Mitsubishi UFJ Financial Group Inc. (Holding Company); MUFG Bank Ltd. (Lead Bank)

S&P Global Ratings has stable outlooks on its long-term issuer credit ratings on MUFG and its core subsidiaries, including core operating banks. The outlooks reflect our view that the group will likely maintain its solid business base, strong funding, and ample liquidity in the next two years. The outlooks also incorporate our view that creditworthiness of companies in the group will remain stable in the next two years. We expect the likelihood of the group receiving extraordinary government support if required will remain high, underpinning the ratings. This counterbalances the detrimental and ongoing effect of COVID-19. Continuing uncertainties over the pandemic's trajectory and economic recovery will likely further pressure the group's profitability and asset quality. The likelihood of a downgrade

...We expect Japan-based megabank Mitsubishi UFJ Financial Group Inc. (MUFG) to maintain a strong business and favorable financial position as Japan's largest banking group. MUFG group has a leading business presence in Japan and overseas among Japanese banking groups and has been focusing on global diversification of revenue sources and promoting businesses with growth potential. Accordingly, the group is likely to remain somewhat resilient to a persistent low interest rate environment and deteriorating profitability in the Japanese banking industry. We project the group's risk-adjusted capital (RAC) ratio will remain adequate in the next two years, at between 7.3% and 7.7%. MUFG group has made higher profitability its priority under its new medium-term management plan, and efforts to diversify earnings sources and businesses have borne some fruit in recent years. The group's core profitability is relatively strong for Japan's banking industry, and we expect it to accumulate retained earnings....

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