Mitsubishi Corp.

The stable outlook reflects our view that Mitsubishi Corp.'s adjusted capital will remain stable in the coming year or two, exceeding the level of risk-based capital required under our 'A' stress scenario. We base this view on our expectation that the company will continue to steadily accumulate shareholders' equity through retention of a high amount of net income despite uncertain external conditions. In addition, we expect the company to uphold an investment policy centered on financial soundness. The outlook also reflects our expectation that Mitsubishi Corp. will steadily maintain RORA at 15%-20%. We may consider upgrading Mitsubishi Corp. if we come to believe its adjusted capital will exceed risk-based capital required under our 'A' stress scenario constantly and substantially. Specifically,

...Mitsubishi Corp.'s net profit will remain stable at a near-record Ñ700 billion-Ñ900 billion in the next year or two, in our view. Resource prices are likely to decline after a surge in 2022. However, we expect the metallurgical coal business--the world's largest--in the company's mineral resources segment to remain highly cost competitive. Additionally, a new copper mine in Peru began operations in 2022. We expect the mine's year-round operation will contribute significant profit over the next couple of years. Therefore, we forecast high profit for the mineral resources segment over this period. In addition, we see benefits arising from the company's efforts to deliver growth potential and investment returns by reshuffling its portfolio. The situations are also improving for equity-method affiliate Mitsubishi Motors Corp. and subsidiary Lawson Inc., a retail chain. Mitsubishi Corp. reported heavy impairment losses in both of these companies in 2019-2020. Mitsubishi Corp.'s extremely well-diversified...

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