| Loans and Allowance for Credit Losses [Text Block] | 4. LOANS AND ALLOWANCE FOR CREDIT
LOSSES
Loans at March 31, 2014 and 2015 by domicile and industry of
the borrower are summarized below. Classification of loans by
industry is based on the industry segment loan classifications as
defined by the Bank of Japan.
2014 2015
(in
millions)
Domestic:
Manufacturing ¥ 11,540,753 ¥ 11,703,428
Construction 980,877 977,892
Real estate 10,989,562 10,911,240
Services 2,693,561 2,684,355
Wholesale and retail 8,475,143 8,345,481
Banks and other financial institutions (1) 3,985,106 4,329,964
Communication and information services 1,443,466 1,527,811
Other industries 13,496,763 12,674,004
Consumer 16,921,352 16,720,590
Total domestic 70,526,583 69,874,765
Foreign:
Governments and official institutions 811,475 1,052,051
Banks and other financial institutions (1) 9,792,255 11,973,021
Commercial and industrial 24,533,816 29,593,255
Other 4,872,372 6,065,782
Total foreign 40,009,918 48,684,109
Unearned income, unamortized premiums—net and deferred loan
fees—net (260,090 ) (293,672 )
Total (2) ¥ 110,276,411 ¥ 118,265,202
Notes:
(1) Loans to so-called non-bank finance
companies are generally included in the “Banks and other
financial institutions” category. Non-bank finance companies
are primarily engaged in consumer lending, factoring and credit
card businesses.
(2) The above table includes loans held
for sale of ¥46,635 million and ¥88,927 million
at March 31, 2014 and 2015, respectively, which are carried at
the lower of cost or estimated fair value.
Nonaccrual Loans
Originated loans are generally placed on nonaccrual status when
substantial doubt exists as to the full and timely collection of
either principal or interest, when principal or interest is
contractually past due one month or more with respect to loans
within all classes of the Commercial segment, three months or more
with respect to loans within the Card, MUAH, and Krungsri segments,
and six months or more with respect to loans within the Residential
segment. See Note 1 for further information.
The nonaccrual status of loans by class at March 31, 2014 and
2015 is shown below:
2014 2015
(in
millions)
Commercial
Domestic ¥ 737,896 ¥ 514,026
Manufacturing 167,859 118,956
Construction 30,093 20,108
Real estate 141,974 76,969
Services 72,059 54,189
Wholesale and retail 211,770 157,964
Banks and other financial institutions 7,234 5,715
Communication and information services 24,956 23,204
Other industries 35,959 18,562
Consumer 45,992 38,359
Foreign-excluding MUAH and Krungsri 82,617 96,899
Residential 111,252 95,645
Card 72,483 66,979
MUAH 46,574 45,173
Krungsri 25,973 68,103
Total (1) ¥ 1,076,795 ¥ 886,825
Note:
(1) The above table does not include
loans held for sale of nil and ¥624 million at
March 31, 2014 and 2015, respectively, and loans acquired with
deteriorated credit quality of ¥38,651 million and
¥26,248 million at March 31, 2014 and 2015,
respectively.
Impaired Loans
The MUFG Group’s impaired loans primarily include nonaccrual
loans and TDRs. The following table shows information about
impaired loans by class at March 31, 2014 and 2015:
Recorded Loan Balance
At March 31, 2014: Requiring
Not Requiring (1) Total (2) Unpaid Related
(in millions)
Commercial
Domestic ¥ 1,006,333 ¥ 257,215 ¥ 1,263,548 ¥ 1,312,320 ¥ 544,224
Manufacturing 368,866 55,003 423,869 431,745 181,389
Construction 30,537 13,298 43,835 45,323 18,731
Real estate 141,225 63,625 204,850 212,353 52,814
Services 101,969 27,342 129,311 139,299 54,469
Wholesale and retail 248,932 58,633 307,565 317,614 169,523
Banks and other financial institutions 8,295 94 8,389 8,403 6,954
Communication and information services 25,443 11,509 36,952 39,292 16,473
Other industries 36,821 9,634 46,455 47,866 26,903
Consumer 44,245 18,077 62,322 70,425 16,968
Foreign-excluding MUAH and Krungsri 193,360 2,360 195,720 195,935 96,218
Loans acquired with deteriorated credit quality 18,787 186 18,973 32,078 6,111
Residential 203,600 11,563 215,163 255,627 70,393
Card 102,852 762 103,614 115,819 29,244
MUAH 39,552 24,457 64,009 71,210 4,131
Krungsri (3) — — — — —
Total (4) ¥ 1,564,484 ¥ 296,543 ¥ 1,861,027 ¥ 1,982,989 ¥ 750,321
Recorded Loan
Balance
At March 31, 2015: Requiring
Not Requiring (1) Total (2) Unpaid Related
(in millions)
Commercial
Domestic ¥ 890,900 ¥ 234,171 ¥ 1,125,071 ¥ 1,174,925 ¥ 424,537
Manufacturing 420,860 46,876 467,736 478,453 178,867
Construction 20,997 12,018 33,015 33,900 11,515
Real estate 90,735 49,697 140,432 150,029 32,314
Services 74,459 24,766 99,225 105,429 38,107
Wholesale and retail 205,414 61,048 266,462 277,119 120,945
Banks and other financial institutions 5,935 472 6,407 6,773 5,052
Communication and information services 21,374 11,406 32,780 34,094 13,886
Other industries 20,482 7,621 28,103 29,962 12,626
Consumer 30,644 20,267 50,911 59,166 11,225
Foreign-excluding MUAH and Krungsri 192,263 173 192,436 192,436 91,579
Loans acquired with deteriorated credit quality 12,057 — 12,057 23,798 3,302
Residential 160,382 9,429 169,811 208,969 49,985
Card 90,101 604 90,705 102,142 25,726
MUAH 39,510 21,216 60,726 70,457 4,146
Krungsri 24,122 11,878 36,000 43,185 8,012
Total (4) ¥ 1,409,335 ¥ 277,471 ¥ 1,686,806 ¥ 1,815,912 ¥ 607,287
Notes:
(1) These loans do not require an
allowance for credit losses because the fair values of the impaired
loans equal or exceed the recorded investments in the loans.
(2) Included in impaired loans at
March 31, 2014 and 2015 are accrual TDRs as follows:
¥642,408 million and ¥708,414
million—Commercial; ¥99,359 million and
¥71,454 million—Residential; ¥51,834 million
and ¥44,661 million—Card; ¥38,666 million and
¥34,106 million—MUAH; and nil and ¥8,455
million—Krungsri, respectively.
(3) For the Krungsri segment, the
acquired loans were recorded at their fair values as of the
acquisition date, and there were no indications that an allowance
for credit loss was necessary for these loans for the fiscal year
ended March 31, 2014. Therefore, no impaired loans were stated
at March 31, 2014 in the above table.
(4) In addition to impaired loans
presented in the above table, there were loans held for sale that
were impaired of nil and ¥624 million at March 31,
2014 and 2015, respectively.
The following table shows information regarding the average
recorded loan balance and recognized interest income on impaired
loans for the fiscal years ended March 31, 2013, 2014 and
2015:
Fiscal
years ended March 31,
2013 2014 2015
Average Recognized Average Recognized Average Recognized
(in millions)
Commercial
Domestic ¥ 1,414,309 ¥ 24,051 ¥ 1,359,635 ¥ 23,283 ¥ 1,181,941 ¥ 23,216
Manufacturing 418,402 7,017 430,415 6,954 440,258 8,333
Construction 54,687 1,174 47,818 982 38,888 863
Real estate 198,102 2,747 228,045 3,472 170,549 3,163
Services 170,025 3,214 140,627 2,806 115,384 2,704
Wholesale and retail 376,001 6,215 339,619 5,857 283,213 5,358
Banks and other financial institutions 11,506 162 10,719 170 7,230 132
Communication and information services 51,897 1,061 44,417 945 35,249 837
Other industries 58,081 1,271 49,612 985 35,208 745
Consumer 75,608 1,190 68,363 1,112 55,962 1,081
Foreign-excluding MUAH and Krungsri 172,471 2,487 187,656 2,848 183,671 3,161
Loans acquired with deteriorated credit quality 32,964 2,028 30,101 1,659 14,758 697
Residential 320,183 6,006 264,277 5,153 187,642 4,241
Card 135,581 6,504 113,993 5,218 97,159 4,154
MUAH 46,957 1,720 60,943 3,468 59,711 2,040
Krungsri — — — — 18,764 609
Total ¥ 2,122,465 ¥ 42,796 ¥ 2,016,605 ¥ 41,629 ¥ 1,743,646 ¥ 38,118
Interest income on nonaccrual loans for all classes was recognized
on a cash basis when ultimate collectibility of principal was
certain. Otherwise, cash receipts were applied as principal
reductions. Interest income on accruing impaired loans, including
TDRs, was recognized on an accrual basis to the extent that the
collectibility of interest income was reasonably certain based on
management’s assessment.
The following table shows a roll-forward of accrual TDRs and other
impaired loans (including nonaccrual TDRs) for the fiscal years
ended March 31, 2013, 2014 and 2015:
Fiscal years ended
March 31,
2013 2014 2015
(in
millions)
Accrual TDRs:
Balance at beginning of fiscal year ¥ 892,823 ¥ 945,623 ¥ 832,267
Additions (new accrual TDR status) (1) 302,267 231,063 364,445
Transfers to other impaired loans (including nonaccrual TDRs) (56,064 ) (48,295 ) (28,001 )
Loans sold (49 ) (7,698 ) (223 )
Principal payments and other (193,354 ) (288,426 ) (301,398 )
Balance at end of fiscal year (1) ¥ 945,623 ¥ 832,267 ¥ 867,090
Other impaired loans (including nonaccrual TDRs):
Balance at beginning of fiscal year ¥ 1,139,045 ¥ 1,255,143 ¥ 1,028,760
Additions (new other impaired loans (including nonaccrual TDRs)
status) (1)(2) 500,063 313,086 281,456
Charge-off (46,835 ) (123,037 ) (79,684 )
Transfers to accrual TDRs (28,474 ) (63,828 ) (48,176 )
Loans sold (18,618 ) (39,879 ) (14,448 )
Principal payments and other (290,038 ) (312,725 ) (348,192 )
Balance at end of fiscal year (1) ¥ 1,255,143 ¥ 1,028,760 ¥ 819,716
Notes:
(1) In the above table, lease receivables
of ¥4,437 million and ¥924 million in the Krungsri
segment, which were accrual TDRs and nonaccrual TDRs, respectively,
are excluded from the additions of accrual TDRs and other impaired
loans, respectively, for the fiscal year ended March 31, 2015,
and the related ending balances of such TDRs amounting to
¥4,333 million and ¥1,629 million, are also excluded from
the balance of accrual TDRs and other impaired loans, respectively,
as of March 31, 2015.
(2) Included in additions of other
impaired loans for the fiscal years ended March 31, 2013, 2014
and 2015 are nonaccrual TDRs as follows: ¥16,903 million,
¥11,054 million and ¥12,756 million—Card;
¥17,513 million, ¥16,228 million and
¥13,278 million—MUAH; and nil, nil and
¥4,009 million—Krungsri, respectively.
Troubled Debt Restructurings
The following tables summarize the MUFG Group’s TDRs by class
during the fiscal years ended March 31, 2013, 2014 and
2015:
Fiscal years ended
March 31,
2013 2014 2015
Troubled Debt
Restructurings
Pre- Post- Pre- Post- Pre- Post-
(in millions)
Commercial (1)(3)
Domestic ¥ 222,125 ¥ 222,125 ¥ 175,011 ¥ 151,505 ¥ 324,055 ¥ 312,215
Manufacturing 131,105 131,105 93,968 70,462 239,793 227,953
Construction 3,921 3,921 3,435 3,435 5,053 5,053
Real estate 17,409 17,409 21,977 21,977 13,555 13,555
Services 12,564 12,564 13,149 13,149 16,024 16,024
Wholesale and retail 42,061 42,061 32,458 32,458 43,643 43,643
Banks and other financial institutions 889 889 1 1 12 12
Communication and information services 8,442 8,442 1,802 1,802 2,434 2,434
Other industries 1,927 1,927 4,414 4,414 2,005 2,005
Consumer 3,807 3,807 3,807 3,807 1,536 1,536
Foreign-excluding MUAH and Krungsri 10,142 10,142 20,175 20,175 3,090 2,927
Loans acquired with deteriorated credit quality 524 524 7,616 7,616 1,594 1,594
Residential (1)(3) 50,005 50,005 32,777 32,777 26,073 26,073
Card (2)(3) 26,409 26,055 17,141 16,869 19,275 19,015
MUAH (2)(3) 30,091 27,832 29,945 29,403 18,624 18,258
Krungsri (2)(3) — — — — 19,796 19,767
Total ¥ 339,296 ¥ 336,683 ¥ 282,665 ¥ 258,345 ¥ 412,507 ¥ 399,849
Fiscal years ended March 31,
2013 2014 2015
Troubled Debt Restructurings
Recorded Investment
(in millions)
Commercial (1)(3)
Domestic ¥ 6,741 ¥ 22,503 ¥ 5,234
Manufacturing 2,729 11,644 1,769
Construction — 86 322
Real estate 1,444 1,174 119
Services 295 1,481 452
Wholesale and retail 1,024 5,834 2,044
Banks and other financial institutions 330 — —
Communication and information services 434 1,639 264
Other industries 415 152 149
Consumer 70 493 115
Foreign-excluding MUAH and Krungsri 419 — —
Loans acquired with deteriorated credit quality 509 — —
Residential (1)(3) 349 474 345
Card (2)(3) 4,507 4,015 4,793
MUAH (2)(3) 2,155 2,912 2,839
Krungsri (2)(3) — — 1,455
Total ¥ 14,680 ¥ 29,904 ¥ 14,666
Notes:
(1) TDRs for the Commercial and
Residential segments include accruing loans with concessions
granted, and do not include nonaccrual loans with concessions
granted.
(2) TDRs for the Card, MUAH and Krungsri
segments include accrual and nonaccrual loans.
(3) For the fiscal years ended
March 31, 2013 and 2014, extension of the stated maturity date
of loans was the primary concession type in the Commercial and
Residential segments, whereas reduction in the stated rate and
payment deferrals were the primary concession types in the Card and
MUAH segments, respectively. For the fiscal year ended
March 31, 2015, extension of the stated maturity date of loans
was the primary concession type in the Commercial, Residential and
Krungsri segments, reduction in the stated rate was the primary
concession type in the Card segment and payment deferrals was the
primary concession type in the MUAH segment.
The following table summarizes outstanding recorded investment
balances of TDRs by class at March 31, 2014 and 2015:
2014 2015
(in
millions)
Commercial (1)
Domestic ¥ 528,133 ¥ 611,382
Manufacturing 257,049 348,981
Construction 13,751 12,915
Real estate 64,028 63,462
Services 57,480 45,158
Wholesale and retail 95,809 108,504
Banks and other financial institutions 1,156 691
Communication and information services 11,996 9,576
Other industries 10,496 9,545
Consumer 16,368 12,550
Foreign-excluding MUAH and Krungsri 114,275 97,032
Residential (1) 99,359 71,454
Card (2) 103,614 90,705
MUAH (2) 62,363 56,299
Krungsri (2) (3) — 19,924
Total ¥ 907,744 ¥ 946,796
Notes:
(1) TDRs for the Commercial and
Residential segments include accruing loans with concessions
granted, and do not include nonaccrual loans with concessions
granted.
(2) TDRs for the Card, MUAH and Krungsri
segments include accrual and nonaccrual loans. Included in the
outstanding recorded investment balances as of March 31, 2014
and 2015 are nonaccrual TDRs as follows: ¥51,780 million
and ¥46,044 million—Card; ¥23,697 million and
¥22,193 million—MUAH; and nil and ¥7,136
million—Krungsri, respectively.
(3) For the Krungsri segment, the
acquired loans were recorded at their fair values as of the
acquisition date, and there were no indications that an allowance
for credit loss was necessary for these loans for the fiscal year
ended March 31, 2014. Therefore, no TDRs were stated at March 31,
2014 in the above table.
A modification of terms of a loan under a TDR mainly involves:
(i) a reduction in the stated interest rate applicable to the
loan, (ii) an extension of the stated maturity date of the
loan, (iii) a partial forgiveness of the principal of the
loan, or (iv) a combination of all of these. Those loans are
also considered impaired loans, and hence the allowance for credit
losses is separately established for each loan. As a result, the
amount of allowance for credit losses increases in many cases upon
classification as a TDR loan. The amount of pre-modification
outstanding recorded investment and post-modification outstanding
recorded investment may differ due to write-offs made as part of
the concession. The impact of write-offs associated with TDRs on
the MUFG Group’s results of operations for the fiscal years
ended March 31, 2013, 2014 and 2015 was not material.
TDRs for the Commercial and Residential segments in the above
tables include accruing loans with concessions granted, and do not
include nonaccrual loans with concessions granted. Once a loan is
classified as a nonaccrual loan, a modification would have little
likelihood of resulting in the recovery of the loan in view of the
severity of the financial difficulty of the borrower. Therefore,
even if a nonaccrual loan is modified, the loan continues to be
classified as a nonaccrual loan. The vast majority of modifications
to nonaccrual loans are temporary extensions of the maturity dates,
typically for periods up to 90 days, and continually made as the
borrower is unable to repay or refinance the loan at the extended
maturity. Accordingly, the impact of such TDRs on the outstanding
recorded investment is immaterial, and the vast majority of
nonaccrual TDRs have subsequently defaulted.
TDRs that subsequently defaulted in the Commercial and Residential
segments of the above table includes those accruing loans that
became past due one month or more within the Commercial segment and
six months or more within the Residential segment, and those
accruing loans reclassified to nonaccrual loans due to financial
difficulties even without delinquencies. This is because
classification as a nonaccrual loan is regarded as default under
the MUFG Group’s credit policy. Also, the MUFG Group defines
default as payment default for the purpose of the disclosure.
Regarding the Card, MUAH and Krungsri segments, the TDRs in the
above table represent modified nonaccrual and accruing loans, and
the defaulted loans in the above table represent nonaccruing and
accruing loans that became past due one month or more within the
Card segment, 60 days or more within the MUAH segment, and six
months or more within the Krungsri segment.
Historical payment defaults are one of the factors considered when
projecting future cash flows in determining the allowance for
credit losses for each segment.
The MUFG Group provided commitments to extend credit to customers
with TDRs. The amounts of such commitments were
¥44,116 million and ¥24,332 million at
March 31, 2014 and 2015, respectively. See Note 24 for
further discussion of commitments to extend credit.
Credit Quality Indicator
Credit quality indicators of loans by class at March 31, 2014
and 2015 are shown below:
At March 31, 2014: Normal Close
Likely to become Total (1)
(in
millions)
Commercial
Domestic ¥ 50,608,911 ¥ 3,549,135 ¥ 737,692 ¥ 54,895,738
Manufacturing 10,032,892 1,329,356 167,859 11,530,107
Construction 786,640 163,313 30,093 980,046
Real estate 9,747,076 716,302 141,774 10,605,152
Services 2,279,379 328,142 72,059 2,679,580
Wholesale and retail 7,582,548 651,659 211,770 8,445,977
Banks and other financial institutions 3,959,266 18,494 7,234 3,984,994
Communication and information services 1,349,217 68,863 24,956 1,443,036
Other industries 13,274,021 182,727 36,054 13,492,802
Consumer 1,597,872 90,279 45,893 1,734,044
Foreign-excluding MUAH and Krungsri 28,399,163 1,132,038 84,849 29,616,050
Loans acquired with deteriorated credit quality 32,430 33,100 10,210 75,740
Total ¥ 79,040,504 ¥ 4,714,273 ¥ 832,751 ¥ 84,587,528
Accrual Nonaccrual Total (1)
(in
millions)
Residential ¥ 14,864,856 ¥ 113,449 ¥ 14,978,305
Card ¥ 535,511 ¥ 73,110 ¥ 608,621
Credit Quality Based on Credit Quality Based on
Accrual Nonaccrual Pass Special Classified Total (1)(2)
(in
millions)
MUAH ¥ 3,003,826 ¥ 34,989 ¥ 3,946,961 ¥ 98,645 ¥ 95,167 ¥ 7,179,588
Normal Special Substandard or Total (1)
(in
millions)
Krungsri ¥ 2,923,087 ¥ 101,184 ¥ 51,590 ¥ 3,075,861
At March 31, 2015: Normal Close Watch Likely to become Total (1)
(in
millions)
Commercial
Domestic ¥ 51,408,556 ¥ 2,782,394 ¥ 514,023 ¥ 54,704,973
Manufacturing 10,522,968 1,049,399 118,956 11,691,323
Construction 887,030 69,953 20,108 977,091
Real estate 10,101,657 559,144 76,852 10,737,653
Services 2,383,133 235,506 54,189 2,672,828
Wholesale and retail 7,582,985 582,992 157,964 8,323,941
Banks and other financial institutions 4,313,416 10,539 5,715 4,329,670
Communication and information services 1,449,687 54,515 23,204 1,527,406
Other industries 12,504,635 147,477 18,668 12,670,780
Consumer 1,663,045 72,869 38,367 1,774,281
Foreign-excluding MUAH and Krungsri 34,355,619 990,519 99,546 35,445,684
Loans acquired with deteriorated credit quality 20,939 28,398 6,694 56,031
Total ¥ 85,785,114 ¥ 3,801,311 ¥ 620,263 ¥ 90,206,688
Accrual Nonaccrual Total (1)
(in
millions)
Residential ¥ 14,449,091 ¥ 97,471 ¥ 14,546,562
Card ¥ 497,017 ¥ 67,589 ¥ 564,606
Credit Quality Based on Credit
Quality Based on
Accrual Nonaccrual Pass Special Classified Total (1)(2)
(in
millions)
MUAH ¥ 3,820,953 ¥ 32,669 ¥ 5,229,700 ¥ 76,670 ¥ 80,889 ¥ 9,240,881
Normal Special Substandard or Total (1)
(in
millions)
Krungsri ¥ 3,653,931 ¥ 118,164 ¥ 85,231 ¥ 3,857,326
Notes:
(1) Total loans in the above table do not
include loans held for sale.
(2) Total loans of MUAH do not include
FDIC covered loans and small business loans which are not
individually rated totaling ¥59,963 million and
¥53,884 million as of March 31, 2014 and 2015,
respectively. The MUFG Group will be reimbursed for a substantial
portion of any future losses on FDIC covered loans under the terms
of the FDIC loss share agreements.
The MUFG Group classifies loans into risk categories based on
relevant information about the ability of borrowers to service
their debt, including, but not limited to, historical and current
financial information, historical and current payment experience,
credit documentation, public and non-public information about
borrowers and current economic trends as deemed appropriate to each
segment.
The primary credit quality indicator for loans within all classes
of the Commercial segment is the internal credit rating assigned to
each borrower based on the MUFG Group’s internal borrower
ratings of 1 through 15, with the rating of 1 assigned to a
borrower with the highest quality of credit. When assigning a
credit rating to a borrower, the MUFG Group evaluates the
borrower’s expected debt-service capability based on various
information, including financial and operating information of the
borrower as well as information on the industry in which the
borrower operates, and the borrower’s business profile,
management and compliance system. In evaluating a borrower’s
debt-service capability, the MUFG Group also conducts an assessment
of the level of earnings and an analysis of the borrower’s
net worth. Based on the internal borrower rating, loans within the
Commercial segment are categorized as Normal (internal borrower
ratings of 1 through 9), Close Watch (internal borrower ratings of
10 through 12), and Likely to become Bankrupt or Legally/Virtually
Bankrupt (internal borrower ratings of 13 through 15).
Loans to borrowers categorized as Normal represent those that are
not deemed to have collectibility issues.
Loans to borrowers categorized as Close Watch represent those that
require close monitoring as the borrower has begun to exhibit
elements of potential concern with respect to its business
performance and financial condition, the borrower has begun to
exhibit elements of serious concern with respect to its business
performance and financial condition, including business problems
requiring long-term solutions, or the borrower’s loans are
TDRs or loans contractually past due 90 days or more for special
reasons.
Loans to borrowers categorized as Likely to become Bankrupt or
Legally/Virtually Bankrupt represent those that have a higher
probability of default than those categorized as Close Watch due to
serious debt repayment problems with poor progress in achieving
restructuring plans, the borrower being considered virtually
bankrupt with no prospects for an improvement in business
operations, or the borrower being legally bankrupt with no
prospects for continued business operations because of non-payment,
suspension of business, voluntary liquidation or filing for legal
liquidation.
The accrual status is a primary credit quality indicator for loans
within the Residential segment, the Card segment and consumer loans
within the MUAH segment. The accrual status of these loans is
determined based on the number of delinquent payments. See Note 1
for further details of categorization of Accrual and
Nonaccrual.
Commercial loans within the MUAH segment are categorized as either
pass or criticized based on the internal credit rating assigned to
each borrower. Criticized credits are those that are internally
risk graded as Special Mention, Substandard or Doubtful. Special
Mention credits are potentially weak, as the borrower has begun to
exhibit deteriorating trends, which, if not corrected, may
jeopardize repayment of the loan and result in further downgrade.
Classified credits are those that are internally risk graded as
Substandard or Doubtful. Substandard credits have well-defined
weaknesses, which, if not corrected, could jeopardize the full
satisfaction of the debt. A credit classified as Doubtful has
critical weaknesses that make full collection improbable on the
basis of currently existing facts and conditions.
Loans within the Krungsri segment are categorized as Normal,
Special Mention, Substandard, Doubtful, and Doubtful of Loss
primarily based on their delinquency status. Loans categorized as
Special Mention generally represent those that have the overdue
principal or interest payments for a cumulative period exceeding
one month commencing from the contractual due date. Loans
categorized as Substandard, Doubtful or Doubtful of Loss generally
represent those that have the overdue principal or interest
payments for a cumulative period exceeding three months commencing
from the contractual due date.
For the Commercial, Residential and Card segments, credit quality
indicators are based on information as of March 31. For the
MUAH and Krungsri segment, credit quality indicators are generally
based on information as of December 31.
Past Due Analysis
Ages of past due loans by class at March 31, 2014 and 2015 are
shown below:
At March 31, 2014: 1-3 months Greater Total Current Total (1)(2) Recorded
(in
millions)
Commercial
Domestic ¥ 26,210 ¥ 53,632 ¥ 79,842 ¥ 54,815,896 ¥ 54,895,738 ¥ 6,543
Manufacturing 5,363 7,192 12,555 11,517,552 11,530,107 —
Construction 718 664 1,382 978,664 980,046 1
Real estate 4,859 9,689 14,548 10,590,604 10,605,152 2,233
Services 4,315 2,781 7,096 2,672,484 2,679,580 10
Wholesale and retail 4,624 22,829 27,453 8,418,524 8,445,977 3
Banks and other financial institutions 1 52 53 3,984,941 3,984,994 —
Communication and information services 680 1,371 2,051 1,440,985 1,443,036 —
Other industries 667 1,554 2,221 13,490,581 13,492,802 —
Consumer 4,983 7,500 12,483 1,721,561 1,734,044 4,296
Foreign-excluding MUAH and Krungsri 3,283 7,109 10,392 29,605,658 29,616,050 357
Residential 85,549 54,462 140,011 14,822,995 14,963,006 40,500
Card 21,653 33,381 55,034 540,886 595,920 —
MUAH 30,036 14,333 44,369 7,078,621 7,122,990 527
Krungsri 66,871 22,121 88,992 2,936,194 3,025,186 —
Total ¥ 233,602 ¥ 185,038 ¥ 418,640 ¥ 109,800,250 ¥ 110,218,890 ¥ 47,927
At March 31, 2015: 1-3 months Greater Total Current Total (1)(2) Recorded
(in
millions)
Commercial
Domestic ¥ 14,136 ¥ 22,786 ¥ 36,922 ¥ 54,668,051 ¥ 54,704,973 ¥ 5,574
Manufacturing 1,561 2,545 4,106 11,687,217 11,691,323 222
Construction 192 446 638 976,453 977,091 —
Real estate 3,142 5,707 8,849 10,728,804 10,737,653 922
Services 1,046 1,336 2,382 2,670,446 2,672,828 57
Wholesale and retail 2,741 4,237 6,978 8,316,963 8,323,941 47
Banks and other financial institutions 7 506 513 4,329,157 4,329,670 —
Communication and information services 520 414 934 1,526,472 1,527,406 —
Other industries 303 277 580 12,670,200 12,670,780 29
Consumer 4,624 7,318 11,942 1,762,339 1,774,281 4,297
Foreign-excluding MUAH and Krungsri 9,390 2,126 11,516 35,434,168 35,445,684 —
Residential 82,871 53,680 136,551 14,396,635 14,533,186 41,801
Card 18,694 32,097 50,791 501,758 552,549 —
MUAH 20,976 11,091 32,067 9,199,435 9,231,502 362
Krungsri 88,144 57,894 146,038 3,674,796 3,820,834 —
Total ¥ 234,211 ¥ 179,674 ¥ 413,885 ¥ 117,874,843 ¥ 118,288,728 ¥ 47,737
Notes:
(1) Total loans in the above table do not
include loans held for sale and loans acquired with deteriorated
credit quality.
(2) Total loans of MUAH do not include
¥1,600 million and ¥1,116 million of FDIC covered
loans at March 31, 2014 and 2015, respectively, which are not
subject to the guidance on loans and debt securities acquired with
deteriorated credit quality.
Allowance for Credit Losses
Changes in the allowance for credit losses by portfolio segment for
the fiscal years ended March 31, 2013, 2014 and 2015 are shown
below:
Fiscal year ended March 31, 2013: Commercial Residential Card MUAH Total
(in millions)
Allowance for credit losses:
Balance at beginning of fiscal year ¥ 984,308 ¥ 171,837 ¥ 68,903 ¥ 60,459 ¥ 1,285,507
Provision for credit losses 127,874 1,302 12,379 2,987 144,542
Charge-offs 80,534 16,283 32,135 15,585 144,537
Recoveries 23,410 353 2,723 5,189 31,675
Net charge-offs 57,124 15,930 29,412 10,396 112,862
Others (1) 13,405 — — 5,395 18,800
Balance at end of fiscal year ¥ 1,068,463 ¥ 157,209 ¥ 51,870 ¥ 58,445 ¥ 1,335,987
Fiscal year ended March 31, 2014: Commercial Residential Card MUAH Krungsri (2) Total
(in millions)
Allowance for credit losses:
Balance at beginning of fiscal year ¥ 1,068,463 ¥ 157,209 ¥ 51,870 ¥ 58,445 ¥
— ¥ 1,335,987
Provision (credit) for credit losses (70,091 ) (35,952 ) 5,617 (5,945 ) — (106,371 )
Charge-offs 158,875 4,577 20,125 7,521 — 191,098
Recoveries 29,478 230 3,264 4,378 — 37,350
Net charge-offs 129,397 4,347 16,861 3,143 — 153,748
Others (1) 7,882 3 — 10,667 — 18,552
Balance at end of fiscal year ¥ 876,857 ¥ 116,913 ¥ 40,626 ¥ 60,024 ¥ — ¥ 1,094,420
Fiscal year ended March 31, 2015: Commercial Residential Card MUAH Krungsri Total
(in millions)
Allowance for credit losses:
Balance at beginning of fiscal year ¥ 876,857 ¥ 116,913 ¥ 40,626 ¥ 60,024 ¥ — ¥ 1,094,420
Provision (credit) for credit losses 22,621 (30,858 ) 2,561 (1,883 ) 94,557 86,998
Charge-offs 119,160 13,894 10,785 5,349 27,973 177,161
Recoveries 18,995 205 3,268 4,027 — 26,495
Net charge-offs 100,165 13,689 7,517 1,322 27,973 150,666
Others (1) 8,403 — — 7,950 8,374 24,727
Balance at end of fiscal year ¥ 807,716 ¥ 72,366 ¥ 35,670 ¥ 64,769 ¥ 74,958 ¥ 1,055,479
Notes:
(1) Others are principally comprised of
gains or losses from foreign exchange translation.
(2) For the Krungsri segment, the
acquired loans were recorded at their fair values as of the
acquisition date, and there were no indications that an allowance
for credit loss was necessary for these loans for the fiscal year
ended March 31, 2014. Therefore, no allowance for credit loss
was stated at March 31, 2014 in the above table.
Allowance for credit losses and recorded investment in loans by
portfolio segment at March 31, 2014 and 2015 are shown
below:
At March 31, 2014: Commercial Residential Card MUAH Krungsri (2) Total
(in millions)
Allowance for credit losses:
Individually evaluated for impairment ¥ 640,442 ¥ 69,613 ¥ 29,244 ¥ 4,131 ¥ — ¥ 743,430
Collectively evaluated for impairment 209,117 45,355 11,312 55,777 — 321,561
Loans acquired with deteriorated credit quality 27,298 1,945 70 116 — 29,429
Total ¥ 876,857 ¥ 116,913 ¥ 40,626 ¥ 60,024 ¥ — ¥ 1,094,420
Loans:
Individually evaluated for impairment ¥ 1,459,268 ¥ 211,802 ¥ 102,930 ¥ 64,009 ¥ — ¥ 1,838,009
Collectively evaluated for impairment 83,052,520 14,751,204 492,990 7,060,581 3,025,186 108,382,481
Loans acquired with deteriorated credit quality 75,740 15,299 12,701 114,961 50,675 269,376
Total (1) ¥ 84,587,528 ¥ 14,978,305 ¥ 608,621 ¥ 7,239,551 ¥ 3,075,861 ¥ 110,489,866
At March 31, 2015: Commercial Residential Card MUAH Krungsri Total
(in millions)
Allowance for credit losses:
Individually evaluated for impairment ¥ 516,116 ¥ 49,317 ¥ 25,726 ¥ 4,146 ¥ 7,537 ¥ 602,842
Collectively evaluated for impairment 269,289 21,255 9,921 60,214 66,913 427,592
Loans acquired with deteriorated credit quality 22,311 1,794 23 409 508 25,045
Total ¥ 807,716 ¥ 72,366 ¥ 35,670 ¥ 64,769 ¥ 74,958 ¥ 1,055,479
Loans:
Individually evaluated for impairment ¥ 1,317,507 ¥ 167,099 ¥ 90,069 ¥ 60,726 ¥ 31,936 ¥ 1,667,337
Collectively evaluated for impairment 88,833,150 14,366,087 462,480 9,171,892 3,788,898 116,622,507
Loans acquired with deteriorated credit quality 56,031 13,376 12,057 62,147 36,492 180,103
Total (1) ¥ 90,206,688 ¥ 14,546,562 ¥ 564,606 ¥ 9,294,765 ¥ 3,857,326 ¥ 118,469,947
Notes:
(1) Total loans in the above table do not
include loans held for sale and represent balances without
adjustments in relation to unearned income, unamortized premiums
and deferred loan fees.
(2) For the Krungsri segment, the
acquired loans were recorded at their fair values as of the
acquisition date, and there were no indications that an allowance
for credit loss was necessary for these loans for the fiscal year
ended March 31, 2014. Therefore, no allowance for credit loss
was stated at March 31, 2014 in the above table.
Nonperforming loans were actively disposed of by sales during
recent years. The allocated allowance for credit losses for such
loans was removed from the allowance for credit losses and
transferred to the valuation allowance for loans held for sale upon
a decision to sell. Net charge-offs in the above table include a
decrease in the allowance for credit losses due to loan disposal
activity amounting to ¥0.4 billion, ¥16.2 billion and
¥3.5 billion for the fiscal years ended March 31,
2013, 2014 and 2015, respecti |
