Mitsubishi UFJ Financial Group, Inc. Q2 FY2023 earnings call

• Gross profit increased by JPY 342.5 billion year-on-year, driven by factors like higher overseas interest rates, risk return improvement, foreign exchange gains, and trading income. G&A expenses increased by JPY 84.8 billion year-on-year, but net operating profit increased by JPY 257.7 billion to JPY 895.2 billion. Loans, banking and trust accounts increased by JPY 9.3 trillion, with JPY 6.6 trillion due to weak yen impact and JPY 3 trillion from overseas loans. Deposits increased by JPY 6.6 trillion, with JPY 6.2 trillion due to foreign exchange. Set target of JPY 35 trillion in cumulative sustainable finance from FY 2019 to FY 2030, with cumulative amount around JPY 19.4 trillion up to second quarter of FY '22. Prepared MUFG Transition White paper in October for decarbonization efforts.

In the customer segment, AM/IS business posted a slight decrease in profit due to the absence of large performance fees from the previous year. Other business units steadily increased profits, including increases in deposits and loan revenues and foreign exchange-related revenues, resulting in a substantial JPY 218.4 billion increase in total customer segment profits. Global Markets pursued gains from the cancellation of Ayudhya funds and captured profit earning opportunities in market fluctuations, posting an increase of JPY 64.1 billion.

• Revised net operating profit target upward by JPY 200 billion to JPY 1.5 trillion. Approved share buyback of JPY 150 billion considering capital release from Union Bank sale. Cautious outlook for second half due to market uncertainties like global inflation, financial market volatility, and geopolitical risks. Bottom line target of JPY 1 trillion remains unchanged.

• Uncertainties regarding global inflation trends, rising volatility in financial markets, and heightened geopolitical risks. Impact on capital management and future financial performance.

Q: About the share buyback and achievement of net operating profit. Asked about JPY 150 billion share buyback relation to Union Bank capital release and certainty of net operating profit target.

A: JPY 150 billion share buyback is related to Union Bank capital release. Second half outlook is conservative due to cautious treasury operations and strong first half performance. Determined to achieve JPY 1.5 trillion net operating profit target.

Q: About CET1 ratio decline and unrealized loss on foreign bonds. Asked about CET1 ratio decline reason and handling of unrealized loss on foreign bonds.

A: CET1 ratio decline due to market movement impact, loss on MUB sale, interim dividend offer, and share buyback. Unrealized loss on foreign bonds considered with hedge positions, managed by generating revenue from sales and hedge cancellations. Cautious on position management based on market situation.

Q: About capital buffer and revised full year target. Asked about capital buffer level and structure of revised full year target.

A: No specific target level for capital buffer. Revised net operating profit upward by JPY 200 billion, ordinary profit target up by JPY 150 billion, but profit attributable to owners of parent unchanged due to factors like Grab share impairment and MUB sale gain timing.