Notes to the Consolidated Financial Statements
(Notes on Going-Concern Assumption)
None.
(Changes in Accounting Policies)
(Additional
Information)
(Adoption of U.S. Accounting Standards Update (ASU) 2016-13,
Measurement of Credit Losses on Financial Instruments)
Certain overseas subsidiaries which apply Generally
Accepted Accounting Principles in the United States (U.S. GAAP) adopted ASU2016-13, Measurement of Credit Losses on Financial Instruments from the beginning of the current fiscal year.
This update replaces the incurred loss impairment methodology in previous U.S. GAAP with a methodology that reflects expected credit losses, and full lifetime expected credit losses will be recognized upon initial recognition of a financial asset
measured on an amortized cost basis by taking into account certain forecasted information such as macroeconomic indicators. In adopting the accounting standard, retained earnings were adjusted for the cumulative effect at the beginning of the
current fiscal year.
As a result, at the beginning of the current fiscal year, allowance for credit losses increased by
¥172,363 million, retained earnings decreased by ¥118,374 million, and net assets per share decreased by ¥9.21.
(Additional
Information)
(Estimated impact of the COVID-19 pandemic relating to provision for credit losses)
For the fiscal year ended March 31, 2020
MUFG Bank, Ltd. (the Bank), a major consolidated subsidiary of MUFG, and some of the Banks consolidated
subsidiaries, recorded a provision for credit losses of ¥45,347 million by estimating the impact of the COVID-19 pandemic on credit risk, to the extent that such impact was considered not to have been
reflected in the borrowers financial information, considering the expected impact of the pandemic on the borrowers financial performance and on the overall economic environment.
The process for preparing the recorded provision amount involved, among other things, determining the scope of borrowers (in
terms of industry, geographical region, etc.) that were expected to be significantly affected, making certain assumptions relating to economic factors based on certain scenarios, and collectively estimating the degree to which the internal credit
ratings assigned to borrowers in particular industries or geographic regions would be downgraded.
Since there was no
precedent or established market view regarding the extent of the pandemic or the timing of containment of the pandemic available for reference, the Bank and some of its consolidated subsidiaries made certain assumptions, including that economic
conditions recovering to the calendar 2019 level by some time around the end of calendar 2020 globally, and estimated the amount, as best as they could under the circumstances, based on, among other things, such assumptions, information available
from external sources, and the approval of the appropriate management decision-making body given in accordance with prescribed internal rules.
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