agreed to reimburse us for expenses related to the administration and maintenance
of the ADS program, including investor relations expenses, the annual New York Stock Exchange listing fees
and other program-related expenses. There is a limit on the amount of expenses for which the Depositary will
reimburse us based and conditioned on the number of outstanding ADSs and the amount of dividend fees
collected by the Depositary. For the fiscal year ended March 31, 2021, the Depositary reimbursed us $1.0 million
for such expenses.
169
Item 13. Defaults, Dividend Arrearages and Delinquencies.
None.
PART II
Item 14. Material Modifications to the Rights of Security Holders and Use of Proceeds.
None.
Item 15. Controls and Procedures.
Disclosure Controls and Procedures
An evaluation was carried out under the supervision and with the participation of our management,
including the Chief Executive Officer, or CEO, and the Chief Financial Officer, or CFO, of the effectiveness of
our disclosure controls and procedures, as defined in Rule 13a-15(e) under the U.S. Securities Exchange Act of
1934, as of the end of the period covered by this Annual Report.
Based on that evaluation, our CEO and CFO concluded that our disclosure controls and procedures were
effective as of March 31, 2021.
Management’s Annual Report on Internal Control Over Financial Reporting
Our management is responsible for establishing and maintaining adequate internal control over financial
reporting, as defined in Rule 13a-15(f) under the U.S. Securities Exchange Act of 1934. Our internal control over
financial reporting is a process designed by, or under the supervision of, MUFG’s principal executive and
principal financial officers, and effected by MUFG’s board of directors, management, and other personnel, to
provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial
statements for external purposes in accordance with U.S. GAAP and includes those policies and procedures that:
(i)
(ii)
pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the
transactions and dispositions of the assets of MUFG,
provide reasonable assurance that transactions are recorded as necessary to permit preparation of
financial statements in accordance with generally accepted accounting principles, and that receipts and
expenditures of MUFG are being made only in accordance with authorizations of management and
directors of MUFG, and
(iii) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use
or disposition of MUFG’s assets that could have a material effect on the financial statements.
Because of inherent limitations, internal control over financial reporting, no matter how well designed, may
not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are
subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of
compliance with the policies or procedures may deteriorate.
Our management evaluated the effectiveness of our internal control over financial reporting as of March 31,
2021 based on the criteria established in “Internal Control—Integrated Framework (2013)” issued by the
Committee of Sponsoring Organizations of the Treadway Commission. Based on the evaluation, management
has concluded that MUFG maintained effective internal control over financial reporting as of March 31, 2021.
The effectiveness of our internal control over financial reporting as of March 31, 2021 has been audited by
Deloitte Touche Tohmatsu LLC, an independent registered public accounting firm, as stated in its report,
presented on page 172.
170
Changes in Internal Control Over Financial Reporting
During the period covered by this Annual Report, there has been no change in our internal control over
financial reporting that has materially affected or is reasonably likely to materially affect our internal control
over financial reporting.
171
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To the Board of Directors and the Shareholders of
Mitsubishi UFJ Financial Group, Inc.
(Kabushiki Kaisha Mitsubishi UFJ Financial Group):
Opinion on Internal Control over Financial Reporting
We have audited the internal control over financial reporting of Mitsubishi UFJ Financial Group, Inc.
(Kabushiki Kaisha Mitsubishi UFJ Financial Group) (“MUFG”) and subsidiaries (together, the “MUFG Group”)
as of March 31, 2021, based on criteria established in Internal Control—Integrated Framework (2013) issued by
the Committee of Sponsoring Organizations of the Treadway Commission (“COSO”). In our opinion, the MUFG
Group maintained, in all material respects, effective internal control over financial reporting as of March 31,
2021, based on criteria established in Internal Control—Integrated Framework (2013) issued by COSO.
We have also audited, in accordance with the standards of the Public Company Accounting Oversight Board
(United States) (“PCAOB”), the consolidated financial statements as of and for the year ended March 31, 2021,
of the MUFG Group and our report dated July 9, 2021, expressed an unqualified opinion on those financial
statements.
Basis for Opinion
The MUFG Group’s management is responsible for maintaining effective internal control over financial
reporting and for its assessment of the effectiveness of internal control over financial reporting, included in the
accompanying Management’s Annual Report on Internal Control Over Financial Reporting. Our responsibility is
to express an opinion on the MUFG Group’s internal control over financial reporting based on our audit. We are
a public accounting firm registered with the PCAOB and are required to be independent with respect to the
MUFG Group in accordance with the U.S. federal securities laws and the applicable rules and regulations of the
Securities and Exchange Commission and the PCAOB.
We conducted our audit in accordance with the standards of the PCAOB. Those standards require that we
plan and perform the audit to obtain reasonable assurance about whether effective internal control over financial
reporting was maintained in all material respects. Our audit included obtaining an understanding of internal
control over financial reporting, assessing the risk that a material weakness exists, testing and evaluating the
design and operating effectiveness of internal control based on the assessed risk, and performing such other
procedures as we considered necessary in the circumstances. We believe that our audit provides a reasonable
basis for our opinion.
Definition and Limitations of Internal Control over Financial Reporting
A company’s internal control over financial reporting is a process designed to provide reasonable assurance
regarding the reliability of financial reporting and the preparation of financial statements for external purposes in
accordance with generally accepted accounting principles. A company’s internal control over financial reporting
includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail,
accurately and fairly reflect the transactions and dispositions of the assets of the company; (2) provide reasonable
assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance
with generally accepted accounting principles, and that receipts and expenditures of the company are being made
only in accordance with authorizations of management and directors of the company; and (3) provide reasonable
assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the
company’s assets that could have a material effect on the financial statements.
Because of its inherent limitations, internal control over financial reporting may not prevent or detect
misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that
controls may become inadequate because of changes in conditions, or that the degree of compliance with the
policies or procedures may deteriorate.
/s/Deloitte Touche Tohmatsu LLC
Tokyo, Japan
July 9, 2021
172
Item 16A. Audit Committee Financial Expert.
Our board of directors has determined that Mr. Koichi Tsuji, an outside director, is an “audit committee
financial expert” as defined in Item 16A of Form 20-F and is, and has remained since his assumption of office as
a member of our audit committee, “independent” as defined in the listing standards of the NYSE. Mr. Tsuji has
spent most of his professional carrier as a certified public accountant in Japan, auditing Japanese corporations,
including those registered with the U.S. Securities and Exchange Commission. Mr. Tsuji is also the chair of our
audit committee.
Item 16B. Code of Ethics.
We have adopted a code of ethics, which consists of internal rules named MUFG Group Code of Conduct,
compliance rules, compliance manual and rules of employment. Each of these rules applies to our principal
executive officer, principal financial officer, principal accounting officer and persons performing similar
functions. The MUFG Group Code of Conduct was most recently amended on April 1, 2021 primarily to add
details relating to adherence to laws and rules and prevention of financial crimes and also to streamline
explanations. A copy of the MUFG Group Code of Conduct and the sections of our compliance rules, compliance
manual and rules of employment relating to the “code of ethics” (as defined in paragraph (b) of Item 16B of
Form 20-F) is attached as Exhibit 11 to this Annual Report.
No waivers of the MUFG Group Code of Conduct or the relevant sections of our compliance rules,
compliance manual and rules of employment were granted to our principal executive officer, principal financial
officer, principal accounting officer, directors or corporate auditors during the fiscal year ended March 31, 2021.
Item 16C. Principal Accountant Fees and Services.
Fees and Services of Deloitte Touche Tohmatsu LLC
The aggregate fees billed by Deloitte Touche Tohmatsu LLC, our independent registered public accounting
firm and its affiliates, for the fiscal years ended March 31, 2020 and 2021 are presented in the following table:
Audit fees . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Audit-related fees . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Tax fees . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
All other fees . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
2020
2021
(in millions)
¥8,564
249
117
420
¥8,873
255
85
54
Total
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
¥9,350
¥9,267
The description of our fees billed for each category described above is as follows:
Audit fees—Audit fees are primarily for an annual audit of our financial statements, review of our semi-
annual condensed financial statements, statutory audit of our financial statements and audits of our subsidiary
financial statements and attestation services relating to the internal controls over financial reporting under
Section 404 of the U.S. Sarbanes-Oxley Act of 2002.
Audit-related fees—Audit-related fees primarily include accounting consultations, agreed upon procedures
on internal controls, employee benefit plan audit, and advisory services relating to internal control reviews.
Tax fees—Tax fees relate primarily to tax compliance, including assistance with preparation of tax return
filings, tax advisory and tax planning services.
All other fees—All other fees primarily include fees for system advisory services.
173
Pre-Approval Policies and Procedures for Services by Deloitte Touche Tohmatsu LLC
Our audit committee performs the pre-approval function required by applicable SEC rules and regulations.
Our audit committee has established pre-approval policies and procedures that MUFG and its subsidiaries must
follow before engaging Deloitte Touche Tohmatsu LLC to perform audit and permitted non-audit services.
When MUFG or a subsidiary intends to engage Deloitte Touche Tohmatsu LLC to perform audit and
permitted non-audit services, it must make an application for pre-approval on either a periodic or case-by-case
basis.
‰
Periodic application is an application for pre-approval made each fiscal year for services that are
expected to be provided by Deloitte Touche Tohmatsu LLC during the next fiscal year.
‰ Case-by-case application is an application for pre-approval made on a case-by-case basis for services to
be provided by Deloitte Touche Tohmatsu LLC that are not covered by the periodic application.
Pre-approval is resolved in principle by our audit committee prior to engagement, although if necessary a
full-time member of our audit committee may consider any case-by-case application for pre-approval on behalf
of the audit committee prior to the next scheduled audit committee meeting. Such decisions made individually by
a full-time member of our audit committee are reported to the audit committee as appropriate at the next
scheduled audit committee meeting.
Fees approved pursuant to the procedures described in paragraph 2-01(c)(7)(i)(C) of Regulation S-X, which
provides for an exception to the general requirement for pre-approval in certain circumstances, were less than
0.1% of the total fees paid to Deloitte Touche Tohmatsu LLC for each of the fiscal years ended March 31, 2020
and 2021.
Item 16D. Exemptions from the Listing Standards for Audit Committees.
Not applicable.
Item 16E. Purchases of Equity Securities by the Issuer and Affiliated Purchasers.
Issuer Purchases of Common Stock
Total
Number of
Shares
Purchased
as Part of
Publicly
Announced
Plans or
Programs
Maximum
Number of
Shares that
May Yet Be
Purchased
Under the
Plans or
Programs
Total
Number of
Shares
Purchased(1)
Average Price
Paid per Share
April 1 to April 30, 2020 . . . . . . . . . . . . . . . . . . . . . . . . . . . .
May 1 to May 31, 2020 . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
June 1 to June 30, 2020 . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
July 1 to July 31, 2020 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
August 1 to August 31, 2020 . . . . . . . . . . . . . . . . . . . . . . . . .
September 1 to September 30, 2020 . . . . . . . . . . . . . . . . . . .
October 1 to October 31, 2020 . . . . . . . . . . . . . . . . . . . . . . . .
November 1 to November 30, 2020 . . . . . . . . . . . . . . . . . . . .
December 1 to December 31, 2020 . . . . . . . . . . . . . . . . . . . .
January 1 to January 31, 2021 . . . . . . . . . . . . . . . . . . . . . . . .
February 1 to February 28, 2021 . . . . . . . . . . . . . . . . . . . . . .
March 1 to March 31, 2021 . . . . . . . . . . . . . . . . . . . . . . . . . .
1,799
1,372
1,616
2,929
1,674
2,066
2,710
2,377
3,572
2,619
2,550
3,315
Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
28,599
¥413.13
418.83
449.13
421.27
421.65
440.97
423.82
442.53
452.66
480.64
517.49
596.38
¥463.90
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
174
Notes:
(1) The shares purchased were shares constituting less than one unit (100 shares) purchased from registered holders of the shares and shares
purchased pursuant to applicable Japanese law from shareholders who have not responded to communications sent to their registered
addresses for five consecutive years or more and by whom dividend payments have not been received for five consecutive years, each at
the current market price.
We did not make any purchases of shares of our common stock other than as shown in the above table for
the fiscal year ended March 31, 2021.
In May 2021, 13,381,500 shares were purchased by the trustee of the trust for the initial performance-based
stock compensation plan. In connection with the MUFG Americas Holdings Corporation Stock Bonus Plan,
10,692,469 ADSs were purchased by the trustee of the independent trust between April 1, 2019 and March 31,
2020. For descriptions of our stock compensation and bonus plans, see “Item 6.B. Directors, Senior Management
and Employees—Compensation.”
Item 16F. Change in Registrant’s Certifying Accountant.
None.
Item 16G. Corporate Governance.
The NYSE allows NYSE-listed companies that are foreign private issuers, such as MUFG, with certain
exceptions, to follow home-country practices in lieu of the corporate governance practices followed by
U.S. companies pursuant to the NYSE’s Listed Company Manual. The following is a summary of the significant
differences between MUFG’s corporate governance practices and those followed by U.S. listed companies under
the NYSE’s Listed Company Manual.
1. A NYSE-listed U.S. company must have a majority of directors that meet the independence
requirements under Section 303A of the NYSE’s Listed Company Manual.
As of the date of this Annual Report, we have nine outside directors as members of our board of directors,
which consists of a total of sixteen members. Under our governance system, we are required to have outside
directors on each of our nominating, audit and compensation committees, constituting a majority of its members.
For a description of an outside director, see “Item 6.C. Directors and Senior Management—Board Practices.”
The Tokyo Stock Exchange rules require listed companies, including us, to identify at least one individual
who the company believes is unlikely to have a conflict of interest with general shareholders and have such
individual serve as an independent director or outside corporate auditor. The Companies Act requires any listed
company to have an outside director.
Further, a listed company with fewer than two outside directors who are considered independent based on
such internal standards as the company establishes pursuant to the Tokyo Stock Exchange requirements must
publicly disclose the reason for not having at least two such directors on its board of directors. In addition, if a
listed company determines that at least one-third of the members of its board of directors should be independent
outside directors, the listed company must disclose its policy relating to the determination. We have adopted and
made public our corporate governance policy providing, among other things, that, in general, half of the members
of our board of directors will be independent outside directors. The Tokyo Stock Exchange is expected to
restructure its stock market into three new market segments in April 2022, namely, Prime Market, Standard
Market and Growth Market. A stricter standard is expected to be applied to those companies to be listed on the
Prime Market, requiring at least one-third (or majority if necessary) of the members of their respective boards of
directors to be independent outside directors.
2. A NYSE-listed U.S. company must have an audit committee composed entirely of independent
directors.
Under the Companies Act, we are required to have an audit committee consisting of at least three
non-executive directors, and the majority of its members must be outside directors. Currently, our audit
175
committee consists of four outside directors and two non-executive directors. Our audit committee satisfies the
requirements of Rule 10A-3 under the U.S. Securities Exchange Act of 1934, including the independence
requirements thereunder.”
3. A NYSE-listed U.S. company must have a compensation committee composed entirely of independent
directors.
Under the Companies Act, we are required to have a compensation committee consisting of at least three
directors, and the majority of its members must be outside directors. Currently, our compensation committee
consists of five directors, four of whom are outside directors. Further, starting in April 2022, a stricter standard is
expected be applied to those companies to be listed on the Prime Market of the Tokyo Stock Exchange, requiring
the majority of compensation committee members to be in principle independent outside directors.
4. A NYSE-listed U.S. company must have a nominating or corporate governance committee composed
entirely of independent directors.
Under the Companies Act, we are required to have a nominating committee consisting of at least three
directors, and the majority of its members must be outside directors. Currently, our nominating committee, which
we call the nominating and governance committee, consists of five directors, four of whom are outside directors.
Further, starting in April 2022, a stricter standard is expected to be applied to those companies to be listed on the
Prime Market of the Tokyo Stock Exchange, requiring the majority of nominating committee members to be in
principle independent outside directors.
5. A NYSE-listed U.S. company must obtain shareholder approval with respect to any equity
compensation plan.
Under the Companies Act, an equity compensation plan for directors and corporate executives is deemed to
be compensation for the services performed by the company’s directors and corporate executives. Our
compensation committee establishes the policy with respect to the determination of the individual compensation
of our directors and corporate executives, including equity compensation in the form of performance-based stock
compensation plan, and determines individual compensation in accordance with the policy. Under the Companies
Act, a public company with board audit, compensation and nominating committees seeking to introduce a
performance-based stock compensation plan must obtain the approval of its compensation committee, not its
shareholders.
6. A NYSE-listed U.S. company must adopt and disclose Corporate Governance Guidelines and a Code of
Business Conduct and Ethics, and it must also disclose any exemptions granted to directors or executives.
Our corporate governance policies, which are called the “MUFG Corporate Governance Policies,” are based
on applicable home-country rules, particularly the Tokyo Stock Exchange rules, which require listed companies,
such as us, to adopt a corporate governance code setting forth fundamental principles designed to establish an
effective corporate governance system or explain in their corporate governance reports the reasons for not
adopting such a code. We disclose these policies on our website. The Tokyo Stock Exchange rules regarding
corporate governance are expect to become stricter for companies to be listed on the Prime Market starting in
April 2022, including without limitation those discussed in 1, 3 and 4 above.
We have adopted a code of conduct, compliance rules, compliance manual and rules of employment, which
meet the definition of “code of ethics” in “Item 16B. Code of Ethics.”
7. A NYSE-listed U.S. company must hold regularly scheduled executive sessions where participants are
limited to non-management directors.
Under the Companies Act, Japanese corporations are not obliged to hold executive sessions where
participants are limited to non-management directors. Such executive sessions are also not required under our
internal corporate governance rules.
Item 16H. Mine Safety Disclosure.
Not Applicable.
176
PART III
Item 17. Financial Statements.
In lieu of responding to this item, we have responded to Item 18 of this Annual Report.
Item 18. Financial Statements.
Our consolidated financial statements are included in this Annual Report, as required by this item, starting
on page F-1.
Pursuant to Rule 3-09 of Regulation S-X, the financial statements and supplementary data of Morgan
Stanley, our equity method investee, as of December 31, 2019 and 2020 and for the fiscal years ended
December 31, 2018, 2019 and 2020, are incorporated in this Annual Report as Exhibit 99(c) by reference to
Morgan Stanley’s annual report on Form 10-K filed on February 26, 2021.
Item 19. Exhibits.
Exhibit
Description
1(a)
1(b)
1(c)
1(d)
1(e)
1(f)
1(g)
1(h)
2(a)
2(b)
2(c)
8
11
Articles of Incorporation of Mitsubishi UFJ Financial Group, Inc., as amended on July 6, 2018
(English translation)*
Board of Directors Regulations of Mitsubishi UFJ Financial Group, Inc., as amended on
June 25, 2015 (English translation)*
Corporation Meetings Regulations of Mitsubishi UFJ Financial Group, Inc., as amended on
April 1, 2021 (English translation)
Share Handling Regulations of Mitsubishi UFJ Financial Group, Inc., as amended on June 25,
2015 (English Translation)**
Charter of the Audit Committee of Mitsubishi UFJ Financial Group, Inc., as amended on July 1,
2018 (English translation)*
Charter of the Compensation Committee of Mitsubishi UFJ Financial Group, Inc., as amended
on July 1, 2018 (English translation)*
Charter of the Nominating and Governance Committee of Mitsubishi UFJ Financial Group,
Inc., as amended on July 1, 2018 (English translation)*
Charter of the Risk Committee of Mitsubishi UFJ Financial Group, Inc., as amended on July 1,
2018 (English translation)*
Form of American Depositary Receipt*
Form of Deposit Agreement, amended and restated as of December 22, 2004, among Mitsubishi
Tokyo Financial Group, Inc. (subsequently renamed Mitsubishi UFJ Financial Group, Inc.), The
Bank of New York Mellon and the holders from time to time of American Depositary Receipts
issued thereunder*
Description of Securities
Subsidiaries of the Company—see “Item 4.C. Information on the Company—Organizational
Structure.”
MUFG Group Code of Conduct, Compliance Rules, Compliance Manual, and Rules of
Employment of Mitsubishi UFJ Financial Group, Inc. applicable to its principal executive
officer, principal financial officer, principal accounting officer and persons performing similar
functions (English translation of relevant sections)
177
Exhibit
12
13
15(a)
15(b)
99(a)
99(b)
Description
Certifications required by Rule 13a-14(a) (17 CFR 240.13a-14(a)) or Rule 15d-14(a)
(17 CFR 240.15d-14(a))
Certifications required by Rule 13a-14(b) (17 CFR 240.13a-14(b)) or Rule 15d-14(b)
(17 CFR 240.15d-14(b)) and Section 1350 of Chapter 63 of Title 18 of the United States
Code (18 U.S.C. 1350)
Consent of independent registered public accounting firm (Deloitte Touche Tohmatsu LLC)
Consent of independent registered public accounting firm (Deloitte & Touche LLP)
Capitalization and Indebtedness of Mitsubishi UFJ Financial Group, Inc. as of March 31,
2021***
Unaudited Reverse Reconciliation of Selected Financial Information of Mitsubishi UFJ
Financial Group, Inc. as of and for the fiscal year ended March 31, 2021****
99(c)
Financial Statements and Supplementary Data of Morgan Stanley*****
101.INS
Inline XBRL Instance Document—the instance document does not appear in the Interactive
Data File because its XBRL tags are embedded within the Inline XBRL document
101.SCH
Inline XBRL Taxonomy Extension Schema Document
101.CAL
Inline XBRL Taxonomy Extension Calculation Linkbase Document
101.DEF
Inline XBRL Taxonomy Extension Definition Linkbase Document
101.LAB
Inline XBRL Taxonomy Extension Label Linkbase Document
101.PRE
Inline XBRL Taxonomy Extension Presentation Linkbase Document
104
Notes:
*
**
***
****
*****
The cover page for the Company’s Annual Report on From 20-F for the year ended March 31,
2021, has been formatted in Inline XBRL
Incorporated by reference to our annual report on Form 20-F (File No. 000-54189) filed on July 12, 2018.
Incorporated by reference to our registration statement on Form S-8 (File No. 333-230590) filed on March 29, 2019.
Deemed to be incorporated by reference into the registration statement on Form F-3 (No. 333-242048) of Mitsubishi UFJ Financial
Group, Inc. and to be a part thereof.
Deemed to be incorporated as Annex A to the registration statement on Form F-3 (No. 333-242048) of Mitsubishi UFJ Financial
Group, Inc. and to be a part thereof.
Incorporated by reference to Morgan Stanley’s annual report on Form 10-K (File No. 001-11758) filed on February 26, 2021.
178
SELECTED STATISTICAL DATA
Due to close integration of our foreign and domestic activities, it is difficult to make a precise determination
of the assets, liabilities, income and expenses of our foreign operations. The foreign operations as presented
include the business conducted by overseas subsidiaries and branches, and the international business principally
conducted by the international banking-related divisions headquartered in Japan. Our management believes that
the results appropriately represent our domestic and foreign activities.
A-1
I. Distribution of Assets, Liabilities and Equity; Interest Rates and Interest Differential
Average Balance Sheets, Interest and Average Rates
The following table shows our average balances, interest and average interest rates for the fiscal years ended
March 31, 2019, 2020 and 2021. Average balances are generally based on a daily average while a month-end
average is used for certain average balances when it is not practicable to obtain applicable daily averages.
Fiscal years ended March 31,
2019
2020
2021
Average
balance
Interest
income
Average
rate
Average
balance
Interest
income
Average
rate
Average
balance
Interest
income
Average
rate
(in millions, except percentages)
Assets:
Interest-earning assets:
Interest-earning deposits in
other banks:
Domestic . . . . . . . . . . . . . ¥ 32,727,743 ¥
Foreign . . . . . . . . . . . . . .
9,025,391
31,287
152,040
0.10% ¥ 30,349,122 ¥
1.68
8,268,196
31,578
135,689
0.10% ¥ 38,009,750
9,905,602
1.64
¥33,413
23,142
0.09%
0.23
Total
. . . . . . . . . . . .
41,753,134
183,327
0.44
38,617,318
167,267
0.43
47,915,352
56,555
0.12
Call loans, funds sold, and
receivables under resale
agreements and securities
borrowing transactions:
Domestic . . . . . . . . . . . . .
Foreign . . . . . . . . . . . . . .
6,429,788
7,594,119
5,920
149,788
Total
. . . . . . . . . . . .
14,023,907
155,708
Trading account assets:
Domestic . . . . . . . . . . . . .
Foreign . . . . . . . . . . . . . .
5,204,308
19,467,632
31,284
468,440
Total
. . . . . . . . . . . .
24,671,940
499,724
Investment securities(1):
Domestic . . . . . . . . . . . . .
Foreign . . . . . . . . . . . . . .
35,073,801
7,782,349
202,755
195,448
Total
. . . . . . . . . . . .
42,856,150
398,203
Loans(2):
Domestic . . . . . . . . . . . . .
Foreign . . . . . . . . . . . . . .
65,843,445
777,306
52,258,780 1,799,111
Total
. . . . . . . . . . . . 118,102,225 2,576,417
Total interest-earning assets:
Domestic . . . . . . . . . . . . . 145,279,085 1,048,552
96,128,271 2,764,827
Foreign . . . . . . . . . . . . . .
Total
. . . . . . . . . . . . 241,407,356 3,813,379
0.09
1.97
1.11
0.60
2.41
2.03
0.58
2.51
0.93
1.18
3.44
2.18
0.72
2.88
1.58
8,170,312
10,339,632
4,624
252,973
18,509,944
257,597
7,305,805
22,242,975
29,108
460,734
29,548,780
489,842
34,535,660
8,623,509
200,330
214,175
43,159,169
414,505
64,897,973
732,783
51,550,492 1,865,149
116,448,465 2,597,932
145,258,872
998,423
101,024,804 2,928,720
246,283,676 3,927,143
0.06
2.45
1.39
0.40
2.07
1.66
0.58
2.48
0.96
1.13
3.62
2.23
0.69
2.90
1.59
8,772,553
9,894,459
(3,232) (0.04)
0.87
86,459
18,667,012
83,227
0.45
9,641,674
22,805,949
38,554
334,646
32,447,623
373,200
43,679,522
8,568,989
141,557
156,703
52,248,511
298,260
68,785,326
618,678
48,852,657 1,322,076
117,637,983 1,940,754
168,888,825
828,970
100,027,656 1,923,026
268,916,481 2,751,996
0.40
1.47
1.15
0.32
1.83
0.57
0.90
2.71
1.65
0.49
1.92
1.02
Non-interest-earning assets:
Cash and due from banks . . . .
Other non-interest-earning
assets . . . . . . . . . . . . . . . . . .
Allowance for credit losses . . .
33,631,665
46,952,826
(699,000)
Total non-interest-
earning assets . . .
79,885,491
Total assets . . . . . . . . . . . . . . . . . . ¥321,292,847
32,929,678
46,962,448
(675,353)
79,216,773
¥325,500,449
42,417,354
45,669,470
(1,010,734)
87,076,090
¥355,992,571
Notes:
(1) Tax-exempt income of tax-exempt investment securities has not been calculated on a tax equivalent basis because the effect of such
calculation would not be material.
(2) Average balances on loans outstanding include all nonaccrual and restructured loans. See “III. Loan Portfolio.” The amortized portion of
net loan origination fees (costs) is included in interest income on loans, which accounts for an insignificant amount of an adjustment to
the yields.
A-2
Fiscal years ended March 31,
2019
2020
2021
Average
balance
Interest
expense
Average
rate
Average
balance
Interest
expense
Average
rate
Average
balance
Interest
expense
Average
rate
(in millions, except percentages)
Liabilities and equity:
Interest-bearing liabilities:
Deposits:
Domestic . . . . . . . . . . . . ¥124,661,909 ¥
Foreign . . . . . . . . . . . . .
41,945,626
67,948
649,418
0.05% ¥124,294,925 ¥
1.55
45,216,271
77,143
758,938
0.06% ¥135,662,556 ¥
1.68
47,092,772
35,308
294,084
0.03%
0.62
Total
. . . . . . . . . . . 166,607,535
717,366
0.43
169,511,196
836,081
0.49
182,755,328
329,392
0.18
Call money, funds purchased,
and payables under
repurchase agreements and
securities lending
transactions:
Domestic . . . . . . . . . . . .
Foreign . . . . . . . . . . . . .
17,201,589
9,204,904
188,009
149,536
Total
. . . . . . . . . . .
26,406,493
337,545
Due to trust account, other
short-term borrowings and
trading account liabilities:
Domestic . . . . . . . . . . . .
Foreign . . . . . . . . . . . . .
5,777,333
7,184,301
13,576
141,697
Total
. . . . . . . . . . .
12,961,634
155,273
Long-term debt:
Domestic . . . . . . . . . . . .
Foreign . . . . . . . . . . . . .
25,558,707
3,108,828
234,603
73,194
Total
. . . . . . . . . . .
28,667,535
307,797
Total interest-bearing
liabilities:
Domestic . . . . . . . . . . . . 173,199,538
Foreign . . . . . . . . . . . . .
504,136
61,443,659 1,013,845
Total
. . . . . . . . . . . 234,643,197 1,517,981
1.09
1.62
1.28
0.23
1.97
1.20
0.92
2.35
1.07
0.29
1.65
0.65
Non-interest-bearing
liabilities . . . . . . . . . . . . . . . . . .
70,572,971
Total equity . . . . . . . . . . . . . . . . .
16,076,679
Total liabilities and equity . . . . . ¥321,292,847
Net interest income and interest
rate spread . . . . . . . . . . . . . . . .
Net interest income as a
percentage of total interest-
earning assets . . . . . . . . . . . . . .
17,245,242
10,502,391
137,759
222,893
27,747,633
360,652
0.80
2.12
1.30
18,084,898
11,000,681
29,085,579
39,725
52,888
92,613
0.22
0.48
0.32
6,025,686
7,542,997
20,557
144,350
13,568,683
164,907
25,313,006
2,721,002
237,995
84,709
28,034,008
322,704
172,878,859
473,454
65,982,661 1,210,890
238,861,520 1,684,344
0.34
1.91
1.22
0.94
3.11
1.15
0.27
1.84
0.71
16,025,141
6,209,147
22,234,288
26,464
45,939
72,403
29,205,636
2,632,097
181,679
71,815
31,837,733
253,494
198,978,231
66,934,697
283,176
464,726
265,912,928
747,902
0.17
0.74
0.33
0.62
2.73
0.80
0.14
0.69
0.28
71,221,044
15,417,885
¥325,500,449
74,398,116
15,681,527
¥355,992,571
¥2,295,398
0.93%
¥2,242,799
0.88%
¥2,004,094
0.74%
0.95%
0.91%
0.75%
The percentage of total average assets attributable to foreign activities was 36.8%, 38.1% and 33.6%,
respectively, for the fiscal years ended March 31, 2019, 2020 and 2021.
The percentage of total average liabilities attributable to foreign activities was 37.0%, 38.2% and 33.8%,
respectively, for the fiscal years ended March 31, 2019, 2020 and 2021.
A-3
Analysis of Net Interest Income
The following table shows changes in our net interest income by changes in volume and by changes in
interest rate for the fiscal year ended March 31, 2020 compared to the fiscal year ended March 31, 2019, and the
fiscal year ended March 31, 2021 compared to the fiscal year ended March 31, 2020.
Fiscal year ended March 31, 2019
versus
fiscal year ended March 31, 2020
Fiscal year ended March 31, 2020
versus
fiscal year ended March 31, 2021
Increase (decrease)
due to changes in
Increase (decrease)
due to changes in
Volume(1)
Rate(1)
Net change
Volume(1)
Rate(1)
Net change
(in millions)
Interest income:
Interest-earning deposits in other banks:
Domestic . . . . . . . . . . . . . . . . . . . . ¥ (2,365) ¥ 2,656 ¥
Foreign . . . . . . . . . . . . . . . . . . . . . .
(12,504)
(3,847)
291 ¥
7,205 ¥
(5,370) ¥
(16,351)
22,548
(135,095)
1,835
(112,547)
Total . . . . . . . . . . . . . . . . . . . .
(14,869)
(1,191)
(16,060)
29,753
(140,465)
(110,712)
Call loans, funds sold, and receivables
under resale agreements and
securities borrowing transactions:
Domestic . . . . . . . . . . . . . . . . . . . .
Foreign . . . . . . . . . . . . . . . . . . . . . .
1,348
61,973
(2,644)
41,212
(1,296)
103,185
317
(10,452)
(8,173)
(156,062)
(7,856)
(166,514)
Total . . . . . . . . . . . . . . . . . . . .
63,321
38,568
101,889
(10,135)
(164,235)
(174,370)
Trading account assets:
Domestic . . . . . . . . . . . . . . . . . . . .
Foreign . . . . . . . . . . . . . . . . . . . . . .
10,311
62,079
(12,487)
(69,785)
(2,176)
(7,706)
9,340
11,389
106
(137,477)
9,446
(126,088)
Total . . . . . . . . . . . . . . . . . . . .
72,390
(82,272)
(9,882)
20,729
(137,371)
(116,642)
Investment securities(2):
Domestic . . . . . . . . . . . . . . . . . . . .
Foreign . . . . . . . . . . . . . . . . . . . . . .
(3,120)
20,913
695
(2,186)
(2,425)
18,727
44,264
(1,346)
(103,037)
(56,126)
(58,773)
(57,472)
Total . . . . . . . . . . . . . . . . . . . .
17,793
(1,491)
16,302
42,918
(159,163)
(116,245)
Loans:
Domestic . . . . . . . . . . . . . . . . . . . .
Foreign . . . . . . . . . . . . . . . . . . . . . .
(11,041)
(24,645)
(33,482)
90,683
(44,523)
66,038
41,862
(93,380)
(155,967)
(449,693)
(114,105)
(543,073)
Total . . . . . . . . . . . . . . . . . . . .
(35,686)
57,201
21,515
(51,518)
(605,660)
(657,178)
Total interest income:
Domestic . . . . . . . . . . . . . . . . . . . .
Foreign . . . . . . . . . . . . . . . . . . . . . .
(4,867)
107,816
(45,262)
56,077
(50,129) 102,988
(71,241)
163,893
(272,441)
(934,453)
(169,453)
(1,005,694)
Total
. . . . . . . . . . . . . . . . . . . ¥102,949 ¥ 10,815 ¥113,764 ¥ 31,747 ¥(1,206,894) ¥(1,175,147)
Notes:
(1) Volume/rate variance is allocated based on the percentage relationship of changes in volume and changes in rate to the total “net
change.”
(2) Tax-exempt income of tax-exempt investment securities has not been calculated on a tax equivalent basis because the effect of such
calculation would not be material.
A-4
Fiscal year ended March 31, 2019
versus
fiscal year ended March 31, 2020
Fiscal year ended March 31, 2020
versus
fiscal year ended March 31, 2021
Increase (decrease)
due to changes in
Increase (decrease)
due to changes in
Volume(1)
Rate(1)
Net change
Volume(1)
Rate(1)
Net change
(in millions)
Interest expense:
Deposits:
Domestic . . . . . . . . . . . . . . . . . . . .
Foreign . . . . . . . . . . . . . . . . . . . . .
Total
. . . . . . . . . . . . . . . . . . .
¥
(201) ¥
52,686
52,485
9,396
56,834
¥
9,195
109,520
¥ 6,498
30,270
¥
(48,333) ¥ (41,835)
(464,854)
(495,124)
66,230
118,715
36,768
(543,457)
(506,689)
Call money, funds purchased, and
payables under repurchase
agreements and securities lending
transactions:
Domestic . . . . . . . . . . . . . . . . . . . .
Foreign . . . . . . . . . . . . . . . . . . . . .
Total
. . . . . . . . . . . . . . . . . . .
476
23,113
23,589
(50,726)
50,244
(50,250)
73,357
(482)
23,107
6,401
10,102
16,503
(104,435)
(180,107)
(98,034)
(170,005)
(284,542)
(268,039)
Due to trust account, other short-term
borrowings and trading account
liabilities:
Domestic . . . . . . . . . . . . . . . . . . . .
Foreign . . . . . . . . . . . . . . . . . . . . .
Total
. . . . . . . . . . . . . . . . . . .
607
6,943
7,550
Long-term debt:
Domestic . . . . . . . . . . . . . . . . . . . .
Foreign . . . . . . . . . . . . . . . . . . . . .
(2,271)
(9,952)
Total
. . . . . . . . . . . . . . . . . . .
(12,223)
6,374
(4,290)
2,084
5,663
21,467
27,130
6,981
2,653
9,634
3,392
11,515
14,907
20,687
(22,022)
(14,780)
(76,389)
5,907
(98,411)
(1,335)
(91,169)
(92,504)
32,729
(2,696)
(89,045)
(10,198)
(56,316)
(12,894)
30,033
¥
(99,243) ¥ (69,210)
Total interest expense:
Domestic . . . . . . . . . . . . . . . . . . . .
Foreign . . . . . . . . . . . . . . . . . . . . .
(1,389)
72,790
(29,293)
124,255
(30,682)
197,045
66,315
15,654
¥ (256,593)
(761,818)
(190,278)
(746,164)
Total
. . . . . . . . . . . . . . . . . . .
¥ 71,401
¥ 94,962
¥166,363
¥ 81,969
¥(1,018,411) ¥(936,442)
Net interest income:
Domestic . . . . . . . . . . . . . . . . . . . .
Foreign . . . . . . . . . . . . . . . . . . . . .
¥ (3,478) ¥ (15,969) ¥ (19,447) ¥ 36,673
(86,895)
(33,152)
(68,178)
35,026
¥
(15,848) ¥ 20,825
(259,530)
(172,635)
Total
. . . . . . . . . . . . . . . . . . .
¥ 31,548
¥ (84,147) ¥ (52,599) ¥(50,222) ¥ (188,483) ¥(238,705)
Note:
(1) Volume/rate variance is allocated based on the percentage relationship of changes in volume and changes in rate to the total “net
change.”
A-5
II.
Investment Portfolio
The following table shows information as to the value of our Available-for-sale debt securities,
Held-to-maturity debt securities, and Marketable equity securities at March 31, 2019, 2020 and 2021:
2019
Amortized
cost
Fair value
Net
unrealized
gains
(losses)
At March 31,
2020
Amortized
cost
Fair value
(in millions)
2021
Net
unrealized
gains
(losses)
Amortized
cost
Fair value
Net
unrealized
gains
(losses)
Available-for-sale debt
securities:
Domestic:
Japanese national government
and Japanese government
agency bonds . . . . . . . . . . . ¥ 23,748,558 ¥ 24,077,696 ¥329,138 ¥ 23,308,538 ¥ 23,462,879 ¥154,341 ¥ 35,166,245 ¥ 35,273,211 ¥106,966
8,825
12,898
Corporate bonds . . . . . . . . . . .
Other securities . . . . . . . . . . . .
991,039
5,246,547
982,214
5,233,649
1,099,328
4,080,746
999,707
3,402,696
1,090,442
4,064,659
988,137
3,377,266
8,886
16,087
11,570
25,430
Total domestic . . . . . . . . . .
28,113,961
28,480,099
366,138
28,463,639 28,642,953
179,314
41,382,108 41,510,797
128,689
Foreign:
U.S. Treasury and other
U.S. government agencies
bonds . . . . . . . . . . . . . . . . .
Other government and official
institution bonds . . . . . . . . .
Mortgage-backed securities . .
Other securities . . . . . . . . . . . .
1,722,943
1,710,328
(12,615)
1,994,173
2,086,763
92,590
1,805,518
1,873,019
67,501
925,931
1,138,101
1,273,551
931,091
1,115,714
1,281,271
5,160
(22,387)
7,720
941,937
1,063,983
1,444,035
950,725
1,064,787
1,454,975
8,788
804
10,940
1,048,519
1,096,412
1,531,288
1,053,944
1,133,253
1,546,800
5,425
36,841
15,512
Total foreign . . . . . . . . . . .
5,060,526
5,038,404
(22,122)
5,444,128
5,557,250
113,122
5,481,737
5,607,016
125,279
Total
. . . . . . . . . . . . . . . ¥ 33,174,487 ¥ 33,518,503 ¥344,016 ¥33,907,767 ¥34,200,203 ¥292,436 ¥46,863,845 ¥47,117,813 ¥253,968
Held-to-maturity debt securities:
Domestic:
Japanese national government
and Japanese government
agency bonds . . . . . . . . . . . ¥
1,100,701 ¥
1,142,320 ¥ 41,619 ¥ 1,100,574 ¥ 1,130,430 ¥ 29,856 ¥ 1,100,447 ¥ 1,123,480 ¥ 23,033
Total domestic . . . . . . . . . .
1,100,701
1,142,320
41,619
1,100,574
1,130,430
29,856
1,100,447
1,123,480
23,033
Foreign:
U.S. Treasury and other
U.S. government agencies
bonds . . . . . . . . . . . . . . . . .
Other government and
official institution
bonds . . . . . . . . . . . . . . .
Mortgage-backed securities . .
Asset-backed securities . . . . .
138,731
138,712
(19)
148,927
148,318
(609)
233,883
233,350
(533)
—
1,071,257
2,131,212
—
1,051,135
2,120,780
—
(20,122)
(10,432)
2,628
883,281
2,030,371
2,791
893,423
2,002,932
163
10,142
(27,439)
—
522,774
2,046,659
—
546,210
2,036,103
—
23,436
(10,556)
Total foreign . . . . . . . . . . .
3,341,200
3,310,627
(30,573)
3,065,207
3,047,464
(17,743)
2,803,316
2,815,663
12,347
Total
. . . . . . . . . . . . . . . ¥ 4,441,901 ¥ 4,452,947 ¥ 11,046 ¥ 4,165,781 ¥ 4,177,894 ¥ 12,113 ¥ 3,903,763 ¥ 3,939,143 ¥ 35,380
Marketable equity securities:
Domestic:
Marketable equity
securities . . . . . . . . . . . . . . .
Total domestic . . . . . . . . . .
— ¥
6,331,815
— 6,331,815
Foreign:
Marketable equity
securities . . . . . . . . . . . . . . .
Total foreign . . . . . . . . . . .
—
—
26,728
26,728
Total
. . . . . . . . . . . . . . .
— ¥ 6,358,543
—
—
—
—
—
— ¥ 4,740,188
— 4,740,188
—
—
28,130
28,130
— ¥ 4,768,318
—
—
—
—
—
— ¥ 5,716,702
— 5,716,702
—
—
42,790
42,790
— ¥ 5,759,492
—
—
—
—
—
Nonmarketable equity securities presented in Equity securities in the accompanying consolidated financial
statements were primarily carried at cost of ¥591,237 million, ¥576,977 million and ¥417,859 million, at
March 31, 2019, 2020 and 2021, respectively. The corresponding fair values at those dates were not readily
determinable. Investment securities held by certain subsidiaries subject to specialized industry accounting
principles for investment companies and brokers and dealers presented in Equity securities were carried at fair
value of ¥27,820 million, ¥39,963 million and ¥45,569 million, at March 31, 2019, 2020 and 2021, respectively.
A-6
The following table presents the book values, maturities and weighted average yields of Available-for-sale
debt securities and Held-to-maturity debt securities at March 31, 2021. Weighted average yields are calculated
based on amortized cost. Yields on tax-exempt obligations have not been calculated on a tax equivalent basis
because the effect of such calculation would not be material:
Maturities within
one year
Maturities after
one year but
within five years
Maturities after
five years but
within ten years
Maturities after
ten years
Total
Amount
Yield
Amount Yield
Amount Yield
Amount Yield
Amount Yield
(in millions, except percentages)
Available-for-sale debt
securities:
Domestic:
Japanese national
government and Japanese
government agency
bonds . . . . . . . . . . . . . . . . ¥ 22,972,078 0.03% ¥3,803,768 0.12% ¥4,534,262 0.21% ¥3,963,103 0.67% ¥35,273,211 0.14%
Corporate bonds . . . . . . . . .
Other securities . . . . . . . . . .
217,839 0.13
668,132 0.03
632,369 0.16
1,409,546 0.23
103,568 0.42
2,460,633 0.16
37,263 0.50
708,236 0.23
991,039 0.19
5,246,547 0.17
Total domestic . . . . . . .
23,858,049 0.03
5,845,683 0.15
7,098,463 0.20
4,708,602 0.60
41,510,797 0.14
Foreign:
U.S. Treasury and other U.S.
government agencies
bonds . . . . . . . . . . . . . . . .
Other government and
official institution
bonds . . . . . . . . . . . . . . . .
Mortgage-backed
securities . . . . . . . . . . . . .
Other securities . . . . . . . . . .
198,875 1.93
672,375 2.21
985,115 2.19
16,654 1.24
1,873,019 2.16
343,761 2.19
686,038 2.09
23,573 3.39
572 3.78
1,053,944 2.15
— —
414,636 1.79
6,704 2.12
918,883 2.59
279,943 2.14
162,619 2.35
846,606 2.19
50,662 1.73
1,133,253 2.18
1,546,800 2.32
Total foreign . . . . . . . .
957,272 1.96
2,284,000 2.33
1,451,250 2.22
914,494 2.15
5,607,016 2.21
Total . . . . . . . . . . . . . ¥ 24,815,321 0.11% ¥8,129,683 0.76% ¥8,549,713 0.53% ¥5,623,096 0.85% ¥47,117,813 0.38%
Held-to-maturity debt
securities:
Domestic:
Japanese national
government and Japanese
government agency
bonds . . . . . . . . . . . . . . . . ¥
— —% ¥1,100,447 0.51% ¥
— —% ¥
— —% ¥ 1,100,447 0.51%
Total domestic . . . . . . .
— — 1,100,447 0.51
— —
— —
1,100,447 0.51
Foreign:
U.S. Treasury and other U.S.
government agencies
bonds . . . . . . . . . . . . . . . .
Mortgage-backed securities . . .
Asset-backed securities . . . .
— —
— —
14,562 0.45
— —
64,067 2.22
15,445 0.77
45,644 2.12
67,793 2.31
713,396 0.91
188,239 1.62
390,914 2.64
1,303,256 1.13
233,883 1.72
522,774 2.55
2,046,659 1.04
Total foreign . . . . . . . .
14,562 0.45
79,512 1.94
826,833 1.09
1,882,409 1.49
2,803,316 1.38
Total . . . . . . . . . . . . . ¥
14,562 0.45% ¥1,179,959 0.61% ¥ 826,833 1.09% ¥1,882,409 1.49% ¥ 3,903,763 1.13%
Other than U.S. Treasury and other U.S. government agencies bonds and Japanese national government
bonds, none of the individual issuers held in our investment securities portfolio exceeded 10% of the
consolidated total Mitsubishi UFJ Financial Group shareholders’ equity at March 31, 2021.
A-7
III. Loan Portfolio
The following table shows our loans outstanding, before deduction of allowance for credit losses, by
domicile and industry of the borrower at March 31 for each of the five fiscal years ended March 31, 2021.
Classification of loans by industry is based on the industry segment loan classification as defined by the Bank of
Japan for regulatory reporting purposes and is not necessarily based on the use of proceeds:
2017
2018
At March 31,
2019
(in millions)
2020
2021
Domestic:
Manufacturing . . . . . . . . . .
Construction . . . . . . . . . . .
Real estate . . . . . . . . . . . . .
Services . . . . . . . . . . . . . . .
Wholesale and retail
. . . . .
Banks and other financial
institutions(1)
Communication and
. . . . . . . . .
information services . . .
Other industries . . . . . . . . .
. . . . . . . . . . . . .
Consumer
¥ 11,796,803
819,262
11,622,372
2,549,300
7,970,579
¥ 10,876,625
781,262
11,763,769
2,689,086
7,989,080
¥ 11,153,996
717,664
11,706,419
2,653,191
7,643,397
¥ 11,448,778
733,212
12,054,671
2,585,111
7,504,561
¥ 13,133,360
763,958
11,997,301
2,908,975
7,766,070
5,223,906
4,818,364
5,213,020
5,161,093
6,443,296
1,634,584
8,898,712
16,491,010
1,551,533
8,939,291
16,287,332
1,510,596
8,756,483
15,802,024
1,572,344
8,673,871
15,319,721
1,407,738
8,838,718
15,066,986
Total domestic . . . . . .
67,006,528
65,696,342
65,156,790
65,053,362
68,326,402
Foreign:
Governments and official
institutions . . . . . . . . . . .
1,037,795
920,538
841,695
726,347
655,367
Banks and other financial
. . . . . . . . .
13,844,964
12,851,570
11,641,373
11,788,225
10,649,029
institutions(1)
Commercial and
industrial
. . . . . . . . . . . .
Other . . . . . . . . . . . . . . . . .
30,279,641
6,334,551
30,591,173
7,270,928
31,951,169
7,597,502
32,565,030
8,404,062
29,574,176
6,822,771
Total foreign . . . . . . .
51,496,951
51,634,209
52,031,739
53,483,664
47,701,343
Total
. . . . . . . . .
118,503,479
117,330,551
117,188,529
118,537,026
116,027,745
Unearned income, unamortized
premiums—net and deferred
loan fees—net . . . . . . . . . . . .
(288,507)
(294,656)
(304,588)
(350,287)
(308,882)
Total(2) . . . . . . . .
¥118,214,972
¥117,035,895
¥116,883,941
¥118,186,739
¥115,718,863
Notes:
(1) Loans to so-called “non-bank finance companies” are generally included in the “Banks and other financial institutions” category.
Non-bank finance companies are primarily engaged in consumer lending, factoring and credit card businesses.
(2) The above table includes loans held for sale of ¥185,940 million, ¥226,923 million, ¥291,794 million, ¥344,790 million and
¥353,095 million at March 31, 2017, 2018, 2019, 2020 and 2021, respectively, which are carried at the lower of cost or fair value.
A-8
Maturities and Sensitivities of Loans to Changes in Interest Rates
The following table shows the maturities of our loan portfolio at March 31, 2021:
One year or less One to five years Over five years
Total
(in millions)
Maturity
Domestic:
Manufacturing . . . . . . . . . . . . . . . . . . . . . . .
Construction . . . . . . . . . . . . . . . . . . . . . . . . .
Real estate . . . . . . . . . . . . . . . . . . . . . . . . . .
Services . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Wholesale and retail
. . . . . . . . . . . . . . . . . .
Banks and other financial institutions . . . . .
Communication and information
services . . . . . . . . . . . . . . . . . . . . . . . . . .
Other industries . . . . . . . . . . . . . . . . . . . . . .
Consumer . . . . . . . . . . . . . . . . . . . . . . . . . . .
¥ 6,791,586
394,730
2,572,698
1,290,437
5,417,809
3,878,557
¥ 4,081,940
267,815
4,458,503
1,127,387
1,578,268
1,780,739
¥ 2,259,834
101,413
4,966,100
491,151
769,993
784,000
¥ 13,133,360
763,958
11,997,301
2,908,975
7,766,070
6,443,296
364,682
4,877,299
2,056,352
906,526
2,182,011
3,024,685
136,530
1,779,408
9,985,949
1,407,738
8,838,718
15,066,986
Total Domestic . . . . . . . . . . . . . . . . . .
27,644,150
19,407,874
21,274,378
68,326,402
Foreign . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
21,179,115
16,101,709
10,420,519
47,701,343
Total
. . . . . . . . . . . . . . . . . . . . . .
¥48,823,265
¥35,509,583
¥31,694,897
¥116,027,745
The above loans due after one year which had predetermined interest rates and floating or adjustable interest
rates at March 31, 2021 are shown below:
Predetermined rate . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Floating or adjustable rate . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
¥19,901,638
20,780,614
(in millions)
¥ 5,309,349
21,212,879
¥25,210,987
41,993,493
Total
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
¥40,682,252
¥26,522,228
¥67,204,480
Domestic
Foreign
Total
Nonaccrual, Past Due and Restructured Loans
We generally discontinue the accrual of interest income on loans when substantial doubt exists as to the full
and timely collection of either principal or interest, when principal or interest is contractually past due one month
or more with respect to loans within all classes of the Commercial segment, three months or more with respect to
loans within the Card, MUFG Americas Holdings, and Krungsri segments, and six months or more with respect
to loans within the Residential segment.
Regarding our policy for placing loans on nonaccrual status, see “Summary of Significant Accounting
Policies — Loans” in Note 1 to our consolidated financial statements included elsewhere in this Annual Report.
A-9
The following table shows the distribution of our nonaccrual loans, restructured loans and accruing loans
which are contractually past due 90 days or more as to principal or interest payments at March 31 of each of the
five fiscal years ended March 31, 2021, based on the domicile and type of industry of the borrowers:
2017
2018
2019
2020
2021
At March 31,
(in millions)
Nonaccrual loans:
Domestic:
Manufacturing . . . . . . . . . . . . . . . . . . . . . . ¥ 185,124 ¥
Construction . . . . . . . . . . . . . . . . . . . . . . .
Real estate . . . . . . . . . . . . . . . . . . . . . . . . .
Services . . . . . . . . . . . . . . . . . . . . . . . . . . .
. . . . . . . . . . . . . . . . .
Wholesale and retail
Banks and other financial institutions . . . .
Communication and information
15,248
50,142
38,977
131,545
2,432
77,188 ¥
10,922
37,853
31,733
108,639
1,145
65,921 ¥
9,877
26,513
27,115
94,990
898
93,798 ¥ 251,815
6,521
8,558
86,979
30,449
89,552
52,182
100,889
94,440
689
994
services . . . . . . . . . . . . . . . . . . . . . . . . .
Other industries . . . . . . . . . . . . . . . . . . . . .
. . . . . . . . . . . . . . . . . . . . . . . . .
Consumer
Total domestic . . . . . . . . . . . . . . . . . .
Foreign:
Governments and official institutions . . . .
Banks and other financial institutions . . . .
Commercial and industrial
. . . . . . . . . . . .
Other . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Total foreign . . . . . . . . . . . . . . . . . . .
18,711
10,352
161,680
614,211
—
5,902
301,685
64,834
372,421
13,815
37,677
149,491
468,463
—
1,716
215,601
67,869
285,186
11,955
26,110
143,668
407,047
—
1,160
219,669
78,780
299,609
10,539
20,766
136,181
447,907
34
443
255,214
100,628
356,319
10,086
9,764
138,331
694,626
155
10,562
393,592
123,468
527,777
Total
. . . . . . . . . . . . . . . . . . . . . . . . . ¥ 986,632 ¥ 753,649 ¥ 706,656 ¥ 804,226 ¥1,222,403
Restructured loans:
Domestic . . . . . . . . . . . . . . . . . . . . . . . . . . . . ¥ 682,041 ¥ 557,368 ¥ 511,151 ¥ 492,566 ¥ 543,372
167,524
Foreign . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
158,784
172,549
137,674
127,931
Total
. . . . . . . . . . . . . . . . . . . . . . . . . ¥ 840,825 ¥ 695,042 ¥ 639,082 ¥ 665,115 ¥ 710,896
Accruing loans contractually past due 90 days
or more:
Domestic . . . . . . . . . . . . . . . . . . . . . . . . . . . . ¥
Foreign(1) . . . . . . . . . . . . . . . . . . . . . . . . . . . .
37,650 ¥
3,430
17,356 ¥
2,408
13,621 ¥
2,778
11,148 ¥
2,339
15,822
4,717
Total
. . . . . . . . . . . . . . . . . . . . . . . . . ¥
41,080 ¥
19,764 ¥
16,399 ¥
13,487 ¥
20,539
Total(2) . . . . . . . . . . . . . . . . . . . . . . . . ¥1,868,537 ¥1,468,455 ¥1,362,137 ¥1,482,828 ¥1,953,838
Note:
(1) Foreign accruing loans contractually past due 90 days or more do not include ¥1,514 million, ¥549 million, ¥234 million, ¥74 million
and nil of Federal Deposit Insurance Corporation (“FDIC”) covered loans held by MUFG Americas Holdings which are subject to the
guidance on loans and debt securities acquired with deteriorated credit quality at March 31, 2017, 2018, 2019, 2020 and 2021,
respectively.
Gross interest income which would have been accrued at the original terms on domestic nonaccrual and
restructured loans outstanding during the fiscal year ended March 31, 2021 was approximately ¥34.5 billion, of
which ¥15.0 billion was included in the results of operations for the fiscal year. Gross interest income which
would have been accrued at the original terms on foreign nonaccrual and restructured loans outstanding for the
fiscal year ended March 31, 2021 was approximately ¥37.2 billion, of which ¥19.8 billion was included in the
results of operations for the fiscal year.
A-10
Potential Problem Loans
We do not have potential problem loans where known information about possible credit problems of
borrowers causes management to have serious doubts as to the borrowers’ ability to comply with the present loan
repayment terms that are not disclosed as nonaccrual loans, restructured loans and accruing loans past due
90 days or more.
Foreign Loans Outstanding
Cross-border outstandings are defined, for this purpose, as loans (including accrued interest), acceptances,
interest-earning deposits with other banks, other interest-earning investments and any other monetary assets
denominated in Japanese yen or other non-local currencies. Material local currency loans outstanding which are
neither hedged nor funded by local currency borrowings are included in cross-border outstandings.
We had no cross-border outstandings to borrowers domiciled in a foreign country which in total exceeded
0.75% of our consolidated total assets at March 31, 2019, 2020. The following table sets forth our cross-border
outstandings for the country in which total were between 0.75% and 1% of consolidated total assets at March 31,
2021.
Cayman Islands . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Cross-border
outstandings
Percentage of
total assets
(in millions, except percentage)
¥2,830,846
0.80%
Guarantees of outstandings to borrowers domiciled in other countries are considered to be outstandings of
the guarantor. Loans made to, or deposits placed with, a branch of a foreign bank located outside the foreign
bank’s home country are considered to be loans to, or deposits with, the foreign bank. Outstandings of a country
do not include principal or interest amounts which are supported by written, legally enforceable guarantees by
guarantors of other countries or the amounts of outstandings to the extent that they are secured by tangible, liquid
collateral held and realizable by MUFG Bank, Mitsubishi UFJ Trust and Banking and their subsidiaries outside
the country in which they operate.
In addition to credit risk, cross-border outstandings are subject to country risk that as a result of political or
economic conditions in a country, borrowers may be unable or unwilling to pay principal and interest according
to contractual terms. Other risks related to cross-border outstandings include the possibility of insufficient
foreign exchange and restrictions on its availability.
In order to manage country risk, we establish various risk management measures internally. Among other
things, we regularly monitor economic conditions and other factors globally and assess country risk in each country
where we have cross-border exposure. For the purposes of monitoring and controlling the amount of credit exposed
to country risk, we set a country limit, the maximum amount of credit exposure for an individual country, in
consideration of the level of country risk and our ability to bear such potential risk. We also determine our credit
policy for each country in accordance with our country risk level and our business plan with regard to the country.
The assessment of country risk, establishment of country limits, and determination of country credit policies are
subject to review and approval by our senior management and are updated periodically.
Loan Concentrations
At March 31, 2021, there were no concentrations of loans to a single industry group of borrowers, as defined
by the Bank of Japan industry segment loan classifications, which exceeded 10 % of our consolidated total loans,
except for loans in a category disclosed in the table of loans outstanding above.
Credit Risk Management
We have a credit rating system, under which borrowers and transactions are graded on a worldwide basis.
We calculate probability of default by statistical means and manage our credit portfolio based on this credit
A-11
rating system. For a detailed description of this system and other elements of our risk management structure, see
“Item 11. Quantitative and Qualitative Disclosures about Credit, Market and Other Risk—Credit Risk
Management.”
IV. Summary of Loan Loss Experience
The following table shows an analysis of our loan loss experience by industry of the borrower for each of
the five fiscal years ended March 31, 2021:
Allowance for credit losses at beginning of
fiscal year
. . . . . . . . . . . . . . . . . . . . . . . . . . . .
Effect of adopting new guidance on
measurement of credit losses on financial
instruments(2) . . . . . . . . . . . . . . . . . . . . . . . . . .
Provision for (reversal of) credit losses . . . . . . .
Charge-offs:
Domestic:
Manufacturing . . . . . . . . . . . . . . . . . . . . . . .
Construction . . . . . . . . . . . . . . . . . . . . . . . .
Real estate . . . . . . . . . . . . . . . . . . . . . . . . . .
Services . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Wholesale and retail
. . . . . . . . . . . . . . . . . .
Banks and other financial institutions . . . . .
Communication and information
services . . . . . . . . . . . . . . . . . . . . . . . . . .
Other industries . . . . . . . . . . . . . . . . . . . . . .
. . . . . . . . . . . . . . . . . . . . . . . . . .
Consumer
Total domestic . . . . . . . . . . . . . . . . . . .
Total foreign . . . . . . . . . . . . . . . . . . . .
. . . . . . . . . . . . . . . . . . . . . . . . . .
Total
Recoveries collected:
Total
Domestic . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Foreign . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
. . . . . . . . . . . . . . . . . . . . . . . . . .
Net charge-offs . . . . . . . . . . . . . . . . . . . . . . . . . .
Other(1) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Allowance for credit losses at end of fiscal
year . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Allowance for credit losses applicable to foreign
activities:
Balance at beginning of fiscal year . . . . . . .
Fiscal years ended March 31,
2017
2018
2019
2020
2021
(in millions, except percentages)
¥1,111,130
¥1,182,188
¥764,124
¥658,184
¥ 809,540
—
253,688
—
(240,847)
—
34,330
—
321,713
323,704
484,210
30,549
647
2,318
5,225
17,402
—
2,903
767
22,877
82,688
131,070
213,758
21,954
21,995
43,949
169,809
(12,821)
10,621
789
1,305
1,867
20,979
650
1,254
29,839
26,786
94,090
138,019
232,109
22,261
28,849
51,110
180,999
3,782
10,525
992
619
4,207
20,901
2,523
11,309
2,758
24,795
78,629
95,412
174,041
15,467
28,650
44,117
129,924
(10,346)
9,923
300
2,584
6,533
12,529
12
1,370
596
28,791
62,638
180,497
243,135
24,838
39,020
63,858
179,277
8,920
4,132
208
4,625
4,879
3,873
154
375
1,392
28,443
48,081
242,425
290,506
10,189
34,893
45,082
245,424
(23,639)
¥1,182,188
¥ 764,124
¥658,184
¥809,540
¥1,348,391
¥ 416,221
¥ 387,250
¥303,719
¥303,867
¥ 402,784
Balance at end of fiscal year . . . . . . . . . . . .
¥ 387,250
¥ 303,719
¥303,867
¥402,784
¥ 675,597
Provision for credit losses . . . . . . . . . . . . . .
¥
92,689
¥
21,889
¥ 77,338
¥231,831
¥ 274,808
Ratio of net charge-offs during the fiscal year to
average loans outstanding during the fiscal
year . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
0.14%
0.15%
0.11%
0.15%
0.21%
Notes:
(1) Other principally includes losses (gains) from foreign exchange translation.
(2) For more information, see Note 1 to our consolidated financial statements included elsewhere in this Annual Report.
A-12
The following table shows an allocation of our allowance for credit losses at March 31 for each of the
five fiscal years ended March 31, 2021:
At March 31,
2017
2018
2019
2020
2021
% of
loans in
each
category
to total
loans Amount
% of
loans in
each
category
to total
loans Amount
% of
loans in
each
category
to total
loans Amount
% of
loans in
each
category
to total
loans
Amount
Amount
% of
loans in
each
category
to total
loans
(in millions, except percentages)
Domestic:
Manufacturing . . . . . . . . . . . ¥ 409,018
12,097
Construction . . . . . . . . . . . . .
33,579
Real estate . . . . . . . . . . . . . .
42,023
Services . . . . . . . . . . . . . . . .
Wholesale and retail
138,119
. . . . . .
Banks and other financial
9.95% ¥179,799
7,934
0.69
21,062
9.81
29,518
2.15
99,985
6.73
9.27% ¥108,463
6,856
0.67
15,664
10.03
24,473
2.29
93,112
6.81
9.52% ¥146,281
5,671
0.61
15,244
9.99
45,202
2.26
93,636
6.52
9.66% ¥ 178,960
5,603
0.62
92,972
10.17
86,680
2.18
103,770
6.33
11.32%
0.66
10.34
2.51
6.69
institutions . . . . . . . . . . . .
14,732
4.41
7,636
4.11
6,198
4.45
5,932
4.35
31,597
5.55
Communication and
information services . . . . .
Other industries . . . . . . . . . .
Consumer . . . . . . . . . . . . . . .
Foreign:
Governments and official
13,902
25,156
106,312
1.38
7.50
13.92
17,300
13,543
80,238
1.32
7.62
13.88
8,327
15,398
75,271
1.29
7.47
13.49
7,327
15,055
72,408
1.33
7.32
12.93
9,648
34,195
129,369
1.21
7.62
12.99
institutions . . . . . . . . . . . .
25,098
0.88
751
0.78
367
0.72
369
0.61
913
0.56
Banks and other financial
institutions . . . . . . . . . . . .
20,717
11.68
10,452
10.95
6,970
9.93
10,117
9.94
28,273
9.18
Commercial and
industrial
. . . . . . . . . . . . .
Other . . . . . . . . . . . . . . . . . .
Unallocated . . . . . . . . . . . . . . . . .
263,429
78,006
—
25.55
5.35
—
197,653
94,863
3,390
26.07
6.20
—
196,237
100,293
555
27.27
6.48
—
250,438
141,860
—
27.47
7.09
—
397,239
249,172
—
25.49
5.88
—
Total
. . . . . . . . . . . . . . ¥1,182,188 100.00% ¥764,124 100.00% ¥658,184 100.00% ¥809,540 100.00% ¥1,348,391 100.00%
Allowance as a percentage of
loans . . . . . . . . . . . . . . . . . . . . .
1.00%
0.65%
0.56%
0.68%
1.17%
Allowance as a percentage of
nonaccrual loans, restructured
loans and accruing loans
contractually past due 90 days
or more . . . . . . . . . . . . . . . . . . .
63.27%
52.04%
48.32%
54.59%
69.01%
While the allowance for credit losses contains amounts allocated to components of specifically identified
loans as well as a group on a portfolio of loans, the allowance for credit losses covers the credit losses of the
entire loan portfolio and the allocations shown above are not intended to be restricted to the specific loan
category. Accordingly, as the evaluation of credit risk changes, allocations of the allowance will be adjusted to
reflect current conditions and various other factors.
A-13
V. Deposits
The following table shows the average amount of, and the average rate paid on, the following deposit
categories for the fiscal years ended March 31, 2019, 2020 and 2021:
Fiscal years ended March 31,
2019
2020
2021
Average
amount
Average
rate
Average
amount
Average
rate
Average
amount
Average
rate
(in millions, except percentages)
Domestic offices:
Non-interest-bearing demand
deposits . . . . . . . . . . . . . . . .
¥ 24,429,358
—% ¥ 25,243,586
—% ¥ 29,531,551
—%
Interest-bearing demand
deposits . . . . . . . . . . . . . . . .
Deposits at notice . . . . . . . . . .
Time deposits . . . . . . . . . . . . .
Certificates of deposit . . . . . . .
Foreign offices:
Non-interest-bearing demand
80,318,814
1,658,467
40,670,338
2,014,290
0.05
0.01
0.07
0.01
81,846,344
1,413,584
39,291,672
1,743,325
0.07
0.00
0.04
0.01
93,175,326
1,575,097
39,404,132
1,508,001
0.01
0.00
0.07
0.01
deposits . . . . . . . . . . . . . . . .
5,356,424
—
5,037,045
—
5,654,123
—
Interest-bearing deposits,
principally time deposits
and certificates of
deposit . . . . . . . . . . . . . . . . .
Total . . . . . . . . . . . . . . . .
41,945,626
1.55
45,216,271
1.68
47,092,772
0.62
¥196,393,317
¥199,791,827
¥217,941,002
Deposits at notice represent interest-bearing demand deposits which require the depositor to give two or
more days notice in advance of withdrawal.
The average amounts of total deposits by foreign depositors included in domestic offices for the fiscal years
ended March 31, 2019, 2020 and 2021 were ¥820,311 million, ¥775,125 million and ¥720,283 million,
respectively.
At March 31, 2021, the balances and remaining maturities of time deposits and certificates of deposit
(“CDs”) issued by domestic offices in amounts of ¥10 million (approximately U.S.$90 thousand at the Federal
Reserve Bank of New York’s noon buying rate on March 31, 2021) or more and total foreign deposits issued in
amounts of U.S.$100,000 or more are shown in the following table:
Time
deposits
Certificates of
deposit
(in millions)
Total
Domestic offices:
Three months or less . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Over three months through six months . . . . . . . . . . . . . . . . . . . .
Over six months through twelve months . . . . . . . . . . . . . . . . . . .
Over twelve months . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
¥ 6,575,184
3,780,634
10,492,679
3,064,780
¥1,015,528
85,195
150,926
55,000
¥ 7,590,712
3,865,829
10,643,605
3,119,780
¥23,913,277
¥1,306,649
¥25,219,926
Foreign offices . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
¥23,673,512
A-14
VI Short-Term Borrowings
The following table shows certain additional information with respect to our short-term borrowings for the
fiscal years ended March 31, 2019, 2020 and 2021:
Call money, funds purchased, and payables under repurchase
agreements and securities lending transactions:
Average balance outstanding during the fiscal year . . . . . . . . . .
Maximum balance outstanding at any month-end during the
fiscal year
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Balance at end of fiscal year . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Weighted average interest rate during the fiscal year . . . . . . . . .
Weighted average interest rate on balance at end of fiscal
Fiscal years ended March 31,
2019
2020
2021
(in millions, except percentages)
¥26,406,493
¥27,747,633
¥29,085,579
31,395,497
28,588,039
36,535,711
36,535,711
33,435,910
27,764,363
1.28%
1.30%
0.32%
year . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
1.13%
0.72%
0.18%
Due to trust account and other short-term borrowings:
Average balance outstanding during the fiscal year . . . . . . . . . .
Maximum balance outstanding at any month-end during the
fiscal year
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Balance at end of fiscal year . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Weighted average interest rate during the fiscal year . . . . . . . . .
Weighted average interest rate on balance at end of fiscal
¥ 9,875,361
¥ 9,883,337
¥16,586,236
10,821,354
9,467,025
19,433,229
19,433,229
21,237,645
18,079,554
1.25%
1.34%
0.24%
year . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
1.40%
0.55%
0.05%
A-15
CONSOLIDATED FINANCIAL STATEMENTS
INDEX
Report of Independent Registered Public Accounting Firm . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Consolidated Balance Sheets as of March 31, 2020 and 2021 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Consolidated Statements of Income for the Fiscal Years ended March 31, 2019, 2020 and 2021 . . . . . . . .
Consolidated Statements of Comprehensive Income for the Fiscal Years ended March 31, 2019, 2020
and 2021 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Consolidated Statements of Equity for the Fiscal Years ended March 31, 2019, 2020 and 2021 . . . . . . . .
Consolidated Statements of Cash Flows for the Fiscal Years ended March 31, 2019, 2020 and 2021 . . . .
Notes to Consolidated Financial Statements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
1. Basis of Financial Statements and Summary of Significant Accounting Policies . . . . . . . . . . . . . .
2. Business Developments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
3. Investment Securities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
4. Loans and Allowance for Credit Losses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
5. Premises and Equipment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
6. Goodwill and Other Intangible Assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
7. Lease Transactions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
8. Income Taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
9. Pledged Assets and Collateral . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
10. Deposits . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
11. Call Money and Funds Purchased . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
12. Due to Trust Account, Short-term Borrowings and Long-term Debt . . . . . . . . . . . . . . . . . . . . . . .
13. Severance Indemnities and Pension Plans . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
14. Other Assets and Liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
15. Offsetting of Derivatives, Repurchase Agreements, and Securities Lending Transactions . . . . . .
16. Repurchase Agreements, and Securities Lending Transactions Accounted for as Secured
Page
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F-17
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F-59
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F-66
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F-82
F-84
Borrowings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
F-85
17. Preferred Stock . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
F-87
18. Common Stock and Capital Surplus . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
F-87
19. Retained Earnings, Legal Reserve and Dividends . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
F-88
20. Accumulated Other Comprehensive Income (Loss) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
F-91
F-95
21. Regulatory Capital Requirements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
22. Earnings per Common Share Applicable to Common Shareholders of MUFG . . . . . . . . . . . . . . . F-102
23. Derivative Financial Instruments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . F-102
24. Obligations Under Guarantees and Other Off-balance Sheet Instruments . . . . . . . . . . . . . . . . . . . F-109
25. Variable Interest Entities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . F-112
26. Contingent Liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . F-123
27. Fees and Commissions Income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . F-123
28. Trading Account Profits and Losses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . F-125
29. Business Segments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . F-125
30. Foreign Activities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . F-129
31. Fair Value . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . F-131
32. Parent Company Only Financial Information . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . F-148
33. Subsequent Events . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . F-151
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F-2
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To the Board of Directors and the Shareholders of
Mitsubishi UFJ Financial Group, Inc.
(Kabushiki Kaisha Mitsubishi UFJ Financial Group)
Opinion on the Financial Statements
We have audited the accompanying consolidated balance sheets of Mitsubishi UFJ Financial Group, Inc.
(Kabushiki Kaisha Mitsubishi UFJ Financial Group) (“MUFG”) and subsidiaries (together, the “MUFG Group”)
as of March 31, 2020 and 2021, the related consolidated statements of income, comprehensive income, equity
and cash flows for each of the three years in the period ended March 31, 2021, and the related notes (collectively
referred to as the “financial statements”) (all expressed in Japanese yen). In our opinion, the financial statements
present fairly, in all material respects, the financial position of the MUFG Group as of March 31, 2020 and 2021,
and the results of its operations and its cash flows for each of the three years in the period ended March 31, 2021,
in conformity with accounting principles generally accepted in the United States of America.
We have also audited, in accordance with the standards of the Public Company Accounting Oversight Board
(United States) (“PCAOB”), the MUFG Group’s internal control over financial reporting as of March 31, 2021,
based on criteria established in Internal Control—Integrated Framework (2013) issued by the Committee of
Sponsoring Organizations of the Treadway Commission and our report dated July 9, 2021, expressed an
unqualified opinion on the MUFG Group’s internal control over financial reporting.
Change in Accounting Principle
As discussed in Note 1 to the financial statements, the MUFG Group has changed its method of accounting
for credit losses as of April 1, 2020 due to the adoption of Financial Accounting Standards Board Accounting
Standards Update 2016-13, Financial Instruments—Credit Losses (Topic 326): Measurement of Credit Losses on
Financial Instruments.
Basis for Opinion
These financial statements are the responsibility of the MUFG Group’s management. Our responsibility is
to express an opinion on the MUFG Group’s financial statements based on our audits. We are a public
accounting firm registered with the PCAOB and are required to be independent with respect to the MUFG Group
in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and
Exchange Commission and the PCAOB.
We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we
plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of
material misstatement, whether due to error or fraud. Our audits included performing procedures to assess the
risks of material misstatement of the financial statements, whether due to error or fraud, and performing
procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding
the amounts and disclosures in the financial statements. Our audits also included evaluating the accounting
principles used and significant estimates made by management, as well as evaluating the overall presentation of
the financial statements. We believe that our audits provide a reasonable basis for our opinion.
Critical Audit Matters
The critical audit matters communicated below are matters arising from the current-period audit of the
financial statements that were communicated or required to be communicated to the audit committee and that
(1) relate to accounts or disclosures that are material to the financial statements and (2) involved our especially
challenging, subjective, or complex judgments. The communication of critical audit matters does not alter in any
F-3
way our opinion on the financial statements, taken as a whole, and we are not, by communicating the critical
audit matters below, providing separate opinions on the critical audit matters or on the accounts or disclosures to
which they relate.
Allowance for Credit Losses—Commercial, MUFG Americas Holdings and Krungsri Segments—
Macroeconomic Variables in Selected Economic Forecast Scenarios and Relative Weightings—Refer to
Notes 1 and 4 to the Financial Statements
Critical Audit Matter Description
The MUFG Group has banking subsidiaries that engage in lending as one of their core businesses. It
maintains an allowance for credit losses, which is an estimate of the credit losses that are expected over the life,
or exposure, of the financial instrument. The allowance for credit losses involves significant judgments on a
number of assumptions, including the assessment of risk characteristics, assignment of borrower’s internal credit
ratings, valuation of collateral, expectations of future economic conditions and the development of qualitative
adjustments. The MUFG Group divides its loan portfolio into the following segments—Commercial, Residential,
Card, MUFG Americas Holdings, Krungsri, and Other—based on the segments used to determine the allowance
for credit losses. At March 31, 2021, the MUFG Group recorded ¥85,925 billion, ¥8,496 billion and
¥6,605 billion of loans in the Commercial segment, the MUFG Americas Holdings segment and the Krungsri
segment, respectively, and recorded an allowance for credit losses against these loans of ¥735 billion,
¥132 billion and ¥293 billion, respectively.
The allowance for credit losses are estimated using quantitative models that incorporate economic forecast
scenarios through the use of macroeconomic variables. These variables include, but are not limited to,
unemployment rates and gross domestic product, which have been correlated with historical credit losses. The
scenarios that are chosen, and the weightings given to each scenario, depend on a variety of factors including
recent economic conditions and views of internal as well as third-party economists.
The determination of the allowance for credit losses for the Commercial, the MUFG Americas Holdings and
the Krungsri segments required management to make significant judgements due to the subjectivity and
uncertainty associated with expectations of future economic conditions. Due to the heightened volatility and
uncertainty in future economic conditions, including the duration and severity of the economic downturn caused
by the COVID-19 pandemic, there was a particularly high degree of uncertainty necessitating subjective
judgments to be made by management to develop certain key macroeconomic variables in selected economic
forecast scenarios and weightings given to each scenario.
Thus, we identified certain key macroeconomic variables and the relative weightings used to determine the
allowance for credit losses for the Commercial, the MUFG Americas Holdings and the Krungsri segments as
critical audit matters. Auditing these significant assumptions required a high degree of auditor judgment and an
increased extent of effort, including the need to involve our credit specialists, when performing audit procedures
to evaluate the reasonableness of these significant assumptions.
How the Critical Audit Matter Was Addressed in the Audit
Our audit procedures related to certain key macroeconomic variables and the relative weightings used to
determine the allowance for credit losses for the Commercial, the MUFG Americas Holdings and the Krungsri
segments included the following, among others:
‰ We tested the effectiveness of controls, including the review and approval of certain key
macroeconomic variables, and the review and approval of relative weightings.
‰ We tested the effectiveness of controls over the completeness and accuracy of the information used in
performing the aforementioned controls.
F-4
‰ With the assistance of our credit specialists, we evaluated the reasonableness of certain key
macroeconomic variables, such as unemployment rate and gross domestic product, and the
reasonableness of the relative weightings by comparing to macroeconomic forecasts from available
external sources.
Allowance for Credit Losses—MUFG Americas Holdings and Krungsri Segments—Qualitative
Adjustments—Refer to Notes 1 and 4 to the Financial Statements
Critical Audit Matter Description
The allowance for credit losses includes qualitative adjustments to cover losses that are expected but were
not reflected in the modeled allowance.
The determination of the allowance for credit losses for the MUFG Americas Holdings and the Krungsri
segments required management to make significant judgements due to the subjectivity and uncertainty associated
with the development of qualitative adjustments, including model input adjustments and overlays implemented as
a result of COVID-19. There was a particularly high degree of uncertainty necessitating subjective judgments to
be made by management to develop certain qualitative adjustments to capture the heightened volatility and
uncertainty in the economy and events due to the COVID-19 pandemic.
Thus, we identified certain qualitative adjustments for the MUFG Americas Holdings and the Krungsri
segments as a critical audit matter. Auditing these significant assumptions required a high degree of auditor
judgment and an increased extent of effort, including the need to involve our credit specialists, when performing
audit procedures to evaluate the reasonableness of these significant assumptions.
How the Critical Audit Matter Was Addressed in the Audit
Our audit procedures related to certain qualitative adjustments for the MUFG Americas Holdings and the
Krungsri segments included the following, among others:
‰ We tested the effectiveness of controls, including the review and approval of the quantitative models
and methodology, and the review and approval of certain qualitative adjustments to modeled results.
‰ We tested the effectiveness of controls over the completeness and accuracy of the information used in
performing the aforementioned controls.
‰ With the assistance of our credit specialists, we evaluated the appropriateness of the quantitative models
and methodology by assessing the conceptual soundness and model performance by inspecting model
documentation as well as reperforming model performance testing to determine whether the models
operated as intended.
‰ With the assistance of credit specialists, we evaluated the reasonableness of the use of qualitative
adjustments to modeled results and tested significant judgments applied by management by comparing
management’s results to available relevant external information.
Allowance for Credit Losses—Commercial Segment—Internal Credit Ratings—Refer to Notes 1 and 4 to the
Financial Statements
Critical Audit Matter Description
The determination of the allowance for credit losses for the Commercial segment required management to
make significant judgments due to the subjectivity and uncertainty associated with the determination of
borrowers’ internal credit ratings, which were highly dependent on the estimation of a borrower’s performance
and business sustainability, particularly in cases in which borrowers were experiencing weaknesses in their
business performance. When these borrowers’ performance and business sustainability were affected by changes
F-5
in the external and internal business environment, including the COVID-19 pandemic impacts, there was a
particularly high degree of uncertainty necessitating subjective judgments to be made by management to
determine the borrowers’ internal credit ratings.
Thus, for particular borrowers operating in industries heavily impacted by the COVID-19 pandemic, we
identified the internal credit ratings used to determine the allowance for credit losses for the Commercial segment
as a critical audit matter. Auditing the borrowers’ internal credit ratings required a high degree of auditor
judgment and an increased extent of effort, including the need to involve our credit specialists, when performing
audit procedures to evaluate the reasonableness of these significant assumptions.
How the Critical Audit Matter Was Addressed in the Audit
Our audit procedures related to the internal credit ratings for particular borrowers used to determine the
allowance for credit losses for the Commercial segment included the following, among others:
‰ We tested the effectiveness of controls, including the review and approval of the borrowers’ internal
credit ratings.
‰ We tested the effectiveness of controls over the completeness and accuracy of the information used in
performing the aforementioned controls, including the borrowers’ underlying information.
‰ With the assistance of our credit specialists, we tested significant judgments applied by management to
determine the internal credit ratings and the appropriateness of the borrowers’ underlying information
by comparing them with available relevant external information.
Goodwill—MUFG Americas Holdings Corporation Reporting Units—Refer to Notes 1 and 6 to the Financial
Statements
Critical Audit Matter Description
As part of its global strategies, the MUFG Group has executed multiple large-scale acquisitions,
investments, and capital alliances, and recorded goodwill from these business combinations. The MUFG Group’s
consolidated goodwill balance was ¥370,852 million at March 31, 2021, which was allocated to the MUFG
Group’s reporting units. Goodwill arising from a business combination is not amortized but is tested at least
annually for impairment. Goodwill is recorded and assessed for impairment at a designated reporting unit level.
The MUFG Group’s evaluation of goodwill impairment involves the comparison of the fair value of each
reporting unit to its respective carrying value. The MUFG Group determined the fair values of the MUFG
Americas Holdings Corporation (“MUAH”) reporting units within the Global Commercial Banking Business
Group segment and Global Corporate & Investment Banking Business Group segment (“MUAH reporting
units”) using a combination of the income and the market approaches. The income approach determined the fair
values of the reporting units by discounting management’s projections of each reporting unit’s future cash flows,
including a terminal value to estimate the fair value of cash flows beyond the final year of projected results, using
a discount rate derived from the Capital Asset Pricing Model. The market approach incorporated comparable
public company price-to-tangible book values and price-to-earnings multiples. The MUFG Group determined
that the carrying values of the MUAH reporting units exceeded their respective fair values as of the measurement
dates, resulting in an impairment loss on goodwill of ¥147,564 million for the fiscal year ended March 31, 2021.
The determination of the fair values of the MUAH reporting units using the income approach required
management to make significant judgments related to projected future operating cash flows based on forecasted
future income. If the projected future operating cash flows are not appropriate, there is a risk that the valuation of
the goodwill is not properly measured.
Thus, we identified auditing projected future operating cash flows used to determine the fair values of
certain MUAH reporting units as a critical audit matter, specifically the Commercial Banking and Real Estate
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Industries business unit and the Global Corporate & Investment Banking—U.S. business unit, because the
procedures involved a high degree of auditor judgment and an increased extent of effort, including the need to
involve our fair value specialists.
How the Critical Audit Matter Was Addressed in the Audit
Our audit procedures related to the projected future operating cash flows used to determine the fair values of
these business units included the following, among others:
‰ We tested the effectiveness of controls, including the review and approval of the projected future
operating cash flows supporting the forecasted future income in the income approach, including controls
over the assumptions used to estimate the projected future operating cash flows.
‰ We tested the effectiveness of controls over the completeness and accuracy of the key underlying data
used in performing the aforementioned controls.
‰ We evaluated the reasonableness of management’s projected future operating cash flows based on
forecasted future income by inquiring of management, performing a retrospective review, and
inspecting financial trends and metrics.
‰ We considered the impact of changes in macroeconomic and company specific factors on management’s
forecasts.
‰ With the assistance of our fair value specialists, we evaluated the reasonableness of management’s
assumptions, inputs and projected future operating cash flows used to determine the fair value for these
business units.
/s/Deloitte Touche Tohmatsu LLC
Tokyo, Japan
July 9, 2021
We have served as the MUFG Group’s auditor since 1976.
F-7
MITSUBISHI UFJ FINANCIAL GROUP, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
AS OF MARCH 31, 2020 AND 2021
(in millions)
ASSETS
Cash and due from banks (Note 9) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Interest-earning deposits in other banks (Note 9) . . . . . . . . . . . . . . . . . . . . . . . . . .
2020
2021
¥ 33,283,032
45,266,680
¥ 49,977,480
53,346,721
Cash, due from banks and interest-earning deposits in other banks . . . . . . . . . .
78,549,712
103,324,201
Call loans and funds sold . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Receivables under resale agreements (Note 15) . . . . . . . . . . . . . . . . . . . . . . . . . . .
Receivables under securities borrowing transactions (Note 15) . . . . . . . . . . . . . . .
Trading account assets (including assets pledged that secured parties are
permitted to sell or repledge of ¥6,709,467 and ¥5,032,178 in 2020 and 2021)
(including ¥20,964,024 and ¥18,231,238 measured at fair value under the fair
value option in 2020 and 2021) (Notes 9, 15, 23 and 31) . . . . . . . . . . . . . . . . . .
Investment securities (Notes 3, 9 and 31):
Available-for-sale debt securities (including assets pledged that secured
parties are permitted to sell or repledge of ¥4,490,360 and ¥2,877,061 in
2020 and 2021) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Held-to-maturity debt securities (including assets pledged that secured parties
are permitted to sell or repledge of ¥56,411 and ¥105,029 in 2020 and
2021) (fair value of ¥4,177,894 and ¥3,939,143 in 2020 and 2021) . . . . . . . .
Equity securities (including assets pledged that secured parties are permitted
1,168,515
23,995,961
3,443,959
1,256,075
13,779,763
3,369,903
47,504,058
44,444,379
34,200,203
47,117,813
4,165,781
3,903,763
to sell or repledge of ¥616 and ¥1,532 in 2020 and 2021) (including
¥4,850,376 and ¥5,866,846 in 2020 and 2021 measured at fair value)
. . . . .
5,385,258
6,222,920
Total investment securities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
43,751,242
57,244,496
Loans, net of unearned income, unamortized premiums and deferred loan fees
(including assets pledged that secured parties are permitted to sell or repledge
of ¥648,437 and ¥204,488 in 2020 and 2021) (Notes 4 and 9) . . . . . . . . . . . . . .
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Allowance for credit losses (Note 4)(1)
118,186,739
(809,540)
115,718,863
(1,348,391)
Net loans . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
117,377,199
114,370,472
Premises and equipment—net (Notes 5 and 7) . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Customers’ acceptance liability . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Intangible assets—net (Notes 2 and 6) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Goodwill (Notes 2 and 6) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Other assets (net of allowance for credit losses of ¥14,741 at March 31, 2021)
929,529
167,257
1,239,526
517,626
874,992
283,194
1,184,994
370,852
(Notes 7, 8, 9, 13, 14 and 31) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
13,108,699
13,321,304
Total assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
¥331,753,283
¥353,824,625
Assets of consolidated VIEs included in total assets above that can be used
only to settle obligations of consolidated VIEs (Note 25)
Cash and due from banks . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Interest-earning deposits in other banks . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Trading account assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Investment securities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Loans . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
All other assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
¥
846
30,047
695,069
1,804,459
16,072,595
244,645
¥
2,698
30,422
959,001
1,727,292
15,247,928
161,075
Total assets of consolidated VIEs . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
¥ 18,847,661
¥ 18,128,416
F-8
MITSUBISHI UFJ FINANCIAL GROUP, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS—(Continued)
AS OF MARCH 31, 2020 AND 2021
(in millions, except shares)
LIABILITIES AND EQUITY
Deposits (Notes 9 and 10):
Domestic offices:
2020
2021
Non-interest-bearing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Interest-bearing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
¥ 28,091,421
126,485,629
¥ 32,287,997
141,908,498
Overseas offices:
Non-interest-bearing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Interest-bearing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
5,290,262
44,087,216
6,233,108
48,777,333
Total deposits . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
203,954,528
229,206,936
Call money and funds purchased (Notes 9 and 11) . . . . . . . . . . . . . . . . . . . . . . . . .
Payables under repurchase agreements (Notes 9, 15 and 16) . . . . . . . . . . . . . . . . .
Payables under securities lending transactions (Notes 9, 15 and 16) . . . . . . . . . . .
Due to trust account and other short-term borrowings (including ¥377,133 and
¥196,113 measured at fair value under the fair value option in 2020 and 2021)
(Notes 9, 12 and 31) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Trading account liabilities (Notes 15, 23 and 31) . . . . . . . . . . . . . . . . . . . . . . . . . .
Bank acceptances outstanding . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Long-term debt (including ¥304,067 and ¥402,823 measured at fair value
under the fair value option in 2020 and 2021) (Notes 7, 9, 12 and 31)
. . . . . . .
Other liabilities (Notes 1, 7, 8, 9, 13, 14, 15, 16, 26 and 31) . . . . . . . . . . . . . . . . .
3,668,922
31,849,915
1,016,874
2,353,830
24,567,943
842,590
19,433,229
14,767,433
167,257
18,079,554
12,017,553
283,194
27,926,763
13,223,846
35,157,651
15,070,820
Total liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
316,008,767
337,580,071
Commitments and contingent liabilities (Notes 24 and 26)
Mitsubishi UFJ Financial Group shareholders’ equity:
Capital stock (Notes 17 and 18)—common stock authorized, 33,000,000,000
shares; common stock issued, 13,581,995,120 shares and 13,581,995,120
shares at March 31, 2020 and 2021, with no stated value . . . . . . . . . . . . . . . .
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Capital surplus (Note 18)
Retained earnings (Notes 19 and 33):
Appropriated for legal reserve . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Unappropriated retained earnings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Accumulated other comprehensive income, net of taxes (Note 20) . . . . . . . . . .
Treasury stock, at cost—741,772,308 common shares and 737,282,154
2,090,270
5,533,520
2,090,270
5,533,761
239,571
8,079,530
(420,417)
239,571
8,589,900
(289,481)
common shares at March 31, 2020 and 2021 . . . . . . . . . . . . . . . . . . . . . . . . .
(505,987)
(503,072)
Total Mitsubishi UFJ Financial Group shareholders’ equity . . . . . . . . .
Noncontrolling interests . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
15,016,487
728,029
15,660,949
583,605
Total equity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
15,744,516
16,244,554
Total liabilities and equity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
¥331,753,283
¥353,824,625
Liabilities of consolidated VIEs for which creditors or beneficial interest
holders do not have recourse to the general credit of Mitsubishi UFJ
Financial Group (Note 25)
Other short-term borrowings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Long-term debt
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
All other liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
¥
¥
30,831
465,352
101,969
Total liabilities of consolidated VIEs . . . . . . . . . . . . . . . . . . . . . . . . . .
¥
598,152
¥
33,599
457,763
103,457
594,819
See the accompanying notes to Consolidated Financial Statements.
F-9
MITSUBISHI UFJ FINANCIAL GROUP, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
FOR THE FISCAL YEARS ENDED MARCH 31, 2019, 2020 AND 2021
(in millions)
Interest income:
Loans, including fees (Note 4) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Deposits in other banks . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Investment securities:
Interest . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Dividends . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Trading account assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Call loans and funds sold . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Receivables under resale agreements and securities borrowing
2019
2020
2021
¥2,576,417
183,327
¥2,597,932
167,267
¥1,940,754
56,555
237,378
160,825
499,724
10,354
242,123
172,382
489,842
11,286
178,873
119,387
373,200
4,721
transactions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Total
145,354
3,813,379
246,311
3,927,143
78,506
2,751,996
Interest expense:
Deposits . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Call money and funds purchased . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Payables under repurchase agreements and securities lending
717,366
3,913
836,081
3,270
329,392
1,105
transactions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
333,632
357,382
91,508
Due to trust account, other short-term borrowings and trading account
Long-term debt
Total
liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Net interest income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Provision for credit losses (Note 4)
. . . . . . . . . . . . . . . . . . . . . . . . . . . .
Net interest income after provision for credit losses . . . . . . . . . . . . . .
Non-interest income:
Fees and commissions income (Note 27) . . . . . . . . . . . . . . . . . . . . . . . . .
. . . . . . . . . . . . . . . . . . .
Foreign exchange gains (losses)—net (Note 28)
Trading account profits (losses)—net (Notes 28 and 31) . . . . . . . . . . . . .
Investment securities gains (losses)—net (Note 3) . . . . . . . . . . . . . . . . . .
Equity in earnings of equity method investees—net (Note 14) . . . . . . . .
Gains on sales of loans (Note 4) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Gain on remeasurement of previously held equity method investment
(Note 2) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Other non-interest income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Total
Non-interest expense:
Salaries and employee benefits (Note 13) . . . . . . . . . . . . . . . . . . . . . . . . .
Occupancy expenses—net (Notes 5 and 26) . . . . . . . . . . . . . . . . . . . . . . .
Fees and commissions expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Outsourcing expenses, including data processing . . . . . . . . . . . . . . . . . . .
Depreciation of premises and equipment (Note 5) . . . . . . . . . . . . . . . . . .
Amortization of intangible assets (Note 6) . . . . . . . . . . . . . . . . . . . . . . . .
Impairment of intangible assets (Note 6) . . . . . . . . . . . . . . . . . . . . . . . . .
Insurance premiums, including deposit insurance . . . . . . . . . . . . . . . . . .
Communications . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Taxes and public charges . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Impairment of goodwill (Note 6) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Provision for (reversal of) off-balance sheet credit instruments . . . . . . . .
. . . . . . . . . . . . . . . . . . . . .
Other non-interest expenses (Notes 5 and 26)
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Total
155,273
307,797
1,517,981
2,295,398
34,330
2,261,068
164,907
322,704
1,684,344
2,242,799
321,713
1,921,086
72,403
253,494
747,902
2,004,094
484,210
1,519,884
1,438,578
(95,987)
168,900
(252,307)
209,732
22,663
1,502,052
(281,790)
765,373
(532,248)
282,712
9,956
1,527,283
99,337
(410,368)
1,458,264
355,730
17,926
—
103,665
1,595,244
41,218
88,422
1,875,695
—
109,615
3,157,787
1,175,405
179,780
313,745
275,052
98,867
235,083
118,108
93,756
59,166
95,358
—
38,463
302,687
2,985,470
1,242,563
182,917
332,033
303,632
113,489
237,328
3,732
98,441
59,976
100,198
383,810
(62,279)
367,721
3,363,561
1,253,461
178,107
318,797
298,777
87,305
250,106
21,680
90,529
59,798
97,783
147,564
(56,749)
322,171
3,069,329
F-10
MITSUBISHI UFJ FINANCIAL GROUP, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME—(Continued)
FOR THE FISCAL YEARS ENDED MARCH 31, 2019, 2020 AND 2021
(in millions, except per share amount)
Income before income tax expense . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Income tax expense (Note 8) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Net income before attribution of noncontrolling interests . . . . . . . . .
Net income attributable to noncontrolling interests . . . . . . . . . . . . . . . . .
2019
870,842
133,237
737,605
18,960
2020
433,220
114,505
318,715
12,760
2021
1,608,342
444,948
1,163,394
46,096
Net income attributable to Mitsubishi UFJ Financial Group . . . . . . .
¥ 718,645
¥ 305,955
¥1,117,298
Earnings applicable to common shareholders of Mitsubishi UFJ
Financial Group . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
¥ 718,645
¥ 305,955
¥1,117,298
Earnings per common share applicable to common shareholders of
Mitsubishi UFJ Financial Group (Notes 19 and 22):
Basic earnings per common share—Earnings applicable to common
shareholders of Mitsubishi UFJ Financial Group . . . . . . . . . . . . . . . . .
¥
55.03
¥
23.69
¥
86.88
Diluted earnings per common share—Earnings applicable to common
shareholders of Mitsubishi UFJ Financial Group . . . . . . . . . . . . . . . . .
Cash dividend per common share . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Weighted average common shares outstanding . . . . . . . . . . . . . . . . . . . .
Weighted average diluted common shares outstanding . . . . . . . . . . . . . .
54.74
21.00
13,059
13,059
23.47
23.50
12,913
12,913
86.56
25.00
12,860
12,860
Note:
(1) New guidance on measurement of credit losses on financial instruments requires the allowance for credit losses to be measured using the
current expected credit losses model from April 1, 2020. For additional information, refer to Note 1
See the accompanying notes to Consolidated Financial Statements.
F-11
MITSUBISHI UFJ FINANCIAL GROUP, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
FOR THE FISCAL YEARS ENDED MARCH 31, 2019, 2020 AND 2021
(in millions)
Net income before attribution of noncontrolling interests . . . . . .
Other comprehensive income (loss), net of tax (Note 20):
Net unrealized gains (losses) on investment securities . . . . . . . .
Net debt valuation adjustments . . . . . . . . . . . . . . . . . . . . . . . . . .
Net unrealized gains (losses) on derivatives qualifying for cash
flow hedges . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Defined benefit plans (Note 13) . . . . . . . . . . . . . . . . . . . . . . . . .
Foreign currency translation adjustments . . . . . . . . . . . . . . . . . .
Total
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Comprehensive income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Net income attributable to noncontrolling interests . . . . . . . . . .
Other comprehensive income (loss) attributable to
2019
2020
2021
¥ 737,605
¥ 318,715
¥1,163,394
88,180
9,729
(4,890)
(88,940)
(42,212)
(38,133)
699,472
18,960
23,619
54,172
(70,776)
(83,364)
10,642
(131,523)
(81,065)
(124,155)
194,560
12,760
32,175
319,056
(115,251)
81,840
1,245,234
46,096
noncontrolling interests . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
21,209
11,993
(49,062)
Comprehensive income attributable to Mitsubishi UFJ Financial
Group . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
¥ 659,303
¥ 169,807
¥1,248,200
See the accompanying notes to Consolidated Financial Statements.
F-12
MITSUBISHI UFJ FINANCIAL GROUP, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF EQUITY
FOR THE FISCAL YEARS ENDED MARCH 31, 2019, 2020 AND 2021
(in millions, except per share amount)
2019
2020
2021
Capital stock (Notes 17 and 18):
Balance at beginning of fiscal year . . . . . . . . . . . . . . . . . . . . . . . . . . .
¥ 2,090,270
¥ 2,090,270
¥ 2,090,270
Balance at end of fiscal year . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
¥ 2,090,270
¥ 2,090,270
¥ 2,090,270
Capital surplus (Note 18):
Balance at beginning of fiscal year . . . . . . . . . . . . . . . . . . . . . . . . . . .
Stock-based compensation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Retirement of common stock . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Other—net . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
¥ 5,740,165
(180)
(162,720)
(79)
¥ 5,577,186
2,596
(58,626)
12,364
¥ 5,533,520
2,762
—
(2,521)
Balance at end of fiscal year . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
¥ 5,577,186
¥ 5,533,520
¥ 5,533,761
Retained earnings appropriated for legal reserve (Note 19):
Balance at beginning of fiscal year . . . . . . . . . . . . . . . . . . . . . . . . . . .
Balance at end of fiscal year . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Unappropriated retained earnings (Note 19):
Balance at beginning of fiscal year . . . . . . . . . . . . . . . . . . . . . . . . . . .
Net income attributable to Mitsubishi UFJ Financial Group . . . . . . .
Cash dividends:
Common stock—¥21.00 per share in 2019, ¥23.50 per share in
2020, and ¥25.00 per share in 2021 . . . . . . . . . . . . . . . . . . . .
Losses on sales of shares of treasury stock . . . . . . . . . . . . . . . . . . . . .
Effect of adopting new guidance by a foreign affiliated company . . .
Effect of adopting new guidance on recognition and measurement of
financial assets and financial liabilities . . . . . . . . . . . . . . . . . . . . . .
Effect of adopting new guidance on recognition of breakage for
certain prepaid stored-value products . . . . . . . . . . . . . . . . . . . . . . .
Effect of adopting new guidance on leases . . . . . . . . . . . . . . . . . . . . .
Effect of adopting new guidance on measurement of credit losses on
financial instruments (Note 1) . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
¥
¥
239,571
239,571
¥
¥
239,571
239,571
¥
¥
239,571
239,571
¥ 4,945,733
718,645
¥ 8,094,026
305,955
¥ 8,079,530
1,117,298
(275,551)
—
1,173(1)
(303,742)
(1)
(1,825)(2)
(321,089)
(1)
—
2,702,242
—
—
—
—
—
(14,883)
1,784
—
—
—
(285,838)
Balance at end of fiscal year . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
¥ 8,094,026
¥ 8,079,530
¥ 8,589,900
F-13
MITSUBISHI UFJ FINANCIAL GROUP, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF EQUITY—(Continued)
FOR THE FISCAL YEARS ENDED MARCH 31, 2019, 2020 AND 2021
(in millions)
2019
2020
2021
Accumulated other comprehensive income (loss), net of taxes:
Balance at beginning of fiscal year . . . . . . . . . . . . . . . . . . . . . . . . . . .
Net change during the fiscal year . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Effect of adopting new guidance on recognition and measurement of
. . . . . . . . . . . . . .
Effect of adopting new guidance on measurement of credit losses on
financial instruments (Note 1) . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
financial assets and financial liabilities (Note 1)
¥ 2,477,315
(59,342)
¥ (284,269) ¥ (420,417)
130,902
(136,148)
(2,702,242)
—
—
—
—
34
Balance at end of fiscal year . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
¥ (284,269) ¥ (420,417) ¥ (289,481)
Treasury stock, at cost:
Balance at beginning of fiscal year . . . . . . . . . . . . . . . . . . . . . . . . . . .
Purchases of shares of treasury stock (Note 18) . . . . . . . . . . . . . . . . .
Sales of shares of treasury stock . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Retirement of common stock . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Net decrease resulting from changes in interests in consolidated
¥ (522,872) ¥ (517,236) ¥ (505,987)
(20)
2,598
—
(161,043)
3,775
162,720
(50,028)
2,635
58,626
subsidiaries, consolidated VIEs, and affiliated companies . . . . . . .
184
16
337
Balance at end of fiscal year . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
¥ (517,236) ¥ (505,987) ¥ (503,072)
Total Mitsubishi UFJ Financial Group shareholders’ equity . . . .
¥15,199,548
¥15,016,487
¥15,660,949
Noncontrolling interests:
Balance at beginning of fiscal year . . . . . . . . . . . . . . . . . . . . . . . . . . .
Initial subscriptions of noncontrolling interests . . . . . . . . . . . . . . . . .
Transactions between the consolidated subsidiaries and the related
¥
675,633
108,235
¥
785,200
58,228
¥
728,029
9,246
noncontrolling interest shareholders . . . . . . . . . . . . . . . . . . . . . . . .
(2,830)
(8,627)
(96,335)
Decrease in noncontrolling interests related to deconsolidation of
subsidiaries . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
(20,497)
(119,797)
(22,430)
Decrease in noncontrolling interests related to disposition of
subsidiaries . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Net income attributable to noncontrolling interests . . . . . . . . . . . . . .
Dividends paid to noncontrolling interests . . . . . . . . . . . . . . . . . . . . .
Other comprehensive income (loss), net of taxes . . . . . . . . . . . . . . . .
Effect of adopting new guidance on measurement of credit losses on
financial instruments (Note 1) . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Other—net . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
—
18,960
(15,853)
21,209
—
343
(3,488)
12,760
(8,487)
11,993
—
247
(23)
46,096
(6,523)
(49,062)
(25,330)
(63)
Balance at end of fiscal year . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
¥
785,200
¥
728,029
¥
583,605
Total equity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
¥15,984,748
¥15,744,516
¥16,244,554
Notes:
(1) The effect resulted from the adoption of new accounting guidance on “Leases”.
(2) The effect resulted from the adoption of new accounting guidance on “Measurement of Credit Losses on Financial Instruments”.
See the accompanying notes to Consolidated Financial Statements.
F-14
MITSUBISHI UFJ FINANCIAL GROUP, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE FISCAL YEARS ENDED MARCH 31, 2019, 2020 AND 2021
(in millions)
Cash flows from operating activities:
Net income before attribution of noncontrolling interests . . . . . . . . . . . . . . . . . . . . . . . .
Adjustments to reconcile net income before attribution of noncontrolling interests to
net cash provided by operating activities:
Depreciation and amortization (Notes 5 and 6) . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Impairment of goodwill (Note 6) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Impairment of intangible assets (Note 6) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Provision for credit losses (Note 4) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Employee benefit cost (income) for severance indemnities and pension plans
(Note 13) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Investment securities (gains) losses—net
Amortization of premiums on investment securities . . . . . . . . . . . . . . . . . . . . . . . .
Changes in financial instruments measured at fair value under fair value option,
excluding trading account securities—net (Note 31) . . . . . . . . . . . . . . . . . . . . . .
Foreign exchange (gains) losses—net . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Equity in earnings of equity method investees—net . . . . . . . . . . . . . . . . . . . . . . . .
Provision (benefit) for deferred income tax expense . . . . . . . . . . . . . . . . . . . . . . . .
Decrease (increase) in trading account assets, excluding foreign exchange
2019
2020
2021
¥
737,605
¥
318,715
¥
1,163,394
333,950
—
118,108
34,330
(19,839)
252,307
78,509
13,880
565,304
(209,732)
(47,796)
350,817
383,810
3,732
321,713
(6,917)
532,248
65,078
2,894
544,763
(282,712)
(60,967)
337,411
147,564
21,680
484,210
2,804
(1,458,264)
59,614
5,002
(103,917)
(355,730)
266,273
contracts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
(2,695,035)
(4,902,492)
1,351,570
Increase (decrease) in trading account liabilities, excluding foreign exchange
contracts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Net increase in collateral for derivative transactions . . . . . . . . . . . . . . . . . . . . . . . .
Net decrease (increase) in margin for listed derivative transactions . . . . . . . . . . . .
Increase in cash collateral for the use of the Bank of Japan’s settlement
infrastructure . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Other—net . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
1,370,846
(79,338)
(87,075)
2,217,808
(217,864)
(279,844)
(1,463,152)
(421,781)
20,984
(60,462)
(77,228)
(54,018)
(292,664)
(33,292)
(269,437)
(245,067)
Net cash provided by (used in) operating activities . . . . . . . . . . . . . . . . . . . . .
228,334
(1,355,900)
Cash flows from investing activities:
Proceeds from sales of Available-for-sale debt securities (including proceeds
from debt securities under the fair value option) (Note 3) . . . . . . . . . . . . . . . . . .
Proceeds from maturities of Available-for-sale debt securities (including proceeds
from debt securities under the fair value option) (Note 3) . . . . . . . . . . . . . . . . . .
Purchases of Available-for-sale debt securities (including purchases of debt
securities under the fair value option) (Note 3) . . . . . . . . . . . . . . . . . . . . . . . . . .
Proceeds from maturities of Held-to-maturity debt securities . . . . . . . . . . . . . . . . .
Purchases of Held-to-maturity debt securities . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Proceeds from sales and redemption of Equity securities (including proceeds
from equity securities under the fair value option) . . . . . . . . . . . . . . . . . . . . . . .
Purchases of Equity securities (including purchases of equity securities under the
fair value option) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Purchase of common stock in Bank Danamon, an equity method investee of BK
31,283,601
60,731,107
62,660,266
26,448,801
24,335,639
43,245,884
(62,309,072)
560,646
(1,192,989)
(87,618,074)
708,068
(495,346)
(115,383,753)
605,781
(382,159)
2,722,948
3,871,908
1,903,784
(2,770,356)
(3,129,666)
(1,561,344)
(Note 2) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
(132,335)
—
Acquisition of Bank Danamon, a subsidiary of BK, net of cash acquired
(Note 2) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Acquisition of FSI (formerly, Colonial First State Global Asset Management),
subsidiaries of TB, net of cash acquired (Note 2) . . . . . . . . . . . . . . . . . . . . . . . .
Acquisition of DVB Bank’s Aviation Finance Division, net of cash acquired
(Note 2) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Net decrease (increase) in loans . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Net decrease (increase) in call loans, funds sold, and receivables under resale
agreements and securities borrowing transactions . . . . . . . . . . . . . . . . . . . . . . . .
Proceeds from sales of premises and equipment . . . . . . . . . . . . . . . . . . . . . . . . . . .
Capital expenditures for premises and equipment . . . . . . . . . . . . . . . . . . . . . . . . . .
Purchases of intangible assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Proceeds from sales and dispositions of investments in equity method
investees . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Proceeds from sales of consolidated VIEs and subsidiaries—net . . . . . . . . . . . . . .
Other—net . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
—
—
(243,597)
(249,615)
—
—
—
—
330,198
(555,250)
(1,631,085)
—
2,939,996
627,327
26,191
(126,479)
(276,880)
161,566
64,395
(49,590)
(13,714,288)
64,400
(123,804)
(308,081)
171,882
168,970
(68,611)
9,833,348
41,472
(116,707)
(250,061)
64,011
71,643
(14,802)
Net cash provided by (used in) investing activities . . . . . . . . . . . . . . . . . . . . .
(4,632,028)
(18,085,443)
3,657,359
F-15
MITSUBISHI UFJ FINANCIAL GROUP, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS—(Continued)
FOR THE FISCAL YEARS ENDED MARCH 31, 2019, 2020 AND 2021
(in millions)
Cash flows from financing activities:
2019
2020
2021
Net increase in deposits . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Net increase (decrease) in call money, funds purchased, and payables under
repurchase agreements and securities lending transactions . . . . . . . . . . . . . . . . . . . . .
Net increase (decrease) in due to trust account and other short-term borrowings . . . . . .
Proceeds from issuance of long-term debt . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Repayments of long-term debt . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Proceeds from sales of treasury stock . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Payments for acquisition of treasury stock (Note 18) . . . . . . . . . . . . . . . . . . . . . . . . . . .
Dividends paid . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Dividends paid by subsidiaries to noncontrolling interests . . . . . . . . . . . . . . . . . . . . . . .
Other—net . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
3,602,674
5,746,624
23,428,386
(303,042)
(768,649)
5,020,636
(4,236,887)
2,322
(159,962)
(275,581)
(15,853)
197,673
8,077,351
9,944,171
4,999,531
(4,983,073)
1,235
(50,028)
(303,728)
(8,487)
358,922
(8,523,347)
(939,069)
18,707,004
(11,360,120)
899
(20)
(321,024)
(6,523)
(22,566)
Net cash provided by financing activities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
3,063,331
23,782,518
20,963,620
Effect of exchange rate changes on cash and cash equivalents . . . . . . . . . . . . . . . . . . . . .
43,975
(362,652)
397,287
Net increase (decrease) in cash and cash equivalents . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
(1,296,388)
3,978,523
24,773,199
Cash and cash equivalents at beginning of fiscal year . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Cash and cash equivalents:
75,873,456
74,577,068
78,555,591
Cash, due from banks and interest-earning deposits in other banks . . . . . . . . . . . . . . . .
Restricted cash included in other assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
74,571,260
5,808
78,549,712
5,879
103,324,201
4,589
Cash and cash equivalents at end of fiscal year . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
¥ 74,577,068
¥ 78,555,591
¥ 103,328,790
¥ 1,488,136
302,019
¥ 1,759,239
128,124
¥
879,917
124,705
12,754
46,482
—
—
1,811,160
1,242,115
51,314
332,914
68,519
572,487
2,599
3,487
50,564
—
—
—
—
—
—
—
—
—
Supplemental disclosure of cash flow information:
Cash paid during the fiscal year for:
Interest . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Income taxes, net of refunds . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Non-cash investing and financing activities:
Assets acquired under finance lease arrangements (Note 7) . . . . . . . . . . . . . . . . . . . . . . . . . .
Assets acquired under operating lease arrangements (Note 7)
. . . . . . . . . . . . . . . . . . . . . . . .
Available-for-sale debt securities transferred to Held-to-maturity debt securities . . . . . . . . .
Marketable Equity Securities issued by Bank Danamon transferred to investments in
11,280
—
221,537
subsidiaries and affiliates (Note 2) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
98,934
Acquisition of Bank Danamon, a subsidiary of BK (Note 2):
Fair value of assets acquired, excluding cash and cash equivalents . . . . . . . . . . . . . . . .
Fair value of liabilities assumed . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Fair value of noncontrolling interests . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Acquisition of FSI (formerly, Colonial First State Global Asset Management), subsidiaries
of TB (Note 2):
Fair value of assets acquired, excluding cash and cash equivalents . . . . . . . . . . . . . . . .
Fair value of liabilities assumed . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Acquisition of DVB Bank’s Aviation Finance Division (Note 2):
Fair value of assets acquired . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Fair value of liabilities assumed . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
—
—
—
—
—
—
—
See the accompanying notes to Consolidated Financial Statements.
F-16
MITSUBISHI UFJ FINANCIAL GROUP, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
1. BASIS OF FINANCIAL STATEMENTS AND SUMMARY OF SIGNIFICANT ACCOUNTING
POLICIES
Description of Business
Mitsubishi UFJ Financial Group, Inc. (“MUFG”) is a holding company for MUFG Bank, Ltd. (formerly,
The Bank of Tokyo-Mitsubishi UFJ, Ltd., “MUFG Bank” or “BK”), Mitsubishi UFJ Trust and Banking
Corporation (“Mitsubishi UFJ Trust and Banking” or “TB”), Mitsubishi UFJ Securities Holdings Co., Ltd.
(“Mitsubishi UFJ Securities Holdings” or “SCHD”), Mitsubishi UFJ NICOS Co., Ltd. (“Mitsubishi UFJ
NICOS”), and other subsidiaries. Mitsubishi UFJ Securities Holdings is an intermediate holding company for
Mitsubishi UFJ Morgan Stanley Securities Co., Ltd. (“Mitsubishi UFJ Morgan Stanley Securities”). Through its
subsidiaries and affiliated companies, MUFG engages in a broad range of financial operations, including
commercial banking, investment banking, trust banking and asset management services, securities businesses,
and credit card businesses, and it provides related services to individual and corporate customers. See Note 29 for
more information by business segment.
Basis of Financial Statements
The accompanying consolidated financial statements are presented in Japanese yen, the currency of the
country in which MUFG is incorporated and principally operates. The accompanying consolidated financial
statements have been prepared on the basis of accounting principles generally accepted in the United States of
America (“U.S. GAAP”). In certain respects, the accompanying consolidated financial statements reflect
adjustments which are not included in the consolidated financial statements issued by MUFG and certain of its
subsidiaries in accordance with applicable statutory requirements and accounting practices in their respective
countries of incorporation. The major adjustments include those relating to (1) investment securities,
(2) derivative financial instruments, (3) allowance for credit losses, (4) income taxes, (5) consolidation,
(6) premises and equipment, (7) transfer of financial assets, (8) accrued severance indemnities and pension
liabilities, (9) goodwill and other intangible assets and (10) lease transactions.
Fiscal years of certain subsidiaries, which end on December 31, and MUFG’s fiscal year, which ends on
March 31, have been treated as coterminous. For the fiscal years ended March 31, 2019, 2020 and 2021, the
effect of recording intervening events for the three-month periods ended March 31 on MUFG’s proportionate
equity in net income of subsidiaries with fiscal years ended on December 31, would have resulted in an increase
of ¥19.97 billion, a decrease of ¥164.48 billion, and an increase of ¥157.32 billion to net income attributable to
Mitsubishi UFJ Financial Group, respectively. No intervening events occurred during each of the three-month
periods ended March 31, 2019, 2020 and 2021 which, if recorded, would have had material effects on
consolidated total assets, loans, total liabilities, deposits or total equity as of March 31, 2019, 2020 and 2021.
Use of Estimates
The preparation of consolidated financial statements in conformity with U.S. GAAP requires management
to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosures of
contingent assets and liabilities at the date of the consolidated financial statements and the reported amounts of
revenues and expenses during the reporting period. Actual results could differ from those estimates. Material
estimates that are particularly susceptible to management judgment primarily relate to the allowance for credit
losses, the valuation of deferred tax assets, the valuation of financial instruments, the accounting for goodwill
and intangible assets, impairment of investment securities, the allowances for repayment of excess interest and
accrued severance indemnities and pension liabilities.
F-17
MITSUBISHI UFJ FINANCIAL GROUP, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
Summary of Significant Accounting Policies
Significant accounting policies applied in the accompanying consolidated financial statements are
summarized below:
Consolidation—The accompanying consolidated financial statements include the accounts of MUFG, its
subsidiaries and certain variable interest entities (“VIE”s) (together, the “MUFG Group”). In situations in which
the MUFG Group has a controlling financial interest in other entities, including certain VIEs, such entities are
consolidated and noncontrolling interests, if any, are recorded in Total equity. Intercompany transactions and
balances have been eliminated. Investments in affiliated companies (companies over which the MUFG Group has
the ability to exercise significant influence) are accounted for by the equity method of accounting and are
reported in Other assets. The MUFG Group’s equity interest in the earnings of these equity investees and other-
than-temporary impairment (“OTTI”) are reported in Equity in earnings of equity method investees-net. The
MUFG Group recognizes an impairment loss on investments in equity method investees that is other-than-
temporary. The MUFG Group determines whether loss on investments is other-than-temporary, through
consideration of various factors, such as inability to recover the carrying amount of the investment, the inability
of the investee to sustain an earnings capacity that would justify the carrying amount of the investment, the
length of time and the extent to which the fair value has been less than cost, the financial condition and near-term
prospects of the investees, and the intent and ability to retain its investment in the investees for a period of time
sufficient to allow for any anticipated recovery in the fair value. The MUFG Group also evaluates additional
factors, such as the condition and trend of the economic cycle, and trends in the general market.
The MUFG Group consolidates VIEs if it has the power to direct the activities of a VIE which most
significantly impact the VIE’s economic performance and has the obligation to absorb losses or the right to
receive benefits that could potentially be significant to the VIE. To assess whether a VIE should be consolidated
or not, the MUFG Group considers all factors, such as the purpose and design of the VIE, contractual
arrangements, and the MUFG Group’s involvement in both the establishment of the VIE and day-to-day
activities of the VIE. The MUFG Group considers a right to make the most significant decisions affecting a VIE
to determine whether it is deemed to have the power to direct the activities of the VIE. Furthermore, the MUFG
Group considers its economic interests in the VIE, including investments in debt or equity instruments issued by
the VIE, liquidity and credit enhancement, and guarantees to determine whether such interests are potentially
significant to the VIE or not.
Assets that the MUFG Group holds in an agency, fiduciary or trust capacity are not assets of the MUFG
Group and, accordingly, are not included in the accompanying consolidated balance sheets.
Cash Flows—For the purposes of reporting cash flows, cash and cash equivalents consist of Cash and due
from banks, Interest-earning deposits in other banks, and certain restricted cash included in Other assets.
Restricted cash included in cash and cash equivalents represents cash or deposits subject to withdrawal or usage
restrictions, and mainly consist of reserves on deposits with the Bank of Japan and similar reserves required for
foreign offices and subsidiaries engaged in banking businesses in foreign countries. Cash flows from qualified
hedging activities are classified in the same category as the items being hedged.
Translation of Foreign Currency Financial Statements and Foreign Currency Transactions—Financial
statements of overseas entities are translated into Japanese yen using the respective fiscal year-end exchange
rates for assets and liabilities. Income and expense items are translated at average rates of exchange for the
respective fiscal years.
Foreign currency translation gains and losses related to the financial statements of overseas entities of the
MUFG Group, net of related income tax effects, are credited or charged directly to Foreign currency translation
F-18
MITSUBISHI UFJ FINANCIAL GROUP, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
adjustments, a component of Accumulated other comprehensive income (“Accumulated OCI”). Tax effects of
gains and losses on foreign currency translation of the financial statements of overseas entities are not recognized
unless it is apparent that the temporary differences will reverse in the foreseeable future.
Foreign currency-denominated assets and liabilities are translated into the functional currencies of the
individual entities included in consolidation at the respective fiscal year-end foreign exchange rates. Foreign
currency-denominated income and expenses are translated using average rates of exchange for the respective
fiscal years. Gains and losses from such translation are included in Foreign exchange gains (losses)—net, as
appropriate.
Repurchase Agreements, Securities Lending and Other Secured Financing Transactions—Securities sold
with agreements to repurchase (“repurchase agreements”), securities purchased with agreements to resell (“resale
agreements”) and securities lending and borrowing transactions are accounted for as secured financing or lending
transactions, if the transferor has not surrendered control over the securities. Repurchase agreements and resale
agreements are generally carried at the amounts at which the securities will be subsequently sold or repurchased,
and securities lending and borrowing transactions are generally carried at the amount of cash collateral advanced
or received. If they meet the relevant conditions for the surrender of control, they are accounted for as sales of
securities with related off-balance sheet forward repurchase commitments or purchases of securities with related
off-balance sheet forward resale commitments. For the fiscal years ended March 31, 2019, 2020 and 2021, there
were no such transactions accounted for as sales or purchases.
Collateral—For secured lending transactions, including resale agreements, securities borrowing
transactions, commercial lending and derivative transactions, the MUFG Group, as a secured party, generally has
the right to require the counterparties to provide collateral, including letters of credit, cash, securities and other
financial assets. For most secured lending transactions, the MUFG Group maintains strict levels of
collateralization governed by a daily mark-to-market analysis. Financial assets pledged as collateral are generally
negotiable financial instruments and are permitted to be sold or repledged by secured parties. If the
MUFG Group sells these financial assets received as collateral, it recognizes the proceeds from the sale and its
obligation to return the collateral. For secured borrowing transactions, principally repurchase agreements and
securities lending transactions and derivative transactions, where the secured party has the right to sell or
repledge financial assets pledged as collateral, the MUFG Group separately discloses those financial assets
pledged as collateral in the accompanying consolidated balance sheets.
Trading Account Securities—Securities and money market instruments held in anticipation of short-term
market movements and for resale to customers are included in Trading account assets, and short trading positions
of these instruments are included in Trading account liabilities. Trading positions are carried at fair value in the
accompanying consolidated balance sheets and recorded on a trade date basis. Changes in the fair value of
trading positions are recognized in Trading account profits (losses). The MUFG Group has elected the fair value
option for certain foreign securities. See Note 31 for a further discussion of fair value option.
Investment Securities—Debt securities for which the MUFG Group has both the ability and positive intent
to hold to maturity are classified as Held-to-maturity debt securities and are carried at amortized cost. Debt
securities that the MUFG Group may not hold to maturity other than those classified as Trading account
securities, are classified as Available-for-sale debt securities, and are carried at their fair values, with unrealized
gains and losses reported on a net-of-tax basis within Accumulated OCI, which is a component of equity.
Available-for-sale debt securities are considered to be impaired if the fair value is less than the amortized cost
basis. An impairment loss is recognized in earnings for a security if the MUFG Group has intent to sell such a
debt security or if it is more likely than not the MUFG Group will be required to sell such a debt security before
F-19
MITSUBISHI UFJ FINANCIAL GROUP, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
recovery of its amortized cost basis. If not, the credit component of an impairment loss is recognized in earnings
by recording an allowance for credit losses, limited by the amount of impairment loss. However, the noncredit
component of an impairment loss is recognized in Accumulated OCI. In determining whether a credit loss exists,
the MUFG Group generally considers factors such as the financial condition of the issuer and the extent of
decline in fair value. For Held-to-maturity debt securities, an allowance for expected credit losses over the
remaining expected life is required to be provided.
Equity securities include marketable equity investment securities and nonmarketable equity investment
securities. Marketable equity investment securities are measured at fair value with unrealized gains or losses
reflected in net income. Nonmarketable equity investment securities are primarily measured at cost minus
impairment, if any, plus or minus changes resulting from observable price changes. Nonmarketable equity
investment securities held by subsidiaries that are investment companies or brokers and dealers, are subject to the
specialized industry accounting principles for investment companies and brokers and dealers. Securities of those
subsidiaries are carried at their fair values.
Interest and dividends on investment securities are reported in Interest income. Dividends are recognized
when the shareholder right to receive the dividend is established. Gains and losses on disposition of investment
securities are computed using the average cost method and are recognized on the trade date.
Derivative Financial Instruments—The MUFG Group engages in derivative activities involving swaps,
forwards, futures, options, and other types of derivative contracts. Derivatives are used in trading activities to
generate trading revenues and fee income for its own account and to respond to customers’ financial needs.
Derivatives are also used to manage counterparty credit risk and market risk exposures to fluctuations in interest
and foreign exchange rates, equity and commodity prices.
Derivatives entered into for trading purposes are carried at fair value and are reported as Trading account
assets or Trading account liabilities, as appropriate. The fair values of derivative contracts executed with the
same counterparty under legally enforceable master netting agreements are presented on a gross basis. Changes
in the fair value of such contracts are recognized currently in Foreign exchange gains (losses)—net with respect
to foreign exchange contracts and in Trading account profits (losses)—net with respect to interest rate contracts
and other types of contracts.
Embedded features that are not clearly and closely related to the host contracts and meet the definition of
derivatives are separated from the host contracts and measured at fair value unless the contracts embedding the
derivatives are measured at fair value in their entirety.
Derivatives are also used to manage exposures to fluctuations in interest and foreign exchange rates arising
from mismatches of asset and liability positions. Certain of those derivatives are designated as hedging
instruments and qualify for hedge accounting. The MUFG Group designates a derivative as a hedging instrument
at the inception of each such hedge relationship, and it documents, for such individual hedging relationships, the
risk management objective and strategy, including the item being hedged, the specific risk being hedged and the
method used to assess the hedge effectiveness. In order for a hedging relationship to qualify for hedge
accounting, the changes in the fair value of the derivative instruments must be highly effective in achieving
offsetting changes in fair values or variable cash flows of the hedged items attributable to the risk being hedged.
All qualifying hedging derivatives are valued at fair value and included in Other assets or Other liabilities, as
appropriate. For fair value hedges, the changes in the fair value of a hedging instrument are recognized in the
same income statement line as the hedged item. For cash flow hedges, the changes in the fair value of a hedging
instrument are recognized in Accumulated OCI. Amounts realized on cash flow hedges related to variable rate
F-20
MITSUBISHI UFJ FINANCIAL GROUP, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
loans are recognized in Net interest income in the period when the cash flow from the hedged item is realized.
Any difference that arises from gains or losses on hedging derivatives offsetting corresponding gains or losses on
the hedged items, and gains and losses on derivatives attributable to the risks excluded from the assessment of
hedge effectiveness are recognized in earnings.
Loans—Loans originated by the MUFG Group (“originated loans”) are carried at the principal amount
outstanding, adjusted for unearned income and deferred net nonrefundable loan fees and costs. Originated loans
held and intended for dispositions or sale in secondary markets are transferred to the held-for-sale classification
and carried at the lower of cost or estimated fair value generally on an individual loan basis. Loan origination
fees, net of certain direct origination costs, are deferred and recognized over the contractual life of the loan as an
adjustment to yield using a method that approximates the interest method.
The MUFG Group classifies its loan portfolio into the following portfolio segments—Commercial,
Residential, Card, MUFG Americas Holdings Corporation (“MUFG Americas Holdings” or “MUAH”), Bank of
Ayudhya Public Company Limited (“Krungsri”), and Other based on the grouping used by the MUFG Group to
determine the allowance for credit losses. The MUFG Group further classifies the Commercial segment into
classes based on initial measurement attributes, risk characteristics, and its method of monitoring and assessing
credit risk.
Past due status is determined based on the contractual terms of the loan and the actual number of days since
the date the last payment was made.
Originated loans are generally placed on nonaccrual status when substantial doubt exists as to the full and
timely collection of either principal or interest, specifically when principal or interest is contractually past due
one month or more with respect to loans within all classes of the Commercial segment, three months or more
with respect to loans within the Card, MUFG Americas Holdings, and Krungsri segments, and six months or
more with respect to loans within the Residential segment. A nonaccrual loan may be restored to an accrual
status when interest and principal payments become current and management expects that the borrower will
make future contractual payments as scheduled. When a loan is placed on nonaccrual status, interest accrued but
not received is generally reversed against interest income. Cash receipts on nonaccrual loans, for which the
ultimate collectibility of principal is uncertain, are applied as principal reductions; otherwise, such collections are
credited to income.
The MUFG Group modifies certain loans in conjunction with its loss-mitigation activities. Through these
modifications, concessions are granted to a borrower who is experiencing financial difficulty, generally in order
to minimize economic loss, to avoid foreclosure or repossession of collateral, and to ultimately maximize
payments received from the borrower. The concessions granted vary by portfolio segment, by program, and by
borrower-specific characteristics, and may include interest rate reductions, term extensions, payment deferrals,
and partial principal forgiveness. Loan modifications that represent concessions made to borrowers who are
experiencing financial difficulties are identified as troubled debt restructurings (“TDRs”).
Generally, accruing loans that are modified in a TDR remain as accruing loans subsequent to the
modification, and nonaccrual loans remain as nonaccrual. However, if a nonaccrual loan has been modified as a
TDR, the borrower is not delinquent under the modified terms, and demonstrates that its financial condition has
improved, the MUFG Group may reclassify the loan to accrual status. This determination is generally performed
at least once a year through a detailed internal credit rating review process. Once a nonaccrual loan is deemed to
be a TDR, the MUFG Group will continue to designate the loan as a TDR even if the loan is reclassified to
accrual status.
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MITSUBISHI UFJ FINANCIAL GROUP, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
Loan Securitization—The MUFG Group securitizes and services commercial, industrial, and residential
loans in the normal course of business. The MUFG Group accounts for a transfer of loans in a securitization
transaction as a sale if it meets relevant conditions for the surrender of control. Otherwise, the transfer is
accounted for as a collateralized borrowing transaction. When a securitization is accounted for as a sale, the
proceeds from a sale of financial assets consist of the cash and any other assets obtained, including beneficial
interests and separately recognized servicing assets, in the transfer less any liabilities incurred, including
separately recognized servicing liabilities. All proceeds and reductions of proceeds from a sale shall be initially
measured at fair value.
Allowance for Credit Losses (Loans)—The MUFG Group maintains an allowance for credit losses, which is
a valuation account that is deducted from the amortized cost basis of the loans to present the net amount expected
to be collected on the loans. The amount necessary to adjust the allowance for credit losses for management’s
current estimate of expected credit losses on loans is reported in net income as a credit loss expense.
Actual credit losses (amounts deemed uncollectible, in whole or in part), net of recoveries, are generally
determined based on detailed loan reviews and a credit assessment by management at each balance sheet date and
are deducted from the allowance for credit losses as net charge-offs. The MUFG Group generally applies its
charge-off policy to all loans in its portfolio regardless of the type of borrower. Management believes that the
provision for credit losses is adequate.
Key elements relating to the policies and discipline used in determining the allowance for credit losses are
credit classification and the related borrower categorization process. The categorization is based on conditions
that may affect the ability of borrowers to service their debt, taking into consideration current financial
information, historical payment experience, credit documentation, public information, analyses of relevant
industry segments or existing economic conditions. In determining the appropriate level of the allowance, the
MUFG Group evaluates the probable loss by collateral value, historical loss experience, probability of insolvency
and category of loan based on its type and characteristics.
The methodologies used to estimate the allowance and the charge-off policy for the major portfolio
segments are as follows:
Commercial segment
In the Commercial segment, expected credit losses of loans are measured on a collective basis when similar
risk characteristics exist. Risk characteristics that are considered for aggregation of loans include internal credit
ratings, geographical location, and industry of the borrower. The collectively-assessed allowance is measured
over the contractual term of the loans that is adjusted for expected prepayments, using probability of default
(“PD”), loss given default (“LGD”) and exposure at default (“EAD”) loss forecasting model, which is based on
historical information and adjusted to incorporate expectations of future economic conditions considering
economic variables such as gross domestic product and unemployment rates. The PD is determined as the
marginal PD that denotes the likelihood that a borrower is observed to experience the default during a defined
period of time, based on internal credit rating, geographical location, or industry of the borrower. The LGD is
determined as the estimated loss on the loan that would be realized upon the default of the borrower, mainly
based on the historical experience of collections against loans in default. The PD and LGD are continually
reviewed to determine the appropriate level of the allowance for credit loss. Qualitative adjustments are made to
cover losses that are expected but not adequately captured in the quantitative forecasting model or economic
assumptions, considering factors such as borrowers’ ability to make scheduled payments, loans’ remaining time
to maturity and extent of prepayments, the volume and severity of past due loans, changes in lending policy and
F-22
MITSUBISHI UFJ FINANCIAL GROUP, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
procedures, the industry in which a borrower operates, and changes in other external factors. The collectively-
assessed allowance methodology incorporates an economic forecast over a three-year period. Beyond the three-
year economic forecast, the allowance methodology reverts to an average historical loss information on a
straight-line basis over a two-year period. When a loan does not share risk characteristics with other loans,
expected credit losses for that loan are measured on an individual basis. Individually-assessed allowance is
measured based on the present value of expected future cash flows discounted at the loan’s original effective
interest rate, or the fair value of the collateral if the loan is collateral dependent.
The allowance for loans that have been modified into a TDR or reasonably expected to be modified TDR
are measured on an individual basis. For nonaccrual TDRs, the allowance for credit losses is provided for these
loans using the discounted cash flow method, or based on the fair value of the collateral. For TDRs accounted for
as accruing loans, the allowance for credit losses is determined by discounting the estimated future cash flows
using the original effective interest rate of the loans prior to modification.
In relation to loans categorized as Legally/Virtually Bankrupt, the carrying amount of loans less estimated
value of the collateral and guaranteed amount is generally considered uncollectible, and is charged off.
Residential segment
In the Residential segment, the loans are comprised of smaller-balance homogeneous loans and expected
credit losses of loans are measured on a collective basis. The allowance for credit losses is measured over the
contractual term of the loans that is adjusted for expected prepayments, using the state transition probability
matrix, which captures delinquency status changes and prepayments by loans’ remaining term, and is based on
historical information and adjusted to incorporate expectations of future economic conditions considering
economic variables, such as unemployment rates. The LGD is also used to capture the estimated loss on the loan
that would be realized upon the default of the borrower. The allowance methodology incorporates an economic
forecast over a three-year period. Beyond the three-year economic forecast, the allowance methodology reverts to
average historical loss information on a straight-line basis over a two-year period.
The allowance for loans that have been modified into a TDR or reasonably expected to be modified TDR
are measured on an individual basis. For nonaccrual TDRs, the allowance for credit losses is provided for these
loans using the discounted cash flow method, or based on the fair value of the collateral. For TDRs accounted for
as accruing loans, the allowance for credit losses is determined by discounting the estimated future cash flows
using the original effective interest rate of the loans prior to modification.
In relation to loans that are in past due status over a certain period of time and deemed uncollectible, the
carrying amount of loans less estimated value of the collateral and guaranteed amount is generally considered
uncollectible and charged off.
Card segment
In the Card segment, the loans are smaller-balance homogeneous loans and expected credit losses of loans
are measured on a collective basis. The allowance for credit losses is measured over the contractual term of the
loans that is adjusted for expected prepayments, using the state transition probability matrix, which captures
delinquency status changes and prepayments by loans’ remaining term, and is based on historical information
and adjusted to incorporate expectations of future economic conditions considering economic variables, such as
unemployment rate. The collectively-assessed allowance methodology incorporates an economic forecast over a
three-year period. Beyond the three-year economic forecast, the allowance methodology reverts to average
historical loss information.
F-23
MITSUBISHI UFJ FINANCIAL GROUP, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
The allowance for loans that have been modified into a TDR or reasonably expected to be modified TDR
are measured on an individual basis, and the allowance for credit losses is determined using the discounted cash
flow method whereby the estimated future cash flows are discounted using the original effective interest rate of
the loans prior to modification.
In relation to loans that are in past due status over a certain period of time and deemed uncollectible, the
amount of loans is generally fully charged off.
MUFG Americas Holdings segment
In the MUFG Americas Holdings segment, expected credit losses are measured on a collective basis when
similar risk characteristics exist. The allowance for credit loss is calculated as the product of PD, LGD, and EAD
modeled parameters that are projected on a monthly basis over the assets’ remaining contractual lives. The sum
of each month’s expected loss calculation results in the collectively-assessed allowance estimate. Expected loss
models use historical loss information and a variety of economic assumptions that consider economic variables
such as gross domestic product and unemployment rates, to estimate PD, LGD, and EAD. These models are
tailored to different loan segments, classes and products by changing the economic variables or their weighting in
the calculation used to estimate expected losses. The collectively-assessed allowance methodology incorporates
an economic forecast over a two-year period. Beyond the two-year economic forecast, the allowance
methodology reverts to average historical loss information on a straight-line basis over two-year period. Loans
that do not share risk characteristics are evaluated individually to determine the allowance balance. Individually-
assessed allowance is measured based on the present value of expected future cash flows discounted at the loan’s
effective interest rate, or the fair value of the collateral if the loan is collateral dependent.
Management implements qualitative adjustments to the collectively-assessed allowance to account for the
risks not incorporated in the model between current conditions and those reflected in the historical loss
information used to estimate the models. These qualitative factors include changes in credit policies, problem
loan trends, identification of new risks not incorporated into the modeling framework, credit concentrations,
changes in lending management and other external factors. Qualitative adjustments are also used to adjust the
collectively-assessed allowance to account for risks attributed to imprecision in the economic forecast and when
risks emerge that impact specific portfolio components (i.e., natural disasters).
The allocated allowance for large groups of smaller-balance homogeneous loans is established for consumer
loans as well as for smaller balance commercial loans. These loans are managed on a pool basis, and loss factors
are based on expected net charge-off ranges.
The allowance for loans that have been modified into a TDR or reasonably expected to be modified TDR
are measured either individually or in pools with similar risk characteristics. The allowance for individually
assessed TDR loans can be measured using a discounted cash flow methodology, or by evaluating the fair value
of the collateral, if collateral dependent. When the value of a concession cannot be measured using a method
other than the discounted cash flow method, the value of a concession is measured by discounting the expected
future cash flows at the original interest rate of the loan.
Commercial loans are generally considered uncollectible based on an evaluation of the financial condition
of a borrower as well as the value of any collateral and, when considered to be uncollectible, loans are charged
off in whole or in part. Consumer loans are generally considered uncollectible based on past due status and the
value of any collateral and, when considered to be uncollectible, loans are charged off in whole or in part.
F-24
MITSUBISHI UFJ FINANCIAL GROUP, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
Krungsri segment
In the Krungsri segment, expected credit losses are measured on a collective basis for portfolios of loans
that share similar economic risk characteristics. Expected credit losses are a probability-weighted estimate of the
present value of credit losses. These are measured as the present value of the difference between the cash flows
under the contract and the cash flows expected to be received arising from the weighting of multiple future
economic scenarios that consider economic variables such as gross domestic product and unemployment rates,
discounted at the loan’s effective interest rate. Qualitative adjustments are made when considered appropriate.
Loans that do not share risk characteristics are evaluated individually to determine the allowance balance.
Individually-assessed allowance is measured based on the present value of expected future cash flows discounted
at the loan’s original effective interest rate, or the fair value of the collateral if the loan is collateral dependent.
The allocated allowance for large groups of smaller-balance homogeneous loans is established for smaller
balance loans such as housing loans, credit card loans, and personal loans. These loans are managed on a pool
basis, and loss factors are based on expected net charge-off ranges.
The allowance for loans that have been modified into a TDR or reasonably expected to be modified TDR
are measured on an individual basis. For nonaccrual TDRs, the allowance for credit losses is provided for these
loans using the discounted cash flow method, or based on the fair value of the collateral. For TDRs accounted for
as accruing loans, the allowance for credit losses is determined by using the discounted cash flow method
whereby the estimated future cash flows are discounted using the original effective interest rate of the loans prior
to modification.
Loans to customers are charged off when they are determined to be uncollectible considering the financial
condition of a borrower.
In all segments, when estimating the allowance for credit losses, significant management assumptions are
incorporated in economic variables, qualitative adjustments, or both to capture the heightened volatility and
uncertainty in the economy due to the COVID-19 pandemic.
There are de minimis or zero expected credit losses, for example, for lending and financing transactions,
such as Interest-earning deposits in other banks, Call loans and funds sold, Receivables under resale agreements
and Receivables under securities borrowing transactions because the term is short and the credit quality of the
borrowers is normal.
Allowance for Off-Balance Sheet Credit Instruments—The MUFG Group maintains an allowance for credit
losses on off-balance sheet credit instruments that are not unconditionally cancellable, including commitments to
extend credit, guarantees, standby letters of credit and other financial instruments. The allowance is recorded as a
liability in Other liabilities. The MUFG Group adopts the same methodology used in determining the allowance
for credit losses on loans. Potential credit losses related to derivatives are considered in the fair value of the
derivatives.
F-25
MITSUBISHI UFJ FINANCIAL GROUP, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
Premises and Equipment—Premises and equipment are stated at cost less accumulated depreciation and
amortization. Depreciation is charged to operations over the estimated useful lives of the related assets.
Leasehold improvements are depreciated over the terms of the respective leases or the estimated useful lives of
the improvements, whichever is shorter. MUFG, MUFG Bank and Mitsubishi UFJ Trust and Banking apply the
declining-balance method in depreciating their premises and equipment, while other subsidiaries mainly apply
the straight-line method, at rates principally based on the following estimated useful lives:
Buildings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Equipment and furniture . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Leasehold improvements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Years
15 to 50
2 to 20
2 to 39
Maintenance, repairs and minor improvements are charged to operations as incurred. Major improvements
are capitalized. Net gains or losses on dispositions of premises and equipment are included in Other non-interest
income or expense, as appropriate.
Long-lived assets are reviewed for impairment whenever events or changes in circumstances indicate that
the carrying amount of an asset may not be recoverable. Recoverability of an asset to be held and used is
measured by a comparison of the carrying amount to future undiscounted net cash flows expected to be generated
by the asset. If an asset is considered to be impaired, the impairment to be recognized is measured by the amount
by which the carrying amount of the asset exceeds the fair value. For purposes of recognition and measurement
of an impairment loss, a long-lived asset or assets are grouped with other assets and liabilities at the lowest level
with independent and identifiable cash flows. Assets to be disposed of by sale are reported at the lower of the
carrying amount or fair value less estimated cost to sell.
Asset retirement obligations related to restoration of certain leased properties upon lease termination are
recorded in Other liabilities with a corresponding increase in leasehold improvements. The amounts represent the
present value of expected future cash flows associated with returning such leased properties to their original
condition. The difference between the gross and present value of expected future cash flows is accreted over the
life of the related leases as a non-interest expense.
Goodwill—The MUFG Group recognizes goodwill, as of the acquisition date, measured as the excess of the
purchase price over the fair value of the net assets acquired. Goodwill related to investments in equity method
investees is included in Other assets as a part of the carrying amount of investments in equity method investees.
Goodwill arising from a business combination is not amortized but is tested at least annually for
impairment. Goodwill is recorded at a designated reporting unit level for the purpose of assessing impairment.
A reporting unit is an operating segment, or an identified business unit one level below an operating
segment. An impairment loss is recognized to the extent that the carrying amount of a reporting unit exceeds its
fair value, but not exceeding the total amount of goodwill allocated to that reporting unit.
F-26
MITSUBISHI UFJ FINANCIAL GROUP, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
Intangible assets—Intangible assets consist of software, core deposit intangibles, customer relationships,
trade names and other intangible assets. These are amortized over their estimated useful lives unless they have
indefinite useful lives. Amortization of intangible assets is computed in a manner that best reflects the economic
benefits of the intangible assets as follows:
Useful lives
(years)
Amortization method
Software . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Core deposit intangibles . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Customer relationships . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Trade names . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
3 to 10
9 to 16
3 to 27
4 to 40
Straight-line
Straight-line
Straight-line, Declining-balance
Straight-line
Intangible assets having indefinite useful lives are not amortized but are subject to annual impairment tests.
An impairment exists if the carrying value of an indefinite-lived intangible asset exceeds its fair value. For other
intangible assets subject to amortization, an impairment is recognized if the carrying amount is not recoverable
and the carrying amount exceeds the fair value of the intangible asset.
The MUFG Group capitalizes certain costs associated with the acquisition or development of internal-use
software. Costs subject to capitalization are salaries and employee benefits for employees who are directly
associated with and who devote time to the internal-use computer software project, to the extent of time spent
directly on the project. Once the software is ready for its intended use, the MUFG Group begins to amortize
capitalized costs on a straight-line basis.
Accrued Severance and Pension Liabilities—The MUFG Group has defined benefit pension plans and other
postretirement benefit plans, including severance indemnities plans (“SIPs”). The liabilities related to these plans
are computed and recognized based on actuarial computations. Net actuarial gains and losses that arise from
differences between actual experience and assumptions are generally amortized over the average remaining
service period of participating employees if it exceeds the corridor, which is defined as the greater of 10% of plan
assets or the projected benefit obligation. Under the guidance related to employers’ accounting for defined
benefit pension and other postretirement plans, the MUFG Group recognizes a net liability or asset to report the
funded status of its defined benefit pension and other postretirement plans in the accompanying consolidated
balance sheets and mainly recognizes changes in the funded status of defined benefit pension and other
postretirement plans in the year in which the changes occur in Accumulated OCI. Based on actuarial
computations of current and future employee benefits, the service cost component is charged to Salaries and
employee benefits while other components of net pension benefit/cost are charged to Other non-interest
expenses. The MUFG Group measures plan assets and benefit obligations as of the date of the consolidated
balance sheets.
Long-Term Debt—Premiums, discounts and issuance costs of long-term debt are amortized based on the
method that approximates the interest method over the term of the long-term debt.
Obligations under Guarantees—The MUFG Group provides customers with a variety of guarantees and
similar arrangements, including standby letters of credit, financial and performance guarantees, credit protection,
and liquidity facilities. The MUFG Group recognizes guarantee fee income over the guarantee period based on
the contractual terms of the guarantee contracts. It is the MUFG Group’s business practice to receive a guarantee
fee at the inception of the guarantee, which approximates market value of the guarantee and is initially recorded
as a liability, which is then recognized as guarantee fee income over the guarantee period.
Allowance for Repayment of Excess Interest—The MUFG Group maintains an allowance for repayment of
excess interest based on an analysis of past experience of reimbursement of excess interest, borrowers’ profile,
F-27
MITSUBISHI UFJ FINANCIAL GROUP, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
recent trend of borrowers’ claims for reimbursement, and management’s future forecasts. The allowance is
recorded as a liability in Other liabilities.
Fees and Commissions—The MUFG Group recognizes revenue from contracts with customers in the
amount of consideration it expects to receive upon the transfer of control of a good or service. The timing of
recognition is dependent on whether the MUFG Group satisfies a performance obligation by transferring control
of the product or service to a customer over time or at a point in time.
The following is an explanation of the MUFG Group’s key revenue from contracts with customers and the
timing of its recognition.
Fees and commissions on deposits consist of fees and commissions charged for transaction-based services
such as usage of automated teller machines and withdrawal services, and for periodic account maintenance
services. The MUFG Group’s performance obligation for transaction-based services is satisfied and the fees and
commissions are recognized at the point in time when the MUFG Group’s performance under the terms of a
contractual arrangement is completed, which is at the settlement of a transaction, while the MUFG Group’s
performance obligation for maintenance services is satisfied and the fees and commissions are recognized over
the course of each month.
Fees and commissions on remittances and transfers consist of fees and commissions charged for settlement
transactions such as domestic fund remittances, including electronic banking transactions, and are recognized at
the point in time when the MUFG Group’s performance under the terms of a contractual arrangement is
completed, which is at the settlement of a transaction.
Fees and commissions on foreign trading business consist of fees and commissions charged for fund
collection and trade-related financing services related to foreign trading business, and are recognized in the
period in which the related service is provided. If they arise from foreign trading business activities under which
the customer consumes the related services at a point in time (e.g. foreign exchange fees), such fees are
recognized at the same point in time. If they arise from foreign trading business activities under which the
customer consumes the related services equally over the period of service (e.g. commercial letters of credit), such
fees are recognized over the same period.
Fees and commissions on credit card business consist of fees and commissions such as interchange income,
royalty and other service charges from franchisees. Interchange income from the credit card business is
recognized as processed transactions are settled through the associated payment networks, while royalty and
other service charges related to the credit card business are recognized on a straight-line basis over the period of
service.
Fees and commissions on security-related services primarily consist of fees and commissions for sales and
transfers of securities including investment funds, underwriting, brokerage and advisory services, arrangement
fees on securitizations, and agency services for the calculation and payment of dividends. Fees and commissions
on security-related services are recognized in the period in which the related service is provided. If they arise
from security-related services under which the customer consumes the related services at a point in time
(e.g. sales and transfers of securities are executed at the customer’s direction; underwritings of debt and equity
securities or securitizations are completed at the trade date; advice is provided to the clients; and dividends are
calculated and then paid to investors), such fees are recognized at the same point in time. If they arise from
security-related services under which the customer consumes the related services equally over the period of
service (e.g. retainer fees on M&A advisory fees), such fees are recognized over the same period. The advisory
fees which are paid upon meeting certain performance goals (e.g. success fees on M&A advisory fees) are
recognized at the point in time when the performance goals are met.
F-28
MITSUBISHI UFJ FINANCIAL GROUP, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
Fees and commissions on administration and management services for investment funds primarily consist of
fees and commissions earned from administrating and managing investment funds, including assets under
management on behalf of clients. Such fees and commissions are recognized equally over the period of service at
the amount calculated primarily based on the outstanding amount of each entrusted asset, the percentage of fees,
and the extent of the service provided to administer the investment funds.
Trust fees consist primarily of fees earned by fiduciary asset management and administration services for
corporate pension plans and investment funds, and are recognized on an accrual basis, generally based on the
volume of trust assets under management and/or the operating performance for the accounting period of each
trust account. With respect to the trust accounts with a guarantee of trust principal, trust fees are determined
based on the profits earned by individual trust accounts during the trust accounting period, less deductions,
including provision for reserves, impairment for individual investments and dividends paid to beneficiary
certificate holders. The trust fees for these trust accounts are accrued based on the amounts expected to be earned
during the accounting period of each trust account.
Guarantee fees consist of fees related to the guarantee business such as providing guarantees on residential
mortgage loans and other loans, and are recognized over the contractual periods of the respective guarantees.
Insurance commissions consist of commissions earned from third-party insurance companies for marketing
and selling insurance products and for the maintenance of insurance contracts. The former is recognized at the
point in time which the associated service is fulfilled as the insurance contract is established by the insurance
company, while the latter is recognized over the insurance period.
Fees and commissions on real estate business primarily consist of fees from real estate agent services, and
are recognized in the period in which the related service is provided when assisting customers in the sales or
purchase of real estate property.
Other fees and commissions include various fees and commissions earned on services to customers which
have performance obligations that the MUFG Group completes in order to recognize revenue. The primary
portion includes non-refundable financing related fees such as arrangement fees that are recognized when the
service is provided.
Income Taxes—The MUFG Group accounts for income taxes under the asset and liability method, which
requires the recognition of deferred tax assets and deferred tax liabilities for the expected future tax consequences
of events that have been included in the accompanying consolidated financial statements. Under this method,
deferred tax assets and deferred tax liabilities are determined based on the differences between the financial
statements and tax basis of assets and liabilities using enacted tax rates in effect for the year in which the
differences are expected to reverse. The effect of a change in tax rates on deferred tax assets and deferred tax
liabilities is recognized in income in the period that includes the enactment date.
The MUFG Group records net deferred tax assets to the extent these assets will more likely than not be
realized. In making such determination, all available positive and negative evidence is considered, including
future reversals of existing taxable temporary differences, projected future taxable income, tax planning
strategies and recent financial operations. In the event the MUFG Group were to determine that it would be able
to realize deferred tax assets in the future in excess of their net recorded amount, the MUFG Group would make
an adjustment to the valuation allowance, which would reduce the provision for income taxes.
Uncertain tax positions are recorded on the basis of a two-step process whereby (1) it is determined whether
it is more likely than not that the tax position will be sustained on the basis of its technical merits, and (2) for
F-29
MITSUBISHI UFJ FINANCIAL GROUP, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
those tax positions that meet the more-likely-than-not recognition threshold, the MUFG Group recognizes the
largest amount of tax benefit that is more than 50% likely to be realized upon ultimate settlement with the related
tax authority. The MUFG Group recognizes interest and penalties related to unrecognized tax benefits within
income tax expense. Accrued interest and penalties are included within Other liabilities.
Free Distributions of Common Shares—As permitted by the Companies Act of Japan (the “Companies
Act”), Japanese companies, upon approval by the Board of Directors, may make a free distribution of shares, in
the form of a “stock split” as defined, to shareholders. In accordance with generally accepted accounting practice
in Japan, such distribution does not give rise to any change in capital stock or capital surplus accounts. Common
shares distributed are recorded as shares issued on the distribution date. See Note 18 for further information.
Earnings per Common Share—Basic earnings per share (“EPS”) excludes dilutive effects of potential
common shares and is computed by dividing earnings applicable to common stock shareholders by the weighted
average number of common shares outstanding for the period, while diluted EPS gives effect to all dilutive
potential common shares that were outstanding during the period. See Note 22 for the computation of basic and
diluted EPS.
Treasury Stock—The MUFG Group presents its treasury stock, including shares of MUFG owned by its
subsidiaries and affiliated companies, as a reduction of equity on the accompanying consolidated balance sheets
at cost and accounts for treasury stock transactions under an average cost method. Gains (losses) on sales of
treasury stock are charged to capital surplus and unappropriated retained earnings.
Comprehensive Income—Comprehensive income includes net income before attribution to noncontrolling
interests and other comprehensive income (“OCI”). All changes in unrealized gains and losses on investment
securities, unrealized gains and losses on derivatives qualifying for cash flow hedges, defined benefit plans and
foreign currency translation adjustments constitute OCI and are presented, with related income tax effects, in the
accompanying consolidated statements of comprehensive income. OCI also includes changes in the instrument-
specific credit risk on financial liabilities (“debt valuation adjustments” or “DVA”) accounted for under the fair
value option.
Stock-Based Compensation—MUFG and certain of its subsidiaries have a stock compensation-type stock
option plan (“Stock Option Plan”) for directors (excluding outside directors and directors serving as audit
committee members), corporate executives, executive officers and senior fellows (collectively, “officers”).
Compensation costs under the Stock Option Plan are recognized based on the grant date fair value of the stock
option (“Stock Acquisition Rights”) over the period during officers are required to provide service in accordance
with the terms of the plan. MUFG and certain of its subsidiaries also have performance-based stock
compensation plan (“the Board Incentive Plan”). The awards granted under the Board Incentive Plan are
classified as either liability for the part of award which are provided to officers in cash or equity for the part of
award which are provided to officers in the common shares of MUFG. Compensation costs are recognized over
the requisite service period for the entire awards. For awards classified as liability, compensation costs are
measured based on the fair value calculated by the quoted price of common shares of MUFG at the date of fiscal
year-end and remeasured at the end of each reporting period. Changes in quoted prices of common shares of
MUFG between the date of grant and the settlement of awards are recognized in the period which the changes
occur. For awards classified as equity, compensation costs are measured based on the grant date fair value by the
quoted price of the common shares of MUFG.
Accounting Changes
Disclosure Framework—Changes to the Disclosure Requirements for Fair Value Measurement—In August
2018, the Financial Accounting Standards Board (“FASB”) issued new guidance which modifies the disclosure
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MITSUBISHI UFJ FINANCIAL GROUP, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
requirements on fair value measurements. This guidance removes disclosure requirements for the amount of and
reasons for transfers between Level 1 and Level 2 of the fair value hierarchy, the policy for timing of transfers
between levels, and valuation processes for Level 3 fair value measurements. In addition, the guidance modifies
disclosure requirements for investments in certain entities that calculate net asset value and modifies disclosure
requirements related to measurement uncertainty. Lastly, the guidance adds disclosure requirements for changes
in unrealized gains and losses for the period that are included in OCI for recurring Level 3 fair value
measurements held at the end of the reporting period, and the guidance adds disclosure requirements related to
the range and weighted average of significant unobservable inputs used to develop Level 3 fair value
measurements. This guidance is effective for fiscal years, and interim periods within those fiscal years, beginning
after December 15, 2019. Early adoption is permitted upon issuance of this guidance. An entity is permitted to
early adopt any removed or modified disclosures upon issuance of this guidance and delay adoption of the
additional disclosures until their effective date. The MUFG Group early adopted removal disclosure requirements
as of March 31, 2019, and then adopted other requirements of this guidance on April 1, 2020. The guidance
affected disclosures in the notes to the consolidated financial statements and did not affect its financial position
and results of operations.
Measurement of Credit Losses on Financial Instruments—In June 2016, the FASB issued new guidance
which replaces the incurred loss impairment methodology in current U.S. GAAP with a methodology that reflects
expected credit losses and requires consideration of a broader range of reasonable and supportable information to
estimate credit losses. Under this guidance, the measurement of expected credit losses is based on relevant
information about past events, including historical experience, current conditions, and reasonable and
supportable forecasts that affect the collectibility of the reported amount of the financial asset (or a group of
financial assets) measured at amortized cost basis. For available-for-sale debt securities, a credit loss is recorded
through an allowance for credit losses and the amount of the allowance is limited to the amount by which fair
value is below amortized cost. For purchased financial assets with a more-than-insignificant amount of credit
deterioration since origination that are measured at amortized cost basis, the initial allowance for credit losses is
added to the purchase price rather than being reported as a credit loss expense, only subsequent changes in the
allowance are recorded as a credit loss expense, and interest income is recognized based on the effective interest
rate, excluding the discount embedded in the purchase price that is attributable to the acquirer’s assessment of
credit losses at acquisition. This guidance also expands the disclosure requirements regarding an entity’s
assumptions, models, and methods for estimating the allowance, and requires the entity to disclose the amortized
cost balance for each class of financial asset by credit quality indicator, disaggregated by the year of origination.
In April 2019 and November 2019, the FASB issued additional guidance to improve certain aspects of this
guidance. This guidance is effective for fiscal years beginning after December 15, 2019, including interim
periods within those fiscal years. The MUFG Group adopted the guidance on April 1, 2020. Upon adoption, the
MUFG Group resulted in an increase in the beginning balance of the allowance for credit losses and the
allowance for off-balance sheet credit instruments of ¥408.1 billion and a decrease in retained earnings of
¥285.8 billion.
Customer’s Accounting for Implementation Costs Incurred in a Cloud Computing Arrangement That Is a
Service Contract—In August 2018, the FASB issued new guidance which aligns the requirements for
capitalizing implementation costs incurred in a hosting arrangement that is a service contract with the
requirements for capitalizing implementation costs incurred to develop or obtain internal-use software. This
guidance requires an entity (customer) in a hosting arrangement that is a service contract to follow the guidance
on internal-use software to determine which implementation costs to capitalize as an asset related to the service
contract and which costs to expense. This guidance also requires the entity (customer) to expense the capitalized
implementation costs of a hosting arrangement that is a service contract over the term of the hosting arrangement,
F-31
MITSUBISHI UFJ FINANCIAL GROUP, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
apply the existing impairment guidance on internal-use software to the capitalized implementation costs as if the
costs were long-lived assets, and present the capitalized-implementation-cost-related items in the same line items
in the financial statements as those relating to fees associated with the hosting element (service) of the
arrangement. This guidance is effective for fiscal years beginning after December 15, 2019, and interim periods
within those fiscal years. Early adoption is permitted, including adoption in any interim period. The MUFG
Group adopted this guidance on April 1, 2020, and there was no material impact on its financial position and
results of operations.
Disclosure Framework—Changes to the Disclosure Requirements for Defined Benefit Plans—In August
2018, the FASB issued new guidance which modifies the disclosure requirements for employers that sponsor
defined benefit pension or other postretirement plans. This guidance removes certain disclosure requirements,
including amounts in Accumulated OCI expected to be recognized as components of net periodic benefit cost
over the next fiscal year and the amount and timing of plan assets expected to be returned to the employer,
clarifies disclosure requirements for defined benefit plans with projected or accumulated benefit obligations in
excess of plan assets, and adds disclosure requirements for weighted-average interest crediting rates for cash
balance plans and other plans with promised interest crediting rates as well as an explanation of the reasons for
significant gains and losses related to changes in the benefit obligation for the period. This guidance is effective
for fiscal years ending after December 15, 2020. Early adoption is permitted. The MUFG Group adopted this
guidance on March 31, 2021. The guidance affected disclosures in the notes to the consolidated financial
statements and did not affect its financial position and results of operations.
Reference Rate Reform—In March 2020, the FASB issued the guidance which provides optional expedients
and exceptions for applying generally accepted accounting principles to contracts, hedging relationships and
other transactions affected by reference rate reform if certain criteria are met. The MUFG Group adopted this
guidance in March 2020. In January 2021, the FASB issued additional guidance to clarify the scope of expedients
and exceptions relating to contract modifications. The MUFG Group adopted this additional guidance upon
issuance, and there was no material impact on its financial position, results of operations and cash flows. This
guidance will significantly ease the accounting implications of the reference rate reform.
2. BUSINESS DEVELOPMENTS
Acquisition of shares in Bank Danamon in Indonesia
On December 26, 2017, MUFG Bank entered into conditional share purchase agreements with Asia
Financial (Indonesia) Pte. Ltd. (“AFI”) and other affiliated entities (the “Sellers”) to acquire their 73.8% equity
interests in an Indonesian bank, PT Bank Danamon Indonesia, Tbk. (“Danamon”), subject to applicable
regulatory approvals.
Danamon, which was established in 1956, is the fifth most profitable Indonesian commercial bank in terms
of net income. Danamon provides banking and financial products and services to consumer, small and medium
enterprise (“SME”) and corporate customers, with a network of around 900 offices in Indonesia.
MUFG Bank intends to establish an integrated and comprehensive services platform that serves as a
gateway for clients wishing to make inroads into Indonesia’s growing economy as well as local companies
seeking to expand into the region. This investment is also expected to strategically allow MUFG Bank to benefit
from Danamon’s foothold in the developing local retail and SME segments to deepen its banking franchise in
Indonesia.
This strategic investment by MUFG Bank was executed through three steps (the “Proposed Transaction”),
and the completion of the Proposed Transaction resulted in MUFG Bank becoming the largest shareholder in
Danamon and Danamon becoming a consolidated subsidiary of MUFG Bank.
F-32
MITSUBISHI UFJ FINANCIAL GROUP, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
In Step 1, MUFG Bank acquired an initial 19.9% equity interest in Danamon from the Sellers on
December 29, 2017, based on a price of IDR 8,323 (approximately ¥70(1)) per share, for an investment amount of
IDR 15,875 billion (approximately ¥133 billion(1)). The price was based on a price book-value ratio of 2.0
calculated on the basis of Danamon’s net assets as of September 30, 2017 with certain adjustments applied. AFI
continues to be the majority shareholder in Danamon after closing of Step 1. MUFG Bank classified Danamon’s
equity securities as Available-for-sale securities on the acquisition date.
In Step 2, MUFG Bank acquired an additional 20.1% equity interest in Danamon from the Sellers on
August 3, 2018, based on a price of IDR 8,921 (approximately ¥69(2)) per share, for an investment amount of
IDR 17,187 billion (approximately ¥132.3 billion(2)). The price was based on a price book-value ratio of 2.0
calculated on the basis of Danamon’s net assets as of June 30, 2018 with certain adjustments applied. As a result,
equity interest in Danamon increased to 40%, and MUFG Bank started to apply the equity method of accounting
for its investment in Danamon during the six months ended September 30, 2018.
In Step 3, MUFG Bank acquired an additional 54.0% equity interest in Danamon from AFI and other
shareholders on April 29, 2019, based on a price of IDR 9,590 (approximately ¥77(3)) per share, for an investment
amount of IDR 50 trillion (approximately ¥397 billion) in cash. As a result, equity interest in Danamon increased
to 94.0%, and Danamon became a consolidated subsidiary of MUFG Bank. The MUFG Group recorded goodwill
of ¥254,271 million, none of which is deductible for income tax purposes and intangible assets of
¥146,899 million. The MUFG Group also recorded noncontrolling interests of ¥51,314 million at fair value
determined by a quoted market price as of the acquisition date. The equity interest in Danamon held by MUFG
Bank immediately before the acquisition date was remeasured to the fair value of ¥271,830 million based on the
quoted market price, resulting in recognition of profits of ¥41,218 million which is included in Gain on
remeasurement of previously held equity method investment in the accompanying consolidated statements of
income for the fiscal year ended March 31, 2020. During the fiscal year ended March 31, 2020, the MUFG
Group incurred ¥869 million of acquisition-related costs. These expenses are included in Other non-interest
expenses in the accompanying consolidated statements of income for the fiscal year ended March 31, 2020. The
revenue and net loss of Danamon and its subsidiaries since the acquisition date were ¥119,331 million and
¥4,553 million for the fiscal year ended March 31, 2020. In addition, MUFG Bank acquired an additional 92.1%
equity interest in PT Bank Nusantara Parahyangan, Tbk. (“BNP”) from ACOM CO., LTD., an equity method
investee of MUFG, and other shareholders, based on a price of IDR 4,088 (approximately ¥33(3)) per share, for an
investment amount of IDR 3 trillion (approximately ¥24.1 billion). As a result, equity interest in BNP increased
to 99.9%, and BNP became a consolidated subsidiary of MUFG Bank.
On May 1, 2019, MUFG Bank merged BNP into Danamon, acquiring an additional equity interest in
Danamon in exchange for its equity interest in BNP, which resulted in MUFG Bank holding 94.1% equity
interest in Danamon.
Notes:
(1) Calculated based on the exchange rate of IDR1 = ¥0.0084
(2) Calculated based on the exchange rate of IDR1 = ¥0.0077
(3) Calculated based on the exchange rate of IDR1 = ¥0.0080
F-33
MITSUBISHI UFJ FINANCIAL GROUP, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
The following table summarizes the estimated fair values of the assets acquired and liabilities assumed of
Danamon and its subsidiaries as of the acquisition date:
Loans . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Intangible assets(1) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Total assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Deposits—Total deposits . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Total liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
(in millions)
¥1,086,638
146,899
1,728,480
915,075
1,242,115
Note:
(1)
Intangible assets with a weighted average amortization period of 13.2 years primarily include ¥79,552 million of relationships with
agents with a weighted average amortization period of 13.1 years and ¥44,140 million of core deposit intangibles with a weighted
average amortization period of 10.1 years.
Included in the table above are loans with fair values totaling ¥1,068,906 million, which were not subject to
the guidance on loans and debt securities acquired with deteriorated credit quality. As of the acquisition date, the
gross contractual amounts receivable for these loans totaled ¥1,082,422 million, of which ¥34,363 million is not
expected to be collected.
Acquisition of Colonial First State Global Asset Management
On August 2, 2019, Mitsubishi UFJ Trust and Banking acquired 100% of the shares in each of the nine
subsidiaries of Colonial First State Group Limited, for ¥312,225 million in cash, from Australian financial group
Commonwealth Bank of Australia and its wholly-owned subsidiary, Colonial First State Group Limited, and
thereby recorded goodwill of ¥177,065 million, none of which is deductible for income tax purposes and
intangible assets of ¥105,973 million with a weighted average amortization period of 18.7 years primarily
include ¥100,862 million of customer relationships with a weighted average amortization period of 18.0 years.
These nine subsidiaries collectively, including their subsidiaries, had represented the global asset management
business of Colonial First State Global Asset Management, and were renamed First Sentier Investors (“FSI”) on
September 16, 2019.
The MUFG Group is seeking the opportunities to enhance its competitive edge as well as expanding its
client base globally in asset management business. The acquisition of FSI is a milestone to strengthen its
capability and that is the reason such goodwill was paid which is allocated to the segment of Asset
Management & Investor Services Business Group. The MUFG Group will continue to respond to customer
expectations by leveraging the advantages and brands of FSI as well as the MUFG Group’s original asset
management arms, aiming to become an asset management service provider with a global presence.
The assets acquired and liabilities assumed were recorded at their estimated fair values on the acquisition
date. During the fiscal year ended March 31, 2020, the MUFG Group incurred ¥3,775 million of acquisition-
related costs. These expenses are included in Other non-interest expenses in the accompanying consolidated
statements of income for the fiscal year ended March 31, 2020. Total assets acquired amounted to
¥197,867 million, including cash and bank deposits of ¥42,019 million and intangible assets of ¥105,973 million,
and total liabilities assumed amounted to ¥68,519 million, including accrued bonuses of ¥18,769 million. The
revenue and net loss of FSI and its subsidiaries since the acquisition date were ¥38,508 million and ¥734 million
for the fiscal year ended March 31, 2020.
F-34
MITSUBISHI UFJ FINANCIAL GROUP, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
Acquisition of DVB Bank SE’s Aviation Finance Division
On March 1, 2019, MUFG Bank and BOT Lease Co., Ltd. (“BOT Lease”), entered into an agreement with
DVB Bank SE (“DVB”) to transfer DVB’s aviation finance division, including aviation finance-related business,
to MUFG Bank and BOT Lease.
The purpose of the transaction is to improve the MUFG Group’s ability to offer bespoke solutions to its
clients by enhancing its global corporate investment banking business platform in terms of higher returns,
diversifying its portfolio, broadening its customer base, and securing experienced professionals.
On November 18, 2019, MUFG Bank acquired DVB’s most of aviation finance client lending portfolio,
employees, and other part of the operation infrastructure for ¥555 billion in cash. MUFG Bank recorded goodwill
of ¥32,591 million. During the fiscal year ended March 31, 2021, the purchase price adjustments were made,
which increased goodwill by ¥1,105 million. In November 2020, MUFG Bank decided to discontinue the
acquisition of DVB’s aviation investment management and asset management businesses, that was initially
planned to be transferred to a newly established subsidiary of BOT Lease, since it was difficult to fully obtain the
approval of the relevant national authorities.
The following table summarizes the estimated fair values of the assets acquired and liabilities as of the
acquisition date:
Loans . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Total assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Total liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
(in millions)
¥515,933
522,797
138
F-35
MITSUBISHI UFJ FINANCIAL GROUP, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
3.
INVESTMENT SECURITIES
The following tables present the amortized cost, gross unrealized gains and losses, and fair value of
Available-for-sale debt securities and Held-to-maturity debt securities at March 31, 2020 and 2021:
At March 31, 2020:
Available-for-sale debt securities:
Amortized
cost
Gross
unrealized
gains
Gross
unrealized
losses
(in millions)
Fair value
Japanese national government and Japanese
government agency bonds . . . . . . . . . . . . . . . . .
Japanese prefectural and municipal bonds . . . . . . .
Foreign government and official institution
bonds . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Corporate bonds . . . . . . . . . . . . . . . . . . . . . . . . . . .
Residential mortgage-backed securities . . . . . . . . .
Commercial mortgage-backed securities . . . . . . . .
Asset-backed securities . . . . . . . . . . . . . . . . . . . . .
Other debt securities(1) . . . . . . . . . . . . . . . . . . . . . .
¥23,308,538
2,938,743
¥185,302
16,279
¥30,961
2,202
¥23,462,879
2,952,820
2,936,110
1,261,586
1,460,641
379,234
1,461,083
161,832
107,406
12,445
3,083
6,110
9,516
3,190
6,028
1,205
4,331
3,089
1,123
1,956
3,037,488
1,272,826
1,459,393
382,255
1,469,476
163,066
Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
¥33,907,767
¥343,331
¥50,895
¥34,200,203
Held-to-maturity debt securities:
Japanese national government and Japanese
government agency bonds . . . . . . . . . . . . . . . . .
¥ 1,100,574
¥ 29,856
¥ — ¥ 1,130,430
Foreign government and official institution
bonds . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Residential mortgage-backed securities . . . . . . . . .
Commercial mortgage-backed securities . . . . . . . .
Asset-backed securities . . . . . . . . . . . . . . . . . . . . .
151,555
737,242
146,039
2,030,371
243
10,478
2,993
277
689
3,012(2)
317(2)
27,716
151,109
744,708
148,715
2,002,932
Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
¥ 4,165,781
¥ 43,847
¥31,734
¥ 4,177,894
Notes:
(1) Other debt securities in the table above mainly include ¥86,734 million of private placement debt conduit bonds.
(2) MUFG Americas Holdings reclassified residential mortgage-backed securities and commercial mortgage-backed securities from
Available-for-sale debt securities to Held-to-maturity debt securities. As a result of the reclassification of residential mortgage-backed
securities and commercial mortgage-backed securities, the unrealized losses before taxes at the date of reclassification remaining in
Accumulated OCI in the accompanying consolidated balance sheets were ¥8,215 million and ¥3,178 million, respectively, at March 31,
2020 and are not included in the table above.
F-36
MITSUBISHI UFJ FINANCIAL GROUP, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
At March 31, 2021:
Available-for-sale debt securities:
Amortized
cost
Gross
unrealized
gains
Gross
unrealized
losses
(in millions)
Fair value
Japanese national government and Japanese
government agency bonds . . . . . . . . . . . . . . . . . . . . .
Japanese prefectural and municipal bonds . . . . . . . . . . .
Foreign government and official institution bonds . . . .
Corporate bonds . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Residential mortgage-backed securities . . . . . . . . . . . . .
Commercial mortgage-backed securities . . . . . . . . . . . .
Asset-backed securities . . . . . . . . . . . . . . . . . . . . . . . . .
Other debt securities . . . . . . . . . . . . . . . . . . . . . . . . . . .
Commercial paper . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
¥35,166,245
3,719,205
2,854,037
1,123,271
1,459,062
435,975
1,373,450
168,528
564,072
¥147,844
15,123
84,707
11,400
9,119
29,502
11,685
3,780
31
¥40,878
2,815
11,781
401
1,051
912
650
730
5
¥35,273,211
3,731,513
2,926,963
1,134,270
1,467,130
464,565
1,384,485
171,578
564,098
Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
¥46,863,845
¥313,191
¥59,223
¥47,117,813
Held-to-maturity debt securities:
Japanese national government and Japanese
government agency bonds . . . . . . . . . . . . . . . . . . . . .
Foreign government and official institution bonds . . . .
Residential mortgage-backed securities . . . . . . . . . . . . .
Commercial mortgage-backed securities . . . . . . . . . . . .
Asset-backed securities . . . . . . . . . . . . . . . . . . . . . . . . .
¥ 1,100,447
233,883
411,024
111,750
2,046,659
¥ 23,033
2,262
18,590
4,846
1,721
2,795
¥ — ¥ 1,123,480
233,350
429,614
116,596
2,036,103
—(1)
—(1)
12,277
Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
¥ 3,903,763
¥ 50,452
¥15,072
¥ 3,939,143
Note:
(1) MUFG Americas Holdings reclassified residential mortgage-backed securities and commercial mortgage-backed securities from
Available-for-sale debt securities to Held-to-maturity debt securities. As a result of the reclassification of residential mortgage-backed
securities and commercial mortgage-backed securities, the unrealized losses before taxes at the date of reclassification remaining in
Accumulated OCI in the accompanying consolidated balance sheets were ¥4,849 million and ¥1,920 million, respectively, at March 31,
2021 and are not included in the table above.
F-37
MITSUBISHI UFJ FINANCIAL GROUP, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
Contractual Maturities
The amortized cost and fair values of Held-to-maturity debt securities and the fair values of
Available-for-sale debt securities at March 31, 2021 by contractual maturity are shown below. Expected
maturities may be shorter than contractual maturities because issuers of debt securities may have the right to call
or prepay obligations with or without penalties. Debt securities not due at a single maturity date and securities
embedded with call or prepayment options, such as mortgage-backed securities, are included in the table below
based on their contractual maturities.
Held-to-maturity debt
securities
Available-for-sale
debt securities
Due in one year or less . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Due from one year to five years . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Due from five years to ten years . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Due after ten years . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
¥
14,562
1,179,959
826,833
1,882,409
Amortized
cost
Fair value
Fair value
¥
(in millions)
14,572
1,205,257
827,481
1,891,833
¥24,815,321
8,129,683
8,549,713
5,623,096
Total
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
¥3,903,763
¥3,939,143
¥47,117,813
Realized Gains and Losses
For the fiscal years ended March 31, 2019, 2020 and 2021, gross realized gains on sales of
Available-for-sale debt securities were ¥45,244 million, ¥151,015 million and ¥42,123 million, respectively, and
gross realized losses on sales of Available-for-sale debt securities were ¥16,541 million, ¥44,662 million and
¥48,606 million, respectively.
Impairment Losses on Investment Securities
For the fiscal years ended March 31, 2019 and 2020, losses resulting from the impairment of investment
securities to reflect the decline in value considered to be other-than-temporary were ¥606 million and
¥1,590 million, respectively, which were included in Investment securities gains (losses)—net in the
accompanying consolidated statements of income. These losses were recorded from Available-for-sale debt
securities which mainly comprised of corporate bonds for the fiscal years ended March 31, 2019 and 2020.
For the fiscal year ended March 31, 2021, as a result of the adoption of new guidance on a measurement of
credit losses on financial instruments, an allowance for credit losses on Available-for-sale debt securities is
required for impaired securities if a credit loss exists, and an allowance for credit losses on Held-to-maturity debt
securities is required for expected credit losses over the remaining expected life.
For the fiscal year ended March 31, 2021, impairment losses on Available-for-sale debt securities, which
mainly comprised of corporate bonds, were included in Investment securities gains(losses)—net in the
accompanying consolidated statements of income and were not material.
For the fiscal year ended March 31, 2021, the MUFG Group’s Held-to-maturity debt securities were
explicitly or implicitly guaranteed by Japanese or U.S. government entities or agencies and had a long history of
no credit losses or were rated investment grade. Therefore, no credit losses were expected on these securities,
except for certain collateralized loan obligations (“CLOs”) with investment grades, on which immaterial
allowance for credit losses were recognized.
F-38
MITSUBISHI UFJ FINANCIAL GROUP, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
Gross Unrealized Losses and Fair Value
The following tables show the gross unrealized losses and fair value of Available-for-sale debt securities at
March 31, 2020 and 2021 and of Held-to-maturity debt securities at March 31, 2020, by length of time that
individual securities in each category have been in a continuous loss position. For the fiscal year ended
March 31, 2021, the table does not include the securities for which an allowance for credit losses has been
recorded:
At March 31, 2020:
Fair value
Gross
unrealized
losses
Fair value
Gross
unrealized
losses
Fair value
(in millions, except number of securities)
Less than 12 months
12 months or more
Total
Gross
unrealized
losses
Number of
securities
Available-for-sale debt securities:
Japanese national government
and Japanese government
agency bonds . . . . . . . . . . . . ¥11,781,600 ¥30,961 ¥
Japanese prefectural and
— ¥ — ¥11,781,600 ¥30,961
municipal bonds . . . . . . . . . .
935,540
2,202
—
Foreign government and
official institution bonds . . . .
Corporate bonds . . . . . . . . . . . .
Residential mortgage-backed
564,620
522,941
5,481
1,191
114,407
25,228
—
547
14
935,540
2,202
679,027
548,169
6,028
1,205
securities . . . . . . . . . . . . . . . .
114,057
530
388,064
3,801
502,121
4,331
Commercial mortgage-backed
securities . . . . . . . . . . . . . . . .
Asset-backed securities . . . . . .
Other debt securities . . . . . . . . .
182,887
189,775
53,070
3,087
503
132
1,304
86,605
30,657
2
620
1,824
184,191
276,380
83,727
3,089
1,123
1,956
202
340
153
154
402
39
94
24
Total . . . . . . . . . . . . . . . . . . . . . . . . . ¥14,344,490 ¥44,087 ¥ 646,265 ¥ 6,808 ¥14,990,755 ¥50,895
1,408
Held-to-maturity debt securities:
Foreign government and
official institution bonds . . . . ¥
55,746 ¥
689 ¥
— ¥ — ¥
55,746 ¥
689
Residential mortgage-backed
securities . . . . . . . . . . . . . . . .
108,478
1,033
360,841
1,979
469,319
3,012
Commercial mortgage-backed
securities . . . . . . . . . . . . . . . .
Asset-backed securities . . . . . .
10,281
637,201
32
8,536
133,791
1,259,720
285
19,180
144,072
1,896,921
317
27,716
Total . . . . . . . . . . . . . . . . . . . . . . . . . ¥
811,706 ¥10,290 ¥1,754,352 ¥21,444 ¥ 2,566,058 ¥31,734
9
281
31
77
398
F-39
MITSUBISHI UFJ FINANCIAL GROUP, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
Less than 12 months
12 months or more
At March 31, 2021:
Fair value
Available-for-sale debt securities:
Gross
unrealized
losses
Fair value
Gross
unrealized
losses
Fair value
(in millions, except number of securities)
Total
Gross
unrealized
losses
Number of
securities
Japanese national government
and Japanese government
agency bonds . . . . . . . . . . . . . ¥12,098,437 ¥31,055 ¥ 429,235 ¥ 9,823 ¥12,527,672 ¥40,878
870,007
1,584
276,172
1,231
1,146,179
2,815
Japanese prefectural and
municipal bonds . . . . . . . . . .
Foreign government and official
institution bonds . . . . . . . . . .
Corporate bonds . . . . . . . . . . . .
Residential mortgage-backed
429,204
96,582
11,768
166
securities . . . . . . . . . . . . . . . .
378,351
Commercial mortgage-backed
securities . . . . . . . . . . . . . . . .
Asset-backed securities . . . . . . .
Other debt securities . . . . . . . . .
Commercial paper . . . . . . . . . . .
36,633
190,795
22,812
116,016
577
905
394
91
5
50,478
229,518
139,214
2,616
49,428
22,388
—
13
235
474
7
256
639
—
479,682
326,100
11,781
401
517,565
1,051
39,249
240,223
45,200
116,016
912
650
730
5
286
405
71
120
218
21
89
17
8
Total
. . . . . . . . . . . . . . . . . . . . . . . . . ¥14,238,837 ¥46,545 ¥1,199,049 ¥12,678 ¥15,437,886 ¥59,223
1,235
Evaluating Available-for-sale debt securities for Impairment losses
The following describes the nature of the MUFG Group’s Available-for-sale debt securities and the
conclusions reached in determining whether impairment losses exist.
Japanese national government and Japanese government agency bonds, Foreign government and official
institution bonds
As of March 31, 2021, unrealized losses associated with these securities were deemed to be attributable to
changes in market interest rates rather than a deterioration in the creditworthiness of the underlying obligor.
Based on a consideration of factors, including cash flow analysis, the MUFG Group expects to recover the entire
amortized cost basis of these securities. Accordingly, no credit loss was identified as of March 31, 2021 and no
impairment loss has been recorded.
Corporate bonds
As of March 31, 2021, unrealized losses associated with corporate bonds were primarily related to private
placement bonds issued by Japanese non-public companies. The credit loss component recognized in earnings is
identified as the amount of principal cash flows not expected to be received over the remaining terms of the
bonds as estimated using the MUFG Group’s cash flow projections. The key assumptions include probability of
default based on credit ratings of the bond issuers and loss given default.
Residential mortgage-backed securities
As of March 31, 2021, unrealized losses on these securities were primarily driven by securities guaranteed
by a U.S. government agency or a government-sponsored agency which are collateralized by residential
mortgage loans. Unrealized losses mainly resulted from changes in interest rates and not from changes in credit
quality. The MUFG Group determined through analysis that no credit loss was identified on such securities as of
F-40
MITSUBISHI UFJ FINANCIAL GROUP, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
March 31, 2021 because the strength of the issuers’ guarantees through direct obligations or support from the
U.S. government is expected to be sufficient to recover the entire amortized cost basis of these securities.
Asset-backed securities
As of March 31, 2021, unrealized losses on these securities were primarily driven by certain CLOs, highly
illiquid securities for which fair values are difficult to determine. Unrealized losses arise from widening credit
spreads, deterioration of the credit quality of the underlying collateral, uncertainty regarding the valuation of
such securities and the market’s view of the performance of the fund managers. When the fair value of a security
is lower than its amortized cost or when any security is subject to a deterioration in credit rating, the MUFG
Group undertakes a cash flow analysis of the underlying collateral to estimate the credit loss and confirms the
intent and ability to hold these securities until recovery. Based on the analysis performed, no credit loss was
identified as of March 31, 2021 and no impairment loss has been recorded.
Other debt securities
As of March 31, 2021, unrealized losses on other debt securities result from a higher return on capital
expected by the secondary market compared with the return on capital required at the time of origination when
the bonds were purchased. The MUFG Group estimates loss projections for each security by assessing the
underlying collateral of each security. The MUFG Group estimates the portion of loss attributable to credit based
on the expected cash flows of the underlying collateral using estimates of current key assumptions, such as
probability of default and loss severity. Cash flow analysis of the underlying collateral provides an estimate of
credit loss, which is performed when the fair value of a security is lower than its amortized cost and potential
impairment is identified. Based on the analysis, no credit loss was identified as of March 31, 2021.
Equity Securities
The following table presents net realized gains (losses) on sales of equity securities, and net unrealized
losses on equity securities still held at March 31, 2019, 2020 and 2021:
Net gains (losses) recognized during the period(1)
Less:
. . . . . . . . . . . . . . . . . . .
Net gains (losses) recognized during the period on equity securities
sold during the period . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Net unrealized gains (losses) recognized during the reporting period still
held at the reporting date . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Note:
(1)
Included in Investment securities gains (losses)—net.
Fiscal years ended
March 31,
2019
2020
2021
(in millions)
¥(278,746) ¥ (639,813) ¥ 1,467,763
(3,303)
(37,541)
47,775
¥(275,443) ¥ (602,272) ¥ 1,419,988
F-41
MITSUBISHI UFJ FINANCIAL GROUP, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
Measurement Alternative of Equity Securities
The following table presents the carrying value of nonmarketable equity securities that are measured at cost
minus impairment, if any, plus or minus changes resulting from observable price changes (“measurement
alternative”), held at March 31, 2020 and 2021:
Measurement alternative balance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
¥ 534,882
¥ 356,074
The related adjustments for these securities for the fiscal years ended March 31, 2019, 2020 and 2021 were
as follows:
2020
2021
(in millions)
Fiscal years ended
March 31,
2019
2020
2021
(in millions)
. . . . . . . . . . . . . . . . . . . . . . .
Measurement alternative impairment losses(1)(4)
Measurement alternative downward changes for observable prices(1)(2)(3)(5)
. .
Measurement alternative upward changes for observable prices(1)(2)(3)(6) . . . . .
(2,292) ¥ (3,099) ¥
(953) ¥
— ¥
¥
¥
¥ 53,077
¥ 6,223
(5,188)
—
¥ 21,710
Notes:
(1)
(2) Under the measurement alternative, nonmarketable equity securities are carried at cost plus or minus changes resulting from observable
Included in Investment securities gains (losses)—net.
prices in orderly transactions for the identical or a similar investment of the same issuer.
(3) The MUFG Group applied measurement alternative downward or upward changes to certain nonmarketable equity securities, resulting
from observable prices in orderly transactions, such as partial repurchase and transactions by other entities.
(4) The cumulative impairment losses at March 31, 2020 and 2021 were ¥5,007 million and ¥10,102 million, respectively.
(5) The cumulative downward changes for observable prices at March 31, 2020 and 2021 were ¥953 million and ¥953 million, respectively.
(6) The cumulative upward changes for observable prices at March 31, 2020 and 2021 were ¥34,466 million and ¥54,806 million,
respectively.
F-42
MITSUBISHI UFJ FINANCIAL GROUP, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
4. LOANS AND ALLOWANCE FOR CREDIT LOSSES
Loans at March 31, 2020 and 2021 by domicile and industry of the borrower are summarized below.
Classification of loans by industry is based on the industry segment loan classifications as defined by the Bank of
Japan.
2020
2021
(in millions)
Domestic:
Manufacturing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Construction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Real estate . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Services . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Wholesale and retail
. . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Banks and other financial institutions(1)
Communication and information services . . . . . . . . . . . . . . . . . . . . . . . . . . .
Other industries . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Consumer
¥ 11,448,778
733,212
12,054,671
2,585,111
7,504,561
5,161,093
1,572,344
8,673,871
15,319,721
¥ 13,133,360
763,958
11,997,301
2,908,975
7,766,070
6,443,296
1,407,738
8,838,718
15,066,986
Total domestic . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
65,053,362
68,326,402
Foreign:
Governments and official institutions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Banks and other financial institutions(1)
. . . . . . . . . . . . . . . . . . . . . . . . . . . . .
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Commercial and industrial
Other . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
726,347
11,788,225
32,565,030
8,404,062
655,367
10,649,029
29,574,176
6,822,771
Total foreign . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
53,483,664
47,701,343
Unearned income, unamortized premiums—net and deferred loan fees—net . . . .
(350,287)
(308,882)
Total(2) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
¥118,186,739
¥115,718,863
Notes:
(1) Loans to so-called “non-bank finance companies” are generally included in the “Banks and other financial institutions” category.
Non-bank finance companies are primarily engaged in consumer lending, factoring and credit card businesses.
(2) The above table includes loans held for sale of ¥344,790 million and ¥353,095 million at March 31, 2020 and 2021, respectively.
The MUFG Group classifies its loan portfolio into the following portfolio segments—Commercial,
Residential, Card, MUFG Americas Holdings, Krungsri, and Other based on the grouping used by the MUFG
Group to determine the allowance for credit losses. The MUFG Group further classifies the Commercial segment
into classes based on initial measurement attributes, risk characteristics, and its method of monitoring and
assessing credit risk. See Note 1 for further information. Effective as of April 1, 2020, all of the domestic classes
within the Commercial segment were combined into one class.
Nonaccrual Loans
Originated loans are generally placed on nonaccrual status when substantial doubt exists as to the full and
timely collection of either principal or interest, when principal or interest is contractually past due one month or
more with respect to loans within all classes of the Commercial segment, three months or more with respect to
loans within the Card, MUFG Americas Holdings, and Krungsri segments, and six months or more with respect
to loans within the Residential segment. See Note 1 for further information.
F-43
MITSUBISHI UFJ FINANCIAL GROUP, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
The information on nonaccrual loans by class at March 31, 2020 and 2021, and recognized interest income
on nonaccrual loans by class for the fiscal year ended March 31, 2021 are shown below:
March 31, 2020:
Commercial
Nonaccrual
Loans(1)
(in millions)
Domestic . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Foreign . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Residential . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Card . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
MUAH . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Krungsri
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Other . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
¥312,972
127,001
63,998
61,172
35,840
149,732
27,754
Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
¥778,469
March 31, 2021:
Commercial
Recorded Loan Balance
Nonaccrual
Loans(1)
Nonaccrual Loans
Not Requiring
an Allowance for
Credit Losses(2)
(in millions)
Recognized
Interest
Income
Domestic . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Foreign . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Residential . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Card . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
MUAH . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Krungsri . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Other . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
¥ 565,671
258,391
67,968
60,200
73,706
161,338
26,567
Total
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
¥1,213,841
¥111,141
96,833
4,720
—
30,242
3,042
29
¥246,007
¥ 4,355
5,110
923
37
1,057
5,562
4,203
¥21,247
Notes:
(1) Nonaccrual loans in the above table do not include loans held for sale of ¥330 million and ¥8,562 million at March 31, 2020 and 2021,
respectively, and do not include loans acquired with deteriorated credit quality of ¥25,427 million at March 31, 2020.
(2) These loans do not require an allowance for credit losses because the recorded loan balance equals, or does not exceed, the present value
of expected future cash flows discounted at the loans’ original effective interest rate, or the fair value of the collateral if the loan is a
collateral-dependent loan.
F-44
MITSUBISHI UFJ FINANCIAL GROUP, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
Impaired Loans
The MUFG Group’s impaired loans primarily include nonaccrual loans and TDRs. The following table
shows information about impaired loans by class at March 31, 2020:
At March 31, 2020:
Commercial
Domestic . . . . . . . . . . . . . . . . . . . . . .
Foreign . . . . . . . . . . . . . . . . . . . . . . . .
Loans acquired with deteriorated
credit quality . . . . . . . . . . . . . . . . .
Residential(3) . . . . . . . . . . . . . . . . . . . . . . .
Card(3) . . . . . . . . . . . . . . . . . . . . . . . . . . . .
MUAH(3)
. . . . . . . . . . . . . . . . . . . . . . . . . .
Krungsri(3) . . . . . . . . . . . . . . . . . . . . . . . . .
Other(3)
. . . . . . . . . . . . . . . . . . . . . . . . . . .
Recorded Loan Balance
Requiring
an Allowance for
Credit Losses
Not Requiring
an Allowance for
Credit Losses(1)
Total
Unpaid
Principal
Balance
Related
Allowance for
Credit Losses
(in millions)
¥ 598,737
141,897
¥147,890
56,464
¥ 746,627
198,361
¥ 784,298
220,283
¥268,070
96,009
12,906
88,075
65,240
33,884
68,126
22,749
—
4,822
280
33,835
30,833
1,091
12,906
92,897
65,520
67,719
98,959
23,840
19,947
107,629
72,714
84,737
106,265
26,091
4,767
12,770
19,799
5,977
30,198
6,152
Total(2)
. . . . . . . . . . . . . . . . . . . . . . . . . . . .
¥1,031,614
¥275,215
¥1,306,829
¥1,421,964
¥443,742
Notes:
(1) These loans do not require an allowance for credit losses because the recorded loan balance equals, or does not exceed, the present value
of expected future cash flows discounted at the loans’ original effective interest rate, loans’ observable market price, or the fair value of
the collateral if the loan is a collateral-dependent loan.
In addition to impaired loans presented in the above table, there were impaired loans held for sale of ¥330 million at March 31, 2020.
Impaired Loans for Residential, Card, MUAH, Krungsri and Other segments in the above table include loans acquired with deteriorated
credit quality.
(2)
(3)
The following table shows information regarding the average recorded loan balance and recognized interest
income on impaired loans for the fiscal years ended March 31, 2019 and 2020:
2019
2020
Average
Recorded Loan
Balance
Recognized
Interest
Income
Average
Recorded Loan
Balance
Recognized
Interest
Income
Commercial
Domestic . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Foreign . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Loans acquired with deteriorated credit quality . . . . . . . . . . . .
Residential
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Card . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
MUAH . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Krungsri . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Other . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
¥ 766,847
159,999
7,814
107,165
66,187
71,162
83,165
—
(in millions)
¥12,383
3,127
182
1,620
1,614
2,292
4,995
—
¥ 726,794
174,831
9,395
98,238
65,270
82,832
91,577
11,854
¥ 8,722
3,013
74
1,252
1,241
2,801
5,274
494
Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
¥1,262,339
¥26,213
¥1,260,791
¥22,871
Interest income on nonaccrual loans for all classes was recognized on a cash basis when ultimate
collectibility of principal was certain. Otherwise, cash receipts were applied as principal reductions. Interest
income on accruing impaired loans, including TDRs, was recognized on an accrual basis to the extent that the
collectibility of interest income was reasonably certain based on management’s assessment.
F-45
MITSUBISHI UFJ FINANCIAL GROUP, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
Troubled Debt Restructurings
The following table summarizes the MUFG Group’s TDRs by class for the fiscal years ended March 31,
2019, 2020 and 2021:
2019
2020
2021
Troubled Debt Restructurings
Pre-
Modification
Outstanding
Recorded
Investment
Post-
Modification
Outstanding
Recorded
Investment
Pre-
Modification
Outstanding
Recorded
Investment
Post-
Modification
Outstanding
Recorded
Investment
Pre-
Modification
Outstanding
Recorded
Investment
Post-
Modification
Outstanding
Recorded
Investment
(in millions)
¥ 36,693
5,692
¥ 36,693
5,692
¥ 61,735
39,827
¥ 61,735
39,827
¥ 39,282
33,839
¥ 39,282
33,839
50
7,379
19,685
19,837
24,392
—
50
7,379
18,837
19,837
24,330
—
10,786
5,137
22,625
33,782
31,238
12,781
10,786
5,137
21,561
33,564
31,209
12,780
—
18,121
20,857
22,801
18,548
24,968
—
18,121
19,737
22,763
18,548
24,956
Commercial(1)(3)
Domestic . . . . . . . . . . . . . . . . . . . .
Foreign . . . . . . . . . . . . . . . . . . . . .
Loans acquired with deteriorated
credit quality . . . . . . . . . . . . . . .
Residential(1)(3)
. . . . . . . . . . . . . . . . . . .
Card(2)(3)
. . . . . . . . . . . . . . . . . . . . . . . .
MUAH(2)(3)
. . . . . . . . . . . . . . . . . . . . . .
Krungsri(2)(3) . . . . . . . . . . . . . . . . . . . . .
Other(2)(3)
. . . . . . . . . . . . . . . . . . . . . . .
Total
. . . . . . . . . . . . . . . . . . . . . . . . . . .
¥113,728
¥112,818
¥217,911
¥216,599
¥178,416
¥177,246
2019
2020
2021
Troubled Debt Restructurings
That Subsequently defaulted
Recorded Investment
(in millions)
Commercial(1)(3)
Domestic . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Foreign . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Residential(1)(3)
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Card(2)(3)
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
MUAH(2)(3)
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Krungsri(2)(3) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Other(2)(3) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
¥11,002
—
362
3,442
349
7,926
—
¥ 8,857
2,337
31
3,320
4,656
7,305
15
¥16,179
9,861
157
2,733
3,437
6,226
857
Total
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
¥23,081
¥26,521
¥39,450
Notes:
(1) TDRs for the Commercial and Residential segments include accruing loans, and do not include nonaccrual loans.
(2) TDRs for the Card, MUFG Americas Holdings, Krungsri and Other segments include accrual and nonaccrual loans.
(3) For the fiscal year ended March 31, 2019, extension of the stated maturity date of loans was the primary concession type in the
Commercial, Residential and Krungsri segments, reduction in the stated rate was the primary concession type in the Card segment and
forbearance was the primary concession type in the MUFG Americas Holdings segment. For the fiscal year ended March 31, 2020,
extension of the stated maturity date of loans was the primary concession type in the Commercial, Residential, MUFG Americas
Holdings and Krungsri segments and reduction in the stated rate was the primary concession type in the Card and Other segments. For
the fiscal year ended March 31, 2021, extension of the stated maturity date of loans was the primary concession type in the Commercial,
Residential and Krungsri segments, reduction in the stated rate was the primary concession type in the Card segment and forbearance
was the primary concession type in the MUFG Americas Holdings segment.
A modification of terms of a loan under a TDR mainly involves: (i) a reduction in the stated interest rate
applicable to the loan, (ii) an extension of the stated maturity date of the loan, (iii) a partial forgiveness of the
F-46
MITSUBISHI UFJ FINANCIAL GROUP, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
principal of the loan, or (iv) a combination of all of these. The amount of pre-modification outstanding recorded
investment and post-modification outstanding recorded investment may differ due to write-offs made as part of
the concession. The impact of write-offs associated with TDRs on the MUFG Group’s results of operations for
the fiscal years ended March 31, 2019, 2020 and 2021 was not material.
TDRs for the Commercial and Residential segments in the above tables include accruing loans, and do not
include nonaccrual loans. Once a loan is classified as a nonaccrual loan, a modification would have little
likelihood of resulting in the recovery of the loan in view of the severity of the financial difficulty of the
borrower. Therefore, even if a nonaccrual loan is modified, the loan continues to be classified as a nonaccrual
loan. The vast majority of modifications to nonaccrual loans are temporary extensions of the maturity dates,
typically for periods up to 90 days, and continually made as the borrower is unable to repay or refinance the loan
at the extended maturity. Accordingly, the impact of such TDRs on the outstanding recorded investment is
immaterial, and the vast majority of nonaccrual TDRs have subsequently defaulted.
TDRs that subsequently defaulted in the Commercial and Residential segments in the above tables include
those accruing loans that became past due one month or more within the Commercial segment and six months or
more within the Residential segment, and those accruing loans reclassified to nonaccrual loans due to financial
difficulties even without delinquencies. This is because classification as a nonaccrual loan is regarded as default
under the MUFG Group’s credit policy. Also, the MUFG Group defines default as payment default for the
purpose of the disclosure.
In regards to the Card, MUFG Americas Holdings, Krungsri and Other segments, the TDRs in the above
tables represent nonaccrual and accruing loans, and the defaulted loans in the above table represent nonaccruing
and accruing loans that became past due one month or more within the Card segment, 60 days or more within the
MUFG Americas Holdings segment, and six months or more within the Krungsri segment.
Historical payment defaults are one of the factors considered when projecting future cash flows in
determining the allowance for credit losses for each segment.
The MUFG Group provided commitments to extend credit to customers with TDRs. The amounts of such
commitments were ¥90,097 million and ¥130,788 million at March 31, 2020 and 2021, respectively. See Note 24
for further discussion of commitments to extend credit.
In the MUFG Americas Holdings segment, TDR accounting was suspended for loan modifications that
occurred from March 1, 2020, through June 30, 2020, where COVID-19 related modifications were granted to
loans that were current as of December 31, 2019, based on the Coronavirus Aid, Relief, and Economic Security
Act, or where COVID-19 related short-term modifications (i.e., six months or less) were granted to loans that
were current as of the loan modification date, based on interagency statements issued by the U.S. federal bank
regulatory agencies. These loan modifications were primarily payment deferrals, and the related borrowers’ past
due and nonaccrual status will not be impacted during the deferral period. Interest income will continue to be
recognized over the contractual life of the loan.
In the Krungsri segment, TDR accounting was suspended for loan modifications that occurred during the six
months ended June 30, 2020, where COVID-19 related short-term modifications (i.e., six months or less) were
granted to loans that were current as of the loan modification date, based on interagency statements issued by the
U.S. federal bank regulatory agencies. These loan modifications included payment deferrals and reductions in
stated rate, and the related borrowers’ past due and nonaccrual status will not be impacted during the deferral
period. Interest income will continue to be recognized over the contractual life of the loan.
F-47
MITSUBISHI UFJ FINANCIAL GROUP, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
Credit Quality Indicator
Credit quality indicators of loans by class at March 31, 2020 are shown below:
At March 31, 2020:
Commercial
Normal
Close
Watch
Likely to become
Bankrupt or
Legally/Virtually
Bankrupt
(in millions)
Total(1)
Domestic . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Foreign . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Loans acquired with deteriorated credit
¥49,695,889
34,719,041
¥1,186,044
636,523
¥220,245
128,073
¥51,102,178
35,483,637
quality . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
8,255
9,739
18,978
36,972
Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
¥84,423,185
¥1,832,306
¥367,296
¥86,622,787
Residential
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Card . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
¥13,256,744
504,357
¥
(in millions)
¥61,746
¥61,286
¥13,318,490
565,643
¥
Accrual
Nonaccrual
Total(1)
Credit Quality Based on
the Number of Delinquencies
Credit Quality Based on
Internal Credit Ratings
Accrual
Nonaccrual
Pass
Special
Mention
(in millions)
Classified
Total(1)(2)
MUAH . . . . . . . . . .
¥
4,590,805
¥
15,119
¥ 4,877,863
¥
87,648
¥
84,033
¥
9,655,468
Performing
Performing Non-Performing
Total(1)
Under-
(in millions)
Krungsri . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
¥6,241,696
¥508,847
¥161,047
¥6,911,590
Other . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
¥1,086,517
(in millions)
¥31,376
¥1,117,893
Accrual
Nonaccrual
Total(1)
F-48
MITSUBISHI UFJ FINANCIAL GROUP, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
Credit quality indicators of loans and fiscal year of origination by class at March 31, 2021 are shown below:
At March 31, 2021:
2020
2019
2018
2017
2016
Prior
(in millions)
Term Loans
Amortized Cost Basis by Origination Year
Revolving
Loans
Converted to
Term Loans
Amortized
Cost Basis
Revolving
Loans
Amortized
Cost Basis
Total(1)
Commercial: . . . . . . . . . . . . . . . . . . ¥29,805,641 ¥10,256,709 ¥9,410,172 ¥5,360,221 ¥4,736,515 ¥6,945,092 ¥19,401,336
6,934,308
6,604,586
306,236
6,392,946 6,126,746 3,840,964 3,649,145 5,286,408
6,058,126 5,915,318 3,666,734 3,551,332 4,847,597
317,622
162,176
Domestic . . . . . . . . . . . . . . . . . 22,402,694
Normal . . . . . . . . . . . . . . . 21,936,776
Close Watch . . . . . . . . . . .
431,223
Likely to become
195,630
319,073
74,698
Bankrupt or Legally/
Virtually Bankrupt . . . .
Foreign . . . . . . . . . . . . . . . . . . .
Normal . . . . . . . . . . . . . . .
Close Watch . . . . . . . . . . .
Likely to become
34,695
7,402,947
7,158,793
200,305
15,747
15,798
12,054
23,486
3,863,763 3,283,426 1,519,257 1,087,370 1,658,684 12,467,028
3,704,240 3,155,261 1,423,064 1,032,052 1,534,943 12,231,018
197,405
118,027
121,189
23,115
60,422
69,436
91,867
51,433
¥ 9,776
¥85,925,462
— 54,633,211
— 52,580,469
1,806,658
—
—
9,776
9,776
—
246,084
31,292,251
30,249,147
788,895
Bankrupt or Legally/
Virtually Bankrupt . . . .
. . . . . . . . . . . . . . . . . . . ¥
Residential
Card . . . . . . . . . . . . . . . . . . . . . . . . ¥
36,298
43,849
623,328 ¥
623,035
293
Accrual . . . . . . . . . . . . . . .
Nonaccrual . . . . . . . . . . . .
38,605
32,984
30,897
2,087
417,804
404,301
Accrual . . . . . . . . . . . . . . .
Nonaccrual . . . . . . . . . . . .
13,503
. . . . . . . . . . . . . . . . . . . . . ¥ 1,406,996 ¥ 1,366,930 ¥ 915,570 ¥ 861,742 ¥ 770,568 ¥1,291,561 ¥ 1,882,377
41,496
35,771
847,314 ¥ 822,883 ¥ 892,166 ¥1,304,110 ¥8,660,022 ¥
846,787
527
96 ¥
10
86
891,407 1,302,427 8,599,621
60,401
822,411
472
171 ¥
13
158
759
304 ¥
19
285
513 ¥
79
434
110 ¥
7
103
14 ¥
1
13
54,305
1,683
3,885
¥
254,209
—
8
¥13,182,815
— 13,116,585
66,230
8
479,296
¥60,284
419,096
14,666
60,200
45,618
¥ — ¥ 8,495,744
¥
MUAH(2)
Credit Quality Based on the
Number of Delinquencies
Accrual . . . . . . . . . . . . . . .
Nonaccrual . . . . . . . . . . . .
472,892
—
608,580
725
324,369
518
552,380
1,139
516,051
1,035
656,087
14,801
130,514
828
—
—
3,260,873
19,046
Credit Quality Based on
Internal Credit Ratings
920,959
4,865
8,280
707,841
31,361
18,423
Pass . . . . . . . . . . . . . . . . .
Special Mention . . . . . . . .
Classified . . . . . . . . . . . . .
1,625,799
76,487
48,749
Krungsri . . . . . . . . . . . . . . . . . . . . . ¥ 1,316,031 ¥ 1,197,815 ¥ 958,241 ¥ 506,919 ¥ 285,427 ¥ 402,752 ¥ 1,922,946
1,754,840
144,447
23,659
342,619
331,197
11,422
Performing . . . . . . . . . . . .
Under-Performing . . . . . .
Non-Performing . . . . . . . .
1,251,246
52,821
11,964
338,342 ¥
335,830
2,512
1,086,710
85,408
25,697
164,650 ¥
159,363
5,287
855,915
74,848
27,478
84,115 ¥
79,608
4,507
434,818
57,314
14,787
37,394 ¥
35,366
2,028
241,811
31,886
11,730
11,030 ¥
10,556
474
314,114
57,129
31,509
8,538 ¥
8,201
337
Accrual . . . . . . . . . . . . . . .
Nonaccrual . . . . . . . . . . . .
Other . . . . . . . . . . . . . . . . . . . . . . . . ¥
486,354
49,784
54,545
542,634
30,015
48,024
236,715
9,522
7,245
287,316
14,904
6,003
—
—
—
¥14,514
—
—
14,514
¥ — ¥
—
—
4,807,618
216,938
191,269
¥ 6,604,645
5,939,454
503,853
161,338
986,688
960,121
26,567
Notes:
(1) Total loans in the above table do not include loans held for sale, and represent balances without adjustments in relation to unearned
income, unamortized premiums and deferred loan fees.
(2) Total loans of MUFG Americas Holdings do not include FDIC covered loans which are not individually rated totaling ¥365 million and
nil as of March 31, 2020 and 2021, respectively. The MUFG Group will be reimbursed for a substantial portion of any future losses on
FDIC covered loans under the terms of the FDIC loss share agreements.
The MUFG Group classifies loans into risk categories based on relevant information about the ability of
borrowers to service their debt, including, but not limited to, historical and current financial information,
historical and current payment experience, credit documentation, public and non-public information about
borrowers and current economic trends as deemed appropriate to each segment.
The primary credit quality indicator for loans within all classes of the Commercial segment is the internal
credit rating assigned to each borrower based on the MUFG Group’s internal borrower ratings of 1 through 15,
with the rating of 1 assigned to a borrower with the highest quality of credit. When assigning a credit rating to a
F-49
MITSUBISHI UFJ FINANCIAL GROUP, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
borrower, the MUFG Group evaluates the borrower’s expected debt-service capability based on various
information, including financial and operating information of the borrower as well as information on the industry
in which the borrower operates, and the borrower’s business profile, management and compliance system. In
evaluating a borrower’s debt-service capability, the MUFG Group also conducts an assessment of the level of
earnings and an analysis of the borrower’s net worth. Based on the internal borrower rating, loans within the
Commercial segment are categorized as Normal (internal borrower ratings of 1 through 9), Close Watch (internal
borrower ratings of 10 through 12), and Likely to become Bankrupt or Legally/Virtually Bankrupt (internal
borrower ratings of 13 through 15).
Loans to borrowers categorized as Normal represent those that are not deemed to have collectibility issues.
Loans to borrowers categorized as Close Watch represent those that require close monitoring as the
borrower has begun to exhibit elements of potential concern with respect to its business performance and
financial condition, the borrower has begun to exhibit elements of serious concern with respect to its business
performance and financial condition, including business problems requiring long-term solutions, or the
borrower’s loans are TDRs or loans contractually past due 90 days or more for special reasons.
Loans to borrowers categorized as Likely to become Bankrupt or Legally/Virtually Bankrupt represent those
that have a higher probability of default than those categorized as Close Watch due to serious debt repayment
problems with poor progress in achieving restructuring plans, the borrower being considered virtually bankrupt
with no prospects for an improvement in business operations, or the borrower being legally bankrupt with no
prospects for continued business operations because of non-payment, suspension of business, voluntary
liquidation or filing for legal liquidation.
The accrual status is a primary credit quality indicator for loans within the Residential segment, the Card
segment, the Other segment and consumer loans within the MUFG Americas Holdings segment. The accrual
status of these loans is determined based on the number of delinquent payments. See Note 1 for further details of
categorization of Accrual and Nonaccrual.
Commercial loans within the MUFG Americas Holdings segment are categorized as either pass or criticized
based on the internal credit rating assigned to each borrower. Criticized credits are those that are internally risk
graded as Special Mention, Substandard or Doubtful. Special Mention credits are potentially weak, as the
borrower has begun to exhibit deteriorating trends, which, if not corrected, may jeopardize repayment of the loan
and result in further downgrade. Classified credits are those that are internally risk graded as Substandard or
Doubtful. Substandard credits have well-defined weaknesses, which, if not corrected, could jeopardize the full
satisfaction of the debt. A credit classified as Doubtful has critical weaknesses that make full collection
improbable on the basis of currently existing facts and conditions.
Loans within the Krungsri segment are categorized based on their delinquency status. Effective as of
April 1, 2020, the category of the Krungsri segment’s credit quality indicator was changed to Performing, Under-
Performing, and Non-Performing. Loans categorized as Under-Performing generally represent those that have
significant increases in credit risk since origination, including, among other things, loans that are 30 days or more
past due, and loans categorized as Non-Performing generally represent those that are 90 days or more past due.
The above table showing the loans within the Krungsri segment by credit quality indicator category as of
March 31, 2020 has been restated based on the new categories.
For the Commercial, Residential and Card segments, credit quality indicators are based on information as of
March 31. For the MUFG Americas Holdings, Krungsri and Other segments, credit quality indicators are
generally based on information as of December 31.
F-50
MITSUBISHI UFJ FINANCIAL GROUP, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
Past Due Analysis
Ages of past due loans by class at March 31, 2020 and 2021 are shown below:
At March 31, 2020:
Commercial
1-3 months
Past Due
Greater
Than
3 months
Total
Past Due
Current
(in millions)
Total
Loans(1)
90 Days and
Accruing
Domestic . . . . . . . . . . . . . .
Foreign . . . . . . . . . . . . . . . .
Residential
. . . . . . . . . . . . . . . .
Card . . . . . . . . . . . . . . . . . . . . .
MUAH . . . . . . . . . . . . . . . . . . .
Krungsri . . . . . . . . . . . . . . . . . .
Other . . . . . . . . . . . . . . . . . . . . .
¥
9,215
9,927
48,404
14,735
31,052
160,253
16,442
¥ 26,971
23,548
15,443
29,997
14,435
129,186
24,348
¥ 36,186
33,475
63,847
44,732
45,487
289,439
40,790
¥ 51,065,992
35,450,162
13,248,278
518,008
9,603,339
6,616,104
1,069,186
¥ 51,102,178
35,483,637
13,312,125
562,740
9,648,826
6,905,543
1,109,976
¥ 4,720
164
6,288
—
2,101
—
—
Total . . . . . . . . . . . . . . . . . . . . . .
¥290,028
¥263,928
¥553,956
¥117,571,069
¥118,125,025
¥13,273
At March 31, 2021:
Commercial
1-3 months
Past Due
Greater
Than
3 months
Total
Past Due
Current
(in millions)
Total
Loans(1)
90 Days and
Accruing
Domestic . . . . . . . . . . . . . .
Foreign . . . . . . . . . . . . . . . .
Residential
. . . . . . . . . . . . . . . .
Card . . . . . . . . . . . . . . . . . . . . .
MUAH . . . . . . . . . . . . . . . . . . .
Krungsri . . . . . . . . . . . . . . . . . .
Other . . . . . . . . . . . . . . . . . . . . .
¥
4,763
7,302
39,577
2,127
42,082
131,573
21,776
¥ 22,996
22,473
28,375
26,786
29,337
127,533
24,201
¥ 27,759
29,775
67,952
28,913
71,419
259,106
45,977
¥ 54,605,452
31,262,476
13,114,863
450,383
8,424,325
6,345,539
940,711
¥ 54,633,211
31,292,251
13,182,815
479,296
8,495,744
6,604,645
986,688
¥ 4,673
91
11,150
—
4,626
—
—
Total . . . . . . . . . . . . . . . . . . . . . .
¥249,200
¥281,701
¥530,901
¥115,143,749
¥115,674,650
¥20,540
Note:
(1) At March 31, 2020, total loans in the above table do not include loans held for sale and loans acquired with deteriorated credit quality
and represent balances without adjustments in relation to unearned income, unamortized premiums and deferred loan fees. At March 31,
2021, total loans in the above table do not include loans held for sale and represent balances without adjustments in relation to unearned
income, unamortized premiums and deferred loan fees.
F-51
MITSUBISHI UFJ FINANCIAL GROUP, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
Allowance for Credit Losses
Effective as of April 1, 2020, the MUFG Group adopted new guidance on measurement of credit losses on
financial instruments. See Note 1 for more information.
Changes in the allowance for credit losses by portfolio segment for the fiscal years ended March 31, 2019,
2020 and 2021 are shown below:
Fiscal year ended March 31, 2019:
Commercial Residential
Card
MUAH
Krungsri
Total
(in millions)
Allowance for credit losses:
Balance at beginning of fiscal
year . . . . . . . . . . . . . . . . . . . . . . . . ¥
491,098 ¥ 42,546 ¥
32,119 ¥
53,765 ¥ 144,596 ¥
764,124
Provision for (reversal of) credit
losses . . . . . . . . . . . . . . . . . . . . . .
Charge-offs . . . . . . . . . . . . . . . . . . . .
Recoveries collected . . . . . . . . . . . .
Net charge-offs . . . . . . . . . . . . . . . . .
Other(1) . . . . . . . . . . . . . . . . . . . . . . .
(43,850)
76,664
17,565
59,099
1,466
(4,480)
274
834
(560)
—
23,809
24,310
932
23,378
—
9,277
13,224
3,733
49,574
59,569
21,053
9,491
(970)
38,516
(10,842)
34,330
174,041
44,117
129,924
(10,346)
Balance at end of fiscal year . . . . . . ¥
389,615 ¥ 38,626 ¥
32,550 ¥
52,581 ¥ 144,812 ¥
658,184
Fiscal year ended
March 31, 2020:
Allowance for credit
losses:
Balance at beginning
Commercial
Residential
Card
MUAH
Krungsri
Other
Total
(in millions)
of fiscal year . . . . . . ¥
389,615 ¥
38,626 ¥ 32,550 ¥
52,581 ¥ 144,812 ¥
— ¥
658,184
Provision for (reversal
of) credit losses . . . .
Charge-offs . . . . . . . . .
Recoveries
collected . . . . . . . . .
Net charge-offs . . . . . .
. . . . . . . . . . . .
Other(1)
Balance at end of
153,782
85,326
(1,028)
3,227
26,542
25,149
26,427
58,899
(2,223)
375
2,852
—
1,237
23,912
—
30,825
27,934
4,173
23,761
(650)
70,023
77,907
23,170
54,737
9,528
41,569
23,592
8,476
15,116
2,265
321,713
243,135
63,858
179,277
8,920
fiscal year . . . . . . . . ¥
482,275 ¥
34,746 ¥ 35,180 ¥
58,995 ¥ 169,626 ¥
28,718 ¥
809,540
F-52
MITSUBISHI UFJ FINANCIAL GROUP, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
Fiscal year ended
March 31, 2021:
Allowance for credit
losses:
Balance at beginning
Commercial
Residential
Card
MUAH
Krungsri
Other
Total
(in millions)
of fiscal year . . . . . . ¥
482,275 ¥
34,746 ¥ 35,180 ¥
58,995 ¥ 169,626 ¥
28,718 ¥
809,540
Effect of adopting new
guidance on
measurement of
credit losses on
financial
instruments(2)
Provision for credit
. . . . .
losses . . . . . . . . . . .
Charge-offs . . . . . . . . .
Recoveries
collected . . . . . . . . .
Net charge-offs . . . . . .
. . . . . . . . . . . .
Other(1)
Balance at end of
83,828
49,494
14,262
25,037
118,333
32,750
323,704
235,584
77,904
9,262
68,642
1,532
1,385
2,745
13
2,732
—
17,876
24,564
1,463
23,101
—
90,064
40,376
90,167
93,192
4,362
23,415
36,014
(6,327)
69,777
(14,953)
49,134
51,725
6,567
45,158
(3,891)
484,210
290,506
45,082
245,424
(23,639)
fiscal year . . . . . . . . ¥
734,577 ¥
82,893 ¥ 44,217 ¥ 131,755 ¥ 293,396 ¥
61,553 ¥
1,348,391
Notes:
(1) Other is principally comprised of gains or losses from foreign exchange translation.
(2) See Note 1 for more information.
Allowance for credit losses and recorded investment in loans by portfolio segment at March 31, 2020 are
shown below:
At March 31, 2020:
Commercial
Residential
Card
MUAH
Krungsri
Other
Total
(in millions)
Allowance for credit
losses:
. . . . ¥
Individually evaluated
for impairment
Collectively evaluated
for impairment
. . . .
Loans acquired with
deteriorated credit
quality(2)
. . . . . . . . .
364,079 ¥
12,651 ¥ 19,799 ¥
5,977 ¥
30,198 ¥
5,073 ¥
437,777
108,100
21,130
15,369
53,013
139,401
22,566
359,579
10,096
965
12
5
27
1,079
12,184
Total . . . . . . . . . . ¥
482,275 ¥
34,746 ¥ 35,180 ¥
58,995 ¥ 169,626 ¥
28,718 ¥
809,540
. . . . ¥
Loans:
Individually evaluated
for impairment
Collectively evaluated
for impairment
. . . .
Loans acquired with
deteriorated credit
quality(2)
. . . . . . . . .
944,988 ¥
92,448 ¥ 65,292 ¥
67,719 ¥
98,959 ¥
17,512 ¥
1,286,918
85,640,827
13,219,677
497,448
9,581,107
6,806,584
1,092,464
116,838,107
36,972
6,365
2,903
7,007
6,047
7,917
67,211
Total(1)
. . . . . . . . ¥86,622,787 ¥13,318,490 ¥565,643 ¥9,655,833 ¥6,911,590 ¥1,117,893 ¥118,192,236
F-53
MITSUBISHI UFJ FINANCIAL GROUP, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
Notes:
(1) Total loans in the above table do not include loans held for sale, and represent balances without adjustments in relation to unearned
income, unamortized premiums and deferred loan fees.
(2) Loans acquired with deteriorated credit quality in the above table include impaired loans which are individually evaluated for
impairment.
Nonperforming loans were actively disposed of by sales during recent years. The allocated allowance for
credit losses for such loans was removed from the allowance for credit losses and transferred to the valuation
allowance for loans held for sale upon a decision to sell. Net charge-offs in the above table include a decrease
from charge-offs in the allowance for credit losses amounting to ¥19.4 billion and ¥16.8 billion for the fiscal
years ended March 31, 2020 and 2021, respectively, and an increase from recoveries in the allowance for credit
losses amounting to ¥15.1 billion for the fiscal year ended March 31, 2019 due to loan disposal activity.
The MUFG Group sold ¥1,769 billion, ¥2,136 billion and ¥1,684 billion of loans within the Commercial
segment during the fiscal years ended March 31, 2019, 2020 and 2021, respectively.
The MUFG Group sold ¥586 billion of loans within the MUFG Americas Holdings segment during the
fiscal year ended March 31, 2021.
The MUFG Group consolidates certain subsidiaries based on financial information for the year ended
December 31 as this date and MUFG’s fiscal year which ends on March 31 have been treated as coterminous.
For the fiscal year ended March 31, 2020, the effect of recording a provision for credit losses and a provision for
off-balance sheet credit instruments as an intervening event primarily due to economic environment triggered by
COVID-19 for the three-month period ended March 31, 2020 would have been approximately ¥84 billion and
would have resulted in a decrease of ¥58 billion to net income attributable to Mitsubishi UFJ Financial Group.
For the fiscal year ended March 31, 2021, the effects of recording a provision for credit losses and a provision for
off-balance sheet credit instruments for the three-month period ended March 31, 2021 would have been
approximately ¥10 billion and would have resulted in a decrease of ¥5 billion to net income attributable to
Mitsubishi UFJ Financial Group.
Collateral Dependent Loans
The MUFG Group uses, as a practical expedient, the fair value of the collateral when recording the net
carrying amounts of loans and determining the allowance for credit losses of such loans, for which the repayment
is expected to be provided substantially through the operation or sale of the collateral, when the borrower is
experiencing financial difficulty based on the assessment as of the reporting date.
As of March 31, 2020 and 2021, for the Commercial, MUFG Americas Holdings, Krungsri and Other
segments, collateral relating to these loans comprised primarily of real estate, and to a lesser extent, exchange
traded equity securities and deposits etc. For the Residential segment, collateral on these loans was mainly real
estate.
F-54
MITSUBISHI UFJ FINANCIAL GROUP, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
5.
PREMISES AND EQUIPMENT
Premises and equipment at March 31, 2020 and 2021 consisted of the following:
2020
2021
(in millions)
Land . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Buildings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Equipment and furniture . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Leasehold improvements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Construction in progress . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
¥ 380,477
782,367
623,676
310,957
35,594
¥ 379,560
765,341
564,273
303,164
46,513
Total
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Less accumulated depreciation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
2,133,071
1,203,542
2,058,851
1,183,859
Premises and equipment-net . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
¥ 929,529
¥ 874,992
For the fiscal years ended March 31, 2019, 2020 and 2021, the MUFG Group recognized ¥31,345 million,
¥16,575 million and ¥11,424 million, respectively, of impairment losses for long-lived assets, primarily real
estate which was either formerly used for its banking operations and is no longer used or real estate that is being
used where recovery of the carrying amount is doubtful. In addition, ¥411 million, ¥194 million and ¥773million
of impairment losses were recognized for real estate held for sale for the fiscal years ended March 31, 2019, 2020
and 2021, respectively. These losses are included in Other non-interest expenses. In computing the amount of
impairment losses, fair value was determined primarily based on market prices, if available, or the estimated
price based on an appraisal.
Impairment losses for the fiscal year ended March 31, 2019 included ¥21,096 million of losses on long-lived
assets, including land, buildings, and equipment and furniture, which were held by certain consumer finance
subsidiary. See Note 6 for the details of these impairments.
F-55
MITSUBISHI UFJ FINANCIAL GROUP, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
6. GOODWILL AND OTHER INTANGIBLE ASSETS
Goodwill
The table below presents the movement in the carrying amount of goodwill by business segment during the
fiscal years ended March 31, 2020 and 2021:
Global
Corporate &
Investment
Banking
Business
Group
Global
Commercial
Banking
Business
Group
Asset
Management &
Investor
Services
Business
Group
(in millions)
Global
Markets
Business
Group
Total
¥105,339
¥ 490,883
— (177,750)
¥ 27,487
(14,368)
¥2,300
—
¥ 626,009
(192,118)
105,339
34,553
(32,868)
313,133
260,639
(350,942)
13,119
178,308
—
2,300
—
—
433,891
473,500
(383,810)
Balance at March 31, 2019:
Goodwill
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Accumulated impairment losses(2) . . . . . . . . . . .
Goodwill acquired during the fiscal year(1) . . . .
Impairment loss . . . . . . . . . . . . . . . . . . . . . . . . .
Foreign currency translation adjustments and
other . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
(1,354)
(12,877)
8,276
—
(5,955)
Balance at March 31, 2020:
Goodwill
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Accumulated impairment losses . . . . . . . . . . . .
Goodwill acquired during the fiscal year(1) . . . .
Impairment loss . . . . . . . . . . . . . . . . . . . . . . . . .
Foreign currency translation adjustments and
138,538
(32,868)
738,645
(528,692)
214,071
(14,368)
¥105,670
1,105
(30,525)
¥ 209,953
—
(117,039)
¥199,703
4,164
—
2,300
—
¥2,300
—
—
1,093,554
(575,928)
¥ 517,626
5,269
(147,564)
other . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
456
(10,001)
5,066
—
(4,479)
Balance at March 31, 2021:
Goodwill
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Accumulated impairment losses . . . . . . . . . . . .
140,099
(63,393)
728,644
(645,731)
223,301
(14,368)
2,300
—
1,094,344
(723,492)
¥ 76,706
¥ 82,913
¥208,933
¥2,300
¥ 370,852
Notes:
(1) See Note 2 for the goodwill acquired in connection with acquisitions.
(2) Effective April 1, 2018, the MUFG Group reorganized its business groups. Goodwill originally recognized for Retail Banking Business
Group, Corporate Banking Business Group, Trust Assets Business Group and Global Business Group other than MUAH and Krungsri
was ¥1,900,019 million, which has been fully impaired before April 1, 2017. As these impairment losses recorded in past before the
reorganization of the segment and are irrelevant to the annual impairment test under the new segment, the accumulated impaired loss is
not allocated to new business segments after the reorganization of business group.
U.S. GAAP requires to test goodwill for impairment at least annually, or more frequently if events or
changes in circumstances indicate that goodwill may be impaired, using a process that compares the carrying
amount of a reporting unit with its fair value. An impairment loss is recognized to the extent that the carrying
amount of a reporting unit exceeds its fair value, but not exceeding the total amount of goodwill allocated to that
reporting unit.
For the fiscal year ended March 31, 2019, there were no impairment losses recognized. For the fiscal year
ended March 31, 2020, the MUFG Group recognized ¥241,356 million of an impairment of goodwill relating to
F-56
MITSUBISHI UFJ FINANCIAL GROUP, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
Danamon reporting unit within the Global Commercial Banking Business Group Segment, which is included in
impairment of goodwill in the accompanying consolidated statements of income. In determining the acquisition
price of Bank Danamon, the results of multiple valuation techniques were considered with an expectation to
benefit from Danamon’s foothold in the developing local retail and SME segments to deepen its banking
franchise in Indonesia. After the acquisition of Danamon by MUFG Bank, Danamon’s market capitalization
decreased. As a result, the fair value of the reporting unit as an exit price was measured on June 30, 2019 for the
quantitative goodwill impairment test, and led to impairment of goodwill as the fair value had fallen below the
carrying amount of the reporting unit, including goodwill, reflecting a reduction in stock price as well as changes
in the inputs to the valuation techniques in comparison to those considered in determining the acquisition price
such as discount rate. The measurement of the fair value of the reporting unit was primarily based on a market
approach, and was also corroborated by multiple valuation techniques.
For the fiscal year ended March 31, 2020, the MUFG Group recognized ¥62,157 million of impairment of
goodwill relating to Krungsri reporting unit within the Global Commercial Banking Business Group segment.
The global economic slowdown led to slowing economic growth in Thailand and the decline of Krungsri’s stock
price. As a result, the fair value of the reporting unit was measured on December 31, 2019 for the quantitative
goodwill impairment test, and led to impairment of goodwill as the fair value had fallen below the carrying
amount of the reporting unit. The measurement of the fair value of the reporting unit was primarily based on a
market approach, and was also corroborated by multiple valuation techniques.
For the fiscal year ended March 31, 2020, the MUFG Group recognized ¥80,297 million in impairment of
goodwill relating to MUAH reporting unit within the Global Commercial Banking Business Group segment and
Global Corporate & Investment Banking Business Group segment. Due to the decline in interest rates and slower
growth than previously forecasted, cash flow projections for reporting units were lowered. The combination of
these events led management to believe that the fair values of certain reporting units were below carrying value.
As a result, the fair value of the reporting unit was measured on December 31, 2019 for the quantitative goodwill
impairment test, and led to impairment of goodwill with the fair value fallen below the carrying amount of the
reporting unit. The MUFG Group estimated the fair value of its reporting units using a combination of the
income and the market approaches. The income approach estimates the fair value of the reporting units by
discounting management’s projections of each reporting unit’s cash flows, including a terminal value to estimate
the fair value of cash flows beyond the final year of projected results, using a discount rate derived from the
Capital Asset Pricing Model. The market approach incorporates comparable public company price to tangible
book value and price to earnings multiples.
For the fiscal year ended March 31, 2021, the MUFG Group recognized ¥147,564 million in impairment of
goodwill relating to MUAH reporting unit within the Global Commercial Banking Business Group segment and
Global Corporate & Investment Banking Business Group segment. Due largely to increases in observed market
discount rates, the fair values of the reporting units were lowered. This led management to believe that the fair
values of certain reporting unit was below carrying value. As a result, the fair value of the reporting unit was
measured for the quantitative goodwill impairment test, and led to impairment of goodwill with the fair value
fallen below the carrying amount of the reporting unit. The MUFG Group estimated the fair value of its reporting
units using a combination of the income and the market approaches. This goodwill impairment includes the
impact of an intervening event due to economic environment triggered by COVID-19 for the three-month period
ended March 31, 2020.
The MUFG Group consolidates certain subsidiaries, including MUAH, based on financial information for
the year ended December 31 as this date and MUFG’s fiscal year which ends on March 31 have been treated as
coterminous.
F-57
MITSUBISHI UFJ FINANCIAL GROUP, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
Other Intangible Assets
The table below presents the gross carrying amount, accumulated amortization and net carrying amount, in
total and by major class of other intangible assets at March 31, 2020 and 2021:
Gross
carrying
amount
2020
Accumulated
amortization
Net
carrying
amount
Gross
carrying
amount
(in millions)
2021
Accumulated
amortization
Net
carrying
amount
Intangible assets subject to
amortization:
Software . . . . . . . . . . . . .
Customer relationships . .
Core deposit
intangibles . . . . . . . . . .
Trade names . . . . . . . . . .
Other . . . . . . . . . . . . . . . .
¥2,852,273
567,886
¥2,096,635
264,636
¥ 755,638
303,250
¥3,025,769
555,796
¥2,249,340
290,641
¥ 776,429
265,155
174,802
94,748
17,374
100,022
38,055
5,769
74,780
56,693
11,605
164,979
92,422
16,136
102,958
41,629
5,640
62,021
50,793
10,496
Total
. . . . . . . . . . . .
¥3,707,083
¥2,505,117
1,201,966
¥3,855,102
¥2,690,208
1,164,894
Intangible assets not subject to
amortization:
Other(1) . . . . . . . . . . . . . . .
Total
. . . . . . . . . . . . . . . . . . . .
37,560
¥1,239,526
20,100
¥1,184,994
Note:
(1)
Intangible assets not subject to amortization includes ¥29,641 million and ¥11,355 million of mortgage servicing rights accounted for at
fair value at March 31, 2020 and 2021, respectively.
Intangible assets subject to amortization acquired during the fiscal year ended March 31, 2020 amounted to
¥538,925 million, which primarily consisted of ¥291,821 million of software, ¥44,140 million of core deposit
intangibles, ¥180,414 million of customer relationships and ¥16,402 million of trade names. The weighted
average amortization periods for these assets are 5 years, 10 years, 17 years and 23 years, respectively. There is
no significant residual value estimated for these assets. Intangible assets not subject to amortization acquired
during the fiscal year ended March 31, 2020 amounted to ¥23,804 million.
Intangible assets subject to amortization acquired during the fiscal year ended March 31, 2021 amounted to
¥255,336 million, which primarily consisted of ¥251,452 million of software and ¥3,765 million of customer
relationships. The weighted average amortization periods for these assets are 5 years and 21 years, respectively.
There is no significant residual value estimated for these assets. Intangible assets not subject to amortization
acquired during the fiscal year ended March 31, 2021 amounted to ¥1,960 million.
For the fiscal years ended March 31, 2019, 2020 and 2021, the MUFG Group recognized ¥118,108 million,
¥3,732 million and ¥21,680 million, respectively, of impairment losses for intangible assets whose carrying
amounts exceeded their fair value. In computing the amount of impairment losses, fair value was determined
primarily based on the present value of expected future cash flows, the estimated value based on appraisals, or
market prices.
The impairment loss for the fiscal year ended March 31, 2019 included a loss of ¥137,186 million relating to
software held by certain consumer finance subsidiary under the Retail & Commercial Banking Business Group
F-58
MITSUBISHI UFJ FINANCIAL GROUP, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
segment. The consumer finance subsidiary determined to fundamentally review its current system integration
plan, comprehensively taking into account the scale, complexity and the degree of difficulty for the system
development to respond rapid changes in payments market in an appropriate manner, at the meeting of the Board
of Directors on March 25, 2019. The consumer finance subsidiary considered software under development
unlikely to have cost reduction effect and remain in use in the future, and reevaluated the profitability of existing
software in relation to its system integration plan. As a result, it was determined that carrying amounts of both
system software under development and long lived assets group of credit business, including existing system
software, land, buildings, and equipment and furniture exceeded their fair values, and ¥87,596 million and
¥28,494 million of impairment losses were recognized on system software under development and existing
software, respectively. In computing the amount of impairment losses, the fair value was primarily estimated
using an income approach. The income approach is based on the present value of expected cash flows, which
represents market participant perspective. In addition to the impairments on software, ¥21,096 million of
impairment losses on long-lived assets, including land, buildings, and equipment and furniture, were recognized.
The estimated aggregate amortization expense for intangible assets for the next five fiscal years is as
follows:
Fiscal year ending March 31:
(in millions)
2022 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
2023 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
2024 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
2025 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
2026 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
¥267,181
228,631
193,748
150,403
100,619
7. LEASE TRANSACTIONS
Lease transactions as a lessee
Right-of-use assets of finance leases, which are principally related to data processing equipment and
included in Premises and equipment in the accompanying consolidated balance sheets, amounted to
¥18,497 million and ¥15,218 million at March 31, and 2020 and 2021, respectively. Lease liabilities of these
finance leases, which are included in Long-term debt in the accompanying consolidated balance sheets,
amounted to ¥25,186 million and ¥20,137 million at March 31, 2020 and 2021, respectively.
Right-of-use assets of operating leases, which are principally related to office space and equipment are
included in Other assets in the accompanying consolidated balance sheets, amounted to ¥393,435 million and
¥338,547 million at March 31, 2020 and 2021, respectively. Lease liabilities of these operating leases, which are
included in Other liabilities in the accompanying consolidated balance sheets, amounted to ¥482,813 million and
¥476,104 million at March 31, 2020 and 2021, respectively.
For the fiscal year ended March 31, 2021, the MUFG Group recognized ¥56,424 million of impairment
losses for Right-of-use assets of operating leases, where recovery of the carrying amount is doubtful. The losses
are included in Other non-interest expenses.
The discount rates used in determining the present value of leases are the MUFG Group’s incremental
borrowing rate, developed based upon each lease’s term and currency of payment. The lease term includes
options to extend or terminate the lease when it is reasonably certain that the MUFG Group will exercise that
option. The MUFG Group has elected to exclude leases with original terms of less than one year from the
F-59
MITSUBISHI UFJ FINANCIAL GROUP, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
operating lease right-of-use assets and lease liabilities. The MUFG Group’s lease arrangements that have not yet
commenced as of March 31, 2021 are not material. Variable lease costs did not have a material impact on the
MUFG Group’s results of operations.
The following table presents profit or loss of lease transactions as a lessee for the fiscal years ended
March 31, 2020 and 2021:
Finance lease cost:
2020
2021
(in millions)
Amortization of right-of-use assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Interest on lease liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Operating lease cost . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
¥
¥
5,455
460
99,939
4,971
240
91,276
The following table presents information of lease transactions as a lessee for the fiscal years ended
March 31, 2020 and 2021:
Cash paid for amounts included in the measurement of lease liabilities:
Operating cash flows from finance leases . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Operating cash flows from operating leases . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Financing cash flows from finance leases . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Right-of-use assets obtained in exchange for new finance lease liabilities . . . . . . . . . .
Right-of-use assets obtained in exchange for new operating lease liabilities . . . . . . . . .
Weighted-average remaining lease term:
2020
2021
(in millions, except years and
percentages)
¥
482
106,103
7,090
12,754
46,482
¥
331
102,982
7,709
3,487
50,564
Finance leases . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Operating leases . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
4.4 years
9.5 years
4.1 years
8.3 years
Weighted-average discount rate:
Finance leases . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Operating leases . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
0.99%
1.16%
0.87%
0.97%
Maturities of lease liabilities as of March 31, 2021 are as follows:
2022 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
2023 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
2024 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
2025 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
2026 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
2027 and thereafter . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
¥
Finance
leases
Operating
leases
(in millions)
7,550
5,397
3,735
1,585
748
2,090
¥ 106,423
81,112
60,525
51,303
41,089
163,125
Total undiscounted cash flows . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Difference between undiscounted and discounted cash flows . . . . . . . . . . . . . . . .
21,105
(968)
503,577
(27,473)
Amount on balance sheet
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
¥
20,137
¥ 476,104
Lease transactions as a lessor
As part of its financing activities, the MUFG Group enters into leasing arrangements with customers. The
MUFG Group’s leasing operations are conducted through leasing subsidiaries and consist principally of various
F-60
MITSUBISHI UFJ FINANCIAL GROUP, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
types of data processing equipment, office equipment and transportation equipment. Sales type and direct
financing lease are presented in loans. In certain case, the MUFG Group requests lessees to deposit in advance an
amount nearly equal or equal to the residual value of leased assets.
The following table presents profit or loss of lease transactions as a lessor for the fiscal years ended
March 31, 2020 and 2021:
Sales type and direct financing leases:
Finance income on net investment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
¥
119,010
¥ 122,810
Operating leases:
Lease income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
7,856
3,663
Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
¥
126,866
¥ 126,473
2020
2021
(in millions)
Finance income on net investment is included in Interest income—Loans, including fees in the consolidated
statements of income. Lease income from operating lease transactions is included in Other non-interest income in
the consolidated statements of income.
The following table presents the components of sales type and direct financing leases transactions as of
March 31, 2020 and 2021.
Lease receivables (undiscounted) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
¥2,193,360
¥1,913,852
Adjustments:
Discounted unguaranteed residual value . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Initial direct cost on sales type and direct financing leases . . . . . . . . . . . . . .
Deferred selling profit . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
15,515
29,562
(364,206)
15,435
27,869
(313,784)
Net investment in sales type and direct financing leases . . . . . . . . . . . . . . . . . . . . . . . .
¥1,874,231
¥1,643,372
2020
2021
(in millions)
The following table presents maturity of the lease payment receivables of sales type and direct financing
lease transactions as of March 31, 2021:
2022 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
2023 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
2024 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
2025 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
2026 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
2027 and thereafter . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Total undiscounted cash flows . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Difference between undiscounted cash flows and the lease receivables recognized on balance
Lease
receivables
(in millions)
¥ 460,067
417,653
352,767
270,563
188,168
224,634
1,913,852
sheet . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
(270,480)
Amount on balance sheet
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
¥1,643,372
F-61
MITSUBISHI UFJ FINANCIAL GROUP, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
8.
INCOME TAXES
Income before Income Tax Expense
Income before income tax expense by jurisdiction for the fiscal years ended March 31, 2019, 2020 and 2021
was as follows:
Domestic income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Foreign income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
¥228,018
642,824
(in millions)
89,440
¥
343,780
¥ 575,101
1,033,241
Total
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
¥870,842
¥ 433,220
¥1,608,342
2019
2020
2021
Income Tax Expense (Benefit)
The detail of current and deferred income tax expense (benefit) for the fiscal years ended March 31, 2019,
2020 and 2021 was as follows:
2019
2020
2021
(in millions)
Current:
Domestic . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Foreign . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
¥ 57,303
123,730
¥
Total
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
181,033
28,128
147,344
175,472
¥
95,183
83,492
178,675
Deferred:
Domestic . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Foreign . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
(32,746)
(15,050)
(18,949)
(42,018)
310,490
(44,217)
Total
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
(47,796)
(60,967)
266,273
Income tax expense . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Income tax expense (benefit) reported in Accumulated OCI relating to:
133,237
114,505
444,948
Investment securities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Debt valuation adjustments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Derivatives qualifying for cash flow hedges . . . . . . . . . . . . . . . . . . .
Defined benefit plans . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Foreign currency translation adjustments . . . . . . . . . . . . . . . . . . . . .
15,590
4,293
(1,845)
(38,229)
15,148
(29,747)
23,908
4,012
(57,685)
(20,693)
1,146
(36,792)
12,244
139,883
(3,368)
Total
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
(5,043)
(80,205)
113,113
Total
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
¥128,194
¥
34,300
¥ 558,061
The MUFG Group files tax returns on a consolidated basis for corporate income taxes within Japan. A
consolidated basis for corporate income taxes results in the reporting of taxable income or loss based upon the
combined profits or losses of the parent company and its wholly-owned domestic subsidiaries.
Reconciliation of Effective Income Tax Rate
Income taxes in Japan applicable to the MUFG Group are imposed by the national, prefectural and
municipal governments, and in the aggregate resulted in a normal effective statutory rate of approximately
30.6%, 30.6%, and 30.6% for the fiscal years ended March 31, 2019, 2020 and 2021, respectively. Foreign
subsidiaries are subject to income taxes of the countries in which they operate.
F-62
MITSUBISHI UFJ FINANCIAL GROUP, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
A reconciliation of the effective income tax rates reflected in the accompanying consolidated statements of
income to the combined normal effective statutory tax rates for the fiscal years ended March 31, 2019, 2020 and
2021 is as follows:
2019
2020
2021
30.6% 30.6% 30.6%
Combined normal effective statutory tax rate . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
0.3
Nondeductible expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
1.2
0.5
2.4
Impairment of goodwill . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . — 26.1
(0.9)
(9.2)
Foreign tax credit and payments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
(1.0)
(3.2)
Lower tax rates applicable to income of subsidiaries . . . . . . . . . . . . . . . . . . . . . . . . . . .
Change in valuation allowance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
(0.9)
7.9
Realization of previously unrecognized tax effects of subsidiaries . . . . . . . . . . . . . . . . . — (19.8)(1) 0.0
(1.9)
Nontaxable dividends received . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
0.0
Undistributed earnings of subsidiaries . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
(0.1)
Tax and interest expense for uncertainty in income taxes . . . . . . . . . . . . . . . . . . . . . . . .
Noncontrolling interest income (loss) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
0.1
— (0.1)
Effect of changes in tax laws . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
0.1
1.9
Expiration of loss carryforward . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
(0.9)
3.0
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Other—net
(9.1)
0.6
0.6
0.2
0.0
0.1
(1.0)
(15.6)
3.6
0.0
(0.1)
(3.3)
(2.5)
(1.4)
Effective income tax rate . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
15.3% 26.4% 27.7%
Note:
(1)
In October 2019, a wholly owned subsidiary of the MUFG Group was sold. The sale resulted in the realization of tax benefits that were
not previously recognized as deferred tax assets, resulting in a ¥85,588 million reduction of income tax expense and a 19.8% reduction in
the effective tax rate for the fiscal year ended March 31, 2020.
Deferred Tax Assets and Liabilities
Deferred tax assets and liabilities are computed for each tax jurisdiction using currently enacted tax rates
applicable to periods when the temporary differences are expected to reverse. The tax effects of the items
comprising the MUFG Group’s net deferred tax assets at March 31, 2020 and 2021 were as follows:
2020
2021
(in millions)
Deferred tax assets:
Allowance for credit losses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Operating loss carryforwards . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Loans . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Accrued liabilities and other . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Premises and equipment
Derivative financial instruments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Defined benefit plans . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Obligations under operating leases . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Valuation allowance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
¥ 317,770
94,326
2,022
277,807
150,116
96,761
57,836
133,812
(151,530)
¥ 462,369
97,844
790
300,942
117,322
69,039
—
132,443
(137,503)
Total deferred tax assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
978,920
1,043,246
F-63
MITSUBISHI UFJ FINANCIAL GROUP, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
Deferred tax liabilities:
Investment securities (including trading account assets at fair value under the fair
value option) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Intangible assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Lease transactions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Defined benefit plans . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Investments in subsidiaries and affiliates . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Right-of-use assets of operating leases . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Other . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
2020
2021
(in millions)
788,614
87,063
54,349
—
279,583
106,995
90,653
1,017,131
70,575
48,519
81,282
338,713
100,260
92,306
Total deferred tax liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
1,407,257
1,748,786
Net deferred tax assets (liabilities) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
¥ (428,337) ¥ (705,540)
The valuation allowance was provided primarily against deferred tax assets recorded at MUFG and its
subsidiaries with operating loss carryforwards. The valuation allowance is determined to reduce the measurement
of deferred tax assets not expected to be realized. Management considers all available evidence, both positive and
negative, to determine whether the valuation allowance is necessary based on the weight of that evidence.
Management determines the amount of the valuation allowance based on future reversals of existing taxable
temporary differences and future taxable income exclusive of reversing temporary differences. Future taxable
income is developed from forecasted operating results, based on recent historical trends and approved business
plans, the eligible carryforward periods and other relevant factors.
For certain subsidiaries where strong negative evidence exists, such as the existence of significant amounts
of operating loss carryforwards, cumulative losses and the expiration of unused operating loss carryforwards in
recent years, a valuation allowance was recognized against the deferred tax assets as of March 31, 2020 and 2021
to the extent that it is more likely than not that they will not be realized.
Income taxes are not provided on undistributed earnings of certain foreign subsidiaries that are considered
to be indefinitely reinvested in the operations of such subsidiaries. At March 31, 2020 and 2021, the
undistributed earnings of such foreign subsidiaries amounted to approximately ¥67,791 million and
¥105,934 million, respectively. Determination of the amount of unrecognized deferred tax liabilities with respect
to these undistributed earnings is not practicable because of the complexity associated with its hypothetical
calculation including foreign withholding taxes and foreign tax credits. MUFG has neither the plan nor the
intention to dispose of investments in such foreign subsidiaries and, accordingly, does not expect to record
capital gains or losses, or otherwise monetize the undistributed earnings of such foreign subsidiaries.
Furthermore, under the Japanese tax law, 95% of a dividend received from a foreign company in which a
domestic company has held generally at least 25% of the outstanding shares for a continuous period of six
months or more ending on the date on which the dividend is declared can be excluded from the domestic
company’s taxable income. Therefore, if undistributed earnings of certain foreign subsidiaries are repatriated
through dividends, only 5% of the amount of dividends will be included in taxable income.
F-64
MITSUBISHI UFJ FINANCIAL GROUP, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
Operating Loss and Tax Credit Carryforwards
At March 31, 2021, the MUFG Group had operating loss carryforwards for corporate tax of
¥213,108 million and tax credit carryforwards of ¥62,184 million for tax purposes. Such carryforwards, if not
utilized, are scheduled to expire as follows:
Operating loss
carryforwards
Tax credit
carryforwards
(in millions)
Fiscal year ending March 31:
2022 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
2023 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
2024 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
2025 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
2026 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
2027 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
2028 and thereafter . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
No definite expiration date . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
¥ 15,457
5,575
5,209
84,080
59,047
1,722
17,288
24,730
¥
650
8,191
6,705
10
37
70
41,756
4,765
Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
¥213,108
¥62,184
Uncertainty in Income Tax
The following is a roll-forward of the MUFG Group’s unrecognized tax benefits for the fiscal years ended
March 31, 2019, 2020 and 2021:
Balance at beginning of fiscal year . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Gross amount of increases for current year’s tax positions . . . . . . . . . . . . . . .
Gross amount of decreases for current year’s tax positions . . . . . . . . . . . . . . .
Gross amount of increases for prior years’ tax positions . . . . . . . . . . . . . . . . .
Gross amount of decreases for prior years’ tax positions . . . . . . . . . . . . . . . .
Net amount of changes relating to settlements with tax authorities . . . . . . . .
Decreases due to lapse of applicable statutes of limitations . . . . . . . . . . . . . .
Foreign exchange translation and other . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
2019
2020
2021
¥12,917
313
—
8,836
(1,090)
—
(1,540)
(276)
(in millions)
¥19,249
¥19,160
399
202
— (1,919)
212
489
— (2,329)
—
(81)
(116)
(297)
(1,747)
(144)
Balance at end of fiscal year
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
¥19,160
¥19,249
¥13,829
The MUFG Group classifies interest and penalties, if applicable, related to income taxes as Income tax
expense. Accrued interest and penalties (not included in the “unrecognized tax benefits” above) are a component
of Other liabilities. The following is a roll-forward of the interest and penalties recognized in the accompanying
consolidated financial statements for the fiscal years ended March 31, 2019, 2020 and 2021:
Balance at beginning of fiscal year . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Total interest and penalties in the consolidated statements of income . . . . . . . . . .
Total cash settlements, foreign exchange translation and other . . . . . . . . . . . . . . . .
¥ 4,564
(1,655)
147
(in millions)
¥ 3,056
(398)
(46)
¥ 2,612
(398)
203
Balance at end of fiscal year
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
¥ 3,056
¥ 2,612
¥ 2,417
2019
2020
2021
F-65
MITSUBISHI UFJ FINANCIAL GROUP, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
The MUFG Group is subject to ongoing tax examinations by the tax authorities of the various jurisdictions
in which it operates. The following are the major tax jurisdictions in which the MUFG Group operates and the
status of years under audit or open to examination:
Jurisdiction
Tax years
Japan . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
United States—Federal . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
United States—California . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Indonesia . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
2020 and forward
2017 and forward
2015 and forward
2017 and forward
The MUFG Group is currently under continuous examinations by the tax authorities in various domestic and
foreign jurisdictions and many of these examinations are resolved every year. The unrecognized tax benefits will
decrease since resolved items will be removed from the balance regardless of whether their resolution results in
payment or recognition. It is reasonably possible that the unrecognized tax benefits will not increase or decrease
during the next twelve months.
9.
PLEDGED ASSETS AND COLLATERAL
Pledged Assets
At March 31, 2021, assets mortgaged, pledged, or otherwise subject to lien were as follows:
Trading account securities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Investment securities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Loans . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Other . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
2021
(in millions)
¥ 9,966,574
20,250,998
12,289,789
23,745
Total
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
¥42,531,106
The above pledged assets were classified by type of liabilities to which they related as follows:
Deposits . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Payables under repurchase agreements and securities lending transactions . . . . . . . . . . . . . . . . . . . .
Other short-term borrowings and long-term debt . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Other . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
2021
(in millions)
138,491
¥
13,118,547
29,243,996
30,072
Total
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
¥42,531,106
At March 31, 2021, certain investment securities, principally Japanese national government and Japanese
government agency bonds, loans, and other assets with a combined carrying value of ¥20,818,106 million were
pledged for acting as a collection agent of public funds, for settlement of exchange at the Bank of Japan and
Japanese Banks’ Payment Clearing Network, for derivative transactions and for certain other purposes.
The MUFG Group engages in on-balance sheet securitizations. These securitizations of mortgage and
apartment loans, which do not qualify for sales treatment, are accounted for as secured borrowings. The amount
of loans in the table above represents the carrying amount of these transactions with the carrying amount of the
associated liabilities included in Other short-term borrowings and Long-term debt.
F-66
MITSUBISHI UFJ FINANCIAL GROUP, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
Under Japanese law, Japanese banks are required to maintain certain reserves on deposit with the Bank of
Japan based on the amount of deposit balances and certain other factors. There are similar reserve deposit
requirements for foreign offices and subsidiaries engaged in banking businesses in foreign countries. At
March 31, 2020 and 2021 the reserve funds required to be maintained by the MUFG Group, which are included
in Cash and due from banks and Interest-earning deposits in other banks, were ¥2,606,464 million and
¥2,881,778 million, respectively.
Collateral
The MUFG Group accepts and provides financial assets as collateral for transactions, principally
commercial loans, repurchase agreements and securities lending transactions, call money, and derivatives.
Financial assets eligible for such collateral include, among others, marketable equity securities, trade and notes
receivable and CDs.
Secured parties, including creditors and counterparties to certain transactions with the MUFG Group, may
sell or repledge financial assets provided as collateral. Certain contracts, however, may not be specific about the
secured party’s right to sell or repledge collateral under the applicable statutes and, therefore, whether or not the
secured party is permitted to sell or repledge collateral would differ depending on the interpretations of specific
provisions of the existing statutes, contract or certain market practices.
If the MUFG Group determines, based on available information, that a financial asset provided as collateral
might not be sold or repledged by the secured parties, such collateral is not separately reported in the
accompanying consolidated balance sheets. If a secured party is permitted to sell or repledge financial assets
provided as collateral by contract or custom under the existing statutes, the MUFG Group reports such pledged
financial assets separately on the face of the accompanying consolidated balance sheets. At March 31, 2021, the
MUFG Group pledged ¥47,853 billion of assets that may not be sold or repledged by the secured parties.
Certain banking subsidiaries accept collateral for commercial loans and certain banking transactions under a
standardized agreement with customers, which provides that these banking subsidiaries may require the
customers to provide collateral or guarantees with respect to the loans and other banking transactions. Financial
assets pledged as collateral are generally negotiable and transferable instruments, and such negotiability and
transferability are authorized by applicable legislation. In principle, Japanese legislation permits these banking
subsidiaries to repledge financial assets accepted as collateral unless otherwise prohibited by contract or relevant
statutes. Nevertheless, the MUFG Group did not sell or repledge nor does it plan to sell or repledge such
collateral accepted in connection with commercial loans before a debtor’s default or other credit events specified
in the agreements as it is not customary within the banking industry in Japan to dispose of collateral before a
debtor’s default and other specified credit events. Derivative agreements commonly used in the marketplace do
not prohibit a secured party’s disposition of financial assets received as collateral, and in resale agreements and
securities borrowing transactions, securities accepted as collateral may be sold or repledged by the secured
parties. At March 31, 2020 and 2021, the fair value of the collateral accepted by the MUFG Group that is
permitted to be sold or repledged was ¥38,858 billion and ¥30,983 billion, respectively, of which ¥32,095 billion
and ¥23,478 billion, respectively, was sold or repledged.
At March 31, 2020 and 2021, the cash collateral pledged for derivative transactions, which is included in
Other assets, was ¥1,696,108 million and ¥2,005,136 million, respectively, and the cash collateral received for
derivative transactions, which is included in Other liabilities, was ¥1,125,305 million and ¥909,641 million,
respectively.
F-67
MITSUBISHI UFJ FINANCIAL GROUP, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
10. DEPOSITS
The balances of time deposits, including CDs, issued in amounts of ¥10 million (approximately U.S.$
90 thousand at the Federal Reserve Bank of New York’s noon buying rate on March 31, 2021) or more with
respect to domestic deposits and issued in amounts of U.S.$100,000 or more with respect to foreign deposits
were ¥23,957,076 million and ¥23,329,855 million, respectively, at March 31, 2020, and ¥25,219,926 million
and ¥23,673,512 million, respectively, at March 31, 2021.
The maturity information at March 31, 2021 for domestic and foreign time deposits, including CDs, is
summarized as follows:
Due in one year or less . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Due after one year through two years . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Due after two years through three years . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Due after three years through four years . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Due after four years through five years . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Due after five years . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
¥32,811,126
4,345,312
2,454,117
610,596
668,397
757,934
¥23,871,425
460,277
204,050
109,874
31,178
68,309
Total
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
¥41,647,482
¥24,745,113
Domestic
Foreign
(in millions)
11. CALL MONEY AND FUNDS PURCHASED
A summary of funds transactions for the fiscal years ended March 31, 2020 and 2021 is as follows:
Outstanding at end of fiscal year:
Amount . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Principal range of maturities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Weighted average interest rate . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
¥
3,668,922
1 day to 30 days
¥
2,353,830
1 day to 30 days
0.04%
0.04%
2020
2021
(in millions, except percentages and days)
12. DUE TO TRUST ACCOUNT, SHORT-TERM BORROWINGS AND LONG-TERM DEBT
Mitsubishi UFJ Trust and Banking holds assets on behalf of its customers in an agent, fiduciary or trust
capacity. Such trust account assets are not the MUFG Group’s proprietary assets and are managed and accounted
for separately.
However, excess cash funds of individual trust accounts are often placed with Mitsubishi UFJ Trust and
Banking which manages the funds together with its own funds in its proprietary account. Due to trust account
reflects a temporary placement of the excess funds from individual trust accounts and, in view of the MUFG
Group’s funding, due to trust account is similar to short-term funding, including demand deposits and other
overnight funds purchased. The balance changes in response to the day-to-day changes in the excess funds placed
by the trust accounts. A summary of due to trust account transactions at March 31, 2020 and 2021 is as follows:
Amount outstanding at end of fiscal year . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Weighted average interest rate on outstanding balance at end of fiscal year . . . . .
2020
2021
(in millions, except percentages)
¥3,891,831
¥3,377,747
0.00%
0.00%
F-68
MITSUBISHI UFJ FINANCIAL GROUP, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
At March 31, 2020 and 2021, the MUFG Group had unused lines of credit for financing amounting to
¥7,519,582 million and ¥4,408,245 million, respectively. The amounts principally consist of pooled collateral
which are used to cover shortages in the Bank of Japan account and to meet liquidity needs. The MUFG Group
may borrow from the Bank of Japan on demand up to the total amount of collateral eligible for credit extension.
Other short-term borrowings at March 31, 2020 and 2021 were comprised of the following:
2020
2021
(in millions, except percentages)
Domestic offices:
Commercial paper . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Borrowings from the Bank of Japan . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Borrowings from other financial institutions . . . . . . . . . . . . . . . . . . . . . . .
Other . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
¥ 1,160,758
9,800,800
191,453
170,044
¥ 1,207,610
9,238,209
141,060
126,060
Total domestic offices . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
11,323,055
10,712,939
Foreign offices:
Commercial paper . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Borrowings from other financial institutions . . . . . . . . . . . . . . . . . . . . . . .
Short-term debentures . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Other . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Total foreign offices . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
3,836,459
631,502
24,009
241,168
4,733,138
3,281,866
113,874
7,775
71,306
3,474,821
Total
Less unamortized discount
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
16,056,193
711
14,187,760
37
Other short-term borrowings—net
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
¥16,055,482
¥14,187,723
Weighted average interest rate on outstanding balance at end of fiscal year . . .
0.67%
0.06%
F-69
MITSUBISHI UFJ FINANCIAL GROUP, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
Long-term debt (with original maturities of more than one year) at March 31, 2020 and 2021 was comprised
of the following:
MUFG:
2020
2021
(in millions)
Obligations under finance leases . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ¥
Unsubordinated debt (1):
6,552
¥
4,989
Fixed rate bonds, payable in US dollars, due 2021-2039, principally 0.85%-4.29% . . . . . . . . .
Fixed rate bonds, payable in Euro, due 2023-2033, principally 0.34%-1.75% . . . . . . . . . . . . . .
. . .
Fixed rate bonds, payable in other currencies, due 2024-2029, principally 2.08%-4.05%(2)
Floating rate bonds, payable in US dollars, due 2021-2023, principally 0.87%-1.24% . . . . . . .
Floating rate bonds, payable in Euro, due 2023, principally 0.01% . . . . . . . . . . . . . . . . . . . . . .
. . . . . . . . . . .
Floating rate bonds, payable in other currencies, due 2024, principally 1.26% (2)
3,864,822
408,825
28,382
734,254
41,843
26,436
4,224,401
482,856
34,262
669,464
45,430
33,744
Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
5,104,562
5,490,157
Subordinated debt (1):
Fixed rate bonds, payable in Japanese yen, due 2024-2031, principally 0.37%-1.39% . . . . . . .
Adjustable rate bonds, payable in Japanese yen, due 2026-2031, principally 0.29%-0.58% . . .
Adjustable rate bonds, payable in Japanese yen, no stated maturity, principally
685,663
1,043,336
776,886
1,072,209
0.82%-2.50% . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
1,756,087
1,704,816
Adjustable rate borrowings, payable in Japanese yen, due 2028-2029, principally
0.30%-0.46% . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
47,500
31,500
Adjustable rate borrowings, payable in Japanese yen, no stated maturity, principally
0.85%-1.17% . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Floating rate bonds, payable in Japanese yen, no stated maturity, principally 3.02% . . . . . . . . .
Floating rate borrowings, payable in Japanese yen, due 2025-2028, principally
66,649
3,500
87,085
—
0.57%-0.79% . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
86,000
86,000
Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
3,688,735
3,758,496
Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
8,799,849
9,253,642
MUFG Bank:
Obligations under finance leases . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ¥
Unsubordinated debt (1):
5,636
¥
4,628
Fixed rate bonds, payable in Japanese yen, due 2021-2027, principally 0.36%-2.34% . . . . . . .
Fixed rate bonds, payable in US dollars, due 2021-2050, principally 0.00%-4.70% . . . . . . . . .
Fixed rate bonds, payable in Euro, due 2022-2033, principally 0.88%-1.81% . . . . . . . . . . . . . .
. . . . . . . . . . . . .
Fixed rate bonds, payable in other currencies, due 2047, principally 0.00% (2)
Fixed rate borrowings, payable in Japanese yen, due 2021-2028, principally 0.00%-0.25% . . .
Fixed rate borrowings, payable in US dollars, due 2030, principally 2.93% . . . . . . . . . . . . . . .
Floating rate borrowings, payable in US dollars, due 2021-2031, principally 0.20%-4.11% . . .
Floating rate borrowings, payable in Euro, due 2021-2036, principally 0.00%-0.40% . . . . . . .
141,700
1,104,504
108,252
17,620
10,440,217
8,367
897,170
102,123
123,300
1,041,115
109,619
3,100
18,689,074
7,833
721,941
111,611
Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
12,819,953
20,807,593
Subordinated debt (1):
Fixed rate bonds, payable in Japanese yen, due 2021-2031, principally 1.39%-2.91% . . . . . . .
Fixed rate borrowings, payable in Japanese yen, due 2022-2035, principally 0.31%-2.24% . . .
Adjustable rate borrowings, payable in Japanese yen, due 2028, principally 0.98% . . . . . . . . .
Adjustable rate borrowings, payable in Japanese yen, no stated maturity, principally
2.67%-3.52% . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Floating rate borrowings, payable in Japanese yen, due 2027, principally 0.12% . . . . . . . . . . .
490,590
73,400
12,000
13,500
15,000
350,900
73,400
10,000
—
15,000
Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
604,490
449,300
Obligations under loan securitization transaction accounted for as secured borrowings due 2021-
2080, principally 0.11%-8.00% . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
791,139
618,072
Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
14,221,218
21,879,593
F-70
MITSUBISHI UFJ FINANCIAL GROUP, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
2020
2021
(in millions)
Other subsidiaries:
Obligations under finance leases . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ¥
Unsubordinated debt (1):
12,998
¥
10,520
Fixed rate borrowings, bonds and notes, payable in Japanese yen, due 2021-2051, principally
0.00%-56.00% . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Fixed rate borrowings, bonds and notes, payable in US dollars, due 2021-2036, principally
940,691
878,276
0.00%-57.00% . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
1,106,465
885,950
Fixed rate borrowings, bonds and notes, payable in Euro, due 2021-2030, principally
0.00%-0.26% . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
2,965
2,719
Fixed rate borrowings, bonds and notes, payable in Thai baht, due 2021-2027, principally
0.00%-7.15% . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
387,799
349,666
Fixed rate borrowings, bonds and notes, payable in other currencies, due 2021-2037,
principally 0.00%-10.25% (2) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
360,558
320,663
Floating/Adjustable rate borrowings, bonds and notes, payable in Japanese yen, due 2021-
2051, principally 0.00%-65.00% . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Floating rate borrowings, bonds and notes, payable in US dollars, due 2021-2030, principally
0.00%-60.00% . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Floating rate borrowings, bonds and notes, payable in Euro, due 2021-2023, principally
0.00%-4.00% . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Floating/Adjustable rate borrowings, bonds and notes, payable in other currencies, due 2020-
2024, principally 0.00%-7.30% (2) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
1,259,427
1,007,882
378,217
174,997
835
6,804
1,092
—
Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
4,443,761
3,621,245
Subordinated debt (1):
Fixed rate borrowings, bonds and notes, payable in Japanese yen, due 2021-2030, principally
1.36%-2.61% . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Fixed rate borrowings, bonds and notes, payable in US dollars, due 2022-2030, principally
223,095
184,894
7.50%-9.90% . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
737
1,212
Fixed rate borrowings, bonds and notes, payable in Thai baht, due 2027-2029, principally
3.40%-3.90% . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
220,756
209,189
Fixed rate borrowings, bonds and notes, payable in other currencies, due 2021, principally
0.00% (2) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Floating rate borrowings, bonds and notes, payable in Japanese yen, due 2021, principally
0.73% . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Floating rate borrowings, bonds and notes, payable in US dollars, due 2036, principally
1.95% . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
7,179
2,000
4,575
6,915
—
3,820
Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
458,342
406,030
Obligations under loan securitization transaction accounted for as secured borrowings due 2021-
2022, principally 1.84%-2.25% . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
6,453
11
Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
4,921,554
4,037,806
Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
27,942,621
35,171,041
Debt issuance cost
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ¥
(15,858)
¥
(13,390)
Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ¥27,926,763
¥35,157,651
Notes:
(1) Adjustable rate debts are debts where interest rates are reset in accordance with the terms of the debt agreements, and floating rate debts
are debts where interest rates are repriced in accordance with movements of markets indices.
(2) Minor currencies, such as Australian dollar, British pound, Indonesian rupiah, Brazilian real, Russian ruble etc., excluding Japanese yen,
US dollars, Euro and Thai baht have been summarized into the “Other currencies” classification.
The MUFG Group uses derivative financial instruments to manage its interest rate and currency exposures
for certain debts. The derivative financial instruments include swaps, forwards, options and other types of
derivatives. As a result of these derivative instruments, the effective rates reflected in the table above may differ
F-71
MITSUBISHI UFJ FINANCIAL GROUP, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
from the coupon rates. The interest rates for the adjustable and floating rate debt shown in the above table are
those in effect at March 31, 2020 and 2021.
Certain debt agreements permit the MUFG Group to redeem the related debt, in whole or in part, prior to
maturity at the option of the issuer on terms specified in the respective agreements.
The following is a summary of maturities of long-term debt subsequent to March 31, 2021:
MUFG
BK
Other
subsidiaries
Total
(in millions)
Fiscal year ending March 31:
2022 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
2023 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
2024 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
2025 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
2026 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
2027 and thereafter . . . . . . . . . . . . . . . . . . . . . . . . .
¥ 792,201
896,760
752,246
979,603
513,597
5,319,235
¥ 2,014,430
644,383
1,073,761
16,530,494
181,556
1,434,969
¥1,065,677
1,025,627
558,907
272,391
195,186
920,018
¥ 3,872,308
2,566,770
2,384,914
17,782,488
890,339
7,674,222
Total
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
¥9,253,642
¥21,879,593
¥4,037,806
¥35,171,041
New Issuances of Bonds for Basel III
For the fiscal year ended March 31, 2021, the MUFG Group issued to institutional investors in Japan
¥60,000 million aggregate principal amount of unsecured perpetual subordinated Additional Tier 1 notes. These
notes are subject to the MUFG Group’s discretion to cease interest payments and a write-down of the principal
upon the occurrence of certain events, including when the MUFG Group’s Common Equity Tier 1 ratio declines
below 5.125%, when the MUFG Group is deemed to be at risk of becoming non-viable or when the MUFG
Group becomes subject to bankruptcy proceedings.
For the fiscal year ended March 31, 2021, the MUFG Group issued $4,500 million (approximately
¥498,195 million), €500 million (approximately ¥64,900 million) of bonds with an intent to count towards Total
Loss-Absorbing Capacity (“TLAC”) to global institutional investors to meet the TLAC requirement under the
standards issued by the Financial Stability Board. The MUFG Group is required to maintain external TLAC
ratios of 16% on a risk-weighted assets basis and 6% on a leverage exposure basis as of March 31, 2021 and 18%
on a risk-weighted assets basis and 6.75% on a leverage exposure basis from March 31, 2022.
13. SEVERANCE INDEMNITIES AND PENSION PLANS
Defined Benefit Pension Plans
The MUFG Group has funded non-contributory defined benefit pension plans, which cover substantially all
of its employees and mainly provide for lifetime annuity payments commencing at age 65 (“pension benefits”)
based on eligible compensation at the time of severance, rank, years of service and other factors.
MUFG Bank and certain domestic subsidiaries, Mitsubishi UFJ Trust and Banking, Mitsubishi UFJ
Securities Holdings, Mitsubishi UFJ NICOS and some subsidiaries of MUFG have non-contributory Corporate
Defined Benefit Pension plans which provide benefits to all their domestic employees.
The MUFG Group also offers qualified and nonqualified defined benefit pension plans in foreign offices
and subsidiaries for their employees. The qualified plans are non-contributory defined pension plans, which
F-72
MITSUBISHI UFJ FINANCIAL GROUP, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
provide benefits upon retirement based on years of service and average compensation and cover substantially all
of the employees of such foreign offices and subsidiaries. With respect to the offices and subsidiaries in the
United States of America, the qualified plans are funded on a current basis in compliance with the requirement of
the Employee Retirement Income Security Act of the United States of America. The nonqualified plans are
non-contributory defined benefit pension plans, under which certain employees earn pay and interest credits on
compensation amounts above the maximum stipulated by applicable laws under the qualified plans.
Severance Indemnities Plans
The MUFG Group has SIPs under which their employees in Japan, other than those who are directors, are
entitled, under most circumstances, upon mandatory retirement at normal retirement age or earlier termination of
employment, to lump-sum severance indemnities based on eligible compensation at the time of severance, rank,
years of service and other factors. Under SIPs, benefit payments in the form of a lump-sum cash payment with no
option to receive annuity payments, upon mandatory retirement at normal retirement age or earlier termination of
employment, are provided. When a benefit is paid in a single payment to a benefit payee under the plans, the
payment represents final relief of the obligation.
Other Postretirement Plans
The MUFG Group’s foreign offices and subsidiaries, primarily in the United States of America, provide
their employees with certain postretirement medical and life insurance benefits (“other benefits”).
Net periodic cost of pension benefits and other benefits for the fiscal years ended March 31, 2019, 2020 and
2021 include the following components:
Domestic subsidiaries
Foreign offices and subsidiaries
2019
2020
2021
2019
2020
2021
Pension
benefits
and SIP
Pension
benefits
and SIP
Pension
benefits
and SIP
Pension
benefits
Other
benefits
Pension
benefits
Other
benefits
Pension
benefits
Other
benefits
(in millions)
Service cost—benefits earned
during the fiscal year
Interest cost on projected
. . . . . . ¥ 48,352 ¥ 49,194 ¥ 46,861 ¥ 12,395 ¥
525 ¥ 14,406 ¥
366 ¥13,947 ¥
229
benefit obligation . . . . . . . . .
13,504
10,969
11,091
14,958
1,046
17,370
1,159
14,295
793
Expected return on plan
assets . . . . . . . . . . . . . . . . . . .
(74,270)
(74,744)
(71,078)
(33,266)
(2,314)
(31,382)
(1,882) (31,161)
(2,118)
Amortization of net actuarial
loss . . . . . . . . . . . . . . . . . . . .
731
5,641
17,019
9,993
707
8,685
1,162
11,560
208
Amortization of prior service
cost
. . . . . . . . . . . . . . . . . . . .
(1,210)
(1,204)
(1,205)
(3,039)
(2,020)
(2,633)
(1,881)
(2,614)
(448)
Loss (gain) on settlements and
curtailment
. . . . . . . . . . . . . .
(5,980)
(2,366)
(4,605)
49
—
223
—
30
—
Net periodic benefit cost
(income) . . . . . . . . . . . . . . . . ¥(18,873) ¥(12,510) ¥ (1,917) ¥ 1,090 ¥(2,056) ¥ 6,669 ¥(1,076) ¥ 6,057 ¥(1,336)
F-73
MITSUBISHI UFJ FINANCIAL GROUP, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
The following table summarizes the assumptions used in computing the present value of the projected
benefit obligations and the net periodic benefit cost:
Domestic subsidiaries
Foreign offices and subsidiaries
2019
2020
2021
2019
2020
2021
Pension
benefits
and SIP
Pension
benefits
and SIP
Pension
benefits
and SIP
Pension
benefits
Other
benefits
Pension
benefits
Other
benefits
Pension
benefits
Other
benefits
Weighted-average assumptions
used:
Discount rates in
determining expense . . .
0.76% 0.61% 0.63% 3.19% 3.27% 3.80% 3.87% 2.94% 2.72%
Discount rates in
determining benefit
obligation . . . . . . . . . . .
Rates of increase in future
compensation level for
determining expense . . .
Rates of increase in future
compensation level for
determining benefit
obligation . . . . . . . . . . .
Expected rates of return on
plan assets . . . . . . . . . . .
Cash balance crediting rate
for determining
expense . . . . . . . . . . . . .
Cash balance crediting rate
for determining benefit
obligation . . . . . . . . . . .
0.61
0.63
0.71
3.87
3.99
3.05
2.96
2.34
2.23
3.21
3.21
3.46
4.65
—
5.01
—
5.12
—
3.21
3.46
3.46
5.01
—
5.12
—
5.09
—
2.83
2.89
2.93
6.70
7.50
6.25
7.00
6.19
7.00
2.46
2.46
2.46
2.74
—
3.03
—
2.39
2.46
2.46
2.46
3.03
—
2.39
—
1.62
—
—
The following tables present the assumed health care cost trend rates for foreign offices and subsidiaries,
which are used to measure the expected cost of benefits for the next year:
MUAH
Other than MUAH
2020(1)
2021(1)
2020(1)
2021(1)
Initial trend rate . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Ultimate trend rate . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Year the rate reaches the ultimate trend rate . . . . . . . . . . . . . . . . . . . .
4.14%
3.77%
2027
4.17%
3.78%
2028
6.50%
4.50%
2027
6.50%
4.50%
2028
Note:
(1) Fiscal years of MUFG Americas Holdings and foreign subsidiaries end on December 31. Therefore, the above tables present the rates
and amounts at December 31, 2019 and 2020, respectively.
F-74
MITSUBISHI UFJ FINANCIAL GROUP, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
The following table sets forth the combined funded status and amounts recognized in the accompanying
consolidated balance sheets at March 31, 2020 and 2021:
Domestic subsidiaries
Foreign offices and subsidiaries
2020
2021
2020
2021
Non-contributory
pension benefits
and SIP
Non-contributory
pension benefits
and SIP
Pension
benefits
Other
benefits
Pension
benefits
Other
benefits
(in millions)
Change in benefit obligation:
Benefit obligation at beginning of fiscal year . . . . . . . . .
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Service cost
Interest cost
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Plan participants’ contributions . . . . . . . . . . . . . . . . . .
Acquisitions/ Divestitures . . . . . . . . . . . . . . . . . . . . . .
Amendments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Actuarial loss (gain) . . . . . . . . . . . . . . . . . . . . . . . . . . .
Benefits paid . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Lump-sum payment . . . . . . . . . . . . . . . . . . . . . . . . . . .
Translation adjustments and other . . . . . . . . . . . . . . . .
¥1,841,884
49,194
10,969
—
(94)
—
(3,053)
(66,771)
(24,224)
—
¥1,807,905
46,861
11,091
—
(2,845)
(22)
(21,558)
(65,730)
(22,219)
—
¥469,080 ¥31,510 ¥547,013 ¥32,383
229
793
440
—
—
1,506
(2,488)
—
(1,509)
13,947
14,295
30
(260)
(1,187)
51,724(1)
(20,816)
(2,825)
(20,968)
14,406
17,370
28
13,000
3,721
58,831(1)
(21,120)
(2,284)
(6,019)
366
1,159
455
—
—
1,648
(2,326)
—
(429)
Benefit obligation at end of fiscal year . . . . . . . . . . . . . .
1,807,905
1,753,483
547,013
32,383
580,953
31,354
Change in plan assets:
Fair value of plan assets at beginning of fiscal year
. . . .
Actual return on plan assets . . . . . . . . . . . . . . . . . . . . .
Employer contributions . . . . . . . . . . . . . . . . . . . . . . . .
Acquisitions/ Divestitures . . . . . . . . . . . . . . . . . . . . . .
Plan participants’ contributions . . . . . . . . . . . . . . . . . .
Benefits paid . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Translation adjustments and other . . . . . . . . . . . . . . . .
2,594,788
(123,802)
28,653
(21)
—
(66,771)
—
2,432,847
472,185
21,151
(2,440)
—
(65,730)
—
493,495
92,087
2,887
791
28
(21,120)
(8,660)
28,258
5,695
186
—
455
(2,326)
(349)
559,508
82,615
3,896
—
30
(20,816)
(20,829)
31,919
5,165
181
—
440
(2,488)
(1,868)
Fair value of plan assets at end of fiscal year
. . . . . . . . .
2,432,847
2,858,013
559,508
31,919
604,404
33,349
Amounts recognized in the consolidated balance sheets:
. . . . . . . . . . . . . . . . . . . . . . . . . . .
. . . . . . . . . . . . . . . . . . . . . . . . . .
Prepaid benefit cost
Accrued benefit cost
¥ 643,520
(18,577)
¥1,122,507
(17,977)
¥ 81,301 ¥ 4,378 ¥ 94,445 ¥ 6,754
(4,759)
(70,994)
(68,806)
(4,842)
Net amount recognized . . . . . . . . . . . . . . . . . . . . . . . .
¥ 624,943
¥1,104,530
¥ 12,495 ¥ (464) ¥ 23,451 ¥ 1,995
Note:
(1) Significant gains and losses related to changes in the benefit obligation for the fiscal years ended March 31, 2020 and 2021 primarily
result from changes in the discount rate.
The aggregated accumulated benefit obligations of these plans at March 31, 2020 and 2021 were as follows:
Aggregated accumulated benefit obligations . . . . . . . . . . . . . .
¥1,773,042
¥1,719,798
¥523,078
¥554,375
Domestic
subsidiaries
Foreign offices
and subsidiaries
2020
2021
2020
2021
(in millions)
F-75
MITSUBISHI UFJ FINANCIAL GROUP, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
The projected benefit obligations, accumulated benefit obligations and fair value of plan assets for the plans
with accumulated benefit obligations in excess of plan assets at March 31, 2020 and 2021 were as follows:
Domestic
subsidiaries
Foreign offices
and subsidiaries
2020
2021
2020
2021
Projected benefit obligations . . . . . . . . . . . . . . . . . . . . . . . . . . .
Accumulated benefit obligations . . . . . . . . . . . . . . . . . . . . . . . .
Fair value of plan assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
¥
26,442
26,442
7,980
¥
(in millions)
24,527
24,527
6,738
¥ 89,829
67,609
21,014
¥ 92,527
68,720
21,532
MUFG Bank, Mitsubishi UFJ Trust and Banking, Mitsubishi UFJ Securities Holdings, Mitsubishi UFJ
NICOS and other subsidiaries paid special lump-sum termination benefits which are not a part of pension plans
to certain early-terminated employees. The amounts charged to operations for such early termination benefits for
the fiscal years ended March 31, 2019, 2020 and 2021 were ¥9,325 million, ¥13,883 million and ¥16,716 million,
respectively.
The following table presents the amounts recognized in Accumulated OCI of the MUFG Group at
March 31, 2020 and 2021:
Domestic subsidiaries
Foreign offices and subsidiaries
2020
Pension
benefits
and SIP
2021
Pension
benefits
and SIP
2020
2021
Pension
benefits
Other
benefits
Pension
benefits
Other
benefits
(in millions)
Net actuarial loss . . . . . . . . . . . . . . . . . . . . . . . . . . . ¥ 437,254 ¥
Prior service cost . . . . . . . . . . . . . . . . . . . . . . . . . . .
(4,255)
1,557 ¥114,167
(7,875)
(3,072)
¥ 5,164
(2,304)
¥ 96,807
(6,167)
¥ 3,255
(1,869)
Gross amount recognized in Accumulated OCI . . .
Taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
432,999
(174,915)
(1,515) 106,292
(27,974)
(41,639)
2,860
(874)
90,640
(23,900)
1,386
(489)
Net amount recognized in Accumulated OCI . . . . . ¥ 258,084 ¥ (43,154) ¥ 78,318
¥ 1,986
¥ 66,740
¥
897
The following table presents OCI for the fiscal years ended March 31, 2020 and 2021:
Domestic subsidiaries
Foreign offices and subsidiaries
2020
Pension
benefits
and SIP
2021
Pension
benefits
and SIP
2020
2021
Pension
benefits
Other
benefits
Pension
benefits
Other
benefits
(in millions)
Net actuarial loss (gain) arising during the year . . . ¥ 195,492 ¥(423,283) ¥ (1,732) ¥(2,166) ¥
Prior service cost arising during the year . . . . . . . .
Losses (gains) due to amortization:
3,722
(22)
—
—
319
(1,187)
¥(1,541)
—
Net actuarial loss . . . . . . . . . . . . . . . . . . . . . . .
Prior service cost . . . . . . . . . . . . . . . . . . . . . . .
Curtailment and settlement . . . . . . . . . . . . . . . . . . .
Foreign currency translation adjustments . . . . . . . .
(5,641)
1,204
2,366
—
(17,019)
1,205
4,605
(8,685)
2,633
(223)
— (1,125)
(1,162)
1,881
—
(58)
(11,560)
2,614
(30)
(5,808)
(208)
448
—
(173)
Total changes in Accumulated OCI
. . . . . . . . . . . . ¥ 193,421 ¥(434,514) ¥ (5,410) ¥(1,505) ¥(15,652) ¥(1,474)
F-76
MITSUBISHI UFJ FINANCIAL GROUP, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
Investment policies
MUFG’s investment policy for plan assets is based on an asset liability matching strategy which is intended
to maintain adequate liquidity for benefit payments and to achieve a stable increase in the plan assets in the
medium and long-term through proper risk control and return maximization. As a general rule, investment
policies for plan assets are reviewed periodically for some plans and in the following situations for all plans:
(1) large fluctuations in pension plan liabilities caused by modifications to pension plans, or (2) changes in the
market environment. The plan assets allocation strategies are the principal determinant in achieving expected
investment returns on the plan assets. Actual asset allocations may fluctuate within acceptable ranges due to
market value variability. Plan assets are managed by a combination of internal and external asset management
companies and are rebalanced when market fluctuations cause an asset category to fall outside of its strategic
asset allocation range. Performance of each plan asset category is compared against established indices and
similar plan asset groups to evaluate whether the risk associated with the portfolio is appropriate for the level of
return.
The weighted-average target asset allocation of plan assets for the pension benefits and other benefits at
March 31, 2021 was as follows:
Asset category
Japanese equity securities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Japanese debt securities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Non-Japanese equity securities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Non-Japanese debt securities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Real estate . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Short-term assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Domestic
subsidiaries
Foreign offices
and subsidiaries
Pension
benefits
and SIP
36.3%
28.6
15.7
13.9
1.4
4.1
Pension
benefits
Other
benefits
0.3%
—
44.9
43.0
10.0
1.8
—%
—
63.0
27.0
10.0
—
Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
100.0% 100.0% 100.0%
Basis and procedure for estimating long-term return of each asset category
MUFG’s expected long-term rate of return on plan assets for domestic defined benefit pension plans and
SIPs is based on a building-block methodology, which calculates the total long-term rate of return of the plan
assets by aggregating the weighted rate of return derived from both long-term historical performance and
forward-looking return expectations from each asset category.
MUFG has determined the expected long-term rate of return for each asset category as follows:
‰
‰
Japanese equity securities: the rate for Japanese debt securities plus a premium for the risk associated
with Japanese equity securities
Japanese debt securities: economic growth rate of Japan
‰ Non-Japanese equity securities: the rate for non-Japanese debt securities plus a premium for the risk
associated with non-Japanese equity securities
‰ Non-Japanese debt securities: global economic growth rate
F-77
MITSUBISHI UFJ FINANCIAL GROUP, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
Foreign offices and subsidiaries periodically reconsider the expected long-term rate of return for their plan
assets. They evaluate the investment return volatility of different asset categories and compare the liability
structure of their pension and other benefits to those of other companies, while considering their funding policy
to maintain a funded status sufficient to meet participants’ benefit obligations, and reduce long-term funding
requirements and pension costs. Based on this information, foreign offices and subsidiaries update the expected
long-term rate of return.
Estimated future benefit payments
The following table presents benefit payments expected to be paid, which include the effect of expected
future service for the fiscal years indicated:
Domestic
subsidiaries
Foreign offices
and subsidiaries
Pension
benefits
and SIP
Pension
benefits
Other
benefits
(in millions)
Fiscal year ending March 31:
2022 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
2023 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
2024 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
2025 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
2026 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Thereafter (2027-2031) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
¥ 82,295
80,857
81,015
80,709
79,277
387,189
¥ 23,248
24,078
25,322
26,245
28,020
173,667
¥1,976
2,012
2,032
2,004
1,950
8,272
Fair value measurement of the plan assets
The following is a description of the valuation methodologies used for plan assets measured at fair value as
well as the classification of the plan assets pursuant to the fair value hierarchy described in Note 31.
Government bonds and other debt securities
When quoted prices are available in an active market, the MUFG Group adopts the quoted prices to measure
the fair value of securities and such securities are classified in Level 1 of the fair value hierarchy. Level 1
securities include Japanese government bonds, most non-Japanese government bonds and certain corporate
bonds. When quoted prices are available but not traded actively, such securities are classified in Level 2 of the
fair value hierarchy. When quoted prices are not available, the MUFG Group generally estimates fair values by
using non-binding prices obtained from independent pricing vendors. Such securities are generally classified in
Level 2 of the fair value hierarchy. Level 2 securities include certain non-Japanese government bonds, official
institution bonds and corporate bonds. When there is lack of liquidity for securities or significant inputs adopted
to the fair value measurements are unobservable, such securities are classified in Level 3 of the fair value
hierarchy. Such Level 3 securities mainly consist of non-Japanese corporate bonds.
Marketable equity securities
When quoted prices are available in an active market, the MUFG Group adopts the quoted prices to measure
the fair value of marketable equity securities and such securities are classified in Level 1 of the fair value
hierarchy. When quoted prices are available but not traded actively, such securities are classified in Level 2 of
the fair value hierarchy.
F-78
MITSUBISHI UFJ FINANCIAL GROUP, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
Japanese pooled funds
Japanese pooled funds are investment fund vehicles designed for Japanese pension plan investments under
Japanese pension trust fund regulations. Based upon the nature of the funds’ investments, Japanese pooled funds
are categorized into four major fund types: Japanese marketable equity securities type, Japanese debt securities
type, Non-Japanese marketable equity securities type and Non-Japanese debt securities type. The other types of
funds invest in short-term financial instruments or loans receivable. Japanese pooled funds are generally readily
redeemable at their net asset values. The fair values of Japanese pooled funds are measured at their net asset
values per share (or its equivalent) as a practical expedient.
Other investment funds
Other investment funds include mutual funds, private investments funds, common collective funds, private
equity funds and real estate funds. The listed investment funds or mutual funds are valued at quoted prices and
classified in Level 1 or Level 2 of the fair value hierarchy. When there is no available market quotation, the fair
values are generally determined at net asset values per share (or its equivalent) as a practical expedient. Other
investment funds classified in Level 3 of the fair value hierarchy consist of certain real estate funds whose fair
values are not measured at their net asset values but by using significant unobservable inputs and there is inherent
lack of the funds’ liquidity.
Japanese general accounts of life insurance companies
These instruments are contracts with life insurance companies that guarantee return of a certain level of
fixed income, which are mainly invested in assets with low market risk such as Japanese debt securities. They are
measured at conversion value and classified in Level 2 of the fair value hierarchy.
Other investments
Other investments mainly consist of call loans and the rest consist of miscellaneous accounts such as
deposits with banks and short-term investments. These instruments are generally classified in Level 1 or Level 2
of the fair value hierarchy depending on observability of the inputs to measure their fair values.
F-79
MITSUBISHI UFJ FINANCIAL GROUP, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
The following table presents the fair value of each major category of plan assets as of March 31, 2020 and
2021:
Pension benefits and SIP Investments:
At March 31, 2020
Assets category
Domestic subsidiaries
Foreign offices and subsidiaries
Level 1
Level 2 Level 3
Total
Level 1
Level 2 Level 3
Total
(in millions)
Japanese government bonds . . . . . . . . . . . ¥ 147,926 ¥
Non-Japanese government bonds . . . . . .
Other debt securities . . . . . . . . . . . . . . . .
Japanese marketable equity securities . . .
Non-Japanese marketable equity
—
7,014
690,741
— ¥ — ¥ 147,926 ¥
— —
325
— —
19,452
690,741
12,113
— 42,135
— ¥
— ¥ — ¥
—
5,185 — 47,320
— 105,096 — 105,096
—
— —
—
securities . . . . . . . . . . . . . . . . . . . . . . .
Other investment funds . . . . . . . . . . . . . .
Japanese general account of life
insurance companies(1) . . . . . . . . . . . . .
Other investments . . . . . . . . . . . . . . . . . .
47,655
—
235 —
— —
47,890
26,981
— 81,803
616 — 27,597
150,121 — 231,924(2)
— 217,898 —
32,150 —
6,547
217,898
38,697
—
480
— —
250
1,937
—
2,667
Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ¥ 899,883 ¥262,396 ¥325 ¥1,162,604 ¥151,399 ¥262,955 ¥250 ¥414,604
At March 31, 2021
Assets category
Domestic subsidiaries
Foreign offices and subsidiaries
Level 1
Level 2 Level 3
Total
Level 1
Level 2 Level 3
Total
(in millions)
Japanese government bonds . . . . . . . . . . . ¥ 145,236 ¥
Non-Japanese government bonds . . . . . .
Other debt securities . . . . . . . . . . . . . . . .
Japanese marketable equity securities . . .
Non-Japanese marketable equity
—
10,136
862,096
— ¥ — ¥ 145,236 ¥
— —
230
— —
24,431
862,096
14,065
— 44,105
— ¥
— ¥ — ¥
—
4,645 — 48,750
— 117,696 — 117,696
—
— —
—
securities . . . . . . . . . . . . . . . . . . . . . . .
Other investment funds . . . . . . . . . . . . . .
Japanese general account of life
insurance companies(1) . . . . . . . . . . . . .
Other investments . . . . . . . . . . . . . . . . . .
81,525
—
588 —
— —
82,113
34,584
— 76,520
671 — 35,255
164,810 — 241,330(2)
— 217,827 —
5,092 —
8,390
217,827
13,482
—
812
— —
333
13,502
—
14,647
Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ¥1,107,383 ¥237,572 ¥230 ¥1,345,185 ¥156,021 ¥301,324 ¥333 ¥457,678
Notes:
(1) “Japanese general accounts of life insurance companies” is a contract with life insurance companies that guarantees a return of
approximately 1.24% from April 1, 2019 to March 31, 2020 and 1.25% from April 1, 2020 to March 31, 2021.
(2) Other investment funds of the foreign offices and subsidiaries include mutual funds and common collective funds of ¥81,768 million and
¥119,307 million, respectively, which were held by MUFG Americas Holdings at December 31, 2019 and ¥80,717 million and
¥128,005 million, respectively, at December 31, 2020.
F-80
MITSUBISHI UFJ FINANCIAL GROUP, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
The following table presents fair values of certain investments valued at net asset value per share (or its
equivalent) as a practical expedient that were excluded from the above table as of March 31, 2020 and 2021:
Assets category
Japanese pooled funds:
Domestic
subsidiaries
Foreign offices and
subsidiaries
2020
2021
2020
2021
(in millions)
Japanese marketable equity securities . . . . . . . . . . . . .
Japanese debt securities . . . . . . . . . . . . . . . . . . . . . . . .
Non-Japanese marketable equity securities . . . . . . . .
Non-Japanese debt securities . . . . . . . . . . . . . . . . . . .
Other . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
¥ 125,218
212,727
146,796
169,978
100,798
¥ 118,509
324,700
90,598
215,015
153,483
¥
Total pooled funds . . . . . . . . . . . . . . . . . . . . . . . . . . . .
755,517
902,305
— ¥
—
—
—
—
—
—
—
—
—
—
—
Other investment funds . . . . . . . . . . . . . . . . . . . . . . . . . . . .
514,726(1)
610,523(1)
144,904(2) 146,726(2)
Total
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
¥1,270,243
¥1,512,828
¥144,904
¥146,726
Notes:
(1) Other investment funds of the domestic subsidiaries include mutual funds and real estate funds of ¥486,496 million and ¥13,891 million,
respectively, at March 31, 2020 and ¥580,617 million and ¥14,763 million, respectively, at March 31, 2021.
(2) Other investment funds of the foreign offices and subsidiaries include mutual funds, real estate funds and common collective funds of
¥56,125 million, ¥54,474 million and ¥34,098 million, respectively, at March 31, 2020 and ¥58,086 million, ¥51,318 million and
¥37,161 million, respectively, at March 31, 2021.
Other debt securities and Japanese debt securities in the above Pension benefits and SIP tables include
¥942 million (0.03% of plan assets) of debt securities issued by the MUFG Group at March 31, 2020 and
¥600 million (0.02% of plan assets) at March 31, 2021, respectively. Japanese marketable equity securities in the
above Pension benefits and SIP tables include ¥5,843 million (0.20% of plan assets) of common stock issued by
the MUFG Group at March 31, 2020 and ¥6,116 million (0.18% of plan assets) at March 31, 2021, respectively.
F-81
MITSUBISHI UFJ FINANCIAL GROUP, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
14. OTHER ASSETS AND LIABILITIES
Major components of other assets and liabilities at March 31, 2020 and 2021 were as follows:
2020
2021
(in millions)
Other assets:
Accounts receivable:
Receivables from brokers, dealers and customers for securities
transactions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Other(1) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Investments in equity method investees . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Prepaid benefit cost (Note 13) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Cash collateral pledged for derivative transactions (Note 9) . . . . . . . . . . . . . . .
Cash collateral for the use of Bank of Japan’s settlement infrastructure . . . . . .
Accrued interest . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Deferred tax assets (Note 8) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Right-of-use assets of operating leases (Note 7) . . . . . . . . . . . . . . . . . . . . . . . . .
Other . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
¥ 1,191,690
1,212,511
2,421,154
729,199
1,696,108
965,546
308,448
113,031
393,435
4,077,577
¥
400,776
1,162,424
2,560,339
1,223,706
2,005,136
998,838
259,336
122,031
338,547
4,250,171
Total
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
¥13,108,699
¥13,321,304
Other liabilities:
Accounts payable:
Payables to brokers, dealers and customers for securities transactions . . .
Other . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Obligations to return securities received as collateral (Notes 15, 16 and 31) . . .
Accrued interest . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Deferred tax liabilities (Note 8)
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Allowance for off-balance sheet credit instruments . . . . . . . . . . . . . . . . . . . . . .
Accrued benefit cost (Note 13) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Guarantees and indemnifications . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Cash collateral received for derivative transactions (Note 9) . . . . . . . . . . . . . . .
Obligations under operating leases (Note 7) . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Accrued and other liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
¥ 1,078,653
1,251,260
4,806,171
187,096
541,368
56,995
92,225
39,601
1,125,305
482,813
3,562,359
¥ 1,202,371
1,281,436
6,581,759
110,856
827,571
83,615
93,730
38,123
909,641
476,104
3,465,614
Total
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
¥13,223,846
¥15,070,820
Note:
(1) Accounts receivable—Other is primarily comprised of receivables relating to the card business. The provision or reversal of the
allowance for credit losses relating to the receivables is included in Non-interest expense on the condensed consolidated statements of
income. The receivables relating to the card business include ¥4,980 million of past due receivables (1-3 months past due receivables of
¥2,252 million and greater than 3 months past due receivables of ¥2,728 million) as of March 31, 2021, and the credit quality for these
receivables is primarily evaluated based on the extent of past due. The outstanding balance of the accounts receivable is presented on a
net basis after allowance for credit losses. Upon adoption of the new guidance on measurement of credit losses on financial instruments
as of April 1, 2020, the amount of the allowance for credit losses increased by ¥10,248 million. The change of allowance for credit losses
on these receivables during the period ended March 31, 2021 is primarily due to provision of the allowance for the receivables.
Investments in equity method investees include marketable equity securities carried at ¥1,809,161 million
and ¥1,964,118 million at March 31, 2020 and 2021, respectively. Corresponding aggregated market values were
¥1,987,008 million and ¥3,943,990 million, respectively. Marketable equity securities include Morgan Stanley’s
common stock carried at ¥1,411,131 million and ¥1,618,579 million at March 31, 2020 and 2021, respectively.
F-82
MITSUBISHI UFJ FINANCIAL GROUP, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
As of March 31, 2021, the MUFG Group held approximately 20.18% of its common stock. Investments in equity
method investees also include investments in Morgan Stanley MUFG Securities, Co., Ltd. at ¥185,255 million
and ¥174,190 million at March 31, 2020 and 2021, respectively.
The MUFG Group periodically evaluates whether a loss in value of investments in equity method investees
is other-than-temporary. As a result of evaluations, the MUFG Group recognized other-than-temporary declines
in the value of an investment and recorded impairment losses related to certain affiliated companies of
¥51,645 million, ¥21,672 million and ¥53,758 million for the fiscal years ended March 31, 2019, 2020 and 2021
respectively. The impairment losses are included in Equity in earnings of equity method investees—net in the
accompanying consolidated statements of income.
Summarized Financial Information of the MUFG Group’s Equity Method Investees
Summarized financial information of Morgan Stanley, the largest portion of the MUFG Group’s equity
method investees, as of March 31, 2020 and 2021, and for each of the three years ended March 31, 2021 is as
follows:
2020
2021
(in billions)
Trading assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Securities purchased under agreements to resell . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Securities borrowed . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Total assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Deposits . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Customer and other payables . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Borrowings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Total liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Noncontrolling interests . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
¥ 29,484
11,405
7,868
103,149
25,601
21,556
21,206
93,656
149
¥ 34,670
12,701
11,309
128,288
35,775
25,477
23,894
116,377
147
Net revenues . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Total non-interest expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Income from continuing operations before income taxes . . . . . . . . . . . . . . . . . . . . . . .
Net income applicable to Morgan Stanley . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
¥4,363
3,168
1,195
944
(in billions)
¥4,457
3,259
1,140
903
¥5,841
3,932
1,881
1,433
2019
2020
2021
Summarized financial information of the MUFG Group’s equity method investees, other than Morgan
Stanley as of March 31, 2020 and 2021, and for each of the three years ended March 31, 2021 is as follows:
Net loans . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Total assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Deposits . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Total liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Noncontrolling interests . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
¥ 15,190
29,255
8,898
24,025
1,005
¥ 15,417
28,459
9,651
24,176
85
2020
2021
(in billions)
F-83
MITSUBISHI UFJ FINANCIAL GROUP, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
Total interest income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Total interest expense . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Net interest income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Provision for credit losses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Income before income tax expense . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Net income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
2019
2020
2021
¥1,036
430
606
157
205
135
(in billions)
¥1,093
419
674
171
366
285
¥1,058
375
683
215
476
400
15. OFFSETTING OF DERIVATIVES, REPURCHASE AGREEMENTS, AND SECURITIES
LENDING TRANSACTIONS
The following tables present, as of March 31, 2020 and 2021, the gross and net amounts of the derivatives,
resale and repurchase agreements, and securities borrowing and lending transactions, including the related gross
amounts subject to an enforceable master netting arrangement or similar agreement not offset in the consolidated
balance sheets. The MUFG Group primarily enters into International Swaps and Derivatives Association master
netting agreements, master repurchase agreements and master securities lending agreements or similar
agreements for derivative contracts, resale and repurchase agreements, and securities borrowing and lending
transactions. In the event of default on or termination of any one contract, these agreements provide the
contracting parties with the right to net a counterparty’s rights and obligations and to liquidate and setoff
collateral against any net amount owed by the counterparty. Generally, as the MUFG Group has elected to
present such amounts on a gross basis, the amounts subject to these agreements are included in “Gross amounts
not offset in the consolidated balance sheet” column in the tabular disclosure below. For certain transactions
where a legal opinion with respect to the enforceability of netting has not been sought or obtained, the related
amounts are not subject to enforceable master netting agreements and not included in “Gross amounts not offset
in the consolidated balance sheet” column in the tabular disclosure below.
At March 31, 2020
Financial assets:
Derivative assets . . . . . . . . .
Receivables under resale
agreements . . . . . . . . . . . .
Receivables under securities
borrowing transactions . . .
Gross amounts of
recognized
assets/liabilities
Gross amounts
offset in the
consolidated
balance sheet
Net amounts
presented in the
consolidated
balance sheet
Gross amounts not offset in
the consolidated balance sheet
Financial
instruments
Cash collateral
received/pledged
Net amounts
(in billions)
¥14,958
¥ —
¥14,958
¥(11,282)
¥ (874)
¥2,802
25,884
(1,888)
23,996
(23,195)
3,444
—
3,444
(3,336)
(21)
—
780
108
Total . . . . . . . . . . . . . . .
¥44,286
¥(1,888)
¥42,398
¥(37,813)
¥ (895)
¥3,690
Financial liabilities:
Derivative liabilities . . . . . . .
Payables under repurchase
¥14,034
¥ —
¥14,034
¥(11,296)
¥(1,140)
¥1,598
agreements . . . . . . . . . . . .
33,733
(1,883)
31,850
(31,569)
(34)
Payables under securities
lending transactions . . . . .
1,017
Obligations to return
securities received as
collateral . . . . . . . . . . . . . .
4,806
—
—
1,017
(986)
4,806
(1,966)
—
—
Total . . . . . . . . . . . . . . .
¥53,590
¥(1,883)
¥51,707
¥(45,817)
¥(1,174)
247
31
2,840
¥4,716
F-84
MITSUBISHI UFJ FINANCIAL GROUP, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
At March 31, 2021
Financial assets:
Derivative assets . . . . . . . . .
Receivables under resale
agreements . . . . . . . . . . . .
Receivables under securities
borrowing transactions . . .
Gross amounts of
recognized
assets/liabilities
Gross amounts
offset in the
consolidated
balance sheet
Net amounts
presented in the
consolidated
balance sheet
Gross amounts not offset in
the consolidated balance sheet
Financial
instruments
Cash collateral
received/pledged
Net amounts
(in billions)
¥11,997
¥ —
¥11,997
¥ (8,628)
¥ (605)
¥2,764
16,053
(2,273)
13,780
(12,687)
3,370
—
3,370
(3,289)
(37)
—
1,056
81
Total . . . . . . . . . . . . . . .
¥31,420
¥(2,273)
¥29,147
¥(24,604)
¥ (642)
¥3,901
Financial liabilities:
Derivative liabilities . . . . . . .
Payables under repurchase
¥11,714
¥ —
¥11,714
¥ (8,545)
¥(1,624)
¥1,545
agreements . . . . . . . . . . . .
26,800
(2,232)
24,568
(23,835)
Payables under securities
lending transactions . . . . .
843
Obligations to return
securities received as
collateral . . . . . . . . . . . . . .
6,582
—
—
843
(814)
(60)
(2)
6,582
(1,931)
—
673
27
4,651
¥6,896
Total . . . . . . . . . . . . . . .
¥45,939
¥(2,232)
¥43,707
¥(35,125)
¥(1,686)
16. REPURCHASE AGREEMENTS, AND SECURITIES LENDING TRANSACTIONS ACCOUNTED
FOR AS SECURED BORROWINGS
The following tables present gross obligations for payables under repurchase agreements, payables under
securities lending transactions and obligations to return securities received as collateral by remaining contractual
maturity and class of collateral pledged at March 31, 2020 and 2021. Potential risks associated with these
arrangements primarily relate to market and liquidity risks. To manage risks associated with market exposure, the
MUFG Group generally revalues the collateral underlying its repurchase agreements and securities lending
transactions on a daily basis and monitors the value of the underlying securities, consisting of primarily high-
quality securities such as Japanese national government and Japanese government agency bonds, and foreign
government and official institution bonds. In the event the market value of such securities falls below the related
agreements at contract amounts plus accrued interest, the MUFG Group may be required to deposit additional
collateral when appropriate. To address liquidity risks, the MUFG Group conducts stress tests to ensure the
adequate level of liquidity is maintained in the event of a decline in the fair value of any collateral pledged.
March 31, 2020
Remaining Contractual Maturity
Overnight
and open
30 days
or less
31-90
days
Over
90 days
Total
Payables under repurchase agreements . . . . . . . . . . . . . . . . . . .
Payables under securities lending transactions . . . . . . . . . . . . .
. . . . . . .
Obligations to return securities received as collateral
¥ 9,685
934
3,856
¥16,608
64
599
(in billions)
¥4,496
19
276
¥2,944
—
75
¥33,733
1,017
4,806
Total
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
¥14,475
¥17,271
¥4,791
¥3,019
¥39,556
F-85
MITSUBISHI UFJ FINANCIAL GROUP, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
March 31, 2021
Remaining Contractual Maturity
Overnight
and open
30 days
or less
31-90
days
Over
90 days
Total
Payables under repurchase agreements . . . . . . . . . . . . . . . . . . .
Payables under securities lending transactions . . . . . . . . . . . . .
. . . . . . .
Obligations to return securities received as collateral
¥ 6,006
789
5,607
¥16,888
26
278
(in billions)
¥1,973
28
528
¥1,933
—
169
¥26,800
843
6,582
Total
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
¥12,402
¥17,192
¥2,529
¥2,102
¥34,225
Secured borrowing by the class of collateral pledged at March 31, 2020 and 2021 was as follows:
March 31, 2020
Payables under
repurchase
agreements
Payables under
securities lending
transactions
Obligations
to return
securities received
as collateral
Total
(in billions)
Japanese national government and Japanese
government agency bonds . . . . . . . . . . . . . . . . . .
¥10,687
¥
38
¥2,241
¥12,966
Foreign government and official institution
bonds . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Corporate bonds . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Residential mortgage-backed securities . . . . . . . . . .
Other debt securities . . . . . . . . . . . . . . . . . . . . . . . . .
Marketable equity securities . . . . . . . . . . . . . . . . . . .
Other . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
17,326
784
4,248
157
506
25
57
—
—
—
914
8
873
183
10
2
1,497
—
18,256
967
4,258
159
2,917
33
Total
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
¥33,733
¥1,017
¥4,806
¥39,556
March 31, 2021
Payables under
repurchase
agreements
Payables under
securities lending
transactions
Obligations
to return
securities received
as collateral
Total
(in billions)
Japanese national government and Japanese
government agency bonds . . . . . . . . . . . . . . . . . .
¥ 7,754
¥ 104
¥4,022
¥11,880
Foreign government and official institution
bonds . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Corporate bonds . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Residential mortgage-backed securities . . . . . . . . . .
Other debt securities . . . . . . . . . . . . . . . . . . . . . . . . .
Marketable equity securities . . . . . . . . . . . . . . . . . . .
Other . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
13,914
702
3,729
218
462
21
17
1
—
—
721
—
738
214
—
5
1,603
—
14,669
917
3,729
223
2,786
21
Total
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
¥26,800
¥ 843
¥6,582
¥34,225
F-86
MITSUBISHI UFJ FINANCIAL GROUP, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
17. PREFERRED STOCK
Pursuant to the Articles of Incorporation, MUFG had been authorized to issue 400,000,000 shares of
Class 5 Preferred Stock, 200,000,000 shares of Class 6 Preferred Stock, and 200,000,000 shares of Class 7
Preferred Stock without par value as of March 31, 2021.
All classes of preferred stock are non-voting and have preference over common stock for the payment of
dividends and the distribution of assets in the event of a liquidation or dissolution of MUFG. They are all
non-cumulative and non-participating with respect to dividend payments. Shareholders of all classes of preferred
stock have the right to receive a liquidation distribution at ¥2,500 and do not have the right to participate in any
further liquidation distributions.
As of March 31, 2019, 2020 and 2021, there was no preferred stock outstanding and the entire amount of
Capital stock on the consolidated balance sheets consisted of only common stock.
18. COMMON STOCK AND CAPITAL SURPLUS
The changes in the number of issued shares of common stock during the fiscal years ended March 31, 2019,
2020 and 2021 were as follows:
Balance at beginning of fiscal year . . . . . . . . . . . . . . . . . . .
Retirement of shares of common stock . . . . . . . . . . . . . . . .
13,900,028,020
(232,257,500)
(shares)
13,667,770,520
(85,775,400)
13,581,995,120
—
Balance at end of fiscal year
. . . . . . . . . . . . . . . . . . . . . . . .
13,667,770,520
13,581,995,120
13,581,995,120
2019
2020
2021
Under the Companies Act, issuances of common stock, including conversions of bonds and notes, are
required to be credited to the common stock account for at least 50% of the proceeds and to the legal capital
surplus account (“legal capital surplus”) for the remaining amounts.
The Companies Act permits Japanese companies, upon approval by the Board of Directors, to issue shares
in the form of a “stock split,” as defined in the Companies Act. Also, prior to April 1, 1991, Japanese companies
were permitted to issue free share distributions. MUFG Bank and Mitsubishi UFJ Trust and Banking from time
to time made free share distributions. These free distributions usually ranged from 5% to 10% of outstanding
common stock and publicly-owned corporations in the United States issuing shares in similar transactions would
be required to account for them as stock dividends as of the shareholders’ record date by reducing retained
earnings and increasing the appropriate capital accounts by an amount equal to the fair value of the shares issued.
The application of such U.S. accounting practices to the cumulative free distributions made by MUFG Bank and
Mitsubishi UFJ Trust and Banking at March 31, 2021, would have increased capital accounts by
¥1,910,106 million with a corresponding decrease in unappropriated retained earnings.
The Companies Act permits that common stock, legal reserve, additional paid-in capital, and other capital
surplus and retained earnings can be transferred among these accounts under certain conditions upon the approval
of a shareholders’ meeting. The Companies Act limits the increase of paid-in capital in case disposition of
treasury stock and issuance of common stock are performed at the same time.
As for Capital surplus, the fee retained by MUFG’s subsidiary as underwriting compensation, net of stock
issuance expense, was included in the total Capital surplus balance.
F-87
MITSUBISHI UFJ FINANCIAL GROUP, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
Treasury Stock
The Companies Act permits Japanese companies to effect purchases of their own shares pursuant to a
resolution by the shareholders at an annual general meeting until the conclusion of the following ordinary general
meeting of shareholders, and to hold such shares as their treasury stock indefinitely regardless of purpose.
However, the Companies Act requires the amount of treasury stock purchased should be within the amount of
retained earnings available for dividends. Disposition of treasury stock is subject to the approval of the Board of
Directors and is to follow the procedures similar to a public offering of shares for subscription.
From May 16, 2018 to June 4, 2018, MUFG repurchased 72,420,700 shares of MUFG’s common stock by
market purchases based on the discretionary dealing contract regarding repurchase of own shares for
approximately ¥50 billion, in aggregate, in satisfaction of the resolution adopted at the meeting of the Board of
Directors of MUFG held on May 15, 2018. The repurchase plan as authorized by the Board of Directors of
MUFG allowed for the repurchase of an aggregate amount of up to 100,000,000 shares, which represents the
equivalent of 0.76% of the total number of common shares outstanding, or of an aggregate repurchase amount of
up to ¥50 billion. On July 20, 2018, MUFG cancelled all of the acquired shares in satisfaction of the resolution
adopted at the meeting of the Board of Directors of MUFG held on May 15, 2018.
From November 14, 2018 to December 10, 2018, MUFG repurchased 159,836,800 shares of MUFG’s
common stock by market purchases based on the discretionary dealing contract regarding repurchase of own
shares for approximately ¥100 billion, in aggregate, in satisfaction of the resolution adopted at the meeting of the
Board of Directors of MUFG held on November 13, 2018. The repurchase plan as authorized by the Board of
Directors of MUFG allowed for the repurchase of an aggregate amount of up to 200,000,000 shares, which
represents the equivalent of 1.52% of the total number of common shares outstanding, or of an aggregate
repurchase amount of up to ¥100 billion. On January 22, 2019, MUFG cancelled all of the acquired shares in
satisfaction of the resolution adopted at the meeting of the Board of Directors of MUFG held on November 13,
2018.
From November 14, 2019 to December 23, 2019, MUFG repurchased 85,775,400 shares of MUFG’s
common stock by market purchases based on the discretionary dealing contract regarding repurchase of own
shares for approximately ¥50 billion, in aggregate, in satisfaction of the resolution adopted at the meeting of the
Board of Directors of MUFG held on November 13, 2019. The repurchase plan as authorized by the Board of
Directors of MUFG allowed for the repurchase of an aggregate amount of up to 100,000,000 shares, which
represents the equivalent of 0.77% of the total number of common shares outstanding, or of an aggregate
repurchase amount of up to ¥50 billion. On January 20, 2020, MUFG cancelled all of the acquired shares in
satisfaction of the resolution adopted at the meeting of the Board of Directors of MUFG held on November 13,
2019. The purpose of the repurchase is to enhance the return of earnings to shareholders, to improve capital
efficiency, and to implement flexible capital policies.
19. RETAINED EARNINGS, LEGAL RESERVE AND DIVIDENDS
In addition to the Companies Act, Japanese banks, including MUFG Bank and Mitsubishi UFJ Trust and
Banking, are required to comply with the Banking Law of Japan (the “Banking Law”).
Legal Reserve Set Aside as Appropriation of Retained Earnings and Legal Capital Surplus
Under the Companies Act
The Companies Act provides that an amount at least equal to 10% of the aggregate amount of cash
dividends and certain appropriations of retained earnings associated with cash outlays applicable to each period
F-88
MITSUBISHI UFJ FINANCIAL GROUP, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
shall be appropriated and set aside as a legal reserve until the aggregate amount of legal reserve set aside as an
appropriation of retained earnings and the legal capital surplus equals 25% of stated capital as defined in the
Companies Act.
Under the Banking Law
The Banking Law provides that an amount at least equal to 20% of the aggregate amount of cash dividends
and certain appropriations of retained earnings associated with cash outlays applicable to each fiscal year shall be
appropriated and set aside as a legal reserve until the aggregate amount of legal reserve set aside as appropriation
of retained earnings and the legal capital surplus equals 100% of stated capital as defined in the Companies Act.
Transfer of Legal Reserve
Under the Companies Act
Under the Companies Act, Japanese companies, including MUFG, were permitted, pursuant to a resolution
by the shareholders at a general meeting, to make legal reserve set aside as appropriation of retained earnings and
legal capital surplus available for dividends until the aggregate amount of the legal reserve and legal capital
surplus equals 25% of stated capital as defined in the Companies Act.
Under the Companies Act, Japanese companies, including MUFG, MUFG Bank and Mitsubishi UFJ Trust
and Banking, are permitted, primarily pursuant to a resolution by the shareholders at a general meeting, to
transfer legal capital surplus and legal reserve to stated capital and/or retained earnings without limitations of
thresholds, thereby effectively removing the thresholds provided for in the Companies Act and Banking Law at
the company’s discretion.
Under the Banking Law
Under the Banking Law, Japanese banks, including MUFG Bank and Mitsubishi UFJ Trust and Banking,
were permitted, pursuant to a resolution by the shareholders at a general meeting, to set aside a legal reserve as
an appropriation of retained earnings and legal capital surplus available for dividends until the aggregate amount
of the legal reserve and legal capital surplus equals 100% of stated capital as defined in the Companies Act.
Unappropriated Retained Earnings and Dividends
In addition to the provision that requires an appropriation for legal reserve as described above, the
Companies Act and the Banking Law impose certain limitations on the amount available for dividends.
Under the Companies Act, the amount available for dividends is based on the amount recorded in MUFG’s
general books of account maintained in accordance with accounting principles generally accepted in Japan
(“Japanese GAAP”). The adjustments included in the accompanying consolidated financial statements but not
recorded in MUFG’s general books of account, as explained in Note 1, have no effect on the determination of
retained earnings available for dividends under the Companies Act. Under the Banking Law, MUFG, MUFG
Bank and Mitsubishi UFJ Trust and Banking have to meet the minimum capital adequacy requirements and
distributions of retained earnings of MUFG, MUFG Bank and Mitsubishi UFJ Trust and Banking, which are
otherwise distributable to shareholders, are restricted in order to maintain the minimum capital requirements.
MUFG, formerly known as Mitsubishi Tokyo Financial Group, was established on April 2, 2001 with
common stock of ¥924,400 million, preferred stock of ¥222,100 million, legal capital surplus of
¥2,838,693 million and no retained earnings in accordance with the Commercial Code of Japan (“the Code”),
which was replaced by the Companies Act, and Japanese GAAP.
F-89
MITSUBISHI UFJ FINANCIAL GROUP, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
On October 1, 2005, MUFG started with common stock and preferred stock of ¥1,383,052 million, a legal
capital surplus of ¥3,577,570 million and retained earnings of ¥757,458 million in accordance with the Code and
Japanese GAAP.
MUFG’s amount available for dividends, at March 31, 2021, was ¥4,356,678 million, which is based on the
amount recorded in MUFG’s general books of account under Japanese GAAP.
Annual dividends, including those for preferred stock, are approved by the shareholders at an annual general
meeting held subsequent to the fiscal year to which the dividends are applicable. In addition, a semi-annual
interim dividend payment may be made by resolution of the Board of Directors, subject to limitations imposed by
the Companies Act and the Banking Law.
In the accompanying consolidated statements of equity, dividends and appropriations to legal reserve shown
for each fiscal year represent dividends approved and paid during the fiscal year and the related appropriation to
legal reserve.
F-90
MITSUBISHI UFJ FINANCIAL GROUP, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
20. ACCUMULATED OTHER COMPREHENSIVE INCOME (LOSS)
The following table presents the changes in Accumulated OCI, net of tax and net of noncontrolling interests,
for the fiscal years ended March 31, 2019, 2020 and 2021:
2019
2020
2021
(in millions)
Accumulated other comprehensive income (loss), net of taxes:
Net unrealized gains (losses) on investment securities:
Balance at beginning of fiscal year . . . . . . . . . . . . . . . . . . . . . . . . . . .
Net change during the fiscal year . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Effect of adopting new guidance on recognition and measurement of
financial assets and financial liabilities . . . . . . . . . . . . . . . . . . . . . .
Effect of adopting new guidance on measurement of credit losses on
financial instruments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
¥ 2,270,346
60,616
¥(369,369) ¥(344,785)
(38,253)
24,584
(2,700,331)
—
—
—
—
34
Balance at end of fiscal year . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
¥ (369,369) ¥(344,785) ¥(383,004)
Net debt valuation adjustments:
Balance at beginning of fiscal year . . . . . . . . . . . . . . . . . . . . . . . . . . .
Net change during the fiscal year . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Effect of adopting new guidance on recognition and measurement of
financial assets and financial liabilities . . . . . . . . . . . . . . . . . . . . . .
¥
(16,488) ¥
9,729
(8,670) ¥ 45,502
(83,364)
54,172
(1,911)
—
—
Balance at end of fiscal year . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
¥
(8,670) ¥ 45,502
¥ (37,862)
Net unrealized gains (losses) on derivatives qualifying for cash flow
hedges:
Balance at beginning of fiscal year . . . . . . . . . . . . . . . . . . . . . . . . . . .
Net change during the fiscal year . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Balance at end of fiscal year . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
¥
¥
(19,250) ¥ (24,140) ¥ (13,343)
32,372
10,797
(4,890)
(24,140) ¥ (13,343) ¥ 19,029
Defined benefit plans:
Balance at beginning of fiscal year . . . . . . . . . . . . . . . . . . . . . . . . . . .
Net change during the fiscal year . . . . . . . . . . . . . . . . . . . . . . . . . . . .
¥ (119,593) ¥(208,273) ¥(337,918)
317,536
(129,645)
(88,680)
Balance at end of fiscal year . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
¥ (208,273) ¥(337,918) ¥ (20,382)
Foreign currency translation adjustments:
Balance at beginning of fiscal year . . . . . . . . . . . . . . . . . . . . . . . . . . .
Net change during the fiscal year . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Balance at end of fiscal year . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
¥
¥
362,300
(36,117)
¥ 326,183
(96,056)
¥ 230,127
(97,389)
326,183
¥ 230,127
¥ 132,738
Balance at end of fiscal year . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
¥ (284,269) ¥(420,417) ¥(289,481)
F-91
MITSUBISHI UFJ FINANCIAL GROUP, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
The following table presents the before tax and net of tax changes in each component of Accumulated OCI
for the fiscal years ended March 31, 2019, 2020 and 2021:
2019
2020
Tax
(expense)
or benefit Net of tax Before tax
Tax
(expense)
or benefit
Before tax
(in millions)
Net of tax
Before tax
2021
Tax
(expense)
or benefit Net of tax
Net unrealized gains (losses) on
investment securities:
Net unrealized gains
(losses) on investment
securities . . . . . . . . . . . . . ¥ 132,723 ¥ (24,690) ¥ 108,033 ¥ 100,974 ¥
(2,260) ¥
98,714 ¥ (69,247) ¥
(599) ¥ (69,846)
Reclassification adjustment
for losses (gains)
included in net income
before attribution of
noncontrolling
interests . . . . . . . . . . . . . .
(28,953)
9,100
(19,853)
(107,102)
Net change . . . . . . . . .
103,770
(15,590)
88,180
(6,128)
32,007
29,747
(75,095)
(383)
(547)
(930)
23,619
(69,630)
(1,146)
(70,776)
Net unrealized gains
(losses) on investment
securities attributable to
noncontrolling
interests . . . . . . . . . . . . . .
Net unrealized gains
(losses) on investment
securities attributable to
Mitsubishi UFJ Financial
Group . . . . . . . . . . . . . . .
Net debt valuation adjustments:
Net debt valuation
adjustments . . . . . . . . . . .
Reclassification adjustment
for losses included in net
income before attribution
of noncontrolling
interests . . . . . . . . . . . . . .
27,564
(965)
(32,523)
60,616
24,584
(38,253)
13,006
(3,982)
9,024
77,765
(23,812)
53,953
(126,007)
38,584
(87,423)
1,016
(311)
705
315
(96)
219
5,851
(1,792)
4,059
Net change . . . . . . . . .
14,022
(4,293)
9,729
78,080
(23,908)
54,172
(120,156)
36,792
(83,364)
—
9,729
—
—
54,172
(83,364)
(10,397)
2,825
(7,572)
1,375
(560)
815
44,255
(12,359)
31,896
Net debt valuation
adjustments attributable
to noncontrolling
interests . . . . . . . . . . . . . .
Net debt valuation
adjustments attributable
to Mitsubishi UFJ
Financial Group . . . . . . .
Net unrealized gains (losses) on
derivatives qualifying for cash
flow hedges:
Net unrealized gains
(losses) on derivatives
qualifying for cash flow
hedges . . . . . . . . . . . . . . .
Reclassification adjustment
for losses (gains)
included in net income
before attribution of
noncontrolling
interests . . . . . . . . . . . . . .
3,662
(980)
2,682
13,279
14,654
(3,452)
(4,012)
9,827
164
115
279
10,642
44,419
(12,244)
32,175
Net change . . . . . . . . .
(6,735)
1,845
(4,890)
F-92
MITSUBISHI UFJ FINANCIAL GROUP, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
2019
2020
Tax
(expense)
or benefit Net of tax Before tax
Tax
(expense)
or benefit
Before tax
(in millions)
Net of tax
Before tax
2021
Tax
(expense)
or benefit Net of tax
Net unrealized losses on
derivatives qualifying for
cash flow hedges
attributable to
noncontrolling
interests . . . . . . . . . . . . . .
Net unrealized gains
(losses) on derivatives
qualifying for cash flow
hedges attributable to
Mitsubishi UFJ Financial
Group . . . . . . . . . . . . . . .
Defined benefit plans:
Defined benefit plans . . . . .
Reclassification adjustment
for losses (gains)
included in net income
before attribution of
noncontrolling
interests . . . . . . . . . . . . . .
—
(155)
(197)
(4,890)
10,797
32,372
(126,001)
37,655
(88,346)
(195,851)
59,426
(136,425)
436,435
(133,404)
303,031
(1,168)
574
(594)
6,643
(1,741)
4,902
22,504
(6,479)
16,025
Net change . . . . . . . . .
(127,169)
38,229
(88,940)
(189,208)
57,685
(131,523)
458,939
(139,883)
319,056
Defined benefit plans
attributable to
noncontrolling
interests . . . . . . . . . . . . . .
Defined benefit plans
attributable to Mitsubishi
UFJ Financial Group . . . .
Foreign currency translation
adjustments:
Foreign currency translation
adjustments . . . . . . . . . . .
Reclassification adjustment
for losses (gains)
included in net income
before attribution of
noncontrolling
interests . . . . . . . . . . . . . .
Net change . . . . . . . . .
Foreign currency translation
adjustments attributable
to noncontrolling
interests . . . . . . . . . . . . . .
Foreign currency translation
adjustments attributable
to Mitsubishi UFJ
Financial Group . . . . . . .
Other comprehensive income
(loss) attributable to
Mitsubishi UFJ Financial
Group . . . . . . . . . . . . . . . . . . .
(260)
(1,878)
(88,680)
(129,645)
1,520
317,536
(18,062)
(17,932)
(35,994)
(99,520)
19,588
(79,932)
(61,085)
(14,370)
(75,455)
(9,002)
2,784
(6,218)
(2,238)
1,105
(1,133)
(57,534)
17,738
(39,796)
(27,064)
(15,148)
(42,212)
(101,758)
20,693
(81,065)
(118,619)
3,368
(115,251)
(6,095)
14,991
(17,862)
(36,117)
(96,056)
(97,389)
¥ (59,342)
¥(136,148)
¥ 130,902
F-93
MITSUBISHI UFJ FINANCIAL GROUP, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
The following table presents the effect of the reclassification of significant items out of Accumulated
OCI on the respective line items of the accompanying consolidated statements of income for the fiscal years
ended March 31, 2019, 2020 and 2021:
Details of Accumulated OCI components
Net unrealized losses (gains) on investment
securities
Net losses (gains) on sales and redemptions of
Available-for-sale debt securities . . . . . . . .
Impairment losses on investment securities . . .
Other
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Net debt valuation adjustments . . . . . . . . . . . . . . . .
2019
2020
2021
Amount reclassified out of
Accumulated OCI
Line items in the consolidated
statements of income
(in millions)
¥(29,182)
¥(108,193)
¥ 6,410
596
(367)
1,590
(499)
6
(6,799)
Investment securities gains
(losses)—net
Investment securities gains
(losses)—net
(28,953)
9,100
(107,102)
32,007
(383)
(547)
Total before tax
Income tax expense
¥(19,853)
¥ (75,095)
¥
(930) Net of tax
¥ 1,016
1,016
(311)
¥
705
¥
¥
315
315
(96)
219
Equity in earnings of equity
method investees—net or
Other non-interest income
¥ 5,851
5,851
(1,792)
Total before tax
Income tax expense
¥ 4,059
Net of tax
Net unrealized losses (gains) on derivatives
qualifying for cash flow hedges
Interest rate contracts . . . . . . . . . . . . . . . . . . . .
¥ 3,739
¥
9,878
¥ (3,579)
Foreign exchange contracts . . . . . . . . . . . . . . .
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Other
—
(77)
3,662
(980)
3,399
2
13,279
(3,452)
¥ 2,682
¥
9,827
¥
3,743
—
164
115
279
Interest income on Loans,
including fees
Interest expense on Long-
term debt or Foreign
exchange losses—net
Total before tax
Income tax expense
Net of tax
Defined benefit plans
Net actuarial loss(1) . . . . . . . . . . . . . . . . . . . . . .
Prior service cost(1) . . . . . . . . . . . . . . . . . . . . . .
Gain on settlements and curtailment, and
other(1)
. . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Foreign currency translation adjustments . . . . . . . .
Total reclassifications for the period . . . . . . . . . . . .
¥ 11,431
(6,269)
¥ 15,488
(5,718)
¥ 28,787
Other non-interest expenses
(4,267) Other non-interest expenses
Other non-interest income or
expenses
(2,016)
22,504
(6,479)
Total before tax
Income tax expense
(3,127)
6,643
(1,741)
4,902
¥ 16,025
Net of tax
(5,003)
2,765
(2,238)
1,105
¥(57,561) Other non-interest income
27
Other non-interest expenses
(57,534)
17,738
Total before tax
Income tax expense
(6,330)
(1,168)
574
¥
(594)
¥ (9,004)
2
(9,002)
2,784
¥
¥
¥ (6,218)
¥
(1,133)
¥(39,796) Net of tax
¥(34,445)
11,167
¥ (89,103)
27,823
¥(29,398)
9,035
Total before tax
Income tax expense
¥(23,278)
¥ (61,280)
¥(20,363) Net of tax
F-94
MITSUBISHI UFJ FINANCIAL GROUP, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
Note:
(1) These Accumulated OCI components are components of net periodic benefit cost. See Note 13 for more information.
21. REGULATORY CAPITAL REQUIREMENTS
Japan
MUFG, MUFG Bank, Mitsubishi UFJ Trust and Banking and Mitsubishi UFJ Securities Holdings are
subject to various regulatory capital requirements promulgated by the regulatory authorities of the countries in
which they operate. Failure to meet minimum capital requirements will initiate certain mandatory actions by
regulators that, if undertaken, could have a direct material effect on MUFG’s consolidated financial statements.
In Japan, MUFG, MUFG Bank, and Mitsubishi UFJ Trust and Banking are subject to regulatory capital
requirements promulgated by the Financial Services Agency of Japan (“FSA”) in accordance with the provisions
of the Banking Law and related regulations. A banking institution is subject to the minimum capital requirements
both on a consolidated basis and a stand-alone basis, and is required to maintain the minimum capital irrespective
of whether it operates independently or as a subsidiary under the control of another company. When a bank
holding company manages operations of its banking subsidiaries, it is required to maintain the minimum capital
adequacy ratio on a consolidated basis in the same manner as its subsidiary banks. The FSA provides two sets of
capital adequacy guidelines. One is a set of guidelines applicable to Japanese banks and bank holding companies
with their foreign offices conducting international operations, as defined, and the other is applicable to Japanese
banks and bank holding companies that are not engaged in international operations conducted by their foreign
offices.
The Basel Committee on Banking Supervision (“BCBS”) of the Bank for International Settlements
(“BIS”) sets capital adequacy standards for all internationally active banks to ensure minimum levels of capital.
The Group of Central Bank Governors and Heads of Supervision reached an agreement on the new global
regulatory framework, which has been referred to as “Basel III,” in July and September 2010. In December 2010,
the Basel Committee agreed on the details of the Basel III rules. Effective as of March 31, 2013, Basel III was
adopted by the FSA with transitional measures for Japanese banking institutions with international operations
conducted by their foreign offices. MUFG calculated capital ratios as of March 31, 2020 and 2021 in accordance
with Basel III.
Capital Ratios
Basel III is based on “three pillars”: (1) minimum capital requirements, (2) the self-regulation of financial
institutions based on supervisory review process, and (3) market discipline through the disclosure of information.
As for the denominator of the capital ratio, the Basel framework provides the following risk-based
approaches and a range of options for determining risk-weighted assets.
“Credit Risk”
The Basel framework provides options for determining the risk-weighted assets for credit risk to allow
banks to select approaches that are most appropriate for their level of risk assessment. Banks choose one of
three approaches: “Standardized Approach,” “Foundation Internal Ratings-Based Approach” or “Advanced
Internal Ratings-Based Approach (“AIRB”).”
F-95
MITSUBISHI UFJ FINANCIAL GROUP, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
“Market Risk”
In the “Amendment to the Capital Accord to incorporate market risks” of the year 1996, a choice between
two methodologies “the Standardized Measurement Method” and “Internal Models Approach” is permitted.
“Combination of Internal Models Approach and the Standardized Measurement Method” is also allowed
under certain conditions. This is unchanged in Basel III.
“Operational Risk”
Operational risk, which is defined as the risk of loss resulting from inadequate or failed internal processes,
people and systems or from external events, is newly added in Basel II. The Basel framework presents three
methods for calculating operational risk capital charges: (i) the Basic Indicator Approach; (ii) the
Standardized Approach; or (iii) Advanced Measurement Approaches (“AMA”). Banks adopt one of the
three approaches to determine the risk-weighted assets for operational risk.
Banks need to obtain approval from their supervisors prior to adopting the following approaches to calculate
capital requirements for each risk:
‰
‰
‰
the Advanced Internal Ratings-Based Approach for credit risk
the Internal Models Approach for market risk
the Standardized Approach and AMA for operational risk
With approval from the FSA, MUFG and most of its major subsidiaries adopt AIRB to calculate capital
requirements for credit risk, adopt the AMA to calculate capital requirements for operational risk, as for market
risk, adopt the Internal Models Approach mainly to calculate general market risk and adopt the Standardized
Measurement Method to calculate specific risk.
The MUFG Group’s proprietary assets do not include trust assets under management and administration in a
capacity of agent or fiduciary and, accordingly trust account assets are generally not included in the capital
measure. However, guarantees for trust principal are counted as off-balance sheet items requiring a capital charge
in accordance with the capital adequacy guidelines.
Under Basel III, as adopted by the FSA, MUFG’s risk-weighted assets increased, largely reflecting the new
capital charge of the credit valuation adjustment (CVA), the credit risk related to asset value correlation
multiplier for large financial institutions, and the 250% risk-weighted threshold items not deducted from
Common Equity Tier 1 capital, as well as the conversion of certain Basel II capital deductions to risk-weighted
assets, such as securitizations.
On the other hand, as for the numerator of the capital ratio, there are three primary regulatory capital ratios
used to assess capital adequacy, Common Equity Tier 1, Tier 1 and Total capital ratios, which are determined by
dividing applicable capital components by risk-weighted assets. Tier 1 capital consists of Common Equity Tier 1
capital and Additional Tier 1 capital. Common Equity Tier 1 capital is primarily consisting of common stock,
capital surplus, retained earnings, and Accumulated OCI. Regulatory adjustments including certain intangible
fixed assets, such as goodwill, and defined-benefit pension fund assets, are made to Common Equity Tier 1.
Additional Tier 1 capital generally consists of Basel III compliant preferred securities, and during the transition
period, other capital that meets Tier 1 requirements under Basel II standards.
Tier 2 capital generally consists of Basel III compliant subordinated debts, capital that meets Tier 2
requirements under Basel II standards during the transition period, certain allowances for credit losses, and
noncontrolling interests in subsidiaries’ Tier 2 instruments. Total capital is defined as the sum of Tier 1 and
Tier 2 capital.
F-96
MITSUBISHI UFJ FINANCIAL GROUP, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
Effective March 31, 2016, the FSA’s capital conservation buffer, countercyclical buffer and the Global
Systematically Important Bank (“G-SIB”), as designated by the FSB, surcharge requirements became applicable
to Japanese banking institutions with international operations conducted through foreign offices. The
requirements had been phased in and fully implemented as of March 31, 2020. In addition to the 4.50% minimum
Common Equity Tier 1 capital ratio, MUFG is required to maintain a capital conservation buffer of 2.5% and a
G-SIB surcharge of 1.5% as of March 31, 2020 and 2021, and a countercyclical buffer of 0.01% and 0.00% as of
March 31, 2020 and 2021, respectively.
Leverage Ratios
The leverage ratio is designed for monitoring and preventing the build-up of excessive leverage in the
banking sector and is expressed as the ratio of Tier 1 capital to both on and off-balance sheet assets adjusted in
accordance with the FSA guidance. In December 2017, the Group of Central Bank Governors and Heads of
Supervision announced final Basel III reforms. The announced reforms include revisions to the measurement of
the leverage ratio and a 3% minimum leverage ratio requirement, plus a G-SIB leverage ratio buffer equal to
50% of the applicable G-SIB capital surcharge. The announcement sets forth implementation dates of January 1,
2018 for the minimum leverage ratio requirement and January 1, 2022 for the G-SIB leverage ratio buffer
requirement. Effective as of March 31, 2019, the minimum leverage ratio requirement was adopted by the FSA.
The risk-adjusted capital amounts and ratios, and leverage ratios, of MUFG, MUFG Bank and Mitsubishi
UFJ Trust and Banking presented in the following table are based on amounts calculated in accordance with
Japanese GAAP as required by the FSA.
Actual
For capital
adequacy purposes
Amount
Ratio
Amount
Ratio
(in millions, except percentages)
Consolidated:
At March 31, 2020:
Total capital (to risk-weighted assets):
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
MUFG(1)
BK . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
TB . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
¥18,279,566
14,285,601
1,889,973
15.87% ¥13,827,788
7,917,895
14.43
593,652
25.46
12.01%
8.00
8.00
Tier 1 capital (to risk-weighted assets):
MUFG(1)
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
BK . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
TB . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
15,623,321
12,170,005
1,625,712
Common Equity Tier 1 capital (to risk-weighted assets):
MUFG(1)
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
BK . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
TB . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
13,708,333
10,597,133
1,444,348
Leverage ratio:
MUFG . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
BK . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
TB . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
15,623,321
12,170,005
1,625,712
13.56
12.29
21.90
11.90
10.70
19.46
4.42
4.21
4.51
11,525,076
5,938,421
445,239
10.01
6.00
6.00
9,798,042
4,453,816
333,929
10,593,527
8,656,169
1,079,863
8.51
4.50
4.50
3.00
3.00
3.00
F-97
MITSUBISHI UFJ FINANCIAL GROUP, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
Actual
For capital
adequacy purposes
Amount
Ratio
Amount
Ratio
(in millions, except percentages)
At March 31, 2021:
Total capital (to risk-weighted assets):
MUFG(1)
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
BK . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
TB . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
¥18,669,510
14,630,443
2,099,662
16.31% ¥13,730,324
7,779,147
15.04
747,524
22.47
12.00%
8.00
8.00
Tier 1 capital (to risk-weighted assets):
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
MUFG(1)
BK . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
TB . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
15,982,746
12,411,352
1,870,988
Common Equity Tier 1 capital (to risk-weighted assets):
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
MUFG(1)
BK . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
TB . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
14,113,722
10,865,302
1,681,140
Leverage ratio:
MUFG . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
BK . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
TB . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
15,982,746
12,411,352
1,870,988
13.96
12.76
20.02
12.33
11.17
17.99
5.45
5.22
7.53
11,441,937
5,834,360
560,643
10.00
6.00
6.00
9,725,646
4,375,770
420,482
8,781,753
7,123,396
744,744
8.50
4.50
4.50
3.00
3.00
3.00
Stand-alone:
At March 31, 2020:
Total capital (to risk-weighted assets):
BK . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
TB . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
¥12,092,262
2,131,514
14.76% ¥ 6,550,969
670,714
25.42
8.00%
8.00
Tier 1 capital (to risk-weighted assets):
BK . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
TB . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
10,254,608
1,867,723
12.52
22.27
4,913,227
503,035
Common Equity Tier 1 capital (to risk-weighted assets):
BK . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
TB . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
8,738,975
1,686,723
10.67
20.11
3,684,920
377,276
Leverage ratio:
BK . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
TB . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
10,254,608
1,867,723
4.02
5.87
7,644,928
953,353
6.00
6.00
4.50
4.50
3.00
3.00
At March 31, 2021:
Total capital (to risk-weighted assets):
BK . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
TB . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
¥12,359,493
2,294,694
14.60% ¥ 6,770,631
837,567
21.91
8.00%
8.00
Tier 1 capital (to risk-weighted assets):
BK . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
TB . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
10,512,405
2,066,480
12.42
19.73
5,077,974
628,176
Common Equity Tier 1 capital (to risk-weighted assets):
BK . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
TB . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
9,025,272
1,876,980
10.66
17.92
3,808,480
471,132
Leverage ratio:
BK . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
TB . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
10,512,405
2,066,480
5.14
8.95
6,127,521
691,914
6.00
6.00
4.50
4.50
3.00
3.00
F-98
MITSUBISHI UFJ FINANCIAL GROUP, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
Note:
(1) Effective March 31, 2016, the FSA’s capital conservation buffer, countercyclical buffer and G-SIB surcharge requirements became
applicable to Japanese banking institutions with international operations conducted through foreign offices. As a result, in addition to the
4.50% minimum Common Equity Tier 1 capital ratio, MUFG is required to maintain a capital conservation buffer of 2.5% and a G-SIB
surcharge of 1.5% as of March 31, 2020 and 2021, and the countercyclical buffer of 0.01% and 0.00% as of March 31, 2020 and 2021,
respectively.
Mitsubishi UFJ Morgan Stanley Securities and other securities subsidiaries in Japan and overseas are also
subject to regulatory capital requirements of the countries or jurisdictions in which they operate. In Japan, the
Financial Instruments and Exchange Act and related ordinance require financial instruments firms to maintain a
minimum capital ratio of 120% calculated as a percentage of capital accounts less certain fixed assets, as
determined in accordance with Japanese GAAP, against amounts equivalent to market, counterparty credit and
operational risks. Specific guidelines are issued as a ministerial ordinance which details the definition of essential
components of the capital ratios, including capital, deductible fixed asset items and risks, and related measures.
Failure to maintain a minimum capital ratio will trigger mandatory regulatory actions. A capital ratio of less than
140% will call for regulatory reporting and a capital ratio of less than 100% may lead to a suspension of all or
part of the business for a period of time and cancellation of a registration.
At March 31, 2020, Mitsubishi UFJ Morgan Stanley Securities’s capital accounts less certain fixed assets of
¥440,520 million on a stand-alone basis and ¥465,343 million on a consolidated basis, were 313.0% and 316.2%
of the total amounts equivalent to market, counterparty credit and operational risks, respectively. At March 31,
2021, its capital accounts less certain fixed assets of ¥475,343 million on a stand-alone basis, are 275.4% of the
total amounts equivalent to market, counterparty credit and operational risks.
Management believes, as of March 31, 2021, that MUFG, MUFG Bank, Mitsubishi UFJ Trust and Banking,
Mitsubishi UFJ Morgan Stanley Securities and other regulated securities subsidiaries met all capital adequacy
requirements to which they are subject.
United States of America
In the United States of America, MUFG Americas Holdings and its banking subsidiary MUFG Union Bank,
N.A. (“MUFG Union Bank” or “BK(US)”), MUFG Bank’s largest subsidiaries operating outside Japan, are
subject to various regulatory capital requirements administered by the U. S. Federal banking agencies. Failure to
meet minimum capital requirements can initiate certain mandatory, and possibly additional discretionary, actions
by regulators that, if undertaken, could have a material effect on MUFG Americas Holdings’s consolidated
financial statements. Under capital adequacy guidelines and the regulatory framework for prompt corrective
action, MUFG Americas Holdings and MUFG Union Bank must meet specific capital guidelines that involve
quantitative measures of MUFG Americas Holdings’s and MUFG Union Bank’s assets, liabilities, and certain
off-balance sheet items as calculated under regulatory accounting practices. MUFG Americas Holdings’s capital
amounts and MUFG Union Bank’s prompt corrective action classification are also subject to qualitative
judgments by the regulators about components, risk-weightings and other factors. Prompt corrective action
provisions are not applicable to bank holding companies such as MUFG Americas Holdings. MUFG Union Bank
is subject to laws and regulations that limit the amount of dividends MUFG Union Bank can pay to MUFG
Americas Holdings.
Quantitative measures established by regulation to help ensure capital adequacy require MUFG Americas
Holdings and MUFG Union Bank to maintain minimum amounts and ratios (set forth in the tables below) of
Total and Tier 1 capital (as defined in the regulations) to risk-weighted assets (as defined) and of Tier 1 capital
(as defined) to quarterly average assets (as defined).
F-99
MITSUBISHI UFJ FINANCIAL GROUP, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
In July 2013, the Board of Governors of the Federal Reserve System and the other U.S. Federal banking
agencies adopted final rules making significant changes to the U.S. regulatory capital framework for
U.S. banking organizations (U.S. Basel III). The final rules are intended to conform this framework to the BCBS’
current international regulatory capital accord (Basel III). These rules replace the U.S. Federal banking agencies’
general risk-based capital rules (commonly known as “Basel I”), advanced approaches rules (commonly known
as “Basel II”) that are applicable to certain large banking organizations (including MUFG Union Bank), and
leverage rules, and are subject to certain transition provisions. Among other requirements, the U.S. Basel III rules
revise the definition of capital, increase minimum capital ratios, and introduce a minimum Common Equity
Tier 1 capital ratio of 4.5% and a capital conservation buffer of 2.5% (for a total minimum Common Equity
Tier 1 capital ratio of 7.0%) and a potential countercyclical buffer of up to 2.5%, which would be imposed by
regulators at their discretion if it is determined that a period of excessive credit growth is contributing to an
increase in financial institution systemic risk; mandate a Tier 1 leverage ratio of 4% and introduce, for large and
internationally active bank holding companies, a Tier 1 Supplementary Leverage Ratio that is currently set at 3%
and which incorporates off-balance sheet exposures; revise Basel I rules for calculating risk-weighted assets
under a standardized approach; modify the existing Basel II advanced approaches rules for calculating risk-
weighted assets under U.S. Basel III; and eliminate, for advanced approaches institutions, over a four-year
phase-in period beginning on January 1, 2014, the Accumulated OCI or loss exclusion that had applied under
Basel I and Basel II rules.
As required under U.S. Basel III rules, the 2.5% capital conservation buffer is being implemented on a
phased-in basis in equal increments of 0.625% per year over a four-year period that commenced on January 1,
2016. MUFG Americas Holdings and MUFG Union Bank satisfy the minimum capital requirements including
the capital conservation buffer on a fully phased-in basis as those requirements were effective as of
December 31, 2020.
The figures on the table below are calculated according to U.S. Basel III as of December 31, 2019 and 2020.
MUFG Americas Holdings’s actual capital amounts and ratios are presented as follows:
Actual
Minimum capital
ratios required(1)
Amount
Ratio
Amount
Ratio
(in millions, except percentages)
MUAH:
At December 31, 2019:
Total capital (to risk-weighted assets) . . . . . . . . . . . . . . . . . . . . . .
Tier 1 capital (to risk-weighted assets) . . . . . . . . . . . . . . . . . . . . .
Tier 1 capital (to quarterly average assets)(2)
. . . . . . . . . . . . . . . .
Common Equity Tier 1 capital (to risk-weighted assets) . . . . . . .
At December 31, 2020:
Total capital (to risk-weighted assets) . . . . . . . . . . . . . . . . . . . . . .
Tier 1 capital (to risk-weighted assets) . . . . . . . . . . . . . . . . . . . . .
Tier 1 capital (to quarterly average assets)(2)
. . . . . . . . . . . . . . . .
Common Equity Tier 1 capital (to risk-weighted assets) . . . . . . .
$15,769
15,086
15,086
15,086
$16,871
15,823
15,823
15,823
14.73% $11,237
9,097
14.10
6,792
8.88
7,492
14.10
10.500%
8.500
4.000
7.000
16.29% $12,843
10,772
15.28
6,623
9.56
9,218
15.28
12.400%
10.400
4.000
8.900
Notes:
(1) The minimum capital requirement includes a capital conservation buffer of 2.5% at December 31, 2019 and 4.4% at December 31, 2020.
(2) Excludes certain deductions.
F-100
MITSUBISHI UFJ FINANCIAL GROUP, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
The figures on the table below are calculated according to U.S. Basel III as of December 31, 2019 and 2020.
MUFG Union Bank’s actual capital amounts and ratios are presented as follows:
Actual
Minimum capital
ratios required(1)
Ratios OCC
requires to be
“well capitalized”
Amount
Ratio
Amount
Ratio
Amount
Ratio
(in millions, except percentages)
BK(US):
At December 31, 2019:
. . . . . . .
Total capital (to risk-weighted assets)
Tier 1 capital (to risk-weighted assets) . . . . . . .
Tier 1 capital (to quarterly average assets)(2)
. .
Common Equity Tier 1 capital (to risk-
$14,746
14,115
14,115
15.11% $10,244
8,293
14.47
5,304
10.65
10.500% $9,756
7,805
8.500
6,629
4.000
10.00%
8.00
5.00
weighted assets)
At December 31, 2020:
. . . . . . . . . . . . . . . . . . . . . .
14,115
14.47
6,829
7.000
6,342
6.50
Total capital (to risk-weighted assets)
. . . . . . .
Tier 1 capital (to risk-weighted assets) . . . . . . .
. .
Tier 1 capital (to quarterly average assets)(2)
Common Equity Tier 1 capital (to risk-
$15,629
14,634
14,634
16.68% $ 9,836
7,963
15.62
5,262
11.12
10.500% $9,368
7,494
8.500
6,577
4.000
10.00%
8.00
5.00
weighted assets)
. . . . . . . . . . . . . . . . . . . . . .
14,634
15.62
6,557
7.000
6,089
6.50
Notes:
(1) Beginning January 1, 2019, the minimum capital requirement includes a capital conservation buffer of 2.5%.
(2) Excludes certain deductions.
Management believes, as of December 31, 2020, that MUFG Americas Holdings and MUFG Union Bank
met all capital adequacy requirements to which they are subject.
As of December 31, 2019 and 2020, the notification from the OCC categorized MUFG Union Bank as “well
capitalized” under the regulatory framework for prompt corrective action. To be categorized as “well
capitalized,” MUFG Union Bank must maintain a minimum total risk-based capital ratio of 10% as of
December 31, 2019 and 2020, a Tier 1 risk-based capital ratio of 8% as of December 31, 2019 and 2020, a Tier 1
capital to quarterly average assets of 5% as of December 31, 2019 and 2020, and Common Equity Tier 1 risk-
based capital ratio of 6.5% as of December 31, 2019 and 2020, as set forth in the table. There are no conditions
or events since that notification that management believes have changed MUFG Union Bank’s category.
F-101
MITSUBISHI UFJ FINANCIAL GROUP, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
22. EARNINGS PER COMMON SHARE APPLICABLE TO COMMON SHAREHOLDERS OF MUFG
Reconciliations of net income and weighted average number of common shares outstanding used for the
computation of basic EPS to the adjusted amounts for the computation of diluted EPS for the fiscal years ended
March 31, 2019, 2020 and 2021 are as follows:
Income (Numerator):
Net income attributable to Mitsubishi UFJ Financial Group . . . . . . .
Effect of dilutive instruments:
Stock acquisition rights and restricted stock units—Morgan
2019
2020
2021
(in millions)
¥
718,645
¥
305,955
¥ 1,117,298
Stanley . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
(3,745)
(2,861)
(4,159)
Earnings applicable to common shareholders of Mitsubishi UFJ
Financial Group and assumed conversions . . . . . . . . . . . . . . . . . . .
¥
714,900
¥
303,094
¥ 1,113,139
Shares (Denominator):
Weighted average common shares outstanding . . . . . . . . . . . . . . . . .
Effect of dilutive instruments:
Stock acquisition rights and the common shares of MUFG
2019
2020
2021
(thousands of shares)
13,058,698
12,912,790
12,859,737
under the Board Incentive Plan(1)
. . . . . . . . . . . . . . . . . . . . . .
484
166
—
Weighted average common shares for diluted computation . . . . . . . .
13,059,182
12,912,956
12,859,737
2019
2020
(in yen)
2021
Earnings per common share applicable to common shareholders
of Mitsubishi UFJ Financial Group:
Basic earnings per common share:
Earnings applicable to common shareholders of Mitsubishi
UFJ Financial Group . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
¥
55.03
¥
23.69
¥
86.88
Diluted earnings per common share:
Earnings applicable to common shareholders of Mitsubishi
UFJ Financial Group(1)
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
¥
54.74
¥
23.47
¥
86.56
Note:
(1) For the fiscal years ended March 31, 2019, 2020 and 2021, the performance-based plan under the Board Incentive Plan could potentially
dilute earnings per common share but were not included in the computation of diluted earnings per common share due to their
antidilutive effects.
23. DERIVATIVE FINANCIAL INSTRUMENTS
The MUFG Group uses various derivative financial instruments both for trading purposes and for purposes
other than trading (primarily risk management purposes) in the normal course of business to meet the financial
needs of its customers, as a source of revenue and to manage its exposures to a variety of risks.
Market risk is the possibility that future changes in market indices make the financial instruments less
valuable. The MUFG Group is a party to derivative financial instruments, including swaps, forwards, options and
F-102
MITSUBISHI UFJ FINANCIAL GROUP, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
other types of derivatives, dealing primarily with market risk associated with interest rates, foreign currencies,
equity and commodity prices, and credit risk associated with counterparty’s nonperformance of transactions.
Credit risk is the possibility that a loss may result from a counterparty’s failure to perform according to the
terms and conditions of the contract, which may exceed the value of underlying collateral. To reduce credit risk,
the MUFG Group may require collateral or guarantees based on a case-by-case assessment of creditworthiness of
each customer and evaluation of the instrument. The MUFG Group also uses master netting agreements in order
to mitigate overall counterparty credit risk.
Trading Activities
The MUFG Group’s trading activities include dealing and customer accommodation activities. As part of its
trading activities, the MUFG Group offers a variety of derivative financial instruments for managing interest rate
and foreign exchange risk to its domestic and foreign corporate and financial institution customers. The MUFG
Group also enters into other types of derivative transactions, including equity and credit-related contracts, for its
own account.
Risk Management Activities
As part of the MUFG Group’s risk management activities, asset and liability management is viewed as one
of the methods for the MUFG Group to manage its interest rate exposures on interest-bearing assets and
liabilities. The MUFG Group uses certain derivative financial instruments in order to minimize significant
unplanned fluctuations in earnings that are caused by interest rate volatility. For example, an increase or a
decrease in interest income and interest expense on hedged variable rate assets and liabilities as a result of
interest rate fluctuations are expected to be substantially offset by the variability in earnings by gains and losses
on the derivative instruments that are linked to these hedged assets and liabilities.
The MUFG Group enters into interest rate swaps and other contracts primarily to manage the interest rate
risk of its loans, investment securities and deposit liabilities. Interest rate contracts, which are generally
non-leveraged generic interest rate and basis swaps, options and futures, allow the MUFG Group to effectively
manage its interest rate risk position. Option contracts primarily consist of caps, floors, swaptions and options on
index futures. Futures contracts used for asset and liability management activities are primarily index futures
providing for cash payments based upon the movement of an underlying rate index.
The MUFG Group enters into forward exchange contracts, currency swaps and other contracts in response
to currency exposures resulting from on-balance sheet assets and liabilities denominated in foreign currencies in
order to limit the net foreign exchange position by currency to an appropriate level.
Derivatives Designated as Hedges
The MUFG Group adopts hedging strategies and applies hedge accounting to certain derivative transactions
entered mainly by MUFG Americas Holdings whose fiscal period ends on December 31.
Cash Flow Hedges
From time to time, MUFG Americas Holdings uses interest rate derivatives to hedge the risk of changes in
cash flows attributable to changes in the designated interest rate on the London Interbank Offered Rate
(“LIBOR”) indexed loans, and to a lesser extent, to hedge interest rate risk on rollover debt.
F-103
MITSUBISHI UFJ FINANCIAL GROUP, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
MUFG Americas Holdings used interest rate derivatives with an aggregate notional amount of
¥983.3 billion at December 31, 2020 to hedge the risk of changes in cash flows attributable to changes in the
designated interest rates from variable rate loans. MUFG Americas Holdings used interest rate derivatives with
an aggregate notional amount of ¥0.9 billion at December 31, 2020 to hedge the risk of changes in cash flows
attributable to changes in the designated interest rate on LIBOR indexed short-term borrowings. At December 31,
2020, the weighted average remaining life of the active cash flow hedges was 2.7 years.
For cash flow hedges, changes in the fair value of the hedging instruments are reported as a component of
OCI and reclassified into earnings in the same period or periods during which the hedged cash flows are
recognized in net interest income. At December 31, 2020, MUFG Americas Holdings expects to reclassify
approximately ¥11.3 billion of income from Accumulated OCI as an increase to net interest income during the
twelve months ending December 31, 2021. This amount could differ from amounts actually realized due to
changes in interest rates, hedge terminations and the addition of other hedges subsequent to December 31, 2020.
Notional Amounts of Derivative Contracts
The following table summarizes the notional amounts of derivative contracts at March 31, 2020 and 2021:
Notional amounts(1)
2020
2021
(in trillions)
Interest rate contracts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Foreign exchange contracts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Equity contracts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Commodity contracts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Credit derivatives . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Other . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
¥1,553.5
230.2
8.1
0.1
8.7
3.1
¥1,308.4
222.0
8.0
0.1
9.8
3.5
Total
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
¥1,803.7
¥1,551.8
Note:
(1)
Includes both written and purchased positions.
F-104
MITSUBISHI UFJ FINANCIAL GROUP, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
Impact of Derivatives on the Consolidated Balance Sheets
The following table summarizes fair value information on derivative instruments that are recorded on the
MUFG Group’s consolidated balance sheets at March 31, 2020 and 2021:
Fair value of derivative instruments
2020(1)(5)
2021(1)(5)
Not designated
as hedges(2)
Designated
as hedges(3)
Total
derivatives(4)
Not designated
as hedges(2)
Designated
as hedges(3)
Total
derivatives(4)
Derivative assets:
Interest rate contracts . . . . . . . . . . . . . .
Foreign exchange contracts . . . . . . . . . .
Equity contracts . . . . . . . . . . . . . . . . . . .
Commodity contracts . . . . . . . . . . . . . .
Credit derivatives . . . . . . . . . . . . . . . . .
Other(6) . . . . . . . . . . . . . . . . . . . . . . . . . .
¥10,847
3,734
236
26
114
1
Total derivative assets . . . . . . . . . .
¥14,958
Derivative liabilities:
Interest rate contracts . . . . . . . . . . . . . .
Foreign exchange contracts . . . . . . . . . .
Equity contracts . . . . . . . . . . . . . . . . . . .
Commodity contracts . . . . . . . . . . . . . .
Credit derivatives . . . . . . . . . . . . . . . . .
Other(6) . . . . . . . . . . . . . . . . . . . . . . . . . .
¥10,205
3,604
277
26
95
(177)
¥
¥
¥
(in billions)
— ¥10,847
3,734
—
236
—
26
—
114
—
1
—
— ¥14,958
— ¥10,205
3,608
4
277
—
26
—
95
—
(177)
—
¥
¥
¥
¥ 7,718
3,910
231
27
94
17
¥11,997
¥ 7,361
4,022
237
27
109
(47)
— ¥ 7,718
3,910
—
231
—
27
—
94
—
17
—
— ¥11,997
— ¥ 7,361
4,027
5
237
—
27
—
109
—
(47)
—
Total derivative liabilities . . . . . . .
¥14,030
¥
4
¥14,034
¥11,709
¥
5
¥11,714
Notes:
(1) The fair value of derivative instruments is presented on a gross basis even when derivative instruments are subject to master netting
agreements. Cash collateral payable and receivable associated with derivative instruments are not added to or netted against the fair value
amounts.
(2) The derivative instruments which are not designated as a hedging instrument are held for trading and risk management purposes, and are
presented in Trading account assets and liabilities except for (6).
(3) The MUFG Group adopts hedging strategies and applies hedge accounting to certain derivative transactions entered into by certain
subsidiaries. The derivative instruments which are designated as hedging instruments are presented in Other assets or Other liabilities on
the accompanying consolidated balance sheets.
(4) This table does not include contracts with embedded derivatives for which the fair value option has been elected.
(5) For more information about fair value measurement and assumptions used to measure the fair value of derivatives, see Note 31.
(6) Other mainly includes bifurcated embedded derivatives carried at fair value, which are presented in Loans, Deposits and Long-term debt.
F-105
MITSUBISHI UFJ FINANCIAL GROUP, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
Impact of Derivatives on the Consolidated Statements of Income
The following table provides more detailed information regarding the derivative-related impact on the
accompanying consolidated statements of income for the fiscal years ended March 31, 2019, 2020 and 2021:
Gains and losses for trading and risk management derivatives (not designated as hedging instruments)
Trading and risk management derivatives gains and losses
(Not designated as hedging instruments)
2019
2020
2021
Foreign
exchange
gains (losses)
—net
Trading
account
profits (losses)
—net
Total
Foreign
exchange
gains (losses)
—net
Trading
account
profits (losses)
—net
Total
Foreign
exchange
gains (losses)
—net
Trading
account
profits (losses)
—net
Total
(in billions)
Interest rate
contracts . . . . . . . . .
¥ —
¥ 6
¥
6
¥ —
¥(173)
¥(173)
¥ —
¥ 70
¥ 70
Foreign exchange
contracts . . . . . . . . .
(347)
—
(347)
(429)
—
(429)
(91)
—
(91)
Equity
contracts . . . . . . . . .
Credit derivatives . . . .
Other(1) . . . . . . . . . . . .
—
—
(7)
80
(40)
(70)
80
(40)
(77)
—
—
(5)
30
15
(31)
30
15
(36)
—
—
11
(269)
(53)
(178)
(269)
(53)
(167)
Total . . . . . . . . . .
¥(354)
¥(24)
¥(378)
¥(434)
¥(159)
¥(593)
¥(80)
¥(430)
¥(510)
Note:
(1) Other mainly includes bifurcated embedded derivatives carried at fair value, which are presented in Loans, Deposits and Long-term debt.
Credit Derivatives
The MUFG Group enters into credit derivatives to manage its credit risk exposure, to facilitate client
transactions, and for proprietary trading purposes, under which they provide the counterparty protection against
the risk of default on a set of debt obligations issued by a specified reference entity or entities. Types of such
credit derivatives primarily include single name credit default swaps, index and basket credit default swaps. The
MUFG Group will have to perform under a credit derivative if a credit event as defined under the contract
occurs. Such credit events include bankruptcy, dissolution or insolvency of the referenced entity, default and
restructuring of the obligations of the referenced entity. The MUFG Group’s counterparties are banks, broker-
dealers, insurance and other financial institutions. The contractual or notional amounts of these credit derivatives
represent the maximum potential amounts of future payments without consideration of possible recoveries under
recourse provisions or from collateral held or pledged.
F-106
MITSUBISHI UFJ FINANCIAL GROUP, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
The table below summarizes certain information regarding protection sold through credit derivatives as of
March 31, 2020 and 2021:
At March 31, 2020:
Single name credit default swaps:
Protection sold
Maximum potential/Notional amount
by expiration period
1 year
or less
1-5 years
Over
5 years
(in millions)
Total
Fair value
(Asset)/
Liability(1)
. . . . . . . . . . . . . . . . . . . . .
Investment grade(2)
Non-investment grade . . . . . . . . . . . . . . . . . . .
Not rated . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
¥303,870
93,671
2,453
¥2,125,006
279,892
6,826
¥494,040
49,681
—
¥2,922,916
423,244
9,279
¥(63,855)
3,358
(18)
Total
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
399,994
2,411,724
543,721
3,355,439
(60,515)
Index and basket credit default swaps:
Investment grade(2)
. . . . . . . . . . . . . . . . . . . . .
Non-investment grade . . . . . . . . . . . . . . . . . . .
Not rated . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Total
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
20,000
—
28,296
48,296
210,602
106,630
190,398
507,630
14,950
—
5,316
20,266
245,552
106,630
224,010
576,192
(1,823)
(1,360)
(5,205)
(8,388)
Total credit default swaps sold . . . . . . . . . . . . . . . .
448,290
2,919,354
563,987
3,931,631
(68,903)
Other credit derivatives sold:
Investment grade . . . . . . . . . . . . . . . . . . . . . . .
—
—
—
—
—
Total credit derivatives . . . . . . . . . . . . . . . . . . . . . .
¥448,290
¥2,919,354
¥563,987
¥3,931,631
¥(68,903)
At March 31, 2021:
Single name credit default swaps:
Protection sold
Maximum potential/Notional amount
by expiration period
1 year
or less
1-5 years
Over
5 years
(in millions)
Total
Fair value
(Asset)/
Liability(1)
Investment grade(2) . . . . . . . . . . . . . . . . . . . . .
Non-investment grade . . . . . . . . . . . . . . . . . .
Not rated . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
¥294,312
84,780
—
¥2,235,390
311,702
1,683
¥715,896
59,145
—
¥3,245,598
455,627
1,683
¥(67,707)
5,284
(83)
Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
379,092
2,548,775
775,041
3,702,908
(62,506)
Index and basket credit default swaps:
Investment grade(2) . . . . . . . . . . . . . . . . . . . . .
Non-investment grade . . . . . . . . . . . . . . . . . .
Not rated . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
43,000
35,427
59,534
Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
137,961
470,063
65,319
29,971
565,353
29,133
—
852
29,985
542,196
100,746
90,357
733,299
(4,753)
(1,165)
(919)
(6,837)
Total credit default swaps sold . . . . . . . . . . . . . . . .
517,053
3,114,128
805,026
4,436,207
(69,343)
Other credit derivatives sold(3):
Investment grade(2) . . . . . . . . . . . . . . . . . . . . .
—
16,606
—
16,606
57
Total credit derivatives . . . . . . . . . . . . . . . . . . . . . .
¥517,053
¥3,130,734
¥805,026
¥4,452,813
¥(69,286)
F-107
MITSUBISHI UFJ FINANCIAL GROUP, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
Notes:
(1) Fair value amounts are shown on a gross basis prior to cash collateral or counterparty netting.
(2) The MUFG Group considers ratings of Baa3/BBB- or higher to meet the definition of investment grade.
(3) Other credit derivatives primarily consist of guarantees for exposures held by the counterparty under interest rate swaps and other types
of derivative contracts.
Single name credit default swaps—Single name credit default swap protects the buyer against the loss of
principal on a bond or loan in case of a default by the issuer. The protection buyer pays a premium to the MUFG
Group and is protected for the period of the credit default swap. As the seller of protection, the MUFG Group in
turn will have to perform under a credit default swap if a credit event as defined under the contracts occurs. In
order to provide an indication of the current payment/performance risk of the credit default swaps, the external
credit ratings, primarily those provided by Moody’s and Standard & Poor’s (“S&P”), of the underlying reference
entity of the credit default swaps are disclosed.
Index and basket credit default swaps—Index and basket credit default swaps are credit default swaps that
reference multiple names through underlying baskets or portfolios of single name credit default swaps. Typically,
in the event of a default on one of the underlying names, the MUFG Group, as the seller of protection, will have
to pay a pro-rata portion of the total notional amount of the credit default index or basket contract. In order to
provide an indication of the current payment/performance risk of these credit default swaps, the rating scale
based upon internal ratings, which generally correspond to ratings defined by primarily Moody’s and S&P, of the
underlying reference entities comprising the basket or index were calculated and disclosed.
The MUFG Group may economically hedge its exposure to credit derivatives by entering into offsetting
derivative contracts. The carrying value and notional amounts of credit protection sold in which the MUFG
Group held purchased protection with identical underlying referenced entities were approximately ¥65 billion
and ¥3,544 billion, respectively, at March 31, 2020, and approximately ¥66 billion and ¥4,097 billion,
respectively, at March 31, 2021.
Collateral is held by the MUFG Group in relation to these instruments. Collateral requirements are
determined at the counterparty level and cover numerous transactions and products as opposed to individual
contracts.
Credit Risk, Liquidity Risk and Credit-risk-related Contingent Features
Certain derivative instruments held by the MUFG Group contain provisions that require the MUFG Group’s
debt to maintain an investment grade credit rating from each of the major credit rating agencies. If the MUFG
Group’s debt were to fall below investment grade, it would be in violation of these provisions, and the
counterparties to the derivative instruments could request payments on early termination or demand immediate
and ongoing full overnight collateralization on derivative instruments in net liability positions. The aggregate fair
value of all derivative instruments with credit-risk-related contingent features that were in a liability position at
March 31, 2020 and 2021 was approximately ¥0.6 trillion and ¥0.7 trillion, respectively, for which the MUFG
Group has posted collateral of approximately ¥152 billion and ¥227 billion, respectively, in the normal course of
business. The amount of additional collateral and early termination amount which could be requested if the
MUFG Group’s debt falls below investment grade was ¥58 billion and ¥80 billion, respectively, as of March 31,
2020 and ¥63 billion and ¥92 billion, respectively, as of March 31, 2021.
F-108
MITSUBISHI UFJ FINANCIAL GROUP, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
24. OBLIGATIONS UNDER GUARANTEES AND OTHER OFF-BALANCE SHEET INSTRUMENTS
Obligations under Guarantees
The MUFG Group provides customers with a variety of guarantees and similar arrangements, including
standby letters of credit, financial and performance guarantees, credit protection, liquidity facilities, other
off-balance sheet credit-related support and similar instruments, in order to meet the customers’ financial and
business needs. The tables below present the contractual or notional amounts of such guarantees at March 31,
2020 and 2021. The contractual or notional amounts of these instruments represent the maximum potential
amounts of future payments without consideration of possible recoveries under recourse provisions or from
collateral held or pledged.
For certain types of derivatives, such as written interest rate options and written currency options, the
maximum potential future payments are unlimited. Accordingly, it is impracticable to estimate the maximum
potential amount of future payments. As such, the notional amounts of the related contracts, other than the
maximum potential payments, are included in the table.
The MUFG Group mitigates its credit risk exposure resulting from guarantees by utilizing various
techniques, including collateralization in the form of cash, securities, and real estate properties based on
management’s credit assessment of the guaranteed parties and the related credit profile. In order to manage the
credit risk exposure, the MUFG Group also enters into sub-participation contracts with third parties who will
fund a portion of the credit facility and bear its share of the loss to be incurred in the event that the customer fails
to fulfill its obligations. The following table includes guarantees of ¥455.8 billion and ¥499.0 billion at
March 31, 2020 and 2021, respectively, which are syndicated out to third parties. The contractual or notional
amounts summarized in the following table do not necessarily bear any direct relationship to the future actual
credit exposure, primarily because of risk management techniques of the MUFG Group.
At March 31, 2020:
Maximum
potential/
Contractual
or Notional
amount
Standby letters of credit and financial guarantees . . . . . . . . .
Performance guarantees . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Derivative instruments(1)
. . . . . . . . . . . . . . . . . . . . . . . . . . . .
Liabilities of trust accounts . . . . . . . . . . . . . . . . . . . . . . . . . .
Other . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
¥ 4,098
3,058
58,836
13,142
88
Amount by expiration period
1 year
or less
1-5 years
(in billions)
¥
¥ 3,109
2,160
36,021
6,752
8
763
738
14,543
451
73
Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
¥79,222
¥48,050
¥16,568
¥14,604
At March 31, 2021:
Maximum
potential/
Contractual
or Notional
amount
Standby letters of credit and financial guarantees . . . . . . . . .
Performance guarantees . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Derivative instruments(1)
. . . . . . . . . . . . . . . . . . . . . . . . . . . .
Liabilities of trust accounts . . . . . . . . . . . . . . . . . . . . . . . . . .
Other . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
¥ 4,055
3,193
38,499
10,656
40
Amount by expiration period
1 year
or less
1-5 years
(in billions)
¥
¥ 3,174
2,315
15,534
5,667
6
698
755
15,104
718
34
Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
¥56,443
¥26,696
¥17,309
¥12,438
F-109
Over
5 years
¥
226
160
8,272
5,939
7
Over
5 years
¥
183
123
7,861
4,271
—
MITSUBISHI UFJ FINANCIAL GROUP, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
Note:
(1) Credit derivatives sold by the MUFG Group are excluded from this presentation.
Nature of Guarantee Contracts
Standby letters of credit and financial guarantees generally include an obligation of an issuer or a designated
third-party to guarantee the performance of the customer to the beneficiary under the terms of contracts such as
lending contracts and other similar financial transactions. The MUFG Group is required to make payments to the
guaranteed parties in the event that the customers fail to fulfill the obligations under the contracts. The guarantees
whose contractual maturities are over 5 years are mainly comprised of guarantees of housing loans.
Performance guarantees are contracts that contingently require the MUFG Group to make payments to the
guaranteed party based on another party’s failure to perform under an obligating agreement, except financial
obligation. For example, performance guarantees include guarantees of completion of construction projects.
Derivative instruments that are deemed to be included within the definition of guarantees as prescribed in
the guidance on guarantees include certain written options and credit default swaps. In order for the MUFG
Group to determine if those derivative instruments meet the definition of guarantees, as prescribed in the
guidance on guarantees, the MUFG Group has to track whether the counterparties are actually exposed to losses
that will result from the adverse change in the underlyings. Accordingly, the MUFG Group has disclosed
information on all credit default swaps and certain written options for which there is a possibility of meeting the
definition of guarantees as prescribed in the guidance on guarantees, regardless of whether the counterparties
have assets or liabilities related to the underlyings of the derivatives. However, credit derivatives sold by the
MUFG Group at March 31, 2020 and 2021 are excluded from this presentation, as they are disclosed in Note 23.
Liabilities of trust accounts represent the trustee’s potential responsibility for temporary payments to
creditors of liabilities of trust accounts making use of funds of the MUFG Group, unless there are certain
agreements with trust creditors that have provisions limiting the MUFG Group’s exposure as a trustee to the trust
account assets. A trust may incur external liabilities to obtain certain services during the terms of the trust
arrangement. While in principle, any liabilities of a trust are payable by the trust account and its beneficiaries. A
trustee’s responsibility may be interpreted to encompass temporary payments for the trust account liabilities
when the trust account does not maintain sufficient liquidity available for such liabilities unless the agreement
with trust creditors limits the trustee’s exposure to the trust account assets. Liabilities of trust accounts
principally includes obligations to return collateral under security lending transactions. The MUFG Group has
experienced no significant losses on such responsibilities and its exposure to the risk associated with the
temporary payments is judged to be remote because trust account liabilities are generally covered by the
corresponding trust account assets. The MUFG Group continuously monitors the liabilities of trust accounts and
assesses the trust account’s ability to perform its obligations to prevent any unfavorable outcomes; the MUFG
Group claims its recourse for its temporary payments against the trust account assets and the beneficiaries.
Carrying Amount
At March 31, 2020 and 2021, the carrying amounts of the liabilities related to guarantees and similar
instruments set forth above were ¥1,130,522 million and ¥857,862 million, respectively, which are included in
Other liabilities and Trading account liabilities. The guarantees and similar instruments comprising the largest
components of the total were options sold in the amount of ¥1,090,921 million and ¥819,739 million as of
March 31, 2020 and 2021, respectively. Credit derivatives sold by the MUFG Group at March 31, 2020 and 2021
are excluded from this presentation, as they are disclosed in Note 23. In addition, Other liabilities include an
allowance for off-balance sheet instruments of ¥30,911 million and ¥27,688 million at March 31, 2020 and 2021,
respectively, related to these transactions.
F-110
MITSUBISHI UFJ FINANCIAL GROUP, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
Performance Risk
The MUFG Group monitors performance risk of its guarantees using the same credit rating system utilized
for estimating probabilities of default with its loan portfolio. The MUFG Group’s credit rating system is
consistent with both the method of evaluating credit risk under Basel III and those of third-party credit rating
agencies. On certain underlying referenced credits or entities, ratings are not available. Such referenced credits
are included in the “Not rated” category in the following tables.
Presented in the tables below is the maximum potential amount of future payments classified based upon
internal credit ratings as of March 31, 2020 and 2021. The determination of the maximum potential future
payments is based on the notional amount of the guarantees without consideration of possible recoveries under
recourse provisions or from collateral held or pledged. Such amounts do not represent the anticipated losses, if
any, on these guarantees.
At March 31, 2020:
Standby letters of credit and financial guarantees . . . . . . . . . .
Performance guarantees . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Total
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
At March 31, 2021:
Standby letters of credit and financial guarantees . . . . . . . . . .
Performance guarantees . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Total
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Amount by borrower grade
Likely to
become
Bankrupt
or Legally/
Virtually
Bankrupt(2)
¥17
36
¥53
Normal
Close
Watch(1)
(in billions)
¥ 93
96
¥3,984
2,904
¥6,888
¥189
Amount by borrower grade
Likely to
become
Bankrupt
or Legally/
Virtually
Bankrupt(2)
¥15
3
¥18
Normal
Close
Watch(1)
(in billions)
¥108
70
¥3,929
3,092
¥7,021
¥178
Not
rated
¥ 4
22
¥26
Not
rated
¥ 3
28
¥31
Maximum
potential/
Contractual
or Notional
amount
¥4,098
3,058
¥7,156
Maximum
potential/
Contractual
or Notional
amount
¥4,055
3,193
¥7,248
Notes:
(1) Borrowers classified as Close Watch represent those that require close monitoring as the borrower has begun to exhibit elements of
potential concern with respect to its business performance and financial condition, the borrower has begun to exhibit elements of serious
concern with respect to its business performance and financial condition, including business problems requiring long-term solutions, or
the borrower’s loans are TDRs or loans contractually past due 90 days or more for special reasons.
(2) Borrowers classified as Likely to become Bankrupt or Legally/Virtually Bankrupt represent those that have a higher probability of
default than those categorized as Close Watch due to serious debt repayment problems with poor progress in achieving restructuring
plans, the borrower being considered virtually bankrupt with no prospects for an improvement in business operations, or the borrower
being legally bankrupt with no prospects for continued business operations because of non-payment, suspension of business, voluntary
liquidation or filing for legal liquidation.
The guarantees the MUFG Group does not classify based upon internal credit ratings are as follows.
The MUFG Group records all derivative contracts at fair value. Aggregate market risk limits have been
established, and market risk measures are routinely monitored against these limits. The MUFG Group also
F-111
MITSUBISHI UFJ FINANCIAL GROUP, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
manages its exposure to these derivative contracts through a variety of risk mitigation strategies, including, but
not limited to, offsetting economic hedge positions. The MUFG Group expects the risk of loss to be remote and
believes that the notional amounts of the derivative contracts generally exceed its exposure.
Liabilities of trust accounts represent the trustee’s potential responsibility for temporary payments to
creditors of liabilities of trust accounts using funds of the MUFG Group. The MUFG Group has experienced no
significant losses on such responsibilities and its exposure to the risk associated with the temporary payments is
judged to be remote because trust account liabilities are generally covered by the corresponding trust account
assets.
Other Off-balance Sheet Instruments
In addition to obligations under guarantees and similar arrangements set forth above, the MUFG Group
issues other off-balance sheet instruments to meet the financial needs of its customers and for purposes other than
trading. Such off-balance sheet instruments consist of lending-related commitments, including commitments to
extend credit and commercial letters of credit that the MUFG Group provides to meet the financing needs of its
customers. Once the MUFG Group issues these off-balance sheet instruments, the MUFG Group is required to
extend credit to or make certain payments to the customers or beneficiaries specified pursuant to the underlying
contracts unless otherwise provided in the contracts. Since many of these commitments expire without being
drawn upon, the total commitment amounts do not necessarily represent future cash requirements. At March 31,
2021, approximately 67% of these commitments will expire within one year, 30% from one year to five years
and 3% after five years. The table below presents the contractual amounts with regard to such instruments at
March 31, 2020 and 2021:
2020
2021
(in billions)
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Commitments to extend credit
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Commercial letters of credit
Commitments to make investments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Other . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
¥76,398
757
247
5
¥84,614
835
281
—
Commitments to extend credit, which generally have fixed expiration dates or other termination clauses, are
binding agreements to lend to customers. Commitments are different from guarantees in that the commitments
are generally revocable or have provisions that enable the MUFG Group to avoid payments in the event of
violations of any conditions of the contracts and certain deterioration of the potential borrowers’ financial
condition.
Commercial letters of credit, generally used for trade transactions, are typically secured by the underlying
goods. The MUFG Group continually monitors the type and amount of collateral and other securities, and
requires counterparties to provide additional collateral or guarantors as necessary.
Commitments to make investments are legally binding contracts to make additional contributions to
corporate recovery or private equity investment funds in accordance with limited partnership agreements. Some
of these funds, in which the MUFG Group has significant variable interests, are described in Note 25.
25. VARIABLE INTEREST ENTITIES
In the normal course of business, the MUFG Group has financial interests and other contractual obligations
in various entities which may be deemed to be VIEs such as asset-backed conduits, various investment funds,
special purpose entities created for structured financing, repackaged instruments, entities created for the
securitization of the MUFG Group’s assets and trust arrangements.
F-112
MITSUBISHI UFJ FINANCIAL GROUP, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
The following tables present the assets and liabilities of consolidated VIEs recorded on the accompanying
consolidated balance sheets at March 31, 2020 and 2021:
Consolidated VIEs
Consolidated assets
At March 31, 2020:
Total
Cash and
due from
banks
Interest-earning
deposits in
other banks
Trading
account
assets
(in millions)
Investment
securities
Loans
All other
assets
493,757
Asset-backed conduits . . . . ¥ 6,263,082 ¥ 102,781
Investment funds . . . . . . . .
—
Special purpose entities
created for structured
financing . . . . . . . . . . . .
Repackaged instruments . .
Securitization of the
MUFG Group’s
assets . . . . . . . . . . . . . . . 10,956,261
7,527,539
31,295
Trust arrangements . . . . . .
Other . . . . . . . . . . . . . . . . .
204,047
249,529
—
—
350
—
1,330
¥ 31,625
16,482
¥ 12,989 ¥1,195,283 ¥ 4,913,939 ¥
34,121
314,074
6,465
— 129,080
2,658
—
—
42,052
—
118,776
119,348
86,859
82,041
512
—
654
2,055
—
336,546
—
— 10,933,580
6,441,864
6,885
745,846
—
22,681
2,629
22,005
Total consolidated assets
before elimination . . . . . 25,725,510
104,461
53,474
705,661 2,094,026 22,502,475 265,413
The amounts eliminated in
consolidation . . . . . . . . .
Total consolidated
(6,877,849) (103,615)
(23,427)
(10,592)
(289,567)
(6,429,880)
(20,768)
assets . . . . . . . . . . . . . . . ¥18,847,661 ¥
846
¥ 30,047
¥695,069 ¥1,804,459 ¥16,072,595 ¥244,645
Consolidated liabilities
Total
Deposits
Other short-term
borrowings
Long-term
debt
All other
liabilities
Asset-backed conduits . . . . . . . . . . . . . . . ¥ 6,253,318 ¥
Investment funds . . . . . . . . . . . . . . . . . . .
Special purpose entities created for
15,817
(in millions)
— ¥ 4,327,685
—
—
¥ 1,478,921 ¥
5,546
446,712
10,271
structured financing . . . . . . . . . . . . . . .
Repackaged instruments . . . . . . . . . . . . . .
Securitization of the MUFG Group’s
assets . . . . . . . . . . . . . . . . . . . . . . . . . . .
Trust arrangements . . . . . . . . . . . . . . . . . .
Other . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Total consolidated liabilities before
114,357
251,056
—
—
10,924,830
7,522,190
27,302
—
6,743,261
—
—
65,965
16,008
—
5,989
112,474
163,833
10,077,839
—
1,321
1,883
21,258
830,983
778,929
19,992
elimination . . . . . . . . . . . . . . . . . . . . . .
25,108,870
6,743,261
4,415,647
11,839,934
2,110,028
The amounts eliminated in
consolidation . . . . . . . . . . . . . . . . . . . .
The amount of liabilities with recourse to
the general credit of the MUFG
Group . . . . . . . . . . . . . . . . . . . . . . . . . .
Liabilities of consolidated VIEs for
which creditors or beneficial interest
holders do not have recourse to the
general credit of the MUFG Group . . . ¥
(15,045,398)
(703)
(2,526,893)
(11,374,581)
(1,143,221)
(9,465,320)
(6,742,558)
(1,857,923)
(1)
(864,838)
598,152 ¥
— ¥
30,831
¥
465,352 ¥
101,969
F-113
MITSUBISHI UFJ FINANCIAL GROUP, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
Consolidated VIEs
Consolidated assets
At March 31, 2021:
Total
Cash and
due from
banks
Interest-earning
deposits in
other banks
Trading
account
assets
(in millions)
Investment
securities
Loans
All other
assets
374,324
Asset-backed conduits . . . . ¥ 5,986,887 ¥ 109,439
—
Investment funds . . . . . . . .
Special purpose entities
created for structured
financing . . . . . . . . . . . .
Repackaged instruments . .
Securitization of the
MUFG Group’s
assets . . . . . . . . . . . . . . . 10,358,628
9,029,390
43,320
Trust arrangements . . . . . .
Other . . . . . . . . . . . . . . . . .
175,630
281,331
—
—
323
—
3,179
¥ 40,061
15,171
¥
240,327
5,433 ¥1,015,434 ¥ 4,800,221 ¥ 16,299
— 77,314
41,512
2,058
—
4,645
73,914
—
118,199
113,943
85,782
54,984
257
996
—
— 623,466 1,071,708
—
— 10,339,273
7,334,215
4,660
17,108
3,826
18,359
1
17,403
Total consolidated assets
before elimination . . . . . 26,249,510
112,941
62,112
964,893 2,246,853 22,678,094 184,617
The amounts eliminated in
consolidation . . . . . . . . .
Total consolidated
(8,121,094) (110,243)
(31,690)
(5,892)
(519,561)
(7,430,166)
(23,542)
assets . . . . . . . . . . . . . . . ¥18,128,416 ¥
2,698
¥ 30,422
¥959,001 ¥1,727,292 ¥15,247,928 ¥161,075
Consolidated liabilities
Total
Deposits
Other short-term
borrowings
Long-term
debt
All other
liabilities
Asset-backed conduits . . . . . . . . . . . . . . . ¥ 5,989,188 ¥
Investment funds . . . . . . . . . . . . . . . . . . .
Special purpose entities created for
15,039
(in millions)
— ¥ 4,058,248
—
—
¥ 1,461,043 ¥
5,831
469,897
9,208
structured financing . . . . . . . . . . . . . . .
Repackaged instruments . . . . . . . . . . . . . .
Securitization of the MUFG Group’s
assets . . . . . . . . . . . . . . . . . . . . . . . . . . .
Trust arrangements . . . . . . . . . . . . . . . . . .
Other . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Total consolidated liabilities before
97,226
284,795
—
—
10,367,099
9,029,272
39,141
—
7,826,959
—
—
21,343
31,000
—
3,433
84,973
195,987
12,253
67,465
9,839,204
496,895
— 1,202,313
17,393
18,315
elimination . . . . . . . . . . . . . . . . . . . . . .
25,821,760
7,826,959
4,114,024
11,605,353
2,275,424
The amounts eliminated in
consolidation . . . . . . . . . . . . . . . . . . . .
The amount of liabilities with recourse to
the general credit of the MUFG
Group . . . . . . . . . . . . . . . . . . . . . . . . . .
Liabilities of consolidated VIEs for
which creditors or beneficial interest
holders do not have recourse to the
general credit of the MUFG Group . . . ¥
(14,679,458)
— (2,422,978)
(11,144,547)
(1,111,933)
(10,547,483)
(7,826,959)
(1,657,447)
(3,043)
(1,060,034)
594,819 ¥
— ¥
33,599
¥
457,763 ¥
103,457
F-114
MITSUBISHI UFJ FINANCIAL GROUP, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
In general, the creditors or beneficial interest holders of consolidated VIEs have recourse not only to the
assets of those VIEs of which they are creditors or beneficial interest holders, but also to other assets of the
MUFG Group, since the MUFG Group is also contractually required to provide credit enhancement or program-
wide liquidity to these VIEs.
The following tables present the total assets of non-consolidated VIEs, the maximum exposure to loss
resulting from the MUFG Group’s involvement with non-consolidated VIEs and the assets and liabilities which
relate to the MUFG’s variable interests in non-consolidated VIEs at March 31, 2020 and 2021:
Non-consolidated VIEs
At March 31, 2020: Total assets
Maximum
exposure
Total
Asset-backed
On-balance sheet assets
Trading
account
assets
Investment
securities
Loans
All
other
assets
(in millions)
On-balance sheet
liabilities
Total
All other
liabilities
conduits . . . . . . ¥ 27,700,099 ¥ 5,836,895 ¥ 4,797,551 ¥
190 ¥1,737,979 ¥3,059,382 ¥
— ¥
— ¥
—
Investment
funds . . . . . . . .
55,644,434
1,918,403
1,712,037
437,858
525,022
724,253
24,904 356,679 356,679
Special purpose
entities created
for structured
financing . . . . .
Repackaged
37,026,192
3,601,834
2,764,156
392,588
35,774 2,317,128
18,666
6,058
6,058
instruments . . .
Other . . . . . . . . . .
8,215,327
54,962,702
3,030,263
2,940,349
2,931,617
2,314,142
394,478 2,123,058
191,646
361,184
52,897
— 1,995,985 126,511
—
41,693
—
41,693
Total . . . . . . ¥183,548,754 ¥17,327,744 ¥14,519,503 ¥1,416,760 ¥4,421,833 ¥8,457,932 ¥222,978 ¥404,430 ¥404,430
Non-consolidated VIEs
At March 31, 2021: Total assets
Maximum
exposure
Total
Asset-backed
On-balance sheet assets
Trading
account
assets
Investment
securities
Loans
All
other
assets
(in millions)
On-balance sheet
liabilities
Total
All other
liabilities
conduits . . . . . . ¥ 25,491,847 ¥ 5,606,965 ¥ 4,211,342 ¥
277 ¥1,598,992 ¥2,612,073 ¥
— ¥
— ¥
—
Investment
funds . . . . . . . . 102,840,486
2,646,071
2,288,210
538,190
501,434 1,213,179
35,407 114,911 114,911
Special purpose
entities created
for structured
financing . . . . .
Repackaged
38,771,947
4,409,839
3,254,145
476,784
25,234 2,745,441
6,686
10,447
10,447
instruments . . .
Other . . . . . . . . . .
8,604,182
65,455,861
3,088,564
3,039,135
3,008,695
2,176,775
611,245 2,142,482
198,144
204,332
— 1,915,912
50,636
62,719
29,478
24,732
29,478
24,732
Total . . . . . . ¥241,164,323 ¥18,790,574 ¥14,939,167 ¥1,824,640 ¥4,268,142 ¥8,690,937 ¥155,448 ¥179,568 ¥179,568
Maximum exposure to loss on each type of entity is determined based on the carrying amount of any
on-balance sheet assets and any off-balance sheet liabilities held, net of any recourse liabilities. Therefore, the
maximum exposure to loss represents the maximum loss the MUFG Group could possibly incur at each balance
F-115
MITSUBISHI UFJ FINANCIAL GROUP, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
sheet date and does not reflect the likelihood of such a loss being incurred. The difference between the amount of
on-balance sheet assets and the maximum exposure to loss primarily comprises the remaining undrawn
commitments.
Asset-Backed Conduits
This category primarily comprises the following:
Multi-Seller Conduits (MUFG-sponsored Asset-Backed Commercial Paper (“ABCP”) Conduits and Other
ABCP Conduits)
The MUFG Group administers several conduits under asset-backed financing programs under which the
conduits purchase financial assets, primarily trade accounts receivable, from the MUFG Group’s customers by
issuing short-term financing instruments, primarily commercial paper, to third-party investors. Under the asset-
backed financing programs, the MUFG Group acts as an agent for the conduits, which enter into agreements with
the MUFG Group’s customers where the customers transfer financial assets to the conduits in exchange for
monetary consideration. The MUFG Group also underwrites commercial paper for the conduits that is secured by
the assets held by them and provides program-wide liquidity and credit enhancement facilities to the conduits.
The MUFG Group receives fees related to the services it provides to the conduits and the program-wide liquidity
and credit enhancement. The MUFG Group considers itself to be the primary beneficiary of the multi-seller
conduits because, as an agent and sponsor, the MUFG Group has the power to direct activities of the conduits
that most significantly impact the conduits’ economic performance and also has the obligation to absorb losses of
the conduits that could potentially be significant to the conduits through the program-wide liquidity and credit
enhancement. Consequently, the MUFG Group consolidates the conduits.
In addition to the entities described above, the MUFG Group participates as a provider of financing to
several conduits that are administered by third parties. Most of these conduits are established under a multi-seller
asset-backed financing program and the MUFG Group provides financing along with other financial institutions.
With respect to these conduits, the MUFG Group is not considered as the primary beneficiary because the
MUFG Group’s participation in the conduits is only to provide financing along with other third-party financial
institutions and it does not have the power to direct the activities of the conduits. Consequently, the
MUFG Group does not consolidate the conduits.
Asset-Backed Conduits (MUFG-sponsored Asset-Backed Loan (“ABL”) Programs and Other Programs)
The MUFG Group administers several conduits under asset-backed financing programs where the MUFG
Group provides financing to fund the conduits’ purchases of financial assets, comprising primarily trade accounts
receivable, from its customers. The MUFG Group acts as an agent and sponsor for the conduits, which enter into
agreements with the MUFG Group’s customers where the customers transfer assets to the conduits in exchange
for monetary consideration. In most cases, the MUFG Group is the sole provider of financing that is secured by
the assets held by the conduits. The MUFG Group considers itself to be the primary beneficiary of the conduits
because, as an agent and sponsor for the conduits, the MUFG Group has the power to direct activities of the
conduits, such as selection of the assets to be purchased and condition for purchases, and debt collection from the
original obligors, that most significantly impact the conduits’ economic performance, and also has the obligation
to absorb losses of the conduits that could potentially be significant to the conduits through financing it provides.
Consequently, the MUFG Group consolidates the conduits.
In addition, the MUFG Group is involved with entities, which take in most cases the form of a trust, where
originators of financial assets, which primarily comprise lease receivables, entrust the assets with trust banks and
F-116
MITSUBISHI UFJ FINANCIAL GROUP, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
receive beneficial certificates of trusts in exchange. The originators then transfer the beneficiary certificates to
the MUFG Group in exchange for cash. The originators of the financial assets entrusted continue to be involved
in the assets as servicers. Because the originators are deemed to have the power to direct activities of the entities
that most significantly impact the entities’ economic performance through their role as a servicer, the MUFG
Group is not considered as the primary beneficiary of these entities. Consequently, the MUFG Group does not
consolidate these entities.
The MUFG Group also participates as a provider of financing to the ABL programs that are managed by
third parties. The MUFG Group is not considered as the primary beneficiary of the entities used in these
programs as the MUFG Group’s participation in the entities is only to provide financing along with other third
parties and it does not have the power to direct the activities of the entities. Consequently, the MUFG Group does
not consolidate the entities used in these programs.
Investment Funds
This category primarily comprises the following:
Corporate Recovery Funds
These entities are established by fund managers, which are unrelated to the MUFG Group, for the purpose
of investing in debt or equity instruments issued by distressed companies. After investment, the fund managers
work closely with the management of the entities and attempt to enhance corporate value by various means
including corporate restructuring and reorganization. Their exit strategies include, among others, sales to others
and initial public offerings.
Typically, these entities take the form of a limited partnership which is entirely funded by general and
limited partner interests. These partnerships are considered as VIEs unless the limited partners hold substantive
kick-out rights or participating rights.
The MUFG Group mostly serves as a limited partner in corporate recovery funds that are considered as
VIEs, and does not have the power to direct the activities of these funds that most significantly impact the
economic performance of these funds. Therefore, the MUFG Group does not consider itself to be the primary
beneficiary of these funds and does not consolidate them.
Private Equity Funds
The MUFG Group is involved in venture capital funds that are established by either the MUFG Group’s
entities or fund managers unrelated to the MUFG Group. These entities have specific investment objectives in
connection with their acquisition of equity interests, such as providing financing and other support to start-up
businesses, medium and small entities in a particular geographical area, and to companies with certain
technology or companies in a high-growth industry.
These entities typically take the form of a limited partnership and usually are entirely funded by general and
limited partner interests. These partnerships are considered as VIEs unless the limited partners hold substantive
kick-out rights or participating rights.
The MUFG Group participates in these partnerships as a general partner or limited partner. The MUFG
Group consolidates these funds, which are considered as VIEs, if the MUFG Group has the power to direct the
activities of these funds that most significantly impact the economic performance of these funds, and also has the
obligation to absorb losses of these funds that could potentially be significant to these funds or the right to
receive benefits from these funds that could potentially be significant to these funds.
F-117
MITSUBISHI UFJ FINANCIAL GROUP, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
Investment Trusts
The MUFG Group invests in investment trusts that are professionally managed collective investment
schemes which pool money from many investors and invest in, among others, equity and debt securities. Most of
these funds take the form of a trust where there is a separation in investment decisions, which is assumed by an
investment manager who has no investment in a trust, and ownership through beneficiary interests issued by a
trust are owned by investors. Therefore, these investment trusts are considered as VIEs. The MUFG Group
consolidates these funds if the MUFG Group has the power to direct the activities of these funds that most
significantly impact the economic performance of these funds, and also has the obligation to absorb losses of
these funds that could potentially be significant to these funds or the right to receive benefits from these funds
that could potentially be significant to these funds.
Buy-out Financing Vehicles
The MUFG Group provides financing to buy-out vehicles. The buy-out vehicles are established by equity
investments from, among others, private equity funds or the management of target companies for the purpose of
purchasing the equity shares of target companies. Along with other financial institutions, the MUFG Group
provides financing to the buy-out vehicles in the form of loans. While the buy-out vehicles’ equity is normally
substantive in its amount and the rights and obligations associated with it, in some cases, the vehicles have equity
that is insufficient to absorb expected variability primarily because the amount provided by equity investors is
nominal in nature. These vehicles engage in non-investment activities, and are considered as VIEs. In most cases,
the MUFG Group’s participation in these vehicles is only to provide financing to the vehicles, and the power to
direct the activities that most significantly impact the economic performance of the vehicles is held by the
management of target companies. As a result, the MUFG Group is not considered as the primary beneficiary of
these vehicles and does not consolidate them.
Other Investment Funds
The MUFG Group’s investments in VIEs through MUFG Americas Holdings primarily consist of equity
investments in low-income housing credit (“LIHC”) structures, designed to generate a return primarily through
the realization of federal tax credits. MUFG Americas Holdings considers itself as the primary beneficiary of
certain types of LIHC investments.
LIHC Unguaranteed Syndicated Investment Funds
MUFG Americas Holdings creates the investment funds, serves as the managing investor member, and sells
limited investor member interests to third parties. MUFG Americas Holdings receives benefits through income
from the structuring of these funds, servicing fees for managing the funds and, as an investor member, tax
benefits and tax credits to reduce the MUFG Americas Holdings tax liability. MUFG Americas Holdings
considers itself to be the primary beneficiary and consolidates them upon adoption of the current guidance
because, as a sponsor and managing member of the funds, it has the power to direct activities that most
significantly impact the funds’ economic performance and also has the obligation to absorb losses of the funds
that could potentially be significant to the funds.
LIHC Guaranteed Syndicated Investment Funds
MUFG Americas Holdings also forms limited liability companies, which in turn invest in LIHC operating
partnerships, to create LIHC guaranteed syndicated investment funds. Interests in these funds are sold to third
parties who pay a premium for a guaranteed return. MUFG Americas Holdings earns structuring fees from the
F-118
MITSUBISHI UFJ FINANCIAL GROUP, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
sale of these funds and asset management fees. MUFG Americas Holdings serves as the funds’ sponsor and
non-member asset manager, and also guarantees a minimum rate of return throughout the investment term,
therefore, it directs the activities that most significantly impact the funds’ economic performance and also has an
obligation to absorb losses pertaining to its minimum rate of return guarantee to investors. Therefore, the MUFG
Group is considered as the primary beneficiary of these funds and consolidates them.
Special Purpose Entities Created for Structured Financing
This category primarily comprises the following:
Leasing Transaction Vehicles
These entities are established to raise funds to purchase or build equipment and machinery including, among
others, commercial vessels, passenger and cargo aircraft, and production equipment for the purpose of leasing
them to lessees who use the equipment and machinery as part of their business operations. These entities
typically take the form of a limited partnership or a special purpose company where they fund their purchases of
equipment and machinery via senior and subordinate financing. When entities take the form of a limited
partnership, these entities are considered as VIEs unless limited partners hold substantive kick-out rights or
participating rights. The entities considered as VIEs are typically funded only by senior financing or there is a
guarantee provided to the senior financing by parties unrelated to those providing the senior financing. In most
cases, the MUFG Group participates in the senior financing and does not participate in the subordinate financing
or provide guarantees. Generally, because the MUFG Group’s participation in these entities is only to provide
financing, it does not have the power to direct the activities of the entities that most significantly impact the
economic performance of the entities. Therefore, the MUFG Group does not consider itself to be the primary
beneficiary of these entities and does not consolidate them, except for limited circumstances where the MUFG
Group is directly involved with the structuring of the transaction and has the power to direct the activities of the
entities that most significantly impact the economic performance of the entities.
Project Financing Vehicles
These entities are established to raise funds in connection with, among others, production of natural
resources, construction and development of urban infrastructure (including power plants and grids, highways and
ports), and the development of real estate properties or complexes. These projects typically involve special
purpose companies which issue senior and subordinate financing to raise funds in connection with the various
projects. The subordinate financing is usually provided by parties that will ultimately make use of the assets
constructed or developed. By contrast, the senior financing is typically provided by financial institutions,
including the MUFG Group. Because the MUFG Group’s participation in these entities is only to provide
financing, it does not have the power to direct the activities that most significantly impact the economic
performance of these entities. Therefore, the MUFG Group is not considered as the primary beneficiary of these
entities and does not consolidate them.
Sale-and-Leaseback Vehicles
The MUFG Group is involved with vehicles that acquire assets, primarily real estate, from the MUFG
Group’s customers and other unrelated parties where the sellers of the assets continue to use the assets through
leaseback agreements. These vehicles typically take the form of a limited partnership, and are considered as VIEs
unless the limited partners hold substantive kick-out rights or participating rights. The subordinated financing of
these vehicles considered as VIEs is usually provided by the sellers of the assets, with the MUFG Group
F-119
MITSUBISHI UFJ FINANCIAL GROUP, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
providing senior financing for the vehicles. Because the MUFG Group’s participation in these vehicles is only to
provide senior financing, it does not have the power to direct the activities that most significantly impact the
economic performance of these vehicles. Therefore, the MUFG Group is not considered as the primary
beneficiary and does not consolidate them.
Securitization of Client Real Estate Properties
These entities are established for the purpose of securitizing real estate properties held by the MUFG
Group’s customers. In most cases, these entities take the form of a limited partnership or a special purpose
company. When entities take the form of a limited partnership, these entities are considered as VIEs unless the
limited partners hold substantive kick-out rights or participating rights. The entities considered as VIEs are
typically funded by senior and subordinated financing where the original owners of the real estate properties
provide the subordinated financing, primarily in the form of partnership interests or subordinated notes, and
financial institutions, including the MUFG Group, provide senior financing in the form of senior loans. Because
the MUFG Group’s participation in these vehicles is only to provide a portion of senior financing, it does not
have the power to direct the activities that most significantly impact the economic performance of these entities.
Therefore, the MUFG Group is not considered as the primary beneficiary and does not consolidate these entities.
Repackaged Instruments
This category primarily comprises the following:
Investments in Financially-Engineered Products
The MUFG Group is involved in special purpose entities that have been established to issue financial
products through the engineering and repackaging of existing financial instruments such as collateralized debt
obligations (“CDOs”). These entities are considered as VIEs because the holders of the equity investment at risk
do not have the power to direct the activities that most significantly impact their economic performance. These
entities are generally arranged and managed by parties that are not related to the MUFG Group. The MUFG
Group’s involvement with the entities arranged and managed by third parties is for investment purposes. In these
cases, the MUFG Group participates as one of many other investors and the MUFG Group typically holds
investments in senior tranches or tranches with high credit ratings. Therefore, the MUFG Group does not have
the power to direct activities of the entities that most significantly impact the entities’ economic performance,
and thus is not considered as the primary beneficiary of these entities and does not consolidate these entities.
In certain instances, special purpose entities have been established and are managed by the MUFG Group.
The MUFG Group’s involvement includes establishing and arranging the transaction and underwriting securities
issued by the entities to general investors. For these entities, the MUFG Group has the power to direct activities
that most significantly impact the economic performance and it has the obligation to absorb losses or receive
benefits that could potentially be significant to the entities. As such, the MUFG Group considers itself as the
primary beneficiary of these entities and consolidates them.
Investments in Securitized Financial Instruments
The MUFG Group holds investments in special purpose entities that issue securitized financial products.
The assets held by the entities include credit card receivables and residential mortgage loans. These entities are
established and managed by parties that are unrelated to the MUFG Group and the MUFG Group’s involvement
with these entities is for its own investment purposes. In all cases, the MUFG Group participates as one of many
F-120
MITSUBISHI UFJ FINANCIAL GROUP, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
other investors and the MUFG Group does not have the power to direct activities of the entities that most
significantly impact the entities’ economic performance. Therefore, the MUFG Group is not considered as the
primary beneficiary of these entities and does not consolidate them.
Securitization of the MUFG Group’s Assets
This category primarily comprises the following:
Securitization for issuing interests or financing
The MUFG Group establishes entities to securitize its own financial assets that include, among others,
corporate and retail loans and lease receivables. The entities used for securitization, which typically take the form
of a special purpose company or a trust, are established by the MUFG Group and, in most cases, issue senior and
subordinate interests or financing. After securitization, the MUFG Group typically continues to service
securitized assets as a servicer. The MUFG Group may also retain subordinate interests or financing or other
interests. The MUFG Group is considered as the primary beneficiary and consolidates the entities used for
securitization since it has the obligation to absorb losses through subordinate interests, and also has the power for
determining and implementing policies as servicer that give it the ability to manage the entities’ assets that
become delinquent or are in default in order to improve the economic performance of the entities.
Eligible beneficiary interests in housing loan trusts
The MUFG Group establishes trusts, which acquire the MUFG Group’s housing loans and in turn issue
beneficiary interests to the MUFG Group, to pledge these beneficiary interests as collateral for borrowings from
the Bank of Japan, as a result of the decision by the Bank of Japan on June 30, 2016 to accept these beneficial
interests as collateral in the same way as it does for Japanese national government bonds. The MUFG Group is
considered as the primary beneficiary and consolidates the trusts since it has the obligation to absorb losses
through beneficiary interests, and also has the power for determining and implementing policies as servicer that
give it the ability to manage housing loans owned by the trusts that become delinquent or are in default in order
to improve the economic performance of the trusts.
Trust Arrangements
The MUFG Group offers, primarily through Mitsubishi UFJ Trust and Banking, a variety of trust products
and services including securities investment trusts, pension trusts and trusts used as securitization vehicles. In a
typical trust arrangement, however, the MUFG Group manages and administers assets on behalf of the customers
in an agency, fiduciary and trust capacity and does not assume risks associated with the entrusted assets. The
trusts are generally considered as VIEs because the trust beneficiaries, who provide all of the equity at risk,
usually do not have power to direct the activities that most significantly impact its economic performance in the
arrangements. The MUFG Group, however, is not considered as the primary beneficiary, mainly, except for the
case mentioned below, because it merely receives fees for compensation for its services on terms that are
customary for these activities and the fees are insignificant relative to the total amount of the trusts’ economic
performance and variability. Therefore, the MUFG Group does not consolidate these entities.
With respect to the jointly operated designated money in trusts, Mitsubishi UFJ Trust and Banking pools
money from investors and determines how best to invest it. In addition, certain investors, such as money reserve
funds and investment funds, place excess funds in the jointly operated designated money trusts. Mitsubishi UFJ
Trust and Banking typically invests in high-quality financial assets, including government bonds, corporate
F-121
MITSUBISHI UFJ FINANCIAL GROUP, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
bonds and corporate loans including loans to Mitsubishi UFJ Trust and Banking and receives fees as
compensation for services. In this role as a sponsor of these trusts’ Mitsubishi UFJ Trust and Banking provides
guarantees under which it is required to compensate a loss on the stated principal of the trust beneficial interests.
Mitsubishi UFJ Trust and Banking is considered as the primary beneficiary of these trusts’ because it is exposed
to a potentially significant amount of losses and also has the power to direct activities of these trusts’ that most
significantly impact their economic performance. Upon consolidation of the trusts, the certificates issued to the
investors are accounted for as deposit liabilities as the products are structured and marketed to customers similar
to Mitsubishi UFJ Trust and Banking’s term deposit products.
Mitsubishi UFJ Trust and Banking considers the likelihood of incurring losses on the stated principal
guarantee to be highly remote. In the trusts’ operational history that extends over decades, the stated principal
guarantee has never been called upon. The variability in fair value of the net assets of the trusts has been
primarily affected by the fluctuations in interest rates, and the majority of such variability has been absorbed by
investors or trust beneficiaries.
Other
This category primarily comprises the following:
Financing Vehicles of the MUFG Group’s Customers
The MUFG Group is involved with several entities that are established by the MUFG Group’s customers.
These entities borrow funds from financial institutions and extend loans to their group entities. These entities
effectively work as fund-raising vehicles for their respective group entities and enable the groups to achieve
efficient financing by integrating their financing activities into a single entity. In all cases, the MUFG Group is
not considered as the primary beneficiary because the MUFG Group’s participation in these entities is only to
provide financing, and the customers effectively hold the power to direct activities of these entities that most
significantly impact the economic performance of the entities. Consequently, the MUFG Group does not
consolidate these entities.
Funding Vehicles
The MUFG Group has established several wholly-owned off-shore vehicles which issue securities, typically
preferred stock that is fully guaranteed by the MUFG Group, to investors unrelated to the MUFG Group to fund
purchases of debt instruments issued by the MUFG Group. These entities are considered as VIEs because the
MUFG Group’s investment in the vehicles’ equity is not considered at risk and substantive as the entire amount
raised by the vehicles was used to purchase debt instruments issued by the MUFG Group. Because the MUFG
Group does not have variable interests in these vehicles, the MUFG Group does not consolidate these entities.
Troubled Borrowers
During the normal course of business, the borrowers from the MUFG Group may experience financial
difficulties and sometimes enter into certain transactions that require the MUFG Group to assess whether they
would be considered as VIEs due to their difficult financial position. While in most cases such borrowers are not
considered as VIEs when the transactions take place, in limited circumstances they are considered as VIEs due to
insufficient equity investment at risk. In all cases, the MUFG Group is not considered as the primary beneficiary
because the power to direct activities that most significantly impact the economic performance of the troubled
borrowers resides with the management of the troubled borrowers, and the MUFG Group, as a lender, does not
have power over or assume any role in management. Therefore, the MUFG Group does not consolidate these
troubled borrowers.
F-122
MITSUBISHI UFJ FINANCIAL GROUP, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
26. CONTINGENT LIABILITIES
Repayment of Excess Interest
The MUFG Group maintains an allowance for repayment of excess interest based on an analysis of past
experience of reimbursement of excess interest, borrowers’ profile, recent trend of borrowers’ claims for
reimbursement, and management future forecasts. Management believes that the provision for repayment of
excess interest is adequate and the allowance is at the appropriate amount to absorb probable losses, so that the
impact of future claims for reimbursement of excess interest will not have a material adverse effect on the MUFG
Group’s financial position and results of operations. The allowance for repayment of excess interest established
by MUFG’s consumer finance subsidiaries, which was included in Other liabilities, was ¥29,438 million and
¥24,943 million as of March 31, 2020 and 2021, respectively. Provision (reversal) related to the allowance is
included in Other non-interest expenses in the accompanying consolidated statements of income. For the fiscal
years ended March 31, 2019, 2020 and 2021, there was a negative impact of ¥15,632 million, ¥7,800 million and
nil, respectively, on Equity in earnings of equity method investees—net in the accompanying consolidated
statements of income.
Litigation
In the ordinary course of business, the MUFG Group is subject to various litigation and regulatory matters.
In accordance with applicable accounting guidance, the MUFG Group establishes an accrued liability for loss
contingencies arising from litigation and regulatory matters when they are determined to be probable in their
occurrence and the probable loss amount can be reasonably estimated. Based upon current knowledge and
consultation with counsel, management believes the eventual outcome of such litigation and regulatory matters,
where losses are probable and the probable loss amounts can be reasonably estimated, would not have a material
adverse effect on the MUFG Group’s financial position, results of operations or cash flows. Additionally,
management believes the amount of loss that is reasonably possible, but not probable, from various litigation and
regulatory matters is not material to the MUFG Group’s financial position, results of operations or cash flows.
27. FEES AND COMMISSIONS INCOME
Disaggregation of Contract Revenue
Details of fees and commissions income for the fiscal years ended March 31, 2019, 2020 and 2021 were as
follows:
2019
2020
2021
Fees and commissions on deposits . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Fees and commissions on remittances and transfers . . . . . . . . . . . . . . . . .
Fees and commissions on foreign trading business . . . . . . . . . . . . . . . . .
Fees and commissions on credit card business . . . . . . . . . . . . . . . . . . . . .
Fees and commissions on security-related services . . . . . . . . . . . . . . . . .
Fees and commissions on administration and management services for
investment funds . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Trust fees . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Guarantee fees(1)
Insurance commissions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Fees and commissions on real estate business . . . . . . . . . . . . . . . . . . . . .
Other fees and commissions(2) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
¥
52,624
168,756
73,176
225,877
233,448
147,597
115,002
44,962
46,918
45,160
285,058
¥
(in millions)
53,684
¥
169,407
66,025
238,112
221,494
184,559
119,919
46,322
44,415
49,764
308,351
50,131
165,288
79,353
199,625
244,017
235,497
125,658
43,889
42,117
48,110
293,598
Total
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
¥1,438,578
¥1,502,052
¥1,527,283
F-123
MITSUBISHI UFJ FINANCIAL GROUP, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
Notes:
(1) Guarantee fees are not within the scope of the guidance on revenue from contracts with customers.
(2) Other fees and commissions include non-refundable financing related fees that are not within the scope of the guidance on revenue from
contracts with customers.
The following is an explanation of the relationship with revenue information disclosed for each reportable
segment.
These revenues from contracts with customers are related to various reportable segments disclosed in
Note 29. The business segment information is derived from the internal management reporting system used by
management to measure the performance of the MUFG Group’s business segments. In addition, the business
segment information is primarily based on the financial information prepared in accordance with Japanese GAAP
as adjusted in accordance with internal management accounting rules and practices. Further, the format and
information as disclosed in Note 29 are not consistent with the accompanying consolidated financial statements
prepared on the basis of U.S. GAAP. For example, management does not use information on segments’ gross
revenue to allocate resources and assess performance.
The majority of fees and commissions on deposits are from the business activities relevant to Retail &
Commercial Banking Business Group (“R&C”), with Global Commercial Banking Business Group (“GCB”)
providing a smaller impact.
The business activities relevant to fees and commissions on remittances and transfers are attributable to
R&C, Japanese Corporate Investment Banking Business Group (“JCIB”), Global Corporate Investment Banking
Business Group (“GCIB”), and GCB with no significant concentration in any particular segments.
The business activities relevant to fees and commissions on foreign trading business are attributable to
R&C, JCIB, GCIB, and GCB with no significant concentration in any particular segments.
The business activities relevant to fees and commissions on credit card business are substantially
attributable to R&C.
The majority of fees and commissions on security-related services are from the business activities relevant
to R&C, with JCIB and GCIB providing a smaller impact.
The business activities relevant to fees and commissions on administration and management services for
investment funds are substantially attributable to Asset Management & Investor Service Business Group (“AM/
IS”).
The business activities relevant to trust fees are attributable to R&C, JCIB, and AM/IS with no significant
concentration in any particular segments.
The majority of insurance commissions are from the business activities relevant to R&C, with GCB
providing a smaller impact.
The business activities relevant to fees and commissions on real estate business are attributable to R&C and
JCIB with no significant concentration in any particular segments.
F-124
MITSUBISHI UFJ FINANCIAL GROUP, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
28. TRADING ACCOUNT PROFITS AND LOSSES
The MUFG Group performs trading activities through market-making, sales and arbitrage, while
maintaining risk levels within appropriate limits in accordance with its risk management policy.
The MUFG Group has trading account securities and trading derivative assets and liabilities for this
purpose. In addition, the trading account securities include foreign currency-denominated debt securities such as
foreign government or official institution bonds, corporate bonds and mortgage-backed securities, which are
mainly comprised of securities measured at fair value under the fair value option.
Net trading gains (losses) for the fiscal years ended March 31, 2019, 2020 and 2021 were comprised of the
following:
Interest rate and other derivative contracts . . . . . . . . . . . . . . . . . . . . . . . . . .
Trading account securities, excluding derivatives . . . . . . . . . . . . . . . . . . . . .
2019
2020
2021
(in millions)
¥ (24,031) ¥(159,045) ¥(429,586)
19,218
924,418
192,931
Trading account profits (losses)—net
Foreign exchange derivative contracts(1)
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
. . . . . . . . . . . . . . . . . . . . . . . . . . . .
168,900
(354,401)
765,373
(434,052)
(410,368)
(79,559)
Net trading gains (losses) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
¥(185,501) ¥ 331,321
¥(489,927)
Note:
(1) Losses on foreign exchange derivative contracts are included in Foreign exchange gains (losses)—net in the accompanying consolidated
statements of income. Foreign exchange gains (losses)—net in the accompanying consolidated statements of income are also comprised
of foreign exchange gains (losses) other than derivative contracts and foreign exchange gains (losses) related to the fair value option.
For further information on the methodologies and assumptions used to estimate fair value, see Note 31,
which also shows fair values of trading account securities by major category. Note 23 discloses further
information regarding the derivative-related impact on Trading account profits (losses)—net by major category.
29. BUSINESS SEGMENTS
The reportable segments of the MUFG Group are subject to the periodical review by the Executive
Committee, which represents the MUFG Group’s chief operating decision maker, to determine the allocation of
management resources and assess performance. The MUFG Group has established its business units according to
the characteristics of customers and the nature of the underlying business. Each business unit engages in business
activities based on comprehensive strategies developed for and aimed at respective targeted customers and
businesses. The business segment information is primarily based on the financial information prepared in
accordance with accounting principles generally accepted in Japan as adjusted in accordance with internal
management accounting rules and practices. Accordingly, the format and information are not consistent with the
accompanying consolidated financial statements prepared on the basis of U.S. GAAP. A reconciliation is
provided for the total amounts of segments’ operating profit with income before income tax expense under
U.S. GAAP.
See Note 30 for financial information relating to the MUFG Group’s operations by geographic area. The
geographic financial information is consistent with the basis of the accompanying consolidated financial
statements.
The MUFG Group integrated the operations of its consolidated subsidiaries into six business segments.—
Retail & Commercial Banking, Japanese Corporate & Investment Banking, Global Corporate & Investment
Banking, Global Commercial Banking, Asset Management & Investor Services, and Global Markets.
F-125
MITSUBISHI UFJ FINANCIAL GROUP, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
The following is a brief explanation of the MUFG Group’s business segments:
Retail & Commercial Banking Business Group—Covers the domestic retail and commercial banking
businesses of MUFG Bank, Mitsubishi UFJ Trust and Banking, Mitsubishi UFJ Securities Holdings, Mitsubishi
UFJ NICOS and other group companies of MUFG. This business group offers retail and small and medium-sized
enterprise customers in Japan an extensive array of commercial banking, trust banking and securities products
and services.
Japanese Corporate & Investment Banking Business Group—Covers the large Japanese corporate
businesses of MUFG Bank, Mitsubishi UFJ Trust and Banking and Mitsubishi UFJ Securities Holdings,
including the transaction banking, investment banking, trust banking and securities businesses. This business
group offers large Japanese corporations advanced financial solutions designed to respond to their diversified and
globalized needs and to contribute to their business and financial strategies through the global network of the
MUFG group companies.
Global Corporate & Investment Banking Business Group—Covers the global corporate, investment and
transaction banking businesses of MUFG Bank and Mitsubishi UFJ Securities Holdings. Through a global
network of offices and branches, this business group provides non-Japanese large corporate and financial
institution customers with a comprehensive set of solutions that meet their increasingly diverse and sophisticated
financing needs.
Global Commercial Banking Business Group—Covers the retail and commercial banking businesses of
MUFG Union Bank and Krungsri. Starting in the previous fiscal year ended March 31, 2020, this business group
also covers Bank Danamon. This business group offers a comprehensive array of financial products and services
such as loans, deposits, fund transfers, investments and asset management services for local retail, small and
medium-sized enterprise, and corporate customers across the Asia-Pacific region.
Asset Management & Investor Services Business Group—Covers the asset management and asset
administration businesses of Mitsubishi UFJ Trust and Banking and MUFG Bank. Starting in the previous fiscal
year ended March 31, 2020, this business group also covers First Sentier Investors. By integrating the trust
banking expertise of Mitsubishi UFJ Trust and Banking and the global strengths of MUFG Bank, the business
group offers a full range of asset management and administration services for corporations and pension funds,
including pension fund management and administration, advice on pension structures, and payments to
beneficiaries, and also offer investment trusts for retail customers.
Global Markets Business Group—Covers the customer business and the treasury operations of MUFG
Bank, Mitsubishi UFJ Trust and Banking and Mitsubishi UFJ Securities Holdings. The customer business
includes sales and trading in fixed income instruments, currencies, equities and other investment products as well
as origination and distribution of financial products. The treasury operations include asset and liability
management as well as global investments for the MUFG Group.
Other—Consists mainly of the corporate centers of MUFG, MUFG Bank, Mitsubishi UFJ Trust and
Banking and Mitsubishi UFJ Morgan Stanley Securities. The elimination of duplicated amounts of net revenues
among business segments is also reflected in Other.
Management does not use information on segments’ total assets to allocate resources and assess
performance. Accordingly, business segment information on total assets is not presented.
F-126
MITSUBISHI UFJ FINANCIAL GROUP, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
The MUFG Group made modifications to its internal management accounting rules and practices to clarify
the responsibility for profits of each business segment, effective April 1, 2020. Major rule changes are
(i) allocation of adjustments related to the derivative counterparty risk previously included in Other to the Global
Markets Business Group, which holds the derivative assets, and (ii) reorganization of functions between the
Retail & Commercial Banking Business Group, the Japanese Corporate & Investment Banking Business Group,
the Global Corporate & Investment Banking Business Group and Other due to refinement of the business
segment definition. These modifications had the following impact for the fiscal years ended March 31, 2019 and
2020:
‰
‰
‰
‰
increasing the operating profits of Other, the Global Corporate & Investment Banking Business Group
and the Japanese Corporate & Investment Banking Business Group by ¥33.8 billion, 20.2 billion and
14.2 billion, respectively for the fiscal year ended March 31, 2019.
reducing the operating profits of the Global Markets Business Group, the Retail & Commercial Banking
Business Group and the Global Commercial Banking Business Group by ¥46.3 billion, ¥19.1 billion and
¥2.8 billion, respectively for the fiscal year ended March 31, 2019,
increasing the operating profits of Other, the Japanese Corporate & Investment Banking Business Group
and the Global Corporate & Investment Banking Business Group by ¥25.5 billion, ¥13.0 billion and
¥12.4 billion, respectively for the fiscal year ended March 31, 2020,
reducing the operating profits of the Global Markets Business Group, the Retail & Commercial Banking
Business Group and the Global Commercial Banking Business Group by ¥40.2 billion, ¥9.0 billion and
¥1.7 billion, respectively for the fiscal year ended March 31, 2020,
Prior period business segment information has been restated to enable comparison between the relevant
amounts for the fiscal years ended March 31, 2019, 2020 and 2021.
F-127
MITSUBISHI UFJ FINANCIAL GROUP, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
Customer Business
Retail &
Commercial
Banking
Business
Group
Japanese
Corporate &
Investment
Banking
Business
Group
Global
Corporate &
Investment
Banking
Business
Group
Global
Commercial
Banking
Business
Group
Asset
Management
& Investor
Services
Business
Group
Global
Markets
Business
Group Other
Total
Total
Fiscal year ended March 31,
2019:
Net revenue: . . . . . . . . . . . . . . .
BK and TB(1): . . . . . . . . . .
¥1,502.5
718.9
¥569.6
436.9
Net interest
income . . . . . . . . .
Net fees . . . . . . . . . .
. . . . . . . . . . . .
Other
Other than BK and TB . . .
Operating expenses . . . . . . . . .
458.2
229.8
30.9
783.6
1,220.9
175.8
202.9
58.2
132.7
319.5
¥417.4
279.2
120.6
158.0
0.6
138.2
254.9
(in billions)
¥682.0
(1.3)
¥203.0
93.2
¥3,374.5 ¥436.0 ¥ (11.4) ¥3,799.1
1,861.0
1,526.9
259.8
74.3
(1.3)
—
—
683.3
477.8
—
93.2
—
109.8
124.6
753.3
683.9
89.7
1,847.6
2,397.7
201.1
(16.6)
75.3
176.2
226.0
1,145.2
190.8
620.9
(46.4)
(70.1)
94.9
(85.7) 1,938.1
2,726.8
103.1
Operating profit (loss) . . . . . . .
¥ 281.6
¥250.1
¥162.5
¥204.2
¥ 78.4
¥ 976.8 ¥210.0 ¥(114.5) ¥1,072.3
Fiscal year ended March 31,
2020:
Net revenue: . . . . . . . . . . . . . . .
BK and TB(1): . . . . . . . . . .
¥1,485.5
706.6
¥572.7
439.1
Net interest
income . . . . . . . . .
Net fees . . . . . . . . . .
. . . . . . . . . . . .
Other
Other than BK and TB . . .
Operating expenses . . . . . . . . .
444.4
231.8
30.4
778.9
1,195.9
185.7
203.2
50.2
133.6
324.4
¥402.2
287.1
121.4
148.1
17.6
115.1
260.8
¥795.4
(0.4)
¥243.0
94.6
¥3,498.8 ¥536.0 ¥ 19.8 ¥4,054.6
1,878.2
1,527.0
319.3
31.9
0.4
—
(0.8)
795.8
564.3
2.5
92.2
(0.1)
148.4
171.7
754.4
675.3
97.3
1,971.8
2,517.1
129.5
(14.8)
204.6
216.7
233.2
930.3
46.4
605.4
(55.1)
40.6
342.5
(12.1) 2,176.4
2,879.6
129.3
Operating profit (loss) . . . . . . .
¥ 289.6
¥248.3
¥141.4
¥231.1
¥ 71.3
¥ 981.7 ¥302.8 ¥(109.5) ¥1,175.0
Fiscal year ended March 31,
2021:
Net revenue: . . . . . . . . . . . . . . .
BK and TB(1): . . . . . . . . . .
¥1,389.4
645.1
¥559.9
448.8
¥426.3
269.3
¥783.2
0.8
¥293.5
99.4
¥3,452.3 ¥634.8 ¥
1,463.4
389.0
(4.8) ¥4,082.3
1,882.8
30.4
Net interest
income . . . . . . . . .
Net fees . . . . . . . . . .
. . . . . . . . . . . .
Other
Other than BK and TB . . .
Operating expenses . . . . . . . . .
405.2
216.4
23.5
744.3
1,130.4
183.8
216.8
48.2
111.1
319.3
133.2
150.2
(14.1)
157.0
269.8
1.5
—
(0.7)
782.4
509.0
5.5
94.0
(0.1)
194.1
210.1
729.2
677.4
56.8
1,988.9
2,438.6
213.1
(4.3)
180.2
245.8
234.0
976.4
34.1
606.3
(66.8)
63.1
300.1
(35.2) 2,199.5
2,833.7
161.1
Operating profit (loss) . . . . . . .
¥ 259.0
¥240.6
¥156.5
¥274.2
¥ 83.4
¥1,013.7 ¥400.8 ¥(165.9) ¥1,248.6
Note:
(1) “BK and TB” is a sum of MUFG Bank on a stand-alone basis and Mitsubishi UFJ Trust and Banking on a stand-alone basis.
Reconciliation
As set forth above, the measurement basis and the income and expense items of the internal management
reporting system are different from the accompanying consolidated statements of income. Therefore, it is
impracticable to present reconciliations of all of the business segments’ information, other than operating profit,
to corresponding items in the accompanying consolidated statements of income.
F-128
MITSUBISHI UFJ FINANCIAL GROUP, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
A reconciliation of operating profit under the internal management reporting system for the fiscal years
ended March 31, 2019, 2020 and 2021 above to income before income tax expense shown in the accompanying
consolidated statements of income is as follows:
Operating profit: . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Provision for credit losses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Trading account profits (losses)—net
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Equity investment securities gains (losses)—net . . . . . . . . . . . . . . . . . . . . . . . . . .
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Debt investment securities losses—net
Foreign exchange gains (losses)—net
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Equity in earnings of equity method investees—net . . . . . . . . . . . . . . . . . . . . . . .
Impairment of goodwill . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Impairment of intangible assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Reversal of (provision for) off-balance sheet credit instruments . . . . . . . . . . . . . .
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Other—net
2019
2020
2021
(in billions)
¥1,175
¥1,072
(322)
(34)
920
182
(618)
(305)
(403)
(3)
(145)
47
210
283
— (384)
(4)
62
(131)
(118)
(38)
(142)
¥1,249
(484)
(678)
1,480
(129)
9
356
(148)
(22)
57
(82)
Income before income tax expense . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
¥ 871
¥ 433
¥1,608
30. FOREIGN ACTIVITIES
Foreign operations include the business conducted by overseas offices, as well as international business
conducted from domestic offices, principally several international banking-related divisions of MUFG Bank’s
and Mitsubishi UFJ Trust and Banking’s head office in Tokyo, and involve various transactions with debtors and
customers residing outside Japan. Close integration of the MUFG Group’s foreign and domestic activities makes
precise estimates of the amounts of assets, liabilities, income and expenses attributable to foreign operations
difficult and necessarily subjective. Assets, income and expenses attributable to foreign operations are allocated
to geographical areas based on the domicile of the debtors and customers.
F-129
MITSUBISHI UFJ FINANCIAL GROUP, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
Generally, interest rates with respect to funds borrowed and loaned between domestic and foreign operations
are based on prevailing money market rates appropriate for the transactions. In general, the MUFG Group has
allocated all direct expenses and a proportionate share of general and administrative expenses to income derived
from foreign loans and other transactions by the MUFG Group’s foreign operations. The following table sets
forth estimated total assets at March 31, 2019, 2020 and 2021, and estimated total revenue, total expense, income
(loss) before income tax expense (benefit) and net income (loss) attributable to Mitsubishi UFJ Financial Group
for the respective fiscal years then ended:
Domestic
Foreign
Total
Japan
United
States of
America
Europe
Asia/
Oceania
excluding
Japan
Other
areas(1)
(in millions)
1,886,469 ¥ 1,637,569 ¥
2,204,147
1,012,978
222,267 ¥ 1,157,946 ¥
173,934
892,729
504,372 ¥
253,993
5,408,623
4,537,781
(317,678)
624,591
48,333
265,217
250,379
870,842
(345,148)
573,698
50,877
214,582
224,636
718,645
194,070,495
49,987,389
21,535,278
27,992,986
11,642,751
305,228,899
1,596,794 ¥ 2,223,984 ¥
2,565,895
1,051,164
89,412 ¥ 1,326,426 ¥
218,623
1,174,200
566,222 ¥
359,736
5,802,838
5,369,618
(969,101)
1,172,820
(129,211)
152,226
206,486
433,220
(1,001,477)
1,113,913
(140,372)
142,568
191,323
305,955
207,532,337
60,587,867
19,099,410
30,845,864
13,687,805
331,753,283
3,348,733 ¥
2,316,323
741,137 ¥
713,441
356,112 ¥ 1,134,233 ¥
263,753
889,494
329,568 ¥
118,430
5,909,783
4,301,441
1,032,410
27,696
92,359
244,739
211,138
1,608,342
627,138
(231,116)
74,230
366,880
280,166
1,117,298
Fiscal year ended March 31, 2019:
Total revenue(2) . . . . . . . . . . . . . ¥
Total expense(3) . . . . . . . . . . . . .
Income (loss) before income tax
expense (benefit) . . . . . . . . . .
Net income (loss) attributable to
Mitsubishi UFJ Financial
Group . . . . . . . . . . . . . . . . . .
Total assets at end of fiscal
year . . . . . . . . . . . . . . . . . . . .
Fiscal year ended March 31, 2020:
Total revenue(2) . . . . . . . . . . . . . ¥
Total expense(3) . . . . . . . . . . . . .
Income (loss) before income tax
expense (benefit) . . . . . . . . . .
Net income (loss) attributable to
Mitsubishi UFJ Financial
Group . . . . . . . . . . . . . . . . . .
Total assets at end of fiscal
year . . . . . . . . . . . . . . . . . . . .
Fiscal year ended March 31, 2021:
Total revenue(2) . . . . . . . . . . . . . ¥
Total expense(3) . . . . . . . . . . . . .
Income before income tax
expense . . . . . . . . . . . . . . . . .
Net income (loss) attributable to
Mitsubishi UFJ Financial
Group . . . . . . . . . . . . . . . . . .
Total assets at end of fiscal
year . . . . . . . . . . . . . . . . . . . .
240,603,939
49,478,851
21,126,639
31,368,443
11,246,753
353,824,625
Notes:
(1) Other areas primarily include Canada, Latin America, the Caribbean and the Middle East.
(2) Total revenue is comprised of Interest income and Non-interest income.
(3) Total expense is comprised of Interest expense, Provision for (reversal of) credit losses and Non-interest expense.
F-130
MITSUBISHI UFJ FINANCIAL GROUP, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
The following is an analysis of certain asset and liability accounts related to foreign activities at March 31,
2020 and 2021:
2020
2021
(in millions)
Cash and due from banks . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Interest-earning deposits in other banks . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
¥
971,870
12,662,558
¥ 1,090,501
12,377,887
Total
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
¥13,634,428
¥13,468,388
Trading account assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
¥31,374,451
¥28,525,243
Investment securities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
¥ 9,040,512
¥ 8,694,138
Loans—net of unearned income, unamortized premiums and deferred loan fees . . .
¥53,079,542
¥47,333,878
Deposits . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
¥49,291,478
¥55,145,437
Funds borrowed:
Call money, funds purchased . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Payables under repurchase agreements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Payables under securities lending transactions . . . . . . . . . . . . . . . . . . . . . . . . . .
Other short-term borrowings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Long-term debt
¥
276,040
13,476,026
176,998
4,733,138
2,733,242
¥
323,066
10,974,238
130,380
3,474,821
2,421,267
Total
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
¥21,395,444
¥17,323,772
Trading account liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
¥ 6,575,570
¥ 5,575,956
31. FAIR VALUE
Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability in an
orderly transaction between market participants at the measurement date. The guidance on fair value
measurements also specifies a fair value hierarchy that prioritizes the inputs to valuation techniques used to
measure fair value into three broad levels. The fair value hierarchy gives the highest priority to quoted prices in
active markets and the lowest priority to unobservable inputs, for example, the reporting entity’s own data. Based
on the observability of the inputs used in the valuation techniques, the following three-level hierarchy is specified
by the guidance:
‰
‰
‰
Level 1—Unadjusted quoted prices for identical instruments in active markets.
Level 2—Observable inputs other than Level 1 prices for substantially the full term of the instruments,
such as quoted prices for similar instruments in active markets; quoted prices for identical or similar
instruments in markets that are not active; other inputs that are observable; or market-corroborated
inputs.
Level 3—Unobservable inputs that are supported by little or no market activity and that are significant
to the fair value of the instruments.
A financial instrument’s categorization within the fair value hierarchy is based upon the lowest level of
input that is significant to the fair value measurement.
The MUFG Group has an established and documented process for determining fair values in accordance
with the guidance. When available, quoted prices are used to determine fair value. If quoted prices are not
available, fair value is based upon valuation techniques that use observable or unobservable inputs. The fair
values of liabilities are determined by discounting future cash flows at a rate which incorporates the MUFG
F-131
MITSUBISHI UFJ FINANCIAL GROUP, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
Group’s own creditworthiness. In addition, valuation adjustments may be made to ensure the financial
instruments are recorded at fair value. These adjustments include, but are not limited to, amounts that reflect
counterparty credit quality, funding cost, liquidity risk and model risk.
The following section describes the valuation techniques used by the MUFG Group to measure fair values
of certain financial instruments. The discussion includes the general classification of such financial instruments
in accordance with the fair value hierarchy, a brief explanation of the valuation techniques, the significant inputs
to those valuation techniques, and any additional significant assumptions.
Trading Account Assets and Liabilities—Trading Account Securities
When quoted prices are available in an active market, the MUFG Group uses quoted prices to measure the
fair values of securities and such securities are classified in Level 1 of the fair value hierarchy. Examples of
Level 1 securities include certain Japanese and foreign government bonds, and marketable equity securities.
When quoted prices are available but the securities are not traded in active markets, such securities are
classified in Level 2 of the fair value hierarchy. These securities include certain Japanese government agency
bonds, Japanese prefectural and municipal bonds, foreign government and official institution bonds, corporate
bonds, residential mortgage-backed securities and equity securities.
As for quoted prices provided by third-party vendors, independent price verification is performed by the
MUFG group to determine the quality and reliability of the data for fair value measurement purposes. As part of
its independent price verification procedures, the MUFG group obtains a sufficient understanding of the vendors’
pricing sources and valuation processes. Further, the MUFG group performs internal price verification
procedures to ensure that the quoted prices provided from the third-party vendors are reasonable. Such
verification procedures include comparison of pricing sources and analysis of variances beyond certain
thresholds.
When quoted prices are not available, the MUFG Group estimates fair values by using an internal model,
quoted prices of securities with similar characteristics or non-binding prices obtained from independent third
parties. Such securities include certain commercial paper, corporate bonds, asset-backed securities and residential
mortgage-backed securities. For commercial paper, the MUFG Group estimates fair value using discounted cash
flows. The cash flows are estimated in accordance with the terms of contracts and discounted using a discount
rate based on the yield curve estimated from market interest rates appropriate to the securities. Commercial paper
is generally classified in Level 2 of the fair value hierarchy. For corporate bonds, the MUFG Group estimates fair
value using discounted cash flows. The cash flows are estimated in accordance with the terms of contracts and
discounted using discount rates applicable to the maturity of the bonds, which are adjusted to reflect credit risk of
issuers. Credit risk of issuers is reflected in the future cash flows being discounted by the interest rate applicable
to the maturity of the bonds. Corporate bonds are classified in either Level 2 or Level 3 of the fair value
hierarchy, depending primarily on the significance of the adjustments to the unobservable input of credit
worthiness. For residential mortgage-backed securities, the MUFG Group estimates fair value using non-binding
prices obtained from independent third parties. Residential mortgage-backed securities are classified as level 2
unless otherwise significant unobservable input is used for the valuation.
When there is less liquidity for securities or significant inputs used in the fair value measurements are
unobservable, such securities are classified in Level 3 of the fair value hierarchy. Examples of such Level 3
securities include CLOs backed by general corporate loans, which are classified in asset-backed securities. The
fair value of CLOs is measured by weighing the estimated fair value amounts from the internal model and the
non-binding quotes from the independent broker-dealers. The weight of the quotes from independent broker-
dealers is determined based on the result of inquiries with the broker-dealers to understand their basis of fair
F-132
MITSUBISHI UFJ FINANCIAL GROUP, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
value calculation with consideration given to transaction volume. Key inputs to the internal model include
projected cash flows through an analysis of underlying loans, probability of default which incorporates market
indices such as LCDX (which is an index of loan credit default swaps), prepayment rates and discount rates
reflecting liquidity premiums based on historical market data.
Trading Account Assets and Liabilities—Derivatives
Exchange-traded derivatives valued using quoted prices are classified in Level 1 of the fair value hierarchy.
Examples of Level 1 derivatives include stock futures index and interest rate futures. However, the majority of
the derivative contracts entered into by the MUFG Group are traded over-the-counter and valued using valuation
techniques as there are no quoted prices for such derivatives. The valuation techniques and inputs vary depending
on the types and contractual terms of the derivatives. The principal valuation techniques used to value derivatives
include discounted cash flows, the Black-Scholes model and the Hull-White model. The key inputs include
interest rate yield curve, foreign currency exchange rate, volatility, credit quality of the counterparty or the
MUFG Group and spot price of the underlying. These models are commonly accepted in the financial industry
and key inputs to the models are generally readily observable in an active market. Derivatives valued using such
valuation techniques and inputs are generally classified in Level 2 of the fair value hierarchy. Examples of such
Level 2 derivatives include plain-vanilla interest rate swaps, foreign currency forward contracts and currency
option contracts.
Derivatives that are valued using valuation techniques with significant unobservable inputs are classified in
Level 3 of the fair value hierarchy. Examples of Level 3 derivatives include long-term interest rate or currency
swaps and certain credit derivatives, where significant inputs such as volatility and correlation of such inputs are
unobservable.
Investment Securities
Investment securities include Available-for-sale debt and equity securities, whose fair values are measured
using the same valuation techniques as the trading account securities described above. Investment securities also
include investments in nonmarketable equity securities which are subject to specialized industry accounting
principles. The valuation of such nonmarketable equity securities involves significant management judgment due
to the absence of quoted prices, lack of liquidity and the long term nature of these investments. Further, there
may be restriction on transfers of nonmarketable equity securities. The MUFG Group values such securities
initially at transaction price and subsequently adjusts such valuations, considering evidence such as current sales
transactions of similar securities, initial public offerings, recent equity issuances and change in financial
condition of the investee company. Nonmarketable equity securities are included in Level 3 of the fair value
hierarchy.
Other Assets
Other assets measured at fair value mainly consist of securities received as collateral that may be sold or
repledged under securities lending transactions, money in trust for segregating cash deposited by customers on
security transactions and derivatives designated as hedging instruments. The securities received as collateral
under lending transactions mainly consist of certain Japanese and foreign government bonds which are valued
using the valuation techniques previously described in the section entitled “Trading Accounts Assets and
Liabilities—Trading Account Securities” above.
Money in trust for segregating cash deposited by customers on security transactions mainly consists of
certain Japanese government bonds which are valued using the valuation techniques described in the “Trading
Account Assets and Liabilities—Trading Account Securities” above and is included in Level 1 or Level 2 of the
fair value hierarchy depending on the component assets.
F-133
MITSUBISHI UFJ FINANCIAL GROUP, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
The fair values of derivatives designated as hedging instruments are measured using the valuation
techniques described in the “Trading Account Assets and Liabilities—Derivatives” above.
Obligations to Return Securities Received as Collateral
Obligations to return securities received as collateral under securities lending transactions included in Other
liabilities are measured at the fair values of the securities received as collateral. The securities received as
collateral consist primarily of certain Japanese and foreign government bonds, whose fair values are measured
using the valuation techniques described in the “Trading Account Assets and Liabilities—Trading Account
Securities” above.
Other Short-term Borrowings and Long-term Debt
Certain short-term borrowings and long-term debt are measured at fair value due to the election of the fair
value option. The fair value of these instruments are measured principally based on the discounted cash flows.
Where the inputs into the valuation techniques are mainly based on observable inputs, these instruments are
classified in Level 2 of the fair value hierarchy. Where significant inputs are unobservable, they are classified in
Level 3 of the fair value hierarchy.
Market Valuation Adjustments
Counterparty credit risk adjustments are made to certain financial assets such as over-the-counter
derivatives to factor in counterparty credit exposure. As not all counterparties have the same credit risk, it is
necessary in calculating credit risk adjustments, to take into account probability of a default event occurring for
each counterparty, which is primarily derived from observed or estimated spreads on credit default swaps. In
addition, the counterparty credit risk adjustment takes into account the effect of credit risk mitigation such as
pledged collateral and the legal right of offset with the counterparty.
Funding valuation adjustment (“FVA”) represents the adjustment to reflect the impact of uncollateralized
funding. The FVA is calculated using the MUFG’s market funding spread and the funding exposure of any
uncollateralized component of the over-the-counter derivative instrument. The MUFG Group’s FVA framework
incorporates key inputs, such as the expected future funding requirements arising from the MUFG Group’s
positions with each counterparty and collateral arrangements, and the estimated market funding cost in the
principal market, which considers the MUFG Group’s credit risk.
Liquidity adjustments are applied mainly to the instruments classified in Level 3 of the fair value hierarchy
when recent observable prices of such instruments are not available or such instruments are traded in inactive or
less active markets. The liquidity adjustments are based on the facts and circumstances of the markets including
the availability of external quotes and the time since the latest available quote.
Model valuation adjustments such as unobservable parameter valuation adjustments may be provided when
the fair values of instruments are determined based on internally developed valuation techniques. Examples of
such adjustments include adjustments to the model price of certain derivatives where parameters such as
correlation are unobservable. Unobservable parameter valuation adjustments are applied to mitigate the
uncertainty inherent in the resulting valuation estimate.
Investments in Certain Entities That Calculate Net Asset Value per Share
The MUFG Group has interests in investment funds mainly private equity funds, and real estate funds that
are measured at fair value on a recurring or nonrecurring basis.
F-134
MITSUBISHI UFJ FINANCIAL GROUP, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
Private equity funds have specific investment objectives in connection with their acquisition of equity
interests, such as providing financing and other support to start-up businesses, medium and small entities in a
particular geographical area, and to companies with certain technology or companies in a high-growth industry.
Generally, these investments cannot be redeemed with the funds, and the return of invested capital and its gains
are derived from distributions received upon the liquidation of the underlying assets of the fund, the timing of
which is uncertain.
Real estate funds invest globally and primarily in real estate companies, debt recapitalizations and direct
property. These investments are generally not redeemable with the funds. Distributions from each fund will be
received as the underlying investments of the funds are liquidated, the timing of which is uncertain.
Assets and Liabilities Measured at Fair Value on a Recurring Basis
The following tables present the financial instruments carried at fair value by level within the fair value
hierarchy as of March 31, 2020 and 2021:
At March 31, 2020
Assets
Trading account assets:
Level 1
Level 2
Level 3
Fair Value
(in millions)
Trading securities(1) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
¥14,891,635
¥17,061,985
¥
525,946
¥32,479,566
Debt securities
Japanese national government and Japanese government
agency bonds . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Japanese prefectural and municipal bonds . . . . . . . . . . . . . .
Foreign government and official institution bonds . . . . . . . .
Corporate bonds . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Residential mortgage-backed securities . . . . . . . . . . . . . . . .
Asset-backed securities . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Other debt securities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Commercial paper . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Equity securities(2) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Trading derivative assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Interest rate contracts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Foreign exchange contracts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Equity contracts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Commodity contracts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Credit derivatives . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Investment securities:
Available-for-sale debt securities . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Japanese national government and Japanese government agency
bonds . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Japanese prefectural and municipal bonds . . . . . . . . . . . . . . . . . .
Foreign government and official institution bonds . . . . . . . . . . . .
Corporate bonds . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Residential mortgage-backed securities . . . . . . . . . . . . . . . . . . . .
Commercial mortgage-backed securities . . . . . . . . . . . . . . . . . . .
Asset-backed securities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Other debt securities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Equity securities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Marketable equity securities . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Nonmarketable equity securities(3)
. . . . . . . . . . . . . . . . . . . . . . . .
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Other(4)
3,805,039
—
9,356,427
11
—
—
—
—
1,730,158
216,834
74,488
1,550
140,796
—
—
350,128
93,479
417,766
2,537,559
9,037,539
590,556
7,787
2,959,580
1,067,591
14,680,632
10,758,790
3,723,087
87,285
10
111,460
—
—
1,052
144
—
416,259
6,651
—
101,840
60,108
13,329
9,046
7,491
27,492
2,750
4,155,167
93,479
9,775,245
2,537,714
9,037,539
1,006,815
14,438
2,959,580
2,899,589
14,957,574
10,846,607
3,733,683
235,572
27,502
114,210
22,126,881
11,798,392
274,930
34,200,203
19,897,187
—
2,229,694
—
—
—
—
—
4,471,499
4,471,499
—
1,054,186
3,565,692
2,952,820
792,027
1,262,718
1,459,378
380,278
1,328,601
56,878
296,819
296,819
—
45,913
— 23,462,879
2,952,820
—
3,037,488
15,767
1,272,826
10,108
1,459,393
15
382,255
1,977
1,469,476
140,875
163,066
106,188
4,808,281
39,963
4,768,318
—
39,963
39,963
1,136,800
36,701
Total
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
¥42,761,035
¥43,883,741
¥
937,648
¥87,582,424
F-135
MITSUBISHI UFJ FINANCIAL GROUP, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
At March 31, 2020
Level 1
Level 2
Level 3
Fair Value
(in millions)
Liabilities
Trading account liabilities:
Trading securities sold, not yet purchased . . . . . . . . . . . . . . . . . . . . . .
Trading derivative liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Interest rate contracts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Foreign exchange contracts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Equity contracts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Commodity contracts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Credit derivatives . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Obligation to return securities received as collateral(5) . . . . . . . . . . . . . . . . .
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Other(6)
¥
555,664
300,215
153,098
3,360
143,757
—
—
4,663,068
—
¥
3,718
13,851,205
10,038,198
3,596,589
121,229
14
95,175
143,103
514,003
¥
— ¥
56,631
14,079
4,041
11,713
26,775
23
—
6,606
559,382
14,208,051
10,205,375
3,603,990
276,699
26,789
95,198
4,806,171
520,609
Total
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
¥ 5,518,947
¥14,512,029
¥
63,237
¥20,094,213
At March 31, 2021
Assets
Trading account assets:
Level 1
Level 2
Level 3
Fair Value
(in millions)
Trading securities(1) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
¥18,439,146
¥13,165,127
¥
756,413
¥32,360,686
Debt securities
Japanese national government and Japanese government
agency bonds . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Japanese prefectural and municipal bonds . . . . . . . . . . . . . .
Foreign government and official institution bonds . . . . . . . .
Corporate bonds . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Residential mortgage-backed securities . . . . . . . . . . . . . . . .
Asset-backed securities . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Other debt securities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Commercial paper . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Equity securities(2) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Trading derivative assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Interest rate contracts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Foreign exchange contracts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Equity contracts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Commodity contracts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Credit derivatives . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Other(7)
Investment securities:
Available-for-sale debt securities . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Japanese national government and Japanese government agency
bonds . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Japanese prefectural and municipal bonds . . . . . . . . . . . . . . . . . .
Foreign government and official institution bonds . . . . . . . . . . . .
Corporate bonds . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Residential mortgage-backed securities . . . . . . . . . . . . . . . . . . . .
Commercial mortgage-backed securities . . . . . . . . . . . . . . . . . . .
Asset-backed securities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Other debt securities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Commercial paper . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Equity securities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Marketable equity securities . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Nonmarketable equity securities(3)
. . . . . . . . . . . . . . . . . . . . . . . .
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Other(4)
6,800,379
—
9,508,030
5,123
27
—
—
—
2,125,587
136,515
23,906
929
111,680
—
—
—
401,454
193,936
450,443
2,706,611
6,166,313
1,045,706
—
1,001,233
1,199,431
11,774,865
7,673,031
3,896,713
113,586
1
91,534
—
—
—
1,280
77
1,000
336,811
277,635
—
139,610
70,058
21,018
12,520
6,309
26,896
2,354
961
7,201,833
193,936
9,959,753
2,711,811
6,167,340
1,382,517
277,635
1,001,233
3,464,628
11,981,438
7,717,955
3,910,162
231,575
26,897
93,888
961
34,010,613
12,817,584
289,616
47,117,813
32,073,409
—
1,937,204
—
—
—
—
—
—
5,530,077
5,530,077
—
1,202,230
3,199,802
3,731,513
973,041
1,134,108
1,467,115
462,966
1,247,565
37,376
564,098
229,415
229,415
—
42,687
— 35,273,211
3,731,513
—
2,926,963
16,718
1,134,270
162
1,467,130
15
464,565
1,599
1,384,485
136,920
171,578
134,202
564,098
—
5,805,061
45,569
5,759,492
—
45,569
45,569
1,263,701
18,784
Total
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
¥59,318,581
¥38,029,678
¥ 1,180,440
¥98,528,699
F-136
MITSUBISHI UFJ FINANCIAL GROUP, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
At March 31, 2021
Level 1
Level 2
Level 3
Fair Value
(in millions)
Liabilities
Trading account liabilities:
Trading securities sold, not yet purchased . . . . . . . . . . . . . . . . . . . . . .
Trading derivative liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Interest rate contracts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Foreign exchange contracts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Equity contracts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Commodity contracts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Credit derivatives . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Other(7)
Obligation to return securities received as collateral(5) . . . . . . . . . . . . . . . . .
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Other(6)
¥
260,149
150,750
10,696
977
139,077
—
—
—
6,484,452
—
¥
989
11,560,634
7,343,594
4,015,927
92,655
1
108,457
—
97,307
558,553
¥
— ¥
45,031
6,839
5,237
5,686
26,959
83
227
—
(2,212)
261,138
11,756,415
7,361,129
4,022,141
237,418
26,960
108,540
227
6,581,759
556,341
Total
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
¥ 6,895,351
¥12,217,483
¥
42,819
¥19,155,653
Notes:
(1)
(2) Excludes certain investments valued at net asset value of private equity funds whose fair values were ¥66,918 million and
Includes securities measured under the fair value option.
¥102,255 million at March 31, 2020 and 2021, respectively. The amounts of unfunded commitments related to these private equity funds
were ¥102,743 million and ¥97,413 million at March 31, 2020 and 2021, respectively.
(3) Excludes certain investments valued at net asset value of real estate funds and private equity and other funds whose fair values at
March 31, 2020 were ¥23,233 million and ¥18,862 million, respectively, and those at March 31, 2021 were ¥ 27,395 million and
¥34,390 million, respectively. The amounts of unfunded commitments related to these real estate funds and private equity and other
funds at March 31, 2020 were ¥1,494 million and nil, respectively, and those at March 31, 2021 were ¥1,006 million and ¥4,758 million,
respectively.
(4) Mainly comprises securities received as collateral that may be sold or repledged under securities lending transactions and money in trust
(5)
(6)
for segregating cash deposited by customers on security transactions.
Included in Other liabilities.
Includes other short-term borrowings, long-term debt, bifurcated embedded derivatives carried at fair value and derivative liabilities
designated as hedging instruments.
(7) For the period ended March 31, 2021, certain derivatives such as earthquake derivatives previously included in Commodity contracts are
separately disclosed in Other of Trading derivative assets and liabilities.
F-137
MITSUBISHI UFJ FINANCIAL GROUP, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
Changes in Level 3 Recurring Fair Value Measurements
The following tables present a reconciliation of the assets and liabilities measured at fair value on a
recurring basis using significant unobservable inputs (Level 3) during the fiscal years ended March 31, 2020 and
2021. The determination to classify a financial instrument within Level 3 is based upon the significance of the
unobservable inputs to overall fair value measurement. However, Level 3 financial instruments typically include,
in addition to the unobservable or Level 3 input, observable inputs (inputs that are actively quoted and can be
validated to external sources). Accordingly, the gains and losses in the tables below include changes in fair value
due in part to observable inputs used in the valuation techniques.
Total gains (losses)
for the period
March 31,
2019
Included
in
earnings
Included
in other
comprehensive
income
Purchases
Issues
Sales
Settlements
(in millions)
Transfers
into
Level 3
Transfers
out of
Level 3
March 31,
2020
Change in
unrealized
gains (losses)
included in
earnings for
assets and
liabilities
still held at
March 31,
2020
Assets
Trading account assets:
Trading securities(1) . . . . . . . . . . . . ¥ 785,326 ¥
(22,419)(2)
¥
— ¥ 227,656 ¥
— ¥(214,183) ¥(225,980) ¥ 52,140
¥ (76,594)
¥525,946
¥ (18,915)(2)
Debt securities
Foreign government and
official institution
bonds . . . . . . . . . . . . . . . . .
Corporate bonds . . . . . . . . . .
Residential mortgage-backed
securities . . . . . . . . . . . . . .
Asset-backed securities . . . . .
Other debt securities . . . . . . .
Equity securities . . . . . . . . . . . .
Trading derivatives—net . . . . . . . .
Interest rate contracts—net . . . .
Foreign exchange contracts—
net
. . . . . . . . . . . . . . . . . . . . .
Equity contracts—net
. . . . . . . .
Commodity contracts—net . . . .
Credit derivatives—net . . . . . . .
Investment securities:
Available-for-sale debt
securities . . . . . . . . . . . . . . . . . .
Foreign government and official
institution bonds . . . . . . . . . .
Corporate bonds . . . . . . . . . . . .
Residential mortgage-backed
792
31,384
35,181
627,678
35,148
55,143
36,170
(4,189)
18,191
2,862
949
18,357
589
(279)
(695)
(23,494)
(1,239)
2,699
4,503(2)
21,290
(21,429)
5,188
(174)
(372)
—
—
—
—
—
—
178
(24)
89
110
(1)
4
93,957
631
—
113,239
—
19,829
714
—
3
96
615
—
— (92,748)
(3,937)
—
(18)
(4,721)
—
24,882(5)
(1,520)
(47,816)(5)
1,052
144
(12)
(13)
— (23,837)
— (93,655)
—
—
(6)
—
—
(1,449)
—
—
—
(777)
(672)
—
—
—
—
—
(10,649)
(207,509)
—
(3,083)
(33,463)
(12,025)
4,858
(11,305)
—
(14,991)
—
—
—
27,258(8)
40,857
2,254
35,444(5)
(41)
—
3,200
—
—
(27,258)(8)
—
(44,033)
(8,056)
(32,151)(5)
(355)
—
(3,471)
—
416,259
6,651
101,840
3,477
(750)
5,005
(4,222)
717
2,727
—
(18,815)
(387)
312
(16,742)(2)
8,046
(21,483)
(2,846)
(167)
(292)
283,434
(2,402)(3)
804
281,041
(24)
(300,023)
15,201
(3,101)
274,930
(934)(3)
19,246
4,196
—
(458)
securities . . . . . . . . . . . . . . . .
15
—
Commercial mortgage-backed
securities . . . . . . . . . . . . . . . .
Asset-backed securities . . . . . . .
Other debt securities . . . . . . . . .
Equity securities . . . . . . . . . . . . . .
Nonmarketable equity
2,038
131,455
126,484
27,820
—
(1,944)
—
2,585(3)
1,625
342
—
125
(1,085)
(203)
—
828
663
—
—
274,110
5,440
12,718
—
—
—
—
—
—
—
—
—
(1)
—
(5,932)
(6,734)
—
15,201(5)
—
(3,101)(5)
15,767
10,108
—
—
15
—
—
—
—
—
—
—
1,977
140,875
106,188
39,963
—
—
—
(598)
(598)
—
(23)
(163)
— (261,661)
(25,533)
—
(35)
(2,527)
—
(934)
—
—
—
—
863(3)
securities . . . . . . . . . . . . . . . .
Other . . . . . . . . . . . . . . . . . . . . . . . . .
27,820
32,378
2,585
(10,105)(7)
—
(375)
12,718
44,324
(2,527)
—
— (29,334)
(35)
(187)
39,963
36,701
863
(10,136)(7)
Total . . . . . . . . . . . . . . . . . . . . . . . . . ¥1,165,128 ¥
(27,838)
Liabilities
Other . . . . . . . . . . . . . . . . . . . . . . . . . ¥
65,648 ¥
(5,388)(4)
Total
. . . . . . . . . . . . . . . . . . . . . . . . . ¥
65,648 ¥
(5,388)
¥
¥
¥
607
¥ 566,453 ¥
(1,449) ¥(246,068) ¥(559,688) ¥108,198
¥(124,326)
¥881,017
¥ (45,864)
(414)
(414)
¥
¥
— ¥
2,258 ¥
— ¥ (21,133) ¥
333(6) ¥ (46,302)(6) ¥
6,606
— ¥
2,258 ¥
— ¥ (21,133) ¥
333
¥ (46,302)
¥
6,606
¥
¥
9,648(4)
9,648
F-138
MITSUBISHI UFJ FINANCIAL GROUP, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
Total gains (losses)
for the period
March 31,
2020
Included
in
earnings
Included
in other
comprehensive
income
Purchases
Issues
Sales
Settlements
(in millions)
Transfers
into
Level 3
Transfers
out of
Level 3
March 31,
2021
Change in
unrealized
gains (losses)
for assets
and
liabilities
still held at
March 31,
2021
Assets
Trading account assets:
Trading securities(1) . . . . . . . . . . . ¥ 525,946 ¥
21,730(2)
¥
— ¥ 352,917 ¥
— ¥(189,980) ¥(117,399) ¥190,391
¥ (27,192)
¥ 756,413
¥
23,477(2)
Debt securities
Foreign government and
official institution
bonds . . . . . . . . . . . . . . . .
Corporate bonds . . . . . . . . .
Residential mortgage-
backed securities . . . . . . .
Asset-backed securities . . . .
Other debt securities . . . . . .
Equity securities . . . . . . . . . . .
Trading derivatives—net . . . . . . .
Interest rate contracts—net . . .
Foreign exchange contracts—
net
. . . . . . . . . . . . . . . . . . . .
Equity contracts—net
. . . . . . .
Commodity contracts—net . . .
Credit derivatives—net . . . . . .
. . . . . . . . . . . . . .
Other—net(9)
Investment securities:
Available-for-sale debt
securities . . . . . . . . . . . . . . . . .
Foreign government and
official institution bonds . . .
Corporate bonds . . . . . . . . . . .
Residential mortgage-backed
securities . . . . . . . . . . . . . . .
Commercial mortgage-backed
securities . . . . . . . . . . . . . . .
Asset-backed securities . . . . . .
Other debt securities . . . . . . . .
Equity securities . . . . . . . . . . . . .
Nonmarketable equity
1,052
144
—
416,259
6,651
101,840
3,477
(750)
5,005
(4,222)
(65)
2,727
782
625
31
—
12,808
11,096
(2,830)
45,361(2)
14,401
3,743
27,299
1
(166)
83
—
—
—
—
—
—
(104)
(32)
(128)
55
1
—
—
49,637
82
51,533
106,308
69,499
75,858
597
—
—
3
—
—
594
274,930
6,710(3)
(14,559)
308,672
15,767
10,108
15
1,977
140,875
106,188
39,963
—
(8)
—
—
6,718
—
(3,231)(3)
(888)
(1)
—
(346)
(7,958)
(5,366)
—
—
(1,349)
3,518
—
—
—
267,767
37,387
10,481
10,481
2,346
—
—
—
—
— (49,927)
(180)
—
(59)
—
— (50,533)
— (83,700)
—
—
(5,640)
—
—
(653)
—
—
—
—
—
—
(653)
—
—
—
—
—
—
(114,864)
— 190,389(8)
(2,476)
(20,689)
1,405
140
(21,944)
—
(290)
—
2
(2,159)
(99)
(1,480)
(580)
—
—
—
(48)
—
—
—
—
(27,144)(8)
(803)
(746)
3
12
—
—
(72)
1,280
77
1,000
336,811
277,635
139,610
25,027
14,179
7,283
623
(63)
2,271
734
159
(5)
—
16,309
11,096
(4,082)
31,184(2)
11,807
3,812
15,660
1
(182)
86
—
—
—
—
—
—
—
—
—
—
(11)
(276,234)
—
—
—
(1,679)
(45)
—
(11)
(21)
— (270,482)
(4,007)
—
—
(1,725)
(1,725)
(18)
—
(270)
70
—
70
—
—
—
—
285
285
—
(9,962)
289,616
(2,779)(3)
—
(9,962)(5)
16,718
162
—
—
—
—
(204)
(204)
—
15
1,599
136,920
134,202
45,569
45,569
18,784
473
(10)
—
(163)
(4,047)
968
(4,150)(3)
(4,150)
(18,620)(7)
securities . . . . . . . . . . . . . . .
Other . . . . . . . . . . . . . . . . . . . . . . . .
39,963
36,701
(3,231)
(18,626)(7)
Total . . . . . . . . . . . . . . . . . . . . . . . . ¥ 881,017 ¥
51,944
¥
(16,012)
¥ 675,013 ¥
(653) ¥(191,734) ¥(414,592) ¥188,587
¥ (38,161)
¥1,135,409
¥
29,112
Liabilities
Other . . . . . . . . . . . . . . . . . . . . . . . . ¥
6,606 ¥
(32,946)(4)
Total
. . . . . . . . . . . . . . . . . . . . . . . . ¥
6,606 ¥
(32,946)
¥
¥
937
937
¥
¥
— ¥
— ¥
5,336 ¥
— ¥ (27,823) ¥ (7,686)(6) ¥ (10,654)(6) ¥
(2,212) ¥ (17,043)(4)
5,336 ¥
— ¥ (27,823) ¥ (7,686)
¥ (10,654)
¥
(2,212) ¥ (17,043)
Notes:
(1)
(2)
(3)
(4)
(5) Transfers into (out of) Level 3 for Foreign exchange contracts—net were mainly caused by the valuation using certain unobservable
Includes Trading securities measured under the fair value option.
Included in Trading account profits (losses)—net and Foreign exchange gains (losses)—net.
Included in Investment securities gains (losses)—net and Other comprehensive income—net.
Included in Trading account profits (losses)—net.
input. For the fiscal year ended March 31, 2020, transfers into (out of) Level 3 for Corporate bonds were mainly caused by the decrease
(increase) in liquidity or the availability of the quoted prices provided by third-party vendors. For the fiscal year ended March 31, 2021,
transfers out of Level 3 for Corporate bonds were due to changes in the impact of unobservable credit worthiness inputs to the entire fair
value measurement of the private placement bonds issued by Japanese non-public companies. Unobservable credit worthiness inputs
include probability of default based on credit ratings of the bond issuers and loss given default.
(6) Transfers into (out of) Level 3 for long-term debt in Other were mainly caused by the decrease (increase) in the observability of the key
inputs to the valuation models and a corresponding increase (decrease) in the significance of the unobservable inputs.
Included in Fees and commissions income and Other non-interest income.
(7)
(8) Transfers relate to the reclassification of certain securities.
(9) For the fiscal year ended March 31, 2021, certain derivatives such as earthquake derivatives previously included in Commodity
contracts—net are separately disclosed in Other—net of Trading derivatives—net.
F-139
MITSUBISHI UFJ FINANCIAL GROUP, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
Quantitative Information about Level 3 Fair Value Measurements
The following tables present information on the valuation techniques, significant unobservable inputs and
their ranges for each major category of assets and liabilities measured at fair value on a recurring basis and
classified in Level 3:
At March 31, 2020
Fair value(1) Valuation technique
Significant unobservable inputs
Range
Weighted
average(2)
(in millions)
Assets
Trading securities and
Investment securities:
Foreign government and
official institution
bonds . . . . . . . . . . . . . . .
Residential mortgage-
backed securities,
Commercial mortgage-
backed securities and
Asset-backed
securities . . . . . . . . . . . .
Other debt securities . . . . .
¥ 15,767 Return on equity method Probability of default
Recovery rate
Market-required return on capital
0.2%~1.3%
55.0%~90.0%
8.0%~10.0%
0.4%
69.9%
9.9%
92,025 Discounted cash flow
389,170
Internal model(4)
Probability of default
Recovery rate
Asset correlations
Discount factor
Prepayment rate
Probability of default
Recovery rate
Liquidity premium
6,651 Discounted cash flow
86,734 Return on equity method Probability of default
Equity securities . . . . . . . .
27,144 Discounted cash flow
Recovery rate
Market-required return on capital
Liquidity premium
1.2%~5.3%
60.0%~76.0%
1.0%
1.1%~1.4%
21.0%
0.0%~99.0%
57.8%
2.4%
0.0%~25.0%
60.0%~90.0%
8.0%~10.0%
1.0%
5.0%
68.2%
1.0%
1.4%
21.0%
—(3)
57.8%
2.4%
0.3%
79.8%
9.4%
1.0%
At March 31, 2020
Fair value(1) Valuation technique
Significant unobservable inputs
Range
Trading derivatives—net:
Interest rate contracts—net . . . .
(728) Option model
(in millions)
Foreign exchange
contracts—net . . . . . . . . . . . .
5,005 Option model
Equity contracts—net . . . . . . . .
(10,038) Option model
6,166 Discounted cash flow
F-140
Correlation between interest rates
Correlation between interest rate and
foreign exchange rate
Volatility
Correlation between interest rates
Correlation between interest rate and
32.9%~62.5%
16.7%~60.0%
0.0%~100.0%
30.0%~70.0%
foreign exchange rate
15.8%~60.0%
Correlation between foreign exchange
rates
Volatility
Correlation between foreign exchange
rate and equity
Correlation between equities
Volatility
Term of litigation
60.0%
7.5%~17.0%
(58.4)%~56.9%
19.5%~81.0%
24.2%~32.0%
0.1 year~1.1 years
MITSUBISHI UFJ FINANCIAL GROUP, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
At March 31, 2021
Fair value(1) Valuation technique Significant unobservable inputs
Range
Weighted
average(2)
(in millions)
Assets
Trading securities and
Investment securities:
Foreign government and
official institution
bonds . . . . . . . . . . . . . . .
Residential mortgage-
backed securities,
Commercial mortgage-
backed securities and
Asset-backed
securities . . . . . . . . . . . .
Other debt securities . . . . .
¥ 16,718 Return on equity method Probability of default
Recovery rate
Market-required return on
capital
0.2%~1.8%
35.0%~90.0%
0.5%
66.9%
8.0%~10.0%
10.0%
89,607 Discounted cash flow
279,547
Internal model(4)
313,895 Discounted cash flow
79,541 Return on equity method Probability of default
Probability of default
Recovery rate
Asset correlations
Discount factor
Prepayment rate
Probability of default
Recovery rate
Liquidity premium
Recovery rate
Market-required return on
capital
4.3%~4.9%
78.0%~96.6%
3.0%
1.3%~1.6%
18.3%
0.0%~83.7%
57.4%
1.0%~3.2%
0.0%~8.0%
60.0%~90.0%
4.7%
90.6%
3.0%
1.3%
18.3%
—(3)
57.4%
2.9%
0.4%
78.8%
8.0%~10.0%
10.0%
At March 31, 2021
Fair value(1) Valuation technique Significant unobservable inputs
Range
Median(2)
Trading derivatives—net:
Interest rate contracts—net . . . .
(in millions)
12,841 Option model
Foreign exchange
contracts—net . . . . . . . . . . . .
7,283 Option model
Equity contracts—net . . . . . . . .
(4,597) Option model
5,557 Discounted cash flow
Correlation between interest
rates
Correlation between interest rate
and foreign exchange rate
Volatility
Correlation between interest
rates
Correlation between interest rate
and foreign exchange rate
Correlation between foreign
exchange rates
Volatility
Correlation between foreign
exchange rate and equity
Correlation between equities
Volatility
Term of litigation
30.0%~61.9%
44.8%
15.1%~60.0%
0.0%~100.0%
41.6%
65.0%
10.0%~70.0%
51.0%
0.0%~60.0%
38.9%
50.0%~70.6%
9.5%~22.1%
66.4%
13.7%
(58.4)%~55.0%
15.0%~95.0%
27.5%~40.0%
0.0 year~1.2 years
26.2%
54.0%
31.8%
0.6 year
Notes:
(1) The fair value as of March 31, 2020 and 2021 excludes the fair value of investments valued using vendor prices.
(2) Weighted average is calculated by weighing each input by the relative fair value of the respective financial instruments for investment
securities. Median is used for derivative instruments.
(3) See “Probability of default” in “Changes in and range of unobservable inputs”.
(4) For further detail of Internal model, refer to the last paragraph of “Trading Account Assets and Liabilities—Trading Account Securities”.
F-141
MITSUBISHI UFJ FINANCIAL GROUP, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
Changes in and range of unobservable inputs
Probability of default—Probability of default is an estimate of the likelihood that the default event will
occur and the MUFG Group will be unable to collect the contractual amounts. A significant increase (decrease)
in the default rate would have resulted in a significant decrease (increase) in a fair value through a decrease
(increase) in the estimated cash flows. Probability of default used in internal model of Residential mortgage-
backed securities, Commercial mortgage-backed securities and Asset-backed securities represents that of
underlying assets, whereas probability of default used in other valuation techniques represents the counterparty
default risks, determined through the MUFG Group’s credit rating system.
The wide range of probability of default used in the internal model of Residential mortgage-backed
securities, Commercial mortgage-backed securities and Asset-backed securities is mainly caused by Asset-
backed securities. Asset-backed securities have a large number of underlying loans, mainly corporate loans, in
several industries. The MUFG Group primarily makes investments in the senior tranches of such securities, with
no investments in the equity portion. Thus, the MUFG Group’s investments have higher priority of payments
than mezzanine and equity and even if some of underlying loans become default, the MUFG Group may still be
able to receive the full contractual payments.
Discount factor and Liquidity premium—Discount factor and liquidity premium are adjustments to
discount rates to reflect uncertainty of cash flows and liquidity of the instruments. When recent prices of similar
instruments are unobservable in inactive or less active markets, discount rates are adjusted based on the facts and
circumstances of the markets including the availability of quotes and the time since the latest available quotes.
A significant increase (decrease) in discount rate would have resulted in a significant decrease (increase) in a fair
value.
Recovery rate and Prepayment rate—Recovery rate is the proportion of the total outstanding balance of a
bond or loan that is expected to be collected in a liquidation scenario. For many debt securities (such as asset-
backed securities), there is no directly observable market input for recovery, but indications of recovery levels
are available from third-party pricing services. The assumed recovery of a security may differ from its actual
recovery that will be observable in the future. Prepayment rate represents the proportion of principal that is
expected to be paid prematurely in each period on a security or pool of securities. Prepayment rates change the
future cash flows for the investor and thereby change the fair value of the security. Recovery rate and prepayment
rate would affect estimation of future cash flows to a certain extent and changes in these inputs could have
resulted in a significant increase or decrease in fair value.
Volatility—Volatility is a measure of the speed and severity of market price changes and is a key factor in
pricing. Typically, instruments can become more expensive if volatility increases. A significant increase
(decrease) in volatility would cause a significant increase (decrease) in the value of an option resulting in the
significant increase (decrease) in fair value.
The level of volatility generally depends on the tenor of the underlying instrument and the strike price or
level defined in the contract. Volatilities for certain combinations of tenor and strike price are not observable.
The volatility inputs used to estimate fair value of interest rate contracts are distributed throughout the range.
Correlation—Correlation is a measure of the relationship between the movements of two variables (i.e. how
the change in one variable influences a change in the other variables). A variety of correlation-related
assumptions are required for a wide range of instruments including foreign government and official institution
bonds, asset-backed securities, corporate bonds, derivatives and certain other instruments. In most cases,
correlations used are not observable in the market and must be estimated using historical information. Changes in
F-142
MITSUBISHI UFJ FINANCIAL GROUP, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
correlation inputs can have a major impact, favorable or unfavorable, on the value of an instrument, depending
on its nature. In addition, the wide range of correlation inputs are primarily due to the complex and unique nature
of these instruments. There are many different types of correlation inputs, including cross-asset correlation (such
as correlation between interest rate and equity), and same-asset correlation (such as correlation between interest
rates). Correlation levels are highly dependent on market conditions and could have a relatively wide range of
levels within or across asset classes.
For interest rate contracts and foreign exchange contracts, the diversity in the portfolio held by the MUFG
Group is reflected in wide ranges of correlation, as the fair values of transactions with a variety of currencies and
tenors are determined using several foreign exchange and interest rate curves. For equity derivative contracts, the
wide range of correlation between interest rate and equity is primarily due to the large number of correlation
pairs with different maturities of contracts. For credit derivative contracts, the wide range of correlation between
underlying assets is primarily due to factors such as reference assets with different maturities, capital structure
subordinations, and credit quality.
Term of litigation—Term of litigation is the estimated period until the resolution of a certain litigation
matter that relates to an issuer’s restricted shares (“Covered Litigation”) that the MUFG Group purchased, which
is referenced in certain swap transactions.
These swaps are valued using a discounted cash flow methodology and are dependent upon the final
resolution of the Covered Litigation. The settlement timing of the Covered Litigation is not observable in the
market, therefore the estimated term is classified as a level 3 input.
The restricted shares which the MUFG Group purchased will be convertible to listed shares of the issuer at
the end of the Covered Litigation. The restricted shares will be diluted dependent upon the settlement amount of
the Covered Litigation and the dilution of the restricted shares is accomplished through an adjustment to the
conversion rate of the restricted shares. In order to hedge the reduction of the conversion rate, the MUFG Group
entered into certain swaps with the seller which references the conversion rate. The value generated by these
trades is subject to the ultimate term of the issuer’s litigation, subject to a minimum term referenced within the
trade contracts.
Market-required return on capital—Market-required return on capital is the return on capital expected by
the secondary market. A significant increase (decrease) in the market-required return on capital would have
resulted in a significant decrease (increase) in a fair value of a financial asset.
Loan Price—Loan price refers to independent valuations which are supported by a number of third-party
quotes. A significant increase (decrease) in the loan price would have resulted in a significant increase (decrease)
in a fair value of a financial asset.
F-143
MITSUBISHI UFJ FINANCIAL GROUP, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
Assets and Liabilities Measured at Fair Value on a Nonrecurring Basis
Certain assets and liabilities may be measured at fair value on a nonrecurring basis in periods subsequent to
their initial recognition. These assets are subject to fair value adjustments that result from the application of the
lower of cost or fair value accounting, write-downs of individual assets or the measurement alternative for
nonmarketable equity securities. The following table presents the carrying value of assets measured at fair value
on a nonrecurring basis by level within the fair value hierarchy as of March 31, 2020 and 2021:
2020
Total
2021
Level 1 Level 2 Level 3
carrying value Level 1 Level 2
Level 3
Total
carrying value
(in millions)
Assets
Investment securities(1)(2)
Loans . . . . . . . . . . . . . . . . . . . .
Loans held for sale . . . . . .
Collateral dependent
. . . . . ¥ — ¥15,473 ¥
2,548
—
2,703
9,199 260,282
— 73,573
¥ 18,176
272,029
73,573
¥
— ¥32,421
5,125
—
2,667
—
¥
8,357
255,676
52,159
¥ 40,778
263,468
52,159
2,548
loans . . . . . . . . . . . . . . .
—
Premises and equipment . . . . . .
—
Intangible assets . . . . . . . . . . . .
Goodwill . . . . . . . . . . . . . . . . . .
—
Other assets . . . . . . . . . . . . . . . . 73,015
9,199 186,709
— 37,109
453
—
— 283,032
— 18,609
198,456
37,109
453
283,032
91,624
Investments in equity
2,667
—
—
—
5,125
203,517
—
15,243
2,421
—
— 132,976
24,512
111,626 33,840
211,309
15,243
2,421
132,976
169,978
method investees(1) . . . . 73,015
—
Other . . . . . . . . . . . . . . . . .
— 5,911
— 12,698
78,926
12,698
111,626 33,840
—
—
8,384
16,128
153,850
16,128
Total . . . . . . . . . . . . . ¥75,563 ¥24,672 ¥602,188
¥702,423
¥114,293 ¥71,386
¥439,185
¥624,864
Notes:
(1) Excludes certain investments valued at net asset value of ¥12,935 million and ¥24,319 million at March 31, 2020 and 2021, respectively.
The unfunded commitments related to these investments are ¥17,216 million and ¥19,101 million at March 31, 2020 and 2021,
respectively. These investments are in private equity funds.
Includes certain nonmarketable equity securities that are measured at fair value on a nonrecurring basis, including impairment and
observable price change for nonmarketable equity securities measured under the measurement alternative.
(2)
The following table presents losses (gains) recorded as a result of changes in the fair value of assets
measured at fair value on a nonrecurring basis for the fiscal years ended March 31, 2020 and 2021:
Investment securities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Loans . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Loans held for sale . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Collateral dependent loans . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Premises and equipment
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Intangible assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Goodwill
Other assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Investments in equity method investees . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Other . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
2020
2021
(in millions)
¥ (2,171) ¥ (16,522)
116,849
959
115,890
11,548
19,200
147,564
111,374
53,758
57,616
47,359
4,688
42,671
16,517
3,732
383,810
46,237
21,672
24,565
Total
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
¥495,484
¥390,013
F-144
MITSUBISHI UFJ FINANCIAL GROUP, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
Investment securities for the year ended March 31, 2020 and 2021 primarily include nonmarketable equity
securities measured under the measurement alternative. See Note 3 for the details of the measurement alternative.
Loans include loans held for sale and collateral dependent loans. Loans held for sale are recorded at the
lower of cost or estimated fair value. The fair value of the loans held for sale is based on secondary market
prices, recent transactions or discounted cash flows. These loans are principally classified in Level 3 of the fair
value hierarchy, and when quoted prices are available but not traded actively, such loans held for sale are
classified in Level 2 of the fair value hierarchy. Collateral dependent loans are measured at fair value of the
underlying collateral. Collateral is comprised mainly of real estate and exchange-traded equity securities. The
MUFG Group maintains an established process for internally determining the fair value of real estate, using the
following valuation techniques and assumptions. Collateral dependent loans that are measured based on
underlying real estate collateral are classified in Level 3 of the fair value hierarchy.
‰
‰
‰
Replacement cost approach. The replacement cost approach is primarily used for buildings and the land
they are built on. This approach calculates the fair value of the collateral using the replacement cost of
the property as of the valuation date. Replacement cost tables and useful life tables used for this
approach are developed by subsidiaries of MUFG.
Sales comparison approach. The sales comparison approach is mainly used for land. The fair value of
the collateral located in Japan is based on Japanese government official land prices and standard land
prices, considering the results of comparison analysis between the official roadside value which is used
for tax purposes and the related government official land and standard land prices.
Income approach. The income approach is, as a general rule, applied to all rental properties based on the
highest and best use concept. This approach calculates the fair value of the collateral using expected
future cash flows. In this approach, the expected annual net operating income is discounted using the
related capitalization yield. The significant assumptions within the income approach are the expected
annual net operating income and capitalization yield. The expected annual net operating income is
estimated based on rental income of the property. The capitalization yield is determined based on the
location and use of the property by subsidiaries of MUFG. The capitalization yield may be adjusted to
reflect the trends in locations, occupancy rates and rent level and other factors.
Premises and equipment consist of those assets which were written down to fair value. The fair values are
determined based on prices obtained from an appraiser or discounted cash flows. These impaired premises and
equipment are classified as Level 3 of the fair value hierarchy.
Intangible assets consist of those assets which were written down to fair value. The fair values are
determined based on discounted cash flows. These impaired intangible assets are classified as Level 3 of the fair
value hierarchy.
Other assets mainly consist of investments in equity method investees which were written down to fair value
due to impairment. When investments in equity method investees are marketable equity securities, the fair values
are determined based on quoted prices. Impaired investments in equity method investees which are marketable
equity securities are classified in either Level 1 or Level 2 of the fair value hierarchy. When investments in
equity method investees are nonmarketable equity securities, the fair values are determined using the same
methodologies as those for impaired nonmarketable equity securities described above. Impaired investments in
equity method investees which are nonmarketable equity securities are classified in Level 3 of the fair value
hierarchy.
F-145
MITSUBISHI UFJ FINANCIAL GROUP, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
Fair Value Option
The MUFG Group elected the fair value option for foreign currency-denominated debt securities and equity
securities held by MUFG Bank and Mitsubishi UFJ Trust and Banking. The election was made to mitigate
accounting mismatches related to fluctuations of foreign exchange rates by allowing the gains and losses on
translation of these securities to be included in current earnings. The gains and losses on translation of debt
securities without the fair value option, are included in OCI, while the gains and losses on translation of foreign
currency-denominated financial liabilities are included in current earnings.
The MUFG Group also elected the fair value option for certain financial instruments held by Mitsubishi UFJ
Securities Holdings’s foreign subsidiaries because those financial instruments are managed on a fair value basis,
and these exposures are considered to be trading-related positions. These financial assets are included in Other
assets. These financial liabilities are mainly included in Other short-term borrowings and Long-term debt.
Unrealized gains and losses on such financial instruments are recognized in the accompanying consolidated
statements of income.
The following table presents the gains or losses recorded for the fiscal years ended March 31, 2019, 2020
and 2021 related to the eligible instruments for which the MUFG Group elected the fair value option:
2019
2020
2021
Trading
account
profits (losses)
Foreign
exchange
gains (losses)
Total
changes in
fair value
Trading
account
profits (losses)
Foreign
exchange
gains (losses)
Total
changes in
fair value
Trading
account
profits (losses)
Foreign
exchange
gains (losses)
Total
changes in
fair value
(in millions)
Financial assets:
Trading account
securities(1) . . . . . .
¥208,952
¥186,578
¥395,530
¥837,832
¥(596,017) ¥241,815
¥(370,238)
¥723,505 ¥353,267
Total
. . . . . . . .
¥208,952
¥186,578
¥395,530
¥837,832
¥(596,017) ¥241,815
¥(370,238)
¥723,505 ¥353,267
Financial liabilities:
Other short-term
borrowings(2) . . . .
Long-term debt(2) . . .
¥ (5,559)
(8,322)
Total
. . . . . . . .
¥ (13,881)
¥
¥
— ¥ (5,559)
(8,322)
—
¥
5,194
(8,087)
— ¥ (13,881)
¥ (2,893)
¥
¥
— ¥
—
5,194
(8,087)
¥ (6,484)
1,523
— ¥ (2,893) ¥
(4,961)
¥
¥
— ¥ (6,484)
1,523
—
— ¥ (4,961)
Notes:
(1) Excludes Danamon’s equity securities. See Note 2 for reference.
(2) Change in value attributable to the instrument-specific credit risk related to those financial liabilities are not material.
The following table presents the differences between the aggregate fair value and the aggregate remaining
contractual principal balance outstanding as of March 31, 2020 and 2021 for long-term debt instruments for
which the fair value option has been elected:
2020
2021
Remaining
aggregate
contractual
amounts
outstanding
Fair value
Fair value
over (under)
remaining
aggregate
contractual
amounts
outstanding
Remaining
aggregate
contractual
amounts
outstanding
(in millions)
Fair value
over (under)
remaining
aggregate
contractual
amounts
outstanding
Fair value
Financial liabilities:
Long-term debt
. . . . . . . . . . . .
¥319,149
¥304,067
¥(15,082)
¥420,227
¥402,823
¥(17,404)
Total . . . . . . . . . . . . . . . . .
¥319,149
¥304,067
¥(15,082)
¥420,227
¥402,823
¥(17,404)
F-146
MITSUBISHI UFJ FINANCIAL GROUP, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
Interest income and expense related to the assets and liabilities for which the fair value option is elected are
measured based on the contractual rates and dividend income related to these assets are recognized when the
shareholder right to receive the dividend is established. These interest income and expense and dividend income
are reported in the accompanying consolidated statements of income as either interest income or expense,
depending on the nature of the related asset or liability.
Estimated Fair Value of Financial Instruments
The following is a summary of carrying amounts and estimated fair values by level within the fair value
hierarchy of financial instruments which are not carried at fair value on a recurring basis in the accompanying
consolidated balance sheets as of March 31, 2020 and 2021:
At March 31, 2020
Financial assets:
Carrying
amount
Estimated fair value
Total
Level 1
Level 2
Level 3
(in billions)
—
—
—
—
—
2,002
118,235
—
—
—
—
—
—
—
—
—
—
Cash and due from banks . . . . . . . . . . . . . . . . . . . . . . . . . ¥ 33,283 ¥ 33,283 ¥33,283 ¥
Interest-earning deposits in other banks . . . . . . . . . . . . . .
Call loans and funds sold . . . . . . . . . . . . . . . . . . . . . . . . .
Receivables under resale agreements . . . . . . . . . . . . . . . .
Receivables under securities borrowing transactions . . .
Investment securities . . . . . . . . . . . . . . . . . . . . . . . . . . . .
. . . . . . . . . . .
Loans, net of allowance for credit losses(1)
. . . . . . . . . . . . . . . . . . . . . . . . . .
Other financial assets(2)
45,267
1,169
23,996
3,444
4,178
118,497
8,494
45,267
1,169
23,996
3,444
4,166
117,373
8,494
— 45,267
1,169
—
— 23,996
3,444
—
1,042
1,134
259
3
8,494
—
— ¥
Financial liabilities:
Deposits
Non-interest-bearing . . . . . . . . . . . . . . . . . . . . . . . . . ¥ 33,382 ¥ 33,382 ¥ — ¥ 33,382 ¥
Interest-bearing . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Total deposits . . . . . . . . . . . . . . . . . . . . . . . . . .
Call money and funds purchased . . . . . . . . . . . . . . . . . . .
Payables under repurchase agreements . . . . . . . . . . . . . .
Payables under securities lending transactions . . . . . . . .
Due to trust account and other short-term borrowings . . .
Long-term debt . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Other financial liabilities . . . . . . . . . . . . . . . . . . . . . . . . .
— 170,631
— 204,013
—
3,669
— 31,850
—
1,017
— 19,057
— 27,941
7,139
—
170,631
204,013
3,669
31,850
1,017
19,057
27,941
7,139
170,574
203,956
3,669
31,850
1,017
19,057
27,772
7,139
F-147
MITSUBISHI UFJ FINANCIAL GROUP, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
At March 31, 2021
Financial assets:
Carrying
amount
Estimated fair value
Total
Level 1
Level 2
Level 3
(in billions)
Cash and due from banks . . . . . . . . . . . . . . . . . . . . . . . . . ¥ 49,977 ¥ 49,977 ¥49,977 ¥
Interest-earning deposits in other banks . . . . . . . . . . . . . .
Call loans and funds sold . . . . . . . . . . . . . . . . . . . . . . . . .
Receivables under resale agreements . . . . . . . . . . . . . . . .
Receivables under securities borrowing transactions . . .
Investment securities . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Loans, net of allowance for credit losses(1)
. . . . . . . . . . .
. . . . . . . . . . . . . . . . . . . . . . . . . .
Other financial assets(2)
53,347
1,256
13,780
3,370
3,904
114,350
8,108
53,347
1,256
13,780
3,370
3,939
115,709
8,108
— 53,347
—
1,256
— 13,780
3,370
—
780
1,123
298
3
8,108
—
— ¥
Financial liabilities:
Deposits
Non-interest-bearing . . . . . . . . . . . . . . . . . . . . . . . . . ¥ 38,521 ¥ 38,521 ¥ — ¥ 38,521 ¥
Interest-bearing . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Total deposits . . . . . . . . . . . . . . . . . . . . . . . . . .
Call money and funds purchased . . . . . . . . . . . . . . . . . . .
Payables under repurchase agreements . . . . . . . . . . . . . .
Payables under securities lending transactions . . . . . . . .
Due to trust account and other short-term borrowings . . .
Long-term debt . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Other financial liabilities . . . . . . . . . . . . . . . . . . . . . . . . .
— 190,712
— 229,233
2,354
—
— 24,568
—
843
— 17,883
— 35,042
7,027
—
190,712
229,233
2,354
24,568
843
17,883
35,042
7,027
190,695
229,216
2,354
24,568
843
17,883
34,773
7,027
—
—
—
—
—
2,036
115,408
—
—
—
—
—
—
—
—
—
—
Notes:
(1)
Includes loans held for sale and collateral dependent loans measured at fair value on a nonrecurring basis. Refer to “Assets and Liabilities
Measured at Fair Value on a Nonrecurring Basis” for the details of the level classification.
(2) Excludes investments in equity method investees of ¥2,421 billion and ¥2,560 billion at March 31, 2020 and 2021, respectively.
The fair values of certain off-balance sheet financial instruments held for purposes other than trading,
including commitments to extend credit and commercial letters of credit, are estimated using the fees currently
charged to enter into similar agreements, taking into account the remaining terms of the agreements and the
credit quality. The aggregate fair value of such instruments at March 31, 2020 and 2021 was not material.
32. PARENT COMPANY ONLY FINANCIAL INFORMATION
Distributions of retained earnings of MUFG Bank and Mitsubishi UFJ Trust and Banking are restricted in
order to meet the minimum capital adequacy requirements under the Banking Law. Additionally, retained
earnings of these banking subsidiaries are restricted, except for approximately ¥5,247 billion and ¥5,155 billion,
in accordance with the statutory reserve requirements under the Companies Act at March 31, 2020 and 2021,
respectively. See Notes 19 and 21 for further information.
The Banking Law and related regulations restrict the ability of these banking subsidiaries to extend loans or
credit to the parent company. Such loans or credits to the parent company are generally limited to 15% of the
banking subsidiary’s consolidated total capital, as determined by the capital adequacy guidelines.
At March 31, 2020 and 2021, approximately ¥5,696 billion and ¥6,007 billion, respectively, of net assets of
consolidated subsidiaries may be restricted as to payment of cash dividends and loans to the parent company.
F-148
MITSUBISHI UFJ FINANCIAL GROUP, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
The following table presents the parent company only financial information of MUFG:
Condensed Balance Sheets
As of March 31,
2020
2021
(in millions)
Assets:
Cash and interest-earning deposits with banking subsidiaries . . . . . . . . . . . . . .
Investments in subsidiaries and affiliated companies . . . . . . . . . . . . . . . . . . . . .
Banking subsidiaries . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Non-banking subsidiaries and affiliated companies . . . . . . . . . . . . . . . . . .
Loans to subsidiaries . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Banking subsidiaries . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Non-banking subsidiaries . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Other assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
¥
185,668 ¥
16,116,568
12,361,190
3,755,378
8,746,231
8,222,278
523,953
241,441
229,380
16,658,522
12,793,367
3,865,155
9,208,439
8,690,696
517,743
197,231
Total assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
¥25,289,908 ¥ 26,293,572
Liabilities and Shareholders’ equity:
Short-term borrowings from banking subsidiaries . . . . . . . . . . . . . . . . . . . . . . .
Long-term debt from non-banking subsidiaries and affiliated companies . . . . .
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Long-term debt
Other liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
¥ 1,255,991 ¥ 1,206,694
15,897
9,226,046
183,986
30,686
8,758,646
228,098
Total liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
10,273,421
10,632,623
Total shareholders’ equity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
15,016,487
15,660,949
Total liabilities and shareholders’ equity . . . . . . . . . . . . . . . . . . . . . . . . . .
¥25,289,908 ¥ 26,293,572
F-149
MITSUBISHI UFJ FINANCIAL GROUP, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
Condensed Statements of Income
Income:
¥
Dividends from subsidiaries and affiliated companies . . . . . . . . .
Banking subsidiaries . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Non-banking subsidiaries and affiliated companies . . . . . . .
Management fees from subsidiaries . . . . . . . . . . . . . . . . . . . . . . .
Interest income from subsidiaries . . . . . . . . . . . . . . . . . . . . . . . . .
Foreign exchange gains (losses)—net . . . . . . . . . . . . . . . . . . . . . .
Trading account losses—net . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Gains on sales of investment in subsidiaries and affiliated
companies—net . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Other income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Total income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Expense:
Operating expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Interest expense to subsidiaries and affiliated companies . . . . . . .
Interest expense . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Other expense . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Total expense . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Fiscal years ended March 31,
2019
2020
2021
(in millions)
306,879
207,161
99,718
28,305
127,117
(20,598)
(8,078)
252,253
3,199
689,077
28,168
34,594
108,756
1,657
173,175
¥
¥
376,376
277,472
98,904
33,543
174,500
4,834
(37,272)
404,064
317,453
86,611
35,095
174,816
1,089
(18,285)
67,406
14,968
95
12,552
634,355
609,426
30,431
26,244
155,774
15,024
227,473
37,567
11,415
159,057
8,164
216,203
Equity in undistributed net income (loss) of subsidiaries and affiliated
companies—net . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
194,390
(108,069)
727,257
Income before income tax expense (benefit) . . . . . . . . . . . . . . . . . . . . .
Income tax expense (benefit) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
710,292
(8,353)
298,813
(7,142)
1,120,480
3,182
Net income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
¥
718,645
¥
305,955
¥ 1,117,298
F-150
MITSUBISHI UFJ FINANCIAL GROUP, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
Condensed Statements of Cash Flows
Fiscal years ended March 31,
2019
2020
2021
(in millions)
Operating activities:
Net income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Adjustments and other . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
¥
718,645
(351,775)
¥
305,955
(1,704)
¥ 1,117,298
(568,317)
Net cash provided by operating activities . . . . . . . . . . . . . . . . . . . . . . .
366,870
304,251
548,981
Investing activities:
Proceeds from redemption of other investment securities . . . . . .
Proceeds from sales of investment in subsidiaries and affiliated
—
240,000
—
companies . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
455,605
135,581
35,081
Purchase of equity investment in subsidiaries and an affiliated
company . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Net increase in loans to subsidiaries . . . . . . . . . . . . . . . . . . . . . . .
Other—net . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
(18,346)
(2,112,711)
(9,009)
—
(1,547,178)
(12,572)
—
(462,208)
(11,531)
Net cash used in investing activities . . . . . . . . . . . . . . . . . . . . . . . . . . .
(1,684,461)
(1,184,169)
(438,658)
Financing activities:
Net decrease in short-term borrowings from subsidiaries . . . . . . .
. . . . . . . . . . . . . . . . . .
Proceeds from issuance of long-term debt
Repayment of long-term debt
. . . . . . . . . . . . . . . . . . . . . . . . . . . .
Repayment of long-term debt to affiliated companies . . . . . . . . .
Proceeds from sales of treasury stock . . . . . . . . . . . . . . . . . . . . . .
Payments for acquisition of treasury stock . . . . . . . . . . . . . . . . . .
Dividends paid . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Other—net . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
(194,300)
2,043,677
(314)
(500)
3
(150,277)
(276,279)
(15,490)
Net cash provided by (used in) financing activities . . . . . . . . . . . . . . .
1,406,520
Net increase (decrease) in cash and cash equivalents . . . . . . . . . . . . . .
. . . . . . . . . . . . .
Cash and cash equivalents at beginning of fiscal year
88,929
114,784
(164,272)
1,844,488
(214,994)
(241,000)
2
(50,022)
(304,538)
(7,791)
861,873
(18,045)
203,713
(49,058)
831,121
(514,436)
(10,500)
1
(13)
(321,772)
(1,954)
(66,611)
43,712
185,668
Cash and cash equivalents at end of fiscal year
. . . . . . . . . . . . . . . . . .
¥
203,713
¥
185,668
¥
229,380
33. SUBSEQUENT EVENTS
Approval of Dividends
On June 29, 2021, the shareholders approved the payment of cash dividends of ¥12.5 per share of Common
stock, totaling ¥160,918 million, that were payable on June 30, 2021, to the shareholders of record on March 31,
2021.
* * * * *
F-151
Exhibit
Description
EXHIBIT INDEX
1(a)
1(b)
1(c)
1(d)
1(e)
1(f)
1(g)
1(h)
2(a)
2(b)
2(c)
8
11
12
13
15(a)
15(b)
99(a)
99(b)
Articles of Incorporation of Mitsubishi UFJ Financial Group, Inc., as amended on July 6, 2018
(English translation)*
Board of Directors Regulations of Mitsubishi UFJ Financial Group, Inc., as amended on
June 25, 2015 (English translation)*
Corporation Meetings Regulations of Mitsubishi UFJ Financial Group, Inc., as amended on
April 1, 2021 (English translation)
Share Handling Regulations of Mitsubishi UFJ Financial Group, Inc., as amended on June 25,
2015 (English Translation)**
Charter of the Audit Committee of Mitsubishi UFJ Financial Group, Inc., as amended on July 1,
2018 (English translation)*
Charter of the Compensation Committee of Mitsubishi UFJ Financial Group, Inc., as amended
on July 1, 2018 (English translation)*
Charter of the Nominating and Governance Committee of Mitsubishi UFJ Financial Group,
Inc., as amended on July 1, 2018 (English translation)*
Charter of the Risk Committee of Mitsubishi UFJ Financial Group, Inc., as amended on July 1,
2018 (English translation)*
Form of American Depositary Receipt*
Form of Deposit Agreement, amended and restated as of December 22, 2004, among Mitsubishi
Tokyo Financial Group, Inc. (subsequently renamed Mitsubishi UFJ Financial Group, Inc.), The
Bank of New York Mellon and the holders from time to time of American Depositary Receipts
issued thereunder*
Description of Securities
Subsidiaries of the Company—see “Item 4.C. Information on the Company—Organizational
Structure.”
MUFG Group Code of Conduct, Compliance Rules, Compliance Manual, and Rules of
Employment of Mitsubishi UFJ Financial Group, Inc. applicable to its principal executive
officer, principal financial officer, principal accounting officer and persons performing similar
functions (English translation of relevant sections)
Certifications required by Rule 13a-14(a) (17 CFR 240.13a-14(a)) or Rule 15d-14(a)
(17 CFR 240.15d-14(a))
Certifications required by Rule 13a-14(b) (17 CFR 240.13a-14(b)) or Rule 15d-14(b)
(17 CFR 240.15d-14(b)) and Section 1350 of Chapter 63 of Title 18 of the United States Code
(18 U.S.C. 1350)
Consent of independent registered public accounting firm (Deloitte Touche Tohmatsu LLC)
Consent of independent registered public accounting firm (Deloitte & Touche LLP)
Capitalization and Indebtedness of Mitsubishi UFJ Financial Group, Inc. as of March 31,
2021***
Unaudited Reverse Reconciliation of Selected Financial Information of Mitsubishi UFJ
Financial Group, Inc. as of and for the fiscal year ended March 31, 2021****
99(c)
Financial Statements and Supplementary Data of Morgan Stanley*****
101.INS
Inline XBRL Instance Document—the instance document does not appear in the Interactive
Data File because its XBRL tags are embedded within the Inline XBRL document
101.SCH
Inline XBRL Taxonomy Extension Schema Document
Exhibit
Description
101.CAL
Inline XBRL Taxonomy Extension Calculation Linkbase Document
101.DEF
Inline XBRL Taxonomy Extension Definition Linkbase Document
101.LAB
Inline XBRL Taxonomy Extension Label Linkbase Document
101.PRE
Inline XBRL Taxonomy Extension Presentation Linkbase Document
104
Notes:
*
**
***
****
*****
The cover page for the Company’s Annual Report on From 20-F for the year ended March 31,
2021, has been formatted in Inline XBRL
Incorporated by reference to our annual report on Form 20-F (File No. 000-54189) filed on July 12, 2018.
Incorporated by reference to our registration statement on Form S-8 (File No. 333-230590) filed on March 29, 2019.
Deemed to be incorporated by reference into the registration statement on Form F-3 (No. 333-242048) of Mitsubishi UFJ Financial
Group, Inc. and to be a part thereof.
Deemed to be incorporated as Annex A to the registration statement on Form F-3 (No. 333-242048) of Mitsubishi UFJ Financial
Group, Inc. and to be a part thereof.
Incorporated by reference to Morgan Stanley’s annual report on Form 10-K (File No. 001-11758) filed on February 26, 2021.
The registrant hereby certifies that it meets all of the requirements for filing on Form 20-F and that it has
duly caused and authorized the undersigned to sign this Annual Report on its behalf.
Signature
MITSUBISHI UFJ FINANCIAL GROUP, INC.
By:
Name:
Title:
/s/ HIRONORI KAMEZAWA
Hironori Kamezawa
President & Group Chief Executive Officer
Date: July 9, 2021
[Translation]
Exhibit 1(c)
CORPORATION MEETINGS REGULATIONS
Chapter I. General Provisions
Article 1. General Provisions
1.
These Rules shall govern the structure and operation of both the Executive Committee (as provided for in
Article 11 of the Office Organization Rules) and Committees (as provided for in Article 12 of the Office
Organization Rules).
2. Corporate Policy Meetings shall be held to help in the discussion and decision making of the Executive
Committee. These Rules shall govern the structure and operation of Corporate Policy Meetings.
Article 2. Amendment and Abolition
The amendment and abolition of these Rules shall be determined by resolution of the Executive Committee.
Article 3. Jurisdiction
The Corporate Planning Division has jurisdiction over these Rules.
Chapter II. Executive Committee
Article 4. Members and Attendees
1.
2.
3.
The Executive Committee shall consist of all Representative Corporate Executives, as well as Corporate
Executives and Executive Officers nominated by the President & CEO of the Company (“Committee
Members”).
The President & CEO may, if they deem necessary, require Group C-Suite to attend meetings of the
Executive Committee as members.
The President & CEO may, if they deem it necessary, require any of the Members of the Board of Directors
other than the Committee Members, the Executive Officers and the Members of the Board of Directors of
relevant subsidiaries of the Company, etc., to attend meetings of the Executive Committee.
4. Members of the Audit Committee may attend meetings of the Executive Committee.
Article 5. Chairman
1.
2.
The President & CEO shall convene meetings of the Executive Committee and shall preside over the
meetings.
If the President & CEO is unable to act as such, one of the other Corporate Executives shall act in their
place, in accordance with the order of priority previously determined by the Executive Committee.
Article 6. Meeting Dates
Meetings of the Executive Committee shall be held, in principle, once every two (2) weeks; however, they
may be held at any time if the need arises.
Article 7. Matters to be Discussed and Determined
1.
The Executive Committee shall, in principle, discuss and determine the following general important matters
concerning management of the Company pursuant to the basic policies determined by the Board of
Directors:
1) Matters entrusted by the Board of Directors;
2) Matters concerning execution of policies concerning general management and control of the Company;
3) Matters concerning company financial results;
4) Matters concerning company shares, etc.;
5) Matters concerning nominations, compensation, etc.;
6) Matters concerning important matters concerning the subsidiaries of the Company, etc.;
7) Matters concerning important matters concerning the administration and management of the
subsidiaries of the Company, etc.;
8) Matters concerning the establishment of, amendment to and abolition of rules, etc.;
9) Matters concerning regulatory compliance and risk management;
10) Matters required to be submitted to the Executive Committee by provisions stipulated in various rules
and regulations; and
11) Any other matters requiring executive action.
2.
The matters to be discussed and determined set forth in the preceding paragraph shall be submitted by any
of the Committee Members in control of such matters, or Group C-Suite and Heads of the Business Groups
pursuant to Article 4 Paragraph 2, or any of the Members of the Board of Directors other than the
Committee Members or the Executive Officers pursuant to Article 4 Paragraph 3.
Article 8. Method of Discussion and Determination
1.
2.
The proceedings of a meeting of the Executive Committee shall be determined by the President & CEO with
the unanimous consent of all the Committee Members present who shall constitute in number a majority of
the Committee Members.
If unanimous consent is not given by the Committee Members present at a meeting, the President & CEO
shall determine the relevant items of business with consideration to the opinions of all Members present,
upon consultation with the Chairman, or in the event a Deputy Chairman is appointed, with the Chairman
and the Deputy Chairman.
Article 9. Discussion and Determination in Writing
1. Notwithstanding the provisions of Article 7, in special circumstances, the circulation of a written resolution
drafted by the person making such proposal may be substituted for the holding of a meeting of the Executive
Committee.
2.
In the case of the preceding paragraph, the person making such proposal must report to the next Executive
Committee meeting on the matters discussed and determined.
Article 10. Emergency Procedures
1.
2.
In case of emergency, such as a natural disaster, etc., if there is no time for discussion at the Executive
Committee or for circulation of a written resolution, irrespective of the provisions set forth in Article 7, the
President & CEO may take any and all expedient steps as may be necessary as matters of urgency.
In the case of the preceding paragraph, the President & CEO shall immediately report on such steps to the
Executive Committee.
Article 11. Reporting and Exchange of Information
Each of the Committee Members or Group C-Suite and Heads of the Business Groups pursuant to Article 4
Paragraph 2, or any of the Members of the Board of Directors other than the Committee Members or the
Executive Officers pursuant to Article 4 Paragraph 3 shall, at meetings of the Executive Committee, report on the
state of execution of their duties and shall also exchange general information with one another.
Article 12. Meeting Minutes
The Corporate Administration Division shall record a summary of the proceedings of meetings of the
Executive Committee and the results thereof in the minutes, and the President & CEO shall sign their name or
affix their seal to such minutes, which shall then be kept at the Company Head Office for ten (10) years.
Article 13. Communication
The matters resolved by the Executive Committee shall be rapidly communicated to the relevant Executive
Officers and Heads of Divisions, etc.
Chapter III. Committees
Article 14. Purpose and Matters to be Deliberated
1. A committee shall arrange, examine and deliberate on the following matters upon a mandate given by the
President & CEO in order to contribute to the discussions and decision-making of the Executive Committee.
1. Matters concerning management policies of the entire group;
2. Matters concerning management plans of the entire group;
3. Matters concerning risk management of the entire group;
4. Matters concerning the setting up of management and execution policies among the subsidiaries of the
Company; and
5. Any other specified matters necessary for deliberation by the Executive Committee.
Article 15. Establishment and Membership
1.
2.
The Executive Committee shall establish a committee, which shall consist of several members appointed by
the chairman thereof.
The chairman of the committee may appoint Members of the Board of Directors with Executive Power, etc.
of the subsidiaries of the Company to be members, as described in the preceding paragraph.
Article 16. Chairman
1.
2.
3.
4.
5.
Each committee shall have a chairman.
The chairman of the committee shall preside over the committee.
The committee may have a vice-chairman if necessary.
The President & CEO shall appoint a chairman and a vice-chairman of the committee from among its
members.
If the chairman of the committee is prevented from acting as such, the vice-chairman or any other member
appointed by the President & CEO shall act on the chairman’s behalf.
Article 17. Secretariat
1.
2.
Each committee shall have a secretariat.
The secretariat shall be under the direction of the chairman of the committee and shall be responsible for
committee administrative matters.
Article 18. Convocation
The chairman of the committee shall convene meetings of the committee.
Article 19. Deliberation
1.
2.
3.
4.
Each time a committee meeting is held, the chairman may decide attendees in accordance with matters to be
deliberated in the committee. Committee members must make efforts to attend meetings of their committees
where they shall carefully and actively discuss matters from the viewpoint of the Group as a whole, so that
the deliberations of the committee can be completed in a timely manner.
If a member is to be absent from a meeting, they may submit their written opinions to the head of the
secretariat in advance.
If necessary, the committee may require persons concerned to attend a meeting of the committee so that the
committee may hear their opinions.
If necessary, the committee may require a division or subsidiary of the Company, etc. to submit materials or
to make other cooperative efforts.
Article 20. Submissions and Reports
1.
2.
3.
The chairman of the committee or a member of the committee nominated by the chairman shall, from time
to time, submit or report on important matters deliberated at the committee to the Executive Committee.
In reports set forth in the preceding paragraph the minority opinions of the committee must be included.
If a long period of time is required for the deliberations in Article 20 Paragraph 1 the chairman of the
committee or a member of the committee nominated by the chairman must provide interim reports to the
Executive Committee about the state of the deliberations.
Article 21. Working Groups
A committee may establish working groups to ensure smooth deliberation.
Chapter IV. Corporate Policy Meetings
Article 22. Purpose and Matters to be Deliberated
The purpose of Corporate Policy Meetings is to exchange views from a wide range of perspectives and
discuss the basic direction of important matters with regard to the management and administration of the
Company Group on a consolidated basis, to contribute to decision-making at the Executive Committee.
Article 23. Composition
Corporate Policy Meetings shall consist of relevant Executive Committee Members, relevant Members of
the Board of Directors, Corporate Executives, Executive Officers and Heads of Divisions, and Members of the
Board of Directors, etc. of relevant subsidiaries of the Company.
Article 24. Meeting Dates
Corporate Policy Meetings shall be held whenever required.
Article 25. Secretariat
The secretariat of Corporate Policy Meetings shall share jurisdiction with the Corporate Planning Division
over matters to be deliberated.
Article 26. Submissions and Reports
In principle, matters to be deliberated at Corporate Policy Meetings shall be submitted or reported to the
Executive Committee.
Chapter V. Business Group Management Meetings
Article 27. Purpose and Matters to be Deliberated
Business Group Management Meetings shall be established in each Business Group under Article 6 of the
Office Organization Rules to deliberate and exchange views from a wide range of perspectives regarding the
management of the Business Group, and to contribute to the management of the Business Group.
Article 28. Composition
Business Group Management Meetings shall consist of the Head of the Business Group, relevant Executive
Committee Members, relevant Members of the Board of Directors, Corporate Executives, Executive Officers and
Heads of Divisions, and Members of the Board of Directors, etc. of relevant subsidiaries of the Company.
Article 29. Holding of meetings
Business Group Management Meetings shall be held in each Business Group, in principle two (2) times a
year.
Article 30. Secretariat
The Corporate Planning Division and the division in charge of planning in each Business Group shall jointly
be responsible for being the secretariat of Business Group Management Meetings.
Article 31. Purpose and Matters to be Deliberated
Chapter VI. Unit Management Meetings
Unit Management Meetings shall be held by each Unit organized pursuant to the provisions under Articles
7, 8, 9, 10, 11 and 12 of the Rules of Organization for the purposes of exchanging opinions and deliberating on
the Unit’s operations from a broad perspective, thereby aiming to contribute to the management of the Unit.
Article 32. Composition
The members of each Unit Management Meeting shall be composed of the Head of the Business Group that
is responsible for the Unit, the Head of the Unit, the relevant Members of the Executive Committee, relevant
Members of the Board of Directors, and relevant Corporate Executives, Executive Officers and Heads of
Divisions, as well as Members of the Board of Directors, etc. of relevant subsidiaries.
Article 33. Holding of meetings
Unit Management Meetings shall be held by each Unit, in principle, two (2) times a year.
Article 34. Secretariat
The Corporate Planning Division, the division in charge of planning in each Business Group and the
division in charge of planning in each Unit shall jointly be responsible for acting as the secretariat for the Unit
Management Meetings of the Unit.
Article 35. Purpose and Matters to be Deliberated
Chapter VII. Human Resource Management Meetings
Human Resource Management Meetings shall be held for the purposes of exchanging opinions and
deliberating on the human resources operations from a broad perspective, thereby aiming to contribute to the
management of human resources.
Article 36. Composition
The members of Human Resource Management Meetings shall be composed of the relevant Members of the
Executive Committee, relevant Members of the Board of Directors, and relevant Corporate Executives,
Executive Officers and Heads of Divisions, as well as Members of the Board of Directors, etc. of relevant
subsidiaries.
Article 37. Holding of meetings
Human Resource Management Meetings shall be held, in principle, one (1) time a year.
Article 38. Secretariat
The secretariat of Human Resource Management Meetings shall share jurisdiction with the Corporate
Planning Division over matters to be deliberated.
Article 39. Purpose and Matters to be deliberated
Chapter VIII. Information Systems Management Meetings
Information Systems Management Meetings shall be held to deliberate and exchange views from a wide
range of perspectives regarding the information system operations in MUFG Group, and to contribute to the
management of them.
Article 40. Composition
Information Systems Management Meetings shall consist of relevant Executive Committee Members,
relevant Members of the Board of Directors, Corporate Executives, Executive Officers and Heads of Divisions,
and Members of the Board of Directors, etc. of relevant subsidiaries.
Article 41. Holding of meetings
Information Systems Management Meetings shall be held in principle one (1) time a year.
Article 42. Secretariat
The secretariat of Information Systems Management Meetings shall share jurisdiction with the Corporate
Planning Division over matters to be deliberated.
Article 43. Purpose and Matters to be Deliberated.
Chapter IX. Facility Management Meetings
Facility Management Meetings shall be held to deliberate and exchange views from a wide range of
perspectives regarding facility operations in MUFG Group, and to contribute to the management of facilities.
Article 44. Composition
Facility Management Meetings shall consist of relevant Executive Committee Members, relevant Members
of the Board of Directors, Corporate Executives, Executive Officers and Heads of Divisions, and Members of the
Board of Directors, etc. of relevant subsidiaries.
Article 45. Holding of meetings.
Facility Management Meetings shall be held in principle one (1) time a year.
Article 46. Secretariat
The secretariat of Facility Management Meetings shall share jurisdiction with the Corporate Planning
Division over matters to be deliberated.
1.
These Rules shall become effective as from October 1, 2005.
Supplementary Provisions
Amendment History
July 31, 2006
Amendment to Article 4 Paragraph 2
December 24, 2010
Changes to layout by chapters.
April 1, 2013
May 14, 2014
Amendment to Article 4
Amendment to Article 3, Article 4
March 31, 2015
Amendment to Article 22, Article 24, Article 25
April 1, 2015
June 23, 2015
June 25, 2015
July 3, 2015
Addition of Chapter V. (Article 27, Article 28, Article 29)
Rules in effect
Addition to Article 3, number of other Articles moved down. Amendment to
Article 2, Article 4, Article 5, Article 7, Article 8, Article 10, Article 11, Article 12,
Article 14, Article 15, Article 16, Article 23, Article 28
Rules in effect
Amendment to Article 4, Article 7, Article 11, Article 27, Article 28, Article 29,
Article 30
Rules in effect
July 1, 2018
Addition of Chapter VI. (Article 31, Article 32, Article 33, Article 34)
Rules in effect
March 1, 2019
Addition of Chapter VII. (Article 35, Article 36, Article 37, Article 38)
Addition of Chapter VIII. (Article 39, Article 40, Article 41, Article 42)
October 7, 2019
Addition of Chapter IX. (Article 43, Article 44, Article 45, Article 46)
Rules in effect
Rules in effect
April 1, 2021
Amendment to Chapter II. (Article 4 Paragraph 2), Chapter III (Article 15
Paragraph 1, Article 19 Paragraphs 1 and 2)
Rules in effect
DESCRIPTION OF SECURITIES
Exhibit 2(c)
Common Stock
We summarize below the material provisions of our Articles of Incorporation, our share handling
regulations and the Companies Act as they relate to a type of joint stock company known as kabushiki kaisha,
within which we fall. Because it is a summary, this discussion should be read together with our Articles of
Incorporation and share handling regulations, each attached as an exhibit to our annual report on Form 20-F.
General
A joint stock company is a legal entity incorporated under the Companies Act. The investment and rights of
the shareholders of a joint stock company are represented by shares of stock in the company and shareholders’
liability is limited to the amount of the subscription for the shares. Our authorized common share capital is
comprised of 33,000,000,000 shares of common stock with no par value.
We may issue shares from our authorized but unissued share capital following a resolution to that effect by
our board of directors. An increase in our authorized share capital is only possible by amendment of our Articles
of Incorporation, which generally requires shareholders’ special approval.
In order to assert shareholder rights against us, a shareholder must have its name and address registered on
our register of shareholders in accordance with the Companies Act and our share handling regulations. The
registered holder of deposited shares underlying the ADSs is the depositary for the ADSs, or its nominee.
Accordingly, holders of ADSs will not be able to assert shareholder rights other than as provided in the
agreement among us, the depositary and the holders of the ADSs.
Under the Act on Book-Entry Transfer of Company Bonds, Shares, etc., the shares of all Japanese
companies listed on any Japanese stock exchange, including our shares, are traded without share certificates
through entry in the books maintained under a central clearing system.
Dividends
Dividends are distributed in proportion to the number of shares owned by each shareholder on the record
date for the dividend. Dividends for each financial period may be distributed following shareholders’ approval at
a general meeting of shareholders.
Payment of dividends on common stock is subject to the preferential dividend rights of holders of preferred
stock.
Under the Banking Law and our Articles of Incorporation, our financial accounts are closed on March 31 of
each year, and dividends, if any, are paid to shareholders of record as of March 31 following shareholders’
approval at a general meeting of shareholders. In addition to year-end dividends, our board of directors may by
resolution declare an interim cash dividend to shareholders of record as of September 30 of each year. Under the
Companies Act, distribution of dividends will take the form of distribution of surplus (as defined below). We will
be permitted to make distributions of surplus to our shareholders any number of times per fiscal year pursuant to
resolutions of our general meetings of shareholders, subject to certain limitations described below. Distributions
of surplus are in principle required to be authorized by a resolution of a general meeting of shareholders.
Distributions of surplus would, however, be permitted to be made pursuant to a resolution of our board of
directors if:
(a) our Articles of Incorporation so provide (our Articles of Incorporation currently contain no such
provisions);
1
(b)
the normal term of office of our directors is one year; and
(c)
certain conditions concerning our non-consolidated annual financial statements and certain documents
for the latest fiscal year as required by an ordinance of the Ministry of Justice are satisfied.
In an exception to the above rule, even if the requirements described in (a) through (c) are not met, we are
permitted to make distributions of surplus in cash to our shareholders by resolutions of the board of directors
once per fiscal year as mentioned above concerning interim cash dividend.
Under the Companies Act, distributions of surplus may be made in cash or in kind in proportion to the
number of shares of common stock held by each shareholder. A resolution of a general meeting of shareholders
or our board of directors authorizing a distribution of surplus must specify the kind and aggregate book value of
the assets to be distributed, the manner of allocation of such assets to shareholders, and the effective date of the
distribution. If a distribution of surplus is to be made in kind, we may, pursuant to a resolution of a general
meeting of shareholders or (as the case may be) our board of directors, grant to our shareholders the right to
require us to make such distribution in cash instead of in kind. If no such right is granted to shareholders, the
relevant distribution of surplus must be approved by a special resolution of a general meeting of shareholders.
See “Common Stock—Voting Rights” below.
Under the Companies Act, we may make distributions of surplus to the extent that the aggregate book value
of the assets to be distributed to shareholders does not exceed the distributable amount (as defined below) as of
the effective date of such distributions of surplus. The amount of surplus (the “surplus”) at any given time shall
be the amount of our assets and the book value of our treasury stock after subtracting the amounts of items (1)
through (5) below as they appear on our non-consolidated balance sheet as of the end of our last fiscal year, and
after reflecting the changes in our surplus after the end of our last fiscal year, by adding the amounts of items (6),
(7) and (8) below and/or subtracting the amounts of items (9), (10) and (11) below:
(1) our liabilities;
(2) our stated capital;
(3) our additional paid-in capital;
(4) our accumulated legal reserve;
(5) other amounts as are set out in an ordinance of the Ministry of Justice;
(6)
(7)
(8)
(if we transferred our treasury stock after the end of the last fiscal year) the transfer price of our
treasury stock after subtracting the book value thereof;
(if we decreased our stated capital after the end of the last fiscal year) the amount of decrease in our
stated capital (excluding the amount transferred to additional paid-in capital or legal reserve);
(if we decreased our additional paid-in capital or legal reserve after the end of the last fiscal year) the
amount of decrease in our additional paid-in capital or legal reserve (excluding the amount transferred
to stated capital);
(9)
(if we cancelled our treasury stock after the end of the last fiscal year) the book value of the cancelled
treasury stock;
(10) (if we distributed surplus to shareholders after the end of the last fiscal year) the amount of the assets
distributed to shareholders by way of such distribution of surplus; and
(11) other amounts as are set out in an ordinance of the Ministry of Justice.
A distributable amount (the “distributable amount”) at any given time shall be the aggregate amount of
(a) the surplus, (b) the amount of profit as recorded for the period after the end of our last fiscal year until the
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date of an extraordinary settlement of account (if any) as is set out in an ordinance of the Ministry of Justice and
(c) the transfer price of our treasury stock in the same period, after subtracting the amounts of the following
items:
(1)
the book value of our treasury stock;
(2)
(3)
(if we transferred our treasury stock after the end of the last fiscal year) the transfer price of our
treasury stock;
the losses recorded for the period after the end of our last fiscal year until the date of an extraordinary
settlement of account (if any) as set out in an ordinance of the Ministry of Justice; and
(4) other amounts as set out in an ordinance of the Ministry of Justice.
In Japan, the “ex-dividend” date and the record date for any dividends precede the date of determination of
the amount of the dividend to be paid. The market price of shares generally becomes ex-dividend on the second
business day prior to the record date. Under our Articles of Incorporation, we are not obligated to pay any
dividends which are left unclaimed for a period of five years after the date on which they first became payable.
Capital and Reserves
Under the Companies Act, we may reduce our additional paid-in capital or legal reserve (without limitation
as to the amount of such reduction) generally by resolution of a general meeting of shareholders and, if so
resolved in the same resolution, may account for the whole or any part of the amount of such reduction as stated
capital. We may also reduce our stated capital generally by special resolution of a general meeting of
shareholders and, if so resolved in the same resolution, such reduction may account for the whole or any part of
the amount of such reduction as additional paid-in capital or legal reserve. Conversely, we may reduce our
surplus and increase either (i) stated capital or (ii) additional paid-in capital and/or legal reserve by the same
amount, in either case by resolution of a general meeting of shareholders.
Stock Splits
Stock splits of our outstanding stock may be effected at any time by resolution of the board of directors.
When a stock split is to be effected, we may increase the authorized share capital to cover the number of shares
to be increased by the stock split by amending our Articles of Incorporation by resolution of the board of
directors without approval by special resolution of the general meeting of shareholders, unless more than one
class of stock is issued and outstanding. We must give public notice of the stock split, specifying a record date at
least two weeks prior to the record date.
Unit Share (tan-gen kabu) System
We have adopted a unit share system, where 100 shares of either common or preferred stock shall each
constitute a unit.
Under the unit share system, each unit is entitled to one voting right. A holder of less than one unit has no
voting right. Our Articles of Incorporation provide that the holders of shares constituting less than a full unit will
not have shareholder rights except for those specified in the Companies Act or an ordinance of the Ministry of
Justice, including rights (i) to receive dividends, (ii) to receive cash or other assets in case of consolidation or
split of shares, stock-for-stock exchange or stock-for-stock transfer, corporate split or merger or (iii) to be
allotted rights to subscribe for free for new shares and stock acquisition rights when such rights are granted to
shareholders. Shareholders may require us to purchase shares constituting less than a unit at the current market
price. In addition, holders of shares constituting less than a unit may require us to sell them such number of
shares, which, when combined with the number of shares already held by such holder, shall constitute a whole
unit of share; provided that we will be obliged to comply with such request only when we own a sufficient
number of shares to accommodate the desired sale and purchase. The board of directors may reduce the number
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of shares constituting a unit or cease to use the unit share system by amendments to the Articles of Incorporation
without shareholders’ approval even though amendments to the Articles of Incorporation generally require a
special resolution of the general meeting of shareholders.
General Meeting of Shareholders
The ordinary general meeting of our shareholders is usually held in June of each year in Tokyo. In addition,
we may hold an extraordinary general meeting of shareholders whenever necessary by giving at least two weeks’
advance notice to shareholders who are entitled to vote at the relevant general meeting of shareholders. The
record date for ordinary general meetings of our shareholders is March 31.
Any shareholder holding at least 300 voting rights or 1% of the total number of voting rights for six
consecutive months or longer may propose a matter to be considered at a general meeting of shareholders by
submitting a written request to a director at least eight weeks prior to the date of the meeting. We may limit the
number of matters that can be proposed by an eligible shareholder to 10. The number of minimum voting rights,
minimum percentage and time period necessary for exercising the minority shareholder rights described above
may be decreased or shortened if our Articles of Incorporation so provide. Our Articles of Incorporation
currently contain no such provisions.
Voting Rights
A holder of shares of our common stock is generally entitled to one voting right for each unit of common
stock held. The following shares of common stock are not entitled to voting rights even when such shares
constitute a whole unit, and such shares of common stock are not considered when determining whether a
quorum exists for a shareholders’ meeting:
‰
‰
‰
treasury stock;
shares held by a company in which we and/or our subsidiaries own 25% or more of the total voting
rights; and
shares issued after the record date as a result of conversion of convertible stock, exercise of stock
acquisition rights, and fractional shareholders becoming a shareholder of a whole unit share.
On the other hand, holders of certain class of preferred stock shall be entitled to a voting right for each unit
of preferred stock held under certain conditions provided for by relevant laws or regulations and our Articles of
Incorporation, for example, when a proposal to pay the full amount of preferential dividends on any class of
preferred stock in compliance with the terms of such preferred stock is not included in the agenda of the relevant
shareholders meeting. See “Preferred Stock” below.
Under our Articles of Incorporation, except as otherwise provided by law or by other provisions of our
Articles of Incorporation, a resolution can be adopted at a shareholders’ meeting by the holders of a majority of
the voting rights represented at the meeting. The Companies Act and our Articles of Incorporation require a
quorum of not less than one-third of the total number of voting rights for election of our directors.
The Companies Act and our Articles of Incorporation provide that a quorum of not less than one-third of
outstanding voting rights, excluding those owned by our subsidiaries and affiliates of which we own, directly or
indirectly, 25 percent or more, must be present at a shareholders’ meeting to approve specified corporate actions,
such as:
‰
‰
‰
the amendment of our Articles of Incorporation, except in some limited cases;
the repurchase of our own stock from a specific shareholder other than our subsidiary;
the consolidation of shares;
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‰
‰
‰
‰
‰
‰
‰
‰
‰
the offering to persons other than shareholders of stock at a specially favorable price, or of stock
acquisition rights or bonds or notes with stock acquisition rights with specially favorable conditions;
the exemption from liability of a director or corporate auditor, with certain exceptions;
a reduction in stated capital with certain exceptions in which a shareholders’ resolution is not required;
a distribution of in-kind dividends which meets certain requirements;
the transfer of the whole or an important part of our business, except in some limited circumstances;
the acquisition of the whole business of another company, except in some limited circumstances;
a dissolution, merger or consolidation, except for certain types of mergers;
a stock-for-stock exchange (kabushiki-kokan) or stock-for-stock transfer (kabushiki-iten), except in
some limited circumstances; and
a corporate split, except in some limited circumstances.
A special resolution representing at least two-thirds of the voting rights represented at the meeting is
required to approve these actions.
Our Articles of Incorporation do not include any provision that grants shareholders cumulative voting rights
at elections of directors.
Subscription Rights
Holders of our shares have no preemptive rights under our Articles of Incorporation. Under the Companies
Act, however, our board of directors may determine that shareholders be given subscription rights in connection
with a particular issue of new shares. In this case, these subscription rights must be given on uniform terms to all
shareholders, and if a specified record date is set, it must be announced in a public notice at least two weeks prior
to the record date. A notification to each individual shareholder must also be given at least two weeks prior to the
subscription date.
Under the Companies Act, rights to subscribe for new shares may not be transferred; however, we may allot
stock acquisition rights to shareholders without consideration, and such rights will be transferable.
Stock Acquisition Rights
We may issue stock acquisition rights (shinkabu yoyakuken), which in the United States are often in the
form of warrants, or bonds with stock acquisition rights that cannot be detached (shinkabu yoyakuken-tsuki
shasai), which in the United States are often in the form of convertible bonds or bonds with non-detachable
warrants. Except where the issuance would be on “specially favorable” conditions, the issuance of stock
acquisition rights or bonds with stock acquisition rights may be authorized by a resolution of our board of
directors. Upon exercise of the stock acquisition rights, the holder of such rights may acquire shares by paying
the applicable exercise price or, if so determined by a resolution of our board of directors, by making a substitute
payment, such as having the convertible bonds redeemed for no cash in lieu of the exercise price.
Liquidation Rights
Upon our liquidation, the assets remaining after payment of all debts, liquidation expenses, taxes and
preferred distributions to holders of shares of our preferred stock will be distributed among the holders of shares
of our common stock in proportion to the number of shares they own.
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Transfer Agent
Mitsubishi UFJ Trust and Banking is the transfer agent for our common stock. The office of Mitsubishi UFJ
Trust and Banking for this purpose is located at 4-5, Marunouchi 1-chome, Chiyoda-ku, Tokyo 100-8212, Japan.
Mitsubishi UFJ Trust and Banking maintains our register of shareholders.
Reports to Shareholders
We furnish to our shareholders notices, in Japanese, of shareholders’ meetings, annual business reports,
including our financial statements, and notices of resolutions adopted at our shareholders’ meetings.
Record Dates
As stated above, March 31 is the record date for the payment of annual dividends (if any), the determination
of shareholders entitled to vote at ordinary general meetings of our shareholders, and the determination of class
shareholders entitled to vote at meetings of our class shareholders if any matter to be resolved at an ordinary
general meeting of our shareholders requires a resolution by our class shareholders in addition to a resolution by
our shareholders. September 30 is the record date for the payment of interim dividends, if any. In addition, by a
resolution of our board of directors and after giving at least two weeks’ prior public notice, we may at any time
set a record date in order to determine the shareholders who are entitled to the rights pertaining to our shares.
Repurchase of Our Shares
We may repurchase our own shares:
‰
‰
‰
‰
‰
through the Tokyo Stock Exchange or other stock exchanges on which our shares are listed, if
authorized by a resolution of a general meeting of shareholders or our board of directors;
by way of a tender offer, if authorized by a resolution of a general meeting of shareholders or our board
of directors;
from a specific party, if authorized by a special resolution of a general meeting of shareholders and we
give notice thereof to shareholders prior to such general meeting, in general;
from all shareholders of a specific class of shares offering to sell their shares, if authorized by a
resolution of a general meeting of shareholders or our board of directors and we give a public notice or
notice thereof to all of the shareholders (if we repurchase any class of preferred stock, notices to all
shareholders of the relevant class of preferred stock); or
from our subsidiaries, if authorized by a resolution of the board of directors.
When the repurchase is made by us from a specific party, as authorized by a special resolution of a general
meeting of shareholders, any shareholder may make a demand to a director, five days or more prior to the
relevant shareholders’ meeting, that we also repurchase the shares held by that shareholder. However, no such
right will be available if the shares have a market price, and if the purchase price does not exceed the then market
price calculated in a manner set forth in an ordinance of the Ministry of Justice.
Repurchase of our own shares described above must satisfy various specified requirements. In general, the
same restrictions on the distributable amount as described in the seventh paragraph under “—Common Stock—
Dividends.” are applicable to the repurchase of our own shares, so the total amount of the repurchase price may
not exceed the distributable amount.
We may hold our own shares so repurchased without restrictions. In addition, we may cancel or dispose of
our repurchased shares by a resolution of our board of directors.
6
American Depositary Shares
The Bank of New York Mellon will issue ADRs. Each ADR will represent ownership interests in ADSs.
Each ADS represents one share of our common stock. Each ADS is held by MUFG Bank, acting as custodian, at
its principal office in Tokyo, on behalf of The Bank of New York Mellon, acting as depositary. Each ADS will
also represent securities, cash or other property deposited with The Bank of New York Mellon but not distributed
to ADS holders. The Bank of New York Mellon’s corporate trust office is located at 240 Greenwich Street,
New York, New York 10286 and its principal executive office is located at 240 Greenwich Street, New York,
New York 10286.
You may hold ADSs either directly or indirectly through your broker or other financial institution. If you
hold ADSs directly, you are an ADS holder. This description assumes you hold your ADSs directly. If you hold
the ADSs indirectly, you must rely on the procedures of your broker or other financial institution to assert the
rights of ADS holders described herein. You should consult with your broker or financial institution to find out
what those procedures are.
The Bank of New York Mellon will actually be the registered holder of the common stock, so you will have
to rely on it to exercise your rights as a shareholder. Our obligations and the obligations of The Bank of
New York Mellon are set out in a deposit agreement among us, The Bank of New York Mellon and you, as an
ADS holder. The deposit agreement and the ADSs are governed by New York law.
The following is a summary of the material terms of the deposit agreement. Because it is a summary, it does
not contain all the information that may be important to you. For more complete information, you should read the
entire deposit agreement and the form of ADR, each attached as an exhibit to our annual report on Form 20-F.
Share Dividends and Other Distributions
The Bank of New York Mellon has agreed to pay to you the cash dividends or other distributions it or the
custodian receives on shares of common stock or other deposited securities, after deducting its fees and expenses.
You will receive these distributions in proportion to the number of shares your ADSs represent.
Cash. The Bank of New York Mellon will convert any cash dividend or other cash distribution we pay on
our common stock into U.S. dollars, if it can do so on a reasonable basis and can transfer the U.S. dollars to the
United States. If that is not possible or if any approval from the Japanese government is needed and cannot be
obtained, the deposit agreement allows The Bank of New York Mellon to distribute the Japanese yen only to
those ADS holders to whom it is possible to do so. The Bank of New York Mellon will hold the Japanese yen it
cannot convert for the account of the ADS holders who have not been paid. It will not invest the Japanese yen
and it will not be liable for any interest.
Before making a distribution, any withholding taxes that must be paid under Japanese law will be deducted.
The Bank of New York Mellon will distribute only whole U.S. dollars and cents and will round fractional cents
to the nearest whole cent. If the relevant exchange rates fluctuate during a time when The Bank of New York
Mellon cannot convert the Japanese currency, you may lose some or all of the value of the distribution.
Shares. The Bank of New York Mellon may distribute new ADSs representing any shares we may distribute
as a dividend or free distribution, if we furnish The Bank of New York Mellon promptly with satisfactory
evidence that it is legal to do so. The Bank of New York Mellon will only distribute whole ADSs. It will sell
shares which would require it to issue a fractional ADS and distribute the net proceeds in the same way as it
distributes cash dividends. If The Bank of New York Mellon does not distribute additional ADSs, each ADS will
also represent the new shares.
Rights to receive additional shares. If we offer holders of our common stock any rights to subscribe for
additional shares of common stock or any other rights, The Bank of New York Mellon may, after consultation
7
with us, make those rights available to you. We must first instruct The Bank of New York Mellon to do so and
furnish it with satisfactory evidence that it is legal to do so. If we do not furnish this evidence and/or do not give
these instructions, and The Bank of New York Mellon decides that it is practical to sell the rights, The Bank of
New York Mellon will sell the rights and distribute the proceeds in the same way as it distributes cash dividends.
The Bank of New York Mellon may allow rights that are not distributed or sold to lapse. In that case, you will
receive no value for them.
If The Bank of New York Mellon makes rights available to you, upon instruction from you it will exercise
the rights and purchase the shares on your behalf. The Bank of New York Mellon will then deposit the shares and
issue ADSs to you. It will only exercise the rights if you pay it the exercise price and any other charges the rights
require you to pay.
U.S. securities laws may restrict the sale, deposit, cancellation and transfer of the ADSs issued after the
exercise of the rights. For example, you may not be able to trade the ADSs freely in the United States. In this
case, The Bank of New York Mellon may issue the ADSs under a separate restricted deposit agreement which
will contain the same provisions as the deposit agreement, except for changes needed to put the restrictions in
place. The Bank of New York Mellon will not offer you rights unless those rights and the securities to which the
rights relate are either exempt from registration or have been registered under the U.S. Securities Act with
respect to a distribution to you. We will have no obligation to register under the Securities Act those rights or the
securities to which they relate.
Other distributions. The Bank of New York Mellon will send to you anything else we distribute on
deposited securities by any means it thinks is legal, fair and practical. If it cannot make the distribution in that
way, The Bank of New York Mellon has a choice. It may decide to sell what we distributed and distribute the net
proceeds in the same way as it does with cash. Or, it may decide to hold what we distributed, in which case ADSs
will also represent the newly distributed property.
The Bank of New York Mellon is not responsible if it decides that it is unlawful or impractical to make a
distribution available to any ADS holders. We have no obligation to register ADSs, shares, rights or other
securities under the Securities Act. We also have no obligation to take any other action to permit the distribution
of ADSs, shares, rights or anything else to ADS holders. This means that you may not receive the distributions
we make on our shares or any value for them if it is illegal or impractical for us or The Bank of New York
Mellon to make them available to you.
Deposit, Withdrawal and Cancellation
The Bank of New York Mellon will issue ADSs if you or your broker deposits shares or evidence of rights
to receive shares with the custodian. Upon payment of its fees and expenses and of any taxes or charges, such as
stamp taxes or stock transfer taxes or fees, The Bank of New York Mellon will register the appropriate number of
ADSs in the names you request and will deliver the ADSs at its corporate trust office to the persons you request.
In certain circumstances, subject to the provisions of the deposit agreement, The Bank of New York Mellon
may issue ADSs before the deposit of the underlying shares. This is called a pre-release of ADSs. A pre-release
is closed out as soon as the underlying shares are delivered to the depositary. The depositary may receive ADSs
instead of the shares to close out a pre-release. The depositary may pre-release ADSs only under the following
conditions:
‰ Before or at the time of the pre-release, the person to whom the pre-release is made must represent to
the depositary in writing that it or its customer, as the case may be, owns the shares to be deposited;
‰
‰
The pre-release must be fully collateralized with cash or collateral that the depositary considers
appropriate; and
The depositary must be able to close out the pre-release on not more than five business days’ notice.
8
The pre-release will be subject to whatever indemnities and credit regulations that the depositary considers
appropriate. In addition, the depositary will limit the number of ADSs that may be outstanding at any time as a
result of a pre-release.
You may turn in your ADSs at the Corporate Trust Office of The Bank of New York Mellon’s office. Upon
payment of its fees and expenses and of any taxes or charges, such as stamp taxes or stock transfer taxes or fees,
The Bank of New York Mellon will deliver (1) the underlying shares to an account designated by you and
(2) any other deposited securities underlying the ADS at the office of the custodian. Or, at your request, risk and
expense, The Bank of New York Mellon will deliver the deposited securities at its Corporate Trust Office.
The ADSs may only be presented for cancellation and release of the underlying shares of common stock or
other deposited securities in multiples of 100 ADSs. Holders of ADRs evidencing less than 100 ADSs are not
entitled to delivery of any underlying shares or other deposited securities unless ADRs, together with other ADRs
presented by the same holder at the same time, represent in the aggregate at least 100 ADSs. If any ADSs are
surrendered but not cancelled pursuant to the preceding sentence, The Bank of New York Mellon will execute
and deliver an ADR or ADRs evidencing the balance of ADSs not so cancelled to the person or persons
surrendering the same.
Voting Rights
If you are an ADS holder on a record date fixed by The Bank of New York Mellon, you may instruct The
Bank of New York Mellon to vote the shares underlying your ADSs at a meeting of our shareholders in
accordance with the procedures set forth in the deposit agreement.
The Bank of New York Mellon will notify you of the upcoming meeting and arrange to deliver our voting
materials to you. The notice shall contain (a) such information as is contained in such notice of meeting, (b) a
statement that as of the close of business on a specified record date you will be entitled, subject to any applicable
provision of Japanese law and our Articles of Incorporation, to instruct The Bank of New York Mellon as to the
exercise of the voting rights, if any, pertaining to the amount of shares or other deposited securities represented
by your ADSs, and (c) a brief statement as to the manner in which such instructions may be given, including an
express indication that instructions may be given to The Bank of New York Mellon to give a discretionary proxy
to a person designated by us. Upon your written request, received on or before the date established by The Bank
of New York Mellon for such purpose, The Bank of New York Mellon shall endeavor in so far as practicable to
vote or cause to be voted the amount of shares or other deposited securities represented by your ADSs in
accordance with the instructions set forth in your request. So long as Japanese law provides that votes may only
be cast with respect to one or more whole shares or other deposited securities, The Bank of New York Mellon
will aggregate voting instructions to the extent such instructions are the same and vote such whole shares or other
deposited securities in accordance with your instructions. If, after aggregation of all instructions to vote received
by The Bank of New York Mellon, any portion of the aggregated instructions constitutes instructions with
respect to less than a whole share or other deposited securities, The Bank of New York Mellon will not vote or
cause to be voted the shares or other deposited securities to which such portion of the instructions apply. The
Bank of New York Mellon will not vote or attempt to exercise the right to vote that attaches to the shares or other
deposited securities, other than in accordance with the instructions of the ADS holders. If no instructions are
received by The Bank of New York Mellon from you with respect to any of the deposited securities represented
by your ADSs on or before the date established by The Bank of New York Mellon for such purpose, The Bank of
New York Mellon shall deem you to have instructed The Bank of New York Mellon to give a discretionary
proxy to a person designated by us with respect to such deposited securities and The Bank of New York Mellon
shall give a discretionary proxy to a person designated by us to vote such deposited securities, provided that no
such instruction shall be given with respect to any matter as to which we inform The Bank of New York Mellon
(and we have agreed to provide such information as promptly as practicable in writing) that (1) we do not wish
such proxy given, (2) substantial opposition exists or (3) such matter materially and adversely affects the rights
of holders of shares.
9
We cannot assure you that you will receive the voting materials in time to ensure that you can instruct The
Bank of New York Mellon to vote your shares. In addition, The Bank of New York Mellon is not responsible for
failing to carry out voting instructions or for the manner of carrying out voting instructions as long as it has acted
in good faith. This means that you may not be able to exercise your right to vote and there may be nothing you
can do if your shares are not voted as you requested.
Payment of Taxes
You will be responsible for any taxes or other governmental charges payable on your ADSs or on the
deposited securities underlying your ADSs. The Bank of New York Mellon may refuse to transfer your ADSs or
allow you to withdraw the deposited securities underlying your ADSs until those taxes or other charges are paid.
It may apply payments owed to you or sell deposited securities underlying your ADSs to pay any taxes owed and
you will remain liable for any deficiency. If it sells deposited securities, it will, if appropriate, reduce the number
of ADSs to reflect the sale and pay to you any property remaining after it has paid the taxes.
Reclassifications, Recapitalizations and Mergers
If we:
‰
‰
‰
reclassify, split up or consolidate any of our shares or the deposited securities;
recapitalize, reorganize, merge, liquidate, consolidate or sell all or substantially all of our assets or take
any similar action; or
distribute securities on the shares that are not distributed to you, then,
(1)
the cash, shares or other securities received by The Bank of New York Mellon will become deposited
securities and each ADS will automatically represent its equal share of the new deposited securities
unless additional ADSs are issued; and
(2) The Bank of New York Mellon may, and will if we request, issue new ADSs or ask you to surrender
your outstanding ADSs in exchange for new ADSs, identifying the new deposited securities.
Amendment and Termination
We may agree with The Bank of New York Mellon to amend the deposit agreement and the ADSs without
your consent for any reason. If the amendment adds or increases fees or charges, except for taxes and other
governmental charges, registration fees, cable, telex or facsimile transmission costs, delivery costs or other such
expenses, or prejudices an important right of ADS holders, it will only become effective three months after The
Bank of New York Mellon notifies you of the amendment. At the time an amendment becomes effective, you are
considered, by continuing to hold your ADS, to agree to the amendment and to be bound by the ADSs and the
deposit agreement as amended. However, no amendment will impair your right to receive the deposited securities
in exchange for your ADSs.
The Bank of New York Mellon will terminate the deposit agreement if we ask it to do so, in which case it
must notify you at least 30 days before termination. The Bank of New York Mellon may also terminate the
deposit agreement if The Bank of New York Mellon has told us that it would like to resign and we have not
appointed a new depositary bank within 60 days.
If any ADSs remain outstanding after termination, The Bank of New York Mellon will stop registering the
transfers of ADSs, will stop distributing dividends to ADS holders and will not give any further notices or do
anything else under the deposit agreement other than:
(1) collect dividends and distributions on the deposited securities;
(2)
sell rights and other property offered to holders of deposited securities; and
10
(3) deliver shares and other deposited securities in exchange for ADSs surrendered to The Bank of New
York Mellon.
At any time after one year following termination, The Bank of New York Mellon may sell any remaining
deposited securities. After that, The Bank of New York Mellon will hold the money it received on the sale, as
well as any other cash it is holding under the deposit agreement for the pro rata benefit of the ADS holders that
have not surrendered their ADSs. It will not invest the money and has no liability for interest. The Bank of
New York Mellon’s only obligations will be to account for the money and other cash and with respect to
indemnification and to retain depositary documents. After termination, our only obligations will be with respect
to indemnification and to pay certain amounts to The Bank of New York Mellon.
Limitations on Obligations and Liability to ADS Holders
The deposit agreement expressly limits our obligations and the obligations of The Bank of New York
Mellon. It also limits our liability and the liability of The Bank of New York Mellon. We and The Bank of
New York Mellon:
‰
‰
‰
‰
are only obligated to take the actions specifically set forth in the deposit agreement without negligence
or bad faith;
are not liable if either is prevented or delayed by law, any provision of our Articles of Incorporation or
circumstances beyond our control from performing our obligations under the deposit agreement;
are not liable if either exercises or fails to exercise discretion permitted under the deposit agreement;
have no obligation to become involved in a lawsuit or other proceeding related to the ADSs or the
deposit agreement on your behalf or on behalf of any other party unless indemnified to their satisfaction;
and
‰ may rely upon any advice of or information from legal counsel, accountants, any person depositing
shares, any ADS holder or any other person believed in good faith to be competent to give them that
advice or information.
In the deposit agreement, we and The Bank of New York Mellon agree to indemnify each other for
liabilities arising out of acts performed or omitted by the other party in accordance with the deposit agreement.
Requirements for Depositary Actions
Before The Bank of New York Mellon will issue or register transfer of an ADS, make a distribution on an
ADS, or permit withdrawal of shares, it may require:
‰
‰
‰
payment of stock transfer or other taxes or other governmental charges and transfer or registration fees
charged by third parties for the transfer of any shares or other deposited securities;
production of satisfactory proof of the identity and genuineness of any signature or other information it
deems necessary; and
compliance with regulations it may establish, from time to time, consistent with the deposit agreement,
including presentation of transfer documents.
The Bank of New York Mellon may refuse to deliver, transfer, or register transfers of ADSs generally when
its transfer books are closed, when our transfer books are closed or at any time if it or we think it advisable to do
so.
You have the right to cancel your ADSs and withdraw the underlying shares at any time except:
‰ when temporary delays arise because: (1) The Bank of New York Mellon has closed its transfer books
or we have closed our transfer books; (2) the transfer of shares is blocked to permit voting at a
shareholders’ meeting; or (3) we are paying a dividend on the shares;
11
‰ when you or other ADS holders seeking to withdraw shares owe money to pay fees, taxes and similar
charges; or
‰ when it is necessary to prohibit withdrawals in order to comply with any laws or governmental
regulations that apply to ADSs or to the withdrawal of shares or other deposited securities.
This right of withdrawal may not be limited by any other provision of the deposit agreement.
Reports and Other Communications
The Bank of New York Mellon will make available for your inspection at its corporate trust office any
reports and communications, including any proxy soliciting material, that it receives from us, if those reports and
communications are both (a) received by The Bank of New York Mellon as the holder of the deposited securities
and (b) made generally available by us to the holders of the deposited securities. If we ask it to, The Bank of
New York Mellon will also send you copies of those reports it receives from us.
Inspection of Transfer Books
The Bank of New York Mellon will keep books for the registration and transfer of ADSs, which will be
open for your inspection at all reasonable times. You will only have the right to inspect those books if the
inspection is for the purpose of communicating with other owners of ADSs in connection with our business or a
matter related to the deposit agreement or the ADSs.
Preferred Stock
The following is a summary of information concerning the shares of our preferred stock, including brief
summaries of the relevant provisions of our Articles of Incorporation, the share handling regulations and the
Companies Act as currently in effect. The detailed rights of our preferred stock are set out in our Articles of
Incorporation and the resolutions of our board of directors relating to the issuance of the relevant stock.
General
We are authorized under our Articles of Incorporation to issue four classes of preferred stock totaling
800,000,000 shares of preferred stock, including 400,000,000 shares of each of the second to fourth series of
class 5 preferred stock (provided the aggregate number of shares authorized to be issued with respect to the three
series of class 5 preferred stock does not exceed 400,000,000 shares), 200,000,000 shares of each of the first to
fourth series of class 6 preferred stock (provided the aggregate number of shares authorized to be issued with
respect to the four series of class 6 preferred stock does not exceed 200,000,000 shares), and 200,000,000 shares
of each of the first to fourth series of class 7 preferred stock (provided the aggregate number of shares authorized
to be issued with respect to the four series of class 7 preferred stock does not exceed 200,000,000 shares).
Our preferred stock has equal preference over our shares of common stock with respect to dividend
entitlements and distribution of assets upon our liquidation. However, holders of shares of our preferred stock are
not entitled to vote at general meetings of shareholders, subject to the exceptions provided under our Articles of
Incorporation.
We may acquire shares of second to fourth series of class 5 and first to fourth series of class 6 preferred
stock at our discretion pursuant to the terms and conditions provided by our Articles of Incorporation and the
resolution of our board of directors. The provisions for acquisition of shares of second to fourth series of class 5
and first to fourth series of class 6 preferred stock will be determined by the board of directors at the time of
issuance of such preferred stock. When issued, any holder of shares of first to fourth series of class 6 preferred
stock or first to fourth series of class 7 preferred stock may request acquisition of shares of such preferred stock
12
in exchange for shares of our common stock during the period determined by resolution of the board of directors
adopted at the time of issuance of such shares of preferred stock. Any shares of first to fourth series of class 6
preferred stock or first to fourth series of class 7 preferred stock for which no request for acquisition in exchange
for shares of our common stock is made during such period will be mandatorily acquired on the day immediately
following the last day of such period (the “Mandatory Acquisition Date”) in the number obtained by dividing an
amount equivalent to the subscription price per each relevant share of preferred stock by the average
daily closing price of our common stock as reported by the Tokyo Stock Exchange for the 30 trading days
commencing on the 45th trading day prior to the Mandatory Acquisition Date.
Additionally, in order to enable the relevant preferred stock to meet the criteria for Additional Tier 1 capital
under Basel III requirements as adopted by the Financial Services Agency of Japan, the terms of the second to
fourth series of class 5 as well as all the series of class 6 and class 7 preferred stock have mandatory acquisition
provisions. When newly issuing these preferred stock, the board of directors will determine events that will
require us to acquire the relevant preferred stock pursuant to the capital adequacy requirements applicable to us.
Upon the occurrence of such events, we will acquire all the relevant preferred stock on an acquisition date, which
is a date determined by the board of directors either at the time of the issuance or after the occurrence of such
event. We shall acquire the relevant preferred stock in exchange for common stock or for no consideration as
determined by the board of directors at the time of the issuance, considering certain factors including the market
conditions. The formula to be used in exchanging the preferred stock for common stock will also be determined
by the board of directors at the time of the issuance.
Preferred Dividends
In priority to the payment of dividends to holders of our common stock, the amount of preferred dividends
payable each fiscal year for each class of our preferred stock is set forth below:
‰
‰
‰
second to fourth series of class 5 preferred stock: to be set by resolution of our board of directors at the
time of issuance, up to a maximum of ¥250.00 per share;
first to fourth series of class 6 preferred stock: to be set by resolution of our board of directors at the
time of issuance, up to a maximum of ¥125.00 per share; and
first to fourth series of class 7 preferred stock: to be set by resolution of our board of directors at the
time of issuance, up to a maximum of ¥125.00 per share.
In the event that our board of directors decides to pay an interim dividend to holders of record of our
common stock as of September 30 of any year, we will, in priority to the payment of that interim dividend, pay a
preferred interim dividend in the amount specified in our Articles of Incorporation to holders of record of our
preferred stock as of September 30 of the same year. The amount of any preferred interim dividend will be
deducted from the preferred dividend payable on the relevant class of our preferred stock for the same fiscal year.
No preferred dividend will be paid on any of our preferred stock converted into our common stock for the
period from the date following the record date for the preferred dividend or preferred interim dividend last
preceding the relevant conversion date to the relevant conversion date, but the common stock issued upon
conversion will be entitled to receive any dividend payable to holders of record of common stock upon the next
succeeding record date for common stock dividends.
No payment of dividends on our preferred stock or any other shares can be made unless we have a sufficient
distributable amount and a resolution to distribute such distributable amount is obtained at the relevant ordinary
general meeting of shareholders, in the case of annual preferred dividends, or at the board of directors, in the case
of preferred interim dividends.
Dividends on our preferred stock are non-cumulative. If the full amount of any dividend is not declared on
our preferred stock in respect of any fiscal year, holders of our preferred stock do not have any right to receive
13
dividends in respect of the deficiency in any subsequent fiscal year, and we will have no obligation to pay the
deficiency or to pay any interest regardless of whether or not dividends are paid in respect of any subsequent
fiscal year. The holders of our preferred stock are not entitled to any further dividends or other participation in or
distribution of our profits.
Liquidation Rights
In the event of our voluntary or involuntary liquidation, record holders of our preferred stock are entitled,
equally in rank as among themselves, to receive before any distribution out of our residual assets is made to
holders of our common stock, a distribution out of our residual assets of:
‰
‰
‰
¥2,500 per share of second to fourth series of class 5 preferred stock;
¥2,500 per share of first to fourth series of class 6 preferred stock; and
¥2,500 per share of first to fourth series of class 7 preferred stock.
The holders of our preferred stock are not entitled to any further dividends or other participation in or
distribution of our residual assets upon our liquidation.
Voting Rights
No holder of our preferred stock has the right to receive notice of, or to vote at, a general meeting of
shareholders, except as otherwise specifically provided under our Articles of Incorporation or other applicable
law. Under our Articles of Incorporation, holders of our preferred stock will be entitled to receive notice of, and
have one voting right per unit of preferred stock at, our general meetings of shareholders:
‰
‰
from the commencement of our ordinary general meeting of shareholders if an agenda for approval to
declare a preferred dividend is not submitted to such meeting; or
from the close of any ordinary general meeting of shareholders if a proposed resolution to declare a
preferred dividend is not approved at such meeting.
In each case, holders of our preferred stock will be entitled to receive notice of and vote at the relevant
general meetings of shareholders unless and until such time as a resolution of an ordinary general meeting of
shareholders declaring a preferred dividend is passed.
14
Exhibit 11
M UF G Group Code of Conduct 2021
Contents Me ssage from the Group CE O · · 01 Introduction MU FG Way and Code of Conduc t · · 02 Code of Conduc t Main text · · 03 A bout the Code of Conduc t · · 05 Failure t o A bide by the Code of Conduc t · · 06 Role s a nd Responsibilitie s of M anagers · · 07 Code of Conduc t Cha pte r 1. Customer Foc us 08 - Honesty a nd Inte grity · · 09 - E nsuring Quali ty· · · 10 - E xc eeding Customer E xpe ctations · · 11 Cha pte r 2. Responsibility a s a Corporate Citiz en 12 Adherence to La ws and Rule s · · 13 P revention of Financial Crime · · 14 Contributing to S oc iety· · 15 Cha pter 3. Behaviors in the Workpla ce 16 - Cha llenge Ourse lve s to Grow · · 17 Collaborati ve a nd Professional Working E nvironme nt · 18 Prote cting M UF G’s A sse ts a nd Prope rty · · 19 Reporting Problem Situations a nd See ki ng Advice · 2 N ote Explanations in ea ch chapter a re desc ribed in â –¡1 –¡4or
M essage from the Group CEO Be the company with enduring trust Allow me to pose t his question to all of you, my MU FG all staff: What do you conside r the most important asse t for fina nc ial institut ions? M y a nsw er? “Trust” – of our c ustomers a nd society. Our c ompany is able to do business beca use of t he indispensable trust of our custome rs and soc iety – the trust that our pre de cessors ea rned and be st ow ed on us over our l ong history. A s a result of the Covid-19 pandemic, I strongly feel the importa nc e of re -recogni zing the social mission w e have as a fina nc ial institution while responding to ac cele rat ing changes in t he w orld and c re ating a new form of trust. With the determina tion to contribute to socie ty, c ustomers, e mployees, and t he w ider w orld as a force that empowers us towa rd a brighter future, we have c ha nged our purpose to “e mpowe ring a brighter future” . We have a lso formulated the MU FG Way, which aims to he lp share these values and de fine our medium to long-term goals. The M UFG W ay is the M UFG group’s basic sta nc e in carrying out our ma na gement activities and is also the guiding princi ple for all of our w ide r ac tivities. This is t he reason for our Code of Conduct. It la ys stepping stones to de fine the path of re sponsible de cision-making through unce rtain times. It al so informs our day-today behavior and hel ps guide us to do the right thing at a ll time s. In other words, our t rust is founded on the “right a ctions” you and I take every day. T here are times when we struggle to make a decision. In such ca ses, w e should re fer to the Code of Conduct a s our guide . O ne good way to ga uge if we a re doing the right thing is to ask ourse lve s: Ca n w e explain our choic es with honor to our fa mily and friends? If you notice anything tha t might contra ve ne our sta ndards of c onduct – even sl ightly – report it immediately to your supervisor or use Compl iance He lpline . D o not he sitate. Reporting these matters is the right thing t o do a nd is everyone’s sacred responsibility. MU FG G roup e ntitie s a re fully c ommitted to cultivating a n a tmosphere of spe aking free ly w ithout fe ar. Y our courage is apprec iated by the firm, which is re sponsible for responding a ppropriately. No re pe rc ussions w ill ever be ta ke n a ga inst a sta ff who makes a since re, hone st report in order to prote ct what’s right. Put simply, the Code of Conduc t is not just for re ading. It is for action – lite ra lly. Being the compa ny with the enduring t rust of our customers and socie ty depends on ea ch of us – all of us – doing the ri ght thing in our da y-to-day work. Alw ays. ruest standards are within our ow n hea rts. When struggling to a t work,we should A pril 2021 Hironori K ameza wa M ember of t he Board of Directors, President & G roup CE O
M UF G Way and Code of Conduct T he corpora te vision of the M UFG G roup has bee n revised to M UFG Way in orde r to ma ke each employe e aw are of the purposition of the Group. T he diagra m below illustrates the re lationship betwe en our Corporate V ision and our Code of Conduc t. T he MU FG Way sets forth the most ba sic stance of the M UF G Group in the e xe cution of its busine ss a ctivities, and is the guidi ng principle for all its act ivitie s. Code of Conduct shows how Group me mbe rs should ma ke the ir decisions and a ct on a daily basis, and is an important part of supporting the M UFG Way. “ Cult ure” Culture refers to the patterns of thinking and behavior sha re d by all staff. This include s both expl icit written doc uments, suc h a s our Corpora te Vision and Code of Conduct, and norms that a re shared implic itly a mong all staff.
Code of Conduct M ain text Chapter 1. Customer Focus O ur custome rs are at the ce nte r of everything we do, and should al ways be the focus of our thoughts. Our aim should be to win the trust and confidence of our c ustomers a t all times. MU FG exists toda y bec ause of the trust and c onfidence that customers have place d in us over ma ny yea rs. Our role is to increase a nd stre ngthen this bedrock of trust and c onfide nc e. Our a ctivities are not drive n by the prospec t of short-te rm ga ins. Inste ad, w e look to build ongoing rela tionships w ith our c ustomers to support their long-term grow th. Our customers are at the center of everything we do. W e carry out fair a nd transpa rent corporate ac tivities with honesty and inte grity. We tre at custome r assets w ith c are and respect and strive al ways to e nsure that our actions do not unjust ly damage our customers’ intere sts. T o build lasting relationships of trust a nd confidence with our customers, we listen ca refully to what our c ustomers a re te lling us and maintai n thoroughgoing quality control of all our produc ts and services, from planning a nd developme nt to provision and subsequent re visions, with a view to furthe r enhancing quality. We aim to meet the diverse nee ds of our customers w orldwide, and to provide servic es excee ding their e xpe ctations t hrough the highest standards of professiona lism, by l evera ging our gl obal netw ork and the consolida ted strengths of the entire G roup. Chapter . Re sponsibi lity a s a Corporate Citiz en A s we develop our business globally, we c omply with all the domestic and international law s a nd rule s that may apply. We do all we can to ma inta in sta bility and confidence in the globa l financial system, and w e contribute to the sound a nd healthy growth of society. Aw are of the responsi bility and acc ountability eac h of us has as a membe r of M UFG , w e ca rry out fair and t ransparent c orporate activities w ith honesty a nd integrit y, in a manne r that supports a nd stre ngthens the trust and c onfidence M UFG has e arned from socie ty over ma ny years. In addition to a dhe ring strictly to all domestic and international laws, regula tions and rules, we strive to do the right thing based on our stri ct code of ethics. Honesty and Int egrity Ensuring Quality - E xc eeding Customer E xpe ctations Adhere nc e to Law s and Rules Chapter 3 Code of Conduct Chapter 2 Chapter 1 Introduction
V iolations of l aws or rule s dama ge t he vita l socia l infra structure of the financia l syste m and lead to a loss of trust i n M UFG . We st rictly abide by a ll laws and rules relating to our busine ss. We have z ero tolerance for supporting or fa cilitating financi al crime or any a ttempt to circumvent the rules and proc edures aime d at preventing fina nc ial crime. We take all reasonable steps possible to prevent our produc ts a nd services from being use d by individuals or entities involve d in illegal or improper activities such as money laundering and te rrorist financ ing. We re spe ct the history, c ultures, and c ustoms of diffe re nt c ountrie s a nd regions around the world, and w ork to c ontribute to the developme nt of diverse communities a nd the protect ion of the environment throughout our c orporate a ctivities and the socia l volunteer efforts of our staff. Chapter 3. Behaviors in the Workpla ce We strive to respond and adapt promptly to the diversifying a nd evolving needs of our customers and the rapidly changing environment in w hic h w e work. T he w orking e nvironment at M UFG fosters mutual re spec t, enables individuals to make the most of their a biliti es as professionals, and maximize s the powe r of tea mwork across regions and differe nt a rea s of business, encouraging a ll staff membe rs to embrac e ne w challe nge s. We w ork alwa ys to protect a nd maintain the tangibl e and intangible assets and property that M UFG has ac cumula ted. We strive to enhance our know ledge , e xpe rtise, and pote ntia l and maximize the powe r of tea mw ork. We believe that the changing business e nvironment represe nts opportunity and are alwa ys ready to embrace new challenges in ne w fie lds. We respect the huma n rights a nd dive rsity of all M UFG st aff. We do not e nga ge i n or tolerate a ny form of disc rimination or ha rassment or any othe r behavior that infringe s these bel iefs. We prote ct the tangible a nd intangible assets and prope rty of M UFG a nd individual G roup entitie s a nd do not tolera te any be ha vi or tha t might damage these assets. If you become aw are of conduct that c ontravenes the law , c ompany regulations, or t he provisions of this Code of Conduct, or any other problem si tua tions, you must promptly report the matte r and seek advice from a supervisor, human re sourc es, complia nc e officer or issue a report via Compli ance He lpline arrangements ma de available by MU FG. Prevention of Financi al Crime Contributing to Society Challenge Ourselves to G row Collabora tive and Profe ssional Working Environment P rotect ing M UFG’s Assets and Property Re porting Proble m Situat ions and S eeking A dvic e
A bout the Code of Conduct (1)The Code of Conduct is de signe d to provide guidance a t a ll times, or when we find itdifficult to know if we are making the right c hoice . (In some cases, the Code ofConduct may be supplemented by a dditional entity or location spe cific guidelines,whic h provide furthe r guida nc e.) (2)In situations where you fe el unc erta in, you shoul d consider the fol low ing:Is the conduct in line with the Code of Conduc t and internal and e xternal la ws, rules, and regulations? Am I dec eiving myself to ra tiona lize my be ha vior? Is there any possibility that others might rega rd the conduct as inappropria te? Would I do the same thing to my family or those that a re c lose to me? (3)All sta ff must undergo training on the Code of Conduc t once a ye ar, as a general rule .In addi tion, eac h member of staff must make an atte station, in a form de termined bythe releva nt G roup entity, that he or she will abide by the M UFG Code of Conduc t.Phrases to Watc h O ut For Be careful if you catc h yourself or others using langua ge suc h as: â š«“Just this once …”â š«“ Everyone else is doing it” âš«“Don’t argue ”âš«“It’s urgent so we need to make an exception”⇒ D o not fa ll i nto the tra p of failing to think critic ally. Take the time to think ca re fully anddo the right thing. Cha pte r 3 Code of Conduc t Cha pte r 2 Cha pte r 1 Introduction
07 Failure to A bide by the Code of Conduct All staff must a bide by the Code of Conduc t, a s well as a pplica ble laws, re gula tions, rules, protocols, procedures, and ot he r guide line s dete rmined by G roup M UFG entities. If we have policies that are more restric tive than the Code of Conduct, w e must follow those pol icies. Any conduct that fails to mee t the se standards may result in disc iplinary me asures, up to and inc luding terminat ion of employme nt, in acc ordance w ith the employme nt regulations a nd other rule s e stablished se pa rat ely by individual M UFG c ompanies. Staff may be held pe rsonally responsible for conduc t tha t da ma ge s the reputation a nd trust of a n M UFG compa ny or damages the company’s inte re sts. Sta ff ma y also be held responsible a nd ac counta ble for the ac tion or inac tion ofothers if they fail to take ac tion despite know ing about ina ppropriate behavior orconduct on t he part of others that is likely to have a se rious negat ive i mpac t onthe trust or interests of any Group entity, or if they i gnore a ny such conductdespite being in a position of responsibility re quiring them to know about it. A llstaff must c ooperate in any a udit, examination, or inve sti ga tion conduc tedre lated to potential violations of the Code, Compa ny policy, proc edures, orguide lines. In additi on, staff conduct may be re ported to the relevant authoritie s, w hic h c ould re sult in a fine , loss of the qua lific ation to work in the financia l industry, and/or even imprisonment. What happens if I ca nnot excee d c ustomer expe ctations or achieve grow th a nd new c ha llenges? T he Code of Conduct c ontains a mixture of different guideli ne s. Behaviors like “ Acting with honesty and inte grity” and “Prevention of financial crime” must be followed at all times. Othe rs, inc luding “E xc eeding c ustomer expe ctations” and “growth and challenges” a re more like ta rgets that you should aim toward. Conduc t Ri sk In addition to violation of existing rule s (such a s regulations), behavior 1) that is contrary to conventiona l wisdom or sociall y common idea , 2) c ontravenes business customs or market prac tices, or 3) does not c onsider from the custome rs’ perspective could be de trimental to the intere sts of st akeholders, suc h as customers a nd share holders, a nd as a result, c ould have a negative impact on our c orporate va lue , profit, and reputation. T his risk is ca lled “conduc t risk.”
08 Roles and Re sponsibili ties of Ma na ge rs M anagers have several additional roles and re sponsibi lities. (“M anager” here re fers primari ly to all managers w ith responsibility for leading te am membe rs, head of departme nt a nd head of divisions.) 1Le ad by example and be proactive a bout acting ethicall y in acc ordance w ith theM UF G Corporate V ision a nd the Code of Conduct.2Work to ensure that sta ff under your supe rvision understa nd the content of theM UFG Corporate Vision and the Code of Conduct in a manner a ppropriate to there spe ctive organiza tion.3Foster a n e nvironment where all staff feel c omfortable raising c once rns when theyare struggling to rea ch a work-rela ted de cision or faci ng a problem.4Stric tly a void any c onduct that could be c onstrue d as an abuse of your position.⑤T ake appropria te, time ly a ction w hen a proble m has a risen, either a ddressing theissue dire ctly or esca lating a ppropriately.T he Importance of L istening A s a supervisor, how do you re spond w hen one of your tea m comes to you with a problem? D o you give them your a ttention, or simply a sk w ha t t he y w ant without eve n looking up from your desk? When some one c omes to you for a dvic e, it is importa nt to take the time to listen carefully and with an open mind to what they have to sa y. Pa rtic ula rly in the c ase of a problem that might touch on the Code of Conduct, it is vita l t o take a ppropriate mea sures promptly before the problem ge ts out of hand. Re me mbe r: The bett er you a re a s a liste ne r, the more effe ctive you w ill be a s a ma na ger. Chapter 3 Code of Conduct Chapter 2 Chapter 1 Introduction
Chapte r 1. Customer Focus Our c ustomers are a t the center of everything we do, a nd should alw ays be the foc us of our thoughts. Our a im should be to win the trust and c onfide nc e of our custome rs at al l time s. M UFG exists today because of the trust a nd confidenc e tha t custome rs have pl aced in us over many years. O ur role is to inc re ase and strengthen t his bedrock of trust a nd confidence . O ur acti vitie s a re not driven by the prospect of short-term gains. Instea d, we look to build ongoing re lationships with our custome rs to support their long-te rm growth.
13 Our c ustomers a re a t the center of everything w e do. We c arry out fair a nd tra nsparent corpora te ac tiviti es with honesty and inte grity. We trea t customer assets with ca re a nd re spe ct and st rive alw ays t o ensure t ha t our a ctions do not unjustly damage our custome rs’ i nte rests. Ac ting w ith H onesty and Integri ty âš«We plac e our custome rs at the ce nte r of everything we do. Our thoughts are alwa ysof how best to help our c ustomers, a nd we work fa irly and honestly to support ourcustomers’ long-term sustaine d grow th. Safeguarding Customer Assets (Including Information) âš«Our c ustomers entrust us w ith importa nt asse ts such as ca sh and securit ies as well a si nformation. T he loss, le akage, or misuse of our c ustomers’ informa tion ca n not onlycause serious damage to customer interests but c an a lso seriously unde rmine thetrust and confidence in M UFG . â š«We trea t our c ustomers’ financ ial assets with the utmost ca re a nd ensure that theya re properly sa feguarde d a t all times. âš«W e also protect the confidentia lity, sec urity and priva cy of customer informat ion. Prote cting Custome r Inte re sts Prope rly âš«To protec t t he inte rests of our clie nts, we act to tre at our custome rs in a fair, ethical,a nd non-disc riminatory manner w ith honesty a nd integrity a nd conduct our sale s-relate d transactions with re sponsibi lity a nd a high le ve l of ethics. âš«Whe n c onducting business with customers, we are sensitive to the possibility ofconflicts of interest that may exist be twee n c ustomers or be twee n a c ustomer and aG roup entity. We a ct appropriat ely a t all times, in line w ith the guidelines onmanaging conflicts of interest.About Performance Objectives H ave you ever fel t a conflict of interest betwe en achieving your targets and ma inta ining the custome r’s t rust? As a company, w e have a re sponsibility a nd ac counta bility to achieve our objectives. But the se must be ac hie ve d by doing the right thing and e arning trust and a good reputation from our custome rs. If you ever fee l a ny conflic t be twee n your obj ective and the custome r’s trust, a lways prioritiz e the custome r’s t rust. Re mind yourself that a chieving objectives is only meaningful if it is ac hie ve d by following the correct proce dures. Honesty a nd Inte grity Cha pte r 3 Code of Conduc t Cha pte r 2 Cha pte r 1 Introduction
13 To build la sti ng re lationships of trust and confidence w ith our c ustomers, w e listen carefully to what our custome rs are telling us a nd maintain thoroughgoing qua lity c ontrol of a ll our products and servic es, from planning and de ve lopment to provision and subsequent revisions, w ith a view to further enha nc ing quality. Best Possible Produc ts a nd Services for Customers â š«In orde r to earn t rust from customers and build lasting positive busine ssrela tionships w ith the m, it is important to maintai n thorough quality control at allstages in the developme nt a nd delivery of our products and se rvice s. âš«Qua lity c ontrol mea ns developing a nd providi ng the best possible produc ts andse rvices for custome rs and ensuring a ccura cy and safety in all our business dealings. â š«T o this end, it is important to alwa ys kee p in mind the follow ing principles: 1Clea rly de fine the customer a nd their ne eds w hen pla nning a nd developing products. 2E nsure that the risks associate d w ith our products and se rvice s a re understa ndable and ac ceptable to the customer. 3Ensure tha t products and service s proposed and provided to customers match theirpurposes, ne eds, knowledge, experience, fina nc ial capabilitie s, a nd other relevantconditions. 4Give cle ar a nd ac curat e expl anations that ena ble c ustomers to understa nd the nature and risks of our products and se rvices. ⑤Be fa ir-minded, courteous, a nd sincere in all dealings with our customers. U nendi ng Work to Improve Quality âš«We regula rly confirm that our products and se rvice s a re mee ting the needs of ourcustomers, and we w ork c onstantly to review and improve the quality of all ourproduc ts and services.E nsuring Qualit y Financia l produc ts a nd servic es are not visible or physica l. H owever, qualit y control is important, just like w ith a ny produc t, from the viewpoint of suita bi lity for custome r needs, ease of underst anding, and e ase of use. Specifically, effec tive management is ba se d on the life c yc le from product planning and de velopment to sales and aft er-sales follow -up. If problems arise, the y w ill appe ar in the voice of the customer or in the obse rvation of some one el se in the company. Be se nsitive e nough to notic e them. E nsuring Q ua lity
12 We aim to me et the dive rse nee ds of our customers w orldwide, and to provide servic es excee ding their e xpec tations through the highest standards of professiona lism, by le vera ging our global netw ork and the consolida ted strengths of the entire G roup. Improving Expertise âš«To provide our c ustomers w ith the be st possible product s a nd servic es, every oneof us w orks to improve our profe ssional knowledge and expe rtise . L everaging the Consolidate d Strengths of M UF G âš«For our custome rs, MU FG is a single compa ny. We wi ll c ontinue to provide se rvicesthat e xc eed custome r expec tations by bringing our strengths a nd ca pa bilitiestoge ther a nd act ing as an integra ted group. Using O ur Global N etwork âš«We use M UFG ’s global netw ork to provide outstanding produc ts a nd services thatare truly world-cla ss.What is the Risk-ownershi p of the 1st line of defe nse ? The first line of defense re fers to the Business Unit of business exec ution, suc h as sale s and marketing. T he re a re risks a ssocia ted with sales and marketing acti vitie s, but some people wit hin the first line of defe nse ma y have a false sense that risk management should be entrusted to the Risk M anagement Offic e, which is the se cond line of defense, and that they should concentrate on e arning. T he primary responsibility for ma na ging risk associate d w ith sa les and marketing a ctivities rests with the first line of de fense, which is re sponsible for the c onsequences of risk e ve nt s. Risk-ownership mea ns being prepared for the c onsequences of sale s-relate d risks. Sta ff in the fi rst line should be awa re of risk ow ne rship, identify risks in their day-to-day operations, a nd strive t o control them as needed. Exce eding Custome r E xpec tations Chapter 3 Code of Conduct Chapter 2 Chapter 1 Introduc tion
Chapte r 2. Re sponsibi lity a s a Corporate Citiz en A s we develop our business globally, we c omply with all the domestic and international laws a nd rule s that may apply. We do all we can to ma inta in sta bility and confidence in the globa l financial system, and w e contribute to the sound a nd healthy growth of society. Aw are of the responsibility and acc ountability eac h of us has as a membe r of M UFG , w e ca rry out fair and t ransparent c orporate activities w ith honesty a nd integrity, in a manne r that supports and stre ngthens the trust and c onfidence M UFG has e arned from socie ty over ma ny years.
15-2 In a ddition to adhering strictly to a ll domestic a nd interna tiona l la ws, re gulations and rules, we strive to do the right thing ba sed on our stric t c ode of e thics. V iolations of l aws or rule s dama ge t he vita l socia l infra structure of the financia l syste m and lead to a loss of trust i n M UFG . We st rictly abide by a ll laws and rules relating to our busine ss, including the follow ing area s: Prohibition of Insider Trading âš«Insider trading is ill egal in ma ny countries and is strictly re gula ted, regardless of the amount of mone y involve d. âš«We manage mat eria l information rigorously a nd have no involve me nt in ac tivi tiesthat use ma terial nonpublic information to gain illegal profits. Ban on Unfa ir T rading Pra ctice s â š«A s a pa rtic ipa nt in a fair, transpa rent, and free competitive marke t, w e have noinvolvement with unfair trading practic es (including c arte ls, a buse of domina ntposition, a nd marke t ma nipulation). âš«We abide strictly with all the law s a nd rule s (including all loca l ta x a nd compliancerequire me nts) in plac e to protect fair trading, including fire wall regula tions and thearm’s length rule in c ase of intercompa ny transa ctions bet wee n M UFG entities. Prohibition of inappropria te Gifts and H ospital ity â š«Complying with the Global Standard for Offe r and Acc eptance of G ifts and Business Hospitality,we e xerc ise good judgment and fair de aling to ensure that the giving or rece ivi ngof gift s a nd hospital ity w ith third parties (e .g., clie nts, vendors, public officials) is: â ž¢For a le gitima te business purpose (not to improperly influenc e business judgment) â ž¢Reasonable based on the facts and circ umsta nc es (not lavish or too frequent) 4 Acc urate Re cording a nd Appropria te Disc losure âš«Records of our business ac tivi ties, i nc luding financia l information, a re a ccura telyre corded and prope rly maintained and ma na ge d. âš«T o ensure tha t MU FG is prope rly understood and evaluate d in the wider soc iety, it isincumbent on us to ensure tha t c ompany information is disc lose d in a timely andappropriate ma nner, inc luding financia l reports. Conc ealment or nondiscl osure ofinforma tion damages our trust and reputation. W e are not involved in any inac cura teor inappropria te disc losure of informa tion, or in any a ttempt to concea l information. Adhere nc e to L aw s a nd Rules Chapter 3 Code of Conduct Cha pter 2 Chapter 1 Introduction
15 We have ze ro tol era nc e for supporting or fac ilitating financial c rime or a ny atte mpt to circ umvent the rule s a nd proce dures aimed at preventing financia l crime . We ta ke all re asona ble steps possibl e to prevent our products and servic es from being used by individua ls or e ntities involved in ill egal or imprope r ac tivities suc h a s money laundering a nd terrorist financing.
P reventing Financial Crimes and M isuse of Financial Se rvice s
â š«We rema in al ert to the possibility tha t the financia l se rvice s provided by M UFG on aglobal ba sis ma y be misuse d to facilita te financia l crime s a s per below, and doeverything in our power to prevent illicit ac tivities involving our products andse rvice s such as;
A ttempted or Ac tua l Money laundering / T errorist financing V iol ations of e conomic sanctions pa rtic ipa tion in or promotion of bribery and c orruption Fa cilitat ion of tax evasion Fra ud, which is de fined generally as any a ction through w hich an individua l orentity inte rnationally atte mpts to se cure a n unfa ir or unlawful ga in. A nti-Bribery and Corruption(“ABC”) We adhere to the highest standa rds of ethica l c onduct. In particular, w e prohi bit:
O ffering or giving anything of value1 to anyone, dire ctly or indirectly, if it isintended or it appears a s i nte nded to imprope rly obta in or reta in busine ssa dva nta ge s S olic iting or a cce pting anything of value from a nyone, direct ly or indire ctly, if itinfluence s or could appear to i nfluence decisions on behalf of MU FG Fal sifying or c once aling a ny books, rec ords accounts or other informati on inconne ction w ith M UF G’s busine ss.
W e comply with ABC Policy requirements that apply to ce rtain ac tivi ties (e.g., giftsand hospitality, hiring, engagement of intermediaries, donations), especia lly w he nthe y involve public officials. 3 No Relationships wi th Crimina l E lements
a ll re lationships with any known cri minal e lements are strictly forbidden. We workc lose ly w ith t he police , le ga l counsel, and othe r re levant externa l organizations toprotect the safety of all our staff.
1 Anything of value for the purpose this sec tion will have definition in Global ABC Policy.
16 We respe ct the history, c ult ures, and c ustoms of di ffere nt c ountrie s a nd regions around the world, and w ork to c ontribute to the development of diverse communitie s a nd the protec tion of the environment throughout our c orporate a ctivities and the soci al volunteer efforts of our staff. Giving Back to Communitie s â š«A s a good corporate citize n, M UFG i s proa ctively enga ged w ith loc al communitiesa nd contributes to the ir development. â š«A s me mbers of re gional communitie s a nd the globa l community, w e volunteerac tive ly to take part in a ctivities that make a meaningful contribution to society. Commitment to t he E nvironme nt â š«We w ork to minimize the e nvironmental impact of our c orporate a ctivities, as we llas strive to de ve lop and supply product s a nd servic es that contribute toenvi ronme nta l conse rvation and prote ction, thus contribut ing to ma king asustainable society a reality.Sustainable G rowth Ha ve you ever hea rd of “E SG” or “SDG s”? E SG stands for “E nvironme nt, Socia l and G overnance,” three esse ntia l elements for the long-te rm growth of a company. SD Gs (“ Susta inable De ve lopment Goals” ) are the blue print for c ooperative interactions be twee n national gove rnments a nd privat e compa nie s to tac kl e soc ial issue s, such as cle an e nergy and e conomic grow th, to achieve a be tter global future . O ur custome rs and investors now have a strong tendency to view compa nie s from suc h perspectives. With the de ve lopment of the informa tion age, including the introduction of soc ial networking servic es, our socie ty has become a plac e where good and bad conduc t can be quic kly and easily re ve aled to t he public. Increasingly, a company that engages in proper conduct a s a c orporate citize n ca n w in more trust from customers and re ceive positive evaluations from inve stors. H owever, the reverse is also true. With consideration of the public nature of financi al servic es and our posi tion in the industry, we must assume t ha t socia l expe ctations toward M UFG are ve ry high, and it is therefore essentia l tha t e ach member of sta ff a nd exec ut ive ma na ge me nt e nga ge s in proper c onduct with an understanding of those expecta tions. Contributing to S oc iety Cha pte r 3 Code of Conduc t Cha pte r 2 Cha pte r 1 Introduction
Chapte r 3. Be ha viors i n the Workplac e We strive to re spond a nd adapt promptly to the diversifying and evolving ne eds of our c ustomers and the rapidly cha nging e nvironment in which we w ork. T he working environme nt a t MU FG fosters mutual respect, enables individuals to make the most of their abilities as professiona ls, a nd maximizes the pow er of teamwork a cross re gions and different areas of busine ss, encoura ging all staff members to embra ce new c hallenges. We work alw ays to prote ct and ma inta in the ta ngible and intangible a ssets and property t ha t M UF G has acc umulate d.
W e strive to enhance our know ledge , e xpe rtise, and potentia l and maximize the powe r of tea mw ork. We be lieve that the changing busine ss e nvironment represe nts opportunity and are alwa ys ready to embrace new challenges in ne w fie lds. Persona l Grow th â š«A s the nee ds and businesses of our customers c ontinue to e volve, it is essentialthat w e too c ontinue to grow profe ssionally so a s to provide the best possibleproducts and se rvices for custome rs. âš«We endeavor to improve our i ndividua l skills, abilitie s, and pote ntia l, through ourwork and by taking a dva nta ge of tra ining and e duc ationa l opportunities bothinside and outside of M UFG . We proa ctively support the efforts of all MU FG stafftow ard personal grow th. T eamwork â š«We share informa tion, skills, a nd expertise within MU FG and continue to becommitted to maximizing the pow er of te amwork in pursuit of our business. O penne ss to Ne w Challenges âš«Monitoring de ve lopments in soc iety and cha nges in the business environme nt,w e embra ce new c ha llenges in the belie f that change represe nts opportunity.We positive ly support and e va lua te staff who acti ve ly ta ke on challe nges.T he re is no growth without c ha llenge s, a nd no succ ess without grow th. L earning and expe rie nc e are important aspe cts of how we grow as pe ople. But some time s c hallenges are ne cessary, too. Particularly w he n major change s a re happening, a ccepting a challe nge w ithout fe ar of failure can lea d to major growth. This applies not only to individuals but to e ntire organiza tions. Challenge Ourselves to G row Chapter 3 Code of Conduct Chapter 2 Chapter 1 Int roduc tion
W e respec t the human rights and diversity of a ll MU FG staff. We do not engage in or tole ra te any form of discrimination or hara ssme nt or a ny other behavior that infringes these beliefs. Re spe ct for H uma n Rights and D ive rsity âš«As a globa l group, our workforce is highly diverse in terms of ethnic ity, c olor, nationalorigin, birthplace , belie fs, re ligion, gende r, sexual orientati on, ge nde r identity, a ge ,physical or menta l disability, as we ll as in other dimensions. âš«Di ve rsity is one of M UFG ’s stre ngths and w e respe ct a diversity of values. A diverse group of staff results in broa de r ideas and a more rewa rding w ork expe rienc e. âš«W e do not tole rate disc rimination, harassment or infringeme nt of the rights of a nyindividual, on a ny basis as may be se t forth in applic able law and w e provide e qua lempl oyment opportunity accordi ngly. Open Communic ation â š«We strive to cre ate a n open and vibra nt w orkpla ce in which staff deal w ith oneanother w ith sinc erity and honesty, regardless of position, he lping and respec tingone anothe r. Prohibition of H arassment âš«H arassment undermines the dignity of the recipient and seri ously da ma ge s the smooth running of the organizati on. We do not commit or tole rate se xua lha rassment, “power” harassme nt (as may be de scribe d in the laws of somecountrie s), or ot he r thre atening or hostile behavior, including harassme nt fromexternal sources. âš«We do not tolera te any ha rassment or bullying within the compa ny.Respec t e ach othe r Ha ra ssment, such as se xua l ha rassment and powe r harassment, a re a cts tha t seriously ha rms pe ople a nd will not be tole ra ted by MU FG, regardle ss of w hether it is re gula ted by law or not. In order for a ll e xecutives and sta ff to respect one anothe r, it is import ant to think a bout dive rsity and incl usiveness. Collaborative and Professiona l Working E nvironment
21 We protec t the tangible a nd intangibl e assets and prope rty of MU FG a nd individual Group entitie s a nd do not tolera te any be ha vior tha t might da mage these assets. âš«We all use corporate asse ts for legitimate c ompany business and sa fe guard t he m a ga instc yber-rela ted risk, unauthorize d a ccess, theft, loss, waste , or a buse. Subject to compa nypolicie s a nd applicable la w, MU FG may inspe ct and monitor all use of M UFG technology,fac ilities, and other assets. âš«We protec t the c onfide ntiality, se curity and privacy of informa tion of our staff and thirdparti es and c olle ct, use a nd disclose such information in a n authoriz ed and sec ure manner.L essons L earned Reports on corporate sca ndals appea r in the me dia almost on a da ily basis. You must never think that these scandals are some thing that doe sn’t concern us. Wha t ha s happened at other c ompanies could ha ppen here too. Sca nda ls have a ffected M UFG c ompanies a s w ell. We must a na lyz e the re asons for these fa ilures, discuss w ays of ensuring they do not ha ppe n agai n, and the n implement these mea sures thoroughly. Be ing humble e nough to learn from our own mista ke s a nd those of othe rs is a key pa rt of w ha t i t ta ke s to build a good, strong compa ny. Speak Up If you have concerns or questions about conduc t tha t you think might contra ve ne the law, company-pol icies or rule s, or this Code of Conduct, be sure to report the matte r promptly to the appropria te pe rson or seek advice from a supervisor or pe rson in cha rge of compliance issues, or use the Compliance hel pline system established within eac h M UFG company. Never worry tha t you might be making a fuss about something minor. T rust your sense that something is wrong. There w ill not be any repercussions for reporting a matter through the Complia nc e helpline syste m or otherwise. M anagement or the designa ted human re sourc es or similar func tion w ill be responsible for carrying out full a nd proper investigation int o the matte r you have brought to our attention. P rotecti ng MU FG’s Assets and Property Chapter 3 Code of Conduct Chapter 2 Chapter 1 Introduc tion
If you be come aware of c onduct that contravene s the la w, compa ny re gula tions, or the provisions of this Code of Conduct , or a ny other problem situations, you must promptly re port the ma tter a nd see k advice from a supe rvisor, human resources, compliance office r or issue a re port via Compliance H elpline arra ngements made availa ble by M UFG . â š«If you suspe ct there is any problem within the compa ny, you must promptly report thema tter to an appropriat e pe rson, for example a supervisor or senior mana ge r, or you must use the various compliance helpline arra nge me nts in place a cross the Group or other mea nsa va ilable locally. âš«Whether the c ompliance he lpline reporting channe ls are utiliz ed or not, the person whorec eives the re port or information about any problem will treat it in the stricte st c onfidencea nd MU FG is committed to e nsuring that reporting sta ff do not suffer reta liation or othernegative conseque nces. âš«Reports of suspec ted viola tions made in good faith, including those ma de to law enforcement or a governmental age nc y, will not subje ct the staff to a ny adverse actionbased on such reporting.T he M UF G Group Complianc e Helpline N ishimura & A sa hi (Atte nti on: M UFG G roup Compliance H elpline) (Address) Otemon T ower, 1-1-2 Ote ma chi, Chiyoda -ku, T okyo 100-8124, Ja pa n (Web Address) http://w ww .jurists.c o.jp/en/ ?P lease note that the MU FG G roup Compliance H elpline ma y not be available in some countries or re gions due , for example, to da ta protecti on law s. Se e your loc alComplia nc e Helpline Policy for de tails of the esca lation routes available to you.M UFG Audit Committee (Address) 2-7-1, Marunouchi, Chi yoda-ku, Tokyo 100-8388, Japan?M UFG A udit Committee contac ts you through an externa l la w office.Contact information for ea ch region A sia Plea se use the M UF G Group Complia nc e Helpline a s refere nc ed be low , or your loca l he lpli ne a s se t out in the loc al polic y. A me ric as www .MU FGA me ric asIntegrityL ine.com EM EA For MU FG Bank branche s, subsidia ries, and representative office s, see the EM EA homepage on F IDE S and follow the Complia nc e helpline link: https://intranet .sps.emeares.local/e mea/Pa ge s/de fa ult.a spx For M US(EM EA ), M US(EU ) and the ir bra nc he s, se e the EM EA homepage on c onnec t and foll ow the Compliance helpline link: http://home.intrane t.mfil.loc al/Pa ge s/de fault.aspx ?For M UT B and its subsidia ries, please report in acc ordance w ith your compa ny’sCompliance he lpline system. Reporting P roblem Situations a nd See king Advice
M itsubishi U FJ F ina nc ial Group,Inc . G loba l Compliance D ivi sion, Corporate P lanning Division A pril.2021 establishment
Excerpts from MUFG’s Compliance Rules
(English Translation)
(Objective)
Article 1.
These rules prescribe basic matters relating to compliance with laws and regulations.
(Revision and abolition)
Article 2.
These rules may be revised or abolished by decision of the Executive Committee; provided, however, that
any material revision or abolishment of rules relating to the duties and responsibilities of the Board of Directors
or Member of the Board of Directors shall be made pursuant to a resolution of the Board of Directors.
(Definitions)
Article 4.
(1)
(2)
(3)
In these rules, “laws and regulations” mean laws and government ordinances to be strictly observed by
MUFG personnel when carrying out business operations, as well as MUFG’s Articles of Incorporation,
Code of Ethics, and other rules and regulations established according to the laws and government
ordinances above.
In these rules, “compliance” means understanding the purpose and contents of laws and regulations
properly, and behaving in an appropriate manner so as not to violate applicable laws and regulations.
In these rules, “affiliates” is a general term for MUFG’s consolidated subsidiaries and affiliated companies
accounted for by the equity-method.
(4)
In these rules, “MUFG Group” means MUFG and its affiliates.
(Fundamental Policy)
Article 5.
The MUFG Ethical Framework and Code of Conduct are the foundations of compliance at MUFG.
(Responsibilities of Members of the Board of Directors, Corporate Executives (Shikko Yaku), Executive officers
(Shikko Yakuin) and Board of Directors)
Article 6.
(1)
In accordance with the “Ethical Framework and Code of Conduct”, MUFG Members of the Board of
Directors, corporate executives (shikko yaku) and executive officers (shikko yakuin) must carry out their
responsibilities with the recognition that compliance is one of the most important objectives of management.
(2) The board of directors must establish systems necessary for compliance and seek to achieve and maintain
compliance.
(Responsibility of MUFG Managing Directors)
Article 7.
Managing Directors must implement compliance within their division.
(Responsibility of MUFG Employees)
Article 8.
(1) MUFG employees must ensure compliance while performing their duties, and act in accordance with the
“Ethical Framework and Code of Conduct”.
(2) MUFG employees must strive to acquire adequate knowledge of the laws and regulations which are
necessary to their business operations.
(Directors in charge of the Global Compliance Division and the Global Financial Crimes Division)
Article 10.
(1) The Directors in charge of the Global Compliance Division and the Global Financial Crimes Division must
report matters concerning compliance to the Board of Directors or Executive Committee as necessary.
(2) When there is a risk of an unavoidable conflict of interest with a different division that the director in charge
of the Global Compliance Division is also in charge of, to insure the independence of the Global
Compliance Division, the managing director of the Global Compliance Division shall report to the President
and CEO. The President and CEO will report to the Board of Directors or Executive Committee as
necessary. Appropriate action shall also be taken to avoid conflicts of interest in cases other than those
mentioned above.
(Office in Charge of Compliance)
Article 11.
(1) The Global Compliance Division is in charge of overseeing the overall compliance framework.
*
*
*
(4) When the Global Compliance Division receives reports of problems or possible problems relating to
compliance, or when it discovers such problems itself, it must take necessary actions.
Article 11. ii
The Global Financial Crimes Division is in charge of overseeing the Group’s measures and management
systems concerning global financial crimes, including money laundering prevention, economic sanctions
measures, and bribery and corruption prevention.
(Compliance Officers Responsible)
Article 12.
The head of each business group is the compliance officer responsible for that business group. The
compliance officer responsible oversees their business group and is responsible for any compliance related
planning and supervision within their jurisdiction.
(Group Chief Compliance Officer)
Article 13.
(1) A Group Chief Compliance Officer (CCO) (primarily the responsibility of the Global Compliance Division
and the Global Financial Crimes Division) will be appointed based on Article 19 Paragraph 2 of the
Organizational Regulations. When there is no appointed Group CCO, the director overseeing the Global
Compliance Division will act as CCO.
(2) The Group CCO (or in cases where there is no Group CCO, the CCO) shall oversee the coordination of
division compliance officers (defined in Article 14), the chief compliance officer of each company in the
MUFG Group, and any persons filling both those roles, as well as provide necessary guidance, advice and
instruction based on the management agreement.
(3) The Group CCO (or in cases where there is no Group CCO, the CCO) can request reports on compliance
matters from the specified compliance officers responsible (defined in Article 12).
(Division Compliance Officers)
Article 14.
*
*
*
(1) A chief manager in each division will serve as division compliance officer. Each managing director may
appoint a person equivalent to a chief manager as division compliance officer. In such cases, the managing
director should report to the Global Compliance Division in the Corporate Center, the compliance officer
responsible for each business group (defined in Article 12), or the Global Compliance Division.
(2) The division compliance officer is responsible for the strengthening of compliance in each division and for
planning and supervising compliance related issues regarding business matters under their jurisdiction.
Furthermore, the compliance officer will carry out duties including the management and compliance
checking of documents, gathering information concerning the establishment and revision of laws relating to
the duties of each division, working to improve general compliance conditions, and will play a central role
in implementing compliance measures in each division.
(Responsibilities of Managing Directors)
Article 15.
When the managing director receives reports of problems or possible problems relating to compliance from
the division compliance officer, or when they discover such problems themselves, they must consult with the
managing director of the Global Compliance Division as well as provide orders and instructions to the division
compliance officer. Furthermore, in each business group, they must report to the compliance officer responsible.
(Compliance Reporting System)
Article 16.
(1) When a MUFG employee discovers problems or possible problems relating to compliance, they must report
directly to their senior managers and the division compliance officer as stipulated in Article 14.
(2) A person receiving such report must treat the report with appropriate care in working towards a resolution.
Furthermore, the information relating to any reporting person must be treated with appropriate caution.
(3) When the compliance officers receive reports of or otherwise detect violations of laws and regulations, or
possible violations, they must report directly to the Global Compliance Division or the Global Financial
Crimes Division and the managing director of their division. In cases where the managing director is
involved in inappropriate conduct or behavior (including cases where such involvement is suspected or
where a determination as to such involvement is difficult to make), such reports must be made to the Global
Compliance Division or the Global Financial Crimes Division.
(4) When a MUFG employee does not wish to report to their senior managers and the division compliance
officer due to said officer being complicit in a violation of laws and regulations or the possibility thereof, or
when no response or remediation is made despite an employee having made a report, the employee can
report directly to the Global Compliance Division. In each business group, reports can be made to necessary
parties other than those mentioned above, based on the instructions of the compliance officer responsible
(defined in Article 12).
(5) When a report of a problem or possible problem relating to compliance are made, it shall be prohibited to
take any action to seek or identify the person who made the report or take any adverse employment action
against such person for making the report.
Excerpts from MUFG’s Compliance Manual
(English Translation)
I.
Legal issues regarding Management
(3) Board Director and Corporate Executive
(4) Transactions involving a conflict of interest
When a Board Member or a Corporate Executive engages in a transaction involving a conflict of
interest, the Board Member or the Corporate Executive must receive the approval of the Board of
Directors.
III. Specific issues
5. Conflicts of interest
When a conflict of interest arises in connection with an operation involving any of the MUFG Group
companies, Directors or employees, on one hand, and a customer or other third-party, the Director or
employee, the MUFG Group company to which such Director or employee belongs, or any other
MUFG Group company, on the other, the MUFG Group company, Director or employee must perform
the operation in a proper manner.
Excerpts from MUFG’s Rules of Employment
(English Translation)
(Disciplinary Action)
Article 40.
The company will take disciplinary action when employees take the following prohibited actions:
(17) If an employee violated the rules of employment or any other applicable internal rules.
CERTIFICATION
Exhibit 12
I, Hironori Kamezawa, certify that:
1.
I have reviewed this annual report on Form 20-F of Mitsubishi UFJ Financial Group, Inc.;
2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state
a material fact necessary to make the statements made, in light of the circumstances under which such
statements were made, not misleading with respect to the period covered by this report;
3. Based on my knowledge, the financial statements, and other financial information included in this report,
fairly present in all material respects the financial condition, results of operations and cash flows of the
company as of, and for, the periods presented in this report;
4.
The company’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure
controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control
over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the company and
have:
(a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to
be designed under our supervision, to ensure that material information relating to the company,
including its consolidated subsidiaries, is made known to us by others within those entities, particularly
during the period in which this report is being prepared;
(b) Designed such internal control over financial reporting, or caused such internal control over financial
reporting to be designed under our supervision, to provide reasonable assurance regarding the
reliability of financial reporting and the preparation of financial statements for external purposes in
accordance with generally accepted accounting principles;
(c) Evaluated the effectiveness of the company’s disclosure controls and procedures and presented in this
report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end
of the period covered by this report based on such evaluation; and
(d) Disclosed in this report any change in the company’s internal control over financial reporting that
occurred during the period covered by the annual report that has materially affected, or is reasonably
likely to materially affect, the company’s internal control over financial reporting; and
5.
The company’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of
internal control over financial reporting, to the company’s auditors and the audit committee of the
company’s board of directors (or persons performing the equivalent functions):
(a) All significant deficiencies and material weaknesses in the design or operation of internal control over
financial reporting which are reasonably likely to adversely affect the company’s ability to record,
process, summarize and report financial information; and
(b) Any fraud, whether or not material, that involves management or other employees who have a
significant role in the company’s internal control over financial reporting.
July 9, 2021
/s/ Hironori Kamezawa
Name: Hironori Kamezawa
Title: President & Group Chief Executive Officer
CERTIFICATION
I, Tetsuya Yonehana, certify that:
1.
I have reviewed this annual report on Form 20-F of Mitsubishi UFJ Financial Group, Inc.;
2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state
a material fact necessary to make the statements made, in light of the circumstances under which such
statements were made, not misleading with respect to the period covered by this report;
3. Based on my knowledge, the financial statements, and other financial information included in this report,
fairly present in all material respects the financial condition, results of operations and cash flows of the
company as of, and for, the periods presented in this report;
4.
The company’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure
controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control
over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the company and
have:
(a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to
be designed under our supervision, to ensure that material information relating to the company,
including its consolidated subsidiaries, is made known to us by others within those entities, particularly
during the period in which this report is being prepared;
(b) Designed such internal control over financial reporting, or caused such internal control over financial
reporting to be designed under our supervision, to provide reasonable assurance regarding the
reliability of financial reporting and the preparation of financial statements for external purposes in
accordance with generally accepted accounting principles;
(c) Evaluated the effectiveness of the company’s disclosure controls and procedures and presented in this
report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end
of the period covered by this report based on such evaluation; and
(d) Disclosed in this report any change in the company’s internal control over financial reporting that
occurred during the period covered by the annual report that has materially affected, or is reasonably
likely to materially affect, the company’s internal control over financial reporting; and
5.
The company’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of
internal control over financial reporting, to the company’s auditors and the audit committee of the
company’s board of directors (or persons performing the equivalent functions):
(a) All significant deficiencies and material weaknesses in the design or operation of internal control over
financial reporting which are reasonably likely to adversely affect the company’s ability to record,
process, summarize and report financial information; and
(b) Any fraud, whether or not material, that involves management or other employees who have a
significant role in the company’s internal control over financial reporting.
July 9, 2021
/s/ Tetsuya Yonehana
Name: Tetsuya Yonehana
Title: Group Chief Financial Officer
Exhibit 13
MITSUBISHI UFJ FINANCIAL GROUP, INC.
CERTIFICATION REQUIRED BY
RULE 13a-14(b) OR RULE 15d-14(b)
AND 18 U.S.C. Section 1350
In connection with the Annual Report of Mitsubishi UFJ Financial Group, Inc. (the “Company”) on
Form 20-F for the fiscal year ended March 31, 2021 as filed with the US Securities and Exchange Commission
on the date hereof (the “Report”), I, Hironori Kamezawa, President & Group Chief Executive Officer of the
Company, hereby certify, pursuant to 18 U.S.C. Section 1350 that:
1. The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act
of 1934; and
2. The information contained in the Report fairly presents, in all material respects, the financial condition
and results of operations of the Company.
Dated: July 9, 2021
/s/ Hironori Kamezawa
Name: Hironori Kamezawa
Title: President & Group Chief Executive Officer
MITSUBISHI UFJ FINANCIAL GROUP, INC.
CERTIFICATION REQUIRED BY
RULE 13a-14(b) OR RULE 15d-14(b)
AND 18 U.S.C. Section 1350
In connection with the Annual Report of Mitsubishi UFJ Financial Group, Inc. (the “Company”) on
Form 20-F for the fiscal year ended March 31, 2021 as filed with the US Securities and Exchange Commission
on the date hereof (the “Report”), I, Tetsuya Yonehana, Group Chief Financial Officer of the Company, hereby
certify, pursuant to 18 U.S.C. Section 1350 that:
1. The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act
of 1934; and
2. The information contained in the Report fairly presents, in all material respects, the financial condition
and results of operations of the Company.
Dated: July 9, 2021
/s/ Tetsuya Yonehana
Name: Tetsuya Yonehana
Title: Group Chief Financial Officer
CONSENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
We consent to the incorporation by reference in Registration Statement No. 333-230590 on Form S-8 and
Registration Statement No. 333-242048 on Form F-3 of our reports dated July 9, 2021, relating to the financial
statements of Mitsubishi UFJ Financial Group, Inc. (“MUFG”) and the effectiveness of the MUFG’s internal
control over financial reporting appearing in the Annual Report on Form 20-F of MUFG for the year ended
March 31, 2021.
Exhibit 15(a)
/s/Deloitte Touche Tohmatsu LLC
Tokyo, Japan
July 9, 2021
CONSENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
We consent to the incorporation by reference in Registration Statement No. 333-230590 on Form S-8 and
Registration Statement No. 333-242048 on Form F-3 of Mitsubishi UFJ Financial Group, Inc. of our reports
dated February 26, 2021, relating to the consolidated financial statements of Morgan Stanley, and the
effectiveness of Morgan Stanley’s internal control over financial reporting, appearing in the Annual Report on
Form 10-K of Morgan Stanley for the year ended December 31, 2020.
Exhibit 15(b)
/s/ Deloitte & Touche LLP
New York, New York
July 9, 2021
CAPITALIZATION AND INDEBTEDNESS
The following table presents our capitalization and indebtedness at March 31, 2021:
Total short-term borrowings(1)
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Exhibit 99(a)
At March 31,
2021
(in millions)
¥45,843,917
Long-term debt:
Obligations under finance leases . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Unsubordinated debt . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Subordinated debt . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Obligations under loan securitization transactions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Debt issuance costs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
20,137
29,918,995
4,613,826
618,083
(13,390)
Total long-term debt
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
35,157,651
Shareholders’ equity:
Capital stock, with no stated value (common stock authorized: 33,000,000,000 shares;
common stock issued: 13,581,995,120 shares) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Capital surplus . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Retained earnings:
Appropriated for legal reserve . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Unappropriated retained earnings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Accumulated other comprehensive income, net of taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Treasury stock, at cost: 737,282,154 common shares . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
2,090,270
5,533,761
239,571
8,589,900
(289,481)
(503,072)
Total shareholders’ equity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
15,660,949
Noncontrolling interests . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
583,605
Total equity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
16,244,554
Total capitalization and indebtedness . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
¥51,402,205
Note:
(1) Total short-term borrowings consist of call money and funds purchased, payables under repurchase agreements, payables under securities
lending transactions, due to trust account and other short-term borrowings.
UNAUDITED REVERSE RECONCILIATION OF
SELECTED FINANCIAL INFORMATION
Exhibit 99(b)
Our consolidated financial statements are prepared in accordance with U.S. GAAP as described in the notes
thereto. The basis of our consolidated financial statements prepared under U.S. GAAP is significantly different
from Japanese GAAP in certain respects. Under Japanese banking regulations and Tokyo Stock Exchange rules,
we are required to report our annual and quarterly results prepared in accordance with Japanese GAAP. We
present below a reverse reconciliation of total equity under U.S. GAAP to net assets under Japanese GAAP as of
March 31, 2021 and net income before attribution of noncontrolling interests for the fiscal year ended March 31,
2021.
Total equity in accordance with U.S. GAAP . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Differences arising from different accounting for:
1. Investment securities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
2. Loans . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
3. Allowance for credit losses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
4. Fixed assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
5. Pension liability . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
6. Derivative financial instruments and hedging activities . . . . . . . . . . . . . . . . . . . . . . . . . .
7. Compensated absences . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
8. Long-term debt . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
9. Consolidation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
10. Goodwill . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
11. Intangible assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
12. Investments in equity method investees . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Other . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Deferred income tax effects, when applicable . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
As of
March 31, 2021
(in millions)
¥
16,244,554
(11,495)
13,706
395,656
338,975
(13,383)
187,549
50,623
(6,369)
291,740
327,550
(10,466)
606,633
(542,008)
(157,008)
Net assets in accordance with Japanese GAAP . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
¥
17,716,257
Net income before attribution of noncontrolling interests in accordance with U.S. GAAP . . . . .
Differences arising from different accounting for:
1. Investment securities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
2. Loans . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
3. Allowance for credit losses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
4. Fixed assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
5. Pension liability . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
6. Derivative financial instruments and hedging activities . . . . . . . . . . . . . . . . . . . . . . . . . .
7. Compensated absences . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
8. Long-term debt . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
9. Consolidation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
10. Goodwill . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
11. Intangible assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
12. Investments in equity method investees . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Other . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Deferred income tax effects, when applicable . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
For the fiscal year
ended
March 31, 2021
(in millions)
¥
1,163,394
(728,535)
29,814
(45,989)
(12,071)
(3,216)
158,575
2,720
(373)
(41,992)
130,731
(2,027)
(120,601)
66,648
259,889
Net income before attribution of noncontrolling interests in accordance with Japanese
GAAP . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
¥
856,967
Explanation of Differences between U.S. GAAP and Japanese GAAP
Major factors which explain the differences shown in the above table are as follows:
1. Investment securities
The cost basis of certain securities is different under U.S. GAAP and Japanese GAAP due primarily to the
following:
‰ On October 1, 2005, Mitsubishi Tokyo Financial Group, Inc. (“MTFG”) merged with UFJ Holdings,
Inc. (“UFJ Holdings”), with MTFG being the surviving entity, and was renamed “Mitsubishi UFJ
Financial Group, Inc.” Under U.S. GAAP, in accordance with the guidance on accounting for business
combinations, the assets and liabilities of companies acquired in purchase transactions are recorded at
fair value at the date of acquisition. Therefore, the new cost basis of investment securities, including
available-for-sale and other investment securities, of UFJ Holdings was established and they were
recognized at fair value as of October 1, 2005. Under Japanese GAAP, which was effective as of
October 1, 2005, the new cost basis was not established for such investment securities and they were
carried over at their historical cost basis.
‰ Under U.S. GAAP, available-for-sale debt securities are considered to be impaired if the fair value is
less than the amortized cost basis. An impairment loss is recognized in earnings for a security if the
MUFG Group has intent to sell such a debt security or if it is more likely than not the MUFG Group will
be required to sell such a debt security before recovery of its amortized cost basis. If not, the credit
component of an impairment loss is recognized in earnings by recording an allowance for credit losses,
limited by the amount of impairment loss. However, the noncredit component of an impairment loss is
recognized in accumulated OCI. For Held-to-maturity debt securities, an allowance for expected credit
losses over the remaining expected life is required to be provided. In addition, marketable equity
securities are measured at fair value with unrealized gains or losses reflected in net income. Under
Japanese GAAP, significant declines in the fair value of securities below cost are recorded in earnings
for both debt security and marketable equity security. In determining a significant decline, the extent of
the decline in fair value below cost and credit standing of the issuers are considered.
‰ Under U.S. GAAP, measurement alternative is elected for nonmarketable equity securities, and these
securities are primarily measured at cost minus impairment, if any, plus or minus changes resulting from
observable price changes in orderly transactions for the identical or a similar investment of the same
issuer. Under Japanese GAAP, these securities are measured at cost minus impairment, but changes
resulting from observable price changes are not recognized.
‰ Under U.S. GAAP, changes in the fair value of foreign securities held by MUFG Bank and Mitsubishi
UFJ Trust and Banking are recognized in earnings since the fair value option was elected for these
foreign securities in accordance with the guidance on accounting for fair value options for financial
assets and financial liabilities. Under Japanese GAAP, only the changes attributable to movements in
foreign currency exchange rates are recognized in earnings and the other changes in the fair value are
recognized in other comprehensive income.
2. Loans
Under U.S. GAAP, loan origination fees, net of certain direct origination costs, are deferred and recognized
as income over the contractual life of the loans, while under Japanese GAAP, they are primarily recognized in
earnings at the time of origination.
3. Allowance for credit losses
Under U.S. GAAP, the credit loss allowance is measured on a collective basis over the contractual term of
the loans, when similar risk characteristics exist, based on relevant information about past events, including
historical experience, current conditions, and reasonable and supportable forecasts that affect the collectibility of
the loan or a group of loans. For loans that do not share similar risk characteristics, the credit loss allowance is
measured on an individual basis, primarily based on the present value of expected future cash flows discounted at
the loan’s effective interest rate, or the fair value of the collateral if the loan is collateral dependent. Under
Japanese GAAP, the allowance for loans, which is measured on a collective basis, is provided based mainly on
historical loss experience for the immediately following one-year period or the average remaining term to
maturity of loans. In addition, the allowance for certain types of loans, which is measured on an individual basis,
is provided based on historical loss experience. These differences between U.S. GAAP and Japanese GAAP
generally result in a larger amount of allowance for credit losses under U.S. GAAP.
4. Fixed assets
The differences between Japanese GAAP and U.S. GAAP principally consist of (1) Premises and
equipment, and (2) Land revaluation.
(1) Premises and equipment
Under U.S. GAAP, a nonmonetary asset acquired in exchange for another nonmonetary asset is generally
recorded at the fair value of the asset surrendered or that of the asset received, and a gain or loss is recognized on
the exchange. Under Japanese GAAP, the asset received is recorded at the cost of the asset surrendered in
relevant types of exchange transactions, resulting in no gain or loss.
(2) Land revaluation
U.S. GAAP does not allow revaluation of operating assets and requires land to be recorded at cost. Under
Japanese GAAP, land used for business operations of domestic subsidiaries was revalued as of March 31, 1998
for Bank of Tokyo-Mitsubishi, as of March 31, 2002 for The Mitsubishi Trust and Banking Corporation and as of
December 31, 2001 for other domestic subsidiaries of MTFG with the corresponding impact recorded directly in
equity as well as related deferred tax assets/liabilities, pursuant to the Law concerning Revaluation of Land.
Accordingly, land held on the revaluation dates are recorded at different values.
5. Pension liability
Under both U.S. GAAP and Japanese GAAP, the funded status of defined benefit plans is recognized as
assets or liabilities in a consolidated balance sheet, and actuarial gains or losses and prior service costs or benefits
that have not yet been recognized through earnings as net periodic benefit cost are recognized in other
comprehensive income, net of tax, until they are amortized as a component of net periodic benefit cost. Actuarial
gains or losses are amortized based on corridor approach under U.S. GAAP, while they are amortized over a
specified number of years under Japanese GAAP.
6. Derivative financial instruments and hedging activities
MUFG utilizes derivatives to manage its exposures to fluctuations in market factors such as interest rates
and foreign exchange rates arising from mismatches in the risk profiles of assets and liabilities. Under U.S.
GAAP, most derivatives used by MUFG are accounted for as trading assets or liabilities because they do not
qualify for hedge accounting under the criteria prescribed in the guidance on accounting for derivative
instruments and hedging activities. Japanese GAAP permits hedge accounting for certain derivative hedging
activities, including portfolio hedges, using less restrictive hedging criteria.
In addition, bifurcation requirements are different between U.S. GAAP and Japanese GAAP. Under U.S.
GAAP, if the economic characteristics and risks of the embedded derivatives are deemed “clearly and closely
related” to the economic characteristics and risks of the host contracts, the embedded derivatives are not
bifurcated from their host contracts. Under Japanese GAAP, the embedded derivatives may be bifurcated from
their host contracts if the risk of the embedded derivatives and host contracts are managed separately.
7. Compensated absences
Under U.S. GAAP, in accordance with the guidance on accounting for compensated absences, an employer
is required to accrue a liability for employees’ rights to receive compensation for future absences such as unused
vacations and holidays when certain conditions are met (for example, unexpired vacation benefits that employees
have earned but have not yet taken). Under Japanese GAAP, employers are not required to recognize liabilities
and accordingly, no liabilities are recognized for such short-term employee benefits.
8. Long-term debt
Under U.S. GAAP, in accordance with the guidance on accounting for business combinations, the new cost
basis of long-term debt of UFJ Holdings was established and it was recognized at fair value as of October 1,
2005. Under Japanese GAAP, which was effective as of October 1, 2005, the new cost basis was not established
and the long-term debt was recorded at its historical cost basis.
9. Consolidation
The scope of consolidation is different under U.S. GAAP and Japanese GAAP primarily because, under
U.S. GAAP, the primary beneficiary must consolidate variable interest entities based on variable interests, which
resulted in additional consolidation of certain variable interest entities. Japanese GAAP does not have a concept
of variable interest entities.
On the other hand, certain variable interest entities including funding vehicles, which are consolidated under
Japanese GAAP due to the majority ownership of the voting rights, are not consolidated under U.S. GAAP
because MUFG and its consolidated subsidiaries are not their primary beneficiaries.
The breakdown of the impact of the difference on total equity is as follows.
Consolidation
under
U.S. GAAP
Deconsolidation
under
U.S. GAAP
Total
Investment securities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Loans . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Trading account assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Short-term borrowings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Long-term debt . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Others . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
¥ 1,782,599
(2,414,887)
(1,390,954)
1,690,415
306,652
(19,232)
(in millions)
¥ 91,384
872,129
336
(18,000)
(394,463)
(214,239)
¥ 1,873,983
(1,542,758)
(1,390,618)
1,672,415
(87,811)
(233,471)
Total
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
¥
(45,407)
¥ 337,147
¥
291,740
The breakdown of the impact of the difference on net income before attribution of noncontrolling interests is
as follows.
Consolidation
under
U.S. GAAP
Deconsolidation
under
U.S. GAAP
Total
Investment securities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Loans . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Trading account assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Short-term borrowings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Long-term debt . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Others . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
¥ (121,857)
(15,207)
(17,188)
9,502
2,763
17,352
(in millions)
2,428
¥
166,811
727
(47)
(4,419)
(82,857)
¥ (119,429)
151,604
(16,461)
9,455
(1,656)
(65,505)
Total
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
¥ (124,635)
¥ 82,643
¥
(41,992)
10. Goodwill
Under U.S. GAAP, in accordance with the guidance on accounting for business combinations, identifiable
assets acquired, liabilities assumed, and any noncontrolling interest in an acquired company are recorded at fair
value at the date of acquisition. Goodwill is the excess of the fair value of noncontrolling interest and
consideration transferred, over the fair value of identifiable assets acquired and liabilities assumed. Goodwill is
not amortized, but is subject to an annual impairment test at the reporting unit level, and also reviewed more
frequently if events or changes in circumstance indicate that the goodwill might be impaired. Under Japanese
GAAP, goodwill is the difference between the purchase price consideration and the acquirer’s share of fair value
of the net assets acquired. Goodwill is amortized by straight-line method over the estimated period not exceeding
20 years, and an impairment test is required only if indication of impairment is identified.
In addition, the acquisition of UFJ Holdings has been accounted for by a method similar to
pooling-of-interests, and consequently goodwill has not been recognized in accordance with Japanese GAAP,
which was effective as of October 1, 2005.
11. Intangible assets
Under U.S. GAAP, in accordance with the guidance on accounting for business combinations, all
identifiable intangible assets acquired in purchase transactions are recorded at fair value at the date of
acquisition. Intangible assets with definite useful lives are amortized over their estimated useful life and reviewed
for impairment whenever events or changes in circumstance indicate that their carrying amount may not be
recoverable. Intangible assets with indefinite useful lives are tested for impairment at least annually, and also
reviewed more frequently if events or changes in circumstance indicate that the assets might be impaired. Under
Japanese GAAP, which was effective as of October 1, 2005, intangible assets have not been recognized in
connection with the acquisition of UFJ Holdings.
12. Investments in equity method investees
Under U.S. GAAP, a portion of a difference between the cost of an investment and the amount of
underlying equity in net assets of an investee is not amortized. A loss in value of an investment that is other than
a temporary decline is recognized as an impairment loss. Under Japanese GAAP, goodwill which is included in
investments in equity method investees is amortized by straight-line method. If a decline in the market value
below the cost is substantial, based on the extent of decline in market value and the credit standing of the issuers,
an impairment loss is recognized within the limit of the amount of unamortized goodwill.