Filing under Rule 425 under the U.S. Securities Act of 1933
Filing by: Mitsubishi Tokyo Financial Group, Inc.
Subject Company: UFJ Holdings, Inc.
MTFG SEC File No. 1-10277
MTFG
Mitsubishi Tokyo Financial Group
Investor Meeting
December 3, 2004
This document contains forward-looking statements in regard to forecasts, targets, plans etc. of Mitsubishi Tokyo Financial Group (MTFG) and its group companies. These forward-looking statements are based on information currently available to MTFG and are stated here on the basis of the outlook at the time that this document was produced. In addition, in producing these statements certain assumptions (premises) have been utilized. These statements and assumptions (premises) are subjective and may prove to be incorrect and may not be realized in the future. Underlying such circumstances are a large number of risks and uncertainties. Please see our latest Annual Report and other public filings for additional information regarding such risks and uncertainties.
In addition, information in regard to companies and others etc. outside MTFG or the Group that is recorded in this document has been obtained from publicly available information and other sources. The accuracy and appropriateness of that information has not been verified by MTFG and cannot be guaranteed.
Figures used in this report are defined as follows:
Consolidated : MTFG Consolidated.
Sum of the 2 banks : Sum of the non-consolidated figures for BTM and MTB on a simple combined basis.
2
Agenda
Overview
Outline of FY04 H1 results
FY2004 Interim results
Gross Profit (Consolidated)
Expenses (Consolidated)
Net Operating Profit (Consolidated)
Deposit and Lending Income
Fees & Commissions
NPLs 1 (Sum of the 2 banks)
NPLs 2 (Sum of the 2 banks)
Securities Gains and Losses/Equity Portfolio
Mitsubishi Securities
UnionBanCal Corporation
FY 2004 Earning Targets
Integration with UFJ group
Aims of Management Integration
Expanding Business Opportunity through Management Integration
Examples of Expanding Business Opportunity
Segment Strategy — Retail 1, 2
Segment Strategy — Corporate 1, 2
Segment Strategy — Trust assets 1, 2
Effective Use of Resources
Review Domestic and Overseas Network and New Channel Strategy 1, 2
New group — Management Structure
Business Management Platform of New Group (BSC/ISO) 1, 2
New group — Shared Personnel Platform
Business Tie-ups: Launched and under Consideration
Reference:Status of Key Products and Services
Reference
3
Overview
Outline of FY 04 H1 Results
Continuing shift in profit structure
Decline in treasury income, etc. led to decline in net business profit but customer business made strong progress (Share of core business profit increased from 54% to 64%)
Strong balance sheet maintained
Increase in NPLs but declining trend intact
Credit related expenses broadly in line with May forecast
BIS capital ratio maintained at around 11% after capital injection to UFJ Bank and investment in ACOM
Integration with UFJ Group
New aspiration
Become one of global top 5 financial institutions by market cap by end of FY2008
(Yen bn)
FY 2003 H1
FY 2004 H1
Change
1 Net business profit*1 417.8 388.9 (28.9)
2 Net gains (losses) on equity securities (9.0) (4.7) 4.3
3 Ordinary income 273.4 310.3 36.8
4 Net special gains 234.9 17.5 (217.3)
5 Interim net income 301.8 171.6 (130.1)
6 Core businesses net profit 234.0 266.4 32.4
(%of total) (54%) (64%) +10 points
7 Credit related costs*2 (sum of 2 banks) 92.8 (50.1) (143.0)
8 Credit related costs *2 (consolidated) 63.2 (56.3) (119.6)
End March 2004
End Sept 2004
Change
9 NPL ratio (sum of two banks) 2.93% 3.28% 0.34 points
10 Equity holdings/Tier 1 ratio*3 72.12% 62.80% (9.31) points
11 BIS Capital ratio 12.95% 10.92% (provisional) (2.02)points
*1 Before credit costs for trust accounts and provision for formula allowance for loan losses
*2 Including gain on reversal of provisions
*3 Sum of equity and foreign equity within Other marketable securities (Consolidated; Acquisition price basis)
FY2004 Interim Results
Gross Profit (consolidated)
Gross profit declined mainly due to decline in treasury income (-¥ 19.0 bn from FY03 H1), which was partly offset by an increase in fees and commissions (+¥46.3 bn)
(Yen bn)
Fiscal 03 H1
Fiscal 04 H1
Change
% of total
% of total
% change
1 Gross profit (Cons.)*1 907.3 100.0% 888.2 100.0% (19.0) (2.1%)
2 Interest income*2 552.3 60.8% 528.4 59.4% (23.8) (4.3%)
3 Commissions * 3 221.5 24.4% 267.8 30.1% 46.3 20.9%
4 Special & Other *4 133.5 14.7% 91.9 10.3% (41.6) (31.1%)
(Yen bn)
Fiscal 03 H1
Fiscal 04 H1
Change
% of total
% of total
% change
5 Gross profit (Cons.) * 1 907.3 100.0% 888.2 100.0% (19.0) (2.1%)
6 BTM 467.4 51.5% 471.0 53.0% 3.6 0.7%
7 MTBC 178.6 19.6% 157.3 17.7% (21.3) (11.9%)
8 (Sum of the 2 banks) 646.0 71.1% 628.3 70.7% (17.6) (2.7%)
9 Mitsubishi Securities 60.6 6.6% 54.6 6.1% (6.0) (9.9%)
10 UNBC 133.2 14.6% 130.5 14.7% (2.6) (2.0%)
11 Other *5 67.4 7.4% 74.8 8.4% 7.3 10.8%
*1 Before trust account write-offs.
*2 Lending income+Fees from loan trusts and jointly-managed trusts.
*3 Transaction fees + Trust fees (excluding loan trusts and jointly-managed trusts).
*4 Profit from special transactions etc. + Other business profit.
*5 Including gross profits of consolidated subsidiaries of MTFG other than BTM, MTBC, Mitsubishi Securities and UNBC, and consolidation adjustment.
Gross profit by segment
(Yen bn)
1,000
800
600
400
200
0
FY02 H1
FY03 H1
FY04 H1
Special & *4
Fees & Commisions *3
Lending income*2
Gross profit by company
(Yen bn)
1,000
800
600
400
200
0
FY02 H1
FY03 H1
FY04 H1
Other
UNBC
Mitsubishi Securities *
MTBC
BTM
*6 Mitsubishi Securities FY 2002 H1 figures comprise the April-August 2002 figures for the former Tokyo-Mitsubishi Securities and the former Tokyo-Mitsubishi Personal Securities and the September 2002 figures for Mitsubishi Securities.
7
Expenses (consolidated)
Consolidated expenses increased ¥9.8 bn from FY03 H1
Expense ratio increased by 2.3 percentage points to 56.2%
Expenses decreased by ¥1.9 bn based on sum of the 2 banks basis despite increases in deposit insurance payments and depreciation
(¥ bn)
FY 03 H1 FY 04 H1 Change
% of % of %
total*1 total*1 change
1 Consolidated expenses 489.5 53.9% 499.3 56.2% 9.8 2.0%
2 BTM 232.3 49.7% 237.6 50.4% 5.2 2.2%
3 MTBC 77.3 43.2% 70.1 44.5% (7.2) (9.3%)
4 Sum of the 2 banks 309.6 47.9% 307.7 48.9% ( 1.9) (0.6%)
5 Of which personnel 120.8 - 114.3 - (6.5) (5.3%)
expenses
6 Of which non-personnel 173.5 - 176.8 - 3.2 1.8%
expenses
7 - Of which depreciation 36.4 - 38.7 - 2.2 6.2%
8 - Of which insurance 20.9 - 22.0 - 1.1 5.4%
deposit payments
9 Mitsubishi Securities 43.6 71.9% 45.3 83.1% 1.7 4.0%
10 UNBC 79.7 59.8% 81.2 62.2% 1.5 1.9%
11 Other *2 56.5 - 65.0 - 8.4 15.0%
*1 Expenses÷consolidated gross profit before credit costs for trust accounts
*2 Including expenses of consolidated subsidiaries of MTFG other than BTM, MTB, Mitsubishi Securities and UNBC, and consolidation adjustment.
Breakdown of expenses (exc. taxes) .
(sum of the 2 banks)
(Yen bn)
350
300
250
129.6 120.8 114.3
200
150
120.1 116.2 116.1
100
50 18.9 20.9 22.0
34.1 36.4 38.7
0
2002 H1 2003 H1 2004 H1
Depreciation Deposit insurance Others Personnel expenses
8
Consolidated Net Operating Profit
Strong growth in core net business profits *1
Ratio to total net business profit rose to 64%
* 1 Net operating profits —————-Consolidated business profits before consolidation adjustments(managerial accounts basis; excludes only dividends from subsidiaries) Core net operating profits——— Net operating profits for the three business segments (retail, corporate and trust assets)
Consolidated net operating profit
(¥ bn)
500 400 300 200 100 0
Total 427.7 bn
193.7
(UNBC 56.7 Treasury 179.2)
39.0
195.2 Core 234.0 bn
Trust assets (2)
Total 414.7 bn
Treasury, UNBC*1 etc 148.3 (UNBC (*1) 64.5 Treasury 129.0)
Retail 61.1 Corporate 202.7 Core 266.4 bn Trust assets 2.6 2003 H1 2004 H1
Core net operating profits Total net operating profits = 54% 64%
Profit drivers for each business segment
<Retail>
Increase in sales of equity investment trusts (BTM+MTB + Mitsubishi Securities) Sales amount approx. ¥440 bn (+15% from FY03 H1)
Increase in sales of individual annuity insurance (BTM+MTB + Mitsubishi Securities) Sales amount approx. ¥274 bn (+140% from FY03 H1)
<Corporate>
Increase in average lending volume*2 for SMEs (BTM) +¥300bn from FY03 H1
Increase in revenues from investment banking business for customer derivatives
<Trust assets>
Increase in investment trust under management
Approx.¥1.7tn as of end Sept.04(+50% from end of Sept.03)
Increase in asset balance under administration
Approx. ¥101tn (+16% from end of Sept.03)
*1 Including ¥13.9 bn profit of special items such as sale of UNBC’s
merchant card business
*2 Average lending volume by BTM (administered through Commercial Banking
Business Unit) for creditworthy corporates with annual sales being less than ¥3bn
9
Deposit and Lending Income
Deposits and lending income declined by¥4.7bn from FY03 H1 (Sum of the 2 banks ¥Management accounts basis)
Mainly due to decline in income from ‘Close watch or below’ category loans (-¥8.7bn). Income
from loans to domestic creditworthy borrowers increased by ¥2.5 bn from FY03 H1
Maintained growth in average lending balance to creditworthy domestic borrowers. In
particular, new lending products sales to SMEs steadily grew
its and lending income
(Sum of the 2 banks¥
[GRAPHIC APPEARS HERE]
10
Fees and Commissions
Strong growth in fees and commissions. Increased by ¥26.6 billion (+23.8%) from FY03 H1
(sum of the 2 banks, Management accounts base)
Investment trust (+ ¥9.0bn)/Individual annuity insurance sales (+ ¥7.5 bn), particularly strong
Fee income ratio (consolidated/financial accounting basis) recorded 30.1%, increased by
5.7 percentage points from FY03 H1
Fees and commissions (sum of the 2 banks/Management accounts basis)
(¥ bn)
140 120 100 80 60 40 20 0
FY02 H1
FY03 H1
FY04 H1
Total ¥100.5 bn
13.5 35.1 3.5 15.3 32.9
Total ¥111.3 bn
14.0
30.4
11.6
18.9
36.5
Total ¥138.0
18.5
34.9
20.7
26.4
37.5
Forex fees, etc.
Trust and asset management and administration
Investment trusts/annuities
Investment banking
Domestic service fees
Key points of FY04 H1 results Key
Investment trusts, Investment annuities
Strong growth in sales of equity investment trusts and individual annuity insurances with its commissions increased (investment trust +¥1.7bn, Insurance +¥7.3bn)
Investment banking
Syndicated loans +¥5bn, Bond issuance +¥1.1bn, both strong
Trusts, Asset management and administration
Real estate +¥1.8bn, Securities transfer agency +¥1.6bn etc. strong
11
NPLs 1 (sum of the 2 banks)
NPL ratio rose to 3.28% caused by a downgrade of a few large borrowers
NPL ratio expected to decline to between 2 and 3% by end of FY04 H2
Credit related expenses in line with May forecast
Amount and ratio of NPLs disclosed under the Financial Revitalization Law *1
¥ bn
(%)
3,000
2,500
2,000
1,500
1,000
500
0
Achieved the target of halving NPL ratio
5.34%
3.84%
2.93%
3.28%
Expected to decline to 2-3% by end of FY04 H2
End Mar 03
End Sep 03
End Mar 04
End Sep 04
Claims on bankrupt or virtually bankrupt borrowers
Claims under high risk
Claims under close observation
NPL ratio
6.00
5.00
4.00
3.00
2.00
1.00
0.00
Credit related expenses FY04 H1 *1
(¥ bn)
231.3
Formula allowance for loan losses
Reversal gain
Loss on disposal,etc.
Specific allowance for loan losses
223.9
57.5
Expense realized
Credit-related expenses (net)
50.1
In line with May forecast
-50 -100 -150 -200 -250 -300 300 250 200 150 100 50 0
*1 Figures are the sum of the 2 banks basis.
12
NPLs 2 (sum of the 2 banks)
In FY04 H1, there was a significant shift from the “Claims under close observation” category to the “Claims under high risk and below” category caused by downgrade of a few large borrowers
FY03- H1 NPL shift by debtor category
( ¥ bn)
-1,000 -800 -600 -400 -200 0 200 400 600 800 1,000
Close observation
collection, etc.
High risk or below
Decrease
collection, etc.
Increase
Total
Write off and sale, etc.
collection, etc .
Category up to creditworthy and close watch
Category down from creditworthy and close watch
FY04 H1- NPL shift by debtor category
(¥ bn)
-1,000 -800 -600 -400 -200 0 200 400 600 800 1,000
Close observation
High risk or below collection,etc.
Total
Write off and sale, etc.
Category up to creditworthy and close watch
Category down from creditworthy and close watch
Change in
NRL category
High risk or below close observation
Close observation High risk or below
Decrease in NPLs
Category up to creditworthy and close watch
Increase in NPLs
Category down from creditworthy and close watch
The above two chart shows the rounded amounts of the claim under close observation and the claims under high risk or below, which are different from the ones disclosed under the Financial Revitalization Law.
13
Securities Gains and Losses/ Equity Portfolio
Net unrealized gains on “Other marketable securities” ¥705.7bn
Ratio of Equity holdings to Tier 1 capital down to approx. 62% (consolidated acquisition cost basis)
Other marketable securities - gains/losses *1 (Cons.)
(¥ bn)
Acquisition cost Balance Sheet amount End September 2004
Appraisal gain/loss
Compared End Mar 04 Appraisal Gain Appraisal loss
Equities 2,508.0 3,142.6 634.6 (150.6) 744.2 109.6
Bonds 20,192.1 20,216.2 24.1 20.7 45.4 21.3
Other 7,642.7 7,689.7 46.9 (111.8) 100.0 53.0
Total 30,342.8 31,048.5 705.7 (241.8) 889.7 184.0
*1 Market value on last day of period
Maturities of Japanese government, foreign bonds *2
(¥ bn)
Japanese End Mar 04 55.5% 37.3% 5.6% 1.6% 100.0%
Government End Sep 04 59.2% 31.9% 7.4% 1.4% 100.0%
Bonds Change 3.7% (5.3%) 1.8% (0.2%) -
Foreign End Mar 04 16.1% 66.9% 6.9% 10.0% 100.0%
Bonds End Sep 04 8.0% 62.2% 15.5% 14.2% 100.0%
Change (8.1%) (4.7%) 8.6% 4.2% -
*2 Bonds with a redemption date & bonds intended to be held to maturity in ‘Other marketable securities’
*3 For JGB’s with maturities 10 years or longer, floating rate JGBs excluded.
Reduction in equity holdings *4
Reduced to within Tier 1 capital
Approx.62 % of Tier1
(¥ tn)
4.5 4.0 3.5 3.0 2.5 2.0 1.5 1.0 0.5 0.0
End March 03
End Sep. 03
End March 04
End Sep. 04
Equity holdings
Tier 1
*4 Total of Japanese and overseas equities for which a market price is available in ‘Other marketable securities’ (Consolidated purchase cost basis).
Mitsubishi Securities
Strong increase in commissions but trading income declined
(Yen bn)
FY 03 H1 FY 04 H1
Change
Operating revenue 67.7 67.3 (0.4)
Net Operating Revenue*1 65.5 59.7 (0.5)
Sales and general expenses 48.8 50.9 2.0
Operating income 16.7 8.8 (7.9)
Ordinary income 17.9 10.7 (7.2)
Net income 20.5 11.4 (9.1)
*1 Net Operating Revenue =Operating revenue – Financial cost
Breakdown of operating revenue and Net income (Consolidated)
(¥ bn)
80 70 60 50 40 30 20 10 0
FY03 H1
FY04 H1
Financial income
Trading income
Commissions
Operating revenue
Operating income
Net income
: FY 04 H1 : Key points
Commissions up strongly: + approx. 44% from FY03 H1
Equity commissions +¥5.2 bn (up 43%)
Underwriting/Sales fees increased by ¥1.8 bn (up 47%) as large mandates won
Placement/Selling fees increased sharply on sales of investment trusts +¥1.4bn (up 52%)
Other fees and commissions +¥3.6bn (up 45%) as a result of strong performance in M&A and securitization
Trading income decreased by approx. 41% from FY03 H1
15
UnionBanCal Corporation
Increase in demand deposit account has lowered funding costs,
Growth in lending and retail fee income has contributed to stable profit growth
Large reduction in NPAs resulted in reversal of NPA reserves
(US$ mn)
FY 03 H1 FY 04 H1
Change
Gross profit 1,166 *1,344 177
Operating expenses 693 749 55
Net business profit 473 594 121
Addition to reserves 55 (15) (70)
Net income 280 388 108
NPAs 379 183 (195)
* Including US$128 mn profit of special items such as sale of UNBC’s merchant card business
Income growth
(US$ million)
1,400 1,200 1,000 800 600 400 200 0
Fee and commissions
Interest income
FY02 H1
FY03 H1
FY04 H1
Gross profit
Net business profit
Net income
FY04 H1: Key points
Lower funding costs, Lending and fee business strong
Demand deposit A/C balance: $19.9bn (+15.6% on FY03 H1)
Overall cost of funds : 0.44% (-0.2 pts on FY03 H1)
Commercial lending balance : $9.2bn (+4.7% on end FY03 )
Home loans outstanding : $8.2bn (+10.2% on end FY03 )
Non-interest income : $540m (+39.4% on FY03 H1)
Major decline in NPAs
(-51.5% from FY03 H1)
(Reserves/NPAs 272%)
: $180m
: $500m
Non performing assets NPA reserves
Trend in NPAs and Reserves
(US$ million)
800 700 600 500 400 300 200 100 0
150%
147%
272%
FY02 H1
FY03 H1
FY04 H1
(Reserves/NPA ratio)
NPAs
Reserves
16
FY2004 Earnings Targets
MTFG
Ordinary income (loss)
Net income (loss)
Dividend on common stock per share(Yen)
FY 2004 Target (Yen bn)
Consolidated Non-consolidated
640.0 206.0
340.0 206.0
6,000
FY 2003 (Yen bn)
Consolidated Non-consolidated
578.3 64.4
560.8 64.4
6,000
(Reference)
Bank of Tokyo-Mitsubishi
Net business profit*
Ordinary income (loss)
Net income (loss)
FY 2004 Target (Yen bn)
Consolidated Non-consolidated
- 500.0
525.0 380.0
275.0 210.0
FY 2003 (Yen bn)
Consolidated Non-consolidated
612.0 466.8
446.5 290.2
429.2 359.7
*Before provision for formula allowance for loan losses
Mitsubishi Trust
Net business profit*
Ordinary income (loss)
Net income (loss)
FY 2004 Target (Yen bn)
Consolidated Non-consolidated
- 165.0
125.0 120.0
65.0 65.0
FY 2003 (Yen bn)
Consolidated Non-consolidated
188.4 188.0
147.4 138.5
130.2 122,7
*Before credit costs for trust accounts and provision for formula allowance for loan losses
17
Integration with UFJ Group
Aim of Management Integration
Establish strong customer base and network through management integration with UFJ
Aim to increase revenues and maximize shareholder value by offering attractive product / service mix through the three core integrated business groups
MTFG
Bank
Trust
Securities
Earning Drivers
Retail
Housing Mortgage Loans Investment Trusts Individual Annuity Insurance Foreign Currency Deposits Comprehensive Card Consumer Loans
Corporate
Loans for SMEs Syndicated Loans
Investment banking, Trust Businesses Derivatives Cash Settlement
Trust Asset
Investment Trust
(Asset Management/Asset Administration)
Expanding investment product line up Pension consulting services
Customer base & Network
Retail
High net worth Asset building
Mass retail
Corporate
Blue chip
SMEs
Overseas
Tokyo Metropolitan district
Central Japan Region (Chubu)
Western Japan Region (Kansai)
UFJ
18
Expanding Business Opportunity through Management Integration
Increase revenue by providing enhanced product/service and by expanding customer/transaction base
Trend toward deregulation further facilitates integrated strategy for bank, trust and securities businesses
Product/Service capabilities
Increase revenue by introducing innovative products/services by fully utilizing resources generated by management integration, such as additional IT/systems investment and human resources
MTFG UFJ
Strong product line up
Global network
UFJ MTFG
Convenient direct banking and ATM network
Promote integrated strategy of bank, trust and securities businesses
Targeting further revenue increase by taking advantage of deregulation such as regulatory permission for banks participating in securities brokerage business, capital market intermediary business and amendment of the Trust Business Act.
Revenue opportunity prior to Management Integration
MTFG UFJ
Strong foundation of high net worth customers
Large corporates/overseas business base
UFJ MTFG
Central/Western Japan customer base
Mass retail/SME business base
Customer/business base
19
Examples of Expanding Business Opportunity
Combine the strengths of each group to drastically expand business opportunities
Maximize shareholder value while enhancing customer convenience
Retail
Corporate
Business area
Sales of investment products
Consumer Finance
Housing mortgage Loans
SME transactions
Large company
transaction
MTFG’s strengths
Strong product line up such as “Premiere”
Strategic and capital alliance with Acom
Innovative services including BTM-VISA Card
Strong sales capabilities at offices offering
campaigned products and other successful products
Preeminent global network
Advanced GCMS
Diverse products, including
TKC strategic management
loans, asset backed loans and credit
derivative loans
Equipped with banking, trust banking and
scurities functions of both groups +MTFG’s
solid and global full line functions
UFJ’s strengths
Strong retail customer base in Central and Western Japan
Leading financial group in the credit card industry
Tie-ups with reputable housing developers
Extensive experience and solid SME customer base
Expanded business opportunity
Expansion of customer base for high return products
Provide high quality consumer finance product and services
Strengthen sales at branch offices in Central and Western Japan
Strengthen sales in Tokyo Metropolitan District through tie-ups
with housing developers
Supporting the Japanese customers of UFJ in their overseas expansion
Share UFJ’s business know-how
Offering MTFG’s products designed for SMEs to UFJ’s financially sound SME Customers
Expanding business with financially sound, large corporate customers of both groups
20
Segment Strategy – Retail 1
New group will have approx. 40 million customers, retail Strong business foundation - deposits of approx. ¥66 trillion
Strength of the New Group
1.Scale merit and strong complimentary feature
Diverse and solid customer base ranging from mass retail to high net worth segment
Highly complimentary business and networks
Geographically balanced network (ex. Less overlapping branch networks in Central and Western Japan regions)
UFJ : Strength in mass retail segment and ATM network
MTFG : Strength in high net worth segment, foreign currency deposits and individual annuity insurance
EStrength in housing mortgage loans UFJ : Tie-ups with housing developers MTFG: Campaign products
2.Full line financial service provided by integrated bank, trust bank and securities company ”Integrated Business Group System”
3.Develop global business by utilizing overseas network ex) UBOC, Manulife, etc.
4.Cutting-edge services focusing on the security of customer transactions ex) IC card, Biometric recognition system, etc.
function for promoting wide (card business, consumer finance, credit company, etc.)
5.Strengthening support range of consumer finance business
6.New products, services and business alliances Actively enter into a unprecedented alliances
No. of customers and customers assets By customer segment
Total
Segment by retail
customer Number of customers deposits
assets with (million) of new
MTFG/UFJ group
(tn)
Approx. 2
“High net Approx.
worth” Tokyo Metropolitan District 1.0
Central Japan Region 0.3 40tn
(¥10 m+)
Western Japan Region 0.5
Approx. 10
“Asset Approx.
formation” Tokyo Metropolitan District 5.0
Central Japan Region 2.0 25tn
(¥0.5m+)
Western Japan Region 2.5
“Mass Approx 30
Tokyo Metropolitan District 15.0 Approx.
retail”
Central Japan Region 5.0 1~2tn
(up to ¥0.5m) Western Japan Region 7.0
Note. Total amount of the 4 banks on a simple combined basis
(2 commercial banks and 2 trust banks)
11 21
Segment Strategy – Retail 2
Seek to maximize shareholder value and customer satisfaction by providing highest quality domestic and overseas products/services in Japan
New group’s retail strategy - Vision
Maximize shareholder value
Maximize profit and maintain strong Balance sheet
Enhance business efficiency (net profit/person; expense ratio)
Deliver highest quality products and services to a geographically balanced, sophisticated customer base
Leverage strengths in credit cards and consumer finance to expand revenue generated from the consumer finance business
Utilize the preeminent global network to develop global business
Achieve highest level of customer satisfaction
Enhance customer satisfaction by providing quality service to increase the number of frequent user customers
Branch layout, products, services responding to customer needs
Easy access after business hours/on weekends
Cutting-edge services such as “Comprehensive Card” that are quick, easy to use and convenient
Deliver full line financial services that include banking, trust and securities and global operations
Promote education focused on ‘People’ and ‘Educating people’ at Retail Academy
Encourage thoughtfulness and care “Encourage everyone to actively participate in business development”
Social contribution/Responsibility
Establish Advisory Committee
Contribute a portion of net business profit to society (after repaying public funds)
Contribute to education on asset formation
Launch consumer education program to prevent ‘excessive borrowing’
Compliance
Establish world-class compliance framework
Compliance framework responding to Information Security/Personal data protection Law (including ISO certification)
22
Segment Strategy- Corporate 1
Implement specified strategy for each customer/ business segment to maximize the strengths of both groups
Create synergies, and build new business model
Core competence of the new group
Total financial service capabilities
Full line of “bank, trust, securities, and global” functions
Business/service function
Domestic and foreign network regionally balanced and balanced in Scale
Overseas
Leading global network among Japanese banks Strong business base in Asia
Customer base
Outstanding customer base across all customer segments
Market leader
Highest market share in virtually all business areas
IT development capability
Enable convenient and user-friendly domestic and overseas settlement services
Build new business model
Banks’ participation in
Securities brokerage business,
capital market intermediary business,
Corporate rehabilitation business,
Principal investment,
Business succession,
Small business card…
MTFG
Generate integration synergies
UFJ
Strategic business areas
Increase loans to SME businesses
Strengthen business in Asia
Domestic and foreign settlement business
EB, Web products, global CMS
Investment banking business
Syndicated loans, derivatives
Trust business
Securities agency business, real estate
Securities business
Strengthen equity business, M&A, Equity trading business
23
Segment Strategy- Corporate 2
Integrate banking/ trust/ securities / global operations - provide top quality service and innovative products worldwide
Maintain preeminent position - No. 1 in domestic corporate business + No. 1 in overseas business for Japanese companies
Large
[Of which, MTFG serves as lead position] Non-clients clients
Large companies
Contribution to clients to increase corporate value by providing full line financial solutions
Multi-line business model
(Industry finance model/ Market-type indirect finance model/ Combined Banking, Securities model/ Risk intermediation model)
Approx. 4,000 companies. 75 % are clients, of which 30% MTFG holds main bank position
Further developing relationship with existing clients is vital
Mid-sized
[Of which, MTFG serves as lead position ]clients Non-clients
Mid-sized companies
Promote main bank relationship with major clients
Develop detailed regional strategy
Multi-faceted support for diverse client needs
(derivatives/small scale securitization/business succession/IPOs/domestic & overseas alliances/business matching/domestic, foreign settlement as major line)
Overseas
Leverage global network to deliver comprehensive financial solutions
(Support companies overseas development, trade finance, BRICs/Expand in Eastern Europe and other emerging markets, business with European and US multinationals)
Approx. 45,000 companies, approx 50% are clients of which 20% MTFG holds main bank position
Further developing relationship with existing clients and developing undeveloped regional market is vital
SMEs
(Of which, MTFG serves as lead position) clients
Non-clients
SMEs
Build effective and efficient business model
Develop new markets to achieve major expansion of client base
(Strengthen face-to-face and direct channels/Strengthen alliances/ Improve model screening/ Increase non-interest income)
Approx. 1.6m companies, 16% are clients, of which 8% MTFG holds main bank position
Developing undeveloped market where a lot
of non-clients exist=major opportunity to expand
24
Segment Strategy- Trust Assets 1
Generate profits by utilizing dominant market share and combining two group’s know-how in management integration
Create a virtuous circle of “economies of scale” and “improved product/service quality”
Strengths of MTFG
Business base:
Tokyo metropolitan areas
Customer base:
Corporate pension funds, Bank affiliated investment trust companies
Functions: custody services (domestic and overseas), administrative system consulting (pension funds)
Management integration
Overwhelming scale
Assets under management totaling approx. ¥34 trillion
Assets under administration totaling approx. ¥130 trillion
Integration and sophistication of know-how
Strengths of UFJ
Business base:
Central and west Japan
Customer base:
Multi-company employees pension fund, Security company affiliated investment trust companies
Functions: General managing services for pension funds
Further expansion of scale and improvement in profitability
<Pension funds/securities>
Development of high return products, enhancement of products <Investment trusts> Establishment of brand name, expand sales channel and enhance support function
·Improve quality of products
and services
·Improve price competitiveness
·Respond to new regulations
·Develop computer systems
Solidify top rank position
in the market
Realize further efficiency while maintaining dominant market share
Increased efficiencies to enable further investment in product/service quality improvement
25
Segment Strategy- Trust Assets 2
Provide full line service of asset management and asset administration by fully utilizing group capacity
Provide pension fund, securities, investment trust and custody customers with sophisticated products and meticulous service
Pension fund customers *
balance of approx. ¥22 trillion
Asset management
Asset administration
A full line of management services for corporate and retail assets
Defined Benefits
Products oriented: Increase ratio of active-type management products (=high fees)
Plans oriented : Promote packaged service of asset management and administration mainly consisting of balanced-type investment, Internet communications: Utilize the Internet to promote remote sales structure
Consulting, etc.
Defined contrib.
Corporate: Expand portfolio management and asset administration amount with high level consulting capability
Personal : Tap into the large customer base of the group by utilizing expanded customer base
Securities customers*
balance of approx. ¥24 trillion
Public funds/mutual pensions: Make proposals that meet the customer structure (Example: Customize innovative pension products)
Financial institutions: Propose management products which correspond to the risk tolerance level of the customer (Example: Expand private placement of investment trusts)
Corporations: Tie up with the corporate divisions and investigate their needs (Example: Special funds/treasury stock trusts, etc.)
Investment trust* customers
Balance of managed assets approx. ¥4 trillion Balance of administered assets approx.
¥23 trillion
Retail
Establish brand and reinforce sales support;
Strengthen partnership with retail divisions
Corporate
Enhance line up of products by developing new products;
Strengthen partnership with corporate divisions
Investment trust companies
Increase the amount of investment
trusts based on advanced asset
administration services provided
by MTBJ
Consulting for pension structure and portfolio management
Wealth management services
Custody customers
Balance of approx. ¥60 trillion
Expansion of the domestic and global custody business
Insourcing of securities administration from financial institutions
*Of the asset management and administration of securities, pension fund management and administration is classified as “Pension fund customers”, Investment trust management and administration is classified as “Investment trust customers”, while other management and administration such as Securities investment trust (ex. Independently operated designated money trusts) is classified as “Securities customers”
26
Effective Use of Resources
Realize groupwide rationalization benefits of approx. ¥200-250 bn per annum through consolidation of domestic and overseas branch network
Raising efficiency in personnel usage, operations and systems
1. Review domestic and overseas branches network and introduce new channel strategy
Integrate overlapping branches in Japan and overseasto raise efficiency
· New channel strategy to improve customer convenience
2. Effective use of human resources
· Reduce/reallocate groupwide staff by approx. 10,000 by streamlining headquarters and back offices
· Allocate resources into key strategic areas such as retail / SME businesses /Investment banking / Asset management
3. Enhance efficiency in operations and systems
·Create common platform for system and operation
·Reduce system invest and operational costs through management integration
Aim to realize rationalization benefits of approx. ¥200-250 billion per annum
Improve customer satisfaction by effective use of resources
Maximize Shareholder value
27
Review Domestic and Overseas Network and
New Channel Strategy 1
Respond to the diverse needs of customers, and organize a highly convenient network of branches, ATMs and direct channels which can be accessed “whenever” and “wherever”
Network of new group (End of Sept 04)
In general, overlapping locations are planned to be merged of the integration date
Overseas
Over 40 countries 408 locations
(Including 301 locations of UBOC)
Throughout world
Asia·Oceania : 55 locations
Europe · Middle East, etc . : 26 locations
Americas : 26 locations
UBOC:301 locations
UBOC( 301 locations)
Enhance direct channels by utilizing IT
Throughout 24 hours
Currently studying whether to merge or abolish the overlapping locations (mostly in the metropolitan area, approx. 200 retail/90 corporate)
Domestic
Convenience store ATM
Approx.16,000 locations
Non-branch ATM
Approx.2,100 locations
Further develop Convenience store ATM
Central Japan
Retail :170 branches Corporate : 75 locations
East Japan
Retail : 475 branches Corporate:185 locations
Develop branches focused on consulting or Plus-type branches
West Japan Retail : 267 branches Corporate : 123 locations
Including Tokyo Metropolitan
Retail : 450 Branches Corporte : 170 locations
Further develop UFJ24
Establish outlets focused on handling transactions for large corporations
Develop outlets focused on mid to small-sized companies in areas where there is currently no presence
The number of overseas branches are the sum of banks, trust banks and UBOC
Number of domestic branches are the sum of banks, trust banks and securities companies
28
Review Domestic and Overseas Network and New Channel Strategy 2
Raise efficiency by consolidating overlapping branches while maintaining and enhancing customer convenience
Actively develop new channel strategy to improve customer convenience
Current situation*
Retail branches (912)
Non-branch ATMs (Approx 2,100 locations)
Corporate offices (Domestic 385) (Overseas 107)
Outline of efficiency measures
Considering integration of overlapping branches (approx. 200 total) mainly in Tokyo area (almost no overlap in Chubu) z
Domestic: Considering integration of overlapping branches (approx.90 total) mainly in Tokyo area
Overseas: In principle, integrate all overlapping branches by integration date
New channel strategy to raise customer convenience
Progressive development of UFJ24
Accelerate shift to Plaza branch- deliver ‘one stop’ comprehensive financial services (targeting at about 100 plazas utilizing agency system)
Develop new channels to meet needs of each customer segment
Develop convenience store ATMs and direct banking functions
Consider corporate business offices in areas where major companies concentrated (Large company transactions), such as Tokyo, Osaka and Nagoya
Consider special SME business offices in areas where no representative office exists (SME transactions)
*Branch numbers include banking, trust banking and securities operations as of end of Sept. 2004
29
New Group - Management Structure
Introduce “integrated business group system” to the new group in order to smoothly promote integrated group strategy (Will provide flexible financial services with regional characteristics taken into consideration)
Establish strong internal control system such as CSA (Control Self Assessment) based upon COSO framework, which is appropriate for global top 5 financial institution
Full compliance with the U.S. Sarbanes-Oxley Act and risk management system as a NYSE listed company
Integrated business group system
New bank
New trust bank
New Securities Company
Retail
Corporate
Trust assets
Close cooperation
Corporate staff
Corporate Planning
Financial Planning
Accounting
Corporate Communications/IR
General affairs/Secretariat
Corporate Risk Management
Risk management framework
Credit risk
Market risk
Operational risk
Information security
Compliance
Compliance framework
Internal audit framework
Assess effectiveness of internal control
Implementation of a strong internal control system in compliance with COSO framework (Establish strong internal control system such as CSA )
30
Business Management Platform of New Group (BSC/ISO) 1
For purposes of adequately promoting a group-wide strategy, implementing internal controls for the world’s largest comprehensive financial group based on assets, and improving customer service, the new group will enhance its management controls to a higher level, and introduce a business management platform (BSC/ISO) that can be commonly used by all companies in the group
Introduction of BSC (Balanced Score Card)
Establish balanced management goals
Reinforce the strategy to all group employees, and promote an understanding of the strategy
Clearly define the roles of organizations and individuals, and conduct fair and equal evaluations linked to the roles
Continuously improve performance through the PDCA cycle
Adopt advanced business management controls suitable for a global top 5 company
synergy effect
Introduction of management improvement measures that utilize ISO, etc.
Continuously improve quality of service toward the customer (customer focus), and promote the improvement of operations
Implement best practices based on the PDCA cycle, and promote organizational learning
Conduct objective evaluations and verifications by obtaining and maintaining ISO certification
Maintain and improve service quality as the organization expands
Business management platform that will steadily enhance customer satisfaction and shareholder value
31
Business Management Platform of New Group (BSC/ISO) 2
Reflect ISO improvement processes and feedback from customers to concrete BSC Strategic measures
BSC=Business management based on corporate strategy (Business management based on strategic map and success indicators)
Plan :
Formulate and communicate strategic goals
Do :
Execute strategy and confirm results
Act :
Pursue/Revise strategy
Check :
Verify indicators of success and appropriateness of strategy
ISO=Improve management quality from the customers viewpoint
PDCA cycle originates from customers and sales force
Customer feedback
Monitor achievement of a number of BSC success indicators to further enhance management quality and effectiveness
32
New group– Shared Personnel Platform
Create a common personnel platform to implement integrated business strategy
Establish brand new corporate culture for the new group through harmonization of former two groups’ corporate culture
1. Personnel Structure with the emphasis on achievement and professionalism
2. Infrastructure of intra-group personnel exchanges
Reform personnel appraisal and evaluation infrastructure of each group company
Shared personnel platform
3. Sharing of group’s targets and links between individual performance evaluation
Use BSC to share group strategic targets and link to appraisal of each individuals performance
4. Personnel training and evaluation in line with group’s corporate philosophy
Foster a new corporate culture by reflecting group corporate philosophy in personnel training and appraisal
33
Business Tie-ups: Launched and under Consideration
Enacting and considering a wide range of business tie-ups ahead of integration to raise shareholder value by rapidly realizing integration benefits, while rapidly delivering integration benefits to customers
Retail business
Open access to ATMs & CDs of both groups in October (no charges for cash withdrawal)
Starting with investment annuity product Premiere (end December 2004) then Global REIT Open, etc.: Mutual sales of other members’ top products
Extend UFJ’s internet/mobilephone inquiry service for waiting times at branches/ATMs to BTM branches
Personnel exchange, joint seminars, Considering other measures such as joint training at Retail Academy
Corporate business
MTFG co-hosted UFJ Business Forum in Osaka for the first time (November)
Indian Investment Seminar, Vietnam Investment Seminar and further joint seminars on overseas topics (from November)
Support for UFJ customers’ overseas expansion in regions where UFJ not present; Cooperate in leasing and securitization business in the Americas
Tie-up for information exchange in real estate brokerage business
Joint development of new products for SMEs; Planning broad ranging tie-ups in Investment banking: Bond placements; Syndicated loans etc./Overseas business/ Securities business
Trust assets business
Jointly proposed various products to pension funds, and combined the two groups’ know-how concerning pension fund consulting
Sales by both groups of private placement investment trusts offered by investment trust companies in MTFG group
Plan to jointly host seminars on “pension systems,” “treasury stock trusts,” etc.
34
Reference: Status of Key Retail Products and Services 1
Key retail products and services (End of March 2004) ¥ 100 million
MTFG UFJ New group SMBC Mizuho FG
Balance of loans to individuals 83,454 109,599 (1)193,053 138,759 123,356
Year on year growth 6,003 7,132 (1)13,135 2,100 5,131
Retail deposits 334,023 267,543 (1)601,566 316,318 304,653
Year on year growth 12,379 1,719 (1)14,098 4,216 1,637
Retail foreign currency
9,441 5,375 (1)14,816 5,713 N.A
deposits
Cumulative sales of
3,609 2,540 (1)6,149 4,829 N.A
investment annuities
Balance of investment trusts 13,872 10,163 (1)24,035 20,057 12,145
Year on year growth 4,917 1,744 (1)6,661 3,308 3,135
Note: Figures are the sum of the 2 banks of MTFG and UFJ on a non-consolidated basis(excluding securities companies). Figures for other companies are derived from each companies’ disclosed materials such as Disclosure Report and IR materials. Investment trust balances are sourced from Kinyuuzaiseijijo magazine.
Figures with circle means ranking among Japanese financial institutions as of the end of March 2004
Testamentary trusts/Real estate commissions (End of March 2004 and FY2003)
(No./ ¥100 million)
MTBC UFJ Trust New group Sumitomo Trust Mizuho Trust
Number of testamentary trusts
8,626 5,423 (1)14,049 1,953 4,877
(with execution)
Real estate commissions 220 145 364 N.A N.A
Note: Real estate commissions are on a management accounts basis. Including housing sales subsidiaries. Figures for other companies are sourced from the Nikkei Financial Daily.
35
Reference: Status of Key Products and Services 2
(Unit: 1,000 companies)
Corporate customers after integration (image) (End of August 2004)
BTM+UFJ Sumitomo Mitsui Mizuho
Revenue
Number % of total Number % of total Number % of total
¥100 bn + 1.3 0.5% 1.1 0.5% 1.3 0.6%
¥10 bn - ¥100 bn 9.7 3.4% 7.8 3.5% 9.0 4.4%
¥3 bn - ¥10 bn 18.5 6.5% 14.2 6.4% 15.8 7.7%
Up to ¥3 bn 255.3 89.7% 199.8 89.7% 177.8 87.2%
Total 284.8 100.0% 222.9 100.0% 203.8 100.0%
Publicly listed companies 3.1 1.1% 2.5 1.1% 3.0 1.5%
Note: Based on data from Teikoku Data Bank Cosmos II
(Unit: Trillion yen)
Comparison of loan balances on a consolidated basis/mid to small-sized business loan balances (End of September 2004)
MTFG+UFJ SMFG Mizuho FG
Loan balance on a 87.1 55.4 64.2
consolidated basis
Mid to small-sized 26.8 20.9 25.4
business loan balances *
Mid to small-sized loan balances are based on IR presentation materials for each company, and is the sum of bank accounts and trust accounts, excluding consumer loan balances. MTFG refers to Bank of Tokyo-Mitsubishi + Mitsubishi Trust Bank, UFJ refers to UFJ Bank + UFJ Trust + certain subsidiary companies, SMFG refers solely to the Sumitomo Mitsui Bank on a non-consolidated basis, and Mizuho FG refers to Mizuho Bank + Mizuho Corporate Bank + Mizuho Trust + certain special subsidiaries established for rehabilitation purposes.
36
Reference: Status of Key Products and Services 3
Pension Trusts, Securities Trusts, and other trust products
(Asset balances at end of March 2004)
MTBC UFJ trust Total Rank
Pension trusts 78,187 47,822 126,008 No. 1
Specified money trusts
71,140 20,199 91,339 No. 1
for pension
Independently operated
71,204 38,442 109,646 No. 1
designated money trusts
Fund trusts 2,243 1,142 3,385 No. 1
Specified money trusts 40,903 18,733 59,636 No. 1
Investment trusts 95,273 125,821 221,094 No. 1
Note: Welfare pension fund and defined benefit pension fund in market value, others in book value
Source: Estimates from each trust bank.
37
Appendix
Financial Highlights (P/L)
(in billions of yen )
Six months ended September 30, 2003 (A)
Six months ended September 30, 2004 (B)
(B) - (A)
1 Gross profits 898.9 885.9 (12.9)
2 Net interest income 533.1 506.5 (26.5)
3 Trust fees 36.4 46.1 9.6
4 Credit costs for trust accounts (8.4) (2.3) 6.0
5 Net fees and commissions 195.8 241.3 45.5
6 Net trading profits 72.0 50.2 (21.7)
7 Net other business income 61.5 41.7 (19.8)
8 Net gains on foreign exchange transactions 45.5 36.1 (9.4)
9 Net gains (losses) on debt securities (2.7) 27.8 30.5
10 Net gains (losses) on derivatives (total of the two Banks ) 25.7 (33.0) (58.8)
11 General and administrative expenses 489.5 499.3 9.8
12 Personnel expenses (total of the two Banks ) 120.8 114.3 (6.5)
13 Non-personnel expenses (total of the two Banks ) 173.5 176.8 3.2
14 Taxes (total of the two Banks ) 15.2 16.5 1.2
Net business profits before credit costs for trust accounts and
15 417.8 388.9 (28.9)
provision for formula allowance for loan losses
16 Provision for formula allowance for loan losses [119.0] [237.4] [118.4]
17 Net business profits 409.3 386.5 (22.8)
18 Net non-recurring gains (losses) (135.9) (76.2) 59.6
19 Credit related costs (91.8) (65.4) 26.4
20 Losses on loan charge-offs (49.8) (28.5) 21.2
21 Provision for specific allowance for loan losses [40.3] [(227.0)] [(267.3)]
22 Provision for allowance for loans to specific foreign borro [4.1] [0.8] [(3.3)]
23 Losses on sales of loans to the Resolution and Collection Corporation (13.8) (0.8) 13.0
24 Other credit related costs (28.1) (35.9) (7.7)
25 Net losses on equity securities (9.0) (4.7) 4.3
26 Gains on sales of equity securities 48.0 42.9 (5.0)
27 Losses on sales of equity securities (53.4) (14.1) 39.3
28 Losses on write down of equity securities (3.6) (33.5) (29.8)
29 Other (34.9) (6.1) 28.8
30 Ordinary profit 273.4 310.3 36.8
(in billions of yen )
Six months ended September 30, 2003 (A)
Six months ended September 30, 2004 (B)
(B) - (A)
31 Net special gains 234.9 17.5 (217.3)
32 Gains on loans charged-off 15.3 12.3 (2.9)
33 Reversal of allowance for loan losses 163.5 11.3 (152.2)
34 Impairment losses - (3.9) (3.9)
35 Refund of enterprise taxes by the Tokyo Metropolitan Government 41.9 - (41.9)
Gains on transfer of the substitutional portion of future pension
36 26.5 - (26.5)
obligations
37 Income before income taxes and others 508.3 327.8 (180.4)
38 Income taxes-current 25.5 39.6 14.1
39 Income taxes-deferred 159.5 95.6 (63.8)
40 Minority interest 21.4 20.9 (0.5)
41 Net income 301.8 171.6 (130.1)
42 Total credit costs (4+19+33) 63.2 (56.3) (119.6)
39
Financial Highlights (B/S)
(in billions of yen except percentages)
As of March 31, 2004 (A) As of September 30, 2004 (B
(B) - (A)
)
1 Loans and bills discounted 46,590.1 47,420.9 830.8
Domestic loans (except for loans from The Bank of Tokyo-Mitsubishi, Ltd.
2 30,844.5 31,091.4 246.8
and The Mitsubishi Trust and Banking Corporation to MTFG)
3 Overseas branches 4,427.9 4,526.9 98.9
4 Overseas subsidiaries (UNBC and BTMT) 2,947.9 3,171.0 223.0
5 Domestic housing loans 7,655.4 7,894.4 238.9
6 Domestic other consumer loans 461.8 435.9 (25.8)
FY03IH FY04IH
Book value of loans sold during the six months ended September 30, 2003 and
7 (77.2) (29.7) 47.5
2004 (total of the two Banks)
8 Sold to the Resolution and Collection Corporation (“RCC”) (38.2) (1.8) 36.3
9 [Sold to the RCC before charge-offs] [(63.3)] [(4.9)] [58.3]
10 Other loans sold (39.0) (27.8) 11.2
Charge-offs during the six months ended September 30, 2003 and 2004
11 (total of the two Banks) (39.1) (18.2) 20.9
12 Investment securities 28,329.5 33,690.3 5,360.8
13 Domestic equity securities 3,761.2 4,361.1 599.9
14 Japanese Government Bonds (total of the two Banks *) 14,984.5 19,936.2 4,951.6
15 Foreign bonds (total of the two Banks *) 5,744.3 5,280.0 (464.3)
FY03IH FY04IH
Book value of investment securities sold during the six months ended September
16 30, 2003 and 2004 (total of the two Banks) (493.8) (225.4) 268.4
17 Transferred to an exchange-traded fund (81.5) - 81.5
18 Sold in the market or by other means (412.2) (225.4) 186.8
Write down during the six months ended September 30, 2003 and 2004
19 (total of the two Banks) (6.7) (33.4) (26.7)
20 Total assets 106,615.4 113,408.4 6,792.9
(in billions of yen except percentages)
As of March 31, 2004 (A) As of September 30, 2004 (B)
(B) - (A)
21 Deposits 66,097.5 67,082.4 984.8
22 Total of the two Banks 62,664.1 62,817.3 153.2
23 Individuals 33,402.3 33,801.7 399.3
24 Corporations and others 20,575.1 20,396.4 (178.6)
25 Overseas branches 7,852.1 7,832.0 (20.1)
26 Total liabilities 101,969.8 108,739.8 6,769.9
27 Total shareholders’ equity 4,295.2 4,306.4 11.1
28 Capital stock 1,258.0 1,258.0 -
29 Capital surplus 931.3 931.1 (0.1)
30 Retained earnings 1,506.5 1,659.4 152.8
31 Unrealized gains on securities available for sale 560.3 422.9 (137.3)
32 Less treasury stock (3.6) (3.4) 0.1
33 BIS risk-adjusted capital ratio 12.95 % 10.92 % (2.02%)
34 Tier I ratio 7.14 % 7.39 % 0.24 %
35 Tier I capital 3,859.4 4,025.9 166.4
36 Risk-adjusted assets 53,996.7 54,457.1 460.3
37 USD/JPY 105.69 111.05 5.36
40
Disclosed Claims Subject to FRL
Disclosed Claims Subject to FRL(Financial Revitalization Law)
[Banking
and trust accounts : sum of the 2 banks (Non-consolidated)] [Yen Bn]
Sept. 30, 2003 (A) Mar. 31, 2004 (B) Sept. 30, 2004 (C) (C)-(A) (C)-(B)
1 Claims to bankrupt and substantially bankrupt debtors 182.3 140.4 107.8 (74.4) (32.5)
2 Claims under high risk 745.7 541.3 1,168.0 422.2 626.7
3 Claims under close observation 929.2 737.3 356.6 (572.6) (380.7)
4 Total 1,857.2 1,419.0 1,632.5 (224.7) 213.4
5 Normal claims 46,424.7 46,887.4 48,097.8 1,673.1 1,210.4
Flow Analysis [Banking and Trust Accounts : Sum of the 2 banks (Non-consolidated)]
(1) Mar.31,2004-Sep.30,2004 [Yen Bn]
Mar. 31, 2004 (A) Inflow (B) Outflow* (C) Sep. 30, 2004 (A)+(B)-(C) (B)-(C)
6 Claims to bankrupt and substantially bankrupt debtors 140.4 5.0 (37.6) 107.8 (32.5)
7 Claims under high risk 541.3 856.7 (230.0) 1,168.0 626.7
8 Total 681.7 861.8 (267.6) 1,275.9 594.1
*Outflow includes disposition, sales to market, write-off, collection of claims, improvement of financial position of borrowers.
(2) Sep.30,2003-Mar.31,2004 [Yen Bn]
Sep. 30, 2003 Inflow Outflow* Mar. 31, 2004
(A) (B) (C) (A)+(B)-(C) (B)-(C)
9 Claims to bankrupt and substantially bankrupt debtors 182.3 14.7 (56.5) 140.4 (41.8)
10 Claims under high risk 745.7 120.0 (324.4) 541.3 (204.4)
11 Total 928.0 134.7 (381.0) 681.7 (246.3)
*Outflow includes disposition, sales to market, write-off, collection of claims, improvement of financial position of borrowers.
1 Improvement through restructuring 9%
2 Improvement 35%
3 Collection etc. 34%
4 Corporate liquidation 1%
5 Corporate restructuring 3%
6 Loan sales 11%
7 Write-off 7%
1 Improvement through restructuring 2 Improvement
3 Collection etc. 4 Corporate liquidation
5 Corporate restructuring 6 Loan sales
7 Write-off
(Yen bn)
Amount %
1 Improvement through restructuring 23.7 9%
2 Improvement 93.6 35%
3 Collection etc. 92.2 34%
Sub total 209.7 78%
4 Corporate liquidation 2.1 1%
5 Corporate restructuring 7.3 3%
6 Loan sales 29.9 11%
7 Write-off 18.5 7%
Total 267.6 100%
41
Reserves/Reserve Ratio
Reserve Ratio on Disclosed Claims subject to FRL (Sept. 30, 2004)
[Banking and Trust Accounts : sum of the 2 banks (Non-consolidated)] [Yen Bn,%]
Collater al & Guarantees Unsecured portion (A) Reserve ratio (B)/(A)
Category Claims Reserve (B) Change from Mar.31 2004
1 Claims to bankrupt and substantially bankrupt debtors 107.8 95.9 11.9 11.9 100.0% 0.0%
2 Claims under high risk 1,168.0 441.1 726.8 376.0 51.7% (13.2%)
3 Claims under close observation 356.6 204.3 152.2 43.9 28.8% (0.3%)
4 Total 1,632.5 741.4 891.0 431.9 48.4% 5.5%
5 (Change from Mar.31 2004) 213.4 68.1 145.3 111.5 - -
6 Normal claims 48,097.8
Change of Reserve Ratio on Self-Assessment of Assets
[Banking Account : sum of the 2 banks (Non-consolidated)]
Sep. 30, 2003 Mar. 31, 2004 Sep. 30, 2004
(A) (B) (C) Change (C-A) Change (C-B)
7 Normal 0.17% 0.14% 0.12% (0.04%) (0.02%)
8 Close watch 8.74% 9.41% 6.13% (2.61%) (3.28%)
9 excluding secured assets 15.38% 15.80% 13.00% (2.37%) (2.79%)
10 Close watch* 4.00% 4.81% 4.45% 0.44% (0.36%)
11 (excluding secured assets) 7.39% 8.73% 9.24% 1.85% 0.50%
12 Internal rating 10 2.49% 2.24% 2.16% (0.32%) (0.07%)
13 Internal rating 11 7.45% 10.88% 9.89% 2.44% (0.99%)
14 Borrowers with credit under close observation 20.23% 21.10% 13.73% (6.49%) (7.36%)
15 (excluding secured assets) 32.02% 29.76% 32.31% 0.28% 2.54%
16 Likely to become bankrupt (excluding secured assets) 72.42% 65.23% 51.76% (20.66%) (13.46%)
* Close Watch is classified into two ratings based on the credit profile of borrowers Note : Above figures excluding certain mortgage and consumer loans
42
Status of Deferred Tax Assets
Tax effects of the items comprising net defferd tax assets
(Sum of the 2 banks) (Yen bn)
End Sep.04 VS End Mar.04
1 Deferred tax assets 1,020.5 (96.6)
2 Allowance for loan losses 356.4 2.5
3 Write down of investment securities 104.1 4.5
4 Net operating loss carryforwards 561.4 (101.3)
5 Reserve for employees’ retirement 39.4 3.5
6 Securities available for sale - -
7 Other 53.4 (1.9)
8 Valuation allowance 94.4 4.0
9 Deferred tax liabilities 308.8 (95.4)
10 Gains on placing trust for retirement benefits 7.3 -
11 Securities available for sale 295.6 (91.7)
12 Other 5.8 (3.6)
13 Net defferd tax assets 711.7 (1.2)
(Consolidated)
14 Net defferd tax assets 653.9 (1.5)
Net business profits before credit costs and taxable income(FY04 H1)
(Sum of the 2 banks) (Yen bn)
FY04 H1
15 Net business profits before credit costs 320.6
16 Credit related costs 50.1
17 Income before income taxes 240.6
18 Reconciliation to taxable income 3.1
19 Taxable income 243.8
Net business profits before credit costs and taxable income(past five fiscal years)
(Sum of the 2 banks) (Yen bn)
FY1999 FY00 FY01 FY02 FY03
20 Net business profits before credit costs 578.6 552.0 619.5 689.9 654.8
21 Credit related costs 652.4 730.5 666.3 485.9 105.7
22 Income before income taxes 409.4 (199.0) (359.3) (485.2) 719.0
23 Reconciliation to taxable income (76.3) 304.4 142.0 (1,021.4) (443.9)
24 Taxable income 333.1 105.3 (217.2) (1,506.7) 275.0
43
( Reference)Achievement of retail business
Loans extended to individuals
(Executed amount)
(¥ tn)
1.2
1.0
0.8
0.6
0.4
0.2
0.0
FY02H1 FY02H2 FY03H1 FY03H2 FY04H1
Residential Mortgage Loan
Yen deposits of individuals
(Outstanding amount)*
(¥ tn)
36
34
32
30
28
26
FY02H1 FY02H2 FY03H1 FYO3H2 FY04H1
Equity mutual funds sales amount
(¥ tn)
0.5
0.4
0.3
0.2
0.1
0.0
FY02H1 FY02H2 FY03H1 FY03H2 FY04H1
Foreign currency deposits of individuals
(Outstanding amount) *
( ¥ tn/@120)
1.0
0.8
0.6
0.4
FY02H1 FY02H2 FY03H1 FY03H2 FY04H1
Individual pension insurance sales amount
(¥ bn)
300
200
100
0
FY02H1 FY02H2 FY03H1 FY03H2 FY04H1
Testamentary trust custody asset amount
(¥ tn)
3.5
2.5
1.5
FY02H1 FY02H2 FY03H1 FY03H2 FY04H1
* Yen deposits of individuals and foreign currency deposits of individuals are the figures managed by retail integrated business group.
The figures are the sum of BTM, MTB and Mitsubishi Securities
44
(Reference) Achievement of corporate business
Number of new SME customers
(No.)
5,000
4,000
3,000
2,000
1,000
0
FY03H 1 FY03H 2 FY04H 1
Arrangement of Syndicated loans in Japan
(¥ tn)
2.0
1.5
1.0
0.5
0.0
FY02H1 FY02H2 FY03H1 FY03H2 FY04H1
(No.)
250
200
150
100
50
0
Arrangement of Syndicated loans overseas* for FY04H1
(US$ bn)
25
20
15
10
5
0
M TFG
M izuho
SM FG
UFJ
250
200
150
100
50
* Quote : IFR (Book runner basis)
Amount
No.
Trade handling amount & FX customs clearance share
(US$ bn)
150
100
50
0
(%)
30
28
26
24
22
20
FY02H 1
FY02H 2
FY03H 1
FY03H 2
FYO4H 1
Stock transfer agency Number of shareholders
(No.)
6,500
6,000
5,500
5,000
FY02H1 FY02H2 FY03H1 FY03H2 FY04H1
Balance of Securitization of Receivables
(¥ tn)
5
4
3
2
1
0
03/09
03/03
02/09
04/03
04/09
Others
Residential Mortgage Loan Claim
45
(Reference)Achievement of trust asset business
Pension Trusts Specified money trusts for Pension Privately placed mutual funds (Asset administration) Defined contribution pension (Asset administration)
MTB 21% MTB 32% MTB 28% MTB 25%
Other trust banks 79% Other trust banks 68% Other trust banks 72% Other trust banks 75%
(The figures are on an estimated basis)
*1) The figures for Master Trust Bank of Japan are included.
Mutual funds under management
M itsubishi Trust Asset Management
(¥ tn) Tokyo Mitsubishi Asset Management
1.8
1.6
1.4
1.2
1.0
0.8
0.6
0.4
0.2
0.0
End Mar.03 End Sept.03 End Mar.04 End Sept.04
Corporate pension outstanding*
Pension Trusts
Specified Money Trusts for Pension
(¥ tn)
16
14
12
10
8
6
4
2
0
End Mar.03 End Sept.03 End Mar. 04 End Sept. 04
* The figures for Master Trust bank of Japan are included
Asset under administration
Overseas Domestic Asset Administration Domestic Overseas Asset Admnistration DomesticAsset Admnistration
(¥ tn)
120
100
80
60
40
20
0
End Mar03 End Sept03 End Mar.04 End Sept04
*The figures for Master Trust Bank of Japan are included.
46
For U.S. Investors . .
Filings with the U.S. SEC
Mitsubishi Tokyo Financial Group, Inc. (“MTFG”) may file a registration statement on Form F-4 (“Form F-4”) with the U.S. SEC in connection with the proposed management integration of UFJ Holdings, Inc. (“UFJ”) with MTFG. The Form F-4 (if filed) will contain a prospectus and other documents. If a Form F-4 is filed and declared effective, UFJ plans to mail the prospectus contained in the Form F-4 to its U.S. shareholders prior to the shareholders meeting at which the proposed business combination will be voted upon. The Form F-4 (if filed) and prospectus will contain important information about MTFG, UFJ, management integration, and related matters. U.S. shareholders of UFJ are urged to read the Form F-4, the prospectus and the other documents that may be filed with the U.S. SEC in connection with the management integration carefully before they make any decision at the UFJ shareholders meeting with respect to the proposed business combination. The Form F-4 (if filed), the prospectus and all other documents filed with the U.S. SEC in connection with the management integration will be available when filed, free of charge, on the U.S. SEC’s web site at www.sec.gov. In addition, the prospectus and all other documents filed with the U.S. SEC in connection with the management integration will be made available to shareholders, free of charge, by calling, writing or e-mailing:
MTFG CONTACT:
Mr. Hirotsugu Hayashi
26F Marunouchi Bldg., 4-1
Marunouchi 2-chome, Chiyoda-ku
Tokyo 100-6326 Japan
81-3-3240-9059
Hirotsugu_Hayashi@mtfg.co.jp
UFJ CONTACT
Mr.Shiro Ikushima
1-1 Otemachi 1-chome, Chiyoda-ku Tokyo 100-8114
Japan
81-3-3212-5458
shiro_ikushima@ufj.co.jp
In addition to the Form F-4 (if filed), the prospectus and the other documents filed with the U.S. SEC in connection with the management integration, MTFG is obligated to file annual reports with, and submit other information to, the U.S. SEC. You may read and copy any reports and other information filed with, or submitted to, the U.S. SEC at the U.S. SEC’s public reference rooms at 450 Fifth Street, N.W., Washington, D.C. 20549 or at the other public reference rooms in New York, New York and Chicago, Illinois. Please call the U.S. SEC at 1-800-SEC-0330 for further information on public reference rooms. Filings with the U.S. SEC also are available to the public from commercial document-retrieval services and at the web site maintained by the U.S. SEC at www.sec.gov.
Forward-Looking Statements
This communication contains forward-looking information and statements about MTFG, UFJ and their combined businesses after completion of the management integration. Forward-looking statements are statements that are not historical facts. These statements include financial projections and estimates and their underlying assumptions, statements regarding plans, objectives and expectations with respect to future operations, products and services, and statements regarding future performance. Forward-looking statements are generally identified by the words “expect,” “anticipates,” “believes,” “intends,” “estimates” and similar expressions. Although MTFG’s and UFJ’s management believe that the expectations reflected in such forward-looking statements are reasonable, investors and holders of UFJ securities are cautioned that forward-looking information and statements are subject to various risks and uncertainties, many of which are difficult to predict and generally beyond the control of MTFG and UFJ, that could cause actual results and developments to differ materially from those expressed in, or implied or projected by, the forward-looking information and statements. These risks and uncertainties include those discussed or identified in the public filings with the SEC and the local filings made by MTFG and UFJ, including those listed under “Cautionary Statement Concerning Forward-Looking Statements” and “Risk Factors” in the prospectus included in the registration statement on Form F-4 that MTFG may file with the U.S. SEC. Other than as required by applicable law, MTFG and UFJ do not undertake any obligation to update or revise any forward-looking information or statements.