Thank you very much for waiting. We would now like to start MUFJ Fiscal 2019 Results Briefing this next conference. I will serve as the emcee today. My name is Tanya from the IR office financial planning division. As for the proceedings our Senior Managing Corporate Executive, Group CFO Tetsuya Yonehana, will give a briefing on the results for about 15 minutes. And then we will take questions. The total time for this conference is 50 minutes at most. Before we start to briefing, let me give you some reminders. In the briefing, we may make future forecasts based on current outlook. But they're all accompanied by risk and uncertainty. Please be aware that the actual results may differ from the forecasts. Now, we will start the results briefing. Turning it over to you Ms. Yonehana.

Thanks from the Office of Group CFO. This past April, my name is Yonehana. I guided constructive dialogue with our shareholders and investors. And I thank you for the relationship. Thank you very much for joining us for this MUFJ Net conference. Please look at the material entitled financial highlights under Japanese GAAP for fiscal year ended March 31, 2020. Please turn to Page 1. Let me give you an overview of our 2019 financial results and shareholder return policies. The first bullet point at the top net operating profits, which is profits from our main business, it was up 105.8 billion year-on-year making a first turnaround of net operating profit in five years. Next profit attributable to owners of parent there was an increase in credit costs arising from the absence of write backs of loan loss reserves booked last year, as well as for single provisions in light of the impact of COVID-19. There are also net extraordinary losses resulting from one time amortization of goodwill of our overseas completed subsidiaries. As a result, profits attributable to owners of parent was down 244.5 billion year-on-year at 528.1 billion. On shareholder returns in line with the forecast announced in May of last year, annual dividend will be ¥25, including a ¥12.5 interim dividend, up by ¥3 over the previous year. As for fiscal 2020, currently, we cannot foresee when COVID-19 will be contained, and the scale of its impact on the real economy continues to be uncertain. But by making certain assumptions on the business environment, we have set a target of 550 billion for the profits attributable to owners of parent. As for our dividend forecasts based on the same business environment assumptions we made in our profit forecast. We set it at ¥25 for the full year.…

Now, we would like to take your questions. First question is from Nomura Securities. Takamia-san, please. Question. Takamia from Nomura Securities. I have two questions. The first question is how you feel about the level of capital, whether there's excess or shortage. The second question is how to fill the gap with the ROE target of the midterm business plan. As for the first question, based on the business environments that you can assess at the moment, the level of capital, do you think it is in excess or in shortage? How do you see it as a good CFO? I'd love to hear your views. The second question is the gap with the ROE target in the midterm business plan. This fiscal year's net income is forecasted to be lower than the traditionally expected levels. I can understand that in some respects, it cannot be helped. But on the other hand, when you think about ROE selling equity holdings, controlling risk weighted assets, adjusting for the shareholders equity, cutting costs. I feel that there are things that you can do outside of environmental factors. The company has now developed its plan, but based on the fact that it is greatly deviating from the ROE targets of the midterm business plan. As the management of the company will be making efforts to try to fill that gap or not. Can you talk about your thoughts? Thank you. Answer. Thank you very much. Let me answer them in turn. The first question, I believe, what about my sense of the level of capital, whether it's in excess or in shortage? But before I address that question, let me talk about our understanding of the current environment. As you know, the spread of COVID-19 is having an impact on the real economy.…

We would like to take the next question. The next question is from Mr. Nakamura from Goldman Sachs Securities. Please go ahead. Question. I'm Nakamura from Goldman Sachs, thank you for taking my question. I have two questions. At first, I would like to confirm about your credit cost plan of ¥450 billion. If possible, I would like to know the breakdown of these trends, such as by entities or by different categories if there are any? Moreover the preventative provision of ¥50 billion that was recorded in fiscal year 2019. If possible, I would like to know what is the positioning of that going to be this is my first question. My second question is in regards to this fiscal year's net operating profit. It's about a negative ¥135 billion year-on-year. The breakdown of this, how are you looking at the breakdown of the top-line revenue consisting factors in terms of increasing or decreasing? And also what is your assumption in regards to expenses? These are my two questions.

Your question was regarding fiscal year 2020 for credit cost of ¥450 billion. This ¥450 billion was estimated based on the scenario explained to you previously. In the process of reaching this total of ¥450 billion, we have analyzed in detail the impact on each business category company with a top down approach and compiled this ¥450 billion. Within this, the impact of COVID-19 for fiscal year 2020, is about ¥200 billion out of the ¥450 billion. In fiscal year 2019, approximately ¥50 billion provision for COVID-19 impact with net. Therefore, additional provisioning for COVID-19 for over all fiscal year 2020 will be ¥250 billion in total. As for the breakdown by entity, we cannot disclose it. However, within the additional provision made the overseas portion is relatively large. One cause of this is as disclosed as additional information results as new law in the United States, Bank of Ayudhya in Thailand. And then Danamon are incorporated into any MUFG consolidated basis under U.S. GAAP. There is the impact of CECL. Current expected credit loss model, which records expenses including the future expected expenses. Therefore, the total credit costs for ¥90 billion for the first quarter of the three banks total were incorporated into our first quarter numbers. This is included as one of the breakdown factors for the ¥450 billion, large part of the overall additional cost will be from overseas businesses. Next will be regarding your second question about net operating profit. Regarding net operating profit, if you look at Page 11 of the highlight of the material, you will see here items that are expected to impact your net operating profit. First item is declining interest rates. Especially declining U.S. interest rates impact and share prices impact. Especially trust assets business group is assumed to be most impacted by the decrease of assets under management. In addition to this as said in the scenario explanation previously, non-interest income will be impacted by the deteriorating economic activities. The total of fees is ¥300 billion, efforts to reduce expenses will continue. However, it is flat from the original plan. It's just the right.

So, the best image that I should have is that though it may be difficult to answer, but the market business, is there a downward pressure on the markets business or flat? I would like to know something about this.

When you say market business, you mean global market business group? Yes. As for the global markets business groups, there are various factors involved. So it is difficult to answer. However, unrealized gains of both domestic bonds and foreign bonds in total is over ¥900 billion. On the other hand, there's almost no other than in U.S. long-term and short-term interest rates. Japan didn't have any differences from the beginning, you as long-term and short-term interest rate difference is becoming smaller, this getting difficult to gain carry income. These are the two factors and as for the treasury income we are expecting it to be as originally planned.

Next question from Miziho Securities [indiscernible].

I have two questions. The first question is about credit costs. Of the credit cost targets of 450 billion this fiscal year, how have you factored in the exposure to resources as well as aviation finance risk? If you have sensitivity analysis of oil prices, could you tell us about that? The second question is about future risk. The remaining impairment risk of goodwill, both FSI and [indiscernible], can you comment on this?

The projected credit costs for fiscal 2020, the question I believe, was how we are looking at resources, energy and aviation finance. Earlier I explained how we estimated this amount of 450 billion. Allow me to say this again, based on the scenario that we developed by industry, we have reviewed individual companies and we added them up. And on top of that, we took a top down approach to come up with the final credit cost number. And in that process for resources, energy and the air transport industry including aviation finance, we have estimated a certain level of credit cost. Now the components are 450 billion, there is 200 billion that is COVID related this fiscal year, plus 50 billion from last year. This total of 250 billion, this includes credit cards for resources, energy and aviation finance. The answer may not be detailed enough, but our approach is to examine the situation by industry and by company to make estimates and adjustments. We did look at such risks to a certain level to arrive at this amount of credit costs. The second question about impairment risk of goodwill. First, the remaining balance of goodwill at the end of March, it was ¥283.6 billion. Of which large ones are, as you pointed out, FSI which was acquired in 2019. And, EULA most recently impairments have not been recognized for them. But with the unprecedented changes in the economic environment. We need to closely monitor the situation. Since we had amortization of goodwill in 2019, we want to be very vigilant. Thank you.

Next Citi Group Securities [Indiscernible]. Please go ahead. Question. I would like to know about CET1 ratio and dividend. Can you hear me? Answer: Yes, we can hear you. Question. My first question is regarding CET1 ratio. If you have any target figure for CET1 ratio during this fiscal year 2020, I would like to know and also within that, how much will risk weighted assets increase. If I can receive the comments, I would like to know that it's my first question. The second question is from the perspective of stability of dividends. And I'm looking at page 12. The premise for your fiscal year 2020 target is that at some point of time, the economy will recover. However, if a deeper and more serious than the scenarios economic deterioration continues, is it possible to continue a payout ratio around 50%? I would like to know about this point. Answer. Thank you. Your first question with regard to the CET1 ratio. We do have certain internal plans for our CET1 ratio and capital. However, recently capital demand from our customers is increasing. Thus we think that there may be a gap between the plan and the actual operation. As for risk weighted assets, it is as explained before, internally we conduct various simulations, as well as calculate what the CET1 ratio will be like and estimate how much we can respond to our customers capital needs. And how much of an increase will there be in terms of risk weighted assets. Therefore we conduct simulations, as well as control our risk weighted assets. By control we means that we offer review in what form can the loan be provided? Through these efforts, though there may be partial ups and down against the trend or time. However, we would like…

We are getting close to our scheduled ending time. Therefore, we would like to conclude this Q&A session. Before we close this meeting, Ms. Yonehana, would like to make some closing remarks. Thank you for asking many valuable questions today. The briefing session for investors scheduled on the 28th. Is also planned to be held in this net conference format. Therefore, I feel bad that the situation of not being able to directly exchange greetings with you is continuing. Under the circumstances of COVID-19 pandemic and many unclear parts remain in our business outlook, as the Group CFO I will place importance on having dialogues with our shareholders and investors as well as putting effort in conducting a stable and sustainable financial and capital operations. Moreover, we will continue to work on measures responding to issues that MUFG faces such as profitability improvement, expense control and risk weighted asset control in order to improve business management efficiency. I continue to seek your understanding and further support. Thank you very much for today.

Mr. Yonehana thank you. With this I would like to conclude Mitsubishi’s UFJ Financial Highlights for fiscal year ended March 31, 2020. I thank you very much for participating despite the late hours.