Table of Contents
As filed with the Securities and Exchange Commission on July 24, 2023
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
☒ ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended March 31, 2023
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, Email and/or 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 ................................................................................................................................................
New York Stock Exchange (1)
American depositary shares, each of which represents one share of common stock ...................................................................
MUFG
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, 2023, 12,687,710,920 shares of common stock (including 665,392,775 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 ☒ 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 ☒
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 ☒ 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 ☒ 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
☒
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 ☒ No ☐
If securities are registered pursuant to Section 12(b) of the Act, indicate by check mark whether the financial statements of the registrant included in the filing reflect the correction of an error to
previously issued financial statements. ☐
Indicate by check mark whether any of those error corrections are restatements that required a recovery analysis of incentive-based compensation received by any of the registrant’s executive officers
during the relevant recovery period pursuant to §240.10D-1(b). ☐
Indicate by check mark which basis of accounting the registrant has used to prepare the financial statements included in this filing:
U.S. GAAP
☒ International Financial Reporting Standards as issued by the
International Accounting Standards Board
☐
Other
☐
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.
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).
Item 17 ☐ Item 18 ☐
Yes ☐ No ☒
Table of Contents
TABLE OF CONTENTS
Forward-Looking Statements .........................................................................................................................................................
Item 1.
Item 2.
Item 3.
Item 4.
Identity of Directors, Senior Management and Advisers ............................................................................................
Offer Statistics and Expected Timetable .....................................................................................................................
Key Information ...........................................................................................................................................................
Information on the Company .......................................................................................................................................
Item 4A.
Unresolved Staff Comments ........................................................................................................................................
Item 5.
Item 6.
Item 7.
Item 8.
Item 9.
Item 10.
Item 11.
Item 12.
Operating and Financial Review and Prospects ..........................................................................................................
Directors, Senior Management and Employees ...........................................................................................................
Major Shareholders and Related Party Transactions ...................................................................................................
Financial Information ..................................................................................................................................................
The Offer and Listing ..................................................................................................................................................
Additional Information ................................................................................................................................................
Quantitative and Qualitative Disclosures about Credit, Market and Other Risk .........................................................
Description of Securities Other than Equity Securities ...............................................................................................
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 ................................................................................................................................................
Item 16I
Disclosure Regarding Foreign Jurisdictions That Prevent Inspections .......................................................................
Item 17.
Item 18.
Financial Statements ....................................................................................................................................................
Financial Statements ....................................................................................................................................................
Item 19.
Exhibits ........................................................................................................................................................................
Selected Statistical Data ..................................................................................................................................................................
Consolidated Financial Statements .................................................................................................................................................
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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, liquidity coverage ratios and net stable funding
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
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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.
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.
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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 (including, but not limited to, our sustainability-related 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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deterioration in economic conditions in Japan and around the world,
external events, such as natural disasters and other health pandemics or epidemics, terrorism, and geopolitical 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 our ability to access or maintain 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,
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,” “Item 11. Quantitative and
Qualitative Disclosures about Credit, Market and Other Risk” and elsewhere in this Annual Report.
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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.
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Item 1.
Identity of Directors, Senior Management and Advisers.
PART I
Not applicable.
Item 2.
Offer Statistics and Expected Timetable.
Not applicable.
Item 3.
Key Information.
A.
[Reserved]
B. Capitalization and Indebtedness
Not applicable.
C. Reasons for the Offer and Use of Proceeds
Not applicable.
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.”
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, 2023, 65.4% of our total assets were related to Japanese domestic assets,
including Japanese national government and Japanese government agency bonds, which accounted for 64.1% of our total investment
securities portfolio and 10.5% of our total assets, respectively. Interest and non-interest income in Japan represented 41.5% of our total
interest and non-interest income for the fiscal year ended March 31, 2023. Furthermore, as of March 31, 2023, our loans in Japan
accounted for 57.5% 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, particularly between the Japanese yen and other
major currencies, may also have an adverse impact on our asset and liability management as well as our results of operations. Various
other factors, including large-scale public health issues, significant or prolonged inflationary or deflationary price trends, the
decreasing and aging demographics in Japan, stagnation or deterioration of economic and market conditions in other countries,
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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 credit costs, as the credit quality of our
borrowers could deteriorate. Borrowers in particular industries may be adversely affected by disruptions in commodity supply chains,
changes in economic behavior, trade restrictions and other consequences of pandemics, geopolitical and geoeconomic conflicts, and
other events that are beyond the control of those that are affected. 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 global inflation trends,
changes in the monetary and fiscal policies in major jurisdictions and the fiscal condition of major countries, rapid and significant
fluctuations in foreign exchange rates, and concerns and developments affecting financial institutions. Uncertainty over the Japanese
and global economies still remain because of such other factors as concerns over political developments in the United States, concerns
over the U.S.-China conflict, geopolitical instabilities and conflicts, interruptions in international supply chains and trade, and political
turmoil in various regions around the world. As of March 31, 2023, based principally on the domicile of the obligors, assets related to
the United States accounted for approximately 15.6% of our total assets, assets related to Asia and Oceania excluding Japan accounted
for approximately 9.0% of our total assets, and assets related to Europe accounted for approximately 6.5% 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, geopolitical conflicts 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, geopolitical, political and social conflicts, 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. We may
also 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. In addition, such external events may negatively impact the economic conditions in the markets
we or our customers operate. As a result, our business, operating results and financial condition may be materially and adversely
affected.
For example, the geopolitical developments in Ukraine have led to the imposition of economic and financial sanctions against
certain banks, companies and individuals in or related to Russia by the governments of Japan, the United States, the European Union
and other jurisdictions, resulting in increased complexity in our compliance and control environment. These geopolitical tensions have
also led to increased risk of cyber-attacks. A further continuation or escalation of these and other geopolitical conflicts and tensions
may hamper our ability to manage such complexity or risk and may result in significant financial, reputational and other losses.
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.
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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. ICE Benchmark Administration Limited, the LIBOR administrator,
ceased publication of short-term U.S. dollar LIBOR settings and all non-U.S. dollar LIBOR settings on a representative basis after
December 31, 2021, ceased publication of all other U.S. dollar LIBOR settings after June 30, 2023.
In preparation for the discontinuation of the publication of LIBOR, we have been taking measures to deal with the reform of
LIBOR and other interest rate benchmarks and the transition to alternative reference rates, and our transition away from LIBOR with
respect to transactions referencing LIBOR settings which ceased to be published at the end of calendar year 2021 have been mostly
completed, with a strategy in place for the remainder of such transactions. With respect to transactions referencing U.S. dollar LIBOR
settings which ceased to be published at the end of June 2023, we continue to take measures to complete our transition away from U.S.
dollar LIBOR, while legislative solutions have been developed to address existing contracts that cannot feasibly be transitioned away
from U.S. dollar LIBOR. Such transition from LIBOR and other interest rate benchmarks to alternative reference rates is complex and
entails uncertainty, including as to the economic characteristics and performance, market acceptance, and accounting and regulatory
treatment of such alternative reference rates and the transition to such rates, 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 as planned;
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;
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
our operational and risk management systems may not be fully effective to deal with the reform of LIBOR and other
interest rate benchmarks and the transition to alternative reference rates.
Climate change could have a material adverse impact on us and our clients.
We are exposed to risks of physical impacts of climate change and risks arising from the process of transitioning to a less
carbon-dependent economy. Climate change-related physical risks include increased severity and frequency of adverse weather events,
such as extreme storms and flooding, and longer-term shifts in climate patterns, such as rising temperatures and sea levels and changes
in precipitation amount and distribution. Such physical risks may have adverse impacts on us, both directly on our business operations
and as a result of impacts on our borrowers and counterparties, such as declines in the value of loans, investments, real estate and other
assets, disruptions in business operations and economic activity, including supply chains, and market volatility.
Transition risks include changes in regulations, market preferences and technologies toward a less carbon-dependent economy.
The possible adverse impacts of transition risks include asset devaluations, increased operational and compliance costs, and an
inability to meet regulatory or market expectations. For example, we and our borrowers and counterparties may become subject to new
or heightened regulatory requirements and stakeholder expectations regarding climate change, including those relating to lending,
investing and advisory as well as natural resource extraction and processing, energy generation and other business activities, capital
and liquidity adequacy, operational resiliency, and disclosure and financial reporting. We and our borrowers and counterparties may
also be unable to adapt product and service offerings or loan and investment portfolio management approaches to changes occurring in
the course of transitioning to a less carbon-dependent economy.
Because the timing and nature of climate change events and regulatory and market changes in reaction to them may be difficult
or impossible to predict, our risk management strategies may not be effective in mitigating climate change-related risk exposure.
Regulatory and market expectations regarding climate change continue to evolve rapidly and generate conflicting views and
approaches and may further develop in ways that diverge from our expectations or vary from market to market. The methodologies
and data used to monitor and manage climate change-related risks also continue to evolve and currently utilize information and
estimates derived from information or factors that are currently available which may be revised or replaced. In light of these and other
developments and uncertainties, we expect that climate change-related risks will increase over time.
We have defined and disclosed our aspirational goals and other information relating to climate change based on the standards
that have been adopted by us or are applicable to us. Such goals may prove to be considerably more costly or difficult than currently
expected, or even impossible, to achieve, particularly given the high degree of uncertainties surrounding climate change. In addition, if
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our risk assessment and disclosure relating to climate change that we make and plan to enhance with the intent to be aligned with the
recommendations of the Task Force on Climate-related Financial Disclosures, or TCFD, and other standards are deemed insufficient,
if our measures designed to combat climate change or facilitate the transition to a less carbon-dependent economy do not proceed as
planned, if our climate change-related risk management proves not to be as effective as expected, if we fail, or are deemed to have
failed, to comply with regulatory requirements relating to climate change, or if, as a result of any of the foregoing, we are considered
to be failing to fulfill our responsibility to society, then our corporate value may be impaired and our business, financial condition 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 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. Our
competitiveness may decline 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;
the fair value of our financial assets fluctuate to a larger extent than anticipated;
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;
our foreign currency funding becomes limited or unavailable;
we are restricted in agility or flexibility in investing in non-financial institutions under applicable laws and regulations in
and outside of Japan; and
rapid and significant deposit outflows caused by deteriorated customer confidence in our financial health or market
confidence in the financial industry result in a lack of liquidity.
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, including adoption or integration of new technologies, 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 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
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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, and
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, 2023, the total balance of goodwill was ¥296.8 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 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 22.6% of the voting rights in Morgan Stanley as of March 31, 2023 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, market or financial
conditions, changes in the regulatory environment, or any failure to integrate or share staff, products or services, or to operate, manage
or implement the business strategy of the joint venture securities 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 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 and revenue 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,
2023, our total risk-adjusted capital ratio was 13.91% compared to the minimum risk-adjusted capital ratio required of 12.04%, our
Tier 1 capital ratio was 12.04% compared to the minimum Tier 1 capital ratio required of 10.04%, and our Common Equity Tier 1
capital ratio was 10.76% compared to the minimum Common Equity Tier 1 capital ratio required of 8.54%, each including a capital
conservation buffer of 2.5%, a G-SIB surcharge of 1.5% and a countercyclical buffer of 0.04%. As of the same date, our leverage ratio
was 4.70% compared to the minimum leverage ratio required of 3.75%, which is the sum of a minimum leverage ratio requirement at
3.00% plus a leverage ratio buffer set at 50% of the G-SIB surcharge. On and after April 1, 2024, the applicable minimum leverage
ratio requirement is expected to be raised to 3.15%, and the applicable leverage ratio buffer requirement is expected to be set at 50%
of a G-SIB surcharge plus an additional 0.05%, while deposits with the Bank of Japan will continue to be excluded from the leverage
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exposure for the purpose of the calculation of the leverage ratio, in light of exceptional macroeconomic conditions and other
circumstances. Basel III risk measurement reforms are expected to be phased in from 2024. 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.
If our or our Japanese banking subsidiaries’ capital ratios or leverage ratios fall below the required levels, including various
capital buffers or a leverage buffer, the FSA may require us to take a variety of corrective actions, including abstention from making
capital distributions, such as dividends, share buybacks, interest payments on, and redemption and repurchase of, Additional Tier 1
capital instruments and bonus payments, 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.
Factors that will affect our and our bank subsidiaries’ capital ratios or leverage ratios include:
•
•
•
•
•
•
•
fluctuations in our or our banking subsidiaries’ portfolios due to deterioration in the creditworthiness of borrowers and the
issuers of equity and debt securities;
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.
We are also subject to the FSA’s 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,
2023, we maintained 20.22% of External TLAC on a risk-weighted assets basis compared to the required minimum ratio of 18.00%
and 9.47% of External TLAC on a leverage exposure basis compared to the required minimum ratio of 6.75%. The required minimum
ratio of External TLAC on a total exposure basis on and after April 1, 2024 is expected to be raised to 7.10%, while deposits with the
Bank of Japan will continue to be excluded from the total exposure for the purpose of the calculation of the external TLAC ratio, in
light of exceptional macroeconomic conditions and other circumstances. 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, 2023, the average balance of our foreign interest-earning assets was
¥115,159.2 billion and the average balance of our foreign interest-bearing liabilities was ¥76,295.0 billion, representing 39.6% of our
average total interest-earning assets and 25.9% 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
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incur foreign currency translation losses with respect to our foreign subsidiaries and equity method investees due to fluctuations in
foreign currency exchange rates.
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 real estate industry, to which we have significant credit risk exposure, worsen, or if climate change, public health issues,
geopolitical conflicts, fluctuations in commodity, real estate or stock prices or in interest or foreign exchange rates, changes in the
competitive environment or other developments adversely affect global or local economic conditions or particular industries or
borrowers, 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.
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 as well as macroeconomic trends. While we closely observe conditions of our individual borrowers and
industry and macroeconomic trends, if we need to provide for additional allowance for credit losses, or the value or liquidity of
collateral declines, due to deterioration in domestic and global economic conditions, commodity price fluctuations or other conditions
specific to certain borrowers, we may incur significant credit losses.
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.
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 real estate industry are relatively high in comparison to other
industries. The credit quality of borrowers in such industry does not necessarily correspond to general economic conditions in Japan or
other parts of the world, and adverse developments in the real estate market may disproportionately increase our credit losses.
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. Such problems
recently manifested in a series of high-profile failures of financial institutions in the United States and Europe. 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, 2023, with the percentage being 18.9% as of March 31, 2023. 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;
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•
•
•
•
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 and investors 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, which account for a vast majority of our total domestic marketable equity securities,
were approximately ¥4.2 trillion as of March 31, 2023. A decline in stock prices adversely affects the value of our equity portfolio and
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.
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, 2023, approximately 23.2% 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, 2023 was 11.5% of our total assets. In particular, the Japanese national government
and Japanese government agency bonds accounted for 10.5% of our total assets as of March 31, 2023. 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 net interest income may be adversely affected as banks, including us, generally pay interest on
deposits based on short-term interest rates and earn income on loans based on long-term interest rates. While the Bank of Japan has
maintained its negative interest rate policy, the central banks in the United States and other major jurisdictions have increased interest
rates in response to the ongoing inflation. If interest rates in and outside of Japan rise, we may incur significant losses on sales of, and
valuation losses on, our bond portfolio, and our debt funding costs may also increase significantly.
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
Market liquidity and other external circumstances and an actual or perceived decline in our creditworthiness could
negatively affect our ability to access and maintain liquidity
Our liquidity may be impaired by factors such as an inability to raise funding in financial markets, an increase in our funding
costs, unexpected increases in cash or collateral requirements, an inability to sell assets or enter into or settle other transactions as
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planned or needed, and an inability to attract or retain deposits. These situations may arise due to circumstances which we may be
unable to control but which have occurred in the past, including market or economic disruptions, financial system instability, and a
downgrade in our credit ratings, or circumstances specific to us, including an actual or perceived decline in our creditworthiness.
Insufficient liquidity may have a material adverse impact on our business, operating results and financial condition.
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, 2023 by one-notch on the same date, we estimate that MUFG
and its three main subsidiaries would have been required to provide approximately ¥180.1 billion of additional collateral postings
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 postings for the same MUFG group companies under their derivative contracts would
have been approximately ¥210.6 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 their evaluation of these factors or in their rating methodologies, rating agencies may
downgrade our ratings or our subsidiaries’ ratings.
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.
For example, 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, 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 Act 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
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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,
geopolitical 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 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
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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 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 emerging
technologies, political and geopolitical developments, environmental, social and governance concerns, and other concerns enveloping
the global financial sector. There is also growing political pressure to demand even greater capital and liquidity requirements and
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.” The laws,
regulations and standards that apply to us are often complex and, in many cases, we must make interpretive decisions regarding the
application of such laws, regulations and standards to our business activities. Future developments or changes in laws, regulations,
rules, policies, accounting standards or methods, voluntary codes of practice, interpretations 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 inability 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 ¥472.8 billion as of March 31, 2023, compared to ¥464.3 billion as of March 31, 2022.
Mitsubishi UFJ NICOS’s consumer loan portfolio has been adversely affected by a series of legislative reforms and judicial
decisions that were put in place in Japan through 2010, which have negatively affected the domestic consumer lending industry. These
legal developments effectively reduced the maximum rate of interest that may be charged on consumer loans from 29.2% per annum
to 15 to 20% per annum depending on the amount of loan principal, while leaving interest payments previously made in excess of the
reduced maximum permissible interest rate, which is commonly referred to as “gray-zone interest,” generally recoverable. Following
these legal developments and other industry developments, Mitsubishi UFJ NICOS revises its estimate of allowance for repayment of
excess interest by updating management’s future forecast semi-annually to reflect updated reimbursement claims information and
other data. As of March 31, 2021, 2022 and 2023, we had ¥24.9 billion, ¥21.1 billion and ¥12.1 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. For further information, See “Item 4.B. Information
on the Company—Business Overview—Supervision and Regulation—Japan.”
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 local and international communities Our reputation is critical in maintaining our relationships with stakeholders,
including customers, investors, regulators, workforce 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 adverse to the intent and policy underlying
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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
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, 2023, we held approximately 22.6% 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.
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 was
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.
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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.
On December 1, 2022, MUFG Americas Holding completed the transfer of all of the shares in MUFG Union Bank to U.S.
Bancorp. See “Item 5. Operating and Financial Review and Prospects—Recent Developments—Sale of MUFG Union Bank and
Investment in Shares of U.S. Bancorp.”
Our registered address is 7-1, Marunouchi 2-chome, Chiyoda-ku, Tokyo 100-8330, Japan, and our telephone number is
81-3-3240-8111.
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B.
Business Overview
We are one of the world’s largest and most diversified financial groups with total assets of ¥381.74 trillion as of March 31,
2023. 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 Act of Japan. Our services include commercial
banking, trust banking, securities, credit cards, consumer finance, asset management, leasing and many more fields of financial
services. As of March 31, 2023, the Group had the largest overseas network among Japanese banks, consisting of approximately 2,400
business locations in more than 50 countries, including 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. On December 1, 2022, we completed the sale of the shares in MUFG Union
Bank to U.S. Bancorp.
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. The environment we operate in has been affected by issues including the
growing awareness of environmental and social issues and advances in digital technologies that enable the entry of new competitors
into the financial sector and, more recently, concerns about inflation rates remaining high or continuing to accelerate globally,
increasing geopolitical risks, and instability in financial markets and financial systems originating in the United States and Europe.
These developments are changing the business environment in significant ways.
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 defined and have been working towards our purpose: “Empowering
a brighter future.” Our current Medium-Term Business Plan being implemented for the three-year period ending March 31, 2024,
outlines our current strategies to leverage our financial and digital strengths to help our stakeholders around the world. In the fiscal
year ended March 31, 2023, we sought to make unified and concerted efforts to achieve results, continuing from the fiscal year ended
March 31, 2022.
We continue to strive to meet the expectations of all 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.
The descriptions of our Medium-Term Business Plan below contain forward-looking statements reflecting our current intent,
plans, targets, beliefs or expectations and are subject to risks, uncertainties and assumptions. See “Forward-Looking Statements” and
“Item 3.D. Key Information—Risk Factors.”
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.
Furthermore, for MUFG to achieve sustainable corporate growth and improvement in our corporate value, it is important to
secure a business portfolio generating even higher and more stable profits, and to that end, we believe that strategic investment in
growth areas is essential. In addition, we aim to be regarded as a company where employees can direct their energies into their work,
and through best practices for creating new values and supporting employees who are doing their best to take on new challenges, we
also aim to create a virtuous cycle of new challenges spreading forth from our Purpose.
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 three-year period 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 seek to change how we operate and execute. While focusing on “Digital
transformation” and “Contribution to addressing environmental and social issues,” we also aim to implement “Cultural Reforms” in
order to accelerate decision making.
Under our “Strategy for Growth” strategy, in order to strengthen profitability, we 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-weighted asset control,”
“Transformation of platforms and our business infrastructure,” 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
developments in our business environment, 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 (DX)
Contribution to addressing
environmental and social issues
Transform our corporate culture (a
culture with a focus placed on “speed”
and “new challenges”)
(2) Strategy for Growth
Main strategies
Wealth Management
Approach of proposing solutions to
customers' issues
Asia Business
GCIB and Global Markets
Global Asset Management/Investor
Services
(3) Structural Reforms
Main strategies
Cost and RWA control
Transformation of our platforms and our
business infrastructure
Review of our business portfolios
MUFG’s Approach to Sustainability
Governance
(1) Sustainability
•
•
•
•
•
•
•
•
•
•
•
•
•
•
•
Main initiatives
Enhance our contact points for digital services for all customers while pushing
ahead with digitalizing our products and services .
Reduce the workload via the use of digital technologies.
Step up an integrated approach in which the execution of management strategies
go in tandem with the pursuit of solutions for environmental and social issues. To
this end, realign our business strategies, risk management and social contribution
initiatives in light of 10 priority issues we have identified.
Encourage employees to always act in line with our Purpose while fostering an
open-minded corporate culture, with the aim of speeding up strategic execution
and empowering employees to autonomously take on new challenges.
Main initiatives
the wealth management business via
the development of
Strengthen
infrastructure for enhancing our comprehensive asset management proposal
capabilities, the allocation of human resources and the provision of solutions for
business owners.
Help resolve management challenges confronting large Japanese corporate clients
via the strengthening of risk-taking capabilities and the use of a group-wide,
integrated approach.
Seize growth opportunities in Asia by taking advantage of our broad regional
network consisting mainly of Bank of Ayudhya (Thailand) and Bank Danamon
(Indonesia), both of which are consolidated subsidiaries, in addition to promoting
digital transformation.
Promote the optimization of our portfolio by, for example, rebalancing the
portfolio to the institutional investor business. Also, step up asset velocity and
cross-selling approach via the integrated operation of GCIB and Global Markets
business groups.
Push ahead with our businesses in the global AM/IS field, an industry that has
robust growth potential, in a way that takes full advantage of our strength.
Main initiatives
Execute necessary investment for growth while thoroughly curbing base
expenses.
Enhance RWA control via replacing low-profitability assets with high-
profitability assets.
Carry out efficient and effective investment for the digital shift.
Simplify procedures and rules to facilitate reforms while reviewing our decision-
making process.
Review resource allocations to low-profitability businesses.
Step up external collaboration and other initiatives related to new businesses.
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Sustainability-related issues are managed by the Executive Committee with various management sub-committees, subject to
the oversight of the Board of Directors.
For more information on our governance structure, see “Item 6.C. Directors, Senior Management and Employees—Board
Practices.”
The Sustainability Committee, which is a sub-committee formed under the Executive Committee and is chaired by the Chief
Sustainability Officer, regularly deliberates policies on addressing sustainability-related matters, including risks and opportunities
arising from such matters, and monitors the progress on the MUFG Group’s measures designed to address such matters. The
committee reports to the Executive Committee and, as necessary, reports to the Board of Directors.
The Executive Committee is established as a decision-making body for business execution and discusses and decides on
important matters related to management of the operations of the MUFG Group based on the basic policies determined by the Board
of Directors. The Executive Committee reports to the Board of Directors from time to time as necessary.
The Board of Directors oversees management of sustainability-related matters in line with its business strategy, risk
management and financial oversight. Such oversight is performed based on, among other things, a plan-do-check-act, or PDCA, cycle.
The Board of Directors deems sustainability-related matters including climate change to be of high-priority importance and
accordingly discusses and deliberates them regularly based on an annual schedule or as appropriate.
From the perspective of objectively evaluating the effectiveness of our wide-ranging sustainability initiatives, in the fiscal
year ended March 31, 2022, we began to assess the degree of improvement in the external ratings granted by major ESG rating
agencies as part of performance-linked indicators to be used to determine performance-based stock compensation for qualified
directors (excluding outside directors and directors serving as audit committee members), corporate executives and others of MUFG
and its major domestic subsidiaries.
(2) Climate Change
In order to contribute to the achievement of a sustainable society, we have identified climate change measures and
environmental protection as one of our priority environmental and social issues. As an essential part of sustainability, climate change-
related matters are managed by the Executive Committee with various management sub-groups, subject to the oversight of the Board
of Directors.
We have established a Carbon Neutral Project Team, which is a project team on a group-wide and global basis and is tasked
with ensuring progress on initiatives. Each initiative is reported to and discussed by the Steering Committee, which includes the Group
CEO and other key management members, and by the Sustainability Committee. These committees report to the Executive
Committee.
In addition, since we consider climate change-related risks to be our top risks requiring close attention, such risks are
reviewed by the Credit & Investment Management Committee, the Credit Committee and the Risk Management Committee, which are
also sub-committees formed under the Executive Committee, based on their respective expertise. The deliberations of these sub-
committees are reported to the Executive Committee.
In addition, the Risk Committee, which is a sub-committee of the Board of Directors, deliberates and reports on matters
regarding group-wide risk management, including climate change, and top risk matters.
(3) Human Capital
Basic policies and strategies related to human capital for the MUFG Group are discussed and determined by the Human
Resources Management Committee and the Sustainability Committee, in which the Group Chief Human Resources Officer (CHRO),
the Group CEO, and other relevant members of the Executive Committee and the Board of Directors participate. Group companies
determine and implement their own detailed initiatives and action plans under the leadership of their respective CHROs or directors in
charge of human capital-related matters based on the basic policies and key strategies determined by the holding company.
The progress on each initiative and human capital-related risks are monitored and managed at the Group company level in the
first instance, while matters relating to key initiatives and significant risks are reported to the Human Resources Division of the
holding company and the Group CHRO, who is responsible for the division, and are further reported to the Human Resources
Management Committee, the Sustainability Committee, the Executive Committee and the Board of Directors of the holding company
when appropriate.
Strategy
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(1) Sustainability
We have defined 10 priority issues that we believe must be tackled to help achieve environmental and social sustainability in
light of our newly established Purpose, “Committed to empowering a brighter future,” with an eye to better fulfilling society's
expectations in areas where MUFG's capabilities can be brought to bear.
Based on such 10 priority issues, the following chart lists various opportunities and risks that we currently recognize.
Priority Issues
1. Climate change measures
Opportunities and risks: The ongoing trend toward decarbonization is expected to result in major
MUFG’s recognition
& environmental protection
changes in the global industrial structure which, in turn, will position MUFG and its customers to
face both risks affecting their business continuity and opportunities for growth. It is important to
ensure smooth transition to a carbon-neutral society and a virtuous cycle of environmental and
economic improvement in order to realize a sustainable society.
Opportunities and risks: The scope of across-the-board environmental protection initiatives is likely
to expand to include not only climate change measures but also the protection of biodiversity, etc.
Opportunities： Leveraging our comprehensive financial service capabilities is important in order to
meet evolving and diversifying customer needs in the face of changes in social structure due to aging
population and low birthrate.
Risks： The aging population and low birthrate may lead to economic stagnation and a decline in
growth potential, leading to shrinkage of both funding demand and interest margins, a situation that
could, in turn, have a particularly negative impact on the traditional commercial banking businesses.
Opportunities： Empowering diverse talents to inspire one another will facilitate the creation of new
concepts and ideas and the transformation of employee modes of behavior, enabling MUFG to
transform its corporate culture and deliver new values that surpass the expectations of customers and
society as a whole, while it will also contribute to inclusion of diverse individuals.
Risks： Developing a resilient organization and society capable of empowering diverse talents with
differing sense of values is essential to flexibly adapting to a time of rapid changes.
Opportunities： Robust countermeasures against the aging of infrastructure at home and abroad are
key to the creation of a sustainable society, as is the construction of social infrastructure, particularly
in developing countries.
Risks：For us to maintain trust and reliability as a financial institution and a component of social
infrastructure, proper handling of threats to safety and security is a requisite. It is therefore essential
to strengthen security measures safeguarding informational assets and prevent financial crimes that
have become ever more complex and sophisticated.
Opportunities and risks： Offering assistance for the creation of growing industries, which are drivers
of economies, and vibrant venture startups are essential to avoiding economic stagnation and securing
sustainable growth. Our financial functions are expected to play an important role as such endeavors
require a financier capable of risk-taking.
Opportunities and risks：Providing more customers with opportunities to access financial services
and investment not only contributes to improving the growth of economies but is also expected to
provide MUFG with opportunities to secure an even more robust foundation for growth.
2. Response to aging
population &
low birthrate
3. Inclusion & diversity
4. Developing social
infrastructure
5. Supporting industrial
development &
innovation
6. Ensuring equal access
to financial services
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7. Promoting workstyle
reforms
Opportunities and risks：On the back of Japan’s declining population, businesses are expected to
provide their employees with opportunities to embrace flexible workstyles aligned with an evolving
sense of values, changes in the social structure and a growing need to strike a work-life balance.
Fulfilling these expectations can provide a baseline for effective utilization of human resources and
achievement of corporate growth and, in light of the impact of COVID-19, has become a matter of
even greater importance.
Opportunities and risks：Improving the efficiency of our financial functions, which constitute a part
of social infrastructure, is expected to help society as a whole achieve higher productivity while
positioning us for greater productivity as well.
Risks：Poverty often results in a variety of other problems posing serious threats to social stability
(e.g., public health, hygiene and security) and human rights (e.g., sufficiency in food, clothing and
housing) as well as to the formation of a basis for sustainable economic growth (e.g., educational
equality).
Opportunities： Those who are now students will shape the next generation and, therefore, constitute
the foundation of future society. Among them may also be our potential colleagues. Therefore,
supporting them is of great importance.
Risks： Proper education is at the base of social stability and sustainable economic growth. Thus,
educational shortfalls can result in a negative heritage of inequality that will be passed down to future
generations. The lack of educational opportunity due to economic disadvantage therefore deserves
major public attention and needs to be tackled.
Opportunities： Innovation in the healthcare sector will contribute to improvement in social and
economic resilience.
Risks： The sustainability of economic activities will be largely dependent on the strengthening of
capabilities for preventing novel infectious viruses from spreading (via the development of vaccines,
etc.) and responsiveness to a pandemic (via the development of medical technologies and institutions)
in order to ensure robust social functions in anticipation of the further aging of population.
8. Response to poverty
9. Reduction of
educational disparities
10. Overcoming threats
to health
(2) Climate Change
MUFG recognizes that addressing climate change measures and environmental protection is one of the most important
management issues. We seek to respond to them by regarding them as business opportunities and matters requiring careful risk
management.
We participate in various initiatives to address climate change, including the Partnership for Carbon Accounting Financials,
the Net-Zero Banking Alliance and the Glasgow Financial Alliance for Net Zero, and support the recommendations formulated by the
TCFD, a special taskforce established by the Financial Stability Board.
Based on the TCFD recommendations, we have identified, and are working to address, two categories of climate change-
related risks for financial institution. The first category includes risks arising from physical damage due to increased severity and
frequency of adverse weather events, such as extreme storms and flooding, and longer-term shifts in climate patterns, such as rising
temperatures and sea levels and changes in precipitation amount and distribution, and is often referred to as “physical risks.” The
second category includes risks arising in connection with the transition to a decarbonized society, such as changes in regulations,
market preferences and technologies toward a decarbonized society, and is often referred to as “transition risks.”
Cognizant of our share of responsibilities as a global financial institution in combatting climate change, we are committed to
supporting efforts to transition to a decarbonized society through products and services we provide to clients and measures designed to
reduce the adverse impact of our operational activities on the environment.
(3) Human Capital
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Attracting, developing and retaining a highly qualified and motivated workforce that enables us to better serve our clients,
generate long-term value for our shareholders and other stakeholders, and contribute to society, is a strategic priority for us. We intend
to accelerate our effort to further transform the MUFG Group into a workplace that fosters integrity, responsibility, professionalism,
teamwork and diversity, with a robust culture and opportunities for our employees to challenge themselves and grow and develop in
their career, in line with our core values set forth in “MUFG Way,” our foundational group policy. Built on this group policy, the
MUFG Human Resources Principles serve as the common basis for the human resources management strategy of our group
companies, each tailored to their particular circumstances.
(a) Human Resource Development
As set out in the MUFG Human Resources Principles, a basic policy of human resource development in MUFG is “to
develop human resources who can realize MUFG Way by providing educational opportunities where each employee can raise his or
her insights and values as well as his or her knowledge and expertise.” We encourage and support career growth and professional
development through various training programs and on-the-job training.
Our sustainable growth and long-term success depend on our ability to attract, develop and retain talented individuals in all of
our business fields. We seek to recruit highly competent talents from external candidate pools and internal human resources flexibly
based on the qualifications required for the particular position to be filled.
(b) Internal Environmental Improvement
We consider a diverse workforce and an inclusive and equitable culture to be essential for our ability to maintain
organizational resilience and remain competitive. We continue to strive to develop a work environment which fosters diverse
experience, backgrounds and perspectives, which, in turn, facilitate creativity and innovation.
We also consider the well-being of our employees to be an essential element of our success. To this end, we are working to
implement “Workstyle Reforms” designed to enable employees to build a sustainable professional career. As part of such reforms, we
have made enhancements to our operational infrastructure to allow for flexibility in workstyles, including remote work and paperless
capabilities.
We are also working to support the physical and mental health of our employees through a range of medical advisory and
personal wellness services. For example, such services are made available to employees through industrial physicians and counselors
on-site at our group companies in Japan. We also have programs designed to help our employees in Japan build a stable asset portfolio
and improve their financial wellness through, among others, asset accumulation savings, corporate pensions, and employee stock
ownership associations.
Furthermore, we continuously review and update our human resource management framework and compensation in order to
attract and retain human resources and maximizes the abilities of our employees.
Risk Management
(1) Sustainability
Based on the MUFG Environmental Policy Statement and the MUFG Human Rights Policy Statement, in an effort to
promote environmentally and socially responsible financing, we have implemented the MUFG Environmental and Social Policy
Framework to manage environmental and social risks associated with finance operations (which mainly consist of credit, bond and
equity underwriting for corporate clients of MUFG Bank, Mitsubishi UFJ Trust and Banking, and Mitsubishi UFJ Securities
Holdings). We have established a finance policy and introduced a due diligence process to identify and assess the environmental and
social risks or impacts associated with such transactions.
Standard due diligence is conducted by departments that have a direct contact with customers to identify and assess the
environmental and social risks of the business that is to be financed by us. If it is determined that the business needs to be examined
more carefully, we conduct enhanced due diligence and decide whether or not to finance the business.
As for businesses that are considered to have significant environmental and social risks and could potentially damage our
corporate value or develop into a reputational risk, we hold discussions on how to handle it within a framework participated in by
senior management. In addition, MUFG Bank adopted the Equator Principles, a framework for identifying, assessing and controlling
the environmental and social risks of large-scale projects, and conducts risk assessments in accordance with its Guidelines.
The status of policies and initiatives relating to environmental and social risks are reviewed and discussed by the Credit &
Investment Management Committee, the Credit Committee and the Risk Management Committee depending on the areas of their
respective expertise. Conclusions reached by these committees are reported to the Executive Committee, and important matters
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discussed by the Executive Committee are reported to and, in turn, discussed by the Board of Directors, which oversees the
management of risks related to environmental and social issues.
The process of identifying and assessing the environmental and social risks or impacts of a business to be financed
(2) Climate Change
In order to strengthen our response to risks related to climate change, climate change-related risk management is currently being
integrated into our overall risk management framework based on our governance structure described above with an aim to better
enable identification, measurement and reduction of climate change-related risks and their potential portfolio, business and financial
impact from a comprehensive group-wide perspective. Our risk management framework is intended to address physical risks and
transition risks.
In the MUFG Environmental and Social Policy Framework mentioned above, with respect to the coal-fired power generation,
mining (coal), oil and gas, and other specific sectors in which concerns are raised over environmental and social impacts, including
climate change, we have established our finance policy and a due diligence process to identify and assess the environmental and social
risks or impacts associated with transactions has been introduced.
For a discussion of our climate change-related risks, see “Item 3.D. Key Information—Risk Factors—Risks Related to Our
Business Environment—Climate change could have a material adverse impact on us and our clients.” For more information on our
risk management framework, see “Item 11. Quantitative and Qualitative Disclosures about Credit, Market and Other Risk.”
(3) Human Capital
MUFG has positioned human capital as one of the most important capital in the Group, and considers it critical to acquire and
retain qualified talents for its business competitiveness. In order to manage human capital retention risk, among other risks, each of
our group companies has established a human capital management framework designed to attract talents and help employees make the
best of their capabilities and provide competitive benefits.
MUFG also considers both physical and mental health of its employees crucial for a sustainable development of MUFG.
Various employee health programs are in place at Group companies. In addition, employee health-related issues are regularly
monitored and reported to the Group CHRO and the Executive Committee, including relevant subcommittees, as appropriate.
Metrics & Targets
(1) Sustainability
MUFG sets and monitors specific metrics and targets for initiatives intended to address environmental and social issues. We
have set a sustainable finance target of providing a cumulative ¥35 trillion (including ¥18 trillion in the environmental sector) of
financing from the fiscal year ended March 31, 2020 to the fiscal year ending March 31, 2031. Our sustainable finance currently
consists of the provision of financing, including loans, equity investments in funds, arrangements of project finance and syndicated
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loans, underwriting of equities and bonds, and financial advisory service, with reference to the relevant external standards, such as the
Green Loan Principles, the Green Bond Principles and the Social Bond Principles, to businesses that are considered to contribute to the
adaptation to and moderation of climate change, to the development of startups, job creation, and poverty alleviation and to the
energization of local communities and regional revitalization, as well as fundamental service businesses including those involved in
basic infrastructure and essential public services.
(2) Climate Change
In May 2021, we announced our intent to achieve net zero greenhouse gas, or GHG, emissions from our financed portfolio by
the end of 2050 and net zero GHG emissions from our operations by the end of 2030 in the MUFG Carbon Neutrality Declaration.
These goals demonstrate our support for the goals of the Paris Agreement on Climate Change and our recognition of climate change-
related risks and opportunities as a top strategic priority for the MUFG Group.
In order to achieve net zero GHG emissions from our financed portfolio, so far we have set 2030 interim targets for the power,
oil and gas, real estate, steel and shipping sectors. For each interim target, we have considered and reflected, among other factors, the
relevant characteristics of decarbonization pathways as well as the uniqueness of our financed portfolio for each sector.
(3) Human Capital
MUFG regards human capital as one of its highest priorities, and through the expansion of human capital, we seek to create an
enabling environment for employees to grow and take on challenges and self-innovation. In the fiscal year ending March 31, 2024, we
plan to invest ¥4.2 billion in the aggregate in externally sourced education and training for employees of MUFG Bank, Mitsubishi UFJ
Trust and Banking, and Mitsubishi UFJ Morgan Stanley Securities in Japan. In addition, MUFG and each company in the group
provide a variety of internal educational opportunities for executives and employees through training where executives and employees
of MUFG Group entities serve as instructors.
We are working to create a workplace where each and every employee can make the most of his or her abilities. In particular,
recognizing that increasing female representation in management is an important issue, we have set a target of 22% for the ratio of
women in line management (jicho or kacho) or higher positions in Japan in MUFG Bank, Mitsubishi UFJ Trust and Banking, and
Mitsubishi UFJ Morgan Stanley Securities on a combined basis by March 2024. As of March 2023, the ratio was 19.6%.
(4) Uncertainties and Risks
Our ability to achieve any one or more of the foregoing targets is subject to various uncertainties and risks, which may be
beyond our control. If any such uncertainty or risk materializes, we may be unable to achieve our targets. See “Item 3.D. Key
Information—Risk Factors—Risks Related to Our Business Environment—Climate change could have a material adverse impact on
us and our clients.” and “Item 3.D. Key Information—Risk Factors—Operational Risk—Damage to our reputation could harm our
businesses.”
Business Groups
Under the current Medium-term Business Plan, our business groups have been 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
The Digital Service 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. This business
group was established on April 1, 2021 mainly by separating the mass-segment businesses that previously belonged to the Retail &
Commercial Banking 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.
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 provide 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.
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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 Strategy
In the domestic market in which we operate, demographic changes, including Japan’s aging population with a declining
birthrate, further acceleration of digital transformation and promotion of work style reforms continue to diversify customer
expectations for financial institutions. 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 (WM) business, which is one of our key strategic focus areas, we are accelerating utilization of tools
to offer wealth management solutions, including asset management, asset and business succession transfer, and real estate services.
For example, we have begun operating the “WM Digital Platform,” a digital tool for understanding customers’ assets and needs across
the MUFG Group, at all of our business locations. Through this tool, we have established a system designed to provide comprehensive
solutions on a group-wide basis to the various challenges our customers face.
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 increase our lending spreads by reducing low-profitability loans and improving risk-taking for projects with high
profitability potential. In addition, we are working to accelerate the reduction of our equity holdings and have made significant
progress towards achieving the reduction target under the Medium-Term Business Plan.
We also intend to expand and deepen our engagement with customers to resolve environmental and social issues as well as
management issues of our customers which are becoming more complex and diverse. We have also made investments with customers
in multiple businesses that are expected to contribute to solving social issues.
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
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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 secured finance, and offering financial advice in various sectors, including natural resources, power, and
infrastructure, backed by our experience, expertise, knowledge, and global network.
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 Krungsri in Thailand, Bank Danamon in Indonesia, VietinBank in
Vietnam and Security Bank in the Philippines. MUFG Union Bank, a Partner Bank in the United States, was sold to U.S. Bancorp on
December 1, 2022.
The network among the Partner Banks covers a vast market, consisting of four countries with population totaling approximately
557 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.
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 614 branches (consisting of 575 banking branches, 40 automobile
finance business branches and one overseas branch) and other service outlets nationwide. In addition, Krungsri’s consolidated
subsidiaries include the largest credit card issuer in Thailand with a market share of 15%, 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, 2023. 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 medium-sized enterprises, and large corporations in
Indonesia. It operates an extensive distribution network spread out from Aceh to Papua, with more than 879 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.
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MUFG made an initial investment in December 2017 and owns a 92.47% ownership interest in Bank Danamon through MUFG
Bank as of March 31, 2023. 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
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.
In November 2022, we agreed to acquire 100.0% of the shares of HC Consumer Finance Philippines, Inc. and 85.0% of the
shares of PT Home Credit Indonesia, both of which are subsidiaries of Home Credit B.V., a Dutch consumer finance company.
Through this acquisition, we plan to reinforce and expand our retail business in the Philippines and Indonesia.
See “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 ended
March 31, 2022, we started 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.
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. 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.
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Global Strategic Alliance with Morgan Stanley
As of March 31, 2023, we held approximately 377 million shares of Morgan Stanley’s common stock representing
approximately 22.6% 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.
In July 2023, we jointly announced with Morgan Stanley the launch of “Alliance 2.0”, an enhanced Global Strategic Alliance
for further collaboration between both companies for the next decade and beyond. In launching “Alliance 2.0”, we and Morgan
Stanley have entered into memoranda of understanding to collaborate in foreign exchange trading and in the Japanese research and
equity businesses for institutional clients. Both companies will work to conclude definitive agreements regarding each collaboration
initiative with a targeted implementation date in the first half of 2024, subject to regulatory approval.
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, SBI Shinsei Bank, regional banks, and credit associations (shinkin
banks);
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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 January 4, 2023):
•
•
ordinary banks (121 ordinary banks and 56 foreign commercial banks with ordinary banking operations); and
trust banks (13 trust banks, including two Japanese subsidiaries of foreign financial institutions).
Ordinary banks in turn are classified as city banks, of which there are four, including MUFG Bank, and regional banks, of which
there are 99 and other banks, of which there are 18. 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
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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 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. As of March 31, 2023, Japan Post Holdings
held 60.62% of the outstanding shares of Japan Post Bank, with a publicly announced target to reduce its shareholding in
Japan Post Bank to 50% or below by the end of March 2026. As of March 31, 2023, Japan Post Holdings held 49.84% of
the outstanding shares of Japan Post Insurance.
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 Act. Among the various laws that regulate financial institutions, the Banking Act and its subordinated orders and
ordinances are regarded as the fundamental law for ordinary banks and other private financial institutions. The Banking Act 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 cope with conflicts of interest that may arise
from their business operations.
The Banking Act 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 Act, an amendment to
the Banking Act 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 Act 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 Act 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 Act which took effect in November 2021 allows banks to engage in certain services contributory to the construction of a
sustainable society such as regional revitalization or productivity enhancement and allows 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 Act.
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 Act, 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.
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.
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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, or LCR, and a longer term structural net stable funding ratio, or
NSFR, 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 shares and perpetual subordinated obligations, net of
regulatory adjustments.
Tier 2 capital generally consists of:
•
•
•
Basel III compliant subordinated obligations,
allowances for credit losses, and
non-controlling interests in subsidiaries’ Tier 2 capital instruments.
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.
The approval granted to us by the FSA to exclude the majority of our investment in Morgan Stanley from being subject to
double gearing adjustments, which had been phased out over a ten-year period, expired on March 30, 2023.
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The Financial Stability Board identified us as a global systemically important bank, or G-SIB, in its most recent annual report
published in November 2022, 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, 2023 consist of a capital conservation buffer of 2.5%, a G-SIB surcharge of 1.5% and a countercyclical
buffer of 0.04% in addition to the 4.5% 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;
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 April 2022, the FSA announced a further deferment of the implementation
date by one more year to March 31, 2024 for banking institutions with international operations conducted through foreign offices,
including us.
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. In April 2022,
the FSA announced a further deferment of the implementation date by one more year to March 31, 2024 for banking institutions with
international operations conducted through foreign offices, including us.
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, including us, are required to maintain
a minimum leverage ratio and disclose their leverage ratios calculated in accordance with the methodology prescribed in the FSA
guidelines that have 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 guidelines. 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 a minimum leverage ratio requirement at
3.00%, effective March 31, 2019, and the minimum leverage ratio requirement applied to us as of March 31, 2023 is 3.75%, including
a leverage ratio buffer set at 50% of a G-SIB surcharge which, as applied to us, equals 0.75%. Since June 30, 2020, deposits with the
Bank of Japan have been temporarily excluded from the calculation of the leverage ratio. On November 11, 2022, the FSA announced
that the applicable minimum leverage ratio requirement including the applicable minimum leverage ratio buffer requirement will be
raised from 3.00% plus a G-SIB leverage ratio buffer set at 50% of a G-SIB surcharge to 3.15% plus a G-SIB leverage ratio buffer set
at 50% of a G-SIB surcharge plus 0.05% on and after April 1, 2024, while deposits with the Bank of Japan will continue to be
excluded from the leverage exposure for the purpose of the calculation of the leverage ratio, in light of exceptional macroeconomic
conditions and other circumstances.
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
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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 and which became applicable to (i) G-SIBs in Japan
in phases starting on March 31, 2019 until fully implemented on March 31, 2022, 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”) in phases
starting on March 31, 2021 until its scheduled full implementation on March 31, 2024, 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 and the Japanese TLAC Standard compliant
obligations, net of regulatory adjustments. Internal TLAC debt generally consists of Basel III compliant regulatory capital 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 currently requires a Japanese G-SIB, including us, to issue and maintain TLAC debt in an amount
not less than 18% of its consolidated risk-weighted assets and 6.75% of the applicable Basel III leverage ratio denominator. In
addition, under the Japanese TLAC Standard, Japanese G-SIBs are allowed to count as external TLAC the Japanese Deposit Insurance
Fund Reserves in an amount equivalent to 3.5% of their consolidated risk-weighted assets.
Deposits with the Bank of Japan are temporarily excluded from the calculation of External TLAC ratio and Internal TLAC
amounts on a total exposure basis as well as the leverage ratio from June 30, 2020 until March 31, 2024. On November 11, 2022, the
FSA announced that the applicable external TLAC ratio on a total exposure basis will be raised from 6.75% to 7.10% on and after
April 1, 2024, while deposits with the Bank of Japan continue to be excluded from the total exposure for the purpose of the calculation
of External TLAC ratio and Internal TLAC amounts in light of exceptional macroeconomic conditions and other circumstances.
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.
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. In July and November 2022, the FSA published
amendments to the regulatory notices and related ordinances regarding the leverage ratio buffer requirement which became applicable
to Japanese G-SIBs, including us, from March 31, 2023. Under these amendments, the FSA may order a bank or a bank holding
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company to submit and carry out a capital distribution constraints plan, if the bank or the bank holding company fails to maintain Tier
1 capital required as the applicable leverage buffer. A capital distribution constraints plan must be determined to be reasonably
designed to restore the required capital buffers by restricting capital distributions, such as dividends, share buybacks, interest payments
on, and redemption and repurchase of, Additional Tier 1 capital instruments, 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, 2023, the Deposit Insurance
Corporation charged an insurance premium equal to 0.021% per year on the deposits in the settlement accounts, and a premium equal
to 0.014% 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 assets or a bank 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 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)
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,
institution (“Specified Item 1
measures” (tokutei dai ichigo sochi) under Article 126-2, Paragraph 1, Item 1 of the Deposit Insurance Act); or
the financial condition of
into consideration
the financial
taking
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(b)
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 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 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.
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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 2022, 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 Act 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 conducted through foreign
offices are required to maintain a minimum LCR and disclose their LCRs calculated in accordance with the methodology prescribed in
the FSA guidelines that have 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 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. Japanese banks and bank holding companies with international operations conducted through foreign
offices are also required to maintain a minimum NSFR and disclose their NSFRs calculated in accordance with the methodology
prescribed in the FSA guidelines that have been adopted to implement the relevant Basel III standard. 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 guidelines on
March 31, 2021, and the NSFR requirements became applicable on September 30, 2021, requiring a minimum NSFR of 100%. Once a
bank or bank holding company fails to meet the minimum NSFR of 100%, it is required to immediately report such failure to the FSA.
If the FSA deems the financial condition of the bank or bank holding company to be serious, the FSA may issue a business
improvement order.
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.
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 Act 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 Act, which include certain
deregulations of restrictions on shareholdings by banks, as described above.
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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 Act 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. In June 2021, certain amendments to the Cabinet Office Ordinance under the Act became effective,
which allowed non-public and other information of foreign company customers to be shared within a financial group. In addition, on
June 22, 2022, certain amendments to the Cabinet Office Ordinance under the Act became effective, which allowed non-public and
other information of certain subject companies such as listed companies to be shared within a financial group without consent of such
companies, but required financial institutions to establish measures to respond to a request from relevant companies for suspension of
sharing of such information. At the same time, financial institutions are required to strengthen the effectiveness of measures to prevent
market abuse.
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 Provision of Financial Services. Under the Act on Provision of Financial Services, 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 addition, under a single registration for financial services intermediary business, registrants are permitted to provide
intermediary services of each of banking, securities and insurance. The Act does not require any provider of financial services
intermediary business to belong to a specific financial institution, but imposes certain regulations on such provider 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 suspicious
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 Act 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 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 and 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 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. The MUFG Group is 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:
•
•
authorized qualifying bank holding companies to opt to become “financial holding companies,” and thereby obtain the
authority to engage in an expanded list of activities; and
modified the role of the FRB by redefining the relationships between the FRB and the functional regulators of non-bank
subsidiaries of both bank holding companies and financial holding companies.
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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 banking organization is prohibited from engaging in
various tying arrangements involving it or its affiliates in connection with any extension of credit, taking of deposits, sale or lease of
any property or provision of most 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. 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 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, including making acquisitions, as a financial holding company. In addition, a financial holding company must ensure that its
U.S. insured banking subsidiaries meet certain minimum standards under the Community Reinvestment Act of 1977.
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 17 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.; Tempe, Arizona; Los Angeles, Menlo Park, Monterey
Park, Redwood City, San Diego and San Francisco, California; Danbury, Connecticut; Atlanta, Georgia; Florence, Kentucky; Boston,
Massachusetts; Edina, Minnesota; Jersey City, New Jersey; Charlotte, North Carolina; Irving, Texas; and Seattle, Washington.
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 affiliates have 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 (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 previously owned and controlled 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 bank holding company.
Effective December 1, 2022, MUFG Union Bank, N.A. was sold to U.S. Bancorp.
Bank capital requirements and capital distributions. MUFG Bank and Mitsubishi UFJ Trust and Banking, as foreign banking
organizations that have U.S. branches and agencies and 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 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.
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.
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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 “—
Recent regulatory developments” below.
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 of 2007-2008 and the perception that lax supervision of
the financial industry in the United States may have been a contributing cause to the crisis, 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 largest 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.
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. 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 monitor developments that relate to the Dodd-Frank Act and the potential impact of its implementing
regulations 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. Intermediate Holdings Company (“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. We will be
required to maintain an IHC in the U.S. as long as the average sum of the consolidated assets of our top-tier U.S. subsidiary for the
four most recent calendar quarters equals $50 billion or more.
MUFG Americas Holdings is subject to various U.S. prudential requirements as a BHC and became subject to additional
requirements with the designation of MUFG Americas Holdings as our IHC as of July 1, 2016. As an IHC, MUFG Americas Holdings
is subject to risk-based and leverage capital requirements, capital planning and stress testing, liquidity requirements, including
liquidity stress testing, enhanced risk management and other enhanced prudential standards similar to the standards applicable to large
U.S. bank holding companies. In calendar year 2022, MUFG Americas Holdings was subject to the FRB supervisory Dodd-Frank Act
stress testing cycle, the results of which were initially released on June 27, 2022. Under the 2022 stress testing cycle, the FRB noted
that due to certain accounting reclassifications by MUFG Americas Holdings related to the then-pending sale of MUFG Union Bank,
the Board determined not to include MUFG Americas Holdings’ detailed projections in the 2022 stress test. The FRB did note,
however, that it conducted an evaluation and determined that MUFG Americas Holdings’ has sufficient capital to absorb losses and
continue to serve as a credit intermediary under a severe recession. Under tailoring of regulations applicable to domestic and foreign
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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 in even years.
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 FRB originally in December 2013, and substantive portions were subsequently
amended in November 2019. The Volcker Rule restricts the ability of banking entities to conduct certain proprietary trading activities,
which means trading in securities and financial instruments for their own account, subject to certain exceptions, including market-
making, hedging, and underwriting if such activities are conducted within a rigorous compliance framework. The Volcker Rule also
restricts banking entities from engaging in certain activities regarding hedge funds and private equity funds known as covered funds.
The Volcker Rule excludes restrictions on such activities if they are conducted solely outside of the United States. The Volcker Rule
requires banking entities to implement a number of policies, procedures, quantitative metrics reporting that are reasonably designed to
ensure and monitor compliance with the restrictions under the Rule. 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 its complexity, the
Rule may be subject to further rule-making and regulatory interpretation in the future.
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. In addition, MUFG Securities EMEA plc registered with the SEC as a
securities-based swap dealer during the fiscal year ended March 31, 2022. 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 July 23, 2020, the CFTC voted to approve final rules that modify and codify the cross-
border application of certain of its Title VII swap rules to both U.S. and non-U.S. registered swap dealers. Similarly, the SEC has
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 have implemented measures designed to comply
with the relevant rules and regulations by the prescribed compliance dates while continuing to consider the effects of other proposed
rules 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 IHC. In July 2021, MUFG CUSO began complying with 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.
Separately, based on the categorization of MUAH as a Category IV entity under the final rules tailoring prudential standards for
large banking organization (“Tailoring Final Rules”), SCCL no longer applies 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 Tailoring Final Rules apply
the same framework as to the U.S. and foreign BHCs but use a differing calibration for foreign BHCs. The Tailoring Final Rules
became effective on December 31, 2019.
The final rule that was issued 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 one of three categories. The categorization framework was based on aggregate U.S. assets
and four other risk-based indicators, including weighted short-term wholesale funding, cross-jurisdictional activity, nonbank assets,
and off-balance sheet exposure. The second final rule, issued jointly by the FRB, the OCC, and the FDIC, 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.
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G-SIBs; and (ii) MUAH, the U.S. 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 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. As informed by the FRB tailoring rule, the final rule
tailors the requirements for firms that do not pose the same systemic risk as the largest institutions, requiring resolution plans for these
firms 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 Category 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,
extended the then-upcoming submission date by 90 days to September 29, 2021, and subsequently extended the submission date again
to December 17, 2021 as a Targeted Information Request focusing on covered companies’ actions in response to COVID-19 was
added to industry required submissions. MUFG submitted on December 17, 2021 its Targeted 165(d) Resolution Plan and the required
Targeted Information Request. MUFG’s full resolution plan is currently due July 1, 2024.
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 and applies to MUFG’s investments globally.
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 is 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
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 continues 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 approaches rules.
The Federal Reserve issued amendments to the Regulatory Capital, Capital Plan, and Stress Test Rules which became effective
on October 1, 2021. 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, or SCB, of
3.3%. 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
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Holdings capital distributions and discretionary bonus payments are subject to the following regulatory minimum risk-based capital
ratios: (1) 7.8% Common Equity Tier 1 capital ratio, (2) 9.3% Tier 1 capital ratio and (3) 11.3% total capital ratio. In addition, failure
by MUFG Americas Holdings 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.
For more information, see Note 21 to our 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, MUFG Americas Holdings met applicable TLAC long-
term debt and associated additional TLAC requirements by the initial implementation date of January 1, 2019.
Recent regulatory developments. MUFG Bank undertook necessary actions relating to the consent order which MUFG Bank
entered into with the OCC in February 2019, and the OCC terminated the consent order in December 2022. The consent order was
related 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 required 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.
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 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, 2023, 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, has previously issued guarantees outstanding mainly in connection with prior
petroleum-related transactions with Iran by its customers that were permissible under applicable sanctions regulations. 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, 2023, the aggregate fee income relating to these transactions was less than ¥5 million, representing less than 0.0005 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 MUFG Bank and a non-U.S. affiliate of MUFG provided credit and/or settlement services to fewer
than 100 Iranian government-related individuals including Iranian diplomats. MUFG Bank also maintains settlement accounts outside
the United States for certain other entities specified in Executive Order 13224 or 13382, which settlement accounts were frozen in
accordance with applicable laws and regulations. For the fiscal year ended March 31, 2023, 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 interest and fee income from
the transactions attributable to these account holders was less than ¥50 million, representing less than 0.001 percent of our total
interest and fee income.
We recognize 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. We have 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.
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C. Organizational Structure
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Set forth below is a list of our principal consolidated subsidiaries as of March 31, 2023
Name
MUFG Bank, Ltd.
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.
Human Resources Governance Leaders 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
Global Open Network, Inc.
MUFG Innovation Partners Co., Ltd.
MUFG Americas Holdings Corporation
Bank of Ayudhya Public Company Limited
PT Bank Danamon Indonesia, Tbk.
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.
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
USA
Thailand
Indonesia
UK
Luxembourg
Luxembourg
UK
Bermuda
Australia
UK
UK
China
Canada
100.00%
100.00%
100.00%
100.00%
46.50%
100.00%
100.00%
100.00%
100.00%
100.00%
60.00%
51.00%
100.00%
100.00%
100.00%
100.00%
46.50%
100.00%
100.00%
100.00%
100.00%
100.00%
60.00%
51.00%
100.00%
100.00%
94.19%
80.00%
100.00%
100.00%
76.88%
92.47%
51.00%
100.00%
100.00%
100.00%
100.00%
100.00%
100.00%
100.00%
100.00%
100.00%
94.19%
80.00%
100.00%
100.00%
76.88%
92.47%
51.00%
100.00%
100.00%
100.00%
100.00%
100.00%
100.00%
100.00%
100.00%
100.00%
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D.
Property, Plant and Equipment
Land
Buildings
Equipment and furniture
Leasehold improvements
Construction in progress
Total
Less accumulated depreciation
Premises and equipment—net
As of March 31,
2022
2023
(in millions)
¥
372,710 ¥
766,945
497,478
255,679
30,894
1,923,706
1,107,877
393,932
800,821
509,828
255,712
34,679
1,994,972
1,134,394
¥
815,829 ¥
860,578
Our registered address is 7-1, Marunouchi 2-chome, Chiyoda-ku, Tokyo 100-8330, Japan. As of March 31, 2023, we and our
subsidiaries conducted our operations either in premises we owned or in properties we leased.
We decided to build a new MUFG headquarters building at the location where the current MUFG and MUFG Bank head office
building stands. In conjunction with the construction of the new building, the head offices for MUFG and MUFG Bank are planned to
be temporarily relocated to 4-5, Marunouchi 1-chome, Chiyoda-ku, Tokyo, Japan in July 2024. Details of the construction project,
including the construction period and the total expenditure, are yet to be determined. For the fiscal year ended March 31, 2023, ¥1,602
million was invested in the project.
The following table presents the book values of our material offices and other properties as of March 31, 2023:
Owned land
Owned buildings
Book Value
(in millions)
¥
¥
393,932
255,168
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, 2023, we invested approximately ¥116,367 million in premises and equipment, primarily
for office renovations and relocation on an MUFG consolidated base.
Item 4A.
Unresolved Staff Comments.
None.
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Item 5.
Operating and Financial Review and Prospects.
The following discussion and analysis should be read in conjunction with “Selected Statistical Data” and our consolidated
financial statements and related notes.
Summary of Financial Data
Business Environment
Recent Developments
A. Operating Results
Results of Operations
Business Segment Analysis
Geographic Segment Analysis
Effect of Change in Exchange Rates on Foreign Currency Translation
B.
Liquidity and Capital Resources
Financial Condition
Capital Adequacy
Non-exchange Traded Contracts Accounted for at Fair Value
C. Research and Development, Patents and Licenses, etc.
D. Trend Information
E. Critical Accounting Estimates
Page
51
53
55
58
58
67
71
72
72
72
83
86
87
87
87
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Summary of Financial Data
The selected statement of operations data and selected balance sheet data set forth below have been derived from our
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 summary of financial data set forth below are derived from our consolidated financial statements
prepared in accordance with U.S. GAAP.
You should read the summary of financial data set forth below in conjunction with the remainder of this Item 5, “Selected
Statistical Data” and our consolidated financial statements and related notes and other financial data included elsewhere in this Annual
Report. These data are qualified in their entirety by reference to all of that information.
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Statement of operations data:
Interest income
Interest expense
Net interest income
Provision for credit losses
Net interest income after provision for credit losses
Non-interest income
Non-interest expense
Income (loss) before income tax expense (benefit)
Income tax expense (benefit)
Net income (loss) before attribution of noncontrolling interests
Net income attributable to noncontrolling interests
Net income (loss) attributable to Mitsubishi UFJ Financial Group
Earnings (loss) applicable to common shareholders of Mitsubishi UFJ Financial Group
Amounts per share:
Basic earnings (loss) per common share—Earnings (loss) applicable to common
shareholders of Mitsubishi UFJ Financial Group
Diluted earnings (loss) per common share—Earnings (loss) applicable to common
shareholders of Mitsubishi UFJ Financial Group
Number of shares used to calculate basic earnings per common share (in thousands)
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
¥
¥
¥
¥
$
2021
2022
2023
(in millions, except per share data and number of shares)
¥
2,751,996 ¥
2,530,938 ¥
747,902
2,004,094
484,210
1,519,884
3,157,787
3,069,329
1,608,342
444,948
1,163,394
46,096
1,117,298 ¥
1,117,298 ¥
560,357
1,970,581
277,995
1,692,586
1,394,789
3,146,102
(58,727)
(14,511)
(44,216)
39,104
(83,320) ¥
(83,320) ¥
86.88 ¥
(6.51) ¥
86.56
12,859,737
12,859,737
(6.93)
12,798,060
12,798,060
4,611,410
2,221,996
2,389,414
8,148
2,381,266
1,695,422
3,419,954
656,734
26,413
630,321
30,413
599,908
599,908
48.70
48.39
12,317,723
12,318,855
25.00 ¥
0.24 $
26.00 ¥
0.23 $
30.50
0.23
Balance sheet data:
Total assets
Loans, net of allowance for credit losses
Total liabilities
Deposits
Long-term debt
Total equity
Capital stock
2021
2022
(in millions)
2023
¥
353,824,625 ¥
367,650,018 ¥
381,735,733
114,370,472
337,580,071
229,206,936
35,157,651
16,244,554
2,090,270
111,678,692
351,353,496
224,589,943
34,696,599
16,296,522
2,090,270
118,682,562
365,269,566
235,276,781
39,071,755
16,466,167
2,090,270
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Other financial data:
Average balances:
Interest-earning assets
Interest-bearing liabilities
Total assets
Total equity
Return on equity and assets:
2021
2022
2023
(in millions, except percentages)
¥
268,916,481
¥
276,179,049
¥
291,018,346
265,912,928
355,992,571
15,681,527
279,759,500
370,588,337
16,269,224
294,877,689
396,151,869
16,300,493
Earnings (loss) applicable to common shareholders as a percentage of average total assets
Earnings (loss) applicable to common shareholders as a percentage of average total equity
Dividends per common share as a percentage of basic earnings per common share
Average total equity as a percentage of average
total assets
Net interest income as a percentage of average total interest-earning assets
0.31%
7.12%
28.78%
4.41%
0.75%
(0.02) %
(0.51) %
—
(3)
4.39%
0.71%
0.15%
3.68%
62.63%
4.11%
0.82%
Credit quality data:
Allowance for credit losses
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(2)
¥
¥
1,348,391
1.17%
245,424
¥
¥
1,470,701
1.30%
179,297
¥
¥
1,272,898
1.06%
259,608
0.21%
0.74%
16.31%
0.16%
0.72%
14.29%
0.21%
0.83%
13.91%
Includes the common shares held by the trusts under the Board Incentive Plan. See “ Item 6.B. Directors, Senior Management and Employees—Compensation.”
Notes:
(1)
(2) 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.”
(3) Dividends per common share have not been presented because such information is not meaningful.
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, 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.
General Economic Conditions
The global economy remained vulnerable to external events during the fiscal year ended March 31, 2023. The global economy
faced a sharp rise in energy prices triggered by the conflict in Ukraine. This led to a rise in inflation globally, followed by considerable
monetary tightening in major markets, which put downward pressure on economies. Nevertheless, economic activities continued to
normalize as the effects of COVID-19 on people's daily lives lessened, and, on the whole, the global economy was beginning to
recover gradually. However, there are signs that the conflict in Ukraine may continue for a longer period, and the cumulative effects of
monetary tightening have caused instability in the financial system particularly in the United States and Europe and have also
increased downward pressure on the global economy. As a result, there has recently been a marked slowing of economic growth. In
addition, any new or expansion or prolongation of geopolitical conflicts, the financial system uncertainty that originated in the United
States and Europe, and other uncertainties, events and developments may have a further adverse effect on the real economy.
Japan’s economy generally followed the global economic trends, showing a mixture of negative and positive trends, during the
fiscal year ended March 31, 2023. Japan’s real gross domestic product, or GDP, grew by 1.4% for the quarter ended June 30, 2022,
contracted by 0.4% for the quarter ended September 30, 2022, grew by 0.1% for the quarter ended December 31, 2022, and grew by
0.7% for the quarter ended March 31, 2023 on a quarter-on-quarter basis. These fluctuations mainly reflected the progress in balancing
the normalization of economic activities with COVID-19 measures since the priority preventative measures were lifted in March 2022
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as well as the negative impact of such factors as supply chain disruptions and inflation. On a year-on-year basis, Japan’s real GDP
grew by 1.8% for the quarter ended June 30, 2022, 1.5% for the quarter ended September 30, 2022, 0.4% for the quarter ended
December 31, 2022, and 1.9% for the quarter ended March 31, 2023. Japan’s Consumer Price Index, or CPI, fluctuated between
negative 0.6% and positive 0.4% on a month-on-month basis and between positive 1.2% and positive 4.3% on a year-over-year basis
during the fiscal year ended March 31, 2023. The unemployment rate in Japan remained low while slightly increasing from 2.6% in
March 2022 to 2.8% in March 2023. According to Teikoku Databank, a Japanese research institution, the number of companies that
filed for legal bankruptcy in Japan between April 2022 and March 2023 was 6,799, a 14.9% increase 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, 2023 were
¥2,339 billion, an increase of 97.7% from the previous fiscal year. The Japanese economy remains subject to instabilities resulting
from geopolitical developments, increasing public debt, intensifying trade conflicts and global competition, declining domestic
population, inflationary trends, downward pressure on private consumption, and various other factors that could adversely affect
economic conditions in Japan.
The U.S. economy generally underwent upward trends during the fiscal year ended March 31, 2023, with U.S. real GDP
contracting by 0.6% for the quarter ended June 30, 2022, but growing by 3.2% for the quarter ended September 30, 2022, 2.6% for the
quarter ended December 31, 2022, and 2.0% for the quarter ended March 31, 2023, on a quarter-on-quarter annualized basis. On a
year-on-year basis, U.S. real GDP grew by 1.8% for the quarter ended June 30, 2022, 1.9% for the quarter ended September 30, 2022,
0.9% for the quarter ended December 31, 2022 and 1.8% for the quarter ended March 31, 2023. The unemployment rate declined to
3.5% in March 2023, from 3.6% in March 2022. The long-term prospects of the U.S. economy remain uncertain in light of the impact
of instabilities resulting from inflationary trends, geopolitical developments, political situation, bank failures, and the government’s
economic, monetary, trade and foreign relations policies, and various other factors.
The Eurozone economy also grew modestly during the fiscal year ended March 31, 2023, with Eurozone real GDP growing by
0.8% for the quarter ended June 30, 2022, and 0.4% for the quarter ended September 30, 2022, and contracting by 0.1% for the quarter
ended December 31, 2022, and 0.1% for the quarter ended March 31, 2023, on a quarter-on-quarter basis. On a year-over-year basis,
Eurozone real GDP grew by 4.3% for the quarter ended June 30, 2022, 2.5% for the quarter ended September 30, 2022, 1.8% for the
quarter ended December 31, 2022, and 1.0% for the quarter ended March 31, 2023. The unemployment rate in the Eurozone declined
to 6.6% in March 2023, from 6.8% in March 2022. The Eurozone economy remains subject to various uncertainties, including
instabilities resulting from inflationary trends, geopolitical developments, concerns over the financial system 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, 2023. The economic conditions of these regions remain subject to various uncertainties, including the 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 0.168% and 0.527% during the fiscal year ended March 31, 2023. The Bank of Japan
has maintained its quantitative and qualitative monetary easing policy with yield curve control currently applying a negative interest
rate of minus 0.1% to the “Policy-Rate Balances,” which are a part of current account amounts held by financial institutions at the
Bank of Japan, and aiming to keep the yield of 10-year Japanese government bonds around zero percent, and with exchange-traded
fund, bond and commercial paper purchase programs. In December 2022, the Bank of Japan announced that it would expand the target
range of fluctuations in the yield of 10-year Japanese government bonds from between around plus and minus 0.25 percentage points
to between around plus and minus 0.5 percentage points, causing some volatility in the Japanese government bond market. However,
the Bank of Japan has since announced its intent to retain its monetary easing policy until such time as the 2% CPI inflation target is
achieved and maintained in a sustainable and stable manner accompanied by wage increases.
In the United States, since the Federal Open Market Committee meeting in March 2022, the Committee has continued to raise
the target range for the federal funds rate in light of, among other factors, inflated inflation. Between March 2022 and May 2023, the
target range for the federal funds rate rose from 0.25% to 0.50% to 5.00% to 5.25%. The Committee also began reducing its holdings
of Treasury securities and agency debt and agency mortgage-backed securities in June 2022. Following the meeting in June 2023, the
Committee decided to keep the target range for the federal funds rate at 5.00% to 5.25% and closely monitor incoming information for
the economic outlook and assess the appropriate stance of monetary policy. In determining the extent of additional policy firming that
may be appropriate to return inflation to 2% over time, the Committee stated that it will take into account the cumulative tightening of
monetary policy, the lags with which monetary policy affects economic activity and inflation, and economic and financial
developments. Also, the Committee announced that the current median projection by FRB members for the federal funds rate at the
end of calendar year 2023 is 5.1%. The 10-year U.S. Treasury bond yield increased from 2.341% at the end of March 2022 to 3.5% at
the end of March 2023, while fluctuating between 2.341% and 4.244% during the period. The yield currently fluctuates between 3.3%
and 3.8%.
Foreign Currency Exchange Rates
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The Japanese yen depreciated against the U.S. dollar from ¥122.39 to the U.S. dollar as of March 31, 2022 to ¥133.53 to the
U.S. dollar as of March 31, 2023. The Japanese yen has been fluctuating between around ¥130 and ¥140 to the U.S. dollar since April
2023.
The Japanese yen was on a generally depreciating trend against the euro during the fiscal year ended March 31, 2023, with the
exchange rate being ¥145.72 to the euro as of March 31, 2023 compared to ¥136.70 to the euro as of March 31, 2022. The Japanese
yen has been fluctuating between around ¥140 and ¥150 to the euro since April 2023.
The Japanese yen was on a generally depreciating trend against the Thai baht during the fiscal year ended March 31, 2023, with
the exchange rate being ¥3.91 to the Thai baht as of March 31, 2023 compared to ¥3.68 to the Thai baht as of March 31, 2022. The
Japanese yen has been fluctuating between ¥3.85 and ¥4.10 to the Thai baht since April 2023.
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 ¥27,821.43 on March 31, 2022 to ¥28,041.50 on March 31, 2023. The closing price of the Nikkei Stock
Average has since risen and has been fluctuating between ¥25,000 and ¥30,000 and has risen above ¥33,000 in June 2023.
Recent Developments
During the fiscal year ended March 31, 2023, 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 significant inflationary price trends, instability in the financial
system, geographical conflicts, 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 ending in the fiscal year ending March 31, 2024,
we aim to leverage our financial and digital strengths to provide value to our stakeholders around the world.
Implementation of Share Repurchase Programs and Cancellation of Treasury Shares
During May 2022 and October 2022, we repurchased 418,926,300 shares of our common stock for ¥299,999,909,768 under a
share repurchase program that was adopted in May 2022 and completed in October 2022. Under the program, we were authorized by
the Board of Directors to repurchase up to the lesser of 600,000,000 shares of our common stock and ¥300.0 billion between May
2022 and November 2022 and to cancel the repurchased shares. We cancelled all of the repurchased shares on November 30, 2022.
During November 2022 and January 2023, we repurchased 175,357,900 shares of our common stock for ¥149,999,996,001
under a share repurchase program that was adopted in November 2022 and completed in January 2023. Under the program, we were
authorized by the Board of Directors to repurchase up to the lesser of 300,000,000 shares of our common stock and ¥150.0 billion
between November 2022 and January 2023 and to cancel the repurchased shares. We cancelled all of the repurchased shares on
February 28, 2023.
We intend to agilely engage in repurchases of shares of our own stock as a means to return profits to shareholders and improve
capital efficiency, taking into account our business performance and capital position, opportunities for growth investments, and market
conditions including stock prices. As a general policy, we intend to cancel treasury shares to the extent that such shares exceed
approximately 5% of our total issued shares (including treasury shares).
Issuances of TLAC Eligible Senior Debt
During the fiscal year ended March 31, 2023, we obtained $16.3 billion, or ¥2,171.9 billion, ¥624.5 billion, and €3.1 billion, or
¥444.5 billion, aggregate principal amount of external TLAC eligible senior debt financing in the form of securities and borrowings. In
April 2023, we issued $2.5 billion, or ¥333.7 billion, aggregate principal amount of external TLAC eligible senior debt in the form of
securities. In June 2023, we obtained ¥255.0 billion, and €0.5 billion, or ¥75.1 billion, aggregate principal amount of external TLAC
eligible senior debt financing in the form of securities and borrowings.
As of March 31, 2023, our external TLAC ratios were 20.22% on a risk-weighted assets basis and 9.47% on a leverage exposure
basis. We are required to maintain external TLAC ratios of 18% on a risk-weighted assets basis and 6.75% on a leverage exposure
basis as of the same date. See “—B. Liquidity and Capital Resources—Capital Adequacy” below and “Item 4.B. Information on the
Company—Business Overview—Supervision and Regulation—Japan—Total loss-absorbing capacity.”
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Issuances of Basel III-Compliant Domestic Subordinated Debt
During the fiscal year ended March 31, 2023, we obtained ¥100.0 billion aggregate principal amount of perpetual subordinated
Additional Tier 1 debt financing in the form of securities and borrowings in Japan. In June 2023, we issued ¥330.0 billion aggregate
principal amount of perpetual subordinated Additional Tier 1 debt in the form of securities in Japan. These securities and borrowings
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.
During the fiscal year ended March 31, 2023, we obtained ¥476.0 billion aggregate principal amount of subordinated term Tier
2 debt financing in the form of securities and borrowings in Japan. We can be exempted from the obligation to pay principal of and
interest on these securities and borrowings 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 MUFG Union Bank and Investment in Shares of U.S. Bancorp
On December 1, 2022, MUFG and MUFG Bank completed the sale of all shares of MUFG Union Bank (“MUB”), MUFG’s
subsidiary owned through MUFG Americas Holdings (“MUAH”), to U.S. Bancorp (“USB”) (the “Share Transfer”) pursuant to a
Share Purchase Agreement, dated as of September 21, 2021, by and among MUFG, MUAH and USB (as amended, supplemented and
modified from time to time, the “Share Purchase Agreement”). The MUB businesses that were transferred to USB excluded the Global
Corporate & Investment Banking (GCIB) business (with certain exceptions as agreed to by the parties, including certain deposits of
the GCIB business that were retained by MUB), the Global Markets business to the extent related to the GCIB business, which
consisted of transactions with clients and investors, and certain assets and liabilities that were part of shared middle and back office
functions. Such businesses, and the customer assets and liabilities related to these businesses (including related transactions with such
customers) were transferred to MUFG Bank and MUAH prior to the Share Transfer. In addition, the corporate credit card business for
GCIB business customers and certain Japanese customers was transferred from MUB to MUFG Bank in April 2023.
As consideration for the Share Transfer, MUFG Bank and MUAH received from USB ¥754.0 billion in cash and 44,374,155
shares of USB common stock (representing approximately 3% of USB’s outstanding shares) on the closing date, and will receive from
USB an additional ¥464.5 billion in cash within five years of the closing date. Before the closing of the Share Transfer, MUB declared
and paid a special dividend of approximately ¥636.8 billion to MUAH.
MUFG recorded a pretax gain on sale of MUB of ¥557,954 million, which was included in Gain on sale of MUB in the
consolidated statements of operations for the fiscal year ended March 31, 2023.
The MUB businesses that were transferred to USB recorded pretax losses of ¥11.4 billion for the fiscal year ended March 31,
2022 and ¥506.3 billion for the fiscal years ended March 31, 2023, mainly attributable to loss on valuation adjustment for loans held
for sale of ¥282.5 billion and impairment of investment securities losses of ¥359.6 billion.
For further information on the impact of the transaction on our financial statements as of and for the fiscal year ended March 31,
2023, see Note 2 to our consolidated financial statements. See also “—A. Operating Results—Results of Operations—Non-Interest
Income” and “—A. Operating Results—Results of Operations—Non-Interest Expense.”
MUFG to Acquire HC Consumer Finance Philippines, Inc & PT Home Credit Indonesia
In November 2022, MUFG agreed to acquire 100.0% of the shares of HC Consumer Finance Philippines, Inc. (“HC
Philippines”) and 85.0% of shares of PT Home Credit Indonesia (“HC Indonesia”), both of which are subsidiaries of Home Credit
B.V. (“HC”), for estimated maximum total consideration of €596 million, or ¥87 billion, through its subsidiaries, MUFG Bank,
Krungsri and PT. Adira Dinamika Multi Finance (“ADMF”). The acquisition is expected to be completed within calendar year 2023,
subject to receipt of approvals from the relevant regulatory authorities. Following the completion of the acquisition, Krungsri will hold
75% of the shares of HC Philippines and 75% of the shares of HC Indonesia, MUFG Bank will hold 25% of the shares of HC
Philippines, and ADMF will hold 10% of shares of HC Indonesia.
Headquartered in the Netherlands, HC is a consumer finance company engaged primarily in the point-of-sale loan business.
Each of HC Philippines and HC Indonesia is a leading point-of-sale lender in its respective market. With our equity method affiliate
Security Bank Corporation in the Philippines and our consolidated subsidiary Bank Danamon in Indonesia, we plan to continue to
reinforce and expand our retail business in both countries through these acquisitions.
MUFG to Acquire PT Mandala Multifinance Tbk
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In June 2023, MUFG Bank and its consolidated subsidiary PT Adira Dinamika Multi Finance Tbk (“ADMF”, a finance
company in Indonesia) agreed with PT Jayamandiri Gemasejati and certain other shareholders on the acquisition of 81% of the shares
in PT Mandala Multifinance Tbk (“MFIN”), at a cost of approximately IDR7,042 billion, or ¥66billion. The acquisition is expected to
be completed by early calendar year 2024, subject to the receipt of approvals from the relevant regulatory authorities. The completion
of this acquisition will result in MUFG Bank becoming the largest shareholder in MFIN by directly holding 71% of shares, while
ADMF would be directly holding 10% of the shares of MFIN.
MFIN is an Indonesian company which mainly provides auto loans for new motorbikes and multi-purpose loans secured by
motorbikes in the domestic market, with strong presence especially in eastern Indonesia. MUFG Bank and ADMF intend to leverage
MFIN’s strengths, in both products and geography, to further reinforce and expand our auto loan business in Indonesia.
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A. Operating Results
The following discussion relates to our operating results for the fiscal years ended March 31, 2023 compared to our operating results
for the fiscal year ended March 31, 2022, unless otherwise noted. For the discussion on our operating results for the fiscal year ended
March 31, 2021, including certain comparative discussion on our operating results for the fiscal years ended March 31, 2021 and
2022, please refer to “Item 5. Operating and Financial Review and Prospects—5.A. Operating Results” in our annual report on Form
20-F for the fiscal year ended March 31, 2021, filed with the SEC on July 8, 2022.
Results of Operations
Interest income
Interest expense
Net interest income
Provision for credit losses
Non-interest income
Non-interest expense
Income (loss) before income tax expense (benefit)
Income tax expense (benefit)
Net income (loss) before attribution of noncontrolling interests
Net income attributable to noncontrolling interests
Net income (loss) attributable to Mitsubishi UFJ Financial Group
Fiscal years ended March 31,
2022
2023
% Change
(in billions, except percentages)
¥
2,531.0 ¥
560.4
1,970.6
278.0
1,394.8
3,146.1
(58.7)
(14.5)
(44.2) ¥
39.1
(83.3) ¥
¥
¥
4,611.4
2,222.0
2,389.4
8.1
1,695.4
3,420.0
656.7
26.4
630.3
30.4
599.9
82.2 %
296.5
21.3
(97.1)
21.6
8.7
N/M
N/M
N/M
(22.2)
N/M
We recorded net income attributable to Mitsubishi UFJ Financial Group of ¥599.9 billion primarily due to an increase in net
interest income mainly as a result of an increase in foreign interest income and the gain on sale of MUFG Union Bank as well as a
decrease in provision for credit losses.
Net interest income increased 21.3% mainly due to an increase in foreign interest income, particularly on foreign loans,
reflecting the higher average interest rate on the larger average asset balance. Our average interest rate spread (which is the average
interest rate on interest-earning assets less the average interest rate on interest-bearing liabilities) increased 0.11 percentage points to
0.83%.
Provision for credit losses decreased 97.1% mainly due to changes in our assessment of the impact of the COVID-19 pandemic
on our loan portfolio and the qualitative reserve which, for the previous fiscal year, reflected our assessment of the rapidly changing
Russia-Ukraine situation.
Non-interest income increased 21.6% primarily due to the gain on sale of MUFG Union Bank and financing-related fees in
foreign branches of MUFG Bank, while non-interest expense increased 8.7% due to loss on valuation adjustment for loans held for
sale held by MUFG Union Bank and an increase in salaries and employee benefits.
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Net Interest Income
Interest-earning assets:
Domestic
Foreign
Total
Financed by:
Interest-bearing liabilities:
Domestic
Foreign
Total
Fiscal years ended March 31,
2022
2023
% Change
Change
Average
balance(1)
Interest
income
(expense)
Average
rate
Average
balance(1)
Interest
income
(expense)
Average
rate
Average
balance(1)
Interest
income
(expense)
(in billions, except percentages)
¥ 175,474.0 ¥ 825.6
0.47% ¥ 175,859.2 ¥ 997.1
0.57%
0.2 %
20.8 %
100,705.1
1,705.4
1.69
115,159.2
3,614.3
3.14
14.4
111.9
¥ 276,179.1 ¥ 2,531.0
0.92% ¥ 291,018.4 ¥ 4,611.4
1.58%
5.4 %
82.2 %
¥ 211,839.0 ¥ (277.1)
0.13% ¥ 218,582.7 ¥ (772.2)
0.35%
3.2 % 178.7 %
67,920.5
(283.3)
0.42
76,295.0
(1,449.8)
1.90
279,759.5
(560.4)
0.20
294,877.7
(2,222.0)
0.75
N/M
296.5
12.3
5.4
7.8
Average
rate 2023
minus
2022
(percentage
points)
0.10
1.45
0.66
0.22
1.48
0.55
—
0.56
0.11
0.11
Non-interest-bearing liabilities (assets)
(3,580.4)
—
(3,859.3)
—
Total
¥ 276,179.1
0.20% ¥ 291,018.4
0.76%
5.4 %
Net interest income and interest rate
spread
Net interest income as a percentage of
total interest-earning assets
¥ 1,970.6
0.72%
¥ 2,389.4
0.83%
21.3 %
0.71%
0.82%
Effect of Volume and Rate Changes on Net Interest Income
Domestic
Foreign
Total
Fiscal Year Ended March 31, 2022
versus
Fiscal Year Ended March 31, 2023
Increase (decrease)
due to changes in
Volume(2)
Rate(2)
Net change
(in millions)
¥
¥
250 ¥
(323,933) ¥
(323,683)
306,410
436,106
306,660 ¥
112,173 ¥
742,516
418,833
Notes:
(1) 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.
(2) Volume/rate variance is allocated based on the percentage relationship of changes in volume and changes in rate to the total “net change.”
Net interest income increased 21.3% primarily due to a significant increase in net foreign interest income, particularly on foreign
loans. Foreign interest income increased due to the higher average rate in overseas branches and subsidiaries of our commercial
banking subsidiaries. The average interest rate on foreign interest-earning assets increased to 3.14% from 1.69%, while the average
interest rate on interest-bearing liabilities increased to 1.90% from 0.42%, resulting in a decrease in the average foreign interest rate
spread to 1.24% for the fiscal year ended March 31, 2023 from 1.27% for the previous fiscal year. However, the impact of the interest
rate increase on foreign interest income was larger than the impact of the interest rate increase 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. Domestic interest expense increased 178.7% due to an increase in the average interest rate on domestic interest-bearing
liabilities and increases in the average balances of payables under repurchase agreements and long-term debt. Domestic interest
income increased 20.8% due to the higher average interest rate on domestic interest-bearing assets. Our average domestic interest rate
spread decreased to 0.22% for the fiscal year ended March 31, 2023 from 0.34% for the previous fiscal year. As a result, net domestic
interest income significantly decreased.
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Provision for credit losses
We recorded ¥8.1 billion of provision for credit losses for the fiscal year ended March 31, 2023, compared to ¥278.0 billion of
provision for credit losses for the previous fiscal year. Provision for credit losses decreased ¥269.9 billion mainly due to a decrease in
provision for credit losses for the Commercial segment, primarily reflecting improvements in the business performance of some large
domestic borrowers and a decrease in qualitative reserve recorded for the Russia-Ukraine situation.
Non-Interest Income
Fiscal years ended March 31,
2022
2023
% Change
(in billions, except percentages)
Fees and commissions income:
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
Total
Foreign exchange gains—net
Trading account losses—net:
Net profits (losses) on interest rate and other derivative contracts
Net losses on trading account securities, excluding derivatives
Total
Investment securities 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 (losses) on sales of loans including valuation adjustment for loans held for
sale
Gain on sale of MUFG Union Bank
Other non-interest income
Total non-interest income
¥
51.0 ¥
157.2
56.3
207.1
264.5
286.6
133.3
45.9
42.4
65.6
349.0
1,658.9
106.9
(102.1)
(722.3)
(824.4)
48.8
(47.3)
(131.7)
11.2
(119.0)
436.6
16.6
—
119.2
49.8
147.6
69.0
230.4
224.9
282.3
131.0
48.0
49.4
68.4
400.8
1,701.6
25.2
(2.4) %
(6.1)
22.5
11.3
(15.0)
(1.5)
(1.7)
4.7
16.7
4.3
14.9
2.6
(76.4)
238.2
N/M
(1,030.3)
(792.1)
(42.6)
3.9
(62.4)
(359.3)
89.0
78.5
(254.2)
398.1
(34.0)
558.0
92.8
N/M
N/M
N/M
N/M
(113.5)
(8.8)
N/M
N/M
(22.1)
21.6 %
¥
1,394.8 ¥
1,695.4
Non-interest income increased 21.6% mainly due to the gain on the sale of MUFG Union Bank, partially offset by an increase in
net investment securities losses.
Fees and commissions income
Fees and commissions income increased 2.6% primarily due to an increase in financing-related fees in foreign branches of
MUFG Bank, which are included in Other fees and commissions, and an increase in fees and commissions on foreign trading business
reflecting larger volumes of money transfers and foreign exchange trading activities. These increases were partially offset by a
decrease in fees and commissions security-related services due to decreases in commissions on underwriting, secondary distribution
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of, and offering to sell to and solicitation of offers to buy from professional investors, securities in our securities and banking
subsidiaries.
Net foreign exchange gains (losses)
Foreign exchange gains—net:
Net foreign exchange gains (losses) on derivative contracts
Net foreign exchange losses on other than derivative contracts
Net foreign exchange gains related to the fair value option
Total
Net foreign exchange gains (losses) consist of the following:
Fiscal years ended March 31,
2022
2023
% Change
(in billions, except percentages)
¥
¥
(44.7) ¥
57.9
N/M
(1,601.4)
(1,401.8)
1,753.0
106.9 ¥
1,369.1
25.2
12.5
(21.9)
(76.4) %
• 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 our consolidated financial statements.
Net foreign exchange gains for the fiscal year ended March 31, 2023 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 ¥122.39 to the U.S. dollar as of March 31, 2022 to ¥133.53 to the U.S. dollar as of March 31,
2023, which represented a slightly smaller exchange rate fluctuation compared to the previous fiscal year when the Japanese yen
depreciated against the U.S. dollar from ¥110.71 to the U.S. dollar as of March 31, 2021 to ¥122.39 to the U.S. dollar as of March 31,
2022. The gains on such securities for the fiscal year ended March 31, 2023 were offset by 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, 2022 and March 31, 2023.
Net trading account profits (losses)
Trading account losses—net:
Net profits (losses) on interest rate and other derivative contracts
Interest rate contracts
Equity contracts
Credit derivatives
Other
Total
Net losses on trading account securities, excluding derivatives
Trading account securities
Trading account securities under the fair value option
Total
Total
61
Fiscal years ended March 31,
2022
2023
% Change
(in billions, except percentages)
¥
50.9 ¥
(98.1)
(33.8)
(21.1)
(102.1) ¥
262.3 ¥
(984.6)
(722.3) ¥
(824.4) ¥
¥
¥
¥
¥
262.8
(12.7)
(19.9)
8.0
238.2
150.0
(1,180.3)
(1,030.3)
(792.1)
N/M
87.1
41.1
N/M
N/M
(42.8) %
(19.9)
(42.6) %
3.9 %
Table of Contents
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 losses for the fiscal year ended March 31, 2023.
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;
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, 2023 mainly reflected net losses on trading account securities
under the fair value option. During the fiscal year ended March 31, 2023, 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 2023. Net losses on credit derivatives
resulted from losses on such derivatives for hedging purposes at our commercial banking subsidiaries. These losses were partially
offset by net profits on interest rate contracts which reflected interest rate swap gains in our trust banking subsidiary.
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 losses for the fiscal year ended March 31, 2023 were ¥254.2 billion, compared to net losses of ¥119.0
billion for the fiscal year ended March 31, 2022. This was mainly due to larger impairment losses on the available-for-sale debt
securities held for sale related to the transferred business of MUFG Union Bank. These losses were partially offset by net gains from
62
Table of Contents
marketable equity securities which reflected slightly higher stock prices in Japan as of March 31, 2023 compared to the end of the
previous fiscal year, with an upward trend towards the end of March 2023.
Net equity in earnings of equity method investees
Net equity in earnings of equity method investees for the fiscal year ended March 31, 2023 was ¥398.1 billion, compared to
¥436.6 billion for the previous fiscal year, reflecting lower earnings of our equity method investees, including Morgan Stanley.
Gain on sale of MUFG Union Bank
We recorded a pre-tax gain on the sale of MUFG Union Bank in the amount of ¥558.0 billion for the fiscal year ended March
31, 2023. For further information on the transaction, see Note 2 to our consolidated financial statements.
Non-Interest Expense
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
Provision for (reversal of) off-balance sheet credit instruments
Impairment (reversal of impairment) of assets held for sale
Loss on valuation adjustment for loans held for sale held by MUFG Union Bank
Other non-interest expenses
Total non-interest expense
Fiscal years ended March 31,
2022
2023
% Change
(in billions, except percentages)
¥
1,277.4 ¥
165.3
1,343.6
162.2
310.9
318.0
82.7
261.0
33.3
95.6
57.4
99.7
—
46.3
134.1
3.2
261.2
340.1
351.3
73.8
274.4
5.2
74.3
58.4
100.3
33.6
20.7
(134.1)
282.5
433.7
¥
3,146.1 ¥
3,420.0
5.2%
(1.9)
9.4
10.5
(10.7)
5.1
(84.5)
(22.2)
1.8
0.6
N/M
55.2
N/M
N/M
65.9
8.7 %
Non-interest expense increased 8.7% mainly due to loss on valuation adjustment for loans held for sale related to the sale of
MUFG Union Bank and increases in salaries and employee benefits, as well as impairment of goodwill relating to First Sentier
Investors, partially offset by reversal of impairment of assets held for sale related to the sale of MUFG Union Bank.
Loss on valuation adjustment for loans held for sale held by MUFG Union Bank
Loss on valuation adjustment for loans held for sale held by MUFG Union Bank of ¥282.5 billion was recorded for the fiscal
year ended March 31, 2023 due to the valuation losses on the loans held for sale related to the transferred business of MUFG Union
Bank. These valuation losses were reflected in the carrying value of net assets transferred. Since these valuation losses had no impact
on the consideration for the sale of shares of MUFG Union Bank, to the extent of the decrease in the carrying amount of the loans held
for sale resulting from these valuation losses, the gains on the sale of shares of MUFG Union Bank increased. For more information
on business developments and fair value valuation, see Notes 2 and 31 to our consolidated financial statements.
Salaries and employee benefits
Salaries and employee benefits increased ¥66.2 billion mainly due to the foreign exchange translation impact of the depreciation
of the Japanese yen against other major currencies and an increase in employee retention costs abroad in the tighter labor market
especially in North America.
Impairment (reversal of impairment) of assets held for sale
63
Table of Contents
Reversal of impairment of assets held for sale of ¥134.1 billion was recorded for the fiscal year ended March 31, 2023. During
the second half of the fiscal year ended March 31, 2022, ¥134.1 billion of impairment of assets held for sale was recognized through
the application of the lower of cost or market method to the disposal group related to the sale of MUFG Union Bank. However, as of
March 31, 2023, the fair value less cost to sell exceeded the carrying value and the reversal was recognized. For more information, see
Notes 2 and 31 to our consolidated financial statements.
Impairment of goodwill
Impairment of goodwill of ¥33.6 billion was recorded relating to the First Sentier Investors reporting unit within the Asset
Management & Investor Services Business Group segment for the fiscal year ended March 31, 2023 since the cash flow forecast for
the reporting unit was revised downwards due to a decrease in the balance of assets under management, which reflected a decline in
equity markets. See Note 6 to our consolidated financial statements.
Given the three-month difference between our consolidated reporting period and the reporting period of some of our
subsidiaries, including First Sentier Investors, 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.
Income Tax Expense (Benefit)
Income (loss) before income tax expense (benefit)
¥
(58.7)
¥
Income tax expense (benefit)
Effective income tax rate
Combined normal effective statutory tax rate
(14.5)
24.7%
30.6%
656.7
26.4
4.0%
30.6%
N/M
N/M
—
—
Fiscal years ended March 31,
2022
2023
% Change
(in billions, except percentages)
64
Table of Contents
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
Taxation for gain on sale of shares in subsidiary(1)
Nontaxable dividends received
Undistributed earnings of subsidiaries
Tax and interest expense for uncertainty in income taxes
Noncontrolling interest income
Effect of changes in tax laws
Expiration of loss carryforward
Other—net
Effective income tax rate
Fiscal years ended March 31,
2022
2023
Net Change
(percentage
points)
30.6%
30.6%
—
(12.0)
—
28.7
30.8
(90.1)
—
85.1
(25.6)
(10.8)
(0.7)
(2.4)
(7.0)
(1.9)
0.8
1.5
(4.7)
(5.3)
(10.5)
3.4
(14.8)
(0.3)
—
0.3
0.6
0.1
2.3
12.8
1.5
(33.4)
(36.1)
79.6
3.4
(99.9)
25.3
10.8
1.0
3.0
7.1
4.2
24.7%
4.0%
(20.7)
Note:
(1)
In March 2023, MUAH repurchased a portion of the shares in MUAH held by MUFG and MUFG Bank. The transaction resulted in the realization of a difference
between the book value of the shares in MUAH for accounting and tax purposes, resulting in a ¥22,250 million increase in income tax expense and a 3.4
percentage points increase in the effective tax rate for the fiscal year ended March 31, 2023.
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, 2022 and
2023. Foreign subsidiaries are subject to income taxes of the jurisdictions in which they operate. These taxes are reflected in the
effective income tax rate.
Prior to the fiscal year ended March 31, 2023, the MUFG Group filed tax returns on a consolidated basis for corporate income
taxes within Japan, and from the beginning of fiscal year ended March 31, 2023, the MUFG Group applied the Group Tax Sharing
System, where the calculation of taxable income or loss is still made based upon the combined profits or losses of the parent company
and its wholly-owned domestic subsidiaries, but the tax payments are made by each of these companies.
Fiscal Year Ended March 31, 2023
The effective income tax rate for the fiscal year ended March 31, 2023 was 4.0%, which was 26.6 percentage points lower than
the combined normal effective statutory rate of 30.6%.
This lower effective income tax rate primarily reflected our receipt of nontaxable dividends, which resulted in a decrease of
¥97.2 billion in income tax expense and a decrease of 14.8 percentage points in the effective income tax rate for the fiscal year ended
March 31, 2023. 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 a reduction in valuation allowance against deferred tax
assets for certain subsidiaries, which resulted in a decrease of ¥68.7 billion in income tax expense and a decrease of 10.5 percentage
points in the effective income tax rate for the fiscal year ended March 31, 2023. The decrease in valuation allowance included a
release of valuation allowance related to the loss which was previously expected on the sale of all of the shares in MUFG Union Bank
to U.S. Bancorp.
Fiscal Year Ended March 31, 2022
The effective income tax rate for the fiscal year ended March 31, 2022 was 24.7%, which was 5.9 percentage points lower than
the combined normal effective statutory rate of 30.6%. This lower effective income tax rate primarily reflected an addition of ¥47.4
65
Table of Contents
billion of valuation allowance against deferred tax assets for certain subsidiaries, which resulted in an increase of ¥52.9 billion in
income tax expense and a decrease of 90.1 percentage points in the effective income tax rate for the fiscal year ended March 31, 2022.
The increase in valuation allowance includes recognition of valuation allowance related to the loss which is expected on the sale of the
shares in MUFG Union Bank to U.S. Bancorp. This impact was partially offset by an increase of 85.1 percentage points in the
effective income tax rate resulting from our receipt of nontaxable dividends, which resulted in a decrease of ¥50.0 billion in income
tax expense for the fiscal year ended March 31, 2022. 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.
Net income attributable to noncontrolling interests
We recorded ¥30.4 billion of net income attributable to noncontrolling interests for the fiscal year ended March 31, 2023,
compared to ¥39.1 billion of net income attributable to noncontrolling interests for the previous fiscal year. This mainly reflected a
decrease in net income of certain consolidated VIEs.
66
Table of Contents
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 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 (loss) before income tax expense (benefit) shown on the consolidated statements of
operations, 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. However, in order
to ensure more efficient management of resources, and to strengthen controls on profits and losses in each business group, we have
allocated fixed assets of both MUFG Bank on a stand-alone basis and Mitsubishi UFJ Trust and Banking on a stand-alone basis to
each business unit of such subsidiaries as of March 31, 2022. Accordingly, such fixed assets allocated to business groups are presented
below.
In addition, we made modifications to our internal management accounting rules and practices, effective April 1, 2022,
including reallocation of au Kabucom Securities Co., Ltd., an internet securities subsidiary, to the Digital Service Business Group
from the Retail & Commercial Banking Business Group as well as updates to internal booking rules relating to certain net fees and
other net revenue in the customer business groups and corresponding adjustments in Other.
These changes had the following impact on our previously reported business segment information for the fiscal years ended
March 31, 2021 and 2022:
•
•
•
•
increasing the operating profits of the Digital Service Business Group, the Japanese Corporate & Investment Banking
Business Group, the Global Corporate & Investment Banking Business Group and the Global Commercial Banking
Business Group by ¥8.2 billion, ¥5.7 billion, ¥4.9 billion and ¥0.8 billion, respectively, for the fiscal year ended March 31,
2021,
reducing the operating profits of the Retail & Commercial Banking Business Group, Other, the Global Markets Business
Group and the Asset Management & Investor Services Business Group by ¥9.1 billion, ¥7.4 billion, ¥2.9 billion and ¥0.2
billion, respectively, for the fiscal year ended March 31, 2021,
increasing the operating profits of the Digital Service Business Group, the Global Corporate & Investment Banking
Business Group, the Japanese Corporate & Investment Banking Business Group and the Global Commercial Banking
Business Group by ¥10.3 billion, ¥6.5 billion, ¥0.9 billion and ¥0.3 billion, respectively, for the fiscal year ended March
31, 2022, and
reducing the operating profits of the Retail & Commercial Banking Business Group, Other, the Global Markets Business
Group and the Asset Management & Investor Services Business Group by ¥11.0 billion, ¥3.9 billion, ¥3.0 billion and ¥0.1
billion, respectively, for the fiscal year ended March 31, 2022.
Prior period business segment information has been restated to enable comparison between the relevant amounts for the fiscal
years ended March 31, 2021, 2022 and 2023.
For further information, see Note 29 to our consolidated financial statements.
67
Table of Contents
Fiscal year ended
March 31, 2021
Net revenue
BK and TB(1):
Net interest
income
Net fees
Other
Other than BK
and TB
Operating expenses
Operating profit
(loss)
Fiscal year ended
March 31, 2022
Net revenue
BK and TB(1):
Net interest
income
Net fees
Other
Other than BK
and TB
Operating expenses
Operating profit
(loss)
Fixed assets(2)
Fiscal year ended
March 31, 2023
Net revenue
BK and TB(1):
Net interest
income
Net fees
Other
Customer Business
Digital
Service
Business
Group
Retail &
Commercial
Banking
Business
Group
Japanese
Corporate &
Investment
Banking
Business
Group
Global
Commercial
Banking
Business
Group
Asset
Management
& Investor
Services
Business
Group
Global
Corporate &
Investment
Banking
Business
Group
(in billions)
Global
Markets
Business
Group
Total
Other
Total
¥
744.7 ¥
550.3 ¥
565.7 ¥
778.7 ¥
293.4 ¥
438.7 ¥ 3,371.5 ¥
640.3 ¥
(7.2) ¥ 4,004.6
255.5
373.2
453.5
223.4
29.2
2.9
489.2
565.0
165.9
188.9
18.4
177.1
492.2
187.4
218.6
47.5
112.2
319.9
1.0
3.3
—
(2.3)
777.7
501.7
99.4
5.5
93.9
—
194.0
213.0
274.7
1,457.3
386.3
34.2
1,877.8
138.2
136.9
(0.4)
723.7
667.5
66.1
166.9
80.8
(2.4)
(58.8)
221.8
12.2
971.4
606.3
300.1
164.0
1,914.2
254.0
(41.4)
2,126.8
272.2
2,364.0
243.1
150.5
2,757.6
¥
179.7 ¥
58.1 ¥
245.8 ¥
277.0 ¥
80.4 ¥
166.5 ¥ 1,007.5 ¥
397.2 ¥ (157.7) ¥ 1,247.0
¥
741.6 ¥
584.6 ¥
623.2 ¥
771.7 ¥
348.9 ¥
540.1 ¥ 3,610.1 ¥
427.0 ¥ 11.3 ¥ 4,048.4
257.2
390.3
496.8
219.3
36.0
1.9
484.4
558.9
166.8
201.7
21.8
194.3
490.9
231.6
212.7
52.5
126.4
320.9
1.9
1.9
—
—
769.8
528.0
106.3
362.2
1,614.7
203.4
53.2
1,871.3
9.3
97.0
—
242.6
241.4
172.2
173.8
16.2
801.1
721.2
92.4
231.5
120.0
1,152.6
(8.7)
(19.4)
(55.9)
(10.9)
656.6
62.1
177.9
1,995.4
223.6
(41.9)
2,177.1
295.3
2,435.4
253.0
127.6
2,816.0
¥
¥
182.7 ¥
93.7 ¥
140.6 ¥
191.7 ¥
302.3 ¥
155.8 ¥
243.7 ¥
107.5 ¥
244.8 ¥ 1,174.7 ¥
174.0 ¥ (116.3) ¥ 1,232.4
1.0 ¥
13.3 ¥
133.0 ¥ 635.4 ¥
108.4 ¥ 550.3 ¥ 1,294.1
¥
747.6 ¥
614.1 ¥
805.7 ¥
870.6 ¥
360.8 ¥
712.9 ¥ 4,111.7 ¥
408.9 ¥
(4.8) ¥ 4,515.8
251.4
429.6
647.4
35.1
105.4
531.9
2,000.8
130.6
19.2
2,150.6
215.4
32.9
3.1
496.2
533.2
196.5
200.5
32.6
184.5
456.8
355.0
230.6
61.8
158.3
331.1
35.7
—
(0.6)
835.5
580.3
9.4
96.0
—
255.4
255.7
260.3
1,072.3
710.4
71.9
1,854.6
243.1
28.5
803.1
125.4
(16.6)
(50.0)
736.5
(563.2)
(2.7)
(440.5)
181.0
2,110.9
278.3
(24.0)
2,365.2
336.9
2,494.0
271.8
172.4
2,938.2
214.4 ¥
157.3 ¥
156.9 ¥
201.9 ¥
474.6 ¥
161.2 ¥
290.3 ¥
105.1 ¥
376.0 ¥ 1,617.7 ¥
137.1 ¥ (177.2) ¥ 1,577.6
1.1 ¥
18.8 ¥
171.2 ¥ 711.2 ¥
110.6 ¥ 546.3 ¥ 1,368.1
37.0 ¥
10.6 ¥
41.9 ¥
21.1 ¥
37.1 ¥
36.6 ¥
0.6 ¥
0.2 ¥
11.6 ¥
6.0 ¥
23.4 ¥ 151.5 ¥
23.2 ¥ 34.2 ¥ 208.9
35.2 ¥ 109.8 ¥
28.3 ¥ 19.5 ¥ 157.6
Other than BK
and TB
Operating expenses
Operating profit
(loss)
Fixed assets(2)
Increase in fixed
assets(3)
Depreciation(3)
¥
¥
¥
¥
“BK and TB” is a sum of MUFG Bank on a stand-alone basis (BK) and Mitsubishi UFJ Trust and Banking on a stand-alone basis (TB).
Notes:
(1)
(2) Fixed assets in the above table are based on the financial information prepared in accordance with Japanese GAAP as adjusted in accordance with internal
management accounting rules and practices, and it corresponds to the U.S. GAAP amounts of premises and equipment-net, intangible assets-net and goodwill of
BK and TB. Fixed assets of MUFG and other consolidated subsidiaries and Japanese GAAP consolidation adjustments amounting to ¥1,286.1 billion as of
March 31, 2022 and ¥1,210.2 billion as of March 31, 2023, respectively, are not allocated to each business segment when determining the allocation of
management resources and assessing performance and, therefore, such amounts are not included in the table above.
(3) These amounts are related to the fixed assets of BK and TB included in the table above.
Fiscal Year Ended March 31, 2023 Compared to Fiscal Year Ended March 31, 2022
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Table of Contents
Digital Service Business Group—Covers digital-based non-face-to-face businesses servicing “mass-segment” customers, or
retail customers and small and medium-sized enterprise customers, of Mitsubishi UFJ NICOS, other consumer finance companies, and
MUFG Bank in Japan. Its net revenue mainly consists of interest income from lending and deposit-taking operations and fees relating
to credit card settlement and consumer financing products and services.
Net revenue increased slightly due to increases in consumer finance and foreign exchange revenue. The decrease in operating
expenses was primarily due to the progress on our sales channel reforms and lower deposit insurance premium rates. The increase in
operating profit mainly reflected the decrease in operating expenses.
Retail & Commercial Banking Business Group—Covers the domestic retail and commercial banking businesses. This business
group mainly 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. Its net revenue
mainly consists of interest income from lending and deposit-taking operations and fees relating to domestic and foreign exchange
settlement services and wealth management solutions, including asset management, asset and business succession transfer and real
estate services.
Net revenue increased mainly due to higher interest income from lending and deposit-taking operations reflecting an
improvement in interest margins partly due to a rise in U.S. interest rates as well as increases in fees on foreign exchange and foreign
exchange derivatives transactions due to a transaction volume increase. Operating expenses decreased due to lower deposit insurance
premium rates, a decrease in depreciation cost following asset impairment charges being recorded in the previous fiscal year, and
measures implemented to optimize staff utilization and restructure sales channels.
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.
Net revenue increased mainly due to an increase in loan interest income reflecting improved interest margins partly due to a rise
in U.S. interest rates as well as an increase in foreign exchange transactions seeking profits from market fluctuations. The increase in
operating expenses was mainly due to increased system expenses in our banking subsidiary and an increase in performance-linked
expenses in our securities subsidiary.
Global Commercial Banking Business Group—Covers the retail and commercial banking businesses of Krungsri and PT Bank
Danamon Indonesia, Tbk. 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 Krungsri and Bank Danamon.
Net revenue increased mainly due to higher net interest income reflecting the escalation of policy interest rate increases in the
United States and Thailand. The increase in operating expenses was mainly due to increases in performance-linked expenses and IT-
related cost in Krungsri and personnel cost in Bank Danamon.
Asset Management & Investor Services Business Group—Covers the asset management and asset administration businesses of
Mitsubishi UFJ Trust and Banking, MUFG Bank and 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 offers 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 an increase in income from bundled services provided to global investors and an increase
in income from funds under administration reflecting higher U.S. interest rates. The increase in operating expenses primarily resulted
from the foreign exchange translation impact of the depreciation of the Japanese yen against other major currencies on overseas
expenses denominated in such other currencies as well as office relocation cost in our banking subsidiary.
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 large non-Japanese 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
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and deposit-taking operations and fees and commissions from investment banking services and foreign exchange and derivatives
transactions.
Net revenue increased mainly due to higher interest income from loans reflecting a rise in U.S. interest rates as well as increases
in flow transactions and cross-selling transactions under fluctuating market conditions. The increase in operating expenses was mainly
due to employee retention costs abroad increasing in the tighter labor market especially in North America, particularly with the foreign
exchange translation impact of the depreciation of the Japanese yen on such costs.
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.
Net revenue decreased mainly due to net losses on debt securities primarily associated with our foreign bond portfolio re-
balancing operations in the treasury business in the rising interest rate environment, partially offset by an improvement in the customer
business due to an increase in flow transactions seeking profits from market fluctuations. The increase in operating expenses mainly
reflected the impact of foreign exchange translation and inflation on overseas expenses.
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, 2022 Compared to Fiscal Year Ended March 31, 2021
Digital Service Business Group
Net revenue decreased mainly due to a decrease in interest income associated with mortgage loans because the lending spread
on newly executed loans was lower than that on repaid loans. Money transfer revenue also decreased since money transfer fee rates
were lowered following revisions of money transfer fee rates for inter-bank transactions and also because customers shifted to internet
banking where money transfer fees are lower than those for money transfers through branches or ATMs. In addition, consumer finance
business revenue decreased due to the adverse impact of the prolonged COVID-19 pandemic. The decrease in operating expenses was
primarily due to measures implemented to optimize our branch network.
Retail & Commercial Banking Business Group
Net revenue increased mainly due to an increase in investment product sales as well as strong performance of our real estate
business, derivative solutions business and primary capital markets business. In addition, our domestic small and medium-sized
enterprise lending spread improved slightly. Operating expenses decreased due to measures implemented to optimize staff utilization
and restructure sales channels.
Japanese Corporate & Investment Banking Business Group
Net revenue increased mainly due to an increase in loan interest income reflecting an improvement in our lending spread as well
as an increase in income from primary market securities transactions, while the solutions business was stagnant. The increase in
operating expenses was mainly due to the impact of foreign exchange translation on overseas expenses.
Global Commercial Banking Business Group
Net revenue decreased mainly due to the lower net interest income reflecting declines in the policy interest rates in the United
States, Thailand and Indonesia as well as a decrease in the automobile loan balance of Bank Danamon. The increase in operating
expenses primarily resulted from expenditures for system development and regulatory compliance.
Asset Management & Investor Services Business Group
Net revenue increased primarily due to an increase in performance fees reflecting strong investment returns as well as an
increase in fund administration revenue from bundled services to global investors. The increase in operating expenses primarily
resulted from additional personnel expenses to support increased business, especially the global asset management business.
Global Corporate & Investment Banking Business Group
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 Markets Business Group
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Net revenue decreased mainly due to losses on sale of foreign bonds during the quarter ended March 31, 2022 when interest
rates rose in the United States, a decrease in flow transactions in the customer business, and net losses in overseas securities
subsidiaries. The increase in operating expense mainly reflected the impact of foreign exchange translation on overseas expenses.
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.
Total revenue (interest income and non-interest income):
Domestic
Foreign:
United States of America
Europe
Asia/Oceania excluding Japan
Other areas(1)
Total foreign
Total
Income (loss) before income tax expense (benefit):
Domestic
Foreign:
United States of America
Europe
Asia/Oceania excluding Japan
Other areas(1)
Total foreign
Total
Net income (loss) attributable to Mitsubishi UFJ Financial Group:
Domestic
Foreign:
United States of America
Europe
Asia/Oceania excluding Japan
Other areas(1)
Total foreign
Total
Fiscal years ended March 31,
2022
2023
% Change
(in billions, except percentages)
¥
2,160.5 ¥
2,618.0
21.2 %
500.6
67.7
975.3
221.6
1,765.2
3,925.7 ¥
1,527.8
173.0
1,479.6
508.4
3,688.8
6,306.8
205.2
155.6
51.7
129.5
109.0
60.7 %
(38.1) ¥
543.6
N/M
(166.0)
(244.0)
249.3
140.1
(20.6)
(58.7) ¥
(93.7)
(197.1)
196.8
207.1
113.1
656.7
43.5
19.2
(21.1)
47.9
N/M
N/M
(7.4) ¥
616.2
N/M
¥
¥
¥
¥
(498.2)
(344.0)
506.6
259.7
(75.9)
¥
(83.3) ¥
113.0
(246.1)
9.1
107.7
(16.3)
599.9
N/M
28.5
(98.2)
(58.5)
78.5
N/M
Note:
(1) Other areas primarily include Canada, Latin America, the Caribbean and the Middle East.
Domestic net income attributable to Mitsubishi UFJ Financial Group for the fiscal year ended March 31, 2023 was ¥616.2
billion compared to net loss of ¥7.4 billion for the fiscal year ended March 31, 2022. This improvement was primarily due to a
decrease in provision for credit losses for the fiscal year ended March 31, 2023.
Foreign net loss attributable to Mitsubishi UFJ Financial Group for the fiscal year ended March 31, 2023 was ¥16.3 billion
compared to net loss of ¥75.9 billion for the fiscal year ended March 31, 2022. This improvement was mainly due to the gain on the
sale of MUFG Union Bank. However, net income for Asia/Oceania excluding Japan decreased mainly due to an increase in income
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tax expense for the fiscal year ended March 31, 2023. Net loss was recorded for Europe for each of the fiscal years ended March 31,
2022 and 2023 primarily because of net trading account losses, primarily reflecting net losses on trading account securities under the
fair value option.
Effect of Change in Exchange Rates on Foreign Currency Translation
The average exchange rate for the fiscal year ended March 31, 2023 was ¥135.47 per US$1.00, compared to the prior fiscal
year's average exchange rate of ¥112.38 per US$1.00. The average exchange rate for the conversion of the US dollar financial
statements of some of our foreign subsidiaries for the fiscal year ended December 31, 2022 was ¥131.43 per US$1.00, compared to the
average exchange rate for the fiscal year ended December 31, 2021 of ¥109.80 per US$1.00.
The change in the average exchange rate of the Japanese yen against the US dollar and other foreign currencies had the effect of
increasing total revenue by ¥609.7 billion, net interest income by ¥336.0 billion and income before income taxes by ¥133.6 billion,
respectively, for the fiscal year ended March 31, 2023.
B.
Liquidity and Capital Resources
Financial Condition
Our total assets and total liabilities as of March 31, 2023 were ¥381,735.7 billion and ¥365,269.6 billion, respectively, compared
to ¥367,650.0 billion and ¥351,353.5 billion, respectively, as of March 31, 2022.
The assets and liabilities related to the business of MUFG Union Bank that were expected to be transferred to U.S. Bancorp
were reclassified as assets held for sale and liabilities held for sale and were included in Other assets and Other liabilities, respectively,
as of March 31, 2022, and such assets and liabilities were transferred to U.S. Bancorp on December 1, 2022. The business of MUFG
Union Bank that was transferred to U.S. Bancorp included ¥2,251.3 billion of interest-earning deposits in other banks, ¥3,123.3 billion
of investment securities, ¥7,567.7 billion of loans and ¥11,789.9 billion of deposits as of December 1, 2022. See Notes 2 to our
consolidated financial statements.
For information on our off-balance sheet arrangements, see Note 24 to our consolidated financial statements, and for
information on our contractual obligations, see Notes 10 and 12 to our consolidated financial statements.
Total Assets
Our total assets as of March 31, 2023 were ¥381,735.7 billion, an increase of ¥14,085.7 billion from ¥367,650.0 billion as of
March 31, 2022. The increase in total foreign assets was ¥11,183.7 billion, mainly due to a ¥5,119.0 billion increase in the United
States, a ¥2,355.9 billion increase in Europe and a ¥2,542.8 billion increase in Asia/Oceania excluding Japan. These increases
primarily reflected an increase in investment securities in the United States as well as increases in loan assets in Europe and Asia/
Oceania excluding Japan.
Japan
Foreign(1):
United States
Europe
Asia/Oceania excluding Japan
Other areas(2)
Total foreign
Total
As of March 31,
2022
2023
% Change
(in billions, except percentages)
¥
246,637.1 ¥
249,539.1
1.2%
54,576.6
22,319.4
31,909.3
12,207.6
59,695.6
24,675.3
34,452.1
13,373.6
121,012.9
132,196.6
9.4
10.6
8.0
9.6
9.2
¥
367,650.0 ¥
381,735.7
3.8%
Notes:
(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.
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Loan Portfolio
The following table sets forth our loans outstanding, before deduction of allowance for credit losses by class. We classify our
loan portfolio into the following portfolio segments—Commercial, Residential, Card, Krungsri, and Other based on the grouping to
determine the allowance for credit losses. 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. The Domestic Commercial
segment includes commercial loans to borrowers in Japan, and the Foreign Commercial segment includes commercial loans other than
those included in the Domestic Commercial, Krungsri and Other segments. The Residential segment includes housing loans to
borrowers in Japan, and the Card segment includes consumer loans to borrowers in Japan. The Krungsri segment includes loans held
by Krungsri and its subsidiaries. The Other segment mainly consists of Bank Danamon. In addition, as a result of the sale of MUFG
Union Bank and an internal reorganization within the MUFG Group, which involved the transfer of assets, including loans of ¥2,614.5
billion, from the MUFG Americas Holdings segment to the Foreign Commercial segment on November 14, 2022, the importance of
the remaining MUFG Americas Holdings segment as a segment declined. Accordingly, the remaining MUFG Americas Holdings
segment is included in the Other segment in the following discussion of our loan portfolio as of and for the fiscal year ended March
31, 2023. These changes have not been retroactively applied to the information on our loan portfolio as of the end of and for prior
fiscal years.
Commercial
Domestic
Foreign
Residential
Card
MUFG Americas Holdings
Krungsri
Other(1)
Total(2)
Unearned income, unamortized premium—net and deferred loan fees—net
Total(2)
As of March 31,
2022
2023
% Change
(in billions, except percentages)
¥
54,044.7 ¥
55,626.1
34,980.2
13,301.5
464.3
2,813.0
6,822.8
1,045.1
42,189.7
12,874.9
472.8
—
7,782.6
1,410.4
113,471.6
120,356.5
(322.2)
(401.0)
¥
113,149.4 ¥
119,955.5
2.9 %
20.6
(3.2)
1.8
(100.0)
14.1
35.0
6.1
(24.4)
6.0 %
Notes:
(1) The Other segment in the above table included loans of ¥176.7 billion, which was previously included in the MUAH segment, as of March 31, 2023.
(2) The above table includes loans held for sale of ¥514.1 billion and ¥967.1 billion as of March 31, 2022 and 2023, respectively, which are carried at the lower of
cost or fair value, but excludes the loans held for sale related to the transferred business of MUFG Union Bank as of March 31, 2022.
As of March 31, 2023, our total loan balance increased 6.0% compared to March 31 2022, and our total loans accounted for
31.4% of total assets as of March 31, 2023, compared to 30.8% as of March 31, 2022. Our domestic commercial loan balance
increased mainly due to increased funding needs of customers with economic activity gradually resuming as COVID-19 pandemic-
related restrictions began to ease. Our foreign commercial loan balance increased mainly due to the reorganization within the MUFG
Group by the transfer of certain assets, including loans, of MUFG Union Bank to MUFG Bank prior to the sale of MUFG Union
Bank. As of March 31, 2023, loans, off-balance sheet credit instruments and due from banks held in relation to borrowers and
counterparties that are subject to Russia country risk monitoring in accordance with our internal credit management policy amounted
to approximately ¥0.25 trillion on a gross basis before taking into account any allowances.
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Credit quality indicator
Commercial
Domestic
Normal
Close Watch
Likely to become Bankrupt or Legally/Virtually Bankrupt
Foreign
Normal
Close Watch
Likely to become Bankrupt or Legally/Virtually Bankrupt
Residential
Card
Accrual
Nonaccrual
Accrual
Nonaccrual
MUFG Americas Holdings
Credit Quality Based on Internal Credit Ratings
Pass
Special Mention
Classified
Krungsri
Performing
Under-Performing
Non-Performing
Other
Accrual
Nonaccrual
As of March 31,
2022
2023
(in billions, except percentages)(1)
% Change
¥
88,581.7 ¥
96,848.6
53,975.4
51,999.4
1,559.4
416.6
34,606.3
33,602.5
783.7
220.1
55,538.4
53,692.9
1,538.3
307.2
41,310.2
40,339.7
733.7
236.8
¥
13,301.5 ¥
12,874.9
13,246.6
12,828.4
54.9
¥
464.3 ¥
401.7
62.6
¥
2,742.1 ¥
2,635.4
65.8
40.9
¥
6,822.8 ¥
6,147.3
509.7
165.8
¥
1,045.1 ¥
1,018.5
26.6
46.5
472.8
405.6
67.2
—
—
—
—
7,782.6
6,928.0
642.9
211.7
1,410.4
1,380.6
29.8
9.3 %
2.9
3.3
(1.4)
(26.3)
19.4
20.0
(6.4)
7.6
(3.2) %
(3.2)
(15.3)
1.8 %
1.0
7.3
(100.0) %
(100.0)
(100.0)
(100.0)
14.1 %
12.7
26.1
27.7
35.0 %
35.6
12.1
Note:
(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.
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
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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 troubled debt restructuring 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, the Card segment and the Other
segment. The accrual status of these loans is determined based on the number of delinquent payments.
Loans within the Krungsri segment are categorized as Performing, Under-Performing or Non-Performing based on their
delinquency status. 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. Loans categorized as Non-Performing
generally represent those that are 90 days or more past due.
Commercial loans within the MUFG Americas Holdings segment were 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 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.
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.
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Allowance for credit losses
Fiscal year ended March 31, 2022:
Commercial
Residential
Card
MUFG
Americas
Holdings
(in billions)
Krungsri
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)
¥
734.6 ¥
82.9 ¥ 44.2 ¥ 131.8 ¥ 293.4 ¥ 61.5 ¥ 1,348.4
236.6
(10.9)
15.5
(101.1)
57.8
11.8
46.0
8.8
2.1
0.0
2.1
—
20.2
1.3
18.9
—
19.2
9.5
9.7
9.4
90.5
83.5
22.9
60.6
47.4
278.0
55.2
238.0
13.2
58.7
42.0
179.3
(0.9)
6.3
23.6
Balance at end of fiscal year
¥
934.0 ¥
69.9 ¥ 40.8 ¥ 30.4 ¥ 322.4 ¥ 73.2 ¥ 1,470.7
Fiscal year ended March 31, 2023:
Commercial
Residential
Card
Krungsri
Other(2)
Total
(in billions)
Allowance for credit losses:
Balance at beginning of fiscal year
¥
934.0 ¥
69.9 ¥
40.8 ¥ 322.4 ¥ 103.6 ¥ 1,470.7
Transfer from MUAH to Commercial segment
Provision for (reversal of) credit losses
33.1
—
(113.9)
(9.5)
Charge-offs
Recoveries collected
Net charge-offs
Other(1)
158.8
18.8
140.0
6.4
0.6
0.0
0.6
—
—
19.2
18.3
0.7
17.6
—
—
70.7
95.5
25.5
70.0
34.9
(33.1)
41.6
55.9
24.5
31.4
12.4
—
8.1
329.1
69.5
259.6
53.7
Balance at end of fiscal year
¥
719.6 ¥
59.8 ¥
42.4 ¥ 358.0 ¥
93.1 ¥ 1,272.9
Notes:
(1) Other is principally comprised of gains or losses from foreign exchange translation.
(2) For the fiscal year ended March 31, 2023, the beginning balance and the ending balance of the Other segment in the above table includes the allowance for credit
losses of ¥30.4 billion and ¥3.4 billion respectively, which were previously included in the MUAH segment.
We recorded ¥8.1 billion of provision for credit losses for the fiscal year ended March 31, 2023, compared to ¥278.0 billion of
provision for credit losses for the previous fiscal year. Our total allowance for credit losses as of March 31, 2023 was ¥1,272.9 billion,
a decrease of ¥197.8 billion from ¥1,470.7 billion as of March 31, 2022. The total allowance for credit losses represented 1.06% of the
total loan balance as of March 31, 2023, compared to 1.30% as of March 31, 2022.
Provision for credit losses for the fiscal year ended March 31, 2023 decreased ¥269.9 billion compared to the previous fiscal
year mainly due to reversal of credit losses in the Commercial segment, reflecting improvements in the business performance of some
large domestic borrowers and a decrease in qualitative reserve recorded for the Russia-Ukraine situation, for the fiscal year ended
March 31, 2023, partially offset by a decrease in reversal of credit losses relating to loans transferred from the MUFG Americas
Holdings segment to the Other segment in connection with the sale of MUFG Union Bank and the internal reorganization within the
MUFG Group.
Significant trends in our portfolio segments are discussed below.
Commercial segment—We recorded ¥113.9 billion of reversal of credit losses for the fiscal year ended March 31, 2023,
compared to ¥236.6 billion of provision for credit losses for the previous fiscal year. The reversal of credit losses for the fiscal year
ended March 31, 2023 was primarily due to improvements in the business performance of some large domestic borrowers and a
decrease in qualitative reserve recorded for the Russia-Ukraine situation. The ratio of loans classified as Close Watch to total loans in
the segment decreased to 2.35% as of March 31, 2023 from 2.65% as of March 31, 2022. The ratio of loans classified as Likely to
become Bankrupt or Legally/Virtually Bankrupt to total loans in the segment decreased to 0.56% as of March 31, 2023 from 0.72% as
of March 31, 2022. The ratio of total allowance for credit losses to the total loan balance in this segment decreased to 0.74% as of
March 31, 2023 from 1.05% as of March 31, 2022.
Krungsri segment—We recorded ¥70.7 billion of provision for credit losses for the fiscal year ended March 31, 2023, compared
to ¥90.5 billion of provision for credit losses for the previous fiscal year. The provision recorded for the fiscal year mainly reflected
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the additional provision for credit losses due to increased uncertainty over inflation and geopolitical risks. The ratio of loans classified
as Under-Performing or below to total loans in the segment increased to 10.98% as of March 31, 2023 from 9.90% as of March 31,
2022. The ratio of total allowance for credit losses to the total loan balance in this segment decreased to 4.60% as of March 31, 2023
from 4.73% as of March 31, 2022.
When there is an improvement in asset quality, reversal of credit losses is recorded in our consolidated statements of operations
to maintain the allowance for credit losses at a level management deems appropriate. 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
We apply the current expected credit loss model that reflects expected credit losses and requires consideration of a broader range
of reasonable and supportable information under Accounting Standards Codification 326 Financial Instruments - Credit Losses, to
estimate credit losses.
We maintain an allowance for credit losses to absorb expected losses on the loan portfolio. We have divided our allowance for
credit losses into five portfolio segments—Commercial, Residential, Card, Krungsri and Other.
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 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 and Krungsri segments, our allowance for credit losses represents an estimate of the credit losses that are
expected over the life of the financial instrument or exposure and is recognized by incorporating relevant available information
relating to past events, current conditions, and reasonable and supportable forecasts. The allowance for credit losses primarily consists
of (1) an allowance for loans measured on a collective basis, when similar risk characteristics exist, and (2) an allowance for loans
measured on an individual basis, for loans that do not share similar risk characteristics. Expected losses are calculated using
quantitative models that incorporate historical loss information and economic forecast scenarios and qualitative adjustments are also
implemented to account for the risks that are not adequately captured in the quantitative model or economic forecasting assumptions.
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 “—E. Critical Accounting Estimates—
Allowance for Credit Losses” below.
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 ¥143.8 billion as of March 31, 2023, an increase of
¥17.7 billion from ¥126.1 billion as of March 31, 2022. The increase was primarily due to the additional provision for allowance
reflecting the deterioration in the financial performance of some large borrowers.
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 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.
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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.”
Commercial
Domestic
Foreign
Residential
Card
MUFG Americas Holdings
Krungsri
Other
Total(1)
As of March 31,
2022
2023
% Change
(in billions, except percentages)
¥
858.3 ¥
633.7
224.6
56.2
62.6
15.3
165.8
26.6
648.5
401.8
246.7
47.9
67.2
—
211.7
29.8
(24.4) %
(36.6)
9.8
(14.7)
7.3
(100.0)
27.7
12.1
¥
1,184.8 ¥
1,005.1
(15.2) %
Note:
(1) The above table does not include loans held for sale of ¥7.9 billion and ¥9.2 billion as of March 31, 2022 and 2023, respectively, and does not include the loans
held for sale related to the business of MUFG Union Bank to be transferred to U.S. Bancorp as of March 31, 2022.
Nonaccrual loans in the Domestic Commercial segment decreased ¥231.9 billion between March 31, 2022 and March 31, 2023.
This decrease mainly related to the loans to a large borrower in the domestic automobile industry. The increase in nonaccrual loans in
the Krungsri segment was mainly attributable to the deterioration in the financial condition of small and medium-sized enterprise
borrowers after the government’s COVID-19 financial assistance program was discontinued.
Troubled debt restructurings
Total troubled debt restructurings, or TDRs, for the fiscal year ended March 31, 2023 were ¥256.4 billion compared to ¥263.5
billion for the previous fiscal year. TDRs in the Krugsri segment for the fiscal year ended March 31, 2023 were ¥94.8 billion
compared to ¥14.9 billion for the previous fiscal year. The TDRs in this segment mainly related to loans to small and medium-sized
enterprise borrowers whose financial condition deteriorated after the government’s COVID-19 financial assistance program was
discontinued. In addition, TDRs in the foreign Commercial segment for the fiscal year ended March 31, 2023 were ¥35.3 billion
compared to ¥16.1 billion for the previous fiscal year. The TDRs in this segment mainly related to modifications of loans to some
borrowers whose financial condition deteriorated. On the other hand, TDRs in the domestic Commercial segment for the fiscal year
ended March 31, 2023 were ¥68.5 billion compared to ¥167.3 billion for the previous fiscal year. The TDRs in this segment decreased
mainly due to repayment by some large borrowers. The TDR amounts in this paragraph are on a post-modification outstanding
recorded investment basis. See Note 4 to our consolidated financial statements.
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 41.8% as
of March 31, 2023, compared to 61.5% as of March 31, 2022, as we sold a significant portion of our available-for-sale Japanese
government bond portfolio with unrealized losses. On the other hand, our holding of Japanese government bonds that are classified as
held-to-maturity debt securities increased between March 31, 2022 and March 31, 2023, accounting for 22.3% of the total investment
securities as of March 31, 2023, compared to 3.2% as of March 31, 2022. Our total investment securities increased 11.5% as of March
31, 2023, compared to March 31, 2022, mainly due to an increase in held-to-maturity debt securities, particularly Japanese
government bonds.
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, 2022 and
2023, 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 2022, we announced that we have increased
our target to reduce the balance of equity securities held for strategic purposes on an acquisition cost basis to ¥500.0 billion within the
three years ending March 31, 2024. During the two fiscal years ended March 31, 2023, we sold down an aggregate of approximately
¥323.0 billion of equity securities held in our strategic equity investment portfolio on an acquisition cost basis. However, various
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factors, including market conditions and changes, may affect the amount of equity securities we should sell and our ability to achieve
the target as planned. For more information, see “Item 11. Quantitative and Qualitative Disclosures about Credit, Market and Other
Risk—Risk Management of Strategic Equity Portfolio.
Debt Securities
Available-for-sale debt securities:
Japanese national government and
Japanese government agency
bonds
Japanese prefectural and municipal
As of March 31,
2022
2023
% 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)
¥ 34,383.1 ¥ 34,327.8 ¥
(55.3) ¥ 26,153.9 ¥ 26,046.6 ¥
(107.3)
(23.9) % (24.1) %
(93.7) %
bonds
4,154.5
4,146.1
(8.4)
2,773.8
2,759.9
(13.9)
(33.2)
(33.4)
(66.1)
Foreign government and official
institution bonds
Corporate bonds
2,671.8
2,631.3
(40.5)
3,029.0
2,922.7
(106.3)
1,081.6
1,090.1
8.5
1,051.3
1,058.2
Mortgage-backed securities
900.8
900.5
(0.3)
1,110.0
1,110.3
Asset-backed securities
1,547.1
1,588.4
41.3
1,418.6
1,430.3
13.4
(2.8)
23.2
11.1
(2.9)
23.3
(8.3)
(10.0)
(162.8)
(20.1)
132.7
(71.6)
6.9
0.3
11.7
Commercial paper
Other debt securities
1,010.6
1,010.6
104.9
103.6
0.0
(1.3)
—
—
—
(100.0)
(100.0)
(100.0)
417.8
412.8
(5.0)
298.4
298.5
(285.2)
Total available-for-sale debt securities
Held-to-maturity debt securities(1)
¥ 45,854.4 ¥ 45,798.4 ¥
(56.0) ¥ 35,954.4 ¥ 35,740.8 ¥
(213.6)
(21.6) % (22.0) % (281.9) %
¥ 4,595.1 ¥ 4,606.3 ¥
11.2 ¥ 21,520.1 ¥ 21,386.2 ¥
(133.9)
368.3 % 364.3 %
N/M
Note:
(1) See Note 3 to our consolidated financial statements for more details.
Net unrealized losses on available-for-sale debt securities increased 281.9% for the fiscal year ended March 31, 2023 compared
to the previous fiscal year primarily due to increases in net unrealized losses on Japanese national government and Japanese
government agency bonds and foreign government and official institution bonds. Net unrealized losses on Japanese national
government and Japanese government agency bonds increased because interest rates on such bonds were higher at the end of March
2023 compared to the end of March 2022. Net unrealized losses on foreign government and official institution bonds increased
because interest rates in the United States were higher at the end of March 2023 compared to the end of March 2022.
The amortized cost of available-for-sale debt securities decreased 21.6% mainly due to a 23.9% decrease in Japanese
government and Japanese government agency bonds and a 33.2% decrease in Japanese prefectural and municipal bonds because we
sold down these bonds with unrealized losses as interest rates rose in Japan. All of the commercial paper which we held as collateral
for loans extended under the Bank of Japan's COVID-19 program was redeemed during the fiscal year ended March 31, 2023. These
decreases were partially offset by increases in mortgage-backed securities and foreign government and official institution bonds. On
the other hand, the amortized cost of held-to-maturity debt securities significantly increased as we purchased Japanese government and
other bonds in the rising interest rate environment globally. See “—Business Environment.”
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Equity Securities
Marketable equity securities
Nonmarketable equity securities:
Unlisted preferred securities(1)
Other(2)
Investment securities held by investment companies and brokers and
dealers(3)
Total
As of March 31,
2022
2023
(in billions, except percentages)
% Change
¥
4,986.1 ¥
4,463.6
(10.5) %
81.1
299.1
55.9
81.9
380.7
74.8
¥
5,422.2 ¥
5,001.0
0.9
27.3
33.8
(7.8) %
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 decreased 7.8% mainly because marketable equity securities decreased due to sales of equity securities held in
our strategic equity investment portfolio. Marketable equity securities largely consist of listed equity securities in Japan.
Cash and Due from Banks, and Interest-earning Deposits in Other Banks
Cash and due from banks increased ¥9,078.1 billion to ¥60,050.6 billion as of March 31, 2023 from ¥50,972.5 billion as of
March 31, 2022. This increase was primarily because of an increase in deposits with the Bank of Japan.
Interest-earning deposits in other banks decreased ¥4,858.2 billion to ¥53,989.9 billion as of March 31, 2023 from
¥58,848.1 billion as of March 31, 2022. This decrease was mainly because of a decrease in deposits with the Bank of Japan.
Receivables under Resale Agreements
Receivables under resale agreements increased ¥1,555.6 billion to ¥14,059.0 billion as of March 31, 2023 from
¥12,503.4 billion as of March 31, 2022. This increase was mainly because of an increase in short-term funding transactions as part of
our asset and liability management.
Receivables under Securities Borrowing Transactions
Receivables under securities borrowing transactions increased ¥59.3 billion to ¥4,555.7 billion as of March 31, 2023 from
¥4,496.4 billion as of March 31, 2022. This increase was mainly due to an increase in collateral deposited for funding in our domestic
banking and securities subsidiaries.
Trading Account Assets
Trading account assets increased ¥3,500.2 billion to ¥46,168.5 billion as of March 31, 2023 from ¥42,668.3 billion as of March
31, 2022. Trading account assets mainly consist of trading account securities and trading derivative assets. Trading account securities
increased ¥1,106.0 billion to ¥33,252.9 billion as of March 31, 2023 from ¥32,146.9 billion as of March 31, 2022. Trading derivative
assets increased ¥2,380.3 billion to ¥12,901.7 billion as of March 31, 2023 from ¥10,521.4 billion as of March 31, 2022 mainly due to
increased dealing on volatile interest rate fluctuations in and outside of Japan.
Total Liabilities
As of March 31, 2023, total liabilities were ¥365,269.6 billion, an increase of ¥13,916.1 billion from ¥351,353.5 billion as of
March 31, 2022. This was primarily due to a ¥12,406.9 billion increase in payables under repurchase agreements.
Deposits
Deposits are our primary source of funds. The balance of deposits increased ¥10,686.9 billion to ¥235,276.8 billion as of
March 31, 2023 from ¥224,589.9 billion as of March 31, 2022. The increase was mainly because of an increase in foreign interest-
bearing deposits, including such deposits in the United States and other regions, both on a local currency basis and as translated into
Japanese yen. Domestic deposits also increased between March 31, 2022 and March 31, 2023.
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The total average balance of interest-bearing deposits increased ¥7,807.1 billion to ¥198,834.0 billion for the fiscal year ended
March 31, 2023 from ¥191,026.9 billion for the fiscal year ended March 31, 2022. The increase was mainly because of an increase in
foreign interest-bearing deposits, including such deposits in the United States and other regions, both on a local currency basis and as
translated into Japanese yen. The average balance of domestic deposits also increased between the same periods. The average balance
for each fiscal year (up to the sale of MUFG Union Bank) included the interest-bearing deposits related to the business of MUFG
Union Bank transferred to U.S. Bancorp.
Payables under Repurchase Agreements
Payables under repurchase agreements increased ¥12,406.9 billion to ¥40,132.5 billion as of March 31, 2023 from
¥27,725.6 billion as of March 31, 2022. This increase was mainly because of our funding strategy in the low interest rate environment
in Japan.
Other Short-Term Borrowings
Other short-term borrowings decreased ¥8,105.1 billion to ¥8,438.0 billion as of March 31, 2023 from ¥16,543.1 billion as of
March 31, 2022. This decrease was mainly because we decreased borrowings from the Bank of Japan.
Trading Account Liabilities
Trading account liabilities increased ¥3,159.3 billion to ¥14,178.3 billion as of March 31, 2023 from ¥11,019.0 billion as of
March 31, 2022. This increase was mainly due to an increase in the fair value of interest rate-related derivatives in our securities
subsidiaries.
Long-term Debt
Long-term debt increased ¥4,375.2 billion to ¥39,071.8 billion as of March 31, 2023 from ¥34,696.6 billion as of March 31,
2022. This increase was mainly due to an increase in the outstanding bonds issued by MUFG and an increase in long-term debt of
MUFG Bank.
The average balance of long-term debt for the fiscal year ended March 31, 2023 was ¥36,503.3 billion, an increase of ¥1,780.1
billion from ¥34,723.2 billion for the previous fiscal year. The average balance for each fiscal year (up to the sale of MUFG Union
Bank) included the long-term debt related to the business of MUFG Union Bank transferred to U.S. Bancorp.
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, including those related to the transferred business of MUFG Union Bank for the period up to the sale of
MUFG Union Bank, increased to ¥235,852.1 billion for the fiscal year ended March 31, 2023 from ¥227,850.5 billion for the fiscal
year ended March 31, 2022. These deposits provide us with a sizable source of stable and low-cost funds. Our average deposits,
including those related to the transferred business of MUFG Union Bank for the period up to the sale of MUFG Union Bank,
combined with our average total equity of ¥16,300.5 billion, funded 63.7% of our average total assets of ¥396,151.9 billion during the
fiscal year ended March 31, 2023. Our deposits exceeded our loans before allowance for credit losses by ¥115,321.3 billion as of
March 31, 2023 compared to ¥111,440.5 billion as of March 31, 2022. 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, including those related to the transferred business of MUFG Union Bank for the period up to the sale of
MUFG Union Bank, for the fiscal year ended March 31, 2023 was ¥52,505.9 billion. The average balance of long-term debt, including
those related to the transferred business of MUFG Union Bank for the period up to the sale of MUFG Union Bank, for the fiscal year
ended March 31, 2023 was ¥36,503.3 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.
Our liquidity may be impaired by factors such as an inability to raise funding in financial markets, an increase in our funding
costs, unexpected increases in cash or collateral requirements, an inability to sell assets or enter into or settle other transactions as
planned or needed, and an inability to attract or retain deposits. See “Item 3.D. Key Information—Risk Factors—Funding Liquidity
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Risk—Market illiquidity and other external circumstances and an actual or perceived decline in our creditworthiness could negatively
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.
For information on our commitments, guarantees and other off-balance sheet credit instruments, please see Note 24 to our
consolidated financial statements.
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 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 “—Capital Adequacy—Liquidity Coverage Ratios of MUFG and Major Banking
Subsidiaries in Japan” below.
Stable Funding Requirements for Banking Institutions in Japan
We are required to calculate and disclose our NSFR calculated in accordance with the methodology prescribed in the FSA
guidance that has been adopted to implement the relevant Basel III standard. Starting in September 2021, we are required to maintain a
minimum NSFR of 100%. See “Item 4.B. Information on the Company—Business Overview—Supervision and Regulation—Japan—
Net Stable Funding Ratio” and “—Capital Adequacy—Net Stable Funding Ratios of MUFG and Major Banking Subsidiaries in
Japan” below.
Total Equity
Capital stock
Capital surplus
Retained earnings
Retained earnings appropriated for legal reserve
Unappropriated retained earnings(1)
Accumulated other comprehensive income, net of taxes(1)
Treasury stock, at cost
Total Mitsubishi UFJ Financial Group shareholders’ equity
Noncontrolling interests
Total equity
Ratio of total equity to total assets
As of March 31,
2022
2023
% Change
(in billions, except percentages)
¥
2,090.3
¥
2,090.3
5,327.8
8,412.2
239.6
8,172.6
227.0
(452.2)
4,902.2
8,409.2
239.6
8,169.6
844.2
(482.6)
¥ 15,605.1
¥ 15,763.3
691.4
702.8
¥ 16,296.5
¥ 16,466.1
4.43%
4.31%
— %
(8.0)
0.0
—
0.0
271.8
(6.7)
1.0
1.7
1.0 %
Note:
(1) 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 despite a
three-month lag period. In connection with the sale of MUFG Union Bank, whose fiscal year ends on December 31, such difference in reporting periods was
eliminated, and MUFG Union Bank's profit, loss and other comprehensive income for the period from September 1, 2022 to November 30, 2022, which is the
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three-month lag period preceding the sale date of December 1, 2022, have been recognized as direct adjustments to retained earnings and accumulated other
comprehensive income, respectively, as of March 31, 2023 (and have not been reflected on the consolidated statements of operations and the consolidated
statements of comprehensive income for the fiscal year ended March 31, 2023). In addition, the assets and liabilities of the MUFG Union Bank operations that
were excluded from those which were transferred to U.S. Bancorp were transferred to MUFG Bank with a fiscal year end of March 31 before the sale of MUFG
Union Bank, which required the reporting lag associated with such transferred assets and liabilities to be eliminated. At the time of transfer, the three months of
activity immediately preceding the transfer were recognized directly in equity. The effects of the elimination of the difference in reporting periods in connection
with the sale of MUFG Union Bank and the transfer of such assets and liabilities to MUFG Bank prior to the sale resulted in a net adjustment to unappropriated
retained earnings of ¥223.3 billion including Loss on valuation adjustment for loans held for sale of ¥114.1 billion and impairment of Investment securities losses
of ¥143.4 billion, and to accumulated other comprehensive income (loss), net of taxes of ¥20.3 billion, which is recorded in Elimination of the difference in
reporting periods of the transferred business in the consolidated statements of equity for the fiscal year ended March 31, 2023. For further information, see Note 2
to our consolidated financial statements.
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, 2023, we were required to maintain a capital conservation buffer of 2.5%, a G-SIB surcharge of 1.5% and a
countercyclical buffer of 0.04% 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.”
For information on the issuances of Additional Tier 1 and Tier 2 securities, see also “Recent Developments—Issuances of Basel
III-Compliant Domestic Subordinated Debt.”
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, 2023, we were required to maintain a minimum leverage ratio of 3.75%,
including a leverage ratio buffer equal to 50% of the applicable G-SIB capital surcharge. The minimum leverage ratio on or after April
1 ,2024 is expected to be raised to 3.15% plus a G-SIB leverage ratio buffer set at 50% of a G-SIB surcharge plus 0.05% while
deposits with the Bank of Japan will continue to be excluded from the leverage ratio calculation. 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 a total exposure in accordance with the FSA guidance. We are required to
maintain external TLAC ratios of 18% on a risk-weighted assets basis and 6.75% on a total exposure basis. The minimum external
TLAC ratio on a total exposure basis on or after April 1 ,2024 is expected to be raised to 7.10% in line with the expected increase in
the minimum leverage ratio. 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 TLAC Eligible Senior Debt.”
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Table of Contents
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,
2022
Minimum
ratios required(1)
As of March 31,
2023
Minimum
ratios required(1)
(in billions, except percentages)
¥
13,823.9
¥
13,280.8
1,652.3
15,476.2
2,382.3
¥
17,858.6
¥ 124,914.2
1,582.8
14,863.7
2,302.3
¥
17,166.1
¥ 123,363.3
11.06 %
12.38 %
14.29 %
5.14 %
18.23 %
9.23 %
8.51 %
10.01 %
12.01 %
3.00 %
18.00 %
6.75 %
10.76 %
12.04 %
13.91 %
4.70 %
20.22 %
9.47 %
8.54 %
10.04 %
12.04 %
3.75 %
18.00 %
6.75 %
Notes:
(1) The minimum capital ratios required as of March 31, 2022 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, 2023 include a capital conservation buffer of 2.5%, a G-SIB surcharge of 1.5% and a
countercyclical buffer of 0.04%.
(2) Deposits with the Bank of Japan are excluded from the leverage exposure 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, 2022 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, 2023 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 0.04%.
Management believes that, as of March 31, 2023, 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, 2023 was lower compared to the ratio as of March 31, 2022 primarily
due to a decrease in Common Equity Tier 1 capital. The decrease in Common Equity Tier 1 capital was mainly due to an increase in
double gearing adjustments. See “Item 4.B. Information on the Company—Business Overview—Supervision and Regulation—Japan
—Capital adequacy.”
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
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Consolidated:
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)
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)
As of March 31,
2022
Minimum
ratios required
As of March 31,
2023
Minimum
ratios required
9.86 %
11.11 %
12.94 %
4.96 %
17.31 %
19.03 %
20.78 %
6.77 %
8.81 %
10.20 %
11.91 %
4.59 %
16.89 %
18.42 %
19.97 %
7.81 %
4.50 %
6.00 %
8.00 %
3.00 %
4.50 %
6.00 %
8.00 %
3.00 %
4.50 %
6.00 %
8.00 %
3.00 %
4.50 %
6.00 %
8.00 %
3.00 %
9.89 %
11.04 %
12.58 %
4.75 %
16.41 %
17.93 %
20.67 %
7.29 %
8.11 %
9.30 %
10.71 %
4.02 %
15.74 %
17.11 %
19.60 %
8.15 %
4.50 %
6.00 %
8.00 %
3.00 %
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 based on notification issued by the FSA.
Management believes that, as of March 31, 2023, 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.
MUFG (consolidated)
MUFG Bank (consolidated)
MUFG Bank (stand-alone)
Mitsubishi UFJ Trust and Banking (consolidated)
Mitsubishi UFJ Trust and Banking (stand-alone)
March 31,
2022(1),(6)
June 30,
2022(2),(6)
Three months ended
September 30,
2022(3),(6)
December 31,
2022(4),(6)
March 31,
2023(5),(6)
169.4 %
185.0 %
198.1 %
112.9 %
132.9 %
163.4 %
177.0 %
191.0 %
110.6 %
128.1 %
158.6 %
169.5 %
182.0 %
114.0 %
134.6 %
152.8 %
160.6 %
168.9 %
123.1 %
149.7 %
152.2 %
162.5 %
166.5 %
116.8 %
143.2 %
Notes:
(1) Each of the ratios is calculated as the average balance of High-Quality Liquid Assets on the business days between January 4, 2022 and March 31 2022 divided by
the average amount of net cash outflows for the same 59 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, 2022 and June 30 2022 divided by the
average amount of net cash outflows for the same 61 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, 2022 and September 30 2022 divided
by the average amount of net cash outflows for the same 62 business days.
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(4) Each of the ratios is calculated as the average balance of High-Quality Liquid Assets on the business days between October 3, 2022 and December 30, 2022
divided by the average amount of net cash outflows for the same 62 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, 2023 and March 31, 2023 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.”
Net Stable Funding Ratios of MUFG and Major Banking Subsidiaries in Japan
The NSFRs in the table below are calculated in accordance with Basel III as adopted by the FSA as of the date indicated. The
figures underlying the ratios are calculated in accordance with Japanese banking regulations. The percentages below are rounded
down.
MUFG (consolidated)
MUFG Bank (consolidated)
MUFG Bank (stand-alone)
Mitsubishi UFJ Trust and Banking (consolidated)
Mitsubishi UFJ Trust and Banking (stand-alone)
As of
March 31,
2022
As of
June 30,
2022
As of
September 30,
2022
As of
December 31,
2022
As of
March 31,
2023
132.4 %
146.0 %
154.5 %
114.3 %
111.4 %
127.3 %
140.7 %
147.9 %
110.2 %
111.8 %
120.5 %
132.7 %
138.8 %
119.4 %
120.9 %
122.0 %
134.5 %
136.0 %
130.5 %
135.0 %
132.8 %
146.2 %
148.2 %
128.1 %
130.7 %
See “—B. Liquidity and Capital Resources—Sources of Funding and Liquidity.”
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 to market, counterparty credit and operational risks. Specific guidelines are issued as a
ministerial ordinance which details the definitions 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, 2023, Mitsubishi UFJ Morgan Stanley Securities’ capital accounts less certain fixed assets of ¥550.3 billion
represented 310.9% of the total amounts equivalent to market, counterparty credit and operational risks. As of March 31, 2022,
Mitsubishi UFJ Morgan Stanley Securities’ capital accounts less certain fixed assets of ¥486.8 billion represented 317.1% 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.
Capital Ratios of Banking Subsidiaries in the United States
The MUFG Group sold all the issued and outstanding shares of common stock of MUFG Union Bank to U.S. Bancorp on
December 1, 2022 and the portion of the business operated in MUFG Americas Holdings became immaterial in the MUFG group
perspective. For capital requirements for banking institutions in the United States and capital ratios of MUFG Americas Holdings and
MUFG Union Bank, 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 losses—net” in our consolidated statements of operations.
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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
Maturities of Non-exchange Traded Contracts
Fiscal years ended March 31,
2022
2023
¥
¥
(in millions)
680 ¥
(22)
—
30
(702)
(14) ¥
(14)
(46)
358
153
(3)
448
As of March 31, 2023
Net fair value of contracts—unrealized gains
Prices provided by
other external sources
Prices based on models and
other valuation methods
¥
¥
(in millions)
— ¥
—
—
—
— ¥
5
353
—
90
448
Maturity less than 1 year
Maturity less than 3 years
Maturity less than 5 years
Maturity 5 years or more
Total fair value
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. 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 estimation of the allowance for credit losses involves significant judgment on a number of
assumptions including the assessment of risk characteristics, assignment of a borrower’s internal credit rating, 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, Krungsri, and Other—and determine the allowance for credit losses for each
segment.
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At March 31, 2023, we had ¥97,815.7 billion and ¥7,782.6 billion of loans in the Commercial segment and the Krungsri
segments, respectively, and recorded an allowance for credit losses against these loans of ¥719.6 billion and ¥358.0 billion,
respectively.
The allowance for credit losses is estimated using quantitative models that incorporate economic forecast scenarios. These
economic forecast scenarios include macroeconomic variables that have historically been correlated with historical credit losses. These
variables include, but are not limited to, unemployment rates and gross domestic product. As any one economic forecast scenario is
inherently uncertain, multiple economic forecast scenarios were leveraged. The macroeconomic variables in multiple economic
forecast scenarios and 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 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 determine certain macroeconomic variables in the multiple economic
forecast scenarios and the weightings given to each scenario, to capture the heightened volatility and uncertainty in future economic
conditions arising mainly from the prolonged COVID-19 and Russia-Ukraine situation.
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 Commercial and Krungsri segments required
management to make significant judgements due to the subjectivity and uncertainty associated with the development of qualitative
adjustments. 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 primarily due to the prolonged COVID-19 and Russia-Ukraine
situation.
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 a borrower’s internal credit rating, 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. Particularly significant judgment was required to be made when these
borrowers’ performance and business sustainability were affected by changes in the external and internal business environment,
including the prolonged COVID-19 and Russia-Ukraine situation. 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.
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.
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.
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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.”
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 unit 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
¥296.8 billion at March 31, 2023, which was allocated to our reporting units. For a reporting unit for which an observable quoted price
is not available, we determined the fair value of each reporting unit mainly using the income approach. 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 determination of the fair value of these reporting units requires management to make significant judgments related to
significant assumptions due to the subjectivity 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 the fiscal year ended March 31, 2023, the MUFG Group recognized ¥33,553 million of impairment of goodwill relating to
the First Sentier Investors reporting unit within the Asset Management & Investor Services Business Group segment. Due largely to
market volatility and a decline in the equity markets, the portfolio balance of assets under management decreased, which resulted in a
decrease in the reporting unit’s cash flow projections. As a result, the fair value of the reporting unit was measured on December 31,
2022 for the quantitative goodwill impairment test, and led to an impairment of goodwill as the fair value had fallen below the
carrying amount of the reporting unit. The income approach estimates the fair value of the reporting unit by discounting management’s
projections of the 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.
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.
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.
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Accounting Changes and Recently Issued Accounting Pronouncements
See “Accounting Changes” and “Recently Issued Accounting Pronouncements” in Note 1 to our consolidated financial
statements.
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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 July 1, 2023, together with their respective dates of
birth, positions and experience:
Name
(Date of Birth)
Mariko Fujii
(March 9, 1955)
Position in MUFG
Member of the Board
of Directors
(Outside Director)
April 1977
Joined Ministry of Finance of Japan
Business Experience
July 1997
April 1999
March 2001
April 2004
Director, International Affairs and Research Division,
Customs and Tariff Bureau, Ministry of Finance
Associate Professor, Research Center for Advanced
Science and Technology, The University of Tokyo
Professor, Research Center for Advanced 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
Ambassador Extraordinary and Plenipotentiary of Japan to
the Republic of Latvia
June 2016
Emeritus Professor of The University of Tokyo
(incumbent)
January 2019
Retired from Ambassador of Japan to the Republic of
Latvia
June 2019
Outside Director of NTT DATA CORPORATION
(currently NTT DATA GROUP CORPORATION)
(incumbent)
Member of the Board of Directors (Outside Director) of
MUFG (incumbent)
Keiko Honda
(September 27, 1961)
Member of the Board
April 1984
Joined Bain & Company Japan, Incorporated
of Directors
(Outside Director)
May 1986
Joined Shearson Lehman Brothers Securities Co., Ltd.
July 1989
July 1999
July 2007
July 2013
Joined McKinsey & Company, Inc. Japan
Partner of McKinsey & Company
Director (Senior Partner) of McKinsey & Company
Executive Vice President of Multilateral Investment
Guarantee Agency (World Bank Group)
June 2014
Executive Vice President & CEO of Multilateral
October 2019
January 2020
Investment Guarantee Agency (World Bank Group)
Retired from Multilateral Investment Guarantee Agency
(World Bank Group)
Columbia University School of International and Public
Affairs as Adjunct Professor and Adjunct Senior
Research Scholar (incumbent)
March 2020
Outside Director of AGC Inc. (incumbent)
June 2020
Member of the Board of Directors (Outside Director) of
MUFG (incumbent)
June 2022
Outside Director of the Board of Recruit Holdings Co., Ltd.
(incumbent)
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Name
(Date of Birth)
Kaoru Kato
(May 20, 1951)
Position in MUFG
Business Experience
Member of the Board
April 1977
Joined Nippon Telegraph and Telephone Public
of Directors
(Outside Director)
Corporation (NTT)
July 1999
General Manager of Plant Department of NTT Kansai
Mobile Communications Network, Inc.
April 2000
General Manager of Plant Department of NTT DoCoMo
Kansai, Inc.
June 2002
General Manager of Corporate Strategy and Planning
Department, Member of the Board of Directors of NTT
DoCoMo Kansai, Inc.
July 2005
Representative Director and Senior Corporate Executive
Officer of Sumitomo Mitsui Card Co., Ltd.
July 2007
Executive Vice President, General Manager of Corporate
Strategy and Planning Department, Member of the Board
of Directors of NTT DoCoMo Kansai, Inc.
June 2008
Executive Vice President, General Manager of Corporate
Strategy and Planning Department, Member of the Board
of Directors of NTT DOCOMO, INC.
June 2012
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
June 2019
Corporate Advisor of NTT DOCOMO, INC.
Member of the Board of Directors (Outside Director) of
MUFG (incumbent)
March 2021
Non-executive Director of Kirin Holdings Company,
Limited
June 2022
Senior Advisor of NTT DOCOMO, INC.
Satoko Kuwabara
(November 1, 1964)
Member of the Board
April 1990
Registered as an attorney at law, Member of the Daini
of Directors
(Outside Director)
Tokyo Bar Association
Joined Mori Sogo (currently Mori Hamada & Matsumoto)
January 1998
Partner of Mori Hamada & Matsumoto
June 2016
Outside Director of BANDAI NAMCO Holdings Inc.
(incumbent)
March 2020
Outside Auditor of Unicafe Inc. (incumbent)
April 2020
June 2020
Partner of Gaien Partners (incumbent)
Outside Audit and Supervisory Board Member of Nippon
Yusen Kabushiki Kaisha
June 2021
Member of the Board of Director (Outside Director) of
MUFG (incumbent)
June 2023
Outside Director of Nippon Yusen Kabushiki Kaisha
(incumbent)
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Name
(Date of Birth)
Hirofumi Nomoto
(September 27, 1947)
Position in MUFG
Business Experience
Member of the Board
April 1971
Joined TOKYU CORPORATION
of Directors
(Outside Director)
April 2003
Executive General Manager of Media Business
Headquarters of TOKYU CORPORATION
April 2004
President & Representative Director of its communications
Inc.
June 2007
Director of TOKYU CORPORATION
Executive Officer of Real Estate Development Business
Unit of TOKYU CORPORATION
January 2008
Managing Director of TOKYU CORPORATION
June 2008
April 2010
Senior Managing Director of TOKYU CORPORATION
Executive Officer & Senior Executive General Manager of
Urban Life Produce Business Unit of TOKYU
CORPORATION
June 2010
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)
June 2019
President & CEO of THREE HUNDRED CLUB CO.,
LTD. (incumbent)
Member of the Board of Directors (Outside Director) of
MUFG (incumbent)
David Sneider
(July 25, 1957)
Member of the Board
December 1984 Associate of Paul, Weiss, Rifkind, Wharton & Garrison
of Directors
(Outside Director)
LLP
June 1985
Registered as an attorney at law, admitted in States of New
York in the United States
July 1987
Director and Counsel of Legal Department, Salomon
Brothers Inc.
February 1992
Associate of Simpson Thacher & Bartlett LLP
January 1994
Partner of Simpson Thacher & Bartlett LLP
June 2022
Outside Director of PHC Holdings Corporation
(incumbent)
June 2023
Member of the Board of Directors (Outside Director) of
MUFG (incumbent)
Koichi Tsuji
(April 10, 1957)
Member of the Board
October 1984
Joined Peat Marwick Mitchell & Company
of Directors
(Outside Director)
September
1988
February 1989
Registered as Certified Public Accountant in Japan
Resident Representative, Zurich, Switzerland
July 2004
Senior Partner of Ernst & Young ShinNihon 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 of EY Japan Co., Ltd.
June 2021
Member of the Board of Directors (Outside Director) of
MUFG (incumbent)
June 2023
Outside Statutory Auditor of TEIJIN LIMITED
(incumbent)
Outside Director of MARUICHI STEEL TUBE LTD.
(incumbent)
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Table of Contents
Name
(Date of Birth)
Tarisa Watanagase
(November 30, 1949)
Kenichi Miyanaga
(February 25, 1960)
Ryoichi Shinke
(December 8, 1965)
Position in MUFG
Business Experience
Member of the Board
June 1975
Joined the Bank of Thailand
of Directors
(Outside Director)
January 1988
Economist, International Monetary Fund (On the
Secondment)
October 2002
Deputy Governor of the Bank of Thailand
November
2006
September
2010
March 2013
Governor of the Bank of Thailand
Retired from the Bank of Thailand
Outside Director of the Siam Cement Public Company
Limited
June 2017
Member of the Board of Directors (Outside Director) of
MUFG (incumbent)
Member of the Board
April 1982
Joined The Toyo Trust and Banking Company, Limited
of Directors
June 2009
June 2013
June 2016
June 2017
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
June 2021
Member of the Board of Directors of MUFG (incumbent)
Member of the Board
April 1988
Joined The Sanwa Bank, Limited
of Directors
June 2014
May 2018
May 2020
April 2022
June 2023
Executive Officer of BK
Managing Executive Officer of BK
Managing Executive Officer of MUFG
Senior Managing Executive Officer of BK
Member of the Board of Directors of MUFG (incumbent)
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Table of Contents
Name
(Date of Birth)
Kanetsugu Mike
(November 4, 1956)
Hironori Kamezawa
(November 18, 1961)
Position in MUFG
Business Experience
Member of the Board
April 1979
Joined The Mitsubishi Bank, Limited
of Directors
Chairman
(Corporate Executive)
June 2005
Executive Officer of The Bank of Tokyo-Mitsubishi,Ltd.
Executive Officer of Mitsubishi Tokyo Financial Group,
May 2009
May 2011
June 2011
Inc.
Managing Executive Officer of BK
Managing Executive Officer of MUFG
Member of the Board of Directors, Managing Executive
Officer of BK
May 2013
Senior Managing Executive Officer of BK
October 2015
Executive Chairman of MUAH
Executive Chairman of MUFG Union Bank, N.A.
May 2016
Deputy President and Executive Officer of BK
June 2016
June 2017
Senior Managing Corporate Executive of MUFG
Member of the Board of Directors, Deputy President of BK
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)
Member of the Board
April 1986
Joined The Mitsubishi Bank, Limited
of Directors
President & Group
CEO
(Representative
Corporate
Executive)
June 2010
Executive Officer of BK
Executive Officer of MUFG
May 2014
Managing Executive Officer of BK
Managing Executive Officer of MUFG
July 2014
May 2017
June 2017
Deputy CEO of Americas at MUFG Union Bank, N.A.
Managing Corporate Executive of MUFG
Member of the Board of Directors, Managing Executive
Officer of BK
May 2018
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 Directors of
Global Open Network, Inc.
April 2019
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)
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Table of Contents
Name
(Date of Birth)
Iwao Nagashima
(March 15, 1963)
Position in MUFG
Business Experience
Member of the Board
April 1985
Joined The Mitsubishi Trust and Banking Corporation
of Directors
June 2011
June 2013
Executive Officer of TB
Managing Executive Officer of TB
Executive Officer of MUFG
June 2015
Director and Managing Executive Officer of TB
Managing Executive Officer of MUFG
June 2016
April 2019
Director and Senior Managing Executive Officer of TB
Director, Deputy President, and Executive Officer of TB
Senior Managing Corporate Executive of MUFG
President & CEO of MU Trust Apple Planning Company,
Ltd.
April 2020
President and CEO of TB (incumbent)
Deputy Chairman of MUFG
June 2020
Member of the Board of Directors, Deputy Chairman of
MUFG
April 2022
Member of the Board of Directors of MUFG (incumbent)
Junichi Hanzawa
(January 19, 1965)
Member of the Board
April 1988
Joined The Mitsubishi Bank, Limited
of Directors
June 2014
Executive Officer of BK
Makoto Kobayashi
(February 22, 1962)
May 2018
April 2019
June 2019
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
April 2021
President & CEO of BK (incumbent)
Deputy Chairman of MUFG
June 2021
Member of the Board of Directors, Deputy Chairman of
MUFG
April 2022
Member of the Board of Directors of MUFG (incumbent)
Member of the Board
April 1985
Joined The Mitsubishi Bank, Limited
of Directors
June 2011
May 2015
July 2015
July 2018
Executive Officer of BK
Managing Executive Officer of BK
Executive Officer of MUFG
Managing Executive Officer of SCHD
Managing Executive Officer of MUFG
October 2018
Managing Executive Officer of TB
April 2020
Senior Managing Executive Officer of SCHD
Deputy President of MUMSS
June 2020
Member of the Board of Directors, Senior Managing
Executive Officer of SCHD
June 2021
Member of the Board of Directors, Deputy President of
MUMSS
April 2022
June 2022
President & Global CEO of SCHD (incumbent)
President & CEO of MUMSS (incumbent)
Member of the Board of Directors of MUFG (incumbent)
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Table of Contents
Notes:
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.
“MUAH” refers to MUFG Americas Holdings Corporation.
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Table of Contents
Corporate Executives
The following table sets forth our corporate executives as of June 29, 2023, together with their respective dates of birth,
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.
Business Experience
See “Members of the Board of Directors” under this Item 6.A.
Senior Managing
April 1986
Joined The Tokai Bank, Ltd.
positions and experience:
Name
(Date of Birth)
Kanetsugu Mike
(November 4, 1956)
Hironori Kamezawa
(November 18, 1961)
Yoshitaka Shiba
(July 25, 1961)
Tetsuya Yonehana
(February 10, 1964)
Corporate Executive
(Group Chief Audit
Officer, or Group
CAO)
Managing Director,
Head of Internal
Audit Division
Senior Managing
Corporate Executive
(Representative
Corporate
Executive)
(Group Chief Financial
Officer, or Group
CFO)
Takayuki Yasuda
(June 19, 1963)
Senior Managing
Corporate Executive
(Group Head, Asset
Management &
Investor Services
Business Group)
June 2012
July 2015
May 2016
Executive Officer of BK
Executive Officer of MUFG
Managing Executive Officer of BK
April 2020
Senior Managing Corporate Executive of MUFG
(incumbent)
April 1986
June 2012
June 2015
June 2016
April 2019
April 2020
Joined The Mitsubishi Trust and Banking 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
June 2020
Member of the Board of Directors, Senior Managing
Executive Officer of BK (incumbent)
April 2022
Senior Managing Corporate Executive (Representative
Corporate Executive) of MUFG (incumbent)
April 1987
June 2013
Joined The Mitsubishi Trust and Banking Corporation
Executive Officer of TB
February 2015
June 2017
Executive Officer of MUFG
Managing Executive Officer of TB
April 2021
Director and Senior Managing Executive Officer of TB
Senior Managing Corporate Executive of MUFG
(incumbent)
April 2023
Director, Deputy President, and Executive Officer of TB
(incumbent)
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Table of Contents
Name
(Date of Birth)
Yasushi Itagaki
(May 24, 1964)
Seiichiro Akita
(November 11, 1966)
Position in MUFG
Business Experience
Senior Managing
April 1987
Joined The Bank of Tokyo, Ltd.
Corporate Executive
(Group Chief
Operating Officer-
International, or
Group COO-I,
Group Head
Global Commercial
Banking Business
Group)
June 2013
July 2013
May 2017
Executive Officer of BK
Executive Officer of MUFG
Managing Executive Officer of BK
October 2019
President & CEO of PT Bank Danamon Indonesia, Tbk.
April 2021
April 2022
April 2023
Senior Managing Corporate Executive of BK
Deputy President of BK
Senior Managing Corporate Executive of MUFG
(incumbent)
June 2023
Member of the Board of Directors, Deputy President of BK
Senior Managing
Corporate Executive
(Representative
Corporate
Executive)
(Group Head, Japanese
April 1989
June 2015
April 2019
May 2019
(incumbent)
Joined The Mitsubishi Bank, Limited
Executive Officer of BK
Managing Executive Officer of BK
President & CEO, Bank of Ayudhya Public Company
Limited
Corporate &
Investment Banking
Business
Group(excluding in
charge of Wealth
Management
Research Division))
May 2023
Deputy President of BK
Senior Managing Corporate Executive (Representative
Corporate Executive) of MUFG (incumbent)
June 2023
Member of the Board of Directors, Deputy President of BK
(incumbent)
Hiroshi Mori
(February 21, 1965)
Managing Corporate
April 1989
Joined Development Bank of Japan (currently
Executive
(Group Chief Legal
Officer, or Group
CLO)
April 1993
June 2003
Development Bank of Japan, Inc.)
Seconded to Finance Bureau of Ministry of Home Affairs
Seconded to Tesac Corporation, a Company under
Reorganization Trustee Representative, Manager of
Corporate Planning Department
October 2006
Registered as attorney at law
November
2010
January 2012
Joined Nishimura & Asahi
Outside Director, USEN Corporation
Partner at Nishimura & Asahi
June 2013
Substitute Auditor of KAGOME CO., LTD.
March 2016
Outside Director, Audit & Supervisory Committee Member
of KAGOME CO., LTD.
June 2016
Outside Director, Audit & Supervisory Committee Member
of SCHD
June 2019
Member of the Board of Directors, Managing Executive
Officer of BK (incumbent)
Managing Corporate Executive of MUFG (incumbent)
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Table of Contents
Name
(Date of Birth)
Yutaka Miyashita
(October 11, 1967)
Position in MUFG
Managing Corporate
Executive
(Representative
Corporate
Executive)
April 1990
Joined The Sanwa Bank, Limited
Business Experience
June 2016
Executive Officer of BK
Executive Officer of MUFG
(Group Head, Retail &
April 2020
Managing Executive Officer of BK
Commercial
Banking Business
Group (excluding in
charge of Wealth
Management
Research Division))
Managing Executive Officer of MUFG
June 2020
Member of the Board of Directors, Managing Executive
April 2021
April 2022
Officer of BK (incumbent)
Managing Corporate Executive of MUFG
Managing Corporate Executive (Representative Corporate
Executive) of MUFG (incumbent)
Keitaro Tsukiyama
(December 7, 1967)
Managing Corporate
April 1991
Joined The Mitsubishi Bank, Limited
Executive
(Group Chief
Compliance Officer,
or Group CCO)
June 2018
Executive Officer of BK
Executive Officer of MUFG
April 2021
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)
Fumitaka Nakahama
(July 28, 1966)
Managing Corporate
December 2009 Joined The Bank of Tokyo-Mitsubishi UFJ, Ltd.
Executive
(Group Head, Global
Corporate &
Investment Banking
Business Group)
June 2018
Executive Officer of BK
Executive Officer of MUFG
April 2021
Managing Executive Officer of BK
Toshiki Ochi
(June 23, 1968)
Managing Executive Officer of MUFG
April 2022
June 2022
Managing Corporate Executive of MUFG (incumbent)
Member of the Board of Directors, Managing Executive
Officer of BK (incumbent)
Managing Corporate
April 1991
Joined The Sanwa Bank, Limited
Executive
(Group Chief
Information Officer,
or Group CIO)
June 2018
Executive Officer of BK
Executive Officer of MUFG
April 2019
Managing Executive Officer of Mitsubishi UFJ NICOS
Co., Ltd.
April 2022
Managing Executive Officer of BK
Managing Corporate Executive of MUFG (incumbent)
June 2022
Member of the Board of Directors, Managing Executive
Officer of BK (incumbent)
Hiroyuki Seki
(March 10, 1968)
Managing Corporate
April 1990
Joined The Mitsubishi Bank, Limited
Executive
(Group Head, Global
Markets Business
Group)
June 2016
Executive Officer of BK
Executive Officer of MUFG
April 2021
Managing Executive Officer of BK
Managing Executive Officer of MUFG
April 2022
June 2022
Managing Corporate Executive of MUFG (incumbent)
Member of the Board of Directors, Managing Executive
Officer of BK (incumbent)
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Table of Contents
Name
(Date of Birth)
Hideaki Takase
(December 14, 1968)
Shuichi Yokoyama
(December 17, 1965)
Position in MUFG
Managing Corporate
Executive
(Group Chief Strategy
Officer, or Group
CSO (Corporate
Planning Division
excluding Finances
& Resources
Management and
Global Business)
In charge of Corporate
Administration
Division)
Managing Corporate
Executive
(Group Chief Risk
Officer, or Group
CRO)
April 1991
June 2018
Business Experience
Joined The Mitsubishi Bank, Limited
Executive Officer of BK
Executive Officer of MUFG
August 2019
President & CEO of MUFG Bank (Europe) N.V.
April 2021
April 2022
June 2022
Managing Executive Officer of BK
Managing Corporate Executive of MUFG
Member of the Board of Directors, Managing Executive
Officer of BK (incumbent)
April 2023
Managing Corporate Executive (Representative Corporate
Executive) of MUFG (incumbent)
April 1990
June 2016
April 2020
April 2022
June 2022
Joined The Bank of Tokyo, Ltd.
Executive Officer of BK
Executive Officer of MUFG
Managing Executive Officer of BK
Managing Corporate Executive of MUFG (incumbent)
Member of the Board of Directors, Managing Executive
Officer of BK (incumbent)
Kenji Horikawa
(December 9, 1967)
Managing Corporate
April 1990
Joined The Sanwa Bank, Limited
Executive
(Group Chief Human
Resources Officer,
or Group CHRO)
June 2016
April 2020
Executive Officer of BK
Managing Executive Officer of SCHD
Managing Executive Officer of MUMSS
Tadashi Yamamoto
(May 23, 1969)
April 2022
Managing Executive Officer of MUFG
Member of the Board of Directors, Managing Executive
Officer of SCHD
Member of the Board of Directors, Managing Executive
Officer of MUMSS
April 2023
Managing Corporate Executive of MUFG (incumbent)
Managing Corporate
April 1992
Joined The Bank of Tokyo, Ltd.
Executive
(Group Head, Digital
Service Business
Group
Group Chief Digital
Transformation
Officer, or Group
CDTO)
June 2018
Executive Officer of BK
April 2022
June 2022
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 2023
Managing Corporate Executive of MUFG (incumbent)
Notes:
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.
“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.
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Table of Contents
B. Compensation
The compensation paid by MUFG and its subsidiaries during the fiscal year ended March 31, 2023 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.
The following table sets forth details of the aggregate compensation paid by MUFG and its subsidiaries during the fiscal year
ended March 31, 2023 to our directors (excluding outside directors), corporate executives and outside directors:
Classification
Non-Adjustable Compensation Adjustable Compensation
Number of
Recipients(1)
Aggregate
Compensation
Annual
Base
Salary(2)
Performance-
based Stock
Performance-
based Stock
Compensation Cash Bonuses
Compensation
(in millions)
Directors (excluding outside directors)
Corporate Executives
Outside Directors
6 ¥
18 ¥
9 ¥
721 ¥
338 ¥
1,968 ¥
1,046 ¥
244 ¥
244
59 ¥
318 ¥
―
217 ¥
416 ¥
―
107
188
―
Notes:
(1)
(2)
Includes the current directors and corporate executives as well as those who retired during the fiscal year ended March 31, 2023.
Includes other benefits.
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, 2023:
Directors
Kanetsugu Mike
Hironori Kamezawa
Iwao Nagashima
Junichi Hanzawa
Makoto Kobayashi
Yoshitaka Shiba
Naomi Hayashi
Atsushi Miyata
Teruyuki Sasaki
Non-Adjustable Compensation Adjustable Compensation
Annual
Base
Salary
Performance-
based Stock
Compensation
Cash
Bonuses
Performance-
based Stock
Compensation
Aggregate
Compensation Paid by
(in millions)
¥
¥
¥
¥
¥
¥
¥
¥
¥
162 MUFG
257 MUFG
¥
¥
BK
194 MUFG
¥
TB
250 MUFG
¥
BK
113 MUFG
¥
SCHD
MUMSS
100 MUFG
141 MUFG
BK
141 MUFG
BK
116 MUFG
BK
¥
¥
¥
¥
¥
52 ¥
71 ¥
18
35 ¥
35
42 ¥
46
19 ¥
9
9 ¥
61 ¥
44 ¥
26
44 ¥
26
39 ¥
22
21 ¥
23 ¥
7
8 ¥
14
10 ¥
14
3 ¥
2
2 ¥
13 ¥
10 ¥
16
10 ¥
16
7 ¥
23
66 ¥
99 ¥
―
37 ¥
31
49 ¥
49
24 ¥
12
12 ¥
17 ¥
20 ¥
13
20 ¥
13
10 ¥
6
23
39
―
17
17
20
20
11
5
5
9
7
5
7
5
5
4
Note:
(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.
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Table of Contents
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.
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 or ESG 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 non-forfeitable,
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 non-forfeitable, 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 a 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 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. Each grantee receives shares of
MUFG common stock in exchange for points upon the grantee’s departure from his or her job responsibilities based on which the right
to receive such shares was granted.
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.”
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Table of Contents
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.
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 non-forfeitable 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 claw-back 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, 2023, 148,089,572 RSUs have been granted under
the plan, of which 15,614,429 RSUs were outstanding as of June 30, 2023.
For more information on the plan, see “Item 16E. Purchases of Equity Securities by the Issuer and Affiliated Purchasers.”
Share Ownership
As of July 1, 2023, our directors and corporate executives held the following numbers of shares of our common stock:
Directors
Mariko Fujii
Keiko Honda
Kaoru Kato
Satoko Kuwabara
Hirofumi Nomoto
David Sneider
Koichi Tsuji
Tarisa Watanagase
Kenichi Miyanaga
Ryoichi Shinke
Iwao Nagashima
Junichi Hanzawa
Makoto Kobayashi
Number of Shares
Registered
—
—
—
—
25,000
―
—
—
183,678
1,100
129,081
58,900
153,058
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Corporate Executives
Kanetsugu Mike
Hironori Kamezawa
Yoshitaka Shiba
Tetsuya Yonehana
Takayuki Yasuda
Yasushi Itagaki
Hiroshi Mori
Yutaka Miyashita
Keitaro Tsukiyama
Fumitaka Nakahama
Toshiki Ochi
Hiroyuki Seki
Hideaki Takase
Shuichi Yokoyama
Kenji Horikawa
Tadashi Yamamoto
Seiichiro Akita
Number of Shares
Registered
292,062
69,639
129,403
89,922
30,500
―
8,285
26,400
26,769
11,269
18,800
23,150
15,800
39,800
61,667
9,400
3,712
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 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. We
also have 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 current 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.
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;
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•
•
•
•
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, who is a director concurrently performing an executive role, 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, a manager or any other type of employee of the company’s parent
company, or a natural person who controls the company;
the person is not an executive director, who is a director concurrently performing an executive role, a corporate executive, a
manager or any other type of employee of another subsidiary of the company’s parent company or another company
controlled by a natural person who controls the 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 natural person who controls the company.
Further, companies listed on the Prime Market of the Tokyo Stock Exchange, including us, must have the majority of each of
nominating and compensation committee members in principle qualify as outside directors who are considered independent based on
such internal standards as each company establishes pursuant to the Tokyo Stock Exchange requirements, or independent outside
directors, or publicly disclose the reason for not having such directors on each such committee.
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.
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 15 directors, eight of whom are independent outside
directors and two of whom are internal non-executive directors. Companies listed on the Prime Market of the Tokyo Stock Exchange,
including us, must have one third (or, in cases where such companies deem appropriate, the majority) of directors qualify as
independent outside directors, or publicly disclose the reason for not having such directors on the board of directors.
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
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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. Further, companies listed on the Prime Market of the Tokyo Stock Exchange, including us, must have the
majority of nominating committee members in principle qualify as independent outside directors or publicly disclose the reason for not
having such directors on the nominating committee. Our nominating committee, which we call the nominating and governance
committee, currently consists of five directors. The chairman of the committee is Hirofumi Nomoto, an independent outside director.
The other members of this committee are Mariko Fujii, Kaoru Kato and Satoko Kuwabara, who are independent outside directors, and
Hironori Kamezawa, Director, President & Group CEO. Between April 2022 and March 2023, the nominating and governance
committee met 11 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 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 five members. The chairman of the committee is Koichi Tsuji, an
independent outside director. The other members of the committee are Keiko Honda and Kaoru Kato, who are independent outside
directors, and Kenichi Miyanaga and Ryoichi Shinke, who are non-executive directors. Between April 2022 and March 2023, 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. Further, companies listed on the Prime Market of the Tokyo Stock Exchange, including us, must have the
majority of compensation committee members in principle qualify as independent outside directors or publicly disclose the reason for
not having such directors on the compensation committee. Our compensation committee currently consist of five directors. The
chairman of the committee is Satoko Kuwabara, an independent outside director. The other members of this committee are Mariko
Fujii, Kaoru Kato and Hirofumi Nomoto, who are independent outside directors, and Hironori Kamezawa, Director, President &
Group CEO. Between April 2022 and March 2023, the compensation committee met 7 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 independent outside director. The other members of this
committee are David Sneider and Tarisa Watanagase, who are independent outside directors, Hideaki Takase, Managing Corporate
Executive and Group CSO, and Shinichi Koide, Atsushi Miyanoya, Kazuhiko Ohashi and Takeo Hoshi, who are external experts.
Between April 2022 and March 2023, the risk committee met four times.
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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.
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 or more 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 17 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.
D. Employees
As of March 31, 2023, we had approximately 121,800 employees, a decrease of approximately 7,900 employees compared with
the number of employees as of March 31, 2022 primarily due to the sale of MUFG Union Bank, N.A. in December 2022. In addition,
as of March 31, 2023, we had approximately 27,900 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, 2023:
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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
Digital Service Business Unit
Corporate Center/Corporate Staff
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 Commercial Banking Business Unit
Trust Assets Business Unit
Global Markets Business Unit
Digital Service 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
109
13%
3
2
40
1
2
16
3
5
1
0
2
2
1
0
0
0
1
0
2
1
1
1
0
0
0
3
100%
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Location
MUFG Bank:
Japan
United States
Europe
Asia/Oceania excluding Japan
Other areas
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
25%
4
2
46
1
8
1
1
1
5
0
0
0
3
0
0
0
3
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.”
F. Disclosure of a Registrant’s Action to Recover Erroneously Awarded Compensation
Not applicable.
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Item 7.
Major Shareholders and Related Party Transactions.
A. Major Shareholders
Common Stock
As of March 31, 2023, we had 1,064,553 registered shareholders of our common stock. The ten largest holders of our common
stock appearing on the register of shareholders as of March 31, 2023, and the number and the percentage of such shares held by each
of them, were as follows:
Name
The Master Trust Bank of Japan, Ltd. (Trust account)(1)
Custody Bank of Japan, Ltd. (Trust account)(1)
SSBTC CLIENT OMNIBUS ACCOUNT
THE BANK OF NEW YORK MELLON AS DEPOSITARY BANK FOR DR HOLDERS(2)
STATE STREET BANK WEST CLIENT - TREATY 505234
The Master Trust Bank of Japan, Ltd.
(Meiji Yasuda Life Insurance Company retirement benefit trust account)
JP MORGAN CHASE BANK 385781
JPMorgan Securities Japan Co., Ltd.
Toyota Motor Corporation
GOVERNMENT OF NORWAY
Total
Number of
shares
held
Percentage of
total shares in
issue(3)
1,945,291,400
15.33%
741,362,200
257,748,540
241,322,875
218,331,191
175,000,000
166,053,638
152,600,825
149,263,153
147,989,424
5.84%
2.03%
1.90%
1.72%
1.37%
1.30%
1.20%
1.17%
1.16%
4,194,963,246
33.02%
Notes:
(1)
(2)
(3)
(4)
Includes the shares held in trust accounts, which do not disclose the names of beneficiaries.
An owner of record for our ADSs.
Numbers are truncated after two decimal points.
According to a beneficial ownership report on Schedule 13G filed with the SEC by BlackRock Inc. on February 1, 2023, BlackRock and its consolidated
subsidiaries beneficially owned an aggregate of 6.2% of the outstanding shares of our common stock as of December 31, 2022. 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 3, 2023, 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, 2022. Other than as described in the table above, we have not
independently confirmed this beneficial ownership information.
As of March 31, 2023, 1,573,884 shares, representing approximately 0.01% of our outstanding common stock, were held by our
directors and corporate executives.
As of March 31, 2023, 1,815,944,634 shares, representing 14.31% of our outstanding common stock, were owned by 407 U.S.
shareholders of record who are resident in the United States, one of whom is the ADR depository’s nominee holding 241,322,875
shares, or 1.90%, 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, 2023, we held approximately 22.6% 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 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
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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, 2023, 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 his or her 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.
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, 2021 and 2022 and for the fiscal years ended December 31, 2020, 2021 and 2022, 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
24, 2023.
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.
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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 ¥16.0 per share of our common stock (in addition to interim
dividends of ¥16.0 per share of our common stock) for the fiscal year ended March 31, 2023 were approved by shareholders at the
ordinary general meeting of shareholders held on June 29, 2023.
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.”
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.
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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:
•
•
•
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 Act;
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 Act 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, 2023, a total of 12,687,710,920 shares of common stock (including 665,392,775 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.
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 following is a general summary of major Japanese foreign exchange controls regulations applicable to holders of shares of
our common stock or voting rights thereunder who are “foreign investors,” as described below. The statements regarding Japanese
foreign exchange controls regulations set forth below are based on the laws and regulations in force and as interpreted by the Japanese
authorities as of the date of this Annual Report and are subject to subsequent changes in the applicable Japanese laws or interpretations
thereof. This summary is not exhaustive of all possible foreign exchange controls considerations that may apply to a particular
investor, and potential investors are advised to satisfy themselves as to the overall foreign exchange controls consequences of the
acquisition, ownership and disposition of shares of our common stock or voting rights thereunder by consulting their own advisors.
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 and voting rights by non-residents
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of Japan and foreign investors, both as defined below. It also applies to the acquisition and holding of ADSs representing authority to
exercise our voting rights by foreign investors that constitutes an “inward direct investment” as described below.
“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:
•
•
•
•
•
natural persons who are non-residents 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.
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.
Inward Direct Investment in Shares of Listed Companies
For the purpose of the regulations in connection with an “inward direct investment” under the Foreign Exchange Law, Japanese
listed companies are classified into the following categories:
(i) companies engaged only in the businesses other than certain businesses (the “Designated Businesses”) designated by the
Foreign Exchange Act as Designated Businesses;
(ii) companies engaged in the Designated Businesses other than the certain Designated Businesses designated by the Foreign
Exchange Act as core sector businesses (the “Core Sector Designated Businesses”); and
(iii) companies engaged in the Core Sector Designated Businesses.
For reference purposes only, the Minister of Finance publishes, and may update from time to time, a list that classifies Japanese
listed companies into the above categories, and according to the list published by the Minister of Finance at April 24, 2023, businesses
which are currently engaged in by us are classified as category (ii), i.e., the Designated Business other than the Core Sector Designated
Businesses.
Definition of Inward Direct Investment
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If a foreign investor acquires shares or voting rights of a Japanese company that is listed on a Japanese stock exchange and, as a
result of the acquisition, the foreign investor, in combination with any existing holdings, directly or indirectly holds 1% or more of the
issued shares or the total number of voting rights of the relevant company, such acquisition constitutes an “inward direct investment.”
In addition, acquisition of the authority to exercise, or instruct to exercise, voting rights held by other shareholders that results in the
foreign investor, in combination with any existing shareholding, directly or indirectly holding 1% or more of the total number of
voting rights of the relevant company, constitutes an “inward direct investment.”
In addition to the acquisitions of shares or voting rights described above, if a foreign investor (i) is granted the authority to
exercise proxy voting rights on behalf of other shareholders of the relevant company regarding certain matters which may control
substantially or have material influence on the management of such company such as the election or removal of directors or (ii)
obtains consent from another foreign investor holding the voting rights of the relevant company to exercise the voting rights of such
company jointly, and, in each case, as a result of any of these arrangements, the number of the voting rights directly or indirectly held
by the foreign investor, including the total number of the voting rights subject to such proxy, or the sum of the number of the voting
rights directly or indirectly held by the foreign investor and such other foreign investors subject to such joint voting agreement, as the
case may be, is 10% or more of the total number of voting rights of the relevant company, each such arrangement regarding voting
rights (“voting arrangement”) constitutes an “inward direct investment.” Additionally, if a foreign investor who directly or indirectly
holds 1% or more of the total voting rights of a Japanese listed company, at a general meeting of shareholders, consents to certain
proposals having material influence on the management of such company such as (i) election of such foreign investor or its related
persons (as defined in the Foreign Exchange Act) as directors or corporate auditors of the relevant company or (ii) transfer or
discontinuation of its business, such consent will also constitute an “inward direct investment.”
Prior Notification Requirements
If a foreign investor intends to consummate an acquisition of shares or voting rights of a Japanese listed company that
constitutes an “inward direct investment” as described above, in certain circumstances, such as where the foreign investor is in a
country that is not listed on an exemption schedule in the Foreign Exchange Act or where that Japanese company is engaged in the
Designated Businesses, prior notification of the relevant inward direct investment must be filed with the Minister of Finance and any
other competent Ministers.
However, a foreign investor seeking to acquire shares or voting rights of a Japanese listed company or the authority to exercise,
either directly or through instructions, voting rights held by other shareholders that constitutes an “inward direct investment” may be
eligible for the exemptions, if certain conditions are met.
In the case of an acquisition of shares or voting rights or the authority to exercise, voting rights of a Japanese listed company
that is engaged in the Designated Businesses other than Core Sector Designated Businesses, like us, the foreign investor may be
exempted from the prior notification requirement if such foreign investor complies with the following conditions:
(i) the foreign investor or its closely-related persons (as defined in the Foreign Exchange Law) will not become directors or
corporate auditors of the relevant company;
(ii) the foreign investor will not make certain proposals (as prescribed in the Foreign Exchange Law) at a general meeting of
shareholders, including transfer or discontinuation of the Designated Businesses of the relevant company; and
(iii) the foreign investor will not access non-public technical information in relation to the Designated Businesses of the relevant
company, or take certain other actions that may lead to the leak of such non-public technical information (as prescribed in the Foreign
Exchange Law).
Notwithstanding the above, if a foreign investor falls under a category of disqualified investors designated by the Foreign
Exchange Law (including (a) investors who have records of certain sanctions due to violations of the Foreign Exchange Law and (b)
certain investors who are state-owned enterprises or other related entities excluding those who are accredited by the Minister of
Finance), in no event may such foreign investor be eligible for the exemptions described above.
In addition, if a foreign investor intends to make a voting arrangement with respect to a Japanese listed company engaged in the
Designated Businesses or consents to a proposal at a general meeting of shareholders of such company, in each case, that constitutes
an “inward direct investment” as described above, in certain circumstances, prior notification of the relevant inward direct investment
must be filed with the Minister of Finance and any other competent Ministers. However, the exemptions from the prior notification
requirements may be available in the cases where the relevant voting arrangement is regarding matters other than certain matters
which may control substantially or have material influence on the management of the relevant company, such as the election or
removal of directors, which would have required prior notification.
Procedures for Prior Notification
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If such prior notification is filed, the proposed inward direct investment may not be consummated until after 30 days have
passed from the date of filing, although this screening period may be shortened to two weeks unless the Ministers deem it necessary to
review the proposed inward direct investment. The Ministers may extend the screening period up to five months if they deem it
necessary to review the proposed inward direct investment and may recommend any modification or abandonment of the proposed
inward direct investment and, if the foreign investor does not accept such recommendation, the Ministers may order the modification
or abandonment of such inward direct investment. In addition, if the Ministers consider the proposed inward direct investment to be an
inward direct investment that is likely to cause damage to the national security of Japan and, if a foreign investor (i) consummates
such inward direct investment without filing the prior notification described above; (ii) consummates such inward direct investment
before the expiration of the screening period described above; (iii) in connection with such inward direct investment, makes false
statements in the prior notification described above; or (iv) does not follow the recommendation or order issued by the Ministers to
modify or abandon such inward direct investment, the Ministers may order such foreign investor to dispose of all or part of the shares
acquired or take other measures.
Post Facto Reporting Requirements
A foreign investor who consummates an inward direct investment as described above through an acquisition of shares or voting
rights or the authority to exercise, directly or through instructions, voting rights of a Japanese listed company that is engaged in the
Designated Businesses, but is not subject to the prior notification requirements described above due to the exemptions from such prior
notification requirements, in general, must file a report of the relevant inward direct investment with the Minister of Finance and any
other competent Ministers having jurisdiction over such Japanese company within 45 days of such inward direct investment when, as a
result of such acquisition, the foreign investor (excluding, in the cases of (i) and (ii) below, a foreign investor who falls under a
category of certain foreign financial institutions (as prescribed in the Foreign Exchange Law)) directly or indirectly holds (i) 1% or
more but less than 3% of the total number of issued shares or voting rights, for the first time, (ii) 3% or more but less than 10% of the
total number of issued shares or voting rights, for the first time, or (iii) 10% or more of the total number of issued shares or voting
rights.
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, in each case by a foreign investor, where such acquisition of ADSs or withdrawal of the underlying shares constitutes an
inward direct investment, in general, a prior notification will be required unless the exemption is available, as noted above, and if such
prior notification is not required due to the exemption, a post facto report will 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 shareholding.
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 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.
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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 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.
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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:
•
•
•
•
•
a citizen or resident of the United States as determined for U.S. federal income tax purposes;
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
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
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.
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
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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 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.” However, recently issued Treasury regulations that apply to taxes paid or accrued in taxable years
beginning on or after December 28, 2021 impose additional requirements for foreign taxes to be eligible for a foreign tax credit, and
there can be no assurance that those requirements will be satisfied. Further, in certain circumstances, if a U.S. holder:
•
•
has held shares or ADSs for less than a specified minimum period during which such U.S. holder is not protected from the
risk of loss; or
is obligated to make payments related to the dividends,
such U.S. holder will not be allowed a foreign tax credit for foreign taxes imposed on dividends paid on shares or ADSs. Instead
of claiming a foreign tax credit, a U.S. holder may be able to deduct Japanese withholding taxes on dividends in computing such
holder’s taxable income, subject to generally applicable limitations under U.S. law (including that a U.S. holder is not eligible for a
deduction for foreign income taxes paid or accrued in a taxable year if such U.S. holder claims a foreign tax credit for any foreign
income taxes paid or accrued in the same taxable year). 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 1995, 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, 2023. 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, 2024 or any future taxable year
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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.
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 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:
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•
•
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/).
I.
Subsidiary Information
Please refer to the discussion under “Item 4.C. Information on the Company—Organizational Structure.”
J.
Annual Report to Security Holders
We submitted an English translation of our local annual report to security holders in electronic format as exhibits to a report on
Form 6-K, dated May 31, 2023.
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.
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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.
Type of Risk
Credit Risk
Market Risk
Funding Liquidity Risk
Definition
The risk of financial loss in credit assets (including off-balance sheet instruments) caused by
deterioration in the credit condition 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.
Operational Risk
The risk of loss resulting from inadequate or failed internal processes, people or systems, or
from external events.
• Operations Risk
•
•
Information Risk
IT Risk
• Tangible Asset Risk
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 such risk.
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 such risk.
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.
Personnel Risk
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.
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
such risk.
The risk of 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 such
risk.
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.
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•
•
•
Legal Risk
Reputation Risk
Model Risk
Risk Management System
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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 have appointed a chief risk officer and established
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 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
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 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
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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.
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,
2023. 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 Advanced Measurement Approach and the Basic Indicator 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 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.
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The following diagram summarizes the credit risk management framework for our major banking subsidiaries:
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
1
2
3
4
5
6
7
8
9
MUFG Borrower Rating Definition
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:
10 through 12
(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.
10
11
12
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.)
13
14
15
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 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
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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. 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.
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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.
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 fluctuations 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, 2023 was subject to a variation of approximately ¥2.0 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.
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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.
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
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-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.
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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). 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 deposits” 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.
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, 2023 was ¥ 2.88 billion, comprising interest rate risk exposure
of ¥2.27 billion, foreign exchange risk exposure of ¥1.23 billion, and equity-related risk exposure of ¥0.25 billion. Our average daily
VaR for the fiscal year ended March 31, 2023 was ¥2.14 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 by risk category for the periods indicated:
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April 1, 2021—March 31, 2022
Average
Maximum(1)
Minimum(1)
March 31, 2022
MUFG
Interest rate
Yen
U.S. Dollars
Foreign exchange
Equities
Commodities
Less diversification effect
¥
1.37 ¥
1.97 ¥
0.97 ¥
(in billions)
1.41
0.85
1.11
0.38
0.24
0.00
(0.66)
2.03
1.39
3.77
0.81
0.82
0.00
—
1.11
0.53
0.56
0.23
0.11
0.00
—
1.14
1.35
0.82
1.01
0.24
0.16
0.00
(0.61)
April 1, 2022—March 31, 2023
Average
Maximum(1)
Minimum(1)
March 31, 2023
¥
2.14 ¥
3.25 ¥
1.25 ¥
(in billions)
2.02
1.19
1.43
0.64
0.22
0.00
(0.74)
2.74
2.41
1.92
1.36
0.55
0.01
—
1.36
0.76
0.89
0.21
0.07
0.00
—
2.88
2.27
1.21
1.55
1.23
0.25
0.00
(0.87)
MUFG
Interest rate
Yen
U.S. Dollars
Foreign exchange
Equities
Commodities
Less diversification effect
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 in the fiscal year ended March 31, 2023 was as follows:
Quarter
April—June 2022
July—September 2022
October—December 2022
January—March 2023
Daily average VaR
(in billions)
¥
1.58
1.97
2.39
2.63
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, 2023, the revenue from our trading activities has been relatively stable,
keeping positive numbers in 217 days out of 261 trading days in the period. During the same period, there were 146 days with positive
revenue exceeding ¥1 billion and 15 days with negative revenue exceeding minus ¥1 billion.
Non-trading Activities
The aggregate VaR for our total non-trading activities as of March 31, 2023, excluding market risks related to our strategic
equity portfolio, was ¥974.0 billion. Market risk related to interest rates equaled ¥923.4 billion and equities-related risk equaled ¥85.9
billion. Compared with the VaR as of March 31, 2022, we experienced an increase in market risk during the fiscal year ended March
31, 2023, primarily due to an increase in interest rate risk.
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Based on a simple sum of figures across market risk categories, interest rate risks accounted for approximately 91% of our total
non-trading activity market risks as of March 31, 2023. Looking at a breakdown of interest rate related risk by currency, as of March
31, 2023, the Japanese yen accounted for approximately 29% while the U.S. dollar accounted for approximately 67%, and the euro
approximately 4%, with a 12 percentage point decrease in the Japanese yen, a 12 percentage point increase in the U.S. dollar and the
euro remaining unchanged compared to March 31, 2022.
For a description of our strategic equity investment risk management, see “—Risk Management of Strategic Equity Portfolio.”
The following tables set forth the VaR related to our non-trading activities by risk category for the periods indicated:
April 1, 2021—March 31, 2022
Average
Maximum(1)
Minimum(1)
March 31, 2022
Interest rate
Yen
U.S. Dollars
Foreign exchange
Equities(2)
Commodities
Less diversification effect
Total
¥
460.0 ¥
517.0 ¥
397.6 ¥
(in billions)
201.5
313.0
2.1
234.4
0.4
(143.2)
553.7
257.7
370.8
3.9
329.3
4.5
—
623.5
174.8
276.6
1.3
169.9
0.0
—
479.0
506.9
252.7
336.0
2.1
197.6
0.0
(123.7)
582.9
April 1, 2022—March 31, 2023
Average
Maximum(1)
Minimum(1)
March 31, 2023
¥
628.4 ¥
923.4 ¥
463.1 ¥
(in billions)
272.0
439.6
4.4
156.8
0.1
(72.4)
717.3
332.6
751.7
7.7
204.9
1.2
—
974.0
207.1
322.9
1.6
85.9
0.0
—
551.8
923.4
332.6
751.7
7.1
85.9
0.1
(42.5)
974.0
Interest rate
Yen
U.S. Dollars
Foreign exchange
Equities(2)
Commodities
Less diversification effect
Total
Assumptions for VaR calculations:
Historical simulation method
Holding period: 10 business days
Confidence interval: 99%
Observation period: 701 business days
Notes:
(1)
(2)
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.
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, 2023 was as follows.
Quarter
April—June 2022
July—September 2022
October—December 2022
January—March 2023
Daily average VaR
(in billions)
¥
490.32
576.70
706.65
740.91
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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.
Hypothetical losses never exceeded the VaR amount in the fiscal year ended March 31, 2023. 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, 2023:
The following graph shows VaR of trading activities and hypothetical profits and losses on a daily basis for the fiscal year ended
March 31, 2023:
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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 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 LCR and NSFR
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 and NSFR even at the sufficient stage. At higher alert stages, we hold
group-wide LCR and NSFR liaison meetings to discuss issues relating to LCR and NSFR and, based on the discussion as well as the
information and data that have been shared, take countermeasures to improve LCR and NSFR 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.” See also “Item 3.D. Key Information—Risk Factors—Funding Liquidity
Risk—Market illiquidity and other external circumstances and an actual or perceived decline in our creditworthiness could negatively
affect our ability to access and maintain liquidity.”
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
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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.
The following diagram summarizes our operational risk management framework:
Operational Risk Management Framework
Operations Risk Management
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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.
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 performing 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 countermeasure 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, we have contingency plans, including alternatives for
both operations and systems, designed for our operational resilience to recover quickly and reduce the scope and magnitude of impact
of such 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 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
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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.
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.
Outline of Measurement Model
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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.
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.
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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.”
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 chair 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:
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Compliance Framework
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 Group companies. In the holding company, the contents of the reported
cases as well as the results of surveys are 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's accounting practices.
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.
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•
•
•
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.
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
The 1st Line of Defense
Divisions
Business divisions and
client-facing divisions
Roles
• Undertake risks within the extent of risk exposure assigned
•
Responsible and accountable for identifying, evaluating and
controlling business risks
The 2nd Line of Defense
Risk management
division, compliance
division, etc.
• 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
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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.
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.
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ADS holders must pay:
$5.00 (or less) per 100 ADSs (or portion thereof)
$0.02 (or less) per ADS
For:
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
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
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
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, 2023, the Depositary waived $130,968.31 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, 2023, the Depositary
reimbursed us $1.0 million for such expenses.
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PART II
Item 13.
Defaults, Dividend Arrearages and Delinquencies.
None.
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, 2023.
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, 2023 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, 2023.
The effectiveness of our internal control over financial reporting as of March 31, 2023 has been audited by Deloitte Touche
Tohmatsu LLC, an independent registered public accounting firm, as stated in its report, presented on page 146.
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.
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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, 2023, 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, 2023, 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, 2023, of the MUFG Group and our report
dated July 24, 2023, 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 24, 2023
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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, 2023 primarily to update and streamline explanatory commentaries. 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, 2023.
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, 2022 and 2023 are presented in the following table:
Audit fees
Audit-related fees
Tax fees
Total
2022
2023
(in millions)
¥
9,716 ¥
9,077
262
131
591
105
¥
10,109 ¥
9,774
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, assurance services and 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.
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
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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, 2022 and 2023.
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
April 1 to April 30, 2022
May 1 to May 31, 2022
June 1 to June 30, 2022
July 1 to July 31, 2022
August 1 to August 31, 2022
September 1 to September 30, 2022
October 1 to October 31, 2022
November 1 to November 30, 2022
December 1 to December 31, 2022
January 1 to January 31, 2023
February 1 to February 28, 2023
March 1 to March 31, 2023
Total
Total
Number of
Shares
Purchased(1)
Average Price
Paid per Share
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(2)
1,575 ¥
763.37
—
—
35,305,055
70,159,360
77,152,763
83,246,373
61,443,812
91,629,464
729.68
35,303,700 564,696,300
741.07
70,157,900 494,538,400
725.28
77,150,300 417,388,100
726.55
83,244,200 334,143,900
723.56
61,441,900 272,702,000
669.58
91,628,300 181,073,700
1,753
710.34
—
—
90,509,235
77,452,725
7,403,168
2,670
776.78
90,506,600 209,493,400
936.26
77,450,700 132,042,700
7,400,600 124,642,100
970.36
910.90
—
—
ー
594,307,953 ¥
757.21
594,284,200
Notes:
(1) The shares purchased were shares constituting less than one unit (100 shares) purchased from registered holders of the shares, each at the current market price, in
addition to those purchased as part of the publicly announced program described in Note (2) below.
(2) During May to October 2022, we repurchased 418,926,300 shares of our common stock for ¥299,999,909,768 under a share repurchase program that was adopted
D May 16, 2022 and completed in November 2022. Under the program, we were authorized by the Board of Directors to repurchase up to the lesser of
600,000,000 shares of our common stock and ¥300 billion between May 17, 2022 and November 11, 2022. On November 30, 2022, we cancelled the repurchased
shares. Also, During December 2022 to January 2023, we repurchased 175,357,900 shares of our common stock for ¥149,999,996,001 under a share repurchase
program that was adopted on November 14, 2022 and completed in January 2023. Under the program, we were authorized by the Board of Directors to repurchase
up to the lesser of 300,000,000 shares of our common stock and ¥150 billion between December 2, 2022 and January 31, 2023. On February 28, 2023, we
cancelled the repurchased securities.
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, 2023.
As for our Performance-based Stock Compensation Plans, there were no stock purchases during the fiscal year ended March 31,
2023. In connection with the MUFG Americas Holdings Corporation Stock Bonus Plan, 13,700,757 ADSs were purchased by the
trustee of the independent trust between April 1, 2022 and March 31, 2023.
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.
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Table of Contents
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 eight outside directors as members of our board of directors, which consists of a
total of fifteen members. Under our governance system, we are required to have independent 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.
Further, companies listed on the Prime Market of the Tokyo Stock Exchange, including us, must have one third (or, in cases
where such companies deem appropriate, the majority) of directors qualify as outside directors who are considered independent based
on such internal standards as each company establishes pursuant to the Tokyo Stock Exchange requirements, or independent outside
directors, or publicly disclose the reason for not having such directors on the board of directors. We have adopted and made public our
corporate governance policy providing, among other things, that, in general, the majority of the members of our board of directors will
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 committee consists of three 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. Further, companies listed on the Prime Market of the Tokyo Stock Exchange,
including us, must have the majority of compensation committee members in principle qualify as independent outside directors or
publicly disclose the reason for not having such directors on the compensation committee. Currently, our compensation committee
consists of five directors, four of whom are 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. Further, companies listed on the Prime Market of the Tokyo Stock Exchange,
including us, must have the majority of nominating committee members in principle qualify as independent outside directors or
publicly disclose the reason for not having such directors on the nominating committee. Currently, our nominating committee, which
we call the nominating and governance committee, consists of five directors, four of whom are 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.
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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 became stricter for companies listed on the Prime Market, including us, 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.
Item 16I.
Disclosure Regarding Foreign Jurisdictions That Prevent Inspections.
Not Applicable.
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Table of Contents
Item 17.
Financial Statements.
PART III
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, 2021 and 2022 and for the fiscal years ended December 31, 2020, 2021 and 2022, 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
24, 2023.
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)
4(a)
4(b)
8
11
12
13
15(a)
15(b)
99(a)
99(b)
Articles of Incorporation of Mitsubishi UFJ Financial Group, Inc., as amended on June 29, 2022 (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, 2022 (English
translation)**
Share Handling Regulations of Mitsubishi UFJ Financial Group, Inc., as amended on August 2, 2022 (English
Translation)
Charter of the Audit Committee of Mitsubishi UFJ Financial Group, Inc., as amended on February 3. 2023 (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***
Share Purchase Agreement, dated September 21, 2021, among Mitsubishi UFJ Financial Group, Inc., MUFG Americas
Holdings Corporation and U.S. Bancorp**
Amendment No. 1 to the Share Purchase Agreement, dated May 10, 2022
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, 2023****
Unaudited Reverse Reconciliation of Selected Financial Information of Mitsubishi UFJ Financial Group, Inc. as of and
for the fiscal year ended March 31, 2023*****
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Exhibit
99(c)
Description
101.INS
Financial Statements and Supplementary Data of Morgan Stanley******
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
The cover page for the Company’s Annual Report on From 20-F for the year ended March 31, 2023, has been formatted
in Inline XBRL
Notes:
*
**
***
****
*****
******
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 annual report on Form 20-F (File No. 000-54189) filed on July 8, 2022.
Incorporated by reference to our annual report on Form 20-F (File No. 000-54189) filed on July 9, 2021.
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 24, 2023.
152
Table of Contents
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
Table of Contents
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, 2021,
2022 and 2023. 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. Average balances in the tables include those relating to the
assets and liabilities held for sale of MUFG Union Bank. For more information, see Note 2 to our consolidated financial statements
included elsewhere in this Annual Report.
Assets:
Interest-earning assets:
Interest-earning deposits in other banks:
Domestic
Foreign
Total
Call loans and funds sold:
Domestic
Foreign
Total
Receivables under resale agreements:
Domestic
Foreign
Total
Receivables under securities borrowing
transactions:
Domestic
Foreign
Total
Trading account assets:
Domestic
Foreign
Total
Investment securities(1):
Domestic
Foreign
Total
Loans(2):
Domestic
Foreign
Total
Total interest-earning assets:
Domestic
Foreign
Total
Non-interest-earning assets:
Cash and due from banks
Other non-interest-earning
assets
Allowance for credit losses
Fiscal years ended March 31,
2021
2022
2023
Average
balance
Interest
income
Average
rate
Average
balance
Interest
income
Average
rate
Average
balance
Interest
income
Average
rate
(in millions, except percentages)
¥ 38,009,750 ¥
33,413
0.09 % ¥ 41,455,342 ¥
35,325
0.09 % ¥ 36,816,513 ¥
29,336
0.08 %
9,905,602
47,915,352
23,142
56,555
0.23
0.12
12,303,262
53,758,604
22,067
57,392
514,946
505,869
1,020,815
107
4,614
4,721
0.02
0.91
0.46
1,083,472
396,886
1,480,358
62
4,356
4,418
0.18
0.11
0.01
1.10
0.30
14,346,858
329,718
51,163,371
359,054
1,196,362
583,746
1,780,108
3,677
16,177
19,854
2.30
0.70
0.31
2.77
1.12
6,318,701
(5,121)
(0.08)
5,112,747
(4,910)
(0.10)
5,937,814
(21,614)
(0.36)
8,234,923
14,553,624
74,175
69,054
0.90
0.47
7,263,156
12,375,903
24,401
19,491
0.34
0.16
7,790,682
137,645
13,728,496
116,031
1,938,906
1,153,667
3,092,573
1,782
7,670
9,452
9,641,674
38,554
22,805,949
334,646
32,447,623
373,200
43,679,522
141,557
8,568,989
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
42,417,354
45,669,470
(1,010,734)
1,789,988
1,232,193
3,022,181
2,487
507
2,994
9,980,365
48,607
23,319,951
351,578
33,300,316
400,185
49,365,484
145,586
9,417,502
168,910
58,782,986
314,496
66,686,589
598,484
46,772,112
1,133,478
113,458,701
1,731,962
175,473,987
825,641
100,705,062
1,705,297
276,179,049
2,530,938
0.14
0.04
0.10
0.49
1.51
1.20
0.29
1.79
0.54
0.90
2.42
1.53
0.47
1.69
0.92
2,115,629
1,815,906
3,931,535
16,330
27,114
43,444
11,245,370
57,270
21,076,033
494,102
32,321,403
551,372
50,504,454
165,188
12,603,729
382,800
63,108,183
547,988
68,042,979
746,937
56,942,271
2,226,730
124,985,250
2,973,667
175,859,121
997,124
115,159,225
3,614,286
291,018,346
4,611,410
51,911,727
43,795,286
(1,297,725)
94,409,288
¥ 370,588,337
54,355,901
52,138,693
(1,361,071)
105,133,523
¥ 396,151,869
0.09
0.66
0.31
0.40
1.47
1.15
0.32
1.83
0.57
0.90
2.71
1.65
0.49
1.92
1.02
A-2
1.77
0.85
0.77
1.49
1.11
0.51
2.34
1.71
0.33
3.04
0.87
1.10
3.91
2.38
0.57
3.14
1.58
Total non-interest-earning assets
87,076,090
Total assets
¥ 355,992,571
Table of Contents
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 loans and loans modified into troubled debt restructurings. 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.
Fiscal years ended March 31,
2021
2022
2023
Average
balance
Interest
expense
Average
rate
Average
balance
Interest
expense
Average
rate
Average
balance
Interest
expense
Average
rate
(in millions, except percentages)
¥ 135,662,556 ¥
35,308
0.03 % ¥ 142,382,405 ¥
34,432
0.02 % ¥ 143,977,238 ¥ 100,837
0.07 %
47,092,772
294,084
182,755,328
329,392
0.62
0.18
48,644,527
182,159
191,026,932
216,591
0.37
0.11
54,856,782
1,069,318
198,834,020
1,170,155
1.95
0.59
2,054,431
(536)
(0.03)
1,756,392
(259)
(0.01)
2,876,551
(238)
(0.01)
218,895
2,273,326
15,408,367
10,715,710
26,124,077
1,641
1,105
40,346
47,998
88,344
0.75
0.05
0.26
0.45
0.34
357,691
2,114,083
15,565,212
10,153,952
25,719,164
(85)
(0.01)
3,249
3,164
4.92
0.46
362,987
80,008
442,995
944
685
20,883
6,226
27,109
402
4,066
4,468
0.26
0.03
0.13
0.06
0.11
0.11
5.08
1.01
156,406
3,032,957
4,021
3,783
20,895,775
308,826
10,566,506
169,171
31,462,281
477,997
451,216
50,939
502,155
486
687
1,173
2.57
0.12
1.48
1.60
1.52
0.11
1.35
0.23
(85)
(0.01)
1,232,999
(76)
(0.01)
1,414,564
(439)
(0.03)
18,869
18,784
0.56
0.43
3,181,684
4,414,683
4,980
4,904
0.16
0.11
4,863,555
130,175
6,278,119
129,736
2.68
2.07
622,100
66,076
688,176
1,027,741
3,376,101
4,403,842
14,997,400
2,833,046
17,830,446
26,549
27,070
53,619
29,205,636
181,679
2,632,097
71,815
31,837,733
253,494
198,978,231
283,176
66,934,697
464,726
265,912,928
747,902
74,398,116
15,681,527
¥ 355,992,571
0.18
0.96
0.30
0.62
2.73
0.80
0.14
0.69
0.28
18,302,064
3,016,333
21,318,397
27,177
19,897
47,074
32,236,949
194,458
2,486,297
65,068
34,723,246
259,526
211,839,008
277,017
67,920,492
283,340
279,759,500
560,357
0.15
0.66
0.22
0.60
2.62
0.75
0.13
0.42
0.20
14,486,918
3,777,939
18,264,857
31,123
27,939
59,062
34,480,413
331,588
2,022,887
48,502
36,503,300
380,090
218,582,675
772,183
76,295,014
1,449,813
294,877,689
2,221,996
0.21
0.74
0.32
0.96
2.40
1.04
0.35
1.90
0.75
74,559,613
16,269,224
¥ 370,588,337
84,973,687
16,300,493
¥ 396,151,869
¥ 2,004,094
0.74 %
¥ 1,970,581
0.72 %
¥ 2,389,414
0.83 %
0.75 %
0.71 %
0.82 %
Liabilities and equity:
Interest-bearing liabilities:
Deposits:
Domestic
Foreign
Total
Call money and funds purchased:
Domestic
Foreign
Total
Payables under repurchase agreements:
Domestic
Foreign
Total
Payables under securities lending
transactions:
Domestic
Foreign
Total
Commercial paper:
Domestic
Foreign
Total
Due to trust account, other short-term
borrowings and trading account
liabilities:
Domestic
Foreign
Total
Long-term debt:
Domestic
Foreign
Total
Total interest-bearing liabilities:
Domestic
Foreign
Total
Non-interest-bearing liabilities
Total equity
Total liabilities and equity
Net interest income and interest rate spread
Net interest income as a percentage of total
interest-earning assets
The percentage of total average assets attributable to foreign activities was 33.6%, 32.5% and 35.3% respectively, for the fiscal
years ended March 31, 2021, 2022 and 2023.
A-3
Table of Contents
The percentage of total average liabilities attributable to foreign activities was 33.8%, 32.8% and 35.2%, respectively, for the
fiscal years ended March 31, 2021, 2022 and 2023.
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, 2022 compared to the fiscal year ended March 31, 2021, and the fiscal year ended March 31, 2023 compared to
the fiscal year ended March 31, 2022.
Interest income:
Interest-earning deposits in other banks:
Domestic
Foreign
Total
Call loans and funds sold:
Domestic
Foreign
Total
Receivables under resale agreements:
Domestic
Foreign
Total
Receivables under securities borrowing transactions:
Domestic
Foreign
Total
Trading account assets:
Domestic
Foreign
Total
Investment securities(2)
：
Domestic
Foreign
Total
Loans:
Domestic
Foreign
Total
Total interest income:
Domestic
Foreign
Total
Fiscal year ended March 31, 2021
versus
fiscal year ended March 31, 2022
Fiscal year ended March 31, 2022
versus
fiscal year ended March 31, 2023
Increase (decrease)
due to changes in
Rate(1)
Volume(1)
Increase (decrease)
due to changes in
Rate(1)
Volume(1)
Net change
Net change
(in millions)
¥
2,959 ¥
(1,047) ¥
1,912 ¥
(3,790) ¥
(2,199) ¥
(5,989)
4,938
7,897
(6,013)
(7,060)
(1,075)
837
66
(1,098)
(1,032)
(111)
840
729
(45)
(258)
(303)
4,265
475
7
2,789
2,796
303,386
301,187
307,651
301,662
3,608
9,032
12,640
3,615
11,821
15,436
1,069
(858)
211
(913)
(15,791)
(16,704)
(7,884)
(41,890)
(49,774)
(6,815)
(42,748)
(49,563)
1,899
986
111,345
95,554
113,244
96,540
(146)
489
343
1,395
7,635
9,030
17,447
15,267
32,714
851
(7,652)
(6,801)
8,658
9,297
17,955
(13,418)
(3,060)
(16,478)
705
(7,163)
(6,458)
10,053
16,932
26,985
4,029
12,207
16,236
531
352
883
6,368
(36,604)
(30,236)
3,423
70,141
73,564
13,312
26,255
39,567
2,295
179,128
181,423
16,179
143,749
159,928
13,843
26,607
40,450
8,663
142,524
151,187
19,602
213,890
233,492
(18,839)
(1,355)
(20,194)
12,400
136,053
148,453
(54,601)
(133,997)
(188,598)
286,034
807,218
1,093,252
(73,440)
(135,352)
(208,792)
298,434
943,271
1,241,705
3,951
(7,280)
(3,329)
18,026
153,457
171,483
(35,254)
(182,475)
(217,729)
328,876
1,580,113
1,908,989
¥
(31,303) ¥ (189,755) ¥ (221,058) ¥ 346,902 ¥ 1,733,570 ¥ 2,080,472
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
Table of Contents
Interest expense:
Deposits:
Domestic
Foreign
Total
Call money and funds purchased:
Domestic
Foreign
Total
Payables under repurchase agreements:
Domestic
Foreign
Total
Payables under securities lending transactions:
Domestic
Foreign
Total
Commercial paper:
Domestic
Foreign
Total
Due to trust account, other short-term borrowings and
trading account liabilities:
Domestic
Foreign
Total
Long-term debt:
Domestic
Foreign
Total
Total interest expense:
Domestic
Foreign
Total
Net interest income:
Domestic
Foreign
Total
Fiscal year ended March 31, 2021
versus
fiscal year ended March 31, 2022
Fiscal year ended March 31, 2022
versus
fiscal year ended March 31, 2023
Increase (decrease)
due to changes in
Rate(1)
Volume(1)
Increase (decrease)
due to changes in
Rate(1)
Volume(1)
Net change
Net change
(in millions)
¥
1,698 ¥
(2,574) ¥
(876) ¥
390 ¥
66,015 ¥
66,405
9,395
(121,320)
(111,925)
11,093
(123,894)
(112,801)
26,146
26,536
861,013
927,028
887,159
953,564
69
708
777
208
(1,405)
(1,197)
277
(697)
(420)
407
(19,870)
(19,463)
(2,392)
(39,380)
(41,772)
(1,985)
(59,250)
(61,235)
21
705
726
466
112
578
487
817
1,304
(15)
24
9
(1,029)
(12,860)
(13,889)
(1,044)
(12,836)
(13,880)
(122)
(812)
(934)
9,520
263
9,783
95
(1,118)
(1,023)
(13)
3,979
3,966
143
3,889
4,032
278,423
162,682
441,105
21
3,077
3,098
287,943
162,945
450,888
(11)
(2,261)
(2,272)
84
(3,379)
(3,295)
(350)
(363)
121,216
120,866
125,195
124,832
5,305
1,657
6,962
(4,677)
(8,830)
(13,507)
628
(6,470)
(7,173)
(6,545)
5,435
(1,035)
10,416
2,607
13,023
3,946
8,042
11,988
18,414
(5,635)
12,779
14,376
122,754
137,130
(3,885)
14,529
(2,862)
(8,497)
(6,747)
(11,427)
(5,139)
(16,566)
6,032
2,949
117,615
120,564
25,899
(32,058)
(6,159)
5,159
(186,545)
(181,386)
17,776
22,466
477,390
495,166
1,144,007
1,166,473
¥
31,058 ¥ (218,603) ¥ (187,545) ¥
40,242 ¥
1,621,397 ¥ 1,661,639
¥
(21,948) ¥
24,778 ¥
2,830 ¥
250 ¥
(323,933) ¥
(323,683)
(40,413)
4,070
(36,343)
306,410
436,106
742,516
¥
(62,361) ¥
28,848 ¥
(33,513) ¥ 306,660 ¥
112,173 ¥
418,833
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
Table of Contents
II. Investments in Debt Securities
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, 2023. 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:
Japanese national government and Japanese
government agency bonds
Japanese prefectural and municipal bonds
Foreign government and official institution
bonds
Corporate bonds
¥ 20,439,073
0.00 % ¥ 2,746,984
0.07 % ¥
478,541
0.35 % ¥ 2,382,005
0.55 % ¥ 26,046,603
0.07 %
294,617
0.27
1,627,564
0.17
837,760
0.13
—
—
2,759,941
0.17
562,166
1.92
1,725,065
2.69
635,511
3.17
—
—
2,922,742
2.65
194,127
0.47
663,968
0.59
193,721
0.49
6,345
0.58
1,058,161
0.55
Residential mortgage-backed securities
—
—
6,651
0.41
86,863
0.29
1,016,740
0.21
1,110,254
0.21
Asset-backed securities
Other debt securities
Total
332,953
3.01
1,050,555
2.51
46,807
0.67
—
—
1,430,315
2.57
303,714
0.40
96,221
4.41
983
0.31
11,868
0.17
412,786
1.35
¥ 22,126,650
0.11 % ¥ 7,917,008
1.09 % ¥ 2,280,186
1.11 % ¥ 3,416,958
0.45 % ¥ 35,740,802
0.43 %
Held-to-maturity debt securities:
Japanese national government and Japanese
government agency bonds
Japanese prefectural and municipal bonds
Corporate bonds
Residential mortgage -backed securities
Asset-backed securities
Total
¥
602,851
0.20 % ¥ 9,458,590
0.09 % ¥ 3,778,663
0.25 % ¥
20,353
1.02 % ¥ 13,860,457
0.14 %
—
—
—
—
—
—
—
—
46,730
0.39
—
—
—
—
448,524
0.13
696,301
0.33
—
—
—
—
—
—
—
—
1,144,825
0.25
46,730
0.39
3,913,346
4.53
3,913,346
4.53
1,668,563
4.28
886,160
6.01
2,554,723
4.88
¥
602,851
0.20 % ¥ 9,953,844
0.09 % ¥ 6,143,527
1.36 % ¥ 4,819,859
4.79 % ¥ 21,520,081
1.51 %
A-6
Table of Contents
III. Loan Portfolio
The following table shows the maturities of our loan portfolio at March 31, 2023:
Commercial
Domestic
Foreign
Residential
Card
Krungsri
Other
One year or less
One to five years
Five to 15 years
Over 15 years
Total
(in millions)
Maturity
¥ 26,064,531 ¥ 18,692,608 ¥
9,172,398 ¥
1,696,521 ¥ 55,626,058
20,858,775
17,069,934
679,793
292,296
2,473,756
175,354
3,827,703
5,227,704
5,192
2,275,789
2,798,337
1,765,121
648,163
612,546
53,987
433,260
42,189,672
4,493,602
12,874,855
—
943,388
95,714
472,842
7,782,635
1,410,410
Total
¥ 50,819,347 ¥ 41,822,535 ¥ 20,052,105 ¥
7,662,485 ¥ 120,356,472
Unearned income, unamortized premiums—net
and deferred loan fees—net
Total
(401,012)
¥ 119,955,460
The above loans due after one year which had predetermined interest rates and floating or adjustable interest rates at March 31,
2023 are shown below:
Commercial
Domestic
Foreign
Residential
Card
Krungsri
Other
Total
Predetermined
rate
Floating or
adjustable rate
Total
(in millions)
¥ 19,063,208 ¥ 10,498,319 ¥ 29,561,527
1,085,413
2,174,635
180,546
20,245,484
21,330,897
10,020,427
12,195,062
—
180,546
2,907,512
2,599,334
5,506,846
570,206
192,041
762,247
¥ 25,981,520 ¥ 43,555,605 ¥ 69,537,125
A-7
Table of Contents
IV. Allowance for Credit Losses
The following table shows an allocation of our allowance for credit losses, credit ratios, and components for ratio calculations at
March 31, 2022 and 2023:
Commercial
Domestic
Foreign
Residential
Card
MUAH
Krungsri
Other
2022
% of
loans in
each
category
to total
loans
Amount
(in millions, except percentages)
¥
659,601
274,485
69,887
40,768
30,365
322,386
73,209
47.63%
30.83
11.72
0.41
2.48
6.01
0.92
Allowance for credit losses Total
¥
1,470,701
100.00%
Loans, net of unearned income, unamortized premiums and deferred loan fees
¥ 113,149,393
Nonaccrual loans
Allowance for credit losses as a percentage of loans
Nonaccrual loans as a percentage of loans
Allowance for credit losses as a percentage of Nonaccrual loans
¥
1,192,775
1.30 %
1.05 %
123.30 %
Commercial
Domestic
Foreign
Residential
Card
Krungsri
Other
2023
% of
loans in
each
category
to total
loans
Amount
(in millions, except percentages)
¥
392,723
326,866
59,747
42,469
358,031
93,062
46.22%
35.05
10.70
0.39
6.47
1.17
Allowance for credit losses Total
¥
1,272,898
100.00%
Loans, net of unearned income, unamortized premiums and deferred loan fees
¥ 119,955,460
Nonaccrual loans
Allowance for credit losses as a percentage of loans
Nonaccrual loans as a percentage of loans
Allowance for credit losses as a percentage of Nonaccrual loans
¥
1,014,338
1.06 %
0.85 %
125.49 %
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Table of Contents
The following table shows ratio of net charge-offs to average loans outstanding for the fiscal years ended March 31, 2021, 2022
and 2023:
Fiscal years ended March 31,
2021
Average
loans
outstanding
Net
charge-offs
Ratio
Net
charge-offs
2022
Average
loans
outstanding
Ratio
(in millions, except percentages)
¥
12,059 ¥ 54,596,412
0.02% ¥
24,299 ¥ 53,231,613
0.05%
56,583
32,307,809
2,732
13,662,900
23,101
525,334
36,014
9,232,029
69,777
6,290,791
45,158
1,022,708
0.18
0.02
4.40
0.39
1.11
4.42
21,651
30,604,489
2,107
12,967,432
18,922
487,509
9,676
8,774,764
60,584
6,388,121
42,058
1,004,773
0.07
0.02
3.88
0.11
0.95
4.19
¥
245,424 ¥ 117,637,983
0.21% ¥
179,297 ¥ 113,458,701
0.16%
Fiscal years ended March 31,
2023
Average
loans
outstanding
Ratio
Net
charge-offs
(in millions, except percentages)
¥
128,300 ¥ 54,556,136
0.24 %
11,696
41,259,989
629
13,020,801
17,535
466,042
70,032
7,319,483
31,416
8,362,799
0.03
0.00
3.76
0.96
0.38
¥
259,608 ¥ 124,985,250
0.21 %
Commercial
Domestic
Foreign
Residential
Card
MUAH
Krungsri
Other
Total
Commercial
Domestic
Foreign
Residential
Card
Krungsri
Other
Total
A-9
Table of Contents
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, 2021, 2022 and 2023:
Fiscal years ended March 31,
2021
2022
2023
Average
amount
Average
rate
Average
amount
Average
rate
Average
amount
Average
rate
(in millions, except percentages)
Domestic offices:
Non-interest-bearing demand deposits
¥ 29,531,551
—% ¥ 32,195,640
—% ¥ 34,108,393
—%
Interest-bearing demand deposits
Deposits at notice
Time deposits
Certificates of deposit
Foreign offices:
93,175,326
1,575,097
39,404,132
1,508,001
0.01
0.00
0.07
0.01
100,484,992
1,666,104
38,602,335
1,628,974
0.01
0.00
0.07
0.01
103,411,286
1,556,368
36,563,214
2,446,370
0.06
0.03
0.11
0.01
Non-interest-bearing demand deposits
5,654,123
—
4,627,968
—
2,909,735
—
Interest-bearing deposits, principally time
deposits and certificates of deposit
Total
47,092,772
0.62
48,644,527
0.37
54,856,782
1.95
¥ 217,941,002
¥ 227,850,540
¥ 235,852,148
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,
2021, 2022 and 2023 were ¥720,283 million, ¥757,724 million and ¥945,588 million, respectively.
At March 31, 2022 and 2023, our uninsured deposits were ¥138,119 billion and ¥147,197 billion, respectively. Our uninsured
deposits consist of (1) the portion of deposits in domestic offices that are in excess of the limit stipulated by the Deposit Insurance Act
in Japan and (2) deposits that are otherwise uninsured (including for example, uninsured account deposits in domestic offices,
uninsured account deposits in foreign offices, or the portion of deposits in foreign offices that are in excess of any country-specific
insurance fund limit). Under the Deposit Insurance Act in Japan, the maximum amount of protection is ¥10 million per customer
within one bank. The ¥10 million maximum applies to all deposits in domestic offices, 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. Domestic office's deposits in settlement accounts are fully protected without a maximum amount limitation.
Certain types of deposits in domestic offices are not covered by the deposit insurance system, such as foreign currency deposits and
negotiable certificates of deposit.
At March 31, 2023, (1) the portion of time deposits in domestic offices that are in excess of the limit stipulated by the Deposit
Insurance Act in Japan and (2) time deposits that are otherwise uninsured (including for example, uninsured account time deposits in
domestic offices, uninsured account time deposits in foreign offices, or the portion of time deposits in foreign offices that are in excess
of any country-specific insurance fund limit), by remaining maturity, are shown in the following table:
Portion of time deposits
in domestic offices that are in
excess of the limit stipulated by
the Deposit Insurance Act
in Japan
Time deposits
that are
otherwise uninsured
(in millions)
Three months or less
Over three months through six months
Over six months through twelve months
Over twelve months
Total
¥
¥
5,547,682 ¥
25,186,766 ¥
4,071,479
9,473,145
4,099,389
5,322,334
3,551,711
1,014,655
23,191,695 ¥
35,075,466 ¥
Total
30,734,448
9,393,813
13,024,856
5,114,044
58,267,161
A-10
Table of Contents
CONSOLIDATED FINANCIAL STATEMENTS
INDEX
Report of Independent Registered Public Accounting Firm (PCAOB ID No.1044)
Consolidated Balance Sheets as of March 31, 2022 and 2023
Consolidated Statements of Operations for the Fiscal Years ended March 31, 2021, 2022 and 2023
Consolidated Statements of Comprehensive Income for the Fiscal Years ended March 31, 2021, 2022 and 2023
Consolidated Statements of Equity for the Fiscal Years ended March 31, 2021, 2022 and 2023
Consolidated Statements of Cash Flows for the Fiscal Years ended March 31, 2021, 2022 and 2023
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 Borrowings
17. Preferred Stock
18. Common Stock and Capital Surplus
19. Retained Earnings, Legal Reserve and Dividends
20. Accumulated Other Comprehensive Income (Loss)
21. Regulatory Capital Requirements
22. Earnings (Loss) per Common Share Applicable to Common Shareholders of MUFG
23. Derivative Financial Instruments
24. Obligations Under Guarantees and Other Off-balance Sheet Instruments
25. Variable Interest Entities
26. Contingent Liabilities
27. Fees and Commissions Income
28. Trading Account Profits and Losses
29. Business Segments
30. Foreign Activities
31. Fair Value
32. Parent Company Only Financial Information
33. Subsequent Events
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Table of Contents
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, 2022 and 2023, the
related consolidated statements of operations, comprehensive income, equity and cash flows for each of the three years in the period
ended March 31, 2023, 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,
2022 and 2023, and the results of its operations and its cash flows for each of the three years in the period ended March 31, 2023, 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, 2023, 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 24, 2023, expressed an unqualified opinion on the MUFG Group’s internal control over financial reporting.
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 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.
F-3
Table of Contents
Allowance for Credit Losses—Commercial and Krungsri Segments — Macroeconomic Variables in Multiple Economic Forecast
Scenarios and Weightings Given to Each Scenario—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
estimation of the allowance for credit losses involves significant judgments on a number of assumptions, including the assessment of
risk characteristics, assignment of a borrower’s internal credit rating, 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, Krungsri, and Other—and determines the allowance for credit losses for each segment. At March 31,
2023, the MUFG Group recorded ¥97,815.7 billion and ¥7,782.6 billion of loans in the Commercial segment and the Krungsri
segment, respectively, and recorded an allowance for credit losses against these loans of ¥719.6 billion and ¥358.0 billion,
respectively.
The allowance for credit losses is estimated using quantitative models that incorporate economic forecast scenarios. These
economic forecast scenarios include macroeconomic variables that have historically been correlated with historical credit losses. These
variables include, but are not limited to, unemployment rates and gross domestic product. As any one economic forecast scenario is
inherently uncertain, multiple economic forecast scenarios were leveraged. The macroeconomic variables in multiple economic
forecast scenarios and 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 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 arising mainly from the prolonged COVID-19 and Russia-
Ukraine situation, there was a particularly high degree of uncertainty necessitating subjective judgments to be made by management to
determine certain macroeconomic variables in the multiple economic forecast scenarios and the weightings given to each scenario.
Thus, we identified certain macroeconomic variables in the multiple economic forecast scenarios and the weightings given to
each scenario, which are used to determine the allowance for credit losses for the Commercial 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 macroeconomic variables in the multiple economic forecast scenarios and the weightings
given to each scenario used to determine the allowance for credit losses for the Commercial and the Krungsri segments included the
following, among others:
• We tested the effectiveness of controls, including the review and approval of certain macroeconomic variables in the multiple
economic forecast scenarios, and the review and approval of the weightings given to each scenario.
• We tested the effectiveness of controls over the completeness and accuracy of the key information used in performing the
aforementioned controls.
• With the assistance of our credit specialists, we evaluated the reasonableness of certain macroeconomic variables in the
multiple economic forecast scenarios, such as unemployment rate and gross domestic product, and the reasonableness of the
weightings given to each scenario by comparing to macroeconomic forecasts from available external sources.
F-4
Table of Contents
Allowance for Credit Losses—Commercial 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 Commercial and Krungsri segments required management to make
significant judgements due to the subjectivity and uncertainty associated with the development of qualitative adjustments. 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 primarily due to the prolonged COVID-19
and Russia-Ukraine situation.
Thus, we identified certain qualitative adjustments included in the allowance for credit losses for the Commercial and 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 included in the allowance for credit losses for the Commercial
and Krungsri segments included the following, among others:
• We tested the effectiveness of controls, including the review and approval of the quantitative models and methodologies, 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 key information used in performing the
aforementioned controls.
• With the assistance of our credit specialists, we evaluated the appropriateness of the quantitative models and methodologies
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 Rating—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 a borrower’s internal credit rating, 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 in the external and internal business environment, including the prolonged COVID-19 and Russia-Ukraine
situation, there was a particularly high degree of uncertainty necessitating subjective judgments to be made by management to
determine the borrowers’ internal credit rating.
Thus, for particular borrowers heavily impacted by the prolonged COVID-19 and Russia-Ukraine situation, we identified the
internal credit rating used to determine the allowance for credit losses for the Commercial segment as a critical audit matter. Auditing
the borrowers’ internal credit rating 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.
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Table of Contents
How the Critical Audit Matter Was Addressed in the Audit
Our audit procedures related to the internal credit rating 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 rating.
• We tested the effectiveness of controls over the completeness and accuracy of the key 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 rating and the appropriateness of the borrowers’ underlying information by comparing them with available relevant
external information.
/s/Deloitte Touche Tohmatsu LLC
Tokyo, Japan
July 24, 2023
We have served as the MUFG Group’s auditor since 1976.
F-6
Table of Contents
(in millions)
ASSETS
MITSUBISHI UFJ FINANCIAL GROUP, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
AS OF MARCH 31, 2022 AND 2023
Cash and due from banks (Note 9)
Interest-earning deposits in other banks (Note 9)
Cash, due from banks and interest-earning deposits in other banks
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 ¥8,857,073 and ¥11,407,569 in 2022 and 2023) (including ¥17,135,481 and
¥19,691,210 measured at fair value under the fair value option in 2022 and 2023) (Notes 9,
15, 23 and 31)
Investment securities (Notes 3, 9 and 31):
2022
2023
¥
50,972,491 ¥
60,050,640
58,848,056
53,989,863
109,820,547
114,040,503
1,315,761
1,802,463
12,503,396
14,058,963
4,496,376
4,555,748
42,668,336
46,168,461
Available-for-sale debt securities (including assets pledged that secured parties are permitted
to sell or repledge of ¥3,151,799 and ¥6,277,947 in 2022 and 2023)
45,798,442
35,740,802
Held-to-maturity debt securities (including assets pledged that secured parties are permitted to
sell or repledge of ¥148,763 and ¥8,264,085 in 2022 and 2023) (fair value of ¥4,606,305
and ¥21,386,156 in 2022 and 2023)
Equity securities (including assets pledged that secured parties are permitted to sell or
repledge of ¥741 and ¥724 in 2022 and 2023) (including ¥5,111,630 and ¥4,619,120 in
2022 and 2023 measured at fair value)
Total investment securities
Loans, net of unearned income, unamortized premiums and deferred loan fees (including assets
pledged that secured parties are permitted to sell or repledge of ¥167,152 and ¥144,288 in
2022 and 2023) (Notes 4 and 9)
Allowance for credit losses (Note 4)
Net loans
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 (including assets held for sale relating to transferred business of MUFG Union
Bank of ¥11,621,567 at March 31, 2022) (including net of allowance for credit losses of
¥13,998 and ¥15,918 at March 31, 2022 and 2023) (Notes 2, 7, 8, 9, 13, 14 and 31)
Total assets
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
Total assets of consolidated VIEs
4,595,109
21,520,081
5,422,200
5,001,048
55,815,751
62,261,931
113,149,393
119,955,460
(1,470,701)
(1,272,898)
111,678,692
118,682,562
815,829
371,034
1,148,601
303,611
860,578
378,525
1,174,223
296,772
26,712,084
17,455,004
¥ 367,650,018 ¥ 381,735,733
¥
6,728 ¥
27,382
1,252,308
1,824,892
8,243
52,031
1,367,928
2,076,737
15,651,462
16,598,585
195,795
998,096
¥
18,958,567 ¥
21,101,620
F-7
Table of Contents
MITSUBISHI UFJ FINANCIAL GROUP, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS—(Continued)
AS OF MARCH 31, 2022 AND 2023
(in millions, except shares)
LIABILITIES AND EQUITY
Deposits (Notes 9 and 10):
Domestic offices:
Non-interest-bearing
Interest-bearing
Overseas offices:
Non-interest-bearing
Interest-bearing
Total deposits
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 ¥123,028 and ¥49,555
measured at fair value under the fair value option in 2022 and 2023) (Notes 9, 12 and 31)
Trading account liabilities (Notes 15, 23 and 31)
Bank acceptances outstanding
Long-term debt (including ¥483,051 and ¥431,338 measured at fair value under the fair value
option in 2022 and 2023) (Notes 7, 9, 12 and 31)
Other liabilities (including liabilities held for sale relating to transferred business of MUFG
2022
2023
¥
33,584,539 ¥
35,186,603
144,412,415
147,716,037
2,911,513
2,617,346
43,681,476
49,756,795
224,589,943
235,276,781
2,416,313
3,437,614
27,725,612
40,132,459
1,021,887
1,137,693
22,850,600
11,019,046
371,034
14,309,258
14,178,275
378,525
34,696,599
39,071,755
Union Bank of ¥11,157,660 at March 31, 2022) (Notes 1, 2, 7, 8, 9, 13, 14, 15, 16, 26 and 31)
26,662,462
17,347,206
Total liabilities
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, 13,281,995,120 shares and 12,687,710,920 shares at March 31, 2022 and
2023, 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—668,286,238 common shares and 665,392,775 common shares at
March 31, 2022 and 2023
Total Mitsubishi UFJ Financial Group shareholders’ equity
Noncontrolling interests
Total equity
Total liabilities and equity
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
Total liabilities of consolidated VIEs
351,353,496
365,269,566
2,090,270
5,327,772
2,090,270
4,902,155
239,571
8,172,646
227,033
239,571
8,169,710
844,192
(452,224)
(482,552)
15,605,068
15,763,346
691,454
702,821
16,296,522
16,466,167
¥ 367,650,018 ¥ 381,735,733
¥
39,582 ¥
449,231
95,219
¥
584,032 ¥
45,432
406,429
163,075
614,936
See the accompanying notes to Consolidated Financial Statements.
F-8
MITSUBISHI UFJ FINANCIAL GROUP, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
FOR THE FISCAL YEARS ENDED MARCH 31, 2021, 2022 AND 2023
Table of Contents
(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 transactions
Total
Interest expense:
Deposits
Call money and funds purchased
Payables under repurchase agreements and securities lending transactions
Due to trust account, other short-term borrowings and trading account liabilities
Long-term debt
Total
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—net (Note 28)
Trading account losses—net (Notes 28 and 31)
Investment securities gains (losses)—net (Note 3)
Equity in earnings of equity method investees—net (Note 14)
Gains (losses) on sales of loans including valuation adjustment for loans held for sale (Note 4)
Gain on sale of MUFG Union Bank (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
Impairment (reversal of impairment) of assets held for sale (Note 2)
Loss on valuation adjustment for loans held for sale held by MUFG Union Bank (Note 2)
Other non-interest expenses (Notes 5 and 26)
Total
F-9
2021
2022
2023
¥
1,940,754 ¥
1,731,962 ¥
2,973,667
56,555
57,392
359,054
178,873
119,387
373,200
4,721
78,506
180,959
133,537
400,185
4,418
22,485
401,935
146,053
551,372
19,854
159,475
2,751,996
2,530,938
4,611,410
329,392
216,591
1,170,155
1,105
91,508
72,403
253,494
747,902
685
31,577
51,978
259,526
560,357
3,783
479,170
188,798
380,090
2,221,996
2,004,094
1,970,581
2,389,414
484,210
277,995
8,148
1,519,884
1,692,586
2,381,266
1,527,283
1,658,863
1,701,637
99,337
106,868
25,232
(410,368)
(824,420)
(792,098)
1,458,264
(119,026)
(254,178)
355,730
17,926
—
436,583
16,600
—
109,615
119,321
398,086
(34,039)
557,954
92,828
3,157,787
1,394,789
1,695,422
1,253,461
1,277,408
1,343,631
178,107
318,797
298,777
87,305
250,106
21,680
90,529
59,798
97,783
147,564
(56,749)
—
—
322,171
165,323
310,861
317,995
82,652
261,026
33,301
95,551
57,369
99,659
—
46,339
134,141
3,165
261,312
162,204
340,141
351,323
73,793
274,380
5,151
74,334
58,375
100,291
33,553
20,747
(134,141)
282,540
433,632
3,069,329
3,146,102
3,419,954
Table of Contents
MITSUBISHI UFJ FINANCIAL GROUP, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS—(Continued)
FOR THE FISCAL YEARS ENDED MARCH 31, 2021, 2022AND 2023
(in millions, except per share amount)
Income (loss) before income tax expense (benefit)
Income tax expense (benefit) (Note 8)
Net income (loss) before attribution of noncontrolling interests
Net income attributable to noncontrolling interests
Net income (loss) attributable to Mitsubishi UFJ Financial Group
Earnings (loss) applicable to common shareholders of Mitsubishi UFJ Financial Group
Earnings (loss) per common share applicable to common shareholders of Mitsubishi UFJ Financial
Group (Notes 19 and 22):
Basic earnings (loss) per common share—Earnings (loss) applicable to common shareholders of Mitsubishi
UFJ Financial Group
Diluted earnings (loss) per common share—Earnings (loss) 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
2021
1,608,342
444,948
1,163,394
46,096
2022
2023
(58,727)
(14,511)
(44,216)
39,104
656,734
26,413
630,321
30,413
¥
¥
1,117,298 ¥
(83,320) ¥
599,908
1,117,298 ¥
(83,320) ¥
599,908
¥
86.88 ¥
(6.51) ¥
48.70
86.56
25.00
12,860
12,860
(6.93)
26.00
12,798
12,798
48.39
30.50
12,318
12,319
See the accompanying notes to Consolidated Financial Statements.
F-10
Table of Contents
MITSUBISHI UFJ FINANCIAL GROUP, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
FOR THE FISCAL YEARS ENDED MARCH 31, 2021, 2022 AND 2023
(in millions)
Net income (loss) before attribution of noncontrolling interests
2021
2022
2023
¥ 1,163,394 ¥
(44,216) ¥
630,321
Other comprehensive income, net of tax (Note 20):
Net unrealized 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 noncontrolling interests
(70,776)
(261,493)
(220,772)
(83,364)
23,324
32,175
319,056
(12,774)
50,949
(115,251)
752,479
81,840
552,485
17,806
5,398
7,262
847,705
657,399
1,245,234
508,269
1,287,720
46,096
(49,062)
39,104
35,971
30,413
19,949
Comprehensive income attributable to Mitsubishi UFJ Financial Group
¥ 1,248,200 ¥
433,194 ¥ 1,237,358
See the accompanying notes to Consolidated Financial Statements.
F-11
Table of Contents
MITSUBISHI UFJ FINANCIAL GROUP, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF EQUITY
FOR THE FISCAL YEARS ENDED MARCH 31, 2021, 2022 AND 2023
2021
2022
2023
¥ 2,090,270 ¥ 2,090,270 ¥ 2,090,270
¥ 2,090,270 ¥ 2,090,270 ¥ 2,090,270
¥ 5,533,520 ¥ 5,533,761 ¥ 5,327,772
(6,022)
1,555
2,762
—
(204,456)
(418,098)
(2,521)
(1,497)
¥ 5,533,761 ¥ 5,327,772 ¥ 4,902,155
(3,088)
¥
¥
239,571 ¥
239,571 ¥
239,571 ¥
239,571 ¥
239,571
239,571
¥ 8,079,530 ¥ 8,589,900 ¥ 8,172,646
599,908
(83,320)
1,117,298
(321,089)
(333,934)
(379,571)
(1)
(285,838)
—
—
—
—
(223,273)
¥ 8,589,900 ¥ 8,172,646 ¥ 8,169,710
—
—
(in millions, except per share amount)
Capital stock (Notes 17 and 18):
Balance at beginning of fiscal year
Balance at end of fiscal year
Capital surplus (Note 18):
Balance at beginning of fiscal year
Stock-based compensation
Retirement of common stock
Other—net
Balance at end of fiscal year
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 (loss) attributable to Mitsubishi UFJ Financial Group
Cash dividends:
Common stock—¥25.00 per share in 2021, ¥26.00 per share in 2022, and
¥30.50 per share in 2023
Losses on sales of shares of treasury stock
Effect of adopting new guidance on measurement of credit losses on financial
instruments
Elimination of the difference in reporting periods of the transferred business
(Note 2)
Balance at end of fiscal year
F-12
Table of Contents
MITSUBISHI UFJ FINANCIAL GROUP, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF EQUITY—(Continued)
FOR THE FISCAL YEARS ENDED MARCH 31, 2021, 2022 AND 2023
(in millions)
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 measurement of credit losses on financial
instruments
Elimination of the difference in reporting periods of the transferred business (Note
2)
Balance at end of fiscal year
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 (increase) resulting from changes in interests in consolidated
subsidiaries, consolidated VIEs, and affiliated companies
Balance at end of fiscal year
Total Mitsubishi UFJ Financial Group shareholders’ equity
Noncontrolling interests:
Balance at beginning of fiscal year
Initial subscriptions of noncontrolling interests
Transactions between the consolidated subsidiaries and the related noncontrolling
interest shareholders
Decrease in noncontrolling interests related to deconsolidation of subsidiaries
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
Other—net
Balance at end of fiscal year
Total equity
2021
2022
2023
¥
(420,417) ¥
(289,481) ¥
227,033
130,902
516,514
637,450
34
—
—
—
—
(20,291)
¥
(289,481) ¥
227,033 ¥
844,192
¥
(505,987) ¥
(503,072) ¥
(452,224)
(20)
(158,529)
(450,376)
2,598
—
5,581
204,456
2,118
418,098
337
(660)
(168)
(503,072) ¥
¥
(482,552)
¥ 15,660,949 ¥ 15,605,068 ¥ 15,763,346
(452,224) ¥
¥
728,029 ¥
583,605 ¥
691,454
9,246
5,647
3,316
(96,335)
67,300
(22,430)
(14,468)
(23)
(80)
46,096
39,104
(10,174)
(9,925)
(2,489)
30,413
(6,523)
(25,626)
(18,784)
(49,062)
35,971
19,949
(25,330)
(63)
—
1
—
(939)
583,605 ¥
¥
702,821
¥ 16,244,554 ¥ 16,296,522 ¥ 16,466,167
691,454 ¥
See the accompanying notes to Consolidated Financial Statements.
F-13
Table of Contents
MITSUBISHI UFJ FINANCIAL GROUP, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE FISCAL YEARS ENDED MARCH 31, 2021, 2022 AND 2023
(in millions)
Cash flows from operating activities:
2021
2022
2023
Net income (loss) before attribution of noncontrolling interests
¥
1,163,394 ¥
(44,216) ¥
630,321
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)
Gain on sale of MUFG Union Bank (Note 2)
Impairment (reversal of impairment) of assets held for sale (Note 2)
Loss on valuation adjustment for loans held for sale held by MUFG Union Bank (Note 2)
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—net
Equity in earnings of equity method investees—net
Provision (benefit) for deferred income tax expense
337,411
147,564
21,680
—
—
—
484,210
2,804
(1,458,264)
59,614
5,002
(103,917)
(355,730)
266,273
343,678
—
33,301
—
134,141
3,165
277,995
(25,675)
119,026
72,672
(55,634)
(345,968)
(436,583)
(370,668)
Decrease (increase) in trading account assets, excluding foreign exchange contracts
1,351,570
4,143,581
348,173
33,553
5,151
(557,954)
(134,141)
282,540
8,148
47,740
254,178
51,514
(37,318)
(508,644)
(398,086)
(427,776)
(184,246)
Increase (decrease) in trading account liabilities, excluding foreign exchange contracts
(1,463,152)
(2,195,400)
2,740,193
Net decrease (increase) in collateral for derivative transactions
Net decrease (increase) in margin for listed derivative transactions
Decrease (increase) in cash collateral for the use of the Bank of Japan’s settlement infrastructure
Net increase in loans held for sale in the business transferred to U.S. Bancorp (Note 2)
Other—net
Net cash provided by (used in) operating activities
Cash flows from investing activities:
(421,781)
20,984
(33,292)
(824,720)
(103,568)
65,838
713,541
(136,057)
—
—
—
(1,499,485)
(269,437)
(245,067)
118,390
909,355
874,791
2,106,136
Proceeds from sales of Available-for-sale debt securities (including proceeds from debt securities
under the fair value option) (Note 3)
62,660,266
58,611,669
56,577,840
Proceeds from maturities of Available-for-sale debt securities (including proceeds from debt securities
under the fair value option) (Note 3)
43,245,884
36,056,569
32,907,726
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
(115,383,753)
(94,237,804)
(81,038,628)
605,781
565,012
127,815
(382,159)
(1,712,488)
(16,975,528)
Proceeds from sales and redemption of Equity securities (including proceeds from equity securities
under the fair value option)
1,903,784
2,212,801
2,857,748
Purchases of Equity securities (including purchases of equity securities under the fair value option)
(1,561,344)
(1,503,946)
(1,912,280)
Net decrease in cash from sale of MUB
Net cash paid for dispositions of certain business of MUAH
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
—
—
—
(1,711,764)
(724,428)
—
2,939,996
164,122
(1,496,724)
9,833,348
1,005,422
(1,297,909)
41,472
(116,707)
(250,061)
64,011
71,643
(14,802)
76,068
(102,964)
(264,038)
65,398
42,050
(16,608)
32,214
(116,367)
(272,534)
137,992
1,697
(34,917)
Net cash provided by (used in) investing activities
3,657,359
236,835
(12,213,619)
F-14
Table of Contents
MITSUBISHI UFJ FINANCIAL GROUP, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS—(Continued)
FOR THE FISCAL YEARS ENDED MARCH 31, 2021, 2022 AND 2023
(in millions)
Cash flows from financing activities:
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
Net cash provided by financing activities
Effect of exchange rate changes on cash and cash equivalents
Net increase in cash and cash equivalents
Cash and cash equivalents at beginning of fiscal year
Cash and cash equivalents:
2021
2022
2023
23,428,386
1,559,807
6,207,093
(8,523,347)
(939,069)
18,707,004
1,128,806
4,404,313
4,659,212
11,656,491
(8,456,081)
7,529,772
(11,360,120)
(5,466,007)
(4,168,619)
899
(20)
(321,024)
(6,523)
(22,566)
20,963,620
397,287
24,773,199
2,688
(158,529)
(333,844)
(25,626)
(385,778)
5,385,042
1,251,522
7,782,754
1,212
(450,376)
(379,490)
(18,784)
55,059
11,976,277
1,063,752
2,932,546
78,555,591
103,328,790
111,111,544
Cash, due from banks and interest-earning deposits in other banks
103,324,201
109,820,547
114,040,503
Restricted cash included in other assets
Cash and cash equivalents classified as assets held for sale included in other assets (Note 2)
Cash and cash equivalents at end of fiscal year
4,589
—
5,778
1,285,219
3,587
—
¥ 103,328,790 ¥ 111,111,544 ¥ 114,044,090
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)
Reclassification of assets and liabilities in transferred business of MUFG Union Bank to assets and liabilities
held for sale (Note 2)
Assets reclassified, excluding cash and cash equivalents
Liabilities reclassified
Dispositions of certain business of MUAH
Assets transferred, excluding cash and cash equivalents
Liabilities transferred
Sale of MUFG Union Bank (Note 2)
Assets sold, excluding cash and cash equivalents
Liabilities sold
Shares of U.S. Bancorp common stock received
Non-interest bearing note receivable from U.S. Bancorp
¥
879,917 ¥
596,453 ¥
1,942,163
124,705
220,139
453,869
3,487
50,564
4,055
48,095
11,066
35,678
—
—
—
—
—
—
—
—
10,336,348
11,157,660
4,477
758,654
—
—
—
—
—
—
—
—
11,501,815
13,127,973
276,099
396,601
See the accompanying notes to Consolidated Financial Statements.
F-15
Table of Contents
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. (“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”), 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 to conform with U.S. GAAP and therefore are not included in the consolidated
financial statements issued by MUFG in accordance with accounting principles generally accepted in Japan (“Japanese GAAP”) and
certain of its subsidiaries in accordance with the corresponding 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, 2021, 2022 and 2023, 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 ¥157.32 billion, a decrease of ¥60.64 billion, and an increase of ¥16.6 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, 2021, 2022 and 2023 which, if recorded, would have had material effects on consolidated total assets,
loans, total liabilities, deposits or total equity as of March 31, 2021, 2022 and 2023.
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.
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
F-16
Table of Contents
MITSUBISHI UFJ FINANCIAL GROUP, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS-(Continued)
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 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, 2021, 2022 and 2023, 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.
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MITSUBISHI UFJ FINANCIAL GROUP, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS-(Continued)
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 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
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.
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MITSUBISHI UFJ FINANCIAL GROUP, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS-(Continued)
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. The MUFG Americas Holdings segment was eliminated due to the transfer of the
MUFG Union Bank shares to U.S. Bancorp and the internal reorganization within the MUFG Group. Please refer to Note 2 and Note 4
for further information of the transfer.
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.
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
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MITSUBISHI UFJ FINANCIAL GROUP, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS-(Continued)
service their debt, taking into consideration current financial information, historical payment experience, credit documentation, public
information, analyses of relevant industry segments and 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.
For the allowance methodology, the MUFG Group uses quantitative models that incorporate economic forecast scenarios. These
economic forecast scenarios include macroeconomic variables that have historically been correlated with historical credit losses. These
variables include, but are not limited to, unemployment rates and gross domestic product. As any one economic forecast scenario is
inherently uncertain, multiple economic forecast scenarios were leveraged. The macroeconomic variables in multiple economic
forecast scenarios and 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 allowance for credit losses for TDR is measured using the discounted cash
flow method, or based on the fair value of the collateral if the loan is collateral dependent.
The allowance for credit losses includes qualitative adjustments to cover losses that are expected but were not reflected in the
modeled allowance. For example, factors that the MUFG considers include remaining time to maturity and extent of prepayments,
credit concentration, the volume and severity of past due, changes in lending policy and procedures, among others.
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 future economic conditions
arising mainly from the prolonged COVID-19 and Russia-Ukraine situation.
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.
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 remaining time to maturity and extent of prepayments, the volume and
severity of past due loans, changes in lending policy and 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 into a 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.
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Residential segment
MITSUBISHI UFJ FINANCIAL GROUP, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS-(Continued)
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 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 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 into a 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.
The allowance for loans that have been modified into a TDR or reasonably expected to be modified into a 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.
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 to cover losses that
are expected but not adequately captured in the quantitative forecasting model. 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 into a 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.
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MITSUBISHI UFJ FINANCIAL GROUP, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS-(Continued)
Loans to customers are charged off when they are determined to be uncollectible considering the financial condition of a
borrower.
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.
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.
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:
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MITSUBISHI UFJ FINANCIAL GROUP, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS-(Continued)
Software
Core deposit intangibles
Customer relationships
Trade names
Useful lives
(years)
Amortization method
3 to 10 Straight-line
9 to 16 Straight-line
7 to 27 Straight-line, Declining-balance
10 to 40 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.
Assets and Liabilities Held for Sale—The MUFG Group classifies assets and liabilities as held for sale (“disposal group”) when
management, having the authority to approve the action, commits to a plan to sell the disposal group and the sale is probable within
one year, actions required to complete the plan indicate that it is unlikely that significant changes to the plan will be made or that the
plan will be withdrawn, and the disposal group is available for immediate sale in its present condition subject only to terms that are
usual and customary for sales of such disposal groups. The disposal group is measured at the lower of carrying value or fair value less
costs to sell. Any loss resulting from the measurement is recognized in the period the held-for-sale criteria are met. Conversely, gains
are not recognized until the date of the sale. After being classified as held for sale, loans held for investment are transferred to loans
held for sale, carried at the lower of cost or fair value measured on a portfolio basis, and no allowance for loan losses is estimated.
After being classified as held for sale, held-to-maturity debt securities are transferred to securities available for sale and assets are not
depreciated or amortized.
In September 2021, the MUFG Group agreed to the sale of all shares in MUFG Union Bank, N.A., the wholly-owned primary
operating subsidiary in the United States, to U.S. Bancorp. As a result, the assets and liabilities of MUFG Union Bank, which were
transferred to U.S. Bancorp, were reclassified as held for sale, and included in Other assets and Other liabilities in the accompanying
consolidated balance sheets at March 31, 2022. See Note 2 for further discussion. Unless otherwise indicated, all other notes to the
consolidated financial statements do not include amounts of assets and liabilities held for sale.
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, recent trend of borrowers’ claims for
reimbursement, and management’s future forecasts. The allowance is recorded as a liability in Other liabilities.
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MITSUBISHI UFJ FINANCIAL GROUP, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS-(Continued)
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.
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.
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MITSUBISHI UFJ FINANCIAL GROUP, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS-(Continued)
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 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 (loss) 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 (loss) 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
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MITSUBISHI UFJ FINANCIAL GROUP, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS-(Continued)
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.
Reclassifications
Reclassifications have been made to the consolidated financial statements for the fiscal year ended March 31, 2022 to conform to
the presentation for the fiscal year ended March 31, 2023. These reclassifications consist of the presentation of “Loss on valuation
adjustment for loans held for sale held by MUFG Union Bank” as a new line item which had previously been presented in “Other non-
interest expenses” in the consolidated statement of operations and had been previously included in “Other-net” in the statement of cash
flows for the fiscal year ended March 31, 2022, respectively. These reclassifications did not result in a change to previously reported
financial position, results of operations or cash flows.
Accounting Changes
Accounting for Obligations to Safeguard Crypto-Assets an Entity Holds for Platform Users—In March 2022, the U.S. Securities
and Exchange Commission (“SEC”) issued Staff Accounting Bulletin No. 121 which expresses the views of the SEC staff regarding
the accounting for obligations to safeguard crypto-assets an entity holds for platform users. This guidance requires an entity that
performs crypto asset custodial activities, whether directly or through an agent acting on its behalf, to record a liability with a
corresponding asset. In addition, the guidance requires disclosure of the nature and amount of crypto assets the entity is responsible for
safeguarding for its customers. This guidance is effective for interim and annual periods ending after June 15, 2022. The MUFG
Group adopted this guidance on April 1, 2022, and there was no material impact on its financial position and results of operations.
Recently Issued Accounting Pronouncements
Troubled Debt Restructurings and Vintage Disclosures—In March 2022, the Financial Accounting Standards Board (“FASB”)
issued new guidance which eliminates the accounting and disclosure requirements for TDRs by creditors and introduces new required
disclosures for loan modifications made to borrowers experiencing financial difficulty. The guidance also amends the requirement for
vintage disclosures to disclose current period gross charge-offs by year of origination. This guidance is effective for fiscal years
beginning after December 15, 2022, including interim periods within those fiscal years. Early adoption is permitted, including
adoption in an interim period. The guidance should be applied prospectively, except for requirements related to the recognition and
measurement of TDRs, for which entities have the option to apply a modified retrospective transition method. The MUFG Group
adopted the guidance on April 1, 2023, using the modified retrospective transition method on the requirements related to the
recognition and measurement of TDRs, and there will be no material impact on its financial position and results of operations. The
allowance for modified loans will mainly be measured using a discounted cash flow methodology, that utilizes a discount rate that is
based on the post-modification contractual interest rate, other than those in the Card segment, for which the allowance will be
measured using collectively-assessed allowance methodology.
Fair Value Measurement of Equity Securities Subject to Contractual Sale Restrictions—In June 2022, the FASB issued new
guidance which clarifies the guidance when measuring the fair value of an equity security subject to contractual restrictions that
prohibit the sale of an equity security. The guidance also introduces new disclosure requirements for equity securities subject to
contractual sale restrictions that are measured at fair value. This guidance is effective for fiscal years beginning after December 15,
2023, including interim periods within those fiscal years. Early adoption is permitted, including adoption in an interim period. The
MUFG Group is currently evaluating what effect this guidance will have on its consolidated financial statements and related
disclosures.
2. BUSINESS DEVELOPMENTS
Sale of MUFG Union Bank and Investment in Shares of U.S. Bancorp
In September 2021, the MUFG Group agreed to the sale of all shares in MUFG Union Bank, N.A. (“MUFG Union Bank”), the
wholly-owned primary operating subsidiary in the United States, to U.S. Bancorp (“USB”), which is not a related party of the MUFG
Group. The businesses of MUFG Union Bank that the MUFG Group transferred to USB exclude the Global Corporate & Investment
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MITSUBISHI UFJ FINANCIAL GROUP, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS-(Continued)
Banking (GCIB) business (with certain exceptions as agreed to by the parties, including certain deposits of the GCIB business that
were retained by MUFG Union Bank), the Global Markets business to the extent related to the GCIB business and certain assets and
liabilities that are part of shared middle and back office functions. Under a legal agreement, the assets and liabilities of these
operations were transferred to other entities within the MUFG Group before it sold the shares of MUFG Union Bank. Through this
transaction, the MUFG Group aimed to maximize shareholder value by improving our capital efficiency. In addition, as of the end of
the reporting period (ended March 31, 2023), the corporate credit card business for GCIB business customers and certain Japanese
customers was expected to be transferred from MUFG Union Bank to MUFG Bank, subject to contractual conditions precedent. Such
transfer was completed subsequent to the reporting period.
The assets and liabilities of MUFG Union Bank, which were transferred to USB, were reclassified as held for sale, and included
in Other assets and Other liabilities in the accompanying consolidated balance sheets at March 31, 2022.
Assets and liabilities reclassified as held for sale at March 31, 2022 are shown below:
Assets held for sale:
Interest-earning deposits in other banks
Investment securities
Loans, net of allowance for credit losses
Other
Total
Liabilities held for sale:
Deposits
Other
Total
At March 31, 2022
(in millions)
¥
¥
¥
¥
1,110,633
3,188,257
6,561,316
761,361
11,621,567
10,448,481
709,179
11,157,660
The carrying amount of any assets that are not covered by the guidance on long-lived assets and included in the disposal group,
must be adjusted in accordance with other applicable guidance before measuring the disposal group by lower of cost or market
method. The loss amount, which was recognized through lower of cost or market method from the assets and liabilities held for sale,
was ¥134,141 million for the fiscal year ended March 31, 2022. Such amount, which included the fluctuation of the fair value related
to the transferred business from the date of the contract to March 31, 2022, is included in Impairment (reversal of impairment) of
assets held for sale in the consolidated statements of operations. However, the fair value less cost to sell exceeded the carrying value
during the first half of the fiscal year ended March 31, 2023, and the reversal of ¥134,141 million, which is included in Impairment
(reversal of impairment) of assets held for sale in the consolidated statements of operations, was recognized, and as a result, the
valuation allowance for assets held for sale which was included in Other Asset was fully reversed.
On December 1, 2022, the MUFG Group sold all the issued and outstanding shares of common stock of MUFG Union Bank to
USB for the agreed upon consideration, received ¥754.0 billion in cash and 44,374,155 shares, ¥276.1 billion, of USB common stock
representing approximately 3% of the outstanding shares subject to future closing adjustments. The MUFG Group will receive from
USB an additional ¥464.5 billion in cash within five years of the closing date, whose discounted present value at sale was ¥396.6
billion. Before the closing of the share transfer, MUFG Union Bank declared and paid a special dividend of approximately ¥636.8
billion to MUAH. The MUFG Group recorded a pretax gain on the sale of MUFG Union Bank of ¥557,954 million, net of cost to sell
the business. The gain was included in Gain on sale of MUFG Union Bank in the consolidated statements of operations for the fiscal
year ended March 31, 2023. The business of MUFG Union Bank that was transferred to USB had ¥13,935.6 billion in assets at sale,
including ¥2,251.3 billion of interest-earning deposits in other banks, ¥3,123.3 billion of investment securities, and ¥7,567.7 billion of
loans. The total amount of liabilities was ¥13,128.0 billion, including ¥11,789.9 billion of deposits. The pretax loss recorded for the
business transferred to USB was ¥52,021 million, ¥11,385 million and ¥506,329 million for the fiscal years ended March 31, 2021,
2022 and 2023, respectively. The cash receipts and cash payments for loans held for sale that were originated by MUFG Union Bank
during the current year, prior to the sale to USB, are presented within Net increase in loans held for sale in the business transferred to
U.S. Bancorp in the consolidated statement of cash flows for the fiscal year ended March 31, 2023. MUFG Union Bank's cash and
cash equivalents balance at sale was ¥2,433.8 billion, which when combined with ¥754.0 billion in cash received from USB and
certain adjustments resulted in a net decrease in cash and cash equivalents at sale of ¥1,711.8 billion.
F-27
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MITSUBISHI UFJ FINANCIAL GROUP, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS-(Continued)
As described in Note 1, 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. The fiscal year end of MUFG Union Bank is December 31 and the profit, loss and other
comprehensive income for the period from September 1, 2022 to November 30, 2022, which is the three-month lag period preceding
the sale date of December 1, 2022, are not reflected on the consolidated statements of operations and the consolidated statements of
comprehensive income for the fiscal year ended March 31, 2023, and instead have been recognized as direct adjustments to retained
earnings and accumulated other comprehensive income, respectively for the elimination of the difference in reporting periods of the
sold and transferred business. In addition, the assets and liabilities of the MUFG Union Bank operations that were transferred to other
entities within MUFG before the sale of MUFG Union Bank were transferred to MUFG entities with a fiscal year end of March 31,
which required the reporting lag associated with such transferred assets and liabilities to be eliminated. At the time of transfer, the
three months of activity immediately preceding the transfer were recognized directly in equity. The effects of the elimination of the
difference in reporting periods for the sale of MUFG Union Bank and transfer of such assets and liabilities prior to the sale resulted in
a net adjustment to unappropriated retained earnings of ¥223,273 million including Loss on valuation adjustment for loans held for
sale of ¥114,139 million and impairment of Investment securities losses of ¥143,408 million, and to accumulated other comprehensive
income (loss), net of taxes of ¥20,291 million, which is recorded in Elimination of the difference in reporting periods of the transferred
business in the consolidated statements of equity for the fiscal year ended March 31, 2023.
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, 2022 and 2023:
At March 31, 2022:
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
Asset-backed securities
Other debt securities
Commercial paper
Total
Held-to-maturity debt securities:
Amortized
cost
Gross
unrealized
gains
Gross
unrealized
losses
(in millions)
Fair value
¥ 34,383,131 ¥
77,144 ¥ 132,511
¥ 34,327,764
4,154,459
2,671,797
1,081,620
900,799
1,547,098
104,869
6,672
8,586
9,601
256
41,544
2,243
14,987
49,040
1,073
648
222
3,533
4,146,144
2,631,343
1,090,148
900,407
1,588,420
103,579
1,010,607
¥ 45,854,380 ¥
49
19
146,095 ¥ 202,033
1,010,637
¥ 45,798,442
Japanese national government and Japanese
government agency bonds
Japanese prefectural and municipal bonds
Residential mortgage-backed securities
Asset-backed securities
Total
¥
1,808,312 ¥
13,691 ¥
175,072
234,652
4
49
2,377,073
12,352
3,633
1,116
8,778
1,373
¥
1,818,370
173,960
225,923
2,388,052
¥
4,595,109 ¥
26,096 ¥
14,900
¥
4,606,305
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MITSUBISHI UFJ FINANCIAL GROUP, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS-(Continued)
At March 31, 2023:
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
¥ 26,153,862 ¥
16,510 ¥
123,769
¥ 26,046,603
Japanese prefectural and municipal bonds
Foreign government and official institution bonds
Corporate bonds
Residential mortgage-backed securities
Asset-backed securities
Other debt securities
Total
Held-to-maturity debt securities:
2,773,750
3,029,042
1,051,347
1,110,126
1,418,563
417,755
2,063
2,072
9,791
569
16,116
1,873
15,872
108,372
2,977
441
4,364
6,842
2,759,941
2,922,742
1,058,161
1,110,254
1,430,315
412,786
¥ 35,954,445 ¥
48,994 ¥
262,637
¥ 35,740,802
Japanese national government and Japanese government
agency bonds
¥ 13,860,457 ¥
32,927 ¥
19,789
¥ 13,873,595
Japanese prefectural and municipal bonds
Corporate bonds
Residential mortgage-backed securities
Asset-backed securities
Total
Contractual Maturities
1,144,825
46,730
3,913,346
2,554,723
2,473
213
13,606
19
7,808
3
105,754
49,809
1,139,490
46,940
3,821,198
2,504,933
¥ 21,520,081 ¥
49,238 ¥
183,163
¥ 21,386,156
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, 2023 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.
Due in one year or less
Due from one year to five years
Due from five years to ten years
Due after ten years
Total
Realized Gains and Losses
Held-to-maturity debt
securities
Amortized
cost
Fair value
(in millions)
Available-for-
sale
debt securities
Fair value
¥
602,851 ¥
604,679 ¥ 22,126,650
9,953,844
6,143,527
4,819,859
9,976,471
6,101,314
4,703,692
7,917,008
2,280,186
3,416,958
¥ 21,520,081 ¥ 21,386,156 ¥ 35,740,802
For the fiscal years ended March 31, 2021, 2022 and 2023, gross realized gains on sales of Available-for-sale debt securities
were ¥42,123 million, ¥85,525 million and ¥107,238 million, respectively, and gross realized losses on sales of Available-for-sale debt
securities were ¥48,606 million, ¥36,698 million and ¥169,686 million, respectively.
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MITSUBISHI UFJ FINANCIAL GROUP, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS-(Continued)
Impairment Losses on Investment Securities
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 operations
and were not material.
For the fiscal years ended March 31, 2022 and 2023, impairment losses on Available-for-sale debt securities of ¥47,281 million
and ¥359,330 million were included in Investment securities gains (losses)—net in the accompanying consolidated statements of
operations. These were mainly the impairment losses on the Available-for-sale debt securities held by MUFG Union Bank, which
were reclassified as held for sale, and included in Other assets in the accompanying consolidated balance sheets at March 31, 2022,
and then sold on December 1, 2022.
For the fiscal years ended March 31, 2021, 2022 and 2023, 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.
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, 2022 and
2023 by length of time that individual securities in each category have been in a continuous loss position:
At March 31, 2022:
Available-for-sale debt securities:
Japanese national government and Japanese
Less than 12 months
12 months or more
Gross
unrealized
losses
Fair value
Gross
unrealized
losses
Fair value
Fair value
Total
Gross
unrealized
losses
Number of
securities
(in millions, except number of securities)
government agency bonds
¥ 22,998,960 ¥
126,516 ¥
353,932 ¥
5,995 ¥ 23,352,892 ¥
132,511
Japanese prefectural and municipal bonds
2,430,603
14,864
31,139
123
2,461,742
14,987
Foreign government and official institution
bonds
Corporate bonds
Residential mortgage-backed securities
Asset-backed securities
Other debt securities
Commercial paper
1,376,267
31,470
427,739
178,857
115,695
44,128
367,043
925
58
222
3,526
19
167,446
94,364
391,265
—
1,089
—
17,570
1,543,713
148
590
—
7
—
522,103
570,122
115,695
45,217
367,043
49,040
1,073
648
222
3,533
19
486
926
87
173
12
12
4
30
Total
¥ 27,939,292 ¥
177,600 ¥ 1,039,235 ¥
24,433 ¥ 28,978,527 ¥
202,033
1,730
At March 31, 2023:
Available-for-sale debt securities:
Japanese national government and Japanese
Less than 12 months
12 months or more
Gross
unrealized
losses
Fair value
Gross
unrealized
losses
Fair value
Fair value
Total
Gross
unrealized
losses
Number of
securities
(in millions, except number of securities)
government agency bonds
¥ 7,644,337 ¥
8,066 ¥ 2,105,210 ¥
115,703 ¥ 9,749,547 ¥
123,769
Japanese prefectural and municipal bonds
962,234
1,781
711,896
14,091
1,674,130
15,872
Foreign government and official institution
bonds
Corporate bonds
Residential mortgage-backed securities
Asset-backed securities
Other debt securities
858,970
331,411
166,778
310,388
48,804
18,677
1,436,798
89,695
2,295,768
108,372
1,800
5
4,170
1,266
249,088
522,774
39,806
47,886
1,177
436
194
5,576
580,499
689,552
350,194
96,690
2,977
441
4,364
6,842
438
723
118
256
15
32
28
Total
¥ 10,322,922 ¥
35,765 ¥ 5,113,458 ¥
226,872 ¥ 15,436,380 ¥
262,637
1,610
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Table of Contents
MITSUBISHI UFJ FINANCIAL GROUP, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS-(Continued)
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, Japanese prefectural and municipal bonds, Foreign
government and official institution bonds
As of March 31, 2023, 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, 2023 and no impairment loss has been recorded.
Corporate bonds
As of March 31, 2023, 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, 2023, 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 March 31, 2023 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, 2023, 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, 2023
and no impairment loss has been recorded.
F-31
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Equity Securities
MITSUBISHI UFJ FINANCIAL GROUP, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS-(Continued)
The following table presents net realized gains (losses) on sales of equity securities, and net unrealized gains (losses) on equity
securities still held at March 31, 2021, 2022 and 2023:
2021
Fiscal years ended
March 31,
2022
(in millions)
2023
Net gains (losses) recognized during the period(1)
¥
1,467,763 ¥
(125,271) ¥
104,023
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
47,775
(38,042)
18,313
the reporting date
¥
1,419,988 ¥
(87,229) ¥
85,710
Note:
(1)
Included in Investment securities gains (losses)—net.
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, 2022 and 2023:
Measurement alternative balance
2022
2023
(in millions)
¥
310,570 ¥
381,928
The related adjustments for these securities for the fiscal years ended March 31, 2021, 2022 and 2023 were as follows:
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)
Notes:
(1)
Included in Investment securities gains (losses)—net.
Fiscal years ended
March 31,
2021
2022
2023
(in millions)
¥
¥
¥
(5,188) ¥
(4,299) ¥
(8,230)
— ¥
21,710 ¥
— ¥
3,067 ¥
(440)
5,090
(2) Under the measurement alternative, nonmarketable equity securities are carried at cost plus or minus changes resulting from observable 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, 2022 and 2023 were ¥12,354 million and ¥20,151 million respectively.
(5) The cumulative downward changes for observable prices at March 31, 2022 and 2023 were ¥954 million and ¥1,393 million, respectively.
(6) The cumulative upward changes for observable prices at March 31, 2022 and 2023 were ¥54,223 million and ¥59,069 million, respectively.
F-32
Table of Contents
MITSUBISHI UFJ FINANCIAL GROUP, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS-(Continued)
4. LOANS AND ALLOWANCE FOR CREDIT LOSSES
The MUFG Group classifies its loan portfolio into the following portfolio segments—Commercial, Residential, Card, MUAH,
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.
However, for the fiscal year ended March 2023, the MUAH segment is included in the Other segment in the respective tables,
because its importance as a segment declined as a result of the sale of MUFG Union Bank and an internal reorganization within the
MUFG Group. The reorganization involved the transfer of assets, including loans of ¥2,614,535 million from the MUAH segment to
the Commercial segment on November 14, 2022. See Note 2 for further information.
F-33
Table of Contents
MITSUBISHI UFJ FINANCIAL GROUP, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS-(Continued)
Total Outstanding Loans and Past Due Analysis
The table below presents total outstanding loans and past due analysis by class at March 31, 2022 and 2023.
At March 31, 2022:
1-3 months
Past Due
Greater
Than
3 months
Total
Past Due
Current
(in millions)
Loans
Held for Sale(1)
Total
Loans
Past Due 90 Days
and
Accruing
Commercial
Domestic
Foreign
Residential
Card
MUAH
Krungsri
Other
Total
Unearned income,
unamortized premiums
—net and deferred loan
fees—net
Total
¥
12,556 ¥
9,138 ¥
21,694 ¥ 53,953,767 ¥
69,257 ¥ 54,044,718 ¥
17,405
32,078
10,250
625
115,636
21,729
10,598
13,598
26,818
—
126,494
21,152
28,003
45,676
37,068
625
242,130
42,881
34,578,265
13,255,829
427,198
2,741,503
6,580,635
1,002,240
374,011
34,980,279
—
—
70,841
—
—
13,301,505
464,266
2,812,969
6,822,765
1,045,121
3,260
—
3,360
—
—
—
—
¥
210,279 ¥
207,798 ¥
418,077 ¥ 112,539,437 ¥
514,109 ¥ 113,471,623 ¥
6,620
(322,230)
¥ 113,149,393
At March 31, 2023:
1-3 months
Past Due
Greater
Than
3 months
Total
Past Due
Current
(in millions)
Loans
Held for Sale
Total
Loans
Past Due 90 Days
and
Accruing
Commercial
Domestic
Foreign
Residential
Card
Krungsri
Other(2)
Total
Unearned income,
unamortized premiums
—net and deferred loan
fees—net
Total
¥
6,599 ¥
12,485 ¥
19,084 ¥ 55,519,315 ¥
87,659 ¥ 55,626,058 ¥
8,818
32,514
14,992
188,802
14,241
33,203
11,496
26,587
136,627
20,235
42,021
44,010
41,579
325,429
34,476
41,268,228
12,830,845
431,263
7,457,206
1,375,934
879,423
42,189,672
—
—
—
—
12,874,855
472,842
7,782,635
1,410,410
2,652
12,158
3,342
—
—
—
¥
265,966 ¥
240,633 ¥
506,599 ¥ 118,882,791 ¥
967,082 ¥ 120,356,472 ¥
18,152
(401,012)
¥ 119,955,460
Notes:
(1) Does not include the loans in transferred business of MUFG Union Bank to U.S. Bancorp, which is included in Other assets in the accompanying consolidated balance
sheets at March 31, 2022. See Note 2 for further information.
(2) The Other segment in the above table included loans of ¥176,691 million, which was previously included in the MUAH segment, at March 31, 2023.
F-34
Table of Contents
Nonaccrual Loans
MITSUBISHI UFJ FINANCIAL GROUP, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS-(Continued)
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, MUAH, and Krungsri segments, and
six months or more with respect to loans within the Residential segment. See Note 1 for further information.
The information on nonaccrual loans by class at March 31, 2022 and 2023, and recognized interest income on nonaccrual loans
by class for the fiscal years ended March 31, 2022 and 2023 are shown below:
Recorded Loan Balance
Nonaccrual
Loans
Not Requiring
an Allowance
for
Credit Losses(2)
(in millions)
Recognized
Interest
Income
Nonaccrual
Loans(1)
¥
633,768 ¥
109,919 ¥
224,566
56,175
62,578
15,349
165,775
26,618
84,837
3,579
—
—
2,824
7
6,532
4,734
811
25
77
4,076
3,688
¥ 1,184,829 ¥
201,166 ¥
19,943
Recorded Loan Balance
Nonaccrual
Loans
Not Requiring
an Allowance
for
Credit Losses(2)
(in millions)
Recognized
Interest
Income
Nonaccrual
Loans(1)
¥
401,836 ¥
99,657 ¥
246,675
47,910
67,159
211,705
29,848
65,242
3,962
—
3,286
5
5,409
5,918
1,052
17
6,482
3,885
¥ 1,005,133 ¥
172,152 ¥
22,763
March 31, 2022:
Commercial
Domestic
Foreign
Residential
Card
MUAH
Krungsri
Other
Total
March 31, 2023:
Commercial
Domestic
Foreign
Residential
Card
Krungsri
Other
Total
Notes:
(1) Nonaccrual loans in the above table do not include loans held for sale of ¥7,946 million and ¥9,205 million at March 31, 2022 and 2023, respectively.
(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-35
Table of Contents
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, 2021, 2022 and 2023:
2021
2022
Pre-
Modification
Outstanding
Recorded
Investment
Troubled Debt Restructurings
Post-
Modification
Outstanding
Recorded
Investment
Pre-
Modification
Outstanding
Recorded
Investment
(in millions)
Post-
Modification
Outstanding
Recorded
Investment
¥
39,282 ¥
39,282 ¥
168,348 ¥
167,342
33,839
18,121
20,857
22,801
18,548
24,968
33,839
18,121
19,737
22,763
18,548
24,956
16,144
22,484
20,937
11,384
14,869
11,403
16,144
22,484
19,824
11,384
14,869
11,403
¥
178,416 ¥
177,246 ¥
265,569 ¥
263,450
2021
2022
Troubled Debt Restructurings
That Subsequently Defaulted
Recorded Investment
(in millions)
¥
16,179 ¥
9,861
157
2,733
3,437
6,226
857
12,020
13,180
203
2,746
—
5,657
4,715
¥
39,450 ¥
38,521
Commercial(1)(3)
Domestic
Foreign
Residential(1)(3)
Card(2)(3)
MUAH(2)(3)
Krungsri(2)(3)
Other(2)
Total
Commercial(1)(3)
Domestic
Foreign
Residential(1)(3)
Card(2)(3)
MUAH(2)(3)
Krungsri(2)(3)
Other(2)
Total
Notes:
(1) TDRs for the Commercial and Residential segments include accruing loans, and do not include nonaccrual loans.
(2) TDRs for the Card, MUAH, Krungsri and Other segments include accrual and nonaccrual loans.
(3) 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
MUAH segment. For the fiscal year ended March 31, 2022, 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 MUAH segment.
F-36
Table of Contents
MITSUBISHI UFJ FINANCIAL GROUP, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS-(Continued)
2023
Troubled Debt Restructurings
Pre-
Modification
Outstanding
Recorded
Investment
Post-
Modification
Outstanding
Recorded
Investment
(in millions)
¥
68,477 ¥
35,319
15,291
22,355
94,790
21,141
68,477
35,319
15,291
21,407
94,790
21,141
¥
257,373 ¥
256,425
2023
Troubled Debt Restructurings
That Subsequently Defaulted
Recorded Investment
(in millions)
¥
¥
8,123
11,945
116
2,783
5,289
1,569
29,825
Commercial(1)(3)
Domestic
Foreign
Residential(1)(3)
Card(2)(3)
Krungsri(2)(3)
Other(2)
Total
Commercial(1)(3)
Domestic
Foreign
Residential(1)(3)
Card(2)(3)
Krungsri(2)(3)
Other(2)
Total
Notes:
(1) TDRs for the Commercial and Residential segments include accruing loans, and do not include nonaccrual loans.
(2) TDRs for the Card, Krungsri and Other segments include accrual and nonaccrual loans.
(3) For the fiscal year ended March 31, 2023, extension of the stated maturity date of loans was the primary concession type in the Commercial, Residential and
Krungsri segments and reduction in the stated rate was the primary concession type in the Card 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 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, 2021, 2022 and 2023 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
F-37
Table of Contents
MITSUBISHI UFJ FINANCIAL GROUP, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS-(Continued)
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, MUAH, Krungsri and Other segments, the TDRs in the above tables represent nonaccrual and accruing
loans, and the defaulted loans in the above table represent nonaccrual and accruing loans that became past due one month or more
within the Card segment, 60 days or more within the MUAH 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
¥132,456 million and ¥101,339 million at March 31, 2022 and 2023, respectively. See Note 24 for further discussion of commitments
to extend credit.
In the Krungsri segment, TDR accounting was suspended for loan modifications, 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-38
Table of Contents
Credit Quality Indicator
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, 2022 and 2023 are shown below:
At March 31, 2022:
2021
2020
2019
2018
2017
Prior
(in millions)
Term Loans
Amortized Cost Basis by Origination Year
Revolving
Loans
Amortized
Cost Basis
Revolving
Loans
Converted to
Term Loans
Amortized
Cost Basis
Total(1)
—
—
—
—
53,975,461
51,999,427
1,559,415
416,619
—
—
—
—
220,093
¥ 13,301,505
13,246,642
54,863
Commercial:
Domestic
Normal
Close Watch
¥ 27,445,726 ¥ 10,850,943 ¥ 7,634,337
¥ 6,509,048
¥ 3,924,194
¥ 8,827,987
¥ 23,380,258 ¥
9,236
¥ 88,581,729
19,038,698
7,937,529
5,003,439
4,499,174
2,817,819
6,639,931
8,038,871
18,756,933
7,646,272
4,669,784
4,335,640
2,698,956
6,205,070
7,686,772
257,276
266,311
167,387
150,834
104,047
307,367
306,193
Likely to become Bankrupt or
Legally/Virtually Bankrupt
24,489
24,946
166,268
12,700
14,816
127,494
45,906
Foreign
Normal
Close Watch
8,407,028
2,913,414
2,630,898
2,009,874
1,106,375
2,188,056
15,341,387
9,236
34,606,268
8,250,729
2,814,362
2,501,594
1,881,532
1,031,105
2,031,243
15,089,995
1,912
33,602,472
149,502
90,355
73,253
110,170
36,274
93,622
223,203
7,324
783,703
Likely to become Bankrupt or
Legally/Virtually Bankrupt
6,797
8,697
56,051
18,172
38,996
63,191
28,189
Residential
¥ 782,446
¥ 641,706
¥ 976,736
¥ 866,282
¥ 900,959
¥ 9,104,691
¥
28,685
¥
Accrual
Nonaccrual
Accrual
Nonaccrual
Card
MUAH
Credit Quality Based on Internal
Credit Ratings
Pass
Special Mention
Classified
782,314
641,499
976,162
865,761
900,120
9,054,326
132
207
574
521
839
50,365
26,460
2,225
¥
19
¥
106
¥
182
¥
175
¥
276
¥
437
¥ 400,552
¥
62,519
¥ 464,266
1
18
8
98
8
174
9
166
13
263
41
396
387,648
12,904
13,960
48,559
401,688
62,578
¥ 364,236
¥ 306,134
¥ 147,821
¥
62,455
¥
50,264
¥ 122,149
¥ 1,689,069
¥
—
¥ 2,742,128
357,334
298,658
126,083
3,106
3,796
—
7,476
20,013
1,725
48,653
2,415
11,387
43,938
117,778
1,642,946
5,981
345
805
3,566
33,471
12,652
—
—
—
2,635,390
65,791
40,947
Krungsri
¥ 1,350,265
¥ 964,094
¥ 901,955
¥ 680,090
¥ 329,847
¥ 481,981
¥ 2,099,727
¥
14,806
¥ 6,822,765
Performing
Under-Performing
Non-Performing
1,297,054
891,374
788,828
573,840
270,783
363,905
1,961,481
42,326
10,885
58,084
14,636
90,519
22,608
80,841
25,409
45,982
13,082
78,690
39,386
113,283
24,963
—
—
14,806
6,147,265
509,725
165,775
Other
¥ 400,482
¥ 143,336
¥
85,496
¥
40,445
¥
35,346
¥
Accrual
Nonaccrual
398,744
136,317
1,738
7,019
83,278
2,218
38,609
1,836
32,934
2,412
—
—
—
¥ 340,016
¥
328,621
11,395
—
—
—
¥ 1,045,121
1,018,503
26,618
F-39
Table of Contents
MITSUBISHI UFJ FINANCIAL GROUP, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS-(Continued)
At March 31, 2023:
2022
2021
2020
2019
2018
Prior
(in millions)
Term Loans
Amortized Cost Basis by Origination Year
Revolving
Loans
Amortized
Cost Basis
Revolving
Loans
Converted to
Term Loans
Amortized
Cost Basis
Total(1)
—
—
—
—
—
733,743
236,844
¥ 12,874,855
12,828,364
46,491
Commercial:
Domestic
Normal
Close Watch
Likely to become Bankrupt or
Legally/Virtually Bankrupt
Foreign
Normal
Close Watch
Likely to become Bankrupt or
Legally/Virtually Bankrupt
¥ 32,957,651 ¥ 10,100,587 ¥ 8,626,319
¥ 5,653,421
¥ 4,385,807
¥ 9,366,641
¥ 25,743,172 ¥
15,050
¥ 96,848,648
20,132,474
6,099,692
6,675,895
4,002,329
3,214,528
7,406,590
8,006,891
19,867,845
5,957,659
6,472,135
3,823,755
3,126,146
6,722,981
7,722,379
222,202
124,499
172,270
114,534
74,635
567,514
262,686
42,427
17,534
31,490
64,040
13,747
116,095
21,826
—
—
—
—
55,538,399
53,692,900
1,538,340
307,159
12,825,177
4,000,895
1,950,424
1,651,092
1,171,279
1,960,051
17,736,281
15,050
41,310,249
12,508,547
3,931,278
1,857,934
1,577,120
1,083,934
1,824,977
17,540,822
15,050
40,339,662
262,388
34,656
60,637
50,210
71,966
79,450
174,436
54,242
34,961
31,853
23,762
15,379
55,624
21,023
Residential
¥ 688,000
¥ 747,161
¥ 607,237
¥ 919,359
¥ 811,469
¥ 9,077,669
¥
23,960
¥
Card
Accrual
Nonaccrual
Accrual
Nonaccrual
687,800
747,121
607,047
918,781
810,933
9,034,589
200
40
190
578
536
43,080
22,093
1,867
¥
12
¥
147
¥
240
¥
239
¥
181
¥
587
¥ 403,687
¥
67,749
¥ 472,842
1
11
7
140
10
230
8
231
9
172
37
550
391,237
12,450
14,374
53,375
405,683
67,159
Krungsri
¥ 1,824,628
¥ 1,046,959
¥ 654,933
¥ 692,616
¥ 515,731
¥ 605,053
¥ 2,427,923
¥
14,792
¥ 7,782,635
Performing
Under-Performing
Non-Performing
1,689,034
956,470
570,865
108,770
26,824
66,555
23,934
67,504
16,564
553,616
111,435
27,565
406,258
459,322
2,292,418
85,928
23,545
98,103
47,628
104,652
30,853
—
—
14,792
6,927,983
642,947
211,705
Other
¥ 551,560
¥ 190,786
¥ 108,148
¥
48,867
¥
19,875
¥
80,252
¥ 410,922
¥
Accrual
Nonaccrual
549,274
187,638
106,522
2,286
3,148
1,626
47,235
1,632
17,832
2,043
75,726
4,526
396,334
14,588
—
—
—
¥ 1,410,410
1,380,561
29,849
Note:
(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.
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 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
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MITSUBISHI UFJ FINANCIAL GROUP, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS-(Continued)
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 and the Other
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 MUAH 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 as Performing, Under-Performing or Non-Performing based on their
delinquency status. 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.
For the Commercial, Residential and Card segments, credit quality indicators are based on information as of March 31. For the
MUAH, Krungsri and Other segments, credit quality indicators are generally based on information as of December 31.
Allowance for Credit Losses
Changes in the allowance for credit losses by portfolio segment for the fiscal years ended March 31, 2021, 2022 and 2023 are
shown below:
Fiscal year ended March 31, 2021:
Commercial
Residential
Card
MUAH
Krungsri
Other
Total
(in millions)
Allowance for credit losses:
Balance at beginning 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(1)
Provision for credit losses
Charge-offs
Recoveries collected
Net charge-offs
Other(2)
Balance at end of fiscal year
83,828
235,584
77,904
9,262
68,642
1,532
49,494
1,385
2,745
13
2,732
—
14,262
17,876
24,564
1,463
23,101
25,037
90,064
40,376
4,362
36,014
118,333
90,167
93,192
23,415
69,777
32,750
49,134
323,704
484,210
51,725
290,506
6,567
45,082
45,158
245,424
—
(6,327)
(14,953)
(3,891)
(23,639)
¥ 734,577 ¥ 82,893 ¥ 44,217 ¥ 131,755 ¥ 293,396 ¥ 61,553 ¥ 1,348,391
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MITSUBISHI UFJ FINANCIAL GROUP, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS-(Continued)
Fiscal year ended March 31, 2022:
Commercial
Residential
Card
MUAH
Krungsri
Other
Total
(in millions)
Allowance for credit losses:
Balance at beginning of fiscal year
¥ 734,577 ¥ 82,893 ¥ 44,217 ¥ 131,755 ¥ 293,396 ¥ 61,553 ¥ 1,348,391
Provision for (reversal of) credit losses
236,659
(10,899)
15,473
(101,112)
90,514
47,360
277,995
Charge-offs
Recoveries collected
Net charge-offs
Other(2)
Balance at end of fiscal year
57,848
11,898
45,950
8,800
2,121
14
2,107
—
20,153
1,231
18,922
—
19,208
9,532
9,676
9,398
83,474
22,890
60,584
55,208
238,012
13,150
58,715
42,058
179,297
(940)
6,354
23,612
¥ 934,086 ¥ 69,887 ¥ 40,768 ¥ 30,365 ¥ 322,386 ¥ 73,209 ¥ 1,470,701
Fiscal year ended March 31, 2023:
Commercial
Residential
Card
Krungsri
Other(3)
Total
(in millions)
Allowance for credit losses:
Balance at beginning of fiscal year
¥ 934,086 ¥ 69,887 ¥ 40,768 ¥ 322,386 ¥ 103,574 ¥ 1,470,701
Transfer from MUAH to Commercial
segment
33,062
Provision for (reversal of) credit losses
(113,886)
(9,511)
19,236
Charge-offs
Recoveries collected
Net charge-offs
Other(2)
Balance at end of fiscal year
158,780
18,784
139,996
6,323
645
16
629
—
18,255
720
17,535
—
70,729
95,489
25,457
70,032
34,948
(33,062)
41,580
—
8,148
55,922
329,091
24,506
69,483
31,416
259,608
12,386
53,657
¥ 719,589 ¥ 59,747 ¥ 42,469 ¥ 358,031 ¥ 93,062 ¥ 1,272,898
Notes:
(1) Effective as of April 1, 2020, the MUFG Group adopted new guidance on measurement of credit losses on financial instruments.
(2) Other is principally comprised of gains or losses from foreign exchange translation.
(3) For the fiscal year ended March 31, 2023, the beginning balance and the ending balance of the Other segment in the above table includes the allowance for credit
losses of ¥30,365 million and ¥3,428 million, respectively, which were previously included in the MUAH segment.
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
¥16.8 billion, ¥0.4 billion and ¥79.9 billion for the fiscal years ended March 31, 2021, 2022 and 2023, respectively, due to loan
disposal activity.
The MUFG Group sold ¥1,684 billion, ¥2,011 billion and ¥2,879 billion of loans within the Commercial segment during the
fiscal years ended March 31, 2021, 2022 and 2023, respectively.
The MUFG Group sold ¥586 billion and ¥518 billion of loans within the MUAH segment during the fiscal years ended
March 31, 2021 and 2022, respectively. The MUFG Group sold ¥556 billion of loans within the current Other segment, previously
included in the MUAH segment, during the fiscal year ended March 31, 2023.
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.
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MITSUBISHI UFJ FINANCIAL GROUP, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS-(Continued)
For the Commercial, MUAH, Krungsri and Other segments, collateral relating to these loans is 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.
5.
PREMISES AND EQUIPMENT
Premises and equipment at March 31, 2022 and 2023 consisted of the following:
Land
Buildings
Equipment and furniture
Leasehold improvements
Construction in progress
Total
Less accumulated depreciation
Premises and equipment-net
2022
2023
(in millions)
¥
372,710 ¥
766,945
497,478
255,679
30,894
1,923,706
1,107,877
393,932
800,821
509,828
255,712
34,679
1,994,972
1,134,394
¥
815,829 ¥
860,578
For the fiscal years ended March 31, 2021, 2022 and 2023, the MUFG Group recognized ¥11,424 million, ¥6,574 million and
¥5,317 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, ¥773 million, ¥58 million and ¥174 million of impairment losses were recognized for real estate held for sale for the fiscal
years ended March 31, 2021, 2022 and 2023, 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.
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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, 2022 and 2023:
Balance at March 31, 2021:
Goodwill
Accumulated impairment losses(1)
Foreign currency translation adjustments and
other
Balance at March 31, 2022:
Goodwill
Accumulated impairment losses
Less: Goodwill, net of accumulated impairment
losses in transferred business of MUFG Union
Bank(2)
Impairment loss
Foreign currency translation adjustments and
other
Balance at March 31, 2023:
Goodwill(3)
Accumulated impairment losses(3)
Global
Corporate &
Investment
Banking
Business
Group
Global
Commercial
Banking
Business
Group
Asset
Management &
Investor
Services
Business
Group
(in millions)
Global
Markets
Business
Group
Total
¥
140,099 ¥
728,644 ¥
223,301 ¥
2,300 ¥
1,094,344
(63,393)
(645,731)
(14,368)
76,706
82,913
208,933
—
2,300
(723,492)
370,852
4,694
7,358
12,493
—
24,545
144,793
736,002
235,794
(63,393)
(645,731)
(14,368)
2,300
—
1,118,889
(723,492)
(2,415)
(89,371)
—
—
(91,786)
¥
78,985 ¥
900 ¥
221,426 ¥
2,300 ¥
303,611
—
—
(33,553)
9,683
(900)
17,931
—
—
(33,553)
26,714
152,236
481,263
253,725
(63,568)
(481,263)
(47,921)
2,300
—
889,524
(592,752)
¥
88,668 ¥
— ¥
205,804 ¥
2,300 ¥
296,772
Notes:
(1) 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.
(2) Represents goodwill, net of accumulated impairment losses in transferred business of MUFG Union Bank, which is included in Other assets in the accompanying
consolidated balance sheet at March 31, 2022.
(3) For the balance at March 31, 2023, the Goodwill and Accumulated impairment losses of the Global Corporate & Investment Banking Business Group and Global
Commercial Banking Business Group in the above table exclude the goodwill and accumulated impairment losses previously recorded for MUFG Union Bank,
which was sold during the fiscal year ended March 31, 2023. See Note 2 for further information.
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, 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
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MITSUBISHI UFJ FINANCIAL GROUP, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS-(Continued)
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
the economic environment triggered by COVID-19 for the three-month period ended March 31, 2020.
For the fiscal year ended March 31, 2023, the MUFG Group recognized ¥33,553 million of impairment of goodwill relating to
the First Sentier Investors reporting unit within the Asset Management & Investor Services Business Group segment. Due largely to
market volatility and a decline in the equity markets, the portfolio balance of assets under management decreased, which resulted in a
decrease in the reporting unit’s cash flow projections. As a result, the fair value of the reporting unit was measured on December 31,
2022 for the quantitative goodwill impairment test, and led to an impairment of goodwill as the fair value had fallen below the
carrying amount of the reporting unit. The income approach estimates the fair value of the reporting unit by discounting management’s
projections of the 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 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.
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, 2022 and 2023:
Gross
carrying
amount
2022
Accumulated
amortization
Net
carrying
amount
Gross
carrying
amount
(in millions)
2023
Accumulated
amortization
Net
carrying
amount
¥ 3,169,332 ¥ 2,380,861 ¥
788,471 ¥ 3,440,220 ¥ 2,606,923 ¥
833,297
528,969
114,059
76,858
15,194
282,324
246,645
58,972
36,846
4,859
55,087
40,012
10,335
552,204
119,555
79,861
17,861
319,293
232,911
69,379
41,090
6,751
50,176
38,771
11,110
¥ 3,904,412 ¥ 2,763,862
1,140,550 ¥ 4,209,701 ¥ 3,043,436
1,166,265
8,051
¥ 1,148,601
7,958
¥ 1,174,223
Intangible assets subject to amortization:
Software
Customer relationships
Core deposit intangibles
Trade names
Other
Total
Intangible assets not subject to
amortization:
Other
Total
Intangible assets subject to amortization acquired during the fiscal year ended March 31, 2022 amounted to ¥262,826 million,
which primarily consisted of ¥262,645 million of software. The weighted average amortization periods for these assets are 6 years.
There is no significant residual value estimated for these assets. Intangible assets not subject to amortization acquired during the fiscal
year ended March 31, 2022 amounted to ¥3,498 million.
Intangible assets subject to amortization acquired during the fiscal year ended March 31, 2023 amounted to ¥273,108 million,
which primarily consisted of ¥272,410 million of software. The weighted average amortization periods for these assets are 5 years.
There is no significant residual value estimated for these assets. Intangible assets not subject to amortization acquired during the fiscal
year ended March 31, 2023 amounted to ¥1,479 million.
For the fiscal years ended March 31, 2021, 2022 and 2023, the MUFG Group recognized ¥21,680 million, ¥33,301 million and
¥5,151 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.
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MITSUBISHI UFJ FINANCIAL GROUP, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS-(Continued)
The estimated aggregate amortization expense for intangible assets for the next five fiscal years is as follows:
Fiscal year ending March 31:
2024
2025
2026
2027
2028
7.
LEASE TRANSACTIONS
Lease transactions as a lessee
(in millions)
¥
281,137
236,575
193,844
146,394
111,124
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 ¥12,980 million and ¥16,402 million at March 31, 2022 and
2023, respectively. Lease liabilities of these finance leases, which are included in Long-term debt in the accompanying consolidated
balance sheets, amounted to ¥16,104 million and ¥19,470 million at March 31, 2022 and 2023, 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 ¥261,803 million and ¥227,112 million at March 31, 2022 and 2023,
respectively. Lease liabilities of these operating leases, which are included in Other liabilities in the accompanying consolidated
balance sheets, amounted to ¥384,183 million and ¥337,391 million at March 31, 2022 and 2023, respectively.
For the fiscal years ended March 31, 2022 and 2023, the MUFG Group recognized ¥20,830 million and ¥15,720 million,
respectively, 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 operating lease right-of-use assets and lease liabilities. The MUFG Group’s lease
arrangements that have not yet commenced as of March 31, 2023 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, 2021, 2022 and
2023:
Finance lease cost:
Amortization of right-of-use assets
Interest on lease liabilities
Operating lease cost
2021
2022
(in millions)
2023
¥
4,971 ¥
4,816 ¥
240
91,276
198
81,206
5,672
208
67,393
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MITSUBISHI UFJ FINANCIAL GROUP, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS-(Continued)
The following table presents information of lease transactions as a lessee for the fiscal years ended March 31, 2022 and 2023:
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:
Finance leases
Operating leases
Weighted-average discount rate:
Finance leases
Operating leases
Maturities of lease liabilities as of March 31, 2023 are as follows:
2024
2025
2026
2027
2028
2029 and thereafter
Total undiscounted cash flows
Difference between undiscounted and discounted cash flows
Amount on balance sheet
Lease transactions as a lessor
2022
2023
(in millions, except years and
percentages)
¥
262
¥
282
107,047
101,549
7,426
4,055
48,095
8,124
11,066
35,678
3.6 years
8.0 years
3.5 years
7.6 years
0.77%
0.76%
0.84%
0.90%
Finance
leases
Operating
leases
(in millions)
¥
7,718 ¥
5,539
2,994
1,991
1,004
642
19,888
(418)
19,470 ¥
¥
85,292
62,184
44,667
30,870
26,836
106,453
356,302
(18,911)
337,391
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 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.
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MITSUBISHI UFJ FINANCIAL GROUP, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS-(Continued)
The following table presents profit or loss of lease transactions as a lessor for the fiscal years ended March 31, 2021, 2022 and
2023:
Sales type and direct financing leases:
Finance income on net investment
Operating leases:
Lease income
Total
2021
2022
(in millions)
2023
¥
122,810 ¥
116,430 ¥
127,724
3,663
4,202
6,978
¥
126,473 ¥
120,632 ¥
134,702
Finance income on net investment is included in Interest income—Loans, including fees in the consolidated statements of
operations. Lease income from operating lease transactions is included in Other non-interest income in the consolidated statements of
operations.
The following table presents the components of sales type and direct financing leases transactions as of March 31, 2022 and
2023:
Lease receivables (undiscounted)
Adjustments:
Discounted unguaranteed residual value
Initial direct cost on sales type and direct financing leases
Deferred selling profit
Net investment in sales type and direct financing leases
2022
2023
(in millions)
¥
1,855,125 ¥
2,046,277
12,439
27,695
10,278
32,780
(306,316)
(350,553)
¥
1,588,943 ¥
1,738,782
The following table presents maturity of the lease payment receivables of sales type and direct financing lease transactions as of
March 31, 2023:
2024
2025
2026
2027
2028
2029 and thereafter
Total undiscounted cash flows
Difference between undiscounted cash flows and the lease receivables recognized on balance sheet
Amount on balance sheet
¥
Lease
receivables
(in millions)
507,241
466,812
387,246
274,201
205,295
205,482
2,046,277
(307,495)
¥
1,738,782
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MITSUBISHI UFJ FINANCIAL GROUP, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS-(Continued)
8.
INCOME TAXES
Income (Loss) before Income Tax Expense (Benefit)
Income (loss) before income tax expense (benefit) by jurisdiction for the fiscal years ended March 31, 2021, 2022 and 2023 was
as follows:
Domestic income (loss)
Foreign income
Total
Income Tax Expense (Benefit)
2021
2022
(in millions)
2023
¥
575,101 ¥
(886,921) ¥
(588,227)
1,033,241
828,194
1,244,961
¥
1,608,342 ¥
(58,727) ¥
656,734
The detail of current and deferred income tax expense (benefit) for the fiscal years ended March 31, 2021, 2022 and 2023 was as
follows:
Current:
Domestic
Foreign
Total
Deferred:
Domestic
Foreign
Total
Income tax expense (benefit)
Income tax expense (benefit) reported in Accumulated OCI relating to:
Investment securities
Debt valuation adjustments
Derivatives qualifying for cash flow hedges
Defined benefit plans
Foreign currency translation adjustments
Total
Total
2021
2022
(in millions)
2023
¥
95,183 ¥
243,993 ¥
83,492
178,675
310,490
(44,217)
266,273
444,948
1,146
(36,792)
12,244
139,883
(3,368)
113,113
112,164
356,157
(308,214)
(62,454)
(370,668)
(14,511)
(87,628)
10,296
(4,968)
19,039
96,742
33,481
¥
558,061 ¥
18,970 ¥
250,780
203,409
454,189
(348,997)
(78,779)
(427,776)
26,413
(66,401)
7,858
1,594
(677)
86,576
28,950
55,363
Prior to the fiscal year ended March 31, 2023, the MUFG Group filed tax returns on a consolidated basis for corporate income
taxes within Japan, and from the beginning of fiscal year ended March 31, 2023, the MUFG Group applied the Group Tax Sharing
System, where the calculation of taxable income or loss is still made based upon the combined profits or losses of the parent company
and its wholly-owned domestic subsidiaries, but the tax payments are made by each of these companies.
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, 2021, 2022 and 2023, respectively. Foreign subsidiaries are subject to income taxes of the countries in which they operate.
F-49
Table of Contents
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 operations to the
combined normal effective statutory tax rates for the fiscal years ended March 31, 2021, 2022 and 2023 is as follows:
Combined normal effective statutory tax rate
Nondeductible expenses
Impairment of goodwill
Foreign tax credit and payments
Lower tax rates applicable to income of subsidiaries
Change in valuation allowance
Taxation for gain on sale of shares in subsidiary
Nontaxable dividends received
Undistributed earnings of subsidiaries
Tax and interest expense for uncertainty in income taxes
Noncontrolling interest income
Effect of changes in tax laws
Expiration of loss carryforward
Other—net
Effective income tax rate
2021
30.6%
0.3
2.4
(0.9)
(1.0)
(0.9)
—
(1.9)
—
(0.1)
0.1
(0.1)
0.1
(0.9)
2022
2023
30.6%
(12.0)
—
28.7
30.8
(90.1)
—
85.1
(25.6)
(10.8)
(0.7)
(2.4)
(7.0)
(1.9)
30.6%
0.8
1.5
(4.7)
(5.3)
(10.5)
3.4
(1)
(14.8)
(0.3)
—
0.3
0.6
0.1
2.3
27.7%
24.7%
4.0%
Note:
(1)
In March 2023, MUAH repurchased a portion of the shares in MUAH held by MUFG and MUFG Bank. The transaction resulted in the realization of a difference
between the book value of the shares in MUAH for accounting and tax purposes, resulting in a ¥22,250 million increase in income tax expense and a 3.4
percentage points increase in the effective tax rate for the fiscal year ended March 31, 2023.
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, 2022 and 2023 were as follows:
Deferred tax assets:
Allowance for credit losses
Operating loss carryforwards
Loans
Accrued liabilities and other
Premises and equipment
Derivative financial instruments
Obligations under operating leases
Valuation allowance
Total deferred tax assets
2022
2023
(in millions)
¥
462,303 ¥
99,566
37
309,017
124,419
154,237
106,864
418,732
99,870
561
413,587
119,395
303,644
88,088
(184,932)
(153,053)
1,071,511
1,290,824
F-50
Table of Contents
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
Total deferred tax liabilities
Net deferred tax liabilities
2022
2023
(in millions)
605,443
69,276
47,432
102,998
506,829
77,274
113,335
379,581
65,973
12,514
50,730
639,592
64,741
103,915
1,522,587
1,317,046
¥
(451,076) ¥
(26,222)
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, 2022 and 2023 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, 2022 and 2023, the undistributed earnings of such foreign subsidiaries
amounted to approximately ¥108,311 million and ¥66,897 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.
Operating Loss and Tax Credit Carryforwards
At March 31, 2023, the MUFG Group had operating loss carryforwards for corporate tax of ¥221,609 million and tax credit
carryforwards of ¥57,084 million for tax purposes. Such carryforwards, if not utilized, are scheduled to expire as follows:
F-51
Table of Contents
MITSUBISHI UFJ FINANCIAL GROUP, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS-(Continued)
Fiscal year ending March 31:
2024
2025
2026
2027
2028
2029
2030 and thereafter
No definite expiration date
Total
Uncertainty in Income Tax
Operating loss
carryforwards
Tax credit
carryforwards
(in millions)
¥
5,344 ¥
84,378
53,457
624
3,108
636
35,173
38,889
221,609 ¥
¥
649
146
145
143
143
347
46,957
8,554
57,084
The following is a roll-forward of the MUFG Group’s unrecognized tax benefits for the fiscal years ended March 31, 2021,
2022 and 2023:
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
Decreases due to lapse of applicable statutes of limitations
Foreign exchange translation and other
Balance at end of fiscal year
2021
2022
(in millions)
2023
¥
19,249 ¥
13,829 ¥
21,794
202
(1,919)
489
(2,329)
(116)
(1,747)
28
—
6,320
(183)
(8)
1,808
¥
13,829 ¥
21,794 ¥
451
—
279
(166)
(116)
3,158
25,400
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, 2021, 2022 and 2023:
Balance at beginning of fiscal year
Total interest and penalties in the consolidated statements of operations
Total cash settlements, foreign exchange translation and other
Balance at end of fiscal year
2021
2022
2023
(in millions)
2,612 ¥
2,417 ¥
(398)
203
156
275
2,417 ¥
2,848 ¥
¥
¥
2,848
(1,052)
371
2,167
F-52
Table of Contents
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
Japan
United States—Federal
United States—California
Indonesia
Tax years
2022 and forward
2019 and forward
2015 and forward
2018 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, 2023, assets mortgaged, pledged, or otherwise subject to lien were as follows:
Trading account securities
Investment securities
Loans
Other
Total
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
Total
2023
(in millions)
¥ 12,699,080
25,666,561
11,950,542
20,368
¥ 50,336,551
2023
(in millions)
¥
14,985
27,968,380
22,280,877
72,309
¥ 50,336,551
At March 31, 2023, certain investment securities, principally Japanese national government and Japanese government agency
bonds, loans, and other assets with a combined carrying value of ¥19,436,978 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.
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, 2022 and 2023, 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
¥2,991,833 million and ¥2,918,282 million, respectively.
F-53
Table of Contents
Collateral
MITSUBISHI UFJ FINANCIAL GROUP, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS-(Continued)
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 certificates of deposit (“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, 2023, the MUFG Group pledged ¥35,115 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, 2022 and 2023, the fair value of the collateral accepted by the MUFG Group that is permitted to be sold
or repledged was ¥31,167 billion and ¥32,111 billion, respectively, of which ¥23,699 billion and ¥24,063 billion, respectively, was
sold or repledged.
At March 31, 2022 and 2023, the cash collateral pledged for derivative transactions, which is included in Other assets, was
¥2,893,178 million and ¥2,585,837 million, respectively, and the cash collateral received for derivative transactions, which is included
in Other liabilities, was ¥1,017,580 million and ¥1,318,338 million, respectively.
10.
DEPOSITS
At March 31, 2022 and 2023, the aggregate amount of time deposit accounts (including CDs) in denominations that meet or
exceed the insured limit were ¥54,819,050 million and ¥60,245,700 million, respectively. These time deposits included domestic time
deposits in denominations that meet or exceed the limit stipulated by the Deposit Insurance Act in Japan, which is ¥10 million, and
foreign time deposits in denominations that meet or exceed any country-specific insurance fund limit.
The maturity information at March 31, 2023 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
Total
F-54
Domestic
Foreign
(in millions)
¥ 31,966,328 ¥ 29,492,912
4,400,809
2,327,682
454,931
448,420
706,729
504,083
170,605
99,234
40,959
32,825
¥ 40,304,899 ¥ 30,340,618
Table of Contents
MITSUBISHI UFJ FINANCIAL GROUP, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS-(Continued)
11. CALL MONEY AND FUNDS PURCHASED
A summary of funds transactions for the fiscal years ended March 31, 2022 and 2023 is as follows:
Outstanding at end of fiscal year:
Amount
Principal range of maturities
Weighted average interest rate
2022
2023
(in millions, except percentages and days)
¥
2,416,313
¥
3,437,614
1 day to 30 days
1 day to 30 days
0.06%
0.01%
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, 2022 and 2023 is as
follows:
Amount outstanding at end of fiscal year
Weighted average interest rate on outstanding balance at end of fiscal year
2022
2023
(in millions, except percentages)
¥ 6,307,463
¥ 5,871,244
0.00%
0.00%
At March 31, 2022 and 2023, the MUFG Group had unused lines of credit for financing amounting to ¥4,741,464 million and
¥3,321,061 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.
F-55
Table of Contents
MITSUBISHI UFJ FINANCIAL GROUP, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS-(Continued)
Other short-term borrowings at March 31, 2022 and 2023 were comprised of the following:
Domestic offices:
Commercial paper
Borrowings from the Bank of Japan
Borrowings from other financial institutions
Other(1)
Total domestic offices
Foreign offices:
Commercial paper
Borrowings from other financial institutions
Short-term debentures
Other
Total foreign offices
Total
Less unamortized discount
Other short-term borrowings—net
Weighted average interest rate on outstanding balance at end of fiscal year
Note:
(1)
Includes borrowings from the jointly operated designated money in trusts.
2022
2023
(in millions, except percentages)
¥
1,491,509
¥
1,123,528
10,231,483
1,186,251
68,384
810,849
95,785
976,832
12,602,225
3,382,396
3,776,737
4,771,323
82,914
22,059
59,287
3,940,997
16,543,222
85
160,292
21,338
105,501
5,058,454
8,440,850
2,836
¥ 16,543,137
¥
8,438,014
0.09 %
2.83 %
F-56
Table of Contents
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, 2022 and 2023 was comprised of the following:
MUFG:
Obligations under finance leases
Unsubordinated debt (1):
2022
2023
(in millions)
¥
3,326 ¥
1,720
Fixed rate bonds, payable in US dollars, due 2023-2039, principally 0.85%-5.72%
5,501,311
7,226,689
Fixed rate bonds, payable in Euro, due 2023-2033, principally 0.34%-3.56%
Fixed rate bonds, payable in other currencies, due 2024-2029, principally 2.08%-4.05% (2)
Adjustable rate bonds, payable in Japanese yen, due 2024-2034, principally 0.14%-1.47%
Adjustable rate bonds, payable in Euro, due 2025-2027, principally 0.34%-3.27%
Adjustable rate borrowings, payable in Japanese yen, due 2025-2037, principally 0.76%-1.86%
Floating rate bonds, payable in US dollars, due 2023-2026, principally 5.53%-6.16%
Floating rate bonds, payable in Euro, due 2023, principally 3.25%
Floating rate bonds, payable in other currencies, due 2024, principally 4.52% (2)
Total
Subordinated debt (1):
Fixed rate bonds, payable in Japanese yen, due 2024-2033, principally 0.37%-1.56%
Fixed rate borrowings, payable in Japanese yen, due 2025-2028, principally 0.57%-0.79%
Adjustable rate bonds, payable in Japanese yen, due 2028-2033, principally 0.29%-1.21%
Adjustable rate bonds, payable in Japanese yen, no stated maturity, principally 0.82%-2.50%
Adjustable rate borrowings, payable in Japanese yen, due 2029-2032, principally 0.30%-0.72%
Adjustable rate borrowings, payable in Japanese yen, no stated maturity, principally 0.85%-1.33%
Floating rate borrowings, payable in Japanese yen, due 2025-2028, principally 0.57%-0.79%
Total
Total
MUFG Bank:
Obligations under finance leases
Unsubordinated debt (1):
Fixed rate bonds, payable in Japanese yen, due 2023-2027, principally 0.63%-2.34%
Fixed rate bonds, payable in US dollars, due 2023-2052, principally 0.00%-4.70%
Fixed rate bonds, payable in Euro, due 2033, principally 1.81%
Fixed rate borrowings, payable in Japanese yen, due 2023-2028, principally 0.00%-0.25%
Fixed rate borrowings, payable in US dollars, due 2030, principally 2.93%
Adjustable rate borrowings, payable in US dollars, due 2023, principally 5.14%-5.54%
Floating rate borrowings, payable in US dollars, due 2023-2031, principally 4.49%-8.76%
Floating rate borrowings, payable in Euro, due 2025-2036, principally 2.30%-3.39%
Total
Subordinated debt (1):
Fixed rate bonds, payable in Japanese yen, due 2025-2031, principally 1.95%-2.91%
Fixed rate borrowings, payable in Japanese yen, due 2023-2035, principally 0.44%-2.24%
Adjustable rate borrowings, payable in Japanese yen, due 2028, principally 1.06%
Floating rate borrowings, payable in Japanese yen, due 2027, principally 0.27%
Total
Obligations under loan securitization transaction accounted for as secured borrowings due 2023-2080, principally
0.13%-10.00%
Total
F-57
508,524
37,424
95,900
68,350
—
416,171
47,845
36,800
578,508
37,425
451,500
408,016
272,000
400,487
51,002
35,876
6,712,325
9,461,503
771,014
—
905,925
872,810
86,000
908,541
1,486,734
1,366,633
31,500
86,725
86,000
34,000
94,856
—
3,367,898
3,362,840
10,083,549
12,826,063
¥
4,419 ¥
4,652
72,400
37,300
1,052,443
1,073,796
6,152
6,557
18,582,830
20,582,218
8,371
—
714,718
103,231
7,601
86,127
671,936
100,065
20,540,145
22,565,600
236,000
175,500
71,000
10,000
15,000
59,500
10,000
15,000
332,000
260,000
519,718
445,821
21,396,282
23,276,073
Table of Contents
MITSUBISHI UFJ FINANCIAL GROUP, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS-(Continued)
Other subsidiaries:
Obligations under finance leases
Unsubordinated debt (1):
2022
2023
(in millions)
¥
8,359 ¥
13,098
Fixed rate borrowings, bonds and notes, payable in Japanese yen, due 2023-2051, principally 0.00%-23.00%
1,088,884
1,012,649
Fixed rate borrowings, bonds and notes, payable in US dollars, due 2023-2036, principally 0.00%-50.00%
Fixed rate borrowings, bonds and notes, payable in Euro, due 2024-2030, principally 0.00%
Fixed rate borrowings, bonds and notes, payable in Thai baht, due 2023-2028, principally 0.00%-6.90%
Fixed rate borrowings, bonds and notes, payable in other currencies, due 2023-2037, principally 0.00%-9.50%(2)
Floating/Adjustable rate borrowings, bonds and notes, payable in Japanese yen, due 2023-2053, principally
0.00%-38.50%
Floating/Adjustable rate borrowings, bonds and notes, payable in US dollars, due 2023-2032, principally
0.00%-43.00%
Adjustable rate bonds and notes, payable in Euro, due 2024-2025, principally 0.10%-1.00%
Total
Subordinated debt (1):
Fixed rate borrowings, bonds and notes, payable in Japanese yen, due 2023-2030, principally 1.53%-2.61%
Fixed rate bonds and notes, payable in US dollars, due 2027-2030, principally 7.50%-8.00%
Fixed rate bonds and notes, payable in Thai baht, due 2029-2032, principally 3.00%-4.30%
Floating rate bonds and notes, payable in US dollars, due 2028, principally 9.86%
Total
Obligations under loan securitization transaction accounted for as secured borrowings due 2022, principally 2.25%
Total
Total
Debt issuance cost
Total
124,841
10,796
230,630
306,778
95,593
1,148
154,698
322,457
1,000,691
1,009,268
130,597
103,125
230
193
2,893,447
2,699,131
114,946
2,262
34,700
2,329
208,581
231,138
2,866
5,253
328,655
273,420
1
—
3,230,462
2,985,649
34,710,293
39,087,785
¥
(13,694) ¥
(16,030)
¥ 34,696,599 ¥ 39,071,755
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, Indonesian rupiah, South Korean won, 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 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, 2022 and 2023.
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.
F-58
Table of Contents
MITSUBISHI UFJ FINANCIAL GROUP, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS-(Continued)
The following is a summary of maturities of long-term debt subsequent to March 31, 2023 :
Fiscal year ending March 31:
2024
2025
2026
2027
2028
2029 and thereafter
Total
New Issuances of Debt for Basel III
MUFG
BK
Other
subsidiaries
Total
(in millions)
¥
899,334 ¥
1,239,768 ¥
691,145 ¥
2,830,247
1,331,578
2,267,854
580,729
1,346,562
6,400,006
18,187,331
1,245,954
164,253
1,167,991
1,270,776
494,856
317,642
258,031
101,229
1,122,746
20,013,765
3,831,450
1,003,013
2,615,782
8,793,528
¥ 12,826,063 ¥ 23,276,073 ¥
2,985,649 ¥ 39,087,785
For the fiscal year ended March 31, 2023, the MUFG Group issued to institutional investors in Japan ¥90,000 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, 2023, the MUFG Group obtained debt financing of ¥624,500 million, $16,265 million
(approximately ¥2,171,865 million) and €3,050 million (approximately ¥444,446 million) 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 18% on a risk-weighted assets basis and
6.75% on a leverage exposure basis.
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 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.
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MITSUBISHI UFJ FINANCIAL GROUP, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS-(Continued)
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”).
As part of the transaction discussed in Note 2, assets and obligations of defined benefit pension plan and other postretirement
plan, which MUFG Union Bank had maintained, were assigned to MUFG Bank and U.S. Bancorp in proportion to each entity’s share
of the underlying participant obligations of the plans, and the related profit, loss and other comprehensive income for the three-month
lag period are not reflected on the consolidated statements of operations and the consolidated statements of comprehensive income for
the fiscal year ended March 31, 2023, and instead have been recognized as direct adjustments to retained earnings and Accumulated
OCI, respectively. The effects of the elimination of the difference in reporting periods for the assets and obligations of defined pension
plan and other postretirement plan resulted in a net adjustment to unappropriated retained earnings of ¥2,086 million and Accumulated
OCI, net of taxes of ¥27,593 million, which is recorded in Elimination of the difference in reporting periods of the transferred business
in the consolidated statements of equity for the fiscal year ended March 31, 2023. However, the disclosures in the remainder of this
note disregard the separate presentation of this effect in the funded status, and the removal of these gains, losses, and OCI for the three
months period from the components of net periodic cost and OCI.
Net periodic cost of pension benefits and other benefits for the fiscal years ended March 31, 2021, 2022 and 2023 include the
following components:
Domestic subsidiaries
Foreign offices and subsidiaries
2021
2022
2023
2021
2022
2023
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
¥ 46,861 ¥ 44,160 ¥ 41,026 ¥ 13,947 ¥
229 ¥ 16,853 ¥
140 ¥ 16,808
¥
97
Interest cost on projected benefit obligation
11,091
11,995
14,356
14,295
793
11,233
494
20,573
1,002
Expected return on plan assets
Amortization of net actuarial loss (gain)
Amortization of prior service cost
(71,078)
(81,902)
(84,084)
(31,161)
(2,118)
(33,269)
(2,415)
(44,590)
(3,200)
17,019
770
1,446
11,560
208
16,573
(64)
7,534
(1,205)
(1,280)
(1,396)
(2,614)
(448)
(2,802)
(385)
(3,124)
84,345 (1)
155
(432)
—
Loss (gain) on settlements and curtailment
(4,605)
(5,820)
(4,860)
30
—
44
—
Net periodic benefit cost (income)
¥ (1,917) ¥ (32,077) ¥ (33,512) ¥ 6,057 ¥ (1,336) ¥ 8,632 ¥ (2,230) ¥ 81,546
¥ (2,378)
Note:
(1) One-time write off of unrecognized retirement benefit obligations of ¥84,345 million was recorded in connection with a pension buyout transaction to transfer
portions of the defined benefit pension plans of MUFG Bank’s overseas branches.
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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
2021
2022
2023
2021
2022
2023
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)
Weighted-average assumptions used:
Discount rates in determining expense
0.63%
0.71%
0.86%
2.94%
2.72%
2.19%
1.82%
2.51%
2.21%
Discount rates in determining benefit obligation
0.71
0.86
1.36
2.34
2.23
2.78
2.63
4.76
4.68
Rates of increase in future compensation level for
determining expense
3.46
3.46
3.46
5.12
—
5.09
—
5.04
—
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
3.46
2.93
3.46
2.89
3.47
2.93
5.09
6.19
—
7.00
2.46
2.46
2.46
2.39
2.46
2.46
2.46
1.62
—
—
5.04
5.91
1.62
1.94
—
7.00
—
—
5.09
4.86
1.94
3.72
—
5.50
—
—
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:
Initial trend rate
Ultimate trend rate
Year the rate reaches the ultimate trend rate
MUAH
2022(1)
2023
Other than MUAH
2022(1)
2023(1)
4.13%
3.77%
2029
—
—
—
6.50%
4.50%
2029
7.00%
4.50%
2031
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, 2021 and 2022, respectively.
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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, 2022 and 2023:
Domestic subsidiaries
2022
2023
Non-
contributory
pension
benefits
and SIP
Non-
contributory
pension
benefits
and SIP
Foreign offices and subsidiaries
2022
2023
Pension
benefits
Other
benefits
Pension
benefits
Other
benefits
(in millions)
Change in benefit obligation:
Benefit obligation at beginning of fiscal year
¥ 1,753,483 ¥ 1,692,105 ¥
580,953
¥
31,354 ¥
619,739
¥
30,791
97
1,002
689
(3,818)
—
(5,329)
(3,785)
—
4,548
24,195
39,528
(6,722)
(8,104)
(5,649)
689
(3,785)
6,240
22,197
Service cost
Interest cost
Plan participants’ contributions
Acquisitions/ Divestitures
Amendments
Actuarial loss (gain)
Benefits paid
Lump-sum payment
Translation adjustments and other
Benefit obligation at end of fiscal year
Change in plan assets:
44,160
11,995
—
(242)
(1,054)
(28,814)
(65,853)
(21,570)
—
41,026
14,356
—
(584)
—
16,853
11,233
—
(130)
402
(113,554)
(24,611) (1)
(65,897)
(20,179)
—
(24,501)
(3,591)
63,131
1,692,105
1,547,273
619,739
Fair value of plan assets at beginning of fiscal year
2,858,013
2,890,503
604,404
Actual return on plan assets
Employer contributions
Acquisitions/ Divestitures
Plan participants’ contributions
Benefits paid
77,848
20,487
8
—
(76,526)
26,734
(242)
—
49,277
4,627
—
—
140
494
433
—
—
(2,269)
(2,580)
—
3,219
30,791
33,349
4,619
(116)
—
433
16,808
20,573
—
(77,231)
(1,250)
(98,693) (1)
(33,456)
(4,476)
(247,171) (2)
194,843
705,864
(126,085)
1,277
(100,438)
—
Translation adjustments and other
—
—
Fair value of plan assets at end of fiscal year
2,890,503
2,774,572
72,057
705,864
3,823
39,528
(231,343) (2)
215,819
Amounts recognized in the consolidated balance sheets:
(65,853)
(65,897)
(24,501)
(2,580)
(33,456)
Prepaid benefit cost
Accrued benefit cost
Net amount recognized
¥ 1,216,703 ¥ 1,245,150 ¥
153,861
(18,305)
(17,851)
(67,736)
¥ 1,198,398 ¥ 1,227,299 ¥
86,125
¥
¥
12,104 ¥
89,109
(3,367)
(68,133)
8,737 ¥
20,976
¥
¥
1,110
(3,108)
(1,998)
Notes:
(1) Significant gains and losses related to changes in the benefit obligation for the fiscal years ended March 31, 2022 and 2023 primarily result from changes in the
(2)
discount rate.
In connection with a pension buyout transaction, portions of the defined benefit pension plans of MUFG Bank’s overseas branches were transferred. The related
obligations and assets were ¥327,203 million and ¥327,203 million, respectively.
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MITSUBISHI UFJ FINANCIAL GROUP, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS-(Continued)
The aggregated accumulated benefit obligations of these plans at March 31, 2022 and 2023 were as follows:
Domestic
subsidiaries
Foreign offices
and subsidiaries
2022
2023
2022
2023
(in millions)
Aggregated accumulated benefit obligations
¥
1,663,543 ¥
1,521,419 ¥
596,153 ¥
170,917
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, 2022 and 2023 were as follows:
Projected benefit obligations
Accumulated benefit obligations
Fair value of plan assets
Domestic
subsidiaries
Foreign offices
and subsidiaries
2022
2023
2022
2023
(in millions)
¥
25,327 ¥
24,918 ¥
87,876 ¥
25,327
7,223
24,918
7,315
67,612
20,139
81,128
62,308
12,995
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, 2021, 2022 and 2023 were
¥16,716 million, ¥16,235 million and ¥16,888 million, respectively.
The following table presents the amounts recognized in Accumulated OCI of the MUFG Group at March 31, 2022 and 2023:
Domestic subsidiaries
2022
2023
Pension
benefits
and SIP
Pension
benefits
and SIP
Foreign offices and subsidiaries
2022
2023
Pension
benefits
Other
benefits
Pension
benefits
Other
benefits
(in millions)
Net actuarial loss (gain)
Prior service cost
¥ (18,183) ¥ 32,257 ¥ 47,093 ¥
(1,070) ¥ 21,347 ¥
2,729
(2,845)
(1,449)
(3,742)
(1,650)
(1,747)
(1,375)
Gross amount recognized in Accumulated OCI
(21,028)
30,808
43,351
(2,720)
19,600
Taxes
(36,389)
(52,367)
(12,092)
616
(6,135)
Net amount recognized in Accumulated OCI
¥ (57,417) ¥ (21,559) ¥ 31,259 ¥
(2,104) ¥ 13,465 ¥
1,354
(736)
618
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MITSUBISHI UFJ FINANCIAL GROUP, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS-(Continued)
The following table presents OCI for the fiscal years ended March 31, 2022 and 2023:
Domestic subsidiaries
Foreign offices and subsidiaries
2022
Pension
benefits
and SIP
2023
Pension
benefits
and SIP
2022
2023
Pension
benefits
Other
benefits
Pension
benefits
Other
benefits
(in millions)
Net actuarial loss (gain) arising during the year
¥
(24,790) ¥
47,026 ¥
(40,559) ¥
(4,471) ¥
59,505
¥
4,129
Prior service cost arising during the year
Losses (gains) due to amortization:
Net actuarial loss (gain)
Prior service cost
Curtailment and settlement
Foreign currency translation adjustments
Total changes in Accumulated OCI
(1,053)
—
402
55
(597)
—
(770)
(1,446)
(16,573)
1,280
5,820
—
1,396
4,860
—
2,802
(44)
6,683
64
385
—
(139)
(7,534)
3,124
(84,345) (1)
6,096
(155)
432
—
(332)
¥
(19,513) ¥
51,836 ¥
(47,289) ¥
(4,106) ¥
(23,751)
¥
4,074
Note:
(1) One-time write off of unrecognized retirement benefit obligations of ¥84,345 million was recorded in connection with a pension buyout transaction to transfer
portions of the defined benefit pension plans of MUFG Bank’s overseas branches.
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Investment policies
MITSUBISHI UFJ FINANCIAL GROUP, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS-(Continued)
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, 2023 was as
follows:
Asset category
Japanese equity securities
Japanese debt securities
Non-Japanese equity securities
Non-Japanese debt securities
Real estate
Short-term assets and other
Total
Domestic
subsidiaries
Pension
benefits
and SIP
Foreign offices
and subsidiaries
Pension
benefits
Other
benefits
34.2%
—%
—%
27.6
13.8
18.1
1.3
5.0
—
16.3
64.8
3.6
15.3
—
30.0
64.0
6.0
—
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
•
•
•
•
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.
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MITSUBISHI UFJ FINANCIAL GROUP, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS-(Continued)
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:
Fiscal year ending March 31:
2024
2025
2026
2027
2028
Thereafter (2029-2033)
Fair value measurement of the plan assets
Domestic
subsidiaries
Pension
benefits
and SIP
Foreign offices
and subsidiaries
Pension
benefits
(in millions)
Other
benefits
¥
80,489 ¥
14,370 ¥
79,347
78,884
77,514
77,892
372,835
10,311
11,562
13,474
14,440
97,390
2,364
2,252
2,138
2,014
1,874
7,868
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.
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
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MITSUBISHI UFJ FINANCIAL GROUP, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS-(Continued)
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 with the remainder consisting 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.
The following table presents the fair value of each major category of plan assets as of March 31, 2022 and 2023:
Pension benefits and SIP Investments:
At March 31, 2022
Assets category
Domestic subsidiaries
Foreign offices and subsidiaries
Level 1
Level 2
Level 3
Total
Level 1
Level 2
Level 3
Total
Japanese government bonds
Non-Japanese government bonds
Other debt securities
Japanese marketable equity securities
Non-Japanese marketable equity securities
Other investment funds
Japanese general account of life insurance
companies(1)
Other investments
Total
At March 31, 2023
Assets category
(in millions)
¥ 140,538 ¥
— ¥
— ¥ 140,538 ¥
— ¥
— ¥
— ¥
—
—
—
9,950
14,648
848,482
87,983
—
—
176
—
—
209,482
11,819
17,563
—
232
—
—
—
—
—
—
68,887
5,385
24,830
848,482
—
—
88,159
34,659
133,815
—
556
—
83,442
186,372
209,482
—
—
—
—
—
—
—
—
74,272
133,815
—
35,215
269,814 (2)
—
29,382
1,001
11,095
39,729
51,825
¥ 1,098,772 ¥ 241,869 ¥
232 ¥ 1,340,873 ¥ 187,989 ¥ 337,223 ¥ 39,729 ¥ 564,941
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
Non-Japanese government bonds
Other debt securities
Japanese marketable equity securities
Non-Japanese marketable equity securities
Other investment funds
Japanese general account of life insurance
companies(1)
Other investments
Total
¥ 133,664 ¥
— ¥
— ¥ 133,664 ¥
— ¥
— ¥
— ¥
—
—
—
2,793
6,251
809,371
78,840
—
—
165
—
—
19,644
205,117
4,677
—
40
—
—
—
—
—
—
2,632
9,084
809,371
79,005
—
—
—
3
38
2,339
15,749
—
—
59,023
—
—
—
—
—
205,117
24,321
—
2,937
—
1,869
—
25,362
4,971
15,749
—
3
59,061
—
30,168
¥ 1,044,312 ¥ 216,210 ¥
40 ¥ 1,260,562 ¥
5,610 ¥ 78,980 ¥ 25,362 ¥ 109,952
Notes:
(1)
“Japanese general accounts of life insurance companies” is a contract with life insurance companies that guarantees a return of approximately 1.25% from April 1,
2021 to March 31, 2022 and 1.25% from April 1, 2022 to March 31, 2023.
(2) Other investment funds of the foreign offices and subsidiaries include mutual funds and common collective funds of ¥86,724 million and ¥146,169 million,
respectively, which were held by MUFG Americas Holdings at December 31, 2021.
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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, 2022 and 2023:
Assets category
2022
2023
2022
2023
Domestic
subsidiaries
Foreign offices and
subsidiaries
Japanese pooled funds:
Japanese marketable equity securities
¥
Japanese debt securities
Non-Japanese marketable equity securities
Non-Japanese debt securities
Other
Total pooled funds
Other investment funds
Total
(in millions)
¥
71,753
¥
120,108
186,555
332,691
76,892
104,793
221,250
219,018
249,274
92,558
886,893
662,737 (1)
787,999
726,011 (1)
¥
1,549,630
¥
1,514,010
¥
¥
—
—
—
—
—
—
140,923 (2)
140,923
¥
—
—
—
—
—
—
105,867 (2)
105,867
Notes:
(1) Other investment funds of the domestic subsidiaries include mutual funds and real estate funds of ¥625,237 million and ¥15,417 million, respectively, at
March 31, 2022 and ¥690,781 million and ¥12,351 million, respectively, at March 31, 2023.
(2) Other investment funds of the foreign offices and subsidiaries include mutual funds, real estate funds and common collective funds of ¥25,356 million, ¥80,349
million and ¥34,971 million, respectively, at March 31, 2022 and ¥12,136 million, ¥63,759 million and ¥29,756 million, respectively, at March 31, 2023.
Other debt securities and Japanese debt securities in the above Pension benefits and SIP tables include ¥625 million (0.02% of
plan assets) of debt securities issued by the MUFG Group at March 31, 2022 and ¥1,614 million (0.05% of plan assets) at March 31,
2023, respectively. Japanese marketable equity securities in the above Pension benefits and SIP tables include ¥4,606 million (0.13%
of plan assets) of common stock issued by the MUFG Group at March 31, 2022 and ¥5,284 million (0.18% of plan assets) at
March 31, 2023, respectively.
F-68
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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, 2022 and 2023 were as follows:
Other assets:
Accounts receivable:
Receivables from brokers, dealers and customers for securities transactions
¥
644,443 ¥
754,483
2022
2023
(in millions)
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)
Assets held for sale relating to transferred business of MUFG Union Bank (Note 2)
Other
Total
Other liabilities:
Accounts payable:
1,187,311
3,066,738
1,356,603
2,893,178
933,000
246,271
79,191
261,803
11,621,567
1,794,983
3,482,292
1,335,369
2,585,837
933,000
500,506
182,388
227,112
—
4,421,979
5,659,034
¥ 26,712,084 ¥ 17,455,004
Payables to brokers, dealers and customers for securities transactions
¥
1,970,158 ¥
2,062,782
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)
Liabilities held for sale relating to transferred business of MUFG Union Bank (Note 2)
Accrued and other liabilities
Total
1,311,035
6,826,215
98,183
530,267
126,055
89,062
45,358
1,017,580
384,183
11,157,660
1,920,945
6,891,545
385,921
208,610
143,770
89,092
54,359
1,318,338
337,391
—
3,106,706
3,934,453
¥ 26,662,462 ¥ 17,347,206
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 consolidated statements of operations. The receivables relating to the card business include
¥5,483 million and ¥6,849 million of past due receivables (1-3 months past due receivables of ¥2,581 million and ¥3,173 million, and greater than 3 months past
due receivables of ¥2,902 million and ¥3,676 million) as of March 31, 2022 and 2023, respectively 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. The
change of allowance for credit losses on these receivables during the fiscal years ended March 31, 2021, 2022 and 2023 is primarily due to provision of the
allowance for the receivables.
Investments in equity method investees include marketable equity securities carried at ¥2,481,644 million and ¥2,918,480
million at March 31, 2022 and 2023, respectively. Corresponding aggregated market values were ¥4,714,562 million and ¥5,099,671
million, respectively. Marketable equity securities include Morgan Stanley’s common stock carried at ¥2,058,638 million and
¥2,443,602 million at March 31, 2022 and 2023, respectively. As of March 31, 2023, the MUFG Group held approximately 22.58% of
its common stock. Investments in equity method investees also include investments in Morgan Stanley MUFG Securities, Co., Ltd. at
¥183,932 million and ¥194,225 million at March 31, 2022 and 2023, respectively.
F-69
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MITSUBISHI UFJ FINANCIAL GROUP, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS-(Continued)
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 ¥53,758 million, ¥6,949 million and ¥58,061 million for the
fiscal years ended March 31, 2021, 2022 and 2023 respectively. The impairment losses are included in Equity in earnings of equity
method investees—net in the accompanying consolidated statements of operations.
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, 2022 and 2023, and for each of the three years ended March 31, 2023 is as follows:
Trading assets
Securities purchased under agreements to resell
Securities borrowed
Total assets
Deposits
Customer and other payables
Borrowings
Total liabilities
Noncontrolling interests
2022
2023
(in billions)
¥
36,335 ¥
15,637
18,480
149,589
44,163
29,815
28,127
42,770
16,275
19,524
160,223
46,405
29,470
33,407
136,851
146,609
144
151
Net revenues
Total non-interest expenses
Income from continuing operations before income taxes
Net income applicable to Morgan Stanley
2021
2022
(in billions)
2023
¥
5,841 ¥
6,655 ¥
3,932
1,881
1,433
4,498
2,139
1,650
7,235
5,376
1,797
1,402
Summarized financial information of the MUFG Group’s equity method investees, other than Morgan Stanley as of March 31,
2022 and 2023, and for each of the three years ended March 31, 2023 is as follows:
Net loans
Total assets
Deposits
Total liabilities
Noncontrolling interests
Total interest income
Total interest expense
Net interest income
Provision for credit losses
Income before income tax expense
Net income
2022
2023
(in billions)
¥
17,107 ¥
32,992
11,291
27,255
93
18,114
35,208
11,963
29,123
77
2021
2022
(in billions)
2023
¥
1,058 ¥
1,119 ¥
1,430
375
683
215
476
400
335
784
207
582
488
519
911
245
616
498
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Table of Contents
MITSUBISHI UFJ FINANCIAL GROUP, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS-(Continued)
15. OFFSETTING OF DERIVATIVES, REPURCHASE AGREEMENTS, AND SECURITIES LENDING
TRANSACTIONS
The following tables present, as of March 31, 2022 and 2023, 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, 2022:
Financial assets:
Derivative assets
Gross
amounts of
recognized
assets/
liabilities
Gross
amounts
offset in the
consolidated
balance
sheet
Net amounts
presented in
the
consolidated
balance
sheet(1)
Gross amounts not offset in
the consolidated balance
sheet
Financial
instruments
Cash
collateral
received/
pledged
(in billions)
Net amounts
¥
10,611 ¥
— ¥
10,611 ¥
(7,032) ¥
(620) ¥
2,959
Receivables under resale agreements
Receivables under securities borrowing transactions
14,527
4,571
(2,024)
12,503
(11,614)
(75)
4,496
(4,367)
(29)
—
860
129
¥
29,709 ¥
(2,099) ¥
27,610 ¥
(23,013) ¥
(649) ¥
3,948
Total
Financial liabilities:
Derivative liabilities
¥
10,948 ¥
— ¥
10,948 ¥
(6,749) ¥
(2,225) ¥
Payables under repurchase agreements
Payables under securities lending transactions
Obligations to return securities received as collateral
29,717
1,097
6,826
(1,991)
27,726
(26,115)
(75)
—
1,022
6,826
(990)
(1,864)
(85)
(5)
—
Total
¥
48,588 ¥
(2,066) ¥
46,522 ¥
(35,718) ¥
(2,315) ¥
1,974
1,526
27
4,962
8,489
At March 31, 2023:
Financial assets:
Derivative assets
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
(in billions)
Net amounts
¥
12,911 ¥
— ¥
12,911 ¥
(9,902) ¥
(690) ¥
2,319
Receivables under resale agreements
Receivables under securities borrowing transactions
16,152
4,630
(2,093)
14,059
(13,391)
(74)
4,556
(4,478)
(32)
—
636
78
Total
Financial liabilities:
Derivative liabilities
¥
33,693 ¥
(2,167) ¥
31,526 ¥
(27,771) ¥
(722) ¥
3,033
¥
13,833 ¥
— ¥
13,833 ¥
(9,668) ¥
(1,489) ¥
2,676
Payables under repurchase agreements
Payables under securities lending transactions
Obligations to return securities received as collateral
42,172
1,212
6,892
(2,040)
40,132
(39,232)
(74)
—
1,138
6,892
(1,108)
(1,975)
(76)
(18)
—
Total
¥
64,109 ¥
(2,114) ¥
61,995 ¥
(51,983) ¥
(1,583) ¥
824
12
4,917
8,429
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MITSUBISHI UFJ FINANCIAL GROUP, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS-(Continued)
Note:
(1) Net amounts in this table includes those relating to Financial assets and liabilities of transferred business of MUFG Union Bank. See Note 2 for more information.
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, 2022 and 2023. 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.
Payables under repurchase agreements
Payables under securities lending transactions
Obligations to return securities received as collateral
Total
Payables under repurchase agreements
Payables under securities lending transactions
Obligations to return securities received as collateral
Total
March 31, 2022
Remaining Contractual Maturity
Overnight
and open
30 days
or less
31-90
days
Over
90 days
Total
(in billions)
¥
6,703 ¥ 17,050 ¥
3,934 ¥
2,030 ¥ 29,717
972
5,782
95
450
29
437
1
157
1,097
6,826
¥ 13,457 ¥ 17,595 ¥
4,400 ¥
2,188 ¥ 37,640
March 31, 2023
Remaining Contractual Maturity
Overnight
and open
30 days
or less
31-90
days
Over
90 days
Total
(in billions)
¥
8,593 ¥ 23,546 ¥
8,393 ¥
1,640 ¥ 42,172
947
191
5
69
1,212
5,516
642
¥ 15,056 ¥ 24,379 ¥
404
8,802 ¥
330
6,892
2,039 ¥ 50,276
F-72
Table of Contents
MITSUBISHI UFJ FINANCIAL GROUP, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS-(Continued)
Secured borrowing by the class of collateral pledged at March 31, 2022 and 2023 was as follows:
March 31, 2022
Payables under
repurchase
agreements
Payables under
securities
lending
transactions
Obligations
to return
securities
received
as collateral
Japanese national government and Japanese government agency bonds ¥
Foreign government and official institution bonds
Corporate bonds
Residential mortgage-backed securities
Other debt securities
Marketable equity securities
Other
Total
¥
29,717 ¥
1,097 ¥
6,826 ¥
37,640
(in billions)
7,486 ¥
359 ¥
4,199 ¥
14,116
745
6,720
276
360
14
11
68
1
—
641
17
1,017
330
—
2
1,278
—
March 31, 2023
Payables under
repurchase
agreements
Payables under
securities
lending
transactions
Obligations
to return
securities
received
as collateral
(in billions)
13,280 ¥
577 ¥
3,956 ¥
17,618
657
9,650
552
367
48
9
70
—
—
556
—
1,122
400
—
46
1,368
—
Total
12,044
15,144
1,143
6,721
278
2,279
31
Total
17,813
18,749
1,127
9,650
598
2,291
48
¥
42,172 ¥
1,212 ¥
6,892 ¥
50,276
Japanese national government and Japanese government agency bonds ¥
Foreign government and official institution bonds
Corporate bonds
Residential mortgage-backed securities
Other debt securities
Marketable equity securities
Other
Total
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,
2023.
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, 2021, 2022 and 2023, 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, 2021, 2022 and 2023
were as follows:
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MITSUBISHI UFJ FINANCIAL GROUP, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS-(Continued)
Balance at beginning of fiscal year
Retirement of shares of common stock
Balance at end of fiscal year
2021
2022
(shares)
2023
13,581,995,120
13,581,995,120
13,281,995,120
—
(300,000,000)
(594,284,200)
13,581,995,120
13,281,995,120
12,687,710,920
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, 2023, 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.
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.
MUFG resolved at the meeting of Board of Directors held on November 15, 2021 to repurchase up to the lesser of 300,000,000
shares of our common stock and ¥150 billion from November 16, 2021 to March 31, 2022. Under this share repurchase program,
MUFG repurchased 225,408,800 shares of MUFG's common stock for ¥149,999,964,962 from November 2021 to March 2022. Also,
MUFG cancelled 300,000,000 shares of treasury stock on November 30, 2021.
MUFG resolved at the meeting of Board of Directors held on May 16, 2022 to repurchase up to the lesser of 600,000,000 shares
of our common stock and ¥300 billion from May 17, 2022 to November 11, 2022. Under this share repurchase program, MUFG
repurchased 418,926,300 shares of MUFG's common stock for ¥299,999,909,768 from May 2022 to October 2022. Also, MUFG
cancelled 418,926,300 shares of treasury stock on November 30, 2022.
MUFG resolved at the meeting of Board of Directors held on November 14, 2022 to repurchase up to the lesser of 300,000,000
shares of our common stock and ¥150 billion from December 2, 2022 to January 31, 2023. Under this share repurchase program,
MUFG repurchased 175,357,900 shares of MUFG's common stock for ¥149,999,996,001 from December 2022 to January 2023. Also,
MUFG cancelled 175,357,900 shares of treasury stock on February 28, 2023.
MUFG intends to agilely engage in repurchases of shares of MUFG's own stock as a means to return profits to shareholders and
improve capital efficiency, taking into account MUFG's business performance and capital position, opportunities for growth
investments, and market conditions including stock prices. As a general policy, MUFG intends to cancel treasury shares to the extent
that such shares exceed approximately 5% of our total issued shares (including treasury shares).
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Table of Contents
MITSUBISHI UFJ FINANCIAL GROUP, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS-(Continued)
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 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 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-75
Table of Contents
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, 2023, was ¥4,214,685 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.
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, 2021, 2022 and 2023:
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 measurement of credit losses on financial
instruments
Elimination of the difference in reporting periods of the transferred business (Note 2)
Balance at end of fiscal year
Net debt valuation adjustments:
Balance at beginning of fiscal year
Net change during the fiscal year
Balance at end of fiscal year
Net unrealized gains (losses) on derivatives qualifying for cash flow hedges:
Balance at beginning of fiscal year
Net change during the fiscal year
Elimination of the difference in reporting periods of the transferred business (Note 2)
Balance at end of fiscal year
Defined benefit plans:
Balance at beginning of fiscal year
Net change during the fiscal year
2021
2022
2023
(in millions)
¥ (344,785) ¥ (383,004) ¥ (674,230)
(38,253)
(291,226)
(227,053)
34
—
—
—
—
17,817
¥ (383,004) ¥ (674,230) ¥ (883,466)
¥
45,502 ¥
(37,862) ¥
(14,538)
(83,364)
23,324
17,806
¥
(37,862) ¥
(14,538) ¥
3,268
¥
(13,343) ¥
32,372
—
19,029 ¥
(13,060)
—
5,969
5,140
(10,515)
¥
19,029 ¥
5,969 ¥
594
¥ (337,918) ¥
(20,382) ¥
29,124
317,536
49,506
6,773
Elimination of the difference in reporting periods of the transferred business (Note 2)
—
—
(27,593)
Balance at end of fiscal year
Foreign currency translation adjustments:
Balance at beginning of fiscal year
Net change during the fiscal year
Balance at end of fiscal year
Balance at end of fiscal year
¥
(20,382) ¥
29,124 ¥
8,304
¥ 230,127 ¥ 132,738 ¥ 880,708
(97,389)
747,970
834,784
¥ 132,738 ¥ 880,708 ¥ 1,715,492
¥ (289,481) ¥ 227,033 ¥ 844,192
F-76
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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, 2021, 2022 and 2023:
2021
Tax
(expense)
or benefit
Before tax
Net of tax
Before tax
2022
Tax
(expense)
or benefit
Net of tax
Before tax
2023
Tax
(expense)
or benefit
Net of tax
(in millions)
Net unrealized gains (losses) on investment securities:
Net unrealized losses on investment securities
¥ (69,247) ¥
(599) ¥ (69,846) ¥ (347,106) ¥ 76,360 ¥ (270,746) ¥ (600,339) ¥ 159,480 ¥ (440,859)
Reclassification adjustment for losses (gains)
included in net income (loss) before attribution
of noncontrolling interests
Elimination of the difference in reporting periods
of the transferred business (Note 2)
(383)
(547)
(930)
(2,015)
11,268
9,253
337,313
(99,409)
237,904
—
—
—
—
—
—
(24,147)
6,330
(17,817)
Net change
(69,630)
(1,146)
(70,776)
(349,121)
87,628
(261,493)
(287,173)
66,401
(220,772)
Net unrealized gains (losses) on investment
securities attributable to noncontrolling interests
Net unrealized losses on investment securities
attributable to Mitsubishi UFJ Financial Group
Net debt valuation adjustments:
(32,523)
(38,253)
29,733
(291,226)
6,281
(227,053)
Net debt valuation adjustments
(126,007)
38,584
(87,423)
32,735
(10,025)
22,710
25,220
(7,722)
17,498
Reclassification adjustment for losses included in
net income (loss) before attribution of
noncontrolling interests
5,851
(1,792)
4,059
885
(271)
614
444
(136)
308
Net change
(120,156)
36,792
(83,364)
33,620
(10,296)
23,324
25,664
(7,858)
17,806
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 (loss) before attribution
of noncontrolling interests
Elimination of the difference in reporting periods
of the transferred business (Note 2)
—
(83,364)
—
23,324
—
17,806
44,255
(12,359)
31,896
(5,542)
1,825
(3,717)
(38,278)
10,600
(27,678)
164
115
279
(12,200)
3,143
(9,057)
31,019
(8,458)
22,561
(3,736)
(1,594)
10,515
5,398
—
—
—
—
—
—
14,251
Net change
44,419
(12,244)
32,175
(17,742)
4,968
(12,774)
6,992
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MITSUBISHI UFJ FINANCIAL GROUP, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS-(Continued)
2021
Tax
(expense)
or benefit
Before tax
Net of tax
Before tax
2022
Tax
(expense)
or benefit
Net of tax
Before tax
2023
Tax
(expense)
or benefit
Net of tax
(in millions)
(197)
32,372
286
(13,060)
258
5,140
436,435
(133,404)
303,031
62,946
(17,350)
45,596
(129,100)
37,654
(91,446)
22,504
(6,479)
16,025
7,042
(1,689)
5,353
98,428
(27,313)
71,115
Net unrealized gains (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 included
in net income (loss) before attribution of
noncontrolling interests
Elimination of the difference in reporting
periods of the transferred business (Note 2)
—
—
—
—
—
—
37,257
(9,664)
Net change
458,939
(139,883)
319,056
69,988
(19,039)
50,949
6,585
677
Defined benefit plans attributable to
noncontrolling interests
Defined benefit plans attributable to Mitsubishi
UFJ Financial Group
Foreign currency translation adjustments:
1,520
317,536
1,443
49,506
27,593
7,262
489
6,773
Foreign currency translation adjustments
(61,085)
(14,370)
(75,455)
853,517
(98,059)
755,458
958,705
(94,056)
864,649
Reclassification adjustment for gains included in
net income (loss) before attribution of
noncontrolling interests
(57,534)
17,738
(39,796)
(4,296)
1,317
(2,979)
(24,424)
7,480
(16,944)
Net change
(118,619)
3,368
(115,251)
849,221
(96,742)
752,479
934,281
(86,576)
847,705
Foreign currency translation adjustments
attributable to noncontrolling interests
Foreign currency translation adjustments
attributable to Mitsubishi UFJ Financial
Group
Other comprehensive income attributable to
Mitsubishi UFJ Financial Group
(17,862)
4,509
12,921
(97,389)
¥ 130,902
747,970
¥ 516,514
834,784
¥ 637,450
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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 operations for the fiscal years ended March 31, 2021, 2022 and 2023:
Details of Accumulated OCI components
Net unrealized losses (gains) on investment securities
Net losses (gains) on sales and redemptions of
2021
2022
2023
Amount reclassified out of
Accumulated OCI
(in millions)
Line items in the consolidated
statements of operations
Available-for-sale debt securities
¥
6,410 ¥ (48,637) ¥
(2,682) Investment securities gains (losses)—net
Impairment losses on investment securities
Gain on sale of MUFG Union Bank (Note 2)
6
—
47,069
359,629 Investment securities gains (losses)—net
—
(28,251) Gain on sale of MUFG Union Bank
Other
(6,799)
(447)
8,617
(383)
(547)
(2,015)
337,313 Total before tax
11,268
(99,409) Income tax expense (benefit)
(930) ¥
9,253 ¥ 237,904 Net of tax
5,851 ¥
885 ¥
444
Equity in earnings of equity method investees
—net or Other non-interest income
¥
¥
5,851
(1,792)
885
(271)
444 Total before tax
(136) Income tax expense (benefit)
¥
4,059 ¥
614 ¥
308 Net of tax
Net debt valuation adjustments
Net unrealized losses (gains) on derivatives
qualifying for cash flow hedges Interest rate
contracts
Interest rate contracts
¥
(3,579) ¥ (12,017) ¥
(4,447) Interest income on Loans,
including fees
Foreign exchange contracts
3,743
(183)
(1,419)
Interest expense on Long-term debt or Foreign
exchange gains—net
Gain on sale of MUFG Union Bank (Note 2)
Defined benefit plans
Net actuarial loss(1)
Prior service cost(1)
—
164
115
—
36,885 Gain on sale of MUFG Union Bank
(12,200)
31,019 Total before tax
3,143
(8,458) Income tax expense (benefit)
¥
279 ¥
(9,057) ¥ 22,561 Net of tax
¥ 28,787 ¥ 17,279 ¥
9,135 Other non-interest expenses
(4,267)
(4,467)
(4,952) Other non-interest expenses
Loss (gain) on settlements and curtailment, and
other(1)
(2,016)
(5,770)
79,850 Other non-interest income or expenses
Gain on sale of MUFG Union Bank (Note 2)
—
—
14,395 Gain on sale of MUFG Union Bank
Foreign currency translation adjustments
¥ (57,561) ¥
(4,303) ¥ (24,424) Other non-interest income
22,504
7,042
98,428 Total before tax
(6,479)
(1,689)
(27,313) Income tax expense (benefit)
¥ 16,025 ¥
5,353 ¥ 71,115 Net of tax
27
7
— Other non-interest expenses
(57,534)
(4,296)
(24,424) Total before tax
17,738
1,317
7,480 Income tax expense (benefit)
¥ (39,796) ¥
(2,979) ¥ (16,944) Net of tax
Total reclassifications for the period
¥ (29,398) ¥ (10,584) ¥ 442,780 Total before tax
9,035
13,768
(127,836) Income tax expense (benefit)
¥ (20,363) ¥
3,184 ¥ 314,944 Net of tax
Note:
(1) These Accumulated OCI components are components of net periodic benefit cost. See Note 13 for more information.
F-79
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MITSUBISHI UFJ FINANCIAL GROUP, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS-(Continued)
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, 2022 and 2023 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”).”
“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:
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MITSUBISHI UFJ FINANCIAL GROUP, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS-(Continued)
•
•
•
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.
Effective March 31, 2016, the FSA’s capital conservation buffer, countercyclical buffer and the Global Systemically 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, 2022. 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, 2022 and 2023, and a countercyclical buffer of 0.01%
and 0.04% as of March 31, 2022 and 2023, 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. In addition, effective as of
March 31, 2023, a leverage ratio buffer set at 50% of a G-SIB surcharge, which is 0.75% for MUFG, 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.
F-81
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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)
¥ 17,858,656
14.29% ¥ 15,002,201
12.01%
14,076,877
12.94
1,969,282
20.78
8,700,226
758,073
8.00
8.00
15,476,287
12.38
12,503,916
10.01
12,092,189
11.11
1,803,306
19.03
6,525,170
568,555
6.00
6.00
13,823,912
11.06
10,630,203
10,728,587
9.86
1,640,458
17.31
4,893,877
426,416
15,476,287
12,092,189
1,803,306
5.14
4.96
6.77
9,023,770
7,312,672
798,855
8.51
4.50
4.50
3.00
3.00
3.00
¥ 17,166,109
13.91% ¥ 14,852,953
12.04%
14,207,818
12.58
2,041,563
20.67
9,029,639
790,026
8.00
8.00
14,863,717
12.04
12,385,685
10.04
12,469,254
1,770,924
11.04
17.93
6,772,229
592,519
6.00
6.00
13,280,842
10.76
10,535,234
11,172,146
9.89
1,620,889
16.41
5,079,172
444,389
14,863,717
12,469,254
1,770,924
4.70
4.75
7.29
11,851,297
7,867,085
728,488
8.54
4.50
4.50
3.75
3.00
3.00
Consolidated:
At March 31, 2022:
Total capital (to risk-weighted assets):
MUFG(1)
BK
TB
Tier 1 capital (to risk-weighted assets):
MUFG(1)
BK
TB
Common Equity Tier 1 capital (to risk-weighted assets):
MUFG(1)
BK
TB
Leverage ratio:
MUFG
BK
TB
At March 31, 2023:
Total capital (to risk-weighted assets):
MUFG(1)
BK
TB
Tier 1 capital (to risk-weighted assets):
MUFG(1)
BK
TB
Common Equity Tier 1 capital (to risk-weighted assets):
MUFG(1)
BK
TB
Leverage ratio:
MUFG(2)
BK
TB
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MITSUBISHI UFJ FINANCIAL GROUP, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS-(Continued)
Stand-alone:
At March 31, 2022:
Total capital (to risk-weighted assets):
BK
TB
Tier 1 capital (to risk-weighted assets):
BK
TB
Common Equity Tier 1 capital (to risk-weighted assets):
BK
TB
Leverage ratio:
BK
TB
At March 31, 2023:
Total capital (to risk-weighted assets):
BK
TB
Tier 1 capital (to risk-weighted assets):
BK
TB
Common Equity Tier 1 capital (to risk-weighted assets):
BK
TB
Leverage ratio:
BK
TB
Actual
For capital
adequacy purposes
Amount
Ratio
Amount
Ratio
(in millions, except percentages)
¥ 11,167,553
11.91 % ¥ 7,498,348
8.00 %
2,122,840
19.97
850,030
8.00
9,565,792
10.20
1,957,340
18.42
5,623,761
637,523
6.00
6.00
8,261,659
8.81
1,794,840
16.89
4,217,821
478,142
4.50
4.50
9,565,792
1,957,340
4.59
7.81
6,249,606
751,302
3.00
3.00
¥ 11,115,302
10.71 % ¥ 8,295,019
8.00 %
2,131,007
19.60
869,700
8.00
9,644,128
9.30
1,861,150
17.11
6,221,264
652,275
6.00
6.00
8,410,290
8.11
1,711,650
15.74
4,665,948
489,206
4.50
4.50
9,644,128
1,861,150
4.02
8.15
7,183,295
684,297
3.00
3.00
Notes:
(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, 2022 and 2023, and the countercyclical buffer
of 0.01% and 0.04% as of March 31, 2022 and 2023, respectively.
(2) Effective March 31, 2023, the G-SIB leverage ratio buffer requirement became applicable to Japanese banking institutions with international operations conducted
through foreign offices. As a result, in addition to the 3.0% minimum leverage ratio, MUFG is required to maintain a G-SIB leverage ratio buffer of 0.75% as of
March 31, 2023.
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.
F-83
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MITSUBISHI UFJ FINANCIAL GROUP, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS-(Continued)
At March 31, 2022, Mitsubishi UFJ Morgan Stanley Securities’s capital accounts less certain fixed assets of ¥486,756 million
on a stand-alone basis were 317.1% of the total amounts equivalent to market, counterparty credit and operational risks. At March 31,
2023, its capital accounts less certain fixed assets of ¥550,276 million on a stand-alone basis, are 310.9% of the total amounts
equivalent to market, counterparty credit and operational risks.
Management believes, as of March 31, 2023, 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)”) 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 must meet specific
capital guidelines that involve quantitative measures of MUFG Americas Holdings’s assets, liabilities, and certain off-balance sheet
items as calculated under regulatory accounting practices. MUFG Americas Holdings’s capital amounts are also subject to qualitative
judgments by the regulators about components, risk-weightings and other factors.
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).
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%) 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, 2021.
As described in Note 2, the MUFG Group sold all the issued and outstanding shares of common stock of MUFG Union Bank to
U.S. Bancorp on December 1, 2022 and the portion of the business operated in MUFG Americas Holdings became immaterial in the
MUFG group perspective. The figures on the table below are calculated according to U.S. Basel III as of December 31,2021. MUFG
Americas Holdings’s actual capital amounts and ratios are presented as follows:
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MITSUBISHI UFJ FINANCIAL GROUP, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS-(Continued)
Actual
Minimum capital
ratios required(1)
Amount
Ratio
Amount
Ratio
(in millions, except percentages)
MUAH:
At December 31, 2021:
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)
$
17,177
16.32% $
11,890
11.30%
16,843
16.01
16,843
10.44
16,843
16.01
9,786
6,453
8,208
9.30
4.00
7.80
Notes:
(1) The minimum capital requirement includes a capital conservation buffer of 3.3% at December 31, 2021.
(2) Excludes certain deductions.
The figures on the table below are calculated according to U.S. Basel III as of December 31, 2021. MUFG Union Bank’s actual
capital amounts and ratios are presented as follows:
BK(US):
At December 31, 2021:
Total capital (to risk-weighted assets)
Tier 1 capital (to risk-weighted assets)
Tier 1 capital (to quarterly average assets)(2)
Actual
Minimum capital
ratios required(1)
Ratios OCC
requires to be
“well capitalized”
Amount
Ratio
Amount
Ratio
Amount
Ratio
(in millions, except percentages)
$ 16,265
17.36 % $ 9,840
10.50 % $ 9,371
10.00 %
15,629
16.68
7,966
15,629
12.14
5,149
8.50
4.00
7.00
7,497
6,436
6,091
8.00
5.00
6.50
Common Equity Tier 1 capital (to risk-weighted assets)
15,629
16.68
6,560
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, 2021, that MUFG Americas Holdings and MUFG Union Bank met all capital
adequacy requirements to which they are subject.
22. EARNINGS (LOSS) PER COMMON SHARE APPLICABLE TO COMMON SHAREHOLDERS OF MUFG
Reconciliations of net income (loss) 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, 2021, 2022 and 2023 are as
follows:
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MITSUBISHI UFJ FINANCIAL GROUP, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS-(Continued)
Income (loss) (Numerator):
Net income (loss) attributable to Mitsubishi UFJ Financial Group
¥ 1,117,298 ¥
(83,320) ¥ 599,908
Effect of dilutive instruments:
Stock acquisition rights and restricted stock units—Morgan Stanley
(4,159)
(5,361)
(3,816)
2021
2022
2023
(in millions)
Earnings (loss) applicable to common shareholders of Mitsubishi UFJ Financial Group and
assumed conversions
Shares (Denominator):
Weighted average common shares outstanding
Effect of dilutive instruments:
Stock acquisition rights and the common shares of MUFG under the Board Incentive
Plan(1)
Weighted average common shares for diluted computation
Earnings (loss) per common share applicable to common shareholders of Mitsubishi
UFJ Financial Group:
Basic earnings (loss) per common share:
Earnings (loss) applicable to common shareholders of Mitsubishi UFJ Financial
Group
Diluted earnings (loss) per common share:
¥ 1,113,139 ¥
(88,681) ¥ 596,092
2021
2022
2023
(thousands of shares)
12,859,737
12,798,060
12,317,723
—
—
1,132
12,859,737
12,798,060
12,318,855
2021
2022
(in yen)
2023
¥
86.88 ¥
(6.51)
¥48.70
Earnings (loss) applicable to common shareholders of Mitsubishi UFJ Financial
Group(1)
¥
86.56 ¥
(6.93)
¥48.39
Note:
(1) For the fiscal years ended March 31, 2021 and 2022, 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 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.
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MITSUBISHI UFJ FINANCIAL GROUP, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS-(Continued)
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.
Notional Amounts of Derivative Contracts
The following table summarizes the notional amounts of derivative contracts at March 31, 2022 and 2023:
Interest rate contracts
Foreign exchange contracts
Equity contracts
Commodity contracts
Credit derivatives
Other
Total
Note:
(1)
Includes both written and purchased positions.
Notional amounts(1)
2022
2023
(in trillions)
¥
1,391.8 ¥
1,625.6
245.0
7.4
0.1
9.8
3.2
307.4
5.3
0.1
11.5
3.2
¥
1,657.3 ¥
1,953.1
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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, 2022 and 2023:
Not designated
as hedges(2)
2022(1)(5)
Designated
as hedges(3)
Fair value of derivative instruments
Total
derivatives(4)
Not designated
as hedges(2)
(in billions)
2023(1)(5)
Designated
as hedges(3)
Total
derivatives(4)
¥
5,445 ¥
— ¥
5,445 ¥
7,445 ¥
— ¥
4,801
151
22
103
10
2
—
—
—
—
4,803
5,276
151
22
103
10
90
10
80
5
5
—
—
—
—
7,445
5,281
90
10
80
5
¥
¥
10,532 ¥
2 ¥
10,534 ¥
12,906 ¥
5 ¥
12,911
5,652 ¥
4,907
277
22
101
(65)
— ¥
5,652 ¥
8,697 ¥
— ¥
1
—
—
—
—
4,908
277
22
101
5,018
128
10
90
(65)
(110)
—
—
—
—
—
8,697
5,018
128
10
90
(110)
Derivative assets:
Interest rate contracts
Foreign exchange contracts
Equity contracts
Commodity contracts
Credit derivatives
Other(6)
Total derivative assets
Derivative liabilities:
Interest rate contracts
Foreign exchange contracts
Equity contracts
Commodity contracts
Credit derivatives
Other(6)
Total derivative liabilities
¥
10,894 ¥
1 ¥
10,895 ¥
13,833 ¥
— ¥
13,833
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.
Impact of Derivatives on the Consolidated Statements of Operations
The following table provides more detailed information regarding the derivative-related impact on the accompanying
consolidated statements of operations for the fiscal years ended March 31, 2021, 2022 and 2023:
Gains and losses for trading and risk management derivatives (not designated as hedging instruments)
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MITSUBISHI UFJ FINANCIAL GROUP, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS-(Continued)
Trading and risk management derivatives gains and losses
(Not designated as hedging instruments)
Foreign
exchange
gains
(losses)
—net
2021
Trading
account
profits
(losses)
—net
Total
Foreign
exchange
gains
(losses)
—net
2022
Trading
account
profits
(losses)
—net
(in billions)
Foreign
exchange
gains
(losses)
—net
2023
Trading
account
profits
(losses)
—net
Total
Total
¥ — ¥
70 ¥ 70 ¥ — ¥
51 ¥ 51 ¥ — ¥
263 ¥ 263
(91)
—
(91)
(39)
—
(39)
(269) (269)
(53)
(53)
—
—
(98)
(98)
(34)
(34)
61
—
—
—
61
(13)
(13)
(20)
(20)
(178) (167)
(6)
(21)
(27)
(3)
8
5
—
—
11
¥
(80) ¥
(430) ¥ (510) ¥
(45) ¥
(102) ¥ (147) ¥
58 ¥
238 ¥ 296
Interest rate contracts
Foreign exchange contracts
Equity contracts
Credit derivatives
Other(1)
Total
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.
The table below summarizes certain information regarding protection sold through credit derivatives as of March 31, 2022 and
2023:
At March 31, 2022:
Single name credit default swaps:
Investment grade(2)
Non-investment grade
Total
Index and basket credit default swaps:
Investment grade(2)
Non-investment grade
Not rated
Total
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)
¥
408,281 ¥ 1,874,796 ¥
731,946 ¥ 3,015,023 ¥
(61,308)
91,161
349,847
66,452
507,460
5,378
499,442
2,224,643
798,398
3,522,483
(55,930)
67,600
56,299
19,944
143,843
458,153
19,936
279,955
758,044
36,955
—
886
37,841
562,708
76,235
300,785
939,728
(9,604)
(61)
(7,320)
(16,985)
Total credit default swaps sold
¥
643,285 ¥ 2,982,687 ¥
836,239 ¥ 4,462,211 ¥
(72,915)
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MITSUBISHI UFJ FINANCIAL GROUP, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS-(Continued)
At March 31, 2023:
Single name credit default swaps:
Investment grade(2)
Non-investment grade
Total
Index and basket credit default swaps:
Investment grade(2)
Non-investment grade
Not rated
Total
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)
¥
616,504 ¥ 2,222,393 ¥
529,796 ¥ 3,368,693 ¥
(30,117)
163,982
780,486
—
37,359
—
313,135
48,177
525,294
2,535,528
577,973
3,893,987
13,477
(16,640)
217,259
599,638
435,452
1,596
6,200
3,192
218,855
643,197
438,644
(1,266)
(7,121)
(3,329)
37,359
1,252,349
10,988
1,300,696
(11,716)
Total credit default swaps sold
¥
817,845 ¥ 3,787,877 ¥
588,961 ¥ 5,194,683 ¥
(28,356)
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.
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 ¥70 billion and ¥4,083 billion, respectively, at March 31, 2022, and approximately
¥27 billion and ¥4,880 billion, respectively, at March 31, 2023.
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, 2022 and 2023 was approximately ¥0.5 trillion and ¥0.8 trillion, respectively, for which the MUFG Group has posted
collateral of approximately ¥349 billion and ¥222 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 ¥53
billion and ¥60 billion, respectively, as of March 31, 2022 and ¥70 billion and ¥116 billion, respectively, as of March 31, 2023.
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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, 2022 and 2023. 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 ¥646.1 billion and ¥549.1 billion at March 31,
2022 and 2023, 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, 2022:
Maximum
potential/
Contractual
or Notional
amount
Amount by expiration period
1 year
or less
1-5 years
Over
5 years
(in billions)
Standby letters of credit and financial guarantees
¥
4,731 ¥
3,733 ¥
784 ¥
Performance guarantees
Derivative instruments(1)
Liabilities of trust accounts
Other
Total
At March 31, 2023:
3,828
39,982
12,262
71
2,807
14,670
6,413
6
887
16,988
672
65
¥
60,874 ¥
27,629 ¥
19,396 ¥
13,849
Maximum
potential/
Contractual
or Notional
amount
Amount by expiration period
1 year
or less
1-5 years
Over
5 years
(in billions)
4,179
48,363
17,139
85
3,100
22,197
8,780
15
930
16,036
798
70
¥
74,741 ¥
38,139 ¥
18,577 ¥
18,025
214
134
8,324
5,177
—
185
149
10,130
7,561
—
Standby letters of credit and financial guarantees
¥
4,975 ¥
4,047 ¥
743 ¥
Performance guarantees
Derivative instruments(1)
Liabilities of trust accounts
Other
Total
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
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MITSUBISHI UFJ FINANCIAL GROUP, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS-(Continued)
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, 2022 and 2023 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, 2022 and 2023, the carrying amounts of the liabilities related to guarantees and similar instruments set forth above
were ¥814,734 million and ¥1,243,157 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 ¥769,376
million and ¥1,188,798 million as of March 31, 2022 and 2023, respectively. Credit derivatives sold by the MUFG Group at
March 31, 2022 and 2023 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 ¥51,852 million and ¥48,615 million at March 31, 2022 and 2023, respectively, related
to these transactions.
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, 2022 and 2023. 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.
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At March 31, 2022:
MITSUBISHI UFJ FINANCIAL GROUP, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS-(Continued)
Amount by borrower grade
Maximum
potential/
Contractual
or Notional
amount
Normal
Close
Watch(1)
(in billions)
Likely to
become
Bankrupt
or Legally/
Virtually
Bankrupt(2)
Not
rated
Standby letters of credit and financial guarantees
Performance guarantees
Total
¥
¥
4,731 ¥
4,575 ¥
121 ¥
3,828
3,706
73
8,559 ¥
8,281 ¥
194 ¥
31 ¥
22
53 ¥
At March 31, 2023:
Amount by borrower grade
Maximum
potential/
Contractual
or Notional
amount
Normal
Close
Watch(1)
(in billions)
Likely to
become
Bankrupt
or Legally/
Virtually
Bankrupt(2)
Not
rated
Standby letters of credit and financial guarantees
Performance guarantees
Total
¥
¥
4,975 ¥
4,819 ¥
4,179
4,066
78 ¥
53
9,154 ¥
8,885 ¥
131 ¥
17 ¥
29
46 ¥
4
27
31
61
31
92
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 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. Substantially all of our off-balance sheet
instruments is comprised of commitments to extend credit at March 31, 2023, and approximately 62% of these commitments will
expire within one year, 34% from one year to five years and 4% after five years. The table below presents the contractual amounts
with regard to the other off-balance sheet instruments at March 31, 2022 and 2023:
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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS-(Continued)
Commitments to extend credit
Commercial letters of credit
Commitments to make investments
2022
2023
(in billions)
¥
82,886 ¥
88,631
908
478
871
705
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 such as 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.
The following tables present the assets and liabilities of consolidated VIEs recorded on the accompanying consolidated balance
sheets at March 31, 2022 and 2023:
Consolidated VIEs
Consolidated assets
At March 31, 2022:
Asset-backed conduits
Investment funds
Cash and
due from
banks
Total
Interest-
earning
deposits in
other
banks
Trading
account
assets
(in millions)
Investment
securities
Loans
All other
assets
¥ 6,115,286 ¥ 114,679 ¥ 24,959 ¥ 30,114 ¥
906,109 ¥ 5,016,254 ¥ 23,171
538,336
578
28,021
351,806
55,567
—
102,364
Special purpose entities created for structured
financing
Repackaged instruments
Securitization of the MUFG Group’s assets
Trust arrangements
Other
192,200
342,771
10,544,934
8,581,448
67,650
1,694
4,798
—
—
465
5,463
7,294
—
—
134,387
111,711
119,002
88,209
1,204
—
—
10,526,124
—
760,960
1,303,063
6,517,421
58,747
3,666
17,606
4
3,910
22,110
15,684
3,496
21,985
Total consolidated assets before elimination
26,382,625
122,214
63,557
1,306,671
2,392,134
22,270,506
227,543
The amounts eliminated in consolidation
(7,424,058) (115,486)
(36,175)
(54,363)
(567,242) (6,619,044)
(31,748)
Total consolidated assets
¥ 18,958,567 ¥
6,728 ¥ 27,382 ¥ 1,252,308 ¥ 1,824,892 ¥ 15,651,462 ¥ 195,795
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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS-(Continued)
Asset-backed conduits
Investment funds
Special purpose entities created for structured financing
Repackaged instruments
Securitization of the MUFG Group’s assets
Trust arrangements
Other
Total
Deposits
Consolidated liabilities
Other short-
term
borrowings
(in millions)
Long-term
debt
All other
liabilities
¥ 6,091,830 ¥
— ¥ 4,443,656 ¥ 1,337,938 ¥
310,236
29,368
101,814
345,606
10,569,281
—
—
—
—
—
—
6,497
95,218
22,791
248,535
—
10,102,964
8,581,731
7,063,850
683,346
—
63,126
—
2,268
39,511
22,871
6,596
74,280
466,317
834,535
21,347
Total consolidated liabilities before elimination
The amounts eliminated in consolidation
25,782,756
7,063,850
5,152,061
11,830,663
1,736,182
(15,116,977)
(756)
(2,590,224) (11,378,021)
(1,147,976)
The amount of liabilities with recourse to the general credit of the
MUFG Group
(10,081,747)
(7,063,094)
(2,522,255)
(3,411)
(492,987)
Liabilities of consolidated VIEs for which creditors or beneficial
interest holders do not have recourse to the general credit of the
MUFG Group
¥
584,032 ¥
— ¥
39,582 ¥
449,231 ¥
95,219
Consolidated VIEs
Consolidated assets
At March 31, 2023:
Total
Interest-
earning
deposits in
other
banks
Cash and
due from
banks
Trading
account
assets
(in millions)
Investment
securities
Loans
All other
assets
Asset-backed conduits
Investment funds
Special purpose entities created for structured
financing
Repackaged instruments
Securitization of the MUFG Group’s assets
Trust arrangements
Other
¥ 7,388,845 ¥
71,649 ¥
34,521 ¥
47,606 ¥ 1,027,862 ¥ 6,185,514 ¥
21,693
1,331,962
248,952
243,513
10,389,398
8,176,795
62,109
—
—
46,157
359,777
65,204
—
860,824
2,593
8,624
—
135,606
102,129
7,882
—
167,007
53,617
15,007
—
—
—
584
1,434
—
—
10,371,275
16,689
—
833,864
1,514,530
5,828,397
4
3,952
14,606
16,159
2,822
23,986
Total consolidated assets before elimination
27,841,574
80,115
88,657
1,431,484
2,677,372
22,538,621
1,025,325
The amounts eliminated in consolidation
(6,739,954)
(71,872)
(36,626)
(63,556)
(600,635) (5,940,036)
(27,229)
Total consolidated assets
¥ 21,101,620 ¥
8,243 ¥
52,031 ¥ 1,367,928 ¥ 2,076,737 ¥ 16,598,585 ¥ 998,096
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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS-(Continued)
Asset-backed conduits
Investment funds
Special purpose entities created for structured financing
Repackaged instruments
Securitization of the MUFG Group’s assets
Trust arrangements
Other
Total
Deposits
Consolidated liabilities
Other short-
term
borrowings
(in millions)
Long-term
debt
All other
liabilities
¥ 7,364,030 ¥
— ¥ 5,587,813 ¥ 1,367,234 ¥
408,983
830,751
127,768
245,829
10,418,160
—
—
—
—
817,292
—
—
—
7,407
109,352
230,285
10,154,662
8,176,907
6,408,837
840,690
—
56,902
—
1,456
31,900
6,052
18,416
15,544
263,498
927,380
23,546
Total consolidated liabilities before elimination
The amounts eliminated in consolidation
27,220,347
6,408,837
7,247,251
11,900,840
1,663,419
(16,102,106)
(302)
(3,696,647)
(11,469,378)
(935,779)
The amount of liabilities with recourse to the general credit of the
MUFG Group
(10,503,305)
(6,408,535)
(3,505,172)
(25,033)
(564,565)
Liabilities of consolidated VIEs for which creditors or beneficial
interest holders do not have recourse to the general credit of the
MUFG Group
¥
614,936 ¥
— ¥
45,432 ¥
406,429 ¥
163,075
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, 2022 and 2023:
Non-consolidated VIEs
At March 31, 2022:
Asset-backed conduits
Investment funds
Special purpose entities created for
structured financing
Repackaged instruments
Other
Total
Non-consolidated VIEs
At March 31, 2023:
Asset-backed conduits
Investment funds
Special purpose entities created for
structured financing
Repackaged instruments
Other
Total
Total assets
Maximum
exposure
Total
Trading
account
assets
Investment
securities
Loans
All
other
assets
Total
All other
liabilities
On-balance sheet assets
On-balance sheet
liabilities
(in millions)
¥ 27,325,711
¥ 6,010,143
¥ 4,858,210
¥
—
¥ 1,756,122
¥ 3,102,088
¥
—
¥
520
¥
520
112,262,392
3,352,266
2,622,407
328,963
622,967
1,628,737
41,740
4,507
4,507
42,312,881
4,829,867
3,275,008
234,384
20,854
3,012,252
7,518
25,424
25,424
7,533,839
3,627,418
3,448,224
563,524
2,424,602
373,834
86,264
1,590
1,590
74,119,635
3,474,163
2,402,341
170,859
7,552
2,139,751
84,179
28,128
28,128
¥ 263,554,458
¥ 21,293,857
¥ 16,606,190
¥ 1,297,730
¥ 4,832,097
¥ 10,256,662
¥ 219,701
¥ 60,169
¥ 60,169
Total assets
Maximum
exposure
Total
Trading
account
assets
Investment
securities
Loans
All
other
assets
Total
All other
liabilities
On-balance sheet assets
On-balance sheet
liabilities
(in millions)
¥ 41,001,958
¥ 8,062,589
¥ 6,384,079
¥
21,719
¥ 2,205,877
¥ 4,142,995
¥ 13,488
¥ 10,823
¥ 10,823
55,386,213
4,930,989
3,446,109
262,312
120,436
2,710,177
353,184
27,606
27,606
54,543,066
5,864,814
3,907,598
80,382
39,357
3,749,670
38,189
208,100
208,100
9,034,058
4,372,581
4,117,969
944,795
2,641,384
386,793
144,997
2,230
2,230
87,989,676
3,989,548
2,761,087
146,286
7,552
2,523,976
83,273
46,354
46,354
¥ 247,954,971
¥ 27,220,521
¥ 20,616,842
¥ 1,455,494
¥ 5,014,606
¥ 13,513,611
¥ 633,131
¥ 295,113
¥ 295,113
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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS-(Continued)
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 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.
Analysis of Each Transaction Category
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 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
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MITSUBISHI UFJ FINANCIAL GROUP, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS-(Continued)
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.
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.
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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS-(Continued)
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 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.
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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS-(Continued)
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 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.
F-100
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Trust Arrangements
MITSUBISHI UFJ FINANCIAL GROUP, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS-(Continued)
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 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-101
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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 ¥21,120 million and ¥12,113
million as of March 31, 2022 and 2023, respectively. Provision (reversal) related to the allowance is included in Other non-interest
expenses in the accompanying consolidated statements of operations. For the fiscal years ended March 31, 2021, 2022 and 2023, there
was a negative impact of nil, ¥23,332 million and nil, respectively, on Equity in earnings of equity method investees—net in the
accompanying consolidated statements of operations.
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, 2021, 2022 and 2023 were as follows:
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)
Total
2021
2022
(in millions)
2023
¥
50,131 ¥
51,032 ¥
165,288
79,353
199,625
244,017
235,497
125,658
43,889
42,117
48,110
157,236
56,344
207,080
264,530
286,549
133,322
45,849
42,353
65,611
49,785
147,582
69,010
230,386
224,900
282,282
131,069
47,986
49,420
68,407
293,598
348,957
400,810
¥
1,527,283 ¥
1,658,863 ¥
1,701,637
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.
F-102
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MITSUBISHI UFJ FINANCIAL GROUP, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS-(Continued)
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 attributable to Digital Service Business Group (“DS”) and Global
Commercial Banking Business Group (“GCB”) with no significant concentration in any particular segments.
The business activities relevant to fees and commissions on remittances and transfers are attributable to DS, Retail &
Commercial Banking Business Group (“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 DS, 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 DS.
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 DS, R&C, JCIB, and GCB with no
significant concentration in any particular segments.
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.
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, 2021, 2022 and 2023 were comprised of the following:
Interest rate and other derivative contracts
Trading account securities, excluding derivatives
Trading account losses—net
Foreign exchange derivative contracts(1)
Net trading losses
Note:
F-103
2021
2022
(in millions)
2023
¥
(429,586) ¥
(102,122) ¥
238,162
19,218
(722,298)
(1,030,260)
(410,368)
(824,420)
(792,098)
(79,559)
(44,693)
57,914
¥
(489,927) ¥
(869,113) ¥
(734,184)
Table of Contents
MITSUBISHI UFJ FINANCIAL GROUP, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS-(Continued)
(1) Gains (losses) on foreign exchange derivative contracts are included in Foreign exchange gains—net in the accompanying consolidated statements of operations.
Foreign exchange gains—net in the accompanying consolidated statements of operations are also comprised of foreign exchange losses other than derivative
contracts and foreign exchange gains 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 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 Japanese GAAP 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. The MUFG Group does not use information on the segments’ total assets to allocate its resources and assess performance.
Accordingly, business segment information on total assets is not presented. However, in order to ensure more efficient management of
resources, and to strengthen controls on profits and losses in each business group, the MUFG Group has allocated fixed assets of both
MUFG Bank on a stand-alone basis and Mitsubishi UFJ Trust and Banking on a stand-alone basis to each business unit of such
subsidiaries as of March 31, 2022. Accordingly, such fixed assets allocated to business groups are presented below.
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 seven business segments.—Digital Service,
Retail & Commercial Banking, Japanese Corporate & Investment Banking, Global Commercial Banking, Asset Management &
Investor Services, Global Corporate & Investment Banking, and Global Markets.
The following is a brief explanation of the MUFG Group’s business segments:
Digital Service Business Group—Covers digital-based non-face-to-face businesses servicing “mass-segment” customers, or
retail customers and small and medium-sized enterprise customers, of Mitsubishi UFJ NICOS, other consumer finance companies, and
MUFG Bank in Japan.
Retail & Commercial Banking Business Group—Covers the domestic retail and commercial banking businesses. This business
group mainly 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.
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 the MUFG group companies.
Global Commercial Banking Business Group—Covers the retail and commercial banking businesses of Krungsri and 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, MUFG Bank and 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 offers investment trusts for retail customers.
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
F-104
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MITSUBISHI UFJ FINANCIAL GROUP, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS-(Continued)
group provides large non-Japanese corporate and financial institution customers outside Japan with a comprehensive set of solutions
that meet their increasingly diverse and sophisticated financing needs.
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.
The MUFG Group made modifications to its internal management accounting rules and practices, effective April 1, 2022,
including reallocation of au Kabucom Securities Co., Ltd., an internet securities subsidiary, to the Digital Service Business Group
from the Retail & Commercial Banking Business Group as well as updates to internal booking rules relating to certain net fees and
other net revenue in the customer business groups and corresponding adjustments in Other.
These changes had the following impact on its previously reported business segment information for the fiscal years ended
March 31, 2021 and 2022:
•
•
•
•
increasing the operating profits of the Digital Service Business Group, the Japanese Corporate & Investment Banking
Business Group, the Global Corporate & Investment Banking Business Group and the Global Commercial Banking Business
Group by ¥8.2 billion, ¥5.7 billion, ¥4.9 billion and ¥0.8 billion, respectively, for the fiscal year ended March 31, 2021,
reducing the operating profits of the Retail & Commercial Banking Business Group, Other, the Global Markets Business
Group and the Asset Management & Investor Services Business Group by ¥9.1 billion, ¥7.4 billion, ¥2.9 billion and ¥0.2
billion, respectively, for the fiscal year ended March 31, 2021,
increasing the operating profits of the Digital Service Business Group, the Global Corporate & Investment Banking Business
Group, the Japanese Corporate & Investment Banking Business Group and the Global Commercial Banking Business Group
by ¥10.3 billion, ¥6.5 billion, ¥0.9 billion and ¥0.3 billion, respectively, for the fiscal year ended March 31, 2022, and
reducing the operating profits of the Retail & Commercial Banking Business Group, Other, the Global Markets Business
Group and the Asset Management & Investor Services Business Group by ¥11.0 billion, ¥3.9 billion, ¥3.0 billion and ¥0.1
billion, respectively, for the fiscal year ended March 31, 2022.
Prior period business segment information has been restated to enable comparison between the relevant amounts for the fiscal
years ended March 31, 2021, 2022 and 2023.
F-105
Table of Contents
Fiscal year ended March 31,
2021:
Net revenue:
BK and TB(1):
Net interest income
Net fees
Other
Other than BK and TB
Operating expenses
Operating profit (loss)
Fiscal year ended March 31,
2022:
Net revenue:
BK and TB(1):
Net interest income
Net fees
Other
Other than BK and TB
Operating expenses
Operating profit (loss)
Fixed assets(2)
Fiscal year ended March 31,
¥
¥
MITSUBISHI UFJ FINANCIAL GROUP, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS-(Continued)
Customer Business
Digital
Service
Business
Group
Retail &
Commercial
Banking
Business
Group
Japanese
Corporate
&
Investment
Banking
Business
Group
Global
Commercial
Banking
Business
Group
Asset
Management
& Investor
Services
Business
Group
Global
Corporate &
Investment
Banking
Business
Group
(in billions)
Global
Markets
Business
Group
Total
Other
Total
¥
744.7 ¥
550.3 ¥
565.7 ¥
778.7 ¥
293.4 ¥
438.7 ¥ 3,371.5
¥ 640.3 ¥
(7.2) ¥ 4,004.6
255.5
223.4
29.2
2.9
489.2
565.0
373.2
165.9
188.9
18.4
177.1
492.2
453.5
187.4
218.6
47.5
112.2
319.9
1.0
3.3
—
(2.3)
777.7
501.7
99.4
5.5
93.9
—
194.0
213.0
274.7
1,457.3
138.2
723.7
386.3
166.9
136.9
667.5
(2.4)
(58.8)
(0.4)
66.1
164.0
1,914.2
221.8
254.0
34.2
1,877.8
80.8
12.2
971.4
606.3
300.1
(41.4)
2,126.8
272.2
2,364.0
243.1
150.5
2,757.6
¥
179.7 ¥
58.1 ¥
245.8 ¥
277.0 ¥
80.4 ¥
166.5 ¥ 1,007.5
¥ 397.2 ¥ (157.7) ¥ 1,247.0
¥
741.6 ¥
584.6 ¥
623.2 ¥
771.7 ¥
348.9 ¥
540.1 ¥ 3,610.1
¥ 427.0 ¥ 11.3 ¥ 4,048.4
257.2
219.3
36.0
1.9
484.4
558.9
390.3
166.8
201.7
21.8
194.3
490.9
496.8
231.6
212.7
52.5
126.4
320.9
1.9
1.9
—
—
769.8
528.0
106.3
9.3
97.0
—
242.6
241.4
362.2
1,614.7
203.4
53.2
1,871.3
172.2
801.1
231.5
120.0
1,152.6
173.8
721.2
16.2
92.4
(8.7)
(19.4)
(55.9)
(10.9)
656.6
62.1
177.9
1,995.4
223.6
(41.9)
2,177.1
295.3
2,435.4
253.0
127.6
2,816.0
182.7 ¥
93.7 ¥
302.3 ¥
243.7 ¥
107.5 ¥
244.8 ¥ 1,174.7
¥ 174.0 ¥ (116.3) ¥ 1,232.4
140.6 ¥
191.7 ¥
155.8 ¥
1.0 ¥
13.3 ¥
133.0 ¥ 635.4
¥ 108.4 ¥ 550.3 ¥ 1,294.1
2023:
Net revenue:
BK and TB(1):
Net interest income
Net fees
Other
Other than BK and TB
Operating expenses
Operating profit (loss)
Fixed assets(2)
Increase in fixed assets(3)
Depreciation(3)
¥
747.6 ¥
614.1 ¥
805.7 ¥
870.6 ¥
360.8 ¥
712.9 ¥ 4,111.7
¥ 408.9 ¥
(4.8) ¥ 4,515.8
251.4
215.4
32.9
3.1
496.2
533.2
429.6
196.5
200.5
32.6
184.5
456.8
647.4
355.0
230.6
61.8
158.3
331.1
35.1
35.7
—
(0.6)
835.5
580.3
105.4
9.4
96.0
—
255.4
255.7
531.9
2,000.8
260.3
1,072.3
130.6
710.4
19.2
2,150.6
71.9
1,854.6
243.1
803.1
(16.6)
(50.0)
736.5
28.5
125.4
(563.2)
(2.7)
(440.5)
181.0
2,110.9
278.3
(24.0)
2,365.2
336.9
2,494.0
271.8
172.4
2,938.2
¥
¥
¥
¥
214.4 ¥
157.3 ¥
474.6 ¥
290.3 ¥
105.1 ¥
376.0 ¥ 1,617.7
¥ 137.1 ¥ (177.2) ¥ 1,577.6
156.9 ¥
201.9 ¥
161.2 ¥
37.0 ¥
10.6 ¥
41.9 ¥
37.1 ¥
21.1 ¥
36.6 ¥
1.1 ¥
0.6 ¥
0.2 ¥
18.8 ¥
171.2 ¥ 711.2
¥ 110.6 ¥ 546.3 ¥ 1,368.1
11.6 ¥
23.4 ¥ 151.5
6.0 ¥
35.2 ¥ 109.8
¥
¥
23.2 ¥ 34.2 ¥ 208.9
28.3 ¥ 19.5 ¥ 157.6
“BK and TB” is a sum of MUFG Bank on a stand-alone basis (BK) and Mitsubishi UFJ Trust and Banking on a stand-alone basis (TB).
Notes:
(1)
(2) Fixed assets in the above table are based on the financial information prepared in accordance with Japanese GAAP as adjusted in accordance with internal
management accounting rules and practices, and it corresponds to the U.S. GAAP amounts of premises and equipment-net, intangible assets-net and goodwill of
BK and TB. Fixed assets of MUFG and other consolidated subsidiaries and Japanese GAAP consolidation adjustments amounting to ¥1,286.1 billion as of
March 31, 2022 and ¥1,210.2 billion as of March 31, 2023, respectively, are not allocated to each business segment when determining the allocation of
management resources and assessing performance and, therefore, such amounts are not included in the table above.
(3) These amounts are related to the fixed assets of BK and TB included in the table above.
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 operations. 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 operations.
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MITSUBISHI UFJ FINANCIAL GROUP, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS-(Continued)
A reconciliation of operating profit and fixed assets under the internal management reporting system for the fiscal years ended
March 31, 2021, 2022 and 2023 above to income before income tax expense shown in the accompanying consolidated statements of
operations and the total amount of premises and equipment-net, intangible assets-net and goodwill are as follows:
Operating profit:
Provision for credit losses
Trading account losses—net
Equity investment securities gains (losses)—net
Debt investment securities gains (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
Reversal of impairment (impairment) of assets held for sale
Loss on valuation adjustment for loans held for sale held by MUFG Union
Bank
Gain on sale of MUFG Union Bank
Loss on pension buyout
Other—net
Income (loss) before income tax expense (benefit)
Fixed assets:
U.S. GAAP adjustments and other
Premises and equipment-net, Intangible assets-net and Goodwill
¥
¥
¥
30. FOREIGN ACTIVITIES
2021
2022
(in billions)
2023
¥
1,247 ¥
1,232 ¥
1,578
(484)
(678)
1,480
(129)
9
356
(148)
(22)
57
—
—
—
—
(80)
1,608 ¥
(278)
(1,174)
(109)
139
(9)
437
—
(33)
(46)
(134)
(3)
—
—
(81)
(59) ¥
— ¥
1,294 ¥
—
974
— ¥
2,268 ¥
(8)
(1,385)
(139)
517
(33)
398
(34)
(5)
(21)
134
(283)
558
(84)
(536)
657
1,368
964
2,332
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.
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, 2021, 2022 and 2023, 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:
F-107
Table of Contents
MITSUBISHI UFJ FINANCIAL GROUP, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS-(Continued)
Income before income tax expense
1,032,410
27,696
Net income (loss) attributable to Mitsubishi UFJ Financial Group
627,138
(231,116)
92,359
74,230
Fiscal year ended March 31, 2021:
Total revenue(2)
Total expense(3)
Total assets at end of fiscal year
Fiscal year ended March 31, 2022:
Total revenue(2)
Total expense(3)
Income (loss) before income tax expense (benefit)
Domestic
Foreign
Total
United
States of
America
Europe
Japan
Asia/
Oceania
excluding
Japan
Other
areas(1)
(in millions)
¥ 3,348,733 ¥ 741,137 ¥ 356,112 ¥ 1,134,233 ¥ 329,568 ¥ 5,909,783
2,316,323
713,441
263,753
889,494
244,739
366,880
118,430
211,138
280,166
4,301,441
1,608,342
1,117,298
240,603,939
49,478,851
21,126,639
31,368,443
11,246,753
353,824,625
¥ 2,160,509 ¥ 500,590 ¥
67,687 ¥ 975,340 ¥ 221,601 ¥ 3,925,727
2,198,650
666,564
311,639
(38,141)
(165,974)
(243,952)
726,042
249,298
506,621
81,559
3,984,454
140,042
259,688
(58,727)
(83,320)
Net income (loss) attributable to Mitsubishi UFJ Financial Group
(7,380)
(498,205)
(344,044)
Total assets at end of fiscal year(4)
Fiscal year ended March 31, 2023:
Total revenue(2)
Total expense(3)
Income (loss) before income tax expense (benefit)
Net income (loss) attributable to Mitsubishi UFJ Financial Group
246,637,054
54,576,602
22,319,350
31,909,321
12,207,691
367,650,018
¥ 2,617,973 ¥ 1,527,756 ¥ 173,013 ¥ 1,479,618 ¥ 508,472 ¥ 6,306,832
2,074,369
1,621,492
370,130
1,282,806
543,604
616,243
(93,736)
(197,117)
196,812
113,038
(246,138)
9,074
301,301
207,171
107,691
5,650,098
656,734
599,908
Total assets at end of fiscal year
249,539,149
59,695,647
24,675,334
34,452,071
13,373,532
381,735,733
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 credit losses and Non-interest expense.
(4) Total assets at the fiscal year ended March 31, 2022 in this table includes those relating to financial assets and liabilities of transferred business of MUFG Union
Bank. See Note 2 for more information.
The following is an analysis of certain asset and liability accounts related to foreign activities at March 31, 2022 and 2023:
Cash and due from banks
Interest-earning deposits in other banks
Total
Trading account assets
Investment securities
Loans—net of unearned income, unamortized premiums and deferred loan fees
Deposits
Funds borrowed:
Call money, funds purchased
Payables under repurchase agreements
Payables under securities lending transactions
Other short-term borrowings
Long-term debt
Total
Trading account liabilities
F-108
2022
2023
(in millions)
¥
1,050,661 ¥
738,309
12,459,897
17,518,035
¥ 13,510,558 ¥ 18,256,344
¥ 26,849,102 ¥ 31,158,079
¥
7,157,322 ¥ 11,456,886
¥ 45,338,581 ¥ 50,981,148
¥ 46,932,643 ¥ 52,278,932
¥
306,053 ¥
18,088
10,769,853
10,730,611
144,854
54,985
3,940,997
5,058,454
1,596,146
1,530,782
¥ 16,757,903 ¥ 17,392,920
8,611,974
¥
5,919,017 ¥
Table of Contents
31. FAIR VALUE
MITSUBISHI UFJ FINANCIAL GROUP, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS-(Continued)
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 tables in this note except for Estimated Fair Value of Financial Instruments include the portion of the assets and liabilities
held for sale.
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 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
F-109
Table of Contents
MITSUBISHI UFJ FINANCIAL GROUP, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS-(Continued)
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 1, 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
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. 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.
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
F-110
Table of Contents
MITSUBISHI UFJ FINANCIAL GROUP, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS-(Continued)
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.
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, 2022 and 2023:
F-111
MITSUBISHI UFJ FINANCIAL GROUP, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS-(Continued)
Table of Contents
At March 31, 2022
Assets
Trading account assets:
Trading securities(1)
Debt securities
Level 1
Level 2
Level 3
Fair Value
(in millions)
¥ 17,170,976 ¥ 13,998,654 ¥
797,997 ¥ 31,967,627
7,927,707
—
7,606,345
3,198
—
—
—
—
—
1,633,726
201,860
121,584
2,514
77,762
—
—
—
344,034
132,097
471,163
2,664,869
6,792,386
7,402
1,210,875
—
1,271,921
1,103,907
10,204,531
5,268,790
4,788,739
47,207
88
99,707
—
—
—
1,711
683
—
—
315,231
313,166
—
167,206
115,040
54,309
9,560
25,979
21,984
2,808
400
8,271,741
132,097
8,079,219
2,668,750
6,792,386
7,402
1,526,106
313,166
1,271,921
2,904,839
10,521,431
5,444,683
4,800,813
150,948
22,072
102,515
400
32,672,696
12,912,810
212,936
45,798,442
30,989,319
—
1,683,377
—
—
—
—
—
4,834,102
4,834,102
—
1,434,046
421,450
409,618
11,832
3,338,445
4,146,144
936,076
1,087,059
900,392
1,464,041
30,016
1,010,637
152,041
152,041
—
38,574
2,791,372
2,713,377
77,995
—
—
11,890
3,089
15
124,379
73,563
—
55,883
—
55,883
4,912
78,521
65,262
13,259
34,327,764
4,146,144
2,631,343
1,090,148
900,407
1,588,420
103,579
1,010,637
5,042,026
4,986,143
55,883
1,477,532
3,291,343
3,188,257
103,086
¥ 56,735,130 ¥ 40,097,982 ¥
1,265,289 ¥ 98,098,401
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(2)
Trading derivative assets
Interest rate contracts
Foreign exchange contracts
Equity contracts
Commodity contracts
Credit derivatives
Other(8)
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
Asset-backed securities
Other debt securities
Commercial paper
Equity securities
Marketable equity securities
Nonmarketable equity securities(4)
Other(5)
Assets held for sale
Investment securities
Other
Total
F-112
Table of Contents
At March 31, 2022
Liabilities
Trading account liabilities:
MITSUBISHI UFJ FINANCIAL GROUP, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS-(Continued)
Level 1
Level 2
Level 3
Fair Value
(in millions)
Trading securities sold, not yet purchased
¥
57,371 ¥
2,455 ¥
— ¥
59,826
Trading derivative liabilities
Interest rate contracts
Foreign exchange contracts
Equity contracts
Commodity contracts
Credit derivatives
Other(8)
Obligation to return securities received as collateral(6)
Other(7)
Liabilities held for sale
Other
Total
217,570
10,697,699
19,841
4,017
193,712
—
—
—
6,670,482
—
852
852
5,615,033
4,901,054
80,806
—
100,806
—
155,733
525,135
50,744
50,744
43,951
16,816
2,097
2,559
22,029
79
371
—
16,463
1,603
1,603
10,959,220
5,651,690
4,907,168
277,077
22,029
100,885
371
6,826,215
541,598
53,199
53,199
¥
6,946,275 ¥ 11,431,766 ¥
62,017 ¥ 18,440,058
F-113
Table of Contents
At March 31, 2023
Assets
Trading account assets:
Trading securities(1)
Debt securities
MITSUBISHI UFJ FINANCIAL GROUP, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS-(Continued)
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(2)
Trading derivative assets
Interest rate contracts
Foreign exchange contracts
Equity contracts
Commodity contracts
Credit derivatives
Other(8)
Trading loans(3)
Investment securities:
Level 1
Level 2
Level 3
Fair Value
(in millions)
¥ 19,098,208 ¥ 12,746,415 ¥
1,182,319 ¥ 33,026,942
6,092,523
—
11,760,274
3,965
—
—
—
—
—
1,241,446
84,406
40,013
3,909
40,484
—
—
—
—
329,502
279,168
493,691
2,252,424
4,978,709
4,627
1,210,381
—
1,931,569
1,266,344
12,674,978
7,311,689
5,258,511
28,617
17
76,144
—
13,820
—
—
6,422,025
279,168
1,168
12,255,133
—
—
—
668,911
334,124
—
178,116
142,343
93,833
13,714
20,659
9,908
3,801
428
—
2,256,389
4,978,709
4,627
1,879,292
334,124
1,931,569
2,685,906
12,901,727
7,445,535
5,276,134
89,760
9,925
79,945
428
13,820
Available-for-sale debt securities
25,236,359
10,250,511
253,932
35,740,802
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
Equity securities
Marketable equity securities
Nonmarketable equity securities(4)
Other(5)
Total
23,292,055
—
1,944,304
—
—
—
—
4,362,017
4,362,017
—
2,754,548
2,759,941
978,438
1,056,191
1,110,239
1,247,377
343,777
101,576
101,576
—
1,535,446
848,596
—
—
—
1,970
15
182,938
69,009
74,761
—
74,761
92,251
26,046,603
2,759,941
2,922,742
1,058,161
1,110,254
1,430,315
412,786
4,538,354
4,463,593
74,761
2,476,293
¥ 50,316,436 ¥ 36,635,896 ¥
1,745,606 ¥ 88,697,938
F-114
Table of Contents
At March 31, 2023
Liabilities
Trading account liabilities:
MITSUBISHI UFJ FINANCIAL GROUP, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS-(Continued)
Level 1
Level 2
Level 3
Fair Value
(in millions)
Trading securities sold, not yet purchased
¥
232,287 ¥
2,620 ¥
— ¥
234,907
Trading derivative liabilities
Interest rate contracts
Foreign exchange contracts
Equity contracts
Commodity contracts
Credit derivatives
Other(8)
Obligation to return securities received as collateral(6)
Other(7)
Total
163,129
13,718,992
85,641
1,679
75,809
—
—
—
6,664,578
—
8,566,043
5,013,909
48,953
—
90,087
—
158,763
313,482
61,247
45,204
2,369
3,731
9,817
62
64
68,204
73,663
13,943,368
8,696,888
5,017,957
128,493
9,817
90,149
64
6,891,545
387,145
¥
7,059,994 ¥ 14,193,857 ¥
203,114 ¥ 21,456,965
Includes securities measured under the fair value option.
Notes:
(1)
(2) Excludes certain investments valued at net asset value of private equity funds whose fair values were ¥179,278 million and ¥225,972 million at March 31, 2022
and 2023, respectively. The amounts of unfunded commitments related to these private equity funds were ¥110,360 million and ¥172,562 million at March 31,
2022 and 2023, respectively.
Includes loans measured under the fair value option.
(3)
(4) Excludes certain investments valued at net asset value of real estate funds and private equity and other funds whose fair values at March 31, 2022 were ¥30,142
million and ¥39,462 million, respectively, and those at March 31, 2023 were ¥29,308 million and ¥51,458 million, respectively. The amounts of unfunded
commitments related to these real estate funds and private equity and other funds at March 31, 2022 were ¥1,011 million and nil, respectively, and those at
March 31, 2023 were ¥1,305 million and nil, respectively.
Included in Other liabilities.
(5) Mainly comprises securities received as collateral that may be sold or repledged under securities lending transactions.
(6)
(7) Mainly includes other short-term borrowings, long-term debt, bifurcated embedded derivatives carried at fair value.
(8)
Includes certain derivatives such as earthquake derivatives.
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, 2022 and 2023. 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.
F-115
Table of Contents
Assets
Trading account assets:
Trading securities(1)
Debt securities
MITSUBISHI UFJ FINANCIAL GROUP, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS-(Continued)
Total gains (losses)
for the period
March 31,
2021
Included
in
earnings
Included
in other
comprehen
sive
income
Purchases
Issues
Sales
Settlements
(in millions)
Transfers
into
Level 3(10)
Transfers
out of Level
3(10)
March 31,
2022
Change in
unrealized
gains
(losses)
for
assets and
liabilities
still held at
March 31,
2022
¥ 756,413 ¥
41,919
(2)
¥
—
¥ 458,395 ¥
—
¥ (197,245) ¥ (262,150) ¥
665
¥
—
¥ 797,997
¥
40,113
(2)
Foreign government and
official institution bonds
Corporate bonds
Residential mortgage-backed
securities
Asset-backed securities
Other debt securities
Equity securities
1,280
77
1,000
336,811
277,635
139,610
287
(68)
(2)
26,692
14,179
831
Trading derivatives—net
25,027
23,754
(2)
Interest rate contracts—net
14,179
(25,977)
Foreign exchange contracts—
net
Equity contracts—net
Commodity contracts—net
Credit derivatives—net
Other—net(9)
Investment securities:
7,283
2,403
623
46,579
(63)
2,271
734
30
750
(31)
—
—
—
—
—
—
1,882
824
206
858
(6)
—
—
31,591
126
97,197
270,974
21,352
37,155
51
—
21
30
—
—
—
Available-for-sale debt securities
289,616
277
(3)
25,143
236,786
16,718
162
15
1,599
136,920
134,202
45,569
45,569
18,784
—
—
—
—
(328)
—
—
580
25
5,856
(3)
5,856
(402) (7)
(2,589) (11)
(963)
(1,626)
607
68
—
104
14,066
10,298
—
—
1,049
4,234
3,791
443
5,163
557
—
—
231,039
27
9,899
9,899
2,369
770
1
769
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
securities
Other
Assets held for sale
Investment securities
Other
Total
Liabilities
Other
Total
—
—
—
—
—
—
(674)
—
—
—
—
—
(674)
—
—
—
—
—
—
—
—
—
—
—
—
—
(31,432)
(100)
(15)
—
(98,176)
(19)
(67,500)
(251,746)
—
(37)
—
(10,370)
—
648
—
—
—
17
(16,312)
41,076
9,696
39,609
(5)
1,833
1,467
(27,543)
(6)
(292)
—
—
—
—
—
—
—
—
—
—
—
(3,715)
(838)
(5,750)
2,873
—
—
—
1,711
683
—
315,231
313,166
167,206
71,089
37,493
7,463
23,420
(45)
2,729
29
47
(69)
—
27,693
14,179
(1,737)
46,149
(2)
4,410
(1,640)
42,546
30
819
(16)
(287,747)
15,651
(66,790)
212,936
12,545
(3)
(5,964)
—
(114)
2,854
—
(524)
(258,226)
—
—
—
(4,634)
(110)
—
(1,179)
11,890
3,089
15
—
—
124,379
(22,919)
12,797
(8)
(60,867)
(3,113)
(3,113)
(4,612)
—
—
—
—
—
(202)
130
130
—
(4,247)
78,750
(4,247)
66,680
—
12,070
(2,458)
(2,458)
(12,074)
—
—
—
73,563
55,883
55,883
4,912
76,918
65,262
11,656
87
(265)
—
—
6,651
6,072
3,960
(3)
3,960
1,245
(7)
1,461
(11)
5,737
(4,276)
—
—
—
—
—
—
—
—
—
—
—
—
—
—
¥ 1,135,409 ¥
68,815
¥
32,308
¥ 708,270 ¥
(674) ¥ (204,970) ¥ (570,658) ¥ 136,272
¥
(85,037)
¥ 1,219,735
¥ 105,473
¥
¥
(2,212) ¥
8,315
(4)
(2,212) ¥
8,315
¥
¥
(3,080) ¥
— ¥
36,535
(3,080) ¥
— ¥
36,535
¥
¥
—
—
¥
¥
(19,361) ¥
5,364
(6)
(19,361) ¥
5,364
¥
¥
1,372
(6)
1,372
¥
¥
16,463
16,463
¥
¥
15,532
(4)
15,532
F-116
—
(8)
—
—
—
—
—
—
—
—
—
—
—
—
—
Table of Contents
Assets
Trading account assets:
Trading securities(1)
Debt securities
MITSUBISHI UFJ FINANCIAL GROUP, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS-(Continued)
Total gains (losses)
for the period
Included
in
earnings
and
retained
earnings(12)
Included
in other
comprehen
sive
income
March 31,
2022
Purchases
Issues
Sales
Settlements
(in millions)
Transfers
into
Level 3
Transfers
out of
Level 3
March 31,
2023
Change in
unrealized
gains
(losses)
for assets
and
liabilities
still held at
March 31,
2023
¥ 797,997 ¥
50,044
(2) ¥
—
¥ 387,100 ¥
—
¥
(21,409) ¥
(30,468) ¥
—
¥
(945)
¥ 1,182,319
¥
43,990
(2)
Foreign government and
official institution bonds
Corporate bonds
Asset-backed securities
Other debt securities
Equity securities
1,711
683
315,231
313,166
167,206
16
—
17,132
21,297
11,599
Trading derivatives—net
71,089
(2,045) (2)
Interest rate contracts—net
37,493
(27,947)
Foreign exchange contracts—
net
Equity contracts—net
Commodity contracts—net
Credit derivatives—net
Other—net(9)
Investment securities:
7,463
8,210
23,420
16,190
(45)
2,729
29
153
1,273
76
—
—
—
—
—
1,138
297
86
758
(3)
—
—
5,718
—
354,978
8,128
18,276
612
—
—
19
—
—
—
—
—
—
—
(334)
—
—
—
—
—
593
(334)
(5,765)
(250)
—
—
(15,636)
(2,794)
(8,467)
(18,957)
—
—
—
—
—
(262)
(683)
—
—
—
(17,198)
55,211
(27,377)
10,932
55,243
(5)
(27,389)
(5)
(4,484)
(32)
(23,369)
(14)
(263)
—
—
—
—
—
102
(90)
—
—
—
Available-for-sale debt securities
212,936
(1,303) (3)
16,357
301,283
(272,638)
1,405
(4,108)
253,932
2,094
(3)
11,890
3,089
—
(164)
(925)
142
128
1,823
15
—
—
—
124,379
(1,174)
14,406
296,645
73,563
55,883
55,883
4,912
76,918
65,262
11,656
35
712
(3)
712
61
(7)
992
(11)
(3,619)
4,611
2,734
345
345
(21)
9,263
7,156
2,107
2,687
18,963
18,963
90,986
1,620
297
1,323
—
—
—
—
—
—
—
—
—
—
—
—
(11,093)
—
—
(67)
1,255
(4,108)
—
(251,318)
(10,160)
—
—
150
—
—
—
(2,682)
(806)
3,411
(1,065)
(2,682)
(806)
—
(5,612)
(77,390)
(11,403)
(56,292)
(12,804)
(21,098)
1,401
3,411
1,925
—
—
—
(1,065)
—
—
—
—
Foreign government and
official institution bonds
Corporate bonds
Residential mortgage-backed
securities
Asset-backed securities
Other debt securities
Equity securities
Nonmarketable equity
securities
Other
Assets held for sale
Investment securities
Other
Total
Liabilities
Obligation to return securities
received as collateral
Other
Total
¥ 1,219,735 ¥
48,461
¥
27,082
¥ 800,564 ¥
(334) ¥ (101,481) ¥ (338,125) ¥
61,952
¥
(33,495)
¥ 1,684,359
¥
92,168
¥
— ¥
—
¥
—
¥
— ¥
73,595
¥
16,463
35,755
(4)
(3,879)
—
53,887
¥
16,463 ¥
35,755
¥
(3,879) ¥
— ¥ 127,482
¥
—
—
—
¥
(5,391) ¥
—
(36,792)
72,173
(6)
¥
(42,183) ¥
72,173
¥
¥
—
¥
68,204
¥
—
(192)
(192)
73,663
43,066
(4)
¥ 141,867
¥
43,066
Notes:
(1)
(2)
(3)
(4)
(5) Transfers into (out of) Level 3 for Interest rate contracts—net were mainly caused by changes in the impact of unobservable input to the entire fair value
Includes Trading securities measured under the fair value option.
Included in Trading account losses—net and Foreign exchange gains—net.
Included in Investment securities gains (losses)—net and Other comprehensive income—net.
Included in Trading account losses—net and Other comprehensive income—net.
measurement. Unobservable input includes 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)
Includes certain derivatives such as earthquake derivatives.
(10) Includes the reclassification of assets and liabilities in transferred business of MUFG Union Bank to assets and liabilities held for sale.
(11) Included in Investment securities gains (losses)—net, Trading account losses—net, Fees and commissions income and Other comprehensive income—net.
(12) Included the profits and losses recognized in three months before the sale of MUFG Union Bank which were reclassified to retained earnings.
F-117
1,168
—
668,911
334,124
178,116
81,096
48,629
11,345
16,928
91
3,739
364
(35)
—
15,749
20,646
7,630
45,862
(2)
10,779
7,877
25,646
153
1,303
104
—
1,970
15
182,938
69,009
74,761
74,761
92,251
—
—
—
—
147
—
(823)
2,770
161
(3)
161
61
(7)
—
—
—
Table of Contents
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:
Valuation technique
Significant unobservable inputs
Range
Weighted
average(2)
At March 31, 2022
Assets
Fair value(1)
(in millions)
Trading securities, Investment securities
and Other assets:
Foreign government and official
institution bonds
¥
17,297 Return on equity method
Probability of default
Recovery rate
0.2%~1.8%
35.0%~70.0%
Market-required return on capital
10.0%
Residential mortgage-backed
securities, Commercial mortgage-
backed securities and Asset-
backed securities
98,325 Discounted cash flow
Recovery rate
238,864
Internal model(4)
Asset correlations
Discount factor
Prepayment rate
100.0%
3.0%
0.6%~1.0%
29.0%
0.5%
64.4%
10.0%
100.0%
3.0%
0.9%
29.0%
Other debt securities
369,445 Discounted cash flow
Liquidity premium
Recovery rate
58,677 Return on equity method
Probability of default
Recovery rate
69.9%
0.9%~3.2%
0.1%~8.0%
60.0%~90.0%
Market-required return on capital
8.0%~10.0%
69.9%
2.8%
0.4%
82.7%
9.9%
Probability of default
0.0%~85.4%
—
(3)
At March 31, 2022
Trading derivatives—net:
Fair value(1)
(in millions)
Valuation technique
Significant unobservable inputs
Range
Median(2)
Interest rate contracts—net
35,195 Option model
Correlation between interest rates
30.0%~62.9%
45.6%
Foreign exchange contracts—net
7,463 Option model
Correlation between interest rates
10.0%~70.0%
Correlation between interest rate
and foreign exchange rate
Volatility
15.3%~60.0%
0.0%~100.0%
41.0%
61.9%
51.5%
Equity contracts—net
772 Option model
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
0.0%~60.0%
37.4%
50.0%~70.6%
9.0%~21.7%
(58.4)%~55.0%
2.4%~95.0%
26.0%~38.0%
66.4%
13.3%
23.1%
51.4%
31.8%
22,648 Discounted cash flow
Term of litigation
1.8 years
1.8 years
F-118
Table of Contents
MITSUBISHI UFJ FINANCIAL GROUP, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS-(Continued)
At March 31, 2023
Assets
Trading securities and Investment
securities:
Residential mortgage-backed
securities and Asset-backed
securities
Valuation technique
Significant unobservable inputs
Range
Weighted
average(2)
Fair value(1)
(in millions)
¥
101,014 Discounted cash flow
Recovery rate
591,515
Internal model(4)
Asset correlations
Discount factor
Prepayment rate
100.0%
3.0%
2.0%~2.3%
13.1%
100.0%
3.0%
2.0%
13.1%
Probability of default
0.0%~99.0%
—
(3)
Other debt securities
385,046 Discounted cash flow
Liquidity premium
Recovery rate
72.2%
0.9%~3.2%
72.2%
2.8%
At March 31, 2023
Trading derivatives—net:
Interest rate contracts—net
Fair value(1)
(in millions)
Valuation technique
Significant unobservable inputs
Range
Median(2)
48,209 Option model
Correlation between interest rates
30.0%~60.6%
44.4%
Foreign exchange contracts—net
11,345 Option model
Correlation between interest rates
30.0%~70.0%
Correlation between interest rate
and foreign exchange rate
Volatility
2.0%~60.0%
70.3%~106.7%
36.6%
80.1%
50.6%
Equity contracts—net
3,316 Option model
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
14.3%~60.0%
36.8%
50.0%~70.6%
10.6%~23.0%
(58.4)%~55.0%
5.6%~95.0%
28.0%~37.0%
66.4%
15.6%
15.0%
54.1%
32.2%
13,612 Discounted cash flow
Term of litigation
0.1 years~1.0 year
0.5 years
Notes:
(1) The fair value as of March 31, 2022 and 2023 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.”
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.
F-119
Table of Contents
MITSUBISHI UFJ FINANCIAL GROUP, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS-(Continued)
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 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.
F-120
Table of Contents
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, 2022 and 2023:
2022
2023
Level 1
Level 2
Level 3
Total
carrying
value
Level 1
Level 2
Level 3
Total
carrying
value
(in millions)
¥
— ¥
9,839 ¥ 11,158 ¥
20,997 ¥
— ¥ 13,366 ¥ 13,271 ¥
26,637
2,175
—
2,175
—
—
—
11,880
11,880
—
—
—
3,153
236,622
241,950
—
42,994
42,994
3,153
193,628
198,956
17,301
17,301
359
—
359
—
1,917
—
1,917
—
—
—
17,282
29,162
178,592
1,035
16,247
255,002
255,002
12,915
178,592
16,247
255,002
255,002
—
—
—
—
—
—
—
—
—
—
—
3,388
611,055
—
439,361
3,388
171,694
11,835
309
184,364
29,003
616,360
439,361
176,999
11,835
309
184,364
207,595
12,472
16,531
191,064
16,531
—
—
—
—
—
—
—
—
—
—
—
—
¥ 14,055 ¥ 12,992 ¥ 537,724 ¥ 564,771 ¥ 180,509 ¥ 16,754 ¥ 849,837 ¥ 1,047,100
Assets(3)
Investment securities(1)(2)
Loans
Loans held for sale
Collateral dependent loans
Premises and equipment
Intangible assets
Goodwill
Other assets
Investments in equity method
investees(1)
Other
Assets held for sale
Loans held for sale
Total
(2)
Notes:
(1) Excludes certain investments valued at net asset value of ¥26,644 million and ¥33,595 million at March 31, 2022 and 2023, respectively. The unfunded
commitments related to these investments are ¥22,197 million and ¥23,029 million at March 31, 2022 and 2023, 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.
In addition to the above table, the assets and liabilities of MUFG Union Bank, which were transferred to U.S. Bancorp, were reclassified as held for sale. As a
result, the disposal group was measured at fair value less expected costs to sell which was lower than its carrying amount. The amount of the fair value is
¥1,992,632 million as of March 31, 2022 and classified in Level 3 based on the transaction's expected consideration.
(3)
F-121
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MITSUBISHI UFJ FINANCIAL GROUP, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS-(Continued)
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, 2022 and 2023:
Investment securities
Loans
Loans held for sale
Collateral dependent loans
Premises and equipment
Intangible assets
Goodwill
Other assets
Investments in equity method investees
Other
Assets held for sale
Loans held for sale
Total(1)
2022
2023(2)
(in millions)
1,232 ¥
30,638
1,893
28,745
5,701
10,412
—
27,268
6,949
20,319
3,165
3,165
78,416 ¥
3,580
73,282
32,146
41,136
5,293
3,650
33,553
74,470
58,061
16,409
282,540
282,540
476,368
¥
¥
Notes:
(1)
In addition to the above table, the assets and liabilities of MUFG Union Bank, which were transferred to U.S. Bancorp, were reclassified as held for sale. As a
result, the disposal group was measured at fair value less expected costs to sell which was lower than its carrying amount. The impairment of assets held for sale
was ¥134,141 million for the fiscal year ended March 31, 2022. See Note 2 for further information.
(2) The profits and losses which were recognized in the three months before the sale of MUFG Union Bank were reclassified to retained earnings.
Investment securities for the year ended March 31, 2022 and 2023 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
F-122
Table of Contents
MITSUBISHI UFJ FINANCIAL GROUP, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS-(Continued)
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
and loans held for sale which will be transferred to U.S. Bancorp and were written down to fair value. 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.
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 operations.
The following table presents the gains or losses recorded for the fiscal years ended March 31, 2021, 2022 and 2023 related to the
eligible instruments for which the MUFG Group elected the fair value option:
Trading
account
profits
(losses)
2021
Foreign
exchange
gains
(losses)
Total
changes in
fair value
Trading
account
profits
(losses)
2022
Foreign
exchange
gains
(losses)
(in millions)
Total
changes in
fair value
Trading
account
profits
(losses)
2023
Foreign
exchange
gains
(losses)
Total
changes in
fair value
Financial assets:
Trading account securities
¥ (370,238) ¥ 723,505 ¥ 353,267 ¥ (984,605) ¥ 1,752,995 ¥ 768,390 ¥ (1,180,311) ¥ 1,369,071 ¥ 188,760
Total
Financial liabilities:
Other short-term borrowings(1)
Long-term debt(1)
¥ (370,238) ¥ 723,505 ¥ 353,267 ¥ (984,605) ¥ 1,752,995 ¥ 768,390 ¥ (1,180,311) ¥ 1,369,071 ¥ 188,760
¥
(6,484) ¥
— ¥
(6,484) ¥
5,552 ¥
— ¥
5,552 ¥
(3,626) ¥
— ¥
(3,626)
1,523
—
1,523
50,082
—
50,082
40,944
—
40,944
Total
¥
(4,961) ¥
— ¥
(4,961) ¥ 55,634 ¥
— ¥ 55,634 ¥
37,318 ¥
— ¥ 37,318
Note:
(1) Changes in the value attributable to the instrument-specific credit risk related to those financial liabilities were not material.
F-123
Table of Contents
MITSUBISHI UFJ FINANCIAL GROUP, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS-(Continued)
The following table presents the differences between the aggregate fair value and the aggregate remaining contractual principal
balance outstanding as of March 31, 2022 and 2023 for long-term debt instruments for which the fair value option has been elected:
2022
2023
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
Total
¥
¥
511,851 ¥
511,851 ¥
483,051 ¥
483,051 ¥
(28,800) ¥
(28,800) ¥
501,982 ¥
431,338 ¥
501,982 ¥
431,338 ¥
(70,644)
(70,644)
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
operations 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,
2022 and 2023:
F-124
Table of Contents
At March 31, 2022
Financial assets:
MITSUBISHI UFJ FINANCIAL GROUP, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS-(Continued)
Carrying
amount
Total
Estimated fair value
Level 1
(in billions)
Level 2
Level 3
Cash and due from banks
¥
50,972 ¥
50,972 ¥
50,972 ¥
— ¥
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)
58,848
1,316
12,503
4,496
4,595
111,669
9,207
58,848
1,316
12,503
4,496
4,606
112,391
9,207
—
—
—
—
1,758
2
—
58,848
1,316
12,503
4,496
460
245
9,207
Financial liabilities:
Deposits
Non-interest-bearing
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
¥
36,496 ¥
36,496 ¥
— ¥
36,496 ¥
188,112
224,608
2,416
27,726
1,022
22,728
34,245
7,560
188,080
224,576
2,416
27,726
1,022
22,728
33,974
7,560
—
—
—
—
—
—
—
—
188,080
224,576
2,416
27,726
1,022
22,728
33,974
7,560
—
—
—
—
—
2,388
112,144
—
—
—
—
—
—
—
—
—
—
F-125
Table of Contents
At March 31, 2023
Financial assets:
MITSUBISHI UFJ FINANCIAL GROUP, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS-(Continued)
Carrying
amount
Total
Estimated fair value
Level 1
(in billions)
Level 2
Level 3
Cash and due from banks
¥
60,051 ¥
60,051 ¥
60,051 ¥
— ¥
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)
53,990
1,802
14,059
4,556
21,520
118,679
10,108
53,990
1,802
14,059
4,556
21,386
118,933
10,108
—
—
—
—
13,527
2
—
53,990
1,802
14,059
4,556
5,354
263
10,108
Financial liabilities:
Deposits
Non-interest-bearing
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
¥
37,804 ¥
37,804 ¥
— ¥
37,804 ¥
197,500
235,304
3,438
40,132
1,138
14,260
38,704
9,595
197,573
235,377
3,438
40,132
1,138
14,260
37,928
9,595
—
—
—
—
—
—
—
—
197,573
235,377
3,438
40,132
1,138
14,260
37,928
9,595
—
—
—
—
—
2,505
118,668
—
—
—
—
—
—
—
—
—
—
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 ¥3,067 billion and ¥3,482 billion at March 31, 2022 and 2023, 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,
2022 and 2023 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 ¥5,094 billion and ¥5,837 billion, in accordance with the statutory reserve requirements under the
Companies Act at March 31, 2022 and 2023, 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, 2022 and 2023, approximately ¥5,662 billion and ¥5,352 billion, respectively, of net assets of consolidated
subsidiaries may be restricted as to payment of cash dividends and loans to the parent company.
F-126
Table of Contents
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
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
Total assets
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
Total liabilities
Total shareholders’ equity
Total liabilities and shareholders’ equity
As of March 31,
2022
2023
(in millions)
¥
231,389 ¥
173,603
16,504,756
16,834,133
11,731,745
11,893,171
4,773,011
4,940,962
10,062,030
12,841,655
9,516,847
12,225,477
545,183
266,773
616,178
229,005
¥ 27,064,948 ¥ 30,078,396
¥
1,146,147 ¥
1,291,660
24,535
15,591
10,055,876
12,792,670
233,322
215,129
11,459,880
14,315,050
15,605,068
15,763,346
¥ 27,064,948 ¥ 30,078,396
F-127
Table of Contents
MITSUBISHI UFJ FINANCIAL GROUP, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS-(Continued)
Condensed Statements of Operations
Fiscal years ended March 31,
2021
2022
2023
(in millions)
Income:
Dividends from subsidiaries and affiliated companies
¥ 404,064 ¥ 586,108 ¥ 605,115
Banking subsidiaries
Non-banking subsidiaries and affiliated companies
Management fees from subsidiaries
Interest income from subsidiaries
Foreign exchange gains—net
Trading account profits (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
Equity in undistributed net income (loss) of subsidiaries and affiliated companies—net
Income (loss) before income tax expense
Income tax expense
Net income (loss)
317,453
86,611
35,095
174,816
1,089
419,691
166,417
34,957
183,679
6,851
(18,285)
(4,059)
95
12,552
609,426
—
11,732
819,268
407,630
197,485
35,052
273,536
3,465
28,970
17,748
13,255
977,141
37,567
11,415
40,158
12,256
44,149
15,442
159,057
167,057
256,333
8,164
216,203
727,257
7,154
6,496
226,625
322,420
(667,088)
(35,857)
1,120,480
(74,445)
618,864
3,182
8,875
18,956
¥ 1,117,298 ¥
(83,320) ¥ 599,908
F-128
Table of Contents
MITSUBISHI UFJ FINANCIAL GROUP, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS-(Continued)
Condensed Statements of Cash Flows
Operating activities:
Net income (loss)
Adjustments and other
Net cash provided by operating activities
Investing activities:
Proceeds from sales of investment in subsidiaries and affiliated companies
Purchase of equity investment in subsidiaries and an affiliated company
Net increase in loans to subsidiaries
Other—net
Net cash used in investing activities
Financing activities:
Net increase (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
Net cash provided by (used in) financing activities
Net increase (decrease) in cash and cash equivalents
Cash and cash equivalents at beginning of fiscal year
Cash and cash equivalents at end of fiscal year
33. SUBSEQUENT EVENTS
Approval of Dividends
Fiscal years ended March 31,
2021
2022
2023
(in millions)
¥ 1,117,298 ¥
(83,320) ¥ 599,908
(568,317)
653,768
9,733
548,981
570,448
609,641
35,081
136
41,125
—
(1,000)
—
(462,208)
(257,619) (2,204,831)
(11,531)
(9,413)
(7,791)
(438,658)
(267,896) (2,171,497)
(49,058)
(61,415)
145,513
831,121
1,625,173
3,833,878
(514,436) (1,369,254) (1,630,695)
(10,500)
1
—
—
—
—
(13)
(150,017)
(450,019)
(321,772)
(334,620)
(380,447)
(1,954)
(10,410)
(14,160)
(66,611)
(300,543) 1,504,070
43,712
185,668
2,009
(57,786)
229,380
231,389
¥ 229,380 ¥ 231,389 ¥ 173,603
On June 29, 2023, the shareholders approved the payment of cash dividends of ¥16.0 per share of Common stock, totaling
¥192,860 million, that were payable on June 30, 2023, to the shareholders of record on March 31, 2023.
* * * * *
F-129
Table of Contents
EXHIBIT INDEX
Exhibit
Description
1(a)
1(b)
1(c)
1(d)
1(e)
1(f)
1(g)
1(h)
2(a)
2(b)
2(c)
4(a)
4(b)
8
11
12
13
15(a)
15(b)
99(a)
99(b)
Articles of Incorporation of Mitsubishi UFJ Financial Group, Inc., as amended on June 29, 2022 (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, 2022 (English
translation)**
Share Handling Regulations of Mitsubishi UFJ Financial Group, Inc., as amended on August 2, 2022 (English
Translation)
Charter of the Audit Committee of Mitsubishi UFJ Financial Group, Inc., as amended on February 3. 2023 (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***
Share Purchase Agreement, dated September 21, 2021, among Mitsubishi UFJ Financial Group, Inc., MUFG Americas
Holdings Corporation and U.S. Bancorp**
Amendment No. 1 to the Share Purchase Agreement, dated May 10, 2022
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, 2023****
Unaudited Reverse Reconciliation of Selected Financial Information of Mitsubishi UFJ Financial Group, Inc. as of and
for the fiscal year ended March 31, 2023*****
99(c)
101.INS
Financial Statements and Supplementary Data of Morgan Stanley******
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
The cover page for the Company’s Annual Report on From 20-F for the year ended March 31, 2023, has been formatted
in Inline XBRL
Notes:
*
Incorporated by reference to our annual report on Form 20-F (File No. 000-54189) filed on July 12, 2018.
Table of Contents
**
***
****
*****
******
Incorporated by reference to our annual report on Form 20-F (File No. 000-54189) filed on July 8, 2022.
Incorporated by reference to our annual report on Form 20-F (File No. 000-54189) filed on July 9, 2021.
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 24, 2023.
Table of Contents
Signature
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.
MITSUBISHI UFJ FINANCIAL GROUP, INC.
By:
Name:
Title:
/s/ HIRONORI KAMEZAWA
Hironori Kamezawa
President & Group Chief Executive Officer
Date: July 24, 2023
Exhibit 1(a)
ARTICLES OF INCORPORATION
OF
MITSUBISHI UFJ FINANCIAL GROUP, INC.
CHAPTER I.
GENERAL PROVISIONS
(English Translation)
(Trade Name)
Article 1.
The Company shall be called “Kabushiki Kaisha Mitsubishi UFJ Financial Group” and shall be called in English “Mitsubishi
UFJ Financial Group, Inc.” (hereinafter referred to as the “Company”).
(Purpose)
Article 2.
The purpose of the Company shall be to engage in the following businesses as a bank holding company:
1. Administration of management of banks, trust banks, specialized securities companies, insurance companies or other
companies which the Company may own as its subsidiaries under the Banking Law;
2. Any businesses incidental to the foregoing businesses mentioned in the preceding item; and
3. 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.
(Location of Head Office)
Article 3.
The Company shall have its head office in Chiyoda-ku, Tokyo.
(Organization)
Article 4.
The Company, being a company with three committees, shall establish the following organizations in addition to the general
meeting of shareholders and the Directors:
1. The Board of Directors;
2.
3.
4.
The Nominating and Governance Committee (which constitutes a Nominating Committee defined in the Companies Act),
the Audit Committee, and the Compensation Committee;
Corporate Executives; and
An Accounting Auditor.
(Method of Public Notice)
Article 5.
1. Public notices of the Company shall be given by way of electronic public notice.
2.
In cases where the Company is unable to give an electronic public notice due to unavoidable circumstances, public notices of the
Company shall be given in the manner of the publication in the Nihon Keizai Shimbun.
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CHAPTER II.
SHARES
(Total Number of Shares Authorized to be Issued)
Article 6.
The aggregate number of shares authorized to be issued by the Company shall be thirty-three billion eight hundred million
(33,800,000,000) shares, and the aggregate number of each class shares authorized to be issued shall be as set forth below; provided,
however, that the aggregate number of shares authorized to be issued with respect to the Second to the Fourth Series of Class 5
Preferred Shares shall not exceed four hundred million (400,000,000) in total, the aggregate number of shares authorized to be issued
with respect to the First to the Fourth Series of Class 6 Preferred Shares shall not exceed two hundred million (200,000,000) in total,
and the aggregate number of shares authorized to be issued with respect to the First to the Fourth Series of Class 7 Preferred Shares
shall not exceed two hundred million (200,000,000) in total.
Ordinary Shares:
The Second Series of Class 5 Preferred Shares:
The Third Series of Class 5 Preferred Shares:
The Fourth Series of Class 5 Preferred Shares:
The First Series of Class 6 Preferred Shares:
The Second Series of Class 6 Preferred Shares:
The Third Series of Class 6 Preferred Shares:
The Fourth Series of Class 6 Preferred Shares:
The First Series of Class 7 Preferred Shares:
The Second Series of Class 7 Preferred Shares:
The Third Series of Class 7 Preferred Shares:
The Fourth Series of Class 7 Preferred Shares:
thirty-three billion (33,000,000,000) shares
four hundred million (400,000,000) shares
four hundred million (400,000,000) shares
four hundred million (400,000,000) shares
two hundred million (200,000,000) shares
two hundred million (200,000,000) shares
two hundred million (200,000,000) shares
two hundred million (200,000,000) shares
two hundred million (200,000,000) shares
two hundred million (200,000,000) shares
two hundred million (200,000,000) shares
two hundred million (200,000,000) shares
(Number of Shares Constituting One (1) Unit of Shares)
Article 7.
The number of shares constituting one (1) unit of shares of the Company shall be one hundred (100) with respect to Ordinary
Shares and each class of Preferred Shares, respectively.
(Rights Pertaining to Fractional Unit Shares)
Article 8.
A Shareholder of the Company may not exercise any rights with respect to fractional unit shares held by such shareholder,
except for the following:
1. The rights provided for in each item of Article 189, Paragraph 2 of the Companies Act;
2. The right to make a request pursuant to Article 166, Paragraph 1 of the Companies Act;
3. The right to receive an allotment of offered shares and offered stock acquisition rights in proportion to the number of shares
held by such shareholder; and
4.
The right to make a request provided for in the following Article.
2
(Request for Sale of Fractional Unit Shares)
Article 9.
A shareholder of the Company may request the Company to sell to the shareholder such number of shares which will, when
combined with the fractional unit shares already held by such shareholder, constitute one (1) full unit of shares pursuant to the Share
Handling Regulations.
(Record Date)
Article 10.
1. The Company shall deem the shareholders whose names have been entered or recorded in the latest register of shareholders
as of March 31 of each year to be the shareholders who are entitled to exercise their rights at the ordinary general meeting of
shareholders for the relevant business year.
2. The provision of the preceding paragraph shall apply mutatis mutandis to the record date for voting rights at general meetings
of class shareholders, where there is a matter to be resolved at an ordinary general meeting of shareholders that requires, in
addition to such resolution, a resolution by the relevant general meeting of class shareholders.
3.
In addition to the preceding two paragraphs of this article, whenever necessary, the Company may, upon giving prior public
notice, fix a date as a record date and may deem the shareholders or registered share pledgees whose names have been
entered or recorded in the latest register of shareholders as of such date as the shareholders or the registered share pledgees
entitled to exercise their rights.
(Transfer Agent)
Article 11.
1. The Company shall have a share transfer agent.
2. The share transfer agent and the handling office thereof shall be designated by resolution of the Board of Directors, and
public notice thereof shall be given.
3. The establishment and retention of the register of shareholders and the register of stock acquisition rights of the Company and
any other businesses with respect to the register of shareholders and the register of stock acquisition rights of the Company
shall be handled by the share transfer agent, not by the Company.
(Share Handling Regulations)
Article 12.
The registration of transfers of shares, the registration of pledges on shares, the entries or records in the register of shareholders
and in the register of stock acquisition rights, and any other handling with respect to shares and stock acquisition rights as well as the
fees therefor shall be governed by the Share Handling Regulations established by the Board of Directors.
CHAPTER III
PREFERRED SHARES
(Preferred Dividends)
Article 13.
1. The Company shall distribute cash dividends from surplus on Preferred Shares (hereinafter referred to as the “Preferred
Dividends”) in such respective amount as prescribed below to the holders of Preferred Shares (hereinafter referred to as the
“Preferred Shareholders”) or registered share pledgees who hold pledges over Preferred Shares (hereinafter referred to as the
“Registered Preferred Share Pledgees”), whose names have been entered or recorded in the latest register of shareholders as of
March 31 of each year, with priority over the holders of Ordinary Shares (hereinafter referred to as the “Ordinary Shareholders”)
or registered share pledgees who hold pledges over Ordinary Shares (hereinafter referred to as the “Registered Ordinary Share
Pledgees”); provided, however, that in the event that the Preferred Interim Dividends provided for in Article 14 hereof have been
paid in the relevant business year, the amount so paid shall be deducted accordingly from the amount of the Preferred Dividends
set forth below for each relevant class of Preferred Shares.
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The Second to the Fourth Series of Class 5 Preferred Shares:
Amount to be determined by resolution of the Board
of Directors adopted at the time of issuance of the
Class 5 Preferred Shares, up to two hundred fifty
(250) yen per share per year
The First to the Fourth Series of Class 6 Preferred Shares:
Amount to be determined by resolution of the Board
of Directors adopted at the time of issuance of the
Class 6 Preferred Shares, up to one hundred
twenty-five (125) yen per share per
year
The First to the Fourth Series of Class 7 Preferred Shares:
Amount to be determined by resolution of the Board
of Directors adopted at the time of issuance of the
Class 7 Preferred Shares, up to one hundred
twenty-five (125) yen per share per
year
2.
If the aggregate amount paid to a Preferred Shareholder or Registered Preferred Share Pledgee as cash dividends from surplus in
any particular business year is less than the prescribed amount of the relevant Preferred Dividends, the unpaid amount shall not be
carried over to nor cumulated in subsequent business years.
3. The Company shall not distribute any dividends from surplus to any Preferred Shareholder or Registered Preferred Share Pledgee
in excess of the prescribed amount of the relevant Preferred Dividends except for the distribution from surplus in the process of
the corporate split (kyushu-bunkatsu) pursuant to Article 758, Item 8 (b) or Article 760, Item 7 (b) of the Companies Act, or the
distribution from surplus in the process of the corporate split (shinsetsu-bunkatsu) pursuant to Article 763 Paragraph 1, Item 12
(b) or Article 765 Paragraph 1, Item 8 (b) of the said act.
(Preferred Interim Dividends)
Article 14.
In the event of payment of Interim Dividends provided for in Article 46 of these Articles (hereinafter referred to as the
“Preferred Interim Dividends”), the Company shall make a cash distribution from surplus in such respective amount as prescribed
below for each class of Preferred Shares to the Preferred Shareholders or Registered Preferred Share Pledgees with priority over the
Ordinary Shareholders or Registered Ordinary Share Pledgees.
The Second to the Fourth Series of Class 5 Preferred Shares:
Amount to be determined by resolution of the Board
of Directors adopted at the time of issuance of the
Class 5 Preferred Shares, up to one hundred
twenty-five (125) yen per share
The First to the Fourth Series of Class 6 Preferred Shares:
Amount to be determined by resolution of the Board
of Directors adopted at the time of issuance of the
Class 6 Preferred Shares, up to sixty-two and fifty
hundredths (62.50) yen per share
The First to the Fourth Series of Class 7 Preferred Shares:
Amount to be determined by resolution of the Board
of Directors adopted at the time of issuance of the
Class 7 Preferred Shares, up to sixty-two and fifty
hundredths (62.50) yen per share
(Distribution of Residual Assets)
Article 15.
1.
If the Company distributes its residual assets in cash upon liquidation, the Company shall pay cash to the Preferred Shareholders
or Registered Preferred Share Pledgees with priority over the Ordinary Shareholders or Registered Ordinary Share Pledgees in
such respective amount as prescribed below:
4
The Second to the Fourth Series of Class 5 Preferred Shares:
Two thousand five hundred (2,500) yen
per share
The First to the Fourth Series of Class 6 Preferred Shares:
Two thousand five hundred (2,500) yen
per share
The First to the Fourth Series of Class 7 Preferred Shares:
Two thousand five hundred (2,500) yen
per share
2. The Company shall not make a distribution of residual assets other than as provided for in the preceding paragraph to the
Preferred Shareholders or Registered Preferred Share Pledgees.
(Voting Rights)
Article 16.
Unless otherwise provided for by laws or regulations, the Preferred Shareholders shall not have voting rights at any general
meeting of shareholders; provided, however, that the Preferred Shareholders shall have voting rights from (i) the commencement of an
ordinary general meeting of shareholders in the event that no proposal for declaration of the Preferred Dividends be paid to the
Preferred Shareholders is submitted to such ordinary general meeting of shareholders or (ii) the close of an ordinary general meeting
of shareholders in the event that such proposal is rejected at such ordinary general meeting of shareholders, until, in either case, a
proposal for declaration of the Preferred Dividends be paid to the Preferred Shareholders is approved at an ordinary general meeting of
shareholders.
(Consolidation or Split of Preferred Shares and Rights to Be Allotted Shares, etc.)
Article 17.
1. Unless otherwise provided for by laws or regulations, the Company shall not consolidate or split any Preferred Shares.
2. The Company shall not grant the Preferred Shareholders any rights to be allotted shares or stock acquisition rights.
3. The Company shall not grant the Preferred Shareholders any rights for the free allotment of shares or stock acquisition rights.
(Provisions for Acquisition)
Article 18.
1.
In respect of the Second to the Fourth Series of Class 5 Preferred Shares and/or the First to the Fourth Series of Class 6 Preferred
Shares, the Company may, after issuance of the respective Preferred Shares and after the lapse of the period designated by
resolution of the Board of Directors adopted at the time of the issuance of respective Preferred Shares, acquire such Preferred
Shares, in whole or in part, in exchange for the amount of cash as deemed appropriate as the acquisition price giving due
consideration to the prevailing market conditions, as determined by such resolution of the Board of Directors, on a certain date as
separately determined by the Company by a resolution of the Board of Directors after the issue of the relevant Preferred Shares.
2.
Partial acquisition shall be effected pro rata or in lot.
(Right to Request Acquisition)
Article 19.
Any holder of the First to the Fourth Series of Class 6 or the First to the Fourth Series of Class 7 Preferred Shares may request
acquisition of such Preferred Shares during the period in which such Preferred Shareholder is entitled to request acquisition as
determined by resolution of the Board of Directors adopted at the time of issuance of such Preferred Shares, in exchange for Ordinary
Shares of the Company in the number as is calculated by the formula designated by such resolution.
(Mandatory Acquisition)
Article 20.
1. The Company shall mandatorily acquire any of the First to the Fourth Series of Class 6 Preferred Shares or the First to the Fourth
Series of Class 7 Preferred Shares for which no request for acquisition is made during the period in which the holders of such
5
Preferred Shares are entitled to request acquisition on the day immediately following the last day of such period in exchange for
Ordinary Shares in the number as is obtained by dividing an amount equivalent to the subscription price per each relevant
Preferred Share by the average daily closing price (including closing bids or offered prices) of Ordinary Shares of the Company
(in regular trading) as reported by the Tokyo Stock Exchange for the thirty (30) consecutive trading days (excluding a trading day
or days on which no closing price or closing bid or offered price is reported) commencing on the forty-fifth (45th) trading day
prior to such date; provided, however, that such calculation shall be made to the second decimal place denominated in yen, and
rounded up to one decimal place when the fraction beyond it is equal to or more than 0.05 yen, discarding amounts less than 0.05
yen. If the relevant average price is less than the amount determined by resolution of the Board of Directors adopted at the time of
issuance of respective Preferred Shares, the relevant Preferred Shares shall be acquired in exchange for Ordinary Shares in the
number as is obtained by dividing an amount equivalent to the subscription price per each relevant Preferred Shares by an amount
so determined by such resolution of the Board of Directors.
2. After issuance of the Second to the Fourth Series of Class 5 Preferred Shares, the First to the Fourth Series of Class 6 Preferred
Shares and/or the First to the Fourth Series of Class 7 Preferred Shares, upon the occurrence of a certain event that requires the
acquisition of the relevant Preferred Shares pursuant to the capital adequacy requirements applicable to the Company and which
event shall be determined by resolution of the Board of Directors adopted at the time of the issuance of the relevant Preferred
Shares, the Company shall mandatorily acquire the relevant Preferred Shares in whole on an acquisition date which falls after the
occurrence of the certain event. The acquisition date shall be either of a certain date which falls after the occurrence of the
relevant certain event and which date shall be determined by such resolution of the Board of Directors, giving due consideration
to such capital adequacy requirements and other factors, or a date separately determined by the Company by resolution of the
Board of Directors adopted after the occurrence of the relevant certain event. The Company shall mandatorily acquire the relevant
Preferred Shares in exchange for Ordinary Shares or free of consideration, and whether such acquisition shall be made in
exchange for Ordinary Shares or free of consideration shall be determined by resolution of the Board of Directors adopted at the
time of issuance of the relevant Preferred Shares, giving due consideration to the market conditions and other factors. The formula
for calculating the number of Ordinary Shares in case where the relevant Preferred Shares shall be acquired in exchange for
Ordinary Shares shall be determined by resolution of the Board of Directors adopted at the time of issuance of the relevant
Preferred Shares, giving due consideration to the market price of Ordinary Shares, the subscription price of the relevant Preferred
Shares and other factors.
3.
In the calculation of the number of Ordinary Shares provided for in the preceding two paragraphs of this article, if any number
less than one (1) share is yielded, such fractions shall be handled by the method provided for in Article 234 of the Companies Act.
(Order of Priority)
Article 21.
All classes of Preferred Shares shall rank pari passu with each other in respect of the payment of Preferred Dividends and
Preferred Interim Dividends and the distribution of residual assets.
(Prescription Period)
Article 22.
The provisions set forth in Article 47 of these Articles shall apply mutatis mutandis to the payment of Preferred Dividends and
Preferred Interim Dividends.
CHAPTER IV.
GENERAL MEETING OF SHAREHOLDERS
(Convocation)
Article 23.
1. An ordinary general meeting of shareholders shall be convened within three (3) months from the last day of each business year.
2. An extraordinary general meeting of shareholders shall be convened whenever necessary.
(Chairman)
Article 24.
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1. The Director concurrently serving as President and Representative Corporate Executive shall act as chairman of general meetings
of shareholders.
2.
If the Director concurrently serving as President and Representative Corporate Executive is unable to act as such, one of the other
Directors shall act as chairman in accordance with the order of priority determined in advance by the Board of Directors.
(Measures for Electronic Provision, Etc.)
Article 25.
1. The Company shall, when convening a general meeting of shareholders, provide information contained in the reference
documents for the general meeting of shareholders, etc. electronically.
2. Among the matters to be provided electronically, the Company may choose not to include all or part of the matters stipulated in
the Ordinance of the Ministry of Justice in the paper copy to be sent to shareholders who have requested it by the record date for
voting rights.
(Method of Resolution)
Article 26.
1. Unless otherwise provided for by law or regulation or these Articles of Incorporation, resolutions of a general meeting of
shareholders shall be adopted by an affirmative vote of a majority of the voting rights of the shareholders in attendance who are
entitled to vote.
2. Resolutions of a general meeting of shareholders provided for in Article 309, Paragraph 2 of the Companies Act and resolutions
of a general meeting of shareholders for which the method of resolution provided for in the said Paragraph shall be applied
mutatis mutandis pursuant to the Companies Act and other laws and regulations shall be adopted by an affirmative vote of two-
thirds (2/3) or more of the voting rights of the shareholders in attendance who hold in the aggregate not less than one-third (1/3) of
the total number of voting rights of all shareholders who are entitled to vote.
(Voting by Proxy)
Article 27.
1. Shareholders may exercise their voting rights at a general meeting of shareholders by appointing one (1) proxy who is one (1)
shareholder of the Company entitled to exercise its own voting rights at such meeting.
2.
In the case of the preceding paragraph, the shareholder or the proxy thereof shall submit to the Company a document evidencing
authority of the proxy to act as such at each general meeting of shareholders.
(Minutes)
Article 28.
The proceedings of general meetings of shareholders shall be stated or recorded in the minutes pursuant to laws and regulations.
(General Meetings of Holders of Classes of Shares)
Article 29.
1. The provisions of Articles 24, 25, 27 and 28 of these Articles shall apply mutatis mutandis to general meetings of class
shareholders.
2. The provisions of Article 26, Paragraph 1 of these Articles shall apply mutatis mutandis to the resolutions of general meetings of
class shareholders made pursuant to Article 324, Paragraph 1 of the Companies Act.
3. The provisions of Article 26, Paragraph 2 of these Articles shall apply mutatis mutandis to the resolutions of general meetings of
class shareholders made pursuant to Article 324, Paragraph 2 of the Companies Act.
CHAPTER V.
DIRECTORS AND BOARD OF DIRECTORS
(Number of Directors and Method of Election)
7
Article 30.
1. The Company shall have not more than twenty (20) Directors, who shall be elected at a general meeting of shareholders.
2. A resolution for the election of Directors shall be adopted at a general meeting of shareholders by an affirmative vote of a
majority of the voting rights of the shareholders in attendance who hold voting rights representing in the aggregate one-third (1/3)
or more of the total number of voting rights of all shareholders who are entitled to vote.
3. Resolutions for the election of Directors shall not be made by cumulative voting.
(Term of Office)
Article 31.
The term of office of Directors shall expire at the close of the ordinary general meeting of shareholders held in respect of the last
business year ending within one (1) year after their election.
(Board of Directors)
Article 32.
1. The Board of Directors shall decide the business execution of the Company and oversee the performance of duties of Corporate
Executives and Directors.
2. Unless otherwise provided for by laws and regulations, the Board of Directors may delegate decisions on the business execution
of the Company to Corporate Executives.
3. Unless otherwise provided for by laws and regulations, the Director determined in advance by the Board of Directors shall
convene meetings of the Board of Directors and act as chairman. If the Director determined in advance by the Board of Directors
is unable to act as such, one of the other Directors shall act as Chairman and Director in accordance with the order of priority
determined in advance by the Board of Directors.
4. Notice to convene a meeting of the Board of Directors shall be given to each Director at least three (3) days prior to the date of
such meeting; provided, however, that the foregoing shall not apply in cases of emergency.
5. Unless otherwise provided for by law or regulation, resolutions of a meeting of the Board of Directors shall be adopted by an
affirmative vote of a majority of the Directors present who constitute in number a majority of all the Directors of the Company.
6. With respect to the matters to be resolved by the Board of Directors, the Company shall deem that such matters were approved by
a resolution of the Board of Directors when all the Directors express their agreement in writing or by an electromagnetic device.
7. The proceedings of meetings of the Board of Directors shall, pursuant to laws and regulations, be stated or recorded in the
minutes, to which the Directors present shall put their names and affix their seals or electronic signatures.
(Exemption from Liability of Directors)
Article 33.
In accordance with the provisions of Article 426, Paragraph 1 of the Companies Act, the Company may, by a resolution of the
Board of Directors, exempt Directors (including former Directors) from their liabilities provided for in Article 423, Paragraph 1 of the
Companies Act within the limits stipulated by laws and regulations provided that such Director has acted in good faith and without
gross negligence.
(Limited Liability Agreement with Directors)
Article 34.
Pursuant to the provisions of Article 427, Paragraph 1 of the Companies Act, the Company may execute agreements with
Directors other than Executive Directors etc., which limit the liability of such Directors provided for in Article 423, Paragraph 1 of the
Companies Act; provided, however, that the limit of the liability under such agreements shall be the greater of an amount determined
in advance which shall not be less than ten million (10,000,000) yen or the minimum liability amount prescribed by laws or
regulations.
CHAPTER VI.
Committees
8
(Method of Appointment of Committee Members)
Article 35.
The members of the Nominating and Governance Committee (which constitutes a Nominating Committee defined in the
Companies Act), the Audit Committee, and the Compensation Committee shall be appointed from among the Directors by the
resolution of the Board of Directors.
(Authority etc. of Committees)
Article 36.
Matters concerning the Nominating and Governance Committee (which constitutes a Nominating Committee defined in the
Companies Act), the Audit Committee, and the Compensation Committee shall be governed by the Regulations thereof established by
each Committee, as well as by applicable laws and regulations, these Articles of Incorporation, or resolutions of the Board of
Directors.
CHAPTER VII.
Corporate Executives
(Method of Election)
Article 37.
Corporate Executives shall be elected by the Board of Directors.
(Term of Office)
Article 38.
The term of office of Corporate Executives shall expire at the close of the first meeting of the Board of Directors convened after
the close of the ordinary general meeting of shareholders held in respect of the last business year ending within one (1) year after their
election.
(Representative Corporate Executive and Corporate Executive with Executive Power)
Article 39.
1. The Board of Directors shall, by its resolution, elect Representative Corporate Executive(s) from among the Corporate
Executives.
2. The Board of Directors may, by its resolution, appoint the President and Corporate Executive, Chairman and Corporate Executive,
Deputy Chairman and Corporate Executive(s), Deputy President and Corporate Executive(s), Senior Managing Corporate
Executive (s) and Managing Corporate Executive (s).
(Exemption from Liability of Corporate Executives)
Article 40.
In accordance with the provisions of Article 426, Paragraph 1 of the Companies Act, the Company may, by a resolution of the
Board of Directors, exempt Corporate Executives (including former Corporate Executives) from their liabilities provided for in Article
423, Paragraph 1 of the Companies Act within the limits stipulated by laws and regulations provided that such Corporate Executive
has acted in good faith and without gross negligence.
CHAPTER VIII.
ACCOUNTING AUDITOR
(Method of Election)
Article 41.
The Accounting Auditor shall be elected at a general meeting of shareholders.
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(Term of Office)
Article 42.
1. The term of office of the Accounting Auditor shall expire at the close of the ordinary general meeting of shareholders held in
respect of the last business year ending within one (1) year after his/her assumption of office.
2. The Accounting Auditor shall be deemed to be reappointed at a general meeting of shareholders provided that there is no
resolution to the contrary.
CHAPTER IX.
ACCOUNTS
(Business Year)
Article 43.
The business year of the Company shall commence on April 1 of each year and end on March 31 of the following year.
(Acquisition of Own Shares)
Article 44.
Unless otherwise provided for by laws or regulations, the company may determine by a resolution of the Board of Directors to
acquire its own shares by obtaining consent of the shareholders as provided for in Article 459, Paragraph 1, Item 1 of the Companies
Act.
(Year-End Dividends)
Article 45.
The Company shall distribute cash dividends from surplus (referred to as the “Year-End Dividends” in these Articles of
Incorporation) to the shareholders or registered share pledgees whose names have been entered or recorded in the latest register of
shareholders as of March 31 of each year.
(Interim Dividends)
Article 46.
By resolution of the Board of Directors, the Company may distribute cash dividends from surplus pursuant to Article 454,
Paragraph 5 of the Companies Act (referred to as the “Interim Dividends” in these Articles of Incorporation) to the shareholders or
registered share pledgees whose names have been entered or recorded in the latest register of shareholders as of September 30 of each
year.
(Prescription Period for Payment of Dividends)
Article 47.
In the event that the dividends from surplus are to be paid in cash, the Company shall be released from the obligation to
distribute dividends from surplus if such distribution has not been accepted after the lapse of five (5) full years from the date of
commencement of payment thereof. Year-End Dividends and Interim Dividends of the Company shall bear no interest.
(Transitional Measure Regarding Exemption from Liability of Corporate Auditors)
Additional Rule(s)
Article 1.
In accordance with the provisions of Article 426, Paragraph 1 of the Companies Act, the Company may, by a resolution of the
Board of Directors, exempt Corporate Auditors (including former Corporate Auditors) from their liabilities provided for in Article
423, Paragraph 1 of the Companies Act in relation to the acts conducted before the close of the 10th Ordinary General Meeting of
Shareholders within the limits stipulated by laws and regulations provided that such Corporate Auditor has acted in good faith and
without gross negligence.
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Date of Establishment
April 2, 2001
Date of Amendment
June 27, 2002
June 27, 2003
June 29, 2004
June 29, 2005
October 1, 2005 (However, the Amendments to Articles of 5, 11, 12 (except for the amendment to Article12 changing the reference
to Article 37 into that to Article 38), 13,17, 18 and 39 shall be effective from October 3, 2005.)
- End -
(However, the Amendments to Article 6, Article 8 through Article 16, Article 19, Article 21, Article 50 and Article
51 (except for the deletions in the Articles of Incorporation pertaining to Class 9 Preferred Shares and Class 10
Preferred Shares) shall be effective from September 30, 2007.)
June 29, 2006
June 28, 2007
June 26, 2009
June 27, 2013
June 25, 2015
June 29, 2016
July 6, 2018
June 29, 2022
11
Exhibit 1(d)
SHARE HANDLING REGULATIONS OF
MITSUBISHI UFJ FINANCIAL GROUP, INC.,
AS AMENDED ON AUGUST 2, 2022
(ENGLISH TRANSLATION)
CHAPTER I. GENERAL PROVISIONS
Article 1. (Purpose)
1. The handling with respect to the shares and stock acquisition rights and the fees therefor provided for in Article 12 of the
Articles of Incorporation of the Company shall be governed by the rules prescribed by the Japan Securities Depository
Center, Inc., as a depository company (hereinafter referred to as the “Center”), and account management institutions, such as
securities companies and trust banks (hereinafter referred to as the “Securities Companies, Etc.”) as well as these
Regulations.
2. The handling of special accounts opened pursuant to the agreement entered into by and between the Company and a trust
bank designated by the Company and the fees therefor shall be governed by the rules prescribed by such trust bank as well as
these Regulations.
Article 2. (Share Transfer Agent)
The Company’s share transfer agent and its handling office shall be as follows:
Share Transfer Agent:
Mitsubishi UFJ Trust and Banking Corporation
4-5, Marunouchi 1-chome, Chiyoda-ku, Tokyo
Handling Office:
Mitsubishi UFJ Trust and Banking Corporation Corporate Agency Division
4-5, Marunouchi 1-chome, Chiyoda-ku, Tokyo
Article 3. (Method of Making Requests or Notifications)
1. All requests or notifications to the Company shall be made in the form prescribed by the Company, except in the event where
such request or notification is made through the Securities Companies, Etc. and the Center or through the Securities
Companies, Etc., and in the event set forth in Article 36, Paragraph 1 hereof.
2.
3.
In case any request or notification as described in the preceding paragraph is made by a proxy or requires consent of a
protector (hosanin) or an assistant (hojonin), a document evidencing the authority of such proxy; or such consent,
respectively, shall be submitted.
In the event that the request or the notification set forth in Paragraph 1 is made through the Securities Companies, Etc. and
the Center or through the Securities Companies, Etc., such request or notification may be deemed to have been made by a
shareholder himself/herself.
4. The Company may require the person who made the request or the notification set forth in Paragraph 1 to submit materials
certifying that the person is a shareholder or a proxy himself/herself.
5.
In the event that the Company requires the person to submit the materials provided for in the preceding paragraph, the
Company shall not accept the request or the notification set forth in Paragraph 1 unless such materials are submitted.
CHAPTER II. ENTRIES OR RECORDS, ETC. IN REGISTER OF SHAREHOLDERS
Article 4. (Entries or Records in Register of Shareholders)
1. The Company shall make entries or records in the register of shareholders in accordance with the notice concerning all
shareholders (sokabunushi tsuchi) (which means the notice provided for in Article 151 of the Law Concerning Central
Clearing of Bonds, Shares and Other Securities; hereinafter referred to as the “Clearing Law”) given by the Center.
2.
In the event that the Company receives a notice of a change of address of a person entered or recorded in the register of
shareholders (hereinafter referred to as the “Shareholder(s), Etc.”) or a notice of any other change in the matters entered or
recorded in the register of shareholders (other than an individual shareholder notice (kobetsu kabunushi tsuchi) (which means
the notice provided for in Article 154, Paragraph 3 of the Clearing Law; the same shall apply hereinafter)) through the
Securities Companies, Etc. and the Center, the Company shall change the entry or the record in the register of shareholders
pursuant to such notice.
3.
In addition to the provisions of the preceding two (2) paragraphs, in the case of the issuance of new shares or in any other
case prescribed by laws or regulations, the Company shall make entries or records in the register of shareholders.
Article 5. (Characters, Etc. to be Used in Register of Shareholders)
Entries or records in the register of shareholders of the Company shall be made using the characters and/or symbols designated
by the Center.
Article 6. (Entries or Records, Etc. in Ledger of Stock Acquisition Rights)
1. A request for entries or records in the ledger of stock acquisition rights, a request for registration, transfer or cancellation of a
pledge with respect to stock acquisition rights, and/or a request for the recordation of shares held in trust or cancellation
thereof shall be made to the share transfer agent.
2.
In addition to the provisions of the preceding paragraph, the handling of stock acquisition rights may be separately
prescribed.
CHAPTER III. NOTIFICATIONS, ETC.
Article 7. (Notification of Address, and Name or Trade Name)
1. Shareholders, Etc. shall notify the Company of their addresses and names or trade names.
2. The notification set forth in the preceding paragraph or any change in such notification shall be made through the Securities
Companies, Etc. and the Center, except in the case of the issuance of new shares or in any other case prescribed by laws or
regulations.
Article 8. (Notification of Nonresident Shareholders, etc.)
1. Shareholders, Etc. residing in foreign countries shall either appoint their standing proxies in Japan or designate their mailing
addresses in Japan for receiving notices and notify the Company thereof.
2. Standing proxies shall be included in the Shareholders, Etc. set forth in Paragraph 1 of the preceding article.
3. The notification set forth in Paragraph 1 or any change in such notification shall be made through the Securities Companies,
Etc. and the Center, except in the case of the issuance of new shares or in any other case prescribed by laws or regulations.
Article 9. (Representative of Corporation)
1.
In case a Shareholder, Etc. is a corporation, the title and the name of one (1) representative of such corporation shall be
notified.
2. The notification set forth in the preceding paragraph or any change in such notification shall be made through the Securities
Companies, Etc. and the Center, except in the case of the issuance of new shares or in any other case prescribed by laws or
regulations.
Article 10. (Representative, Etc. of Co-owned Shares)
1. Shareholders who co-own shares shall appoint one (1) representative on their behalf, and shall notify the address and the
name or the trade name of such representative.
2. The notification set forth in the preceding paragraph or any change in such notification shall be made through the Securities
Companies, Etc. and the Center, except in the case of the issuance of new shares or in any other case prescribed by laws or
regulations.
3.
In case a Shareholder, Etc. is an unincorporated association, the provisions of the preceding two (2) paragraphs shall apply.
Article 11. (Statutory Agent)
1.
In case a statutory agent, such as a person in parental authority or a guardian (kokennin) represents a Shareholder, Etc., the
address and the name or the trade name of such statutory agent shall be notified.
2. The notification set forth in the preceding paragraph, or any change or cancellation thereof, shall be made through the
Securities Companies, Etc. and the Center, except in the case of the issuance of new shares or in any other case prescribed by
laws or regulations.
Article 12. (Other Notifications)
1.
In addition to the notifications set forth in Article 7 hereof through the preceding article, unless otherwise designated by the
Company, any notification to the Company shall be made through the Securities Companies, Etc. and the Center, or through
the Securities Companies, Etc., except in the case of the issuance of new shares or in any other case prescribed by laws or
regulations.
2. Any notification that is unable to be accepted or handled by the Securities Companies, Etc. shall be made to the share transfer
agent.
Article 13. (Matters, Etc. to be Notified concerning Holders of Stock Acquisition Rights)
The provisions of Article 7 hereof through the preceding article shall apply mutatis mutandis to the matters to be notified
concerning the person who is entered or recorded and the method of notification thereof in the ledger of stock acquisition rights of the
Company, except that such notification shall be made to the share transfer agent, unless otherwise prescribed pursuant to Article 6,
Paragraph 2 hereof.
Article 14. (Making a request for delivery in paper format and lodging objections)
Requests for paper versions of reference documents for shareholder meetings provided in electronic form as stipulated in
Article 325-5, paragraph (1) of the Companies Act (hereafter referred to as a “request for delivery in paper format”) and the lodging of
objections stipulated in paragraph (5) of the above Article shall be made in writing. However, if the request for delivery in paper
format is made through a securities company, etc. or through a securities depository center, the procedures shall be as stipulated by the
securities company, etc. or securities depository center.
CHAPTER IV. PURCHASE OF FRACTIONAL UNIT SHARES
Article 15. (Request for Purchase of Fractional Unit Shares)
In case a shareholder requests the Company to purchase fractional unit shares, such request shall be made through the Securities
Companies, Etc. and the Center in accordance with the rules prescribed by the Center.
Article 16. (Determination of Purchase Price)
The purchase price of fractional unit shares shall be the amount equivalent to the closing price per share of the shares of the
Company as reported by the Tokyo Stock Exchange on the day when a request pursuant to the preceding article reaches the handling
office of the share transfer agent provided for in Article 2 hereof, multiplied by the number of such fractional unit shares; provided,
however, that if there is no trading of the shares of the Company effected on such day or if such day falls on a day when the Tokyo
Stock Exchange is closed, such closing price shall be deemed the amount equivalent to the first trading price per share effected
thereafter.
Article 17. (Payment of Purchase Proceeds)
1. The Company shall pay to the shareholder who requested for purchase of fractional unit shares the amount equivalent to the
purchase price as calculated pursuant to the preceding article after deducting the handling fees set forth in Article 40 hereof
(hereinafter referred to as the “Purchase Proceeds”) on the fourth (4th) business day from the day immediately following the
day on which the purchase price is determined, unless the Company otherwise determines; provided, however, that if the
purchase price reflects the right to receive dividends from a surplus or shares arising from a stock split, etc., such purchase
price shall be paid by the record date.
2. Upon request of the shareholder who requested for purchase of fractional unit shares, the Purchase Proceeds may be paid by
transfer to a bank account designated by him/her or by Japan Post Bank cash payment. In such cases, the payment of the
Purchase Proceeds is deemed to be completed when the procedures for such transfer or the procedures for Japan Post Bank
cash payment are taken.
Article 18. (Transfer of Shares Purchased)
The fractional unit shares for which a request for purchase is made shall be transferred to the transfer account of the Company
on the day on which the payment of the Purchase Proceeds, as prescribed in the preceding article, has been completed.
CHAPTER V. PURCHASE OF ADDITIONAL FRACTIONAL UNIT SHARES BY FRACTIONAL UNIT
SHAREHOLDERS
Article 19. (Request for Purchase of Additional Fractional Unit Shares by Fractional Unit Shareholders)
In case a shareholder holding fractional unit shares makes a request for the Company to sell to such fractional unit shareholder
shares held by the Company in the number as will constitute one (1) full unit of shares when added to the fractional unit shares held by
such shareholder (hereinafter referred to as the “Request for Additional Purchase”), such request shall be made through the Securities
Companies, Etc. and the Center pursuant to the rules prescribed by the Center.
Article 20. (Restriction on Request for Additional Purchase)
If an aggregate number of fractional unit shares for which the Requests for Additional Purchase are made on the same day
exceeds the number of shares owned by the Company which shall be transferred, the Company shall not transfer any fractional unit
share for any of the Requests for Additional Purchase made on such day.
Article 21. (Effective Date of Request for Additional Purchase)
Requests for Additional Purchase shall be deemed to be made on the day when a request as described in Article 19 hereof is
accepted at the handling office of the share transfer agent provided for in Article 2 hereof.
Article 22. (Determination of Additional Purchase Price)
The additional purchase price of fractional unit shares shall be the amount equivalent to the closing price per share of the shares
of the Company as reported by the Tokyo Stock Exchange on the day when the request set forth in Article 19 hereof is accepted at the
handling office of the share transfer agent provided for in Article 2 hereof, multiplied by the number of such fractional unit shares;
provided, however, that if there is no trading of the shares of the Company effected on such day or if such day falls on a day when the
Tokyo Stock Exchange is closed, such closing price shall be deemed the amount equivalent to the first trading price per share effected
thereafter.
Article 23. (Timing of Transfer of Shares Additionally Purchased)
With respect to the fractional unit shares for which the Request for Additional Purchase is made, the application for the transfer
thereof to the transfer account of the shareholder who made such Request for Additional Purchase shall be made on the day on which
it is confirmed that the amount of the additional purchase price calculated pursuant to the preceding article and the fees provided for in
Article 40 hereof (hereinafter referred to as the “Proceeds from Additional Purchase”) have been remitted to the bank account
designated by the Company.
Article 24. (Suspension of Acceptance of Request for Additional Purchase)
1. The Company shall suspend the acceptance of Requests for Additional Purchase during the period beginning ten
(10) business days prior to any of the days provided for in the following items up to the day provided for in such item:
i. March 31;
ii. September 30; and
iii.Any other determination date of shareholders.
2.
In addition to the case provided for in the preceding paragraph, when the Company or the Center deems necessary, the
Company may suspend the acceptance of Requests for Additional Purchase.
Article 25. (Exceptions for Preferred Shares)
CHAPTER VI. PREFERRED SHARES
1. With respect to the provisions concerning the Preferred Shares, notwithstanding any other provisions hereof, the provisions of
this Chapter shall prevail and apply.
2. All request or notification procedures, or any other handling, concerning the Preferred Shares shall be made to the share
transfer agent, unless otherwise provided for in this Chapter.
Article 26. (Entries or Records in Register of Holders of Preferred Shares)
1.
2.
In case of a request for entries or records in the register of holders of the Preferred Shares (hereinafter referred to as the
“Registration of Transfer”), a written request therefor, with the names and seals of both the holder of the Preferred Shares
entered or recorded in the register of shareholders and the person who acquired such Preferred Shares affixed thereto, shall be
submitted together with the materials evidencing the matters regarding the Registration of Transfer.
In case a request for the Registration of Transfer is made with respect to the Preferred Shares acquired due to inheritance,
merger or any other event other than assignment, a written request therefor shall be submitted together with a document
evidencing the cause for such acquisition.
Article 27. (Notifications of Holders, Etc. of Preferred Shares)
1. Holders of the Preferred Shares and the registered preferred share pledgees, or their statutory agents, in addition to the
notification set forth in Article 7 hereof, shall notify the Company of their seal impressions; provided, however, that
foreigners may substitute their specimen signatures for seal impressions.
2.
In case of a change in the matters notified pursuant to the preceding paragraph, such change shall be notified.
3. All requests, notifications or any other exercises of holders’ rights concerning the Preferred Shares to the Company shall be
made in the form prescribed by the Company, bearing the seal impressions notified pursuant to the provisions of Paragraph 1.
Article 28. (Registration of Transfer in Case of Special Procedures Required by Laws and Regulations)
If any special procedure is required by laws and regulations in connection with transfer of the Preferred Shares, a written request
therefor shall be submitted together with a document evidencing the completion of such procedure.
Article 29. (Registration of Pledges, Transfer or Cancellation Thereof)
In case of a request for the registration of pledges on the Preferred Shares, transfer or cancellation thereof, a written request
therefor with the names and seals of both a pledgor and a pledgee affixed thereto shall be submitted.
Article 30. (Recordation of Shares Held in Trust or Cancellation Thereof)
In case of a request for the recordation of the Preferred Shares held in trust or cancellation thereof, a written request therefor
shall be submitted either by a trustor or a trustee.
Article 31. (Method for Request for Acquisition of Preferred Shares)
1.
In case of a request to the Company for acquisition of Class 6 Preferred Shares (the First to the Fourth Series) and Class 7
Preferred Shares (the First to the Fourth Series), in exchange for ordinary shares of the Company (hereinafter referred to as
the “Ordinary Shares”) in the number as is calculated by the formula set forth in Article 19 of the Articles of Incorporation,
such request shall be made in the prescribed written form through the Securities Companies, Etc. or otherwise in accordance
with the rules prescribed by the Center, and a transfer account (other than a special account) which has been opened for
himself/herself for the purpose of the transfer of such Ordinary Shares shall be designated.
2. The request provided for in the preceding paragraph may not be cancelled after submitting the written request therefor.
3. The delivery of the Ordinary Shares set forth in Paragraph 1 shall be made by a notification of new record or an application
for the transfer of such Ordinary Shares to the transfer account designated pursuant to the provisions of such paragraph.
Article 32. (Effect of Request for Acquisition of Preferred Shares)
The request set forth in the preceding article shall come into effect when the written request therefor reaches the handling office
of the share transfer agent provided for in Article 2 hereof.
Article 33. (Notice or Public Notice of Change in Acquisition Price and Delivery Ratio of Preferred Shares)
In case the acquisition price or the delivery ratio included in the terms of the acquisition of Preferred Shares provided for in
Article 19 of the Articles of Incorporation shall be reset or adjusted, details of such reset or adjustment and the number of the Ordinary
Shares to be delivered in exchange for acquisition of Preferred Shares shall be notified or notified publicly to the holders of the
Preferred Shares by the day preceding the reset date or the day on which such adjusted acquisition price or delivery ratio shall be
applied (hereinafter referred to as the “Reset Date, Etc.”); provided, however, that in case the Company is not able to give notices or
public notices of such change to the holders of the Preferred Shares by the day preceding the Reset Date, Etc., the Company shall give
notices or public notices of such change to the holders of the Preferred Shares promptly after the Reset Date, Etc.
Article 34. (Notice or Public Notice of Restriction on Period for Request for Acquisition of Preferred Shares)
In case there is a provision which excludes a certain period within the period in which the holders of the Preferred Shares are
entitled to request acquisition, included in the terms of the acquisition of Preferred Shares provided for in Article 19 of the Articles of
Incorporation, the Company shall give notices or public notices of such excluded period to the holders of the Preferred Shares in
advance.
Article 35. (Procedures for Acquisition pursuant to Provisions of Acquisition of Preferred Shares)
1.
2.
In case of acquisition of Preferred Shares set forth in Article 18 of the Articles of Incorporation, the Company shall give
notices or public notices of the amount of cash to be delivered to the holders of the Preferred Shares in exchange for the
acquisition of one (1) share of such Preferred Shares and any other necessary matters to the holders of the Preferred Shares.
In case of mandatory acquisition of Preferred Shares provided for in Article 20 of the Articles of Incorporation, the Company
shall give notices or public notices of (i) the acquisition date, (ii) the occurrence of any acquisition event, (iii) if the Ordinary
Shares will be delivered in exchange for the acquisition of such Preferred Shares set forth in the said article, the number of
the Ordinary Shares to be delivered, (iv) if such Preferred Shares will be acquired free of consideration, the fact that such
Preferred Shares will be acquired free of consideration, and (v) any other necessary matters, to the holders of the Preferred
Shares.
Article 36. (Delivery of New Shares upon Mandatory Acquisition of Preferred Shares)
1.
In case of mandatory acquisition of Preferred Shares provided for in Article 20 of the Articles of Incorporation, a holder of
the Preferred Shares shall give written notice of a transfer account (other than a special account) which has been opened for
himself/herself for the purpose of the transfer of such Ordinary Shares.
2. The delivery of the Ordinary Shares set forth in the preceding paragraph shall be made by a notification of new record or an
application for the transfer of such Ordinary Shares to the transfer account notified pursuant to the provisions of the
preceding paragraph.
CHAPTER VII. METHODS BY WHICH TO EXERCISE
MINORITY SHAREHOLDERS’ RIGHTS, ETC.
Article 37. (Methods by Which to Exercise Minority Shareholders’ Rights, Etc.)
1.
In case of direct exercise of the minority shareholders’ rights, etc. set forth in Article 147, Paragraph 4 of the Clearing Law
against the Company, a shareholder shall submit a document on which his/her printed name and seal is affixed, after
requesting the individual shareholder notice; provided, however, that a foreigner may substitute his/her signature for such
printed name and seal.
2. Notwithstanding the provisions of the preceding paragraph, in case of exercise of the minority shareholders’ rights, etc. by
the holders of the Preferred Shares, the request for the individual shareholder notice shall not be required.
3. The provisions of Article 3, Paragraphs 2, 4 and 5 hereof shall apply mutatis mutandis to the exercise of the minority
shareholders’ rights, etc. referred to in the preceding two (2) paragraphs.
Article 38. (Agenda that are Proposed by Shareholders in Reference Materials for General Meeting of Shareholders)
In case of exercise of the shareholders’ proposal rights pursuant to the provisions of Paragraph 1 of the preceding article, if the
description of the following matters that are included in the proposed agenda exceeds 400 characters or is otherwise determined by the
Company to be inappropriate to describe all of the matters, such description may be summarized in the reference materials for a
general meeting of shareholders: (1) Reasons for the proposal; or (2) Matters relating to the appointment of directors, accounting
advisors, corporate auditors and accounting auditors.
CHAPTER VIII. IDENTIFICATION OF SHAREHOLDERS
Article 39. (Identification of Shareholders)
1.
In case of exercises of shareholders’ rights, except as otherwise provided for in laws and regulations or these Regulations, the
Company may request the submission of materials certifying that the person who exercises the rights is a shareholder himself/
herself or a proxy thereof.
2. The provisions of Article 3, Paragraphs 2 and 5 hereof shall apply mutatis mutandis to the identifications of shareholders set
forth in the preceding paragraph.
Article 40. (Handling Fees)
CHAPTER IX. HANDLING FEES
Fees for handling of shares of the Company (including consumption tax) shall be as follows:
1.
In case of purchase of fractional unit shares pursuant to Article 15 hereof or purchase of additional fractional unit shares
pursuant to Article 19 hereof:
The fee shall be the amount obtained by multiplying the purchase price provided for in Article 16 hereof by 0.75%, or
the amount obtained by multiplying the additional purchase price provided for in Article 22 hereof by 0.75%, in each case
plus consumption tax. (Fractions less than one (1) yen shall be disregarded.)
2. Fees to be paid by the Shareholders, Etc. to the Securities Companies, Etc. or the Center shall be borne by the Shareholders,
Etc.
Amendment History
October 1, 2001
June 27, 2002
April 1, 2003
July 1, 2003
June 29, 2004
June 29, 2005
October 1, 2005
May 1, 2006
June 29, 2006
September 30, 2007
January 5, 2009
May 19, 2009
June 26, 2009
June 27, 2013
June 25, 2015
August 2, 2022
Article 9 amended
Articles 1, 9, 10, 11, 23, 33, 34, 35 and 36 amended
Articles 4, 5, 24, 25, 26, 27, 29, 30, 33, 40, 41, Article 2 of Supplemental Provision amended
Articles after No. 28 were renumbered
Articles 1, 2, 32, 33, 35, 36, 37, 38, 39, 40, 41, 42, 45, 46, 47, 48 and 49 amended
Articles after No. 43 were renumbered
Articles 1, 45, 46, 47 and 48 amended
Articles 43, 44, 45, 46, 47 and 48 amended
Articles 2, 33, 35, 36, 38, 41, 43, 49 and 50 amended
Articles after No. 37 were renumbered
Articles 2, 4 through 10, 16 through 18, 20, 21, 23 through 27, 29, 31 through 33, and 35 through 50
amended
Articles after No. 37 were renumbered
Articles 1 through 3 of Supplemental Provisions amended
Articles 1, 9, 23 (newly established), 34, 39, 41, 46, 48, 49, 50, 51, 52 and Article 1 of Supplemental
Provisions amended
Articles after No. 34 were renumbered
Articles 1, 3, 5 through 7, 15 through 17, 26, 29 through 39, 42, 44, 46 through 50 amended
Articles after No. 7 were renumbered
Article 1 of Supplemental Provisions amended
Article 3 of Supplemental Provisions deleted
The Regulations were wholly amended
Article 36 amended
Article 1 of Supplemental Provisions deleted
Articles after No. 2 of Supplemental Provisions were renumbered
Articles 1, 30, and 32 through 35 amended
Articles 17, 22, 34 and 35 amended
Article 30 amended
Articles 1 through 4 of Supplemental deleted
CHAPTER Ⅲ（amendment of chapter name）
Articles 14（newly established）, 17, 21 through 23, 40 amended
Articles after No. 14 were renumbered
- No further entry -
MITSUBISHI UFJ FINANCIAL GROUP, INC.
AUDIT COMMITTEE CHARTER
Exhibit 1(e)
(TRANSLATION)
1. Purpose
i.
The Audit Committee (“Committee”), as a committee of the Board of Directors (“Board”) of Mitsubishi UFJ
Financial Group, Inc. (“Company”), shall oversee the Company’s operations as set forth herein.
ii. Pursuant to the provisions of the Companies Act of Japan, the Committee shall conduct an audit on the execution by
the members of the Board and the corporate executive officers of the Company of their respective duties and
responsibilities (“Companies Act Audit”) and shall prepare a report on such audit.
iii. The Committee shall assist the Board with oversight of the operations of the Company and its subsidiaries
(collectively, “Group”) by overseeing the following:
a.
b.
c.
d.
e.
financial reporting,
risk management and internal controls,
compliance,
internal audits, and
external audits.
iv. The above purpose shall include all such duties and responsibilities as are imposed by the laws, regulations and rules
in Japan (“Japanese Law”) and the U.S. Securities Exchange Act of 1934, the rules of the U.S. Securities and
Exchange Commission (“SEC”) and the rules of the New York Stock Exchange (“U.S. Law” and, together with
Japanese Law, “Applicable Laws”) on companies, including the Company, which are publicly listed in Japan and in
the United States.
2. Composition
i. Membership
a. The Committee shall consist of five or more non-executive directors who shall be appointed as members of
the Committee (“Committee Members”) by the Board each year based on recommendations of the
Nominating and Governance Committee of the Company.
b. The Committee shall, as appropriate, engage in communications with and, to the extent it deems necessary,
provide its view to, the Board and the Nominating and Governance Committee of the Company regarding
appointments of Committee Members.
c. Each Committee Member shall have such qualifications as are required by Applicable Laws for members of
audit committees, including the independence requirements under U.S. Law, and have such expertise and
work experience as are necessary to fulfill the duties and responsibilities of a Committee Member. The
Committee shall collectively maintain appropriate knowledge and expertise relating to the capital markets
and the financial sector.
d. At least one Committee Member shall be an “audit committee financial expert” as determined by the Board
in accordance with Item 16A of Form 20-F.
ii. The Board shall appoint a Committee Member who is an “independent outside director” as such term is defined by
Japanese Law to serve as the Committee Chair. The Committee Chair shall not concurrently serve as the chair of any
other committees of the Board (except any such subcommittee as the Committee may create pursuant to Section 4.ⅴ
hereof). The Committee Chair shall (1) call meetings of the Committee, (2) establish the agendas for the meetings in
consultation with the other Committee Members, (3) preside at the meetings, and (4) communicate and share
information with the other Committee Members and the Chairs of the Board and the other committees of the Board
as appropriate.
iii. Each Committee Member shall report to the Board on the Committee’s discussions and actions as appropriate.
iv. The Committee may have up to two Committee Members engaged in Committee activities on a full-time basis
(“full-time committee members”). The full-time committee members shall attend meetings of the other committees
of the Board, and the Executive Committee, the Disclosure Committee and other committees and organizations of
the Company as appropriate, and shall report to the Committee on such meetings.
v. The Committee shall establish a secretariat office to assist the Committee in administering and managing the
operations of the Committee. The secretariat office shall be staffed with employees from the Internal Audit Division
of the Company and such other persons as the Committee determines appropriate.
3. Operations
i.
The Committee shall meet once a month unless it otherwise determines, in which case it shall meet as it deems
necessary.
ii. The quorum for a meeting of the Committee shall be a simple majority of the Committee Members.
iii. The Committee may, as it deems necessary, have the external auditor, other members of the Board, the Chief Audit
Officer (Group CAO), the Chief Compliance Officer (Group CCO), the Chief Financial Officer (Group CFO) and
other corporate executive officers and employees of the Company, and any external adviser retained pursuant to
Section 4.ⅵ hereof attend its meetings.
iv.
The Committee shall, as necessary, communicate with other members of the Board and the corporate executive
officers and other employees of the Company. The Committee shall, as appropriate, exchange opinions with the
representative corporate executive officers of the Company.
v. The Committee shall, as necessary, obtain reports from management and other employees of the Company with
respect to such matters subject to the oversight of the audit committees, audit and supervisory committees, and
corporate auditors (“audit committees and other committees”) of the Company’s subsidiaries as the Committee
deems may have a material impact on the Group.
vi. The Committee shall, as it deems necessary, obtain the assistance of the Group CAO and Internal Audit Division of
the Company, through their cooperation with the internal audit divisions of the Company’s subsidiaries or other
appropriate means, with the Committee’s coordination with the audit committees and other committees of the
Company’s subsidiaries.
vii. The Committee shall have prepared and maintained minutes of its meetings to properly record its discussions,
deliberations, reports, and other actions and activities. The Committee may, as it deems appropriate, make such
minutes, in part or whole, available to other members of the Board.
viii. The Committee shall report to the Board on the Committee’s discussions, deliberations, reports, and other actions
and activities as appropriate, and shall make recommendations to the Board as necessary.
ix. The Committee shall conduct an annual evaluation of the performance of its duties and responsibilities and shall
report the results of such evaluation to the Board.
4. Authority
i.
The Committee shall have such authority as is necessary to fulfill its purpose set forth in Section 1 hereof and its
duties and responsibilities set forth in Section 5 hereof in accordance with Applicable Laws and any such other
authority as is granted to it by Applicable Laws.
ii. The Committee shall have the authority to request such information relating to the operations of the Group as it
deems necessary from the external auditor, other members of the Board, and the corporate executive officers and
other employee of the Company in accordance with Applicable Laws.
iii. The Committee shall have the authority to request, in accordance with Applicable Laws, from the audit committees
and other committees of the Company’s subsidiaries such information relating to their discussions, deliberations,
reports, and other actions and activities, as well as investigations conducted by them and other matters as it deems
necessary.
iv. The Committee shall have the authority to conduct any such investigation relating to the Group’s operations and
assets and other matters as it deems necessary in accordance with Applicable Laws.
v. The Committee shall have the authority to delegate any of its duties and responsibilities, together with the necessary
authority, to one or more subcommittees consisting of one or more Committee Members as the Committee
determines appropriate.
vi. The Committee shall have the authority, in its sole discretion, to retain and obtain the advice and assistance of such
external advisers as it determines necessary.
vii. The Company shall provide such funding and other resources as the Committee determines appropriate for the
fulfillment of the Committee’s purpose and duties and responsibilities set forth herein.
5. Duties and Responsibilities
i. Companies Act Audits
a. The Committee shall conduct a Companies Law Audit on the execution by the members of the Board and
the corporate executive officers of the Company of their respective duties and responsibilities based on
such audit policy and plans as the Committee adopts for each fiscal year.
b. The Committee shall, as appropriate, report to the Board on its audit policy and plan for such Companies
Law Audit.
c. The Committee shall report to the Board on the results of its Companies Act Audit in the form of an audit
report to be included in the Company’s Annual Business Report for each fiscal year or otherwise presented.
ii. Oversight of Financial Reporting
a. The Committee shall discuss with the external auditor and management, and examine, the following
matters relating to financial reporting:
•
•
•
The Company’s financial statements and accompanying notes prepared in accordance with
Japanese Law and generally accepted accounting principles in Japan (“Japanese GAAP”)
(including the Company’s non-consolidated and consolidated financial statements and
accompanying schedules prepared in accordance with the Companies Act and the Company’s non-
consolidated and consolidated full-year and semi-annual financial statements and accompanying
notes prepared in accordance with the Financial Instruments and Exchange Act of Japan)
(collectively, the “Japanese GAAP Financial Statements”).
The Company’s financial information prepared in accordance with U.S. Law and generally
accepted accounting principles in the United States (“U.S. GAAP”) and filed with the SEC
(including the Company’s financial statements, accompanying notes and financial analysis and
discussion filed on Form 20-F with, and the Company’s semi-annual financial statements,
accompanying notes and financial analysis and discussion submitted on Form 6-K to, the SEC)
(collectively, the “U.S. GAAP Financial Information”).
The Company’s quarterly reports prepared in accordance with Japanese GAAP (including the
Company’s quarterly reports prepared in accordance with the Financial Instrument and Exchange
Act) (“Japanese GAAP Quarterly Reports”).
b. The Committee shall examine the financial information included in the Company’s earnings releases
(kessan-tanshin), press releases, investor relations materials and other information that are published in
connection with the Japanese GAAP Financial Statements, the U.S. GAAP Financial Information and the
Japanese GAAP Quarterly Reports prior to their publication, considering discussions of the Disclosure
Committee and the Executive Committee and other relevant information.
c.
The Committee shall discuss with the external auditor, the Internal Audit Division and management, and
examine, the Group’s critical accounting policies and practices (including those accounting policies and
practices which relate to such items as critical accounting estimates, items requiring a high degree of
judgment, items involving uncertainty such as contingent liabilities, and related party transactions) and
related disclosures.
d. The Committee shall obtain reports from the external auditor and management with respect to any material
communications relating to the Group’s financial and accounting matters between the external auditor and
management in accordance with Applicable Laws. The Committee shall discuss with the external auditor
and management, and examine, disagreements between them regarding such matters to resolve such
disagreements.
e. The Committee shall prepare a report based on the result of its examination of the Company’s non-
consolidated and consolidated financial statements and accompanying schedules prepared in accordance
with Japanese GAAP and present such report to the Board.
iii. Oversight of Risk Management and Internal Controls
a. The Committee shall obtain reports from management, the Internal Audit Division and the external auditor
on, examine and evaluate any significant risks and the risk management and corporate governance
frameworks of the Group and the operation of such frameworks.
b. The Committee shall communicate and coordinate, as appropriate, with the Risk Committee of the
Company with respect to the Group’s risk management through such means as the participation of the full-
time committee members in meetings of the Risk Committee and discussions with the Risk Committee, as
necessary.
c. The Committee shall obtain reports from management, the Internal Audit Division and the external auditor
on, discuss and examine the following matters relating to the Group’s internal control over financial
reporting:
•
The Group’s accounting and financial reporting processes and the frameworks for internal
controls over the Group’s accounting and financial reporting and the operation of such
frameworks.
• Management’s assessment of the effectiveness of such processes and internal controls, the Internal
Audit Division’s audit relating to management’s assessment of the same, and the external auditor’s
evaluation of the same.
•
Any significant deficiency, material weakness or other similar issue identified through such
assessment, audit or evaluation.
• Management’s responses to any such deficiency, weakness or issue.
•
Any fraud, or reasonably suspected fraud, that involves management or other employees who have
a significant role in the Group’s processes and internal controls described above.
d. The Committee shall obtain reports from management, the Internal Audit Division and the external auditor
on, discuss and examine the framework for the disclosure controls for the Company’s disclosures and the
operation of such framework.
iv. Oversight of Compliance
a. The Committee shall oversee the framework for the Group’s compliance with Applicable Laws and other
applicable laws, regulations and rules and the operation of such framework.
b. The Committee shall obtain reports from management on, and examine, the status of any material failure of
the Group to comply with Applicable Laws or other applicable laws, regulations or rules, and any legal
proceedings or regulatory matters.
c. The Committee shall review the Group’s codes of ethics and other internal rules, monitor compliance with
such codes and rules, and evaluate the framework for ensuring compliance with such codes and rules.
d. The Committee shall establish procedures (i) pertaining to complaints received by the Company regarding
accounting, internal accounting controls and auditing matters and (ii) for the confidential, anonymous
submission by Group employees of concerns regarding questionable accounting or auditing matters, and
shall handle any such complaint and concern received through such procedures in a confidential and
appropriate manner. The Committee shall obtain reports from the audit committees and other committees of
the Company’s subsidiaries on, and examine, their handling of concerns received directly from subsidiary
employees pertaining to the same matters.
v. Oversight of Internal Audits
a. The Committee shall review and evaluate the framework for the Group’s internal audit function and the
operation of such framework.
b. The Committee shall obtain the Internal Audit Division’s explanations on, and discuss with such Division,
such Division’s proposed audit plan, risk assessment based on which such plan has been prepared, audit
focus areas, and staffing plan including retention of any external expert, and shall approve such audit plan.
c. The Committee shall obtain the Internal Audit Division’s reports on, and discuss with such Division, any
significant matters relating to an internal audit, including the execution, findings and results of, and
communications with management regarding, the internal audit, and shall provide instructions, as
necessary, to such Division.
d. The Committee shall examine the evaluation of the Internal Audit Division periodically performed, and any
recommendation made, by an external third party and shall evaluate the Internal Audit Division’s responses
to such evaluation or recommendation.
e. The Committee shall obtain reports from the Internal Audit Division on, and evaluate, the performance of
its duties and responsibilities, and such Division’s measures designed to continuously improve and enhance
the internal audit function, including audit methodologies and human resource development, and the
implementation of such measures.
f. The Committee shall determine the appointment of the Group CAO and other personnel who perform
significant internal audit functions, and shall communicate such determination to the Nominating and
Governance Committee of the Board.
g. The Committee shall perform an annual evaluation of the Group CAO, considering the performance of the
Internal Audit Division, and submit such evaluation to the Compensation Committee of the Board.
vi. Oversight of External Audits
a. The Committee shall oversee the work of the external auditor and obtain reports directly from the external
auditor.
b. The Committee shall set a policy for the appointment, termination and non-appointment of the external
auditor and, in accordance with such policy, determine whether to submit to shareholder vote a proposal for
the appointment, termination and non-appointment of the external auditor.
c. The Committee shall obtain the external auditor’s explanations on the external auditor’s proposed annual
audit plan, any material changes in such plan, the risk assessment based on which such plan has been
prepared, audit focus areas, estimated audit work hours and other related matters, and shall discuss and
evaluate such plan.
d. The Committee shall obtain from, and discuss with, the external auditor an estimate of audit work hours
and a fee proposal for auditing the Company’s financial statements and internal control over financial
reporting based on the external auditor’s audit plan, and shall approve such estimate and proposal.
e. The Committee shall, as appropriate, obtain the external auditor’s reports on, and discuss with the external
auditor, any significant matters relating to the Company’s accounting, internal controls and financial
reporting, including the execution, findings and results of, and communications with management
regarding, the external auditor’s audit, and shall examine and evaluate the audit performed by the external
auditor.
f. The Committee shall pre-approve any non-audit services to be provided to the Group by the external
auditor and any of its domestic and overseas member firms by ensuring, prior to the provision of such
services, that such non-audit services are not prohibited under Applicable Laws or other applicable laws,
regulations or rules. The Committee shall establish appropriate policies and procedures for pre-approving
such non-audit services.
g. The Committee shall obtain explanations from the external auditor on, and evaluate, the external auditor’s
compliance, and the framework for ensuring compliance, with the auditor independence standards under
Applicable Laws and other applicable laws, regulations and rules.
h. The Committee shall obtain from the external auditor reports on, and examine, any material issues raised by
any quality-control reviews (including any internal or peer quality-control reviews and any inquiries,
inspections or investigations by governmental or professional authorities in Japan, the United States and
other jurisdictions) and any steps taken to deal with such issues, and shall evaluate the quality of services
provided by the external auditor.
i.
j.
The Committee shall, at least annually, receive the external auditor’s explanation or presentation on, and
evaluate, the external auditor’s audit quality-control framework (including the frameworks for executing
audit work with required expertise and for ensuring compliance with the applicable independence
requirements).
The Committee shall examine and evaluate whether all of the matters that the external auditor is required to
communicate to the Committee under Applicable Laws and other applicable laws, regulations and rules
have been appropriately communicated to the Committee.
k. The Committee shall set the Group’s hiring policies for employees or former employees of the external
auditor and evaluate the implementation of such policies.
6. Coordination with the Audit Committees and Other Committees of the Company’s Subsidiaries
i.
The Committee shall monitor the oversight of the operations of the Company’s domestic and overseas subsidiaries
by their audit committees and other committees through coordination with such audit committees and other
committees in accordance with Sections 6.ⅱ and 6.ⅲ hereof to ensure the effective and efficient oversight of the
operations of the Group.
ii. The Committee shall coordinate with the audit committees and other committees of MUFG Bank, Ltd., Mitsubishi
UFJ Trust and Banking Corporation, Mitsubishi UFJ Securities Holding Co., Ltd. and Mitsubishi UFJ NICOS Co.,
Ltd. in the following manner or otherwise as appropriate:
a. The Committee shall obtain reports from such audit committees and other committees on, and discuss with
such audit committees, the audit plans, the execution of such plans and the audit reports relating to their
respective Companies Act Audits.
b. The Committee shall obtain from such audit committees and other committees information relating to their
discussions and other activities and, if determined necessary by the Committee, request such audit
committees and other committees to submit minutes of their meetings and other meeting materials and
otherwise provide reports on their discussions and other activities in accordance with Applicable Laws.
c. The full-time committee members shall, as necessary, attend meetings of such audit committees and other
committees and report to the Committee on such meetings as appropriate.
The Committee shall coordinate with the audit committees and other committees of the Company’s other
subsidiaries in Japan, as necessary, by obtaining reports from such audit committees and other committees on, and
discussing with such audit committees and other committees, their respective Companies Act Audits and other
matters.
In coordinating with the audit committees and other committees of the Company’s subsidiaries in Japan as set
forth above, the Committee shall consider all applicable requirements under Japanese Laws, including any
requirement for such audit committees and other committees to maintain their independence with respect to
decision-making.
iii.
The Committee shall, as necessary, coordinate with the audit committees and other committees of the Company’s
overseas subsidiaries as well and request for information from such audit committees and other committees. In
making such coordination and request, the Committee shall, as necessary, coordinate with the audit committees and
other committees of the Company’s domestic subsidiaries that are intermediate holding companies of such overseas
subsidiaries. In coordinating with such audit committees and other committees, the Committee shall consider the
requirements of all applicable local and other laws, regulations and rules to which such audit committees and other
committees are subject, including any requirement for such audit committees and other committees to maintain their
independence with respect to decision-making.
iv.
The Committee shall, as necessary, provide the audit committees and other committees of the Company’s
subsidiaries with appropriate assistance, including the following, designed to enhance the oversight of the operations
of the Group by such audit committees and other committees:
a.
b.
plan and provide training and other sessions for the members of such audit committees and other
committees, and
implement, as appropriate, measures to promote interactions and communications among the Committee
and such audit committees and other committees to enhance the performance of their duties and
responsibilities, including providing such audit committees and other committees with information to help
enhance their administration and operations.
7. Amendments
i.
The Committee shall annually review this Charter in terms of its effectiveness, appropriateness and other criteria,
considering the Committee’s self-evaluation conducted in accordance with Section 3.ⅸ hereof, and determine
whether the Charter should be amended. If the Committee determines that any amendment to the Charter is
necessary, the Committee shall propose such amendment to the Board.
End
Date of Establishment
December 1, 2017
Dates of Amendments
July 1, 2018
July 1, 2022
February 3, 2023
Exhibit 11
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.
Exhibit 12
I, Hironori Kamezawa, certify that:
CERTIFICATION
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)
(b)
(c)
(d)
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;
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;
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
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)
(b)
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
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 24, 2023
/s/ Hironori Kamezawa
Name: Hironori Kamezawa
Title: President & Group Chief Executive
Officer
I, Tetsuya Yonehana, certify that:
CERTIFICATION
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 24, 2023
/s/ Tetsuya Yonehana
Name: Tetsuya Yonehana
Title: Group Chief Financial 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
Exhibit 13
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, 2023 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 24, 2023
/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, 2023 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 24, 2023
/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 24, 2023, 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, 2023.
Exhibit 15(a)
/s/Deloitte Touche Tohmatsu LLC
Tokyo, Japan
July 24, 2023
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 24, 2023, relating to
the financial statements of Morgan Stanley and subsidiaries (the “Firm”) and the effectiveness of the Firm’s internal control over
financial reporting, appearing in the Annual Report on Form 10-K of the Firm for the year ended December 31, 2022.
Exhibit 15(b)
/s/ Deloitte & Touche LLP
New York, New York
July 24, 2023
The following table presents our capitalization and indebtedness at March 31, 2023:
CAPITALIZATION AND INDEBTEDNESS
Total short-term borrowings(1)
Long-term debt:
Obligations under finance leases
Unsubordinated debt
Subordinated debt
Obligations under loan securitization transactions
Debt issuance costs
Total long-term debt
Shareholders’ equity:
Capital stock, with no stated value (common stock authorized: 33,000,000,000 shares; common stock issued:
12,687,710,920 shares)
Capital surplus
Retained earnings:
Appropriated for legal reserve
Unappropriated retained earnings
Accumulated other comprehensive income, net of taxes
Treasury stock, at cost: 665,392,775 common shares
Total shareholders’ equity
Noncontrolling interests
Total equity
Total capitalization and indebtedness
Exhibit 99(a)
At March 31,
2023
(in millions)
¥ 59,017,024
19,470
34,726,234
3,896,260
445,821
(16,030)
39,071,755
2,090,270
4,902,155
239,571
8,169,710
844,192
(482,552)
15,763,346
702,821
16,466,167
¥ 55,537,922
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, 2023 and net income before attribution of noncontrolling interests for the fiscal year ended
March 31, 2023.
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
Net assets in accordance with Japanese GAAP
As of
March 31, 2023
(in millions)
¥ 16,466,167
(40,079)
46,148
274,540
294,908
(12,550)
243,755
56,613
(15,718)
294,636
397,629
(84,070)
707,314
(547,028)
190,592
¥ 18,272,857
For the fiscal year
ended
March 31, 2023
(in millions)
¥
630,321
601,329
44,617
(156,153)
(837)
46,977
472,070
6,180
(1,159)
156,935
92,629
35,658
(31,597)
(355,357)
(341,297)
1,200,316
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
Net income before attribution of noncontrolling interests in accordance with Japanese GAAP
¥
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.
Investment securities
Loans
Trading account assets
Short-term borrowings
Long-term debt
Others
Total
Consolidation
under
U.S. GAAP
Deconsolidation
under
U.S. GAAP
(in millions)
Total
¥
¥
4,072,030 ¥
(3,667,545)
(3,051,279)
3,550,604
214,796
(1,263,847)
(145,241) ¥
98,931 ¥
934,351
(18,650)
(31,960)
(310,876)
(231,919)
439,877 ¥
4,170,961
(2,733,194)
(3,069,929)
3,518,644
(96,080)
(1,495,766)
294,636
The breakdown of the impact of the difference on net income before attribution of noncontrolling interests is as follows.
Investment securities
Loans
Trading account assets
Short-term borrowings
Long-term debt
Others
Total
10.Goodwill
Consolidation
under
U.S. GAAP
Deconsolidation
under
U.S. GAAP
(in millions)
¥
¥
265,725 ¥
(48,886)
(184,061)
52,152
2,725
6,565
94,220 ¥
6,818 ¥
168,143
(2,894)
(76)
(3,419)
(105,857)
62,715 ¥
Total
272,543
119,257
(186,955)
52,076
(694)
(99,292)
156,935
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.