MUFG(US:MUFG)2024-05-18 07:38Financial Data and Key Indicator Changes - The profits attributable to owners of the parent increased by ¥374.2 billion year-on-year to ¥1,490.7 billion, marking the highest profit in MUFG history [10] - The net operating profit increased by ¥249.4 billion to ¥1,843.7 billion, a record high, offsetting the impact of the sale of MUB [58] - The CET1 ratio on a finalized and fully implemented Basel III basis is 10.1%, which is around the middle of the new MTBP target range [62] Business Line Data and Key Indicator Changes - In Customer segments, total net operating profit rose sharply by ¥470.3 billion, mainly due to an increase in lending and deposit interest income and fee income [4] - Global Markets posted a decrease in profit due to increased foreign currency funding costs and the significant impact of portfolio rebalancing [4] - The net fees and commissions increased approximately ¥130 billion, mainly due to an increase in fees related to foreign loans and the AM/IS business and Wealth Management business [3] Market Data and Key Indicator Changes - Domestic corporate lending spreads showed improvement, particularly for large corporations, while SMEs indicated a gradual improvement [5] - The overseas lending spreads maintained an improving trend, reflecting efforts to enhance profitability [33] Company Strategy and Development Direction - The new medium-term business plan (MTBP) focuses on expanding and refining growth strategies, driving social and environmental progress, and accelerating transformation and innovation [36] - The company aims to achieve a net operating profit of over ¥2.1 trillion by FY '26, targeting an increase of 30% compared to FY '23 [15] - The company plans to maintain a disciplined management approach with an expense ratio target of around 60% in FY '26 [17] Management's Comments on Operating Environment and Future Outlook - Management expects the yen to strengthen year-on-year, which will offset the negative impact on profits [13] - The company anticipates that the timing of interest rate changes will provide a positive effect on profits, although limited in FY '24 [43] - Management acknowledged the challenges posed by credit costs, particularly in the Americas, but does not expect them to increase at the same pace going forward [88] Other Important Information - The company announced a share repurchase of up to ¥100 billion, aiming for a payout ratio of 40% [21][63] - The target for equity holdings reduction in the new MTBP is set at ¥350 billion, with the aim of reducing the ratio of market value to consolidated net assets to less than 20% [34][50] Q&A Session Summary Question: Thoughts on the ¥1.5 trillion profit target - Management discussed the ambitious target of ¥1.5 trillion, which is slightly higher than market consensus, and emphasized the potential upside driven by interest rate changes [40][43] Question: Factors behind the CET1 ratio decline - Management explained that the decline was due to small retained earnings and technical factors related to foreign currency translation reserves [48][49] Question: Shareholder return policy in the new MTBP - Management confirmed that the shareholder return policy remains unchanged, aiming for a dividend payout ratio of around 40% [69] Question: Credit costs and their implications - Management provided insights into rising credit costs, particularly in the Americas, and projected a total credit cost of ¥400 billion for FY '24 [88] Question: Achievability of NOP target through organic growth - Management indicated that the NOP target of over ¥2.1 trillion includes contributions from both organic growth and announced deals [91]