MUFG raises net profit target to ¥2.8 trillion after 26.1% earnings growth
Key Facts
Mitsubishi UFJ Financial Group raised its net profit target for the fiscal year ending March 31, 2027, to ¥2.8 trillion from ¥2.7 trillion after reporting stronger first-half earnings. In its review released on November 13, the group said the revision amounted to ¥100 billion, or 3.7%, above its previous target. Net profit attributable to owners of the parent totaled ¥1.6308 trillion in the first six months, up 26.1% year over year. Net operating profits also reached ¥1.6174 trillion, up ¥330.3 billion from the same period. MUFG said the target revision was based on strong performance in its customer segments and higher profits from equity-method investees.
Income details showed net interest income rose 29% to ¥1.85 trillion in the first half, supported by higher interest rates in Japan and domestic and overseas loan growth. Fee income increased 14% to ¥1.23 trillion, indicating that revenue growth was supported by more than lending income. MUFG attributed part of the improvement to rising yen interest rates, which added about ¥140 billion to net operating income. Foreign-exchange movements also contributed about ¥35 billion during the period. The group said growth in income from loans, deposits and fees supported net operating profits despite inflation and cybersecurity costs. Credit costs, meanwhile, fell to ¥70.9 billion from ¥76.3 billion in the first half of the previous fiscal year.
MUFG's net profit rose 10% year over year to ¥821.5 billion in the July-September quarter, according to Reuters. The quarterly result puts continued earnings growth at the center of the annual forecast revision, following higher profits across the first half. Reuters linked improved earnings at Japan's three largest banking groups to a return in corporate demand for loans to fund growth, capital spending and mergers and acquisitions. It also said higher interest rates lifted banks' lending margins. This reflects an operating environment combining stronger financing demand with improved returns on lending. Customer-segment performance and profits from investee companies, in MUFG's account, were among the factors supporting the group's higher target.
The group raised its expected shareholder returns, forecasting a dividend of ¥100 per share for fiscal 2026, up ¥14 from the previous year and ¥4 from its initial forecast. It also approved share buybacks of up to ¥200 billion in the second half, bringing total annual buybacks to ¥300 billion. This adds a direct element to the earnings revision through a higher cash dividend and a share-buyback program for the remainder of the fiscal year. The decisions accompany the increase in the net profit target to ¥2.8 trillion, reflecting the group's link between reported performance and announced shareholder returns. The buybacks planned for the second half account for most of the stated annual total. The expected dividend is ¥4 per share above the group's initial estimate.
On risk, MUFG's credit exposure to data centers stood at ¥3.3 trillion, compared with total credit exposure of ¥180 trillion, according to a Reuters report published on November 13. This coincided with a warning from the head of Sumitomo Mitsui Financial Group that a slowdown in data-center investment could affect the Japanese and global economies and his group's results over the following six months. The warning concerns a potential impact on SMFG, while the exposure figures represent MUFG's credit exposure to the sector. This places data-center financing in the context of Japanese banks' revised annual results. MUFG raised its profit target and increased shareholder returns, while developments in sector investment remain a factor the market will monitor in the coming months.