DOWNLOAD
Mitsubishi UFJ Financial Group
- Sector: Financial Services
- Sub Sector: Banks
- Region: Japan
Read this content. Log in or sign up.
If you are an investor with us, log in first to your Metrobank Wealth Manager account.
If you are not yet a client, we can help you by clicking the SIGN UP button.
Fundamental View
AS OF 12 Jun 2025MUFG is the largest of Japan’s three megabanks, and has the most diversified operations by business line and geography. It has also been the most acquisitive until recently.
Core profitability had been weak due to Japan’s ultra-low interest rates and growth; that improved post an efficiency drive and a CEO change in April 2020; the bank has improved international margins and benefits from rising domestic interest rates.
Given its size and systemic importance, MUFG is considered too big to fail, and will be supported by the Japanese government if needed.
Business Description
AS OF 12 Jun 2025- The 2 main banks of MUFG are MUFG Bank (earlier Bank of Tokyo-Mitsubishi UFJ or BTMU) & Mitsubishi UFJ Trust & Banking. In the early stages of Japan's long banking crisis, Bank of Tokyo merged with Mitsubishi Bank, and in the late stages they absorbed UFJ (former Sanwa Bank & Tokai Bank) while Mitsubishi Trust absorbed Toyo Trust & Nippon Trust.
- The group includes consumer lenders Mitsubishi-UFJ NICOS & ACOM, and securities/IB joint ventures with Morgan Stanley. MUFG invested in Morgan Stanley in 2008 and now has a ~20% stake. In Dec-22, it completed the sale of its US retail and commercial bank, MUFG Union Bank, to US Bancorp.
- It has a majority stake in Thailand's Bank of Ayudhya (now Krungsri), 20% stakes in Vietnam's Vietinbank and Philippines' Security Bank, and 100% of Indonesia's Bank Danamon.
- In August 2019, it acquired Colonial First State from Commonwealth Bank of Australia to strengthen its global asset management business, in 2020 it invested $700 mn in SE Asia's Grab, and more recently has bought Home Credit's Philippine and Indonesian subsidiaries, Link (an Australian pension fund administrator), auto loan companies in Indonesia, Albacore Capital, StanChart's Indonesian retail operations, and an Indian NBFI.
Risk & Catalysts
AS OF 12 Jun 2025Its recent divisional performance has been strong, with the domestic businesses benefiting from higher BOJ rates, and robust growth in fee income.
Credit costs have been rising because of increased exposure to personal unsecured loans in Japan and Southeast Asia, as well as higher-risk lending in Southeast Asia.
Its close relationship with Morgan Stanley has led it to take large positions in US corporate finance loans, which could have proven problematic.
We see limited risk from rising JGB and USD yields as the large equity unrealised gains dwarf the unrealised losses on the bond portfolio.
Key Metric
AS OF 12 Jun 2025| JPY bn | FY20 | FY21 | FY22 | FY23 | FY24 |
|---|---|---|---|---|---|
| Net Interest Revenue/Average Assets | 0.56% | 0.57% | 0.79% | 0.64% | 0.73% |
| Operating Income/Average Assets | 1.16% | 1.11% | 1.22% | 1.23% | 1.22% |
| Operating Expense/Operating Income | 68% | 69% | 65% | 61% | 67% |
| Pre-Impairment Operating Profit / Average Assets | 0.37% | 0.34% | 0.43% | 0.48% | 0.40% |
| Impairment charge/Average Loans | (0.48%) | (0.30%) | (0.61%) | (0.44%) | (0.09%) |
| ROAA | 0.23% | 0.32% | 0.30% | 0.39% | 0.47% |
| ROAE | 4.7% | 6.7% | 6.5% | 8.1% | 9.3% |
| CET1 post Basel 3 reforms excl. secs gains | 9.7% | 10.4% | 10.3% | 10.1% | 10.8% |
CreditSight View Comment
AS OF 16 May 2025MUFG is the largest of the megabanks with more diversified business lines. Digitalisation and operational efficiency improvements, in addition to higher rates in Japan and the US, has led to much better results in FY24. Lending discipline has lifted international margins, which are now well higher than the other two. Its ~20% shareholding in Morgan Stanley has been a boon. Acquisitions have become more targeted. Its $ liquidity is also the best amongst its peers, and government support is assured. Accelerated sales of its shareholdings accompanied by buybacks may pressure its CET1 ratio buffer, which is in line with its peers at ~230 bp. We see 20 bp of upside from current levels for its TLAC senior paper.
Recommendation Reviewed: May 16, 2025
Recommendation Changed: January 27, 2025
Who We Recommend
Sumitomo Mitsui Financial Group
PT Mineral Industri Indonesia
JD.com
