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    MUFG
    Earnings call· Sep 2025(Q2 FY25)

    MITSUBISHI UFJ FINANCIAL GROUP INC MUFG

    Nov 17, 2025 Source

    Executive summary

    Mitsubishi UFJ Financial Group Q2 FY25 — Record Half-Year Profit and Upgraded Outlook

    Mitsubishi UFJ Financial Group reported record first-half profits for FY25, driven by strong core business performance, including increased net operating profits and equity-accounted earnings from Morgan Stanley. The company raised its full-year net income target and announced increased shareholder returns through higher dividends and an additional JPY 250 billion share repurchase. Strategic investments in AI and digital banking are underway, with a clear path outlined for achieving a 12% mid- to long-term ROE target.

    Highlights

    5

    • Profits attributable to owners of parent reached a record high of JPY 1,292.9 billion for the first half of FY25.

    • Net operating profits increased by JPY 61.3 billion year-on-year, driven by rising yen interest rates and improved lending spreads.

    • Net fees and commissions expanded significantly, partly due to JPY 48 billion from acquisitions and growth in solution services.

    • Full-year net income target revised up by JPY 100 billion to JPY 2.1 trillion.

    • Annual dividend forecast for FY25 increased to JPY 74 per share, up JPY 4 from initial forecast.

    Concerns

    3

    • Net gains and losses on equity securities decreased by JPY 235.3 billion year-on-year due to a large gain on sale in the prior year.

    • CET1 ratio fell 30 basis points from end of March to 10.5% due to growth investments, loan increase, and yen appreciation.

    • G&A expenses increased by JPY 127.9 billion year-on-year due to inflation, acquisitions, and strategic investments.

    Guidance & targets

    8
    CategoryTargetConfidence
    Full-year FY25 Net Income
    JPY 2.1 trillion
    high materiality
    High
    Dividend Payout Ratio
    approximately 40%
    high materiality
    High
    Annual Dividend per Share
    JPY 74
    high materiality
    High
    Full-year Share Repurchase Program
    JPY 500 billion
    high materiality
    High
    AI Use Cases
    over 250 cases
    medium materiality
    High
    Mid- to Long-Term ROE
    12%
    high materiality
    High
    Full-year Credit Costs
    unchanged
    medium materiality
    High
    CET1 Ratio
    between 10% and 10.5%
    high materiality
    High

    Operational metrics

    20
    Expense ratio
    56.1flat year-on-year
    H1 FY25

    Expense ratio was flat year-on-year.

    Progress toward initial full year net income target
    64.6vs JPY 2 trillion target
    H1 FY25

    Progress toward initial full year target of JPY 2 trillion stands at a high level of 64.6%.

    Loans increase (ex-government loans)
    JPY 4 trillionfrom end of FY24
    H1 FY25

    Excluding government loans, it increased both in Japan and overseas by approximately JPY 4 trillion.

    Equity holdings cumulative sales (acquisition cost basis)
    JPY 339 billionabout half of JPY 700 billion target
    current MTBP

    The cumulative sales during the current MTBP were JPY 339 billion on an acquisition cost basis, which is about half of the JPY 700 billion target.

    Equity holdings target agreed amount
    nearly 80of JPY 700 billion target
    current MTBP

    The agreed amount has reached nearly 80% of the target, and we are making steady progress toward achieving this target.

    AI use cases
    116
    current

    The number of AI use cases has reached 116.

    Cumulative AI benefits
    JPY 30 billion
    3 years of current MTBP

    Current estimates suggest that the cumulative benefits over the 3 years of the current MTBP is approximately JPY 30 billion.

    NOP increase from growth strategies
    JPY 150 billioncompared to FY23
    current MTBP

    Each of the seven strategies for seasoning growth is on track, resulting in an increase in NOP of approximately JPY 150 billion compared to FY '23.

    Foreign bond duration
    4
    current

    Overall duration shortened to 4 years, despite long statutory maturities of mortgage bonds categorized as long term.

    Acquisition effect on fee revenues
    JPY 48 billion
    H1 FY25

    Acquisition of WealthNavi, MPMS acquired by our Trust Bank and NICOS acquiring Zenhoren has resulted in a total acquisition effect of about JPY 48 billion.

    CET1 ratio FX impact (Dec-Jun)
    40decline
    Dec-Jun

    The dollar-yen exchange rate from December to June saw the yen appreciate by about JPY 14. We took some hedging measures, but were implemented after April or May and hence, this impact.

    CET1 ratio increase from net income accumulation
    80
    H2 FY25 forecast

    approximately 80 basis points up in the second half from the accumulation of net income based on the revised performance targets

    CET1 ratio decrease from shareholder returns
    65
    H2 FY25 forecast

    65 basis points down due to shareholder returns, including dividends and share buybacks

    CET1 ratio decrease from risk asset increase
    30
    H2 FY25 forecast

    around 30 basis points down from the planned increase in risk assets

    One-off gains (JACCS, Tidlor, liquidation)
    JPY 40 billion
    H1 FY25

    Step-up gains from acquiring shares of JACCS, one-off gains from acquisition of Tidlor as a subsidiary and gains related to liquidation of local subsidiaries, a part of them were not factored in, accounting for approximately JPY 40 billion.

    Financial indicators revision impact (mainly FX)
    JPY 30 billion
    FY25 revised target

    The revision of financial indicators is expected to have an impact of approximately JPY 30 billion, mainly due to the weak yen.

    NOP upside from ForEx (FY25 revised target)
    JPY 25 billion
    FY25 revised target

    Within NOP, JPY 25 billion is from ForEx, assuming the yen to be about JPY 5 stronger.

    NOP upside from treasury trading gains (FY25 revised target)
    JPY 130 billion
    FY25 revised target

    The rebound from treasury trading gains was concentrated in the first half, as I said, and the difference between first half and second half is about JPY 130 billion.

    Expense increase (FY25 revised target)
    JPY 100 billion
    FY25 revised target

    All in all, about JPY 100 billion in expense increase. Includes EMUTO, IT costs, AI, cyber-related impact from certain inflation-related costs, base wage increase.

    Ordinary profit upside from one-off step-up gain (ownership interest)
    JPY 100 billion
    H1 FY25

    Regarding ordinary profit, there is a one-off step-up gain from an increase in our ownership interest. This accounted for about JPY 100 billion in the first half.

    Industry KPIs

    10
    MetricValueDetails
    LoansJPY 1.8 trillionJPY
    Rotce ROE12%
    Cet1 ratio10.5%
    Capital returnsJPY 500 billionJPY
    Fee income linesexpanded significantly
    Net interest incomeincreased
    Net charge offs npls—
    Total operating expensesJPY 127.9 billionJPY
    Provision for credit lossesdecreased by JPY 65.7 billionJPY
    Efficiency ratio operating leverage56.1%

    Product announcements

    1
    ProductTypeDetails
    EMUTOlaunch

    Deals & partnerships

    6
    WealthNaviAcquisition of WealthNavi

    Acquisition of WealthNavi by MUFG.

    MPMSAcquisition of MPMS

    MPMS acquired by MUFG's Trust Bank.

    ZenhorenAcquisition of Zenhoren

    NICOS acquiring Zenhoren.

    JACCSIncrease in ownership interest in JACCS

    Step-up gains from acquiring shares of JACCS.

    TidlorAcquisition of Tidlor as a subsidiary

    One-off gains from acquisition of Tidlor as a subsidiary.

    OpenAIStrategic partnership for AI transformation

    Launch of a new strategic partnership with OpenAI to accelerate AI adoption and collaborate on services.

    Risks & headwinds

    6
    Decrease in net gains and losses on equity securitiesH1 FY25

    JPY 235.3 billion decrease year-on-year

    Mitigation: In line with projection at the beginning of FY25, due to gain on sale of large equity holdings last year.

    Increased G&A expensesH1 FY25

    JPY 127.9 billion increase year-on-year

    Mitigation: Due to impact of inflation and acquisitions, as well as strategic expense allocation, mainly in Retail and Digital business group.

    Economic slowdown in AsiaH1 FY25

    Affected Global Commercial Banking

    Mitigation: GCIB is promoting O&D measures and working to improve capital efficiency.

    Yen appreciation impact on CET1 ratioH1 FY25

    CET1 ratio fell 30 basis points from end of March

    Mitigation: Expects ratio to remain around midpoint of target range by FY25 end; weak yen would lift CET1 ratio.

    Private credit market volatilitycurrent

    Extremely strong market with recent increase in volatility

    Mitigation: MUFG has limited exposure; careful project selection for lending to data centers.

    Impact of tariffs on credit costsFY25

    Full year credit costs will depend on the impact of tariffs

    Mitigation: Full year outlook for credit costs kept unchanged.

    What to watch in Q3 FY25

    5

    Mid- to long-term ROE target achievement

    mid- to long-term
    Current12% target
    TargetProgress towards 12%

    Why it matters

    This is a key strategic goal and investment evaluation criterion for the company's future profitability.

    Regarding the mid- to long-term ROE target of 12%, I want to know if there were any changes in your thinking and the management's perspective, reflecting the changes in the environment or tailwinds.

    Q&A highlights

    5

    Why is the JPY 100 billion revision considered small given current market conditions (Nikkei, USD/JPY)? And has the thinking behind the 12% ROE target changed, especially regarding assumptions like 1% interest rate and no equity sale gains?

    The JPY 100 billion revision was deemed appropriate for timely disclosure, despite internal discussions on its size. Assumptions for the second half include a strong yen and increased strategic expenses. The 12% ROE target's assumptions (1% policy rate, no equity sale gains) were clarified in writing due to investor questions, and the company is now evaluating investments based on their contribution to this ROE target.

    “We originally began the discussions to set the 12% target by trying to see how much we can increase our profit under the assumptions that Japan's policy interest rate will be around 1% and that we have no gain on sale of equity holdings, which I strongly insisted.”

    asked by Ken Takamiya · answered by Jun Togawa

    2 min read6 chapters

    Detailed Narrative

    01

    Strong First Half Performance and Upgraded Outlook

    MUFG delivered a record high first-half profit of JPY 1,292.9 billion, representing 64.6% progress towards its initial full-year target. This strong performance led to an upward revision of the full-year net income target by JPY 100 billion to JPY 2.1 trillion. The revision was attributed to better-than-planned customer segment NOP, lower credit costs, strong Morgan Stanley equity-accounted earnings, and one-time📎 gains.

    02

    Core Business Strength and Fee Income Growth

    The company's core business demonstrated strength with net operating profits increasing by JPY 61.3 billion year-on-year. This was supported by rising yen interest rates, improving lending spreads, and benefits from bond portfolio rebalancing. Net fees and commissions expanded significantly, driven by growth in domestic and overseas solution services and the impact of recent acquisitions, contributing approximately JPY 48 billion.

    03

    Capital Management and Shareholder Returns

    MUFG maintains a strong capital position, with the CET1 ratio at 10.5% at the upper end of its target range, despite growth investments and loan increases. The company announced an additional JPY 250 billion in share repurchases for the second half, bringing the full-year total to JPY 500 billion, alongside the cancellation of 200 million treasury shares. The annual dividend forecast for FY25 was raised to JPY 74 per share, reflecting the revised profit target and a commitment to a 40% payout ratio.

    04

    Strategic Investments and AI Transformation

    MUFG is actively pursuing transformation and innovation, with a focus on becoming an "AI-native company." The number of AI use cases has reached 116, with a target to exceed 250 by FY26, expecting cumulative benefits of approximately JPY 30 billion over the current MTBP. A new strategic partnership with OpenAI is expected to accelerate AI adoption across the company, particularly in digital banking and retail services.

    05

    Progress on Mid-Term Business Plan (MTBP) and ROE Target

    The company is making steady progress on its three pillars of the MTBP, including expanding growth strategies, social and environmental progress, and transformation. NOP from growth strategies increased by approximately JPY 150 billion compared to FY23. MUFG reiterated its mid- to long-term ROE target of 12%, clarifying assumptions such as a policy rate of around 1% and no future gain on sale from equity holdings reduction.

    06

    Asset Quality and Balance Sheet Health

    The NPL ratio remains at a low level, and credit costs decreased by JPY 65.7 billion year-on-year, partly due to reversals of large loan loss provisions. Loans increased by JPY 1.8 trillion from the end of FY24, with domestic and overseas lending spreads showing improvement. Unrealized gains on domestic equity securities increased by JPY 0.36 trillion, and the company is making steady progress towards its JPY 700 billion target for equity holdings reduction.

    AI-generated summary of the company’s earnings call. Not investment advice.