MUFG trims bond portfolio to limit losses but earnings slowdown looms

Its earnings growth is expected to slow to 5% from fiscal 2027.

Mitsubishi UFJ Financial Group (MUFG)’s reduction of its domestic bond portfolio will limit losses, although earnings growth is still expected to slow to 5% in fiscal 2027, said Morningstar in an analyst note.

Fiscal 2025 earnings—the year ending in March 2026— are in line with Morningstar’s estimate, although guidance implies slightly stronger net interest margins, said Lorraine Tain, director, Morningstar.

“But we are mainly impressed with MUFG's reduction in its domestic bond portfolio, which should limit losses,” Tan wrote in a note on 18 May.

Tan and Morningstar’s view on MUFG’s earnings through fiscal 2029 has changed little.

“We expect earnings growth to slow to 5% from fiscal 2027, mainly due to our view that global interest rates ex-Japan should ease. This, coupled with slowing contributions from associate Morgan Stanley, should eat into domestic growth,” Tan said.

MUFG guides for an 11% net income growth to $16.99b (JPY2.7t) in fiscal 2026.