6-K
Mitsubishi Ufj Financial Group Inc (MUFG)
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form 6-K
Report ofForeign Private Issuer
Pursuant to Rule 13a-16 or15d-16 under
the Securities Exchange Act of 1934
For the month of June 2024
Commission File No. 000-54189
MITSUBISHI UFJ FINANCIAL GROUP, INC.
(Translation of registrant’s name into English)
7-1, Marunouchi 2-chome, Chiyoda-ku
Tokyo 100-8330, Japan
(Address of principal executive office)
Indicate bycheck mark whether the registrant files or
will file annual reports under cover of Form 20-For Form 40-F.
Form 20-F X Form 40-F
THIS REPORT ON FORM 6-K SHALL BE DEEMED TO BE INCORPORATED BY REFERENCE IN THE REGISTRATION STATEMENT ON FORM F-3 (NO. 333-273681) OF MITSUBISHI UFJ FINANCIAL GROUP, INC. AND TO BE A PART THEREOF FROM THE DATE ON WHICH THIS REPORT IS FURNISHED TO THE U.S. SECURITIES AND EXCHANGE COMMISSION TO THE EXTENT NOT SUPERSEDED BY DOCUMENTS OR REPORTS SUBSEQUENTLY FILED WITH OR FURNISHED TO THE U.S. SECURITIES AND EXCHANGE COMMISSION.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
Date: June 25, 2024
| Mitsubishi UFJ Financial Group, Inc. | |
|---|---|
| By: | /s/ Toshinao Endo |
| Name: | Toshinao Endo |
| Title: | Managing Director, Head of Documentation &<br><br><br>Corporate Secretary Department,<br> <br>Corporate Administration<br>Division |
English Translation of Excerpts from Securities Report Filed in Japan
This document is an English translation of selected information included in the Securities Report for the fiscal year ended March 31, 2024 filed by Mitsubishi UFJ Financial Group, Inc. (“MUFG” or “we”) with the Kanto Local Financial Bureau, the Ministry of Finance of Japan, on June 25, 2024 (the “Securities Report”). An English translation of certain information included in the Securities Report was previously submitted in a report on Form 6-K dated May 15, 2024. Accordingly, this document should be read together with the previously submitted report.
The Securities Report has been prepared and filed in Japan in accordance with applicable Japanese disclosure requirements as well as generally accepted accounting principles in Japan (“J-GAAP”). There are significant differences between J-GAAP and generally accepted accounting principles in the United States. In addition, the Securities Report is being filed in the context of other prior disclosures filed by MUFG in Japan and discusses selected recent developments taking into account those prior disclosures. Accordingly, you may need to review the following disclosure, together with other prior disclosures, to obtain all of the information that is important to you. For a more complete discussion of the background to information provided below, please see our annual report on Form 20-F for the fiscal year ended March 31, 2023 and other reports filed with or submitted to the U.S. Securities and Exchange Commission by MUFG.
The following disclosure contains forward-looking statements, which, unless specifically stated otherwise, reflect our understanding as of the date of filing of the Securities Report. Actual results may significantly differ from those expressed or implied by such forward-looking statements. In addition, although the Risk Committee identified the top risks below, there may be other material risks that emerge as we operate our businesses.
Risks Relating to Our Business
We determine the significance of various risk scenarios based on their assessed impact and probability and identify potential risk events that are deemed to require close monitoring and attention for the next one-year period as top risks. The main top risks identified by our Risk Committee in March 2024 are as follows. By identifying these top risks, we seek to implement necessary risk management measures designed to minimize such risks to the extent possible and manage them in such a manner that they can be agilely dealt with in the event that they materialize. In addition, through management’s participation in discussions on such top risks, we strive to take effective measures based on a shared assessment of risks.
Main TopRisks
| Risk events | Risk scenarios |
|---|---|
| Decline in capital<br>sufficiency /<br> <br>Increase in risk assets | • Our capital management may be adversely affected by an increase in unrealized losses on debt<br>securities due to a rise in interest rates globally. |
| Foreign currency liquidity risk | • Deterioration in<br>market conditions may result in a depletion of foreign currency funding liquidity and an increase in our foreign currency funding costs. |
| Increase in credit costs | • Sudden deterioration in global economic activities may result in an increase in our credit<br>costs.<br> <br>• Deterioration in the credit quality of particular industries or counterparties, to<br>which we have relatively larger exposures, may result in an increase in our credit costs. |
| IT risk | • Cyber-attacks may<br>result in customer information leakage, suspension of our services, and reputational damage.<br><br><br>• System problems may result in our payment of financial compensation and damage to our<br>reputation. |
| Risks relating to climate changes | • If our efforts to address climate change-related risks or to make appropriate disclosure are<br>deemed insufficient, our corporate value may be impaired.<br> <br>• Our credit portfolio may be<br>adversely affected by the negative impact of climate change on our borrowers and transaction counterparties. |
| * | These risk events are among the risk events that were reported to MUFG’s Board of Directors following the<br>Risk Committee’s discussion in March 2024. These risk events include risk events of general applicability. |
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Based on our analysis of the top risks described above, we have described below major matters relating to risks to our business and other risks that we believe may have a material impact on an investor’s investment decision. In addition, to proactively disclose information to investors, we have described matters that do not necessarily correspond to such risk factors, but that we believe are material to investors in making an investment decision. We will, with the understanding that these risks may occur, endeavor to avoid the occurrence of such risks and to address such risks if they occur.
This section contains forward-looking statements, which, unless specifically stated otherwise, reflect our understanding as of the date of filing of this Securities Report.
Risks Related to Our Business Environment
| 1. | Risks relating to deterioration in economic conditions in Japan and globally |
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Economic conditions in Japan and around the world may deteriorate due to various factors such as changes in the monetary and fiscal policies in major jurisdictions and the fiscal condition of major countries, rapid and significant fluctuations in foreign exchange rates, global inflation, and real estate market trends, and concerns and developments affecting financial institutions. Uncertainty over the Japanese and global economies still remain because of such other factors as concerns over political developments in the United States, concerns over the U.S.-China conflict, geopolitical instabilities and conflicts, interruptions in international supply chains and trade, and political turmoil in various regions around the world.
Worsening economic conditions in Japan and around the world may result in, among other things, impairment or valuation losses on securities and other assets that we hold due to declines in the market value of such assets, an increase in our non-performing loans and credit costs due to deterioration in borrowers’ business performance, a decrease in our profits due to deterioration in the creditworthiness of counterparties in market transactions, a reduction in foreign currency funding liquidity, an increase in our foreign currency funding costs, and an increase in the level of risk in, and the balance of, the risk assets that we hold. Our profitability may be adversely affected by various other factors, including a decline in our net interest income caused by such factors as an increase in our funding costs due to a rise in interest rates globally resulting from changes in the monetary policies of central banks in various jurisdictions. In addition, an economic downturn may result in a decline in new investments and business transactions by customers due to stagnation in economic activity, weak consumer spending, diminished investor appetite for making investments in uncertain financial markets, and a decrease in our assets under custody or management.
In the event of a financial market turmoil or depression resulting from significant volatility in bond and stock markets or foreign currency exchange rates, or a global financial crisis, the market value of financial instruments that we hold may significantly decline, properly quoted market prices of such instruments may become unavailable for valuation purposes, or financial markets may become dysfunctional. As a result, we may incur impairment or valuation losses on financial instruments in our portfolio.
Any of the foregoing factors may materially and adversely affect our business, operating results and financial condition.
| 2. | Risks relating to external circumstances or events (such as conflicts, terrorist attacks and naturaldisasters) |
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As a major financial institution incorporated in Japan and operating in major international financial markets, our business operations, ATMs and other information technology systems, personnel, and facilities and other physical assets are subject to the risks of earthquakes, typhoons, floods and other natural disasters, terrorism, geopolitical conflicts and ensuing economic sanctions, political and social conflicts, health pandemics or epidemics, and other disruptions caused by external events, which are beyond our control. Such external events may result in loss of facility, personnel and other resources, suspension or delay in all or part of our operations, inability to implement business strategic measures or respond to changes in the market or regulatory environment as planned, and other disruptions to our operations. We may also be required to incur significant costs and expenses, including those incurred for preventive or remedial measures, to deal with the consequences of such external events. In addition, such external events may negatively impact the economic conditions in the markets we or our customers operate. As a result, our business, operating results and financial condition may be materially and adversely affected.
As with other Japanese companies, we are exposed to heightened risks of large-scale natural disasters, particularly earthquakes. In particular, a large-scale earthquake occurring in the Tokyo metropolitan area and other areas where we have our important business functions may have a material adverse effect on our business, operating results and financial condition.
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Our risk management policies and procedures may be insufficient to address the consequences of these external events, resulting in our inability to continue to operate a part or the whole of our business, although we work to strengthen our operational resilience (the ability of a bank to deliver critical operations through disruption such as a conflict, terrorism (including cyber terrorism), or natural disaster) by establishing a business continuity framework based on the regulations of each relevant jurisdiction and testing through training and other measures.
Our redundancy and backup measures may not be sufficient to avoid a material disruption in our operations, and our contingency and business continuity plans may not address all eventualities that may occur in the event of a material disruption caused by a large-scale natural disaster.
| 3. | Risks relating to Sustainability |
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Amid recently widening recognition of environmental and social issues and growing awareness of efforts towards the realization of a sustainable environment and society, we are cognizant of rising societal expectations placed upon us. We have in place the “MUFG Environmental Policy” and the “MUFG Human Rights Policy” and, based on the “MUFG Environmental and Social Policy Framework”, implement policies applicable to certain specific industry sectors with raised concerns over their environmental or social impacts in the corporate lending and debt and equity securities underwriting businesses of our three major subsidiaries, MUFG Bank, Ltd., Mitsubishi UFJ Trust and Banking Corporation and Mitsubishi UFJ Securities Holdings Co., Ltd., and conduct a due diligence process designed to identify and assess the environmental and social risks and impacts of the business operations to be financed by the subsidiaries. Regarding climate change, we support the recommendations of the Climate-related Financial Disclosure Task Force, or TCFD, and continue to make an effort to improve our understanding and evaluation of the relevant risks, enhance our related disclosures, and strengthen our governance in accordance with such recommendations and applicable regulatory requirements. We also seek to provide assistance with responses to climate change and measures to transition to a decarbonized society as well as efforts towards the realization of a sustainable environment and society.
However, if our measures or disclosures described above prove or are deemed inappropriate, if such measures do not proceed as planned, if we fail or are deemed to have failed to effectively respond to expansion of regulatory requirements or diversification of policies, or if, as a result of any of the foregoing, we are considered to be failing to fulfill our responsibility to society, then our corporate value may be impaired and our business, financial condition and results of operations may be adversely affected. Climate change, in particular, entails transition risks arising from, among other things, changes in regulations, technologies and market preferences toward a less carbon-dependent society and physical risks associated with, among other things, direct damage to assets and disruptions in supply chains caused by changes in the climate. These climate change-related risks may directly affect our operations and may also have other indirect effects on us, including their impact on the business and financial performance of our borrowers adversely affecting our loan portfolio management. These direct and indirect effects may have a significant negative impact on our results of operations and financial condition.
Risks Related to Our Strategies andOur Major Investees
| 4. | Risks relating to competitive pressures and failure to achieve business plans or operating targets |
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Competition in the financial services industry may further intensify due to the increase in the number of non-financial institutions entering the financial services industry with alternative services such as electronic settlement services as a result of development of new technologies as well as significant changes in regulatory barriers.
We have been implementing various business strategies on a global basis designed to strengthen our competitive position and profitability. However, competition may further increase as other global financial institutions enhance their competitive strength through mergers, acquisitions, strategic alliances, and profit improvement and other measures.
Under such circumstances, our business, financial condition and results of operations may be adversely affected if our strategies fail to produce the results we expect or if we are required to delay or otherwise change our strategies. Our competitiveness may decline because of various factors, including where:
| • | the volume of loans made to borrowers cannot be maintained or does not increase as anticipated;<br> |
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| • | our income from interest spreads on loans does not improve as anticipated; |
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| • | our fee income does not increase as much or quickly as planned; |
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| • | our strategy to build a business infrastructure for new services and products through digital transformation, use<br>of new technologies or otherwise does not proceed as planned; |
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| • | our strategy to improve financial and operational efficiency does not proceed as planned; |
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| • | clients and business opportunities are lost, or costs and expenses significantly exceed our expectations, as a<br>result of the ongoing or planned strategies to streamline our business portfolio, to integrate our systems, or to improve financial and operational efficiency not being achieved as expected; |
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| • | we are unable to hire or retain necessary human resources; |
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| • | our foreign currency funding becomes limited or unavailable; |
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| • | we are restricted in agility or flexibility in investing in non-financial<br>institutions under applicable laws and regulations in and outside of Japan; and |
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| • | rapid and significant deposit outflows caused by deteriorated customer confidence in our financial health or<br>market confidence in the financial industry result in a lack of liquidity. |
| --- | --- |
| 5. | Risks accompanying the global expansion of our operations and the range of products and services |
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As we expand our business operations and operate our business as a global financial institution, we may become exposed to new and increasingly complex risks associated therewith. We may not be able to establish appropriate internal controls or risk management systems or to hire or retain necessary human resources to effectively deal with compliance, regulatory and other risks entailing the expanded scope of our operations, products and services in all cases and, as a consequence, our financial condition and results of operations may be adversely affected.
As a strategic measure implemented in an effort to become the world’s most trusted financial group, we acquire businesses, make investments and enter into capital alliances globally. We may continue to pursue opportunities to acquire businesses, make investments and enter into capital alliances. Our major overseas subsidiaries include Krungsri, an indirect subsidiary in Thailand, and Bank Danamon, an indirect subsidiary in Indonesia. Our acquisition, investments and capital alliances may not proceed as planned or may be changed or dissolved, we may not achieve the synergies or other results that we expected, or we may incur impairment or valuation losses on securities acquired or intangible assets, including goodwill, recorded in connection with such business acquisitions, investments or business alliances, because of, among other things, political and social instability, stagnation of the economy, fluctuations of the financial market, inability to obtain regulatory approvals, changes in the laws, regulations or accounting standards, changes in the strategies or financial condition of our acquirees, investees or alliance partners that are inconsistent with our interests, and unanticipated changes in the local market, industry or business environment affecting our acquirees, investees or alliance partners. These and other similar circumstances may adversely affect our business strategies, financial condition and results of operations. In addition, we may be unable to achieve the benefits expected from our efforts to expand business operations if our expansion strategy does not proceed as planned.
| 6. | Risks relating to our strategic alliance with Morgan Stanley |
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We hold shares of common stock (representing 22.4% of the voting rights immediately following the conversion of convertible preferred stock in June 2011 and 23.2% as of March 31, 2024) in Morgan Stanley and continue to hold certain non-convertible (non-voting) preferred stock previously issued to us by Morgan Stanley. We have entered into a strategic alliance with Morgan Stanley to, among other things, jointly manage securities business joint ventures in Japan and to cooperate with each other in the corporate finance business in the United States.
We intend to further strengthen the alliance. However, if the social, economic, market or financial environment changes, or if our collaboration of personnel, products and services or the formation and implementation of the joint ventures’ management, controls or business strategies are not realized as planned, we may not be able to achieve the synergy and other results that we expected from the strategic alliance.
If our strategic alliance with Morgan Stanley is terminated, it may adversely affect our business strategies, financial condition and results of operations. In addition, we are a non-controlling shareholder, and we cannot control Morgan Stanley’s business, nor can we make decisions for Morgan Stanley. If Morgan Stanley makes independent decisions that are not consistent with our interests, we may not be able to achieve the goals expected from our strategic alliance with Morgan Stanley. In addition, because of our large investment in Morgan Stanley, if Morgan Stanley’s financial condition or results of operations deteriorate, we may incur substantial losses on our investment.
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We hold 23.2% of the voting rights in Morgan Stanley as of March 31, 2024 and appoint two representatives to Morgan Stanley’s board of directors. Accordingly, Morgan Stanley is our affiliated company accounted for under the equity method. As a result, Morgan Stanley’s results of operations or changes in our ownership interest in Morgan Stanley will have an impact on our results of operations as the amount of Morgan Stanley’s income or loss in proportion to our shareholding ratio is recognized as income or loss from investments in affiliates in our statements of income, and changes in our ownership interest in Morgan Stanley resulting from changes in our shareholder ratio in Morgan Stanley caused by increases or decreases in Morgan Stanley’s outstanding shares will be recognized as gains or losses in our statements of income.
Risks Related to Our Ability to Meet Regulatory Capital Requirements
| 7. | Risks relating to regulatory capital ratio and other related requirements |
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| (1) | Capital ratio and other regulatory ratio requirements and factors that can adversely affect our ratios<br> |
| --- | --- |
We and our subsidiary banks are subject to capital adequacy ratio and leverage ratio requirements adopted in Japan in accordance with Basel III. Final Basel III reforms became applicable to us on March 31, 2024, as announced by the FSA in its public notice relating to partial amendments to the capital ratio requirements, dated April 28, 2022. The applicable minimum leverage ratio requirement was raised on April 1, 2024, as announced by the FSA on November 11, 2022, while the temporary measure previously in place to exclude the amount of deposits with the Bank of Japan from the total exposure amount has been maintained. The Financial Stability Board has identified us as one of the global systemically important banks, or G-SIBs, which are subject to a leverage ratio buffer from the end of March 2023.
If our or our subsidiary banks’ capital ratios or leverage ratios fall below the required levels, including various capital buffers, the FSA may require us to take a variety of corrective actions, including abstention from making capital distributions and suspension of our business operations.
In addition, some of our bank subsidiaries are subject to the local capital adequacy ratio and other regulatory ratio requirements of various foreign countries, including the United States, and if their ratios fall below the required levels, the local regulators may require them to take a variety of corrective actions.
Factors that will affect our and our bank subsidiaries’ capital ratios or leverage ratios include:
| • | fluctuations in our or our banking subsidiaries’ portfolios due to deterioration in the creditworthiness of<br>borrowers and the issuers of equity and debt securities, |
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| • | difficulty in refinancing or issuing instruments upon redemption or at maturity of such instruments to raise<br>capital under terms and conditions similar to prior financings or issuances, |
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| • | declines in the value of our or our banking subsidiaries’ securities portfolios, |
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| • | adverse changes in foreign currency exchange rates, |
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| • | adverse revisions to the capital ratio and other regulatory ratio requirements, |
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| • | reductions in the value of our or our banking subsidiaries’ deferred tax assets, and |
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| • | other adverse developments. |
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| (2) | Regulations applicable to G-SIBs |
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The G-SIBs, including us, are subject to a capital surcharge. As such, we may be required to meet stricter capital ratio requirements.
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| (3) | Total loss absorbing capacity in resolution |
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The Financial Stability Board issued “Principles on Loss-absorbing and Recapitalisation Capacity of G-SIBs in Resolution” in November 2015 and “Guiding Principles on the Internal Total Loss-Absorbing Capacity of G-SIBs (‘Internal TLAC’)” in July 2017. These principles are designed to ensure that if a G-SIB fails, it has sufficient total loss-absorbing capacity, or TLAC, available in resolution. Based on these principles, in Japan, G-SIBs, including us, are required to maintain certain minimum levels of capital and liabilities that are deemed to have loss-absorbing and recapitalization capacity, or External TLAC, and allocate a certain minimum level of External TLAC to any material subsidiary within their respective groups of companies, or Internal TLAC, starting in the fiscal year ended March 31, 2019. The applicable minimum requirements were raised in the fiscal year ended March 31, 2022, and the applicable minimum required external TLAC ratio on a total exposure basis was further raised on April 1, 2024. Within the MUFG Group, MUFG Bank, Mitsubishi UFJ Trust and Banking and Mitsubishi UFJ Morgan Stanley Securities Co., Ltd. are designated as our material subsidiaries. We may become subject to various regulatory actions, including restrictions on capital distributions, if we are unable to maintain our External TLAC ratios or the amount of Internal TLAC allocated to any of our material subsidiaries in Japan above the minimum levels required by the standards imposed by the FSA. Our External TLAC ratios and the amount of our Internal TLAC are affected by various factors described in (1) and (2) pertaining to the capital adequacy ratio and other related regulations. Although we plan to issue TLAC-qualified debt in an effort to meet the minimum required levels of External TLAC ratios and Internal TLAC amounts, we may fail to do so if we are unable to issue or refinance TLAC-qualified debt as planned.
| 8. | Risks relating to foreign exchange rate |
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We operate our business globally and we hold assets and liabilities denominated in foreign currencies. The Japanese yen translation amounts of our assets and liabilities denominated in foreign currencies will fluctuate due to fluctuations in the foreign currency exchange rates. To the extent that our foreign currency-denominated assets and liabilities are not matched in the same currency or appropriately hedged, fluctuations in foreign currency exchange rates against the Japanese yen may adversely affect our capital ratios, financial condition, and results of operations.
Credit Risk (Risk of Loss Resulting from Deterioration in Financial Condition of Borrowers or Transaction Counterparties)
| 9. | Risks relating to our lending business |
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The lending business is one of our primary businesses. To the extent that our measures designed to mitigate credit risk, including collateral, guarantees and credit derivatives, are insufficient, our credit costs may significantly increase if borrowers fail to meet their interest payment or principal repayment obligations as expected or if we fail to effectively and adequately anticipate and deal with deterioration in the credit quality of our borrowers. Any such failure may adversely affect our financial condition and results of operations and may also result in a decrease in our capital ratios. Our credit costs and problem loans may increase in the future due to deterioration in economic conditions in Japan and other parts of the world, including emerging countries, fluctuations in oil and other commodity prices, declines in real estate and stock prices, depreciation of currencies of emerging markets, rises in interest rates, or financial difficulties of our borrowers due to such factors as intensifying competition within their respective industries.
| (1) | Status of our allowance for credit losses |
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Our allowance for credit losses is recorded based on assumptions and estimates of the condition of borrowers, the value of collateral and the economy as a whole. If general economic conditions or the financial performance of specific borrowers deteriorates, if the value or liquidity of collateral declines, or if our actual loan losses exceed our allowance for credit losses, we may also incur additional credit losses. In addition, the regulatory standards or guidance on establishing allowances may also change, causing us to change some of the evaluations used in determining the allowances. As a result, we may need to provide for additional allowance for credit losses. As of March 31, 2024, the balance of our allowance for credit losses was ¥1,535.2 billion.
| (2) | Concentration of loan and other credit exposures to particular industries and counterparties<br> |
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When we make loans and other extensions of credit, we seek to diversify our portfolio to avoid any concentration of exposure to a particular industry or counterparty. However, our credit exposures to the real estate industry are relatively high in comparison to other industries, and we are consequently susceptible to adverse changes particularly in that industry. While we continue to monitor and respond to changes in circumstances and other developments relating to particular industries and individual counterparties as well as each relevant country and region, including emerging countries, the quality of our credit portfolio may deteriorate to an extent greater than expected due to changes in economic conditions in Japan and other countries and regions, including the impact of climate change and geopolitical developments, and fluctuations in real estate prices, oil and other commodity prices, and foreign currency exchange rates.
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| (3) | Our response to borrowers |
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Even in the event that a borrower defaults, based on the efficiency and effectiveness of collecting on loans and other factors, we may not exercise all of our legal rights as a creditor against the borrower.
In addition, if we determine that it is reasonable, we may forgive debt or provide additional loans or equity capital to support borrowers. If such support is provided, our outstanding loans may increase significantly, our credit costs may increase, and the value of the additional equity purchased may decline.
| 10. | Transactions with other financial institutions |
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Declining asset quality and other financial problems may exist at some domestic and foreign financial institutions, including banks, non-bank lending and credit institutions, securities companies and insurance companies, and these problems may worsen or these problems may arise again as new issues. Such problems recently manifested in a series of high-profile failures of financial institutions in the United States and Europe. If financial difficulties of financial institutions continue, worsen or arise, they may not only lead to liquidity and insolvency problems for such financial institutions but also result in systemic problems adversely affecting the financial market and the wider economy, and may adversely affect us for the following reasons:
| • | we have credit extended to some financial institutions; |
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| • | we are shareholders of some financial institutions; |
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| • | financial institutions that face problems may terminate or reduce financial support to borrowers and, as a<br>result, these borrowers may become distressed or our problem loans to these borrowers may increase; |
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| • | we may be requested to participate in providing support to distressed financial institutions;<br> |
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| • | if the government elects to provide regulatory, tax, funding or other benefits to financial institutions that the<br>government controls to strengthen their capital, increase their profitability or for other purposes, they may adversely affect our competitiveness against them; |
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| • | our deposit insurance premiums may rise if deposit insurance funds prove to be inadequate; |
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| • | bankruptcies or government control of financial institutions may generally undermine the confidence of depositors<br>and investors in, or adversely affect the overall environment for, financial institutions; and |
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| • | negative media coverage of the financial industry or system, regardless of its accuracy and applicability to us,<br>may harm our reputation and market confidence. |
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Risk Related to Our Strategic Equity Portfolio (Risk of Loss Resulting from a Declinein the Value of Equity Securities We Hold)
| 11. | Risks relating to our equity portfolio |
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We hold large amounts of marketable equity securities, including those held for strategic investment purposes. As of March 31, 2024, the market value of such securities was approximately ¥5.0 trillion, and the book value of such securities was approximately ¥1.4 trillion. In view of mitigating the risk of equity price volatility, our basic policy is to reduce the amount of equity securities held for strategic investment purposes. We examine the objective and economic rationale for strategically held equity securities, and if we determine that it no longer makes reasonable sense to continue to hold them, we will seek to dispose of such equity securities. For our strategic equity portfolio, we endeavor to manage the risk of stock price fluctuations by hedging a portion of the portfolio using total return swaps and other hedging instruments.
However, if stock prices decline, we may incur significant impairment losses or valuation losses on our equity investment portfolio. In addition, since unrealized gains and losses on equity securities are reflected in the calculation of regulatory capital amounts, a decline in stock prices may result in a decrease in our capital ratios and other regulatory ratios. As a result, our financial condition and results of operations may be adversely affected.
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Market Risk (Risk of Loss Resulting from Fluctuations in Interest Rates, Prices of Securities and ForeignCurrency Exchange Rates)
| 12. | Risks relating to our financial markets operations |
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We undertake extensive financial market operations involving a variety of financial instruments, including derivatives, and hold large volumes of such financial instruments. For example, if market interest rates decline due to such factors as changes in the monetary policies of central banks in various jurisdictions, the yield on the Japanese government bonds and foreign government bonds that we hold may also decline. Furthermore, if short-term interest rates rise to a larger extent than long-term interest rates, or if long-term interest rates decline to a larger extent than short-term interest rates, our net interest income may be adversely affected. If interest rates in and outside of Japan rise, we may incur significant losses on sales of, and valuation losses on, our bond portfolio, and our debt financing costs may also increase significantly. In addition, an appreciation of the Japanese yen will cause the value of our foreign currency-denominated investments recorded in our financial statements to decline and may cause us to recognize losses on sales or valuation losses. Furthermore, if stock prices decline, and the value of marketable equity securities and trading account equity securities that we hold also declines, we may incur significant losses on sales of, and valuation losses on, our marketable equity securities and trading account equity securities portfolios. Although we seek to manage market risk, which is the risk of incurring losses due to various market changes including interest rates, foreign currency exchange rates and stock prices, market risk exposure amounts that we calculate cannot accurately reflect the actual risk that we face in all cases, and we may realize actual losses that are greater than our estimated market risk exposure.
Funding Liquidity Risk (Risk of Loss Due to Inability to Raise Funds or Need to Raise Funds at Unexpectedly High Interest Rates)
| 13. | Risks associated with a downgrade of our credit ratings and other external factors |
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Deterioration in market illiquidity or other external circumstances or an actual or perceived decline in our creditworthiness could negatively affect our ability to access and maintain liquidity. Our liquidity may be impaired by factors such as an inability to raise funding in financial markets, an increase in our funding costs, unexpected increases in cash or collateral requirements, an inability to sell assets or enter into or settle other transactions as planned or needed, and an inability to attract or retain deposits. These situations may arise due to circumstances which we may be unable to control but which have occurred in the past, including market or economic disruptions, financial system instability, and a downgrade in our credit ratings, or circumstances specific to us, including an actual or perceived decline in our creditworthiness. Insufficient liquidity may have a material adverse impact on our business, operating results and financial condition.
Assuming all of the relevant credit rating agencies downgraded the credit ratings of MUFG, MUFG Bank, Mitsubishi UFJ Trust and Banking and Mitsubishi UFJ Securities Holdings as of March 31, 2024 by one-notch on the same date, we estimate that MUFG and its three main subsidiaries would have been required to provide approximately ¥47.2 billion of additional collateral postings under their derivative contracts. Assuming a two-notch downgrade by all of the same credit rating agencies occurring on the same date, we estimate that the additional collateral postings for the same MUFG group companies under their derivative contracts would have been approximately ¥97.4 billion.
Operational Risk (Risk of Loss Resulting from Inappropriate Management of Operations or External Factors)
| 14. | Risks of being deemed to have engaged in inappropriate or illegal practices or other conduct and, as aresult, becoming subject to regulatory actions |
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We conduct our business subject to laws, regulations, rules, policies and voluntary codes of practice in Japan and other markets where we operate. We are subject to various regulatory inquiries or investigations from time to time in connection with various aspects of our business and operations. Our compliance risk management systems and programs, which are continually enhanced, may not be fully effective in preventing all violations of laws, regulations and rules.
If we are deemed not compliant with applicable laws, regulations or rules, including those relating to money laundering, economic sanctions, bribery, corruption, financial crimes, or other inappropriate or illegal transactions, if our conduct is deemed to constitute unfair or inappropriate business practices, or if we are deemed to have failed to meet market or industry rules or standards, customer protection requirements, or corporate behavior expectations, we may become subject to penalties, fines, public reprimands, reputational damage, issuance of business improvement, suspension or other administrative orders, or withdrawal of authorization to operate. These consequences may result in loss of customer or market confidence in us or otherwise may adversely affect our financial condition and results of operations. Our ability to obtain regulatory approvals for future strategic initiatives may also be adversely affected.
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We have received requests and subpoenas for information from government agencies in some jurisdictions in connection with their investigations into past submissions made by panel members, including us, to the bodies that set various interbank benchmark rates as well as investigations into foreign exchange related practices of global financial institutions. Some of the investigations into foreign exchange related practices resulted in our payment of monetary penalties to the relevant government agencies. We are cooperating with those investigations and have been conducting an internal investigation. In connection with these matters, we and other financial institutions are involved as defendants in a number of civil lawsuits.
These developments or other similar events, including potential additional regulatory actions against us, agreements to make significant additional settlement payments, may result in significant adverse financial and other consequences to us.
Additionally, on June 14, 2024, the Securities and Exchange Surveillance Commission of Japan (“SESC”) issued and announced a recommendation that the Prime Minister and the Commissioner of the Financial Services Agency (“FSA”) take administrative action against our subsidiaries MUFG Bank and Mitsubishi UFJ Morgan Stanley Securities and our securities affiliate. The recommendation was based on the SESC’s findings of, among other things, inappropriate sharing of customer information as well as improper solicitation of business in contravention of the prohibition on engagement by Registered Financial Institutions in securities-related business activities. The SESC’s findings concerned, among other things, the business collaboration among the bank and securities companies and the management of non-public corporate information **** by the bank and securities companies.
In response to the SESC’s recommendation, on June 24, 2024, the FSA issued business improvement orders to MUFG Bank, Mitsubishi UFJ Morgan Stanley Securities and our securities affiliate under Articles 51-2 and 51 of the Financial Instruments and Exchange Act of Japan. Additionally, the FSA has required MUFG and MUFG Bank to submit reports under Articles 52-31 and 24 of the Banking Act of Japan.
| 15. | Risks relating to loss or leakage of confidential information |
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We are required to appropriately handle customer information or personal information in accordance with laws and regulations in Japan and other parts of the world. We possess a large amount of customer information and personal information, and we are working to improve our information management system by preparing information management policies and procedures concerning the storage and handling of information and implementing information system enhancements. However, due to improper management, unauthorized access from external sources such as cyber-attacks, or computer virus infection, we may not be able to completely prevent the loss or leakage of customer information and personal information. In such event, we may be subject to penalties, administrative sanctions and other direct losses such as compensation paid to customers. In addition, loss of customer and market confidence may adversely affect our business, financial condition and results of operations. We may also incur additional costs to deal with the consequences of these events.
| 16. | Risks relating to cyber-attacks |
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Our information, communications and transaction management systems (including our own proprietary systems as well as those third-party systems which are provided for our use or to which our systems are connected) constitute a core infrastructure for our accounting and other business operations and are of critical importance particularly in the current business environment with increasing dependence on remote or online networks and our strategy to promote digitization. We are working to prevent system failures through appropriate design and testing and other means and to establish security-conscious systems. However, we may not be able to completely prevent system failures, cyber-attacks, unauthorized access, computer virus infection, human errors, equipment malfunctions, defects in services provided by third parties such as communications service providers, and failure to appropriately deal with technological advances and new systems and tools. In addition, we may be unable to enhance our financial transaction management systems as required for all of our business operations or under increasingly stricter regulations applicable to financial institutions. Furthermore, our system development or improvement projects, many of which are critical to our ability to operate in accordance with market and regulatory standards, may not be completed as planned due to the complexity and other difficulty relating to such projects. Moreover, our cybersecurity risk management framework and practices may be found inadequate, particularly in light of expanding regulatory requirements and growing market expectations, including those relating to incident reporting and risks associated with our use of third-party services and systems. Such inability, failure and inadequacy may lead to errors and delays in transactions, information leakage and other adverse consequences, and, if serious, could lead to the suspension of our business operations and financial losses such as those incurred in connection with compensation for damages caused by such suspension, diminish confidence in us, harm our reputation, subject us to administrative sanctions, or result in our incurring additional costs to deal with the consequences of these events.
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| 17. | Risks relating to transactions with counterparties in countries designated as state sponsors of terrorism |
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We engage in limited business activities with entities in or affiliated with Iran and other countries designated by the U.S. Department of State as “state sponsors of terrorism.” In addition, our banking subsidiary has a representative office in Iran.
U.S. law generally prohibits or limits U.S. persons from doing business with state sponsors of terrorism. In addition, we are aware of initiatives by U.S. governmental entities and U.S. institutional investors, such as pension funds, to prohibit or restrict transactions with or investments in entities doing business with Iran and other countries identified as state sponsors of terrorism. It is possible that such initiatives may result in our being unable to gain or retain business with U.S. governmental entities, U.S. institutional investors, such as pension funds, and entities subject to such prohibition or restrictions as customers or as investors in our shares. In addition, depending on socio-political developments, our reputation may suffer because of our associations with these countries. The above circumstances may adversely affect our financial condition, results of operations and the price of our shares.
The U.S. Government sanctions against Iran apply to prohibit, among other things, U.S. persons from conducting transactions relating to Iran, subject to limited exceptions. In addition, in May 2018, the United States withdrew from participation in the Joint Comprehensive Plan of Action. Under subsequently issued executive orders, the United States may impose secondary sanctions against non-U.S. persons who engage in or facilitate a broad range of transactions and activities involving Iran. We will continue to monitor and implement measures to address this heightened risk of U.S. measures, including any possible secondary sanctions.
Companies registered with the U.S. Securities and Exchange Commission (including non-U.S. companies) are subject to the disclosure requirement relating to certain Iran-related transactions. Moreover, certain Japanese sanctions measures are in effect, including freezing the assets of persons involved in Iran’s sensitive nuclear activities and development of nuclear weapon delivery systems. We continue to work to improve our policies and procedures to comply with such regulatory requirements. There remains a risk of potential regulatory action against us, however, if regulators perceive our policies and procedures not to be in compliance with applicable regulations. For more information on relevant regulatory actions, please refer to “14. Risks of being deemed to have engaged in inappropriate or illegal practices or other conduct and, as a result, becoming subject to regulatory actions.”
| 18. | Risks relating to regulatory changes |
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As a global financial services provider, our business is subject to ongoing changes in laws, regulations, rules, policies, accounting standards or methods, voluntary codes of practice and interpretations in Japan and other markets where we operate. Major global financial institutions currently face an increasingly stricter set of laws, regulations and standards as a result of emerging or new technologies, political and geopolitical developments, environmental, social and governance concerns, efforts to combat increasingly sophisticated criminal activity, and other concerns enveloping the global financial sector. There is also growing political pressure to demand even greater internal compliance and risk management systems following several high-profile scandals and risk management failures in the financial industry and the resulting failures of financial institutions. The laws, regulations and standards that apply to us are often complex and, in many cases, we must make interpretive decisions regarding the application of such laws, regulations and standards to our business activities. Future developments or changes in laws, regulations, rules, policies, accounting standards or methods, voluntary codes of practice, interpretations and their effects are expected to require greater capital, human and technological resources as well as significant management attention, and may require us to modify our business strategies and plans. We may be unable to enhance our compliance management programs and systems, which, in some cases, are supported by third-party service providers, as required or planned. Our failure or inability to comply fully with applicable laws and regulations may lead to penalties, fines, public reprimands, damage to reputation, issuance of business improvement and other administrative orders, enforced suspension of operations, our inability to obtain regulatory approvals for future strategic initiatives or, in extreme cases, withdrawal of authorization to operate, adversely affecting our business and results of operations.
| 19. | Risks relating to our consumer lending business |
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We have subsidiaries and affiliates in the consumer finance industry as well as loans outstanding to consumer finance companies. Changes in the business or regulatory environment for consumer finance companies may adversely affect our results of operations. The results of a series of court cases, including the stricter interpretation of the requirements for deemed payments, or “minashi bensai,” have made a borrower’s claim for reimbursement of previously collected interest payments in excess of the limits stipulated by the Interest Rate Restriction Law easier, and, as a result, there have been a significant number of such claims. In addition to the refund of overpaid interest by our subsidiaries and affiliates engaged in the consumer finance business, we may incur additional credit costs due to deterioration in the financial performance of consumer finance companies to which we extend credit. Moreover, any adverse changes in judicial decisions or regulatory requirements may result in our incurring additional costs and expenses.
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| 20. | Risks relating to our reputation |
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We are one of the leading financial institutions in Japan and one of the handful G-SIBs in the world, and we aim to be the world’s most trusted financial group. Our ability to conduct business is indispensably dependent on the trust and confidence of our customers as well as local and international communities. Our reputation is critical in maintaining our relationships with customers, investors, regulators and the general public. Our reputation may be damaged by their negative perceptions of us and our operations in light of their concerns relating to human rights, the environment, public health and safety, or other corporate social responsibilities, or by our transactions if they are deemed repugnant to the intent and policy underlying applicable laws and regulations such as anti-money laundering, economic sanctions and competition laws as well as the prohibition on dealing with anti-social forces. Failure to prevent or properly address these issues may result in impairment of our corporate brand, loss of our existing or prospective customers or investors, or increased public or regulatory scrutiny, and may adversely affect our business, financial condition and results of operations.
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Additional Japanese GAAP Financial Information for the Fiscal Year Ended March 31, 2024
| 1. | Significant Accounting Policies Applied to the Consolidated Financial Statements |
|---|---|
| I. | Scope of consolidation |
| --- | --- |
| (1) | Number of consolidated subsidiaries: 253 |
| --- | --- |
Principal companies:
MUFG Bank, Ltd.
Mitsubishi UFJ Trust and Banking Corporation
Mitsubishi UFJ Securities Holdings Co., Ltd.
Mitsubishi UFJ NICOS Co., Ltd.
ACOM CO., LTD.
| (a) | Changes in the scope of consolidation in the fiscal year ended March 31, 2024 |
|---|
Albacore Capital Limited and twenty six other companies were newly included in the scope of consolidation due to acquisition of shares or other reasons.
Otemachi Guarantee Co., Ltd. and nineteen other companies were excluded from the scope of consolidation due to dissolution through a merger or other reasons.
| (2) | Non-consolidated subsidiaries: None |
|---|---|
| (3) | Entities not regarded as subsidiaries even though Mitsubishi UFJ Financial Group, Inc. (“MUFG”) owns<br>the majority of voting rights in its own account: |
| --- | --- |
Hygeia Co., Ltd.
HISHOH Biopharma Co., Ltd.
| (a) | Reasons for excluding from the scope of consolidation |
|---|
These entities were not treated as subsidiaries because they were established as property management agents for land trust projects without any intent to control, or MUFG’s consolidated venture capital subsidiaries owned the majority of voting rights primarily to benefit from the appreciation of their investments resulting from growth or restructuring of the investees’ businesses without any intent to control.
| II. | Application of the equity method |
|---|---|
| (1) | Number of non-consolidated subsidiaries accounted for under the equity<br>method: None |
| --- | --- |
| (2) | Number of equity method affiliates: 51 |
| --- | --- |
Principal companies:
Mitsubishi HC Capital Inc.
Morgan Stanley
| (a) | Changes in the scope of application of the equity method in the fiscal year ended March 31, 2024<br> |
|---|
WealthNavi Inc. and six other companies were newly included in the scope of application of the equity method due to acquisition of shares or other reasons. .
Kanmu, Inc. and one other company were excluded from the scope of application of the equity method due to the transfer to the scope of consolidation or other reason
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| (3) | Number of non-consolidated subsidiaries not accounted for under the<br>equity method: None |
|---|---|
| (4) | Number of affiliates not accounted for under the equity method: None |
| --- | --- |
| (5) | Entities not regarded as affiliates in which MUFG owns 20% to 50% of their voting rights in its own account:<br> |
| --- | --- |
Kamui Pharma Co., Ltd.
Alchemedicine, Inc.
DT Axis, Inc.
FELIQS CORPORATION
| (a) | Reasons for excluding from the scope of affiliates |
|---|
These entities were not regarded as affiliates because MUFG’s consolidated venture capital subsidiaries owned 20% to 50% of voting rights primarily to benefit from the appreciation of their investments resulting from growth or restructuring of the investees’ businesses without any intent to control.
| III. | The balance sheet dates of the consolidated subsidiaries | |
|---|---|---|
| (1) | The balance sheet dates of the consolidated subsidiaries were as follows:<br> | |
| --- | --- | |
| The end of October: | 1 | subsidiary |
| --- | --- | --- |
| The end of December: | 182 | subsidiaries |
| The end of March: | 70 | subsidiaries |
| (2) | A subsidiary whose balance sheet date is the end of October was consolidated based on its preliminary financial<br>statements as of the end of January. | |
| --- | --- |
The remaining subsidiaries were consolidated based on their financial statements as of their respective balance sheet dates.
Adjustments were made to the consolidated financial statements to reflect any significant transactions within the consolidated group that occurred between the balance sheet dates of the relevant subsidiaries and the consolidated balance sheet date.
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| IV. | Accounting policies |
|---|---|
| (1) | Trading assets and Trading liabilities; Trading income and expenses |
| --- | --- |
Transactions involving short-term fluctuations or arbitrage opportunities in interest rates, currency exchange rates, market prices of financial instruments or other market indices (“trading purposes”) are presented in “Trading assets” and “Trading liabilities” on the consolidated balance sheet on a trade-date basis, and gains and losses from trading transactions (interest and dividends, gains or losses on sales and gains or losses on valuation) are presented in “Trading income” and “Trading expenses” on the consolidated statement of income.
Trading assets and trading liabilities are stated at fair value as of the consolidated balance sheet date.
With respect to derivative transactions for trading purposes, specific market risk and counterparty credit risk exposures are measured in groups of trading assets and trading liabilities, and fair value is determined for each such group of trading assets and trading liabilities on a net basis.
| (2) | Securities |
|---|---|
| (a) | Debt securities being held to maturity are stated at amortized cost (using the straight-line method) computed<br>using the moving-average method. Available-for-sale securities are stated at their quoted market prices (cost of securities sold is calculated primarily using the<br>moving-average method), and equity securities with no quoted market price available are stated at acquisition cost computed using the moving-average method. |
| --- | --- |
Net unrealized gains (losses) on available-for-sale securities are included directly in net assets, net of applicable income taxes, except in the case of application of the fair value hedge accounting method, in which the change in the fair value recognized is recorded in current earnings.
| (b) | Securities included in trust assets in money held in trust are accounted for on the same basis as noted above<br>in Notes (1) and (2)(a). |
|---|
Net unrealized gains (losses) on securities in money held in trust which are not held for trading purposes or held to maturity are included directly in net assets, net of applicable income taxes.
| (3) | Derivatives |
|---|
Derivative transactions (excluding those for trading purposes) are stated at fair value as of the consolidated balance sheet date.
With respect to derivative transactions for trading purposes, specific market risk and counterparty credit risk exposures are measured in groups of trading assets and trading liabilities, and fair value is determined for each such group of trading assets and trading liabilities on a net basis.
| (4) | Depreciation and amortization of fixed assets |
|---|---|
| (a) | Tangible fixed assets (except for lease assets) |
| --- | --- |
Depreciation of tangible fixed assets of MUFG and its domestic consolidated banking subsidiaries and domestic consolidated trust banking subsidiaries is computed primarily using the declining-balance method. The useful lives are primarily estimated as follows:
Buildings: 15 to 50 years
Equipment: 2 to 20 years
Depreciation of tangible fixed assets of other consolidated subsidiaries is computed primarily using the straight-line method based on their estimated useful lives and other factors.
| (b) | Intangible fixed assets (except for lease assets) |
|---|
Amortization of intangible fixed assets is computed using the straight-line method.
Development costs for internally used software are amortized using the straight-line method over the estimated useful lives of primarily 3 to 10 years.
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| (c) | Lease assets |
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Depreciation or amortization of lease assets in “Tangible fixed assets” or “Intangible fixed assets” under finance leases other than those that are deemed to transfer the ownership of leased property to the lessees is computed using the straight-line method over the lease periods with zero residual value unless residual value is guaranteed by the corresponding lease contracts, in which case the residual value equals the guaranteed amount.
| (5) | Deferred assets |
|---|
Bond issuance costs and stock issuance costs are expensed as incurred.
| (6) | Allowance for credit losses |
|---|
Principal domestic consolidated subsidiaries determine the amount of allowance for credit losses in accordance with the internal standards for self-assessment of asset quality and the internal standards for write-offs and provisions.
For claims on borrowers that have entered into bankruptcy, special liquidation proceedings or similar legal proceedings or whose notes have been dishonored and suspended from processing through clearing houses (“bankrupt borrowers”) or borrowers that are not legally or formally bankrupt but are regarded as substantially in similar condition (“virtually bankrupt borrowers”), allowances are provided based on the amount of claims, after the write-offs as stated below, net of expected amounts to be collected through the disposal of collateral and the execution of guarantees.
For claims on borrowers that are not yet legally or formally bankrupt but deemed to have a high possibility of becoming bankrupt (“likely to become bankrupt borrowers”), where the amounts of principal repayments and interest payments cannot be reasonably estimated from the borrowers’ cash flows, allowances are provided based on an overall solvency assessment of the claims, net of expected amounts to be collected through the disposal of collateral and the execution of guarantees.
For claims on likely to become bankrupt borrowers and claims on borrowers requiring close monitoring, where the amounts of principal repayments and interest payments can be reasonably estimated from the borrowers’ cash flows, allowances are provided in an amount equal to the difference between the book value of the claims and the relevant cash flows discounted by the initial contractual interest rates.
For other claims, allowances are provided based mainly on expected losses for the immediately following one-year period or the average remaining term to maturity of loans. Expected losses are calculated by applying a loss rate, which is obtained based on the average rate of historical credit loss experience or historical default probability experience over a certain period, which is derived from actual credit losses or actual defaults over a one-year period or over a period equal to the average remaining term to maturity of loans, with necessary adjustments for future loss projections and other factors.
For claims originated in certain foreign countries, additional allowances are provided based on an assessment of political and economic conditions of these countries.
All claims are assessed by the relevant branches and the credit supervision departments in accordance with the internal standards for self-assessment of asset quality. The credit review department, which is independent from those operating sections, subsequently audits these assessments.
For claims on bankrupt borrowers and virtually bankrupt borrowers, the amount of claims exceeding the estimated value of collateral and guarantees, which is deemed uncollectible, is written off. The total amount of write-offs was ¥217,701 million (¥216,625 million as of March 31, 2023).
Consolidated subsidiaries not adopting the procedures stated above provide for allowances based on their historical credit loss experience or other factors for collectively assessed claims and based on individual assessments of the possibility of collection for specific deteriorated claims.
–15–
(Additional information)
(Allowance for credit losses of certain overseas subsidiaries which apply Generally Accepted Accounting Principles in the United States (“U.S. GAAP”))
Certain overseas subsidiaries which apply U.S. GAAP have adopted U.S. Accounting Standards Codification (“ASC”) Topic 326, “Financial Instruments—Credit losses,” provide for allowance for credit losses by estimating credit losses currently expected for the remaining term of the relevant contract. Expected credit losses are calculated collectively for each portfolio of loans with similar risk characteristics based on the loss rates derived from past credit loss experience or bankruptcy experience through the application of a model that incorporates future forecast information, such as macroeconomic variables, into the probability of bankruptcy, etc. In addition, adjustments are made in the calculation of allowance for credit losses for qualitative factors relating to current conditions and future forecasts which may not be sufficiently captured in such model but should be appropriately taken into account. Future uncertainties due to the impact of the prolonged COVID-19 pandemic and the Russia-Ukraine situation are factored into estimates for the credit loss provisioning through such adjustments based on macroeconomic variables and/or qualitative factors.
With respect to loan assets with deteriorated credit risk that are deemed not to entail risks in common with other loan assets, allowance for credit losses is recognized individually for each loan asset based on risks that are particular to the asset. This credit loss provisioning is done through certain methodologies, including calculating the difference between the carrying amount of the loan asset and the amount of estimated cash flows from the loan asset discounted by the effective interest rate as well as using the fair value of the collateral for the loan asset.
| (7) | Reserve for bonuses |
|---|
Reserve for bonuses, which is provided for future bonus payments to employees, is recorded in the amount deemed to have accrued based on the estimated amount of bonuses as of the consolidated balance sheet date.
| (8) | Reserve for bonuses to directors |
|---|
Reserve for bonuses to directors, which is provided for future bonus payments to directors, is recorded in the amount deemed to have accrued based on the estimated amount of bonuses as of the consolidated balance sheet date.
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| (9) | Reserve for stocks payment |
|---|
Reserve for stocks payment, which is provided for future payments of compensation under the stock compensation plan for directors and officers of MUFG and certain domestic consolidated subsidiaries, is recorded in the amount deemed to have accrued based on the estimated amount of compensation as of the consolidated balance sheet date.
| (10) | Reserve for retirement benefits to directors |
|---|
Reserve for retirement benefits to directors, which is provided for future payments of retirement benefits to directors of consolidated subsidiaries, is recorded in the amount deemed to have accrued based on the estimated amount of benefits as of the consolidated balance sheet date.
| (11) | Reserve for loyalty award credits |
|---|
Reserve for loyalty award credits, which is provided for the future redemption of points awarded to customers of certain consolidated subsidiaries, is calculated by estimating the amount that will be redeemed in the future based on the monetary amount converted from the awarded but unused points, and is recorded in the appropriate amount as a reserve.
| (12) | Reserve for contingent losses |
|---|
Reserve for contingent losses, which is provided for possible losses from contingent events related to off-balance sheet transactions and various litigation and regulatory matters, is calculated by estimating the impact of such contingent events. This reserve also includes future claims for repayment of excess interest payments on consumer loans that are estimated based on the past repayments, the pending claims and other factors.
| (13) | Reserves under special laws |
|---|
Reserves under special laws represent the reserves for contingent liabilities from derivative financial instruments transactions executed for clients, which are recorded in accordance with Article 46-5-1 of the Financial Instruments and Exchange Law and Article 175 of the Cabinet Office Ordinance on Financial Instruments Business.
| (14) | Retirement benefits |
|---|
In calculating the amount of benefit obligation, the portion of projected benefit obligation attributed to the fiscal year ended March 31, 2023 is determined using the benefit formula basis.
Prior service cost is amortized using the straight-line method over a fixed period, primarily over 10 years, within the employees’ average remaining service period.
Net actuarial gains (losses) are amortized using the straight-line method over a fixed period, primarily over 10 years, within the employees’ average remaining service period, primarily beginning in the subsequent fiscal year after such gains (losses) are recognized.
For certain overseas branches of domestic consolidated subsidiaries and certain consolidated subsidiaries, net defined benefit liability and retirement benefit expenses are calculated using the simplified method.
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| (15) | Revenue Recognition |
|---|---|
| (a) | Revenue recognition |
| --- | --- |
Revenues arising from contracts with customers are recognized in the consolidated statements of income based on the status of fulfillment of the performance obligations identified in each contract, depending on the actual nature of the transactions under the contract.
| (b) | Revenue Recognition for Principal Categories of Transactions |
|---|
Revenue arising from contracts with customers is recognized using a method that is designed to closely reflect economic reality, with the timing of fulfillment of performance obligations, which is an important factor in determining the timing of revenue recognition, assessed as described below.
In most cases, the consideration for transactions is settled in cash at the time of the transaction. In other cases, receivables recognized in connection with transactions are generally collected within one year.
Of the fees and commissions, those on remittances and transfers consist mainly of remittance and transfer fees and are recognized as revenue at the time of settlement.
Of the fees and commissions, those on deposits consist mainly of ATM usage fees and periodic account management service fees. ATM usage fees are recognized as revenue at the time of execution of transactions, and periodic account management service fees are recorded as revenue over the service period.
Of the fees and commissions, those on loans consist mainly of the consideration for administration and management services during the tenors of syndicated loans and the consideration for financial advice to clients, and are recorded as revenue over the service period.
Of the fees and commissions, those on trust-related services consist mainly of the consideration for shareholder registry administration services for issuers of stocks, real estate brokerage and appraisal services, and succession services including preparation, maintenance and execution of wills and inheritance management. These fees and commissions are recognized as revenue at the time when the services are provided.
Of the fees and commissions, those on securities-related services consist mainly of fees related to sales and transfers of securities including investment trust, underwriting, brokerage and advisory services, fees related to securitization, and agent fees related to calculation and payment of dividends. Fees on securities-related services are recorded as revenue over the relevant service period. Fees arising from securities-related services that are consumed by a client at a point in time (e.g., sales and transfers of securities executed under the direction of clients, underwriting or securitization of bonds and equity securities which is completed on the date of the transaction, provision of advice to clients, and calculation and payment to investors of dividends) are recognized as revenue at such point in time. Fees arising from securities-related services that are used by a client at equal intervals over the service period (e.g., retainer fees for M&A advisory services) are recognized as revenue over such service period. Fees to be paid when a particular performance target is achieved (e.g., success fees for M&A advisory services) are recognized as revenue at the time when such performance target is achieved.
Of the fees and commissions, those on credit card business consist mainly of credit card merchant fees and royalty fees from franchised merchants. Merchant fees are recorded as revenue at the time when the credit sale data is received, and royalty fees from franchised merchants are recorded as revenue over the service period.
Of the fees and commissions, those on administration and management services for investment funds and investment advisory services arise mainly from asset management and investment advisory services and consist of asset management fees, success fees and investment advisory fees related to investment trusts. Asset management fees and investment advisory fees are recognized as revenue in the amount MUFG is entitled to charge based on the balance of assets under management as MUFG’s performance obligations are satisfied over the service period. Performance-based success fees are recognized as revenue at the time when performance targets are met and it is deemed highly likely that there will be no material reversal of the recognized revenue.
Trust fees consist mainly of fees on administration and management of trust assets and are recognized as revenue in the amount MUFG is entitled to charge based generally on the balance of assets under management for each trust or the performance of each trust account for an accounting period as MUFG’s performance obligations are satisfied over the service period.
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| (16) | Translation of assets and liabilities denominated in foreign currencies |
|---|
Assets and liabilities denominated in foreign currencies or booked at overseas branches of domestic consolidated banking subsidiaries and domestic consolidated trust banking subsidiaries are translated into yen primarily at exchange rates prevailing at the consolidated balance sheet date, except for investments in non-consolidated affiliates which are translated into yen at exchange rates prevailing at the acquisition dates.
Assets and liabilities denominated in foreign currencies of other consolidated subsidiaries are translated into yen at exchange rates prevailing at the respective balance sheet date.
| (17) | Leasing transactions |
|---|
(As lessees)
Domestic consolidated subsidiaries’ finance leases other than those that are deemed to transfer the ownership of leased property to the lessees are accounted for in a similar way to purchases, and depreciation of lease assets is computed using the straight-line method over the lease term with zero residual value unless residual value is guaranteed by the corresponding lease contracts, in which case the residual value equals the guaranteed amount.
(As lessors)
Finance leases other than those that are deemed to transfer the ownership of leased property to the lessees are accounted for in a similar way to sales and income and expenses related to such leases are recognized by allocating interest equivalents to applicable fiscal periods instead of recording sales as “Other ordinary income.
| (18) | Hedge accounting |
|---|---|
| (a) | Hedge accounting for interest rate risks |
| --- | --- |
Domestic consolidated banking subsidiaries and domestic consolidated trust banking subsidiaries have adopted the deferred hedge accounting method for hedging transactions to hedge interest rate risks arising from financial assets and liabilities, except for certain transactions qualifying for special hedge accounting treatment of interest rate swaps. Portfolio hedging or individual hedging, as described in the Japanese Institute of Certified Public Accountants (“JICPA”) Industry Committee Practical Guidelines No. 24, “Treatment of Accounting and Auditing of Application of Accounting Standard for Financial Instruments in Banking Industry” (March 17, 2022), and JICPA Accounting Committee Report No. 14, “Practical Guidelines for Accounting for Financial Instruments” (January 31, 2000), is primarily applied to determine hedged items.
With respect to hedging transactions to offset fluctuations in the fair value of fixed rate deposits, loans and other instruments, hedging instruments (e.g., interest rate swaps) are designated to hedged items individually or collectively by their maturities in accordance with JICPA Industry Committee Practical Guidelines No. 24. With respect to hedging transactions to offset fluctuations in the fair value of fixed rate bonds classified as available-for-sale securities, hedging instruments (e.g., interest rate swaps) are designated to hedged items collectively by the type of bond. Since material terms related to hedged items and hedging instruments are substantially identical, and such hedging transactions are deemed highly effective, the assessment of effectiveness is based on the similarity of the terms.
With respect to hedging transactions to fix the cash flows of forecasted transactions related to floating rate deposits, loans and other instruments as well as forecasted transactions related to short-term fixed rate deposits, loans and other instruments, hedging instruments (e.g., interest rate swaps) are designated to hedged items collectively by interest rate indices and tenors in accordance with JICPA Industry Committee Practical Guidelines No. 24. Since material terms related to hedged items and hedging instruments are substantially identical, and such hedging transactions are deemed highly effective, the assessment of effectiveness is based on the similarity of the terms. The effectiveness of hedging transactions is also assessed by the correlation between factors that cause fluctuations in interest rates of hedged items and those of hedging instruments.
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| (b) | Hedge accounting for foreign currency risks |
|---|
Domestic consolidated banking subsidiaries and domestic consolidated trust banking subsidiaries have adopted the deferred hedge accounting method for hedging foreign currency risks arising from financial assets and liabilities denominated in foreign currencies, except for certain transactions qualifying for the allocation method applicable to forward exchange contracts and other contracts. Portfolio hedging is applied to determine hedged items as described in JICPA Industry Committee Practical Guidelines No. 25 “Treatment of Accounting and Auditing concerning Accounting for Foreign Currency Transactions in the Banking Industry” (October 8, 2020). Hedging instruments (e.g., currency swaps and forward exchange contracts) are designated to hedged items collectively by currencies.
Portfolio hedging or individual hedging is applied to hedge foreign currency risks arising from equity investments in foreign subsidiaries and foreign affiliates and from available-for-sale securities (other than bonds) denominated in foreign currencies as well as from future equity investments in foreign subsidiaries. Monetary claims and liabilities denominated in the same foreign currencies or forward exchange contracts are used as hedging instruments. As for the hedge accounting method applied to equity investments in foreign subsidiaries and foreign affiliates, foreign currency translation differences arising from hedging instruments are recorded as foreign currency translation adjustments. The fair value hedge accounting method is applied to available-for-sale securities (other than bonds) denominated in foreign currencies, and the deferred hedge accounting method is applied to future equity investments in foreign subsidiaries.
| (c) | Hedge accounting for stock price fluctuation risks |
|---|
Individual hedging is applied to hedge market fluctuation risks arising from strategic equity securities held by domestic consolidated banking subsidiaries and domestic consolidated trust banking subsidiaries. Instruments such as total return swaps are used as hedging instruments. The effectiveness of hedging transactions is assessed by the correlation between changes in the fair value of hedged items and changes in the fair value of hedging instruments. The fair value hedge accounting method is applied.
| (d) | Transactions among consolidated subsidiaries |
|---|
Derivative transactions including interest rate swaps and currency swaps which are designated as hedging instruments among consolidated subsidiaries or between trading accounts and other accounts (or among internal sections) are not eliminated from the consolidated statements of income or valuation difference, but are recognized as related gains or losses or deferred under hedge accounting because these derivative transactions meet non-arbitrariness and certain other criteria under JICPA Industry Committee Practical Guidelines No. 24 and No. 25 and are regarded as equivalent to external third-party cover transactions.
| (19) | Amortization of goodwill |
|---|
Goodwill was primarily amortized using the straight-line method over 10 to 20 years beginning in the period of the acquisition. Other goodwill with insignificant balance was amortized as incurred.
| (20) | Cash and cash equivalents in the consolidated statements of cash flows |
|---|
Cash and cash equivalents in the consolidated statements of cash flows are defined as “Cash and due from banks” on the consolidated balance sheet.
| (21) | Consumption taxes |
|---|
National and local consumption taxes are primarily excluded from transaction amounts of MUFG and its domestic consolidated subsidiaries. Non-deductible portions of consumption taxes on the purchases of tangible fixed assets are expensed when incurred.
| (22) | Adoption of the Group Tax Sharing System |
|---|
MUFG and some of its domestic consolidated subsidiaries have adopted the group tax sharing system.
–20–
| (23) | Accounting of bills discounted and rediscounted |
|---|
Bills discounted and rediscounted are accounted for as financial trading in accordance with JICPA Industry Committee Practical Guidelines No. 24
| (24) | Accounting standard for foreign subsidiaries |
|---|
If the financial statements of foreign subsidiaries are prepared in accordance with the International Financial Reporting Standards (“IFRS”) or the Generally Accepted Accounting Principles in the United States (“U.S. GAAP”), such financial statements are used in the consolidated accounting process.
If the financial statements of foreign subsidiaries are prepared in accordance with generally accepted accounting principles in each domicile country and not in accordance with IFRS or U.S. GAAP, the financial statements of foreign subsidiaries are mainly rearranged in accordance with U.S. GAAP.
Adjustments are also made when necessary in the consolidated accounting process.
–21–
Significant Accounting Estimates
| I. | Allowance for credit losses |
|---|---|
| (1) | Amount recorded in the consolidated financial statements for the current fiscal year |
| --- | --- |
MUFG has banking subsidiaries including MUFG Bank, Ltd. (“the Bank”), and they are engaged in lending services as one of our core businesses. To absorb probable losses resulting from decreases in or elimination of the value of assets such as loan receivables due to deterioration in the financial condition of parties to which loans and other forms of credit have been extended (the risk of incurring such losses being referred to as “credit risk” within the MUFG Group), an allowance for credit losses is recorded according to the calculation process prescribed in our internal policies. The amount of allowance for credit losses recorded in the consolidated balance sheet as of the end of the current fiscal year is 1,535,253 million yen (1,245,727 million yen as of March 31, 2023).
The allowance for credit losses is determined in accordance with predetermined internal policies and approved by the Credit Committee under the Executive Committee. In addition, independent credit audit departments audit the evaluation results as described in “(6) Allowance for credit losses” under “IV. Accounting policies” under “1. Significant Accounting Policies Applied to the Consolidated Financial Statements.”
There is uncertainty in the estimates and significant assumptions used in calculating the allowance for credit losses. In particular, future developments concerning the Russia-Ukraine situation, which are expected to impact our borrowers’ operating environment and the economic environment, remain subject to significant uncertainty. Accordingly, we make certain assumptions, including that the current Russia-Ukraine situation continues for the foreseeable future. The recorded allowance represents our best estimate made in a manner designed to ensure objectivity and rationality.
| (2) | Other information which is relevant to an understanding by readers of the consolidated financial statements<br>with regard to the accounting estimates |
|---|
(Allowance for credit losses of principal domestic consolidated banking subsidiaries)
| (a) | Method of calculation of the amount recorded in the consolidated financial statements for the current fiscal<br>year |
|---|
The process of calculating the allowance for credit losses for the Bank and its domestic consolidated subsidiaries, our principal domestic consolidated banking subsidiaries, involves various estimates such as determination of borrower credit ratings which are based on evaluation and classification of borrowers’ debt-service capacity, assessment of the value of collateral provided by borrowers, estimation of future cash flows when applying the cash flow estimation method, and adjustments for future loss projections and other factors to the loss rates calculated based on historical credit loss experience. For details of the allowance calculation method, refer to “(6) Allowance for credit losses” under “IV. Accounting policies” under “1. Significant Accounting Policies Applied to the Consolidated Financial Statements.” The amount of allowance for credit losses and the loan balance of the Bank, our principal domestic consolidated banking subsidiary, recorded in the Bank’s balance sheet as of the end of the current fiscal year, are 841,518 million yen and 103,444,984 million yen, respectively (641,107 million yen and 97,127,749 million yen, respectively as of March 31, 2023).
| (b) | Significant assumptions used in calculating the amounts presented in the consolidated financial statements for<br>the current fiscal year |
|---|
In order to make appropriate borrower classification determinations, our principal domestic consolidated banking subsidiaries use a credit rating system that is consistent with the borrower classification as a uniform standard for evaluating credit risk. As a general rule, internal credit ratings are assigned to all customers to which we extend credit and their transactions. Among our internal credit ratings, the borrower ratings for non-financial business corporations and certain other borrowers are assigned based on our evaluation of their debt-service capacity over the next 3 to 5 years on a 15-rating scale. Our principal domestic consolidated banking subsidiaries assign internal credit ratings to borrowers based on qualitative factors such as the current and expected future business environment of the industry to which borrowers belong as well as their management and funding risks in addition to quantitative financial evaluations through an analysis of their financial results. In this regard, our internal credit ratings may be highly dependent on estimation of borrowers’ future performance and business sustainability in case they experience poor business performance or financial difficulties. Estimates relating to these borrowers’ future performance and business sustainability are affected by changes in their external and internal business environment, including changes in economic condition, inflation and monetary policy in each country as well as geopolitical situation, and are accordingly subject to a high degree of uncertainty.
–22–
The Bank, our principal domestic consolidated banking subsidiary, applies the cash flow estimation method when providing for allowance for credit losses for loans to substantially bankrupt borrowers and borrowers requiring special attention and caution in cases where it is possible to reasonably estimate the cash flows related to the collection of loan principal and receipt of interest payments.
The estimation of such future cash flows is based on a borrower-specific assessment regarding the collectability of loans, including past collection experience, evaluation of the borrower’s restructuring plans, the financial condition and operating results of the borrower, and the economic environment of the industry to which the borrower belongs. In this regard, the estimation of future cash flows may be highly dependent on estimation of borrowers’ future performance and business sustainability. Estimates are subject to a high degree of uncertainly especially when made in connection with assessments regarding the collectability of loans to substantially bankrupt borrowers with respect to which objective information is not readily available.
In addition, the Bank determines loss rates primarily by calculating a rate of loss based on a historical average of the credit loss rate or a historical average of the default probability derived from actual credit loss experience or actual bankruptcy experience and making necessary adjustments based on future projections and other factors. The Bank makes such adjustments based on future projections and other factors to the loss rate calculated based on historical loss experience, when and to the extent such adjustments are deemed appropriate by, for example, considering any additional expected loss amount not reflected in such loss rate calculated based on historical loss experience, especially in light of the Russia-Ukraine situation. The amount of impact of these adjustments as of the end of the current fiscal year is 42,492 million yen (69,569 million yen as of March 31, 2023).
Since these adjustments based on future loss projections and other factors to loss rates calculated based on historical loss experience, which are made to reflect the credit risk for loans and other assets held as of the end of the fiscal year, are based on estimation relating to the Russia-Ukraine situation with respect to which objective information is not readily available, such estimates are subject to a high degree of uncertainty.
Given that actual loss information after the spread of COVID-19 has been accumulated and the impact of COVID-19 is reflected in the loss rates calculated based on historical loss experience, during the current fiscal year, no adjustment is made based on future projections that take into account the rate of increase in the credit loss rate or the default probability in recent period.
| (c) | Effect on the consolidated financial statements for the following fiscal year |
|---|
The internal credit ratings and the estimates of future cash flows when applying the cash flow estimation method are reviewed at least once a year. Estimates relating to borrowers’ future performance, business sustainability and the collectability of loans, which we consider to be significant assumptions, may be reviewed in light of changes in borrowers’ creditworthiness due to changes in their financial condition and in the relevant industry environment. As a result, the allowance for credit losses may significantly increase or decrease in the following fiscal year if the overall credit risk is deemed to have increased or decreased.
Adjustments based on future loss projections and other factors to loss rates calculated based on historical loss experience, which we consider to be significant assumptions, are based on estimation relating to the Russia-Ukraine situation with respect to which objective information is not readily available. These assumptions change to reflect developments in the Russia-Ukraine situation, and changes in the assumptions may result in a significant increase or decrease in the allowance for credit losses in the following fiscal year.
(Allowance for credit losses of certain overseas subsidiaries which apply U.S. GAAP)
| (a) | Method of calculation of the amount recorded in the consolidated financial statements for the current fiscal<br>year |
|---|
Certain overseas subsidiaries which apply U.S. GAAP have adopted ASC Topic 326, “Measurement of Credit Losses on Financial Instruments,” and provide for allowance for credit losses by estimating credit losses currently expected over the remaining contractual term of the financial assets. For details of the allowance provision method, refer to Additional Information in “(6) Allowance for credit losses” under “IV. Accounting policies” under “1. Significant Accounting Policies Applied to the Consolidated Financial Statements.” The amount of allowance for credit losses and the loan balance recorded in the consolidated balance sheet as of the end of the current fiscal year with respect to our principal overseas subsidiaries that apply U.S. GAAP are 529,711 million yen and 7,752,929 million yen, respectively (455,625 million yen and 6,773,525 million yen, respectively as of March 31, 2023).
–23–
| (b) | Significant assumptions used in calculating the amounts presented in the consolidated financial statements for<br>the current fiscal year |
|---|
Expected credit losses of our principal overseas subsidiaries that apply U.S. GAAP are calculated for each portfolio of loans with similar risk characteristics using a quantitative model that reflects economic forecast scenarios based on macroeconomic variables. Macroeconomic variables include the unemployment rate, GDP and other inputs, which correlate with historical credit losses. The subsidiaries use multiple economic forecast scenarios in light of the uncertainty in such scenarios and consider such scenarios by applying certain weightings. Various factors, such as the latest economic environment and the views of internal and external economists, are taken into account in the determination of the macroeconomic variables reflected in such economic forecast scenarios and the weightings applied to each economic forecast scenario. In this regard, the estimates made in determining such macroeconomic variables reflected in multiple economic forecast scenarios and the weightings applied to each economic forecast scenario are subject to a high degree of uncertainty due to the significant variability and uncertainty in the future economic environment arising mainly from changes in economic condition, inflation and monetary policy in each country as well as geopolitical situation.
The calculated amount of expected credit losses is adjusted for qualitative factors to compensate for expected credit losses that are not reflected in a quantitative model. The subsidiaries forecast the impact of inflation and temporary relief measure on the expected credit losses determined using quantitative models and reflect adjustments based on such qualitative factors. These qualitative adjustments are estimates with respect to which objective information is not readily available and are similarly subject to a high degree of uncertainty.
| (c) | Effect on the consolidated financial statements for the following fiscal year |
|---|
The determination of macroeconomic variables to be reflected in multiple economic forecast scenarios and the weighting to be assigned to each such scenario, as well as the application of adjustments based on qualitative factors, are based on estimates relating to the economic environment and other factors with respect to which objective information is not readily available. Relevant assumptions may change to reflect developments in the economic environment and other factors and, as a result, the amount of allowance for credit losses.
| II. | Valuation of goodwill recorded in connection with acquisitions and investments |
|---|---|
| (1) | Amount recorded in the consolidated financial statements for the current fiscal year |
| --- | --- |
As part of its strategic measures designed to become the world’s most trusted financial group, the MUFG Group enters into acquisitions, equity investments and capital alliances on a global basis. Any goodwill arising from these business combination transactions is recorded in the consolidated balance sheet.
Such acquisitions, equity investments and capital alliances may result in the MUFG Group’s inability to achieve the synergies and other benefits anticipated by the MUFG Group due to unexpected changes in the industry to which the acquiree, investee or alliance partner belongs and other factors or in an impairment of such goodwill, adversely affecting the MUFG Group’s business strategy, financial position and operating results.
The amount of goodwill recorded on the consolidated balance sheet as of the end of the current fiscal year is 405,629 million yen (252,009 million yen as of March 31, 2023), of which 183,063 million yen (180,273 million yen as of March 31, 2023) was recorded in connection with the acquisition of First Sentier Investors (“FSI”).
The recorded balance of goodwill is subject to identification of an indication of impairment (an event indicating the possibility of impairment of a group of assets including goodwill) and recognition and measurement of impairment loss in accordance with the Accounting Standards for Impairment of Fixed Assets (Business Accounting Council, August 9, 2002) and other standards and with predetermined internal policies. In addition, such identification of indications of impairment and recognition and measurement of impairment loss are tested for appropriateness in accordance with predetermined internal policies and other regulations. The estimates and significant assumptions made in identifying indications of impairment of the goodwill recorded in connection with the acquisition of FSI, which accounts for a substantial portion of the balance of goodwill held by the MUFG Group, are subject to uncertainty. The recorded goodwill represents our best estimate made in a manner designed to ensure objectivity and rationality.
| (2) | Other information which is relevant to an understanding by readers of the consolidated financial statements<br>with regard to the accounting estimates |
|---|---|
| (a) | Method of calculation of the amount recorded in the consolidated financial statements for the current fiscal<br>year |
| --- | --- |
Identification of indications of impairment of goodwill and recognition and measurement of impairment loss are performed on the basis of a larger unit consisting of the group of assets relating to the business to which the goodwill is allocated and such goodwill.
–24–
The MUFG Group determines whether any indication of impairment exists based on the characteristics of an asset group in accordance with certain established criteria.
The goodwill recorded in connection with the acquisition of FSI, which accounts for a substantial portion of the balance of goodwill held by the MUFG Group, is reported in the amount based on the determination as to the existence of an indication of impairment and valuation performed on FSI as a single asset group.
To identify an indication of impairment, we determine based on certain established criteria whether FSI’s future profits for a certain period projected by considering FSI’s latest business plan have declined to a level where the investment may not be recoverable due to such decline in the profitability. In addition, to determine whether any indication of impairment exists, we analyze whether FSI has reported net operating losses after amortization of goodwill for two consecutive reporting periods and whether there are factors that cause the recoverability of the investment in FSI to significantly diminish, including deterioration in the stock indices in the stock market, a decline in the balance of FSI’s assets in custody, and the attrition rate of key fund managers.
For the current fiscal year, we identified no event indicating impairment and determined that no indication of impairment existed.
With respect to goodwill with an identified indication of impairment, impairment loss is not recognized if the carrying amount, before impairment loss, of the group of assets relating to the business to which the goodwill is allocated plus the carrying amount of the goodwill is smaller than the total amount of undiscounted future cash flows derived from the larger unit including the goodwill (hereinafter referred to as “undiscounted future cash flows”). If the aggregate carrying amount exceeds the amount of undiscounted future cash flows, the difference is recognized as impairment loss to the extent that it does not exceed the balance of the goodwill.
| (b) | Significant assumptions used in calculating the amounts presented in the consolidated financial statements for<br>the current fiscal year |
|---|
Identification of indications of impairment and estimation of undiscounted future cash flows necessarily involve judgment and often incorporate significant estimates and assumptions.
Forecasts relating to projected profits used to identify an indication of impairment of the goodwill recorded in connection with the acquisition of FSI, which accounts for a substantial portion of the balance of goodwill held by the MUFG Group, are based on significant estimates, and such estimates are based on assumptions. The primary assumptions include the growth rate of the business based on current and past facts and operating results, and the growth rate of the market and the overall economy in the future.
| (c) | Effect on the consolidated financial statements for the following fiscal year |
|---|
The MUFG Group believe that the primary assumptions used to identify indications of goodwill impairment as of the end of the current fiscal year are reasonable. However, changes in the primary assumptions used in the identification of indications of impairment due to unforeseeable future changes in assumptions relating to the business may have a material impact on recognition of any impairment loss and measurement of the amount of impairment loss for the following fiscal year.
| III. | Fair value of derivative transactions |
|---|---|
| (1) | Amount recorded in the consolidated financial statements for the current fiscal year |
| --- | --- |
The MUFG Group engages in a large number of various derivative transactions in connection with the business of providing foreign exchange, financing and securities services to customers as well as market transactions and liquidity and funding management operations. For details of the fair value of derivative transactions grouped by transaction type, refer to “II. Matters concerning fair value of financial instruments and breakdown by input level” under “8. Financial Instruments.”
The fair value of derivative transactions is calculated in accordance with the policies and procedures for the calculation of fair value and the procedures for the use of fair value valuation models set forth in predetermined internal policies. The estimates and significant assumptions made in calculating the fair value of derivative transactions are subject to uncertainty. The recorded fair value represents our best estimate made in a manner designed to ensure objectivity and rationality and subject to internal controls. For details of the processes for calculating the fair value of derivative transactions, refer to “(Note 1) Description of the valuation techniques and inputs used to determine fair value” to “II. Matters concerning fair value of financial instruments and breakdown by input level” under “8. Financial Instruments.”
–25–
| (2) | Other information which is relevant to an understanding by readers of the consolidated financial statements<br>with regard to the accounting estimates |
|---|---|
| (a) | Method of calculation of the amount recorded in the consolidated financial statements for the current fiscal<br>year |
| --- | --- |
The fair value of exchange-traded derivative transactions is based on the price posted by exchanges. The fair value of over-the-counter derivative transactions is based on the discounted present value or amount calculated under the option-price calculation model. The valuation models are tested from a market consistency perspective. However, the estimates and assumptions used in such models necessarily involve judgment and are subject to complexity and uncertainty. For details of the calculation method, refer to “(Note 1) Description of the valuation techniques and inputs used to determine fair value” to “II. Matters concerning fair value of financial instruments and breakdown by input level” under “8. Financial Instruments.”
| (b) | Significant assumptions used in calculating the amounts presented in the consolidated financial statements for<br>the current fiscal year |
|---|
Inputs used in valuation models include inputs that can be observed directly or indirectly in the market such as foreign currency exchange rates, yield curves, volatility, credit curves and stock prices, as well as inputs that cannot be observed in the market such as correlation coefficients and other significant estimates. The MUFG Group classifies the fair value of financial instruments into three levels depending on the observability and significance of the input used in the fair value calculation. In particular, the estimates and assumptions made in the valuation of derivative transactions classified into level 3, where inputs that cannot be observed in the market are used as a material basis for the calculated fair value, are subject to significant complexity and uncertainty. For details of such inputs, refer to “(1) Quantitative information on significant unobservable inputs” under “(Note 2) Quantitative information about financial assets and liabilities measured and presented on the consolidated balance sheet at fair value and classified in Level 3” to “II. Matters concerning fair value of financial instruments and breakdown by input level” under “8. Financial Instruments.”
| (c) | Effect on the consolidated financial statements for the following fiscal year |
|---|
The MUFG Group have determined that the fair value of derivatives transactions is reasonable after conducting testing. However, the significant assumptions used to calculate the fair value are subject to uncertainty. In particular, the estimates and assumptions made in the valuation of the fair value of derivative transactions classified into Level 3 are subject to significant complexity and uncertainty. The fair value of derivative transactions held by the MUFG Group may fluctuate as a result of changes in inputs used for valuation due to changes in the market environment and other factors. For details of the sensitivity of the fair value to changes in inputs, refer to “(4) Description of the sensitivity of the fair value to changes in significant unobservable inputs” under “(Note 2) Quantitative information about financial assets and liabilities measured and presented on the consolidated balance sheet at fair value and classified in Level 3” to “II. Matters concerning fair value of financial instruments and breakdown by input level” under “8. Financial Instruments.”
–26–
New Accounting Pronouncements
(Accounting Standard Board of Japan (“ASBJ”) Statement No. 27, “Accounting Standard for Current Income Taxes” (ASBJ, October 28, 2022), ASBJ Statement No. 25, “Accounting Standard for Presentation of Comprehensive Income” (ASBJ, October 28, 2022), and ASBJ Guidance No. 28, “Guidance on Accounting Standard for Tax Effect Accounting” (ASBJ, October 28, 2022))
| (1) | Summary |
|---|
The new accounting standards and guidance provide for the accounting classification of income taxes on other comprehensive income and for the treatment of the tax effects of sales of shares of subsidiaries when the group corporate taxation system is applied.
| (2) | Planned adoption date |
|---|
The MUFG Group plans to adopt the accounting standards and guidance as of the beginning of the fiscal year starting on April 1, 2024.
| (3) | Estimated impact |
|---|
The MUFG Group is currently evaluating the impact of adopting the accounting standards and guidance on its consolidated financial statements and related disclosures.
Changes in Presentation of Financial Information
(Note to the Consolidated Statement of Income)
“Refund of income taxes”, which was previously presented separately from “Income taxes” on a disaggregated basis for the fiscal year ended March 31, 2023, is included in “Income taxes” on a net basis from the fiscal year ended March 31,2024 due to the decreased significance in the recorded amount. In order to reflect this change in presentation, the consolidated financial statements for the fiscal year ended March 31, 2023 have been reclassified.
As a result, “Income taxes” of ¥493,256 million and “Refund of income taxes” of ¥(56,288) million previously presented in the consolidated statement of income for the fiscal year ended March 31, 2023 have been aggregated on a net basis and reclassified into “Income taxes” of ¥436,968 million.
Additional Information
(Provisional closing of accounts of a significant equity-method affiliate)
Morgan Stanley, a significant equity-method affiliate of MUFG, closes its financial accounts based on a fiscal year-end of December 31 and, previously, the equity method of accounting was applied to Morgan Stanley’s consolidated financial statements as of the end of Morgan Stanley’s fiscal year. However, from the perspective of providing financial information in a more timely manner, MUFG has decided to make modifications so that, effective from the fiscal year ended March 31, 2024, the equity method of accounting is to applied to Morgan Stanley based on a provisional closing of accounts implemented as of March 31, which is the end of MUFG’s fiscal year.
Accordingly, for the fiscal year ended March 31, 2024, the equity method of accounting has been applied to Morgan Stanley’s consolidated financial statements for the fifteen-month period from January 1, 2023 to March 31, 2024 based on a provisional closing of accounts, and the impact of implementation of such provisional closing of accounts has been reflected in MUFG’s consolidated financial statements from the beginning of the fiscal year ended March 31, 2024.
For the period from January 1, 2023 to March 31, 2023, equity in earnings of the equity method investees related to Morgan Stanley is 106,161 million yen, losses on change in equity related to Morgan Stanley is 22,058 million yen, and share of other comprehensive income of associates accounted for using equity method related to Morgan Stanley included in other comprehensive income is 406,491 million yen.
(Provisional closing of accounts of a significant subsidiary planned for the fiscal year ending March 31, 2025)
Bank of Ayudhya Public Company Limited (“Krungsri”), a significant subsidiary of MUFG, closes its financial accounts based on a fiscal year-end of December 31, and is consolidated based on its consolidated financial statements as of the December 31 fiscal year-end.
However, from the perspective of providing financial information in a more timely manner, MUFG has decided to consolidate Krungsri based on a provisional closing of accounts of Krungsri to be implemented as of March 31, which is MUFG’s fiscal year-end, effective from the beginning of the fiscal year ending March 31, 2025.
Accordingly, for the fiscal year ending March 31, 2025, Krungsri’s financial results for the 15-month period from January 1, 2024 to March 31, 2025 are expected to be reflected in MUFG’s consolidated financial statements.
–27–
| 2. | Consolidated Balance Sheets | |||
|---|---|---|---|---|
| I. | Equity securities and other capital investments in affiliates | |||
| --- | --- | |||
| (in millions of yen) | ||||
| --- | --- | --- | --- | --- |
| March 31, 2023 | March 31, 2024 | |||
| Equity securities in affiliates | ¥ | 3,757,973 | ¥ | 4,374,498 |
| Other capital investments in affiliates | 43,571 | 55,966 |
The amount of investments in jointly controlled companies included in the amounts in the above table was as follows:
| (in millions of yen) | ||||
|---|---|---|---|---|
| March 31, 2023 | March 31, 2024 | |||
| Investments in jointly controlled companies | ¥ | 5,956 | ¥ | 6,900 |
| II. | Securities loaned under unsecured and secured securities lending transactions included in<br>“Securities” and “Monetary claims bought”. | |||
| --- | --- | |||
| (in millions of yen) | ||||
| --- | --- | --- | --- | --- |
| March 31, 2023 | March 31, 2024 | |||
| Securities loaned under unsecured and secured securities lending transactions | ¥ | 87,730 | ¥ | 74,772 |
Securities borrowed under securities borrowing transactions and securities purchased under resale agreements where the borrowers or purchasers have the right to dispose of the securities through sale or re-pledging without any restrictions
| (in millions of yen) | ||||
|---|---|---|---|---|
| March 31, 2023 | March 31, 2024 | |||
| Securities re-pledged | ¥ | 16,534,808 | ¥ | 17,194,551 |
| Securities re-loaned | 2,597,315 | 3,772,967 | ||
| Securities held without disposition | 6,465,540 | 9,966,683 |
Bank acceptance bills discounted, commercial bills discounted and foreign currency bills bought discounted with the right to dispose of the bills discounted through sale or re-pledging without any restrictions
| (in millions of yen) | ||||
|---|---|---|---|---|
| March 31, 2023 | March 31, 2024 | |||
| Bills discounted (face value) | ¥ | 1,114,509 | ¥ | 1,506,038 |
Foreign currency bills bought which were re-discounted upon transfer
| (in millions of yen) | ||||
|---|---|---|---|---|
| March 31, 2023 | March 31, 2024 | |||
| Foreign currency bills re-discounted (face value) | ¥ | 8,289 | ¥ | 5,086 |
–28–
| III. | Loans to be disclosed under the Banking Act and the Financial Reconstruction Act (the “FRA”) were as<br>follows. Disclosed loans include corporate bonds included in Securities (to the extent that such bonds were issued through private placements as stipulated in Article 2-3 of the Financial Instruments and<br>Exchange Act and that the principal of and interest on such bonds are partly or fully guaranteed by MUFG), Loans and bills discounted, Foreign exchanges, accrued interest and suspense payments included in Other assets, and Customers’<br>liabilities for acceptances and guarantees, each as included in the consolidated balance sheets, and securities loaned (to the extent borrowers have the right to sell or pledge such securities) as included in the notes to the consolidated balance<br>sheets. | |||
|---|---|---|---|---|
| (in millions of yen) | ||||
| --- | --- | --- | --- | --- |
| March 31, 2023 | March 31, 2024 | |||
| Bankrupt or De facto Bankrupt | ¥ | 198,312 | ¥ | 239,004 |
| Doubtful | ¥ | 746,207 | ¥ | 1,134,503 |
| Special Attention | ¥ | 618,892 | ¥ | 634,023 |
| Accruing loans contractually past due 3 months or more | ¥ | 23,679 | ¥ | 26,869 |
| Restructured loans | ¥ | 595,212 | ¥ | 607,154 |
| Subtotal | ¥ | 1,563,411 | ¥ | 2,007,531 |
| Normal | ¥ | 121,766,210 | ¥ | 130,602,373 |
| Total | ¥ | 123,329,622 | ¥ | 132,609,905 |
Bankrupt or De facto Bankrupt represents loans to borrowers that are bankrupt or in substantially similar condition due to reasons including a petition being filed to commence bankruptcy, reorganization or rehabilitation proceedings.
Doubtful represents loans to borrowers that are not yet in a state of bankruptcy but that are in deteriorated financial condition, with deteriorated operating results, and with a high likelihood of loan principal and interest not being collected or received in accordance with contractual terms, other than loans included in the Bankrupt or De facto Bankrupt category.
Accruing loans contractually past due 3 months or more represent loans with respect to which principal repayments or interest payments have been past due for 3 months or more, other than loans included in the Bankrupt or De facto Bankrupt category or the Doubtful category.
Restructured loans represent loans that have been modified with concessionary terms, including interest rate reductions, deferral of interest payments, deferral of principal repayments, waivers of loan claims and other renegotiated terms, that are favorable to borrowers, for the purpose of assisting such borrowers in improving their financial condition, other than loans included in the Bankrupt or De facto Bankrupt category, the Doubtful category or the Accruing loans contractually past due 3 months or more category.
Normal represents loans with no particular issues identified in terms of the financial condition and results of operations of borrowers and thus not included in the Bankrupt or De facto Bankrupt category, the Doubtful category, the Accruing loans contractually past due 3 months or more category or the Restructured loan category.
The amounts provided in the table above represent gross amounts before deduction of allowance for credit losses.
–29–
| IV. | Assets pledged as collateral |
|---|
Assets pledged as collateral and their relevant liabilities as of March 31, 2023 and 2024 were as follows:
| (in millions of yen) | ||||
|---|---|---|---|---|
| March 31, 2023 | March 31, 2024 | |||
| Assets pledged as collateral: | ||||
| Cash and due from banks | ¥ | 5,020 | ¥ | 4,292 |
| Trading assets | 303,918 | 500,000 | ||
| Securities | 9,959,654 | 9,023,306 | ||
| Loans and bills discounted | 11,806,356 | 13,424,905 | ||
| Other assets | 191 | 601 | ||
| Tangible fixed assets | 4,635 | 92 | ||
| Total | ¥ | 22,079,777 | ¥ | 22,953,199 |
| Relevant liabilities to above assets: | ||||
| Deposits | ¥ | 13,900 | ¥ | 13,900 |
| Borrowed money | 21,962,993 | 22,800,405 | ||
| Bonds payable | 24,574 | 21,787 | ||
| Other liabilities | 4,618 | 672 |
In addition to the above, the following assets were pledged as collateral for cash settlements and other transactions or asdeposits for margin accounts for futures and other transactions:
| (in millions of yen) | ||||
|---|---|---|---|---|
| March 31, 2023 | March 31, 2024 | |||
| Cash and due from banks | ¥ | 33,382 | ¥ | — |
| Monetary claims bought | 33,093 | 46,930 | ||
| Trading assets | 1,668,783 | 1,871,424 | ||
| Securities | 16,367,312 | 17,481,814 | ||
| Loans and bills discounted | 1,904,568 | 2,498,238 |
Furthermore, the following assets were sold under repurchase agreements or loaned under securities lending transactions with cash collateral as of March 31, 2023 and 2024:
| (in millions of yen) | ||||
|---|---|---|---|---|
| March 31, 2023 | March 31, 2024 | |||
| Monetary claims bought | ¥ | — | ¥ | 54,582 |
| Trading assets | 1,750,274 | 2,770,003 | ||
| Securities | 23,442,434 | 16,920,718 | ||
| Total | ¥ | 25,192,709 | ¥ | 19,745,303 |
| Relevant liabilities to above assets: | ||||
| Payables under repurchase agreements | ¥ | 25,934,089 | ¥ | 18,920,170 |
| Payables under securities lending transactions | 565,888 | 349,665 |
–30–
In addition, the following assets were pledged under general collateral repurchase agreements using the subsequent collateral allocation method as of March 31, 2023 and 2024:
| (in millions of yen) | ||||
|---|---|---|---|---|
| March 31, 2023 | March 31, 2024 | |||
| Trading assets | ¥ | 1,131,433 | ¥ | 916,424 |
| Securities | 1,668,012 | 1,100,570 | ||
| Total | ¥ | 2,799,446 | ¥ | 2,016,994 |
| V. | Non-recourse debt of consolidated special purpose companies was as<br>follows. | |||
| --- | --- | |||
| (in millions of yen) | ||||
| --- | --- | --- | --- | --- |
| March 31, 2023 | March 31, 2024 | |||
| Non-recourse debt | ||||
| Borrowed money | ¥ | 2,100 | ¥ | 2,100 |
| Bonds payable | 9,074 | — | ||
| Relevant assets to above non-recourse debt: | ||||
| Cash and due from banks | ¥ | 1,072 | ¥ | — |
| Securities | 8,958 | — | ||
| Loans and bills discounted | 20,000 | 20,000 | ||
| Other assets | 191 | — | ||
| Tangible fixed assets | 4,635 | — |
The above table includes certain assets reported in the immediately preceding Item IV.
| VI. | Overdraft facilities and commitment lines of credit are binding contracts under which MUFG’s consolidated<br>subsidiaries have obligations to disburse funds up to predetermined limits upon the borrower’s request as long as there have been no breach of contracts. The total amount of the unused portion of these facilities as of March 31, 2023 and<br>March 31, 2024 was as follows: | |||
|---|---|---|---|---|
| (in millions of yen) | ||||
| --- | --- | --- | --- | --- |
| March 31, 2023 | March 31, 2024 | |||
| Unused overdraft facilities and commitment lines of credit | ¥ | 96,203,085 | ¥ | 102,894,396 |
The total amount of the unused portion does not necessarily represent actual future cash requirements because many of these contracts are expected to expire without being drawn upon. In addition, most of these contracts include clauses that allow MUFG’s consolidated subsidiaries to decline a borrower’s request for disbursement or decrease contracted limits for cause, such as changes in financial market condition or deterioration in a borrower’s creditworthiness. MUFG’s consolidated subsidiaries may request a borrower to pledge real property and/or securities as collateral upon signing of a contract and will perform periodic monitoring on a borrower’s business condition in accordance with internal procedures, which may lead to renegotiation of the terms and conditions of the contracts and/or initiation of a request for additional collateral and/or guarantees.
| VII. | The amount of assets that belonged to the declaration of trust for which domestic trust banking subsidiaries<br>were the settlor and the trustee was as follows: | |||
|---|---|---|---|---|
| (in millions of yen) | ||||
| --- | --- | --- | --- | --- |
| March 31, 2023 | March 31, 2024 | |||
| Loans and bills discounted | ¥ | 259,749 | ¥ | — |
–31–
| VIII. | In accordance with the “Law concerning Revaluation of Land” (the “Land Revaluation Law”)<br>(No. 34, March 31, 1998), land used for business operations of domestic consolidated banking subsidiaries and domestic consolidated trust banking subsidiaries has been revalued as of the dates indicated below. The total excess from revaluation,<br>net of income taxes corresponding to the excess that were recognized as “Deferred tax liabilities for land revaluation,” is stated as “Land revaluation excess” in net assets. Land revaluation excess includes MUFG’s share of<br>affiliated companies’ Land revaluation excess. |
|---|
Dates of revaluation:
Domestic consolidated banking subsidiaries: March 31, 1998.
Domestic consolidated trust banking subsidiaries: March 31, 1998, December 31, 2001 and March 31, 2002.
The method of revaluation as set forth in Article 3, Paragraph 3 of the Land Revaluation Law:
Fair values are determined based on (1) “published land price under the Land Price Publication Law” stipulated in Article 2-1 of the “Enforcement Ordinance of the Law concerning Revaluation of Land” ( “Ordinance” ) (No. 119, March 31, 1998), (2) “standard land price determined on measurement spots under the Enforcement Ordinance of the National Land Planning Law” stipulated in Article 2-2 of the Ordinance, (3) “land price determined by the method established and published by the Director General of the National Tax Agency in order to calculate land value that is used for determining taxable amounts subject to landholding tax articulated in Article 16 of the Landholding Tax Law” stipulated in Article 2-4 of the Ordinance with price adjustments for shape and time and (4) appraisal by certified real estate appraisers stipulated in Article 2-5 of the Ordinance with price adjustments for time.
In addition, some of MUFG’s affiliates that were accounted for under the equity method conducted a revaluation for land used for business operations on March 31, 2002.
| IX. | Accumulated depreciation on tangible fixed assets | |||
|---|---|---|---|---|
| (in millions of yen) | ||||
| --- | --- | --- | --- | --- |
| March 31, 2023 | March 31, 2024 | |||
| Accumulated depreciation on tangible fixed assets | ¥ | 1,082,897 | ¥ | 1,123,454 |
| X. | Deferred gains on tangible fixed assets deducted for tax purposes | |||
| --- | --- | |||
| (in millions of yen) | ||||
| --- | --- | --- | --- | --- |
| March 31, 2023 | March 31, 2024 | |||
| Deferred gains on tangible fixed assets | ¥ | 67,377 | ¥ | 62,278 |
| Deferred gains on tangible fixed assets for the fiscal year | ¥ | – | ¥ | – |
| XI. | Subordinated borrowings with special contractual provisions which rank below other debts with regard to the<br>fulfillment of obligations included in “Borrowed money” | |||
| --- | --- | |||
| (in millions of yen) | ||||
| --- | --- | --- | --- | --- |
| March 31, 2023 | March 31, 2024 | |||
| Subordinated borrowings | ¥ | 260,500 | ¥ | 315,500 |
| XII. | Subordinated bonds included in “Bonds payable” | |||
| --- | --- | |||
| (in millions of yen) | ||||
| --- | --- | --- | --- | --- |
| March 31, 2023 | March 31, 2024 | |||
| Subordinated bonds | ¥ | 3,637,670 | ¥ | 4,494,288 |
| XIII. | The principal amount of money trusts entrusted to domestic trust banking subsidiaries for which repayment of<br>the principal to the customers was guaranteed | |||
| --- | --- | |||
| (in millions of yen) | ||||
| --- | --- | --- | --- | --- |
| March 31, 2023 | March 31, 2024 | |||
| Principal-guaranteed money trusts | ¥ | 6,408,838 | ¥ | 3,292,449 |
–32–
| XIV. | Guarantee obligations for private placement bonds (provided in accordance with the Article 2-3 of the Financial Instruments and Exchange Law) among the bonds and other securities included in “Securities” | |||
|---|---|---|---|---|
| (in millions of yen) | ||||
| --- | --- | --- | --- | --- |
| March 31, 2023 | March 31, 2024 | |||
| Guarantee obligations for private placement bonds | ¥ | 313,903 | ¥ | 334,872 |
| XV. | Contingent liabilities | |||
| --- | --- |
(Litigation)
In the ordinary course of business, MUFG is subject to various litigation and regulatory matters. In accordance with applicable accounting guidance, MUFG establishes a Reserve for Contingent Losses arising from litigation and regulatory matters when they are determined to be probable in their occurrences and the probable loss amount can be reasonably estimated. Based upon current knowledge and consultation with counsel, management believes the eventual outcome of such litigation and regulatory matters, where losses are probable and the probable loss amounts can be reasonably estimated, would not have a material adverse effect on MUFG’s financial position, results of operations or cash flows.
Management also believes the amount of loss that is reasonably possible, but not probable, from various litigation and regulatory matters is not material to MUFG’s financial position, results of operations or cash flows.
–33–
| 3. | Consolidated Statements of Income | |||
|---|---|---|---|---|
| I. | “Other ordinary income” for the periods indicated included the following: | |||
| --- | --- | |||
| (in millions of yen) | ||||
| --- | --- | --- | --- | --- |
| For the fiscal year ended March 31, | ||||
| 2023 | 2024 | |||
| Equity in earnings of the equity method investees | ¥ | 425,829 | ¥ | 531,803 |
| Gains on sales of equity securities | 332,747 | 452,125 | ||
| II. | “General and administrative expenses” for the periods indicated included the following:<br> | |||
| --- | --- | |||
| (in millions of yen) | ||||
| --- | --- | --- | --- | --- |
| For the fiscal year ended March 31, | ||||
| 2023 | 2024 | |||
| Personnel expenses | ¥ | 1,362,991 | ¥ | 1,374,870 |
| Depreciation and amortization | 314,708 | 340,137 | ||
| III. | “Other ordinary expenses” for the periods indicated included the following: | |||
| --- | --- | |||
| (in millions of yen) | ||||
| --- | --- | --- | --- | --- |
| For the fiscal year ended March 31, | ||||
| 2023 | 2024 | |||
| Write-offs of loans | ¥ | 547,783 | ¥ | 193,119 |
| IV. | “Gains on sales of shares of subsidiaries” for the fiscal year ended March 31, 2023 included<br>¥699,509 million of gains on sales of shares of subsidiaries resulting from the sale of the shares in MUFG Union Bank, N.A. (hereinafter referred to as “MUB”). | |||
| --- | --- | |||
| V. | “Losses on pension buyout” for the fiscal year ended March 31, 2023 included<br>¥78,111 million of loss on a pension buyout transaction to transfer portions of the defined benefit pension plans of the Bank’s overseas branches. | |||
| --- | --- | |||
| VI. | (Additional Information) | |||
| --- | --- |
In connection with the sale of the shares in MUB, MUFG Americas Holdings Corporation recognized an aggregate of ¥952,590 million of losses for the twelve months ended December 31, 2022, primarily in accordance with ASC Topic 326, “Financial Instruments—Credit losses,” and ASC Topic 310, “Receivables.” The aggregate losses reflected ¥555,421 million of valuation losses related to securities held for sale recorded as Other operating expenses and ¥400,511 million of valuation losses related to loans held for sale recorded as Other ordinary expenses.
–34–
| 4. | Comprehensive Income |
|---|
The components of other comprehensive income for the years ended March 31, 2023 and 2024 were as follows:
| (in millions of yen) | ||||||
|---|---|---|---|---|---|---|
| 2023 | 2024 | |||||
| Unrealized gains (losses) on available-for-sale securities: | ||||||
| Gains (losses) arising during the year | ¥ | (1,027,640 | ) | ¥ | 976,986 | |
| Reclassification adjustments to profits (losses) | 87,494 | 98,111 | ||||
| Amount before income tax effect | (940,145 | ) | 1,075,097 | |||
| Income tax effect | 263,262 | (368,999 | ) | |||
| Total | (676,883 | ) | 706,097 | |||
| Deferred gains (losses) on derivatives under hedge accounting: | ||||||
| Gains (losses) arising during the year | (516,317 | ) | (638,853 | ) | ||
| Reclassification adjustments to profits (losses) | 59,537 | 212,224 | ||||
| Adjustments to acquisition costs of assets | — | (1,197 | ) | |||
| Amount before income tax effect | (456,780 | ) | (427,825 | ) | ||
| Income tax effect | 140,910 | 130,663 | ||||
| Total | (315,870 | ) | (297,162 | ) | ||
| Foreign currency translation adjustments: | ||||||
| Gains (losses) arising during the year | 701,419 | 586,974 | ||||
| Reclassification adjustments to profits (losses) | — | 188 | ||||
| Amount before income tax effect | 701,419 | 587,162 | ||||
| Income tax effect | 8 | 443 | ||||
| Total | 701,427 | 587,606 | ||||
| Defined retirement benefit plans: | ||||||
| Gains (losses) arising during the year | (129,196 | ) | 574,046 | |||
| Reclassification adjustments to profits (losses) | 47,962 | (40,277 | ) | |||
| Amount before income tax effect | (81,234 | ) | 533,769 | |||
| Income tax effect | 26,443 | (164,000 | ) | |||
| Total | (54,790 | ) | 369,769 | |||
| Share of other comprehensive income in affiliates accounted for using the equity method: | ||||||
| Gains (losses) arising during the year | 311,154 | 403,653 | ||||
| Reclassification adjustments to profits (losses) | (6,553 | ) | (25,207 | ) | ||
| Total | 304,600 | 378,446 | ||||
| Total other comprehensive income | ¥ | (41,515 | ) | ¥ | 1,744,757 |
–35–
| 5. | Consolidated Statements of Changes in Net Assets |
|---|
For the fiscal year ended March 31, 2023
| I. | Information on the class and number of issued shares and treasury stock | |||||||||
|---|---|---|---|---|---|---|---|---|---|---|
| (Thousand shares) | ||||||||||
| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |
| Number of<br>shares as of<br>April 01, 2022 | Number<br>of shares<br>increased | Number<br>of shares<br>decreased | Number of<br>shares as of<br>March 31, 2023 | Note | ||||||
| Issued shares: | ||||||||||
| Common stock | 13,281,995 | — | 594,284 | 12,687,710 | (Note 1) | |||||
| Total | 13,281,995 | — | 594,284 | 12,687,710 | ||||||
| Treasury stock: | ||||||||||
| Common stock | 667,296 | 594,307 | 597,538 | 664,065 | (Note 2) (Note 3) | |||||
| Total | 667,296 | 594,307 | 597,538 | 664,065 | ||||||
| (Note 1) | The decrease in the number of shares of common stock by 594,284 thousand shares was due to the cancellation of shares. | |||||||||
| --- | --- | |||||||||
| (Note 2) | The increase in the number of shares of common stock held in treasury by 594,307 thousand shares was due to the acquisitions of shares pursuant to provisions of the Articles of Incorporation and the repurchases of shares in<br>response to requests made by shareholders holding shares constituting less than one whole unit. The decrease in the number of shares of common stock held in treasury by 597,538 thousand shares was due to the cancellation of shares, the sale of<br>shares for a performance-based director and officer stock compensation plan using a Board Incentive Plan trust (“BIP trust”), the sales of shares in response to requests made by shareholders holding shares constituting less than one whole<br>unit, the sales of shares by equity method affiliates and a decrease in the number of shares held by equity method affiliates. | |||||||||
| (Note 3) | The number of shares of common stock as of April 01, 2022 and March 31, 2023 includes 31,660 thousand shares and 28,407 thousand shares held by the BIP trust, respectively. For the fiscal year ended March 31,<br>2023, the number of shares held by the BIP trust decreased by 3,252 thousand shares. | |||||||||
| II. | Information on share subscription rights | |||||||||
| --- | --- | |||||||||
| None. | ||||||||||
| --- | ||||||||||
| III. | Information on Cash Dividends | |||||||||
| --- | --- | |||||||||
| (1) | Cash dividends paid in the fiscal year ended March 31, 2023 | |||||||||
| --- | --- | |||||||||
| Date of approval | Type of stock | Total<br>Dividends<br>(in millions of<br>yen) | Dividend<br>per share<br>(in yen) | Dividend record date | Effective date | |||||
| --- | --- | --- | --- | --- | --- | --- | --- | |||
| Annual General Meeting of <br>Shareholders on June 29, 2022 | Common stock | 183,396 | 14.5 | March 31, 2022 | June 30, 2022 | |||||
| Meeting of Board of <br>Directors on November 14, 2022 | Common stock | 197,131 | 16.0 | September 30, 2022 | December 5, 2022 | |||||
| (Note) | The total dividend amount as resolved by the Annual General Meeting of Shareholders on June 29, 2022 includes ¥459 million of dividends on the treasury shares held by the BIP trust, and the total dividend amount as<br>resolved by the Meeting of the Board of Directors on November 14, 2022 includes ¥459 million of dividends on the treasury shares held by the BIP trust. | |||||||||
| --- | --- | |||||||||
| (2) | Dividends the record date for which fell within the fiscal year and the effective date of which was after the<br>fiscal year ended March 31, 2023 | |||||||||
| --- | --- | |||||||||
| Date of approval | Type of stock | Total<br>Dividends<br>(in millions of<br>yen) | Source of<br>dividends | Dividend<br>per share<br>(in yen) | Dividend record<br>date | Effective date | ||||
| --- | --- | --- | --- | --- | --- | --- | --- | --- | ||
| Annual General Meeting of <br>Shareholders on June 29, 2023 | Common stock | 192,859 | Retained<br>earnings | 16.0 | March 31, 2023 | June 30, 2023 | ||||
| (Note) | The total dividend amount includes ¥454 million of dividends on the treasury shares held by the BIP trust. | |||||||||
| --- | --- |
–36–
| IV. | “Change from transaction under common control involving overseas subsidiary” includes the change in<br>capital surplus resulting from the transfer of the GCIB business of MUB to the Bank. |
|---|
For the fiscal year ended March 31, 2024
| I. | Information on the class and number of issued shares and treasury stock | |||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| (Thousand shares) | ||||||||||||||
| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | |||||
| Number of<br>shares as of<br>April 01, 2023 | Number of<br>shares<br>increased | Number of<br>shares<br>decreased | Number of<br>shares as of<br>March 31, 2024 | Note | ||||||||||
| Issued shares: | ||||||||||||||
| Common stock | 12,687,710 | — | 350,000 | 12,337,710 | (Note 1) | |||||||||
| Total | 12,687,710 | — | 350,000 | 12,337,710 | ||||||||||
| Treasury stock: | ||||||||||||||
| Common stock | 664,065 | 300,677 | 353,220 | 611,522 | (Note 2) (Note 3) | |||||||||
| Total | 664,065 | 300,677 | 353,220 | 611,522 | ||||||||||
| (Note 1) | The decrease in the number of shares of common stock by 350,000 thousand shares was due to the cancellation of shares. | |||||||||||||
| --- | --- | |||||||||||||
| (Note 2) | The increase in the number of shares of common stock held in treasury by 300,677 thousand shares was due to the acquisitions of shares pursuant to provisions of the Articles of Incorporation, the repurchases of shares in<br>response to requests made by shareholders holding shares constituting less than one whole unit and increase in the number of shares held by equity method affiliates. The decrease in the number of shares of common stock held in treasury by<br>353,220 thousand shares was due to the cancellation of shares, the sale of shares for the BIP trust, the sales of shares in response to requests made by shareholders holding shares constituting less than one whole unit and a decrease in the<br>number of shares held by equity method affiliates. | |||||||||||||
| (Note 3) | The number of shares of common stock held in treasury as of April 01, 2023 and March 31, 2024 includes 28,407 thousand shares and 25,769 thousand shares held by the BIP trust, respectively. For the fiscal year<br>ended March 31, 2024, the number of shares held by the BIP trust decreased by 2,638 thousand shares. | |||||||||||||
| II. | Information on share subscription rights | |||||||||||||
| --- | --- | |||||||||||||
| Issuer | Type of<br>share<br>subscription<br>rights | Class of<br>shares to be<br>issued | Number of shares<br>subject to subscription rights | Balance as of March<br>31, 2024<br>(in millions of yen) | ||||||||||
| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |
| As of April<br>1, 2023 | Increase | Decrease | As of March<br>31, 2024 | |||||||||||
| Consolidated subsidiaries | — | — | — | — | — | — | 0 | |||||||
| Total | — | — | — | — | 0 | |||||||||
| III. | Information on Cash Dividends | |||||||||||||
| --- | --- | |||||||||||||
| (1) | Cash dividends paid in the fiscal year ended March 31, 2024 | |||||||||||||
| --- | --- | |||||||||||||
| Date of approval | Type of stock | Total<br>Dividends<br>(in millions of<br>yen) | Dividend<br>per share<br>(in yen) | Dividend record date | Effective date | |||||||||
| --- | --- | --- | --- | --- | --- | --- | --- | |||||||
| Annual General Meeting of <br>Shareholders on June 29, 2023 | Common stock | 192,859 | 16.0 | March 31, 2023 | June 30, 2023 | |||||||||
| Meeting of Board of <br>Directors on November 14, 2023 | Common stock | 247,101 | 20.5 | September 30, 2023 | December 5, 2023 | |||||||||
| (Note) | The total dividend amount as resolved by the Annual General Meeting of Shareholders on June 29, 2023 includes ¥454 million of dividends on the treasury shares held by the BIP trust, and the total dividend amount as<br>resolved by the Meeting of the Board of Directors on November 14, 2023 includes ¥529 million of dividends on the treasury shares held by the BIP trust. | |||||||||||||
| --- | --- |
–37–
| (2) | Dividends the record date for which fell within the fiscal year and the effective date of which was after the<br>fiscal year ended March 31, 2024 |
|---|
The following matters relating to dividends are submitted to shareholder vote at the Annual General Meeting of Shareholders scheduled to be held on June 27, 2024
| Date of approval<br>(proposed) | Type of stock | Total<br>Dividends<br>(in millions of<br>yen) | Source of<br>dividends | Dividend<br>per share<br>(in yen) | Dividend record date | Effective date | |||
|---|---|---|---|---|---|---|---|---|---|
| Annual General Meeting of <br>Shareholders on June 27, 2024 <br>(scheduled) | Common<br>stock | 240,937 | Retained<br>earnings | 20.5 | March 31, 2024 | June 28, 2024 | |||
| (Note) | The total dividend amount includes ¥528 million of dividends on the treasury shares held by the BIP trust. | ||||||||
| --- | --- |
–38–
| 6. | Consolidated Statements of Cash Flows |
|---|---|
| I. | “Cash and cash equivalents” compared to items presented on the consolidated balance sheet<br> |
| --- | --- |
The amount of “Cash and cash equivalents” is equal to the amount of “Cash and due from banks” on the consolidated balance sheet.
| II. | Major components of assets and liabilities of subsidiaries newly consolidated through share acquisitions<br> |
|---|
For the fiscal year ended March 31, 2024
Components of the assets and liabilities of each of HC Consumer Finance Philippines, Inc. (“HC Philippines”) and PT Home Credit Indonesia (“HC Indonesia”) at the time of consolidation as a result of acquisition of its shares and a reconciliation between the acquisition cost and the net payment for the acquisition are as follows:
HC Philippines
| (in millions of yen) | |||
|---|---|---|---|
| Assets | ¥ | 137,576 | |
| Liabilities | (96,151 | ) | |
| Foreign currency translation adjustments | 220 | ||
| Goodwill | 28,195 | ||
| Acquisition cost | 69,841 | ||
| Cash and cash equivalents of HC Philippines | (5,736 | ) | |
| Payments for acquisition of subsidiaries’ equity affecting the scope of<br>consolidation | ¥ | 64,104 |
HC Indonesia
| (in millions of yen) | |||
|---|---|---|---|
| Assets | ¥ | 44,177 | |
| Liabilities | (30,493 | ) | |
| Foreign currency translation adjustments | 93 | ||
| Goodwill | 18,034 | ||
| Acquisition cost | 31,811 | ||
| Cash and cash equivalents of HC Indonesia | (2,894 | ) | |
| Payments for acquisition of subsidiaries’ equity affecting the scope of<br>consolidation | ¥ | 28,917 |
Components of the assets and liabilities of AlbaCore Capital Limited (“AlbaCore”) at the time of consolidation as a result of acquisition of its shares and a reconciliation between the acquisition cost and the net payment for the acquisition are as follows:
| (in millions of yen) | |||
|---|---|---|---|
| Assets | ¥ | 33,583 | |
| Liabilities | (12,187 | ) | |
| Goodwill | 63,063 | ||
| Non-controlling interests | (17,214 | ) | |
| Acquisition cost | 67,244 | ||
| Acquisition cost payable | (18,660 | ) | |
| Cash and cash equivalents of AlbaCore | (6,448 | ) | |
| Payments for acquisition of subsidiaries’ equity affecting the scope of<br>consolidation | ¥ | 42,135 |
–39–
| III. | Major components of assets and liabilities of subsidiary deconsolidated as a result of sale of shares<br> |
|---|
For the fiscal year ended March 31, 2023
Components of the assets and liabilities of MUB, which was deconsolidates as a result of the sale of its shares to U.S. Bancorp,at the time of the sale are as follows:
| (in millions of yen) | |||
|---|---|---|---|
| Assets | ¥ | 13,639,869 | |
| Liabilities | (12,981,874 | ) | |
| Gains on sales of shares of subsidiaries | 699,509 | ||
| Consideration received for sale of shares | 1,357,504 | ||
| Accounts receivable | (432,381 | ) | |
| Securities | (276,119 | ) | |
| Cash and cash equivalents of MUB | (2,433,758 | ) | |
| Payments for sales of shares of subsidiaries resulting in change in scope of<br>consolidation | ¥ | (1,784,755 | ) |
–40–
| 7. | Leases |
|---|
Operating leases ****
| (1) | Lessee |
|---|
Future lease payments, including interest expenses, under non-cancelable operating leases as of March 31, 2023 and 2024 were as follows:
| (in millions of yen) | ||||
|---|---|---|---|---|
| March 31, 2023 | March 31, 2024 | |||
| Due within one year | ¥ | 40,128 | ¥ | 39,805 |
| Due after one year | 102,509 | 104,382 | ||
| Total | ¥ | 142,637 | ¥ | 144,187 |
| (Note) | The above table does not include lease payments that are booked as “Right-of-use asset” at overseas subsidiaries. | |||
| --- | --- | |||
| (2) | Lessor | |||
| --- | --- |
Future lease receivables, including interest receivables, under non-cancelable operating leases as of March 31, 2023 and 2024 were as follows:
| (in millions of yen) | ||||
|---|---|---|---|---|
| March 31, 2023 | March 31, 2024 | |||
| Due within one year | ¥ | 7,232 | ¥ | 11,254 |
| Due after one year | 66,627 | 70,405 | ||
| Total | ¥ | 73,860 | ¥ | 81,660 |
–41–
| 8. | Financial Instruments |
|---|---|
| I. | Disclosure on financial instruments |
| --- | --- |
| (1) | Policy for financial instruments |
| --- | --- |
MUFG provides comprehensive financial services such as deposit-taking and lending services, securities investment and other securities services and foreign exchange services.
In order to prevent these businesses from being negatively affected by fluctuations in interest and foreign exchange rates and other market conditions, MUFG conducts asset and liability management (“ALM”) by adjusting market exposure and the balance between short-term and long-term assets and liabilities. To do so, among other things, MUFG raises capital from the market and hedges risks through derivative transactions.
| (2) | Nature and extent of risks arising from financial instruments |
|---|
MUFG holds various types of financial instruments such as loans, securities, and derivatives and is thus exposed to credit and market risks.
Credit risk is the risk of loss on receivables such as loans due to nonperformance of contractual obligations caused by factors such as deterioration in the financial condition of a borrower.
Market risk mainly arises from changes in domestic and overseas interest rates, foreign exchange rates, and fluctuations in market prices of stocks and bonds. For example, an increase in domestic and overseas interest rates would reduce the value of MUFG’s bond portfolio consisting of government and other bonds, and a rise in yen would reduce the value of foreign-currency-denominated securities and other assets when converted into yen. MUFG also invests in marketable equity securities, and a fall in the market price would decrease the fair value of these securities. As part of MUFG’s trading and ALM activities, MUFG holds derivative products such as interest rate swaps. A significant change in foreign exchange or interest rates may cause a significant fluctuation in the fair value of these derivative products. In conducting derivative transactions for purposes of hedging risks, MUFG hedges against interest rate risks associated with instruments including fixed rate deposits, loans and bonds, floating rate deposits and loans, and forecasted transactions involving fixed rate deposits and loans through designated hedging methods including interest rate swaps. MUFG hedges against exchange rate fluctuation risks associated with instruments such as foreign currency denominated monetary claims and liabilities through designated hedging methods including currency swap transactions and forward exchange contracts. In lieu of effectiveness determination, MUFG designs hedging activities so that the material terms of the designated hedging instruments are almost identical to those of the hedged items. In limited circumstances, the effectiveness of hedging activities is assessed by verification of the correlation between factors that cause fluctuations in interest rates.
| (3) | Risk management relating to financial instruments |
|---|---|
| (A) | Credit risk management |
| --- | --- |
MUFG regularly monitors and assesses the credit portfolios of MUFG’s group companies and uses credit rating and asset evaluation and assessment systems to ensure timely and proper evaluation of credit risk.
Within the basic framework of MUFG’s credit risk control system based on MUFG’s credit risk control rules, each group company has established a consolidated and global credit risk control system while MUFG monitors group-wide credit risk. MUFG provides training and advice when necessary in addition to monitoring credit risk management conducted by MUFG’s group companies.
In screening individual transactions and managing credit risk, each major group company has in place a check-and-balance system in which the credit administration section and the business promotion section are kept separate.
MUFG holds regular management committee meetings to ensure full reporting and discussion on important credit risk management and administration matters.
In addition to providing check-and-balance between different functions and conducting management level deliberations, the audit department also undertakes to validate credit operations to ensure appropriate credit administration.
–42–
| (B) | Market risk management |
|---|---|
| (a) | Risk management system |
| --- | --- |
MUFG has adopted an integrated system to manage market risks associated with market activities for trading purposes (trading activities) and non-trading market activities (banking activities). MUFG monitors group-wide market risk while each of the major group companies has established a market risk management system on a consolidated and global basis.
At each of the major group companies, checks and balances are maintained through a system in which the back office (operating and administrative section) and the middle office (risk control section) operate independently from the front office (market department). As part of risk control by management,the Executive Committee or another appropriate body establishes the framework for the market risk management system and defines responsibilities relating to market operations. MUFG allocates economic capital corresponding to the levels of market risk within the scope of MUFG’s capital base, and establishes quantitative limits on market risk based on the allocated economic capital as well as limits on losses to contain MUFG’s exposure to risks and losses within a certain range.
| (b) | Market risk management |
|---|
The status of the group-wide exposure to market risk and compliance with quantitative limits on market risk and losses at each major group company is reported daily to the Chief Risk Officer of MUFG, while the status of each major group company’s exposure to market risk and compliance with quantitative limits on market risk and losses is reported daily to the group company’s risk management officer. MUFG and each major group company conduct comprehensive analyses on risk profiles, including stress testing, and the results are regularly reported to their respective ALM Committees and Corporate Risk Management Committees.
MUFG’s major group companies manage risks by hedging against interest rate and exchange rate fluctuation risks associated with marketable assets and liabilities with various hedging transactions using marketable securities and derivatives as appropriate. With respect to trading account transactions and their administration, MUFG documents the processes and periodically verifies through internal audits that the valuation methods and management of such transactions are appropriate.
| (c) | Market risk measurement model |
|---|
Since the daily variation in market risk is significantly greater than that in other types of risks, MUFG measures and manages market risk primarily using Value at Risk (“VaR”), Value.
Market risk for both trading and banking activities (excluding strategic equity securities) is measured using a market risk measurement model. The principal method used for the model is the historical simulation method (Trading activities: holding period — 1 business day; confidence interval — 95%; and observation period — 250 business days) (Banking activities: holding period — 10 business days; confidence interval — 99%; and observation period — 701 business days).
* The historical simulation method calculates VaR amounts by estimating the profit and loss on the current portfolio by applying actual fluctuations in market rates and prices that occurred over a fixed period in the past. The noted features of the historical simulation method include the ability to directly reflect the characteristics of the market fluctuations. However, VaR may not be able to ascertain risks when market volatility reaches abnormal levels because they measure market risks with a fixed event probability calculated statistically based on past market changes.
–43–
| (d) | Quantitative information in respect of market risk |
|---|---|
| (i) | Amount of market risk associated with trading activities |
| --- | --- |
The amount of consolidated market risk associated with trading activities across the Group was ¥2.8 billion and ¥1.7 billion as of March 31, 2023 and 2024, respectively.
| (ii) | Amount of market risk associated with banking activities |
|---|
The amount of consolidated market risk associated with banking activities (excluding strategic equity securities) across the Group was ¥974.0 billion and ¥558.4 billion as of March 31, 2023 and 2024, respectively. As appropriate identification of interest rate risk is vital to banking activities (excluding strategic equity securities), the risk is managed based on the following assumptions for appropriate measurement of core deposits and prepayments on loans and deposits.
For a certain portion of the deposits without contractual maturities (so-called core deposits), interest rate risk is recognized by allocating maturities of various terms (no longer than 10 years) according to the features of deposits, taking into account the results of a statistical analysis using data on changes in the balance by product, expected deposit interest rates and other business judgments. The amount of core deposits and the method of allocating maturities are reviewed on a regular basis. Meanwhile, deposits and loans with contractual maturities involve risks associated with premature repayment or cancellation. These risks are reflected in interest rate risks by estimating the ratio of cancellations through a statistical analysis based on factors including interest rate fluctuations and actual repayments and cancellations.
| (iii) | Risk of strategic equity portfolio |
|---|
With respect to the strategic equity securities (publicly traded) held by MUFG as of March 31, 2023 and 2024, MUFG estimates that the total market value of such securities would fluctuate by ¥2.2 billion and ¥1.9 billion per one-point change in TOPIX.
| (e) | Limitations of the market risk measurement model and related measures |
|---|---|
| VaR,which is measured using a market risk measurement model,is calculated using the historical simulation<br>method which estimates the loss on the current portfolio by applying actual fluctuations in market rates and prices over a fixed period in the past. Actual losses may exceed VaR in the event, for example, that the market fluctuates to a degree not<br>accounted for in the observation period, or that the correlations among various risk factors, including interest rates and foreign currency exchange rates, deviate from those in the past period. | |
| --- | |
| As a means to measure potential losses that the current market risk measurement model is not designed to<br>capture, MUFG measures potential losses by applying various scenarios, including those which take into account estimates regarding future market volatility (stress testing) in order to better identify risks. | |
| --- | |
| MUFG also utilizes back-testing to verify the effectiveness of its market risk measurement model in order to<br>better ensure sufficient accuracy of the model. | |
| --- |
–44–
| (C) | Management of liquidity risk associated with funding activities |
|---|
MUFG’s major group companies strive to secure appropriate liquidity in both yen and foreign currencies by managing the sources of funding and liquidity gap, liquidity-supplying products such as commitment lines, as well as buffer assets that help maintain liquidity level.
Specifically, the Board of Directors, etc. provide the framework for liquidity risk management, operate businesses at various stages according to the urgency of funding needs and manage liquidity risk at each such stage. The department responsible for risk management is designed to perform checking functions independent of other departments. The department reports to the ALM Committee, the Risk Management Committee and other appropriate bodies on the results of the performance of its responsibilities such as evaluation of funding urgency and monitoring of compliance with quantitative limits. The department responsible for funding management performs funding and management activities, and regularly reports the current funding status and forecast as well as the current liquidity risk status to the department responsible for risk management and other appropriate bodies such as the ALM Committee.
| (4) | Supplementary explanation of the fair value of financial instruments |
|---|
Since certain assumptions are applied in measuring the fair value of financial instruments, such fair value may vary if different assumptions are used.
| II. | Matters concerning fair value of financial instruments and breakdown by input level |
|---|
The amounts on the consolidated balance sheet, the fair value of financial instruments, the difference between them as well as a breakdown of financial instruments by input level are as follows.
The following tables do not include investment trusts which are accounted for in accordance with Paragraphs 24-3 and 24-9 of ASBJ Implementation Guidance No. 31, “Implementation Guidance on Accounting Standard for Fair Value Measurement” (ASBJ, June 17, 2021) (“Implementation Guidance on Fair Value Measurement”), stocks with no market price, etc. and investments in partnerships and others which are accounted for in accordance with Paragraph 24-16 of the Implementation Guidance on Fair Value Measurement. (See Note (*2) to each of the tables in (1), (Note 3) and (Note 4) below.)
The fair values of financial instruments are classified into the following three levels depending on the observability and significance of the input used in the fair value calculation.
Level 1: Fair value determined based on (unadjusted) quoted prices in active markets for identical assets or liabilities
Level 2: Fair value determined based on directly or indirectly observable inputs other than the Level 1 inputs
Level 3: Fair value determined based on significant unobservable inputs
Where multiple inputs are used with a significant impact on the fair value calculation, the fair value of a financial instrument is classified based on the lowest of the priority levels to which any of those inputs belongs.
–45–
| (1) | Financial assets and liabilities at fair value on the consolidated balance sheets |
|---|
As of March 31, 2023
| (in millions of yen) | |||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|
| Category | Amount on<br>consolidated<br>balance sheet | ||||||||||
| Level1 | Level2 | Level3 | Total | ||||||||
| Monetary claims bought (*1) | — | 792,625 | 591,530 | 1,384,156 | |||||||
| Trading assets | 3,665,466 | 5,339,485 | 112,109 | 9,117,060 | |||||||
| Money held in trust (Trading purpose / Other) | — | 1,196,190 | 8,272 | 1,204,462 | |||||||
| Securities<br>(Available-for-sale securities) | 41,033,674 | 21,355,832 | 400,105 | 62,789,613 | |||||||
| Domestic equity securities | 4,246,104 | 23,429 | 2,389 | 4,271,923 | |||||||
| Government bonds | 23,292,055 | 226,776 | — | 23,518,832 | |||||||
| Municipal bonds | — | 2,759,940 | — | 2,759,940 | |||||||
| Short-term corporate bonds | — | — | — | — | |||||||
| Corporate bonds | — | 3,473,132 | — | 3,473,132 | |||||||
| Foreign equity securities | 364,746 | 4,484 | 39,147 | 408,377 | |||||||
| Foreign bonds | 13,021,062 | 8,686,933 | 2,165 | 21,710,161 | |||||||
| Investment trusts (*2) | 105,025 | 6,094,265 | 2,189 | 6,201,481 | |||||||
| Other securities | 4,679 | 86,870 | 354,213 | 445,764 | |||||||
| Total assets | 44,699,141 | 28,684,133 | 1,112,017 | 74,495,292 | |||||||
| Trading liabilities | 5,246,139 | 102,380 | — | 5,348,520 | |||||||
| Borrowed money (FVO) (*3) | — | 181,414 | — | 181,414 | |||||||
| Bonds payable (FVO) (*3) | — | 195,802 | 102,130 | 297,933 | |||||||
| Total liabilities | 5,246,139 | 479,596 | 102,130 | 5,827,867 | |||||||
| Derivatives (*4) (*5) (*6) | (34,824 | ) | (1,052,077 | ) | 316,707 | (770,193 | ) | ||||
| Interest rate-related derivatives | 4,362 | (1,164,150 | ) | 198,796 | (960,990 | ) | |||||
| Currency-related derivatives | 2,229 | 91,679 | 12,696 | 106,605 | |||||||
| Equity-related derivatives | (40,343 | ) | (10,682 | ) | 21,110 | (29,914 | ) | ||||
| Bond-related derivatives | (1,073 | ) | 30,192 | 82,566 | 111,685 | ||||||
| Commodity-related derivatives | — | — | 90 | 90 | |||||||
| Credit-related derivatives | — | 883 | 1,082 | 1,965 | |||||||
| Other derivatives | — | — | 364 | 364 | |||||||
| (*1) | Monetary claims bought consists of securitized products, etc. of ¥1,384,156 million accounted for in<br>the same manner as available-for-sale securities. | ||||||||||
| --- | --- | ||||||||||
| (*2) | The amount of investment trusts which are accounted for in accordance with Paragraph 24-3 and 24-9 of the Implementation Guidance on Fair Value Measurement is not included in the table above. The amount of such investment trusts on the consolidated balance<br>sheet is ¥563,208 million of financial assets. | ||||||||||
| --- | --- | ||||||||||
| (*3) | Some overseas subsidiaries apply the fair value option. | ||||||||||
| --- | --- | ||||||||||
| (*4) | Derivative transactions in trading assets and liabilities as well as other assets and liabilities are shown<br>together. Assets or liabilities arising from derivative transactions are presented on a net basis, and net liabilities in the aggregate are presented in minus. | ||||||||||
| --- | --- | ||||||||||
| (*5) | Derivative transactions to which hedge accounting is applied are reported on the consolidated balance sheet at<br>¥(570,813) million. | ||||||||||
| --- | --- | ||||||||||
| (*6) | Transactions to which hedge accounting is applied include interest rate swap transactions designated as hedging<br>instruments for the purpose of fixing cash flows from hedged loans and other assets. Deferred hedge accounting is applied to these transactions. Of these hedge relationships, all hedge relationships to which “Practical Solution on the Treatment<br>of Hedge Accounting for Financial Instruments that Reference LIBOR” (ASBJ PITF No.40, March 17, 2022) applies are accounted for under the standard. | ||||||||||
| --- | --- |
–46–
As of March 31, 2024
| (in millions of yen) | ||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Category | Amount on<br>consolidated<br>balance sheet | |||||||||||
| Level1 | Level2 | Level3 | Total | |||||||||
| Monetary claims bought (*1) | — | 643,385 | 1,248,256 | 1,891,641 | ||||||||
| Trading assets | 5,123,276 | 5,193,024 | 74,665 | 10,390,967 | ||||||||
| Money held in trust (Trading purpose / Other) | — | 1,182,414 | 5,864 | 1,188,278 | ||||||||
| Securities<br>(Available-for-sale securities) | 38,777,821 | 19,187,848 | 603,542 | 58,569,211 | ||||||||
| Domestic equity securities | 5,074,443 | 24,554 | 2,694 | 5,101,691 | ||||||||
| Government bonds | 21,336,858 | 28,382 | — | 21,365,241 | ||||||||
| Municipal bonds | — | 1,045,990 | — | 1,045,990 | ||||||||
| Short-term corporate bonds | — | — | — | — | ||||||||
| Corporate bonds | — | 2,663,412 | — | 2,663,412 | ||||||||
| Foreign equity securities | 628,522 | 44,455 | 36,587 | 709,565 | ||||||||
| Foreign bonds | 11,412,226 | 9,575,971 | 2,285 | 20,990,483 | ||||||||
| Investment trusts (*2) | 321,189 | 5,743,840 | 2,218 | 6,067,249 | ||||||||
| Other securities | 4,580 | 61,239 | 559,756 | 625,577 | ||||||||
| Total assets | 43,901,097 | 26,206,672 | 1,932,328 | 72,040,098 | ||||||||
| Trading liabilities | 5,650,311 | 183,539 | — | 5,833,851 | ||||||||
| Borrowed money (FVO) (*3) | — | 126,251 | — | 126,251 | ||||||||
| Bonds payable (FVO) (*3) | — | 93,700 | 26,411 | 120,111 | ||||||||
| Other liabilities | — | — | 17,413 | 17,413 | ||||||||
| Total liabilities | 5,650,311 | 403,491 | 43,824 | 6,097,627 | ||||||||
| Derivatives (*4) (*5) (*6) | (14,670 | ) | (836,182 | ) | 138,640 | (712,212 | ) | |||||
| Interest rate-related derivatives | (6,713 | ) | (881,512 | ) | 39,723 | (848,502 | ) | |||||
| Currency-related derivatives | 9,518 | 33,389 | 10,274 | 53,183 | ||||||||
| Equity-related derivatives | (17,465 | ) | (28,978 | ) | 11,688 | (34,756 | ) | |||||
| Bond-related derivatives | (9 | ) | 43,350 | 77,444 | 120,785 | |||||||
| Commodity-related derivatives | — | — | (45 | ) | (45 | ) | ||||||
| Credit-related derivatives | — | (2,437 | ) | (351 | ) | (2,789 | ) | |||||
| Other derivatives | — | 4 | (92 | ) | (88 | ) | ||||||
| (*1) | Monetary claims bought consists of securitized products, etc. of ¥1,891,641 million accounted for in<br>the same manner as available-for-sale securities. | |||||||||||
| --- | --- | |||||||||||
| (*2) | The amount of investment trusts which are accounted for in accordance with Paragraphs 24-3 and 24-9 of the Implementation Guidance on Fair Value Measurement is not included in the table above. The amount of such investment trusts on the consolidated balance<br>sheet is ¥817,460 million of financial assets. | |||||||||||
| --- | --- | |||||||||||
| (*3) | Some overseas subsidiaries apply the fair value option. | |||||||||||
| --- | --- | |||||||||||
| (*4) | Derivative transactions in trading assets and liabilities as well as other assets and liabilities are shown<br>together. Assets or liabilities arising from derivative transactions are presented on a net basis, and net liabilities in the aggregate are presented in minus. | |||||||||||
| --- | --- | |||||||||||
| (*5) | Derivative transactions to which hedge accounting is applied are reported on the consolidated balance sheet at<br>¥(1,310,705) million. | |||||||||||
| --- | --- | |||||||||||
| (*6) | Transactions to which hedge accounting is applied include interest rate swap transactions designated as hedging<br>instruments for the purpose of fixing cash flows from hedged loans and other assets. Deferred hedge accounting is applied to these transactions. Of these hedge relationships, all hedge relationships to which “Practical Solution on the Treatment<br>of Hedge Accounting for Financial Instruments that Reference LIBOR” (ASBJ PITF No.40, March 17, 2022) applies are accounted for under the standard. | |||||||||||
| --- | --- |
–47–
| (2) | Financial assets and liabilities which are not stated at fair value on the consolidated balance sheet<br> |
|---|
Cash and due from banks, Call loans and bills bought, Receivables under resale agreements, Receivables under securities borrowing transactions, Foreign exchanges (assets and liabilities), Call money and bills sold, Payables under repurchase agreements, Payables under securities lending transactions, Commercial papers, Due to trust accounts and Other liabilities are not included in the following tables since they are predominantly short-term (within one year), and their fair values approximate their carrying amounts.
As of March 31, 2023
| (in millions of yen) | |||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Category | Fair value | Amount on<br>consolidated<br>balance sheet | Difference | ||||||||||
| Level 1 | Level 2 | Level 3 | Total | ||||||||||
| Monetary claims bought (*1) | — | — | 5,889,213 | 5,889,213 | 5,941,029 | (51,815 | ) | ||||||
| Money held in trust (other / held to maturity) | — | 80,433 | — | 80,433 | 82,557 | (2,123 | ) | ||||||
| Securities (held to maturity) | 13,526,750 | 5,354,471 | — | 18,881,222 | 18,965,357 | (84,135 | ) | ||||||
| Government bonds | 13,526,750 | — | — | 13,526,750 | 13,513,972 | 12,778 | |||||||
| Municipal bonds | — | 1,139,490 | — | 1,139,490 | 1,144,825 | (5,334 | ) | ||||||
| Short-term corporate bonds | — | — | — | — | — | — | |||||||
| Corporate bonds | — | 393,783 | — | 393,783 | 393,214 | 568 | |||||||
| Foreign bonds | — | 3,821,197 | — | 3,821,197 | 3,913,345 | (92,148 | ) | ||||||
| Other securities | — | — | — | — | — | — | |||||||
| Loans and bills discounted (*2) (*3) | — | 225,701 | 108,219,822 | 108,445,523 | 108,162,952 | 282,570 | |||||||
| Total assets | 13,526,750 | 5,660,606 | 114,109,035 | 133,296,393 | 133,151,897 | 144,495 | |||||||
| Deposits | — | 213,744,141 | — | 213,744,141 | 213,609,501 | 134,639 | |||||||
| Negotiable certificates of deposit | — | 13,667,733 | — | 13,667,733 | 13,632,559 | 35,173 | |||||||
| Borrowed money | — | 24,579,207 | — | 24,579,207 | 24,674,925 | (95,717 | ) | ||||||
| Bonds payable (*3) | — | 14,879,435 | — | 14,879,435 | 15,410,786 | (531,351 | ) | ||||||
| Total liabilities | — | 266,870,518 | — | 266,870,518 | 267,327,774 | (457,255 | ) | ||||||
| (*1) | Monetary claims bought includes securitized products, etc. of ¥2,554,723 million accounted for in the<br>same manner as securities held to maturity. | ||||||||||||
| --- | --- | ||||||||||||
| (*2) | General and specific allowances for credit losses of ¥983,319 million corresponding to loans are<br>deducted. However, with respect to items other than loans, the amount stated on the consolidated balance sheet is shown since the amount of allowance for credit losses corresponding to these items is insignificant. | ||||||||||||
| --- | --- | ||||||||||||
| (*3) | With respect to interest rate swaps to which special hedge accounting treatment is applied to offset<br>fluctuations in the market value of the hedged items and forward exchange contracts, etc. to which the allocation method is applied, the fair value of such interest rate swaps and such currency swaps is included in the fair value of the hedged<br>items. Of these hedge relationships, all hedge relationships to which “Practical Solution on the Treatment of Hedge Accounting for Financial Instruments that Reference LIBOR” (ASBJ PITF No.40, March 17, 2022) applies are accounted for<br>under the standard. | ||||||||||||
| --- | --- |
–48–
As of March 31, 2024
| (in millions of yen) | |||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Category | Fair value | Amount on<br>consolidated<br>balance sheet | Difference | ||||||||||
| Level 1 | Level 2 | Level 3 | Total | ||||||||||
| Monetary claims bought (*1) | — | — | 5,890,505 | 5,890,505 | 5,895,337 | (4,831 | ) | ||||||
| Money held in trust (other / held to maturity) | — | 79,931 | — | 79,931 | 82,537 | (2,605 | ) | ||||||
| Securities (held to maturity) | 14,522,296 | 7,456,590 | — | 21,978,887 | 22,262,495 | (283,607 | ) | ||||||
| Government bonds | 14,522,296 | 30,000 | — | 14,552,296 | 14,643,055 | (90,759 | ) | ||||||
| Municipal bonds | — | 1,984,901 | — | 1,984,901 | 1,999,181 | (14,279 | ) | ||||||
| Short-term corporate bonds | — | — | — | — | — | — | |||||||
| Corporate bonds | — | 665,990 | — | 665,990 | 668,174 | (2,184 | ) | ||||||
| Foreign bonds | — | 4,775,698 | — | 4,775,698 | 4,952,083 | (176,384 | ) | ||||||
| Other securities | — | — | — | — | — | — | |||||||
| Foreign bonds (amortized at cost in accordance with IFRS9) | 7,974 | 14,705 | — | 22,680 | 21,930 | 749 | |||||||
| Loans and bills discounted (*2) (*3) | — | 251,277 | 115,456,405 | 115,707,682 | 115,546,436 | 161,245 | |||||||
| Total assets | 14,530,271 | 7,802,505 | 121,346,910 | 143,679,687 | 143,808,736 | (129,049 | ) | ||||||
| Deposits | — | 224,252,054 | — | 224,252,054 | 224,035,035 | 217,019 | |||||||
| Negotiable certificates of deposit | — | 16,623,704 | — | 16,623,704 | 16,555,451 | 68,252 | |||||||
| Borrowed money | — | 25,799,730 | — | 25,799,730 | 25,829,710 | (29,980 | ) | ||||||
| Bonds payable(*3) | — | 15,796,677 | — | 15,796,677 | 16,183,186 | (386,509 | ) | ||||||
| Total liabilities | — | 282,472,193 | — | 282,472,193 | 282,603,383 | (131,190 | ) | ||||||
| (*1) | Monetary claims bought include securitized products, etc. of ¥2,581,465 million accounted for in the<br>same manner as securities held to maturity. | ||||||||||||
| --- | --- | ||||||||||||
| (*2) | General and specific allowances for credit losses of ¥1,279,223 million corresponding to loans are<br>deducted. However, with respect to items other than loans, the amount stated on the consolidated balance sheet is shown since the amount of allowance for credit losses corresponding to these items is insignificant. | ||||||||||||
| --- | --- | ||||||||||||
| (*3) | With respect to interest rate swaps to which special hedge accounting treatment is applied to offset<br>fluctuations in the market value of the hedged items, the fair value of such interest rate swaps is included in the fair value of the hedged items. Of these hedge relationships, all hedge relationships to which “Practical Solution on the<br>Treatment of Hedge Accounting for Financial Instruments that Reference LIBOR” (ASBJ PITF No.40, March 17, 2022) applies are accounted for under the standard. | ||||||||||||
| --- | --- |
–49–
| (Note 1) | Description of the valuation techniques and inputs used to determine fair value |
|---|
Monetary claims bought
The fair value of monetary claims bought is determined using prices obtained from third-party vendors (broker-dealers, etc.) or the prices estimated based on internal models.
With respect to some securitized products backed by general corporate loans, the fair value is measured by considering the estimated fair value amounts determined using projected cash flows through an analysis of the underlying loans, probability of default, prepayment rates, etc. and discounting the projected cash flows using discount rates reflecting the liquidity premium based on historical market data and the prices obtained from independent broker-dealers. These products are classified into Level 3.
For other securitized products, the fair value is determined based on the prices obtained from independent third parties after considering the results of periodic confirmation of the current status of these products, including price comparison with similar products, time series data comparison of the same product, and analysis of consistency with publicly available market indices. These products are classified into Level 2 or Level 3 depending on the inputs used for the prices obtained from independent third parties.
For certain monetary claims bought for which these methods do not apply, the fair value is measured based on either the present value using projected future cash flows through an analysis of prepayment rates, etc., and discounting the project cash flows at the market interest rates as of the valuation date with certain adjustments, or is the carrying amount if their fair value approximates such carrying amount from their qualitative viewpoint. If these monetary claims bought are measured at present value, these monetary claims bought are classified into Level 2 or, if they are short-term and their fair value approximates the carrying amount, then the carrying amount is presented as their fair value, and they are classified into Level 3.
Trading assets and liabilities
Securities such as bonds that are held for trading purposes are classified as Level 1 if prices quoted by stock exchanges are available in an active market, and as Level 2 if the fair value is determined based on either the present value of the expected future cash flows discounted at an interest rate based on the market interest rates as of the date of evaluation with certain adjustments or prices quoted by the financial institutions from which these securities are purchased.
Money held in trust
For securities that are part of trust property in an independently managed monetary trust with the primary purpose to manage securities, the fair value is determined based on the prices quoted by the financial institutions from which these securities are purchased, and these securities are classified into Level 2 depending on the fair value hierarchy of the component assets.
See “Money Held in Trust” for notes on money held in trust by category based on each purpose of holding the money held in trust.
Securities
The fair value of equity securities is determined based on the prices quoted by stock exchanges and equity securities are primarily classified into Level 1 as the quoted prices are available in active markets. The fair value of bonds is determined based on the market price or the price quoted by the financial institutions from which they are purchased or based on the price reasonably calculated using internal models. Government bonds are primarily classified into Level 1, other bonds are primarily classified into Level 2, and foreign equity securities with maturity as well as preferred securities included in Other securities are primarily classified into Level 3.
For privately placed guaranteed bonds held by MUFG’s bank subsidiaries, the fair value is determined based on the present value of expected future cash flows, which are adjusted to reflect credit risk, the amounts expected to be collected from collateral and guarantees and guarantee fees and discounted at an interest rate based on the market interest rates as of the date of evaluation with certain adjustments. These bonds are classified into Level 2 depending on credit risk, etc.
The fair value of investment trusts is determined based on the closing market price or other publicly available net asset value. Listed investment trusts and listed real estate investment trusts, which have closing market prices, are primarily classified into Level 1, and other investment trusts are primarily classified into Level 2. Investment trusts which are accounted for at net asset value in accordance with Paragraphs 24-3 and 24-9 of the Implementation Guidance on Fair Value Measurement are not classified into any fair value hierarchy.
See “Securities” for notes on securities by category based on each purpose of holding the securities.
–50–
Loans and bills discounted
With respect to loans, for each category of loans based on their types, credit ratings and maturity periods, the fair value is determined based on the present value of expected future cash flows, which are adjusted to reflect default risk and the amount expected to be collected from collateral and guarantees and discounted at an interest rate based on the market interest rates as of the date of evaluation with certain adjustments. These loans are classified into Level 3. For certain loans with floating interest rates, the carrying amount is presented as the fair value, as the fair value approximates such carrying amount, unless the creditworthiness of the borrower has changed significantly since the loan origination. These loans are classified as Level 3.
For receivables from bankrupt, virtually bankrupt and likely to become bankrupt borrowers, credit loss is estimated based on factors such as the present value of expected future cash flows or the amount expected to be collected from collateral and guarantees. Since the fair value of these items approximates the net amount of receivables after the deduction of allowance for credit losses on the consolidated balance sheet as of the consolidated balance sheet date, such amount is presented as the fair value. These receivables are classified into Level 3. The fair value of loans qualifying for special hedge accounting treatment of interest rate swaps or the allocation method applicable to forward exchange contracts and other contracts under Generally Accepted Accounting Principles in Japan (“JGAAP”) reflects the fair value of such interest rate swaps or forward exchange contracts and other contracts.
Deposits and Negotiable certificates of deposit
For demand deposits, the amount payable on demand as of the consolidated balance sheet date (i.e., the carrying amount) is considered to be the fair value. For floating rate time deposits, the carrying amount is presented as the fair value, as the fair value approximates such carrying amount because the market interest rates are reflected in such deposits within a short time period. The fair value of most fixed rate time deposits is the present value of expected future cash flows grouped by certain maturity periods discounted at the market interest rates. These are classified into Level 2.
Borrowed money
For floating rate borrowings, the carrying amount is presented as the fair value, as the fair value approximates such carrying amount. This is on the basis that the interest rates on such floating rate borrowings reflect the market interest rates in a short time period and that there has been no significant change in the creditworthiness of MUFG or MUFG’s consolidated subsidiaries after such borrowings were made. For fixed rate borrowings, the fair value is calculated as the present value of expected future cash flows from these borrowings grouped by certain maturity periods, which are discounted at the market interest rates reflecting the premium applicable to MUFG or MUFG’s consolidated subsidiaries. These are classified as Level 2.
Bonds payable
The fair value of corporate bonds issued by MUFG and MUFG’s consolidated subsidiaries is determined based on their market price. For certain corporate bonds, the fair value is calculated as the present value of expected future cash flows discounted at the market interest rates. For floating rate corporate bonds without market prices, the carrying amount of such bonds is presented as the fair value, as the fair value approximates such carrying amount. This is on the basis that the interest rates on such floating rate corporate bonds reflect the market interest rates in a short time period and that there has been no significant change in the creditworthiness of MUFG or MUFG’s consolidated subsidiaries after the issuance. For fixed rate corporate bonds without market prices, the fair value is the present value of expected future cash flows from these borrowings, which are discounted at the market interest rates reflecting the premium applicable to MUFG or MUFG’s consolidated subsidiaries. These are classified as Level 2. The fair value of corporate bonds qualifying for special hedge accounting treatment of interest rate swaps under JGAAP reflects the fair value of such interest rate swaps.
For structured bonds issued by some overseas subsidiaries, the fair value option is applied, and the fair value of structured bonds is calculated based on models. Structured bonds for which observable inputs are used are classified into Level 2. Structured bonds for which significant unobservable inputs are used are classified into Level 3.
–51–
Other liabilities
Contingent consideration associated with a business combination, which is included in other liabilities, is classified as Level 3 as the fair value of such contingent consideration is calculated using the discounted present value method, taking into account future cash flows, the probability of obligation and other factors.
Derivative transactions
Derivative transactions are ones involving interest rates (interest futures, interest options, interest swaps and other transactions), ones involving foreign currencies (currency futures, currency options, currency swaps and other transactions), and ones involving bonds (bond futures, bond future options and other transactions). The fair value of exchange-traded derivative transactions is based on the prices posted by exchanges. The fair value of over-the-counter derivative transactions is based on the discounted present value or amount calculated under the option-price calculation model.
The key inputs used in the valuation techniques for over-the-counter derivative transactions include interest rate yield curves, foreign currency exchange rates and volatility. For over-the-counter derivative transactions, adjustments are made for counterparty credit risk adjustments (credit valuation adjustments (CVA)) and adjustments are also made to reflect the impact of uncollateralized funding (funding valuation adjustments (FVA)). The calculation of CVA takes into account the probability of a default event occurring for each counterparty which is primarily derived from an observed or estimated spread on credit default swaps. In addition, the calculation of CVA takes into account the effect of credit risk mitigation such as pledged collateral and the legal right of offset with the counterparty. The calculation of FVA takes into account MUFG’s market funding spread reflecting the credit risk of MUFG and the funding exposure of any uncollateralized component of an over-the-counter derivative instrument entered into with the counterparty.
Exchange-traded derivative transactions valued using quoted prices are classified into Level 1. Over-the-counter derivative transactions are classified into Level 2 if their fair value is not measured based on significant unobservable inputs. Over-the-counter derivative transactions whose fair value is measured based on significant unobservable inputs are classified into Level 3.
–52–
| (Note 2) | Quantitative information about financial assets and liabilities measured and presented on the consolidated<br>balance sheet at fair value and classified in Level 3 |
|---|---|
| (1) | Quantitative information on significant unobservable inputs |
| --- | --- |
As of March 31, 2023
| Category | Valuation technique | Signification unobservable inputs | Range | Weighted<br>average (*1) |
|---|---|---|---|---|
| Monetary claims bought | ||||
| Securitized products | Internal model (*2) | Correlation between underlying assets | 3.0% | 3.0% |
| Liquidity premium | 2.0%~2.2% | 2.0% | ||
| Prepayment rate | 13.1% | 13.1% | ||
| Probability of default | 0.0%~99.0% | — | ||
| Recovery rate | 72.2% | 72.2% | ||
| Securities | ||||
| Foreign equity securities | Discounted cash flow | Liquidity premium | 0.8%~1.7% | 1.3% |
| Other | Discounted cash flow | Liquidity premium | 1.1%~3.2% | 2.9% |
| Derivatives | ||||
| Interest rate-related derivatives | Option model | Correlation between interest rates | 30.0%~60.6% | — |
| Correlation between interest rate and foreign exchange rate | 1.9%~60.0% | — | ||
| Volatility | 62.2%~106.6% | — | ||
| Currency-related derivatives | Option model | Correlation between interest rates | 30.0%~70.0% | — |
| Correlation between interest rate and foreign exchange rate | 13.6%~60.0% | — | ||
| Correlation between foreign exchange rates | 50.0%~70.5% | — | ||
| Volatility | 10.5%~22.9% | — | ||
| Equity-related derivatives | Option model | Volatility | 20.4%~37.0% | — |
| Correlation between foreign exchange rate and equity | (58.3)%~54.9% | — | ||
| Correlation between equities | (2.3)%~95.0% | — | ||
| Discounted cash flow | Term of litigation | 1~12.0 months | — | |
| (*1) | The weighted average is calculated by weighing each input by the relative fair value of the respective<br>financial assets. | |||
| --- | --- | |||
| (*2) | For further details of Internal model, refer to “Monetary claims bought” in “(Note 1)<br>Description of the valuation techniques and inputs used to measure fair value” under “II. Matters concerning fair value, etc. of financial instruments and breakdown by input level” above. | |||
| --- | --- |
–53–
As of March 31, 2024
| Category | Valuation technique | Signification unobservable inputs | Range | Weighted<br>average (*1) |
|---|---|---|---|---|
| Monetary claims bought | ||||
| Securitized products | Internal model (*2) | Correlation between underlying assets | 3.0% | 3.0% |
| Liquidity premium | 1.4%~1.6% | 1.4% | ||
| Prepayment rate | 17.6% | 17.6% | ||
| Probability of default | 0.0%~93.0% | — | ||
| Recovery rate | 55.0% | 55.0% | ||
| Securities | ||||
| Foreign equity securities | Discounted cash flow | Liquidity premium | 0.8%~1.7% | 1.4% |
| Other | Discounted cash flow | Liquidity premium | 1.1%~3.2% | 2.9% |
| Derivatives | ||||
| Interest rate-related derivatives | Option model | Correlation between interest rates | 30.0%~60.7% | — |
| Correlation between interest rate and foreign exchange rate | (1.9)%~60.0% | — | ||
| Volatility | 61.2%~97.4% | — | ||
| Currency-related derivatives | Option model | Correlation between interest rates | 30.0%~70.0% | — |
| Correlation between interest rate and foreign exchange rate | 5.5%~60.0% | — | ||
| Correlation between foreign exchange rates | 50.0%~70.5% | — | ||
| Volatility | 9.8%~21.3% | — | ||
| Equity-related derivatives | Option model | Volatility | 22.9%~37.0% | — |
| Correlation between foreign exchange rate and equity | 0.0%~30.0% | — | ||
| Correlation between equities | 1.5%~82.3% | — | ||
| (*1) | The weighted average is calculated by weighing each input by the relative fair value of the respective<br>financial assets. | |||
| --- | --- | |||
| (*2) | For further details of Internal model, refer to “Monetary claims bought” in “(Note 1)<br>Description of the valuation techniques and inputs used to measure fair value” under “2. Matters concerning fair value, etc. of financial instruments and breakdown by input level” above. | |||
| --- | --- |
–54–
| (2) | Table showing reconciliation between the opening balance and the closing balance during the reporting period,<br>and unrealized gains (losses) recognized in net income (loss) |
|---|
For the fiscal year ended March 31, 2023
| (in millions of yen) | |||||||||||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Category | March 31,<br>2022 | Included<br>in<br>net income<br>(loss)<br>(*1) | Included<br>in other<br>comprehensive<br>income<br>(*2) | Purchases,<br>Issues,<br>Sales,<br>Settlements<br>and others | Transfers<br>into<br>Level 3<br>(*3) | Transfers<br>out of<br>Level 3<br>(*3) | March 31,<br>2023 | Change in<br>unrealized<br>gains (losses)<br>included in<br>net income<br>(loss) on<br>assets and<br>liabilities<br>still held<br>at<br>March 31,<br>2023 (*1) | |||||||||||||||
| Monetary claims bought | 238,878 | 29,697 | (15,750 | ) | 338,704 | — | — | 591,530 | 29,366 | ||||||||||||||
| Trading assets | 57,124 | 4,340 | — | 51,622 | 0 | (977 | ) | 112,109 | 4,256 | ||||||||||||||
| Monetary held in trust (Trading purpose / Other) | 8,957 | 0 | 159 | (844 | ) | — | — | 8,272 | 0 | ||||||||||||||
| Securities (Available-for- sale securities) | 452,414 | 30,369 | 3,812 | (89,146 | ) | 6,322 | (3,665 | ) | 400,105 | 33,895 | |||||||||||||
| Domestic equity securities | — | 1,901 | 20 | 274 | 192 | — | 2,389 | 1,294 | |||||||||||||||
| Corporate bonds | 2,519 | 2 | (158 | ) | (67 | ) | 1,255 | (3,552 | ) | — | — | ||||||||||||
| Foreign equity securities | 32,535 | 1,740 | 3,104 | (915 | ) | 2,683 | — | 39,147 | 2,115 | ||||||||||||||
| Foreign bonds | 77,265 | (4,470 | ) | 9,410 | (80,092 | ) | 166 | (113 | ) | 2,165 | (6 | ) | |||||||||||
| Other securities | 340,092 | 30,930 | (8,564 | ) | (8,345 | ) | 100 | — | 354,213 | 30,226 | |||||||||||||
| Total assets | 757,374 | 64,407 | (11,778 | ) | 300,335 | 6,322 | (4,643 | ) | 1,112,017 | 67,519 | |||||||||||||
| Bonds payable (FVO) | 46,674 | (33,158 | ) | 3,688 | 11,306 | 74,361 | (741 | ) | 102,130 | 40,314 | |||||||||||||
| Total liabilities | 46,674 | (33,158 | ) | 3,688 | 11,306 | 74,361 | (741 | ) | 102,130 | 40,314 | |||||||||||||
| Derivatives (*4) | 186,601 | 92,326 | 603 | (1,034 | ) | 73,687 | (35,476 | ) | 316,707 | 138,979 | |||||||||||||
| Interest rate-related derivatives | 110,133 | 59,990 | 100 | 4,622 | 35,652 | (11,703 | ) | 198,796 | 71,464 | ||||||||||||||
| Currency-related derivatives | 8,471 | 8,404 | 120 | (4,305 | ) | (32 | ) | 37 | 12,696 | 8,472 | |||||||||||||
| Equity-related derivatives | 17,423 | 23,950 | 383 | (20,912 | ) | 4 | 260 | 21,110 | 25,306 | ||||||||||||||
| Bond-related derivatives | 50,300 | (792 | ) | — | 19,065 | 38,063 | (24,070 | ) | 82,566 | 32,896 | |||||||||||||
| Commodity-related derivatives | (45 | ) | 151 | (1 | ) | (13 | ) | — | — | 90 | 151 | ||||||||||||
| Credit-related derivatives | 320 | 513 | — | 248 | — | — | 1,082 | 583 | |||||||||||||||
| Other derivatives | (3 | ) | 107 | — | 259 | — | — | 364 | 104 | ||||||||||||||
| (*1) | Mainly included in Trading income and Other operating income in the consolidated statements of income.<br> | ||||||||||||||||||||||
| --- | --- | ||||||||||||||||||||||
| (*2) | Included in Net unrealized gains (losses) on<br>available-for-sale securities and Foreign currency translation adjustments in Other comprehensive income in the consolidated statements of comprehensive income.<br> | ||||||||||||||||||||||
| --- | --- | ||||||||||||||||||||||
| (*3) | Transfers into Level 2 from Level 3 and Transfers into Level 2 from Level 3 were results<br>from material inputs for valuation of derivatives that were mainly previously observable becoming unobservable (unobservable becoming observable) and the significance of the impact of unobservable inputs increasing(declining). These transfers were<br>made at the beginning of the fiscal year. | ||||||||||||||||||||||
| --- | --- | ||||||||||||||||||||||
| (*4) | Derivative transactions in trading assets and liabilities as well as other assets and liabilities are shown<br>together. Assets or liabilities and gains or losses arising from derivative transactions are presented on a net basis, and net liabilities and losses in the aggregate are presented in minus. | ||||||||||||||||||||||
| --- | --- |
–55–
For the fiscal year ended March 31, 2024
| (in millions of yen) | |||||||||||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Category | March 31,<br>2023 | Included<br>in<br>net income<br>(loss)<br>(*1) | Included<br>in other<br>comprehensive<br>income<br>(*2) | Purchases,<br>Issues,<br>Sales,<br>Settlements | Transfers<br>into<br>Level 3<br>(*3) | Transfers<br>out of<br>Level 3<br>(*4) | March 31,<br>2024 | Change in<br>unrealized<br>gains (losses)<br>included in<br>net income<br>(loss) on<br>assets and<br>liabilities<br>still held<br>at<br>March 31,<br>2024 (*1) | |||||||||||||||
| Monetary claims bought | 591,530 | 108,236 | 22,149 | 526,339 | — | — | 1,248,256 | 107,367 | |||||||||||||||
| Trading assets | 112,109 | 7,504 | — | (57,111 | ) | 12,260 | (95 | ) | 74,665 | 7,196 | |||||||||||||
| Monetary held in trust (Trading purpose / Other) | 8,272 | 96 | 156 | (2,661 | ) | — | — | 5,864 | 49 | ||||||||||||||
| Securities (Available-for- sale securities) | 400,105 | 51,117 | 8,356 | 143,957 | 25 | (19 | ) | 603,542 | 50,223 | ||||||||||||||
| Domestic equity securities | 2,389 | 167 | 124 | 12 | — | — | 2,694 | 167 | |||||||||||||||
| Corporate bonds | — | (2 | ) | 0 | (3 | ) | 25 | (19 | ) | — | — | ||||||||||||
| Foreign equity securities | 39,147 | 3,770 | 1,167 | (7,497 | ) | — | — | 36,587 | 2,874 | ||||||||||||||
| Foreign bonds | 2,165 | (83 | ) | 167 | 36 | — | — | 2,285 | (83 | ) | |||||||||||||
| Investment trusts | 2,189 | (160 | ) | 190 | — | — | — | 2,218 | (160 | ) | |||||||||||||
| Other securities | 354,213 | 47,426 | 6,706 | 151,410 | — | — | 559,756 | 47,426 | |||||||||||||||
| Total assets | 1,112,017 | 166,954 | 30,662 | 610,524 | 12,285 | (115 | ) | 1,932,328 | 164,837 | ||||||||||||||
| Bonds payable (FVO) | 102,130 | 39,452 | 10,475 | (104,567 | ) | 1,938 | (23,018 | ) | 26,411 | (4,820 | ) | ||||||||||||
| Other liabilities | — | — | — | 17,413 | — | — | 17,413 | — | |||||||||||||||
| Total liabilities | 102,130 | 39,452 | 10,475 | (87,154 | ) | 1,938 | (23,018 | ) | 43,824 | (4,820 | ) | ||||||||||||
| Derivatives (*5) | 316,707 | (22,089 | ) | 1,680 | (6,136 | ) | 80,114 | (231,635 | ) | 138,640 | 2,959 | ||||||||||||
| Interest rate-related derivatives | 198,796 | (23,906 | ) | (1,302 | ) | 8,803 | 28,527 | (171,194 | ) | 39,723 | (2,911 | ) | |||||||||||
| Currency-related derivatives | 12,696 | 2,043 | 941 | (940 | ) | 97 | (4,563 | ) | 10,274 | 139 | |||||||||||||
| Equity-related derivatives | 21,110 | 5,508 | 2,029 | (18,935 | ) | 2,612 | (637 | ) | 11,688 | 7,831 | |||||||||||||
| Bond-related derivatives | 82,566 | (3,277 | ) | — | 4,500 | 48,894 | (55,239 | ) | 77,444 | 293 | |||||||||||||
| Commodity-related derivatives | 90 | (131 | ) | 11 | (15 | ) | — | — | (45 | ) | (131 | ) | |||||||||||
| Credit-related derivatives | 1,082 | (1,803 | ) | — | 386 | (18 | ) | — | (351 | ) | (1,746 | ) | |||||||||||
| Other derivatives | 364 | (520 | ) | — | 64 | — | — | (92 | ) | (515 | ) | ||||||||||||
| (*1) | Mainly included in Trading income and Other operating income in the consolidated statements of income.<br> | ||||||||||||||||||||||
| --- | --- | ||||||||||||||||||||||
| (*2) | Included in Net unrealized gains (losses) on<br>available-for-sale securities and Foreign currency translation adjustments in Other comprehensive income in the consolidated statements of comprehensive income.<br> | ||||||||||||||||||||||
| --- | --- | ||||||||||||||||||||||
| (*3) | Transfers into Level 2 from Level 3 were results from material inputs for valuation of derivatives<br>that were mainly previously observable becoming unobservable and the significance of the impact of unobservable inputs increasing. These transfers were made at the beginning of the fiscal year. | ||||||||||||||||||||||
| --- | --- | ||||||||||||||||||||||
| (*4) | Transfers into Level 2 from Level 3 were made primarily based on declines in the significance of<br>unobservable inputs for valuation of interest rate-related derivatives, taking into account credit valuation adjustments (CVA) for counterparty credit risk and funding valuation adjustments (FVA) for unsecured financing. These transfers were made at<br>the beginning of the fiscal year. | ||||||||||||||||||||||
| --- | --- | ||||||||||||||||||||||
| (*5) | Derivative transactions in trading assets and liabilities as well as other assets and liabilities are shown<br>together. Assets or liabilities and gains or losses arising from derivative transactions are presented on a net basis, and net liabilities and losses in the aggregate are presented in minus. | ||||||||||||||||||||||
| --- | --- |
–56–
| (3) | Description of the fair value valuation process |
|---|
At MUFG, the middle division establishes policies and procedures for the calculation of fair value and procedures for the use of fair value valuation models, and the front division develops fair value valuation models in accordance with such policies and procedures. The middle division verifies such models, the inputs used and the fair values obtained through calculation to ensure compatibility with the policies and procedures. In addition, based on the results of such verification, the middle division determines appropriate fair value input level classifications. In the event that market prices obtained from third parties are used as fair values, they are verified through appropriate methods such as confirming the valuation techniques and inputs used and comparing them with the fair values of similar financial instruments.
| (4) | Description of the sensitivity of the fair value to changes in significant unobservable inputs<br> |
|---|
Probability of default
Probability of default is an estimate of the likelihood that the default event will occur and MUFG will be unable to collect the contractual amounts. A significant increase (decrease) in the default rate would result in a significant decrease (increase) in a fair value.
Recovery rate and Prepayment rate
Recovery rate is the proportion of the total outstanding balance of a bond or loan that is expected to be collected in a liquidation scenario. Prepayment rate represents the proportion of principal that is expected to be paid prematurely in each period on a security or pool of securities. Recovery rate and prepayment rate would affect estimation of future cash flows to a certain extent and changes in these inputs could result in a significant increase or decrease in fair value.
Liquidity premium
Liquidity premium is an adjustment to discount rates to reflect uncertainty of cash flows and liquidity of the financial instruments.
When recent prices of similar instruments are unobservable in inactive or less active markets, discount rates are adjusted based on the facts and circumstances of the markets including the availability of quotes and the time since the latest available quotes. A significant increase (decrease) in discount rate would result in a significant decrease (increase) in a fair value.
Volatility
Volatility is a measure of the speed and severity of market price changes and is a key factor in pricing. A significant increase (decrease) in volatility would cause a significant increase (decrease) in the value of an option resulting in the significant increase (decrease) in fair value. The level of volatility generally depends on the tenor of the underlying assets and the strike price or level defined in the contract. Volatilities for certain combinations of tenor and strike price are not observable.
Correlation
Correlation is a measure of the relationship between the movements of two variables (i.e. how the change in one variable influences a change in the other variables). A variety of correlation-related assumptions are required for a wide range of instruments including foreign government and official institution bonds, asset-backed securities, corporate bonds, derivatives and certain other financial instruments. In most cases, correlations used are not observable in the market and must be estimated using historical information. Changes in correlation inputs can have a major impact, favorable or unfavorable, on the value of an instrument, depending on its nature. In addition, the wide range of correlation inputs are primarily due to the complex and unique nature of these instruments. There are many different types of correlation inputs, including cross-asset correlation (such as correlation between interest rate and equity) and same-asset correlation (such as correlation between interest rates). Correlation levels are highly dependent on market conditions and could have a relatively wide range of levels within or across asset classes. For interest rate contracts and foreign exchange contracts, the diversity in the portfolio held by MUFG is reflected in wide ranges of correlation, as the fair values of transactions with a variety of currencies and tenors are determined using several foreign exchange and interest rate curves. For equity derivative contracts, the wide range of correlation between interest rate and equity is primarily due to the large number of correlation pairs with different maturities of contracts.
–57–
Term of litigation
Term of litigation is the estimated period until the resolution of a certain litigation matter that relates to an issuer’s restricted shares (“Covered Litigation”) that MUFG purchased, which is referenced in certain swap transactions. These swaps are valued using a discounted cash flow methodology and are dependent upon the final resolution of the Covered Litigation.
The settlement timing of the Covered Litigation is not observable in the market, therefore, the estimated term is classified as a level 3 input. The restricted shares which MUFG purchased will be convertible to listed shares of the issuer at the end of the Covered Litigation. The restricted shares will be diluted depending upon the settlement amount of the Covered Litigation and the dilution of the restricted shares is accomplished through an adjustment to the conversion rate of the restricted shares. In order to hedge the reduction of the conversion rate, MUFG entered into certain swaps with the seller which references the conversion rate. The value generated by these trades is subject to the ultimate term of the issuer’s litigation, subject to a minimum term referenced within the trade contracts.
| (Note 3) | Quantitative information about investment trusts which are accounted for in accordance with Paragraphs 24-3 and 24-9 of the Implementation Guidance on Fair Value Measurement Table showing reconciliation between the opening balance and the closing balance during the reporting<br>period, and unrealized gains (losses) recognized in net income (loss) |
|---|
For the fiscal year ended March 31, 2023
| Category | March 31,<br>2022 | Included<br>in<br>net income<br>(loss)<br>(*1) | Included<br>in other<br>comprehensive<br>income<br>(*2) | Purchases,<br>Sales,<br>Redemptions | Transfers<br>into<br>Paragraphs<br>24-3 and<br>24-9 | Transfers<br>out of<br>Paragraphs<br>24-3 and<br>24-9 | March 31,<br>2023 | Change in<br>unrealized<br>gains (losses)<br>included in<br>net income<br>(loss) on<br>Investment<br>trusts<br>still held at<br>March 31,<br>2023<br>(*1) | |||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Investment trusts<br><br><br>(Available-for-sale<br>securities) | 323,042 | 15,239 | 12,702 | 212,223 | — | — | 563,208 | 13,397 | |||||||||
| Paragraph 24-3 (*3) | 293,398 | 14,751 | 12,393 | 213,356 | — | — | 533,900 | 13,397 | |||||||||
| Paragraph 24-9 | 29,644 | 488 | 308 | (1,133 | ) | — | — | 29,308 | — | ||||||||
| (*1) | Mainly included in Other operating income in the consolidated statements of income. | ||||||||||||||||
| --- | --- | ||||||||||||||||
| (*2) | Included in Net unrealized gains (losses) on<br>available-for-sale securities in Other comprehensive income in the consolidated statements of comprehensive income. | ||||||||||||||||
| --- | --- | ||||||||||||||||
| (*3) | Investment trusts that were subject to significance cancellation or repurchase restrictions as of<br>March 31, 2023 primarily included ¥ 234,680 million of those which were irrevocable, ¥9,023 million of those which were subject to cancellation restrictions for a certain period, ¥ 68,146 million of those which<br>required advance notice or had a specified redemption date and ¥ 222,050 million of those which were subject to caps on redemption amounts. | ||||||||||||||||
| --- | --- |
–58–
For the fiscal year ended March 31, 2024
| (in millions of yen) | |||||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Category | March 31,<br>2023 | Included<br>in<br>net income<br>(loss)<br>(*1) | Included<br>in other<br>comprehensive<br>income<br>(*2) | Purchases,<br>Sales,<br>Redemptions | Transfers<br>into<br>Paragraphs<br>24-3 and<br>24-9 | Transfers<br>out of<br>Paragraphs<br>24-3 and<br>24-9 | March 31,<br>2024 | Change in<br>unrealized<br>gains (losses)<br>included in<br>net income<br>(loss) on<br>Investment<br>trusts<br>still held at<br>March 31,<br>2024<br>(*1) | |||||||||
| Investment trusts<br><br><br>(Available-for-sale<br>securities) | 563,208 | 61,989 | 8,045 | 186,279 | — | (2,063 | ) | 817,460 | 57,010 | ||||||||
| Paragraph 24-3 (*3) | 533,900 | 61,989 | 7,320 | 181,132 | — | — | 784,343 | 57,010 | |||||||||
| Paragraph 24-9 | 29,308 | — | 725 | 5,147 | — | (2,063 | ) | 33,116 | — | ||||||||
| (*1) | Mainly included in Other operating income of the consolidated statements of income. | ||||||||||||||||
| --- | --- | ||||||||||||||||
| (*2) | Included in Net unrealized gains (losses) on<br>available-for-sale securities in Other comprehensive income in the consolidated statements of comprehensive income. | ||||||||||||||||
| --- | --- | ||||||||||||||||
| (*3) | Investment trusts that were subject to significance cancellation or repurchase restrictions as of<br>March 31, 2024 primarily included ¥ 262,327 million of those which were irrevocable, ¥15,082million of those which were subject to cancellation restrictions for a certain period, ¥ 79,260 million of those which required<br>advance notice or had a specified redemption date and ¥ 427,672 million of those which were subject to caps on redemption amounts. | ||||||||||||||||
| --- | --- | ||||||||||||||||
| (Note 4) | The following table sets forth the amounts of equity securities with no market price available and investments<br>in partnerships and others on the consolidated balance sheet. These securities and investments are not included in “Trading assets” or “Securities” in the tables presented under the section captioned “Matters concerning fair<br>value of financial instruments and breakdown by input level”. | ||||||||||||||||
| --- | --- | ||||||||||||||||
| (in millions of yen) | |||||||||||||||||
| --- | --- | --- | --- | --- | |||||||||||||
| Amount on consolidated balance sheet | |||||||||||||||||
| March 31, 2023 | March 31, 2024 | ||||||||||||||||
| Equity securities with no quoted market price available (*1) (*3) | ¥ | 240,353 | ¥ | 287,909 | |||||||||||||
| Investments in partnerships and others (*2) (*3) | 386,822 | 489,116 | |||||||||||||||
| (*1) | Equity securities with no market price available include unlisted equity securities, etc. and are not subject<br>to fair value disclosure in accordance with Paragraph 5 of ASBJ Implementation Guidance No. 19 “Implementation Guidance on Disclosures about Fair Value of Financial Instruments” (ASBJ, March 31, 2020.) | ||||||||||||||||
| --- | --- | ||||||||||||||||
| (*2) | Investments in partnerships and others mainly include silent partnerships and investment partnerships and other<br>partnerships. Their fair values are not subject to fair value disclose in accordance with Paragraph 24-16 of the Implementation Guidance on Fair Value Measurement. | ||||||||||||||||
| --- | --- | ||||||||||||||||
| (*3) | An impairment loss of ¥13,277 million and ¥8,410 million was recorded on unlisted equity<br>securities and other investments for the fiscal year ended March 31, 2023 and 2024, respectively. | ||||||||||||||||
| --- | --- |
–59–
| (Note 5) | Maturity analysis for financial assets and securities with contractual maturities | |||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|
| (in millions of yen) | ||||||||||||
| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |
| March 31, 2023 | ||||||||||||
| Due in one<br>year or less | Due after one<br>year through<br>three years | Due after three<br>years through<br>five years | Due after five<br>years through<br>seven years | Due after<br>seven years<br>through<br>ten years | Due after<br>ten years | |||||||
| Securities (*1) (*2): | ¥ | 25,712,061 | ¥ | 12,900,676 | ¥ | 14,558,909 | ¥ | 4,327,261 | ¥ | 7,932,893 | ¥ | 13,170,906 |
| Held-to-maturity<br>securities: | 602,851 | 4,136,211 | 5,817,632 | 1,063,460 | 5,080,066 | 4,819,857 | ||||||
| Japanese government bonds | 599,971 | 3,915,340 | 5,244,958 | 890,528 | 2,863,173 | — | ||||||
| Municipal bonds | — | 46,951 | 401,573 | 132,003 | 564,297 | — | ||||||
| Short-term corporate bonds | — | — | — | — | — | — | ||||||
| Corporate bonds | 2,880 | 173,919 | 171,101 | 3,825 | 21,135 | 20,353 | ||||||
| Foreign bonds | — | — | — | — | — | 3,913,345 | ||||||
| Other | — | — | — | 37,103 | 1,631,460 | 886,159 | ||||||
| Available-for-sale<br>securities with contractual maturities: | 25,109,210 | 8,764,465 | 8,741,276 | 3,263,800 | 2,852,826 | 8,351,048 | ||||||
| Japanese government bonds | 20,239,309 | 1,336,146 | 527,939 | 67,411 | 241,915 | 1,106,111 | ||||||
| Municipal bonds | 294,616 | 782,053 | 845,511 | 478,379 | 359,380 | — | ||||||
| Short-term corporate bonds | — | — | — | — | — | — | ||||||
| Corporate bonds | 369,558 | 792,792 | 666,764 | 187,713 | 174,063 | 1,282,240 | ||||||
| Foreign equity securities | 6,690 | 10,203 | 17,530 | — | — | — | ||||||
| Foreign bonds | 3,759,532 | 5,375,839 | 3,750,738 | 2,411,119 | 1,971,997 | 4,440,771 | ||||||
| Other | 439,503 | 467,429 | 2,932,791 | 119,176 | 105,470 | 1,521,925 | ||||||
| Loans (*1) (*3) | 44,812,412 | 21,031,784 | 17,334,833 | 7,588,067 | 6,231,757 | 11,236,329 | ||||||
| Total | ¥ | 70,524,473 | ¥ | 33,932,461 | ¥ | 31,893,742 | ¥ | 11,915,328 | ¥ | 14,164,651 | ¥ | 24,407,235 |
| (*1) | The amounts above are stated at the carrying amount. | |||||||||||
| --- | --- | |||||||||||
| (*2) | Securities include securitized products included in “Monetary claims bought.” | |||||||||||
| --- | --- | |||||||||||
| (*3) | Loans do not include those amounts whose repayment schedules cannot be determined including those due from<br>“bankrupt” borrowers, “virtually bankrupt” borrowers and “likely to become bankrupt” borrowers amounting to ¥911,086 million. | |||||||||||
| --- | --- |
–60–
| (in millions of yen) | ||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|
| March 31, 2024 | ||||||||||||
| Due in one<br>year or less | Due after one<br>year through<br>three years | Due after three<br>years through<br>five years | Due after five<br>years through<br>seven years | Due after<br>seven years<br>through<br>ten years | Due after<br>ten years | |||||||
| Securities (*1) (*2): | ¥ | 27,755,493 | ¥ | 11,818,013 | ¥ | 11,302,211 | ¥ | 5,113,190 | ¥ | 6,716,009 | ¥ | 13,925,850 |
| Held-to-maturity<br>securities: | 3,540,172 | 4,792,008 | 3,701,580 | 2,228,461 | 4,689,378 | 5,892,359 | ||||||
| Japanese government bonds | 3,409,951 | 4,272,975 | 2,919,580 | 1,404,893 | 2,635,655 | — | ||||||
| Municipal bonds | 35,140 | 314,750 | 514,533 | 354,351 | 780,406 | — | ||||||
| Short-term corporate bonds | — | — | — | — | — | — | ||||||
| Corporate bonds | 95,081 | 204,282 | 267,467 | 16,647 | 28,030 | 56,665 | ||||||
| Foreign bonds | — | — | — | — | — | 4,952,083 | ||||||
| Other | — | — | — | 452,569 | 1,245,286 | 883,610 | ||||||
| Available-for-sale<br>securities with contractual maturities: | 24,215,320 | 7,026,004 | 7,600,631 | 2,884,729 | 2,026,630 | 8,033,490 | ||||||
| Japanese government bonds | 18,988,941 | 1,415,258 | 113,555 | — | 238,929 | 608,555 | ||||||
| Municipal bonds | 308,670 | 383,703 | 104,196 | 144,081 | 105,338 | — | ||||||
| Short-term corporate bonds | — | — | — | — | — | — | ||||||
| Corporate bonds | 399,478 | 522,630 | 295,184 | 189,116 | 121,136 | 1,135,866 | ||||||
| Foreign equity securities | 12,113 | 11,203 | 8,875 | — | — | — | ||||||
| Foreign bonds | 3,741,605 | 4,434,962 | 4,205,884 | 2,495,846 | 1,459,547 | 4,652,539 | ||||||
| Other | 764,509 | 258,246 | 2,872,934 | 55,684 | 101,678 | 1,636,528 | ||||||
| Loans (*1) (*3) | 48,248,940 | 24,745,934 | 17,611,974 | 7,646,017 | 5,993,960 | 11,207,509 | ||||||
| Total | ¥ | 76,004,433 | ¥ | 36,563,947 | ¥ | 28,914,186 | ¥ | 12,759,207 | ¥ | 12,709,970 | ¥ | 25,133,359 |
| (*1) | The amounts above are stated at the carrying amount. | |||||||||||
| --- | --- | |||||||||||
| (*2) | Securities include securitized products included in “Monetary claims bought.” | |||||||||||
| --- | --- | |||||||||||
| (*3) | Loans do not include those amounts whose repayment schedules cannot be determined including those due from<br>“bankrupt” borrowers, “virtually bankrupt” borrowers and “likely to become bankrupt” borrowers amounting to ¥1,371,322 million. | |||||||||||
| --- | --- |
–61–
| (Note 6) | Maturity analysis for “Time deposits,” “Negotiable certificates of deposit” and other<br>interest-bearing liabilities | |||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|
| (in millions of yen) | ||||||||||||
| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |
| March 31, 2023 | ||||||||||||
| Due in one<br>year or less | Due after one<br>year through<br>three years | Due after<br>three years<br>through<br>five years | Due after five<br>years through<br>seven years | Due after<br>seven years<br>through<br>ten years | Due after<br>ten years | |||||||
| Time deposits and negotiable certificates of deposit (*1) | ¥ | 56,837,061 | ¥ | 6,288,605 | ¥ | 866,969 | ¥ | 60,023 | ¥ | 107,282 | ¥ | 2,112 |
| Borrowed money (*1) (*2) (*3) | 2,721,092 | 19,554,621 | 1,482,816 | 139,290 | 210,945 | 747,574 | ||||||
| Bonds (*1) (*2) | 1,825,996 | 4,264,092 | 2,113,572 | 2,206,309 | 1,789,349 | 3,509,398 | ||||||
| Total | ¥ | 61,384,150 | ¥ | 30,107,319 | ¥ | 4,463,358 | ¥ | 2,405,623 | ¥ | 2,107,577 | ¥ | 4,259,085 |
| (*1) | The amounts above are stated at the carrying amount. Interest-bearing liabilities whose outstanding balances<br>are expected to be redeemed within one year are omitted. | |||||||||||
| --- | --- | |||||||||||
| (*2) | “Borrowed money” and “Bonds” whose maturities are not defined are recorded under “Due<br>after ten years.” | |||||||||||
| --- | --- | |||||||||||
| (*3) | There was no outstanding balance of rediscounted bills as of March 31, 2023. | |||||||||||
| --- | --- | |||||||||||
| (in millions of yen) | ||||||||||||
| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |
| March 31, 2024 | ||||||||||||
| Due in one<br>year or less | Due after one<br>year through<br>three years | Due after<br>three years<br>through<br>five years | Due after five<br>years through<br>seven years | Due after<br>seven years<br>through<br>ten years | Due after<br>ten years | |||||||
| Time deposits and negotiable certificates of deposit (*1) | ¥ | 65,415,969 | ¥ | 5,879,709 | ¥ | 802,833 | ¥ | 81,257 | ¥ | 247,715 | ¥ | 2,394 |
| Borrowed money (*1) (*2) (*3) | 21,201,804 | 1,724,606 | 1,808,055 | 158,398 | 286,559 | 776,537 | ||||||
| Bonds (*1) (*2) | 1,507,435 | 3,908,345 | 2,880,264 | 1,715,842 | 2,537,187 | 3,754,223 | ||||||
| Total | ¥ | 88,125,209 | ¥ | 11,512,661 | ¥ | 5,491,152 | ¥ | 1,955,498 | ¥ | 3,071,461 | ¥ | 4,533,156 |
| (*1) | The amounts above are stated at the carrying amount. Interest-bearing liabilities whose outstanding balances<br>are expected to be redeemed within one year are omitted. | |||||||||||
| --- | --- | |||||||||||
| (*2) | “Borrowed money” and “Bonds” whose maturities are not defined are recorded under “Due<br>after ten years.” | |||||||||||
| --- | --- | |||||||||||
| (*3) | There was no outstanding balance of rediscounted bills as of March 31, 2024. | |||||||||||
| --- | --- |
–62–
| 9. | Securities |
|---|
In addition to “Securities” on the consolidated balance sheet, the figures in the following tables include trading account securities, securities related to trading transactions and short-term corporate bonds classified as “Trading assets,” negotiable certificates of deposit in “Cash and due from banks,” securitized products in “Monetary claims bought” and others.
| I. | Trading securities | ||||||
|---|---|---|---|---|---|---|---|
| (in millions of yen) | |||||||
| --- | --- | --- | --- | --- | --- | ||
| For the fiscal year ended March 31, | |||||||
| 2023 | 2024 | ||||||
| Net unrealized gains (losses) recorded on the consolidated statement of income | ¥ | (56,384 | ) | ¥ | 1,155 | ||
| II. | Debt securities being held to maturity | ||||||
| --- | --- | ||||||
| (in millions of yen) | |||||||
| --- | --- | --- | --- | --- | --- | --- | --- |
| March 31, 2023 | |||||||
| Amount on<br>consolidated<br>balance sheet | Fair value | Difference | |||||
| Securities whose fair value exceeds amount on consolidated balance sheet: | |||||||
| Domestic bonds | ¥ | 10,376,390 | ¥ | 10,412,002 | ¥ | 35,612 | |
| Government bonds | 9,759,930 | 9,792,060 | 32,129 | ||||
| Municipal bonds | 371,872 | 374,345 | 2,473 | ||||
| Short-term corporate bonds | — | — | — | ||||
| Corporate bonds | 244,587 | 245,596 | 1,009 | ||||
| Other securities | 1,372,943 | 1,386,568 | 13,625 | ||||
| Foreign bonds | 1,359,270 | 1,372,876 | 13,606 | ||||
| Other | 13,672 | 13,691 | 18 | ||||
| Subtotal | ¥ | 11,749,333 | ¥ | 11,798,571 | ¥ | 49,237 | |
| Securities whose fair value does not exceed amount on consolidated balance sheet: | |||||||
| Domestic bonds | ¥ | 4,675,622 | ¥ | 4,648,022 | ¥ | (27,599 | ) |
| Government bonds | 3,754,041 | 3,734,689 | (19,351 | ) | |||
| Municipal bonds | 772,953 | 765,145 | (7,808 | ) | |||
| Short-term corporate bonds | — | — | — | ||||
| Corporate bonds | 148,627 | 148,186 | (440 | ) | |||
| Other securities | 5,095,124 | 4,939,561 | (155,563 | ) | |||
| Foreign bonds | 2,554,074 | 2,448,320 | (105,754 | ) | |||
| Other | 2,541,050 | 2,491,241 | (49,809 | ) | |||
| Subtotal | ¥ | 9,770,747 | ¥ | 9,587,583 | ¥ | (183,163 | ) |
| Total | ¥ | 21,520,080 | ¥ | 21,386,154 | ¥ | (133,925 | ) |
–63–
| (in millions of yen) | |||||||
|---|---|---|---|---|---|---|---|
| March 31, 2024 | |||||||
| Amount on<br>consolidated<br>balance sheet | Fair value | Difference | |||||
| Securities whose fair value exceeds amount on consolidated balance sheet: | |||||||
| Domestic bonds | ¥ | 2,881,098 | ¥ | 2,887,984 | ¥ | 6,886 | |
| Government bonds | 2,361,247 | 2,365,840 | 4,592 | ||||
| Municipal bonds | 402,639 | 404,686 | 2,047 | ||||
| Short-term corporate bonds | — | — | — | ||||
| Corporate bonds | 117,211 | 117,457 | 245 | ||||
| Other securities | 1,392,129 | 1,398,962 | 6,832 | ||||
| Foreign bonds | 585,636 | 588,788 | 3,151 | ||||
| Other | 806,493 | 810,174 | 3,681 | ||||
| Subtotal | ¥ | 4,273,228 | ¥ | 4,286,947 | ¥ | 13,719 | |
| Securities whose fair value does not exceed amount on consolidated balance sheet: | |||||||
| Domestic bonds | ¥ | 14,429,313 | ¥ | 14,315,203 | ¥ | (114,109 | ) |
| Government bonds | 12,281,807 | 12,186,455 | (95,351 | ) | |||
| Municipal bonds | 1,596,542 | 1,580,214 | (16,327 | ) | |||
| Short-term corporate bonds | — | — | — | ||||
| Corporate bonds | 550,963 | 548,533 | (2,430 | ) | |||
| Other securities | 6,141,419 | 5,955,361 | (186,057 | ) | |||
| Foreign bonds | 4,366,446 | 4,186,910 | (179,536 | ) | |||
| Other | 1,774,972 | 1,768,451 | (6,520 | ) | |||
| Subtotal | ¥ | 20,570,732 | ¥ | 20,270,565 | ¥ | (300,167 | ) |
| Total | ¥ | 24,843,961 | ¥ | 24,557,513 | ¥ | (286,447 | ) |
–64–
| III. | Available-for-sale securities<br> | ||||||
|---|---|---|---|---|---|---|---|
| (in millions of yen) | |||||||
| --- | --- | --- | --- | --- | --- | --- | --- |
| March 31, 2023 | |||||||
| Amount on<br>consolidated<br>balance sheet | Acquisition<br>cost | Difference | |||||
| Securities whose fair value exceeds the acquisition cost: | |||||||
| Domestic equity securities | ¥ | 4,163,474 | ¥ | 1,418,238 | ¥ | 2,745,235 | |
| Domestic bonds | 17,607,265 | 17,585,008 | 22,256 | ||||
| Government bonds | 15,329,062 | 15,319,949 | 9,112 | ||||
| Municipal bonds | 963,233 | 961,170 | 2,062 | ||||
| Short-term corporate bonds | — | — | — | ||||
| Corporate bonds | 1,314,969 | 1,303,888 | 11,081 | ||||
| Other securities | 10,331,365 | 10,042,218 | 289,146 | ||||
| Foreign equity securities | 84,666 | 61,576 | 23,090 | ||||
| Foreign bonds | 7,246,857 | 7,185,651 | 61,205 | ||||
| Other | 2,999,841 | 2,794,990 | 204,850 | ||||
| Subtotal | ¥ | 32,102,105 | ¥ | 29,045,466 | ¥ | 3,056,638 | |
| Securities whose fair value does not exceed the acquisition cost: | |||||||
| Domestic equity securities | ¥ | 108,448 | ¥ | 132,955 | ¥ | (24,506 | ) |
| Domestic bonds | 12,144,639 | 12,286,917 | (142,277 | ) | |||
| Government bonds | 8,189,769 | 8,285,247 | (95,477 | ) | |||
| Municipal bonds | 1,796,707 | 1,812,579 | (15,871 | ) | |||
| Short-term corporate bonds | — | — | — | ||||
| Corporate bonds | 2,158,162 | 2,189,090 | (30,928 | ) | |||
| Other securities | 20,765,881 | 22,235,570 | (1,469,688 | ) | |||
| Foreign equity securities | 323,710 | 412,405 | (88,695 | ) | |||
| Foreign bonds | 14,463,304 | 15,640,718 | (1,177,413 | ) | |||
| Other | 5,978,866 | 6,182,446 | (203,579 | ) | |||
| Subtotal | ¥ | 33,018,970 | ¥ | 34,655,443 | ¥ | (1,636,472 | ) |
| Total | ¥ | 65,121,075 | ¥ | 63,700,909 | ¥ | 1,420,165 | |
| (Note) | The total difference amount shown in the table above includes ¥127,758 million revaluation gains on<br>securities by application of the fair value hedge accounting method. | ||||||
| --- | --- |
–65–
| (in millions of yen) | |||||||
|---|---|---|---|---|---|---|---|
| March 31, 2024 | |||||||
| Amount on<br>consolidated<br>balance sheet | Acquisition<br>cost | Difference | |||||
| Securities whose fair value exceeds the acquisition cost: | |||||||
| Domestic equity securities | ¥ | 5,068,276 | ¥ | 1,303,100 | ¥ | 3,765,175 | |
| Domestic bonds | 3,172,626 | 3,163,137 | 9,488 | ||||
| Government bonds | 2,501,260 | 2,497,628 | 3,631 | ||||
| Municipal bonds | 109,811 | 109,585 | 226 | ||||
| Short-term corporate bonds | — | — | — | ||||
| Corporate bonds | 561,553 | 555,923 | 5,630 | ||||
| Other securities | 12,193,102 | 11,789,323 | 403,779 | ||||
| Foreign equity securities | 585,709 | 537,880 | 47,829 | ||||
| Foreign bonds | 6,907,143 | 6,838,098 | 69,045 | ||||
| Other | 4,700,248 | 4,413,344 | 286,904 | ||||
| Subtotal | ¥ | 20,434,004 | ¥ | 16,255,560 | ¥ | 4,178,443 | |
| Securities whose fair value does not exceed the acquisition cost: | |||||||
| Domestic equity securities | ¥ | 33,415 | ¥ | 39,706 | ¥ | (6,291 | ) |
| Domestic bonds | 21,902,018 | 22,041,456 | (139,438 | ) | |||
| Government bonds | 18,863,980 | 18,938,403 | (74,423 | ) | |||
| Municipal bonds | 936,179 | 945,979 | (9,799 | ) | |||
| Short-term corporate bonds | — | — | — | ||||
| Corporate bonds | 2,101,859 | 2,157,074 | (55,215 | ) | |||
| Other securities | 19,366,902 | 20,673,775 | (1,306,872 | ) | |||
| Foreign equity securities | 123,855 | 158,932 | (35,076 | ) | |||
| Foreign bonds | 14,083,339 | 15,149,692 | (1,066,353 | ) | |||
| Other | 5,159,707 | 5,365,150 | (205,442 | ) | |||
| Subtotal | ¥ | 41,302,336 | ¥ | 42,754,939 | ¥ | (1,452,602 | ) |
| Total | ¥ | 61,736,341 | ¥ | 59,010,499 | ¥ | 2,725,841 | |
| (Notes) | |||||||
| --- | |||||||
| 1. | Foreign bonds of ¥21,930 million (¥22,680 million at fair value) that are amortized at cost<br>in accordance with IFRS9 at certain overseas subsidiaries are not included in the table as of March 31, 2024. | ||||||
| --- | --- | ||||||
| 2. | The total difference amount shown in the table above includes ¥399,298 million revaluation gains on<br>securities by application of the fair value hedge accounting method. | ||||||
| --- | --- |
–66–
| IV. | Available-for-sale securities<br>sold | |||||
|---|---|---|---|---|---|---|
| (in millions of yen) | ||||||
| --- | --- | --- | --- | --- | --- | --- |
| For the fiscal year ended March 31, 2023 | ||||||
| Amount sold | Gains on sales | Losses on sales | ||||
| Domestic equity securities | ¥ | 447,590 | ¥ | 293,564 | ¥ | 6,306 |
| Domestic bonds | 44,052,416 | 64,502 | 159,779 | |||
| Government bonds | 42,648,819 | 63,655 | 140,466 | |||
| Municipal bonds | 1,201,255 | 777 | 18,320 | |||
| Short-term corporate bonds | — | — | — | |||
| Corporate bonds | 202,341 | 69 | 992 | |||
| Other securities | 14,156,179 | 77,456 | 839,738 | |||
| Foreign equity securities | 17,726 | 3,912 | 391 | |||
| Foreign bonds | 12,722,270 | 31,615 | 812,730 | |||
| Other | 1,416,183 | 41,929 | 26,616 | |||
| Total | ¥ | 58,656,187 | ¥ | 435,524 | ¥ | 1,005,824 |
| (in millions of yen) | ||||||
| For the fiscal year ended March 31, 2024 | ||||||
| Amount sold | Gains on sales | Losses on sales | ||||
| Domestic equity securities | ¥ | 676,592 | ¥ | 425,448 | ¥ | 366 |
| Domestic bonds | 39,920,925 | 16,166 | 121,495 | |||
| Government bonds | 38,092,377 | 14,934 | 109,520 | |||
| Municipal bonds | 1,403,104 | 740 | 10,514 | |||
| Short-term corporate bonds | — | — | — | |||
| Corporate bonds | 425,443 | 491 | 1,460 | |||
| Other securities | 24,239,515 | 134,722 | 508,054 | |||
| Foreign equity securities | 13,031 | 8,296 | 742 | |||
| Foreign bonds | 23,053,955 | 107,255 | 450,594 | |||
| Other | 1,172,528 | 19,170 | 56,718 | |||
| Total | ¥ | 64,837,033 | ¥ | 576,337 | ¥ | 629,916 |
–67–
| V. | Securities reclassified due to change of purpose in holding such securities |
|---|
As of March 31, 2023
None.
As of March 31, 2024
None.
| VI. | Securities with impairment losses |
|---|
Securities other than those held for trading purposes and investment in affiliates (excluding certain equity securities with no quoted market price available and investments in partnerships and others) are subject to write-downs when their fair value significantly declines and it is determined as of the end of the reporting period that it is not probable that the value will recover to the acquisition cost. In such case, the fair value is recorded on the consolidated balance sheet and the difference between the fair value and the acquisition cost is recognized as losses for the reporting period (referred to as “impairment losses”).
Impairment losses on such securities for the fiscal year ended March 31, 2023 were ¥2,825 million consisting of ¥2,370 million on equity securities and ¥455 million on bonds and other securities.
Impairment losses on such securities for the fiscal year ended March 31, 2024 were ¥1,805 million consisting of ¥866 million on equity securities and ¥939 million on bonds and other securities.
Whether there is any “significant decline in the fair value” is determined for each category of issuers in accordance with the internal standards for self-assessment of asset quality as provided below:
Bankrupt issuers, virtually bankrupt issuers and likely to become bankrupt issuers:
The fair value is lower than acquisition cost.
Issuers requiring close watch:
The fair value has declined 30% or more from acquisition cost.
Normal issuers:
The fair value has declined 50% or more from acquisition cost.
“Bankrupt issuers” means issuers who have entered into bankruptcy, special liquidation proceedings or similar legal proceedings or whose notes have been dishonored and suspended from processing through clearing houses. “Virtually bankrupt issuers” means issuers who are not legally or formally bankrupt but are regarded as substantially in similar condition. “Likely to become bankrupt issuers” means issuers who are not yet legally or formally bankrupt but deemed to have a high possibility of becoming bankrupt. “Issuers requiring close watch” means issuers who are financially weak and are under close monitoring by our subsidiaries.
“Normal issuers” means issuers other than those who are categorized in the four categories mentioned above.
–68–
| 10. | Money Held in Trust | ||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|
| I. | Money held in trust for trading purposes | ||||||||||
| --- | --- | ||||||||||
| (in millions of yen) | |||||||||||
| --- | --- | --- | --- | --- | |||||||
| March 31, 2023 | |||||||||||
| Amount on the<br>consolidated<br>balance sheet | Net unrealized gains (losses) recorded on the consolidated<br>statement of income | ||||||||||
| Money held in trust for trading purposes | ¥ | 60,892 | ¥ 3,039 | ||||||||
| (in millions of yen) | |||||||||||
| March 31, 2024 | |||||||||||
| Amount on the<br>consolidated<br>balance sheet | Net unrealized gains (losses) recorded on the consolidated<br>statement of income | ||||||||||
| Money held in trust for trading purposes | ¥ | 50,395 | ¥ 99 | ||||||||
| II. | Money held in trust being held to maturity | ||||||||||
| --- | --- | ||||||||||
| (in millions of yen) | |||||||||||
| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |
| March 31, 2023 | |||||||||||
| (a)<br>Amount on the<br>consolidated<br>balance sheet | (b) Fair value | Difference<br>(b) - (a) | Money held in<br>trust with<br>respect to<br>which (b)<br>exceeds (a) | Money held<br>in trust with<br>respect to<br>which (b)<br>does not<br>exceed (a) | |||||||
| Money held in trust being held to maturity | ¥ | 42,057 | ¥ | 42,203 | ¥ | 145 | ¥ | 145 | ¥ | — | |
| (in millions of yen) | |||||||||||
| March 31, 2024 | |||||||||||
| (a)<br>Amount on the<br>consolidated<br>balance sheet | (b) Fair value | Difference<br>(b) - (a) | Money held in<br>trust with<br>respect to<br>which (b)<br>exceeds (a) | Money held<br>in trust with<br>respect to<br>which (b)<br>does not<br>exceed (a) | |||||||
| Money held in trust being held to maturity | ¥ | 42,037 | ¥ | 41,926 | ¥ | (111 | ) | ¥ | — | ¥ | 111 |
| (Note) | “Money held in trust with respect to which (b) exceeds (a)” and “Money held in trust with<br>respect to which (b) does not exceed (a)” show the breakdown of “Difference (b) - (a)”. | ||||||||||
| --- | --- |
–69–
| III. | Money held in trust not for trading purposes or being held to maturity | ||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|
| (in millions of yen) | |||||||||||
| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |
| March 31, 2023 | |||||||||||
| (a)<br>Amount on the<br>consolidated<br>balance sheet | (b)<br>Acquisition<br>cost | Difference<br>(a) - (b) | Money held in<br>trust with<br>respect to<br>which (a)<br>exceeds (b) | Money held<br>in trust with<br>respect to<br>which (a)<br>does not<br>exceed (b) | |||||||
| Money held in trust not for trading purposes or being held to maturity | ¥ | 1,184,070 | ¥ | 1,194,684 | ¥ | (10,614 | ) | ¥ | 152 | ¥ | 10,767 |
| (in millions of yen) | |||||||||||
| March 31, 2024 | |||||||||||
| (a)<br>Amount on the<br>consolidated<br>balance sheet | (b)<br>Acquisition<br>cost | Difference<br>(a) - (b) | Money held in<br>trust with<br>respect to<br>which (a)<br>exceeds (b) | Money held<br>in trust with<br>respect to<br>which (a)<br>does not<br>exceed (b) | |||||||
| Money held in trust not for trading purposes or being held to maturity | ¥ | 1,178,382 | ¥ | 1,177,008 | ¥ | 1,374 | ¥ | 1,452 | ¥ | 78 | |
| (Note) | “Money held in trust with respect to which (a) exceeds (b)” and “Money held in trust with<br>respect to which (a) does not exceed (b)” show the breakdown of “Difference (a) - (b)”. | ||||||||||
| --- | --- |
–70–
| 11. | Net Unrealized Gains (Losses) onAvailable-for-Sale Securities |
|---|
Net unrealized gains (losses) on available-for-sale securities recorded on the consolidated balance sheet as of the dates indicated consisted of the following:
As of March 31, 2023
| (in millions of yen) | |||
|---|---|---|---|
| Net unrealized gains (losses) | ¥ | 1,292,586 | |
| Available-for-sale<br>securities | 1,303,200 | ||
| Money held in trust not for trading purpose or being held to maturity | (10,614 | ) | |
| Deferred tax liabilities | (353,658 | ) | |
| Net unrealized gains (losses) on<br>available-for-sale securities, net of deferred tax liabilities (before adjustments by ownership share) | 938,927 | ||
| Non-controlling interests | (8,248 | ) | |
| MUFG’s ownership share in equity method investees’ unrealized gains (losses) on<br>available- for-sale securities | (129,723 | ) | |
| Total | ¥ | 800,955 |
(Notes)
| 1. | “Net unrealized gains (losses)” shown in the above table excludes ¥127,758 million of<br>revaluation gains on securities as a result of application of the fair value hedge accounting method, which are recorded in current earnings. |
|---|---|
| 2. | “Net unrealized gains (losses)” shown in the above table includes ¥5,945 million of<br>unrealized gains on available-for-sale securities in investment limited partnerships and ¥4,847 million of unrealized gains as a result of foreign exchange<br>adjustments related to available-for-sale securities denominated in foreign currencies that are included in equity securities with no quoted market price available.<br> |
| --- | --- |
As of March 31, 2024
| (in millions of yen) | |||
|---|---|---|---|
| Net unrealized gains (losses) | ¥ | 2,367,665 | |
| Available-for-sale<br>securities | 2,366,291 | ||
| Money held in trust not for trading purpose or being held to maturity | 1,374 | ||
| Deferred tax liabilities | (722,636 | ) | |
| Net unrealized gains (losses) on<br>available-for-sale securities, net of deferred tax liabilities (before adjustments by ownership share) | 1,645,029 | ||
| Non-controlling interests | (11,528 | ) | |
| MUFG’s ownership share in equity method investees’ unrealized gains (losses) on<br>available- for-sale securities | (99,406 | ) | |
| Total | ¥ | 1,534,094 |
(Notes)
| 1. | “Net unrealized gains (losses)” shown in the above table excludes ¥399,298 million of<br>revaluation gains on securities as a result of application of the fair value hedge accounting method, which are recorded in current earnings. |
|---|---|
| 2. | “Net unrealized gains (losses)” shown in the above table includes ¥33,738 million of<br>unrealized gains on available-for-sale securities in investment limited partnerships and ¥6,010 million of unrealized gains as a result of foreign exchange<br>adjustments related to available-for-sale securities denominated in foreign currencies that are included in equity securities with no quoted market price available.<br> |
| --- | --- |
–71–
| 12. | Derivatives |
|---|---|
| I. | Derivatives to which hedge accounting is not applied |
| --- | --- |
With respect to derivatives to which hedge accounting is not applied, the contract amounts or notional principal amounts and the fair values and related valuation gains (losses) as of the end of the specified fiscal year by transaction type were as follows. The contract and other amounts do not represent the market risk exposures associated with the relevant derivatives.
| (1) | Interest rate-related derivatives | ||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|
| (in millions of yen) | |||||||||||
| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |
| March 31, 2023 | |||||||||||
| Contract amount | Valuation<br> gains (losses) | ||||||||||
| Total | Over one year | Fair value | |||||||||
| Transactions listed on exchanges: | |||||||||||
| Interest rate futures | Sold | ¥ | 3,212,393 | ¥ | 1,023,741 | ¥ | (2,630 | ) | ¥ | (2,630 | ) |
| Bought | 6,947,059 | 3,941,952 | 9,547 | 9,547 | |||||||
| Interest rate options | Sold | 1,242,739 | 164,656 | (1,665 | ) | 522 | |||||
| Bought | 2,839,283 | 217,661 | 4,976 | (525 | ) | ||||||
| OTC transactions: | |||||||||||
| Forward rate agreements | Sold | 4,890,444 | 127,798 | (178 | ) | (178 | ) | ||||
| Bought | 4,679,399 | 141,997 | 247 | 247 | |||||||
| Interest rate swaps | Receivable fixed rate/<br>Payable floating rate | 670,597,702 | 498,363,469 | (1,542,358 | ) | (1,542,358 | ) | ||||
| Receivable floating rate/<br> <br>Payable fixed<br>rate | 677,389,391 | 496,675,884 | 1,133,783 | 1,133,783 | |||||||
| Receivable floating rate/<br>Payable floating rate | 92,175,425 | 67,731,962 | 30,390 | 30,390 | |||||||
| Receivable fixed rate/<br>Payable fixed rate | 1,341,839 | 1,144,120 | 14,217 | 14,217 | |||||||
| Interest rate swaptions | Sold | 28,156,998 | 18,344,562 | (573,133 | ) | (446,244 | ) | ||||
| Bought | 23,325,825 | 15,824,115 | 430,994 | 376,357 | |||||||
| Other | Sold | 6,182,525 | 4,019,200 | (107,195 | ) | (57,719 | ) | ||||
| Bought | 5,158,134 | 4,063,502 | 69,566 | 20,521 | |||||||
| Total | — | — | ¥ | (533,439 | ) | ¥ | (464,069 | ) |
(Note)
The transactions above are stated at fair value and the related valuation gains (losses) are reported in the consolidated statements of income.
–72–
| (in millions of yen) | |||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|
| March 31, 2024 | |||||||||||
| Contract amount | Valuation<br> gains (losses) | ||||||||||
| Total | Over one year | Fair value | |||||||||
| Transactions listed on exchanges: | |||||||||||
| Interest rate futures | Sold | ¥ | 3,505,005 | ¥ | 1,288,365 | ¥ | (5,515 | ) | ¥ | (5,515 | ) |
| Bought | 3,253,762 | 1,295,046 | (2,602 | ) | (2,602 | ) | |||||
| Interest rate options | Sold | 2,268,001 | 516,141 | (5,971 | ) | 3,210 | |||||
| Bought | 4,314,182 | 1,090,536 | 6,491 | 705 | |||||||
| OTC transactions: | |||||||||||
| Forward rate agreements | Sold | 13,987,346 | 2,090,418 | (19,437 | ) | (19,437 | ) | ||||
| Bought | 12,426,934 | 2,859,165 | 138 | 138 | |||||||
| Interest rate swaps | Receivable fixed rate/<br>Payable floating rate | 763,778,484 | 637,215,078 | (4,055,927 | ) | (4,055,927 | ) | ||||
| Receivable floating rate/<br>Payable fixed rate | 766,698,904 | 630,984,503 | 4,220,466 | 4,220,466 | |||||||
| Receivable floating rate/<br>Payable floating rate | 74,879,940 | 59,092,688 | 54,671 | 54,671 | |||||||
| Receivable fixed rate/<br>Payable fixed rate | 1,639,743 | 1,590,761 | 15,831 | 15,831 | |||||||
| Interest rate swaptions | Sold | 26,435,953 | 20,085,063 | (399,537 | ) | (297,228 | ) | ||||
| Bought | 23,157,977 | 16,222,988 | 280,820 | 220,075 | |||||||
| Other | Sold | 9,514,648 | 4,875,536 | (84,002 | ) | (13,789 | ) | ||||
| Bought | 6,385,749 | 5,203,162 | 71,350 | 10,994 | |||||||
| Total | — | — | ¥ | 76,775 | ¥ | 131,591 |
(Note)
The transactions above are stated at fair value and the related valuation gains (losses) are reported in the consolidated statements of income.
–73–
| (2) | Currency-related derivatives | ||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|
| (in millions of yen) | |||||||||||
| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |
| March 31, 2023 | |||||||||||
| Contract amount | Valuation<br> gains (losses) | ||||||||||
| Total | Over one year | Fair value | |||||||||
| Transactions listed on exchanges: | |||||||||||
| Currency futures | Sold | ¥ | 80,331 | ¥ | — | ¥ | 181 | ¥ | 181 | ||
| Bought | 477,916 | 63,107 | 2,047 | 2,047 | |||||||
| OTC transactions: | |||||||||||
| Currency swaps | 71,642,892 | 54,326,533 | 223,796 | 223,796 | |||||||
| Forward contracts on foreign exchange | 203,252,064 | 11,544,013 | (26,371 | ) | (26,371 | ) | |||||
| Currency options | Sold | 9,999,109 | 3,171,417 | (97,602 | ) | 10,372 | |||||
| Bought | 9,744,806 | 3,071,078 | 129,718 | (18,556 | ) | ||||||
| Total | — | — | ¥ | 231,771 | ¥ | 191,471 |
(Note)
The transactions above are stated at fair value and the related valuation gains (losses) are reported in the consolidated statements of income.
| (in millions of yen) | |||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|
| March 31, 2024 | |||||||||||
| Contract amount | Valuation<br> gains (losses) | ||||||||||
| Total | Over one year | Fair value | |||||||||
| Transactions listed on exchanges: | |||||||||||
| Currency futures | Sold | ¥ | 90,298 | ¥ | — | ¥ | (220 | ) | ¥ | (220 | ) |
| Bought | 710,000 | 86,768 | 9,739 | 9,739 | |||||||
| OTC transactions: | |||||||||||
| Currency swaps | 77,590,746 | 60,022,825 | 338,182 | 338,182 | |||||||
| Forward contracts on foreign exchange | 228,025,839 | 14,455,413 | 39,294 | 39,294 | |||||||
| Currency options | Sold | 9,779,985 | 3,218,312 | (192,515 | ) | (46,149 | ) | ||||
| Bought | 9,047,198 | 3,176,734 | 216,101 | 47,377 | |||||||
| Total | — | — | ¥ | 410,581 | ¥ | 388,224 |
(Note)
The transactions above are stated at fair value and the related valuation gains (losses) are reported in the consolidated statements of income.
–74–
| (3) | Equity-related derivatives | ||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|
| (in millions of yen) | |||||||||||
| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |
| March 31, 2023 | |||||||||||
| Contract amount | Valuation <br> gains (losses) | ||||||||||
| Total | Over one year | Fair value | |||||||||
| Transactions listed on exchanges: | |||||||||||
| Stock index futures | Sold | ¥ | 570,055 | ¥ | 9,429 | ¥ | (2,325 | ) | ¥ | (2,325 | ) |
| Bought | 377,946 | 4,946 | 1,485 | 1,485 | |||||||
| Stock index options | Sold | 871,243 | 345,095 | (66,185 | ) | 5,996 | |||||
| Bought | 410,704 | 121,491 | 26,682 | 3,034 | |||||||
| OTC transactions: | |||||||||||
| OTC securities option transactions | Sold | 325,392 | 121,690 | (19,147 | ) | (2,728 | ) | ||||
| Bought | 757,371 | 683,303 | 30,260 | 29,357 | |||||||
| OTC securities index swap transactions | Receivable index volatility/ Payable interest rate | 779,211 | 61,800 | 6,681 | 6,681 | ||||||
| Receivable interest rate/<br> <br>Payable<br>index volatility | 847,067 | 238,812 | 12,893 | 12,893 | |||||||
| Forward transactions in OTC securities indexes | Sold | 150 | — | 15 | 15 | ||||||
| Bought | 59,035 | — | (2,180 | ) | (2,180 | ) | |||||
| Total | — | — | ¥ | (11,818 | ) | ¥ | 52,231 |
(Note)
The transactions above are stated at fair value and the related valuation gains (losses) are reported in the consolidated statements of income.
–75–
| (in millions of yen) | |||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|
| March 31, 2024 | |||||||||||
| Contract amount | Valuation<br> gains (losses) | ||||||||||
| Total | Over one year | Fair value | |||||||||
| Transactions listed on exchanges: | |||||||||||
| Stock index futures | Sold | ¥ | 801,152 | ¥ | — | ¥ | (16,967 | ) | ¥ | (16,967 | ) |
| Bought | 113,590 | 6,919 | 3,672 | 3,672 | |||||||
| Stock index options | Sold | 711,263 | 103,850 | (60,839 | ) | (18,734 | ) | ||||
| Bought | 444,283 | 77,707 | 55,904 | 33,103 | |||||||
| OTC transactions: | |||||||||||
| OTC securities option transactions | Sold | 172,828 | 6,989 | (16,488 | ) | (8,166 | ) | ||||
| Bought | 474,285 | 383,700 | 14,259 | 13,030 | |||||||
| OTC securities index swap transactions | Receivable index volatility/ Payable interest rate | 822,625 | 18,851 | 23,497 | 23,497 | ||||||
| Receivable interest rate/ <br>Payable index volatility | 740,419 | 83,916 | (10,144 | ) | (10,144 | ) | |||||
| Forward transactions in OTC securities indexes | Sold | 41,387 | — | (6,140 | ) | (6,140 | ) | ||||
| Bought | 102,819 | — | 6,518 | 6,518 | |||||||
| Total | — | — | ¥ | (6,727 | ) | ¥ | 19,670 |
(Note)
The transactions above are stated at fair value and the related valuation gains (losses) are reported in the consolidated statements of income.
–76–
| (4) | Bond-related derivatives | ||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|
| (in millions of yen) | |||||||||||
| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |
| March 31, 2023 | |||||||||||
| Contract amount | Valuation<br> gains (losses) | ||||||||||
| Total | Over one year | Fair value | |||||||||
| Transactions listed on exchanges: | |||||||||||
| Bond futures | Sold | ¥ | 303,891 | ¥ | — | ¥ | (668 | ) | ¥ | (668 | ) |
| Bought | 555,926 | — | (767 | ) | (767 | ) | |||||
| Bond futures options | Sold | 155,276 | — | (92 | ) | 434 | |||||
| Bought | 152,495 | — | 454 | (45 | ) | ||||||
| OTC transactions: | |||||||||||
| Bond OTC options | Sold | 1,442,951 | — | (2,827 | ) | (529 | ) | ||||
| Bought | 1,442,951 | — | 2,838 | 236 | |||||||
| Bond OTC swaps | Receivable fixed rate /<br>Payable variable rate | 131,100 | 131,100 | 25,709 | 25,709 | ||||||
| Receivable variable rate/<br>Payable fixed rate | 3,156 | 3,156 | (404 | ) | (404 | ) | |||||
| Receivable variable rate/<br>Payable variable rate | 233,518 | 233,518 | 37,347 | 37,347 | |||||||
| Receivable fixed rate/<br>Payable fixed rate | 372,300 | 372,300 | 53,678 | 53,678 | |||||||
| Total return swaps | Sold | — | — | — | — | ||||||
| Bought | 301,535 | 218,974 | (3,581 | ) | (3,581 | ) | |||||
| Total | — | — | ¥ | 111,685 | ¥ | 111,408 |
(Note)
The transactions above are stated at fair value and the related valuation gains (losses) are reported in the consolidated statements of income.
–77–
| (in millions of yen) | |||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|
| March 31, 2024 | |||||||||||
| Contract amount | Valuation<br> gains (losses) | ||||||||||
| Total | Over one year | Fair value | |||||||||
| Transactions listed on exchanges: | |||||||||||
| Bond futures | Sold | ¥ | 339,480 | ¥ | — | ¥ | (120 | ) | ¥ | (120 | ) |
| Bought | 322,925 | — | 407 | 407 | |||||||
| Bond futures options | Sold | 26,819 | — | (397 | ) | (47 | ) | ||||
| Bought | 19,294 | — | 100 | (12 | ) | ||||||
| OTC transactions: | |||||||||||
| Bond OTC options | Sold | 2,000,128 | — | (3,820 | ) | (1,091 | ) | ||||
| Bought | 2,000,128 | — | 2,422 | (582 | ) | ||||||
| Bond OTC swaps | Receivable fixed rate/<br>Payable variable rate | 245,800 | 245,800 | 27,163 | 27,163 | ||||||
| Receivable variable rate/<br>Payable fixed rate | 3,579 | 3,579 | (18 | ) | (18 | ) | |||||
| Receivable variable rate/<br>Payable variable rate | 232,082 | 187,513 | 57,455 | 57,455 | |||||||
| Receivable fixed rate/<br>Payable fixed rate | 600,100 | 600,100 | 49,223 | 49,223 | |||||||
| Total return swaps | Sold | — | — | — | — | ||||||
| Bought | 282,920 | 168,407 | (11,630 | ) | (11,630 | ) | |||||
| Total | — | — | ¥ | 120,785 | ¥ | 120,745 |
(Note)
The transactions above are stated at fair value and the related valuation gains (losses) are reported in the consolidated statements of income.
–78–
| (5) | Commodity-related derivatives | ||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|
| (in millions of yen) | |||||||||||
| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |
| March 31, 2023 | |||||||||||
| Contract amount | Valuation<br> gains (losses) | ||||||||||
| Total | Over one year | Fair value | |||||||||
| OTC transactions: | |||||||||||
| Commodity swaps | Receivable index volatility/<br>Payable interest rate | ¥ | 72,188 | ¥ | 72,188 | ¥ | (9,777 | ) | ¥ | (9,777 | ) |
| Receivable interest rate/<br>Payable index volatility | 72,188 | 72,188 | 9,907 | 9,907 | |||||||
| Commodity options | Sold | 100 | 100 | (39 | ) | (39 | ) | ||||
| Bought | — | — | — | — | |||||||
| Total | — | — | ¥ | 90 | ¥ | 90 |
(Notes)
| 1. | The transactions above are stated at fair value and the related valuation gains (losses) are reported in the<br>consolidated statements of income. | ||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|
| 2. | The commodities are mainly those related to natural gas and other commodities. | ||||||||||
| --- | --- | ||||||||||
| (in millions of yen) | |||||||||||
| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |
| March 31, 2024 | |||||||||||
| Contract amount | Valuation<br> gains (losses) | ||||||||||
| Total | Over one year | Fair value | |||||||||
| OTC transactions: | |||||||||||
| Commodity swaps | Receivable index volatility/<br>Payable interest rate | ¥ | 76,979 | ¥ | 76,979 | ¥ | (18,282 | ) | ¥ | (18,282 | ) |
| Receivable interest rate/<br>Payable index volatility | 76,979 | 76,979 | 18,281 | 18,281 | |||||||
| Commodity options | Sold | 100 | 100 | (44 | ) | (44 | ) | ||||
| Bought | — | — | — | — | |||||||
| Total | — | — | ¥ | (45 | ) | ¥ | (45 | ) |
(Notes)
| 1. | The transactions above are stated at fair value and the related valuation gains (losses) are reported in the<br>consolidated statements of income. |
|---|---|
| 2. | The commodities are mainly those related to natural gas and other commodities. |
| --- | --- |
–79–
| (6) | Credit-related derivatives | ||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|
| (in millions of yen) | |||||||||||
| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |
| March 31, 2023 | |||||||||||
| Contract amount | Valuation<br> gains (losses) | ||||||||||
| Total | Over one year | Fair value | |||||||||
| OTC transactions: | |||||||||||
| Credit default options | Sold | ¥ | 5,194,703 | ¥ | 4,376,844 | ¥ | 28,424 | ¥ | 28,424 | ||
| Bought | 6,187,626 | 5,291,269 | (26,458 | ) | (26,458 | ) | |||||
| Total | — | — | ¥ | 1,965 | ¥ | 1,965 |
(Notes)
| 1. | The transactions above are stated at fair value and the related valuation gains (losses) are reported in the<br>consolidated statements of income. | ||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|
| 2. | “Sold” refers to transactions where the credit risk is assumed, and “Bought” refers to<br>transactions where the credit risk is transferred. | ||||||||||
| --- | --- | ||||||||||
| (in millions of yen) | |||||||||||
| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |
| March 31, 2024 | |||||||||||
| Contract amount | Valuation<br> gains (losses) | ||||||||||
| Total | Over one year | Fair value | |||||||||
| OTC transactions: | |||||||||||
| Credit default options | Sold | ¥ | 2,209,475 | ¥ | 1,838,076 | ¥ | 29,028 | ¥ | 29,028 | ||
| Bought | 3,002,250 | 2,605,549 | (31,818 | ) | (31,818 | ) | |||||
| Total | — | — | ¥ | (2,789 | ) | ¥ | (2,789 | ) |
(Notes)
| 1. | The transactions above are stated at fair value and the related valuation gains (losses) are reported in the<br>consolidated statements of income. |
|---|---|
| 2. | “Sold” refers to transactions where the credit risk is assumed, and “Bought” refers to<br>transactions where the credit risk is transferred. |
| --- | --- |
–80–
| (7) | Other derivatives | ||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|
| (in millions of yen) | |||||||||||
| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |
| March 31, 2023 | |||||||||||
| Contract amount | Valuation<br> gains (losses) | ||||||||||
| Total | Over one year | Fair value | |||||||||
| OTC transactions: | |||||||||||
| Earthquake derivatives | Sold | ¥ | 7,000 | ¥ | 7,000 | ¥ | (1 | ) | ¥ | 332 | |
| Bought | 7,354 | 7,000 | 357 | (236 | ) | ||||||
| Other | Sold | 5,129 | 5,129 | (62 | ) | (62 | ) | ||||
| Bought | 7,466 | 7,466 | 70 | 70 | |||||||
| Total | — | — | ¥ | 364 | ¥ | 104 |
(Note)
The transactions above are stated at fair value and the related valuation gains (losses) are reported in the consolidated statements of income.
| (in millions of yen) | |||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|
| March 31, 2024 | |||||||||||
| Contract amount | Valuation<br> gains (losses) | ||||||||||
| Total | Over one year | Fair value | |||||||||
| OTC transactions: | |||||||||||
| Earthquake derivatives | Sold | ¥ | 13,500 | ¥ | 6,500 | ¥ | (534 | ) | ¥ | 153 | |
| Bought | 13,500 | 6,500 | 429 | (567 | ) | ||||||
| Other | Sold | 5,666 | 5,666 | (51 | ) | (51 | ) | ||||
| Bought | 12,599 | 4,909 | 68 | 68 | |||||||
| Total | — | — | ¥ | (88 | ) | ¥ | (396 | ) |
(Note)
The transactions above are stated at fair value and the related valuation gains (losses) are reported in the consolidated statements of income.
–81–
| II. | Derivatives to which hedge accounting is applied |
|---|
With respect to derivatives to which hedge accounting is applied, their contract amounts or notional principal amounts and the fair values as of the end of the specified fiscal year by transaction type and hedge accounting method were as follows. The contract and other amounts do not represent the market risk exposures associated with the relevant derivatives.
| (1) | Interest rate-related derivatives | ||||||||
|---|---|---|---|---|---|---|---|---|---|
| (in millions of yen) | |||||||||
| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |
| March 31, 2023 | |||||||||
| Hedge accounting method | Transaction type | Major hedged item | Contract<br>amount | Contract<br>amount due<br>after one year | Fair value | ||||
| Deferred hedge <br>accounting | Interest rate swaps: | ||||||||
| Receivable fixed rate/<br>Payable floating rate | Interest earning financial assets<br>or interest bearing financial liabilities such as loans,<br>deposits and other transactions | ¥ | 32,509,004 | ¥ | 31,159,301 | ¥ | (379,282 | ) | |
| Receivable floating rate/<br>Payable fixed rate | 15,016,679 | 10,739,956 | (47,373 | ) | |||||
| Fair value hedge <br>accounting | Interest rate swaps: | ||||||||
| Receivable fixed rate/<br>Payable floating rate | Available-for-sale securities (debt securities) | 177,369 | 177,369 | (1,026 | ) | ||||
| Receivable floating rate/<br>Payable fixed rate | 90,785 | 90,785 | 130 | ||||||
| Special treatment for<br>interest rate swaps | Interest rate swaps: | ||||||||
| Receivable fixed rate/<br>Payable floating rate | Interest earning financial assets or interest bearing financial liabilities such as loans, borrowings, bonds and other transactions | 30,000 | 30,000 | Notes 2 | |||||
| Receivable floating rate/<br>Payable fixed rate | 4,201 | 4,201 | |||||||
| Total | — | — | ¥ | (427,551 | ) |
(Notes)
| 1. | These derivatives are mainly accounted for by applying the deferred hedge accounting in accordance with the<br>Japanese Institute of Certified Public Accountants Industry Committee Practical Guidelines No. 24 “Treatment of Accounting and Auditing of Application of Accounting Standard for Financial Instruments in the Banking Industry.”<br> |
|---|---|
| 2. | The fair values of interest rate swaps accounted for in accordance with the special hedge accounting treatment<br>for interest rate swaps are measured together with the loans, bonds and other financial instruments that are subject to the relevant hedging transactions in their entirety, and thus are included in the fair values of the respective relevant<br>financial instruments disclosed in the “Financial Instruments” section. |
| --- | --- |
–82–
| (in millions of yen) | |||||||||
|---|---|---|---|---|---|---|---|---|---|
| March 31, 2024 | |||||||||
| Hedge accounting method | Transaction type | Major hedged item | Contract<br>amount | Contract<br>amount due<br>after one year | Fair value | ||||
| Deferred hedge <br>accounting | Interest rate swaps: | ||||||||
| Receivable fixed rate/<br>Payable floating rate | Interest earning financial assets<br>or interest bearing financial liabilities such as loans,<br>deposits and other transactions | ¥ | 40,910,369 | ¥ | 37,073,440 | ¥ | (909,401 | ) | |
| Receivable floating rate/<br>Payable fixed rate | 7,874,109 | 6,468,873 | (15,598 | ) | |||||
| Fair value hedge <br>accounting | Interest rate swaps: | ||||||||
| Receivable fixed rate/<br>Payable floating rate | Available-for-sale securities (debt securities) | 186,078 | 186,078 | (452 | ) | ||||
| Receivable floating rate/<br>Payable fixed rate | 126,849 | 116,797 | 173 | ||||||
| Special treatment for<br>interest rate swaps | Interest rate swaps: | ||||||||
| Receivable fixed rate/<br>Payable floating rate | Interest earning financial assets or interest bearing financial liabilities such as loans, bonds and other transactions | 30,000 | 30,000 | Notes 2 | |||||
| Receivable floating rate/<br>Payable fixed rate | 4,088 | 3,088 | |||||||
| Total | — | — | ¥ | (925,278 | ) |
(Notes)
| 1. | These derivatives are mainly accounted for by applying the deferred hedge accounting in accordance with the<br>Japanese Institute of Certified Public Accountants Industry Committee Practical Guidelines No. 24 “Treatment of Accounting and Auditing of Application of Accounting Standard for Financial Instruments in the Banking Industry.”<br> |
|---|---|
| 2. | The fair values of interest rate swaps accounted for in accordance with the special hedge accounting treatment<br>for interest rate swaps are measured together with the loans, bonds and other financial instruments that are subject to the relevant hedging transactions in their entirety, and thus are included in the fair values of the respective relevant<br>financial instruments disclosed in the “Financial Instruments” section. |
| --- | --- |
–83–
| (2) | Currency-related derivatives | ||||||||
|---|---|---|---|---|---|---|---|---|---|
| (in millions of yen) | |||||||||
| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |
| March 31, 2023 | |||||||||
| Hedge accounting method | Transaction type | Major hedged item | Contract<br>amount | Contract<br>amount due<br>after one year | Fair value | ||||
| Deferred hedge <br>accounting | Currency swaps | Loans, securities, deposits and others denominated in foreign currencies | ¥ | 14,121,349 | ¥ | 5,182,029 | ¥ | (124,896 | ) |
| Foreign currency forward contracts | Equity in investments in foreign subsidiaries | 13,926 | — | (268 | ) | ||||
| Total | — | — | ¥ | (125,165 | ) |
(Notes)
| 1. | These derivatives are mainly accounted for by applying the deferred hedge accounting in accordance with the<br>Japanese Institute of Certified Public Accountants Industry Committee Practical Guidelines No. 25, “Accounting and Auditing Treatments for Foreign Currency Transactions in the Banking Industry.” | ||||||||
|---|---|---|---|---|---|---|---|---|---|
| (in millions of yen) | |||||||||
| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |
| March 31, 2024 | |||||||||
| Hedge accounting method | Transaction type | Major hedged item | Contract<br>amount | Contract<br>amount due<br>after one year | Fair value | ||||
| Deferred hedge <br>accounting | Currency swaps | Loans, securities, deposits and others denominated in foreign currencies | ¥ | 16,234,153 | ¥ | 5,248,655 | ¥ | (357,722 | ) |
| Foreign currency forward contracts | Equity in investments in foreign subsidiaries | 31,638 | — | 324 | |||||
| Total | — | — | ¥ | (357,398 | ) |
(Notes)
| 1. | These derivatives are mainly accounted for by applying the deferred hedge accounting in accordance with the<br>Japanese Institute of Certified Public Accountants Industry Committee Practical Guidelines No. 25, “Accounting and Auditing Treatments for Foreign Currency Transactions in the Banking Industry.” |
|---|
–84–
| (3) | Equity-related derivatives | ||||||||
|---|---|---|---|---|---|---|---|---|---|
| (in millions of yen) | |||||||||
| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |
| March 31, 2023 | |||||||||
| Hedge accounting method | Transaction type | Major hedged item | Contract<br>amount | Contract<br>amount due<br>after one year | Fair value | ||||
| Fair value hedge<br>accounting | Total return swaps | Available-for-sale securities<br>(equity securities) | ¥ | 370,656 | ¥ | 370,656 | ¥ | (18,135 | ) |
| Equity forward transactions | Available-for-sale securities<br>(equity securities) | 753 | 558 | 39 | |||||
| Total | — | — | ¥ | (18,096 | ) | ||||
| (in millions of yen) | |||||||||
| March 31, 2024 | |||||||||
| Hedge accounting method | Transaction type | Major hedged item | Contract<br>amount | Contract<br>amount due<br>after one year | Fair value | ||||
| Fair value hedge <br>accounting | Total return swaps | Available-for-sale securities<br>(equity securities) | ¥ | 697,415 | ¥ | 697,415 | ¥ | (28,231 | ) |
| Equity forward transactions | Available-for-sale securities<br>(equity securities) | 672 | — | 202 | |||||
| Total | — | — | ¥ | (28,028 | ) | ||||
| (4) | Bond-related derivatives | ||||||||
| --- | --- |
As of March 31, 2023, the balance of bond-related derivatives subject to hedge accounting was nil.
As of March 31, 2024, the balance of bond-related derivatives subject to hedge accounting was nil.
–85–
| 13. | Liability for Retirement Benefits |
|---|---|
| I. | Outline of retirement benefit plans |
| --- | --- |
Domestic consolidated subsidiaries have retirement benefit plans with defined benefits, such as defined benefit corporate pension plans and lump-sum severance payment plans, and defined contribution pension plans. In certain cases of severance of employees, additional severance benefits may be paid which are not included in retirement benefit obligations calculated actuarially pursuant to the applicable accounting standard for retirement benefits.
Certain overseas branches of domestic consolidated subsidiaries and certain overseas consolidated subsidiaries also have retirement benefit plans with defined benefits and defined contributions.
| II. | Defined benefit plans | |||||
|---|---|---|---|---|---|---|
| (1) | The changes in defined benefit obligation for the fiscal years ended March 31, 2023 and 2024 were as<br>follows: | |||||
| --- | --- | |||||
| (in millions of yen) | ||||||
| --- | --- | --- | --- | --- | --- | --- |
| March 31, 2023 | March 31, 2024 | |||||
| Balance at beginning of year | ¥ | 2,448,776 | ¥ | 1,793,780 | ||
| of which foreign exchange translation adjustments | (83,433 | ) | (22,575 | ) | ||
| Service cost | 60,149 | 49,234 | ||||
| Interest cost | 35,683 | 29,799 | ||||
| Actuarial gains (losses) | (219,116 | ) | (76,122 | ) | ||
| Benefits paid | (127,845 | ) | (121,302 | ) | ||
| Past service cost | (1,244 | ) | (844 | ) | ||
| Decrease due to pension buyout transaction | (322,516 | ) | — | |||
| Others | (102,680 | ) | 5,242 | |||
| Balance at end of year | ¥ | 1,771,205 | ¥ | 1,679,786 | ||
| (Note) | Some overseas branches of the domestic consolidated subsidiaries and some consolidated subsidiaries have adopted the simplified method in calculating their projected benefit obligation. | |||||
| --- | --- | |||||
| (2) | The changes in plan assets for the fiscal years ended March 31, 2023 and 2024 were as follows:<br> | |||||
| --- | --- | |||||
| (in millions of yen) | ||||||
| --- | --- | --- | --- | --- | --- | --- |
| March 31, 2023 | March 31, 2024 | |||||
| Balance at beginning of year | ¥ | 3,753,964 | ¥ | 3,038,470 | ||
| of which foreign exchange translation adjustments | (100,370 | ) | (28,275 | ) | ||
| Expected return on plan assets | 131,898 | 94,319 | ||||
| Actuarial gains (losses) | (342,665 | ) | 499,487 | |||
| Contributions from the employer | 28,451 | 28,191 | ||||
| Benefits paid | (103,262 | ) | (98,876 | ) | ||
| Decrease due to pension buyout transaction | (322,516 | ) | — | |||
| Others | (135,675 | ) | (1,459 | ) | ||
| Balance at end of year | ¥ | 3,010,195 | ¥ | 3,560,132 |
–86–
| (3) | A reconciliation between liability for retirement benefits and asset for retirement benefits recorded in the<br>consolidated balance sheet and the balances of defined benefit obligation and plan assets was as follows: | ||||
|---|---|---|---|---|---|
| --- | --- | --- | --- | --- | --- |
| March 31, 2024 | |||||
| Funded defined benefit obligation | 1,686,716 | ¥ | 1,579,494 | ||
| Plan assets | (3,010,195 | ) | (3,560,132 | ) | |
| (1,323,478 | ) | (1,980,638 | ) | ||
| Unfunded defined benefit obligation | 84,488 | 100,291 | |||
| Net liability (asset) arising from defined benefit obligation | (1,238,989 | ) | ¥ | (1,880,346 | ) |
| March 31, 2024 | |||||
| Liability for retirement benefits | 86,445 | ¥ | 102,155 | ||
| Asset for retirement benefits | (1,325,434 | ) | (1,982,502 | ) | |
| Net liability (asset) arising from defined benefit obligation | (1,238,989 | ) | ¥ | (1,880,346 | ) |
| (4) The components of net periodic retirement benefit costs for the<br>fiscal years ended March 31, 2023 and 2024 were as follows: | |||||
| March 31, 2024 | |||||
| Service cost | 60,149 | ¥ | 49,234 | ||
| Interest cost | 35,683 | 29,799 | |||
| Expected return on plan assets | (131,898 | ) | (94,319 | ) | |
| Amortization of past service cost | (2,924 | ) | 99 | ||
| Recognized actuarial losses | (44,688 | ) | (40,711 | ) | |
| Losses on pension buyout | 78,111 | — | |||
| Others (additional temporary severance benefits, etc.) | 15,728 | 24,533 | |||
| Net periodic retirement benefit costs | 10,161 | ¥ | (31,364 | ) | |
| (Note) Retirement benefit costs of some overseas branches of domestic<br>consolidated subsidiaries and some consolidated subsidiaries which have adopted the simplified method are included in “Service cost.” | |||||
| (5) Amounts recognized in other comprehensive income (before income tax effect) in respect of<br>defined retirement benefit plans as of March 31, 2023 and 2024 were as follows: | |||||
| March 31, 2024 | |||||
| Past service cost | (3,774 | ) | ¥ | 979 | |
| Actuarial gains (losses) | (77,460 | ) | 532,790 | ||
| Total | (81,234 | ) | ¥ | 533,769 | |
| (Note) Total amount recognized in other comprehensive income (before<br>income tax effect) in respect of defined retirement benefit plans as of March 31, 2023 reflects 78,111 million of one-time write off of unrecognized retirement benefit obligations in connection<br>with a pension buyout transaction. | |||||
| (6) Amounts recognized in accumulated other comprehensive income (before income tax effect) in<br>respect of defined retirement benefit plans as of March 31, 2023 and 2024 were as follows: | |||||
| March 31, 2024 | |||||
| Unrecognized past service cost | (924 | ) | ¥ | 55 | |
| Unrecognized actuarial gains (losses) | 196,550 | 729,341 | |||
| Total | 195,626 | ¥ | 729,396 |
All values are in Japanese Yen.
–87–
| (7) | Plan assets |
|---|---|
| (a) | Components of plan assets |
| --- | --- |
Plan assets consisted of the following:
| 2023 | 2024 | |||||
|---|---|---|---|---|---|---|
| Domestic equity investments | 32.40 | % | 36.08 | % | ||
| Domestic debt investments | 14.06 | 13.30 | ||||
| Foreign equity investments | 13.94 | 14.00 | ||||
| Foreign debt investments | 21.63 | 22.23 | ||||
| General accounts of life insurance | 7.13 | 5.90 | ||||
| Others | 10.84 | 8.49 | ||||
| Total | 100.00 | 100.00 | ||||
| (Note) | Total plan assets include retirement benefit trusts, which were set up for corporate pension plans, accounting for 29.46% and 34.02% as of March 31, 2023 and 2024, respectively. | |||||
| --- | --- | |||||
| (b) | Method of determining the expected rate of return on plan assets | |||||
| --- | --- |
The expected rate of return on plan assets is determined considering the allocation of the plan assets which are expected currently and in the future and the long-term rates of return which are expected currently and in the future on the various components of the plan assets.
| (8) | Actuarial assumptions used for the fiscal years ended March 31, 2023 and 2024 were as follows:<br> | |||
|---|---|---|---|---|
| 2023 | 2024 | |||
| --- | --- | --- | --- | --- |
| Discount rate: | ||||
| Domestic | 0.06%-1.44% | 0.22%-1.83% | ||
| Overseas | 1.44%-10.63% | 1.92%-9.63% | ||
| Expected salary increase rate: | ||||
| Domestic | 2.63%-7.50% | 2.63%-7.80% | ||
| Overseas | 2.25%-13.00% | 2.20%-12.80% | ||
| Expected rate of return on plan assets: | ||||
| Domestic | 1.50%-3.70% | 1.50%-3.60% | ||
| Overseas | 1.50%-10.63% | 3.10%-9.63% |
–88–
| 14. | Stock Options | |||
|---|---|---|---|---|
| I. | Amount of, and income statement line-item for, expenses relating to stock options | |||
| --- | --- | |||
| (in millions of yen) | ||||
| --- | --- | --- | --- | --- |
| For the fiscal year<br>ended March 31, | ||||
| 2023 | 2024 | |||
| General and administrative expenses | ¥ | 8,106 | ¥ | 12,685 |
–89–
| 15. | Income Taxes | |||||
|---|---|---|---|---|---|---|
| I. | The tax effects of significant temporary differences which resulted in “Deferred tax assets and<br>liabilities” as of March 31, 2023 and 2024 were as follows: | |||||
| --- | --- | |||||
| (in millions of yen) | ||||||
| --- | --- | --- | --- | --- | --- | --- |
| 2023 | 2024 | |||||
| Deferred tax assets: | ||||||
| Excess over deductible limits on provision for <br>allowance for credit losses and write-offs of<br>loans | ¥ | 362,524 | ¥ | 431,218 | ||
| Revaluation losses on securities | 69,338 | 59,652 | ||||
| Unrealized losses on<br>available-for-sale securities | 176,066 | 161,119 | ||||
| Liability for retirement benefits | 39,657 | 17,967 | ||||
| Reserve for contingent losses | 48,549 | 38,954 | ||||
| Depreciation and impairment losses | 112,431 | 113,260 | ||||
| Tax loss carryforwards | 104,423 | 92,524 | ||||
| Deferred losses on derivatives under hedge accounting | 214,077 | 395,780 | ||||
| Other | 555,829 | 443,124 | ||||
| Subtotal | 1,682,897 | 1,753,601 | ||||
| Less valuation allowance | (270,928 | ) | (244,272 | ) | ||
| Total | ¥ | 1,411,968 | ¥ | 1,509,328 | ||
| Deferred tax liabilities: | ||||||
| Unrealized gains on<br>available-for-sale securities | ¥ | (507,833 | ) | ¥ | (859,856 | ) |
| Revaluation gains on securities at merger | (50,213 | ) | (47,280 | ) | ||
| Unrealized gains on lease transactions | (13,655 | ) | (15,042 | ) | ||
| Asset for retirement benefits | (112,450 | ) | (270,918 | ) | ||
| Gains on establishment of retirement benefit trusts | (47,090 | ) | (44,951 | ) | ||
| Retained earnings of subsidiaries and affiliates | (261,063 | ) | (310,088 | ) | ||
| Accrued dividend income | (6,581 | ) | (6,598 | ) | ||
| Other | (248,710 | ) | (263,212 | ) | ||
| Total | ¥ | (1,247,599 | ) | ¥ | (1,817,949 | ) |
| Net deferred tax assets (liabilities) | ¥ | 164,369 | ¥ | (308,621 | ) | |
| (a) | Changes in presentation | |||||
| --- | --- |
“Asset for retirement benefits” which was included in “Other” as of March 31, 2023 is reported as a separate line-item as of March 31, 2024 due to its increased significance. In order to apply this change in presentation, the information in this Note 15 as of March 31, 2023 has been reclassified.
As a result, the amount which was previously presented as “Other” as of March 31, 2023 totaling ¥(361,161) million has been reclassified into “Asset for retirement benefits” of ¥(112,450) million and “Other” of ¥(248,710) million.
| II. | The reconciliation between the normal effective statutory tax rates and the actual effective tax rates<br>reflected in the accompanying consolidated statements of income for the fiscal year ended March 31, 2023 and 2024 was as follows: | |||||
|---|---|---|---|---|---|---|
| 2023 | 2024 | |||||
| --- | --- | --- | --- | --- | --- | --- |
| Normal effective statutory tax rate | 30.62 | % | 30.62 | % | ||
| Elimination of dividends received from subsidiaries and affiliates | 14.91 | 15.49 | ||||
| Permanent non-taxable differences (e.g., non-taxable dividend income) | (16.70 | ) | (14.85 | ) | ||
| Equity in gains of the equity method investees | (8.31 | ) | (7.94 | ) | ||
| Tax rate difference of overseas subsidiaries | (1.23 | ) | (2.53 | ) | ||
| Retained earnings of subsidiaries and affiliates | 0.85 | 2.41 | ||||
| Change in valuation allowances | (0.77 | ) | (1.55 | ) | ||
| Taxation on unrealized gains on<br>available-for-sale securities | — | (1.51 | ) | |||
| Taxation on gains on sales of shares of subsidiaries | 3.26 | (0.29 | ) | |||
| Amortization of goodwill | 0.35 | 0.28 | ||||
| Expiration of tax loss carryforwards | 0.02 | 0.05 | ||||
| Other | 0.54 | 3.15 | ||||
| Actual effective tax rate | 23.54 | % | 23.33 | % | ||
| III. | Accounting treatment of corporate tax and local corporation tax, and<br>tax-effect accounting relating to corporate tax and local corporate tax | |||||
| --- | --- |
MUFG and some of its domestic consolidated subsidiaries, upon adoption of the Group Tax Sharing System, have applied accounting treatment of corporate tax and local corporation tax, and tax-effect accounting relating to corporate tax and local corporate tax, in accordance with ASBJ Practical Issues Task Force Report No. 42, “Practical Solution on the Accounting and Disclosure under the Group Tax Sharing System” (ASBJ PITF No. 42, August 12, 2021).
–90–
| 16. | Business Combinations |
|---|
(HC Consumer Finance Philippines, Inc. and PT Home Credit Indonesia became consolidated subsidiaries through share acquisitions by Krungsri)
Krungsri (a commercial bank in the Kingdom of Thailand), which is a consolidated subsidiary of MUFG and MUFG Bank, PT. Adira Dinamika Multi Finance (“ADMF”, a finance company in Indonesia),which is a consolidated subsidiary of MUFG, and the MUFG Bank, acquired 100.0% of the shares of HC Consumer Finance Philippines, Inc. (“HC Philippines”) and 85.0% of the shares of PT Home Credit Indonesia (“HC Indonesia”), and HC Philippines and HC Indonesia became consolidated subsidiaries of MUFG, MUFG Bank and Krungsri. HC Philippines and HC Indonesia were previously subsidiaries of Home Credit B.V.
| I. | Business combinations through acquisitions |
|---|---|
| (1) | Overview of the business combinations |
| --- | --- |
| (A) | Names and business description of the acquired companies |
| --- | --- |
| Names of the acquired companies | HC Consumer Finance Philippines, Inc. and PT Home Credit Indonesia |
| --- | --- |
| Business description | Consumer finance |
| (B) | Main objectives of the business combinations |
| --- | --- |
HC Philippines and HC Indonesia have high brand recognition and customer satisfaction, having top market shares in terms of point of sale, or POS, loans (i.e., consumer installment loans provided at automobile and household appliance dealerships), in their respective countries. While MUFG already has a certain presence in the consumer finance markets in Philippines and Indonesia through investments in its equity method affiliate Security Bank Corporation and consolidated subsidiary Bank Danamon, these acquisitions represent continued efforts to reinforce and expand its retail business in both countries.
| (C) | Dates of the business combinations |
|---|---|
| HC Philippines | June 1, 2023 |
| --- | --- |
| HC Indonesia | October 2, 2023 |
| (D) | Legal form of the business combinations |
| --- | --- |
Consolidation of the companies as subsidiaries through the acquisitions of their shares
| (E) | Company names after the business combinations |
|---|
No change
| (F) | Ratio of the acquired voting rights |
|---|---|
| HC Philippines | Krungsri 75% and MUFG Bank 25% |
| --- | --- |
| HC Indonesia | Krungsri 75% and ADMF 10% |
–91–
| (2) | Period in which the acquired companies’ operating results were reflected in the consolidated statements of<br>income |
|---|
The fiscal year end of HC Philippines and HC Indonesia is the end of December, which differs by three months from the consolidated balance sheet date of MUFG.
The results of operations of HC Philippines for the period from June 1, 2023 to December 31, 2023, and those of HC Indonesia for the period from October 2, 2023 to December 31, 2023 were included in the consolidated statement of income.
| (3) | Acquisition costs relating to the acquired companies and components thereof |
|---|
HC Philippines
| Consideration for the acquisition | Cash | ¥69,841 million |
|---|---|---|
| Acquisition cost | ¥69,841 million |
HC Indonesia
| Consideration for the acquisition | Cash | ¥31,811 million |
|---|---|---|
| Acquisition cost | ¥31,811 million | |
| (4) | Description and amount of major acquisition-related expenses | |
| --- | --- |
Direct expenses relating to the acquisitions Advisory fees, etc. ¥1,044 million
| (5) | Amount of goodwill recorded, reason for goodwill recorded, amortization method and amortization period<br> |
|---|---|
| (A) | Amount of goodwill recorded |
| --- | --- |
| HC Philippines | ¥28,195 million |
| --- | --- |
| HC Indonesia | ¥18,034 million |
(Note) HC Indonesia recognizes goodwill by full goodwill method in accordance with U.S. GAAP.
| (B) | Reason for goodwill recorded |
|---|
The recorded goodwill reflected expected increases in profits from future business operations.
| (C) | Amortization method and amortization period |
|---|
Straight-line method over 10 years
| (6) | Amounts of assets received and liabilities assumed on the dates of the business combinations and major<br>components thereof |
|---|
HC Philippines
| (A) Amount of assets | Total assets | ¥137,576 million |
|---|---|---|
| Of which, other assets | ¥61,307 million | |
| (B) Amount of liabilitie | Total liabilities | ¥96,151 million |
| Of which, unsubordinated borrowings | ¥77,964 million |
In the allocation of the acquisition cost, the amount allocated to intangible fixed assets other than goodwill was ¥9,372 million, which mainly consisted of ¥8,376 million of customer relationships (to be amortized over a period of 7 years and 6 months).
–92–
HC Indonesia
| (A) Amount of assets | Total assets | ¥44,177 million |
|---|---|---|
| Of which, other assets | ¥20,923 million | |
| (B) Amount of liabilitie | Total liabilities | ¥30,493 million |
| Of which, unsubordinated borrowings | ¥22,299 million |
In the allocation of the acquisition cost, the amount allocated to intangible fixed assets other than goodwill was ¥3,963 million, which mainly consisted of ¥3,650 million of customer relationships (to be amortized over a period of 7 years and 1 month).
| (7) | Estimated amount of the impact of the business combinations on the consolidated statement of income for the<br>fiscal year ended March 31, 2024 and the calculation method of such amount assuming that the business combinations were completed on the beginning date of the fiscal year ended March 31, 2024 |
|---|
HC Philippines
| Ordinary income | ¥ 24,544 million |
|---|---|
| Ordinary profits | ¥ 4,191 million |
| Profits attributable to owners of parent | ¥ 2,343 million |
HC Indonesia
| Ordinary income | ¥ 19,914 million |
|---|---|
| Ordinary loss | ¥ 449 million |
| Loss attributable to owners of parent | ¥ 361 million |
(Method used for calculating the estimated amount)
The estimated amount represents the impact of the business combinations on ordinary income, ordinary profits, ordinary loss, profits attributable to owners of parent and loss attributable to owners of parent, each calculated based on the assumption that the business combinations were completed on the beginning date of the fiscal year ended March 31,2024. The amount of amortization has also been calculated based on the assumption that the goodwill and the intangible fixed assets recognized in connection with the business combinations were recognized as of the beginning date of the fiscal year ended March 31,2024.
The estimated amount is unaudited.
–93–
(AlbaCore Capital Limited became a consolidated subsidiary through a share acquisition by First Sentier Investors)
On November 14, 2023, Australian global asset management company FSI, a consolidated subsidiary (with a December 31 fiscal year-end) of MUFG and Mitsubishi UFJ Trust and Banking Corporation (the “Trust Bank”), acquired shares in leading European alternative investment manager AlbaCore, and AlbaCore became a consolidated subsidiary of MUFG, the Trust Bank, and FSI.
| I. | Business combination through acquisition |
|---|---|
| (1) | Overview of the business combination |
| --- | --- |
| (A) | Name and business description of the acquired company |
| --- | --- |
| Name of the acquired company | AlbaCore Capital Limited |
| --- | --- |
| Business description | Asset management, etc. |
| (B) | Main objectives of the business combination |
| --- | --- |
As part of its sustainable growth and profitability improvement strategy, MUFG aims to allocate its capital to growth areas, including the global asset management business. Since FSI was acquired by the Trust Bank in 2019, as the core global asset management subsidiary, FSI has been working to enhance its asset management capabilities and product competitiveness, while pursuing inorganic investment opportunities in order to complement its asset management capabilities.
AlbaCore is headquartered in London with a presence in Dublin and has capabilities spanning various parts of the corporate credit spectrum including private credit, CLOs, liquid credit and structured credit in Europe.
Founded in 2016, AlbaCore has significantly grown its business to US$9.4 billion in assets under management with long-standing relationships with public and private pension funds, sovereign wealth funds, insurance companies, and endowments and high net worth clients.
Through the acquisition, the Trust Bank and FSI will seek to accelerate growth by offering a diversified and new range of alternative credit solutions to meet high market demand, while expanding their client relationships, and to further strengthen the global asset management businesses within MUFG.
| (C) | Date of the business combination |
|---|
November 14, 2023
| (D) | Legal form of the business combination |
|---|
Consolidation of the company as a subsidiary through the acquisition of its shares
| (E) | Company name after the business combination |
|---|
No change
| (F) | Ratio of the acquired voting rights |
|---|
75%
–94–
| (2) | Period in which the acquired company’s operating results were reflected in the consolidated statements of<br>income |
|---|
The fiscal year end of AlbaCore is the end of December, which differs by three months from the consolidated balance sheet date of MUFG.
The results of operations of AlbaCore for the period from November 14, 2023 to December 31, 2023 were included in the consolidated statement of income.
| (3) | Acquisition cost relating to the acquired company and components thereof | |
|---|---|---|
| Consideration for the acquisition | Cash | ¥67,244 million |
| --- | --- | --- |
| Acquisition cost | ¥67,244 million |
(Note) Consideration for the acquisition includes contingent consideration (fair value).
| (4) | Description and amount of major acquisition-related expenses |
|---|
Direct expenses relating to the acquisition Advisory fees, etc. ¥2,599 million
| (5) | Amount of goodwill recorded, reason for goodwill recorded, amortization method and amortization period<br> |
|---|---|
| (A) | Amount of goodwill recorded ¥63,063 million |
| --- | --- |
(Note) The goodwill recorded is recognized by full goodwill method in accordance with U.S. GAAP.
| (B) | Reason for goodwill recorded |
|---|
The recorded goodwill reflected expected increases in profits from future business operations.
| (C) | Amortization method and amortization period |
|---|
Straight-line method over 20 years
| (6) | Amounts of assets received and liabilities assumed on the date of the business combination and major components<br>thereof | |
|---|---|---|
| (A) Amount of assets | Total assets | ¥ 33,583 million |
| --- | --- | --- |
| Of which, cash and due from banks | ¥ 6,448 million | |
| (B) Amount of liabilities | Total liabilities | ¥ 12,187 million |
| Of which, deferred tax liabilities | ¥ 5,927 million |
In the allocation of the acquisition cost, the amount allocated to intangible fixed assets other than goodwill was ¥23,709 million, which mainly consisted of ¥22,478 million of customer relationships (to be amortized over a period of 16 years).
–95–
| (7) | Details of the contingent consideration specified in the agreement governing the business combination and the<br>accounting policy to be applied |
|---|
Based on the agreement, additional consideration may be paid depending on the future performance of the acquired business.
In accordance with U.S. GAAP, the fair value of such contingent consideration at the time of the acquisition was initially recognized as part of the consideration for the acquisition, and subsequent changes in the fair value are also to be recognized in accordance with U.S. GAAP.
| (8) | Estimated amount of the impact of the business combination on the consolidated statement of income for the<br>fiscal year ended March 31, 2024 and the calculation method of such amount assuming that the business combination was completed on the beginning date of the fiscal year ended March 31, 2024 |
|---|---|
| Ordinary income | ¥ 7,490 million |
| --- | --- |
| Net loss | ¥ 1,701 million |
(Method used for calculating the estimated amount)
The estimated amount represents the impact of the business combination on ordinary income and net loss, each calculated based on the assumption that the business combination was completed on the beginning date of the fiscal year ended March 31, 2024. The amount of amortization has also been calculated based on the assumption that the goodwill and intangible fixed assets recognized in connection with the business combination was recognized as of the beginning date of the fiscal year ended March 31, 2024.
The estimated amount is unaudited.
–96–
| 17. | Revenue Recognition |
|---|
Disaggregated information on revenues from contracts with customers
| (in millions of yen) | ||||
|---|---|---|---|---|
| For the fiscal year ended<br>March 31, | ||||
| 2023 | 2024 | |||
| Fees and commissions | ¥ | 1,883,428 | 2,047,232 | |
| Fees and commissions on remittances and transfers | 162,312 | 168,163 | ||
| Fees and commissions on deposits | 62,810 | 44,561 | ||
| Fees and commissions on loans (*1) | 374,474 | 439,904 | ||
| Fees and commissions on trust-related services | 123,273 | 130,383 | ||
| Fees and commissions on security-related services | 136,204 | 163,037 | ||
| Fees and commissions on credit card business (*1) | 304,634 | 330,177 | ||
| Fees and commissions on administration and management services for investment funds and investment<br>advisory services | 240,542 | 283,193 | ||
| Guarantee fees (*2) | 121,513 | 132,402 | ||
| Other fees and commissions (*1) | 357,661 | 355,408 | ||
| Trust fees | ¥ | 140,637 | 139,363 |
(Notes)
| 1. | Include revenues that are not within the scope of ASBJ Statement No.29, “Accounting Standard for Revenue<br>Recognition.” |
|---|---|
| 2. | Guarantee fees are not included within the scope of ASBJ Statement No.29, “Accounting Standard for Revenue<br>Recognition.” |
| --- | --- |
| 3. | Fees and commissions on remittances and transfers were generated mainly through the Digital Service Business<br>Group, the Retail & Commercial Banking Business Group, the Japanese Corporate & Investment Banking Business Group, the Global Commercial Banking Business Group and the Global Corporate & Investment Banking Business Group.<br>Fees and commissions on deposits were generated mainly through the Digital Service Business Group and the Global Commercial Banking Business Group. Fees and commissions on loans were generated mainly through the Digital Service Business Group, the<br>Retail & Commercial Banking Business Group, the Japanese Corporate & Investment Banking Business Group and the Global Corporate & Investment Banking Business Group. Fees and commissions on trust-related services were<br>generated mainly through the Asset Management & Investor Services Business Group. Fees and commissions on security-related services were generated mainly through the Retail & Commercial Banking Business Group, the Japanese<br>Corporate & Investment Banking Business Group and the Global Corporate & Investment Banking Business Group. Fees and commissions on credit card business were generated mainly through the Digital Service Business Group. Fees and<br>commissions on administration and management services for investment funds and investment advisory services were generated mainly through the Asset Management & Investor Services Business Group. Trust fees were generated mainly through the<br>Retail & Commercial Banking Business Group, the Japanese Corporate & Investment Banking Business Group and the Asset Management & Investor Services Business Group. |
| --- | --- |
| 4. | For details of the performance obligations and the timing of revenue recognition for each revenue category,<br>refer to “(15)Revenue Recognition” under “IV. Accounting policies” under “1.Significant Accounting Policies Applied to the Consolidated Financial Statements.” |
| --- | --- |
–97–
| 18. | Segment Information |
|---|---|
| I. | Business segment information |
| --- | --- |
| (1) | Summary of reporting segments |
| --- | --- |
MUFG’s reporting segments are business units of MUFG which its Executive Committee, the decision-making body for the execution of its business operations, regularly reviews to make decisions regarding allocation of management resources and evaluate performance.
MUFG makes and executes unified group-wide strategies based on customer characteristics and the nature of business.
Accordingly, MUFG has adopted customer-based and business-based segmentation, which consists of the following reporting segments: Digital Service Business Group, Retail & Commercial Banking Business Group, Japanese Corporate & Investment Banking Business Group, Global Commercial Banking Business Group, Asset Management & Investor Services Business Group, Global Corporate & Investment Banking Business Group, Global Markets Business Group and Other.
| Digital Service Business Group: | Providing financial services mainly in non-face-to-face transactions to individual and corporate customers, and<br>promoting MUFG-wide digital transformation |
|---|---|
| Retail & Commercial Banking<br>Business Group: | Providing services relating to finance, real estate and stock transfers to Japanese individual and corporate customers |
| Japanese Corporate & Investment<br>Banking Business Group: | Providing services relating to finance, real estate and stock transfers to large Japanese corporate customers |
| Global Commercial Banking<br>Business Group: | Providing financial services to individual and small to medium sized corporate customers of overseas commercial bank investees of MUFG |
| Asset Management & Investor<br>Services Business Group: | Providing asset management and administration services to domestic and overseas investor and asset manager customers |
| Global Corporate & Investment<br>Banking Business Group: | Providing financial services to large non-Japanese corporate customers |
| Global Markets Business Group: | Providing services relating to foreign currency exchange, funds and investment securities to customers, as well as conducting market transactions and managing liquidity and cash for MUFG |
| Other: | Other than the businesses mentioned above |
–98–
| (2) | Methods of calculation of net revenue, operating profit (loss), and fixed assets for each reporting segment<br> |
|---|
The accounting methods applied to the reported business segments, except the scope of consolidation, are generally consistent with the methods described in “1. Significant Accounting Policies Applied to the Consolidated Financial Statements”. The scope of consolidation includes MUFG’s major subsidiaries. The reported figures are generally prepared based on internal managerial accounting rules before elimination of inter-segment transactions and other consolidation adjustments. Net revenues and operating expenses attributable to multiple segments are reported in accordance with internal managerial accounting rules generally calculated based on market value.
Fixed assets for each reporting segment disclosed below represent the tangible fixed assets and intangible fixed assets related to the Trust Bank as allocated to each reporting segment.
| (a) | Changes in the method of calculation of operating profit (loss) of each reporting segment<br> |
|---|
In the fiscal year ended March 31, 2024, MUFG changed the method of allocation of net revenue and operating expenses among reporting segments and accordingly changed the method of calculation of operating profit (loss) of each reporting segment.
The business segment information for the fiscal year ended March 31, 2023, has been restated based on the new calculation method.
–99–
| (3) | Information on net revenue, operating profit (loss), and fixed assets for each reporting segment<br> |
|---|
For the fiscal year ended March 31, 2023
| (in millions of yen) | |||||||||||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| For the fiscal year ended March 31, 2023 | |||||||||||||||||||||||
| Digital<br>Service<br>Business<br>Group | Retail &<br>Commercial<br>Banking<br>Business<br>Group | Japanese<br>Corporate<br>&<br>Investment<br>Banking<br>Business<br>Group | Global<br>Commercial<br>Banking<br>Business<br>Group | Asset<br>Management<br>&<br>Investor<br>Services<br>Business<br>Group | Global<br>Corporate<br>&<br>Investment<br>Banking<br>Business<br>Group | Total of<br>Customer<br>Business | Global<br>Markets<br>Business<br>Group | Other | Total | ||||||||||||||
| Net revenue | ¥ | 748,145 | ¥ | 614,544 | ¥ | 800,940 | ¥ | 870,584 | ¥ | 360,754 | ¥ | 712,622 | ¥ | 4,107,592 | ¥ | 409,118 | ¥ | (954 | ) | ¥ | 4,515,756 | ||
| BK and TB <br>combined | 251,935 | 430,057 | 645,485 | 35,077 | 105,409 | 532,325 | 2,000,291 | 130,813 | 19,502 | 2,150,607 | |||||||||||||
| Net interest income | 214,106 | 192,355 | 342,496 | 35,719 | 9,369 | 260,238 | 1,054,284 | 710,555 | 89,806 | 1,854,646 | |||||||||||||
| Net non-interest income | 37,829 | 237,701 | 302,989 | (641 | ) | 96,040 | 272,087 | 946,006 | (579,741 | ) | (70,304 | ) | 295,960 | ||||||||||
| Other than BK and TB<br>combined | 496,210 | 184,487 | 155,454 | 835,506 | 255,344 | 180,297 | 2,107,300 | 278,304 | (20,456 | ) | 2,365,148 | ||||||||||||
| Operating <br>expenses | 527,493 | 458,938 | 330,754 | 580,308 | 255,623 | 334,790 | 2,487,909 | 274,063 | 176,200 | 2,938,172 | |||||||||||||
| Operating <br>profit (loss) | ¥ | 220,652 | ¥ | 155,606 | ¥ | 470,186 | ¥ | 290,275 | ¥ | 105,130 | ¥ | 377,832 | ¥ | 1,619,683 | ¥ | 135,054 | ¥ | (177,154 | ) | ¥ | 1,577,583 | ||
| Fixed assets <br>at period end | 156,944 | 201,909 | 161,198 | 1,135 | 18,822 | 171,172 | 711,182 | 110,630 | 546,288 | 1,368,101 | |||||||||||||
| Increase in fixed assets | 37,017 | 41,850 | 37,116 | 578 | 11,553 | 23,351 | 151,467 | 23,189 | 34,239 | 208,896 | |||||||||||||
| Depreciation and<br>amortization | 10,638 | 21,118 | 36,611 | 191 | 6,016 | 35,201 | 109,778 | 28,302 | 19,500 | 157,581 |
(Notes)
| 1. | “BK” refers to MUFG Bank, Ltd. and “TB” refers to Mitsubishi UFJ Trust and Banking<br>Corporation. |
|---|---|
| 2. | “Net revenue” in the above table is used in lieu of net sales generally used by Japanese non-financial companies. |
| --- | --- |
| 3. | “Net revenue” includes net interest income, trust fees, net fees and commissions, net trading profit,<br>and net other operating profit. |
| --- | --- |
| 4. | “Operating expenses” includes personnel expenses and premise expenses. |
| --- | --- |
| 5. | “Fixed assets at period end” for each reporting segment in the above table represent those related to<br>the Bank and the Trust Bank. Those fixed assets and consolidation adjustments related to MUFG and its other consolidated subsidiaries, which are not allocated to reporting segments, were ¥1,210,195 million. With respect to such fixed assets<br>not allocated to reporting segments, certain related expenses are allocated to reporting segments on a reasonable basis. |
| --- | --- |
| 6. | “Increase in fixed assets” for each reporting segment in the above table represents such increase<br>related to the Bank and the Trust Bank. |
| --- | --- |
| 7. | “Depreciation and amortization” for each reporting segment in the above table represents those<br>related to the Bank and the Trust Bank. |
| --- | --- |
–100–
For the fiscal year ended March 31, 2024
| (in millions of yen) | ||||||||||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| For the fiscal year ended March 31, 2024 | ||||||||||||||||||||||
| Digital<br>Service<br>Business<br>Group | Retail &<br>Commercial<br>Banking<br>Business<br>Group | Japanese<br>Corporate<br>&<br>Investment<br>Banking<br>Business<br>Group | Global<br>Commercial<br>Banking<br>Business<br>Group | Asset<br>Management<br>&<br>Investor<br>Services<br>Business<br>Group | Global<br>Corporate<br>&<br>Investment<br>Banking<br>Business<br>Group | Total of<br>Customer<br>Business | Global<br>Markets<br>Business<br>Group | Other | Total | |||||||||||||
| Net revenue | ¥ | 782,544 | ¥ | 709,398 | ¥ | 1,013,680 | ¥ | 684,992 | ¥ | 432,311 | ¥ | 863,065 | ¥ | 4,485,994 | ¥ | 323,387 | ¥ | (37,592 | ) | ¥ | 4,771,789 | |
| BK and TB combined | 253,139 | 492,538 | 829,497 | 29,278 | 118,560 | 781,034 | 2,504,048 | 21,761 | 40,142 | 2,565,953 | ||||||||||||
| Net interest income | 212,997 | 232,736 | 501,077 | 29,268 | 14,742 | 413,792 | 1,404,614 | 113,238 | 99,062 | 1,616,914 | ||||||||||||
| Net non-interest income | 40,141 | 259,802 | 328,419 | 10 | 103,818 | 367,242 | 1,099,434 | (91,476 | ) | (58,919 | ) | 949,038 | ||||||||||
| Other than BK <br>and TB combined | 529,405 | 216,859 | 184,183 | 655,713 | 313,751 | 82,030 | 1,981,945 | 301,626 | (77,735 | ) | 2,205,835 | |||||||||||
| Operating <br>expenses | 536,613 | 463,978 | 343,839 | 382,862 | 307,305 | 361,391 | 2,395,990 | 300,033 | 232,871 | 2,928,896 | ||||||||||||
| Operating <br>profit (loss) | ¥ | 245,931 | ¥ | 245,419 | ¥ | 669,841 | ¥ | 302,130 | ¥ | 125,005 | ¥ | 501,674 | ¥ | 2,090,003 | ¥ | 23,353 | ¥ | (270,463 | ) | ¥ | 1,842,893 | |
| Fixed assets <br>at period end | 186,829 | 228,577 | 169,234 | 1,636 | 21,246 | 170,905 | 778,429 | 114,297 | 502,246 | 1,394,973 | ||||||||||||
| Increase in fixed assets | 38,577 | 47,075 | 46,093 | 459 | 11,486 | 32,482 | 176,175 | 28,174 | 29,350 | 233,700 | ||||||||||||
| Depreciation and <br>amortization | 14,672 | 24,635 | 42,113 | 239 | 9,062 | 42,143 | 132,868 | 32,491 | 16,272 | 181,632 |
(Notes)
| 1. | “Net revenue” in the above table is used in lieu of net sales generally used by Japanese non-financial companies. |
|---|---|
| 2. | “Net revenue” includes net interest income, trust fees, net fees and commissions, net trading profit,<br>and net other operating profit. |
| --- | --- |
| 3. | “Operating expenses” includes personnel expenses and premise expenses. |
| --- | --- |
| 4. | “Fixed assets at period end” for each reporting segment in the above table represents those related<br>to the Bank and the Trust Bank. Those fixed assets and consolidation adjustments related to MUFG and its other consolidated subsidiaries, which are not allocated to reporting segments, were ¥1,505,407 million. With respect to such fixed<br>assets not allocated to reporting segments, certain related expenses are allocated to reporting segments on a reasonable basis. |
| --- | --- |
| 5. | “Increase in fixed assets” for each reporting segment in the above table represents such increase<br>related to the Bank and the Trust Bank. |
| --- | --- |
| 6. | “Depreciation and amortization” for each reporting segment in the above table represents those<br>related to the Bank and the Trust Bank. |
| --- | --- |
–101–
| (4) | Reconciliation of the total operating profit in each of the above tables to the ordinary profit in the<br>consolidated statement of income for the corresponding fiscal year | |||||
|---|---|---|---|---|---|---|
| (in millions of yen) | ||||||
| --- | --- | --- | --- | --- | --- | --- |
| For the fiscal years ended March 31, | ||||||
| 2023 | 2024 | |||||
| Total operating profit of reporting segments | ¥ | 1,577,583 | ¥ | 1,842,893 | ||
| Operating profit of consolidated subsidiaries excluded from reporting segments | (1,420 | ) | (373 | ) | ||
| Provision for general allowance for credit losses | (36,608 | ) | (6,723 | ) | ||
| Credit related expenses | (746,353 | ) | (592,913 | ) | ||
| Gains on reversal of reserve for contingent losses included in credit costs | 11,550 | — | ||||
| Gains on loans written-off | 96,569 | 101,726 | ||||
| Net gains on equity securities and other securities | 288,000 | 371,274 | ||||
| Equity in earnings of the equity method investees | 425,829 | 531,803 | ||||
| Others | (594,421 | ) | (119,727 | ) | ||
| Ordinary profit in the consolidated statement of income | ¥ | 1,020,728 | ¥ | 2,127,958 |
(Note)
In connection with the planned sale of the shares in MUB, an aggregate of ¥952,590 million of losses was recognized for the fiscal year ended March 31, 2023, primarily in accordance with ASC Topic 326, “Financial Instruments - Credit losses,” and ASC Topic 310, “Receivables.” These losses consist mainly of ¥555,421 million of valuation losses related to securities held for sale, which are included in “Others”, and ¥400,511 million of valuation losses related to loans held for sale, which are included in “Credit related expenses.”
–102–
| II. | Related information |
|---|
For the fiscal year ended March 31, 2023
| (1) | Information by type of service |
|---|
Omitted because it is similar to the above-explained reporting segment information.
| (2) | Geographical information |
|---|
(a) Ordinary income
| (in millions of yen) | |||||
|---|---|---|---|---|---|
| For the fiscal year ended March 31,<br>2023 | |||||
| Japan | United States | Europe/Middle East | Asia/Oceania | Others | Total |
| ¥ 4,613,149 | ¥ 1,971,247 | ¥ 694,211 | ¥ 1,756,236 | ¥ 246,181 | ¥ 9,281,027 |
(Notes)
| 1. | Ordinary income is used in lieu of net sales generally used by Japanese<br>non-financial companies. |
|---|---|
| 2. | Ordinary income is categorized by either country or region based on the location of MUFG’s operating<br>offices. |
| --- | --- |
(b) Tangible fixed assets
| (in millions of yen) | |||
|---|---|---|---|
| March 31, 2023 | |||
| Japan | Thailand | Others | Total |
| ¥ 993,155 | ¥ 91,058 | ¥ 135,958 | ¥ 1,220,172 |
| (3) | Information by major customer | ||
| --- | --- |
None.
–103–
For the fiscal year ended March 31, 2024
| (1) | Information by type of service |
|---|
Omitted because it is similar to the above-explained reporting segment information.
| (2) | Geographical information |
|---|
(a) Ordinary income
| (in millions of yen) | |||||
|---|---|---|---|---|---|
| For the fiscal year ended March 31,<br>2024 | |||||
| Japan | United States | Europe/Middle East | Asia/Oceania | Others | Total |
| ¥ 5,148,480 | ¥ 2,684,445 | ¥ 1,166,422 | ¥ 2,507,082 | ¥ 383,919 | ¥ 11,890,350 |
(Notes)
| 1. | Ordinary income is used in lieu of net sales generally used by Japanese<br>non-financial companies. |
|---|---|
| 2. | Ordinary income is categorized by either country or region based on the location of MUFG’s operating<br>offices. |
| --- | --- |
(b) Tangible fixed assets
| (in millions of yen) | |||
|---|---|---|---|
| March 31, 2024 | |||
| Japan | Thailand | Others | Total |
| ¥ 976,361 | ¥ 108,097 | ¥ 144,547 | ¥ 1,229,007 |
| (3) | Information by major customer | ||
| --- | --- |
None.
–104–
| III. | Information on impairment losses on fixed assets by reporting segment |
|---|
For the fiscal year ended March 31, 2023
| (in millions of yen) | ||||||||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| For the fiscal year ended March 31, 2023 | ||||||||||||||||||||
| Digital<br>Service<br>Business<br>Group | Retail &<br>Commercial<br>Banking<br>Business<br>Group | Japanese<br>Corporate<br>&<br>Investment<br>Banking<br>Business<br>Group | Global<br>Commercial<br>Banking<br>Business<br>Group | Asset<br>Management<br>&<br>Investor<br>Services<br>Business<br>Group | Global<br>Corporate<br>&<br>Investment<br>Banking<br>Business<br>Group | Total of<br>Customer<br>Business | Global<br>Markets<br>Business<br>Group | Other | Total | |||||||||||
| Impairment losses | ¥ | 2,037 | ¥ | 6,427 | ¥ | 22 | ¥ | 0 | ¥ | — | ¥ | 6 | ¥ | 8,494 | ¥ | 7 | ¥ | 1,623 | ¥ | 10,125 |
(Note)
Impairment losses on fixed assets related to MUFG and its consolidated subsidiaries other than those related to the Bank and the Trust Bank are not allocated to reporting segments. Such unallocated impairment losses for the fiscal year ended March 31, 2023 were ¥8,042 million.
For the fiscal year ended March 31, 2024
| (in millions of yen) | ||||||||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| For the fiscal year ended March 31, 2024 | ||||||||||||||||||||
| Digital<br>Service<br>Business<br>Group | Retail &<br>Commercial<br>Banking<br>Business<br>Group | Japanese<br>Corporate<br>&<br>Investment<br>Banking<br>Business<br>Group | Global<br>Commercial<br>Banking<br>Business<br>Group | Asset<br>Management<br>&<br>Investor<br>Services<br>Business<br>Group | Global<br>Corporate<br>&<br>Investment<br>Banking<br>Business<br>Group | Total of<br>Customer<br>Business | Global<br>Markets<br>Business<br>Group | Other | Total | |||||||||||
| Impairment losses | ¥ | 1,059 | ¥ | 3,079 | ¥ | 3,110 | ¥ | 0 | ¥ | — | ¥ | 7,236 | ¥ | 14,485 | ¥ | 1,772 | ¥ | 4,147 | ¥ | 20,405 |
(Note)
Impairment losses on fixed assets related to MUFG and its consolidated subsidiaries other than those related to the Bank and the Trust Bank are not allocated to reporting segments. Such unallocated impairment losses for the fiscal year ended March 31, 2024 were ¥10,702 million.
–105–
| IV. | Information on amortization and unamortized balance of goodwill by reporting segment |
|---|
For the fiscal year ended March 31, 2023
| (in millions of yen) | ||||||||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| For the fiscal year ended March 31, 2023 | ||||||||||||||||||||
| Digital<br>Service<br>Business<br>Group | Retail &<br>Commercial<br>Banking<br>Business<br>Group | Japanese<br>Corporate<br>&<br>Investment<br>Banking<br>Business<br>Group | Global<br>Commercial<br>Banking<br>Business<br>Group | Asset<br>Management<br>&<br>Investor<br>Services<br>Business<br>Group | Global<br>Corporate<br>&<br>Investment<br>Banking<br>Business<br>Group | Total of<br>Customer<br>Business | Global<br>Markets<br>Business<br>Group | Other | Total | |||||||||||
| Amortization | ¥ | 175 | ¥ | 260 | ¥ | 44 | ¥ | 2,914 | ¥ | 12,691 | ¥ | 3,842 | ¥ | 19,928 | ¥ | — | ¥ | — | ¥ | 19,928 |
| Unamortized balance at period end | 700 | 978 | 343 | 7,212 | 203,128 | 39,645 | 252,009 | — | — | 252,009 |
For the fiscal year ended March 31, 2024
| (in millions of yen) | ||||||||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| For the fiscal year ended March 31, 2024 | ||||||||||||||||||||
| Digital<br>Service<br>Business<br>Group | Retail &<br>Commercial<br>Banking<br>Business<br>Group | Japanese<br>Corporate<br>&<br>Investment<br>Banking<br>Business<br>Group | Global<br>Commercial<br>Banking<br>Business<br>Group | Asset<br>Management<br>&<br>Investor<br>Services<br>Business<br>Group | Global<br>Corporate<br>&<br>Investment<br>Banking<br>Business<br>Group | Total of<br>Customer<br>Business | Global<br>Markets<br>Business<br>Group | Other | Total | |||||||||||
| Amortization | ¥ | 805 | ¥ | 260 | ¥ | 44 | ¥ | 3,396 | ¥ | 14,069 | ¥ | 3,652 | ¥ | 22,230 | ¥ | — | ¥ | — | ¥ | 22,230 |
| Unamortized balance at period end | 12,504 | 717 | 299 | 87,669 | 266,033 | 38,405 | 405,629 | — | — | 405,629 | ||||||||||
| V. | Information on gains on negative goodwill by reporting segment | |||||||||||||||||||
| --- | --- |
None.
| VI. | Related-party transactions |
|---|---|
| (1) | Transactions between MUFG and its related parties |
| --- | --- |
| (a) | Unconsolidated subsidiaries and affiliates |
| --- | --- |
For the fiscal year ended March 31, 2023
None.
For the fiscal year ended March 31, 2024
None.
–106–
| (2) | Information on the parent company or significant equity method investees |
|---|---|
| (a) | Information on the parent company |
| --- | --- |
None.
| (b) | Summarized financial information of MUFG’s significant equity method investees |
|---|
Summarized consolidated financial information of Morgan Stanley, MUFG’s significant equity method investee, as of and for the fiscal year ended December 31, 2022 and as of and for the fifteen months ended March 31, 2024 is as follows.
For the fiscal year ended March 31, 2024, the equity method of accounting has been applied to Morgan Stanley’s consolidated financial statements for the fifteen-month period from January 1, 2023 to March 31, 2024 based on a provisional closing of accounts
The consolidated financial statements of Morgan Stanley are prepared in accordance with U.S.GAAP.
| (in millions of yen) | ||||
|---|---|---|---|---|
| Morgan Stanley | ||||
| December 31, 2022 | March 31, 2024 | |||
| Trading assets at fair value | ¥ | 39,984,500 | ¥ | 55,663,312 |
| Securities purchased under agreements to resell | 15,115,458 | 18,583,003 | ||
| Securities borrowed | 17,698,729 | 20,115,121 | ||
| Total assets | 156,616,653 | 186,007,639 | ||
| (in millions of yen) | ||||
| Morgan Stanley | ||||
| December 31, 2022 | March 31, 2024 | |||
| Deposits | ¥ | 47,326,924 | ¥ | 53,371,116 |
| Customer and other payables | 28,680,981 | 32,457,761 | ||
| Borrowings | 31,590,296 | 41,090,100 | ||
| Total liabilities | 143,183,300 | 170,845,441 | ||
| Noncontrolling interests | 144,643 | 142,628 | ||
| (in millions of yen) | ||||
| Morgan Stanley | ||||
| For the fiscal year ended<br>December 31, 2022 | For the fifteen months<br>ended March 31, 2024 | |||
| Net revenues | ¥ | 7,121,743 | ¥ | 10,489,533 |
| Total non-interest expenses | 5,214,977 | 7,955,838 | ||
| Income before provision for income taxes | 1,869,610 | 2,454,053 | ||
| Net income applicable to Morgan Stanley | 1,463,548 | 1,892,473 |
–107–
| 19. | Per Share Information | |
|---|---|---|
| For the fiscal year ended<br>March 31,<br>2023 | For the fiscal year ended<br>March 31,<br>2024 | |
| --- | --- | --- |
| Total equity per common share | ¥1,433.11 | ¥1,670.44 |
| Basic earnings per common share | ¥90.72 | ¥124.64 |
| Diluted earnings per common share | ¥90.41 | ¥124.32 |
(Notes)
| 1. | The bases for the calculation of basic earnings per common share and diluted earnings per common share for the<br>periods indicated were as follows: | ||
|---|---|---|---|
| For the fiscal year ended<br>March 31, 2023 | For the fiscal year ended<br>March 31, 2024 | ||
| --- | --- | --- | --- |
| Basic earnings per common share | |||
| Profits attributable to owners of parent | million yen | 1,116,496 | 1,490,781 |
| Profits not attributable to common shareholders | million yen | — | — |
| Profits attributable to common shareholders of parent | million yen | 1,116,496 | 1,490,781 |
| Average number of common shares during the periods | thousand shares | 12,305,714 | 11,959,977 |
| Diluted earnings per common share | |||
| Adjustments to profits attributable to owners of parent | million yen | (3,912) | (3,807) |
| Adjustments related to dilutive shares of <br>consolidated subsidiaries and others | million yen | (3,912) | (3,807) |
| Increase in common shares | thousand shares | — | — |
| Description of antidilutive securities which were not included in the calculation of diluted<br>earnings per common share | Share subscription rights issued by equity method affiliates:<br><br><br>Morgan Stanley Stock options and others<br><br><br>— 3 million units as of December 31, 2022 | Share subscription rights issued by equity method affiliates:<br><br><br>Morgan Stanley Stock options and others<br><br><br>— 0 million units as of March 31, 2024 | |
| 2. | The bases for the calculation of total equity per common share for the periods indicated were as follows:<br> | ||
| --- | --- | ||
| As of March 31, 2023 | As of March 31, 2024 | ||
| --- | --- | --- | --- |
| Total equity | million yen | 18,272,857 | 20,746,978 |
| Deductions from total equity: | million yen | 1,041,565 | 1,159,004 |
| Subscription rights to shares | million yen | — | 0 |
| Non-controlling interests | million yen | 1,041,565 | 1,159,003 |
| Total equity attributable to common shares | million yen | 17,231,291 | 19,587,974 |
| Number of common shares at period end used for the calculation of total equity per common<br>share | thousand shares | 12,023,645 | 11,726,188 |
| 3. | The shares of MUFG common stock remaining in the BIP trust, which were included in the treasury stock as part<br>of shareholders’ equity, were deducted from the average number of common shares for each reporting period used for the calculation of earnings per common share and from the number of common shares as of the end of each reporting period used for<br>the calculation of total equity per common share. The average number of such treasury stock deducted from the calculation of earnings per common share for the fiscal year ended March 31, 2023 and 2024 was 29,528 thousand shares and<br>26,547 thousand shares, respectively, and the number of such treasury stock deducted from the calculation of total equity per common share as of March 31, 2023 and 2024 was 28,407 thousand shares and 25,769 thousand shares,<br>respectively. | ||
| --- | --- |
–108–
| 20. | Subsequent Events |
|---|
(Repurchase of own shares)
MUFG resolved, at a meeting of the Board of Directors held on May 15, 2024, to repurchase shares of its common stock pursuant to the provisions of Article 156, Paragraph 1 of the Company Act, in accordance with the provisions of Article 459, Paragraph 1, Item 1 of the Company Act and Article 44 of its Articles of Incorporation.
| I. | Reasons for the repurchase of own shares |
|---|
MUFG seeks to enhance shareholder returns primarily through dividends, while pursuing an optimal balance between effective capital management and strategic investments for growth.
As a general policy, MUFG intends to agilely engage in repurchases of shares of its own stock as a means to return profits to shareholders and improve capital efficiency, taking into account its business performance and capital position, opportunities for growth investments, and market conditions including stock prices.
| II. | Outline of the repurchase of own shares |
|---|---|
| (1) | Type of shares to be repurchased: Common shares of MUFG |
| --- | --- |
| (2) | Aggregate number of shares to be repurchased: Up to 80,000,000 shares (equivalent to 0.68% of the total number<br>of issued shares (excluding treasury shares)) |
| --- | --- |
| (3) | Aggregate amount of repurchase price: Up to JPY 100,000,000,000 |
| --- | --- |
| (4) | Repurchase period: From May 16, 2024 to June 30, 2024 |
| --- | --- |
| (5) | Repurchase method: Market purchases on the Tokyo Stock Exchange |
| --- | --- |
| III. | Results of the repurchase of own shares |
| --- | --- |
| (1) | Type of shares repurchased: Common shares of MUFG |
| --- | --- |
| (2) | Aggregate number of shares repurchased: 62,666,100 shares |
| --- | --- |
| (3) | Aggregate amount of repurchase price: JPY 99,999,986,737 |
| --- | --- |
| (4) | Repurchase period: From May 16, 2024 to June 21, 2024 |
| --- | --- |
| (5) | Repurchase method: Market purchases on the Tokyo Stock Exchange |
| --- | --- |
–109–
| 21. | Bonds Payable |
|---|
Bonds payable as of March 31, 2023 and 2024 consisted of the following:
| (in millions of yen) | |||||||
|---|---|---|---|---|---|---|---|
| Description | Issued | 2023 | Coupon<br>rate (%) | Secured or<br>unsecured | Due | ||
| MUFG: | |||||||
| Subordinated bonds payable in yen | Jun. 2014 to Sep. 2023 | 1,781,351 | ¥1,901,024<br>[63,000] | 0.29-1.67 | Unsecured | Jun. 2024 to<br>Jan. 2034 | |
| Undated subordinated bonds payable in yen | Oct. 2015 to Mar. 2024 | 1,367,400 | 1,969,620 | 0.82-2.50 | Unsecured | — | |
| Undated subordinated bonds payable in US$ | Oct. 26, 2023 | — | 113,557<br> <br>(US$750 million) | 8.20 | Unsecured | — | |
| Straight bonds payable in yen | Nov. 2021 to Jun. 2023 | 451,500 | 545,200 | 0.14-1.47 | Unsecured | Jun. 2024 to<br>Mar. 2034 | |
| Senior bonds payable in US$ | Mar. 2016 to Apr. 2023 | 7,627,175(US57,119 million)[774,130] | 7,922,549<br>(US$52,325 million)<br>[658,180] | 0.84-6.98 | Unsecured | Jul. 2023 to<br>Jul. 2039 | |
| Euro senior bonds payable in Euro | Sep. 2017 to Jun. 2023 | 1,037,526(7,120 million)[123,862] | 1,104,841<br>(EUR6,768 million)<br>[285,540] | 0.33-4.63 | Unsecured | May. 2023 to<br>Jan. 2033 | |
| Euro senior bonds payable in A$ | Jul. 2017 to Oct. 2019 | 64,218(A716 million) | 70,604<br>(A$716 million)<br>[49,305] | 2.07-5.61 | Unsecured | Oct. 2024 to<br>Dec. 2027 | |
| Euro senior bonds payable in HK$ | May. 2018 to Nov. 2019 | 9,083(HK534 million) | 10,327<br>(HK$534 million) | 2.73-3.55 | Unsecured | May. 2025 to<br>Nov. 2029 | |
| the Bank: *1 | |||||||
| Straight bonds payable in yen | Apr. 2007 to Jul. 2014 | 37,300[20,200] | 17,200<br>[8,900] | 0.63-2.34 | Unsecured | Apr. 2023 to<br>Apr. 2027 | |
| Senior bonds payable in US$ | Sep. 2013 to Mar. 2015 | 352,545(US2,640 million)[165,806] | 211,871<br>(US$1,399 million)<br>[151,416] | 3.05-4.70 | Unsecured | Sep. 2023 to<br>Mar. 2044 | |
| Euro senior bonds payable in US$ | May. 2015 to Mar. 2022 | 711,069(US5,325 million) | 838,122<br>(US$5,535 million) | 0.00 | Unsecured | May. 2045 to<br>Mar. 2052 | |
| Euro senior bonds payable in Euro | Sep. 21, 2018 | 6,557(45 million) | 7,345<br>(EUR45 million) | 4.19 | Unsecured | Sep. 21, 2033 | |
| Subordinated bonds payable in yen | Oct. 2009 to Jun. 2011 | 175,500 | 176,000 | 1.95-2.91 | Unsecured | Nov. 2025 to<br>Jan. 2031 | |
| the Trust Bank: *1 | |||||||
| Short-term bonds | Sep. 2022 to Mar. 2024 | 120,999[120,999] | 230,987<br>[230,987] | 0.001-0.030 | Unsecured | Apr. 2023 to<br>Jul. 2024 | |
| Subordinated bonds payable in yen | Oct. 28, 2010 | 19,700 | 20,000 | 1.92 | Unsecured | Oct. 28, 2025 | |
| Euro subordinated bonds payable in yen | Apr. 27, 2010 | 10,000 | 10,000 | 2.61 | Unsecured | Apr. 26, 2030 | |
| Subsidiaries: *2 | |||||||
| Short-term bonds | Jan. 2023 to Mar. 2024 | 926,500[926,500] | 980,781<br>[980,781] | 0.00-0.20 | Unsecured | Apr. 2023 to<br>Jul. 2024 | |
| Straight bonds | Feb. 2007 to Mar. 2024 | 1,764,997(US3,784 million)(2 million)(A2 million)(THB35,565 million)(CNY47 million)(IDR5,387,450 million)[739,921] | 1,080,946<br>(US$853 million)<br>(EUR1 million)<br>(A$2 million)<br>(THB43,100 million)<br>(CNY100 million)<br>(IDR7,902,600 million)<br>[289,302] | 0.00-42.00 | *3 | Jan. 2023 to<br>Mar. 2054 | |
| Straight bonds (*4) | Mar. 2020 to Mar. 2022 | 9,074[696] | — | 0.95 | Secured | Sep. 2034 to<br>Mar. 2037 | |
| Subordinated bonds | Aug. 1997 to Nov. 2022 | 283,719(US57 million)(THB60,825 million)[1,379] | 304,087<br>(US$55 million)<br>(THB60,825 million)<br>[1,790] | 0.24-12.62 | Unsecured | Jun. 2027 to<br>Mar. 2035 | |
| Total | — | 16,756,213 | ¥17,515,061 | — | — | — |
All values are in Japanese Yen.
–110–
(Notes)
| *1. | “the Bank” refers to MUFG Bank, Ltd., and “the Trust Bank” refers to Mitsubishi UFJ Trust<br>and Banking Corporation. | |
|---|---|---|
| *2. | Subsidiaries include MUFG Americas Holdings Corporation, MUFG Securities EMEA plc, BTMU (Curacao) Holdings<br>N.V., Bank of Ayudhya Public Company Limited, PT Bank Danamon Indonesia, Tbk., PT Mandala Multifinance Tbk, EASY BUY Public Company Limited, Mitsubishi UFJ Securities Holdings Co., Ltd., Mitsubishi UFJ NICOS Co., Ltd., and ACOM CO., LTD., etc.<br> | |
| --- | --- | |
| *3. | The straight bonds payable include 13 series of secured straight bonds payable issued by MUFG’s<br>consolidated subsidiaries. The remaining series are unsecured. | |
| --- | --- | |
| *4. | The straight bonds payable are non-recourse debt.<br> | |
| --- | --- | |
| 5. | “( )” represents the amounts expressed in the foreign currencies payable.<br> | |
| --- | --- | |
| 6. | “[ ]” represents the amounts expected to be redeemed within one year. | |
| --- | --- | |
| 7. | Annual maturities of bonds payable as of March 31, 2024 were as follows: | |
| --- | --- | |
| Year ending March 31 | (in millions of yen) | |
| --- | --- | --- |
| Bonds payable | ||
| 2025 | ¥ | 2,719,205 |
| 2026 | 3,013,442 | |
| 2027 | 894,902 | |
| 2028 | 1,512,423 | |
| 2029 | 1,367,841 |
–111–
| 22. | Borrowed Money, Lease Liabilities and Commercial Paper |
|---|
“Borrowed money,” “Lease liabilities” and “Commercial paper” as of March 31, 2023 and 2024 were as follows:
| (in millions of yen) | ||||
|---|---|---|---|---|
| March 31, 2023 | March 31, 2024 | |||
| Borrowings from banks and other due 2023-2051 at 0.43% on average | ¥ | 24,856,340 | ¥ | 25,955,961 |
| Bills rediscounted | – | – | ||
| Total borrowed money | ¥ | 24,856,340 | ¥ | 25,955,961 |
| Lease liabilities due 2023-2036 | 61,093 | 69,738 | ||
| Commercial paper at 5.32% on average | 2,220,723 | 3,105,779 |
(Notes)
| 1. | The interest rates above are calculated using the weighted-average method based on the interest rates and<br>balances as of March 31. The average interest rate on lease liabilities is not presented above because finance lease liabilities are recorded in the accompanying consolidated balance sheets on the basis of the total amount of lease payments before<br>deduction of interest in certain consolidated companies. |
|---|---|
| 2. | The borrowings above include non-recourse debts of a consolidated<br>special purpose entity. |
| --- | --- |
| 3. | Since the commercial banking business accepts deposits and raises and manages funds through the call loan and<br>commercial paper markets in the ordinary course of business, this Note 22 shows details of Borrowed money included in Liabilities and Lease liabilities included in Other liabilities in the accompanying consolidated balance sheets.<br> |
| --- | --- |
| 4. | “Commercial paper” is issued in the form of promissory notes as a funding operation.<br> |
| --- | --- |
Annual maturities of borrowings as of March 31, 2024 were as follows:
| Year ending March 31 | (in millions of yen) | |
|---|---|---|
| 2024 | ¥ | 21,201,804 |
| 2025 | 1,396,725 | |
| 2026 | 327,880 | |
| 2027 | 1,214,031 | |
| 2028 | 594,023 |
Annual maturities of lease liabilities as of March 31, 2024 were as follows:
| Year ending March 31 | (in millions of yen) | |
|---|---|---|
| 2025 | ¥ | 17,901 |
| 2026 | 12,329 | |
| 2027 | 10,113 | |
| 2028 | 7,713 | |
| 2029 | 5,929 |
–112–