Mitsubishi UFJ Financial Group, Inc. Q4 FY2023 earnings call

• Income statement summary: Profits attributable to owners of parent ¥1.1164T, ROE 7.03%. Gross profit up due to overseas interest income, foreign exchange/trading income, and foreign loan fees. G&A expenses increased but improved in real terms. NOP recovered to pre-negative interest rate levels.
• Performance targets for FY '23: Target of ¥1.3T profits attributable to owners of parent, aiming for ROE 7.5% in the final year of the medium-term business plan, despite challenges from yen appreciation and overseas financial institution impacts.
• Progress on ROE drivers: Profits in customer segments increased, expenses controlled, and RWA managed as part of efforts to achieve ROE targets.

Profits attributable to owners of parent was ¥1.1164 trillion, roughly flat year-on-year. Gross profit increased by ¥539 billion year-on-year, driven by factors like overseas interest income growth, foreign exchange and trading income from market fluctuations, and foreign loan-related fees. Customer segments' net operating profits increased significantly by ¥443.1 billion. ROE was 7.03%. G&A expenses increased year-on-year but improved in real terms. NOP was ¥1.5942 trillion, recovering to pre-negative interest rate levels. Total credit costs increased mainly due to MUB valuation losses, but real terms saw a decrease.

• Target of ¥1.3 trillion profits attributable to owners of parent for FY '23. - Progress toward achieving ROE of 7.5% for the final year of the medium-term business plan. - Expectation of accumulation of net operating profit in customer segments despite challenges from strong yen and absence of MUB net operating profit.

• Concerns about bankruptcies of overseas financial institutions impacting the real economy. - Impact of yen appreciation on financial results. - Uncertainty in the business environment due to rising interest rates in the U.S. and Europe.

Q: Please explain views on capital level, share buyback decision, and underlying profit growth in FY '23.

A: Explained share buyback decision due to financial instability post overseas institution bankruptcies, and broke down NOP target and underlying profit projections considering factors like MUB sale and yen appreciation.

Q: Update on overseas CRE exposure and dividend payout ratio for FY '23.

A: Stated limited exposure to U.S. CRE, and clarified dividend payout ratio is based on normalized earnings excluding one-off factors like Morgan Stanley's equity method change impact.

Q: ROE denominator FX assumption, and details on equity method change for Morgan Stanley.

A: Explained FX assumption impact on ROE, and provided details on the equity method change for Morgan Stanley, including its effect on net income calculation.

Q: Details on gain on sale of subsidiary and CET1 ratio target.

A: Explained nonconsolidated gain from MUB share sale and clarified that the CET1 ratio target in the medium-term plan is not a strict range to be targeted by adjusting RWA.

Q: Questions on M&A, share buyback timing, and growth investment.

A: Discussed M&A investments made in FY '22, rationale for share buyback timing, and projected growth investment and profit contribution from initiatives like Home Credit in FY '23