Higher interest rates, fees lifts MUFG’s profitability

Earnings contribution from subsidiary banks will also support its profitability.

Mitsubishi UFJ Financial Group’s (MUFG) profitability is expected to improve gradually on the increase of domestic interest rates and an expansion of fees and commissions, according to Moody’s Ratings.

The Japanese megabank’s focus on increasing fees by strengthening its solution offering capabilities has resulted in historically high fees and commissions in the fiscal year 2024 (ended March 2025), the ratings agency noted.

“We expect MUFG's profitability to improve gradually, helped by a gradual increase in domestic interest rates, the groups' initiatives to increase revenues, control expenses and improve risk-adjusted returns,” Moody’s Ratings said on 25 August 2025, where it affirmed MUFG’s A1 ratings and gave the bank a stable outlook.

Steady earnings contribution from its subsidiary banks in Asia Pacific also supports its profitability. In particular, its 23.5% ownership stake in Morgan Stanley is an important earnings contributor, representing JPY500.1b or 27% of MUFG’s consolidated net income.

MUFG's liquidity remains strong, as evidenced by its low consolidated loans to deposits ratio of 49.4% as of the end of March 2025.

“It has strong deposit-gathering ability, underpinned by its strong and stable franchise in Japan's retail, wholesale and trust banking markets,” Moody’s said.

The group's foreign currency funding is not as strong as its domestic funding and poses risks during times of market volatility, Moody’s added. However, MUFG can utilize its Japanese government bond holdings as collateral for the Fed's discount window and secure foreign-currency borrowings from the Bank of Japan.