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4-Traders Homepage  >  Equities  >  Tokyo  >  Mitsubishi UFJ Financial Group Inc    8306   JP3902900004

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Announcement: Moody's: MUFG and JPMorgan show different risk profiles but equal standalone creditworthiness

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10/05/2017 | 04:38pm CEST

Release date- 05102017 - Moody's Japan K.K. says that Mitsubishi UFJ Financial Group, Inc. (MUFG, A1 stable) and JPMorgan Chase & Co. (JPM, A3 stable) - the largest banking groups in Japan and the US respectively by assets and net profit - demonstrate different risk profiles.

Nevertheless, Moody's has assigned the same a3 baseline credit assessment (BCA) to both because of their equal standalone credit worthiness.

'MUFG's a3 BCA takes into account its low-risk business model, while JPM's identical BCA reflects its sound capitalization, profitability and liquidity; factors which mitigate the risks from its exposure to the capital markets,' says Raymond Spencer, a Moody's Senior Vice President.

Moody's analysis is contained in its just-released report titled 'Mitsubishi UFJ Financial Group, Inc., JPMorgan Chase & Co.: Peer comparison: Different risk profiles but equal standalone creditworthiness,' and is authored by Spencer.

Moody's report says that while both banking groups face low asset risks, such risks are lower for MUFG. Moody's explains that MUFG focuses on commercial banking, with a small exposure to the capital markets, and its nonperforming loan ratio has historically proven low.

As for JPM, it has substantially narrowed the gap with MUFG in loan performance but its asset risks are tied to its large capital markets businesses, which make it vulnerable to the confidence-sensitivity of customers, as well as large concentration risks.

On the issue of the capital markets in relation to MUFG, Moody's says that MUFG's business model is unique and gives it access to expertise in the global capital markets and related products through its 23% ownership of Morgan Stanley (A3 stable), which, like JPM, is a global investment bank.

MUFG has its own capital markets businesses, but they are relatively small. And, MUFG's strategy of keeping Morgan Stanley as an equity method affiliate somewhat insulates it from direct exposure to the risks associated with the global capital markets, and increases earnings potential by creating synergistic business opportunities.

With JPM, Moody's says that the US banking group demonstrates stronger capital buffers, and its profitability mitigates the higher risks that it faces. In particular, JPM has a superior tangible common equity ratio, supported by a stronger ability to generate capital internally when compared with MUFG, and its diversified non-investment banking businesses reduce earnings volatility.

In terms of liquidity, both MUFG and JPM demonstrate sound liquidity profiles. MUFG's liquidity levels are ample, because of its limited reliance on the capital markets for funding, and also because of the preference of customers in Japan for deposits.

JPM, on the other hand, relies more heavily on wholesale funding and frequently issues debt. Nonetheless, its liquidity profile is robust, with a substantial stock of unencumbered high quality liquid assets that can be converted immediately into cash in times of stress. Its loans-to-deposit ratio is also low.

Subscribers can access the report at:

http://www.moodys.com/viewresearchdoc.aspx?docid=PBM_1084778

NOTE TO JOURNALISTS ONLY: For more information, please call one of our global press information hotlines: New York +1-212-553-0376, London +44-20-7772-5456, Tokyo +813-5408-4110, Hong Kong +852-3758-1350, Sydney +61-2-9270-8141, Mexico City 001-888-779-5833, Sao Paulo 0800-891-2518, or Buenos Aires 0800-666-3506. You can also email us at [email protected] or visit our web site at www.moodys.com.

This publication does not announce a credit rating action. For any credit ratings referenced in this publication, please see the ratings tab on the issuer/entity page on www.moodys.com for the most updated credit rating action information and rating history.

Raymond Mark Spencer

Senior Vice President

Financial Institutions Group

Moody's Japan K.K.

Atago Green Hills Mori Tower 20fl

2-5-1 Atago, Minato-ku

Tokyo 105-6220

Japan

JOURNALISTS: 81 3 5408 4110

Client Service: 81 3 5408 4100

Graeme Knowd

MD - Banking

Financial Institutions Group

JOURNALISTS: 81 3 5408 4110

Client Service: 81 3 5408 4100

Releasing Office:

Moody's Japan K.K.

Atago Green Hills Mori Tower 20fl

2-5-1 Atago, Minato-ku

Tokyo 105-6220

Japan

JOURNALISTS: 81 3 5408 4110

Client Service: 81 3 5408 4100

(c) 2017 Electronic News Publishing -, source ENP Newswire

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Financials ( JPY)
Sales 2018 5 024 B
EBIT 2018 1 356 B
Net income 2018 987 B
Debt 2018 -
Yield 2018 2,55%
P/E ratio 2018 9,81
P/E ratio 2019 9,64
Capi. / Sales 2018 2,03x
Capi. / Sales 2019 2,03x
Capitalization 10 209 B
Chart MITSUBISHI UFJ FINANCIAL G
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Mitsubishi UFJ Financial G Technical Analysis Chart | 8306 | JP3902900004 | 4-Traders
Technical analysis trends MITSUBISHI UFJ FINANCIAL G
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TrendsBullishNeutralNeutral
Income Statement Evolution
Consensus
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Mean consensus OUTPERFORM
Number of Analysts 17
Average target price 856  JPY
Spread / Average Target 18%
EPS Revisions
Managers
NameTitle
Nobuyuki Hirano President, Group CEO & Representative Director
Kiyoshi Sono Executive Chairman
Muneaki Tokunari Group Financial Officer & Director
Satoshi Murabayashi Group Chief Information Officer
Takashi Nagaoka Vice Chairman
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