Mitsubishi UFJ Financial : MUFG Report 2022 (JGAAP) (for viewing)（PDF / 8.08MB）

MUFG Report 2022

Integrated Report

Mitsubishi UFJ Financial Group

What is the

MUFG

Way

MUFG Way serves as the basic policy in conducting our business activities, and provides guidelines for all group activities.

MUFG Way also is the foundation for management decisions, including the formulation of management strategies and management plans, and serves as the core value for all employees.

To empower our communities and society

We will play our part in the development of robust and resilient communities and societies through innovation and the provision of secure platforms.

Values Purpose Vision

To empower our customers and partners

We will take full advantage of digital technologies and deliver innovative financial solutions to help our customers lead fulfilling lives and support them through life's challenges.

To empower future generations

We will address issues our society faces to help create

a world in which society and the Earth's environment can coexist in harmony.

Code of Conduct

Purpose

Committed to empowering a brighter future.

Today, all of our stakeholders are striving to overcome challenges and

find a way to the next stage toward sustainable growth.

We at MUFG will make every effort to help realize these goals. This will be our unchanging purpose now, and into the future.

Values

In addition to our unchanging primary value of "Integrity and Responsibility,"

we also value "Professionalism and Teamwork" and will "Challenge Ourselves and Grow."

Vision

By empowering our stakeholders to find a way to the next stage toward sustainable growth, we will make every effort to

become an indispensable partner for them and to be the world's most trusted financial group.

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Committed to empowering a brighter future.

We will work to resolve issues faced by all our stakeholders by formulating and executing strategies based on the challenges they confront.

To empower shareholders and investors

We will live up to shareholder expectations by continuously enhancing our sustainability and corporate value.

To empower MUFG employees

We will create a working environment where diversity

is respected and where employees can shine and grow together.

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CONTENTS

MUFG Way	1
Contents	3
Management Message
Message from the CEO	5

Message from the CFO

1 5

Message from the CSuO

2 3

Management Strategies and Performance

Medium-Term Business Plan (MTBP)

Review of the MTBP	4 5
Progress under the MTBP	4 7
Structural Reforms	49
FOCUS Challenges Taken on by Mars Growth	50
	Capital
Corporate Transformation
Digital Transformation (DX)	5 1
FOCUS Challenges for Digitalizing Paper	5 2
	Documents	5 3
FOCUS	Developing Money Canvas
FOCUS	Establishing Biz Forward	5 4
Contribution to Addressing Environmental and	5 5
Social Issues
FOCUS Our Leadership in the Net-Zero	5 6
	Banking Alliance (NZBA)	5 8
FOCUS	Promoting Sustainable Businesses
Climate Change Measures & Environmental	5 9
Protection (Disclosure Based on TCFD
Recommendations)
Transform Our Corporate Culture /
Human Resources Strategy
Message from the CHRO	6 5

FOCUS Becoming a Certified Instructor-an	69
Example of a Dual In-House Assignment
System Applicant
FOCUS The "DEEP" Training Program Aimed at	7 0
Nurturing Core Digital Specialists
Roundtable Discussion-	7 3
How We Take on New Challenges

Strategies Executed by Each Business Group

Business Group Performance	7 7
Digital Service Business Group (DS)	7 9
Retail & Commercial Banking Business Group (R&C)	8 1
Japanese Corporate & Investment Banking	8 3
Business Group (JCIB)
Global Commercial Banking Business Group (GCB)	8 5
Asset Management & Investor Services Business	8 7
Group (AM/IS)
Global Corporate & Investment Banking Business	8 9
Group (GCIB)
Global Markets Business Group	9 1

Leadership and Governance

Dialogue between Outside Directors and	9 5
Institutional Investors

Corporate Governance	9 7
Risk Management	1 09
Cyber Security	1 1 3
Compliance	1 1 5
Internal Audit	1 1 8
Initiatives for Practicing a Customer-Oriented Approach	1 1 9
Initiatives to Respect Human Rights	1 20
Financial Data / Corporate Data
Eleven-Year Summary of Major Financial Data	1 2 1
Financial Review for Fiscal 2021	1 2 3
Consolidated Financial Statements	1 2 7
ESG-Related External Recognition and Participation in	1 3 1
Global Initiatives
Performance Comparisons with Competitors	1 3 3
Company Overview	1 3 4

Sustainability Management Focused on	2 5
Addressing 10 Priority Issues
Response to Opportunities and Risks	2 7
MUFG's Pursuit of Value Creation
Value Creation Process	3 1
Trajectory of MUFG's Operations Aligned	3 3
with Changes in Society
MUFG's Unique Strengths	3 5
Value Creation Initiatives Undertaken by the Seven	3 7
Business Groups
Track Record in Value Creation	3 9
(Financial and Non-Financial Highlights)
Value Delivered to Stakeholders	4 1

Roundtable Discussion-Inclusion & Diversity

6 7

We would like to extend our gratitude to readers of the MUFG Report 2022 integrated report.

Guided by its Purpose, "Commited to empowering a brighter future," MUFG is engaged in ongoing value creation efforts. In the 2021 edition of this integrated report, we focused on discussing the necessity of accelerating business model innovation amid a rapidly evolving business environment and elaborated on what we aim to do under the new MTBP to realize such innovation. The 2022 edition features reports on progress in these initiatives. Also, based on feedback gleaned from stakeholder dialogue, this edition incorporates enriched descriptions regarding tangible examples of MUFG's corporate activities so that our readers can develop a well-informed conception of what we are doing.

As the officer in charge of IR and responsible for the preparation of this report, I hereby declare that the MUFG Report 2022 has been sincerely prepared through the involvement of top management and collaboration between various departments and that its content is accurate.

I would be very pleased if this report were to help our stakeholders understand MUFG's operations. Going forward, we will value any insights and takeaways acquired through stakeholder dialogue to enhance the content and transparency of information disclosure. We welcome frank opinions from our readers about this publication.

Tetsuya Yonehana Representative Corporate Executive, Senior Managing Corporate Executive, Group CFO

Main Disclosure Outlets

			Corporate Website
Detailed
		Annual Report	Sustainability Report
		Basel III Information
		Databook	Corporate
		Governance Report
			Integrated Report
			Investor Meeting
			Presentation
General			Business Report
		Financial	Non-Financial

Editorial Overview

To best explain our efforts to create sustained value to our investors and other stakeholders, we, Mitsubishi UFJ Financial Group, or MUFG, have compiled this integrated report, MUFG Report 2022, with reference to such guidelines as the framework provided by the Value Reporting Foundation (VRF) as well as the Guidance for

Collaborative Value Creation issued by the Ministry of Economy, Trade and Industry. Further details on our financial status and sustainability initiatives are available on our website. In addition, our plans call for issuing the MUFG Sustainability Report 2022, a publication detailing our response to sustainability issues, in September 2022 or later.

Reporting Period

April 1, 2021 to March 31, 2022

(The report includes some information pertaining to activities undertaken up to July 2022.)

Disclaimer

This report contains forward-looking statements with regard to the expectations, forecasts, targets and plans of Mitsubishi UFJ Financial Group, Inc. and its subsidiaries and affiliates. These forward-looking statements are based on information currently available to the Group and are stated in this document on the basis of the outlook at the time that this document was produced. In producing these forward-looking statements, certain assumptions (premises) have been utilized that are subjective and may prove to be incorrect. Should any underlying assumption prove to be incorrect, actual results in the future may vary materially from some of the forward-looking statements in this document. The Group has no obligation or intent to update any forward-looking statements contained in this document. In addition, information on companies and other entities outside the Group that is included in this document has been obtained from publicly available information and other sources. The accuracy and appropriateness of that information has not been verified by the Group and cannot be guaranteed. All figures contained in this report are calculated according to generally accepted accounting principles in Japan, unless otherwise noted.

Definitions of Specific Terms Used in This Report

MUFG/The Group: Mitsubishi UFJ Financial Group, Inc. and its subsidiaries and affiliates

The Bank: MUFG Bank, Ltd.

The Trust Bank: Mitsubishi UFJ Trust and Banking Corporation

The Securities: Mitsubishi UFJ Securities Holdings Co., Ltd. and its subsidiaries

MUMSS: Mitsubishi UFJ Morgan Stanley Securities Co., Ltd.

NICOS: Mitsubishi UFJ NICOS Co., Ltd.

MUAH: MUFG Americas Holdings Corporation

Krungsri (KS): Bank of Ayudhya Public Company Limited

Bank Danamon (BDI): PT Bank Danamon Indonesia, Tbk.

FSI: First Sentier Investors Holdings Pty Ltd

AM: Asset Management

IS: Investor Services

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Management Message

Message from the CEO

		MUFG's Pursuit of		Management Strategies		Leadership and		Financial Data /
Management Message		Value Creation		and Performance		Governance		Corporate Data

A Fresh Beginning

Our Pledge to "Empower" Extends to All MUFG Stakeholders

Hironori

Kamezawa

President & Group CEO

Assessing Our Environment & Challenges

Every New Year, my family celebrates with a newly crafted parchment of Japanese calligraphy, featuring a character chosen to represent a resolution.

For my 2022 resolution, I chose "初"-representing "a fresh beginning."

It has been almost three years since I was appointed CEO, and almost two since the Group entered its current Medium-Term Business Plan (MTBP) cycle. So why choose a character representing "beginning" when we are already well down the road in significant ways?

Two reasons.

First, we are witnessing the advent of a new epoch. We have endured the COVID-19 pandemic for more than two long years, with a general sense that we will never return exactly to a pre-pandemicstate-and the virus is just one of several radical forces transforming society. We are stepping into a different world.

Second, for a clear vision of how to adapt to this world, society needs fresh eyes and a learner's perspective- what you could call a beginner's "young mind." Utterly unfamiliar circumstances surely lie ahead, and we cannot put our full faith in past experience or current "expert opinion" about a shape-shifting future.

As I have asserted before, to flourish we must do much more than fortify the status quo. At MUFG, everyone across the Group is being called on to reshape their course of action from square one and be clear on what needs to be tackled next. We are working on embracing a fresh mindset-not just modeling our successful track record-as we take on the unfamiliar.

We have also seen irreversible megatrends toward "Digital" and "Green." We need to pay close attention to these forces while assessing how they will be affected by current developments in international affairs and economies. Will they accelerate? Will they change course? True, it is hard to prepare for changes beyond our imagination, as we have seen with the pandemic. But we must clue into the slightest signs of societal shifts to reveal opportunities they may be cloaking. And we need to be flexible enough to handle the unexpected.

This is an era of decentralization and diversification. In general, thought-lines of society-andindustry-have historically been shaped by consensus and guided by authority. But diversification of values-and the means to broadcast so many voices-sparks public debate on a more granular level than ever before. Social Networking Services (SNSs) and other emerging media provide new communication platforms that give individuals the power to freely broadcast personal opinions.

This democratization of public discourse helps drive decentralization of power, and is fueled by rapid advances in Information Communication Technologies, facilitating the interconnection of various "things" and creating new value. Moreover, Web 3.0 and Metaverse- which are drawing entrepreneurial attention-may lead to the complete reshaping of our worldview and value systems.

If this happens, we may well see major disruptions in our current mechanisms for decision-making and consensus- setting. These might marginalize prevailing concepts of nationality or currency, or even render them obsolete- and in the process redefine finance.

Such projections are no longer far-fetched. Being sensitive to diversification of value systems among customers, MUFG is looking to address an even more wide-reaching range of customer needs. Amid these and other changes in society, the survival of financial institutions hinges on successful innovation.

In a milieu of decentralization and diversification, what corporate management approach should we take? As employees increasingly judge and take actions for themselves, they cannot be hidebound by top-down management. Yet management maintains a responsibility to provide a shared "axis"-a common base for all employees to stand on and common standards to guide their actions-so individual efforts merge into a single, concerted force.

In this regard, MUFG's stated Purpose, announced in April 2021-to be "Committed to empowering a brighter future."-was deliberately crafted to serve this objective of providing that axis to shape and guide our actions.

Our Purpose was not created to be a mere slogan. Simply posting it on breakroom walls is woefully insufficient. For our stated purpose to have institutional impact, it is vital for employees to individually accept its

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Management Message

Message from the CEO

		MUFG's Pursuit of		Management Strategies		Leadership and		Financial Data /
Management Message		Value Creation		and Performance		Governance		Corporate Data

importance and believe in its power-then translate it into daily business conduct.

Over the past year, we have created mechanisms to help employees "own" the Purpose , including formal sessions to frame it within a simple corporate-culture moniker, the "MUFG Way." I hosted one of these sessions, which caused me to reflect on past experiences of taking on something new, some dating as far back as my early childhood. I recalled educational and developmental stages in my life- including when I first joined this Group, and-when I faced career-altering role changes and transfers.

Along the way, I somehow got accustomed to the idea that being flawless in every detail is the hallmark of a good banker. But these sessions forced me to reflect on my true aspirations. Hadn't I always hoped to contribute something positive to society? Shouldn't this hope be my reason for being? How can I apply it to my role at work?

People hesitate to share inner thoughts like this with others in a professional setting. But it is a path to fulfillment in our everyday jobs. I encourage employees to tap into what originally motivated them to become a part of MUFG. And as CEO, I am motivated to create a work community and atmosphere where each employee can remain true to, and openly pursue, their original aim in a career that serves themselves, their families, their communities, and society.

The MUFG Purpose also provides a basis for our initiatives to empower stakeholders, as encapsulated in our current MTBP, launched in fiscal 2021. We have positioned the MTBP period as three years of new challenges and transformation, which aims to create a model finely tuned to the evolving business environment, and we have worked throughout its first year toward this goal.

Review of Fiscal 2021 and

Targets for Fiscal 2022

In fiscal 2021, we took a firm step toward transformation through initiatives that put our Purpose into practice. We have also made solid progress on three specific transformative pillars: Corporate Transformation, Strategies for Growth, and Structural Reforms.

In particular, our work on Strategies for Growth and Structural Reforms is reflected in our financial results. For example, net operating profits of customer

segments such as wealth management and global asset management & investor services (AM/IS) increased significantly over the previous year. Expenses also declined year on year, excluding the impact of foreign exchanges. We have maintained a firm grip on risk- weighted assets (RWAs) as well. Profits attributable to owners of parent amounted to ¥1.13 trillion, hitting an all-time best for MUFG, and ROE stood at 7.79%, up 2.16 percentage points from the previous fiscal year.

We have made progress in the review of our business portfolio as well. In September 2021, we decided to sell MUFG Union Bank to U.S. Bancorp, to optimally allocate our management resources, and when the transaction is complete, we will concentrate our management resources for the U.S. business in corporate transactions. To enhance our earnings power, we are focused on growth in existing key strategic fields while tackling new risk-taking endeavors and new businesses. For example, we increased the overall size of our investment in Mars Growth Capital, which handles startup financing in Asia, to US$500 million. We also established MUFG Ganesha Fund to invest a total of US$300 million for startups in India.

In fiscal 2022, we will speed implementation of these initiatives and establish a clear path toward our fiscal 2023 MTBP targets of achieving ROE of 7.5% and consistently earning at least ¥1 trillion of annual profits attributable to owners of parent.

Of course, we cannot know what COVID has in store, and are accordingly cautious. The outlook for developments in international affairs and geopolitical risks is also unclear. We need to remain vigilant against potential major market fluctuations from shifts in monetary policy outlook, influenced by rapid inflation in Europe and the United States.

Even so, we intend to steadily improve operating results, especially in our established customer segments, and to raise net operating profits. We have set our target for profits attributable to owners of parent at ¥1 trillion with a view toward our overall MTBP targets, even as we deal with a decline in net gains on equity securities, the recording of net unrealized losses on our bond holdings upon the sale of MUFG Union Bank, and other negative factors.

This leads to the topic of our progress so far-and challenges ahead-regardingCorporate Transformation, including "Digital transformation (DX)," "Contribution to addressing environmental and social issues," and "Transforming our corporate culture."

Digital Transformation (DX)

In April 2021, we established the Digital Service Business Group to consolidate functions and authority over digital initiatives and back-office operations. This move made it possible to accelerate our DX initiatives by streamlining existing operations and taking on challenges in new fields.

Through digitalization of existing operations, we made steady progress in transforming branch operations and in going paperless, which has curbed expenses and produced a tangible financial impact. By fiscal 2023, with few exceptions our customers will no longer be asked to visit branches for routine processes, and we will expand the scope of online tools to encompass 70% to 80% of key procedures, such as account openings and address changes. We have also fully enacted digitalization of paper documents-such as those for registering personal seal images-through AI and robotics technologies provided by Ripcord.

We are taking on challenges in new fields through a variety of services in collaboration with external partners. Previously, our services were organized in a silo structure according to specific products or entities. We reviewed this structure and began realigning it into module-based functional allocations that allow more flexible service delivery. For example, Biz Forward, a joint venture we established in tandem with Money Forward, provides SMEs with new financial services such as online factoring.

Similarly, Busikul, a platform offered by Business Tech, a company we recently acquired, solves various problems associated with DX and ESG. Through Busikul, we also offer new functions developed by Zeroboard, such as measuring greenhouse gas (GHG) emissions, and supporting their funding needs through Biz Forward. With this reorganization, we have made it possible to extend our support to SMEs in even more diverse ways, including non-financial solutions addressing a variety of problems they commonly confront.

For individual customers, we launched the asset management platform, Money Canvas. To assure delivery of what customers genuinely need, we offer financial products developed not only by the Group but also by other companies. These initiatives are meant to increase customer contact points and reach out to an even broader market range.

We are also engaged in Banking as a Service (BaaS), in

which we deliver our financial services on platforms of external partners. Usually, the operation of payment, personal authentication, and other relevant systems entails considerable costs, due to their stringent security requirements. This makes it quite hard for non-financial players to quickly adopt such functions. We believe there is great value in MUFG assuming the bulk of responsibility in providing safe and secure BaaS, so that our customers can confidently use our payment and ID services.

Of course, it will take time before these early-stage initiatives become profitable, but they are solid strides forward in our multifaceted approach to become a financial and digital platform operator. These endeavors will help define the direction and shape the future of MUFG business operations.

Addressing Environmental and Social Issues

We believe that empowering members of society to effectively confront environmental and social issues is an integral part of our mission as a financial institution.

Since we announced the MUFG Carbon Neutrality Declaration in May 2021, we have been promoting our climate change-related initiatives at a robust pace. We launched a project team-nine working groups taking a groupwide, cross-regionalapproach-that meets periodically in committee meetings with top management. We also established the Sustainable Business Division and hired an external expert to lead the Division.

As we work toward our goal of reducing-down to zero-GHG emissions from our financed portfolio, we have announced interim emission targets in our Power and Oil & Gas sectors, as reported in the MUFG Progress Report issued in April 2022. We continue to engage with approximately 550 corporate clients at home and abroad to understand the varied issues and needs our customers face. And for our own energy sources at MUFG, we plan to complete our conversion to 100% renewable for electricity procured domestically by the end of fiscal 2022. We have made progress in these and other ways, with preparatory initiatives that have leaned toward the reactive, and are beginning to turn our focus more toward the proactive.

We cannot be a genuine contributor to a sustainable society and become a sustainable company ourselves

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