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Mitsubishi UFJ Financial Group Inc ADR MUFG

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Morningstar’s Analysis

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We Like MUFG’s Deal to Sell Union Bank of Calif. to an Acquirer More Able to Maximize Its Potential

Michael Makdad Senior Equity Analyst

Analyst Note

| Michael Makdad |

We raise our fair value estimate for Mitsubishi UFJ Financial Group, or MUFG, by 10.5% to JPY 685 per share ($6.23 for the ADRs) after it announced a deal to sell California-based Union Bank for $5.5 billion cash and $2.5 billion worth of U.S. Bancorp shares (equivalent to a 2.9% stake in the acquirer). We continue to prefer Sumitomo Mitsui Financial Group, or SMFG, over MUFG among Japanese megabanks. However, the difference in our preference has narrowed somewhat with this positive announcement from MUFG. Our new estimate values MUFG at 0.51 times book value, versus our fair multiple of 0.53 times for SMFG.

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Company Profile

Business Description

Mitsubishi UFJ Financial Group is the largest bank in Japan in terms of market capitalization and assets with an 8.5% share of all domestic loans as of December 2020. It is the largest non-Chinese bank group globally and has a balance sheet slightly larger than those of JPMorgan Chase and HSBC Holdings. MUFG's operations in Japan account for around half of profit, banking in Thailand and Indonesia for around 15% and equity-method earnings from Morgan Stanley more than 30%.

7-1, Marunouchi 2-Chome, Chiyoda-ku
Tokyo, 100-8330, Japan
T +81 332408111
Sector Financial Services
Industry Banks - Diversified
Most Recent Earnings Mar 31, 2021
Fiscal Year End Dec 31, 2021
Stock Type
Employees 163,500