Published
# Mitsubishi UFJ Financial Group, Inc. (MUFG) — Narrative, quarter ended June 30, 2026
MUFG reports in Japanese yen. Every money amount below has been converted from yen (or, where noted, euros) into US dollars: flows at the average exchange rate for the period they cover, balances at the rate on the balance-sheet date (for March 31, 2026, the ¥159.88 per dollar rate stated in the annual report). Amounts the company itself states in dollars are given as stated. Because the yen weakened sharply between the two first quarters (an average of about ¥144 per dollar in April–June 2025 against about ¥159 in April–June 2026), growth rates measured in dollars are noticeably lower than the yen growth rates the company reports; where the company's own yen percentage is quoted it is labelled as such. MUFG's fiscal year ends on March 31. One American depositary share represents one share of common stock.
Two accounting bases appear in this document and should not be mixed. The annual results (fiscal year ended March 31, 2026) are under U.S. GAAP. The first-quarter results (three months ended June 30, 2026) are under Japanese GAAP, which differs materially from U.S. GAAP (for example in consolidation scope and goodwill accounting); MUFG publishes U.S. GAAP results only semi-annually and annually.
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## Business
*Source: Annual Report on Form 20-F for the fiscal year ended March 31, 2026, accession 0001628280-26-047095.*
MUFG is a Japanese bank holding company and one of the world's largest and most diversified financial groups, with total assets of $2.66 trillion at March 31, 2026 (U.S. GAAP). Through MUFG Bank, Mitsubishi UFJ Trust and Banking, Mitsubishi UFJ Morgan Stanley Securities, Mitsubishi UFJ NICOS (credit cards and consumer finance), Mitsubishi UFJ Asset Management and other subsidiaries, it sells commercial banking, trust banking, securities, credit card, consumer finance, asset management and leasing services to individuals, small and mid-sized companies, large Japanese and non-Japanese corporations, financial institutions and governments. It has the largest overseas network of any Japanese bank — about 2,000 locations in more than 41 countries — including majority-owned commercial banks in Thailand (Krungsri) and Indonesia (Bank Danamon). The holding company sets group strategy; the subsidiaries execute it.
Most of its income comes from two sources. In the fiscal year ended March 31, 2026, net interest income — the spread between what it earns on loans and securities and what it pays on deposits and borrowings — was $24.44 billion, and non-interest income was $21.58 billion, of which fees and commissions were $16.07 billion (securities-related services, fund administration, credit cards, remittances, trust fees and financing fees). Equity-method earnings are also large — $5.78 billion in the year — and include MUFG's roughly 23.9% voting stake in Morgan Stanley, which MUFG says has contributed a significant portion of its net income and revenue in recent periods. Japan remains the core of the balance sheet: at March 31, 2026, 59.9% of total assets and 53.6% of loans were Japanese, while Japan accounted for 37.1% of total interest and non-interest income for the year.
### Business groups
MUFG manages itself through seven business groups plus a corporate center ("Other"). Segment profit is measured as "operating profit" on a Japanese GAAP management-accounting basis, which excludes items such as part of credit costs and foreign-exchange and investment-securities gains. Total segment operating profit was $15.69 billion in the year ended March 31, 2026. By group (operating profit, fiscal year ended March 31, 2026):
- **Japanese Corporate & Investment Banking** — lending, settlement, foreign exchange, investment banking and real-estate solutions for large Japanese companies. The largest profit contributor: $4.69 billion. The group is also executing the plan to reduce strategic shareholdings in client companies.
- **Global Corporate & Investment Banking** — corporate, investment and transaction banking for large non-Japanese corporates and financial institutions, run jointly with Global Markets; MUFG describes itself as one of the world's top project-finance providers. $3.85 billion. On October 1, 2025, MUFG Bank took direct ownership of MUFG Securities EMEA, MUFG Securities Asia and MUFG Securities (Canada) in an internal reorganization.
- **Commercial Banking & Wealth Management** — small and mid-sized Japanese companies and wealthy individuals, with an emphasis on business and asset succession. $2.71 billion.
- **Global Commercial Banking** — retail and SME banking in Asia through "Partner Banks": Krungsri (76.88% owned), Bank Danamon (92.47% owned), and minority stakes in VietinBank (19.73%) and Security Bank in the Philippines (20%). $2.57 billion. Krungsri consolidated Thai lender Tidlor Holdings (46.51% stake with shareholder rights) in August 2025.
- **Retail & Digital** — individual customers in Japan (outside wealth management) and the NICOS card and consumer-finance businesses, served through branch, remote and digital channels (including the "Emut" brand launched June 2025). $1.90 billion.
- **Asset Management & Investor Services** — asset management, pension and fund administration through Mitsubishi UFJ Trust and Banking, Mitsubishi UFJ Asset Management and First Sentier Group, plus MUFG Pension & Market Services. $1.01 billion.
- **Global Markets** — sales and trading in rates, currencies and equities, and the group's treasury (asset-liability management and investment portfolio). An operating loss of $235.46 million, much smaller than the prior year's loss, which reflected a deliberate bond-portfolio rebalancing.
### Strategic positions
- **Morgan Stanley alliance.** MUFG held about 377 million Morgan Stanley common shares (about 23.9% of voting rights) at March 31, 2026, plus $521.4 million of 10% Series C preferred stock, and has two Morgan Stanley board seats. The two companies run two Japanese securities joint ventures: Mitsubishi UFJ Morgan Stanley Securities (MUFG 60% economic and voting, consolidated) and Morgan Stanley MUFG Securities (MUFG 60% economic, 49% voting, equity-accounted). "Alliance 2.0", announced in July 2023, extended cooperation to Japanese equity research and equities (January 2024) and foreign-exchange trading (April 2024).
- **India.** On April 8, 2026, MUFG Bank completed the purchase of a 20% stake (fully diluted) in Shriram Finance Limited, an Indian non-bank lender focused on used commercial and passenger vehicle loans to small businesses and owner-operators, through a preferential allotment of new shares (details under Subsequent events). This follows a 2023 investment in DMI Finance.
- **Indonesia.** In May 2026, Bank Danamon and MUFG Bank agreed to a memorandum of understanding to explore combining Bank Danamon with MUFG Bank's Jakarta branch; the integration is targeted within calendar 2027 and still needs a binding agreement and regulatory and shareholder approvals.
- **Medium-term business plan.** The current three-year plan runs to March 31, 2027 on three pillars: expanding growth strategies (domestic retail and wealth, the combined corporate-and-investment-banking/markets model overseas, Asia), accelerating transformation (AI and data, system development capacity), and social and environmental progress. Its ROE target was raised in May 2026 (see Current quarter).
Competitors in Japan include Mizuho Financial Group and Sumitomo Mitsui Financial Group, government institutions such as Japan Post Bank, the Nomura and Daiwa securities groups, and internet-based players such as the Rakuten, SBI and NTT groups and PayPay.
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## Risk factors
*Source: Form 20-F, Item 3.D, accession 0001628280-26-047095.*
The risks that matter most to MUFG's earnings and capital:
- **Japanese economy and interest rates.** About 60% of assets and over half of loans are in Japan, and Japanese government and government-agency bonds alone were 7.2% of total assets. A rapid fall in Japanese government bond prices (a sudden rise in yields), for example from further Bank of Japan tightening, would hit the securities portfolio and borrowers' ability to service debt; conversely, if rates fall again, domestic lending spreads would narrow.
- **Regulatory capital.** As a global systemically important bank (G-SIB), MUFG must hold capital buffers, including a 1.5% G-SIB surcharge. At March 31, 2026 its Common Equity Tier 1 ratio was 12.47% against a required 8.68%, total capital 16.85% against 12.18%, leverage 4.94% against 3.95%, and External TLAC (loss-absorbing capacity) 23.25% of risk-weighted assets against 18.00%. Falling below these could lead regulators to restrict dividends and buybacks. Ratios are sensitive to securities values, credit quality, foreign exchange and the ability to refinance capital instruments.
- **Credit losses.** Rising rates, trade and industrial policy, commodity prices and geopolitical shocks could raise problem loans; exposure is relatively concentrated in real estate and financial institutions (loans to banks and other financial institutions were 22.3% of loans at March 31, 2026). Allowances could prove insufficient, and MUFG may choose to support troubled Japanese borrowers beyond what a narrow economic analysis would justify.
- **Strategic equity and market risk.** Strategic holdings of Japanese equities were about $23.14 billion at March 31, 2026, and about 27.1% of total assets are measured at fair value. Falling stock prices reduce both earnings and capital; rising rates create bond losses; a stronger yen shrinks the yen value of foreign investments.
- **Acquisitions and goodwill.** MUFG plans to keep acquiring and investing overseas (recently asset managers and investor-services firms, and non-banks mostly in Asia-Pacific). Goodwill stood at $3.54 billion at March 31, 2026, and impairments have already been taken on First Sentier Group and MUFG Pension & Market Services (see MD&A).
- **Morgan Stanley dependence.** Morgan Stanley contributes a significant share of net income through equity-method accounting, and MUFG's Japanese securities business runs through the joint ventures; a breakdown of the alliance, or losses at Morgan Stanley, would hurt results and strategy.
- **Funding liquidity and ratings.** Foreign-currency funding could tighten in a market dislocation. A one-notch downgrade of MUFG and its three main subsidiaries at March 31, 2026 would have required about $148.86 million of additional derivative collateral, and a two-notch downgrade about $934.45 million.
- **Conduct and regulatory actions.** In June 2024 Japan's Financial Services Agency issued business improvement orders to MUFG Bank, Mitsubishi UFJ Morgan Stanley Securities and a securities affiliate over improper sharing of customer information between bank and securities arms, and in December 2024 required MUFG Bank to report on a former employee's theft of customer assets from safe-deposit boxes; remediation continues. MUFG is also a defendant in civil suits relating to benchmark-rate submissions and foreign-exchange practices.
- **Foreign exchange.** Average foreign interest-earning assets were 38.7% of the total in the fiscal year; currency moves cause transaction and translation losses where positions are not matched or hedged.
- **Cyber, technology, AI and third parties.** Operations depend on proprietary and third-party systems; cyber-attacks, AI-related failures (faulty outputs, data leakage, vendor concentration) and failures at outsourced providers could cause losses, regulatory action and reputational damage.
- **Consumer finance in Japan.** Domestic consumer loans are about a tenth of total loans; NICOS's consumer loans were $3.49 billion at March 31, 2026. Past legal changes capped consumer-loan interest rates and made "gray-zone" excess interest refundable; MUFG carried a $71.30 million allowance for such refunds at March 31, 2026.
- **Sanctions.** Subsidiaries conduct limited, licensed business with Iran-linked counterparties and keep an information-only representative office in Iran, which could deter some U.S. investors or customers.
- **Climate and natural disasters.** A large earthquake in the Tokyo area could disrupt operations; climate transition and physical risks affect borrowers and could impair MUFG's reputation if its own targets (net-zero operations by March 2031, net-zero financed emissions by 2050) are judged inadequate.
- **ADS holders** must act through the depositary and may not be able to enforce U.S. judgments in Japan.
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## Management's discussion — fiscal year ended March 31, 2026 (U.S. GAAP)
*Source: Form 20-F, Item 5, accession 0001628280-26-047095.*
Net income attributable to MUFG rose to $11.47 billion from $8.30 billion, up 38.1% in dollars (up 36.5% in yen), driven by higher net interest income and higher non-interest income, partly offset by higher expenses. Basic earnings per share were $1.01 against $0.71.
**Net interest income** rose to $24.44 billion from $20.24 billion (up 20.7% in dollars; 19.3% in yen), and the overall interest spread widened 0.22 points to 0.89%.
- *Domestic:* net domestic interest income roughly doubled, to $2.48 billion from $1.17 billion, as Japan moved out of its long zero-rate era; the average domestic interest rate spread widened to 0.2% from 0.05%. The Bank of Japan raised its policy rate in July 2024, January 2025 and December 2025, and again in June 2026 to 1.0%.
- *Foreign:* net foreign interest income rose to $21.95 billion from $19.07 billion. Overseas short-term rates fell, but rates on foreign liabilities fell further than rates on foreign assets, and foreign assets are about 1.5 times foreign liabilities; average foreign earning assets also grew 7.5%. The foreign spread widened to 1.32% from 1.14%.
**Credit costs.** The provision for credit losses nearly doubled to $1.50 billion from $798.20 million, mainly because of a provision for one large borrower in the foreign manufacturing sector; provisions at Krungsri fell as its auto-loan collection measures took effect.
**Non-interest income** rose to $21.58 billion from $16.85 billion:
- Fees and commissions grew to $16.07 billion (up 10.8% in yen), led by securities-related fees from higher corporate market activity and financing-related fees.
- Net investment securities gains of $4.42 billion replaced a prior-year loss of $5.46 billion, chiefly from $6.51 billion of net gains on marketable equities as Japanese stock prices rose; losses on sales of available-for-sale debt securities increased as Japanese bond prices fell.
- Equity-method earnings rose to $5.78 billion from $4.39 billion, including higher earnings at Morgan Stanley.
- Offsetting these, net foreign-exchange losses were $4.22 billion and net trading account losses $4.32 billion, the latter mainly from interest-rate derivative losses as Japanese rates rose and lower equity-swap gains as Japanese stocks rose.
**Non-interest expense** rose to $27.87 billion from $24.52 billion (up 12.3% in yen). The drivers: salaries and benefits ($10.57 billion, up 8.2% in yen) from a full year of MUFG Pension & Market Services and the Tidlor acquisition; outsourcing for AI, IT and cybersecurity (up 22.0% in yen); fees tied to the Zenhoren rent-guarantee business; and higher cost of goods at a trading subsidiary, MUFG Trading. Goodwill impairment totalled $646.51 million, chiefly $256.02 million on MUFG Pension & Market Services (loss of a significant client and weaker corporate capital-markets activity) and $356.17 million on First Sentier Group (lower projected revenue at AlbaCore Capital Group as new fund launches were delayed), following a $720.28 million First Sentier impairment the year before.
**Segments.** Total segment operating profit rose to $15.69 billion from $10.26 billion:
- Japanese Corporate & Investment Banking, Commercial Banking & Wealth Management and Retail & Digital all benefited from higher yen interest rates on loans and deposits, alongside higher fee income (solutions and M&A fees, asset-management fees, and card and consumer-finance volumes).
- Global Corporate & Investment Banking rose to $3.85 billion from $3.02 billion on balance-sheet optimization, asset growth and project-finance fees.
- Global Commercial Banking fell to $2.57 billion from $2.87 billion, mainly because the prior year included 15 months of Krungsri results after Krungsri's fiscal year-end was aligned with MUFG's (about 15% of that year's segment profit); Thai household debt also weighed on Krungsri's lending income.
- Global Markets' loss narrowed to $235.46 million from $4.31 billion, primarily reflecting the bond-portfolio rebalancing carried out in the prior year to improve future profitability.
**Capital management and funding during the year.**
- From November 2025 to February 2026, MUFG repurchased 94,456,300 shares for about $1.60 billion and cancelled 200 million treasury shares.
- It issued $9.0 billion of dollar-denominated TLAC-eligible senior debt plus euro and yen tranches, as well as Additional Tier 1 and Tier 2 capital instruments.
- MUFG Bank raised its stake in Japanese consumer-credit company JACCS to 39.43% in September 2025, including a $263.76 million share subscription.
- NICOS acquired 50.02% of rent-guarantee company Zenhoren for $90.07 million in April 2025.
- As a general policy, MUFG intends to cancel treasury shares above about 5% of issued shares.
Dividends per share declared for the year totalled $0.54.
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## Current quarter — three months ended June 30, 2026 (Japanese GAAP)
*Sources: Consolidated Summary Report for the three months ended June 30, 2026, Form 6-K filed August 3, 2026, accession 0001193125-26-329414 (interim review completed with no changes, Form 6-K filed August 6, 2026, accession 0001193125-26-336512); Basel III capital ratios, Form 6-K filed August 14, 2026, accession 0001193125-26-350183; plan target revision, Form 6-K filed May 15, 2026, accession 0001193125-26-225088; share repurchase completion, Form 6-K filed June 26, 2026, accession 0001193125-26-283770; general meeting results, Form 6-K filed June 30, 2026, accession 0001193125-26-289289.*
**Results.** First-quarter profits attributable to owners of the parent were $5.08 billion against $3.78 billion a year earlier, up 34.4% in dollars (48.2% in yen). Basic earnings per share were $0.45, against $0.33. Ordinary profit (pre-tax profit before extraordinary items) rose to $7.02 billion from $4.90 billion (57.8% in yen), and ROE for the quarter on the Japan Exchange Group basis was 14.40% against 10.78%. The quarterly summary report gives the line-item movements but no commentary on drivers; MUFG published that separately on its website.
Line-item movements, comparing April–June 2026 with April–June 2025:
- **Gross profits** rose to $10.89 billion from $9.40 billion (27.8% in yen). Within them:
- Net interest income rose to $5.54 billion from $4.78 billion (27.7% in yen). At MUFG Bank and the trust bank combined, the domestic loan-deposit spread widened to 1.14% from 0.89%: average domestic loan yields rose to 1.45% from 1.06%, while deposit costs rose only to 0.30% from 0.17%.
- Net fees and commissions rose to $3.50 billion from $3.19 billion (20.9% in yen).
- Net trading profits rose to $832.70 million from $296.13 million.
- Losses on debt securities widened slightly, to $219.85 million from $195.51 million.
- **General and administrative expenses** rose to $5.82 billion from $5.64 billion (13.7% in yen), so net operating profit rose to $5.11 billion from $3.85 billion.
- **Total credit costs** increased to $452.19 million from $324.84 million.
- **Net gains on equity securities** (mostly gains on sales of equity securities) rose to $620.71 million from $209.79 million.
- **Equity in earnings of equity-method investees** rose to $1.64 billion from $1.09 billion (65.6% in yen). Shriram Finance has been an equity-method affiliate since April 8, 2026; the filing does not break the total down by investee.
- **Income taxes** rose to $1.70 billion from $1.02 billion; most of the increase was in deferred taxes.
- **Comprehensive income** was $7.16 billion against $938.37 million, helped by gains on available-for-sale securities and foreign-currency translation, compared with translation losses a year earlier.
**Segments.** MUFG changed how it allocates net revenue and expenses among segments this quarter and restated the prior-year quarter on the new basis. Segment operating profit totalled $5.15 billion, up from $3.75 billion, on net revenue of $11.06 billion. Every group except Other was profitable:
- Japanese Corporate & Investment Banking: $1.27 billion (from $1.02 billion)
- Global Corporate & Investment Banking: $1.13 billion (from $756.88 million)
- Global Markets: $932.73 million (from $559.99 million)
- Commercial Banking & Wealth Management: $835.88 million (from $601.42 million)
- Global Commercial Banking: $621.13 million (from $602.85 million)
- Retail & Digital: $534.92 million (from $459.38 million)
- Asset Management & Investor Services: $252.05 million (from $255.39 million; up 8.9% in yen)
- Other (corporate center): a loss of $425.88 million
**Balance sheet and asset quality (June 30, 2026, Japanese GAAP).**
- Total assets were $2.67 trillion, slightly above March 31 in yen.
- Loans were $826.85 billion, up slightly from March 31 in yen. Deposits were $1.46 trillion, down slightly.
- Shareholders' equity was $139.59 billion.
- Unrealized gains on available-for-sale securities rose to $18.89 billion from $16.94 billion at March 31, mainly on domestic equities. Held-to-maturity bonds carried unrealized losses of $7.73 billion, mostly on Japanese government bonds.
- Non-performing loans (Banking Act/Financial Reconstruction Act basis) fell to $7.61 billion, or 0.80% of loans, from $9.14 billion (0.96%) at March 31; most of the decline was in restructured loans.
- MUFG Bank's forward-looking adjustment to its credit-loss rates, made for the uncertain geopolitical environment including the Middle East, stood at $174.93 million, up from $152.35 million at March 31. Its underlying assumptions were substantially unchanged: oil and commodity supply disruptions persist for a time, then gradually normalize. MUFG warns that significant additional provisions are possible.
**Capital.** At June 30, 2026, MUFG's Common Equity Tier 1 ratio was 12.95% (12.47% at March 31), Tier 1 15.60% and total capital 17.44%. Risk-weighted assets were $768.84 billion, up from $752.32 billion.
**Capital returns and guidance.**
- *Buyback.* MUFG completed a repurchase of 31,967,100 shares for about $624.65 million between May 18 and June 25, 2026. Treasury shares rose to 611.9 million of 11.87 billion shares issued.
- *Year-end dividend.* The $0.31-per-share year-end dividend for the year ended March 31, 2026, totalling $3.56 billion, was approved at the June 26, 2026 general meeting and paid June 29. The meeting also elected 15 directors, including President & Group CEO Junichi Hanzawa.
- *Dividend forecast.* For the fiscal year ending March 31, 2027 (which MUFG calls FY2026), the forecast is $0.59 per share, paid as two equal payments of $0.30 (interim and year-end), up from $0.54 for the prior year. The forecast was not revised at the first quarter.
- *Earnings target.* MUFG's target for profits attributable to owners of the parent for that year is $16.60 billion (converted at the June 30, 2026 rate), unchanged from May 15, 2026. MUFG gives a profit target rather than a forecast.
- *ROE target.* On May 15, 2026, MUFG raised its medium-term-plan ROE target for that year to about 12% (Tokyo Stock Exchange definition) from about 9% (its former, MUFG-defined measure). It had already reached 9% in the plan's first year, and says performance is expected to exceed initial projections.
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## Subsequent events
### Events after the annual balance-sheet date (from the 20-F's subsequent-events note and Recent Developments)
*Source: Form 20-F, Note 33 and Item 5 "Recent Developments", accession 0001628280-26-047095.*
These occurred between April and June 2026, so they fall inside the quarter discussed above.
- **Shriram Finance acquisition completed.** On April 8, 2026, MUFG Bank completed its investment in Shriram Finance Limited under a December 19, 2025 agreement with Shriram Finance and its major shareholders, Shriram Ownership Trust and Shriram Capital Private Limited. It acquired 20.0% through a preferential allotment of new shares. Total cash outflow, including the purchase price and acquisition costs, was $4.50 billion at the April 8 rate. MUFG Bank expects to record the equity-method investment at $5.44 billion. Under U.S. GAAP it expects to recognize a $773.96 million gain on the change in the purchase contract's fair value in the fiscal year ending March 31, 2027, based on Shriram's share prices on March 31 and April 8, 2026. A $157.06 million gain on the contract had already been recognized in the year ended March 31, 2026.
- **Debt and capital issuance and redemptions.**
- In April 2026 MUFG issued $5.5 billion of dollar-denominated TLAC-eligible senior debt and a €0.5 billion tranche ($575.42 million), plus $2.2 billion of yen-denominated perpetual subordinated Additional Tier 1 securities.
- In June 2026 it redeemed €0.5 billion ($575.42 million) of euro TLAC senior debt.
- In April and June 2026 it redeemed $345.13 million of Tier 2 subordinated debt.
- **Share repurchase.** On May 15, 2026, the board authorized a repurchase of up to 45 million shares, subject to a yen spending cap, through June 30, 2026. MUFG estimated the repurchase would lower its capital ratios by about 0.1 percentage point. It was completed on June 25, 2026 (see Current quarter).
- **Dividend.** On June 26, 2026, shareholders approved the year-end dividend described above, paid June 29, 2026.
- **Bank Danamon.** The May 2026 memorandum of understanding on integrating Bank Danamon with MUFG Bank's Jakarta branch is described under Business.
### Events after the quarter end (June 30, 2026)
- **$3.0 billion senior notes, July 2026.** *(Form 6-K filed July 24, 2026, accession 0001193125-26-315288.)* Under an underwriting agreement dated July 13, 2026, MUFG issued six tranches of senior callable notes. Two were floating-rate notes ($400 million due 2030 and $500 million due 2032). Four were fixed-to-fixed reset notes with coupons from 4.980% (due 2030) to 6.049% (due 2047).
- **First-quarter results reviewed.** *(Form 6-K filed August 6, 2026, accession 0001193125-26-336512.)* MUFG announced that a Japanese audit firm had completed an interim review of the Japanese GAAP first-quarter statements, with no changes to the figures published on August 3, 2026.
- **$3.5 billion senior notes, September 2026.** *(Form 6-K filed September 18, 2026, accession 0001193125-26-395145.)* MUFG issued five tranches of senior callable notes under shelf registration statement No. 333-297942 (the July notes used No. 333-273681), with an underwriting agreement dated September 8, 2026. They comprise $400 million of floating-rate notes due 2032 and four fixed-to-fixed reset tranches with coupons from 5.126% (due 2030) to 6.205% (due 2047).