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Mitsubishi UFJ (MUFG) Earnings Rise in 1H24, NII Declines
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Mitsubishi UFJ Financial Group, Inc. (MUFG - Free Report) reported profits attributable to owners of the parent for the first half of fiscal 2024 (ended Sep 30) of ¥927.3 billion ($6.42 billion), up significantly year over year.
Increased gross profits, a rise in net fees and commissions and net trading profits acted as tailwinds. Also, a rise in loan and deposit balances was positives. On the flip side, a decline in net interest income (NII) was a dampener.
Gross Profits Rise, G&A Expenses Decline
Gross profits (before credit costs for trust accounts) for the first half were ¥2.49 trillion ($17.23 billion), up 7.1% year over year. The upsurge was mainly on higher net fees and commissions, as well as net trading profits.
Results reflect a 26.5% decline in NII, which was ¥1.23 trillion ($8.51 billion). Nonetheless, trust fees, along with net fees and commissions, totaled ¥848.7 billion ($5.87 billion), up 9.9%. Net trading profits (including net other operating profits) were ¥409 billion ($2.83 billion) against a loss of ¥122.8 billion in the prior year.
Mitsubishi UFJ’s total credit costs in the first half of fiscal 2024 were ¥181.2 billion ($1.25 billion), down from ¥243.8 billion for the first half of fiscal 2023.
G&A expenses witnessed a year-over-year decrease from ¥1.43 trillion to ¥1.4 trillion ($9.69 billion).
The expense ratio was 56.3%, down from 61.4% in the prior-year period. A decrease in this ratio indicates a rise in profitability.
Balance Sheet Position Strong
As of Sep 30, 2023, Mitsubishi UFJ reported period-end loans of ¥114.88 trillion ($768.9 billion), up 1.4% sequentially. The rise can be primarily attributed to an increase in overseas loans.
Deposits sequentially rose to ¥217.86 trillion ($1.46 trillion) from ¥216.59 trillion as demand for domestic corporates and overseas and other deposits increased.
Total assets summed ¥398.18 trillion ($2.67 trillion), up 2.8% on a sequential basis.
Conclusion
MUFG has a robust business model, a diversified product mix and solid capital ratios. However, high costs may hurt the bottom line in the near term.
Concurrently, MUFG has announced a share repurchase plan. Under the plan, the company’s board of directors authorized to buy back up to 400 million shares or nearly 3.31% of its outstanding shares (excluding treasury stock) for an aggregate amount of ¥400 billion. The shares are expected to be repurchased between Nov 15, 2023 and Mar 31, 2024.
Mitsubishi UFJ Financial Group, Inc. Price, Consensus and EPS Surprise
Deutsche Bank (DB - Free Report) reported a third-quarter 2023 profit attributable to its shareholders of €1.03 billion ($1.12 billion), down 7.5% from the year-ago quarter. The Germany-based lender reported a profit before tax of €1.72 billion ($1.88 billion), up 6.7% year over year.
The results of DB were largely driven by higher net revenues, lower provisions and a strong capital position. However, a rise in operating expenses was an offsetting factor.
Barclays (BCS - Free Report) reported a third-quarter 2023 net income attributable to ordinary equity holders of £1.27 billion ($1.61 billion), down 16% from the prior-year quarter.
BCS recorded an increase in revenues, along with higher credit impairment charges. Operating expenses increased marginally in the quarter under review.
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Mitsubishi UFJ (MUFG) Earnings Rise in 1H24, NII Declines
Mitsubishi UFJ Financial Group, Inc. (MUFG - Free Report) reported profits attributable to owners of the parent for the first half of fiscal 2024 (ended Sep 30) of ¥927.3 billion ($6.42 billion), up significantly year over year.
Increased gross profits, a rise in net fees and commissions and net trading profits acted as tailwinds. Also, a rise in loan and deposit balances was positives. On the flip side, a decline in net interest income (NII) was a dampener.
Gross Profits Rise, G&A Expenses Decline
Gross profits (before credit costs for trust accounts) for the first half were ¥2.49 trillion ($17.23 billion), up 7.1% year over year. The upsurge was mainly on higher net fees and commissions, as well as net trading profits.
Results reflect a 26.5% decline in NII, which was ¥1.23 trillion ($8.51 billion). Nonetheless, trust fees, along with net fees and commissions, totaled ¥848.7 billion ($5.87 billion), up 9.9%. Net trading profits (including net other operating profits) were ¥409 billion ($2.83 billion) against a loss of ¥122.8 billion in the prior year.
Mitsubishi UFJ’s total credit costs in the first half of fiscal 2024 were ¥181.2 billion ($1.25 billion), down from ¥243.8 billion for the first half of fiscal 2023.
G&A expenses witnessed a year-over-year decrease from ¥1.43 trillion to ¥1.4 trillion ($9.69 billion).
The expense ratio was 56.3%, down from 61.4% in the prior-year period. A decrease in this ratio indicates a rise in profitability.
Balance Sheet Position Strong
As of Sep 30, 2023, Mitsubishi UFJ reported period-end loans of ¥114.88 trillion ($768.9 billion), up 1.4% sequentially. The rise can be primarily attributed to an increase in overseas loans.
Deposits sequentially rose to ¥217.86 trillion ($1.46 trillion) from ¥216.59 trillion as demand for domestic corporates and overseas and other deposits increased.
Total assets summed ¥398.18 trillion ($2.67 trillion), up 2.8% on a sequential basis.
Conclusion
MUFG has a robust business model, a diversified product mix and solid capital ratios. However, high costs may hurt the bottom line in the near term.
Concurrently, MUFG has announced a share repurchase plan. Under the plan, the company’s board of directors authorized to buy back up to 400 million shares or nearly 3.31% of its outstanding shares (excluding treasury stock) for an aggregate amount of ¥400 billion. The shares are expected to be repurchased between Nov 15, 2023 and Mar 31, 2024.
Mitsubishi UFJ Financial Group, Inc. Price, Consensus and EPS Surprise
Mitsubishi UFJ Financial Group, Inc. price-consensus-eps-surprise-chart | Mitsubishi UFJ Financial Group, Inc. Quote
Mitsubishi UFJ currently carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Performance of Other Foreign Banks
Deutsche Bank (DB - Free Report) reported a third-quarter 2023 profit attributable to its shareholders of €1.03 billion ($1.12 billion), down 7.5% from the year-ago quarter. The Germany-based lender reported a profit before tax of €1.72 billion ($1.88 billion), up 6.7% year over year.
The results of DB were largely driven by higher net revenues, lower provisions and a strong capital position. However, a rise in operating expenses was an offsetting factor.
Barclays (BCS - Free Report) reported a third-quarter 2023 net income attributable to ordinary equity holders of £1.27 billion ($1.61 billion), down 16% from the prior-year quarter.
BCS recorded an increase in revenues, along with higher credit impairment charges. Operating expenses increased marginally in the quarter under review.