DBRS Confirms Ratings of Bank of Tokyo-Mitsubishi UFJ, Ltd.

DBRS has today confirmed the Issuer Rating and long- and short-term ratings of the Bank of Tokyo-Mitsubishi UFJ, Ltd. (BTMU) at “A” and R-1 (middle), respectively. All trends remain Stable. The intrinsic assessment for BTMU is A (low). The long-term rating of “A” incorporates the implied support of the Japanese government, adding one notch to the intrinsic assessment. The ratings of BTMU are based on DBRS’s assessment of Mitsubishi UFJ Financial Group, Inc. (MUFG or the Group).

For the half-year ended September 30, 2012 (H1 2013), operating profit before provisions for loan losses for MUFG fell by 5.6% from the prior comparable period. This declining trend indicates that MUFG, like its Japanese peers, continues to face the following challenges, which have been reflected in the ratings for many years: (1) domestic loan demand is weak, as domestic loan portfolio growth has continued to remain relatively flat over the past two years, largely due to the still-weak domestic economy and intense competition; and (2) net interest margin remained low at 0.84% for H1 2013, mainly attributable to competition among domestic banks for loans and Japan’s near-zero interest rate monetary policy.

Asset quality is not expected to emerge as a major issue for MUFG, based on the adequate position of non-performing loans and the emphasis on asset quality over the past decade. The Bank also continues to place emphasis on growth overseas, which is contributing to loan growth.

Notes:
All figures are in Japanese Yen unless otherwise noted.

DBRS ratings on the Bank of Tokyo-Mitsubishi UFJ (Canada) apply to debt that is guaranteed by The Bank of Tokyo-Mitsubishi UFJ, Ltd.

The applicable methodologies are Global Methodology for Rating Banks and Banking Organisations (January 14, 2010) and DBRS Criteria: Intrinsic and Support Assessments (February 11, 2009), which can be found on our website under Methodologies.

The related regulatory disclosures pursuant to the National Instrument 25-101 Designated Rating Organizations are hereby incorporated by reference and can be found by clicking on the link to the right under Related Research or by contacting us at info@dbrs.com.