UFJ Holdings, Inc. Financial Results for Interim Period ended September November 27, 2001

Transcription

1 UFJ Holdings, Inc. Financial Results for Interim Period ended September 21 November 27, 21

2 - Table of Contents - Financial Results for Interim Period Ended September 21 - Financial Highlights 1 - Income 2 - Assets & Liabilities 5 - Stockholders Equity 6 - Problem Loans 7 - Market Risks 1 - Status of Business Units 13 - Forecasts for Fiscal Year Ending March 22 2 Strategies to Enhance Financial Soundness - Resolution of Problem Loans Issues 21 - Financial Strategies 25 Prompt Realization of Integration Effects - Management Systems 29 - Start of UFJ Bank 32 - Start of UFJ Trust Bank 37 - Integration Schedule 38 - Progress in Restructuring 4 - Integration Effects 41 Financial Data Appendix

3 Financial Highlights (Yen bil.) Combined for 3 Banks (non consolidated) Sept. 3, 21 Sept Change Gross Operating Profit Business Profit (excl. net transfer to gen. reserve) Credit Related Expenses (251.5) (325.7) 74.1 Gains/ Losses on Stocks (26.2) (264.3) (47.6) Net Income (21.7) UFJ Holdings (non consolidated) Net Income.2 UFJ Holdings (consolidated) Net Income (67.4) UFJ Holdings Financial Results for Interim Period ended Sept. 21 1

4 Income: Combined for 3 Banks (non consolidated) (1) Sept. 3, 21 Sept. 3, 2 Combined for 3 Banks Combined for 3 Banks (Yen bil.) Change Sanwa Tokai Toyo Sanwa Tokai Toyo Gross Operating Profit Interest Income Trust Fees (before write-off) Fees & commissions Trading Profit (.3) 26. Other Operating Net Income (.1) Expenses (minus) Personnel expenses (minus) (6.3) Non personnel expenses (minus) Business Profit (excluding net transfer to general reserve) Key Points (compared with 6 months ended Sept. 2) Interest income: +Yen 49.9 bil. (+11%) Interest received from bond investments: +Yen 28.5 bil. Effects from change in accounting method for dividends received: +Yen 16. bil. Fees & commissions: +Yen 3.9 bil. (+4%) Expenses Personnel: -Yen 6.3 bil. Non personnel: +Yen 1.9 bil. related: +Yen 5.6 bil. Trading profit: +Yen 26. bil. (X 3.1) Gains on trading financial derivatives +Yen 2.4 bil. Other operating net income: +Yen bil. (X 8.1) Bonds related income +Yen 16.5 bil. Gains on financial derivatives +Yen 21.7 bil. UFJ Holdings Financial Results for Interim Period ended Sept. 21 2

5 Income: Combined for 3 Banks (non consolidated) (2) Sept. 3, 21 Sept. 3, 2 Combined for 3 Banks Combined for 3 Banks (Yen bil.) Change Sanwa Tokai Toyo Sanwa Tokai Toyo Business Profit (excl. net transfer to general reserve) Net Transfer to General Reserve (minus) (14.) (1.6) (24.7) 12.3 (6.9) (2.7) (4.2) - (7.) Business Profit (before write-off in trust account) Other Income & Expenses ('rinji son-eki') (496.8) (256.6) (126.2) (113.9) (116.2) (31.) (7.4) (14.7) (38.6) Credit costs (261.5) (139.) (79.5) (42.9) (337.2) (169.1) (13.8) (64.2) 75.6 Gains/losses on stocks & other equity securities(1) (26.2) (12.7) (38.6) (64.7) (47.6) Tokyo & Osaka business tax (11.3) (8.) (1.9) (1.3) (5.5) (3.4) (1.3) (.7) (5.7) Ordinary Profit (56.1) (161.2) Extraordinary Gains/ Losses (1.7) 5.8 (9.4) (1.) (11.9) Gains on sales of premises & equipment (1.9) (4.8) (.9) 3.9 (5.8) (3.9) (1.5) (.3) 3.9 Amortization of unrecognized pension obligation (17.4) (5.7) (1.4) (1.3) (17.4) (5.7) (1.4) (1.3) - Gains on establishment of retirement benefit trust Reversal of reserve for possible loan losses (4.5) Income before Income Taxes (5.2) (111.9) Income Taxes (current) (minus) (1.7) (1.8) (43.7) Income Taxes (deferred) (minus) (.2) (19.5) (46.4) Net Income (28.8) (217.) (1) For Toyo Trust in the 6M ended Sept. 2, includes gains on equity derivatives. Key Points Credit related expenses: Yen bil. Net transfer to general reserve: -Yen 14. bil. Credit costs: Yen bil. Gains/ losses on stocks & other equity securities: -Yen 26.2 bil. Revaluation losses: -Yen bil. Tokyo & Osaka business tax: Yen 11.3 bil. Extraordinary gains & losses: Yen 39.8 bil. Amortization of unrecognized pension obligation: -Yen 17.4 bil. Gains on establishment of retirement benefit trust: Yen 47.9 bil. UFJ Holdings Financial Results for Interim Period ended Sept. 21 3

6 Income: UFJ Holdings (consolidated, non consolidated) UFJ Holdings (Consolidated) (For reference) Combined for 3 Banks (non consolidated) (Yen bil.) UFJ Holdings (Non consolidated) Sept. 3, 21 Sept. 3, 21 Sept. 3, 2 Sept. 3, 21 Gross Operating Profit Operating Income 6. Interest income Operating Expenses (minus) 5.2 Trust income (before write-off) Operating Profit.7 Fees & commissions Ordinary Profit.4 Trading profit Income before Income Taxes.4 Other gross operating profit Net Income.2 Expenses (minus) Business Profit (excl. net transfer to general reserve) Net Transfer to General Reserve (minus) 7.5 (14.) (6.9) Business Profit ('gyomu jun-eki') Other Income & Expenses ('rinji son-eki') (583.2) (496.4) (116.2) Credit costs (354.1) (261.5) (337.2) Ordinary Profit (76.4) Extraordinary Gains/ Losses (9.4) Income before Income Taxes (41.6) Income Taxes (current) (minus) Income Taxes (deferred) (minus) Net Income (67.4) Key Points Difference in net income bet. UFJ Holdings (consolidated) & combined for 3 banks (non consolidated): Yen 15.8 bil. Sanwa Credit: Red ink of Yen 98.8 bil. Main reason: Increase in reserves of Yen 96.1 bil. (Increased capital subscribed by Sanwa Bank: Yen 19.6 bil.) UFJ Holdings Financial Results for Interim Period ended Sept. 21 4

7 Assets & Liabilities: Combined for 3 Banks (non consolidated) Sept. 3, 21 March. 31, 21 Combined for 3 Banks Combined for 3 Banks (Yen bil.) Sanwa Tokai Toyo Sanwa Tokai Toyo Assets 9, , ,27. 11, , , , ,415.8 Banking account 86, , ,27. 8, , , , ,8.9 Trust account (1) 3, , , ,46.8 Loans (2) 5, , , , , , , ,474.5 Housing loans 5, , , , , , Loans to small & mid. sized companies 31, , , , , , , ,77.2 Securities (3) 18, , , , , , , ,766.7 JGB 8, , ,65.5 1, , , , ,327.9 Stocks 5, , , , , , ,34.6 Liabilities 86, , , , , , , ,789.5 Banking account 82, , , , , , ,73.8 7,434. Trust account (1) 3, , , ,355.4 Deposits, Trust principal (2) 54, , , , , ,22. 19, ,294.8 Domestic corporate deposits 16, , , ,98.1 9, , Domestic individuals' deposits 25, , , , , ,719. 9, ,944.8 Key Points (compared with Mar. 21) Assets Loans: -Yen 3. tril. (loans for small & mid. sized companies -Yen 1.8 tril., housing loans +Yen.1 tril.) Securities: -Yen 3.5 tril. (JGB -Yen 1.2 tril., stocks -Yen 1.4 tril.) Liabilities Deposits, trust principal: -Yen 2.5 tril. (domestic corporate deposits -Yen.6 tril., domestic individuals deposits +Yen.4 tril., trust principal -Yen.5 tril.) UFJ Holdings Financial Results for Interim Period ended Sept. 21 5

8 Stockholders Equity: BIS Capital Ratio (Yen bil.) Sept. 3, 21 Mar. 31, 21 UFJ Holdings Sanwa Tokai Toyo(1) Sanwa Tokai Toyo(1) Total Capital 6, , , , , Tier I 3, , , ,989. 1, Capital stock Capital surplus 2, Retained earnings (11.) Unrealized losses on AFS(2) (31.5) (79.5) (133.3) (17.3) Others (.4) Tier II 2,98.4 1, , Excess of land revaluation after 55% discount Subordinated loans (bonds) 2, , , General reserve for possible loan losses Deductions Risk Weighted Assets 58, , , , ,41.9 2, ,796.3 Capital Ratio (%) 11.31% 1.72% 11.17% 1.78% 1.51% 12.8% 11.94% Tier I Ratio (%) 6.3% 5.45% 7.5% 6.82% 5.78% 7.54% 8.17% (1) While Toyo Trust adopts the domestic standard, the BIS standard is applied to the calculations of the figures given here. (2) AFS = Available-for-sale securities Key Points Capital ratio: 11.3% Over 11% for holding company; maintained over 1.5% on each bank basis Negative impact of unrealized losses on available-for-sale securities on Tier I capital: Yen 31.5 bil. On adoption of marked-to-market accounting, unrealized losses on available-for-sale securities, net of tax, gives negative impact on Tier I capital of UFJ Holdings: lower the ratios by.5% UFJ Holdings Financial Results for Interim Period ended Sept. 21 6

9 Problem Loans: Credit Related Expenses (Combined for 3 Banks (non-consolidated) ) Credit related expenses = Yen 251 bil. (Yen bil.) Credit related expenses Net transfer to general reserve (14.) Loans written-off Net transfer to specific reserve 6.7 Loss on sales of loans to CCPC 11.4 Net transfer to reserve for contingent liabilities related to loans sold 16.7 Net loss on loans securitized/ sold 2.6 Net transfer to reserve for supporting specific borrowers (17.3) Net transfer to specific reserves for loans to refinancing countries (5.9) Others * 4. Credit Costs Banking account 23.9 Trust account * 34.6 * Includes trust account loss indemnified <Analysis of causes> (Yen bil.) Business deterioration 27 Decline in collateral value 39 Securitization related 28 Others (collection, etc.) (16) <Reserves (combined for 3 Banks)> (Yen bil.) General reserve Specific reserve Specific reserves for loans to refinancing countries 6. Sub total 1,78.9 Reserve for supporting specific borrowers Reserve for contingent liabilities related to loans sold Special reserve for loan trusts, reserve for possible impairment of principal UFJ Holdings Financial Results for Interim Period ended Sept. 21 7

10 Problem Loans: Problem Loans Outstanding (Combined for 3 Banks (non-consolidated) ) Problem Loans Outstanding (under Financial Revitalization Law ) = Yen 2.8 tril. (Yen.2 tril. increase from Mar. 21) (Yen bil.) Loans to possible non-performing or lower Sept , Yen 2,46.8 bil. (4.1% of total loans) grade borrowers: increase of Yen 137 bil. (Bankrupt & quasi-bankrupt, doubtful loans) Balance as of Mar. 31 1,724. (Yen bil.) Increase Write-off * Mar , Yen 2,67.4 bil. (4.5% of total loans) Securitization 77.1 Collection, repayment Sept. 1 Possible non-performing or lower grade Yen 1,861 bil , ,28.1 Yen 2,889.1 bil. (5.1% of total loans) Business improvement 79. Balance as of Sept. 3 * Includes adjustment of claims and write-offs in liquidation or reorganization 1,861. 1, 2, 3, Bankrupt & quasi-bankrupt Doubtful Sub-standard (Includes principal indemnified trust accounts) Put emphasis on corporate revitalization as well as off-balancing (securitization, write-off) UFJ Holdings Financial Results for Interim Period ended Sept. 21 8

11 Problem Loans: Coverage (Combined for 3 Banks (non-consolidated) ) Coverage ratio for problem loans = 69.% (1.4% decrease from Mar. 21) - Unified reserve policy for 3 banks adopted - Mar. 1 Sept. 1 Mar. 1 Sept. 1 Bankrupt & Quasi-Bankrupt 85.% 15.% 91.4% 8.6% Doubtful 45.% 4.% 15.% 55.% 3.9% 14.1% Coverage Ratio (1% (1%) (85.1%) (86.%) Reserve ratio for loans for Special Mention borrowers (excluding sub standard) 5.32% Mar. 1 Sept. 1 Sub-standard 29.3% 12.9% 57.8% 27.9% 11.6% 6.5% % 2% 4% 6% 8% 1% (42.2%) (39.6%) Reserve ratio for loans for Normal borrowers.22% Collateral/guarantees Reserves Uncovered (Includes principal indemnified trust accounts) UFJ Holdings Financial Results for Interim Period ended Sept. 21 9

12 Market Risks: Net Unrealized Profit/ Loss on Securities (Combined for 3 Banks (non-consolidated) ) Net unrealized loss on available-for-sale securities of Yen 53.6 billion (after revaluation loses) due to a decline in stock prices Impact of changes in accounting standards Application of marked-to-market accounting on available-for-sale securities >> Direct reflection of net unrealized profit loss, net of tax, in stockholders equity Change in rule for revaluation losses >> Revaluation losses recorded for stocks with market value (avg. in Sept.) falling below 5% of book value, after possibility of recovery taken into account (Yen bil.) Unrealized Profit (Loss) on Securities Direct reflection in stockholders equity , -1, Net unrealized loss after revaluation loss 53.6 Revaluation losses (impact on Income Statement) -1,4 UFJ Holdings Financial Results for Interim Period ended Sept. 21 1

13 Market Risks: Stock Price (Combined for 3 Banks (non-consolidated) ) Acceleration of unwinding cross shareholdings for more efficient use of capital & reduction of market risks Amount sold in 6 months ended Sept. 21: Yen 78 bil. Decrease in book value: Yen 1.4 tril. (including revaluation losses of Yen 31 bil. and reflection of net unrealized losses) Targeting to reduce the amount below stockholders equity ASAP Eradicate shareholdings where UFJ Bank has over 5% Utilization of stock purchasing company established by government (Yen bil.) (Yen tril.) Stock Book Value (after revaluation losses) Net Unrealized Loss <Unwinding <Unwinding of of cross cross shareholdings> shareholdings> FY 3/21 FY 3/22 FY 3/21 FY 3/22 1st half2nd half (target) 1st half2nd half (target) Book Book value value sold: sold: Over 78Over 6 6 Stockholders equity equivalent UFJ Holdings Financial Results for Interim Period ended Sept

14 Market Risks: Interest Rate (Combined for 3 Banks (non-consolidated) ) Appropriate control on risks arising from rise in interest rates through flexible ALM operations Bond Portfolio Optimal portfolio management based on ALM strategy, while controlling liquidity & interest rate risks Swaps Position Closed out macro hedging positions (off-balance sheet) at Sanwa & Tokai, while maintaining unrealized profit <Bond portfolio (book value)> (Yen tril.) (Banking account) Foreign bonds Short-term JGB Mid/ long term JGB Foreign bonds - Yen 95 bil. Decrease of approx. Yen 1 tril. compared with Mar. 1 (All funding in foreign currency & repurchase agreements --- no forex risk) Short-termJGBs - Yen 2 bil. Maintain balance compared with Mar. 1 Policy: Continue to hold a certain amount hereafter to maintain liquidity Mid & long-term JGBs - Yen 1,9 bil. Decrease of approx. Yen 1 tril. compared with Mar. 1 Policy: Developing flexible ALM strategy, while curbing risks UFJ Holdings Financial Results for Interim Period ended Sept

15 Status of BU: Consolidated Earnings by BU (Yen bil.) Sept. 1 * Sept. * Change Gross Operating Profit Retail Banking Corporate Banking Global Banking & Trading Trust Asset Management (.1) Securities & Inv. Banking Planning & Administration Expenses (minus) Retail Banking Corporate Banking (3.8) Global Banking & Trading Trust Asset Management Securities & Inv. Banking Planning & Administration 16.4 (12.)** 28.4 Business Profit ('gyomu jun-eki') Retail Banking (1.) Corporate Banking Global Banking & Trading Trust Asset Management (.8) 1.8 (2.7) Securities & Inv. Banking Planning & Administration (Yen bil.) (Yen Bil.) Gross Operating Profit Business Profit /9 1/9 /9 1/9 UFJ Holdings Financial Results for Interim Period ended Sept

16 Status of BU: Retail Banking (consolidated) (Yen bil.) Sept. 1 Sept. Change Gross Operating Profit Interest Income (3.4) Loans & bills discounted Deposits (4.4) Non Interest Income Remittances, exchanges ATM related Inv. trust commissions (.8) Other domestic commissions Forex, derivatives (.2) Commissions payable (11.5) (12.2).7 Others (2.6) (3.2).6 Investment Trust Retail Affiliates Expenses (minus) Net Business Profit (1.) Key Points Housing loans: Steady growth primarily thro. housing contractors Outstanding: Yen 5,334.6 bil. (+Yen bil. from Mar. 1 New transactions: Yen 54 bil. (of which, 73% thro. housing contractors) Deposit income: Decreased due to lower spread on liquid deposit Non interest income: Increased due primarily to growth in ATM related commissions Investment trusts: Balance outstanding increased to Yen 83 bil. (of which, stock investment trust 22%) Mobit: Steady increase: loans outstanding at Yen 4.7 bil., no. of contracted individuals at 72, Expenses: Increased due to IT expenses, launch of new businesses etc. UFJ Holdings Financial Results for Interim Period ended Sept (Yen tril.) Yen bil Yen bil Retail Loans 9/ 3/1 9/1 Loans (avg. balance) Loans spread Housing Loans (excluding apartment loans) 9/ 3/1 9/1 Housing loans outstanding New transactions Thro. housing contractors Mobit 9/ 3/1 9/1 Loan outstanding No. of contracted individuals 2.% 1.9% 1.8% 1.7% 1.6% 1.5% Yen bil. Investment Trusts Outstanding Yen bil. 5,5 8 5, 4,5 4, (Yen tril.) X 1, people Yen bil Retail Deposits 9/ 3/1 9/1 9/ 3/1 9/1.7%.6%.5%.4%.3%.2% Deposits (avg. balance) Deposit spread Expenses 9/ 3/1 9/1 Personnel (inc. part-timers) Non-personnel Others (affiliates, etc.)

17 Status of BU: Corporate Banking (consolidated) (Yen bil.) Sept. 1 Sept. Change Gross Operating Profit Interest Income (1.5) Loans & bills discounted (1.5) Deposits (9.) Non Interest Income Domestic commissions Forex Investment banking Derivatives Asset securitization Cost of stocks held (16.) (25.7) 9.7 Others (3.) Expenses (minus) (3.8) Business Profit Key Points Loans outstanding: Decreased due to stagnant demand for funds & progress in problem loan disposal Loan spread: Expanded due to effects of resumption of zero interest rate policy Deposit spread: Decrease from effects of lower interest rates Non interest income: Significant increase year-on-year from investment banking, derivatives, etc. Non interest income ratio: 2.9% (+3.4% from Sept. 2) Reduction in stocks: Yen bil. (before revaluation loss) Sold amount during 6M: Yen bil. (inc. amount for establishment of retirement benefit trust) Balance at Sept. 21: Yen 5,79 bil. (after revaluation loss, before reflection of net unrealized losses) Yen tril Yen bil Corporate Loans 9/ 3/1 9/1 Loan (avg. balance) Loan spread Yen tril. Non Interest Income % 1.1% 1.%.9%.8% Stocks Outstanding (book value) 9/ 3/1 9/1* 23% 21% 19% 17% 15% 9/ 3/1 9/1 Non interest income Non interest income ratio Yen tril. No Corporate Deposits 9/ 3/1 9/1 Deposit (avg. balance) Deposit spread Syndicated Loans.5%.4%.3%.2%.1%.% * Book value before reflection of net unrealized losses) 9/ 3/1 9/1 Gross operating profit Yen bil UFJ Holdings Financial Results for Interim Period ended Sept

18 Status of BU: Global Banking & Trading (consolidated) (Yen bil.) Sept. 1 Sept. Change Gross Operating Profit Market related Trading Flow trading Proprietary trading Banking Derivatives for clients Commissions, taxes, etc. (3.8) (4.2).3 Overseas commercial banking Overseas branches Japanese clients (.7) Non Japanese clients Structured finance Subsidiaries Expenses (minus) Business Profit X 1, Derivatives for Clients 9/ 3/1 9/1 Yen bil. Yen tril Risk Assets of Overseas Branches (by region) 9/ 3/1 9/1 China, Asia Americas, Europe Key Points Derivatives for clients: No. of deals has steadily increased, a nd earnings have been maintained at high level Flow trading : Steady earnings source Proprietary trading & banking: Earnings increased significantly Overseas non-japanese: Increased earnings from rise in assets in Asia and expansion in commission income in USA & Europe Structured finance: Increased profits primarily from domestic project finance Yen bil Flow Trading 9/ 3/1 9/1 Gross operating profit Risk Assets of Overseas Branches (by client type) Yen tril. 9/ 3/1 9/1 UFJ Holdings Financial Results for Interim Period ended Sept

19 Status of BU: Trust (consolidated) (Yen bil.) Sept. 1 Sept. Change Gross Operating Profit Securities related Corporate agency Pensions (.1) Real estate (.4) Asset securitization Private client service (1.) Expenses (minus) Business profit Key Points Corporate agency Steady increase in no. of corporate clients & no. of shareholders under administration Real estate Decrease in commissions from real estate brokerage Slower growth in real estate securitization Private clients service Decrease in commissions on investment trusts sold Synergy effects with Sanwa and Tokai Progress in information linkages (real estate, pensions, corp. agency, inheritance related) Earnings effect for 6 M ended Sept. 21: Yen 1.7 bil. (Yen 2 bil. for full FY 3/21) (Companies) Corporate Agency (X million ) 1 11 UFJ Holdings Financial Results for Interim Period ended Sept (Yen tril.) (Yen tril.) (Yen tril.) Securities under Administration 9/ 3/1 9/1 Specified money trust Independently operated designated money trust Investment trust Balance of Pension Trust 9/ 3/1 9/1 Corporate pension trust Pension specified trust Balance of Asset Securitization 9/ 3/1 9/ (Yen tril.) (Case) / 3/1 9/1 1 Corporate client (public co.) Corporate client (others) Shareholders under administration Balance of Real Estate Securitization 9/ 3/1 9/1 Testamentary Trusts 9/ 3/1 9/1 No. of testamentary trust Newly entrusted asset Yen bil

20 Status of BU: Asset Management (consolidated) (Yen bil.) Sept. 1 Sept. * Change Gross Operating Profit (.2) Toyo Trust & Banking (.1) UFJ Asset Management UFJ Partners Asset Management Expenses (minus) Business Profit (.8) 1.8 (27.) * Based on figures prior to reorganization of asset management companies within the Group (Yen tril.) AUM: Toyo Trust 9/ 3/1 9/1 Pension trust Others Key Points Asset management: Toyo Trust, UFJ Asset Management Pension asset under management steadily increased (Yen 6.3 tril., +5% from Mar. 21) Earnings growth was limited Decline in value of asset due to sluggish market Increased weight in public fund assets with lower fees Investment trust management: UFJ Partners Asset Management Equity related: Yen.8 tril. (-13% from Mar. 2) Sluggish stock market declined value of asset as well as sales amount Bond related: Yen 2.5 tril. (+25% from Mar. 2) (Yen tril.) (Yen tril.) AUM: UFJ AM 9/ 3/1 9/1 Pension Others AUM: UFJ Partners AM 9/ 3/1 9/1 Equity related Bond related & others UFJ Holdings Financial Results for Interim Period ended Sept

21 Status of BU: Securities & Investment Banking (consolidated) (Yen bil.) Sept. 1 Sept. Change Gross Operating Profit UFJ Capital Markets Securities Retail securities (3.4) Tsubasa Securities (3.6) kabu.com Securities Overseas securities subsidiaries Expenses (minus) Business Profit Key Points Wholesale securities: UFJ Capital Markets Securities Sanwa Securities & Tokai Int l Securities merged (Jul. 1) Bolstering corporate finance business by concentrating investment banking functions within Group (M&A, securitization, etc.) Retail securities: TSUBASA Securities Despite decrease in G&A expenses, posted red ink due to stagnant stock market: Yen 2.9 bil. Online securities: kabu.com Securities ewing Securities & Japan Online Securities merged (Apr. 1) No. of accounts: 76, (No.5 among net brokers) (Sept. 1) Overseas securities subsidiaries Significant increase in profits due to good performance in proprietary trading of Tokai Bank Europe (Yen bil.) (Yen tril.) (X 1,) UFJ CM Securities (Gross Operating Profit) 9/ 3/1 9/1 Secondary markets Corporate finance Others 9/ 3/1 9/1 No. of Online Accounts (Yen bil.) Asset under management Stock sales commission UFJ Holdings Financial Results for Interim Period ended Sept

22 Forecasts for Fiscal Year Ending March 22 (Yen bil.) UFJ Holdings Non consolidated Consolidated Operating Income Ordinary Profit Net Income ,6 (9) (6) Subsidiary Banks (non consolidated) UFJ Bank UFJ Trust Combined for 3 Banks * Business Profit (excluding net transfer to general reserve) Credit Costs Ordinary Profit Net Income (1,) (6) (4) (3) (25) (15) (2,) - - * Business profit and credit cost of Tokai Bank until Jan , when it merges with Sanwa Bank to form UFJ Bank, are added. UFJ Holdings Financial Results for Interim Period ended Sept. 21 2

23 Resolution of Problem Loans Issues: Credit Costs Forecast Annual Credit Costs Yen 2 tril. Hit Income Statements of UFJ Bank Sanwa Yen 1. tril. (Yen tril.) Hit Balance Sheet of UFJ Bank Merger Accounting To be reflected in Income statement until merger (Apr.1 - Jan.14) Tokai Yen.7 tril. 1.2 Hit Income Statements of UFJ Trust Toyo Trust Yen.3 tril Reserve Ratio for Special Mention Loans Sept. 1 Mar. 2 Special Mention Overall 6.38% Approx. 8% Sub-standard (uncovered portion) 16.22% Approx. 2% Other Special Mention 5.32% Approx. 56% Revitalization etc. of large borrowers Measures for other borrowers 'Off-balancing' and other final resolution Increase in general reserve Credit costs in the 1st half UFJ Holdings Financial Results for Interim Period ended Sept

24 Resolution of Problem Loans Issues: Framework Management puts top priority on resolution of problem loans Resolution of troubled large borrowers Initiative of specialized divisions towards corporate rehabilitation >> Drastic measures to be taken, with credit related expenses of Yen 1.2 tril. for FY 3/22 Resolution of other troubled borrowers Establishment of advisory company to enhance improving soundness of loans and off-balancing >> Aim to final resolution of problem loans issues >> Complete resolution of non-performing, quasi non-performing, possible non-performing and sub-standard by Mar. 23 Adequate general reserves Higher reserve ratios applied for special mention borrowers (excluding sub-standard) within certain riskier industries Sept. 3, 21 Yen bil. Doubtful Yen 1,241.8 bil. Bankrupt & Quasibankrupt Substandard Yen 1,28.1 bil. Special mention Method for Resolution: UFJ Holdings Financial Results for Interim Period ended Sept

25 Resolution of Problem Loans Issues: Core Strategy Scheme for drastic resolution of problem loans Loans to be Resolved: Doubtful/ Bankrupt & Quasi-bankrupt >> Final resolution through off-balancing, etc. Sub-standard >> Improvement in soundness of loans thro. corp. rehabilitation Core Strategy: Utilizing advisory company (to be newly established), promote quick revitalization or final resolution for problem loans (incl. sub-standard) Time Frame: Such measures shall be completed within shorter period than those stated under government s Advanced Reform Program : Existing problem loans >> within 2 years New problem loans >> within 3 years Advisory Subsidiary (to be newly established) Investment banking services Personnel / knowhow (Advisor) The scheme is designed for full resolution of problem loans Promoting final resolution of problem loans Establishment/ personnel Drastic initiatives to support corp. restructuring Securing transparency of the measures Business Sponsors Investment Fund RCC, etc. Borrowers to be Revitalized (mainly sub-standard) Loans to be collected (mainly bankrupt & quasi-bankrupt) Frontier Servicer (functions to be expanded) Consignment of collection Securitization Utilization of Advisory Subsidiary Nomination of Merrill Lynch (Japan) as advisor UFJ Holdings Financial Results for Interim Period ended Sept

26 Resolution of Problem Loans Issues: Roles of Participants Each company shall steadily perform respective roles to achieve resolution of problem loans Set Set problem problem loan loan resolution resolution strategy, strategy, utilizing utilizing advisory advisory subsidiary subsidiary Based Based on on advice advice received received from from advisory advisory subsidiary: subsidiary: Corporate Corporate restructuring restructuring through through work-outs work-outs Loan Loan collection collection through through off-balancing off-balancing Promote Promote final final resolution resolution of of problem problem loans loans <UFJ Bank, UFJ Trust> <Advisory Subsidiary> Advisor Advisor & Control Control Tower Tower for for problem problem loan loan resolution resolution Provide Provide investment investment banking banking services services for for resolution resolution of of problem problem loans loans Consider Consider measures measures for for specific specific loans loans Advise Advise on on revitalization revitalization & & final final disposal disposal schemes schemes Advise Advise on on business business sponsors sponsors in in work-outs work-outs Advise Advise on on fund fund raising raising in in off-balancing off-balancing <Merrill Lynch (Japan)> Overall Overall advisor advisor for for this this scheme scheme Dispatch Dispatch personnel personnel to to advisory advisory subsidiary subsidiary Provide Provide advice advice & & knowhow knowhow >> >> Corporate Corporate revitalization revitalization & & loan loan collection collection schemes schemes Utilize Utilize world-wide world-wide network network >> >> Support Support overseas overseas funding funding & & cross-border cross-border M&As, M&As, etc. etc. Check Check suitability suitability & & transparency transparency as as a a third third party party <Frontier Servicer Co.> Comprehensive Comprehensive servicer servicer for for UFJ UFJ Group Group Negotiate Negotiate with with & & collect collect loans loans from from debtors debtors after after off-balancing off-balancing <Others> Corporate Corporate sponsors, sponsors, investment investment fund, fund, RCC, RCC, etc. etc. UFJ Holdings Financial Results for Interim Period ended Sept

27 Financial Strategies: Bolstering Capital Make strategic efforts to bolster capital to maintain adequate capital ratio Capital Raising Capital raising initiatives ahead of pier groups since establishment of UFJ Group Sanwa sold UFJ Holdings preferred stocks: Yen 8 bil. of (May 21) Sanwa issued subordinated bonds: US$ 2 bil. (Jun. 21) Sanwa, through SPC, issued preferred securities (counted under Tier I): Yen 218 bil. (Oct.-Nov. 21) Scheduled to raise additional capital hereafter as necessary Reduction in Risk Assets Accelerate unwinding cross shareholdings (Yen 1.4 tril. during FY 3/22) Improvement soundness/ off-balancing of problem loans Maintain BIS capital ratio at approx. 1% at the end of FY 3/22 <Assumptions> Credit costs: Yen 2 tril. (combined for 3 banks) Nikkei 225: Yen 1, UFJ Holdings Financial Results for Interim Period ended Sept

28 Financial Strategies: Draw Down of Legal Reserve Drive drastic disposal of problem loans and secure retained earnings through drawing down of legal reserve. Make financial strategies flexible in the future. UFJ Holdings Timing: Expect a resolution at a stockholders meeting by June 22 Amount: To be determined (legal limit = portion exceeding ¼ of capital equivalent amount) Significance of draw down of legal reserve Make possible to buy-back UFJ Holdings stocks held by subsidiary banks as treasury stocks Secure further financial avenues to promote comprehensive financial strategies UFJ Bank Timing: By the end of current fiscal year (March 31, 22) Amount: To be determined (legal limit = portion exceeding capital equivalent amount) Significance of draw down of legal reserve Secure legal reserve subject to draw down at the time of merger of Sanwa and Tokai Make possible to pay sufficient interim dividends to UFJ Holdings, even after drastic resolution of problem loans Secure income available for dividend from unrealized loss on securities concurrent with stock price fluctuations Facilitate capital raising hereafter by steadily securing retained earnings UFJ Holdings Financial Results for Interim Period ended Sept

29 Financial Strategies: Securing Income Available for Dividend Secure necessary income available for dividend at UFJ Holdings, by receiving interim dividend from UFJ Bank for FY 3/22 UFJ Holdings Necessary Income Available for Dividend (Mar. 31, 22) = Approx. Yen 16 bil. (= dividend amount for preferred stocks) Secure dividend resources for preferred stocks by receiving interim dividend for FY 3/22 from UFJ Bank No dividend on ordinary shares (scheduled) UFJ Bank Secure retained earnings as at Mar. 31, 22 through drawing down of legal reserve (amount to be determined) Securitization of Tokyo headquarters building Interim dividend for FY 3/22 = Approx. Yen 14 bil. (scheduled) Curb risks of holding real estate, while securing retained earnings UFJ Holdings Financial Results for Interim Period ended Sept

30 Financial Strategies: Utilization of Merger Accounting Utilizing merger accounting to write-off unrealized loss, UFJ Bank secure enough legal reserve subject to drawing down as retained earnings <Utilization of Merger Accounting> Tokai Bank (Sept. 3, 21) Tokai Bank (before merger accounting) Capital Yen723.1 Capital bil. Legal Reserve X Legal Reserve, etc. Voluntary Reserve, etc Voluntary Reserve, etc Key Points on Utilizing Merger Accounting Profit/ loss on Tokai Bank (to Jan. 14, 22) to be reflected in legal reserve before merger accounting (X) >> Disposal of problem loans to be driven without directly impacting on retained earnings of UFJ Bank Utilize merger accounting to enhance a sound financial condition >> Write-off unrealized loss on securities, etc (Y) Remainder (X -Y) to be allocated to legal reserve of UFJ Bank >> Legal reserve available for drawing down as retained earnings [ (2) (1) ] increases Tokai Bank (after merger accounting) Sanwa Bank UFJ Bank (Jan. 15, 22) Capital Capital Capital Legal Reserve X - Y (1) Legal Reserve Legal Reserve Unrealized Loss Written-off Voluntary Reserve, etc Y Voluntary Reserve, etc (2) Voluntary Reserve, etc UFJ Holdings Financial Results for Interim Period ended Sept

31 Management Systems: Outline of UFJ Group UFJ Holdings (As of January 15, 22) Major Subsidiaries & Affiliated Companies Overseas Business United California Bank Overseas Securities Subsidiaries Asset Mgmt. Business UFJ Partners Asset Management UFJ Asset Management Securities Business Retail Business UFJ Capital Markets Securities Scheduled to merge in first half of FY 23/3, to form UFJ TSUBASA Securities TSUBASA Securities Mobit UFJ Card Corporate Business Other Business UFJ Capital Factoring, lease, etc. UFIT (systems solutions) UFJ Institute UFJ Holdings Financial Results for Interim Period ended Sept

32 Management Systems: Business Management (from Jan. 22 ~ ) Mission: Enhance corporate value through transferring business results of the group to shareholders value, with a strong impetus for the creation of comprehensive financial strategies. Main Changes in UFJ Holdings Organization: UFJ Holdings shall focus on group business management & group strategy planning functions, aiming to develop ideal business portfolio Securities & Investment Banking BU Business Management System UFJ Holdings Group Planning Dept. Asset Mgmt. Planning function of following BUs shall be transferred to respective subsidiary. Each subsidiary bank develop its strategies hereafter to be approved & evaluated by UFJ Holdings Retail Banking Corporate banking Global Banking & Trading Trust UFJ Holdings to directly manage following BUs for promotion of comprehensive financial strategies. (The planning functions shall be transferred to subsidiaries in the future.) Asset Management Securities & Investment Banking UFJ TSUBASA Securities UFJ Bank Retail Banking Retail Banking Company Corporate Banking Corporate Banking Company Global Banking & Trading Global Banking & Trading Company UFJ Trust Bank Trust Trust business UFJ Partners Asset Mgmt. UFJ Asset Management UFJ Holdings Financial Results for Interim Period ended Sept. 21 3

33 Management Systems: Corporate Governance (From January 22 ~ ) Corporate Auditors/ Board of Corporate Auditors <UFJ Holdings> Shareholders Meeting Board of Directors Non Executive Chairman of the Board Deputy Chairman Directors External Directors Segregation Nomination Committee Compensation Committee Corporate Governance that secures segregation between Board of Directors and Management Executive Rep. Director & President Director & Executive Officer Management Other Executive Officers Executive Officers Bank President Trust Bank President Group Management Meeting Group Auditing Committee Holdings President monitors management of UFJ Bank, as Chairman (non executive) Holdings Executive Officer monitors management of UFJ Trust bank, as a non executive officer UFJ Bank Trust Bank Board of Directors: Chairman (non executive), President (executive), Directors (non executive), Director & Executive Officer Group Auditing Committee: Subordinate organization to Board of Directors Management Meeting: Advisory body to president (comprising senior executive officers responsible, etc.) UFJ Holdings Financial Results for Interim Period ended Sept

34 Start of UFJ Bank: Outline of UFJ Bank UFJ Bank Merger of Sanwa Bank & Tokai Bank (January 15, 22) Combined for 2 banks (Sept. 3, 21) Total assets Yen 78.3 tril.loans Yen 45.5 tril. Capital Yen 3.3 tril.deposits Yen 48.1 tril. Customer Transaction Type: Customer & Business Base: Retail Banking Co. Mass individuals High net worth individuals Small businesses No. of individuals customers Approx. 15 mil. Individual deposits Housing loans Yen 23.5 tril. Yen 5.3 tril. Corporate Banking Co. Large & public corporations Small- & mid-sized companies No. of corporate customers Approx. 95, Ratio of loans to small- & mid-sized Approx. 65% Global Banking & Trading Co. Overseas commercial banking Trading and Market related Overseas loans Trading assets (avg. balance in 1st half FY 3/22) Yen 4.5 tril. Yen 3.9 tril. UFJ Holdings Financial Results for Interim Period ended Sept

35 Start of UFJ Bank: Business Strategies Business Base <Branch Network by Region> Capitalize on branch network which is well balanced within 3 major economic regions (aggregate of Sanwa and Tokai) Manned Branches 581 (Branches + Sub-Branches) ATM Branches (As of Sept. 3, 21) Separation of Marketing system of corporate banking & retail banking Adequate response to client needs Efficient utilization of branches & personnel Utilization of servicer for collection Consign problem loan collection of corporate, retail & associated companies to The Frontier Servicer Co., Ltd. >>Effective utilization of personnel & know-how >>Accelerated & maximized collection UFJ Holdings Financial Results for Interim Period ended Sept

36 Start of UFJ Bank: Business Strategies (Corporate Banking) Corporate Banking Network System Business structure that allows efficient & effective response to customer needs by segment 3 main offices (Tokyo, Osaka, Nagoya): Provide comprehensive services mainly to prime corporations, utilizing functions of HQ & group companies Large-scale branches: Provide comprehensive services to large and/or listed companies & to mid-sized companies going public Core branches: Provide comprehensive services mainly to mid-sized companies, as core branch in each region General branches: Mainly extend loans to small- and mid-sized companies near by Relationship Management (RM) System Unify earnings and risk management of a customer by a RM officer dealing all the negotiation. RM officer concentrates on marketing and sales, by utilizing assistants, junior RM officers Assignment of Qualified Staff to Branches Aim to raise performance by positioning function of headquarters within branches FRA (Financial Risk Advisor) - Build system that allows prompt response to derivative needs of customers Trust Business RM realize synergy effects of commercial banking & trust banking Specialized Division for Troubled Borrowers Support restructuring & promote collection through centralized management of low credit rating borrowers at specialized division UFJ Holdings Financial Results for Interim Period ended Sept

37 Start of UFJ Bank: Business Strategies (Retail Banking) Block Business Structure Block business structure affording enhanced competitiveness & efficiency Block branches: Core branch with all functions for retail banking business General branches branches: Specialize in settlement and asset management consultation for mass market Block Business Structure Block Branch Core branch within a region (block) with all functions for retail banking business Channel Development Network strategy, effectively utilizing channel mix Internet branch ATM network (ATM branches, ATMs at convenience stores) Telephone, Internet, mobile and TV banking s (Automatic Consultation & Contract Machines) New Branch System (FITS 21) Features Image processing On-line, Centralization Remote control from HQ Utilization of database Simplification of teller operation >>Replacement with temporary employment staff >>More customer interfacing Reduction in back office operation at branches Cost reduction through paperless processing Efficient branch monitoring by headquarters Enhanced sales promotion by utilizing database On-line processing of branch operation Image Processing Centralization UFJ Holdings Financial Results for Interim Period ended Sept Branch (Teller) Image processing using scanner On-line verification of seal imprints Automatic probe of cash Business development using customer information & database Focus on consultation FITS 21 Outline Concentration of database & information Greater Efficiency Reduction in back office operation at branches Monitoring General Branch General Branch Specialize in settlement and asset management consulting for mass market Centralized authorization Inspection of transaction records Remote inspection by HQ Centralize operation for anomaly transactions Centralize operating know-how General Branch Processing Center

38 Start of UFJ Bank: Integration of Infrastructure <Systems Integration> Newly integrated system --- state-of-the-art within industry>> Operative at same time as establishment of UFJ Bank Versatile system that excels in complex links for channels and business products (January 15, 22) component, hub and spokes, integrated data warehouse open platform Realization of development speed and low cost, by eradicating development of bridging system for integration Integration of systems center Integration to 2 centers: Chiba Center (main), Nagoya Center (sub) on January 15, 22 New branch system (introduction of FITS 21) Increased operational efficiency through image processing and centralization at procesing centers >> realization of stronger marketing power at branches <Integration of Administrative Operation System> Greater efficiency of operating system from introduction of FITS 21 >> supports smooth integration Reorganization & integration of administrative operation related companies (January 15, 22) UFJ Business Service (Tokyo, Osaka, Nagoya) << cash and other delivery company UFJ Operation Service (Tokyo, Osaka, Nagoya) << domestic business operation company UFJ International Operation Service << Forex related operation company <Integration of Personnel Systems> Ahead of establishment of UFJ Bank, personnel systems of Sanwa & Tokai was integrated in Oct. 21 Compensation that reflects job duties and performance. Introduction of highly transparent evaluation system through external institutions and 36-degree evaluations by co-workers UFJ Holdings Financial Results for Interim Period ended Sept

39 Start of UFJ Trust Bank: Business Development Transfer of Lending & Deposit Taking Business to UFJ Bank (targeting 1st half of FY 23) Aims of Integration Greater efficiency>> Reduce costs as a group by integrating overlapping business with UFJ Bank Pursuit of earnings synergy>> Bolster trust related business by utilizing client base of UFJ Bank Better products & services>> Strengthen product development capabilities & services through specialization to trust business Realization of Synergies with UFJ Bank Expansion of Client Base for Trust Business Targeting client base of UFJ Bank (about 9-times that of UFJ Trust Bank) for trust business >> Business expansion through shift of staff from lending & deposit taking business to trust business >> Considering nomination of some UFJ Bank branches as trust agencies Joint Branch Development Promotion of joint branch usage together with UFJ Bank >> Bolstering client base at branch site of UFJ Trust Bank (increased client convenience) >> Realization of mutual synergy effects between UFJ Bank & UFJ Trust Bank >> Reduction in branch costs Development of Trust Business Corporate Trust Business>> Bolstering ties with UFJ Bank in pension, real estate, asset securitization, corporate agency businesses, based on consulting function of UFJ Trust Bank Private Asset Management Business>> Development of united model for trust & commercial banking in strategies for high net worth segment UFJ Holdings Financial Results for Interim Period ended Sept

40 Integration Schedule: Domestic Group Companies Respond to client needs, capitalizing on functions of comprehensive financial group Commercial Banking UFJ Bank Integration Scheduled: Jan. 15, 22 Establish UFJ Bank through merger of Sanwa & Tokai Well balanced client base in 3 major economic regions Trust UFJ Trust Bank To be renamed: Jan. 15, 22 Transfer lending & deposit taking business promptly to commercial bank, and specialize in trust related business Asset Management UFJ Partners Asset Management Integrated: Apr. 1, 21 Respond to increasing individuals risk taking investment and to expanding investment trust market UFJ Asset Management Integrated: Apr. 2, 21 Seek business opportunities on revision in pension system Systems UFIT Established: Apr. 1, 21 Support provision of comprehensive financial functions through development of IT solutions Cost reduction through streamlining personnel & infrastructure Provide IT solutions mainly for UFJ Group clients Securities <UFJ TSUBASA Securities> Integration scheduled for 1 st half of FY 23/3 Bolster competitiveness through combination of wholesale & retail businesses, and unified sales & production of services Card UFJ Card Integration Scheduled: Jan. 15, 22 Develop card business under UFJ brand Promote cross selling within Financial One Alliance by offering a gateway function Venture Capital <UFJ Capital> Integration scheduled: Jan. 15, 22 Bolster venture capital function of the group Research <UFJ Institute> Integration scheduled for Apr. 1, 22 Contribute to enhanced comprehensive financial services of UFJ Group UFJ Holdings Financial Results for Interim Period ended Sept

41 Integration Schedule: Overseas Bases Concurrent with merger of Sanwa & Tokai, consolidation of overseas bases will be accelerated Branches (Start point: Mar. 31, 21; figures as of Nov.27, 21) Integrated: 2 branches < Los Angeles (July 21), Dusseldorf (July 21)> To be integrated: 9 branches < New York, Cayman, London, Hong Kong, Shanghai, Taipei, Singapore, Bangkok, Labuan > Sub-Branches & Representative Offices Abolished: 11 bases < Americas 4, Europe 3, Asia 4 > To be abolished:12 bases < Americas 1, Europe 3, Asia 8 > Subsidiaries Integrated: 5 5 bases < California, Canada, Switzerland, Indonesia, Australia > To be integrated: 1 1 base < Securities subsidiary in London > UFJ Holdings Financial Results for Interim Period ended Sept

42 Progress in Restructuring Realize establishment of efficient marketing system & reform of cost structure through aggressive reduction in number of employees and consolidation of overlapping branches & offices Trend in Costs Domestic Branches (Yen bil.) (Actual) (Actual) (Actual) (Target) (Target) Personnel Costs branches 46 Non Personnel Excl. integration costs , 2, 1, Integration one-time costs - - * * Integration one-time costs are expected to be increased for the latter half of FY22/3, for the merger of commercial banks will take place in January, 22. Another Yen 4.5 billion of Integration one-time costs were incurred as other expenses for 6 months ended Sept ,83 No. of Employees 26,99 25,843 New recruit in April 21 at 862 Target number of employees as of March 31, 22 at 24,9 2, Overseas Bases (Branches & Subsidiaries) 14 offices UFJ Holdings Financial Results for Interim Period ended Sept. 21 4