| Loans and Allowance for Credit Losses [Text Block] | 4. LOANS AND ALLOWANCE FOR CREDIT
LOSSES
Loans at March 31, 2016 and 2017 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.
2016 2017
(in
millions)
Domestic:
Manufacturing ¥ 12,158,642 ¥ 11,796,803
Construction 913,180 819,262
Real estate 11,175,130 11,622,372
Services 2,503,446 2,549,300
Wholesale and retail 7,891,364 7,970,579
Banks and other financial institutions (1) 5,146,932 5,223,906
Communication and information services 1,509,858 1,634,584
Other industries 14,739,826 8,898,712
Consumer 16,397,560 16,491,010
Total domestic 72,435,938 67,006,528
Foreign:
Governments and official institutions 1,125,031 1,037,795
Banks and other financial institutions (1) 13,654,335 13,844,964
Commercial and industrial 30,056,474 30,279,641
Other 5,818,747 6,334,551
Total foreign 50,654,587 51,496,951
Unearned income, unamortized premiums—net and deferred loan
fees—net (299,567 ) (288,507 )
Total (2) ¥ 122,790,958 ¥ 118,214,972
Notes:
(1) Loans to so-called “non-bank Non-bank
(2) The above table includes loans held
for sale of ¥100,889 million and
¥185,940 million at March 31, 2016 and 2017,
respectively.
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.
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 loans by class at March 31, 2016 and 2017 is
shown below:
2016 2017
(in
millions)
Commercial
Domestic ¥ 702,896 ¥ 471,148
Manufacturing 372,801 185,095
Construction 15,207 15,202
Real estate 60,134 44,374
Services 40,523 38,602
Wholesale and retail 132,015 131,213
Banks and other financial institutions 675 2,432
Communication and information services 20,270 18,685
Other industries 29,190 10,034
Consumer 32,081 25,511
Foreign-excluding MUAH and Krungsri 189,742 191,889
Residential 79,817 75,399
Card 62,546 61,424
MUAH 66,636 82,150
Krungsri 85,325 94,902
Total (1) ¥ 1,186,962 ¥ 976,912
Note:
(1) The above table does not include
loans held for sale of ¥400 million and nil at
March 31, 2016 and 2017, respectively, and loans acquired with
deteriorated credit quality of ¥12,805 million and
¥9,720 million at March 31, 2016 and 2017,
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, 2016 and 2017:
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
Recorded Loan
Balance
At March 31, 2017: Requiring
Not Requiring (1) Total (2) Unpaid Related
(in millions)
Commercial
Domestic ¥ 875,977 ¥ 187,738 ¥ 1,063,715 ¥ 1,107,203 ¥ 608,122
Manufacturing 555,009 39,587 594,596 602,038 411,787
Construction 15,007 9,068 24,075 24,907 9,107
Real estate 53,048 30,274 83,322 90,797 14,987
Services 48,304 23,162 71,466 78,097 31,074
Wholesale and retail 160,422 53,760 214,182 224,141 115,673
Banks and other financial institutions 1,836 607 2,443 2,443 1,674
Communication and information services 14,166 10,652 24,818 26,641 10,565
Other industries 10,714 5,806 16,520 17,403 7,226
Consumer 17,471 14,822 32,293 40,736 6,029
Foreign-excluding MUAH and Krungsri 262,887 23,019 285,906 309,975 164,682
Loans acquired with deteriorated credit quality 8,013 — 8,013 11,513 3,619
Residential 120,465 6,557 127,022 154,006 46,971
Card 71,849 462 72,311 80,392 20,523
MUAH 77,160 16,292 93,452 113,414 19,173
Krungsri 44,679 20,752 65,431 71,075 19,118
Total (3) ¥ 1,461,030 ¥ 254,820 ¥ 1,715,850 ¥ 1,847,578 ¥ 882,208
Notes:
(1) These loans do not require an
allowance for credit losses because the recorded loan balance
equals, or does not exceed, the present value of expected future
cash flows discounted at the loans’ effective interest rate,
loans’ observable market price, or the fair value of the
collateral if the loan is a collateral-dependent loan.
(2) Included in impaired loans at
March 31, 2016 and 2017 are accrual TDRs as follows:
¥457,219 million and
¥688,746 million—Commercial;
¥60,634 million and ¥50,213
million—Residential; ¥37,896 million and
¥32,564 million—Card; ¥49,601 million and
¥24,708 million—MUAH; and ¥8,494 million
and ¥23,588 million—Krungsri, respectively.
(3) In addition to impaired loans
presented in the above table, there were impaired loans held for
sale of ¥400 million and ¥9,879 million at
March 31, 2016 and 2017, 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, 2015, 2016 and
2017:
2015 2016 2017
Average Recognized Average Recognized Average Recognized
(in millions)
Commercial
Domestic ¥ 1,181,941 ¥ 23,216 ¥ 1,066,585 ¥ 16,572 ¥ 1,137,501 ¥ 14,116
Manufacturing 440,258 8,333 464,157 5,530 601,256 5,845
Construction 38,888 863 29,548 708 26,684 434
Real estate 170,549 3,163 123,203 2,169 96,229 1,593
Services 115,384 2,704 91,339 1,967 81,967 1,236
Wholesale and retail 283,213 5,358 249,656 4,333 238,798 3,466
Banks and other financial institutions 7,230 132 3,982 51 2,272 11
Communication and information services 35,249 837 29,547 677 27,531 570
Other industries 35,208 745 29,018 301 24,709 397
Consumer 55,962 1,081 46,135 836 38,055 564
Foreign-excluding MUAH and Krungsri 183,671 3,161 230,018 3,235 291,612 5,132
Loans acquired with deteriorated credit quality 14,758 697 11,549 495 9,974 432
Residential 187,642 4,241 154,760 2,918 133,876 1,883
Card 97,159 4,154 85,006 3,330 75,809 2,483
MUAH 59,711 2,040 71,966 1,550 91,690 1,664
Krungsri 18,764 609 40,037 2,252 51,597 2,201
Total ¥ 1,743,646 ¥ 38,118 ¥ 1,659,921 ¥ 30,352 ¥ 1,792,059 ¥ 27,911
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, 2015, 2016 and 2017:
2015 2016 2017
(in
millions)
Accrual TDRs:
Balance at beginning of fiscal year ¥ 832,267 ¥ 867,090 ¥ 613,844
Additions (new accrual TDR status) (1) 364,445 175,178 492,269
Transfers to other impaired loans (including nonaccrual TDRs) (28,001 ) (164,016 ) (40,182 )
Loans sold (223 ) (9 ) (1,637 )
Principal payments and other (301,398 ) (264,399 ) (244,475 )
Balance at end of fiscal year (1) ¥ 867,090 ¥ 613,844 ¥ 819,819
Other impaired loans (including nonaccrual TDRs):
Balance at beginning of fiscal year ¥ 1,028,760 ¥ 819,716 ¥ 1,111,306
Additions (new other impaired loans (including nonaccrual TDRs)
status) (1) (2) 281,456 617,481 541,789
Charge-off (79,684 ) (65,198 ) (106,097 )
Transfers to accrual TDRs (48,176 ) (32,190 ) (333,478 )
Loans sold (14,448 ) (12,224 ) (44,984 )
Principal payments and other (348,192 ) (216,279 ) (272,505 )
Balance at end of fiscal year (1) ¥ 819,716 ¥ 1,111,306 ¥ 896,031
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 accrual 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 accrual 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. For the
fiscal year ended March 31, 2017, lease receivables of
¥875 million and ¥74 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, and the related ending balances of such TDRs
amounting to ¥4,065 million and ¥389 million,
are also excluded from the balance of accrual TDRs and other
impaired loans, respectively, as of March 31, 2017.
(2) Included in the additions of other
impaired loans for the fiscal years ended March 31, 2015, 2016
and 2017 are nonaccrual TDRs as follows: ¥12,756 million,
¥10,954 million and ¥11,699 million—Card;
¥13,278 million, ¥19,725 million and
¥25,023 million—MUAH; and ¥4,009 million,
¥7,989 million and
¥7,471 million—Krungsri, respectively.
Troubled Debt Restructurings
The following table summarizes the MUFG Group’s TDRs by class
for the fiscal years ended March 31, 2015, 2016 and 2017:
2015 2016 2017
Troubled Debt
Restructurings
Pre- Post- Pre- Post- Pre- Post-
(in millions)
Commercial (1)(3)
Domestic ¥ 324,055 ¥ 312,215 ¥ 116,299 ¥ 76,530 ¥ 377,563 ¥ 377,563
Manufacturing 239,793 227,953 63,304 23,535 335,347 335,347
Construction 5,053 5,053 2,881 2,881 1,377 1,377
Real estate 13,555 13,555 7,167 7,167 7,457 7,457
Services 16,024 16,024 12,226 12,226 5,268 5,268
Wholesale and retail 43,643 43,643 27,545 27,545 22,868 22,868
Banks and other financial institutions 12 12 — — — —
Communication and information services 2,434 2,434 869 869 2,405 2,405
Other industries 2,005 2,005 1,240 1,240 1,493 1,493
Consumer 1,536 1,536 1,067 1,067 1,348 1,348
Foreign-excluding MUAH and Krungsri 3,090 2,927 23,849 23,849 58,178 58,178
Loans acquired with deteriorated credit quality 1,594 1,594 — — 1,030 1,030
Residential (1)(3) 26,073 26,073 19,316 19,316 13,092 13,092
Card (2)(3) 19,275 19,015 16,002 15,670 17,256 16,759
MUAH (2)(3) 18,624 18,258 64,064 64,064 38,558 38,449
Krungsri (2)(3) 19,796 19,767 17,869 17,781 32,340 32,340
Total ¥ 412,507 ¥ 399,849 ¥ 257,399 ¥ 217,210 ¥ 538,017 ¥ 537,411
2015 2016 2017
Troubled Debt Restructurings
Recorded Investment
(in millions)
Commercial (1)(3)
Domestic ¥ 5,234 ¥ 150,142 ¥ 4,587
Manufacturing 1,769 147,025 1,373
Construction 322 6 11
Real estate 119 745 38
Services 452 1,193 217
Wholesale and retail 2,044 1,090 2,530
Banks and other financial institutions — — —
Communication and information services 264 20 385
Other industries 149 40 —
Consumer 115 23 33
Foreign-excluding MUAH and Krungsri — — 11,268
Loans acquired with deteriorated credit quality — — —
Residential (1)(3) 345 284 231
Card (2)(3) 4,793 4,479 3,661
MUAH (2)(3) 2,839 3,925 6,624
Krungsri (2)(3) 1,455 6,219 3,984
Total ¥ 14,666 ¥ 165,049 ¥ 30,355
Notes:
(1) TDRs for the Commercial and
Residential segments include accruing loans, and do not include
nonaccrual loans.
(2) TDRs for the Card, MUAH and Krungsri
segments include accrual and nonaccrual loans.
(3) 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. For
the fiscal year ended March 31, 2017, extension of the stated
maturity date of loans was the primary concession type in the
Residential segment, reduction in the stated rate was the primary
concession type in the Commercial and Card segments and payment
deferrals was the primary concession type in the MUAH and Krungsri
segments.
The following table summarizes outstanding recorded investment
balances of TDRs by class at March 31, 2016 and 2017:
2016 2017
(in
millions)
Commercial (1)
Domestic ¥ 353,604 ¥ 592,578
Manufacturing 133,524 409,500
Construction 10,502 8,881
Real estate 46,206 38,953
Services 43,918 32,864
Wholesale and retail 95,652 82,968
Banks and other financial institutions 13 11
Communication and information services 6,869 6,133
Other industries 7,711 6,486
Consumer 9,209 6,782
Foreign-excluding MUAH and Krungsri 103,615 96,168
Residential (1) 60,634 50,213
Card (2) 79,309 72,311
MUAH (2) 98,843 69,830
Krungsri (2) 26,422 46,651
Total ¥ 722,427 ¥ 927,751
Notes:
(1) TDRs for the Commercial and
Residential segments include accruing loans, and do not include
nonaccrual loans.
(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, 2016
and 2017 are nonaccrual TDRs as follows: ¥41,413 million
and ¥39,747 million—Card; ¥49,242 million and
¥45,122 million—MUAH; and ¥13,756 million and
¥18,998 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
TDRs for the Commercial and Residential segments in the above
tables include accruing loans, and do not include nonaccrual loans.
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 in 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 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
¥31,302 million and ¥168,840 million at
March 31, 2016 and 2017, 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, 2016
and 2017 are shown below:
At March 31, 2016: Normal Close
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
At March 31, 2017: Normal Close Watch Likely to become Total (1)
(in
millions)
Commercial
Domestic
¥ 49,572,413 ¥ 2,161,965 ¥ 296,961 ¥ 52,031,339
Manufacturing
10,882,533 821,062 65,112 11,768,707
Construction
753,879 53,255 11,550 818,684
Real estate
11,137,637 352,785 42,382 11,532,804
Services
2,267,272 237,067 31,202 2,535,541
Wholesale and retail
7,403,680 462,577 98,423 7,964,680
Banks and other financial institutions
5,207,774 14,341 892 5,223,007
Communication and information services
1,573,518 45,342 15,357 1,634,217
Other industries
8,725,914 125,725 8,086 8,859,725
Consumer
1,620,206 49,811 23,957 1,693,974
Foreign-excluding MUAH and Krungsri
36,134,401 971,228 189,599 37,295,228
Loans acquired with deteriorated credit quality
16,503 12,572 5,065 34,140
Total
¥ 85,723,317 ¥ 3,145,765 ¥ 491,625 ¥ 89,360,707
Accrual Nonaccrual Total (1)
(in
millions)
Residential
¥ 14,256,263 ¥ 76,185 ¥ 14,332,448
Card
¥ 531,331 ¥ 61,822 ¥ 593,153
Credit Quality Based on Credit
Quality Based on
Accrual
Nonaccrual Pass Special Classified Total (1)(2)
(in
millions)
MUAH ¥ 3,837,763 ¥ 22,949 ¥ 4,879,158 ¥ 133,032 ¥ 151,553 ¥ 9,024,455
Normal Special Substandard or Total (1)
(in
millions)
Krungsri
¥ 4,672,435 ¥ 195,472 ¥ 98,335 ¥ 4,966,242
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 ¥43,037 million and
¥40,534 million as of March 31, 2016 and 2017,
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
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,
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, 2016 and 2017 are
shown below:
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
At March 31, 2017: 1-3 months Greater Total Current Total (1)(2) Recorded
(in
millions)
Commercial
Domestic ¥ 12,410 ¥ 19,468 ¥ 31,878 ¥ 51,999,461 ¥ 52,031,339 ¥ 5,817
Manufacturing 1,427 1,671 3,098 11,765,609 11,768,707 20
Construction 281 235 516 818,168 818,684 —
Real estate 2,655 5,058 7,713 11,525,091 11,532,804 1,542
Services 1,294 3,225 4,519 2,531,022 2,535,541 4
Wholesale and retail 1,932 1,883 3,815 7,960,865 7,964,680 149
Banks and other financial institutions 3 21 24 5,222,983 5,223,007 —
Communication and information services 583 216 799 1,633,418 1,634,217 —
Other industries 337 99 436 8,859,289 8,859,725 —
Consumer 3,898 7,060 10,958 1,683,016 1,693,974 4,102
Foreign-excluding MUAH and Krungsri 5,268 50,105 55,373 37,239,855 37,295,228 2,244
Residential 78,227 42,335 120,562 14,202,076 14,322,638 31,382
Card 17,490 31,298 48,788 533,484 582,272 —
MUAH 25,162 14,212 39,374 8,998,049 9,037,423 1,165
Krungsri 103,055 73,261 176,316 4,780,709 4,957,025 —
Total ¥ 241,612 ¥ 230,679 ¥ 472,291 ¥ 117,753,634 ¥ 118,225,925 ¥ 40,608
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
¥732 million and ¥438 million of FDIC covered
loans at March 31, 2016 and 2017, 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, 2015, 2016 and 2017 are shown
below:
Fiscal year ended March 31, 2015: Commercial Residential Card MUAH Krungsri (2) 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
Fiscal year ended March 31, 2017: Commercial Residential Card MUAH Krungsri Total
(in millions)
Allowance for credit losses:
Balance at beginning of fiscal year ¥ 816,559 ¥ 58,598 ¥ 31,187 ¥ 108,454 ¥ 96,332 ¥ 1,111,130
Provision (credit) for credit losses 177,295 12,224 13,289 (62 ) 50,942 253,688
Charge-offs 108,262 5,339 16,309 32,074 51,774 213,758
Recoveries 21,124 1,853 1,998 2,916 16,058 43,949
Net charge-offs 87,138 3,486 14,311 29,158 35,716 169,809
Others (1) (6,030 ) — — (5,501 ) (1,290 ) (12,821 )
Balance at end of fiscal year ¥ 900,686 ¥ 67,336 ¥ 30,165 ¥ 73,733 ¥ 110,268 ¥ 1,182,188
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 as of
March 31, 2014. Therefore, no allowance for credit losses was
stated at beginning of the fiscal year ended March 31, 2015 in
the above table.
Allowance for credit losses and recorded investment in loans by
portfolio segment at March 31, 2016 and 2017 are shown
below:
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
At March 31, 2017: Commercial Residential Card MUAH Krungsri Total
(in millions)
Allowance for credit losses:
Individually evaluated for impairment ¥ 772,804 ¥ 46,520 ¥ 20,523 ¥ 19,174 ¥ 19,035 ¥ 878,056
Collectively evaluated for impairment 115,489 19,255 9,632 54,096 91,137 289,609
Loans acquired with deteriorated credit quality 12,393 1,561 10 463 96 14,523
Total ¥ 900,686 ¥ 67,336 ¥ 30,165 ¥ 73,733 ¥ 110,268 ¥ 1,182,188
Loans:
Individually evaluated for impairment ¥ 1,349,621 ¥ 125,611 ¥ 71,879 ¥ 93,452 ¥ 65,028 ¥ 1,705,591
Collectively evaluated for impairment 87,976,946 14,197,027 510,393 8,944,409 4,891,997 116,520,772
Loans acquired with deteriorated credit quality 34,140 9,810 10,881 27,128 9,217 91,176
Total (1) ¥ 89,360,707 ¥ 14,332,448 ¥ 593,153 ¥ 9,064,989 ¥ 4,966,242 ¥ 118,317,539
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. 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 ¥3.5 billion,
¥0.8 billion and ¥11.0 billion for the fiscal
years ended March 31, 2015, 2016 and 2017, respectively.
The MUFG Group sold ¥748 billion, ¥640 billion
and ¥833 billion of loans within the Commercial segment
during the fiscal years ended March 31, 2015, 2016 and 2017,
respectively.
Loans Acquired in a Transfer
In accordance with |
