MITSUBISHI UFJ FINANCIAL GROUP INC Q4 FY2020 earnings call

• Digitalization: Concluded strategic alliance with Grab for next-gen financial services.
• Resource control: Overseas expenses increased but Japan expense ratio improved; risk weighted assets down through sales of equity holdings and sophisticated risk measurement.
• Strategic investments: Completed investment program, progressing on governance post-investment to maximize synergies.
• ESG: Maintaining top position in green bond underwriting in Japan, investing in ESG loans for sustainable society.

GCB (overseas SMEs and retail clients) saw profits up ¥25.7 billion year-on-year due to consolidation of Bank Danamon. RMC (domestic retail customers and SMEs) profits decreased mainly due to drop in Asset Management revenue. JCID (large Japanese corporates) and GCID (large global corporates) had foreign exchange translation profits decline. Global markets had flexible portfolio management leading to increases in treasury income. Revenue contributions per segment were not explicitly stated in absolute percentage but key segments were highlighted in performance.

• Target for profits attributable to owners of parent in fiscal 2020 is ¥550 billion based on business environment assumptions.
• Dividend forecast for fiscal 2020 is ¥25 per share, unchanged from fiscal 2019.
• Negative impact of COVID-19 estimated at around ¥600 billion on net operating profit and items below net operating profit.

• Uncertainty in COVID-19 containment and its impact on the real economy.
• Impact of low interest rates on net interest margin for both domestic and overseas operations.
• Potential impairment risk of goodwill, particularly for FSI acquired in 2019.

Q: How you feel about the level of capital, whether there's excess or shortage?

A: In current environment, need to maintain capital soundness. Have reasonable headroom as simulations show ability to meet financing needs while controlling risk weighted assets.

Q: How to fill the gap with the ROE target of the midterm business plan?

A: Continue risk weighted assets control, reduce equity securities outstanding, and make efforts to raise ROE despite challenges.

Q: Of the credit cost targets of 450 billion this fiscal year, how have you factored in the exposure to resources as well as aviation finance risk?

A: Estimated based on industry-by-company review and top-down scenario, including impact from COVID-19, with large overseas portion due to factors like CECL and acquisitions.

Q: Regarding CET1 ratio and dividend, any target figure for CET1 ratio during fiscal 2020?

A: Have internal plans but capital demand from customers is increasing; conduct simulations to control risk weighted assets and maintain CET1 ratio within controlled operation.