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Mitsubishi UFJ (MUFG) Earnings Decline Y/Y in Fiscal 2022

Mitsubishi UFJ Financial Group, Inc. MUFG reported profits attributable to owners of the parent for fiscal 2022 (ended Mar 31, 2023) of ¥1.12 trillion ($8.21 billion), down 1.3% year over year.

Increased gross profits, higher net interest income (NII), and a rise in net fees and commissions acted as tailwinds. On the flip side, a decline in loan and deposit balances was a dampener. Also, a rise in general and administrative (G&A) expenses, net trading losses, and a rise in total credit costs hurt to some extent.

Gross Profits Improve, G&A Expenses Rise

Gross profits (before credit costs for trust accounts) for the said period were ¥ 4.5 trillion ($33.13 billion), up 13.6% from the prior-year period. The upsurge was mainly driven by higher NII, and a rise in net fees and commissions.

Results reflected a 42.3% year-over-year increase in NII, which was ¥2.04 trillion ($15.03 billion). Trust fees, along with net fees and commissions, totaled ¥1.7 trillion ($12.47 billion), up 7.7%. However, for Mitsubishi UFJ, net trading loss (including net other operating losses) were ¥100 billion ($0.74 billion) against a profit of ¥345.6 billion ($2.54 billion) recorded in the prior-year period.

Mitsubishi UFJ’s total credit costs were negative ¥674.8 billion ($4.96 billion), up significantly from negative ¥331.4 billion ($2.43 billion) witnessed a year ago.

G&A expenses increased 5.9% year over year to ¥2.91 trillion ($21.4 billion).

The expense ratio was 64.5%, down from 69.3% in the prior-year period. A decrease in this ratio indicates a rise in profitability.

Balance Sheet Position Decent

As of Mar 31, Mitsubishi UFJ reported loans of ¥109.15 trillion ($802.96 billion), down 1.2% from Mar 31, 2022. Deposits declined 1% to ¥213.61 trillion ($1.57 trillion).

Total assets summed ¥386.8 trillion ($2.85 trillion), up 3.5% from Mar 31, 2022.

Capital Deployment

The company repurchased ¥450 billion ($3.31 billion) worth of shares in fiscal 2022 under its share repurchase program.

Our Viewpoint

MUFG has a robust business model, a diversified product mix and solid capital ratios. Supported by a strong liquidity position, Mitsubishi UFJ is poised for inorganic growth. However, high costs may hurt the bottom line in the near term.

Mitsubishi UFJ Financial Group, Inc. Price, Consensus and EPS Surprise


Mitsubishi UFJ Financial Group, Inc. Price, Consensus and EPS Surprise
Mitsubishi UFJ Financial Group, Inc. Price, Consensus and EPS Surprise

Mitsubishi UFJ Financial Group, Inc. price-consensus-eps-surprise-chart | Mitsubishi UFJ Financial Group, Inc. Quote

Mitsubishi UFJ currently carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Performance of Other Banks

Itau Unibanco Holding S.A. ITUB posted recurring managerial results of R$8.43 billion ($1.62 billion) for first-quarter 2023, up 14.6% year over year.

The results of ITUB were supported by higher commissions and fees, and revenues. Increases in total deposits and credit portfolios reflected a strong balance sheet position. However, a rise in non-interest expenses was an offsetting factor.

UBS Group AG UBS reported first-quarter 2023 net profit attributable to shareholders of $1.03 billion, down 51.8% from the prior-year quarter.

UBS’s quarterly performance was worrisome, as there were increases in expenses. Also, lower revenues were major headwinds.

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