Mitsubishi UFJ Financial Group (MUFG), Japan’s largest bank by assets, has posted record first half earnings. For the six months to end September, net operating profits were JPY1.086trn ($7.16bn) up 21%, on continued momentum for enhancing earnings power. This exceeds the impact of the sale of MUFG Union Bank (MUB). MUFG is in the final year of its medium-term business plan and is on track to meet its target of a ROE of 7.5%.

Successful cost control includes disciplined resource management, despite increases due to revenue expansion and inflation. RWA are being managed at around the FY2020-level excluding factors such as FX impact, through disciplined RWA management that optimises risk and return.

Gross profits increased by 7% to JPY2,487.4bn. Foreign interest income from loans and deposits increased and net fees and commissions are also up. This is driven by an increase in foreign loan-related fees, and net trading profits and net other operating profits rose driven by an increase in the Sales & Trading segment benefitting from market volatility.

MUFG: share repurchase and dividend rise

Notably, MUFG plans a share repurchase of up to JPY400bn, equivalent to about 3.3% of its outstanding shares. The MUFG share price is back at levels not witnessed since 2016 and is ahead by 15% YTD.

The FY23 dividend per common stock forecast is JPY41 an increase of 28%.

Looking ahead, MUFG and its peers are set to benefit if the central bank ends its seven-year negative interest-rate policy. This is forecast for 2024 as Japan battles against high levels of inflation.