Bigger Dividend Payout on the Horizon at Mitsubishi UFJ

In today's Wall Street Journal Asia print edition, Natsuo Nishio reports on a shift in priorities at Japan's largest bank in: Mitsubishi UFJ Wants to Return More of Its Profit to Stakeholders.

Mitsubishi UFJ Financial Group was the first among Japan's 3 mega-banks to repay all of its borrowed public funds. Now President Nobuo Kuroyanagi says:

"I can't discuss any specific details, but we want to win [stakeholders'] trust by actively taking steps to return profits. "

Kuroyanagi said its dividend payout won't be raised until "... various conditions are met" as the bank works on balancing its 'three main challenges of lifting and maintaining a sufficiently high capital-adequacy ratio, returning profits to stakeholders and investing for growth.' Since Mitsubishi UFJ is finished paying back taxpayers' money, Kuroyanagi declared:

"We will take autonomous, aggressive management steps."

Mitsubishi UFJ's dividend payout, which was 5.9% for the year ended March 31st, will be increased to be more in-line with nonfinancial Japanese companies at around 20% and closer to global rivals such as Citigroup at around 40%.

Comment: Mitsubishi UFJ is listed on the NYSE and trades under ticker: (MTU) at a 1000:1 ratio to its ordinary shares (Tokyo: 8306). The dividend yield for its ordinary shares is currently 0.42% but I would expect it to receive a sizable boost by the end of the year and perhaps an announcement to introduce a quarterly dividend payment system, which American investors are accustomed to and Japanese investors seem to be taking a liking to.

With its hefty ordinary share price of 1.65 million yen ($14,265) maybe there's also a possibility of a major share split in the near future. A more affordable share price would likely boost individual investor interest resulting in at least a short-term pop in its shares.

The other two mega-banks, Mitsui Sumitomo Financial Group (Tokyo: 8316) and Mizuho Financial Group (Tokyo: 8411) have a dividend yield of 0.23% and 0.41%, respectively. Mizuho is expected to list its shares on the NYSE by the end of September. In terms of P/E ratios, ordinary shares of Mitsubishi UFJ have a ttm P/E of 17.69 versus 17.62 for Mizuho and 13.62 for Mitsui Sumitomo.

See also:

Wall Street Journal article summary from August 1st: Japanese Mega-Banks Diversify Revenue Sources

Merrill Lynch notes on Mitsubishi UFJ from August 7th.

Mitsubishi UFJ Q1 earnings summary (July 31st)