MUFG Raises Profit Target to ¥2,800 Billion After Record First-Half Earnings
Key Facts
On Nov. 13, MUFG Group raised its target for profit attributable to owners of the parent for the fiscal year ending March 31, 2027, to ¥2,800 billion from ¥2,700 billion. The group said the revision adds ¥100 billion, or 3.7%, to its previous forecast. The announcement came after first-half net profit reached ¥1,630.8 billion, up ¥337.9 billion from the same period a year earlier. MUFG said this record first-half level was achieved for the fourth consecutive year. Net operating profits on a management basis also reached ¥1,617.4 billion, up ¥330.3 billion year over year. The higher target makes the first six months’ performance the basis for the group’s new full-year forecast.
MUFG attributed the forecast revision to steady progress in customer segments and increased profits from equity-method investees associated with Morgan Stanley. The group estimated these factors would add about ¥100 billion to ordinary profit in the fiscal year ending March 2027. It raised its ordinary profit target to ¥4,050 billion, ¥100 billion above its initial forecast. By contrast, it kept its net operating profits target at ¥2,900 billion. The differing revisions across profitability measures show that the increase in the net income target was accompanied by a revision to ordinary profit, while the operating target remained unchanged. Ordinary profit totaled ¥2,260.9 billion in the first half, according to the group’s management presentation.
By income source, the group’s management-basis net interest income rose to ¥1,851.2 billion in the first half from ¥1,440 billion in the same period a year earlier. Net fees and commissions increased to ¥1,229.6 billion from ¥1,077.9 billion. MUFG said higher yen interest rates and growth in loan balances supported interest income. It added that fees were strong in financing solutions, lending and asset management, both in Japan and overseas. The group estimated that higher yen interest rates had an after-tax impact of about ¥140 billion on net income during the period. It estimated the after-tax impact of foreign exchange fluctuations on net income at about ¥35 billion.
Credit costs totaled ¥70.9 billion in the first half, compared with ¥76.3 billion in the same period of the previous fiscal year. The group kept its credit cost target for the fiscal year ending March 31, 2027, at ¥350 billion. In the quarter from July to September, MUFG’s net profit rose 10% year over year to ¥821.5 billion, according to Reuters. The agency linked profit growth at Japan’s three largest banking groups to increased corporate demand for loans to finance growth, capital expenditures and mergers and acquisitions. It also noted that higher interest rates had widened banks’ lending margins. This coincided with Japan’s emergence from decades of deflation, in Reuters’ description of the environment supporting demand for financing.
MUFG raised its expected annual dividend to ¥100 per share for the fiscal year ending March 2027. The expected dividend is ¥14 per share higher than the previous year and ¥4 above the initial forecast. In its results announcement, the group said its credit exposure to data center financing totaled ¥3.3 trillion, compared with total credit exposure of ¥180 trillion. This figure refers to MUFG’s exposure, while the warning about the impact of a slowdown in investment came from the head of Sumitomo Mitsui Financial Group, not MUFG. Tōru Nakashima said a slowdown in data center investment could affect the Japanese and global economies and his group’s results over the following six months. He added that his group had tightened credit standards for this financing and limited it to highly creditworthy hyperscalers.