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Mitsubishi UFJ (MUFG) Earnings Rise Y/Y in Q1 Fiscal 2023
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Mitsubishi UFJ Financial Group, Inc. (MUFG - Free Report) reported profits attributable to owners of the parent for first-quarter fiscal 2023 (ended Jun 30) of ¥558.3 billion ($3.91 billion), up significantly year over year.
Increased gross profits, a rise in net fees and commissions and net trading profits acted as tailwinds. Also, a rise in loan and deposit balances were positives. On the flip side, a decline in net interest income (NII) was a dampener.
Gross Profits Rise, G&A Expenses Decline
Gross profits (before credit costs for trust accounts) for the quarter under review were ¥1.24 trillion ($8.69 billion), up 10.4% year over year. The upsurge was mainly on higher net fees and commissions as well as net trading profits.
Results reflect a 59.2% decline in NII, which was ¥584.1 billion ($4.09 billion). Nonetheless, trust fees, along with net fees and commissions, totaled ¥401.4 billion ($2.81 billion), up 8.8%. Net trading profits (including net other operating profits) were ¥255.6 billion ($1.79 billion) against a loss of ¥231.2 billion in the prior year.
Mitsubishi UFJ’s total credit costs at the period end were ¥41.6 billion ($290 million), down from ¥73.9 billion witnessed a year ago.
G&A expenses witnessed a year-over-year decrease from ¥699.6 billion to ¥684.6 billion ($4.79 billion).
The expense ratio was 55.1%, down from 62.1% in the prior-year period. A decrease in this ratio indicates a rise in profitability.
Balance Sheet Position Strong
As of Jun 30, 2023, Mitsubishi UFJ reported period-end loans of ¥113.33 trillion ($790 billion), up 2.6% sequentially. The rise can be primarily attributed to an increase in overseas loans.
Deposits sequentially rose to ¥216.59 trillion ($1.52 trillion) from ¥213.5 trillion, as demand for domestic individuals, and overseas and other deposits increased.
Total assets summed ¥387.45 trillion ($2.71 trillion), up marginally on a sequential basis.
Our Viewpoint
MUFG has a robust business model, a diversified product mix and solid capital ratios. However, high costs may hurt the bottom line in the near term.
Mitsubishi UFJ Financial Group, Inc. Price, Consensus and EPS Surprise
Deutsche Bank (DB - Free Report) reported second-quarter 2023 profits attributable to its shareholders of €763 million ($831 million), down 27% from the year-ago quarter. The Germany-based lender reported profit before tax of €1.41 billion ($1.53 billion), down 9% year over year.
Results of DB were largely driven by higher net revenues and strong capital position. However, higher provisions for credit losses and a rise in operating expenses were offsetting factors.
Barclays (BCS - Free Report) reported second-quarter 2023 net income attributable to ordinary equity holders of £1.33 billion ($1.66 billion), up 24% from the prior-year quarter.
BCS recorded an increase in expenses and lower revenues in the reported quarter. Also, higher credit impairment charges hurt results to an extent.
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Mitsubishi UFJ (MUFG) Earnings Rise Y/Y in Q1 Fiscal 2023
Mitsubishi UFJ Financial Group, Inc. (MUFG - Free Report) reported profits attributable to owners of the parent for first-quarter fiscal 2023 (ended Jun 30) of ¥558.3 billion ($3.91 billion), up significantly year over year.
Increased gross profits, a rise in net fees and commissions and net trading profits acted as tailwinds. Also, a rise in loan and deposit balances were positives. On the flip side, a decline in net interest income (NII) was a dampener.
Gross Profits Rise, G&A Expenses Decline
Gross profits (before credit costs for trust accounts) for the quarter under review were ¥1.24 trillion ($8.69 billion), up 10.4% year over year. The upsurge was mainly on higher net fees and commissions as well as net trading profits.
Results reflect a 59.2% decline in NII, which was ¥584.1 billion ($4.09 billion). Nonetheless, trust fees, along with net fees and commissions, totaled ¥401.4 billion ($2.81 billion), up 8.8%. Net trading profits (including net other operating profits) were ¥255.6 billion ($1.79 billion) against a loss of ¥231.2 billion in the prior year.
Mitsubishi UFJ’s total credit costs at the period end were ¥41.6 billion ($290 million), down from ¥73.9 billion witnessed a year ago.
G&A expenses witnessed a year-over-year decrease from ¥699.6 billion to ¥684.6 billion ($4.79 billion).
The expense ratio was 55.1%, down from 62.1% in the prior-year period. A decrease in this ratio indicates a rise in profitability.
Balance Sheet Position Strong
As of Jun 30, 2023, Mitsubishi UFJ reported period-end loans of ¥113.33 trillion ($790 billion), up 2.6% sequentially. The rise can be primarily attributed to an increase in overseas loans.
Deposits sequentially rose to ¥216.59 trillion ($1.52 trillion) from ¥213.5 trillion, as demand for domestic individuals, and overseas and other deposits increased.
Total assets summed ¥387.45 trillion ($2.71 trillion), up marginally on a sequential basis.
Our Viewpoint
MUFG has a robust business model, a diversified product mix and solid capital ratios. However, high costs may hurt the bottom line in the near term.
Mitsubishi UFJ Financial Group, Inc. Price, Consensus and EPS Surprise
Mitsubishi UFJ Financial Group, Inc. price-consensus-eps-surprise-chart | Mitsubishi UFJ Financial Group, Inc. Quote
Mitsubishi UFJ currently carries a Zacks Rank #4 (Sell).
You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Performance of Other Foreign Banks
Deutsche Bank (DB - Free Report) reported second-quarter 2023 profits attributable to its shareholders of €763 million ($831 million), down 27% from the year-ago quarter. The Germany-based lender reported profit before tax of €1.41 billion ($1.53 billion), down 9% year over year.
Results of DB were largely driven by higher net revenues and strong capital position. However, higher provisions for credit losses and a rise in operating expenses were offsetting factors.
Barclays (BCS - Free Report) reported second-quarter 2023 net income attributable to ordinary equity holders of £1.33 billion ($1.66 billion), up 24% from the prior-year quarter.
BCS recorded an increase in expenses and lower revenues in the reported quarter. Also, higher credit impairment charges hurt results to an extent.