Japan Banks CET1 ratio disclosures as of end June show MUFG recovering to 9

Equity Research 15 August 2026 | 1:44AM JST

Japan Banks: CET1 ratio disclosures as of end-June show MUFG recovering to 9.5% level; risk asset control still a challenge ahead

On August 14, major banks disclosed their capital adequacy ratios as of the end of Makoto Kuroda | June 2026. CET1 ratios were up, ranging from increases of +10 bp qoq (Resona) to Goldman Sachs Japan Co., Ltd. +40 bp qoq (Mizuho), and although domestic lending (excluding to the government) Hibiki Takuma at the megabanks grew by a substantial +10% yoy in Apr-Jun, CET1 ratios still | recovered. We think the background to this includes capital accumulation from many Goldman Sachs Japan Co., Ltd.

banks posting record-high 1Q quarterly net profits, as well as a reduction in risk assets due to investment trust cancellations and ETF sales. Regarding the latter, we see potential for position rebuilding from 2Q onward from the adjusted levels in the stock market. On the other hand, as loan growth has continued from 2Q onward (major bank lending in July was +8.0% yoy), we think risk asset control, including via O&D and the replacement of low-margin assets with high-margin assets, is likely to remain a challenge.

MUFG’s CET1 ratio (excluding AOCI) came in at 9.5% (the lower end of the company’s target range), recovering from 9.2% at the end of FY3/26. Although MUFG booked 1Q net profits of ¥809.4 bn, after capital deductions associated with MS double gearing and capital reductions from share buybacks, we had expected a modest recovery in the CET1 ratio as of end-1Q (end-June) but did not think it had risen to 9.5%, making this a slightly positive surprise. However, with upcoming dividend payments in 2Q, our impression is that MUFG cannot take its foot off the pedal in terms of profit accumulation and risk asset control from now either.

Exhibit 1: CET1 ratio at Japanes banks

MUFG SMFG Mizuho SMTG Resona Chiba Yokohama FG

12.5% 12.0% 11.5% 11.0% 10.5% 10.0% 9.5% 9.0% 8.5% 8.0%

Goldman Sachs does and seeks to do business with companies covered in its research reports. As a result, investors should be aware that the firm may have a conflict of interest that could affect the objectivity of this report. Investors should consider this report as only a single factor in making their investment decision. For Reg AC certification and other important disclosures, see the Disclosure Appendix, or go to Analysts employed by non-US affiliates are not registered/qualified as research analysts with FINRA in the U.S.

Price Target Risks and Methodology - MUFG Target price methodology: We are Buy rated on MUFG. Our 12-month target price of ¥4,000 is based on a target P/B of 1.74X and our end-FY3/28E BPS estimate of ¥2,270. We derive our target P/B multiple from our normalized ROE estimate of 13.94% and a cost of equity of 8.0%.

Key downside risks: (1) Deterioration in the global economic outlook; (2) credit cycle worsening; and (3) capital markets remaining weak.