Mitsubishi UFJ Financial : Presentation Material （PDF / 2.75MB）

MUFG Investors Day 2020

September, 2020

Mitsubishi UFJ Financial Group, Inc.

Disclaimer

This document contains forward-looking statements in regard to forecasts, targets and plans of Mitsubishi UFJ Financial Group, Inc. ("MUFG") and its group companies (collectively, "the group"). These forward-looking statements are based on information currently available to the group and are stated here on the basis of the outlook at the time that this document was produced. In addition, in producing these statements certain assumptions (premises) have been utilized. These statements and assumptions (premises) are subjective and may prove to be incorrect and may not be realized in the future. Underlying such circumstances are a large number of risks and uncertainties. Please see other disclosure and public filings made or will be made by MUFG and the other companies comprising the group, including the latest kessantanshin, financial reports, Japanese securities reports, Integrated reports and annual reports, for additional information regarding such risks and uncertainties. The group has no obligation or intent to update any forward-looking statements contained in this document. In addition, information on companies and other entities outside the group that is recorded in this document has been obtained from publicly available information and other sources. The accuracy and appropriateness of that information has not been verified by the group and cannot be guaranteed. The financial information used in this document was prepared in accordance with Japanese GAAP (which includes Japanese managerial accounting standards), unless otherwise stated. Japanese GAAP and U.S. GAAP, differ in certain important respects. You should consult your own professional advisers for a more complete understanding of the differences between U.S. GAAP and Japanese GAAP and the generally accepted accounting principles of other jurisdictions and how those differences might affect the financial information contained in this document. This document is being released by MUFG outside of the United States and is not targeted at persons located in the United States.

Definitions of figures used in this document

Consolidated：	Mitsubishi UFJ Financial Group (consolidated)
Non-consolidated：	Simple sum of MUFG Bank (non-consolidated) and Mitsubishi UFJ Trust & Banking Corporation (non-consolidated)
the Bank (consolidated)：	MUFG Bank (consolidated)	KS:	Bank of Ayudhya (Krungsri, KS)
MUFG:	Mitsubishi UFJ Financial Group	Bank Danamon (BDI):	Bank Danamon Indonesia
the Bank (BK):	MUFG Bank	FSI:	First Sentier Investors
the Trust Bank (TB):	Mitsubishi UFJ Trust & Banking Corporation
the Securities HD (SCHD):	Mitsubishi UFJ Securities Holdings	R&C:	Retail & Commercial Banking
MUMSS:	Mitsubishi UFJ Morgan Stanley Securities	JCIB:	Japanese Corporate & Investment Banking
MSMS:	Morgan Stanley MUFG Securities	GCIB:	Global Corporate & Investment Banking
NICOS:	Mitsubishi UFJ NICOS	GCB:	Global Commercial Banking
MUAH:	MUFG Americas Holdings Corporation	AM/IS:	Asset Management & Investor Services

All figures are on a managerial accounting basis.

Unless otherwise noted, foreign exchange rates are based on assumed rates determined for internal managerial accounting purposes.

• Gross profits/net operating profits/expense: Figures include the net operating profits yielded by inter-business group collaboration presented below

R&C:	Profits from overseas transactions with Japanese corporate customers and profits from business owner transactions
	which belong to JCIB
JCIB:	Profits from business owner transactions which belong to R&C and profits from Japanese corporate customers served by KS
	which belong to GCB
GCIB:	Profits from non-Japanese large corporate customers of KS which belongs to GCB, profits from R&C and JCIB's non-Japanese
	corporate customers located in Japan, and Joint Venture profits with Global Markets
GCB:	Figures which belong to GCB only (not include figures which belong to other business groups)
Global Markets：Joint Venture profits with GCIB
• ROE：	Calculated based on Risk Assets (R&C, JCIB, GCIB and GCB) or economic capital (AM/IS and Global Markets)	2
	Calculated based on net profits and excluding mid- to long-term foreign currency funding costs
	Excludes the impacts of investment related accounting factors (amortization of goodwill, etc.)

Contents

Retail & Commercial Banking (R&C)	4
Japanese Corporate & Investment Banking (JCIB)	10
Global Corporate & Investment Banking (GCIB)	16
Global Commercial Banking (GCB)	23
Asset Management & Investor Services (AM/IS)	30
Global Markets	36
Digital Strategy	43

3

Retail & Commercial Banking Business Group

Naoki Hori, Group Head

4

R&C	JCIB	GCIB	GCB	AM/IS	Global Markets Digital Strategy

Overview of Retail & Commercial Banking

FY19 results				Changes in net operating profits
	FY18	FY19	YoY	（¥bn）		Turnaround			Personnel
				307.8		of ¥4bn YoY			expenses	307.9
Net operating	307.8	307.9	0.1		in 2nd half			etc
				One-time
profits (¥bn)
							costs*3	etc
Expense ratio	80%	80%	(0ppt)
ROE	1%	9%	9ppt
[6%*1]	[6%*2]
		FY18	JPY loans	WM*4	Investment	Payments	Expenses	FY19
				results	&	/AM*5	Banking /	/CF*6			results
				Real Estate /
Progress of key initiatives				deposits		Inheritance
					Figures in parenthesis represent changes YoY

		WM and AM	P.7		•	Growth in the value of assets identified by the Bank (+¥5tn) and expansion of cross
Strengthen the					transactions*7
				•	A turnaround in revenue from AM by expanding customer referrals in 2nd half
earning base
	SME segment			•	Growth in business succession related loans (+10%) by enhancing proposals targeting
					business owners
Top-line					•	Quality of information sharing of real estate was improved
	Payments / Consumer			•	Constantly solid profits thanks to the higher volume of credit card and consumer finance
		finance				transactions
				•	NICOS decided to promote the system integration by utilizing the existing system

Accelerate cost
Sales channel reforms	P.8
structure

reforms	Productivity improvements
Cost

• Made progress in the optimization of branch and ATM networks and reduced facility costs
• Growth in the no. of IB*8 service users (+1.2mm) and utilization rate (+6%)
• Reallocated staffs at a branch to rebuild sales structure; made progress with BPR
• Promoted online residential mortgage loans while completing the consolidation of branch operations associated with such loans

*1	Excluding the impact of impairment losses on fixed assets of NICOS *2 Excluding the impact of one-time effects of corporate tax refund *3 System and compliance costs
(indirect costs), strategic investments for structural reforms, etc. *4 Wealth Management *5 Asset management (incl. investment product sales) *6 Consumer finance	5
*7	Inheritance and real estate transactions and transactions with client's asset administration companies *8 Mitsubishi UFJ DIRECT: Internet banking for individual customers

R&C	JCIB	GCIB	GCB	AM/IS	Global Markets Digital Strategy

FY20 Q1 results

		FY20	YoY
		Q1 results
(¥bn)

Gross profits	328.7	(36.5)
	Loan interest	54.5	(1.1)
	income
	Deposit interest		29.0	(9.0)
	income
	Domestic and foreign	32.1	(2.8)
	settlement / FX
	Investment	37.1	(5.2)
	product sales
	Card settlement		140.5	(11.1)
	/ CF
Expenses	282.4	(20.7)
Net operating		46.3	(15.8)
profits
Ave. loan balance	31.6	0.7
（¥tn）

Reasons of changes

Impact of COVID-19

(38.0)－

Lending spreads are on a downtrend despite increase of fundraising assistance related to the COVID-19 pandemic

Non-JPY deposit interest margin has shrunk due to reductions in U.S. interest rates

Volume of trading transactions as a whole declined (down 20% YoY), while restraints on activities led to sluggish results

Restraints on proactive sales activities led to stagnation of product sales, leading to a significant decline in flow revenues (down 12% YoY)

Volume of card settlements fell due to stagnation in personal consumption (down 25% YoY)

	- Revenue-linked expenses incurred by MUMSS and
(14.0)	NICOS declined
	- Optimization of personnel by the Bank's BPR measures

and reduction of facility costs

(24.0)	Initiatives of reducing expenses partially offset the
negative impact of COVID-19 in gross profits

Loan balance increased due to fundraising assistance related to the COVID-19 pandemic

Response to

COVID-19

• Response to fundraising assistance related to the COVID-19 pandemic
• Enhance our non face-to-face channels in step with societal digital shift
• Restructure our business strategies to optimize our mode of financial transactions, customer contact points and the way of business in light of changes in the business environment brought

about by the new norm	6

R&C	JCIB	GCIB	GCB	AM/IS	Global Markets Digital Strategy

Strengthen the earning base - Wealth management business

• Expand top-line revenues and accelerate to secure new assets via cross transactions targeting customers seeking succession solutions while strengthening our AM foundation

Achievements

Policies for future initiatives

• Made progress in profiling and achieved steady results in

•

Aim to achieve significant growth by targeting customers

cross transactions and customer referrals

seeking succession solutions by strengthening our structure

∎ Cross transactions

∎ WM / AM

and utilizing digital technology

Assets identified by the Bank (¥tn)

Gross profits of WM / AM

Increase assets identified by the Bank to ¥130tn

Gross profits of cross

75

Gross profits of retail customer referrals

and gross profits of cross transactions to ¥75bn

transactions

(¥bn)

(¥bn)

134

transactions Cross

• Focus on reaching out to

No. of companies

Succession

targeted

+35

130

support

clients seeking succession

40

+44

support

83thd

34

97

assetsSecurenew

90

No. of effective

• Increase no. of effective

87

92

Real estate

information shared from the

information sharing

Others

Bank to the Trust Bank

6thd ⇒ 12thd+

Real

30

33

• Increase no. of specialized

No. of entrusted

estate

staff and strengthen to

Inheritance

testamentary trust

Financial

expand customer base of

40thd ⇒ 50thd

assets

the Bank

FY18

FY19

FY23

FY18

FY19

FY23

Increase gross profits of WM / AM to ¥134bn

∎ Major KPIs

/ WM

FY19

YoY

Upgrade

•

Integrate PB securities*4 with

No. of retail customer

MUMSS and established

No. of group collaboration (thd)*1

23.8

10.5

AM

securities

"WM Division"

referral deals

No. of effective information sharing

function

•

Expand customer referral

15thd ⇒ 30thd+

5.6

0.7

Cross

from the Bank to MUMSS

(thd)

transa

-ctions

Balance of executional entrusted

9.3

0.5

testamentary trust (¥tn)

Release a WM digital platform

Strengthening the frontline

No. of retail customer referral deals

15.4

6.1

system (FY21H1)

WM-specialized staff at the Bank

AM

(thd)

Increase the number of deals

90 ⇒ 500 staff

Investment assets (¥tn)*2

37.1

(2.0)*3

closed by utilizing NBA*5

*1 No. of customer referral from the Bank to MUMSS + collaboration between the Trust Bank and MUMSS etc.

*2 Managerial accounting basis (excl. JPY and non-JPY deposits) *3

Figure excluding the impacts of changes in market prices is +¥0.7tn

7

*4 Mitsubishi UFJ Morgan Stanley PB Securities

*5 Next Best Action: A function designed to provide sales personnel with useful information regarding subsequent actions

R&C	JCIB	GCIB	GCB	AM/IS	Global Markets Digital Strategy

Accelerate cost structure reforms

- digital/sales channel reforms, productivity improvements

- Thoroughly utilize digital technologies to improve productivity and thereby pursue ongoing cost reductions while enhancing our proposal capabilities

	Achievements		Future initiatives

• Digital shift and branch network optimization progressed well • Promote an even faster digital shift and innovate a new

∎ No. of IB service users*1,

∎ No. of BizSTATION

mode of operations and customer contact points

1

•

Develop next-generation IB service

utilization rate*2

subscribers*3

(mm)

15.0

(thd)

400

Develop digital channel

• Upgrade function of online

transactions on MUFG basis

No. of IB service users

platform

•

[Corporate] Develop next-generation

Utilization rate

web channel

+9mm

+100thd

2

Online and self-service

•

Place tablets in all branches

74%

304

systemization of

•

eKYC identity verification

6.4

•

Expand operating processes

+5thd

Contact

transactions

5.9

+0.5mm

Functional

287

299

Improve

Current

paperless, halting personal seal use

Branch image

Guidance to self-

Target

4.7

expansion

275

UI・UX

points

service machine

4.3

31% 34%

basic service

wait in line

to minimize

Turn into a

Advertising

Take a

waiting time

number and

22%

25%

Marketing

Marketing

automation

automation

FY17

FY18

FY19

FY20Q1

FY23

FY17

FY18

FY19

FY20Q1

FY23

Identity

∎ No. of branches (the Bank non-consolidated basis)

verification

Conclude

by camera

Branch specialized to features*4

transactions

image (eKYC)

Fill in paper

Large working

MUFG PLAZA*5

by using tablets

Minimize working

600

form with seal

space

and self-service

space (comfortable

Full-fledged branch

3

machines

customer space)

400

(40%)

-Work style

Workstyle reforms

•

Remote sales structure

- Smart Work Project

•

Use satellite branches and spaces

200

(67%)

4

Proposal ability

Rebuild sales structure

•

Optimize branch structure in light of

- Improve productivity and

market characteristics

0

strengthen business

•

Strengthen WM sales structure

FY06

FY17

FY18

FY19

FY20Q1

FY23

promotion proposal capabilities

•

Expand digital tools for sales support

*1	IB service users = users who log-in IB at least once in 6 months out of all active accounts (excl. accounts used for direct debit only)	8
*2	Utilization rate = IB service users / active accounts *3 Including BizSTATION Light *4 MUFG NEXT and consulting office *5 Group co-located branches

R&C	JCIB	GCIB	GCB	AM/IS	Global Markets Digital Strategy

Initiatives to improve ROE

• Improve ROE by expanding top-line revenues in WM business and further strengthen cost reduction by digital shift

	ROE, RWA*1				Expanding top-line revenues	Gross profits +¥100bn
	RWA (¥tn)	ROE	∎ Effect of key initiatives	∎ Improvement of base revenues
		(comparision with FY19)

						(¥bn)		Expenses		Base revenues
			WM business			Coverage ratio *5
9%	6%*2	6%*3	+¥80bn	95%		97%	98%
-	Expand cross transactions
				and AM from targeting		1,261.4				Optimize fee level
				customers seeking succession solutions	1,258.8 1,242.7
17.4
16.7	16.7				1,201.7	1,218.2	1,221.5	Improve settlement
	Improve base revenues*4			profitability
			- Partially mitigate impact of	+¥20bn					Increase business
				prolonged low interest rate						succession related
			- Target to fully cover expenses					loans
FY17	FY18	FY19	FY23	by base revenues
		FY17		FY18	FY19
Accelerate cost structure reforms	Expenses (¥100bn)

∎ Expenses (image)				Excluding variable expenses and
					MTBP	strategic investments for structure
(¥bn)		(37)			Approx.		reforms etc.
			¥1.3tn		(100)
1,261.4				One-time
		Facility and
			variable	costs*6	1,242.7
			etc.
	Personnel		expenses etc.				Facility and
						operation
	and facility	System
					expenses etc.
	expenses etc.					System
	expenses etc.			Personnel	expenses etc.
						expenses
17年度	人件費・スペース等	システム・子会社等	物件費・業容連動等	一過性コスト等	19年度	人件費	スペース・事務等	システム・子会社等	23年度
FY17					FY19				FY23

• Forecast of no. of personnel

(thd)		R&C
		Of which the Bank

44	43	41
27	26	24
FY17	FY18	FY19	FY23

*1	Credit risk calculated on the basis of current regulations applied. Managerial accounting basis *2 Excluding the impact of impairment losses on fixed assets of NICOS
*3	Excluding the impact of one-time effects of corporate tax refund *4 Loans, deposits, settlements, AM etc.	9
*5	Coverage ratio=base revenues / expenses *6 System and compliance costs (indirect costs), strategic investments for structural reforms, etc.

Japanese Corporate & Investment Banking Business Group

Kenji Yabuta, Group Head

10

R&C	JCIB	GCIB	GCB	AM/IS	Global Markets Digital Strategy

Overview of Japanese Corporate & Investment Banking

FY19 results

	FY18	FY19	YoY
Net operating	244.3	249.6	5.3
profits (¥bn)
Expense ratio	57%	57%	0ppt

ROE

15%

12%

(2ppt)

Progress of key initiatives

Changes in net operating profits

（¥bn）

							249.6
244.3
FY18	Lending	TB*1	Solution	Trust,	Expense	Expense	FY19
results		(deposit,	business	Securities	(domestic)	(overseas)	results
		settlement)

Establish		Transformation to strong earning
	structure
sustainable
Efficient balance sheet
business model
	management and ROE
		improvement
Reinforce our		Further enhancement of solution
approach to solve		capability
customers'
management		Continuous upgrade of RM*3-PO*4
issues		model

• Improvement in lending spreads
  (JPY: achieved a turnaround, non-JPY: ongoing improvement)
• Growth in the average balance of non-JPY deposits (+¥1.5tn YoY)
• Maintained ROE at a high level while expecting to achieve the reduction target of equity holdings
• Improvement in loan-to-deposit gap in non-JPY (down ¥2.9tn YoY)
• Achieved firm results in major finance deals as an arranger (more than ¥10tn)
• Progress in business collaboration with the Securities
  (DCM: ranked first, M&A: ranked second, ECM: ranked third*2)
• Promote the further development of trust-related businesses employing the Bank's customer base (ranked first in terms of gross profits from the real estate trust business, expand support for customer's SR/IR activities)

*1	Transaction Banking	*2 Based on data of Refinitiv, etc. DCM includes both domestic and foreign bonds	11
*3	Relationship Manager	*4 Product Office

R&C	JCIB	GCIB	GCB	AM/IS	Global Markets Digital Strategy

FY20 Q1 results

			FY20	YoY
			Q1 results
（¥bn）
Gross profits	134.5	(6.5)
	Loan interest	31.2	4.6
	income
	Deposit interest		21.5	(12.4)
	income
	Domestic and
	foreign settlement /	18.6	(1.5)
	forex
	Derivatives,	20.4	5.5
	solutions
	M&A、ECM、DCM	9.2	(2.5)
Expenses	79.5	(3.3)
Net operating profits	55.0	(3.1)

Reasons of changes

Impact of COVID-19

(12.0)

Outstanding loan balance increased due to growth in fundraising assistance and withdrawal from existing commitment lines

Impact of U.S. interest rate cuts: down ¥16.0bn

Despite the higher number of capital remittances made to assist customers' overseas local subsidiaries, the overall value of transactions was down due to a decline in actual demand

Growth in the number of deals in response to funding needs

Decline in funding needs by issuing stock and bond

(1.0)	Various cost control measures resulted in overall cost
reductions
(11.0)	The negative impact of the COVID-19 was offset by growth
	in lending and solution-related profits

Ave. loan balance		42.9	3.0		RWA increased by ¥1.3tn
(¥tn)

Response to

COVID-19

• Balance proactive response to fundraising requests and RWA control
• Review and enhance our customer contact points in response to societal digital shift
• Contribute realizing a sustainable society
• Take on the challenge of entering new fields via business partnership with Japanese large corporates

12

R&C	JCIB	GCIB	GCB	AM/IS	Global Markets Digital Strategy

Initiatives under the circumstance with COVID-19

－Place the utmost priority on extending fundraising support; aim to continue offering proactive assistance by employing an integrated, groupwide approach

Status of fundraising assistance amid the COVID-19 pandemic

• Extend prompt fundraising assistance at home and abroad
• Employ an integrated, groupwide and product-neutral approach

Offer proactive corporate assistance employing an integrated, groupwide approach

Needs for	•	Aim to extend approximately ¥1-1.5tn in
	assistance for capital financing out of
capital
	total market needs for capital
reinforcement
	reinforcement of ¥4-5tn*4

（¥tn）

Exposure increase*1

JPY loans

Non-JPY loans

Bonds underwritten*2

Cumulative total

(from Mar to Jun 20)

10.9

5.7

0.9

1.6

			Capital accounted for		Capital accounted for
			as net assets		as liabilities*5
			（Preferred stock, etc.)		(Hybrid loans, etc.)
	Existing		¥0.8tn
	pipelines
	Expected		¥0.7tn
	pipelines

Response to new norm

• Launch of PT for customer support including capital financing

		• Streamline clerical work by going paperless while
			Customer needs
Clerical			reducing workload associated cash collection &
		distribution operations
work
	•	Expansion of working remotely
			(Overseas: 80%, (Domestic) CBD*3: 50%)
				the Bank			MUMSS
Business		• Expand customer contact points at home and
		abroad by employing web-conferencing		Provide best solutions on the Group base
operation		•	Introduce a new tool unique to MUFG to support a
			non face-to-face sales approach		Hybrid loans, hybrid and convertible bonds, preferred stock
					and fund referral, etc.
*1 Include an increase in balance of approved exposure
*2 Domestic bonds are prepared by MUMSS based on REFINITIV and DealWatchDB.
Foreign bonds are prepared by MSMS based on corporate disclosure data, Dealogic, Bloomberg, IFR, and Informa	13
*3 Corporate Banking Division *4 Total market needs. Estimation by the Bank *5 Liabilities that rating agencies deem partially to be equity capital

R&C	JCIB	GCIB	GCB	AM/IS	Global Markets Digital Strategy

Initiatives to improve ROE

－Maintain thoroughgoing RWA control mainly through the reduction of equity holdings; continue to improve capital efficiency by reducing loan-to-deposit gap in non-JPY B/S, etc.

RWA control

• Achieved disciplined RWA control despite placing the utmost priority on meeting fundraising needs arising from the COVID-19

Reduction of equity holdings

• Expect to overachieve the reduction target of ¥800bn
• Aim to accumulate total of ¥1tn including the agreed amount

(¥tn)		RWA*1		Loans (Period-end balance)

38.8

22.3

37.938.2

	Selling		Net gains
	Acquisition
	amount	(losses)
（¥bn）	cost basis

	21.4	21.2
FY17	FY18	FY19	FY20

(estimated)

• Loan-to-depositgap in non-JPY B/S are shrinking thanks to the accumulation of highly "sticky" non-JPY deposits and prudent control on non-JPY lending
• Both JPY and non-JPY lending spreads improved

FY15	211	117	94
FY16	267	149	118
FY17	318	201	117
FY18	242	127	115

Loan-to-deposit gap in non-JPY B/S*2

(¥tn)

18.7	6.2	18.1		16.7
		4.4
			1.5

12.5 13.6 15.2

Lending spread

0.61% 0.63% 0.64%

0.39% 0.36% 0.37%

FY19	240	139	101
FY20 (estimated)	-	140	-
and more
Total	-	870	-

FY17 FY18 FY19FY17 FY18 FY19

Non-JPY loans		Domestic JPY loans
Non-JPY deposits
	Non-JPY loans
Loan-to-deposit gap

*1 Credit risk calculated on the basis of current regulations applied. Managerial accounting basis

		and more
*2 Average balance	14

R&C	JCIB	GCIB	GCB	AM/IS	Global Markets Digital Strategy

Initiatives toward the next medium-term business plan

－Carry out disciplined RWA control and thorough management focusing on ROE.

－Increase gross profits by improving profitability of loan assets, strengthening transaction banking and expanding solution business

Basic policy: Establish a cycle of ROE enhancement through RWA control and improvement of NOP

					Net operating profits (bn)					RWA (tn)			ROE *1
	10%	11%	11%
	215.4		244.3	249.6
	22.3	21.4	21.2
	FY17		FY18	FY19													FY23
	Improvement in profitability of loan assets	(estimated)
			Accelerate conversion to O&D business model
					Enhance management of loan pricing
						Restructure portfolio
	Enhance transaction banking business
	(¥tn)		Non-JPY liquid deposit balance
							liquid deposit ratio (RHS)*2
	9.0				liquid deposit (LHS)			75%
	8.0			67%																		70%
	7.0																						65%
			7.3
	6.0																					60%
				FY19	FY20											FY23
							(estimated)							(estimated)

Support for restructuring of business and capital policies

[the Bank, MURC*3]

・Enhance consulting services targeting

corporate managers of corporate customers

[TB]	[MUMSS]
・Make proposals regarding the	・M&A for business restructuring
utilization of idle assets	・Response to industry reorganization

・Response to issue of parent-child

listing

Contributing to realize a sustainable society

(¥tn)	Sustainable finance
		+¥1tn
1
	FY19	FY20	FY23
			(estimated)

Promote business partnership strategies in tandem with Japanese large corporates

DX

Decarbonization

Mobility Cashless

*1 Managerial figure calculated by adding net operating profits and RWA increase / decrease based on FY17 ROE	15
*2 Ratio of liquid deposit in the entire non-JPY deposit *3 Mitsubishi UFJ Research & Consulting

Global Corporate & Investment Banking Business Group

Masato Miyachi, Group Head

16

R&C	JCIB	GCIB	GCB	AM/IS	Global Markets Digital Strategy

Overview of Global Corporate & Investment Banking

FY19 results

	FY18	FY19	YoY
Net operating	156.0	163.7	7.7
profits (¥bn)
Expense ratio	63%	63%	0ppt
ROE	10%	8%	(2ppt)

Progress of key initiatives

Changes in net operating profits

（¥bn）
156.0						163.7
FY18	Loan	Deposit	Fees	Others	Expense	FY19
results						results

Improve portfolio returns and B/S structure

Reshape business model through enhanced solution offering capability

Create new value under the new business environment

*1 Investment Grade

• Portfolio profitability and loan-to-deposit gap improved through advanced transaction monitoring and B/S management
• Continue to enhance our deal screening framework
• Continued our strong position in IG*1 syndicated loan/DCM
• Accelerated integrated solution offering on an MUFG basis to win non-B/S dependent revenues
• Launch of financing business for startup companies, leveraging real-time data gathering and analytics technology
• Enhanced initiatives for supporting SDGs

17

R&C	JCIB	GCIB	GCB	AM/IS	Global Markets Digital Strategy

FY20 Q1 results

(¥bn)

Gross profits

Loan interest income Deposit interest income

Fees, FX, derivatives

DCM, ECM

JV profits with

Global Markets

Expenses

Net operating profits

Ave. loan balance （¥tn）

FY20	YoY
Q1 results

116.9 2.5

45.5 0.3

11.0 (1.2)

48.2 (4.3)

6.8 3.4

9.4 4.3

74.8 4.2

42.1 (1.6)

24.8 0.6

Reasons of changes

Impact of COVID-19

(11.0)

Loan balance increased due to withdrawals of revolving credit facilities

Decrease in interest margin due to rapid rate cuts in the U.S. offsetting the balance increase

Fee income decreased due to the lower event finance activities

Strong DCM performance due to strong funding needs

Strong FX and derivative performance capturing clients' funding needs and market volatility increase

(1.0)	Increased expenses due to inorganic strategies and
regulatory requirements
(10.0)	Strong performance in DCM and JV profits with Global
Markets, offsetting negative impacts of COVID-19

Loan balance increased due to withdrawals of revolving credit facilities

Response to

COVID-19

• Enhance B/S management to improve risk-return and non-JPY liquidity position
• Improve profitability by expanding cross-sell and delivering suitable solutions
• Promote digital shift to deliver advanced financial services and strengthening initiatives supporting SDGs
• Accelerate expense structure reforms and strengthening risk control

18

R&C	JCIB	GCIB	GCB	AM/IS	Global Markets Digital Strategy

Improve portfolio returns and B/S structure

• Disciplined RWA control
• Improvement in loan-to-deposit gap and portfolio returns

		Efficient asset deployment			Balance Sheet Optimization
		RWA*1 and loan NIM*2			• Portfolio median improved in terms of both
				profitability and profit amount

(¥tn)

25

•

Loan NIM

+0.09%

MTBP

Initial

continues to

Plan

improve

15

Prioritized RWA

•

control over

loan balance

5

expansion

FY17

FY18

FY19

FY20

					Loan NIM
		RWA
				(average of all loans	)

Improving B/S structure

Loan-to-deposit gap

(¥tn) 25

15	12.3			11.8	11.1	8.9
										13.0
5	9.7
End Mar 18	End Mar 19	End Mar 20	End Jun 20
			Loans			Deposits			Loan-to-deposit gap

High

		End Mar 20
Profitability
	End Mar 19
		Median of
		End Mar 18
			FY20
			FY19
		Low-return monitoring area	FY18 criteria

LowProfit amountHigh

Steady improvement in	Client-by-client
account plans and
profitability hurdles
disciplined monitoring

Enhanced B/S management to improve risk-return and non-JPY liquidity position

*1	Credit risk calculated on the basis of current regulations applied. Managerial accounting basis	19
*2	Net Interest Margin. Including non-JPY mid- to long-term funding costs

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Reshape business model through enhanced solution offering capability

• Enhance origination capability tailored to investor needs
• Strengthen cross-sell by leveraging a wide range of sophisticated solutions

Upgrading O&D business

League table position	• Maintain strong position
(Syndicated loan/DCM combined)	alongside major U.S.
		banks by leveraging
	4
6	expertise in IG area

9		•	Enhance origination
	15	15	capability in non-IG
17	area to provide
		attractive assets to
			investors

			IG		Non-IG
(year) 2017	2018	2019
Source: Dealogic

Strengthening cross-sell

		Corpo-		Institutional investors
		rates
	AM*2		MCB*3		HF*4		INS*5
	Working					O&D business
productsCIB	capital

Event finance

DCM

Distribution

Example: O&D business tailored to investor needs		Cash
	Management

		Investor needs	Corporate turnaround in the U.S.
		products	FX
				• Arranged DIP finance*1 with senior
		Higher yield investment	security rights under U.S. law
•		Rates &
•	Risk mitigation by	• Lead arranger of a syndication along	selling-	Credits
with other supporting lenders	solutions
	Structured
		advanced structuring
•	Social contribution under	First ESG bond issuance by Thailand		Cross
		Asset
		the COVID-19 pandemic	• Provided advisory service for bond
			Management
				issuance and ESG certification
•	SDGs/ESG related
• Arranged bond issuance for			Investor
		investment
		distribution to investors			Services
						*2 Asset Manager *3 Money Center Bank
	*1 Provides key funding upon exiting the legal proceedings to support business turnaround
	*5 Insurance Company *6 Asset Management & Investor Services business

Strengthening cross-sell on an MUFG basis

Global Markets product

strategy (P.40)

AM&IS*6 strategy (P.33-34)

*4 Hedge Fund	20

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Create new value under the new business environment

• Financing for startups through leveraging digital technology
• Enhance initiatives to support Sustainable Development Goals (SDGs)

	Digital technology-driven financing for startups		Strengthening SDGs initiatives

Provide financing by leveraging real-time data gathering and analytics technology

FY19 results (global)

• Renewable energy finance league table	#2
•	# of bookrunner in green loans	#2
•	ESG bond underwriting*1 league table	#7

Source: Dealogic、Bloomberg

		Example: Participation in a COVID-19 emergency aid
Startups in Asia-Pacific	program in Africa
Strategic goals	Market trend	Loan

Next-generation	Fund raising by pre-	Guarantee
unicorn companies in
financial services	Southeast Asia (US$bn)		Invested in
			2.2	Offering SDGs related	food, energy and medical support
Realize higher returns			investment
		opportunities for
				investors
Contribute to	Acquire new	0.7
sustainable		Institutional
client base in
development of			Investors
growing	(year) 2016	2018
Asia-Pacific
industries
economy	Source: e-Conomy SEA 2019
		（Google, TEMASEK, BAIN&COMPANY)
*1 Total of social bonds and green bonds underwriting			21

R&C	JCIB	GCIB	GCB	AM/IS	Global Markets Digital Strategy

Initiatives to improve ROE

• Saving costs through accelerating expense management reforms and enhancing risk management under COVID-19 pandemic

Initiatives to improve ROE

			Improve portfolio returns and B/S structure	P.19
Gross profits		Reshape business model through enhanced solution offering	P.20
			capability
			Create new value under the new business environment	P.21
			Expense		•	Optimal resource allocation
	Expenses			•	Disciplined control of personnel expenses and system
		management
					investment
			reforms
				•	End-to-end operations review and streamlining
Net operating profits
					•	Proactive risk monitoring
	Credit costs		Enhancing risk		•	[Aviation finance]
			management			Enhanced credit management by leveraging expertise in
					repossession and reselling of aircraft collateral
					• Corporate turnaround and restructuring initiatives
Net profits
RWA		Improve portfolio returns and B/S structure	P.19

22

Global Commercial Banking Business Group

Takayoshi Futae, Group Head

23

R&C	JCIB	GCIB	GCB	AM/IS	Global Markets Digital Strategy

Overview of Global Commercial Banking

FY19 results

2	FY18	FY19	YoY
Net operating	198.8	217.9	19.1
profits (¥bn)
Expense ratio	70%	72%	1ppt
ROE	6%	(17%)	(23ppt)
[5%*1]

Progress of key initiatives

Changes in net operating profits

（¥bn）
					217.9
198.8
FY18	MUAH*2	KS*2	BDI	Head office, other	FY19
results				(amortization	results
				of goodwill etc.)

Includes the negative impact on net operating profits due to the divestment of subsidiary in Apr 2019

		Capture growth in
Increase partner		Asia
banks' corporate
value		MUB*3 business
		restructuring

Enhance partner bank (PB) synergies

• Built the commercial banking platform encompassing ASEAN via the consolidation of BDI
• Signed an alliance agreement with Grab Holdings; aim for the creation of a new financial service
• Transforming the business model by establishing a new management structure
• Determined in pursuing cost structure reforms to improve cost- intensive business structure
• Rolling out successful initiatives at KS to other PBs. BDI also saw steady progress
• Efforts are now under way to enhance risk management structure to secure resilience against the COVID-19 pandemic

*1	Excludes impairment loss on goodwill and the impact of one-time amortization of goodwill	24
*2	Includes those belonging to GCB only and exclude those belonging to other business groups *3 MUFG Union Bank

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MUFG Union Bank

－The U.S. regional banking strategy is being reformulated

FY20H1 results*1

（¥bn）		FY19H1	FY20 H1	YoY
Gross profits	306.2	321.2	15.0
	Expenses	250.5	256.3	5.8
Net operating profits	55.7	64.9	9.2
	Credit costs	10.1	89.5	79.4
Net income	41.2	(30.5)	(71.7)

Concept of new strategy ("Back to Basic")

• Leveraging MUFG Union Bank's high recognition and extensive branch network in California,
  customer segments will be revised to formulate a new strategy to achieve customer-oriented business

Customer-oriented	Enhance collaboration	Focus on profitability
frameworks	& results

Strategic initiatives

Loan balance		9,535.9	9,323.2	(212.7)
(Period end balance)

Establish a new management structure

Leadership with proven track records MUAH support MUFG support

Enhance middle

1. market and SME
   business
2. Enhance deposit
   transactions

• Strengthen collaboration with GCIB and revise customer segments
• Increase sales head count and improve credit underwriting processes
• Strengthen collaboration between corporate customer RMs*5 and the TB Division
• Enhance product appeal, promote cross- selling

Greg Seibly		D.Delloso		with MUAH Board			Optimize
				・Increased involvement	3		➢ Increase loan assets which brings in new
• New Head of Regional Banking	(CRO*2)			personal loans	customer relationships
• Risk					(Launch of organic unsecured consumer loans)
• Regional bank turnaroud as CEO		・Dispatch GCB BU Deputy
		C.Higgins		Chief Executives
Rohit Khanna				➢ Uplift customer convenience by improving
	✓Chairman of the Board:	4		Improve digital
• New Head of Strategy	(CIOO*3)		1 person		online banking transactions and credit
• IT		✓Board member: 1 person		functions
• Former Krungsri Strategy Head					underwriting system
		・MUFG management
John Elmore	K.Cronin
	involved in target setting			Promote initiatives	➢ Determined execution of company-wide
(Head of GCIB)		and performance
• New MUAH Outside Director	R.Clark		assessment of MUAH	5	for streamlining	initiatives to revamp its structure
	management team	➢ Reorganize the branch network
• Former U.S. Bank Vice Chairman	(Head of TB*4)					internal structure	(including PurePoint locations)

*1 Financial results as disclosed in MUAH's 10-K and 10-Q reports based on U.S. GAAP. Converted into ¥ with actual exchange rate as of each interim end.

FY19H1 USD1=¥107.79, FY20H1 USD1=¥107.74 *2 Chief Risk Officer *3 Chief Information & Operations Officer *4 Transaction Banking25 *5 Relationship Manager

R&C	JCIB	GCIB	GCB	AM/IS	Global Markets Digital Strategy

Krungsri (Bank of Ayudhya)

－Since MUFG's investment, KS has grown to become one of the top five local banks in Thailand

FY20H1 results*1, *2

Major achievements

(¥bn)

FY19 H1

FY20 H1

YoY

[Retail] Top share in consumer finance in Thailand

➢ KS is maintaining its leading position in Thailand, and it

Gross profits

196.6

204.6

8.0

also took the top market share for auto loans in 2020

Expenses

93.3

84.6

(8.7)

Share in consumer finance business in Thailand*3

Net operating profits

103.2

119.9

16.7

2015

2020*4

45.7

60.5

14.8

Credit costs

Personal loans

27％ (1st)

30％ (1st)

Net income

45.1

47.2

2.1

Credit cards

15％ (1st)

16％ (1st)

Auto loans

22％ (2nd)

29％ (1st)

Loan balance

5,938.9

6,250.8

311.9

(Period end balance)

[Corporate] Finance leveraging MUFG's strengths

KS's growth after MUFG's investment

Support for overseas expansion

Net income trends of major banks in Thailand*2

through M&A

Supported acquisition of a Vietnamese corporate

Mid-scale bank

Listed as one of

FY2020 H1:

positioned second

Thailand's

by a Thai corporate through a bridge loan

2nd in net income

only to the Big 4

D-SIBs (2017)

provided by MUFG and long-term credit by KS

(THB bn)

(THB bn)

Support for an ESG-oriented

60

30

joint venture

40

20

• Supported a JV formed by leading Thai and

Japanese chemicals manufacturers to produce

biopolymers with a low environmental impact

20								10	Support for an electric power
									generation project
0								0	• Supported Thai corporates' natural gas-fired
2013	2014	2015	2016	2017	2018	2019	2019 H12020 H1	power plant project in which a Japanese
KRUNGSRI	BANGKOK	SIAM COMMERCIAL		KRUNGTHAI	KASIKORN	corporate has partial stake
(Source) Bloomberg, company data

*1	Based on Thai GAAP. Converted into ¥ with actual exchange rate as of each interim end. FY19H1 THB1=¥3.50, FY20H1:THB1=¥3.49	26
*2	FY19 results deducted profit from divestment of subsidiary. Tax adjustments are approximate calculated by amount deducted by tax rate 20%
*3	Rankings in (parentheses) are for consumer finance business in Thailand. *4 Data shown as of May 2020

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Bank Danamon

－Secured growth in net operating profit despite the impact of COVID-19 pandemic. Formulation and implementation of new strategies are under way since new CEO appointment

FY20H1 results*1

(¥bn)

FY19 H1

FY20 H1

YoY

Gross profits

67.4

70.6

3.2

Expenses

33.9

32.5

(1.4)

Net operating profits

33.4

38.1

4.7

Credit costs

13.2

27.5

14.4

Net income

13.9

6.4

(7.5)

Loan balance

1,141.7

1,084.5

(57.1)

(Period end balance)

Management reforms

Oct 2019 -

May 2019 -

Oct 2019 -

CommissionerGoto

CEO

President

Commissioner

Former KS CEO.

Itagaki

Futae

MUFG Regional

Executive for Asia

Oct 2019 -

Key

CIO*2（Feb 2020 -)

Vice President Director Honggo

Position

CDO*3 (Jul 2020 -)

Former Head of Commercial

Hiring

Banking at Bank Mandiri

Head of SME (Apr 2020-)

MUFG collaborative expertise

Expand BDI's expertise and lay the foundations

to strengthen the organization

Major initiatives

Comprehensive approach to the local ecosystem

Working as "One MUFG"	(¥bn)							(¥bn)
to capture the			+18%	500
entire supply chain	40
Suppliers							400
Manufacturers	20	3.8
					times	300
Distributors
Purchasers	0							200
		2018		2020 H1
				Collaborative
						CASA*4 balance
Success examples				loan balance			(RHS)
				(LHS)

Collaborative business leveraging the alliance

Dealer finance

• Provided financial services to auto dealers in order to support vehicle sales

Real estate value chain

• Provided end-to-end support from the financing of a mixed-use urban development project to housing loans for the residence buyers

Islamic finance

• Provided financial services unique to the region to supply equipment to a major medical institution, in collaboration with Tokyo Century Corporation

*1 Based on Indonesian GAAP. Credit costs includes loss on restructuring. Converted into ¥ with actual exchange rate as of each interim end.	27
FY19H1 IDR1=¥0.0077, FY20H1 IDR1=¥0.0076 *2 Chief Information Officer *3 Chief Digital Officer *4 Current Account, Saving Account

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Strategic alliance with Grab Holdings

－Taking up the challenge of providing new digital financial services

	Capital & business alliance with Grab			Collaborative initiatives at PBs
	Overview of Grab*1			Main services launched to date

Founded in 2012, Grab is the operator of the leading super app in Southeast Asia

Ride-Hailing

Food Delivery

TAXI

Total use: over 3 billion times

Enters Financial Services Business

• Over 9 million drivers and merchants

• Over 200 million downloads

Purpose of the investment and business alliance

To provide new digital financial services by combining MUFG and PBs expertise in finance, with Grab's customer platform and technology

In February 2020, a strategic alliance

agreement was concluded with a maximum

MUFG investment of USD 706 million.

KS is also a co-investor*2

	Date*3	Details
	May	Introduced COVID-19 relief lending for
	merchant restaurants
	Sep	Concluded a long-term business partnership
	agreement in Thailand
	July	Introduced deposit products for app users
	July	Introduced credit cards for app users
	March	Introduced account opening for drivers
	June	Introduced micro-loans for drivers

Initiative to provide new digital financial services in Thailand

	Financial						Advanced
knowledge &	Joint development of	technology &
	expertise	dynamic data
	financial products
Scheduled
Offer products via the Grab platform
for launch
Sep	end
	Merchant	App Users
Drivers
				Restaurants

Future prospects

• Roll out the initiative at other PBs
• Accelerate transformation of mass retail business model of PBs

*1 (Source) Materials published by Grab *2 The actual investor is Krungsri Finnovate (Corporate Venture Capital), a subsidiary of KS	28
*3 All services were launched in 2020

R&C	JCIB	GCIB	GCB	AM/IS	Global Markets Digital Strategy

Initiatives to improve ROE

－Secure greater synergies to seize opportunities arising from ASEAN's economic growth while maintaining appropriate cost and risk control

Continued growth expected for ASEAN economies

Efforts to enhance synergies by utilizing PBs talents

GDP growth rate trend for the four ASEAN countries*1

(US$bn)			7.32%	7.94%	6.73%		9.65% 10%
10,000	6.04%	6.26%
5,000						0.08%	5%
0							0%
	2015	2016	2017	2018	2019	2020	2021

Head of GCB

(BDI President

Commissioner)

Takayoshi Futae

Former Regional Executive for Asia Former KS Vice-Chairman Former Security Bank Director

Regional Executive for Asia Deputy Head of GCB (BDI Commissioner)

Noriaki Goto

Former KS CEO

GDP

Growth Rate

No. of Japanese corporations operating

No. of Japanese staff on assignment

in the four ASEAN countries*2

in the four ASEAN countries*2,3

1st

(people)60,000

+11%

Thailand

4,198

2nd

Indonesia

1,994

d

40,000

Vietnam

1,920

3rd

4th

～

Philippines

1,356

0

2015

2016

2017

2018

*Rank is among ASEAN countries

Thailand

Indonesia

Philippines

Vietnam

Expense control

PB's expense ratio*4

Expense reduction initiatives

Hired	Hired	Hired（MUFG）
	Head of GCB Planning Division	Head of International
	Satinder P.S. Ahluwalia	Credit Division
		Van Uden Menno

Former BDI CFO/CRO

			Sharing credit
Former		Former
Colleague		Colleague	risk expertise

FY19

FY20H1

Change

Former

Colleague

MUB

74.6%

75.6%

0.9%

➢ Implement cost structure reforms.

Currently analyzing peer banks and

identifying where to cut costs

CRO

CRO

CEO

➢ Reduce personnel expenses while

KS

42.9%

41.4%

(1.5%)

Chandrashekar

Adnan

Sanjiv Vohra

curbing advertising and other expenses

Subramanian

➢ Expense ratio is on a downtrend

Qayum Khan

Former Head of

BDI

51.4%

46.0%

(5.4%)

Krishoolndmangalam

MUFG GCIB-Asia

thanks to reductions in various costs,

including personnel expenses

*1

(Source) International Monetary Fund, World Economic Outlook Database, April 2020.

*2

(Source) Ministry of Foreign Affairs "Statistical Survey on the Japanese Nationals Overseas."

*3

Among long-term residents, the number of people affiliated with private corporates *4

Based on local accounting standards.

The expense ratio for MUAH is after adjustment to deduct fees and costs associated with provision of services to MUFG Bank branches in the U.S.,

29

the impact of one-time accounting treatment of renewable energy investments due to U.S. tax reforms (the TCJA), and impairment loss on goodwill

Asset Management & Investor Services Business Group

Sunao Yokokawa, Group Head

30

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Overview of Asset Management & Investor Services

FY19 results

2	FY18	FY19	YoY
Net operating	78.1	70.9	(7.2)
profits (¥bn）
Expense ratio	61%	71%	10ppt
ROE	8%	19%	11ppt
[18%*1]

Progress of key initiatives

Changes in net operating profits

（¥bn）

78.1

70.9

FY18	Macro	AM*2	IS*3 Pension M&A	FY19
results	factors		expenses	results

AM

IS

Pension

• Completed the acquisition of FSI. Reviewed our investment portfolio
• Expanded the balance of AuM*4 for domestic corporates. Achieved growth in accumulative investment products for domestic individual customers
• AuA*5 grew at home and abroad by the solid performance of bundled services (fund finance etc.)
• The cross-selling transactions increased in the institutional investors business; the acceleration of cross- selling initiatives led by the accumulation of solid results
• The number of deals in the field of DB*6 and DC*7 plans increased by providing HR consulting services
• Promoted system development aimed at curbing fixed costs and streamlining operations via the use of digital technologies

*1	ROE excluding the impact of losses on sales of Standard Life Aberdeen shares is 18% *2 Asset Management *3 Investor Services	31
*4	Asset under Management *5 Asset under Administration *6 Defined Benefit Plan *7 Defined Contribution Plan

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FY20 Q1 results

				FY20	YoY
				Q1 results
（¥bn）
Gross profits	73.4	23.4
	AM	31.6	21.3
		Excl. FSI	10.8	0.5
		FSI	20.8	20.8
	IS	26.7	2.2
	Pension	15.1	(0.2)
Expenses	53.0	22.1
Net operating profits	20.4	1.3

Reasons of changes

Impact of COVID-19

(2.0)－

-

Increased in the sales and balance of products for financial institutions etc. in spite of the decrease in AuM

FSI's financial results from Jan to Mar 20, which were before the impact of market fluctuations obviously appeared

Achieved growth in fund finance (FF) thanks to burgeoning demand

The balance of DB pension declined due to market fluctuations

Increased due to the FSI's consolidation and the

• strategic system investment, while travel and other expenses were firmly controlled
• Increased YoY basis due to the growth in FF etc., in

(2.0) spite of decline in AuM and AuA caused by the market fluctuations and new deals

Response to

COVID-19

• Adopt a flexible approach to cost control in preparation for the increasing of the COVID-19's negative impact on gross profits from Q2 onward
• Promote digitalization to enhance the efficiency of our operations and improve the convenience of tools distributed to customers
• Push ahead with responsible investment that places particular focus on the "Social" issues included among the ESG issues

32

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Global AM Strategy and FSI

－Strengthen AM and sales system in high-growth fields and enhance our global presence

Direction of our global AM strategy

FSI's growth strategies

AuM CAGR by products

（2019-2024E）

Alternatives +4%

Active specialty +3%

Active core		+1%
Passive, others		+6%

1. Enhance functions for alternatives and active specialty
2. Grow in overseas markets via organic and inorganic business expansion with FSI

Product base

（Source）BCG,Cerulli

1

2

Client base

AuM CAGR by regions（2017-2022E）

Japan		Asia		Australia		Europe		US
+6%	+12%	+9%	+6%	+5%

• Allocate resources to high-growth fields while maintaining

advantages in fields in which FSI has strength

Forecast for the revenue	FSI's main AM strategy
pool for the industry*2		Contribution ratio to gross
		＝CAGR		333
			profit as of Jun 20
(US$bn)	296			Listed/unlisted
			21%
				162
			+3%	infrastructure
Alternatives	137
Active specialty	54	+1%	56	Emerging,	60%
		global equity
Active core	57
57	0%
Passive, others	48	+4% 59

Post-acquisition results and issues of FSI

2019

2024E

Fields of FSI's focus going forward

• Completed acquisition in Aug 19

•

Establish a multi-boutique platform employing

Results •

Enhanced structure for business execution and

specialist teams equipped with unique strengths

supervision (three outside directors)

FSI

•

Secure a solid position as an asset

•

To counter a decrease in AuM due to the

manager with unique strengths

Issues

COVID-19 and fund outflows

Team

Team

Team

•

Focus on developing infrastructure

•

To achieve sustainable growth and synergies

supporting individual teams and

AuM（A$bn）

Performance

Invest

Invest

Invest

enhancing sales, middle and back-

3.5years CAGR

-ment

-ment

-ment

office functions

+4.5%

Outperformance ratio*1

Sales

229

196

217

212

223

215

80%

Middle, back-office

Secure excellent human

End

End

End

End

End

End

Management, Corporate, IT

resources and achieve

sustainable growth

Jun 16

Jun 17

Jun 18

Jun 19

Dec 19

Jun 20

*1 Three-year performance trend as of end Jun 20.

Proportion of AuM achieving asset management performance in excess of benchmarks

33

*2 （Source）BCG Global Asset Management 2020

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Strengthening of Global IS

－Made progress in bundled services. Enhance services further to meet customer needs

Growth of the alternative fund admin. market

The three-year average growth rate of the total balance of fund admin.*1

20%

10%

0%

2016 2017 2018 2019 2020

Our history and results/issues

ResultsExpanded services via strategic acquisition etc.

Issues

Room for the expansion of peripheral service

compared to competitors

Bundled

services 2013

2020

Expanded by acquisition

Needs

Fund

Entried

admin.

of five companies

Expanded

Finance

Entried

Enhance

AM of

network

Fund FX

Enhance

companies

Custody

Repos,

Enhance

etc.

*1 Based on data from eVestments / Convergence *2 Non-Deliverable Forward

Institutional

Main strategy(1) Fund finance (FF) Investor

Business

• Accumulate admin. profits leveraging FF. Gross profits CAGR (FY17-20) was 12%

How we expend business

（US$bn

）

（US$bn）

18

Balance of FF (LHS)

800

Profit

Balance of fund

admin. (RHS)

FF

12

700

FF

FF

Fund admin.

600

(No use of RWA)

6

Use of

Year

0

500

RWA

FY17 FY19

Main strategy(2) Security lending, fund FX

• Enhance the bundled services by upgrading services for which customer needs are high

		Security lending				Fund FX
	Expand fee business				Increase revenues by
Objective		without dependence				using functions for
		on B/S growth			extending credit to funds
			securitiesProcuring		securitiesLending
Existing		In-house	MUFG	.etccompaniesSecurity		•	Active/passive hedge
	admin.						•	Fowarded exchange
services
	assets						•	Custody FX
New		Admin.						•	Unsecured exchange
	assets by
services							•	NDF*2
	others

34

R&C	JCIB	GCIB	GCB	AM/IS	Global Markets Digital Strategy

Initiatives to Improve ROE

－Contribute to improvement in MUFG's ROE via (1) the expansion of gross profits,

(2) the cost control and (3) capital and RWA controls

AM/IS Business Group's ROE*1

• AM/IS boasts high ROE

Operational streamlining and cost reductions via the use of ICT

Example: Reduce manual labors and streamline clerical works regardless of the format of instructional documents

40%

30%

20%

10%

0%

FY15

FY16

FY17

FY18*2 FY19

FY XX

		Custo-
			mers
Previously			document
			anSend
			instructional
ICT of Use

The Master Trust Bank of Japan ,Ltd.

FAX		Choose the	Enter into	Confirm
	Recep	system	the system	the
PDF	tion	depending on	by hand	data
Print	data-type	work	entered
FAX
	Recep
PDF	tion
	based on RPA	Reduce
				10,900
				hours per

Trend of net operating profits and the proportion of MUFG's consolidated results*1

Initiatives to control capital and RWA

year

• Contribute a higher proportion of consolidated net operating profits and thereby help improve MUFG's ROE

• Execute M&A in accordance with business strategies and carry out portfolio recycling aimed at enhancing capital efficiency

2008

2011

2012

2019

（¥bn）120

80

40

0

	The proportion of MUFG	12%
Net operating profits of	consolidated net operating
AM/IS（LHS）	profits (RHS)

8%

4%

0%

FY15

FY16

FY17 FY18*2 FY19

FY XX

		Aberdeen		AMP			FSI
Invest		¥70bn		¥40bn			¥300bn
ment			SWS MU*3
			¥10bn
Divest								AMP
ment
				Aberdeen

*1	Figures are on a managerial accounting basis. FX rates are based on assumed rates determined for internal managerial accounting purposes	35
*2	ROE excluding the impact of losses on sales of Standard Life Aberdeen shares is 18% *3 SWS MU FUND Management

Global Markets Business Group

Masamichi Yasuda, Group Head

36

R&C	JCIB	GCIB	GCB	AM/IS	Global MarketsDigital Strategy

Overview of Global Markets

FY19 results

	FY18	FY19	YoY
Net operating	298.8	352.0	53.2
profits (¥bn)
Expense ratio	48%	45%	(3ppt)
ROE	5%	6%	1ppt

Progress of key initiatives

Changes in net operating profits

（¥bn）				352.0
298.8
FY18	Institutional Corporates	Treasury Expenses	Others	FY19
results	investors			results

Sales ＆

Trading

(S&T)

Treasury

*1 Net operating profits

S&T business with corporates

Review of overseas securities business & enhancing the institutional investors' business

Flexible market risk management

Stable non-JPY liquidity management

Focus resources on products boasting strengths(e.g. electronic FX brokerage) Provide solutions designed to meet needs for hedging against finance risk

Overseas securities businesses achieved solid results thanks to the success of strategic realignment (¥22.8 billion increase in NOP*1 from FY18 results) Reach out to broader range of customers in the institutional investors' business

Develop a cross-regional, groupwide integrated operational structure Flexibly adjust our portfolio management approach on the downtrend of interest rates

Control loan-to-deposit gaps by acting in close collaboration with customer segments

Ensure stable liquidity management via funding from diverse sources

37

R&C	JCIB	GCIB	GCB	AM/IS	Global MarketsDigital Strategy

FY20 Q1 results

					FY20	YoY
					Q1 results
(¥bn)
Gross profits	276.9	89.5
	S&T（① +②）	78.8	2.7
		① FIC & Equity	58.7	0.9
			Corporates	27.0	(0.3)
			Institutional	27.3	3.1
			investors
		② JV with GCIB	19.8	1.9
	Treasury	198.5	85.3
Expenses	71.9	3.6
Net Operating Profits	204.9	85.9

Reasons of changes

Achieved growth in revenues from both S&T and treasury operations by properly responding to market fluctuations

Derivative transactions by growing finance needs and overseas securities trading pillared the earnings

FX trading profits were down due to the stagnation of actual demand for international trading. Derivatives transactions were performing

Achieved firm results in flow trading when market fluctuations were extreme

DCM operations performed robustly due to growing needs for the issuance of corporate bonds and increasingly volatile market conditions Recorded net gains on debt securities mainly from foreign bonds by seizing opportunities arising from an interest-rate downtrend Despite reductions in such cost items as overseas personnel expenses, overall costs grew due to revenue-linked expenses and system expenses

Profits from S&T and treasury operations both grew on YoY

Response to

COVID-19

• The impact of the COVID-19 materialized in declining profits from FX trading due to the lower volume of ordinary FX settlement flows (¥4bn decline in earnings)
• Provided services and products to meet customer needs and realized stable non-JPY liquidity management even when market fluctuations were extreme
• Deliver diverse solutions to meet customer needs arising from a rapidly evolving business environment
• Accelerated digitalization such as electronic FX brokerage, in response to growing trend toward society's digital shift

38

R&C	JCIB	GCIB	GCB	AM/IS	Global MarketsDigital Strategy

Flexible market risk management

• Balancing the gross profits and unrealized gains by managing portfolio flexibly accommodating to market environment
• Keep on implementing asset allocation by remaining conscious of risk scenarios and market trends

Current operations

History of unrealized gains and gross profits in Treasury*1

Unrealized gains*2

approx. ¥700.0bn

(¥bn)

Gross profits in Treasury

（end Mar 20）

1,400

Unrealized gains from AFS*2

Gross profits in

1,200

Treasury

1,000

¥306.9bn

800

（FY19）

600

400

200

0

End End

End

End

End

End

End

End

End

Mar 12 Mar 13 Mar 14 Mar 15 Mar 16 Mar 17 Mar 18 Mar 19 Mar 20

Nikkei index and JP and US bond yield

(UST 10Y/JGB 10Y)

(¥)

）

Nikkei index (LHS)

UST 10Y (RHS)

4% /

1.5%

25,000

JGB 10Y (RHS)

20,000

3% /

1.0%

15,000

2% /

0.5%

10,000

1% /

0.0%

5,000 End

End

End

End

End

End

End

End

End

0% / (0.5%)

Mar 12 Mar 13 Mar 14 Mar 15

Mar 16 Mar 17 Mar 18 Mar 19 Mar 20

*1 Managerial accounting basis *2 Excluding unrealized gains from equity holdings

Illustrative asset allocation

Risk on

Current Allocation

Credit Domestic bonds

Equity Foreign bonds

Risk off

• Maximize revenues by aligning asset allocation and hedge operations with the global low interest rate environment
• Carry out asset allocation in a way that takes full advantage of the respective strengths of the Bank and the Trust Bank
• Consider long-term diversified investment with an eye to securing resilience against the prolonged low interest rate environment

39

R&C	JCIB	GCIB	GCB	AM/IS	Global MarketsDigital Strategy

Sales & Trading strategy

－Realize a business model that provides customers with optimal solutions

Overseas business model reform

Product strategy

• Rapidly growing customer needs for sophisticated and

Profitability*5

• Enhance

highly specialized solutions

high

derivatives

• Aim to expand O&D business / cross-selling by

• Promote foreign

Rates, bond sales

integrated approach together with GCIB

•

Enhance EFX

credit

•

Expand FX

Our vision

FX

transactions

for institutional

Future direction

Institutional

investors

Coverage

Products

investors

Structured

•

Create digital

Size of the bubble

sales

solutions

platform

illustrates the

Enhance

NOP in FY19

RM*1

Bank products*２

Primary

• Enhance coordination

structured bond

Investment

low

Equity

NOP growth ratio*6

Funding

with origination

Solution

Institutional investors business strategy

products*3

Product

Secondary

Institutional investors

Profit growth*7

sales

FIC&E

MUFG integrated approach

FY17 results

BK・SCHD

BK・SCHD

TB

¥371.1bn

Expand the cross-selling and further promote

GM

GCIB

AM/IS

O&D/OtoD businesses

Fund finance

FY20 KPI

Secured

+¥45.1bn

finance・

An integrated approach

Joint revenue targets

O&D / OtoD

FX etc.

via the unified account

¥416.2bn

with GCIB

plans

no. of transactions

Fund admin.

（GCIB business + GM*4 S&T）

O&D / OtoD

FY19 results

*1

Relationship Manager

*2 Deposit & loan, transaction banking, FX, derivatives etc.

*3

Structuring products such as structured bond, secured finance, securitization etc. *4

Global Markets

*5 NOP per staff (FY19 results)

40

*6

NOP growth rate from FY18 to FY19 *7 Gross profits of institutional investors business

R&C	JCIB	GCIB	GCB	AM/IS	Global MarketsDigital Strategy

Non-JPY liquidity management

－Stabilize non-JPY funding while improving the profitability of non-JPY balance sheet

Stable and efficient non-JPY B/S management*1 ~balance the stability and the profitability

400 Loan balance*2

(US$ bn)

(As of end Mar 20)

400 Deposit balance*2

Customer deposits

300

(Incl. deposits from central

300

banks)

200

253

200

Loans

Increase the sticky deposits

351

100

Mid-tolong-term

100

market funding

Loan balance control

162

0

Secure stability by

0

End

End

End

End

diversified funding

End

End

End

End

Corp bonds/loans

63

Mar 10

Mar 14

Mar 18

Mar 20

Mar 10

Mar 14

Mar 18

Mar 20

Collateralized

31

funding, etc.

Mid-long term

69

currency swaps

Composition of mid-to long term market funding*2

Balancing the stability and the profitability (image)

100%

High

Portion of

Stability

Future non-JPY B/S management

50%

Current

mid-long term

Loan balance control

currency swaps

Increase the sticky deposits

down 27ppt*3

Diversify the funding source and

0%

End

End

End

End

End

End

proactively control the liquidity risk

Mar 15

Mar 16

Mar 17

Mar

18

Mar 19

Mar 20

Profitability

High

Mid

-

long term currency swaps

Collateralized funding

Corp bonds/loans

41

*1 The Bank consolidated excl. MUAH, KS and BDI. Managerial basis *2

Managerial accounting basis *3 Comparison with end Mar 15

R&C	JCIB	GCIB	GCB	AM/IS	Global MarketsDigital Strategy

Initiatives to improve ROE

－Improve ROE via "Global Markets 3.0", a structural reform program

Initiatives of "Global Markets 3.0"

• Initiated the program in FY19, with the review of cost structure being implemented in advance
• Shift our focus to restructuring our gross profit structure and streamline our organization from FY20 onward

FY19 results		FY20 onward

Restructure our

gross profit

structure

Thoroughly

review our cost

structure

• Increase FX transactions with institutional investors
• Promote foreign bond business
• Reorganize functions of overseas offices
• Streamline securities business in overseas (Asia and Americas)
• Cost structure reform of domestic equity business

Gross profits

¥3.3bn

UP

Expenses

¥2.5bn

DOWN

• Expand E-platform(FX, equity, bonds)
• Enhance derivatives business(event risk hedge etc.)
• Expand institutional investors business
• • Domestic：promote foreign bonds sales(MUMSS), Expansion of FX transactions based on standing instruction contracts(TB)
  • Overseas：MUFG integrated approach(BK/TB/SCHD)
• Consolidate redundant operations, reduce workforce

Effects in NOP			Expense ratio
+¥20bn	50%
UP
Mid 40％

Streamline

our organization

• Streamline headquarters
Streamline
functions (planning etc.)	personnel no.
• Consolidate FX execution	115
function
• Consolidate redundant	DOWN
operations

40%

DOWN

＋¥5.8bn		30%	Mid 30％
FY19	FY20	20%
15	16 17 18 19 20（FY）
(results) （estimated）

42

Digital Strategy

Masakazu Osawa, Group CDTO

43

R&C	JCIB	GCIB	GCB	AM/IS	Global Markets Digital strategy

Evolving Digital Transformation (DX) initiatives

－Need for a thoroughgoing "digital shift" in financial services has become more profound

than ever due to changes in customer behavior influenced by the COVID-19 pandemic. The advance of tech-driven financial services is under way at an ever-faster speed

Thoroughgoing reform of operational	Acceleration of the mobile shift
processes

Diversification of collaboration with	Development of data-driven financial
digital platform operators	services

44

R&C	JCIB	GCIB	GCB	AM/IS	Global Markets Digital strategy

Initiatives of MUFG's DX

Middle, line Services/front office back

Retail, SMEs

Mid-sized and large corporates

PFM*1

Multi-bank

Loans for startups

Payment network

Trade finance

Non face-to-face

QR code settlement

infrastructure

("Mable")

("MARS")

platform

promotion tools

("Bank Pay")

("GO-NET")

Digital currency

Web channels for

Application platform

Collaboration with

Digitalize

Personal Data

corporate customers

Trust Bank

("coin")

("AIRPOST")

platform operators

FX rate contracts

("MUFG Biz")

("Dprime")

Smartphone

Online financing

Online securities

Next-gen

FX data-based

Security Token

settlement

service for SMEs

trading

Transaction Banking

marketing utilizing AI

("Progmat")

("MUFG Wallet")

("Biz LENDING")

("MUFG terrace")

Utilize AI (Data marketing, chat tools, etc.)

Enhance operational efficiency by utilizing RPA*2, AI, etc.

Branch		Operation center		Operational		Loans		On-boarding*3		ALM*4
		process
		Digitizing		"BANQUIC"						Use of speech
Housing loans				Borrower rating		Partner Banks		recognition
	paper documents		(card loan)
								technology

Support

Support initiatives at each Business Group

Promotion and support (Digital Transformation Division)

Promote initiatives		Referral, cooperative		Launched AI		Established AI		Share digital initiatives
	support, and investment
as CoE*5			research organization		application guidelines		of group companies
	to tech companies

Development and expansion of digital human resources

E-learning for		Workshop for		Programs for		Posting training		Secondment to		Recruitment
		nurturing staffs who				(mid-career/
all employees		top management			programs		startups, etc.
		will play core roles				new graduate)

*1 Personal Financial Management *2 Robotics Process Automation *3 Process to introduction in overseas transaction banking services	45
*4 Asset Liability Management *5 Center of Excellence

R&C

JCIB

GCIB

GCB

AM/IS

Global Markets Digital strategy

Enhance operational efficiency by digitizing paper documents

Digitizing relevant documents to register personal seal for accounts

• Aim to digitize all paper documents stored at the centralized special warehouse; expecting improvement in the efficiency of clerical work involving the confirmation of stored documents*1

As is		To be
Over 300mm pages		Digitizing paper
of documents		documents
Document search by		Searching in a
staff		database
Huge storage cost		Lower cost

• Ensure data access from any location and discard paper documents that have been digitized in principle
• Employ AI-based OCR*2 and acquire character data, with the aim of enabling instant search via indexing
• Help our staff quickly execute document searches and significantly shorten waiting time for customers
• Reduce facility costs by reducing dependence on warehouses

Enable digitalization by process automation

Digitizing process

			Digitizing paper documents had been difficult due to the
Manual	Setting
	enormous workload involved
documents to
	the device
Automation
Removing		Automating most processes and reducing total workload so
Digitizing	staples		that 30 personnel can complete the project within
			approximately five years
Scanning,
Sorting		Digitize the huge number of paper documents that
OCR			constitute our legacy platforms and thereby improving
			overall operational efficiency

*1	Upon the occurrence of inheritance or other specific transactions, the Bank needs to confirm the content of documents entrusted by customers.
	To find the necessary documents, the Bank thus must search an enormous archive that includes items handed over to the Bank decades ago.	46
*2	Optical Character Recognition

R&C	JCIB	GCIB	GCB	AM/IS	Global Markets Digital strategy

Ongoing review of operational process

Inter-bank transfer and fee receipts operations

• Restructure existing end-to-end operational process via the use of Business Process Management tools
• Significantly reduce processing time and realize operational efficiency

	Message acceptance	Assignment &		Booking & message dispatch
	instruction preparation
	Charge
	Payment
	Request
	Message
Before	system					Input		Approval
Charge	Payment
	info	order
			info
			Vault					Vault
	Settlement	Settlement		Message
	system			system		system

Business Process Restructuring

	BPM tool	2	3	4
				Assignment &	Confirma
	Data input		instruction	Input	Approval
		-tion (staff)
				preparation
	RPA					RPA
After	Settlement Message		1	5	Settlement	Message
system	system				system	system

1	Minimize human	2	Paperless	＋	5	Realize
	operation		operations		location free
3	Eliminate operations	4	Progress		work
	relying on individuals		transparency

Register financial statements in database

• Annually accept more than 100,000 financial statements from customers
• Utilize RPA to automatically register 70% of its work

	Before
	Manually input items of an
Financial	account based on internal
	procedure
statements

				Reflected
				in
		After		system
Customers	Bank
			OCR,	Automati
		Scanning	character	-cally input
			recognition	financial data

Growing scope of operations that can be streamlined

• Place priority on working in fields in which we expect significant effects

Housing	"BANQUIC"	Operation	Inheritance
loans	(card loan)	center
		Assessment	Financial
FX	Loans	of mortgage
closing
		collaterals

47

R&C

JCIB

GCIB

GCB

AM/IS

Global Markets Digital strategy

Provide Personal Financial Management (PFM) services for individual customers

The fallout from the COVID-19 resulted in a shift in customer behavior and accelerated the ongoing trend toward non face-to face services

• Increase number of IB service users since Mar 20
• The ratio of account opening via non face-to-face channels surpassed the one via physical channel

Number of IB service users*1

6.5	(mm)	+210thd
		/per month
		+140thd

Offer daily-use services through a PFM app

• Easily check asset and financial status and thereby assist customers in the hassle-free management of household finances
• Offer high-quality UI/UX while enabling the provision of data-driven recommendations
• Functions supporting the switchover between multiple accounts thanks to the unique strengths of Bank-made PFM tool

6.0	/per month
5.5

To be released

Personal financial

management

0
Dec 19	Jan 20	Feb 20	Mar 20	Apr 20	May 20

Ratio of account opening by channels*2

Physical		Non face-to-face

60%
50%
40%
0%
Dec 19	Jan 20	Feb 20	Mar 20	Apr 20	May 20

Visualize and analyze asset status

Communication

Recommend on household and financial activities

Switchover between

multiple accounts

Open a new separate account and enable customers to freely transfer and manage funds according to the purpose such as saving and temporary saving

*1	Users who log-in IB at least once in 6 months out of all active accounts (excl. accounts used for direct debit only)	48
*2	Physical: application via branch counter, Non face-to-face: application via videophone system, by mail, and mobile app

R&C

JCIB

GCIB

GCB

AM/IS

Global Markets Digital strategy

Offer tools aimed at promoting online sales activities for corporate customers, etc.

Online communications and challenges

• A growing trend toward videoconferencing and other online communications amid the business environment influenced by the COVID-19
• The need to develop a structure enabling customers to complete all necessary transactional procedures online

Customers

Realize interactive communications employing multiple channels selected in light of each customer's situation

Communication

Platform

Provide secure tools for non face-to-face procedures

• Establish a foundation for online transactions and enable customers to engage in secure smartphone-based transactions
• Consult anytime, anywhere (Currently in a trial phase of some functions)

MUFG

Ensure the sharing of key materials among sales team members while taking full advantage of commenting, editing and other functions to ensure common understanding and facilitate collaborative documentation

Share

Ensure seamless coordination with electronic signing and other clerical procedures

	Historical	Make it easier to check the status of
Transaction	tasks involving communications and
management	document sharing

49

R&C

JCIB

GCIB

GCB

AM/IS

Global Markets Digital strategy

Diversification of collaboration with digital platform operators

Aim to release new services while sharing with partners advantages arising from each other's strengths

• Develop new services by combining cutting-edge technologies possessed by digital platform operators with MUFG's financial know-how
• Penetrate into the realm of customers' daily digital activities and perform upstream assessments of their financial needs to deliver new value and services

Example: Establish "AI Technology Lab" with Grab

• MUFG and Grab provide each other with know-how supporting their strengths in services, analysis and development
• Promote organic collaboration and create new value and services

				AI engineers, data scientists, expertise in data
	Experience		Compliance	analysis
Global	and know-	Credit	with financial	Create new vales and services
customer	how in	regulations,
strength
base	financial	risk
	AI
	business		management
				Technology
				Lab
				Share and accumulate know-how

	Platform operators		Data scientists, expertise in data and finance
Online	Advanced	App / online	Data / data
customer	analytical
technologies	services, etc.
contacts	ability

50

R&C	JCIB	GCIB	GCB	AM/IS	Global Markets Digital strategy

Data-driven financial services

－Enhance operations through dynamic management and forecasting using alternative data*1 and AI. Expand the scope of data utilization by largely focusing on employing MUFG's data while incorporating external information, with the aim of developing new services via open innovation involving external corporations

From Jun 2019

Streamlining loan related operations through analyzing account activity by AI

From Oct 2019

To be released in Mar 2021

Personal Data Trust Bank

"FinTech

MUFG

PoC Hub"

certified

by FSA

Integrated database

Service to securely

(Integrate various data sets stored

store personal data

From Apr 2018

by separate systems, organizing

From Mar 2020

them with name-based aggregation)

MUFG

AI

AI Studio

AI Research and

Technology

(M-

AIS)

Lab

Plan to launch in 2020

development

Loans for startups

Group-wide

Joint AI research

AI research function

organization with Grab

Financial Inclusion in ASEAN

Last mile digital finance for the agricultural supply chain

From Feb 2020

AI foreign exchange

To be released PFM app

Leverage both financial and non-financial data to provide financing for supporting growth of the startups

rates forecast

Provide FX rates forecast utilizing AI

Analyze household and asset, then provide recommendations

*1 Any data that was newly collected as a result of technology development, not public information such as financial results, etc.

51