Mitsubishi UFJ Financial Group, Inc. Q2 FY2026 earnings call

• Revised FY '25 net income target up to JPY 2.1 trillion from JPY 2 trillion. - Aim for dividend payout ratio of approx 40%, dividend revised up, share repurchase increased to JPY 500 billion with additional JPY 250 billion in second half. - Progress on MTBP pillars: Growth strategies on track, new service brand EMUTO launched; social and environmental progress with sustainable finance; transformation and innovation with 116 AI use cases, aiming for over 250 by FY '26, and partnership with OpenAI. - Path to 12% ROE: Assume policy rate rise to ~1%, sale of equity holdings end, focus on organic/inorganic growth.

Gross profits increased by JPY 189.3 billion year-on-year. Net interest income rose due to rising yen interest rates, improving lending spreads, and bond portfolio rebalancing. Net fees and commissions expanded significantly from domestic/overseas solution services and acquisitions. G&A expenses increased by JPY 127.9 billion due to inflation, acquisitions, and strategic spending. Net operating profits grew by JPY 61.3 billion. Credit costs decreased by JPY 65.7 billion. Net gains on equity securities decreased by JPY 235.3 billion. Equity in earnings of investees increased significantly, mainly from Morgan Stanley. Profits attributable to owners of parent were JPY 1,292.9 billion. Business groups: Customer segment NOP growing steadily except retail/digital (strategic expenditures) and Global Commercial Banking (impacted by Asia slowdown); all business groups had net income increase. Loans: Up approx JPY 1.8 trillion from end of FY '24; excluding govt loans, up JPY 4 trillion domestically/overseas. Domestic corporate lending spreads rising, overseas lending spreads gradually recovering. NPL ratio low, credit costs unchanged. Unrealized gains on domestic equity securities up, unrealized bond gains/losses controlled. CET1 ratio fell 30 basis points due to growth investments, loans, and yen appreciation.

• Revised net income target to JPY 2.1 trillion from JPY 2 trillion. - Aim for dividend payout ratio of approx 40%, with dividend forecast revised up. - Share repurchase increased to JPY 500 billion. - Assumptions: Policy rate rise to ~1%, sale of equity holdings end, pursue organic/inorganic growth for 12% ROE.

• Private credit market volatility. - Concentration of risk in certain loans (e.g., large-scale loans to Oracle's data center). - Impact of exchange rates on CET1 ratio.

Q: On the upward revision of guidance and 12% ROE target, thoughts on assumptions and small revision?

A: Initial guidance based on certain factors, first half progress exceeded expectations; yen assumption strong but not reason for conservative target; 12% target discussed with assumptions of policy rate and no gain on sale of equity holdings, now fleshing out details including inorganic investment and capital use.

Q: Confirm full year CET1 ratio forecast and inorganic investments?

A: CET1 ratio expected to be between 10%-10.5% toward end of FY '25; no comment on inorganic investment rumors, continue to consider opportunities in AMIS, Digital, and U.S. Asia.

Q: On credit cost and private credit in U.S.?

A: CET1 ratio outlook includes factors like net income accumulation, shareholder returns, and risk asset increase; MUFG has limited exposure to private credit mentioned, but monitor private credit market volatility.

Q: On net fees and commissions trend and CET1 ratio impact of exchange rates?

A: Net fees and commissions expected to continue growing due to acquisitions, O&D initiatives, etc.; CET1 ratio impact in first half due to U.S. MUA and yen appreciation/depreciation, weak yen expected to lift CET1 ratio.

Q: Detailed breakdown of revised target and ROE comment?

A: NOP variance includes ForEx, treasury trading gains, expense increases; ordinary profit revised up due to one-off step-up gains and Morgan Stanley's profit; focus on achieving 12% ROE first, with CEO's comments in context of that target.