MUFG Report 2018 Integrated Report

Mitsubishi UFJ Financial Group WorldReginfo - b5625110-108f-485a-9bca-a62f0ca1d2eb Editorial Overview Who We Are

We, UFJ Financial Group, or MUFG, have compiled our integrated report, MUFG Report 2018, in order to explain our efforts to create sustained value to our investors and other stakeholders. Referencing the framework provided by the International Integrated Corporate Vision Reporting Council (IIRC),* this report introduces our business model through the opening section (“Who We Are”), and explains the methods we have used to create sustainable value through “Value Creation Initiatives,” “Important Issues Concerning Value Creation” and “Foundations of Value.” Further details on our initiatives for addressing ESG issues are available on our website.

* A private-sector foundation established in 2010 by companies, investors, accounting organizations and administrative agencies to develop an international framework for corporate Our reporting. The corporate vision serves as the basic policy in mission conducting our business activities, and provides guidelines for all group activities. Important Issues Concerning Value Creation Our vision Who We Are P. 1 How MUFG Addresses ESG Issues P. 52 The corporate vision also is the foundation for management decisions, including the formulation of management P. 1 Corporate Vision Initiatives for Addressing ESG Issues P. 54 strategies and management plans, and serves as the core toward Sustainable Growth P. 2 MUFG Value Creation Process value for all employees. P. 56 Environmental Initiatives P. 4 History of MUFG Our values Initiatives to Counter Global Warming P. 56 P. 6 Financial Highlights and Climate Change P. 8 ESG Highlights P. 60 Social Contributions MUFG has established Principles of Ethics and Principles of Ethics and Conduct Helping Corporate Customers Achieve Growth P. 60 Management Message P. 10 through Financing Conduct based on its Corporate Vision. These P. 62 Building Sophisticated Investment Chains principles provide standards for all MUFG Responsibility Ethical and Customer as a Corporate Dynamic P. 64 Upgrading the Governance Framework employees to guide their decisions and actions, Focus P. 10 Message from the CEO Citizen Workplace thereby leading them to realize the The New Medium-Term Business Plan— P. 64 Ensuring sustainable growth in our corporate value P. 24 Eleven Transformation Initiatives Pursuing the Best Long-Term Interests of Corporate Vision. P. 70 P. 28 Digitalization Initiatives Our Shareholders How we act to realize the Corporate Vision P. 72 Board of Directors MUFG Operations Encompassing P. 30 the Asia Pacific Region P. 75 Corporate Executives and Executive Officers P. 32 Message from the CFO P. 76 Global Advisory Board Important Issues Concerning Value Creation P. 77 Outline of Annual Meeting Value Creation Initiatives Business Overview P. 38 Foundations of Value P. 78 To be a foundation of strength, committed to meeting the needs of our customers, serving society, and fostering shared and P. 40 Retail & Commercial Banking Business Group Initiatives to Build Sustainable Relationships with P. 80 sustainable growth for a better world. Customers P. 42 Japanese Corporate & Business Group Our mission P. 82 Human Resources Strategy P. 44 Global Corporate & Investment Banking Business Group P. 86 Communicating with Stakeholders P. 46 Global Commercial Banking Business Group P. 88 Risk Management P. 48 Asset Management & Investor Services Business Group Be the world’s most trusted financial group P. 92 Compliance P. 50 Global Markets Business Group P. 94 Internal Audit 1. Work together to exceed the expectations of our customers P. 95 Responding to Global Financial Regulation 2. Provide reliable and constant support to our customers

Financial Data / Corporate Data P. 96 Our vision 3. Expand and strengthen our global presence

P. 96 Ten-Year Summary of Major Financial Data P. 98 Financial Review for Fiscal 2017 P. 102 Consolidated Financial Statements 1. Integrity and Responsibility P. 106 Company Overview 2. Professionalism and Teamwork

Disclaimer 3. Challenge Ourselves to Grow This report contains forward-looking statements with regard to the expectations, forecasts, targets and plans of Mitsubishi UFJ Financial Group, Inc. (“MUFG”) and its subsidiaries and affiliates (collectively, “the Group”). These forward-looking statements are based on information currently available to the Group and are stated in this document on the basis of the outlook at the time that this document was produced. In producing these forward-looking statements certain assumptions (premises) Our values have been utilized that are subjective and may prove to be incorrect. Should any underlying assumption provide to be incorrect, actual results in the future may vary materially from some of the forward-looking statements in this document. The Group has no obligation or intent to update any forward-looking statements contained in this document. In addition, information on companies and other entities outside the Group that is included in this document has been obtained from publicly available Details on our corporate vision are available on our website. https://www.mufg.jp/english/profile/philosophy information and other sources. The accuracy and appropriateness of that information has not been verified by the Group and cannot be guaranteed. All figures contained in this report are calculated according to generally accepted accounting principles in Japan, unless otherwise noted. WorldReginfo - b5625110-108f-485a-9bca-a62f0ca1d2eb MUFG Report 2018 1 Who We Are

MUFG Value Creation Process

Sustainable growth backed by business activities aimed at providing solutions for issues society is confronting

Social Issues MUFG Value delivered to stakeholders

Global economy Shareholders Enhance our new business model via • Countering low economic growth in Invested capital Business models the Eleven Transformation Initiatives (P. 24) • Further enhancing under the new medium-term business plan developed countries and slowing shareholder returns growth in emerging nations A groupwide integrated • Global warming & climate change management approach that is P. 36 • Adapting to widespread simple, speedy and transparent digitalization Groupwide • Social infrastructure integrated operations Commercial • Political and geopolitical risks Banking Human Retail & Commercial Customers capital P. 40 Banking • Services beyond Domestic economy Strategic investment aimed at seizing expectations • Declining birthrate and aging Japanese Corporate & opportunities arising population P. 42 from market growth P. 40~51、P. 80~81 • Ongoing de­lationary trend Investment Banking • Reforming investment chains Investment Intellectual Banking • Invigorating regional economies Global Corporate & • Workstyle reforms capital P. 44 Corporate Investment Banking governance Environment and society framework Retail Business Global Commercial • Initiatives to help realize • Stable asset building P. 46 Banking environmental and • Securing the smooth succession of Risk appetite assets for the next generation Social and framework AM / IS social sustainability relationship capital Asset Management & P. 48 P. 54~63 Corporate Business Investor Services Culture of compliance • Corporate governance reforms Employees • Securing business succession in light of an aging generation of Global Markets P. 50 Initiatives to • HR systems to assist corporate managers Global • Establishing and executing sound Financial address environmental employees in the pursuit and social issues Markets growth strategies (globalization, capital of professional success M&A and the expansion of sales channels) P. 82~85

Contribution to the betterment of society Committed engagement with stakeholders P. 86

Priority environmental and social issues determined by MUFG in reference to such international norms as United Nations Sustainable Development Goals (SDGs) Invested capital

Aging population & Business incubation & Social infrastructure & • 150,000 domestic and overseas employees with diverse • Extensive customer base (34 million individual 1 low birth rate 2 job creation 3 town planning backgrounds customers and 1.3 million corporate customers in Japan) Human Social and capital • Wealth of human resources boasting professional skills relationship • Global network (650 domestic bases and approximately • Strong employee engagement capital 1,200 overseas bases across over 50 countries) Global warming & Financial innovation Workstyle reforms 4 climate change 5 6 • Expertise in the global ­inancial business • Solid balance sheet • Open innovation aimed at incorporating external insights • Diversi­ied pro­it structure Intellectual Financial capital capital • Stable procurement bases at home and abroad 7 Cross-sectoral environment and social issues WorldReginfo - b5625110-108f-485a-9bca-a62f0ca1d2eb 2 MUFG Report 2018 MUFG Report 2018 3 Who We Are

History of MUFG

The MUFG Basic Policy for Among MUFG’s precursors, the oldest dates back approximately 360 years. Over this long span of time, ・MUFG Corporate Governance Fiduciary Duties established our commitment to addressing customer needs has remained unchanged, weathering the course of Policies established The formulation of common guidelines for the Moved to a “company with three mergers prompted by recurring periods of social change and economic adversity, including worldwide ・ Group to enforce its customer-irst policy committees” structure recessions, Japan’s rapid growth period, the rise and fall of bubble economies and, most recently, the Shifted from a “company with a board of MUFG Re-Imagining Strategy announced Global Financial Crisis. corporate auditors” structure to a “company with three-committees” structure, with the We have nurtured our commitment despite the circumstances and are determined to move forward to aim of establishing a more transparent and e ective governance framework achieve mutual and sustainable growth with our customers. Moreover, we aspire to contribute to the sound development not only of Japan but of countries around the world and we aim to be part of the bedrock of society. Our vision Mitsubishi UFJ Securities, Morgan Stanley MUFG Securities inaugurated With all employees sharing this commitment and aspiration, MUFG steadfastly pursues its mission. Be the world’s most trusted inancial group MUFG Corporate Vision renewed Ensured the reputation for trustworthiness Konoike Exchange MUFG inaugurated that MUFG enjoys among customers, which Bureau opened in In August 2004, the predecessor companies signed a basic is backed by a longstanding track record and Osaka (1656) agreement on integration. In October 2005, MUFG was is maintained and passed on, underscoring (One of the precursors inaugurated via the merger of Mitsubishi Tokyo Financial the commitment of each employee 2018 of Sanwa ) Group and UFJ Holdings. U.S.-North Korea summit 2017 The Trump Source：Konoike Limited Partnership Company 2016 administration Mitsubishi UFJ Trust and Banking, The BOJ inaugurated in Mitsubishi Exchange Mitsubishi UFJ Securities inaugurated 2015 introduces a the United House established by Quantitative negative interest States Yataro Iwasaki (1880) 2014 easing rate policy U.K. referendum (One of the precursors Bank of Tokyo-Mitsubishi UFJ The Nippon measures Strategic investment in 2013 Individual introduced by results in a of ) decision to , Indonesia (now MUFG Bank) inaugurated The BOJ Savings the European Account (NISA) leave the Complete repayment of public funds 2012 introduces European Union Source: The Mitsubishi Archives The second quantitative launched Abe and qualitative Bank of Tokyo established (1946) 2011 The Great East administration monetary established (1880) (One of the precursors of MUFG Bank) Mitsubishi UFJ NICOS, 2010 Japan Earthquake inaugurated in easing policies Japan, (One of the precursors Mitsubishi UFJ Lease & The debt crisis initiating the of Bank of Tokyo) 2009 emerges in Europe Finance inaugurated Abenomics The Obama stimulus Toyo Trust and Banking administration established (1959) package Source: Kanagawa Prefectural inaugurated in Museum of Cultural History (One of the precursors of the Integration of Mitsubishi UFJ Trust and Banking) 2008 operations and MUFG Bank Financial crisis Americas business ・Bank of Tokyo-Mitsubishi UFJ Mitsubishi Bank established (1919) 2007 triggered by rebranded to MUFG Bank (One of the precursors of MUFG Bank) Heisei period Subprime Lehman Brothers 2006 mortgage ・Integrate corporate The Bank of Japan problems emerge Sanwa Bank established (1933) 2005 (BOJ) terminated in the United States loan-related business of the Transition to (One of the precursors of 1991 zero interest rate policy Bank and the Trust Bank limited deposit Conversion of MUFG Bank) The collapse guarantee “payo ” (Krungsri), a major commercial of Japan’s scheme in Japan 1964 bubble bank in Thailand, into a subsidiary Showa period Tokyo economies Strategic alliance with Olympic Morgan Stanley Initiated full-scale comprehensive 1941 games inancial services in ASEAN as a key The Paciic War During the global inancial crisis, MUFG invested US$9 billion in Morgan Stanley growth strategy initiative breaks out Capital and operational 1929 (U.S.) as part of its e orts to strengthen Worldwide alliance with Vietnam Taisho period recessions investment banking Joint Stock Commercial Meiji period Edo period Bank for Industry and Trade (VietinBank), a Capital and business alliance with The new medium-term national bank in Vietnam Corporation in the business plan announced Tokai Bank established (1941) Philippines The Eleven Transformation (One of the precursors Initiatives identi¦ed to promote of MUFG Bank) strategic initiatives aimed at realizing objectives of the MUFG Re-Imagining Strategy Mitsubishi Trust established (1927) Yachiyo Securities established (1948) ・UnionBanCal Corporation became a (One of the precursors of Mitsubishi UFJ Trust and Banking) (One of the precursors of Mitsubishi wholly owned subsidiary of MUFG Kawasaki Trust established (1927) UFJ Morgan Stanley Securities) (One of the precursors of Mitsubishi UFJ Trust and Banking) ・ACOM became a consolidated subsidiary of MUFG (JGAAP only) WorldReginfo - b5625110-108f-485a-9bca-a62f0ca1d2eb 4 MUFG Report 2018 MUFG Report 2018 5 Who We Are

Financial Highlights

Key Financial Performance Indicators Financial Results under the Previous Medium-Term Business Plan

EPS (growth) ¥74.55 ROE (profitability) 7.53% FY2014 (Results) FY2017 (Targets) FY2017 (Results) Increase 15% or more Earnings per share (EPS) MUFG definition*1 Growth EPS ¥73.22 ¥74.55 （%） (Yen) Profits attributable to owners of parent (right axis) (Trillions of yen) Tokyo Stock Exchange definition from FY2014    ROE*1 8.74% Between 8.5%-9.0% 7.53% ¥74.55  Profitability   Expenses ratio 61.1% Approx. 60% 68.0%    Common EquityTier 1 Financial Strength 2 12.2% 9.5% or above 12.5%  7.53% capital ratio*   *1 MUFG definition *2 Full implementation  6.32%    Financial Position Compared with Global Peers (G-SIBs)*1  2013 2014 2015 2016 2017 (FY) 2013 2014 2015 2016 2017 (FY) Despite a decrease in net operating profits, profit attributable to owners of parent rose ROE climbed in step with the rise in profit attributable to owners of parent. Market Capitalization due to a decline in credit costs, an elimination of the provision for repayment of excess interest and other factors. EPS grew, as well. (Trillions of yen) Common Equity Tier 1 Capital Ratio  Expenses Ratio (profitability) 68.0% (financial strength) 12.5%  Expenses ratio Common Equity Tier 1 capital ratio (full implementation)*2 General and administrative expenses (right axis)  （%） (Trillions of yen) Common Equity Tier 1 capital ratio Gross profits (before credit costs for trust accounts; right axis) （%） 12.5%  68.0%   12.5%      JP Morgan Bank of HSBC Citigroup Goldman BNP MUFG Deutsche America Sachs Paribas Bank (Exchange rate: ¥106.24 to one U.S. dollar; as of March 31, 2018; source: Bloomberg)    Common Equity Tier 1 Capital Ratio (full implementation)

  （%） ‡ƒ„ * White numbers in the bar chart represent each institution’s required ratio. 14.5%    14.0% 2013 2014 2015 2016 2017 (FY) 2013 2014 2015 2016 2017 (FY) ˆƒ„ 13.3% 12.5% The expense ratio increased mainly due to rises in costs associated with overseas The Common Equity Tier 1 capital ratio remained above the level required by financial 12.4% 12.1% operations and a decline in gross profits on the back of decreases in revenues from regulations. 12.0% 11.8% †ƒ„ 11.5% domestic loans and deposits and gains on debt securities. 10.7% Ratio of the Global Banking Business 9.5% „ƒ„ Segment in the Net Operating Profits 9.0% 9.0% 8.5% 8.5% 9.0% 8.5% 8.5% 9.0% 8.5% Ratio of Fee Income 38% from Customer Segments 37% ‚ƒ„ Ratio of fee income The ratio of the Global Banking business segment in the net operating profits from customer segments HSBC Deutsche Barclays MUFG Citigroup JP Morgan Wells Fargo BNP Bank of Goldman Fee income (right axis) Net operating profits of the Global Banking business segment (right axis) Bank Paribas America Sachs （%） Gross profits (right axis) (Trillions of yen) （%） Net operating profits of customer segments (right axis) (Trillions of yen) (Rates as of December 31, 2017, excluding the rate for MUFG as of March 31, 2018; based on data disclosed by each firm)     38% Credit Ratings 37%  S&P Rating U.S. Firms European Firms     A+     A HSBC BNP Paribas 

MUFG JP Morgan Wells Fargo    A- 2013 2014 2015 2016 2017 (FY) 2014 2015 2016 2017 (FY) With fee income staying virtually unchanged year on year, the ratio of fee income to The ratio of the Global Banking Business Segment in net operating profits from BBB+ Citigroup Goldman Sachs gross profits rose on the back of an overall decrease in gross profits mainly due to a fall customer segments declined due to decreases in customer segment revenues in such in interest income. overseas regions as Europe and the United States as well as increases in domestic customer segment revenues mainly in Business Segment. BBB Barclays

Profits attributable to owners of parent *1 ×100 *2 Calculated on the basis of regulations applied at the end of March 2019. (Rating of issuers of long-term foreign currency denominated debt as of March 31, 2018; source: Bloomberg) [(Total shareholders’ equity at the beginning of the period + Foreign currency translation adjustments at the beginning of the period) + (Total shareholders’ equity at the end of the period + Foreign currency translation * Comparisons with European and American G-SIBs which a G-SIB buffer (announced in 2017) of 1.5% or greater is applied adjustments at the end of the period) ] ÷ 2 WorldReginfo - b5625110-108f-485a-9bca-a62f0ca1d2eb 6 MUFG Report 2018 MUFG Report 2018 7 Who We Are

ESG Highlights

Environment Governance

MUFG’s Track Record and Ranking as a Finance Arranger US$4,343 Million Number of Members of the Board of Directors The Proportion of Independent Outside Directors

in the Renewable Energy Sector (No. 1 ranking) Carbon Dioxide (CO2) Emissions* 224,439t

Total Outside Directors (Millions of US$) (t-CO ） 4,343 2   Company with a Board Company with Three Committees No. 1 of Corporate Auditors   18 No. 1 17 17 FY2017 FY2018  15 15 No. 2  No. 4 No. 1 No. 2  44.4% 53.3%  No. 3  8 8 224,439t 6 7   4

 2011 2012 2013 2014 2015 2016 2017 (CY) 2013 2014 2015 2016*2 2017 (FY) 2014 2015 2016 2017 2018 (FY) Sorce: Bloomberg New Energy Finance ASSET FINANCE/Lead arrangers LEAGUE TABLE *1 Total for MUFG, MUFG Bank, Mitsubishi UFJ Trust and Banking, Mitsubishi UFJ Morgan Stanley Securities and Mitsubishi UFJ NICOS

*2 The figure for fiscal 2016 includes the impact of a CO2 offset scheme employing

emission credits. This scheme resulted in a total reduction of 25,500t-CO2.

Society External Recognition

Number of Occasions in which Number of Business cumulative MUFG Staff Provided Students with Matches Made* Approx. 87,200 Economic and Financial Education* 554 times ESG-related indices Technology Utilization Category Award under the NIKKEI Smart Work Awards 2018 Program （times） MUFG stock has been designated by some 87,200   554 times prominent ESG-related indices in Japan MUFG was chosen by the financial and overseas (as of May 31, 2018). newspaper Nikkei to receive a Technology  Utilization Category Award under the NIKKEI Smart Work Awards 2018 program   in recognition of its pioneering initiatives to enhance productivity and secure  sustainable growth through workstyle reforms.  



  Bloomberg 2013 2014 2015 2016 2017 (FY) 2013 2014 2015 2016 2017 (FY) Gender-Equality Index * The Number of business talks at large-scale business matching conference in Japan * On-demand school lectures and workplace experience programs conducted by sta† at MUFG Bank, Mitsubishi UFJ Trust and Banking, Mitsubishi UFJ Morgan Stanley Securities, MUFG was chosen by the index as a company Mitsubishi UFJ NICOS and ACOM attractive due to its creation of a workplace environment that embraces gender equality Number of Employees Ratio of Female Managers along with efforts to maintain timely information on Childcare Leave* 3,757 in the entire Managerial Positions* 21.0% disclosure, solid cumulative track record and progressive policies in this area. End of March, 2021 （%） 24.0 (planned)  3,757 

 21.0% The 2018 Competitive IT Strategy

 Company Stock Selection  MUFG was selected by Japan’s Ministry of Economy, Trade and Industry and the Tokyo Stock  Exchange as an attractive company due to its  aggressive utilization of IT in its management  activities and engagement in strategic IT 14.4% investments and other initiatives. (Received for a second consecutive year)   2013 2014 2015 2016 2017 (FY) 2014 2015 2016 2017 2018 2019 2020 2021 (FY)

* Total for MUFG Bank, Mitsubishi UFJ Trust and Banking, Mitsubishi UFJ Morgan Stanley * Total for MUFG Bank, Mitsubishi UFJ Trust and Banking and Mitsubishi UFJ Morgan Securities and Mitsubishi UFJ NICOS Stanley Securities WorldReginfo - b5625110-108f-485a-9bca-a62f0ca1d2eb 8 MUFG Report 2018 MUFG Report 2018 9 Management Message Message from the CEO

Creating a Resilient Organization in a

Nobuyuki Hirano Disruptive World President & Group CEO

implied that the domestic “America-first” policy he graying society, and shrinking population, the industrialized nations face them too, including in What do the times demand of promoted since inauguration would accommodate government’s stimulus policies – including monetary Europe. My fear is that aside from obvious economic management? this promising outlook. easing and fiscal action – did produce some good effects, these problems fuel social divisions and 2018 arrived with turbulence – but also with reasons results over the past few years. But other major anti-globalization sentiments that threaten political for optimism, as economic and political But skeptics, including some bankers, identified three efforts – reforming labor markets, overhauling social stability, even in advanced economies. Meanwhile, developments inspired some cautious confidence. conditions that might threaten the global economy: security, and reducing the national deficit – have leaders in emerging economies that could – and Despite a volatile global environment, world leaders Geopolitical risk, trade conflicts – and market fallen short. Meanwhile, uncertainty has hardened should – act as global growth engines nervously who gathered at Davos in January seemed to share a volatility triggered by central ’ strategic shift the mindsets of corporate leaders and consumers, wonder if policies guiding the U.S. mega-economy belief that upturns in employment, consumption, and from monetary-easing policies. Looking back, it who tend to be overcautious about spending. This and China’s state capitalism can really drive growth investment would continue. This view was based seems the skeptics might have been right. In light of combined ineffectiveness of government, business, in a sustainable way. largely on widespread economic growth in the 35 these serious issues, optimism among government, and consumer activity has led to stagnant innovation, member countries of the Organisation for Economic corporate, and consumer sectors has indeed steadily slumping labor productivity, and an economy that Issues like these, I believe, are the real factors Co-operation and Development – and endorsed by dwindled. can’t seem to grow. threatening order and stability in global politics and the leader of the world’s largest economy. In a economies. This makes them management issues as speech delivered the last day of the Summit, he Consider Japan. Responding to a declining birth rate, Japan is not unique in facing these problems. Other well. Since the financial industry mirrors trends in the WorldReginfo - b5625110-108f-485a-9bca-a62f0ca1d2eb 10 MUFG Report 2018 MUFG Report 2018 11 Management Message Message from the CEO

real economy, institutions like MUFG face the CHANGE TO MANAGE CHANGE banking platform to serve ASEAN nations six years Given that tough equation, they submitted a bold consequences of forces beyond any one sector’s ago, the Bank of Ayudhya (Krungsri), a bank we recommendation: Make fundamental reforms to our control. Lessons from the recent past acquired in 2013, has steadily grown and become business model, by organizing ourselves into teams Our previous three-year business plan – launched in one of Thailand’s five Domestic Systemically of colleagues drawn from across the enterprise Our home market suffers from relentlessly depressed fiscal 2015 – made reforms to our businesses, capital Important Banks. Two other investments – Security whose common denominator is a shared customer. interest rates. Monetary policies of the Bank of Japan policies, and governance systems, designed to Bank in the Philippines and Bank Danamon in This led us to create a MUFG Re-Imagining Strategy have dealt blows to financial institutions. counter ultra-low interest rates in Japan and the Indonesia – helped lay the foundations of strong and a new three-year Medium-Term Business Plan Government-led economic stimuli to encourage phenomenon of “secular stagnation” in economies regional networks. Also, the turnaround of our (MTBP) using what we call a “group-based businesses investment may have actually started to around the globe. Japanese subsidiary Acom into a consumer earnings approach.” do the opposite. Household budgets are shrinking, pillar is almost complete. pension funds are underperforming, and the earning What were the results? Our previous three-year plan fell largely short of its power of financial institutions are in long, steady In asset administration, we made multiple M&A deals goals because we simply weren’t equipped for decline. Given the low-growth environment, it’s no In terms of financials, regrettably our net operating and established the MUFG Investor Services brand. change. Now we’ve come to accept that MUFG wonder that bankers worry about their financial profits declined for three consecutive years and fell We are now globally ranked among the top ten cannot grow sustainably with a traditional domestic broking capabilities, and that abiding anxieties have significantly short of targets. We also failed to meet financial institutions handling alternative fund commercial banking model and a conventional crept into the national consciousness. key management goals for our earnings-per-share administration of hedge funds and private equity. We management structure. Confronting this growth, efficiency ratio, and return on equity. This also began integrating platforms of our banking and inconvenient truth with clear eyes, we see the Still, we do see at least one profound bright spot, was due in part to the Bank of Japan’s negative securities units associated with capital market and necessity – and wisdom – of structural reforms. domestically and globally: digital technologies. If interest-rate policy, a plunge in energy prices, and sales & trading. We reduced domestic expenses managed wisely, their widespread use can be a stagnant global trade. Also contributing were a through a range of actions, including judiciously We envision three steps toward those reforms. powerful force to improve daily lives, invigorate decline in market volatility, a surge in U.S. dollar downsizing our workforce. industry, and uplift society. funding costs, and limited liquidity. One, start with the customer when redefining a And regarding capital management, we bought back business segment. They also pose challenges. While FinTech startups Indeed, the list of negative factors is long. Declining shares whenever possible and divested equity Two, apply resources first and foremost in service to have grabbed the public’s attention as a threat to the interest margins at our domestic retail and corporate holdings ahead of plan. customers. financial sector, the real threat will come from banking businesses made things even more difficult. Three, keep priorities focused on high-potential BigTech. As the giants that dominate e-commerce, So did restructuring our oil-and-gas-sector portfolio. We can also proudly make note of two other sectors. search engines, and social-networking services bring Fewer major corporate transactions in East and milestones. This autumn, we will celebrate the 10th their online expertise and enormous customer data Southeast Asia, a decline in yen trading revenue due anniversary of our successful strategic partnership We know these reforms will require more than three to bear on financial services, revolutionary mega- to low market volatility, poor asset-liability with Morgan Stanley. And we recently strengthened years. So we’ve set a deadline a full six years out platforms will emerge. management revenues, and rising U.S. interest rates our Board of Directors by welcoming two capable – extending three years beyond our new MTBP. The also played a role. In addition, expenses for our foreign nationals. I am gratified to say our Board is first three years will be devoted to preparing We have to step up to the challenge. First, we must human-resource and systems development projects clearly moving closer to its vision of what it should management and resources to execute the accurately read the long-term trends destined to to deal with tightened regulations in the Americas become. restructure. shape society in the coming decades. Second, we and Europe deteriorated our efficiency ratio. must immediately identify real-world problems we We expect to be clearly on track but see only modest are certain to face as they arise from these trends. So it’s true we can point to a long list of rationales to Transitioning to a new business progress by the end of year three. By the end of year Third, we must solve these problems using our explain our disappointing results. But the sobering model six, we will have established an entirely new model powerful core capabilities. And fourth, we must facts remain: We’re still not resilient enough to In the summer of 2016, we launched Project Creare purposefully built to grow our domestic and overseas invest in readying our team for this changing and absorb adversity on a great scale, and we’ve been – Latin for “create” – deploying a team of young business. challenging landscape. too slow to change. These are real reasons we leadership talent representing the future of our performed poorly and failed to offset a declining top company. We challenged them to start with a clean We drew up three principles to help chart this I am being realistic by saying we can set the agenda line. slate and create a new vision for MUFG as a future- journey. to accomplish all this. We have the resolve and facing enterprise. They explored how to remain resources to maintain a vibrant workplace, nurture We also have done some important things right. resilient while facing drastic challenges in a mercurial our corporate culture, contribute to society – and environment. support sustainable growth. Since we set out to develop a robust commercial WorldReginfo - b5625110-108f-485a-9bca-a62f0ca1d2eb 12 MUFG Report 2018 MUFG Report 2018 13 Management Message Message from the CEO

conventional deposit and loan revenue-dependent converted into foreign currencies. Tighter liquidity and entity-neutral structure,” meaning resources Three principles for a transformed business model. They also need strategies to offset and regulations are also forcing financial institutions across MUFG are freely available to units in every organization legacy costs. Our recent integration of retail and to set aside greater liquidity reserves. So we are business group. 1. Customers should define our business segments commercial business was designed to address these pivoting from a lending business aimed at quantity to The nearby chart categorizes Japanese Customers, issues by making it easier to reach out to business one focused on quality. For example, we recently integrated the corporate Non-Japanese Customers with subsections of Retail owners whose unique service needs have fallen in lending and relevant operations of the Bank and and Small-to-Medium Enterprise (SME) Businesses gaps between segments. Meanwhile, retail and commercial businesses are Trust Bank – a major step in across-the-board and Wholesale Banking Businesses. Within this growing. In addition to serving four ASEAN nations, functional realignment. We intensified the context, MUFG Group now has six business groups. We’ve divided our overseas banking operations we expect to build a robust global commercial integration of corporate center functions at the – previously centered on the Global Banking Business banking platform encompassing the Asia-Pacific holding company and the Bank, and are now Two remain unchanged – the Asset Management & Group – into the wholesale banking business and regions, collaborating with MUFG Union Bank on the extending it to the Trust Bank and Securities Investor Services Business Group and Global Markets retail and commercial businesses. U.S. West Coast. We believe these businesses can businesses. And we’ve created the new position of Business Group – so I will focus here on the four eventually grow into our largest customer segment Chief Operating Officer-International (COO-I) to we’ve newly defined, the Retail & Commercial Wholesale banking has been a strength in our global but are approaching this prudently, because manage our overseas business platforms, reduce Banking Business Group, Japanese Corporate & expansion. In fact, after the worldwide recession emerging markets can be fragile in stormy their costs, and retire investments that have Investment Banking Business Group, Global triggered by the Lehman Brothers bankruptcy forced conditions. accomplished their missions. Corporate & Investment Banking (CIB) Business European and U.S. financial institutions to reduce Group, and Global Commercial Banking Business their balance sheets, MUFG stood strong. We 2. Customers come first when applying our resources 3. Keep priorities focused on high-potential sectors Group. increased share of corporate lending, and earned a The second step in our transformation is a structure The third transformative step is to focus on sectors solid reputation in the U.S. and throughout Asia as that allows us to optimize resources. Typically with high growth potential where MUFG can fully We are taking on challenges in Japanese retail and the largest foreign lender. described as being “efficient and effective,” this exert our core competencies. We’ve identified eleven commercial banking. Our banking arms – with a base means visibly bringing as much possible benefit of priorities to accomplish this. I want to quickly of 34 million individual customers and 1.3 million But lending has become less profitable because of every resource to the attention and service of highlight eight that are closely associated with our corporate clients – need to break away from the higher funding costs, especially when using yen customers. To do this, we are shifting to a “product- key fields of business.

Time line Reorganization of the business groups

Establishment 1 Last MTBP* New MTBP Next MTBP Before After of MUFG

Retail & FY2017 FY2020 FY2023 Retail R&C Retail & Commercial Banking Japanese Banking SMEs

Improvement of Realize full- fledged bottom- group’s comprehensive Large line effect JCIB Japanese capability Japanese Corporate & Investment Banking corporates Entrench culture Corporate and behavior Banking Customer perspective Establish a Group-driven management structure and Non- Large Productivity Improvements GCIB framework / Global Corporate & Investment Banking Japanese corporates Reform revenue Group-based, Global structure integrated Banking management Non- Retail & GCB Global Commercial Banking Japanese SMEs Simple Speedy Asset Transparent Management & Investor Services AM/IS Asset Management & Investor Services

Enhancement Group-driven of group Move to a group-based, integrated management Global management Global collaboration Markets Markets Global Markets *1 Medium-term business plan WorldReginfo - b5625110-108f-485a-9bca-a62f0ca1d2eb 14 MUFG Report 2018 MUFG Report 2018 15 Management Message Message from the CEO

Priority: Digital Technology. This is critical to all unique to MUFG. collaboration and cross-selling among the Bank, the Indeed our colleagues, our communities, and even business units. As I mentioned, financial institutions Trust Bank, and the Securities and three business our cultures have different ideas on what it means to face an emerging threat from BigTech and startup Priority: New Model for Wholesale Banking in Japan. groups – Global CIB, Global Markets and Asset prosper. digital players invading our sector. They have certain We’ve created a new team by integrating our Management & Investor Services. This will allow us, advantages. Startups are unhampered by legacy domestic wholesale corporate lending and for example, to build capabilities as a comprehensive But we can all try to agree, even if not to-the-letter, costs; and BigTech has scale, infrastructure, and relationship manager units at the Bank and Trust debt house with products tailored to institutional on some fundamental measures. This is the spirit that reach. But digital technology – in conjunction with Bank – to work together as one. A select group of investors and asset managers. created the seventeen United Nations Sustainable external partners and customer big data – can also relationship managers will assist corporate clients, Development Goals (SDGs) – and their strengthen us, building marketing and consulting while product office units associated with the real Priority: Global CIB. This group, which handles Environmental, Social & Governance (ESG) criteria. It capabilities, and developing payment and financing estate business, pension service, corporate agency, wholesale banking for non-Japanese corporations, is is also the spirit that drives us to honor them. businesses. This will increase our transaction volume and investment banking functions will hone their breaking away from a conventional lending- and earning power. Technology can also make our specialist skills. Performance reviews will be based centered, balance-sheet-dependent business model. We believe all businesses are called upon to operations more efficient. It can renovate our online on consolidated MUFG profits, an incentive for entity- It will curb growth in risk-weighted assets and strengthen society by contributing to its well-being banking services, dramatically reduce administrative and product-neutral cross-selling. optimize its portfolio by divesting low-profitability through service to customers, communities, and tasks at the counter, allow digital sales and service lending. It will begin handling collateralized loan colleagues. for residential mortgage loans, and apply robotic Priority: Real Estate. In Japan, the Trust Bank has a obligations, commercial mortgage-backed securities, process automation and artificial intelligence to license as a real-estate broker, a unique advantage high-yield bonds, aviation finance, and other The financial industry in particular has a duty to be a handle routine administrative tasks. We expect that can be shared across MUFG: unlocking value products in highly profitable asset categories. bastion of infrastructure by providing funding – applications of this sort to cut 30% of our domestic throughout the chain of real-estate transactions. This essentially, society’s lifeblood. We consider ESG workload at MUFG Bank. includes property appraisals, tenant leasing, custody, A DEEPER PURPOSE duties integral to our day-to-day operations and asset management and brokerage, and property activities across the board. Priority: Sales Channel Strategy. In Japan, we will use management – all opportunities for new business for Environmental, Social & digital technology and process re-engineering to individual and institutional funds, developers, and Governance criteria This philosophy has been passed down to us by our make the customer’s life easier and make us more even foreign investors. As part of an overall asset- In our pursuit of prosperity for customers and clients, predecessors, the founders of today’s core MUFG efficient. For example, our online banking services management approach, we will establish private real- we know success can be measured in many ways. Group companies, whose individual histories can will become more user-friendly and mark a massive estate investment trusts (REITs), which can be linked shift from physical branches to virtual sales-and- with MUFG’s own corporate real estate (CRE) assets. service channels. We will launch next-generation Plan of net operating profits

services while streamlining our branch network – and Priority: Asset Management in Japan. Our previous Capture Eleven Transformation Initiatives we’re advancing a blended model that offers a range MTBP revealed weaknesses in our abilities to develop the market of Bank, Trust Bank, and Securities services located certain new products. We corrected this in our new growth at shared locations. In short, we will boldly transform plan, which emphasizes competitive products and our sales channels. expanded lineups in Japan, and enriches our pool of human resources to support them. Specifically for Global CIB Priority: Wealth Management Strategy. In the past, this reason, we recently established the Investment Approx. ¥1.25 tn we’ve served wealthy clients through three separate Products Planning Division under the holding New Model Institutional Asset Investors for Wholesale Management entities – the Bank, the Trust Bank, and the Securities. company. Overseas, we will continue to work hand- Banking in Japan in Japan /Real Estate Wealth Now, these three entities will work together on one in-hand with existing investees to optimize potential Sales Management cohesive platform to serve this key clientele. We will and, for investment and acquisition, focus on Regulatory, Global Channel Approx. ¥250 bn system/facility Commercial also take a new approach to sales, emphasizing candidates specializing in fields of high growth. costs Banking

fiduciary duty and assets under management to Digital Technology ensure a stable, resilient revenue structure. We will Priority: Institutional Investors. We have placed NII from offer high-end customers a variety of services institutional investors alongside individual customers, JPY loans /deposits delivered by highly skilled staff from the three Japanese corporations, and non-Japanese Consumer entities, under the new brand name MUFG Wealth corporations as a fourth customer segment. In the finance Management. These professionals will provide one- past, our services to these investors have not been FY2017 FY2020 FY2023 stop services in a private-banking business model well-coordinated. Our new structure will facilitate results targets WorldReginfo - b5625110-108f-485a-9bca-a62f0ca1d2eb 16 MUFG Report 2018 MUFG Report 2018 17 Management Message Message from the CEO

extend back a century or more. It’s part of our culture In the renewable-energy sector, MUFG has built a – both corporate and national – and we have always noteworthy track record, part of our pledge to abided by it in our own way. support countermeasures to global warming and climate change. In fact, MUFG is a pioneer in project But in 2017, the MUFG Board of Directors applied finance for solar, wind, and geothermal power new discipline to how we approach ESG criteria. This generation. In fiscal 2017, we occupied first place on led us to codify our stance on these criteria, to the Asset Finance Lead Arrangers league table that conform with international standards and ensure that ranks financial institutions serving as lead arrangers our ESG-related initiatives and disclosures are in financing for renewable energy projects. Securing comprehensive, compliant, and clear. this position for a second consecutive year, MUFG is demonstrably helping popularize clean energy on a The specific SDGs we wish to prioritize at MUFG worldwide basis. include financial innovation, global warming & climate change, business incubation & job creation, We are also committed to abide by Task Force on social infrastructure & town planning, and an aging Climate-related Financial Disclosures (TCFD) population & low birth rate. recommendations.

These priorities are now incorporated into the Social Responsibility. MUFG focuses on social strategies and policies of each business group. initiatives tied to our core competencies, such as MUFG also welcomes stakeholder dialogue and financial innovation, business incubation, job direct feedback, while our Board monitors progress creation, population aging, and low birth rate. on initiatives alongside our company’s management institution is to help clients and customers grow and educating all who seek to secure their financial future committees. In business terms, we are operating a Digital technology plays a part here, too. Successful protect their financial future. This informs our by offering financial-literacy and other outreach Plan-Do-Check-Act – or PDCA – cycle geared for real innovation in financial services depends largely on IT, involvement in business incubation and job creation. programs. improvement. and we are involved in a wide variety of innovations It transcends financial services by helping clients find in various technological fields to benefit society, from potential business partners among our vast customer And as one of the largest domestic asset managers, During this process, we reviewed, consolidated, and novel financial profit-making endeavors to base. In this prolonged low-growth economic we offer sophisticated but simple-to-use investment fortified a number of ad-hoc policies developed over operational platforms boosting productivity. We also environment, for 13 years we’ve organized business- tools for investors, and we are always guided – in time, and unified them into three official documents are skilled in planning financial services to support matching events to make connections among SMEs spirit and in concrete policy – by full compliance with released this year – our Environmental Policy Industry 4.0 and Society 5.0 – conceptual work and innovators seeking collaborators. These events the code of stewardship that anchors our business Statement, our Human Rights Policy Statement, and aimed at industrial and societal reforms – and have led to 87,000 successful business matchups philosophy. our Environmental and Social Policy Framework. designing infrastructure to support them. This involving 40,000 companies. And to nurture includes MUFG Coins – digital currencies using startups, we host “Rise Up Festa” events and joined MAPPING OUR JOURNEY: A VOYAGE, NOT A DESTINATION. Human Dignity. Our Human Rights Policy Statement blockchain technologies – to support the IoT and with U.S.-based Plug and Play, LLC to operate the certifies MUFG’s support of the Universal Declaration shared economies, and to help regional economic Accelerator Program that supports FinTech ventures. Governance issues of Human Rights and the Guiding Principles on zones flourish. Our continuous drive to elevate the company’s Business and Human Rights. It also defends human We are also determined to help the Japanese people governance system derives from a conviction that dignity by holding our suppliers and clients to Other initiatives involve blockchain digital-payment solve financial problems arising from the nation’s it’s a matter of substance, not formality. We have standards protecting the rights of their workers. services for swift low-cost transactions, co- declining birth rate and aging society. To help young seen too many cases of respected brands damaged developed with U.S.-based Akamai Technologies, people secure their future – and to relieve the public- – deeply and quickly – when their seemingly Environmental Stewardship. Our Environmental and Inc., and encouraging FinTech startups to use our pension burden to some degree – a thoughtful long- sophisticated governance systems failed to prevent Social Policy Framework specifies cluster-bomb open Application Programing Interface (the set of term investment strategy is essential. or detect some spectacular misconduct. manufacturing as a type of business MUFG will never programming instructions and standards for finance. It also mandates rigorous due diligence accessing our software applications) to develop their As a major distributor of investment products in We also believe governance is a voyage, not a whenever we contemplate providing services to ideas. Japan, we’re committed to fulfilling our fiduciary duty destination. With this in mind, over the past several such businesses as coal thermal power generation. to individual customers, helping them build stable years MUFG has worked to fortify the function of its We believe our fundamental mission as a financial long-term assets. We’re equally committed to Board of Directors, by increasing the number of WorldReginfo - b5625110-108f-485a-9bca-a62f0ca1d2eb 18 MUFG Report 2018 MUFG Report 2018 19 Management Message Message from the CEO

outside directors, shifting to a “company with establishing intermediate holding companies (IHCs) colleagues for a moment. predecessor. (I hope for a great day when the committees” system, and appointing a Lead and ensuring that their overseas branches meet local previous phrase might just as well say, “in contrast to Independent Outside Director. This ensures that our legal business requirements. Given the growing Right now, MUFG is poised to enact profound her predecessor.”) This is a tradition we should Board and its committees can freely engage in complexities of global financial regulations and local reforms. That means that right now, we need free preserve. It’s a strength. meaningful, candid, in-depth discussions of laws, we take strong measures to ensure our exchange of ideas more than ever before. We all management issues. business conduct complies with the highest ethical need to step away from conventional thinking and But systematically nurturing talent to meet all these and legal standards. We also allocate considerable help create a workplace with an open, interactive criteria isn’t easy. For several years, our Nominating Recent MUFG governance changes include last resources to countermeasures against financial atmosphere. This is how ideas and new insights arise and Governance Committee has discussed this issue year’s appointment of two foreign nationals as crimes. to guide us. and developed CEO succession plans for the holding independent outside directors. Considering the company, the Bank, the Trust Bank, and the global nature of our business – with overseas Ultimately, though, our business conduct depends Our 150,000 colleagues around the world are quite Securities. operations accounting for around 40% of our on our corporate culture. Clear messages about the diverse in gender, race, religion, age, and orientation. revenues – this was a welcome and relevant high standards we are duty-bound to uphold must In the U.S., Europe, and at partner banks in Asia, our In 2017, we began placing more formal emphasis on enhancement. Employees outside Japan also be communicated sincerely and passionately from organizations are operated by colleagues – including identifying and developing next-generation leaders compose about 40% of our workforce, and overseas top management to frontline colleagues. We need C-Suite leaders – who reflect the regions’ broad earlier in their careers. This led to establishing MUFG shareholders account for about the same ongoing employee education programs, and diversity. University this year, to prepare succession percentage. So clearly we need a Board that reflects message-cascading mechanisms, so everyone candidates for near- and long-term horizons and our increasingly diverse base. Appropriately, our two throughout the organization is well-versed on key Our Japanese workforce is lagging behind, however. different management levels. Its curriculum includes new outside directors are from the U.S. and Thailand, information. And to emphatically underscore how For instance, the percentage of women in management skills as well as a liberal-arts education countries where MUFG has strong local subsidiaries important conduct is, we calibrate our job- management positions remains at 20%. This year, that incorporates cross-cultural studies to instill a that contribute substantially to our global presence. performance evaluations to strongly encourage we’ve only managed to increase the number of broad, open perspective. robust compliance and discourage fraudulent female directors and executive officers to four. That’s This year, we reduced the number of executive activity just as strongly. progress, but it’s small and too slow. On the positive 3. Guiding How Digital Technologies Change Our directors, and we now have a total of fifteen side, our Board now includes three women among Work Styles directors, with independent members in the majority. our eight independent outside directors. In the best-seller Race Against The Machine, the This enhances the Board’s supervisory function over My leadership mission author makes a case that intelligent machines will management. The success of every initiative I’ve mentioned hinges Considering all factors, I think our diversity initiatives someday replace humans in the workforce. on the dedication of our 150,000 colleagues in 50 over the past ten years are starting to deliver results. Meanwhile today, advances in artificial intelligence, Strong internal controls are also critical, including risk nations who compose our worldwide team. Simply We will continue to set higher targets and work hard robotic process automation, and other digital management and compliance. Key issues include put, our success depends almost entirely on them. to reach them – building that 20% number closer to technologies are prompting lively management volatility triggered by central banks’ strategic shifts 30% over the next six years, for example, by helping discussions about how technological trends are on monetary policies, and significant trade or Therefore I consider stewardship of our greatest women chart career paths and bolstering our changing how humans work. In Japan, “work style geopolitical events. We pay close attention for signs resource – our human resource – one of my highest mentoring programs. reforms” are part of the national conversation, within of a turning point in the credit cycle. And we apply duties, and I view it through three lenses. the context of an aging society with a low birthrate. increasingly sophisticated risk-management tools 2. Nurturing Next-Generation Leaders when we undertake new types of credit business and 1. Promoting Workforce Diversity It is a simple fact that every CEO, no matter who or In 2017, I announced a six-year plan to automate expand our foreign currency-denominated liquidity, Diversity adds power to an organization only when where, has a duty to identify and develop talent to some of our domestic banking operations, reducing and upgrade our cyber-security measures. tied to inclusion. Each individual has unique qualities assume the helm, sooner or later. At MUFG, we the human workload by roughly 30% – equivalent to and characteristics – and that distinction is valuable, expect leaders to protect our legacy and nurture our 9,500 employees. I’ve been flooded with mixed We are also alert to new international compliance particularly when multiplied 150,000 times. Different future talent while doing their utmost to fulfill our reactions from colleagues and external observers and regulatory developments and stay fully viewpoints and opinions can cause friction among business mission. Their role is like a relay racer’s ever since. Some have doubted the plan’s feasibility. responsive to regulations wherever we do business. people, but it’s essential to share them. Suppressing – combining running ability with baton-passing skills. And most colleagues are understandably anxious For instance, Basel III reforms are almost finalized but differences defeats diversity’s purpose. Harnessing Both qualities are essential. about their own futures. the Fundamental Review of Trading Book (FRTB) is them can energize a small team or an entire not. Regulatory trends, which of course we track with organization and spark innovative solutions. MUFG also has a distinct tradition of succession But there’s no escaping the fact that digitalization is great care, suggest that financial institutions may - each new leader has had viewpoints and destined to improve productivity across all industries. need to take additional measures such as At this point, please allow me to directly address our characteristics in unusual contrast to his At MUFG, we have identified and specified almost WorldReginfo - b5625110-108f-485a-9bca-a62f0ca1d2eb 20 MUFG Report 2018 MUFG Report 2018 21 Management Message Message from the CEO

every task and function subject to automation balance among maintaining solid equity capital, must therefore be bold, with deep reforms based on changes shoulder-to-shoulder with our fellow crew. throughout the organization – and we’re developing making strategic investments for sustainable growth, clear-eyed reality. That’s why we launched initiatives Once we absorb this mindset into our culture, a detailed staffing schedule to ensure a smooth and enhancing shareholder returns. We are also this year aimed at re-imagining MUFG – a goal we solutions will be clearer and actions swifter. This is switchover in each case. determined not to carry over capital surplus and to clarified by formulating an MUFG Re-Imagining exactly what I mean when I say we need to embrace maintain a tight grip on capital policy. Strategy. management methods that are “simple, speedy and I take the position that digitalization of routine tasks transparent.” will lead to more flexible work styles and creative (ii) We will place great emphasis on paying dividends Our long voyage toward transformation has just jobs for people – provided they’re open to learning as a vehicle for shareholder returns. Although MUFG begun. I am almost certain it will involve treacherous We are the change agents as one of the world’s new skills. For this to work, all managers, myself continually repurchases shares, our dividend payout passages, rough seas, high winds, sudden squalls leading financial institutions is making a fresh start. included, must provide education, skill training, and ratio has remained relatively low. Looking ahead, and major storms. But we must keep true to our That in itself is very exciting – and the results will be, new opportunities. Then, colleagues must accept the however, we will strive for steady, continuous course – especially through rough weather. too. By re-imagining our place in the world and challenge and take the initiative to forge a path to increases in dividends per share, targeting a dividend A successful voyage requires a crew willing to act as executing concrete initiatives, we are transforming new job satisfaction. payout ratio of 40%. one. So often, challenges are rooted in some our enterprise to earn and deserve a reputation as inconvenient truth that everyone sees but no one the world’s most-trusted financial group. (iii) We will engage in share repurchases in a more mentions – they’re afraid to speak up. That is a toxic Enhancing Shareholder returns flexible manner, giving due consideration to our environment. We all need the freedom to share We ask your continued support as we reach for our Obviously, financial targets and capital policies are performance, capital status, and opportunities for what’s really going on, and the power to make goal. key topics as we establish a new sustainable business growth investment, as well as stock prices and other model – it’s our fundamental duty to deploy the market conditions. capital our shareholders entrust to us as effectively, efficiently, and responsibly as possible. We follow We intend these capital policies to enhance three metrics to assess our performance: efficiency shareholder returns and help fulfill expectations of ratio, return on equity, and common equity tier 1 our investors. capital ratio.

As described earlier, we’ve designated the three-year Reflections span of our new MTBP as a time to start making It’s been ten years since the worldwide recession drastic structural reforms – a period of intense was triggered by the Lehman Brothers bankruptcy. July 2018 “heads-down” focus. In the short term, we expect As the crisis unfolded, I observed how financial only limited improvement to our ROE and efficiency institutions around the world reacted, each making ratio, even with a likely upturn in operating income. different decisions on how to avoid fallout – then facing different consequences. Still, we’ve set mid- and long-term targets of approximately 9% to 10% for ROE and 60% for our This experience drove home the importance of the efficiency ratio. This is based on our confidence in following three lessons. First, a financial institution Nobuyuki Hirano our new business structure and lower risk profile. must remain true to its core competencies. Second, President & Group CEO it must lay out clear strategies attuned to the After we announced our upgraded capital and dynamics driving industrial and societal changes. shareholder-return policies in May 2018, I received a Third, when action is necessary, it is leadership’s duty variety of comments and questions from to enact it as swiftly as possible. shareholders. Although our CFO provides a detailed discussion of these matters on the following pages, I I’m grateful for the valuable lessons my predecessors want to summarize MUFG’s stance with these three have passed down by example. However, I wonder if points: the current adversities are even greater than those in the past, including in 2008. Ours are not cyclical in (i) We will maintain our basic policy for capital nature. Instead, they are arising from irreversible management and strive to strike an appropriate structural changes. Our response to these challenges WorldReginfo - b5625110-108f-485a-9bca-a62f0ca1d2eb 22 MUFG Report 2018 MUFG Report 2018 23 Management Message

The New Medium-Term Business Plan— (1) Digital Technology Utilize Digital Technologies to Drive Eleven Transformation Initiatives Strategic Reforms across the Board Enhance convenience Reduce workloads Improve top-line Encourage Reduce Increase the Today’s customers are increasingly choosing alternative customers to use transactions volume of online internet banking being processed settlements banking transactions methods. With the growing (IB)*1 at bank counter Under the new medium-term business plan, we have outlined the Eleven Transformation Initiatives, Digitalize market popularization of smartphones and other digital devices, Improve UI/UX*2 Shift work at transactions which are specifically designed to help MUFG weather a difficult business environment and get back on operation centers the number of customers who prefer online settlement is into digital Create new a sustainable growth track. Each initiative shares the following features: (1) a large growth potential, (2) growing, while the number of those who regularly visit Upgrade functions businesses the power to enable MUFG to demonstrate its capabilities and (3) the promise to become a main MUFG bank branches is decreasing. business, or a support function of a main business. Optimization In response, we are striving to utilize digital technologies We are aiming for growth of approximately ¥250 billion in net operating profits, with MUFG Group to provide customers with diverse lineups of highly Physical channels Digital channels companies, business groups and the corporate center working as one to push forward with these convenient transactional channels that allow them to initiatives. choose the one best for them. At the same time, we Technology Investment Infrastructure expect these technologies to help us reduce workload AI/Big data/ Strategic Cloud/Open API/ and improve productivity while facilitating the expansion Blockchain/ investment in Liberalization of Voice recognition startups financial platform of online transactions and the creation of new businesses. & authorization Our digitalization strategies are thus intended to boost *1 Mitsubishi UFJ DIRECT: Internet banking for individual customers (2) Sales Channel our overall business profitability. *2 UI: User interface; UX: User experience

(3) Wealth Management (2) Sales Channel

Customer segments Upgrade Our Channels (4) New Model for Wholesale Banking in Japan No. of branches Eleven Transformation Initiatives (MUFG Bank: non-consolidated basis) Shift from By enhancing user-friendliness and online transaction 11.2 branches No. of IB 1 functions, we will facilitate a shift from “real” to “online” service users*1, *2 to the internet  (Millions) channels. This will, in turn, help us optimize both face- (5) Real Estate (1) Digital Technology 7.4 to-face channels and non face-to-face channels. Diversify customer 2 Specifically, we will diversify the face-to-face channels  interface at branches operated by branches and, to this end, offer a wider 4.2 MUFG NEXT (6) Asset Management in Japan MUFG NEXT variety of options and types of transaction to meet  (consulting o‰ice) MUFG PLAZA customer needs. These options will include MUFG (Group co-located branch) NEXT branches that offer customers to easy-to- Branch with bank counter (7) Institutional Investors  operate terminals and thereby accommodate needs 2006 2017 2020 2023 (FY) for even quicker and more convenient banking services *1 Mitsubishi UFJ DIRECT: Internet banking for individual customers as well as MUFG NEXT consulting offices that provide *2 The number of DIRECT users = the number of active accounts (excluding (8) Global CIB accounts used only for bank transfers) that have been logged into by users at face-to-face consulting services. Furthermore, we will least once in the last six months establish MUFG PLAZA, a blended model that offers a range of Bank, Trust Bank, and Securities services at (9) Overseas Operations shared locations. The Trust Bank Head office

For more details of non face-to-face channels, please also see page 28. The Bank (10) Human Resources

(11) Corporate Center Operations MUMSS image image

MUFG NEXT MUFG NEXT MUFG PLAZA New EXperience Together Consulting office Group co-located branch —Create a brand-new UX with customers— WorldReginfo - b5625110-108f-485a-9bca-a62f0ca1d2eb 24 MUFG Report 2018 MUFG Report 2018 25 Management Message The New Medium-Term Business Plan–Eleven Transformation Initiatives

(3) Wealth Management (5) Real Estate (9) Overseas Operations

With the integration of the retail and commercial establish a consistently profitable business structure The Group, in an integrated and continuous manner, We will shift our business focus from “region-/legal banking units, as well as a “group-based, integrated by focusing on fee-based asset management. provides solutions to satisfy various customer needs entity-based” to “customer-/business-based,” and approach” taken by the Bank, the Trust Bank and the Professionals of the Bank, the Trust Bank and the with regard to the real estate value chain.* Branches reinforce business-driven operations across the Securities, we can support rising customer needs for Securities will develop and implement a business will assess customer needs and collect extra Group. Our global branch network will also be asset management and inheritance services. This is model that seamlessly provides various business information so that it can be maximized to enhance upgraded, centralized, and standardized for business an important consideration for Japan’s aging, low- solutions. brokerage businesses and asset management administration and systems in order to establish a birthrate society. Additionally, we will strive to businesses, adding more value. structure to flexibly address environmental changes.

* The course of business regarding real estate from “sales” to “development” to “tenant Our approach to individual customers (business owners) and corporate clients leasing” to “asset management.”

Business owners Corporate clients (6) Asset Management in Japan (10) Human Resources Corporate Asset ownership Total assets inheritance Assets Liabilities succession, M&A We will offer asset management services to our In addition to the acceleration of personnel Own shares customers on an integrated groupwide basis. We will allocations and transfers across the Group to drive develop competitive products, supply a full product our strategy, the new HR Division will be set up to Real estate Capital lineup, and expand our talent portfolio to support manage domestic and international HR operations, these moves. Additionally, we will upgrade our asset creating a globally integrated HR capability. Asset Real Net Financial assets estate assets Real estate management business by pushing to be a more management For more details, please also see pages 82 to 85. globally recognized industry player and by enhancing our talent, products and solutions.

(4) New Model for Wholesale Banking in Japan (7) Institutional Investors (11) Corporate Center Operations

In implementing restructuring measures by business RMs”—those who itemize customers’ business issues. We will provide a wide range of services to satisfy The Corporate Center function will be reorganized from function, the corporate loan businesses of the Bank Meanwhile, the PO*2 will extend its expertise, various professional needs for asset management on integrated operations by “MUFG and the Bank” to that and the Trust Bank have been consolidated. providing optimized solutions for customer needs. an integrated groupwide basis, while extending of “MUFG, the Bank, the Trust Bank and the Securities” Additionally, the RMs*1 are now referred to as “MUFG’s business relationships with the institutional investors to effectively take advantage of our business resources *1 Abbreviation for Relationship Managers, in charge of sales. *2 Abbreviation for Product Office, namely, business units and staff in charge of the of each legal entity and business group across the on a groupwide basis. This move will also help us planning, development and the provision of products and services RM/PO model Group. improve the sharing of specialist knowledge and know- how among Group entities, thereby boosting our Bank RMs Trust Bank RMs corporate center functions.

Current status Our goal (8) Global CIB Integrate the organizational MUFG RMs Integrated operations by management of all corporate “MUFG and the Bank” center functions by field In order to realize the sustainable growth of the Global CIB* business, we will respond to the needs of MUFG MUFG Securities Securities The Trust The Bank

global corporate customers and improve portfolio Bank The return by constantly recycling loan assets, etc. In The Trust Bank addition, we will be shifting value to “quality” over The Securities The Bank DCM “quantity” through origination and distribution under Risk management Real Corporate … Loans Settlement Derivatives Pension M&A ECM … the integrated platform of banking and securities IT model development Estate agency Auditing IPO functions. Global financial regulations … * Abbreviation for Corporate and Investment Banking. This business consists of MUFG’s PO functions traditional corporate banking (e.g. deposits and loans) and investment banking (e.g. capital markets and M&A etc.) and provides sophisticated financial services. WorldReginfo - b5625110-108f-485a-9bca-a62f0ca1d2eb 26 MUFG Report 2018 MUFG Report 2018 27 Management Message

5 Financial Innovation Japan Digital Design Collaboration with Akamai

Synergies of MUFG Expertise and Technologies, Inc. (U.S.A) Digitalization Initiatives External Insights MUFG and Akamai Technologies, Inc. (Akamai), a In October 2017, Japan Digital Design, Inc. (JDD) was U.S.-based cloud delivery platform, jointly MUFG boasts extensive expertise in the financial business and over time has built a reputation for established. Spun out from MUFG, JDD was founded developed a new blockchain-based technology trustworthiness. Bringing together these strengths with cutting-edge digital technologies as well as upon the platform of the Innovation Lab, a former boasting the capacity to process a million innovative ideas and services offered by FinTech startups, we will create next-generation financial in-house business unit, and has been recruiting transactions per second and the ability to finalize services that boast superior customer convenience and are more secure. Through these initiatives, we external engineers while collaborating with 35* transactions in less than two seconds. will also strive to deliver solutions for various issues society is now confronting, including those that regional financial institutions. Looking ahead, JDD will cannot be resolved by financial institutions alone. engage in the development of new services that Leveraging this technology, MUFG and Akamai will offer revolutionary UX and other initiatives aimed at strive to offer diverse payment options by reducing social cost. developing an open platform capable of supporting pay-per-use, micropayments and other * As of June 30, 2018 upcoming payment methods that are expected to aims to provide a new financial infrastructure that become commonplace in the IoT* generation. Improving UI/UX of Mitsubishi UFJ Direct Regional financial institution transcends the conventional boundaries of transfer Staff secondment and * Internet of Things At MUFG Bank, we are stepping up efforts to improve and settlement services. MUFG resources business partnerships UI/UX and expand functions of our “Mitsubishi UFJ Expertise Collaborate in the verification in FinTech of innovative solutions Direct” internet banking service for individual We have also, conducted verification testing of Provide fast and Upgrade existing AI and IoT Together resolve issues of secure connections infrastructure Payment customers. For example, our plans call for payment via on-premises convenience stores and a Global network experiment bank operation Merchant service provider incorporating fingerprint and other biometric café that uses MUFG Coin settlement accessed via a authorization systems into Mitsubishi UFJ Direct scanned QR code, with an eye to realizing the smartphone apps in addition to providing users with practical use of these currencies in a wider society.

access to up to 10 years of transactional banking A high-speed, low-cost and Address social issues and thus contribute to the Japanese economy secure payment platform statements via this service. Hackathons utilizing the Akamai network and In March 2018, MUFG Bank held a hackathon* with Share fruits of operational reforms the new blockchain currency End-to-End Paperless Procedures for Enhance productivity of the entire Achieve both flexibility and scalability the theme “A New World Emerging from the Use of banking industry Swiftly establish a de facto standard Opening Accounts Digital Currencies.” This event, sponsored by a IoT New kabu.com Securities Co., Ltd. service payment financial institution and aimed at utilizing its digital provider Process large Provide a payment service amounts of data while platform for the IoT kabu.com Securities offers end-to-end paperless currency functions, was the first of its kind in Japan. Establishment of MUFG AI Studio ensuring security generation procedures for customers wanting to open new Looking ahead, we will strive to expand the Within JDD, MUFG AI Studio (M-AIS) was launched as accounts. These procedures require only possibilities of MUFG Coin and, to this end, hold an initiative aimed at researching and developing government-issued individual number cards and these and other events in addition to engaging in proprietary AI models for use by MUFG Group. Verification Testing Employing NFC*-equipped smartphones. As of June 2018, some business collaboration with external corporations. In Technologies Offered by Ripple Inc. (U.S.A) Android smartphones can be used for these this way, we will deliver new value that could not be Going forward, M-AIS will engage in joint research procedures. created by banks alone while helping resolve various with such external research institutions as the In May 2017, Bank of Ayudhya Public Company issues society is now confronting. University of Tokyo and collaborate with domestic Limited (Krungsri), a subsidiary of MUFG Bank Compared with conventional procedures that require and overseas AI venture companies. Through this carried out a pilot test for moving real funds using * A neologism combining “hack” and “marathon,” a hackathon is an event in which customers to deal with physical documents posted software developers collaborate intensively on development projects aimed at creating work, M-AIS will endeavor to provide solutions to software provided by Ripple Inc., with the objective new programs and designing innovative services. Such events often incorporate to them, the new streamlined procedures make competitive elements. improve financial services and help solve social of making cross-border payments more speedy opening accounts much faster. issues. and transparent. This is the first time for a Japanese company to conduct cross-border payments from * Near Field Communication Thailand to Singapore between real accounts Finance Cash flow analysis*1 using Ripple. We will continue to promote a variety Initiatives toward Realizing the Practical Market transactions

Key Fields and scoring Use of MUFG Coin of innovative projects in the future.

Expanding the Scope of In-House Verification Management Customer behavior Testing prediction and HR Tech*2 Discussions are now under way at MUFG Bank to marketing publically issue MUFG Coin, a digital currency *1 Analysis of cash flows based on such data as bank account deposits and withdrawals employing blockchain technologies. This project *2 A neologism combining “Human Resources” and “Technology” WorldReginfo - b5625110-108f-485a-9bca-a62f0ca1d2eb 28 MUFG Report 2018 MUFG Report 2018 29 Management Message

The Market Environment Surrounding Our Partner Banks Suggests Abundant Growth Potential

All the five countries in which our partner banks operate boast MUFG Operations Encompassing significant GDP growth and are expected to maintain GDP growth at the current level. On the other hand, the banking U.S.A.: MUFG Union Bank services penetration rate has been stagnant in such countries the Asia Pacific Region as Vietnam, the Philippines and Indonesia. This, in turn, 2 Ranking among domestic banks* 13th suggests these countries’ considerable future potential for Total assets*3 ¥27.6 trillion market growth and economic expansion. Number of business bases*4 Under the previous medium-term business plan, we strove to help the Bank of Ayudhya Public Company 361 Number of employees*4 12,641 Limited (Krungsri), a consolidated subsidiary, achieve business growth while executing strategic investments Growth of Real GDP MUFG’s equity stake*5 100.0% in Security Bank Corporation and PT Bank Danamon Indonesia, Tbk.,*1 major commercial banks based in the United States Thailand Indonesia Vietnam Philippines Philippines and Indonesia, respectively. Thanks to these efforts, we were able to make steady progress in the （%） Forecast  development of a robust business platform encompassing regions across Southeast Asia.   Looking ahead, we will promote business operations with partner banks, including MUFG Union Bank, N.A. in  the United States and VietinBank in Vietnam, helping them enhance their corporate value, stepping up efforts  - to create synergies and striving to raise the level of internal management at each partner bank. - 2008 2010 2012 2014 2016 2018E 2020 (FY) *1 As of August 2018, MUFG holds 40% equity stake in Bank Danamon, with plans calling for acquiring additional shares on another occasion subject to regulatory approval. Upon the completion of the planned share acquisition, MUFG Bank is expected to become the majority shareholder of Bank Danamon. Source: International Monetary Fund, World Economic Outlook Database

Bank Account Penetration （%）  94% 78% Vietnam: VietinBank  36% Ranking among domestic banks*2 2nd 31% 31% Total assets*3 ¥5.4 trillion Number of business bases*4  1,113 United States Thailand Indonesia Vietnam Philippines 4 Number of employees* 23,784 Source: 2014 World Bank data MUFG’s equity stake*5 19.7%

Our Track Record in Business Collaboration in the Field of Retail Settlement Services

To seize opportunities arising from burgeoning inbound marketing demand backed by constant growth in the number of tourists visiting Japan from elsewhere in Asia, we are striving to expand our lineup of settlement services.

Specifically, Mitsubishi UFJ NICOS Co., Ltd. is acting in partnership with Krungsri (Thailand), VietinBank (Vietnam) and Security Bank (the Philippines), to provide foreign tourists who hold membership cards issued by a partner bank with some of the membership privileges offered at Mitsubishi UFJ NICOS Thailand: Krungsri Indonesia: Bank Danamon The Philippines: Security Bank card franchise stores across Japan.

Ranking among domestic banks*2 5th Ranking among domestic banks*2 5th Ranking among domestic banks*2 5th Total assets*3 ¥6.7 trillion Total assets*3 ¥1.5 trillion Total assets*3 ¥1.7 trillion Initiatives to Create Synergies Number of business bases*4 700 Number of business bases*4, *7 992 Number of business bases*4 302 Number of employees*4 31,545 Number of employees*4 36,410 Number of employees*4 5,437 In December 2017, we held the second round of the MUFG Global Partnership Conference to facilitate the sharing of MUFG’s equity stake*5 MUFG’s equity stake*6 MUFG’s equity stake*5 76.8% 40.0% 20.0% expertise and collaboration among partner banks and MUFG Bank. With chairpersons, CEOs and other executives from partner banks attending the event, the conference focused on three key themes, namely, “collaboration in the trust banking (Source: Data publicized SNL Financial, Philippine Central Bank and Bloomberg as well as information disclosed by each partner bank) business,” “digitalization” and “businesses targeting local *2 Calculated based on total assets as of December 2017. However, Krungsri’s ranking among Thai banks is based on the Domestic Systemically Important Bank (D-SIBs) rankings. corporations.” Engaging in active discussion, attendees from *3 The sum of total assets held by each partner bank and loan balances recorded at local business bases run by MUFG Bank. *4 As of December 2017, based on information disclosed by each partner bank and data compiled for internal managerial purposes. partner banks and MUFG Bank were able to discuss issues *5 As of March 2018 each is now confronting while exchanging insights. *6 As of August 2018 *7 Excluding the number of business bases run by Adira Finance and Adira Insurance, etc. WorldReginfo - b5625110-108f-485a-9bca-a62f0ca1d2eb 30 MUFG Report 2018 MUFG Report 2018 31 Management Message Message from the CFO

Practicing Solid Financial buildings under a subsidiary bank as part of structural Looking ahead, we expect longstanding low-growth, reforms. Some extraordinary gains were also realized, low-interest rate conditions to remain in place. We such as gains on the exchange of shares of affiliates also forecast that Japan’s structural problems & Capital Management: in connection with the merger of a MUFG equity- attributable to its low birthrate and aging society will method affiliate. continue. Meanwhile, advances in digital Supporting MUFG’s technologies are poised to bring drastic changes to Taking all this into account, profits attributable to society and to the industrial sector. We therefore “Re-imagining” owners of parent totaled ¥989.6 billion, a year-on- need to make a bold shift away from our year increase of approximately 7%, exceeding the conventional business model. Taking the above MUFG has just launched its new Medium-term Business Plan (MTBP). previously announced target of ¥950.0 billion. forecasts into account and in consideration of the As Group CFO, it is my pleasure to explain the initiatives we will be previous MTBP’s results, the MUFG Re-Imagining undertaking under this plan, as well as our outlook. The breakdown of profits attributable to owners of Strategy, specifying basic policies for structural parent shows that all key subsidiaries and affiliates, reforms, was announced in May 2017. both in Japan and overseas, contributed to profits. August 2018 Specifically, contributions from MUFG Americas These policies have been translated into concrete Holdings Corporation (MUAH; the United States), measures and incorporated into the new MTBP. Krungsri (Thailand) and Morgan Stanley together comprised approximately 35% of the profits. This is a Financial Targets under the New MTBP Muneaki Tokunari testament to steady progress in MUFG’s efforts to The new MTBP was formulated based on the Group CFO diversify and globalize profit sources. presumption that global economic growth will decelerate. Our forecasts for the financial Review of the Previous MTBP (fiscal 2015 – 2017) environment therefore include consistently low Four financial targets were identified under the interest rates—despite the gradual shift to the Financial Management and Business Plan Breakdown of Profits Attributable to Owners of Parent* previous MTBP. Of these, the Common Equity Tier 1 normalization of central bank monetary policies in (Billions of yen) Morgan MUFG Fiscal 2017 Business Results Stanley (Consolidated) (CET1) capital ratio exceeded its target. However, mostly developed countries. ™š™““ 171.8 989.6 The operating environment remained tough the Securities HD earnings per share (EPS), return on equity (ROE), and ™š“““ 43.1 throughout fiscal 2017, despite moderate recovery in ACOM Other the expense ratio all fell short of their respective Although the new MTBP is a three-year plan, a longer the Trust Bank NICOS 28.2 the domestic economy. This was due to intensifying ˜““ (Non-consolidated) Krungsri 10.6 (67.7) targets. time frame is needed in order to yield sufficient 186.7 67.0 —““ MUAH competition between lenders on the back of Japan’s 112.0 effects through various structural reform measures, prolonged ultra-low interest rate environment. –““ the Bank In particular, consolidated net operating profits such as enhancing operational efficiency and (Non-consolidated) 437.7 Overseas, robust economic growth in the United •““ decreased year-on-year for the third consecutive reforming channels for customers. Accordingly, States compelled the raising of interest rates. This, in year. Over the last three years, falls in net operating financial targets for fiscal 2020, the final year of the ”““ turn, triggered major fluctuations in financial markets. profits have been significant, totaling approximately new MTBP, as well as medium- to long-term targets, ’““ ¥440.0 billion. This has been attributable in part to have been set.

Against this backdrop, MUFG’s gross profits totaled “ the introduction of the Bank of Japan’s negative

¥3,854.2 billion, down approximately 4% year-on- * The above figures reflect the percentage holding in each subsidiaries and equity interest rate policy and other external factors. The plan specifies targets for three key indicators: year. Key contributing factors included decreases in method investees (after-tax basis) However, I must admit that our actions to counter ROE, the expense ratio, and CET1 capital ratio. net interest income from loans and deposits in Japan such changes were not taken as quickly or as and from bond portfolios, as well as a decrease in net Credit costs decreased ¥109.2 billion compared with thoroughly as conditions dictated. Of these, ROE is the most essential indicator. Our aim trading profits. These offset robust revenues from the previous fiscal year. This was mainly attributable loans and deposits at overseas operations. to the reversal of allowance for credit losses. The balance of non-recurring gains and losses improved Financial Targets under the New MTBP Overall expenses rose from the previous fiscal year. ¥171.1 billion from non-recurring losses in the previous FY2017 results FY2020 Targets Medium- to long-term targets While expenses associated with domestic operations fiscal year. This was due to falls in the provision of fell, thanks to cost control efforts and other factors, allowance for the repayment of excess / ROE (MUFG definition)*1 7.53% Approx. 7% to 8% 9% to 10% these were offset by higher expenses for overseas loan interest, as recorded by consumer finance operations due to matters related to complying with subsidiaries in the same fiscal year. Expense ratio 68.0% Below FY2017 results Approx. 60% financial regulations. Common Equity Tier 1 capital ratio 11.7% Approx. 11% Extraordinary losses totaled ¥53.0 billion, virtually (finalized Basel III reforms basis)*2 As a result, net operating profits decreased unchanged from the previous fiscal year, and were *1 For details on calculation methods, please also see descriptions on ROE featured in “Financial Highlights” on page 6. approximately 13% year-on-year to ¥1,232.8 billion. mainly attributable to the impairment of branch *2 Estimated Common Equity Tier 1 capital ratio reflecting the risk-weighted assets increase, as calculated on a finalized Basel III reforms basis. WorldReginfo - b5625110-108f-485a-9bca-a62f0ca1d2eb 32 MUFG Report 2018 MUFG Report 2018 33 Management Message Message from the CFO

Forecast Assuming Normal Economic and Financial Development in Key Regions over the Next Three Years connect business strategies, financial plans and risk owners of parent totaled approximately ¥2.8 trillion. 2018 2019 2020 management practices in an organic manner, Of this, funds appropriated for objectives (1), (2) and Modest economic recovery will continue, supported Japan*2 (0.1) (0.1) (0.1) thereby realizing even more transparent (3) listed above accounted for 27%, 26%, and 47% Japan by robust corporate earnings and cyclical recovery in Policy interest rate*1 (%) production U.S.A. 2.25 2.50 2.50 management. (26% cash dividend payments + 21% share

Long-term interest repurchases) of the total, respectively. United The upward trend will continue on the back of improving Japan 0.2 0.3 0.3 Economy States and rate*1 based on 10-year employment, despite political and policy risks Linking Financial Targets and Compensation Europe government bonds (%) U.S.A. 2.7 2.9 2.9 Under the new MTBP, the current compensation While the economy is likely to continue maturing, overall Foreign exchange US$/yen 110 Capital Triangle Asia growth will remain robust due to the expansion of the plans for directors and officers have been revised in (rate in business plan) middle class and strong investment in infrastructure Euro/yen 125 a way that links financial targets and pay more 3 Further enhance Shareholder ( ) shareholder returns returns … Monetary policies will be gradually normalized, mainly in *1 Policy interest rate is the closing value. Long-term interest rates are averaged for closely, thus ensuring that they are even more aware Financial developed countries. However, interest rates will be kept each period.  dividend payments low, reflecting lower growth rates *2 Rate applicable to the policy interest rate balance of the Bank of Japan’s current  share repurchases account deposits. of the risks and returns shared with shareholders. Specifically, with CET1 capital ratio set as a minimum requirement, compensation is determined based on MUFG’s is to stably maintain a level exceeding capital cost growth areas, such as wealth management services degree of accomplishment in terms of ROE and Corporate Value over the medium- to long-term. Of course, we will targeting High-End customers and real estate-related expense ratio targets. Comparisons with the

also strive to improve EPS. businesses. performance of other financial institutions will also Maintain solid Strategic investments be considered. (1) equity capital (2) for sustainable growth As for the expense ratio, we expect the newly Systems and Facilities Retained earnings…… Growth investment… ％ introduced “Eleven Transformation Initiatives” to yield Regarding IT investment strategies, we are aware of Compared with the prior compensation package, the (Percentages in this figure represent the appropriation of profits yielded over the course cost reduction effects totaling ¥50.0 billion for fiscal the importance of striking an optimal balance currently installed package allocates a greater of the three-year period during the previous MTBP.) 2020. The medium- to long-term target is between investment for maintaining existing systems proportion to share-based compensation and other approximately 60%. and investment for promoting digitalization. medium- to long-term incentives and less to cash compensation. Maintenance of Solid Equity Capital and Our Solid equity capital, assessed via indicators such as The former is essential to the long term maintenance Actions to Meet TLAC Requirements the above-mentioned CET1 capital ratio, is critically of our financial intermediary functions as social The Fiscal 2018 Outlook As a Global-Systematically Important Bank (G-SIB), important to financial institutions. With an eye to infrastructure. The latter includes strategic The operating environment is expected to remain MUFG is expected to maintain its CET1 capital ratio at maintaining our external credit ratings at “single-A” or investments to improve operational efficiency, and tough in fiscal 2018 due to the previously mentioned more than 8.5%. Moreover, new requirements will be above, we will strive to keep our CET1 capital ratio in other forward-looking /experimental investments prolonged ultra-low Japanese interest rate enforced from March 31, 2020. This will mandate excess of 11%. This also factors in the increase of aimed at the rapid emergence of FinTech. For environment and other factors. Considerable keeping a Total Loss Absorbing Capacity (TLAC) ratio risk-weighted assets, as calculated on the basis of financial institutions, the success or failure of expenses for structural reforms will also be incurred. of at least 16% as of the starting day of the mandate, finalized Basel III reforms. respective IT investments will directly impact their As a result, net operating profits will stay weak. The and 18% after March 31, 2022. futures. absence of one-time gains recorded in fiscal 2017 will Management Resource Allocations and Risk also affect year-on-year performance. Accounting for MUFG raised various regulatory capital totaling Appetite Framework Capital these factors, we aim for profits attributable to approximately ¥1.9 trillion during fiscal 2017 to meet To secure sustainable growth, the new MTBP is In addition to utilizing our capital for strategic owners of parent at ¥850.0 billion, down from these requirements. MUFG also issued its first TLAC- designed to counter the adversity by implementing investments, we periodically review investments in comparable fiscal 2017 figures. eligible Green Bonds in Europe. We continuously Eleven Transformation Initiatives. To this end, the key light of profitability/strategy and recover them where Capital Management strive to diversify capital funding methods. for success is to realize optimal allocation of human necessary. We will also formulate ROE plans by resources, systems and facilities, and capital. business group. In doing so, capital efficiency will be Basic Policy (Capital Triangle) We aim to combine these debt instruments efficiently enhanced through the replacement of our portfolio MUFG maintains a focus on capital management that in order to pursue what we call the “best capital mix.” Human Resources with highly profitable assets and by the acceleration appropriately balances: (1) maintaining solid equity In doing so, we will improve ROE while satisfying Expectations hold for reducing the workload of O&D to increase profitability. capital, (2) strategic investments for sustainable regulatory requirements for capital adequacy ratios. equivalent of about 9,500 employees by introducing growth, and (3) further enhancement of shareholder Robotic Process Automation (RPA) and Business Capital is an essential component for financial returns. Process Re-engineering (BPR), as well as overhauling institutions in two important ways: by strengthening our channels. They will also help ensure that despite resilience against risk and by serving as a source of Capital management policies are regularly discussed Total Amount of Funding (FY 2017) the inevitable retirement of large numbers of revenues. At MUFG, we have clarified our risk as one of our most important management subjects employees hired en masse decades ago, our appetite in terms of types and levels of acceptable by the Board of Directors, which is comprised of a AT1 perpetual subordinated debt ¥320.0 billion workforce will remain sufficiently robust without risk. This has afforded a management framework majority of outside directors. Tier 2 subordinated debt ¥479.5 billion additional hiring. Furthermore, human resources will aimed at appropriating necessary capital based on be shifted to higher-value-added operations in risk appetite. Thanks to this framework, we are able to Over the prior three-year MTBP, profits attributable to TLAC-eligible senior debt Approx. ¥1.1 trillion WorldReginfo - b5625110-108f-485a-9bca-a62f0ca1d2eb 34 MUFG Report 2018 MUFG Report 2018 35 Management Message Message from the CFO

Strategic Investments for Sustainable Growth sustainable increases in dividends per share, toward Divestment of Equity Holdings Dialogue with Shareholders and Investors Strategic investment that employs excess capital is a the payout ratio target of 40%. Plans also call for the Regarding equity holding divestment, ongoing policy key driver for achieving sustainable growth. As of flexible repurchase of our shares, the holding of a calls for limiting the ratio of equity holdings in the Dialogue Affords Valuable Insights August 2018, we hold 40% equity stake in PT Bank maximum of approximately 5% of the total issued total balance of Tier 1 capital to approximately 10% by For MUFG, it is very important to stably raise capital Danamon, with plans calling for acquiring additional share count, and the cancellation of shares that the end of fiscal 2020. Under this policy, the value of and debt from capital markets, so as to comply with shares on another occasion subject to regulatory exceed this amount. divested equity holdings since fiscal 2015 now totals financial regulations, maintain credit ratings, and approval, in line with our strategy aimed at seizing ¥467.0 billion. As a result, the ratio of equity holdings secure foreign currency liquidity. Dialogue with our upon growth opportunities in Southeast Asia. Based on these policies, MUFG paid a year-end to total Tier 1 capital declined to 14.2%. Going shareholders and investors is my primary mission, dividend of ¥10 per share for fiscal 2017, an increase forward, we aim to further divest of our equity and often provides valuable opportunities to learn As CFO, maintaining capital discipline when making from the initially planned ¥9, bringing the full fiscal holdings. and to be exposed to new insights. We will continue strategic investments is of primary importance. year total to ¥19. For fiscal 2018, a further increase to to ensure that opinions voiced by our shareholders Careful examination is performed to ascertain ¥20 per share is planned. Reduction of Equity Holdings and investors are shared among Board members. whether the expected return from an investment will Acquisition price of domestic equity securities with fair value included in available-for-sale securities (consolidated) exceed the cost of capital within an allotted time Looking ahead, MUFG will endeavor to sustainably （Trillions of yen） Ratio of equity holdings to Tier 1 capital* Enhancement of Disclosure  51.8% frame. enhance shareholder value. To this end, we aim for 9.20 MUFG’s operations are becoming increasingly stable increases in dividends per share through profit Aim to reduce our diverse, both by region and in the types of business it equity holdings to Periodic reviews of existing investments are also growth, and for the early achievement of the above- approx. 10% of our Tier 1 handles. This, in turn, makes it difficult for people conducted in light of strategy and capital efficiency. mentioned 40% dividend payout ratio target. The capital towards the end outside MUFG to get a good overview of the whole of the new MTBP Most recently, we divested equity stakes in CIMB flexible share repurchase effort will be carried out on 22.8% organization. We therefore believe that providing  19.7% 4.29 17.9% 16.6% Group Holdings Berhad in Malaysia and Banco an ongoing basis. 14.2% accurate and timely explanations to our stakeholders Bradesco SA in Brazil. 2.82 2.79 2.66 about our operations and strategies has become 2.52 2.32 Approx. ever more important, and that furnishing such 10% Results of Investment and Divestment Basic Policies for MUFG continuously seeks to improve shareholder explanations is a prerequisite for meaningful returns, focusing on dividends in the pursuit of an Shareholder Stock Investment/Divestment (Date) Value optimal balance between solid equity capital and  dialogue. Returns strategic investment for growth. Mar 31, Mar 31, Mar 31, Mar 31, Mar 31, Mar 31, Mar 31, Mar 31, 2002 2008 2014 2015 2016 2017 2018 2021 PT Bank Danamon Investment Approx. (Indonesia) (December 2017, August 2018) ¥266 billion * On a Basel II basis until Mar. 31, 2012 (consolidated) In line with this belief, during fiscal 2017 we held a MUFG aims for a stable and sustainable increase in business strategy seminar in September 2017, where CIMB Group Holdings Approx. Dividends dividends per share through profit growth, with a Divestment (September 2017) Berhad (Malaysia) ¥68 billion dividend payout ratio target of 40%. Compliance with Tax Regulations and the Chief Digital Transformation Officer offered a Banco Bradesco SA Approx. presentation on MUFG’s digital strategies. Divestment (April 2018) MUFG plans to flexibly repurchase its own shares, Tax Planning (Brazil) ¥45 billion Share as part of its shareholder return strategy, in order Repurchases (As of August 2018) to improve capital efficiency. MUFG recognizes that as a corporate citizen, To enhance MUFG’s brand recognition among displaying the best effort toward making appropriate overseas investors, we changed our ticker symbol In principle, MUFG plans to hold a maximum of Further Enhancement of Shareholder Returns Share tax payments is an important duty. With this in mind, used at the New York Stock Exchange (NYSE) to approximately 5% of the total issued shares, and MUFG continuously seeks to improve shareholder Cancellation cancel shares that exceed this amount. the entire MUFG Group strives to enhance corporate “MUFG” in April 2018. returns in the pursuit of maintaining solid equity governance with regard to tax compliance and to capital and making strategic investments for growth, maintain and enhance tax compliance through, Stance on SR Initiatives, ESG Issues and SDGs as described in the above-mentioned Capital Results and Forecasts of Dividend per Common Stock among other means, employee education and MUFG has garnered a solid reputation for its investor Triangle. This has long been a staple of MUFG’s training. In practice, we strive to maintain engagement and other IR activities, and has received Year-end cash dividend Interim cash dividend fundamental stance on shareholder returns. Dividend payout ratio 40% transparency by disclosing tax information in several awards from the Japan Investor Relations 31.0% accordance with local regulations of the countries in Association, the Securities Analysts Association of

While maintaining this stance, as CFO I am 26.3% 26.4% 25.5% which we operate and, where necessary, consult Japan, and Institutional Investor magazine. 24.6% 23.4% Full-year cash determined to enhance shareholder returns and help 22.0% ¥20 dividend per with the local tax authorities in advance. ¥19 fulfill our investors’ expectations, as also stated in the ¥18 ¥18 ¥18 common Looking ahead, we remain committed to engaging in ¥16 share Message from the CEO. ¥10 Through these initiatives, we aim to comply with the investor dialogue, with an eye to stepping up ¥13 ¥9 ¥9 ¥9 ¥10 ¥9 spirit of tax legislation, the BEPS Action Plan, OECD shareholder relations (SR) activities while placing Basic Policies for Shareholder Returns have recently ¥7 Transfer Pricing Guidelines, and other international greater emphasis on environmental, social, and

been announced in order to clarify our relevant ¥9 ¥9 ¥9 ¥9 ¥10 rules on taxation. Finally, in the course of tax governance (ESG) issues, as well as such ¥7 directions. A summary of these policies follows. ¥6 planning, we prioritize compliance with tax laws. In sustainability initiatives as the United Nations 2012 2013 2014 2015 2016 2017 2018 （FY） doing so, we are engaged in the appropriate Sustainable Development Goals (SDGs). (Forecast) Dividends are the focus of the primary means for payment of taxes. Total payout ratio shareholder returns. As such, we aim for stable and 22.0% 23.4% 34.2% 47.2% 47.9% 45.7% (for reference) WorldReginfo - b5625110-108f-485a-9bca-a62f0ca1d2eb 36 MUFG Report 2018 MUFG Report 2018 37 Value Creation Initiatives Business Overview

MUFG Net Operating Profits ¥1,206.8 billion*1, *2

Retail & Commercial Banking Global Markets Business Group Business Group (R&C) ¥363.5 billion ¥357.4 billion

27% 27% Asset Management Japanese Corporate & & Investor Service Investment Banking Business Group (AM/IS) Business Group (JCIB) ¥71.1 billion 5% ¥226.1 billion 17% 14% 10% Global Corporate & Global Commercial Banking Investment Banking Business Group (GCB) Business Group (GCIB) ¥192.6 billion ¥127.7 billion

All figures presented in the Business Overview section are on a managerial accounting basis. Figures are based on exchange rates at fiscal year - end, unless otherwise noted. MUAH represents MUFG Americas Holdings Corporation KS represents Bank of Ayudhya (Krungsri) *1 In addition to the net operating profits of the six business groups, figures include profits or losses of headquarters and other elements *2 Figures exclude the net operating profits yielded by inter-business group collaboration presented below R&C: Profits from overseas transactions with Japanese corporate customers and profits from business owner transactions which belong to JCIB JCIB: Profits from business owner transactions which belong to R&C and profits from Japanese corporate customers served by MUAH and KS which belong to GCB GCIB: Profits from non-Japanese large corporate customers of KS which belongs to GCB, profits from JCIB’s non-Japanese corporate customers located in Japan, and O&D profits related to Global Markets Global Markets: O&D profits related to GCIB WorldReginfo - b5625110-108f-485a-9bca-a62f0ca1d2eb 38 MUFG Report 2018 MUFG Report 2018 39 Value Creation Initiatives Business Overview

Retail & Commercial Banking Business Group Strategies under the New Medium-Term Business Plan

Having positioned individual customers and SMEs as targeted customer segments, we provide residential SME Business Net Operating Profit Plan* mortgage loans, lending, wealth management and settlement services as well as business and asset Connecting our value chain to business fields for both (Billions of yen) succession solutions to meet diverse needs. corporate clients and individual business owners, MUFG’s  360.0 360.0

staff provides one-stop services representing the MUFG  Group as a whole, with all other Group members working with it in collaboration. Employing MUFG’s strengths in  Composition of Gross Profits* Fiscal 2017 Gross Profit Breakdown thoroughgoing customer profiling, we are thereby able to 

■ Consumer finance and card 35% meet a variety of needs.  ■ Loans and yen deposits 22% 2017 2020 (FY) 1 Retail Business among the Bank and the Securities * Including profits from overseas transactions with Japanese corporate 41% ■ Investment product sales* 19% customers and profits from business owner transactions which belong to JCIB We will promote a groupwide integrated approach while * Total gross profit for six ■ Settlement 10% business groups ■ Investment banking and securities business 4% utilizing business expertise offered by Morgan Stanley, with Number of Referrals via Intra-Group Collaboration* (wealth management) ■ Inheritance and real estate 3% the aim of developing an asset management model capable (Thousand cases) ■ Overseas*2 2% of driving our wealth management business. Moreover, we  ■ Other 5% will deliver products and services that are better tailored to 10.5 *1 Including fees and commissions on stocks and bonds, etc. meeting needs of the Bank’s customers via collaboration 9.3 *2 Overseas business with Japanese corporations with the Securities. At the same time, we will strive to  enhance customer convenience through the utilization of 4.9  digital technologies and by striving to develop human resources across the board. In doing so, we will enhance  Our Medium- and Long-Term Vision our capabilities to fulfill diverse wealth management needs. 2017 2020 2023 (FY) * Intermediary customer referral business via MUMSS’s brokerage services and deals closed through collaboration between the Trust A Retail & Commercial Bank That Boasts Unparalleled Business for Retail Customers Bank and MUMSS Strengths in Japan and Is Capable of Achieving Sustainable To promote a shift from savings to stable asset building, we Growth in Tandem with Customers and Society as a Whole Balance of Assets under Management are stepping up efforts to address asset management and (wealth management) With the aim of accurately meeting a variety of customer needs, asset building needs that vary with each customer’s life (Trillions of yen) we have integrated retail and commercial banking functions to stage. As part of these efforts, we began handling fund  16.3 deliver comprehensive solutions in a seamless manner, employing wraps at all MUFG Bank branches in November 2017 and 14.5  12 0 MUFG’s unique perspective encompassing Group companies and began marketing Funded NISA-based products in January . a broad range of operations across retail and commercial banking. 2018. 

We will strive to deliver genuine value that goes beyond  customers’ expectations and, to this end, tirelessly endeavor to  enhance the strength of each Group entity in its area of specialty. 2017 2020 2023* (FY) In these ways, we will achieve sustainable growth in tandem with * Excluding the impact of changes in market prices customers and society as a whole.

Operating Environment Analysis

Today, customers’ needs and behaviors are radically changing on For Smooth Business Succession ESG the back of such factors as an ever faster decline in birthrate, the Due to the rapid aging of domestic SME owners, ensuring smooth business succession 1 Aging population & low birth rate rapid aging of society, the widespread use of digital technologies has become critical to maintaining a robust industrial sector and securing sustainable development for the Japanese economy. MUFG assists its customers not only in treasury Naoki Hori and changes in the industrial structure. With this in mind, we will deliver optimal solutions through the integrated management of stock inheritance, which often names family members as inheritors, but also strives to Group Head, meet needs for M&A, IPO and other succession methods that involve non-family members. Retail & Commercial Banking Business Group retail and commercial banking functions while steadfastly focusing These methodologies are expected to become more widespread going forward. While on the customer perspective. focusing on the perspective of corporate clients in the course of furnishing business succession solutions, we will also offer powerful assistance to individual business owners wishing to pass on wealth via testamentary trusts, real estate sales and purchases and other methodologies. WorldReginfo - b5625110-108f-485a-9bca-a62f0ca1d2eb 40 MUFG Report 2018 MUFG Report 2018 41 Value Creation Initiatives Business Overview

Japanese Corporate & Strategies under the New Medium-Term Business Plan Investment Banking Business Group New RM/PO Model for Wholesale Banking Net① Operating Profit Plan* We strive to help major Japanese corporations enhance corporate value via global expansion and, to this end, We will transfer the Trust Bank’s corporate loan-related (Billions of yen) business to the Bank with the aim of ensuring that  280.0 provide loan, settlement, forex and other services. Simultaneously, we offer optimal solutions that fully 240.2 employ the strength of each Group entity in their field of specialty associated with M&A and real estate. relationship managers (RMs) representing MUFG can meet customer requests even more swiftly. Meanwhile, product  offices (POs), namely, staff in charge of the planning, Composition of Gross Profits* Fiscal 2017 Gross Profit Breakdown development and provision of products and services, will  work to enhance their specialist expertise in M&A, SR/IR* ■ Overseas* 30%  and the real estate business. 2017 2020 (FY) Investment banking and securities ■ 29% 13% business * Shareholder Relations and Investor Relations: MUFG’s POs assist corporate clients in the * Including profits from business owner transactions which belong to formulation of their SR/IR strategies. R&C and profits from Japanese corporate customers served by MUAH and KS which belong to GCB * Total gross profit for six ■ Deposit and lending 18% business groups ■ Settlement 15% Upgrading a Sector Approach Balance of Real Estate Assets under Management / ■ Trust 7% To boost our comprehensive solution proposal capabilities, we will fully utilize the advisory functions of the Bank, the Number③不動産 of Effective Information KPISharing ■ Other 1% Trust Bank, the Securities and all other relevant Group Balance of assets under management * Overseas business with Japanese corporations Number of eective information sharing entities while facilitating collaboration between POs. At the (Billions of yen) (Deals) same time, we will step up our efforts to help major   corporations and venture startups engage in collaborative  business creation initiatives.  4,860  3,100  Our Medium- and Long-Term Vision Overseas Business Involving Japanese Corporations 580  380  We will strive to maximize the strength of our global network 180 with the aim of better assisting our customers in the pursuit   Be the First Call Business Partner for Customers 2017 2020 2023 (FY) We will strive to become our customers’ ”First Call Business of their global strategies. At the same time, we will stably meet burgeoning demand for foreign currency funding Partner“ capable of delivering greater value. To this end, we will Average Overseas Deposit Balance while delivering solutions to address customer needs for ②外貨預金・・ develop a new RM/PO* model via functional realignment. (Trillions of yen) more sophisticated, highly efficient cash and foreign 11.7 Furthermore, we will step up our sector approach to provide  10.3 customers with optimal solutions to the business challenges they exchange management. We will thereby expand our confront. Through these initiatives, we will help Japanese transaction banking business.  corporations enhance their competitiveness at home and abroad  while securing sustainable growth for MUFG.  * RM: Relationship Managers, PO: Product Office  2017 2020 (FY) Operating Environment Analysis

Today, our corporate clients are facing rapidly evolving and diversifying business issues, such as a growing need for cross- border M&A and meeting ever stricter corporate governance ALL JAPAN Tourist Area Regeneration/Revitalization Fund ESG requirements. To help them address these challenges, we will In February 2018, MUFG Bank, in tandem with other eight companies, became a co- 3 Social infrastructure & town planning strive to raise our capabilities to deliver optimal solutions by taking founder of Regional Revitalization Solution, Inc., an investment fund management firm. a companywide integrated approach that employs each Group This joint venture resulted in the institution of the ALL JAPAN Tourist Area Regeneration/ entity and MUFG business bases in Japan and overseas. Revitalization Fund in April 2018, with a total investment amounting to approximately ¥20 Kenji Yabuta billion. Encompassing all 47 prefectures nationwide, this pioneering megafund boasts the largest asset value among domestic private funds of this kind and is uniquely designed to Group Head, facilitate investment that transcends regional boundaries. MUFG will help resolve various Japanese Corporate & Investment Banking issues individual communities are now confronting, and by doing so, MUFG will actively Business Group contribute to Japan’s growth strategies and regional vitalization. WorldReginfo - b5625110-108f-485a-9bca-a62f0ca1d2eb 42 MUFG Report 2018 MUFG Report 2018 43 Value Creation Initiatives Business Overview

Global Corporate & Strategies under the New Medium-Term Business Plan Investment Banking Business Group Global Portfolio Recycle Net Operating Profit Plan* Balance Sheet Optimization We provide non-Japanese large corporate and financial institution customers with a comprehensive set (Billions of yen) of solutions that meet their financing needs, including transaction banking and various advisory services. Through our “3R (Repricing, Reduction, and Restructuring)”  strategy, we aim to improve overall portfolio return by redirecting capital to assets with higher returns. By 220.0 leveraging MUFG’s products and industry expertise, we will  1 Composition of Gross Profits* Fiscal 2017 Gross Profit Breakdown* develop a robust business portfolio that enables sustainable 143.5 growth. ■ Americas 53%  9% ■ Asia (including Krungsri) 21% Asset Velocity through O&D* Business Model ■ Europe, Middle East, Africa 17% As we try to enhance asset returns, we are transforming our * Total gross profit for six Non-Japanese corporations operating business groups ■ in Japan 5% business model from “Quantity” to “Quality.” This requires  2 accelerating O&D* and OtoD* with the goal of enhancing our ■ Capital Markets JV* 4% 2017 2020 (FY) *1 Prior to adjustment for other business and overlap asset velocity. Through an integrated business model between * Including profits from non-Japanese large corporate customers of KS between regions which belongs to GCB, profits from JCIB’s non-Japanese corporate *2 Capital Markets revenues from a joint venture with the Bank and the Securities, we aim to serve both corporate customers located in Japan, and O&D profits related to Global Markets Global Markets Business Group and institutional investor clients with a refined corporate & investment banking model.

* O&D: Origination and Distribution / OtoD: Originate to Distribute Distribution Amount / Ratio* Distribution amount Distribution ratio Global Subsidiary Banking (Trillions of yen) （%） We aim to serve the subsidiaries of global large corporate   Our Medium- and Long-Term Vision 53% customers through MUFG’s extensive global network with a 46% A Top-Tier Global Debt House dedicated subsidiary banking team. With a shift to a global  24.7 Our vision is to “Become a Top-tier Global Debt House” by alignment, our team is now better positioned to serve our  clients’ needs. We will also upgrade our groupwide 19.6 providing our global client base with comprehensive set of  solutions that meet their increasingly diverse and sophisticated management information to enhance our customer financing needs. To this end, we have moved to customer-based interactions on a global basis.  management approach that integrates MUFG’s capabilities across  Group entities, Business Groups and regions. Our supporting initiatives include globally aligned HR management for better   talent development and allocation, as well as shifting to more 2017 2020 2023 (FY) * Distribution Amount = Arrangement amount - Final hold amount global organizational structure. (syndicated loan, project finance, securitization, aviation finance, etc.) + Securities’ arrangement amount of DCM, ABS, etc. Distribution Ratio = Distribution Amount ÷ Total amount of loans to Operating Environment Analysis global large corporate customers

Large corporate lending business is facing challenges due to the low-margin environment and heightened regulatory costs in multiple countries. We seek to address the challenges through MUFG’s group capabilities and its unique global network, so that we continue to provide our clients with superior value-added Support Issuance of “Green Bonds” ESG solutions. Cross-sectoral environment and MUFG is helping business corporations issue “Green Bonds” (a type of bonds whose 7 social issues Masato Miyachi proceeds are used to fund environment-friendly projects). Group Head, Since launching a dedicated team for Green Bonds in 2016, we have led a number of Global Corporate & Investment Banking projects, putting our extensive network in the United States, Europe and Asia to work Business Group —one example of how MUFG continues to contribute to environmental preservation and sound social development. WorldReginfo - b5625110-108f-485a-9bca-a62f0ca1d2eb 44 MUFG Report 2018 MUFG Report 2018 45 Value Creation Initiatives Business Overview

Global Commercial Banking Business Group Strategies under the New Medium-Term Business Plan

We provide financial services with local SMEs and individual customers in countries overseas through our Regional Strategies for the Asian Market Net Operating Profit Plan existing investees, such as MUFG Union Bank, N.A. and the Bank of Ayudhya Public Company Limited (Krungsri). In Asia, auto loans handled by Krungsri have made strong (Billions of yen) Note: Entities managed by the Global Commercial Banking Business Group include MUFG Union Bank, Krungsri, Bank Danamon, Security Bank and VietinBank.  showings. In addition, MUFG announced strategic 320.0 investment in Bank Danamon, a major commercial bank in  Indonesia, in December 2017, thus acquiring 40%* equity 192.6 stake in this bank. This move is expected to help us develop  Composition of Gross Profits* Fiscal 2017 Gross Profit Breakdown* a solid business platform in Indonesia, which boasts a fast-  growing economy, thereby accelerating our business  ■ MUAH (interest income) 44% expansion and corporate growth. 2017 2020 (FY) 16% ■ Krungsri (interest income) 35% * As of August 2018. With plans calling for acquiring additional shares on another occasion subject to regulatory approval. Upon the completion of the planned share acquisition, MUFG Bank is ■ Krungsri (non-interest income, etc.) 11% Average Deposit and Loan Balances Held by * Total gross profit for six expected to become the majority shareholder of Bank Danamon. Krungsri and MUFG Union Bank* business groups ■ MUAH (non-interest income, etc.) 10% Average deposit balance Average loan balance * Prior to adjustment for other business and overlap Regional Strategies for the U.S. Market between regions In the United States, MUFG Union Bank is stepping up efforts (Trillions of yen)  to secure deposits through the Pure Point* direct banking 8.2 8.3 8.5  service and downsized branches. These efforts have steadily 6.6 6.8 6.7  helped increase deposit balances. In addition, MUFG Union 4.4 4.7 4.0 3.8 Bank aims to improve productivity and, to this end, intends to  3.2 3.4 accelerate the relocation of customer support functions and 

part of back office operations to Phoenix, Arizona. By doing so,  this partner bank will achieve both profitability improvement 2015 2016 2017 2015 2016 2017 (FY) Our Medium- and Long-Term Vision Krungsri MUFG Union Bank and sustainable corporate growth. * Of commercial banking operations handled by MUAH, figures represent SME and retail loan balances. A Business Group That Achieves Growth in Tandem with * A financial service platform that encompasses regions across the United States and is run by Partner Banks via Operations Spanning the Asia Pacific Region MUFG Union Bank. Targeting individual customers, Pure Point comprises internet banking as well as services offered via a network of downsized branches. Reference: Comparisons of Average Loan Under the slogan “Banking Across the Pacific Rim—Connect, Balances Held by Partner Banks*1, *2 and 3 Synergize, and Grow Together,” we will strive to become a Helping Partner Banks Enhance Their Corporate Value Domestic Loan Balances Held by MUFG* business group that creates synergies and helps partner banks We will facilitate the sharing of specialist expertise and Partner banks MUFG domestic loans and MUFG Bank, achieve growth through operations extending business experience accumulated by partner banks via (Trillions of yen) throughout the Asia Pacific region. While MUFG’s operation is on a operations in the United States and Asia. This will, in turn, 35.8 global scale, partner banks’ operations are deeply rooted in better position MUFG and partner banks to create synergies regional society. By bringing together the robust platforms MUFG 16.5 and enhance the corporate value of each bank. Furthermore,  14.3 15.4 has developed with the community-based services these banks we will share know-how on and insights into such matters as offer, we have succeeded in developing a business network that  governance and risk management issues (e.g., credit, market boasts distinctive strengths second to none in the world. Looking and liquidity), with the aim of accelerating our efforts to ahead, we will deliver ever more sophisticated solutions by better 2015 2016 2017 2017 (FY) develop a more sophisticated operating platform for the *1 The sum of loan balances held by MUFG Union Bank, Krungsri, Bank employing this network. Danamon, Security Bank and VietinBank overseas commercial banking business. *2 Of commercial banking operations handled by MUAH, figures for MUFG Union Bank represent SME and retail loan balances Operating Environment Analysis Please see page 30 for details on these initiatives. *3 SME and retail loan balances

Our investee banks are based in five countries, namely the United States, Thailand, Indonesia, the Philippines and Vietnam, with a Microfinance through Krungsri’s subsidiaries ESG cumulative population of 840 million (520 million in ASEAN nations Eiichi Yoshikawa and 320 million in the United States, respectively). These banks In ASEAN, the Bank of Ayudhya (Krungsri) helps to support those with low incomes 2 Business incubation & job creation perhaps with a limited or no credit history who are unable to obtain adequate access to Group Head, thus serve an extensive, multi national market. Moreover, GDPs are financial services through traditional sources. In Thailand, Krungsri’s Ngern Tid Lor is the Global Commercial Banking Business Group largely growing in these countries. In particular, ASEAN nations are leader in the microcredit sector providing auto loans and nano-finance loans through its expected to see growth in financing needs on the back of income nearly 650 highly accessible branches nationwide. In September 2016, Krungsri growth and economic development. Accordingly, our partner successfully acquired 100 percent stake of Limited (HKL), today the banks in these regions are poised to seize opportunities from third-largest microfinance institution in Cambodia. highly likely market growth in the future. With our values that are based on responsible lending, both Ngern Tid Lor and Hattha Kaksekar continue to grow steadily while enriching the quality of life for the people we serve. WorldReginfo - b5625110-108f-485a-9bca-a62f0ca1d2eb 46 MUFG Report 2018 MUFG Report 2018 47 Value Creation Initiatives Business Overview

Asset Management & Investor Services Business Group Strategies under the New Medium-Term Business Plan

Employing our sophisticated specialist know-how in the areas of asset management, investor services, Asset Management Business Net Operating Profit Plan and pensions, we provide such services as consulting while constantly striving to further enhance our We will take a groupwide integrated approach in the course (Billions of yen) asset management capabilities and develop products capable of better meeting diverse needs of of providing our customers with asset management  customers at home and abroad. 80.0 services. To this end, we will develop investment products  71.1 with greater competitiveness while expanding our product 

lineup. Moreover, we will enhance our portfolio of human  Composition of Gross Profits* Fiscal 2017 Gross Profit Breakdown resources supporting these efforts. In addition, we will step  ■ Pensions 32% up the provision of alternative products and further  ■ Global IS*1 28% enhance our asset management capabilities with the aim of 2017 2020 (FY) 5% ■ Domestic Individual Investors 15% becoming an asset manager boasting global presence. ■ Domestic Investment Trust Administration * Total gross profit for six 12% Balance of Alternative Products* business groups Domestic Institutional Investors*2 ■ 11% Investor Services Business (Billions of yen) 3 ■ Global AM* 2% Globally, we will strive to meet increasingly diversifying  660.0 *1 Investor services provided under the MUFG Investor Services customer needs through the provision of one-stop services brand, custody and fund administration services, etc.  *2 Asset management services, etc. provided for domestic encompassing fund administration, finance and other 445.0 institutional investors (e.g., financial institutions) other than corporate pension funds services under the brand name of MUFG Investor Services.  *3 Asset management services, etc., provided for overseas investors In Japan, we will also strive to provide comprehensive 180.0  services, focusing on accurately satisfying the needs of such customers as non-Japanese corporations and up-and-  2017 2020 2023 (FY) coming asset management firms. * Balance of real-estate and other low-liquidity investment products Our Medium- and Long-Term Vision developed in-house Pensions Business A Business Group Boasting Unparalleled Strength in Japan and In the field of defined benefit pension plans, we will Balance of Defined Benefit Pension Trusts Significant Global Presence in Terms of Asset Management and endeavor to raise our pension trust balance. As for defined (Trillions of yen) Investor Services  13.6 contribution pension plans, we will work to increase the 12.3 We will become an asset manager boasting superior asset number of enrollees. In addition, we will provide 11.2 management capabilities and comprehensive strengths in solution comprehensive consulting services with regard to  proposals while striving to earn recognition in terms of employee benefit plans other than pensions and, to this contribution to a shift from savings to stable asset building in end, take a groupwide integrated approach. In these ways,  Japan. In the field of investor services, we will strive to expand our we will serve an even broader range of customers while lineup of banking and other value-added services, thereby enhancing our capabilities to accurately satisfy their needs.  becoming the best partner for customers in Japan and overseas. 2017 2020 2023 (FY) In the field of pension administration, we will strive to secure the position of Japan’s top player in terms of both defined benefit plans and defined contribution plans.

Operating Environment Analysis Utilizing Non-Financial Information in Asset Management ESG

Cross-sectoral environment and social issues Overseas, demand for asset management and investor services is As an institutional investor, we believe that assessing investees’ non-financial 7

information, which includes corporate philosophies and stances vis-à-vis Medium- to Long-Term Investment Returns expected to grow further due to the low interest rate environment governance, is essential to securing medium- to long-term investment returns. Financial Information in developed countries and growth in the number of wealthy Accordingly, as an institutional investor that engages in long-term stock holding, individuals in emerging nations. Turning to Japan, there will be the Trust Bank also encourages its investees to seek to cultivate sustainable Non-Financial Information growing asset management needs among institutional investors growth through investee dialogue. Investment Sunao Yokokawa Initiatives Initiatives Initiatives due to expectations that the negative interest-rate policy will to Address to Address to Address Group Head, In addition, the balance of responsible investment, which represents the balance Environmental Social Issues Governance Asset Management & remain in place. Also, a gradual shift from savings to stable asset of ESG-oriented investment, is 5.0%. Issues Issues Investor Services Business Group building will address customers’ asset management needs. E S G Growth Opportunities for Businesses Risk Resilience WorldReginfo - b5625110-108f-485a-9bca-a62f0ca1d2eb 48 MUFG Report 2018 MUFG Report 2018 49 Value Creation Initiatives Business Overview

Global Markets Business Group Strategies under the New Medium-Term Business Plan

We serve our customers through sales & trading (S&T) operations associated with interest rates, bonds, Institutional Investors Business forex and equities in addition to engaging in treasury operations.* We will provide institutional investors with a broad range of Net Operating Profit Plan* * Including ALM (which is the integrated management of liquidity risk and interest rate risk inherent in assets (loans, etc.) and liabilities (deposits, etc.)), global investment and other services on a global basis by taking an integrated, groupwide (Billions of yen) related operations  approach in collaboration with other business groups. The 530.0 Global Markets Business Group will promote O&D* and, to  this end, collaborate with business groups serving 385.2 Composition of Gross Profits* Fiscal 2017 Gross Profit Breakdown customers with funding needs while also endeavoring to  satisfy customers with professional and diverse investment  ■ Customer segments 58% needs. By doing so, we will offer our customers investment 15% ■ Treasury 42% opportunities available only through MUFG.  * Total gross profit for six * O&D: Origination and Distribution / OtoD: Originate to Distribute business groups  Businesses Targeting Corporations  In the field of traditional S&T operations, including forex and 2017 2020 (FY) interest rates, we will digitalize our operational flows to * Including O&D profits related to GCIB improve the efficiency of existing operations. By doing so, we will free up greater resources to be allocated to such growth fields as asset management as well as hedging transactions Sales of Structured Products for Domestic aimed at addressing new type of risks, such as those Institutional Investors* associated with M&A financing. We will also step up (Trillions of yen) Our Medium- and Long-Term Vision collaboration with business units in charge of handling primary and solution businesses, such as designated contract market (DCM) derivatives, thereby nurturing a new business A Driver of Across-the-Board Business Reforms Taking a  Groupwide Integrated Approach model that is not dependent on lending. We will become an organization capable of delivering value to customers by taking a groupwide integrated approach that Treasury  1.8 transcends the boundaries of business groups and Group entities. Addressing the foreign currency liquidity and other issues we In particular, we will strive to ensure that our customers are offered are facing in terms of balance sheet management, we will  trading opportunities from optimal booking entities and, to this improve liquidity risk management by taking a groupwide 0.6 end, initiate efforts to standardize system, risk management and integrated approach. At the same time, we will engage in other infrastructure in place at the Bank, the Trust Bank and the market risk management by taking advantage of the  2017 2020 2023 (FY) Securities. As for operations outside Japan, we will practice human strengths of the Bank and the Trust Bank in their areas of resource allocation in which the same staff concurrently engages * Amount of domestic and foreign securitized products and structured specialty. Furthermore, we will develop new corporate clients bonds sold mainly in Japan in banking and securities operations. while instituting new products. In addition, we will step up our ongoing efforts to secure low-cost and stable funding Operating Environment Analysis from the market. In these ways, we will promote foreign currency businesses that are more sustainable and sound. Looking at the current market trend, there is a looming sense of uncertainty regarding the future, especially with regard to geopolitical risk. Furthermore, yen volatility remains low on the back of the prolonged trend toward negative interest rates. ESG Investment ESG Meanwhile, U.S. interest rates are expected to rise. For both the Cross-sectoral environment and Around the world, public pension funds and other institutional investors are increasingly 7 Shigeru Asai yen and dollar, the gaps between short-term and long-term social issues interest rates are narrowing. Taking these factors into account, we paying attention to ESG-oriented investment, believing that giving consideration to the Group Head, approaches of investees to ESG issues will improve returns over the long term. While Global Markets Business Group expect a harsh environment to remain in place. On the other hand, MUFG has diversified its investment portfolio to encompass domestic bonds, foreign the markets business is expected to achieve significant bonds, stock and corporate bonds and thereby improve the risk-return management of its breakthroughs when rapidly advancing digital technologies are own investment portfolio. We also invest in Green Bonds. Looking ahead, the Global applied in this field. Therefore, we will strive to create new value by Markets Business Group will strive to enhance MUFG’s financial revenues while proactively utilizing these technologies. contributing to sustainable economic growth via ESG investment. WorldReginfo - b5625110-108f-485a-9bca-a62f0ca1d2eb 50 MUFG Report 2018 MUFG Report 2018 51 Important Issues Concerning Value Creation How MUFG Addresses ESG Issues

In line with its Corporate Vision, MUFG is striving to fulfill its mission as a financial institution, by building lasting relationships with customers and society as a whole and working hand in hand with these stakeholders to ensure sustainable mutual development. To this end, MUFG is addressing a variety of ESG issues society is now confronting.

In fiscal 2017, the Board of Directors unanimously reconfirmed its commitment to addressing ESG issues and engaging in value creation initiatives over the long term to fulfill stakeholder expectations. In addition, the Board of Directors and the Global Advisory Board met a total of four times for the express purpose of addressing ESG issues. WorldReginfo - b5625110-108f-485a-9bca-a62f0ca1d2eb 52 MUFG Report 2018 MUFG Report 2018 53 Important Issues Concerning Value Creation Environment / Social / Governance

Initiatives for Addressing ESG Issues toward Sustainable Growth

How MUFG Determined Its Priority (SDGs) as well as prevailing industry standards. Establishing Our Environmental Policy considerations, and “Restricted Transactions” which Environmental and Social Issues Furthermore, we have incorporated input from Statement, Human Rights Policy require confirmation of environmental and social external specialists. The determination of the seven Statement and Environmental and Social considerations by clients with respect to extension of MUFG aims to help resolve environmental and social priority issues presented below has thus been made Policy Framework credit and underwriting of bonds and stocks with issues through its business activities while securing with an eye to better fulfilling society’s expectations corporate clients. sustainable growth. To this end, we have determined in areas where MUFG’s capabilities can be brought to In May 2018, MUFG established the “MUFG priority issues to be addressed by MUFG. This bear. Environmental Policy Statement” and “MUFG Human In addition, the framework mandates the introduction determination involved selecting issues relevant to Rights Policy Statement” with the aim of stepping up of a due diligence process to identify and assess the MUFG’s operations at home and abroad from among Currently, each business group has incorporated these its initiatives that address ESG issues. As a framework environmental and social risks or impacts associated the environmental and social issues identified by priority issues into their business strategies and is for implementing these basic policies, we established with transactions. United Nations Sustainable Development Goals pushing forward with initiatives to address these issues. the MUFG Environmental and Social Policy Framework. This framework aims to appropriately Transactions assessed as having the potential to have identify and manage the environmental and social significant negative impacts on the corporate value risks arising from MUFG’s business activities. The of MUFG are evaluated with the involvement of Assessing a broad Environmental and social issues on a global basis 17 SDGs range of environmental framework has been in force since July 2018. executive management. SDGs Implementation Guiding Principles (cabinet office) and social issues Environmental and social issues unique to Japan Keidanren’s policies regarding ESG issues The framework is applicable to MUFG's core We will periodically review the content of this policy subsidiaries the Bank, the Trust Bank and the framework in accordance with changes in business Relevance to the Dialogue with external Securities, and establishes “Prohibited Transactions” activities and the business environment, and will Society’s expectations Global mega trends financial industry specialists from the perspective of environmental and social work to improve and refine them. Integration and selection

Areas where MUFG’s capabilities can be brought to bear Corporate Vision and the Principles of Ethics and Conduct

Priority Issues MUFG Must Address MUFG Environmental Policy Statement MUFG Human Rights Policy Statement

1 Aging population & low birth rate 2 Business incubation & job creation A framework aimed at appropriately identifying and managing the environmental and social risks arising from MUFG’s business activities Assist our customers achieve smooth business succession while helping enhance Support companies with growth potential to incubate new their financial literacy through the provision MUFG Environmental and Social Policy Framework industries and create employment of investment education, thereby facilitating a shift from savings to stable asset building • Identify “Prohibited Transactions” and “Restricted Transactions” (e.g., cluster munitions manufacturing sector, coal fired power generation sector) P. 41, 62 and 63 P. 47, 60 and 61 • Declare our policy of actively financing renewable energy businesses, such as solar and wind power generation, to help combat climate change while supporting the adoption of advanced technologies aimed at reducing GHG emissions 3 Social infrastructure & town planning 4 Global warming & climate change • Introduce an enhanced due diligence process to identify and assess E/S risks associated with designated transactions Offer corporate clients assistance in such projects as those aimed at developing Curb the impact of climate change by, for infrastructure overseas, refreshing social example, facilitating the use of renewable capital and enhancing the operational energy on a global basis efficiency of public facilities P. 43 and 61 P. 56 to 59 Endorsement of International Sustainability Initiatives 5 Financial innovation 6 Workstyle reforms MUFG has declared its support of and is acting as an Financial Stability Board to provide recommendations Provide a broader range of the general Contribute to across-the-board efforts in Japan to improve public with access to financial services productivity by, for example, helping employees adopt diverse advocate for such international sustainability initiatives with regard to the disclosure of financial information in by developing and offering cutting-edge workstyles to strike an optimal balance between their jobs and as the Task Force on Climate-related Financial connection with climate change. financial services child rearing, nursing care and other family duties Disclosures (TCFD), which has been established by the P. 28, 29 and 61 P. 84 and 85

7 Cross-sectoral environment and social issues

Help realize environmental and social sustainability by, for example, encouraging investees to address ESG issues and assisting in the issuance of Green Bonds

P. 45, 49, 51 and 63 WorldReginfo - b5625110-108f-485a-9bca-a62f0ca1d2eb 54 MUFG Report 2018 MUFG Report 2018 55 Important Issues Concerning Value Creation Environment / Social / Governance Environmental Initiatives

4 Global warming & climate change

Initiatives to Counter Global Warming Issuance of MUFG Green Bonds The Status of Credits Offered to Coal Fired Green Bonds refer to a type of bond that limits the Thermal Power Generation Operators usage of proceeds from its issuance to funding for As of December 31, 2017, approximately half of and Climate Change renewable energy and other projects deemed to be MUFG’s power-related project finance and asset helping preserve the global environment. portfolio was accounted for by renewable energy businesses. Financing for the coal fired power MUFG has positioned countermeasures against global warming and climate change as one of the priority In January 2018, MUFG issued MUFG Green Bonds in generation sector is accounted for less than 10% of environmental and social issues that it must address. In line with this positioning, we are engaged in conformity with international TLAC regulations*1 as this portfolio. initiatives to reduce environmental burdens attributable to human activities and contribute to the part of an initiative to contribute to environmental realization of environmental and social sustainability. and social sustainability. This follows a previous MUFG supports international initiatives that are issuance of Green Bonds in September 2016. aiming to reach the objectives set by the Paris Leveraging Our Financing Functions Agreement and supports the adoption of advanced Proceeds from these bonds are used for financing technologies for high efficiency power generation Corporations, etc., that MUFG’s Contribution to ESG-Oriented green projects*2 through the Bank after an which contribute to reducing greenhouse gases Investment and Financing pursue environmentally MUFG friendly operations assessment of eligibility based on their conformity emissions and carbon dioxide capture and storage ESG-centered with the Equator Principles (EP). technologies. ESG investment The Trust Bank dialogue/ESG-centered Investees asset management *1 Total Loss-Absorbing Capacity: A capital regulation applied to G-SIBs *2 Renewable energy projects whose environmental and social impacts are reviewed in Furthermore, MUFG believes that providing accordance with the EP before being certified as eligible to funding The net proceeds assistance to those switching over to alternative from the issuance Eligible green The Bank Financing Allocation of Funds and Environmental Impact energy sources with low CO2 emissions is a projects Issuance of Green (as of March 31, 2018) responsibility of financial institutions. Bonds Balance of Eligible Green Projects that Investors US$1,256 million were funded by the net proceeds from (total 29 projects) MURC* the issuance of MUFG Green Bonds The Bank and the Trust Bank refer to international Climate change countermeasure Businesses and guidelines such as OECD Arrangement on officially consulting public agencies Total annual power generation capacity 8,411 million kWh The Securities Supported Export Credits, when considering the Total annual estimated reduction 4.3 million tons volume (CO equivalent) provision of financing for new coal fired power Underwriting 2 Issuance of Green generation. Decisions on financing are made and marketing Bonds Issuers Note: The sum of the net proceeds totaling US$500 million from bonds issued on Structuring September 13, 2016 and the net proceeds totaling 500 million euro from bonds issued following recognition of both the local and the on January 26, 2018 * Mitsubishi UFJ Research and Consulting Co., Ltd. international circumstances surrounding coal fired For more details, please visit the following page of our website. https://www.mufg.jp/english/csr/juten/sustainability/greenbond/reporting/ power generation. Promotion and Popularization driving force behind the dissemination of renewable of Renewable Energy energy around the world. Thanks to these efforts, in Drawing on its solid track record, abundant know- 2017 we were able to secure first place in the global how and extensive network at home and abroad, ranking of financial institutions serving as lead Response to the Task Force on Climate-Related Financial Disclosures (TCFD) MUFG is acting as project finance arranger and arrangers in financing for renewable energy projects. MUFG recognizes that, as a global financial institution, MUFG is putting into practice the TCFD’s lender for solar, wind and geothermal power We have seized this position for a second we play an important role in the transition to a low- recommendations on governance, strategy and risk generation projects. In these ways, we serve as a consecutive year. carbon society and other global actions aimed at management as well as metrics and targets. Here, we combating climate change. In line with this recognition, outline our initiatives related to these four items. MUFG’s Track Record and Ranking as a Finance Arranger in the Renewable Energy Sector · Established an MUFG Environmental Policy Statement that includes MUFG’s policies on climate change while formulating (Millions of U.S.$) the MUFG Environmental and Social Policy Framework, a framework designed to provide specific guidance on risk 4,343 Governance management  · The Corporate Social Responsibility Committee, operating under the Executive Committee, engages in regular 1st discussions centered on countermeasures to address climate change and other environmental and social issues  2,911 2,639 · Identified priority environmental and social issues that MUFG must address · Implementing employee training on ESG-related initiatives and conduct stakeholder dialogue 2,309 2,094 2,031 1st Strategy  1,837 2nd · Promoting and popularizing of renewable energy 4th · Assisting businesses with the issuance of Green Bonds while itself issuing MUFG Green Bonds 1st 2nd  3rd · Announced an MUFG Environmental and Social Policy Framework that includes MUFG’s policies on financing for the coal Risk Management fired power generation sector  · Implementing due diligence based on the Equator Principles · Upgrading our risk management by, for example, incorporating external opinions of experts

Metrics and Targets · Disclosed GHG emissions by five Group companies 2011 2012 2013 2014 2015 2016 2017 (Source: Bloomberg New Energy Finance ASSET FINANCE/Lead Arrangers LEAGUE TABLE) WorldReginfo - b5625110-108f-485a-9bca-a62f0ca1d2eb 56 MUFG Report 2018 MUFG Report 2018 57 Important Issues Concerning Value Creation Environment / Social / Governance Environmental Initiatives

4 Global warming & climate change aimed at helping commercialize cutting-edge Assisting Clients with the Formulation of CO2 emissions. As a result, CO2 emissions in fiscal initiatives to curb global warming while developing Environmental Strategies 2017 were 25% below the level recorded in fiscal Environmental and Social Risk Management schemes for financing such initiatives. Mitsubishi UFJ Research and Consulting Co., Ltd. is 2013. Based on the Equator Principles assisting public agencies and private corporations 1 MUFG Bank adopted the Equator Principles (EP) in When it comes to global warming countermeasures, with the formulation of environmental strategies Carbon Dioxide (CO2) Emissions* 2005 to ensure that the projects it finances and two factors are important: Mitigating climate change covering subjects ranging from climate change to (t-CO2) advises on are developed in a socially responsible (e.g., curbing greenhouse gas (GHG) emissions); and energy and resources and the management of  manner and establish good environmental Adapting to climate change (e.g., reducing the impact natural capital. In fiscal 2017, 37 projects were management practices to minimize, mitigate, and/or of climate change and preparing for the risks). implemented.  offset environmental and social risks and impacts. 224,439 MUFG Bank supports its client’s environmental and In this regard, Mitsubishi UFJ Morgan Stanley Securities For example, Mitsubishi UFJ Research and Consulting

social risk management and contributes toward a (MUMSS) has been commissioned by the Ministry of engages in research and analysis aiming for the  sustainable world through implementation of the EP. Economy, Trade and Industry (METI) to conduct a operationalization of the Paris Agreement, which lays 2013 2014 2015 2016*2 2017 (FY) *1 Total for MUFG, MUFG Bank, Mitsubishi UFJ Trust and Banking, Mitsubishi UFJ MUFG Bank will not finance to projects where the study on climate change adaptation businesses. In out an international framework to tackle climate Morgan Stanley Securities and Mitsubishi UFJ NICOS *2 The figure for fiscal 2016 includes the impact of a CO offset scheme employing client will not, or is unable to, comply with the EP. fiscal 2017, MUMSS developed a guidebook on change, provide assistance to international 2 emission credits. This scheme resulted in a total reduction of 25,500t-CO2. adaptation business also and helped upgrade METI’s negotiations and support the development of a At MUFG Bank, Social & Environmental Risk Climate Change Adaptation Good Practices by national system to manage greenhouse gas Assessment Office (SERAO) is responsible for Japanese Private Sector, which showcases successful emissions and removals in developing countries. environmental and social considerations and other adaptation businesses overseas. MUMSS Continues to Initiatives to Promote Environmental relevant activities. SERAO will conduct site visits, as contribute in promotion of adaptation businesses As a research institute, Mitsubishi UFJ Research and Education appropriate, to assess social and environmental amongst Japanese private sector. Consulting also engages in policy proposal with Endowment to Promote aspects on the project sites over the world. regard to the concept of “green infrastructure” Climate Change Studies at Universities Outline of the JCM (infrastructure and land development plans that Since 1994, The Mitsubishi UFJ Environment The JCM is a bilateral credit creation scheme between Japan and Employing the Mega Solar Fund developing countries that was proposed by the Japanese government to employ a variety of functions the natural Foundation has established a number of endowed the international community as a new mechanism to complement the CDM. MUFG has instituted a mega solar fund in tandem with Benefits of the JCM include the mutual implementation of projects by Japan environment lends to human society). In this way, courses at universities, aiming to encourage and any country that signed a bilateral document, a broader range of Mitsubishi Research Institute, Inc. (MRI). Utilizing robust applicable projects compared to the CDM, shorter processing times, and this subsidiary is striving to help resolve issues our students, the leaders of future generations, to learn consulting functions and know-how, MRI has the availability of Japanese government subsidies. global society is now confronting via the utilization of about environmental issues. To date, the foundation developed in operating a think tank business, MUFG is Sign bilateral the positive value of the environment. Currently, this has established such endowed courses at Sophia Japan document Host country delivering high-value-added solutions to customers subsidiary is acting as a part of industry-government- University, Kobe University and Hitotsubashi Use in achieving JCM projects who have rights to renewable energy through this fund. Japan’s reduction Low-carbon academia collaboration centered on green University, among others. In fiscal 2018, the target technology GHG emissions infrastructure, measuring the estimated effect of foundation created an endowed course at Tsukuba reduction/ The first eligible project was a mega solar business Subsidy sequestration green infrastructure, formulating business University, that encompasses an annual series of 25 operated in Makinouchi, Kagoshima Prefecture, development methodologies and promoting other lectures including one titled “Scientific Theory of with an investment totaling approximately ¥10 billion Credits Joint committee Credits cutting-edge research projects. In addition, Global Environmental Changes and Other Relevant appropriated for the project under the funding scheme. Mitsubishi UFJ Research and Consulting formed a Global Issues” as well as field work, for a three-year Major Projects Supported by Mitsubishi study group in tandem with external institutions and period leading up to the end of the fiscal 2020 Looking ahead, we intend to expand the scope of UFJ Morgan Stanley Securities in Fiscal co-authored “GREEN INFRASTRUCTURE,” a book academic year. In addition to students, citizens are 2017 for JCM Procedures (Unit: t-CO /year) investment to encompass renewable energy 2 showcasing pioneering examples of green being welcomed to participate in open symposiums Estimated volume generation facilities in general. By doing so, we will Country Outline of JCM Projects of reduction in infrastructure. to be held as part of this course. GHG emissions help resolve issues associated with regional Introduction of solar power generation systems at commercial facilities 1,277 vitalization as well as those the energy sector is Indonesia Introduction of solar power generation Reducing Environmental Burdens confronting. 400 systems at factories Attributable to Our Business Activities Thailand Introduction of heat pumps at factories 1,056

Providing Consulting Services on Introduction of high-efficiency weaving Curbing CO2 Emissions Bangladesh 454 Climate Change Countermeasures machines at factories MUFG is striving to reduce the environmental Introduction of high-efficiency lighting MUFG supports the Joint Crediting Mechanism (JCM), equipment in marine vessels 742 burdens imposed by its own operations and, to this a carbon credit system designed to supplement the Installation of environmentally friendly air end, is promoting the effective limitation of resource Vietnam 4,681 Clean Development Mechanism (CDM) formulated conditioning systems at factories usage in various aspects of business activities. For Introduction of high-efficiency transformers to 3,564 based on the Kyoto Protocol. With the Japanese power distribution networks example, we have installed energy-saving air government acting as an international advocate for Mongolia Supply of electricity via solar power generation 11,221 conditioning and lighting systems at the Head Office this mechanism, MUFG provides consulting services Fiscal 2017 Total 23,395 building and each branch in an effort to curb total A lecture at Tsukuba University GHG: greenhouse gas WorldReginfo - b5625110-108f-485a-9bca-a62f0ca1d2eb 58 MUFG Report 2018 MUFG Report 2018 59 Important Issues Concerning Value Creation Environment / Social / Governance Social Contributions

2 Business incubation & job creation considerable but the certainty of future commercialization is weak. Under the program, Helping Corporate Customers Achieve 5 Financial innovation headquarters departments and commercial banking MUFG Digital Accelerator Program offices act in collaboration to conduct interviews and Growth through Financing MUFG provides assistance for the launch of new plant tours to assess whether applicants are eligible businesses in FinTech and other cutting-edge for non-collateral, non-guaranteed financing based technological fields through the MUFG Digital on careful analyses of their strengths and the MUFG aims to contribute to social development through financing, the primary function representing its Accelerator program, which it hosts. Participating management challenges they face. business operations. companies are offered advice from mentors boasting extensive expertise and given access to dedicated The first recipient of financing under the program In particular, we provide services unique to MUFG in such fields as “business incubation & job creation,” working spaces. They may also take advantage of a was Japan Environment PLANning, INC. (JEPLAN), a “social infrastructure & town planning” and “financial innovation.” network comprising the participant companies and startup that has taken on the challenge of the MUFG Group entities. commercializing recycled polyester fiber.

In February 2016, MUFG entered a partnership with 3 Social infrastructure & town planning Plug and Play, LLC, a tech company based in Silicon Supporting Infrastructure Businesses vary widely due to differing levels of development. Valley, to jointly operate the program. Having thus 2 Business incubation & job creation Overseas Accordingly, MUFG optimizes its services to fit their accelerated our business incubation efforts, we will Supporting Corporate Growth individual needs, whether they are startups, growing strive to create a number of revolutionary businesses Investment in U.K. Rail Infrastructure Acting as a partner for its corporate customers, corporations, mature companies or companies through open innovation in tandem with venture Japan Infrastructure Initiative (JII), established in MUFG is well aware of the fact that their needs may undergoing corporate rehabilitation. startups. January 2017 via a business alliance between MUFG, Mitsubishi UFJ Lease & Finance Company Limited, MUFG Bank, Hitachi, Ltd. and Hitachi Capital Startup Stage Growth Stage Maturation Stage Revitalization Stage 2 Business incubation & job creation Corporation to serve as an open financial platform, Emerging Industrial Technology Support Program executed its first investment in September 2017, Supporting up-and-coming Offering smooth financing while Supporting smooth business Assisting corporate rehabilitation businesses with growth potential creating new business succession in collaboration with external The Emerging Industrial Technology Support targeting High Speed 1 (HS1), a component of the “Rise Up Festa” opportunities expert organizations Program is a program run by MUFG Bank with the U.K. rail infrastructure, with total investment 4 outstanding companies Approximately 23,000 Approximately 4,200 Approximately 90 aim of assisting corporate clients taking on the amounting to £75 million. Going forward, JII will 6 excellent companies The number of business The number of corporate clients The number of in-house challenge of commercializing new technologies. strive to support Japanese corporations engaged in Number of award-winning matching cases* in fiscal 2017 that received visits by specialist specialists* in corporate Typically, the program finances pioneering projects infrastructure businesses overseas. teams during fiscal 2017 rehabilitation corporations included in the * The sum of business matching cases in business fields where the potential for growth is fiscal 2017 Rise Up Festa conducted by branches and those * The total number of specialists at established at business matching domestic headquarters at the Bank events held in Japan and overseas

Interview with a Client How Finances under the Emerging Industrial Michihiko Iwamoto Supporting Promising Startups ”Rise Up Festa“ Business Matching Events Technology Support Program Are Utilized CO-FOUNDER, JEPLAN, INC. Rise Up Festa is a business support program aimed at MUFG hosts periodic large-scale business matching assisting growing companies engaged in novel and events, aimed at helping corporate clients seeking We run “BRING,” a recycling project that aims to create creative segments as well as those trying to extend the solutions, such as a need for a wider variety of suppliers, clothing out of clothing. boundaries of existing businesses. Through this program, to increase their customer base or to upgrade marketing MUFG engages with them as business partners over the and logistics operations. Employing MUFG’s extensive Under this project, we encourage consumers to bring medium- to long-term backed by its extensive business network, MUFG introduces them to potential business in used fabric items that would otherwise be discarded. network and abundant know-how in management partners that may help them resolve these challenges, We also utilize textile waste from factories. Then, we support. thereby assisting them in their pursuit of business apply our chemical-based fiber recycling technologies expansion. In February 2018, one such event was held in to process the items, thereby manufacturing pellets In April 2018, MUFG conducted final screening for the Osaka, and attendees included representatives from that are the raw materials of recycled polyester fiber. I fifth round of this program, with four outstanding overseas investment promotion agencies as well as a am grateful to the staff at MUFG Bank for their companies and six excellent companies being chosen number from MUFG Union Bank, N.A. and Krungsri. understanding and support of our project’s objectives from among the many candidates. Award-winning and our technologies. Looking ahead, we will strive to Staff at the Shibuya Commercial Banking Office engaging interview companies may take advantage of various support help create a recycling-oriented society. with CO-FOUNDER Iwamoto (right) programs aimed at helping them achieve growth. WorldReginfo - b5625110-108f-485a-9bca-a62f0ca1d2eb 60 MUFG Report 2018 MUFG Report 2018 61 Important Issues Concerning Value Creation Environment / Social / Governance Social Contributions

7 Cross-sectoral environment and social issues ・Mitsubishi UFJ Morgan Stanley Building Sophisticated Securities has been running an educational program aimed at helping 2 MUFG’s Role as an Asset Manager junior high and high school students Investment Chains Elementary, learn about stock investment. MUFG is maintaining engagement with its investees junior high and to facilitate their sustainable growth. In doing so, high school ・MUFG Union Bank helps students at students public high schools establish and run MUFG is striving to make the best use of its The development of sophisticated investment chains plays an essential supporting role in assuring the “High School Branches,” providing capabilities and expertise as an asset manager stable accumulation of household assets and sustainable growth for the economy. To help develop such them with opportunities to learn about entrusted with valuable customer assets. We believe investment chains, MUFG plays the dual role of sales company and asset manager. inance and economics via actual banking operations. that such engagement is key to enhancing returns to beneficiaries in the long run. For example, the Trust Bank engages in ongoing dialogue with its investees ・We give lectures aimed at enhancing to ensure a shared understanding of the issues they basic financial literacy with regard to University properly managing loans, credit cards are facing, such as a need to update their Conceptual Diagram for the Investment Chains students and household budgets while providing governance structure. This understanding helps the knowledge about various asset building Trust Bank facilitate changes that enhance clients’ methods based on personal life plans. corporate value. Household 2 Assets Asset Owners Asset Manager D Public pension funds Mitsubishi UFJ Trust and Corporate pension funds Investees B Banking C As a Member of Local Community Investment trusts Mitsubishi UFJ Kokusai Entrustment Asset Manegement Investment MUFG encourages its employees to engage in a variety Moreover, MUFG supports organizations aimed at MU Investments, etc. of volunteer activities that contribute to the sound creating a better society through sports activities. development of communities in which it operates.

A Returns: Sustainable business expansion and growth Global Volunteer Month Supporting the Sound Upbringing of Future in corporate value over the medium- to long-term MUFG Gives Back Generations through Sports “MUFG Gives Back” is an annual Global Volunteer Month Guided by our aspiration to support the sound Sales companies sell investment Asset manager engages in constructive 1 Sales Company campaign aimed at encouraging employees worldwide upbringing of children, who will lead our future, we host products according to principles dialogue (engagement) and exercises A C of customer-centric business voting rights to improve the corporate to simultaneously engage in community contribution the MUFG Junior Tennis Tournament while sponsoring MUFG Bank management (Fiduciary Duties) value of investees activities. Since 2013, we have held this campaign to the MUFG Cup, a football game for sixth graders to Mitsubishi UFJ Trust and Banking communicate our gratitude to the people all around the celebrate their graduation from elementary school. In Mitsubishi UFJ Morgan Stanley Securities The asset owner asks the asset The investees strive to appropriately world who generously supported Japan’s reconstruction these ways, we are supporting human resource manager to conduct stewardship build and administrate their corporate kabu.com Securities B D Mitsubishi UFJ Morgan Stanley PB Securities, initiatives while monitoring such governance systems for sustainable efforts after the Great East Japan Earthquake. development through sports activities. etc. initiatives growth Fiscal 2017 Approximately In addition, MUFG is the first company in Japan to Total hours spent on volunteer activities 340,000 hours* become a Global Partner of Laureus, a global sporting organization that engages in social contribution A total of more than 9,800 initiatives to counter such issues as violence and 1 Aging population & low birth rate November 2017 employees in 40 countries discrimination via sports activities and encourages the management and facilitating periodic investment MUFG Gives Back and regions participated in general public to understand how sports can positively 1 MUFG’s Role as a Sales Company the campaign and diversified investment) aimed at assisting impact society. Going forward, MUFG will act in MUFG announced the MUFG Basic Policy for customers in stable asset building as well as at * The total of employees at the MUFG Bank, MUFG Union Bank, N.A. and Krungsri collaboration with Laureus to promote various initiatives. Fiduciary Duties to provide unified guiding principles evaluating the outcomes of these activities in terms aimed at ensuring that a customer-centric approach of customer satisfaction. is thoroughly embraced by all Group entities. Also, each Group entity has identified key performance In addition, MUFG provides educational programs indicators (KPIs) for objectively assessing and and informational materials for customers in a variety evaluating their own practice of a customer-centric of age groups so that they can better understand approach while periodically publicizing the status of what it takes to start investing. such practice. In addition, these KPIs were For details on the MUFG Basic Policy for Fiduciary Duties and initiatives undertaken by formulated by focusing on assessing the status of each Group company, please also visit the following page of our website. Group employees engaging in volunteer activities in Karachi, Pakistan A Laureus ambassador interacting with children at a football event https://www.mufg.jp/english/profile/governance/fd/ business activities (e.g., conducting long-term asset WorldReginfo - b5625110-108f-485a-9bca-a62f0ca1d2eb 62 MUFG Report 2018 MUFG Report 2018 63 Important Issues Concerning Value Creation Environment / Social / Governance Upgrading the Governance Framework

strengthening its supervisory functions. performance of executive members. The results of Ensuring Sustainable Growth in Our these questionnaires and interviews are reported to Meanwhile, the Nominating and Governance and discussed at the Nominating and Governance Committee engages in the nomination of multiple Committee and the Board of Directors. Corporate Value director candidates from individuals inside and outside the MUFG Group. In fiscal 2017, the In fiscal 2017, MUFG appointed two foreign nationals committee nominated two new director candidates as outside directors, based on the results of the fiscal three committees” governance structure. The after examining a number of potential candidates in 2016 evaluation. This move effectively globalized its Fundamental Concepts functions of oversight and execution in the holding terms of their backgrounds and expertise from composition, enabling the Board of Directors to MUFG will aim for sustainable growth and the company are separated, thereby strengthening the multilateral perspectives. embrace a new perspective when discussing increase of corporate value over the medium- to oversight function of the Board of Directors and the overseas operations, risk management and long-term, in consideration of the perspectives of its committee system has also been reorganized for In addition, we have overhauled senior advisor governance issues and empowering it to deliberate stakeholders, including shareholders as well as more effective governance. We are aiming for a systems operated by the Bank, the Trust Bank and on an even broader range of management issues as customers, employees and local communities. MUFG governance framework that will be more familiar and the Securities. These systems have been transitioned well as to engage in the in-depth examination of will aim to realize effective corporate governance transparent to overseas stakeholders, in line with our to the new senior advisor system now in place at these issues. Thanks to this, the fiscal 2017 evaluation through fair and highly transparent management status as a G-SIB (Global Systemically Important these entities. concluded that the appointment of these directors based on the guidance provided by MUFG Corporate Bank). In June 2017, two foreign nationals were helped MUFG improve its corporate governance. On Evaluation Framework of the Working Governance Policies established in May 2015. appointed as directors to further diversify the Board the other hand, the fiscal 2017 evaluation also Practices of the Board of Directors’ Operation of Directors. identified a need for increasing the proportion of Steps to Improve Our Governance Since 2013, MUFG has employed external outside directors. Therefore, in June 2018, MUFG Structure In June 2018, the number of directors was decreased consultants to evaluate the working practices of its reduced the total number of directors as described Since its establishment, MUFG has worked to build a from 18 to 15, with outside directors accounting for Board of Directors. Each director is asked to fill in a above while securing the outside directors that stable and effective corporate governance structure, the majority of the Board of Director membership. questionnaire and is interviewed on such subjects as account for the majority. putting emphasis on ensuring external oversight. In This move is intended to boost our efforts to enhance the composition of key committees, the quality of June 2015, MUFG transitioned to the “company with the quality of discussions at the Board while the preparatory materials assembled prior to each We are continuously upgrading the functions of the meeting, the content of discussions, the operations Board of Directors via the implementation of a PDCA of the Board, the Board’s contributions, and the cycle. Corporate Governance Development

October 2005 Establishment of MUFG June 2013 June 2014 June 2015 June 2016 June 2017 June 2018 Governance Company with Three Company with a Board of Corporate Auditors Structure Committees Evaluation of the Working Practices of the Board of Directors’ Operation Eight (Two Eight Outside 2005 2006 2012 Fiscal 2016 evaluation Fiscal 2017 initiatives Fiscal 2017 evaluation Three Five Six Seven foreign (To make up the Directors Four Three Two nationals) majority) Evaluation

Governance The Board’s operation has Committee Nominating and Governance been steadily enhanced 2005 Committee (Statutory Nomination Nominating Committee) Committee 2008 The appointment of two foreign national outside Nomination and Compensation 2005 directors helped globalize the Board’s composition Committees Committee Compensation Committee Compensation while enabling it to incorporate a new perspective (Statutory) under the Committee Need for globalizing the Appointed two foreign nationals as outside into discussions. This move empowered the Board composition of the Board directors Board to deliberate on an even broader range of of Directors 2005 Audit Committee Issues to be addressed management issues and engage in the in-depth Internal Audit and Compliance Committee (Statutory) examination of these issues, thereby helping improve corporate governance. Evaluation Risk Committee · Roles and responsibilities of each committee have been clearly defined thanks to the U.S. Risk Merged redundant governance functions formulation of committee charters Need for constant upgrades Committee in place at the holding company and · The Group’s governance structure has been to the Group’s governance Group entities while streamlining the entire upgraded thanks to exchanges between outside structure 2005 Advisory Board governance system directors and between members of the Audit Advisory Integrated into the Global Committee at the holding company and those Board Advisory Board of board of corporate auditors at Group entities Global Advisory Board Need for stepping up Expanded the pool of successor candidates Robust discussions centered on plans for succession planning while while discussing the ideal composition of securing successors for key positions and those Evaluation of Board of Directors nurturing management leaders the Board and reviewing in-house standards Board of of outside directors continued for the next generation for appointing outside directors Reduced the Directors Independent Outside Directors Meeting/ total number of Issues to be Operations Appointment of Lead Independent addressed Need for decreasing the total number of directors directors from Outside Director while increasing the proportion of outside directors 18 to 15 in June 2018, with outside MUFG Corporate Governance Policy Need for incorporating agendas discussed at the directors making Policies Board based on a Groupwide perspective while up the majority improving the content of handout materials WorldReginfo - b5625110-108f-485a-9bca-a62f0ca1d2eb 64 MUFG Report 2018 MUFG Report 2018 65 Important Issues Concerning Value Creation Environment / Social / Governance Upgrading the Governance Framework

feasibility of the planned targets,” “It is important to Utilizing Insights Offered by Outside Directors Compensation System Outline of Compensation System ensure that MUFG’s management strategies are We believe that insights offered by outside directors understood and supported by those on the sales MUFG has adopted a performance-based stock Underlying Concepts and Objectives are essential to enhancing the content of discussions frontlines” and “The long-term policies need a PDCA- compensation plan for all directors, corporate MUFG’s stance on the determination of at the Board of Directors Meetings. MUFG is striving based management approach employing process KPIs.” executives and executive officers (hereinafter compensation is focused on ensuring the steady to ensure that outside directors are given sufficient referred to collectively as “recipients”) who serve at implementation of its management policies and information about agenda items prior to Board In addition, outside directors have opportunities outside the holding company, MUFG Bank and Mitsubishi UFJ securing sustainable corporate expansion and meetings. For example, we provide materials before the Board and committee meetings to intensively Trust and Banking as well as the Securities. The medium- to long-term growth in corporate value. meetings and give presentations. In addition, we deliberate on the MUFG Group’s business strategies and introduction of this plan is intended to provide Accordingly, MUFG aims to better motivate hold meetings to help them understand MUFG’s issues. Moreover, we strive to secure robust greater incentives for those individuals to maintain recipients to contribute to growth in business business and management environment immediately communication between outside directors and MUFG’s an awareness of the Group’s overall corporate performance not only in the short term but also over upon their appointment and on a regular basis during managerial positions by holding special meetings on performance, stock price and capital efficiency over the medium to long term while discouraging an their terms of service. multiple occasions. A series of such meetings held in the medium- to long-term when pursuing their excessively risk-taking approach. MUFG also fiscal 2017 helped attendees engage in active discussion duties. determines compensation by giving due In fiscal 2017, formulating the new medium-term of and exchange their insights into such topics as ESG- consideration to its operating results, financial business plan, we gave presentations to outside oriented management—one of the key management In May 2018, MUFG carried out a partial revision of soundness and domestic and overseas regulatory directors multiple times prior to Board meetings. issues—and workstyle reforms in addition to addressing this plan, incorporating ROE and the expense ratio requirements associated with compensation paid for These presentations encompassed strategies issues associated with our human resources into evaluation indices for determining stock these recipients. formulated by each business group and MUFG’s management strategies and reviewing operations compensation and bonuses for directors while digital transformation initiatives as well as MUFG’s undertaken by overseas investees acting as partner increasing the proportion of performance-based Content of Compensation overseas business operations, human resource banks. compensation. This move is expected to better strategies and financial planning. Valuable feedback harmonize our compensation system with • Compensation consists of three components, provided by outside directors included the following These initiatives, in turn, helped enhance the quality of shareholders’ interests. namely, basic compensation (fixed); stock statements: “MUFG should formulate concrete discussions at the Board meetings and our corporate compensation (linked to stock prices and medium- initiatives at the earliest possible time to increase the governance as a whole. to long-term corporate performance); and bonuses

Compensation System Overview

Ratio*1 Type Evaluation method Payment Incorporating Outside Directors’ Perspectives Into Key Management Themes June August October December February April

Board Board Board Process for formulating the new medium-term business plan (MTBP) Basic Compensation Meeting Meeting Meeting Determined by the position and place of residence of individual officers, etc. Monthly in cash 1 (fixed) The new MTBP fixed Formulated the new Presentation 1 Presentation 2 Presentation 3 5.5 MTBP together ・ Reflection on the ・ The irst draft of ・ The second previous MTBP Gave outside overall business draft of overall ・ Business group strategies business directors Stock Compensation At the time of strategies, the and inancial strategies Corresponding to the base amount determined depending on position presentations (non-performance-based) retirement*7 multiple times prior outline of key planning and inancial to Board meetings strategies and ・ Discussions planning MUFG’s overall of individual ・ Discussions Performance factor*3 [medium/long-term evaluation] policies themes of individual 1 Base amount 1) Consolidated ROE 2) Consolidated expense ratio themes Upon the Stock Compensation determined 2 termination of (performance-based* ) depending on 4 Performance factor* [single FY evaluation] MTBP*7 the position 1) Consolidated net business profits Board Educational 2) Profits attributable to owners of parent Sessions ・ESG-oriented ・Enhance of real estate business ・ Initiatives to enhance onsite 3 5 Regularly held management ・Human resource management capabilities Performance factor* to ensure that ・Workstyle reforms ・Management for corporate ・ System architecture 1) Consolidated NOP outside directors clients credit diagnosis and evaluation are apprised of Base amount 2) Profits attributable to owners of parent MUFG’s business Officers’ Bonuses determined 3) Consolidated ROE 4) Consolidated expense ratio operations and 1 (short-term performance- Annually in cash ・Presentation on partner banks based*2) depending on the management the position environment surrounding it 1.5 Status of the execution of the duties of the Officers, etc.*6 immediately upon ・The operating environment in Europe and their appointment ・Wealth management business future strategies ・Overall reorganization of sales functions FY17 FY18 *1 As for the case of the president of MUFG *2 Range: 0-150% *3 Rate of attainment of targets of the indicators in the MTBP *4 Comparison of the rate of increase in the indicators from the previous fiscal year with that of competitors *5 Rate of increase/decrease of the indicators from the previous fiscal year and the rate of attainment of targets of these indicators *6 Determined exclusively by independent outside directors at the Compensation Committee *7 Subject to claw-back clause, etc. WorldReginfo - b5625110-108f-485a-9bca-a62f0ca1d2eb 66 MUFG Report 2018 MUFG Report 2018 67 Important Issues Concerning Value Creation Environment / Social / Governance Upgrading the Governance Framework

(linked to short-term corporate performance). The of whom eight (the majority) are outside directors It also discusses matters related to the Chairman, Risk Committee proportion of each component is appropriately with a high degree of independence. Of the 15 Vice-Chairman, President, and other major The Committee is composed of corporate executive determined by giving due consideration to the directors, three (20%) are female, and two are foreign management positions in the holding company or officers, outside directors and outside expert concepts and objectives described above as well as nationals appointed as outside directors from the major subsidiaries and makes recommendations to members, with an outside director as Chairperson. duties carried out by each recipient United States and Thailand, respectively. The outside the Board of Directors. It examines the corporate The Committee examines matters related to directors include a corporate manager, a financial governance policy and framework and makes groupwide risk management and reports to the • Stock compensation plan utilizes a trust scheme specialist, a lawyer and a certified public accountant, recommendations to the Board of Directors. Board of Directors. It examines important issues of and provides recipients with MUFG shares. and are a balanced group in terms of each the overall risk management matters and issues constituent’s area of specialty, country of origin and Compensation Committee relating to the top risk matters, as well as other issues • As for compensation for the MUFG president’s gender. The Committee is composed of outside directors that need to be examined by the Risk Committee service for fiscal 2018 and later, the proportion of all and the President & CEO, with an outside director as and makes recommendations to the Board of three components is set equally (provided that Nominating and Governance Committee Chairperson. The Committee decides the Directors. stock compensation and bonuses have been paid The Committee is composed of outside directors compensation policy for directors and corporate in standard amounts.) and the President & CEO, with an outside director as executive officers and also decides the details of U.S. Risk Committee Chairperson. The Committee decides on proposals individual compensation. It examines the The U.S. Risk Committee is composed of the Outline of Board of Directors and Committees for the appointment or dismissal of directors that are compensation systems for senior management at members of MUFG Americas Holdings Corporation The Board of Directors is composed of 15 members, submitted to the General Meetings of Shareholders. the holding company and major subsidiaries and (the Americas HD) Risk Committee, (a) delegate(s) makes recommendations on establishment and from MUFG, a Regional Executive for the Americas reform to the Board of Directors. and the CEO of the Americas HD. Chaired by the Management Structure General Meeting of Shareholders head of the Americas HD Risk Committee, the U.S. Audit Committee Risk Committee deliberates on all types of risk in the The Committee is composed of outside directors United States, reports and makes recommendations Mitsubishi UFJ Financial Group and non-executive directors, with an outside director to the MUFG Risk Committee in addition to as Chairperson. The Committee examines the overseeing the status, control and management of Oversight Board of Directors Statutory Committees execution of business by directors and corporate the material risks to which MUFG’s operations in the Outside Directors Nominating and executive officers and prepares auditing reports. It country may be exposed and overall risk (Eight) Governance Committee also examines the business and financial situation of management framework with respect to MUFG’s Directors (Seven) Compensation Committee the holding company and subsidiaries, conducting operations in the U.S. fieldwork where necessary. Audit Committee Nominating and Compensation Audit Risk Committee Membership Governance Committee Committee Committee Committee Outside Director Director Risk Committee U.S. Risk Committee* Hiroshi Kawakami Outside director ◯ ◯ ◯ Non-Executive Chairperson Yuko Kawamoto Outside director Director * Established based on the U.S. Prudential Regulations ◯ ◯ ◎ Haruka Matsuyama Outside director ◯ ◎ Execution Toby S. Myerson Outside director ◯ Executive Committee Global Advisory Board Tsutomu Okuda Outside director ◎ ◯ President & Group CEO Yasushi Shingai Outside director ◯ ◯

Tarisa Watanagase Outside director ◯

C-Suite Officers in Charge Akira Yamate Outside director ◎

Planning and Administration Divisions Business Groups Tadashi Kuroda Non-executive director ◯

Junichi Okamoto Non-executive director ◯

Director Nobuyuki Hirano President & Group CEO ◯ ◯

Naomi Hayashi Managing corporate executive MUFG Bank, Ltd. General Meeting of Shareholders Group CSO ◯ Mitsubishi UFJ Trust and Banking Corporation Outside expert, Audit & Supervisory Cooperation Akira Ariyoshi ◯ Board of Directors graduate school professor Mitsubishi UFJ Securities Holdings Co., Ltd. Committee Kenzo Yamamoto Outside expert ◯

Membership includes outside directors and committee members (As of June 28, 2018) (As of June 28, 2018) WorldReginfo - b5625110-108f-485a-9bca-a62f0ca1d2eb 68 MUFG Report 2018 MUFG Report 2018 69 Important Issues Concerning Value Creation Environment / Social / Governance Upgrading the Governance Framework

In short, the directors are seeking to be well-informed MUFG’s approach to planning and business execution Pursuing the Best and to engage very proactively with management, so is very thoughtful, strategic and customer centric, and that in our oversight role we can be sure that these are significant strengths. As a result of this Long-Term management is implementing plans and strategies that approach, MUFG avoided many of the serious are in the best long-term interests of its shareholders problems other institutions encountered during the Interests of Our and other constituents. recent global financial crisis because it “did the right thing” in serving its customers and by not taking on Shareholders Q: What are your views on MUFG’s Re- excessive risk. Imagining Strategy, which was announced in Toby S. Myerson May 2017? Sometimes, people say MUFG is a bit too cautious. Chairman & CEO, Longsight Strategic Advisors LLC The Re-Imagining Strategy is breathtaking in scope. It’s While MUFG is now making transformational An attorney at law in the States of New York and California, Mr. Myerson practiced also very necessary. The kind of change contemplated investments in technology, there are other large corporate law in New York for four decades. In January of 2017, he founded a strategic advisory firm, where he serves as Chairman & CEO, to give business and by the Strategy is essential for MUFG’s future, and it’s financial institutions, particularly non-Japanese banks, strategy advice to global companies. He also serves as Lead Outside Director of critically important that it be executed well. that are technologically more advanced and that have both MUFG Union Bank, N.A. and MUFG Americas Holdings Corporation. He was appointed Outside Director of MUFG in 2017. greater product diversity. But MUFG is very focused on The Re-Imagining Strategy has three basic what needs to be done, and the Re-Imagining Strategy components: focus on our customers and determine is a carefully thought out and ambitious plan. how we can serve them best; realign our businesses Q: In your opinion, we would like to know if of the internationalization of our business and without regard to historical legal entities, so executives As mentioned, MUFG came through the financial crisis you think MUFG has the corporate governance and the diversity of Board members. in a given business are working together in a extremely strong financially and culturally, whereas governance framework it needs to succeed cooperative and streamlined fashion; and introduce other institutions were weakened and destabilized. as a global company? Q: MUFG launched a new medium-term digital technologies to promote efficiency, speed and MUFG’s financial strength and stability have made the The answer is certainly yes, for reasons I will explain. At business plan in April 2018. Could you tell us transparency. It is completely logical, appropriate, and organization a very attractive place for people to work, the same time, it’s important to recognize that good about your participation as an outside absolutely necessary for MUFG retain its position of and, as a result, MUFG was able to hire some extremely governance is not a destination, it’s an ongoing journey. director in the formulation of long-term leadership and to achieve its financial and societal goals talented, world class individuals. I think the people strategy plans? for the future. component of the Bank has been significantly Corporate governance is really a process that requires The role of the Board is oversight. We are not members enhanced in recent years. continuous improvement. In terms of where MUFG is of management. What we bring to the table is a keen The most challenging part over the next few years— today, let’s start with the Board of Directors: We have desire to understand what the plans and strategies are during the course of this new medium-term business Q: Please tell us how MUFG is bene iting by eight outside directors, with individuals representing and to understand analytics that underpin them – both plan and the one that follows—is implementation. The having you concurrently serve as a director at three nationalities. Three of the eight outside directors the upside and the downside. It’s important for us to pace of change in Japan is generally slow. One of the MUFG and MUFG Americas Holdings are female. The directors have experience in industry understand the goals and objectives, the costs of things that we as directors are trying to encourage Corporation. and finance, the professions like law and accounting, achieving them, in both financial and human terms, and management to do is to execute on and implement the One of the things we are working on is more direct and the bank regulatory community, so we have a the execution risks. It’s vital that we receive high-quality Re-Imagining Strategy as quickly as they can, connectivity between MUFG in Tokyo and the Bank’s diversity of experience and a diversity of human beings. information and that we receive from management consistent with maintaining the safety and soundness operations in North America, with more and better Importantly, following this year’s annual shareholder thoughtful and detailed analyses and support for their of the institution and careful risk management. information flowing in both directions. I am very meeting, outside directors will represent a majority of strategies. pleased to be a part of that. I am able to talk to the the Board of Directors. That’s an extremely important members of the Board of MUFG about governance Q: What do you think are MUFG’s main development. In the Boardroom we engage in lively and detailed strengths? practices, risk strategies, technology issues and other discussions so we can understand what sort of returns things that we are grappling with in North America, As a result, the dialogue at the Board level is very the Bank is intending to achieve and what kinds of When I think about MUFG compared to other large which not only helps the MUFG Board be better engaged and proactive. We present a credible business risks are inherent in each strategy. Here’s global banks, I believe MUFG’s excellent reputation, informed about our operations in the United States, but challenge to management with regard to business where the credible challenge comes in. We also strong culture, integrity and the commitment of its also helps provoke thought and discussion about the strategies, risk appetite, corporate culture and other consider the environmental, societal and governance people are tremendous assets. Starting with the tone at Japanese and other aspects of MUFG’s businesses. aspects of MUFG’s business – with an eye on global (“ESG”) components of each new strategy. ESG is a the top, MUFG employees are truly outstanding in the Conversely, I think it’s very helpful to management and standards. new and evolving discipline that the Bank is using with integrity they bring to their jobs, to the business the boards in the U.S. to understand more about what new business strategies in order to enhance the challenges they confront and in the way they serve the parent Board is thinking about the U.S. operations. Having said all this, there are always ways to improve positive aspects of the way the Bank does business as a customers. So the information flow is enhanced in both directions, and we are hard at work on it. I think we’re in a good global financial institution. generating better communication and the cross- place and we are headed in the right direction in terms Let me say a word about the conduct of the business. pollenation of ideas. WorldReginfo - b5625110-108f-485a-9bca-a62f0ca1d2eb 70 MUFG Report 2018 MUFG Report 2018 71 Important Issues Concerning Value Creation Environment / Social / Governance Upgrading the Governance Framework

1 2 3 4 5 6 7 8 9 10 11 12 13 14 15

Board of Directors As of July 1, 2018

Member of the Board of Directors (Outside Director) Member of the Board of Directors (Outside Director) Member of the Board of Directors (Outside Director) Member of the Board of Directors Member of the Board of Directors Member of the Board of Directors Hiroshi Kawakami 1 Toby S. Myerson 4 Tarisa Watanagase 7 Audit Committee Member Deputy Chairman Deputy Chairman Advisor, Central Japan International Airport Lawyer, Chairman & CEO, Former Governor of the Bank of Thailand Tadashi Kuroda 9 Mikio Ikegaya 12 Saburo Araki 14 Mr. Kawakami joined in 1972. He became a Longsight Strategic Advisors LLC Ms. Watanagase first joined the Bank of Thailand in Mr. Kuroda joined Sanwa Bank in 1981. In 2014, he President & CEO, President & CEO, managing executive officer of TOYOTA in 2003 and Mr. Myerson has been registered as attorney at law 1975. During her career as a central banker, she was was appointed as member of the board of directors, Mitsubishi UFJ Trust and Banking Corporation Mitsubishi UFJ Securities Holdings Co., Ltd. a senior managing director in 2007. In 2008, he of California and New York, U.S., since 1977. He has seconded to the International Monetary Fund (IMF) in managing executive officer of MUFG and in the same Mr. Ikegaya joined Mitsubishi Trust and Banking in President & CEO, became vice president of Toyota Tsusho Corp. and held top management positions in a career spanning 1988 and served as an economist. In 2002, she year as a director of Mitsubishi UFJ Trust and 1981. In June 2015, he became senior managing Mitsubishi UFJ Morgan Stanley Securities Co., Ltd. in 2009, he was appointed as president of the four decades, most recently as Partner and as a assumed the position of deputy governor of the Banking. In June 2015, he was appointed as a director of Mitsubishi UFJ Trust and Banking Mr. Araki joined Mitsubishi Bank in 1981. In 2012, he Central Japan International Airport Co., Ltd. In June Co-Chair of Global Mergers and Acquisitions at Paul, bank. From 2006 to 2010, she served as governor of member of the board of directors, senior managing (hereafter “the Trust Bank”), and managing was appointed as member of the board of directors 2015, he became a senior advisor of Central Japan Weiss, Rifkind, Wharton & Garrison LLP. He left the the central bank of the country. Since 2013, she has corporate executive of MUFG, as well as a member executive officer of MUFG. In April 2016, he was of MUFG and member of the board of directors, International Airport as well as an outside director of firm in December 2016 and founded a strategic served as an outside director of The Siam Cement of the board of directors, senior managing executive appointed as president & CEO of the Trust Bank managing executive officer of Bank of Tokyo- MUFG (incumbent). In 2016, he became an outside advisory firm in January, 2017 where he serves as Public Company Limited (incumbent). She was officer of Bank of Tokyo-Mitsubishi UFJ. In June 2018, (incumbent). In June 2016, he became a member of Mitsubishi UFJ. In April 2018, he was appointed as director of AT-Group Co., Ltd. (incumbent) and, in Chairman & CEO (incumbent). He also serves as an appointed as an outside director of MUFG in 2017 he was appointed member of the board of directors the board of directors and deputy chairman of president & CEO of Mitsubishi UFJ Securities 2017, he was appointed as advisor for the Central outside director of both MUFG Union Bank, N.A. and (incumbent). and member of the Audit Committee of MUFG MUFG (incumbent). Holdings Co., Ltd. (incumbent) and Mitsubishi UFJ Japan International Airport (incumbent). MUFG Americas Holdings Corporation. He was (incumbent). Morgan Stanley Securities Co., Ltd. (incumbent). In appointed as an outside director of MUFG Member of the Board of Directors (Outside Director) Member of the Board of Directors June 2018, he became member of the board of Member of the Board of Directors (Outside Director) (incumbent) in 2017. Member of the Board of Directors directors and deputy chairman of MUFG 8 Deputy Chairman Akira Yamate Audit Committee Member (incumbent). 2 Yuko Kawamoto Member of the Board of Directors Certified Public Accountant Kanetsugu Mike 13 Junichi Okamoto 10 Professor, Waseda Graduate School of Business and (Lead Independent Outside Director) Mr. Yamate joined Price Waterhouse in 1977, President & CEO, MUFG Bank, Ltd. Member of the Board of Directors Finance Mr. Okamoto joined Toyo Trust and Banking in 1980. Tsutomu Okuda 5 becoming a certified public accountant in 1983. In Mr. Mike joined Mitsubishi Bank in 1979. He was President & Group CEO After working at Bank of Tokyo from 1982 to 1986, 1991, he became a representative partner of Aoyama In 2010, he was appointed as managing executive appointed as a regional executive for the Americas Nobuyuki Hirano 15 Ms. Kawamoto joined McKinsey & Company in 1988. Special Advisor, J. Front Retailing Audit Corporation and a Partner of Price Waterhouse. officer of Mitsubishi UFJ Trust and Banking (hereafter “the Trust Bank”) and executive officer of MUFG. In at MUFG and Bank of Tokyo-Mitsubishi UFJ (now At McKinsey, she was promoted to senior expert of Mr. Okuda joined The Daimaru, Inc. in 1964. In 1997, In 2000, he became a representative partner of Chairman of the Board of Directors, 2013, he became a director, deputy president and MUFG Bank, Ltd., hereafter “the Bank”), and the Tokyo branch in 2001. After leaving McKinsey, he was named president of Daimaru and in 2003 Chuo Aoyama Audit Corporation and a partner of MUFG Bank, Ltd. executive officer of the Trust Bank and a member of executive chairman of the board at MUFG Americas she took up a professorship at the Waseda Graduate chairman and chief executive officer. In 2007, he Pricewaterhouse Coopers. From 2006 to 2013, he the board of directors of MUFG in 2013. He was Holdings Corporation and MUFG Union Bank, N.A., Mr. Hirano joined Mitsubishi Bank in 1974. In 2009, School of Finance, Accounting and Law (current assumed the office of president and chief executive served as a representative partner of appointed as a senior managing corporate executive in 2015. He was appointed as a senior managing he was appointed as member of the board of name: Business and Finance) in 2004 (incumbent). officer of J. Front Retailing Co., Ltd., where he Pricewaterhouse Coopers Aarata. In 2013, he was of MUFG in 2015. In June 2017, he was appointed as a corporate executive of MUFG and as a member of directors, deputy president of Bank of Tokyo- From 2006, she has served as an outside audit and became chairman and chief executive officer in appointed as a corporate auditor of Nomura Real member of the board of directors and member of the board of directors, deputy president of the Bank Mitsubishi UFJ (now MUFG Bank, Ltd., hereafter “the supervisory board member of Holdings, 2010. Since 2014, he has served as a senior advisor Estate Holdings and Nomura Real Estate. In June the Audit Committee of MUFG (incumbent). in 2016. He became president & CEO of the Bank Bank”) and managing executive officer of MUFG. In Inc. (Retired in June 2018). She became a director of of the company and became a special advisor in 2015, he was appointed as an outside director of (incumbent) and member of the board of directors 2010, he became member of the board of directors, MUFG in 2013, and, a member of the National Public 2018 (incumbent). In 2014, He was appointed as an MUFG (incumbent) and in the same year appointed and deputy chairman of MUFG (incumbent) in June deputy president of MUFG. In 2012, he became Member of the Board of Directors, Chairman Safety Commission in 2014 (incumbent). In 2016, Ms. outside director of MUFG (incumbent). as an external director of Nomura Real Estate 2017. president & CEO of the Bank, and a year later, in Kawamoto was appointed as an outside director of Holdings (incumbent) and an external corporate Kiyoshi Sono 11 2013, he became president of MUFG. In June 2015, MUFG (incumbent). Member of the Board of Directors (Outside Director) auditor of Prudential Holdings of Japan (incumbent). he was appointed as member of the board of Deputy Chairman of the Board of Directors, directors and president & group CEO of MUFG 6 MUFG Bank, Ltd. Member of the Board of Directors (Outside Director) Yasushi Shingai (incumbent). In April 2016, he became chairman of Mr. Sono joined Sanwa Bank in 1976. In 2012, he was 3 Former Representative Director and Executive Vice the board of directors of the Bank (incumbent). Haruka Matsuyama President of Japan Tobacco Inc. appointed member of the board of directors, deputy Lawyer, Partner, Hibiya Park Law Offices President of Bank of Tokyo-Mitsubishi UFJ (now Mr. Shingai joined Japan and Salt Public Corporation MUFG Bank, Ltd., hereafter “the Bank”) and managing Ms. Matsuyama became an assistant judge to the (now Japan Tobacco Inc., hereafter “JT”) in 1980. In executive officer of MUFG. In 2014, he became Tokyo District Court in 1995. Upon becoming an July 2001, he was appointed as general manager of chairman of the board of directors of MUFG as well attorney-at-law and joining the Daini Tokyo Bar the Financial Planning Department of JT, and as an as deputy chairman of the board of directors of the Association in 2000, she joined Hibiya Park Law executive officer and a Finance Group Leader in June Bank (incumbent). In June 2015, he was appointed as Offices, where she was promoted to partner in 2002. 2004. At the same firm, he became a chief financial member of the board of directors and chairman of She also became an outside corporate auditor of officer in 2004, then a director and chief financial MUFG (incumbent). Vitec Co., Ltd. in 2012, an outside director of T&D officer in 2005. In June 2006, he assumed the office Holdings, Inc. in 2013 (incumbent), and an external of executive vice president of JT International S. A. corporate auditor of & Co., Ltd. in 2014. In while serving as a director of JT. In June 2011, he took 2014, she became an outside director of MUFG office as representative director and executive vice (incumbent) and in 2015, became an outside director president of JT. In June 2014, he was appointed as an of VITEC HOLDINGS CO., LTD (incumbent). outside director of Recruit Holdings Co., Ltd. (retired in June 2018). In January 2018, he became a director (Note) Mr. Hiroshi Kawakami, Ms. Yuko Kawamoto, Ms. of JT. In March 2018, he was appointed as an outside Haruka Matsuyama, Mr. Toby S. Myerson, Mr. Tsutomu director of Asahi Group Holdings, Ltd. (incumbent) Okuda, Mr. Yasushi Shingai, Ms. Tarisa Watanagase and and in June 2018, he was appointed an outside Mr. Akira Yamate are outside directors as defined in Article director of MUFG (incumbent). 2, Item 15 of the Companies Act. WorldReginfo - b5625110-108f-485a-9bca-a62f0ca1d2eb 72 MUFG Report 2018 MUFG Report 2018 73 Important Issues Concerning Value Creation Environment / Social / Governance

Upgrading the Governance Framework As of July 1, 2018

Board of Directors Corporate Executives Attendance 1 Type and Number of Area of Name Position in MUFG* Main Business Experience at Board 2 Meetings MUFG Shares Owned* Specialty Kiyoshi Sono Akira Hamamoto Masato Miyachi Chairman (Representative Corporate Executive) Senior Managing Corporate Executive Senior Managing Corporate Executive Member of the Board of Directors*3 Hiroshi Nominating Member Former Senior Managing Director of Corporate Group CCO & Group CLO Group Head, Global Corporate & Investment Banking Kawakami Compensation Member TOYOTA MOTOR CORPORATION 11/11 - management Mikio Ikegaya Business Group Audit Member Deputy Chairman (Representative Corporate Executive) Masamichi Yasuda Senior Managing Corporate Executive Shigeru Yoshifuji Member of the Board of Directors*3 Kanetsugu Mike Group CRO Managing Corporate Executive Yuko Nominating Member Professor, Waseda Graduate School of Ordinary Shares: 11/11 Finance Deputy Chairman (Representative Corporate Executive) Group CAO Kawamoto Compensation Member Business and Finance 25,600 Managing Director, Head of Internal Audit Division Risk Member (Chairperson) Kenji Yabuta Saburo Araki Senior Managing Corporate Executive Deputy Chairman (Representative Corporate Executive) Group Head, Japanese Corporate & Investment Sunao Yokokawa 3 Managing Corporate Executive Haruka Member of the Board of Directors* Lawyer Ordinary Shares: Legal Banking Business Group Nominating Member 11/11 Nobuyuki Hirano Group Head, Asset Management & Investor Services Matsuyama Compensation Member (Chairperson) Partner, Hibiya Park Law Offices 2,400 affairs President (Representative Corporate Executive) Naoki Hori Business Group Group CEO Senior Managing Corporate Executive Group Head, Retail & Commercial Banking Business Naomi Hayashi Toby S. 3 Lawyer Muneaki Tokunari Member of the Board of Directors* Former Partner of Paul, Weiss, Rifkind, 9/9*4 Legal Group Managing Corporate Executive Myerson Risk Member - affairs Wharton & Garrison LLP Senior Managing Corporate Executive Group CSO Group CFO Hironori Kamezawa Senior Managing Corporate Executive Member of the Board of Directors*3 Eiichi Yoshikawa CEO: Chief Executive Officer Tsutomu (Lead Independent Outside Director) Former President and Chief Executive Ordinary Shares: Corporate Group CIO & Group CDTO CSO: Chief Strategy Officer 11/11 Senior Managing Corporate Executive Okuda Nominating Member (Chairperson) Officer of J. Front Retailing Co., Ltd. 16,800 management CFO: Chief Financial Officer Compensation Member Group Head, Global Commercial Banking Business Hiroshi Naruse CRO: Chief Risk Officer Group and Group COO-I Senior Managing Corporate Executive CHRO: Chief Human Resources Officer COO-I: Chief Operating Officer International 3 Former Representative Director and Corporate Group CHRO & Group Deputy CIO Yasushi Member of the Board of Directors* management, Shigeru Asai CCO: Chief Compliance Officer Audit Member Executive Vice President of Japan - - CLO: Chief Legal Officer Shingai Risk Member Tobacco Inc. Financial Senior Managing Corporate Executive accounting CAO: Chief Audit Officer Group Head, Global Markets Business Group CIO: Chief Information Officer CDTO: Chief Digital Transformation Officer

Tarisa 3 Member of the Board of Directors* Former Governor of the Bank of 4 Watanagase Risk Member Thailand 9/9* - Finance Executive Officers

Akira Member of the Board of Directors*3 Certified Public Accountant 11/11 - Financial Yamate Audit Member (Chairperson) accounting Managing Executive Officers Executive Officers Atsushi Murakami Randall Chafetz Denise DeMaio Attendance 1 Type and Number of Iwao Nagashima Yasushi Itagaki Takemasa Niki Name Position in MUFG* Concurrent Positions at Board 2 Meetings MUFG Shares Owned* Akio Ninomiya Naoki Isetani Shinjiro Yamamoto Ordinary Shares: Toshihiko Mori Hiroki Kameda Katsunori Yokomaku Tadashi 94,900 Member of the Board of Directors 11/11 Kuroda Audit Member Dilutive Shares: Takayoshi Futae Takanori Sazaki Masahiro Kameda 87,303 Masahiro Kuwahara Kazunori Yamagata Junichi Narikawa Tetsuro Shinohara Minoru Soutome Eiji Ihori Junichi Member of the Board of Directors 4 Ordinary Shares: Satoshi Takizawa Hiroyuki Ogata Kazuji Tanikawa Okamoto Audit Member 9/9* 172,300 Hitoshi Usui Masaki Enomoto Johannes Worsoe Tetsuya Yonehana Yutaka Miyashita Michael Coyne Ordinary Shares: Jiro Omori Kiyoshi 57,920 Stephen Cummings Shigeharu Sanada Member of the Board of Directors Deputy Chairman of the Board of Directors, MUFG Bank 11/11 Sono Chairman Director, Mitsubishi UFJ NICOS Dilutive Shares: Ritsuo Ogura Jun Togawa Kevin Cronin 500,423 Kazuto Uchida Takayuki Yasuda Yushi Ando Ordinary Shares: Kenichi Miyanaga Shuichi Yokoyama Yoshihisa Harata Mikio Member of the Board of Directors 42,630 President & CEO, Mitsubishi UFJ Trust and Banking 9/11 Mitsugu Enjoji Shinichi Arai Yukinori Shimoguchi Ikegaya Deputy Chairman Dilutive Shares: 286,490 Tsutomu Sambai Tomohiro Kimura Hiroshi Ikebe Takenobu Inaba Tai Nishida Hiroshi Takimoto Ordinary Shares: Kanetsugu 31,455 Hisashi Kanamori Donna Dellosso Takafumi Ihara Member of the Board of Directors President & CEO, MUFG Bank 9/9*4 Mike Deputy Chairman Dilutive Shares: Masakazu Ikeda Toru Fujita Hiroyuki Seki 330,031 Masahiko Kato Masashi Kanematsu Yoshitake Manabe Ordinary Shares: Akihiro Sugimura Masatoshi Komoriya Tetsuya Niimi Saburo President & CEO, Mitsubishi UFJ Securities Holdings 32,680 Member of the Board of Directors President & CEO, Mitsubishi UFJ Morgan Stanley - Araki Deputy Chairman Securities Dilutive Shares: Hiroyuki Hayashi Masashi Onodera Hideyuki Toriumi 355,536 Makoto Kobayashi Masakazu Osawa Keitaro Tsukiyama

Member of the Board of Directors Ordinary Shares: Motoi Mitsuishi Hideaki Takase Hirochika Iwadare Nobuyuki 42,400 President & Group CEO Chairman of the Board of Directors, MUFG Bank 11/11 Atsushi Miyata Takuya Tanaka Hiroshi Kasugai Hirano Nominating Member Director, Morgan Stanley Dilutive Shares: Compensation Member 599,468 Kiyoshi Sato Hiroshi Kanae Noriyuki Miyata Kazuo Koshi Fumitaka Nakahama Koji Nakayama *1 Nominating Member: Member of the Nominating and Governance Committee Audit Member: Member of the Audit Committee Compensation Member: Member of the Compensation Committee Risk Member: Member of the Risk Committee Saiko Nanri Koichiro Oshima *2 As of March 31, 2018 *3 Mr. Hiroshi Kawakami, Ms. Yuko Kawamoto, Ms. Haruka Matsuyama, Mr. Toby S. Myerson, Mr. Tsutomu Okuda, Mr. Yasushi Shingai, Ms. Tarisa Watanagase and Mr. Akira Yamate Toshiki Ochi Youichi Orikasa are outside directors as defined in Article 2, Item 15 of the Companies Act. Tadashi Yamamoto Hiroyuki Tomita *4 Attendance at meeting of the board of directors, etc. for Mr. Toby S. Myerson, Ms. Tarisa Watanagase, Mr. Junichi Okamoto and Mr. Kanetsugu Mike refers to the meetings held after they assumed the post of Member of the Board of directors in June 2017. Masayuki Tanaka WorldReginfo - b5625110-108f-485a-9bca-a62f0ca1d2eb 74 MUFG Report 2018 MUFG Report 2018 75 Important Issues Concerning Value Creation Environment / Social / Governance Global Advisory Board

MUFG has established the Global Advisory Board to function as an advisory body to the Executive Committee, and the Board holds regular meetings. The Global Advisory Board is made up of members from Japan, Europe, Asia, and the Americas who are external experts in areas such as corporate management, financial regulation, and government policy. They provide advice and recommendations on groupwide management, global governance, business strategy and other management issues from an independent standpoint.

Dr. Victor K Fung Dr. Gertrude Tumpel-Gugerell Group Chairman, Fung Group, Hong Kong Chairman of the Advisory Board, Asia Member of Supervisory Board, Global Institute Österreichische Bundesbahnen-Holding Former Honorary Chairman, the AG International Chamber of Commerce Former Member of Executive Board, European Central Bank Outline of Annual Meeting In December 2017, MUFG held an annual meeting of its Global Advisory Board in Tokyo. In addition to Global Advisory Board members, attendees included MUFG officers, directors, outside directors and Ambassador Mr. Toshio Iwamoto representatives from overseas partner banks. They John V. Roos engaged in active discussion on a broad range of Principal Executive Advisor themes, including MUFG’s business portfolio, the NTT DATA Corporation Former United States Ambassador to new medium-term business plan and latest Japan developments in global politics.

Here, we showcase the content of these discussions.

CEO Session At the beginning of the meeting, the Group CEO gave a presentation on the future outlook of the Lord (James) Mr. Akio Mimura economic environment in Japan and abroad as well Sassoon, Kt as issues MUFG is now confronting, overall policies Honorary Chairman, under the new medium-term business plan and the Nippon Steel & Sumitomo Metal Director, Jardine Matheson Holdings Corporation MUFG Re-Imagining Strategy. In response, a number Limited Former Commercial Secretary to the of attendees, including Global Advisory Board Treasury, United Kingdom members, provided valuable advice. Some attendees recommended that quick action should be taken with a sense of urgency to address immediate issues, Breakout Sessions while others shared successful examples of business In addition to the foregoing, breakout sessions were model reforms undertaken by overseas corporations. held to discuss such issues as operational reforms driven by digital technologies as well as a broad Associate Professor Policies Implemented by and Implications of the range of ESG-related topics. In particular, the session Simon S.C. Tay Trump Administration focused on digital technologies included a Members from the United States gave a presentation presentation given by the CDTO* with regard to open Chairman of the Singapore Institute of on the current status of the Trump administration innovation initiatives aimed at realizing MUFG’s future International Affairs Former Member of Parliament, Singapore and shared their outlook on foreign affairs and other vision. This presentation was followed by the key issues surrounding it. This was followed by an exchange of insights and observations among active exchange of opinions with regard to such attendees. topics as future U.S. monetary policies. * Chief Digital Transformation Officer WorldReginfo - b5625110-108f-485a-9bca-a62f0ca1d2eb 76 MUFG Report 2018 MUFG Report 2018 77 Foundations of Value WorldReginfo - b5625110-108f-485a-9bca-a62f0ca1d2eb 78 MUFG Report 2018 MUFG Report 2018 79 Foundations of Value Initiatives to Build Sustainable Relationships with Customers

Customer Satisfaction Surveys Introducing Universal Design Maintaining a customer-centric approach, To assess how customers evaluate our initiatives and whether our services meet customers’ expectations, To ensure that every customer can use its services we conduct periodic customer satisfaction (CS) with confidence, MUFG is pushing ahead with MUFG is sincerely committed to engaging surveys, with each Group company sending out ongoing efforts from two angles: 1) enhancing questionnaires by post and conducting online employees’ customer engagement skills to meet in fair and transparent corporate activities. surveys. By doing so, we strive to improve product diverse customer needs (hospitality) and 2) and service quality in a way that better satisfies developing barrier-free branches capable of needs of our customers. accommodating all customers no matter their age, We are endeavoring to improve our operations and service quality by incorporating customer feedback. physical condition or disability (facility). As such, we For detailed results of CS surveys, please also visit the following page of our website. Moreover, we are striving to enhance employee skills so that all customers can rest assured about our services. URL: https://www.mufg.jp/english/csr/juten/customer/okyakusamanokoe/ are abiding by the spirit of universal design in various ways. Results of CS Surveys for Individual Customers Key findings revealed via this meeting are reported (November–December 2017) Enhancing Reception Skills Concepts behind MUFG’s Customer Relations to Fiduciary Duties Committee, which operates under Satisfied Somewhat satisfied Neutral We provide staff at MUFG Bank and Mitsubishi UFJ Ensuring the consideration of customer’s the Executive Committee, and identified as important Somewhat dissatisfied Dissatisfied No response Not sure Trust and Banking Corporation with training 1 6（%） perspectives and being fair and sincere in our management issues to be addressed to enforce our MUFG Bank 2.7 . programs to enhance their customer reception skills undertakings are basic to our business operations. customer-centric operational approach. 42.6 30.4 22.3 0.4 to accommodate needs of the elderly and people Mitsubishi UFJ Trust and Banking 3.3 0.8 with disabilities through the use of case studies on In line with the Corporate Vision, MUFG has established 25.3 40.4 29.9 0.2 how to usher them at branches and explain our Incorporating Customer Feedback to the Principles of Ethics and Conduct, a set of standards Mitsubishi UFJ Morgan Stanley Securities services and products to them. Improve Our Operations each officer and employee should apply to their day-to- 24.3 41.9 18.1 5.8 10.0 day business conduct and decisions. Monitoring System Mitsubishi UFJ NICOS For MUFG, comments and requests from customers 25.4 34.0 29.8 8.8 2.0 Having stated at the top of these principles that we constitute valuable assets. Each Group company is ACOM “place our diverse customers at the center of all continually collecting, analyzing and sharing the 13.5 47.7 30.7 5.3 2.8 activities,” we are engaging in exhaustive initiatives ”Voice of Customers“, VOC, in order to improve their to be the embodiment of this tenet. products and services. Quality Improvement Initiatives Pursuing Customer-Centric Business In fiscal 2017, the number of such VOC received by Quality Management That Takes into Account the Management Group companies totaled approximately 237,000.* Customer’s Perspective MUFG holds periodic Customer Feedback Monitoring We made 458 improvements based on this activity. To enhance the quality of our products and services, Meetings in which the representatives of Group we closely examine their sufficiency to ensure that * The sum of MUFG Bank, Mitsubishi UFJ Trust and Banking Corporation, Mitsubishi UFJ companies assess how customers evaluate our Morgan Stanley Securities, Mitsubishi UFJ NICOS and ACOM the customer’s perspective is reflected in all aspects A seminar focused on how to tend to customers with physical challenges products and services. of business processes, which range from the (Mitsubishi UFJ Trust and Banking Corporation) planning, development and provision of products and services for after-sales. Offering Services Using Sign Language and Communicating via Text Customers Training Our Employees to MUFG Bank and Mitsubishi UFJ NICOS offer Complaints, opinions and requests Improvement Enhance Customer Relations customers with hearing disabilities or conversational Each Group company constantly provides training handicaps services employing a teleconferencing Group companies MUFG courses and study sessions to their employees. system that connects them with operators who use Collect Branches Call centers Postcards Websites Questionnaires Those courses are not only for their specialty of sign language or communicate via text.

Monitor business but also for enhancing their hospitality skills 1. Changes in the external environment Note: These services available at MUFG Bank are on a trial basis and limited to the filing Analyze customer views 2. In-house policies Fiduciary Duties Committee and/or improving customer satisfaction. of applications for notifying the Bank of a loss or theft of bankbook or cash card. Analyze

Identify issues Report

Improve products & services; reform business processes; conduct employees trainings; etc. Improve Report Customer Feedback Report Verify improvements Monitoring Meetings Committees, Meeting, etc. WorldReginfo - b5625110-108f-485a-9bca-a62f0ca1d2eb 80 MUFG Report 2018 MUFG Report 2018 81 Foundations of Value Human Resources Strategy

evolving operating environment, our plans call for Integrated Management of Human Resources Nurturing Professionals and Encouraging establishing the MUFG University by the end of fiscal around the Globe 2018. Currently, the MUFG Group has approximately 60,000 employees hired in countries other than Them to Pursue Higher Targets The candidates will be selected from those in Japan. In an effort to ensure that all of them feel managerial positions and the university will provide comfortable about being part of the MUFG them with a curriculum that brings together workforce, we are stepping up employee training We are striving to nurture professionals equipped with distinctive strengths in their areas of specialty as well as programs aimed at enhancing practical business aimed at facilitating their understanding of MUFG human relations skills capable of succeeding on the global stage. In doing so, we encourage them to take on the skills and those centered on liberal arts and other culture. We have also introduced on-the-job (OJT) challenge of driving innovation and are thereby delivering greater value to customers and society as a whole. academic disciplines. We will thus nurture human training programs in which overseas employees take resources capable of applying a wider perspective to on assignments in countries outside of their location With this in mind, under the new medium-term business plan we will step up the integrated management managing business and better attuned to future of employment, such as in Japan. of our Group’s human resources around the world. trends in the operating environment. In these ways, we will secure the people who will lead MUFG’s Furthermore, we have established a unified talent business expansion in the future. management framework that applies to MUFG’s corporate center to achieve the objectives of our human resources around the globe. On top of the MUFG Human Resources Principles new medium-term business plan. Nurturing Employees with Multiple Skills previously existing separate human resource The MUFG Human Resources Principles provide the In addition to offering a broader range of career management systems in place for business units basis on which the Group has built a human Specifically, we will accelerate staff allocation and opportunities to employees, we will push ahead with operating in each of the three regional blocs of resources management platform that aligns with its exchange in a way that transcends the boundaries of workstyle reforms involving the greater use of EMEA, the Americas and Asia, we have established a Corporate Vision. These principles are: Group entities to assist in the execution of business robotics, AI and other technologies. Doing so will free single HR committee charged with ensuring the • Shared Values strategies. Furthermore, we will manage employees employees from certain tasks while increasing the integrated management of human resources on an • HR Mission in Japan and overseas in an integrated manner, time they have available for engaging with across-the-board basis. • HR Vision thereby practicing more sophisticated human customers. In order to deliver greater value to • HR Philosophy resources management on a global basis. customers, it is also important for employees to Thanks to these ongoing efforts, ever greater acquire a broader range of skills and enhance these numbers of those who were hired in countries For the full text of the MUFG Human Resources Principles, please also visit our corporate Human Resources Development website. URL: https://www.mufg.jp/english/csr/stakeholder/employee/principles/ skills during their downtime at work. abroad are taking on managerial positions at MUFG. To nurture human resources capable of contributing For example, MUFG Bank executive officers include to the success of the MUFG Re-Imagining Strategy, Taking these factors into account, we believe that 13 people hired in countries abroad. Of these, four Outline of the Human Resources Strategy we will provide employees with career opportunities providing employees with greater opportunities to executive officers are female. Moreover, as a result of under the Medium-Term Business Plan that help them embrace a higher perspective and acquire a more extensive set of skills will become ever our broadening the range of career paths available to To counter the harsh management environment, we acquire a broader range of business experience. more important. In line with this belief, we are striving them, we have seen improved motivation among will engage in human resources management aimed to enhance training systems aimed at instilling individuals hired overseas and their drive is helping to at supporting concerted efforts undertaken by The Establishment of MUFG University practical business skills. Furthermore, we are striving inspire their peers hired in Japan. In short, our operating companies, business groups and the As we aim to secure a greater number of top to enrich the content of programs that assist in self- approach to global human resources development is management candidates capable of succeeding in directed studies, to this end developing e-learning creating a more positive cycle. accomplishing business reforms amid a rapidly programs that enable employees to study at home. Medium-Term Business Plan Integrated management of groupwide human resources

Assist in smooth HR exchange Group HR Enhance training structure for the entire Group management Revise HR system to nurture professionals with superior skills

Sophisticated HR management on a global basis

Unify HR systems for those working at the Bank and the Securities regardless place of their hiring Global HR management Integrated management of employees in Japan and overseas Upgrade the management of overseas personnel costs

Allocate resources to the pursuit of operational streamlining and priority strategies

All employees are offered greater career opportunities to engage in a broad range of MUFG operations at home and abroad WorldReginfo - b5625110-108f-485a-9bca-a62f0ca1d2eb 82 MUFG Report 2018 MUFG Report 2018 83 Foundations of Value Human Resources Strategy

6 Workstyle Reforms Facilitating the Understanding of Sexual Minorities Stepping up Diversity Management system. In these ways, we are encouraging Promoting Diversity & Inclusion In July 2017, MUFG hosted the MUFG Global Diversity For those in managerial positions, MUFG provides candidates to embrace the perspective of a Helping Strike a Balance between Forum in Tokyo. Approximately 200 employees diversity management training so that they can corporate manager. Work and Child Rearing attended this forum focused on facilitating the acquire skills necessary to properly manage a diverse Currently, around 3,800 MUFG Group employees* understanding of sexual orientation and gender range of individuals and assist them with their career Supporting Individuals with Disabilities to Become are on childcare leave. Committed to assisting them identity issues, learning from the insights offered by development efforts. Active Participants in the Workforce in their ongoing career development, MUFG has outside experts who served as lecturers. The Under MUFG, we have three subsidiaries that are introduced a counseling service that helps attendees also engaged in active discussion to Promoting Flexible Workstyles designed to provide barrier-free environments for employees searching for childcare facilities and increase their understanding. To provide employees with options for their individuals with disabilities. provides them with career information that addresses workstyles, we have in place various programs, worries common to those caring for children. including those allowing them to work at home or to For example, we accommodate the needs of those Moreover, in April 2018 we opened our second stagger their hours, and are promoting the programs’ with hearing impairments by distributing voice company-sponsored childcare facility. more widespread use. recognition software that translates speech into text that displays on a digital screen and have installed * As of March 31, 2018; total of MUFG Bank, Mitsubishi UFJ Trust and Banking, Mitsubishi UFJ Morgan Stanley Securities and Mitsubishi UFJ NICOS. We have also introduced free-seating and other alert lights to draw attention in emergency situations. innovative work space platforms aimed at creating an open and inclusive workplace environment. In another example, our employees are welcome to come to the office with their guide dogs. Assisting Women with Career Development Thanks to the initiatives described above, we have Percentage of Individuals with Disabilities in Our seen steady growth in the number of female Workforce (as of April 1, 2018)

MUFG Global Diversity Forum employees who choose to continue with their MUFG Bank 2.27%* careers and succeed in taking higher positions after Mitsubishi UFJ Trust and Banking Corporation 2.37%* In the United Kingdom, the Pride Alliance Network, such life events as childbirth. In fact, more than 96%*1 Mitsubishi UFJ Morgan Stanley Securities 2.20 which is supported by MUFG Group employees who of MUFG Group employees return to the workforce Note: Statutory employment rate: 2.2% belong to the LGBTQ community and their allies, after having a child. In addition, more than 20% of * Including special purpose subsidiaries and back office subsidiaries For more details on initiatives undertaken by each Group entity, please also see our raises awareness among their peers by hosting in- female employees are in managerial positions as of Diversity Report. URL: https://www.mufg.jp/english/csr/employee/diversityreport/ 2 Children being cared at an MUFG childcare facility house events. March 31, 2018. We aim to increase this ratio to 24%* by the end of fiscal 2020. In addition, MUFG encourages male employees to In the United States, we co-sponsor or participate in *1 The sum of employees at MUFG Bank, Mitsubishi UFJ Trust and Banking Corporation take childcare leave by, for example, presenting them a variety of LGBTQ events. Moreover, MUFG Union and Mitsubishi UFJ Morgan Stanley Securities who gave birth in fiscal 2016 and are included in the office headcount as of March 31, 2018 with real-life examples of peers who have taken Bank was awarded the full score on the Corporate *2 The sum of MUFG Bank, Mitsubishi UFJ Trust and Banking and Mitsubishi UFJ Morgan childcare leave without problem. Thanks to creative Equity Index,* which aims to assess whether Stanley Securities efforts undertaken by each Group entity, the number members of sexual minorities are treated equally in Targets Set by Each Entity to Raise the Number of of male employees who take childcare leave has the workforce, for the fifth consecutive year. Women Holding High-Ranking Positions* grown significantly. * Index bestowed to businesses via a benchmarking scheme operated by the Human Bank Trust Bank Securities Rights Campaign Foundation, one of the United States’ most prominent human rights organizations Helping Strike a Balance between Female executives 3 1 -

Work and Nursing Care Female managers 120 or more 17% 8% A round-table meeting with executives We hold seminars for employees that impart basic (ratio to total managers) (Approx. 7%)

knowledge of nursing care and what it takes to strike * Based on Japan’s Act on Promotion of Women’s Participation and Advancement in the Workplace; figures include only those hired in Japan. a balance between work and the provision of nursing In addition, MUFG Bank and Mitsubishi UFJ Morgan Stanley Securities have set targets to be accomplished by March 31, 2021. The target set by Mitsubishi UFJ Trust and care. At the same time we operate a counseling Banking Corporation is to be accomplished by March 31, 2019. service that employs external specialists who provide consultation on issues individuals are now facing. We We are also striving to identify top management have also initiated a web-based employee service candidates from among this employee group. With that assists users in their search of nursing care each Group entity setting numerical targets, unique facilities. In addition, we distribute a handbook of human resource initiatives are now under way, useful information regarding how to maintain an including joint training sessions aimed at helping optimal balance between work and the provision of candidates inspire one another, round-table meetings nursing care. with executives and the provision of a mentoring A joint training session for female managers WorldReginfo - b5625110-108f-485a-9bca-a62f0ca1d2eb 84 MUFG Report 2018 MUFG Report 2018 85 Foundations of Value Communicating with Stakeholders

Enhancing Our Corporate Value Dialogue with Shareholders and Investors Dialogue with Employees General Meeting of Shareholders MUFG holds town hall meetings and round-table The 13th Annual General Meeting of Shareholders conferences aimed at enhancing mutual through Committed Engagement was held on June 28, 2018. understanding between top management and The number of attendees: 1,315 employees and ensuring that MUFG’s visions and with Stakeholders policies are shared by all. In addition to a presentation on the past fiscal year and a report on MUFG’s key business strategies and Furthermore, MUFG’s executives often visit branches MUFG believes that winning the support of its various stakeholders is essential to securing sustainable capital policies, the meeting entailed lively Q&A and interact with the frontline employees who growth in its business activities and thus its corporate value. In line with this belief, we engage with sessions, with MUFG executive officers and Group directly engage with customers, exchanging insights stakeholders via a variety of channels and take heed of their expectations and requests to make CEO providing answers to questions from 11 about how to enhance MUFG’s onsite capabilities. improvements in our business management. shareholders. The meeting provided an excellent This interaction is an example of their efforts to opportunity to interact with shareholders and create a better workplace in which employees’ enhance mutual understanding. opinions are reflected in business operations and MUFG’s Channels for Shareholders every employee finds their job rewarding. Communication with and investors The environment Large meetings for individual investors Stakeholders • General Meeting of • Participation in Shareholders Held on nine occasions in fiscal 2017; approximately various initiatives • Presentation meetings 1,360 attendees P.5559 for investors • Seminars and individual meetings Large meetings for institutional investors Held on 15 occasions in fiscal 2017 Customers One on one meetings with institutional investors Communities • Sales personnel and call • Participation in centers Held on 592 occasions in fiscal 2017 community activities in • Dedicated contacts for (Of those, 403 meetings with overseas investors) collaboration with NPOs customer feedback and • Employees volunteer MUFG inquiries activities • Questionnaires (customer satisfaction surveys) P.6063 P.8081

Employees MUFG Union Bank • Town hall meetings Business partners • Training sessions and workshops • Purchasing activities • Employee • Business alliance satisfaction surveys and collaboration P.8285

dialogue with other participants. By doing so, MUFG Engagement with Communities, Local strives to maintain the trust and confidence of local Societies and the Environment societies at home and abroad. MUFG employees proactively participate in volunteer activities and local events as members of the The 13th Annual General Meeting of Shareholders (Nippon Budokan) Mitsubishi UFJ Trust and Banking Corporation communities they serve. Such efforts are intended to enhance interaction with other community members and nurture ties with them.

At the same time, MUFG engages with NGOs and NPOs that work to resolve issues society is confronting, incorporating the insights and advice such bodies provide into its environmental, social and governance (ESG) initiatives. Moreover, MUFG takes part in a variety of external collaborative initiatives to address ESG issues and engages in MUFG Group employees engaging in cleanup activities in Seattle Large meeting for individual investors (Tokyo) MUFG Bank WorldReginfo - b5625110-108f-485a-9bca-a62f0ca1d2eb 86 MUFG Report 2018 MUFG Report 2018 87 Foundations of Value

Risk Management

Furthermore, the Risk Appetite Framework provides set out below. In order to effectively implement the Basic Policy Risk Appetite Framework Management guidelines for effective risk management that backs Risk Appetite Framework, risk evaluation and Process Since the 2008 financial crisis, financial institutions our business strategy and financial plan while verification procedures (capital allocation system, have been compelled to adopt more comprehensive supporting efforts to avoid unexpected losses and In the formulation and execution of its business stress tests, Top Risk management) will be applied at and sophisticated risk management systems. This enhance risk return management. strategy and financial plan, MUFG will set the every stage of the management planning process. risk management function has also grown in Risk Appetite Framework appropriate level of risk appetite and proceed to importance for MUFG as a global bank with monitor and analyze risk volume. Furthermore, even after the plan is formulated, we subsidiaries spanning the commercial, trust and The Risk Appetite Framework aims to clarify MUFG’s are ready to take immediate actions in emergency investment banking sectors. risk appetite (types and amount of risk that it is willing The process of setting and managing risk appetite is situations through monitoring of the set risk appetite. to accept) as it works to achieve its business strategy MUFG aims to strengthen its Group risk management and financial plan. The framework is designed to through the diffusion of a risk culture that increase management transparency and generate strengthens the structure of Group business more profit opportunities in an environment where Risk Appetite Setting and Management Process

management as well as integrated risk management. risk is properly controlled. Before formulating the overall business plan, assess pressure points for business strategy and 1. Confirming assumptions for financial and capital operations based on the internal and external environment. Our goal is effective risk governance that is business plan formulation consistent across regions, subsidiaries and the • Future balance sheet simulation based on macroeconomic scenarios holding company. In pursuing management’s vision, formulate a business plan proposal based on business 2. Formulate business plan proposal strategy, financial plan and risk appetite. • Clarify risks to be accepted and risks to be avoided on the basis of Risk Culture

Risk Management System Revise strategy based on results Holding Company (Mitsubishi UFJ Financial Group, Inc.) The risk management divisions will mainly assess the appropriate level of risk appetite. The strategy proposal will be amended if the stress tests indicate that the maximum level of 3. Risk appetite assessment and acceptable risk will be exceeded. verification Risk Committee Board of Directors • Assess and verify the plan from a risk/return perspective • Evaluation of strategy profitability and soundness based on stress tests Corporate Risk Management Management Planning U.S. Risk Committee Committee Executive Committee Committee (including ALM) (including crisis management) The Executive Committee and Board of Directors discuss and subsequently make decisions based on an integrated view of business strategy, the financial plan and risk appetite. 4. Business plan decision Credit & Investment • On the basis of the capital allocation system, capital is allocated to subsidiaries and operational divisions Market Risk, Liquidity Risk, Management Committee Corporate Risk Management in accordance with the level of risk Operational Risk, Div. (coordinates risk Operations Risk, Credit Committee management) Reputation Risk, Model Risk The risk management divisions of the holding company and subsidiaries monitor risk volume in relation to allocated capital and risk appetite. Credit Policy & Planning Div. Credit Risk 5. Risk monitoring • Forward-looking valuation of internal and external environment based on Top Risk management • Regular monitoring of risk appetite compliance Global Compliance Div. Information Risk, Regulatory Risk Cases where risk volume exceeds upper limit Operations & Systems IT Risk Planning Div. The risk appetite plan will be revised if monitoring reveals that risk appetite and actual levels of risk diverge, or if environmental factors increase the level of risk. Corporate Administation Div. Tangible Asset Risk 6. Revision of risk appetite • Stress tests may be conducted again in order to reset risk appetite. • Discussion between operational divisions and corporate risk management division when exceed the risk appetite Human Resources Div. Personnel Risk

Legal Div. Legal Risk

Risk Committee

Risk Appetite Framework To upgrade its corporate governance and risk reports to the Board of Directors. management structures through the incorporation of Management Plan external perspectives, in 2013 MUFG established the At committee meetings, those other than committee Financial Plan Risk Appetite Risk Committee, a non-mandatory governance-related members are often invited to attend and engage in committee operating directly under the Board of active discussion. For example, staff at overseas • Net operating profit Organic Correlation • Capital allocation plan and RWA plan • Net income Capital strategy and distribution based on Directors. The committee consists of independent business units in charge of risk management report on • ROE risk outside directors and external specialist members, issues relevant to ongoing themes being discussed at • RORA discusses a broad range of risk management issues the committee, while outside directors who are not Business Strategy • Liquidity risk etc. • Expenses ratio Risk appetite for difficult-to-quantify risk relevant to MUFG’s operations and provides advice and committee members join and contribute their insights. • Common equity Tier 1 Ratio • Group business strategy WorldReginfo - b5625110-108f-485a-9bca-a62f0ca1d2eb 88 MUFG Report 2018 MUFG Report 2018 89 Foundations of Value Risk Management

its own economic capital, based on internal risk Risk Appetite Statement Enterprise Risk Management Enhancing the Effectiveness of Risk assessment. The Risk Appetite Statement elucidates the Risk Management MUFG makes every effort to recognize the risk that Appetite Framework which embodies MUFG’s emerges in the course of business execution, Stress tests analyze both the internal and external Effective risk management and a strong Risk Appetite attempts to achieve an integrated group strategy assessing them according to uniform criteria. environment, and use three-year-period preventative Framework depend on a Risk Culture that enables along with effective risk management. The Risk Enterprise risk management is then conducted while scenarios. meaningful discussion and clear communication Appetite Statement contains an overview of the Risk maintaining business stability and striving to throughout the Group. Appetite Framework (basic policy and management maximize shareholder value. Enterprise risk • Liquidity stress test process) as well as specific business strategies, management is a dynamic approach, promoting In liquidity stress tests, the impact of MUFG-specific Developing and Diffusing a Risk Culture financial plans and risk appetite details. stable profits commensurate with risk as well as the or overall market stress on the balance sheet is MUFG defines a Risk Culture as the basic approach that appropriate allocation of resources. assessed so as to implement MUFG’s business specifies how to take risks and risk management for A summary of the Risk Appetite Statement is strategy and financial plan. Various options are MUFG’s organizational and individual behaviors. MUFG distributed throughout the Group in an effort to Enterprise risk management is composed of three examined to respond to short-term fund outflows or thus formulated its Risk Culture in the Risk Appetite spread the basic philosophy behind the Risk Appetite main strands: the capital allocation system, stress long-term structural changes in the balance sheet Statement while maintaining its consistency with Framework. tests and Top Risk management. with a view to ensuring there is no funding shortage. Principles of Ethics and Conduct. In order to share this Risk Culture throughout the Group, management issues Through the penetration of risk culture and risk Capital Allocation System Top Risk Management regular strategic messages and holds regular meetings appetite framework, we will take actions in In this framework, latent losses associated with risk are The potential losses that emerge from scenario globally. anticipation of environmental changes both inside converted to a required capital amount, and capital is analysis are classified as risks and then their relative and outside of the Group, while the environment then allocated across group companies and between importance is weighed according to degree of continues to be uncertain. different risk categories according to business strategy impact and probability. The risks that need to be MUFG’s Risk Culture and the profit plan. The framework is intended to allow watched most closely over the next year are Taking a consistently customer-centric approach, we are committed to engaging in fair and Ensure Consistency with Principles the appropriate distribution of capital throughout the classified as Top Risks and a risk map is created, Sincerity transparent corporate activities, properly handling assets customers entrust to us and protecting Customer Focus Group as MUFG monitors to preserve financial thereby ensuring a forward-looking approach to risk customers’ interests from undue damage. of Ethics and Conduct soundness, evaluate capital adequacy versus risk and management. With the aim of retaining the lasting trust of customers, we practice thoroughgoing quality management and improvement measures across all aspects of our business processes, from Quality judge impact on overall capital strategy. planning and development to the provision of products and services. Through these efforts, we At MUFG and its core subsidiaries, management is satisfy diverse customer needs and deliver high quality services that exceed expectations. Responsibility Stress Tests regularly engaged in discussions aimed at All staff members must be aware of their responsibilities with regard to risk management and as a Corporate swiftly report to and consult with their supervisors whenever an issue is identified. In addition to Citizen • Stress tests for capital adequacy assessment addressing Top Risks to ensure that the Responsibility complying with all laws, regulations and rules enforced in Japan and countries abroad, we choose In formulating its business strategy, MUFG regularly understanding of these risks is shared throughout always to take the higher moral ground, thereby contributing to the maintenance of stable and trustworthy financial systems and the sound development of society assesses its internal capital adequacy through stress their organizations. By doing so, management is Every MUFG Group employee remains a committed professional with a strong sense of personal Respect tests based on two perspectives: regulatory capital, implementing effective countermeasures against responsibility and the deepest respect for their colleagues. Ethical and Dynamic based on capital adequacy regulations (Basel III), and Top Risks. (Major Top Risks identified by MUFG are as Sensitivity and We remain sensitive to the constantly evolving management environment and ever diversifying Workplace listed below.) flexibility needs and swiftly take action to address changes in these factors.

Major Top Risks

Risk incidents*1 Risk scenarios Cyber Security

A decline in profitability • Decline in profitability of net interest income due to negative interest rate policy. Given the increasingly sophisticated nature of Whenever a cyberattack is identified and deemed to (including a decline in profitability • Decline in overall profitability due to constraints on balance sheet size caused by regulatory factors. of net interest income) cyberattacks, MUFG has positioned cyber security as affect MUFG’s business operations, MUFG immediately one of its Top Risks and, under the leadership of top implements measures to contain the impact of the • Depletion of foreign currency liquidity or significant increase in its cost due to deterioration of market Foreign currency liquidity risk management, has put in place countermeasures incident, with specialist staff at MUFG-CERT conditions. against cyber threats. spearheading these efforts. Furthermore, in the course • Rises in credit costs in specific sectors and regions with potential credit concentration risk due to the slowdown of product release, MUFG deploys cyber security An increase in credit costs of real economies around the world due to the U.S. and European central banks’ exit strategies from monetary Specifically, MUFG has instated MUFG-CERT, a measures specifically designed for new products to easing and the heightening tensions in the Korean peninsula, Middle East and other regions with geopolitical risk. dedicated team in charge of cyber security that is ensure that customers can always rest assured about charged with constantly upgrading MUFG’s the safety of our services. • Customer information leakage and reputational damage due to cyberattacks. IT risk • Payment of compensation costs and reputational damage due to system failure. multilayered protection and detection measures, reinforcing the monitoring structure and facilitating In addition, MUFG announced a Cyber Security Risk associated with money • Regulatory issues such as the infringement of anti-money laundering regulations or applicable regulations related to collaboration with external specialist organizations in Management Declaration in June 2018, publicly laundering and economic sanctions economic sanctions could lead to legal actions such as business suspension or civil fines, and reputational damage. Japan and overseas. disclosing initiatives associated with cyber security. * Note: The aforementioned risk scenarios are examples of scenarios reported to MUFG’s Board of Directors after being discussed at a Risk Committee meeting held in March 2018. These scenarios include types of incidents that are not necessarily specific to MUFG and can happen to business corporations in general. WorldReginfo - b5625110-108f-485a-9bca-a62f0ca1d2eb 90 MUFG Report 2018 MUFG Report 2018 91 Foundations of Value

Compliance

related issues for which the Group should share a EMEA and Asia, respectively. Basic Policy Compliance System common understanding. We have clarified our Group mission, long-term vision Compliance management divisions have been Initiatives to Enhance Global Financial GFCD established policies which define the and shared values in the Corporate Vision and established at the holding company Mitsubishi UFJ Crimes Compliance Framework governance and oversight structure for the expressed our commitment to meeting the Financial Group, and at MUFG Bank, Mitsubishi UFJ management of the Financial Crimes compliance expectations of customers and society as a whole. Trust and Banking, and Mitsubishi UFJ Securities On November 30, 2017, MUFG Bank established the framework across the Bank and provide the Furthermore, we have established the Principles of Holdings (referred to as the three companies below). Global Financial Crimes Division (“GFCD”), which is in foundation for the implementation of the Bank’s Ethics and Conduct as the guidelines for how the Each compliance management division formulates charge of Anti-Money Laundering (“AML”), Sanctions Financial Crimes compliance program in a manner Group’s directors and employees should act to realize compliance programs and organizes training courses Compliance, and Anti-Bribery and Corruption that is commensurate with the strategies, business the Corporate Vision. This expresses our to promote compliance, and regularly reports to (collectively, “Global Financial Crimes Compliance”). activities and risk profiles of each MUFG Bank office. commitment to complying with laws and regulations each company’s Board of Directors and Executive GFCD is headquartered in New York, where the Additionally, GFCD established Global Standards that globally, to acting with honesty and integrity, and to Committee on the status of compliance activities. excellence for Global Financial Crimes Compliance is define more detailed requirements. behaving in a manner that supports and strengthens centralized. The aim is to enhance the Bank’s global the trust and confidence of society. The holding company has the Group Compliance program to prevent and detect Global Financial Under GFCD’s leadership, MUFG Bank will implement Committee while the three companies have Crimes, against the backdrop of the heightened the Financial Crimes Compliance policies and In addition, as we expand our business globally, we Compliance Committees which deliberate important regulatory expectations in that area. At the same standards across all of MUFG Bank, ensuring a are committed to keeping abreast with matters related to compliance. Additionally, the time, Regional Financial Crimes Offices (“RFCOs”) consistent and integrated approach. Furthermore, developments in the laws and regulations of the holding company has the Group Chief Compliance under GFCD, which are responsible for the GFCD will develop a program framework to maintain jurisdictions in which we operate, including those Officer (CCO) Committee composed of the CCO of implementation of Financial Crimes Compliance in the effectiveness of the program. targeting money laundering and bribery, as well as the holding company and the CCOs of the three the region, were established in the Americas, Japan, competition laws, while paying attention to trends in companies. This committee deliberates important financial crimes. matters related to compliance and compliance-

Compliance System Holding Company (Mitsubishi UFJ Financial Group, Inc.) Chief Compliance Officer Personnel outside the Global Financial Crimes Division (GFCD) Board of Directors Audit Committee Personnel at GFCD Matters related to U.S. BSA/AML and Executive Officer in charge of AML Project. Executive Committee Group Compliance Committee OFAC Sanctions Compliance insofar as it impacts the Bank’s transactions and operations in the U.S. CCO (Chief Compliance Officer) Group CCO Committee Chief Risk Officer for the Americas Global Compliance Division (Coordinates compliance issues) Global Head of FC*2 Compliance

Consultation and report Guidance, advice and instruction

Global Co-Head of FC*2 Compliance Group Companies

Japan Head of FC*2 Compliance Global Head of ABC*Global Head Global Head of AML Compliance Global Head Global Head of FC*Global Head of FC*Global Head of FC*Global Head of FC*Global Head of FC*Global Head Head of AML ProjectHead Office. Global Head of FC*Global Head

Initiatives to Protect Privacy Information of Sanctions Global Head

Americas Head of Program Management Regulatory Analysis FC*2 Compliance

In line with its Corporate Vision, MUFG is highly aware Prefaced with strict compliance with laws, regulations Management Compliance Operations Planning

of its social responsibilities to ensure the proper and other standards with respect to the appropriate Testing handling of privacy information (including customer handling of customers’ privacy information, efforts now

Asia Head of 2 2 2 2 2

numbers and other identifying information; hereinafter under way at MUFG also extend to the installation of Compliance Compliance Compliance Compliance Compliance 2 1 FC* Compliance Compliance

collectively referred to as privacy information). information security management measures to prevent 2 Issue Accordingly, MUFG has formulated policies on the a loss or leak of such information. Furthermore, MUFG protection of privacy information while ensuring that all is regularly reviewing its management structure and EMEA Head of officers and employees adhere to these policies. In initiatives related to the protection of privacy 2 FC* Compliance doing so, MUFG spares no effort to protect customers’ information in an effort to make continuous privacy information. improvement. *1 Anti-Bribery and Corruption *2 Financial Crimes Planning Tokyo WorldReginfo - b5625110-108f-485a-9bca-a62f0ca1d2eb 92 MUFG Report 2018 MUFG Report 2018 93 Foundations of Value Foundations of Value

Internal Audit Responding to Global Financial Regulation

office and branch operations of these companies. In Role of Internal Audit Since the global financial crisis of 2008, financial institutions have been required to hold higher standards addition, each of these internal audit divisions of financial soundness and management discipline, with a number of new regulations having been Internal audit functions within MUFG seek to verify undertakes direct audits of their respective developed and implemented. In this section, we explain our response to these regulations and challenges the adequacy and effectiveness of internal control subsidiaries, and monitors and oversees the separate that we will face in the future. systems from a standpoint independent of the internal audit functions established within them. This operating functions. This includes monitoring the helps to evaluate and verify the adequacy and status of risk management and compliance systems, effectiveness of internal controls within MUFG on a which are critical to the maintenance of sound and consolidated basis. · The Implementation of Revised Basel III standards MUFG’s Response appropriate business operations. Internal audit Implementing Effective and Efficient The Basel Committee on Banking Supervision agreed results are reported to senior management. An Internal Audit The Status of Our Compliance with on revised Basel III standards in December 2017. With additional role of internal audit is to make Prudential Regulations the aim of improving the comparability of banks’ suggestions to help improve or rectify any issues or To ensure that internal audit processes use available As of March 31, 2018, the following Basel III capital ratios, these revisions encompass a review of specific problems that are identified. resources with optimal effectiveness and efficiency, requirements are applied. MUFG has already been various risk-weighted asset measurement methods Group Internal Audit Framework the internal audit divisions implement risk-focused compliant with the required level for each item on and capital floor requirements as well as upward internal audits in which the nature and magnitude of March 31, 2019. revisions in the required leverage ratio applied to The holding company has instituted MUFG’s internal the associated risks are considered in determining G-SIBs. A series of these revised standards will be audit policy to define the policy, function, and audit priorities and the frequency and depth of Results Required level*1 Required level*1 phased in from 2022. organizational position of internal audits. Separate internal audit activities. The internal audit divisions March 31, 2018 March 31, 2018 March 31, 2019 Common Equity 1. Review of risk-weighted asset measurement methodologies internal audit divisions have been created within the ensure that audit personnel attend key meetings, 12.58% 7.51% 8.52% Tier 1 Capital Ratio Capital ratio capital / risk-weighted assets holding company and certain subsidiaries. Through collect important internal control documents and Tier 1 Capital Ratio 14.32% 9.01% 10.02% close cooperation and collaboration among the access databases to facilitate efficient off-site Review of various risk-weighted asset measurement methodologies Review of capital floor internal audit divisions of the holding company and monitoring. Total Capital Ratio 16.56% 11.01% 12.02%

these subsidiaries, these internal audit divisions Liquidity Coverage 137.9% 80.0% 100.0% 2. Review of regulatory framework for leverage ratio Reports to the Audit Committee Ratio provide coverage for the Group and also support the (total assets on the balance sheet Leverage ratio capital / exposure board of directors of the holding company in The holding company has an audit committee within Results Required level*2 and off-balance sheet assets) March 31, 2018 March 31, 2019 (Forecast) monitoring and overseeing all MUFG operations. its board of directors as required by the Companies Review of measurement methodologies for denominator (exposure) Leverage Ratio 5.01% 3.0% In addition to having primary responsibility for Act of Japan, and each of the major subsidiaries in Surcharge on the required leverage ratio of G-SIBs initiating and preparing plans and proposals related which MUFG directly holds equity interests has an *1 Figures calculated by taking into account G-SIB buffer of 1.5% and counter cyclical to internal audits of the Group, the internal audit Audit & Supervisory Committee or a voluntarily capital buffer of 0.02% *2 Required level for G-SIBs is expected to be raised after 2022 Outlook division at the holding company monitors and, as established audit committee. necessary, guides, advises, and administers the Within the holding company and each of the major Upcoming Regulations MUFG Must Global financial regulations had been focused on internal audit divisions of subsidiaries and affiliated subsidiaries, the internal audit division reports to the Comply with in the Future developing new regulations. The focus is now shifting companies. committee on important matters including the · Requirement to secure Total Loss Absorbing to implementing and monitoring the effectiveness of results of the internal audits and basic policies for Capacity (TLAC) regulations. In fact, the FSB and other international The internal audit divisions within the major planning internal audits. In addition to Basel III capital requirements, the organizations have begun undertaking assessments subsidiaries conduct audits of the respective head upcoming regulations, which will be enforced in of the impact of regulations which have been 2019, will oblige G-SIBs,*3 including MUFG, to acquire implemented. If these assessments reveal unintended additional capital and liabilities that meet certain negative consequences, there will be a need for subordinated conditions (TLAC-eligible liabilities). calibrating the regulations in question. These regulations are intended to ensure orderly Internal Audit Framework resolution without injecting public funds when Moreover, although the tightened regulations are Holding Company (Mitsubishi UFJ Financial Group, Inc.) G-SIBs fail. expected to help enhance banks’ financial soundness, the global economy may be hit by a Board of Directors Audit Committee (Chairman: Outside Director) *3 G-SIBs refer to Global Systemically Important Banks, institutions whose failure would have a major impact on the global financial system according to the Financial Stability Board major crisis caused by unexpected factors. We must Reporting Instructing (FSB). G-SIBs are asked to meet stricter requirements than those applied to other banks. Executive Committee For example, Basel III stipulates a surcharge on the required capital ratio of G-SIBs. also be vigilant against newly emerging risks arising Internal Audit Division from technological advancements. MUFG, Each Division Auditing From 2019 From 2022 onward onward Consulting and reporting Guidance, advice and management With this in mind, MUFG will strive to realize an Required level of TLAC (RWA) 16% 18% optimal global financial regulatory framework so that Group Companies Required level of TLAC we will contribute to global economic growth, which 6% 6.75% (leverage ratio denominator) is fundamental role of financial institutions. WorldReginfo - b5625110-108f-485a-9bca-a62f0ca1d2eb 94 MUFG Report 2018 MUFG Report 2018 95 Financial Data / Corporate Data

Ten-Year Summary of Major Financial Data

(Billions of Yen) (Billions of Yen) FY 2008 FY 2009 FY 2010 FY 2011 FY 2012 FY 2013 FY 2014 FY 2015 FY 2016 FY 2017 Currency exchange rate (USD/JPY) (yen)      Currency exchange rate (USD/JPY) (yen)      

Statement of income data: Statement of income data: Gross profits before credit costs for trust accounts      Gross profits before credit costs for trust accounts       Net interest income       Net interest income      Trust fees excluding credit costs       Trust fees excluding credit costs      Net fees and commissions        Net fees and commissions      Net trading profits       Net trading profits       Net other business profits （）       Net other business profits      Net gains (losses) on debt securities       Net gains (losses) on debt securities      General and administrative expenses        General and administrative expenses        Expenses ratio        Expenses ratio       Net operating profits before credit costs for trust accounts Net operating profits before credit costs for trust accounts and provision for general allowance for credit losses        and provision for general allowance for credit losses      Total credit costs       Total credit costs （）     the Bank and the Trust Bank combined       the Bank and the Trust Bank combined （）    （） Net gains (losses) on equity securities （）  （） （） （） Net gains (losses) on equity securities      Gains (losses) on sales of equity securities    （ ）  Gains (losses) on sales of equity securities      Losses on write-down of equity securities （ ） （） （ ） （ ） （） Losses on write-down of equity securities （ ） （） （） （） （） Profits (losses) from investments in affiliates （）     Profits (losses) from investments in affiliates       Other non-recurring gains (losses) （ ） （ ） （） （） （） Other non-recurring gains (losses) （） （） （） （） （） Ordinary profits      Ordinary profits        Net extraordinary gains (losses)   （） （）  Net extraordinary gains (losses) （） （ ） （） （） （） Total taxes       Total taxes       Tax burden ratio       Tax burden ratio       Profits attributable to non-controlling interests   （ ）   Profits attributable to non-controlling interests      Profits attributable to owners of parent （ ）     Profits attributable to owners of parent     

Balance sheet data: Balance sheet data: Total assets        Total assets         Loans and bills discounted          Loans and bills discounted         Securities        Securities         Total liabilities           Total liabilities         Deposits          Deposits       Negotiable certificates of deposit         Negotiable certificates of deposit       Total net assets        Total net assets      Total shareholders’ equity         Total shareholders’ equity      Retained earnings       Retained earnings      Total accumulated other comprehensive income （）  （）   Total accumulated other comprehensive income          Non-controlling interests       Non-controlling interests       

Financial Ratios Financial Ratios Common Equity Tier 1 capital ratio*1 ー ー ー ー  Common Equity Tier 1 capital ratio*1       Tier 1 capital ratio*1*2      Tier 1 capital ratio*1*2      Total capital ratio*1       Total capital ratio*1      Dividends per share (DPS) (yen)      Dividends per share (DPS) (yen)      Dividend payout ratio ー     Dividend payout ratio      Book-value per share (BPS) (yen)       Book-value per share (BPS) (yen)        Earnings per share (EPS) (yen) （）        Earnings per share (EPS) (yen)      ROE MUFG definition （ ）       ROE MUFG definition      ROE TSE definition （ ）       ROE TSE definition      Total number of ordinary shares (excluding own shares) (billion shares)      Total number of ordinary shares (excluding own shares) (billion shares)      Share price (fiscal year-end) (yen)       Share price (fiscal year-end) (yen)       Market capitalization*3 (trillions of yen)      Market capitalization*3 (trillions of yen)      PBR*3 (times)       PBR*3 (times)      PER*3 (times) （ ）     PER*3 (times)     

*1 The risk-adjusted capital ratios and the amounts of components thereof prior to FY 2014 reflect corrections of errors discovered in the risk weighting applied to certain assets, mostly residential mortgage loans, and certain other adjustments made under Basel I standards to obtain amounts that were used for floor adjustments in determining the amounts of risk-weighted assets under Basel III standards. *2 FY 2008 to FY 2011 are under Basel II standards *3 Figures based on fiscal year-end share price WorldReginfo - b5625110-108f-485a-9bca-a62f0ca1d2eb 96 MUFG Report 2018 MUFG Report 2018 97 Financial Data / Corporate Data

Financial Review for Fiscal 2017

Profits Attributable to Owners of Parent Net Operating Profits by Business Segment growth in revenues due to a rise in stock prices as Consolidated Earnings Summary Net extraordinary losses decreased ¥4.4 billion from Consolidated net operating profits* decreased ¥171.7 well as increases in pension, investment trust and Consolidated Net Operating Profits the previous fiscal year. This was due to a decrease billion from the previous fiscal year to ¥1,224.1 billion. other assets under our management thanks to our Consolidated gross profits for the fiscal year ended in net losses on change in equity related to Morgan This was due to decreases in Japanese Corporate efforts to capture new assets under management. March 31, 2018 decreased ¥157.5 billion from the Stanley and the posting of gains on an exchange of Banking Business Group, Global Banking Business Temporary gains recorded at affiliates also previous fiscal year to ¥3,854.2 billion. Net interest shares associated with the merger of Aberdeen and Group and Global Markets Business Group, partially contributed to growth in net operating profits. income decreased mainly due to a decrease in net Standard Life, despite the recording of impairment offset by increases in Retail Banking Business Group interest income from domestic loans and deposits as loss associated with structural reforms. Tax expenses and Asset Management / Investor Services Business Global Markets Business Group well as from bond portfolios, and net gains on debt decreased ¥28.7 billion. Group. In the Global Markets Business Group, net operating

securities decreased, while net interest income from * On a managerial accounting basis (the Japanese Corporate Banking Business Group profits decreased ¥115.2 billion to ¥254.5 billion. This overseas loans and deposits remained steadily. As a result, profits attributable to owners of parent excludes overseas Japanese corporate business) was mainly attributable to the sluggish performance increased ¥63.2 billion to ¥989.6 billion, exceeding of domestic S&T and flexible approach in ALM General and administrative expenses increased ¥27.8 the target of ¥950.0 billion. Retail Banking Business Group operation to improve the value of bond portfolios by billion from the previous fiscal year to ¥2,621.4 billion. In the Retail Banking Business Group, net operating seizing opportunities arising from interest rate hike. While expenses associated with domestic operations profits increased ¥40.4 billion to ¥266.1 billion. This History of Profits Attributable to Owners of Parent fell, thanks to cost control efforts and other factors, was attributable to the stronger showings of card First half Second half these were offset by higher expenses for overseas (Billions of Yen) settlement and consumer finance businesses and Net Operating Profits by Business Segment operations due to matters related to complying with  growth in investment product sales and other Retail Banking Japanese Corporate Banking Global Banking Global Markets Asset Management / Investor Services financial regulations. 1,033.7 securities businesses as well as the success of efforts 984.8 989.6 (Billions of Yen) 1,395.8*1  951.4 to curb expenses. 926.4 Target 1,224.1*1 As a result, consolidated net operating profits 852.6 850.0 369.7 decreased ¥185.4 billion from the previous fiscal year 455.0 362.7 Japanese Corporate Banking Business Group 254.5  352.0 to ¥1,232.8 billion. 454.6 In the Japanese Corporate Banking Business Group, 60.9 435.9 69.8 400.0 net operating profits decreased ¥28.7 billion to  Credit Costs 562.1 ¥392.8 billion. This was attributable to decreases in 482.2 422.3 Total credit costs decreased ¥109.2 billion from the revenues from loans, derivatives and primary Customer Customer previous fiscal year to a net provision of ¥46.1 billion  securities transactions in addition to a decline in segments*2 segments*2 85％ 94％ thanks to the absence of costs associated with the 626.9 investment banking revenues due to the absence of 392.8 578.7 599.3 421.5 530.2 deterioration of credit quality of some large 490.5 450.0 large-scale transactions recorded in the previous  borrowers in the previous fiscal year and a decrease 290.4 fiscal year. 225.7 266.1 in credit costs for resource- and energy-related clients in the Americas.  Global Banking Business Group 2016 2017 (FY) 2012 2013 2014 2015 2016 2017 2018 (FY) In the* Total Global net operating Banking profits include Business net operating Group, profit for net “Other” operating segment * Total net operating profits include net operating profit for “Other” segment ‚FY „ †: ‚ˆ†‰Š‹ bnŒ, FY „ ‘: ‚ˆ’Š‰ bnŒŒ ‚FY „ †: ‚ˆ†‰Š‹ bnŒ, FY „ ‘: ‚ˆ’Š‰ bnŒŒ Net Gains (Losses) on Equity Securities profits*„ Ratio decreased of customer segments ¥59.9 “ net billion operating to profits ¥422.3 from customer billion. segments In / total *„ Ratio of customer segments “ net operating profits from customer segments / total Breakdown of Profits Attributable to Owners of Parent* net operating profits ‚*Œ. In addition, ‹‘• of the fiscal „ ‘ customer segment net operating profits ‚*Œ. For FY„ ‘, Global Banking segment accounted for ‹‘• Net gains on equity securities increased ¥8.2 billion additionprofits towere the earned impact from overseas of an business. increase ‚The figure in was foreign calculated by dividing of total customer segment. net operating profits from overseas operations of customer segments by overall net (Billions of Yen) Morgan to ¥133.1 billion. This was mainly attributable to Stanley MUFG currencyoperating funding profits from costs, all customer net segmentsŒ. operating profits were —ž—’’”’ 171.8 (Consolidated) progress in the sales of equity holdings. the Securities HD 989.6 negatively affected by a number of factors in regions 43.1 —ž’’’”’ ACOM around the globe. Our Americas businesses targeting Breakdown of Changes in Net Operating Profits the Trust Bank Krungsri 28.2 67.0 NICOS Other (Billions of Yen) Ordinary Profits œ’’”’ (Non-consolidated) 10.6 (67.7) non-Japanese corporations were sluggish due mainly 186.7 Retail Banking Asset MUAH Ordinary profits increased ¥101.6 billion to ¥1,462.4 ›’’”’ to the slowdown of growth in the M&A market, while 40.4 Management / 112.0 1,395.8 Investor Services billion. Despite the posting of temporary expenses in the Bank our European operations faced rises in expenses due 8.9 š’’”’ (Non-consolidated) Japanese connection with structural reforms, other non- 437.7 to a need for regulatory compliance and project Corporate ™’’”’ Banking Global Banking recurring losses decreased ¥171.1 billion from the preparation expenses. These negative factors were (28.7) 1,224.1 (59.9) previous fiscal year mainly due to an elimination of ˜’’”’ well in excess of the growth in net operating profits Global Others Markets (17.1) provision of allowance for excess interest repayment “’’”’ recorded by Krungsri thanks to the strong showings (115.2) of consumer finance subsidiaries that occurred in of its auto loans. Sum of customer segments •’’”’ (39.4) the previous fiscal year. –’’”’ Asset Management / Investor Services Business Group —’’”’ In the Asset Management / Investor Services ’ Business Group, net operating profits increased ¥8.9 * The above figures reflect the percentage holding in each subsidiaries and equity 2016 2017 (FY) method investees (after-tax basis) billion to ¥69.8 billion. This was mainly attributable to WorldReginfo - b5625110-108f-485a-9bca-a62f0ca1d2eb 98 MUFG Report 2018 MUFG Report 2018 99 Financial Data / Corporate Data Financial Review for Fiscal 2017

1 Loans (Period-end balance)* Capital Adequacy (Billions of Yen) Housing Domestic corporate*2 Government Consolidated Balance Sheet Summary Capital Change Overseas*3 Consumer finance / Others Mar. 31, Mar. 31, from Mar. 2018 2017 Loans (banking and trust accounts) / Deposits (Trillions of Yen) Total Capital 31, 2017 113.9 Loans decreased ¥811.7 billion from the previous 111.9 109.2 109.0 108.3 Common Equity Tier 1 capital increased by ¥871 Common Equity Tier 1 capital ratio      105.0 1.3 1.3 1.5 1.6 1.7 fiscal year ended March 31, 2017, to ¥108,397.7 billion. 1.3 billion and Total capital increased by ¥719 billion Tier 1 capital ratio      Despite growth in domestic corporate loans, this 42.4 43.0 43.4 respectively from the end of March 2017, mainly due Total capital ratio     38.9 44.2 42.9 decrease was attributable to a downturn in overseas to increases in retained earnings and other  9.7 10.1 5.5 4.2 3.8 3.7 loans due to the negative effect of foreign currency comprehensive income. Tier 1 capital     42.7 43.8 43.4 44.2 43.7 44.4 exchange rates. Common Equity Tier 1 capital     15.6 15.5 15.6 15.7 15.5 15.4 Risk Weighted Assets (RWA) Retained earnings     Deposits increased ¥6,582.0 billion from the previous Sep. 30, Mar. 31, Sep. 30, Mar. 31, Sep. 30, Mar. 31, RWA decreased by ¥522 billion from the previous Other comprehensive income    2015 2016 2016 2017 2017 2018 fiscal year ended March 31, 2017, to ¥177,312.3 billion fiscal year ended March 31, 2017, reflecting a Regulatory adjustments    * Sum of banking and trust accounts thanks to increases in domestic corporate deposits * Excluding loans to government and governmental institutions, and including foreign decrease in credit-related RWA mainly due to Additional Tier 1 capital    currency denominated loans Preferred securities and as well as deposits in overseas branches and other *’ Loans booked in overseas branches, MUAH, Krungsri, the Bank ˜China™, the Bank improved ratings issued to some clients.    ˜Malaysia™ and the Bank ˜Europe™ subordinated debt MUFG subsidiaries. Foreign currency translation -   Deposits (Period-end balance) Capital Adequacy adjustments Domestic Deposit / Lending Rates Overseas and Others Domestic corporate, etc. Domestic individual The Common Equity Tier 1 capital ratio was 12.58%, Tier 2 capital     (Trillions of Yen) Differences in yield between the lending and the the Tier 1 capital ratio was 14.32% and the Total Subordinated debt     170.7 171.8 177.3 deposit rate in Japan, excluding loans to 154.4 160.9 161.6 capital ratio was 16.56%. Amounts equivalent to 45% of unrealized gains on available-for- -    36.5 37.6 38.8 government, decreased 0.02 percentage points 36.2 37.1 34.0 sale securities from FY 2016 4Q on the back of the prolonged low 61.0 59.8 63.1 The provisional figure for the Common Equity Tier 1 Total capital (Tier 1+Tier 2)     47.4 52.7 56.2 interest rate environment. capital ratio, calculated on the basis of regulations  70.7 71.0 71.2 73.0 74.2 75.3 applied at the end of March 2019, is 12.5%. The Risk weighted assets     Investment Securities provisional figure calculated by taking into account Credit risk      The balance of available-for-sale securities increased Sep. 30, Mar. 31, Sep. 30, Mar. 31, Sep. 30, Mar. 31, the impact of an expected increase in RWA Market risk    2015 2016 2016 2017 2017 2018 ¥584.1 billion compared with the balance as of March calculated on the finalized Basel III reforms basis, is Operational risk    31, 2017, reaching ¥55,397.3 billion due mainly to Changes in Domestic Deposit / Lending Rates* 11.7%. Floor adjustment    increases in domestic equity and other securities Lending rate （%） Dierences in yield between lending rate and deposit rate despite a decrease in Japanese Government Bonds  Deposit rate Shareholder Returns (JGBs). MUFG paid a year-end dividend of ¥10 per share for Results and Forecasts of Shareholder Returns  fiscal year ended March 31, 2018, bringing the full 0.89 Year-end dividend Interim dividend Dividend payout ratio 0.87 0.86 0.85 0.86 Net unrealized gains on available-for-sale securities fiscal year total to ¥19, which is up ¥1 per share from 31.0% 0.87 0.86 0.85 increased ¥378.3 billion compared with the previous  0.84 0.84 the annual dividend paid for the previous fiscal year. 26.3% 26.4% 25.5% 24.6% fiscal year to ¥3,517.4 billion due to an increase in net 0.01 0.01 0.01 0.01 0.01 23.4% Dividend 22.0% ¥20 unrealized gains on domestic equity securities  During fiscal 2017, we repurchased our own shares ¥19 per 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q ¥18 ¥18 ¥18 common despite decreases in net unrealized gains on JGBs for approximately ¥100.0 billion in May and ¥16 stock 2014 2015 2016 2017 ¥10 and foreign bonds. November 2017, respectively, thus expending a total ¥13 ¥9 ¥9 ¥9 ¥10 * Excluding lending to government etc. ¥9 of ¥200.0 billion for share repurchases, in line with ¥7 Balance of Japanese Government Bonds (JGB) Portfolio Available-for-sale Securities with Fair Value (Billions of Yen) our policy of striking an optimal balance between the by Maturity (the Bank and the Trust Bank combined) ¥9 ¥9 ¥9 ¥9 ¥10 ¥6 ¥7 Balance Unrealized gains (losses) Within 1 year 1 year to 5 years 5 years to 10 years Over 10 years maintenance of solid equity capital, strategic (Right axis) Duration (JGB, non-consolidated) Change Change investments for sustainable growth and further 2012 2013 2014 2015 2016 2017 2018 (FY) Mar. 31, from Mar. 31, from (Trillions of Yen) (Years) enhancement of shareholder returns. (Forecast) 4.0 3.9 2018 Mar. 31, 2018 Mar. 31,   2017 2017 30.2 3.3 Total     28.3 25.1 23.6  2.4 21.7  Domestic equity 25.5 2.6     3.2 2.5 2.5 securities 5.4 3.3 2.1 5.7 1.4  2.7 1.6 3.6  Domestic bonds      4.8 2.5 11.0 6.3 Japanese 8.6 7.2 6.0 7.7 government bonds         Others     13.8 11.3 10.7 10.1 11.4 10.8 Foreign Equity Securities 334.5     Sep. 30, Mar. 31, Sep. 30, Mar. 31, Sep. 30, Mar. 31, Foreign bonds 17,448.3     2015 2016 2016 2017 2017 2018 * Available-for-sale securities and held-to-maturity securities (duration is for Others     available-for-sale securities only) WorldReginfo - b5625110-108f-485a-9bca-a62f0ca1d2eb 100 MUFG Report 2018 MUFG Report 2018 101 Financial Data / Corporate Data

Consolidated Financial Statements

Consolidated Balance Sheets Consolidated Financial Results Consolidated Statements of Comprehensive Income (Millions of Yen) (Millions of Yen) (Millions of Yen) (Millions of Yen) Mar 31, 2018 Mar 31, 2017 Mar 31, 2018 Mar 31, 2017 FY 2017 FY 2016 FY 2017 FY 2016 Assets: Liabilities: Gross profits   Profits   Cash and due from banks    Deposits   Gross profits before credit costs for trust Other comprehensive income   accounts Call loans and bills bought    Negotiable certificates of deposit   Net unrealized gains (losses) on  （ ） Net interest income   available-for-sale securities Receivables under resale agreements    Call money and bills sold    Trust fees   Net deferred gains (losses) on hedging Receivables under securities Payables under repurchase （） （ ）      instruments borrowing transactions agreements Credit costs for trust accounts ー  Land revaluation excess （） （） Monetary claims bought   Payables under securities lending Net fees and commissions      transactions Foreign currency translation Trading assets （） （）   Net trading profits    adjustments Commercial papers   Money held in trust   Net other operating profits   Remeasurements of defined benefit plans   Trading liabilities   Securities     Net gains (losses) on debt securities   Share of other comprehensive income Borrowed money    Loans and bills discounted    General and administrative expenses    of associates accounted for using equity （） （） Foreign exchanges     method Foreign exchanges   Amortization of goodwill   Short-term bonds payable   Total other comprehensive income  （） Other assets   Net operating profits before credit costs for Bonds payable    trust accounts, provision for general allowance    Comprehensive income   Tangible fixed assets    for credit losses and amortization of goodwill Due to trust accounts    (Comprehensive income attributable to) Buildings   Net operating profits before credit costs Comprehensive income attributable to Other liabilities      Land   for trust accounts and provision for   owners of parent Reserve for bonuses   general allowance for credit losses Lease assets   Comprehensive income attributable to Reserve for bonuses to directors    Provision for general allowance for credit losses ー （）   Construction in progress   non-controlling interests Reserve for stocks payment   Net operating pro its*1    Other tangible fixed assets   Net defined benefit liabilities    Net non-recurring gains (losses)    Intangible fixed assets   Reserve for retirement benefits to Credit costs （） （ ） Software     directors Losses on loan write-offs （） （） Goodwill   Reserve for loyalty award credits   Provision for specific allowance for ー  Lease assets   Reserve for contingent losses   credit losses Other intangible fixed assets   Reserves under special laws   Other credit costs （） （） Net defined benefit assets   Deferred tax liabilities   Reversal of allowance for credit losses  ー Deferred tax assets   Deferred tax liabilities for land Reversal of reserve for contingent   ー ー Customers’ liabilities for acceptances revaluation losses included in credit costs   and guarantees Acceptances and guarantees   Gains on loans written-off   Allowance for credit losses （） （ ） Total liabilities    Net gains (losses) on equity securities    Total assets    Net assets: Gains on sales of equity securities   Capital stock   Losses on sales of equity securities （） （） Capital surplus   Losses on write-down of equity securities （） （） Retained earnings   Profits (losses) from investments in affiliates   Treasury stock （） （） Other non-recurring gains (losses) （） （） Total shareholders’ equity   Ordinary profits   Net unrealized gains (losses) on Net extraordinary gains (losses) （） （ ）    available-for-sale securities Losses on change in equity （） （） Net deferred gains (losses) on hedging   Profits before income taxes  instruments  Income taxes-current   Land revaluation excess    Foreign currency translation Income taxes-deferred     adjustments Total taxes   Remeasurements of defined benefit  （ ） Profits   plans Profits attributable to non-controlling interests   Debt value adjustments of foreign （） （） subsidiaries and affiliates Profits attributable to owners of parent   Total accumulated other *1 Net operating profits = Banking subsidiaries’ net operating profits + Other consolidated    comprehensive income entities’ gross profits - Other consolidated entities’ general and administrative expenses - Other consolidated entities’ provision for general allowance for credit Subscription rights to shares   losses - Amortization of goodwill - Inter-company transactions

Non-controlling interests   (Reference) Total net assets    FY 2017 FY 2016 Total liabilities and net assets    Total credit costs*2 （） （）

*2 Total credit costs = Credit costs for trust accounts + Provision for general allowance for credit losses + Credit costs (included in non-recurring gains / losses) + Reversal of allowance for credit losses + Reversal of reserve for contingent losses included in credit costs + Gains on loans written-off WorldReginfo - b5625110-108f-485a-9bca-a62f0ca1d2eb 102 MUFG Report 2018 MUFG Report 2018 103 Financial Data / Corporate Data Consolidated Financial Statements

Consolidated Statements of Changes in Net Assets (Millions of Yen) Consolidated Statements of Cash Flows (Millions of Yen) (Millions of Yen) Accumulated other Shareholders’ equity comprehensive income FY 2017 FY 2016 FY 2017 FY 2016 Net unrealized Net deferred FY 2017 Total gains (losses) on gains (losses) on Cash flows from operating activities: Capital stock Capital surplus Retained earnings Treasury stock shareholders’ Cash flows from investing activities: available-for-sale hedging equity securities instruments Proits before income taxes   Purchases of securities （73,029,164） （56,618,395） Balance at the beginning of the period    （）     Depreciation and amortization   Proceeds from sales of securities   Changes during the period  Impairment losses   Cash dividends （） （） Proceeds from redemption of securities   Profits attributable to owners of parent     Amortization of goodwill   Payments for increase in money held in trust （） （） Repurchase of treasury stock （） （） Equity in losses (gains) of equity method （） （） Disposal of treasury stock （）    investees Proceeds from decrease in money held in trust    Retirement of treasury stock （ ）   ー Increase (decrease) in allowance for （） （ ） Purchases of tangible fixed assets （ ） （） Reversal of land revaluation excess   credit losses  Increase (decrease) in reserve for Changes in subsidiaries’ equity （） （）  （） Purchases of intangible fixed assets （） （ ） Effects due to revision of accounting standards bonuses for foreign subsidiaries and affiliates   Proceeds from sales of tangible fixed assets   Increase (decrease) in reserve for   Net changes of items other than shareholders’ equity  （） bonuses to directors Proceeds from sales of intangible fixed assets    Total changes during the period ー （）  （ ）    （） Increase (decrease) in reserve for stocks   Balance at the end of the period     （）     payment Payments for transfer of business （） ー Decrease (increase) in net defined (Millions of Yen) （ ） Payments for acquisition of subsidiaries’ benefit assets （）  Accumulated other comprehensive income equity affecting the scope of （） （ ） Increase (decrease) in net defined consolidation Debt value Total （）  Foreign Subscription benefit liabilities Land Remeasurements adjustments accumulated Non-controlling currency rights Total net assets Proceeds from sales of subsidiaries’ revaluation of defined of foreign other interests Increase (decrease) in reserve for translation to shares equity affecting the scope of ー  excess benefit plans subsidiaries comprehensive （）  adjustments retirement benefits to directors and affiliates income consolidation Increase (decrease) in reserve for loyalty Balance at the beginning of the period   （ ） （）      award credits   Others （） （） Changes during the period Increase (decrease) in reserve for （）  Net cash provided by (used in)   Cash dividends （） contingent losses investing activities （） Profits attributable to owners of parent   Interest income recognized on （ ） Cash flows from financing activities: Repurchase of treasury stock （） statement of income （）  Disposal of treasury stock  Proceeds from subordinated borrowings   Interest expenses recognized on   Retirement of treasury stock ー statement of income Repayments of subordinated （） （ ） Reversal of land revaluation excess  Losses (gains) on securities （） （） borrowings redemption Changes in subsidiaries’ equity （） Losses (gains) on money held in trust   Proceeds from issuance of subordinated   Effects due to revision of accounting standards  bonds payable and bonds with warrants for foreign subsidiaries and affiliates Foreign exchange losses (gains)    Net changes of items other than shareholders’ equity （） （）  （  ）  （） （ ）  Payments for redemption of Losses (gains) on sales of fixed assets  （） subordinated bonds payable and bonds （ ） （ ） Total changes during the period （ ） （ ） （ ） （ ） （ ）            with warrants Balance at the end of the period     （）     Net decrease (increase) in trading assets  （） Proceeds from issuance of common   (Millions of Yen) Net increase (decrease) in trading liabilities （）  stock to non-controlling shareholders  Accumulated other Net decrease (increase) in unsettled Repayments to non-controlling Shareholders’ equity （） （） （ ） （） comprehensive income trading accounts shareholders  Net unrealized Net deferred Net decrease (increase) in loans and bills FY 2016 Total Payments for redemption of preferred gains (losses) on gains (losses) on   （） （ ） Capital stock Capital surplus Retained earnings Treasury stock shareholders’ discounted securities available-for-sale hedging equity securities instruments Net increase (decrease) in deposits   Dividends paid by MUFG （） （） Balance at the beginning of the period （ ） Net increase (decrease) in negotiable           （ ） Dividends paid by subsidiaries to non- certificates of deposit （）  （） （） Cumulative effects due to revision of accounting   controlling shareholders standards for foreign subsidiaries and affiliates Net increase (decrease) in borrowed money （ ）  Restated balance     （  ）     (excluding subordinated borrowings)  Purchases of treasury stock （） （） Changes during the period Net decrease (increase) in due from （）  Proceeds from sales of treasury stock   Cash dividends （） （） banks (excluding cash equivalents) Payments for purchases of subsidiaries’ Net decrease (increase) in call loans and Profits attributable to owners of parent   （ ） equity not affecting the scope of （ ） bills bought and others   （）  Repurchase of treasury stock （） （） consolidation Net decrease (increase) in receivables Disposal of treasury stock （ ）   （ ） under securities borrowing transactions   Proceeds from sales of subsidiaries’ Reversal of land revaluation excess   equity not affecting the scope of  Net increase (decrease) in call money  （ ） consolidation Changes in subsidiaries’ equity （） （） and bills sold and others    Net changes of items other than shareholders’ equity （ ） （） Net increase (decrease) in commercial papers （）  Others   Total changes during the period ー （ ） （ ） （ ） （ ）       Net cash provided by (used in) Net increase (decrease) in payables （） （ ） Balance at the end of the period    （）     under securities lending transactions   financing activities Effect of foreign exchange rate changes (Millions of Yen) Net decrease (increase) in foreign （） （） （ ） on cash and cash equivalents （） Accumulated other comprehensive income exchanges (assets) Net increase (decrease) in cash and cash Debt value Total Net increase (decrease) in foreign Foreign Subscription  （）   Land Remeasurements adjustments accumulated Non-controlling exchanges (liabilities) equivalents currency rights Total net assets revaluation of defined of foreign other interests translation to shares Net increase (decrease) in short-term Cash and cash equivalents at the excess benefit plans subsidiaries comprehensive    adjustments （） beginning of the period and affiliates income bonds payable Cash and cash equivalents at the end of Balance at the beginning of the period    （ ） ー      Net increase (decrease) in issuance and     redemption of unsubordinated bonds payable   the period Cumulative effects due to revision of accounting （） （） ー standards for foreign subsidiaries and affiliates Net increase (decrease) in due to trust accounts  （） Restated balance    （ ） （）      Interest income (cash basis)   Changes during the period Interest expenses (cash basis) （） （） Cash dividends （） Profits attributable to owners of parent  Others （） （ ） Repurchase of treasury stock （） Sub-total   Disposal of treasury stock  Income taxes （） （） Reversal of land revaluation excess  Refund of income taxes   Changes in subsidiaries’ equity （） Net changes of items other than shareholders’ equity （）（）  （ ）（） （） （ ） （  ） Net cash provided by (used in)  operating activities  Total changes during the period （）（）  （ ）（） （） （ ） （） Balance at the end of the period   （ ） （）      WorldReginfo - b5625110-108f-485a-9bca-a62f0ca1d2eb 104 MUFG Report 2018 MUFG Report 2018 105 Financial Data / Corporate Data

Company Overview Corporate Information Major MUFG Group Companies (As of March 31, 2018)

(As of March 31, 2018) Company Name Mitsubishi UFJ Financial Group, Inc.

Head Office 7-1, 2-Chome, Chiyoda-ku, ■ Consolidated subsidiary ● Equity method investee Tokyo 100-8330, Japan

Date of Establishment April 2, 2001

Amount of Capital ¥2,141.5 billion

Common Stock (Issued) 13,900,028,020 shares Mitsubishi UFJ Financial Group Stock Listing Tokyo Stock Exchange, Nagoya Stock Exchange, New York Stock Exchange

Commercial Bank Credit Cards / Consumer Finance / Installment Credit Ticker Symbol Number 8306 (Tokyo Stock Exchange, Nagoya Stock Exchange) MUFG (New York Stock Exchange)* ■ MUFG Bank* ■ Mitsubishi UFJ NICOS Number of shareholders 685,265 ■ Bank of Ayudhya Public Company ■ ACOM * Mitsubishi UFJ Financial Group, Inc. changed the ticker symbol it uses at the New York Stock Exchange (NYSE) from “MTU” to “MUFG” on April 1, 2018. ● Security Bank Corporation ● JACCS

● Vietnam Joint Stock Commercial Bank for Industry and Trade ● JALCARD

Stock Price Tokyo Stock Exchange Ownership and Distribution of Shares* Commercial Bank Holding Company Leasing Government and local MUFG Nikkei 225  Securities: governments: ■ MUFG Americas Holdings Corporation ● Mitsubishi UFJ Lease & Finance 3.56% 0.02%  

● Dah Sing Financial Holdings ● Hitachi Capital  Individuals and others:  12.70% Foreign institutions, etc.: Trust Bank Asset Management ­ 39.34%  ■ Mitsubishi UFJ Trust and Banking ■ MU Investments  Corporations: ■ The Master Trust Bank of Japan ■ Mitsubishi UFJ Kokusai Asset Management  13.07% Financial ■ Mitsubishi UFJ Investor Services & Banking (Luxembourg) ■ Mitsubishi UFJ Asset Management (UK) institutions:  2017/3 2017/6 2017/9 2017/12 2018/3 31.27% ■ Mitsubishi UFJ Baillie Gifford Asset Management Note: Share index (2017/3E = 100) * Excludes treasury shares and fractional shares Securities ■ MUFG Lux Management Company

■ Mitsubishi UFJ Securities Holdings Website (Securities Holding Company) Holding Company For more detailed information, please refer to our website. ■ Mitsubishi UFJ Morgan Stanley Securities ■ MUFG Investor Services Holdings (Fund Management) ■ Mitsubishi UFJ Morgan Stanley PB Securities Note: Abbreviation of group companies in the MUFG Report ● AMP Capital Holdings (Asset Management) ■ kabu.com Securities the Bank: MUFG Bank the Trust Bank: Mitsubishi UFJ Trust & Banking Corporation ■ MUFG Securities (Canada) Internet Bank / Regional Bank the Securities HD: Mitsubishi UFJ Securities Holdings ■ MUFG Securities EMEA ● Jibun Bank MUMSS: Mitsubishi UFJ Morgan Stanley Securities ■ Mitsubishi UFJ Trust International ● The Chukyo Bank NICOS: Mitsubishi UFJ NICOS ■ MUFG Securities Asia (Singapore) MUAH: MUFG Americas Holdings Corporation KS: Bank of Ayudhya (Krungsri) ■ MUFG Securities Asia Others ● Morgan Stanley MUFG Securities ■ Mitsubishi UFJ Real Estate Services About MUFG https://www.mufg.jp/english/ (English) ■ Japan Digital Design

● Mitsubishi Research Institute DCS

* Bank of Tokyo-Mitsubishi UFJ, Ltd. was rebranded MUFG Bank, Ltd. on April 1, 2018. Note: In August 2018, MUFG Bank increased its investment in PT Bank Danamon Indonesia, Tbk., making it an equity method investee. This integrated report was printed in Japan on FSC paper with vegetable oil ink. WorldReginfo - b5625110-108f-485a-9bca-a62f0ca1d2eb 106 MUFG Report 2018 MUFG Report 2018 107 Mitsubishi UFJ Financial Group, Inc. 7-1, Marunouchi 2-Chome, Chiyoda-ku, Tokyo 100-8330, Japan Telephone: 81-3-3240-8111 Issued September 2018 www.mufg.jp/english/ Printed in Japan WorldReginfo - b5625110-108f-485a-9bca-a62f0ca1d2eb