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Price: $21.70
Discount category: Close to intrinsic value
Next earnings: 2026-11-13
Next earnings is estimate: No
Company name: Mitsubishi UFJ Financial Group
Sector: Banking
About: Mitsubishi UFJ Financial Group (MUFG) is one of the largest financial groups in the world and is based in Japan. Its main companies are MUFG Bank, Mitsubishi UFJ Trust and Banking, Mitsubishi UFJ Morgan Stanley Securities, Mitsubishi UFJ NICOS for cards and consumer finance, and Mitsubishi UFJ Asset Management. It also owns Krungsri in Thailand and Bank Danamon in Indonesia, and it held about 23.9% of the voting rights in Morgan Stanley at March 31, 2026. In April 2026, MUFG Bank bought a 20% stake in Shriram Finance in India. Total assets were ¥433.9 trillion at June 30, 2026. Its fiscal year ends on March 31. Each American depositary share (ADS) on the New York Stock Exchange is one common share, and the shares also trade in Tokyo.
Thesis: The market doubts that MUFG can keep its recent high returns. Profit attributable to owners of parent rose 30.3% to ¥2,427.2 billion in the year to March 31, 2026, and rose 48.2% in the quarter to June 30, 2026, mainly because higher yen interest rates raised lending margins in Japan. Investors ask how much of this gain stays when Japanese rate rises stop. Overseas credit costs can rise, and MUFG keeps extra allowances for geopolitical risk. MUFG also paid ¥706.9 billion for a 20% stake in Shriram Finance in April 2026, which must earn its cost. For the gap to close, three things must be true. Profit must stay on track for the target of ¥2,700.0 billion for the year to March 31, 2027; Q1 profit was 30.0% of the target. ROE must stay near or above the raised target of about 12% on the Tokyo Stock Exchange basis, after 14.40% in Q1. The CET1 ratio of 12.95% at June 30, 2026 must support more buybacks and a dividend payout ratio of about 40%. The first half results on November 13, 2026 are the next test. The next medium-term business plan, which starts in the year to March 2028, gives a longer test. If these checks pass, the gap can close over the next four to six quarters. The main reason it may not close is lower Japanese rates, a weaker economy or a credit shock abroad.
Risks: Profit growth in 2025 and 2026 came mainly from higher yen interest rates. If the Bank of Japan stops raising rates or cuts them, or if deposit costs rise faster than loan rates, profit and ROE can fall. MUFG lends around the world and holds banks in Thailand and Indonesia. Credit losses can rise in a downturn. At June 30, 2026, it held ¥28.4 billion of extra allowances for geopolitical risks, including the Middle East, and it says that more provisions may be needed. Large stakes in Morgan Stanley and Shriram Finance add to profit, but their results and values can change. MUFG paid ¥706.9 billion for the Shriram Finance stake in April 2026. MUFG reports in yen, and the ADS trades in U.S. dollars. A weaker yen lowers the dollar value of the ADS and of the dividends.
Balance sheet: MUFG is a bank group, so capital and credit quality matter more than net debt. Total assets were ¥433.9 trillion and total net assets were ¥24.2 trillion at June 30, 2026. The CET1 capital ratio was 12.95%, up from 12.47% at March 31, 2026. The Tier 1 ratio was 15.60% and the total capital ratio was 17.44%, on risk-weighted assets of ¥125.0 trillion. The non-performing loan ratio was 0.80%, down from 0.96% at March 31, 2026. MUFG held ¥28.4 billion of extra credit loss allowances for geopolitical risks. It funds itself mainly with deposits and also sells senior notes in U.S. dollars and other currencies. It targets a dividend payout ratio of about 40% and buys back shares from time to time: up to ¥250 billion from November 2025 to February 2026 and up to ¥100 billion from May to June 2026. For a bank, net debt is not a useful measure, so this profile does not show debt figures. As of 2026-06-30.
Checkpoints: Nov 13, 2026: First half results: profit against the target. Pending. Watch: First half profit at or above half of the ¥2,700.0 billion target, or a higher target, and a new buyback pass; a lower target or a sharp rise in credit costs fail. May 2027 (estimate): New medium-term business plan. Pending. Watch: An ROE target above the current target of about 12% and a clear shareholder return policy pass; a lower ROE target or lower payouts fail.
Recent events: 2026-10-02: MUFG said that it will announce its first half results for the year to March 31, 2027 on November 13, 2026. 2026-08-14: MUFG reported its capital ratios at June 30, 2026. The CET1 ratio rose to 12.95% from 12.47% at March 31, 2026, and the total capital ratio was 17.44%. 2026-08-03: MUFG reported Q1 results for the year to March 31, 2027. Profit attributable to owners of parent rose 48.2% to ¥809.4 billion, or 30.0% of the full-year target of ¥2,700.0 billion, which MUFG kept. ROE was 14.40% on the Tokyo Stock Exchange basis. The non-performing loan ratio fell to 0.80%. 2026-05-15: MUFG reported results for the year to March 31, 2026. Profit attributable to owners of parent rose 30.3% to ¥2,427.2 billion, above its target. The dividend rose to ¥86 per share from ¥64, and MUFG expects ¥96 for the next year. It set a profit target of ¥2,700.0 billion for the year to March 31, 2027, raised its ROE target for that year to about 12% from about 9%, and approved a buyback of up to ¥100 billion from May 18 to June 30, 2026. 2026-04-08: MUFG Bank completed its investment in Shriram Finance, an Indian lender. It bought 471,121,055 new shares at 840.93 rupees each and now holds 20.0% on a fully diluted basis. MUFG gives the total cost as ¥706.9 billion. Shriram Finance is an equity method affiliate. 2026-04-01: Junichi Hanzawa became President and Group CEO. Hironori Kamezawa, the former Group CEO, became Chairman. MUFG announced the change on December 16, 2025. 2025-11-14: MUFG approved a buyback of up to 130 million shares or ¥250 billion, from November 17, 2025 to February 27, 2026.