REGISTERED BANKDISCLOSURE STATEMENT
31 MARCH 2023

MUFG BANK, LTD.
AUCKLAND BRANCH

Financial Statements
For the Year Ended 31 March 2023

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

31

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

38

10. Provision for expected credit losses

38

11. Other Liabilities

39
2

MUFG Bank, Ltd.
Auckland Branch

Financial Statements
For the Year Ended 31 March 2023

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

39

13. Key Management Personnel Compensation

40

14. Related Party Disclosures

41

15. Derivative Financial Instruments

42

16. Concentration of Credit Risk

44

17. Concentration of Funding50

18. Interest Rate Risk

50

19. Maturity Analysis for Assets and Liabilities

52

20. Fair Value of Financial Instruments

53

21. Profitability and Size

55

22. Asset Quality

56

23. Exposures to Market Risk

57

24. Capital Adequacy

57

25. Insurance Business58

26. Non-Consolidated Activities

59

27. Securitisation, Funds Management, and Other Fiduciary Activities

59

28. Financial Support

59

29. Subsequent Events

59

Auditor’s Report

60

3

MUFG Bank, Ltd.
Auckland Branch

Financial Statements
For the Year Ended 31 March 2023
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 2023
2.

Recognition and Priority of Claims of Creditors or Classes in the Event of Insolvency
The Deposit Insurance Law of Japan is intended to protect depositors if a financial institution fails tomeet its obligations. The Deposit Insurance Corporation of Japan (DICJ) was established in accordancewith that law. The Deposit Insurance System (DIS) is administered by the DICJ. The DICJ is a semigovernment organization that was established in 1971 with the purpose of operating Japan’s deposit
insurance system, in compliance with the Deposit Insurance Law. Banks and certain other credit
institutions participate in the DIS on a compulsory basis.
All deposits are protected and subject to the JPY 10 million maximum per customer. The only exception
is for non interest deposits that are redeemable on demand and used by the depositor primarily for
payment and settlement functions. The deposits in settlement accounts are fully protected without amaximum amount limitation. The DICJ charges insurance premiums on an annual basis on all deposits
for the protection.
Certain types of deposits such as foreign currency deposits (currencies other than JPY), negotiablecertificates of deposit, and deposit in overseas branches are outside the scope of protection under the
DIS. Liquidation dividends will be payable in accordance with the asset situation of the failing financial
institution. The following deposits of MUFG Bank, Ltd., Auckland Branch are not protected:
As at 31 March
2023
NZD
Amount due to related parties
Retail deposit
Certificate deposit
Call deposit
Term deposit

4,174,133,335
117,215,417
633,689,126
140,295,029
1,273,225,749
6,338,558,656

As at 31 March
2022
NZD
3,656,001,495
244,696,757
955,451,322
167,572,466
935,594,276
5,959,316,316

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

3.

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

4.

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

5

MUFG Bank, Ltd.
Auckland Branch

Financial Statements
For the Year Ended 31 March 2023
5.

Directorate
5.1

Address to which communications to the Directors and Responsible Persons may be sent:
C/- Mr Takahiro Iino,
Managing Director, Head of Oceania, Head of Sydney Branch(and Authorised Attorney on behalf of the Directors)
MUFG Bank, Ltd., Sydney Branch
Level 25, Gateway Building, 1 Macquarie Place
Sydney, NSW 2000, AUSTRALIA
C/- Mr 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. on the date of signing this Disclosure Statement:

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

Naoki Hori
Chairman
Japan

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

Yasushi Itagaki
Deputy President
Japan

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

Ichiro Takahara
Deputy President
Japan

Executive director
Faculty of Law
Kyoto University, Japan

Executive director
Bachelor of Law
Kyoto University, Japan

Executive director
Faculty of Law
Nanzan University, Japan;

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

Junichi Hanzawa
President & CEO
Japan

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

Seiichiro Akita
Deputy President
Japan

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

Minoru Soutome
Deputy President
Japan

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

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

Executive director
BA in Economics
Waseda University, Japan

6

MUFG Bank, Ltd.
Auckland Branch

Financial Statements
For the Year Ended 31 March 2023
5.

Directorate (continued)

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

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

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

Yutaka Miyashita
Managing Executive Officer
Japan

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

Keitaro Tsukiyama
Managing Executive Officer
Japan

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

Fumitaka Nakahama
Managing Executive Officer
Japan

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

Hiroyuki Seki
Managing Executive Officer
Japan

Executive director
Faculty of Law
Koyto University, Japan

Executive director
Faculty of Commerce
Doshisha University, Japan;

Executive director
Faculty of Foreign Studies
Sophia University, Japan

Executive director
Faculty of Business
Keio University, Japan

Name:
Occupation:

Takefumi Tango
Managing Executive Officer

Residence:
Executive or Independent
director:
Qualification:

Japan

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

Hiroshi MoriManaging Executive Officer
Japan

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

Hideaki Takase
Managing Executive Officer
Japan

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

Shuichi Yokoyama
Managing Executive Officer
Japan

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

Toshiki Ochi
Managing Executive Officer
Japan

Executive director
BA in Economics
The University of Tokyo,
Japan

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

Executive director
Faculty of Economics
Hitotsubashi University, Japan;
MBA
Massachusetts Institute ofTechnology, USA

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

Independent
Executive director
Faculty of Commerce andManagement
Hitotsubashi University, Japan

7

MUFG Bank, Ltd.
Auckland Branch

Financial Statements
For the Year Ended 31 March 2023
5.

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

Tadashi Yamamoto
Managing Executive Officer
Japan

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

Keiichi Shiotsuka
Director
Japan

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

Shinichi Koide
Director
Japan

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

Masahiko Kato
Director
Japan

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

Takeshi Suzuki
Director
Japan

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

Hironori Kamezawa
Director
Japan

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

Independent director
BA in Economics
Chuo University, Japan

Independent director
College of Economics
Aoyama Gakuin
University, Japan

Executive director
School of Law
Nagoya University, Japan

Executive director
BA in Economics
Keio University, Japan

Executive director
Master of Science
The University of Tokyo,
Japan;Name:
Masahito Monguchi
Occupation:
Director
Residence:Japan
Executive or Independent
director:
Independent director
Qualification:
Faculty of Law
The University of Tokyo, Japan;
Attorney
Name:
Minoru Hagio
Occupation:
Director
Residence:Japan
Executive or Independent
director:
Executive director
Qualification:
BA in Economics
Keio University, Japan

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

Toshifumi Kitazawa
Director
Japan

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

Tadayuki Matsushige
Director
Japan

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

Akio Negishi
Director
Japan

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

Shigeru Yoshifuji
DirectorJapan

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

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

Independent director
Faculty of Science andEngineering
Waseda University, Japan;

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

8

MUFG Bank, Ltd.
Auckland Branch

Financial Statements
For the Year Ended 31 March 2023
5.

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

Mitsubishi UFJ Financial Group, Inc.

Toshifumi Kitazawa has other directorships as follows:i.

Tokio Marine & Nichido Fire Insurance Co., Ltd.

Shinichi Koide has other directorships as follows:i.

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

Akio Negishi has other directorships as follows:i.

5.3

Chairman of the Board, Meiji Yasuda Life Insurance Company.

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

Occupation

Residence

Qualification

Takahiro Iino

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

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

Masami Yoshitake

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

Bachelor of Economics
Nagoya University, Japan

MUFG Bank, Ltd – Auckland Branch’s Registered Bank Disclosure Statement for the year ended 31 March 2023
(signed on 29 June 2023) has been withdrawn due to the transition of the New Zealand Chief Executive Officer.
The application to appoint the new Chief Executive Officer is currently being reviewed by the Reserve Bank of
New Zealand and as a result he is currently not authorised to sign the Disclosure Statement. As a result, theDisclosure Statement has been reissued with an authorised signatory.

9

MUFG Bank, Ltd.
Auckland Branch

Financial Statements
For the Year Ended 31 March 2023
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 other thanthose that would be given to any other person, or could be reasonably likely to influencematerially the exercise of the Directors’ or New Zealand Chief Executive Officer’s duties.
There have been no related transactions for year ended 31 March 2023 (2022: 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 2023.

5.6

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

6.

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

Conditions of Registration
There have been no changes to the conditions of registration since the last disclosure statement as at 30
September 2022.
These conditions of registration apply on and after 1 January 2022.
The registration of MUFG Bank, Ltd. (“the registered bank”) in New Zealand is subject to the following
conditions:1.

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

10

MUFG Bank, Ltd.
Auckland Branch

Financial Statements
For the Year Ended 31 March 2023
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 sum of thefollowing amounts for entities in the banking group:a.

if the business of an entity predominantly consists of insurance business and the entity is nota 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 assetsof the group headed by the entity; andb.

if the entity conducts insurance business and its business does not predominantly consist of
insurance business and the entity is not a subsidiaryof 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; andb.

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

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

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

4.

That no appointment to the position of the New Zealand chief executive officer of the registered bankshall be made unless:5.

a.

the Reserve Bank has been supplied with a copy of the curriculum vitae of the proposed
appointee; andb.

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

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 2023
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

Minimum
requirement on
and after 31
March 2015

Common Equity
Tier 1 capital

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; andb.

are otherwise as administered by the Japanese Financial Services Agency.

7.

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

8.

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

9.

That, for a loan-to-valuation measurement period ending on or after 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.

10. That, for a loan-to-valuation measurement period ending on or before 31 March 2022, the total of
the bank’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.
11. That, for a loan-to-valuation measurement period ending on or after 30 April 2022, the total of thebusiness of the registered bank in New Zealand’s qualifying new mortgage lending amount inrespect of non property-investment residential mortgage loans with a loan-to-valuation ratio of
more than 80%, must not exceed 10% of the total of the qualifying new mortgage lending amountin respect of non property-investment residential mortgage loans arising in the loan-to-valuation
measurement period.

12

MUFG Bank, Ltd.
Auckland Branch

Financial Statements
For the Year Ended 31 March 2023
7.

Conditions of Registration (continued)
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
associated mortgage require that a borrower obtain the registered bank’s agreement before theborrower can grant to another person a charge over the residential property used as security forthe loan.
In these conditions of registration,—“banking group” means the New Zealand business of the registered bank and its subsidiaries as
required to be reported in group financial statements for the group’s New Zealand business under
section 461B(2) of the Financial Markets Conduct Act 2013.
“business of the registered bank in New Zealand” means the New Zealand business of the registeredbank as defined in the requirement for financial statements for New Zealand business in section
461B(1) of the Financial Markets Conduct Act 2013.
“generally accepted accounting practice” has the same meaning as in section 8 of the Financial
Reporting Act 2013.
“liabilities of the registered bank in New Zealand” means the liabilities that the registered bank would
be required to report in financial statements for its New Zealand business if section 461B(1) of the
Financial Markets Conduct Act 2013 applied.
In conditions of registration 9 to 12,—“loan-to-valuation ratio”, “non property-investment residential mortgage loan”, “property-investment
residential mortgage loan”, “qualifying new mortgage lending amount in respect of propertyinvestment residential mortgage loans”, “qualifying new mortgage lending amount in respect of nonproperty-investment residential mortgage loans”, and “residential mortgage loan” have the same
meaning as in the Reserve Bank of New Zealand document entitled “Framework for Restrictions on
High-LVR Residential Mortgage Lending” (BS19) dated October 2021, and where the version datesof the Reserve Bank of New Zealand Banking Prudential Requirement (BPR) documents referred toin BS19 for the purpose of defining these terms are—
BPR document

Version date

BPR131: Standardised credit risk RWAs

1 October 2021

BPR001: Glossary

1 July 2021

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

8.

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

13

MUFG Bank, Ltd.
Auckland Branch

Financial Statements
For the Year Ended 31 March 2023
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

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

A
A1
A-

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

S&P’s

Moody’s

Fitch

AAA
AA
A
BBB
BB
B
CCC
CC
C
D

Aaa
Aa
A
Baa
Ba
B
Caa
Ca
C
-

AAA
AA
A
BBB
BB
B
CCC
CC
C
D

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
2023
NZD(000’s)

Year ended
31 March
2022
NZD(000’s)

Year ended
31 March
2021
NZD(000’s)

Year ended
31 March
2020
NZD(000’s)

Year ended
31 March
2019
NZD(000’s)

240,422215,571
31,91279,302
46,645
29,154

68,61944,01732,403

127,997
99,291
21,405132,536
108,869
19,6802,679
17,842
36,242
6,615
29,6273,307
14,43544,0709,134
34,936274
10,341
46,3909,804
36,585(125)
11,08839,148
8,778
30,369910,69832,6407,015
25,625

-

-

-

-

-

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

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

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

5,383,281
5,194,272
83,000106,0096,864,097
6,547,928
83,000233,168

14

MUFG Bank, Ltd.
Auckland Branch

Financial Statements
For the Year Ended 31 March 2023
11.

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

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 2023
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 2023;◼

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

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

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

_____________________________________
Mr. Takahiro Iino
Managing Director, Head of Oceania
Head of Sydney Branch(and Authorised Attorney on behalf of
the Directors)
Dated (Sydney): 10 July 2023_______________________________________Mr. Masami Yoshitake
Managing Director,
Head of Auckland Branch(New Zealand Chief Executive Officer)
Dated (Auckland): 10 July 2023

The New Zealand Chief Executive Officer and the signing date are changed. Please refer to note on page 9.
16

MUFG Bank, Ltd.
Auckland Branch

Financial Statements
For the Year Ended 31 March 2023
Statement of Comprehensive Income

NoteInterest income
Interest expense
Net interest income

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

4
4

Twelve Months
ended
31 March 2023

Twelve Months
ended
31 March 2022

NZD

NZD

240,422,269

79,302,048(215,571,114)(46,644,653)

24,851,155

32,657,395

29,839,248

29,535,497

2,072,718(381,608)

31,911,966

29,153,889(71,325)(56,933)(3,897,420)(3,682,114)(201,713)(217,145)(13,671,404)(10,478,610)

38,921,259

47,376,482

Expected credit losses(2,679,203)(3,306,739)

Profit before income tax expense

36,242,056

44,069,743(6,615,277)(9,133,534)

29,626,779

34,936,209(391,801)(7,928,928)

109,704

2,220,100

Other comprehensive (expense) net of tax(282,097)(5,708,828)

Total comprehensive income, net of tax

29,344,682

29,227,381

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

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

4
4
4
4

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 2023
Statement of Changes in Equity
NZD
Head
OfficeCapitalRetained
Earnings

Investment
Revaluation
Reserve

Total

83,000,000

172,490,270

2,106,360

257,596,630

Profit from continuing operations-

34,936,209-

34,936,209

Other comprehensive income, net oftax-(5,708,828)(5,708,828)

Total comprehensive income, netof tax34,936,209(5,708,828)

29,227,381

Balance at 1 April 2021

Balance at 31 March 2022

83,000,000

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

286,824,011

Balance at 1 April 2022

83,000,000

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

286,824,011

Profit from continuing operations-

29,626,779-

29,626,779

Other comprehensive (expense), net of
tax

-

-

(282,097)(282,097)

Total comprehensive income, net of tax-

29,626,779(282,097)

29,344,682

83,000,000

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

316,168,693

Balance at 31 March 2023

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 2023
Statement of Financial Position

Note

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

16
14
16
16
10, 1616
15

6
5

Total Assets
Liabilities
Amounts due to related parties
Deposits
Acceptances
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
2023

As at
31 March
2022

NZD

NZD

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

413,616,070
746,709,559
514,986,246
359,276,178
4,224,642,885
5,829,126
158,521,175
2,378,859
24,588953,952
1,318,517

6,864,097,288

6,428,257,155

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

3,656,001,495
2,303,314,821
5,829,126
163,414,696
12,873,006

6,547,928,595

6,141,433,144

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

83,000,000
207,426,479(3,602,468)

316,168,693

286,824,011

6,864,097,288

6,428,257,155

Total Interest Earning and Discount Bearing
Assets18

5,979,718,416

5,551,326,878

Total Interest and Discount Bearing Liabilities

18

6,333,857,652

5,955,272,907

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 2023
Statement of Cash Flows
Twelve Months
ended
31 March 2023
NZD
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 in operating
assets and liabilities

Twelve Months
ended
31 March 2022
NZD

224,830,971
30,000,959(198,205,667)(12,787,835)

78,133,824
30,153,458(43,447,827)(10,274,814)

43,838,428

54,564,641(433,752,508)(180,094,362)(86,564,653)(115,087,747)
53,240,409
2,357,423(579,807,076)(349,987,242)
87,807,180(139,788,892)
8,659,337(573,403,979)(147,402,671)
509,279,564(2,336,714)
359,540,179

31,184,841(117,155,458)(10,002,258)(95,972,875)(176,428,469)(9,470,264)(185,898,733)(614,812,213)(15,941,927)(630,754,140)

Cash Flows from / (used in) Investing Activities
Payment for property, plant and equipment
Net cash flows (used in) investing activities(5,928)(5,928)(372,086)(372,086)

Cash Flows from / (used in) Financing Activities
Lease payment
Net cash flows (used in) financing activities(119,120)(119,120)(314,486)(314,486)

Net Change in Cash and Cash Equivalents
Net (decrease) in cash and cash equivalents
Cash and cash equivalents at beginning of year
Cash and cash equivalents at end of the year

(186,023,781)
413,616,070
227,592,289(631,440,712)
1,045,056,782
413,616,070

Reconciliation of Closing Cash and Cash Equivalents
Cash and short term liquid assets
Closing cash and cash equivalents

227,592,289
227,592,289

413,616,070
413,616,070

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

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

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 2023
Statement of Cash Flows (continued)

Twelve Months
ended
31 March 2023

Twelve Months
ended
31 March 2022

NZD

NZD

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

29,626,779

34,936,209(Increase) in corporate loans(447,762,490)(178,759,820)(Increase) in due from other financial institutions(86,564,653)(349,987,242)(Increase) / Decrease in investment in debt instruments(116,457,064)

88,647,828

Decrease / (Increase) in due from related parties

53,277,083(139,825,566)

Decrease in acceptances of customers

2,336,713

8,527,074(Increase) in other assets(70,405)(271,168)(321,762,196)

116,179,019(Decrease) / Increase in certificate of deposit
Increase / (Decrease) in commercial paper and deposits

182,872,697(83,173,561)

Increase / (Decrease) in due to related parties

518,131,839(115,779,249)(Decrease) in acceptances(2,336,713)(8,527,074)

Increase in other liabilities

4,496,420

1,893,408(Decrease) in tax payable(9,469,823)(15,941,845)

193,293

191,484

2,679,203

3,306,739

Non-Cash items:
Depreciation of property, plant and equipment(Decrease) / Increase in provision for expected credit losses
Increase in tax payable

6,614,837

9,133,452

Other(1,704,253)(1,303,828)(185,898,733)(630,754,140)

Net cash flows from operating activities

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

21

MUFG Bank, Ltd.
Auckland BranchNotes to the Financial Statements
For the Year Ended 31 March 2023
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 and applicable tothe year ended 31 March 2023. 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 affectthe amounts reported in the financial statements and the accompanying notes. The management has reviewed
and applied its estimation and judgment on an ongoing basis,

22

MUFG Bank, Ltd.
Auckland BranchNotes to the Financial Statements
For the Year Ended 31 March 2023
2.

Significant Accounting Policiesa) Standards and Interpretations approved but not yet effective
No new standards, amendments or interpretation to existing standards that are not yet effective have been early
adopted by the Branch in these financial statementsb) Foreign Currency(i)Functional and presentation currency
Items included in the financial statements are measured using the currency of the primary economic
environment in which the entity operates (“the functional currency”). The financial statements arepresented in New Zealand dollars, which is the Branch’s functional and presentation currency.

(ii)

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

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

23

MUFG Bank, Ltd.
Auckland BranchNotes to the Financial Statements
For the Year Ended 31 March 2023
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 and services
provided by related party.
f) Goods and Services Tax
Revenue, expenses and assets are recognised net of the amount of goods and services tax (GST) except:•

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

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

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

MethodPeriodStraight Line1 – 3 years

Diminishing value

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

24

MUFG Bank, Ltd.
Auckland BranchNotes to the Financial Statements
For the Year Ended 31 March 2023
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 value ofmoney, for the credit risk associated with the principal amount outstanding during a particular period of themand for other basic lending risks and as well as a profit margin.
At initial recognition, the Branch measures a financial asset at its fair value plus, in the case of a financial asset
not at fair value through profit or loss, transaction costs that are directly attributable to the acquisition of thefinancial asset. Transaction costs of financial assets measured at fair value through profit or loss are expensed
in profit or loss. Derivative financial instruments are recognised initially at fair value and are subsequently
measured at fair value through profit or loss.
Subsequently, financial assets are then measured according to the following classifications:-

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

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

Financial assets at fair value through profit or loss

Financial assets at fair value through profit or loss include derivative instruments. Derivative instruments areused to manage exposures to interest rate, foreign currency and credit risks, including exposures arising fromforecast transactions.
The Branch also enters into derivative instruments for trading purposes, including foreign exchange contracts,
options, interest rate swaps, and currency swaps. All derivative instruments are recognized at fair value. The fairvalue is determined using listed market prices or cash flow discounting models based on current market prices
and contracted prices for the underlying instruments, as well as the time value of money and yield curves.
All derivative financial instruments are included under assets if their fair value is positive and under liabilities if
their fair value is negative.
25

MUFG Bank, Ltd.
Auckland BranchNotes to the Financial Statements
For the Year Ended 31 March 2023
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 they have:••contractual terms that give rise to cash flows on specified dates, that represent solely payments ofprincipal and interest on the principal amount outstanding; andare held within business model whose objective is achieved by both collecting contractual cash flows
and selling financial assets.

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

Financial assets at amortised cost

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

Acceptances

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

Offsetting of income and expenses

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

(6)

Offsetting Financial Assets

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

26

MUFG Bank, Ltd.
Auckland BranchNotes to the Financial Statements
For the Year Ended 31 March 2023
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 the risks
and rewards of the asset. If all or substantially all risks and rewards are retained, the financial assets are notderecognised from the statement of financial position.
A financial liability is derecognised when the obligation under the liability is discharged, cancelled or expires.
Where an existing financial liability is replaced by another from the same lender on substantially different
terms, or the terms of an existing liability are substantially modified, such as exchange or modification is treatedas a derecognition of the original liability and the recognition of a new liability.
i) Other assets
Other assets include all other financial assets and non-financial assets. All other financial assets are measured
at amortised cost using the effective interest method. All other non-financial assets are recorded at cost.
j) Financial Liabilities
The Branch classifies significant financial liabilities in the following categories: Amounts due to related partiesand deposits. They are recognised when an obligation arises. They are initially recognised at fair value lesstransaction costs and subsequently measured at amortised cost.
k) Other Liabilities
Other liabilities include accrued interest, other accrued expense payable and all other financial liabilities. They
are recognised initially at their fair value, and subsequently measured at amortised cost.
Other liabilities also include lease liabilities which are initially measured at the present value of the lease
payments as per lease contracts, discounted using the interest rate determined by the Branch’s incremental
borrowing rate.
l) Impairment of financial assets, financial guarantee and undrawn loan commitment
Impairment allowances apply to financial assets at amortised cost, financial assets at fair value through OCI,
financial guarantee, and undrawn loan commitment. The Branch recognises expected credit losses (ECL) basedon unbiased forward looking information as impairment allowance. The Branch calculates the ECL by threestages:• Stage I: “12-months ECL”
The financial instruments without significant increases in credit risk after initial recognition are
included in Stage I to calculate their impairment allowance at an amount equivalent to the portion of
the lifetime ECL associated with the probability of default events occurring within the next 12 months;•

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

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

27

MUFG Bank, Ltd.
Auckland BranchNotes to the Financial Statements
For the Year Ended 31 March 2023
2.

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

Borrower Rating
1 to 8.2
8.3
928

MUFG Bank, Ltd.
Auckland BranchNotes to the Financial Statements
For the Year Ended 31 March 2023
2.

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

WA Probability
60%
35%
5%

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

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

Termination benefits

Termination benefits are payable when employment is terminated before the normal retirement date, or
whenever an employee accepts redundancy in exchange for these benefits. The Branch recognises termination
benefits when it is demonstrably committed to terminate the employment of current employees. The Branchdoes not have a formal plan for termination benefits.
o) Leasing
Interest expense on lease liabilities and depreciation on right-of-use assets are recognised in the profit and loss
as an expensep) 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 is29

MUFG Bank, Ltd.
Auckland BranchNotes to the Financial Statements
For the Year Ended 31 March 2023
2.

Significant Accounting Policies (continued)
not probable that an outflow of resources will be required to settle an obligation, or the amount of the obligation
cannot be measured with sufficient reliability.
The Branch issues commitments to extend credit and guarantees. These financial instruments attract service
charges in line with market practice for similar arrangements. They are not sold or traded. The items generally
do not involve cash payments other than in the event of default. The charge pricing is set as part of the broader
customer credit process and reflects the probability of default. They are disclosed as contingent liabilities attheir face value.
q) Taxation
Income tax on the profit and loss for the year comprises current and deferred tax. Income tax is recognised in
the profit or loss except to the extent that it relates to items recognised in other comprehensive income or
directly in equity, in which case it is recognised in other comprehensive income or directly in equity.
Current tax is the expected tax payable on the taxable income for the year, using tax rates enacted or
substantively enacted at balance date after taking advantage of all allowable deductions under current taxation
legislation and any adjustment to tax payable in respect of previous years.
Deferred tax is accounted for using the balance sheet liability method, providing for temporary differences
between the carrying amounts of assets and liabilities for financial purposes and the amounts used for taxation
purposes. The amount of deferred tax provided is based on the expected manner of realisation or settlement of
the carrying amount of assets and liabilities, using tax rates enacted or substantively enacted at balance date.
A deferred tax asset is recognised only to the extent that it is probable that future taxable profits will beavailable against which the asset can be utilised. Deferred tax assets are reduced to the extent that it is no longer
probable that the related tax benefit will be realised.
r) Investment Revaluation Reserve
This reserve includes changes in fair value of FVOCI financial assets, net of tax. These changes are transferredto the profit and loss when the asset is derecognised or impaired.
s) Statement of Cash Flows
The Statement of Cash Flows is prepared inclusive of GST.
Cash flows arising from commercial paper, customer deposits to and withdrawals from deposit accounts,
acceptances, borrowings, repayments on loans and other receivables and acceptances of customers arepresented on a net basis.
Definitions of the terms used in the Statement of Cash Flows are:“Cash and cash equivalents” includes coins and notes, demand deposits and other highly liquid investments
readily convertible into cash. At balance date all cash is held in a bank account.
“Operating activities” include all transactions and other events that are not investing or financing activities.
“Investing activities” are those activities relating to the acquisition and disposal of current and non-current
investments and any other non-current assets.
“Financing activities” are those activities relating to changes in equity and debt capital structure of the company
and those activities relating to the cost of servicing the company’s equity capital.

30

MUFG Bank, Ltd.
Auckland BranchNotes to the Financial Statements
For the Year Ended 31 March 2023
3.

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

31

MUFG Bank, Ltd.
Auckland BranchNotes to the Financial Statements
For the Year Ended 31 March 2023
3.

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

32

MUFG Bank, Ltd.
Auckland BranchNotes to the Financial Statements
For the Year Ended 31 March 2023
3.

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

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

As at
31 March 2023
NZD
227,592,289
693,432,476
601,550,899
475,341,441
1,997,917,105

As at
31 March 2022
NZD
413,616,070
746,709,559
514,986,246
359,276,178
2,034,588,053

f) Commodity Risk
Commodity risk is the risk of loss arising from adverse movements in the prices of commodities. The Branchdoes not undertake any activities exposing it to commodity risk.
g) Operational Risk
Operational risk is defined as the risk of loss resulting from inadequate or failed internal processes, people andsystems or from external events. This definition includes legal risk but excludes credit, market, strategic andreputation risk. However the cultural nature of the Branch is such that reputational risk arising from operationalrisk events is considered within our operational risk management frameworks.
Oceania branch utilises the three lines of defence approach to the management of risk, with the business lines
accountable for the application of the Operational Risk framework, and the management of risks. The
dedicated second line function is accountable for the design of the Operational Risk Framework and provisionof assurance over the application.
The primary method the Branch uses to manage Operational Risk is by having a robust suite of controls. The
Branch also has operating procedures that have been established to conform to the Parent Bank’s guidelines.
Operational procedures are documented in procedural manuals for each department and approved variances
to these procedures are noted and tracked.
h) Internal Audit Function
Audit teams from the Parent Bank conduct on-site audits of the Branch’s procedures including loans, treasury
and general office inspections on regular basis in accordance with the banks Internal Audit methodology.
These are based on the Branch’s risk profile under the Parent Bank risk based approach to scoping audits, andalso based on the local regulatory requirement. The result of all internal audits are reported to corporate
auditors who report to the Board of Directors under the Parent Bank’s corporation governance systems.
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 Planning
Department monthly. The matters raised by SI are discussed and actioned by the Branch as soon as practicable
but not later than a month after identification of any risks (non-compliance of policies and procedures and/or
any process gaps/weaknesses). All SI findings are reported monthly to local management and to the Parent
Bank on a quarterly basis.
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 2023
4.

Profit Before Income Tax Expense

Operating revenue(a) Interest income
Corporate loans and other accounts
Related parties(b) Fees and commissions income
Fees and commissions income(c) Gains less losses on financial instruments
Net gain on interest rate derivatives
Net gain/(loss) on currency derivatives
Net (loss)/gain on foreign currency
Loss on sale of negotiable certificates of deposit bought
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
Loss on sale of negotiable certificates of deposit bought
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 & 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 2023
NZD

Twelve Months ended
31 March 2022
NZD

239,921,074
501,195

79,027,729
274,319

240,422,269

79,302,048

29,839,248
29,839,248

29,535,497
29,535,497

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

317,012(728,589)
29,969(381,608)
108,455,937

233,196,913
7,225,356

75,490,819
3,811,229

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

29,471,513(544,023)
162,415
63,984
108,455,937

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

18,832,096
27,812,557
46,644,653

215,571,114
215,571,114

46,644,653
46,644,653

71,32556,93345,602
18,692129,000

36,694
18,436
136,354201,713
3,846,680
50,74013,478,110
2,679,203
20,521,065
36,242,056

217,1453,639,764
42,35030,438
10,256,688
3,306,739
17,741,541
44,069,743

Total income excluding any net loss for twelve months ended 31 March 2023 is NZD 272,347,514 (twelve months ended 31 March 2022: NZD
108,999,960).

34

MUFG Bank, Ltd.
Auckland BranchNotes to the Financial Statements
For the Year Ended 31 March 2023
5.

Property, Plant and Equipment
As at
31 March 2023
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 2022
NZD

315,173
315,173645,404
309,565(639,796)
315,173(42,302)(45,602)(87,904)
227,269(640,298)(36,694)
634,690(42,302)272,871

1,122,412
5,929
1,128,341

1,256,113
62,521(196,222)
1,122,412(1,066,578)(18,692)(1,085,270)
43,071(1,219,032)(18,436)
170,890(1,066,578)
55,83438,091
38,091

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

1,095,207
1,095,207

1,648,877
1,095,207(1,648,877)
1,095,207(105,395)(129,000)(234,395)
860,812(375,145)(136,354)
406,104(105,395)
989,812

1,131,152

1,318,517

35

MUFG Bank, Ltd.
Auckland BranchNotes to the Financial Statements
For the Year Ended 31 March 2023
6.

Income Tax
Income Tax recognised in profit and loss
As at
31 March 2023
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 2022
NZD

7,245,507

9,778,362(630,230)(644,828)

6,615,277

9,133,534

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

36,242,056

44,069,743

Income tax expense calculated at 28%

10,147,776

12,339,528

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

554,400(3,694,669)

408,800(3,188,366)

238,000
7,245,507

218,400
9,778,362(630,230)
6,615,277(644,828)
9,133,534

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(391,801)(7,928,928)

Income tax expense calculated at 28%(109,704)(2,220,100)

The Branch did not have any imputation credits as at the year ended 31 March 2023 (2022: Nil).
The Branch had 2,368,980 as current tax asset at the year ended 31 March 2023 (2022: 24,588).
Deferred tax balance
Deferred tax assets arise from the following
NZD
Openingbalance*

NZD
Charged toincome31 March 2023
NZD
Charged toothercomprehensive
incomeNZD
Changes intax rate

NZD
Closingbalance

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

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

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

36

MUFG Bank, Ltd.
Auckland BranchNotes to the Financial Statements
For the Year Ended 31 March 2023
6.

Income Tax (continued)
NZD
Openingbalance

NZD
Charged toincome31 March 2022
NZD
Charged toothercomprehensive
incomeNZD
Changes intax rate

NZD
Closingbalance

Temporary differences
Provision for employee entitlement
Property, plant & equipment
Provision for ECL
Others40,33574,782
285,096
4,608
404,821(2,182)
8,415
543,326(428)
549,131--

38,153
83,197
828,4224,180
953,952

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 2023
NZD

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

8.

As at
31 March 2022
NZD

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

239,749,580
4,947,177
955,451,322
167,572,466
935,594,276
2,303,314,821

Total Liabilities of the Branch Net of Amounts Due to Related Parties
As at
31 March 2023
NZD

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

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

As at
31 March 2022
NZD

6,141,433,144(3,726,384,323)
2,415,048,821

37

MUFG Bank, Ltd.
Auckland BranchNotes to the Financial Statements
For the Year Ended 31 March 2023
9.

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 2023
NZD
Assurance Services
Auditor of the Branch
Audit & review of the Branch’s Disclosure Statements
Other non-audit services

Twelve Months
ended
31 March 2022
NZD

201,713-217,145-

The auditor of the Branch is Deloitte Limited, Auckland.

10.

Provision for expected credit losses

The following table reconciles the 31 March 2023 provision for expected credit losses on loan, financial guarantee andcommitments based on the requirements of NZ IFRS 9.
Stage 1NZD
Provision for impairment charges as at 31 March 2022
Net transfers in / (out) of stages *New financial assets originatedFinancial assets derecognized during the period
Change in ECL due to net further lending / repayment
Change in ECL due to amounts written-off
Total provision for ECL as at 31 March 2023

Loan

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

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

Total

4,788,538
759,960(1,782,358)
3,701,601
7,467,741* Represents the transfers between stages

The total provision was increased. It was mainly due to increase in asset portfolio, change in recovery ratio and weighted
average factor.
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
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 2023
Provision for ECL as at 31 March 2023
Total net carrying amount as at 31 March 2023

Stage 1
4,227,601,534
2,087,318,564(1,680,216,717)
40,660,643
4,675,364,024(5,389,178)
4,669,974,846

38

MUFG Bank, Ltd.
Auckland BranchNotes to the Financial Statements
For the Year Ended 31 March 2023
11.

Other Liabilities
As at
31 March 2023
NZD

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

12.

As at
31 March 2022
NZD

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

136,260
2,360,737
6,765,696

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

1,829,889
998,046
782,378
12,873,006

Commitments and Contingent Liabilities

Note

As at
31 March 2023
NZD

As at
31 March 2022
NZDa) Other commitments
Undrawn facility commitments

16

2,213,583,424

2,749,893,864

16
16
16

77,672,494
311,111,561
24,031,204
412,815,259

78,148,314
229,867,155
21,242,132
329,257,601b) Contingent liabilities
Guarantees given
Performance related contingencies
Trade related contingencies

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

Guarantee given – a financial guarantee that is an agreement by which the Branch agrees to pay anamount of money on demand on behalf of a customer to a third party during the life of the guarantee;
and•Performance related contingencies – a guarantee given by the Branch that undertakes to pay a sum ofmoney to a third party where the customer fails to fulfill certain terms and conditions of a contract;and•Trade related contingencies – contingent liabilities arising from trade related obligations secured
against an underlying shipment of goods to make a payment to a third party if a counterparty fails to
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 must also
provide the Branch with a written indemnity, undertaking that, in the event the Branch is called upon to pay,
the Branch will be fully reimbursed by the customer.
The Branch has no financial assets that have been pledged as collateral for liabilities or contingent liabilities.

39

MUFG Bank, Ltd.
Auckland BranchNotes to the Financial Statements
For the Year Ended 31 March 2023
13.

Key Management Personnel Compensation
The compensation of the executives, being the key management personnel of the Branch, is set out below:
Twelve Months ended
31 March 2023
NZD

Short term benefits
Loan Disclosure
Loan Outstanding
Interest charged

Twelve Months
ended
31 March 2022
NZD

1,059,592
1,059,592

911,496
911,496--

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

40

MUFG Bank, Ltd.
Auckland BranchNotes to the Financial Statements
For the Year Ended 31 March 2023
14.

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

Twelve Months
ended
31 March 2023
NZD

Twelve Months
ended
31 March 2022
NZDa) Balances
AssetsAmounts due from related parties
Derivative instruments
Others693,432,476
131,746,972
8,969

746,709,559
98,129,464
132,018

825,188,417

844,971,041

4,174,133,335
55,262,481
8,932,686

3,656,001,495
63,617,132
6,765,696

4,238,328,502

3,726,384,323

83,000,000

83,000,000

5,683,941
1,150,000

5,683,941
1,150,000

6,833,941

6,833,941

Liabilities
Amounts due to related parties
Derivative instruments
Other

EquityHead Office capital
Off Balance Sheet
Guarantees given
Performance related contingencies

41

MUFG Bank, Ltd.
Auckland BranchNotes to the Financial Statements
For the Year Ended 31 March 2023
14.

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

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

274,319
27,812,557
42,978,857
4,403
8,672,354

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 Branch does notseparately 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 2023.
The notional principal amounts below represent the face value of the transaction.
As at
31 March 2023
NZD

As at
31 March 2022
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
Notional principal amount 4 to 5 years
Notional principal amount more than 5 years
Total notional principal

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

1,301,658,977
79,598,292
19,954,268
60,200,269
1,885,903
1,463,297,709

1,326,134,522
88,939,153
12,562,097
2,618,817
1,430,254,589(25,847)(18,211)(2,444)(4,185)(113)(50,800)(14,246)(8,843)(1,353)(3,503)(27,945)42

MUFG Bank, Ltd.
Auckland BranchNotes to the Financial Statements
For the Year Ended 31 March 2023
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

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

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

759,567,179
1,114,307,780
1,380,532,852
945,493,431
867,017,645
310,000,000
5,376,918,887(20,769)(77,385)(141,680)(527,218)(12,875)(512,541)(1,292,468)(2,133)(252,829)(145,780)(300,691)(690,890)(596,473)(1,988,796)

165,195,316
247,707,202
132,253,455
772,912,108
1,318,068,081

158,642,462
174,945,248
944,484,311
1,278,072,021(3,680)(177,442)(24,315)(1,621,253)(1,826,690)(811)(233,123)(2,642,846)(2,876,780)

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

43

MUFG Bank, Ltd.
Auckland BranchNotes to the Financial Statements
For the Year Ended 31 March 2023
16.

Concentration of Credit Risk
Credit risk is the risk of loss to the Branch arising from the failure of a counterparty to repay principal and/orinterest under a commitment entered into with the Branch. Credit risk arises from the lending, treasury andtrade finance activities of the Branch. Credit risk also arises from the possibility that the counterparty to a
derivative financial instrument will not adhere to the terms of the contract with the Branch when settlement
becomes due.
Corporate loans originated by the Bank are secured partially by following collateral/credit enhancements:i.
financial guarantee by either third parties or customer’s parent company
ii.
deposit assignmentiii.
asset assignment such as aircraft
Concentration of credit risk is determined by management to be by industry sector, geographical location andcustomer credit rating. Industry sectors are determined by reference to the categories in the RBNZ Bank
Balance Sheet Survey. The geographical locations reflect the primary location of the underlying borrower.
The following table details the Branch’s maximum credit risk exposure without taking account of any
collateral/credit enhancement held in respect of recognised financial assets and derivative financial
instruments as at the reporting date.

As at
31 March 2023
NZD

As at
31 March 2022
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

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

413,616,070
746,709,559
514,986,246
359,276,178
4,227,601,534
5,829,126
2,325,902
6,270,344,615

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

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

78,148,314
229,867,155
21,242,132
2,749,893,864
3,079,151,465

185,189,279

158,521,175

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

44

MUFG Bank, Ltd.
Auckland BranchNotes to the Financial Statements
For the Year Ended 31 March 2023
16.

Concentration of Credit Risk (continued)i.

Concentration of Credit Risk by Customers Industry Sector
As at
31 March 2023
NZD

On Balance Sheet
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 2022
NZD

237,111,961
242,274,469
658,742,008
2,591,363,070
152,153,653
388,336,201
106,626,805
305,511,744
85,571,247
448,872,532
330,774,874
100,063,298
221,626,093
777,767,625
32,377,029
6,679,172,609

163,478,622
72,125,934
78,315,415
573,790,932
2,771,761,788
116,753,742
753,369,123
119,919,448
317,315,551
84,981,605
394,013,246
199,361,339
108,705
210,340,244
392,266,372
22,442,549
6,270,344,615

82,048,466
40,532,904
905,142,622
413,803,306
528,140,670
278,020
16,630,157
60,764,354
140,894,709
3,575,791
355,566,110
67,016,229
12,005,345
2,626,398,683

31,561,573
142,573,425
4,649,540
1,294,660,643
634,182,927
160,116,490
228,020
22,340,665
97,592,837
107,584,723
412,610,041
155,903,728
15,146,853
3,079,151,465

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
Retail trade
Transport and storage
Wholesale trade
Wood and paper manufacturing
Total

45

MUFG Bank, Ltd.
Auckland BranchNotes to the Financial Statements
For the Year Ended 31 March 2023
16.

Concentration of Credit Risk (continued)

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

ii.

7,824,056
57,29033,922,896
131,870,408
397,0212,863,117
173,649
2,377,541
2,206,516
2,994,625
502,160
185,189,279

8,619,998
37,606,478
99,225,899
351,964
710,047
3,354,041
781,323
398,023
5,792,141
905,284
775,977
158,521,175

Concentration of Credit Risk by Customers Geographic Location
As at
31 March 2023
NZD

As at
31 March 2022
NZD

Notional principal
On Balance Sheet
New ZealandJapan
Australia
United States of America
Malaysia
FranceChina
Total

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

4,792,453,378
771,945,838
578,979,674
2,100,238
124,864,523
964
6,270,344,615

Off Balance Sheet
New ZealandJapan
Australia
Other
Total

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

3,047,633,424
6,833,941
15,504,430
9,179,670
3,079,151,465

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

60,384,453
98,129,465
7,257
158,521,175

Fair value
Derivative Instrument
New ZealandJapan
Australia
Total

iii.

Concentration of Credit Risk by Customer Credit Rating

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

46

MUFG Bank, Ltd.
Auckland BranchNotes to the Financial Statements
For the Year Ended 31 March 2023
16.

Concentration of Credit Risk (continued)

31 March 2023
Notional principal
Credit Rating

S&P Rating

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

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

On balance Sheet

Off balance Sheet

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

Derivative financial
instruments

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

9,700,981
43,739,813
1,513
131,746,972
185,189,279

31 March 2022
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
1,878,405,603
3,645,229,453
746,709,559
6,270,344,615

Off balance Sheet

Derivative financial
instruments

1,232,495,721
1,839,821,803
6,833,941
3,079,151,465

9,753,152
50,638,559
98,129,464
158,521,175* The ‘not rated’ exposure is related to inter-branch exposure.

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

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

b.

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

c.

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

d.

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

47

MUFG Bank, Ltd.
Auckland BranchNotes to the Financial Statements
For the Year Ended 31 March 2023
16.

Concentration of Credit Risk (continued)e.

Derivative instruments
The Branch is exposed to credit risk on derivative contracts, which arises as a result of counterparty credit
risk. This credit risk from derivatives is mitigated where possible through master netting agreements
whereby derivative assets and liabilities with the same counterparty can be offset. A master netting
agreement provides the contractual framework within which dealing activities across a range of over-thecounter products are conducted and contractually binds both parties to apply close-out netting across all
outstanding transactions covered by an agreement if either party defaults or other predetermined eventsoccur. There have been no amounts set off in the statement of financial position for derivative assets andderivative liabilities as at 31 March 2023 (2022: Nil).
Financial assets subject to offsetting, enforceable master netting arrangements and similar agreements:
As at 31 March 2023
NZD
Gross amounts ofrecognised financial
assets (a)Derivatives

Gross amounts of
Net amounts of financial
recognised financial
assets presented in theliabilities set off in thestatement of financial
statement of financial
position (c) = (a) – (b)position (b)185,189,279

Related amounts
not setoff in thestatement offinancial position(d)

Net amount(e) = (c) – (d)-185,189,279

19,971,768

165,217,511

Gross amounts ofrecognised financial
liabilities set off in thestatement of financial
position (b)-Net amounts of financial
assets presented in thestatement of financial
position (c) = (a) – (b)Related amounts
not setoff in thestatement offinancial position(d)
18,239,323

Net amount(e) = (c) – (d)As at 31 March 2022

NZD
Gross amounts ofrecognised financial
assets (a)Derivatives

158,521,175

158,521,175

140,281,852

Financial liabilities subject to offsetting, enforceable master netting arrangements and similar agreements:
As at 31 March 2023
NZD
Gross amounts ofrecognised financial
liabilities (a)Derivatives

188,359,237

Gross amounts ofrecognised financial
assets set off in thestatement of financial
position (b)-Net amounts of financial
liabilities presented in thestatement of financial
position (c) = (a) – (b)Gross amounts ofrecognised financial
assets set off in thestatement of financial
position (b)-Net amounts of financial
liabilities presented in thestatement of financial
position (c) = (a) – (b)188,359,237

Related amounts
not setoff in thestatement offinancial position(d)
19,971,765

Net amount(e) = (c) – (d)Related amounts
not setoff in thestatement offinancial position(d)
18,239,323

Net amount(e) = (c) – (d)168,387,472

As at 31 March 2022
NZD
Gross amounts ofrecognised financial
liabilities (a)Derivatives

163,414,696

163,414,696

There has been no collateral obtained against derivative assets for the year end 31 March 2023
(Mar 2022: Nil).
f.

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

48

MUFG Bank, Ltd.
Auckland Branch

145,175,373

Notes to the Financial Statements
For the Year Ended 31 March 2023
16.

Concentration of Credit Risk (continued)g.

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

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

In other instances, a client’s facilities may be secured by collateral with value less than the carrying amountof the credit exposure. These facilities are deemed secured, partially secured or unsecured.
The Branch lending is generally to large corporate counterparties of strong financial standing, the majorityof which borrow on unsecured terms. If there is collateral received during loan drawdown, the value of thecollateral will be checked against the agreement to ensure that it is either equal to or over the agreed value.
The total collateral value as at 31 March 2022 is over NZD 1,160,613,635 (2022: NZD 953,098,806) which
is based on guarantees received from third parties and market value of business assets.
On Balance Sheet

As at
31 March 2023

As at
31 March 2022

Maximum Exposure

NZD
6,679,172,609%
100.00NZD
6,270,344,615%
100.00Collateral classification
SecuredPartially secured
Unsecured

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

14.04
0.45
85.51

650,048,359
14,720,749
5,605,575,507

10.37
0.23
89.40

h.

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

Off Balance Sheet

As at
31 March 2023

As at
31 March 2022

Maximum Exposure

NZD
2,626,398,683%
100.00NZD
3,079,151,465%
100.00Collateral classification
SecuredPartially secured
Unsecured

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

7.76
92.24

292,171,516
2,786,979,949

9.49
90.51

49

MUFG Bank, Ltd.
Auckland BranchNotes to the Financial Statements
For the Year Ended 31 March 2023
17.

Concentration of Funding
As at
31 March 2023
NZD

As at
31 March 2022
NZDa) Category analysis
Customer deposits
Due to related parties

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

2,303,314,821
3,656,001,495
5,959,316,316

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

1,852,836
6,054,172
250,438,065
4,453,323,783
28,284,691
7,522
23,98839,950,514
469,832,506
7,722,555
20,042,433
166,628,537
129,077
353,356,833
143,797,226
17,871,578
5,959,316,316

3,064,555,751
2,096,885,715
1,140,259,560
3,103,651
33,753,979
6,338,558,656

2,646,504,671
2,265,329,792
1,044,386,059
3,095,794
5,959,316,316b) Industry analysis
Agriculture
Communications
Constructions
Electricity, gas and water
Finance
Food manufacturing
Fishing
Forestry
Insurance
Other industries
Other manufacturing
Property and business services
Public administration and safety
Retail trade
Transport and storage
Wholesale trading
Wood and paper manufacturingc) Geographical analysis
Australia
New ZealandJapan
Singapore
Fiji

18.

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

50

MUFG Bank, Ltd.
Auckland BranchNotes to the Financial Statements
For the Year Ended 31 March 2023
18.

Interest Rate Risk (continued)

31 March 2023

Up to 3 months
NZD

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

Over 1 year and
up to 2 years
NZD

NON INTERESTSENSITIVE
NZDOver 2 years
NZD

TOTAL
NZD

WEIGHT
ED AVE.
EFF.
RATE
%

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

227,592,289
-

-

-

-

-

693,432,476

227,592,289
693,432,476

0.00%
0.00%

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

167,892,020--

601,550,899
475,341,441

4.85%
2.09%

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

55,212,203
55,212,203

21,552,344
21,552,344

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

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

6.13%

4,154,020,818
1,912,628,807
6,066,649,625

20,011,534
243,768,679
263,780,213

2,548,888
2,548,888-

878,926
878,926

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

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

5.24%
5.00%
2.61%

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

31 March 2022

Up to 3 months
NZD

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

Over 1 year and
up to 2 years
NZD

NON INTERESTSENSITIVE
NZDOver 2 years
NZD

TOTAL
NZD

WEIGHT
ED AVE.
EFF.
RATE
%

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

413,616,070-

35,846,850

-

-

-

710,862,709

413,616,070
746,709,559

0.00%
1.97%

364,995,560-

149,990,686--

263,970,909

95,305,269-

514,986,246
359,276,178

1.27%
4.07%

2,398,626,476
3,177,238,106

1,611,678,104
1,797,515,640

113,633,715
113,633,715

76,339,676
340,310,585

27,323,563
122,628,832(2,958,649)
5,829,126
1,318,517
161,878,574
876,930,277

4,224,642,885
5,829,126
1,318,517
161,878,574
6,428,257,155

2.40%

1,762,403,025
1,218,519,027
2,980,922,052

1,874,097,941
576,054,621
2,450,152,562

15,525,920
503,793,996
519,319,916

3,880,331
3,880,331

998,046
998,046

94,278
4,947,177
5,829,126
175,289,656
186,160,237

3,656,001,495
2,303,314,821
998,046
5,829,126
175,289,656
6,141,433,144

1.52%
1.33%
2.61%

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

At 31 March 2023, 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 3.1 million lower (2022: NZD 2.5M 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
3.1 million higher (2022: NZD 2.5M 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 2022 and 2021 because asimilar funding structure was applied in 2023 and 2022.

51

MUFG Bank, Ltd.
Auckland BranchNotes to the Financial Statements
For the Year Ended 31 March 2023
19.

Maturity Analysis for Assets and Liabilities

The tables below analyse the Branch’s financial assets and liabilities, as required by NZ IFRS 7 “Financial Instruments:
Disclosures”, in relevant maturity groupings based on the remaining period at the reporting date to the contractual
maturity date. The tables have been drawn up based on the undiscounted cash flows of financial assets and liabilities
based on the earliest date on which the obligation is crystallised. There is no expectation that the principal or interest
will be repaid or received earlier than the obligation. The table includes both interest and principal cash flows.
Therefore, they may differ to the carrying amounts on the statement of financial position.
31 March 2023
1 to 3Months
NZD

3 to 12Months
NZD

1 to
5 Years
NZD

Over 5Years
NZD

On Demand
NZD

To 1 Month
NZD

Total
NZD

227,592,289
693,432,476

-

-

-

-

-

227,592,289
693,432,476

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

200,000,000
308,250,000

405,000,000
440,000

440,000

176,440,000-

605,000,000
485,570,000

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

413,616,070
710,862,709--

35,846,850--

413,616,070
746,709,559

31 March 2022

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

180,000,000
6,875,000

185,000,000
250,000

150,000,000
7,125,000

357,625,000-

515,000,000
371,875,000

400,363,813
1,524,842,592

12,846,087
4,230,931
8,111,743
2,301,314
214,365,075

180,624,331
1,598,195
16,481,469
24,588383,978,583

732,346,850
35,972,099
961,290,799

2,997,271,274
106,012,841
3,460,909,115

163,747,662
58,533,432
222,281,094

4,487,200,017
5,829,126
225,111,584
2,325,902
6,767,667,258

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

94,278412,269,223
2,749,893,864
3,162,257,365

1,763,158,048
811,502,630
4,230,931
8,086,743
9,810
35,149,077
67,469,195
2,689,606,434

1,282,572,285
327,506,013
1,598,195
16,479,083
19,684
132,870,398
21,242,132
1,782,287,790

421,158,429
510,281,362
35,965,120
89,625
13,129,510
20,730,167
1,001,354,213

205,007,719
257,089,897
106,004,985
541,405
29,126,500
8,797,395
606,567,901

58,533,431
337,522743,227
59,614,180

3,671,990,759
2,318,649,125
5,829,126
225,069,362
998,046
2,749,893,864
78,148,314
229,867,155
21,242,132
9,301,687,883

52

MUFG Bank, Ltd.
Auckland BranchNotes to the Financial Statements
For the Year Ended 31 March 2023
19.

Maturity Analysis for Assets and Liabilities (Continued)

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

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

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

20.

Fair Value of Financial Instruments

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

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

b.

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

c.

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

d.

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

53

MUFG Bank, Ltd.
Auckland BranchNotes to the Financial Statements
For the Year Ended 31 March 2023
20.

Fair Value of Financial Instruments (continued)

31 March 2023
Note

FVTPL

FVOCI

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

a
a
a

NZD

Amortised
Cost

Total
Carrying
AmountFair Value

NZD

NZD

NZD

-

-

227,592,289
693,432,476

227,592,289
693,432,476

227,592,289
693,432,476-

475,341,441

601,550,899-

601,550,899
475,341,441

601,550,899
475,341,441

bc, a

185,189,279
185,189,279

475,341,441

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

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

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

b
a, b
c, a

188,359,237
188,359,237-

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

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

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

Note

FVTPL

FVOCI

NZD

NZD

Amortised
Cost
NZD

Total
Carrying
AmountNZDFair ValueNZDd31 March 2022

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

-

-

413,616,070
746,709,559

413,616,070
746,709,559

413,616,070
746,709,559

ad-359,276,178

514,986,246-

514,986,246
359,276,178

514,986,246
359,276,178bc, a158,521,175
158,521,175

359,276,178

4,224,642,885
8,130,440
5,908,085,200

4,224,642,885
166,651,615
6,425,882,553

4,223,320,351
166,651,615
6,424,560,019

b
a, b
c, a

163,414,696
163,414,696-

3,656,001,495
2,303,314,821
5,829,126
5,965,145,442

3,656,001,495
2,303,314,821
169,243,822
6,128,560,138

3,659,972,135
2,294,225,551
169,243,822
6,123,441,508

54

MUFG Bank, Ltd.
Auckland BranchNotes to the Financial Statements
For the Year Ended 31 March 2023
20.

Fair Value of Financial Instruments (continued)

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

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

•

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

•

Level 3 fair value measurements are those derived from valuation techniques that include inputs for the asset or
liability that are not based on observable market data (unobservable inputs).
31 March 2023
Level 1
Level 231 March 2022
Level 1
Level 2Derivative financial assets
Interest rate swaps
Currency swaps
FX forwards
Total derivative financial assets-

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

91,472,990
39,391,044
27,657,141
158,521,175

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

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

93,461,786
42.267.824
27,685,086
163,414,696

475,341,441-

359,276,178-

Investment in debt instruments

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

21.

Profitability and Size
The Overseas Banking Groupa)

Profitability

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

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

Twelve Months ended
31 March 2022
JPY(000’s)

618,071,000
0.20%

537,994,000
0.18%

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

Twelve Months ended
31 March 2022
JPY(000’s)

313,849,208,000

299,610,983,000

4.75%

3.22%

Size

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

55

MUFG Bank, Ltd.
Auckland BranchNotes to the Financial Statements
For the Year Ended 31 March 2023
22.

Asset Quality(i)

The Overseas Banking GroupAs at
31 March 2023
JPY(000’s)
Total individually impaired assets (before allowances for
credit impairment loss and net of interest held in suspense)
Total individually impaired assets expressed as apercentage of total assets
Total individual credit impairment allowance
Total individually credit impairment allowance expressed asa percentage of total individually impaired assets
Total collective credit impairment allowance

(ii)

As at
31 March 2022
JPY(000’s)

1,378,122,000

1,296,271,000

0.44%

0.43%

403,391,000

446,370,000

29.27%

34.43%

719,625,000

660,451,000

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 2023 (31 March 2022: Nil).
The Branch did not charge or credit to the statement of comprehensive income for any increase or decrease inindividual credit impairment allowance during this accounting period ended 31 March 2023 (31 March 2022:
Nil).
The total interest income recognised on impaired asset over this accounting period ended 31 March 2023 is
Nil (31 March 2022: Nil).
There is no undrawn balance on lending commitments to counterparties for whom drawn balances areclassified as individually impaired. There are no other amounts under administration.
The Branch does not have any financial assets designated as at fair value through profit or loss on which there
have been changes in fair value that are attributable to changes in credit risk of the financial asset.
The Branch has only one type of credit exposure: Corporate exposures. The movement in balance of collective
provision for expected credit loss and the impacts of changes in gross carrying amounts of loan by expectedcredit loss allowance are disclosed in note 10.

56

MUFG Bank, Ltd.
Auckland BranchNotes to the Financial Statements
For the Year Ended 31 March 2023
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 2023
NZD
(000’s)Twelve Months Ended
31 March 2022
NZD
(000’s)(1) Aggregate Interest Rate Exposure(a)Notional Capital Charge *

3,922

3,586

(b)

Implied risk weighted exposure

49,02544,825* The Notional Capital Charge is calculated in accordance with Capital Adequacy Framework (Standardized Approach)
BS2A.
Peak End of Day
Ending31 March 2023
NZD
(000’s)Peak End of Day
Ending31 March 2022
NZD
(000’s)(1) Aggregate Interest Rate Exposure (continued)(a)Notional Capital Charge **

4,397

5,758

(b)

Implied risk weighted exposure

54,963

71,975** The peak end of day Notional Capital Charge has been derived by determining the maximum over the period at theclose of each business day derived in accordance with BPR 140: Market Risk.
(2) Aggregate Foreign Currency Exposure

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

24.

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

57

MUFG Bank, Ltd.
Auckland BranchNotes to the Financial Statements
For the Year Ended 31 March 2023
24.

Capital Adequacy (continued)
The Financial Stability Board identified the Overseas Banking Group as a global systematically importantbank, or G-SIB, in its most recent annual report published in November 2017.
Effective 31 March, 2016, the FSA’s capital conservation buffer, countercyclical buffer and G-SIB surcharge
requirements became applicable to Japanese banking institutions with international operations conducted
through foreign offices. As a result, starting from 31 March 2016, Overseas Banking Group is required tomaintain a capital conservation buffer of 0.625% and a G-SIB surcharge of 0.375% in addition to the 4.50%
minimum Common Equity Tier 1 capital ratio. As of the same date, no countercyclical buffer is applicable.
From 31 March 2019, the Overseas Banking Group will be required to maintain a capital conservation bufferof 2.5%, a countercyclical buffer of up to 2.5%, and a G-SIB surcharge of 1.5%, assuming the Overseas
Banking Group will be in Bucket 2 of the G-SIB list.
The table below presents the minimum consolidated risk-based capital ratios from 31 March 2022:

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

2022
4.50%
2.50%
0.01%
1.50%
8.51%
10.01%
12.01%

2023
4.50%
2.50%
0.04%
1.50%
8.54%
10.01%
12.01%

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 2023

As at
31 March 2022

9.89%
11.04%
12.58%As at
31 March 2023

9.86%
11.11%
12.94%As at
31 March 2022

8.11%
9.30%
10.71%

8.81%
10.20%
11.91%The most recent publicly available information in relation to capital adequacy framework implemented by theoverseas bank and overseas banking group are disclosed under the ultimate holding company’s annual reportwhich can be accessed via the Bank’s global website: www.mufg.jp.

25.

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

58

MUFG Bank, Ltd.
Auckland BranchNotes to the Financial Statements
For the Year Ended 31 March 2023
26.

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

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 2023, 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.

59

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 57-58) 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 2023, and the statementof comprehensive income, statement of changes in equity and statement 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 andCapital Adequacy) comprise the information required to be disclosed under Schedules 4, 7, 11, and 13 of theRegistered Bank Disclosure Statements (Overseas Incorporated Registered Banks) Order 2014 (as amended) (the‘Order’).
In our opinion, the accompanying financial statements, on pages 17 to 59:••

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 2023, and its financial
performance and cash flows for the year then ended in accordance with New Zealand Equivalents toInternational Financial Reporting Standards (‘NZ IFRS’) and International Financial Reporting Standards(‘IFRS’).

In our opinion, the supplementary information (excluding the information relating to Credit and Market Risk
Exposures and Capital Adequacy) disclosed in accordance with Schedules 4, 7, 11 and 13 of the Order (the‘Supplementary Information’):•••has been prepared, in all material respects, in accordance with the guidelines issued pursuant to Section
78(3) of the Banking (Prudential Supervision) Act 1989 and any Conditions of Registration;is in accordance with the books and records of the Branch in all material respects; andfairly states in all material respects the matters to which it relates in accordance with those Schedules.

Basis for opinion
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 to provide a basis for our
opinion.
We are independent of the Branch in accordance with Professional and Ethical Standard 1 International Code of
Ethics for Assurance Practitioners (including International Independence Standards) (New Zealand) issued by the
New Zealand Auditing and Assurance Standards Board and the International Ethics Standards Board for
Accountants’ Code of Ethics for Professional 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.

60

Key audit matters
Key audit matters are those matters that, in our professional judgement, were of most significance in our auditof the financial statement of the current period. These matters were addressed in the context of our audit of
the financial statements as a whole, and in forming our opinion thereon, and we do not provide a separate
opinion on these matters.
Key audit matter
Expected credit loss on loans and advances tocustomers
As described in note 10, the expected credit loss
has been determined as $7,467,741.
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 tocustomers and in estimating the provision.
As detailed in note 10, the Branch has gross loans
and advances of $4,675,634,024 and impairment
allowances of $5,389,178 on loans and advancesand $2,078,563 on undrawn commitments andguarantees.
Key areas of judgement include:••

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

How our audit addressed the key audit matter
We have performed the following audit procedures:•

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

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

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

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

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

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

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

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

Assessed the completeness and accuracy of the key model
inputs such as loan data as well as the design andimplementation of controls over these inputs; and•We assessed the adequacy of related disclosures.

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Other information
The directors are responsible on behalf of the Branch for the other information. The other information
comprises the information in the financial statements in accordance 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 not cover 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 is materially inconsistent with thefinancial statements and supplementary information, or our knowledge obtained in the audit or otherwise
appears to be materially misstated. If so, we are required to report that fact. We have nothing to report in thisregard.
Directors’ responsibilities for the financial statements and supplementary information (excluding
supplementary information relating to credit and market risk exposures and capital adequacy)
The directors are responsible on behalf of the Branch for the preparation of the financial statement inaccordance with NZ IFRS and IFRS and that give a true and fair view 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 isnecessary 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 andwhich is prepared in accordance with any guidelines issued pursuant to Section 78(3) of the Banking (Prudential
Supervision) Act 1989; any Conditions of Registration; and 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 andusing the going concern basis of accounting unless the directors either intend to liquidate the Branch or to cease
operations, or have no realistic alternative but to do so.
Auditor’s responsibilities for the audit of the financial statements and supplementary information (excluding
supplementary information relating to credit and market risk exposures and capital adequacy)
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 anauditor’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 the basis of these financial statements and supplementary information.
It is our responsibility to express an opinion on the financial statements and supplementary information
prepared and presented by the directors, and report our opinion in accordance with clause 1 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/auditors-responsibilities/audit-report-2
This description forms part of our auditor’s report.

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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 forthe satisfaction of debts of the entire Branch, not solely those appearing on the accompanying statement offinancial position and its debts may result in claims against assets not appearing thereon. Our opinion is not
qualified in respect of this matter.
Emphasis of matter – reissued financial statements
Without qualifying our opinion, we draw attention to Note 5 on page 9 of the financial statements which statesthat these financial statements were reissued on 10 July 2023 and replace the financial statements dated 29
June 2023. As a result, this audit report supersedes the earlier audit report dated 29 June 2023. We have not
performed any procedures, other than those relating to the amendment to the financial statements,
subsequent to 29 June 2023. There have been no other amendments to the report.
Restriction on use
This report is made solely to the Branch’s shareholders, as a body. Our audit has been undertaken so that wemight state to the Branch’s shareholders those matters we are required to state to them in an auditor’s reportand for no other purpose. To the fullest extent permitted by law, we do not accept or assume responsibility toanyone 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
10 July 2023
This audit report relates to the financial statements of MUFG Bank, Ltd. – Auckland Branch (the ‘Branch) for theyear ended 31 March 2023 included on the Company’s website. The Directors are responsible for the maintenanceand integrity 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 initially presented on the website. The audit report refers only to the financial statements named above. It
does not provide an opinion on any other information which may have been hyperlinked to/from these financial
statements. If readers of this report are concerned with the inherent risks arising from electronic data
communication they should refer to the published hard copy of the audited financial statements and related audit
report dated 10 July 2023 to confirm the information included in the audited financial statements presented on thiswebsite.

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Independent Assurance Report
To the Shareholders of MUFG Bank, Ltd. – Auckland Branch
Limited Assurance Report on The Information Required on Credit and Market Risk Exposures and Capital Adequacy
Conclusion
We have undertaken a limited assurance engagement on the MUFG Bank, Ltd. – Auckland Branch’s (the ‘Branch’)compliance, in all material respects, with clause 22 of the Registered Bank Disclosure Statements (Overseas Incorporated
Registered Banks) Order 2014 (as amended) (the “Order”) which requires information prescribed in Schedule 9 of theOrder relating to credit and market risk exposures and capital adequacy to be disclosed in its Disclosure Statement for theyear ended 31 March 2023.
Based on the procedures we have performed and the evidence we have obtained, nothing has come to our attention thatcauses use to believe that the Branch’s information relating to credit and market exposures and capital adequacy,
included in the Disclosure Statement in compliance with clause 22 of the Order as disclosed in note 24 is not, in allmaterial respects, disclosed in accordance with Schedule 9 of the Order.
Basis of conclusion
We have conducted our engagement in accordance with Standard on Assurance Engagement (SAE) 3100 (Revised)Compliance Engagements (SAE 3100 (Revised) issued by the New Zealand Auditing and Assurance Standards Board.
We believe that the evidence we have obtained is sufficient and appropriate to provide a basis of our conclusion.
Directors’ Responsibilities
The Directors of the Branch are responsible on behalf of MUFG Bank, Ltd – Auckland Branch’s for compliance with theOrder, including Clause 22 of the order which requires information relating to credit and market risk exposures andcapital adequacy prescribed in Schedule 9 of the Order to be included in the Branch’s Disclosure Statement, for theidentification of risks that may threaten compliance with that clause, controls that would mitigate those risks andmonitoring ongoing compliance.
Our Independence and Quality Control
We have complied with the independence and other ethical requirements of the Professional and Ethical Standard 1
International Code of Ethics for Assurance Practitioners (including International Independence Standards) (New Zealand)(‘PES-1’) issued by the New Zealand Auditing and Assurance Standards Board, which is founded on fundamental principles
of integrity, objectivity, professional competence and due care, confidentiality and professional behaviour.
Other than in our capacity as auditor, we have no relationship with or interests in the Branch.
The firm applies Professional and Ethical Standard 3: Quality Management for Firms that Perform Audits or Reviews ofFinancial Statements, or Other Assurance or Related Services Engagements, which requires the firm to design, implement
and operate a system of quality management including policies and procedures regarding compliance with ethicalrequirements, professional standards and applicable legal and regulatory requirements
Assurance Practitioner’s Responsibilities
Our responsibility is to express a limited assurance conclusion on whether the Branch’s information relating to credit andmarket risk exposures and capital adequacy, included in the Disclosure Statement in compliance with the Clause 22 of theOrder is not, in all material respects, disclosed in accordance with Schedule 9 of the Order. Our review has been
conducted in accordance with Standard on Assurance Engagements 3100: Compliance Engagements (‘SAE 3100’) issued
by the External Reporting Board, to provide limited assurance that the Bank has complied with the Clause 22, disclosed inaccordance with Schedule 9 of the Order, in all material respects.

64In a limited assurance engagement, the assurance practitioner performs procedures, primarily consisting of discussion
and enquiries of management and others within the entity, as appropriate, and observation and walk-throughs, andevaluates the evidence obtained. The procedures selected depend on our judgement, including identifying areas where
the risk of material non-compliance with clause 22 of the Order in respect of the information relating to credit andmarket risk exposures and capital adequacy is likely to arise.
Our procedures included:•
Obtained an understanding of the process, models, data and internal controls implemented over the preparationof the information relating to credit and market exposures and capital adequacy;•
Obtained an understanding of the Branch’s compliance framework and internal control environment to ensure theinformation relating to credit and market risk exposures and capital adequacy is in compliance with the Reserve
Bank of New Zealand;•
Performed analytical and other procedures on the information relating to credit and market risk exposures andcapital adequacy disclosed in accordance with Schedule 9 of the Order, and considered its consistency with thefinancial statements; and•Agreed the information relating to credit and market risk exposures and capital adequacy disclosed in accordancewith schedule 9 of the Order to information extracted from the Branch’s models, accounting records or othersupporting documentation, which included publicly available information as prescribed by clauses 5 and 6 of
Schedule 9 of the Order.
The procedures performed in a limited assurance engagement vary in nature and timing from, and are less in extent thanfor, a reasonable assurance engagement. Consequently, the level of assurance obtained in a limited assurance
engagement is substantially lower than the assurance that would have been obtained had a reasonable assurance
engagement been performed. Accordingly, we do not express a reasonable assurance opinion on compliance with thecompliance requirements.
Inherent Limitations
Because of the inherent limitations of an assurance engagement, together with the inherent limitations of any systems ofinternal control, it is possible that fraud, error or non-compliance with compliance requirements may occur and not be
detected even though the engagement is properly planned and performed in accordance with Standards on Assurance
Engagements.
A limited assurance engagement of the Branch’s information relating to credit and market risk exposures and capital
adequacy prescribed in Schedule 9 of the Order to be included in the Disclosure Statement in compliance with clause 22of the Order does not provide assurance on whether compliance will continue in the future.
Use of Report
This report is provided solely for your exclusive use and solely for the purpose of establishing that these compliancerequirements have been met. Our report is not to be used for any other purpose, recited or referred to in any document,
copied or made available (in whole or in part) to any other person without our prior written express consent. We accept
or assume no duty, responsibility or liability to any other party in connection with the report or this engagement,
including without limitation, liability for negligence in relation to the opinion expressed in this report.
The engagement partner on the engagement resulting in this independent assurance report is Bindi Shah.

Auckland, New Zealand
10 July 2023

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