REGISTERED BANKDISCLOSURE STATEMENT
31 MARCH 2021

MUFG BANK, LTD.
AUCKLAND BRANCH

Financial Statements
For the Year Ended 31 March 2021

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

14

10. Historical Summary of Financial Statements

14

11. Other Material Matters

15

12. Financial Statements of the Registered Bank and the Overseas Banking Group15

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

16

Financial Statements
Statement of Comprehensive Income

17

Statement of Changes in Equity

18

Statement of Financial Position

19

Statement of Cash Flows20

Notes to Financial Statements
1.

Statement of Significant Accounting Principles

222.

Significant Accounting Policies

23

3.

Risk Management Policies

30

4.

Profit Before Income Tax Expense

34

5.

Property, Plant and Equipment

35

6.

Income Tax

36

7.

Deposits

37

8.

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

37

9.

Remuneration of Auditor

37

10. Provision for expected credit losses

38

11. Other Liabilities

38
2

MUFG Bank, Ltd.
Auckland Branch

Financial Statements
For the Year Ended 31 March 2021

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

39

13. Key Management Personnel Compensation

39

14. Related Party Disclosures40

15. Derivative Financial Instruments

41

16. Concentration of Credit Risk

43

17. Concentration of Funding49

18. Interest Rate Risk

49

19. Maturity Analysis for Assets and Liabilities

51

20. Fair Value of Financial Instruments

52

21. Profitability and Size

54

22. Asset Quality

55

23. Exposures to Market Risk

56

24. Capital Adequacy

56

25. Insurance Business57

26. Non-Consolidated Activities

57

27. Securitisation, Funds Management, and Other Fiduciary Activities

58

28. Financial Support

58

29. Subsequent Events

58

Auditor’s Report

59

3
MUFG Bank, Ltd.
Auckland Branch

Financial Statements
For the Year Ended 31 March 2021
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 100-8330, 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 2021
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 protectedwithout a maximum 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 failingfinancial institution. The following deposits of MUFG Bank, Ltd., Auckland Branch are not protected:
As at 31 March
2021
NZD
Amount due to related parties
Retail deposit
Certificate deposit
Call deposit
Term deposit

3,771,780,745
183,361,306
838,697,399
262,796,712
985,453,945
6,042,090,107

As at 31 March
2020
NZD
5,042,976,787
256,892,999
330,044,948
275,480,071
198,221,596
6,103,616,401

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
of assets 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 2021
5.

Directorate
5.1

Address to which communications to the Directors and Responsible Persons may be sent:
C/- Mr Hiroto Fukashiro,
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 Masami Yoshitake
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. as of 31 March 2021:

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

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

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

Kiyoshi Sono
ChairmanJapan
Executive director
Faculty of Law
Kyushu University, Japan

Akihiko Nakamura
Deputy President
Japan
Executive director
BA in Economics
Waseda University, Japan;

Naoki Hori
Deputy President
Japan
Executive director
Faculty of Law
Kyoto University, Japan

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

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

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

Kanetsugu Mike
President & CEO
Japan
Executive director
BA in Economics
Keio University, Japan;
MBA
University of Pennsylvania,
USA
Kenji Yabuta
Deputy President
Japan
Executive director
Faculty of Law
The University of Tokyo, Japan

Masato Miyachi
Deputy President
Japan
Executive director
BA in Economics
The University of Tokyo,
Japan;
Master of Science
Stanford University, USA;
Doctor of Philosophy
Waseda University, Japan

6
MUFG Bank, Ltd.
Auckland Branch

Financial Statements
For the Year Ended 31 March 2021
5.

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

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

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

Takayoshi Futae
Senior Managing Executive
OfficerJapan
Executive director
BA in Economics
Osaka University, Japan;
MBA
University of Chicago,
USA
Masakazu Ikeda
Senior Managing Executive
OfficerJapan
Executive director
Faculty of Law
Koyto University, Japan

Tetsuya Yonehana
Senior Managing Executive
OfficerJapan
Executive director
Faculty of Engineering
The University of Tokyo,
Japan;Name:
Occupation:
Residence:
Executive or Independent
director:
Qualification:

Naomi Hayashi
Managing Executive Officer
Japan

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

Hiroki Kameda
Managing Executive Officer
Japan

Executive director
BA in Economics
Keio University, Japan;
Graduate School ofBusiness

Executive director
BA in Economics
Keio University , Japan;
MS in Management ofTechnology
Massachusetts Institute ofTechnology, USA

Muneya Taniguchi
Senior Managing Executive
Officer
Japan

Name:
Occupation:
Residence:
Executive
ordirector:
Qualification:

Independent
Executive director
BA in Economics
Keio University, Japan

Masahiro Kuwahara
Senior Managing Executive
Officer
Japan

Name:
Occupation:
Residence:
Executive
ordirector:
Qualification:

Independent
Executive director
Faculty of Law
The University of Tokyo,
Japan;
MBA
University of California,
USA

Shigeru Yoshifuji
Senior Managing Executive
Officer
Japan

Name:
Occupation:
Residence:
Executive
ordirector:
Qualification:

Name:
Occupation:
Residence:
Executive
ordirector:
Qualification:

Name:
Occupation:
Residence:
Executive
ordirector:
Qualification:

Independent
Executive director
Bachelor of Engineering
Master of Engineering
Ph.D Engineering
Tokyo Institute ofTechnology, Japan
Junichi Hanzawa
Managing Executive Officer
Japan
Independent
Executive director
BA in Economics
The University of Tokyo,
Japan;

Hiroshi MoriManaging Executive Officer
Japan
Independent
Executive director
Faculty of Law
The University of Tokyo,
Japan;
Duke University School ofLaw, USA
Attorney

7
MUFG Bank, Ltd.
Auckland Branch

Financial Statements
For the Year Ended 31 March 2021
5.

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

Yutaka Miyashita
Managing Executive Officer
Japan

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

Hironori Kamezawa
Director
Japan

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

Takeshi Suzuki
Director
Japan

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

Fumikazu Tatsumi
Director
Japan

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

Toshifumi Kitazawa
Director
Japan

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

Masahito Monguchi
Director
Japan

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

Executive director
Faculty of Law
Koyto University, Japan

Executive director
Master of Science
The University of Tokyo,
Japan;

Executive director
BA in Economics
Keio University, Japan

Executive director
School of Law and Politics
Kwansei Gakuin
University, Japan

Independent director
BA in Economics
The University of Tokyo,
Japan;

Independent director
Faculty of Law
The University of Tokyo,
Japan;
AttorneyName:
Occupation:
Residence:
Executive
ordirector:
Qualification:

Name:
Occupation:
Residence:
Executive
ordirector:
Qualification:

Name:
Occupation:
Residence:
Executive
ordirector:
Qualification:

Name:
Occupation:
Residence:
Executive
ordirector:
Qualification:

Name:
Occupation:
Residence:
Executive
ordirector:
Qualification:

Name:
Occupation:
Residence:
Executive
ordirector:
Qualification:

Masakazu Oosawa
Managing Executive Officer
Japan
Independent
Executive director
Faculty of Law
The University of Tokyo,
Japan;
Master of Law
University of Chicago Law
School, USA
Naoto Hirota
DirectorJapan
Independent
Executive director
BA in Economics
Keio University, Japan;
MBA
Stanford University, USA
Akira Hamamoto
DirectorJapan
Independent
Executive director
Faulty of Law
Waseda University, Japan;
Shinichi Koide
DirectorJapan
Independent
Independent director
College of Economics
Aoyama Gakuin
University, Japan
Tadayuki Matsushige
DirectorJapan
Independent
Independent director
School of Political Scienceand Economics
Waseda University, Japan;
CPA
Shigeo Ohyagi
DirectorJapan
Independent
Independent director
BA in Economics
Keio University, Japan

Kenji Matsuo
DirectorJapan
Independent director
B.A Economics
Kobe University, Japan

8
MUFG Bank, Ltd.
Auckland Branch

Financial Statements
For the Year Ended 31 March 2021
5.

Directorate (continued)
Hironori Kamezawa, Kiyoshi Sono, Kanetsugu Mike, Kenji Yabuta, Naoki Hori, Masato Miyachi,
Masakazu Ikeda, Takayoshi Futae, Masahiro Kuwahara, Tetsuya Yonehana, Shigeru Yoshifuji,Junichi Hanzawa, Hiroshi Mori, Yutaka Miyashita and Naomi Hayashi have other directorships
as follows:i.

Mitsubishi UFJ Financial Group, Inc.

Masakazu Oosawa has other directorship as follows:
i.
ii.
iii.

Mitsubishi UFJ Financial Group, Inc.
Global Open Network, Inc.
Global Open Network Japan, Inc.

Hiroki Kameda has other directorship as follows:
i.
ii.
iii.
iv.

Mitsubishi UFJ Financial Group, Inc.
Global Open Network, Inc.
Global Open Netwerk Japan, Inc.
Mitsubishi UFJ Information Technology, Ltd

Toshifumi Kitazawa has other directorships as follows:i.

Tokio Marine & Nichido Fire Insurance Co., Ltd.

Shinichi Koide has other directorships as follows:i.

5.3

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

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

Occupation

Residence

Qualification

Hiroto Fukashiro

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

Bachelor of Law
Hitotsubashi University,
Japan

Masami Yoshitake

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

Bachelor of Economics
Nagoya University, Japan

9
MUFG Bank, Ltd.
Auckland Branch

Financial Statements
For the Year Ended 31 March 2021
5.

Directorate (continued)
5.4

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 otherthan those 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 2021 (2020: 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 2021.

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,
the Director 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
80 Queen Street
Auckland 1010
New Zealand7.

Conditions of Registration
There have been changes to the conditions of registration since the last disclosure statement as at 30
September 2020.
These conditions of registration apply on and after 1 March 2021.
The registration of MUFG Bank, Ltd. (“the registered bank”) in New Zealand is subject to thefollowing conditions:1.

That the banking group does not conduct any non-financial activities that in aggregate are material
relative to its total activities.

10
MUFG Bank, Ltd.
Auckland Branch

Financial Statements
For the Year Ended 31 March 2021
7.

Conditions of Registration (continued)
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 sumof the following 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; and(b) if the entity conducts insurance business and its business does not predominantly consist of
insurance business and the entity is not a subsidiary of another entity in the banking groupwhose business predominantly consists of insurance business, the amount of the insurance
business to sum is the total liabilities relating to the entity’s insurance business plus the equity
retained by the entity to meet the solvency or financial soundness needs of 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 with generally
accepted accounting practice; and(b) if products or assets of which an insurance business is comprised also contain a non-insurancecomponent, the whole of such products or assets must be considered part of 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 contractof 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.

11
MUFG Bank, Ltd.
Auckland Branch

Financial Statements
For the Year Ended 31 March 2021
7.

Conditions of Registration (continued)
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

Common Equity
CapitalTier 1Minimum requirement
on and after 31 March
2015
4.5 %

Tier 1 Capital

6%

Total Capital8%

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 before 30 September 2021, the totalof the business of the registered bank in New Zealand’s qualifying new mortgage lending amountin respect of property-investment residential mortgage loans with a loan-to-valuation ratio of morethan 70%, must not exceed 5% of the total of the qualifying new mortgage lending amount inrespect of property-investment residential mortgage loans arising in the loan-to-valuation
measurement period.

10. That, for a loan-to-valuation measurement period ending on or after 31 October 2021, the total of
the business of the registered bank in New Zealand’s qualifying new mortgage lending amount inrespect of property-investment residential mortgage loans with a loan-to-valuation ratio of morethan 60%, must not exceed 5% of the total of the qualifying new mortgage lending amount inrespect of property-investment residential mortgage loans arising in the loan-to-valuation
measurement period.
11. That, for a loan-to-valuation measurement period, the total 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-to-valuation ratio of more than 80%, must not exceed 20%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.
12. 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 associatedmortgage require that a borrower obtain the registered bank’s agreement before the borrower can
grant to another person a charge over the residential property used as security for the loan.
12
MUFG Bank, Ltd.
Auckland Branch

Financial Statements
For the Year Ended 31 March 2021
7.

Conditions of Registration (continued)
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 theregistered bank as defined in the requirement for financial statements for New Zealand business insection 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 bankwould be required to report in financial statements for its New Zealand business if section 461B(1)of the Financial Markets Conduct Act 2013 applied.
In conditions of registration 9 to 12, “loan-to-valuation ratio”, “non property-investment residential mortgage loan”, “propertyinvestment residential mortgage loan”, “qualifying new mortgage lending amount in respect ofproperty-investment residential mortgage loans”, “qualifying new mortgage lending amount inrespect of non property-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 January 2019, and wherethe version of the Reserve Bank of New Zealand document “Capital Adequacy Framework(Standardised Approach)” (BS2A) referred to in BS19 for the purpose of defining these terms isthat dated November 2015.
“loan-to-valuation measurement period” means(a) the six calendar month period ending on the last day of August 2021; and(b) thereafter a period of six calendar months ending on the last day of the sixth calendar month,
the first of which ends on the last day of September 2021.

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.

13
MUFG Bank, Ltd.
Auckland Branch

Financial Statements
For the Year Ended 31 March 2021
9.

Credit Rating
The Registered Bank has the following long term credit ratings which are applicable to the Banking
Group in New Zealand.
Current RatingStandard & Poor’s
Moody’s
Fitch

A
A1
A-

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

Date of Change
8-Apr-2020

Rating scales are:
Credit Ratings

S&P’s

Moody’s

Fitch

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

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

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)

Total interest revenue
Total interest expense
Total other revenue
Total expected credit loss
charged to the income statement(e) Total other expenses(f) Net profit or (loss) before taxation(g) Taxation(h) Net profit or (loss) after taxation(i) Net profit or (loss) attributable to noncontrolling interests(j) The amount of branch profits
repatriated(k) Total assets(l) Total individually impaired assets(m) Total liabilities(n) Head office capital(o) Retained earnings and reserve

Year ended
31 March
2021
NZD(000’s)

Year ended
31 March
2020
NZD(000’s)

Year ended
31 March
2019
NZD(000’s)

Year ended
31 March
2018
NZD(000’s)

Year ended
31 March
2017
NZD(000’s)

68,61944,01732,403

127,997
99,291
21,405132,536
108,869
19,68095,54378,533
15,34786,70575,81812,874274
10,341
46,3909,804
36,585(125)
11,08839,148
8,778
30,369910,69832,6407,015
25,6255,400
26,957
5,384
21,573

4,280
19,482
1,452
18,029

-

-

-

-

-

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

5,383,281
5,194,272
83,000106,009

4,056,981
3,892,897
83,00081,0843,560,396
3,417,850
83,00059,546

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

14
MUFG Bank, Ltd.
Auckland Branch

Financial Statements
For the Year Ended 31 March 2021
11.

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

12.

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.

15
MUFG Bank, Ltd.
Auckland Branch

Financial Statements
For the Year Ended 31 March 2021
13.

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 2021;


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
rate risk, currency risk, equity risk, liquidity risk and other business risks, and that those systems
were being properly applied; and

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

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

_____________________________________
Mr. Hiroto Fukashiro
Managing Director, Head of Oceania
Head of Sydney Branch(and Authorised Attorney on behalf of
the Directors)
Dated (Sydney): 30 June 2021_______________________________________Mr. Masami Yoshitake
Managing Director,
Head of Auckland Branch(New Zealand Chief Executive Officer)
Dated (Auckland): 30 June 2021

16
MUFG Bank, Ltd.
Auckland Branch

Financial Statements
For the Year Ended 31 March 2021
Statement of Comprehensive Income

NoteInterest income
Interest expense
Net interest income

44Fees and commission income
Net gain/(losses) on financial instruments

44

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

4
4
4
4

Twelve Months
ended
31 March 2021

Twelve Months
ended
31 March 2020

NZD

NZD

68,619,097

127,997,383(44,017,536)(99,291,298)

24,601,561

28,706,085

27,403,121

24,540,697

4,999,901(3,135,778)

32,403,022

21,404,919(138,014)(123,061)(3,699,346)(3,728,515)(156,450)(151,700)(6,347,263)(7,085,287)

46,663,510

39,022,441

Expected credit losses(273,896)

125,561

Profit before income tax expense

46,389,614

39,148,002(9,804,261)(8,778,217)

Profit from continuing operations

36,585,353

30,369,785

Other Comprehensive income
Items that may be reclassified subsequently
to profit or loss
Debt instruments measured at FVOCI- (Loss)/Profit arising during the year
- Income tax benefit/ (expense) on
Debt instruments measured at FVOCIOther comprehensive (expense)/ income net oftax(994,101)

3,262,110

278,348(913,391)(715,753)

2,348,719

Total comprehensive income, net of tax

35,869,600

32,718,504

Income tax expense

6

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 2021
Statement of Changes in Equity
NZD
Head
OfficeCapitalRetained
Earnings

Investment
Revaluation
Reserve

Total

83,000,000

105,535,132

473,394

189,008,526

Profit from continuing operations-

30,369,785-

30,369,785

Other comprehensive income, net oftax-

2,348,719

2,348,719

Total comprehensive income, netof tax30,369,785

2,348,719

32,718,504

Balance at 1 April 2019

Balance at 31 March 2020

83,000,000

135,904,917

2,822,113

221,727,030

Balance at 1 April 2020

83,000,000

135,904,917

2,822,113

221,727,030

Profit from continuing operations-

36,585,353-

36,585,353

Other comprehensive (expense), net oftax-(715,753)(715,753)

Total comprehensive income, net of tax-

36,585,353(715,753)

35,869,600

83,000,000

172,490,270

2,106,360

257,596,630

Balance at 31 March 2021

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 2021
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
Deferred tax asset
Property, plant and equipment

16
14
16
16
16
16
15
6
5

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

14
7

15
11

Total Liabilities
EquityHead Office capital
Retained earnings
Investment revaluation reserve

14

Total Equity
Total Liabilities and Equity

As at
31 March
2021

As at
31 March
2020

NZD

NZD

1,045,056,782
606,883,993
164,999,004
455,852,935
4,045,883,065
14,356,200
122,833,075
2,107,696
404,8211,315,919

232,514,336
116,526,694
219,996,756
596,778,945
5,182,261,318
16,550,082
145,758,081
3,103,972
369,706
1,512,588

6,459,693,490

6,515,372,478

3,771,780,745
2,270,309,362
14,356,200
8,454,775
127,182,572
10,013,206

5,042,976,787
1,062,618,439
16,550,082
9,354,841
152,250,027
9,895,272

6,202,096,860

6,293,645,448

83,000,000
172,490,270
2,106,360

83,000,000
135,904,917
2,822,113

257,596,630

221,727,030

6,459,693,490

6,515,372,478

Total Interest Earning and Discount Bearing
Assets18

5,814,239,198

6,232,386,618

Total Interest and Discount Bearing Liabilities

18

6,031,921,441

6,091,280,753

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

19
MUFG Bank, Ltd.
Auckland Branch

Financial Statements
For the Year Ended 31 March 2021
Statement of Cash Flows
Twelve Months ended
31 March 2021
NZD

Twelve Months ended
31 March 2020
NZD

74,617,670
29,995,303(46,868,021)(11,472,454)

121,428,066
25,053,525(101,907,443)(10,711,790)

46,272,498

33,862,358

1,132,814,552(492,947,619)

54,997,752
137,223,142(490,357,299)
3,520,315
838,198,462

34,430,726(431,305,807)(52,651,255)(8,081,822)(950,555,777)

1,207,850,384(1,268,505,019)(627,870)(61,282,505)

357,226,437
620,936,057
7,253,197
985,415,691

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

823,188,455

68,722,272

Net tax (paid)
Net cash flows from / (used in) operating activities(10,461,093)
812,727,362(950,288)
67,771,984

Payment for property, plant and equipment
Net cash flows from / (used in) investing activities(12,987)(12,987)(3,854)(3,854)

Cash Flows from Financing Activities
Lease payment(171,929)(164,416)

Net cash flows from financing activities(171,929)(164,416)

812,542,446
232,514,336
1,045,056,782

67,603,714
164,910,622
232,514,336

1,045,056,782
1,045,056,782

232,514,336
232,514,336

Cash Flows from Operating Activities
Interest income received
Commission fees & trading income
Interest paid
Payments to suppliers, employees and others
Net cash flows from operating activities before changes inoperating assets and liabilities
Net (increase) / decrease in operating assets:
Net decrease/ (increase) in corporate loans originated by theBank
Net decrease in amounts due from other financial
Institutions
Net decrease/ (increase) in investment in debt instruments
Net (increase) in amounts due from related parties
Net decrease /(increase) in other assets
Net increase / (decrease) in operating liabilities:
Net increase in commercial papers and deposits
Net (decrease)/increase in amounts due to related parties
Net (decrease) /increase in other liabilities

Cash Flows from Investing Activities

Net Change in Cash and Cash Equivalents
Net increase 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.

20
MUFG Bank, Ltd.
Auckland Branch

Financial Statements
For the Year Ended 31 March 2021
Statement of Cash Flows (continued)

Twelve Months
ended
31 March 2021

Twelve Months
ended
31 March 2020

NZD

NZD

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

36,585,353

30,369,785

1,136,195,317(491,067,331)

Decrease in due from other financial institutions

54,997,752

34,430,726

Decrease/(Increase) in investment in debt instruments

139,931,909(439,755,412)(Increase) in due from related parties(490,357,299)(52,651,255)

2,193,882(7,343,920)

996,275(309,369)

508,176,506

286,161,684

Decrease/(Increase) in corporate loans

Decrease /(Increase) in acceptances of customers
Decrease/(Increase) in other assets
Increase in certificate of deposit
Increase in commercial paper and deposits

699,514,417

71,632,842(Decrease)/Increase in due to related parties(1,271,196,043)

617,751,822(Decrease) /Increase in acceptances(2,193,882)

7,343,920

Increase / (Decrease) in other liabilities

1,230,549(469,916)

Increase /(Decrease) in provision for expected credit losses

273,896(125,561)(Decrease)/Increase in tax(656,832)

7,827,929

209,656

217,751

Non-Cash items:
Depreciation of property, plant and equipment
Other
Net cash flows from operating activities(3,174,094)

3,758,289

812,727,362

67,771,984

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

21
MUFG Bank, Ltd.
Auckland BranchNotes to the Financial Statements
For the Year Ended 31 March 2021
1.

Statement of Significant Accounting Principlesa) 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 the New Zealand Equivalents to International Financial
Reporting Standard (“NZ IFRS”) and other applicable financial reporting standards as appropriate for profitorientated 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.
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. The Branch
has applied, where relevant, all new or revised accounting standards and interpretation effective andapplicable to the year ended 31 March 2021. However, they have had no impact on the Branch’s reported
result or financial position.

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
affect the amounts reported in the financial statements and the accompanying notes. The management hasreviewed and applied its estimation and judgment on an ongoing basis. Due to the impact of COVID 19,
several the Branch’s customers credit profile were down guided. As a result, the total provision for ECL had
been increased for this period.

22
MUFG Bank, Ltd.
Auckland BranchNotes to the Financial Statements
For the Year Ended 31 March 2021

2.

Significant Accounting Policiesa) Standards and Interpretations approved but not yet effective
A number of new standards, amendments to standards and interpretations are effective for annual periods
beginning on or after 1 January 2020.
Standard / Interpretation

Interest Rate Benchmark Reform – Phase 2 (Amendments to NZ IFRS 9, NZ IAS
39, NZ IFRS 7, NZ IFRS 4 and NZ IFRS 16)
Classification of liabilities as Current or Non-Current (Amendments to NZ IAS 1)

Effective for annual
reportingperiodbeginning on or after

Expected
tobeinitially applied in thefinancial year ahead

1 January 2021
1 January 2023

31 March 2022
31 March 2024

The impact on the disclosure statement of the Branch upon initial application of these standards andinterpretations is yet to be determined.
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 theirreporting currency using the exchange rate in effect at the close of the transaction date. Gains andlosses 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 andloss using the effective interest method. The effective interest method is a method of calculating theamortised cost of 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 allfees paid or received between parties to the contract that are an integral part of the effective interest rate,transaction costs and all other premiums 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.

23
MUFG Bank, Ltd.
Auckland BranchNotes to the Financial Statements
For the Year Ended 31 March 2021
2.

Significant 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 andservices 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, or under finance leases, are stated at cost less accumulated
depreciation and impairment. Cost includes expenditures that are directly attributable to the acquisition of theitem. In the event that settlement of all or part of the purchase consideration is deferred, cost is determined bydiscounting 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 are depreciatedover the period of lease or estimated useful life, whichever is the shorter, using the straight 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

24
MUFG Bank, Ltd.
Auckland BranchNotes to the Financial Statements
For the Year Ended 31 March 2021
2.

Significant 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 valueof money, for the credit risk associated with the principal amount outstanding during a particular period ofthem and 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
the financial 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 aresubsequently 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.
25
MUFG Bank, Ltd.
Auckland BranchNotes to the Financial Statements
For the Year Ended 31 March 2021
2.

Significant 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 theyhave:contractual terms that give rise to cash flows on specified dates, that represent solely payments ofprincipal and interest on the principal amount outstanding; and

are 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 plustransaction 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
and liability 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 anintention to settle on a net basis, or to realise an asset and settle the liability simultaneously. In all othersituations they are presented gross.

26
MUFG Bank, Ltd.
Auckland BranchNotes to the Financial Statements
For the Year Ended 31 March 2021
2.

Significant 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 therisks and rewards of the asset. If all or substantially all risks and rewards are retained, the financial assets are
not derecognised 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 istreated as 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 relatedparties and deposits. They are recognised when an obligation arises. They are initially recognised at fair valueless transaction 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.
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)
based on unbiased forward looking information as impairment allowance. The Branch calculates the ECL by
three stages:
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 12months;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 overthe 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
in stage III, with their impairment allowance measured at the lifetime ECL.

Financial instruments can be transferred between the different stages depending on their relative increase incredit risk since initial recognition.

27
MUFG Bank, Ltd.
Auckland BranchNotes to the Financial Statements
For the Year Ended 31 March 2021
2.

Significant Accounting Policies (continued)
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 andanalysis and to reflect the result in the rating. In addition, the local economic environment, local businessenvironment, and future macroeconomic conditions are also considered and reflected in the rating. They arebased 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 the same 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 of creditworthiness 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. “DF rate” is calculated based on the actual value of number of borrowers falling in default for one
year to the effective borrower numbers by each credit rating. PD for each borrower rating is based on simple
average of DF rate of last decade.
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 7
8
9

Assets may move in both directions through the stages of the impairment model due to the creditworthinessof the 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.

28
MUFG Bank, Ltd.
Auckland BranchNotes to the Financial Statements
For the Year Ended 31 March 2021
2.

Significant Accounting Policies (continued)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 sickleave 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 aresettled. 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 Branch does not have a formal plan for termination benefits.
o) 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 ofthe broader customer credit process and reflects the probability of default. They are disclosed as contingent
liabilities at their face value.
p) 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 fortaxation purposes. The amount of deferred tax provided is based on the expected manner of realisation orsettlement of the carrying amount of assets and liabilities, using tax rates enacted or substantively enacted atbalance date.

29
MUFG Bank, Ltd.
Auckland BranchNotes to the Financial Statements
For the Year Ended 31 March 2021
2.

Significant Accounting Policies (continued)
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 nolonger probable that the related tax benefit will be realised.
q) Investment Revaluation Reserve
This reserve includes changes in fair value of FVOCI financial assets, net of tax. These changes aretransferred to the profit and loss when the asset is derecognised or impaired.
r) 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 thecompany and those activities relating to the cost of servicing the company’s equity capital.

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 andtrade finance activities of the Branch. The Branch is subject to the same credit review process as the Sydney
Branch.

30
MUFG Bank, Ltd.
Auckland BranchNotes to the Financial Statements
For the Year Ended 31 March 2021
3.

Risk Management Policies (continued)
The Parent Bank sets the Branch’s exposure limits to clients. The Branch has been granted a discretionary
lending limit by the Parent Bank with such discretion limited to the Regional Head for Oceania. A borrower
rating system is used to monitor the creditability of customers. The Parent Bank assigns a borrower rating foreach 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 beclassified into four categories: Normal, Close Watch, Likely to Become Bankrupt, and (Virtually) 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 forcustomers 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 and transactions above a certain
credit limit require approval from the Parent Bank after the Regional Head for Oceania has approved therelevant transaction.
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 andbranches of the Parent Bank and are subject to annual review. Credit risk exposures are monitored on a daily
basis and any 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 withcustomers as well as from loans and deposits undertaken in foreign currencies. The Branch does not act as a
price maker for other institutions in the interbank foreign exchange market and does not take speculative
trading positions in foreign 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 toback foreign 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.
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 related parties; issuing securities such as commercial paper and medium term notes; trade financetransactions; investing in 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 otherinstitutions 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.

31
MUFG Bank, Ltd.
Auckland BranchNotes to the Financial Statements
For the Year Ended 31 March 2021
3.

Risk Management Policies (continued)d) Traded Equity Risk
Traded equity risk is the risk of loss arising from adverse movements in the prices of traded equities. The
Branch does 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 falldue, 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 of a 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 andwould form the day-to-day focus of the Branch’s liquidity management.
Bank-specific (“name”) crisis – which covers the behavior of cash flows where there is some 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.
The Branch holds the following liquid assets in order to manage its liquidity risk:
As at
31 March 2021
NZD
Cash and cash equivalents
Amounts due from related parties
Amounts due from other financial institutions
Investment in debt instruments

1,045,056,782
606,883,993
164,999,004
455,852,935
2,272,792,714

As at
31 March 2020
NZD
232,514,336
116,526,694
219,996,756
596,778,945
1,165,816,731f) 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.

32
MUFG Bank, Ltd.
Auckland BranchNotes to the Financial Statements
For the Year Ended 31 March 2021
3.

Risk Management Policies (continued)g) Operational Risk
Operational risk is defined as the risk of loss resulting from inadequate or failed internal processes, people
and systems or from external events. This definition includes legal risk but excludes credit, market, strategic
and reputation risk. However the cultural nature of the Branch is such that reputational risk is consideredwithin our frameworks.
Oceania branch utilises the three lines of defence approach to the management of risk, with the businesslines 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 andprovision of 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.
The Parent Bank maintains close supervision of the Branch’s activities as described below in (h) “Internal
Audit Function”.
h) 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 toscoping audits. The last branch wide internal audit was conducted during July 2016. Since that time theaudit methodology has evolved to target specific high risk topics on a thematic basis. Oceania has been
subjected to four audits over the last 12 months. 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.
i) 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 monthly.
The matters raised by SI are discussed and actioned by the Branch as soon as practicable but not later than amonth 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 the Parent Bank.
j) 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.

33
MUFG Bank, Ltd.
Auckland BranchNotes to the Financial Statements
For the Year Ended 31 March 2021

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/ (loss) on interest rate derivatives
Net gain/ (loss) on currency derivatives
Net gain/ (loss) on foreign currency
Other income

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
Other income
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 & operating lease costs
Depreciation
Furniture, fixtures and fittings
Office equipment
Motor vehicles
Right-of-use assets depreciation
Auditors' 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 2021
NZD

Twelve Months ended
31 March 2020
NZD

68,233,159
385,938

127,348,419
648,964

68,619,097

127,997,383

27,403,121
27,403,121

24,540,697
24,540,697

2,754,143
2,070,655
173,193
1,910
4,999,901
101,022,119(2,895,631)(123,438)(117,747)
1,038(3,135,778)
149,402,302

65,191,960
3,427,137

121,833,361
6,164,022

27,403,121
2,142,449
2,855,542
1,910
101,022,119

24,540,654(3,505,053)
368,237
43
1,038
149,402,302

12,063,161
31,954,375
44,017,536

17,819,215
81,472,083
99,291,298

44,017,536
44,017,536

99,291,298
99,291,298

138,014123,061

6,850
14,261
188,545

8,263
19,967
2,921
186,600

156,450
3,665,550
33,796
6,137,607
273,896
10,614,969
46,389,614

151,700
3,635,404
93,111
6,867,536(125,561)
10,963,002
39,148,002

Total income excluding any net loss for twelve months ended 31 March 2021 is NZD 101,022,119 (twelve months ended 31 March 2020
: NZD 152,539,118).

34
MUFG Bank, Ltd.
Auckland BranchNotes to the Financial Statements
For the Year Ended 31 March 2021
5.

Property, Plant and Equipment
As at
31 March 2021
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

Right-of-use assets:
Opening balance
Additions
Disposals
Closing balance
Accumulated depreciation
Opening balance
Depreciation during the year
Disposals
Closing balance

Net book value as at 31 March

As at
31 March 2020
NZD

645,404
645,404

645,404
645,404(633,448)(6,850)(640,298)
5,106(625,185)(8,263)(633,448)
11,956

1,243,126
12,987
1,256,113

1,264,791
3,854(25,519)
1,243,126(1,204,771)(14,261)(1,219,032)
37,081(1,210,323)(19,967)
25,519(1,204,771)
38,35538,091
38,091

38,091
38,091(38,091)(38,091)-(35,170)(2,921)(38,091)-

1,648,877
1,648,877

1,648,877
1,648,877(186,600)(188,545)(375,145)
1,273,732(186,600)(186,600)
1,462,277

1,315,919

1,512,588

35
MUFG Bank, Ltd.
Auckland BranchNotes to the Financial Statements
For the Year Ended 31 March 2021
6.

Income Tax
Income Tax recognised in profit and loss
As at
31 March 2021
NZD

Tax expense / (benefit) 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 2020
NZD

10,053,316

8,469,965(213,940)

186,130(35,115)
9,804,261

122,122
8,778,217

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

46,389,614

39,148,002

Income tax expense calculated at 28%

12,989,092

10,961,441

Effect of other assessable incomes
Effect of other deductible expenses
Effect of expenses that are not deductible in determining taxable
profit210,000(4,130,223)

249,200(4,276,048)

949,332
10,018,201

1,657,494
8,592,087(213,940)

186,130

9,804,261

8,778,217

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

The prima facie income tax expense on pre-tax accounting other comprehensive income reconciles to the income tax expense in
the financial statement as follows:
Profit from other comprehensive income(994,101)

3,262,110

Income tax expense calculated at 28%(278,348)

913,391

The Branch did not have any imputation credits as at the year ended 31 March 2021 (2020: Nil).
The Branch had Nil as current tax asset at the year ended 31 March 2021 (2020: Nil).
Deferred tax balance
Deferred tax assets arise from the following
31 March 2021
NZD
Openingbalance*

NZD
Charged toincomeNZD
Charged toothercomprehensive
incomeNZD
Changes intax rate

NZD
Closingbalance

Temporary differences
Provision for employee entitlement
Property, plant & equipment
Provision for ECL
Others54,801
76,082
234,858
3,965
369,706(14,466)(1,300)50,238643
35,115--40,33574,782
285,096
4,608
404,82136
MUFG Bank, Ltd.
Auckland BranchNotes to the Financial Statements
For the Year Ended 31 March 2021
6.

Income Tax (continued)
31 March 2020
NZD
Openingbalance

NZD
Charged toincomeNZD
Charged toothercomprehensive
incomeNZD
Changes intax rate

19,615(4,371)(138,512)
1,146(122,122)

-

-

NZD
Closingbalance

Temporary differences
Provision for employee entitlement
Property, plant & equipment
Provision for ECL
Others35,18680,453373,3702,819
491,82854,801
76,082
234,858
3,965
369,706

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.

7.

Deposits
As at
31 March 2021
NZD

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

8.

173,963,431
9,397,875
838,697,399
262,796,712
985,453,945
2,270,309,362

248,638,364
10,233,460
330,044,948
275,480,071
198,221,596
1,062,618,439

Total Liabilities of the Branch Net of Amounts Due to Related Parties
As at
31 March 2021
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 2020
NZD

As at
31 March 2020
NZD

6,202,096,860

6,293,645,448(3,857,530,889)
2,344,565,971(5,131,584,468)
1,162,060,980

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 2021
NZD
Assurance Services
Auditor of the Branch
Audit & review of the Branch’s Disclosure Statements
Other non-audit services

156,450-

Twelve Months
ended
31 March 2020
NZD

151,700-

The auditor of the Branch is Deloitte Limited, Auckland.

37
MUFG Bank, Ltd.
Auckland BranchNotes to the Financial Statements
For the Year Ended 31 March 2021
10.

Provision for expected credit losses

The following table reconciles the 31 March 2021 provision for expected credit losses on loan, financial guarantee
and commitments based on the requirements of NZ IFRS 9.
Stage 1Loan

NZD
Provision for impairment charges as at 31 March 2020
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 2021

835,263
190,303(239,874)
232,507
1,018,199

Financialguarantee
andcommitments
372,640
197,206(102,232)(4,014)
463,600

Total

1,207,903
387,509(342,106)
228,493
1,481,799* Represents the transfers between stages

The total provisions for ECL had been increased due to the down guide of several the Branch’s customers credit
profile which were affected by the impact of COVID 19 on their business environment.
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.
NZD

Stage 1
5,183,096,581
879,110,240(1,916,737,418)(98,568,139)
4,046,901,264(1,018,199)
4,045,883,065

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 as at 31 March 2021
Provision for ECL as at 31 March 2021
Total net carrying amount as at 31 March 2021

11.

Other Liabilities
As at
31 March 2021
NZD

Provision for employee entitlements
Unearned income
Management fee charged by related parties
Provisions for ECL on financial guarantee andcommitment
Lease Liabilities
OthersAs at
31 March 2020
NZD

144,051
1,697,792
4,060,474

195,716
1,648,204
4,352,421

463,600
1,312,532
2,334,757
10,013,206

372,640
1,484,461
1,841,830
9,895,272

38
MUFG Bank, Ltd.
Auckland BranchNotes to the Financial Statements
For the Year Ended 31 March 2021
12.

Commitments and Contingent Liabilities

Note

As at
31 March 2020
NZD

As at
31 March 2021
NZDa) Other commitments
Undrawn facility commitments

16

2,252,390,739

2,002,446,603

16
16
16

49,586,637
202,124,744
15,358,641
267,070,022

19,815,637
75,229,720
17,122,476
112,167,833b) 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 arethree principal 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 theguarantee; and

Performance related contingencies – a guarantee given by the Branch that undertakes to pay a sumof money to a third party where the customer fails to fulfill certain terms and conditions of acontract; 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 fulfil 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 mustalso provide the Branch with a written indemnity, undertaking that, in the event the Branch is called upon topay, 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.

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
Loan Disclosure
Loan Outstanding
Interest charged

Twelve Months ended
31 March 2021
NZD

Twelve Months ended
31 March 2020
NZD

1,182,943
1,182,943

1,198,550
1,198,550--

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

39
MUFG Bank, Ltd.
Auckland BranchNotes to the Financial Statements
For the Year Ended 31 March 2021
14.

Related Party Disclosures
The Auckland Branch is a branch of an overseas company, MUFG Bank, Ltd., which is incorporated inJapan and 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
due in accordance with an agreed date. Amounts due to related parties are mainly term deposits which are
due in accordance 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 andinclude foreign exchange forwards, interest rate swaps, currency swaps, and currency options.

Twelve Months
ended
31 March 2021
NZD

Twelve Months ended
31 March 2020
NZDa) Balances
AssetsAmounts due from related parties

606,883,993

116,526,694

Derivative instruments
Others45,077,635-

67,458,324
1,247

651,961,628

183,986,265

3,771,780,745

5,042,976,787

81,689,670
4,060,474

84,255,260
4,352,421

3,857,530,889

5,131,584,468

83,000,000

83,000,000

6,183,941
1,150,000

6,183,941
1,590,057

7,333,941

7,773,998

Liabilities
Amounts due to related parties
Derivative instruments
Other

EquityHead Office capital
Off Balance Sheet
Guarantees given
Performance related contingencies

40
MUFG Bank, Ltd.
Auckland BranchNotes to the Financial Statements
For the Year Ended 31 March 2021
14.

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

385,938
31,954,375(12,136,941)
5,734(4,060,474)

648,964
81,472,083(3,542,222)
4,943(4,352,421)

The Branch’s Head Office capital comprises funds provided by the overseas bank to support the Branch’s
daily operation and to fulfil 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 2021.
The notional principal amounts below represent the face value of the transaction.
As at
31 March 2021
NZD

As at
31 March 2020
NZD

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
Total notional principal

Fair value < 1 year
Fair value 1 to 2 years
Fair value 2 to 3 years
Total fair value

1,182,429,286
155,608,566
1,338,037,852

781,620,811
68,223,242
21,349,679
871,193,732(16,544)(20,532)(37,076)(30,056)(10,382)(1,222)(41,660)

41
MUFG Bank, Ltd.
Auckland BranchNotes to the Financial Statements
For the Year Ended 31 March 2021
15.

Derivative Financial Instruments (continued)

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

288,628,828
857,094,923
918,707,772
1,134,071,922
851,248,356
771,374,105
4,821,125,906

1,111,858,168
298,281,574
592,555,330
925,562,220
1,071,441,290
946,512,033
4,946,210,615

1,077(28,719)(1,940,455)(126,346)(95,375)(681,981)(2,871,799)(109,999)(70,213)(313,925)(3,227,441)(447,766)(1,790,764)(5,960,108)

162,300,411
963,935,862
1,126,236,273

169,941,308
328,603,628
498,544,936(10,787)(1,429,835)(1,440,622)(40,754)(449,424)(490,178)

Notional principal amount < 1 year
Notional principal amount 1 to 2 years
Total notional principal--

Fair value < 1 year
Fair value 1 to 2 years
Total fair value--

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

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

Currency Options Contracts

42
MUFG Bank, Ltd.
Auckland BranchNotes to the Financial Statements
For the Year Ended 31 March 2021
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. The Branch’s credit exposure on derivative financial instruments is determined in accordancewith Capital Adequacy Framework (Standardized Approach) BS2A. The credit equivalent is derived bytaking into account the residual maturity of each instrument.
Concentration of credit risk is determined by management to be by industry sector, geographical locationand customer credit rating. Industry sectors are determined by reference to the categories based on ANZSIC
code. 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 2021
NZD

As at
31 March 2020
NZD

Notional principal
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

1,045,056,782
606,883,993
164,999,004
455,852,935
4,046,901,264
14,356,200
2,018,312
6,336,068,490

232,514,336
116,526,694
219,996,756
596,778,945
5,183,096,581
16,550,082
3,051,420
6,368,514,814

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

49,586,637
202,124,744
15,358,641
2,252,390,739
2,519,460,761

19,815,637
75,229,720
17,122,476
2,002,446,603
2,114,614,436

122,833,075

145,758,081

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

43
MUFG Bank, Ltd.
Auckland BranchNotes to the Financial Statements
For the Year Ended 31 March 2021
16.

Concentration of Credit Risk (continued)i.

Concentration of Credit Risk by Customers Industry Sector
As at
31 March 2021
NZD

On Balance Sheet
Agriculture
Communications
Construction
Education
Electricity, gas and water
Finance
Fishing
Food manufacturing
Forestry
Health care & social assistanceMiningOther manufacturing
Property and business services
Retail Trade
Transport and storage
Wholesale trade
Wood and paper manufacturing
Total

As at
31 March 2020
NZD

126,423,045
77,584,187
69,683,805
801,790,958
2,830,420,213
78,524,038
772,603,486
101,524,659
212,761,817
112,440,585
442,244,298
171,127,942
329,568,627
192,765,436
16,605,394
6,336,068,490

185,835,460
255,301,175
60,072,636
1,017,975,438
2,129,667,671
106,926,984
712,703,527
96,195,032
172,588,497
49,865,300
381,266,999
324,098,147
60,188,227
453,318,419
355,437,172
7,074,130
6,368,514,814

61,333,541
217,713,879
75,083,014
651,799,124
385,833,940
282,719,114
178,020
98,814
115,369,529
126,644,329
50,714,285
163,416,494
257,035,649
115,163,256
16,357,773
2,519,460,761

90,000,000
33,424,538
603,604,288
180,273,998
491,386,639
1,173,020
2,537,839
127,648,190
4,809,265
97,692,429
94,973,049
285,778,859
73,793,186
27,519,136
2,114,614,436

Notional principal
Off Balance Sheet
Communications
Construction
Education
Electricity, gas and water
Finance
Food manufacturing
Forestry
Health care & social assistance
Other manufacturing
Property and business services
Public administration and safely
Retail trade
Transport and storage
Wholesale trade
Wood and paper manufacturing
Total

44
MUFG Bank, Ltd.
Auckland BranchNotes to the Financial Statements
For the Year Ended 31 March 2021
16.

Concentration of Credit Risk (continued)

Fair value
Derivative Instrument
Communications
Construction
Education
Electricity, gas and water
Finance
Fishing
Food manufacturing
Forestry
Health care & social assistance
Other manufacturing
Transport and storage
Wholesale trade
Wood and paper manufacturing
Total

ii.

2,343,049
371,058
410,497
32,627,196
47,003,534
2,149,996
11,403,434
202,281
1,672,162
9,849,835
10,148,381
2,761,842
1,889,810
122,833,075

333,080
33,094,169
71,699,420
8,517,994
8,525,011
91,832
11,982,088
6,540,561
1,595,695
3,378,231
145,758,081

Concentration of Credit Risk by Customers Geographic Location
As at
31 March 2021
NZD

As at
31 March 2020
NZD

Notional principal
On Balance Sheet
New ZealandJapan
Australia
United States of America
FranceTotal

4,565,266,992
651,959,428
1,117,914,467
927,6036,336,068,490

5,826,587,005
187,331,957
354,595,718
134
6,368,514,814

Off Balance Sheet
New ZealandJapan
Australia
Other
Total

2,502,632,654
7,333,941
1,333,541
8,160,625
2,519,460,761

2,102,695,776
7,773,997
4,144,663
2,114,614,436

77,229,999
45,210,683
392,393
122,833,075

77,401,436
67,641,534
715,111
145,758,081

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
ratings in accordance with the credit quality of customers for financial assets and derivative financial
instruments. Please refer to Note 22 for impaired assets.

45
MUFG Bank, Ltd.
Auckland BranchNotes to the Financial Statements
For the Year Ended 31 March 2021
16.

Concentration of Credit Risk (continued)

31 March 2021
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

1,496,728,496
4,232,456,001
606,883,993
6,336,068,490

Derivative financial
instruments

729,040,300
1,783,086,520
7,333,941
2,519,460,761

12,535,058
65,127,555
92,82745,077,635
122,833,075

31 March 2020
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
2,265,266,933
3,986,719,940
116,527,941
6,368,514,814

Off balance Sheet

Derivative financial
instruments

510,998,912
1,595,841,526
7,773,998
2,114,614,436

13,380,774
64,567,029
351,954
67,458,324
145,758,081* 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 onthese balances 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.

46
MUFG Bank, Ltd.
Auckland BranchNotes to the Financial Statements
For the Year Ended 31 March 2021
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 masternetting agreement provides the contractual framework within which dealing activities across a range ofover-the-counter 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 otherpredetermined events occur. There have been no amounts set off in the statement of financial position
for derivative assets and derivative liabilities as at 31 March 2021 (2020: Nil).
Financial assets subject to offsetting, enforceable master netting arrangements and similar agreements:
As at 31 March 2021
NZD
Gross amounts ofrecognised financial
assets (a)Derivatives

122,833,075

Gross amounts ofrecognised financial
liabilities set off in thestatement of financial
position (b)-Net amounts offinancial assets
presented in thestatement of financial
position (c) = (a) – (b)122,833,075

Related amounts
not setoff in thestatement offinancial position(d)7,680,519

Net amount(e) = (c) – (d)Gross amounts ofrecognised financial
liabilities set off in thestatement of financial
position (b)-Net amounts offinancial assets
presented in thestatement of financial
position (c) = (a) – (b)145,758,081

Related amounts
not setoff in thestatement offinancial position(d)3,727,697

Net amount(e) = (c) – (d)115,152,556

As at 31 March 2020

NZD
Gross amounts ofrecognised financial
assets (a)Derivatives

145,758,081

142,030,384

Financial liabilities subject to offsetting, enforceable master netting arrangements and similar
agreements:
As at 31 March 2021
NZD
Gross amounts ofrecognised financial
liabilities (a)Derivatives

127,182,572

Gross amounts ofrecognised financial
assets set off in thestatement of financial
position (b)-Net amounts offinancial liabilities
presented in thestatement of financial
position (c) = (a) – (b)152,250,027

Related amounts
not setoff in thestatement offinancial position(d)7,680,519

Net amount(e) = (c) – (d)Gross amounts ofrecognised financial
assets set off in thestatement of financial
position (b)-Net amounts offinancial liabilities
presented in thestatement of financial
position (c) = (a) – (b)152,250,027

Related amounts
not setoff in thestatement offinancial position(d)3,727,697

Net amount(e) = (c) – (d)119,502,053

As at 31 March 2020
NZD
Gross amounts ofrecognised financial
liabilities (a)Derivatives

152,250,027

There has been no collateral obtained against derivative assets for the year end 31 March 2021
(Mar 2020: Nil).
f.

Acceptance of Customer and Other Assets
Collateral is generally not sought on these balances.
47

MUFG Bank, Ltd.
Auckland Branch

148,522,330

Notes to the Financial Statements
For the Year Ended 31 March 2021
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
amount of 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, themajority of which borrow on unsecured terms. If there is collateral received during loan drawdown, thevalue of the collateral will be checked against the agreement to ensure that it is either equal to or over theagreed value. The total collateral value as at 31 March 2021 is over NZD 1,029,628,536 which is basedon guarantees received from third parties, the current unaudited financial accounts, and market value ofbusiness assets.
On Balance Sheet

As at
31 March 2021

As at
31 March 2020

Maximum Exposure

NZD
6,336,068,490%
100.00NZD
6,368,514,814%
100.00Collateral classification
SecuredPartially secured
Unsecured733,329,841
20,147,635
5,582,591,014

11.57
0.32
88.11

1,210,699,059
31,838,609
5,125,977,146

19.01
0.50
80.49

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 thenature of the transaction.

Off Balance Sheet

As at
31 March 2021

As at
31 March 2020

Maximum Exposure

NZD
2,519,460,761%
100.00NZD
2,114,614,436%
100.00Collateral classification
SecuredPartially secured
Unsecured

285,043,883
2,234,416,878

11.31
88.69

167,058,019
1,947,556,417

7.90
92.10

48
MUFG Bank, Ltd.
Auckland BranchNotes to the Financial Statements
For the Year Ended 31 March 2021
17.

Concentration of Funding
As at
31 March 2021
NZD

As at
31 March 2020
NZDa) Category analysis
Customer deposits
Due to related parties

2,270,309,362
3,771,780,745
6,042,090,107

1,062,618,439
5,042,976,787
6,105,595,226

53,773,516
54,979,544
9,777,224
157,770,774
4,868,964,812
35,673,534
7,866
3,594,937
32,019,323
245,655
45,640,770
20,007,348
170,125,905
70,296331,688,400
250,311,603
7,438,600
6,042,090,107

11,236,784
50,325,356
2,835,122
7,088
41,604,209
5,412,768,363
157,652,828
8,582
13,06538,042,659
1,151,733
96,665,731
15,038,677
116,696
200,636,315
71,198,125
6,293,893
6,105,595,226

2,526,626,047
2,269,766,765
1,212,114,510
33,582,785
6,042,090,107

4,160,944,700
1,029,989,301
819,742,207
62,561,176
32,357,842
6,105,595,226b) Industry analysis
Agriculture
Communications
Constructions
Education
Electricity, gas and water
Finance
Food manufacturing
Fishing
Forestry
Insurance
Other industries
Other manufacturing
Property and business services
Public administration and safely
Retail trade
Transport and storage
Wholesale trading
Wood and paper manufacturingc) Geographical analysis
Australia
New ZealandJapan
Singapore
Fiji

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 the repricing of the assets and liabilities. These mismatches are managed by the Sydney
Branch as part of the overall risk management process conducted in accordance with strict policy guidelines.

49
MUFG Bank, Ltd.
Auckland BranchNotes to the Financial Statements
For the Year Ended 31 March 2021
18.

Interest Rate Risk (continued)

31 March 2021
Over 3 months
and up to 6
monthsNZDOver 6months andup to 1 year
NZD

1,045,056,782

-

-

-

-

-

1,045,056,782

0.00%

75,004,667

26,424,546

-

-

-

505,454,780

606,883,993

0.33%

Up to 3monthsNZDOver 1 year
and up to 2
years
NZD

NON INTERESTSENSITIVE
NZDOver 2 years
NZD

WEIGHTED
AVE. EFF.
RATE
%

TOTAL
NZD

ASSETSCash and short term liquid
assetsAmounts due from relatedpartiesAmounts due from otherfinancial institutions

164,999,004

‐

‐

‐

‐

‐

164,999,004

0.36%

Investment in debt instruments
Corporate loans originated by
the Bank
Due from customers on
acceptance

231,237,815

-

-

-

224,615,120-

455,852,935

0.67%

3,868,701,815

65,224,815

17,915,333

64,219,485

30,839,816(1,018,199)

4,045,883,065

1.39%

-

-

-

-

-

14,356,200

14,356,200

Property, Plant and Equipment
Other assets
Total assets

5,385,000,083

91,649,361

17,915,333

64,219,485

255,454,936

1,315,919
125,345,592
645,454,292

1,315,919
125,345,592
6,459,693,490

3,712,760,481
1,919,082,079
5,631,842,560

45,226,803
311,925,879
357,152,682

29,903,529
29,903,529

5,870,569
5,870,569

5,839,569
1,312,532
7,152,101

2,083,323
9,397,875
14,356,200
144,338,021
170,175,419

3,771,780,745
2,270,309,362
1,312,532
14,356,200
144,338,021
6,202,096,860

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

Over 2 years
NZD

NON INTERESTSENSITIVE
NZD

232,514,336

-

-

-

-

-

232,514,336

0.00%

-

-

-

-

-

116,526,694

116,526,694

0.00%

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

0.64%
0.64%
1.70%

31 March 2020
Up to 3monthsNZDOver 1 year
and up to 2
years
NZD

WEIGHTED
AVE. EFF.
RATE
%

TOTAL
NZD

ASSETSCash and short term liquid
assetsAmounts due from relatedpartiesAmounts due from otherfinancial institutions

219,996,756

‐

‐

‐

‐

‐

219,996,756

1.12%

Investment in debt instruments
Corporate loans originated by
the Bank
Due from customers on
acceptance

254,474,523--

108,211,657

234,092,765-

596,778,945

0.83%

4,812,932,988

299,059,678

26,054,568

15,879,687

29,169,660(835,263)

5,182,261,318

1.69%

-

-

-

-

-

16,550,082

16,550,082

Property, Plant and Equipment
Other assets
Total assets

5,519,918,603

299,059,678

26,054,568

124,091,344

263,262,425

1,512,588
149,231,759
282,985,860

1,512,588
149,231,759
6,515,372,478

4,760,203,230
1,036,326,379
5,796,529,609

248,065,173
16,058,600
264,123,773

4,454
4,454

10,294,408
10,294,408

18,848,502
1,480,007
20,328,509

5,565,474
10,233,460
16,550,082
170,015,679
202,364,695

5,042,976,787
1,062,618,439
1,484,461
16,550,082
170,015,679
6,293,645,448

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

1.48%
0.95%
1.70%

At 31 March 2021, 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 2.3 million lower (2020: NZD 1.1M 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
2.3 million higher (2020: NZD 1.1M 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 2020 and 2019 because asimilar funding structure was applied in 2021 and 2020.

50
MUFG Bank, Ltd.
Auckland BranchNotes to the Financial Statements
For the Year Ended 31 March 2021
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 thecontractual 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 andprincipal cash flows. Therefore, they may differ to the carrying amounts on the statement of financial position.
31 March 2021

On Demand
NZD
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
LIABILITIESAmounts due to related parties
Deposits
Acceptance
Derivative instruments
Lease liability
Gross loan commitment
Guarantees given
Performance related contingencies
Trade related contingencies

To 1 Month
NZD

1 to 3Months
NZD

3 to 12Months
NZD

1 to
5 Years
NZD

Over 5
Years
NZD

Total
NZD

1,045,056,782
505,454,781-

75,004,663

26,424,550--

1,045,056,782
606,883,994-

80,000,000
22,500,000

85,000,000
213,000,000

5,500,000

216,500,000-

165,000,000
457,500,000

348,531,251
1,899,042,814

376,163,109
12,562,543
7,985,201
2,018,312
501,229,165

133,557,340
1,793,657
21,277,385
529,633,045

535,290,482
40,860,036
608,075,068

2,575,315,652
101,852,635
2,893,668,287

217,607,923
217,607,923

4,186,465,757
14,356,200
171,975,257
2,018,312
6,649,256,302

446,158,018
2,252,390,739
2,698,548,757

1,524,878,312
480,317,731
12,562,543
7,983,758
14,321
5,149,077
80,543,046
2,111,448,788

1,195,353,450
802,544,457
1,793,657
21,316,645
28,70077,477,935
15,358,641
2,113,873,485

252,730,434
342,697,836
38,957,881
133,069
43,567,833
37,583,714
715,670,767

811,925,215
199,900,000
100,171,186
797,061
126,500
6,520,049
1,119,440,011

339,381743,227
1,082,608

3,784,887,411
2,271,618,042
14,356,200
168,429,470
1,312,532
2,252,390,739
49,586,637
202,124,744
15,358,641
8,760,064,416

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

31 March 2020

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

232,514,336
116,526,694

-

-

-

-

-

232,514,336
116,526,694-

75,000,000
259,250,000

145,000,000
3,000,000

12,250,000

326,750,000-

220,000,000
601,250,000

456,899,898
805,940,928

4,450,514
11,558,918
6,901,778
3,051,420
360,212,630

168,067,354
4,991,164
11,145,072
332,203,590

1,053,936,146
34,612,400
1,100,798,546

3,597,817,194
111,830,543
4,036,397,737

108,467,767
27,162,318
135,630,085

5,389,638,873
16,550,082
191,652,111
3,051,420
6,771,183,516

534,351,896
2,002,446,603
2,536,798,499

2,637,628,624
159,465,356
11,558,918
7,425,999
14,057
14,9632,816,107,917

1,737,766,345
152,196,693
4,991,164
11,260,918
28,17333,544,757
17,122,476
1,956,910,526

455,939,206
16,210,921
33,792,774
129,699
17,940,910
27,867,069
551,880,579

225,640,612
199,800,000
105,097,153
759,298
1,005,000
13,802,931
546,104,994

25,691,240
553,234
869,727
27,114,201

5,056,974,787
1,062,024,866
16,550,082
183,268,084
1,484,461
2,002,446,603
19,815,637
75,229,720
17,122,476
8,434,916,716

51
MUFG Bank, Ltd.
Auckland BranchNotes to the Financial Statements
For the Year Ended 31 March 2021
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 bothprincipal 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 valueof the 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 anddeposits, 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’ anddeposits’ origination.

c.

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

d.

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

52
MUFG Bank, Ltd.
Auckland BranchNotes to the Financial Statements
For the Year Ended 31 March 2021
20.

Fair Value of Financial Instruments (continued)

31 March 2021
Note

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

FVTPL

FVOCI

NZD

NZD

Amortised
Cost
NZD

Total
Carrying
AmountNZDFair Value
NZD

a

-

-

1,045,056,782

1,045,056,782

1,045,056,782

a
a

-

-

606,883,993
164,999,004

606,883,993
164,999,004

606,883,993
164,999,004

db-

455,852,935-

4,045,883,065

455,852,935
4,045,883,065

455,852,935
4,048,379,671

c, a

122,883,075
122,833,075

455,852,935

16,374,512
5,879,197,356

139,207,587
6,457,883,366

139,207,587
6,460,379,972

b
a, b
c, a

127,182,572
127,182,572-

3,771,780,745
2,270,309,362
14,356,200
6,056,446,307

3,771,780,745
2,270,309,362
141,538,772
6,183,628,879

3,773,850,734
2,272,713,016
141,538,772
6,188,102,522

Note

FVTPL

FVOCI

NZD

NZD

Amortised
Cost
NZD

Total
Carrying
AmountNZDFair Value
NZD

31 March 2020

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

-

-

232,514,336
116,526,694
219,996,756

232,514,336
116,526,694
219,996,756

232,514,336
116,526,694
219,996,756

db-

596,778,945-

5,182,261,318

596,778,945
5,182,261,318

596,778,945
5,184,467,300

c, a

145,758,081
145,758,081

596,778,945

18,251,700
5,769,550,804

164,009,781
6,512 087,830

164,009,781
6,514,293,812

b
a, b
c, a

152 250 027
152 250 027-

5,042,976,787
1,062,618,439
16,550,082
6,122,145,308

5,042,976,787
1,062,618,439
168,800,109
6,274,395,335

5,046,681,075
1,070,661,698
168,800,109
6,286,142,882

53
MUFG Bank, Ltd.
Auckland BranchNotes to the Financial Statements
For the Year Ended 31 March 2021
20.

Fair Value of Financial Instruments (continued)

The following table provides an analysis of financial instruments that are measured subsequent to initial recognition
at fair 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
identical assets 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 2021
Level 1
Level 231 March 2020
Level 1
Level 2Derivative financial assets
Interest rate swaps
Currency swaps
Currency options
FX forwards
Total derivative financial assets-

62,428,146
28,382,210
32,022,719
122,833,075-

73,962,265
48,683,264
23,112,552
145,758,081

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

65,299,945
29,822,832
32,059,795
127,182,572-

79,922,373
49,173,442
23,154,212
152,250,027

455,852,935-

596,778,945-

Investment in debt instruments

Financial assets and financial liabilities, other than the items on the above table, are carried at amortised cost.
Their fair 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
Twelve Months ended
31 March 2021
JPY(000’s)

Net Profit After Tax
Net Profit After Tax over the previous 12 month
period as a percentage of average total assetsb)

327,960,000
0.12%

Twelve Months ended
31 March 2020
JPY(000’s)
139,555,000
0.05%

Size

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

Twelve Months ended
31 March 2021
JPY(000’s)

Twelve Months ended
31 March 2020
JPY(000’s)

290,269,735,000

270,418,512,000

7.34%

6.75%

54
MUFG Bank, Ltd.
Auckland BranchNotes to the Financial Statements
For the Year Ended 31 March 2021
22.

Asset Quality(i)

The Overseas Banking Group

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
as a percentage of total individually impaired assets
Total collective credit impairment allowance

(ii)

As at
31 March 2021
JPY(000’s)

As at
31 March 2020
JPY(000’s)

1,160,312,000

903,766,000

0.40%

0.33%

261,771,000

165,282,000

22.56%

18.29%

725,272,000

447,252,000

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 2021 (31 March 2020: Nil).
The Branch did not charge or credit to the statement of comprehensive income for any increase or decrease
in individual credit impairment allowance during this accounting period ended 31 March 2021 (31 March
2020: Nil).
The total interest income recognised on impaired asset over this accounting period ended 31 March 2021 is
Nil (31 March 2020: 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 ofcollective provision for expected credit loss and the impacts of changes in gross carrying amounts of loan byexpected credit loss allowance are disclosed in note 10.

55
MUFG Bank, Ltd.
Auckland BranchNotes to the Financial Statements
For the Year Ended 31 March 2021
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 2021
NZD
(000’s)Twelve Months Ended
31 March 2020
NZD
(000’s)(1) Aggregate Interest Rate Exposure(a)Notional Capital Charge *

3,565

5,216

(b)

Implied risk weighted exposure

44,56365,200* The Notional Capital Charge is calculated in accordance with Capital Adequacy Framework (Standardized Approach)
BS2A.
Peak End of Day
Ending31 March 2021
NZD
(000’s)Peak End of Day
Ending31 March 2020
NZD
(000’s)(1) Aggregate Interest Rate Exposure (continued)(a)Notional Capital Charge **

6,860

7,594

(b)

Implied risk weighted exposure

85,75094,925** 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 Capital Adequacy Framework (Standardized Approach) BS2A.
(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 therisk-weighted approach introduced by the Basel Committee on Banking Supervision of the Bank forInternational Settlements.
Basel II, as adopted by the FSA, has been applied to Japanese banks since 31 March, 2007. Certain
provisions of 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, theminimum capital required by FSA is at least equal to Basel II.
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.
56
MUFG Bank, Ltd.
Auckland BranchNotes to the Financial Statements
For the Year Ended 31 March 2021
24.

Capital Adequacy (continued)
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 isrequired to maintain 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 capitalconservation buffer of 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 31 March 2020:

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

2020
4.50%
2.50%
0.01%
1.50%
8.51%
10.01%
12.01%

2021
4.50%
2.50%
0.00%
1.50%
8.50%
10.00%
12.00%

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 2021

11.17%
12.76%
15.04%As at
31 March 2021

10.66%
12.42%
14.60%As at
31 March 2020

10.70%
12.29%
14.43%As at
31 March 2020

10.67%
12.52%
14.76%The most recent publicly available information in relation to capital adequacy framework implemented by
the overseas bank and overseas banking group are disclosed under the ultimate holding company’s annual
report which can be accessed via the Bank’s global website: www.mufg.jp.

25.

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

26.

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

57
MUFG Bank, Ltd.
Auckland BranchNotes to the Financial Statements
For the Year Ended 31 March 2021
27.

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.

28.

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.

29.

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 2021, 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. The impact of COVID-19 pandemic has not resulted in any specific subsequent event.

58
MUFG Bank, Ltd.
Auckland BranchIndependent Auditor’s Report
To the Shareholders of MUFG Bank, Ltd. – Auckland Branch
REPORT ON THE AUDIT OF THE FINANCIAL STATEMENTS AND SUPPLEMENTARY INFORMATION (EXCLUDING
SUPPLEMENTARY INFORMATION RELATING TO CREDIT AND MARKET RISK EXPOSURES AND CAPITAL ADEQUACY)
OpinionWe have audited the financial statements and the supplementary information (excluding
the information relating to Credit and Market Risk Exposures and Capital Adequacy on
pages 56-57) of the MUFG Bank, Ltd. – Auckland Branch (‘the Branch’ and ‘the Banking
Group’).
The financial statements comprise the statement of financial position as at 31 March
2021, and the statement of comprehensive income, statement of changes in equity andstatement of cash flows for the year then ended, and notes to the financial statements,
including a summary of significant accounting policies.
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 17 to 58:••

comply with generally accepted accounting practice in New Zealand; andgive a true and fair view of the financial position of the Branch as at 31 March 2021,
and its financial performance and cash flows for the year then ended in accordancewith New Zealand Equivalents to International Financial Reporting Standards (‘NZ
IFRS’) and International Financial Reporting Standards (‘IFRS’).

In our opinion, the supplementary information (excluding the information relating toCredit and Market Risk Exposures and Capital Adequacy) disclosed in accordance with
Schedules 4, 7, 11 and 13 of 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 Reserve Bank of New Zealand Act 1989 andany 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 accordancewith those Schedules.

We conducted our audit in accordance with International Standards on Auditing (‘ISAs’)
and International Standards on Auditing (New Zealand) (‘ISAs (NZ)’). Our responsibilities
under those standards are further described in the Auditor’s Responsibilities for the
Audit of the Financial Statements and Supplementary Information section of our report.
We believe that the audit evidence we have obtained is sufficient and appropriate toprovide a basis for our opinion.

Key audit matters

Key audit matters are those matters that, in our professional judgement, were of mostsignificance in our audit of the financial statement of the current period. These matterswere addressed in the context of our audit of the financial statements as a whole, and informing our opinion thereon, and we do not provide a separate opinion on thesematters.

59

Key audit matter

How our audit addressed the key audit matter

Expected credit loss on loans and advances to customers

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

As described in note 10, the expected credit loss has been
determined as $1,481,799.
We considered this a Key Audit Matter due to thesignificant judgement made by management indetermining when to recognise an allowance for
impairment losses on loans and advances to customers
and in estimating the provision.
As detailed in note 10, the Branch has loans and advancesof $4,046,901,264 and impairment allowances of$1,018,199 on loans and advances and $463,600 on
undrawn commitments and guarantees.
Key areas of judgement include:••

Determination of the requirements under NZ IFRS 9
when calculating the impairment allowance, which isreflected in the Branch’s expected credit loss model;
andAssumptions used in the expected credit loss modelsuch as credit risk level of the borrower and macro
economic enviroment including the continued
forecast impacts of the COVID-19 as described innote 2.

We tested the operating effectiveness of key
controls in the lending cycle, specifically isolated tothe assessment of credit risk related to eachcounterparty. We tested the approval of newlending arrangements, the performance of loan
assessments and controls over the monitoring ofcounterparty credit quality.
We assessed the data used in determining the
expected credit loss, including transactional data
captured at commencement of the loan, internal
credit quality assessment.
The Branch has assessed the expected credit loss
through the aggregation of borrower ratings anddetermined the expected credit loss on a collective
basis. As a result, we challenged the probability ofdefault for each borrower rating. We also challenged
the probability of default and expected recovery
ratio applied to each security type, this included theforward-looking information used.
We tested the accuracy of key inputs into themodels by reconciling each of the balances throughto the general ledger. We tested the operating
effectiveness of IT controls related to the systemthat generated the relevant reports.
We assessed the mathematical accuracy of the
expected credit loss model and the reasonablenessof the inputs in the model, as well as the design andimplementation of controls over these inputs.
In addition, we assessed the adequacy of the related
disclosures including disclosures around thecontinued impact of COVID-19 on the determinationof the ECL at year-end.

Other information

The directors are responsible on behalf of the Branch for the other information. The
other information comprises the information in the Disclosure Statement inaccordance with Schedule 2 of the Order on pages 1 to 16 that accompanies the financial statements, supplementary information, and the audit report.
Our opinion on the financial statements and supplementary information does notcover the other information and we do not express any form of assurance
conclusion thereon.
Our responsibility is to read the other information and consider whether it ismaterially inconsistent with the financial statements and supplementary
information or our knowledge obtained in the audit or otherwise appears to bematerially misstated. If so, we are required to report that fact. We have nothing toreport in this regard.

60

Directors’ responsibilities forthe financial statements

The directors are responsible on behalf of the Branch for the preparation of thefinancial statement in accordance with NZ IFRS and IFRS and that give a true and fairview of the matters to which they relate. The directors are also responsible on
behalf of the Branch for such internal control as the directors determine is necessary
to enable the preparation of financial statements that are free from material
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 accordancewith any guidelines issued pursuant to Section 78(3) of the Reserve Bank of New
Zealand Act 1989; any Conditions of Registration; and in accordance with the books
and records of the Branch.
In preparing the financial statements, the directors are responsible on behalf of the
Branch for assessing the Branch’s ability to continue as a going concern, disclosing,as applicable, matters related to going concern and using the going concern basis ofaccounting 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 forthe audit of the financial
statements andsupplementary information

Our objectives are to obtain reasonable assurance about whether the financial
statements and supplementary information as a whole are free from material
misstatement, whether due to fraud or error, and to issue an auditor’s report 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 a material misstatement when it exists. Misstatements can arise from fraud
or error and are considered material if, individually or in the aggregate, they could
reasonably be expected to influence the economic decisions of users taken on thebasis of these financial statements and supplementary information.
It is our responsibility to express an opinion on the financial statements andsupplementary information prepared and presented by the directors, and report our
opinion in accordance with clause 2 of Schedule 1 of the Order. Our responsibility is
to express an opinion based on our audit. A further description of our
responsibilities for the audit of the financial statements is located on the External
Reporting Board’s website at:https://www.xrb.govt.nz/standards-for-assurance-practitioners/auditorsresponsibilities/audit-report-2
This description forms part of our auditor’s report.

Report on other legal andregulatory requirements

In accordance with the requirements of clauses 2(1)(d) and 2(1)(e) of Schedule 1 of
the Order, we report that:• we have obtained all the information and explanations we have required; and• in our opinion proper accounting records have been kept by the Branch as far as
appears from our examination of those records.

61

REPORT ON THE REVIEW OF THE SUPPLEMENTARY INFORMATION RELATING TO CREDIT AND MARKET RISK EXPOSURESAND CAPITAL ADEQUACY
Information subject to ourreview

We have reviewed the supplementary information relating to Credit and Market Risk
Exposures and Capital Adequacy on pages 56 to 57.

Directors’ responsibilities

The directors are responsible on behalf of the Branch for the preparation and fairpresentation of the supplementary information relating to Credit and Market Risk
Exposures and Capital Adequacy prepared in accordance with Schedule 9 of the Order,and for such internal control as the directors determine is necessary to enable thepreparation and fair presentation of the supplementary information relating to Credit
and Market Risk Exposures and Capital Adequacy that is free from material
misstatement, whether due to fraud or error.

Our responsibilities

Our responsibility is to express a conclusion on the supplementary information relating
to Credit and Market Risk Exposures and Capital Adequacy based on our review. We
conducted our review in accordance with NZ SRE 2410 Review of Financial Statements
Performed by the Independent Auditor of the Entity (‘NZ SRE 2410’). We are required toconclude whether anything has come to our attention that would cause us to believethat the supplementary information relating to Credit and Market Risk Exposures andCapital Adequacy is not in all material respects:•

prepared in accordance with the guidelines issued pursuant to Section 78(3) of theReserve Bank of New Zealand Act 1989; any Conditions of Registration; and inaccordance with the books and records of the Branch;•

prepared in accordance with the Capital Adequacy Framework (Standardised
Approach) (BS2A); and•disclosed in accordance with Schedule 9 of the Order.

As the auditor of the Branch, NZ SRE 2410 requires that we comply with the ethicalrequirements relevant to the audit of the annual financial statements of the Branch.
A review in accordance with NZ SRE 2410 is a limited assurance engagement. The
auditor performs procedures, primarily consisting of making enquiries, primarily of
persons responsible for financial and accounting matters, and applying analytical andother review procedures.
The procedures performed in a review are substantially less than those performed in anaudit conducted in accordance with International Standards on Auditing (New Zealand).
Accordingly, we do not express an audit opinion on the supplementary information
relating to Credit and Market Risk Exposures and Capital Adequacy.
Conclusion

Based on our review, nothing has come to our attention that causes us to believe thatthe supplementary information relating to Credit and Market Risk Exposures and Capital
Adequacy, disclosed on pages 56 to 57, as required by Schedule 9 of the Order, is not in
all material respects:•

prepared in accordance with the guidelines issued pursuant to Section 78(3) of theReserve Bank of New Zealand Act 1989; any Conditions of Registration; and inaccordance with the books and records of the Branch;•

prepared in accordance with Capital Adequacy Framework (Standardised Approach)(BS2A); and•disclosed in accordance with Schedule 9 of the Order.

62

AUDITOR INDEPENDENCE
We are independent of the Branch in accordance with Professional and Ethical Standard 1 International Code of Ethics for
Assurance Practitioners (including International Independence Standards) (New Zealand) issued by the New ZealandAuditing and Assurance Standards Board and the International Ethics Standards Board for Accountants’ Code of Ethics forProfessional Accountants, 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.
EMPHASIS OF MATTER – BRANCH
The Branch is part of MUFG Bank, Ltd. As described in Note 28, the assets of the Branch are legally available for thesatisfaction of debts of the entire Branch, not solely those appearing on the accompanying statement of financial position
and its debts may result in claims against assets not appearing thereon. Our opinion is not qualified in respect of thismatter.
RESTRICTION ON USE
This report is made solely to the Branch’s shareholders, as a body. Our audit has been undertaken so that we might state
to the Branch’s shareholders those matters we are required to state to them in an auditor’s report and for no otherpurpose. To the fullest extent permitted by law, we do not accept or assume responsibility to anyone other than the
Branch’s shareholders as a body, for our audit work, for this report, or for the opinions we have formed.

Bindi ShahPartnerfor Deloitte Limited
Auckland, New Zealand
30 June 2021

This audit report relates to the financial statements of MUFG Bank, Ltd. – Auckland Branch (the ‘Branch) for the year
ended 31 March 2021 included on the Company’s website. The Directors are responsible for the maintenance andintegrity of the Company’s website. We have not been engaged to report 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 initiallypresented 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 thisreport 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 30 June 2021 to confirm theinformation included in the audited financial statements presented on this website.

63