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

Our focus will be on MUFG's use of accumulating earnings, as capitalization has already reached its strategic targets. The group has not made large-scale acquisitions in recent years while being open towards opportunities. In the absence of such investments, the group will likely consider increasing shareholders returns. Therefore, we believe it is unlikely for capital adequacy ratios to continue to rise. Japan Banking Outlook 2024, Jan. 24, 2024 Mitsubishi UFJ Financial Group Inc. (Holding Company); MUFG Bank Ltd. (Lead Bank), Nov. 20, 2023 Banking Industry Country Risk Assessment: Japan, June 15, 2023 The stable outlooks on the long-term issuer credit ratings on MUFG and its core subsidiaries, including core operating banks, reflect our view that the group will likely maintain

...What's new: Mitsubishi UFJ Financial Group, Inc. (MUFG) has announced the outline of its new medium-term business plan starting from fiscal 2024 (starting April 2024). The only key financial target disclosed was to achieve a return on equity (ROE) of approximately 9% in fiscal 2026. Further details are expected to be released in May. The group will seek to refine and pursue growth strategies, while adapting to social and environmental challenges and supporting the transformation of the business environment in which it operates. Why it matters: The new plan follows on from previous business strategies, in our view, including management of profitability and capital adequacy. Its ROE target of 9% is at the lower end of MUFG's mid- to long-term target of 9%-10%. Helped by one-time factors and solid earnings from global operations, ROE for the nine months to Q3 of fiscal 2023 stood at 9.9%. MUFG has no great need to pursue profitability, as tailwinds from the latest policy rate hike in Japan...

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