Mitsubishi UFJ Financial Group Inc Investment in Shriram Finance Ltd Net Conference Transcript

The following is excerpted from the question-and-answer section of the transcript.

Question: Shinichiro Nakamura - Bofa Merrill Lynch Asset Holdings Inc - Analyst : This is Nakamura from BofA Securities. Thank you for your explanation. I have two questions. My first question is about capital management, which Mr. Togawa mentioned earlier. It appears that CET1 ratio will fall to just over 9.8% by the end of FY25 with this transaction. Compared to the past, your forecast is below 10%, the midpoint of the target range. I am concerned that the pace of share buybacks may slow down. LSEG STREETEVENTS | www.lseg.com | Contact Us consent of LSEG. 'LSEG' and the LSEG logo are registered trademarks of LSEG and its affiliated companies. DECEMBER 19, 2025 / 8:30AM, 8306.T - Mitsubishi UFJ Financial Group Inc Investment in Shriram Finance Ltd Net Conference Please clarify your view on share buyback, whether you will be restraining additional growth investments, going forward; and the balance between the two. That is my first question. Second question: While it is a good deal, I feel the price is quite high. I would like to know why this particular deal was necessary. The timeline of aiming to contribute to ROE of over 12% in the MTBP after the next seven years from now seems rather long. If BOJ's policy rate rises to 1.25% or higher before the MTBP after the next, wouldn't domestic businesses potentially offer more attractive ROE? It seems like waiting a bit longer might have yielded better opportunities. I am not entirely clear on why this deal had to be done at this specific timing so could you please explain? Unidentified Company Representative Thank you. Mr. Togawa will answer the first question on capital management. Mr. Itagaki will answer the second question on why this deal is necessary. Mr. Togawa, please. Jun Togawa - Mitsubishi UFJ Financial Group Inc - Senior Managing Executive Officer, Group Chief Financial Officer, Representative Executive Officer Thank you for your question, Nakamura. As you pointed out, CET1 ratio will decline by approximately 60 basis points with this transaction. But because this deal was still under review when we announced our Q2 financial results, the impact was not factored into our second-half CET1 ratio forecast. On the other hand, as we assume a certain level of capital usage from growth investment, including the increase in risk-weighted assets, CET1 ratio will not decline by 60 basis points from our forecast at the end of Q2. As a result, we expect it to remain within the target range but slightly below the midpoint, as Nakamura mentioned. We understand your concerns about a decline in shareholder return. We have anticipated these transactions and managed our shareholder returns based on our existing basic policy for capital allocation from last fiscal year to this fiscal year. We will continue to consider shareholder returns flexibly, as we have done in the past, taking into account progress in our business performance and exchange rate trends, while monitoring the balance between shareholder returns and growth investments and our outlook for the CET1 ratio in the future. We understand the concerns about the impact on share buybacks. We'll thoroughly consider this towards the end of FY25, given that our annual profit level is now JPY2 trillion. Furthermore, we will continue to examine the balance of growth investments within the target range for CET1 ratio. We cannot share with you the current status but hope you could understand where we stand. Unidentified Company Representative Thank you, Nakamura. Itagaki will answer your second question. LSEG STREETEVENTS | www.lseg.com | Contact Us consent of LSEG. 'LSEG' and the LSEG logo are registered trademarks of LSEG and its affiliated companies. DECEMBER 19, 2025 / 8:30AM, 8306.T - Mitsubishi UFJ Financial Group Inc Investment in Shriram Finance Ltd Net Conference Yasushi Itagaki - Mitsubishi UFJ Financial Group In - Senior Managing Corporate Executive Group COO-I, Group Head - Global Commercial Banking Business Group We have been searching for a partner for India for four years. During which, we seriously considered a few other deals. We believe this deal, Shriram, is the best of all. It is an excellent company, with a great founder and management team. Their unrivaled competitive advantage in the business domain they focus on that competitors cannot imitate and the talent and corporate culture that support it gave us confidence that they will achieve sustainable growth. In fact, their ROE has remained above 15% for the past three years. That said, there are also constraints. Because Shriram does not belong to any large conglomerates or banks, its growth capital was limited, compared to its peers. We believe this has held back its growth. With MUFG's capital, it will be freed from these capital constraints and can unleash and unlock its potential. We are considering various synergies. But, first and foremost, we believe that our capital will further accelerate its growth. As the global order and economy move towards protectionism and block economy, extending the GCB portfolio built in ASEAN and advancing further into India, a major power with strong domestic demand that is not dependent on trade, holds significant strategic importance. While we understand your point that its ROE may be insufficient, it is important to leverage MUFG's experience in ASEAN to build a good platform and good relationship to promote growth.