REGISTERED BANKDISCLOSURE STATEMENT
31 MARCH 2024

MUFG BANK, LTD.
AUCKLAND BRANCH

Financial Statements
For the Year Ended 31 March 2024

TABLE OF CONTENTS
Disclosure Statements

Page

1.

Corporate Information

4

2.

Recognition and Priority of Claims of Creditors or Classes in the Event of Insolvency

5

3.

Excess of Assets Over Deposit Liabilities

5

4.

Guarantee Arrangement

55.

Directorate

6

6.

Auditors

10

7.

Conditions of Registration

10

8.

Pending Proceedings or Arbitration

13

9.

Credit Rating

13

10. Historical Summary of Financial Statements

14

11. Climate Disclosure Statement14

12. Other Material Matters

14

13. Financial Statements of the Registered Bank and the Overseas Banking Group14

14. Directors’ and Managing Director Auckland Branch’s Statements

15

Financial Statements
Statement of Comprehensive Income

16

Statement of Changes in Equity

17

Statement of Financial Position

18

Statement of Cash Flows

19

Notes to Financial Statements
1.

Statement of Material Accounting Polices

21

2.

Material Accounting Policies

22

3.

Risk Management Policies

31

4.

Profit Before Income Tax Expense

35

5.

Property, Plant and Equipment

36

6.

Income Tax

37

7.

Deposits

39

8.

Total Liabilities of the Branch Net of Amounts Due to Related Parties

39

9.

Remuneration of Auditor

39

10. Provision for expected credit losses

40

11. Other Liabilities

41
2

MUFG Bank, Ltd.
Auckland Branch

Financial Statements
For the Year Ended 31 March 2024

TABLE OF CONTENTS
Notes to Financial Statements
12. Commitments and Contingent Liabilities

41

13. Key Management Personnel Compensation

42

14. Related Party Disclosures

42

15. Derivative Financial Instruments

43

16. Concentration of Credit Risk

45

17. Concentration of Funding51

18. Interest Rate Risk

51

19. Maturity Analysis for Assets and Liabilities

53

20. Fair Value of Financial Instruments

54

21. Profitability and Size

56

22. Asset Quality

57

23. Exposures to Market Risk

58

24. Capital Adequacy

58

25. Lease60

26. Insurance Business60

27. Non-Consolidated Activities

61

28. Securitisation, Funds Management, and Other Fiduciary Activities

61

29. Financial Support

61

30. Subsequent Events

61

Auditor’s Report

62

3

MUFG Bank, Ltd.
Auckland Branch

Financial Statements
For the Year Ended 31 March 2024
This Disclosure Statement contains information as required by the Registered Bank Disclosure Statements(Overseas Incorporated Registered Banks) Order 2014 (as amended) (‘the Order’).
1.

Corporate Information

1.1

Registered Bank (The ‘Overseas Bank’)
MUFG Bank, Ltd.
7-1, Marunouchi 2-chome
Chiyoda-ku, Tokyo 100-8388, JapanThe ‘Overseas Banking Group’ includes all entities consolidated for the purposes of public
reporting in Japan including MUFG Bank, Ltd., its subsidiaries, and associated companies.

1.2

New Zealand Branch
MUFG Bank, Ltd., Auckland Branch
Level 19, 151 Queen Street
Auckland, New Zealand
It is the only member of the ‘Banking Group’ in New Zealand

1.3

The Ultimate Parent BankMUFG Bank, Ltd.
7-1, Marunouchi 2-chome
Chiyoda-ku, Tokyo 100-8388, Japan

1.4

The Ultimate Holding Company
Mitsubishi UFJ Financial Group, Inc.
7-1, Marunouchi 2-chome
Chiyoda-ku, Tokyo 100-8388, Japan

1.5

Summary of Regulations
There are no regulations, legislation or other restrictions of a legally enforceable nature which
may materially inhibit the legal ability of MUFG Bank, Ltd., or Mitsubishi UFJ Financial
Group, Inc. to provide material financial support to MUFG Bank, Ltd. Auckland Branch.

4

MUFG Bank, Ltd.
Auckland Branch

Financial Statements
For the Year Ended 31 March 2024
2.

Recognition and Priority of Claims of Creditors or Classes in the Event of Insolvency
The Deposit Insurance Law of Japan is intended to protect depositors if a financial institution fails tomeet its obligations. The Deposit Insurance Corporation of Japan (DICJ) was established in accordancewith that law. The Deposit Insurance System (DIS) is administered by the DICJ. The DICJ is a semigovernment organization that was established in 1971 with the purpose of operating Japan’s deposit
insurance system, in compliance with the Deposit Insurance Law. Banks and certain other credit
institutions participate in the DIS on a compulsory basis.
All deposits are protected and subject to the JPY 10 million maximum per customer. The only exception
is for non interest deposits that are redeemable on demand and used by the depositor primarily for
payment and settlement functions. The deposits in settlement accounts are fully protected without amaximum amount limitation. The DICJ charges insurance premiums on an annual basis on all deposits
for the protection.
Certain types of deposits such as foreign currency deposits (currencies other than JPY), negotiablecertificates of deposit, and deposit in overseas branches are outside the scope of protection under the
DIS. Liquidation dividends will be payable in accordance with the asset situation of the failing financial
institution. The following deposits of MUFG Bank, Ltd., Auckland Branch are not protected:
As at 31 March
2024
NZD
Amount due to related parties
Retail deposit
Certificate deposit
Call deposit
Term deposit

3,831,683,699
102,290,184
1,488,126,678
76,806,944
709,273,505
6,208,181,010

As at 31 March
2023
NZD
4,174,133,335
117,215,417
633,689,126
140,295,029
1,273,225,749
6,338,558,656

In the event of a bank default, except for the above protection afforded by the DIS, all creditors will rank
equally.

3.

Excess of Assets Over Deposit Liabilities
MUFG Bank, Ltd., Auckland Branch is not required by any statute to hold in New Zealand an excess ofassets over deposit liabilities.
In Japan, under Japanese law for the Reserve Requirement System, Japanese banks (including MUFG
Bank, Ltd.) are required to maintain certain reserves on deposit with the Bank of Japan based on theamount of deposit balances and certain other factors. This requirement has potential impact on the
management of the liquidity of the New Zealand operations.

4.

Guarantee Arrangement
The obligations of the Banking Group are not guaranteed under any guarantee (including government
guarantee and cross guaranteeing arrangements) as at the date of signing this Disclosure Statement.

5

MUFG Bank, Ltd.
Auckland Branch

Financial Statements
For the Year Ended 31 March 20245.

Directorate
5.1

Address to which communications to the Directors and Responsible Persons may be sent:
C/- Mr Takahiro Iino,
Managing Director, Head of Oceania, Head of Sydney Branch(and Authorised Attorney on behalf of the Directors)
MUFG Bank, Ltd., Sydney Branch
Level 25, Gateway Building, 1 Macquarie Place
Sydney, NSW 2000, AUSTRALIA
C/- Mr Nick Congdon
Managing Director, Head of Auckland Branch
MUFG Bank, Ltd., Auckland Branch
Level 19, 151 Queen Street
Auckland, NEW ZEALAND

5.2

Directors of MUFG Bank, Ltd. On the date of signing this Disclosure Statement:

Name:
Occupation:
Residence:
Executive or Independent
director:
Qualification:

Naoki Hori
Chairman
Japan

Name:
Occupation:
Residence:
Executive or Independent
director:
Qualification:

Yasushi Itagaki
Deputy President
Japan

Name:
Occupation:
Residence:
Executive or Independent
director:
Qualification:

Ichiro Takahara
Deputy President
Japan

Executive director
Faculty of Law
Kyoto University, Japan

Executive director
Bachelor of Law
Kyoto University, Japan

Executive director
Faculty of Law
Nanzan University, Japan

Name:
Occupation:
Residence:
Executive or Independent
director:
Qualification:

Junichi Hanzawa
President & CEO
Japan

Name:
Occupation:
Residence:
Executive or Independent
director:
Qualification:

Seiichiro Akita
Deputy President
Japan

Name:
Occupation:
Residence:
Executive or Independent
director:
Qualification:

Minoru Soutome
Deputy President
Japan

Executive director
BA in Economics
The University of Tokyo,
Japan

Executive director
BA in Law
Keio University, Japan;
Arthur D. Little School ofManagement, USA;
Carroll Graduate School ofManagement Boston College
USA

Executive director
BA in Economics
Waseda University, Japan

6

MUFG Bank, Ltd.
Auckland Branch

Financial Statements
For the Year Ended 31 March 20245.

Directorate (continued)
Name:
Occupation:
Residence:
Executive or Independent
director:
Qualification:

Tetsuya Yonehana
Senior Managing Executive
OfficerJapan
Executive director
Faculty of Engineering
The University of Tokyo,
Japan

Name:
Occupation:
Residence:
Executive or Independent
director:
Qualification:

Yutaka Miyashita
Managing Executive Officer
Japan

Name:
Occupation:
Residence:
Executive or Independent
director:
Qualification:

Keitaro Tsukiyama
Managing Executive Officer
Japan

Name:
Occupation:
Residence:
Executive or Independent
director:
Qualification:

Fumitaka Nakahama
Managing Executive Officer
Japan

Name:
Occupation:
Residence:
Executive or Independent
director:
Qualification:

Hiroyuki Seki
Managing Executive Officer
Japan

Name:
Occupation:
Residence:
Executive or Independent
director:
Qualification:

Tadashi Yamamoto
Managing Executive Officer
Japan

Executive director
Faculty of Law
Kyoto University, Japan

Executive director
Faculty of Commerce
Doshisha University, Japan

Executive director
Faculty of Foreign Studies
Sophia University, Japan

Executive director
Faculty of Business andCommerce
Keio University, Japan

Executive director
BA in Economics
The University of Tokyo,
Japan

Name:
Occupation:

Takefumi Tango
Managing Executive Officer

Residence:
Executive or Independent
director:
Qualification:

Japan

Name:
Occupation:
Residence:
Executive or Independent
director:
Qualification:

Hiroshi MoriManaging Executive Officer
Japan

Name:
Occupation:
Residence:
Executive or Independent
director:
Qualification:

Hideaki Takase
Managing Executive Officer
Japan

Name:
Occupation:
Residence:
Executive or Independent
director:
Qualification:

Shuichi Yokoyama
Managing Executive Officer
Japan

Name:
Occupation:
Residence:
Executive or
director:
Qualification:

Toshiki Ochi
Managing Executive Officer
Japan

Name:
Occupation:
Residence:
Executive or
director:
Qualification:

Executive director
BA in Economics
The University of Tokyo,
Japan

Executive director
Faculty of Law
The University of Tokyo, Japan
Duke University School of Law,
USA
Attorney

Executive director
Faculty of Economics
Hitotsubashi University, JapanMBA
Massachusetts Institute ofTechnology, USA

Executive director
Faculty of Science and Engineering
Waseda University, Japan;
MBA
Massachusetts Institute ofTechnology, USA

Independent
Executive director
Faculty of Commerce andManagement
Hitotsubashi University, Japan

Masahito Monguchi
DirectorJapan
Independent
Independent director
Faculty of Law
The University of Tokyo, Japan;
Attorney

7

MUFG Bank, Ltd.
Auckland Branch

Financial Statements
For the Year Ended 31 March 20245.

Directorate (continued)
Name:
Occupation:
Residence:
Executive or Independent
director:
Qualification:

Keiichi Shiotsuka
Director
Japan

Name:
Occupation:
Residence:
Executive or Independent
director:
Qualification:

Shinichi Koide
Director
Japan

Name:
Occupation:
Residence:
Executive or Independent
director:
Qualification:

Masahiko Kato
Director
Japan

Name:
Occupation:
Residence:
Executive or Independent
director:
Qualification:

Takeshi Suzuki
Director
Japan

Name:
Occupation:
Residence:
Executive or Independent
director:
Qualification:

Hironori Kamezawa
Director
Japan

Name:
Occupation:
Residence:
Executive or Independent
director:
Qualification:

Hiroshi Goto
DirectorJapan

Independent director
BA in Economics
Chuo University, Japan

Independent director
College of Economics
Aoyama Gakuin
University, Japan

Executive director
School of Law
Nagoya University, Japan

Executive director
BA in Economics
Keio University, Japan

Executive director
Master of Science
The University of Tokyo,
Japan

Name:
Minoru Hagio
Occupation:
Director
Residence:Japan
Executive or Independent
director:
Executive director
Qualification:
BA in Economics
Keio University, Japan

Name:
Occupation:
Residence:
Executive or Independent
director:
Qualification:

Toshifumi Kitazawa
Director
Japan

Name:
Occupation:
Residence:
Executive or Independent
director:
Qualification:

Tadayuki Matsushige
Director
Japan

Name:
Occupation:
Residence:
Executive or Independent
director:
Qualification:

Akio Negishi
Director
Japan

Name:
Occupation:
Residence:
Executive or Independent
director:
Qualification:

Shigeru Yoshifuji
DirectorJapan

Independent director
BA in Economics
The University of Tokyo,
Japan

Independent director
School of Political Scienceand Economics
Waseda University, Japan;
CPA

Independent director
Faculty of Science andEngineering
Waseda University, Japan

Executive director
Bachelor of Engineering
Master of Engineering
Ph.D. Engineering
Tokyo Institute ofTechnology, Japan

Independent director
Faculty of Law
The University of Tokyo,
Japan;
Attorney

8

MUFG Bank, Ltd.
Auckland Branch

Financial Statements
For the Year Ended 31 March 20245.

Directorate (continued)
Hironori Kamezawa, Naoki Hori, Junichi Hanzawa, Tetsuya Yonehana, Hiroshi Mori, Yutaka
Miyashita, Shuichi Yokoyama, Fumitaka Nakahama, Hiroyuki Seki, Hideaki Takase, Keitaro
Tsukiyama, Toshiki Ochi, Tadashi Yamamoto, Yasushi Itagaki, Seiichiro Akita, and Takefumi
Tango have other directorships as follows:i.

Mitsubishi UFJ Financial Group, Inc.

Toshifumi Kitazawa has other directorships as follows:i.

Tokio Marine & Nichido Fire Insurance Co., Ltd.

Shinichi Koide has other directorships as follows:i.

Chairman, President and CEO of Salesforce Japan Co., Ltd.

Akio Negishi has other directorships as follows:i.

5.3

Chairman of the Board, Meiji Yasuda Life Insurance Company.

Signatories who have signed the Disclosure Statement. Responsible Person signing on
behalf of Directors and New Zealand Chief Executive Officer:

Name

Occupation

Takahiro Iino

Managing Director,
Australia
Head of Oceania,
Head of Sydney Branch(Responsible Person on behalf of the Directors)

BA in Economics
Waseda University, Japan;
MBA
Purdue University,
West Lafayette USA

Nick Congdon

Managing Director,
New ZealandHead of Auckland Branch(New Zealand Chief Executive Officer)

Bachelor of Commerce
University of Canterbury, NZ

5.4

Residence

Qualification

Director and New Zealand Chief Executive Officer related transactions
A related transaction is out of the normal course of business, is entered into on terms other thanthose that would be given to any other person or could be reasonably likely to influencematerially the exercise of the Directors’ or New Zealand Chief Executive Officer’s duties.
There have been no related transactions for year ended 31 March 2024 (2023: Nil).

5.5

MUFG Bank, Ltd. does not have a board audit committee. However, the Bank has elected toadopt a corporation governance system based on corporate auditors which includes ten
corporate auditors, six of whom are external corporate auditors as of 31 March 2024.

9

MUFG Bank, Ltd.
Auckland Branch

Financial Statements
For the Year Ended 31 March 20245.

Directorate (continued)
5.6

Dealing with Conflicts of Interest arising from personal, professional or business interests
When a Director or a Corporate Executive Officer engages in a transaction involving a conflictof interest, the Director or the Corporate Executive Office must receive the approval of theBoard of Directors.
When there is a risk of an unavoidable conflict of interest with a different division that thedirector in charge of the Compliance Division is also in charge of, to ensure the independenceof the Compliance Division, the general manager of the Compliance Division shall report to the
President and CEO. The President and CEO will report to the Board of Directors of Executive
Committee as necessary.
When a conflict of interest arises in connection with an operation involving any of the MUFG
Group companies, Directors or employees, on one hand, and a customer or other third-party, theDirector or employee, the MUFG Group company to which such Director or employee belongs,
or any other MUFG Group company, on the other, the MUFG Group company, Director or
employee must perform the operation in a proper manner.

6.

Auditors
Name and address of Auditor whose report is referred to in this Disclosure Statement:
Deloitte Limited
Deloitte Centre
1 Queen Street
Auckland 1010
New Zealand7.

Conditions of Registration
There have been no changes to the conditions of registration since the last disclosure statement as at 30
September 2023.
These conditions of registration apply on and after 1 June 2023.
The registration of MUFG Bank, Ltd. (“the registered bank”) in New Zealand is subject to the following
conditions:1.

That the banking group does not conduct any non-financial activities that in aggregate are material
relative to its total activities.
In this condition of registration, the meaning of “material” is based on generally accepted
accounting practice.

2.

That the banking group’s insurance business is not greater than 1% of its total consolidated assets.

For the purposes of this condition of registration, the banking group’s insurance business is the sum of thefollowing amounts for entities in the banking group:(a)

if the business of an entity predominantly consists of insurance business and the entity is
not a subsidiary of another entity in the banking group whose business predominantly
consists of insurance business, the amount of the insurance business to sum is the total
consolidated assets of the group headed by the entity; and10

MUFG Bank, Ltd.
Auckland Branch

Financial Statements
For the Year Ended 31 March 2024(b)

if the entity conducts insurance business and its business does not predominantly consistof insurance business and the entity is not a subsidiary of another entity in the banking
group whose business predominantly consists of insurance business, the amount of theinsurance business to sum is the total liabilities relating to the entity’s insurance businessplus the equity retained by the entity to meet the solvency or financial soundness needsof its insurance business.

In determining the total amount of the banking group’s insurance business—(a)

all amounts must relate to on balance sheet items only, and must comply withgenerally accepted accounting practice; and(b)

if products or assets of which an insurance business is comprised also contain a noninsurance component, the whole of such products or assets must be considered partof the insurance business.

For the purposes of this condition of registration,—“insurance business” means the undertaking or assumption of liability as an insurer under a contract of
insurance:“insurer” and “contract of insurance” have the same meaning as provided in sections 6 and 7 of the
Insurance (Prudential Supervision) Act 2010.
3.

That the business of the registered bank in New Zealand does not constitute a predominant
proportion of the total business of the registered bank.

4.

That no appointment to the position of the New Zealand chief executive officer of the registeredbank shall be made unless:(a)the Reserve Bank has been supplied with a copy of the curriculum vitae of the proposed
appointee; and(b)

the Reserve Bank has advised that it has no objection to that appointment.

5.

That MUFG Bank, Ltd. complies with the requirements imposed on it by the Japanese Financial
Services Agency.

6.

That, with reference to the following table, each capital adequacy ratio of MUFG Bank, Ltd.
must be equal to or greater than the applicable minimum requirement.

Capital adequacy ratio

Minimum requirement
on and after
31 March 2015

Common Equity Tier 1 capital

4.5%

Tier 1 capital

6%

Total capital

8%

11

MUFG Bank, Ltd.
Auckland Branch

Financial Statements
For the Year Ended 31 March 2024
7.

Conditions of Registration (continued)
For the purposes of this condition of registration, the capital adequacy ratios—(a)must be calculated as a percentage of the registered bank’s risk weighted assets; and(b)

are otherwise as administered by the Japanese Financial Services Agency.

7.

That liabilities of the registered bank in New Zealand, net of amounts due to related parties(including amounts due to a subsidiary or affiliate of the registered bank), do not exceed
NZ$15 billion.

8.

That retail deposits of the registered bank in New Zealand do not exceed $200 million. For the
purposes of this condition of registration retail deposits are defined as deposits by natural
persons, excluding deposits with an outstanding balance which exceeds $250,000.

9.

That, for a loan-to-valuation measurement period ending on or after 30 November 2023, thetotal of the business of the registered bank in New Zealand’s qualifying new mortgage lending
amount in respect of property-investment residential mortgage loans with a loan-to-valuation
ratio of more than 65%, must not exceed 5% of the total of the qualifying new mortgage
lending amount in respect of property-investment residential mortgage loans arising in theloan-to-valuation measurement period.

10.

That, for a loan-to-valuation measurement period ending on or after 30 November 2023, thetotal of the business of the registered bank in New Zealand’s qualifying new mortgage lending
amount in respect of non property-investment residential mortgage loans with a loan-tovaluation ratio of more than 80%, must not exceed 15% of the total of the qualifying new
mortgage lending amount in respect of non property-investment residential mortgage loans
arising in the loan-to-valuation measurement period.

11.

That the business of the registered bank in New Zealand must not make a residential mortgage
loan unless the terms and conditions of the loan contract or the terms and conditions for an
associated mortgage require that a borrower obtain the registered bank’s agreement before theborrower can grant to another person a charge over the residential property used as security
for the loan.

In these conditions of registration,—“banking group” means the New Zealand business of the registered bank and its subsidiaries as required
to be reported in group financial statements for the group’s New Zealand business under section
461B(2) of the Financial Markets Conduct Act 2013.
“business of the registered bank in New Zealand” means the New Zealand business of the registeredbank as defined in the requirement for financial statements for New Zealand business in section
461B(1) of the Financial Markets Conduct Act 2013.
“generally accepted accounting practice” has the same meaning as in section 8 of the Financial
Reporting Act 2013.
“liabilities of the registered bank in New Zealand” means the liabilities that the registered bank would
be required to report in financial statements for its New Zealand business if section 461B(1) of the
Financial Markets Conduct Act 2013 applied.

12

MUFG Bank, Ltd.
Auckland Branch

Financial Statements
For the Year Ended 31 March 2024
7.

Conditions of Registration (continued)
In conditions of registration 9 to 11,—“loan-to-valuation ratio”, “non property-investment residential mortgage loan”, “property-investment
residential mortgage loan”, “qualifying new mortgage lending amount in respect of propertyinvestment residential mortgage loans”, “qualifying new mortgage lending amount in respect of nonproperty-investment residential mortgage loans”, and “residential mortgage loan” have the same
meaning as in the Reserve Bank of New Zealand document entitled “Framework for Restrictions on
High-LVR Residential Mortgage Lending” (BS19) dated October 2021, and where the version dates of
the Reserve Bank of New Zealand Banking Prudential Requirement (BPR) documents referred to in
BS19 for the purpose of defining these terms are—
BPR document

Version date

BPR131: Standardised credit
risk RWAs

1 October 2021

BPR001: Glossary

1 July 2021

“loan-to-valuation measurement period” means a period of six calendar months ending on the last dayof the sixth calendar month.

8.

Pending Proceedings or Arbitration
There are no pending proceedings or arbitration concerning MUFG Bank, Ltd., Auckland Branch, or
MUFG Bank, Ltd. Group that may have a material adverse effect on the Auckland Branch, or MUFG Bank,
Ltd.

9.

Credit Rating
The Registered Bank has the following long term credit ratings which are applicable to the Banking
Group in New Zealand as at the date signing of this Disclosure Statement.
Current RatingStandard & Poor’s
Moody’s
Fitch

A
A1
A

Previous Rating(if changed in the previous two years)
A-

Rating scales are:
Credit Ratings
Highest quality/Extremely strong capacity to pay its financial commitments
High quality/Very strong capacity to pay its financial commitments
Upper medium grade/Strong capacity to pay its financial commitments
Medium grade (lowest investment grade)/Adequate to pay its financial commitments
Predominantly speculative/Less near term vulnerability to default
Speculative, low grade/Great vulnerability
Poor to default/identifiable vulnerability
Highest speculations
Lowest quality, no interest
Defaulted on obligations

S&P’s

Moody’s

Fitch

AAA
AA
A
BBB
BB
B
CCC
CC
C
D

Aaa
Aa
A
Baa
Ba
B
Caa
Ca
C
-

AAA
AA
A
BBB
BB
B
CCC
CC
C
D

13

MUFG Bank, Ltd.
Auckland Branch

Financial Statements
For the Year Ended 31 March 2024
9.

Credit Rating (continued)
Standard & Poor’s and Fitch – Ratings are modified by the addition of a plus (+) or minus (-) sign toshow relative standing within the major rating categories.
Moody’s – A numeric modifier is applied to each generic rating category from Aa to B, indicating thatthe counterparty is (1) in the higher end of its letter-rating category, (2) in mid-range, (3) in lower end.

10.

Historical Summary of Financial Statements
The following table is a historical summary taken from audited financial statements of MUFG Bank,
Ltd., Auckland Branch.

(a)
(b)
(c)
(d)
(e)
(f)
(g)
(h)
(i)
(j)
(k)
(l)
(m)
(n)
(o)

11.

Total interest revenue
Total interest expense
Total other revenue
Total expected credit loss
charged to the income statement
Total other expenses
Net profit before taxation
Taxation
Net profit after taxation
Net profit attributable to non-controllinginterests
The amount of branch profits repatriatedTotal assets
Total individually impaired assets
Total liabilities
Head office capital
Retained earnings and reserve

Year ended
31 March
2024
NZD(000’s)

Year ended
31 March
2023
NZD(000’s)

Year ended
31 March
2022
NZD(000’s)

Year ended
31 March
2021
NZD(000’s)

Year ended
31 March
2020
NZD(000’s)

395,459
322,073
31,910240,422215,571
31,91279,302
46,645
29,154

68,61944,01732,403

127,997
99,291
21,405

5,057
21,51078,72818,08860,641

2,679
17,842
36,242
6,615
29,6273,307
14,43544,0709,134
34,936274
10,341
46,3909,804
36,585(125)
11,08839,148
8,778
30,3696,770,341
6,389,114
83,000298,227

6,864,097
6,547,928
83,000233,168

6,428,257
6,141,433
83,000203,824

6,459,693
6,202,097
83,000174,597

6,515,372
6,293,645
83,000138,727

Climate Disclosure Statement
The Branch is a climate reporting entity for the purposes of the Financial Market Conduct Act 2013. A
copy of the climate statements will be available via the Branch’s website: www.nz.bk.mufg.jp by 31 July
2024.

12.

Other Material Matters
There are no matters relating to the business or affairs of the Registered Bank and its Banking Group thatare not contained elsewhere in the Disclosure Statement and would, if disclosed, materially affect thedecision of a person to subscribe for debt securities of which the Registered Bank or any member of its
Banking Group is the issuer.

13.

Financial Statements of the Registered Bank and the Overseas Banking GroupThe most recent publicly available Disclosure Statement for the Banking Group can be accessed via the
Branch’s website: www.nz.bk.mufg.jp. Copies of the most recent publicly available DisclosureStatement for the Banking Group will be provided within two working days at no charge to any person
who requests a copy.
The most recent publicly available Financial Statements of the Registered Bank and the Overseas
Banking Group may be accessed via the Bank’s global website: www.mufg.jp. In addition, Financial
Statements are also prepared and filed with the United States Securities and Exchange Commission,
Washington, D.C.
14

MUFG Bank, Ltd.
Auckland Branch

Financial Statements
For the Year Ended 31 March 2024
14.

Directors’ and Managing Director Auckland Branch’s Statements

After due enquiry, each Director and the Managing Directors Auckland Branch believe that:as at the date on which the Disclosure Statement is signed;the Disclosure Statement contains all the information that is required by the Registered Bank
Disclosure Statements (Overseas Incorporated Registered Banks) Order 2014 (as amended);the Disclosure Statement is not false or misleading;and over the twelve-month accounting period ended 31 March 2024;


MUFG Bank, Ltd., Auckland Branch had systems in place to monitor and control adequately thematerial risks of the Banking Group, including credit risk, concentration of credit risk, interest raterisk, currency risk, equity risk, liquidity risk and other business risks, and that those systems werebeing properly applied; and

MUFG Bank, Ltd. has complied with all Conditions of Registration that applied during the period.

Signed for and on behalf of the Board of Directors of MUFG Bank, Ltd. by their agent duly appointed in writing,and by the Managing Director, Auckland Branch.

_____________________________________
Mr. Takahiro Iino
Managing Director, Head of Oceania
Head of Sydney Branch(and Authorised Attorney on behalf of
the Directors)
Dated (Sydney): 25 June 2024_______________________________________
Mr. Nick Congdon
Managing Director,
Head of Auckland Branch(New Zealand Chief Executive Officer)
Dated (Auckland): 25 June 2024

15

MUFG Bank, Ltd.
Auckland Branch

Financial Statements
For the Year Ended 31 March 2024
Statement of Comprehensive Income

NoteInterest income
Interest expense
Net interest income

44Fees and commission income
Net gain on financial instruments

4
4

Twelve Months
ended
31 March 2024

Twelve Months
ended
31 March 2023

NZD

NZD

395,458,895

240,422,269(322,072,957)(215,571,114)

73,385,938

24,851,155

27,845,716

29,839,248

4,064,279

2,072,718

31,909,995

31,911,966(77,299)(71,325)(4,218,898)(3,897,420)(246,500)(201,713)(16,968,010)(13,671,404)

83,785,226

38,921,259

Expected credit losses(5,056,738)(2,679,203)

Profit before income tax expense

78,728,488

36,242,056(18,087,726)(6,615,277)

60,640,762

29,626,779

Occupancy expenses
Personnel expenses
Auditor’s remuneration
Administration and other expenses
Profit before expected credit losses andincome tax expense

Income tax expense
Profit from continuing operations

4
4
4
4

6

Other Comprehensive income
Items that may be reclassified subsequently
to profit or loss
Debt instruments measured at FVOCI- Profit/(Loss) arising during the year
- Income tax (expense) / benefit on
Debt instruments measured at FVOCI

6,135,451(391,801)(1,717,926)

109,704

Other comprehensive income/(expense) net of tax

4,417,525(282,097)

Total comprehensive income, net of tax

65,058,287

29,344,682

The statement of comprehensive income is to be read in conjunction with the accompanying notes to and forming part of thefinancial statements.

16

MUFG Bank, Ltd.
Auckland Branch

Financial Statements
For the Year Ended 31 March 2024
Statement of Changes in Equity
NZD
Head
OfficeCapitalRetained
Earnings

Investment
Revaluation
Reserve

Total

83,000,000

207,426,479(3,602,468)

286,824,011

Profit from continuing operations-

29,626,779-

29,626,779

Other comprehensive income, netof tax--(282,097)(282,097)

Total comprehensive income, netof tax-

29,626,779(282,097)

29,344,682

Balance at 31 March 2023

83,000,000

237,053,258(3,884,565)

316,168,693

Balance at 1 April 2023

83,000,000

237,053,258(3,884,565)

316,168,693

Profit from continuing operations-

60,640,762-

60,640,762

Other comprehensive income, netof tax--4,417,525

4,417,525

Total comprehensive income, netof tax-60,640,762

4,417,525

65,058,287

83,000,000

297,694,020

532,960

381,226,980

Balance at 1 April 2022

Balance at 31 March 2024

The statement of comprehensive income is to be read in conjunction with the accompanying notes to and forming part of thefinancial statements.

17

MUFG Bank, Ltd.
Auckland Branch

Financial Statements
For the Year Ended 31 March 2024
Statement of Financial Position

Note

AssetsCash and short term liquid assets
Amounts due from related parties
Amounts due from other financial institutions
Investment in debt instruments
Corporate loans originated by the Bank
Acceptances of customers
Derivative instruments
Other assets
Current tax asset
Deferred tax asset
Property, plant and equipment

16
14
16
16
10, 16
16
15

6
5, 25

Total Assets
Liabilities
Amounts due to related parties
Deposits
Acceptances
Derivative instruments
Other liabilities
Current tax liability

14
7
15
11
6

Total Liabilities
EquityHead Office capital
Retained earnings
Investment revaluation reserve

14

Total Equity
Total Liabilities and Equity

As at
31 March
2024

As at
31 March
2023

NZD

NZD

72,826,571
101,056,300
885,119,167
508,409,810
5,046,546,963
3,699,354
143,253,675
5,676,929
2,722,301
1,029,907

227,592,289
693,432,476
601,550,899
475,341,441
4,669,974,846
3,492,413
185,189,279
2,449,263
2,368,980
1,574,250
1,131,152

6,770,340,977

6,864,097,288

3,831,683,699
2,376,497,311
3,699,354
142,736,017
22,480,207
12,017,409

4,174,133,335
2,164,425,321
3,492,413
188,359,237
17,518,289-

6,389,113,997

6,547,928,595

83,000,000
297,694,020
532,960

83,000,000
237,053,258(3,884,565)

381,226,980

316,168,693

6,770,340,977

6,864,097,288

Total Interest Earning and Discount Bearing
Assets18

6,522,412,774

5,979,718,416

Total Interest and Discount Bearing Liabilities

18

6,144,941,639

6,333,857,652

The statement of comprehensive income is to be read in conjunction with the accompanying notes to and forming part of thefinancial statements.

18

MUFG Bank, Ltd.
Auckland Branch

Financial Statements
For the Year Ended 31 March 2024
Statement of Cash Flows
Twelve Months
ended
31 March 2024
NZD
Cash Flows from Operating Activities
Interest income received
Commission fees & trading income
Interest paid
Lease interest payment
Payments to suppliers, employees and others
Net cash flows from operating activities before changes in operating
assets and liabilities

Twelve Months
ended
31 March 2023
NZD

397,153,618
27,936,863(317,179,545)(21,202)(17,149,991)

224,830,971
30,000,959(198,181,338)(24,329)(12,787,835)

90,739,743

43,838,428(376,980,534)(433,752,508)(283,568,268)(32,345,553)
592,376,176(2,196,642)(102,714,821)(86,564,653)(115,087,747)
53,240,409
2,357,423(579,807,076)

213,111,660(348,361,516)(723,467)(135,973,323)(147,402,671)
509,279,564(2,336,714)
359,540,179(147,948,401)(6,567,314)(154,515,715)(176,428,469)(9,470,264)(185,898,733)

Cash Flows from / (used in) Investing Activities
Payment for property, plant and equipment
Net cash flows (used in) investing activities(124,234)(124,234)(5,928)(5,928)Cash Flows from / (used in) Financing Activities
Lease payment
Net cash flows (used in) financing activities(125,769)(125,769)(119,120)(119,120)(154,765,718)
227,592,289
72,826,571(186,023,781)
413,616,070
227,592,289

72,826,571
72,826,571

227,592,289
227,592,289

Net (increase) / decrease in operating assets:
Net (increase) in corporate loans originated by the Bank
Net (increase) in amounts due from other financial
Institutions
Net (increase) in investment in debt instruments
Net decrease in amounts due from related parties
Net (increase) / decrease in other assets
Net increase / (decrease) in operating liabilities:
Net increase / (decrease) in commercial papers and deposits
Net (decrease) / increase in amounts due to related parties
Net (decrease) in other liabilities

Net cash flows (used in) operating activities before income tax
Net tax (paid)
Net cash flows (used in) operating activities

Net Change in Cash and Cash Equivalents
Net (decrease) in cash and cash equivalents
Cash and cash equivalents at beginning of year
Cash and cash equivalents at end of the year
Reconciliation of Closing Cash and Cash Equivalents
Cash and short term liquid assets
Closing cash and cash equivalents

The statement of cash flow is to be read in conjunction with the accompanying notes to and forming part of the financial
statements.

19

MUFG Bank, Ltd.
Auckland Branch

Financial Statements
For the Year Ended 31 March 2024
Statement of Cash Flows (continued)

Twelve Months
ended
31 March 2024

Twelve Months
ended
31 March 2023

NZD

NZD

Reconciliation of profit from continuing operations to net cashused in operating activities
Profit from continuing operations

60,640,762

29,626,779(Increase) in corporate loans(380,698,446)(447,762,490)(Increase) in due from other financial institutions(283,568,268)(86,564,653)(Increase) in investment in debt instruments(26,932,919)(116,457,064)

Decrease in due from related parties

592,376,176

53,277,083

Decrease in acceptances of customers

206,9422,336,713(Increase) in other assets(3,227,666)(70,405)

Increase / (Decrease) in certificate of deposit

854,437,552(321,762,196)(Decrease) / Increase in commercial paper and deposits(642,365,562)

182,872,697(Decrease) / Increase in due to related parties(342,449,636)

518,131,839(Decrease) in acceptances(206,942)(2,336,713)

Increase in other liabilities

4,195,459

4,496,420(Decrease) in tax payable(6,567,314)(9,469,823)

Depreciation of property, plant and equipment

225,479

193,293

Increase in provision for expected credit losses

5,056,738

2,679,203

Non-Cash items:

Increase in tax payable

18,087,726

6,614,837

Other(3,725,796)(1,704,253)(154,515,715)(185,898,733)

Net cash flows from operating activities

The statement of cash flows is to be read in conjunction with the accompanying notes to and forming part of the financial
statements.

20

MUFG Bank, Ltd.
Auckland BranchNotes to the Financial Statements
For the Year Ended 31 March 2024
1.

Statement of Material Accounting Policesa) Reporting entity and Statement of Compliance
MUFG Bank, Ltd., Auckland Branch (“The Branch”) operates in Auckland, New Zealand and the Registered
Bank is incorporated in Japan. The Branch is profit-oriented and is an FMC Reporting Entity under the
Financial Markets Conduct Act 2013. The financial statements of the Branch incorporated in this DisclosureStatement have been prepared in accordance with Generally Accepted Accounting Practice in New Zealand(“NZ GAAP”) and the Registered Bank Disclosure Statements (Overseas Incorporated Registered Banks)
Order 2014 (as amended). They comply with IFRS Accounting Standards (“NZ IFRS”) and other applicablefinancial reporting standards as appropriate for profit-orientated entities. The financial statements also comply
with International Financial Reporting Standards (“IFRS”).
The financial statements were authorised for issue by the directors on the date of signing this DisclosureStatement.
b) Basis of Preparation
The financial statements are presented in New Zealand dollars.
The financial statements have been prepared on the historical cost basis, except for the revaluation of certain
non-current assets and financial instruments. The going concern assumption and the accrual basis ofaccounting have been adopted.
Cost is based on the fair-value of the consideration given in exchange for assets.
c) Changes in Accounting Policy
The accounting policies used by the Branch are consistent with those used in previous period.
d) Comparative Figures
There has been no re-statement on comparatives figures for this financial statement.
e) Use of Estimates and Judgments
The preparation of financial statements requires the management to make estimates and assumptions that affectthe amounts reported in the financial statements and the accompanying notes. The management has reviewed
and applied its estimation and judgment on an ongoing basis.

21

MUFG Bank, Ltd.
Auckland BranchNotes to the Financial Statements
For the Year Ended 31 March 2024
2.

Material Accounting Policiesa) Standards and Interpretations approved but not yet effective
The Branch has not yet assessed the impact of IFRS 18 Presentation and Disclosure in Financial Statements
but the standard is expected to impact the way the disclosure statements are presented.
At the date of authorisation of this disclosure statement, the Branch has not applied new and revised NZ IFRS
standards and amendments that have been issued but are not yet effective. It is not expected that the adoptionof any other standards and amendments will have a material impact on the disclosure statements of the Branch.
b) Foreign Currency(i)Functional and presentation currency
Items included in the financial statements are measured using the currency of the primary economic
environment in which the entity operates (“the functional currency”). The financial statements arepresented in New Zealand dollars, which is the Branch’s functional and presentation currency.

(ii)

Transactions and balances
Foreign currency balances are translated into the functional currency using the rates of exchangeruling at balance date. Transactions denominated in foreign currency are translated into their reporting
currency using the exchange rate in effect at the close of the transaction date. Gains and losses on
foreign exchange dealings and differences are recognised in the profit or loss in the period in which
they arise.

c) Interest
For all interest bearing financial instruments, interest income and expense are recognised in the profit and loss
using the effective interest method. The effective interest method is a method of calculating the amortised costof a financial asset or a financial liability and of allocating the interest income and interest expense over the
relevant period. The effective interest rate is the rate that exactly discounts estimated future cash payment or
receipts through the expected life of the financial instrument, or where appropriate, a shorter period, to the net
carrying amount of the financial asset or liability. When calculating the effective interest rate, cash flows are
estimated based upon contractual terms and behavioural aspects of the financial instrument (e.g. prepayment
options), but do not consider future credit losses. The calculation includes all fees paid or received between
parties to the contract that are an integral part of the effective interest rate, transaction costs and all otherpremiums or discounts.
d) Fee and Commission Income
Fee income integral to the loan categorised as loans and receivables are accounted for under NZ IFRS 9 andincluded in the effective interest rate, and recognised in profit and loss over the expected life of the instrument.
Fees and commissions that related to the execution of a significant act (for example, advisory or arrangement
services) are recognised when the significant act has been completed. Fees charged for providing ongoing
services (for example, maintaining and administering existing facilities) are recognised as income over theperiod the service is provided.

22

MUFG Bank, Ltd.
Auckland BranchNotes to the Financial Statements
For the Year Ended 31 March 2024
2.

Material Accounting Policies (continued)e) Other expense
Operating and administration expenses are recognized on an accrual basis.
Management expenses are charged by the Overseas Banking Group to reflect the cost of resources and services
provided by related party.
f) Goods and Services Tax
Revenue, expenses and assets are recognised net of the amount of goods and services tax (GST) except:•

Where the amount of GST incurred is not recovered from the taxation authority, it is recognised aspart of the cost of acquisition of an asset or as part of an item of expense; or•

For receivables and payables which are recognised inclusive of GST (the net amount of GST
recoverable from or payable to the taxation authority is included as part of receivables or payables).

Cash flows are included in the statement of cash flows on a gross basis. The GST component of cash flows
arising from investing and financing which is recovered from, or paid to, the taxation authority is classified as
operating cash flow.
g) Property, Plant and Equipment and Depreciation
Property, plant and equipment owned, and right-of-use assets under leasing arrangement are stated at cost lessaccumulated depreciation and impairment. Cost includes expenditures that are directly attributable to theacquisition of the item. The right-of-use asset is initially measured at cost, which comprises the initial amountof the lease liability, any initial direct costs incurred by the Branch, and any lease payments made in advanceof the lease commencement date (net of any incentives received). In the event that settlement of all or part ofthe purchase consideration is deferred, cost is determined by discounting the amounts payable in the future to
their present value as at the date of acquisition.
Depreciation is provided on property, plant and equipment.
Depreciation is calculated on a straight line or diminishing value basis so as to write off the net cost of each
asset over its expected useful life to its estimated residual value. Leasehold improvements and right-of-use
assets are depreciated over the period of lease or estimated useful life, whichever is the shorter, using thestraight line or diminishing value method. The estimated useful lives, residual values and depreciation method
are reviewed at the end of each annual reporting period.
Property, plant and equipment is depreciated at appropriate rates so as to write off the cost of each asset during
its effective useful life using following methods:
Asset valueLess than or equal to NZD
equivalent of JPY 200,000
More than NZD equivalentof JPY 200,000
Furniture Fixtures and Fittings
Office Equipment
Motor Vehicles

MethodPeriodStraight Line1 – 3 years

Diminishing value

estimated usefullife as follows
3 – 15 years
3 – 20 years
6 years

23

MUFG Bank, Ltd.
Auckland BranchNotes to the Financial Statements
For the Year Ended 31 March 2024
2.

Material Accounting Policies (continued)h) Financial Assets
The Branch classifies its financial assets in the following measurement categories:
those to be measured subsequently at fair value (either through other comprehensive income “FVOCI”,
or through profit and loss “FVTPL”), andthose to be measured at amortised cost.

-

The classification depends on the Branch’s business model for managing the financial assets and theircontractual cash flow characteristics.
The business model reflects how the Branch manages the assets in order to generate cash flows. The Branch
determines the business models at a level that reflects how groups of financial assets are managed together toachieve a particular business objective. The Branch’s business model does not depend on management’s
intentions for an individual instrument, therefore the business model assessment is performed at a high levelof aggregation rather than on an individual instrument basis.
The Branch determines the contractual cash flow characteristics are based on the contractual cash flow test
which is referred to as ‘solely payment of principal and interest’ “SPPI”. Under the SPPI test, the principal
amount may change over the life of the financial assets. Interest consists of consideration for the time value ofmoney, for the credit risk associated with the principal amount outstanding during a particular period of themand for other basic lending risks and as well as a profit margin.
At initial recognition, the Branch measures a financial asset at its fair value plus, in the case of a financial asset
not at fair value through profit or loss, transaction costs that are directly attributable to the acquisition of thefinancial asset. Transaction costs of financial assets measured at fair value through profit or loss are expensed
in profit or loss. Derivative financial instruments are recognised initially at fair value and are subsequently
measured at fair value through profit or loss.
Subsequently, financial assets are then measured according to the following classifications:-

Financial assets that fail the SPPI test will be measured at FVTPL;
Financial assets passing the SPPI test, a business model test is preformed to assess the objective ofholding the assets:
•
•
•
(1)

Financial assets will be measured at amortised cost if they are held within a business model
where the objective is to hold financial assets in order to collect contractual cash flows;
Financial assets will be measured as FVOCI if they are held within a business model where theobjective is achieved by both collecting contractual cash flows and selling financial assets
Financial assets will be measured at FVTPL if they do not meet either of the criteria’s above.

Financial assets at fair value through profit or loss

Financial assets at fair value through profit or loss include derivative instruments. Derivative instruments areused to manage exposures to interest rate, foreign currency and credit risks, including exposures arising fromforecast transactions.
The Branch also enters into derivative instruments for trading purposes, including foreign exchange contracts,
options, interest rate swaps, and currency swaps. All derivative instruments are recognized at fair value. The fairvalue is determined using listed market prices or cash flow discounting models based on current market prices
and contracted prices for the underlying instruments, as well as the time value of money and yield curves.
All derivative financial instruments are included under assets if their fair value is positive and under liabilities if
their fair value is negative.
24

MUFG Bank, Ltd.
Auckland BranchNotes to the Financial Statements
For the Year Ended 31 March 2024
2.

Material Accounting Policies (continued)(2)

Financial assets at fair value through other comprehensive income

Investment in debt instruments are measured at fair value through other comprehensive income where they have:••contractual terms that give rise to cash flows on specified dates, that represent solely payments ofprincipal and interest on the principal amount outstanding; andare held within business model whose objective is achieved by both collecting contractual cash flows
and selling financial assets.

These debt instruments are initially recognized at fair value plus direct attributable transaction costs andsubsequently measured at fair value. Gains and losses arising from changes in fair value are included in othercomprehensive income within a separate component of equity. Impairment gains and losses and interest revenue
are recognized in profit and loss. Upon disposal, the cumulative gain or loss previously recognized in othercomprehensive income is reclassified from equity to the profit and loss.
(3)

Financial assets at amortised cost

Financial assets that are held for collection of contractual cash flows where those cash flows represent solely
payments of principal and interest are measured at amortised cost and presented as cash and cash equivalents,
amounts due from related parties, amount due from other financial institutions, and corporate loans originatedby the Bank. At initial recognition, the Branch measures these financial assets at its fair value plus transaction
cost that are directly attributable to the acquisition of the financial assets.
Interest income from these financial assets is using the effective interest rate method. Impairment losses areincluded in credit impairment losses in the Statement of Comprehensive income.
(4)

Acceptances

Acceptances are financial assets used to facilitate trade settlements on behalf of customer.
Acceptances are recognised in the Statement of Financial Position as both assets and liabilities. Both asset andliability are measured at amortised cost using the effective interest method.
(5)

Offsetting of income and expenses

Income and expenses are not offset unless required or permitted by an accounting standard. It generally arisesin the following circumstances:•where transaction costs form an integral part of the effective interest rate of a financial instrument
which is measured at amortised cost, these are offset against the interest income generated by thefinancial instrument; or•where gains and loss arise from a group of similar transactions, such as foreign exchange gains andlosses.

(6)

Offsetting Financial Assets

Financial assets and liabilities are offset and the net amount reported in the statement of financial position if,
and only if, there is a currently enforceable legal right to set off the recognised amounts and there is an intention
to settle on a net basis, or to realise an asset and settle the liability simultaneously. In all other situations they
are presented gross.

25

MUFG Bank, Ltd.
Auckland BranchNotes to the Financial Statements
For the Year Ended 31 March 2024
2.

Material Accounting Policies (continued)(7)

Derecognition of financial assets and financial liabilities

The Branch derecognises financial assets when the rights to receive cash flows from the asset have expired orwhen the Branch transfers its rights to receive cash flows from the asset together with substantially all the risks
and rewards of the asset. If all or substantially all risks and rewards are retained, the financial assets are notderecognised from the statement of financial position.
A financial liability is derecognised when the obligation under the liability is discharged, cancelled or expires.
Where an existing financial liability is replaced by another from the same lender on substantially different
terms, or the terms of an existing liability are substantially modified, such as exchange or modification is treatedas a derecognition of the original liability and the recognition of a new liability.
i) Other assets
Other assets include all other financial assets and non-financial assets. All other financial assets are measured
at amortised cost using the effective interest method. All other non-financial assets are recorded at cost.
j) Financial Liabilities
The Branch classifies significant financial liabilities in the following categories: Amounts due to related partiesand deposits. They are recognised when an obligation arises. They are initially recognised at fair value lesstransaction costs and subsequently measured at amortised cost.
k) Other Liabilities
Other liabilities include accrued interest, other accrued expense payable and all other financial liabilities. They
are recognised initially at their fair value, and subsequently measured at amortised cost.
Other liabilities also include lease liabilities which are initially measured at the present value of the lease
payments as per lease contracts, discounted using the interest rate determined by the Branch’s incremental
borrowing rate.
l) Impairment of financial assets, financial guarantee and undrawn loan commitment
Impairment allowances apply to financial assets at amortised cost, financial assets at fair value through OCI,
financial guarantee, and undrawn loan commitment. The Branch recognises expected credit losses (ECL) basedon unbiased forward looking information as impairment allowance. The Branch calculates the ECL by threestages:• Stage I: “12-months ECL”
The financial instruments without significant increases in credit risk after initial recognition are
included in Stage I to calculate their impairment allowance at an amount equivalent to the portion of
the lifetime ECL associated with the probability of default events occurring within the next 12 months;•

Stage II: “Lifetime ECL – not credit impaired”
Financial instruments that have had a significant increase in credit risk since initial recognition but
have no objective evidence of impairment are included in Stage II, with their impairment allowancemeasured at an amount equivalent to the ECL that will result from all possible default events over the
expected life of financial instruments;•

Stage III: “Lifetime ECL – credit impaired”
Financial instruments with objective evidence of impairment at the balance sheet date are included instage III, with their impairment allowance measured at the lifetime ECL.

26

MUFG Bank, Ltd.
Auckland BranchNotes to the Financial Statements
For the Year Ended 31 March 2024
2.

Material Accounting Policies (continued)
Financial instruments can be transferred between the different stages depending on their relative increase incredit risk since initial recognition.
Measurement of ECL
The assessment of credit risk, and the estimation of ECL, are unbiased and probability-weighted, andincorporate all available information which is relevant to the assessment including information about past
events, current conditions and reasonable and supportable forecasts of future events and economic conditions
at the reporting date.
The Branch calculates ECL using 3 main components, a borrower rating (BR), a probability of default (PD)and an expected recovery ratio (ER).
The BR represents the credit risk level of the borrower. It is designed to assess the medium-to long-term
creditworthiness of the borrower based on the quantitative analysis (financial analysis, etc.) and qualitative
analysis (industry trend, corporate competitiveness, management policy, etc). Assigning a rating is not amechanical work: it is necessary to identify the creditworthiness of the borrower through research and analysis
and to reflect the result in the rating. In addition, the local economic environment, local business environment,
and future macroeconomic conditions are also considered and reflected in the rating. They are based on current
economic forecasts including (but are not limited to) GDP growth rate, and CPI rate. The estimation of forward
looking information is a critical accounting judgement. For example, if there are 2 customers who have thesame level of creditworthiness but they are in different industries, the local economic impact on these industries
will also affect the BR rating of these 2 customers. If there are 2 customers who have the same level ofcreditworthiness but they are in different countries, the countries’ economic impact will also affect the BR
rating of these 2 customers. All the analysis and factors are reviewed annually and the BR is updated
accordingly.
PD is the ratio of default for a certain period. “Default” is referred to the downgrade of BR to rating 9 or below.
“PD rate” is produced by Stress Testing Probability of Default (PD) model which was developed by Moody’s
Analytics for MUFG Bank Oceania Region (MUFG Oceania) including Australia and New Zealand.
Statistically developed Catch-all model was designed for all the existing portfolios for MUFG Oceania. The
model development has relied on the historical economic data and forecast data provided by Moody’s
Analytics. In addition, the model was based on credit quality index, called Z-index obtained from Moody’s
CreditEdge data. Linear regression models were developed to predict the Z index based upon Macroeconomic
indicators within Oceania. The forecast data for the macroeconomic variables were provided by Moody’s
Analytics Scenario Studio data. Since the model predicted Z-index are at a portfolio level, logistic-spreading
methodology was adopted to forecast the PDs at rating level.
ER is the collection ratio from each collateral, guarantee and unsecured portion. The determination of current
ER is based on weighted average balance after March 2001.
The ECL should be calculated by PD on individual borrower rating and following formula:
ECL = Credit amount x PD x (1-ER)
The 3 stages for calculating ECL is based on following matrix with borrower rating:StagesI
II
III

Borrower Rating
1 to 8.2
8.3
927

MUFG Bank, Ltd.
Auckland BranchNotes to the Financial Statements
For the Year Ended 31 March 2024
2.

Material Accounting Policies (continued)
Assets may move in both directions through the stages of the impairment model due to the creditworthiness ofthe borrower. Assets previously in stage 1 may move to stage 2 if it is considered that there has been asignificant increase in credit risk. Similarly, assets in stage 2 may move to stage 3 if they are assessed to be
non-performing.
For Borrower rating 10, 100% exposure will be written off from financial asset as credit loss.
The calculation of ECL incorporate forward-looking information. The Bank assesses ECL in 3 scenarios:
Baseline, S3, and HO. The PD ratios for Baseline and S3 are generated from the Branch’s in-house Stress
Testing Probability of Default (PD) model for Neutral and negative scenarios respectively on reporting date.
The PD ratios for HO are extracted from the registered bank’s PD model data on reporting date. Following thisassessment, the Branch measures ECL as a weighted average probability of ECL in the next 12-month under
the three scenarios for Stage 1 financial instruments. The weighted average probability which is determined by
the likeness on prediction in next 12 months for each scenario is summarised as follows:
Scenario
Baseline
S3
HO

WA Probability
65%
30%
5%

m) Provisions
Provisions are recognised when the Branch has a present legal or constructive obligation as a result of past
events; it is probable that an outflow of resources will be required to settle the obligation; and the amount canbe reliably estimated.
n) Employee benefits(i)Wages and salaries, annual leave and sick leave

Provisions for wages and salaries, including non-monetary benefits, annual leave and accumulating sick leave
expected to be settled within 12 months of the reporting date are recognised in respect of employees’ services
up to the reporting date and are measured at the amounts expected to be paid when the liabilities are settled.
Provisions for non-accumulating sick leave are recognised when the leave is taken and measured at the rates
paid or payable.
(ii)

Termination benefits

Termination benefits are payable when employment is terminated before the normal retirement date, or
whenever an employee accepts redundancy in exchange for these benefits. The Branch recognises termination
benefits when it is demonstrably committed to terminate the employment of current employees. The Branchdoes not have a formal plan for termination benefits.
o) Leasing
Lease arrangements entered into by the Branch are for the purpose of accommodating the Branch’s needs.
These include lease arrangement over premises and office equipment used by staff in conducting businessactivities.
Rental payments are determined in terms of the relevant lease requirements, usually reflecting market rentals
during the time when the Branch is negotiating the lease with the lessor. The Branch as lessee has no purchase
options over premises occupied. There are no restrictions imposed on the Branch’s lease of space other thanthose forming part of the negotiated lease arrangement for the premise.
28

MUFG Bank, Ltd.
Auckland BranchNotes to the Financial Statements
For the Year Ended 31 March 2024
2.

Material Accounting Policies (continued)
Extension option is included in the property lease but there is no termination option. This extension option isused to maximize operational flexibility in terms of managing contracts. The extension option is exercisable
only by the Branch and not by the lessor.
At lease commencement date, the Branch recognizes a right-of-use asset and a lease liability in the statementof financial position. The right-of-use asset is measured at cost, which is made up the initial measurement of
the lease liability, any initial direct costs incurred by the Branch, and any lease payments made in advance ofthe lease commencement date (net of any incentives received).
The Branch depreciates the right-of-use assets on a straight-line basis from the lease commencement date to
the end of the lease term in line with lease payment excluding interest factor. The Branch also assesses theright-of-use asset for impairment when such indicators exist.
At the commencement date, the Branch measures the lease liability at the present value of the lease payments
unpaid at that date, discounted using the interest rate implicit in the lease if that rate is readily available or the
Branch’s incremental borrowing rate being the rate that the Branch would have to borrow the funds necessary
to obtain an asset of similar value with similar terms.
Lease payments included in the measurement of the lease liability includes fixed payments as per lease
contracts. Subsequent to initial measurement, the lease liability will be reduced for lease payment made andincreased for interest. When the lease liability is remeasured, the corresponding adjustment is reflected in theright-of-use asset, or profit and loss if the right-of-use asset is already reduced to zero.
The Branch has elected to account for short-term leases (less than 12 months) and leases of low-value assets
using the practical expedients. Instead of recognizing a right-of-use asset and lease liability, the payments inrelation to these are recognized as an expense in profit and loss on a straight-line basis over the lease term.
On the statement of financial position, right-of-use assets have been included in property, plant and equipment
and lease liabilities have been included in other liabilities.
Interest expense on lease liability and depreciation on right-of-use assets are recognized in the profit and loss
as an expense.
p) Contingent Liabilities and Credit Commitments
The Branch is involved in a range of transactions that give rise to contingent and/or future liabilities.
The Branch discloses a contingent liability when it has a possible obligation arising from past events that will
be confirmed by the occurrence or non-occurrence of one or more uncertain future events not wholly within
the Branch’s control. A contingent liability is disclosed when a present obligation is not recognised because it
is not probable that an outflow of resources will be required to settle an obligation, or the amount of theobligation cannot be measured with sufficient reliability.
The Branch issues commitments to extend credit and guarantees. These financial instruments attract service
charges in line with market practice for similar arrangements. They are not sold or traded. The items generally
do not involve cash payments other than in the event of default. The charge pricing is set as part of the broader
customer credit process and reflects the probability of default. They are disclosed as contingent liabilities attheir face value.

29

MUFG Bank, Ltd.
Auckland BranchNotes to the Financial Statements
For the Year Ended 31 March 2024
2.

Material Accounting Policies (continued)q) Taxation
Income tax on the profit and loss for the year comprises current and deferred tax. Income tax is recognised in
the profit or loss except to the extent that it relates to items recognised in other comprehensive income or
directly in equity, in which case it is recognised in other comprehensive income or directly in equity.
Current tax is the expected tax payable on the taxable income for the year, using tax rates enacted or
substantively enacted at balance date after taking advantage of all allowable deductions under current taxation
legislation and any adjustment to tax payable in respect of previous years.
Deferred tax is accounted for using the balance sheet liability method, providing for temporary differences
between the carrying amounts of assets and liabilities for financial purposes and the amounts used for taxation
purposes. The amount of deferred tax provided is based on the expected manner of realisation or settlement of
the carrying amount of assets and liabilities, using tax rates enacted or substantively enacted at balance date.
A deferred tax asset is recognised only to the extent that it is probable that future taxable profits will beavailable against which the asset can be utilised. Deferred tax assets are reduced to the extent that it is no longer
probable that the related tax benefit will be realised.
r) Investment Revaluation Reserve
This reserve includes changes in fair value of FVOCI financial assets, net of tax. These changes are transferredto the profit and loss when the asset is derecognised or impaired.
s) Statement of Cash Flows
The Statement of Cash Flows is prepared inclusive of GST.
Cash flows arising from commercial paper, customer deposits to and withdrawals from deposit accounts,
acceptances, borrowings, repayments on loans and other receivables and acceptances of customers arepresented on a net basis.
Definitions of the terms used in the Statement of Cash Flows are:“Cash and cash equivalents” includes coins and notes, demand deposits and other highly liquid investments
readily convertible into cash. At balance date all cash is held in a bank account.
“Operating activities” include all transactions and other events that are not investing or financing activities.
“Investing activities” are those activities relating to the acquisition and disposal of current and non-current
investments and any other non-current assets.
“Financing activities” are those activities relating to changes in equity and debt capital structure of the company
and those activities relating to the cost of servicing the company’s equity capital.

30

MUFG Bank, Ltd.
Auckland BranchNotes to the Financial Statements
For the Year Ended 31 March 2024
3.

Risk Management Policies
The risk management policies and procedures of the Branch conform to those of the ultimate parent bank, MUFG
Bank, Ltd. (“the Parent Bank”).
The Branch's application of risk management systems is subject to review by the Parent Bank Internal Audit
Office on a regular basis.
a) Credit Risk
Credit risk is the risk of loss to the Branch arising from the failure of counterparty to repay principal and/orinterest under a commitment entered into with the Branch. Credit risk arises from the lending, treasury and tradefinance activities of the Branch. The Branch is subject to the same credit review process as the Sydney Branch.
The Parent Bank sets the Branch’s exposure limits to clients. The Branch has been granted a discretionary lending
limit by the Parent Bank. A borrower rating system is used to monitor the creditability of customers. The Parent
Bank assigns a borrower rating for each customer based on a credit review performed. This borrower rating will
be reviewed and updated at least annually in accordance with the customer’s credit information. The Parent
Bank’s borrower rating can be classified into four categories: Normal, Close Watch, Likely to Become Bankrupt,
Virtually Bankrupt and Bankrupt. The Parent Bank will make general provisions for customers whose borrower
rating are under ‘’Normal’’, and ‘’Close Watch’’ categories. The Parent bank will also instruct the Branch to
make specific provision for customers whose borrower ratings are under the “Likely to Become Bankrupt” and“(Virtually) Bankrupt” categories (also some “Close Watch”). In addition to complying with the Branch’s
internal guidelines, transactions with clients other than those based in Australia and New Zealand andtransactions above a certain credit limit require approval from the Parent Bank after local approval of the relevanttransaction.
The Branch’s overseas exposures are monitored closely and country exposure limits, based upon the controls
used by the Parent Bank, will be adopted where necessary.
The Branch’s exposures to financial institutions and corporates are controlled and monitored by the appropriate
credit division of the Parent Bank on a consolidated basis. The limits are reviewed and approved by the Branch
annually in consultation with the Parent Bank. Formal limits have been established for subsidiaries and branchesof the Parent Bank and are subject to annual review. Credit risk exposures are monitored on a daily basis andany irregularities are reported to the Regional Head for Oceania immediately as they are identified.
b) Foreign Currency Risk
Foreign currency risk is the risk of loss to the Branch arising from fluctuations in foreign exchange rates. Foreign
currency exposures and risks arise from the Branch undertaking foreign exchange transactions with customers
as well as from loans and deposits undertaken in foreign currencies. The Branch does not act as a price makerfor other institutions in the interbank foreign exchange market and does not take speculative trading positions inforeign exchange.
The currency risks arising from foreign exchange transactions with customers and from loans and deposits
undertaken in foreign currencies are immediately transferred to the Sydney Branch by entering into back to backforeign exchange transactions. These risks are managed within the Sydney Branch’s foreign exchange risk limits.
The Sydney Branch has a set of formal policies and limits governing transaction limits, daylight limits, overnight
position limits and foreign currency options portfolio limits. Overnight, currency option risk and forward limits
are set and monitored by the Parent Bank.

31

MUFG Bank, Ltd.
Auckland BranchNotes to the Financial Statements
For the Year Ended 31 March 2024
3.

Risk Management Policies (continued)c) Interest Rate Risk
Interest rate risk is the risk of loss to the Branch arising from movements in interest rates. The Branch's activities
in the following areas will expose it to interest rate risk: borrowing from and lending to customers and relatedparties; issuing securities such as commercial paper and medium term notes; trade finance transactions; investingin securities such as commercial paper, bank bills and government stock; and offering instruments such as FRAs
and swaps to customers. The Branch does not act as a price maker for other institutions in the interbank market
and does not take a speculative trading position in interest rate instruments.
Any long term interest rate risks of the Branch arising from the above activities are immediately transferred to
the Sydney Branch by entering into back to back transactions. Short term interest rate risk of the Branch will bemonitored and managed daily by the Sydney Branch. An interest rate position analysis is performed on a daily
basis. The risks are managed within the guidelines and limits set by the Parent Bank. The Oceania Region’s
Asset and Liability Management Committee comprising senior management meets monthly to monitor the
Branch’s interest rate and liquidity risk positions.
d) Traded Equity Risk
Traded equity risk is the risk of loss arising from adverse movements in the prices of traded equities. The Branchdoes not undertake any activities exposing it to traded equity risk.
e) Liquidity Risk
Liquidity risk is the risk that the Branch will not have sufficient funds to meet its financial obligations. The
Branch has policies to ensure that sufficient funds are available to meet its obligations as and when they fall due,and to maintain a prudent level of liquidity buffer to meet unexpected demands for funds under adverse market
conditions. To achieve this objective, the Branch adopts a set of liquidity management strategies which limits
the liquidity risk to acceptable levels. The compliance of such internal limits are being independently monitored
and regularly reported to the Regional Head for Oceania. A contingency plan has been developed in the event ofa major liquidity problem. The operations of the Branch are subject to these policies.
The Branch measures its liquidity requirements by undertaking scenario analysis under the following three
scenarios:
Going-concern – which refers to the normal behavior of cash flows in the ordinary course of business and would
form the day-to-day focus of the Branch’s liquidity management.
5 Day stress tests – which covers the behavior of cash flows where there is an immediate actual or perceived
problem with the Branch
Liquidity Coverage Ratio – a one month liquidity stress described in the APRA APS 210 standard
The Branch is committed to raising its liabilities from a wide range of institutional and corporate lenders. This
reduces dependence upon certain lenders and the possibility that a large portion of the deposit base will bewithdrawn with little notice. As part of its liquidity management policies, the Branch maintains a portfolio of
readily liquid assets and has established committed funding arrangements from other institutions. Liquidity is
managed by the Treasury Department of the Sydney Branch with oversight from the Oceania Region Asset andLiability Management Committee. Reports on liquidity are reviewed by the Regional Head for Oceania, sent to
the Parent Bank daily and presented to the Oceania Region Asset and Liability Management Committee monthly.

32

MUFG Bank, Ltd.
Auckland BranchNotes to the Financial Statements
For the Year Ended 31 March 2024
3.

Risk Management Policies (continued)
The Branch holds the following liquid assets in order to manage its liquidity risk:

Cash and cash equivalents
Amounts due from related parties
Amounts due from other financial institutions
Investment in debt instruments

As at
31 March 2024
NZD
72,826,571
101,056,300
885,119,167
508,409,810
1,567,411,848

As at
31 March 2023
NZD
227,592,289
693,432,476
601,550,899
475,341,441
1,997,917,105f) Commodity Risk
Commodity risk is the risk of loss arising from adverse movements in the prices of commodities. The Branchdoes not undertake any activities exposing it to commodity risk.
g) Operational Risk
Operational risk is defined as the risk of loss resulting from inadequate or failed internal processes, people andsystems or from external events. This definition includes legal risk but excludes credit, market, strategic andreputation risk. However the cultural nature of the Branch is such that reputational risk arising from operationalrisk events is considered within our operational risk management frameworks.
Oceania branch utilises the three lines of defence approach to the management of risk, with the business lines
accountable for the application of the Operational Risk framework, and the management of risks. The
dedicated second line function is accountable for the design of the Operational Risk Framework and provisionof assurance over the application.
The primary method the Branch uses to manage Operational Risk is by having a robust suite of controls. The
Branch also has operating procedures that have been established to conform to the Parent Bank’s guidelines.
Operational procedures are documented in procedural manuals for each department and approved variances
to these procedures are noted and tracked.
h) Climate Risk
Climate risk, or the risks driven by climate change, is also managed under the Policies and Procedures of the
Parent Bank. Climate risk is recognised by the MUFG Group as one of the top systemic risks faced by theGroup and impacts, amongst others; credit, operational, legal / compliance and reputational risks. The Policies
and Procedures pertaining to Climate Risk are driven by the MUFG Group Purpose: “Committed toempowering a brighter future” and the Carbon Neutrality Declaration to be carbon neutral by 2050. To achievethis, and ultimately manage the risks associated with climate change, the Group has 4 key strategies:-

Reducing emissions from own operations
Reducing emissions from our financed portfolio
Engagement and support with our clients
Risk management and governance

These strategies are overseen at Group level by a Sustainability Committee reporting directly to the MUFG
Group Executive Committee and are implemented throughout the MUFG Group and overseen at New Zealand
Branch level by the Oceania Executive Committee.

33

MUFG Bank, Ltd.
Auckland BranchNotes to the Financial Statements
For the Year Ended 31 March 2024
3.

Risk Management Policies (continued)i) Internal Audit Function
Audit teams from the Parent Bank conduct on-site audits of the Branch’s procedures including loans, treasury
and general office inspections on regular basis in accordance with the banks Internal Audit methodology.
These are based on the Branch’s risk profile under the Parent Bank risk based approach to scoping audits, andalso based on the local regulatory requirement. The result of all internal audits are reported to corporate
auditors who report to the Board of Directors under the Parent Bank’s corporation governance systems.
j) Self Inspection
Self Inspection (SI) from Sydney Branch provides a limited procedural assurance to the Branch. The locallyappointed Self Inspection Checker conducts the monthly tests and reports to the SI team in Sydney Planning
Department monthly. The matters raised by SI are discussed and actioned by the Branch as soon as practicable
but not later than a month after identification of any risks (non-compliance of policies and procedures and/or
any process gaps/weaknesses). All SI findings are reported monthly to local management and to the Parent
Bank on a quarterly basis.
k) Access to parental disclosures
The most recent publicly available information in relation to capital adequacy requirements or risk
management processes implemented by the ultimate holding company are disclosed under the ultimate holding
company’s annual report which can be accessed via the Bank’s global website: www.mufg.jp.

34

MUFG Bank, Ltd.
Auckland BranchNotes to the Financial Statements
For the Year Ended 31 March 2024
4.

Profit Before Income Tax Expense

Operating revenue(a) Interest income
Corporate loans and other accounts
Related parties(b) Fees and commissions income
Fees and commissions income(c) Gains less losses on financial instruments
Net gain on interest rate derivatives
Net gain on currency derivatives
Net gain/(loss) on foreign currency
Loss on sale of negotiable certificates of deposit bought

Total interest income derived from financial assets:
At amortised cost
Investment in debt instruments (FVOCI)
Total fee income derived from financial assets that are not at fair value
through profit or loss
Net unrealised gain/(loss) on financial assets/liabilities (FVTPL)Net realised gain on financial assets/liabilities (FVTPL)Other fee income
Loss on sale of negotiable certificates of deposit bought
Expenses(a) Interest expense
Deposits and other accounts
Related parties
Total interest expense was derived from financial liabilities:
At amortised cost(b) Other operating expense
Rental & lease costs
Depreciation
Furniture, fixtures and fittings
Office equipment
Right-of-use assets depreciation
Auditor’s remuneration (see note 9)
Audit fees
Salaries
Staff related costs
Net losses from the disposal of fixed assets
General administration and other operating expenses
Provision for credit impairment
Profit before income tax expense

Twelve Months ended
31 March 2024
NZD

Twelve Months ended
31 March 2023
NZD

395,390,228
68,667

239,921,074
501,195

395,458,895

240,422,269

27,845,716
27,845,716

29,839,248
29,839,248

2,519,832
1,289,259
255,188
4,064,279
427,368,890

941,225
1,337,913(193,141)(13,279)
2,072,718
272,334,235

381,391,174
14,067,721

233,196,913
7,225,356

27,629,830
3,687,617
376,662
215,886
427,368,890

29,813,408
1,736,171
349,826
25,840(13,279)
272,334,235

137,014,253
185,058,704
322,072,957

74,458,959
141,112,155
215,571,114

322,072,957
322,072,957

215,571,114
215,571,114

77,29971,32541,89451,457132,128

45,602
18,692129,000

246,500
4,161,677
57,221
16,742,531
5,056,738
26,567,445
78,728,488

201,713
3,846,680
50,74013,478,110
2,679,203
20,521,065
36,242,056

Total income excluding any net loss for twelve months ended 31 March 2024 is NZD 427,368,890 (twelve months ended 31 March 2023: NZD
272,347,514).

35

MUFG Bank, Ltd.
Auckland BranchNotes to the Financial Statements
For the Year Ended 31 March 2024
5.

Property, Plant and Equipment
As at
31 March 2024
NZD
Furniture, fixtures and fittings:
Cost as at 1 April
Additions
Disposals
Cost as at 31 March
Accumulated depreciation
Opening balance
Depreciation during the year
Disposals
Closing balance

Office equipment:
Cost as at 1 April
Additions
Disposals
Cost as at 31 March
Accumulated depreciation
Opening balance
Depreciation during the year
Disposals
Closing balance

Motor vehicles:
Cost as at 1 April
Additions
Disposals
Cost as at 31 March
Accumulated depreciation
Opening balance
Depreciation during the year
Disposals
Closing balance

As at
31 March 2023
NZD

315,173
315,173

315,173
315,173(87,904)(41,894)(129,798)
185,375(42,302)(45,602)(87,904)
227,269

1,128,341
124,234
1,252,575

1,122,412
5,929
1,128,341(1,085,270)(51,457)(1,136,727)
115,848(1,066,578)(18,692)(1,085,270)
43,071

38,091(38,091)-

38,091
38,091(38,091)
38,091-(38,091)(38,091)-36

MUFG Bank, Ltd.
Auckland BranchNotes to the Financial Statements
For the Year Ended 31 March 2024
6.

Income Tax
Income Tax recognised in profit and loss
As at
31 March 2024
NZD
Tax expense comprises:
Current tax expense
Adjustments recognised in the current year in relation to thecurrent tax of prior years
Deferred tax expense relating to the origination andreversal of temporary differences

As at
31 March 2023
NZD

18,699,798

7,245,507(612,072)(630,230)

18,087,726

6,615,277

The prima facie income tax benefit on pre-tax accounting profit from operation reconciles to the income tax benefit in thefinancial statement as follows:
Profit from operations

78,728,488

36,242,056

Income tax expense calculated at 28%

22,043,977

10,147,776

Effect of other assessable incomes
Effect of other deductible expenses
Effect of expenses that are not deductible in determining
taxable profit

842,801(4,377,380)

554,400(3,694,669)

190,400
18,699,798

238,000
7,245,507(612,072)
18,087,726(630,230)
6,615,277

Adjustment recognised in the current year in relation to thecurrent tax and deferred tax of prior years

37

MUFG Bank, Ltd.
Auckland BranchNotes to the Financial Statements
For the Year Ended 31 March 2024
6.

Income Tax (continued)
The prima facie income tax expense on pre-tax accounting other comprehensive income reconciles to the income tax expensein the financial statement as follows:
As at
As at
31 March 2024
31 March 2023
NZD
NZD
Profit from other comprehensive income

6,135,451(391,801)

Income tax expense calculated at 28%

1,717,926(109,704)

The Branch did not have any imputation credits as at the year ended 31 March 2024 (2023: Nil).
The Branch had no current tax asset at the year ended 31 March 2024 (2023: 2,368,980).
The branch had NZD 12,017,409 as current tax liability at the year ended 31 March 2024 (2023: Nil).
Deferred tax balance
Deferred tax assets arise from the following
31 March 2024
NZD
Openingbalance*

NZD
Charged tostatement ofcomprehensive
incomeNZD
Charged toothercomprehensive
incomeNZD
Changes intax rate

NZD
Closingbalance

Temporary differences
Provision for employee entitlement
Property, plant & equipment
Provision for ECL
Others43,55916,682
1,508,970
5,039
1,574,250(10,691)(451)
1,155,372
3,821
1,148,051--

32,86816,2312,664,342
8,860
2,722,301

31 March 2023
NZD
Openingbalance

NZD
Charged tostatement ofcomprehensive
incomeNZD
Charged toothercomprehensive
incomeNZD
Changes intax rate

NZD
Closingbalance

5,406(66,515)
680,548859
620,298--

Temporary differences
Provision for employee entitlement
Property, plant & equipment
Provision for ECL
Others38,153
83,197
828,4224,180
953,952

43,55916,682
1,508,970
5,039
1,574,250

All deferred tax on temporary difference is recognised in the profit and loss. Based on current forecast, it is expected
to crystallize in future to offset tax liabilities.

38

MUFG Bank, Ltd.
Auckland BranchNotes to the Financial Statements
For the Year Ended 31 March 20247.

Deposits
As at
31 March 2024
NZD

Retail deposit bearing interest
Retail deposit not bearing interest
Certificate deposit
Call deposit
Term deposit

8.

97,927,375
4,362,809
1,488,126,678
76,806,944
709,273,505
2,376,497,311

111,736,470
5,478,947
633,689,126
140,295,029
1,273,225,749
2,164,425,321

Total Liabilities of the Branch Net of Amounts Due to Related Parties
As at
31 March 2024
NZD

Total Liabilities
Less: total amounts due to related parties (Note: 14)
Total liabilities net of amounts due to related parties

9.

As at
31 March 2023
NZD

6,389,113,997(3,887,939,746)
2,501,174,251

As at
31 March 2023
NZD

6,547,928,595(4,238,328,502)
2,309,600,093

Remuneration of Auditor
During the period the following fees were paid or payable for services provided by the auditor of the Branch:Twelve Months
ended
31 March 2024
NZD
Assurance Services
Auditor of the Branch
Audit & review of the Branch’s Disclosure Statements
Other assurance services

Twelve Months
ended
31 March 2023
NZD

231,500
15,000201,713-

The auditor of the Branch is Deloitte Limited, Auckland.

39

MUFG Bank, Ltd.
Auckland BranchNotes to the Financial Statements
For the Year Ended 31 March 2024
10.

Provision for expected credit losses

The following table reconciles the 31 March 2024 provision for expected credit losses on loan, financial guarantee andcommitments based on the requirements of NZ IFRS 9.
Stage 1

Loan

Financialguarantee andcommitments
NZD

Total

31 March 2024

NZD

Provision for impairment charges as at 31 March 2023
Net transfers in / (out) of stages *New financial assets originatedFinancial assets derecognized during the period
Change in ECL due to net further lending / repayment
Change in ECL due to amounts written-off
Total provision for ECL as at 31 March 2024

5,389,178
3,943,115(1,918,889)
2,102,103
9,515,507

2,078,563
1,331,062(507,058)
106,405
3,008,972

7,467,741
5,274,177(2,425,947)
2,208,508
12,524,479

2,958,649
478,418(861,422)
2,813,533
5,389,178

1,829,889
281,542(920,936)
888,068
2,078,563

4,788,538
759,960(1,782,358)
3,701,601
7,467,741

NZD

31 March 2023
Provision for impairment charges as at 31 March 2022
Net transfers in / (out) of stages *New financial assets originatedFinancial assets derecognized during the period
Change in ECL due to net further lending / repayment
Change in ECL due to amounts written-off
Total provision for ECL as at 31 March 2023
* Represents the transfers between stages

The Branch does not have stage 2 and stage 3 collective provision, and individual provision during the period.
The provisions for ECL on loan, financial guarantee, and commitments disaggregated into types of credit exposures
have been disclosed in note 22.
The following table explains in gross carrying amounts of loan during the period have contributed to changes in theprovisions for expected credit losses on loans.

As at
31 March 2024
NZD
Total gross carrying amount at the beginning of the period
Net transfers in / (out) of stages *New financial assets originatedFinancial assets derecognized during the period
Net further lending / repayment
Amounts written-off
Total gross carrying amount
Provision for ECL
Total net carrying amount

4,675,364,024
2,131,388,404(1,765,486,371)
14,796,413
5,056,062,470(9,515,507)
5,046,546,963

As at
31 March 2023
NZD
4,227,601,534
2,087,318,564(1,680,216,717)
40,660,643
4,675,364,024(5,389,178)
4,669,974,846

40

MUFG Bank, Ltd.
Auckland BranchNotes to the Financial Statements
For the Year Ended 31 March 2024
11.

Other Liabilities
As at
31 March 2024
NZD

Provision for employee entitlements
Unearned income
Management fee charged by related parties
Provisions for ECL on financial guarantee andcommitment
Lease Liabilities
Others

12.

As at
31 March 2023
NZD

117,388
3,172,321
11,074,359

155,569
2,294,509
8,930,195

3,008,972
753,157
4,354,010
22,480,207

2,078,563
878,926
3,180,527
17,518,289

Commitments and Contingent Liabilities

Note

As at
31 March 2024
NZD

As at
31 March 2023
NZDa) Other commitments
Undrawn facility commitments

16

1,785,893,383

2,213,583,424

16
16
16

77,691,824
386,466,560
50,764,886
514,923,270

77,672,494
311,111,561
24,031,204
412,815,259b) Contingent liabilities
Guarantees given
Performance related contingencies
Trade related contingencies

The Branch provides guarantees in its normal course of business on behalf of its customers and there are threeprincipal types of guarantee:•

Guarantee given – a financial guarantee that is an agreement by which the Branch agrees to pay anamount of money on demand on behalf of a customer to a third party during the life of the guarantee;
and•Performance related contingencies – a guarantee given by the Branch that undertakes to pay a sum ofmoney to a third party where the customer fails to fulfill certain terms and conditions of a contract;and•Trade related contingencies – contingent liabilities arising from trade related obligations secured
against an underlying shipment of goods to make a payment to a third party if a counterparty fails to
fulfill a contractual non-monetary obligation.

The credit risk involved in issuing guarantees is essentially the same as that involved in extending loan
facilities to customers. Apart from the normal documentation for a facility of this type, the customer must also
provide the Branch with a written indemnity, undertaking that, in the event the Branch is called upon to pay,
the Branch will be fully reimbursed by the customer.
The Branch has no financial assets that have been pledged as collateral for liabilities or contingent liabilities.
The Branch has no short term lease contracts entered into as at 31 March 2024 (2023: Nil).

41

MUFG Bank, Ltd.
Auckland BranchNotes to the Financial Statements
For the Year Ended 31 March 2024
13.

Key Management Personnel Compensation
The compensation of the executives, being the key management personnel of the Branch, is set out below:

Short term benefits

Twelve Months ended
31 March 2024
NZD

Twelve Month ended
31 March 2023
NZD

1,386,360
1,386,360

1,059,592
1,059,592--

Loan Disclosure
Loan Outstanding
Interest charged

Key management personnel are those persons having authority and responsibility for planning, directing andcontrolling the activities of the Branch.

14.

Related Party Disclosures
The Auckland Branch is a branch of an overseas company, MUFG Bank, Ltd., which is incorporated in Japanand is the ultimate parent bank.
Related party transactions are unsecured and entered into in the normal course of business. During the period
there have been dealings between Auckland Branch, other overseas Branches and Head Office. Amounts duefrom related parties is related to the settlement account which is due on demand and term loans which are duein accordance with an agreed date. Amounts due to related parties are mainly term deposits which are due inaccordance with an agreed date. The maturity analysis for these balances are presented in Note 19. The interest
rate risk analysis for these balances are presented in Note 18. No related party debts have been written off,
forgiven or calculated ECL during the reporting period.
Derivative instruments with related parties are used to manage interest rate and currency exposures and include
foreign exchange forwards, interest rate swaps, currency swaps, and currency options.

a) Balances
AssetsAmounts due from related parties
Derivative instruments
OthersLiabilities
Amounts due to related parties
Derivative instruments
Other
EquityHead Office capital
Off Balance Sheet
Guarantees given
Performance related contingencies

Twelve Months
ended
31 March 2024
NZD

Twelve Months
ended
31 March 2023
NZD

101,056,300
97,793,122
9,578
198,859,000

693,432,476
131,746,972
8,969
825,188,417

3,831,683,699
45,085,380
11,170,667
3,887,939,746

4,174,133,335
55,262,481
8,932,686
4,238,328,502

83,000,000

83,000,000

5,683,941
1,950,000
7,633,941

5,683,941
1,150,000
6,833,941

42

MUFG Bank, Ltd.
Auckland BranchNotes to the Financial Statements
For the Year Ended 31 March 2024
14.

Related Party Disclosures (continued)b) Transactions
Interest income
Interest expense
Net profit from derivative instruments
Fees and commissions income
Management fee expense

As at
31 March 2024
NZD

As at
31 March 2023
NZD

68,667
185,058,704
12,972,376
2,366
10,884,973

501,195
141,112,155
45,613,890
3,419
9,292,967

The Branch’s Head Office capital comprises funds provided by the overseas bank to support the Branch’s
daily operation and to fulfill local thin capitalisation requirement. It is non-interest bearing and there is no
fixed date for repatriation. The capital of the registered bank is managed by the overseas bank. The Branchdoes not separately manage capital other than for the purpose of the Reserve Bank of New Zealand’s
requirements as disclosed in Note 23 and Note 24.
Other transactions like sundry administrative charges are not material to the results and are therefore notdisclosed separately.

15.

Derivative Financial Instruments
The Branch uses derivatives to manage its financial position and to service the needs of its clients. Suchderivative financial instruments include swaps, and forwards based on interest rates and exchange rates. The
following table summarises the notional amounts and fair value by maturity date of the Branch’s derivatives
at 31 March 2024.
The notional principal amounts below represent the face value of the transaction.
As at
31 March 2024
NZD

As at
31 March 2023
NZD

2,052,192,048
508,098,807
44,295,738
53,525,271
77,780,240
2,735,892,104

1,301,658,977
79,598,292
19,954,268
60,200,269
1,885,903
1,463,297,709(7,569)(1,262)
1,628
2,556
(284)
(4,931)(25,847)(18,211)(2,444)(4,185)(113)(50,800)

Foreign Exchange Contracts
Spot and forward contracts:
Notional principal amount < 1 year
Notional principal amount 1 to 2 years
Notional principal amount 2 to 3 years
Notional principal amount 4 to 5 years
Notional principal amount more than 5 years
Total notional principal

Fair value < 1 year
Fair value 1 to 2 years
Fair value 2 to 3 years
Fair value 4 to 5 years
Fair value more than 5 years
Total fair value

43

MUFG Bank, Ltd.
Auckland BranchNotes to the Financial Statements
For the Year Ended 31 March 2024
15.

Derivative Financial Instruments (continued)
As at
31 March 2024
NZD

As at
31 March 2023
NZD

Interest Rate Swap Contracts
Notional principal amount < 1 year
Notional principal amount 1 to 2 years
Notional principal amount 2 to 3 years
Notional principal amount 3 to 4 years
Notional principal amount 4 to 5 years
Notional principal amount more than 5 years
Total notional principal

Fair value < 1 year
Fair value 1 to 2 years
Fair value 2 to 3 years
Fair value 3 to 4 years
Fair value 4 to 5 years
Fair value more than 5 years
Total fair value

1,278,267,261
1,061,977,146
867,016,557
434,405,092
505,597,192
430,798,152
4,578,061,400

1,321,407,623
1,352,640,116
1,035,392,915
821,016,896
209,238,880
350,000,000
5,089,696,430

10,391
26,73916,81279,609210,780
717,939
1,062,270(20,769)(77,385)(141,680)(527,218)(12,875)(512,541)(1,292,468)

249,940,861
135,605,117
187,302,093
604,267,451
1,177,115,522

165,195,316
247,707,202
132,253,455
772,912,108
1,318,068,081(5,191)
7,471
17,344(559,305)(539,681)(3,680)(177,442)(24,315)(1,621,253)(1,826,690)

Currency Swap Contracts
Notional principal amount < 1 year
Notional principal amount 1 to 2 years
Notional principal amount 2 to 3 years
Notional principal amount 3 to 4 years
Notional principal amount 4 to 5 years
Notional principal amount more than 5 years
Total notional principal

Fair value < 1 year
Fair value 1 to 2 years
Fair value 2 to 3 years
Fair value 3 to 4 years
Fair value 4 to 5 years
Fair value more than 5 years
Total fair value

44

MUFG Bank, Ltd.
Auckland BranchNotes to the Financial Statements
For the Year Ended 31 March 2024
16.

Concentration of Credit Risk
Credit risk is the risk of loss to the Branch arising from the failure of a counterparty to repay principal and/orinterest under a commitment entered into with the Branch. Credit risk arises from the lending, treasury andtrade finance activities of the Branch. Credit risk also arises from the possibility that the counterparty to a
derivative financial instrument will not adhere to the terms of the contract with the Branch when settlement
becomes due.
Corporate loans originated by the Bank are secured partially by following collateral/credit enhancements:
i.
ii.
iii.

financial guarantee by either third parties or customer’s parent company
deposit assignment
asset assignment such as aircraft

Concentration of credit risk is determined by management to be by industry sector, geographical location andcustomer credit rating. Industry sectors are determined by reference to the categories in the RBNZ Bank
Balance Sheet Survey. The geographical locations reflect the primary location of the underlying borrower.
The following table details the Branch’s maximum credit risk exposure without taking account of any
collateral/credit enhancement held in respect of recognised financial assets and derivative financial
instruments as at the reporting date.

As at
31 March 2024
NZD

As at
31 March 2023
NZD

On Balance Sheet
Cash and short term liquid assets
Amounts due from related parties
Amounts due from other financial institutions
Investment in debt instruments
Corporate loans originated by the Bank*
Acceptance of customers
Other assets
Total

72,826,571
101,056,300
885,119,167
508,409,810
5,056,062,470
3,699,354
5,560,427
6,632,734,099

227,592,289
693,432,476
601,550,899
475,341,441
4,675,364,024
3,492,413
2,399,067
6,679,172,609

Off Balance Sheet (Note 12)
Guarantees given
Performance related contingencies
Trade related contingencies
Undrawn facility commitments
Total

77,691,824
386,466,560
50,764,886
1,785,893,383
2,300,816,653

77,672,494
311,111,561
24,031,204
2,213,583,424
2,626,398,683

143,253,675

185,189,279

Notional principal

Fair value
Derivative Instruments* Total gross loans, excluding provision (note 10).

45

MUFG Bank, Ltd.
Auckland BranchNotes to the Financial Statements
For the Year Ended 31 March 2024
16.

Concentration of Credit Risk (continued)i.

Concentration of Credit Risk by Customers Industry Sector

On Balance Sheet
Automobiles
Construction
EnergyFood and Beverage
Finance
Health Care
Materials, Metals, & Mining
OthersProfessional Services
Real Estate
Telecommunication
Utilities
Trading
Transport
Total

As at
31 March 2024
NZD

As at
31 March 2023
NZD

121,730,745
339,196,946
233,317,994
877,898,422
2,461,354,961
266,113,358
240,884,564
92,795,456
219,005,681
182,283,531
446,370,886
634,801,709
275,818,776
241,161,070
6,632,734,099

142,239,186
242,274,469
235,747,795
780,377,238
2,673,715,710
305,489,916
316,793,447
161,637,985
254,695,860
259,328,877
237,205,081
621,121,513
230,411,852
218,133,680
6,679,172,609

Notional principal
Off Balance Sheet
Automobiles
Construction
Finance
Food and Beverage
Health Care
Materials, Metals, & Mining
OthersProfessional Services
Real Estate
Telecommunication
Trading
Transport and Distributors
Utilities
Total

82,662,648
57,832,170
294,061,309
382,629,863
39,687,781
82,190,509
92,000,000
62,303,352
36,000,000
108,254,081
35,000,000
201,566,667
826,628,273
2,300,816,653

35,577,570
40,532,904
276,067,660
528,610,533
41,630,157
51,283,365
45,575,791
57,500,000
140,894,709
229,548,466
331,534,906
847,642,622
2,626,398,683

46

MUFG Bank, Ltd.
Auckland BranchNotes to the Financial Statements
For the Year Ended 31 March 2024
16.

Concentration of Credit Risk (continued)
As at
31 March 2024
NZD

As at
31 March 2024
NZD

507,276
8,575
1,043,579
99,268,221
6,970,815
814,639
203,001
2,133,711
4,786,372
303,647
1,869,093
25,344,746
143,253,675

400,415
57,2902,377,541
131,812,505
3,260,138
313,958
157,2112,698,865
7,881,957
118,581
2,187,922
33,922,896
185,189,279

Fair value
Derivative Instrument
Automobiles
Construction
EnergyFinance
Food and Beverage
Health Care
Materials, Metals, & Mining
OthersTelecommunication
Trading
Transport and Distributors
Utilities
Total

ii.

Concentration of Credit Risk by Customers Geographic Location
As at
31 March 2024
NZD

As at
31 March 2023
NZD

On Balance Sheet
New ZealandJapan
Australia
United States of America
Malaysia
Other
China
Total

6,159,091,482
101,065,878
330,060,749
37,847,724
4,668,266
6,632,734,099

5,305,868,095
703,832,989
551,232,932
105,173,861
1,798
13,062,934
6,679,172,609

Off Balance Sheet
New ZealandJapan
Australia
Other
Total

2,208,381,576
7,633,941
46,566,667
38,234,469
2,300,816,653

2,596,357,015
6,833,941
14,800,000
8,407,727
2,626,398,683

45,167,344
97,793,121
293,210
143,253,675

53,395,310
131,748,485
45,484
185,189,279

Notional principal

Fair value
Derivative Instrument
New ZealandJapan
Australia
Total

iii.

Concentration of Credit Risk by Customer Credit Rating

The following tables set out credit quality information for balances which are neither past due nor impaired.
The credit rating numbers are the Banking Group’s internal borrower ratings which are mapped to S&P ratingsin accordance with the credit quality of customers for financial assets and derivative financial instruments.
Please refer to Note 22 for impaired assets.
47

MUFG Bank, Ltd.
Auckland BranchNotes to the Financial Statements
For the Year Ended 31 March 2024
16.

Concentration of Credit Risk (continued)

31 March 2024
Notional principal
Credit Rating

S&P Rating

1-2
3-7
8-9
Not rated*

A- and above
B- to BBB+
CCC+/-

On balance Sheet

Off balance Sheet

2,502,922,681
4,000,587,478
28,158,062
101,065,878
6,632,734,099

Derivative financial
instruments

475,727,367
1,815,655,345
1,800,000
7,633,941
2,300,816,653

5,523,290
39,780,610
156,654
97,793,121
143,253,675

31 March 2023
Notional principal
Credit Rating

S&P Rating

1-2
3-7
8-9
Not rated*

A- and above
B- to BBB+
CCC+/-

On balance Sheet
2,106,382,981
3,879,348,183
693,441,445
6,679,172,609

Off balance Sheet

Derivative financial
instruments

1,039,224,220
1,580,340,522
6,833,941
2,626,398,683

9,700,981
43,739,813
1,513
131,746,972
185,189,279* The ‘not rated’ exposure is related to inter-branch exposure.

There is no period end aggregate exposure equal to or exceeding 10% of the global equity of the Overseas
Banking Group.
Collateral and other credit enhancements
The general nature and amount of collateral or other credit enhancements taken to mitigate the credit risk ofeach financial asset class are summarized as follows:a.

Cash and short term liquid assets
These exposures are mainly to relatively low risk banks (rate A+, AA- or better).
These balances are not collateralized.

b.

Amounts due from related parties
These exposures are generally considered to be low risk due to the nature of the counterparties. There are
typically no collateral or other credit enhancements obtained in respect of amounts due from relatedparties.

c.

Amounts due from other financial institutions
The balance is short term deposit to other financial institutions. Collateral is not generally sought on thesebalances as exposures are considered to be of low risk.

d.

Investment in debt instruments
These exposures are with the New Zealand government. Collateral is not sought directly with respect tothese exposures.

48

MUFG Bank, Ltd.
Auckland BranchNotes to the Financial Statements
For the Year Ended 31 March 2024
16.

Concentration of Credit Risk (continued)e.

Derivative instruments
The Branch is exposed to credit risk on derivative contracts, which arises as a result of counterparty credit
risk. This credit risk from derivatives is mitigated where possible through master netting agreements
whereby derivative assets and liabilities with the same counterparty can be offset. A master netting
agreement provides the contractual framework within which dealing activities across a range of over-thecounter products are conducted and contractually binds both parties to apply close-out netting across all
outstanding transactions covered by an agreement if either party defaults or other predetermined eventsoccur. There have been no amounts set off in the statement of financial position for derivative assets andderivative liabilities as at 31 March 2024 (2023: Nil).
Financial assets subject to offsetting, enforceable master netting arrangements and similar agreements:
As at 31 March 2024
NZD
Gross amounts ofrecognised financial
assets (a)Derivatives

Gross amounts of
Net amounts of financial
recognised financial
assets presented in theliabilities set off in thestatement of financial
statement of financial
position (c) = (a) – (b)position (b)143,253,675

Related amounts
not setoff in thestatement offinancial position(d)

Net amount(e) = (c) – (d)-143,253,675

17,945,296

125,308,379

Gross amounts ofrecognised financial
liabilities set off in thestatement of financial
position (b)-Net amounts of financial
assets presented in thestatement of financial
position (c) = (a) – (b)Related amounts
not setoff in thestatement offinancial position(d)
19,971,768

Net amount(e) = (c) – (d)As at 31 March 2023

NZD
Gross amounts ofrecognised financial
assets (a)Derivatives

185,189,279

185,189,279

165,217,511

Financial liabilities subject to offsetting, enforceable master netting arrangements and similar agreements:
As at 31 March 2024
NZD
Gross amounts ofrecognised financial
liabilities (a)Derivatives

142,736,017

Gross amounts ofrecognised financial
assets set off in thestatement of financial
position (b)-Net amounts of financial
liabilities presented in thestatement of financial
position (c) = (a) – (b)Gross amounts ofrecognised financial
assets set off in thestatement of financial
position (b)-Net amounts of financial
liabilities presented in thestatement of financial
position (c) = (a) – (b)142,736,017

Related amounts
not setoff in thestatement offinancial position(d)
17,945,296

Net amount(e) = (c) – (d)Related amounts
not setoff in thestatement offinancial position(d)
19,971,765

Net amount(e) = (c) – (d)124,790,721

As at 31 March 2023
NZD
Gross amounts ofrecognised financial
liabilities (a)Derivatives

188,359,237

188,359,237

There has been no collateral obtained against derivative assets for the year end 31 March 2024
(Mar 2023: Nil).
f.

Acceptance of Customer and Other Assets
Collateral is generally not sought on these balances.

49

MUFG Bank, Ltd.
Auckland Branch

168,387,472

Notes to the Financial Statements
For the Year Ended 31 March 2024
16.

Concentration of Credit Risk (continued)g.

Corporate loans originated by the Bank
The Branch assesses the integrity and ability of counterparties to meet their contracted financial obligation
for repayment. Principal collateral types for corporate loan include:
i.
ii.
iii.

Cash (usually in the form of a charge over a deposit)
Guarantee received from third parties
Charges over business assets such as real estate, aircraft and ships

In other instances, a client’s facilities may be secured by collateral with value less than the carrying amountof the credit exposure. These facilities are deemed secured, partially secured or unsecured.
The Branch lending is generally to large corporate counterparties of strong financial standing, the majorityof which borrow on unsecured terms. If there is collateral received during loan drawdown, the value of thecollateral will be checked against the agreement to ensure that it is either equal to or over the agreed value.
The total collateral value as at 31 March 2024 is over NZD 1,052,850,583 (2023: NZD1,160,613,635)
which is based on guarantees received from third parties and market value of business assets.
On Balance Sheet

As at
31 March 2024

As at
31 March 2023

Maximum Exposure

NZD
6,632,734,099%
100.00NZD
6,679,172,609%
100.00Collateral classification
SecuredPartially secured
Unsecured

898,942,700
5,733,791,399

13.55
0.00
86.45

938,000,214
29,797,689
5,711,374,706

14.04
0.45
85.51

h.

Undrawn facility commitments and contingent liabilities
The Branch applies the same principle for off balance sheet risk as it does for its on balance sheet risks.
In the case of undrawn facility commitments, counterparties will be subject to the same principle ascorporate loans and collateral may be sought depending on the strength of the counterparty and the natureof the transaction.

Off Balance Sheet

As at
31 March 2024

As at
31 March 2023

Maximum Exposure

NZD
2,300,816,653%
100.00NZD
2,626,398,683%
100.00Collateral classification
SecuredPartially secured
Unsecured

153,907,883
2,140,908,770

6.69
93.31

203,888,553
2,422,510,130

7.76
92.24

50

MUFG Bank, Ltd.
Auckland BranchNotes to the Financial Statements
For the Year Ended 31 March 2024
17.

Concentration of Funding
As at
31 March 2024
NZD

As at
31 March 2023
NZDa) Category analysis
Customer deposits
Due to related parties

2,376,497,311
3,831,683,699
6,208,181,010

2,164,425,321
4,174,133,335
6,338,558,656

3,857,493
111,457,276
2,698,953
5,361,870,920
22,263,772
9,375
4,002,946
30,162,214
87,588,249
18,101,459
80,204,059
37,346405,234,784
65,337,610
15,354,554
6,208,181,010

2,940,152
40,890,329
5,208,349
21,089,893
5,243,918,633
26,163,688
8,137
6,616,126
34,098,785
114,475,236
7,526,696
20,108,248
153,659,465
76,461
508,507,469
134,951,332
18,319,657
6,338,558,656

2,855,724,412
2,243,169,534
913,010,025
73,424,294
24,485,428
98,367,317
6,208,181,010

3,064,555,751
2,096,885,715
1,140,259,560
3,103,651
33,753,979
6,338,558,656b) Industry analysis
Agriculture
Communications
Constructions
Electricity, gas and water
Finance
Food manufacturing
Fishing
Forestry
Insurance
Other industries
Other manufacturing
Property and business services
Public administration and safety
Retail trade
Transport and storage
Wholesale trading
Wood and paper manufacturingc) Geographical analysis
Australia
New ZealandJapan
Singapore
Fiji
Belgium

18.

Interest Rate Risk
Interest rate risk is the risk of loss to the Branch arising from movements in interest rates thereby having anadverse effect on the net interest earnings of the Branch in the current reporting period and in future years.
The following table represents the interest rate sensitivity gap of the Branch as at the reporting date. It analyses
the Branch’s assets and liabilities in relevant maturity groupings based on the earlier of residual contractual
maturity or interest repricing date. One of the major causes of the mismatches is timing differences in therepricing of the assets and liabilities. These mismatches are managed by the Sydney Branch as part of theoverall risk management process conducted in accordance with strict policy guidelines.

51

MUFG Bank, Ltd.
Auckland BranchNotes to the Financial Statements
For the Year Ended 31 March 2024
18.

Interest Rate Risk (continued)

31 March 2024

Up to 3 months
NZD

Over 3 months
and up to 6
monthsNZDOver 6 months
and up to 1 year
NZD

Over 1 year and
up to 2 years
NZD

NON INTERESTSENSITIVE
NZDOver 2 years
NZD

TOTAL
NZD

WEIGHT
ED AVE.
EFF.
RATE
%

ASSETSCash and short term liquid assets
Amounts due from related parties
Amounts due from other financial
institutions
Investment in debt instruments
Corporate loans originated by theBank
Due from customers on acceptance
Property, Plant and Equipment
Other assets
Total assets

72,826,571
-

-

-

-

-

101,056,300

72,826,571
101,056,300

5.00%
0.00%

885,113,923
324,742,528--

128,497,690

55,169,592

5,244
-

885,119,167
508,409,810

5.59%
5.30%

4,844,290,161
6,126,973,183

191,372,095
191,372,095

10,651,182
10,651,182

9,749,032
138,246,722

55,169,592(9,515,507)
3,699,354
1,029,907
151,652,905
247,928,203

5,046,546,963
3,699,354
1,029,907
151,652,905
6,770,340,977

6.89%

3,354,371,165
1,987,480,414
32,4905,341,884,069

417,682,815
384,654,088
33,427802,370,330

67,501
67,501

139,019
139,019

480,720
480,720

59,629,719
4,362,809
3,699,354
176,480,476
244,172,358

3,831,683,699
2,376,497,311
753,157
3,699,354
176,480,476
6,389,113,997

5.67%
5.80%
2.61%

LIABILITIESAmounts due to related parties
Deposits
Lease liability
Liability for acceptance
Other liabilities
Total liabilities

31 March 2023

Up to 3 months
NZD

Over 3 months
and up to 6
monthsNZDOver 6 months
and up to 1 year
NZD

Over 1 year and
up to 2 years
NZD

NON INTERESTSENSITIVE
NZDOver 2 years
NZD

TOTAL
NZD

WEIGHT
ED AVE.
EFF.
RATE
%

ASSETSCash and short term liquid assets
Amounts due from related parties
Amounts due from other financial
institutions
Investment in debt instruments
Corporate loans originated by theBank
Due from customers on acceptance
Property, Plant and Equipment
Other assets
Total assets

227,592,289
-

-

-

-

-

693,432,476

227,592,289
693,432,476

0.00%
0.00%

601,550,899
307,449,421--

167,892,020--

601,550,899
475,341,441

4.85%
2.09%

4,585,925,184
5,722,517,793

55,212,203
55,212,203

21,552,344
21,552,344

12,674,293
180,566,313-(5,389,178)
3,492,413
1,131,152
191,581,772
884,248,635

4,669,974,846
3,492,413
1,131,152
191,581,772
6,864,097,288

6.13%

4,154,020,818
1,912,628,807
30,612
6,066,680,237

20,011,534
243,768,679
31,516
263,811,729

2,548,888
63,641
2,612,529

133,418
133,418

619,739619,739

100,983
5,478,947
3,492,413
204,998,600
214,070,943

4,174,133,335
2,164,425,321
878,926
3,492,413
204,998,600
6,547,928,595

5.24%
5.00%
2.61%

LIABILITIESAmounts due to related parties
Deposits
Lease liability
Liability for acceptance
Other liabilities
Total liabilities

At 31 March 2024, assuming that all other variables held constant, if interest rates had been 50 basis points higher,
post-tax profit for the year would have been NZD 1.7 million lower (2023: NZD 3.1M lower) due to decrease in net
interest income. It is due to the increase in funding close by using shorter term of funding to longer term of lending. If
interest rate had been 50 basis points lower with all the variables held constant, post-tax profit would have been NZD
1.7 million higher (2023: NZD 3.1M higher) due to increase in net interest income as a result of the funding gap. The
impact of interest rate movement on pre-tax profit is immaterial due to the back to back transactions with Sydney
Branch to minimize any long term interest rate risk (Note 3(c)). The sensitivity is similar in 2023 and 2022 because asimilar funding structure was applied in 2024 and 2023.

52

MUFG Bank, Ltd.
Auckland BranchNotes to the Financial Statements
For the Year Ended 31 March 2024
19.

Maturity Analysis for Assets and Liabilities

The tables below analyse the Branch’s financial assets and liabilities, as required by NZ IFRS 7 “Financial Instruments:
Disclosures”, in relevant maturity groupings based on the remaining period at the reporting date to the contractual
maturity date. The tables have been drawn up based on the undiscounted cash flows of financial assets and liabilities
based on the earliest date on which the obligation is crystallised. There is no expectation that the principal or interest
will be repaid or received earlier than the obligation. The table includes both interest and principal cash flows.
Therefore, they may differ to the carrying amounts on the statement of financial position.
31 March 2024

ASSETSCash and short term liquid assets
Amounts due from related parties
Amounts due from other financial
institutions
Investment in debt instruments
Corporate loans originated by theBank
Acceptance of customers
Derivative instruments
Other assets
Total assets
LIABILITIESAmounts due to related parties
Deposits
Acceptance
Other Liabilities
Derivative instruments
Lease liability
Gross loan commitment
Guarantees given
Performance related contingencies
Trade related contingencies
Total liabilities

1 to 3Months
NZD

3 to 12Months
NZD

1 to
5 Years
NZD

Over 5Years
NZD

On Demand
NZD

To 1 Month
NZD

Total
NZD

72,826,571
101,056,300

-

-

-

-

-

72,826,571
101,056,300

487,809,222-

85,000,000
1,787,500

315,000,000
326,965,002

1,937,500

192,237,500-

887,809,222
522,927,502

10,611,291
672,303,384

814,211,608
3,364,127
11,106,203
5,560,427
921,029,865

241,009,145
335,227
19,472,822
902,782,196

1,121,173,255
77,066,176
1,200,176,931

3,450,688,278
211,087,360
3,854,013,138

37,798,855
58,669,443
96,468,298

5,675,492,432
3,699,354
377,402,004
5,560,427
7,646,773,812

59,629,649
179,097,129
117,388
1,785,893,383
2,024,737,549

2,050,868,799
373,057,467
3,364,127
329,630
11,078,147
10,686
5,284,077
276,300,414
2,720,293,347

620,864,886
903,170,335
335,227
96,30819,442,290
21,80438,892,599
29,149,122
1,611,972,571

759,598,033
664,159,199
14,820,041
76,888,949
100,928
57,538,020
49,345,110
21,615,764
1,644,066,044

432,469,151
331,501,606
210,269,456
592,609
14,399,864
21,928,437
1,011,161,123

20,00058,167,336
27,130469,863
58,684,329

3,923,430,518
2,450,985,736
3,699,354
15,383,367
375,846,178
753,157
1,785,893,383
77,691,824
386,466,560
50,764,886
9,070,914,963

On Demand
NZD

To 1 Month
NZD

1 to 3Months
NZD

3 to 12Months
NZD

1 to
5 Years
NZD

Over 5
Years
NZD

Total
NZD

227,592,289
693,432,476

-

-

-

-

-

227,592,289
693,432,476

31 March 2023

ASSETSCash and short term liquid assets
Amounts due from related parties
Amounts due from other financial
institutions
Investment in debt instruments
Corporate loans originated by theBank
Acceptance of customers
Derivative instruments
Other assets
Total assets-

200,000,000
308,250,000

405,000,000
440,000

440,000

176,440,000-

605,000,000
485,570,000

148,019,231
1,069,043,996

176,360,547
14,604,573
2,399,067
701,614,187

216,038,867
3,492,413
23,822,522
648,793,802

921,515,743
80,167,994
1,002,123,737

3,794,691,518
201,891,556
4,173,023,074

20,076,063
90,953,005
111,029,068

5,276,701,969
3,492,413
411,439,650
2,399,067
7,705,627,864

LIABILITIESAmounts due to related parties
Deposits
Acceptance
Other Liabilities
Derivative instruments
Lease liability
Gross loan commitment
Guarantees given
Performance related contingencies
Trade related contingencies
Total liabilities

94,279257,510,446
155,569
2,213,583,424
2,471,343,718

1,800,070,010
697,765,973
3,148,305
14,559,668
10,065
102,606,121
2,618,160,142

1,268,730,399
721,046,432
3,492,413
2,491
23,801,016
20,547
156,923,935
24,031,204
2,198,048,437

637,222,010
261,349,883
8,930,195
80,132,344
95,15642,653,690
29,013,776
1,059,397,054

548,262,411
260,124,863
201,802,316
566,465
34,548,941
22,567,729
1,067,872,725

20,00090,952,993
186,693
469,863
91,629,549

4,254,379,109
2,197,797,597
3,492,413
12,256,560
411,248,337
878,926
2,213,583,424
77,672,494
311,111,561
24,031,204
9,506,451,625

53

MUFG Bank, Ltd.
Auckland BranchNotes to the Financial Statements
For the Year Ended 31 March 2024
19.

Maturity Analysis for Assets and Liabilities (Continued)

The balances in the table above will not necessarily agree to the amounts presented on the face of the statement offinancial position as the amounts in the table incorporate cash flows on an undiscounted basis and include both principal
and associated future interest payments, and in respect of derivatives:••

Interest rate swaps are settled net and therefore the net cash flows (before discounting) are included in theliquidity table above; andForeign exchange contracts are settled gross and therefore the gross cash flows (before discounting) are
included in the liquidity table above.

As disclosed in note 3, although the bank has liquid assets over various different terms, the Branch can draw down on
these liquid assets before the expected maturity as needed. The Branch has loan commitments which are on demand,
the Branch has historically managed loan commitments as required based on the available liquid assets.

20.

Fair Value of Financial Instruments

Quoted market prices, where available, are used to estimate the fair value of financial instruments. However, quoted
market prices are not available for a substantial portion of financial instruments and fair value for such financial
instruments is estimated using discounted cash flow models that utilise prices from observable current market
transactions or other valuation techniques. The summary table shows the carrying amounts and estimated fair valuesof financial instruments as at the reporting date. The methodologies and assumptions used to estimate the fair value ofthe financial instruments are:a.

For those assets or liabilities that are short term in nature, the related carrying value is equivalent to their fairvalue.

b.

For floating rate loans and deposits, the carrying amount in the statement of financial position is considered areasonable estimate of their fair value after making allowances for impairment. For fixed rate loans and deposits,
fair value is estimated using discounted cash flow models based on current market rates. The differences between
estimated fair value of loans and deposits and carrying value reflect the difference between observable market
interest rates and customer rates on day one and changes in interest rates since the loans’ and deposits’ origination.

c.

The fair values of derivative instruments are calculated using the discounted cash flow model. Swap transactions
are measured at the present value of future cash flows estimated and discounted based on the applicable yield
curves derived from observable foreign exchange and interest rates. Foreign currency forward contracts aremeasured using observable forward exchange rates.

d.

The fair values of investment in debt instruments are derived from quoted prices in the active market.

54

MUFG Bank, Ltd.
Auckland BranchNotes to the Financial Statements
For the Year Ended 31 March 2024
20.

Fair Value of Financial Instruments (continued)

31 March 2024
Note

FVTPL

FVOCI

NZD
AssetsCash and cash equivalents
Amounts due from related parties
Amounts due from other financial
institutions
Investment in debt instruments
Corporate loans originated by the
Bank
Other assets
Total financial assets
Liabilities
Amounts due to related parties
Deposits
Other liabilities
Total financial liabilities

a
a
a

NZD

Amortised
Cost

Total
Carrying
AmountFair Value

NZD

NZD

NZD

-

-

72,826,571
101,056,300

72,826,571
101,056,300

72,826,571
101,056,300-

508,409,810

885,119,167-

885,119,167
508,409,810

885,119,167
508,409,810bc, a143,253,675
143,253,675

508,409,810

5,046,546,963
9,259,781
6,114,808,782

5,046,546,963
152,513,456
6,766,472,267

5,051,144,338
152,513,456
6,771,069,642

b
a, b
c, a

142,736,017
142,736,017-

3,831,683,699
2,376,497,311
31,853,286
6,240,034,296

3,831,683,699
2,376,497,311
174,589,303
6,382,770,313

3,846,591,384
2,396,741,592
174,589,303
6,417,922,279

Note

FVTPL

FVOCI

NZD

NZD

Amortised
Cost
NZD

Total
Carrying
AmountNZDFair ValueNZDd31 March 2023

AssetsCash and cash equivalents
Amounts due from related parties
Amounts due from other financial
institutions
Investment in debt instruments
Corporate loans originated by the
Bank
Other assets
Total financial assets
Liabilities
Amounts due to related parties
Deposits
Other liabilities
Total financial liabilities

a
a

-

-

227,592,289
693,432,476

227,592,289
693,432,476

227,592,289
693,432,476

ad-

475,341,441

601,550,899-

601,550,899
475,341,441

601,550,899
475,341,441

bc, a

185,189,279
185,189,279

475,341,441

4,669,974,846
5,891,480
6,198,441,990

4,669,974,846
191,080,759
6,858,972,710

4,669,648,922
191,080,759
6,858,646,786

b
a, b
c, a

188,359,237
188,359,237-

4,174,133,335
2,164,425,321
16,627,898
6,355,186,554

4,174,133,335
2,164,425,321
204,987,135
6,543,545,791

4,181,414,926
2,167,694,649
204,987,135
6,554,096,710

55

MUFG Bank, Ltd.
Auckland BranchNotes to the Financial Statements
For the Year Ended 31 March 2024
20.

Fair Value of Financial Instruments (continued)

The following table provides an analysis of financial instruments that are measured subsequent to initial recognition atfair value, grouped into Level 1 to 3 based on the degree to which the fair value is observable.
•

Level 1 fair value measurements are those derived from quoted prices (unadjusted) in active markets for identicalassets or liabilities.

•

Level 2 fair value measurements are those derived from inputs other than quoted prices included within Level 1
that are observable for the asset or liability for substantially the entire term of the instrument, either directly (i.e.
as prices) or indirectly (i.e. derived from prices).

•

Level 3 fair value measurements are those derived from valuation techniques that include inputs for the asset or
liability that are not based on observable market data (unobservable inputs).
31 March 2024
Level 1
Level 231 March 2023
Level 1
Level 2Derivative financial assets
Interest rate swaps
Currency swaps
FX forwards
Total derivative financial assets-

81,636,216
37,550,314
24,067,145
143,253,675-

124,351,091
43,500,394
17,337,794
185,189,279

Derivative financial liabilities
Interest rate swaps
Currency swaps
FX forwards
Total derivative financial liabilities-

80,573,948
38,089,994
24,072,075
142,736,017-

125,643,559
45,327,084
17,388,594
188,359,237

508,409,810-

475,341,441-

Investment in debt instruments

Financial assets and financial liabilities, other than the items on the above table, are carried at amortised cost. Theirfair value is represented by Level 2 fair value measurements.
There were no financial assets and liabilities which are carried at fair value categorised under Level 3 in this year
and prior year.

21.

Profitability and Size
The Overseas Banking Groupa)

Profitability

Net Profit After Tax
Net Profit After Tax over the previous 12 months period as apercentage of average total assetsb)

Twelve Months ended
31 March 2024
JPY(000’s)

Twelve Months ended
31 March 2023
JPY(000’s)

973,515,000
0.31%

618,071,000
0.20%

Twelve Months ended
31 March 2024
JPY(000’s)

Twelve Months ended
31 March 2023
JPY(000’s)

323,861,142,000

313,849,208,000

3.19%

4.75%

Size

Total Assets% Change in total assets over the previous 12 months

56

MUFG Bank, Ltd.
Auckland BranchNotes to the Financial Statements
For the Year Ended 31 March 2024
22.

Asset Quality(i)

The Overseas Banking GroupAs at
31 March 2024
JPY(000’s)
Total individually impaired assets (before allowances for
credit impairment loss and net of interest held in suspense)
Total individually impaired assets expressed as apercentage of total assets
Total individual credit impairment allowance
Total individually credit impairment allowance expressed asa percentage of total individually impaired assets
Total collective credit impairment allowance

(ii)

As at
31 March 2023
JPY(000’s)

1,816,632,000

1,378,122,000

0.56%

0.44%

642,929,000

403,391,000

35.39%
759,098,000

29.27%
719,625,000

MUFG Bank, Ltd., Auckland Branch.

The provision for impairment is based on NZ IFRS 9’s impairment model which requires the Branch torecognised expected credit losses (ECL) based on unbiased forward looking information. The Branch will
incorporate all available information which is relevant to the assessment including information about past
events, current conditions and reasonable and supportable forecasts of economic conditions at the reporting
date.
The Branch does not have any individually impaired assets that have been recognised, any individual credit
impairment allowances, and any assets that are less than 30 days past due; at least 30 days but less than 60days past due; at least 60 days but less than 90 days past due; and at least 90 days past due but not impaired
as at 31 March 2024 (31 March 2023: Nil).
The Branch did not charge or credit to the statement of comprehensive income for any increase or decrease inindividual credit impairment allowance during this accounting period ended 31 March 2024 (31 March 2023:
Nil).
The total interest income recognised on impaired asset over this accounting period ended 31 March 2024 is
Nil (31 March 2023: Nil).
There is no undrawn balance on lending commitments to counterparties for whom drawn balances areclassified as individually impaired. There are no other amounts under administration.
The Branch does not have any financial assets designated as at fair value through profit or loss on which there
have been changes in fair value that are attributable to changes in credit risk of the financial asset.
The Branch has only one type of credit exposure: Corporate exposures. The movement in balance of collective
provision for expected credit loss and the impacts of changes in gross carrying amounts of loan by expectedcredit loss allowance are disclosed in note 10.

57

MUFG Bank, Ltd.
Auckland BranchNotes to the Financial Statements
For the Year Ended 31 March 2024
23.

Exposures to Market Risk
Aggregate market risk exposures of MUFG Bank, Ltd., Auckland Branch have been derived in accordancewith Schedule 9 of the Reserve Bank Order.
Twelve Months Ended
31 March 2024
NZD
(000’s)Twelve Months Ended
31 March 2023
NZD
(000’s)(1) Aggregate Interest Rate Exposure(a)Notional Capital Charge *

4,160

3,922

(b)

Implied risk weighted exposure

52,00049,025* The Notional Capital Charge is calculated in accordance with Capital Adequacy Framework (Standardized Approach)
BS2A.
Peak End of Day
Ending31 March 2024
NZD
(000’s)Peak End of Day
Ending31 March 2023
NZD
(000’s)(1) Aggregate Interest Rate Exposure (continued)(a)Notional Capital Charge **

5,710

4,397

(b)

Implied risk weighted exposure

71,37554,963** The peak end of day Notional Capital Charge has been derived by determining the maximum over the period at theclose of each business day derived in accordance with BPR 140: Market Risk.
(2) Aggregate Foreign Currency Exposure

MUFG Bank, Ltd., Auckland Branch does not have any foreign currency exposures.
(3) Aggregate Equity Exposure
MUFG Bank, Ltd., Auckland Branch does not have any equity exposures.
By entering into foreign exchange transactions, interest rate swap transactions, currency swap transactions and long term
fixed interest deposits with the Sydney Branch, the Branch does not hold any significant foreign exchange exposure andlong term interest rate exposure. Please refer to Note 3 (b) and (c) for detail. Under this arrangement, the Branch is exposed
to limited market risk which is immaterial.

24.

Capital Adequacy
The capital adequacy guidelines adopted by the Financial Services Agency (FSA) in Japan that are applicable
to Japanese bank holding companies and banks with international operations closely follow the risk-weighted
approach introduced by the Basel Committee on Banking Supervision of the Bank for International
Settlements.
Basel II, as adopted by the FSA, has been applied to Japanese banks since 31 March, 2007. Certain provisionsof Basel III have been adopted by the FSA for Japanese banking institutions with international operations
conducted through their foreign offices and became effective 31 March 2013. As a result, the minimum capitalrequired by FSA is at least equal to Basel II.

58

MUFG Bank, Ltd.
Auckland BranchNotes to the Financial Statements
For the Year Ended 31 March 2024
24.

Capital Adequacy (continued)
The Financial Stability Board identified the Overseas Banking Group as a global systematically importantbank, or G-SIB, in its most recent annual report published in November 2017.
Effective 31 March, 2016, the FSA’s capital conservation buffer, countercyclical buffer and G-SIB surcharge
requirements became applicable to Japanese banking institutions with international operations conducted
through foreign offices. As a result, starting from 31 March 2016, Overseas Banking Group is required tomaintain a capital conservation buffer of 0.625% and a G-SIB surcharge of 0.375% in addition to the 4.50%
minimum Common Equity Tier 1 capital ratio. As of the same date, no countercyclical buffer is applicable.
From 31 March 2019, the Overseas Banking Group will be required to maintain a capital conservation bufferof 2.5%, a countercyclical buffer of up to 2.5%, and a G-SIB surcharge of 1.5%, assuming the Overseas
Banking Group will be in Bucket 2 of the G-SIB list.
The table below presents the minimum consolidated risk-based capital ratios from:

Minimum Common Equity Tier 1 ratio
Capital Conservation Buffer
Countercyclical Buffer
G-SIB Surcharge
Total
Minimum Tier 1 ratio
Minimum Capital ratio

1 April
2022
4.50%
2.50%
0.04%
1.50%
8.54%
10.04%
12.04%

1 April
2023
4.50%
2.50%
0.16%
1.50%
8.66%
10.04%
12.04%

Both the Overseas Banking Group and the Overseas Bank met those requirements at the reporting date.

Overseas Banking Group

Capital ratios:
Common Equity Tier 1 capital
Tier 1 capital
Total capital

Overseas Bank

Capital ratios:
Common Equity Tier 1 capital
Tier 1 capital
Total capital

As at
31 March 2024

As at
31 March 2023

13.80%
16.11%
18.11%As at
31 March 2024

9.89%
11.04%
12.58%As at
31 March 2023

11.77%
14.38%
16.29%

8.11%
9.30%
10.71%The most recent publicly available information in relation to capital adequacy framework implemented by theoverseas bank and overseas banking group are disclosed under the ultimate holding company’s annual reportwhich can be accessed via the Bank’s global website: www.mufg.jp.

59

MUFG Bank, Ltd.
Auckland BranchNotes to the Financial Statements
For the Year Ended 31 March 2024
25.

Lease
The statement of financial position shows the following Right-of-use assets amounts relating to leases:

Property:
Cost as at 1 April
Additions
Disposals
Cost as at 31 March
Accumulated depreciation
Opening balance
Depreciation during the year
Disposals
Closing balance

As at
31 March 2024
NZD

As at
31 March 2023
NZD

1,085,245
1,085,245

1,085,245
1,085,245

229,706
129,620359,326
725,919

103,171
126,535
229,706
855,539

9,962
9,962

9,962
9,962

4,689
2,508
7,197
2,765

2,224
2,465
4,689
5,273

728,684

860,812

Office equipment:
Cost as at 1 April
Additions
Disposals
Cost as at 31 March
Accumulated depreciation
Opening balance
Depreciation during the year
Disposals
Closing balance

Net book value as at 31 March

The statement of financial position shows the following lease liabilities amounts:
Current lease liabilities
Non current lease liabilities
Total lease liabilities

133,418
619,739
753,157

125,769
753,157
878,926

132,128
21,202
153,330

129,000
24,329153,329

The following are the amounts recognized in profit and loss:
Depreciation expense of right-of-use assets
Interest expense on lease liability
Total right-of-use assets

The total cash outflow for lease in 2024 was $125,769 (2023: was $119,120).

26.

Insurance Business
MUFG Bank, Ltd., Auckland Branch does not conduct any insurance business in or outside New Zealand.

60

MUFG Bank, Ltd.
Auckland BranchNotes to the Financial Statements
For the Year Ended 31 March 2024
27.

Non-Consolidated Activities
MUFG Bank, Ltd. does not conduct any insurance business or non-financial activities in New Zealand outside
MUFG Bank, Ltd., Auckland Branch.

28.

Securitisation, Funds Management, and Other Fiduciary Activities(a) MUFG Bank, Ltd., Auckland Branch is not involved in any establishment, marketing, or sponsorship oftrust, custodial, funds management or other fiduciary activities.
(b) MUFG Bank, Ltd., Auckland Branch is not involved in any origination of securitized assets or in themarketing or servicing of securitization schemes.
(c) MUFG Bank, Ltd., Auckland Branch is not involved in the marketing and distribution of insurance
products.

29.

Financial Support
The Auckland Branch is part of MUFG Bank, Ltd. The assets of the Branch are legally available for thesatisfaction of debts of the entire company, not solely those appearing in the accompanying statement offinancial position, and its debts may result in claims against assets not appearing thereon.

30.

Subsequent Events
There has not been any matter or circumstance, other than that referred to in the financial statements or notes
thereto, that has arisen since 31 March 2024, that has significantly affected, or may significantly affect, theoperations of the Branch, the results of the operations, or the state of affairs of the Branch in future financial
years.

61

MUFG Bank, Ltd.
Auckland BranchIndependent Auditor’s Report to the Directors of MUFG Bank, Ltd. – Auckland Branch
OpinionWe have audited the financial statements and the supplementary information (excluding theinformation relating to Credit and Market Risk Exposures and Capital Adequacy on pages 58 – 59) of
MUFG Bank, Ltd. – Auckland Branch (the ‘Branch’ and ‘the Banking Group’).
The financial statements comprise the statement of financial position as at 31 March 2024, and thestatement of comprehensive income, statement of changes in equity and statement of cash flows
for the year then ended, and notes to the financial statements, including material accounting policy
information.
The supplementary information (excluding the information relating to Credit and Market Risk
Exposures and Capital Adequacy) comprise the information required to be disclosed under
Schedules 4, 7, 11, and 13 of the Registered Bank Disclosure Statements (Overseas Incorporated
Registered Banks) Order 2014 (as amended) (the ‘Order’).
In our opinion, the accompanying financial statements, on pages 16 to 61, present fairly, in allmaterial respects, the financial position of the Company as at 31 March 2024, and its financial
performance and cash flows for the year then ended in accordance with New Zealand Equivalents to
IFRS Accounting Standards (‘NZ IFRS’) as issued by the External Reporting Board and IFRS AccountingStandards (‘IFRS’) as issued by the International Accounting Standards Board.
In our opinion, the supplementary information (excluding the information relating to Credit andMarket Risk Exposures and Capital Adequacy) disclosed in accordance with Schedules 4, 7, 11 and 13of the Order (the ‘Supplementary Information’):•••Basis for opinion

has been prepared, in all material respects, in accordance with the guidelines issued
pursuant to Section 78(3) of the Banking (Prudential Supervision) Act 1989 and any
Conditions of Registration;is in accordance with the books and records of the Branch in all material respects; andfairly states in all material respects the matters to which it relates in accordance withthose Schedules.

We conducted our audit in accordance with International Standards on Auditing (‘ISAs’) andInternational Standards on Auditing (New Zealand) (‘ISAs (NZ)’). Our responsibilities under thosestandards are further described in the Auditor’s Responsibilities for the Audit of the Financial
Statements section of our report.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis
for our opinion.
We are independent of the Branch in accordance with Professional and Ethical Standard 1
International Code of Ethics for Assurance Practitioners (including International IndependenceStandards) (New Zealand) issued by the New Zealand Auditing and Assurance Standards Board andthe International Ethics Standards Board for Accountants’ International Code of Ethics forProfessional Accountants (including International Independence Standards), and we have fulfilled
our other ethical responsibilities in accordance with these requirements.
Other than in our capacity as auditor, we have no relationship with or interests in the Branch.

Key audit matters

Key audit matters are those matters that, in our professional judgement, were of most significancein our audit of the financial statements of the current period. These matters were addressed in thecontext of our audit of the financial statements as a whole, and in forming our opinion thereon, andwe do not provide a separate opinion on these matters.

62

Key audit matter

How our audit addressed the key audit matter

Expected credit loss on loans and advances to customers

We have performed the following audit procedures:

As described in note 10, the expected credit loss has been
determined as $12,524,479.

•

We assessed the modelling methodology against therequirements of NZ IFRS 9;

We considered this a Key Audit Matter due to the significant
judgement made by management in determining when torecognise an allowance for impairment losses on loans andadvances to customers and in estimating the provision.

•

We tested the operating effectiveness of key controls in
the lending cycle, specifically isolated to the assessmentof credit risk related to each counterparty. We tested theapproval of new lending arrangements, the performanceof loan assessments and controls over the monitoring ofcounterparty credit quality;•

We assessed the data used in determining the expectedcredit loss, including transactional data captured atcommencement of the loan and used in the internal
credit quality assessment;•

The Branch has assessed the expected credit loss throughthe aggregation of borrower ratings and determined the
expected credit loss on a collective basis. As a result, we
challenged the probability of default for each borrower
rating. We also challenged the expected recovery ratio
applied to each security type, this included the forwardlooking information used;•

We evaluated the probability weightings allocated tomultiple economic scenarios by benchmarking against
industry trends and considering the appropriateness of
selected weightings;•

For a sample of exposures, we have assessed thecustomer borrower rating that has been allocated to theborrower and assessed whether there is objective
evidence of impairment;•

We tested the accuracy of key inputs into the models byreconciling each of the balances through to the generalledger. We tested the operating effectiveness of IT
controls related to the system that generated therelevant reports;•

We assessed the mathematical accuracy of the expectedcredit loss model;•

Assessed the completeness and accuracy of the keymodel inputs such as loan data as well as the design andimplementation of controls over these inputs;•

We involved our technical specialists to develop analternative comparison ECL model using the observableindustry data relating to probability of default and loss
given default. ECL provision was compared to the Bank’s
total collective provision to assess if it fell within ourrange of expection; and•We assessed the adequacy of related disclosures.

As detailed in note 10, the Branch has gross loans and advances of$5,056,062,470 and impairment allowances of $9,515,507 on loans
and advances and $3,008,972 on undrawn commitments andguarantees.
Key areas of judgement include:••

Determination of the requirements under NZ IFRS 9 whencalculating the impairment allowance, which is reflected in
the Branch’s expected credit loss model; andAssumptions used in the expected credit loss model such as
credit risk level of the borrower and macro economic
environment as described in note 2.

Other information

The directors are responsible on behalf of the Branch for the other information. The otherinformation comprises the information in the financial statements in accordance with Schedule 2 of
the Order on pages 1 to 15 that accompanies the financial statements, supplementary information,and the audit report, and the Climate Report, which is expected to be made available to us after thedate of this auditor's report.

63

Our opinion on the financial statements does not cover the other information and we will not
express any form of assurance conclusion thereon.
Our responsibility is to read the other information identified above when it becomes available andconsider whether the other information is materially inconsistent with the financial statements or
our knowledge obtained in the audit, or otherwise appears to be materially misstated.
When we read the Climate Report, if we conclude that there is a material misstatement therein, weare required to communicate the matter to the directors and consider further appropriate actions.
Directors’ responsibilities for thefinancial statements

The directors are responsible on behalf of the Branch for the preparation and fair presentation of
the financial statements in accordance with NZ IFRS and IFRS, and for such internal control as the
directors determine is necessary to enable the preparation of financial statements that are free frommaterial misstatement, whether due to fraud or error.
The directors are also responsible on behalf of the Branch for the preparation of Supplementary
Information which fairly states the matters required to be disclosed under Schedules 2, 4, 7, 11 and
13 of the Order and which is prepared in accordance with any guidelines issued pursuant to Section
78(3) of the Banking (Prudential Supervision) Act 1989; any Conditions of Registration; and inaccordance with the books and records of the Branch.
In preparing the financial statements, the directors are responsible on behalf of the Branch forassessing the Branch’s ability to continue as a going concern, disclosing, as applicable, mattersrelated to going concern and using the going concern basis of accounting unless the directors either
intend to liquidate the Branch or to cease operations, or have no realistic alternative but to do so.

Auditor’s responsibilities for theaudit of the financial statements

Our objectives are to obtain reasonable assurance about whether the financial statements as awhole are free from material misstatement, whether due to fraud or error, and to issue an auditor’sreport that includes our opinion. Reasonable assurance is a high level of assurance, but is not aguarantee that an audit conducted in accordance with ISAs and ISAs (NZ) will always detect amaterial misstatement when it exists. Misstatements can arise from fraud or error and areconsidered material if, individually or in the aggregate, they could reasonably be expected toinfluence the economic decisions of users taken on the basis of these financial statements.
A further description of our responsibilities for the audit of the financial statements is located on theExternal Reporting Board’s website at:https://www.xrb.govt.nz/standards-for-assurance-practitioners/auditors-responsibilities/auditreport-2
This description forms part of our auditor’s report.

Emphasis of matter - Branch

The Branch is part of MUFG Bank, Ltd. As described in Note 28, the assets of the Branch are legallyavailable for the satisfaction of debts of the entire Branch, not solely those appearing on theaccompanying statement of financial position and its debts may result in claims against assets notappearing thereon. Our opinion is not qualified in respect of this matter.

Restriction on use

This report is made solely to the Branch’s Directors, as a body. Our audit has been undertaken sothat we might state to the Branch’s Directors those matters we are required to state to them in anauditor’s report and for no other purpose. To the fullest extent permitted by law, we do not accept
or assume responsibility to anyone other than the Branch’s Directors as a body, for our audit work,for this report, or for the opinions we have formed.

Bindi ShahPartnerfor Deloitte Limited
Auckland, New Zealand
25 June 2024
This audit report relates to the financial statements of MUFG Bank, Ltd. – Auckland Branch (the ‘Branch’) for the year ended 31 March 2024 included on
the Company’s website. The Directors are responsible for the maintenance and integrity of the Company’s website. We have not been engaged toreport on the integrity of the Company’s website. We accept no responsibility for any changes that may have occurred to the financial statements since
they were initially presented on the website. The audit report refers only to the financial statements named above. It does not provide an opinion on
any other information which may have been hyperlinked to/from these financial statements. If readers of this report are concerned with the inherent
risks arising from electronic data communication they should refer to the published hard copy of the audited financial statements and related audit
report dated 25 June 2024 to confirm the information included in the audited financial statements presented on this website.
64Independent Assurance Report to The Directors of MUFG Bank, Ltd. – Auckland Branch
LIMITED ASSURANCE REPORT ON THE INFORMATION REQUIRED ON CREDIT AND MARKET RISK EXPOSURES AND CAPITALADEQUACY
Conclusion
We have undertaken a limited assurance engagement on the MUFG Bank, Ltd. – Auckland Branch’s (the ‘Branch’) compliance, inall material respects, with clause 22 of the Registered Bank Disclosure Statements (Overseas Incorporated Registered Banks)
Order 2014 (as amended) (the “Order”) which requires information prescribed in Schedule 9 of the Order relating to credit andmarket risk exposures and capital adequacy to be disclosed in its Disclosure Statement for the year ended 31 March 2024.
Based on the procedures we have performed and the evidence we have obtained, nothing has come to our attention thatcauses use to believe that the Branch’s information relating to credit and market exposures and capital adequacy, included in
the Disclosure Statement in compliance with clause 22 of the Order as disclosed in note 24 is not, in all material respects,
disclosed in accordance with Schedule 9 of the Order.
Basis of conclusion
We have conducted our engagement in accordance with Standard on Assurance Engagement (SAE) 3100 (Revised) ComplianceEngagements (SAE 3100 (Revised) issued by the New Zealand Auditing and Assurance Standards Board.
We believe that the evidence we have obtained is sufficient and appropriate to provide a basis of our conclusion.
Directors’ Responsibilities
The Directors of the Branch are responsible on behalf of MUFG Bank, Ltd – Auckland Branch’s for compliance with the Order,
including Clause 22 of the order which requires information relating to credit and market risk exposures and capital adequacyprescribed in Schedule 9 of the Order to be included in the Branch’s Disclosure Statement. This responsibility includes theidentification of risks that may threaten compliance requirements identified above being met and the design, implementationand maintenance of internal controls relevant to mitigating those risks and monitoring ongoing compliance.
Our Independence and Quality Control
We have complied with the independence and other ethical requirements of the Professional and Ethical Standard 1
International Code of Ethics for Assurance Practitioners (including International Independence Standards) (New Zealand) (‘PES-1’)
issued by the New Zealand Auditing and Assurance Standards Board, which is founded on fundamental principles of integrity,
objectivity, professional competence and due care, confidentiality and professional behaviour.
Other than in our capacity as auditor, we have no relationship with or interests in the Branch.
The firm applies Professional and Ethical Standard 3: Quality Management for Firms that Perform Audits or Reviews of Financial
Statements, or Other Assurance or Related Services Engagements, which requires the firm to design, implement and operate asystem of quality management including policies and procedures regarding compliance with ethical requirements, professional
standards and applicable legal and regulatory requirements.
Assurance Practitioner’s Responsibilities
Our responsibility is to express a limited assurance conclusion on whether the Branch’s information relating to credit and market
risk exposures and capital adequacy, included in the Disclosure Statement in compliance with the Clause 22 of the Order is not,in all material respects, disclosed in accordance with Schedule 9 of the Order. Our review has been conducted in accordancewith Standard on Assurance Engagements 3100: Compliance Engagements (‘SAE 3100’) issued by the External Reporting Board,
to provide limited assurance that the Bank has complied with the Clause 22, disclosed in accordance with Schedule 9 of theOrder, in all material respects.
In a limited assurance engagement, the assurance practitioner performs procedures, primarily consisting of discussion andenquiries of management and others within the entity, as appropriate, and observation and walk-throughs, and evaluates theevidence obtained. The procedures selected depend on our judgement, including identifying areas where the risk of material
non-compliance with clause 22 of the Order in respect of the information relating to credit and market risk exposures andcapital adequacy is likely to arise.

65

Our procedures included:•
Obtained an understanding of the process, models, data and internal controls implemented over the preparation of theinformation relating to credit and market exposures and capital adequacy;•
Obtained an understanding of the Branch’s compliance framework and internal control environment to ensure theinformation relating to credit and market risk exposures and capital adequacy is in compliance with the Reserve Bank of
New Zealand;•
Performed analytical and other procedures on the information relating to credit and market risk exposures and capital
adequacy disclosed in accordance with Schedule 9 of the Order, and considered its consistency with the financial
statements; and•Agreed the information relating to credit and market risk exposures and capital adequacy disclosed in accordance withschedule 9 of the Order to information extracted from the Branch’s models, accounting records or other supporting
documentation, which included publicly available information as prescribed by clauses 5 and 6 of Schedule 9 of theOrder.
The procedures performed in a limited assurance engagement vary in nature and timing from, and are less in extent than for, areasonable assurance engagement. Consequently, the level of assurance obtained in a limited assurance engagement issubstantially lower than the assurance that would have been obtained had a reasonable assurance engagement been
performed. Accordingly, we do not express a reasonable assurance opinion on compliance with the compliance requirements.
Inherent Limitations
Because of the inherent limitations of an assurance engagement, together with the inherent limitations of any systems ofinternal control, it is possible that fraud, error or non-compliance with compliance requirements may occur and not be detectedeven though the engagement is properly planned and performed in accordance with Standards on Assurance Engagements.
A limited assurance engagement of the Branch’s information relating to credit and market risk exposures and capital adequacyprescribed in Schedule 9 of the Order to be included in the Disclosure Statement in compliance with clause 22 of the Order does
not provide assurance on whether compliance will continue in the future.
Use of Report
Our assurance report is made solely for the Directors for the purpose of establishing that these compliance requirements havebeen met. Our work has been undertaken so that we might state to the Directors those matters we have been engaged to statein this assurance report and for no other purpose. To the fullest extent permitted by law, we do not accept or assume
responsibility to anyone other than the Directors of the Branch for our work, for this assurance report, or for the conclusions wehave reached.

Auckland, New Zealand
25 June 2024

66