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 2017
During the fiscal year ended March 31, 2018, domestic interest income declined due mainly to the prolonged trend of low interest rates. Because of this, gross profits fell 157.5 billion yen year on year to 3,854.2 billion yen. At the same time, general and administrative expenses increased 27.8 billion yen year on year. This was mainly attributable to increases in regulation-related costs and personnel expenses in countries overseas even as domestic operations successfully reduced general and administrative expenses. Consequently, net operating profits totaled 1,232.8 billion yen, down 185.4 billion yen year on year.
In addition to the decrease in net operating profits, the Company recorded temporary expenses in connection with structural reforms. However, total credit costs improved, while Morgan Stanley, an equity-method affiliate of MUFG, contributed to profit. As a result, profits attributable to owners of parent amounted to 989.6 billion yen, up 63.2 billion yen year on year, meeting our target of 950.0 billion yen.
As of March 31, 2018, MUFG’s capital adequacy ratio remained robust at 12.58% (Common Equity Tier1 Capital ratio).
The Formulation of the Medium-Term Business Plan
(for more details, please also refer the related press release)
The global economy has achieved steady recovery over the last few years. However, going forward, markets merit close watch for changes which could be triggered by shifts in central bank policies or signs of a turning point in the credit cycle, as well as growing uncertainty caused by geopolitical risks.
Meanwhile, Japan’s low growth and ultra-low interest-rate environment are seen as likely to continue on the back of serious challenges such as its aging population, declining birthrate and deceasing population. In addition, the ongoing wave of digital technology-fueled transformation is poised to drastically change society and whole industries—including the financial industry.
MUFG publicly announced the outline of its “MUFG Re-Imagining Strategy” in May 2017. This plan aims to swiftly and flexibly respond to the above-mentioned changes and put the Company on a growth track and, to this end, clarifies the Company’s policies for forward-looking reforms. And in April 2018, the Company launched a new medium-term business plan (MTBP) that identifies specific initiatives that it intends to execute over the coming years.
MUFG’s Vision ~ Beyond the “Re-Imagining” Initiative
We aim to deliver the best value to all stakeholders through simple, speedy and transparent group-integrated operations. Also, we will contribute to the realization of sustainable growth and a better society by promoting solution-oriented business.
- (1) Engage in the needs and issues of customers and society, and provide optimized solutions.
- (2) Redefine ideal legal entities and the group, and develop a sustainable business model unique to MUFG.
- (3) Provide a workplace where each employee can realize his or her talent development.
- (4) Based on the results achieved above, respond to shareholders’ expectations and enhance a reliable relationships with them.
Moreover, “Eleven Transformation Initiatives” have been outlined in the new MTBP as specific initiatives to help the Company to weather a difficult business environment, and to get back to a sustainable growth track. Each initiative shares the following features: (1) a large growth potential, (2) the power to enable MUFG to demonstrate its capabilities, (3) the promise to become a main MUFG business, or a support function of a main business.
Additionally, we will establish the Global Commercial Banking Business Group focused on the Retail, local corporate and SME banking business outside of Japan, aiming to surely and steadily capture market growth in the United States and Southeast Asia.
Our Basic Policies for Shareholder Returns
In conjunction with the medium-term business plan, MUFG has established its “Basic Policies for Shareholder Returns.” MUFG aims for stable and sustainable increase in dividends per share through profit growth, with a dividend payout ratio target of 40%. As part of these policies, MUFG also plans to flexibly repurchase its own shares in order to improve capital efficiency.
In line with these policies, MUFG’s fiscal 2017 year-end cash dividends will be 10 yen per share, up 1 yen per share compared with fiscal 2016. As a result, the annual dividend for fiscal 2017, including both the interim and year-end dividends, will amount to 19 yen per share. (note1) In addition, the Company forecasts that its fiscal 2018 annual dividend will total 20 yen per share, up another 1 yen per share compared with fiscal 2017. Furthermore, MUFG will execute a share repurchase, expending a total of 50.0 billion yen. Plans call for cancelling all the shares acquired through this repurchase.
While maintaining a strong domestic base and tapping into global growth, we at MUFG will steadily improve our business model as we continuously move forward toward becoming the world’s most trusted financial group—our overarching goal presented in the Corporate Vision.
- The amount presented above for fiscal 2017 year-end dividends presumes that approval for the payment of said dividends is granted by the Annual General Meeting of Shareholders scheduled for June 28, 2018.
Member of the Board of Directors, President & Group CEO