AsfiledwiththeSecuritiesandExchangeCommissiononJuly27,2015 UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON,D.C.20549 FORM 20-F ‘REGISTRATIONSTATEMENTPURSUANTTOSECTION12(b)OR(g)OF THESECURITIESEXCHANGEACTOF1934 OR ÈANNUALREPORTPURSUANTTOSECTION13OR15(d)OF THESECURITIESEXCHANGEACTOF1934 ForthefiscalyearendedMarch31,2015 OR ‘TRANSITIONREPORTPURSUANTTOSECTION13OR15(d)OF THESECURITIESEXCHANGEACTOF1934 Forthetransitionperiod to OR ‘SHELLCOMPANYREPORTPURSUANTTOSECTION13OR15(d)OF THESECURITIESEXCHANGEACTOF1934 Dateofeventrequiringthisshellcompanyreport Commissionfilenumber000-54189 KABUSHIKI KAISHA MITSUBISHI UFJ FINANCIAL GROUP (ExactnameofRegistrantasspecifiedinitscharter) MITSUBISHI UFJ FINANCIAL GROUP, INC. (TranslationofRegistrant’snameintoEnglish) Japan (Jurisdictionofincorporationororganization) 7-1,Marunouchi2-chome Chiyoda-ku,Tokyo100-8330 Japan (Addressofprincipalexecutiveoffices) KazutakaYoneda,+81-3-3240-8111,+81-3-3240-7073,sameaddressasabove (Name,Telephone,FacsimilenumberandAddressofCompanyContactPerson) SecuritiesregisteredortoberegisteredpursuanttoSection12(b)oftheAct: Titleofeachclass Nameofeachexchangeonwhichregistered Commonstock,withoutparvalue................................................................. NewYorkStockExchange(1) Americandepositaryshares,eachofwhichrepresentsoneshareofcommonstock .......................... NewYorkStockExchange (1) Thelistingoftheregistrant’scommonstockontheNewYorkStockExchangeisfortechnicalpurposesonlyandwithouttradingprivileges. SecuritiesregisteredortoberegisteredpursuanttoSection12(g)oftheAct: RestrictedShareUnitsgrantingrightstoundertheUnionBanCalCorporationStockBonusPlan SecuritiesforwhichthereisareportingobligationpursuanttoSection15(d)oftheAct: $2,300,000,000Fixed/FloatingRateNon-CumulativePreferredSecuritiesofMUFGCapitalFinance1Limited,andMitsubishiUFJFinancialGroup,Inc.’s Guaranteethereof €750,000,000Fixed/FloatingRateNon-CumulativePreferredSecuritiesofMUFGCapitalFinance2Limited,andMitsubishiUFJFinancialGroup,Inc.’s Guaranteethereof RestrictedShareUnitsgrantingrightstocommonstockpursuanttotheMUFGAmericasHoldingsCorporationStockBonusPlan Indicatethenumberofoutstandingsharesofeachoftheissuer’sclassesofcapitalorcommonstockasofthecloseoftheperiodcoveredbytheannualreport: AsofMarch31,2015,14,168,853,820sharesofcommonstock(including151,647,230sharesofcommonstockheldbytheregistrantanditsconsolidated subsidiariesastreasurystock) Indicatebycheckmarkiftheregistrantisawell-knownseasonedissuer,asdefinedinRule405oftheSecuritiesAct. Yes È No ‘ Ifthisreportisanannualortransitionreport,indicatebycheckmarkiftheregistrantisnotrequiredtofilereportspursuanttoSection13or15(d)ofthe SecuritiesExchangeActof1934. Yes ‘ No È Note—CheckingtheboxabovewillnotrelieveanyregistrantrequiredtofilereportspursuanttoSection13or15(d)oftheSecuritiesExchangeActof1934 fromtheirobligationsunderthoseSections. Indicatebycheckmarkwhethertheregistrant(1)hasfiledallreportsrequiredtobefiledbySection13or15(d)oftheSecuritiesExchangeActof1934during thepreceding12months(orforsuchshorterperiodthattheregistrantwasrequiredtofilesuchreports),and(2)hasbeensubjecttosuchfilingrequirementsforthe past90days. Yes È No ‘ IndicatebycheckmarkwhethertheregistranthassubmittedelectronicallyandpostedonitscorporateWebsite,ifany,everyInteractiveDataFilerequiredto besubmittedandpostedpursuanttoRule405ofRegulationS-T(§232.405ofthischapter)duringthepreceding12months(orforsuchshorterperiodthatthe registrantwasrequiredtosubmitandpostsuchfiles). Yes È No ‘ Indicatebycheckmarkwhethertheregistrantisalargeacceleratedfiler,anacceleratedfiler,oranon-acceleratedfiler.Seedefinitionof“acceleratedfilerand largeacceleratedfiler”inRule12b-2oftheExchangeAct.(Checkone): Largeacceleratedfiler È Acceleratedfiler ‘ Non-acceleratedfiler ‘ Indicatebycheckmarkwhichbasisofaccountingtheregistranthasusedtopreparethefinancialstatementsincludedinthisfiling: U.S.GAAP È InternationalFinancialReportingStandardsasissued Other ‘ bytheInternationalAccountingStandardsBoard ‘ If“Other”hasbeencheckedinresponsetothepreviousquestion,indicatebycheckmarkwhichfinancialstatementitemtheregistranthaselectedtofollow. Item 17 ‘ Item18 ‘ Ifthisisanannualreport,indicatebycheckmarkwhethertheregistrantisashellcompany(asdefinedinRule12b-2oftheExchangeAct). Yes ‘ No È TABLEOFCONTENTS Page Forward-LookingStatements .............................................................. 3 Item1. IdentityofDirectors,SeniorManagementandAdvisers ............................... 4 Item2. OfferStatisticsandExpectedTimetable ........................................... 4 Item3. KeyInformation .............................................................. 4 Item4. InformationontheCompany .................................................... 26 Item4A. UnresolvedStaffComments .................................................... 61 Item5. OperatingandFinancialReviewandProspects ...................................... 62 Item6. Directors,SeniorManagementandEmployees ...................................... 143 Item7. MajorShareholdersandRelatedPartyTransactions .................................. 164 Item8. FinancialInformation .......................................................... 165 Item9. TheOfferandListing .......................................................... 167 Item10. AdditionalInformation ......................................................... 168 Item11. QuantitativeandQualitativeDisclosuresaboutCredit,MarketandOtherRisk ............. 190 Item12. DescriptionofSecuritiesOtherthanEquitySecurities ................................ 215 Item13. Defaults,DividendArrearagesandDelinquencies ................................... 217 Item14. MaterialModificationstotheRightsofSecurityHoldersandUseofProceeds ............. 217 Item15. ControlsandProcedures ........................................................ 217 Item16A. AuditCommitteeFinancialExpert................................................ 221 Item16B. CodeofEthics ............................................................... 221 Item16C. PrincipalAccountantFeesandServices ........................................... 221 Item16D. ExemptionsfromtheListingStandardsforAuditCommittees .......................... 222 Item16E. PurchasesofEquitySecuritiesbytheIssuerandAffiliatedPurchasers ................... 223 Item16F. ChangeinRegistrant’sCertifyingAccountant ...................................... 223 Item16G. CorporateGovernance ......................................................... 223 Item16H. MineSafetyDisclosure ........................................................ 225 Item17. FinancialStatements........................................................... 226 Item18. FinancialStatements........................................................... 226 Item19. Exhibits ..................................................................... 226 SelectedStatisticalData .................................................................. A-1 ConsolidatedFinancialStatements .......................................................... F-1 ForpurposesofthisAnnualReport,wehavepresentedourconsolidatedfinancialstatementsinaccordance withaccountingprinciplesgenerallyacceptedintheUnitedStates,orU.S.GAAP,exceptforrisk-adjusted capitalratios,businesssegmentfinancialinformationandsomeotherspecificallyidentifiedinformation.Unless otherwisestatedorthecontextotherwiserequires,allamountsinourfinancialstatementsareexpressedin Japaneseyen. WhenwereferinthisAnnualReportto“MUFG,”“we,”“us,”“our”andthe“Group,”wegenerallymean MitsubishiUFJFinancialGroup,Inc.anditsconsolidatedsubsidiaries,butfromtimetotimeasthecontext requires,wemeanMitsubishiUFJFinancialGroup,Inc.asanindividuallegalentity.Similarly,referencesto “MTFG”and“UFJHoldings”aretoMitsubishiTokyoFinancialGroup,Inc.andtoUFJHoldings,Inc.,assingle entities,respectively,aswellastoMTFGandUFJHoldingsandtheirrespectiveconsolidatedsubsidiaries,asthe contextrequires.Inaddition,our“commercialbankingsubsidiaries”referstoTheBankofTokyo-Mitsubishi UFJ,Ltd.,or“BTMU,”and,asthecontextrequires,itsconsolidatedsubsidiariesengagedinthecommercial bankingbusiness.Our“trustbankingsubsidiaries”referstoMitsubishiUFJTrustandBankingCorporation,or “MUTB,”and,asthecontextrequires,itsconsolidatedsubsidiariesengagedinthetrustbankingbusiness.Our “bankingsubsidiaries”referstoBTMUandMUTBand,asthecontextrequires,theirrespectiveconsolidated subsidiariesengagedinthebankingbusiness.Our“securitiessubsidiaries”referstoMitsubishiUFJSecurities HoldingsCo.,Ltd.,or“MUSHD,”andasthecontextrequires,itsconsolidatedsubsidiariesengagedinthe securitiesbusiness. Referencesto“MUAH”and“MUB”aretoMUFGAmericasHoldingsCorporationandMUFGUnion Bank,N.A.,assingleentities,respectively,aswellastoMUAHandMUBandtheirrespectiveconsolidated 1 subsidiaries,asthecontextrequires.EffectiveJuly1,2014,weintegratedBTMU’soperationsintheAmericas regionwiththeoperationsofUnionBanCalCorporation,or“UNBC,”whichisawhollyownedsubsidiaryof BTMU,andchangedUNBC’scorporatenameto“MUFGAmericasHoldingsCorporation.”UnionBank,N.A., whichisMUAH’sprincipalsubsidiary,wasalsorenamed“MUFGUnionBank,N.A.,”effectivethesameday. Referencesto“KS”or“Krungsri”aretoBankofAyudhyaPublicCompanyLimited,asasingleentity,as wellastoKSanditsrespectiveconsolidatedsubsidiaries,asthecontextrequires.EffectiveJanuary5,2015,we integratedtheoperationsoftheBTMUBangkokbranchwiththeoperationsofKStocomplywiththeThai regulatoryrequirementgenerallyreferredtoasthe“onepresence”policy,whichlimitsfinancialconglomerates toasinglelicenseddeposittakingentityinThailand. ReferencesinthisAnnualReportto“yen”or“¥”aretoJapaneseyen,referencesto“U.S.dollars,” “U.S.dollar,”“dollars,”“U.S.$”or“$”aretoUnitedStatesdollars,andreferencesto“euro”or“€”aretothe currencyofthememberstatesoftheEuropeanMonetaryUnion. OurfiscalyearendsonMarch31ofeachyear.Referencestoyearsnotspecifiedasbeingfiscalyearsareto calendaryears. WeusuallyholdtheordinarygeneralmeetingofshareholdersofMitsubishiUFJFinancialGroup,Inc.in JuneofeachyearinTokyo. 2 Forward-LookingStatements Wemayfromtimetotimemakewrittenororalforward-lookingstatements.Writtenforward-looking statementsmayappearindocumentsfiledwithorsubmittedtotheU.S.SecuritiesandExchangeCommission,or SEC,includingthisAnnualReport,andotherreportstoshareholdersandothercommunications. TheU.S.PrivateSecuritiesLitigationReformActof1995providesa“safeharbor”forforward-looking informationtoencouragecompaniestoprovideprospectiveinformationaboutthemselves.Werelyonthissafe harborinmakingtheseforward-lookingstatements. Forward-lookingstatementsappearinanumberofplacesinthisAnnualReportandincludestatements regardingourcurrentintent,businessplan,targets,belieforexpectationsorthecurrentbelieforcurrent expectationsofourmanagementwithrespecttoourresultsofoperationsandfinancialcondition,including, amongothermatters,ourproblemloansandloanlosses.Inmany,butnotallcases,weusewordssuchas “anticipate,”“aim,”“believe,”“estimate,”“expect,”“intend,”“plan,”“probability,”“risk,”“will,”“may”and similarexpressions,astheyrelatetousorourmanagement,toidentifyforward-lookingstatements.These statementsreflectourcurrentviewswithrespecttofutureeventsandaresubjecttorisks,uncertaintiesand assumptions.Shouldoneormoreoftheserisksoruncertaintiesmaterializeorshouldunderlyingassumptions proveincorrect,actualresultsmayvarymateriallyfromthosewhichareaimed,anticipated,believed,estimated, expected,intendedorplanned,orotherwisestated. Ourforward-lookingstatementsarenotguaranteesoffutureperformanceandinvolverisksand uncertainties.Actualresultsmaydifferfromthoseintheforward-lookingstatementsasaresultofvarious factors.WeidentifyinthisAnnualReportin“Item3.D.KeyInformation—RiskFactors,”“Item4.B.Information ontheCompany—BusinessOverview,”“Item5.OperatingandFinancialReviewandProspects”andelsewhere, some,butnotnecessarilyall,oftheimportantfactorsthatcouldcausethesedifferences. Weareundernoobligation,anddisclaimanyobligation,toupdateoralterourforward-lookingstatements, whetherasaresultofnewinformation,futureeventsorotherwise. 3 PARTI Item1. IdentityofDirectors,SeniorManagementandAdvisers. Notapplicable. Item2. OfferStatisticsandExpectedTimetable. Notapplicable. Item3. KeyInformation. A. SelectedFinancialData Theselectedstatementofincomedataandselectedbalancesheetdatasetforthbelowhasbeenderivedfrom ourauditedconsolidatedfinancialstatements. Exceptforrisk-adjustedcapitalratios,whicharecalculatedinaccordancewithJapanesebankingregulations basedoninformationderivedfromourconsolidatedfinancialstatementspreparedinaccordancewithaccounting principlesgenerallyacceptedinJapan,orJapaneseGAAP,theselectedfinancialdatasetforthbelowarederived fromourconsolidatedfinancialstatementspreparedinaccordancewithU.S.GAAP. Youshouldreadtheselectedfinancialdatasetforthbelowinconjunctionwith“Item5.Operatingand FinancialReviewandProspects,”“SelectedStatisticalData”andourconsolidatedfinancialstatementsandother financialdataincludedelsewhereinthisAnnualReport.Thesedataarequalifiedintheirentiretybyreferenceto allofthatinformation. 4 FiscalyearsendedMarch31, 2011 2012 2013 2014 2015 (inmillions,exceptpersharedataandnumberofshares) Statementofincomedata: Interestincome(1) ................................. ¥ 2,550,144 ¥ 2,595,956 ¥ 2,427,521 ¥ 2,522,283 ¥ 2,894,645 Interestexpense .................................. 670,673 640,139 556,418 560,972 663,184 Netinterestincome ............................... 1,879,471 1,955,817 1,871,103 1,961,311 2,231,461 Provision(credit)forcreditlosses .................... 292,035 223,809 144,542 (106,371) 86,998 Netinterestincomeafterprovision(credit)forcredit losses ........................................ 1,587,436 1,732,008 1,726,561 2,067,682 2,144,463 Non-interestincome............................... 1,694,822 1,440,576 2,067,909 1,821,081 2,845,078 Non-interestexpense .............................. 2,460,446 2,322,642 2,378,599 2,468,320 2,726,885 Incomebeforeincometaxexpense ................... 821,812 849,942 1,415,871 1,420,443 2,262,656 Incometaxexpense ............................... 433,625 429,191 296,020 337,917 666,020 Netincomebeforeattributionofnoncontrolling interests ...................................... 388,187 420,751 1,119,851 1,082,526 1,596,636 Netincome(loss)attributabletononcontrolling interests ...................................... (64,458) 4,520 50,727 67,133 65,509 NetincomeattributabletoMitsubishiUFJFinancial Group ........................................ ¥ 452,645 ¥ 416,231 ¥ 1,069,124 ¥ 1,015,393 ¥ 1,531,127 EarningsapplicabletocommonshareholdersofMitsubishi UFJFinancialGroup ............................ ¥ 431,705 ¥ 398,291 ¥ 1,051,184 ¥ 994,152 ¥ 1,522,157 Amountspershare: Basicearningspercommonshare—Earningsapplicableto commonshareholdersofMitsubishiUFJFinancial Group ........................................ ¥ 30.55 ¥ 28.17 ¥ 74.30 ¥ 70.21 ¥ 107.81 Dilutedearningspercommonshare—Earningsapplicable tocommonshareholdersofMitsubishiUFJFinancial Group ........................................ 30.43 28.09 74.16 69.98 107.50 Numberofsharesusedtocalculatebasicearningsper commonshare(inthousands) ..................... 14,131,567 14,140,136 14,148,060 14,158,698 14,118,469 Numberofsharesusedtocalculatedilutedearningsper commonshare(inthousands)(2) .................... 14,144,737 14,156,820 14,169,080 14,180,080 14,137,645 Cashdividendspersharepaidduringthefiscalyear: —Commonstock ................................. ¥ 12.00 ¥ 12.00 ¥ 12.00 ¥ 14.00 ¥ 18.00 $ 0.14 $ 0.15 $ 0.15 $ 0.14 $ 0.16 —Preferredstock(Class3) ......................... ¥ 30.00 — — — — $ 0.34 — — — — —Preferredstock(Class5)(3)........................ ¥ 115.00 ¥ 115.00 ¥ 115.00 ¥ 115.00 ¥ 57.50 $ 1.33 $ 1.45 $ 1.42 $ 1.14 $ 0.57 —Preferredstock(Class11)(4)....................... ¥ 5.30 ¥ 5.30 ¥ 5.30 ¥ 5.30 ¥ 2.65 $ 0.06 $ 0.07 $ 0.07 $ 0.05 $ 0.03 AsofMarch31, 2011 2012 2013 2014 2015 (inmillions) Balancesheetdata: Totalassets................................. ¥202,850,243 ¥215,202,514 ¥230,559,276 ¥253,661,077 ¥280,886,326 Loans,netofallowanceforcreditlosses .......... 86,261,519 91,012,736 97,254,242 109,181,991 117,209,723 Totalliabilities .............................. 194,187,331 206,344,067 219,617,296 240,909,633 265,604,985 Deposits ................................... 136,631,704 139,493,730 148,209,739 162,517,786 171,991,267 Long-termdebt.............................. 13,356,728 12,593,062 12,182,358 14,498,678 19,968,735 Totalequity ................................ 8,662,912 8,858,447 10,941,980 12,751,444 15,281,341 Capitalstock................................ 2,086,232 2,087,244 2,088,135 2,089,245 2,090,270 5 FiscalyearsendedMarch31, 2011 2012 2013 2014 2015 (inmillions,exceptpercentages) Otherfinancialdata: Averagebalances: Interest-earningassets ........................ ¥180,260,385 ¥184,179,147 ¥193,824,256 ¥212,176,348 ¥237,247,664 Interest-bearingliabilities ..................... 161,344,664 165,420,569 173,399,441 189,413,309 210,101,348 Totalassets................................. 204,781,984 211,835,389 225,682,785 247,729,744 277,557,493 Totalequity ................................ 8,987,129 8,594,310 9,244,530 10,683,098 13,002,955 Returnonequityandassets: Earningsapplicabletocommonshareholdersasa percentageofaveragetotalassets ............. 0.21% 0.19% 0.47% 0.40% 0.55% Earningsapplicabletocommonshareholdersasa percentageofaveragetotalequity ............. 4.80% 4.63% 11.37% 9.31% 11.71% Dividendspercommonshareasapercentageof basicearningspercommonshare ............. 39.28% 42.60% 16.15% 19.94% 16.70% Averagetotalequityasapercentageofaveragetotal assets ................................... 4.39% 4.06% 4.10% 4.31% 4.68% Netinterestincomeasapercentageofaveragetotal interest-earningassets ...................... 1.04% 1.06% 0.97% 0.92% 0.94% Creditqualitydata: Allowanceforcreditlosses .................... ¥ 1,240,456 ¥ 1,285,507 ¥ 1,335,987 ¥ 1,094,420 ¥ 1,055,479 Allowanceforcreditlossesasapercentageof loans .................................... 1.42% 1.39% 1.36% 0.99% 0.89% Impairedloans .............................. ¥ 1,893,098 ¥ 2,031,868 ¥ 2,200,766 ¥ 1,861,027 ¥ 1,686,806 Impairedloansasapercentageofloans........... 2.16% 2.20% 2.23% 1.69% 1.43% Allowanceforcreditlossesrelatedtoimpairedloans asapercentageofimpairedloans ............. 39.30% 42.92% 43.39% 40.32% 36.00% Netloancharge-offs.......................... ¥ 342,100 ¥ 173,370 ¥ 112,862 ¥ 153,748 ¥ 150,666 Netloancharge-offsasapercentageofaverage loans .................................... 0.39% 0.20% 0.12% 0.15% 0.13% Averageinterestratespread.................... 0.99% 1.02% 0.93% 0.89% 0.90% Risk-adjustedcapitalratiocalculatedunderJapanese GAAP(5) ................................. 14.89% 14.91% 16.68% 15.53% 15.68% Notes: (1) InterestincomeforthefiscalyearendedMarch31,2012includesagainof¥139,320millionontheconversionrateadjustmentof MorganStanley’sconvertiblepreferredstock.Exclusiveoftheone-timegainassociatedwiththeconversion,interestincomewouldhave beenlowerforthefiscalyearendedMarch31,2012. (2) IncludesthecommonsharesthatwerepotentiallyissuableuponconversionoftheClass11PreferredStock. (3) Preferreddividendswere¥57.5pershareandpaidsemi-annually.InApril2014,weacquiredandcancelledalloftheissuedsharesof FirstSeriesofClass5PreferredStock.Asaresult,thereiscurrentlynoissuedClass5PreferredStock.SeeNote16toouraudited consolidatedfinancialstatementsincludedelsewhereinthisAnnualReport. (4) Preferreddividendswere¥2.65pershareandpaidsemi-annually.InAugust2014,weacquiredalloftheissuedsharesofClass11 PreferredStockinexchangefor1,245sharesofourcommonstockheldintreasury,andcancelledtheacquiredshares.SeeNote16to ourauditedconsolidatedfinancialstatementsincludedelsewhereinthisAnnualReport. (5) Risk-adjustedcapitalratioshavebeencalculatedinaccordancewithJapanesebankingregulationsasapplicableontherelevant calculationdate,basedoninformationderivedfromourconsolidatedfinancialstatementspreparedinaccordancewithJapaneseGAAP. Foradescriptionoftheapplicablecapitalratiocalculationandotherrequirementsapplicable,see“Item4.B.Informationonthe Company—BusinessOverview—SupervisionandRegulation—Japan—Capitaladequacy”and“Item5.B.OperatingandFinancial ReviewandProspects—LiquidityandCapitalResources—CapitalAdequacy.” 6 ExchangeRateInformation Thetablesbelowsetforth,foreachperiodindicated,certaininformationconcerningtherateofexchangeof JapaneseyenperU.S.$1.00basedonexchangerateinformationfoundonBloomberg.OnJuly13,2015,the closingexchangeratewas¥123.43toU.S.$1.00andtheinverseratewasU.S.$0.81to¥100.00. Year2015 February March April May June July(1) High .................................... ¥120.48 ¥122.03 ¥120.84 ¥124.46 ¥125.86 ¥123.73 Low..................................... ¥116.66 ¥118.33 ¥118.50 ¥118.89 ¥121.94 ¥120.41 Note: (1) PeriodfromJuly1,2015toJuly13,2015. FiscalyearsendedMarch31, 2011 2012 2013 2014 2015 Average(ofmonth-endrates) ........................... ¥84.99 ¥78.90 ¥83.32 ¥100.38 ¥110.82 B. CapitalizationandIndebtedness Notapplicable. C. ReasonsfortheOfferandUseofProceeds Notapplicable. D. RiskFactors Investinginoursecuritiesinvolvesahighdegreeofrisk.Youshouldcarefullyconsidertherisksdescribed inthissection,whichisintendedtodisclosealloftherisksthatweconsidermaterialbasedontheinformation currentlyavailabletous,aswellasalltheotherinformationinthisAnnualReport,includingourconsolidated financialstatementsandrelatednotes,“Item5.OperatingandFinancialReviewandProspects,”“Item11. QuantitativeandQualitativeDisclosuresaboutCredit,MarketandOtherRisk”and“SelectedStatisticalData.” Ourbusiness,operatingresultsandfinancialconditioncouldbemateriallyandadverselyaffectedbyanyof thefactorsdiscussedbelow.Thetradingpriceofoursecuritiescoulddeclineduetoanyofthesefactors.This AnnualReportalsocontainsforward-lookingstatementsthatinvolverisksanduncertainties.Ouractualresults coulddiffermateriallyfromthoseanticipatedintheseforward-lookingstatementsasaresultofvariousfactors, includingthosedescribedinthissectionandelsewhereinthisAnnualReport.See“Forward-Looking Statements.” RisksRelatedtoOurBusiness BecausealargeportionofourassetsaswellasourbusinessoperationsareinJapan,wemayincur lossesifeconomicconditionsinJapanworsen. OurperformanceisparticularlyaffectedbythegeneraleconomicconditionsofJapanwhereweare headquarteredandconductasignificantamountofourbusiness.AsofMarch31,2015,60.3%ofourtotalassets wererelatedtoJapanesedomesticassets,includingJapanesenationalgovernmentandJapanesegovernment agencybonds,whichaccountedfor70.0%ofourtotalinvestmentsecuritiesportfolioand13.0%ofourtotal assets,respectively.Interestandnon-interestincomeinJapanrepresented52.6%ofourtotalinterestandnon- interestincomeforthefiscalyearendedMarch31,2015.Furthermore,asofMarch31,2015,ourloansinJapan accountedfor59.1%ofourtotalloansoutstanding. 7 ThereissignificantuncertaintysurroundingJapan’seconomy.Forexample,Japan’sfiscalhealthand sovereigncreditworthinessmaydeteriorateiftheJapanesegovernment’seconomicmeasuresandtheBankof Japan’smonetarypoliciesproveineffectiveorresultinnegativeconsequences.IfthepricesofJapanese governmentbondsdeclinerapidly,resultinginanunexpectedlysuddenincreaseininterestrates,ourinvestment securitiesportfolioaswellasourlending,borrowing,tradingandotheroperationsmaybenegativelyimpacted. Inrecentperiods,majorcreditratingagencieshavedowngradedthecreditratingsofJapan’ssovereigndebt, includingadowngradebyMoody’sInvestorService,Inc.inDecember2014andadowngradebyFitchRatings, Ltd.inApril2015. InstabilityintheJapanesestockmarketandforeigncurrencyexchangeratesmayalsohaveasignificant adverseimpactonourassetandliabilitymanagementaswellasourresultsofoperations.Variousotherfactors, includingstagnationordeteriorationofeconomicandmarketconditionsinothercountries,andgrowingglobal competition,mayalsohaveamaterialnegativeimpactontheJapaneseeconomy.Foradetaileddiscussiononthe businessenvironmentinJapanandabroad,see“Item5.OperatingandFinancialReviewand Prospects—BusinessEnvironment.” SinceourdomesticloansinJapanaccountedforasignificantportionofourloanportfolio,deterioratingor stagnanteconomicconditionsinJapanmaycauseadverseeffectsonourfinancialresults,suchasincreasesin creditcosts,asthecreditqualityofsomeborrowerscoulddeteriorate.Forexample,duetotheintensifyingglobal competitionandweakeningconsumerspendinginrecentperiods,someJapanesecompanies,including electronicsmanufacturers,haveexperiencedsignificantfinancialdifficulties.Forafurtherdiscussion, see“—RisksRelatedtoOurBusiness—Wemaysufferadditionalcredit-relatedlossesinthefutureifour borrowersareunabletorepaytheirloansasexpectedorifthemeasureswetakeinreactionto,orinanticipation of,ourborrowers’deterioratingrepaymentabilitiesproveinappropriateorinsufficient.” Iftheglobaleconomydeterioratesfurther,ourcredit-relatedlossesmayincrease,andthevalueofthe financialinstrumentsweholdmaydecrease,resultinginlosses. Globaleconomicconditionsremainvolatile,anditisuncertainhowtheglobaleconomywillevolveover time.TheshiftinthemonetarypolicyintheUnitedStates,theprolongedeconomicstagnationinEurope, slowingeconomicgrowthinChinainthemidstofashiftinthegovernment’seconomicpolicy,andthepolitical turmoilinvariousregionsaroundworldcouldnegativelyimpactwidermarkets,includingthoseofboth emerginganddevelopedcountries.AsofMarch31,2015,basedprincipallyonthedomicileoftheobligors, assetsrelatedtoEuropeaccountedforapproximately9.9%ofourtotalassets,assetsrelatedtoAsiaandOceania excludingJapanaccountedforapproximately9.3%ofourtotalassets,andassetsrelatedtotheUnitedStates accountedforapproximately16.5%ofourtotalassets.Iftheglobaleconomydeterioratesortheglobaleconomic recoverysignificantlyslowsdownagain,theavailabilityofcreditmaybecomelimited,andsomeofour borrowersmaydefaultontheirloanobligationstous,increasingourcreditlosses.Inaddition,concernsoverthe sovereigndebtprobleminsomeEuropeancountriesmaylimitliquidityintheglobalfinancialmarkets.Someof ourcreditderivativetransactionsmayalsobenegativelyaffected,includingtheprotectionwesoldthroughsingle namecreditdefaultswaps,andindexandbasketcreditdefaultswaps.Thenotionalamountsoftheseprotections soldasofMarch31,2015were¥2,583.2billionand¥791.1billion,respectively.Inaddition,ifcreditmarket conditionsworsen,ourcapitalfundingstructuremayneedtobeadjustedorourfundingcostsmayincrease, whichcouldhaveamaterialadverseimpactonourfinancialconditionandresultsofoperations. Furthermore,wehaveincurredlosses,andmayincurfurtherlosses,asaresultofchangesinthefairvalue ofourfinancialinstrumentsresultingfromweakeningmarketconditions.Forexample,declinesinthefairvalue ofourinvestmentsecurities,particularlyequityinvestmentsecurities,resultedinourrecordingimpairmentlosses of¥124.2billion,¥6.5billionand¥5.9billionforthefiscalyearsendedMarch31,2013,2014and2015, respectively.AsofMarch31,2015,approximately33.7%ofourtotalassetswerefinancialinstrumentsforwhich wemeasurefairvalueonarecurringbasis,andlessthan0.5%ofourtotalassetswerefinancialinstrumentsfor whichwemeasurefairvalueonanon-recurringbasis.Generally,inordertoestablishthefairvalueofthese 8 instruments,werelyonquotedprices.Ifthevalueofthesefinancialinstrumentsdeclines,acorrespondingwrite- downmayberecognizedinourconsolidatedstatementsofincome.Inaddition,becauseweholdalargeamount ofinvestmentsecurities,short-termfluctuationsinthevalueofoursecuritiesmaytriggerlossesorexitcostsfor ustomanageourrisk.Formoreinformationonourvaluationmethodforfinancialinstruments,see “Item5.OperatingandFinancialReviewandProspects—CriticalAccountingEstimates.” Ourbusinessoperationsareexposedtorisksofnaturaldisasters,terrorismandotherdisruptionscaused byexternalevents. AsamajorfinancialinstitutionincorporatedinJapanandoperatinginmajorinternationalfinancialmarkets, ourbusinessoperations,ATMsandotherinformationtechnologysystems,personnel,andfacilitiesandother physicalassetsaresubjecttotherisksofearthquakes,typhoons,floodsandothernaturaldisasters,terrorismand otherpoliticalandsocialconflicts,healthepidemics,andotherdisruptionscausedbyexternalevents,whichare beyondourcontrol.Asaconsequenceofsuchexternalevents,wemayberequiredtoincursignificantcostsand expensesforremedialmeasuresorcompensationtocustomersortransactioncounterpartiesforresultinglosses. Wemayalsosufferlossofbusiness.Inaddition,suchexternaleventsmayhavevariousothersignificantadverse effects,includingdeteriorationineconomicconditions,declinesinthebusinessperformanceofourborrowers anddecreasesinstockprices,whichmayresultinhighercreditcostsorimpairmentorvaluationlossesonthe financialinstrumentswehold.Theseeffectscouldmateriallyandadverselyaffectourbusiness,operatingresults andfinancialcondition. AswithotherJapanesecompanies,weareexposedtoheightenedrisksoflarge-scalenaturaldisasters, particularlyearthquakes.Inparticular,alarge-scaleearthquakeoccurringintheTokyometropolitanareacould resultinmarketdisruptionsorsignificantdamageto,orlossesof,tangibleorhumanassetsrelatingtoour businessandcounterpartiesbecausemanyofourimportantbusinessfunctionsandmanyofthemajorJapanese companiesandfinancialmarketsarelocatedinthearea.Inaddition,suchanearthquakecouldcausealonger- termeconomicslowdownandadowngradeofJapan’ssovereigncreditratingduetoincreasesingovernment spendingfordisasterrecoverymeasures. Ourriskmanagementpoliciesandproceduresmaybeinsufficienttoaddresstheconsequencesofthese externalevents,resultinginourinabilitytocontinuetooperateapartorthewholeofourbusiness.Inaddition, ourredundancyandbackupmeasuresmaynotbesufficienttoavoidamaterialdisruptioninouroperations,and ourcontingencyandbusinesscontinuityplansmaynotaddressalleventualitiesthatmayoccurintheeventofa materialdisruptioncausedbyalarge-scalenaturaldisastersuchastheMarch2011GreatEastJapanEarthquake, whichledtotsunamis,soilliquefactionandfires,aswellaselectricitypowersupplyshortagesandelectricity powerconservationmeasuresresultingfromthesuspensionoftheoperationsofthenuclearpowerplants. Wemaysufferadditionalcredit-relatedlossesinthefutureifourborrowersareunabletorepaytheir loansasexpectedorifthemeasureswetakeinreactionto,orinanticipationof,ourborrowers’deteriorating repaymentabilitiesproveinappropriateorinsufficient. Whenwelendmoneyorcommittolendmoney,weincurcreditriskwhichistheriskoflossesifour borrowersdonotrepaytheirloans.Wemayincursignificantcreditlossesorhavetoprovideforasignificant amountofadditionalallowanceforcreditlossesif: ‰ largeborrowersbecomeinsolventormustberestructured; ‰ domesticorglobaleconomicconditions,eithergenerallyorinparticularindustriesinwhichlarge borrowersoperate,deteriorate; ‰ thevalueofthecollateralwehold,suchasrealestateorsecurities,declines;or ‰ weareadverselyaffectedbycorporatecredibilityissuesamongourborrowers,toanextentthatisworse thananticipated. 9
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