Message from Management
First of all, I would like to begin by extending my deepest gratitude for your ongoing support of our operations.
Performance Results for Fiscal 2016
During the fiscal year ended March 31, 2017, interest income declined due to a prolonged trend toward low interest rates. Investment product sales in the retail business segment were sluggish in the first half, while market-related profit fell in the second half due to rises in interest rates in such countries as the United States. As a result, gross profits totaled 4,011.8 billion yen, down 131.3 billion yen year on year. At the same time, despite an increase in regulation-related costs, general and administrative expenses remained virtually unchanged from the previous fiscal year thanks to the effect of the appreciation of the yen. Consequently, net operating profits totaled 1,418.2 billion yen, down 139.6 billion yen year on year.
Total credit costs were 155.3 billion yen, down 99.7 billion yen year on year, while net gains on equity securities totaled 124.9 billion yen, up 36.6 billion. Taking these factors into account, ordinary income stood at 1,360.7 billion yen, down 178.7 billion yen year on year, and profit attributable to owners of parent amounted to 926.4 billion yen, down 24.9 billion yen compared with the previous fiscal year. Moreover, although we recorded a year-on-year decrease in profit, our performance regarding the latter indicator outpaced the initial target of 850.0 billion yen.
As of March 31, 2017, MUFG’s capital adequacy ratio (Common Equity Tier1 Capital ratio) was 11.76%, maintaining the capital adequacy ratio required under current financial regulations. The non-performing loan (NPL) ratio, that is, the ratio of risk-monitored loans to total loans, stood at 1.41 percentage points. As such, MUFG continued to maintain its NPL ratio at a low level.
Looking at the content of shareholder returns, full-year dividends for fiscal 2016 will total 18 yen per share. Moreover, MUFG will execute a share buyback for the sixth consecutive semi-annual period, expending a total of 100.0 billion yen. In addition, MUFG has established a new policy for the cancellation of treasury stock, setting an upper limit for treasury stock shares as a percentage of total shares outstanding at approximately 5%. In general, this policy would require the cancellation of any treasury stock shares in excess of said limit. As the percentage of treasury stock as of March 31, 2017, stood at approximately 5% of the total number of shares outstanding, plans call for cancelling all of the shares acquired through the aforementioned buyback in line with this new policy.
MUFG Re-Imaging Strategy— Building Anew at MUFG
Today’s operating environment is continually evolving, reflecting structural market changes in Japan and overseas in response to low interest rates at home and widespread digitalization around the globe. Committed to becoming a strong financial group and a global winner amid this environment, the Company has announced the “MUFG Re-Imaging Strategy,” which embraces the following tenets.
MUFG Re-Imaging Strategy— Building Anew at MUFG
We aim to provide customers, employees, shareholders and all stakeholders with the best value through an integrated group-based management approach that is simple, speedy and transparent. We also aim to achieve sustainable growth and contribute to the betterment of society by developing solutions-oriented businesses.
- (1) Strengthening our management approach based on customer- and business-based segments
- (2) Business transformation through the use of digital technology
- (3) Initiatives to improve productivity
- (4) Reorganization of MUFG group management structure
The aforementioned initiatives are supported by approximately 70 concrete measures. With the reorganization of our Group management structure carefully positioned to play a key role in driving all other initiatives, we are undertaking the following.
Reorganization of MUFG Group Management Structure
- (1) Integrate corporate loan-related business of Bank of Tokyo-Mitsubishi UFJ and Mitsubishi UFJ Trust and Banking
- ·Establish the most suitable formation to service our corporate clients as one group
- ·Clarify the mission and responsibility of each group member
- (2) Strengthen AM and IS businesses - New trust banking model
- ·Accelerate AM and IS businesses as growth area for group
- ·Make Mitsubishi UFJ Kokusai Asset Management a wholly owned subsidiary of Mitsubishi UFJ Trust and Banking
- (3) Review customer segmentation
- ·Integrate Japanese retail banking and SME segments
- ·Reorganize Japanese large corporate and global corporate segments respectively, each of which is managed globally across geographical boundaries
- (4) Establish the framework to promote our digital strategy
- ·Appoint a Chief Digital Transformation Officer (CDTO)
- ·Establish Digital Transformation Division
- (5) Reinforce retail payment business
- ·Make Mitsubishi UFJ NICOS a wholly owned company of MUFG
- (6) Rename the commercial bank as “MUFG Bank”
For details of these measures, please also refer to pages 34–41 of DInvestor Meeting Presentation—Fiscal Year Ended Mar. 2017.
We are striving to achieve reforms that will facilitate our becoming the world’s most trusted financial group. Moreover, our structural reforms are forward-looking and intended to ensure that the next generation will inherit just such a financial group. MUFG is rallying its overall strengths to blaze a new trail into the future. Looking ahead, we ask for your continued support.
Director, President & Group CEO