UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

Form 6-K

Report of Foreign Private Issuer

Pursuant to Rule 13a-16 or 15d-16 under

the Securities Exchange Act of 1934

For the month of June 2022

Commission File No. 000-54189

MITSUBISHI UFJ FINANCIAL GROUP, INC.

(Translation of registrant’s name into English)

7-1, Marunouchi 2-chome, Chiyoda-ku

Tokyo 100-8330, Japan

(Address of principal executive office)

Indicate by check mark whether the registrant files or

will file annual reports under cover of Form 20-F or Form 40-F.

Form 20-F        X        Form 40-F                  

Indicate by check mark if the registrant is submitting the Form 6-K

in paper as permitted by Regulation S-T Rule 101(b)(1):

Indicate by check mark if the registrant is submitting the Form 6-K

in paper as permitted by Regulation S-T Rule 101(b)(7):

THIS REPORT ON FORM 6-K SHALL BE DEEMED TO BE INCORPORATED BY REFERENCE IN THE REGISTRATION STATEMENT ON FORM F-3 (NO. 333-242048) OF MITSUBISHI UFJ FINANCIAL GROUP, INC. AND TO BE A PART THEREOF FROM THE DATE ON WHICH THIS REPORT IS FURNISHED TO THE U.S. SECURITIES AND EXCHANGE COMMISSION TO THE EXTENT NOT SUPERSEDED BY DOCUMENTS OR REPORTS SUBSEQUENTLY FILED WITH OR FURNISHED TO THE U.S. SECURITIES AND EXCHANGE COMMISSION.

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

Date: June 27, 2022

Mitsubishi UFJ Financial Group, Inc.
By:	/s/ Toshinao Endou
Name:	Toshinao Endou
Title:	Managing Director, Head of Documentation & Corporate Secretary Department, Corporate Administration Division

English Translation of Excerpts from Securities Report Filed in Japan

This document is an English translation of selected information included in the Securities Report for the fiscal year ended March 31, 2022 filed by Mitsubishi UFJ Financial Group, Inc. (“MUFG” or “we”) with the Kanto Local Financial Bureau, the Ministry of Finance of Japan, on June 27, 2022 (the “Securities Report”). An English translation of certain information included in the Securities Report was previously submitted in a report on Form 6-K dated May 16, 2022. Accordingly, this document should be read together with the previously submitted report.

The Securities Report has been prepared and filed in Japan in accordance with applicable Japanese disclosure requirements as well as generally accepted accounting principles in Japan (“J-GAAP”). There are significant differences between J-GAAP and generally accepted accounting principles in the United States. In addition, the Securities Report is being filed in the context of other prior disclosures filed by MUFG in Japan and discusses selected recent developments taking into account those prior disclosures. Accordingly, you may need to review the following disclosure, together with other prior disclosures, to obtain all of the information that is important to you. For a more complete discussion of the background to information provided below, please see our annual report on Form 20-F for the fiscal year ended March 31, 2021 and other reports filed with or submitted to the U.S. Securities and Exchange Commission by MUFG.

The following disclosure contains forward-looking statements, which, unless specifically stated otherwise, reflect our understanding as of the date of filing of the Securities Report. Actual results may significantly differ from those expressed or implied by such forward-looking statements. In addition, although the Risk Committee identified the top risks below, there may be other material risks that emerge as we operate our businesses.

Risks Relating to Our Business

We determine the significance of various risk scenarios based on their impact and probability and identify potential risk events that are deemed to require close monitoring and attention for the next one-year period as top risks. The main top risks identified by our Risk Committee in March 2022 are as follows. By identifying these top risks, we seek to implement necessary risk management measures designed to minimize such risks to the extent possible and manage them in such a manner that they can be agilely dealt with in the event that they materialize. In addition, through management’s participation in discussions on such top risks, we strive to take effective measures based on a shared assessment of risks.

Main Top Risks

Risk events	Risk scenarios
A decline in profitability (including a decline in net interest income)	•  Our overall profitability may be adversely affected by, among other things, a decline in our net interest income due to low interest rates in Japan, an increase in net valuation losses on debt securities due to a rise in foreign currency (such as U.S. dollar) interest rates, and an increase in our funding costs.
Foreign currency liquidity risk	•  Deterioration in market conditions may result in a depletion of foreign currency funding liquidity and an increase in our foreign currency funding costs.
An increase in credit costs	•  Sudden deterioration in global economic activities may result in an increase in our credit costs. •  Deterioration in the credit quality of particular industries or counterparties, to which we have relatively larger exposures, may result in an increase in our credit costs.
IT risk	•  Cyber-attacks may result in customer information leakage, suspension of our services, and reputational damage. •  System problems may result in our payment of financial compensation and damage to our reputation.
Risks relating to external circumstances or events (such as health pandemics, earthquakes, floods, terrorism and geopolitical conflicts)	•  Health pandemics, natural disasters, conflicts, terrorism, geopolitical conflicts and ensuing economic sanctions may result in disruptions to all or part of our operations or an increase in costs and expenses in addressing such circumstances or events.
Risks relating to climate changes	•  If our efforts to address climate change-related risks or to make appropriate disclosure are deemed insufficient, our corporate value may be impaired. •  Our credit portfolio may be adversely affected by the negative impact of climate change on our borrowers and transaction counterparties.

* These risk events are among the risk events that were reported to MUFG’s Board of Directors following the Risk Committee’s discussion in March 2022. These risk events include risk events of general applicability.

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Based on our analysis of the top risks described above, we have described below major matters relating to risks to our business and other risks that we believe may have a material impact on your investment decision. In addition, to proactively disclose information to investors, we have described matters that do not necessarily correspond to such risk factors, but that we believe are material to you in making an investment decision. We will, with the understanding that these risks may occur, endeavor to avoid the occurrence of such risks and to address such risks if they occur.

This section contains forward-looking statements, which, unless specifically stated otherwise, reflect our understanding as of the date of filing of this annual securities report.

Risks Related to Our Business Environment

1. Risks relating to deterioration in economic conditions in Japan and globally

Economic conditions in Japan and around the world may deteriorate due to various factors such as the COVID-19 pandemic and measures being implemented in response to the pandemic, including restrictions on travel, store operations and other economic activities, in Japan and other countries and regions. Despite some signs of economic activity gradually returning to normal, uncertainty over the Japanese and global economies still remains because of the unpredictability of the timing of containment of COVID-19. Uncertainty is also caused by such other factors as concerns over political developments in the United States, concerns over the U.S.-China conflict, inflation concerns worldwide, global geopolitical risks, interruptions in global supply of commodities and international trade, political turmoil in various regions around the world, changes in the monetary and fiscal policies in major jurisdictions, and rapid and significant fluctuations in foreign exchange rates. In addition, external events, such as political and social conflicts, terrorism, geopolitical conflicts and ensuing economic sanctions, earthquakes, typhoons, floods and other natural disasters, and health pandemics or epidemics, may cause deterioration in economic conditions and market instability in affected areas.

Worsening economic conditions in Japan and around the world may result in, among other things, impairment or valuation losses on securities and other assets that we hold due to declines in the market value of such assets, an increase in our non-performing loans and credit costs due to deterioration in borrowers’ business performance, a decrease in our profits due to deterioration in the creditworthiness of counterparties in market transactions, a reduction in foreign currency funding liquidity, an increase in our foreign currency funding costs, and an increase in the level of risk in, and the balance of, the risk assets that we hold. Our profitability may be adversely affected by various other factors, including a decline in our net interest income caused by such factors as changes in the monetary policies of central banks in various jurisdictions. In addition, an economic downturn may result in a decline in new investments and business transactions by customers due to stagnation in economic activity, weak consumer spending, diminished investor appetite for making investments in uncertain financial markets, and a decrease in our assets under custody or management.

In the event of a financial market turmoil or depression resulting from significant volatility in bond and stock markets or foreign currency exchange rates, or a global financial crisis, the market value of financial instruments that we hold may significantly decline, properly quoted market prices of such instruments may become unavailable for valuation purposes, or financial markets may become dysfunctional. As a result, we may incur impairment or valuation losses on financial instruments in our portfolio.

Any of the foregoing factors may materially and adversely affect our business, operating results and financial condition.

2. Risks relating to external circumstances or events (such as conflicts, terrorist attacks and natural disasters)

As a major financial institution incorporated in Japan and operating in major international financial markets, our business operations, ATMs and other information technology systems, personnel, and facilities and other physical assets are subject to the risks of earthquakes, typhoons, floods and other natural disasters, terrorism, geopolitical conflicts and ensuing economic sanctions, political and social conflicts, health pandemics or epidemics, and other disruptions caused by external events, which are beyond our control. Such external events may result in loss of facility and human and other resources, suspension or delay in all or part of our operations, inability to implement business strategic measures or respond to changes in the market or regulatory environment as planned, and other disruptions to our operations. In addition, we may be required to incur significant costs and expenses, including those incurred for preventive or remedial measures, to deal with the consequences of such external events. As a result, our business, operating results and financial condition may be materially and adversely affected.

For example, the COVID-19 pandemic has required us to temporarily close some of our business locations, resulted in reduction in our and our vendors’ operational capacity due to restrictions on mobility, and had other negative impact on us. Although we have taken various measures, including establishing response and control headquarters headed by our Group CEO and implementing remote work and off-peak commute policies and programs, designed to ensure the safety of our employees and vendors as well as the continuity of our operations, if the pandemic impacts our workforce or vendors and results in disruptions in our business operations or if our workforce management adjustments result in cybersecurity vulnerabilities and data losses, we may be further adversely affected.

As with other Japanese companies, we are exposed to heightened risks of large-scale natural disasters, particularly earthquakes. In particular, a large-scale earthquake occurring in the Tokyo metropolitan area and other areas where we have our important business functions may have a material adverse effect on our business, operating results and financial condition.

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Our risk management policies and procedures may be insufficient to address the consequences of these external events, resulting in our inability to continue to operate a part or the whole of our business, although we work to strengthen our operational resilience (a comprehensive ability to continue critical operations in the event of a disruption such as a conflict, terrorism (including cyber terrorism), or natural disaster) by establishing a business continuity framework based on the regulations of each relevant jurisdiction and testing through training and other measures.

Our redundancy and backup measures may not be sufficient to avoid a material disruption in our operations, and our contingency and business continuity plans may not address all eventualities that may occur in the event of a material disruption caused by a large-scale natural disaster.

3. Risks relating to reforms of London Interbank Offered Rate and other interest rate benchmarks

We have various transactions, including derivatives, loans, bonds, and securitized products, that reference London Interbank Offered Rate, or LIBOR, and other interest rate benchmarks. ICE Benchmark Administration Limited, the LIBOR administrator, ceased publication of the one-week and two-month U.S. dollar LIBOR settings and all non-U.S. dollar LIBOR settings on a representative basis after December 31, 2021, with plans to cease publication of all other U.S. dollar LBIOR settings after June 30, 2023.

In anticipation of the discontinuation of the publication of LIBOR after the end of calendar year 2021, we have been taking measures to deal with the reform of LIBOR and other interest rate benchmarks and the transition to alternative reference rates, and our transition away from LIBOR with respect to transactions referencing LIBOR settings which ceased to be published at the end of calendar year 2021 have been mostly completed, with a strategy in place for the remainder of such transactions. However, with respect to transactions referencing U.S. dollar LIBOR settings which are expected to cease to be published at the end of June of calendar year 2023, we continue to take measures to complete our transition away from LIBOR. Such transition from LIBOR and other interest rate benchmarks to alternative reference rates is complex and entails uncertainty, including as to the economic characteristics and performance, market acceptance, and accounting and regulatory treatment of such alternative reference rates and the transition to such rates, and may have various adverse impacts on our business, financial position and operating results. In particular, among other things,

• such transition may adversely affect the price, liquidity, profitability, and tradability of a wide range of financial instruments, such as loans and derivatives, included in our financial assets and liabilities that reference LIBOR and other interest rate benchmarks;

• we may be unable to modify contracts with our counterparties to replace the reference rate for existing contracts based on or linked to LIBOR and other interest rate benchmarks with alternative reference rates by the dates set for cessation of LIBOR and other interest rate benchmarks;

• such transition may result in disputes with customers and counterparties concerning the interpretation of affected contracts or economic adjustments to the alternative reference rate adopted in connection with the reform of LIBOR and other interest rate benchmarks and the transition to alternative reference rates, or disputes concerning inappropriate trade practices or abuse of a dominant bargaining position in transactions with customers;

• such transition may require us to respond to regulatory authorities in connection with the reform of LIBOR and other interest rate benchmarks and the transition to alternative reference rates; and

• our operational and risk management systems may not be fully effective to deal with the reform of LIBOR and other interest rate benchmarks and the transition to alternative reference rates.

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4. Risks relating to climate change

Physical damage caused by extreme weather conditions and natural disasters resulting from climate change, as well as the transition to a decarbonized society including measures to strengthen climate change-related regulations and adoption of decarbonization technologies, may directly affect our operations or have other indirect effects on us, including our loan portfolio management due to adverse effects on the business and financial performance of our borrowers. These direct and indirect effects may negatively impact our results of operations and financial condition.

We support the recommendations of the Climate-related Financial Disclosure Task Force, or TCFD, and continue to make an effort to improve our understanding and evaluation of the relevant risks and to enhance our related disclosure. We also seek to provide assistance with responses to climate change and measures to transition to a decarbonized society. However, if our effort to address climate change-related risks or to make appropriate disclosure proves or is deemed inappropriate, if our strategy to provide assistance with responses to climate change and measures to transition to a decarbonized society does not proceed as planned, if our climate change-related risk management proves not to be as effective as expected, if we fail, or are deemed to have failed, to comply with regulatory requirements relating to climate change, or if, as a result of any of the foregoing, we are considered to be failing to fulfill our responsibility to society, then our corporate value may be impaired and our business, financial condition and results of operations may be adversely affected.

Risks Related to Our Strategies and Our Major Investees

5. Risks relating to competitive pressures and failure to achieve business plans or operating targets

Competition in the financial services industry may further intensify due to the increase in the number of non-financial institutions entering the financial services industry with alternative services such as electronic settlement services as a result of development of new technologies as well as significant changes in regulatory barriers.

We have been implementing various business strategies on a global basis designed to strengthen our competitive position and profitability. However, competition may further increase as other global financial institutions enhance their competitive strength through mergers, acquisitions, strategic alliances, and profit improvement and other measures.

Under such circumstances, our business, financial condition and results of operations may be adversely affected if our strategies fail to produce the results we expect or if we are required to delay or otherwise change our strategies. Our competitiveness may decline because of various factors, including where:

• the volume of loans made to borrowers cannot be maintained or does not increase as anticipated;

• our income from interest spreads on the existing loans does not improve as anticipated;

• our loan interest spread further narrows as a result of the “quantitative and qualitative monetary easing with yield curve control” program being maintained in Japan for an extended period or the negative interest rate being lowered from the current level;

• our fee income does not increase as much or quickly as planned;

• our strategy to build a business infrastructure for new services and products through digital transformation or otherwise does not proceed as planned;

• our strategy to improve financial and operational efficiency does not proceed as planned;

• clients and business opportunities are lost, or costs and expenses significantly exceed our expectations, as a result of the ongoing or planned strategies to streamline our business portfolio, to integrate our systems, or to improve financial and operational efficiency not being achieved as expected;

• we are unable to hire or retain necessary human resources;

• our foreign currency funding becomes limited or unavailable; and

• we are restricted in agility or flexibility in investing in non-financial institutions under applicable laws and regulations in and outside of Japan.

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6. Risks accompanying the global expansion of our operations and the range of products and services

As we expand our business operations and operate our business as a global financial institution, we may become exposed to new and increasingly complex risks associated therewith. We may not be able to establish appropriate internal controls or risk management systems or to hire or retain necessary human resources to effectively deal with compliance, regulatory and other risks entailing the expanded scope of our operations, products and services in all cases and, as a consequence, our financial condition and results of operations may be adversely affected.

As a strategic measure implemented in an effort to become the world’s most trusted financial group, we acquire businesses, make investments and enter into capital alliances globally. We may continue to pursue opportunities to acquire businesses, make investments and enter into capital alliances. Our major overseas subsidiaries include MUFG Americas Holdings, a wholly owned subsidiary in the United States, Krungsri, an indirect subsidiary in Thailand, and Bank Danamon, an indirect subsidiary in Indonesia. Our acquisition, investments and capital alliances may not proceed as planned or may be changed or dissolved, we may not achieve the synergies or other results that we expected, or we may incur impairment or valuation losses on securities acquired or intangible assets, including goodwill, recorded in connection with such business acquisitions, investments or business alliances, because of, among other things, political and social instability, stagnation of the economy, fluctuations of the financial market, inability to obtain regulatory approvals, changes in the laws, regulations or accounting standards, changes in the strategies or financial condition of our acquirees, investees or alliance partners that are inconsistent with our interests, and unanticipated changes in the local market, industry or business environment affecting our acquirees, investees or alliance partners. These and other similar circumstances may adversely affect our business strategies, financial condition and results of operations. In addition, we may be unable to achieve the benefits expected from our efforts to expand business operations if our expansion strategy does not proceed as planned.

7. Risks relating to the sale of MUFG Union Bank, N.A.

MUFG and MUFG Bank, a core banking subsidiary of MUFG, announced on September 21, 2021 that we agreed with U.S. Bancorp (USB) to the sale of all shares in MUFG Union Bank, N.A. (MUB), MUFG’s subsidiary owned through MUFG Americas Holdings, and have entered into a Share Purchase Agreement.

Although the transfer of the MUB shares to USB (the Share Transfer) was originally expected to become effective in the first half of calendar year 2022, the U.S. regulatory approval process remains ongoing. Therefore, considering the current timing, the expected closing date has shifted to the second half of calendar year 2022, subject to the receipt of required regulatory approvals and the satisfaction of other closing conditions. If these conditions precedent are not satisfied or if there is any unexpected delay in satisfaction of these conditions precedent, the Share Transfer may not be completed as we currently expect or at all.

The MUB businesses that MUFG will transfer to USB through the Share Transfer exclude the GCIB (Global Corporate & Investment Banking) business (with certain exceptions as agreed to by the parties, including certain deposits of the GCIB business that will be retained by MUB), the Global Markets business to the extent related to the GCIB business, which consist of transactions with clients and investors, and certain assets and liabilities, etc. that are part of shared middle and back office functions, etc. Such businesses, and the customer assets and liabilities, etc. related to these businesses (including related transactions with such customers), are planned to be transferred to MUFG Bank’s U.S. branches or affiliates prior to the Share Transfer.

In addition, MUFG and USB plan to enter into a Transitional Service Agreement (TSA) and a Reverse Transitional Service Agreement (RTSA) with an aim for both companies to be able to collaborate to smoothly continue MUB’s customer transactions by MUB and/or MUFG Bank even after the Share Transfer and to provide even higher quality financial services. These planned business transfer and provision of services under the TSA and the RTSA are expected to require implementation of multiple complex measures in a short period of time and, especially with respect to systems, require, among other things, provision of assistance to USB in integrating certain systems and preparation for sharing certain systems with USB. These requirements are expected to impose various burdens on the MUFG Group. Such burdens on the MUFG Group may be greater than currently expected due to unanticipated future developments.

If the Share Transfer is not completed as planned by MUFG, including for any of the reasons described above, or if our actual costs and other requirements in connection with the Share Transfer exceed our current expectations, our business strategies, financial condition and results of operations may be adversely affected.

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8. Risks relating to our strategic alliance with Morgan Stanley

We hold shares of common stock (representing 22.4% of the voting rights immediately following the conversion of convertible preferred stock in June 2011 and 21.5% as of March 31, 2022) in Morgan Stanley and continue to hold certain non-convertible (non-voting) preferred stock previously issued to us by Morgan Stanley. We have entered into a strategic alliance with Morgan Stanley to, among other things, jointly manage securities business joint ventures in Japan and to cooperate with each other in the corporate finance business in the United States.

We intend to further strengthen the alliance. However, if the social, economic, market or financial environment changes, or if our collaboration of personnel, products and services or the formation and implementation of the joint ventures’ management, controls or business strategies are not realized as planned, we may not be able to achieve the synergy and other results that we expected from the strategic alliance.

If our strategic alliance with Morgan Stanley is terminated, it may adversely affect our business strategies, financial condition and results of operations. In addition, we are a non-controlling shareholder, and we cannot control Morgan Stanley’s business, nor can we make decisions for Morgan Stanley. If Morgan Stanley makes independent decisions that are not consistent with our interests, we may not be able to achieve the goals initially expected from our strategic alliance with Morgan Stanley. In addition, because of our large investment in Morgan Stanley, if Morgan Stanley’s financial condition or results of operations deteriorate, we may incur substantial losses on our investment.

We hold 21.5% of the voting rights in Morgan Stanley as of March 31, 2022 and appoint two representatives to Morgan Stanley’s board of directors. Accordingly, Morgan Stanley is our affiliated company accounted for under the equity method. As a result, Morgan Stanley’s results of operations or changes in our ownership interest in Morgan Stanley will have an impact on our results of operations as the amount of Morgan Stanley’s income or loss in proportion to our shareholding ratio is recognized as income or loss from investments in affiliates in our statements of income, and changes in our ownership interest in Morgan Stanley resulting from changes in our shareholder ratio in Morgan Stanley caused by increases or decreases in Morgan Stanley’s outstanding shares will be recognized as gains or losses in our statements of income.

Risks Related to Our Ability to Meet Regulatory Capital Requirements

9. Risks relating to regulatory capital ratio and other related requirements

(1) Capital ratio and other regulatory ratio requirements and factors that can adversely affect our ratios

We and our subsidiary banks are subject to capital adequacy ratio and leverage ratio requirements adopted in Japan in accordance with Basel III. Final Basel III reforms are expected to become applicable to Japanese banking institutions with international operations conducted through foreign offices, including us, on March 31, 2024, as announced by the FSA in its public notice relating to partial amendments to the capital ratio requirements, dated April 28, 2022. The leverage ratio surcharge is expected to become applicable in 2023.

If our or our subsidiary banks’ capital ratios or leverage ratios fall below the required levels, including various capital buffers, the FSA may require us to take a variety of corrective actions, including abstention from making capital distributions and suspension of our business operations.

In addition, some of our bank subsidiaries are subject to the local capital adequacy ratio and other regulatory ratio requirements of various foreign countries, including the United States, and if their ratios fall below the required levels, the local regulators may require them to take a variety of corrective actions.

Factors that will affect our and our bank subsidiaries’ capital ratios or leverage ratios include:

• fluctuations in our or our banking subsidiaries’ portfolios due to deterioration in the creditworthiness of borrowers and the issuers of equity and debt securities,

• difficulty in refinancing or issuing instruments upon redemption or at maturity of such instruments to raise capital under terms and conditions similar to prior financings or issuances,

• declines in the value of our or our banking subsidiaries’ securities portfolios,

• adverse changes in foreign currency exchange rates,

• adverse revisions to the capital ratio and other regulatory ratio requirements,

• reductions in the value of our or our banking subsidiaries’ deferred tax assets, and

• other adverse developments.

(2) Regulations applicable to G-SIBs

The Financial Stability Board has identified us as one of the G-SIBs, which are subject to a capital surcharge. As such, we may be required to meet stricter capital ratio requirements.

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(3) Total loss absorbing capacity in resolution

The Financial Stability Board issued “Principles on Loss-absorbing and Recapitalisation Capacity of G-SIBs in Resolution” in November 2015 and “Guiding Principles on the Internal Total Loss-Absorbing Capacity of G-SIBs (‘Internal TLAC’)” in July 2017. These principles are designed to ensure that if a G-SIB fails, it has sufficient total loss-absorbing capacity, or TLAC, available in resolution. Based on these principles, in Japan, G-SIBs, including us, are required to maintain certain minimum levels of capital and liabilities that are deemed to have loss-absorbing and recapitalization capacity, or External TLAC, and allocate a certain minimum level of External TLAC to any material subsidiary within their respective groups of companies, or Internal TLAC, starting in the fiscal year ended March 31, 2019. The applicable minimum requirements were raised in the fiscal year ended March 31, 2022. Within the MUFG Group, MUFG Bank, Mitsubishi UFJ Trust and Banking, Mitsubishi UFJ Morgan Stanley Securities Co., Ltd. and MUFG Americas Holdings are designated as our material subsidiaries. We may become subject to various regulatory actions, including restrictions on capital distributions, if we are unable to maintain our External TLAC ratios or the amount of Internal TLAC allocated to any of our material subsidiaries in Japan above the minimum levels required by the standards imposed by the FSA. Our External TLAC ratios and the amount of our Internal TLAC are affected by various factors described in (1), (2) and (3) pertaining to the capital adequacy ratio and other related regulations. Although we plan to issue TLAC-qualified debt in an effort to meet the minimum required levels of External TLAC ratios and Internal TLAC amounts, we may fail to do so if we are unable to issue or refinance TLAC-qualified debt as planned.

In addition, MUFG Americas Holdings, a U.S. banking subsidiary within our group, is subject to local TLAC regulations and may become subject to various regulatory actions in the United States if the subsidiary fails to meet the minimum required levels.

10. Risks relating to foreign exchange rate

We operate our business globally and we hold assets and liabilities denominated in foreign currencies. The Japanese yen translation amounts of our assets and liabilities denominated in foreign currencies will fluctuate due to fluctuations in the foreign currency exchange rates. To the extent that our foreign currency-denominated assets and liabilities are not matched in the same currency or appropriately hedged, fluctuations in foreign currency exchange rates against the Japanese yen may adversely affect our capital ratios, financial condition, and results of operations.

Credit Risk (Risk of Loss Resulting from Deterioration in Financial Condition of Borrowers or Transaction Counterparties)

11. Risks relating to our lending business

The lending business is one of our primary businesses. To the extent that our measures designed to mitigate credit risk, including collateral, guarantees and credit derivatives, are insufficient, our credit costs may significantly increase if borrowers fail to meet their interest payment or principal repayment obligations as expected or if we fail to effectively and adequately anticipate and deal with deterioration in the credit quality of our borrowers. Any such failure may adversely affect our financial condition and results of operations and may also result in a decrease in our capital ratios. Our credit costs and problem loans may increase in the future due to deterioration in economic conditions in Japan and other parts of the world, including emerging countries, fluctuations in oil and other commodity prices, declines in real estate and stock prices, depreciation of currencies of emerging markets, or financial difficulties of our borrowers due to such factors as intensifying competition within their respective industries.

(1) Status of our allowance for credit losses

Our allowance for credit losses is recorded based on assumptions and estimates of the condition of borrowers, the value of collateral and the economy as a whole. Because of deterioration in general economic conditions or in the financial performance of specific borrowers, we may be required to increase our provision for credit losses. We may also incur additional credit losses if our actual loan losses exceed our allowance for credit losses. In addition, the regulatory standards or guidance on establishing allowances may also change, causing us to change some of the evaluations used in determining the allowances. As a result, we may need to provide for additional allowance for credit losses. As of March 31, 2022, the balance of our allowance for credit losses was ¥1,222.1 billion.

(2) Concentration of loan and other credit exposures to particular industries and counterparties

When we make loans and other extensions of credit, we seek to diversify our portfolio to avoid any concentration of exposure to a particular industry or counterparty. However, our credit exposures to the real estate industry are relatively high in comparison to other industries, and we are consequently susceptible to adverse changes particularly in that industry. While we continue to monitor and respond to changes in circumstances and other developments relating to particular industries and individual counterparties as well as each relevant country and region, including emerging countries, the quality of our credit portfolio may deteriorate to an extent greater than expected due to changes in economic conditions in Japan and other countries and regions, including the impact of climate change, the COVID-19 pandemic and the geopolitical developments in Ukraine, and fluctuations in real estate prices, oil and other commodity prices, and foreign currency exchange rates.

(3) Our response to borrowers

Even in the event that a borrower defaults, based on the efficiency and effectiveness of collecting on loans and other factors, we may not exercise all of our legal rights as a creditor against the borrower.

In addition, if we determine that it is reasonable, we may forgive debt or provide additional loans or equity capital to support borrowers. If such support is provided, our outstanding loans may increase significantly, our credit costs may increase, and the value of the additional equity purchased may decline.

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12. Transactions with other financial institutions

Declining asset quality and other financial problems may exist at some domestic and foreign financial institutions, including banks, non-bank lending and credit institutions, securities companies and insurance companies, and these problems may worsen or these problems may arise again as new issues. If financial difficulties of these financial institutions continue, worsen or arise, they may not only lead to liquidity and insolvency problems for such financial institutions but also result in systemic problems adversely affecting the financial market and the wider economy, and may adversely affect us for the following reasons:

• we have credit extended to some financial institutions;

• we are shareholders of some financial institutions;

• financial institutions that face problems may terminate or reduce financial support to borrowers and, as a result, these borrowers may become distressed or our problem loans to these borrowers may increase;

• we may be requested to participate in providing support to distressed financial institutions;

• if the government elects to provide regulatory, tax, funding or other benefits to financial institutions that the government controls to strengthen their capital, increase their profitability or for other purposes, they may adversely affect our competitiveness against them;

• our deposit insurance premiums may rise if deposit insurance funds prove to be inadequate;

• bankruptcies or government control of financial institutions may generally undermine the confidence of depositors in, or adversely affect the overall environment for, financial institutions; and

• negative media coverage of the financial industry or system, regardless of its accuracy and applicability to us, may harm our reputation and market confidence.

Risk Relating to Our Strategic Equity Portfolio (Risk of Loss Resulting from a Decline in the Value of Equity Securities We Hold)

13. Risks relating to our equity portfolio

We hold large amounts of marketable equity securities, including those held for strategic investment purposes. As of March 31, 2022, the market value of such securities was approximately ¥4.6 trillion, and the book value of such securities was approximately ¥1.8 trillion. In view of mitigating the risk of equity price volatility, our basic policy is to reduce the amount of equity securities held for strategic investment purposes. We examine the objective and economic rationale for strategically held equity securities, and if we determine that it no longer makes reasonable sense to continue to hold them, we will seek to dispose of such equity securities. For our strategic equity portfolio, we endeavor to manage the risk of stock price fluctuations by hedging a portion of the portfolio using total return swaps and other hedging instruments.

However, if stock prices decline, we may incur significant impairment losses or valuation losses on our equity investment portfolio. In addition, since unrealized gains and losses on equity securities are reflected in the calculation of regulatory capital amounts, a decline in stock prices may result in a decrease in our capital ratios and other regulatory ratios. As a result, our financial condition and results of operations may be adversely affected.

Market Risk (Risk of Loss Resulting from Fluctuations in Interest Rates, Prices of Securities and Foreign Currency Exchange Rates)

14. Risks relating to our financial markets operations

We undertake extensive financial market operations involving a variety of financial instruments, including derivatives, and hold large volumes of such financial instruments. For example, if market interest rates decline due to such factors as changes in the monetary policies of central banks in various jurisdictions, the yield on the Japanese government bonds and foreign government bonds that we hold may also decline. Furthermore, if short-term interest rates rise to a larger extent than long-term interest rates, or if long-term interest rates decline to a larger extent than short-term interest rates, our net interest income may be adversely affected. If interest rates in and outside of Japan rise, we may incur significant losses on sales of, and valuation losses on, our bond portfolio. In addition, an appreciation of the Japanese yen will cause the value of our foreign currency-denominated investments recorded in our financial statements to decline and may cause us to recognize losses on sales or valuation losses. Furthermore, if stock prices decline, the value of marketable equity securities and trading account equity securities that we hold also declines, we may incur significant losses on sales of, and valuation losses on, our marketable equity securities and trading account equity securities portfolios. Although we seek to manage market risk, which is the risk of incurring losses due to various market changes including interest rates, foreign currency exchange rates and stock prices, market risk exposure amounts that we calculate cannot accurately reflect the actual risk that we face in all cases, and we may realize actual losses that are greater than our estimated market risk exposure.

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Funding Liquidity Risk (Risk of Unavailability of Funds)

15. Risks relating to difficulty in our funding operations following a downgrade of our credit ratings

A downgrade of our credit ratings by one or more of the credit rating agencies may adversely affect our financial market operations and other aspects of our business. Any downgrade could increase the cost, or decrease the availability, of our funding, particularly in U.S. dollars and other foreign currencies, adversely affect our liquidity position or net interest margin, trigger additional collateral or funding obligations, and result in losses of depositors, investors and counterparties willing or permitted to transact with us, thereby reducing our ability to generate income and weakening our financial position. For example, assuming all of the relevant credit rating agencies downgraded the credit ratings of MUFG, MUFG Bank, Mitsubishi UFJ Trust and Banking and Mitsubishi UFJ Securities Holdings as of March 31, 2022 by one-notch on the same date, we estimate that MUFG and its three main subsidiaries would have been required to provide of approximately ¥149.2 billion of additional collateral under their derivative contracts. Assuming a two-notch downgrade by all of the same credit rating agencies occurring on the same date, we estimate that the additional collateral requirements for the same MUFG group companies under their derivative contracts would have been approximately ¥179.4 billion.

Rating agencies regularly evaluate us and our major subsidiaries as well as our and their respective debt securities. Their ratings are based on a number of factors, including their assessment of the relative financial strength of MUFG or of the relevant subsidiary, as well as conditions generally affecting the financial services industry in Japan or on a global basis, some of which are not entirely within our control. In addition, changes in their evaluation or rating methodologies are beyond our control. We strive to ensure appropriate funding liquidity by, for example, setting and monitoring certain indicators for funding liquidity risk management purposes. However, as a result of changes in rating agencies’ evaluations based on the above factors or the rating methodologies, our ratings or the ratings of our subsidiaries may be downgraded. Such downgrade may adversely affect the profitability of our markets operations and other operations as well as our financial condition and results of operations.

Operational Risk (Risk of Loss Resulting from Inappropriate Management of Operations or External Factors)

16. Risks of being deemed to have engaged in inappropriate or illegal practices or other conduct and, as a result, becoming subject to regulatory actions

We conduct our business subject to laws, regulations, rules, policies and voluntary codes of practice in Japan and other markets where we operate. We are subject to various regulatory inquiries or investigations from time to time in connection with various aspects of our business and operations. Our compliance risk management systems and programs, which are continually enhanced, may not be fully effective in preventing all violations of laws, regulations and rules.

If we are deemed not compliant with applicable laws, regulations or rules, including those relating to money laundering, economic sanctions, bribery, corruption, financial crimes, or other inappropriate or illegal transactions, if our conduct is deemed to constitute unfair or inappropriate business practices, or if we are deemed to have failed to meet market or industry rules or standards, customer protection requirements, or corporate behavior expectations, we may become subject to penalties, fines, public reprimands, reputational damage, issuance of business improvement, suspension or other administrative orders, or withdrawal of authorization to operate. These consequences may result in loss of customer or market confidence in us or otherwise may adversely affect our financial condition and results of operations. Our ability to obtain regulatory approvals for future strategic initiatives may also be adversely affected.

In February 2019, MUFG Bank entered into a consent order with the U.S. Office of the Comptroller of the Currency, or OCC, relating to deficiencies identified by the OCC in the Bank Secrecy Act/Anti-Money Laundering compliance program of MUFG Bank’s U.S. branches in New York, Los Angeles, and Chicago. The consent order requires MUFG Bank and its U.S. branches to implement various remedial measures to address the deficiencies found in the OCC examination, including a comprehensive action plan satisfactory to the OCC, implementation of measures to ensure effective compliance management and qualified staffing, the adoption of comprehensive Bank Secrecy Act/Anti-Money Laundering risk assessment policies and procedures, and other remedial actions. MUFG Bank is undertaking necessary actions relating to the consent order.

We have received requests and subpoenas for information from government agencies in some jurisdictions that are conducting investigations into past submissions made by panel members, including us, to the bodies that set various interbank benchmark rates as well as investigations into foreign exchange related practices of global financial institutions. Some of the investigations into foreign exchange related practices resulted in our payment of monetary penalties to the relevant government agencies. We are cooperating with the ongoing investigations and have been conducting an internal investigation, among other things. In connection with these matters, we and other financial institutions are involved as defendants in a number of civil lawsuits, including putative class actions, in the United States.

These developments or other similar events, including potential additional regulatory actions against us, agreements to make significant additional settlement payments, may result in significant adverse financial and other consequences to us.

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17. Risks relating to loss or leakage of confidential information

We are required to appropriately handle customer information or personal information in accordance with laws and regulations in Japan and other parts of the world. We possess a large amount of customer information and personal information, and we are working to improve our information management system by preparing information management policies and procedures concerning the storage and handling of information and implementing information system enhancements. However, due to improper management, unauthorized access from external sources such as cyber-attacks, or computer virus infection, we may not be able to completely prevent the loss or leakage of customer information and personal information. In such event, we may be subject to penalties, administrative sanctions and other direct losses such as compensation paid to customers. In addition, loss of customer and market confidence may adversely affect our business, financial condition and results of operations. We may also incur additional costs to deal with the consequences of these events.

18. Risks relating to cyber-attacks

Our information, communications and transaction management systems (including our own proprietary systems as well as those third-party systems which are provided for our use or to which our systems are connected) constitute a core infrastructure for our accounting and other business operations and are of critical importance particularly in the current business environment with increasing dependence on remote or online networks and our strategy to promote digitization. We are working to prevent system failures through appropriate design and testing and other means and to establish security-conscious systems. However, we may not be able to completely prevent system failures, cyber-attacks, unauthorized access, computer virus infection, human errors, equipment malfunctions, defects in services provided by third parties such as communications service providers, and failure to appropriately deal with technological advances and new systems and tools. In addition, we may be unable to enhance our financial transaction management systems as required for all of our business operations or under increasingly stricter regulations applicable to financial institutions. Furthermore, our system development or improvement projects, many of which are critical to our ability to operate in accordance with market and regulatory standards, may not be completed as planned due to the complexity and other difficulty relating to such projects. Such failures and inability may lead to errors and delays in transactions, information leakage and other adverse consequences, and, if serious, could lead to the suspension of our business operations and financial losses such as those incurred in connection with compensation for damages caused by such suspension, diminish confidence in us, harm our reputation, subject us to administrative sanctions, or result in our incurring additional costs to deal with the consequences of these events.

19. Risks relating to transactions with counterparties in countries designated as state sponsors of terrorism

We currently have limited transactions with entities in or affiliated with Iran and other countries designated by the U.S. Department of State as “state sponsors of terrorism.” In addition, our banking subsidiary has a representative office in Iran.

U.S. law generally prohibits or limits U.S. persons from doing business with state sponsors of terrorism. In addition, we are aware of initiatives by U.S. governmental entities and U.S. institutional investors, such as pension funds, to prohibit or restrict transactions with or investments in entities doing business with Iran and other countries identified as state sponsors of terrorism. It is possible that such initiatives may result in our being unable to gain or retain business with U.S. governmental entities, U.S. institutional investors, such as pension funds, and entities subject to such prohibition or restrictions as customers or as investors in our shares. In addition, depending on socio-political developments, our reputation may suffer because of our associations with these countries. The above circumstances may adversely affect our financial condition, results of operations and the price of our shares.

The U.S. Government sanctions against Iran apply to prohibit, among other things, U.S. persons from conducting transactions relating to Iran. In addition, in May 2018, the United States withdrew from participation in the Joint Comprehensive Plan of Action. Under subsequently issued executive orders, the United States may impose secondary sanctions against non-U.S. persons who engage in or facilitate a broad range of transactions and activities involving Iran. We will continue to monitor and implement measures to address this heightened risk of U.S. measures, including any possible secondary sanctions.

Companies registered with the U.S. Securities and Exchange Commission (including non-U.S. companies) are subject to the disclosure requirement relating to certain Iran-related transactions. Moreover, certain Japanese sanctions measures are in effect, including freezing the assets of persons involved in Iran’s sensitive nuclear activities and development of nuclear weapon delivery systems. We continue to work to improve our policies and procedures to comply with such regulatory requirements. There remains a risk of potential regulatory action against us, however, if regulators perceive our policies and procedures not to be in compliance with applicable regulations. For more information on the relevant regulatory actions, please refer to “16. Risks of being deemed to have engaged in inappropriate or illegal practices or other conduct and, as a result, becoming subject to regulatory actions.”

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20. Risks relating to regulatory changes

As a global financial services provider, our business is subject to ongoing changes in laws, regulations, rules, policies, accounting standards or methods, voluntary codes of practice and interpretations in Japan and other markets where we operate. Major global financial institutions currently face an increasingly stricter set of laws, regulations and standards as a result of emerging technologies, political and geopolitical developments, environmental, social and governance concerns, and other concerns enveloping the global financial sector. There is also growing political pressure to demand even greater internal compliance and risk management systems following several high-profile scandals and risk management failures in the financial industry. The laws, regulations and standards that apply to us are often complex and, in many cases, we must make interpretive decisions regarding the application of such laws, regulations and standards to our business activities. Future developments or changes in laws, regulations, rules, policies, accounting standards or methods, voluntary codes of practice, interpretations and their effects are expected to require greater capital, human and technological resources as well as significant management attention, and may require us to modify our business strategies and plans. We may be unable to enhance our compliance management programs and systems, which, in some cases, are supported by third-party service providers, as required or planned. Our failure or inability to comply fully with applicable laws and regulations may lead to penalties, fines, public reprimands, damage to reputation, issuance of business improvement and other administrative orders, enforced suspension of operations, our inability to obtain regulatory approvals for future strategic initiatives or, in extreme cases, withdrawal of authorization to operate, adversely affecting our business and results of operations.

21. Risks relating to our consumer lending business

We have subsidiaries and affiliates in the consumer finance industry as well as loans outstanding to consumer finance companies. Changes in the business or regulatory environment for consumer finance companies may adversely affect our results of operations. The results of a series of court cases, including the stricter interpretation of the requirements for deemed payments, or “minashi bensai,” have made a borrower’s claim for reimbursement of previously collected interest payments in excess of the limits stipulated by the Interest Rate Restriction Law easier, and, as a result, there have been a significant number of such claims. In addition to the refund of overpaid interest by our subsidiaries and affiliates engaged in the consumer finance business, we may incur additional credit costs due to deterioration in the financial performance of consumer finance companies to which we extend credit. Moreover, any adverse changes in judicial decisions or regulatory requirements may result in our incurring additional costs and expenses.

22. Risks relating to our reputation

We are one of the leading financial institutions in Japan and one of the handful G-SIBs in the world, and we aim to be the world’s most trusted financial group. Our ability to conduct business is indispensably dependent on the trust and confidence of our customers as well as local and international communities. Our reputation is critical in maintaining our relationships with customers, investors, regulators and the general public. Our reputation may be damaged by their negative perceptions of us and our operations in light of their concerns over human rights, the environment, public health and safety, or other corporate social responsibilities, or by our transactions or operations if they are deemed repugnant to the intent and policy underlying applicable laws and regulations such as anti-money laundering, economic sanctions and competition laws as well as the prohibition on dealing with anti-social forces. Failure to prevent or properly address these issues may result in impairment of our corporate brand, loss of our existing or prospective customers or investors, or increased public or regulatory scrutiny, and may adversely affect our business, financial condition and results of operations.

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1. Significant Accounting Policies Applied to the Consolidated Financial Statements

I. Scope of consolidation

(1) Number of consolidated subsidiaries: 252

Principal companies:

MUFG Bank, Ltd.

Mitsubishi UFJ Trust and Banking Corporation

Mitsubishi UFJ Securities Holdings Co., Ltd.

Mitsubishi UFJ NICOS Co., Ltd.

ACOM CO., LTD.

(a) Changes in the scope of consolidation in the fiscal year ended March 31, 2022

Mitsubishi UFJ Capital 8, Limited Partnership and eleven other companies were newly included in the scope of consolidation due to new establishment or other reasons.

PT U Finance Indonesia and seventeen other companies were excluded from the scope of consolidation due to the sale of shares or other reasons.

(2) Non-consolidated subsidiaries: None

(3) Entities not regarded as subsidiaries even though Mitsubishi UFJ Financial Group, Inc. (“MUFG”) owns the majority of voting rights in its own account:

Hygeia Co., Ltd.

OiDE BetaRevive, Inc.

ARM Drug Development G.K.

OiDE OptoEye, Inc.

HISHOH Biopharma Co., Ltd.

(a) Reasons for excluding from the scope of consolidation

These entities were not treated as subsidiaries because they were established as property management agents for land trust projects without any intent to control, or because MUFG’s consolidated venture capital subsidiaries owned the majority of voting rights primarily to benefit from the appreciation of their investments resulting from growth or restructuring of the investees’ businesses without any intent to control.

II. Application of the equity method

(1) Number of non-consolidated subsidiaries accounted for under the equity method: None

(2) Number of equity method affiliates: 53

Principal companies:

Mitsubishi HC Capital Inc.

Morgan Stanley

(a) Changes in the scope of application of the equity method in the fiscal year ended March 31, 2022

Cotra Ltd. and three other companies were newly included in the scope of application of the equity method due to new establishment or other reasons.

Southern California Business Development Corporation and two other companies were excluded from the scope of application of the equity method due to liquidation or other reasons.

Hitachi Capital Corporation was excluded from the scope of application of the equity method due to an absorption-type merger with Mitsubishi UFJ Lease & Finance Company Limited.

Mitsubishi UFJ Lease & Finance Company Limited changed its company name to Mitsubishi HC Capital Inc. as of April 1, 2021.

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(3) Number of non-consolidated subsidiaries not accounted for under the equity method: None

(4) Number of affiliates not accounted for under the equity method: None

(5) Entities not regarded as affiliates in which MUFG owns 20% to 50% of their voting rights in its own account:

Hirosaki Co., Ltd.

AKITAYA Co., Ltd.

Shonai Paradiso Co., LTD

Kamui Pharma Co., Ltd.

GEXVal Inc.

Reborna Biosciences, Inc.

Alchemedicine, Inc.

HuLa immune Inc.

DT Axis, Inc.

(a) Reasons for excluding from the scope of affiliates

These entities were not regarded as affiliates because MUFG’s consolidated venture capital subsidiaries owned 20% to 50% of voting rights primarily to benefit from the appreciation of their investments resulting from growth or restructuring of the investees’ businesses without any intent to control.

III. The balance sheet dates of the consolidated subsidiaries

(1) The balance sheet dates of the consolidated subsidiaries were as follows:

The end of June:	1	subsidiary
The end of August:	1	subsidiary
The end of October:	1	subsidiary
The end of December:	174	subsidiaries
The end of March:	75	subsidiaries

(2) A subsidiary whose balance sheet date is the end of June was consolidated based on its preliminary financial statements as of the end of December.

A subsidiary whose balance sheet date is the end of August was consolidated based on its preliminary financial statements as of the end of February.

A subsidiary whose balance sheet date is the end of October was consolidated based on its preliminary financial statements as of the end of January.

The remaining subsidiaries were consolidated based on their financial statements as of their respective balance sheet dates.

Adjustments were made to the consolidated financial statements to reflect any significant transactions within the consolidated group that occurred between the balance sheet dates of the relevant subsidiaries and the consolidated balance sheet date.

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IV. Accounting policies

(1) Trading assets and Trading liabilities; Trading income and expenses

Transactions involving short-term fluctuations or arbitrage opportunities in interest rates, currency exchange rates, market prices of financial instruments or other market indices (“trading purposes”) are presented in “Trading assets” and “Trading liabilities” on the consolidated balance sheet on a trade-date basis, and gains and losses from trading transactions (interest and dividends, gains or losses on sales and gains or losses on valuation) are presented in “Trading income” and “Trading expenses” on the consolidated statement of income.

Trading assets and trading liabilities are stated at fair value as of the consolidated balance sheet date.

With respect to derivative transactions for trading purposes, specific market risk and counterparty credit risk exposures are measured in groups of trading assets and trading liabilities, and fair value is determined for each such group of trading assets and trading liabilities on a net basis.

(2) Securities

(a) Debt securities being held to maturity are stated at amortized cost (using the straight-line method) computed using the moving-average method. Available-for-sale securities are stated at their quoted market prices (cost of securities sold is calculated primarily using the moving-average method), and equity securities with no quoted market price available are stated at acquisition cost computed using the moving-average method.

Net unrealized gains (losses) on available-for-sale securities are included directly in net assets, net of applicable income taxes, except in the case of application of the fair value hedge accounting method, in which the change in the fair value recognized is recorded in current earnings.

(b) Securities included in trust assets in money held in trust are accounted for on the same basis as noted above in Notes (1) and (2)(a).

Net unrealized gains (losses) on securities in money held in trust which are not held for trading purposes or held to maturity are included directly in net assets, net of applicable income taxes.

(3) Derivatives

Derivative transactions (excluding those for trading purposes) are stated at fair value as of the consolidated balance sheet date.

With respect to derivative transactions for trading purposes, specific market risk and counterparty credit risk exposures are measured in groups of trading assets and trading liabilities, and fair value is determined for each such group of trading assets and trading liabilities on a net basis.

(4) Depreciation and amortization of fixed assets

(a) Tangible fixed assets (except for lease assets)

Depreciation of tangible fixed assets of MUFG and its domestic consolidated banking subsidiaries and domestic consolidated trust banking subsidiaries is computed using the declining-balance method. The useful lives are primarily estimated as follows:

Buildings: 15 to 50 years

Equipment: 2 to 20 years

Depreciation of tangible fixed assets of other consolidated subsidiaries is computed primarily using the straight-line method based on their estimated useful lives and other factors.

(b) Intangible fixed assets (except for lease assets)

Amortization of intangible fixed assets is computed using the straight-line method.

Development costs for internally used software are amortized using the straight-line method over the estimated useful lives of primarily 3 to 10 years.

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(c) Lease assets

Depreciation or amortization of lease assets in “Tangible fixed assets” or “Intangible fixed assets” under finance leases other than those that are deemed to transfer the ownership of leased property to the lessees is computed using the straight-line method over the lease periods with zero residual value unless residual value is guaranteed by the corresponding lease contracts, in which case the residual value equals the guaranteed amount.

(5) Deferred assets

Bond issuance costs and stock issuance costs are expensed as incurred.

(6) Allowance for credit losses

Principal domestic consolidated subsidiaries determine the amount of allowance for credit losses in accordance with the internal standards for self-assessment of asset quality and the internal standards for write-offs and provisions.

For claims on borrowers that have entered into bankruptcy, special liquidation proceedings or similar legal proceedings or whose notes have been dishonored and suspended from processing through clearing houses (“bankrupt borrowers”) or borrowers that are not legally or formally bankrupt but are regarded as substantially in similar condition (“virtually bankrupt borrowers”), allowances are provided based on the amount of claims, after the write-offs as stated below, net of expected amounts to be collected through the disposal of collateral and the execution of guarantees.

For claims on borrowers that are not yet legally or formally bankrupt but deemed to have a high possibility of becoming bankrupt (“likely to become bankrupt borrowers”), where the amounts of principal repayments and interest payments cannot be reasonably estimated from the borrowers’ cash flows, allowances are provided based on an overall solvency assessment of the claims, net of expected amounts to be collected through the disposal of collateral and the execution of guarantees.

For claims on likely to become bankrupt borrowers and claims on borrowers requiring close monitoring, where the amounts of principal repayments and interest payments can be reasonably estimated from the borrowers’ cash flows, allowances are provided in an amount equal to the difference between the book value of the claims and the relevant cash flows discounted by the initial contractual interest rates.

For other claims, allowances are provided based mainly on expected losses for the immediately following one-year period or the average remaining term to maturity of loans. Expected losses are calculated by applying a loss rate, which is obtained based on the average rate of historical credit loss experience or historical default probability experience over a certain period, which is derived from actual credit losses or actual defaults over a one-year period or over a period equal to the average remaining term to maturity of loans, with necessary adjustments for future loss projections and other factors.

For claims originated in certain foreign countries, additional allowances are provided based on an assessment of political and economic conditions of these countries.

All claims are assessed by the relevant branches and the credit supervision departments in accordance with the internal standards for self-assessment of asset quality. The credit review department, which is independent from those operating sections, subsequently audits these assessments.

For claims on bankrupt borrowers and virtually bankrupt borrowers, the amount of claims exceeding the estimated value of collateral and guarantees, which is deemed uncollectible, is written off. The total amount of write-offs was ¥246,542 million. (¥298,281 million as of March 31, 2021).

Consolidated subsidiaries not adopting the procedures stated above provide for allowances based on their historical credit loss experience or other factors for collectively assessed claims and based on individual assessments of the possibility of collection for specific deteriorated claims.

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(Additional information)

(Allowance for credit losses of certain overseas subsidiaries which apply Generally Accepted Accounting Principles in the United States (“U.S. GAAP”))

Certain overseas subsidiaries which apply U.S. GAAP have adopted Accounting Standards Codification (“ASC”) Topic 326, “Measurement of Credit Losses on Financial Instruments,” and provide for allowance for credit losses by estimating credit losses currently expected over the remaining contractual term of the financial assets. Expected credit losses are calculated collectively for each portfolio of loans with similar risk characteristics based on the loss rates derived from past credit loss experience or bankruptcy experience through the application of a model that incorporates future forecast information, such as macroeconomic variables, into the probability of bankruptcy, etc. In addition, adjustments are made in the calculation of allowance for credit losses for qualitative factors relating to current conditions and future forecasts which may not be sufficiently captured in such model but should be appropriately taken into account. Future uncertainties due to the impact of the COVID-19 pandemic are factored into estimates for the credit loss provisioning through such adjustments based on macroeconomic variables and/or qualitative factors.

With respect to loan assets with deteriorated credit risk that are deemed not to entail risks in common with other loan assets, allowance for credit losses is recognized individually for each loan asset based on risks that are particular to the asset. This credit loss provisioning is done through certain methodologies, including calculating the difference between the carrying amount of the loan asset and the amount of estimated cash flows from the loan asset discounted by the effective interest rate as well as using the fair value of the collateral for the loan asset.

No allowance for credit losses was recorded for the loans reclassified as loans held for sale in connection with the execution of the Share Purchase Agreement pursuant to which all of the shares of MUFG Union Bank, N.A. (“MUB”) held by MUFG Americas Holdings Corporation (“MUAH”) will be sold to U.S. Bancorp (“USB”) because these loans are measured at fair value in accordance with ASC Topic 310, “Receivables”

(7) Reserve for bonuses

Reserve for bonuses, which is provided for future bonus payments to employees, is recorded in the amount deemed to have accrued based on the estimated amount of bonuses as of the consolidated balance sheet date.

(8) Reserve for bonuses to directors

Reserve for bonuses to directors, which is provided for future bonus payments to directors, is recorded in the amount deemed to have accrued based on the estimated amount of bonuses as of the consolidated balance sheet date.

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(9) Reserve for stocks payment

Reserve for stocks payment, which is provided for future payments of compensation under the stock compensation plan for directors and officers of MUFG and certain domestic consolidated subsidiaries, is recorded in the amount deemed to have accrued based on the estimated amount of compensation as of the consolidated balance sheet date.

(10) Reserve for retirement benefits to directors

Reserve for retirement benefits to directors, which is provided for future payments of retirement benefits to directors of consolidated subsidiaries, is recorded in the amount deemed to have accrued based on the estimated amount of benefits as of the consolidated balance sheet date.

(11) Reserve for loyalty award credits

Reserve for loyalty award credits, which is provided for the future redemption of points awarded to customers through Super IC Cards, etc., is calculated by estimating the amount that will be redeemed in the future based on the monetary amount converted from the awarded but unused points, and is recorded in the appropriate amount as a reserve.

(12) Reserve for contingent losses

Reserve for contingent losses, which is provided for possible losses from contingent events related to off-balance sheet transactions and various litigation and regulatory matters, is calculated by estimating the impact of such contingent events. This reserve also includes future claims for repayment of excess interest payments on consumer loans that are estimated based on the past repayments, the pending claims and other factors.

(13) Reserves under special laws

Reserves under special laws represent the reserves for contingent liabilities from derivative financial instruments transactions executed for clients, which are recorded in accordance with Article 46-5-1 of the Financial Instruments and Exchange Law and Article 175 of the Cabinet Office Ordinance on Financial Instruments Business.

(14) Retirement benefits

In calculating the amount of benefit obligation, the portion of projected benefit obligation attributed to the fiscal year ended March 31, 2022 is determined using the benefit formula basis.

Prior service cost is amortized using the straight-line method over a fixed period, primarily over 10 years, within the employees’ average remaining service period.

Net actuarial gains (losses) are amortized using the straight-line method over a fixed period, primarily over 10 years, within the employees’ average remaining service period, primarily beginning in the subsequent fiscal year after such gains (losses) are recognized.

For certain overseas branches of domestic consolidated subsidiaries and certain consolidated subsidiaries, net defined benefit liability and retirement benefit expenses are calculated using the simplified method.

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(15) Revenue Recognition

(a) Revenue recognition

Revenues arising from contracts with customers are recognized in the consolidated statements of income based on the status of fulfillment of the performance obligations identified in each contract, depending on the actual nature of the transactions under the contract.

(b) Revenue Recognition for Principal Categories of Transactions

Revenue arising from contracts with customers is recognized using a method that is designed to closely reflect economic reality, with the timing of fulfillment of performance obligations, which is an important factor in determining the timing of revenue recognition, assessed as described below.

In most cases, the consideration for transactions is settled in cash at the time of the transaction. In other cases, receivables recognized in connection with transactions are generally collected within one year.

Of the fees and commissions, those on remittances and transfers consist mainly of remittance and transfer fees and are recognized as revenue at the time of settlement.

Of the fees and commissions, those on deposits consist mainly of ATM usage fees and periodic account management service fees. ATM usage fees are recognized as revenue at the time of execution of transactions, and periodic account management service fees are recorded as revenue over the service period.

Of the fees and commissions, those on loans consist mainly of the consideration for administration and management services during the tenors of syndicated loans and the consideration for financial advice to clients, and are recorded as revenue over the service period.

Of the fees and commissions, those on trust-related services consist mainly of the consideration for shareholder registry administration services for issuers of stocks, real estate brokerage and appraisal services, and succession services including preparation, maintenance and execution of wills and inheritance management. These fees and commissions are recognized as revenue at the time when the services are provided.

Of the fees and commissions, those on securities-related services consist mainly of fees related to sales and transfers of securities including investment trust, underwriting, brokerage and advisory services, fees related to securitization, and agent fees related to calculation and payment of dividends. Fees on securities-related services are recorded as revenue over the relevant service period. Fees arising from securities-related services that are consumed by a client at a point in time (e.g., sales and transfers of securities executed under the direction of clients, underwriting or securitization of bonds and equity securities which is completed on the date of the transaction, provision of advice to clients, and calculation and payment to investors of dividends) are recognized as revenue at such point in time. Fees arising from securities-related services that are used by a client at equal intervals over the service period (e.g., retainer fees for M&A advisory services) are recognized as revenue over such service period. Fees to be paid when a particular performance target is achieved (e.g., success fees for M&A advisory services) are recognized as revenue at the time when such performance target is achieved.

Of the fees and commissions, those on credit card business consist mainly of credit card merchant fees and royalty fees from franchised merchants. Merchant fees are recorded as revenue at the time when the credit sale data is received, and royalty fees from franchised merchants are recorded as revenue over the service period.

Of the fees and commissions, those on administration and management services for investment funds and investment advisory services arise mainly from asset management and investment advisory services and consist of asset management fees, success fees and investment advisory fees related to investment trusts. Asset management fees and investment advisory fees are recognized as revenue in the amount MUFG is entitled to charge based on the balance of assets under management as MUFG’s performance obligations are satisfied over the service period. Performance-based success fees are recognized as revenue at the time when performance targets are met and it is deemed highly likely that there will be no material reversal of the recognized revenue.

Trust fees consist mainly of fees on administration and management of trust assets and are recognized as revenue in the amount MUFG is entitled to charge based generally on the balance of assets under management for each trust or the performance of each trust account for an accounting period as MUFG’s performance obligations are satisfied over the service period.

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(16) Translation of assets and liabilities denominated in foreign currencies

Assets and liabilities denominated in foreign currencies or booked at overseas branches of domestic consolidated banking subsidiaries and domestic consolidated trust banking subsidiaries are translated into yen primarily at exchange rates prevailing at the consolidated balance sheet date, except for investments in non-consolidated affiliates which are translated into yen at exchange rates prevailing at the acquisition dates.

Assets and liabilities denominated in foreign currencies of other consolidated subsidiaries are translated into yen at exchange rates prevailing at the respective balance sheet date.

(17) Leasing transactions

(As lessees)

Domestic consolidated subsidiaries’ finance leases other than those that are deemed to transfer the ownership of leased property to the lessees are accounted for in a similar way to purchases, and depreciation of lease assets is computed using the straight-line method over the lease term with zero residual value unless residual value is guaranteed by the corresponding lease contracts, in which case the residual value equals the guaranteed amount.

(As lessors)

Finance leases other than those that are deemed to transfer the ownership of leased property to the lessees are accounted for in a similar way to sales and income and expenses related to such leases are recognized by allocating interest equivalents to applicable fiscal periods instead of recording sales as “Other ordinary income.

(18) Hedge accounting

(a) Hedge accounting for interest rate risks

Domestic consolidated banking subsidiaries and domestic consolidated trust banking subsidiaries have adopted the deferred hedge accounting method for hedging transactions to hedge interest rate risks arising from financial assets and liabilities, except for certain transactions qualifying for special hedge accounting treatment of interest rate swaps. Portfolio hedging or individual hedging, as described in the Japanese Institute of Certified Public Accountants (“JICPA”) Industry Committee Practical Guidelines No. 24, “Treatment of Accounting and Auditing of Application of Accounting Standard for Financial Instruments in Banking Industry” (March 17, 2022), and JICPA Accounting Committee Report No. 14, “Practical Guidelines for Accounting for Financial Instruments” (January 31, 2000), is primarily applied to determine hedged items.

With respect to hedging transactions to offset fluctuations in the fair value of fixed rate deposits, loans and other instruments, hedging instruments (e.g., interest rate swaps) are designated to hedged items individually or collectively by their maturities in accordance with JICPA Industry Committee Practical Guidelines No. 24. With respect to hedging transactions to offset fluctuations in the fair value of fixed rate bonds classified as available-for-sale securities, hedging instruments (e.g., interest rate swaps) are designated to hedged items collectively by the type of bond. Since material terms related to hedged items and hedging instruments are substantially identical, and such hedging transactions are deemed highly effective, the assessment of effectiveness is based on the similarity of the terms.

With respect to hedging transactions to fix the cash flows of forecasted transactions related to floating rate deposits, loans and other instruments as well as forecasted transactions related to short-term fixed rate deposits, loans and other instruments, hedging instruments (e.g., interest rate swaps) are designated to hedged items collectively by interest rate indices and tenors in accordance with JICPA Industry Committee Practical Guidelines No. 24. Since material terms related to hedged items and hedging instruments are substantially identical, and such hedging transactions are deemed highly effective, the assessment of effectiveness is based on the similarity of the terms. The effectiveness of hedging transactions is also assessed by the correlation between factors that cause fluctuations in interest rates of hedged items and those of hedging instruments.

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(b) Hedge accounting for foreign currency risks

Domestic consolidated banking subsidiaries and domestic consolidated trust banking subsidiaries have adopted the deferred hedge accounting method for hedging foreign currency risks arising from financial assets and liabilities denominated in foreign currencies, except for certain transactions qualifying for the allocation method applicable to forward exchange contracts and other contracts. Portfolio hedging is applied to determine hedged items as described in JICPA Industry Committee Practical Guidelines No. 25 “Treatment of Accounting and Auditing concerning Accounting for Foreign Currency Transactions in the Banking Industry” (October 8, 2020). Hedging instruments (e.g., currency swaps and forward exchange contracts) are designated to hedged items collectively by currencies.

Portfolio hedging or individual hedging is applied to hedge foreign currency risks arising from equity investments in foreign subsidiaries and foreign affiliates and from available-for-sale securities (other than bonds) denominated in foreign currencies. Monetary claims and liabilities denominated in the same foreign currencies or forward exchange contracts are used as hedging instruments. As for the hedge accounting method applied to equity investments in foreign subsidiaries and foreign affiliates, foreign currency translation differences arising from hedging instruments are recorded as foreign currency translation adjustments. The fair value hedge accounting method is applied to available-for-sale securities (other than bonds) denominated in foreign currencies.

(c) Hedge accounting for stock price fluctuation risks

Individual hedging is applied to hedge market fluctuation risks arising from strategic equity securities held by domestic consolidated banking subsidiaries and domestic consolidated trust banking subsidiaries. Instruments such as total return swaps are used as hedging instruments. The effectiveness of hedging transactions is assessed by the correlation between changes in the fair value of hedged items and changes in the fair value of hedging instruments. The fair value hedge accounting method is applied.

(d) Transactions among consolidated subsidiaries

Derivative transactions including interest rate swaps and currency swaps which are designated as hedging instruments among consolidated subsidiaries or between trading accounts and other accounts (or among internal sections) are not eliminated from the consolidated statements of income or valuation difference, but are recognized as related gains or losses or deferred under hedge accounting because these derivative transactions meet non-arbitrariness and certain other criteria under JICPA Industry Committee Practical Guidelines No. 24 and No. 25 and are regarded as equivalent to external third-party cover transactions.

(19) Amortization of goodwill

Goodwill was primarily amortized using the straight-line method over 20 years beginning in the period of the acquisition. Other goodwill with insignificant balance was amortized as incurred.

(20) Cash and cash equivalents in the consolidated statements of cash flows

Cash and cash equivalents in the consolidated statements of cash flows are defined as “Cash and due from banks” on the consolidated balance sheet.

(21) Consumption taxes

National and local consumption taxes are primarily excluded from transaction amounts of MUFG and its domestic consolidated subsidiaries. Non-deductible portions of consumption taxes on the purchases of tangible fixed assets are expensed when incurred.

(22) Adoption of consolidated taxation system

MUFG and some of its domestic consolidated subsidiaries have adopted the consolidated taxation system.

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(23) Application of Tax Effect Accounting for the Transition from the Consolidated Taxation System to the Group Tax Sharing

System

MUFG and some of its domestic consolidated subsidiaries plan to shift from the consolidated taxation system to the group tax sharing system in the following fiscal year.

MUFG and these domestic consolidated subsidiaries do not apply Paragraph 44 of Accounting Standards Board of Japan (“ASBJ”) Guidance No. 28, “Amendments to Accounting Standard for Tax Effect Accounting” (February 16, 2018), to items revised under the stand-alone taxation system in connection with the transition from the consolidated taxation system to the group tax sharing system under the “Partial Amendments to Income Tax Act, etc.” (Act No. 8, March 31, 2020) due to the application of Paragraph 3 of ASBJ Practical Issues Task Force Report No. 39, “Practical Solution on the Treatment of Tax Effect Accounting for the Transition from the Consolidated Taxation System to the Group Tax Sharing System” (March 31, 2020), and instead apply the pre-amendment income tax provisions to the amount of deferred tax assets and deferred tax liabilities.

From the beginning of the following fiscal year, MUFG and these domestic consolidated subsidiaries plan to adopt ASBJ Practical Issues Task Force Report No. 42, “Practical Solution on the Accounting and Disclosure under the Group Tax Sharing System” (August 12, 2021), which prescribes the accounting treatment and disclosure of corporate tax and local corporate tax as well as tax-effect accounting under the group tax sharing system.

(24) Accounting of bills discounted and rediscounted

Bills discounted and rediscounted are accounted for as financial trading in accordance with JICPA Industry Committee Practical Guidelines No. 24

(25) Accounting standard for foreign subsidiaries

If the financial statements of foreign subsidiaries are prepared in accordance with the International Financial Reporting Standards (“IFRS”) or the U.S. GAAP, such financial statements are used in the consolidated accounting process.

If the financial statements of foreign subsidiaries are prepared in accordance with generally accepted accounting principles in each domicile country and not in accordance with IFRS or U.S. GAAP, the financial statements of foreign subsidiaries are mainly rearranged in accordance with U.S. GAAP.

Adjustments are also made when necessary in the consolidated accounting process.

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Significant Accounting Estimates

I. Allowance for credit losses

(1) Amount recorded in the consolidated financial statements for the current fiscal year

We have banking subsidiaries including MUFG Bank, Ltd. (“the Bank”), and they are engaged in lending services as one of our core businesses. To absorb probable losses resulting from decreases in or elimination of the value of assets such as loan receivables due to deterioration in the financial condition of parties to which loans and other forms of credit have been extended (the risk of incurring such losses being referred to as “credit risk” within the MUFG Group), an allowance for credit losses is recorded according to the calculation process prescribed in our internal policies. The amount of allowance for credit losses recorded in the consolidated balance sheet as of the end of the current fiscal year is 1,222,162 million yen(1,105,541 million yen as of March 31, 2021).

The allowance for credit losses is determined in accordance with predetermined internal policies and approved by the Credit Committee under the Executive Committee. In addition, independent credit audit departments audit the evaluation results as described in “(6) Allowance for credit losses” under “IV. Accounting policies” under “1. Significant Accounting Policies Applied to the Consolidated Financial Statements.”

There is uncertainty in the estimates and significant assumptions used in calculating the allowance for credit losses. In particular, future developments concerning the COVID-19 pandemic and the Russia-Ukraine situation, which are expected to impact our transaction borrowers’ operating environment and the economic environment, remain subject to significant uncertainty. Accordingly, we make certain assumptions, including that the effects of COVID-19 would generally improve, while some would remain, as vaccine and treatment development progresses and restrictions on economic activity are relaxed primarily in developed countries, resulting in alleviation of the economic impact, and that the business environment would remain uncertain due to sudden changes relating to the Russia-Ukraine situation. The recorded allowance represents our best estimate made in a manner designed to ensure objectivity and rationality.

(2) Other information which is relevant to an understanding by readers of the consolidated financial statements with regard to the accounting estimates

(Allowance for credit losses of our principal consolidated domestic banking subsidiaries)

(a) Method of calculation of the amount recorded in the consolidated financial statements for the current fiscal year

The process of calculating the allowance for credit losses for the Bank and its domestic consolidated subsidiaries, our principal domestic consolidated banking subsidiaries, involves various estimates such as determination of borrower credit ratings which are based on evaluation and classification of borrowers’ debt-service capacity, assessment of the value of collateral provided by borrowers, and adjustments for future loss projections and other factors to the loss rates calculated based on historical credit loss experience. For details of the allowance calculation method, refer to “(6) Allowance for credit losses” under “IV. Accounting policies” under “1.Significant Accounting Policies Applied to the Consolidated Financial Statements.” The amount of allowance for credit losses and the loan balance of the Bank, our principal domestic consolidated banking subsidiary, recorded in the Bank’s balance sheet as of the end of the current fiscal year, are 650,033 million yen and 90,421,234 million yen, respectively (465,391 million yen and 88,447,036 million yen, respectively as of March 31, 2021).

(b) Significant assumptions used in calculating the amounts presented in the consolidated financial statements for the current fiscal year

In order to make appropriate borrower classification determinations, our principal domestic consolidated banking subsidiaries use a credit rating system that is consistent with the borrower classification as a uniform standard for evaluating credit risk. As a general rule, internal credit ratings are assigned to all customers to which we extend credit and their transactions. Among our internal credit ratings, the borrower ratings for non-financial business corporations and certain other borrowers are assigned based on our evaluation of their debt-service capacity over the next 3 to 5 years on a 15-rating scale. Our principal domestic consolidated banking subsidiaries assign internal credit ratings to borrowers based on qualitative factors such as the current and expected future business environment of the industry to which borrowers belong as well as their management and funding risks in addition to quantitative financial evaluations through an analysis of their financial results. In this regard, our internal credit ratings may be highly dependent on estimation of borrowers’ future performance and business sustainability in case they experience poor business performance or financial difficulties. In particular, the prolonged COVID-19 pandemic and sudden changes relating to the Russia-Ukraine situation have had significant impacts on the financial position and operating results of some borrowers of our principal domestic consolidated banking subsidiaries. Estimates relating to these borrowers’ future performance and business sustainability are affected by changes in their external and internal business environment and are accordingly subject to a high degree of uncertainty.

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The Bank, our principal consolidated domestic banking subsidiary, determines loss rates primarily by calculating a rate of loss based on a historical average of the credit loss rate or a historical average of the default probability derived from actual credit loss experience or actual bankruptcy experience and making necessary adjustments based on future projections and other factors. The Bank makes such adjustments based on future loss projections and other factors to loss rates calculated based on historical loss experience when and to the extent such adjustments are necessary, by taking into account the rate of increase in the credit loss rate or the default probability in a more recent period, an additional expected losses, and other factors, especially in light of the prolonged COVID-19 pandemic and sudden changes relating to the Russia-Ukraine situation. The amount of impact of these adjustments recorded in the consolidated balance sheet as of the end of the current fiscal year is 77,572 million yen (30,846 million yen as of March 31, 2021).

Since these adjustments based on future loss projections and other factors to loss rates calculated based on historical loss experience, which are made to reflect the credit risk for loans and other assets held as of the end of the fiscal year, are based on estimation relating to the economic environment with respect to which objective data are not readily available, such estimates are subject to a high degree of uncertainty.

(c) Effect on the consolidated financial statements for the following fiscal year

The internal credit ratings are reviewed at least once a year. Estimates relating to borrowers’ future performance and business sustainability, which we consider to be significant assumptions, may be reviewed in light of changes in borrowers’ creditworthiness due to changes in their financial condition and in the relevant industry environment. As a result, the allowance for credit losses may significantly increase or decrease in the following fiscal year if the overall credit risk of our principal domestic consolidated banking subsidiaries is deemed to have increased or decreased.

Adjustments based on future loss projections and other factors to loss rates calculated based on historical loss experience, which we consider to be significant assumptions, are based on estimation relating to the economic environment with respect to which objective data are not readily available. These assumptions change to reflect developments in the economic environment, and changes in the assumptions may result in a significant increase or decrease in the allowance for credit losses in the following fiscal year.

(Allowance for credit losses of certain overseas subsidiaries which apply U.S. GAAP)

(a) Method of calculation of the amount recorded in the consolidated financial statements for the current fiscal year

Certain overseas subsidiaries which apply U.S. GAAP have adopted ASC Topic 326, “Measurement of Credit Losses on Financial Instruments,” and provide for allowance for credit losses by estimating credit losses currently expected over the remaining contractual term of the financial assets. For details of the allowance provision method, refer to Additional Information in “(6) Allowance for credit losses” under “IV. Accounting policies” under “1. Significant Accounting Policies Applied to the Consolidated Financial Statements.” The amount of allowance for credit losses and the loan balance recorded in the consolidated balance sheet as of the end of the current fiscal year with respect to our principal overseas subsidiaries that apply U.S. GAAP are 430,156 million yen and 14,937,312 million yen, respectively(491,868 million yen and 13,916,797million yen, respectively as of March 31, 2021).

(b) Significant assumptions used in calculating the amounts presented in the consolidated financial statements for the current fiscal year

Expected credit losses of our principal overseas subsidiaries that apply U.S. GAAP are calculated for each portfolio of loans with similar risk characteristics using a quantitative model that reflects economic forecast scenarios based on macroeconomic variables. Macroeconomic variables include the unemployment rate, GDP and other inputs, which correlate with historical credit losses. The subsidiaries select multiple economic forecast scenarios in light of the uncertainty in such scenarios and consider such scenarios by applying certain weightings. Various factors, such as the latest economic environment and the views of internal and external economists, are taken into account in the determination of the macroeconomic variables in such economic forecast scenarios and the weightings applied to each economic forecast scenario. In this regard, the estimates made in determining such macroeconomic variables in multiple economic forecast scenarios and the weightings applied to each economic forecast scenario are subject to significant uncertainty due to the significant variability and uncertainty in the future economic environment, including the degree of impact and duration of the prolonged COVID-19 pandemic on the economy.

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The calculated amount of expected credit losses is adjusted for qualitative factors to compensate for expected credit losses that are not reflected in a quantitative model. The subsidiaries not only apply economic assumptions to macroeconomic variables in a quantitative model but also make qualitative adjustments. As a result, the estimates made in making such qualitative adjustments are similarly subject to significant uncertainty.

(c) Effect on the consolidated financial statements for the following fiscal year

The determination of macroeconomic variables in multiple economic forecast scenarios and the weightings applied to each economic forecast scenario and the qualitative adjustments are based on estimation relating to the economic environment with respect to which objective data are not readily available. These assumptions change to reflect developments in the economic environment, and changes in the assumptions may result in a significant increase or decrease in the allowance for credit losses in the following fiscal year.

II. Impairment of fixed assets

(1) Amount recorded in the consolidated financial statements for the current fiscal year

In line with the reorganization of MUFG’s business groups, in the fiscal year ended March 31, 2019, the Bank reorganized its business units, which constitute its managerial accounting segments, on a consolidated basis. Thereafter, the Bank continued to make modifications to its managerial accounting, focusing on the allocation of operating expenses, with an aim to enhance profit and loss management for each such business unit. In order to improve efficiency and effectiveness in resource management for investments in systems and other fixed assets, which are expected to increase further in importance, the Bank has adopted for each such business unit a decision-making process for budget limit management and investments. In March 2022, the Bank allocated business infrastructure assets to each of its business units in order to establish a framework that facilitates each business unit to manage such assets more autonomously. In connection with these measures, the Bank modified its application of accounting for impairment of fixed assets. Specifically, in addition to conducting impairment test on a business location basis and on a bank-wide basis as previously done, the Bank allocated certain corporate assets to business units and conducted impairment test on a business unit basis. The allocation of such corporate assets to business units was determined based on the utilization ratio for each such asset (considering the number of employees, the number of customers, and the floor area) and other allocation criteria.

As a result, the carrying amounts of the business assets belonging to the Digital Service Business Unit, the Retail & Commercial Banking Business Unit and the Global Commercial Banking Business Unit of the Bank were reduced to their net selling value, and impairment losses of ¥127,023 million on such assets (including ¥31,500 million on buildings and ¥93,242 million on software) were recorded.

Identification of indications of impairment and recognition and measurement of impairment losses are performed mainly in accordance with the Accounting Standards for Impairment of Fixed Assets (Business Accounting Council, August 9, 2002) and other standards and with predetermined internal policies. Estimates and significant assumptions made in recognizing and measuring impairment losses are subject to uncertainty. The recorded impairment losses represent our best estimate made in a manner designed to ensure objectivity and rationality.

(2) Other information which is relevant to an understanding by readers of the consolidated financial statements with regard to the accounting estimates

(a) Method of calculation of the amount recorded in the consolidated financial statements for the current fiscal year

The reporting segments of the Bank including its consolidated subsidiaries consist of those components of the Bank for which discrete financial information is available and whose operating results are regularly reported to, and reviewed by, the Board of Directors and the Management Committee in order to make decisions regarding allocation of management resources and evaluate performance. The Bank treats each business location as the smallest grouping unit, allocates certain corporate assets to business units, and identifies indications of impairment and recognizes and measures impairment losses on a business unit basis as well as on other bases. As part of this process of determining impairment losses on a business unit basis, the identification of indications of impairment and the recognition and measurement of impairment losses are conducted in the manner described below.

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(Identification of indications of impairment)

If a corporate asset allocated to a business group meets any of the following conditions, an indication of impairment is identified:

• The profit or loss or cash flow arising from the business operations of the business unit is continuously negative or is expected to be continuously negative;

• The total unrealized losses on assets with market value account for 50% or more of the carrying amount of such assets; and

• The business environment for the business unit has deteriorated significantly or is expected to deteriorate significantly.

(Determination of the need for recognition and measurement of impairment loss)

For corporate assets of a business unit identified as having an indication of impairment, the total undiscounted future cash flows from the business unit are compared to the aggregate carrying amount of assets including corporate assets. Impairment losses are recognized if the aggregate carrying amount of such assets exceeds the total undiscounted future cash flows from such assets.

Impairment losses are measured by calculating the difference between the carrying amount of corporate assets and the higher of the value in use and the net selling value of such assets.

(b) Significant assumptions used in calculating the amounts presented in the consolidated financial statements for the current fiscal year

The Bank allocates corporate assets to business units based on the utilization ratio for each such asset (considering the number of employees, the number of customers, and the floor area) and other allocation criteria.

The future cash flows from assets used to measure the value in use of such assets for the Digital Service Business Unit, the Retail & Commercial Banking Business Unit and the Global Commercial Banking Business Unit of the Bank, which recognized impairment losses on such assets in the current fiscal year, were estimated based on the business plan of the Bank, reflecting such significant assumptions as projected amounts of credit transactions.

The value in use of assets is calculated as a discounted present value of future cash flows from such assets. The discount rate used in the calculation is based on the cost of capital (calculated based on risk-free rates, equity beta, market risk premiums and other factors).

The net selling value of assets is calculated using a price indicator, such as an appraisal price, which is deemed to appropriately reflect the market price of such assets net of the estimated disposal cost.

The appraisal price of commonly used real estate assets allocated to business units is determined by obtaining valuation based on the cost method, the income capitalization method and the sales comparison method and adopting the valuation method that is most appropriate based on the relevant characteristics of primary willing purchasers of each real estate asset and the valuation obtained based on such method. The price determination process incorporates rent and capitalization rates and other factors relating to such real estate assets as primary assumptions and involves assessment of the social and economic environment, the real estate market environment, the condition of neighboring areas, the condition of the real estate assets, market participants for and the most efficient use of such assets, and other factors.

Software assets are customized as systems for internal use and, since they are unusable to other companies, their net selling value was determined to be nil based on valuation using the income approach.

(c) Effect on the consolidated financial statements for the following fiscal year

Rent and capitalization rates and other factors used as primary assumptions for real estate appraisal, based on which the liquidation value of real estate assets is determined, are estimated by assessing social and economic, real estate market and other conditions. These assumptions change as social and economic, real estate market and other conditions change, and impairment losses on such assets may significantly increase in the following fiscal year due to changes in such assumptions.

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III. Valuation of goodwill recorded in connection with acquisitions and investments

(1) Amount recorded in the consolidated financial statements for the current fiscal year

As part of its strategic measures designed to become the world’s most trusted financial group, the MUFG Group enters into acquisitions, equity investments and capital alliances on a global basis. Any goodwill arising from these business combination transactions is recorded in the consolidated balance sheet.

Such acquisitions, equity investments and capital alliances may result in the MUFG Group’s inability to achieve the synergies and other benefits anticipated by the MUFG Group due to unexpected changes in the industry to which the acquiree, investee or alliance partner belongs and other factors or in an impairment of such goodwill, adversely affecting the MUFG Group’s business strategy, financial position and operating results.

The amount of goodwill recorded on the consolidated balance sheet as of the end of the current fiscal year is 271,353 million yen(273,092 million yen as of March 31, 2021), of which 177,862 million yen(177,726 million yen as of March 31, 2021) was recorded in connection with the acquisition of First Sentier Investors (“FSI”).

The recorded balance of goodwill is subject to identification of an indication of impairment (an event indicating the possibility of impairment of a group of assets including goodwill) and recognition and measurement of impairment loss in accordance with the Accounting Standards for Impairment of Fixed Assets and other standards and with predetermined internal policies. In addition, such identification of indications of impairment and recognition and measurement of impairment loss are tested for appropriateness in accordance with predetermined internal policies and other regulations. The estimates and significant assumptions made in identifying indications of impairment of the goodwill recorded in connection with the acquisition of FSI, which accounts for a substantial portion of the balance of goodwill held by the MUFG Group, are subject to uncertainty. The recorded goodwill represents our best estimate made in a manner designed to ensure objectivity and rationality.

(2) Other information which is relevant to an understanding by readers of the consolidated financial statements with regard to the accounting estimates

(a) Method of calculation of the amount recorded in the consolidated financial statements for the current fiscal year

Identification of indications of impairment of goodwill and recognition and measurement of impairment loss are performed on the basis of a larger unit consisting of the group of assets relating to the business to which the goodwill is allocated and such goodwill.

The MUFG Group determines whether any indication of impairment exists based on the characteristics of an asset group in accordance with certain established criteria.

The goodwill recorded in connection with the acquisition of FSI, which accounts for a substantial portion of the balance of goodwill held by the MUFG Group, is reported in the amount based on the determination as to the existence of an indication of impairment and valuation performed on FSI as a single asset group.

To identify an indication of impairment, we determine based on certain established criteria whether FSI’s future profits for a certain period projected by considering FSI’s latest business plan have declined to a level where the investment may not be recoverable due to such decline in the profitability. In addition, to determine whether any indication of impairment exists, we analyze whether FSI has reported net operating losses after amortization of goodwill for two consecutive reporting periods and whether there are factors that cause the recoverability of the investment in FSI to significantly diminish, including deterioration in the stock indices in the stock market, a decline in the balance of FSI’s assets in custody, and the attrition rate of key fund managers.

For the current fiscal year, we identified no event indicating impairment and determined that no indication of impairment existed.

With respect to goodwill with an identified indication of impairment, impairment loss is not recognized if the carrying amount, before impairment loss, of the group of assets relating to the business to which the goodwill is allocated plus the carrying amount of the goodwill is smaller than the total amount of undiscounted future cash flows derived from the larger unit including the goodwill (hereinafter referred to as “undiscounted future cash flows”). If the aggregate carrying amount exceeds the amount of undiscounted future cash flows, the difference is recognized as impairment loss to the extent that it does not exceed the balance of the goodwill.

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(b) Significant assumptions used in calculating the amounts presented in the consolidated financial statements for the current fiscal year

Identification of indications of impairment and estimation of undiscounted future cash flows necessarily involve judgment and often incorporate significant estimates and assumptions.

Forecasts relating to projected profits used to identify an indication of impairment of the goodwill recorded in connection with the acquisition of FSI, which accounts for a substantial portion of the balance of goodwill held by the MUFG Group, are based on significant estimates, and such estimates are based on assumptions. The primary assumptions include the growth rate of the business based on current and past facts and operating results, and the growth rate of the market and the overall economy in the future.

(c) Effect on the consolidated financial statements for the following fiscal year

The MUFG Group believe that the primary assumptions used to identify indications of goodwill impairment as of the end of the current fiscal year are reasonable. However, changes in the primary assumptions used in the identification of indications of impairment due to unforeseeable future changes in assumptions relating to the business may have a material impact on recognition of any impairment loss and measurement of the amount of impairment loss for the following fiscal year.

IV. Fair value of derivative transactions

(1) Amount recorded in the consolidated financial statements for the current fiscal year

The MUFG Group engages in a large number of various derivative transactions in connection with the business of providing foreign exchange, financing and securities services to customers as well as market transactions and liquidity and funding management operations. For details of the fair value of derivative transactions grouped by transaction type, refer to “II. Matters concerning fair value of financial instruments and breakdown by input level” under “8. Financial Instruments.”

The fair value of derivative transactions is calculated in accordance with the policies and procedures for the calculation of fair value and the procedures for the use of fair value valuation models set forth in predetermined internal policies. The estimates and significant assumptions made in calculating the fair value of derivative transactions are subject to uncertainty. The recorded fair value represents our best estimate made in a manner designed to ensure objectivity and rationality and subject to internal controls. For details of the processes for calculating the fair value of derivative transactions, refer to “(Note 1) Description of the valuation techniques and inputs used to determine fair value” to “II. Matters concerning fair value of financial instruments and breakdown by input level” under “8. Financial Instruments.”

(2) Other information which is relevant to an understanding by readers of the consolidated financial statements with regard to the accounting estimates

(a) Method of calculation of the amount recorded in the consolidated financial statements for the current fiscal year

The fair value of exchange-traded derivative transactions is based on the price posted by exchanges. The fair value of over-the-counter derivative transactions is based on the discounted present value or amount calculated under the option-price calculation model. The valuation models are tested from a market consistency perspective. However, the estimates and assumptions used in such models necessarily involve judgment and are subject to complexity and uncertainty. For details of the calculation method, refer to “(Note 1) Description of the valuation techniques and inputs used to determine fair value” to “II. Matters concerning fair value of financial instruments and breakdown by input level” under “8. Financial Instruments.”

(b) Significant assumptions used in calculating the amounts presented in the consolidated financial statements for the current fiscal year

Inputs used in valuation models include inputs that can be observed directly or indirectly in the market such as foreign currency exchange rates, yield curves, volatility, credit curves and stock prices, as well as inputs that cannot be observed in the market such as correlation coefficients and other significant estimates. The MUFG Group classifies the fair value of financial instruments into three levels depending on the observability and significance of the input used in the fair value calculation. In particular, the estimates and assumptions made in the valuation of derivative transactions classified into level 3, where inputs that cannot be observed in the market are used as a material basis for the calculated fair value, are subject to significant complexity and uncertainty. For details of such inputs, refer to “(1) Quantitative information on significant unobservable inputs” under “(Note 2) Quantitative information about financial assets and liabilities measured and presented on the consolidated balance sheet at fair value and classified in Level 3” to “II. Matters concerning fair value of financial instruments and breakdown by input level” under “8. Financial Instruments.”

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(c) Effect on the consolidated financial statements for the following fiscal year

The MUFG Group have determined that the fair value of derivatives transactions is reasonable after conducting testing. However, the significant assumptions used to calculate the fair value are subject to uncertainty. In particular, the estimates and assumptions made in the valuation of the fair value of derivative transactions classified into Level 3 are subject to significant complexity and uncertainty. The fair value of derivative transactions held by the MUFG Group may fluctuate as a result of changes in inputs used for valuation due to changes in the market environment and other factors. For details of the sensitivity of the fair value to changes in inputs, refer to “(4) Description of the sensitivity of the fair value to changes in significant unobservable inputs” under “(Note 2) Quantitative information about financial assets and liabilities measured and presented on the consolidated balance sheet at fair value and classified in Level 3” to “II. Matters concerning fair value of financial instruments and breakdown by input level” under “8. Financial Instruments.”

V. Calculation of Reserve for contingent losses (Allowance for Repayment of Excess Interest)

(1) Amount recorded in the consolidated financial statements for the current fiscal year

In the loan business of the MUFG Group, there are loan products that were contracted on or before June 17, 2007, bearing interest which exceed the maximum interest rate permitted under the Interest Rate Restriction Act. In the event that customers of the MUFG Group assert liability based on the maximum permitted interest rate and demand debt waivers or repayment of excess payments, we may waive such debt or repay such payments. To absorb probable losses resulting from such customer demand, an allowance for repayment of excess interest is recorded in an amount estimated to be appropriate based on an analysis of historical repayment experience and recent repayment trends.

The amount of allowance for repayment of excess interest included in the allowance for contingent losses recorded in our consolidated financial statements as of the end of the current fiscal year is 107,308 million yen(81,679 million yen as of March 31, 2021).

The allowance for repayment of excess interest is calculated in accordance with predetermined internal policies. There is uncertainty in the estimates and significant assumptions used in calculating the allowance for repayment of excess interest. The recorded allowance represents our best estimate made in a manner designed to ensure objectivity and rationality and subject to internal controls.

(2) Other information which is relevant to an understanding by readers of the consolidated financial statements with regard to the accounting estimates

(a) Method of calculation of the amount recorded in the consolidated financial statements for the current fiscal year

To absorb probable losses resulting from future claims for repayment of excess interest payments, we reasonably estimate the amount of claims by preparing forecasts based on an analysis of historical repayment experience and other factors. In making such estimate, we calculate a forecasted repayment claim amount for a certain future period by preparing forecasts of the number of future repayment claims and forecasts of the average amount per claim of future repayments based on the actual number repayment claims received and the average amount per claim of actual repayments made in the past. When preparing forecasts of the number of future repayment claims, which are subject to particularly significant uncertainty, we calculate the expected number of future claims for each law firm and judicial scrivener firm, whose claim trends vary from firm to firm, primarily by applying the filed claim rate which is calculated based on historical experience and is adjusted based on the latest analysis of the relevant environment and the latest trends in the claims filed.

(b) Significant assumptions used in calculating the amounts presented in the consolidated financial statements for the current fiscal year

Significant assumptions mainly include forecasts of the number of future repayment claims (the number of future claims expected to be filed by each law firm and judicial scrivener firm) and forecasts of the average amount per claim of future repayments.

(c) Effect on the consolidated financial statements for the following fiscal year

Forecasts of the expected number of claims to be filed by, and the average amount per claim of future repayments for, each law firm and judicial scrivener firm are calculated based on historical experience with adjustments to reflect the latest analysis of the relevant environment and the latest trends in the claims filed and thus are considered to be significant assumptions subject to uncertainty inherent in estimates. Accordingly, the amount of provision for repayment of excess interest may significantly increase or decrease in the following fiscal year.

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Changes in Accounting Policies

(Changes in Accounting Policies Due to Revisions to Accounting Standards, etc.)

(Accounting Standard for Revenue Recognition)

ASBJ Statement No. 29, “Accounting Standard for Revenue Recognition” (ASBJ, March 30, 2018), and ASBJ Guidance No. 30, “Implementation Guidance on Accounting Standard for Revenue Recognition” (ASBJ, March 30, 2018), are applied from the beginning of the fiscal year ended March 31, 2022. Under these accounting standards, revenue is recognized in an amount expected to be received in exchange for goods or services when control of promised goods or services is transferred to a customer. A primary change resulting from the application of these accounting standards relates to revenue from annual membership fees recorded as income from the credit card business. Such revenue was previously recognized when received from customers but is currently recognized over the period in which the services are provided.

In accordance with the transitional measures set forth in the proviso in paragraph 84 of the Accounting Standard for Revenue Recognition, the cumulative effect of retroactively applying the new accounting policy to reporting periods prior to the beginning of the fiscal year ended March 31, 2022 was recognized as adjustments to retained earnings at the beginning of the fiscal year ended March 31, 2022, and the new accounting policy is applied from the beginning of the fiscal year ended March 31, 2022 as a change in MUFG’s accounting policies. However, due to application of the method set forth in paragraph 86 of the Accounting Standard for Revenue Recognition, the new accounting policy was not retroactively applied to a contract for which substantially all of the revenue had been recognized in accordance with the previous accounting treatment prior to the beginning of the fiscal year ended March 31, 2022.

As a result, at the beginning of the fiscal year ended March 31, 2022, retained earnings decreased by ¥6,617 million. The impact on each fee and commissions income, ordinary profits, profits before income taxes and per share information for the fiscal year ended March 31, 2022 is not significant.

In accordance with the transitional measures set forth in paragraph 89-3 of the Accounting Standard for Revenue Recognition, information on breakdowns of revenues from contracts with customers for fiscal year ended March 31, 2021 is not disclosed.

Changes in Presentation of Financial Information

From the beginning of the fiscal year ended March 31, 2022, expenses related to credit cards, which were previously recorded as general and administrative expenses, are recorded as fees and commissions expenses.

This reflects the change made in the presentation of expenses corresponding to income related to credit cards, which is recorded as fees and commissions income, as a result of a review of fees and commissions income that was conducted in connection with the adoption of ASBJ Statement No.29, “Accounting Standard for Revenue Recognition” and ASBJ Guidance No.30, “Implementation Guidance on Accounting Standard for Revenue Recognition” from the beginning of the fiscal year ended March 31, 2022, to disclose financial information in a manner that more closely reflects the actual economic situation.

In order to reflect this change in the presentation of the financial information, the consolidated financial statements for the fiscal year ended March 31, 2021, have been retroactively restated.

As a result, fees and commissions expenses of ¥230,822 million and general and administrative expenses of ¥2,786,505 million previously presented in the consolidated statement of income for the fiscal year ended March 31, 2021 have been restated, resulting in the current presentation of fees and commissions expenses of ¥307,778 million and general and administrative expenses of ¥2,709,549 million.

–29–

2. Consolidated Balance Sheets

I. Equity securities and other capital investments in affiliates

	(in millions of yen)
	March 31, 2021		March 31, 2022
Equity securities in affiliates	¥	2,734,165	¥	3,256,142
Other capital investments in affiliates		29,239		36,163

The amount of investments in jointly controlled companies included in the amounts in the above table was as follows:

	(in millions of yen)
	March 31, 2021		March 31, 2022
Investments in jointly controlled companies	¥	36,320	¥	4,893

II. Securities loaned under unsecured and secured securities lending transactions included in “Securities”

	(in millions of yen)
	March 31, 2021		March 31, 2022
Securities loaned under unsecured and secured securities lending transactions	¥	49,430	¥	20,608

Securities borrowed under securities borrowing transactions and securities purchased under resale agreements where the borrowers or purchasers have the right to dispose of the securities through sale or re-pledging without any restrictions

	(in millions of yen)
	March 31, 2021		March 31, 2022
Securities re-pledged	¥	17,327,289	¥	17,459,614
Securities re-loaned		1,518,005		1,814,243
Securities held without disposition		5,751,240		6,148,125

Bank acceptance bills discounted, commercial bills discounted, documentary bills discounted and foreign currency bills bought discounted with the right to dispose of the bills discounted through sale or re-pledging without any restrictions

	(in millions of yen)
	March 31, 2021		March 31, 2022
Bills discounted (face value)	¥	1,156,955	¥	1,166,976

Foreign currency bills bought which were re-discounted upon transfer

	(in millions of yen)
	March 31, 2021		March 31, 2022
Foreign currency bills re-discounted (face value)	¥	5,238	¥	8,552

–30–

III. Loans to be disclosed under the Banking Act and the Financial Reconstruction Act (the “FRA”) were as follows. Disclosed loans include corporate bonds included in Securities (to the extent that such bonds were issued through private placements as stipulated in Article 2-3 of the Financial Instruments and Exchange Act and that the principal of and interest on such bonds are partly or fully guaranteed by MUFG), Loans and bills discounted, Foreign exchanges, accrued interest and suspense payments included in Other assets, and Customers’ liabilities for acceptances and guarantees, each as included in the consolidated balance sheets, and securities loaned (to the extent borrowers have the right to sell or pledge such securities) as included in the notes to the consolidated balance sheets.

	(in millions of yen)
	March 31, 2021		March 31, 2022
Bankrupt or De facto Bankrupt	¥	289,615	¥	252,148
Doubtful	¥	627,797	¥	799,214
Special Attention	¥	446,504	¥	420,453
Accruing loans contractually past due 3 months or more	¥	23,657	¥	12,104
Restructured loans	¥	422,846	¥	408,348
Subtotal	¥	1,363,917	¥	1,471,816
Normal	¥	117,264,113	¥	122,326,614
Total	¥	118,628,030	¥	123,798,430

Bankrupt or De facto Bankrupt represents loans to borrowers that are bankrupt or in substantially similar condition due to reasons including a petition being filed to commence bankruptcy, reorganization or rehabilitation proceedings.

Doubtful represents loans to borrowers that are not yet in a state of bankruptcy but that are in deteriorated financial condition, with deteriorated operating results, and with a high likelihood of loan principal and interest not being collected or received in accordance with contractual terms, other than loans included in the Bankrupt or De facto Bankrupt category.

Accruing loans contractually past due 3 months or more represent loans with respect to which principal repayments or interest payments have been past due for 3 months or more, other than loans included in the Bankrupt or De facto Bankrupt category or the Doubtful category.

Restructured loans represent loans that have been modified with concessionary terms, including interest rate reductions, deferral of interest payments, deferral of principal repayments, waivers of loan claims and other renegotiated terms, that are favorable to borrowers, for the purpose of assisting such borrowers in improving their financial condition, other than loans included in the Bankrupt or De facto Bankrupt category, the Doubtful category or the Accruing loans contractually past due 3 months or more category.

Normal represents loans with no particular issues identified in terms of the financial condition and results of operations of borrowers and thus not included in the Bankrupt or De facto Bankrupt category, the Doubtful category, the Accruing loans contractually past due 3 months or more category or the Restructured loan category.

The amounts provided in the table above represent gross amounts before deduction of allowance for credit losses.

(Changes in Presentation of Financial Information)

As the Cabinet Office Ordinance to Partially Amend the Enforcement Regulations of the Banking Act (Cabinet Office Ordinance No. 3, January 24, 2020) came into effect on March 31, 2022, the presentation of “risk-monitored loans” previously based on the categories stipulated by the Banking Act has been revised based on the categories of loans to be disclosed under the FRA.

–31–

IV. Assets pledged as collateral

Assets pledged as collateral and their relevant liabilities as of March 31, 2021 and 2022 were as follows:

	(in millions of yen)
	March 31, 2021		March 31, 2022
Assets pledged as collateral:
Cash and due from banks	¥	3,940	¥	4,137
Trading assets		337,572		272,895
Securities		16,740,970		18,130,636
Loans and bills discounted		12,107,017		11,552,990
Other assets		5,203		5,292
Tangible fixed assets		5,221		4,926
Total	¥	29,199,925	¥	29,970,878
Relevant liabilities to above assets:
Deposits	¥	472,244	¥	577,699
Call money and bills sold		—		5,702
Trading liabilities		19,360		15,713
Borrowed money		28,698,014		29,339,072
Bonds payable		59,620		35,781
Other liabilities		7,445		4,930

In addition to the above, the following assets were pledged as collateral for cash settlements and other transactions or asdeposits for margin accounts for futures and other transactions:

	(in millions of yen)
	March 31, 2021		March 31, 2022
Cash and due from banks	¥	—	¥	14
Monetary claims bought		27,441		30,347
Trading assets		1,757,709		1,435,764
Securities		13,659,016		14,292,419
Loans and bills discounted		5,373,937		5,487,371

Furthermore, the following assets were sold under repurchase agreements or loaned under securities lending transactions with cash collateral as of March 31, 2021 and 2022:

	(in millions of yen)
	March 31, 2021		March 31, 2022
Trading assets	¥	2,328,320	¥	1,938,540
Securities		6,223,880		9,931,784
Total	¥	8,552,201	¥	11,870,325
Relevant liabilities to above assets:
Payables under repurchase agreements	¥	8,035,898	¥	13,465,290
Payables under securities lending transactions		162,559		504,422

–32–

In addition, the following assets were pledged under general collateral repurchase agreements using the subsequent collateral allocation method as of March 31, 2021 and 2022:

	(in millions of yen)
	March 31, 2021		March 31, 2022
Trading assets	¥	3,612,051	¥	2,774,134
Securities		948,493		695,798
Total	¥	4,560,544	¥	3,469,932

V. Non-recourse debt of consolidated special purpose companies was as follows.

	(in millions of yen)
	March 31, 2021		March 31, 2022
Non-recourse debt
Borrowed money	¥	2,100	¥	2,100
Bonds payable		3,714		6,154
Relevant assets to above non-recourse debt:
Cash and due from banks	¥	474	¥	726
Securities		—		4,118
Loans and bills discounted		20,000		20,000
Other assets		154		173
Tangible fixed assets		5,221		4,926

The above table includes certain assets reported in the immediately preceding Item IV.

VI. Overdraft facilities and commitment lines of credit are binding contracts under which MUFG’s consolidated subsidiaries have obligations to disburse funds up to predetermined limits upon the borrower’s request as long as there have been no breach of contracts. The total amount of the unused portion of these facilities as of March 31, 2021 and March 31, 2022 was as follows:

	(in millions of yen)
	March 31, 2021		March 31, 2022
Unused overdraft facilities and commitment lines of credit	¥	91,174,733	¥	91,546,435

The total amount of the unused portion does not necessarily represent actual future cash requirements because many of these contracts are expected to expire without being drawn upon. In addition, most of these contracts include clauses that allow MUFG’s consolidated subsidiaries to decline a borrower’s request for disbursement or decrease contracted limits for cause, such as changes in financial market condition or deterioration in a borrower’s creditworthiness. MUFG’s consolidated subsidiaries may request a borrower to pledge real property and/or securities as collateral upon signing of a contract and will perform periodic monitoring on a borrower’s business condition in accordance with internal procedures, which may lead to renegotiation of the terms and conditions of the contracts and/or initiation of a request for additional collateral and/or guarantees.

VII. The amount of assets that belonged to the declaration of trust for which domestic trust banking subsidiaries were the settlor and the trustee was as follows:

	(in millions of yen)
	March 31, 2021		March 31, 2022
Loans and bills discounted	¥	490,744	¥	462,268

VIII. In accordance with the “Law concerning Revaluation of Land” (the “Land Revaluation Law”) (No. 34, March 31, 1998), land used for business operations of domestic consolidated banking subsidiaries and domestic consolidated trust banking subsidiaries has been revalued as of the dates indicated below. The total excess from revaluation, net of income taxes corresponding to the excess that were recognized as “Deferred tax liabilities for land revaluation,” is stated as “Land revaluation excess” in net assets. Land revaluation excess includes MUFG’s share of affiliated companies’ Land revaluation excess.

Dates of revaluation:

Domestic consolidated banking subsidiaries: March 31, 1998.

Domestic consolidated trust banking subsidiaries: March 31, 1998, December 31, 2001 and March 31, 2002.

–33–

The method of revaluation as set forth in Article 3, Paragraph 3 of the Land Revaluation Law:

Fair values are determined based on (1) “published land price under the Land Price Publication Law” stipulated in Article 2-1 of the “Enforcement Ordinance of the Law concerning Revaluation of Land” ( “Ordinance” ) (No. 119, March 31, 1998), (2) “standard land price determined on measurement spots under the Enforcement Ordinance of the National Land Planning Law” stipulated in Article 2-2 of the Ordinance, (3) “land price determined by the method established and published by the Director General of the National Tax Agency in order to calculate land value that is used for determining taxable amounts subject to landholding tax articulated in Article 16 of the Landholding Tax Law” stipulated in Article 2-4 of the Ordinance with price adjustments for shape and time and (4) appraisal by certified real estate appraisers stipulated in Article 2-5 of the Ordinance with price adjustments for time.

In addition, some of MUFG’s affiliates that were accounted for under the equity method conducted a revaluation for land used for business operations on March 31, 2002.

IX. Accumulated depreciation on tangible fixed assets

	(in millions of yen)
	March 31, 2021		March 31, 2022
Accumulated depreciation on tangible fixed assets	¥	1,156,029	¥	1,171,014

X. Deferred gains on tangible fixed assets deducted for tax purposes

	(in millions of yen)
	March 31, 2021		March 31, 2022
Deferred gains on tangible fixed assets	¥	72,906	¥	70,440
Deferred gains on tangible fixed assets for the fiscal year	¥	—	¥	—

XI. Subordinated borrowings with special contractual provisions which rank below other debts with regard to the fulfillment of obligations included in “Borrowed money”

	(in millions of yen)
	March 31, 2021		March 31, 2022
Subordinated borrowings	¥	259,500	¥	259,500

XII. Subordinated bonds included in “Bonds payable”

	(in millions of yen)
	March 31, 2021		March 31, 2022
Subordinated bonds	¥	4,291,810	¥	3,726,693

XIII. The principal amount of money trusts entrusted to domestic trust banking subsidiaries for which repayment of the principal to the customers was guaranteed

	(in millions of yen)
	March 31, 2021		March 31, 2022
Principal-guaranteed money trusts	¥	7,827,463	¥	7,064,123

XIV. Guarantee obligations for private placement bonds (provided in accordance with the Article 2-3 of the Financial Instruments and Exchange Law) among the bonds and other securities included in “Securities”

	(in millions of yen)
	March 31, 2021		March 31, 2022
Guarantee obligations for private placement bonds	¥	268,057	¥	259,497

XV. Contingent liabilities

(Litigation)

In the ordinary course of business, MUFG is subject to various litigation and regulatory matters. In accordance with applicable accounting guidance, MUFG establishes a Reserve for Contingent Losses arising from litigation and regulatory matters when they are determined to be probable in their occurrences and the probable loss amount can be reasonably estimated. Based upon current knowledge and consultation with counsel, management believes the eventual outcome of such litigation and regulatory matters, where losses are probable and the probable loss amounts can be reasonably estimated, would not have a material adverse effect on MUFG’s financial position, results of operations or cash flows.

Management also believes the amount of loss that is reasonably possible, but not probable, from various litigation and regulatory matters is not material to MUFG’s financial position, results of operations or cash flows.

–34–

3. Consolidated Statements of Income

I. “Other ordinary income” for the periods indicated included the following:

	(in millions of yen)
	For the fiscal year ended March 31,
	2021		2022
Equity in earnings of the equity method investees	¥	321,761	¥	441,595
Gains on sales of equity securities		189,957		378,040

II. “General and administrative expenses” for the periods indicated included the following:

	(in millions of yen)
	For the fiscal year ended March 31,
	2021		2022
Personnel expenses	¥	1,272,995	¥	1,273,973
Depreciation and amortization		338,617		345,199

III. “Other ordinary expenses” for the periods indicated included the following:

	(in millions of yen)
	For the fiscal year ended March 31,
	2021		2022
Write-offs of loans	¥	188,852	¥	157,730
Provision for reserve for contingent losses		16,006		98,862

IV. In line with the reorganization of the business groups of MUFG, in the fiscal year ended March 31, 2019, the Bank reorganized its business units, which constitute its managerial accounting segments, on a consolidated basis. Thereafter, the Bank continued to make modifications to its managerial accounting, focusing on the allocation of operating expenses, with an aim to enhance profit and loss management for each such business unit. In order to improve efficiency and effectiveness in resource management for investments in systems and other fixed assets, which are expected to increase further in importance, the Bank has adopted for each such business unit a decision-making process for budget limit management and investments. In March 2022, the Bank allocated business infrastructure assets to each of its business units in order to establish a framework that facilitates each business unit to manage such assets more autonomously.

In connection with these measures, the Bank modified its application of accounting for impairment of fixed assets. Specifically, in addition to conducting impairment test on a business location basis and on a bank-wide basis as previously done, the Bank detailed certain corporate assets, allocated some of such corporate assets to business units and conducted impairment test on a business unit basis. The allocation of such assets to business units was determined based on the utilization ratio for each such asset and other allocation criteria.

Primarily as a result of the foregoing, impairment losses were recorded on assets (mainly software and the headquarters building) of the Digital Service Business Unit, the Retail & Commercial Banking Business Unit and the Global Commercial Banking Business Unit of the Bank as the carrying amount of such assets was no longer deemed fully recoverable.

Such impairment losses were ¥127,023 million (including ¥31,500 million on buildings and ¥93,242 million on software) and were included in the total amount of impairment losses reported in the consolidated statement of income.

The recoverable value of such assets of each business unit was calculated based on their net selling value, which represented the market value of such assets (calculated based on the real estate appraisal standards and other methods) net of estimated disposal costs.

–35–

4. Comprehensive Income

The components of other comprehensive income for the years ended March 31, 2021 and 2022 were as follows:

	(in millions of yen)
	2021			2022
Unrealized gains (losses) on available-for-sale securities:
Gains (losses) arising during the year	¥	932,445		¥	(1,103,734	)
Reclassification adjustments to profits (losses)		(238,436	)		(225,204	)
Amount before income tax effect		694,008			(1,328,939	)
Income tax effect		(207,982	)		403,616
Total		486,026			(925,323	)
Deferred gains (losses) on derivatives under hedge accounting:
Gains (losses) arising during the year		(126,937	)		(245,576	)
Reclassification adjustments to profits (losses)		42,332			(67,247	)
Amount before income tax effect		(84,605	)		(312,824	)
Income tax effect		27,726			94,917
Total		(56,879	)		(217,906	)
Land revaluation surplus:
Gains (losses) arising during the year		—			—
Reclassification adjustments to profits (losses)		—			—
Amount before income tax effect		—			—
Income tax effect		—			1
Total		—			1
Foreign currency translation adjustments:
Gains (losses) arising during the year		(148,241	)		516,825
Reclassification adjustments to profits (losses)		(166	)		634
Amount before income tax effect		(148,408	)		517,460
Income tax effect		356			(1,070	)
Total		(148,051	)		516,390
Defined retirement benefit plans:
Gains (losses) arising during the year		434,529			68,655
Reclassification adjustments to profits (losses)		24,157			(26,350	)
Amount before income tax effect		458,687			42,305
Income tax effect		(139,628	)		(10,023	)
Total		319,058			32,281
Share of other comprehensive income in affiliates accounted for using the equity method:
Gains (losses) arising during the year		(87,131	)		202,485
Reclassification adjustments to profits (losses)		(45,333	)		(17,065	)
Total		(132,465	)		185,420
Total other comprehensive income	¥	467,688		¥	(409,136	)

–36–

5. Consolidated Statements of Changes in Net Assets

For the fiscal year ended March 31, 2021

I. Information on the class and number of issued shares and treasury stock

	(Thousand shares)
	Number of shares as of April 1, 2020		Number of shares increased		Number of shares decreased		Number of shares as of March 31, 2021		Note
Issued shares:
Common stock		13,581,995		—		—		13,581,995
Total		13,581,995		—		—		13,581,995
Treasury stock:
Common stock		741,363		28		4,199		737,192		(Note 1) (Note 2)
Total		741,363		28		4,199		737,192

(Note 1)

The increase in the number of shares of common stock held in treasury by 28 thousand shares was due to the repurchases of shares in response to requests made by shareholders holding shares constituting less than one whole unit. The decrease in the number of shares of common stock held in treasury by 4,199 thousand shares was mainly due to the sale of shares for a performance-based director and officer stock compensation plan using a Board Incentive Plan trust (“BIP trust”), the sale of shares in response to requests made by shareholders holding shares constituting less than one whole unit, the sale of shares by equity method affiliates and a decrease in the number of shares held by equity method affiliates.

(Note 2)

The number of shares of common stock as of April 1, 2020 and March 31, 2021 includes 31,064 thousand shares and 27,002 thousand shares held by the BIP trust, respectively. For the fiscal year ended March 31, 2021, the number of shares held by the BIP trust decreased by 4,062 thousand shares.

II. Information on share subscription rights

None.

III. Information on Cash Dividends

(1) Cash dividends paid in the fiscal year ended March 31, 2021

Date of approval	Type of stock	Total Dividends (in millions of yen)		Dividend per share (in yen)		Dividend record date	Effective date
Annual General Meeting of Shareholders on June 29, 2020	Common stock		160,918		12.5	March 31, 2020	June 30, 2020
Meeting of Board of Directors on November 13, 2020	Common stock		160,918		12.5	September 30, 2020	December 7, 2020

(Note) The total dividend amount as resolved by the Annual General Meeting of Shareholders on June 29, 2020 includes ¥388 million of dividends on the treasury shares held by the BIP trust, and the total dividend amount as resolved by the Meeting of the Board of Directors on November 13, 2020 includes ¥337 million of dividends on the treasury shares held by the BIP trust.

(2) Dividends the record date for which fell within the fiscal year and the effective date of which was after the fiscal year ended March 31, 2021

Date of approval	Type of stock	Total Dividends (in millions of yen)		Source of dividends	Dividend per share (in yen)		Dividend record date	Effective date
Annual General Meeting of Shareholders on June 29, 2021	Common stock		160,918	Retained earnings		12.5	March 31, 2021	June 30, 2021

(Note) The total dividend amount includes ¥337 million of dividends on the treasury shares held by the BIP trust.

–37–

For the fiscal year ended March 31, 2022

I. Information on the class and number of issued shares and treasury stock

	(Thousand shares)
	Number of shares as of April 1, 2021		Number of shares increased		Number of shares decreased		Number of shares as of March 31, 2022		Note
Issued shares:
Common stock		13,581,995		—		300,000		13,281,995	(Note 1)
Total		13,581,995		—		300,000		13,281,995
Treasury stock:
Common stock		737,192		238,832		308,729		667,296	(Note 2) (Note 3)
Total		737,192		238,832		308,729		667,296

(Note 1)	The decrease in the number of shares of common stock by 300,000 thousand shares was due to the cancellation of shares.
(Note 2)	The increase in the number of shares of common stock held in treasury by 238,832 thousand shares was due to the acquisitions of shares pursuant to provisions of the Articles of Incorporation, the acquisition of shares for the BIP trust, the repurchases of shares in response to requests made by shareholders holding shares constituting less than one whole unit and an increase in the number of shares held by equity method affiliates. The decrease in the number of shares of common stock held in treasury by 308,729 thousand shares was mainly due to the cancellation of shares, the sale of shares for the BIP trust, the sales of shares in response to requests made by shareholders holding shares constituting less than one whole unit, the sales of shares by equity method affiliates and a decrease in the number of shares held by equity method affiliates.
(Note 3)	The number of shares of common stock held in treasury as of April 1, 2021 and March 31, 2022 includes 27,002 thousand shares and 31,660 thousand shares held by the BIP trust, respectively. For the fiscal year ended March 31, 2022, the number of shares held by the BIP trust increased by 13,381 thousand shares and decreased by 8,723 thousand shares.

II. Information on share subscription rights

None.

III. Information on Cash Dividends

(1) Cash dividends paid in the fiscal year ended March 31, 2022

Date of approval	Type of stock	Total Dividends (in millions of yen)		Dividend per share (in yen)		Dividend record date	Effective date
Annual General Meeting of Shareholders on June 29, 2021	Common stock		160,918		12.5	March 31, 2021	June 30, 2021
Meeting of Board of Directors on November 15, 2021	Common stock		173,791		13.5	September 30, 2021	December 6, 2021

(Note) The total dividend amount as resolved by the Annual General Meeting of Shareholders on June 29, 2021 includes ¥377 million of dividends on the treasury shares held by the BIP trust, and the total dividend amount as resolved by the Meeting of the Board of Directors on November 15, 2021 includes ¥427 million of dividends on the treasury shares held by the BIP trust.

(2) Dividends the record date for which fell within the fiscal year and the effective date of which was after the fiscal year ended March 31, 2022

The following matters relating to dividends are submitted to shareholder vote at the Annual General Meeting of Shareholders scheduled to be held on June 29, 2022

Date of approval (proposed)	Type of stock	Total Dividends (in millions of yen)		Source of dividends		Dividend per share (in yen)		Dividend record date	Effective date
Annual General Meeting of Shareholders on June 29, 2022 (scheduled)	Common stock		183,396		Retained earnings		14.5	March 31, 2022	June 30, 2022

(Note) The total dividend amount includes ¥459 million of dividends on the treasury shares held by the BIP trust.

–38–

6. Consolidated Statements of Cash Flows

I. “Cash and cash equivalents” compared to items presented on the consolidated balance sheet

The amount of “Cash and cash equivalents” is equal to the amount of “Cash and due from banks” on the consolidated balance sheet.

II. Major components of assets and liabilities transferred in a transaction where cash and cash equivalents were received as consideration

For the fiscal year ended March 31, 2022

MUAH, which is a consolidated subsidiary of MUFG, completed the sale of a portion of its business to a major U.S. regional bank in the fiscal year ended March 31, 2022. The components of assets and liabilities decreased due to the sale are as follows:

	(in millions of yen)
Assets	¥	761,161
Liabilities		(758,654	)
Goodwill		2,685
Gains on transfer of businesses		29,032
Transfer value		34,225
Cash and cash equivalents included in above assets		758,654
Payments for transfer of businesses	¥	(724,428	)

–39–

7. Leases

Operating leases

(1) Lessee

Future lease payments, including interest expenses, under non-cancelable operating leases as of March 31, 2021 and 2022 were as follows:

	(in millions of yen)
	March 31, 2021		March 31, 2022
Due within one year	¥	47,170	¥	41,168
Due after one year		126,671		112,978
Total	¥	173,841	¥	154,147

(Note) The above table does not include lease payments that are booked as “Right-of-use asset” at overseas subsidiaries.

(2) Lessor

Future lease receivables, including interest receivables, under non-cancelable operating leases as of March 31, 2021 and 2022 were as follows:

	(in millions of yen)
	March 31, 2021		March 31, 2022
Due within one year	¥	6,936	¥	5,486
Due after one year		25,972		29,042
Total	¥	32,908	¥	34,529

–40–

8. Financial Instruments

I. Disclosure on financial instruments

(1) Policy for financial instruments

MUFG provides comprehensive financial services such as deposit-taking and lending services, securities investment and other securities services and foreign exchange services.

In order to prevent these businesses from being negatively affected by fluctuations in interest and foreign exchange rates and other market conditions, MUFG conducts asset and liability management (“ALM”) by adjusting market exposure and the balance between short-term and long-term assets and liabilities. To do so, among other things, MUFG raises capital from the market and hedges risks through derivative transactions.

(2) Nature and extent of risks arising from financial instruments

MUFG holds various types of financial instruments such as loans, securities, and derivatives and is thus exposed to credit and market risks.

Credit risk is the risk of loss on receivables such as loans due to nonperformance of contractual obligations caused by factors such as deterioration in the financial condition of a borrower.

Market risk mainly arises from changes in domestic and overseas interest rates, foreign exchange rates, and fluctuations in market prices of stocks and bonds. For example, an increase in domestic and overseas interest rates would reduce the value of MUFG’s bond portfolio consisting of government and other bonds, and a rise in yen would reduce the value of foreign-currency-denominated securities and other assets when converted into yen. MUFG also invests in marketable equity securities, and a fall in the market price would decrease the fair value of these securities. As part of MUFG’s trading and ALM activities, MUFG holds derivative products such as interest rate swaps. A significant change in foreign exchange or interest rates may cause a significant fluctuation in the fair value of these derivative products. In conducting transactions in derivative products for purposes of hedging risks, MUFG hedges against interest rate risks associated with instruments including fixed rate deposits, loans and bonds, floating rate deposits, loans and bonds, and forecasted transactions involving fixed rate deposits and loans through designated hedging methods including interest rate swaps. MUFG hedges against exchange rate fluctuation risks associated with instruments such as foreign currency denominated monetary claims and liabilities through hedging methods including currency swap transactions and forward exchange contracts. In lieu of effectiveness determination, MUFG designs hedging activities so that the material terms of the hedging instruments are almost identical to those of the hedged items. In limited circumstances, the effectiveness of hedging activities is assessed by verification of the correlation between factors that cause fluctuations in interest rates.

(3) Risk management relating to financial instruments

(A) Credit risk management

MUFG regularly monitors and assesses the credit portfolios of MUFG’s group companies and uses credit rating and asset evaluation and assessment systems to ensure timely and proper evaluation of credit risk.

Within the basic framework of MUFG’s credit risk control system based on MUFG’s credit risk control rules, each group company has established a consolidated and global credit risk control system while MUFG monitors group-wide credit risk. MUFG provides training and advice when necessary in addition to monitoring credit risk management conducted by MUFG’s group companies.

In screening individual transactions and managing credit risk, each major group company has in place a check-and-balance system in which the credit administration section and the business promotion section are kept separate.

MUFG holds regular management committee meetings to ensure full reporting and discussion on important credit risk management and administration matters.

In addition to providing check-and-balance between different functions and conducting management level deliberations, the audit department also undertakes to validate credit operations to ensure appropriate credit administration.

–41–

(B) Market risk management

(a) Risk management system

MUFG has adopted an integrated system to manage market risks associated with market activities for trading purposes (trading activities) and non-trading market activities (banking activities). MUFG monitors group-wide market risk while each of the major group companies has established a market risk management system on a consolidated and global basis.

At each of the major group companies, checks and balances are maintained through a system in which the back office (the operating and administrative section) and the middle office (the risk control section) operate independently from the front office (the market department). As part of risk control by management, the Board of Directors, etc. establish the framework for the market risk management system and define responsibilities relating to market operations. MUFG allocates economic capital corresponding to the levels of market risk within the scope of MUFG’s capital base, and establishes quantitative limits on market risk based on the allocated economic capital as well as limits on losses to contain MUFG’s exposure to risks and losses within a certain range.

(b) Market risk management

The status of the group-wide exposure to market risk and compliance with quantitative limits on market risk and losses at each major group company is reported daily to the Chief Risk Officer of MUFG, while the status of each major group company’s exposure to market risk and compliance with quantitative limits on market risk and losses is reported daily to the group company’s risk management officer. MUFG and each major group company conduct comprehensive analyses on risk profiles, including stress testing, and the results are regularly reported to their respective ALM Committees and Corporate Risk Management Committees.

At the business unit level, MUFG’s major group companies manage risks by hedging against interest rate and exchange rate fluctuation risks associated with marketable assets and liabilities with various hedging transactions using marketable securities and derivatives as appropriate. With respect to trading account transactions and their administration, MUFG documents the processes and periodically verifies through internal audits that the valuation methods and management of such transactions are appropriate.

(c) Market risk measurement model

Since the daily variation in market risk is significantly greater than that in other types of risks, MUFG measures and manages market risk using the Value at Risk (“VaR”), Value at Idiosyncratic Risk (“VaI”) and other methods.

Market risk for both trading and banking activities (excluding strategic equity securities) is measured using a uniform market risk measurement model. The principal method used for the model is the historical simulation method (Trading activities: holding period — 1 business day; confidence interval — 95%; and observation period — 250 business days) (Banking activities: holding period — 10 business days; confidence interval — 99%; and observation period — 701 business days).

* Market risk can be classified into “general market risk” defined as the risk of suffering loss due to the volatility in the general market trend, and “specific market risk” defined as the risk of suffering loss due to the volatility of specific financial instruments such as debt securities or stocks, independent of the general market trend. The amount of general market risk calculated by a market risk measurement method is called VaR, while the amount of specific market risk is called VaI.

* The historical simulation method calculates the VaR and VaI amount by estimating the profit and loss on the current portfolio by applying actual fluctuations in market rates and prices that occurred over a fixed period in the past. The noted features of the historical simulation method include the ability to directly reflect the characteristics of the market fluctuations and the ability to rigorously measure the risk arising from options. However, they may not be able to ascertain risks when market volatility reaches abnormal levels because VaR and VaI measure market risks with a fixed event probability calculated statistically based on past market changes.

–42–

(d) Quantitative information in respect of market risk

(i) Amount of market risk associated with trading activities

The amount of consolidated market risk associated with trading activities across the Group was ¥1.3 billion and ¥1.1 billion as of March 31, 2021 and 2022, respectively.

(ii) Amount of market risk associated with banking activities

The amount of consolidated market risk associated with banking activities (excluding strategic equity securities) across the Group was ¥614.0 billion and ¥582.9 billion as of March 31, 2021 and 2022, respectively. As appropriate identification of interest rate risk is vital to banking activities (excluding strategic equity securities), such risk is managed based on the following assumptions for appropriate measurement of core deposits and prepayments on loans and deposits.

For a certain portion of the deposits without contractual maturities (so-called core deposits), interest rate risk is recognized by allocating maturities of various terms (no longer than 10 years) according to the features of deposits, taking into account the results of a statistical analysis using data on changes in the balance by product, expected deposit interest rates and other business judgments. The amount of core deposits and the method of allocating maturities are reviewed on a regular basis. Meanwhile, deposits and loans with contractual maturities involve risks associated with premature repayment or cancellation. These risks are reflected in interest rate risks by estimating the ratio of cancellations through a statistical analysis based on factors including interest rate fluctuations and actual repayments and cancellations.

(iii) Risk of strategic equity portfolio

With respect to the equity securities strategically held by MUFG (publicly traded), MUFG estimates that the market value of such securities would have fluctuated by ¥2.7 billion and ¥2.4 billion as of March 31, 2021 and 2022, respectively, had TOPIX moved one point in either direction.

(e) Backtesting

In order to test the accuracy of the market risk measurement model, MUFG conducts backtesting to compare the VaR with one-day holding period computed by the model with the daily hypothetical profit or loss.

As part of the backtesting, MUFG also endeavors to ensure the accuracy of its market risk measurement model by verifying the characteristics of such model from various perspectives, including testing of the appropriateness of the assumptions used in such model.

The results of backtesting on the trading business (based on Basel standards) as of the end of the fiscal years ended March 31, 2021 and 2022 (250 business days) indicate that the hypothetical loss exceeded the VaR 0 and 0 times, respectively.

Given that the hypothetical loss exceeded the VaR four times or less in a one-year period, MUFG believes that its VaR measurement model used by its group companies provides sufficiently accurate measurements of market risk.

(f) Stress testing

To measure VaR using a market risk measurement model, MUFG applies the historical simulation method, in which the potential loss for a certain period is calculated by applying market fluctuations over a fixed period in the past to its currently held portfolio. For this reason, losses greater than VaR may arise in cases where a market fluctuation observed before the observation period occurs or each risk factor, such as interest rates and exchange rates, shows different moves from historical correlations.

As a means to measure expected losses that cannot be captured by the current risk measurement model, MUFG conducts stress testing using various scenarios.

By conducting stress testing as appropriate using various scenarios in view of future forecasts, each of the group companies makes an effort to apprehend where risks lie and aim to manage its assets more stably and securely.

–43–

(C) Management of liquidity risk associated with funding activities

MUFG’s major group companies strive to secure appropriate liquidity in both yen and foreign currencies by managing the sources of funding and liquidity gap, liquidity-supplying products such as commitment lines, as well as buffer assets that help maintain liquidity level.

Specifically, the Board of Directors, etc. provide the framework for liquidity risk management, operate businesses at various stages according to the urgency of funding needs and manage liquidity risk at each such stage. The department responsible for liquidity risk management is designed to perform checking functions independent of other departments. The department reports to the ALM Committee and the Board of Directors, etc. on, among other things, the results of its evaluation of funding urgency and monitoring of compliance with quantitative limits. The department responsible for funding management performs funding and management activities, and regularly reports the current funding status and forecast as well as the current liquidity risk status to the department responsible for liquidity risk management and other appropriate bodies such as the ALM Committee.

(4) Supplementary explanation regarding the fair value, etc. of financial instruments

Since certain assumptions are applied in measuring the fair value of financial instruments, such fair value may vary if different assumptions are applied.

II. Matters concerning fair value, etc. of financial instruments and breakdown by input level

The amounts on the consolidated balance sheet, the fair value of financial instruments, the difference between them as well as a breakdown of financial instruments by input level are as follows.

The following tables do not include investment trusts and stocks with no market price, etc. for which transitional measures are applied in accordance with Paragraph 26 of ASBJ Guidance No. 31, “Implementation Guidance on Accounting Standard for Fair Value Measurement” (ASBJ, July 4, 2019, “Guidance for Application of Fair Value Measurement”), and investments in partnerships and others for which transitional measures are applied in accordance with Paragraph 27 of the Guidance for Application of Fair Value Measurement. (See Note (*2) to each of the tables in (1) and (Note 3) below.)

The fair values of financial instruments are classified into the following three levels depending on the observability and significance of the input used in the fair value calculation.

Level 1: Fair value determined based on (unadjusted) quoted prices in active markets for identical assets or liabilities

Level 2: Fair value determined based on directly or indirectly observable inputs other than the Level 1 inputs

Level 3: Fair value determined based on significant unobservable inputs

Where multiple inputs are used with a significant impact on the fair value calculation, the fair value of a financial instrument is classified based on the lowest of the priority levels to which any of those inputs belongs.

–44–

(1) Financial assets and liabilities at fair value on the consolidated balance sheets

As of March 31, 2021

	(in millions of yen)
Category	Amount on consolidated balance sheet
	Level1			Level2			Level3			Total
Monetary claims bought (*1)		—			1,245,990			279,561			1,525,551
Trading assets (*2)		7,350,626			4,381,559			60,127			11,792,313
Money held in trust (Trading purpose / Other)		—			1,189,564			3,015			1,192,580
Securities (Available-for-sale securities)		47,871,133			19,240,770			430,361			67,542,265
Domestic equity securities		5,188,975			27,410			—			5,216,386
Government bonds		32,073,409			271,300			—			32,344,709
Municipal bonds		—			3,731,515			—			3,731,515
Short-term corporate bonds		—			564,097			—			564,097
Corporate bonds		—			3,911,889			57			3,911,947
Foreign equity securities		85,064			903			56			86,025
Foreign bonds		10,518,815			10,601,532			116,351			21,236,699
Other securities (*2)		4,868			132,119			313,895			450,883
Total assets		55,221,759			26,057,885			773,066			82,052,711
Trading liabilities (*2)		5,447,473			82,488			—			5,529,962
Borrowed money (FVO) (*3)		—			276,788			—			276,788
Bonds payable (FVO) (*3)		—			194,560			24,844			219,405
Total liabilities		5,447,473			553,837			24,844			6,026,155
Derivatives (*4) (*5) (*6)		(19,470	)		381,463			86,167			448,160
Interest rate-related derivatives		(796	)		490,815			50,231			540,249
Currency-related derivatives		(48	)		(108,078	)		8,116			(100,011	)
Equity-related derivatives		(20,770	)		18,698			12,960			10,889
Bond-related derivatives		2,145			(16,812	)		14,312			(355	)
Commodity-related derivatives		—			(0	)		(62	)		(62	)
Credit-related derivatives		—			(3,158	)		(62	)		(3,220	)
Other derivatives		—			—			672			672

(*1) Monetary claims bought consists of securitized products, etc. of ¥1,525,551 million accounted for in the same manner as available-for-sale securities.

(*2) The amount of investment trusts to which transitional measures are applied in accordance with Paragraph 26 of the Guidance for Application of Fair Value Measurement is not included in the table above. The amount of such investment trusts on the consolidated balance sheet is financial assets of ¥4,560,086 million and financial liabilities of ¥145,293 million.

(*3) Some overseas subsidiaries apply the fair value option.

(*4) Derivative transactions in trading assets and liabilities as well as other assets and liabilities are shown together. Assets or liabilities arising from derivative transactions are presented on a net basis, and net liabilities in the aggregate are presented in minus.

(*5) Derivative transactions to which hedge accounting is applied are reported on the consolidated balance sheet at ¥(321,373) million.

(*6) Transactions to which hedge accounting is applied include interest rate swap transactions and interest rate futures transactions designated as hedging instruments for the purpose of fixing cash flows from hedged loans and other assets. Deferred hedge accounting is applied to these transactions. Of these hedge relationships, all hedge relationships to which “Practical Solution on the Treatment of Hedge Accounting for Financial Instruments that Reference LIBOR” (ASBJ PITF No.40, September 29, 2020) applies are accounted for under the standard.

–45–

As of March 31, 2022

	(in millions of yen)
Category	Amount on consolidated balance sheet
	Level1			Level2			Level3			Total
Monetary claims bought (*1)		—			817,335			238,878			1,056,213
Trading assets (*2)		6,699,555			3,967,410			57,124			10,724,090
Money held in trust (Trading purpose / Other)		—			1,240,956			8,957			1,249,914
Securities (Available-for-sale securities)		44,649,269			22,692,890			452,414			67,794,574
Domestic equity securities		4,595,207			18,497			—			4,613,704
Government bonds		30,989,318			422,535			—			31,411,854
Municipal bonds		—			4,146,145			—			4,146,145
Short-term corporate bonds		—			1,010,637			—			1,010,637
Corporate bonds		—			3,862,485			2,519			3,865,004
Foreign equity securities		184,157			1,906			32,535			218,599
Foreign bonds		8,866,996			13,086,264			77,265			22,030,527
Other securities (*2)		13,589			144,419			340,092			498,101
Total assets		51,348,825			28,718,592			757,374			80,824,793
Trading liabilities (*2)		5,363,556			135,852			—			5,499,408
Borrowed money (FVO) (*3)		—			251,758			—			251,758
Bonds payable (FVO) (*3)		—			250,986			46,674			297,660
Total liabilities		5,363,556			638,597			46,674			6,048,827
Derivatives (*4) (*5) (*6)		(44,651	)		(350,375	)		186,601			(208,425	)
Interest rate-related derivatives		6,608			(273,126	)		110,133			(156,384	)
Currency-related derivatives		(1,455	)		(83,947	)		8,471			(76,931	)
Equity-related derivatives		(59,916	)		(22,712	)		17,423			(65,204	)
Bond-related derivatives		10,112			26,257			50,300			86,671
Commodity-related derivatives		—			—			(45	)		(45	)
Credit-related derivatives		—			3,152			320			3,473
Other derivatives		—			—			(3	)		(3	)

(*1) Monetary claims bought consists of securitized products, etc. of ¥1,056,213 million accounted for in the same manner as available-for-sale securities.

(*2) The amount of investment trusts to which transitional measures are applied in accordance with Paragraph 26 of the Guidance for Application of Fair Value Measurement is not included in the table above. The amount of such investment trusts on the consolidated balance sheet is financial assets of ¥5,844,791 million and financial liabilities of ¥25,720 million.

(*3) Some overseas subsidiaries apply the fair value option.

(*4) Derivative transactions in trading assets and liabilities as well as other assets and liabilities are shown together. Assets or liabilities arising from derivative transactions are presented on a net basis, and net liabilities in the aggregate are presented in minus.

(*5) Derivative transactions to which hedge accounting is applied are reported on the consolidated balance sheet at ¥(481,856) million.

(*6) Transactions to which hedge accounting is applied include interest rate swap transactions designated as hedging instruments for the purpose of fixing cash flows from hedged loans and other assets. Deferred hedge accounting is applied to these transactions. Of these hedge relationships, all hedge relationships to which “Practical Solution on the Treatment of Hedge Accounting for Financial Instruments that Reference LIBOR” (ASBJ PITF No.40, March 17, 2022) applies are accounted for under the standard.

–46–

(2) Financial assets and liabilities which are not stated at fair value on the consolidated balance sheet

Cash and due from banks, Call loans and bills bought, Receivables under resale agreements, Receivables under securities borrowing transactions, Foreign exchanges (assets and liabilities), Call money and bills sold, Payables under repurchase agreements, Payables under securities lending transactions, Commercial papers, Short-term bonds payable, Due to trust accounts and Other liabilities are not included in the following tables since they are predominantly short-term (within one year), and their fair values approximate their carrying amounts.

As of March 31, 2021

	(in millions of yen)
Category	Fair value								Amount on consolidated balance sheet		Difference
	Level 1		Level 2		Level 3		Total
Monetary claims bought (*1)		—		—		4,444,134		4,444,134		4,457,324		(13,189	)
Money held in trust (other / held to maturity)		—		90,303		—		90,303		90,598		(295	)
Securities (held to maturity)		1,123,480		779,560		—		1,903,040		1,857,104		45,935
Government bonds		1,123,480		—		—		1,123,480		1,100,447		23,032
Municipal bonds		—		—		—		—		—		—
Short-term corporate bonds		—		—		—		—		—		—
Corporate bonds		—		—		—		—		—		—
Foreign bonds		—		779,560		—		779,560		756,657		22,902
Other securities		—		—		—		—		—		—
Loans and bills discounted (*2) (*3)		—		264,506		107,108,922		107,373,428		106,233,590		1,139,838
Total assets		1,123,480		1,134,370		111,553,057		113,810,907		112,638,618		1,172,289
Deposits		—		211,551,672		—		211,551,672		211,521,257		30,415
Negotiable certificates of deposit		—		8,101,001		—		8,101,001		8,099,119		1,882
Borrowed money		—		30,775,278		—		30,775,278		30,833,677		(58,399	)
Bonds payable (*3)		—		13,073,206		—		13,073,206		12,689,100		384,106
Total liabilities		—		263,501,159		—		263,501,159		263,143,154		358,004

(*1) Monetary claims bought includes securitized products, etc. of ¥2,044,691 million accounted for in the same manner as securities held to maturity.

(*2) General and specific allowances for credit losses of ¥949,478 million corresponding to loans are deducted. However, with respect to items other than loans, the amount stated on the consolidated balance sheet is shown since the amount of allowance for credit losses corresponding to these items is insignificant.

(*3) With respect to interest rate swaps to which special hedge accounting treatment is applied to offset fluctuations in the market value of the hedged items and forward exchange contracts, etc. to which the allocation method is applied, the fair value of such interest rate swaps and such currency swaps is included in the fair value of the hedged items. Of these hedge relationships, all hedge relationships to which “Practical Solution on the Treatment of Hedge Accounting for Financial Instruments that Reference LIBOR” (ASBJ PITF No.40, September 29, 2020) applies are accounted for under the standard.

–47–

As of March 31, 2022

	(in millions of yen)
Category	Fair value								Amount on consolidated balance sheet		Difference
	Level 1		Level 2		Level 3		Total
Monetary claims bought (*1)		—		—		5,422,565		5,422,565		5,410,608		11,956
Money held in trust (other / held to maturity)		—		81,269		—		81,269		82,578		(1,308	)
Securities (held to maturity)		1,758,197		460,056		—		2,218,253		2,218,035		217
Government bonds		1,758,197		—		—		1,758,197		1,748,029		10,167
Municipal bonds		—		173,960		—		173,960		175,071		(1,111	)
Short-term corporate bonds		—		—		—		—		—		—
Corporate bonds		—		60,173		—		60,173		60,283		(110	)
Foreign bonds		—		225,923		—		225,923		234,652		(8,728	)
Other securities		—		—		—		—		—		—
Loans and bills discounted (*2) (*3)		—		215,178		109,783,170		109,998,348		109,409,289		589,059
Total assets		1,758,197		756,504		115,205,735		117,720,436		117,120,512		599,924
Deposits		—		215,446,232		—		215,446,232		215,427,299		18,933
Negotiable certificates of deposit		—		10,943,271		—		10,943,271		10,938,831		4,439
Borrowed money		—		31,437,438		—		31,437,438		31,511,574		(74,135	)
Bonds payable(*3)		—		12,674,840		—		12,674,840		12,959,686		(284,845	)
Total liabilities		—		270,501,783		—		270,501,783		270,837,392		(335,609	)

(*1) Monetary claims bought includes securitized products, etc. of ¥2,377,072 million accounted for in the same manner as securities held to maturity.

(*2) General and specific allowances for credit losses of ¥1,016,935 million corresponding to loans are deducted. However, with respect to items other than loans, the amount stated on the consolidated balance sheet is shown since the amount of allowance for credit losses corresponding to these items is insignificant.

(*3) With respect to interest rate swaps to which special hedge accounting treatment is applied to offset fluctuations in the market value of the hedged items and forward exchange contracts, etc. to which the allocation method is applied, the fair value of such interest rate swaps and such currency swaps is included in the fair value of the hedged items. Of these hedge relationships, all hedge relationships to which “Practical Solution on the Treatment of Hedge Accounting for Financial Instruments that Reference LIBOR” (ASBJ PITF No.40, March 17, 2022) applies are accounted for under the standard.

–48–

(Note 1) Description of the valuation techniques and inputs used to measure fair value

Monetary claims bought

The fair value of monetary claims bought are determined using prices obtained from third-party vendors (broker-dealers, etc.) or the prices estimated based on internal models.

With respect to some securitized products backed by general corporate loans, the fair value is measured by considering the estimated fair value amounts determined using projected cash flows through an analysis of the underlying loans, probability of default, prepayment rates, etc. and discounting the projected cash flows using discount rates reflecting the liquidity premium based on historical market data and the prices obtained from independent broker-dealers. These products are classified into Level 3.

For other securitized products, the fair value is determined based on the prices obtained from independent third parties after considering the results of periodic confirmation of the current status of these products, including price comparison with similar products, time series data comparison of the same product, and analysis of consistency with publicly available market indices. These products are classified into Level 2 or Level 3 depending on the inputs used for the prices obtained from independent third parties.

For certain monetary claims bought for which these methods do not apply, the fair value is measured based on either the present value using projected future cash flows through an analysis of prepayment rates, etc., and discounting the project cash flows at the market interest rates as of the valuation date with certain adjustments, or is the carrying amount if their fair value approximates such carrying amount from their qualitative viewpoint. If these monetary claims bought are measured at present value, these monetary claims bought are classified into Level 2 or, if they are short-term and their fair value approximates the carrying amount, then the carrying amount is presented as their fair value, and they are classified into Level 3.

Trading assets and liabilities

Securities such as bonds that are held for trading purposes are classified as Level 1 if prices quoted by stock exchanges are available in an active market, and as Level 2 if the fair value is determined based on either the present value of the expected future cash flows discounted at an interest rate based on the market interest rates as of the date of evaluation with certain adjustments or prices quoted by the financial institutions from which these securities are purchased.

Money held in trust

For securities that are part of trust property in an independently managed monetary trust with the primary purpose to manage securities, the fair value is determined based on the prices quoted by the financial institutions from which these securities are purchased, and these securities are classified into Level 2 depending on the fair value hierarchy of the component assets.

See “Money Held in Trust” for notes on money held in trust by category based on each purpose of holding the money held in trust.

Securities

The fair value of equity securities is determined based on the prices quoted by stock exchanges and equity securities are primarily classified into Level 1 as the quoted prices are available in active markets. The fair value of bonds is determined based on the market price or the price quoted by the financial institutions from which they are purchased or based on the price reasonably calculated. Government bonds are primarily classified into Level 1, other bonds are primarily classified into Level 2, and foreign equity securities with maturity as well as preferred securities included in Other securities are primarily classified into Level 3.

For privately placed guaranteed bonds held by MUFG’s bank subsidiaries, the fair value is determined based on the present value of expected future cash flows, which are adjusted to reflect credit risk, the amounts expected to be collected from collateral and guarantees and guarantee fees, and discounted at an interest rate based on the market interest rates as of the date of evaluation with certain adjustments. These bonds are classified into Level 2 depending on credit risk, etc.

The fair value of investment trusts is determined based on the publicly available price and these investment trusts are not classified into any fair value hierarchy as a result of applying the transitional measures in accordance with Paragraph 26 of the Guidance for Application of Fair Value Measurement.

See “Securities” for notes on securities by category based on each purpose of holding the securities.

–49–

Loans and bills discounted

With respect to loans, for each category of loans based on their types, credit ratings and maturity periods, the fair value is determined based on the present value of expected future cash flows, which are adjusted to reflect default risk and the amount expected to be collected from collateral and guarantees and discounted at an interest rate based on the market interest rates as of the date of evaluation with certain adjustments. These loans are classified into Level 3. For loans with floating interest rates such as certain residential loans provided to individual home owners, the carrying amount is presented as the fair value, as the fair value approximates such carrying amount, unless the creditworthiness of the borrower has changed significantly since the loan origination. These loans are classified as Level 3.

For receivables from bankrupt, virtually bankrupt and likely to become bankrupt borrowers, credit loss is estimated based on factors such as the present value of expected future cash flows or the amount expected to be collected from collateral and guarantees. Since the fair value of these items approximates the net amount of receivables after the deduction of allowance for credit losses on the consolidated balance sheet as of the consolidated balance sheet date, such amount is presented as the fair value. These receivables are classified into Level 3. The fair value of loans qualifying for special hedge accounting treatment of interest rate swaps or the allocation method applicable to forward exchange contracts and other contracts under Generally Accepted Accounting Principles in Japan (“JGAAP”) reflects the fair value of such interest rate swaps or forward exchange contracts and other contracts.

Deposits and Negotiable certificates of deposit

For demand deposits, the amount payable on demand as of the consolidated balance sheet date (i.e., the carrying amount) is considered to be the fair value. For floating rate time deposits, the carrying amount is presented as the fair value, as the fair value approximates such carrying amount because the market interest rates are reflected in such deposits within a short time period. The fair value of most fixed rate time deposits is the present value of expected future cash flows grouped by certain maturity periods discounted at the market interest rates. These are classified into Level 2.

Borrowed money

For floating rate borrowings, the carrying amount is presented as the fair value, as the fair value approximates such carrying amount. This is on the basis that the interest rates on such floating rate borrowings reflect the market interest rates in a short time period and that there has been no significant change in the creditworthiness of MUFG or MUFG’s consolidated subsidiaries after such borrowings were made. For fixed rate borrowings, the fair value is calculated as the present value of expected future cash flows from these borrowings grouped by certain maturity periods, which are discounted at the market interest rates reflecting the premium applicable to MUFG’s or MUFG’s consolidated subsidiaries. These are classified as Level 2. The fair value of borrowed money qualifying for special hedge accounting treatment of interest rate swaps under JGAAP reflects the fair value of such interest rate swaps.

Bonds payable

The fair value of corporate bonds issued by MUFG and MUFG’s consolidated subsidiaries is determined based on their market price. For certain corporate bonds, the fair value is calculated as the present value of expected future cash flows discounted at the market interest rates. For floating rate corporate bonds without market prices, the carrying amount of such bonds is presented as the fair value, as the fair value approximates such carrying amount. This is on the basis that the interest rates on such floating rate corporate bonds reflect the market interest rates in a short time period and that there has been no significant change in the creditworthiness of MUFG’s or MUFG’s consolidated subsidiaries after the issuance. For fixed rate corporate bonds without market prices, the fair value is the present value of expected future cash flows from these borrowings, which are discounted at the market interest rates reflecting the premium applicable to MUFG or MUFG’s consolidated subsidiaries. These are classified as Level 2. The fair value of corporate bonds qualifying for special hedge accounting treatment of interest rate swaps under JGAAP reflects the fair value of such interest rate swaps.

For structured bonds issued by some overseas subsidiaries, the fair value option is applied, and the fair value of structured bonds is calculated based on models. Structured bonds for which observable inputs are used are classified into Level 2. Structured bonds for which significant unobservable inputs are used are classified into Level 3.

Derivative transactions

Derivative transactions are ones involving interest rates (interest futures, interest options, interest swaps and other transactions), ones involving foreign currencies (currency futures, currency options, currency swaps and other transactions), and ones involving bonds (bond futures, bond future options and other transactions). The fair value of exchange-traded derivative transactions is based on the prices posted by exchanges. The fair value of over-the-counter derivative transactions is based on the discounted present value or amount calculated under the option-price calculation model.

The key inputs used in the valuation techniques for over-the-counter derivative transactions include interest rate yield curves, foreign currency exchange rates and volatility. For over-the-counter derivative transactions, adjustments are made for counterparty credit risk adjustments (credit valuation adjustments (CVA)) and adjustments are also made to reflect the impact of uncollateralized funding (funding valuation adjustments (FVA)). The calculation of CVA takes into account the probability of a default event occurring for each counterparty which is primarily derived from an observed or estimated spread on credit default swaps. In addition, the calculation of CVA takes into account the effect of credit risk mitigation such as pledged collateral and the legal right of offset with the counterparty. The calculation of FVA takes into account MUFG’s market funding spread reflecting the credit risk of MUFG and the funding exposure of any uncollateralized component of an over-the-counter derivative instrument entered into with the counterparty.

Exchange-traded derivative transactions valued using quoted prices are classified into Level 1. Over-the-counter derivative transactions are classified into Level 2 if their fair value is not measured based on significant unobservable inputs. Over-the-counter derivative transactions whose fair value is measured based on significant unobservable inputs are classified into Level 3.

–50–

(Note 2) Quantitative information about financial assets and liabilities measured and presented on the consolidated balance sheet at fair value and classified in Level 3

(1) Quantitative information on significant unobservable inputs

As of March 31, 2021

Category	Valuation technique	Signification unobservable inputs	Range	Weighted average (*1)
Monetary claims bought
Securitized products	Internal model (*2)	Correlation between underlying assets	3.0%	3.0%
		Liquidity premium	1.3%~1.5%	1.3%
		Prepayment rate	18.3%	18.3%
		Probability of default	0.0%~83.7%	—
		Recovery rate	57.4%	57.4%
Securities
Foreign bonds	Return on equity method	Probability of default	0.0%~8.0%	0.3%
		Recovery rate	35.0%~90.0%	76.7%
		Market-required return on capital	8.0%~10.0%	9.9%
Other	Discounted cash flow	Liquidity premium	0.9%~3.2%	2.9%
Derivatives
Interest rate-related derivatives	Option model	Correlation between interest rates	30.0%~61.9%	—
		Correlation between interest rate and foreign exchange rate	15.1%~60.0%	—
		Volatility	0.0%~100.0%	—
Currency-related derivatives	Option model	Correlation between interest rates	10.0%~70.0%	—
		Correlation between interest rate and foreign exchange rate	0.0%~60.0%	—
		Correlation between foreign exchange rates	50.0%~70.5%	—
		Volatility	9.4%~22.1%	—
Equity-related derivatives	Option model	Volatility	21.5%~39.9%	—
		Correlation between interest rate and equity	38.9%	—
		Correlation between foreign exchange rate and equity	(58.3)%~54.9%	—
		Correlation between equities	9.0%~95.0%	—
	Discounted cash flow	Term of litigation	0.1~14.0 months	—

(*1) The weighted average is calculated by weighing each input by the relative fair value of the respective financial assets.

(*2) For further details of Internal model, refer to “Monetary claims bought” in “(Note 1) Description of the valuation techniques and inputs used to measure fair value” under “II. Matters concerning fair value, etc. of financial instruments and breakdown by input level” above.

–51–

As of March 31, 2022

Category	Valuation technique	Signification unobservable inputs	Range	Weighted average (*1)
Monetary claims bought
Securitized products	Internal model (*2)	Correlation between underlying assets	3.0%	3.0%
		Liquidity premium	0.6%~0.9%	0.9%
		Prepayment rate	29.0%	29.0%
		Probability of default	0.0%~85.3%	—
		Recovery rate	69.9%	69.9%
Securities
Foreign equity securities	Discounted cash flow	Liquidity premium	0.8%~1.7%	1.1%
Foreign bonds	Return on equity method	Probability of default	0.0%~8.0%	0.4%
		Recovery rate	35.0%~90.0%	78.5%
		Market-required return on capital	8.0%~10.0%	9.9%
Other	Discounted cash flow	Liquidity premium	1.1%~3.2%	2.9%
Derivatives
Interest rate-related derivatives	Option model	Correlation between interest rates	30.0%~62.9%	—
		Correlation between interest rate and foreign exchange rate	15.3%~60.0%	—
		Volatility	0.0%~100.0%	—
Currency-related derivatives	Option model	Correlation between interest rates	10.0%~70.0%	—
		Correlation between interest rate and foreign exchange rate	0.0%~60.0%	—
		Correlation between foreign exchange rates	50.0%~70.5%	—
		Volatility	8.9%~21.6%	—
Equity-related derivatives	Option model	Volatility	23.9%~37.9%	—
		Correlation between foreign exchange rate and equity	(58.3)%~54.9%	—
		Correlation between equities	2.2%~95.0%	—
	Discounted cash flow	Term of litigation	21.0 months	—

(*1) The weighted average is calculated by weighing each input by the relative fair value of the respective financial assets.

(*2) For further details of Internal model, refer to “Monetary claims bought” in “(Note 1) Description of the valuation techniques and inputs used to measure fair value” under “2. Matters concerning fair value, etc. of financial instruments and breakdown by input level” above.

–52–

(2) Table showing reconciliation between the opening balance and the closing balance during the reporting period, and unrealized gains (losses) recognized in net income (losses)

For the fiscal year ended March 31, 2021

	(in millions of yen)
Category	March 31, 2020			Included in earnings (*1)			Included in other comprehensive income (*2)			Purchases, Issues, Sales, Settlements			Transfers into Level 3 (*3)			Transfers out of Level 3 (*4)			March 31, 2021			Change in unrealized gains (losses) included in earnings for assets and liabilities still held at March 31, 2021 (*1)
Monetary claims bought		389,185			1,771			3,469			(114,864	)		—			—			279,561			6,366
Trading assets		18,658			7,234			0			34,455			2			(222	)		60,127			6,578
Monetary held in trust (Trading purpose / Other)		1,129			(7	)		(23	)		1,917			—			—			3,015			(7	)
Securities (Available-for-sale securities)		335,718			3,491			(5,757	)		105,954			70			(9,114	)		430,361			3,489
Corporate bonds		9,151			(2	)		(0	)		(46	)		70			(9,114	)		57			(3	)
Foreign equity securities		212			0			5			(162	)		—			—			56			0
Foreign bonds		123,961			(3	)		(5,582	)		(2,024	)		—			—			116,351			(3	)
Other securities		202,393			3,496			(180	)		108,186			—			—			313,895			3,496
Total assets		744,690			12,489			(2,311	)		27,462			72			(9,337	)		773,066			16,427
Bonds payable (FVO)		31,222			3,382			(606	)		(1,699	)		5,459			(12,914	)		24,844			(1,531	)
Total liabilities		31,222			3,382			(606	)		(1,699	)		5,459			(12,914	)		24,844			(1,531	)
Derivatives (*5)		34,704			70,288			(177	)		4,523			(19,960	)		(3,210	)		86,167			68,426
Interest rate-related derivatives		13,495			54,853			(65	)		15,590			(31,188	)		(2,454	)		50,231			57,158
Currency-related derivatives		5,887			4,175			(88	)		(312	)		(1,479	)		(66	)		8,116			3,870
Equity-related derivatives		10,106			12,029			(24	)		(21,168	)		12,707			(690	)		12,960			7,291
Bond-related derivatives		3,196			833			—			10,282			—			—			14,312			781
Commodity-related derivatives		(65	)		1			1			(0	)		—			—			(62	)		1
Credit-related derivatives		1,379			(1,630	)		(0	)		188			—			—			(62	)		(707	)
Other derivatives		704			25			—			(57	)		—			—			672			31

(*1) Mainly included in Trading income and Other operating income in the consolidated statements of income.

(*2) Included in Net unrealized gains (losses) on available-for-sale securities and Foreign currency translation adjustments in Other comprehensive income in the consolidated statements of comprehensive income.

(*3) Transfers into Level 3 from Level 2 resulted from the lack of observable market data due to a decrease in market activity for derivatives. These transfers were made at the beginning of the fiscal year.

(*4) Transfers into Level 2 from Level 3 for corporate bonds were due principally to changes in the impact of unobservable creditworthiness inputs of private placement bonds guaranteed by MUFG Bank. Transfers into Level 2 from Level 3 for bonds payable (FVO) were due principally to changes in the impact of significant unobservable inputs. These transfers were made at the beginning of the fiscal year.

(*5) Derivative transactions in trading assets and liabilities as well as other assets and liabilities are shown together. Assets or liabilities and gains or losses arising from derivative transactions are presented on a net basis, and net liabilities and losses in the aggregate are presented in minus.

–53–

For the fiscal year ended March 31, 2022

	(in millions of yen)
Category	March 31, 2021			Included in earnings (*1)			Included in other comprehensive income (*2)			Purchases, Issues, Sales, Settlements			Transfers into Level 3 (*3)		Transfers out of Level 3 (*4)			March 31, 2022			Change in unrealized gains (losses) included in earnings for assets and liabilities still held at March 31, 2022 (*1)
Monetary claims bought		279,561			20,308			2,008			(62,999	)		—		—			238,878			21,402
Trading assets		60,127			4,610			—			(8,068	)		666		(212	)		57,124			4,106
Monetary held in trust (Trading purpose / Other)		3,015			91			(99	)		5,950			—		—			8,957			91
Securities (Available-for-sale securities)		430,361			29,522			(2,938	)		(7,385	)		2,854		—			452,414			29,518
Corporate bonds		57			3			(281	)		(114	)		2,854		—			2,519			—
Foreign equity securities		56			216			137			32,124			—		—			32,535			216
Foreign bonds		116,351			11			11,314			(50,411	)		—		—			77,265			11
Other securities		313,895			29,290			(14,108	)		11,015			—		—			340,092			29,290
Total assets		773,066			54,532			(1,029	)		(72,503	)		3,520		(212	)		757,374			55,117
Bonds payable (FVO)		24,844			(10,581	)		2,568			31,394			5,515		(7,067	)		46,674			11,437
Total liabilities		24,844			(10,581	)		2,568			31,394			5,515		(7,067	)		46,674			11,437
Derivatives (*5)		86,167			47,715			1,285			24,578			41,962		(15,107	)		186,601			87,847
Interest rate-related derivatives		50,231			8,677			754			12,579			40,494		(2,604	)		110,133			15,427
Currency-related derivatives		8,116			2,545			138			1,953			1,467		(5,749	)		8,471			(1,485	)
Equity-related derivatives		12,960			33,040			399			(22,222	)		—		(6,754	)		17,423			37,203
Bond-related derivatives		14,312			3,241			—			32,747			—		—			50,300			36,361
Commodity-related derivatives		(62	)		31			(6	)		(7	)		—		—			(45	)		31
Credit-related derivatives		(62	)		180			—			202			—		—			320			296
Other derivatives		672			(1	)		—			(674	)		—		—			(3	)		13

(*1) Mainly included in Trading income and Other operating income in the consolidated statements of income.

(*2) Included in Net unrealized gains (losses) on available-for-sale securities and Foreign currency translation adjustments in Other comprehensive income in the consolidated statements of comprehensive income.

(*3) Transfers into Level 3 from Level 2 were made primarily based on the significance of unobservable inputs for valuation of interest rate-related derivatives, taking into account credit valuation adjustments (CVA) for counterparty credit risk and funding valuation adjustments (FVA) for unsecured financing. These transfers were made at the beginning of the fiscal year.

(*4) Transfers into Level 2 from Level 3 resulted from material inputs for valuation of derivatives embedded in bonds payable (FVO) that were previously unobservable becoming observable and the significance of the impact of unobservable inputs declining. These transfers were made at the beginning of the fiscal year.

(*5) Derivative transactions in trading assets and liabilities as well as other assets and liabilities are shown together. Assets or liabilities and gains or losses arising from derivative transactions are presented on a net basis, and net liabilities and losses in the aggregate are presented in minus.

–54–

(3) Description of the fair value valuation process

At MUFG, the middle division establishes policies and procedures for the calculation of fair value and procedures for the use of fair value valuation models, and the front division develops fair value valuation models in accordance with such policies and procedures. The middle division verifies such models, the inputs used and the fair values obtained through calculation to ensure compatibility with the policies and procedures. In addition, based on the results of such verification, the middle division determines appropriate fair value input level classifications. In the event that market prices obtained from third parties are used as fair values, they are verified through appropriate methods such as confirming the valuation techniques and inputs used and comparing them with the fair values of similar financial instruments.

(4) Description of the sensitivity of the fair value to changes in significant unobservable inputs

Probability of default

Probability of default is an estimate of the likelihood that the default event will occur and MUFG will be unable to collect the contractual amounts. A significant increase (decrease) in the default rate would result in a significant decrease (increase) in a fair value.

Recovery rate and Prepayment rate

Recovery rate is the proportion of the total outstanding balance of a bond or loan that is expected to be collected in a liquidation scenario. Prepayment rate represents the proportion of principal that is expected to be paid prematurely in each period on a security or pool of securities. Recovery rate and prepayment rate would affect estimation of future cash flows to a certain extent and changes in these inputs could result in a significant increase or decrease in fair value.

Market-required return on capital

Market-required return on capital is the return on capital expected by the secondary market. A significant increase (decrease) in the market-required return on capital would result in a significant decrease (increase) in a fair value of a financial asset.

Liquidity premium

Liquidity premium is an adjustment to discount rates to reflect uncertainty of cash flows and liquidity of the financial instruments.

When recent prices of similar instruments are unobservable in inactive or less active markets, discount rates are adjusted based on the facts and circumstances of the markets including the availability of quotes and the time since the latest available quotes. A significant increase (decrease) in discount rates would result in a significant decrease (increase) in a fair value.

Volatility

Volatility is a measure of the speed and severity of market price changes and is a key factor in pricing. A significant increase (decrease) in volatility would cause a significant increase (decrease) in the value of an option resulting in the significant increase (decrease) in fair value. The level of volatility generally depends on the tenor of the underlying assets and the strike price or level defined in the contract. Volatilities for certain combinations of tenor and strike price are not observable.

Correlation

Correlation is a measure of the relationship between the movements of two variables (i.e. how the change in one variable influences a change in the other variables). A variety of correlation-related assumptions are required for a wide range of instruments including foreign government and official institution bonds, asset-backed securities, corporate bonds, derivatives and certain other financial instruments. In most cases, correlations used are not observable in the market and must be estimated using historical information. Changes in correlation inputs can have a major impact, favorable or unfavorable, on the value of an instrument, depending on its nature. In addition, the wide range of correlation inputs are primarily due to the complex and unique nature of these instruments. There are many different types of correlation inputs, including cross-asset correlation (such as correlation between interest rate and equity) and same-asset correlation (such as correlation between interest rates). Correlation levels are highly dependent on market conditions and could have a relatively wide range of levels within or across asset classes. For interest rate contracts and foreign exchange contracts, the diversity in the portfolio held by MUFG is reflected in wide ranges of correlation, as the fair values of transactions with a variety of currencies and tenors are determined using several foreign exchange and interest rate curves. For equity derivative contracts, the wide range of correlation between interest rate and equity is primarily due to the large number of correlation pairs with different maturities of contracts.

–55–

Term of litigation

Term of litigation is the estimated period until the resolution of a certain litigation matter that relates to an issuer’s restricted shares (“Covered Litigation”) that MUFG purchased, which is referenced in certain swap transactions. These swaps are valued using a discounted cash flow methodology and are dependent upon the final resolution of the Covered Litigation.

The settlement timing of the Covered Litigation is not observable in the market, therefore, the estimated term is classified as a level 3 input. The restricted shares which MUFG purchased will be convertible to listed shares of the issuer at the end of the Covered Litigation. The restricted shares will be diluted depending upon the settlement amount of the Covered Litigation and the dilution of the restricted shares is accomplished through an adjustment to the conversion rate of the restricted shares. In order to hedge the reduction of the conversion rate, MUFG entered into certain swaps with the seller which references the conversion rate. The value generated by these trades is subject to the ultimate term of the issuer’s litigation, subject to a minimum term referenced within the trade contracts.

(Note 3) The following table sets forth the amounts of equity securities, etc. with no market price and investments in partnerships and others on the consolidated balance sheets. These securities and investments are not included in “Trading assets” or “Securities” in the tables presented under the section captioned “Matters concerning fair value, etc. of financial instruments and breakdown by input level”.

	(in millions of yen)
	Amount on consolidated balance sheet
	March 31, 2021		March 31, 2022
Equity securities with no quoted market price available (*1) (*3)	¥	270,297	¥	204,063
Investments in partnerships and others (*2) (*3)		190,649		303,408

(*1) Equity securities with no market price include unlisted equity securities, etc. and are not subject to fair value disclosure in accordance with Paragraph 5 of ASBJ Guidance No. 19 “Implementation Guidance on Disclosures about Fair Value of Financial Instruments” (March 31, 2020.)

(*2) Investments in partnerships and others mainly include silent partnerships and investment partnerships and other partnerships. Their fair values are not disclosed in accordance with Paragraph 27 of the Guidance for Application of Fair Value Measurement.

(*3) An impairment loss of ¥7,098 million and ¥6,626 million was recorded on unlisted equity securities and other investments for the fiscal years ended March 31, 2021 and 2022, respectively.

–56–

(Note 4) Maturity analysis for financial assets and securities with contractual maturities

	(in millions of yen)
	March 31, 2021
	Due in one year or less		Due after one year through three years		Due after three years through five years		Due after five years through seven years		Due after seven years through ten years		Due after ten years
Securities (*1) (*2):	¥	26,747,787	¥	6,972,341	¥	8,660,300	¥	4,744,171	¥	8,795,506	¥	13,452,586
Held-to-maturity securities:		14,561		270,152		909,781		66,212		760,621		1,882,436
Japanese government bonds		—		199,889		900,557		—		—		—
Municipal bonds		—		—		—		—		—		—
Short-term corporate bonds		—		—		—		—		—		—
Corporate bonds		—		—		—		—		—		—
Foreign bonds		—		62,594		1,446		23,064		90,371		579,179
Other		14,561		7,667		7,776		43,147		670,249		1,303,256
Available-for-sale securities with contractual maturities:		26,733,226		6,702,189		7,750,519		4,677,958		8,034,884		11,570,150
Japanese government bonds		22,879,850		1,988,339		1,008,405		312,914		3,567,105		2,588,095
Municipal bonds		69,592		469,999		920,239		1,023,807		1,247,876		—
Short-term corporate bonds		564,097		—		—		—		—		—
Corporate bonds		300,057		691,700		750,107		506,377		251,432		1,412,271
Foreign bonds		2,549,349		2,223,889		4,797,983		2,615,221		2,562,302		6,487,953
Other		370,278		1,328,261		273,783		219,639		406,167		1,081,829
Loans (*1) (*3)		44,289,229		19,822,823		13,325,360		7,330,037		6,405,592		15,094,200
Total	¥	71,037,017	¥	26,795,165	¥	21,985,660	¥	12,074,208	¥	15,201,099	¥	28,546,786

(*1) The amounts above are stated at the carrying amount.

(*2) Securities include securitized products included in “Monetary claims bought.”

(*3) Loans do not include those amounts whose repayment schedules cannot be determined including those due from “bankrupt” borrowers, “virtually bankrupt” borrowers and “likely to become bankrupt” borrowers amounting to ¥915,826 million.

	(in millions of yen)
	March 31, 2022
	Due in one year or less		Due after one year through three years		Due after three years through five years		Due after five years through seven years		Due after seven years through ten years		Due after ten years
Securities (*1) (*2):	¥	26,144,878	¥	10,537,571	¥	5,566,633	¥	5,139,393	¥	9,023,719	¥	14,062,925
Held-to-maturity securities:		7,645		1,108,700		135,238		11,220		2,240,773		1,091,529
Japanese government bonds		—		1,100,320		—		—		647,708		—
Municipal bonds		—		—		82,894		—		92,176		—
Short-term corporate bonds		—		—		—		—		—		—
Corporate bonds		—		8,380		49,474		—		2,428		—
Foreign bonds		—		—		—		—		—		234,652
Other		7,645		—		2,869		11,220		1,498,459		856,877
Available-for-sale securities with contractual maturities:		26,137,233		9,428,871		5,431,395		5,128,173		6,782,945		12,971,395
Japanese government bonds		21,026,975		3,632,391		1,286,750		66,745		2,835,431		2,563,559
Municipal bonds		154,954		679,355		1,271,701		939,783		1,100,350		—
Short-term corporate bonds		1,010,637		—		—		—		—		—
Corporate bonds		353,245		779,891		738,792		376,962		187,433		1,428,679
Foreign equity securities		8,664		14,721		9,085		—		—		—
Foreign bonds		2,566,945		3,311,677		1,869,986		3,534,190		2,534,140		8,213,587
Other		1,015,810		1,010,834		255,078		210,491		125,589		765,568
Loans (*1) (*3)		45,848,375		20,641,877		15,015,843		6,945,991		6,205,734		14,709,749
Total	¥	71,993,253	¥	31,179,449	¥	20,582,476	¥	12,085,385	¥	15,229,454	¥	28,772,674

(*1) The amounts above are stated at the carrying amount.

(*2) Securities include securitized products included in “Monetary claims bought.”

(*3) Loans do not include those amounts whose repayment schedules cannot be determined including those due from “bankrupt” borrowers, “virtually bankrupt” borrowers and “likely to become bankrupt” borrowers amounting to ¥1,058,653 million.

–57–

(Note 5) Maturity analysis for “Time deposits,” “Negotiable certificates of deposit” and other interest-bearing liabilities

	(in millions of yen)
	March 31, 2021
	Due in one year or less		Due after one year through three years		Due after three years through five years		Due after five years through seven years		Due after seven years through ten years		Due after ten years
Time deposits and negotiable certificates of deposit (*1)	¥	50,459,421	¥	6,596,175	¥	1,151,497	¥	100,465	¥	103,812	¥	3,990
Borrowed money (*1) (*2)(*3)		11,549,727		1,941,912		16,718,255		300,086		182,242		418,241
Bonds (*1) (*2)		1,724,070		2,843,151		1,900,563		1,798,837		1,837,388		2,804,493
Total	¥	63,733,219	¥	11,381,239	¥	19,770,316	¥	2,199,389	¥	2,123,443	¥	3,226,725

(*1) The amounts above are stated at the carrying amount. Interest-bearing liabilities whose outstanding balances are expected to be redeemed within one year are omitted.

(*2) “Borrowed money” and “Bonds” whose maturities are not defined are recorded under “Due after ten years.”

(*3) There was no outstanding balance of rediscounted bills as of March 31, 2021.

	(in millions of yen)
	March 31, 2022
	Due in one year or less		Due after one year through three years		Due after three years through five years		Due after five years through seven years		Due after seven years through ten years		Due after ten years
Time deposits and negotiable certificates of deposit (*1)	¥	51,587,555	¥	6,321,924	¥	1,016,205	¥	84,990	¥	120,278	¥	2,481
Borrowed money (*1) (*2) (*3)		11,652,979		17,539,662		1,699,955		212,179		161,329		497,225
Bonds (*1) (*2)		1,819,762		2,746,177		1,666,353		2,357,959		1,514,243		3,152,850
Total	¥	65,060,297	¥	26,607,764	¥	4,382,515	¥	2,655,128	¥	1,795,852	¥	3,652,558

(*1) The amounts above are stated at the carrying amount. Interest-bearing liabilities whose outstanding balances are expected to be redeemed within one year are omitted.

(*2) “Borrowed money” and “Bonds” whose maturities are not defined are recorded under “Due after ten years.”

(*3) There was no outstanding balance of rediscounted bills as of March 31, 2022.

–58–

9. Securities

In addition to “Securities” on the consolidated balance sheet, the figures in the following tables include trading account securities, securities related to trading transactions and short-term corporate bonds classified as “Trading assets,” negotiable certificates of deposit in “Cash and due from banks,” securitized products in ”Monetary claims bought” and others.

I. Trading securities

	(in millions of yen)
	For the fiscal year ended March 31,
	2021		2022
Net unrealized gains (losses) recorded on the consolidated statement of income	¥	126,190	¥	(45,542	)

II. Debt securities being held to maturity

	(in millions of yen)
	March 31, 2021
	Amount on consolidated balance sheet		Fair value		Difference
Securities whose fair value exceeds amount on consolidated balance sheet:
Domestic bonds	¥	1,100,447	¥	1,123,480	¥	23,032
Government bonds		1,100,447		1,123,480		23,032
Municipal bonds		—		—		—
Short-term corporate bonds		—		—		—
Corporate bonds		—		—		—
Other securities		1,027,737		1,055,170		27,432
Foreign bonds		615,901		641,612		25,711
Other		411,836		413,557		1,721
Subtotal	¥	2,128,184	¥	2,178,650	¥	50,465
Securities whose fair value does not exceed amount on consolidated balance sheet:
Domestic bonds	¥	—	¥	—	¥	—
Government bonds		—		—		—
Municipal bonds		—		—		—
Short-term corporate bonds		—		—		—
Corporate bonds		—		—		—
Other securities		1,775,579		1,760,494		(15,085	)
Foreign bonds		140,756		137,948		(2,808	)
Other		1,634,823		1,622,546		(12,277	)
Subtotal	¥	1,775,579	¥	1,760,494	¥	(15,085	)
Total	¥	3,903,764	¥	3,939,144	¥	35,380

–59–

	(in millions of yen)
	March 31, 2022
	Amount on consolidated balance sheet		Fair value		Difference
Securities whose fair value exceeds amount on consolidated balance sheet:
Domestic bonds	¥	1,110,840	¥	1,124,535	¥	13,695
Government bonds		1,100,320		1,114,010		13,689
Municipal bonds		6,920		6,924		4
Short-term corporate bonds		—		—		—
Corporate bonds		3,600		3,601		1
Other securities		2,101,752		2,117,193		15,441
Foreign bonds		48,814		48,864		49
Other		2,052,937		2,068,329		15,392
Subtotal	¥	3,212,592	¥	3,241,729	¥	29,136
Securities whose fair value does not exceed amount on consolidated balance sheet:
Domestic bonds	¥	872,543	¥	867,794	¥	(4,748	)
Government bonds		647,708		644,187		(3,521	)
Municipal bonds		168,151		167,035		(1,115	)
Short-term corporate bonds		—		—		—
Corporate bonds		56,683		56,572		(111	)
Other securities		509,972		499,821		(10,151	)
Foreign bonds		185,837		177,059		(8,777	)
Other		324,135		322,762		(1,373	)
Subtotal	¥	1,382,516	¥	1,367,616	¥	(14,899	)
Total	¥	4,595,108	¥	4,609,345	¥	14,236

–60–

III. Available-for-sale securities

	(in millions of yen)
	March 31, 2021
	Amount on consolidated balance sheet		Acquisition cost		Difference
Securities whose fair value exceeds the acquisition cost:
Domestic equity securities	¥	5,046,662	¥	1,656,411	¥	3,390,250
Domestic bonds		26,326,866		26,158,978		167,887
Government bonds		20,753,038		20,629,641		123,397
Municipal bonds		2,568,637		2,553,512		15,124
Short-term corporate bonds		448,081		448,050		31
Corporate bonds		2,557,108		2,527,774		29,334
Other securities		13,498,203		12,828,440		669,762
Foreign equity securities		68,554		47,450		21,104
Foreign bonds		9,546,542		9,168,543		377,998
Other		3,883,106		3,612,447		270,659
Subtotal	¥	44,871,732	¥	40,643,830	¥	4,227,901
Securities whose fair value does not exceed the acquisition cost:
Domestic equity securities	¥	169,723	¥	209,436	¥	(39,712	)
Domestic bonds		14,225,404		14,270,785		(45,381	)
Government bonds		11,591,671		11,628,123		(36,452	)
Municipal bonds		1,162,878		1,165,692		(2,814	)
Short-term corporate bonds		116,015		116,020		(4	)
Corporate bonds		1,354,838		1,360,947		(6,109	)
Other securities		14,625,146		15,018,034		(392,888	)
Foreign equity securities		17,470		17,472		(1	)
Foreign bonds		11,690,157		11,965,154		(274,996	)
Other		2,917,518		3,035,407		(117,889	)
Subtotal	¥	29,020,274	¥	29,498,256	¥	(477,981	)
Total	¥	73,892,007	¥	70,142,087	¥	3,749,919

(Note) The total difference amount shown in the table above includes ¥161,847 million revaluation gains on securities by application of the fair value hedge accounting method.

–61–

	(in millions of yen)
	March 31, 2022
	Amount on consolidated balance sheet		Acquisition cost		Difference
Securities whose fair value exceeds the acquisition cost:
Domestic equity securities	¥	4,436,937	¥	1,476,861	¥	2,960,076
Domestic bonds		13,352,843		13,265,497		87,345
Government bonds		9,375,338		9,311,074		64,264
Municipal bonds		1,611,243		1,604,572		6,671
Short-term corporate bonds		643,594		643,545		48
Corporate bonds		1,722,666		1,706,305		16,361
Other securities		10,594,205		10,023,745		570,460
Foreign equity securities		123,410		73,774		49,635
Foreign bonds		5,726,303		5,649,626		76,676
Other		4,744,492		4,300,343		444,148
Subtotal	¥	28,383,986	¥	24,766,103	¥	3,617,882
Securities whose fair value does not exceed the acquisition cost:
Domestic equity securities	¥	176,766	¥	222,742	¥	(45,975	)
Domestic bonds		27,080,798		27,229,955		(149,157	)
Government bonds		22,036,515		22,156,181		(119,666	)
Municipal bonds		2,534,901		2,549,889		(14,987	)
Short-term corporate bonds		367,043		367,061		(18	)
Corporate bonds		2,142,338		2,156,823		(14,485	)
Other securities		19,268,126		20,298,991		(1,030,865	)
Foreign equity securities		95,189		117,033		(21,844	)
Foreign bonds		16,304,223		17,233,766		(929,542	)
Other		2,868,713		2,948,191		(79,478	)
Subtotal	¥	46,525,692	¥	47,751,690	¥	(1,225,998	)
Total	¥	74,909,679	¥	72,517,794	¥	2,391,884

(Note) The total difference amount shown in the table above includes ¥174,462 million revaluation gains on securities by application of the fair value hedge accounting method.

–62–

IV. Available-for-sale securities sold

	(in millions of yen)
	For the fiscal year ended March 31, 2021
	Amount sold		Gains on sales		Losses on sales
Domestic equity securities	¥	271,631	¥	146,868	¥	5,212
Domestic bonds		30,873,185		18,741		39,955
Government bonds		30,762,681		18,700		39,925
Municipal bonds		11,929		9		4
Short-term corporate bonds		10,000		—		1
Corporate bonds		88,574		31		23
Other securities		32,751,827		473,946		234,699
Foreign equity securities		37,504		1,400		7,393
Foreign bonds		31,393,263		437,331		205,458
Other		1,321,060		35,214		21,847
Total	¥	63,896,644	¥	639,556	¥	279,867
	(in millions of yen)
	For the fiscal year ended March 31, 2022
	Amount sold		Gains on sales		Losses on sales
Domestic equity securities	¥	489,551	¥	321,447	¥	6,060
Domestic bonds		45,854,800		73,400		35,737
Government bonds		45,669,186		73,333		35,696
Municipal bonds		26,079		18		12
Short-term corporate bonds		108,000		0		6
Corporate bonds		51,533		48		22
Other securities		14,680,753		122,323		254,583
Foreign equity securities		9,623		6,891		201
Foreign bonds		13,178,203		62,873		237,808
Other		1,492,926		52,559		16,573
Total	¥	61,025,105	¥	517,172	¥	296,381

–63–

V. Securities reclassified due to change of purpose in holding such securities

As of March 31, 2021

None.

As of March 31, 2022

Foreign bonds of ¥794,010 million which had been previously classified as “Debt securities being held to maturity” were reclassified as “Available-for-sale securities” as of March 31, 2022. This reclassification was made in accordance with ASC Topic 320, “Investments — Debt Securities”, in connection with the execution of the Share Purchase Agreement to sell all of the shares in MUFG Union Bank, which was not anticipated at the time of acquisition of these foreign bonds.

The impact of this reclassification on the consolidated financial statements as of and for the fiscal year ended March 31, 2022 is not significant.

VI. Securities with impairment losses

Securities other than those held for trading purposes and investment in affiliates (excluding certain equity securities with no quoted market price available and investments in partnerships and others) are subject to write-downs when their fair value significantly declines and it is determined as of the end of the reporting period that it is not probable that the value will recover to the acquisition cost. In such case, the fair value is recorded on the consolidated balance sheet and the difference between the fair value and the acquisition cost is recognized as losses for the reporting period (referred to as “impairment losses”).

Impairment losses on such securities for the fiscal year ended March 31, 2021 were ¥1,184 million consisting of ¥1,033 million on equity securities and ¥150 million on bonds and other securities.

Impairment losses on such securities for the fiscal year ended March 31, 2022 were ¥4,643 million consisting of ¥4,581 million on equity securities and ¥61 million on bonds and other securities.

Whether there is any “significant decline in the fair value” is determined for each category of issuers in accordance with the internal standards for self-assessment of asset quality as provided below:

Bankrupt issuers, virtually bankrupt issuers and likely to become bankrupt issuers:

The fair value is lower than acquisition cost.

Issuers requiring close watch:

The fair value has declined 30% or more from acquisition cost.

Normal issuers:

The fair value has declined 50% or more from acquisition cost.

“Bankrupt issuers” means issuers who have entered into bankruptcy, special liquidation proceedings or similar legal proceedings or whose notes have been dishonored and suspended from processing through clearing houses. “Virtually bankrupt issuers” means issuers who are not legally or formally bankrupt but are regarded as substantially in similar condition. “Likely to become bankrupt issuers” means issuers who are not yet legally or formally bankrupt but deemed to have a high possibility of becoming bankrupt. “Issuers requiring close watch” means issuers who are financially weak and are under close monitoring by our subsidiaries.

“Normal issuers” means issuers other than those who are categorized in the four categories mentioned above.

–64–

10. Money Held in Trust

I. Money held in trust for trading purposes

	(in millions of yen)
	March 31, 2021
	Amount on the consolidated balance sheet		Net unrealized gains (losses) recorded on the consolidated statement of income
Money held in trust for trading purposes	¥	47,619	¥	(9,173	)
	(in millions of yen)
	March 31, 2022
	Amount on the consolidated balance sheet		Net unrealized gains (losses) recorded on the consolidated statement of income
Money held in trust for trading purposes	¥	64,282	¥	(1,641	)

II. Money held in trust being held to maturity

	(in millions of yen)
	March 31, 2021
	(a) Amount on the consolidated balance sheet		(b) Fair value		Difference (b) - (a)		Money held in trust with respect to which (b) exceeds (a)		Money held in trust with respect to which (b) does not exceed (a)
Money held in trust being held to maturity	¥	42,098	¥	42,519	¥	420	¥	420	¥	—
	(in millions of yen)
	March 31, 2022
	(a) Amount on the consolidated balance sheet		(b) Fair value		Difference (b) - (a)		Money held in trust with respect to which (b) exceeds (a)		Money held in trust with respect to which (b) does not exceed (a)
Money held in trust being held to maturity	¥	42,078	¥	42,234	¥	156	¥	156	¥	—

(Note) “Money held in trust with respect to which (b) exceeds (a)” and “Money held in trust with respect to which (b) does not exceed (a)” show the breakdown of “Difference (b) - (a)”.

–65–

III. Money held in trust not for trading purposes or being held to maturity

	(in millions of yen)
	March 31, 2021
	(a) Amount on the consolidated balance sheet		(b) Acquisition cost		Difference (a) - (b)			Money held in trust with respect to which (a) exceeds (b)		Money held in trust with respect to which (a) does not exceed (b)
Money held in trust not for trading purposes or being held to maturity	¥	1,193,461	¥	1,212,966	¥	(19,504	)	¥	244	¥	19,749
	(in millions of yen)
	March 31, 2022
	(a) Amount on the consolidated balance sheet		(b) Acquisition cost		Difference (a) - (b)			Money held in trust with respect to which (a) exceeds (b)		Money held in trust with respect to which (a) does not exceed (b)
Money held in trust not for trading purposes or being held to maturity	¥	1,226,132	¥	1,231,695	¥	(5,563	)	¥	159	¥	5,723

(Note) “Money held in trust with respect to which (a) exceeds (b)” and “Money held in trust with respect to which (a) does not exceed (b)” show the breakdown of “Difference (a) - (b)”.

–66–

11. Net Unrealized Gains (Losses) on Available-for-Sale Securities

Net unrealized gains (losses) on available-for-sale securities recorded on the consolidated balance sheet as of the dates indicated consisted of the following:

As of March 31, 2021

	(in millions of yen)
Net unrealized gains (losses)	¥	3,561,035
Available-for-sale securities		3,587,271
Money held in trust not for trading purpose or being held to maturity		(19,504	)
Reclassification from “Available-for-sale securities” to “Debt securities being held to maturity”		(6,731	)
Deferred tax liabilities		(1,020,528	)
Net unrealized gains (losses) on available-for-sale securities, net of deferred tax liabilities (before adjustments for non-controlling interests)		2,540,506
Non-controlling interests		(9,246	)
MUFG’s ownership share in equity method investees’ unrealized gains (losses) on available-for-sale securities		52,158
Total	¥	2,583,417

(Notes)

1. “Net unrealized gains (losses)” shown in the above table excludes ¥161,847 million of revaluation gains on securities as a result of application of the fair value hedge accounting method, which are recorded in current earnings.

2. “Net unrealized gains (losses)” shown in the above table includes ¥213 million of unrealized losses on available-for-sale securities in investment limited partnerships and ¥587 million of unrealized losses as a result of foreign exchange adjustments related to available-for-sale securities denominated in foreign currencies that are included in equity securities with no quoted market price available.

As of March 31, 2022

	(in millions of yen)
Net unrealized gains (losses)	¥	2,232,625
Available-for-sale securities		2,238,189
Money held in trust not for trading purpose or being held to maturity		(5,563	)
Deferred tax liabilities		(616,645	)
Net unrealized gains (losses) on available-for-sale securities, net of deferred tax liabilities (before adjustments for non-controlling interests)		1,615,980
Non-controlling interests		(9,416	)
MUFG’s ownership share in equity method investees’ unrealized gains (losses) on available-for-sale securities		8,496
Total	¥	1,615,060

(Notes)

1. “Net unrealized gains (losses)” shown in the above table excludes ¥174,462 million of revaluation gains on securities as a result of application of the fair value hedge accounting method, which are recorded in current earnings.

2. “Net unrealized gains (losses)” shown in the above table includes ¥17,605 million of unrealized gains on available-for-sale securities in investment limited partnerships and ¥3,161 million of unrealized gains as a result of foreign exchange adjustments related to available-for-sale securities denominated in foreign currencies that are included in equity securities with no quoted market price available.

–67–

12. Derivatives

I. Derivatives to which hedge accounting is not applied

With respect to derivatives to which hedge accounting is not applied, the contract amounts or notional principal amounts and the fair values and related valuation gains (losses) as of the end of the specified fiscal year by transaction type were as follows. The contract and other amounts do not represent the market risk exposures associated with the relevant derivatives.

(1) Interest rate-related derivatives

		(in millions of yen)
		March 31, 2021
		Contract amount							Valuation     gains (losses)
		Total		Over one year		Fair value
Transactions listed on exchanges:
Interest rate futures	Sold	¥	7,891,121	¥	2,215,379	¥	(5,686	)	¥	(5,686	)
	Bought		1,015,246		823,267		468			468
Interest rate options	Sold		401,135		45,680		(131	)		53
	Bought		1,318,622		616,439		3,516			1,540
Over-the-counter (“OTC”) transactions:
Forward rate agreements	Sold		74,912,366		8,479,625		(189	)		(189	)
	Bought		75,361,207		8,497,790		(172	)		(172	)
Interest rate swaps	Receivable fixed rate/ Payable floating rate		461,422,309		363,901,050		5,956,934			5,956,934
	Receivable floating rate/ Payable fixed rate		457,690,070		359,944,279		(5,417,036	)		(5,417,036	)
	Receivable floating rate/ Payable floating rate		105,484,197		85,477,780		25,558			25,558
	Receivable fixed rate/ Payable fixed rate		1,130,871		1,063,450		14,413			14,413
Interest rate swaptions	Sold		22,963,538		16,397,995		(232,484	)		(68,570	)
	Bought		20,163,202		13,361,454		184,143			106,431
Other	Sold		3,898,056		3,316,715		(33,022	)		(198	)
	Bought		4,654,833		3,807,451		44,179			417
Total			—		—	¥	540,490		¥	613,962

(Note)

The transactions above are stated at fair value and the related valuation gains (losses) are reported in the consolidated statements of income.

–68–

		(in millions of yen)
		March 31, 2022
		Contract amount							Valuation     gains (losses)
		Total		Over one year		Fair value
Transactions listed on exchanges:
Interest rate futures	Sold	¥	5,562,614	¥	1,694,534	¥	3,464		¥	3,464
	Bought		3,426,482		3,003,428		(1,892	)		(1,892	)
Interest rate options	Sold		564,022		112,378		(615	)		(70	)
	Bought		3,121,133		1,989,227		5,652			1,980
OTC transactions:
Forward rate agreements	Sold		8,633,085		1,098,308		(46	)		(46	)
	Bought		9,999,817		1,088,401		(57	)		(57	)
Interest rate swaps	Receivable fixed rate/ Payable floating rate		503,253,639		370,308,254		1,914,186			1,914,186
	Receivable floating rate/ Payable fixed rate		511,898,837		372,631,979		(1,889,000	)		(1,889,000	)
	Receivable floating rate/ Payable floating rate		230,559,181		77,234,911		33,463			33,463
	Receivable fixed rate/ Payable fixed rate		1,232,992		1,098,048		12,187			12,187
Interest rate swaptions	Sold		25,350,726		18,244,366		(136,791	)		983
	Bought		20,626,441		15,045,619		70,143			10,452
Other	Sold		4,639,595		4,057,594		(50,206	)		(16,275	)
	Bought		5,039,357		4,119,573		46,675			3,917
Total			—		—	¥	7,163		¥	73,292

(Note)

The transactions above are stated at fair value and the related valuation gains (losses) are reported in the consolidated statements of income.

–69–

(2) Currency-related derivatives

		(in millions of yen)
		March 31, 2021
		Contract amount				Fair value			Valuation     gains (losses)
		Total		Over one year
Transactions listed on exchanges:
Currency futures	Sold	¥	60,158	¥	453	¥	468		¥	468
	Bought		261,813		51,087		(477	)		(477	)
Currency options	Sold		—		—		—			—
	Bought		2,222		—		5			(2	)
OTC transactions:
Currency swaps			61,251,096		47,114,495		125,034			125,034
Forward contracts on foreign exchange			130,683,832		8,808,484		126,132			126,132
Currency options	Sold		8,699,540		2,588,071		(67,217	)		36,333
	Bought		7,912,996		2,220,993		36,202			(54,602	)
Total			—		—	¥	220,148		¥	232,887

(Note)

The transactions above are stated at fair value and the related valuation gains (losses) are reported in the consolidated statements of income.

		(in millions of yen)
		March 31, 2022
		Contract amount							Valuation     gains (losses)
		Total		Over one year		Fair value
Transactions listed on exchanges:
Currency futures	Sold	¥	46,750	¥	2,158	¥	578		¥	578
	Bought		283,916		55,008		(2,048	)		(2,048	)
OTC transactions:
Currency swaps			63,070,732		48,165,664		168,927			168,927
Forward contracts on foreign exchange			157,443,042		9,767,039		93,453			93,453
Currency options	Sold		7,769,345		2,486,845		(127,424	)		(39,869	)
	Bought		7,070,060		2,298,452		82,133			4,707
Total			—		—	¥	215,620		¥	225,748

(Note)

The transactions above are stated at fair value and the related valuation gains (losses) are reported in the consolidated statements of income.

–70–

(3) Equity-related derivatives

		(in millions of yen)
		March 31, 2021
		Contract amount				Fair value			Valuation      gains (losses)
		Total		Over one year
Transactions listed on exchanges:
Stock index futures	Sold	¥	702,055	¥	20,821	¥	(11,956	)	¥	(11,956	)
	Bought		371,326		7,189		19,290			19,290
Stock index options	Sold		1,393,497		455,432		(108,044	)		(14,654	)
	Bought		1,008,108		308,165		79,941			29,748
OTC transactions:
OTC securities option transactions	Sold		380,546		172,171		(46,295	)		(30,316	)
	Bought		612,185		476,107		66,743			62,479
OTC securities index swap transactions	Receivable index volatility/ Payable interest rate		463,164		93,291		(1,688	)		(1,688	)
	Receivable interest rate/ Payable index volatility		1,861,638		258,166		5,767			5,767
Forward transactions in OTC securities indexes	Sold		1,598		—		232			232
	Bought		48,521		2,704		7,872			7,872
Total			—		—	¥	11,862		¥	66,774

(Note)

The transactions above are stated at fair value and the related valuation gains (losses) are reported in the consolidated statements of income.

–71–

		(in millions of yen)
		March 31, 2022
		Contract amount				Fair value			Valuation      gains (losses)
		Total		Over one year
Transactions listed on exchanges:
Stock index futures	Sold	¥	896,559	¥	4,406	¥	(34,100	)	¥	(34,100	)
	Bought		370,048		7,189		10,308			10,308
Stock index options	Sold		1,143,562		430,080		(88,755	)		5,929
	Bought		707,402		205,692		52,630			12,976
OTC transactions:
OTC securities option transactions	Sold		317,525		135,266		(26,881	)		(11,305	)
	Bought		635,470		574,374		44,900			42,855
OTC securities index swap transactions	Receivable index volatility/ Payable interest rate		583,079		79,171		2,418			2,418
	Receivable interest rate/ Payable index volatility		931,348		267,559		2,232			2,232
Forward transactions in OTC securities indexes	Sold		—		—		—			—
	Bought		51,201		—		(2,200	)		(2,200	)
Total			—		—	¥	(39,447	)	¥	29,115

(Note)

The transactions above are stated at fair value and the related valuation gains (losses) are reported in the consolidated statements of income.

–72–

(4) Bond-related derivatives

		(in millions of yen)
		March 31, 2021
		Contract amount				Fair value			Valuation      gains (losses)
		Total		Over one year
Transactions listed on exchanges:
Bond futures	Sold	¥	553,416	¥	—	¥	1,307		¥	1,307
	Bought		457,020		—		(445	)		(445	)
Bond futures options	Sold		560,349		—		(605	)		389
	Bought		815,820		—		1,888			172
OTC transactions:
Bond OTC options	Sold		203,167		—		(490	)		(71	)
	Bought		203,167		—		598			126
Bond forward contracts	Sold		1,866,591		—		(8,816	)		(8,816	)
	Bought		1,077,086		—		4,044			4,044
Bond OTC swaps	Receivable fixed rate / Payable variable rate		26,800		26,800		4,295			4,295
	Receivable variable rate/ Payable fixed rate		—		—		—			—
	Receivable variable rate/ Payable variable rate		328,981		328,981		1,333			1,333
	Receivable fixed rate/ Payable fixed rate		29,300		29,300		7,704			7,704
Total return swaps	Sold		—		—		—			—
	Bought		309,835		208,018		(11,169	)		(11,169	)
Total			—		—	¥	(355	)	¥	(1,130	)

(Note)

The transactions above are stated at fair value and the related valuation gains (losses) are reported in the consolidated statements of income.

–73–

		(in millions of yen)
		March 31, 2022
		Contract amount				Fair value			Valuation      gains (losses)
		Total		Over one year
Transactions listed on exchanges:
Bond futures	Sold	¥	1,019,677	¥	—	¥	13,573		¥	13,573
	Bought		1,035,372		—		(5,773	)		(5,773	)
Bond futures options	Sold		20,448		—		(119	)		379
	Bought		948,334		—		2,431			(5,679	)
OTC transactions:
Bond OTC options	Sold		199,097		—		(837	)		56
	Bought		199,097		—		1,015			109
Bond forward contracts	Sold		608,392		—		(211	)		(211	)
	Bought		536,146		—		796			796
Bond OTC swaps	Receivable fixed rate/ Payable variable rate		92,400		92,400		24,671			24,671
	Receivable variable rate/ Payable fixed rate		—		—		—			—
	Receivable variable rate/ Payable variable rate		292,854		292,854		26,764			26,764
	Receivable fixed rate/ Payable fixed rate		102,300		102,300		24,070			24,070
Total return swaps	Sold		—		—		—			—
	Bought		297,204		211,341		287			287
Total			—		—	¥	86,671		¥	79,047

(Note)

The transactions above are stated at fair value and the related valuation gains (losses) are reported in the consolidated statements of income.

–74–

(5) Commodity-related derivatives

		(in millions of yen)
		March 31, 2021
		Contract amount				Fair value			Valuation      gains (losses)
		Total		Over one year
OTC transactions:
Commodity swaps	Receivable index volatility/ Payable interest rate	¥	55,546	¥	55,529	¥	(26,891	)	¥	(26,891	)
	Receivable interest rate/ Payable index volatility		55,546		55,529		26,891			26,891
Commodity options	Sold		324		137		(67	)		(19	)
	Bought		225		38		4			(27	)
Total			—		—	¥	(62	)	¥	(47	)

(Notes)

1. The transactions above are stated at fair value and the related valuation gains (losses) are reported in the consolidated statements of income.

2. The commodities are mainly those related to oil and other commodities.

		(in millions of yen)
		March 31, 2022
		Contract amount				Fair value			Valuation      gains (losses)
		Total		Over one year
OTC transactions:
Commodity swaps	Receivable index volatility/ Payable interest rate	¥	62,234	¥	62,234	¥	(21,984	)	¥	(21,984	)
	Receivable interest rate/ Payable index volatility		62,234		62,234		21,983			21,983
Commodity options	Sold		142		99		(50	)		(47	)
	Bought		43		—		5			2
Total			—		—	¥	(45	)	¥	(44	)

(Notes)

1. The transactions above are stated at fair value and the related valuation gains (losses) are reported in the consolidated statements of income.

2. The commodities are mainly those related to oil, natural gas and other commodities.

–75–

(6) Credit-related derivatives

		(in millions of yen)
		March 31, 2021
		Contract amount							Valuation     gains (losses)
		Total		Over one year		Fair value
OTC transactions:
Credit default options	Sold	¥	4,441,422	¥	3,919,182	¥	69,254		¥	69,254
	Bought		5,242,763		4,693,253		(72,474	)		(72,474	)
Total			—		—	¥	(3,220	)	¥	(3,220	)

(Notes)

1. The transactions above are stated at fair value and the related valuation gains (losses) are reported in the consolidated statements of income.

2. “Sold” refers to transactions where the credit risk is assumed, and “Bought” refers to transactions where the credit risk is transferred.

		(in millions of yen)
		March 31, 2022
		Contract amount							Valuation     gains (losses)
		Total		Over one year		Fair value
OTC transactions:
Credit default options	Sold	¥	4,462,132	¥	3,790,108	¥	73,011		¥	73,011
	Bought		5,240,650		4,577,637		(69,537	)		(69,537	)
Total			—		—	¥	3,473		¥	3,473

(Notes)

1. The transactions above are stated at fair value and the related valuation gains (losses) are reported in the consolidated statements of income.

2. “Sold” refers to transactions where the credit risk is assumed, and “Bought” refers to transactions where the credit risk is transferred.

–76–

(7) Other derivatives

		(in millions of yen)
		March 31, 2021
		Contract amount							Valuation     gains (losses)
		Total		Over one year		Fair value
OTC transactions:
Earthquake derivatives	Sold	¥	18,000	¥	18,000	¥	(288	)	¥	681
	Bought		18,674		18,000		961			(242	)
Other	Sold		—		—		—			—
	Bought		5,228		3,290		—			—
Total			—		—	¥	672		¥	438
(Note)
The transactions above are stated at fair value and the related valuation gains (losses) are reported in the consolidated statements of income.
		(in millions of yen)
		March 31, 2022
		Contract amount							Valuation gains (losses)
		Total		Over one year		Fair value
OTC transactions:
Earthquake derivatives	Sold	¥	18,000	¥	—	¥	(403	)	¥	1,241
	Bought		18,000		—		399			(777	)
Other	Sold		—		—		—			—
	Bought		5,779		2,141		—			—
Total			—		—	¥	(3	)	¥	463
(Note)
The transactions above are stated at fair value and the related valuation gains (losses) are reported in the consolidated statements of income.

–77–

II. Derivatives to which hedge accounting is applied

With respect to derivatives to which hedge accounting is applied, their contract amounts or notional principal amounts and the fair values as of the end of the specified fiscal year by transaction type and hedge accounting method were as follows. The contract and other amounts do not represent the market risk exposures associated with the relevant derivatives.

(1) Interest rate-related derivatives

			(in millions of yen)
			March 31, 2021
Hedge accounting method	Transaction type	Major hedged item	Contract amount		Contract amount due after one year		Fair value
Deferred hedge accounting	Interest rate swaps:
	Receivable fixed rate/ Payable floating rate	Interest earning financial assets or interest bearing financial liabilities such as loans, deposits and other transactions	¥	16,710,912	¥	13,389,038	¥	641
	Receivable floating rate/ Payable fixed rate			4,858,790		3,842,558		(1,927	)
	Interest rate futures			3,590,282		1,104,276		1,036
Fair value hedge accounting	Interest rate swaps:
	Receivable fixed rate/ Payable floating rate	Available-for-sale securities (debt securities)		102,322		102,322		57
	Receivable floating rate/ Payable fixed rate			84,072		84,072		(49	)
Special treatment for interest rate swaps	Interest rate swaps:
	Receivable fixed rate/ Payable floating rate	Interest earning financial assets or interest bearing financial liabilities such as loans, borrowings, bonds and other transactions		70,000		30,000		Notes 2
	Receivable floating rate/ Payable fixed rate			13,404		10,208
Total				—		—	¥	(241	)

(Notes)

1. These derivatives are mainly accounted for by applying the deferred hedge accounting in accordance with the Japanese Institute of Certified Public Accountants Industry Audit Committee Report No. 24 “Treatment of Accounting and Auditing of Application of Accounting Standard for Financial Instruments in the Banking Industry.”

2. The fair values of interest rate swaps accounted for in accordance with the special hedge accounting treatment for interest rate swaps are measured together with the loans, borrowings, bonds and other financial instruments that are subject to the relevant hedging transactions in their entirety, and thus are included in the fair values of the respective relevant financial instruments disclosed in the “Financial Instruments” section.

–78–

			(in millions of yen)
			March 31, 2022
Hedge accounting method	Transaction type	Major hedged item	Contract amount		Contract amount due after one year		Fair value
Deferred hedge accounting	Interest rate swaps:
	Receivable fixed rate/ Payable floating rate	Interest earning financial assets or interest bearing financial liabilities such as loans, deposits and other transactions	¥	17,727,061	¥	15,940,954	¥	(181,636	)
	Receivable floating rate/ Payable fixed rate			9,495,687		8,973,596		18,143
	Receivable floating rate/ Payable floating rate			260,000		—		(133	)
Fair value hedge accounting	Interest rate swaps:
	Receivable fixed rate/ Payable floating rate	Available-for-sale securities (debt securities)		114,677		114,677		129
	Receivable floating rate/ Payable fixed rate			32,109		24,655		(49	)
Special treatment for interest rate swaps	Interest rate swaps:
	Receivable fixed rate/ Payable floating rate	Interest earning financial assets or interest bearing financial liabilities such as loans, borrowings, bonds and other transactions		30,000		30,000		Notes 2
	Receivable floating rate/ Payable fixed rate			7,360		6,360
Total				—		—	¥	(163,547	)

(Notes)

1. These derivatives are mainly accounted for by applying the deferred hedge accounting in accordance with the Japanese Institute of Certified Public Accountants Industry Committee Practical Guidelines No. 24 “Treatment of Accounting and Auditing of Application of Accounting Standard for Financial Instruments in the Banking Industry.”

2. The fair values of interest rate swaps accounted for in accordance with the special hedge accounting treatment for interest rate swaps are measured together with the loans, borrowings, bonds and other financial instruments that are subject to the relevant hedging transactions in their entirety, and thus are included in the fair values of the respective relevant financial instruments disclosed in the “Financial Instruments” section.

–79–

(2) Currency-related derivatives

			(in millions of yen)
			March 31, 2021
Hedge accounting method	Transaction type	Major hedged item	Contract amount		Contract amount due after one year		Fair value
Deferred hedge accounting	Currency swaps	Loans, securities, deposits and others denominated in foreign currencies	¥	13,843,129	¥	5,369,769	¥	(320,496)
	Foreign currency forward contracts	Securities denominated in foreign currencies, equity in investments in foreign subsidiaries		25,381		—		337
Allocation method	Currency swaps	Loans, borrowings and others denominated in foreign currencies		16,847		2,108		Notes 2
Total				—		—	¥	(320,159)

(Notes)

1. These derivatives are mainly accounted for by applying the deferred hedge accounting in accordance with the Japanese Institute of Certified Public Accountants Industry Audit Committee Report No. 25, “Accounting and Auditing Treatments for Foreign Currency Transactions in the Banking Industry.”

2. The fair values of currency swaps accounted for in accordance with the allocation method of hedge accounting treatment are measured together with the loans, borrowings and other financial instruments that are subject to the relevant hedging transactions in their entirety, and thus are included in the fair values of the respective relevant financial instruments disclosed in the “Financial Instruments” section.

			(in millions of yen)
			March 31, 2022
Hedge accounting method	Transaction type	Major hedged item	Contract amount		Contract amount due after one year		Fair value
Deferred hedge accounting	Currency swaps	Loans, securities, deposits and others denominated in foreign currencies	¥	11,618,235	¥	4,194,158	¥	(292,911)
	Foreign currency forward contracts	Securities denominated in foreign currencies, equity in investments in foreign subsidiaries		26,431		—		359
Allocation method	Currency swaps	Loans, borrowings and others denominated in foreign currencies		2,303		—		Notes 2
Total				—		—	¥	(292,552)

(Notes)

1. These derivatives are mainly accounted for by applying the deferred hedge accounting in accordance with the Japanese Institute of Certified Public Accountants Industry Committee Practical Guidelines No. 25, “Accounting and Auditing Treatments for Foreign Currency Transactions in the Banking Industry.”

2. The fair values of currency swaps accounted for in accordance with the allocation method of hedge accounting treatment are measured together with the loans, borrowings and other financial instruments that are subject to the relevant hedging transactions in their entirety, and thus are included in the fair values of the respective relevant financial instruments disclosed in the “Financial Instruments” section.

–80–

(3) Equity-related derivatives

			(in millions of yen)
			March 31, 2021
Hedge accounting method	Transaction type	Major hedged item	Contract amount		Contract amount due after one year		Fair value
Fair value hedge accounting	Total return swaps	Available-for-sale securities (equity securities)	¥	540,066	¥	540,066	¥	(1,417	)
	Equity forward transactions	Available-for-sale securities (equity securities)		1,945		1,945		444
Total				—		—	¥	(973	)
			(in millions of yen)
			March 31, 2022
Hedge accounting method	Transaction type	Major hedged item	Contract amount		Contract amount due after one year		Fair value
Fair value hedge accounting	Total return swaps	Available-for-sale securities (equity securities)	¥	497,123	¥	497,123	¥	(26,977	)
	Equity forward transactions	Available-for-sale securities (equity securities)		1,945		194		1,220
Total				—		—	¥	(25,757	)

(4) Bond-related derivatives

As of March 31, 2021, the balance of bond-related derivatives subject to hedge accounting was nil.

As of March 31, 2022, the balance of bond-related derivatives subject to hedge accounting was nil.

–81–

13. Liability for Retirement Benefits

I. Outline of retirement benefit plans

Domestic consolidated subsidiaries have retirement benefit plans with defined benefits, such as defined benefit corporate pension plans and lump-sum severance payment plans, and defined contribution pension plans. In certain cases of severance of employees, additional severance benefits may be paid which are not included in retirement benefit obligations calculated actuarially pursuant to the applicable accounting standard for retirement benefits.

Certain overseas branches of domestic consolidated subsidiaries and certain overseas consolidated subsidiaries also have retirement benefit plans with defined benefits and defined contributions.

II. Defined benefit plans

(1) The changes in defined benefit obligation for the fiscal years ended March 31, 2021 and 2022 were as follows:

	(in millions of yen)
	March 31, 2021			March 31, 2022
Balance at beginning of year	¥	2,396,548		¥	2,458,711
of which foreign exchange translation adjustments		20,867			(60,230	)
Service cost		61,292			62,090
Interest cost		25,986			24,540
Actuarial gains (losses)		29,582			(59,890	)
Benefits paid		(114,439	)		(120,124	)
Past service cost		(1,270	)		(635	)
Others		782			649
Balance at end of year	¥	2,398,481		¥	2,365,342

(Note) Some overseas branches of the domestic consolidated subsidiaries and some consolidated subsidiaries have adopted the simplified method in calculating their projected benefit obligation.

(2) The changes in plan assets for the fiscal years ended March 31, 2021 and 2022 were as follows:

	(in millions of yen)
	March 31, 2021			March 31, 2022
Balance at beginning of year	¥	3,021,934		¥	3,587,262
of which foreign exchange translation adjustments		21,141			(67,118	)
Expected return on plan assets		104,306			120,479
Actuarial gains (losses)		456,536			14,320
Contributions from the employer		26,012			25,913
Benefits paid		(89,530	)		(94,972	)
Others		885			590
Balance at end of year	¥	3,520,144		¥	3,653,594

–82–

(3) A reconciliation between liability for retirement benefits and asset for retirement benefits recorded in the consolidated balance sheet and the balances of defined benefit obligation and plan assets was as follows:

	(in millions of yen)
	March 31, 2021			March 31, 2022
Funded defined benefit obligation	¥	2,312,473		¥	2,282,135
Plan assets		(3,520,144	)		(3,653,594	)
		(1,207,670	)		(1,371,458	)
Unfunded defined benefit obligation		86,007			83,206
Net liability (asset) arising from defined benefit obligation	¥	(1,121,662	)	¥	(1,288,252	)
	(in millions of yen)
	March 31, 2021			March 31, 2022
Liability for retirement benefits	¥	88,914		¥	86,355
Asset for retirement benefits		(1,210,577	)		(1,374,607	)
Net liability (asset) arising from defined benefit obligation	¥	(1,121,662	)	¥	(1,288,252	)
(4)   The components of net periodic retirement benefit costs for the fiscal years ended March 31, 2021 and 2022 were as follows:
	(in millions of yen)
	March 31, 2021			March 31, 2022
Service cost	¥	61,292		¥	62,090
Interest cost		25,986			24,540
Expected return on plan assets		(104,306	)		(120,479	)
Amortization of past service cost		(4,922	)		(2,722	)
Recognized actuarial losses		28,736			(20,864	)
Others (additional temporary severance benefits, etc.)		16,037			16,006
Net periodic retirement benefit costs	¥	22,824		¥	(41,429	)
(Note)  Retirement benefit costs of some overseas branches of domestic consolidated subsidiaries and some consolidated subsidiaries which have adopted the simplified method are included in “Service cost.”
(5)   Amounts recognized in other comprehensive income (before income tax effect) in respect of defined retirement benefit plans as of March 31, 2021 and 2022 were as follows:
	(in millions of yen)
	March 31, 2021			March 31, 2022
Past service cost	¥	(4,078	)	¥	(1,139	)
Actuarial gains (losses)		462,765			43,445
Total	¥	458,687		¥	42,305
(6)   Amounts recognized in accumulated other comprehensive income (before income tax effect) in respect of defined retirement benefit plans as of March 31, 2021 and 2022 were as follows:
	(in millions of yen)
	March 31, 2021			March 31, 2022
Unrecognized past service cost	¥	3,989		¥	2,850
Unrecognized actuarial gains (losses)		230,566			274,011
Total	¥	234,556		¥	276,861

–83–

(7) Plan assets

(a) Components of plan assets

Plan assets consisted of the following:

	2021			2022
Domestic equity investments		29.69	%		27.91	%
Domestic debt investments		14.70			15.01
Foreign equity investments		22.19			21.29
Foreign debt investments		18.18			20.50
General accounts of life insurance		6.55			6.17
Others		8.69			9.12
Total		100.00			100.00

(Note) Total plan assets include retirement benefit trusts, which were set up for corporate pension plans, accounting for 25.06% and 25.17% as of March 31, 2021 and 2022, respectively.

(b) Method of determining the expected rate of return on plan assets

The expected rate of return on plan assets is determined considering the allocation of the plan assets which are expected currently and in the future and the long-term rates of return which are expected currently and in the future on the various components of the plan assets.

(8) Actuarial assumptions used for the fiscal years ended March 31, 2021 and 2022 were as follows:

	2021		2022
Discount rate:
Domestic		0.00%-0.75%		0.07%-0.93%
Overseas		0.00%-8.50%		0.52%-9.04%
Expected salary increase rate:
Domestic		2.63%-7.50%		2.63%-7.50%
Overseas		0.90%-9.00%		1.50%-10.50%
Expected rate of return on plan assets:
Domestic		1.50%-4.00%		1.50%-3.80%
Overseas		0.00%-7.00%		0.90%-9.04%

–84–

14. Stock Options

I. Amount of, and income statement line-item for, expenses relating to stock options

	(in millions of yen)
	For the fiscal year ended March 31,
	2021		2022
General and administrative expenses	¥	8,629	¥	12,361

–85–

15. Income Taxes

I. The tax effects of significant temporary differences which resulted in “Deferred tax assets and liabilities” as of March 31, 2021 and 2022 were as follows:

	(in millions of yen)
	2021			2022
Deferred tax assets:
Excess over deductible limits on provision for allowance for credit losses and write-offs of loans	¥	356,946		¥	391,764
Revaluation losses on securities		82,815			80,409
Unrealized losses on available-for-sale securities		20,948			42,930
Liability for retirement benefits		30,414			16,647
Reserve for contingent losses		54,893			68,793
Depreciation and impairment losses		71,519			113,765
Tax loss carryforwards		128,479			112,273
Deferred losses on derivatives under hedge accounting		—			56,646
Other		464,403			491,544
Subtotal		1,210,420			1,374,775
Less valuation allowance (Note)		(331,570	)		(281,864	)
Total	¥	878,850		¥	1,092,910
Deferred tax liabilities:
Unrealized gains on available-for-sale securities	¥	(1,017,656	)	¥	(634,666	)
Revaluation gains on securities at merger		(56,777	)		(53,111	)
Unrealized gains on lease transactions		(49,812	)		(48,286	)
Deferred gains on derivatives under hedge accounting		(79,555	)		—
Gains on establishment of retirement benefit trusts		(47,070	)		(47,158	)
Retained earnings of subsidiaries and affiliates		(192,757	)		(231,639	)
Accrued dividend income		(5,070	)		(6,521	)
Other		(300,812	)		(350,054	)
Total	¥	(1,749,512	)	¥	(1,371,439	)
Net deferred tax assets (liabilities)	¥	(870,662	)	¥	(278,528	)

(Note) Valuation allowance decreased by ¥49,706 million. This was mainly because the valuation allowance for tax loss carryforwards was reduced in MUFG’s consolidated domestic consumer finance subsidiary.

II. The reconciliation between the normal effective statutory tax rates and the actual effective tax rates reflected in the accompanying consolidated statements of income for the fiscal year ended March 31, 2021 and 2022 was as follows:

	2021			2022
Normal effective statutory tax rate		30.62	%		30.62	%
Elimination of dividends received from subsidiaries and affiliates		13.88			14.87
Permanent non-taxable differences (e.g., non-taxable dividend income)		(14.01	)		(14.18	)
Change in valuation allowances		(2.51	)		(3.91	)
Equity in gains of the equity method investees		(9.45	)		(9.08	)
Tax rate difference of overseas subsidiaries		(2.53	)		(2.40	)
Retained earnings of subsidiaries and affiliates		0.72			1.13
Expiration of tax loss carryforwards		2.19			0.33
Amortization of goodwill		0.46			0.34
Other		(1.61	)		1.30
Actual effective tax rate		17.76	%		19.02	%

–86–

16. Business Combinations

(Additional Information)

(Agreement for the Sale of MUFG Union Bank, and Transfer of Certain Businesses of MUFG Union Bank)

On September 21, 2021, MUAH, a subsidiary of MUFG whose financial statements as of and for the twelve-month period ended December 31, 2021 have been consolidated with MUFG’s financial statements included in this report, entered into a Share Purchase Agreement with USB, to sell all of the shares in MUB, held by MUAH. The MUB businesses that will be transferred to USB through the planned transfer of the MUB shares (“Share Transfer”) exclude the GCIB (Global Corporate & Investment Banking) business, the Global Markets business to the extent related to the GCIB business (transactions with clients and investors) that is currently run by MUB, and certain assets and liabilities, etc. that are part of shared middle and back office functions, etc. It was decided by a resolution of the Board of Directors of the Bank that such businesses, and the customer assets and liabilities, etc. related to these businesses (including related transactions with such customers), will be transferred to the Bank’s U.S. branches, subsidiaries or affiliates prior to the Share Transfer for consideration to be paid in the form of cash.

I. Business Divestiture

(1) Outline of the business divestiture

(a) Name of the acquiring entity

U.S. Bancorp

(b) Description of the businesses to be divested

Retail and Commercial Banking businesses of MUB

(c) Main objectives of the business divestiture

MUFG has viewed the U.S. regional banking business as an important business for the group’s strategy. At the same time, given MUB’s current business environment, including the need for increased technology investments as part of digital transformation, a certain scale is required to maintain and strengthen MUB’s competitiveness.

Under these circumstances, MUFG concluded that transferring MUB to USB, a major U.S. bank with a strong business foundation, is the most appropriate decision that is expected to lead to providing higher quality financial services to customers and communities and unlock MUB’s potential franchise value. From the perspective of MUFG’s optimization of management resources under the current medium-term business plan, MUFG determined that the sale of MUB and the shift of focus to corporate transactions in the United States are expected to maximize shareholder value through an increase in capital efficiency.

(d) Date of the business divestiture(*)

Expected to be effective in the first half of calendar year 2022

(e) Legal form of the business divestiture

Transfer of shares for consideration to be paid in the form of cash and shares

(2) Name of the reporting segment in which the businesses to be divested are mainly included

Global Commercial Banking Business Group

II. Transaction under Common Control

(1) Overview and objectives of the business transfer

The GCIB (Global Corporate & Investment Banking) business, the Global Markets business to the extent related to the GCIB business (transactions with clients and investors) that is currently run by MUB, and certain assets and liabilities, etc. that are part of shared middle and back office functions, etc., are expected to be transferred from MUB to the Bank’s U.S. branches, subsidiaries or affiliates prior to the Share Transfer.

The MUFG group will continue to view the U.S. market as a strategically important market after the Share Transfer and, through this transaction, aims to optimize management resources with a strategic focus on corporate transactions where the MUFG group believes it can leverage its strengths.

–87–

(2) Overview of the accounting treatment to be applied

The transaction will be treated as a transaction under common control under ASBJ Statement No. 21, “Accounting Standard for Business Combinations” (ASBJ, January 16, 2019), and ASBJ Guidance No. 10, “Implementation Guidance on Accounting Standard for Business Combinations and Accounting Standard for Business Divestitures” (ASBJ, January 16, 2019).

(Subsequent Events)

(Change in the expected date of closing of the sale of MUFG Union Bank shares to U.S. Bancorp)

The Share Transfer was originally expected to be closed in the first half of calendar year 2022, subject to all required regulatory approvals and other conditions precedent. The regulatory approval process remains ongoing and, as a result, the Share Transfer is currently expected to be closed in the second half of calendar year 2022, subject to the remaining conditions precedent.

I. (d) Date of the business divestiture(*)

Expected to be effective in the second half of calendar year 2022

(Valuation losses of a foreign subsidiary which are expected to be reflected in MUFG’s consolidated financial statements as of and for the first quarter of the fiscal year ending March 31, 2023)

It is currently estimated that, in connection with the Share Transfer, an aggregate of approximately ¥270 billion of valuation losses recognized by MUAH for the quarter ended March 31, 2022 mainly related to securities and loans held for sale subject to valuation primarily in accordance with ASC Topic 326, “Financial Instruments-Credit losses,” and ASC Topic 310, “Receivables,” issued by the FASB will be reflected in Other operating expenses, Other ordinary expenses and other expense items in MUFG’s consolidated financial statements as of and for the quarter ending June 30, 2022.

Any gains on sale of shares in subsidiaries resulting from the Share Transfer will be reflected in MUFG’s consolidated financial statements for the quarterly reporting period which begins immediately after the business divestiture becomes effective.(*)

(*) The closing of the Share Transfer is subject to the approval of the relevant authorities and other conditions precedent.

–88–

17. Revenue Recognition

Disaggregated information on revenues from contracts with customers

	(in millions of yen)
	For the fiscal year ended March 31, 2022
Fees and commissions	¥	1,729,100
Fees and commissions on remittances and transfers		167,670
Fees and commissions on deposits		58,005
Fees and commissions on loans (*1)		280,310
Fees and commissions on trust-related services		119,205
Fees and commissions on security-related services		196,015
Fees and commissions on credit card business (*1)		281,095
Fees and commissions on administration and management services for investment funds and investment advisory services		251,989
Guarantee fees (*2)		108,828
Other fees and commissions (*1)		265,979
Trust fees		144,147

(Notes)

1. Include revenues that are not within the scope of ASBJ Statement No.29, “Accounting Standard for Revenue Recognition.”

2. Guarantee fees are not included within the scope of ASBJ Statement No.29, “Accounting Standard for Revenue Recognition.”

3. Fees and commissions on remittances and transfers were generated mainly through the Digital Service Business Group, the Retail & Commercial Banking Business Group, the Japanese Corporate & Investment Banking Business Group, the Global Commercial Banking Business Group and the Global Corporate & Investment Banking Business Group. Fees and commissions on deposits were generated mainly through the Digital Service Business Group and the Global Commercial Banking Business Group. Fees and commissions on loans were generated mainly through the Digital Service Business Group, the Retail & Commercial Banking Business Group, the Japanese Corporate & Investment Banking Business Group and the Global Corporate & Investment Banking Business Group. Fees and commissions on trust-related services were generated mainly through the Asset Management & Investor Services Business Group. Fees and commissions on security-related services were generated mainly through the Retail & Commercial Banking Business Group, the Japanese Corporate & Investment Banking Business Group and the Global Corporate & Investment Banking Business Group. Fees and commissions on credit card business were generated mainly through the Digital Service Business Group. Fees and commissions on administration and management services for investment funds and investment advisory services were generated mainly through the Asset Management & Investor Services Business Group. Trust fees were generated mainly through the Retail & Commercial Banking Business Group, the Japanese Corporate & Investment Banking Business Group and the Asset Management & Investor Services Business Group.

4. For details of the performance obligations and the timing of revenue recognition for each revenue category, refer to “(15)Revenue Recognition” under “IV. Accounting policies” under “1.Significant Accounting Policies Applied to the Consolidated Financial Statements.”

–89–

18. Segment Information

I. Business segment information

(1) Summary of reporting segments

MUFG’s reporting segments are business units of MUFG which its Executive Committee, the decision-making body for the execution of its business operations, regularly reviews to make decisions regarding allocation of management resources and evaluate performance.

MUFG makes and executes unified group-wide strategies based on customer characteristics and the nature of business.

Accordingly, MUFG has adopted customer-based and business-based segmentation, which consists of the following reporting segments: Digital Service Business Group, Retail & Commercial Banking Business Group, Japanese Corporate & Investment Banking Business Group, Global Commercial Banking Business Group, Asset Management & Investor Services Business Group, Global Corporate & Investment Banking Business Group, Global Markets Business Group and Other.

Digital Service Business Group:	Providing financial services mainly in non-face-to-face transactions to individual and corporate customers, and promoting MUFG-wide digital transformation
Retail & Commercial Banking Business Group:	Providing services relating to finance, real estate and stock transfers to Japanese individual and corporate customers
Japanese Corporate & Investment Banking Business Group:	Providing services relating to finance, real estate and stock transfers to large Japanese corporate customers
Global Commercial Banking Business Group:	Providing financial services to individual and small to medium sized corporate customers of overseas commercial bank investees of MUFG
Asset Management & Investor Services Business Group:	Providing asset management and administration services to domestic and overseas investor and asset manager customers
Global Corporate & Investment Banking Business Group:	Providing financial services to large non-Japanese corporate customers
Global Markets Business Group:	Providing services relating to foreign currency exchange, funds and investment securities to customers, as well as conducting market transactions and managing liquidity and cash for MUFG
Other:	Other than the businesses mentioned above

(a) Changes in reporting segments

MUFG has reorganized its business groups (previously consisting of Retail & Commercial Banking Business Group, Japanese Corporate & Investment Banking Business Group, Global Corporate & Investment Banking Business Group, Global Commercial Banking Business Group, Asset Management & Investor Services Business Group, Global Markets Business Group and Other) in light of changes in the business environment, including the digital shift in society, under the medium-term business plan that was commenced in the fiscal year ended March 31, 2022 and changed its reporting segments to the current segmentation based on the reorganized business groups.

The business segment information for the fiscal year ended March 31, 2021 has been restated to reflect the foregoing changes in the reporting segments.

–90–

(2) Methods of calculation of net revenue, operating profit (loss), and fixed assets for each reporting segment

The accounting methods applied to the reported business segments, except the scope of consolidation, are generally consistent with the methods described in “1. Significant Accounting Policies Applied to the Consolidated Financial Statements”. The scope of consolidation includes MUFG’s major subsidiaries. The reported figures are generally prepared based on internal managerial accounting rules before elimination of inter-segment transactions and other consolidation adjustments. Net revenues and operating expenses attributable to multiple segments are reported in accordance with internal managerial accounting rules generally calculated based on market value.

Fixed assets for each reporting segment disclosed below represent the tangible fixed assets and intangible fixed assets related to the Bank and Mitsubishi UFJ Trust and Banking Corporation (“the Trust Bank”) as allocated to each reporting segment.

(a) Changes in the method of calculation of operating profit (loss) of each reporting segment

In the fiscal year ended March 31, 2022, MUFG changed the method of allocation of net revenue and operating expenses among reporting segments and accordingly changed the method of calculation of operating profit (loss) of each reporting segment.

The business segment information for the fiscal year ended March 31, 2021 has been restated based on the new calculation method.

In addition, as described in “Changes in Presentation of Financial Information” above, expenses related to credit cards, which were previously recorded as general and administrative expenses, are recorded as fees and commissions expenses. Accordingly, the business segment information for the fiscal year ended March 31, 2021 has also been retroactively restated to reflect this change.

–91–

(3) Information on net revenue, operating profit (loss), and fixed assets for each reporting segment

For the fiscal year ended March 31, 2021

	(in millions of yen)
	For the fiscal year ended March 31, 2021
	Digital Service Business Group		Retail & Commercial Banking Business Group		Japanese Corporate & Investment Banking Business Group		Global Commercial Banking Business Group			Asset Management & Investor Services Business Group		Global Corporate & Investment Banking Business Group		Total of Customer Business		Global Markets Business Group		Other			Total
Net revenue	¥	731,140	¥	567,389	¥	563,085	¥	783,457		¥	293,514	¥	431,478	¥	3,370,066	¥	640,338	¥	7,477		¥	4,017,882
BK and TB combined		258,441		373,768		451,523		1,039			99,494		274,396		1,458,663		386,255		32,894			1,877,813
Net interest income		223,578		165,765		186,990		1,649			5,451		138,299		721,735		212,268		37,362			971,365
Net non-interest income		34,862		208,002		264,533		(610	)		94,043		136,097		736,927		173,987		(4,467	)		906,448
Other than BK and TB combined		472,699		193,621		111,561		782,418			194,020		157,081		1,911,402		254,082		(25,416	)		2,140,068
Operating expenses		559,685		500,192		323,015		507,307			212,951		269,869		2,373,022		240,223		157,600			2,770,845
Operating profit (loss)	¥	171,455	¥	67,197	¥	240,069	¥	276,150		¥	80,563	¥	161,608	¥	997,044	¥	400,115	¥	(150,122	)	¥	1,247,037

(Notes)

1. “BK” refers to MUFG Bank, Ltd. and “TB” refers to Mitsubishi UFJ Trust and Banking Corporation.

2. “Net revenue” in the above table is used in lieu of net sales generally used by Japanese non-financial companies.

3. “Net revenue” includes net interest income, trust fees, net fees and commissions, net trading profit, and net other operating profit.

4. “Operating expenses” includes personnel expenses and premise expenses.

5. Assets and liabilities of each reporting segment are not reported since MUFG does not allocate assets and liabilities among the segments for internal management purposes.

–92–

For the fiscal year ended March 31, 2022

	(in millions of yen)
	For the fiscal year ended March 31, 2022
	Digital Service Business Group		Retail & Commercial Banking Business Group		Japanese Corporate & Investment Banking Business Group		Global Commercial Banking Business Group			Asset Management & Investor Services Business Group		Global Corporate & Investment Banking Business Group		Total of Customer Business		Global Markets Business Group			Other			Total
Net revenue	¥	727,040	¥	600,553	¥	620,578	¥	781,422		¥	348,940	¥	527,229	¥	3,605,765	¥	427,030		¥	27,115		¥	4,059,910
BK and TB combined		260,354		388,599		495,155		1,931			106,364		361,690		1,614,095		203,426			53,807			1,871,329
Net interest income		219,032		166,529		230,625		2,119			9,314		170,473		798,095		219,930			134,599			1,152,625
Net non-interest income		41,321		222,069		264,529		(187	)		97,050		191,216		816,000		(16,504	)		(80,792	)		718,703
Other than BK and TB combined		466,685		211,954		125,423		779,491			242,575		165,538		1,991,669		223,604			(26,691	)		2,188,581
Operating expenses		554,665		495,882		319,146		537,992			241,379		288,884		2,437,951		250,024			139,527			2,827,503
Operating profit (loss)	¥	172,374	¥	104,670	¥	301,431	¥	243,430		¥	107,561	¥	238,344	¥	1,167,813	¥	177,006		¥	(112,412	)	¥	1,232,407
Fixed assets at period end	¥	140,620	¥	191,676	¥	155,786	¥	1,031		¥	13,285	¥	133,019	¥	635,419	¥	108,360		¥	550,318		¥	1,294,098

(Notes)

1. “Net revenue” in the above table is used in lieu of net sales generally used by Japanese non-financial companies.

2. “Net revenue” includes net interest income, trust fees, net fees and commissions, net trading profit, and net other operating profit.

3. “Operating expenses” includes personnel expenses and premise expenses.

4. “Fixed assets” for each reporting segment in the above table represent those related to the Bank and the Trust Bank. Those fixed assets and consolidation adjustments related to MUFG and its other consolidated subsidiaries, which are not allocated to reporting segments, were ¥1,286,139 million. With respect to such fixed assets not allocated to reporting segments, certain related expenses are allocated to reporting segments on a reasonable basis.

(4) Reconciliation of the total operating profit in each of the above tables to the ordinary profit in the consolidated statement of income for the corresponding fiscal year

	(in millions of yen)
	For the fiscal years ended March 31,
	2021			2022
Total operating profit of reporting segments	¥	1,247,037		¥	1,232,407
Operating profit of consolidated subsidiaries excluded from reporting segments		(403	)		(383	)
Provision for general allowance for credit losses		(203,867	)		65,436
Credit related expenses		(378,886	)		(485,479	)
Gains on loans written-off		67,224			88,558
Net gains on equity securities and other securities		130,273			332,629
Equity in earnings of the equity method investees		321,761			441,595
Others		(129,526	)		(137,114	)
Ordinary profit in the consolidated statement of income	¥	1,053,610		¥	1,537,649

–93–

II. Related information

For the fiscal year ended March 31, 2021

(1) Information by type of service

Omitted because it is similar to the above-explained reporting segment information.

(2) Geographical information

(a) Ordinary income

(in millions of yen)
For the fiscal year ended March 31, 2021
Japan	United States	Europe/Middle East	Asia/Oceania	Others	Total
¥    3,258,653	¥    1,070,419	¥    378,864	¥    1,207,509	¥    109,889	¥    6,025,336

(Notes)

1. Ordinary income is used in lieu of net sales generally used by Japanese non-financial companies.

2. Ordinary income is categorized by either country or region based on the location of MUFG’s operating offices.

(b) Tangible fixed assets

(in millions of yen)
March 31, 2021
Japan	United States	Others	Total
¥    1,059,309	¥    89,439	¥    147,653	¥    1,296,402

(3) Information by major customer

None.

For the fiscal year ended March 31, 2022

(1) Information by type of service

Omitted because it is similar to the above-explained reporting segment information.

(2) Geographical information

(a) Ordinary income

(in millions of yen)
For the fiscal year ended March 31, 2022
Japan	United States	Europe/Middle East	Asia/Oceania	Others	Total
¥    3,347,625	¥    1,098,812	¥    333,684	¥    1,195,662	¥    100,102	¥    6,075,887

(Notes)

1. Ordinary income is used in lieu of net sales generally used by Japanese non-financial companies.

2. Ordinary income is categorized by either country or region based on the location of MUFG’s operating offices.

(b) Tangible fixed assets

(in millions of yen)
March 31, 2022
Japan	United States	Others	Total
¥    989,835	¥    93,550	¥    152,626	¥    1,236,012

(3) Information by major customer

None.

–94–

III. Information on impairment losses on fixed assets by reporting segment

Starting in the fiscal year ended March 31, 2022, impairment losses on fixed assets are allocated to reporting segments. Total impairment losses on fixed assets for the fiscal years ended March 31, 2021 were ¥41,240 million.

For the fiscal year ended March 31, 2022

	(in millions of yen)
	For the fiscal year ended March 31, 2022
	Digital Service Business Group		Retail & Commercial Banking Business Group		Japanese Corporate & Investment Banking Business Group		Global Commercial Banking Business Group		Asset Management & Investor Services Business Group		Global Corporate & Investment Banking Business Group		Total of Customer Business		Global Markets Business Group		Other		Total
Impairment losses	¥	72,090	¥	59,332	¥	952	¥	3,694	¥	857	¥	720	¥	137,647	¥	755	¥	3,358	¥	141,761
(Note) Impairment losses on fixed assets related to MUFG and its consolidated subsidiaries other than those related to the Bank and the Trust Bank are not allocated to reporting segments. Such unallocated impairment losses for the fiscal year ended March 31, 2022 were ¥32,372 million. IV.  Information on amortization and unamortized balance of goodwill by reporting segment For the fiscal year ended March 31, 2021
	(in millions of yen)
	For the fiscal year ended March 31, 2021
	Digital Service Business Group		Retail & Commercial Banking Business Group		Japanese Corporate & Investment Banking Business Group		Global Commercial Banking Business Group		Asset Management & Investor Services Business Group		Global Corporate & Investment Banking Business Group		Total of Customer Business		Global Markets Business Group		Other		Total
Amortization	¥	—	¥	175	¥	44	¥	2,679	¥	10,957	¥	2,977	¥	16,833	¥	—	¥	—	¥	16,833
Unamortized balance at period end		—		1,050		431		31,888		199,267		40,453		273,092		—		—		273,092
For the fiscal year ended March 31, 2022
	(in millions of yen)
	For the fiscal year ended March 31, 2022
	Digital Service Business Group		Retail & Commercial Banking Business Group		Japanese Corporate & Investment Banking Business Group		Global Commercial Banking Business Group		Asset Management & Investor Services Business Group		Global Corporate & Investment Banking Business Group		Total of Customer Business		Global Markets Business Group		Other		Total
Amortization	¥	—	¥	240	¥	44	¥	2,914	¥	11,719	¥	3,134	¥	18,051	¥	—	¥	—	¥	18,051
Unamortized balance at period end		—		2,115		387		30,148		199,732		38,969		271,353		—		—		271,353

V. Information on gains on negative goodwill by reporting segment

None.

VI. Related-party transactions

(1) Transactions between MUFG and its related parties

(a) Unconsolidated subsidiaries and affiliates

For the fiscal year ended March 31, 2021

None.

For the fiscal year ended March 31, 2022

None.

–95–

(2) Information on the parent company or significant equity method investees

(a) Information on the parent company

None.

(b) Summarized financial information of MUFG’s significant equity method investees

Summarized consolidated financial information of Morgan Stanley, MUFG’s significant equity method investee, as of and for the fiscal year ended December 31, 2020 and 2021 is as follows:

The consolidated financial statements of Morgan Stanley are prepared in accordance with U.S.GAAP.

	(in millions of yen)
	Morgan Stanley
	December 31, 2020		December 31, 2021
Trading assets at fair value	¥	32,368,383	¥	33,915,832
Securities purchased under agreements to resell		12,030,219		13,802,284
Securities borrowed		11,632,468		14,919,589
Total assets		115,491,717		136,659,862
	(in millions of yen)
	Morgan Stanley
	December 31, 2020		December 31, 2021
Deposits	¥	32,165,937	¥	39,977,961
Customer and other payables		23,539,729		26,303,348
Borrowings		22,467,676		26,814,267
Total liabilities		104,815,795		124,398,960
Noncontrolling interests		141,588		133,078
	(in millions of yen)
	Morgan Stanley
	For the fiscal year ended December 31,
	2020		2021
Net revenues	¥	5,046,349	¥	6,873,020
Total non-interest expenses		3,475,323		4,610,346
Income before provision for income taxes		1,492,263		2,262,213
Net income applicable to Morgan Stanley		1,138,086		1,729,210

–96–

19. Per Share Information

	For the fiscal year ended March 31, 2021	For the fiscal year ended March 31, 2022
Total equity per common share	¥1,308.12	¥1,349.51
Basic earnings per common share	¥60.49	¥88.44
Diluted earnings per common share	¥60.25	¥88.05

(Notes)

1. The bases for the calculation of basic earnings per common share and diluted earnings per common share for the periods indicated were as follows:

		For the fiscal year ended March 31, 2021	For the fiscal year ended March 31, 2022
Basic earnings per common share
Profits attributable to owners of parent	million yen	777,018	1,130,840
Profits not attributable to common shareholders	million yen	—	—
Profits attributable to common shareholders of parent	million yen	777,018	1,130,840
Average number of common shares during the periods	thousand shares	12,843,564	12,785,341
Diluted earnings per common share
Adjustments to profits attributable to owners of parent	million yen	(3,175)	(5,050)
Adjustments related to dilutive shares of consolidated subsidiaries and others	million yen	(3,175)	(5,050)
Increase in common shares	thousand shares	—	—
Description of antidilutive securities which were not included in the calculation of diluted earnings per common share		Share subscription rights issued by equity method affiliates:     Morgan Stanley Stock options and others     —  5 million units as of December 31, 2020	Share subscription rights issued by equity method affiliates:     Morgan Stanley Stock options and others     —  0 million units as of December 31, 2021

2. The bases for the calculation of total equity per common share for the periods indicated were as follows:

		As of March 31, 2021	As of March 31, 2022
Total equity	million yen	17,716,257	17,988,245
Deductions from total equity:	million yen	913,684	964,471
Non-controlling interests	million yen	913,684	964,471
Total equity attributable to common shares	million yen	16,802,572	17,023,773
Number of common shares at period end used for the calculation of total equity per common share	thousand shares	12,844,802	12,614,699

3. The shares of MUFG common stock remaining in the BIP trust, which were included in the treasury stock as part of shareholders’ equity, were deducted from the average number of common shares for each reporting period used for the calculation of earnings per common share and from the number of common shares as of the end of each reporting period used for the calculation of total equity per common share. The average number of such treasury stock deducted from the calculation of earnings per common share for the fiscal year ended March 31, 2021 and 2022 was 28,248 thousand shares and 32,343 thousand shares, respectively, and the number of such treasury stock deducted from the calculation of total equity per common share as of March 31, 2021 and 2022 was 27,002 thousand shares and 31,660 thousand shares, respectively.

–97–

20. Bonds Payable

Bonds payable as of March 31, 2021 and 2022 consisted of the following:

		(in millions of yen)
Description	Issued	2021		2022		Coupon rate (%)	Secured or unsecured	Due
MUFG:
Subordinated bonds payable in yen	Jun.2014 to Jul. 2021		¥1,849,095		¥1,676,939	0.29-1.39	Unsecured	Jun. 2024 to Jul. 2031
Undated subordinated bonds payable in yen	Oct. 2015 to Oct. 2021		1,650,300		1,445,100	0.82-2.50	Unsecured	—
Straight bonds payable in yen	Nov. 4, 2021		—		95,900	0.14-0.42	Unsecured	Nov. 2025 to Nov. 2032
Senior bonds payable in US$	Mar. 2016 to Jan. 2022		4,893,864 (US$44,204 million) [789,720]		5,917,482 (US$48,349 million) [916,980]	0.82-4.28	Unsecured	Jul. 2021 to Jul. 2039
Euro senior bonds payable in Euro	Sep. 2017 to Jun. 2021		528,286 (EUR4,070 million)		624,719 (EUR4,570 million) [68,350]	0.02-1.74	Unsecured	Jan. 2023 to Jan. 2033
Euro senior bonds payable in A$	Jul. 2017 to Oct. 2019		60,401 (A$716 million)		65,872 (A$716 million)	1.31-4.05	Unsecured	Oct. 2024 to Dec. 2027
Euro senior bonds payable in HK$	May. 2018 to Nov. 2019		7,604 (HK$534 million)		8,351 (HK$534 million)	2.73-3.55	Unsecured	May. 2025 to Nov. 2029
the Bank: *1
Straight bonds payable in yen	Oct. 2002 to Jul. 2014		123,300 [51,000]		72,400 [35,000]	0.35-2.34	Unsecured	Apr. 2021 to Apr. 2027
Senior bonds payable in US$	Feb. 2013 to Mar. 2015		430,121 (US$3,885 million) [83,033]		383,567 (US$3,133 million) [61,183]	2.60-4.70	Unsecured	Sep. 2021 to Mar. 2044
Euro senior bonds payable in US$	Jan. 2015 to Mar. 2022		598,437 (US$5,405 million)		655,392 (US$5,354 million)	0.00	Unsecured	Apr. 2021 to Mar. 2052
Senior bonds payable in Euro	Mar. 11, 2015		97,288 (EUR749 million) [97,288]		—	0.87	Unsecured	Mar. 11, 2022
Euro senior bonds payable in Euro	Sep. 2017 to Sep. 2018		12,331 (EUR95 million)		6,151 (EUR45 million)	(0.32)- (0.10)	Unsecured	Sep. 2021 to Sep. 2033
Euro senior bonds payable in A$	Mar. 17, 2017		3,095 (A$36 million)		—	0.00	Unsecured	Mar. 17, 2022
Subordinated bonds payable in yen	Oct. 2009 to May. 2012		350,900 [115,000]		236,000 [60,000]	1.39-2.91	Unsecured	Jun. 2021 to Jan. 2031
the Trust Bank: *1
Short-term bonds	Mar. 2022 to Mar. 2022		—		289,999 [289,999]	0.00	Unsecured	May. 2022 to Jul. 2022
Straight bonds payable in yen	Jun. 2014 to Sep. 2014		10,000 [10,000]		—	0.35-0.44	Unsecured	Jun. 2021 to Sep. 2021
Euro bonds payable in US$	Jun. 27, 2016		12,071 (US$109 million) [12,071]		—	1.88	Unsecured	Jun. 15, 2021
Euro bonds payable in A$	Jun. 27, 2016		14,009 (A$171 million) [14,009]		—	2.85	Unsecured	Jun. 15, 2021
Subordinated bonds payable in yen	Oct. 2010 to Jun. 2012		169,894 [69,961]		99,946 [79,946]	1.36-1.92	Unsecured	Apr. 2021 to Oct. 2025
Euro subordinated bonds payable in yen	Apr. 27, 2010		10,000		10,000	2.61	Unsecured	Apr. 26, 2030
Subsidiaries: *2
Short-term bonds	Sep. 2020 to Mar. 2022		1,043,001 [1,043,001]		1,026,803 [1,026,803]	(0.03)-0.03	Unsecured	Apr. 2021 to Oct. 2022
Straight bonds	Feb. 2007 to Mar. 2022		1,822,167 (US$3,969 million) (EUR13 million) (A$5 million) (KHR120,000 million) (THB89,364 million) (CNY35 million) (IDR8,406,810 million) (MYR250 million) [477,290]		1,694,660 (US$2,775 million) (EUR3 million) (A$5 million) (THB59,708 million) (CNY34 million) (IDR6,758,950 million) (MYR250 million) [597,355]	0.00-65.00	*3	Jan. 2021 to Mar. 2052
Straight bonds (*4)	Mar. 2020 to Mar. 2021		3,714 [256]		6,154 [463]	0.95	Secured	Sep. 2034 to Jan. 2035
Subordinated bonds	Aug. 1997 to Dec. 2021		261,621 (US$48 million) (THB60,810 million) [2,606]		258,708 (US$44 million) (THB60,810 million) [483]	0.10-9.90	Unsecured	Mar. 2021 to Mar. 2035
Total	—		¥13,951,499		¥14,574,143	—	—	—

–98–

(Notes)

*1. “the Bank” refers to MUFG Bank, Ltd., and “the Trust Bank” refers to Mitsubishi UFJ Trust and Banking Corporation.

*2. Subsidiaries include MUFG Americas Holdings Corporation, MUFG Securities EMEA plc, BTMU (Curacao) Holdings N.V., MUFG Bank (Malaysia) Berhad, Bank of Ayudhya Public Company Limited, PT Bank Danamon Indonesia, Tbk., EASY BUY Public Company Limited, Mitsubishi UFJ Morgan Stanley Securities Co., Ltd., Mitsubishi UFJ Securities Holdings Co., Ltd., Mitsubishi UFJ NICOS Co., Ltd., and ACOM CO., LTD., etc.

*3. The straight bonds payable as of March 31, 2022 include 19 series of secured straight bonds payable issued by MUFG’s consolidated subsidiaries.The remaining series are unsecured.

*4. The straight bonds payable are non-recourse debt.

5. “(    )” represents the amounts expressed in the foreign currencies payable.

6. “[    ]” represents the amounts expected to be redeemed within one year.

7. Annual maturities of bonds payable as of March 31, 2022 were as follows:

Year ending March 31	(in millions of yen)
	Bonds payable		Bonds payable that are non-recourse debt
2023	¥	3,136,102	¥	463
2024		1,271,881		463
2025		1,473,369		463
2026		1,115,022		463
2027		550,404		463

–99–

21. Borrowed Money, Lease Liabilities and Commercial Paper

“Borrowed money,” “Lease liabilities” and “Commercial paper” as of March 31, 2021 and 2022 were as follows:

	(in millions of yen)
	March 31, 2021		March 31, 2022
Borrowings from banks and other due 2021-2051 at 0.07% on average	¥	31,110,465	¥	31,763,332
Bills rediscounted		–		–
Total borrowed money	¥	31,110,465	¥	31,763,332
Lease liabilities due 2021-2048		123,355		118,850
Commercial paper at 0.43% on average		1,810,350		2,108,531

(Notes)

1. The interest rates above are calculated using the weighted-average method based on the interest rates and balances as of March 31. The average interest rate on lease liabilities is not presented above because finance lease liabilities are recorded in the accompanying consolidated balance sheets on the basis of the total amount of lease payments before deduction of interest in certain consolidated companies.

2. The borrowings above include non-recourse debts of a consolidated special purpose entity.

3. Since the commercial banking business accepts deposits and raises and manages funds through the call loan and commercial paper markets in the ordinary course of business, this Note 22 shows details of Borrowed money included in Liabilities and Lease liabilities included in Other liabilities in the accompanying consolidated balance sheets.

4. “Commercial paper” is issued in the form of promissory notes as a funding operation.

Annual maturities of borrowings as of March 31, 2022 were as follows:

Year ending March 31	(in millions of yen)
2023	¥	11,652,979
2024		1,049,809
2025		16,489,853
2026		1,308,350
2027		391,605

Annual maturities of lease liabilities as of March 31, 2022 were as follows:

Year ending March 31	(in millions of yen)
2023	¥	26,065
2024		21,201
2025		16,292
2026		13,551
2027		11,367

–100–