MUFG Report
2023
Integrated Report
Issued August 2023

つなぐManagement Message

What’s

MUFG
Way

MUFG Way serves as the basic policy in conducting our businessactivities, and provides guidelines for all group activities.
MUFG Way also is the foundation for management decisions,
including the formulation of management strategies andmanagement plans, and serves as the core value for all employees.

MUFG’s Pursuit ofValue Creation

Management Strategies
and Performance

Leadership andGovernance

Financial Data /Corporate Data

Financing for supporting industrial
development & innovation
To empower industrial development & innovation,
we provide finance brokerage which connects
businesses in need of financing with depositors
and investors.

Fund settlement functions
that enable developing
social infrastructure in
remote regions
To empower social infrastructure development,
we provide fund settlement including cross-border
settlement, and connect parties in distant locations.

ValuesPurpose

VisionCommitted to empowering a brighter future.
We are helping to resolve social issued by connecting diverse stakeholders.

Code of Conduct

Asset management and succession
planning to ensure response toaging population & low birthrate

PurposeCommitted to empowering a brighter future.
Today, all of our stakeholders are striving to overcome challenges andfind a way to the next stage toward sustainable growth.
We at MUFG will make every effort to help realize these goals.
This will be our unchanging purpose now, and into the future.

ValuesIn addition to our unchanging primary value of “Integrity and Responsibility,”
we also value “Professionalism and Teamwork” and will “Challenge Ourselves to Grow.”

VisionBy empowering our stakeholders to find a way to the next stage towardsustainable growth, we will make every effort to become an indispensable
partner for them and to be the world’s most trusted financial group.

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MUFG Report 2023

To empower response to aging population andlow birthrate, we provide asset management andsuccession planning to connect customers with
future generations, and connect their career savings
to retirement life.

力

Rulemaking for environmental
protection in Asia andaround the world

To empower climate change measures andenvironmental protection initiatives, we take part ininternational rulemaking and connect Asia with otherregions worldwide.

Transforming our corporate culture toenable employees to fully live up to
their aspirations and serve as
the driving force behind MUFG

To empower a brighter future, we connect issues the world is
now confronting with the aspirations of employees.

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MUFG’s Pursuit ofValue Creation

Management Strategies
and Performance

Leadership andGovernance

Financial Data /Corporate Data

CONTENTSMUFG Way ...................................................................................................... 1
Contents .......................................................................................................... 3

Management Message
CEO Message ....................................................................................................... 5

Management Strategies and Performance
Review of the Medium-Term Business Plan (MTBP) ................... 5 1
Progress under the Medium-Term Business Plan (MTBP) ........ 5 3
Track Record in Value Creation .......................................................... 5 5(Financial and Non-Financial Highlights)
Digital Transformation
CDTO Message ............................................................................... 5 7

Contribution to Addressing Environmental andSocial Issues
CSuO Message ........................................................................................ 6 1

MUFG’s Pursuit of Value Creation

Trajectory of MUFG’s Operations Aligned ..................................... 3 3with Changes in Society
Message from Kevin Cronin CEO and Regional ................ 3 5
Executive for the Americas

Retail & Commercial Banking Business Group (R&C) ............... 9 5
Japanese Corporate & Investment Banking .................................. 9 7
Business Group (JCIB)
Global Commercial Banking Business Group (GCB) ................. 9 9Asset Management & Investor Services Business ...................... 1 0 1Group (AM/IS)
Global Corporate & Investment Banking Business .................... 1 0 3Group (GCIB)
Global Markets Business Group (Global Markets) ...................... 1 0 5

Leadership and Governance

CFO Message ................................................................................................... 1 7

Value Creation Process ......................................................................... 2 9Value Delivered to Stakeholders .............................................. 3 1

Business Group Performance ............................................................. 9 1
Digital Service Business Group (DS) ................................................ 9 3

Sustainability Management Focused on .............................. 6 3
Addressing 10 Priority Issues
FOCUS
Promoting Sustainable Businesses ................. 6 8
Climate Change Measures & Environmental Protection ..... 6 9(Disclosure Based on TCFD Recommendations)

Transforming Our Corporate Culture /Human Capital Strategy
CHRO Message ............................................................................... 7 9

Dialogue between Outside Directors and ..................................... 1 0 9
Institutional Investors

Global Advisory Board ........................................................................... 1 1 2
Corporate Governance ......................................................................... 1 1 3
Risk Management .................................................................................... 1 2 3Cyber Security .......................................................................................... 1 2 7Compliance ................................................................................................ 1 2 9Internal Audit ............................................................................................. 1 3 1

Initiatives for Practicing a Customer-Oriented Approach ....... 1 3 2

We would like to extend our gratitude to readers of the
MUFG Report 2023 integrated report.
In this edition, we focus on reporting on our progress
thus far under the Medium-Term Business Plan (MTBP),
the second year of which we have just completed, while
including descriptions of what we believe MUFG ideallyshould look like in the long term, initiatives we are taking
on to enhance shareholder value and messages fromkey management members. Also, based on feedback
gleaned from stakeholder dialogue, this edition
incorporates enriched descriptions regarding MUFG’s
unique strengths including Group companies’
comprehensive capabilities as well as global network inorder to facilitate understanding.
As the officer in charge of IR and responsible for the
preparation of this report, I hereby declare that the
MUFG Report 2023 has been sincerely prepared with
the involvement of top management and thecollaboration of various departments and that its
content is accurate.
Going forward, we will value any insights andtakeaways acquired through stakeholder dialogue tofurther enhance the content and transparency of
information disclosure. We welcome frank opinionsfrom our readers about this publication.

Tetsuya Yonehana

Representative Corporate Executive,
Senior Managing Corporate Executive, Group CFO

Financial Data / Corporate Data
Eleven-Year Summary of Major Financial Data ............................. 1 3 3Financial Review for Fiscal 2022 ........................................................ 1 3 5

MUFG’s Unique Strengths .................................................................... 3 7Group Companies’ Comprehensive Capabilities ............. 3 8
Strategies in Asia ........................................................................... 4 1
Alliance with Morgan Stanley ................................................... 4 5
Global AM Business ...................................................................... 4 7Main Disclosure Outlets

Editorial Overview

Disclaimer

Definitions of Specific Terms Used in This Report

Investor Meeting
Presentation

To best explain our efforts to create sustained value to our investors andother stakeholders, we, Mitsubishi UFJ Financial Group, or MUFG, havecompiled this integrated report, MUFG Report 2023, with reference tosuch guidelines as the framework provided by the Value Reporting
Foundation (VRF) as well as the Guidance forCollaborative Value Creation issued by the
Ministry of Economy, Trade and Industry. Further
details on our financial status and sustainability
initiatives are available on our website. In
addition, our plans call for issuing the MUFG
Sustainability Report 2023, a publication detailing
our response to sustainability issues, in
September 2023 or later.

Reporting Period

MUFG/The Group: Mitsubishi UFJ Financial Group, Inc. and its subsidiaries
and affiliates
The Bank: MUFG Bank, Ltd.
The Trust Bank: Mitsubishi UFJ Trust and Banking Corporation
The Securities: Mitsubishi UFJ Securities Holdings Co., Ltd. and its
subsidiaries
MUMSS: Mitsubishi UFJ Morgan Stanley Securities Co., Ltd.
NICOS: Mitsubishi UFJ NICOS Co., Ltd.
MUAH: MUFG Americas Holdings Corporation
Krungsri (KS): Bank of Ayudhya Public Company Limited
Bank Danamon (BDI): PT Bank Danamon Indonesia, Tbk.
FSI: First Sentier Investors Holdings Pty Ltd
AM: Asset Management
IS: Investor Services

Business Report

This report contains forward-looking statements with regard to the
expectations, forecasts, targets and plans of Mitsubishi UFJ Financial
Group, Inc. and its subsidiaries and affiliates. These forward-looking
statements are based on information currently available to the Group andare stated in this document on the basis of the outlook at the time that thisdocument was produced. In producing these forward-looking statements,
certain assumptions (premises) have been utilized that are subjective andmay prove to be incorrect. Should any underlying assumption prove to beincorrect, actual results in the future may vary materially from some of theforward-looking statements in this document. The Group has no obligation
or intent to update any forward-looking statements contained in thisdocument. In addition, information on companies and other entities
outside the Group that is included in this document has been obtained
from publicly available information and other sources. The accuracy andappropriateness of that information has not been verified by the Groupand cannot be guaranteed. All figures contained in this report arecalculated according to generally accepted accounting principles inJapan, unless otherwise noted.

Corporate Website

Detailed
Annual Report

Sustainability Report

Basel III Information
Databook

Corporate
Governance Report

Integrated Report

GeneralFinancial

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Four Key Initiatives Supporting Human Capital ............. 8 1
Management
Fostering a culture of taking on challenges and ............ 8 5transformation

Consolidated Financial Statements ................................................. 1 3 9
Performance Comparisons with Competitors ............................. 1 4 3Company Overview ................................................................................ 1 4 4

Non-Financial

April 1, 2022 to March 31, 2023
(The report includes some information pertaining to activities undertaken
up to July 2023.)

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Management Strategies
and Performance

Leadership andGovernance

Financial Data /Corporate DataManagement Message

CEO Message

Beyond Finance;
Beyond Our Comfort Zone

Reflections on Fiscal 2022
As the world began to stir from its pandemic dormancy in 2022 and overseas business travel
became possible again, I set out in April to reestablish face-to-face connections with clients andcolleagues, domestically and abroad, for a total of 63 days on the road. The onrush of exposure
to diverse points of view after so long in lockdown was invigorating and informative. I returned
alert to the immense public expectations of Japan as the world’s third largest economy and theonly Asian nation in the G7. I heard similar expectations of MUFG as a Global Systemically
Important Financial Institution (G-SIFI) and representative of Asia in general. Above all, I was
reminded how energizing and reviving—and humanizing—it is to exchange ideas in person.
I also emerged from the pandemic cocoon with a quiet resolution to take on the challenge ofconducting much more of my daily interactions in English. I have spoken it in certain settings
for years—meeting with global CEOs, attending meetings and dinners, delivering speecheswith English as lingua franca—but I now resolved to consciously expand its use outside my
comfort zone.
Through travel and language, I set out to build rapport and deepen relationships with my peers
by reinforcing personal connections. I had been cultivating these connections virtually during
the pandemic, but now was able to enrich them in person. These experiences taught me how a
combination of digital and physical meetings can be powerful, positive, and productive.
Engaging with peers in impromptu pockets of time can be especially beneficial. When walking
to a venue for the next meeting, or taking a coffee break, or enjoying a shared lunch or dinner,peers can engage in much more frank conversations than formal settings allow. I’ve gained
valuable insights for developing MUFG’s business strategies from these casual exchanges. I’ve
also seen informal conversations among leaders result in consensus on vital issues.
Common topics discussed with peers during these travels were digital, green, and changes inworkstyles and social values, with the precept that finding solutions to global issues requires
global collaboration among all parties, including Japan. During these travels, leaders asked me
about MUFG’s position on addressing climate change, or my observations on relevant public
discourse in Asia and Japan. When I asked for reciprocal insights, CEOs often volunteered tocollaborate with MUFG on solutions to shared concerns. This engagement extended into thedigital tech community with startup representatives at home and abroad who also haveconsiderable interest in —and expectations of—MUFG.
I believe our company, with its exceptionally strong global network, has a unique role to play increating consensus on vital matters like climate change and digital transformation. We also havea corresponding duty to address the trajectory of issues affecting the global economy andsociety at large.
With this in mind, some thoughts on these issues.

Hironori
Kamezawa
President &Group CEO5

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CEO Message

Assessing the Business Environment & Challenges Ahead
This past year brought a rolling tide of profound, world-changing events. With repercussions of
the pandemic still in effect, the international community was stunned by Russia’s invasion of
Ukraine in the spring. Fallout from U.S.-China confrontation and pandemic disruptions had alreadydestabilized free trade, and the invasion widened economic rifts and disrupted supply chains evenmore dramatically. Meanwhile, monetary policies in Europe and the United States were upended
to counter the accelerating pace of inflation. This caused market interest rates to surge radically,
and the yen to experience record-breaking depreciation on the foreign-exchange market. Now
well into 2023, credit uncertainties among U.S. and European banks have surfaced, as a number ofbanks have collapsed or entered reorganization. I cannot personally recall experiencing a single
year of more radical changes in our business environment.

Thoughts on Generative Artificial Intelligence
When hearing the news that ChatGPT passed a law bar exam in the U.S., with a score approaching the 90th percentile, I was
actually more perplexed than impressed. Yes, AI has access to massive amounts of data, can recognize patterns, and even in
a sense, learn. But however clever, is this latest AI capable of genuinely understanding the foundational concepts posed bythese tests? I rather doubt it, if for no other reason than ChatGPT, as it now stands, lacks the ability to truly experience anything.
However, ChatGPT does have the ability to raise unique questions in the human mind. Do its rote answers with “correct”
language mean AI understands the fundamental constructs of thought that actually lead to language? For that matter, what
constitutes language? What constitutes understanding? What does it take to truly think?

Meanwhile today, the world is contending with at least two major societal trends.

Fascinating—and sure to become even more so. We are witnessing the dawn of a new DX dimension—the DX of cogitation.
We already see the concept of “prompt engineering” that provides AI with a baseline of well-thought-out precepts to direct it
down a path to useful results (an approach that seems to have much in common with working with humans). The next stepwould be outsourcing a part of one’s cogitation processes to machines, which might lead in turn to even deeper humancogitation. Such collaboration will no doubt materialize, perhaps quite soon, and usher in a new era of cogitation DX, in whichpeople think with, and work alongside, artificial intelligence.

First is normalization. After three grueling years of battling Covid, the pandemic is subsiding,bringing eagerly awaited normalization of social and economic activities. We don’t know when
inflation will ease, or how long financial authorities will counter it with monetary tightening. But it isfair to say that interest rates in mature economies including Europe and the United States finallyseem to be on a path toward more familiar activity, and Japan is closely examining the side effects
of its overly low interest-rate policy. Rapid interest-rate hikes and the collapse of some U.S. andEuropean banks may actually be traceable to efforts to resolve problems arising from prolonged
monetary easing, but in a broader sense they can also be seen as part of a dynamic normalization
cycle bringing us full circle to a more normal status.

But here’s another question: Can humans retain our autonomy in cogitation and judgment? As AI grows more sophisticatedand incorporates new models of structural understanding—not just the current Large Language Models*1—we need
substantive discussions on a wide range of relevant topics, including rulemaking. AI will keep advancing and insinuating itself
into the mainstream—and nooks and crannies—of the human experience. Wherever it leads, inevitably we must all keep pacewith AI development.

Second is a countervailing response to changes driven by the forces we identify as digital andgreen—changes in workstyles and social values sweeping us toward a very different world. Some
corporations have begun reevaluating their existing businesses and returning to conventional
operations—a trend toward normalization. But given how forcefully the green-and-digital tides arerising, slowing the pace of reforms they are driving seems ill-advised.

At MUFG, this means creating an in-house environment, building an external community of partners, and developing a base ofcolleagues adept at working productively with this genuinely transformative technology.
*1 A computerized language model developed using massive data sets and deep learning technologies.

One example is digital transformation, or DX. Evolution of digital technologies has been a major
driver of radical change in social behavior and lifestyles via the DX of process and analysis. Now,
the emergence of ChatGPT and other generative artificial intelligence (AI) platforms istransforming the space into what we might call the DX of thinking—specifically, the digitalization ofhuman thought and language. Such technology means revisiting roles traditionally assigned either
to humans or to computers. As humanity explores how to coexist with digital technologies, ourbehavior may—in fact surely will—transform profoundly.

The Past is Prologue: Fiscal 2022 and 2023

Various initiatives aimed at global issues related to green and other ESG concerns are also gaining
momentum. The Inflation Reduction Act and the Green Deal Industrial Plan have been introducedin the United States and the EU, respectively, and the Japanese government has announced abasic policy for green transformation, or GX. Similar new national industrial policies are being
announced one after another around the globe. Robust investment from diverse stakeholders inpublic and private sectors will surely materialize.

Throughout the fiscal year ended March 31, 2023 (fiscal 2022)—the second year of our current
three-year Medium-Term Business Plan (MTBP)—we successfully promoted three transformative
pillars: Corporate Transformation, Strategies for Growth, and Structural Reforms. As in theprevious fiscal year, we made major progress by focusing on the latter two, which led totangible financial achievements.
Leveraging the Group’s deep capabilities, we made considerable progress in the wealthmanagement business while stepping up risk-taking endeavors in our businesses for large
Japanese corporate clients and overseas institutional investors. We improved margins forcorporate lending, both at home and abroad, through disciplined profitability management. This
led to significant year-on-year growth of net operating profits in customer segments. Meanwhile,
expenses—excluding the impact of foreign exchange fluctuations and other extraordinary
factors—declined from the previous fiscal year, while risk-weighted assets (RWAs) remained wellunder control. Profits attributable to owners of parent amounted to ¥1,116.4 billion. For two years ina row, we have been ahead of schedule in meeting our MTBP target of profits attributable toowners of parent of ¥1 trillion or more. Although ROE, a top-priority commitment under ourcurrent MTBP, did edge downward to 7.03% from the previous year, we are making steadyprogress toward our target of 7.5%.

To my mind, any business strategy at MUFG that does not give due consideration to issues ofdigital technologies and ESG will be pointless.
The changing landscape presents major opportunities for our company. We have developed an
unparalleled customer base around the globe via the Bank, the Trust Bank, Securities, and otherGroup companies—and through our long history of relationship banking. As a matter of course,
we help our customers address a broad spectrum of management issues. With a growing numberof customers who see the need to transform—and are poised to do so—we are confident that ourlong-standing reputation as a trustworthy and reliable financial institution will lead them to choose
MUFG as their “go-to” partner. Just as people visit family physicians for health-related issues, we
aim to be our customers’ “family doctor”—their first choice—for help with finance andmanagement issues. The comprehensive capabilities our Group and global network can marshal
on behalf of our customers can power their growth—and ours.

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Progress under the MTBP
Pages 53-54

MUFG’s Unique Strengths
Pages 37-47

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Financial Data /Corporate DataManagement Message

CEO Message

We have also made progress in reviewing our business portfolio. In December 2022, wecompleted the sale of MUFG Union Bank, marking our exit from the retail banking business in the
United States. However, the U.S. remains a strong, vital MUFG market, generating more than half
our overseas revenue. To date, the majority of profits from the Americas business derives from
corporate transactions. To expand this business, we will leverage our strong partnership with
Morgan Stanley to step up our risk-taking endeavors. Mr. Kevin Cronin, credited for substantial
growth of our Global Corporate & Investment Banking (GCIB) business in the Americas, has been
appointed to cover GCIB business in EMEA and drive synergies and strategic sophistication.

Message from Kevin Cronin
CEO and Regional Executive
for the Americas Pages 35-36

We are also taking on entirely new challenges to strengthen our earnings power. Having
positioned Asia as our second “home market,” we developed a commercial banking footprint in
the region from 2012 through 2019—stage one of seizing opportunities arising from Asia’s
economic growth. Now in our second stage, we are expanding operations to accommodate
growth in demand for digital finance. In the ASEAN region, where we invested in Grab in 2020, we
have broadened the scope of investees with recent interests in Home Credit, which handles Pointof Sales (POS) loans, and Akulaku, a provider of Buy Now Pay Later (BNPL) service. We also
invested in DMI Finance, a digital lending service for consumers in India. In novel ways for a bank,each of these investments extends our reach for new contact points with customers in retail andother transactions. As we optimize opportunities from Asia’s economic growth, a primary focus
will be digital business expansion throughout the region. Our collaboration with Grab, and ourinsights from working in tandem with Krungsri and other partner banks, have fortified our ability toevaluate and identify excellent investee candidates in this area.

MUFG’s Unique Strengths—
Strategies in Asia Pages 41-44

We will enhance our strategic alliance with Morgan Stanley under “Alliance2.0” for further
collaboration between both firms for the next decade and beyond. In July 2023, MUFG Bank andMorgan Stanley have entered into an agreement to collaborate in foreign exchange trading as partof our enhanced strategic alliance. MUFG Bank will utilize Morgan Stanley’s leading global foreignexchange business platform, enabling a more competitive offering to better serve MUFG Bank’sclients. The Japan JVs, Mitsubishi UFJ Morgan Stanley Securities and Morgan Stanley MUFG
Securities, will integrate the institutional Japan Equity business by consolidating Japan Equity
Research and Institutional Sales, to jointly become the top securities firm in Japan.

MUFG’s Unique Strengths—
Alliance with Morgan Stanley
Pages 45-46

Deploying DX within MUFG, we have launched “branch dashboards” that visually display the statusof our sales activities and customers’ funding transactions at all domestic branches run by the
Bank. We have also digitalized “toritsugi-hyo,” a key medium for recordkeeping of customertransactions involving cash and other physical instruments. This furthers our aim to improvebranch-operation efficiency so colleagues can dedicate more time directly to customer service.

Helping Address Environmental and Social Issues

MUFG Report 2023

CSuO Message Pages 61-62

Three areas where financial institutions must play such a role are customer engagement,
transition finance, and international rulemaking.

Digital Transformation (DX)9Mars—Supporting Startups via theUse of AI Technologies Page 60

As mentioned, MUFG embraces our responsibility to help resolve the world’s serious environmental
and social issues. We have a societal duty as a leading financial institution in Asia to help leadcollective efforts to achieve carbon neutrality throughout the region, including Japan.

Our strategies to achieve these targets are discussed in greater detail later in this report. But
first, a report on progress and challenges under our Corporate Transformation initiatives,
including Digital Transformation (DX), Contribution to Addressing Environmental and Social Issues,and Transforming Our Corporate Culture.

Because the number of customers who visit physical branches has steadily declined as society
shifts to digital services, we have consolidated our domestic branches and enhanced online
channels. This has fortified our resilience by reducing expenses and improving customer
convenience at the same time. The branch consolidation phase concluded in fiscal 2022, and weare now shifting our focus to our customer and transaction base.

To help create new business, we provide startups with finance via AI. For example, Mars Growth
Capital, a fund focused on startup financing in Asia, has steadily grown its total fund size since
the business began operations in December 2020 to US$750 million as of January 2023. Tobuild on that experience and expand scope, we established Mars Japan to nurture domestic
startups in our home market. MUFG credit professionals are also working with high hopes on an
AI-based credit model to embark on a promising new venture in startup financing.
We are exploring new fields, including metaverse and Web3, that show profound potential. In
February 2023, we signed a basic agreement with ten domestic corporations and financial
institutions to develop an industrial metaverse and common digital content platform known as an“open metaverse.” In May, we made a strategic investment in developing infrastructure functions
such as payment and authorization in the metaverse space. In Web3, which has the potential toinduce structural change to society as a whole, we entered an alliance with Animoca Brands andother partners to strengthen Japanese corporations’ competitiveness through monetization of
corporate content and development of a safe and secure Non-Fungible Token (NFT) environment.

Fiscal 2023 is the final year of our current three-year MTBP. We expect the business environment
to remain challenging, due in part to higher interest rates in Europe and the United States, and thecollapse of some overseas financial institutions. However, our business model has grown far more
resilient thanks to ongoing structural reforms and performance enhancements. Although we failed
to meet our two previous MTBP targets, we are determined and motivated to achieve both our
ROE target of 7.5%, as mentioned, and profits attributable to owners of parent of ¥1 trillion or moreby the conclusion of our current MTBP.

Our Digital Service Business Group was launched in April 2021 to apply digital technologies tohighly convenient, value-added customer services for our domestic retail and corporate
customers, allowing them to conduct key transactions anytime, anywhere, online or offline. The
Group also spearheads DX comprehensively within MUFG.

In December 2022, we launched d Smart Bank, a digital account service operated jointly withNTT DOCOMO. Under a Banking as a Service (BaaS) arrangement, we offer behind-the-scenes
functions to NTT through application programming interface (API) connections, allowing NTT
software to provide bank-account services to their smartphone users. Thanks to new customer
contact points from this collaboration, we are acquiring customers in regions outside of Japan’s
three largest metropolitan areas, where these services have had slow penetration. We not onlyoffer bank-account functions but also provide external partners with payment and asset
management functions of the Trust Bank, Securities, and NICOS. This BaaS model helps
diversify our contact points with customers. We will further expand our customer touch points
by installing consultation booths at train stations, offices, and other locations where customers
can seek online financial advice from specialists. We will also strengthen branch functions byhousing the Bank, the Trust Bank, and Securities in single branch.

CDTO Message Pages 57-58

There is no single optimal pathway toward carbon neutrality. Paths are likely to be
characteristically unique to Europe, the United States, Japan, and elsewhere. In addition tovariations in geography and national energy mix, structural differences in local industries are a
distinct major source of greenhouse gas (GHG) emissions. MUFG is committed to promoting
and supporting the transition toward carbon neutrality in a responsible manner along a varietyof paths, and to helping stakeholders across society understand the necessary intricacies ofthese various pathways. After considerable discussion and input involving many sources, weissued the MUFG Transition Whitepaper in 2022, in collaboration with our corporate clients andare using it to engage with representatives of European and U.S. policymakers. We plan to issue
our Transition Whitepaper 2.0 in 2023, which will present an overview of promising carbonneutrality technologies being developed in Japan and in need of financial support.
Meanwhile, MUFG is helping lead transition-finance framework discussions at the Net-Zero
Banking Alliance (NZBA), composed of more than 100 banks worldwide, and the Asia Transition

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CEO Message

Finance Study Group (ATFSG), formed to facilitate transition finance in Asia. In Indonesia, MUFG
joined the Just Energy Transition Partnership (JETP) as a founding member, alongside five majorbanks from Europe and the United States.
In view of the real economy, we believe that engaging with clients to determine an informed,
orderly path—rather than abrupt divestment—to reach net-zero emissions is the most balanced
approach to achieve transition to a carbon-neutral future. Accordingly, with our partners we areengaging with approximately 1,500 corporate clients at home and abroad to produce solutionsaligned not just with their strategies but also with government policies. We are steadily building
our foundation of accomplishments in financing such customer transition efforts.

Lessons from Samurai Japan Manager Hideki Kuriyama on Creating an Ideal TeamPromoting Sustainable Businesses
Page 68

In October 2022, Ms. Miyuki Zeniya was appointed Chief Sustainability Officer (CSuO) at MUFG.
She has extensive knowledge of sustainability and is keenly aware of the myriad issues shaping
this dynamic field. Other MUFG officers from diverse backgrounds will also bring pertinent expertiseto bear as we honor our obligation to help address climate change and other societal issues.

Transforming Our Corporate Culture
Among the most gratifying words I hear, both inside and outside the company, are: “MUFG haschanged.” And among the most gratifying behaviors of change I witness each workday is theacceleration of our decision-making.
It is also gratifying to see more colleagues taking on challenges—spontaneously andautonomously—to embody our stated Purpose of being committed to empowering a brighter
future. Examples of this trend include the MUFG Way Boost Project launched in 2022. This project
was started by colleagues who wish to take action to fulfill our Purpose, and to foster a sense ofownership at MUFG.
We created and issued a guidebook, MUFG Way—Bringing it to life, which showcases colleagues whobreathe life into our Purpose on their own terms. In November 2022, I served as judge in a businessincubation contest hosted by MUFG, Spark X, and was overwhelmed by participants’ intense passion
to bring positive change to the world, based on ideas transcending the scope of MUFG as we know
it today. Even contestants who did not win embraced the value of taking on new challenges and theiterative process of forming and verifying hypotheses that we promote at MUFG.
I make it a point to engage, face-to-face, in dialogue with colleagues on an ongoing basis, inJapan and overseas, where in fiscal 2022 I hosted 24 townhalls and roundtable talks. An internalfinancial results presentation—an annual event I launched last year—was attended by more than
5,000 colleagues this year. Some showed keen interest in management issues beyond the scopeof typical financial results, asking thoughtful questions on par with those I hear from institutional
investors, including, “What is needed to improve MUFG’s corporate value?” I genuinely
appreciated the passion and serious consideration these colleagues showed for the future of
MUFG as if it were for their own.

Spark X Voices from an AwardWinning Team Page 90

 UFG Headquarters Building
M
Project Page 88

Voices from MUFG Way Boost
Project Members Page 87

In March 2023, Japan’s national baseball team, Samurai Japan,
won the World Baseball Classic championship. Shohei Ohtani—its star player, and an MUFG brand partner—asserted his
generational talent for the world to see. Making the final gameeven more electric, Samurai Japan went head-to-head with thepowerful national team representing the United States, thebirthplace of baseball itself. Like millions of others, I was rivetedto the dramatic showdown, watching Japan win a close gameplayed by all at the highest level.
Recently, thanks to MUFG’s involvement with Samurai Japanand our World Baseball Classic sponsorship, I had the honor of
welcoming Mr. Hideki Kuriyama, the team’s esteemedmanager, to our Head Office. He was as unpretentious as heappears on television, and he immediately put me at ease.
Over the course of a far-ranging conversation, he displayedcompassion for his team members—who extend beyond
players to the whole organization—and dedication to fulfilling
his mission—which extends beyond baseball to winning in life.
He kindly shared wisdom on team management, including
creating an environment to maximize performance as well as
fulfillment, and on motivating talent through communication.
Valuable insights indeed, in synchrony with our ongoing drive
to transform the culture at MUFG.
This meeting reinforced my determination to keep
spearheading our transformation, so every colleague at MUFG
can be better positioned to fulfill their potential… and as one
global team, to honor our shared Purpose and ourcommitment to empowering a brighter future.

Welcoming 2023 Samurai Japan Manager, Mr. Hideki Kuriyama (center), are Mr.
Junichi Hanzawa (left), President & CEO of MUFG Bank, Ltd., and myself (right).

MUFG Brand Partner Shohei Ohtani, MLB All-Star, MVP, leading home-run slugger &strikeout pitcher for the Los Angeles Angels.

every colleague feels empowered—and a sense of excitement —I’m confident productivity will risedramatically. Our managers and leaders, including myself, will drive the imperative of culturaltransformation with determination and focus to propel us toward substantive change.

Given the scale of our organization, however, it’s no surprise to hear some voices saying MUFG
has not changed at all. I acknowledge we have a number of issues regarding agility and speed toaction. The core of our corporate culture remains stubbornly stiff. Efforts to transform it will neveryield genuine, meaningful results until we deploy institutional and individual energies to softenthat core. Safe to say, we have miles to go, and given the furious forces constantly reshaping ourenvironment, our viability hinges on how successful we are in transforming our culture. This iswhat fuels my strong sense of urgency about transformative efforts.
Those efforts will emphasize speed throughout fiscal 2023. We will simplify procedures andprocesses to free more time for colleagues to engage with customers and meet their commitments
to pursue new challenges. We see room for improvement in how we build consensus and conduct
meetings, trimming in areas colleagues identify as excessive artifacts of our traditional “just in case”
mentality of overplanning and preparation. If we succeed in creating a work environment where

11

MUFG Report 2023

Offline attendees at the CEO Financial Results Presentation Session for MUFG colleagues.

MUFG Report 2023

12

Management Message

MUFG’s Pursuit ofValue Creation

Management Strategies
and Performance

Leadership andGovernance

Financial Data /Corporate DataManagement Message

CEO Message

Investment in Human Capital

MUFG as a Force for Connection in a Time of Division

An ideal work environment should provide each colleague the means and motivation to do theirbest possible work. Creating that vibrant atmosphere is our aim at MUFG. Since talent is the mostimportant component of management capital, we reward our colleagues’ efforts on behalf of ourcustomers, communities, and society at large by raising their wages and investing in skills. Thisrequires devoting budget and developing content for in-house training programs, including
training for core digital specialists in a program called DEEP, an acronym for developing
characteristics essential for MUFG’s digital transformation.

CHRO Message Pages 79-80

We are also shifting and sharpening our focus on securing and nurturing top professional talent.
Traditionally, we have focused recruitment on recent university graduates. Today, however, around
40% of our new recruits are sourced mid-career—and when we account for new graduates
earmarked for specialist courses, that figure rises to 60%.

Nurturing Human Resources with
Robust DX Literacy Page 59

The value of diversity, equity & inclusion (DEI) is becoming increasingly clear to global
corporations. Currently, roughly 60% of our workforce is non-Japanese. In fiscal 2023, we enacted
a structure to promote DEI on a groupwide, cross-regional basis, and to foster a culture wherecolleagues understand and embrace the value of diversity, respect their fellows, and feelencouraged to unleash individual potential.

Four Key Initiatives Supporting
Human Capital Management—
Promoting Diversity, Equity &Inclusion (DEI) Pages 83-84

When I took on the role of CEO in April 2020, MUFG’s share price was ¥400. Three years on, it hasregained strength and more than doubled. However, our price-to-book ratio is still unacceptable,
at less than 1x.
Since steadily growing the value of capital that shareholders entrust to us is, by definition,
imperative to our mission, ROE is the core focus of our current MTBP. We have raised dividendper-share by 60% over the past three years, thanks to stable growth in profits, while maintaining ahealthy balance of capital soundness and deployment toward investments for long-term growth.
We also executed share repurchases of ¥450 billion in fiscal 2022. In fiscal 2023, we will maintaindisciplined capital management and strive to improve ROE while presenting a clearly defined andtransparent narrative of growth to shareholders.

But there is a countervailing power. The ubiquitous advancement of digital technologies has been
a force for connection among individuals and institutions, facilitating—even nurturing—immediate
bonds, regardless of location. Ironically, our deeply divided age is also an age when individuals canconnect and build strong communities like never before, based on shared values alone.
What can MUFG, with our committed Purpose of empowering a brighter future, do to contributeto our stakeholders in this scenario? We can deploy the unique and profound power of financeto connect.
Fund settlement services connect parties in distant locations, including cross-border settlement.
Finance brokerage connects growing businesses with depositors and investors who seek to better
manage their surplus funds. M&A and investment banking solutions connect developed andemerging nations across geographic and economic borders. Asset management- and successionrelated services connect customers with future generations, including children and grandchildren,and connect their career savings to retirement life. I could go on; the common function across thewide range of financial services MUFG offers globally is to connect one factor with another.

Raising the ratio of women in management is a major priority across MUFG. In Japan, over the past
two years, we have steadily increased our original three-year target for female representation in
management ranks. Our 2023 goal is now 22%, up from our original target of 18%. Our current
ratio is of course far from sufficient, and our targets must continue to grow, so we will continue
supporting career and skill development of female leadership prospects. We will do this throughsenior-management mentoring programs driven by officers, in addition to regular diversity forumsat all management levels, including departmental and branch; and advancement support for othertalented women at various posts throughout the company.

Capital Management and Shareholder Returns

My long-term vision of MUFG is to be a deep, steady resource for harmonious social progress.
True, this is an ambitious ideal, but worthy because we live in a world where divisions have rarely
been deeper, wider, or fiercer. On a geopolitical level, we see the ongoing struggle for global
prominence between the United States and China, and the situation in Russia and Ukraine. These
struggles, and others less publicized but still impactful, fuel a backlash against globalization. The
result is trade friction, friend-shoring, and other economically divisive forces. On a social level,
steep inflation is fueling profound economic disparity. And on an individual level, the pandemic
has heavily restricted face-to-face communications.

CFO Message Pages 17-26

Above all, what we connect are invaluable financial assets, essential working capital, andindividual and corporate data entrusted to us by customers. We help pump the lifeblood ofsociety—not only in time-honored but also prescient ways. For instance, we can developfunctions to connect customers on metaverse with safe and secure deposit accounts and digitalwallets. This can lead to a growing number of physical and digital contact points with newcustomers. We can combine and deliver these functions with financial and non-financial
services developed by Group companies, embedding MUFG in ecosystems of external partners
and daily lives of consumers.
We are emphatically capable of stable settlement and robust financing backed by our solidbalance sheet. With this leverage, we are able to engage customers who face challenges including
digitalization and decarbonization through risk-taking endeavors and novel, diverse approaches.
These include new businesses co-created with risk-sharing partners thanks to a platform whereparties connect.
Facilitating these connections requires a high level of trustworthiness, reliability, and stability—
traits the public demands in the wake of the tumultuous collapse of Stablecoins, a major cryptocurrency exchange, and subsequent calls for stronger regulations. There are also growing
concerns about emerging credit risks in connection with certain U.S. and European banks, some ofwhich led to bankruptcy. Widespread awareness of these concerns are on full display in ongoing
public discussions about regulations on AI platform operators and GAFAM—“Google, Amazon,
Facebook, Apple & Microsoft.”
MUFG’s most profound assets reside in our diverse, unparalleled customer base, our Group companies’
comprehensive capabilities, and our truly global network. We are also supported by a vast numberof stakeholders across society who find MUFG trustworthy and reliable. In a divisive world we can, andmust, serve as a bridge connecting individuals, institutions, communities, even cultures—a bridge built
on reputation and our finance and digital strengths that we have dutifully earned over time.

13

MUFG Report 2023

MUFG Report 2023

14

Management Message

MUFG’s Pursuit ofValue Creation

Management Strategies
and Performance

Leadership andGovernance

Financial Data /Corporate DataManagement Message

CEO Message

Beyond Finance; Beyond Our “Comfort Zone”
For decades, I have observed a personal New Year’s ritual —creating calligraphy of a single
Chinese character I choose to represent my annual resolution. For 2023, I chose the character—“going beyond”—as a reminder to embody the spirit of the MUFG Purpose.
When the MUFG Way was established two years ago, we characterized it as a fresh take on ourcommitment to help resolve issues related not only to finance, but also to non-financial issues
affecting all of humanity. As divisions widened and deepened worldwide, MUFG formally resolved
to embody a Purpose we express as “Committed to empowering a brighter future.” We aim toleverage our diverse networks, representing a range of stakeholders, to facilitate creativity,community, and connection among individuals and institutions who might have otherwise found it
hard to connect with each other.

A Guide to Quickly Understanding Where MUFG Is Now

KeywordPurposeLocation of
relevant topics
touched on in
CEO Message

Message summary

Locations of detailed
descriptions

Page 15

We commit to helping resolve issues related to finance and nonfinancial issues affecting all of humanity. As divisions widened anddeepened worldwide, MUFG formally resolved to embody a Purpose
we express as “Committed to empowering a brighter future.” byleveraging our diverse networks to facilitate creativity, community, andconnection among stakeholders.

MUFG Way Pages 1-2

Page 9Our business model has grown far more resilient thanks to ongoing
structural reforms and performance enhancements. We aredetermined and motivated to achieve both our ROE target of 7.5%
and profits attributable to owners of parent of ¥1 trillion or more by
the conclusion of our current MTBP.

Pages 9-10

After consolidation of our domestic branches and enhanced online
channels, we are now shifting our focus to our customer andtransaction base. We deploy DX within MUFG to improve branchoperation efficiency. We are also exploring new fields, including
startup financing via AI, metaverse and Web3.

This aim requires reaching beyond established conventions at MUFG that have earned us a
reputation as being trustworthy—but also rigid. To be relevant in a more fluid future, we must
transcend the scope of finance and its traditional business model.
In the spirit of , I wish for each MUFG colleague to join me in embracing the challenge of
breaking through self-imposed limits of our past and instead going beyond into a fuller
dimension of finance and a wider range of services.

Improving ROE

DigitalTransformation(DX)

Hironori Kamezawa
President & Group CEO
July 2023

Addressing
Environmental
and Social
IssuesTransforming
Our Corporate
CultureInvestment in
Human Capital

Shareholder
Returns

15

MUFG Report 2023

Page 10

Having a societal duty to lead the industry to achieve carbon neutrality
throughout Asia, we issued the MUFG Transition Whitepaper in 2022.
Three areas where we must play such a role are customer
engagement, transition finance, and international rulemaking.

Page 11

It is gratifying to see more colleagues taking on challenges to embody
our Purpose. However, I acknowledge we have a number of issues
regarding agility and speed to action. We will emphasize speed andsimplify procedures and processes throughout fiscal 2023.

Page 13

We reward our colleagues’ efforts by raising their wages and investingin skills. 60% of our colleagues joining in a year are specialists. We
promote DEI on a groupwide and we have raised 2023 target for
female representation in management ranks in Japan to 22%.

Page 13

Our price-to-book ratio is still unacceptable, at less than 1x. We haveraised dividend-per-share by 60% over the past three years, andexecuted share repurchases of ¥450 billion in fiscal 2022. We will
maintain disciplined capital management and strive to improve ROE.

 rogress under the MTBPP
Pages 53-54
 FO Message
C
Pages 17-26

 igital Transformation
D
Pages 57-60
 igital Service Business
DGroup Pages 93-94

 ontribution toC
Addressing Environmental
and Social Issues
Pages 61-78

 ransform Our Corporate
T
Culture / Human Capital
Strategy
Pages 79-90

 FO Message
C
Pages 17-26

MUFG Report 2023

16

Management Message

MUFG’s Pursuit ofValue Creation

Management Strategies
and Performance

Leadership andGovernance

Financial Data /Corporate DataManagement Message

CFO Message

Committed to Pursuing Sustainable
Improvement in ROE through Stable
Profit Growth and Disciplined
Capital Management

Tetsuya Yonehana
Representative Corporate Executive,
Senior Managing Corporate Executive, Group CFO

Progress in the MTBP
MTBP Financial Targets—Toward the Improvement of ROE
MUFG has positioned ROE at the core of business management
in line with its priority commitment to improving it under the
MTBP. We will strive to achieve an ROE of 7.5% in fiscal 2023.
Although this figure is not necessarily high enough when
considering the cost of capital, we have identified it as amilestone on the path to securing future growth. To this end, we
have set targets for profits, expenses and RWAs,*1 which we havedefined as the three key drivers that will enable us to achieve thisgoal. We will therefore tighten our control on management
resources while reinforcing the domestic business’s revenue
base and strengthening our global business, with the aim of
becoming a financial group stably earning ¥1 trillion or more in
profits attributable to owners of parent even as we improve ROE.
*1 Risk-weighted assets: The total monetary amount of risk volume calculated byreflecting the degree of risks associated with each asset held by MUFG.

Review of Fiscal 2022 Operating Results
In fiscal 2022, MUFG tackled a radically changing businessenvironment while striving to maintain robust financial management
to counter such factors as steep global inflation as well as rapid andsignificant interest rate hikes by central banks in United States andEurope. Also, the progressive depreciation of the yen temporarily
resulted in an exchange rate of more than ¥150 to the U.S. dollar
and, in March 2023, concerns were raised about the credit risks
associated with some U.S. and European financial institutions.
Against this backdrop, gross profits rose substantially year on
year despite the recording of losses on sales of foreign bonds
due to the re-balance of the securities portfolio as part ofefforts to improve profit margins on a book-value basis. The rise
was primarily attributable to a major increase in net interest
income on the back of improvement in deposit and lending
spreads thanks to our efforts to seize profit opportunities arisingfrom changes in the environment. Other positive factors
affecting gross profits included growth in foreign loan-related
fees as well as rises in income from forex and trading, areas inwhich we took advantage of market fluctuations. On the other
hand, general and administrative expenses rose year on year
due mainly to the depreciation of the yen. However, net
operating profits, which represent the earnings power of ourmainstay operations, grew significantly to ¥1,594.2 billion, up¥377.5 billion, or 31%, year on year, and thus returned to the level

recorded in fiscal 2015 prior to the introduction of the negativeinterest rate policy.
Looking at indicators other than net operating profits, we recorded
valuation losses on loans, bonds and other assets held by MUFG
Union Bank (MUB) in the United States due to an accounting
treatment applied in connection with the decision to sell ourequity stake in MUB. These losses are included in credit costs
and other non-recurring losses. However, the majority of theselosses have been countered in the form of extraordinary gains
upon the sale of said equity stake. If these and other accounting
adjustments between various items are excluded, total credit costs
for the fiscal year ended March 31, 2023 decreased by ¥50.5 billion
and, as result, ordinary profits increased by ¥218.1 billion from theprevious fiscal year. In summary, despite the one-off recording ofextraordinary losses associated with structural reforms, profits
attributable to owners of parent stood at ¥1,116.4 billion, effectively
on par with the all-time best recorded in fiscal 2021.
As described above, in fiscal 2022 we promoted measures tocounter valuation losses on foreign bonds while successfully
offsetting one-time expenses and losses in connection with thesale of MUB as well as structural reforms with higher net
operating profits. We have thus met our Medium-Term Business
Plan (MTBP) target of stably earning ¥1 trillion or more in profits
attributable to owners of parent for two years in a row. This
indicates, I believe, steady improvement in our earnings power.

FY2021

1
2
3
4
5
6

Gross profits
G&A expenses
Net operating profits
Total credit costs
Ordinary profits
Profits attributable to owners of parent

Results
3,964.0
2,747.2
1,216.7(331.4)
1,537.6
1,130.8

4,503.0
2,908.7
1,594.2(674.8)1,020.7
1,116.4

MTBP Financial Targets

ROE
CET1 capital ratio

*1

539.0
161.4
377.5
(343.4)(516.9)(14.3)

MUB-related valuation losses*1
Results
Change——1,594.2(280.8)1,755.7
1,116.4

—
—
377.5
50.5
218.1
(14.3)FY2022

FY2023targets

Medium- to longterm targets

7.79%

7.03%

7.5%

9%–10%

10.4%

10.3%

9.5%–10.0%*1 Estimate reflecting the RWA increase calculated on the finalized Basel III reforms
basis, excluding net unrealized gains on available-for-sale securities

Strategies for growth
Improvement in RORA

*1

Resource allocations to growth fields

Strengthen
profitability

Positive effect of strategies for growth on net operating profits:
Approx. + ¥325.0 billion(Customer-segment net operating profits: + ¥443.1 billion)

Profits attributableto owners of parent

Improvement in ROE

Structural reforms

RWAs
Expense control

Profits attributableto owners of parent
Shareholders’ equity

Capital managementwith the target range of
the CET1 capital ratio

Increase the sophistication of expense control
Free up funds for growth investment by reducing baseexpenses
Reduction in base expenses: − ¥44.0 billion
A year-on-year decrease in overall expenses, excluding the impactof foreign exchange fluctuations and the sale of MUB shares

Maintain fiscal 2020-end level
Replace low-profitability assets with high-profitability assets

RWA control

Disciplined RWA control kept the RWA volume at an appropriate level
Risk return improved on the back of improving lending spreads

Furtherenhancementof shareholder
returns

Reference: After adjustment with

ChangeFY2021: Fiscal 2022 Progress

FY2022
Results

As shown in the table below, we have seen steady improvements
in profit, expenses and RWAs in fiscal 2022. As presented in thegraph on the subsequent page, these improvements resulted insignificant improvement in ROE for all business groups over thecourse of the first two years under the current MTBP with the
exception of the Global Markets Business Group, which recorded
losses on sales of foreign bonds. Although the recording of
one-off expenses caused consolidated ROE to decline from theprevious fiscal year to 7.03%, the strong growth in net operating
profits suggests that our ROE is now on a steady improvement
track. Going forward, we will continuously work to make
improvements in the three key drivers while practicing disciplined
and proper capital management to sustainably improve ROE.

Breakdown of ROE Improving Factors (Logic Tree)

RWAs

Consolidated Income Statement Summary

MUFG (consolidated) (Billions of yen)

I would like to elaborate on our basis for defining the threedrivers to achieve our ROE target. First, in order to maximize our
profits, the numerator of the ROE calculation, we need to build astrong profit base by keeping a robust control on our expenses
even as we work to strengthen our earnings power. Second, weneed to robustly control RWAs, which are related to capital—thedenominator of the ROE calculation—so that we can utilize

capital in growth investment and shareholder returns to further
improve ROE. We are thus confident that we will be able toachieve a higher ROE through efforts related to the combinationof these key drivers.

Aim for a dividend payout ratio of 40% via progressive dividends
Flexibly execute share repurchases
Fiscal 2022: Increased the volume of full-year dividends by ¥4
per share while undertaking share repurchases of¥450.0 billion
Fiscal 2023: Plan to increase the volume of full-year dividends by¥9 per share while considering flexibly undertaking
share repurchases

Shareholders’ equity
RWAs / Shareholders’ equity
Reciprocal of CET1 capital ratio

Strategic
investments
for sustainablegrowthInvest in growth fields (Digital, Global AM/IS, etc.)
Investing in the digital finance field in Asia while deciding toacquire an asset management firm boasting strength inprivate debt

Capital management*1 Return on risk-weighted assets (an indicator suggesting capital profitability)(Optimally allocate capital to improve ROE)

*1 Adjusted the valuation losses on assets held by MUB which was reversed as extraordinary gains. Total credit costs: ¥393.9 billion, ordinary profits: ¥735.0 billion

17

MUFG Report 2023

MUFG Report 2023

18

MUFG’s Pursuit ofValue Creation

Management Message

Management Strategies
and Performance

Leadership andGovernance

Financial Data /Corporate DataManagement Message

CFO Message

Trends in ROE by Business Group
ROE

Structural Reforms—Expense Control
To establish a more tangible profit / loss structure, we aim to
reduce overall expenses, except for revenue-linked items, overthe course of the three-year period under the MTBP.

Size of circle: Size of net operating profits: Fiscal 2022
: Fiscal 2020

High
Asset Management &Investor Services(AM/IS)

Fiscal 2022

7.03%

Fiscal 2020

5.63%

DigitalService(DS)
GlobalCommercial
Banking(GCB)

Retail &Commercial
Banking(R&C)

Therefore, we are taking a more disciplined approach to expense
control in line with the current MTBP. To this end, we haveclassified expenses into three categories: (1) expenses linked torevenues; (2) expenses for business growth; and (3) all otherexpenses, collectively, “base expenses.” We are closely
controlling these items via a PDCA cycle. Specifically, with theaim of curbing overall expenses, we will pursue reductions inbase expenses to free up funds to cover expenses deemed
essential to securing growth. Moreover, expenses for growth will
be narrowly focused on particular areas in business fields subject
to our strategies for growth, such as wealth management, Asia
business and Global AM/IS. In addition, we will review ourresource allocation plans, even those aimed at funding expenses
for growth, on an as necessary basis considering the status ofprogress in business operations. In this way, we exercise
disciplined expense control on a global basis.

Japanese
Corporate &Investment
Banking(JCIB)

GlobalCorporate &Investment
Banking(GCIB)

GlobalMarkets

Low
Small

Capital used*1*1 Calculated based on RWAs and economic capital

Strategies for Growth—Raising Profitability
In line with the current MTBP, we have been striving to reinforce
profitability in five strategic areas, namely, “wealth management”
and “approach of proposing solutions to customer’s issues” inJapan and “Asia business,” “GCIB & Global Markets” and “Global
AM/IS”*1 overseas.
In fiscal 2022, although our initiatives related to “Global AM/IS”
were negatively affected by a downturn in market conditions, wemade steady progress in each initiative under our strategies for
growth. The overall positive effect of these strategies boosted
our net operating profits*2 by approximately ¥400.0 billion over
the two-year period ended fiscal 2022. As we have set a target of
garnering a total of ¥150.0 billion*3 in net operating profits
through these strategies for growth in the above five areas overthe course of three years ending in fiscal 2023, the increase in
net operating profits means that this target was more thansatisfied ahead of schedule in the second year of the MTBP.
Moreover, progress in these strategies also resulted in a ¥443.1
billion (37%) increase in our net operating profits of customersegments compared with the previous fiscal year. Over thecourse of the first two years of the MTBP, we have thus achieveda ¥620.7 billion (62%) increase in this indicator, suggesting that
our operating results are reflecting the effect of our initiatives tostrengthen profitability. Paying close attention to the businessenvironment, we will steadily enhance our earnings power while
agilely aligning our approach to changes in external conditions.

Large

Roadmap toward the Enhancement of Profitability with an
Eye to the Final Year of the MTBPNet operating profits*1(Billions of yen)customer-segment

consolidated

YoY change
1,617.7 1,577.6+443.1

1,247.0
997.0

FY20201,174.6

Expense*1 Control

MTBP:
¥1.4
trillion

FY2022

Expenses
linked torevenues+¥10.0 billion

2,747.0

Profits Attributable to Owners of Parent

19

MUFG Report 2023

Asia
business

Compared with the level as of Mar.
2021; excluding the effect offoreign exchange fluctuations andthe sale of MUB shares

2,909.0

118.6

117.8

Foreignexchange
fluctuations,
etc.*2+¥190.0
billion

AM/IS,
etc.

120.7

(8.6)

9.6

Foreign
Sale ofthe equity exchange
stake in fluctuations
MUB

Ongoing replacement of
low-profitability assets withhigh-profitability assets

1,300.0
1,130.8

1,116.4
Domestic Overseas(¥29.0)+¥7.0
billionbillion

777.0

Please also refer to pages 53 and 54 for details of progress undereach initiative.
*1 Asset management / Investor services*2 Consolidated net operating profits compiled for internalmanagerial accounting purposes*3 Excluding foreign exchange fluctuations

In fiscal 2023, we will continue to maintain robust RWA control.
Simultaneously, we will strive for optimal resource allocations by,for example, allocating RWAs to areas in which we can accumulate
high-profitability assets or take on fresh risk-taking endeavors. In
this way, we will pursue further improvement in risk return.

Base expenses(¥44.0) billion

Systemexpenses(¥22.0)billion

MTBP: Stably earning¥1 trillion or more

(Billions of yen)In fiscal 2022, we maintained the above approach andimplemented ongoing initiatives to improve the capital efficiencyof our assets. Over the first two years of the MTBP, we have
reduced the balance of low-profitability assets by ¥8.6 trillion,
replacing them with high-profitability assets totaling ¥9.6 trillion.
These initiatives resulted in steady improvement in lending
spreads in Japan and abroad while greatly contributing to growthin net interest income. I feel that our business approach focusedon pursuing improvement in risk return is steadily becoming
embedded in front-line operations, and the various mechanisms
we have designed to this end are functioning effectively.

(Trillions of yen)

Expenses
for businessgrowth
+¥6.0 billion

FY2023 target(consolidated)*1 Consolidated net operating profits compiled for internal managerial accounting
purposes (fiscal 2020 figure represents the figure prior to changes in in-housemanagerial accounting standards)

This means expanding the numerator in the ROE calculation in
addition to controlling capital that is the denominator. The
current MTBP has positioned ROE as a KPI requiring utmost
priority for each business group. In line with this positioning, weare strongly focused on improving risk return in front-line
operations. Our endeavors to this end include the developmentof a framework centered on RORA.

RWA*1 Control(Billions of yen)

1,232.4

FY2021

A decrease
attributable to thesale of MUB sharesand foreignexchange
fluctuations

In fiscal 2022, we reduced base expenses, mainly those
associated with domestic operations, by approximately ¥44.0
billion. If the impact of foreign exchange fluctuations and the saleof MUB is excluded, overall expenses decreased approximately¥28.0 billion year on year. Upholding the above MTBP policy of
pursuing reductions in base expenses to free up funds to cover
expenses for growth, we are maintaining tight control overoverall expenses. As a result, the expense ratio decreased 4.7
percentage points year on year to 64.5% thanks in part to higher
gross profits. As such, our efforts to enhance the resilience ofthe profit structure have been steadily progressing.

Structural Reforms—RWA Control
To improve ROE, we aim to maximize returns on RWAs (RORA)
while controlling the overall volume of RWAs.

FY2021

FY2020

FY2021

FY2022

FY2023 target

Mar. 31, 2021

FY2022*1 Figures are compiled for internal managerial accounting purposes*2 The effect of foreign exchange fluctuations and the sale of MUB shares amounted toapproximately ¥130.0 billion and ¥60.0 billion, respectively (provisional calculation).

Mar. 31, 2023
Excluding the effect offoreign exchange
fluctuations and the saleof the equity stake in MUB

Mar. 31, 2023

*1 Estimate reflecting the RWA increase calculated on the finalized Basel III reforms
basis, including net unrealized gains on available-for-sale securities

MUFG Report 2023

20

Management Message

MUFG’s Pursuit ofValue Creation

Management Strategies
and Performance

Leadership andGovernance

Financial Data /Corporate DataManagement Message

CFO Message

Business Portfolio
MUFG takes a “portfolio approach” to business management. This
allows us to optimally combine operations with different profiles
in terms of risk and return. In doing so, we strive to secure both astable profit stream and higher ROE. In line with this approach,we have been developing an extensive business portfolio—
differentiating ourselves from other financial institutions—that
provides us with access to diverse profit sources. At the sametime, we regularly review existing investments.

online stores. We are thus taking a multilateral approach toseizing opportunities arising from Asia’s economic growth.
In addition, Mars Growth Capital (Mars), which launched startup
financing in Asia, has been steadily building an admirable trackrecord since the fund’s formulation and, in January 2023,
announced that the total value of its fund had risen to US$750
million. Going forward, Mars will expand its scope of operations
to encompass Europe and elsewhere across the globe whilebringing its financing services to Japan to contribute to thecreation of Japan-made unicorn corporations and support theirbusiness growth. Initiatives undertaken by Mars also utilize AI and
are aimed at expanding MUFG’s financing functions in the formof the fund. This approach is as effective as establishing a newbank. We consider Mars to be the fresh face of financing
initiatives that bolster MUFG’s business growth.

In fiscal 2022, we completed the sale of U.S.-based MUB in
December 2022, in line with our decision to do so as part of our
pursuit of the optimal allocation of management resources.
Looking ahead, we will concentrate our management resourcesin the Americas to corporate transactions, an area of strength for
us. At the same time, we will step up collaboration among theBank, the Trust Bank and the Securities as well as our alliancewith Morgan Stanley (MS). By doing so, we will achieve thefurther expansion of our operations in this region as well as
improvement in capital efficiency.

If MUFG is to achieve sustainable growth and improvement incorporate value, it is important to make its business portfolio
even more profitable and stable. We believe that investment ingrowth fields is an essential means to that end. Going forward,
we will consider undertaking strategic investment in the Asian
region and business areas such as digital and Global AM/IS. Also,
we will periodically review existing investments. Through these
initiatives, we will enhance the capital profitability of eachbusiness constituting our business portfolio, thereby improving
MUFG’s consolidated ROE.

In Asia, meanwhile, we have been undertaking investment in
the digital finance field while investing in our local commercial
banking platform on an ongoing basis, with the aim ofaccommodating the region’s diverse and growing financing
needs. Through these initiatives, we aim to secure a robust
structure capable of meeting a broad range of needs, including
for purchasing-related financing involving both physical andStrategic Investments for Sustainable Growth*1

Divestment

Strategic investment
Asia
2023

2023 (scheduled)2023

Digital-related

Global AM/IS

2022

2023 (scheduled)

Capital Nomura
Securities¥21.0 billion*22022¥2.1 trillion*8¥87.0 billion¥32.0 billion

2020¥14.0 billion*62022¥10.0 billion

2019

AMP CAPITAL

2012–2019(¥63.0 billion*3)

2023

2022

2016–2023

MUIP
Garuda Fund

MUFG
Ganesha FundOpen innovation
37 investees¥13.0 billion¥37.0 billion¥67.0 billion

*4

*7

2019

2019

(¥536.0 billion )(¥687.0 billion)

2022

2020–2023

2020¥10.0 billion

2018¥300.0 billion*3(¥89.0 billion*3)¥36.0 billion

2013–2020¥49.0 billion¥45.0 billion

2017¥26.0 billion¥133.0 billion*5¥78.0 billion¥76.0 billion¥68.0 billion*1 All figures are approximate *2 5,501 million Thai baht converted into yen at the exchange rate as of the end of June 2022 *3 Initial investment *4 Investment commitment of
US$100 million converted into yen at the exchange rate as of the end of January 2023 *5 Total investment commitment (including planned commitment) converted into yen at theexchange rate as of March 31, 2023 *6 Acquisition of shares from FreakOut Holdings, Inc. *7 Internal managerial basis *8 A total transaction value of US$15.6 billion converted into
yen at the exchange rate as of December 1, 2022

21

MUFG Report 2023

Setting Net Operating Profits on a Growth Trend
As we have touched on in the Review of Fiscal 2022 Operating
Results, net operating profits, which represent our earnings powerin mainstay operations, recovered to the level recorded prior to
the introduction of the negative interest rate policy in Japan.
The diagram on the right shows the recent trend in consolidated
net operating profits. Although the 2016 introduction of thenegative interest rate policy resulted in stagnant net interest
income in domestic operations and thus caused our earnings
power to decline, we have to date striven to reduce domestic
expenses while improving lending spreads and thereby put an
end to the declining trend of domestic net interest income andrealize a turnaround. Furthermore, we have successfullyincreased fee income, which, in turn, hit a record-high, throughthe strengthening of our solution capabilities. In addition, taking
advantage of hikes in overseas interest rates, we expanded net
interest income in overseas operations via the improvement oflending spreads and the curbing of deposit rates. Also, among
the positive outcomes of inorganic growth strategies we havepromoted thus far, our operating results have been buoyed by
the business growth achieved by Krungsri and Bank Danamon,
our partner commercial banks in ASEAN, as well as First Sentier
Investors, a global asset management firm. Our earnings power
has thus improved despite headwinds arising from the negativeinterest rate environment in Japan.
In summary, our net operating profits have obviously transitioned
into a growth trend due to the success of the initiatives
described above. Looking ahead, we will maintain and enhance
the momentum of improvement in our earnings power inanticipation of the normalization of domestic interest rates. In
these ways, we will strive to achieve further profit growth and ahigher ROE.
Fiscal 2023 Financial Targets
In fiscal 2023, conditions in the business environment are
expected to remain uncertain and challenging due mainly to theinterest rate hikes in the United States and Europe as well aslooming concerns of a spillover effect on real economies from thecollapse of some overseas financial institutions. Nevertheless, ourtarget for profits attributable to owners of parent is ¥1,300.0 billion,
the highest we have ever set, and we are aiming to achieve an
ROE of 7.5% in line with the ROE target stipulated under thecurrent MTBP. Although the absence of growth in net operating
profits due to the sale of MUB as well as the expected appreciationof the yen could have some negative effects on profit, we plan tooffset the former by accumulating customer-segment net
operating profits so that the decrease in net operating profits will be
confined to the amount caused by foreign exchange fluctuations.
We have to date striven to develop resilient business models inJapan and abroad by executing strategies for growth andstructural reforms. In fiscal 2023, we will do our utmost to
successfully complete the current MTBP and, to this end, ensurethat various measures we have undertaken thus far will yield
tangible outcomes. By doing so, we will live up to our ROE target,
which represents our priority commitment under the MTBP.

Trend in Consolidated Net Operating Profits(Billions of yen)

1,600

Consolidated net operating profits (left axis)
JPY net interest income (right axis)*1, 2
Non-JPY net interest income (right axis)*1, 2
Trust fees + net fees and commissions (right axis)*1, 3
Net trading profits + net other operating profits (right axis)*1, 4
Domestic expenses (right axis)*1, 5
New income sources (right axis)*1, 6

1,594.2

1,557.9

+200

1,500

1,400

+100

1,300
0
1,200
(100)

1,100

1,000

0

(200)

2015

2016

2017

2018

2019

2020

2021

2022

(FY)

*1 Figures are compiled for internal managerial accounting purposes; representingchanges from the fiscal 2015 level*2 Excluding dividends from subsidiaries; the figure for fiscal 2022 also excludes gains
on investment trusts cancellation*3 Excluding Krungsri, Bank Danamon and FSI*4 The figure for fiscal 2022 includes gains on investment trusts cancellation included
in net interest income*5 Representing decreases in domestic expenses*6 Net operating profits earned by Krungsri, Bank Danamon and FSI

Fiscal 2023 Financial Targets(consolidated)

FY2022

FY2023targets

1 Net operating profits

1,594.2

1,450.0(144.2)

2 Total credit costs(674.8)(300.0)(19.2*1)

3 Ordinary profits

1,020.7

1,850.0

94.3*1

1,116.4

1,300.0

183.6

7.03%

7.5%*20.47ppt(Billions of yen)

4

Profits attributable toowners of parent

5 ROE

Change*1 Representing differences from fiscal 2022 results excluding MUB-related valuation
losses*2 Starting from FY2023, we will change the equity method accounting date forMorgan Stanley from Jan-Dec to Apr-Mar. As a result of this change, FY2023 is
expected to reflect earnings for 15 months, including Morgan Stanley‘s financial
results for the quarter ended Mar 31, 2023. The impact of this change, which isestimated to be approx. ¥60.0bn (based on the financial results for the quarter
ended Mar 31, 2023) is not taken into account in calculating ROE target.

MUFG Report 2023

22

Management Message

MUFG’s Pursuit ofValue Creation

Management Strategies
and Performance

Leadership andGovernance

Financial Data /Corporate DataManagement Message

CFO Message

Capital Management
Basic Policy
We consider capital management to be a matter of importancein terms of achieving the ROE target under the current MTBP.
MUFG has been focused on capital management that achieves
an appropriate balance among the “capital triangle” objectives,
as illustrated below. Upholding this basic policy in the course of
executing the current MTBP, we will endeavor to maintaincreditability and reliability, which are the indispensable traits of afinancial institution and largely dependent on its financial
soundness. Accordingly, we will strive to improve our corporate
value by steadfastly maintaining our financial soundness whilefurther enhancing shareholder returns as well as undertaking
investment in growth fields to raise profitability.

Capital Triangle

Maintain solid equity
capital
CET1 capital ratio*1 target
The 9.5%–10.0% range

Further enhancing
shareholder returns

MUFG’sCorporate
Value

Maintain progressive
dividends while flexibly
considering share
repurchases

Strategic investments forsustainable growth
Focus on capturing returns on existing
investments while considering newinvestment in Asia, digital, global AM/IS andother growth fields on an ongoing basis*1 Estimate reflecting the RWA increase calculated on the finalized Basel III reforms
basis, excluding net unrealized gains on available-for-sale securities

Maintaining Solid Equity Capital
Capital Management Based on Target Range for the CET1
Capital Ratio
Under the current MTBP, we have set a target range for the CET1
capital ratio (CET1 ratio), which indicates financial soundness, at
9.5% to 10.0% (finalized Basel III reforms basis; excluding net
unrealized gains of available-for-sale securities). We strive topractice disciplined capital management in line with this target
range. Based on a CET1 ratio of 8.5% as stipulated by minimum
regulatory requirements applied to MUFG, this target range wasdetermined by taking into account such factors as the results ofthe multifaceted verification of the necessary stress buffer andthe level of capital required of a financial institution deserving of
the “A” rating—our target rating—granted by external rating
agencies. With a CET1 ratio of 9.5% defined as the bottom line,
we have thus set the target range with a breadth of 0.5%.
As indicated in the graph shown in the upper right, our CET1
ratio as of March 31, 2023 was 10.3%, surpassing the target
range. We believe that this suggests the presence of sufficient
capital surplus that can be allocated to the execution of various
capital management measures. However, we are aware of theneed to stay alert against future repercussions of the collapse ofsome overseas financial institutions that began in March 2023
and, accordingly, we will pay attention to the degree of resulting
effect on real economies and financial regulations. Therefore,

23

MUFG Report 2023

we consider that we may need to somewhat increase capitalsurplus at this point in time.
In any case, our basic policy of maintaining the level of capital within
the target range will remain unchanged. We will continue to practicedisciplined capital management in a way that aligns with theexternal environment based on the prevailing circumstances.
Target Range for Capital Management (finalized Basel III
reforms basis; excluding net unrealized gains of available-forsale securities*1)(As of March 31, 2023)

10.3%

Maintain: Progressive dividends
Implement: Additional shareholder returns
Strategic investments forsustainable growth

10.0%
Targetrange

Maintain:
Consider:9.5%

Progressive dividends
Additional shareholder returns
Strategic investments forsustainable growth
Accumulate capital within
the target range

Consider:Stable dividends in line withthe level of profits
Implement: Accumulate capital to
improve CET1 capital ratio tothe target range while
practicing prudent risk
management

8.5%(Requiredcapital)

Implement: Review of the basic policies
for shareholder returns
Strengthen capital
Reduce risks

CET1 ratio*1* Estimate reflecting the RWA increase calculated on the finalized Basel III reforms
basis. Excluding net unrealized gains on available-for-sale securities

Strategic Investments for Sustainable Growth
As I discussed earlier, we consider undertaking strategic
investments aimed at raising profitability essential to securing
sustainable growth and improving corporate value. At the sametime, we maintain discipline in the course of identifying specificinvestment opportunities from the perspective of ensuring strategic
effectiveness, investment profitability and capital efficiency.
In fiscal 2022, we decided to invest in Home Credit (Indonesia andPhilippines), Akulaku (Indonesia), DMI Finance (India) and otherdigital financial players based in Asia, as part of a multilateralendeavor to seize opportunities arising from the growing needfor digital financing in this region. We also formulated new funds
focused on investing in startups in India and Indonesia andincreased Mars Growth Capital’s fund value to expand the scopeof our investment in and financing for startups. Moreover, in thefield of Global AM, we decided to acquire AlbaCore Capital, whichboasts strength in private debt, a type of financing with strong
growth potential, and otherwise made steady progress inmeasures to utilize capital to secure future growth.
We expect that the combined effect of strategic investments andfund investments undertaken thus far in the first two years of thecurrent MTBP will eventually be translated into a 10% or greater
improvement in ROE over the course of the next MTBP period. As

As for our dividend forecasts for fiscal 2023, we intend to pay afull-year dividend of ¥41 per share, up ¥9 per share year on year, inline with our policy of pursuing a progressive increase in dividends
per share and our MTBP target of raising the dividend payout ratio
to 40%. As a result of steady expansion in earnings per share (EPS)
through profit growth and the reduction of the total shares
outstanding via share repurchases, dividends per share will thus
grow 64% over the course of three years of the MTBP.

such, these investments are thought of as future contributors to
MUFG’s consolidated ROE. Going forward, we will continue toconsider measures to utilize capital, including strategic
investments to secure future growth in ROE, even as we take adisciplined approach with an eye to securing sustainablecorporate growth and improvement in corporate value.
Further Enhancement of Shareholder Returns
In line with our Basic Policies for Shareholder Returns, MUFG
strives to enhance the content of shareholder returns, with cash
dividends defined as the primary means to this end, while giving
due consideration to achieving an optimal balance between
shareholder returns, capital soundness and growth investment.
Specifically, (1) MUFG aims for stable and sustainable increases in
dividends per share through profit growth. Accordingly, we will
strive to progressively raise the dividend payout ratio to 40% by
the end of fiscal 2023. At the same time, (2) MUFG has taken a
flexible stance toward executing share repurchases that takes into
account performance progress / forecast and capital situation,
strategic investment opportunities and the market environment,
including share prices, as share repurchases constitute ashareholder return measure contributing to improvement incapital efficiency. Lastly, (3) MUFG will cancel treasury shares inexcess of approximately 5% of the total shares outstanding.
In line with the above policy, we increased the full-year dividend
for fiscal 2022 by ¥4 per share year on year to ¥32 per share. In
addition, we made share repurchases amounting to ¥450.0
billion annually and subsequently cancelled 590,000,000
treasury stocks (4.8% of the total shares outstanding prior tocancellation). As shown in the diagram below, over the course of
the first two years of the MTBP, including fiscal 2021, we haveallocated approximately ¥1.35 trillion, or about 60%, of
cumulative profits attributable to owners of parent totalingaround ¥2.2 trillion to shareholder returns, which comprised cash
dividends and share repurchases.
Cumulative Capital Allocations over the Past Two Years(Fiscal 2021–2022)
Capital release due tothe sale of MUB shares

Strategic investment
Share repurchases(¥600.0 billion)

Profits attributable toowners of parent¥2.2 trillion

Net profits(accumulated)

Dividends(¥750.0 billion)
Profit accumulation

Net profits(allocated)

Double gearing
associated with MS(¥600.0 billion)
terminated infiscal 2022

Strategic investments for sustainable growth, targeting mainly thedigital field in Asia
Share repurchases totaling ¥150.0 billion and ¥450.0 billion,
respectively, in fiscal 2021 and fiscal 2022
Increases of ¥3 yen and ¥4 yen per share in dividends for fiscal
2021 and fiscal 2022, respectively
Accumulation of profit in line with forecast for the external environment
Impact on capital allowances due to the expiration of the special
regulatory adjustment regarding our investment in MS (terminatedin fiscal 2022)

Results and Forecasts of Dividends per Common Stock andEarnings per Share (EPS)Dividends per common stock (yen)
26.4%

25.5%

32.9%

61.0%*1

Dividend payout ratio (%)
41.3%

100
40

35
75
30
25
50
20
15
25
10
5
00

68.28

74.55

66.91

40.95

31.7%

35.3%

88.45

90.73

EPS (yen)
37.9%*2¥41
Yearend
¥20.5

60.5

Interim
¥20.5
¥18
2016

¥19
2017

¥22
2018

¥25
2019

¥25
2020

¥28
2021

¥32
2022

2023

(FY)

*1 Dividend payout ratio amounts to 37% when the impact of the one-time amortizationof goodwill is excluded.
*2 Estimation based on the profits attributable to owners of parent target ¥1,300.0bn.
Dividend payout ratio excluding the impact of change of the equity method
accounting date for Morgan Stanley on our consolidated PL is approx. 40%.

With regard to share repurchases, we have not announced any
plan to undertake share repurchases at the time of fiscal 2022
financial results announcement, but we do intend to consider
flexibly executing share repurchases during fiscal 2023 based on
our current recognition of capital status as described above,even as we pay attention to the surrounding conditions.
As presented in the following diagram, our policy is to utilize
capital in a well-balanced manner for the two purposes ofimproving ROE and securing future growth. In fiscal 2023, theamount of capital to be allocated includes profit accumulationof ¥0.8 trillion (¥1.3 trillion profits attributable to owners ofparent minus ¥0.5 trillion funds for cash dividends.) In this light,
we believe that share repurchases will be an important option
to improve capital efficiency, considering the current
stagnation in MUFG’s stock prices, with the Price Book-value
Ratio (PBR) trending around 0.7 times.
Capital Allocations in Fiscal 2023
10.3％

CET1 ratio(Mar. 31, 2023)

Profits
attributableto ownersof parent

Dividends

GrowthCET1 ratio
investment, (Mar. 31, 2024)
changes in
RWAs, share
repurchases,etc.

MUFG Report 2023

24

Management Message

MUFG’s Pursuit ofValue Creation

Management Strategies
and Performance

Leadership andGovernance

Financial Data /Corporate DataManagement Message

CFO Message

Enhancement of Shareholder Value

Initiatives to Enhance Shareholder ValueAs mentioned earlier, MUFG has positioned ROE at the core ofbusiness management based on a recognition that improving
ROE is essential to enhancing shareholder value.

Relationships between PBR and ROE
PBR

Our Recognition of MUFG’s Stock Price
For MUFG, enhancing shareholder value is an importantmanagement issue.

Japan

U.S.A.

Europe(times)1.6
Morgan Stanley

In line with the current MTBP, we are striving to improve ROE by
executing key strategies (Strategies for Growth and Structural
Reforms) as well as practicing proper capital management.
Details pertaining to these endeavors are provided in Breakdown
of ROE Improving Factors featured on page 18.

1.4

Looking at the recent trend in Total Shareholder Return (TSR),MUFG’s TSR over the past 10 years has been lagging considerably
behind that of some global competitors. Although our two-year
results following the launch of the current MTBP have shown an
upward trend, we believe that this is largely attributable to
growing market expectations regarding MUFG’s future growth inlight of steady progress in key strategies under the MTBP,
including those that led to a 50% increase in EPS over past two
years due to profit growth and disciplined capital management.
Accordingly, we are acutely aware of the importance of steadily
meeting such expectations.
As stated earlier, MUFG’s stock price is currently stagnant, with
the PBR trending around 0.7 times. This is attributable to ourROE falling short of the cost of capital. We therefore consider
low ROE to be a major factor contributing to the present
sluggishness. Taking a look at global banks and the relationshipbetween their PBRs and ROEs as shown in the diagram on theright, these two indicators seem to strongly correlate. In
particular, some U.S. banks whose TSR has remained high overpast decade are appreciated by the market for their robust PBR,
which is a result of ongoing improvement in ROE. This strong
PBR, in turn, help raise stock prices of these banks and enables
them to achieve a constantly high TSR.

JP Morgan

1.2
1.0

GS

0.8

MUFG

0.6

March 2021
Citigroup

0.2
0.0

Santander
BNP Paribas

March 2022

0.4

0

UBS

Bank of America
Wells Fargo
HSBC

Barclays
Deutsche Bank
Societe Generale51015 (%)

ROE

Source: Bloomberg (as of March 31, 2023/forecast for the next fiscal year)

Our recognition of issues
 urrently stagnant PBR is attributable to our ROE falling short of theC
Cost of CapitalAim to enhance ROE through Strategies for growth, Structural reforms
and Capital management

PBR = 1 +Cost of Capital – Growth rate

MUFG

150
500

125

Morgan Stanley

100
75
400

50

2021/032022/092022/032022/09

Divestment of Strategic Equity Holdings
In line with our basic policy of reducing strategic equity holdings,
we divested such holdings by an amount equivalent to ¥870.0
billion (on an acquisition-cost basis) over the six years from fiscal
2015 to fiscal 2020. Thus, going into the current MTBP, ourdivestment target for the three years is set at ¥500.0 billion.

The most recent annual trend in TSR (Closing price as of March 31, 2021 = 100)
175

We are fully aware that the market’s evaluation of MUFG isreflected in the currently stagnant PBR. Taking this situation
seriously, we will strive to sustainably improve ROE so that market
participants can have even greater expectations for our future
growth. In this way, we will enhance shareholder value.

Equity spread (ROE – Cost of Capital)

Global Comparisons of Total Shareholder Return (TSR) (Closing price as of March 31, 2013 = 100)

600

However, our MTBP target of raising ROE to 7.5% remains
insufficient when we consider the cost of capital. To achieve ahigher stock price with PBR of at least 1 time, which represents
the bare minimum level, we need to aim for even higher ROE.
We also believe that, to improve ROE, it is important to practicedisciplined capital management even as we strive for steady andongoing growth in profit. We expect that achieving robust
operating results backed by steady profit growth could positively
impact MUFG’s stock prices via an increase in PER. In addition,
we deem it important to allocate surplus in a well-balancedmanner to both investment for growth and shareholder returns,
including dividends and share repurchases, in a way thatmaintains disciplined capital management.

JP Morgan Chase
and Company

2023/03

Bank of America
Goldman Sachs
Group

300

MUFG
Sumitomo Mitsui FG
BNP Paribas

200

Mizuho FG
Citigroup
HSBC Holdings

100

In fiscal 2022, we were able to divest equity holdings totaling¥154.0 billion thanks to our engagement in intensive dialogue
with corporate clients. This brought the cumulative amount ofequity holdings divested thus far since fiscal 2021 to ¥323.0
billion, making steady progress toward the MTBP target of
reducing such holdings by ¥500.0 billion.
Equity holdings divestment is essential from the perspective of
maintaining robust RWA control as it frees up capital resources.
It also helps reduce financial risk arising from share pricefluctuations. Therefore, MUFG’s stock prices may well bepositively affected by the divestment of equity holdings andresulting reductions in volatility and the cost of capital.

Dialogue with Shareholders andOther Stakeholders
As we aim to help our stakeholders to gain a good overview of
MUFG’s strategic endeavors employing its unique and extensive
business portfolio, we believe that providing them with accurate
and timely explanations of our operations is a matter of importance.
Furthermore, the provision of sufficient information to
stakeholders will lead to the elimination of informational
asymmetry between MUFG and investors, and could possibly
result in reductions in the cost of capital. Accordingly, we are
striving to enhance the content of information disclosure by, forexample, enriching presentation materials. In addition, we alsodeem it important to enhance the content of non-financial
information being disclosed given the growing significance ofsuch information.
In fiscal 2022, we held one-on-one and small meetings tosecure opportunities for dialogue between top management
and investors in Japan and abroad. We also hosted Investors
Day, with presentations by the heads of the seven businessgroups, as well as small meetings hosted by outside directors,
seminars focused on discussing climate change measures,
seminars for individual investors and other events. (Please referto page 31 for details.) As for the disclosure of non-financial
information, we issued the Sustainability Report, the Progress
Report aimed at disclosing progress in our initiatives to realize
carbon neutrality and the Human Rights Report, whichsummarizes our efforts to ensure respect for human rights,
among other publications. In these ways, we strove to enhance
the content of information disclosure.
Dialogue with our stakeholders, including shareholders, investors
and ratings agency representatives often provides valuable
opportunities and insights. Going forward, we will focus on
maintaining such dialogue, stepping up both investor relations(IR) and shareholder relations (SR) engagement with thosecharged with exercising voting rights. Stakeholder opinions areshared among Board members and given due consideration in
the course of business operations and capital management. We
always welcome frank opinions about MUFG.
Having positioned the current MTBP period as “three years of
new challenges and transformation,” we will continue to strive for
improvement in MUFG’s corporate value and the successful
closure of the final year of the MTBP through steady profit
growth and disciplined capital management, thereby achieving ahigher ROE.
We ask for your continuous support in this endeavor.

Going forward, we aim to further divest equity holdings while
engaging in dialogue with our corporate clients to secure
their understanding.

Barclays
Deutsche Bank

025

2013/03

2014/03

MUFG Report 2023

2015/03

2016/032017/032018/03

2019/032020/032021/032022/032023/03

MUFG Report 2023

26

MUFG’s Pursuitof Value Creation
CONTENTS
Value Creation Process ................................................................................................ 2 9Value Delivered to Stakeholders ...................................................................... 3 1
Trajectory of MUFG’s Operations Aligned with Changes in Society .......... 3 3
Message from Kevin Cronin CEO and Regional Executive .................... 3 5for the Americas
MUFG’s Unique Strengths ........................................................................................... 3 7Group Companies’ Comprehensive Capabilities ...................................... 3 8
Strategies in Asia ................................................................................................... 4 1
Alliance with Morgan Stanley ........................................................................... 4 5
Global AM Business .............................................................................................. 4 7

27

MUFG Report 2023

MUFG Report 2023

28

Management Message

MUFG’s Pursuit ofValue Creation

Management Strategies
and Performance

Leadership andGovernance

Financial Data /Corporate Data

MUFG’s Pursuit of Value Creation

Value Creation Process
In line with our Purpose, “Committed to empowering a brighter future.” we work to create value
via business strategies that go in tandem with the pursuit of solutions for environmental andsocial issues, with the aim of becoming the world’s most trusted financial group.

InputsOutcomes

Value delivered to
stakeholders

Financial capital

Results fiscal 2022

Page 31

Financial capital

Deposits ¥213.6 trillion

Profits attributable to owners of parent ¥1.1 trillion

Net assets ¥18.2 trillion

ROE 7.03%

Common Equity Tier 1 capital ratio*1 10.3%

Realize value creation
integrated withmanagement

Human capital
Employees
Approximately 120,000(overseas: 57%)*1
Pages 79–80

Page 37

Group companies’
Comprehensive
Capabilities
A commercial banking
platform encompassing
the ASEAN region
Alliance with
Morgan Stanley
Knowhows of global asset
management businessIntellectual capital
MUFG’s unique strengths
Group companies’
comprehensive capabilities
The broadest product lineup
among financial institutions

Social and relationship capital
A robust customer base,
Japan’s largest of its kind
(Approximately 34 million
individual customers andapproximately 1.1 million
corporate clients)
An extensive network(436 bases in Japan andapproximately 1,600 bases
overseas)
Trustworthy and reliable brandBusiness operations
undertaken byeach segment
Digital Service¥1.3 trillion (fiscal 2023)

7.5% (fiscal 2023),
9% to 10% (medium- to long-term)
Target range 9.5% to 10.0%*1 The finalized Basel III reforms basis, excluding net unrealized
gains on available-for-sale securities

Leveraging MUFG’s
unique strengths*1 Excluding part-time and temporary employees

Page 79

Retail & Commercial Banking

CFO Message

Page 17

Human capital
Ratio of women in management in Japan 19.6%

22% (fiscal 2023)

Number of the Job Challenge programapplicants 2,630

Strengthen engagement with employees

Transform Our
Corporate Culture /Human Capital
Strategy
Page 79

Intellectual capitalStrengthen collaboration withexternal partners

Evolving into a financial and digitalplatform operator

Decision on investment of approximately¥200 billion mainly in Asia

Strengthen andaccelerate value
creation efforts

Social and relationship capital
Number of users of internet banking
9.3 million (fiscal 2022)

Pursue the best mix of face-to-face andonline customer services

DigitalTransformation(DX)
Page 57

Number of branches (the Bank)
327 branches (fiscal 2022)

Japanese Corporate & Investment Banking
Global Commercial Banking

Expand new touchpoints(Online consulting from home, etc.)

Asset Management & Investor Services
Global Corporate & Investment Banking
Global Markets

Natural capital

Page 91

Natural capital
Total energy consumption
volume452,936MWh (fiscal 2021)

Targets and visions

PurposeCommitted toempoweringa brighter future.

Foundations
supporting ourbusiness activities
Page 109

Financed portfolio

Net zero (2050)

Greenhouse gas (GHG) emissions fromown operations
Disclosure of interim targets for fiscal 2025
and 2026

Net zero (2030)

Disclosure of interim targets for 2030
(respective targets for real estate, steel andshipping sectors)

Contribution to
Addressing
Environmental
and Social Issues
Page 61

Publication of MUFG Progress Report and
MUFG Transition White Paper

Improvement in corporate value and the enhancement of each capital category

29

MUFG Report 2023

MUFG Report 2023

30

MUFG’s Pursuit ofValue Creation

Management Message

Management Strategies
and Performance

Leadership andGovernance

Financial Data /Corporate Data

MUFG’s Pursuit of Value Creation

Value Creation Process

Value Delivered to Stakeholders
To secure sustainable growth and enhance its corporate value, MUFG proactively engages incommunications with stakeholders and takes heed of their expectations and requests regarding
improvements in its business management.

Customers and partners
Policies for initiatives
Deliver both financial and non-financial solutions to help
customers resolve challenges they are confronting
through business operations that precisely align withchanges in the business environment and leverage
MUFG’s strength

Communities and society

Examples of Activities Aimed at Delivering Value to Stakeholders
Initiatives
Pages 93-106

Initiatives of each business group ngagement with customers for decarbonization based on collaborationEwith external partners: Approximately 1,500 corporate clients at home
Page 71
and abroadCustomer feedback volume: Approximately 180,000 instances,*1 including
214 inputs utilized to improve services*1 The Bank, the Trust Bank, MUMSS, NICOS and ACOM

Initiatives

Policies for initiatives

Number of dialogues held with NPOs/NGOs: 27

Serve as a component of the financial infrastructure
supporting society by offering stable funding andmaking our solid operations and systems available tocustomers while contributing to the social transition todigital technologies

Response to aging population & low birthrate

Future generations
Discover opportunities from the pressing need to solve
environmental and social issues, thereby becoming apioneering company blazing a path into the coming era

MUFG Colleagues
Policies for initiatives
Promote corporate culture reforms focused on “speed”
and “new challenges” by winning employee empathy
toward “Corporate Transformation” via dialogue

Initiatives

31

Page 66

Financing for infrastructure and energy related projects is more likely to bring stablerevenue even amid economic fluctuations. MUFG has long been a market leader in thisfield. In recent years, we have realized both robust balance sheet control and higher fee
income through project financing by, for example, proactively promoting the Origination& Distribution business*1 and offering interest rate hedges with higher added value toour clients.
Deal members at groundbreaking
ceremony*1 A business model selling syndicated project finance assets to institutional investors and others

Promoting sustainable businesses

Page 68

Disclosure based on TCFD recommendations

MUFG
Colleagues

Pages 69-73

Initiatives
Human capital management

Pages 79-80

 umber of employees who applied for Job Challenge, an in-house job-postingN
program: 2,630, the ratio of applicants transferred to desired positions via the
Page 82
program: 44%
MUFG Way Employee Sessions, MUFG Way Boost ProjectSpark X—new business incubation program

MUFG

Group CEO Joins with Employees from Three Group Entities in Indonesia
in a Town Hall Meeting, Engaging in Vigorous Discussions

To improve employee engagement, we have been proactively holding town hall meetings
attended by officers in Japan and overseas. For the same purpose, a growing number of
departments and branches have recently taken the initiative of hosting roundtable talks
and other events.

Page 87

Pages 89-90
Page 32

Initiatives
 umber of attendees at the General Meeting of Shareholders: 758 (a total of 1,516
Nshareholders watched the meeting online)

Policies for initiatives

 umber of presentation meetings held for institutional investors and analysts: 7
N
Pages 109-111
Dialogue between outside directors and institutional investors

MUFG Report 2023

In June 2022, MUFG signed a project finance agreement to support the expansion of
New Terminal One at John F. Kennedy International Airport in New York City, in the UnitedStates. Acting as Financial Advisor as well as the Lead-Left Bookrunner, MUFG closed thisdeal totaling USD6.6 billion (approximately ¥880.0 billion), which will support a major
infrastructure development project aimed at expanding one of the largest international
gateway airports in the United States handling traveler traffic from around the world.

 articipation in climate change-related initiatives and the dissemination ofP
Page 67
MUFG’s opinions

Number of shareholders Approximately 910,000

Maintain highly transparent information disclosure andengagement in constructive shareholder dialogue whilereflecting shareholder feedback in business management
and strategies

The John F. Kennedy Airport Expansion Project in New York City,
the United States

Looking ahead, we will continue supporting projects that empower our stakeholders, byleveraging our world-leading specialist expertise, extensive experience, and our robust
global network.

Town hall meetings attended by top management members

Shareholders and investors

MUFG

In recognition of the initiatives described above, MUFG was chosen in 2022 as “Global
Bank of the Year” by Project Finance International (PFI), a leading publication company inthe project financing industry.

Pages 127-128

Cyber security-related initiatives

Moving towards Carbon Neutrality

Policies for initiatives

Page 77

 upporting business efforts and innovation-oriented endeavors aimed at
SPage 78
resolving social issues

Communities
and society umber of individual meetings with institutional investors: 359 (215 meetings withN
overseas investors)
 umber of online seminars held for individual investors: 4 (a cumulative total ofN
3,200 viewers)

In September 2022, President & Group CEO Kamezawa flew to Indonesia to host a town
hall meeting. Approximately 200 employees from three Group entities—the Bank’s
Jakarta Branch, Bank Danamon, and Adira Finance (a subsidiary of Bank Danamon)—gathered at the venue.
Over the past decade, MUFG has placed utmost emphasis on executing investment in
the country due to its high economic growth rate, with the acquisition of Bank Danamon
being a prime example of this focus. While addressing attendees at the meeting, Mr.
Kamezawa spoke in the Indonesian language to share MUFG’s Purpose of being“Committed to empowering a brighter future.” He communicated a powerful message
with regard to his expectations for the concerted dedication of staff at three Group
entities to work as One Team to empower a brighter future for Indonesia.

A town hall meeting held at Bank Danamon

Also, a variety of questions from employees were addressed, encompassing such topics
as diversity, equity & inclusion (DEI) and MUFG’s digital transformation (DX) strategy. The
meeting was thus successful in improving employee engagement. Following the event,
Mr. Kamezawa paid visits to neighboring Group bases and local financial authorities,
attracting the attention of local media, with his activities covered in multiple news stories.
In this way, his travel to Indonesia helped demonstrate MUFG’s commitment to supporting
Indonesia’s development.

MUFG Report 2023

32

Management Strategies
and Performance

MUFG’s Pursuit ofValue Creation

Management Message

Leadership andGovernance

Financial Data /Corporate Data

MUFG’s Pursuit of Value Creation

Trajectory of MUFG’s Operations Aligned with
Changes in Society
Striving to remain a trustworthy partner for all our stakeholders,
we have pursued mutual and sustainable growth in tandem with customers
while aligning our business strategies with the changes of the times.

1656–

2005–

2012–

2020–

Hard-earned trust backed by a history
spanning more than 360 years anda robust customer base

MUFG inaugurated
Strengthened investmentbanking operations

Enhanced our presencein the ASEAN region

Started to take on
the challenge ofbusiness model reforms

1656• Konoike Exchange Bureau

2005• MUFG inaugurated

2013• Conversion of Bank of

2020• Capital and business alliance with Grab

opened in Osaka (Precursor of
Sanwa Bank founded in 1933)

1927• Mitsubishi Trustestablished2007• Mitsubishi UFJ NICOS

Mitsubishi UFJ Trust and Banking,Mitsubishi UFJ Securities
inaugurated• Kawasaki Trustestablishedinaugurated

2008• Strategic alliance with

1941
• Tokai Bank establishedSource: Konoike Limited Partnership
Company

1880• Mitsubishi Exchange Houseestablished by Yataro Iwasaki(Precursor of Mitsubishi Bank
founded in 1919)

Ayudhya (Krungsri), a majorcommercial bank in Thailand,
into a subsidiary

Morgan Stanley

2016• Capital and business alliancewith Security Bank Corporationin the Philippines

Holdings Inc.

2021
• Established the MUFG Way (renamed from2019
• Conversion of Bank Danamon,

2022¥1,116.4
billionCorporate Vision)• Launched the Digital Service BusinessIndonesia, into a subsidiaryGroup, transitioning to a seven-businessgroup structure

1948• Yachiyo Securities• Announced the MUFG Carbon Neutrality
Declaration

established1959• Toyo Trust and Banking

2006• Bank of Tokyo-Mitsubishi UFJ

establishedalliance with Vietnam Joint
Stock Commercial Bank for
Industry and Trade (VietinBank),a national bank in Vietnam• UnionBanCal Corporation
became a wholly owned
subsidiary of MUFG

(now MUFG Bank) inaugurated• ACOM became a subsidiary of
MUFG (JGAAP only)• Yokohama Specie Bank

established (Precursor of The
Bank of Tokyo founded in 1946)

2022• Sold MUFG Union Bank• Decided investment of approximately ¥200

• Capital and operational• Conversion of Australia-based
asset manager First Sentier
Investors into a Subsidiarybillion in digital finance field in Asia

2015
• Moved to a “company with2010
• Mitsubishi UFJ Morgan Stanley

three committees” structure

Securities, Morgan Stanley
MUFG Securities inaugurated

Source: The
Mitsubishi Archives

Source: Kanagawa
Prefectural Museumof Cultural History

Overseas
17%

Overseas30%

Overseas41%

Composition*1 of Customer-Segment Profits*2

Changes in Profit
Composition*1 Percentage figures of overseas consist of profits earned byoverseas operations under the supervision of the Integrated
Corporate Banking Business Group for fiscal 2006, profits
earned by the Integrated Global Business Group for fiscal 2013and profits earned by GCB and GCIB for fiscal 2022
*2 Customer-segment net operating profits

Fiscal 2006

Fiscal 2013

Domestic
83%

Trends in Profits

Fiscal 2022

Domestic
70%

Domestic
59%

Profits attributable toowners of parent(billions of yen)

2005

2006

2007

2008

2005

• Transition to limited deposit guarantee

Economic andSocial Trends“payoff” scheme in Japan2006• The Bank of Japan (BOJ) terminated zerointerest rate policy

2008

2009

2010

2010

• The debt crisis emerges in Europe
2011• The Great East Japan Earthquake

2011

2012

2013

2014

2012

• The Abenomics stimulus
package initiated2013• The BOJ introduces quantitativeand qualitative monetary easing
policies

2015

2016

2016

• The BOJ introduces a negativeinterest rate policy and yield
curve control

2018

2017

2018

2019

2020

2021

2022
(FY)

2020

• The COVID-19 pandemic emerges
2022• Russia-Ukraine conflict erupts• U.S.-China trade Friction• Financial crisis triggered by Lehman Brothers
33

MUFG Report 2023

MUFG Report 2023

34

Management Message

MUFG’s Pursuit ofValue Creation

Management Strategies
and Performance

Leadership andGovernance

Financial Data /Corporate Data

MUFG’s Pursuit of Value Creation

Trajectory of MUFG’s Operations Aligned with Changes in Society

Message from Kevin Cronin
CEO and Regional Executive
for the Americas

Kevin Cronin
CEO and Regional Executive for the Americas
Global Executive of Corporate and Investment Banking for the Americas
and EMEA
Co-International Supervision Executive of Capital Markets

Profile: Kevin Cronin is CEO and Regional Executive for the Americas from 2021. He joined MUFG in 2011 as the Head of what is now Global
Corporate and Investment Banking in the Americas.
Prior to joining MUFG, Mr. Cronin spent more than 20 years at Bank of America and its predecessor firms, where he held senior roles
leading U.S. corporate banking, transaction banking, and loan syndications.
Mr. Cronin began his career at Union Bank as a middle-market commercial loan officer.

MUFG Americas: Focused on the Future, Strengthened by History
Collaborating with Purpose
The theme that resonates most with me is “Collaborating with
Purpose.” In the Americas, we’ve set a new strategic course forthe next several years. One of the underlying principles of ourstrategy is increased global and regional collaboration to realize
the full value of our franchise. Our future growth is dependent
upon colleagues understanding and leveraging the full range
capabilities that MUFG offers in service to our clients.
For more than 360 years, MUFG has been a consistent, reliable
partner for businesses navigating times of change—and today
is no different. The Americas region is in the midst of navigating
its own period of transition. We are at a critical but exciting
juncture in our history as we shift to a new operating model in
the Americas focused on becoming a world-class debt house.
In September 2021, MUFG entered into a definitive agreementwith U.S. Bancorp to sell MUFG Union Bank’s core regionalbanking franchise in the U.S. The sale of our retail banking
franchise, which was established in 1864 in San Francisco as
The Bank of California, was a pivotal moment in our company’s
history. As several foreign banking organizations operating in
the U.S. have done in recent years, MUFG came to therealization that the greatest opportunity for growth is inwholesale banking. To fully focus on growth in wholesale, it wasnecessary to exit retail banking operations in the U.S. While it
was a difficult decision to sell one of the cornerstones of ourfranchise, we are now focused on becoming a premiercorporate and investment bank with industry-levelspecialization in high growth sectors.

35

MUFG Report 2023

With the majority of the transition of MUFG Union Bank to U.S.
Bancorp completed, we have set a new strategic course for the
future: leverage our core strengths in corporate and investmentbanking through a groupwide, integrated business approach todeliver results for our clients and colleagues. While there aremany unique business segments, diverse geographies, andgroup companies across Latin America, Canada and the U.S.,
our aim is for clients to experience MUFG as an integrated
global financial institution working tirelessly on their behalf.
Business Line Focus and Areas of Strategic Growth
Following the close of the sale of MUFG Union Bank, our key
businesses lines now include: Global Corporate and Investment
Banking; Global Markets; Japanese Corporate Banking; andAsset Management & Investor Services. Some of our key
products include debt capital markets, structured lending,working capital solutions, transaction banking, fixed income
markets, and corporate advisory.
Going forward, we have an incredible opportunity to leveragewhat we have built over the last decade in the Americas,
including our strong client franchise, large relationship credit
book, deep sector expertise, and an incredible talent base.
To further grow the business, we will strategically expand ourbusiness model, such as with the continued shift of our lending
activities from investment grade to more specialized leveraged
finance products. We will realize the full potential of ourplatform through closer collaboration between our banking andsecurities businesses, which will accelerate our transformation

to be a world class debt house, serving the financial needs ofour most sophisticated global corporate and financial
institution clients.

critical driver of our business outcomes, as well as formeeting our Purpose: “Committed to empowering abrighter future”

Specifically, we will focus on the following areas to grow andfurther integrate our businesses over the next few years:

In addition to growing our revenues, we will be deliberate onaligning our back and middle office functions with ourwholesale-focused business model and ensure we are creating
capacity to invest in areas that will expand and enhance thecapabilities we bring to our clients, as well as to improve overallprofitability.

• Integration of Global Corporate and Investment
Banking and Global Markets
Several years ago, we began integrating our Global
Corporate and Investment Banking and Global Markets
businesses to provide a more seamless client coveragemodel. In the coming years, we will continue on this pathand prioritize investments in areas such as leveraged
finance sales and trading, which is a key to realizing thefull value of these businesses.
• Middle Corporate Expansion: The U.S. middle-market
corporate segment represents a significant opportunity
for national growth. We will expand our client-centric
strategy to bring specialized industry and sub-sector
expertise across our direct lending, advisory, markets andtransaction banking product suite. We will also focus on
sectors that are driving economic growth such astechnology, healthcare, and diversified industries.
• Product and Coverage Opportunities: Transaction
Banking products and services will be deployed across all
businesses. We will focus on our deposits, commercial
card, and integrated payment offerings, seeking bothpartner and expansion opportunities as we move ahead.
In addition to Transaction Banking, we will invest in otherproduct capabilities to capture incremental client revenue,
such as rates, foreign exchange, and secondary tradingflows. In addition, we will increase our focus in areas suchas ESG, where we are looking to achieve our goals
pledged through our Carbon Neutrality Declaration.

Looking to the Future
We operate in one of the most attractive and stable markets inthe world with the largest—and one of the fastest growing—fee
income opportunity pools. Over the past decade, our wholesale
businesses have proven their ability to grow and successfully
navigate in an ever-changing global landscape. There’s alsosignificant opportunity for the Americas region to increase
wallet share by improving our client coverage model,
enhancing our product integration, and working together in an
integrated manner not only in the region but throughout our
global network.
Additionally, having taken on the role of Global Executive ofCorporate and Investment Banking for the Americas and EMEA,
and Co-International Executive of Capital Markets for Americas
and EMEA as of April, my mandate is to further integrate ourbanking and securities businesses, optimize our businessmodel, streamline decision making, and improve profitability
and resource management.
Across the MUFG franchise, the Americas will continue toenhance our client-centric strategy and unlock a more
aspirational plan to further expand our presence in the global
market, and continue to drive the growth for MUFG.

• Partnership with Morgan Stanley: With a renewed focus
on wholesale banking, we will continue toopportunistically expand our strategic partnership todeliver best-in-class execution to our client base. We willcontinue to focus on business collaboration through the
Loan Marketing Joint Venture,*1 while looking to increasecombined efforts in the non-investment grade space.
*1 Joint venture established between MUFG and Morgan Stanley in June 2009
for promoting lending and capital markets services in the Americas. Since
the LMJV’s inception, MUFG and Morgan Stanley have jointly provided
commitments for numerous transactions.

• Maintain our Strong Culture: We are committed toensuring that our unique culture is preserved, and we willleverage our established Culture Principles to drive higher
performance and returns through exceptional client
service. Diversity, equity & inclusion will continue to be a

MUFG Report 2023

36

Management Message

MUFG’s Pursuit ofValue Creation

Management Strategies
and Performance

Leadership andGovernance

Financial Data /Corporate Data

MUFG’s Pursuit of Value Creation

MUFG’s Unique Strengths
Striving to remain as a trustworthy partner for all our stakeholders, we have pursued
mutual and sustainable growth in tandem with customers while aligning ourbusiness strategies with the changes of the times.

A Robust Structure Supporting the Provision of Optimal Financial Services

Group Companies’ Comprehensive Capabilities
pages 38–40

We provide customers with optimal solutions backed by a full lineup of financial services,
including banking, trust banking, securities, credit card and consumer finance.
Delivering diverse financial
services to an unparalleledcustomer base, Japan’slargest of its kind

Approx.
Approx.

34
1.1

MUFG Bank

Example of leveraging Group Companies’ Comprehensive Capabilities

million corporate clients
Strategic alliance

Morgan Stanley*1

Trust banking

Securities

Mitsubishi UFJ Trust andBanking Corporation

Mitsubishi UFJ Securities
Holdings

Mitsubishi UFJ Kokusai
Asset Management

Mitsubishi UFJ Morgan
Stanley Securities

A commercial banking
platform encompassing
the ASEAN region

Krungsri(Bank of Ayudhya)

Bank Danamon

Credit card andconsumer finance

ACOM

Global AM business

Morgan Stanley
MUFG Securities*1

First Sentier Investors(FSI)

Over the course of seven years
since 2013, we have invested incommercial banks in Thailand,
Indonesia, Vietnam and thePhilippines. Moreover, we havestarted investing in digitalfinancial players, beginning with
Grab in 2020.

37

MUFG Report 2023

MUFG provides large-sized finance to its clients leveraging
O&D (Origination & Distribution) business model. The Bankand Securities work together to provide various financing

solutions such as loans and bonds as a package anddistribute such assets to institutional investors, whichenables efficient balance sheet management.

Global AssetManagement (AM)Business
page 47

In 2019, we made a strategic
investment in FSI, an Australiabased asset management firmin order to strengthen our global
AM business.

[Example] The Bank, Securities and Krungsri closed Green Finance forrenewable finance projects
MUFG arranged an AU$ 495 million green loan for RATCHAustralia Corporation (RAC), a renewable energy company
based in Australia. MUFG was able to execute the deal
through Krungsri’s strong relationship with RATCH Groupparent company of RAC based in Thailand.

*1 Equity-method affiliate

pages 41–44

Finance Support through collaboration between the
Bank and the Securities

Mitsubishi UFJ NICOSMUFG Investor
Services Holdings

Strategies in Asia

Taking a groupwide, cross-regional approach, we will leverage
our robust customer base, the largest of its kind in Japan, torealize our commitment to empowering a brighter future.

million individual customers

Mitsubishi UFJ Financial Group, Inc.
(MUFG)

Banking

MUFG boasts a full lineup of financial solutions, includingbanking, trust banking, securities, credit card and consumer
finance. Taking a customer perspective-based approach, eachGroup company draws on its distinctive strengths and insights
in its area of specialty and acts in collaboration with colleagues
in other Group companies to provide customers with financial
services optimized to meet their needs.

Alliance with
Morgan Stanley
pages 45–46

Since 2008, we have maintained astrategic and capital alliance with
Morgan Stanley. While focusing on
investment banking operations, ouralliance with this partner is now
expanding to encompass wealthmanagement and AM/IS. Developing
new stages of collaboration.

In this deal, the Bank provided various solutions not only
loans but also interest rate swap and operating accountservices, while the Securities team offered DCM solutions.
Leveraging the Group’s various financial solutions acrossentities and Partner Banks’ strong relationship with the client,
MUFG was able to address and respond seamlessly toclient’s financing needs.

StrongRelationship

Loan
Novation Swap
Accounts

Clients

MUFG Bank

DCM
Solution
MUFG Securities Asia

Collaboration

MUFG Report 2023

38

Management Message

MUFG’s Pursuit ofValue Creation

Management Strategies
and Performance

Leadership andGovernance

Financial Data /Corporate Data

MUFG’s Pursuit of Value Creation
MUFG’s Unique Strengths

Developing the MUFG Wealth Management
Business Targeting the High Net-worth by
Leveraging Comprehensive Capabilities
Afforded by a Groupwide Collaboration
Market Opportunities Now Available to the MUFG Wealth Management Business
MUFG has positioned its wealth management (WM) business,
which leverages the comprehensive capabilities afforded by theGroup, as a key component of Strategies for Growth. Today, themarket for financial services targeting the high net-worth isexpanding in Japan. We will leverage a groupwide, integrated
approach in which the Bank, the Trust Bank and the Securities
work in collaboration, with the aim of addressing the diverse
issues our customers are now confronting to help them manage
their invaluable assets.
We believe that, in the coming era, customers will expect
financial institutions to help them realize more affluent lives and“to protect, relay and expand” wealth they have accumulated sothat this wealth is securely passed down to the next generation.
Accordingly, through the MUFG WM business, we aim to be apartner worthy of being entrusted with our customers’ present
and future. To this end, we strive to fully understand eachcustomer’s life goals and help them achieve such goals by
providing professional advice. Specifically, we focus on a
profiling approach that examines a diverse range of information
regarding that customer’s past and present status as well as their
aspirations for the future to understand their needs comprehensively,
identify issues that should be addressed and propose solutions
for such issues.

Town Hall Meetings Addressing Collaboration among the Bank, the Trust Bank and the Securities

above profiling amounts to ¥120 trillion. This profiling also
confirmed that the value of capital held by corporate clients ofour WM business total ¥150 trillion. To serve this market, we areleveraging MUFG’s unique and comprehensive capabilities
backed by Group companies to develop the WM business.
Overview of our strategy
Expand clients by our comprehensive capabilities
Protect

MUFG’s WM Unit*1 holds periodic town hall meetings to step up
collaboration among the Bank, the Trust Bank and the Securities
and to help employees in charge of WM develop a sense offamiliarity with top management leaders. With the first roundheld in March 2020, these town hall meetings marked the sixthround in October 2022.
In this round, after the head of the WM Unit delivered his message,a roundtable talk attended by the head and deputy heads of theunit as well as branch staff from the Bank, the Trust Bank and the
Securities was held and livestreamed. The roundtable talk focusedon collaboration among Group companies, with participants fromthe Bank, the Trust Bank and the Securities sharing their bestpractices. In addition, branch employees posed various questions
to the head and deputy heads of the WM Unit, for example,“Although Group companies now seem to engage in closer
collaboration than before, in what ways will this collaboration
develop going forward?” and the unit managers did their best to
provide sincere and thoughtful answers.
Also, one branch employee asked the head and deputy heads ofthe unit to specify what they thought was MUFG’s most notablecompetitive strength compared with other financial institutions.
As summarized below, their responses were heartfelt and vigorous.

High net-worth in Japan
MUFG WM clients
Profiling amountCorporate
Retailcapitalamount ofvalue
profiling¥150 trillion ¥120 trillion
ExpandRelay

Currently, the total value of assets possessed by individual
customers of the MUFG WM business and identified via the

A town hall meeting attended by the head and deputy heads of the WM units as well as branch staff from the Bank,
the Trust Bank and the Securities

Collaboration with Morgan Stanley in the Use of Our WM Digital Platform and Other Endeavors
In the United States, Morgan Stanley (MS) has greatly expanded
its WM business. MUFG is engaged in collaboration with andutilizes insights afforded by MS in diverse areas, ranging fromthe WM digital platform and other digital technologies to asset
management and human resource development.
Released in February 2022, the WM digital platform was designed
to materialize MUFG WM business via the use of MS’s insights.
This consolidates customer profiling data and enables us todeliver high-value-added services through the provision of timely
and appropriate advice to customers based on the overall statusof their assets. In particular, this platform currently makes
possible our groupwide, integrated approach to accommodate
business succession needs among business owners and asset
succession needs among high net-worth customers.

39

MUFG Report 2023

In fiscal 2022, we hosted the MSWM Forum for the first time inthree years. The forum’s purpose is to update our WM digitalplatform and strengthen the proposal capabilities of sales
personnel via the sharing of insights. With MS’s headquarters
division managers and staff in charge of the super-high networth customers invited to Japan, the forum involved roundtabletalks focused on how to effectively utilize the WM digital platform
and how to employ a goal-based approach in delivering
proposals. In addition, we exchanged opinions with these
individuals regarding WM strategies, asset management andhuman resource development.
Our partnership with MS provides the MUFG Group withadditional strength and we strive to take full advantage of thecomprehensive capabilities afforded by the Group in executing
the WM business.

Deputy head of Trust Bank WM Unit: “MUFG’s most notablestrength derives from equal partnerships among the Bank, theTrust Bank and the Securities. In addition to promoting the active
exchange of human resources, we have a partnership structurein which employees from differing Group companies are able tolearn about one another’s culture and work together to achieve
greater results.”

Head of Bank WM Unit: “What MUFG will look like in the next
decade hinges on the dedication of each one of us as we
steadily move forward toward realizing our ideals regarding what
our own lives and our relationships with customers should look in
a decade. I would like everyone to acquire know-how frompartners within and outside the Group and accumulate skills to
empower our customers.”

Deputy head of Securities WM Unit: “MUFG’s strength lies in
its solution capabilities and customer base. Also, thanks to ouralliance with MS, we are the only partner allowed to utilize its
know-how. Furthermore, the combination of the WM digitalplatform and other technologies with our advisory capabilities
lends us another distinctive strength. I believe that bythoroughly utilizing these strengths, we will set ourselves apartfrom other companies.”

Looking ahead, we will provide customers with solutions backed
by a groupwide, integrated approach through the sharing of knowhow and the exchange of opinions among Group members.
*1 The WM Unit refers to a groupwide organizational unit encompassing the Bank, theTrust Bank and the Securities

MUFG Report 2023

40

Management Message

Management Strategies
and Performance

MUFG’s Pursuit ofValue Creation

Leadership andGovernance

Financial Data /Corporate Data

MUFG’s Pursuit of Value Creation
Strategies in Asia

Seizing Opportunities Arising from Asia’s
Economic Growth by Accommodating a
Broad Range of Expanding Financing Needs

Overview

Establishing the Commercial Banking Platform
In addition, in November 2022, MUFG announced its decision toacquire the Indonesian and Filipino subsidiaries of Home
Credit, which provides Point of Sales (POS) loans and otherservices. Furthermore, MUFG invested in Akulaku, a provider of
Buy Now Pay Later (BNPL) and other digital-driven financial
services, and DMI Finance, an India-based company handling a
digital lending business for consumers, in December 2022 andApril 2023, respectively.

MUFG has positioned Asia as our second “home market” and has
been proactively pushing ahead with investment in the ASEAN
region with the aim of capturing opportunities arising from theregion’s burgeoning economic growth. To date, MUFG has
invested in four commercial banks in Thailand, Indonesia,
Vietnam and the Philippines, completing the development of an
extensive commercial banking platform encompassing ASEAN
countries in April 2019. Based on this platform, we have striven todeliver solutions unique to MUFG while helping each partnerbank enhance its corporate value.

At the same time, we have been extending financing assistanceto startups. In August 2020, in tandem with the Israel-based
Liquidity Capital we established Mars Growth Capital and the
new company has since tackled AI-based startup financing.
(Please also refer to an article titled “Mars—Supporting Startups
via the Use of AI Technologies” featured on page 60.) In March
2022, we also established Ganesha Fund, which aims to invest
in Indian startups, and, in January 2023, we launched Garuda
Fund, through which we aim to pursue synergies with Bank
Danamon. Going forward, we will strive to seize opportunities
arising from Asia’s digital-driven financing needs that havebecome ever stronger but cannot be met by conventionalcommercial banks.

On the other hand, the use of conventional financial services has
yet to become widespread in the region. Meanwhile, fintech
companies and others providing digital-driven financial services
powered by data and AI technologies are rapidly growing
businesses. These companies accommodate financing needs
among the underbanked and unbanked individuals as well as
SMEs with the potential to become bank customers, thus
accelerating the trend of financial inclusion. Against thisbackdrop, MUFG signed a capital and business allianceagreement with Grab Holdings, one of the ASEAN’s leading
digital platform operators, in February 2020, with the aim of
securing the ability to provide next-generation financial services.

Since becoming MUFG’s subsidiary in 2013, Thailand based
Krungsri has achieved remarkable profit growth at a pace that
outstrips the growth recorded by any of the top four local banks
in terms of total assets. Furthermore, Krungsri has been
designated as a D-SIB in light of its significance to Thailand’s
financial system and is recognized as one of the country’s
top-tier banks. In sum, Krungsri has been empowered bycollaborative efforts involving MUFG to acquire new service
functions and thereby achieve growth.
Comparison of Profits
Krungrsi

Indonesia

The Philippines

Vietnam

Corporates

Commercial
bank

Commercial
bank

Commercial
bank

Commercial
bank

Securities
firm

30

33.9
10

2013 2014 2015 2016 2017 2018 2019 2020 2021 2022
After
investment

(FY)

2019

5.9
2022

(FY)

2019

2022

(FY)

*1 Current account and savings account (CASA)

After the integration of Bangkok BranchAble to cover a wider range of transaction needs by
MUFG-Partner Bank collaboration

Non-bank

Conventional model

Middle-mass
Offline stores,
POS loans, etc.
E-commerce,
BNPL, etc.

Suppliers
Non-bank,
POS loans, etc.

MUIP
Garuda Fund

Investment fund for startups

End productmanufacturers
Distributors

Finance to startups through AI based credit model (fintech)
*1

MUFG

MUFG
Ganesha Fund

Purchasers

We are also striving to facilitate collaboration between partnerbanks, to this end hosting the annual MUFG Global Partnership
Conference attended by top management from each partnerbank to discuss how to resolve the universal issues these banks
are confronting.
In 2022, the latest round of this conference involved presentationsdelivered by the top management of each partner bank regarding
digitalization and sustainable financing initiatives they are now
undertaking. Moreover, attendees engaged in vigorous
discussions to exchange their thoughts regarding possible
solutions to various challenges each bank is confronting.

MUFG-Partner Bank Collaboration
Suppliers
MUFG
Partnerbank

End productmanufacturers
Distributors
Purchasers

Employees

On-demand transport
services, food delivery, etc.

Digital finance investments

Approx.
x6

Comprehensively meetingcustomer’s transactional needs

Individuals

Non-bank

Startups

37.6

Approx.
x4

In the past, MUFG’s traditional business in the region has mainly
involved end product manufacturers, while Krungsri had
focused on transactions with SMEs and individual customers.
Today, however, synergies created by collaboration with MUFG
has enabled Krungsri to cover a wider range of transactionneeds, from SMEs, including suppliers and distributors, topurchasers and employees. These services are highly
appreciated by customers.

Capital
NomuraSecurities

Unbanked(Billions of yen)

144.1

India

Large
corporatesHigh
Net-worth

Balance of Synergy Low-Cost
Deposits*1(Billions of yen)

*1 Bangkok Bank, Krung Thai Bank, Siam Commercial Bank and Kasikorn Bank

Thailand

SMEs

Synergy Loan Balance

TOP 5 banks(D-SIBs)

50

Prior toinvestment

Business Portfolio in Asia

Collaboration between MUFG Bank and Bank Danamon

Average of top 4 banks*1(Billions of THB)Bank Danamon, which became a consolidated subsidiary of
MUFG in 2019, has similarly striven to establish a strong
collaborative business structure with MUFG. Specifically,collaboration among MUFG Bank’s Jakarta Branch, Bank
Danamon and Adira Finance (the latter’s auto loan subsidiary)
resulted in the successful closing of deals involving acquisition
financing and developer loans. In fiscal 2022, the balance ofsynergy loan thus increased approximately fourfold from thefiscal 2019 level, while the balance of low-cost deposits has
expanded around sixfold.

Investment in startups
Annual MUFG Global Partnership Conference with Partner Banks*1 MUFG Innovation Partners

41

MUFG Report 2023

MUFG Report 2023

42

MUFG’s Pursuit ofValue Creation

Management Message

Management Strategies
and Performance

Leadership andGovernance

Financial Data /Corporate Data

MUFG’s Pursuit of Value Creation
Strategies in Asia

Investment in Digital Financial Players
Background of Our Strategies
In the ASEAN region, a great number of people are categorized
as underbanked or unbanked.
Through strategic investment in the digital-driven financial
service field, MUFG aims to contribute to financial inclusion andmultilaterally seize opportunities arising from growing financing
needs in the region while strengthening its local commercial
banking platform via the use of digital technologies.
Proportion of underbanked and unbanked individuals inSoutheast Asia
Southeast Asia adult population (2018)

Banked:Well-served in financial
services needs

18%

Underbanked:
Not well-served in financial
services or have unmet needs

50%

Unbanked:
No access to basic financial
services (a bank account)

24%

51%
45%

26%
SEA

65%

69%

37%

Thailand

23%

13%
22%

10%
21%

Collaboration Between Each Partner Bank and Grab
Financial productdevelopment
capabilities

Advanced
Al technology

Super AppOne of the largest
One of the largest
financial footprints
unicorns inin Southeast Asia
Southeast Asia
Strategic partnership agreement in Feb 2020

Risk management

43

MUFG Report 2023

Various unique data
Accelerate innovation(BDI subsidiary)
Acquisition cost of approx. ¥87 billion in 2023

Example of Collaboration Between MUFG and Partner Banks(Acquisition of Home Credit Subsidiaries)

Dan Harsono
Senior Advisor at Krungsri
Advisor at MUFG
Commissioner at Bank
DanamonMy role is to promote greater collaboration amongst MUFG
and its partner banks (PBs) in the ASEAN region as a Senior
Advisor at Krungsri and MUFG and a Commissioner memberof Bank Danamon. Prior to the current position, I was the
Head of Krungsri’s Retail & Consumer Banking. With many
years of work experience in ASEAN market, I believe myknowledge and insights could contribute to the collaborationand synergy among MUFG and its PBs.

Indonesia Philippines Vietnam

Investment in Grab
In February 2020, we entered into a capital and businessalliance agreement with Grab Holdings, a leading super app
company that handles ride-hailing, food delivery and otherdigital-based services in the ASEAN region. This alliance isintended to further enhance MUFG’s commercial banking
platform encompassing the region via digitalization. We are
currently promoting collaboration involving each partner bankand Grab to deliver next-generation financial services backed
by the combination of MUFG’s strengths in financial knowledge
and know-how with Grab’s advanced technologies and data
management expertise.

Financial inclusion

Home Credit’s subsidiaries have high brand recognition andcustomer satisfaction. Especially they have dominant market
shares in terms of POS loans in their respective countries and weare continuing to reinforce and expand our retail businesses.
Investment in Home Credit

26%* Population of individuals above age 18
Sources: Euromonitor, Word Bank, Bain and Temasek

Creditstrength

Recent Investment in Digital Financial Players
In November 2022, MUFG announced its decision to acquire
the Indonesian and Filipino subsidiaries of Home Credit, aconsumer finance company headquartered in the Netherlands.
Home Credit provides POS loans and other lending services
that enable customers to complete the process of loan
application, execution, and collection seamlessly through thesuperior user interface (UI) and user experience (UX) of its app.
Home Credit also has advantages in conducting precise andfast credit screening through its utilization of both internal andexternal data and its distinct screening model.

Create new employment
opportunities

Philippine subsidiary

Indonesian subsidiary• No. 1 share in POS loans in both countries• Strengths in digital areas including apps andcredit screening model

In December 2022, MUFG invested in Akulaku, a provider of Buy
Now Pay Later and other services mainly in Indonesia. In
Indonesia, where the penetration rate of financial services are
low, Akulaku’s services are rapidly becoming an essential part of
the financial infrastructure assisting consumers in purchases atoffline and online stores.
In April 2023, MUFG invested in DMI Finance, an India-based
non-bank player that provides fully digitalized personal loans and
POS loans where the entire application and origination process iscompleted online. The company also has an edge in providing
services to underbanked/unbanked individuals receiving credit
for the first time.
MUFG is striving to seize opportunities arising from growing
needs for digital-driven financing by investing in these andother players.

Acquisition of HC Consumer Finance Philippines and Home
Credit Indonesia*1 is a great example of the collaboration among
MUFG and PBs. Krungsri worked very closely with MUFG and
PBs including Adira Finance and leveraged each party’s uniquestrengths to successfully deliver the optimal outcome.
MUFG helped design an M&A structure that would satisfy
regulatory requirements and meet the seller’s and buyer’s
objectives. Krungsri took the lead on due diligence andnegotiations with the seller. Adira Finance provided input
from the Indonesian regulatory perspective and supported
the communication between parties and regulators including
the OJK (Indonesia Financial Services Authority) and Bank
Indonesia. Through close communication with PBs and
MUFG, we were able to adopt various approaches to resolve
challenges facing the deal.
By executing this strategy, we aim to strengthen our businessin the ASEAN region through collaboration and synergy with
MUFG and PBs, which will benefit all stakeholders.

*1 Home Credit Indonesia is currently in the process of acquiring shares

Investment in Startups
In addition to investing in digital financial players, MUFG isengaged in investment in startups supporting the trend toward
digitalization in Asia.
We launched the MUFG Ganesha Fund in India to invest US$ 300
million for local startups in response to rapid growth in thenumber of startups leveraging digital technologies and expertisein the country. This investment framework mainly invests in
middle- to late-stage startups to utilize our group strengths byproviding a wide range of financial services to our portfolio
companies. The Ganesha Fund has already invested in threecompanies and will continue expanding financial assistance tostartups in India by supporting their growth and accommodating
their financing needs.
In Indonesia, the largest digital economy in the ASEAN region,
MUFG Innovation Partners (MUIP) and Bank Danamon collaborated
to launch the Garuda Fund, which is equipped with an investment
facility totaling US$ 100 million and targets early to middle-stage
startups. This fund aims to create synergies through collaboration
between Bank Danamon and startup investees. Accordingly, we
aim to enhance Bank Danamon’s product competitiveness,promote digitalization, and attract new customers through thecustomer contacts that our investees have.

Future Initiatives
Over the past decade since the announcement of its investment
in VietinBank in December 2012, MUFG has endeavored todevelop its commercial banking platform in Asia while investingin digital financial players.

sharing of each investee’s insights regarding consumer financing
and digital-driven services among all MUFG Group members to
invigorate wide-ranging collaboration. In these ways, we will
pursue the creation of fresh synergies.

Looking ahead, we will develop a structure for facilitating the

MUFG Report 2023

44

Management Message

Management Strategies
and Performance

MUFG’s Pursuit ofValue Creation

Leadership andGovernance

Financial Data /Corporate Data

MUFG’s Pursuit of Value Creation
Alliance with Morgan Stanley

Strengthening Our Ability to Accommodate
Customer Needs by Expanding the Scope of
Our Alliance

Expanding the Scope of Collaboration with Morgan Stanley
Since 2008, MUFG and Morgan Stanley (MS) have maintained
strategic capital alliance. ROI, which represents our equity in theearnings of MS (as an equity method investee) divided by the
consolidated book value*1 of investment, stood at 12% in fiscal
2022. This suggests our alliance with MS is significantly
contributing to MUFG’s ROE.

MUFG and Morgan Stanley to Enhance Global Strategic Alliance under “Alliance 2.0”

companies, including CEOs, to discuss the further development of
the strategic alliance. In addition, a cumulative total of more than
80 MUFG employees*3 have also been dispatched to MS as part ofsecondment program. In these ways, we are striving to internalize
MS’s leading-edge practices and insights in a variety of fields.

MUFG has been engaged in ongoing and close collaboration,
including top management-level collaboration, with MS. We
continue to have an active dialogue by bringing two directors*2 toserve at MS while holding biannual Global Steering Committee(GSC) meetings attended by senior managers from both

Acting as strategic partners, MUFG and MS mutually utilize one
another’s strengths while engaging in collaboration in an everbroader range of fields, starting from investment banking andencompassing wealth management, AM/IS and other operations.
Looking ahead, we will develop new stages of collaboration todeliver the unique value from the MUFG- MS alliance.

History of Investment and Alliance with MS

Expansion of Collaboration with MS

Major backgroundResults

2008

Invested US$9 billion in preferredstock in MS to fundamentallystrengthen global investmentbanking operations

Out of overseas investmentbanking operations, M&A
advisory and ECM make the bestuse of MS functions,emphasizing on improving
management efficiency
In the DCM area, where affinity
with lending is high, large-scale
contracts are regularly closed
through collaboration thattakes advantage of thestrengths of both companies

2009

Established a LMJV*4 to provide
corporate financing services in
the Americas

2010

Established Mitsubishi UFJ Morgan
Stanley Securities and Morgan
Stanley MUFG Securities in Japan2011

Appointed the second
representative to MS board of
directors. Shares were converted
into common stock. MS became
MUFG’s equity method affiliate e

At present

Expanding collaboration in wealthmanagement and AM/ISMaintaining top-classinvestment banking league
tables in Japan, centered on
M&A and DCM
 ecognize MS’s profit and lossRby the amount of the equity
ratio as equity in earnings ofequity method investees

 ccelerate wealthAmanagement growth bylearning know-how from MS
In AM/IS, sales of MS
investment products that havestrengths progressed in Japan

Collaboration in wealthmanagement (WM) business(See page 39 for details.)
Incorporate expertise andknow-how offered by MS todevelop MUFG digital platform
Leverage information andinsight afforded by MS’s
research capabilities to form
MUFG’s unique House View
Share comprehensive insights
of WM business via the MS
WM Forum

400.0

Equity in earnings of equity method investees (left axis)
ROI (right axis) = Equity in earnings/Consolidated book value

New fields
MS to provide consulting
services on retirements andpension plans to MUFG’s
Japanese corporate clients in
the U.S.
Provide customers with accessto a platform for managing
stock compensation plansdesigned by Shareworks, ourbusiness alliance partner
Mars to introduce pre-IPO
clients to MS after providing
debt finance

(%)

18

MUFG BankMS

Clients

Clients
Enhance Pricing Capability
Collaboration in FX trading area
via MSMS

Sales

Morgan Stanley MUFG Securities
Trading

Trading

Trading

MUMSS

MSMS

Investors

Investors(Retail/Corporate/Financial Services Clients*1)(Domestic and International Institutional Investors)

Sales/Corporate Access/
Execution Service

Sales/Corporate Access/
Execution Service

Retail, corporate,
Financial Services
Clients

Domestic*2 andoverseas inst.
investors

Research
Domestic*2 andoverseas inst.
investors

New Sales,
Execution Service

Research
New research
Provide Services*3

Underwriting

Joint
Underwriting*4(Mainly focus on retail,corporate and Financial Services Clients)

12

ROI

Underwriting(Mainly focus on domestic*2 andoverseas inst. investors)

12%

200.0

6
100.0

45

Collaboration in Foreign Exchange Trading

Retail, corporate,
Financial Services
Clients

300.0

0

MUFG also plans to disclose business metrics across both
entities. The disclosure, combined with the enhanced
collaboration between the joint venture entities across multiple
business areas, will help demonstrate MUFG’s and MS’s joint goalof becoming the top securities firm in Japan.

Collaboration in Japanese Research and Equity Businesses for Institutional Clients
AM/IS
Made progress in collaboration,
jointly marketing MS asset
management products andacting as fund administrators
Formulated investment trusts
in which the Trust Bank and
Mitsubishi UFJ Kokusai AssetManagement provide their
AM/IS functions employing
a collaborative approachwith MSIMROI Arising from Alliance with MS(Billions of yen)

MUFG’s consolidated subsidiary MUFG Bank and MS have agreed
on a memorandum of understanding for an FX collaboration thatutilizes Morgan Stanley MUFG Securities (MSMS), leveraging theunique and complementary strengths of each party. In this new
collaboration, MUFG Bank will link with Fixed Income at MSMS for
FX trading and utilize MS’s leading global FX business platform,

Sales

Collaboration in theinvestment banking field
Cross-border M&A
DCM/ECMMUMSS and MSMS will integrate the institutional Japan Equity
business by consolidating Japan Equity Research, Institutional
Sales, Corporate Access, and a part of Execution Services
functions of both entities into MSMS. The integration of MUMSS'
broad Japan Equity coverage and domestic client relationships
with MSMS' global operating platform and international client
relationships will better serve clients' sophisticated demand forJapan Equity products and services, making the joint venture a
best-in-class Japanese equity house.

In launching “Alliance 2.0”, our firms have entered intomemoranda of understanding to collaborate in foreign exchange(FX) trading and in the Japanese research and equity businesses
for institutional clients. Both parties will work to conclude
definitive agreements regarding each collaboration initiative witha targeted implementation date in the first half of 2024, subject
to regulatory approval.

Integration

Further Strengthening the Alliance—Developing New Stages of Collaboration

Further collaboration in
investment banking businessJCIB: Collaboration in theissuance of sustainability
bonds
GCIB: Strengthen debt
underwriting in Non-IG field,
expanded collaboration in
Asia Pacific such as Singapore
and Australia

enabling a more competitive offering to serve the diversified andcomplex needs of MUFG Bank’s clients.

MUFG and MS announced the launch of “Alliance 2.0”, anenhanced Global Strategic Alliance for further collaboration
between both firms for the next decade and beyond.

2018

2019

MUFG Report 2023

2020

2021

0
2022 (FY)

Issuers*1	Our holding of MS’s net asset and goodwill. Includes preferred stock. ¥2.8 trillion as end of March 2023.
*2 Hironori Kamezawa and Masato Miyachi*3 As of March 31, 2023
*4 Loan Marketing Joint Venture*1 “Financial Services Clients” includes, among others, proprietary funds for domestic banks and insurance companies, and certain regional financial institutions*2 Other than “Financial Services Clients” defined in *1*3 New Research provides services to MUMSS’s retail, corporate, and financial institution clients through MUMSS. MSMS continues its services for MSMS’s financial institutions clients*4 For certain domestic deals, MSMS may act as selling agent while MUMSS acts as underwriter

MUFG Report 2023

46

Management Message

MUFG’s Pursuit ofValue Creation

Management Strategies
and Performance

Leadership andGovernance

Financial Data /Corporate Data

MUFG’s Pursuit of Value Creation
Global AM Business

Strengthening AM Business throughStrategic Investment Targeting Rapidly
Growing Global Markets
Committed to empowering a brighter future for regional communities and society—
Opening of MUFG PARK

Effect of Acquisition of First Sentier Investors and Future Objectives of Collaborationand Southeast Asia, with the CAGR of asset balances in theseregions amounting to 8% and 13%, respectively. Accordingly, we
believe that focusing on global AM business will enable us toaccelerate the expansion of our AM/IS businesses. Based on
insights afforded by FSI regarding responsible investment, we
will accelerate the development of new products that leverage
our balance sheet while developing asset management functions
and expanding the regions of delivering our products throughinorganic growth measures. In these ways, we will seize
opportunities arising from the expansion of the global AM market
through FSI, with the aim of advancing and expanding our AM
business as a whole.

In 2019, we acquired First Sentier Investors (FSI), an Australian
headquartered global asset management firm. This acquisition
has helped us expand our global customer base while enabling
us to gain the ability to accommodate an even more diverse
range of customer needs through the enhancement of uniqueasset management functions, such as those related to emerging
equities and unlisted infrastructure investment.
In Japan’s asset management industry, the pace of growth in thevalue of assets under management amounted to a CAGR*1 of 7%
over the period from 2010 to 2021. However, the balance of such
assets has been growing at an even faster pace in North America
Strategies for Global AM Business
Products/services

Development of new
products that leverage
our balance sheet

Unlisted
infrastructure,
emerging equities,etc.

×

Inorganic means

etc.

Robust expansionof the industry

Australia,
Asia-Pacific,
Europe, etc.

Trend in the Global Balance of Assets under Management*2

Asia-Pacific ex Japan, etc.

120

13%
6%

August 2019
Completed the acquisition of FSI

December 2021
FSI hit a record-high annual profit

8%40

MUFG Report 2023

1 MSCIAA	Silver award in the Investors category (Asset Manager
division) (the Trust Bank)

2 FTSE

3.3

3.9

	Selected as an environmental sustainable company in
the Environmental Sustainable Company category

3

19.3

18.0

4 S&P Dow Jones

53

62

5 CDP

B

A–

6 Nikkei SDGs

5.0

7 Toyo Keizai

390.6

Sustainalytics

smaller figure stands forhigher evaluation

5.0

Management
Grand Prix

389.9

: indicators in executive compensation

2021

*1 C
 ompound Annual Growth Rate *2 Estimated by MUFG based on reports issued by the Boston Consulting Group and statistics published in each country*3 A
 n international certification system run by B Lab, a U.S.-based NPO, with the aim of certifying corporations that engage in businesses that give due consideration to society andthe environment and thus satisfy criteria for transparency, accountability and other matters

47

2022

March 2023
FSI entered into strategic partnership with AlbaCore CapitalGroup to expand its investment functions

7%
2010

2021

Gold award in the Banking category (the Bank)

Entities

November 2022
FSI achieved the B Corp*3 certification from the perspectiveof promoting CSR

20

0

Major Events related to FSI

May 2021
Launched The First Sentier MUFG Sustainable Investment
Institute with the objective of promoting responsible
investment and increasing our presence in the industry
Completed FSI’s disengagement from IT infrastructure andother functions possessed by its former parent

100

60

Today, there is an ever growing need to solve several issues that
communities and society as a whole are confronting. Theseissues include preserving the natural environment, which isparticularly precious in urban areas, facilitating community
building and creating a resilient society. We will address such

The Fourth ESG Finance Awards Japan

September 2020
Initiated sale of FSI’s unique products to Japanese customers

80

In line with the concept of “offering a place for people topursue a diverse quality of life,” we will also hold various events
at MUFG PARK with the aim of helping to resolve social issues,
supporting community building and contributing to society.
To that end, MUFG employees will work in collaboration withlocal communities.

Evaluation of ESG-related efforts

Expand thescope of regionsin which wedeliver products

Customer base

EuropeMUFG PARK boasts a large square lawn as well as rich greenerywith numerous trees and offers tennis courts, sports grounds, andother facilities such as a community library. With a total land spaceof six hectares, the park is large enough for visitors to take a walkaround while accommodating to a diverse range of activities
from exercise to reading in tranquility or having a barbeque.

issues by promoting robust engagement with local communities
and supporting employee-driven initiatives. Furthermore, taking
full advantage of our experience in the above endeavors, we will
provide our know-how and deliver new value to stakeholders
across society. It is our hope that our initiatives at MUFG PARK
will thus empower a brighter future for regional communities
and society as a whole.

Global AM business(after acquiring FSI)

Global AM business(before acquiring FSI)

CAGR
(Trillions of U.S. dollar)
Japan
North America

On June 26, 2023, we opened MUFG PARK in Nishi-Tokyo City,
Tokyo, as one of our facilities available to the public. This is one of
our initiatives to realize a sustainable environment and society.

(As of May 2023)

MUFG Report 2023

48

Management
Strategies andPerformance
CONTENTS
Review of the Medium-Term Business Plan (MTBP) ............................................. 5 1
Progress under the Medium-Term Business Plan (MTBP) .................................. 5 3
Track Record in Value Creation .................................................................................... 5 5(Financial and Non-Financial Highlights)
Digital Transformation
CDTO Message ........................................................................................................... 5 7
Contribution to Addressing Environmental and Social Issues
CSuO Message ............................................................................................................. 6 1
Sustainability Management Focused on Addressing 10 Priority Issues...... 6 3
Promoting Sustainable Businesses .............................................................. 6 8
Climate Change Measures & Environmental Protection ................................. 6 9(Disclosure Based on TCFD Recommendations)
Transforming Our Corporate Culture / Human Capital Strategy
CHRO Message ......................................................................................................... 7 9
Four Key Initiatives Supporting Human Capital Management ................ 8 1
Fostering a culture of taking on challenges and transformation ........... 8 5
Business Group Performance ....................................................................................... 9 1
Digital Service Business Group (DS) .......................................................................... 9 3
Retail & Commercial Banking Business Group (R&C) ......................................... 9 5
Japanese Corporate & Investment Banking Business Group (JCIB) .............. 9 7
Global Commercial Banking Business Group (GCB) ........................................... 9 9Asset Management & Investor Services Business Group (AM/IS) .............. 1 0 1
Global Corporate & Investment Banking Business Group (GCIB) ............... 1 0 3
Global Markets Business Group (Global Markets) ............................................. 1 0 5

49

MUFG Report 2023

MUFG Report 2023

50

Management Message

MUFG’s Pursuit ofValue Creation

Leadership andGovernanceManagement Strategies
and Performance

Financial Data /Corporate DataManagement Strategies and Performance

Review of the Medium-Term Business Plan (MTBP)

Basic Policy

FY2012–2014

FY2015–2017

FY2018–2020

FY2021–2023

Groupwide Collaboration

A Group-Driven Approach

Group-Integrated Operations

Purpose-Driven Management

Aim for sustainable growth in corporate
value by strengthening collaborationin the following three areas

Maintain our focus on the Japanese market
while working to incorporate the growth of
the global market and evolving andreforming our business model

Realize simple, speedy and transparent
group-integrated operations

Strive to realize our Purpose, “Empowering abrighter future.” beginning with addressing
challenges each stakeholder is now confronting anddelivering our strategic solutions to such challenges

1. Collaboration between Group companies
2.	Collaboration between retail and corporatebanking divisions
3.	Collaboration between domestic andoverseas divisions

1. Customer perspective
2. Group-driven approach
3. Productivity improvements

Enhance our comprehensive financial service

Key
Strategies

capabilities on a global basis

 ontribute to initiatives for revitalizing and regeneratingC
the Japanese market
 everage world-class capabilities in capital and riskLmanagement

Execute the MUFG Re-Imagining Strategy to swiftly andflexibly respond to structural changes and thereby put
the company on a growth track.

 ontribute to the revitalization of the JapaneseC
economy and strengthen the business foundations inJapan to support steady growth

Redefine business segmentation

 nhance and expand global businesses as a drivingEforce for growth

Implement the “Eleven Transformation Initiatives”

 im to be the “premier business partner that pioneers theA
future through the power of finance and digital services” by
the development of a business model finely tuned to theevolving business environment

 romote the effective and efficient utilization ofP
the Group’s resources

Three Strategic Pillars

 pgrade and reform our business model and exploreU
new business areas and customer segments

 orporate Transformation—Change our modes ofCoperation and business execution

 aintain a strong capital base and improve ROE withM
sophisticated financial and capital management

Strategies for Growth—Strengthen profitability
Structural Reforms—Ensure business resilience uild administration practices appropriate for Global
B
Systemically Important Financial Institutions (G-SIFIs)

Met all targets except the expense ratio target, withoverseas operations spearheading growth for the Group

Results
Summary ajorM
achievements

The expense ratio increased mainly due to theallocation of resources to overseas operations

 easons forR
not achieving
targets

Expanded our business platforms, including ourcommercial bank network in the ASEAN region andglobal investor services functions
Failed to meet targets due to the emergence of
disadvantageous external trends, which included anegative interest-rate policy introduced by Bank of Japan(BOJ) that caused our operating results to stagnate in a
way that surpassed the effect of our organizationalcountermeasures

Improved productivity

Challenges

 trengthen governance on a global basis (correspondS
to global financial regulations, etc.)
 volve and reform our business model in light ofEchanges in the business environment

Position this period as “three years of new challenges andtransformation” in which we achieve significant growth
based on the close assessment of changes now taking
place in society romote the reform of our business model centeredP
on traditional commercial banking operations inJapan pdate “group-driven management” to “group-based,U
integrated management”

 ade progress in the development of a groupwide,M
integrated management structure and diversified profit
sources by securing an extensive overseas businessportfolio consisting of a robust commercial banking
platform in the ASEAN region and global asset management
operations
 ailed to meet ROE and expense ratio targets mainly due toFgrowing costs arising from organizational expansion andthe impact of the COVID-19 pandemic

Strengthen revenue base for the domestic businessReshape global business (shift to improvement in “quality”)
 ecure capabilities to swiftly respond to changes in theSenvironment
 eshape a portion of our strategies under the “Eleven
R
Transformation Initiatives” to address shortfalls in theiroutcomes

Financial Targets Met , Unmet
Indicators

FY2012FY2013

FY2014FY2014 targets

Indicators

FY2015FY2016FY2017FY2017 targets

Indicators

FY2018FY2019FY2020

FY2020 targets

Indicators

FY2021

FY2022

ROE

6.45%

3.85%

5.63%

Approx. 7–8%

ROE

7.79%

7.03%

7.5%

Expense ratio

71.0%

70.2%

68.7%

Below FY 2017
results

CET1 capitalratio*3

10.4%

10.3%

9.5–10.0%

CET1 capitalratio*2

11.4%

11.7%

11.9%

Approx. 11%

ROE

8.77%

9.05%

8.74%

Approx. 8%

ROE

7.63%

7.25%

7.53%

Between
8.5–9.0%

Expense ratio

57.6%

60.9%

61.1%

Between55–60%

Expense ratio

62.3%

64.6%

68.0%

Approx. 60%

Net operating
profits
Approx.
(customer 3% growth
segments)

Approx.
21%
growthApprox.
46%
growth

20% increase
from
FY2011

Earnings Per
Share (EPS)¥68.51¥68.28¥74.55(+1.8%)

Increase 15%
or more from
FY2014

CET1 capitalratio*1

11.1%

12.3%

9.5% orabove

CET1 capitalratio*1

12.1%

11.9%

12.5%

9.5% or
above

11.1%

FY2023

FY2023 targets*3 E
 stimated Common Equity Tier 1 Capital ratio reflecting the RWA increase
calculated on the finalized Basel III reforms basis, excluding net unrealized
gains on available-for-sale securities*2 Estimated Common Equity Tier 1 Capital ratio reflecting the RWA increase
calculated on the finalized Basel III reforms basis, including net unrealized gains
on available-for-sale securities*1 Common Equity Tier 1 capital ratio calculated on the basis of regulations applied at the end of March 2019, including net unrealized gains on available-for-sale securities

51

MUFG Report 2023

MUFG Report 2023

52

Management Message

MUFG’s Pursuit ofValue Creation

Management Strategies
and Performance

Leadership andGovernance

Financial Data /Corporate DataManagement Strategies and Performance

Progress under the Medium-Term Business Plan (MTBP)

Overview of the MTBP
Our Vision

Key Strategies (Three Strategic Pillars)

Be the premier business partner that pioneers the future through the power of finance and digital services
To cope with the drastically changing society, we commit to empower all stakeholders to move to the next step forward

Financial
Targets

ROE

Key Strategies

i. Digitaltransformation

7.5%

Aim to become a financial group which constantly earns ¥1 trillion in profits attributable to owners of parent

I. Corporate Transformation

i. Digital transformation (DX)ii. Contribution to addressing environmental and social issues
iii.	Transformation of corporate culture (a culture with a focus
placed on “speed” and “new challenges”)

II. Strategies for Growthi. Wealth managementii.	Approach of proposing solutions
to customer’s issues

iii. Asia businessiv. GCIB & Global Markets
v. Global AM/IS

Corporate
Transformation—Ensure business resilience

i. Cost and risk-weighted asset (RWA) controlii.	Transformation of platforms and our business infrastructureiii. Review of our business portfolios

Corporate Transformation
In terms of digital transformation (DX), we have made progress inthe expansion of the customer base. Pursuing contribution toaddressing environmental and social issues, we also accelerated
our initiatives to realize carbon neutrality. In addition, although“simplification” is still considered an ongoing issue to be tackled
in the context of the transformation of our corporate culture to
realize speed-oriented business operations, our employees’ drive
to take on new challenges has remained robust.
 For more details, please refer to pages 57–90.

Strategies for Growth
We have seen steady growth in our earnings power, thanks to
improvement in corporate lending spreads in Japan and abroad aswell as stable progress in wealth management and other operations.
Although we had aimed for a target of increasing net operating
profits by ¥150 billion through Strategies for Growth over thecourse of the MTBP’s three-year period, growth in net operating
profits has already amounted to approximately ¥400 billion in
the past two years, meeting the target ahead of schedule.
Structural Reforms
With the completion of the sale of MUFG Union Bank, we are now
concentrating management resources available in the Americas
to corporate transactions. Having maintained a tight grip on
expenses and RWAs, we have reduced base expenses while
keeping the RWA balance, excluding the impact of foreignexchange fluctuations, virtually unchanged from the level as ofMarch 31, 2021. The positive effect of structural reforms on net
operating profits totaled approximately ¥85 billion.

Strategies for growthFiscal 2023 target (cumulative
growth from the fiscal 2020 level)

Fiscal 2022 results (cumulative
growth from the fiscal 2020 level)+ Approx. ¥150 billion+ Approx. ¥400 billion(Billions of yen)
500

200

MUFG Report 2023

Encourage employees to always act in line with ourDevelopment of corporate culture “Challenge x

Asiabusiness*1

GCIB &
GlobalMarkets*2

Fiscal 2022 results (cumulative
growth from the fiscal 2020 level)+ Approx. ¥100 billion+ Approx. ¥85 billion

Fiscal 2022
Fiscal 2021

60
40

Capturing the economic growth through inorganic

advantage of our broad regional network
consisting mainly of Krungsri (Bank of Ayudhya)
and Bank Danamon, both of which areconsolidated subsidiaries, in addition to promoting
digital transformation

Promote the optimization of our portfolio by, forexample, rebalancing the portfolio to theinstitutional investor business. Also, step up
origination & distribution (O&D) and cross-selling
approach via the integrated operation of GCIB and
Global Markets business groups ush ahead with our businesses in the global AM/IS
P
field, an industry that has robust growth potential, ina way that takes full advantage of our strengths

Execute necessary investment for growth while
thoroughly curbing base expenses

 nhance RWA control via replacing low-profitabilityEassets with high-profitability assets

ii. Transformation of
platforms andour business
infrastructure

Carry out efficient and effective investment for theiii. Review of ourbusiness portfolios

 eview resource allocations to low-profitabilityRbusinesses

digital shift20

Non-personnel
expenses (facility
expenses, etc.)
and others (the Bank)

Overseas
expenses, etc.

Total

Enhancement of risk-taking in real estate sector
Page 98

strategy and enhance consumer finance business

Pages 41–44 and 100

 apturing loans and cross sells by adjusting theCmarket condition
Enhancement of institutional investors business
Page 104

Enhancing global AM structure
Progress in providing combined high-value-addedservices in IS

Base expense:steadily decreased
RWA: continue disciplined management
Page 20

Maintain resilience of overseas business andoperations

 implify procedures and rules to facilitate reforms
S
while reviewing our decision-making process tep up external collaboration and other initiatives
S
related to new businesses

Personnel
expenses(the Bank)

Pages 39–40 and 96

Seize growth opportunities in Asia by taking

i. Cost and RWA
control

Structural
Reforms80

to increase cross transactions

iii. Asia business(Billions of yen)100

Wealth management digital platform contributes

Pages 47 and 102

Structural reforms
Fiscal 2023 target (cumulative
growth from the fiscal 2020 level)

Pages 85–90

Address social issues through investmentsv. Global AM/IS*1 T
 he MTBP target for the positive effect arising from Strategies for Growth does notfactor in the impact of the fiscal 2021 deterioration in profits in the Asia business due
to policy rate cuts and other factors affecting market conditions. However, the target
does include the expected impact of growth in this business from fiscal 2022 onward*2 Excluding the loss of overseas securities of approximately ¥30 billion

 trengthen the wealth management business via
S
the development of infrastructure for enhancing
our comprehensive asset management proposal
capabilities, the allocation of human resources andthe provision of solutions for business owners

Speed”

 elp resolve management challenges confrontingHlarge Japanese corporate clients via thestrengthening of risk-taking capabilities and theuse of a groupwide, integrated approach

Total

GlobalAM/IS

Purpose while fostering an open-minded corporate
culture, with the aim of speeding up strategic
execution and empowering employees toautonomously take on new challenges

Pages 61–78

ii. Approach of
proposing solutions
to customers’issuesiv. GCIB &Global Markets

100

Approach of
proposingsolutions tocustomer’s issues

Pages 57–60 and 94

iii. Transformation of
corporate culture

Strategies
for Growth

300

0

53

Fiscal 2022
Fiscal 2021

Wealthmanagement

as well as in expansion of new customer base

 isclosed results and set interim targets throughD
Progress Report

400

0Progress as a financial and digital platform operator

 tep up an integrated approach in which theSexecution of management strategies goes intandem with the pursuit of solutions forenvironmental and social issues. To this end,
realign our business strategies, risk management
and social contribution initiatives in light of 10priority issues we have identified

i. Wealthmanagement (WM)

Main Progress in the MTBP
 For details of progress vis-à-vis financial targets, please refer to“CFO Message” featured on pages 17 through 24.

Enhance our contact points for digital services for
all customers while pushing ahead with digitalizing
our products and services

ii. Contribution toaddressing
environmental andsocial issues

III. Structural Reforms—Strengthen profitability

Fiscal 2022 Progress educe the workload via the use of digitalR
technologies—Change our modes of operation and business execution

Three
Strategic
Pillars

Overview

Americas: focus management resources towards

the wholesale business
Asia: investment in digital finances

Pages 21, 35-36 and 41-44*1 Loans secured by fund investment assets, etc.
*2 Non-investment grade

MUFG Report 2023

54

MUFG’s Pursuit ofValue Creation

Management Message

Leadership andGovernanceManagement Strategies
and Performance

Financial Data /Corporate DataManagement Strategies and Performance

Track Record in Value Creation(Financial and Non-Financial Highlights)

We present fiscal 2022 financial and non-financial highlights toshowcase the results of our business activities.

Non-Financial Highlights
GHG*1 Emissions from Our Financed Portfolio (Scope 3)

Financial Highlights
Profits Attributable to Owners of Parent

ROE
（%）

TargetFiscal 2023: 7.5%
Medium- to long-term:
9% to 10%

MUFG definition*1
JPX definition

10(MUFG definition)

8(Trillionsof yen)

1.5

7.03%

6

Profits attributable toowners of parent (left axis)
Earnings per share (EPS)(right axis)

Target(Yen)
Fiscal 2023: ¥1.3 trillion 100
80¥1,116.4
billion 60

1.0

6.51%

4

40

0.5

2
0
*1

20

2018

2019

2020

2021

0

2022 (FY)Profits attributable to owners of parent[(Total shareholders’ equity at the beginning of the period + Foreign currency translation adjustments at the beginning of the period)+ (Total shareholders’ equity at the end of the period + Foreign currency translation adjustments at the end of the period)] ÷ 2

×100

2018

2019

2020

2021

0
2022 (FY)*1 Profits attributable to owners of parent

Despite a downturn in market-related profits due to portfolio rebalance in response to rising interest rates, net operating profits rose significantly on the back of increases in
net interest income from loans and deposits and lending-related fee income overseas as well as rises in income from foreign exchange and trading, areas in which we took
advantage of market fluctuations. However, profits attributable to owners of parent remained virtually unchanged from the previous fiscal year mainly due to the recordingof one-time losses in connection with the sale of the equity stake in MUFG Union Bank (MUB). In addition, ROE declined due in part to foreign exchange fluctuations.

Expenses(Trillionsof yen)5
43Common Equity Tier 1 Capital Ratio

General and administrative (G&A) expenses (left axis)
Expense ratio (right axis)(%)
Target80
Fiscal 2023: Reduction in G&A expenses fromthe fiscal 2020 level (excluding those linked to revenues) 75¥2.91
trillion 70

(%)

14

(Finalized Basel III reforms basis,
excluding net unrealized gains onavailable-for-sale securities)

12

65

2

64.5%

60

1

55

0

50

2018

2019

2020

2021

2022 (FY)

10.7%
10.3%

10

8

2018

2019

2020

2021

2022 (FY)*1 Estimate reflecting the RWA increase calculated on the finalized Basel III reforms basis

RWAs (Risk-weighted assets)

Balance of Strategic Equity Holdings*1

150

RWAs (finalized Basel III reforms basis)
RWAs (current Basel III basis)Target
Maintain the fiscal 2020-end level

Our Common Equity Tier 1 capital ratio remains robust and sufficient due to an
ongoing tight grip on risk-weighted assets (RWAs), the denominator in thecalculation of this ratio.

¥120.7
trillion(Trillionsof yen)TargetReduce by ¥500.0 billion*2 forthe three years to fiscal 2023.

30

76 MtCO2e(9% reduction from 2019)15–28% reduction
from 2019

Commercial real estate

65 kgCO2e/m2

44-47 kgCO2e/m2

Residential real estate

27 kgCO2e/m2

23 kgCO2e/m2

200

22 MtCO2e22% reduction
from the left

100

Real estate sector

2

¥1.55
trillion400

thousandtons

300

Steel sector
Shipping sector

Overseas emissions(Thousandtons) 336

*2

PCA +0.6%

PCA

With an eye to achieving net-zero GHG emissions from our financed portfolio by
the end of 2050, we have promoted the sector-based measurement of GHG
emission and the formulation of interim targets for 2030 in a phased manner. In
April 2023, we disclosed the volume of GHG emissions associated with ourfinanced portfolio in the real estate, steel and shipping sectors.

Target2030:
Net zero

0

2020

2021

2025

2026

Credit Balance Targets for Coal-fired Power Generation
Fiscal 2021

Fiscal 2022

Target(Fiscal 2040)

2.95

2.58

Zero*1(Of this, ¥18 trillion for environment)¥24.6 trillion

30

Project finance(Billions of US$)(Of this, ¥9.1 trillion
for environment)

20

Corporatefinance0

2019-2022

2030

(FY)

2030

In fiscal 2022, we completely shifted to 100% renewable energy for electricity
procured by all domestic consolidated subsidiaries. In addition, we have now set
a new interim target to accelerate our efforts to achieve net zero by 2030.

TargetA cumulative total of ¥35 trillion
from fiscal 2019 to fiscal 2030

40

TargetFiscal 2025
TargetReduceFiscal 2026
domestic
emissios Reduce Groupand global
by 2/3emissionsby 50%

0%*1 Greenhouse gas*2 A measure of consistency that indicates the difference from the required level acrossthe portfolio. Calculates the Vessel Climate Alignment (VCA) of individual vessels
providing financing as a weighted average of the percentages in the loan portfolio(Trillionsof yen)231
thousand
tons

Domestic emissions

Approximately Approximately
90
80

Zero*1*1 Projects that contribute to the transition to a decarbonized society are exceptional
according to the MUFG Environmental and Social Policy Framework(FY)

Promoting financing aimed at empowering customers seeking to resolve
environmental and social issues, we have extended a cumulative total of ¥24.6
trillion in sustainable financing by steadily increasing the balance since fiscal 2019.

We have set a target of reducing the balance of project financing and corporate
financing for coal-fired power generation facilities to zero targeting by fiscal
2040. We have steadily reduced the balance of our financing in this area.

Number of Job Challenge Program Applicants*1(Persons)

(%)
22
22

3,000

TargetFiscal 2023
22.0%

18
18
16
16

2,630
2,303

2,000

1,000

773

14
14

0

2018

2019

2020

2021

2022 (FY-end)

The balance of RWAs on the finalized Basel III reforms basis at the end of fiscal
2022 increased from the end of fiscal 2021, mainly due to foreign exchange
fluctuations. We are continuing our disciplined approach to RWA control.

55

Oil & gas sector

20
20

1

50

156-192 gCO2e/kWh

Ratio of Women in Management in Japan*1(Finalized Basel III reforms basis)

100

Target (2030)

299 gCO2e/kWh

10

G&A expenses grew primarily due to growth in overseas expenses by the
impact of foreign exchange fluctuations and the sale of the equity stake in MUB.
The expense ratio declined thanks to higher gross profits.

(Trillionsof yen)ResultPower sector

Amount of Funds Extended in Sustainable FinanceCommon Equity Tier 1 capital ratio(finalized Basel III reforms basis*1, excluding net
unrealized gains on available-for-sale securities)
TargetCommon Equity Tier 1 capital ratio
9.5% to 10.0% (FY2023 and(current Basel III basis)
medium- to long-term)

GHG Emissions from MUFG’s Own Operations(Scope 1 and 2)

MUFG Report 2023

2018

2019

2020

2021

2022 (FY-end)*1 Simple sum of the Bank and the Trust Bank. Acquisition price of domestic equity
securities in the category of “other securities” with market value (consolidated)*2 Amount of equity holdings reduced via divestment

In line with a basic policy of reducing the balance of equities held for the
purpose of policy-oriented investment, we divested equity holdings worth¥154.0 billion (on an acquisition-cost basis) in fiscal 2022. We have thus madesteady progress toward the Medium-Term Business Plan (MTBP) target of
reducing equity holdings by ¥500.0 billion.

12
12

2018

2019

2020

2021

2022

2023

(FY)

*1 Ratio of women in line manager or higher positions in Japan at the Bank, the Trust
Bank and MUMSS

Having achieved a steady increase in the ratio of women in management aheadof schedule, we have upwardly revised the target in fiscal 2023 to 22.0%.

02020*2

2021

2022

(FY)

*1 Number of applicants to an in-house posting program among employees of theBank, the Trust Bank and MUMSS*2 During the first half of fiscal 2020, the Job Challenge program was not implemented
due to concerns over the COVID-19 pandemic.

The Job Challenge program offers opportunities for each applicant to take ontasks within the Group in a way that aligns with their desires regardless of theentity they belong to. In fiscal 2022, the number of applicants increased to 2,630.

MUFG Report 2023

56

Management Message

MUFG’s Pursuit ofValue Creation

Leadership andGovernanceManagement Strategies
and Performance

Financial Data /Corporate DataManagement Strategies and Performance

Digital Transformation

CDTO Message
Progress of Digital Transformation (DX) and
Its Future Direction
MUFG has promoted DX by taking a groupwide approachthat transcends boundaries among Group companies andbusiness groups. Our DX-related initiatives encompass threeareas: “Upgrading and streamlining our mode of operations
via the use of digital technologies (DX of our own operations),”“Delivering innovative, digital-driven services to customers(customer DX)” and “Pursuing the creation of new technologies
and new businesses as well as investment and alliances to thisend (Center of Excellence).” Here, I will explain outcomes ofthese initiatives and progress made thus far.
Upgrading and Streamlining Our Mode of Operations
via the Use of Digital Technologies
We have established a lean yet resilience network of branches
by enhancing online channels and consolidating branch
offices. Going forward, we will flexibly expand face-to-faceand non-face-to-face touchpoints with customers to betteraccommodate their needs.
Our branches began using digital-driven branch dashboards*1
while digitizing the customer transaction relay form,*2 introducing
a customer ushering support system, and otherwise promoting
a variety of DX measures. We have also introduced tabletsfor use by branch customers to accommodate various
procedures, including those related to account openings. In
these ways, we enhanced the efficiency of branch operations.

*1 A sales support tool designed to consolidate and visualize such information as that
related to customer transactions*2 A form issued when branch staff are entrusted by a customer with the handling ofphysical instruments

Expand customer touchpoints
FaceOver-the-counter transactions to-face• Expand the scope of transactions through!"#$%&'()*+,

bank-counter tablets• Branch staff provide elderly customers withspecial support• Asset management-related consultation atcounters and booths

Online transaction

Non faceto-face• Fully digitized online procedures fromaccount opening to various procedures• Asset management and loans services areavailable from an app• Online consultation with bank staff

57

MUFG Report 2023-.///.///

0!"#$%&'()*+,-./01

23

334
23

measures aimed at transforming MUFG’s corporate culture andnurturing human resources. In anticipation of the launch of thenext MTBP, we will strengthen our functions as an epicenterof innovation support, thereby facilitating leading-edge
endeavors that take on new challenges.
*1 Business incubation contest open to MUFG colleagues in Japan

Co-Creation, Transformation and R&D Enhancement through the CVC Fund
Acting as a CVC,*1 MUFG Innovation Partners (MUIP) is engaged in
Breakdown of MUIP’s Investment Targets(more than 40 investees at home and abroad)strategic investment in startups. To date, MUIP has invested in startups

Tadashi Yamamoto Group CDTO
Delivering Innovative, Digital-Driven Services to Customers
We have launched initiatives to create new value by acting asa financial and digital platform operator and thus making ourfinancial functions available to external partners through API*3
connections. Examples of these initiatives include “d Smart Bank,”a digital account service operated jointly with NTT DOCOMO.
Moreover, we began providing business matching services
to help customers resolve challenges they are confronting in
DX promotion by taking full advantage of insights afforded by
five of our alliance partners. Acting in collaboration with thesepartners, we have contributed to the successful closing of anumber of business matching cases.
*3 Application Programming Interface: Technical specifications for securing
interconnections between different software

Business Matching Connecting Customers and Digital
Service Providers
Customers
Localgovernments
Corporateclients

Coordinate

Bank RM

Looking ahead, we will accelerate DX and increase thesophistication of our own operations to deliver even better
services to customers. At the same time, with an eye to a transition
to the next Medium-Term Business Plan (MTBP) that will launchin fiscal 2024, we will strive to step up various DX measures.

Center of Excellence
Our initiatives in this area are focused on exploring newtechnologies, creating new businesses and identifying
opportunities for investment, alliances and other partnerships.
These endeavors are positioned as upfront investment for the
future. In addition, they are undertaken in coordination with
“Spark X,”*1 an in-house data science competition and other

The Bank

Solution providers

DX support team(Business matching services)

MUFG Group companies

Digital & Payment
Promotion Division

The Bank

Alliance partners

Refer

Alliance partners

In the wake of the revision of the Banking Act, which resulted in
the expansion of legal definitions of operations permitted to abank, our activities to assist customers in their DX efforts havebecome even more sophisticated. Specifically, we initiatedservices aimed at helping MUFG’s corporate clients and othercustomers digitize enormous volumes of paper documents
currently in storage by leveraging know-how and external
connections gained in the course of a joint project with U.S.based Ripcord to digitize personal seal image registration
forms based on technologies afforded by this partner.
Going forward, we will promote customer DX while aligning ourapproach to changes in the environment.

in the United States, Israel, Japan and Southeast Asia through its No. 1
and No. 2 funds, with an eye to securing collaboration between investees
and MUFG. With approximately 40% of investees (based on investment
amount) engaging in successful partnership relationships with MUFG,
MUIP has thus far achieved robust outcomes. Going forward, MUIP aims
to increase investment in domestic investees while looking to step up
initiatives to incorporate startup technologies and business models which
will, in turn, help upgrade MUFG’s operations. We will continue to promote
investment activities focused on facilitating co-creation, transformation
and R&D that align with changes in the market environment.

*1 Corporate Venture Capital: A form of venture investment undertaken by a businesscorporation to achieve its strategic objectives

OthersLending16%

39%

Wealthmanagement

2%

SaaS

7%

OthersLending

13%49%

Blockchain

3%

Wealthmanagement

No. 1
Fund

10%

No. 2
Fund

Neo
bank

7%

Marketplace

Blockchain

14%

15%

SaaS

Neo bank

14%

11%

Initiatives to Achieve the Early Introduction of Generative AI Technologies That Take Full Advantage of Groupwide
Functions for Facilitating AI Utilization
MUFG is equipped with an AI Lab tasked with promoting AI-related
Introduction of Generative AI
initiatives in a way that transcends boundaries among Group companies.
This lab also works in collaboration with M-AIS, an AI research institution
within JDD,*2 while conducting PoC*3 on numerous occasions. So far, theratio of the AI-based functions developed by this lab and adopted in actual
business operations remains extremely high. Furthermore, it is charged
with the development of an AI risk management framework. In short, theAI Lab is playing a central role in the utilization of AI technologies.
Most recently, the lab conducted surveys and research on generative
AI technologies, represented by ChatGPT, in addition to developing a
portion of a large language model in-house. Insights gleaned by the AI
Lab are shared among MUFG Group companies, even as we hold study
sessions and liaison meetings attended by top management members
while proactively striving to achieve the early introduction of generative
AI and other new technologies. and liaison meetings attended by top
management members while proactively striving to achieve the early
introduction of generative AI and other new technologies.
*2 Japan Digital Design: Established in 2017, JDD is an MUFG subsidiary equipped with anumber of experts hired from external sources and specializing in digital technologies*3 Proof of Concept: Verification of new ideas and technologies to assess their feasibility

Under development

Future initiatives

Operational
reforms
Incorporate into
operations at the Bank
• Release additional
functions that make itpossible to search andrefer to in-house
information• Utilize AI to respond toin-house inquiries,
prepare documents andconduct other operations

Verify practicability
and safety• Release an in-houseservice (equivalent to
ChatGPT) for use at
the Bank

Trial
users

Limitedusers• Develop our own large
language model via
the machine learningof MUFG’s information• Realize optimalmechanisms byuse case

Phased expansion of the scope ofusers with an eye to making AI functions
available to all Bank employees

Utilizing a Platform Connecting Headquarters and Branches to Roll Out DX-Related Measures and Provide Feedback
We have developed DX Portal, an in-house platform,
Structure Supporting the In-House Sharing of DX-Related Knowledge
with the aim of communicating and disseminating
measures to promote DX and encouraging
employees to practice such measures. This platform
consolidates DX-related knowledge and solutions
in a way that transcends organizational boundaries
among Group companies. This, in turn, helps
facilitate the exchange of information and opinions
between headquarters and branches. Going forward,
we will focus on empowering each base to promote
DX while ensuring that all employees can feeltangible benefits arising from it.

Branches
Provide information

Opinions and requests

Headquarters
1. Promote DX measures

Integrated operations

2. In-house PR activities

1-1 Measures to heed voices fromfront line employees

2-1 Develop a platform fordisseminating information

1-2 Develop systems to evaluate
DX measures

2-2 Provide information to
support the practice of DX

MUFG Report 2023

58

MUFG’s Pursuit ofValue Creation

Management Message

Leadership andGovernanceManagement Strategies
and Performance

Financial Data /Corporate DataManagement Strategies and Performance

Digital Transformation

Nurturing Human Resources with Robust DX Literacy
We are implementing a variety of programs to nurture humanresources capable of spearheading DX. The DEEP training
program is one such program designed to develop core digitalspecialists and was completed by approximately 300 employees.
Moreover, approximately 500 individuals have completed a
program aimed at discovering and nurturing DX leader
candidates through in-house solicitation. In addition, we host adata science competition to provide a place for employees who
aspire to acquire digital skills to inspire and interact one another.
Also, we are endeavoring to help a broad range of humanresources acquire the ability to take the lead in data utilization
initiatives, with the goal of transforming MUFG into a corporategroup in which all employees practice data-driven operations.
MUFG Data Science Competition
The data science competition began in fiscal 2021, as an event
hosted by the Trust Bank. In fiscal 2022, we expanded this eventand hosted it by the MUFG Group. Thus, the competition is
open to all Group employees, pitting participants against one
another to achieve accurate data prediction via the use of
Python. The event attracted 267 participants from 14 Group
companies in the first round held in March 2022 and 766
participants from 15 Group companies at the second roundheld in December 2022.
Acting in collaboration with AVILEN, a startup supporting thedevelopment of human resources capable of handling AI, we
also provide an e-learning environment in which all employees,
even those without programing literacy, can learn programing
skills from the basics up, gaining hands-on experience inmachine learning-based tool development while receiving
specialist support. For those equipped with intermediate oradvanced programing literacy, this environment helps facilitate
networking and build a community of employees equipped withrobust specialist expertise throughout the Group so they caninspire one another, share insights and seek each other’s advice.

Winners, judges and staffs at the award presentation ceremony at the recent MUFG
Data Science Competition

Human Resource Development Aimed at Realizing
Data-Driven Management
To enable all employees to acquire capabilities for agile, datadriven decision making and action, we are strongly focused on
utilizing a big data platform we have developed using AWS*1 aswell as Tableau, a business intelligence (BI) tool.
In fiscal 2022, all domestic branches of the Bank began using“branch dashboards,” a BI solution designed to visualize theprogress status of deals, activities of branch staff, the trend incustomer fund transactions and other factors. The introductionof branch dashboards relieved employees at each branch ofworkload associated with processing data on Microsoft Excel
while empowering sales personnel to conduct real-timeassessment and in-depth analysis of various data. This, in turn,resulted in a growing number of proposals delivered tocustomers, an increase in the number of customer visits, andyielded other positive outcomes.

MUFG Report 2023

Initiatives Undertaken by Mars Growth Capital
Accomplishments
Mars Growth Capital (Mars) is a joint venture established by
MUFG and fintech company Liquidity Capital. Currently, Mars isproviding finance to startups based mainly in Asia. To date, Mars
has conducted interviews with representatives of more than
2,000 companies and extended financing to 30, stably achieving
business growth.
Because Mars takes the form of a fund, it is capable of
implementing a nontraditional mode of financing and has
embraced the challenge, breaking free of reliance on conventional
credit scoring models used by banks. Specifically, Mars not only
takes into account applicants’ financial information, but also utilizes
prospects’ daily operational data to predict their future performanceprior to considering the extension of financing. This approach allows
Mars to provide new fundraising options to startups, which often
face difficulties in obtaining financing from banks.
Net Cash Investment Amount*1(Millions of U.S. dollars)

420
335
237 253
138

0

13

42

50

69

Dec. 31, Mar. 31, Jun. 30, Sep. 30, Dec. 31, Mar. 31, Jun. 30, Sep. 30, Dec. 31, Mar. 31,
‘20
‘21
‘21
‘21
‘21
‘22
‘22
‘22
‘22
‘23

Number ofcontacted customers
Over

2,000

Our Future Initiatives

Ryutaro Hiroshima
Mars Growth Capital,
Co-CEO

Recently, we invested in Liquidity Capital to leverage ourinsights and know-how—accumulated in the course offinancing activities overseas—in an even broader range ofbusiness fields. Mars Growth Capital is now poised topursue further business expansion, with plans calling forestablishing a new fund in Europe as well as launching afund based on an insurance scheme offered by Nippon
Export and Investment Insurance (NEXI). In addition, we
have decided to establish Mars Japan to play a part in the
incubation of startups in Japan. Looking ahead, we will
promote startup financing on a global basis.
Leading-edge
AI technologies

Employees using branch dashboards

The Bank’s headquarters has established a dedicated teamtasked with spearheading and supporting the utilization of data
gleaned from sources across the organization so that employees
at each department can conduct BI-based data analysis andvisualization on their own. Several employees from each divisionparticipate the team once or twice a week to use the power of
BI to resolve the operational issues currently confronting each
respective department. Through the activities, these humanresources are expected to acquire robust BI skills and, bydisseminating their insights, begin making unique contributionsin their respective departments. In this way, we are promoting
the overall enhancement of our employees’ BI skills.
In addition, we are helping employees raise their data literacy by,for example, aligning the content of training with the level of theirknowledge, offering e-learning programs and assisting them intheir efforts to acquire relevant external certification.

Global network &financing know-how

Mars Europe

IRR (FY2022 results)

Mars Japan

12.7%

Value of the fundafter expansion

USD 750 million

Fund 1 & Fund 2
Mars NEXI Fund

*1 Aggregate net commitment amount of the transactions considering amortizations
during investment period*1	A cloud computing service provided by Amazon Web Service, Inc.
*2	A framework for analyzing and visualizing an enormous volume of data andutilizing it in the course of operational and management decision making

59

Mars—Supporting Startups via the Use of AI Technologies

Launching Mars Japan
Challenges Surrounding Japan’s Startups
Pre-unicorn companies in middle or later stages often need toreceive large-size debt financing to achieve growth. However,compared to countries abroad, Japan has far fewer major lenders
capable of such financing. Because of this, domestic pre-unicorn
companies tend to be dependent solely on equity-based
fundraising, resulting in a great number of instances in which theychoose to be listed before achieving sufficient business growth.
The Objectives of Mars Japan
Aware of this situation, MUFG decided to launch Mars Japan, withthe aim of extending financing to domestic startups in a way thatleverages the AI-based lending screening model developed via
startup financing in Asia. Through Mars Japan, we will provide
promising pre-unicorn and unicorn companies in Japan withfunds for securing business growth. By doing so, we willcontribute to the creation of Japan-made, globally competitive
unicorn companies and support their growth.
Furthermore, with financing as a starting point, we will extend
comprehensive support backed by functions afforded by theGroup and thereby accommodate the needs of startups thatare aiming for an IPO or considering other businessdevelopment measures.

Status of Startup Funding by Growth Stage
7%

Japan
Europe55%

North
America

55%
66%

Global
0%

20%

Seed

40%

Early

60%

80%

100%

Middle/Later

Source: A Survey of Startup Ecosystems issued by the Cabinet Office and the World Bank
Seed

Senior
debt

Small

Early

MiddleLater

IPO

MUFG Bank

Large

Mezzanine
debt
EquityMUCAP*1/MUIP*2/MUFG Bank

*1 Mitsubishi UFJ Capital*2 MUFG Innovation Partners

MUFG Report 2023

60

Management Message

MUFG’s Pursuit ofValue Creation

Management Strategies
and Performance

Leadership andGovernance

Financial Data /Corporate DataManagement Strategies and PerformanceContribution to Addressing Environmental and Social Issues

CSuO Message

We Will Promote Sustainability
Management, Adopting a
Diverse Range of Perspectives
Roles of CSuO
I am Miyuki Zeniya, and took up the position of CSuO in
October 2022. It was only some five years ago that theposition of CSuO started to be gradually recognized inJapan. This is because companies without the perspectiveof sustainability are unlikely to grow. At MUFG, CSO used toconcurrently function as CSuO. The organizational
structure, however, was changed so that, currently, CSO
ensures that the sustainability measures are in line with the
management strategy, and CSuO works, under CSO, on awide range of sustainability challenges, promoting thesustainability management of MUFG in collaboration withbusiness divisions.
In fulfilling the roles of CSuO, I first try to “identify, withoutbias, what the society requires.” In my career, I worked atvarious institutions including a think tank, a regional bank,an insurance company as institutional investor, and a listed
renewable energy company (as outside director). Throughmy experience, I came to know that a matter often looked
different depending on the standpoint, and I now have adiverse range of perspectives. From now on, as before, I
would like to always think how MUFG should be as acompany responsible for solving social issues andcontributing to realization of the sustainable society.
To Solve Environmental Challenges
Last October, MUFG issued the “MUFG Transition
Whitepaper” for achieving the carbon neutrality. For mostcompanies, it is an urgent issue to take steps towards the
carbon neutrality. The Whitepaper presented a path where
MUFG ties up with customer companies to support theirtransition through provision of financial services, after
clarifying inter dependency among industries on the
supply chain.
We believe that the expertise of MUFG for supporting
customer companies is also applicable to the carbon
neutrality efforts of the countries and regions in the Global
South. In Asian countries where the economy is expected
to continue growing, it is a tough issue to achieve thecarbon neutrality and simultaneously to enhance the living
standards, but MUFG will study measures from various
aspects to support the economic growth and at the sametime to contribute to solution of the global environmental

61

MUFG Report 2023

Miyuki Zeniya Group CSuO

issues, in consideration of the energy situation of therespective countries and regions.
Last November, I participated in the COP27 conference(The 27th Session of the Conference of the Parties to theUnited Nations Framework Convention on Climate
Change). It was my first business trip overseas in several
years due to the COVID-19 pandemic, and I reacknowledged
the urgency of the climate change issue. Moreover, I was
keenly aware of the difference in awareness of theinternational rule-making concerning the climate change
between Japan and the world. Participation in suchdiscussions will make it possible to identify the world trends
early and reflect them to the management strategy. It will
also be an opportunity to transmit the information about
the stance and circumstances of Japan in consideration of
the geographical, social and political factors to obtainunderstanding of other countries. From such a viewpoint,
MUFG will continue taking part in the rule-making
discussions proactively.
This April, MUFG issued the “MUFG Progress Report 2023.”
Concerning the greenhouse gas emission reductions of theinvestees and borrowers, MUFG published, in the Report,
the actual results of the power and oil & gas sectors forwhich the interim targets had already been established,
and newly released the interim targets for the real estate,steel and shipping sectors. The Report also carries the
progress status of various initiatives, including the transition
support and rule-making as stated above. For the current
fiscal year, MUFG is planning to publish our Transition Planfor decarbonization, and will continue disclosing its carbonneutrality initiatives in a transparent manner.

Among the environmental challenges, measures toaddress the biodiversity issues are also getting more andmore important, along with the climate change issues. In
the COP15 conference (the 15th Conference of the Parties
to the United Nations Convention on Biological Diversity)that was held last December, Mr. Mark J. Carney, cochairperson of the Glasgow Financial Alliance for Net Zero
(GFANZ), said that companies and financial institutions
should integrate their actions to tackle the climate change
and biodiversity issues. His point of argument was that thebiodiversity issue is not only an issue of nature conservation:
the climate change may affect the ecosystem and material
cycle, and could lead to the food crisis and health damages
around the world. In the coming September, the disclosure
framework of TNFD (the Taskforce on Nature-related
Financial Disclosures) is scheduled to be finalized, andMUFG is now in the process of preparation for the disclosure.
To Solve Social Issues:
Initiatives for Respecting Human Rights
The respecting human rights is closely related to various
environmental and social issues, and is one of the mostimportant issues to be considered in corporate
management. MUFG has been stepping up measures forrespecting human rights, and issued the “MUFG Human
Rights Report 2023” this June that summarizes thephilosophy and initiatives of MUFG for respecting humanrights. The “Respecting human rights” is becoming all themore important globally as initiatives to deal with thepolarization and decoupling of the economies worldwide.
The COVID-19 pandemic and military attack on Ukraine arealso factors for the heightened call for consideration for thehuman rights on the supply chain. I myself was a memberof the Working Group for formulating Japan’s National
Action Plan on Business and Human Rights, and then haveacted as a member of the promotion team. The companies
are now required to take effective measures, not justsharing the value that the “respecting human rights isimportant.” I believe that, towards establishing a value chain
where human rights are respected, it is the role of thefinancial institutions to not only implement their own
measures, but also have numerous talks with the customers
and suppliers to share the importance of the respect for
the human rights for collaboration.
With regard to the respect for the human rights of theemployees, MUFG has been promoting such measures as
prevention of discriminations and harassments, reduction of
overtime hours, and inclusion and diversity (I&D). Morerecently, MUFG incorporated the viewpoint of equity(fairness and equitability) to I&D to make it “diversity, equity

and inclusion (DEI).” In order to promote DEI across theGroup globally with a sense of togetherness, MUFG now
upholds the three pillars from the current fiscal year: genderequality; development of human resources; and cultivationof corporate culture; to accelerate the measures.
To Promote Sustainability Management
In order to remain as a responsible financial institution thatcan contribute to solution of the environmental and social
issues, MUFG must be, first of all, a resilient organization. It
is also important, however, that each and every employee
perceives and identifies “what the society expects” withoutbias and take actions accordingly. As the challenges are
getting more and more complicated and diversified on a
global scale, such as the climate change, biodiversity,
human rights, and poverty and famine, needs for thesustainable finance are expanding rapidly that supports
realization of the sustainable society. A financial institution
needs not only to provide finances but also to follow up the
progress for solution of the issues thereafter, supportingthe customers on an ongoing basis for achievement of thetargets with numerous conversations. The number ofoccasions that I feel expectations from the customers for
MUFG is also increasing. If the customer companies growand their corporate values increase through transactions
with MUFG, it will also help stabilize the society. The
customer growths will also enhance the trust of the society
for the actions of MUFG, which will likely increase thecorporate value of MUFG as well.
I am sure that the financial industry will continue playing
important roles as social infrastructure. Towards realizing
the purpose of MUFG: Committed to empowering abrighter future., we will closely communicate with people
with more diverse standpoints than ever before to promote
the sustainability management, always thinking what isrequired of MUFG.

Please see the homepage for various reports.
https://www.mufg.jp/english/csr/report/index.html

MUFG Report 2023

62

Management Message

MUFG’s Pursuit ofValue Creation

Management Strategies
and Performance

Leadership andGovernance

Financial Data /Corporate DataManagement Strategies and PerformanceContribution to Addressing Environmental and Social Issues

Sustainability Management Focused on Addressing
10 Priority Issues
MUFG considers the pursuit of sustainability to be one of its mostimportant management issues.
With the conviction that environmental and social sustainability
are essential to achieving sustainable growth for MUFG, we areengaged in value creation employing an integrated approach inwhich the execution of management strategies goes in tandemwith the pursuit of solutions for social issues.

In light of our newly established Purpose, “Committed toempowering a brighter future,” and, with an eye to better
fulfilling society’s expectations in areas where MUFG’s
capabilities can be brought to bear, we have reviewed priority
issues that must be tackled to help achieve environmental andsocial sustainability. As a result of this review, we have identified
10 priority issues.

10 Priority Issues and Response to Opportunities and Risks

10 Priority Issues
Climate change measures&environmental protection

MUFG’s recognition
Opportunities
and risks

Opportunities
and risksCommitted to empowering a brighter future.

Response to aging
population & low birthrate

Contribute to the realization of sustainable“people, society and global environment”

Customers
and business
partners

Risks

Shareholders

Inclusion & diversity
Communities
and society

Futuregenerations

Opportunities

Employeesof MUFG

Opportunities

Risks

Developing social
infrastructure

Opportunities

Risks

Climatechangemeasures &environmental
protection

Supporting industrial
development &innovation

Response toaging
population &low birthrate

Overcoming
threats tohealthInclusion &diversity

MUFG’s Sustainability
Management
Reduction of
educational
disparities

Resolving priority issues throughbusiness strategies, risk
management and social
contribution

MUFG Report 2023

Developing
socialinfrastructure

Supporting
industrial
development &innovation
Promotingworkstylereforms

63

Promotingworkstyle reforms

Integration with management strategies

Response topoverty

Ensuring
equal access tofinancialservices

Ensuring equal accessto financial services

Opportunities
and risks

Opportunities
and risks

Opportunities
and risks

Opportunities
and risks

Response to poverty

Reduction of
educational disparities

Risks

Opportunities

Risks

Overcoming threats
to health

Opportunities
Risks

The ongoing trend toward decarbonization is expected to result in major changes in global industrial
structure which, in turn, will position MUFG and its customers to face both risks affecting their business
continuity and opportunities for growth. It is important to ensure smooth transition to a carbon-neutral
society and a virtuous cycle of environmental and economic improvement in order to realize asustainable society.
The importance of across-the-board environmental protection initiatives expand to include not only climatechange measures but also the protection of natural capital and biodiversity, etc.
Pages 65-74
Leveraging our comprehensive financial service capabilities is important in order to meet evolving anddiversifying customer needs in the face of changes in social structure due to aging population and low
birthrate.
The aging population and low birthrate may lead to economic stagnation and a decline in growth potential,
leading to the shrinkage of both funding demand and interest margins, a situation that could, in turn,have a particularly negative impact on the traditional commercial banking businesses.
Page 77
Empowering diverse talents to inspire one another will facilitate the creation of new concepts andideas and the transformation of employee modes of behavior, enabling MUFG to transform its
corporate culture and deliver new value that surpasses the expectations of customers and society as awhole, while it will also contribute to inclusion of diverse individuals.
Developing a resilient organization and society capable of empowering diverse talents with differing
sense of values is essential to flexibly adapting to a time of rapid changes.
Pages 83-84
Robust countermeasures against the aging of infrastructure at home and abroad are key to thecreation of sustainable society, as is the construction of social infrastructure, particularly in developing
countries.
For us to maintain trust and reliability as a financial institution and a component of social infrastructure,
the proper handling of threats to safety and security is a requisite. It is therefore essential to strengthen
security measures safeguarding informational assets and prevent financial crimes that have become
ever more complex and sophisticated.
Page 32 The John F. Kennedy Airport Expansion Project
Offering assistance for the creation of growing industries, which are the drivers of economies, andvibrant venture startups is essential to avoiding economic stagnation and securing sustainable growth.
Our financial functions are expected to play an important role as such endeavors require a financier
capable of risk-taking.
Page 78

Providing more customers with opportunities to access financial services and investment not only
contributes to improving the growth of economies but also allows for MUFG to secure an even morerobust foundation for growth.
Pages 41 and 43 Digital Platform in Asia

On the back of Japan’s declining population, businesses are expected to provide their employees with
opportunities to embrace flexible workstyles aligned with an evolving sense of values, changes insocial structure and the growing need to strike a work-life balance. Fulfilling these expectations
provides the baseline for the effective utilization of human resources and achievement of corporate
growth and, in light of fallout from COVID-19, has become a matter of even greater importance.
Improving the efficiency of our financial functions, which constitute a part of social infrastructure,
will help society as a whole achieve higher productivity while positioning us for greater productivity
as well.
Poverty often results in a variety of other problems posing serious threats to social stability (e.g., publichealth, hygiene and security) and human rights (e.g., sufficiency in food, clothing and housing) as wellas to the formation of a basis for sustainable economic growth (e.g., educational equality).

Those who are now students will shape the next generation and, therefore, constitute the foundationof future society. Among them may also be our potential colleagues. Therefore, supporting them is ofgreat importance.
Proper education is at the base of social stability and sustainable economic growth. Thus, educational
shortfalls can result in a negative heritage of inequality that will be passed down to future generations.
The lack of educational opportunity due to economic disadvantage therefore deserves major publicattention and needs to be tackled.
Innovation in the healthcare sector will contribute to improvement in social and economic resilience.
The sustainability of economic activities will be largely dependent on the strengthening of capabilities
for preventing novel infectious viruses from spreading (via the development of vaccines, etc.) and
responsiveness to the pandemic (via the development of medical technologies and institutions) inorder to ensure robust social functions in anticipation of the further aging of population.

MUFG Report 2023

64

Management Message

MUFG’s Pursuit ofValue Creation

Leadership andGovernanceManagement Strategies
and Performance

Financial Data /Corporate DataManagement Strategies and PerformanceContribution to Addressing Environmental and Social Issues

Promotion Structure for Sustainability Management
At MUFG, the Sustainability Committee has been positioned toplay a central role, under the supervision of the Board of
Directors, in the development of a promotion structure forsustainability management by ensuring the groupwide,
integrated management of all relevant activities. Fully convening
at least once each year, the Sustainability Committee reviews
and discusses the status of sustainability initiatives, submitting its
conclusions to the Executive Committee and the Board of
Directors. Moreover, in October 2022, MUFG appointed a Chief

Moving towards Carbon Neutrality

Sustainability Officer (CSuO), a dedicated executive tasked withspearheading the strengthening of the Group’s capabilities toaccommodate the global trend toward sustainability on various
fronts and the enhancement of its presence in terms of the
public dissemination of its initiatives aimed at addressing
environmental and social concerns.

h ttps://www.mufg.jp/dam/csr/report/progress/202304_en.pdf

2022

2023

2024

…

2019

2020

2021

2030 interim target

Power (emission intensity, gCO2e/kWh)

328

307

299

156–192gCO2e/kWh

Oil & gas
(emission reduction rate, MtCO2e)

84

81

76

(15%)–(28%)

…

2040

…

2050

Net Zero Emissions from the
Financed Portfolio

Mitsubishi UFJ Financial Group, Inc.
Board of Directors

Risk Committee

Execution

Executive Committee

Credit and Investment
Management Committee
Risk Management Committee
Credit Committee

External
Advisors

Advice/Suggestions

Real estate(emission intensity, gCO2e/m2)
Commercial real estate65

44–47kgCO2e/m2

Residential real estate

27

23kgCO2e/m2

Steel(emission reduction rate, MtCO2e)

Sustainability OfficeSustainable Business Div.

22

Net zeroSupervision

Chairperson: Group Chief Sustainability Officer (CSuO)
Members:	Group CEO, CSO, CFO, CRO, Heads of Business Groups,
Officers in charge at Group companies, etc.

in April 2023, we released the latest edition of the MUFG Progress
Report 2023 to update our stakeholders on progress in our
relevant initiatives.

Progress in Fiscal 2022 (Metrics and Targets) 
Please refer to pages 61 to 62 for CSuO Message.

Sustainability Committee

Issuance of the MUFG Progress Report 2023
In May 2021, the MUFG Carbon Neutrality Declaration wasannounced. In line with this declaration, we are aiming for net
zero GHG emissions from our financed portfolio by 2050 and net
zero GHG emissions from our own operations by 2030. Moreover,(22%)

Shipping (PCA )

0.6

*1

PCA 0

Decarbonization through financial
services

Group Companies
Sustainability Committees, etc.

Sustainable finance (trillions of yen)

Departments in Charge of Sustainability

Project finance (billions of U.S. dollar)

Principal Themes of Discussion and Other Items Considered at the Fiscal 2022 Sustainability Committee Meeting
Theme

Details

Response to sustainability issues andassessment of the prevailing environment

 tatus of our response to priority sustainability issues and fiscal 2023 initiatives requiring our focus
S
Assessment of major trends at home and abroad regarding sustainability issues and the prevailing environment

2

Climate change measures

 ain outcomes of initiatives to realize carbon neutrality and our response in fiscal 2023
M
Interim targets for 2030 toward the achievement of net-zero GHG emissions from our financed portfolio in 2050
(interim targets for additional sectors and results of emissions from sectors subject to disclosure)Measurement of financed emissions from sectors specified by the TCFD recommendations
Future policies for promoting transition in light of the invigoration of green transformation (GX)-related investment in Japan

3

Natural capital and biodiversity

 inancial institutions’ positioning of natural capital and biodiversity and trends in the global discussion of such matters
FInitiatives to launch TNFD-related information disclosure (analysis of risks and the examination of opportunities
expected to emerge going forward)

4

Respect for human rights

Identification of priority human rights-related issues that require immediate response based on a human rights risk map
Direction of our response to human rights-related issues (strengthening of human rights due diligence, the issuanceof a human rights report, etc.)

5

Human capital and inclusion & diversity(I&D)

 oncepts regarding and future policies on human capital management and relevant information disclosureCActions to be taken in fiscal 2023 to promote I&D

6

Initiatives as an asset manager

Initiatives to be undertaken in the aftermath of the formulation of the interim targets by the Net Zero Asset Managers
initiative (NZAM)
Issues associated with the promotion of sustainable investment and our response

7

Revision of the MUFG Environmental andSocial Policy Framework

 evision of descriptions regarding the forestry and palm oil sectors, the inclusion of human trafficking in Prohibited
R
Transactions excluded from financing and the addition of businesses in conflict areas to Transactions of High Caution

8

ESG assessment

Results of fiscal 2022 ESG assessment and the status of initiatives now under way to address issues

9Disclosure of non-financial information

Global regulations regarding the disclosure of non-financial information and issues to be addressed going forward

1

Exchanges of Opinions with External Advisors in the Environment and Social Fields
a diverse range of topics that included the latest trends in
MUFG holds periodic meetings and other events to which itinternational initiatives to counter climate change—the current
invites external advisors*1 for the exchange of opinions withhighest priority topic—COP27 concerns and biodiversity—amembers of the Board of Directors, with the aim of garnering
subject whose importance is growing—as well as human capital
external specialist insights that can be utilized to inform its
and initiatives to ensure respect for human rights.
sustainability initiatives. One such meeting held in December
2022 saw attendees engage in lively discussions covering

3.7

7.9

14.5

24.6

¥35 trillion

3.58

3.77

2.95

2.58

50% reduction
from fiscal 2019

Approx.
120

Approx.
90

Approx.
80

Credit balance targets for coal-fired
power generation (FY)Corporate finance (billions of yen)
Net zero GHG emissions fromown operations

Fiscal 2025

Fiscal 2026

Domestic
emission volume
Reduce by 2/3

50% reduction
on a groupwide,
global basis

Net zero
Reduce GHG emissions
per economic intensity
by 50% from 2019 for
55% of assets undermanagement(Target 55% of assets
under management)

Decarbonization initiatives as an
asset manger

Targets for the reduction of CO2
emissions through renewableenergy project finance

Zero
Zero

Cumulative
total of 36.63
million tons

Cumulative total fromfiscal 2019 to 2030:
70 million tons

Carbon-related assets(credit amounts*3)

Results: A total of ¥60.2*4 trillion (energy: ¥8.2 trillion; utility: ¥9.1 trillion; transportation: ¥12.0 trillion; materials & buildings: ¥26.8 trillion;
agriculture, food & forestry products: ¥4.1 trillion) (As of fiscal 2022 end)

Executive compensation linked
with degree of success inclimate change action

In fiscal 2021, we updated indicators for determining executive compensation, adopting a new indicator determined by the degree of
improvement in external ratings granted by ESG rating agencies. Specifically, this new indicator is set to be used as part of theassessment of the level of achievement vis-à-vis targets under the Medium-Term Business Plan (MTBP). Achievement will be assessed on
an absolute evaluation basis in light of ratings granted by five major agencies*5 and reflected in compensation as a portion of stock,
representing 5% of the total evaluation weighting, to be granted based on medium- to long-term performance.

*1 A measure of consistency that indicates the difference from the required level across the portfolio. Calculates the Vessel Climate Alignment (VCA) of individual vessels providing
financing as a weighted average of the percentages in the loan portfolio *2 Cumulative annual CO2 reduction effect from renewable energy projects MUFG has provided with financein each fiscal year, calculated based on generation capacity, capacity factor and emission factor. The value is calculated after taking into account the share of MUFG’s loan arrangement
or underwriting amount. *3 Sum of loans, forex, acceptances and guarantees, unused commitment lines, etc. *4 In accordance with the revised TCFD recommendations of October
2021, the data were compiled for 4 non-financial groups (energy, transportation, materials and buildings, agriculture, food and forest products). Excludes credits for renewable power
belonging to the utility sector. The results include partner banks (Bank of Ayudhya (Krungsri) and Bank Danamon Indonesia). Sector classification is based on the customer's core business(largest sales/power mix) *5. MSCI, FTSE Russell, Sustainalytics, S&P Dow Jones, CDP

Initiatives for Net Zero from Our Own Operations
In fiscal 2022, we completely shifted to 100% renewableenergy for electricity procured by all domestic consolidated
subsidiaries. In addition, we have now set new interim targets
to accelerate our efforts to achieve net zero emissions fromour own operations by 2030. In order to achieve the followinginterim targets, from fiscal 2023 onward, we have beenencouraging tenants and other owners to switch to renewableenergy in Japan and overseas, converting company vehicles
to electric vehicles (EVs), and strengthening measures toreduce the environmental impact.
In addition, to further improve the reliability of our GHG
emissions, we aim to obtain third-party limited assurance forour emissions in fiscal 2022 on a group and global basis.

*1 Rintaro Tamaki (President, Japan Center for International Finance), Junko Edahiro (Professor, Graduate School of Leadership and Innovation, Shizenkan University; President, Institute for Studies in
Happiness, Economy and Society; Founder and President, e’s Inc.), Kenji Fuma (CEO, Neural Inc.)

65

MUFG Report 2023

MUFG Report 2023

66

Management Message

MUFG’s Pursuit ofValue Creation

Management Strategies
and Performance

Leadership andGovernance

Financial Data /Corporate DataManagement Strategies and PerformanceContribution to Addressing Environmental and Social Issues

Participation in Global Climate Change-Related Initiatives andDemonstration of Thought Leadership
MUFG considers facilitating customers’ carbon neutral throughthe provision of financing our top priority in our pursuit of net
zero. In addition to proactively engaging with our customers,
MUFG is actively involved in the discussions to develop global
frameworks through participation in global climate changerelated initiatives. Moreover, we proactively engage tounderstand how our stakeholders assess Japan and Asia’s
pathways toward carbon neutrality, which may not necessarily
be identical with those in Europe and the U.S., through various
projects such as the MUFG Transition Whitepaper development
as well as hosting a side-event at COP27.

Contribution
Contributeto
tointernational
internationalinitiatives
initiatives

Dissemination
Disseminate ourof opinions
our opinions
on transition
on transition
pathwayspathwaysfor Japan
for Japan

GFANZ
GFANZ
and
and
NZBA
NZBA

Transition
Transition
Whitepaper
Whitepaper

Asia
Asia
Transition
Transition
FinanceFinance
Study
Study
Group
Group

COP27
COP27

Engagement with and assistance to customers

Publication of the MUFG Transition
Whitepaper
In October 2022, MUFG published theTransition Whitepaper with the objective offacilitating the understanding of such stakeholders as Europeanand U.S. policymakers regarding pathways toward carbon
neutrality for Japan. MUFG recognizes that the starting point andstrategy to pursue carbon neutrality in each country differ due toregional characteristics. Also, we are convinced that, as Japan’s
economy has long been energized by indirect finance, we should
promote engagement with corporations, rather than divestment,
to support the journey to carbon neutrality across society.
Moreover, no industry can remain viable for long on a standalone

67

MUFG Report 2023

Promoting Sustainable Businesses
Responding to Expectations for
MUFG with Senses of Our Own

Daisuke Nishiyama

CarbonDecarbonization
Neutralityinitiatives
initiativesthroughthroughfinancing
financing

Net-Zero Banking Alliance (NZBA)The NZBA is an industry-led alliance convened by the United
Nations Environment Programme Finance Initiative (UNEP FI) toalign member banks’ lending portfolio with net-zero GHG
emissions by 2050. As of June 2023, the membership consists of
132 banks around the world. MUFG was selected as a member of
the Steering Group, which consists of 12 members, functions as
the governance body of the alliance. A representative of MUFG
has been chairing the Transition Finance working group thatdeveloped the NZBA Transition Finance
Guide (published in October 2022). This
guide provides member banks with highlevel principles as a reference in forming
their strategies on transition finance.

FO C U S

basis, so cross-sectoral interdependencies through electricity,heat and the carbon recycling must be understood to realize
effective emissions reductions. In addition to the factors
described above, we are striving to communicate the necessityof maximizing the use of renewable energy produced in Japanand overseas and creating a new supply chain. At present, we arecompiling the Whitepaper 2.0 in tandem with partner companies
and administrative agencies. The Whitepaper 2.0 will feature thetechnologies and supply chains that are critical for promoting
carbon neutrality of Japan’s electricity and heat sources and wewill present Japan’s transition plan and investment opportunities
ahead of us.
Asia Transition Finance Study Group (ATFSG)
The ATFSG is an initiative formed and led by private financial
institutions to facilitate transition financing in Asia. MUFG has
led discussions with more than 30 participating financial
institutions, based on which the ATFSG has compiled practicalguidelines to be used by financial
institutions when they consider transition
finance along with the ATFSG activity
report and a list of recommendation forsupport from governments and otherstakeholders. These documents were thenpublicized at the Asia Green GrowthPartnership Ministerial Meeting (AGGPM)
hosted by the Ministry of Economy, Tradeand Industry in September 2022.

Managing Director, Head of Sustainable Business Division,
MUFG Bank, Ltd.

All the Voices to MUFG Have Context andBackgroundIn fiscal 2022, the approach for the sustainablebusinesses of MUFG was always to start with discussion
with the customers, then to continue dialogues, andfinally to go into action. At MUFG whether we belong to
the Corporate Banking Units or Corporate Center, beyond
the boundaries of different divisions, we proactively
engage in dialogues with industrial customers, investors,
government ministries and agencies, local municipalities
and international initiative organizations, thereby
endeavor to find a context of our own in the first-handinformation, rather than being influenced by some strong
opinions. While listing to the stories of the customers
with empathy, MUFG continues dialogue with them until
we can fully digest their stories. This, I believe, is theapproach of engagement shared across MUFG. Whilecommunicating with stakeholders, if we identify any
discrepancies or gaps in perception with them, then wetry to work with the customers to narrow down the
differences based on objective information. The
sustainability businesses of MUFG as provider of indirect
finance, carried out in daily business activities ofpromoting engagement with the customers of all theindustries, are no longer activities that belong to a
specific division. They are now an ongoing crossdivisional activity making full use of initiatives such as
the Energy Transformation Strategy Project Team or task
forces for Transition Whitepaper in a timely manner. It isthe corporate culture of MUFG that, in order to realize
the commitments: Emphasize Engagement, notDivestment; and Responsively Support Our Customers’
Transition Journey; we proactively seek support frompartner companies and advisors both from within andoutside of the Group under the idea of “Open & Inclusive,”and promote engagement by always “gathering contexts
behind the voices of stakeholders.

Identical Goal, Different Paths
At present, 92 countries around the world have declaredcarbon neutrality. These countries account for 90% of
global GDP, and have committed to reduce the greenhouseeffect gas emission by 88% globally. The goal is identicalaround the world but the paths differ greatly depending on
the regional characteristics. It is required to pay attention
to the daily life of people, industrial development, and evennational security. It is important to identify levers to achievecarbon neutrality for each country, with an understandingof the horizontal and vertical interconnectivities of theindustries for the country. MUFG has transactions withcustomers in all the industrial sectors. We have theopportunities to represent the Japanese or Asian banks toparticipate in international financial initiatives. From theseexperiences, MUFG is in a position to be able to benchmark
excellent programs of overseas countries, clarify theregional characteristics of respective countries in an
objective manner. With these, MUFG, calmly but with
passion, would like to make progress together with ourcustomers in their current efforts to reduce emissions asmuch as possible, to realize trajectories for carbon neutrality
in the future. To steadily achieve carbon neutrality, MUFG
will provide support for our customers by making
investment ourselves in renewable energy through fundbusinesses such as Z Energy. However domesticallygenerated renewable energy is inadequate, therefore MUFG
believes it important to have macro perspectives and build
international networks, including alliances with overseas
countries, for importing renewable energy sources, and for
this, MUFG will support establishment of new supply chains,such as those for hydrogen, ammonia and methanation.
I do not believe it easy to know all the realities that face thecustomers but, by taking up each issue seriously, by trying
to see the entire picture of the society or industry, and bycollaborating closely with people in the industries,
governments and academia, MUFG will develop sustainablebusinesses that are unique to MUFG on a global scale.

MUFG Report 2023

68

Management Message

MUFG’s Pursuit ofValue Creation

Management Strategies
and Performance

Leadership andGovernance

Financial Data /Corporate DataManagement Strategies and PerformanceContribution to Addressing Environmental and Social Issues

Climate Change Measures & Environmental Protection(Disclosure Based on TCFD Recommendations)

Governance
The Board of Directors’ Supervision of MUFG’s Climate
Change Measures
At MUFG, the Sustainability Committee, which operates
under the Executive Committee, is charged with periodicallydeliberating policies on and determining the status of theGroup’s response to opportunities and risks arising fromclimate change and other environmental and social concerns.
MUFG has positioned climate change-related risk as one of
the Top Risks that it must pay close attention to. Accordingly,
these risks are discussed by the Credit & Investment
Management Committee, the Credit Committee and the Risk
Management Committee, all of which are under the directsupervision of the Executive Committee.

In fiscal 2021, MUFG launched a project team tasked withtaking a groupwide, cross-regional approach to spearheading
and accelerating initiatives to realize the MUFG Carbon
Neutrality Declaration announced in May 2021. The content
of each initiative is also discussed and determined at steeringcommittee meetings attended by the Group CEO and otherkey members of top management.
In fiscal 2022, MUFG held two rounds of steering committee
meetings in addition to holding discussion meetings attended
by management and focused on specific themes on a totalof eight times. Meanwhile, the progress status of initiatives torealize the Carbon Neutrality Declaration was reported to theBoard of Directors as necessary. Furthermore, we hosted
periodic meetings attended by approximately 500 employees,
including individuals engaged in sales departments, servingas Product Offices (POs), credit departments and planningdepartments, to address topics centered on green
transformation (GX). Also, we established the Power Sector
Project Team focused on carbon neutrality for the power
sector. As such, the entire workforce of MUFG is striving tostep up its measures to address climate change-related
issues and promote relevant initiatives.

Conclusions reached by the above committees are reported
to the Executive Committee and, ultimately, reported to anddiscussed by the Board of Directors. In addition, matters
discussed by the Credit & Investment Management
Committee and the Risk Management Committee are also
examined by the Risk Committee, which mainly consists ofoutside directors, and then reported to the Board of Directors.
The Board of Directors considers promoting sustainability
management an important theme. Accordingly, the Boardof Directors actively addresses matters related to this theme
through dedicated sessions. MUFG also maintains threeadvisor positions to which it appoints external specialists
representing the environmental and social fields to engage
in the exchange of opinions with members of the Board. By
doing so, we incorporate insights from outside experts into
our initiatives.

In addition, in order to ensure structural alignment to gather
intelligence and secure business opportunities, we hold a“Global ESG Conference” between our teams in Japan andour regional ESG teams in APAC, EMEA and the Americas.
Through this global structure, we strive to deliver solutions to
our customers—both in Japan and overseas—and maintainrobust engagement with them.

Supervision

Board ofDirectors

 rogress status of initiatives to realize the above declarationP• Progress in sustainable businesses• Setting interim targets for the financed portfolio (real estate, steel
and shipping sectors)• Interim target results of power and oil & gas sectors• Reduction of GHG emissions from MUFG’s own operations, etc.
Revision of the MUFG Environmental and Social Policy Framework
Ratings granted by ESG rating agencies

Risk Committee
Recommendations
for resolutions and reported items at the Boardof Directors

Compensation
Committee


Revisionof the executive compensation system (inclusion of ESGrelated items in indicators for assessing executive performance)

Audit
Committee

Monitoring and proposing regarding ESG compliance

MUFG Report 2023

Execution

69

Main Items Discussed by and Reported to
the Board of Directors Relating to Climate Change

Through these and other endeavors employing a groupwide,cross-regional approach, we strive to develop a robust
framework enabling us to consolidate intelligence on the latest
regulatory trends, exercise a stronger grip on various risks andotherwise strengthen our overall risk management capabilities.

Strategy
Since the announcement of the MUFG Carbon Neutrality
Declaration in May 2021, we have engaged in dialogue withcustomers and provided them with solutions to the issues
they are confronting. To this end, we are making efforts togather necessary information from various perspective
through the participation in international initiatives.
Strengthening Sustainable Businesses throughEngagement
Taking advantage of our global network, which is designed tosupport sustainable businesses, we promote our engagement in
dialogue with clients. Addressing the differing issues and needs
our customers are now facing, we also strive to develop anddeliver services needed by our customers in a timely andseamless manner, working in tandem with them to achieve carbon
neutrality. For more details, please refer to pages 71 and 78.

Supporting Customers’ Efforts toward Carbon Neutrality
while Developing New Business Opportunities
MUFG aims to support customer efforts to transform theirbusiness models as well as the transition of whole industries
toward carbon neutrality. To this end, we provide solutions
designed to assist customers in their pursuit of change andinnovation aimed at promoting transition to carbon neutrality.
In financing, we constantly endeavor to upgrade oursustainable financing products and services to support
customers’ transition efforts. Simultaneously, with an eye todeveloping future business opportunities, we play our part ininternational rulemaking for transition finance (please see
page 67), we support innovation-oriented projects an aim ofbuilding expertise in new technologies, and we are active increating new markets and commercializing new businesses.

Main Initiatives in Fiscal 2022 and Examples of Financing Activities
Underwrote transition bonds issued by JERA Co., Inc. (the first bonds of this kind in the domestic energy industry): Total issuance amount¥20.0 billion
Originated transition-linked loans for Japan Airlines Co., Ltd. (the first loans of this kind in the domestic airline industry): Total amount ¥26.5 billion
Initiated the provision of money-held-in-trust instruments with green finance certification for individual customers, with backing assets
consisting of lending to Tokyu Fudosan Holdings Corporation (First case in Japan)

Meeting Bodies and Items Discussed and Reported Relating to Climate Change
Committee

Furthermore, in fiscal 2020, we established a project team led by
the Group Chief Risk Officer (CRO) and consisting of CROs fromthe holding company, the Bank, the Trust Bank and the Securities
as well as regional CROs of the holding company and the Bank.
This team is engaged in the planning of a management frameworkfor supervising countermeasures against climate change risks.

Committee

Main Items Discussed by and Reported to
the Board of Directors Relating to Climate Change

Executive
Committee

Progress
status of initiatives to realize the above declaration
Revision of the MUFG Environmental and Social Policy Framework
Status of MUFG’s sustainability management and future initiatives(Reporting on matters deliberated by the Sustainability Committee)

Credit &Investment
Management
Committee

 ecognition of the current environment and issues
RDirection of the management system for climate change-related
risks

Risk
Management
Committee

 onitoring of climate change-related risks using enterprise riskMmanagement methods

CreditCommittee

 ecognition of the current environment and issues associatedRwith climate change measuresReport on status and outlook of climate change-related risk
management efforts
Revision of crediting policies related to climate change

Sustainability
Committee

 rogress status of initiatives to realize the above declarationP• Progress in sustainable businesses• Setting interim targets for the financed portfolio (real estate,steel and shipping sectors)• Interim target results of power and oil & gas sectors• Reduction of GHG emissions from MUFG’s own operations, etc.
Revision of the MUFG Environmental and Social Policy Framework
Ratings granted by ESG rating agencies

Formulated a sustainability-linked loan framework for Nagase & Co., Ltd. to facilitate the calculation, disclosure and reduction of GHG
emission associated with its entire supply chain. The framework was selected as a “Green Finance Model project” by the Ministry of theEnvironment under its Green Finance Model Creation Project for fiscal 2022.

Received Gold Award under the ESG Finance Award Japan
Program and Named Best Sustainable Finance Adviser
In February 2023, the Bank received the Gold Award under the
fourth round of the ESG Finance Award Japan program for thesecond consecutive year, in recognition of its efforts to introduce
leading-edge initiatives from overseas to Japanese corporations,and to communicate approach of Japan’s transition financing toEuropean and U.S. administrative authorities, taking the lead in
the development of ESG finance markets in Japan and abroad.
In March 2023, the Bank was also chosen by Asset Publishing
and Research Ltd. (The Asset) as the first winner of the Best
Sustainable Finance Adviser award which was launched by The

Asset in 2022 in light of the importance of sustainable financing.
The Bank was highly evaluated for its financial assistanceinitiatives in the APAC region, in the fields of green, social andsustainability linked financing and was chosen over Europeanand U.S. financial institutions which are active in the ESG field.
Looking ahead, we will continue
to assist customers in their ESG
initiatives and support theirpursuit of sustainable growth,with the aim of contributing to
the resolution of environmental
and social issues.

MUFG Report 2023

70

Management Message

MUFG’s Pursuit ofValue Creation

Leadership andGovernanceManagement Strategies
and Performance

Financial Data /Corporate DataManagement Strategies and PerformanceContribution to Addressing Environmental and Social Issues

Climate Change Measures & Environmental Protection(Disclosure Based on TCFD Recommendations)

Response to Climate Change-Related Risks—Transition and Physical Risks
MUFG is reviewing existing risk categories to understand the impact of climate change, developing scenarios for physical andtransition risk and enhancing its approach to disclosure in accordance with the TCFD recommendations to identify, assess andmanage climate change-related risks.

Opportunities Arising from Climate Change(Development of Sustainable Business)
Engagement with and Assistance to Customers
Based on a customer service model proposed by the UNEPFI, MUFG has endeavored to enhance the content ofengagement activities. To date, we have engaged withapproximately 1,500 corporate clients. We extend ongoing
assistance to them while steadily expanding the climatechange-related business.

With an aim to address issues and needs identified throughcustomer engagement, we develop and provide a diverse
range of solutions, including those designed to help visualize
the volume of GHG emissions, strategy formulation assistancethrough TCFD disclosure-related consulting services,
investment and financing assistance, and the introduction ofoverseas carbon credit schemes to Japanese corporations.
Engagement Activities in Japan

Phase 1

Confirm our position
Explore how MUFG can
support customers’
current activities toachieve net zero

Phase 2Analyze customer
strategies

Organize customer
strategies and operational
issues, along withfinancing opportunities

Phase 3

Support indeveloping
financing plans

Identify financing
requirements in linewith customers’
decarbonization plans

Phase 4

Provide financing

Agree pricing andsolution designs withcustomers and execute
financing contracts

Phase 5

Measureeffectiveness andcheck progress
Support the transition
to a decarbonizedbusiness modelEngagement Activities Overseas

Supported customer measurements and disclosure

Understanding policy through analysis of foreign taxonomies

TCFD consulting services:
Proposed to 85 companies, signed contracts with 11 companies

Promote decarbonization through active engagement with
key industries and public sectors

Visualization support for GHG emissions:
Linked 300 companies to Zeroboard Inc., 100 companies registeredas partners of Zeroboard Inc.,

Risk
categories

Examples of transition risk

Examples of physical riskTimeframe*1

Credit risk

 ur corporate clients’ business activities and financial positions
O
may be negatively affected if they cannot deal with government
policies, regulatory requirements, customer requests or evolving
trends in technological development.

 xtreme weather may cause direct damage to assets held byE
our corporate clients and/or have a negative spillover effecton their business activities and financial positions byindirectly impacting their supply chains.

Short- tolong-term he transition to a decarbonized society may negativelyT
impact certain business sectors, making the value of relevant
securities held by MUFG and/or financial instruments derivingfrom them highly volatile.

 he impact of extreme weather may induce market turmoil andTmake the value of securities held by MUFG highly volatile.

Liquidity
riskIf its credit ratings deteriorate due to such factors as delays in
its response to transition risks, MUFG may face limitations on
methods for funding from the market and thus growth inrisks associated with fundraising.

 orporate clients suffering damage from extreme weatherC
may choose to withdraw their deposits or utilize
commitment lines to secure funds for reconstruction,
leading to a growing volume of cash outflows from MUFG.

Short- tolong-term

Operationalrisk pending on capital investment may grow due to the needSfor measures aimed at reducing CO2 emissions andenhancing business continuity capabilities.

 xtreme weather may cause damage to MUFG’s
E
headquarters, branches and/or data centers and lead to thedisruption of their operations.

Short- tolong-termIf MUFG’s plans and efforts to realize carbon neutrality are
deemed inappropriate or insufficient by external
stakeholders, it may suffer from reputational damage.

If MUFG’s efforts to support customers and communities
affected by extreme weather are deemed insufficient, it
may suffer from reputational damage or a resulting
disruption of operations.

Market risk

Conducted taxonomy analysis of four regions: Europe, the Americas,
China, and ASEAN. Deepened understanding of regulatory designs basedon policy intent

Accumulated sector knowledge through dialogue withkey customers

Continuation of EX Strategy PT*1 (from November 2020):
An internal group established to identify GX policy trends and customer
needs and issues. 70 target companies
Establishment of a new Electricity PT (December 2022):
EXPT subcommittee specializing in electric power

ESG promotion teams in each region participated in forums and eventsand held thematic discussions to accelerate discussion and action towards
decarbonization (more than 40 events).

Diversification of ESG related products

Diversified ESG-related financial product lineup including deposits, tradefinance, carbon credit-related products, etc.

*1 Energy Transformation (EX) Strategy Project Team

Review and propose financing solutions

Discussions and proposals for introducing new ESG financing (approx. 120
companies)- Assisting customers in developing internal frameworks to fulfill transition
finance requirements
Renewableenergy project
finance, etc.

Cumulative
financing results(FY2019–H1 of FY2022)

0.4

Cumulative
financing results(FY2019–H1 of FY2021)

0.3

Underwriting
green bonds

Corporate loans
for environmentrelated businesses

Financial advisory forenvironment-related
businesses

0.5

0.8

0.6

0.4

0.2

0.4

Design and propose financing solutions

Financial advisory for Other
Underwriting Corporate loans
Renewableenergy project green bonds for environment- environment-related
related businesses businesses
finance, etc.

Other

2.5
0.2 ¥trillion

Cumulative
financing results(FY2019–H1 of FY2022)
Cumulative
financing results(FY2019–H1 of FY2021)

1.4¥
trillion

0.0

Reputation
risk

Designed and proposed financing solutions to support clients’ shortand mid-to-long term financing needs for their transition strategy
through active discussion and engagement (approx. 960 companies)- APAC: approx. 360 companies, the Americas: approx. 350
companies, EMEA: approx. 250 companies

1.6
1.1

1.2
0.8

0.2

0.4
0.8

3.0

4.1

¥
trillion

0.8
0.1

¥
trillion

0.0

Transition bonds/transition-linked bonds
19 bonds, total amount underwritten: ¥108.1 billion (April-December 2022)

Follow-up with customers for whom we provided financial assistance• Trial launch of a framework to deepen understanding of customers’ transition progress in FY2022, with the aim of leading to effective engagement• Monitoring the achievement of targets and KPIs set for each deal for sustainability-linked loans/bonds and transition-linked loans/bonds, which are linked
to interest rates and other loan terms and conditions

Ongoing Operation of the GX Strategy PT and the Launch of the Electricity PT
In November 2020, the Bank launched the Energy
Transformation (EX) Strategy Project Team (PT) to develop
the climate change-related business. Since then, the Bank
has striven to strengthen its capabilities to engage withcustomers pursuing carbon neutrality, understand theirneeds and provide them with high-quality products andservices, while periodically holding meetings with relevant
executives and managements to consolidate and shareinsights. Meanwhile, in February 2023, the Cabinet approvedon the Basic Policy for the Realization of Green Transformation(GX), announcing national strategies to realize massive
investment in GX through the contribution of more than ¥150
trillion funding from both government and private sources. In
response, in April 2023, the Bank rebranded the EX Strategy
PT as the GX Strategy PT, updating its role to the creation of

tangible business endeavors and the delivery of information
aimed at facilitating GX-related investment and financing.
This PT currently consists of around 500 members, including
relationship managers in both Japan and overseas, individuals
acting as Product Offices (POs), credit division and corporate
planning departments. In December 2022, the Bank alsoestablished the Electricity PT, which focuses on facilitating
GX in the power sector, a key target sector in terms ofachieving carbon neutrality in Japan. This PT is now striving
to reinforce relationships with power companies and industrialorganizations by holding weekly sessions in which external
experts are invited to facilitate participant’s understanding oftrends in relevant government policies and the complex
systems supporting energy supply and distribution.

Strategicrisk UFG may suffer from reputational damage and/orM
deterioration in its status as an employer due to thecontinuation of relationships with business partners whodoesn’t give enough consideration to environmental
concerns or delays in its transition to decarbonization.
If MUFG fails to live up to its public commitment to support
the transition to a decarbonized society, its capabilities forstrategic execution may be negatively affected by adeterioration in its reputation.

MUFG Report 2023

 UFG may fail to meet the goals of its strategies and plansM
if it fails to properly factor in the direct impact of extreme
weather in the course of long-term management planning.

Short- tolong-term

Short- tolong-term

Medium- tolong-term* Short-term: less than one year; medium-term: one to five years; long-term: more than five years

Analysis of Climate Change Scenarios
Since the summer of 2019, MUFG has been a participant in the pilot project led by the United Nations Environment Programme
Finance Initiative (UNEP FI) with the objective of discussing and developing methods for climate change-related financial
information disclosure for the banking industry. Based on the results of the pilot project, we conducted an analysis of transition
risks up to the year 2050 and physical risks up to the year 2100. In addition to the results of the above-mentioned pilot project,
the scenario analysis reflects the results of verification by external experts.
Results of Scenario Analysis
Transition risks

Physical risks

Various scenarios, including the Sustainable Development
Scenario (“well below 2 °C”) of the IEA*1 and the 1.5°C scenariothat the NGFS*2 has released

RCP2.6 (2°C scenario) and RCP8.5 (4°C scenario) published by
the Intergovernmental Panel on Climate Change (IPCC)

An integrated approach is adopted to assess the impact by
combining the bottom-up approach at the individual company
level and the top-down approach at the sector level. Using thisapproach, the impact on credit ratings in each scenario isanalyzed along with the effect on the overall financial impact of
the sector’s credit portfolio.

Estimated damage in the event of a flood is analyzed, and an
approach to measure its impact on the overall credit portfolio
using the change in default probability that the occurrence offloods would have on the credit portfolio is adopted.
In the calculation of financial impact, the period of thesuspension of the business of the borrower and the loss ofassets, among other aspects, are reflected.

Sectors/targets
subject to analysis

Energy, utility, automobiles, iron & steel, air transportation andmaritime transportation

Flood

Calculation period

Until 2050 using the end of March 2022 as the benchmarking point

Until 2100 using the end of March 2022 as the benchmarking point

Result of analysis

Annual impact: Approx. ¥1.5 billion to ¥28.5 billion

Cumulative impact: Approx. ¥115.5 billion

Scenario

Analytical method*1 International Energy Agency (IEA) *2 Network for Greening the Financial System71

 he value of securities held by MUFG may become volatileT
due to changes in market participants’ medium- to long-term
outlook on the impact of extreme weather and their
expectations regarding countermeasures against thephenomenon.

Results for the full year ended March 2023 are to be updated.

MUFG Report 2023

72

Management Message

MUFG’s Pursuit ofValue Creation

Management Strategies
and Performance

Leadership andGovernance

Financial Data /Corporate DataManagement Strategies and PerformanceContribution to Addressing Environmental and Social Issues

Climate Change Measures & Environmental Protection

Contribution to Addressing Environmental and Social Issues(Disclosure Based on TCFD Recommendations)

Risk Management
Inclusion of Climate Change-Related Risks
in the Risk Appetite Statement
In fiscal 2021, we included climate change-related risks in
our Risk Appetite Statement. This move is intended to help
develop, maintain and upgrade our structure forappropriately managing climate change-related risks.
Positioning of Climate Change-Related Risks inEnterprise Risk Management
MUFG has positioned climate change-related risk as one of
the Top Risks that it must pay close attention to for theyear ahead and going forward (for more details, pleaserefer to page 126).
Management of Environmental andSocial Risks in the Course of Financing
In line with the MUFG Environmental Policy Statement andthe MUFG Human Rights Policy Statement, we haveestablished the MUFG Environmental and Social Policy
Framework, with the aim of properly assessing andmanaging environmental and social risks that may arise in
the course of financing. We implemented MUFG
Environmental and Social Policy Framework to manage
environmental and social risks associated with ourfinancing (note). Concerning coal-fired power generation,mining (coal), oil and gas, and other specific sectors inwhich concerns are raised over environmental and social
impacts, including climate change, we have established
our finance policy and a due diligence process to identify
and assess the environmental and social risks or impacts
associated with transactions has been introduced.
In addition, we are engaged in due diligence based on the
Equator Principles in our efforts to contribute toenvironmental and social sustainability.
The Equator Principles is an international framework
developed to identify, assess, and manage potential
environmental and social risks and impacts of large-scale
projects, including infrastructure and natural resource
development. The Bank conducts environmental andsocial risk assessment based on the Principles prior to theloan decision.
Regarding climate change risks, in addition to examining
technically and economically feasible options that

Natural Capital and Biodiversity
contribute to reducing GHG emissions, the Bank evaluates
status of project developers’ measures to identify andmanage physical and transition risks in line with the TCFD
recommendations.
Examples of Assessments of
Climate Change-Related Risks
The followings are examples of physical and transition risk
assessments of individual projects in which banks
conducted environmental and social risk assessments.
Physical Risks (Offshore Wind Power Generation Project)
The project was evaluated using the climate change
prediction scenarios published by the United Nations
Intergovernmental Panel on Climate Change (IPCC). Strong
winds caused by typhoons and flooding caused by rising
sea levels were identified as the main physical risks, and it
was confirmed that the design of the facilities has been
implemented to deal with these risks.
Physical risks identified
Acute risks: Strong winds, floods, and storm surges causedby typhoons
Chronic risks: Inundation and coastal erosion associated withrising sea levels

Major actions taken by the project proponent
Use of turbines designed to sustain high-speed wind conditions
 levation of onshore facilities (such as substations) to avoidE
impacts by storm surges and inundation
Construction of onshore facilities away from the coastline to
avoid impacts by coastal erosion

Transition Risk (Gas and Diesel Combined Thermal Power
Generation Project)
The project aims to replace an aged power plant with a stateof-the-art thermal power plant in order to support electricity
demand on remote islands. Policy and regulatory risks wereidentified as the primary transition risks, and it was confirmedthat the project will be consistent with the country’s carbon
neutrality goals and contributes to its energy transition.
Transition risks identified
Policy and regulatory risks
Increased operational costs associated with the introduction ofcarbon pricing and the disclosure of GHG emissions

Major actions taken by the project proponent
Adoption of the latest low carbon emission technologies
Implementation of cash flow plan that anticipates an increasein operating costs

Metrics and Targets
To achieve carbon neutrality, MUFG monitors the status ofclimate change-related metrics and targets which are73

MUFG Report 2023

defined to address both opportunities and risks.
 Progress in fiscal 2022 Page 66

Basic Concept
Natural capital refers to the world’s stock of natural resources
consisting of flora and fauna, water, soil and atmosphere,
which together bring benefits to businesses and society as awhole in the form of water, food, minerals and othersubstances via the functions of ecosystems, which, among
other things purify water and regulate climate.
Biodiversity refers to the diversity of flora and fauna, which
are a part of natural capital, and supports the recovery of
ecosystems from such natural disasters as flooding anddrought while contributing to the circulation of carbon andwater and the formation of soil, helping to ensure thesoundness and stability of natural capital.
Once natural capital and biodiversity are damaged, financial
institutions are at a greater risk in investment and financing.
Simultaneously, the growing trend toward business efforts topreserve natural capital and biodiversity is expected to create
emerging business opportunities for financial institutions.
Accordingly, we deem it important to appropriately assess
relevant risks and opportunities.

Initiatives to Address Risks and Opportunities
Associated with Natural Capital(Initiatives to Address the TNFD Disclosure)
The Taskforce on Nature-related Financial Disclosures (TNFD)
is an initiative founded by the UNEP-FI, the United Nations
Development Programme (UNDP), the World Wide Fund for
Nature (WWF) and the Global Canopy in June 2021. In
February 2022, MUFG became a participant in the TNFD
forum to promote initiatives to protect natural capital andbiodiversity via the use of a groupwide, integrated approach.
Also, we act as a member of the TNFD Consultation Group ofJapan launched in June 2022.
In reference to the LEAP approach proposed in the beta
version of the TNFD framework, we have initiated the analysis
of risks associated with natural capital. More specifically, we
employ ENCORE, a risk analysis tool, to determine the degreeof our “dependence” and “impact” on the natural environment.
Looking ahead, we will play proactive roles in discussions
among forum members to boost our contribution to therealization of a sustainable environment and society.

Analysis Process Utilizing the LEAP Approach“Locate”Identify contact points between
the company and the naturalenvironment
Specify priority regions
Specify sectors“Evaluate”“Assess”“Prepare”

Determine the degree of thecompany’s dependency andimpact in the environment

Identify risks and opportunities

 nalyze the degree ofA
dependency

Mitigate and manage risks

 ormulate strategies andF
allocate resources
Measure performance
Report and disclose ssess the significance of risksAand opportunities

 nalyze the degree of theAimpact “Assess”
Conducted the above processtargeting corporate financeprojects via the use of sector
information

Plans call for conducting the above processes in fiscal 2023

Conducted the above processes targeting project finance projects via
the use of sector information as well as geographical information on a
portion of projects

Assessments of Natural Capital-Related Risks (Participation in the Pilot Project Led by the UNEP-FI)
MUFG participated in a pilot program led by the UNEP-FI toanalyze natural capital-related risks associated with offshore
wind power generation. This program was aimed atquantitatively assessing the possible impact on natural
capital and biodiversity of providing financing for offshore
wind power generation.
Under this program, we conducted a quantitative assessmentof such impact using Ocean Data Viewer and World Databaseon Protected Areas to refer to data on important ocean areasand protected areas, in addition to employing the ENCORE.
As a result, it was confirmed that, although some of theoffshore wind power generation projects analyzed are locatedin important ocean areas requiring consideration in terms of
biodiversity protection, all projects were appropriately
assessing and managing risks and impacts through reviews
based on the Equator Principles.

MUFG Report 2023

74

Management Message

MUFG’s Pursuit ofValue Creation

Management Strategies
and Performance

Leadership andGovernance

Financial Data /Corporate DataManagement Strategies and PerformanceContribution to Addressing Environmental and Social Issues

Initiatives to Respect Human Rights
Basic Concept
The United Nations Guiding Principles on Business andHuman Rights requires businesses to fulfill their roles inrespecting human rights by formulating a human rights
policy, conducting human rights due diligence and providing
remedies to human rights violations.
MUFG recognizes respect for human rights as an important
issue to be addressed in the management of our business forthe realization of our Purpose defined in the MUFG Way of
being “Committed to empowering a brighter future.” As in“MUFG Human Rights Policy Statement” formulated in 2018,
we are committed to fulfilling our responsibility to respecthuman rights across all of our operations. The MUFG Human
Rights Policy Statement is determined by the Board of
Directors and is regularly reviewed. In line with this policy
statement, MUFG is conducting human rights due diligenceand providing remedies.
System for Promoting Respect for Human Rights
The Sustainability Committee deliberates on measures andpolicies related to respect for human rights based on the MUFG
Human Rights Policy and other important matters related tohuman rights. The results of the Sustainability Committee’s
deliberations are reported to and supervised by the Board of
Directors. Based on the discussions of the Board of Directors
and the Sustainability Committee, the resources necessary toensure effective respect for and protection of human rights areappropriately allocated to the relevant departments.

Methodology for Creation of human rights issues map
Identificationof humanrights issues

 eferring to international principles for humanRrights such as the International Bill of Human Rights
and the ILO Declaration, as well as issues at otherfinancial organizations, we ascertained salient
human rights issues highly relevant to MUFG
 e assessed the severity of each human rights
Wissue based on the following three criteria :1)
Severity of adverse impact (e.g. the degree towhich human rights abuses affect lives), 2) Extent
of adverse impact (e.g. the number of people
affected, and 3) Difficulty of remedy (e.g. thepossibility of remedy through compensation) ased on UNDP guidance, we make use of outsideBconsultants’ knowledge

Assessment oflikelihood of
occurrence coring risks by country and industry based on
S
external data*1
 ombining data on MUFG’s number of employeesCby country, amount of credit per country/sector,
etc. with the above scores to assess the likelihoodof occurrence

Creation of
Human Rights
Issues Map

 apping of each salient human rights issue
M
for MUFG, with severity on the vertical axis andlikelihood of occurrence on the horizontal axis

*1 Data published by the World Bank, United Nations, etc.
(e.g., Global Slavery Index, etc.) and data from the Business and Human
Rights Resource Center75

MUFG Report 2023

Identification of Human Rights Issues and Assessment
In line with its Human Rights Policy Statement, MUFG
conducts human rights due diligence by respecting the
Guiding Principles on Business and Human Rights and OECD
Due Diligence Guidance for Responsible Business Conduct,
the latter of which translates OECD Guidelines forMultinational Enterprises into practical implementation
guidelines. We identified salient human rights issues highly
relevant to MUFG, assessed their severity and likelihood of
occurrence, and created a human rights issues map. Basedon the results, the Sustainability Committee discussed future
policies for addressing salient human rights issues. This mapof human rights issues will be reviewed on an ongoing basis
in light of changes in the business environment and theresults of stakeholder engagement.

a. Risk related to countries f. Issues on the local
residents of borrowers /in conflictinvestees*2
b. Right to privacy

g. Child laborc. Inhumane treatmentof employees

h. Issues related tothe supplier’s local
population*2

Severity

Assessmentof severity

High

Each Group company similarly recognizes that ensuringrespect for basic human rights is a priority management
issue. Based on this recognition, efforts have been under way
across the Group to put the Human Rights Policy Statement
into practice and fulfill our responsibility to ensure thathuman rights are respected in all aspects of our businessactivities. These efforts include helping employees fully
understand the relevant content of the Human Rights Policy
Statement, the Code of Conduct, and featuring topicalarticles in compliance manuals so that the importance ofhuman rights is understood by all and otherwise raising
human rights awareness among our workforce.

n. Forced labor /human traffickingo. Providing responsible financial
servicesi. Labor issues on employees ofborrowers / investees*1
d. Other issues related
to employee labor*1

j. Labor issues on supplieremployees*1

e. Access to financial
servicesk. Freedom of association and theright to collective bargaining

Prevention and Mitigation of Adverse Impacts
MUFG regularly performs due diligence to assess the statusof human rights-related issues associated with a diverse
range of stakeholders, including customers and employees.

Results of this due diligence are verified and deliberated byrelevant departments to adopt mitigation measures toovercome such issues.

Initiatives for each stakeholder

Employees

 reparation of power harassment/sexual harassment prevention manualPRegular monitoring of working conditions and reduction of overtime workPromotion of DEI

Customers

 onsideration of adverse impacts on human rights when introducing products and servicesCEstablishment of personal information protection rules and systems
Adopt universal design and otherwise accommodate diverse needs of customers with disabilities
or other physical conditions

Borrowers /Investees stablishing MUFG Environmental Social Policy Framework, conducting due diligence on humanErights issues related borrowers/investees
Compliance with the Equator Principles

Suppliers

 espect for human rights is stipulated in the “Approach to Purchasing Activity” requirements forR
suppliers
Regularly check for severe human rights abuses at key suppliers

Mechanisms for Remedies
MUFG has established a contact point that can be accessedby employees, customers and other stakeholders seeking a
response to opinions and complaints regarding humanrights-related issues and other matters.

In April 2023, we invited outside experts in the field of businessand human rights and held a dialogue on respect for humanrights with the executives. From the perspectives ofinternational organizations, NGOs, and lawyers, we discussed
on how financial institutions should respect human rights.

In May 2023, we joined in the Japan Center for Engagement
and Remedy on Business and Human Rights (JaCER), with theobjective of establishing a remedial contact points foradverse human rights impacts that occur throughout thevalue chain, including employees of borrowers/investees andsuppliers, as well as community and neighborhood residents,and making an effort to improve our grievance mechanisms.

Outside Experts

Dialogue with Stakeholders
MUFG aims to proactively promote constructive dialogue
with a variety of stakeholders to deepen mutual
understanding and ensure respect for human rights.

Mr. Ryusuke Tanaka, Programme Officer, ILO Office for Japan
Ms. Akiko Sato, Liaison Officer, Business and Human Rights,
at UNDPMr. Yusuke Yukawa, Partner, Nishimura & Asahi

Main Agenda
1. Progress and impact of legislation
2. Human rights due diligence in financial institutions
3. Civil society’s expectations for financial institutions
4.	Key themes to be addressed (climate change and humanrights, strengthening due diligence in conflict areas)l. Issues on discrimination against
employees
m. Right to privacy

Low

Likelihood of occurrenceHigh*1 Working hours, wages, industrial safety and health, the treatment of migrant workers, etc.
*2 Health of nearby residents, land issues, etc.
Issues on employees
Issues on customers (Issues on ours in providing financial service)
Issues on borrowers / Investees
Issues on suppliers

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Management Message

MUFG’s Pursuit ofValue Creation

Management Strategies
and Performance

Leadership andGovernance

Financial Data /Corporate DataManagement Strategies and PerformanceContribution to Addressing Environmental and Social Issues

from 54 schools completing these programs in fiscal 2022.
Since the beginning of fiscal 2023, MUMSS has also been

Response to Aging Population & Low Birthrate
MUFG strives to enhance its financial products and services
backed by Group companies’ comprehensive capabilities toaddress evolving and diversifying customer needs and issues
from the aging population and low birthrate. We also engage
in the development of infrastructure, research and social
activities for the same purpose.

In terms of infrastructure development, we are enhancing
channels or renovating branch facilities specifically designed
to make access to our services easier for elderly customers.
We constantly work to improve customer convenience by
upgrading our apps and other tools supporting online
channels to realize improvements in operability and design.

Main Initiatives in Each Issue Category
Issue

Financial Services

Infrastructure
Research /Social Contribution
Support for
Employees

Aging Population
Succession ofbusinesses and assets
 upport succession ofSbusinesses and assets

Low Birthrate

Response to the elderly

Asset building espond to deterioration of cognitiveRfunctionsSupport testament and bestowal etc.
via trust banking functions

 onsulting on asset management
Cand asset building
Pension investment and consulting
services for corporates

 ervices in response to aging population andS
deterioration of cognitive functions(27,000 registered supporters in the Bank) UFG Inheritance Research InstituteMJapan Financial Gerontology InstituteSupport for next generation

 ontribute by utilizingCfinancial knowledge

 ranch facilities designed in the spirit of universal design
BImprovement of UI/UX*1
MUFG Financial Education InstituteFinancialand economic education for students
from elementary to high school
Donation for children and students

 reate a workplace that enables both men and women to strike an optimal balance between work and childcare, nursing care or infertility treatment
C(ensure that our assistance programs are known by all, promote the utilization of such programs and foster an inclusive corporate culture)*1 UI (User interface) and UX (User experience). Experiences and values capable of earning through usability of the services

Succession of businesses and assets
Employing Group functions and networks offered by our alliancepartners, we deliver proposals regarding M&A, inheritance,
real estate and asset management by taking a groupwide,
integrated approach. We support the succession of assets andbusinesses worth more than ¥1 trillion on an annual basis.
In July 2022, the Trust Bank released “Tsunageru Toushin,” a newinvestment trust service designed to support the advancement/
succession of assets, with the aim of meeting long-term
asset management needs among individual customers.
Response to the elderly
In the coming era of centenarians, the ways people live anddesign their lives will be increasingly diversified and transcend
the scope of conventional concepts of the three life stagesof student, worker and retiree. In addition to flexibly
accommodating needs from changes in modes of education
and workstyles, financial institutions are being called upon to help
customers secure funds for post-retirement living and to provide
other financial solutions that enable, for example, housing loanborrowers to complete repayment even after retirement or
customers to choose flexible accommodation amid the ongoingdiversification of lifestyles accommodation. With this in mind, theBank released housing loan products with options linked with theassumed residual value of properties. These products provide
borrowers with various choices aligned with an increasingly
diverse range of life design, for example, options to reduce
monthly payments or to secure funds for future relocation.
In addition, we are working to commercialize new services to77

MUFG Report 2023

resolve issues arising from an aging society. These efforts include
the development of technologies to assess cognitive functions
and a system to verify testament content comprehension. To
that end, in fiscal 2022 we launched a verification testing
project as part of an industry-academia research collaboration.
Asset building
MUFG’s asset building assistance services include consulting
for individual customers from diverse age groups as well as
the provision of an extensive lineup of pension asset
management and consulting for corporate clients. In addition,
the Trust Bank-founded MUFG Financial Education Institutedisseminates easy-to-understand information regarding
practical and effective methods for asset building andmanagement from a neutral standpoint.
Also, the Trust Bank is a participant in the 104 consortium aimed
at popularizing investment among young people, mainly thosein their 20s, and is striving to instill investment literacy andhelping them acquire an accurate perception of investment.
Support for the next generation
Taking full advantage of its financial expertise, MUFG provides
financial and economic education to young people. We also
actively support the sound upbringing of children and assist
students in their pursuit of higher education through donations
and other means.
For example, MUMSS has been providing elementary, juniorhigh, high school and university students with programs at
every educational stage, with approximately 3,300 students

providing new programs specifically designed for junior highand high school students.

Supporting Innovation/ Resolving Social Issues
It is essential for the sustainable growth of society to support
the growing industries and foster startups. With this in mind,
MUFG provides financial services that take full advantage ofthe comprehensive financial functions afforded by the Groupto support such industries and businesses while developing
innovative financing methodologies.
Meanwhile, we strive to discover corporations that are strongly
committed to contributing to the resolution of social issues orundertaking initiatives focused on achieving said end. As such,
we are endeavoring to realize both a sustainable society andsustainable growth for MUFG itself.
1. Supporting innovation
MUFG takes a leading-edge approach to support innovation,such as that related to energy transition toward carbon
neutrality, through investment, financing and acceleration
programs. At the same time, we are supporting to incubate
next-generation industries that will eventually enhance Japan’s
economic competitiveness.
(1) Examples of investment in and financing for venturecorporations
PowerX, Inc. is a startup handling the manufacture and sale ofbatteries and EV chargers as well as the development andconstruction of battery tankers with the goal of popularizing
the use of natural energy and advancing energy storage andtransmission technologies. In May 2022, MUFG acquired anequity stake in PowerX via investment and, in November of thesame year, extended financing totaling ¥1.5 billion.
Meanwhile, Kyoto Fusioneering Ltd., which was founded in
October 2019, is a global startup in Japan to promote thedevelopment of nuclear fusion technologies. In April 2023,
MUFG invested in this company to help facilitate carbon
neutrality and create new energy sources with no GHG emission.
(2) Acceleration
As a part of our support for essential technological innovationthat takes into account environmental and social concerns toensure sustainable growth, we co-sponsor the “MUFG ICJ ESG
Accelerator” program in tandem with Inclusion Japan, Inc. The
event’s last two rounds were held in Osaka and Tokyo,
respectively in fiscal 2021 and 2022. This program has also
helped MUFG identify Zeroboard Inc., which currently provides
MUFG’s customers with services aimed at visualizing GHG
emission volumes, as an alliance partner and investee.
2. Addressing social issues
In addition to supporting innovation, MUFG is focused on

addressing social issues in general.
(1) Initiatives to expand the renewable energy market
In 2021, to facilitate the further development of the renewableenergy market, and to provide integrated support from the“generation” business to the ”use” stage of renewableelectricity, we established Z Energy Co., Ltd. in tandem withpartner companies.
Since April 2022, Z Energy Co., Ltd. has been investing insolar power plants via its No. 1 Fund. As a model businessdesignated by the Ministry of the Environment, it discloses its
impact of its investment on the environment, society and theeconomy to investors. Also it aims to provide renewableelectricity to investors and others. Thus far, investment by theNo. 1 Fund has been progressing steadily, with preparatory
measures under way to formulate the No. 2 Fund. Onceestablished, the No. 2 Fund will have wider investment scopethan No.1 Fund and cover renewable energy assets at large,
while soliciting LP investment from an even broader range ofinvestors, including business corporations, to contribute to
the further popularization of renewable energy and thedevelopment of its market.
(2) Promoting carbon neutrality and supporting regional
vitalization
Although Hokkaido faces social issues such as population
decline, it has the greatest potential for introducing
renewable energy in Japan and is the regions with one of
the highest potentials for the implementation of effective
technologies to achieve carbon neutrality. In fiscal 2022, we
hosted “MUFG Hokkaido Oshigoto Audition,” a contest formunicipalities-led projects with a purpose of solving social
issues in Hokkaido to apply for donations to fund the project. In
the process of project screening and publicizing projects frommunicipalities, we acted in collaboration with Boku to Watashi
and. inc. a company specializing in next-generation marketing.
Meanwhile, in April 2023, the Bank entered into a partnershipagreement in GX field with Hokkaido Government, whichcurrently spearheads Zero-Carbon Hokkaido initiatives. Also,
we have decided to issue a report on the potentials forcarbon neutrality in Hokkaido and make donations to a newfund established by Hokkaido Government.
Through these actions in Hokkaido, we are supporting theimplementation of carbon neutrality-related technologies inJapan as well as the incubation of new industries, which
would lead to establishing a model for sustainable society
and contributes to the vitalization of regional economies.

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MUFG’s Pursuit ofValue Creation

Management Message

Management Strategies
and Performance

Leadership andGovernance

Financial Data /Corporate DataManagement Strategies and Performance

Transforming Our Corporate Culture /Human Capital Strategy

CHRO Message
MUFG’s Approach to Human Capital Management
MUFG has positioned human capital as one of the most important
types of capital and, accordingly, is striving to enhance it in order
to become a global financial group capable of contributing tosociety and customers by empowering each employee to work
vibrantly and earn success.
Specifically, we have identified “nurturing professionals & reskilling,”“improving employee engagement,” “promoting diversity, equity& inclusion (DEI)” and “practicing health management” as four
key initiatives. Under these initiatives, we will work to improve
employee well-being and facilitate sustainable growth for bothindividual employees and our organization, with the aim ofrealizing our vision of how MUFG will empower a brighter future
going forward.
Toward Becoming a Global Financial Group Capable ofContributing to Society and Customers by Empowering Each
Employee to Work Vibrantly and Earn SuccessTo realize this vision, MUFG has also identified “strengthening
business competitiveness” and “fostering a culture of taking
on challenges and transformation” as two pillars of humancapital strategy. As we aim to provide customers and society
as a whole with value that transcends their expectations
across the extensive range of business fields the MUFG Groupencompasses, we need to enable each employee to enhancetheir professional skills in each of their fields of specialty. With thisin mind, we encourage them to raise their skills through in-house

A global financial group capable of contributing tosociety and customers by empowering each employee
to work vibrantly and earn successTwo pillars ofhuman capitalmanagement

Strengthening businesscompetitiveness

Fostering a culture oftaking on challenges andtransformation

Nurturing professionals & reskilling
Reinvestment
in humancapitalFour key
initiatives
supporting
human capitalmanagement

Sophisticated skills and specialty

Improving employee engagement
Sense of job fulfillment

Promoting DEI
Diverse talents empowered
to earn success

Practicing health management
Focus on improving employees’ emotional
and physical health

Employee well-being

79

MUFG Report 2023

Embeddingthe desired
cultureKPIs for the Human Capital Management Vision
To strategically promote investment in human capital and thereby
realize the aforementioned vision, we have identified KPIs as
described below. Based on these KPIs, we will quantitatively assess
the effects of various human capital-related measures to facilitate
their continuous improvement and updating. At the same time, wewill review the KPIs in light of changes in the external environment
and the entrenchment of these measures so that our humancapital management approach stays on-trend and meaningful.

I believe that, as a CHRO, my foremost mission is to steadfastly
tackle these key initiatives described above and enhance employee
well-being while spearheading the development of the two pillars

Kenji Horikawa
Group CHRO

and external training programs while strategically using personnel
transfers to ensure that they gain essential experience throughon-the-job (OJT) training. We also strive to provide them withproper performance evaluations and appropriate wages. In theseways, we endeavor to empower our employees to pursue personal
growth while also expanding our pool of professionals needed
to promote our business strategies and, ultimately, strengthen
our business competitiveness.
MUFG’s workforce consists of employees with diverse
backgrounds and values. We believe that in order to empowereach employee to realize their full potential, we need to secure

KPIs for Human Capital-Related Measures Aimed at Improving Corporate Value

We believe that we need to start with enabling each employee tomaintain their emotional and physical well-being while fostering
an organizational culture in which everyone respects the diversity
and uniqueness of their colleagues, so that employees can workwith confidence and take on challenges and transformation.
Upon the establishment of such culture, we will provide every
employee with opportunities to realize their full potential andachieve personal growth in order to ensure that they may discovera greater sense of job fulfillment. Furthermore, we will develop
a framework for enabling the acquisition of sophisticated skillsin their fields of specialty. In these ways, we will strengthen ourbusiness competitiveness and improve corporate value.
Improvements in cash flow attributable to these activities will
be reinvested in in human capital. By doing so, we will ensurethat a culture of taking on challenges and transformation
is firmly embedded, generating a virtuous cycle of humancapital management.

OUTCOME (created value)

INPUT/OUTPUT (investment in / utilization of human capital)
Specificmeasures

KPI

Priority
initiatives

Progress
FY2021
results

FY2022
results

Review treatment of“professionals”

Number of employees
categorized as“professionals”*1

1,159

1,603

Step up therecruitment of
mid-career hires

Ratio ofmid-career hires

24.2%

44.4%

Step up training- andeducation-related
investment

Expenses foreducation and training¥3.1 billion¥3.5 billion

Provide opportunities
to take on challenges

Number of applicants
to the Job Challenge
program

2,303

2,630

Provide abundant
opportunities to gain
diverse experience bytaking advantage of theextensive scope of MUFG’s
business fields

Number of employees
seconded to entities
within and outside
the Group*2

5,152
(12%)

5,127
(12%)

Empowerment of
women

Ratio of female
managers

18%

20%

MUFG’s Basic Concept of Human Capital Management
Visionof human capital strategy. Looking ahead, I will continue to do
my best to achieve MUFG’s vision of being a global financialgroup capable of contributing to society and customers byempowering each employee to work vibrantly and earn success.

an organizational culture in which everyone respects one another’suniqueness and feels free to express their authentic selves
even as they stay emotionally and physically healthy. Upon
establishing such culture, we will assist employees in theirautonomous career development and endeavor to realize aworking environment that enables all of them, from new recruits
to veterans, to spontaneously take on their tasks in a way thatleverages their creativity and thus discover a tangible senseof personal growth and job fulfillment. This is how we aim tofoster a culture of taking on challenges and transformation.

Nurturingprofessionals& reskilling

Ratio of eligible male
employees who tookchildcare leave*3

100%

92%

Emotional andphysical health

Ratio of absentee due
to injury or disease

0.84%

0.89%

VisionStrengthening
business
competitivenessA global financialgroup capable ofcontributing tosociety andcustomers byempowering each
employee to work
vibrantly andearn success

Improving
employeeengagement

Promoting
DEI

Practice diverse
workstyles

Pillars of humancapital management

Fostering a cultureof taking onchallenges andtransformation

Practicing
healthmanagement*1 Number of Bank, Trust Bank and Securities employees who boast sophisticated specialist expertise and are subject to a specific HR system that assigns them a predetermined
scope of duties*2 Figures in ( ) represent the ratio of employees seconded to the total number of employees at the Bank, the Trust Bank and the Securities*3 Calculated based on the Act on Childcare Leave/Caregiver

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MUFG’s Pursuit ofValue Creation

Management Message

Management Strategies
and Performance

Leadership andGovernance

Financial Data /Corporate DataManagement Strategies and Performance
Transforming Our Corporate Culture / Human Capital Strategy

Four Key Initiatives Supporting Human Capital Management

Nurturing Professionals & Reskilling, Improving Employee Engagement andPracticing Health Management
Nurturing Professionals & Reskilling
MUFG is striving to nurture and secure genuine professionals
with highly sophisticated skills and specialist expertise throughcomprehensive initiatives related to hiring and training.
Nurturing and Securing Specialists
For MUFG to achieve sustainable growth, it is important to secure
professionals who can earn success in a diverse range of specialist
fields. As we aim to increase the sophistication of our existing
businesses while expanding into an even broader range of
new businesses, the need for talents with robust expertise in
specific fields and capable of quickly becoming key workforce
components upon joining the Group is becoming ever more
profound. Accordingly, we are proactively engaged in the hiring ofprofessionals from external sources and through business fieldbased recruitment. Currently, around 60% of the total number of
employees hired each year are specialists.
Number of Mid-Career Hires and Other Individuals
Hired through Business Field-Based Recruitment
Increasing the hiring of professionals who are earmarked forvarious fields of specialty (including digital specialists)

 roviding Abundant Training Opportunities and Assisting inP
the Acquisition of Certification
In fiscal 2018, we established “MUFG University” to offer
training programs specially designed to nurture future top
management candidates on a groupwide basis. To date, morethan 950 employees have completed these programs. Targetinga range of employees from line managers to newly appointed
corporate executives, MUFG University provides programs
aimed at instilling broader perspectives and open-minded waysof thinking.
MUFG University
Attended by an annual total of approximately 200 employees
from across the Group
Next-Generation Leader Course
New Corporate Executive Training

Acquire practical viewpoints for corporate management

Generalmanagers
and branchmanagers

Executive Candidate Training

Acquire concept-building capabilities to facilitate the developmentof the financial businesses of the future

Assessment & Coaching

Embrace new modes of action in daily operations

Nurturing MUFG’s
top management
candidates

Management Course
Global Leaders Forum

Develop leadership for global management

Liberal Arts Session

607

289

Deputy general managers,
deputy branch managers
and chief managers

Design & Digital Thinking

As part of efforts to acquire and retain qualified talents describedabove, the Bank plans to newly establish “professional” careercourse*1 eliminating the demarcation of the current twocareer courses, as well as introduce the “Ex” qualification*1 toenable employees with diverse values to pursue professional
development and autonomously craft their careers. Throughthese revisions in HR framework, the Bank aims to develop an
environment in which employees with robust expertise in theirfields of specialty are empowered to earn success and areproperly rewarded.
*1 Subject to agreement with employees’ union and official name of the course andqualification to be determined.

MUFG’s Global Network

Real estatetransaction agent

6,654

2,639

Certified public
accountant

Certified public
tax accountant

45
Charteredfinancial analyst

36
Real estateappraiser

58

81

MUFG Report 2023

200

99
Bar examination

136
FP 1st grade*3

38
Certified Pension
Actuary

1,156
TOEIC scores
860 or more

78

Improving Employee Engagement
MUFG strives to develop a workplace in which employees can findtheir job rewarding and improve employee engagement, with theaim of securing its ability to deliver services with higher added value
and take on the challenge of transformation on a groupwide basis.

Number of Applicants to the Job Challenge Program(intra-Group job postings)

Nurture professional talents, support reskilling andencourage self-innovation through education and training

Enhance opportunities for employees to challenge different
assignment within the Group

¥3,090
million¥3,450
millionFY2021

FY2022¥4,170
millionFY2023(plan)

2,630(Of these, 25%
are transferred
to desired
positions)(Of these, 44%
are transferred
to desired
positions)

FY2021

FY2022

1,610

436

Number of employees
seconded to entities within
and outside the Group
Approx.

5,100*

Number of overseas Group
employees
Approx.

70,0001(Of these, the number of
employees seconded toentities outside the Group:
Approx. 650)

Number of employees dispatchedfrom Japan to countries abroad
Approx.

1,100*1 Sum of the Bank, the Trust Bank and the Securities

3,309

Education and Training Expenses (including expensesof commissioned external training)

Coaching Capability Improvement

Number of overseas bases

Number ofdomestic bases

SMEC*2*1 Certiﬁed member analyst of the securities analysts association of Japan*2 Small and medium sized enterprise consultants*3 1st grade Certified Skilled Professional of Financial Planning

2,303

In fiscal 2019, MUFG, acting in its capacity as the holding company,
launched an employment framework aimed at directly hiringin-house and external talents with competencies in operational
fields that require highly sophisticated specialist expertise andare commonly handled by multiple Group subsidiaries. Under
this framework, candidates are offered wages linked withexternal market benchmarks.

Labor and social
security attorney

CMA*1

Also, proactive efforts are under way at each Group company todevelop human resources through various training programs and
OJT. These efforts include enabling employees to attend external
training programs, implementing officer- and employee- led
lecture sessions addressing topics applicable to the workforcesof either individual companies or all MUFG Group employees,
and offering various mentoring programs and other diverse
educational opportunities.

Enhance concept-building capabilities ascorporate managers
Acquire coaching skills to help team members
realize their potential

FY2022

Total of the Bank, the Trust Bank and the Securities: 14,448

We believe that, for MUFG to improve employee engagement,
enabling employees to autonomously develop careers andempowering them to pursue personal growth and challenges isa matter of importance. Accordingly, we endeavor to enhanceframeworks and opportunities available to employees to assist
them in these pursuits. For example, our Job Challenge programis an in-house job-posting system that has recently attracted a
growing number of applicants (2,630 in FY2022, increased from
2,303 in FY2021), with the ratio of individuals transferred throughthis system in line with their desires for new positions amounting
to 44%. We are also expanding the scope of positions open to inhouse postings. Currently, there are active job postings for a totalof 1,044 in-house positions and 54 external positions.

(55.0%)(37.2%)FY2021

Enhance prediction capabilities necessary for making
organizational decisions

Number of employees with external specialist certificationin the global stage by seconding them to entities within andoutside the Group or dispatching them to countries abroad.
As of the end of fiscal 2022, a total of approximately 5,100
employees from the Bank, the Trust Bank and the Securities areon secondment to corporations within and outside the Group,
and approximately 1,100 employees out of these are taking on
overseas assignments.

MUFG’s workforce also includes a large number of employeeswith external certifications proving specialist expertise. We
also maintain an assistance system to help employees acquire
external certifications in various specialist fields that require ahigh level of expertise.

In addition, we proactively provide employees with opportunities
to acquire diverse competencies and realize their potential

We have also established a wage system designed to securecompetitiveness by attracting highly competent talents, rewarding
employees for their dedication and improving employee
engagement. In fiscal 2023, the Bank and the Trust Bank raisedsalaries by 7%, while the Securities will raise by 5%.
Practicing Health Management
MUFG considers the emotional and physical health of employees
a matter of the utmost importance. Accordingly, the Bank, theTrust Bank and the Securities have announced their Declarationof Health Management and have since promoted healthmanagement as one of corporate missions.
Currently, industrial physicians and counselors are stationed ateach MUFG Group company to contribute their expertise in healthmanagement by, for example, conducting follow-up examinations
based on results of periodic health checkups, providing interviews
with employees deemed to be working excessive hours andundertaking stress checks. Meanwhile, to help employees maintainand improve their emotional and physical health, each company
is implementing such measures as providing e-learning programs
aimed at raising employees’ health literacy, encouraging cessationfrom smoking, preventing second-hand smoking and conducting
Specific Health Guidance.
Also, we believe that helping employees enjoy financial
wellness is essential to their maintaining emotional stability
and health. Based on this belief, we help them build assets by,for example, setting robust retirement benefits and corporate
pensions and allowing them to acquire memberships in
employee shareholding association. Furthermore, employees
are eligible to additional allowances paid by the health insurance
association as well as non-mandatory compensation for
operational or commuting accidents. In addition, a mutual aid
association is in place to support the livelihood of employees
who suffer various hardships.

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82

Management Message

MUFG’s Pursuit ofValue Creation

Management Strategies
and Performance

Leadership andGovernance

Financial Data /Corporate DataManagement Strategies and Performance
Transforming Our Corporate Culture / Human Capital Strategy

Four Key Initiatives Supporting Human Capital Management

Promoting Diversity, Equity & Inclusion (DEI)
MUFG is striving to build an inclusive organization, where
employees with diverse backgrounds and values can thrive andempower each other to perform at their best, and are given
equal opportunities for growth and development, irrespectiveof gender, disability, nationality, race, age, sexual orientationor other attributes. We believe that diversity in the workplace
at MUFG can spark “chemistry” by respecting to each other’s
differences and by leveraging each other’s unique strengths.

GenderequityPromoting DEI
on a Global BasisThree Pillars

Learning
andDevelopment

Embedding
DEI into
our culture

Global & Japan
Moreover, this will encourage the employees to generate newideas and adopt new modes of behavior and, in turn, foster an
open-minded corporate culture and the creation of new valuethat transcends the expectation of customers and society.
We therefore consider that promoting diversity, equity andinclusion (DEI) is essential to achieve our purpose “Commitment
to empowering a brighter future.

In 2006, MUFG established a dedicated organization to promote DEI. Since then, we havebeen working on DEI initiatives as part of our management strategies with the commitment
from the top management. In 2018, the Bank, the Trust Bank and the Securities began tocooperate to promote DEI groupwide.
Also, DEI promotion teams globally have been working on DEI issues specific to each region.
Since 2023, we established three common key DEI pillars; ”Gender equity,“ “Learning andDevelopment” and “Embedding DEI into our culture”, and we are accelerating a variety of DEI
initiatives globally, in close collaboration with the CHROs in respective regions.

DEI Promotion Structure
CHRO members

CHRO members
Kenji Horikawa
Group CHRO

Global Head of DEI

50
40
30
20

Asia

Americas

18%

19.6%

36%
22%

FY2022Japan

Ratio ofoverseas
employees

22%

FY2023

FY2022
Asia

Americas(FY-end)

EMEA*1 Overseas bases: the ratio of female Managing Directors or Directors; domestic bases:
the ratio of female employees in Chief Manager positions and above.

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MUFG Report 2023

At MUFG, we focus on creating a workplace environment, inwhich each employee feels a strong sense of psychologicalsafety and is empowered to play an active role, irrespectiveof gender, age or other attributes. Among all the challenges
we are facing, we consider the improvement of the ratioof female managers is one of most critical common global
challenges. Hence, we are focusing on tackling it. In
Japan, we have an ongoing mentoring program for female
employees led by executives, and we have expanded thescope of eligible employees to participate in this program.
Furthermore, we are creating an environment where bothmale and female employees can balance work and childcare,and we are also building a workplace and an HR frameworkin which employees can continuously develop their careers
after their parental leaves through re-skilling and up-skilling
efforts. Also, building an inclusive environment for employeeswith disabilities is a crucial issue. We will focus on contributing
to the realization of an inclusive society, through empoweringand supporting the career development of people withdisabilities in partnership with our strategic partners such as
Mirairo Inc., which we invested in 2023.

MUFG has a long history of leading with integrity andfortitude. When I consider what it means to co-lead DEI
globally, that history comes to mind. As we continue to
evolve our DEI strategy to focus on gender equity, learningand development and building an inclusive culture, we willlead with integrity and maintain a clear understanding of our
stakeholders and what we want to achieve in partnershipwith them. Supporting an unbiased approach to identify andretain talent while creating transparency of development
opportunities so that all colleagues are positioned to reach
their full potential is critical to our collective success. As
one of the specific examples of our initiatives, in 2022, wehave built a Global Talent Sponsorship Experience program(GTSE) for our diverse high-performing talent, which
provides access and opportunities to engage with some of
MUFGs most senior executives.

Managing Director,
Co-Global Head of DEI

We believe that APAC’s cultural richness and diversity of thoughts will serve as a source of creativity and ideas supporting MUFG’s businessactivities. We launched employee-led communities aiming to empower employee voices and foster diversity of thoughts to increase MUFG’s
efficiency and performance whilst providing equitable access to learning, development and career opportunities for all employees.

Europe (EMEA)
We have launched “SHEROES,” a hybrid meeting space for female employees in EMEA. It is a vehicle to upskill members as they
pursue career progression opportunities, share best practice by partnering with subject matter experts, celebrate achievements, andsupport each other through major life events.

Asia

32%

EMEA
FY2021

Karen Owen
Co-CHRO for EMEA

Ratio of Employees by Region

100Margot King
Co-CHRO for EMEA

EMEA

Ratio of Female Managers*1

End of FY2023
Raised our target
to 22%

Okeatta Brown

Managing Director, Global
Head of DEI, Human
Resources Division

Asian Regions (APAC)

Beth Hoerle
CHRO for Americas

Japan

Nobue Kamba

Angus MacGregor
Global CHRO/CHRO for Asia

Okeatta Brown(Co-Global Head)

Nobue Kamba

Global & Americas

Americas

57%

Japan

International Women’s Day
Every year, we celebrate
International Women’s Day
on March 8. MUFG also
hosts a variety of events in
respective regions aroundthe world.

Promoting Employees’ Understanding of
the LGBTQ Community
We created “PRIDE Art” incollaboration with employees
and their families to celebrate
the LGBTQ community.
Through this artwork, we
enjoyed our differences andlearned the importance ofappreciating our diversity.

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MUFG’s Pursuit ofValue Creation

Management Message

Management Strategies
and Performance

Leadership andGovernance

Financial Data /Corporate DataManagement Strategies and Performance
Transforming Our Corporate Culture / Human Capital Strategy

Fostering a culture of taking on challenges and transformation

Corporate Culture Transformation Aiming for Sustainable Growth
MUFG aims to empower every employee to autonomously andindividually think, act and take on challenging endeavors with asense of ownership when tackling the missions assigned to theirrespective teams. By doing so, we are striving to create anorganization capable of navigating in a time of ever-faster change
and increasing diversification in values. To this end, we deem it
essential to develop an open-minded and speed-oriented
workplace while enabling employees to earn tangible successes in
the course of their daily operations and take pride in their work as
well as to nurture a sense of optimism. Overall, we aim to foster aculture supportive of “Challenge and Speed.”
To empower employees to robustly embrace “Challenges andSpeed” as part of their daily pattern of behavior, we have defined
three components of corporate culture transformation: (1) A
working environment offered by the Company, including
communication tools and human resources frameworks; (2) An
employee mindset underpinned by a sense of relevance alignedwith MUFG’s Purpose; and (3) Opportunities to act on this mindset
and put it into practice. Currently, we strive to promote coordination
among these three components to develop an open-minded,
worker-friendly environment and foster a corporate culture inwhich those who take on challenges to realize the Purpose arehighly appreciated. To be more specific, we have been holding

townhall meetings by the senior management and promotinginternal social networks while implementing a new, employeedriven job-rotation framework and launching the “MUFG SOUL
Project”, a social contribution program through which employees
take the initiative in solving problems confronting the local
communities. These are the examples of the initiatives under our
culture transformation framework, and all in all, they are intended
to create a place for open and resonant dialogue among theemployees and encourage them to turn their aspiration into action.
In fiscal 2022, we strengthened the employee-led initiative bystarting the “MUFG Way Employee Sessions,” in which employees
share their personal definitions of the MUFG Way, as well as the“MUFG Way Boost Project,” which aims to put a spotlight on those
employees who are discovered through recommendation of theirteam members as someone who embodies the MUFG Way, while
also launching Spark X, a new business incubation program.
The outcomes of these initiatives and relevant issues are identified
via, for example, the annual MUFG Employee Survey and reported
to the Board of Directors. On the next page, we will showcase theresults of such a survey to illustrate recent outcomes of corporate
culture transformation efforts and issues that must be addressedgoing forward.

Framework of Transformation of Corporate Culture1

Update our working environment to secure a platform supporting
the transformation of employee behavior

2

Encourage employees to develop a sense of relevance regarding MUFG’s
Purpose to help them transform their mindset

3

Offer opportunities to practice such as “MUFG headquarters building
project” and “Spark X”

Results of the MUFG Employee Survey and Review of Fiscal 2022
The fiscal 2021 survey confirmed that employees have an everstronger drive to take on challenges. On the other hand, it was
revealed that our workforce is still confronting issues associatedwith operational speed. Accordingly, in fiscal 2022 we enhanced
the digital tools available to employees while encouraging
managers to engage in one-on-one meetings with their staff, withthe aim of fostering a workplace culture supportive of more casualexchanges of opinions. Moreover, we developed an environmentthat encourages those who autonomously take on challenges byimplementing “Spark X” and the “MUFG Way Boost Project” as wellas introducing a new job-posting program that allows employees
to gain hands-on experience in different job categories.*1

To empower employees to take on new challenges aimed at
improving corporate value, it is essential that they be able toallocate more time to such endeavors via operational
streamlining. In this light, simplifying hard-to-understand andcomplex procedures and rules is a matter of urgency.
Accordingly, the revision of decision-making processes is under
way in fiscal 2023 at the Bank, the Trust Bank, the Securities andother Group entities. We are also simplifying procedures andrules by various ways such as introducing tablet terminals.
In addition, respondents who gave a positive rating to the questionof “Recommend MUFG as a great place to work” accounted for onlyaround 60% of overall respondents. Among the rationales provided
by those who gave a negative rating to this item, “the lack of sense of
excitement in job” was identified in the largest number of instances.

In the fiscal 2022 survey results approximately 90% of
employees indicated that they are consciously taking on new
challenges in the course of their work. With regard to thequestion of “Speedy decision-making in the workplace” thecumulative number of affirmative ratings grew year on year by
the largest margin among all questions. Many respondents citedtheir participation in MUFG Way Employee Sessions as a reason
for giving high ratings to this question. Specifically, it wassuggested that these sessions, which allowed them to exchange
their thoughts on overlaps between the MUFG Way and theirown beliefs and values with fellow colleagues, left them with agreater sense of psychological safety. This, in turn, resulted in
more robust communications with their peers, leading tospeedier decision making.

Today, businesses are being called upon to adapt to majorchanges and achieve transformation. This means that individual
employees are facing an equivalent level of expectation in theform of behavioral transformation. To empower them to achieve
this transformation and thereby serve as a driving force of
MUFG’s sustainable growth, the Company needs to win theirempathy, be attractive to them and encourage them to have asense of ownership over their role and how to navigate it. Thus,
improving employee engagement is a matter of importance.
With this in mind, we are striving to develop and expand apositive growth cycle in which employees take on the challengeof embodying the Purpose on their own terms, are appreciatedby others and feel a tangible sense of personal growth that, inturn, motivates them to take on the next challenge.

On the other hand, responses to the question “Managed in a
simple and speed manner” indicated stagnation. A number of
respondents have identified the complexity of procedures andrules as the root cause of stagnation, along with the prevailingcumbersome consensus building process used when multiple
departments are involved.

*1 A program that allows applicants to engage in different types of operations for
short periods without having to transfer, thereby providing them with theopportunity to gain hands-on experience in and a deeper understanding of theduties of departments that catch their interest.

Sustainable growth (financial and non-financial)
Review of Fiscal 2022 (Group Awareness and Engagement Survey)
Accelerate purpose-driven business activities that leverage DX and sustainability management

Challenge
Willing to Take on Challenges

Recommend MUFG asa Great Place to Work

Enhance the Sense of Satisfaction and Growth
Develop a sense of relevance about MUFG Way

YES

2

Types of Behavior

Employees’ Mindset= Challenge × Speed

85%
3Highly motivatedto take onchallenges

Opportunities to PracticeOngoing issue:
Employeeengagement

YES

64%

Create challenging opportunity
Own career development

Speed
1

a.
Communication
reforms

Speedy Decision-making in
Workplace

Working Environmentb.
Promotion of“smart” workstylesc.
Human resources
framework andmanagement

Bank
+8%

64%

72%

2021 2022

85

MUFG Report 2023

Trust Bank
+5%

61%

66%

2021 2022

Your workplace engages in
simple & speedy operations

Simplified decision-making process

Securities
+10%

64%

74%

Simplification to Improve Speed

Ongoing issue:
Simplification

YES
57%

Review procedures based on feedback from branches

2021 2022

MUFG Report 2023

86

Management Message

MUFG’s Pursuit ofValue Creation

Management Strategies
and Performance

Leadership andGovernance

Financial Data /Corporate DataManagement Strategies and Performance
Transforming Our Corporate Culture / Human Capital Strategy

Fostering a culture of taking on challenges and transformation

2 Employee Mindset—“MUFG Way Employee Sessions” and“MUFG Way Boost Project”

In line with our aim to help each employee discover the relevanceof our Purpose within their daily operations and thereby encouragethem to take specific action to embody it, we began to upgrade
MUFG Way integration sessions, an initiative launched in fiscal 2021.
First, we initiated “MUFG Way Employee Sessions” as an updated
version of the above sessions. Through these sessions, we
encourage employees to reflect on how the MUFG Way and theirown values, beliefs and aspirations overlap. By doing so, we help
them determine how they can contribute and to whom throughtheir engagement in duties at MUFG on their own terms.
Employees are then invited to engage in frank exchanges of
opinions with their managers and colleagues.
Second, we launched “MUFG Way Boost Project.” This project was
designed to empower a growing number of employees andactivities to embody the MUFG Way. For this project, approximately
70 members appointed by President Kamezawa from a diverse
range of Group companies, including overseas branches, met
online every week and engaged in vigorous discussions. Based onthese discussions, they solicited recommendations for individuals

to be named model employees who embody the MUFG Way frombusiness units across the Group. They then conducted interviews
with each employee recommended to hear about their aspirations
and the details of their activities. The results of these interviews
were summarized in a booklet titled MUFG Way—Bringing it tolife. We expect this publication to provide new insights toemployees who find it difficult to have a sense of ownershipabout the Purpose by letting them know about initiatives
undertaken by their peers. The project members also conductedroundtable talk events, in-house radio broadcasting and video
streaming. Through these and other communication initiatives,
we encourage each employee to autonomously take action toembody the MUFG Way so that
our Purpose can be realized byour entire organization.

P lease scan the above QR code to read MUFG Way—Bringing it to life.

MUFG Headquarters Building Project Led by Employees
We are currently planning the construction of a new MUFG
headquarters (HQ) building designed to further increase thesophistication of our groupwide, integrated management
approach through the consolidation of the HQ functions of theholding company, the Bank, the Trust Bank and the Securities.
In connection with this project, we launched a working group (WG)
via in-house posting by recruiting WG members from employees at
the Bank, the Trust Bank and the Securities. The WG has been formed
to foster an employee culture of spontaneously taking on challenges
and to create opportunities for employees to act in collaboration in a
way that transcends the boundaries of Group companies.
The 19 employees of differing age and positions chosen to form
the inaugural membership of the WG have begun holding remoteand face-to-face discussions in addition to touring external
corporate facilities and attending lecture sessions provided byexperts to gain a diverse range of knowledge. In addition, they
have engaged in discussions with the presidents of MUFG
companies. Through these activities, they have identified “GoBeyond with You” as a project concept, which summarizes MUFG’scollective determination to constantly transform itself and go
beyond its conventional scope of operations. This concept also
represents ideals regarding what the new MUFG HQ building

should look like while indicating the general direction of innovative
workstyles to be adopted at this facility. We expect this concept
to inspire all MUFG employees to update their awareness andtransform their behavior.
Also, many of the WG members contributed positive remarks
regarding takeaways from their WG activities. These remarks
included “Participating in the WG enabled me to develop astronger sense of belonging to MUFG beyond the boundaries ofGroup companies tasked with differing businesses,” “I was glad to
be entrusted with important decision making and this strengthened
my willingness to take on the new challenges accompanying a
growing scope of duties,” and “I was impressed to find that
although we are coming from different departments and havediverse attributes, our passion for MUFG is universal.”
Going forward, we plan to keep the
WG ongoing while replacing its
members. Through the new MUFG
HQ building project, we willcontinue to foster a new corporate
culture and further increase thesophistication of our groupwide,
integrated management approach.

Project concept

Voices from MUFG Way Boost Project Members

Kei Sato
The Bank

Kasumi Yagi

The Trust Bank

Namiko Goto

The Securities HD

Q. Please tell us why you chose to participate in
the project.
Sato: At the Bank, we often say that “Successful financing
hinges entirely on human capabilities.” Having been engaged incorporate sales for eight years, I now feel that this notion is verytrue. Because of that, I am convinced that if we are to become
an attractive financial institution needed by customers,
developing a sense of ownership about the MUFG Way is amatter of foremost importance. In other words, every one of
us should fully leverage our own unique competencies in thecourse of our work. As one of a new generation that will, in turn,build MUFG’s future. I hope to create a desirable corporate
culture in tandem with my colleagues. That’s why I volunteered
to join the MUFG Way Boost Project.

Q. Please share your takeaways from the project.
Yagi: It was amazing to find that all members are passionate
about supporting both customers and colleagues. As an

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MUFG Report 2023

MUFG Group member, this made me feel like I was really partof a group that takes pride in engaging in businesses aimed
at “empowering a brighter future.” I also have become more
conscious than before of how to contribute to people whom
I serve not only directly but also indirectly through my duties
and how to contribute to the world as a whole.

Q. P lease describe your vision for how to leverage theexperience you gained in the course of the project.
Goto: It was quite exciting to engage with project members
who came from various business units across the MUFG
Group and develop tangible action plans based on our own
employee opinions and ideas. I also found that I had astronger sense of belonging and felt highly motivated after
joining the project. This positively affects my regular workand private life. I would like to share this experience withcolleagues at my workplace.

Discussions with President Kamezawa

Discussions among WG members

WG members touring the Marunouchi area surrounding the Bank’s main building

Exchanging opinions with outside directors

Yagi: I felt a great sense of fulfillment upon completing theplanning of project activities from the ground up whileworking alongside a gathering of fellow members not limitedby the boundaries of Group companies. It was my mostprofound experience of success, enabling me to discover
how good MUFG employees are at teamwork and feel asense of unity. Moreover, I have realized the presence of agreat number of like-minded colleagues within the Group. I
feel that these takeaways will empower me to courageously
tackle any challenge that may come my way going forward.

MUFG Report 2023

88

Management Message

MUFG’s Pursuit ofValue Creation

Management Strategies
and Performance

Leadership andGovernance

Financial Data /Corporate DataManagement Strategies and Performance
Transforming Our Corporate Culture / Human Capital Strategy

Fostering a culture of taking on challenges and transformation

3 Practical Opportunities—Spark X, a New Business Incubation Program
Background and Objectives of Launching Spark X
In the face of radical changes in society, we need to redefine roleof finance in the new era and review its positioning. With people’svalue systems becoming more diverse than ever before, ourbusiness growth will hit the wall if we insist on hewing to the
traditional top-down business approach, relying solely on theconventional wisdom within a single entity we belong to, or
enforcing old ways of thinking. Aware of these changes, we aim
to realize genuine diversity management that allows employees
to autonomously take on the challenges of transformation andhave thus identified our ideal regarding what MUFG should look
like going forward in this regard. To this end, we need toencourage all Group employees to leverage their diverse values
and freely contribute their ideas while engaging in open
exchanges of opinions. As part of initiatives to encourage
employees to take on challenges and transform their behavior,
MUFG launched Spark X in 2022.
Spark X is a bottom-up project aimed at enabling employees toperceive situations in the course of their engagement withcustomers and in their daily lives that give rise to perceptions of
discomfort, dissatisfaction, disadvantage in society and thereby
empowering them to become agents of positive change.
Applicants to the project are allowed, based on their own unique
ideas and personal aspirations, to take on the challenge ofcreating new businesses that transcend MUFG’s conventional
scope of operations. The name Spark X was chosen with thehope that this program will nurture individuals who “spark” thefire that will blaze a trail into a new era even as they boldly takeon “X,” the challenge of an unpredictable future. In summary,
Spark X aims to empower applicants to fully live up to theirpersonal aspirations and serve as agents of change who inspireothers to similarly step forward to drive transformation.

Corporate Culture Reforms Driven by Spark X and theCreation of Social Value
In addition, some applicants whose proposals were rejected
commented on how this project affected their behavior, with one
such applicant saying “Through participation in Spark X, I felt asense of excitement by practicing the MUFG Way on my own
terms. This, in turn, helps me take a positive stance toward taking
on challenges in the course of day-to-day operations.” As
expressed in this comment, an employee culture of taking on

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MUFG Report 2023

Going forward, we will strive to disseminate, via Spark X, a culture oftaking on challenges throughout MUFG’s entire workforce. Pushingahead with corporate culture transformation, we will thus build aresilient and innovative organization capable of accommodating
the rapid changes of the times. In this way, we will improve ourcorporate value while resolving issues society is now confronting.

The Spark X logo (designed to convey optimism for taking on challenges via a crosssectional approach)

A Program Designed to Enable All Group Employees to
Become Participants
Spark X is not a program intended for only a few specificemployees equipped with knowledge and experience. Rather, it
is open to any Group employee willing to take on challenges.
With this in mind, the first round of Spark X held in 2022 involved
holding lecture sessions provided by internal and external
experts as well as periodic individual counseling sessions.
Through these events, we sought to provide employees with
opportunities to learn ways of thinking and skills that arenecessary to launch new businesses before we even began
soliciting ideas from employees. Following the document-based
screening of business ideas, selected applicants went on tobrush up their business models with the support of in-house
specialists, including MUFG employees who operate in fields
related to business ideas developed by applicants, and external
consultants, who served as mentors. Meanwhile, applicants
whose proposals were rejected received feedback on their ideas
while being invited to join town hall meetings attended by the
CEO & President and other senior management. In this way, we
strove to ensure that they feel appreciated for their willingness totake on a challenge and better motivated to tackle the next.
In this round, a cumulative total of 2,500 employees participatedin project-related events, with more than 650 ideas being
contributed by applicants who assiduously worked to develop
their own business models with strong aspirations to change theworld. We then conducted a rigorous final screening anddetermined the Grand Prix and Special Award winners. Moreover,an Audience Award was granted to an applicant chosen via
voting by the attendees and online viewers of the final screening
session. MUFG intends to allocate budgets to the Grand Prix andSpecial Award winners to help them realize their business ideas.
Since April 2023, full-scale initiatives have been under way toachieve the commercialization of these ideas while exploring thepossibilities of partnerships with external corporations andspecialists to this end.

Project applicants attending a workshop on the creation of new ideas, with an external
expert serving as a lecturer

challenges and thereby “empowering a brighter future” seems tohave steadily begun to develop roots in MUFG.

Final screening candidates with President Kamezawa

Voices from an Award-Winning Team
Striving to Launch Services for Artists to Create
Opportunities for Artwork Exhibition and Sales
Mizuguchi: Since my graduation from an art university, I
have had an aspiration to draw public attention to thebrilliant artists I encountered when I was a student. This is
why I applied for Spark X. My proposal was to set up
exhibition spaces within Bank branches to display artworks
produced by young artists and provide branch visitors witha place for fresh encounters with art and interactions withartists. On the other hand, I had never gotten involved in
the launch of a new business before and, accordingly, wasanxious at the beginning as I had no idea how to go about
realizing my concept. However, I was given the support offellow MUFG employees equipped with diverse expertiseand personal networks. Because of this, I was able tooperate in a heartening environment. Furthermore,interacting with Group employees beyond departmental
boundaries enabled me to gain new ideas and insights
that, in turn, provided me with a considerable driving force.
Looking ahead, I would like to contribute, as a member of
MUFG, to the expansion of Japan’s art market by helping
the general public discover that how relevant art is to their
daily lives while empowering artists to develop successfulcareers in a growing scope of fields.

The Grand Prix winner celebrated at the award-giving ceremony following the final
screening session

Ogino: As I have been engaged in the management ofinvestment trusts, I had not had regular opportunities todirectly hear from customers. However, Spark X enabled
me to directly engage with both artists and collectors toascertain essential issues and needs that must be
addressed. Although our pathways going forward towardcommercialization will not be easy, I will promote thisendeavor, driven by a strong aspiration to help resolve
issues confronting those in front of us as well as a sense of
excitement arising from taking on new challenges.

Wakana Mizuguchi (left; Investment Planning Division, Mitsubishi UFJ Kokusai AssetManagement) and Taiyo Ogino (right; Index Investment Division, Mitsubishi UFJ
Kokusai Asset Management), the Special Award and Audience Award winners

MUFG Report 2023

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MUFG’s Pursuit ofValue Creation

Management Message

Management Strategies
and Performance

Leadership andGovernance

Financial Data /Corporate DataManagement Strategies and Performance

Business Group Performance

GCB

Breakdown of Fiscal 2022 Net Operating Profits*1 by Business GroupFY 2022

214.4

Customer segments 1,617.7

157.3

474.6

290.3

105.1

376.0

137.1

1,577.6*2

Customer segments 1,174.6

FY 2021

182.7

93.7

302.3

243.7

107.5

244.8

1,232.4*2

174.0

Digital Service Business Group
Loans anddeposits

Consumerfinance21%

42%

Domestic
and foreign
settlement /
forex
5%
Card
settlement

MUAH*

17%

37%

Krungsri(Bank of
Ayudhya)*3

Overview of FY2022 Results
In step with recovery from economic
stagnation caused by the COVID-19
pandemic, income from consumer financeand forex increased. Moreover, net operating
profits rose from the previous fiscal year
thanks to the consolidation of branches andthe digitalization of internal operations, bothof which contributed to cost reductions.

Domestic individual customers andcorporate clients (online transactions
mainly)Main Subsidiaries Belonging to
the Business GroupMUFG Bank
Mitsubishi UFJ NICOS
ACOM

Asset
Management (AM)Pension20%

40%

Investor
Services (IS)40%

32%
*1 Managerial accounting basis. Local currency basis. Gross profit breakdown excludes profits or losses from others.

R&C

Investment
product sales

Loans anddeposits

29%

31%
Domestic
and foreign
settlement /forex

Real estate,
corporateagency andinheritance

17%

11%

Derivatives,
solutions13%

Overview of FY2022 Results
Income from loans and deposits, forex,
derivatives and other operations increased asthey accommodated needs arising fromchanges in the environment due to U.S. interest
rate hikes and other factors. With regard to
expenses, personnel and non-personnel
expenses were curbed by the consolidation of
branches. As a result, net operating profits
grew from the previous fiscal year.

Overseas individual customers and SMEs

Main Subsidiaries Belonging to
the Business GroupMUFG Bank
MUAH
Krungsri (Bank of Ayudhya)
Bank Danamon

Overview of FY2022 Results
In the IS business, the combined provisionof high-value-added services progressed inJapan and overseas, while AM businessbecame first-place in the industry for thebalance of publicly offered stock investment
trusts.*2 However, net operating profits
decreased year on year due to the absenceof performance fees earned by FSI in theprevious fiscal year as well as the impact ofmarket stagnation and a resulting decline infair value.

Main Customers
Domestic individual customers and SMEs
Major Japanese corporations
Large global corporate clients

Main Subsidiaries Belonging to
the Business Group
Mitsubishi UFJ Trust and Banking
Mitsubishi UFJ Kokusai Asset Management
First Sentier Investors*1 Managerial accounting basis. Local currency basis. *2 Excluding ETF

Retail & Commercial Banking Business Group*1

FY2022 Gross Profit Breakdown

Main Customers

Asset Management & Investor Services Business Group*1

FY2022 Gross Profit Breakdown
Main Customers

Hikes in U.S. interest rates led to an increase
in interest income, while in Thailand,
Krungsri enjoyed improvement in lending
spreads due to growth in the loan balanceand hikes in policy rates. Bank Danamon
succeeded in curbing funding costs.
Reflecting these factors, net operating
profits rose from the previous fiscal year.

*1 Managerial accounting basis. Local currency basis. Figures for MUAH and Krungsri include those belonging to GCB only and exclude those belonging to other business groups. Figure
for Bank Danamon is on a standalone entity basis. Gross profit breakdown excludes profits or losses from others. *2 Excluding figures belonging to Trust/Securities subsidiaries, JCIB,
GCIB and Global Markets *3 After GAAP adjustment. Excluding figures that belong to Global Markets

AM/IS

*1

FY2022 Gross Profit Breakdown

Bank Danamon

246%*1 Consolidated net operating profits calculated on a managerial accounting basis*2 Include net operating profits from “Others” segment (fiscal 2021: (¥116.2) billion; fiscal 2022: (¥177.3) billion)

DS

Overview of FY2022 Results

FY2022 Gross Profit Breakdown■ DS ■ R&C ■ JCIB ■ GCB ■ AM/IS ■ GCIB ■ Global Markets(Billions of yen)

Global Commercial Banking Business Group*1

GCIB

Main Customers
Domestic individual customers and SMEs

Main Subsidiaries Belonging to
the Business Group

Global Corporate & Investment Banking Business Group*1

FY2022 Gross Profit Breakdown
Fees andcommissions

Loans anddeposits

48%

52%

MUFG Bank
Mitsubishi UFJ Trust and Banking
Subsidiaries of Mitsubishi UFJ Securities
Holdings*1 Managerial accounting basis. Local currency basis. Gross profit breakdown excludes profits or losses from others.

Overview of FY2022 Results
The stagnation of the capital market led to a
decline in revenues from the securities
primary business. However, this decline wasmore than offset by financing for institutional
investors and sales fees and commissions
associated with project finance as well as
higher net interest income from loans anddeposits and other positive factors. As aresult, net operating profits increased fromthe previous fiscal year.

Main Customers
Large global corporate clients

Main Subsidiaries Belonging to
the Business GroupMUFG Bank
MUAH
Subsidiaries of Mitsubishi UFJ Securities
Holdings*1 Managerial accounting basis. Local currency basis. Gross profit breakdown excludes profits or losses from others.

JCIB

Japanese Corporate & Investment Banking Business Group*1

FY2022 Gross Profit Breakdown
M&A, DCM,*3 ECM*4, 5
7%

Loans anddeposits
54%

Real estate,
corporateagency11%
Derivatives,
solutions*2

Domestic
and foreign
settlement /
forex

13%

15%

Overview of FY2022 Results
Net interest income from loans and deposits
increased significantly as a result of the pursuitof appropriate return on risk and flexible
response to U.S. interest rate hikes and otherchanges in the environment. Furthermore,income from forex, solutions, and othernon-interest income grew, leading to a yearon-year increase in net operating profits.

Main Customers
Major Japanese corporations

Main Subsidiaries Belonging to
the Business GroupMUFG Bank
Mitsubishi UFJ Trust and Banking
Subsidiaries of Mitsubishi UFJ Securities
Holdings*1 Managerial accounting basis. Local currency basis. Gross profit breakdown excludes profits or losses from others. *2 Figures are domestic business only. *3 Debt Capital Markets*4 Equity Capital Markets *5 Including real estate securitization, etc.

91

MUFG Report 2023

Global Markets

Global Markets Business Group*1

FY2022 Gross Profit Breakdown
Treasury
13%

Sales &
trading (S&T)
87%

Overview of FY2022 Results
Income from S&T grew significantly due tothe increased volume of sales activities andthe flexible management of our positions.
With regard to treasury operations, portfolio
valuation losses remained under robust
control via hedging operations despite theharsh environment due mainly to considerable
hikes in U.S. interest rates. We also promoted
new investment businesses.

Main Customers
Major Japanese corporations
Large global corporate clients

Main Subsidiaries Belonging to
the Business GroupMUFG Bank
Mitsubishi UFJ Trust and Banking
Subsidiaries of Mitsubishi UFJ Securities
Holdings*1 Managerial accounting basis. Local currency basis. Gross profit breakdown excludes profits or losses from others.

MUFG Report 2023

92

Management Message

MUFG’s Pursuit ofValue Creation

Management Strategies
and Performance

Leadership andGovernance

Financial Data /Corporate DataManagement Strategies and Performance

Digital Service Business GroupDS

Overall Strategy and Initiatives of Mass-market Business
Vision for the Business Group rovide safe, convenient and well-priced services byP
expanding touchpoints and upgrading customer experienceas they connect with MUFG more and more

Expand online consultation.
Launched trials at stations
and offices*1

Digital rovide domestic individual customers and corporate clientsPwith digital-driven financial services, to this end striving to
expand digitized customer contact points and enhancecustomer convenience

Plan to open new type ofbranch based on changes infoot traffic

RemoteMain Business

The branch network optimization we have carried out to datehas enabled us to flexibly offer optimum channels based on
customer needs. Going forward, we will consider opening a new
type of branch capturing changes in foot traffic. We are also
expanding and improving our online consultations, having
started trials to offer an investment advisory service accessible
from customers’ homes and at booths created within stations
and offices. As we expand our touchpoints, we are keeping aneye on BaaS that offers financial functions to external partners.
Last year, we released a digital account service together with NTT
DOCOMO. In addition to general-purpose BaaS that offers basic
functions of banks, we will offer special function BaaS offeringfunctions such as settlements and asset managements to meetthe needs of our external partners and individual customers.

Branch aximize added value based on groupwide integrated
Mmanagement and data-driven management

Maintain and Expand Customer Touchpoints

In addition to apps, consider
new customer touchpoints inthe metaverse+

Tadashi Yamamoto, Group Head, Digital Service Business Group
BaaS

Enlarge the customer basethrough contact points withexternal partners
Released a digital accountservice with DOCOMO

Overview of Strategies of the Business GroupStrengths*1	Booth provided by telecube, Inc. (left side picture) and East Japan Railway Company(right side picture)

Challenges

 n extensive customer base and a robust network of businessAbases in Japan and product capabilities

Upgrade Customer Experience and Make Personalized Proposals

 nlarge a new customer base and activate existingEcustomers he safe and secure systems necessary for collaboration withT
external partners in providing non-face-to-face services in
addition to hard-earned customer trust and confidence
supported by these systems

 romote collaboration among products and servicesPand data usage within the MUFG GroupMUFG offers one of the best product and service lineups among
financial institutions. We will not only improve the ease of use ofeach product and service but will also improve customer
convenience through seamless collaboration among products
and services, delivering customer experience that makes ourcustomers want to choose MUFG for all their financial transactions.
Furthermore, utilizing customer information obtained throughtheir use of diverse products, we hope to offer advice andinformation tailored to individual customers.

Progress in KPI under the MTBP
Changes in ROE*1

Components of ROE
Net profits +¥19.7 billion

FY2022
results

6%
vstarget4%

Cardsettlement

Other
revenue

Expenses Expenses(branch(deposit
optimization) insurance)

Others

FY2022
result*1	Managerial accounting basis. Local currency basis. ROE is calculated using RWAs and is based on
net profits, excluding non-JPY medium- to long-term funding costs.
*2 Consumer finance93

MUFG Report 2023

Net operating
profits209.7 billion+27.1 billion

Expense ratio

72%–4 ppt

9.5 trillion–0.1 trillion

RWA

Complete anapplication witha few clicks

Personalized
advice for eachlife event

Upgrade Data-driven Marketing
Supporting the aforementioned strategy and initiative is the
upgrading of data-driven marketing. We will gather and analyze
customer information as a group and deepen our understandingof our customers to make personalized proposals designed tomeet the needs of individual customers.
We will develop a customer data platform (CDP) that centrally
manages customer information. The CDP will enable timely andfinely tuned proposal making. We will provide optimal services atthe optimal timing from the viewpoint of our customers’ lifespans.

CustomerData
platform

DeliverysystemImmediately/same day

CF*2

Comparison
with FY2021

Centralized
management

FY2021
results

Find a good
information on thehome screen

Emailnotifications
Appnotifications
Push
notifications

Customer

MUFG Report 2023

94

Management Message

MUFG’s Pursuit ofValue Creation

Leadership andGovernanceManagement Strategies
and Performance

Financial Data /Corporate DataManagement Strategies and Performance

Retail & Commercial Banking Business Group R&C

Progress in Key Strategies under the MTBP
Vision for the Business GroupHelp people enjoy abundant lives while contributing to
growth and business expansion for corporate customers
A team of finance professionals with unparalleled strength
in Japan

Main Business

Promoting Corporate Banking and WM Solutions in an Integrated Manner
WM profits

Although AM struggled due to the impact of market conditions,
WM business’ net operating profit in fiscal 2022 rose to ¥79 billion(up ¥2.8 billion from fiscal 2020) thanks to cost reduction andgrowth in cross transactions*1 such as loans and real estate.

(Billions of yen)

79

800

Provide domestic individual and corporate customers witha range of financial services, such as lending and settlement
as well as those associated with asset management (AM),inheritance and real estate in addition to offering businessand asset succession solutions.

The WM digital platform*2 released in February 2022 with inputs
from Morgan Stanley has enabled the deepening of information 600
collaboration among BK, TB and MUMSS, sending ofrecommendations to RMs, and proposal-making using the Goal 400
Planning System.*3 The number of proposals made using thisplatform has exceeded 200,000*4 and the average fee income*5 200
has almost doubled, demonstrating our improved solutions
0
provision ability.
The AM business will enhance its governance framework andwork toward a healthy growth by establishing a new internalguidance, “MUFG Policy.”

Yutaka Miyashita, Group Head, Retail & Commercial Banking Business Group

97
+46

66

+28

51

(VS FY2020)

FY2020NOP

FY2021
NOP

AM

Cross
transactions

Base
Expenses, FY2022
incomeetc.
NOP

FY2023NOP
target*1 Business afforded by a Group Collaboration among the Bank, the Trust and MUMSS*2 Platform to offer proposals based on total assets of customers by gathering theirprofiling data and providing them with timely and appropriate advice*3 System to visualize simulations to achieve future life goals of each customer*4 Number of proposals prepared using the Goal Planning System*5 Fee income per customer by the Bank (managerial basis; tallied from April to
November 2022)

Overview of Strategies of the Business GroupStrengths

Improve Base Income

Challenges

 he most extensive individual and corporate customer baseTin Japan nhance earnings power by promoting a group-wideE
integrated business model omprehensive capabilities afforded by Group companies toCmeet diverse customer needs

 se digital technologies to raise productivity andU
improve and diversify customer touchpoints

In fiscal 2022, Non-JPY deposit interest income rose significantly
due to changes in the financial environment including the interest
rate hikes in the United States. In addition, our efforts to enhancesophisticated credit transactions such as LBO loans improved
loan spreads in corporate banking. Furthermore, the number ofcorporate users of a foreign exchange service grew in our
corporate online banking service, “Biz STATION,” delivering
higher FX income. Going forward, we will continue enhancing
base income, which is the earnings base of the Retail &Commercial Banking Business Group.

Changes in ROE*1

FY2022
results

Net profits +¥30.3 billion

vstargetAM

Cross*3transactions

Base*4incomeDerivatives,
etc.

Expenses,etc.

FY2022
result*1 Managerial accounting basis. Local currency basis. ROE is calculated using RWAs and is based on
net profits, excluding non-JPY medium- to long-term funding costs.
*2 Wealth Management*3 WM profits from real estate, inheritance, loans and solutions, etc.
*4 Income from deposits, loans (excluding cross transactions), domestic transactions and FX

95

MUFG Report 2023

Comparison
with FY2021

Net operating
profits

146.8 billion+53.9 billion

WM NOP

79.0 billion+13.0 billion

Expense ratio

76%–8 ppt3.5%

FY2021
result(Billions of yen)(Billions of yen)

33

RWA

278
254

16

2021

2022 (FY)

2020

2021

2022 (FY)

Cost Structure Reforms

Components of ROE
5.5%

2

Base income

2020

Progress in KPI under the MTBP: WM*2 profits

Non-JPY depositinterest income

16.6 trillion+0.3 trillion

Base cost reduction is progressing steadily thanks to falls in
system depreciation cost and deposit insurance premiums,
branch network optimization, and a human resource reallocation.
The expense ratio fell to 76% in fiscal 2022 from 90% in fiscal
2020 (under the previous MTBP) as we achieved both revenue
growth and cost reduction.

Expense trend (Billions of yen)
Expense
ratio
90%

495

Given that our cost control initiatives including branch network
optimization achieved goals, our focus will now shift to improving
productivity and expanding and diversifying customer touchpoints
through the further use of digital technologies.

76%

459
Base cost reduction

Approx. ¥40 billion
FY2020

System depreciation
cost and deposit
insurance premium

Branch network
Optimization,
etc.

FY2022

MUFG Report 2023

96

Management Message

MUFG’s Pursuit ofValue Creation

Leadership andGovernanceManagement Strategies
and Performance

Financial Data /Corporate DataManagement Strategies and Performance

Japanese Corporate & Investment Banking Business Group JCIB

Vision for the Business Group

Progress in Key Strategies under the MTBPGrow together with customers by sharing business risk
Realize “staircase management”; steadily climb a growthstaircase and achieve year-on-year improvement toward thegoals of the Medium-Term Business Plan in three years

Deepening of ROE Management

Main BusinessOffer comprehensive financial solutions tailored to needs ofmajor Japanese corporations, with the Bank, the Trust Bank,
the Securities and other Group companies acting in close
collaboration and taking full advantage of their sophisticatedexpertise in their respective financial service fields

We introduced a performance evaluation system linked to ROE
in fiscal 2021. In addition, we began operating our businesses
based on four quadrants that visualize the level of RORA andthe amount of RWA spent. We are embedding the thinking andaction that emphasize profitability in the sales frontline andenhancing profitability improvement. As a result, lending spreads
have improved by 10bp in JPY loans and by 8bp in non-JPY loans
since the start of the MTBP. Non-JPY deposit spreads have grownsignificantly partly thanks to the interest rate environment.

Strengths

Challenges
Achieve sustainable growth in an environment of
increasing uncertainty

Our large corporate customers are currently in the midst of atidal stream of major social transformation such as GX and DX.
In this environment, we are promoting a value co-creation
approach where we support the sustainable growth of ourcustomers by offering both business and financial solutions andfacilitating customer engagement.

Progress in KPI under the MTBP

12
10
8
6
4
2
0

Components of ROE
FY2022
results

Net profits +¥151.6 billion

10%
vstarget5%

6%

FY2021
results

Gross profits

Expenses

OthersRWA

FY2022
resultComparison
with FY2021

Net operating
profits

412.2 billion+127.5 billion

Expense ratio

43%–9 ppt

RWA

0.75%

1.04%

0.47%

0.43%

0.44%

2022 (FY)

2020

2021

JPY
2021

Capital finance(FY2020 result=100)
121

2021

2022 (FY)NRL balance in the realestate field(FY2020 result=100)

143

203

140
100

2022 (FY)

2020

2021

2022 (FY)In fiscal 2022, we made investments for business co-creation toaddress important challenges such as the domestic productionof semiconductors, whose significance is growing due tothe impact of geopolitical risk, and implementation of spacebusiness and the expansion of communication infrastructure
sharing that will become a basis in an era of information
explosion. Our investment balance grew significantly by ninetimes compared to the previous year.
We will use investments to gather insights and create networks
and to capture business opportunities arising from the growthof our customers’ business.

Approach for the co-creation of value
Fundamental
corporate value

33.2 trillion

Realize
the genuine valueof assets

Further growthSocial issueoriented
New business

Engagement forcorporate value
improvement

Co-work withcustomers for
greater valueMarket value

Investment balance forco-creation business(FY2021 result=100)

Key themes of social issue888

Carbonneutrality

Semiconductor

Space

Communication
infrastructure

YoY 9 times

100
2021

FY2020results

0.41%

Deposit spreads (Non-JPY)

Taking on New Challenges to Pursue Sustainable Growth nsure pricing control
E
Continue accumulating highly profitable assets
Implement new businesses that help resolve social
challenges

Changes in ROE*1

0.37%

2020

Capable of delivering sophisticated solutions by taking
advantage of groupwide collaboration and an integrated
cross-regional approach

0.73%

Non-JPY

100

Overview of Strategies of the Business Group

Global reach in securities business operations
Trust banking functions supporting a full-lineup of services
A robust balance sheet and an extensive overseas network, bothof which are at a top level in the domestic banking industry

0.67%

2020

To achieve sustainable growth despite the growing uncertainty inthe global financial market, we are strengthening our origination
capabilities in addition to improving profitability. By involving in
the entire value chain leveraging risk taking, we are increasing
non-interest income such as income from solutions and realestate brokerage.

Seiichiro Akita, Group Head, Japanese Corporate & Investment Banking Business Group

Lending spreads

2022

(FY)

Expand and replace as needed+0.6 trillion*1 Managerial accounting basis. Local currency basis. ROE is calculated using RWAs and is based on
net profits, excluding non-JPY medium- to long-term funding costs.

97

MUFG Report 2023

MUFG Report 2023

98

Management Message

MUFG’s Pursuit ofValue Creation

Leadership andGovernanceManagement Strategies
and Performance

Financial Data /Corporate DataManagement Strategies and Performance

Global Commercial Banking Business Group GCB

Progress in Key Strategies under the MTBP
Vision for the Business Group
Committed to empowering a brighter future for customers inAsia through collaboration between MUFG and partner banks

Main BusinessProvide financial services to corporations expanding into
Asia as well as to local SMEs and individuals through partnerbanks, such as Krungsri (Bank of Ayudhya), Bank Danamon,
VietinBank and Security Bank.

Strengthen Businesses in Thailand and Overseas through M&As (See pages 41-44 for details)
One of Krungsri’s growth strategies is to develop business infast-growing neighboring countries in view of the maturing of
the economy and the arrival of the aging society in Thailand. Aspart of this strategy, Krungsri decided to acquire subsidiaries
of Home Credit, a consumer finance company using digitaltechnologies, in the Philippines and Indonesia. We are expanding
our consumer finance business by combining the insights of
MUFG and our partner banks.

2023
Securities
firm

ThailandAcquisition cost of approx. ¥87 billion in 2023

Capital Nomura Securities*1

Philippine andIndonesian subsidiaries

2023

Vietnam

Non-bank

SHB Finance Company Ltd

Strengthen the Business Platform and Create New Profit Sources

Yasushi Itagaki, Group Head, Global Commercial Banking Business Group

Overview of Strategies of the Business GroupStrengths

Challenges

 wide range of services and functions offered throughA
the combined strength of MUFG and partner banks

 ank Danamon: Strengthen the business platform ofB
the retail business including consumer and auto
finance and create new profit sources he capability to promote financial inclusion through collaborationTwith Grab and startup companies, along with access to thesophisticated digital finance expertise possessed by these partners

Strengthen retail business

Recently, the bank announced the acquisition of MandalaMultifinance, which is a main player in auto finance, andStandard Chartered Bank’s retail assets in Indonesia, to capture
discontinuous growth opportunities.

IIMS (Indonesia International Motor Show)

M&A strategy

Acquisition of retail assets

Profit Contribution of VietinBank and Security Bank
Intra-group collaboration with VietinBank and Security Bank
progressed significantly through the sharing of insights with
MUFG. In fiscal 2022, the two banks posted a record net profit,
making an increasingly greater profit contribution to MUFG.

Contribution to net profits (after amortization of goodwill, etc.)
Profits fromequity investees*3

12.1

Components of ROE*1

Before4.4 amortization

8.5%

8.5%

Net profits +¥35.0 billion*4

6.5%

3.3
2.2
1.1
0.0

FY2022
results

Krungsri’s one-time profit

5.5

After
amortization

5.5%

vs
target4%
FY2021
resultMUFG Report 2023

Net operating
profits

194.7 billion

Expense ratio

58%

Comparison
with FY2021

0.7

0.0

2017

(FY)

2022

(FY)

Security Bank

10 years since the start of investment in Asia, 5 years since the establishment of the business group• Collaboration between MUFG and partner banks enabled offering of comprehensive solutions, establishing a structure that covers customers
across the entire commercial distribution• Investment in Grab has boosted the digital presence of MUFG and partner banks+10.0 billion–1 pptDec. 2012*4

Dec. 2013

Jan. 2016*4

Establishment of
Global Commercial
Banking (GCB)
Business Group
Jul. 2018

Feb. 2020

Apr. 2019Nov. 2022*4

Dec. 2022

Apr. 2023

Digital Strategy
Sale of MUFG Union Bank completed Dec. 2022

Krungsri

Bank Danamon

VTB,
SBC*5

Other

FY2022
result*1	Managerial accounting basis. Local currency basis. ROE is calculated using RWAs and is based on
net profits, excluding non-JPY medium- to long-term funding costs.
*2	MUAH not included*3	Areas shaded with diagonal lines represent amortization of intangible assets, etc.
*4	FY2021 does not include Krungsri’s one-time profit*5	VietinBank, Security Bank

99

2022

VietinBank

4.2

Profits fromequity investees*3

17.5

2014

Progress in KPI under the MTBP

52.5

35.0 (Billions of yen)(Billions of yen)

2.6

Changes in ROE*1, 2, 3

Branch rebranding

Enhancement of auto loans

 rungsri: Pursue new businesses preceding theKdecline in growth expected from the maturation of
the Thai economy

 n unparalleled partner bank network in ASEAN (encompassingA
approximately 3,000 branches and 90,000 employees)

Bank Danamon has become a main sponsor of IIMS,*2 together
with Adira and MUFG, for two consecutive years, deepening
their collaboration with MUFG. In addition, the bank is increasing
investments in its retail business through branch remodeling anddigitalization to enlarge its customer base.

RWA

10.4 trillion+0.8 trillion*1 M
 UAH not included; FY2021 does not include Krungsri’s one-time
profit5 years since the establishment of GCB Business Group
10 years since start of investment in Asia
*1 Name changed to Krungsri Capital Securities after acquisition *2 Abbreviation of Indonesia International Motor Show *3 Our equity share of net profits minus amortization of
goodwill, etc. (differs from the figures in the companies’ financial reports) *4 When the investment was announced

MUFG Report 2023

100

Management Message

MUFG’s Pursuit ofValue Creation

Leadership andGovernanceManagement Strategies
and Performance

Financial Data /Corporate DataManagement Strategies and Performance

Asset Management & Investor Services Business Group AM/IS

Vision for the Business Group

Progress in Key Strategies under the MTBPTo be the professional global asset management (AM) /investor services (IS) player to continuously meet customers’
needs through demonstrating high degree of expertise asa fiduciary toward sustainable society

Asset Management (AM)

Main BusinessProvide various products, services and consulting employing
sophisticated specialist know-how in the areas of AM, IS andpensions.

<Global>AuM of unlisted infrastructure funds, which is one of the flagshipfunds of First Sentier Investors, have been growing at a rate
above the industry average since the 2019 acquisition of Colonial
First State Global Asset Management, on the back of its strong
performance and collaboration with MUFG. Going forward, we
will develop new products using our balance sheet and further
enlarge the geographical areas where we offer products.
<Japan>Accurately capturing the needs of individual customers with theextensive lineup of no-load index funds, centered on the eMAXIS
series, Mitsubishi UFJ Kokusai Asset Management (MUKAM) has
been increasing its AuM, with the largest balance of publicly
offered investment trusts (excluding ETF) in Japan. We plan
to conduct organizational restructuring of MUKAM and MU
Investments in October 2023 with the aim of strengthening ourcapabilities to offer products featuring traditional assets and realestate for our corporate customers.

Takayuki Yasuda, Group Head, Asset Management & Investor Services Business GroupFSI (AU$ billion)

24

The business volume and customer base have steadily
expanded but the balance fluctuates due to market
factors
Further enhance capabilities for alternative investment
and flexible product offeringStrong product development capabilities in the AM/IS fields

Expand one-stop services in IS business

Progress in KPI under the MTBP
Components of ROE
Net profits –¥4.6 billion

FY2022
results

31%
vs target

28%

FY2021
result<Global>
We have expanded products on offer and the regions we serveand have raised efficiency to enhance our capabilities to provide
one-stop IS services. Going forward, we will create an even more
resilient earnings base through measures such as the use of
inorganic means and establishment of new bases.
<Japan>The Master Trust Bank of Japan has become No. 1 in Japanin terms of AuA through differentiation from its competitors,
offering integrated services in Japan and overseas incollaboration with overseas IS companies of MUFG. Goingforward, we will accelerate the provision of overwhelmingly highquality services such as single-party NAV calculation.

Changes in ROE*1

AM

IS

PensionEconomic
capital*1 Managerial accounting basis. Local currency basis. ROE is calculated using
economic capital and is based on net profits

FY2022
resultDevelop new products
by using balance sheet
Further expansionof product areas

12

2019

1,092

+24%

596
2020

2021

2022

2026 (FY)estimation

6%

Publicly offered equity investment trust balance*2
MUKAM*3A

B

C

11.3 (13%)
10.8 (2%)(Trillions of yen) ( ):CAGR on balance basis

8.8 (6%)
8.0 (1%)

2018

2019

2020

2021

MUFG Report 2023

(FY)

Net operating
profits

97.2 billion

Expense ratio

70%

Economic
capital

0.3 trillion+1 ppt+0.0 trillion

80%
69%

2017

2018

2019

2020

2021

2022

2023

2026 (FY)estimation

Trends in AuA
MUFG*1Competitor A¥

2017

Comparison
with FY2021–6.0 billion

Global IS expense ratio trend

2018

2019

2020

2021

615 trillion

2022 (FY)*1 AuA in The Master Trust Bank of Japan

Initiatives to Address Social Issues
D-Canvas, a defined contribution (DC) pension management
app, has been contributing to the expansion of the range of
people investing in DC pension schemes as experiencing theapp kicks off a cycle of behavior change starting with “recognize
current situation,” then, “get noticed,” and finally, “take action.”
Two-thirds of the clients who had never made investment began
investing after using the app. Going forward, we will expand thecycle of behavior change from DC (financial assets) to healthcare and career plan to improve human capital.

Changes in behavior

Utilization to improve
human capital

Recognize

Financialassetscurrent situation

Take action

Get noticed

New

Health1012022

Investor Services (IS)

Challenges

 uperior consulting capabilities backed by sophisticated andS
exclusive know-how

CAGR*1 Source: Preqin *2 Excluding ETF *3 Mitsubishi UFJ Kokusai Asset Management

Overview of Strategies of the Business Group obust human resource capabilities supporting the fulfillment
Rof fiduciary duties

Industry*1 (US$ billion)

+26%

2017

Strengths

年平均成長率*1
高付加価値サービス取引量（2019年度末＝1.0）

AuM of unlisted infrastructure funds

New

Career

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Management Message

MUFG’s Pursuit ofValue Creation

Leadership andGovernanceManagement Strategies
and Performance

Financial Data /Corporate DataManagement Strategies and Performance

Global Corporate & Investment Banking Business Group GCIB

Vision for the Business Group

Progress in Key Strategies under the MTBPDevelop a sustainable business model delivering satisfactory
portfolio returns in a dynamic business environment
Become a global financial partner representing Japan andAsia with world-class expertise and capabilities

GCIB & Global Markets

Main BusinessOffer value-added solutions for large global corporate andfinancial institution customers by leveraging our extensive
network and product capabilities through an integrated
business model mainly among the Bank and the Securities.

We promote to capture comprehensive financial needs of clientsby leveraging the integrated business operation among GCIB
and Sales & Trading (S&T) in Global Markets. Although revenueof O&D/OtoD*1 business was stagnant due to reduced capital
markets activity, profitability improved as we accumulated
higher margin assets such as secured finance*2 for institutional
investors/sponsors, which is one of our key strategies. The
introduction of cross-selling in forex and derivatives, along withother major strategy implementations, has led to a significant
revenue growth in GCIB and Global Markets.

2

Investment
Management
InvestIG Corp.
*2

1

Funds
• Equity/Bonds/Loans• Infrastructure, renewableenergy, etc.

Non-IG Corp.
5

In fiscal 2023, we have identified key strategies for the businessareas to in the right chart. To strengthen our productcapabilities and Sales & Trading functions, we will invest in HR inboth front and middle office sections to improve their expertise.

Fumitaka Nakahama, Group Head, Global Corporate & Investment Banking Business Group

Institutional
Investors(AM*1, Sponsor)

Secondary trading

Direct lending

3

Loans/Bonds underwriting
4

Secured Finance,
and Securitization

FX/Flow product cross-sellInstitutional Investors*1 O: Origination; D: Distribution*2 Lending secured or structured by investment portfolios managed by asset managers

Strengthen Fundamental Business Platform

Strengths

Challenges
Improve profitability with expanding fee income underdisciplined balance sheet control xtensive sector expertise and strong capabilities deliveringE
a variety of value-added solutions

 urther enhance integrated business operation of GCIB
F
and Global Markets

Strong client relationships backed by a robust global network trategic partnership with Morgan Stanley, a world-leadingS
financial group

We continue to enhance portfolio management based on quad
analysis. The quad median and average ROE of each quad has
been steadily improving (both portfolio profitability and profit
amount per client have improved) due to continuous reductionof low-profitability assets and expansion of high-profitability
finances for institutional investors.
In fiscal 2023, we will raise the profitability hurdle rate for new
transactions and develop the monitoring framework to further
improve our portfolio profitability. We will continue to havedisciplined portfolio management by paying attention to non-JPY
liquidity, loan to deposit balances, and our clients’ credit conditions.

Improve operational efficiency and strengthen
expertise in a way aligned with the target businessportfolio

Components of ROE
Net profits +¥16.2 billion

8.5%
vstarget7%13.7% (+2.3 ppt)
2.7% (+0.1 ppt)

12.3% (+1.7 ppt)
Median at
end Mar 2021

4.2% (+0.1 ppt)

RWA below GCIB ROE target

Profit amountHigh*1 Average ROE is based on managerial basis.

FY2022
results

1000

700

Median at
end Mar 2022

Low

Changes in ROE*1

800

Average ROE*1:
FY2021⇒FY2022

Reduce/Improve

Progress in KPI under the MTBP

900

High

Profitability

Overview of Strategies of the Business Group

Comparison
with FY2021

Net operating
profits

269.4 billion+77.6 billion

Expense ratio

51%–7 ppt22.8 trillion–0.0 trillion

Investment in New Growth Opportunities
For details, please refer to page 60 for Mars Growth Capital, page 44 for MUFG Ganesha Fund and pages 70-71 for sustainability
activities, respectively.

7.5%

600
500

FY2021
resultInterest
incomeNoninterest
incomeExpensesCreditcosts/others

FY2022
resultImpact of FY2022
resultthe saleof MUB (adjusted)

RWA*1 Managerial accounting basis. Local currency basis. ROE is calculated using RWAs and is based on
net profits, excluding non-JPY medium- to long-term funding costs.

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MUFG’s Pursuit ofValue Creation

Management Message

Management Strategies
and Performance

Leadership andGovernance

Financial Data /Corporate DataManagement Strategies and Performance

Global Markets Business Group Global Markets

Vision for the Business Group

Progress in Key Strategies under the MTBP

“Standing at the forefront of change” as basic policy, stably
raising our earnings power while challenging ourselves toachieve transformation and contribute to sustainable growthfor customers as well as MUFG under the banner of “Drive
Growth and Transformation”

Further Strengthening Sales & Trading Business

Main BusinessHandle customer-segment sales & trading (S&T) operations
associated with interest rates (bonds), forex and equities
Comprehensively manage MUFG’s assets, liabilities andvarious risks via treasury operations

Utilizing advanced global FX business platform
MUFG Bank and Morgan Stanley have reached an agreement
for an FX collaboration that leverages each of our unique andcomplementary strengths. Both parties will benefit fromthe enhanced scale of the collaboration, which will literally
enhance client service and efficiency by using Morgan
Stanley’s leading global FX business platform through Morgan
Stanley MUFG Securities.

GCIB & Global Markets
We will meet the needs of institutional investors and othercustomers by promoting secured finance, sales of loans/bonds underwritten, and capturing various types of ancillarytransactions, while increasing the activity volume.
Top domestic market share in derivatives
We will meet the needs of our Japanese customers by promoting
the provision of hedge methods, support for investing surplus
funds, and ESG-related derivatives transactions.

Treasury Operation in Response to Changes in the Business Environment
Enhance market risk management—secure financial income—We will try to operate our business to secure overall income
mainly by accumulating capital gains through risk-taking thatflexibly operates our positions (risk volume) and dynamicallychanges portfolio allocation. At the same time, we will use
hedge tools and Held-To-Maturity bond accounts to continue
controlling deterioration in unrealized P/L and ensuring
portfolio soundness.

Hiroyuki Seki, Group Head, Global Markets Business Group

Overview of Strategies of the Business GroupStrengths

Challenges

 he ability to deliver sophisticated solutions that meet diverse
Tcustomer needs

Treasury revenue (Billions of yen)

 &T: Enhance client service and efficiency by usingS
advanced global FX business platform trong presence as Japan’s leading player in the financial
S
marketCapital gain

Income gain

(US$ Billion) As of end Mar 2023*1

Set upper limit,
strengthen
control

200
100Treasury:
JPY ad non-JPY portfolio soundness
Strengthen non-JPY liquidity management
Long-term, diversified portfolio expansion

 obust risk control capabilities enabling us to contribute toR
the stability of the financial and capital market

Total

Strengthen non-JPY liquidity management
We will carry out various types of operations and managementwith a focus on soundness in relation to loan-to-deposit gap
management and each item on both sides of B/S in the situation
where the quantitative tightening of US dollar is intensifying.

Highly liquid
assets(JGB, US Treasury,
etc.)

0
–100

2018

2019

2020

2021

2022

2023 (FY)(plan)Loans
318(YoY+16)
Loan-todeposit gap
56
Investment
securities
134
Interbank mkt
operations,etc. 124
Others

Deposits
262(YoY+14)

Mid-tolong-termmarketfunding 127
Other market
funding,etc. 204

Securing stickiness with
regional and industry
diversification
Emphasizing
diversification of
method and term
• Corp bonds/I/C
borrowings: 74• Collateralized
funding, etc.: 15• Mid-long term
currency swap: 38

Others*1 The Bank consolidated excl. MUAH, KS and BDI

Progress in KPI under the MTBP

Challenges for New Business Areas

Changes in ROE*1

Components of ROE
Net profits –¥44.0 billion

FY2022
results

4%

vstarget3%

FY2021
resultTreasury

Sales &
trading

ExpenseFY2022
resultComparison
with FY2021

Net operating
profits

143.4 billion–61.9 billion

Expense ratio

63%+10 ppt

4.1 trillion+0.0 trillion

Economic
capitalLong-term, diversified portfolio expansion
We have been building our portfolio since FY2021 and willcontinue to mainly accumulate floating rate and highly rated
products. At the same time, we will further facilitate practicallevel collaboration between BK and TB to implement the MUFG
Credit/Alternative Investment Strategy as the entire MUFG.

Initiatives for Carbon Credit (CC)As part of our support for the forestry business, we began
investing in global forest investment funds. We will make further
investment and use the carbon credit received from the funds topromote various initiatives aimed at developing the CC market.

*1 Managerial accounting basis. Local currency basis. ROE is calculated using economic capital and isbased on net profits.

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Leadership andGovernance
CONTENTS
Dialogue between Outside Directors and ......................................... 1 0 9
Institutional Investors
Global Advisory Board................................................................................ 1 1 2
Corporate Governance ............................................................................. 1 1 3
Risk Management ........................................................................................ 1 2 3Cyber Security .............................................................................................. 1 2 7Compliance .................................................................................................... 1 2 9Internal Audit ................................................................................................. 1 3 1
Initiatives for Practicing............................................................................. 1 3 2
a Customer-Oriented Approach107

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108

Management Message

MUFG’s Pursuit ofValue Creation

Management Strategies
and Performance

Leadership andGovernance

Financial Data /Corporate Data

Leadership and GovernanceDialogue between Outside Directors and Institutional Investors

Q

Mariko Fujii

Yasushi Shingai

Koichi Tsuji

Outside Director

Outside Director

Outside Director

Chairperson of the Risk Committee, Member of
the Compensation Committee, Member of theNominating and Governance Committee

Member of the Risk Committee,
Member of the Audit Committee

Chairperson of the Audit Committee

Former Ambassador Extraordinary andPlenipotentiary of Japan to the Republic of Latvia

Former Executive Vice President andRepresentative Director of Japan
Tobacco Inc.

Period in office: June 2021 to the present

Emeritus Professor of The University of Tokyo

Period in office: June 2018 to June 2023

Certified Public Accountant

Period in office: June 2019 to the present

Here, we present a summary of a question and answer session held as part of a small meeting attended by institutional investors and
MUFG’s outside directors that took place in March 2023.

Q

How would you evaluate the performanceof Group CEO Kamezawa and otherexecutives over the past year?

Fujii: Under Group CEO Kamezawa’s leadership, they seem to befunctioning very well as a team. This is shown in the steady results
recorded for each strategy promoted under the Medium-TermBusiness Plan (MTBP). Looking ahead, however, I believe that theexecutives must continue to navigate the Group with an awarenessof the need to stay ahead of changes in society. As an outside
director, I will exercise robust supervision over their progress.
Shingai: I have been impressed with the steady progress being
made toward the MTBP goals and with the investments for future
growth in the digital domain and Asian region. I also appreciate
the fact that the sale of MUFG Union Bank (MUB) was closed
successfully. The challenges going forward will be the formulation of
a U.S. strategy after the MUB sale and structural reforms in Europe.
Also, I have always felt that the terms of office for the CEO and headsof business groups are too short in terms of advancing reforms.
Tsuji: Group CEO Kamezawa has proven capable of demonstrating
stable leadership whatever the circumstances. Moreover, theexecutives are well-informed about the various issues from thepast that the Group has been confronting. Regarding the sale ofMUB, I commend the speed with which the sale was handled
despite its difficulty, but the U.S. strategy shall be monitored
closely going forward. As a global bank, it is also important that
we set forth a solid strategy for Asia and Europe.

Q
109

As an outside director, how are youcontributing to the U.S. strategy
after the sale of MUB?

MUFG Report 2023

Shingai: In line with the Group’s policy of strengthening
corporate transactions in the United States, I consider
strengthening collaboration among the Bank, the Trust Bank andthe Securities a matter of importance. At the same time, theexpanded alliance with Morgan Stanley will be key to this policy.
However, it is vital that we first conduct an overall assessment of
MUFG’s position and hold discussions from both an organic andinorganic perspectives.
Tsuji: We outside directors are updated by executives about thestatus of their discussions in a timely and appropriate mannerfrom the early stages of strategy formulation. At the same time,
we closely monitor their execution of duties to confirm whether
their decisions appropriately reflect management policies
approved by the Board. With regard to acquisition strategies, myfocus is on confirming whether the process for selecting
candidates for acquisition is appropriate and the pace ofacquisitions sufficiently swift.

Q

What kind of discussions are you having
to achieve the medium to long term ROE
target (9-10%)?

Shingai: As for the medium- to long-term ROE target, I intend torobustly address this subject in the course of formulating thenext MTBP. For MUFG to improve its corporate value, it isessential to achieve an ROE in excess of capital costs. Thisrequires improvement not only in ROE but the reduction ofcapital costs, for example, decreasing equity holdings. In thisregard, I feel that MUFG has been working harder than any otherbank in Japan. Nevertheless, to continuously reduce capitalcosts, the Group needs to remain persistent.

Discussions on PBR are progressing at
the Tokyo Stock Exchange, but what are
your thoughts on MUFG’s disclosure of
information?

Shingai: Achieving an ROE exceeding capital costs is essential to
improving PBR. Also, in Asia, MUFG is currently engaged ininvestment projects aimed at laying the groundwork for the next
MTBP. In this light, I think that providing investors with our “equity
story,” which supports a shared vision regarding the Group’s
future growth, is important. In addition, with regard to climatechange action, we need to examine the degree of expected
return from such action by taking the status of both financed
emissions and risk-weighted assets (RWAs) into account. I deem
it essential to disclose information aimed at facilitating investors’
understanding of MUFG’s present status and initiatives, as well as
its future potential to achieve an ROE in excess of capital costs
and otherwise grow sustainably.

Q

MUFG’s corporate culture seems to haveundergone major changes over the past
several years. What are your views onthese changes?

Shingai: Transformative efforts led by successive CEOs havebegun to yield positive results. This is one factor contributing to
the changes taking place in recent years. Moreover, under thecurrent MTBP, Group CEO Kamezawa has taken a head-on
approach in leading the transformation of the Group’s corporate
culture. Thanks to this, steady and ongoing initiatives are now
under way, including MUFG Way Employee Sessions, Spark X
and MUFG headquarters building project, through which
employees are encouraged to develop a sense of ownershipabout the Purpose and given opportunities to autonomously
take action to embody it. Motivating employees through theseendeavors is important.

Q

What is your thoughts on the speed ofdecision making at MUFG?

Tsuji: There remain a number of internal issues that the Group stillneeds to address and I consider its process for reaching consensus
to be quite time-consuming, especially when multiple departments
are involved. Of course, MUFG does act swiftly when called for, forexample, when a given issue requires an immediate priority
response. However, the identification of such priorities still takes
time at MUFG. On the other hand, the speed of decision making byexecutives is faster than previously. The entire organization iscapable of act swiftly when backed by executive decisions.
Shingai: Under the leadership of Group CEO Kamezawa, MUFG
is implementing ongoing corporate culture reforms while
periodically monitoring their effects. I personally feel that, at theindividual level, employees are being empowered to operate at abetter sense of speed and are feeling more motivated to take onchallenges. I believe that, accordingly, the Group now needs topursue “Simple & Speedy” operations as an organization. As thereview of complex procedures and rules has now begun, I will
constantly monitor its outcomes and progress going forward.

Q

What are MUFG’s governance issues andareas that need improvement?

Tsuji: MUFG runs a complex organization—its corporate governancecannot be summarized in a few simple words. However, in thisregard we need to make improvements in connection withinefficient communications. Although I consider the Board of
Directors’ supervision over management to be sufficiently
effective, I feel that more time needs to be allocated to discussions.
Presently, the complexity of the Group’s corporate governancesystem might be what is making it difficult to engage in intensive
deliberations on particular topics. Accordingly, I believe that wehave room for more simplification and improved communication.
Fujii: The majority of the Board of Directors’ membership is
accounted for by outside directors with diverse backgrounds andskills, while the internal directors include the Chairman, President& CEO as well as those who concurrently serve as heads of theBank, the Trust Bank and the Securities. Overall, the compositionof the Board seems to be appropriate. Furthermore, the Board of
Directors regularly evaluates the effectiveness of eachcommittee’s operations as well as its own via the use of external
agencies. These and other initiatives to increase thesophistication of corporate governance have steadily taken root.
Also, outside directors are provided with presentations on
agenda items prior to each meeting and are otherwise updated
via their attendance at Board Educational Sessions, to ensurethat they are on the same page with executives about the statusof issues being addressed by the Board. Moreover, eachcommittee strives to operate flexibly in order to enhance thequality of its discussions in an efficient manner. Looking ahead,
we will continue endeavoring to improve the operational
effectiveness of the Board and each committee.

Q

Given the rapidly changing external
environment, is MUFG’s system forrelaying information to the Board of
Directors sufficiently robust and are
individual committee members
positioned to offer timely advice?

Fujii: The Board of Directors rarely deliberates on specific actions
addressing individual cases. However, extraordinary committee
meetings are convened at times of emergency, with the Board of
Directors being kept up to date in a timely manner. This helps
ensure the swift sharing of information among these bodies. We
have also identified incidents requiring particular caution anddefined them as top risks, thereby placing them under risk
monitoring through the preventive assessment of internal andexternal environments. The structure described above enables
outside directors to receive timely updates, which, in turn, support
their ability to furnish advice as necessary.
Shingai: The Risk Committee discusses risk-related matters while
reviewing risk scenarios and stress scenarios as necessary. As
MUFG has adopted a “company with committees” governancesystem, authority over a considerable portion of management
issues is delegated to executives. However, most of the outside
directors, including myself, have recommended that bad news
should always be reported to CEO as soon as possible. This is

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110

Management Message

MUFG’s Pursuit ofValue Creation

Management Strategies
and Performance

Leadership andGovernance

Financial Data /Corporate Data

Leadership and Governance

Global Advisory Board

essential to the sound management of organization because,usually, what CEO sees and what frontline employees see could
be totally different in the very same circumstances.

Q

Many of MUFG’s top management leadersseem to stay in office for only a shortstretch of time. What is the ideal form ofsuccession?

Fujii: Given the outcome, you may get the impression that the
top management changes after a certain period of time, but the
replacement has never been simple; it has always been the
result of multifaceted discussions at the Nominating andGovernance Committee. This committee engages indeliberations on the composition of the management team,competencies of its members and other matters on various
fronts while giving due consideration to the businessenvironment and management strategies.

Q

Although the reduction of equity holdings
has been progressing, what are yourthoughts on the desirable level of future
reductions?

Shingai: When I was serving as CFO at Japan Tobacco, I took thelead in reducing its equity holdings. There were two reasons forthis endeavor. First, the divestment of shareholdings lacking
commensurate economic value was imperative. Second, crossshareholdings were no longer seen as a viable option for corporate
defense. Rather, winning the support of shareholders and investors
via the enhancement of corporate value has become a matter of
foremost importance. Since then, my basic stance in favor of
reducing equity holdings as much as possible has stood unchanged.
That being said, when the return from a certain shareholding is
considered to exceed its costs, we can conclude that suchshareholding can be justified due to its economic rationale.
Accordingly, we need to verify rationales for each equity holding.
Fujii: MUFG’s basic policy is to continuously reduce the balanceof equity holdings with an eye to controlling risks associatedwith such shareholdings, improving capital efficiency andmaintaining conformity with global financial regulations. In
addition, investor awareness regarding this matter has grownstronger due mainly to the revision of Japan’s Corporate
Governance Code. Therefore, I expect the Group to accelerate
its efforts to reduce its equity holdings.

Q

MUFG has established the Global Advisory Board to function as anadvisory body to the Executive Committee, and the Board holds
regular meetings. The Global Advisory Board is made up of
members from the Americas, Europe, Asia and Japan who areexternal experts in areas such as corporate management, financial

As of March 31, 2023

What are your thoughts on a framework inplace at MUFG to verify rationales forequity holdings as well as its policy forrelevant information disclosure?

Professor Merit E. Janow

MUFG Report 2023

Dr. Victor K. Fung

Dean Emerita, School of International and Public
Affairs, Columbia University
Former Member of Appellate Body, World Trade
Organization

Group Chairman, Fung Group, Hong Kong
Former Honorary Chairman, the International
Chamber of Commerce

Asia

Shingai: MUFG’s policy for equity holdings and its process forverifying the economic rationales behind such holdings have been
disclosed in the MUFG Annual Report. In addition, verification
results are closely monitored by the Board of Directors.

The
Americas

Fujii: Outside directors are keenly aware of the importance ofthe framework for assessing the rationales behind equity
holdings and the disclosure of relevant information. The
divestment of equity holdings requires careful dialogues with
their issuers. In this light, MUFG seem to have been sincerely
engaging in such dialogues. In any case, I believe that the Groupneeds to continue with the timely disclosure of progress statusof equity holdings divestment.

Q

Looking at the content of medium- tolong-term performance-based
remuneration, which constitutes a portionof compensation for directors andofficers, how does it stack up incomparison with global competitors,
rather than with domestic banks?

Fujii: It is important to make comparisons with global financial
institutions, but there is also difficulty to do so because thefinancial industry is affected by the economic conditions andregulations of each country. Also, I consider winning competitionin the domestic market to be a matter of equal importance.

Mr. William Coen

Mr. George Yeo

Chairman, IFRS Foundation’s Advisory Council
Former Secretary General of the Basel Committeeon Banking Supervision

Former Singaporean Minister for Foreign Affairs

Ms. Virginia M. Rometty

Professor Emi Osono

Former Chairman, President and Chief Executive
Officer, IBM

Dean, Professor, Hitotsubashi Business School,
School of International Corporate Strategy

Japan

Ms. Anne Le Lorier
Former First Deputy Governor at Banque deFrance (Central Bank of France)

Mr. Masamichi Kono
Former Deputy Secretary General of OECD
Former Vice Minister for International Affairs,
Financial Services Agency, Japan

EuropeMr. John M Flint
Chief Executive, UK Infrastructure Bank
Former Group Chief Executive, HSBC

Fiscal 2022 Activities
In January 2023, MUFG held its annual Global Advisory Board
meeting in Japan for fiscal 2022. Taking the form of a hybrid
meeting in combination of in-person and online, this event was
attended by Global Advisory Board members as well as MUFG
directors and executives.
The attendees focused on addressing geopolitics, geo-economics
and DX- and GX-related topics, topics that are currently the subjectof vigorous discussion around the world, and exchanged diverse
opinions regarding roles to be fulfilled and actions to be taken by
MUFG amid the evolving environment. In addition to discussing
geopolitical risks and the coming of a multi-polarized world,
they deliberated cyber risks, data management and upcoming
digital technologies that will likely attract public attention aspart of a larger discussion on geo-economics and DX. They also
addressed a number of GX-related topics, providing a general
assessment of COP27 outcomes, discussing trends among majorcountries and financial institutions, and evaluating MUFG’stransition financing initiatives.

111

regulation, and government policy. They provide advice andrecommendations on groupwide management, global
governance, business strategy and other management issues
from an independent standpoint.

In addition, MUFG held small meetings with some of the Global
Advisory Board members on multiple occasions outside theannual meeting so that MUFG executives could obtain timely
advice in connection with particular business fields and regions.
These small meetings were convened to promote in-depth
discussions on priority themes to be tackled by MUFG in thecourse of promoting its management strategies, such as
geopolitics, global financial regulations, corporate culture
reforms and strategies for Asia, with the attending Global
Advisory Board members bringing insights that were particularly
relevant to these subjects.
In the face of a radically evolving business environment,
MUFG will continue to operate the Global Advisory Board in a
flexible and effective manner to ensure its ability to swiftly adapt
to change.

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Management Message

MUFG’s Pursuit ofValue Creation

Management Strategies
and Performance

Financial Data /Corporate Data

Leadership andGovernance

Leadership and GovernanceCorporate Governance

Basic Policy

List of Directors
Name

GenderOutside Directors

Internal, Non-Executive Directors

Chairperson

Execution

GlobalAdvisory Board

Risk Committee

U.S. Risk Committee*1*1 Established based on the U.S. Prudential Regulations

Committees,
etc.

Executive Committee

ReportingInstruction

President & Group CEO

Officers in Charge
Corporate Staff UnitsMUFG Bank, Ltd.
Mitsubishi UFJ Trust and Banking
Corporation
Mitsubishi UFJ Securities Holdings Co., Ltd.

Officers in Charge
Audit Internal Audit Division

General Meeting of
Shareholders
Board of Directors

Internal directors

Officers in Charge
Business Groups

Officers in Charge
Corporate Risk
Management Units

Audit & Supervisory
Committee

Cooperation

FemaleHirofumi Nomoto

MaleDavid Sneider

MaleKoichi Tsuji

Male

Tarisa Watanagase

FemaleKenichi Miyanaga

Male

Ryoichi Shinke

Male

Kanetsugu Mike

Male

Hironori Kamezawa

Male

Iwao Nagashima

Male

Junichi Hanzawa

Male

Makoto Kobayashi*1: Chairperson of the Committee;

Sustainability

Internal Directors

Satoko Kuwabara

IT/digital

Audit Committee

Male

GlobalExecutive Directors (5)Kaoru Kato

Legal affairsCompensation Committee

FemaleFinance &accounting

Outside directors

Nominating andGovernance Committee

Non-Executive Directors (10)

Keiko Honda

Finance

Statutory Committees

FemaleKnowledge, expertise and experience
Corporate
management

Oversight

Mariko Fujii

Risk Committee

Mitsubishi UFJ Financial Group

Audit Committee

General Meeting of Shareholders

Compensation
Committee

Management Structure

Board of Directors

Current position at MUFG andcommittee-related duties*1
Nominating andGovernanceCommittee

structure to secure functional separation between management
supervision and business execution, thereby strengthening theoversight function of its Board of Directors. Through these andother measures, we continually endeavor to develop a more
effective and efficient governance system that will enable us togain the understanding of stakeholders around the world
regarding how we ensure robust corporate governance.

In line with the MUFG Way, we strive to be “the world’s mosttrusted financial group” in the medium- to long-term and, to thisend, have positioned properly developing and operating ourcorporate governance structure as one of the management
issues deserving utmost priority. Since its establishment, MUFG
has built a stable and effective corporate governance structurewith an emphasis on ensuring external oversight. For example, theholding company adopted the “company with three committees”

legal compliance and other diverse areas of strength. In addition,
MUFG has secured human resources with experience in “global”
fields, “IT/digital” and “sustainability,” all of which are deemed tobe matters of growing importance for its business operations.

MUFG’s directors have been selected with a view to ensuring awell-balanced composition and include individuals boasting
in-depth knowledge of its business operations as well as
specialists in finance, financial accounting, risk management,Internal directors shall haveextensive knowledge of MUFG
Group’s business and the ability
to appropriately perform
management of MUFG Group

Male: Committee member

Bodies whose membership includes outside directors and outside committee members

Roles Outside Directors Are Expected to Fulfill
At MUFG, independent outside directors are expected to fulfill the following six roles.

Board of Directors
MUFG’s Board of Directors consists of 15 directors collectively
equipped with a diverse range of knowledge and specialist
expertise. The Board’s composition is well-balanced andparticularly focused on securing diversity in terms of nationality,
gender and other attributes*1 among its outside directors, whomake up the majority of its overall membership.
*1 Agreeing with the “Challenge Initiatives for 30% of Executives to be Women by2030” led by the Nippon Keidanren to help domestic major enterprises to raise theratio of female directors to 30% by 2030, MUFG is proactively promoting inclusion &diversity initiatives.

113

MUFG Report 2023

Independence and Diversity of Directors

10/15

8/15

Female directors 4/15

66.6%

53.3%

Foreign nationals 2/15
Non-executive
directors

Independent
outside directors

Supervise executives’ duties from an independent andobjective standpoint

Exercise the oversight of conflicts of interest that may occur
between MUFG and top management executives or MUFG andcontrolling shareholders

Provide advice and other assistance to top management executives basedon their experience and expertise

Contribute to sustainable corporate development and medium- tolong-term growth in MUFG’s corporate value

Engage in timely and appropriate decision making in the course of deliberating
investment and other management judgments via the careful examination of
the reasoning behind the proposals and other information presented to them

Sufficiently discuss matters reported or proposed by top
management executives, requesting supplementary explanation
where necessary and contributing their opinions

Securing independence and diversity

MUFG Report 2023

114

Management Message

MUFG’s Pursuit ofValue Creation

Management Strategies
and Performance

Leadership andGovernance

Financial Data /Corporate Data

Leadership and Governance
As of July 1, 2023

Board of Directors

 ype and Number of MUFG Shares Owned as of March 31, 2023 (Dilutive Shares: The number ofTcorresponding vested points in the stock compensation system using a trust structure.)
Attendance at Board of Directors Meetings (FY2022)

Mariko Fujii

Keiko Honda

Kaoru Kato

Koichi Tsuji

Tarisa Watanagase

Member of the Board of Directors(Outside Director)

Member of the Board of Directors(Outside Director)

Member of the Board of Directors(Outside Director)

Member of the Board of Directors(Outside Director)

Member of the Board of Directors(Outside Director)

Tenure as an Outside Director: Four years
Ordinary Shares: 0
10/10

Tenure as an Outside Director: Three years
Ordinary Shares: 0
10/10

Tenure as an Outside Director: Four years
Ordinary Shares: 0
9/10

Tenure as an Outside Director: Two years
Ordinary Shares: 0
10/10

Tenure as an Outside Director: Six years
Ordinary Shares: 0
10/10

Former Ambassador Extraordinary and Plenipotentiaryof Japan to the Republic of Latvia
Emeritus Professor of The University of Tokyo

Former Chief Executive Officer of Multilateral
Investment Guarantee Agency, World Bank Group

Former President & CEO, NTT DOCOMO, INC.

Certified Public Accountant

Former Governor, the Bank of Thailand

1984 Joined Peat Marwick Mitchell & Company

1975 Joined the Bank of Thailand

1977 Joined Ministry of Finance of Japan

1986 Joined Shearson Lehman Brothers Securities
Co., Ltd.
1989 Joined McKinsey & Company, Inc. Japan

1977 Joined Nippon Telegraph and Telephone Public
Corporation (NTT)1999 General Manager of Plant Department of NTT
Kansai Mobile Communications Network, Inc.
2000 General Manager of Plant Department of NTT
DoCoMo Kansai, Inc.
2002 General Manager of Corporate Strategy andPlanning Department, Member of the Board of
Directors of NTT DoCoMo Kansai, Inc.
2005 Representative Director and Senior Corporate
Executive Officer of Sumitomo Mitsui Card Co., Ltd.
2007 Executive Vice President, General Manager ofCorporate Strategy and Planning Department,
Member of the Board of Directors of NTT DoCoMo
Kansai, Inc.
2008 Executive Vice President, General Manager ofCorporate Strategy and Planning Department,
Member of the Board of Directors of NTT
DOCOMO, INC.
2012 President and Chief Executive Officer, Member ofthe Board of Directors of NTT DOCOMO, INC.
2016 Corporate Advisor, Member of the Board of
Directors of NTT DOCOMO, INC.
2018 Corporate Advisor of NTT DOCOMO, INC.

1988 Registered as Certified Public Accountant in Japan

1988 Economist, International Monetary Fund(On the Secondment)
2002 Deputy Governor of the Bank of Thailand

1997 Director, International Affairs and Research Division,
Customs and Tariff Bureau, Ministry of Finance1999 Associate Professor, Research Center for Advanced
Science and Technology, The University of Tokyo
2001 Professor, Research Center for Advanced
Economic Engineering, The University of Tokyo
2004 Professor, Research Center for Advanced Scienceand Technology, National University Corporation,
The University of Tokyo
2014 Outside Director of Electric Power Development
Co., Ltd.
2015 Ambassador Extraordinary and Plenipotentiary ofJapan to the Republic of Latvia
2016 Emeritus Professor of The University of Tokyo(current)
2019 Retired from Ambassador of Japan to the Republicof Latvia
Outside Director of NTT DATA CORPORATION(currently NTT DATA GROUP CORPORATION)(current)
Member of the Board of Directors (Outside
Director), MUFG (current)

1984 Joined Bain & Company Japan, Inc.

1999 Partner of McKinsey & Company
2007 Director (Senior Partner) of McKinsey & Company
2013 Executive Vice President of Multilateral Investment
Guarantee Agency, World Bank Group
2014 Executive Vice President & CEO of Multilateral
Investment Guarantee Agency, World Bank Group2019 Retired from Multilateral Investment Guarantee
Agency, World Bank Group
2020 Adjunct Professor and Adjunct Senior Research
Scholar of School of International and Public
Affairs, Columbia University (current)
Outside Director of AGC Inc. (current)
Member of the Board of Directors (Outside
Director), MUFG (current)
2022 Outside Director of the Board of Recruit Holdings
Co., Ltd. (current)

1989 Resident Representative, Zurich, Switzerland
2004 Senior Partner of Ernst & Young ShinNihon LLC
2016 Chairman & CEO of Ernst & Young ShinNihon LLC
2019 Chairman & CEO of EY Japan Godo Kaisha
Member of the Board of Directors of EY Japan Co., Ltd.
2021 Member of the Board of Directors (Outside Director),
MUFG (current)
2023 Outside Statutory Auditor of Teijin Limited (current)
Outside Director of MARUICHI STEEL TUBE LTD.
(current)

2006 Governor of the Bank of Thailand
2010 Retired from the Bank of Thailand
2013 Outside Director of the Siam Cement PublicCompany Limited2017 Member of the Board of Directors (Outside
Director), MUFG (current)

2019 Member of the Board of Directors (Outside
Director), MUFG (current)
2021 Non-executive Director of Kirin Holdings
Company, Limited
2022 Senior Advisor of NTT DOCOMO, INC.

Satoko Kuwabara

Hirofumi Nomoto

David Sneider

Kenichi Miyanaga

Ryoichi Shinke

Kanetsugu Mike

Hironori Kamezawa

Member of the Board of Directors(Outside Director)

Member of the Board of Directors(Lead Independent Outside Director)

Member of the Board of Directors(Outside Director)

Tenure as an Outside Director: Two years
Ordinary Shares: 0
10/10

Tenure as an Outside Director: Four years
Ordinary Shares: 25,000
10/10

Member of the Board of
Directors
Audit Committee Member

Member of the Board of
Directors
Audit Committee Member

Member of the Board of
Directors
Chairman (Corporate Executive)

Member of the Board of Directors
President & Group CEO(Representative Corporate
Executive)

Partner, Gaien Partners

Chairman & Representative Director,
TOKYU CORPORATION

1990 Registered as an attorney at law, Member of theDaini Tokyo Bar Association
Joined Mori Sogo (currently Mori Hamada &Matsumoto)1998 Partner of Mori Hamada & Matsumoto2016 Outside Director of BANDAI NAMCO Holdings Inc.
(current)
2020 Outside Auditor of Unicafe Inc. (current)
Partner of Gaien Partners (current)
Outside Audit & Supervisory Board Member of
Nippon Yusen Kabushiki Kaisha
2021 Member of the Board of Directors (Outside
Director), MUFG (current)
2023 Outside Director of Nippon Yusen Kabushiki
Kaisha (current)

1971 Joined TOKYU CORPORATION
2003 Executive General Manager of Media Business
Headquarters of TOKYU CORPORATION
2004 President & Representative Director of its
communications Inc.
2007 Director of TOKYU CORPORATION
Executive Officer of Real Estate Development
Business Unit of TOKYU CORPORATION
2008 Managing Director of TOKYU CORPORATION
Senior Managing Director of TOKYU CORPORATION
2010 Executive Officer & Senior Executive General
Manager of Urban Life Produce Business Unit of
TOKYU CORPORATION
Senior Managing Director & Representative
Director of TOKYU CORPORATION
2011 President & Representative Director of TOKYUCORPORATION
2018 Chairman & Representative Director of TOKYUCORPORATION (current)
2019 Member of the Board of Directors (Outside
Director), MUFG (current)
President & CEO of THREE HUNDRED CLUB Co.,
Ltd. (current)

Ordinary Shares: 0–/–

Attorney at law
1984 Associate of Paul, Weiss, Rifkind, Wharton &Garrison LLP
1985 Registered as an attorney at law, admitted inState of New York in the United States
1987 Director and Counsel of Legal Department ofSalomon Brothers Inc.
1992 Associate of Simpson Thacher & Bartlett LLP

Tenure as a Director: Two years
Ordinary Shares: 183,678
Dilutive Shares: 31,580
10/10

Ordinary Shares: 1,100
Dilutive Shares: 0–/–

Tenure as a Director: Six years
Chairman of the BoardOrdinary Shares: 292,062
Dilutive Shares: 107,775
10/10
Outside Director of MITSUBISHI
MOTORS CORPORATION

Iwao Nagashima

Junichi Hanzawa

Makoto Kobayashi

Member of the Board of Directors

Member of the Board of Directors

Member of the Board of Directors

Tenure as a Director: Three years
Ordinary Shares: 129,081
Dilutive Shares: 314,115
10/10
President and CEO of Mitsubishi UFJ
Trust & Banking Corporation

Tenure as a Director: Two years
Ordinary Shares: 58,900
Dilutive Shares: 191,278
10/10
President & CEO of MUFG Bank, Ltd.

Tenure as a Director: One yearOrdinary Shares: 153,058
Dilutive Shares: 30,687
9/9*1
President & Global CEO of Mitsubishi UFJ
Securities Holdings Co., Ltd.
President & CEO of Mitsubishi UFJ Morgan
Stanley Securities Co., Ltd.

Tenure as a Director: Four years
Ordinary Shares: 69,639
Dilutive Shares: 383,579
10/10
Member of the Board of Directorsof MUFG Bank, Ltd.
Director of Morgan Stanley

1994 Partner of Simpson Thacher & Bartlett LLP
2022 Outside Director of PHC Holdings Corporation(current)
2023 Member of the Board of Directors (Outside
Director), MUFG (current)*1 Attendance rate for Board of Directors meetings held since assuming office in June 2022.

115

MUFG Report 2023

MUFG Report 2023

116

Management Message

MUFG’s Pursuit ofValue Creation

Management Strategies
and Performance

Leadership andGovernance

Financial Data /Corporate Data

Leadership and GovernanceCorporate GovernanceFiscal 2022 Initiatives Undertaken by the Board of Directors

Evaluation Framework of the Working Practices of the Board of Directors’ Operations

MUFG’s Board of Directors is charged with decision making
regarding fundamental management policies while exercisingsupervision over management. In general, authority over mattersother than legally mandatory items that should be decided by
the Board of Directors is delegated to corporate executives toensure highly flexible management.

Since 2013, MUFG has employed external consultants to evaluate
the working practices of its Board of Directors. Each director is
asked to fill in a questionnaire and is interviewed on such
subjects as the composition of key committees, the quality ofthe preparatory materials assembled prior to each meeting, thecontent of discussions, the operations of the Board, the Board’s
contributions, and the performance of executive members. The
results of these questionnaires and interviews are reported toand discussed at the Nominating and Governance Committee
and the Board of Directors.

As it did in fiscal 2021, in fiscal 2022 the Board of Directors identified
themes requiring particular priority and follow-up monitoring fromamong issues specified a year prior via mapping that encompassed
all agenda items to be handled by the holding company’s Board of
Directors. The Board also prepared an annual schedule fordiscussing the above themes. Moreover, matters deemed to require
constant monitoring were dealt with through an open issue
management (OIM)*1 approach. In these ways, the Board operated
a PDCA cycle on an ongoing basis. Important themes tabled forongoing discussion at Board of Directors meetings, including
progress in the sale of MUFG Union Bank (MUB) and strategies
for U.S. operations in the aftermath of such sale, have also beenaddressed not only within the setting of formal Board meetings but
also through ad-hoc Board meetings. Through its engagement inrobust and timely deliberations on these matters, the Board has
supported discussions and decision making by executives.
MUFG believes that insights offered by outside directors who
are well-versed in its management strategies are essential toenhancing the content of discussions at the Board of Directors
meetings. MUFG is therefore striving to ensure that outside
directors are given sufficient information about agenda items byproviding them with materials and giving presentations before
meetings. Moreover, MUFG holds periodic Board Educational
Sessions for outside directors to provide them with reports fromeach business group head regarding the status of businessexecution and other timely updates on individual initiatives
related to MUFG’s pursuit of carbon neutrality, including theissuance of Transition Whitepaper, and progress status of MUFG’s
response to priority issues.

Key Strategies under the Medium-Term Business Plan (MTBP)Promotion of sustainability management
Progress in corporate culture reforms
Sale of MUB
Wealth management business
Regional banking businesses in Asia
Cost structure reforms
Response to External Events
Russia-Ukraine situation
Impact of the collapse of some U.S. and European financial institutions
Financial Results Related
Fiscal 2022 annual business plan
Performance targets and capital management
Governance Related
Reports from CRO, CCO and other C-Suite ecognition of current risk status and initiatives undertaken in eachRrisk field
Status of compliance-related initiatives, including the Code of Conduct
Evaluation of the Board of Directors’ effectiveness

Reports from each business group head
Digital transformation

Evaluation

Human resources strategies in sync with business strategies
Initiatives related to MUFG’s pursuit of carbon neutrality (e.g. MUFG
Transition Whitepaper)

Length of Board of Directors Meetings
Presentations on agenda items

Fiscal 2022 Status of the Board of Directors Meetings

0

30

20

54%

43%

57%

49%

46%
44%

Further support for
directors’ activities61% stablished effective and efficientEmethods for meeting proceedings

 ffective utilization of pre-briefingEsessions

 he quality of the Board of Directors’Tdiscussions has improved, with theBoard’s monitoring functions having
proven effective in deliberations ofsuch important agenda items as thesale of MUB

 eveloping ways to improve proceedings
D
at Board of Directors meetings

 ach director engaged collectively inE
the Board of Directors’ activities andcommittee-related duties whilestaying keenly conscious of achieving
individual contributions

 tudy sessions in which external
S
specialists are invited to serve as lecturers(Role of the Board of Directors based on amonitoring model)

 pportunities for each director toOreflect on their own activities werecreated through the periodic selfevaluation

 eriodic self-evaluation of directors’P
activities
51%

45%

39%

2017

2018

2019

2020

2021

2022 (FY)Board of Directors

11

9

10

10

10

10

10

Length ofmeetings

25:16

28:32

38:14

25:41

31:23

22:57

99.4%

Fiscal 2022 evaluation

Evaluation

55%

56%

Fiscal 2022 initiatives

Issues tobeaddressed

Number ofmeetings

98.9%

In summary, initiatives undertaken thus far are considered to yieldsteady outcomes in terms of improving the Board of Directors’
effectiveness. In fiscal 2023, the Board of Directors will continue to
strive for the ongoing improvement of its mode of operations andstructure, building on functions of its existing framework.

Efficiency of the Board of
Directors’ operations has
improved and theeffectiveness continued
to be ensured

Continuous improvementof the Board of Directors’
operations

Deliberation(Hours)10

MUFG Report 2023

Fiscal 2021 evaluation

 tatus of the formulation of fiscal 2022 annual business planS(the planning of overall and business group initiatives)*1 An approach for ensuring the ongoing monitoring and management of issues
specified by the Board of Directors

Attendance ratio (all directors)

Specific initiatives undertaken by the Board of Directors in fiscal
2022 included the effective utilization of prior briefings foroutside directors and the updating of methods for handling
agenda items at Board of Directors meetings. These measures
have helped the Board of Directors enhance the quality of its
discussions. At the same time, the Board hosted study sessions
by inviting external specialists to serve as lecturers while securing
opportunities for directors to reflect on their own activities
through the periodic self-evaluation. In these ways, we provided
each director with ongoing support of their activities.

Initiatives to Enhance the Effectiveness of the Board of Directors’ Operations

Subjects Addressed at Board Educational Sessions

Furthermore, outside of formal Board of Directors meetings, theoutside directors engage in direct dialogue with young
employees, who act as leaders of the MUFG headquarters
building project, and also engage in robust communications withCEOs and corporate executives, who are in charge of mainstay
operations. In these and other ways, ongoing initiatives are
implemented to enable outside directors to gain in-depth
understanding of MUFG’s operations.

Attendance ratio (outside directors)

In the course of the fiscal 2022 evaluation, interviews were
undertaken in February and March 2023 and completed
questionnaires collected. The evaluation determined that theBoard of Directors has been able to handle agenda items in amore effective and efficient manner and thus achieved
improvement in the quality of its discussions by updating its
mode of operations and supporting the activities of eachdirector in response to findings revealed via the previous fiscal
year’s evaluation. The ongoing effectiveness of the Board of
Directors’ operations was thus confirmed. It was also concluded

that MUFG’s corporate governance was positively affected by
the Board of Directors discussions, which resulted in steadyoutcomes in various aspects of business operations, including
the divestment of MUB and improvement in ROE.

Measures to reduce strategic equity holdings

40

Number of meetings

117

Agenda Items Discussed by the Board of Directors(Hours)Issues tobeaddressed ngoing improvement of the BoardO
of Directors’ mode of operations andstructure

MUFG Report 2023

118

Management Message

MUFG’s Pursuit ofValue Creation

Management Strategies
and Performance

Leadership andGovernance

Financial Data /Corporate Data

Leadership and GovernanceCorporate Governance

Outline of Committees and Their Fiscal 2022 Initiatives

Strategic Equity Holdings Policy

Nominating and Governance Committee

Basic Policy and the Verification of the Significance of andEconomic Rationales for Strategic Equity Holdings
The holding company, the Bank and the Trust Bank maintain abasic policy of reducing the balance of equities held for the
purpose of policy-oriented investment. This basic policy is
primarily intended to curb risks attributable to equity holdings,
enhance capital efficiency and secure our responsiveness to
global financial regulations and is carried out following sufficientdialogue with our corporate clients to secure their understanding.

(number of meetings held: 11; attendance ratio for all members: 100%; attendance ratio for outside directors: 100%)Overview

Main Agenda Items Discussed in Fiscal 2022

With an outside director as Chairperson, the Committee determines
proposals to be submitted to the General Meeting of Shareholders withregard to the nomination of director candidates and/or dismissal of
director(s) while discussing matters related to candidates for major
management positions in the holding company or major subsidiaries. It alsodeliberates corporate governance policies and frameworks in place at these
entities and makes recommendations thereon to the Board of Directors.

 roposals to be submitted to the General Meeting of Shareholders withP
regard to the nomination of director candidates
Candidates for major management positions in the holding company
Corporate governance policies and structures nnual evaluation of the Board of Directors as well as committees andAother bodies operating under it

Compensation Committee (number of meetings held: 7; attendance ratio for all members: 100%; attendance ratio for outside directors: 100%)Overview

Main Agenda Items Discussed in Fiscal 2022

With an outside director as Chairperson, the Committee discusses anddecides on compensation systems for directors and corporate executives
at the holding company and its major subsidiaries as well as on mattersassociated with the content of individual compensation and makes
recommendations to the Board of Directors.

 ompensation systems for Executives, etc. at the holding company andC
its major subsidiaries
 eriodic verification and review of Policy on Decisions on the Contents
Pof Compensation for Individual Executives, etc.
Market status of executive compensation
 valuation of fiscal 2021 performance of Group CEO, etc. for theEdetermination of bonuses along with the setting of fiscal 2022 targets
for these positions
Individual compensation for directors and corporate executives

Audit Committee (number of meetings held: 16; attendance ratio for all members: 97%; attendance ratio for outside directors: 95%)
Overview

Main Agenda Items Discussed in Fiscal 2022

With an outside director as Chairperson, the Committee examines theexecution of business by directors and corporate executives and prepares
auditing reports. As part of its supervision over business execution, it also
monitors and oversees the content of financial reporting as well as thestatus of risk management, internal control, regulatory compliance,internal audits and external audits, thereby supplementing supervisory
functions of the Board of Directors.

 llowance for credit losses, assets impairment risks and the process ofApreparing financial results

With an outside director as Chairperson, the Committee mainly examines
important matters associated with groupwide risk management in general,risks that may exert a significant impact on the Group’s business
management and risks that have recently emerged or are currently
growing and submits its recommendations to the Board of Directors.

Response to geopolitical risks

MUFG Report 2023

Verificationof economic
rationale

Consideration of
the profitability
fulfillment within a
Unfulfilled certain period oftime, etc.

Notsignificant

Expected

Not expected

Continue
holding*2

Negotiate
for sale*1 The overall business RORA (Return On RiskWeighted Assets) is calculated by dividing
revenues from banking transactions plus trust
banking transactions with and dividends, etc.,from a specific corporate client group, lessexpected losses and other expenses, by RWAs.
In this calculation, RWAs are determined basedon in-house rating methods (the sum of credit
assets and fair-value based equities) in light ofthe capital adequacy ratio regulations applied
to MUFG. In addition, risk asset of equity is
calculated based on market values.
*2 Even equity holdings deemed appropriate for
ongoing possession could be divested in light ofthe market environment, MUFG’s management
and financial strategies and other factors andin keeping with its basic policy of reducing thebalance of such holdings.

 esponse to expansion in unrealized losses on available-for-saleRsecurities due to interest rate hikes
Initiatives to ensure proper capital management

Succession Plans and Selection Process for Group CEO andOther Corporate Leader Candidates

119

Verificationof thesignificanceMain Agenda Items Discussed in Fiscal 2022
Verification of risk appetite in the course of business planningIn fiscal 2022, we divested equity holdings worth approximately¥154.0 billion (simple sum of the Bank and the Trust Bank on an
acquisition-cost basis), bringing the cumulative total amount ofequity holdings divested since fiscal 2021 to approximately¥323.0 billion. We will continue to aim for a target of divesting
equity holdings worth ¥500.0 billion over the three-year period
from fiscal 2021 to fiscal 2023.

Fulfilled

Significant

Group global internal audit systems
Reports from the independent auditors (key audit matters)

As of March 31, 2022, the overall business RORA associated withall equity holdings subject to this verification was approximately
1.2 times the threshold. Individually, 81% of our corporate clientsachieved RORAs higher than the threshold, and such equities
held by MUFG account for 87% on a book value basis and 77% on
a market value basis of overall equity holdings. Although we aim
to improve profitability from business with the corporate clients
whose RORA falls short of the threshold, we consider thedivestment of the equity when improvement is not confirmed
within a certain time period.

Verification of the Significance of and Economic Rationales for Equity Holdings

Sale of MUFG Union Bank and investment in shares of U.S. Bancorp

Risk status and the risk management structure for each entity

At MUFG, the Nominating and Governance Committee isengaged in ongoing discussion regarding ways of nurturing
candidates for major management positions at the holding
company and its major subsidiaries. To this end, the Committee
has defined desirable traits for management members (e.g.
desirable competencies, skills, backgrounds and other attributes
according to position). Based on criteria formulated in line withthese traits, candidates are identified and grouped by generation.
In nominating candidates for Group CEO and other leading

Moreover, even equity holdings deemed appropriate for ongoingpossession could be divested in light of the market environment,
MUFG’s management and financial strategies, and other factors
in keeping with its basic policy of reducing the balance of such

Risk management system, crisis events and compliance risk events

Risk Committee (number of meetings held: 4; attendance ratio for all members: 100%; attendance ratio for outside directors: 100%)Overview

In line with this basic policy, such equity holdings are periodicallyverified via the assessment of growth potential, profitability andthe necessity of maintaining holdings to strengthen transactional
relationships. By doing so, we determine the significance of andeconomic rationales for such equity holdings. If the results ofthese assessments suggest a lack of rationale for specific equity
holdings, we push ahead with the divestment of such holdings
while gaining the sufficient understanding of corporate clients.

holdings. In addition, the verification of the economic rationales
for equity holdings uses MUFG’s target for the overall business
RORA*1 determined based on MUFG’s capital costs as a threshold.

positions, the Committee examines candidates identified in thecourse of succession planning in terms of their personalities,
executional skills, career records and performance while referringto the results of a 360-degree assessment conducted by an
external agency. Based on the findings of these examinations,the Committee deliberates on the aptitude of each candidate.
Lastly, the Committee interviews each individual and prepares
proposals on the nomination of candidates that are, in turn,submitted to and finalized by the Board of Directors.

Standards for the Exercise of Voting Rights
With regard to the exercise of voting rights accompanying equity
held for the purpose of policy-oriented investment, we base ourvoting judgment on the comprehensive consideration of thefollowing two points.
1. Whether our vote will contribute to the medium- to long-term
improvement of the corporate value of our corporate clientsand help them achieve sustainable growth including
enhancement of ESG issues
2. The possibility of growth in the economic interest of the holding
company, the Bank and the Trust Bank over the medium- tolong-termAlso, we occasionally engage in dialogue with representatives ofcorporate clients prior to casting our vote on important agenda
items.*1 The status of the exercise of voting rights associated with
important equity holdings is reported to the holding company’s
Board of Directors.
*1 Agenda items regarding such matters as appropriation of surplus, election of
directors and corporate auditors, election of outside directors and outside corporate
auditors, the provision of retirement benefits to corporate auditors, etc., corporate
reorganization, and anti-takeover measures

MUFG Report 2023

120

MUFG’s Pursuit ofValue Creation

Management Message

Management Strategies
and Performance

Financial Data /Corporate Data

Leadership andGovernance

Leadership and GovernanceCorporate GovernanceCompensation System
MUFG’s compensation system for Executives, etc. is not only
aimed at ensuring the achievement of short-term performancetargets but also intended to better incentivize these individuals
to contribute to a medium- to long-term improvement incorporate value and encourage them to take on the challenge ofdriving innovation.
The compensation system is also developed with reference toexternal economic and social trends, the status of MUFG’soperating results, its financial soundness and regulations
enforced at home and abroad on compensation paid toexecutives while ensuring that our process for determining
compensation is highly objective and transparent.
Composition of Compensation
In principle, compensation consists of (1) annual base salary(fixed), (2) performance-based stock compensation (linked tostock price and medium- to long-term performance) and (3)cash bonuses (linked to short-term performance). Proportions
accounted for by each compensation item vary by the position
held by each individual. The ratio of performance-based portions((2) and (3)) to compensation paid to the Group CEO is highest at
approximately 67%. The ratio of such portions is set atapproximately 60% for the Chairman and Deputy Chairman and

PerformanceType of
Linkage withbased
compensation performance compensation
range
Annual basesalaryFixed

Nonperformancebased——

approximately 50% for the Deputy President. The ratio of such
portions then decreases in the following order: Senior Managing
Corporate Executives, Managing Corporate Executives andExecutives without such titles.
In addition, stock compensation and cash bonuses are not paid
to outside directors and directors who serve as Audit Committee
members in light of their duties of exercising supervisory andmonitoring functions over management. These individuals are
therefore granted only fixed annual base salaries.
To determine the amount of compensation, MUFG has set
targets for financial indicators, including consolidated ROE, toensure close linkage with management strategies. Furthermore,in fiscal 2021 we began to assess the degree of improvement inexternal ratings granted by five major ESG rating agencies aspart of performance-linked indicators to be used to determine
the content of stock compensation.
In fiscal 2022, we also added targets for diversity, equity andinclusion (DEI) to qualitative assessment indicators for determining
the amount of bonuses vis-à-vis the execution status of therecipients’ duties, in order to facilitate management efforts topromote and secure the robust employee understanding of DEI.

Medium- tolong-term
performancebased

0–150%• Paid based on positions, etc.
• Includes Director Allowance, Committee and Chair Allowance, Housing Allowance,
Overseas Representative Allowance, etc.

Monthly

Base amount by position

At the timeofretirementofexecutives

BaseamountbypositionTarget attainment rate of indices below in MTBP
(1) Consolidated ROE(2) Consolidated expenses reduction amount(excluding performance-linked expence)(3) Ratings granted by ESG rating agencies
Performance factor (competitor comparison evaluation)
Comparison of year-on-year growth rate of indices below
with competitors(1) Consolidated net operating profits(2) Profits attributable to owners of parent
Performance factor(quantitative evaluation factor applied to the Group CEO)

Short-term
Cash bonuses performancebased

0–150%

Baseamountbyposition

Rate of year-on-year change and target attainment rate ofindices below(1) Consolidated net operating profits(2) Profits attributable to owners of parent(3) Consolidated ROE(4) Consolidated expense amountMUFG Report 2023

30%
15%
5%

Cash

Proportion ofGroup CEO’scompensation

1

At the endof theMTBPIn addition to incentivizing recipients to advance sustainability
management, the degree of improvement in external ratings
granted by the five major ESG rating agencies (MSCI, FTSE
Russell, Sustainalytics, S&P Dow Jones and CDP) is determinedon an absolute evaluation basis, with the aim of objectively
assessing the recipient’s contribution to MUFG’s initiatives toaddress ESG issues in a variety of fields.

Image of Performance-Based Compensation(e.g., consolidated ROE)

Relative comparisons with competitors are made with Mizuho
Financial Group and Sumitomo Mitsui Financial Group.

Performance factor

ESG-related assessment items subject to qualitative evaluation
include contribution to the resolution of environmental and social
concerns, the promotion of DEI and the strengthening andupgrading of MUFG’s governance structure.

Limit
150%
100%

0%

MTBP targets

Compensation for Directors and Corporate Executives

Total amount of compensation, etc. by compensation types*2
Classification*1

Annual base salary

Cash bonuses

CashNon-performancebased

Cash
Performancebased

Performance-based stockcompensation
Non-cashNon-performancePerformancebased
based

6

721

337

217

58

107

Corporate executives

18

1,967

1,045

415

318

188

Outside directors

9

244

244

—

—

—

*1 The compensation, etc. paid to corporate executives who concurrently serve as directors is described in the column of corporate executives.
*2 The figures represent the total amount of compensations, etc. paid by the holding company and consolidated subsidiaries, etc.

Achievement ratio

Note: Subject
to malus(confiscation)and clawback(restitution
claim)

Performance indices

Consolidated ROE

1(based on MUFG’s standard)
Targetattainment Consolidated expense reduction amountrate of indices (excluding performance-linked expense)
in MTBP
Ratings granted by ESG rating agencies
Comparison Consolidated net operating profits
withcompetitors Profits attributable to owners of parent

25%
25%

Fiscal 2021

WeightTargets

30%

Fiscal 2023: 7.5%

15%
5%
25%
25%

Per
index

Fiscal 2022

Total
evaluation

Per
index

Total
evaluation

Fiscal 2023
Per
index

Total
evaluation

Fiscal 2023: A level below
the fiscal 2020 result
Fiscal 2023: A level improved fromthe fiscal 2020 result
Determined based oncomparisons with competitors

140%
120%

130%

140%
80%

110%

Performance Evaluation Conducted to Determine Cash Bonuses*1 (Group CEO)<60%>

Fiscal 2019 bonuses
Performance indices

<40%>

Total
compensation,
etc.*2

Number ofrecipients

Directors (excluding outside directors)

Type ofevaluation

<50%>

20%
10%
20%
10%

(Millions of yen)

Targets for Indices Set under the Performance-Based Stock Compensation and the Ratio of Their Achievement

50% in shares
50% in cash

<50%>

Status of individual execution of duties(qualitative evaluation factor applied to Group CEO)• Improvement in customer-segment profitability• Risks handling• Enhancement of efforts on ESG, evolution ofsustainability management• TSR, etc.

121

Payment
methodWeightPerformance factor(medium- to long-term achievement evaluation)
Stockcompensation

Time ofpayment

Standards for payment

To incentivize efforts to improve MUFG’s earnings power,
capital efficiency and profit structure, each of which is considereda management issue requiring the utmost priority, the degree ofachievement vis-à-vis target levels stipulated in the Medium-TermBusiness Plan (MTBP) regarding consolidated ROE andconsolidated expense reduction (excluding performance-linked
expense) is determined on an absolute evaluation basis.

Annually

Cash

1

Fiscal 2020 bonuses

Fiscal 2021 bonuses

WeightFiscal 2018
achievement

Payment
ratio

Fiscal 2019achievement

Payment
ratio

Fiscal 2020
achievement

Payment
ratio

50.0%

113.9%

112.5%

106.4%

125.0%

Total evaluation*2

100%

70.0%

Quantitative evaluation (combination of four
indices, including consolidated ROE)*3

60%

83.3%

123.2%

117.3%

Qualitative evaluation

40%

50.0%

100.0%

90.0%*1 All evaluation results are determined solely by independent outside directors in the Compensation Committee.
*2 Qualitative evaluation is determined using an eight-grade rating system, while comprehensive evaluation (the combination of quantitative and qualitative evaluation) is determinedusing a nine-grade rating system.
*3 Each quantitative evaluation indicator is determined by placing equal weight on the year-on-year increase (decrease) and the ratio of accomplishments vis-à-vis targets.

MUFG Report 2023

122

Management Message

MUFG’s Pursuit ofValue Creation

Management Strategies
and Performance

Leadership andGovernance

Financial Data /Corporate Data

Leadership and GovernanceRisk Management

Specifically, in the formulation and execution of its businessstrategy and financial plan, MUFG will set the appropriate level ofrisk appetite and proceed to monitor and analyze risk volume.

Basic Policy
MUFG aims to strengthen its Group risk management throughthe diffusion of a risk culture that strengthens the structure ofGroup business management as well as enterprise risk
management. Our goal is effective risk governance that is
consistent across regions, subsidiaries and the holding company.

MUFG defines a risk culture as the basic approach that specifies
how to take risks and risk management for MUFG’s organizational
and individual behaviors. We have incorporated our risk culture
into the MUFG Group Code of Conduct and are engraining thisculture among directors and employees, mainly through training.

Furthermore, even after the plan is formulated, we are ready totake immediate action in emergency situations through the

Risk Management Framework
The Risk Committee under the Board of Directors comprises
independent outside directors and outside experts. The
committee deliberates various matters related to risk
management, reports to the Board of Directors and submits
recommendations. Based on the deliberations at the committee,
the Board decides management and operational policies related

to various risks. The holding company decides basic policies forthe entire Group, while each Group company develops its own
management systems and manages risks in line with thesepolicies. The Group CRO reports to the Board of Directors
periodically regarding the status of risks and the Group’s
initiatives in various risk areas.

Risk Appetite Framework
Moreover, MUFG’s Risk Appetite Framework (RAF) provides
guidelines for effective risk management that backs our businessstrategy and financial plan while supporting efforts to avoid
unexpected losses and enhance risk return management.

In order to effectively implement the RAF, risk evaluation andverification procedures, such as top risk management, stresstests and the capital allocation system, will be applied at every
stage of the management planning process.

of risk that it is willing to accept) as it works to achieve its
business strategy and financial plan. The framework is
designed to increase management transparency and generate
more profit opportunities in an environment where risk isproperly controlled.

The RAF aims to clarify MUFG’s risk appetite (types and amount

U.S. Risk Committee

Business Plan
Financial Plan
Net operating profits
Net income
ROE
RORA
Expense ratio
Common Equity Tier 1 capital ratio, etc.

Board of Directors

Risk Management Committee(including crisis management)

Executive Committee

Management Planning
Committee (including ALM)

Corporate Risk Management Div.
(coordinates risk management)

Market Risk,
Funding Liquidity Risk,
Operational Risk, Operations Risk,
Reputation Risk, Model Risk

Credit Policy & Planning Div.

Credit Risk

Credit Committee

Risk Committee
The Committee mainly deliberates important matters associatedwith groupwide risk management in general (including risk appetite),risks that may exert a significant impact on the Group’s business
management and risks that have recently emerged or are currently
growing and makes recommendations to the Board of Directors.
Risk Management Committee
The Committee discusses important matters regarding thedevelopment of policies and structures for promoting integrated risk
management for the entire Group.

Global Compliance Div.

Information Risk

Global Financial Crimes Div.

Incompliance with Laws andRegulations Risk
IT Risk

Corporate Administration Div.

Tangible Asset Risk

Human Resources Div.

Personnel Risk

Legal Div.

Legal Risk

123

MUFG Report 2023

Capital allocation plan and RWA plan
Capital strategy and distribution based on risk

Business Strategy

Funding liquidity risk, etc.
Risk appetite for difficult-to-quantify risk

Group business strategy

Risk Appetite Setting and Management Process
1. Confirming assumptions forbusiness plan formulation

Before formulating the overall business plan, assess pressure points for business strategy andfinancial and capital operations based on the internal and external environments.
Future balance sheet simulation based on macroeconomic scenarios

2. Formulate business plan proposal

In pursuing the MUFG Way, formulate a business plan proposal based on business strategy,
financial plan and risk appetite.
Clarify risks to be accepted and risks to be avoided on the basis of Risk Culture

3. R isk appetite assessment andverification

The risk management divisions will mainly assess the appropriate level of risk appetite. The
business plan proposal will be amended if the stress tests indicate that the maximum level of
acceptable risk will be exceeded.
Assess and verify the plan from a risk/return perspective
Evaluation of the plan’s profitability and soundness based on stress tests

4. Business plan decision

The Executive Committee and Board of Directors discuss and subsequently make decisions basedon an integrated view of business strategy, financial plan and risk appetite.
On the basis of the capital allocation system, capital is allocated to subsidiaries and operational
divisions in accordance with the level of risk

5. Risk monitoring

The risk management divisions of the holding company and subsidiaries monitor risk volume inrelation to risk appetite.
Forward-looking valuation of internal and external environment based on top risk management
Regular monitoring of risk appetite complianceCases where risk volume exceeds upper limit

6. Revision of risk appetiteS ee our Annual Report on Form 20-F for risk classification and risk management system.

Organic Correlation

Risk Culture

Information Systems Planning Div.
Cyber Security Div.

Risk Appetite

Revise the business plan proposal based on results

Risk Committee

Credit & Investment
Management Committee

The Risk Appetite Statement (RAS) elucidates the Risk Appetite
Framework, which embodies MUFG’s attempts to achieve an
integrated group strategy along with effective risk management.
In preparing the RAS, the Board of Directors works to ensure its
consistency with the management plan based on deliberationsof meeting bodies specializing in business planning, financial
planning and risk appetite. Since fiscal 2019, each business grouphas formulated a RAS for itself as a management tool whileassuming ownership of its own risks.

Risk Appetite Framework

Risk Management System
Holding Company (Mitsubishi UFJ Financial Group, Inc.)

monitoring of the risk appetite.

The risk appetite plan will be revised if monitoring reveals that risk appetite and actual levels of risk
diverge or if environmental factors increase the level of risk.
Stress tests may be conducted again in order to reset risk appetite.
Discussion between business groups and corporate risk management division when the risk appetite
is exceeded

MUFG Report 2023

124

Management Message

MUFG’s Pursuit ofValue Creation

Management Strategies
and Performance

Leadership andGovernance

Financial Data /Corporate Data

Leadership and GovernanceRisk Management

Enterprise Risk Management
MUFG makes every effort to recognize the risks that emerge inthe course of business execution, assessing them according touniform criteria. Enterprise risk management is then conducted
while maintaining business stability and striving to maximize
shareholder value. Enterprise risk management is a proactive
approach, promoting stable profits commensurate with risk aswell as the appropriate allocation of resources.
Enterprise risk management is composed of three main strands:
Top risk management, stress tests and the capital allocation system.
Top Risk Management
Based on various risk scenario analysis, we classify potential
losses as risk events and we determine the significance based on
their impact and probability. The risks that require closemonitoring and attention for the next one-year period are
identified as top risks by the Risk Committee. Moreover, a risk
map encompassing all top risks is created, thereby ensuring aforward-looking approach to risk management. In addition,
through management’s participation in discussions on such top
risks, we strive to take effective measures based on a sharedassessment of risks at MUFG and its main subsidiaries.

Our Current Recognition of External Risk Events and the Status of Risk Management
Stress Tests
Stress Tests for Capital Adequacy Assessment
In formulating its business plan, MUFG assesses its capital
adequacy through stress tests based on Basel III capital adequacy
regulations. Stress tests analyze the prevailing economic
environment at home and abroad as well as the future outlook
while giving due consideration to top risks and the MUFG Group’sbusiness structure. The three-year-period scenarios are thus
created and utilized to calculate and assess the impact on ourcapital ratio of the materialization of risks. This also helps us verify
the propriety of our business plan.
Liquidity Stress
Tests in liquidity stress tests, the impact of MUFG-specific oroverall market stress on the balance sheet is assessed so as toimplement MUFG’s business strategy and financial plan. Various
options for responding to short-term fund outflows or long-term
structural changes in the balance sheet are examined with a viewto ensuring there is no funding shortage.
Capital Allocation System
In this framework, latent losses associated with risk are converted
to a required capital amount, and capital is then allocated acrossGroup companies and between different risk categories according
to business strategy and the profit plan. The framework is intended
to allow the appropriate distribution of capital throughout theGroup, with MUFG monitoring and controlling this distribution topreserve financial soundness, evaluate capital adequacy versus
risk and judge impact on overall capital strategy.

Throughout fiscal 2022, MUFG tackled a number of radical changes arising from fallout from the COVID-19 pandemic and thematerialization of geopolitical risks, including deterioration in Russia-Ukraine situation, along with supply chain disruption,
inflation around the globe, steep interest rate hikes undertaken in the United States and Europe, and the depreciation of the yen.
Moreover, concerns in credit that emerged in connection with the collapse of some European and U.S. financial institutions
resulted in looming anxiety over possible financial turmoil.
MUFG has organized external risk events that bear particular importance to inform Top Risk management.

Examples of External Risk Events
Materialization of geopolitical risks

Growing public calls for ESG management

Trends of monetary policy of central banks under financial instability
Occurrence of crisis events (natural disasters, large-scale system failures, infectious diseases , etc.)

Major Top Risks
Risk events*1

Risk scenarios

Risk countermeasures

Decline in capitalsufficiency/Increase inrisk assets

 ur capital management may be adversely affected byO
an increase in unrealized losses on debt securities due toa rise in interest rates globally.

 onitor risk volume and gain/loss status in light ofMinterest rates, stock prices and other market changes
while flexibly reviewing our investment management
policies, with the aim of maintaining the soundness ofcapital management

Foreign currency
liquidity risk

Increase incredit costs

IT risk

Risks relating toclimate changes

 eterioration in market conditions may result in aD
depletion of foreign currency funding liquidity andan increase in our foreign currency funding costs.

 udden deterioration in global economic activities may
S
result in an increase in our credit costs.
 eterioration in the credit quality of particular industriesDor counterparties, to which we have relatively larger
exposures, may result in an increase in our credit costs.

 yber-attacks may result in customer information leakage,C
suspension of our services, and reputational damage.
 ystem failures may result in our payment of financial
S
compensation and damage to our reputation.

If our efforts to address climate change-related risks or to
make appropriate disclosure are deemed insufficient, ourcorporate value may be impaired.
 ur credit portfolio may be adversely affected by theOnegative impact of climate change on our borrowers andtransaction counterparties.

 erify and confirm our ability to secure surplus funds byV
implementing sufficient measures when a stressemerges, to this end conducting liquidity stress tests.
 anage signs of fluctuations via the monitoring of gaps
M
between foreign-currency deposit and lending balances
as well as the use of early warning indicators (EWIs).
Identify those portfolios requiring particular attention
in light of overall economic deterioration and keep
updating our management structure for credit
extended to each client.
 aintain and upgrade our cybersecurity structures andMcountermeasures and conduct training and drills toensure our preparedness against cyberattacks.
 nforce stringent quality management in design, testingEin system development processes while conducting drills
for countering system failures and formulating measures
to prevent recurrences.
 romote various measures in line with the Carbon
P
Neutrality Declaration while disclosing relevant
information and enhancing scenario analysis based onrecommendations from the TCFD
 ormulate interim targets consistent with the ParisF
Agreement regarding the volume of GHG emissions inaddition to updating our Environmental and Social Policy
Framework and strengthening engagement withcorporate clients*1 These risk events are among the risk events that were reported to MUFG’s Board of Directors following the Risk Committee’s discussion in March 2023. These risk events include risk
events of general applicability.

F or further information other than top risks, please see our Annual Report on Form 20-F.

125

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MUFG Report 2023

126

Management Message

MUFG’s Pursuit ofValue Creation

Management Strategies
and Performance

Leadership andGovernance

Financial Data /Corporate Data

Leadership and Governance

Cyber Security

Basic Policy

Main Initiatives to Counter Cyber Security Threats

MUFG is well aware of its social responsibilities regarding securing
the assets entrusted to it by its customers and its obligation toprovide secure and stable financial services. MUFG has

positioned risk and threats posed by cyber-attacks and otherrelevant events as one of the Top Risks and is promoting cybersecurity measures under management leadership.

Cyber Security Management Structure
Governance Structure
MUFG has established cyber security standards that refer tointernational guidelines and is engaged in the development ofrelevant strategies and organizational structures as well as theplanning and implementation of initiatives aimed at enhancing
its cyber security measures.
MUFG enacted the Cyber Security Management Declaration with
the intention of strengthening the security management
structure under the direct supervision of top management as a
response to cyber-attacks and crimes that are becoming moreadvanced and sophisticated year by year. Moreover, in 2022,
MUFG separated the Cyber Security Office from the Information
Systems Planning Division as an independent division operating
under the leadership of the Group Chief Information Security
Officer (CISO). MUFG has a governance structure supporting
business judgement according to changes in the surrounding
environment through timely and proper reporting to the Board of
Directors and the Executive Committee. Taking advantage of thestructure, MUFG puts effort into the effective and efficientpromotion of cyber security strategies while continuously
working to defend MUFG against day to day cyber-attacks.
Management Structure
The MUFG Cyber Security Fusion Center (MUFG CSFC), a security
center has been launched to provide threat analysis and security
measures, plays key roles in around-the-clock monitoring andincident response on a groupwide and global basis. Furthermore,

MUFG has set up the MUFG-CERT as an umbrella organization incase of the occurrence of a cyber security incident to act incooperation with the Computer Security Incident Response Teams(CSIRTs) of Group companies. MUFG conducts periodic exercisesand drills to ensure its ability to promptly perform such functions
as information sharing, decision making, external public relations
and technical countermeasures. In addition, MUFG has stepped
up collaborative activities with government agencies, othercompanies in the financial industry and security communities,
including the Nippon CSIRT Association.

Staff working at MUFG Cyber Security Fusion Center (MUFG CSFC)

Holding Company (Mitsubishi UFJ Financial Group, Inc.)
Board of Directors

Law enforcement
agencyExecutive Committee

Group CISO

Mitsubishi Group
companies
Financials ISAC Japan*2
MUFG
Cyber Security Division

IT vendors
Global information
sharing communities

MUFG Group companies at home
and abroad

Group CIO

Financial institutions

MUFG-CERTIn step with the widespread popularization of electronic payment
via such internet services as Internet banking, cybercrimes thattarget online services have become a social issue. MUFG is
implementing a variety of initiatives to deliver safe and secureservices to customers, such as ensuring robust online verification,
thoroughgoing vulnerability countermeasures, threat intelligence,
anomaly detection and suspicious-transaction monitoring.
In May 2022, MUFG was chosen by the Financials ISAC Japan*2 toreceive its fiscal 2021 annual award in recognition of the Company’s
leadership in the sharing of insights and know-how regarding
countermeasures against unlawful remittance and the promotionof other collaborative initiatives among financial institutions.

CISO Ohinata giving a speech at an award ceremony

Our Response to Digital Transformation (DX)MUFG actively utilizes such new technologies as cloud services,
AI, Robotics and Open APIs for business.

Cyber Security Governance Structure (MUFG)
Government agencies
and Bank of Japan

Security Measures to Counter Growing Threats
MUFG has set up a dedicated team focused on threat intelligenceto centralize such related activities as impact analysis for newly
found vulnerabilities or past experiences, and remediation for
those impacts on a groupwide and global basis. Additionally, theteam monitors systems for external stakeholders daily to prevent
any flaws in security updates or configuration settings.

MUFG BankGroup
Deputy CISO

Mitsubishi UFJ Trust and Banking
CorporationGroup
Deputy CISO

Mitsubishi UFJ Morgan Stanley
Securities

Collaboration

CSIRT*1 at eachGroup company

The Cyber Security Division participates in projects related to
new technologies from the early stages, such as the planningand design phases. This activity contributes to the developmentof multilayered security measures and the realization ofcoexistence between safety and technology-driven transformation
through proactive actions, including procedure development forthe safe utilization of new technology, risk evaluation and themonitoring of configuration settings.

Nurturing Security Specialists
Cyber security measures cover a wide range of areas, including
governance, threat intelligence, risk management, engineering,monitoring operation and incident response. MUFG has secured
an in-house team capable of managing and carrying out theabove functions.
To ensure the robust implementation of each security measure,
MUFG has systematically categorized the talents and skill sets
expected of security members to provide them with optimallydesigned human resource development programs, which
combine in-house and external lectures and exercises while
giving due consideration to the competencies of each member,the nature of tasks to be assigned to them and possible
opportunities for their future career advancement. Furthermore,
MUFG has boldly pursued the improvement of security measuresin order to keep up with constant changes in technology, theutilization environment and cyber-attacks, and to nurture themin its professional capacity.
Providing Cyber Security Education to Fostera Proper Culture
For MUFG to maintain the stable operation of its financial
infrastructure, it is essential to foster the corporate culture inwhich each employee understands the importance of cybersecurity and considers what should be done as a company
while acting in collaboration with other financial institutions or
government authorities.
MUFG provides educational programs to not only employees
directly involved in cyber security but also those engaged in theplanning and promotion of business services so that every
employee is well-versed in necessary countermeasures against
cyber-attacks. Furthermore, MUFG provides employees at main
Group companies with e-learning, phishing mail exercises andnewsletters for alerting readers of cyber-attacks and familiarizingthem with proper responses. It also hosts seminars for a wide
scope of Group companies. In addition, MUFG is engaged invarious activities with external organizations, such as various
training programs and drills hosted by the NISC (National center ofIncident readiness and Strategy for Cybersecurity), the Financial
Services Agency, and the Tokyo Metropolitan Police Department.
In July 2022, MUFG signed a partnership agreement involving
industry-academia-government collaboration aimed at nurturing
cyber security specialists. Based on this agreement, MUFG will
expand the scope of interactions with partners from different
sectors and universities to enhance its own cyber security
measures. At the same time, we convey MUFG’s insights tosociety, with the aim of contributing to the enhancement ofcyber security measures for society as a whole.

Collaboration*1 Computer Security Incident Response Team: A team tasked with receiving first-hand reporting on security incidents and conducting investigations into and making responses
to such incidents*2 A framework of collaborative activities undertaken by its more than 400 member financial institutions to protect Japan’s financial infrastructure from the threat of cyberattacks

127

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128

Management Message

MUFG’s Pursuit ofValue Creation

Management Strategies
and Performance

Leadership andGovernance

Financial Data /Corporate Data

Leadership and GovernanceCompliance

Basic Policy
We have established the MUFG Group Code of Conduct as a setof guidelines for how the Group’s directors and employees
should make decisions and act on a daily basis to realize the
MUFG Way. The code expresses our commitment to complying
with laws and regulations globally, to acting with honesty andintegrity, and to behaving in a manner that supports andstrengthens the trust and confidence of society.

Initiatives to Enhance Global Financial Crimes Compliance Framework
In addition, as we expand the geographic scope of ourbusiness globally, we are committed to keeping abreast ofdevelopments in laws and regulations of the jurisdictions inwhich we operate, including anti-money laundering and antibribery rules as well as competition laws, while paying attention
to trends in financial crimes.

Compliance Framework
Management and coordination of compliance-related matters
are the responsibility of separate compliance management
divisions established at the holding company and the major
subsidiaries, namely, the Bank, the Trust Bank and the Securities(hereinafter, the “three subsidiaries”). Each compliancemanagement division formulates compliance programs andorganizes training courses to promote compliance, and regularly
reports to each company’s board of directors and Executive
Committee on the status of compliance activities.
The holding company has established a Group Compliance

Committee while the three subsidiaries have Compliance
Committees under their executive committees to deliberate key
issues related to compliance. Additionally, the holding company
has a Group Chief Compliance Officer (CCO) Committee, which
consists of the CCO of the holding company and the CCOs of thethree subsidiaries. The Group CCO Committee deliberates
important matters related to compliance and compliance-related
issues for which the Group should share a common understanding.
 See our Annual Report on Form 20-F for further details on ourcompliance framework.

Ensuring Thorough Compliance
We engage in ongoing efforts to ensure that each employee
embraces proper action principles in accordance with the Codeof Conduct. These efforts include providing e-learning for all
employees, disseminating messages from management, holding
compliance training sessions that discuss case studies ofexternal compliance incidents and call employee attention toreal-life compliance issues, and implementing periodic tests toconfirm training results. In these ways, we strive to help
employees raise their compliance literacy and awareness. We
also assess the robustness of compliance awareness among ourworkforce via the annual Group Employee Survey and update
the content of the Code of Conduct every year with reference
to the results of this survey as well as changes in both internaland external environment. In fiscal 2023, we reflected in ourcommentaries and columns the strengthening of diversity andpsychological safety toward the realization of an open-mindedorganization as well as messages positively supporting challenges,
changes in the external environment such as the revision ofsupervisory guideline, and the toughening of penalties byoverseas authorities for record-keeping violations. We also
implement communication measures and training at theworkplace in order to make employees to develop a sense ofownership regarding the Code of Conduct. The effects of thesemeasures are confirmed via, for example, the annual Group
Employee Survey, and reported to the Board of Directors. Throughthese ongoing efforts, we strive to ensure thorough compliance.

MUFG established the Global Financial Crimes Division (“GFCD”),
which is in charge of Anti-Money Laundering (“AML”), CounterTerrorist Financing (“CFT”), Sanctions Compliance, and AntiBribery and Corruption (collectively, “Global Financial Crimes
Compliance”), against the backdrop of heightened regulatory
expectations in that area.
MUFG established GFCD’s headquarters in New York, where theexcellence for financial crimes risk management is centralized,
and is implementing a number of initiatives to prevent, detect,and deter financial crimes. MUFG established policies that define
the governance and oversight structure for financial crimes risk
management across MUFG and provide the foundation for the
implementation of the financial crimes compliance program in amanner that is commensurate with the strategies, businessactivities, and risk profiles of each Group company. Throughthese policies, MUFG promotes a consistent and integrated
approach across the Group globally.
MUFG incorporated the Group’s mandate in the “Global Financial
Crimes Policy Statement,” which is available on MUFG’s public
website and provides confirmation that MUFG is committed tocomplying with applicable laws, rules, and regulations and maintaincontrols to manage financial crimes risks. In addition, through theBank, MUFG is a member of the Wolfsberg Group,*1 and is proud towork with other global financial institutions to develop frameworks
and guidance for financial crimes risk management.
The Bank established shared organizations (Centers of Excellence)

Having positioned its whistle-blowing systems as an important
governance tool, MUFG has helped each Group company develop
such a system to ensure their ability to identify compliance issues
early so that any problems can be quickly rectified. Moreover, the
MUFG Compliance Helpline operates year-round and is capable ofhandling a report from any Group member no matter what theirlocation on an around-the-clock basis.

In addition, we aim to ensure that each employee is able toquickly access the Helpline without hesitation whenever he/she

MUFG Report 2023

The Bank is also enhancing its financial crimes compliancesystems and establishing a data warehouse. These enhancements
will support a globally consistent, effective, and efficient financial
crimes compliance program and will help the Bank detect more
complex and sophisticated types of financial crimes in asustainable and flexible manner. Furthermore, the Bank isinvesting in its people, with continued hiring of financial crimes
compliance specialists, training for all employees, updated
information-sharing, and accumulation and exchange ofknowledge and skills through a global staff rotation program.
We continue to work on the enhancement of global financial
crimes compliance in line with the requirements and expectationsof international organizations, including regulators in eachcountry, FATF,*2 etc., to support and strengthen the trust andconfidence of society.
*1 The Wolfsberg Group is an association of thirteen global banks which aims todevelop frameworks and guidance for the management of financial crime risks.
*2 FATF: Financial Action Task Force on money laundering. Inter-governmental bodythat advocates for taking a coordinated international response in AML andcounterterrorist financing.

Whistle-Blowing Systems

The Code of Conduct and the internal policy of each Group
company ensure anonymity of the whistleblower andconfidentiality of the report, so that whistle-blowers will not be
subjected to detrimental treatment. We are thus ensuring
thorough protection for whistle-blowers even as we carry out
investigations into issues being reported and conduct corrective
measures, as well as follow-up inspections.

129

in the Americas, EMEA, Asia, and Japan. Through those Centersof Excellence, the Bank continues to centralize certain AML andsanctions compliance processes and expertise to assist in thefight against money laundering, terrorist financing, and sanctions
violations. As processes move from local branches and offices
and become integrated into the Centers of Excellence, the Bank
will be better positioned to achieve globally consistent andeffective operations.

has even the slightest suspicion regarding compliance. To thisend, we strive to enhance our reliability by making sure theHelpline contact point is well known and our activity wellunderstood by showing the numbers we took care of, andmoreover, sharing actual compliance-related cases in a mannerthat protects the anonymity of individual whistle-blowers.
In fiscal 2022, a total of 411 reports were accepted at MUFG andmain Group companies.
In line with the revised Whistleblower Protection Act, which cameinto effect in June 2022, we have upgraded whistle-blowing
systems in place at MUFG as well as Group subsidiaries andaffiliates, so that employees can feel more secure about using
the systems.
 See our Annual Report on Form 20-F for our Accounting Auditing Hotline.

MUFG Report 2023

130

Management Message

MUFG’s Pursuit ofValue Creation

Management Strategies
and Performance

Leadership andGovernance

Financial Data /Corporate Data

Leadership and GovernanceInternal Audit

Initiatives for Practicing a Customer-Oriented Approach

Basic Policy

Basic Policy

The internal audit aims to evaluate the appropriateness andeffectiveness of governance, risk management and control
processes including compliance framework with independence
to ensure sound and appropriate management of the business.
Internal audit results are reported to senior management.
Additionally, internal audits suggest ways to help audited
departments improve or rectify any issues identified.
We adopted the “MUFG Internal Audit Activity Charter,” which
defines our basic policies for internal audits, including themissions to conduct audits that contribute to improve theGroup’s corporate value and realize the MUFG Way. This charteris designed to encourage internal audit staff to conduct internal
audits in accordance with the global standards set by theInstitute of Internal Auditors*1.
*1	An international association headquartered in the United States, the IIA formulates
practical standards for internal audits, issues accreditation for certified internal
auditors (CIA) and engages in other activities aimed at providing leadership for the
global profession of internal auditing.

 o see the full text of the charter, please also visit our corporate website.
Thttps://www.mufg.jp/english/profile/governance/audit/

With the aim of ensuring the thoroughgoing practice ofcustomer-oriented undertakings, the MUFG Group Code of
Conduct addresses the importance of “Customer Focus” in
Chapter 1, while the MUFG Basic Policy for Fiduciary Duties ispublicized to provide unified guiding principles for the Group.
In line with this policy, all Group entities share a commitment topracticing customer-oriented undertakings and endeavor to
improve their products and services.

MUFG Basic Policy for Fiduciary Duties
MUFG Group Codeof Conduct 1-1
Honesty andIntegrity
MUFG Group Codeof Conduct 1-2
Ensuring Quality

4. Provision of line of products to meet diverse needs
5. Sophistication of investment for the improvement ofcustomers’ investment results
6. Improvement of quality of comprehensive asset
administration services to support customers’ asset
management

Exceeding
Customer
Expectations

8. Establishment of a structure enabling comfortable,
secure and safe transactions
9. Exertion of professionalism

Holding Company (Mitsubishi UFJ Financial Group, Inc.)
Board ofDirectors

Audit Committee(Chairman: Outside Director)
ReportingExecutive
Committee

MUFG, Each
Division

ReportingInstructing

Internal Audit Division
Auditing
Consulting andreporting

Guidance, advice
and management

Group companies

Implementing Effective and Efficient Internal Auditing
internal audit activities. At the same time, through the off-sitemonitoring, internal auditors attend key meetings, collectimportant internal control documents and implement othernecessary measures to assess any changes in risk status.

Operational Structure
MUFG works to strengthen its operational structure for ensuring
a customer-oriented approach by, for example, holding periodic
Fiduciary Duty Promoting Committee meetings while pushingahead with sharing best practices and other across-the-board
endeavors to improve its business operations on a groupwide
basis. We also invite external advisors to incorporate insights
offered by these individuals from their diverse perspectives.

Conducting Groupwide, Cross-Regional Audits
In particular, we conduct groupwide, cross-regional audits inareas such as IT, cyber security, and global financial crime, where
sophisticated specialist expertise is required, promoting thesharing of audit knowledge and know-how in these fields.
Through these efforts, we strive to unify our standards for audits
and enhance audit quality.

Moreover, eight domestic Group companies disclose the statusof their initiatives related to fiduciary duties and KPIs* for suchinitiatives. In addition, the holding company is engaged in themonitoring of initiatives undertaken by each Group company
while periodically reviewing the aforementioned policy. By doing
so, we aim to promote customer-oriented business operations.
* Japanese only

Examples of KPIs Disclosed (the number assigned to each KPI is the same as that assigned to a corresponding paragraphin the MUFG Basic Policy for Fiduciary Duties)
1-1 Honesty and Integrity

1-2 Ensuring Quality

1 Customer assets and number of investment products holders

4 Investment trust fund line-up

1 Assets under management (AuM)

4 Life insurance product line-up

2 Number of awards won for R&I Fund Awards

4 Top 10 investment trust fund in distribution and proportion of distribution amount

2 Number of fund awards won

4 Ratio of distribution amount of products launched by affiliated investment managers

3 Number of holders of wrap accounts and its AuM

5 AuM of the products targeted for “Tsumitate NISA”

3 Transfer amount for investment trust Tsumitate

5 Periodic investment performance on the entire products targeted for “Tsumitate NISA”

3 Number of holders of investment trust Tsumitate

5 External evaluation of the quality of information offered by asset management firms
and relevant customer satisfaction ratings

3 Average period of holding investment trust funds

As we strive to deliver solutions to our clients by leveraging
our functions across the Group, and to promote business
operations on a global basis, we pursue a groupwide, crossregional approach to raise the effectiveness and efficiency ofinternal audit.

3. Implementing customer-oriented consultation andprovision of information

7. Provision of financial services leveraging the Group’s
consolidated strengthInternal Audit Framework

In addition to leading the internal audit planning and proposal
activities of the Group, the internal audit division at the holding
company administers, monitors and, as necessary, guides andadvises the internal audit divisions of subsidiaries and affiliatedcompanies. The division also reports to the holding company’s
Audit Committee and the Board of Directors on importantmatters, including governing principles for internal audit plans
and the results of internal audits.

To ensure that internal audit processes use available resources
with optimal effectiveness and efficiency, the internal audit
divisions implement risk-focused internal audits in which thenature and magnitude of the associated risks are considered indetermining audit priorities and the frequency and depth of

2. Developing and providing products that matchcustomers’ needs

MUFG Group Codeof Conduct 1-3

Internal Audit Framework
The MUFG Group maintains internal audit functions at theholding company level as well as at the subsidiary level that aredesigned to enable the Group to provide coverage for all
operations and support the Board of Directors of the holding
company in the exercise of its supervisory functions via acrossthe-board collaboration with other Group entities.

1. Ensure customer-oriented approach

6 Assets under administration

1-3 Exceeding Customer Expectations

Common KPIs

8 Satisfaction survey

[Common KPI] Cost/return and risk/return of top 20 investment trust funds in terms of AuM
[Common KPI] Ratio of customers by gain/loss on fund performance
Ratio of customers by gain/loss on fund performance including realized gain/loss
[Common KPI] Ratio of customers by gain/loss on performance of fund wrap
[Common KPI] Ratio of customers by gain/loss on performance of wrap service[ Common KPI] Cost/return of top-ranking foreign currency-denominated insurance
products with a lump-sum premium in terms of AuM[ Common KPI] Ratio of customers by gain/loss on performance of foreign currencydenominated insurance products with a lump-sum premium or details of the MUFG Basic Policy for Fiduciary Duties, please also visit our corporate website.
Fhttps://www.mufg.jp/english/profile/governance/fd/

131

MUFG Report 2023

MUFG Report 2023

132

Management Message

MUFG’s Pursuit ofValue Creation

Management Strategies
and Performance

Leadership andGovernance

Financial Data /Corporate Data

Financial Data / Corporate Data

Eleven-Year Summary of Major Financial Data

(Billions of Yen)FY2012Currency exchange rate (US$/JPY) (yen)FY2013

FY2014FY2015FY2016FY2017FY2018FY2019FY2020

FY2021*2

FY2022

94.05

102.92120.17112.68112.19106.24110.99108.83110.71

122.39133.533,634.2
1,816.8
95.1
1,042.2
288.2
391.7
336.7
2,095.0
57.6%

3,753.4
1,878.6
108.4
1,160.3
362.0
244.0
142.8
2,289.3
60.9%

4,229.0
2,181.6
111.4
1,308.6
352.9
274.3
115.1
2,584.1
61.1%

4,143.2
2,113.5
117.0
1,320.5
306.3
285.6
132.9
2,585.2
62.3%

4,011.8
2,024.4
122.0
1,328.4
290.0
246.7
56.8
2,593.5
64.6%

3,854.2
1,906.8
122.5
1,327.1
292.4
205.1
6.7
2,621.4
68.0%

3,725.7
1,922.7
125.3
1,303.9
216.1
157.4
29.9
2,647.1
71.0%

3,986.3
1,892.9130.8
1,341.2
161.4
459.7
492.9
2,801.8
70.2%

3,920.9
1,905.1
140.4
1,257.7
350.0
267.5
119.0
2,672.5
68.1%

3,964.0
2,043.6
144.1
1,430.6
232.4
113.1(140.4)2,747.2
69.3%

4,503.0
2,907.5
140.6
1,554.7
372.0(472.0)(884.6)2,908.7
64.5%

1,539.2

1,464.1

1,644.9

1,557.9

1,418.2

1,232.8

1,078.5

1,184.4

1,248.4

1,216.7

1,594.2

115.6
65.3(53.6)
33.6(87.3)
52.0(77.7)
1,344.1
9.6
395.7
29.2%
105.3
852.6

(11.8)(35.1)
144.5
157.5(12.9)
112.4(38.2)
1,694.8(151.7)
439.9
28.5%
118.1
984.8

161.6
71.1
93.1
97.9
(4.8)
159.6
(23.0)
1,713.0(98.2)
467.7
28.9%
113.2
1,033.7

255.1
103.7
88.3
113.6
(25.3)
230.4(82.0)
1,539.4(40.7)
460.2
30.7%
87.1
951.4

155.3
47.9
124.9
127.4
(2.5)
244.4
(271.4)
1,360.7(57.5)
342.1
26.2%
34.6
926.4

46.1
(79.5)
133.1
140.1
(7.0)
242.8
(100.3)
1,462.4(53.0)
313.4
22.2%
106.2
989.6

5.8
(129.8)112.6
125.9(13.3)
284.3(121.7)
1,348.0(202.7)
195.5
17.0%
77.0
872.6

222.9
(12.6)
31.3
92.1(60.8)
277.2(34.2)
1,235.7(406.3)
220.8
26.6%
80.3
528.1

515.5
223.2
130.2
138.3
(8.0)
321.7
(131.3)
1,053.6(11.5)
185.0
17.7%
79.9
777.0

331.4
233.8
332.6
343.8
(11.1)
441.5(121.9)1,537.6(47.7)
283.4
19.0%
75.6
1,130.8

674.8
98.8
288.0
303.9
(15.9)
425.8(612.5)1,020.7
549.1
369.6
23.5%
83.8
1,116.4

234,498.7
91,299.5
79,526.8
220,979.0
131,697.0
14,855.0
13,519.6
10,578.3
6,267.9
1,158.2
1,774.1

258,131.9
101,938.9
74,515.5
243,019.0
144,760.2
15,548.1
15,112.8
11,346.2
7,033.1
1,709.7
2,048.1

286,149.7
109,368.3
73,538.1
268,862.2
153,357.4
16,073.8
17,287.5
11,328.6
7,860.4
3,989.2
1,961.3

298,302.8
113,756.3
69,993.8
280,916.1
160,965.0
11,591.5
17,386.7
11,855.8
8,587.5
3,602.1
1,920.5

303,297.4
109,005.2
59,438.8
286,639.0
170,730.2
11,341.5
16,658.3
12,318.8
9,278.5
2,961.3
1,377.7

306,937.4
108,090.9
59,266.1
289,642.3
177,312.3
9,854.7
17,295.0
12,880.8
10,064.6
3,143.8
1,270.1

311,138.9
107,412.4
64,262.4
293,877.2
180,171.2
9,413.4
17,261.6
13,300.1
10,640.6
2,879.1
1,082.1

336,571.3
109,114.6
65,555.1
319,715.6
187,623.5
7,787.5
16,855.7
13,471.8
10,855.7
2,518.9864.8

359,473.5
107,183.0
77,122.0
341,757.2
211,521.2
8,099.1
17,716.2
13,816.0
11,200.0
2,986.4
913.6

373,731.9
110,426.2
79,560.5
355,743.6
215,427.2
10,938.8
17,988.2
14,458.6
11,998.1
2,565.1
964.4

386,799.4
109,146.2
86,746.9
368,526.6
213,609.5
13,632.5
18,272.8
14,749.3
12,739.2
2,481.9
1,041.5

11.60%
12.63%
16.53%
13.0
22.0%
800.95
58.99
8.77%
7.96%
14.155
558
7.8
0.69
9.4

11.18%
12.37%
15.43%
16.0
23.4%
893.77
68.29
9.05%
8.05%
14.161
567
8.0
0.63
8.3

11.09%
12.58%
15.62%
18.0
24.6%
1,092.75
73.22
8.74%
7.38%
14.017
743.7
10.4
0.68
10.1

11.63%
13.24%
16.01%
18.0
26.3%
1,121.07
68.51
7.63%
6.18%
13.788
521.5
7.1
0.46
7.6

11.76%
13.36%
15.85%
18.0
26.4%
1,137.78
68.28
7.25%
6.02%
13.429
699.7
9.3
0.61
10.2

12.58%
14.32%
16.56%
19.0
25.5%
1,217.41
74.55
7.53%
6.32%
13.162
697.0
9.1
0.57
9.3

12.23%
13.90%
16.03%
22.0
32.9%
1,252.03
66.91
6.45%
5.41%
12.922
550.0
7.1
0.43
8.2

11.90%
13.56%
15.87%
25.0
61.0%
1,245.33
40.95
3.85%
3.28%
12.840
403.0
5.1
0.32
9.8

12.33%
13.96%
16.31%
25.0
41.3%
1,308.12
60.50
5.63%
4.73%
12.844
591.7
7.6
0.45
9.7

11.06%
12.38%
14.29%
28.0
31.7%
1,349.52
88.45
7.79%
6.68%
12.614
760.3
9.5
0.56
8.5

10.76%
12.04%
13.91%
32.0
35.3%
1,443.12
90.73
7.03%
6.51%
12.023
847.9
10.1
0.58
9.3

Statement of income data:
Gross profits before credit costs for trust accounts
Net interest income
Trust fees excluding credit costs
Net fees and commissions
Net trading profits
Net other operating profits
Net gains (losses) on debt securities
General and administrative expenses
Expense ratio
Net operating profits before credit costs for trust accounts
and provision for general allowance for credit losses
Total credit costs
The Bank and the Trust Bank combined
Net gains (losses) on equity securities
Gains (losses) on sales of equity securities
Losses on write-down of equity securities
Equity in earnings of equity method investees
Other non-recurring gains (losses)
Ordinary profits
Net extraordinary gains (losses)
Total taxes
Tax burden ratio
Profits attributable to non-controlling interests
Profits attributable to owners of parent
Balance sheet data:
Total assets
Loans and bills discounted
Securities
Total liabilities
Deposits
Negotiable certificates of deposit
Total net assets
Total shareholders’ equity
Retained earnings
Total accumulated other comprehensive income
Non-controlling interests
Financial Ratios
Common Equity Tier 1 Capital ratio
Tier 1 Capital ratio
Total Capital ratio
Dividends per share (DPS) (yen)Dividend payout ratio
Book-value per share (BPS) (yen)Earnings per share (EPS) (yen)ROE MUFG definition
ROE JPX definition
Total number of ordinary shares (excluding own shares) (billion shares)
Share price (fiscal year-end) (yen)Market capitalization*1 (trillions of yen)
PBR*1 (times)
PER*1 (times)*1 Figures based on fiscal year-end share price*2 From the beginning of the fiscal year ended March 31, 2022, expenses related to credit cards, which were previously recorded as general and administrative expenses, arerecorded as fees and commissions expenses.
Accordingly, the financial information for the fiscal year ended March 31, 2021 have been retroactively restated.

133

MUFG Report 2023

MUFG Report 2023

134

MUFG’s Pursuit ofValue Creation

Management Message

Management Strategies
and Performance

Leadership andGovernance

Financial Data /Corporate Data

Financial Data / Corporate Data

Financial Review for Fiscal 2022

Performance by Business Group
Looking at the performance of customer-segment businessgroups, the AM/IS Business Group saw a slight decrease in net
operating profits*1 due mainly to the absence of performance fees
previously recorded in connection with major deals in fiscal 2021.
However, all other business groups achieved increases in net
operating profits and overall customer segment had a year-onyear growth amounting to ¥443.1 billion. This was mainly
attributable to increases in net interest income from loans anddeposits, revenues from forex and other items that, in turn,enabled these business groups to steadily accumulate profit.

Consolidated Income Statement Summary
Consolidated Net Operating Profits
Consolidated gross profits for the fiscal year ended March 31, 2023
increased ¥539.0 billion from the previous fiscal year. This was
mainly due to the success of our efforts to seize profit
opportunities arising from changes in the environment, despite
the recording of losses on sales of foreign bonds and other
instruments in connection with the replacement of the securities
portfolio on the back of hikes in U.S. interest rates. Specifically,
positive factors contributing to the increase in gross profits
included higher net interest income supported by improvement indeposit and lending spreads and growth in lending-related fee
income overseas as well as rises in income from forex and trading,areas in which we took advantage of market fluctuations.
General and administrative expenses increased by ¥161.4 billion
from the previous fiscal year due primarily to the impact of foreignexchange fluctuations involving the depreciation of the yen. As aresult, consolidated net operating profits—an indicator of theearnings power of our core business—increased a significant¥377.5 billion (31%) to ¥1,594.2 billion. We have thus restored thisindicator to the level recorded in fiscal 2015 before the negativeinterest-rate policy was introduced.
Ordinary Profits
Total credit costs increased ¥343.4 billion mainly attributable to therecording of valuation losses on loans held by MUFG Union Bank

(MUB) due to an accounting treatment associated with the transferof the equity stake in MUB. Similarly, ordinary profits decreased¥516.9 billion by the recording of valuation losses on bonds andother assets held by MUB due to an accounting treatment
associated with the transfer of the equity stake in MUB. Had theseaccounting adjustments been excluded, total credit costs for the
fiscal year ended March 31, 2023 would show a decrease of ¥50.5
billion and ordinary profits would have increased by ¥218.1 billion
from the previous fiscal year.

On the other hand, net operating profits from the Global Markets
Business Group decreased by ¥36.9 billion due mainly to therecording of losses on sales of bonds in connection withsecurities portfolio replacement executed on the back of interest
rate hikes despite growth in revenues from trading and other
undertakings that took advantage of market fluctuations.

Profits Attributable to Owners of Parent
Net extraordinary gains amounted to ¥549.1 billion, a turnaroundof ¥596.9 billion from the loss recorded in the previous fiscal year
due mainly to the gains on the sale of the equity stake in MUB
and other proceeds. These gains included the negation ofvaluation losses in connection with accounting treatment
associated with the divestment of such equity stake.

 Please also refer to pages 91–106 for a summary of operating resultsby business groups.
*1 On a managerial accounting basis

FY
2021

FY
2022

YoY

4,503.0

539.0—

2 G&A expenses

2,747.2

2,908.7

161.4—

3 Net operating profits

1,216.7

1,594.2

377.5—

4 Total credit costs(331.4)(674.8)(343.4)50.5

Net gains (losses) on
5 equity securities

332.6

288.0

(44.6)—

Equity in earnings of
6 equity method investees

441.5

425.8

(15.7)—

Other non-recurring
7 gains (losses)(121.9)(612.5)(490.6)(149.5)

8 Ordinary profits

1,537.6

1,020.7(516.9)218.1

Net extraordinary gains
9 (losses)(47.7)

549.1

596.9

(138.0)JCIB+172.4

Total of income taxes10 current and income
taxes-deferred(283.4)(369.6)(86.1)—

Profits attributable toowners of parent

1,130.8

1,116.4(14.3)—MUFG Report 2023

872.6

777.0

13600
12700

1,232.4

11800

DS
+31.7

GCB
+46.6
AM/IS
(2.4)

2016

2017

2018

2019

2020

2021

2022 (FY)Y2023
Financial
targets

Differences

1
Global
1,577.6
Markets(36.9) Others(61.0)

2(Before credit costs for trust
accounts and provision forgeneral allowance for credit
losses)1,594.2

1,450.0(144.2)

Total credit costs(674.8)(300.0)(19.2)*1

1,020.7

1,850.0

94.3*1

1,116.4

1,300.0

183.6

R&C
+63.6

3 Ordinary profits

Total of customer segments +443.1

4
2021

Profits attributable toowners of parent

2022 (FY)*1 Represents differences between fiscal 2022 results (excluding the impact of MUBrelated valuation losses) and fiscal 2023 targets.

Breakdown of Profits Attributable to Owners of Parent*1
Impact of MUB-related
valuation losses

Bank
Danamon

The
Bank
600.3

10000

FY2022
Results

Net operating profits

10900(Billions of yen)

*1 Adjustments were made to a portion of valuation losses, etc., recorded during fiscal
2022 in connection with assets held by MUB and then countered by extraordinary
gains. The breakdown of such adjustments is as follows.
Total credit costs: ¥393.9 billion; Other non-recurring gains: ¥341.0 billion; Ordinary
profits: ¥735.0 billion; Net extraordinary losses: ¥735.0 billion

135

14500

528.1

*2

11

989.6

MUFG (Consolidated)

GCIB+131.2

History of Profits Attributable to Owners of Parent (Billions of yen)

After adjustment
for MUB-related
valuation losses*1

3,964.0

Fiscal 2023 Financial Targets (Billions of yen)

Breakdown of Changes in Net Operating Profits
by Business Segment (Billions of yen)

As a result, profits attributable to owners of parent amounted to¥1,116.4 billion, virtually on par with the all-time high recorded in
the previous fiscal year.

926.4

1 Gross profits

To date, MUFG has developed resilient business models in Japanand overseas via, for example, the execution of growth strategies
and structural reforms. In fiscal 2023, we will aim for the successful
conclusion of the current MTBP and, to this end, endeavor toensure that our MTBP measures yield positive effects andtangible outcomes. In these ways, we will live up to our foremost
commitment under the MTBP to achieve our ROE target.

Total taxes decreased by ¥86.1 billion.

1,130.8 1,116.4

Consolidated Income Statement Summary (Billions of yen)

Fiscal 2023 Financial Targets
In fiscal 2023, the business environment is expected to remain
uncertain and harsh due to progressing inflation at home andabroad, looming concerns of a spillover effect on real economies
in the wake of the collapse of some overseas financial institutions,and other negative factors. However, we have set our target for
profits attributable to owners of parent at ¥1,300.0 billion, aiming
for the record high. We will also strive to achieve an ROE of 7.5%, afinancial target stipulated under the current Medium-TermBusiness Plan (MTBP).

Krungsri
The
Securities
ACOM
*3
21.2
HD
The
MUAH 95.7
Trust
NICOS
40.0
21.7
Bank 44.8 1.5
124.5

FSI
22.0

OthersMorgan*4
Stanley 44.6
317.3
MUFG
(Consolidated)

1,116.4*1 The figures reflect the percentage holding in each subsidiary and equity method
investee *2 Exclude gains on the sales of shares of subsidiaries related to the MUAH
repurchase of shares, ¥415.1 billion *3 Exclude the impact of MUB’s valuation losses*4 The figure includes ¥23.7 billion of losses on change in equity

MUFG Report 2023

136

Management Message

MUFG’s Pursuit ofValue Creation

Management Strategies
and Performance

Leadership andGovernance

Financial Data /Corporate Data

Financial Data / Corporate Data

Financial Review for Fiscal 2022

Consolidated Balance Sheet Summary
Loans / Deposits
Loans totaled ¥110.4 trillion, a decrease of ¥1.1 trillion from March
31, 2022, due to a decrease in overseas loans in step with thedivestment of MUB, despite growth in domestic corporate loans.
Domestic individual deposits and domestic corporate deposits
increased by ¥2.5 trillion and ¥2.1 trillion, respectively, while
overseas branch deposits decreased by ¥6.5 trillion on the back of
the divestment of MUB and other factors. As a result, the overall
deposit balance amounted to ¥213.6 trillion.
Excluding the impact of foreign exchange fluctuations, thebalance of non-JPY loans for overseas borrowers decreased ¥4.5
trillion, while overseas deposits decreased ¥9.4 trillion from theprevious fiscal year-end.
The volume of loans to be disclosed under the Banking Act andthe Financial Reconstruction Act (FRA)*1 increased ¥69.2 billion and¥22.5 billion for domestic loans and overseas loans, respectively.
The non-performing loan (NPL) ratio*2 remained low at around 1%.
*1 Because the previous definition of risk-monitored loans to be disclosed became thesame as the definition used under the FRA, such disclosure is as applied under theJapanese Banking Act and the FRA. Regions are based on the borrowers’ location.
Excluding normal loans.
*2 Total non-performing loans / Total loans (the balance of risk-monitored loans /overall loan balance (banking-book basis, period end balance))

CapitalLoans (Period-end balance) (Trillions of yen)
Housing loans*1
OthersDomestic corporate*1, 2Government

Overseas loans –¥1.8 trillion from Mar. 31, 2022 (–¥4.5 trillion
excluding impact of foreign exchange fluctuations)

108.7
2.4

107.5
2.2

104.7
2.3

111.5
2.2
43.0

120.8
2.0

41.2

39.3

38.4

3.2

2.5

2.4

2.1

2.4

1.7

47.9

48.4

46.8

48.9

49.6

50.2

14.6

14.9

14.7

15.0

14.8

14.6

Deposits (Period-end balance) (Trillions of yen)Domestic individual*1

Domestic corporate, etc.*1

Overseas and Others

74.4

MUFG Report 2023

211.5

212.2

215.4

46.9

47.2

47.1

54.3

40.6

79.7

78.6

80.0

77.9

82.1

213.6

89.7

90.8

Sep. 30,
Mar. 31,
Sep. 30,
Mar. 31,
Sep. 30,
2020
2021
2021
2022
2022
*1Sum of the Bank and the Trust Bank *2 U.S. Bancorp

Mar. 31,
2023

82.4

137

Deposits transferred
to USB*2 due to thedivestment of theequity stake in MUB–¥11.8 trillion

222.0

84.8

86.3

88.2

Unrealized gains (losses)
as of Mar. 31, 2023
Changes from
Mar. 31, 2022

16,924.9——

Available-for-salesecurities

65,121.0(9,788.6)

1,420.1(971.7)

Domestic equity
securities

4,271.9(341.7)2,720.7(193.3)

Domestic bonds

29,751.9(10,681.7)(120.0)(58.2)

23,518.8(7,893.0)(86.3)(30.9)

31,097.2

1,234.9(1,180.5)(720.1)

Foreign equity
securities

408.3

189.7

(65.6)(93.3)

Foreign bonds

21,710.1(320.3)(1,116.2)(263.3)

8,978.7

1,365.5

1.2(363.3)

OthersCapital Adequacy (Billions of yen)Mar. 31,2022

Mar. 31,2023

Changesfrom Mar.
31, 2022

CET1 capital ratio

11.06%

10.76%(0.30%)

Tier 1 capital ratio

12.38%

12.04%(0.34%)

Total capital ratio

14.29%

13.91%(0.38%)

Leverage ratio

5.14%

4.70%

(0.44%)

13,823.9

13,280.8(543.0)741.0

CET1 capital

11,998.1

12,739.2

Other comprehensive income

2,565.1

2,481.9(83.1)

Regulatory adjustments(3,242.9)(4,003.0)(760.0)15,476.2

14,863.7(612.5)

17,858.6

Retained earnings

Tier 1 capital
Total capital
Risk weighted assets

In addition, the leverage ratio amounts to 4.70%, well above theregulatory requirement of 3.75%.

In fiscal 2022, MUFG raised approximately ¥3,800.0 billion inexternal TLAC capital by issuing TLAC-eligible senior bonds
worth approximately ¥3,200.0 billion, as well as perpetual
subordinated debt and dated subordinated debt totaling
approximately ¥600.0 billion.
As a result, the external TLAC ratio as of March 31, 2023 (see thegraph on the right) was 20.22%, well above the regulatory
requirement of 18%.

17,166.1(692.5)

124,914.2 123,363.3(1,550.8)

Credit risk

91,927.2

87,666.4(4,260.7)

Market risk

4,389.9

6,682.9

2,293.0

Operational risk

7,990.1

8,474.3

484.1

20,606.9

20,539.5(67.3)

300,792.3 316,034.5

15,242.2*1

Floor adjustments
Total exposure*2

MUFG aims to enhance its external TLAC capital by issuing
TLAC-eligible senior debt in domestic and overseas markets andby issuing subordinated debt in the domestic market.

21,520.0

OthersCapital Adequacy
The CET1 capital ratio, the most important indicator representing
the capital adequacy of financial institutions, stood at 10.76%. On
an estimated basis reflecting the RWA increase calculated on the
finalized Basel III reforms basis, the CET1 capital ratio amounted
to 11.0%, suggesting sufficient capital adequacy.

These regulations require G-SIBs to retain sufficient loss-absorbing
and recapitalization capacity available in resolution (TLAC-eligible
senior debt).

Held-to-maturity
bondsJapanesegovernment bonds

Risk Weighted Assets (RWA)
RWA decreased by ¥1,550.8 billion from March 31, 2022, due
mainly to a decrease in credit risks following the divestment of
the equity stake in MUB.

Total Loss-Absorbing Capacity (TLAC) Ratio
MUFG is subject to the TLAC regulations introduced on March
31, 2019.

Available-for-sale Securities with Fair Value*1 (Billions of yen)
Balance as of Mar. 31,
2023
Changes from
Mar. 31, 2022

Total Capital
Common Equity Tier 1 (CET1) capital decreased by ¥543.0 billion
from March 31, 2022, despite an increase in retained earnings.
This was due mainly to an increase in such adjustments ascapital allowances reflecting the expiration of the special
regulatory exemption regarding our emergency investment inMorgan Stanley.
Similarly, Tier 1 capital decreased by ¥612.5 billion from theprevious fiscal year-end, and total capital fell by ¥692.5 billion to¥17,166.1 billion.

Sep. 30,
Mar. 31,
Sep. 30,
Mar. 31,
Sep. 30,
Mar. 31,
2020
2021
2021
2022
2022
2023
*1 Sum of the Bank and the Trust Bank
*2	Excluding loans to government and governmental institutions and including foreign
currency-denominated loans (+¥0.8 trillion from Mar. 31, 2022 when the impact offoreign exchange fluctuations is excluded)*3	Loans booked in overseas branches, MUAH, Krungsri, Bank Danamon, the Bank
(China), the Bank (Malaysia) and the Bank (Europe)*4 U.S. Bancorp

44.8

Controlling net unrealized gains and losses on bonds and other
instruments becomes important in the face of possible rises ininterest rate hikes. Accordingly, we will maintain robust control byleveraging hedging transactions and investing in such asset
classes as equity securities other than bonds, placing greater
emphasis on overall asset allocation in pursuit of flexible treasury
operations. In these ways, we will secure medium- to long-term
stability in financial management while maintaining proper control
on net unrealized gains and losses on available-for-securities.

110.4
2.5

40.4

201.7

Net unrealized gains on available-for-sale securities decreased ¥1.0
trillion due mainly to hikes in interest rates at home and abroad.
However, overall net unrealized gains remained robust at ¥1.4 trillion.

Loans transferred
to USB*4 due tothe divestment of
the equity stake in
MUB –¥7.5 trillion

51.8–¥6.5 trillion in overseas branch deposits, etc., from Mar. 31, 2022(–¥9.4 trillion excluding impact of foreign exchange fluctuations)

Investment Securities
The balance of available-for-sale securities decreased by ¥9.7 trillion
from March 31, 2022. This was a result of the partial reduction ofdomestic and foreign bond holdings with the intention to curb
growth in net unrealized losses on these instruments on the back ofinterest rate hikes at home and abroad, along with the execution ofa switchover to held-to-maturity bonds.

Overseas*3*1 Adjustments made for the difference in RWA under Basel I and Basel III*2 Deposits with the Bank of Japan are excluded from total exposure

RWA-based External TLAC Ratio
External TLAC ratio 20.22%

External TLAC ratio 18%

Total capital ratio 13.91%

Total capital ratio 12%

As of Mar. 31, 2023
Minimum requirement
6.8%

3.5%
1.8%
1.2%
6.7%
4.0%

Other TLAC
Eligible Debt*1
Contribution of
DIFR*2 (3.5%)
Tier 2
AT1
CET1 (4.5%)
Regulatory Capital
Buffers*3 (4.0%)*1	Including adjustment of the difference between the calculation method of the total
capital ratio and the external TLAC ratio, and adjustment of the amount of other
TLAC-eligible liabilities owned by the issuer’s group, etc.
*2	Contribution of Deposit Insurance Fund Reserves: Japanese Deposit Insurance FundReserves fulfill the requirements for making ex-ante commitments to recapitalize asa G-SIB as per a resolution set out in the FSB’s TLAC term sheet (can include 3.5%
of RWAs in the external TLAC ratio from March 31, 2022 onward)*3	CET1 Buffer applicable to MUFG: G-SIB Surcharge: 1.5%, Capital Conservation
Buffer: 2.5%, and Counter-cyclical Buffer: 0.04%*1 E
 xcluding unrealized losses of ¥555.4 billion recorded upon the signing of anagreement regarding the transfer of the equity stake in MUB

MUFG Report 2023

138

Management Message

MUFG’s Pursuit ofValue Creation

Management Strategies
and Performance

Leadership andGovernance

Financial Data /Corporate Data

Financial Data / Corporate Data

Consolidated Financial Statements

Consolidated Balance Sheets(Millions of Yen)
Mar 31, 2023

(Millions of Yen)
Mar 31, 2023

Mar 31, 2022

Assets:215,427,299

13,632,559

10,938,831

Call money and bills sold

3,449,234

2,429,791

4,517,952

Payables under repurchaseagreements

39,982,955

27,619,262

7,325,185

6,466,822

Trading assets

18,013,184

17,704,455

Payables under securities lendingtransactions

1,171,947

1,072,578

Money held in trust

1,287,020

1,332,492

Commercial papers

2,220,723

2,108,531

Securities

86,746,900

79,560,579

Trading liabilities

14,716,820

12,397,702

Loans and bills discounted

109,146,272

110,426,224

Borrowed money

24,856,340

31,763,332

Foreign exchanges

2,300,198

2,300,859

Foreign exchanges

2,570,412

2,182,400

Other assets

15,195,896

14,050,293

Short-term bonds payable

1,047,499

1,316,803

Tangible fixed assets

1,220,172

1,236,012

Bonds payable

15,708,720

13,257,347

Buildings

286,879

304,935

Due to trust accounts

11,689,414

12,811,123

Land

629,782

646,197

Other liabilities

12,132,972

10,861,695

Lease assets

12,39011,422

196,850

136,724Construction in progress

34,64933,273

Reserve for bonuses to directors

3,639

1,866

Reserve for stocks payment

9,304

8,437

Net defined benefit liabilities

86,44586,355

110,763,205

618,223

872,268

Receivables under resale agreements

14,000,846

12,308,310

Receivables under securities
borrowing transactions

4,549,792

Monetary claims bought

256,469

240,183

1,358,124

1,344,225

Software555,235

507,629

Goodwill

252,009271,353

17

1

Other tangible fixed assets
Intangible fixed assets

Lease assets
Other intangible fixed assets
Net defined benefit assets

550,862565,241

1,325,434

1,374,607

322,021

213,922

Customers’ liabilities for acceptancesand guarantees

11,005,758

10,481,838

Allowance for credit losses(1,245,727)(1,222,162)

386,799,477

373,731,910

Deferred tax assets

Total assets

Deposits
Negotiable certificates of deposit

Reserve for bonuses

Reserve for retirement benefits todirectors
Reserve for loyalty award credits
Reserve for contingent losses

830

812

17,962

17,113

164,891

232,291

4,659

4,656

157,651

492,451

Deferred tax liabilities for land
revaluation

89,525

94,414

Acceptances and guarantees

11,005,758

10,481,838

368,526,620

355,743,665

Reserves under special laws
Deferred tax liabilities

Total liabilities

FY2021

4,503,008

3,964,051

Gross profits before credit costs fortrust accounts

4,503,008

3,964,002

Net interest income

2,907,511

2,043,648

140,637

144,147

Gross profits

213,609,501

113,630,172

Call loans and bills bought

Trust fees—

49

1,554,767

1,430,649

Net trading profits

372,093

232,471

Net other operating profits(472,001)

113,134(884,618)(140,442)

2,908,709

2,747,227

Credit costs for trust accounts
Net fees and commissions

Net gains (losses) on debt securities
General and administrative expenses

19,92818,051

Net operating profits before credit costs
for trust accounts, provision for generalallowance for credit losses andamortization of goodwill

1,614,227

1,234,827

Net operating profits before credit costs
for trust accounts and provision forgeneral allowance for credit losses

1,594,299

1,216,775

Provision for general allowance for credit
losses(36,608)

65,436

Net operating profits*1

1,557,691

1,282,260

Net non-recurring gains (losses)(536,963)

255,388(746,353)(485,479)

Losses on loan write-offs*2(547,783)

Provision for specific allowance for
credit losses

Amortization of goodwill

Credit costs

Other credit costs(315,870)(217,906)(197,561)(258,640)

Land revaluation excess(1,009)(69,108)—

Gains on loans written-off

96,56988,558332,629

Gains on sales of equity securities

332,747

378,040

Capital surplus

349,661

770,277

Losses on sales of equity securities(28,796)(34,232)

12,739,228

11,998,157(481,091)(451,288)

Losses on write-down of equity
securities(15,950)(11,178)

14,749,310

14,458,659

425,829

441,595

Net unrealized gains (losses) on
available-for-sale securities

Equity in earnings of equity method
investees

800,955

1,615,060

Other non-recurring gains (losses)*2(612,559)(121,915)

Net deferred gains (losses) on
hedging instruments(387,079)(81,145)

1,020,728

1,537,649

549,195(47,791)

Land revaluation excess

135,526

140,628(918)

16,862

1,792,840

734,588

Losses on impairment of fixed assets(18,167)(174,133)

Gains on sales of shares of subsidiaries*3

699,509

4,240

Net gains (losses) on change in equity(23,711)45,262

Net gains (losses) on sales of shares ofaffiliates(29,401)

28,968Losses on pension buyout(78,111)——31,021

Debt value adjustments of foreignsubsidiaries and affiliates

140,485

193,865(747)(37,883)

Total accumulated othercomprehensive income

2,481,980

2,565,114

Non-controlling interests

1,041,565

964,471

Total net assets
Total liabilities and net assets

18,272,857

17,988,245

386,799,477

373,731,910

Gains on transfer of businesses

1,569,923

1,489,857

Income taxes-current

493,256

413,935

Refund of income taxes(56,288)(22,300)

Income taxes-deferred(67,361)(108,224)

Profits before income taxes

Total taxes
Profits
Profits attributable to non-controllinginterests
Profits attributable to owners of parent

MUFG Report 2023

Net deferred gains (losses) on hedging
instruments

Net gains (losses) on equity securities

Remeasurements of defined benefit
plans(Millions of Yen)

(157,730)

2,141,513

Foreign currency translation
adjustments

Consolidated Statements of Comprehensive Income(925,323)

11,550Net gains (losses) on disposition of
fixed assets(331,435)*4 Total credit costs = Credit costs for trust accounts + Provision for general allowancefor credit losses + Credit costs (included in non-recurring gains / losses) + Reversal of
allowance for credit losses + Reversal of reserve for contingent losses included in
credit costs + Gains on loans written-off(676,883)—

Net extraordinary gains (losses)

FY2021(674,842)

Net unrealized gains (losses) on
available-for-sale securities—

Ordinary profits

Total credit costs*4

FY20212,141,513

Total shareholders’ equity(Millions of Yen)FY2022

1,206,447

Capital stock

Treasury stock(Reference)

1,200,316

Reversal of reserve for contingent
losses included in credit costs

Reversal of allowance for credit losses*1 Net operating profits = Banking subsidiaries’ net operating profits + Other
consolidated entities’ gross profits − Other consolidated entities’ general andadministrative expenses − Other consolidated entities’ provision for generalallowance for credit losses − Amortization of goodwill − Inter-company transactions*2 In connection with the planned sale of the shares in MUFG Union Bank, N.A. (“MUB”),
an aggregate of ¥952,590 million of losses was recognized primarily in accordancewith Accounting Standards Codification (“ASC”) Topic 326, “Financial Instruments—
Credit losses,” and ASC Topic 310, “Receivables.” These losses consist mainly of¥555,421 million of valuation losses related to securities held for sale, which areincluded in Other non-recurring gains (losses), and ¥400,511 million of valuation losses
related to loans held for sale, which are included in Losses on loan write-offs.”*3 “Gains on sales of shares of subsidiaries” includes ¥699,509 million of gains on salesof shares of subsidiaries resulting from the sale of the shares in MUB.

FY2022

288,000

Net assets:

Retained earnings

139(Millions of Yen)FY2022

Mar 31, 2022

Liabilities:

Cash and due from banks

Consolidated Financial Results

369,607283,410

1,200,316

1,206,447

83,82075,606

1,116,496

1,130,840

Profits
Other comprehensive income—1

Foreign currency translation
adjustments

701,427

516,390

Remeasurements of defined benefit
plans(54,790)

32,281

Share of other comprehensive incomeof associates accounted for using
equity method

304,600

185,420(41,515)(409,136)

1,158,800

797,310Comprehensive income attributable toowners of parent

1,038,465

717,398

Comprehensive income attributable tonon-controlling interests

120,335

79,912

Total other comprehensive income
Comprehensive income(Comprehensive income attributable to)

MUFG Report 2023

140

Management Message

MUFG’s Pursuit ofValue Creation

Management Strategies
and Performance

Leadership andGovernance

Financial Data /Corporate Data

Financial Data / Corporate Data

Consolidated Financial Statements

Consolidated Statements of Changes in Net Assets(Millions of Yen)
Shareholders’ equity

Accumulated othercomprehensive income

Retainedearnings

Net unrealized
Net deferredgains (losses) on gains (losses) on
available-for-salehedgingsecurities
instruments

FY2022
Capital stock

Balance at the beginning of the period
Changes during the period
Cash dividends
Profits attributable to owners of parent
Repurchase of treasury stock
Disposal of treasury stock
Retirement of treasury stockReversal of land revaluation excess
Changes in subsidiaries’ equity
Change from transaction under common control
involving overseas subsidiary
Net changes of items other than shareholders’ equity
Total changes during the period
Balance at the end of the period

2,141,513

Capital surplus

770,277

Treasury stock

11,998,157(380,528)
1,116,496

0(418,097)
1,510

5,102

(451,288)

14,458,659(450,018)
2,118
418,097(380,528)
1,116,496(450,018)
2,118
—
5,102
1,510

(4,028)—2,141,513(420,616)
349,661

Total
shareholders’equity1,615,060

741,070
12,739,228(29,802)(481,091)

290,651
14,749,310

Land
revaluation
excessBalance at the beginning of the period
Changes during the period
Cash dividends
Profits attributable to owners of parent
Repurchase of treasury stock
Disposal of treasury stock
Retirement of treasury stockReversal of land revaluation excess
Changes in subsidiaries’ equity
Change from transaction under common control
involving overseas subsidiary
Net changes of items other than shareholders’ equity
Total changes during the period
Balance at the end of the period

140,628

Debt value
Total accumulated Non-controlling
Foreign currency Remeasurements
adjustments ofotherinterests
translationof definedforeignsubsidiaries
comprehensive
adjustments
benefit plans
and affiliates
income734,588(81,145)

193,865(37,883)(305,933)(305,933)(387,079)(Millions of Yen)

Accumulated other comprehensive income

2,565,114

964,471

Total net assets

17,988,245(380,528)
1,116,496(450,018)
2,118
—
5,102
1,510
(4,028)(5,102)(5,102)
135,526

1,058,251
1,058,251
1,792,840(53,380)(53,380)
140,485

37,136
37,136(747)(83,133)(83,133)
2,481,980

77,09477,094
1,041,565(6,039)284,612
18,272,857(Millions of Yen)

Accumulated othercomprehensive income

Shareholders’ equity

FY2021
Balance at the beginning of the period
Cumulative effects of changes in accounting policies
Restated balance
Changes during the period
Cash dividends
Profits attributable to owners of parent
Repurchase of treasury stock
Disposal of treasury stock
Retirement of treasury stockReversal of land revaluation excess
Changes in subsidiaries’ equity
Net changes of items other than shareholders’ equity
Total changes during the period
Balance at the end of the period

Capital stock

Capital surplus

2,141,513

977,287

2,141,513

977,2870(204,456)(2,554)—2,141,513(207,010)
770,277

Retainedearnings

Treasury stock

Total
shareholders’equity11,200,087(6,617)
11,193,470(502,794) 13,816,094(6,617)(502,794) 13,809,476(334,710)
1,130,840(334,710)
1,130,840(158,529)
5,580
—
8,556
(2,554)

8,556
804,687
11,998,157(158,529)
5,579
204,456

51,505(451,288)

649,182
14,458,659

Net unrealized
Net deferredgains (losses) on gains (losses) on
available-for-salehedgingsecurities
instruments

2,583,417
2,583,417(968,357)(968,357)

1,615,060

Land
revaluation
excessBalance at the beginning of the period
Cumulative effects of changes in accounting policies
Restated balance
Changes during the period
Cash dividends
Profits attributable to owners of parent
Repurchase of treasury stock
Disposal of treasury stock
Retirement of treasury stockReversal of land revaluation excess
Changes in subsidiaries’ equity
Net changes of items other than shareholders’ equity
Total changes during the period
Balance at the end of the period141

MUFG Report 2023

Foreign currencytranslation
adjustments

149,183

9,953

149,183

9,953

131,566
131,566(212,712)(212,712)(81,145)(Millions of Yen)

Accumulated other comprehensive income
Debt value
Total accumulated
Remeasurements
adjustments ofotherof definedforeign subsidiaries comprehensive
benefit plans
and affiliates
income163,189(50,832)

2,986,478

163,189(50,832)

2,986,478

Non-controllinginterests

913,684(14)
913,669

Total net assets

17,716,257(6,632)
17,709,625(334,710)
1,130,840(158,529)
5,580–(8,554)(8,554)
140,628

724,635
724,635
734,588

30,67530,675
193,865

12,94912,949(37,883)(421,363)(421,363)
2,565,114

50,80150,801
964,471(Millions of Yen)FY2022(4,028)(814,104)(814,104)
800,955

Consolidated Statements of Cash Flows

8,556(2,554)(370,562)
278,620
17,988,245

Cash flows from operating activities:

1,569,923

1,489,857

Depreciation and amortization

314,708

345,199

Impairment losses

18,167

174,133

Amortization of goodwill
Equity in losses (gains) of equity method
investees
Losses on pension buyout
Increase (decrease) in allowance for
credit losses
Increase (decrease) in reserve forbonuses
Increase (decrease) in reserve forbonuses to directors
Increase (decrease) in reserve for stocks
payment
Decrease (increase) in net defined
benefit assets
Increase (decrease) in net defined
benefit liabilities
Increase (decrease) in reserve forretirement benefits to directors
Increase (decrease) in reserve for loyalty
award credits
Increase (decrease) in reserve forcontingent losses
Interest income recognized onstatement of income
Interest expenses recognized onstatement of income
Losses (gains) on securities

19,92818,051(425,829)(441,595)

78,111

ー(32,780)

96,652

71,053

15,217

1,727

(18)

866

(2,477)(53,774)(106,980)

123

645

17

(60)

(213)

(540)

(64,789)

47,681(5,298,944)(2,587,445)

Foreign exchange losses (gains)
Losses (gains) on sales of fixed assets
Net decrease (increase) in trading assets
Net increase (decrease) in trading
liabilities
Adjustment of unsettled trading accounts
Net decrease (increase) in loans and bills
discounted
Net increase (decrease) in deposits
Net increase (decrease) in negotiablecertificates of deposit
Net increase (decrease) in borrowed
money (excluding subordinatedborrowings)
Net decrease (increase) in call loans andbills bought and others
Net decrease (increase) in receivables
under securities borrowing transactions
Net increase (decrease) in call moneyand bills sold and others
Net increase (decrease) in commercial
papers
Net increase (decrease) in payables
under securities lending transactions
Net decrease (increase) in foreignexchanges (assets)
Net increase (decrease) in foreignexchanges (liabilities)
Net increase (decrease) in short-termbonds payable
Net increase (decrease) in issuance andredemption of unsubordinated bonds
payableNet increase (decrease) in due to trust
accounts
Interest income (cash basis)
Interest expenses (cash basis)
OthersSub-total
Income taxes
Refund of income taxes
Net cash provided by (used in) operating
activities

FY2021

Cash flows from investing activities:

Profits before income taxes

Losses (gains) on money held in trust(Millions of Yen)FY2022

FY2021

2,372,735

543,957

481,930(225,395)

6,088

21,347(2,255,057)(2,788,581)

918(16,862)(42,347)

3,575,115

2,219,838(2,045,592)(651,611)

793,285(4,211,367)(2,101,763)

7,118,314

3,015,798

2,869,240

2,822,861(6,264,775)

573,366(1,804,036)

1,110,169

153,662(977,957)

12,597,828

2,166,231

179,650

288,342

83,926

227,626(3,533)(365,896)

389,405

75,450(269,304)

273,801

2,595,987

917,007(1,121,708)

1,602,553

4,923,477

2,657,591(2,098,922)(546,500)

440,666(555,008)

13,909,305

10,089,269(549,466)(300,616)

71,934

51,246

13,431,773

9,839,899

Purchases of securities
Proceeds from sales of securities
Proceeds from redemption of
securities
Payments for increase in money heldin trust
Proceeds from decrease in money
held in trust
Purchases of tangible fixed assets(103,993,341)(97,893,977)

58,441,528

60,280,489

36,986,139

36,458,516(1,040,424)(1,165,165)

1,075,874

1,110,030(118,147)(101,275)

Purchases of intangible fixed assets
Proceeds from sales of tangible fixed
assetsProceeds from sales of intangible fixed
assetsPayments for transfer of business(283,478)(282,728)

46,36082,256

180

1,277

—

(724,428)

Proceeds from transfer of businesses
Payments for acquisition ofsubsidiaries’ equity affecting the scopeof consolidation
Payments for sales of subsidiaries’equity affecting the scope of
consolidation
Proceeds from sales of subsidiaries’equity affecting the scope of
consolidation
OthersNet cash provided by (used in)investing activities
Cash flows from financing activities:
Proceeds from subordinatedborrowings
Repayments of subordinatedborrowings
Proceeds from issuance ofsubordinated bonds payable andbonds with warrants
Payments for redemption ofsubordinated bonds payable andbonds with warrants
Proceeds from issuance of common
stock to non-controlling shareholders
Dividends paid by MUFG
Dividends paid by subsidiaries to noncontrolling shareholders
Purchases of treasury stock—

33,038—(1,165)(1,784,755)

—

—

2,813

Proceeds from sales of treasury stock
Payments for purchases ofsubsidiaries’ equity not affecting thescope of consolidation
Net cash provided by (used in)financing activities
Effect of foreign exchange ratechanges on cash and cash equivalents
Net increase (decrease) in cash andcash equivalents
Cash and cash equivalents at the
beginning of the period
Decrease in cash and cash equivalents
resulting from exclusion of subsidiaries
from consolidation
Decrease in cash and cash equivalents
resulting from absorption via corporate
separation
Cash and cash equivalents at the endof the period(5,032)(2,409)(10,675,096)(2,202,726)

29,000—(28,000)—

670,246

226,091(787,754)(789,480)

227

3,569

(380,447)(334,619)(32,050)(32,622)(450,153)(158,515)

2,237

5,399

(444)

(250)

(977,138)(1,080,428)

1,089,328

1,228,889

2,868,867

7,785,634

110,763,205

102,980,711(1,900)(3,109)—(30)

113,630,172

110,763,205

MUFG Report 2023

142

Management Message

MUFG’s Pursuit ofValue Creation

Management Strategies
and Performance

Leadership andGovernance

Financial Data /Corporate Data

Financial Data / Corporate Data

Performance Comparisons with Competitors*1

Company Overview

Market Capitalization

Corporate Information (As of March 31, 2023)(Trillions 60of yen)Company Name

Mitsubishi UFJ Financial Group, Inc.

Ownership and Distribution of Shares*1

50

Head Office7-1, Marunouchi 2-Chome, Chiyoda-ku,
Tokyo 100-8330, Japan

Securities:

40

Date of Establishment

April 2, 200130

Amount of Capital¥2,141.5 billion

Common Stock (Issued)

12,687,710,920 shares

Stock Listing

Tokyo Stock Exchange,
Nagoya Stock Exchange,
New York Stock Exchange

Ticker Symbol Number

8306 (Tokyo Stock Exchange, Nagoya Stock
Exchange)
MUFG (New York Stock Exchange)

Number of Shareholders

1,064,553

20
10
0

JP Morgan

Bank of
America

HSBC

Goldman
Sachs

Citigroup

MUFG

BNP Paribas

SMFG

Mizuho FG

DeutscheBank

Barclays(Calculated based on data available as of March 31, 2023; source: Bloomberg)

5.99%

National and local
governments:

0.03%

Corporations:12.23%

Foreigninstitutions, etc.:

32.75%
Individuals andothers:16.70%

Financial
institutions:32.30%*1 Excludes treasury shares and fractional shares

Credit Ratings*2
Main Subsidiaries and Affiliates (As of March 31, 2023)
S&P Holding
Company Ratings

A-

Japanese Firms
MUFG

SMFG

U.S. Firms
Mizuho FG

BBB+

European Firms

JP Morgan

Bank of
America

HSBC

Goldman
Sachs

Citigroup

Barclays

Consolidated subsidiary

Commercial BankMUFG Bank, Ltd.
Bank of Ayudhya Public Company Limited
PT Bank Danamon Indonesia, Tbk.
au Jibun Bank Corporation
Vietnam Joint Stock Commercial Bank for Industry and Trade
Security Bank Corporation

BBB
Deutsche
Bank

BBB-

Mitsubishi UFJ Financial Group, Inc.

Trust Bank

Moody’s Holding
Company Ratings

A1
A2
A3
Baa1

Japanese Firms
MUFG

SMFG

U.S. Firms
Mizuho FG

JP Morgan

Mitsubishi UFJ Trust and Banking Corporation
The Master Trust Bank of Japan, Ltd.
MUFG Investor Services Holdings Limited
Mitsubishi UFJ Investor Services & Banking (Luxembourg) S.A.

European Firms

Bank of
America

Goldman
Sachs
Citigroup

Securities

HSBC
BNP Paribas

Barclays

DeutscheBank

Baa2(Ratings as of May 2023; based on data disclosed by each firm)*1 Overseas competitors used for performance comparisons are European and U.S. firms subject to a G-SIB buffer (announced in 2022) of 1.5% or more
*2 BNP Paribas and Deutsche Bank: Non-preferred senior ratings
Others: Issuer ratings or long-term foreign currency denominated debt ratings

Equity method investee

BNP Paribas

Mitsubishi UFJ Securities Holdings Co., Ltd. (Securities Holding Company)
Mitsubishi UFJ Morgan Stanley Securities Co., Ltd.
au Kabucom Securities Co., Ltd.
Mitsubishi UFJ Trust International Limited
MUFG Securities (Canada), Ltd.
MUFG Securities EMEA plc
MUFG Securities Asia Limited
Morgan Stanley MUFG Securities Co., Ltd.
Morgan Stanley

Credit Cards / Consumer Finance / Installment Credit
Mitsubishi UFJ NICOS Co., Ltd.
ACOM CO., LTD.
JACCS CO., LTD.
Kanmu, Inc.

Asset Management
Mitsubishi UFJ Kokusai Asset Management Co., Ltd.
MU Investments Co., Ltd.
Mitsubishi UFJ Alternative Investments Co., Ltd.
Mitsubishi UFJ Asset Management (UK) Ltd.
Mitsubishi UFJ Baillie Gifford Asset Management Limited
MUFG Lux Management Company S.A.
First Sentier Investors Holdings Pty Ltd

Leasing
BOT Lease Co., Ltd.
Mitsubishi HC Capital Inc.

OthersJapan Digital Design, Inc.
MUFG Innovation Partners Co., Ltd.
Human Resources Governance Leaders Co., Ltd.
Mitsubishi UFJ Real Estate Services Co., Ltd.
Japan Shareholder Services Ltd.
Mitsubishi Research Institute DCS Co., Ltd.

WebsiteFor more detailed information, please refer to our website.
URL: https://www.mufg.jp/ (Japanese)
URL: https://www.mufg.jp/english/ (English)143

MUFG Report 2023

MUFG Report 2023

144

Mitsubishi UFJ Financial Group, Inc.
7-1, Marunouchi 2-Chome, Chiyoda-ku, Tokyo 100-8330, Japan
Telephone: +81-3-3240-8111
www.mufg.jp/english/