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Region: Japan
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Fundamental View
AS OF 26 Mar 2025Nissan’s core business remains weak but is showing some initial green shoots of improvement. While automotive profitability is expected to remain negative through the end of FY24 in March 2025, it posted 10% retail sales growth in the US in F3Q24 and targets further 16% YoY growth in F4Q24. Management expects the improved sales velocity, driven by the launch of refreshed 2025 model year vehicles, to help reduce dealer inventories by 20% in the current quarter and set the stage for lower incentive spending and improved profitability in FY25. While profit improvement in the US would be a positive development in FY25, the turnaround in its second-largest market, China, will likely take longer as it strives to develop and launch new energy vehicles for that market.
Business Description
AS OF 26 Mar 2025- Nissan, with headquarters in Yokohama, Japan, is a leading global automotive manufacturer with a market presence in many countries around the globe. The company’s growth investments are focused primarily on Japan, North America, and China, core markets with large profit pools in which Nissan has a meaningful market share. The company’s business in China is conducted through a joint venture with Dongfeng Motor Corporation.
- Nissan’s Sales Financing segment supports the sale of its vehicles by providing financing solutions to its customers and dealers. To enhance their creditworthiness, Nissan maintains keepwell (support) agreements with its wholly owned financial subsidiaries including Nissan Motor Acceptance Corporation (NMAC) in the United States and Nissan Financial Services (NFS) in Japan.
- The Renault-Nissan-Mitsubishi Alliance was established in 1999 to enhance member company scale in product development and raw material purchasing. The alliance includes equity participation, which led to Nissan holding ownership stakes in Renault (15% non-voting) and Mitsubishi (34%) and Renault holding an ownership stake in Nissan (43%). The Alliance’s automobile production volume is the third largest globally behind Toyota and Volkswagen.
Risk & Catalysts
AS OF 26 Mar 2025Management reiterated its FY24 targets for production volumes and retail sales, both of which it lowered with the release of last quarter results. It targets 3.2 mn units of production and 3.4 mn units of retail sales, down 7% and 2%, respectively, as it strives to reduce dealer inventories of old model year vehicles to make way for new model year vehicle launches. The retail sales decline is broad-based across most regions, with the steepest decline of 12% in China. However, management targets a 6% retail sales increase in North America, its largest region by volume that is projected to account for 39% of the company’s unit volume in FY24.
Despite the unchanged production and retail sales volume expectations, management lowered its revenue by 2% based on slightly lower wholesale volumes and higher variable marketing expenses. It also lowered its consolidated operating profit outlook by 20% as the benefits of currency and lower raw materials is expected to be offset by high sales incentives, lower volume/mix, and higher manufacturing and other costs. The revised FY24 guidance implies a consolidated operating margin of 1.0%.
Key Metric
AS OF 26 Mar 2025| ¥ bn | FY20 | FY21 | FY22 | FY23 | LTM F3Q24 |
|---|---|---|---|---|---|
| Revenue | 6,843 | 7,393 | 9,573 | 11,524 | 11,411 |
| EBIT | (471) | (42) | 242 | 409 | 57 |
| EBIT Margin | (7%) | (1%) | 3% | 4% | (1%) |
| EBITDA | (201) | 247 | 559 | 760 | 419 |
| EBITDA Margin | (2.9%) | 3.3% | 5.8% | 6.6% | 2.5% |
| Total Liquidity | 4,096 | 3,601 | 3,658 | 4,196 | 3,790 |
| Net Debt | (636) | (728) | (1,213) | (1,546) | (1,546) |
| Total Debt | 1,260 | 973 | 687 | 468 | 468 |
| Gross Leverage | n/m | 3.9x | 1.2x | 0.6x | 1.1x |
| Net Leverage | 3.2x | -2.9x | -2.2x | -2.0x | -3.7x |
CreditSight View Comment
AS OF 01 May 2025Our Underperform recommendation on Nissan Motor and Nissan Motor Acceptance Corporation (NMAC) notes is based on our view the notes are subject to downside risk from the recently enacted US auto import tariffs that could thwart its profit improvement initiatives in teh US and weigh on its credit rating. The major risk to our underperform recommendation is a potential partnership with Foxconn, KKR, Tesla, or Honda, the latter of which could lead to expectations for a near-term rating upgrade back to investment grade.
Recommendation Reviewed: May 01, 2025
Recommendation Changed: February 26, 2025
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Fundamental View
AS OF 26 Mar 2025Absent the potential increase in leverage and complexities of integrating the business with Nissan, Honda management is returning its focus to increasing the production and sale of hybrid vehicles while accelerating investments in electric vehicles to potentially catch up to competitors in China and other markets. The company’s plan to repurchase up to 24% of its outstanding shares in 2025 remains intact but should not adversely impact the company’s fortress balance sheet.
Business Description
AS OF 26 Mar 2025- Honda Motor Co., Ltd. engages in the manufacture and sale of automobiles, motorcycles, and power products. It operates through the following segments: Automobile, Motorcycle, Financial Services, and Power Product and Other Businesses. The Automobile segment manufactures and sells automobiles and related accessories. The Motorcycle segment handles all-terrain vehicles, motorcycle business, and related parts. The Financial Services segment provides financial and insurance services. The Power Products and Other Businesses segment offers power products and relevant parts.
- American Honda Finance Corporation (AHFC) is a wholly-owned subsidiary of American Honda Motor Co., Inc. (AHM or the Parent). Honda Canada Finance Inc. (HCFI) is a majority-owned subsidiary of AHFC. Non-controlling interest in HCFI is held by Honda Canada Inc. (HCI), an affiliate of AHFC. AHM is a wholly-owned subsidiary and HCI is an indirect wholly-owned subsidiary of Honda Motor Co., Ltd. (HMC). Honda Motor Co. (HMC) maintains Keep Well (support) agreements with its North American finance subsidiaries, AHFC and HCFI. Under the Keep Well agreements, HMC agrees to (1) maintain at least 80% ownership in AHFC and HCFI, (2) ensure AHFC and HCFI maintain a positive net worth, and (3) ensure both AHFC and HCFI have sufficient liquidity to meet their debt payment obligations.
Risk & Catalysts
AS OF 26 Mar 2025Management raised its FY25 motorcycle wholesales forecast by 2% but lowered its automobile wholesales forecast for the third consecutive quarter, this time by as modest 1% after decreases of 3% and 5% the previous two quarters. Motorcycle wholesales are now projected to increase 9% YoY, driven by growth in Asia (+9%) – which is expected to account for 85% of total motorcycle wholesales – along with growth in all other regions. The company’s lower automobile wholesale forecast is driven by a downward revision in Japan and Europe, with the former related to the increasingly competitive environment in that country.
Management maintained its FY25 consolidated operating profit forecast but noted some underlying changes to the composition of the forecast. It expects FY25 profit to be reduced by lower automobile unit sales, lower price and higher cost revisions, and increased expenses, all of which are projected to be offset by a favorable currency impact. Consolidated operating profit margins of 6.6% in FY25 were revised lower by 20 bp and are also expected to be 20 bp lower on a YoY basis.
Key Metric
AS OF 26 Mar 2025| ¥ bn | FY21 | FY22 | FY23 | FY24 | LTM F3Q25 |
|---|---|---|---|---|---|
| Revenue | 10,908 | 11,967 | 14,167 | 17,434 | 18,555 |
| EBIT | 576 | 741 | 612 | 1,219 | 1,148 |
| EBIT Margin | 5.3% | 6.2% | 4.3% | 7.0% | 6.5% |
| EBITDA | 1,175 | 1,334 | 1,294 | 1,964 | 1,879 |
| EBITDA Margin | 10.8% | 11.1% | 9.1% | 11.3% | 10.2% |
| Total Liquidity | 3,717 | 4,612 | 4,926 | 6,150 | 6,182 |
| Net Debt | (2,048) | (2,481) | (2,751) | (3,762) | (3,779) |
| Total Debt | 480 | 837 | 803 | 863 | 877 |
| Gross Leverage | 0.4x | 0.6x | 0.6x | 0.4x | 0.5x |
| Net Leverage | -1.7x | -1.9x | -2.1x | -1.9x | -2.0x |
CreditSight View Comment
AS OF 07 May 2025We maintain a Market perform recommendation on Honda Motor Co. and American Honda Finance Corporation based on relative value, our view the profit headwind related to the recently enacted US auto import tariffs will be manageable within the context of its current credit rating, and our expectation that the potentially negative rating headwind related to an acquisition of or merger with Nissan has largely abated.
Recommendation Reviewed: May 07, 2025
Recommendation Changed: April 14, 2025
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Fundamental View
AS OF 25 Mar 2025Toyota is back on the path to normalized production schedules following its vehicle certification challenges in Japan during 1H25 that disrupted production of certain models. The company expects 10 mn units of retail sales in FY25, which would enable it to retain its place as the leading global automaker by volume. Toyota expects sales of its hybrid electric vehicles (HEVs) to account for 46% of retail sales this year, up from 37% in FY24, which is beneficial to customers and the company alike as management claims its HEVs are more profitable than its ICE vehicles. While Toyota was late to the BEV party and BEVs account for a paltry 1% of its retail sales, it has made significant BEV investments that will support the rollout of new BEV models and volumes over the next couple years.
Business Description
AS OF 25 Mar 2025- Toyota Motor Corp. (TMC) engages in the manufacture and sale of motor vehicles and parts. It operates through the following segments: Automotive, Financial Services, and All Other. The Automotive segment designs, manufactures, assembles and sells passenger cars, minivans, trucks, and related vehicle parts and accessories. Toyota is also involved in the development of intelligent transport systems. The Financial Services segment offers purchase or lease financing to Toyota vehicle dealers and customers. It also provides retail leasing through lease contracts purchased by dealers. The company was founded by Kiichiro Toyoda on August 28, 1937, and is headquartered in Toyota, Japan.
- Toyota Financial Services Corporation (TFSC), a wholly owned subsidiary of TMC, oversees the management of Toyota's finance companies worldwide. Toyota Motor Credit Corporation (TMCC) is the company’s principal financial services subsidiary in the United States. Under terms of the credit support agreement between TFSC and TMCC, TFSC agrees to: (1) maintain 100% ownership of TMCC; (2) cause TMCC and its subsidiaries to have a tangible net worth of at least $100,000; (3) make sufficient funds available to TMCC so that it will be able to service the obligations arising out of its own bonds, debentures, notes and other investment securities and commercial paper. The terms of the credit support agreement between TMC and TFSC are very similar to the terms of the TFSC and TMCC credit support agreement.
Risk & Catalysts
AS OF 25 Mar 2025Consolidated vehicle sales are expected to decline by less than 1% YoY, unchanged from last quarter but modestly below its initial FY25 expectation for a modest sales increase of less than 1%. While management affirmed its vehicle sales forecast, it changed the regional composition of sales by boosting its projected sales in North America and Europe while lowering its forecast for Japan, Asia, and other regions.
The company raised its FY25 revenue forecast by 2% from ¥46 tn to ¥47 tn based on the regional shift in expected sales and currency changes. Management also raised its FY25 consolidated operating income forecast to ¥4.7 tn, up 9% compared to its previous forecast of ¥4.3 tn. The higher guidance is based primarily on currency impacts (+7%), especially transactional currency impacts on exports to the US, lower material costs (+3%), and marketing efforts (+4%). These benefits are expected to be partially offset by higher expenses (-2%) and other items (-3%), including the Hino Motors certification debacle.
Key Metric
AS OF 25 Mar 2025| ¥ bn | FY21 | FY22 | FY23 | FY24 | LTM F3Q25 |
|---|---|---|---|---|---|
| Automotive Revenue | 24,652 | 28,606 | 33,777 | 41,081 | 42,191 |
| EBIT | 1,778 | 2,519 | 2,486 | 4,890 | 4,092 |
| EBIT Margin | 6.5% | 8.0% | 6.7% | 10.8% | 8.4% |
| EBITDA | 2,654 | 3,526 | 3,671 | 6,139 | 5,459 |
| EBITDA Margin | 9.8% | 11.2% | 9.9% | 13.6% | 11.1% |
| Total Liquidity | 11,557 | 15,864 | 10,090 | 12,401 | n/m |
| Net Debt | 597 | (1,719) | (2,825) | (4,025) | (4,025) |
| Total Debt | 3,872 | 2,580 | 2,724 | 2,868 | 2,868 |
| Gross Leverage | 1.5x | 0.7x | 0.7x | 0.5x | 0.5x |
| Net Leverage | 0.2x | -0.5x | -0.8x | -0.7x | -0.7x |
CreditSight View Comment
AS OF 09 May 2025We lower our recommendation on notes of Toyota Motor Co. and Toyota Motor Credit Corporation from Market perform to Underperform based primarily on relative value, although we consider the Toyota bond complex to be a relatively safe haven for long-term investors.
Recommendation Reviewed: May 09, 2025
Recommendation Changed: April 14, 2025
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Fundamental View
AS OF 19 Mar 2025Mizuho has emerged as a significantly stronger and more capable institution than it was a decade ago.
Following the RBS North America business acquisition in 2015, which significantly improved its heft and offerings, Mizuho largely shied away from making investments in its businesses due to low capital levels and a focus on reducing expenses; that has changed over the past couple of years (Greenhill/Rakuten); separately, capital levels are now stronger than SMFG’s.
As one of the three megabanks, Mizuho’s credit standing benefits from a strong expectation of government support, if needed.
Business Description
AS OF 19 Mar 2025- Mizuho is the third largest by asset size among Japan's three megabanks. It was formed in 2000 through the merger of the former "City" banks, Fuji and Dai-Ichi Kangyo, and the Industrial Bank of Japan, a provider of long-term industrial credit financed by bond issues.
- Its main units are Mizuho Bank and Mizuho Trust & Banking (focusing on asset management and related services). The group's other main business is Mizuho Securities, a leading player in debt capital markets in Japan and the US.
- It expanded in North America in 2015 by acquiring assets and staff from RBS and has successfully captured more markets and commercial banking business in conjunction with its securities arm. It also acquired Greenhill, a boutique M&A firm, in 2023, and owns ~50% of Rakuten Securities and 15% of Rakuten Cards.
- Mizuho is less diversified than its megabank peers by product segment, although its securities arm is large.
Risk & Catalysts
AS OF 19 Mar 2025Its plans to recycle assets out of Japanese mortgages and low profitability assets into the Americas is sensible.
A series of Japan IT system failures in 2021-22 was a distraction, but has fortunately not recurred recently.
Asset quality is a key strength (but its international loan margins are also lower as a consequence) and credit costs are much lower than its peer megabanks, in part due to not owning a large Japanese personal unsecured loans business.
The buffer between its CET1 ratio (fully Basel III compliant and ex-security gains) and the 8% regulatory minimum has improved from 170 bp a year ago to 240 bp as of Dec-24.
Key Metric
AS OF 19 Mar 2025| JPY bn | FY21 | FY22 | FY23 | 3Q23 | 3Q24 |
|---|---|---|---|---|---|
| Net Interest Revenue/Ave Assets | 0.44% | 0.41% | 0.35% | 0.35% | 0.36% |
| Operating Income/Average Assets | 1.01% | 0.96% | 1.05% | 1.05% | 1.11% |
| Operating Expense/Operating Income | 62% | 63% | 62% | 59% | 60% |
| Pre-Impairment Operating Profit / Average Assets | 0.38% | 0.34% | 0.40% | 0.43% | 0.45% |
| Loan impairment (charge) or reversal/ave. loans | (0.28%) | (0.10%) | (0.12%) | (0.02%) | 0.05% |
| ROAA | 0.24% | 0.23% | 0.26% | 0.34% | 0.42% |
| ROAE | 5.8% | 6.1% | 7.0% | 9.0% | 11.0% |
| CET1 Ratio excl. unrealised securities gains in AOCI | 11.5% | 11.3% | 11.8% | n/a | n/a |
CreditSight View Comment
AS OF 04 Feb 2025Mizuho historically trailed its peers on profitability and capital (which in turn limited franchise investments), as the merger that formed it included IBJ, a large wholesale bank with thin margins. Credit costs related to Russia in 4Q21 + Japan corps in 1Q22 affected results but were better subsequently. Previous issues with its Japan IT system have not resurfaced. CET1 capital has a decent 2.5% buffer. Mizuho was the improved megabank over FY20-21 and again more recently. FY22 net income declined, but FY23 and 9M24 have seen good net income jumps, helped by better trading revenues and low credit costs. It has finally restarted investments in new product/M&A. Govt. support is assured. We see 10-15 bp of upside from current levels, and an improving credit trajectory.
Recommendation Reviewed: February 04, 2025
Recommendation Changed: January 27, 2025
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Search topics about wealth insights and investments.Sumitomo Mitsui Financial Group
- Sector: Financial Services
- Sub Sector: Banks
- Region: Japan
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Fundamental View
AS OF 18 Mar 2025After reorganising and building up capital for the full impact of Basel III, SMFG has in the past few years been acquisitive to build its next phase of growth, and now has a lower capital buffer than Mizuho.
In FY23, SMFG showed the best improvement in net interest income and fee income, but also had a number of one-offs in its results – insurance payouts for SMBCAC planes stuck in Russia offset by losses on the sale of its railcar leasing fleet in the US, as well as an impairment of its goodwill in FE Credit – that on the whole reduced net income. 9M24 results has showed improvements.
Given its size and systemic importance, SMFG is considered too big to fail, and will be supported by the Japanese government if needed.
Business Description
AS OF 18 Mar 2025- The core unit of SMFG is Sumitomo-Mitsui Banking Corp (SMBC), whose main predecessors were Sumitomo Bank and Mitsui Bank.
- SMFG does not have a large trust business as Sumitomo Trust and Chuo Mitsui Trust chose not to join SMFG, but merged with each other to form the separate Sumitomo Mitsui Trust Holdings.
- SMFG's group companies include the securities firm SMBC Nikko, SMBC Trust Bank, SMBC Card Company, SMBC Consumer Finance, Sumitomo Mitsui Finance and Leasing, SMFG India Credit Company (SMICC), Sumitomo Mitsui DS Asset Management, and SMBC Aviation Capital.
- It has been acquisitive over the years, particularly in emerging Asia and leasing assets. In 2021, the group took a 49% stake in Vietnam's FE Credit, 74.9% of Indian NBFI Fullerton Capital (now called SMICC), 4.99% of Philippines' RCBC, and 4.5% of US investment bank Jefferies. In 2022, it increased its stake in RCBC to 20%. In 2023, it acquired a 15% stake in Vietnam's VP Bank, and announced its intention to increase its stake in Jefferies from 4.5% to 15%, and in 2024 took its stake in SMICC to 100%.
Risk & Catalysts
AS OF 18 Mar 2025Similar to the other megabanks, SMFG aims to focus more on the US, and reduce low return RWAs in Europe and Asia ex-Japan.
Credit costs have seen some volatility. In FY23 bank level credit costs were good but worse at the card and personal unsecured loans units. 9M24 credit costs were up 17% YoY, mostly related to overseas banking subsidiaries. It has the lowest NPL ratio amongst the megabanks.
SMFG has taken stakes in FE Credit (49%) and VP Bank (15%) in Vietnam, Fullerton in India (100%, now renamed SMICC or SMFG India Credit Co) and RCBC in the Philippines (20%), to increase its exposure to emerging growth areas. It supported SMBC Aviation in its acquisition of Goshawk, and is increasing its 4.5% stake in Jefferies to 15%. However, FE Credit faced losses in 2022 and 2023 as a result of the Vietnam slowdown in 2022, highlighting the risks associated with EM personal unsecured lending.
Key Metric
AS OF 18 Mar 2025| JPY bn | FY21 | FY22 | FY23 | 3Q23 | 3Q24 |
|---|---|---|---|---|---|
| Net Interest Revenue/Average Assets | 0.64% | 0.68% | 0.70% | 0.68% | 0.78% |
| Operating Income/Average Assets | 1.23% | 1.26% | 1.47% | 1.38% | 1.47% |
| Operating Expense/Operating Income | 62% | 61% | 57% | 60% | 56% |
| Pre-Impairment Operating Profit / Average Assets | 0.48% | 0.51% | 0.58% | 0.61% | 0.68% |
| Impairment charge/Average Loans | (0.31%) | (0.22%) | (0.27%) | (0.18%) | (0.19%) |
| ROAA | 0.30% | 0.32% | 0.36% | 0.40% | 0.53% |
| ROAE | 5.9% | 6.5% | 7.0% | 8.0% | 10.2% |
CreditSight View Comment
AS OF 04 Feb 2025SMFG’s banking business had performed well, while its non-bank subsidiaries had underperformed over FY21-22. The group had a better 2H vs a poor 1H23, with improved trading and fee revenues, partially offset by higher credit costs at the non-bank businesses. The group became acquisitive from 2021, taking a 49% stake in a leading Vietnamese NBFI and 15% of its parent (VP Bank), 20% of RCBC of the Philippines, 74.9% of NBFI Fullerton India (now 100%), and 4.5% in US investment bank Jefferies (increasing to 15%), for the next stage of growth. Its high CET1 ratio has been whittled down by acquisitions. 9M24 results were boosted by share sales and structured investment trusts. Govt. support is assured. We see 10-15 bp of upside from current levels, and an improving credit trajectory.
Recommendation Reviewed: February 04, 2025
Recommendation Changed: January 27, 2025
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Search topics about wealth insights and investments.Mitsubishi UFJ Financial Group
- Sector: Financial Services
- Sub Sector: Banks
- Region: Japan
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Fundamental View
AS OF 18 Mar 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 the best international margin 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 18 Mar 2025- The 2 main banks of MUFG are MUFG Bank (earlier the 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 18 Mar 2025Its recent divisional performance has been strong, with the domestic businesses benefiting from higher JGB yields.
Total credit costs are running at JPY 251 bn in 9M24, of which JPY 203 bn is from overseas operations. As MUFG has budgeted for JPY 400 bn of credit costs this year, there could be some serious kitchen sinking in the coming quarter.
The group’s cost-income ratio was previously in the high 60’s a few years ago, but improved efficiency, the sale of MUFG Union Bank in the US, and better revenues has led to this ratio falling to 61% in FY23 and 58% in 9M24; the group targets a 60% cost-income ratio.
MUFG is exposed to Japanese equities through large unrealised gains, but has steadily been decreasing its shareholdings every year. It reduced the MTM impact of rising yields on its $ bond portfolio, as well as the potential impact on its JGB portfolio given the modifications to yield curve controls.
Key Metric
AS OF 18 Mar 2025| JPY bn | FY21 | FY22 | FY23 | 3Q23 | 3Q24 |
|---|---|---|---|---|---|
| Net Interest Revenue/Average Assets | 0.57% | 0.79% | 0.64% | 0.63% | 0.73% |
| Operating Income/Average Assets | 1.11% | 1.22% | 1.12% | 1.27% | 1.39% |
| Operating Expense/Operating Income | 69% | 65% | 67% | 58% | 58% |
| Pre-Impairment Operating Profit / Average Assets | 0.34% | 0.43% | 0.48% | 0.50% | 0.60% |
| Impairment charge/Average Loans | (0.30%) | (0.61%) | (0.44%) | (0.31%) | (0.28%) |
| ROAA | 0.32% | 0.30% | 0.39% | 0.45% | 0.59% |
| ROAE | 6.7% | 6.5% | 8.1% | 9.6% | 11.7% |
| CET1 Ratio excluding unrealised securities gains in AOCI | 9.5% | 9.8% | 11.8% | n/a | n/a |
CreditSight View Comment
AS OF 15 Apr 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 9M24. 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. The CET1 ratio on a post Basel 3 basis ex security gains has the highest buffer (2.7%) compared to the other megabanks, its $ liquidity is also the best amongst its peers, and government support is assured. NPLs have jumped because of certain Americas exposure. Govt. support is assured.
Recommendation Reviewed: April 15, 2025
Recommendation Changed: January 27, 2025
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