Mitsubishi UFJ Financial Group, Inc. Q4 FY2024 earnings call

Income Statement Summary - Gross profits increased by ¥229.5 billion y-o-y. - Net interest income had a large decrease in FY '23 but excluding specific factors, increased steadily. - Net fees and commissions rose ~¥130 billion due to growth in foreign loans and AM/IS and Wealth Management fees. - G&A expenses down ¥19.9 billion y-o-y despite inflation and yen weakness. - Expense ratio improved to 61%, down 3.5 ppts. - Net operating profit reached record high of ¥1,843.7 billion. - Total credit cost ¥497.9 billion due to no prior year reserve reversal and overseas allowance increase. - Equity in earnings of equity method investees increased due to change in Morgan Stanley's closing date. - Profits attributable to owners of parent hit record ¥1,490.7 billion. ### Balance Sheet - Loans increased ~¥8 trillion, ~70% overseas. - Deposits up ~¥10 trillion, ~¥7.1 trillion overseas. - Nonperforming loans slightly increased but remain low. - Unrealized gains on available-for-sale securities ¥2.7 trillion, unrealized losses on foreign bonds ~¥1 trillion but real terms ~¥0.5 trillion. - Sold ¥216 billion in equity holdings in FY '23, exceeding previous MTBP target. - CET1 ratio on Basel III basis 10.1%. ### FY '24 Targets - Profits attributable to owners of parent target ¥1.5 trillion. - Dividend per common stock forecast ¥50, increase of ¥9 for 2 consecutive years. - Share repurchase up to ¥100 billion resolved. ### New Medium-Term Business Plan - Three pillars: Expand and refine growth strategies, drive social and environmental progress, accelerate transformation and innovation. - Target ROE around 9% in final year of MTBP. - CET1 ratio target range 9.5%-10.5%. - Aim for NOP over ¥2.1 trillion and net profits over ¥1.6 trillion in FY '26. - Expense ratio aim ~60% in FY '26.

Customer segments saw a sharp increase in net operating profit, mainly due to growth in lending and deposit interest income and net fees and commissions. Net operating profit for Customer segments rose sharply by ¥470.3 billion. Global Markets posted a decrease in profit due to higher foreign currency funding costs in treasury business and significant impact from portfolio rebalancing.

FY '24 - Target profits attributable to owners of parent: ¥1.5 trillion. - Dividend per common stock forecast: ¥50, increase of ¥9 for 2 consecutive years. - Share repurchase: Up to ¥100 billion resolved. ### New MTBP - ROE target: around 9%. - CET1 ratio target range: 9.5%-10.5%. - NOP target: over ¥2.1 trillion in FY '26. - Expense ratio target: around 60% in FY '26.

• Exchange rate fluctuations can impact profit and CET1 ratio. - Policy interest rate changes can affect NOP and ROE. - Overseas credit costs and individual company factors can increase credit risk. - Portfolio rebalancing and market conditions can impact unrealized gains/losses.

Q: What were the thoughts behind the ¥1.5 trillion profit attributable to owners of parent target?

A: Assumptions include ¥140 to USD exchange rate and 0.1% domestic policy rate. Heated discussion led to decision under Group CEO's leadership, considering potential plus alpha effect from interest rate hikes.

Q: What's the meaning behind ¥100 billion share repurchase?

A: Aim to reach ~40% dividend payout ratio. With two consecutive dividend increases, almost reached 40% excluding currency impact. Share repurchase set at ¥100 billion with consideration of future growth and capital soundness.

Q: What were the factors behind CET1 ratio decline?

A: Factors include small retained earnings in Q4, dividend, share buyback, goodwill from acquisitions, and foreign currency translation reserve recognition.

Q: Is shareholder return policy in new MTBP unchanged?

A: Yes, dividend payout ratio remains around 40%.

Q: Is NOP target of over ¥2.1 trillion in FY '26 achievable through organic growth?

A: Growth includes impact from strengthened APAC business and platform resilience, some of which are inorganic but part of integrated group growth.