#1CLSA Japan Forum 2007 Mitsubishi UFJ Financial Group Investor Presentation February 2007 Quality for You O MUFG#2This document contains forward-looking statements in regard to forecasts, targets and plans of Mitsubishi UFJ Financial Group, Inc. ("MUFG") and its respective group companies (collectively, "the group"). These forward-looking statements are based on information currently available to the group and are stated here on the basis of the outlook at the time that this document was produced. In addition, in producing these statements certain assumptions (premises) have been utilized. These statements and assumptions (premises) are subjective and may prove to be incorrect and may not be realized in the future. Underlying such circumstances are a large number of risks and uncertainties. Please see other disclosure and public filings made or will be made by MUFG and the other companies comprising the group, including the latest kessan tanshin, financial reports, Japanese securities reports and annual reports, for additional information regarding such risks and uncertainties. The group has no obligation or intent to update any forward-looking statements contained in this document. In addition, information on companies and other entities outside the group that is recorded in this document has been obtained from publicly available information and other sources. The accuracy and appropriateness of that information has not been verified by the group and cannot be guaranteed. The financial information used in this document was prepared in accordance with accounting standards generally accepted in Japan, or Japanese GAAP. O MUFG 1#3Definitions of figures used in this document O MUFG Consolidated Sum of non- consolidated PL items BS items PL items BS items FY2006 Q1-Q3: Mitsubishi UFJ Financial Group (consolidated) FY2005 Q1-Q3: Mitsubishi UFJ Financial Group (consolidated) + UFJ Holdings (consolidated, April-September) (without other adjustments) After Dec. 31, 2005: Mitsubishi UFJ Financial Group (consolidated) Up to September 30, 2005: Mitsubishi Tokyo Financial Group (consolidated) + UFJ Holdings (consolidated) (without other adjustments) FY2006 Q1-Q3: Bank of Tokyo-Mitsubishi UFJ (non-consolidated) + Mitsubishi UFJ Trust and Banking Corporation (non-consolidated) (without other adjustments) FY2005: Bank of Tokyo-Mitsubishi UFJ (non-consolidated) + UFJ Bank (non- consolidated, April-December) + Mitsubishi UFJ Trust and Banking Corporation (non- consolidated) + UFJ Trust Bank (non-consolidated, April-September) (without other adjustments) FY2005 Q1-Q3: Bank of Tokyo-Mitsubishi (non-consolidated) + UFJ Bank (non- consolidated) + Mitsubishi UFJ Trust and Banking Corporation (non-consolidated) + UFJ Trust Bank (non-consolidated, April-September) (without other adjustments) FY2004 & FY2004 Q1-Q3: Bank of Tokyo-Mitsubishi (non-consolidated) + UFJ Bank (non-consolidated) + Mitsubishi Trust and Banking Corporation (non-consolidated) + UFJ Trust Bank (non-consolidated) (without other adjustments) After Mar. 31, 2006: Bank of Tokyo-Mitsubishi UFJ (non-consolidated) + Mitsubishi UFJ Trust and Banking Corporation (non-consolidated) (without other adjustments) Up to Sep. 30, 2005: Bank of Tokyo-Mitsubishi (non-consolidated) + UFJ Bank (non- consolidated) + Mitsubishi Trust and Banking Corporation (non-consolidated) + UFJ Trust Bank (non-consolidated) (without other adjustments) *Unless specifically stated otherwise figures do not include the separate subsidiaries. 2#4Contents Outline and Strengths of MUFG • Outline of MUFG Strengths of MUFG Comprehensive Group Strengths 7 O MUFG Medium-term Business Plan (Fiscal 2007) 5 6 Key Points of Medium-term Business Plan • Financial targets 15 16 Breakdown of increase in net operating profit 17 Building an optimal business portfolio 18 Outline of FY2006 Q1-Q3 Results Business strategy of 3 customer Business Units FY2006 Q1-Q3 Results 9 Summary (P/L) >Retail ➤Corporate • FY2006 Q1-Q3 Results 10 >Trust Assets Summary (B/S) • Capital Policy 2222 19 21 25 27 Deposit and lending rates 11 • Reduction of investment unit 28 • FRL disclosed loans/ 12 Credit-related costs • Comparison with other 13 • Strengthening internal controls • Completion of Day 2 and steady realization of benefits of integration 29 31 Japanese financial groups • Maintaining and strengthening brand 32 value 3#5Outline and Strengths of MUFG Outline of FY2006 Q1-Q3 Results Medium-term Business Plan (Fiscal 2007) O MUFG 4#6Outline of MUFG Key indices of MUFG*1 (Consolidated) (US$ bn) Market capitalization of major financial institutions*4 O MUFG 300 Total assets ¥191.3 tn 271 Loans*2 ¥87.3 tn 250 234 211 210 Deposits ¥116.2 tn 200 178 176 Capital*3 ¥13.9 tn (Net qualifying capital) 150 133 130 BIS ratio*3 12.17% 100 86 79 No. of employees 50 78,907 *1 As of end Dec. 2006 (No. of employees as of end Sep. 2006) *2 Bank a/c + Trust a/c *3 BIS international standard (preliminary basis) 0 Citi BOA HSBC ICBC*5 AIG JPM CCB*6 MUFG Mizuho SMFG *4 As of end Jan. 2007 (quoted from Bloomberg) *5 Industrial and Commercial Bank of China *6 China Construction Bank 5#7Strengths of MUFG Mitsubishi UFJ Financial Group (MUFG) O MUFG Strong customer base Approx. 40 million retail accounts Approx. 400,000 domestic corporate customers Broad global network 891 domestic retail branches*1 420 domestic corporate branches*1 410 overseas offices*1 Comprehensive Group strengths Core of banking, trust and securities + UNBC, investment trusts, credit cards, consumer finance, etc. Healthy financial base Repaid all public funds Tier 1 ratio = 6.88%*2 NPL ratio = 1.33%*2 Solid governance and trusted management Governance system appropriate for NYSE listed company *1 As of the end of Sep. 2006, sum of bank, trust bank, securities company and UBOC. (Not including internet branches and agents) *2 As of the end of Dec. 2006 Tier1 ratio is preliminary base 6#8Comprehensive Group strengths Main MUFG companies Mitsubishi UFJ Financial Group (MUFG) O MUFG Mitsubishi UFJ Lease & Finance* Scheduled for merger Apr 2007 Scheduled for merger Apr 2007 Diamond Lease Bank of Tokyo-Mitsubishi UFJ Mitsubishi UFJ Trust and Banking Mitsubishi UFJ Securities Mitsubishi UFJ NICOS* Merged Jan 2006 Merged Oct 2005 Merged Oct 2005 Bank of Tokyo-Mitsubishi Mitsubishi Trust and Banking Mitsubishi Securities UFJ NICOS UFJ Bank UFJ Trust Bank UFJ Tsubasa Securities DC Card UFJ Central Leasing * Following the merger, Mitsubishi UFJ NICOS and Mitsubishi UFJ Lease & Finance are scheduled to become a consolidated subsidiary and an equity method affiliate of MUFG. respectively. Other main Group companies Asset management Consumer finance Private banking Real estate Mitsubishi UFJ Asset Management / KOKUSAI Asset Management Venture capital Mitsubishi UFJ Capital ACOM / DC Cash One / Mobit Mitsubishi UFJ Merrill Lynch PB Securities Mitsubishi UFJ Real Estate Services Factoring Research & consulting Overseas Mitsubishi UFJ Factors Mitsubishi UFJ Research and Consulting UnionBanCal 7#9Outline and Strengths of MUFG O MUFG Outline of FY2006 Q1-Q3 Results Medium-term Business Plan (Fiscal 2007) 8#10FY 2006 Q1-Q3 Results Summary (P/L) (Consolidated) O MUFG Consolidated gross profits up ¥67.1 bn from FY 05 Q1-Q3 ➤ Despite lower JGB gains, Gross profits increased driven by overseas businesses, increase in investment trust related revenue and new consolidation of subsidiaries, etc. Operating expenses up ¥147.8 bn ➤ Main causes of increase were higher subsidiary expenses (including new consolidation of subsidiaries) and integration costs, etc. • Net income ¥690.5 bn ➤ Net income declined by ¥335.8 bn mainly due to decrease in gain on reversal of allowances Credit-related costs showed a gain of ¥6.7 bn ➤ Declined by ¥285.5 bn 5 16 \ bn From Consolidated Statement of Income FY 05 Q1-Q3 FY 06 Q1-Q3 Change Gross profits *1 2,620.1 2,687.2 67.1 1 (before credit costs for trust accounts) Net interest income 2 1,329.0 1,379.8 50.8 Net fees and commissions 778.0 839.9 61.8 3 4 Net gains on debt securities 40.9 6.2 (34.7) *1 Operating expenses 1,388.0 1,535.9 147.8 Net business profit*2 1,232.0 1,151.3 (80.7) 7 Non-recurring gains (losses) (135.5) (187.2) (51.7) 8 Ordinary profit 1,095.6 963.9 (131.6) 9 Net special gains (losses) 409.4 186.2 (223.2) Net income 1,026.4 690.5 (335.8) 10 *3 Credit-related costs 292.2 6.7 (285.5) 11 Credit-related costs 399.5 114.4 (285.0) 12 (Sum of non-consolidated) Figures in parenthesis refer to costs or losses. *1 Impact of new subsidiary consolidation approx. ¥170 bn in Gross profits and approx. ¥90 bn in General and administrative expenses (approx. figures). *2 Before credit costs for trust accounts and provision for general allowance for loan losses *3 Credit-related costs = Credit costs for trust accounts (included in gross profits) + Provision for formula allowance for loan losses+ credit-related costs (included in net non-recurring gains and losses) + Reversal of allowance for loan losses. 9#11FY 2006 Q1-Q3 Results Summary (B/S) (Consolidated) O MUFG \ bn • Loans up ¥1.2 tn from end Mar. 2006 driven mainly by increases in overseas lending • Deposits down ¥2.7 tn due to decline in corporate deposits. But retail deposits increased by ¥0.9 tn Continuing reduction in FRL disclosed loans, down ¥628.4 bn from end of Mar. 2006 NPL ratio declined to 1.33% Capital ratio of end Dec. 2006 12.17% From Consolidated Balance Sheet 1 Loans (banking +trust accounts) Loans (banking accounts) End Mar. 06 End Dec. 06 End Sep. Change 06 86,113.1 87,354.2 1,241.1 86,007.8 [85,763.1] [87,021.9] [1,258.8] [85,671.1] 2 Housing loans (Sum of non-consolidated)" *3 *1*2 18,244.7 17,360.9 (883.7) 17,406.5 3 Overseas loans*4 12,595.8 14,185.2 1,589.3 13,382.7 48,508.9 48,981.9 472.9 47,766.4 118,988.0 116,258.8 (2,729.2) 115,602.9 + 5 Investment securities (Banking accounts) Deposits FRL disclosed loans (Sum of non-consolidated) 1,825.9 1,197.4 (628.4) 1,277.8 NPL ratio 7 2.07% 1.33% (Sum of non-consolidated) (0.74) points 1.43% 8 Available-for-sale securities - appraisal differences 2,953.2 3,116.7 163.5 2,666.8 End Mar. End Dec. Tier 1 ratio 6.88% (Reference) 06 06 Capital ratio 12.20% 12.17% 9 Ratio of deferred tax assets to Tier 1 capital declined to 3.9% (Tier 1 ratio) (6.80%) (6.88%) 10 Net deferred tax assets/Tier 1 8.3% 3.9% *1 Including loans for the construction of rental properties. *2 Sum of non-consolidated + trust accounts *3 Loan securitization (FY06 Q1-Q3) approx. ¥1.2 tn *4 Overseas branches + UNBC (UnionBanCal Corporation). End Sep. 06 11.95% (6.82%) 7.1% 10#12Deposit and lending rates (Non-consolidated) O • Progress in revising interest rates for short-term prime lending led to expansion of the deposit-lending spread in Q3 Changes in deposit and lending rates (sum of non-consolidated basis) MUFG 1.6% 1.5% Lending rates 0.6% Recent interest rate changes 1.52% 0.5% July 18, 2006 1.42% 1.40% 1.4% 1.37% 0.4% 1.37% 1.38% 1.3% 1.33% 0.3% 1.32% Deposit-lending spread 1.2% 1.1% Deposit rates (right axis) 0.07% 0.2% ■ 0.14% 0.1% 0.03% 0.03% 1.0% FY05 H1 0.0% FY05 H2 FY06 H1 Oct.-Dec. 06*1 *1 Oct-Dec 06 figures are preliminary. Ordinary deposit rate 0.001% Aug. 10, 2006 0.100% Short-term prime rate 1.375% 1.625% Oct. 1, 2006 Variable mortgage rate 2.375% 2.625% ⇒ (the new rates apply to repayments by existing borrowers from January 2007) 11#13FRL disclosed loans/ Credit-related costs (Sum of non-consolidated) Quality of lending assets continues to improve, NPL ratio declined to 1.33% O MUFG • Reversal of allowance for loan losses resulted in credit-related gain of ¥114.4 bn on sum of non-consolidated basis Balance of FRL disclosed loans Credit-related costs (Sum of non-consolidated) (\tn) 4 (\bn) (Figures in parentheses represent costs) 800 3.33% 600 ¥3,009.8 bn 2.72% NPL Ratio 400 Bankrupt/ 3 Substantially bankrupt 2.07% 200 538.9 399.5 Full year 114.4 ¥2,486.2 bn 0 High risk 1.43% 2 ¥1,825.9 bn 1.33% (200) Q1-Q3(Apr. to Dec.) ¥1,277.8 bn ¥1,197.4 bn (400) (600) (543.7) Close observation (800) (1,000) (970.4) (1,200) End Mar. End Sep. End Mar. End Sep. End Dec. FY04 *1 FY05 *1 FY06 05 05 06 06 06 *1 Figures of FY04 Q1-Q3, FY04 full year and FY05 full year include separate subsidiaries. 12#14Comparison with other Japanese financial groups Gross profits/ Fees + Trust fees (Apr.-Dec. 2006 ) Consolidated Domestic deposits balance (sum of non-consolidated) (End Dec. 2006 ) O MUFG ( \100 mn ) 30,000 ( \ tn) 120 26,872 99 Deposits balance 25,000 gross profits*1 100 Of which: Net fees & commissions + trust fees Of which: Retail deposits 20,000 80 14,955 61 63 15,000 13,672 9,530 10,000 5,000 40 4,256 4,361 20 60 40 60 32 20 0 *1 MUFG Mizuho 0 SMFG MUFG Before credit costs for trust accounts Tier 1 ratio (Consolidated) 8% 6.88% 6% 4% 2% (End Dec. 2006) 1.6% Mizuho 61 34 SMFG NPL ratio (sum of non-consolidated) ( End Dec. 2006) 1.4% 1.33% 5.62% 5.68% 1.2% 1.0% 0.8% 1.43% 1.37% 0% 0.6% MUFG Mizuho SMFG MUFG Mizuho SMFG 13#15Outline and Strengths of MUFG Outline of FY2006 Q1-Q3 Results Medium-term Business Plan (Fiscal 2007) O MUFG 14#16Key points of Medium-term Business Plan O MUFG Growth strategy to join the global top 5 by market cap Strengthening internal controls globally and on an enterprise-wide basis Completion of Day 2 and steady realization of benefits of integration Maintaining and strengthening brand power 15#17Financial targets O • Targeting consolidated net operating profit of approx. ¥2.5 tn MUFG and net income of approx. ¥1.1 tn in FY09 (\bn) (Consolidated) FY 06 Forecasts FY 09 Targets Net operating profit Approx. 1,600 Approx. 2,500 Expense ratio Approx. 57% Around 45% Net income 870 Approx. 1,100 ROE Approx. 15% Approx. 15% Macro-economic assumptions FY06 FY07 FY08 FY09 Unsecured call money (period average) 0.2% 0.6% 1.0% 1.0% 10 year JGB (period average) 1.8% 2.1% 2.5% 2.5% Yen/Dollar (value at end of period) ¥115 ¥115 ¥115 ¥115 Real GDP growth ratio (annual rate) 2.1% 1.8% 2.3% 1.6% 16#18Breakdown of increase in net operating profit • Aiming for net operating profit of approx. ¥2.5 tn in FY09, driven by strengthening strategic business areas and the effect of interest rate increase Breakdown of increase in net operating profit O MUFG (\ bn) 2,700 2,500 2,300 2,100 1,900 1,700 Approx. ¥1,600 bn 1,500 Retail Global Market/other Approx. ¥2,500 bn Trust Assets Corporate Effect of interest rate increase 0 FY06 (forecast) FY09 (target) 17#19Building an optimal business portfolio Build an optimal business portfolio for sustainable growth by focusing on growing profits in the three customer businesses led by retail and by strengthening risk/return management Change in business portfolio due to organic growth Global Market/other Trust Assets 5% 7% Corporate overseas (incl. UNBC) 15% FY06 forecast net operating profit approx. ¥1.6 tn Corporate domestic 47% Retail 26% Global Market/other about Trust Assets about 5% 5-10% Retail about Corporate overseas (incl. UNBC) about 10-15%*1 30-35% FY09 target approx. ¥2.5 tn Corporate domestic O MUFG about 40-45% *1 Targeting 20% overseas including non-organic Key points on organic growth High growth/Reforming business model High growth/Promoting growth Retail Securities and Securities intermediation Overall customer assets (Yen deposits, investment products, insurance) Consumer finance Corporate CIB Securities intermediation Settlement business Overseas business Real estate Trust Assets Overseas assets Pensions Investment trust management/administration Low growth/Pursuing efficiency Housing loans Privately-placed bonds 18#20Business Unit strategy: Retail O • Strengthen frontline capabilities. Provide global standard services, products and advices • Win customers' trust through robust compliance and high level security. Fulfill our social responsibility as a leading bank Retail Business Unit net operating profit target FY09: Aiming to double the FY06 forecast MUFG Key points of Retail Business Unit medium-term plan (1) Promote internet/mobile strategy Full-fledged response to the internet society Initiatives in online settlement (2) Strengthen 'overall customer assets' sales approach Full-scale response to shift from savings to investment, extending as far as insurance. Balance of overall customer assets (\tn) (bank + trust bank + securities) 110 100 90 80 70 60 Effect of interest rate increase (3) Pursue fundamental advances in retail securities business 0 Become top-class in retail securities business (flow) FY04 FY05 FY06 (estimate) Increase assets under management ☐ Deposit etc., ☐ Investment ☐ Securities intermediation Insurance trust annuities Others (securities assets etc.,) FY09 (target) Approx. ¥400 bn FY06(forecast) FY09(target) with securities intermediation Strengthen online securities (4) Expansion and long-term sustainable growth in consumer finance Credit card: Market/customer needs-driven approach Card loan: Actively respond to increasing need for banks (5) Radical reorganization and expansion of lending to individuals Business opportunities expanding with increasing need for banks, driven by higher demand for loans among individuals, the shift from government housing loans to private-sector loans, the aging of the population and the amendment of Money Lending Business Law 19#21Asset management business and internet strategy O • Further expand profits by leveraging our base of 40 million customer accounts MUFG in securities intermediation, insurance agency business, etc. • Use our internet strategy to rapidly acquire mass market, and other new customers other than bank and trustbank customers 'Net' channel business Non- bank, non- trust bank customers strategy Net/Mobile strategy Bank + Trust bank customer base (40 million) 2m accounts ¥10M* kabu.com Securities Secure position as 520,000 largest net securities company accounts Specialist KDDI Cellphone users mobile 11m accounts internet bank ¥0.5M* 26 million Mobile internet banking DeNA Paygent 27m accounts 8.5 million users Net settlement services Internet banking 87 million users * deposit balance per account 'Real' channel business strategy Bank + Trust bank Additional opening of private banking offices • Provide broad range of investment products to a wide customer base Yen deposits Investment trusts Securities intermediation Foreign currency deposits Insurance annuities Mitsubishi UFJ Merrill Lynch PB Securities Strengthen securities Intermediation business Newly deregulated insurance products! Full deregulation of insurance agency business Mitsubishi UFJ Securities Enhanced products ●Assign specialized personnel ●Strengthen internal controls (244 Area Business Administrators) 20#22Business Unit strategy: Corporate Domestic In the large corporate customer business segment, aim to secure position as leading player by developing CIB model,etc. • In SME business, aim to become the clear leading bank nationwide Corporate Domestic Business Unit net operating profit target FY09 Aiming for 30-40% increase compared to FY06 forecast Approx. ¥740.0 bn FY06(forecast) Effect of interest rate rises FY09(target) O MUFG Key points of Corporate Domestic Business Unit medium-term plan [1] Large companies/investment banking (1) Develop CIB*1 model (2) Quantum expansion of M&A business (3) Promote O&D*2 model through full-scale development of CPM*3 (4) Strengthen secondary business (5) Strengthen real estate business [2] SMEs (1) Expand business base/lending base (2) Strengthen small business (3) Initial focus on clients' capital strategy (4) Develop approach of capturing commercial flows (5) Strengthen forex business *1 Corporate & Investment Banking *2 Origination & Distribution *3 Credit Portfolio Management 21#23Strengthen Corporate Investment Banking (CIB) business with an integrated bank/securities business approach O MUFG MUS becoming 100% sub. provides opportunity to create an MUFG CIB model that leverages capital strength + bank customer base+ integrated Business Unit framework --From origination to distribution (O.S.T.D): optimize value-chain by optimally unifying bank/securities S Structuring O Origination T Trading D Distribution MUFG Bank Customer base Market type, indirect MUFG Bank financing CPM functions Customer base 400,000 corporate customers Securi ties Lending (Unified coverage) Structuring Direct financing Capital markets business with banking customers Structuring No. of securities intermediation accounts (end Jan. 07 (Securitization) Approx. 150,000 (up 70,000 from end Mar. 06) Securities intermediation Introduction Equity/Debt Underwriting/ Sales MUFG capital strength/personnel (Multichannel) 400,000 corporate customers Retail accounts 40 million Secu rities Retail assets under management ¥86 trillion 22#24Business Unit strategy: Corporate Overseas Aiming to increase in net operating profits by approx.20% through organic growth. Aiming for overseas business to comprise 20% of all business, including through non-organic growth Overseas Corporate Business Unit net profit target FY09 Aiming for increase of approx. 20% over FY06 forecast Approx. ¥230 bn FY06(forecast) FY09(target) O MUFG Key points of Corporate Overseas Business Unit medium-term plan (1) Strengthen Asia business ✓ Accumulate quality assets from business with Japanese and non-Japanese clients by leveraging our solid customer base ✓ Strengthen settlement business by improving cash management services (2) Strengthen non-Japanese company business in Europe and the Americas ✓ Expand and deepen customer base. Develop leveraged finance ✓ CPM business (Launch structured credit business) (3) Strengthening investment banking business ✓ Leverage key strengths in products, funds, etc. (4) Equity participation/alliance strategy ✓ Pursue equity participation and alliances particularly in Asia (5) Reinforce organization ✓ Ensure a global compliance framework 23#25Overseas strategy • Establish an international business model appropriate for a global top five financial group by actively developing investment and alliance strategy and utilizing Japan's leading global network Europe 【Branch network development] Established BTMU Russian subsidiary Opened BTMU (Holland) Prague branch Opened MUS International Milan branch Local branches/ Europe Americas [Investments and Alliances/ Branch Network Development] Alliance between MUS and Perella Weinberg Partners O MUFG Alliance between MUTB and Mellon Group for development and sale of investment products Branch network development: Opening of MUS (USA) San Francisco Branch Union Bank Of California 322 branches in the U.S. as of Sep.06 15 Local branches/ N. America 17 5 MUFG M zuho SMBC Local branches/ Middle East and Africa 2 Asia 8 MUFG Mizuho SMBC Local branches/ C. and S. America 3 2 MUFG Mizuho SMBC MUFG M zuho SMBC Local branches/Asia and Oceania 42 26 23 MUFG M zuho SMBC 【Investments and Alliances/ Branch network development] Business alliances: MUTB alliance with three pension management institutions (China) BTMU alliance with Bank of China (China, including investment ) BTMU alliance with CIMB (Malaysia) BTMU alliance with Vietcombank (Vietnam) MUS alliance with ICICI Bank (India) MUS alliance with Daewoo Securities (South Korea) Acquisition: Bank Nusantara Parahyangan (Indonesia) Branch network development: Wuxi branch, Tianjin Binhai rep. office (both BTMU) Mumbai rep. office ( MUS ) Note: Figures for MUFG are figures for BTMU Branch numbers are total of branches, sub-branches, representative offices and subsidiaries (formulated based on financial reports of each company, etc. as of June 2006) 24#26Business Unit strategy: Trust Assets Provide full-line asset management and administration services. Aiming to be No. 1 trust institution/group in both quality and quantity Trust Assets Business Unit net operating profit target FY09: Aiming for an increase of approx. 50% compared to FY06 forecast Approx. ¥80 bn O MUFG Key points of Trust Assets Business Unit medium-term plan (1) Pensions: Promptly provide advanced management services, etc. ✓ Expand non-passive asset management products Strengthen approach to main and sub-main clients through bank/trust bank cooperation Make full preparations for abolition of tax qualified pension system/ Day 2 ✓ Strengthen approach to ensure enhanced customer satisfaction (2) Investment trust management: Fully benefit from market expansion Extend product lineup ✓ Expand non-Group sales channels. Strengthen sales support (3) Investment trust administration: Enjoy the benefits of market expansion Expand assets in trust through new funds and schemes Win more mandates from securities company affiliated asset management companies (4) Custody: Expand assets and improve added value ✓ Strengthen forex and lending functions ✓ Provide unified management service for management of domestic and overseas assets (5) Other trust business, etc. Expand sales of our products to new client segments (overseas/ financial institutions/NPOs/business corporations, etc.) FY06(forecast) FY09(target) 25#27Blank O MUFG 26#28Capital policy • Strengthen equity capital and enhance shareholder returns while using capital efficiently to achieve sustainable growth and enhanced profitability O MUFG Use capital to achieve sustainable growth and enhance profitability 1. Strengthen risk/return management and efficiently allocate capital 2. Strategic investments to generate sustainable growth 3. If no attractive investment opportunities, consider options for returning capital via share buybacks, etc. Strengthen equity capital Targets: Tier 1: 8% Equity capital: 12% ➤ Also focus on capital quality Capital composition mainly Tier 1 Limited dependence on preferred share capital, etc. MUFG's corporate value Enhance shareholder returns ➤Sustained increase in dividend payments ➤Medium term target of 20% payout ratio 27#29Reduction of investment unit Decision to reduce stock investment unit, aiming to expand shareholder base and enhance corporate value*1 Details of reduction Schedule of subsequent events Investment unit to be reduced to one-tenth of the current unit (1) One for 1,000 split of ordinary stock (2) Adoption of unit share system (one unit = 100 shares) ⚫ Late Jun. 2007 • Mid Aug. 2007 ● Sep. 25-28, 2007 ⚫ Sep. 29, 2007 Sep. 30, 2007 Shareholders meeting Begin submission of existing share certificates O MUFG Suspension of trading on Tokyo Stock Exchange, Osaka Securities Exchange and Nagoya Stock Exchange Record date for stock split Final date for submission of outstanding share certificates Effective date of stock split Adoption of share unit system ⚫ Oct. 1, 2007 Begin trading with new investment unit *1 Assuming approval at Shareholders Meeting 28#30Strengthening internal controls: Future direction of group compliance framework Create an efficient and effective framework, enterprise-wide, • Build an independent, consistent system extending from holding company to branches Holding company: corporate center Group Compliance Framework MUFG director responsible for compliance (Chief Compliance Officer) MUFG Compliance Division O MUFG Director responsible corporate for compliance Director responsible for compliance Director responsible for compliance center Compliance & Legal Division Compliance & Legal Division Compliance Control Division the holding company to branches (vertical controls) Create an independent and consistent framework, from Integrated Ibusiness Iheadquarters functions supervisory Strengthen categories transcend business functions that compliance Strengthening Business Unit compliance managers Business Unit compliance managers Business Unit compliance managers Branches Internal Control Managers Branches Area Business Administrators Compliance officers Overseas compliance Bank managers Internal Control Managers Branches Trust bank Internal Control Managers Branches Securities company Enterprise-wide (horizontal controls) 29#31Strengthening compliance on the frontline O MUFG Ensure proper business execution through strengthening ability to respond to compliance matters not only at HQ (corporate center) level, but also at business divisions and branches, in order to cope with changes in the operating environment and the expanding Group size Bank HQ (corporate center) Director responsible for compliance Response to new laws/regulations ((Financial Instruments and Exchange Law. Tightening of money laundering regulations) Changes in economic and social environment Customer needs Expanding Group size Compliance & Legal Division Reporting/ Supervision Consultation Business Units Branches Business Unit compliance managers Internal Control Managers Responding to customer requests Area Business Administrators Compliance officers Overseas compliance managers Service provision Customer Strengthening ability to respond on the frontline To strengthen ability to respond in branches, we will: (1) Assign divisional internal control managers responsible for compliance (2) Reinforce compliance frameworks in our corporate and international business unit Retail: Assigned 244 Area Business Administrators in all areas Corporate: Assigned 35 compliance officers in corporate banking branches Established Corporate Compliance Division International: Established Global Compliance Division Started to strengthen anti-money laundering approach, etc. Plan to increase international compliance specialists by 100 30#32Completion of Day 2 and steady realization of benefits of integration • Preparations proceeding as planned toward Day 2. Integration synergies estimated to be fully achieved in FY09. O MUFG - FY09 cost synergies approx. ¥220 bn. Average annual one-off integration costs*1 estimated to be approx. ¥100 bn - Aiming for top-line synergies of approx. ¥70 bn in FY09 (\bn) Integration synergies: results and targets Subsidiaries related: Approx. ¥30 bn HQ expenses: Approx. ¥50-60 bn Branch integration/closure: Approx. ¥10-20 bn Systems related: Approx. ¥40 bn Personnel expenses: Approx. ¥10 bn Full-scale systems integration (Day2) Approx. 70 FY06 (forecast) FY07 (target) Appox. 30-40 Approx. 150 Approx. 220 FY08 (target) FY09 (target) Top line synergies Cost synergies Subsidiaries related: Approx. ¥30 bn HQ expenses: Approx. ¥60 bn Branch integration/closure: Approx. ¥20 bn Systems related: Approx. ¥80-90 bn Personnel expenses: Approx. ¥20 bn *1 One-off costs resulting from integration including systems integration costs (depreciated), branch closure elimination and consolidation costs, tax, CI, head office organization closure and consolidation costs, etc. One-off integration costs*1 FY06-09 annual average approx. ¥100bn 31#33Maintaining and strengthening brand value O MUFG • Strengthen brand value by improving services >>Increase customers and become their main bank ➤ No fee money transfers*1 between branches/head office and bank/trust bank branches (since May 2006) Reduction in usage charges for convenience store ATMs scheduled for March 2007 Shareholders (Investors) Aim to increase shareholder value over the medium- term by carrying out business management that takes into consideration a broad range of stakeholders, including shareholders, customers, society and employees, etc. Customers Employees MUFG Local Community, Society Environment *1 ATM card transactions, direct banking (excluding manned, non-automated transactions) *2 The following charges are scheduled to be applied to Bank of Tokyo-Mitsubishi UFJ customers using convenience store ATMs operated by Seven Bank, E-net, and Lawson ATM Networks. Weekdays from 8:45 to 18:00: No charge; Other weekday times, weekends and holidays: ¥105. These charges represent a ¥105 reduction in all categories. 32#34No.1 Service No.1 Reliability No.1 Global Coverage O MUFG 33#35For U.S. Investors Filings with the U.S. SEC O MUFG Mitsubishi UFJ Financial Group, Inc. ("MUFG") filed a registration statement on Form F-4 ("Form F-4") with the U.S. SEC in connection with the proposed share exchange transaction to make Mitsubishi UFJ Securities Co., Ltd. ("MUS") a wholly-owned subsidiary of MUFG. The Form F-4 contains a prospectus and other documents. After the Form F-4 is declared effective, MUS plans to mail the prospectus contained in the Form F-4 to its U.S. shareholders prior to the shareholders meeting at which the proposed transaction will be voted upon. The Form F-4 and prospectus contain important information about MUFG, MUS, the share exchange transaction and related matters. U.S. shareholders of MUS are urged to read the Form F-4, the prospectus and the other documents that are filed with the U.S. SEC in connection with the share exchange transaction carefully before they make any voting and investment decision with respect to the proposed share exchange transaction. The Form F-4, the prospectus and all other documents filed with the U.S. SEC in connection with the share exchange transaction will be available when filed, free of charge, on the U.S. SEC's web site at www.sec.gov. In addition, the prospectus and all other documents filed with the U.S. SEC in connection with the share exchange transaction will be made available to MUS shareholders, free of charge, by calling, writing or e-mailing: MUFG Contact :Mr. Hitoshi Shimamura 2-7-1, Marunouchi, Chiyoda-ku, Tokyo 100-8330, Japan Telephone: 81-3-3240-6608 Email: [email protected] MUS Contact :Mr. Hiroshi Kutose 2-5-2, Marunouchi, Chiyoda-ku Tokyo 100-0005, Japan Telephone: 81-3-6213-6584 Email: [email protected] In addition to the Form F-4, the prospectus and the other documents filed with the U.S. SEC in connection with the share exchange transaction, MUFG is obligated to file annual reports with, and submit other information to, the U.S. SEC. Such filings with the U.S. SEC are available to the public from commercial document retrieval services and at the web site maintained by the U.S. SEC at www.sec.gov. Forward-Looking Statements This communication contains forward-looking information and statements about MUFG, MUS and their businesses after completion of the transaction. Forward-looking statements are statements that are not historical facts. These statements include financial projections and estimates and their underlying assumptions, statements regarding plans, objectives and expectations with respect to future operations, products and services, and statements regarding future performance. Forward-looking statements are generally identified by the words "expect," "anticipates," "believes," "intends," "estimates" and similar expressions. Although MUFG's and MUS's management believe that the expectations reflected in such forward-looking statements are reasonable, investors and holders of MUS securities are cautioned that forward-looking information and statements are subject to various risks and uncertainties, many of which are difficult to predict and generally beyond the control of MUFG and MUS, that could cause actual results and developments to differ materially from those expressed in, or implied or projected by, the forward-looking information and statements. These risks and uncertainties include those discussed or identified in the public filings with the U.S. SEC and the local filings made by MUFG and MUS, including those listed under "Cautionary Statement Concerning Forward-Looking Statements" and "Risk Factors" in the prospectus included in the registration statement on Form F-4 that MUFG has filed with the U.S. SEC. Other than as required by applicable law, MUFG and MUS do not undertake any obligation to update or revise any forward-looking information or statements. 34