| Loans and Allowance for Credit Losses [Text Block] | 4. LOANS AND ALLOWANCE FOR CREDIT
LOSSES
Loans at March 31, 2015 and 2016 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.
2015 2016
(in
millions)
Domestic:
Manufacturing ¥ 11,703,428 ¥ 12,158,642
Construction 977,892 913,180
Real estate 10,911,240 11,175,130
Services 2,684,355 2,503,446
Wholesale and retail 8,345,481 7,891,364
Banks and other financial institutions (1) 4,329,964 5,146,932
Communication and information services 1,527,811 1,509,858
Other industries 12,674,004 14,739,826
Consumer 16,720,590 16,397,560
Total domestic 69,874,765 72,435,938
Foreign:
Governments and official institutions 1,052,051 1,125,031
Banks and other financial institutions (1) 11,973,021 13,654,335
Commercial and industrial 29,593,255 30,056,474
Other 6,065,782 5,818,747
Total foreign 48,684,109 50,654,587
Unearned income, unamortized premiums—net and deferred loan
fees—net (293,672 ) (299,567 )
Total (2) ¥ 118,265,202 ¥ 122,790,958
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 ¥88,927 million and
¥100,889 million at March 31, 2015 and 2016,
respectively, which are carried at the lower of cost or fair
value.
The MUFG Group classifies its loan portfolio into the following
portfolio segments—Commercial, Residential, Card, MUAH, and
Krungsri based on the grouping used by the MUFG Group to determine
the allowance for credit losses. See Note 1 for further
information.
Loans of ¥950,295 million, which were transferred from
the former BTMU Bangkok Branch to Krungsri, were included in the
Commercial segment as of March 31, 2015. For the fiscal year
starting from April 1, 2015, these loans were integrated into
the Krungsri segment since the methodologies used to estimate the
allowance for credit losses on these loans were changed to those of
the Krungsri segment. An allowance for credit losses relating to
these loans was not material as of March 31, 2015.
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, 2015 and
2016 is shown below:
2015 2016
(in
millions)
Commercial
Domestic ¥ 514,026 ¥ 702,896
Manufacturing 118,956 372,801
Construction 20,108 15,207
Real estate 76,969 60,134
Services 54,189 40,523
Wholesale and retail 157,964 132,015
Banks and other financial institutions 5,715 675
Communication and information services 23,204 20,270
Other industries 18,562 29,190
Consumer 38,359 32,081
Foreign-excluding MUAH and Krungsri 96,899 189,742
Residential 95,645 79,817
Card 66,979 62,546
MUAH 45,173 66,636
Krungsri 68,103 85,325
Total (1) ¥ 886,825 ¥ 1,186,962
Note:
(1) The above table does not include
loans held for sale of ¥624 million and
¥400 million at March 31, 2015 and 2016,
respectively, and loans acquired with deteriorated credit quality
of ¥26,248 million and ¥12,805 million at
March 31, 2015 and 2016, 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, 2015 and 2016:
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 (3) ¥ 1,409,335 ¥ 277,471 ¥ 1,686,806 ¥ 1,815,912 ¥ 607,287
Recorded Loan
Balance
At March 31, 2016: Requiring
Not Requiring (1) Total (2) Unpaid Related
(in millions)
Commercial
Domestic ¥ 815,185 ¥ 241,159 ¥ 1,056,344 ¥ 1,101,627 ¥ 467,729
Manufacturing 420,377 85,948 506,325 514,155 283,697
Construction 16,660 8,986 25,646 26,561 7,845
Real estate 67,508 38,833 106,341 113,917 17,074
Services 62,296 22,057 84,353 90,651 27,593
Wholesale and retail 174,946 52,718 227,664 239,763 87,999
Banks and other financial institutions 542 146 688 689 459
Communication and information services 17,047 10,091 27,138 28,312 11,303
Other industries 30,661 6,237 36,898 38,782 24,473
Consumer 25,148 16,143 41,291 48,797 7,286
Foreign-excluding MUAH and Krungsri 285,298 6,008 291,306 305,048 175,040
Loans acquired with deteriorated credit quality 11,365 — 11,365 21,390 3,286
Residential 133,435 8,518 141,953 173,777 39,629
Card 78,770 539 79,309 88,567 21,294
MUAH 68,502 32,022 100,524 108,119 13,422
Krungsri 27,873 16,476 44,349 49,879 14,532
Total (3) ¥ 1,420,428 ¥ 304,722 ¥ 1,725,150 ¥ 1,848,407 ¥ 734,932
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, 2015 and 2016 are accrual TDRs as follows:
¥708,414 million and
¥457,219 million—Commercial;
¥71,454 million and ¥60,634
million—Residential; ¥44,661 million and
¥37,896 million—Card; ¥34,106 million and
¥49,601 million—MUAH; and ¥8,455 million
and ¥8,494 million—Krungsri, respectively.
(3) In addition to impaired loans
presented in the above table, there were loans held for sale that
were impaired of ¥624 million and ¥400 million
at March 31, 2015 and 2016, 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, 2014, 2015 and
2016:
2014 2015 2016
Average Recognized Average Recognized Average Recognized
(in millions)
Commercial
Domestic ¥ 1,359,635 ¥ 23,283 ¥ 1,181,941 ¥ 23,216 ¥ 1,066,585 ¥ 16,572
Manufacturing 430,415 6,954 440,258 8,333 464,157 5,530
Construction 47,818 982 38,888 863 29,548 708
Real estate 228,045 3,472 170,549 3,163 123,203 2,169
Services 140,627 2,806 115,384 2,704 91,339 1,967
Wholesale and retail 339,619 5,857 283,213 5,358 249,656 4,333
Banks and other financial institutions 10,719 170 7,230 132 3,982 51
Communication and information services 44,417 945 35,249 837 29,547 677
Other industries 49,612 985 35,208 745 29,018 301
Consumer 68,363 1,112 55,962 1,081 46,135 836
Foreign-excluding MUAH and Krungsri 187,656 2,848 183,671 3,161 230,018 3,235
Loans acquired with deteriorated credit quality 30,101 1,659 14,758 697 11,549 495
Residential 264,277 5,153 187,642 4,241 154,760 2,918
Card 113,993 5,218 97,159 4,154 85,006 3,330
MUAH 60,943 3,468 59,711 2,040 71,966 1,550
Krungsri — — 18,764 609 40,037 2,252
Total ¥ 2,016,605 ¥ 41,629 ¥ 1,743,646 ¥ 38,118 ¥ 1,659,921 ¥ 30,352
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, 2014, 2015 and 2016:
2014 2015 2016
(in
millions)
Accrual TDRs:
Balance at beginning of fiscal year ¥ 945,623 ¥ 832,267 ¥ 867,090
Additions (new accrual TDR status) (1) 231,063 364,445 175,178
Transfers to other impaired loans (including nonaccrual TDRs) (48,295 ) (28,001 ) (164,016 )
Loans sold (7,698 ) (223 ) (9 )
Principal payments and other (288,426 ) (301,398 ) (264,399 )
Balance at end of fiscal year (1) ¥ 832,267 ¥ 867,090 ¥ 613,844
Other impaired loans (including nonaccrual TDRs):
Balance at beginning of fiscal year ¥ 1,255,143 ¥ 1,028,760 ¥ 819,716
Additions (new other impaired loans (including nonaccrual TDRs)
status) (1)(2) 313,086 281,456 617,481
Charge-off (123,037 ) (79,684 ) (65,198 )
Transfers to accrual TDRs (63,828 ) (48,176 ) (32,190 )
Loans sold (39,879 ) (14,448 ) (12,224 )
Principal payments and other (312,725 ) (348,192 ) (216,279 )
Balance at end of fiscal year (1) ¥ 1,028,760 ¥ 819,716 ¥ 1,111,306
Notes:
(1) For the fiscal year ended
March 31, 2015, 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 TDRs and other impaired loans, respectively, 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. For the fiscal year ended
March 31, 2016, lease receivables of ¥3,124 million
and ¥240 million in the Krungsri segment, which were accrual
TDRs and nonaccrual TDRs, respectively, are excluded from the
additions of TDRs and other impaired loans, respectively, and the
related ending balances of such TDRs amounting to
¥4,172 million and ¥567 million, are also
excluded from the balance of accrual TDRs and other Impaired loans,
respectively, as of March 31, 2016.
(2) Included in additions of other
impaired loans for the fiscal years ended March 31, 2014, 2015
and 2016 are nonaccrual TDRs as follows: ¥11,054 million,
¥12,756 million and ¥10,954 million—Card;
¥16,228 million, ¥13,278 million and
¥19,725 million—MUAH; and nil,
¥4,009 million and
¥7,989 million—Krungsri, respectively.
Troubled Debt Restructurings
The following tables summarize the MUFG Group’s TDRs by class
during the fiscal years ended March 31, 2014, 2015 and
2016:
2014 2015 2016
Troubled Debt
Restructurings
Pre- Post- Pre- Post- Pre- Post-
(in millions)
Commercial (1)(3)
Domestic ¥ 175,011 ¥ 151,505 ¥ 324,055 ¥ 312,215 ¥ 116,299 ¥ 76,530
Manufacturing 93,968 70,462 239,793 227,953 63,304 23,535
Construction 3,435 3,435 5,053 5,053 2,881 2,881
Real estate 21,977 21,977 13,555 13,555 7,167 7,167
Services 13,149 13,149 16,024 16,024 12,226 12,226
Wholesale and retail 32,458 32,458 43,643 43,643 27,545 27,545
Banks and other financial institutions 1 1 12 12 — —
Communication and information services 1,802 1,802 2,434 2,434 869 869
Other industries 4,414 4,414 2,005 2,005 1,240 1,240
Consumer 3,807 3,807 1,536 1,536 1,067 1,067
Foreign-excluding MUAH and Krungsri 20,175 20,175 3,090 2,927 23,849 23,849
Loans acquired with deteriorated credit quality 7,616 7,616 1,594 1,594 — —
Residential (1)(3) 32,777 32,777 26,073 26,073 19,316 19,316
Card (2)(3) 17,141 16,869 19,275 19,015 16,002 15,670
MUAH (2)(3) 29,945 29,403 18,624 18,258 64,064 64,064
Krungsri (2)(3) — — 19,796 19,767 17,869 17,781
Total ¥ 282,665 ¥ 258,345 ¥ 412,507 ¥ 399,849 ¥ 257,399 ¥ 217,210
2014 2015 2016
Troubled Debt Restructurings
Recorded
Investment
(in millions)
Commercial (1)(3)
Domestic ¥ 22,503 ¥ 5,234 ¥ 150,142
Manufacturing 11,644 1,769 147,025
Construction 86 322 6
Real estate 1,174 119 745
Services 1,481 452 1,193
Wholesale and retail 5,834 2,044 1,090
Banks and other financial institutions — — —
Communication and information services 1,639 264 20
Other industries 152 149 40
Consumer 493 115 23
Foreign-excluding MUAH and Krungsri — — —
Loans acquired with deteriorated credit quality — — —
Residential (1)(3) 474 345 284
Card (2)(3) 4,015 4,793 4,479
MUAH (2)(3) 2,912 2,839 3,925
Krungsri (2)(3) — 1,455 6,219
Total ¥ 29,904 ¥ 14,666 ¥ 165,049
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 year ended
March 31, 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 years ended March 31,
2015 and 2016, 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, 2015 and 2016:
2015 2016
(in
millions)
Commercial (1)
Domestic ¥ 611,382 ¥ 353,604
Manufacturing 348,981 133,524
Construction 12,915 10,502
Real estate 63,462 46,206
Services 45,158 43,918
Wholesale and retail 108,504 95,652
Banks and other financial institutions 691 13
Communication and information services 9,576 6,869
Other industries 9,545 7,711
Consumer 12,550 9,209
Foreign-excluding MUAH and Krungsri 97,032 103,615
Residential (1) 71,454 60,634
Card (2) 90,705 79,309
MUAH (2) 56,299 98,843
Krungsri (2) 19,924 26,422
Total ¥ 946,796 ¥ 722,427
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, 2015
and 2016 are nonaccrual TDRs as follows: ¥46,044 million
and ¥41,413 million—Card; ¥22,193 million and
¥49,242 million—MUAH; and ¥7,136 million and
¥13,756 million—Krungsri, respectively.
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, 2014, 2015 and 2016 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 tables include 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 tables 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
¥24,332 million and ¥31,302 million at
March 31, 2015 and 2016, respectively. See Note 25 for
further discussion of commitments to extend credit.
Credit Quality Indicator
Credit quality indicators of loans by class at March 31, 2015
and 2016 are shown below:
At March 31, 2015: Normal Close
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
At March 31, 2016: Normal Close Watch
Likely to become Total (1)
(in
millions)
Commercial
Domestic
¥ 54,765,780 ¥ 2,077,010 ¥ 703,122 ¥ 57,545,912
Manufacturing
11,129,300 602,097 372,941 12,104,338
Construction
842,100 55,250 15,207 912,557
Real estate
10,540,325 461,238 60,125 11,061,688
Services
2,232,882 216,327 40,523 2,489,732
Wholesale and retail
7,226,154 523,813 132,013 7,881,980
Banks and other financial institutions
5,133,471 12,676 675 5,146,822
Communication and information services
1,432,234 51,533 20,270 1,504,037
Other industries
14,611,047 96,522 29,276 14,736,845
Consumer
1,618,267 57,554 32,092 1,707,913
Foreign-excluding MUAH and Krungsri
35,202,041 1,102,422 195,776 36,500,239
Loans acquired with deteriorated credit quality
18,333 16,081 5,991 40,405
Total
¥ 89,986,154 ¥ 3,195,513 ¥
904,889 ¥
94,086,556
Accrual Nonaccrual Total (1)
(in
millions)
Residential
¥ 14,156,030 ¥
80,696 ¥
14,236,726
Card
¥ 530,858 ¥ 63,051 ¥ 593,909
Credit Quality Based
on Credit
Quality Based on
Accrual
Nonaccrual Pass Special Classified Total (1)(2)
(in
millions)
MUAH ¥ 3,650,744 ¥
27,137 ¥ 5,373,188 ¥
126,279 ¥
177,779 ¥
9,355,127
Normal Special Substandard or Total (1)
(in
millions)
Krungsri
¥ 4,421,957 ¥ 161,557 ¥ 90,767 ¥ 4,674,281
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) Total loans of MUAH do not include
FDIC covered loans and small business loans which are not
individually rated totaling ¥53,884 million and
¥43,037 million as of March 31, 2015 and 2016,
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 segments, 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, 2015 and 2016 are
shown below:
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
At March 31, 2016: 1-3 months Greater Total Current Total (1)(2) Recorded
(in
millions)
Commercial
Domestic ¥ 13,948 ¥ 22,305 ¥ 36,253 ¥ 57,509,659 ¥ 57,545,912 ¥ 6,374
Manufacturing 670 4,209 4,879 12,099,459 12,104,338 27
Construction 443 427 870 911,687 912,557 —
Real estate 3,260 5,761 9,021 11,052,667 11,061,688 1,856
Services 2,085 1,084 3,169 2,486,563 2,489,732 106
Wholesale and retail 2,436 3,225 5,661 7,876,319 7,881,980 147
Banks and other financial institutions — 36 36 5,146,786 5,146,822 2
Communication and information services 1,062 435 1,497 1,502,540 1,504,037 73
Other industries 187 117 304 14,736,541 14,736,845 —
Consumer 3,805 7,011 10,816 1,697,097 1,707,913 4,163
Foreign-excluding MUAH and Krungsri 17,685 23,488 41,173 36,459,066 36,500,239 —
Residential 79,243 50,449 129,692 14,095,995 14,225,687 40,835
Card 18,181 31,655 49,836 532,601 582,437 —
MUAH 17,247 8,563 25,810 9,331,855 9,357,665 241
Krungsri 87,023 70,139 157,162 4,494,996 4,652,158 —
Total ¥ 233,327 ¥ 206,599 ¥ 439,926 ¥ 122,424,172 ¥ 122,864,098 ¥ 47,450
Notes:
(1) Total loans in the above table do not
include loans held for sale and loans acquired with deteriorated
credit quality and represent balances without adjustments in
relation to unearned income, unamortized premiums and deferred loan
fees.
(2) Total loans of MUAH do not include
¥1,116 million and ¥732 million of FDIC covered
loans at March 31, 2015 and 2016, 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, 2014, 2015 and 2016 are shown
below:
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
Fiscal year ended March 31, 2016: Commercial Residential Card MUAH Krungsri Total
(in millions)
Allowance for credit losses:
Balance at beginning of fiscal year ¥ 807,716 ¥ 72,366 ¥ 35,670 ¥ 64,769 ¥ 74,958 ¥ 1,055,479
Provision (credit) for credit losses 117,024 (9,478 ) 885 47,429 76,002 231,862
Charge-offs 116,620 6,691 8,323 5,721 61,416 198,771
Recoveries 21,110 2,401 2,955 2,412 12,934 41,812
Net charge-offs 95,510 4,290 5,368 3,309 48,482 156,959
Others (1) (12,671 ) — — (435 ) (6,146 ) (19,252 )
Balance at end of fiscal year ¥ 816,559 ¥ 58,598 ¥ 31,187 ¥ 108,454 ¥ 96,332 ¥ 1,111,130
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 losses was necessary for these loans for the fiscal year
ended March 31, 2014. Therefore, no allowance for credit
losses 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, 2015 and 2016 are shown
below:
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
At March 31, 2016: Commercial Residential Card MUAH Krungsri Total
(in millions)
Allowance for credit losses:
Individually evaluated for impairment ¥ 642,769 ¥ 39,247 ¥ 21,294 ¥ 13,422 ¥ 14,401 ¥ 731,133
Collectively evaluated for impairment 159,761 17,908 9,886 94,926 81,785 364,266
Loans acquired with deteriorated credit quality 14,029 1,443 7 106 146 15,731
Total ¥ 816,559 ¥ 58,598 ¥ 31,187 ¥ 108,454 ¥ 96,332 ¥ 1,111,130
Loans:
Individually evaluated for impairment ¥ 1,347,650 ¥ 140,451 ¥ 78,770 ¥ 100,524 ¥ 43,609 ¥ 1,711,004
Collectively evaluated for impairment 92,698,501 14,085,236 503,667 9,257,873 4,608,549 121,153,826
Loans acquired with deteriorated credit quality 40,405 11,039 11,472 39,767 22,123 124,806
Total (1) ¥ 94,086,556 ¥ 14,236,726 ¥ 593,909 ¥ 9,398,164 ¥ 4,674,281 ¥ 122,989,636
Note:
(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.
Nonperforming loans were actively disposed of by sales during
recent years. |
