Mitsubishi UFJ Financial Group Aktie

Good evening. I am Togawa, Group CFO. May I thank all the investors, shareholders and rating agencies for joining MUFG's online conference call today despite the late hour. Please look at the material titled Financial Highlights under JGAAP for the fiscal year ended March 31, 2026. First, let me explain our FY '25 financial results, followed by FY '26 performance targets, shareholder return policy and others.

Let me begin with the income statement summary. Please turn to Page 8. FY '24 on the far left column includes the impact of the change in financial results closing date at Krungsri in Thailand last year. Therefore, the far right column shows the actual year-on-year change after adjusting for this impact. I will explain this page using the adjusted year-on-year change.

Line 1, gross profits increased by JPY 1,290.2 billion year-on-year. Line 2 and below show the breakdown of gross profits. Net interest income increased by the impact of higher yen interest rates, increased lending with improved lending margins and improvements due to last year's bond portfolio rebalancing. In addition, net fees and commissions expanded significantly, mainly driven by domestic and overseas solution business and contribution from acquisitions. Fee income increased by around JPY 300 billion for 2 consecutive years.

On the other hand, Line 4, net trading profits and net other operating profits increased significantly year-on-year due to special factors. With the review of yen interest rate hedging operations in FY '25, JPY 200 billion of deferred hedging gains and losses recorded in net assets was recognized as realized losses. On the other hand, we had a rebound from approximately JPY 780 billion loss on sale of debt securities, mainly foreign bond following bond portfolio rebalancing in FY '24. Due to these 2 special factors, gross profits increased significantly. The review of yen interest rate hedging operations in FY '25 will boost our net interest income by approximately JPY 20 billion from FY '26 onward.

Next, Line 6, G&A expenses increased by JPY 424.6 billion year-on-year. The increase is around JPY 200 billion, excluding the FX impact of approximately JPY 100 billion and impact of acquisitions of around JPY 120 billion. This is due to strategic expense allocation in Retail and Digital Business Group, AI, cybersecurity, et cetera, and the impact of inflation, among other factors.

As a result, Line 8, net operating profits increased significantly by JPY 865.5 billion year-on-year. Next, Line 9, total credit costs increased by JPY 290.6 billion year-on-year. I will explain this later. Line 10, net gains on equity securities decreased by JPY 108.1 billion due to the absence of large gain on sale of equity holdings in FY '24. Line 12, equity in earnings of equity method investees increased significantly year-on-year, mainly thanks to exceptionally strong performance of Morgan Stanley. As a result, Line 16, profits attributable to owners of parent increased by JPY 586.3 billion year-on-year.

ROE on JPX basis reached 11.3%, exceeding 11% for the first time since MUFG was established. This demonstrates a solid improvement in both profitability and capital efficiency. ROE, excluding the impact of equity holdings is approximately 10.4%, indicating steady progress toward the medium- to long-term ROE target of 12%.

Page 9 through 12 show the results by business group. I will not go into detail, but in line with the steady evolution of our growth strategy, NOP increased year-on-year in all business groups.

Please turn to Page 14 on balance sheet summary. The left diagram shows the overview of our balance sheet. Loans on the upper left increased by approximately JPY 12.3 trillion from the end of FY '24. Excluding government loans in Japan, the increase was approximately JPY 17 trillion due to strong financing needs both in Japan and overseas as well as large high-profitability deals in Japan near the end of the fiscal year.

Next, Page 15 shows the status of domestic loans. The lower right graph shows the trend in domestic corporate lending spreads. The gradual uptrend in both large corporates in red and SMEs in orange continues, thanks to the successful profitability improvement measures. Page 16 shows the status of overseas loans. The bottom right graph shows the trend in overseas lending spreads. It has stabilized somewhat as the replacement of low profitability assets with high profitability assets in the U.S. has run its course, but we will continue to work on improving profitability in each region and expect to maintain a gradual improvement trend.

Please turn to Page 17 on asset quality. NPL ratio shown on the line graph on the left remains at a low level. The bottom right graph shows the breakdown of year-over-year changes in total credit costs. It increased significantly on a bank nonconsolidated basis due to reversal of large credit costs recorded mainly overseas in FY '24. Overseas subsidiaries also saw an increase due to the acquisition of a subsidiary at Krungsri in Thailand. Total credit costs were up by JPY 290.6 billion, a significant increase year-on-year, but were in line with the initial forecast of JPY 350 billion despite the impact of the weaker yen and the acquisition of a subsidiary by Krungsri.

Next, please turn to Page 18 on the breakdown of our credit portfolio. While there are concerns from investors regarding private credit and the Middle East, MUFG's exposure to such areas is currently limited, and we are mainly focusing on low-risk deals. Furthermore, in response to concerns about increased future credit risk stemming from the situation in the Middle East, we recorded a certain amount of provision, roughly JPY 25 billion in FY '25 based on a reasonable estimate at this time.

Please turn to Page 19. This shows the status of investment securities, such as equity and government bonds. I will explain the unrealized gains and losses shown in the table on the upper left. Regarding the balance of domestic equity securities in the third row, while we have made progress in reducing our equity holdings, the balance has increased by JPY 0.19 trillion compared to the end of March '25 due to rising stock prices. Unrealized gains and losses on domestic bonds reflected hedging positions in the upper part of the lower graph on the left, remains under control at a low level of JPY 0.2 trillion, even amid rising interest rates. Furthermore, unrealized gains on foreign bonds reflected hedging positions in the lower section are positive. We can say that the unrealized gains on available-for-sale securities are in an extremely sound condition.

Regarding the reduction of equity holdings on the right, the total agreed amounts to be sold under the current MTBP, including those not yet sold, has reached approximately JPY 600 billion. We will continue to strive to achieve our reduction target of JPY 700 billion. Furthermore, the ratio of domestic listed equity securities and deemed holdings to consolidated net assets stood at 18% partly due to a significant decrease in the balance of deemed holdings in fiscal year '25, raising the likelihood of achieving the ratio of less than 20% during the current MTBP period considerably.

Page 21 outlines our capital adequacy. CET1 ratio reflecting the finalized and fully implemented Basel III basis, excluding net unrealized gains, stood at 9.2%, a 1.6 percentage point decrease from the end of March 2025 and fell below the target range. This was due to capital allocation results shown in the lower right, including our investment in Shriram Finance and the significant increase in loans near the end of the fiscal year that I mentioned.

Originally, we had stated that this ratio was inflated by approximately 30 basis points compared to the end of March '25 due to yen depreciation and that the actual level was around 10.5%. Therefore, in real terms, this represents a decline of 1.3 percentage points. Half of this decline is attributable to the investment in Shriram Finance, while the majority of the remainder is due to risk-weighted asset factors resulting from the increase in lending. Given the rise in profit levels over the past few years, we believe that by steadily accumulating profits, we can restore capital while balancing shareholder returns and growth and to return to the target range within the current fiscal year.

Next, I would like to discuss our view of the business environment forming the basis of the assumptions for FY '26 targets. Please turn back to Page 3. The domestic economy is supported by an accommodative financial environment and various government policies designed to boost growth. While corporate earnings in Japan is facing some downward pressure such as from U.S. tariff policies, we believe the overall growth trend is continuing. At the same time, we currently face a highly uncertain business environment fraught with various risks, particularly the situation in the Middle East and cybersecurity risks. While we continue to monitor the situation closely, we will leverage our group's comprehensive strength and our resilient diversified business portfolio to respond flexibly to these environmental changes.

Please turn to Page 4 regarding our performance targets for FY 2026. As I just mentioned, although the current external business environment remains highly uncertain, our targets for profits attributable to owners of parent is JPY 2.7 trillion, representing an increase of over 10% from fiscal year 2025, which was a record high. As shown in the bottom left chart, growth in NOP, which demonstrates the strength of our core business will continue to be the main driver of growth. Furthermore, for FY 2026, as the financial target for the final year of our current MTBP, we aim for ROE of approximately 12%. We have previously referred to the 2 ROE 12% targets, and this will realize the 12% ROE we had expected to achieve in the short term. While there are various risk factors, including the current situation in the Middle East, none have materialized at this point. Therefore, they have not been factored into the plan's assumptions.

Next, on the right side of the page, we have shareholder returns. We continue to target a dividend payout ratio of around 40%. We have raised the annual dividend for fiscal year 2025 to JPY 86, an increase of JPY 22 from the previous fiscal year and JPY 12 from the most recent forecast. Furthermore, the projected annual dividend for fiscal year 2026 is JPY 96, a further increase of JPY 10 from fiscal year 2025. Regarding share buybacks, based on the trend in the CET1 ratio, we have resolved to repurchase common stock up to JPY 100 billion in the first half of the fiscal year. For the second half, we will evaluate the necessary capital level to ensure financial soundness, taking into account profit progress, the expected use of capital for growth, and the external environment at that time. We will continue to pursue shareholder returns while maintaining an optimal balance between capital soundness and growth investments.

Please turn to Page 5. This shows the progress towards the financial targets of the current MTBP. As I mentioned earlier, we have raised the ROE target for the current MTBP to approximately 12%. At the same time, we have also raised the profit target, which is the driver for achieving the ROE target. We will continue to manage our finances with a focus on 3 key areas: profit, expense and RWA.

Please turn to Page 6. I will now explain the progress of the 3 pillars of MTBP, which we position as the 3 years to pursue and produce growth. First, regarding the first pillar, expand and refine growth strategies. As shown in the graph on the left, the 7 growth strategies are each progressing steadily, resulting in an increase in profit of approximately JPY 440 billion compared to fiscal year 2023. In particular, for domestic retail, the launch of Emut announced last June has led to a significant increase in new account openings and expanded transactions across group companies. Going forward, we aim to further expand our services through new initiatives such as the launch of the digital bank, the integration of Mitsubishi UFJ eSmart Securities and WealthNavi and a strategic partnership with Google announced recently.

Finally, please turn to Page 7. The left side represents the second pillar, social and environmental progress. Even amid high level of uncertainty, we will continue to pursue decarbonization while balancing economic growth. Our recently published Transition Progress 2026 report focuses on the progress of our transition plan toward a sustainable society. Specifically regarding emissions reductions in our finance portfolio, we have revised interim targets for certain sectors and formulated a new 5-year action plan aimed at achieving net zero by 2050. We are also continuing to build a solid track record in sustainable finance.

On the right is the third pillar, transformation and innovation. In our current MTBP, to fully unlock MUFG's potential, we are promoting a group-wide effort that combines ongoing cultural reform with taking on new business challenges, investing in human capital and strengthening our infrastructure in areas such as AI and data. In particular, we are accelerating our efforts to expand the use of AI. By combining this with agile transformation, we are driving a group-wide transformation into an AI native company. The number of implemented AI use cases is progressing at a pace exceeding our plans.

The total investment amount during the current MTBP is expected to exceed JPY 70 billion, and we anticipate that nearly JPY 40 billion in expected benefits will materialize early by the end of fiscal 2026. We will continue to accelerate the use of AI across the entire group and promote initiatives such as partnerships with other companies. The environment surrounding us -- and I believe that I said something similar last year is currently at a major turning point, and we are living in an era of uncertainty. Even so, MUFG will strive for sustainable growth through our diversified business portfolio while working to realize our stated purpose committed to empowering a brighter future. We ask for your continued support. This concludes my presentation. Thank you.

Thank you, Togawa-san. We will now take questions from you. Let me introduce the first questioner. Mr. Takamiya from Nomura Securities, please.

This is Takamiya from Nomura Securities. I have 2 questions. The background behind the decision on the amount of share buyback and your underlying capabilities toward your NOP result for FY '25. Regarding the share buyback, I understand the opaque environment and the fact that CET1 ratio of 9.2% at the end of March '26 is slightly below the lower end of the target range of 9.5%, but the gap is only 30 basis points. Considering that MUFG had previously taken a forward-looking stance and given the net income guidance of JPY 2.7 trillion for FY '26 and the total payout ratio target, an early recovery of the CET1 ratio can be expected. So some investors may view JPY 100 billion as conservative. Could you explain the background and your thinking behind the points I just raised and other relevant points? That is my first question.

Secondly, regarding the increase in net interest income for FY '25, what does the core underlying performance look like? If you have any views on particular business group or region driving this growth, please explain.

Thank you for the question. First, regarding the basis for the JPY 100 billion share buyback, we had no intention of setting a conservative amount given the uncertainty of the future. CET1 ratio at the end of March was 9.2%, which was below the lower end of the target range. So clearly, we think we need to bring it back up to the lower end for the time being. As I mentioned earlier, even with a JPY 100 billion share buyback, we expect to recover to near the lower end of the target range during the first half of the year.

As for the scale of the share buyback for the second half, given the progress towards the JPY 2.7 trillion net income target for FY '26 and the fact that the higher-than-expected lending resulted in a slight shortfall from the target range, we will consider the amount of buyback after carefully assessing the balance with loan growth that will contribute to future profits. Please note that we are not taking future uncertainties into too much consideration. NII was up by about JPY 5 billion year-on-year as decline due to Krungsri impact, change in financial results closing date in FY '24 was offset by a positive impact of weaker yen in FY '25. That said, NII increased even with the absence of the JPY 135 billion in gains on investment trust cancellation in FY '24. So I believe the quality of our NII also improved significantly. I hope this answers your question.

Next, Mr. Nakamura of BofA Securities, please.

This is Nakamura of BofA Securities. I also have 2 questions. First, regarding the CET1 ratio, based on previous communications in the first half, Q3 after the Shriram deal was finalized, perhaps this is just my own assumption, but I expected CET1 ratio at the end of March '26 to be around 9.8%. So 9.2% seems lower than expected. Please explain if there were any factors such as a few dozen basis points from loans and others that caused it to fall below internal expectations. To put it somewhat harshly, was it within the scope of the CEO and other management team's expectations that CET1 ratio fell below the target range despite the hard work of the front offices to increase profits?

If I were in the front office, I would be wondering why CET1 ratio is dropping like this. Since a dividend increase was also announced, only short-term investors may be concerned about the temporary drop in CET1 ratio. But could you explain whether it was managed with the full understanding of everyone, including the CEO? That is my first question.

My second question overlaps with Mr. Takamiya's earlier question. I believe the amount of change in NOP by business group will be given at the IR presentation on the 19th. Could you explain the details of the projected growth in NOP for FY '26?

Thank you for the question. First, CET1 ratio as of the end of March '25 announced in May of last year was 10.8%. But excluding the FX impact on subsidiaries with change in financial results closing date of approximately plus 30 basis points, the actual ratio is around 10.5%. The initial expected impact when we announced the investment in Shriram Finance was approximately negative 60 basis points. Considering the negative impact of 30 to 35 basis points from increased lending, the ratio at the end of March '26 was estimated at around 9.5% to 9.7%.

The fluctuations from the forecast were as follows: approximately plus 10 basis points due to net profit upside, excluding dividend increase and FX impact, around negative 5 basis points impact from additional impact from Shriram Finance investment due to FX fluctuations, negative 9 basis points due to the JPY 3 trillion upside in the loan period end balance as opposed to the usual downtrend, negative 4 basis points due to higher profit accumulation at equity method investees, mainly Morgan Stanley and negative 20 basis points due to an increase in operational RWA resulting from higher gross profits. Therefore, the final CET1 ratio was 9.2%. While some of the upsides in operational RWA, which are technical factors were not fully anticipated, the increase in loan balance itself was within our expectation.

Looking at the results by business group. In FY '25, in Japan, JCIB and Commercial Banking and Wealth Management, in particular, increased their average loan balance while securing lending spreads. And the associated fee income from loan-related activities, LBOs, MBOs and real estate businesses -- so they were significant drivers. Another driver was global CIB, where O&D business, mainly large-scale project finance deals for AI and data centers was successful, although we hear various concerns and loan-related fees increased significantly.

I wanted to ask about the breakdown of your FY '26 plan by business group.

My apologies. For FY '26, we forecast a JPY 170 billion increase from rising yen interest rates. and JPY 140 billion increase due to the rebound from the realized losses resulting from the review of yen interest rate hedging operations, both after-tax basis. And as shown in the left graph on Page 4, JPY 140 billion increase in loan interest income and fee income. On the lending side, approximately JPY 80 billion in both domestic and overseas loans, JPY 45 billion to JPY 50 billion in fee income, JPY 38 billion to JPY 40 billion in AMIS, Asset Management and Investor Services and JPY 17 billion to JPY 18 billion from our Asian partner banks, where the contribution from acquisitions will be fully realized from FY '26. These are the positive factors to the growth in gross profits. We need to carefully monitor the impact of the situation in the Middle East on the performance of our Asian partner banks, but these are the main areas of expected gross profit increase.

I see that you have higher expectations on the domestic side.

Yes, you are right.

Are you expecting net gains and losses on equity securities to be around JPY 600 billion?

We reached JPY 560 billion at the end of FY '25. So in FY '26, we intend to sell the remaining amount to reach JPY 700 billion, including the agreed but unsold and yet to be agreed amount. Therefore, we expect unrealized gains to become gain on sale.

Next is Mr. Matsuno from Mizuho Securities, please.

This is Matsuno from Mizuho Securities. I have 2 questions. My first question is about lending. Please explain why overseas loans increased significantly. MUFG is actively promoting O&D. So is this happening because you are unable to distribute in this environment or that is not the case? This is my first question. My second question is on credit costs. In Q4 of FY '25, you accounted for forward-looking credit costs related to the situation in the Middle East. Could you give us the size of these provisions and your outlook for future credit costs?

Thank you for the question. Overseas lending includes bridge loans related to Japanese companies' overseas acquisitions and a temporary increase due to a timing difference between warehousing and sell-down in O&D. The increase is approximately JPY 5 trillion, excluding the FX impact. So please understand that there are some ad hoc factors.

Regarding credit costs, we accounted just under JPY 25 billion for a specific portfolio for the Middle East. This may be less than other mega banks, but MUFG's approach to building provision for specific portfolio is to calculate the additional required amount based on the reserve ratio relative to the total amount of exposure. Therefore, if the reserve ratio is higher than that of other mega banks, the additional reserve will be smaller. Overall, the historical average over the past 10 years is JPY 330 billion. So we are looking at that average. If the situation in the Middle East worsens and lingers like the COVID-19 pandemic, it could increase by about JPY 100 billion, but we are not currently making such assumptions.

Next, Mr. Yano from JPMorgan Securities.

This is Yano from JPMorgan Securities. I have 2 questions. The first question is on the guidance for FY '26. The interest rate assumption is around 1%. But when do you expect rates to rise to that level? In other words, if the BOJ's rate hike is delayed slightly, for example, if we have to wait until the end of the fiscal year, what would be the downside risk to the earnings forecast and guidance? That is my first question.

My second question concerns the fund-related exposure on Slide 18. I really appreciate you providing this information. Within this, for example, regarding BDCs, I'd like to know the balance or status regarding software-related companies, although I don't think this falls strictly under the BDC category, investments in the so-called data centers. Also, please tell me about the distribution status, whether you are successfully divesting to local investors as planned and within the expected range. Since you have provided an explanation on private credit, I'd like some additional color on data center and software sectors.

Thank you very much. First, regarding the assumption of when the policy rate hike will occur in fiscal year 2026. I understand that the current market consensus is that there is about a 60% chance it will happen in June with a view that it will likely be no later than July. We have based our earnings forecast for FY '26 on these timing assumptions. So as you all know, our interest rate sensitivity when the policy rate rises by 25 basis points is approximately JPY 100 billion in the first year. So please understand that if the rate hike is delayed by about 4 months, then the impact will be shifted accordingly.

Next, regarding your second question, financing for BDCs. I have spoken directly with people on the front lines, and I understand that these are extremely small and diversified loans. It was explained to me that the so-called packaged software and AI-related projects account for only about 20% of this BDC exposure. And I don't believe data centers were included at all. So there is no need for concern on that point.

Now regarding your large-scale data center loans, perhaps in the form of syndicated loans, are there any updates on the distribution or inquiries from local investors?

As of now, I haven't heard of any major cases of hung deals. Distribution is proceeding smoothly, but I believe we need to closely monitor the future environment and assess the business impact.

Next, we have Mr. Matsuda from Daiwa Securities.

This is Matsuda from Daiwa. I have 2 questions as well. My first point concerns the profit plan and actual results. The actual results were quite strong, and on top of that, the profit growth plan appears to be quite substantial. When compared to past trends, my impression is that this plan is less conservative. Could you explain what discussions took place in formulating this plan? There are also some swing factors such as the situation in the Middle East mentioned earlier or the possibility of rate hike delays. If such risk factors materialize, are there downside risks to the JPY 2.7 trillion target? In other words, has the certainty or probability of achieving this target changed compared to the past? That is my first question.

And my second point concerns the CET1 ratio. If my memory serves me right, your past comments suggested that one option for capital management was to consider the CET1 ratio based on the current Basel III basis rather than on the finalized and fully implemented Basel III basis. And looking at the current capital structure, the CET1 ratio appears sufficient. However, when you examine the details, the amount exceeding the 15% threshold for specified items has increased slightly, which I suspect may be partly due to the investment in Shriram Finance. So to summarize my question, I'd like to ask if there was any discussion about evaluating the CET1 level on the current rule basis. And also, given that the amount exceeding the 15% threshold is significant and the capital deduction portion has expanded, if this implies that investment in other financial institutions require greater control or if there are any differences in the direction of capital management that might arise from this balance?

First, regarding some additional color on the outlook for FY 2026. We did discuss internally that we should announce the current most likely scenario and that if the external environment deteriorates and results fall short, we will revise the forecast downward. The heads of each business have agreed to this approach. So in that sense, please understand that the forecast is somewhat less conservative than in the past.

In terms of downside risks, if the situation in the Middle East drags on for a long time or worsens further and given that supply chain disruptions have already occurred in some areas, this could lead to negative impacts on both business operations and credit costs. Additionally, there is the possibility of increased costs related to the Methos issue. While these downside risks do exist, there are some upside factors that have not been included in the plan because the likelihood is still low. Please understand that taking all this into account, we are representing this figure with the view that we can achieve JPY 2.7 trillion under the current environment.

Regarding the CET1 ratio, while there is always debate about whether we should assess on the current rules basis, we must manage the target range for the CET1 ratio, excluding unrealized gains under the finalized Basel III with greater sensitivity since the finalized and fully implemented basis will be in 3 years or so. We consider the gap between our CET1 ratio under the current Basel III basis and the finalized and fully implemented basis as a buffer in case of sudden surge in lending demand from customers or significant deterioration in the external environment. And in this instance, we believe it is best to return to the lower range of the target as soon as possible, thus setting the buyback amount at JPY 100 billion.

That is all for me. Sorry. And regarding the 15% threshold for specified items. One unique aspect for us is that this portion increases in proportion to our stake in Morgan Stanley as its retained earnings increase. While Morgan Stanley's significant profit increase is positive in terms of our share of earnings, it has aspects that are not so welcome from a capital ratio perspective. And that is where the impact is significant.

And on the second point, with that in mind, are you considering the need for more control going forward for investments?

Well, I can't go into much detail yet, but there is room for this to decrease. That is one. And additionally, we plan to review our business portfolio going forward, specifically regarding minority investments in financial institutions that are subject to deductions. We will periodically review the business portfolio and divest as deemed necessary. I believe that this will become even more important in terms of control.

There seems to be no further questions, but the floor is still open. No questions. We still have some time left, but there doesn't seem to be any other questions. So we will conclude the Q&A session. Finally, a few words from Mr. Togawa.

Thank you, and thank you so much for the lively Q&A and comments. While we are reasonably confident in our current performance and forecast, I understand that your primary concerns are the CET1 ratio and the volume of share buybacks. We intend to provide thorough explanations and continue to carefully consider our capital policy. Thank you. At the investor briefing on the 19th, our new CEO, Mr. Hanzawa, will provide a more detailed explanation of our strategy, including his own thoughts. And we look forward to your participation in that event as well. We ask for your continued understanding and support. Thank you very much for your time today in spite of the late hour.

This concludes MUFG online conference on financial results for the fiscal year ended March 31, 2026. Thank you very much.

[Statements in English on this transcript were spoken by an interpreter present on the live call.]

Good evening, investors, shareholders and rating agencies. I am Togawa, Group CFO. Thank you very much for joining MUFG's online conference call today despite the late hour. Please look at the material titled Financial Highlights under JGAAP for the first half of the fiscal year ending March 31, 2026.

Let me first explain our Q2 financial results, followed by revised FY '25 performance targets and shareholder return measures. Let me start from the income statement summary. Please turn to Page 8.

First, the figures for the first half of FY '24 on the far left column of the table include the impact of the change in the equity method accounting date at Krungsri in Thailand. So the far right column shows the actual year-over-year change, adjusting this impact. All explanations on this page will be based on adjusted year-on-year comparisons.

Line 1, gross profits increased by JPY 189.3 billion year-on-year. Line 2 and below shows the breakdown of gross profits. Net interest income increased, thanks to the impact of rising yen interest rates, improving lending spreads and benefits from last year's bond portfolio rebalancing.

In addition, net fees and commissions expanded significantly, primarily due to growth in various fee revenues from domestic and overseas solution services and effects of acquisitions.

Next, Line 6, G&A expenses increased by JPY 127.9 billion year-on-year due to the impact of inflation and acquisitions, as well as strategic expense allocation, mainly in Retail and Digital business group. Expense ratio was flat year-on-year at 56.1%.

As a result, Line 8, net operating profits increased by JPY 61.3 billion year-on-year. Next, Line 9, credit costs decreased by JPY 65.7 billion year-on-year. I will explain the reasons for this later. Line 10, net gains and losses on equity securities decreased by JPY 235.3 billion, due to the gain on sale of large equity holdings last year, which is in line with our projection at the beginning of FY '25. Line 12, equity in earnings of equity method investees increased significantly year-on-year, mainly due to the extremely strong performance of Morgan Stanley.

As a result, Line 16, profits attributable to owners of parent was JPY 1,292.9 billion. Although gain on sale of equity holdings decreased year-on-year, we were able to achieve steady growth in net operating profits and equity accounted earnings, which demonstrates the strength of our core business and also recorded onetime gains related to investments and organizational restructuring, resulting in a record high first half profit. Our progress toward initial full year target of JPY 2 trillion stands at a high level of 64.6%.

Performance by business group is shown on Pages 9 through 12. I will not go into detail, but customer segment NOP is growing steadily with the exception of retail and digital, where strategic expenditures were made and Global Commercial Banking, which was affected by the economic slowdown in Asia. All business groups achieved an increase in net income.

Please turn to Page 14 on balance sheet summary. The diagram on the left shows the overview. Loans shown in the top left increased by approximately JPY 1.8 trillion from the end of FY '24. Excluding government loans, it increased both in Japan and overseas by approximately JPY 4 trillion. Page 15 shows the status of domestic loans. The graph on the bottom right shows the trend in domestic corporate lending spreads. Spreads for large corporates in red line is rising, thanks to the accumulation of large, highly profitable loans. Along with SMEs in orange, profit improvement measures have been successful, and the upward trend is continuing.

Next, Page 16 shows the status of overseas loans. The bottom right graph shows the trend in overseas lending spreads. The Americas has settled somewhat as the replacement of low-profit assets with high profit assets has run its course, but we continue to work on improving profitability in each region and maintain the gradual recovery trend.

Meanwhile, GCIB has seen a significant increase in fee income as their O&D measures are progressing, and we are working to improve capital efficiency on both fronts. Please turn to Page 17 on asset quality. The NPL ratio shown by the line graph on the left continues to remain at a low level. The bottom right graph shows the breakdown of year-on-year changes in total credit costs, while there was an increase in large loan loss provisions overseas last year on the bank nonconsolidated basis, the sale was completed this fiscal year, resulting in a reversal. There were also multiple significant reversals in Japan, resulting in a significant decrease in credit costs.

Credit costs also decreased at our overseas subsidiaries due to the effect of stricter screening criteria for new credit transactions in Asian partner banks. Taking the current situation into account, we kept our full year outlook for credit costs unchanged.

Please turn to Page 18 on investment securities, including equities and government bonds. I will explain the unrealized gains and losses in the upper left table. Line 3, unrealized gains on domestic equity securities increased by JPY 0.36 trillion compared to the end of March 2025, due to rising stock prices despite progress in reducing equity holdings.

In addition, unrealized gains and losses on domestic bonds reflecting hedging positions showing in the upper half of the lower left graph is controlled at a low level of just under JPY 0.3 trillion and unrealized gains and losses on foreign bonds in the bottom half are slightly positive.

Given the scale of our balance sheet and income statement, we think we are in an extremely healthy state with reasonable degree of flexibility. Regarding the reduction of equity holdings on the right, the cumulative sales during the current MTBP were JPY 339 billion on an acquisition cost basis, which is about half of the JPY 700 billion target. The agreed amount has reached nearly 80% of the target, and we are making steady progress toward achieving this target.

Page 20 shows capital adequacy. The CET1 ratio, excluding unrealized gains on the finalized and fully implemented Basel III basis fell 30 basis points from the end of March to 10.5% at the upper end of our target range due to growth investments and increase in loans, as well as yen appreciation versus end of March.

Towards the end of the fiscal year, we expect risk-weighted assets to continue to accumulate and the yen to appreciate based on the financial indicators, I will come back later. Therefore, we expect the ratio to remain around the midpoint of the target range. Capital allocation results are shown on the lower right. We will continue to manage capital with an eye on balancing shareholder returns and growth investments.

Please go back to Page 3. Let me turn to our FY '25 financial targets and shareholder returns. As shown on the left, given the continued strong performance of NOP, particularly in the customer segment and increased income from equity method investee, we revised up our net income target by JPY 100 billion from initial target to JPY 2.1 trillion.

Turning to shareholder returns on the right. We continue to aim for a dividend payout ratio of approximately 40%. And in line with the upward revision of profit target, our annual dividend forecast for FY '25 was revised up to JPY 74, up JPY 10 from the previous year and JPY 4 from initial forecast. Regarding share repurchase, a resolution was approved today to acquire an additional JPY 250 billion in the second half of the year, bringing the total amount for the full year to JPY 500 billion.

As discussed in May, this is due to take into account total shareholder return over the past few years. We also announced today the cancellation of 200 million treasury shares. We aim to achieve our mid- to long-term ROE target and we will work to provide shareholder returns while taking the optimal balance with growth investments into account.

Turning to progress of 3 pillars of MTBP. Please turn to Page 4. First pillar is expand and refine growth strategies as shown on the left. Each of the seven strategies for seasoning growth is on track, resulting in an increase in NOP of approximately JPY 150 billion compared to FY '23.

In particular, in the domestic retail business, a new service brand, EMUTO, was announced in June this year. The credit card reward programs and group-wide campaigns launched in conjunction with EMUTO generated strong response, leading to increased transactions for each group company. We will continue to demonstrate the collective strength of the group and aim to expand our services, including digital banking.

Please turn to Page 5. Second pillar, social and environmental progress is shown on the left. Sustainable finance has steadily built up a track record even with different vectors at play globally. A white paper will be published again this year to communicate our view on contributing to accelerating transition.

On the right is our third pillar, transformation and innovation. Under the current midterm plan to maximize MUFG's potential, we are working as a group to pursue new business initiatives, invest in human capital and strengthen our foundations in areas such as AI and data in addition to continuing cultural reform. Corporate transformation using AI is a particular urgent priority. And by combining this with agile management, we are working to transform into an AI-native company. The number of AI use cases has reached 116, and the aim is to increase to over 250 cases by FY '26.

Current estimates suggest that the cumulative benefits over the 3 years of the current MTBP is approximately JPY 30 billion. The launch of a new strategic partnership with OpenAI is expected to accelerate use of AI across the company and to collaborate on various services, primarily in the retail sector such as digital banking.

Moving on to Page 6. Let me take you through our path to achieving mid- to long-term ROE target of 12%, which has been a popular question since our announcement in May. We assume that the policy rate will rise to around 1%, while the sale of equity holdings will come to an end and capital gains will seize.

After solidifying the goals of the growth strategy of the current MTBP, as explained on Page 4, we will pursue both organic growth by refining existing areas, both domestically and overseas and inorganic growth by focusing on the areas described in the slide, thereby making steady progress towards an ROE of 12%. Mr. Kamezawa will share his thoughts on this point at the investor meeting on the 18th.

Page 7, my last slide. Last month, in October, we celebrated our 20th anniversary as MUFG. Looking back over the past 20 years, thanks to the understanding and support of our stakeholders, including our investors, we have taken on many challenges, gone through three major transitions and achieved growth sometimes despite headwinds.

MUFG will continue to push ourselves forward and guided by our purpose of committed to empowering a brighter future, we will aim to further increase our corporate value even in a rapidly changing external environment. Your continued understanding and support is very much appreciated. That is all for me.

Let me introduce the first questioner, Mr. Takamiya of Nomura Securities.

This is Takamiya from Nomura Securities. I have two questions. On the upward revision of your guidance and the 12% ROE target. I would like to hear your thoughts on the upward revision from two perspectives.

First, I wonder if the assumptions are too conservative considering the current levels of the Nikkei stock average and the dollar-yen exchange rate.

Second, the revision of JPY 100 billion from JPY 2 trillion to JPY 2.1 trillion is not small, but it is a somewhat small revision to your bottom line profit. What was the aim and your thoughts on this small revision? This is my question on your guidance.

My second question is on your ROE target. On Page 6, you explained verbally the general direction you are heading, including assumptions like interest rate of around 1% and no gain on sale from reducing your equity holdings. But I think this is the first time you have clarified this in writing.

Regarding the mid- to long-term ROE target of 12%, I want to know if there were any changes in your thinking and the management's perspective, reflecting the changes in the environment or tailwinds.

Thank you, Takamiya-san. Regarding the upward revision, our initial guidance was JPY 2 trillion based on the assumption that the decrease in net gains and losses on equity securities and the absence of reversal of large loan loss provisions will be offset by continued growth in customer segment NOP, improvement in treasury interest income benefiting from last year's bond portfolio rebalance and a rebound from the loss due to bond portfolio rebalance in FY '24.

Decrease in gains and losses on equity securities, absence of reversal of large loan loss provisions, treasury interest income improvement and rebound from last year's bond portfolio rebalance are in line with our initial forecast.

Meanwhile, progress in the first half exceeded expectations, thanks to better-than-planned customer segment NOP, lower credit costs, upside in Morgan Stanley equity accounted earnings and onetime gains not factored in our initial forecast.

I will explain our assumptions for the second half later, but we forecast strong yen toward the end of the fiscal year, slower treasury sales in the second half as trading gains were weighted to the first half, credit costs in line with our initial forecast, though the full year will depend on the impact of tariffs and an increase in strategic expense allocation, including retail and also included certain financial measures for FY '26, resulting in a guidance of JPY 2.1 trillion.

There was internal discussion about whether a 5% revision was really necessary, but we decided to do so with the aim of disclosing our forecast appropriately at each point in time since the first half of last year. We may not have done this in the past, but that is our line of thinking.

Regarding the assumptions, the yen assumption against the dollar is quite strong given the current level. But depending on interest rate trends, it is not unreasonable for the yen to be in the mid-JPY 140s by the end of the fiscal year. The share price of around JPY 43,000 may also seem conservative, but the impact of share prices on our earnings is not significant. So this was not the reason for the conservative profit target.

As for future upside, we expect further growth in the customer segment and decline in credit costs, which is again subject to tariffs and also an upside in FX that you mentioned. Whether there has been a change in our view on the 12% target, we originally began the discussions to set the 12% target by trying to see how much we can increase our profit under the assumptions that Japan's policy interest rate will be around 1% and that we have no gain on sale of equity holdings, which I strongly insisted.

Since investors asked questions based on different assumptions such as including gain on sale of equity holdings, we made that clear. We are fleshing out the details to achieve this as we speak.

One change in our thinking, both in terms of inorganic investment and the use of capital, as I may have mentioned before, is that we are now discussing potential investments internally based on whether or not they contribute to achieving 12% ROE.

Next, Mr. Nakamura of BofA Securities, please.

This is Nakamura from BofA Securities. I also have two questions. First, let me confirm the full year CET1 ratio forecast on Page 20 again. It doesn't seem like it will approach the middle of the range. So if you could share with us your view on the level and the breakdown to the extent possible. There was an article in Bloomberg about your inorganic investments, and you denied that the information came from you. Could you elaborate on this, if possible? Sorry for asking too much. That is my first question.

My second question is on credit cost. In the first half, there was a reversal on the bank nonconsolidated basis. So if you achieve your target in the second half, this is a reasonable level. So my question is on the current situation of private credit in the U.S.

Although MUFG has not directly mentioned it, we are seeing large-scale loans to Oracle's data center investment, among others, which is widening credit spreads as a result. What are your thoughts on this increasing concentration of risk? Thank you.

First, regarding the outlook for CET1 ratio toward the end of FY '25, the end of March '26, approximately 80 basis points up in the second half from the accumulation of net income based on the revised performance targets, 65 basis points down due to shareholder returns, including dividends and share buybacks, as I explained earlier, around 30 basis points down from the planned increase in risk assets. And with Morgan Stanley's accumulated profit from its extremely strong performance, et cetera, we expect the ratio to be somewhere between 10% and 10.5%.

Regarding the private credit market, MUFG actually does not have a significant exposure. We have some exposure to companies that have been mentioned in the media. But as you saw earlier, our NPL ratio is declining. So I do not think we have a significant exposure.

That said, the private credit market is extremely strong now. So we need to keep a close eye on the recent increase in volatility. I think the risk of lending to data centers depends on the project. We have extensive knowledge on project finance. So it is important to carefully select projects, taking into account factors like sources of cash flow and technical conditions, such as proper installation of high-voltage cables.

Regarding the first question on inorganic investment, sorry, I skipped that. But actually, I have no comment. We continue to consider opportunities in three areas, namely AMIS, Digital and U.S. Asia.

Next, Mr. Matsuno from Mizuho Securities.

Matsuno from Mizuho Securities. I have two questions. First question is on Page 3. Upward revision of financial targets for FY '25. Can you give a more detailed breakdown? The graph on the bottom left shows a breakdown into customer segment, equity method investees and review on financial indicators. Can you give a breakdown of each of them?

For example, weaker yen than the beginning of the year, would that be included in review on financial indicators or the equity market value? Can you give some color on the factors affecting changes in net income?

My second question is on the operational policy of Global Markets in the second half. In the first half of the year, it looks like you did well by drastically reducing yen bonds and super long-term bonds and making profits on foreign bonds. Is there anything you can speak about the operations of Global Markets in the second half of the year? Those are my two questions.

So starting with Page 3, your question on major factors affecting changes in full year targets. Earlier, I said the customer segment is expected to continue making steady progress in the second half of the year and is expected to exceed the initial plan by around JPY 30 billion for the full year.

Regarding equity and earnings of equity method investees, I must admit it is difficult to say how much is coming from Morgan Stanley, but a certain amount is factored in. There are also some one-offs. Please look at the footnote on Page 8.

Step-up gains from acquiring shares of JACCS, one-off gains from acquisition of Tidlor as a subsidiary and gains related to liquidation of local subsidiaries, a part of them were not factored in, accounting for approximately JPY 40 billion. The revision of financial indicators is expected to have an impact of approximately JPY 30 billion, mainly due to the weak yen. Stock price outlook was revised up, but gain on sales of equity holdings has been hedged for stocks scheduled for sale at the beginning of the fiscal year. So impact of sales of equity holdings is minimal.

Although there will be partial impact on earnings due to an increase in AUM in the asset management and investor services, the impact of the revision of stock price assumptions is not that big. The impact is primarily from ForEx, and the total adds up to JPY 100 billion.

For Global Markets, you are right. In Q1, reducing the balance of super long-term JGBs, partially offsetting with redemption gains on bear fund and gains on sale of foreign bonds, that's for the first half of the year.

Regarding yen bond management from the second half onwards, our policy of gradually building up our yen bond positions, while monitoring the rise in Japan's policy rate remains unchanged. Short-term JGBs decreased as the BOJ's growth-oriented lending support operation is gradually coming to an end and need for short-term JGBs as collateral has decreased. The balance of short-term government bonds has fallen significantly.

As for foreign bonds, the balance of long-term bonds appears to be increasing, while duration is decreasing and some might feel this doesn't sit well. This is due to categorizing mortgage bonds with long statutory maturities as long term. But overall duration shortened to 4 years.

Next is Mr. Matsuda from Daiwa Securities.

Matsuda from Daiwa Securities. I also have two questions. Regarding net fees and commissions. Net fees and commissions in the first half of the year was very strong for both domestic and nondomestic. Is this trend in the first half a temporary phenomenon? Or including the current pipeline, can we expect further growth going forward? That is my first question.

Second question is on CET1 ratio on Page 20. The impact of exchange rates was cited as a factor in the decline in the CET1 ratio in the first half of the year. It worsened by 40 basis points, but the yen did not appreciate significantly between the end of March and the end of September. Then why deteriorate by 40 basis points? Was it due to the Thai baht? What was the impact in the first half? If the weak yen environment continues, can we expect the CET1 ratio to improve further? These are my two questions.

Thank you for your questions. Fee revenues, fee income partially include impact of acquisitions. Acquisition of WealthNavi, MPMS acquired by our Trust Bank and NICOS acquiring Zenhoren has resulted in a total acquisition effect of about JPY 48 billion.

Apart from that, GCIB, in particular, is further promoting O&D initiatives, so fee income will grow. Domestically, fees related to loans such as MBOs and LBOs are growing. Solution-related fees are also growing. So we can expect continued growth in this area.

In addition, AUM in asset management is growing steadily, and IS has also issued a press release stating that outsourcing operations have quickly achieved the MTBP target. These areas are growing steadily. So I believe we can continue to grow.

Regarding CET1 ratio for the first half of the year, impact of U.S. MUA is large, as I might have said in May. The dollar-yen exchange rate from December to June saw the yen appreciate by about JPY 14. We took some hedging measures, but were implemented after April or May and hence, this impact. Regarding impact of the weak yen on CET1 ratio, it will depend on the trends in the dollar yen and Thai baht, but the weak yen will have a certain effect in lifting the CET1 ratio. That's all for me.

Next is Mr. Yano, JPMorgan.

I also have two questions. One is a detailed question, a follow-up to Mr. Matsuno's question. Regarding the revised target for this fiscal year, you referred to the waterfall chart on the lower left, but I'd like to confirm referring to the table above. NOP is up JPY 50 billion. Credit costs haven't changed and ordinary profits increased by JPY 150 billion. I assume this is coming from increase in ownership interest, stock-related and other factors accounting for JPY 100 billion. I'd like to know the breakdown. This is my first question.

The second question is a high-level question. Today, there was a headline in the news quoting CEO, Mr. Kamezawa about achieving top -- global top-tier ROE and corporate value. I assume this is along the same lines of what has he has been saying. But just to be sure, can we take this as a hint that the current ROE target of 12% will change? Is there no need to read too much into it? I would like to know what you mean by achieving global top-tier ROE, if there is anything we should know of.

Thank you for the questions. Should I explain both NOP and ordinary profit? Well, if you could elaborate on the variance, if there is anything that is tricky in NOP. Okay. Within NOP, JPY 25 billion is from ForEx, assuming the yen to be about JPY 5 stronger.

The rebound from treasury trading gains was concentrated in the first half, as I said, and the difference between first half and second half is about JPY 130 billion. Then there is increase in expenses, expense incurred in EMUTO, IT costs, AI, cyber-related impact from certain inflation-related costs, base wage increase, among others.

All in all, about JPY 100 billion in expense increase. We are also considering a certain level of structural improvements for next fiscal year as profits are also strong. Averaging them all out, we expected an upside of about JPY 50 billion in NOP.

Regarding ordinary profit, there is a one-off step-up gain from an increase in our ownership interest. This accounted for about JPY 100 billion in the first half. Some of it was not accounted for in the plan, as I said earlier. Combined with Morgan Stanley's profit increase, ordinary profit was revised up by JPY 150 billion.

To your second question, I appreciate the expectations you have on us, but we will first focus on achieving 12%. Mr. Kamezawa spoke in that context. Thank you.

It seems there are no further questions, so we will conclude the Q&A session.

Finally, Mr. Togawa would like to say a few words. Togawa-san, please.

Thank you very much for joining us today despite the late hour and on a day where many companies are announcing their results. Thank you for your diverse questions and comments.

Today, I mainly explain the progress made in Q2 of FY 2025, and President Kamezawa will provide a more detailed explanation, including his own thoughts at the investor briefing on the 18th. We look forward to your participation. We would appreciate your continued understanding and further support. Thank you very much for joining us today.

This concludes the online conference call on financial highlights for the first half of FY '25 of Mitsubishi UFJ Financial Group. Thank you very much for participating today.

[Statements in English on this transcript were spoken by an interpreter present on the live call.]

I am Kamezawa. Thank you for watching the MUFJ Investors Day presentation video. Our medium-term business plan, or MTBP, which started last fiscal year is positioned as 3 years to pursue and produce growth, capturing opportunities from the changes in the environment surrounding MUFJ. The shift in global trade policy and further rise in geopolitical risks since the beginning of this fiscal year may bring about a change in the world economic order.

However, change is also an opportunity. As Japan's leading financial group, MUFJ is determined to support the growth of the Japanese economy and contribute to solving social issues, which will lead to our own growth. MUFJ has been transforming its business model amid a challenging external environment and has built a very unique business portfolio that is diversified in terms of geography and earnings.

We believe that this led to significant profit growth and a much improved risk return profile and made us resilient to changes in the external environment. We will further build on our strength and pursue growth to achieve our new mid- to long-term ROE target of 12%. In our domestic mass retail business, we announced a new strategy in May. We will connect MUFJ's various products and services, increase convenience and benefits and encourage customers to use them more and for longer to further strengthen our dominant customer base in Japan and generate profit.

This presentation will provide a detailed overview of our mass retail strategy, including our medium- to long-term outlook. In Asia, we will expand MUFJ's economic sphere and further strengthen our business portfolio in Asia by capturing the high growth of Asia Times digital in the medium to long term through collaboration with our digital investee companies while strengthening our commercial banking model.

I mentioned 2 businesses as examples, but we are making steady progress in our growth initiatives in all areas. After this, the heads of each business group will explain in detail, and I would be happy if you could get a sense of MUHG's unique strength, growth initiatives and enthusiasm from the perspective of why MUFJ should be chosen when there is growing attention on Japanese banks. I would appreciate it if you could watch until the end.

I am Yamamoto, Group Head of the Retail and Digital Business Group. Please turn to Page 4. Chart on the top left illustrates the factors contributing to the change in ROE from FY '23 to FY '24. In FY '24, primarily due to one-off system impairment at Nikos and other increase in expenses, net profits were down by JPY 23 billion and ROE dropped to 4% FY '24 is positioned as a year of foundation building to enhance future profitability. We have the necessary pieces in place.

Going forward, this foundation will be fully leveraged to raise ROE to around 6.5% in FY '26, the final year of our current MTBP and continue to improve ROE over the medium to long term. MUFJ's retail business strength lies in its unmatched domestic customer base. Individual yen deposits as of the end of FY '24 exceeded JPY 90 trillion, significantly outpacing peers. In the current interest rate environment where value of deposit has increased, our strong customer base is a source of great strength.

We plan to fully capitalize on this foundation to drive our strategic initiatives forward. Turning to retail strategy. In FY '24, we reversed a long-term downward trend by accelerating integrated group operations and increasing new accounts, credit cards and housing loans through various initiatives, including campaigns and strategic interest rate management. We also actively enhanced our business portfolio and strengthened the group's financial functions through several key developments such as full ownership of Wealth Navi and eSmart Securities, progress towards full ownership of MoneyTree, consolidation of Zen Horan and an increased equity stake in JAS.

Looking ahead, we recognize the importance of not only enhancing the competitiveness of each product and service, but also strengthening group-wide collaboration to ensure that our products and services stay relevant for longer. To this end, in FY '25, a new service brand, iMuto was launched aimed at deepening the connections within MUFJ's extensive group network and diverse financial functions, thereby expanding our contact points across all stages of customers' lives.

In FY '26, to make our service more convenient and of value to our customers, we plan to introduce single ID, shared points and loyalty program and launch digital bank. Under the new service brand, we will further reinforce our retail strategy.

Please turn to Page 5. Vision of Retail and Digital Business Group. The most important KPIs in our group strategy is improving customer base and lifetime value, considering the characteristics of the retail business. By combining the 2, our goal is to maximize the lifetime value of all customers across the group. Please look at the graph on the top left. This shows the lifetime value of account holders in their 20s.

Compared to the average of all customers, customers engaged in multiple transactions after opening an account tend to have multiple touch points with MUFJ over an extended period of time through various life events and therefore, generating more revenue as they age. In other words, opening an account at a young age and continuing transactions over the medium to long term is the key to improving profitability.

Next, please look at the figure on the bottom. This shows the 10-year LTV for customers who use multiple MUFJ products. Customers who make 2 or more transactions have a 13x higher LTV than customers who only have an account. Based on this data, we believe that increasing the ratio of customers with multiple transactions will lead to an improvement in overall LTV.

Our most important KPI, customer base combined with LTV will capture number of customers combined with rate of multiple transactions. This is our KPI. We will continue to increase account openings, but at the same time, work to maximize LTV combined with customer base by increasing the ratio of customers who engage with us through multiple transactions. The goal is to increase ROE to double digits in the medium to long term.

Please turn to Page 6. In the next few slides, I will give some color to our initiatives. To maximize the strength of MUFJ Group, we launched a new service brand, iMuto in June 2025. iMuto is a service brand that includes MUFJ's retail products and services. The catchword is the more connected, the more convenient and rewarding. We will realize a world where the more people use MUFJ Group's products, the more convenient and value customers will enjoy.

From young people to the elderly, daily use to mid- to long-term asset formation and even inheritance, we aim to build mid- to long-term relationships with customers. Necessary functions and services will be offered timely in an integrated manner as a comprehensive financial service for every stage of life, such as spending, saving and increasing money and connecting to the next generation.

In the future, MUFJ's retail products and services will be developed mainly under the iMuto brand to accelerate MUFJ's retail strategy. Moving on to Page 7. During the preparation stage for the launch of iMuto Phase 0, we have been making strategic investments to strengthen our coverage. Core financial functions inside the group, including Wealth Navi, eSmart Securities and MoneyTree enable diversification of monetization points and speedy service deployment through swift decision-making. In the meantime, our economic ecosystem works flexibly with external partners.

For example, the bank's BOS business has expanded its partner companies to 10 and Wealth Navi's robo-advisory service has expanded to about 20 companies. We are also working broadly on the latest technologies such as with Google Cloud on Cloud and OpenAI, Sakana AI and KDDI for AI technologies. While we will continue to retain core financial functions within the group, we will collaborate flexibly with companies outside the group to build an ecosystem and to incorporate the latest technologies.

MUFJ is the only financial group that has all the services to support our customers throughout their lives. Leveraging our overwhelming customer base, which is our strength and having customers use more of MUFJ's extensive range of products and services, group-wide transaction share will expand with iMuto at the core.

Please turn to Page 8. Enhancement of asset management business is one of the focus areas during Phase 0. First, Wealth Navi enjoys an overwhelming #1 track record in the robo-adviser market and is steadily growing AUM not only through its own transactions, but also through collaboration with affiliated partners.

eSmart Securities, after changing its name, is working more closely across the group, such as introducing OutoSweep from bank accounts, installment for investment trust using credit card and NISA campaign across the group. As a result, the number of bank brokered account openings increased dramatically. The eMaxis Slim series managed by Muam in the Asset Management and Investor Services business group continues to perform well with a net AUM of JPY 16 trillion sold across over 50 companies.

Going forward, we will take advantage of the strength of having an online securities firm within the group, Japan's #1 robo-advisory service and a powerful product called Emaxis Slim to come up with strategies with a sense of speed and aim to make our service easier to connect with, more convenient with more value.

Please turn to Page 9. In conjunction with the launch of Eemuto, we released the first batch of products and services that embody this vision in June. First, we completely updated the specifications of the Mitsubishi UFJ Bank app to enable one-stop access to other services such as checking credit card balances and securities trading balances. Furthermore, this fall, we plan to enable the use of QR settlement service, Coin+ on the app. This app has been very well received with 8.8 million MAUs at the end of last fiscal year, growing to 9 million MAUs recently.

With this update, the Mitsubishi UFJ Bank app has evolved from a simple deposit account management app to a comprehensive asset management app that serves as a gateway for all transactions. Furthermore, the Mitsubishi UFJ cards rewards program has been completely updated. The new rewards program features one of the highest reward program in the industry and includes up to 30 affiliated partner brands with a wide range of services such as supermarkets and convenience stores that are used on a daily basis.

The biggest feature is that points can be earned through daily use with benefits. To make cards and points even more convenient to use, we have refreshed the card app and released a new point wallet app, significantly improving usability. These services have received a lot of positive feedback since their release. In June, the number of branded searches for Mitsubishi UFJ card significantly increased by approximately 4x year-on-year and the number of monthly card issuance increased by approximately 2x compared to the previous month. We aim to double the number of annual card issuance from 540,000 in fiscal 2024 to 1 million in fiscal year 2026. Please refer to Page 10.

Additionally, we plan to release the second batch of services embodying iMuto by the end of fiscal year 2026. First, by unifying the previously disparate IDs across different businesses into a common ID across group companies, we will enable one-stop connection to various MUFJ services while also advancing customer analysis. At the same time, we will launch a group-based loyalty program and begin issuing standardized points called iMuto Point.

Under the loyalty program, membership will be upgraded with more and longer use and customers will receive benefits such as preferential interest rates, fees and iMuto points. This will enhance customer benefit and accessibility, strengthen loyalty to MUFJ and reinforce medium- to long-term relationship. Furthermore, we plan to overhaul the excellent Club, which provides special value to high net worth and semi-high net worth customers.

In addition to making MUFJ services even more beneficial and convenient to use, such as preferential interest rates and fees for financial services and exclusive advisory service for remembers where customers can consult with experts on asset management and inheritance, we will also expand nonfinancial services to offer exceptional experience. Every year, tens of thousands of people transition from the general population to the semi-high net worth group with many of these transitions triggered by the receipt of retirement allowances.

Through the loyalty program and a group-wide reward points, we aim to encourage customers to utilize MUFJ on a daily basis and provide even more exceptional experience at key milestones of their lives to enhance retention. Additionally, MUFJ will launch a new digital platform for inheritance to support customers, not only in their daily use, but also in connecting their key assets to the next generation.

This platform will include an AI concierge function that can simulate future design, planning and necessary preparations as well as services that allow immediate access to the necessary funds in cases of dementia or inheritance for the elderly and functions that enable smooth inheritance based on prenotified distributions. Furthermore, we will introduce a system that allows the inheritance of customer statuses and benefits from the parent generation, aiming to become an MUFJ that is always connected with each customer and their family across generations.

Next, on Page 11. In addition, we will launch a completely new concept of digital bank during fiscal 2026. In order to respond quickly to major changes in the financial environment, we believe that it is necessary to have agile and adaptable system platform to build a platform that realizes a low-cost business model and the corporate environment and culture for hiring and developing digital specialists to operate and promote it. This led to the establishment of the new digital bank.

The digital bank will offer attractive interest rates and fees as well as advanced UI and UX, leveraging the unique strengths of a digital bank to fundamentally enhance banking functions within iMuto Services. Additionally, Mitsubishi UFJ Bank and Digital Bank will provide a seamless customer experience where customers can transact as if they were dealing with a single bank through the app.

Furthermore, this will be a unique entity that combines the best of both digital and real-world services, offering access to Mitsubishi UFJ Bank's extensive branch network and professional financial advising services not available at pure-play online banking. At its core, the Money Advisory platform or MAP being developed jointly with Wealth Navi will be implemented.

MAP will utilize not only the data of approximately 60 million customers of MUFJ Group, but also the diverse data and AI technology with 6.5 million users of MoneyTree, one of Japan's leading household account app providers, which we announced to acquire in May to implement an optimal individual proposal function tailored to each customer's situation, life stages and life events. Through this, we aim to provide services that support medium- to long-term asset formation.

Please refer to Page 12. Lastly, I will discuss branch and remote strategies conversion and customer touch point enhancement. Over the past 6 years since the MTPB before the last one, we have streamlined our branch network and evolved it into a lean branch channel that enables more efficient branch operations.

Going forward, we will position branches as places that provide added value and transition to a phase where we will reorganize the branch network by function based on customer needs. Specifically, we are considering 3 types of branches: full banking branches, which provide all lineup service for corporates and individuals, iMuto squares focused on individuals to meet their various needs and specialized function pop-up branches that can be flexibly opened in locations with high foot traffic or according to customer needs.

Going forward, we will gradually reorganize existing branches based on function and roll out new branches to enhance customer touch points. This fall, we will open new iMuto Squares in retail facilities in Tokyo and Osaka as the first new branches for Mitsubishi UFJ Bank in about 20 years. In addition to reorganizing our branches, we will also promote operational efficiency by utilizing state-of-the-art technology. We will introduce co-browsing, which supports customers' daily transactions remotely and the next-generation contact center that uses AI to efficiently provide optimal responses to inquiries, thereby improving customer convenience and operational efficiency.

Furthermore, as part of the human capital supporting our branch network, we have established a new graduate recruitment program aimed at cultivating specialists of branch management. Retail business is subject to significant changes in customer needs in response to shifts in the external environment by flexibly evolving our business strategy to address such changes and securing a stable workforce capable of providing consistent service over the medium to long term, we aim to build long-term relationships with our customers. This concludes the explanation from our business group. Thank you very much for your attention.

I am Miyashita, Head of Commercial Banking and Wealth Management Business Group. Today, I'd like to review FY '24 and explain our major strategies for FY '25. Please look at the upper left diagram. In FY '24, fee business expanded and base profits grew as interest rates normalized. As a result, expense ratio declined to 60%. Net profits were JPY 216 billion, up by JPY 74 billion compared to FY '23, and ROE grew significantly to 13%.

We will aim for a higher ROE of over 15% toward FY '26 by further increasing base profits, mainly from deposit income and expanding our owner approach and asset management business to meet the growing needs for business succession and asset management. As shown in the upper right, in FY '24, deposit income increased significantly to JPY 110 billion under normalized interest environment and lending profitability improved with lending spread rising to 0.55% by enhancing risk-taking capabilities.

In addition, we achieved JPY 1 trillion in business succession-related loans by capturing large deals. On the other hand, there are some issues to be addressed. Specifically, there is still room to expand deposit volume and improve lending profitability. In addition, white space exists in the owner approach, leaving room for further business expansion.

In light of these issues and environmental changes, we will further strengthen our efforts in each of our businesses in FY '25. The following slides explain our main initiatives. First is corporate loan and deposit business and segment strategy. For loan, we enhanced our risk-taking capabilities, expanded our efforts in LBOs and real estate nonrecourse loans and have steadily improved our profitability.

In FY '25, we aim to increase loan interest income and further improve the profitability of our portfolio in the medium to long term by capturing more highly profitable loans. Deposits have increased to a certain level as we have taken steps to raise front office awareness from before interest rates rose. We will focus on further increasing deposits by raising deal position through business strategy proposals and strengthening capital business and improving corporate settlement system in addition to settlement-oriented activities.

In the segment strategy on the right side, the number of customers in the large corporate segment is increasing, where issues related to capital strategy are becoming apparent. We will make specialized team-based efforts for issues and themes for each company to provide more appropriate solutions ahead of our competitors. In FY '25, expected amount of fee income exceeds that of FY '24, and we expect further growth.

Our initiative for start-ups is beginning to produce positive results, such as contributing to the listing of 2 unicorn-class start-ups. In April, Mitsubishi UFJ Capital launched a JPY 30 billion fund, bringing the total amount of the group funds provided to start-ups to JPY 1.1 trillion, both in Japan and abroad. We also plan to expand the scope of support through MUFJ Start-up Summit, which had a total of 4,000 participants while contributing to solving Japan's social issues in the area of industry development and innovation.

The second major strategy is owner approach. Owner approach involves the group's concerted efforts based on a strong relationship of trust to address diverse issues faced by business owners from ownership, business and family perspectives. MUFJ's strength has always been in providing expert solutions, leveraging multitude of practices developed over the years.

To meet the needs of customers who anticipate succession-related issues, MUFJ will enhance its internal organization by increasing specialists and expanding customer touch points with the knowledge from academia in order to strengthen our approach. Specifically, we successfully increased the number of specialists with expertise in business succession and M&A to 1,970 and aim to exceed 2,200 in FY '26. We have also been deepening our knowledge of family business sustainability with Kobe University through a joint research from 3 years ago. We will utilize the research findings to expand our touch points with customers facing succession-related issues by holding seminars nationwide.

Next is wealth management business. Asset management is an area where we have developed a business model ahead of our peers, incorporating Morgan Stanley's knowledge. We provide comprehensive solutions such as asset management, cross transactions, including loans and real estate and nonfinancial services based on each customer's future plan through a goal-based approach, utilizing our bank trust bank securities function.

With these solutions, NOP in Wealth Management reached JPY 110 billion in FY '24, driven by a strong market environment. But as white space still exists in this area with 200,000 untapped customers, we plan to achieve further growth toward FY '26. Our customer approach is both face-to-face and non-face-to-face digital usage. In the face-to-face area, we will strengthen wealth management talents through the bank securities integrated management and continue to expand our products and services such as custom-made discretionary investment service released in April.

We will also work to expand our customer base by establishing a new customer development team and focusing on the acquisition of next-generation customers. Regarding the use of non-face-to-face and digital tools, we will expand touch points through the wealth management communication media released in May and promote customer development through efficient approaches using digital wealth adviser. Through these efforts, we intend to scale our wealth management business further. Last point is the enhancement of our corporate infrastructure.

As shown here, we have the largest customer base in Japan with 200,000 corporate and 300,000 individual clients. We will further deepen our relationship by implementing the measures described so far to realize the growth potential of transactions. In terms of human capital, we are securing the quantity of human resources by strengthening recruitment while also working to improve the quality by reinforcing the training system and revitalizing the front lines with interactive communication using IR within divisions and other means.

Autonomous office management, which began in FY '24, introduced a process where we -- each office develops its detailed management policy and sets financial targets on its own. We are seeing positive results such as branch managers exercising more autonomy and stronger sense of ownership among those in charge.

In April, we also introduced a new CRM. We expect that additional releases in the future will drastically improve our productivity. We will also increase the quantity and quality of sales activities by fully automating interview records and utilizing AI for tasks such as preparing internal approval documents. That was the review of our performance in FY '24 and initiatives for FY '25.

I believe the environment is in place where we can achieve further growth in the world with positive interest rates. We will continue to develop our business by paying close attention to the customer needs. That concludes my explanation. Thank you very much for your attention.

I have been appointed Head of Japanese Corporate and Investment Banking Business Group, I am Osawa. Until last fiscal year, I was stationed in Singapore as an officer in charge of the Asia-Oceania region, and I was also involved with JCIB as a regional executive for Asia. Japanese companies have a long history of business expansion in Asia-Oceania and are very active.

MUFJ has a network of partner banks, including the Bank of AITAA and a strong trading base with non-Japanese clients, which other mega banks and foreign banks do not have. By leveraging this foundation and providing global and local financial services, we have been able to meet the trust and expectations of customers.

As the Head of the JCIB Business Group, I intend to make Japan and regions work closer together to further boost MUFJ's large corporate business. I ask for your continued support. Let me start with a review of fiscal year '24 and the outlook for FY '25 and beyond. In FY '24, the first year of the MTBP, both interest and noninterest income grew significantly, thanks to balance sheet management responsive to interest rate fluctuations and efforts to secure large deals through enhanced risk taking.

NOP of JPY 559.7 billion and ROE of 14.5% were record highs, highest levels among all business groups and was a driver for MUFJ as a whole. As shown on the right, the actual ROE for FY '24 was due in part to one-off factors such as large credit cost reversals. On a normalized basis, we expect ROE to be in the mid-12% range. Although downward pressures such as interest rate and others is expected going forward, we intend to steadily strengthen our profitability to achieve a stable ROE above 12%.

Outlook for FY '25. A challenging environment is expected, such as decline in foreign currency deposit income from lower U.S. interest rates and higher expenses from inflation, among others. The business environment surrounding JCIB clients, large Japanese companies is changing rapidly. U.S. trade policies, managing the impact of interest rate differentials, changes in industry structure, the rise of generic AI, increasing in unauthorized acquisitions, just to name a few.

Against this backdrop, we will leverage our strengths that are unmatched by our peers in addressing clients' management challenges, such as further strengthening our alliance with Morgan Stanley, our competitive global network and the seamless provision of services by integrating banking and trust banking front office. Our action plan for FY '25 is based on 3 pillars: one, continuous enhancement of the core banking business regardless of changes in the interest rate environment; two, capture large funding needs, leveraging risk-taking capabilities; and three, support growth of industrial domain and create future pipelines.

Let me elaborate on the next page, strengthen balance sheet. Regarding lending, spreads have improved steadily in recent years, thanks to strategic pricing to ensure adequate returns. Going forward, we will enhance loan quality and volume by leveraging strategic pricing to ensure stable margins and maximize overall profitability while capturing large-scale and high-margin opportunities from clients' corporate actions.

For deposits, we aim to maximize deposit balances and margins through rate-sensitive pricing and growth in transactional deposits from payment businesses. Reduction of equity holdings. The reduction target in the initial MTBP was JPY 350 billion, but last year, the target was raised to JPY 700 billion. Sales in FY '24 was JPY 276 billion, about 40% of the target. Due in part to activist proposals, it is true that there is an increasing demand to continue equity holdings.

We will support our clients to enhance their corporate value through business growth and strengthening of corporate governance. In the meantime, negotiations to reduce equity holdings will be pursued without exceptions. Strengthen origination through enhanced risk taking. In real estate, we have a growing pipeline of high-quality, high-profit deals in various asset classes, both in Japan and overseas. Risk taking will be enhanced, including equity investments.

We will steadily grow our nonrecourse loan balance and fee income by capturing real estate brokerage needs. In March of this year, the through-the-cycle fund was established with Mitsubishi UFJ Bank as the LP and MUTB as the fund manager. This fund will look for intrinsic value in properties in the cyclical real estate market, provide capital and strengthen our equity-based risk-taking capabilities. The plan is to eventually pave the way into business expansion in the real estate value chain. We will further focus on high added value solutions such as capital financing where demand growth is expected, risk taking in the LBO senior loan business and advisory service for booming M&A transactions to name a few.

In M&A and other banking securities primary businesses, following last year's regulatory action, efforts are made to reinforce legal compliance and to prevent recurrence, especially in the front lines of sales. We will strive to serve our customers' needs appropriately through banking securities collaborative business. Approach to co-create value.

As our customers look to develop new business models that meet the challenging needs of society and users, we are working on a value co-creation approach to nurture new industries and businesses by accompanying them on their journey. In space, work is underway to visualize GHG using satellite data and utilize data for various applications.

In GX, real-world challenges in promoting renewable energy are compiled as white paper. We are also contributing to the visualization and reduction of GHG across the supply chain by building advanced financing schemes. In semiconductors, initiatives are being promoted to strengthen the supply chain, ensuring economic security as well. In mobility, to implement autonomous driving services in Japan, global alliances will be leveraged.

As MUFJ, we are working on joint investments with clients and developing new financing schemes to support the resolution of societal challenges and business model transformation that are not limited to traditional industrial domains. While some aspects of these initiatives may not be directly linked to MUFJ's business in the short term by driving industrial restructuring and creating new market demands, we aspire to strengthen the global competitiveness of Japanese companies in the midterm, which in turn will lead to increased profitability for MUFJ in the future.

Lastly but not least, strengthen business foundation. JCIB is taking various steps to meet customer expectations through employee enablement and progression and fostering a culture. Regarding employee enablement and progression, we are increasing mid-career hires and the number of people who qualify under the EX qualification for experts in specific fields.

A talent management system has been introduced to improve training, placement and promotion of specialists in the large corporate domain. Regarding engagement and corporate culture, the rising talent program is now in its third year. Participants will attend the program at the University of Chicago together with our clients' executives. Alumini meetings are being held and our network is steadily expanding. We share web programs featuring co-creation with clients to enhance engagement both in Japan and abroad. The culture of growing and developing the Japanese economy together with our clients is being instilled across JCIB.

Regarding the use of AI, to quickly generate draft proposals for clients, a data lake was built last year to store past proposals. This year, we will work to improve the search function by implementing AI agent. Soon, we hope to drastically reduce the time spent on basic data collection and formatting by automatically creating drafts, allowing bankers to focus more on increasing the added value of solutions. That is all for now.

Our clients are navigating a challenging business environment where it is difficult to grasp global economic trends, not only interest rates and exchange rates. JCIB will continue to provide #1 solutions that only MUFJ can provide to our clients. Thank you for your kind attention.

I am Itagaki, Group Head of the Global Commercial Banking Business Group. Today, I will explain the progress of our group's MTBP and our outlook for the future. First, I will explain the performance of our group.

The ROE for our group in fiscal year 2024 was 11% and the ROE after reflecting the impairment charges implemented at the end of last fiscal year was 6.5%, while the ASEAN region as a whole continued to show steady growth, the deterioration in business sentiments in Thailand and Indonesia has impacted personal consumption and loan demand.

And recently, the impact of U.S. tariffs has also increased uncertainty. Looking ahead to fiscal 2026, we expect ROE to increase at Bank Danamon, Vietin Bank and Security Bank. However, in Thailand, where household debt ratios remain high and personal consumption is sluggish, loan demand is expected to decline and uncertainty about the future is likely to continue.

As a result, we project ROE for fiscal 2026 to be around 7% and around 10% before amortization. On the other hand, for fiscal 2029, amid expectations of a gradual economic recovery, we aim to achieve an ROE of over 10% after amortization, supported by the results by enhancing our business strategy and the management foundation as well as the contribution to earnings from our portfolio companies through our Asia Times digital strategy.

Fiscal 2024 saw multiple achievements. NOP reached a record high since the establishment of this business group. Additionally, Vietin Bank and Security Bank posted record profits with equity earnings from these 2 banks growing to 7.5x the level of fiscal year 2013 when our investments began. Furthermore, in the digital domain, we invested in the 2 largest digital payment service providers in Thailand and the Philippines, expanding our economic sphere.

On the other hand, credit costs increased at Currency's overseas subsidiaries and Bank Danamon subsidiaries. We will also focus on strengthening credit management and strive to operate the business group with a balanced approach between offense and defense. Next, I will explain the performance of Currency and Bank Danamon. First, currency.

In fiscal year 2024, gross profit and NOP both increased due to the contribution of overseas subsidiary acquisitions and increased fee income. Since our investment in 2013, NOP has grown 2.4x, net profits have grown 2.5x and net interest margin has remained above other banks. However, net profits decreased due to increased credit costs. Although the loan balance for fiscal 2024 was significantly lower than the previous year, the downward trend in domestic corporate loans bottomed out in December 2024 and signs of recovery are beginning to emerge.

Furthermore, following the investment in Ascend Money in June last year, the bank strengthened its relationship with the CP Group and secured large-scale financing deals for companies under the group's umbrella. Furthermore, we have been strictly managing credit operations, particularly for domestic auto loans, small- and medium-sized enterprise businesses and an overseas subsidiary, Haka Bank, which were significantly impacted by credit costs.

As a result, credit cost and credit cost ratio have been steadily decreasing since March 2024. We will continue to strengthen our credit control efforts. Next, Bank Danamon. In fiscal 2024, Bank Danamon alone drove loan balances, resulting in increased gross profits and NOP. However, due to increased credit costs at its subsidiary, Adala Finance, net profits for the period decreased.

In the auto loan business, one of the main growth drivers, we will strive to further expand profits by promoting a business strategy that balances offense and defense. On the defensive side, we will implement appropriate credit management and credit control credit costs. On the offensive side, we will expand the scale and enhance mutual complementarity in terms of regions and products through the integration of Adala and Mandala, thereby steadily capturing the growth of the auto market, which is expected to recover.

Even for the bank alone, the effects of reforms in the consumer business are beginning to appear. Through the branch transformation program and enhanced digital app functions, we have improved the convenience in both the real and digital world, resulting in increase in new customer acquisitions, fee income and loan balances. Since investing in Vet Bank in 2013, our business group has accelerated its investments in Asia and completed a commercial banking platform consisting of 4 partner banks.

In recent years, with the aim of capturing the growth of the rapidly expanding digital financial market in Asia, we have made strategic investments in digital finance service providers and expanded MUFJ's unique economic sphere. ASEAN, which is expected to continue to enjoy high GDP growth is characterized by a high proportion of unbanked populations with limited access to financial services.

Going forward, we will capture the growth of the countries as a whole by reaching out to the unbanked population through digital finance in addition to the corporations and mass retail customers covered by our partner banks. In the medium to long term, we aim for GCB to drive the growth of profits across Asia for MUFJ and for digital investments to account for 20% of GCB's revenue portfolio. Next, I will explain GCB's strategy for Indonesia and the Philippines.

In Indonesia, the acceleration of inorganic strategies is laying the groundwork for the expansion of financial services through the fusion of traditional and digital finance. In Indonesia, we ranked fifth among commercial banks and second in auto finance, but we aim to further enhance our presence as a financial group through the expansion of the MUFJ economic sphere.

In the corporate sector, MUFJ's collaborative profits has increased significantly, and we have continued to make progress, rising to the fifth place as lead managing underwriter for syndicated loans in 3 years. In mass retail sector, we are expanding opportunities to provide financial services to a wide range of customers by promoting cross-selling, utilizing the strong digital customer base and sales channels of home credit and Akulaku.

In addition, we have begun supporting collaboration among our digital investees, striving to obtain further revenue opportunities by promoting the growth of our investees. Next, in the Philippines. In fiscal year 2024, we invested in Mint, the largest digital payment service provider in the Philippines, significantly expanding our customer base. Mint is a core subsidiary of the Ayala Group, a major Philippine conglomerate that operates digital payment services. Backed by the vast ecosystem of Globe, its parent and the largest telecommunications company, Mint has widely penetrated the consumer market under the brand name GCash and has grown to become #1 digital payment provider in the country.

We aim to leverage this strength to capture the growth of digital finance in the country. Going forward, we will pursue collaborative opportunities across a wide range of areas through business partnerships and other means. As you can see, MUFJ is investing in commercial banks, nonbanks and digital financial service providers across Asia to expand the MUFJ economic sphere. In each country, we are creating collaborative opportunities and synergies. And by integrating traditional and digital finance, we aim to capture the growth of the country as a whole. So far, I have discussed strategies at the national level.

But finally, I will explain our cross-border initiatives aimed at the sustainable growth of this GCB business group. As part of our efforts to connect our investees through the digital ecosystem mode, we held the second MUFJ FinTech Festival in November last year. More than 200 people from 50 companies, including our investees, attended the event, which led to the creation of collaborative opportunities and synergies. In addition, through support for the growth of digital finance investees, we will contribute to financial inclusion efforts in Asia.

In 10 years from today, we aim to create a world where 1 in 4 adults in ASEAN is connected to the MUFJ economic sphere through digital finance. Furthermore, our business group facilitates the dispatch and exchange of staff and talents between GCB, partner banks and digital portfolio companies, fostering the development of managerial talent, promoting knowledge sharing within the MUFJ Group and strengthening governance management.

This year marks the second year of our MTBP. And while the business environment remains uncertain, we will strive to provide optimal financial services for Asia's growth through our unique economic sphere, aiming to achieve sustainable growth in the medium to long term. Thank you very much for your attention.

I am Mihara, Head of AMIS Business Group. I would like to explain the achievements and challenges of FY '24 and our medium- to long-term strategy for future growth in AMIS Business Group. First is FY '24 review. The upper left diagram shows the ROE results for FY '24. NOP for FY '24 was JPY 124.3 billion, a significant increase of JPY 11.7 billion vis-a-vis FY '23.

However, ROE remained at 9.5% as MTMS, a fully acquired subsidiary, is in its first year with high acquisition-related costs and limited profit contribution and impairment losses were recorded at AMIS overseas subsidiaries due to a partial review of strategies in light of customer trends and environmental changes. The lower left graph shows the path toward FY '26, the final year of our MTBP.

With the steady accumulation of earnings in AM, IS and pension and the absence of onetime acquisition costs, we plan to improve ROE to approximately 15.5% and expense ratio down to about 70% in FY '26. ROE is close to 20% before goodwill amortization, which is an ambitious plan to recover from the decline in FY '24.

Next, right side shows gross profit trends since FY '23. In FY '24, IS pension business posted a significant increase on the back of strong stock market conditions and AM business also posted an increase, excluding the impact of the absence of large performance fee recorded in FY '23 in FSI. Even excluding the impact of market value and FX mentioned below the bar graph, we believe that the earning power of AMIS business Group is growing and expect CAGR to exceed 14% in FY '26, although it will depend on the market environment.

In addition to earnings, in AM business, Mitsubishi UFJ Asset Management leads Japan in publicly offered stock investment trust balance, excluding ETF. In IS business, Master Trust Bank of Japan maintains the top share of domestic AUA. And in pension business, we continue to receive high evaluation and support from our customers. On the other hand, there are risks and issues that need to be addressed. Short-term challenge is the impact of U.S. trade policy.

The business model of AMIS Business Group is susceptible to stock price and FX fluctuations, most notably the Nikkei Index and the U.S. stock market. According to our current estimate, if Nikkei average were to fall below JPY 35,000, for example, there is a risk that our performance may decline year-on-year. Therefore, we will consider and implement measures to offset that, focusing on alternative products that are not influenced by stock prices while assessing the expected impact of market value.

From a mid- to long-term perspective, we believe it is essential to expand alternative products and strengthen our active management capabilities in the AM area, further expand IS function and engage in OCIO operations in the pension area. Next, let me explain our contribution to making Japan a leading asset management center, which is one of our growth strategies.

The plan to make Japan a leading asset management center is a national policy promoted by the government, and we have positioned it as an important strategy and are implementing measures in each business area. In FY '24, we decided to raise the AUM and AUA balance targets for the final year of the current MTBP as the initiatives are generally progressing smoothly.

To give you an example of our measures, in the AM business, we transferred part of the credit investment functions, which have been developed over many years at Global Markets business in Trust Bank and Bank to Mitsubishi UFJ Asset Management, as shown in the upper right chart. We anticipate offering investment products to our customers in the future.

And at this point, we are taking steady steps toward our target of January 2026. In the IS business, as shown in the lower right, we achieved operational efficiency at AM companies by seamlessly connecting with their front office systems through Aladdin system provided by BlackRock. As a result of these measures, BPO contract balance grew by JPY 22 trillion in a single year in FY '24, achieving the balance target for FY '26 ahead of schedule.

Next is global AMIS. The combined gross profits of these 2 businesses have grown to account for more than half of the entire AMIS business group. We will continue to position these 2 as priority areas from FY '25 onward so that they can drive the growth of the entire business group. First is global AM on the left. Our basic strategy is to strengthen our private AM capabilities and expand our product offerings. For example, our group companies, FSI and Albacore have set up several new funds and are preparing to launch more new products in the future.

While the market as a whole is unlikely to see significant growth in traditional asset products such as bonds and stocks, we will focus on strengthening private asset management to raise the level of AM fees. In addition to acquiring client funds when new funds are launched, the trust bank will also contribute funds to support its investment structure.

Next is global IS on the right. We have been providing global fund administration services and high value-added services such as fund finance and security lending as a one-stop shop. In May last year, we acquired Link Administration Holdings in Australia and renamed it MPMS. We are also taking on the challenge of entering new regions and expanding our services.

Fund administration, AUA and related gross profit, which we have been actively working on are increasing steadily. AUA at the end of FY '23 was approximately USD 1 trillion, but grew to USD 1.2 trillion by the end of FY '24, and we will continue to aim for high growth. Next is our initiatives for future growth. First is human resource development on the upper left. In AM business, we are working to strengthen our active investment performance and operational capabilities, which are largely dependent on the human capital, including fund managers and others.

To strengthen such human resources, we will introduce a new HR system and talent development program. And by dispatching personnel to overseas AM subsidiaries such as FSI, we aim to develop and secure talents that are competitive externally. In IS business on the lower left, we are proceeding with PMI of MPMS, where acquisition was completed last fiscal year.

The establishment of governance and management structure as an MUFJ subsidiary was largely completed in FY '24. And as the next step, we have begun full-scale examination of business measures such as synergies from intragroup collaboration and cost reduction. For example, we are considering cross-selling to MUFJ customers doing business in Australia and India and utilizing our offices as low-cost centers. Finally, let me explain our future inorganic strategy. Last year, I mentioned at the Investors Day that in principle, we are not considering large-scale M&As.

We still do not think new acquisitions are essential, but the market environment is changing significantly, including the current impact of trade policy. So we will consider deals that will contribute to our future growth. In AM business, we will consider strengthening our private AM domain, both in Japan and overseas. We do not expect the size to be that big, partly because prices are high, but we'll consider deals that can complement our operational functions and customer base, which our group does not have. In IS business, we will continue to study both the regional and product axis while following our basic strategy.

As I explained earlier, our global IS business is growing steadily and gaining traction. But on the other hand, the global market continues to be oligopolized by a few major companies. We will continue to consider deals of any size to counter this threat. This concludes my explanation on AMIS business Group. Thank you very much.

Nakahama, Group Head of GCIB. I will give a recap of FY '24 and our pathway towards FY '26 based on current business environment. Let me start with a review of FY '24. Please look at top left. ROE adjusted for individual factors for FY '24 was 7.5%, up 1 percentage point year-over-year. This was due to BSO balance sheet optimization, which has taken hold as GCIB's DNA.

That is lending margins improved through portfolio rebalancing and fee income increased mainly from our world-leading project finance business. Expense and credit costs are well controlled. We feel confident about the gains made in profitability and operational efficiency. Due to uncertainties caused by the U.S. trade policy and increasing geopolitical risks, some clients are currently refraining from new investments and M&A and economic growth is expected to slow.

Even in such an environment, we recognize that it is essential to establish a resilient business model and sustainably increase ROE. First, we will thoroughly implement disciplined profit management, which has steadily produced results so far and then firmly allocate resources in areas of focus.

While increasing profitability in this way, as shown in the lower left, we will evolve our business model, which we call project evolution and further increase our activity as a lead left bank or lead underwriter in areas of our strength to move us to a phase where we can steadily expect double-digit ROE. I will come back to project evolution in more detail later.

In this way, we will contribute to achieving the company's medium- to long-term target of 12% ROE as defined by the Tokyo Stock Exchange. On the following pages, I will cover our key initiatives and a summary of our progress under the current MTBP. ROE in red in the upper left was 4% when GCIB was established, then fell to nearly 0% due to COVID, but has been steadily improving ever since. For various reasons, the first factor is optimizing balance sheet returns.

During the past 2 MTBPs, unprofitable assets were divested and replaced with high-profit assets, which resulted in a 50 basis point improvement in lending spread as shown in the lower diagram. Given that the average loan balance for FY '24 was JPY 24 trillion, spread improvement alone will have an annual revenue impact of more than JPY 120 billion.

The second factor is the increase in fee income through products with world-class strengths and the successful accumulation of cross-selling of FX, derivatives, among others, through integrated operations with Global Markets Business Group. Through these efforts, NOP increased 2.7x from the time GCIB was established.

We are, however, fully aware that we cannot expect dramatic growth in the future just by maintaining disciplined balance sheet management and slimming down RWA. To compete with benchmark foreign banks, the entire GCIB is on board to fundamentally evolve our business model. Progress of the current MTBP, let me give some color. As shown in the center, our goal is to establish our position as the leading global debt house.

To strengthen the backbone of the business, a third pillar is to be nurtured in addition to the existing 2 main pillars of project finance and aircraft finance. That is the securitization business. Work is underway with the credit department to revamp the strategy. At the same time, we will improve our profitability by leveraging key initiatives such as increasing high ROE deals through collaboration with global markets, upper left, capturing flow business through strengthening the bank securities integration platform, lower left and global alliance with Morgan Stanley, lower right.

As a lead left bank, we are steadily capturing the robust capital needs generated by global trends such as digital infrastructure investment and transition finance. By implementing these initiatives, we will steadily achieve sustainable earnings growth and double-digit ROE. This is the overall picture of our strategy.

Turning to strengthening of our core business. First is revamping global securitization business shown on the left. We already have a considerable presence in this field, but we have made it a priority and are promoting it because it fits well with asset recycling business and allows us to leverage our leading position in project finance. Key asset classes have been identified based on regional characteristics, and we are now accelerating deal sourcing in close collaboration with credit screening. Tangible results are emerging already, such as large-scale ABS projects.

The second is Global Structured Solutions or GSS, which was launched last year, as shown in the lower left. By leveraging the strengths of both the GCIB and Global Markets, we offer tailor-made solutions that meet the diversifying needs of our customers. Projects with high ROE are steadily increasing.

Currently, we are building up net asset value finance, which provides funds by applying a conservative multiplier to the market value of assets held by institutional investors. Combining GCIB's strong client relationships and sector knowledge with the structuring and monitoring capabilities of global markets, we are controlling risk while optimizing returns.

And finally, the third is project evolution on the right, our most important initiative. This initiative aims to significantly increase activity in both origination and distribution of highly profitable deals in lead left status to achieve double-digit ROE and sustainable earnings growth. Some of you may be wondering how is this different from previous O&D initiatives? There are 3 main differences.

The first is that project evolution accelerates the origination of lead left deals. As deal size becomes larger, we will focus on high-margin projects in areas of strength while managing risk. The second is to significantly increase the amount of activity, which has remained at subscale until now. In the medium to long term, we aim to double fee income and achieve double-digit ROE by increasing origination and distribution by 1.5x.

To achieve this, our sales channels need to be strengthened. We have already signed and/or discussed partnerships with several institutional investors, including major asset managers in Europe, the United States and Asia. Third, to ensure this business model takes root in every corner of the organization, we are changing sales rep evaluation system and refining our management information system.

Since the establishment of GCIB in 2018, steady efforts have been made to ensure profitability improvement initiatives take root as our DNA. Now we will incorporate a new DNA into GCIB, a revolving model with an increase in lead left deals. Our ambition is to increase both revenues and ROE. Next, I would like to talk about enhancing the platform that supports the growth of our global operations. On the left, streamlining and standardizing global operations.

At GCIB, we are consolidating credit approval procedures at a subsidiary, MGS in India, allowing our regional staff to focus on sales activities. For example, we have already centralized credit approval procedures for institutional investors, and we are on our way to centralize project finance approval procedures. System development at MGS is on track.

At the same time, we are also taking steps to standardize procedures and systems, building a robust platform to support our future business volume expansion. Next, please turn to the right, enhancing our human capital base. Approximately 80% of GCIB's employees are hired overseas.

We will create an environment where each individual can fully demonstrate their professional capabilities such as by promoting the most suitable talent regardless of nationality and nurturing female management candidates. That is all for me, and thank you very much for your kind attention.

This is Hiroyuki Seki, Group Head of Global Markets Business Group. Thank you for watching. Today, I will focus on the 7 key strategies outlined in the current MTP of our business group and provide an overview of its first year FY 2024 as well as future initiatives.

First, FY '24 review and future outlook. As shown in the upper left, the ROE for fiscal year 2024 was 3.0%, an increase of 2.5 percentage points compared to the previous year.

Looking ahead to the final fiscal year of 2026, as shown in the lower left, we aim to raise the ROE to 7.5% through various initiatives that will be explained on the following pages. Additionally, based on our understanding of the external environment and the competitive landscape surrounding our business, as shown in the upper right, we have reflected on the achievements in fiscal 2024 and the future challenges as shown in the lower right.

First, in the sales and trading business, we strengthened collaboration with customer segment and integrated operations across business groups or entities, steadily advancing preparations to further expand the business. Additionally, we have further deepened our strategic partnership with Morgan Stanley, resulting in foreign exchange transaction volumes exceeding twice the initial plan.

Furthermore, as a new initiative, we have secured access to Japan's electricity futures and spot markets to contribute to the development of Japan's electricity market and the stabilization of power supply, thereby establishing the foundation for our electricity business. In treasury operations, we have systematically sold foreign bonds with unrealized losses, taking into account the company's overall financial situation, thereby substantially eliminating the unrealized losses in the portfolio.

This has led -- this has prepared us to mitigate the deterioration of future unrealized losses and improve interest income. Furthermore, various initiatives aimed at making Japan a leading asset management center have also been launched as planned.

On the other hand, challenges include the need to strengthen the yen interest rate business, which faced the difficulties in fiscal year 2024 in sales and trading operations and the need to enhance balance sheet operation in treasury, et cetera, particularly in preparation for further increases in yen interest rates.

Please go to the next page. This slide outlines the progress of major strategies and future plans. As indicated in the red box at the top left, the 3 items of vision centered on leading the transformation of MUFJ for further growth remain unchanged. Additionally, as shown in the lower left, we are focusing on 7 key strategies from A to G to achieve this vision. And the progress made in fiscal year 2024 is generally off to a good start as the first year of the medium-term plan.

Furthermore, on the right side, we have specifically outlined the profit contribution of each strategy towards the NOP plan for the final fiscal year of 2026. In fiscal year 2024, the only area where we faced the challenges was C to enhance yen business due to delays in product expansion. But due to the strong start of the other key strategic areas, we aim to further expand our business, including the yen business by fiscal year 2026, targeting an additional JPY 40 billion in NOP.

On the following pages, I will explain the specific strategies and initiatives in detail for each business area. Please turn to the next page. This slide shows the progress of key strategies and the future initiatives in the sales and trading business. Focusing on the 4 strategies of A to D, the entire business achieved gross profit of over JPY 510 billion in fiscal 2024.

The progress of key initiatives under each strategy is shown in green for items with positive results and yellow for items with less favorable progress. First, regarding A in the upper left, the pursuit of MUFJ-wide optimization. In fiscal year 2024, we enhanced our integrated operational platform by advancing the integration of overseas securities into bank subsidiaries and reinforcing the overseas bank securities integrated platform.

Additionally, in strengthening the value chain, we established the JV of GCIB and GM and began accumulating high ROE projects. Based on these initiatives, we aim to further expand our business and achieve an additional JPY 20 billion in gross profit by fiscal year 2026. Regarding B, down left, collaboration with Morgan Stanley, both foreign exchange trading operations in Japan and the Japanese equity business for institutional investors are achieving steady results. We will continue to enhance our ability to provide high value-added services, including expanding new areas of collaboration with the goal of achieving synergies exceeding JPY 10 billion.

Next, regarding C in the upper right, to enhance the business. In fiscal 2024, despite efforts to reorganize and supplement personnel in order to enhance sales structure and derivatives and strengthen collaboration between domestic and overseas securities, business diversification, including product expansion did not progress, and we struggled.

Going forward, we will strive to return to a growth trajectory through increased activity levels due to resource reinforcement and expansion of overseas customer transactions and aim for a gross profit increase of JPY 20 billion by fiscal 2026.

Finally, D, in the lower right corner, which is to enhance Asia business. In particular, we are expanding our currency and product offerings onshore, releasing new multicurrency derivative products tailored to customer needs to create new business. We will continue to strengthen and enhance our operational foundation while leveraging the strong presence of our Asian offices to further expand customer business, aiming for an additional JPY 10 billion in gross profit by fiscal year 2026.

Please turn to the next page. This slide outlines our initiatives in the treasury operations. First, the business environment and the key initiatives are shown in the upper left corner. With the business environment shown above as a backdrop, under the 2 key initiatives outlined in the red box, we will strive to enhance both soundness and profitability. As for the first key initiative to enhance market risk management.

Please look at the lower left. From the perspective of soundness, in fiscal year 2024, we successfully transformed the portfolio into one with net unrealized gains of JPY 100 billion through the planned sale of foreign bonds with unrealized losses and others, thereby advancing the portfolio's soundness.

From the perspective of profitability, we implemented timely and appropriate risk taking by adjusting asset allocation in response to the direction of monetary policies of various countries and flexibly managing position sizes among other measures. This included countering the deterioration of foreign currency interest income, resulting in successful accumulation of trading profits.

Going forward, we will strive to secure returns through similar risk taking, including benefiting from the positive impact on interest income via elimination of unrealized losses in the foreign bond portfolio, et cetera, while aiming for a gross profit increase of JPY 210 billion by fiscal year 2026. Lastly, regarding the second key initiative to enhance Japanese yen and non-Japanese yen balance sheet management, as shown in the lower right, we will continue to enhance our operations and management on both the asset and liability sides, taking into account the contents of the multiple boxes in order to respond to structural changes such as the upward trend in yen interest rates.

Additionally, in foreign currencies, we will strive to manage cash flow in a proactive long-term and conservative manner to prepare for various risks arising from heightened uncertainty. Please go to the next page. Lastly, we will explain our initiatives in new business area. First, the E in the upper left corner represents our challenges in new business and new areas.

In fiscal year 2024, we began trade execution and clearing services for Japan's electricity futures market and invested in eClear Corporation, a company holding a license for spot trading, thereby establishing a business foundation and securing access to both futures and spot markets.

Going forward, we will accelerate efforts to improve liquidity in both markets and continue to contribute to market development and the stabilization of power supply. Next, the lower left, F represents our contribution to making Japan a leading asset management center.

In fiscal 2024, in addition to the smooth launch of both credit and alternative investment areas, we have achieved steady results in the development of Japan's private market, including the launch of a lending subsidiary business, promoting mezzanine debt and other businesses.

Going forward, we will continue to strengthen our asset management capabilities and establish a framework to offer products to investors. Next, regarding G in the upper right corner to accelerate DX and system architecture reconstruction, while preparing to establish market IT strategy team spanning business entities, business groups and regions to address issues such as the complex and siloed structure of our system infrastructure.

We will also accelerate technology and data-driven management to drive business creation and transformation. Additionally, as shown in the lower right, we will continue to actively practice management prioritizing human capital, including additional initiatives highlighted in blue. In summary, the key strategies and initiatives outlined in this business group's medium-term plan are all designed to address the significant structural changes in the business environment. We cannot fully control change itself.

What we can do is to take the lead in change. Without taking the lead in change, we cannot survive in the market. With this in mind, we will continue to approach the operation of our global markets business with a strong resolve and a focus on results. This concludes my explanation.