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Banking Slides: 1 & 2

Banking Slides: 1 & 2. Domestic Deposit/Lending Rates Low Interest Rate environment MUFJ and other banks make higher margin on individual loans over corporate loans. Domestic/Overseas Lending Overseas corporate lending is 33% of corporate loans.

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Banking Slides: 1 & 2

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  1. Banking Slides: 1 & 2 • Domestic Deposit/Lending Rates • Low Interest Rate environment • MUFJ and other banks make higher margin on individual loans over corporate loans • Domestic/Overseas Lending • Overseas corporate lending is 33% of corporate loans

  2. Holdings of Investment Securities and Asia Strategy • Holdings of investment securities – 93% are bonds • 60% of total is government bonds • Another 27% is foreign bonds • Asia Strategy (2) • In Asia Developed Markets like HK, Australia, and Singapore, high percentage of foreign lending • India and Korea also stand out for high rate of MNC focused lending

  3. Gross Profits by regions: Growing Overseas lending by 50% to 18 trillion • India and Korea are 18% combined • ASEAN presumably is Thailand, Indonesia, and Singapore • Greater China is HK and China which are very different, and percentage of foreign lending is lower in China • Customer business gross profits • From H2 FY09 (3 years), non-Japanese profits ratio just rose from 54.1% to 58.7% but Investment Banking profit doubled, Loan profits up by 50%, Deposit profits up by over 2x

  4. Asia Strategy: Competing with Foreign banks like HSBC • 3rd position in China behind HSBC and Citi • 2nd behind HSBC In Korea • Retail strategy in Japan focused on private banking, wealth management and mass affluent advisory

  5. Consumer Finance • ACOM has managed to increase market share from 19.0% to 32% in 3 years while unsecured loans have declined 40% • Guarantee business growing • BTMU BANQUIC • Looking at Retail: revolving Credit Balance Increasing, Card Loan products sales increasing almost 8x in 3 years • Yet Retail is only the 4th priority on the basic strategy slide

  6. Loans/Deposits: MUFJ & Mizuho • Individual loans (other than housing) would be in the 2.2 Trillion Others section • Unsecured lending and guarantees would be approx. half. • Mizuho has 65.3Tn Yen of loans, hasn’t increased overseas lending as rapidly as MUFJ

  7. Sumitomo Mitsui Trust & Shinsei • Increased holdings of JGBs while MUFJ lowered there holdings • Overall increase in JPY bonds 20% • Increased holdings of US Treasuries as a hedge? • Reduced cross-shareholdings • Shinsei increasing customers in LAKE consumer finance business, but cannibalizing existing customers, as overall number of consumer finance customers decline • Loosening approval standards?

  8. SMTH • Government bonds are 50% of available securities • Real estate lending expanding, focusing on individuals and REITS • 20% of AUM is due to Nikko Asset management • Custody and Pension business large but assets under management flat • Global Markets and Retail Financial services are #1 and #2 drivers of gross profits, but global markets is #1 in net profits

  9. Sumitomo Mitsui Financial • Overseas deposit balance but likely institutional, not retail • Almost 20% of net income is due to Consumer Finance and Credit Cards • While the same risk evaluation is used to drive the guarantee business • Overseas loan balance growing by over 50% in 3 years • Growth in guarantee business replacing individual guarantees by family or friends, driven by changes in society

  10. Shinsei • Shinsei has a higher net interest margin…because its investments carry higher risk? • Growth in housing loans, and balance by 20% in overall loan balance

  11. Consumer Finance : Competition Increasing and margins decreasing • Approval rates are increasing • New customer growth flat so lending more to existing customers? • But overall loan balance has decreasing in 2 years • Loan guarantee business growing while consumer loans decreasing

  12. Aozora • 12% of loans are overseas, relatively flat • Reflecting former owners, Cerberus, over 25% were LBO loans • 50% of securities in JGBs, with another 30% in foreign bonds, and 15% in other investments • Very different portfolio mix compared to large Japanese banks

  13. Tokyo Star • 83% of domestic bond holdings were JGBs, while 16% were corporate bonds • Increased JGB bond holdings by 30% in 3 months to Dec 2012 • 2.1Tn in loans, of which almost 90% to individuals • Of 1.4Tn of securities, almost 70% in foreign government bonds

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