MUFG Investor Day 2024

Norbert Gehrke
Tokyo FinTech
Published in
11 min readJul 26, 2024

MUFG has held its Investor Day, with a detailed review of the new Medium-Term Business Plan (MTBP) by business line. The following is a summary of the key points from the presentations.

1. Retail & Digital

Previous MTBP Review

  • Exceeded net operating profit target (¥236 billion) and ROE target (8%).
  • Achieved significant customer shift to online transactions.
  • Mitsubishi UFJ IB service users reached a record high.

Current MTBP Overview

  • Slogan: “Committed to supporting our customers’ lives.”
  • Goal: Maximize the lifetime value (LTV) of each customer across the existing 57 million customer base.

Internet Banking — Phase 1 (by FY24)

  • Completely revamp internet banking (IB), seamlessly integrating group company services.
  • Provide a unified view of customer transactions, including credit card usage, mutual fund values, and deposit balances.
  • Enable applications for QR payments and other services directly through the IB platform.

Internet Banking — Phase 2 (by FY26)

  • Develop a comprehensive “Money Advisory Platform” (MAP) tailored to individual customer life stages.
  • Leverage WealthNavi, Japan’s leading robo-advisor, for personalized financial advice.

Credit Card Strategy

  • Increase customer LTV by promoting cross-selling and bundled product offerings.
  • Implement a new reward program in FY24, encouraging the use of various MUFG services.
  • Launch a new payment app integrated with external content (characters, animation) to attract a wider customer base.

Online Security Strategy

  • Position au Kabu.com Securities as a key online securities company.
  • Deepen integration with MUFG entities, potentially incorporating “Mitsubishi UFJ” into the Kabu.com brand.
  • Introduce innovative services like installment payments for investment trusts and seamless account linking.
  • Offer Morgan Stanley’s Smart Order Routing system to individual investors in Japan.

New Customer Acquisition

  • Launch “Bank as a Service” (BaaS) providing core financial functions to partner companies.
  • Leverage MUFG’s corporate customer base through the “MUFG at Work” framework, expanding financial services to employees.

2. Commercial Banking & Wealth Management

Previous MTBP Review

  • Achieved net operating profits of ¥224.6 billion, exceeding the target.
  • Reduced expense ratio to 67%, exceeding the target.
  • Achieved ROE of 8.5%, exceeding the target.
  • Successfully captured growth opportunities from overseas interest rate hikes.
  • Completed cost structure reforms.

Challenges

  • Untapped potential in business and asset succession services.
  • Need to improve balance sheet profitability.
  • Need to strengthen the corporate infrastructure in the front office.

Current MTBP Overview

  • Improve balance sheet profitability in a positive interest rate environment.
  • Deepen and expand wealth management services by leveraging Morgan Stanley’s expertise.
  • Accelerate the provision of succession-related solutions.
  • Enhance corporate infrastructure through human resource development and DX.

Corporate Business

  • Shift employee mindset and provide tools for effective deposit acquisition, particularly targeting operating account deposits.
  • Focus on high-margin loans (LBOs, non-recourse real estate loans).
  • Implement pricing management to improve the margin on low-profitability loan portfolios.
  • Form specialized teams to address capital strategy issues for core large corporate customers.
  • Enhance understanding of non-core customers and mobilize MUFG services to convert them to core customers.
  • Support startups using financial and non-financial functions, aiming to triple their market cap to ¥20 trillion.

Wealth Management Business

  • Deepen transactions with existing customers and expand outreach to untapped customers.
  • Implement an advisory business model, strengthen collaboration with securities, and offer advanced wealth management services (asset fee plans, discretionary investment).
  • Expand the number of wealth management professionals by approximately double the current level by FY26.
  • Strengthen digital touchpoints, including sales support platforms, wealth simulation tools, and online RMS deployment.

Combined Corporate and Wealth Management Business

  • Focus on addressing the financial needs of business owners, both corporate and personal.
  • Aim to achieve ¥1 trillion in loan balance related to business succession.
  • Target ¥88 billion in net operating profits related to business succession services.

Corporate Infrastructure Enhancement

  • Allocate over 100 employees to strategic fields.
  • Commit to early promotions, encourage senior and female leadership, and expand training programs.
  • Implement autonomous branch management, empowering branches to develop their own management policies and self-report financial targets.
  • Launch social contribution activities (“MUFG Soul”) in each region.
  • Deepen data utilization and upgrade CRM systems to support sales activities, provide recommendations, and streamline internal coordination.

3. Japanese Corporate & Investment Banking

Previous MTBP Review

  • Achieved significant growth due to improved profitability and increased non-JPY deposit income.
  • Successfully transitioned to an ROE-oriented business model.
  • Reduced equity holdings by over ¥500 billion, exceeding the initial target.
  • Increased risk-taking in high-profitability assets.

Challenges

  • Need to strengthen origination and create new, highly profitable assets.
  • Need to further deepen RWA management.

Current MTBP Overview

  • Achieve stable double-digit ROE.

Balance Sheet Strengthening

  • Implement strategic pricing focused on ensuring appropriate returns.
  • Control BS management policy in accordance with market conditions.
  • Continue reducing equity holdings, aiming for ¥350 billion in sales under the current plan and a ratio of less than 20% of total assets by the end of the next MTBP.

Enhanced Risk-Taking

  • Expand highly profitable transactions in real estate and solutions businesses.
  • Build a “through-the-cycle” real estate business model, resilient to market fluctuations.
  • Diversify and strengthen origination capabilities in the solutions business.
  • Establish an M&A strategy office to strengthen origination capabilities for small and medium-sized M&A deals.

Value Co-Creation Approach

  • Accompany customers in expanding their business domains and nurture new industries and businesses.
  • Target new business domains such as the space industry, green energy (hydrogen, storage batteries), and industrial cluster infrastructure.

Corporate Transformation

  • Develop employees with a global worldview, understanding structural changes and future industry trends.
  • Foster a culture of passion, ownership, and professional standards.
  • Implement human resource development programs that go beyond traditional classroom training, focusing on practical thinking, networking, and new experiences.
  • Utilize AI, data infrastructure, and media content to create a new organizational culture.

4. Global Commercial Banking

Previous MTBP Review

  • Initial struggles due to COVID-19, but strong performance in final year led by the consolidation of foreign subsidiaries and the auto business.
  • Achieved both net operating profit and net profit targets.
  • Partner banks’ ROE improved to 7.5% after initial investment.
  • Balanced growth across the business portfolio, including strong earnings from equity method affiliates in Vietnam and Security Bank.

Challenges

  • Managing and strategically utilizing a growing number of subsidiaries and investees.
  • Deepening the digital finance strategy.
  • Identifying and developing new growth markets.

Current MTBP Overview

  • Contribute to MUFG’s overall profit by growing the existing portfolio, centered on partner banks.
  • Establish a digital finance platform.

Partner Bank Strategy

  • Support the growth strategies of each partner bank in their respective countries.
  • Leverage the trust-based relationship built through consistent management involvement and governance support.

Asia and Digital Strategy

  • Promote investments in digital finance service providers.
  • Build a new digital finance platform.
  • Focus on India as a new high-growth market and strengthen the business platform there.

Business Portfolio Evolution

  • Drive growth in the short term through the conventional finance platform centered on partner banks.
  • In the mid to long term (10 years), strategically invest in growth areas like digital and India.
  • Achieve an optimal balance between existing and new businesses and between conventional and digital finance platforms.

Financial Targets

  • Achieve net operating profits of ¥350 billion (a ¥95 billion increase from FY23).
  • Achieve ROE of 9% after amortization.

Krungsri (Thailand)

  • Maintain focus on business growth while closely monitoring credit portfolio.
  • Capture growth opportunities in neighboring countries.
  • Manage overseas business expansion through a new unit under the CEO, focusing on both growth and governance.

Bank Danamon (Indonesia)

  • Continue to realize the positive impact of structural reforms and growth investments.
  • Deepen collaboration among investees and enhance MUFG’s presence.

Asia and Digital

  • Accelerate investments in digital finance, aiming to become ASEAN’s number one digital finance group in 10 years.
  • Leverage the success of the Home Credit acquisition and strategic investments in two digital finance companies.
  • Capitalize on improved deal flow and market recognition as a strategic investor in the Asian digital finance space.
  • Facilitate horizontal connections between digital finance investees, enabling them to share knowledge, leverage each other’s strengths, and benefit from MUFG’s ecosystem.
  • Address financial inclusion in Asia, targeting 14 million digital lending borrowers by FY26.
  • Utilize the “Enhanced Growth Model” to categorize the value proposition for investees, including access to the customer base, financial solutions, ecosystems, and knowledge sharing opportunities.

India Strategy

  • Capitalize on India’s high growth potential driven by domestic demand.
  • Explore investment opportunities in both conventional and digital finance, targeting the growing SME and retail lending markets.

5. Global Corporate & Investment Banking

Previous MTBP Review

  • Achieved net operating profit of over ¥150 billion, exceeding the target.
  • Achieved ROE of 6%, falling short of the target.
  • Successfully improved margins through balance sheet optimization and growth in institutional finance.
  • Increased underwriting and sales fees in project finance.
  • Expanded cross-selling of foreign exchange and derivatives through integrated operations with the Global Markets Business Group.

Challenges

  • Need to further enhance competitiveness in the debt business.
  • Need to strengthen risk management to align with portfolio diversification.

Current MTBP Overview

  • Achieve stable double-digit ROE.
  • Establish a world-leading position as a financial institution.

Enhance Competitiveness in the Debt Business

  • Thoroughly optimize the profitability of the balance sheet.
  • Improve lending spreads through balance sheet optimization.
  • Aim for a top 10 position in both investment grade and non-investment grade syndication and DCM wallet rankings.

Enhance Profitability of Global Platforms

  • Pursue capital efficiency and diversify origination of non-deal transactions, particularly in structured finance.

Financial Targets

  • Achieve a net operating profit increase of ¥95 billion by FY26 (compared to FY23).
  • Achieve an ROE of 8%.

Balance Sheet Optimization

  • Continue to reduce low-profitability assets.
  • Maintain discipline in asset generation and invest in areas where MUFG can demonstrate value.

Project Finance

  • Capitalize on strong demand for project finance, particularly in traditional assets (resources, infrastructure) and new areas (semiconductors, digital infrastructure).
  • Provide integrated solutions through combined GCIB and Global Markets operations.

Global Structured Solutions

  • Establish a dedicated unit to integrate structuring capabilities across business divisions and categories.
  • Provide tailor-made debt solutions by combining coverage, product, distribution, and investor knowledge.

Morgan Stanley Alliance

  • Strengthen collaboration in Asia, leveraging MUFG’s client base and Morgan Stanley’s investment banking capabilities.
  • Focus on expanding capital assistance transactions, particularly in event finance.
  • Expand the scope of collaboration in the US beyond investment grade, increasing deal flow and targeting a broader customer base.

Blended Finance

  • Leverage industry-leading track record and capabilities to expand into portfolio-type blended finance.
  • Utilize funds and partnerships to address social issues and deliver economic value.

Regional Strategies

  • Americas: Expand business with new customers and products while enhancing risk management.
  • Europe: Pursue capital efficiency and diversify origination of non-deal transactions, particularly in structured finance.
  • Asia: Deepen relationships with investment-grade clients, accelerate business with sister clients, and expand product offerings.
  • Resource Allocation: Establish Tokyo headquarters as a control tower for agile resource allocation between regions.
  • Global Operations Support: Establish cross-regional teams for finance, MIS, and operations to pursue global optimization and support global strategy execution.

6. Global Markets

Previous MTBP Review

  • Net operating profits in FY23 were ¥27.5 billion, lower than FY20.
  • ROE was 0.5%, lower than FY20.
  • Declines primarily attributed to systematic sales of securities with unrealized losses and losses in the treasury business.
  • Sales and trading business achieved record profits in FY22, driven by customer flows and flexible position management.
  • Successfully launched Alliance 2.0 with Morgan Stanley.
  • Actively utilized hedging tools in treasury operations to manage the foreign bond portfolio.

Sales and Trading

  • Develop an integrated management framework to address the increasingly diverse needs of customers.
  • Strengthen capabilities to respond to a positive interest rate environment.

Treasury and Other Operations

  • Enhance the soundness of foreign currency and yen portfolios.
  • Strengthen yen balance sheet management.
  • Enhance investment capabilities to support Japan’s development as a leading asset management center.

Current MTBP Overview

  • Slogan: “Lead the transformation of MUFG for further growth.”
  • Achieve sustainable growth by adapting to structural changes.
  • Become a trusted partner by providing solutions to social issues through business activities.
  • Contribute to MUFG’s overall growth through collaboration with other business groups.

Key Strategies

  • Enhance MUFG optimization with GCIB, targeting gross profits of over ¥160 billion.
  • Deepen collaboration with Morgan Stanley under Alliance 2.0, targeting synergies of over ¥10 billion.
  • Enhance the Japanese yen business, targeting gross profits of over ¥100 billion.
  • Enhance the Asia business, targeting gross profits of over ¥120 billion.
  • Enhance market risk management in treasury operations.
  • Strengthen Japanese yen balance sheet management.
  • Promote green business initiatives, including investments in global forest investment funds and activating carbon credit markets.
  • Contribute to making Japan a leading asset management center.
  • Accelerate digital transformation (DX) initiatives.
  • Strengthen infrastructure through human resource investment, DEI promotion, and middle/back office efficiency improvements.

Financial Targets

  • Achieve net operating profits of ¥300 billion by FY26.
  • Achieve an ROE of 6.5% by FY26.

7. Asset Management & Investor Services

Previous MTBP Review

  • Achieved net operating profits of ¥110.8 billion in FY23, a ¥31 billion increase from FY20.
  • Reduced the expense ratio by 2% to 70%.
  • Expanded business volume in both Japan and overseas.
  • Increased profits in the investment trust and DC businesses.

Achievements

  • Mitsubishi UFJ Asset Management achieved the top position in Japan for publicly offered equity investment trust balance (excluding ETFs).
  • Acquired Albacore, strengthening the private asset domain.
  • The Master Trust Bank of Japan became the top manager of assets under management in Japan.
  • Received continued high customer satisfaction in the pension business.

Challenges

  • Declining fees due to increased competition in both the asset management (AM) and investor services (IS) sectors.
  • Need to expand alternative products and strengthen active management capabilities.

Current MTBP Overview

  • Vision: Become a trusted group for asset management and investor services.
  • Become Japan’s number one asset manager with a global presence.
  • Expand regions and functions globally in the IS business.
  • Expand the scope of BPO services for institutional investors and asset management companies in Japan.
  • Explore new channels, such as B2B2C, in the pension sector.

Financial Targets

  • Achieve net operating profits of ¥145 billion in FY26, a ¥35 billion increase from FY23.
  • Maintain ROE at the FY23 level, taking into account the impact of acquisitions and new product development.

Global Asset Management

  • Position asset management as a growth area to drive overall business group growth.
  • Capitalize on the growth potential of the private market, aiming to outperform industry growth rates.
  • Expand product offerings through non-recourse infrastructure investments and the private debt business.

Global Investor Services

  • Build a stronger revenue base by expanding product offerings and geographical reach.
  • Leverage the acquisition of Link Administration Holdings (renamed MUFG Pension and Market Services) to enter new areas, such as pension and stock transfer agency services.
  • Seek synergies between domestic and international operations, leveraging MUFG Trust Bank’s expertise.

“Japan as Asset Management Nation”

  • Strengthen product offerings, asset management capabilities, and governance frameworks.
  • Review remuneration systems and launch new investment management personnel training programs.
  • Leverage MUFG’s knowledge base to expand investment capabilities, particularly in the private sector.
  • Aim to achieve an asset management balance of ¥200 trillion by March 2030.

Investor Services Contribution

  • Promote the outsourcing of middle and back-office operations for asset management companies, aiming to achieve a BPO balance of ¥100 trillion by March 2030.

Pension Sector Expansion

  • Enhance investment education content to improve financial literacy and promote independent asset building.
  • Leverage the success of the “D-Canvas” platform and expand outreach to individual customers and employees through business partners.

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Norbert Gehrke
Tokyo FinTech

Passionate about strategy & innovation across Asia. At home in Japan. Connector of people & ideas.