As filed with the Securities and Exchange Commission on September 28, 2004
================================================================================
                                 UNITED STATES
                      SECURITIES AND EXCHANGE COMMISSION
                            WASHINGTON, D.C. 20549

                               -----------------

                                   FORM 20-F

                               -----------------

        [_] REGISTRATION STATEMENT PURSUANT TO SECTION 12(b) OR (g) OF
                      THE SECURITIES EXCHANGE ACT OF 1934

                                      OR

             [X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF
                      THE SECURITIES EXCHANGE ACT OF 1934
                   For the fiscal year ended March 31, 2004

                                      OR

           [_] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF
                      THE SECURITIES EXCHANGE ACT OF 1934
                  For the transition period        to

                        Commission file number 1-10277

                               -----------------

               KABUSHIKI KAISHA MITSUBISHI TOKYO FINANCIAL GROUP
            (Exact name of Registrant as specified in its charter)

                    MITSUBISHI TOKYO FINANCIAL GROUP, INC.
                (Translation of Registrant's name into English)

                                     Japan
                (Jurisdiction of incorporation or organization)

                            4-1, Marunouchi 2-chome
                          Chiyoda-ku, Tokyo 100-6326
                                     Japan
                   (Address of principal executive offices)
Securities registered or to be registered pursuant to Section 12(b) of the Act:



                             Title of each class                               Name of each exchange on which registered
                             -------------------                               -----------------------------------------
                                                                            
Common stock, without par value...............................................        New York Stock Exchange (1)
American Depositary Shares, each of which represents one one-thousandth of one
  share of common stock.......................................................            New York Stock Exchange

--------
(1) The listing of the registrant's common stock on the New York Stock Exchange
    is for technical purposes only and without trading privileges.

   Securities registered or to be registered pursuant to Section 12(g) of the
   Act: None

   Securities for which there is a reporting obligation pursuant to Section
   15(d) of the Act: None

   Indicate the number of outstanding shares of each of the issuer's classes of
capital or common stock as of the close of the period covered by the annual
report:

   At March 31, 2004, (1) 6,476,099.77 shares of common stock (including 2,714
shares of common stock held by the registrant and its consolidated subsidiaries
as treasury stock), (2) 81,400 shares of class 1 preferred stock and (3) 15,000
shares of class 2 preferred stock were issued and outstanding.

   Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such short period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days:

                               Yes  [X]  No  [_]

   Indicate by check mark which financial statement item the registrant has
elected to follow:

                          Item 17  [_]  Item 18  [X]

================================================================================



                               TABLE OF CONTENTS



                                                                                       Page
                                                                                       ----
                                                                                 
Forward-Looking Statements............................................................   3
Item 1.   Identity of Directors, Senior Management and Advisors.......................   4
Item 2.   Offer Statistics and Expected Timetable.....................................   4
Item 3.   Key Information.............................................................   4
Item 4.   Information on the Company..................................................  19
Item 5.   Operating and Financial Review and Prospects................................  45
Item 6.   Directors, Senior Management and Employees.................................. 102
Item 7.   Major Shareholders and Related Party Transactions........................... 113
Item 8.   Financial Information....................................................... 114
Item 9.   The Offer and Listing....................................................... 115
Item 10.  Additional Information...................................................... 116
Item 11.  Quantitative and Qualitative Disclosures about Credit, Market and Other Risk 135
Item 12.  Description of Securities Other Than Equity Securities...................... 144
Item 13.  Defaults, Dividend Arrearages and Delinquencies............................. 145
Item 14.  Material Modifications of the Rights of Security Holders and Use of Proceeds 145
Item 15.  Controls and Procedures..................................................... 145
Item 16A. Audit Committee Financial Expert............................................ 145
Item 16B. Code of Ethics.............................................................. 145
Item 16C. Principal Accountant Fees and Services...................................... 146
Item 17.  Financial Statements........................................................ 148
Item 18.  Financial Statements........................................................ 148
Item 19.  Exhibits.................................................................... 148
Selected Statistical Data............................................................. A-1
Consolidated Financial Statements..................................................... F-1


For purposes of this Annual Report, we have presented our consolidated
financial statements in accordance with accounting principles generally
accepted in the United States of America, or US GAAP, except for the
risk-adjusted capital ratios, the business segment financial information and
some other specifically identified information, which are prepared in
accordance with accounting principles generally accepted in Japan, or Japanese
GAAP. Unless otherwise stated or the context otherwise requires, all amounts in
our financial statements are expressed in Japanese yen.

When we refer in this Annual Report to "Mitsubishi Tokyo Financial Group,"
"MTFG," "we," "us," "our" and the "Group," we mean Mitsubishi Tokyo Financial
Group, Inc. and its consolidated subsidiaries. References in this Annual Report
to "yen" or "(Yen)" are to Japanese yen and references to "US dollars," "US
dollar," "dollars," "US$" or "$" are to United States dollars. Our fiscal year
ends on March 31 of each year. From time to time, we may refer to the fiscal
year ended March 31, 2004 throughout this Annual Report as fiscal 2003 or the
2003 fiscal year. We may also refer to other fiscal years in a corresponding
manner. References to years not specified as being fiscal years are to calendar
years.

We usually hold the ordinary general meeting of shareholders of Mitsubishi
Tokyo Financial Group, Inc. in June of each year in Chiyoda-ku, Tokyo.

                                      2



                          Forward-Looking Statements

We may from time to time make written or oral forward-looking statements.
Written forward-looking statements may appear in documents filed with the U.S.
Securities and Exchange Commission, or SEC, including this Annual Report, and
other reports to shareholders and other communications.

The U.S. Private Securities Litigation Reform Act of 1995 provides a "safe
harbor" for forward-looking information to encourage companies to provide
prospective information about themselves. We rely on this safe harbor in making
these forward-looking statements.

Forward-looking statements appear in a number of places in this Annual Report
and include statements regarding our intent, business plan, targets, belief or
current expectations and/or the current belief or current expectations of our
management with respect to our results of operations and financial condition,
including, among other matters, our problem loans and loan losses. In many, but
not all cases, we use words such as "anticipate," "aim," "believe," "estimate,"
"expect," "intend," "plan," "probability," "risk" and similar expressions, as
they relate to us or our management, to identify forward-looking statements.
These statements reflect our current views with respect to future events and
are subject to risks, uncertainties and assumptions. Should one or more of
these risks or uncertainties materialize or should underlying assumptions prove
incorrect, actual results may vary materially from those which are anticipated,
believed, estimated, expected, intended or planned.

Our forward-looking statements are not guarantees of future performance and
involve risks and uncertainties. Actual results may differ from those in the
forward-looking statements as a result of various factors. We identify in this
Annual Report in "Item 3.D. Key Information--Risk Factors," "Item 4.B.
Information on the Company--Business Overview," "Item 5. Operating and
Financial Review and Prospects" and elsewhere, some, but not necessarily all,
of the important factors that could cause these differences.

We do not intend to update our forward-looking statements. We are under no
obligation, and disclaim any obligation, to update or alter our forward-looking
statements, whether as a result of new information, future events or otherwise.

                                      3



                                    PART I

Item 1. Identity of Directors, Senior Management and Advisors.

Not applicable.

Item 2. Offer Statistics and Expected Timetable.

Not applicable.

Item 3. Key Information.

A.  Selected Financial Data

On April 2, 2001, we were formed as a holding company for The Bank of
Tokyo-Mitsubishi, Ltd. ("Bank of Tokyo-Mitsubishi"), The Mitsubishi Trust and
Banking Corporation ("Mitsubishi Trust Bank") and Nippon Trust Bank Limited
("Nippon Trust Bank"). Nippon Trust Bank was formerly a majority-owned
subsidiary of Bank of Tokyo-Mitsubishi and merged into Mitsubishi Trust Bank in
October 2001. The business combination between Bank of Tokyo-Mitsubishi and
Mitsubishi Trust Bank was accounted for under the pooling-of-interests method
and, accordingly, the selected statement of operations and balance sheet data
shown below for the periods ended before the combination set forth the combined
results of Bank of Tokyo-Mitsubishi, including Nippon Trust Bank, and
Mitsubishi Trust Bank as if the combination had been in effect for all the
periods presented.

Except for risk-adjusted capital ratios, which are calculated in accordance
with Japanese banking regulations based on information derived from our
financial statements prepared in accordance with Japanese GAAP, and the average
balance information, the selected financial data set forth below are derived
from our financial statements prepared in accordance with US GAAP. In the
fiscal year ended March 31, 2004, certain operations including domestic
mortgage securities business were discontinued and related figures in prior
years were reclassified to discontinued operations to conform to the
presentation for the fiscal year ended March 31, 2004.

                                      4



You should read the selected financial data set forth below in conjunction with
"Item 5. Operating and Financial Review and Prospects" and our consolidated
financial statements and other financial data included elsewhere in this Annual
Report. These data are qualified in their entirety by reference to all of that
information.



                                                              Fiscal years ended March 31,
                                 --------------------------------------------------------------------------------------
                                      2000             2001             2002               2003               2004
                                 --------------  ---------------  ---------------  ---------------      ---------------
                                                (in millions, except per share data and number of shares)
                                                                                         
Statement of operations data:
   Interest income.............. (Yen)2,160,233  (Yen) 2,278,428  (Yen) 2,013,828  (Yen) 1,582,746      (Yen) 1,422,009
   Interest expense.............      1,084,134        1,309,454          938,274          539,270              426,514
                                 --------------  ---------------  ---------------  ---------------      ---------------
   Net interest income..........      1,076,099          968,974        1,075,554        1,043,476              995,495
   Provision (credit) for
    credit losses...............        355,724          783,855          598,412          437,972             (114,109)
                                 --------------  ---------------  ---------------  ---------------      ---------------
   Net interest income after
    provision (credit) for
    credit losses...............        720,375          185,119          477,142          605,504            1,109,604
   Non-interest income..........        376,737          851,093          361,635          839,826            1,306,584
   Non-interest expense.........      1,079,786        1,021,708        1,161,294        1,182,406            1,236,040
                                 --------------  ---------------  ---------------  ---------------      ---------------
   Income (loss) from
    continuing operations
    before income tax expense
    (benefit) and cumulative
    effect of a change in
    accounting principle........         17,326           14,504         (322,517)         262,924            1,180,148
   Income tax expense
    (benefit)...................         61,995           46,594          (98,881)          69,474              357,314
                                 --------------  ---------------  ---------------  ---------------      ---------------
   Income (loss) from
    continuing operations
    before cumulative effect
    of a change in accounting
    principle...................        (44,669)         (32,090)        (223,636)         193,450              822,834
   Income (loss) from
    discontinued
    operations--net.............         (2,873)         (27,084)           1,235           10,370                 (585)
   Cumulative effect of a
    change in accounting
    principle, net of tax/(1)/..             --               --            5,867             (532)                  --
                                 --------------  ---------------  ---------------  ---------------      ---------------
   Net income (loss)............ (Yen)  (47,542) (Yen)   (59,174) (Yen)  (216,534) (Yen)   203,288      (Yen)   822,249
                                 ==============  ===============  ===============  ===============      ===============
   Net income (loss)
    available to common
    shareholders................ (Yen)  (53,006) (Yen)   (67,510) (Yen)  (220,702) (Yen)   190,784      (Yen)   814,268
                                 ==============  ===============  ===============  ===============      ===============
Amounts per share/(2)/:
   Basic earnings (loss) per
    common share--income
    (loss) from continuing
    operations available to
    common shareholders
    before cumulative effect
    of a change in accounting
    principle................... (Yen)(9,140.02) (Yen) (7,350.18) (Yen)(41,011.91) (Yen) 32,212.04      (Yen)128,323.13
   Basic earnings (loss) per
    common share--net income
    (loss) available to
    common shareholders.........      (9,663.81)      (12,274.55)      (39,733.32)       33,963.40           128,231.00
   Diluted earnings (loss)
    per common share--income
    (loss) from continuing
    operations available to
    common shareholders
    before cumulative effect
    of a change in accounting
    principle...................      (9,140.02)       (7,350.18)      (41,011.91)       29,459.67           125,006.95
   Diluted earnings (loss)
    per common share--net
    income (loss) available
    to common shareholders......      (9,663.81)      (12,274.55)      (39,733.32)       31,137.71           124,917.18
   Number of shares used to
    calculate basic earnings
    per common share (in
    thousands)..................          5,485            5,500            5,555            5,617                6,350
   Number of shares used to
    calculate diluted
    earnings per common share
    (in thousands)..............          5,485            5,500            5,555            5,863/(3)/           6,517
   Cash dividends per share
    declared during the
    fiscal year/(4)/:
    --Common shares............. (Yen) 8,255.25  (Yen)  8,255.25  (Yen)  4,127.63  (Yen)  6,000.00      (Yen)  4,000.00
                                     $    79.24      $     79.24      $     39.62      $     57.59          $     38.40
    --Preferred shares (Class
     1)......................... (Yen)57,120.00  (Yen) 82,500.00  (Yen) 41,250.00  (Yen)123,750.00      (Yen) 82,500.00
                                     $   548.28      $    791.90      $    395.95      $  1,187.85          $    791.90
    --Preferred shares (Class
     2)......................... (Yen) 8,150.00  (Yen) 16,200.00  (Yen)  8,100.00  (Yen) 24,300.00      (Yen) 16,200.00
                                     $    78.23      $    155.50      $     77.75      $    233.25          $    155.50




                                                                                 At March 31,
                                               --------------------------------------------------------------------------------
                                                    2000            2001            2002            2003             2004
                                               --------------- --------------- --------------- --------------- ----------------
                                                                                (in millions)
                                                                                                
Balance sheet data:
   Total assets............................... (Yen)84,996,000 (Yen)93,488,950 (Yen)94,365,114 (Yen)96,531,713 (Yen)103,701,080
   Loans, net of allowance for credit losses..      48,563,172      47,953,919      48,494,545      47,105,433       47,637,729
   Total liabilities..........................      80,981,592      90,287,654      91,738,617      93,978,776       99,854,128
   Deposits...................................      54,777,171      60,105,742      63,659,501      67,303,678       70,024,252
   Long-term debt.............................       4,540,277       4,963,455       5,183,841       5,159,132        5,659,877
   Shareholders' equity.......................       4,014,408       3,201,296       2,626,497       2,552,937        3,846,952
   Capital stock/(5)/.........................         956,664         956,664         973,156       1,084,708        1,084,708


                                      5





                                                                             Fiscal years ended March 31,
                                           -------------------------------------------------------------------------------
                                                   2000                 2001                 2002               2003
                                           ---------------      ---------------      ---------------      ---------------
                                                                           (in millions, except percentages)
                                                                                              
Other financial data:
Average balances:                               (unaudited)          (unaudited)          (unaudited)          (unaudited)
   Interest-earning assets................ (Yen)82,987,015      (Yen)83,238,004      (Yen)85,062,897      (Yen)86,265,048
   Interest-bearing liabilities...........      74,408,264           75,645,416           78,683,185           79,658,352
   Total assets...........................      86,620,645           89,341,483           92,376,000           95,478,227
   Shareholders' equity...................       3,599,596            3,464,251            3,045,608            2,431,528
Return on equity and assets:                    (unaudited)          (unaudited)          (unaudited)          (unaudited)
   Net income (loss) available to
    common shareholders as a percentage
    of total average assets...............           (0.06)%              (0.08)%              (0.24)%               0.20%
   Net income (loss) available to
    common shareholders as a percentage
    of average shareholders' equity.......           (1.47)%              (1.95)%              (7.25)%               7.85%
   Dividends per common share as a
    percentage of basic earnings per
    common share..........................              --/(6)/              --/(6)/              --/(6)/           17.67%
   Average shareholders' equity as a
    percentage of total average assets....            4.16%                3.88%                3.30%                2.55%
   Net interest income as a percentage
    of total average interest-earning
    assets................................            1.30%                1.16%                1.26%                1.21%
Credit quality data:
   Allowance for credit losses............ (Yen) 1,486,212      (Yen) 1,716,984      (Yen) 1,735,180      (Yen) 1,360,136
   Allowance for credit losses as a
    percentage of loans...................            2.97%                3.46%                3.45%                2.81%
   Nonaccrual and restructured loans,
    and accruing loans contractually
    past due 90 days or more.............. (Yen) 2,844,915      (Yen) 4,272,794      (Yen) 4,164,982      (Yen) 2,753,026
   Nonaccrual and restructured loans,
    and accruing loans contractually
    past due 90 days or more as a
    percentage of loans...................            5.68%                8.60%                8.29%                5.68%
   Allowance for credit losses as a
    percentage of nonaccrual and
    restructured loans, and accruing
    loans contractually past due 90
    days or more..........................           52.24%               40.18%               41.66%               49.41%
   Net loan charge-offs................... (Yen)   679,736      (Yen)   598,362      (Yen)   603,404      (Yen)   814,811
                                                (unaudited)          (unaudited)          (unaudited)          (unaudited)
   Net loan charge-offs as a percentage
    of average loans......................            1.30%                1.21%                1.23%                1.64%
   Average interest rate spread...........            1.14%                1.01%                1.18%                1.15%
   Risk-adjusted capital ratio
    calculated under Japanese GAAP/(7)/:..           11.43%               10.15%               10.30%               10.84%




                                           -----------------
                                                 2004
                                           ----------------

                                        
Other financial data:
Average balances:                                (unaudited)
   Interest-earning assets................ (Yen) 90,867,520
   Interest-bearing liabilities...........       84,975,055
   Total assets...........................      102,825,996
   Shareholders' equity...................        3,287,929
Return on equity and assets:                     (unaudited)
   Net income (loss) available to
    common shareholders as a percentage
    of total average assets...............             0.79%
   Net income (loss) available to
    common shareholders as a percentage
    of average shareholders' equity.......            24.77%
   Dividends per common share as a
    percentage of basic earnings per
    common share..........................             3.12%
   Average shareholders' equity as a
    percentage of total average assets....             3.20%
   Net interest income as a percentage
    of total average interest-earning
    assets................................             1.10%
Credit quality data:
   Allowance for credit losses............ (Yen)    888,127
   Allowance for credit losses as a
    percentage of loans...................             1.83%
   Nonaccrual and restructured loans,
    and accruing loans contractually
    past due 90 days or more.............. (Yen)  1,731,083
   Nonaccrual and restructured loans,
    and accruing loans contractually
    past due 90 days or more as a
    percentage of loans...................             3.57%
   Allowance for credit losses as a
    percentage of nonaccrual and
    restructured loans, and accruing
    loans contractually past due 90
    days or more..........................            51.30%
   Net loan charge-offs................... (Yen)    337,124
                                                 (unaudited)
   Net loan charge-offs as a percentage
    of average loans......................             0.69%
   Average interest rate spread...........             1.06%
   Risk-adjusted capital ratio
    calculated under Japanese GAAP/(7)/:..            12.95%

--------
(1) Effective April 1, 2001, we adopted Statement of Financial Accounting
    Standards ("SFAS") No. 133, "Accounting for Derivative Instruments and
    Hedging Activities," as amended by SFAS No. 137 and SFAS No. 138. On April
    1, 2002, we also adopted SFAS No. 142, "Goodwill and Other Intangible
    Assets."
(2) Amounts have been adjusted to reflect the stock-for-stock exchanges
    creating Mitsubishi Tokyo Financial Group, Inc. for the fiscal years ended
    March 31, 2000 and 2001.
(3) Includes the common shares potentially issuable pursuant to the 3%
    exchangeable guaranteed notes due 2002 and Class 2 preferred stock. The 3%
    exchangeable guaranteed notes due 2002 were redeemed in November 2002.
(4) For the convenience of readers, the US dollar amounts are presented as
    translations of Japanese yen amounts at the rate of (Yen)104.18 = US$1.00,
    the noon buying rate on March 31, 2004 in New York City for cable transfers
    in Japanese yen as certified for customs purposes by the Federal Reserve
    Bank of New York.
(5) Amounts include common stock and non-redeemable Class 2 preferred stock.
    Redeemable Class 1 preferred stock is excluded.
(6) Percentages against basic loss per common share have not been presented
    because such information is not meaningful.
(7) Risk-adjusted capital ratios have been calculated in accordance with
    Japanese banking regulations, based on information derived from our
    consolidated financial statements prepared in accordance with Japanese
    GAAP. Ratios for the fiscal years ended March 31, 2000 and 2001 represent
    combined risk-adjusted capital ratios of Bank of Tokyo-Mitsubishi and
    Mitsubishi Trust Bank before any combination-related adjustments.

                                      6



Exchange Rate Information

The tables below set forth, for each period indicated, the noon buying rate in
New York City for cable transfers in Japanese yen as certified for customs
purposes by the Federal Reserve Bank of New York, expressed in Japanese yen per
$1.00. On September 21, 2004, the noon buying rate was $1.00 equals (Yen)109.94
and the inverse noon buying rate was (Yen)100 equals $0.91.



                                           Year 2004
     -------------------------------------------------------------------------------------
        March       April        May        June        July       August    September/(1)/
     ----------- ----------- ----------- ----------- ----------- ----------- -------------
                                                        
High (Yen)112.12 (Yen)110.37 (Yen)114.30 (Yen)111.27 (Yen)111.88 (Yen)111.53   (Yen)110.47
Low.      104.18      103.70      108.50      107.10      108.21      109.00        109.22

--------
(1) Period from September 1 to September 21.



                                             Fiscal year ended March 31,
                             -----------------------------------------------------------
                                2000        2001        2002        2003        2004
                             ----------- ----------- ----------- ----------- -----------
                                                              
Average (of month-end rates) (Yen)110.02 (Yen)111.65 (Yen)125.64 (Yen)121.10 (Yen)112.75


B.  Capitalization and Indebtedness

Not applicable.

C.  Reasons for the Offer and Use of Proceeds

Not applicable.

D.  Risk Factors

Investing in our securities involves a high degree of risk. You should
carefully consider the risks described below as well as all the other
information in this Annual Report, including our consolidated financial
statements and related notes, "Item 5. Operating and Financial Review and
Prospects," "Item 11. Quantitative and Qualitative Disclosures about Credit,
Market and Other Risk" and "Selected Statistical Data."

Our business, operating results and financial condition could be materially
adversely affected by any of the factors discussed below. The trading price of
our securities could decline due to any of these factors. This Annual Report
also contains forward-looking statements that involve risks and uncertainties.
Our actual results could differ materially from those anticipated in these
forward-looking statements as a result of various factors, including the risks
faced by us described below and elsewhere in this Annual Report. See
"Forward-Looking Statements."

Risks Related to Our Business

We may suffer additional losses in the future due to problem loans.

We have suffered from worsening asset quality problems since the early 1990s.
Despite recent progress in reducing the level of our problem loans, we continue
to have a considerable amount of problem loans on our balance sheet. A number
of our borrowers are still facing challenging circumstances, and our problem
loans and credit-related expenses could increase if:

..   economic conditions in Japan do not improve;

..   real estate prices in Japan continue to decline or stock prices in Japan
    decline;

..   the rate of corporate bankruptcies in Japan or elsewhere in the world rises;

..   our large borrowers become insolvent or must be restructured;

..   current restructuring plans are not successfully implemented;

..   additional economic problems arise elsewhere in the world; or

..   the global economic environment deteriorates generally.

                                      7



An increase in problem loans and credit-related expenses would adversely affect
our results of operations, weaken our financial condition and erode our capital
base. Our credit losses may increase if we elect, or are forced by economic or
other considerations, to sell or write-off our problem loans at a larger
discount, in a larger amount and/or in a different time or manner than we may
otherwise want. For a discussion of our historical problem loans, see "Item
5.B. Operating and Financial Review and Prospects--Liquidity and Capital
Resources--Financial Condition--Allowance for Credit Losses, Nonperforming and
Past Due Loans" and "Selected Statistical Data--Loan Portfolio."

Our allowance for credit losses may be insufficient to cover future loan losses.

Our allowance for credit losses in our loan portfolio is based on assumptions
and estimates about our customers, the value of collateral we hold and the
economy as a whole. Our actual loan losses could prove to be materially
different from our estimates and could materially exceed our allowance. If our
actual loan losses are higher than we currently expect, our current allowance
for credit losses will be insufficient. If general economic conditions
deteriorate or the standards for establishing allowances change, causing us to
change some of our assumptions and estimates, if the value of collateral we
hold declines or if we are adversely affected by other factors to an extent
that is worse than anticipated, we may have to provide for additional allowance
for credit losses. For a detailed discussion of our allowance policy and the
historical trend of allowances for credit losses, see "Item 5.A. Operating and
Financial Review and Prospects--Operating Results--Critical Accounting
Estimates--Allowance for Credit Losses" and "Item 5.B. Operating and Financial
Review and Prospects--Liquidity and Capital Resources--Financial
Condition--Allowance for Credit Losses, Nonperforming and Past Due Loans."

The credit quality of our loan portfolio may be adversely affected by the
continuing financial difficulties facing companies operating in the Japanese
real estate, construction, wholesale and retail, and automotive sectors.

We have large exposure to borrowers in the Japanese real estate, construction,
wholesale and retail, and automotive sectors, and are thus exposed to the
ongoing financial difficulties faced by some borrowers operating in those
sectors. Some of the companies to which we have extended credit in these
sectors are exposed to ongoing financial difficulties and they may be in
restructuring negotiations or considering whether to seek bankruptcy
protection. If these companies are unsuccessful in their restructuring efforts
due to continuing financial difficulties and other unexpected factors, are
otherwise forced to seek bankruptcy protection, or if other lenders discontinue
or decrease their financial support to these companies for any reason, there
may be further significant deteriorations in the credit quality of our loan
portfolio, which would expose us to further loan losses. For a detailed
discussion of our exposure to these sectors, see "Item 5.B. Operating and
Financial Review and Prospects--Liquidity and Capital Resources--Financial
Condition--Allowance for Credit Losses, Nonperforming and Past Due Loans" and
"Selected Statistical Data--Loan Portfolio."

Our exposure to troubled borrowers may increase, and our recoveries from them
may be lower than expected.

We may provide additional loans or equity capital to troubled borrowers in
order to facilitate their restructuring and revitalization efforts. We may
forbear from exercising some or all of our rights as a creditor against them,
and we may forgive loans to them in conjunction with their debt restructuring.
We may take these steps even when our legal rights might permit us to take
stronger action against the borrower and even when others might take stronger
action against the borrower to maximize recovery or to reduce exposure in the
short term. We may provide support to troubled borrowers for various reasons,
including any of the following reasons arising from Japan's business
environment and customs:

..   political or regulatory considerations;

..   reluctance to push a major client into default or bankruptcy or to disrupt
    a restructuring plan supported by other lenders; and

                                      8



..   a perceived responsibility for the obligations of our affiliated and
    associated companies, as well as companies with which we have historical
    links or other long-standing relationships.

These practices may substantially increase our exposure to troubled borrowers
and increase our losses.

We may experience losses because our remedies for credit defaults by our
borrowers are limited.

We may not be able to realize the value of the collateral held by us or enforce
our rights against defaulting customers because of:

..   the difficulty of foreclosing on collateral in Japan;

..   the illiquidity of and depressed values in the Japanese real estate market;
    and

..   the depressed values of pledged securities held as collateral.

Efforts by other Japanese banks to meet the Japanese government's guidance to
dispose of problem loans by March 31, 2005, or to otherwise address their
nonperforming loans, could exacerbate our credit losses.

Japan's Financial Services Agency, or the Financial Services Agency, announced
in October 2002 that it would strive to reduce by about half the aggregate
ratio of nonperforming credits to total credits of major Japanese banks by
March 31, 2005. Although the Bank of Tokyo-Mitsubishi and Mitsubishi Trust Bank
have achieved this target during the fiscal year ended March 31, 2004,
continuing efforts by other Japanese banks to restructure problem borrowers
within the specified time frame could increase our credit losses. If we are a
minority lender to borrowers engaged in restructuring negotiations with such
borrowers' "main bank," as part of the restructuring we may have to sell or
write-off our problem loans at a larger discount, in a larger amount and/or in
a different time or manner than we would have otherwise. We may also elect to
dispose of problem loans for lower values or in a less than optimal manner as a
result of these restructuring efforts. Alternatively, troubled banks and other
financial institutions may discontinue or decrease their credit support to
troubled borrowers to whom we are a co-lender, resulting in significant
failures of those borrowers and/or a deterioration in the quality of our loan
portfolio.

Our business may be adversely affected by negative developments with respect to
other Japanese financial institutions, both directly and through the effect
they may have on the overall Japanese banking environment and on their
borrowers.

Many Japanese financial institutions, including banks, non-bank lending and
credit institutions, affiliates of securities companies and insurance
companies, are still experiencing declining asset quality and capital adequacy
and other financial problems. This may lead to severe liquidity and solvency
problems, which have in the past resulted in the liquidation, government
control or restructuring of affected institutions. The continued financial
difficulties of other financial institutions could adversely affect us because:

..   we have extended loans to banks and other financial institutions that are
    not our consolidated subsidiaries, some of which are classified as
    nonaccrual and restructured loans;

..   we are a shareholder of some other banks and financial institutions that
    are not our consolidated subsidiaries;

..   we may be requested to participate in providing assistance to support
    distressed financial institutions that are not our consolidated
    subsidiaries;

..   financial institutions may become majority owned and/or controlled by the
    Japanese government as a result of the government's conversion of their
    preferred shares into common stock and/or injection of additional public
    funds into financial institutions pursuant to the Deposit Insurance Law,
    such as the injection of public funds into Resona Bank, Ltd. and Ashikaga
    Bank, Ltd. in 2003, or other newly introduced frameworks for the injection
    of public funds into financial institutions;

                                      9



..   if the government takes control of major financial institutions, we will
    become a direct competitor of government-controlled financial institutions
    and may be put at a competitive disadvantage if the Japanese government
    provides regulatory, tax, funding or other benefits to those financial
    institutions to strengthen their capital, facilitate their sale or
    otherwise;

..   deposit insurance premiums could rise if deposit insurance funds prove to
    be inadequate; and

..   repeated or large-scale bankruptcies and/or government support or control
    of financial institutions could generally undermine depositor confidence or
    adversely affect the overall banking environment.

The proposed management integration with UFJ Holdings, Inc. and its
subsidiaries and affiliates may be delayed, materially altered or abandoned. In
addition, we may have difficulty integrating the operations of the UFJ Group.

On August 12, 2004, Mitsubishi Tokyo Financial Group, Inc. and its subsidiaries
concluded a basic agreement with UFJ Holdings and its subsidiaries regarding a
management integration of the holding companies, banks, trust banks and
securities companies of the two groups.

In addition, on September 10, 2004, Mitsubishi Tokyo Financial Group, Inc., UFJ
Holdings and UFJ Bank entered into an agreement regarding Mitsubishi Tokyo
Financial Group, Inc.'s cooperation in strengthening the UFJ Group's capital.
Pursuant to this agreement, UFJ Bank issued 3.5 billion class E preferred
shares and Mitsubishi Tokyo Financial Group, Inc. purchased those shares for
(Yen)700 billion on September 17, 2004. The capital injection to UFJ Bank is
based on the assumption that our proposed management integration with the UFJ
Group will be completed as outlined in the basic agreement between the two
groups announced on August 12, 2004.

The discussions regarding the proposed integration are still ongoing and the
execution of a merger agreement and completion of the proposed transaction will
be subject to continued due diligence and negotiations between us and the UFJ
Group. The proposed integration will also be subject to approval by
shareholders and relevant regulatory authorities. Even after the capital
strengthening, there is no assurance that we will complete the proposed
integration of our management and business with the UFJ Group. Various factors,
including litigation and possible competing bids, could cause the proposed
transaction to be delayed, materially altered or abandoned. If we fail to
complete the proposed integration with the UFJ Group, we may suffer significant
reputational harm and it may negatively impact our stock price.

Even if we complete the business combination transaction, we may encounter
additional difficulties in integrating the business and operations of the two
institutions. For example:

..   We may encounter difficulties integrating the domestic and overseas branch
    network, head office functions, information and management systems,
    personnel, and customer base of the two institutions. Significant and/or
    unexpected costs may be incurred during the process. As a result, we may
    not be able to enhance the convenience and efficiency of our branch network
    and operational systems as planned. In addition, we may fail to achieve our
    targeted cost reductions from the business integration.

..   Additional credit-related expenses or losses may be incurred as a uniform
    accounting and reserving policy is applied to the asset and loan portfolio
    of the two institutions.

..   The asset portfolio of UFJ Holdings may suffer from unanticipated
    asset-quality problems, and significant losses may be incurred on write
    downs.

If we are unable to resolve smoothly the problems that arise in the integration
process with the UFJ Group, our business, results of operations and financial
condition may be negatively affected. See "Item 5.A. Operating and Financial
Review and Prospects--Recent Developments--Basic Agreement Regarding the
Management Integration of Mitsubishi Tokyo Financial Group and the UFJ Group."

                                      10



We may be adversely affected if the economic conditions in Japan worsen.

Since the early 1990s, the Japanese economy has performed poorly due to a
number of factors, including weak consumer spending and lower capital
investment by Japanese companies, causing a large number of corporate
bankruptcies and the failure of several major financial institutions. Although
recently certain economic indicators and stock prices have shown some signs of
recovery, if the recovery does not materialize or the economy weakens, then our
earnings and credit quality may be adversely affected. For a discussion of
Japan's current economic environment, see "Item 5.A. Operating and Financial
Review and Prospects--Operating Results--Business Environment--Economic
Environment in Japan."

Changes in interest rate policy, particularly unexpected or sudden increases in
interest rates, could adversely affect the value of our bond portfolio, problem
loans and our results of operations.

We hold a significant amount of Japanese government bonds and foreign bonds,
including U.S. Treasury bonds. An increase in relevant interest rates,
particularly if such increase is unexpected or sudden, may negatively affect
the value of our bond portfolio and reduce our so-called "spread," which is the
difference between the rate of interest we earn and the rate of interest we
pay. In addition, an increase in relevant interest rates may increase our
problem loans as some of our borrowers may not be able to meet the increased
interest payment requirements, thereby adversely affecting our results of
operations and financial condition. The yield on Japanese 10-year government
bonds, which is used as a benchmark for long-term interest rates, was
approximately 0.7% in April 2003 and reached a record low of approximately 0.5%
in June 2003 before surging to approximately 1.9% in June and July 2004. In the
United States, the U.S. Federal Reserve raised the federal funds rate by 25
basis points respectively in June, August and September 2004 to 1.75%. For a
detailed discussion of our bond portfolio, see "Selected Statistical
Data--Investment Portfolio."

Corporate credibility issues may increase our problem loans or otherwise
negatively affect our results of operations.

During the past few years, high-profile bankruptcy filings and reports of past
accounting irregularities, including fraud, in the United States and other
countries have raised corporate credibility issues, particularly with respect
to public companies. In response to these developments and regulatory responses
to these developments in the United States and elsewhere, regulators, auditors
and corporate managers generally have begun to review financial statements more
thoroughly and conservatively. As a result, additional accounting
irregularities and corporate governance issues may be uncovered and bring about
additional bankruptcy filings and regulatory action in the United States and
elsewhere. Such developments could increase our credit costs if they directly
involve our borrowers or indirectly affect our borrowers' credit.

We may not be able to maintain our capital ratios above minimum required
levels, which could result in the suspension of some or all of our operations.

We, as a holding company, and our Japanese subsidiary banks, Bank of
Tokyo-Mitsubishi and Mitsubishi Trust Bank, are each required to maintain
risk-weighted capital ratios above the levels specified in the capital adequacy
guidelines of the Financial Services Agency. The capital ratios are calculated
in accordance with Japanese banking regulations based on information derived
from our financial statements prepared in accordance with Japanese GAAP. Our
subsidiaries in California, UnionBanCal Corporation and Union Bank of
California, N.A., which we refer to collectively as UNBC, are subject to
similar U.S. capital adequacy guidelines. We or our subsidiary banks may be
unable to continue to satisfy the capital adequacy requirements because of:

..   declines in the value of our securities portfolio;

..   credit costs we may incur as we dispose of problem loans and remove
    impaired assets from our balance sheet;

..   credit costs we may incur due to losses from a future deterioration in
    asset quality;

..   a reduction in the value of our deferred tax assets;


                                      11



..   changes in accounting rules or in the guidelines regarding the calculation
    of bank holding companies' or banks' capital ratios;

..   our inability to refinance our subordinated debt obligations with equally
    subordinated debt;

..   adverse changes in foreign currency exchange rates; and

..   other adverse developments discussed in these Risk Factors.

If our capital ratios fall below required levels, the Financial Services Agency
could require us to take a variety of corrective actions, including withdrawal
from all international operations or suspension of all or part of our business
operations. For a discussion of our capital ratios and the related regulatory
guidelines, see "Item 4.B. Information on the Company--Business
Overview--Supervision and Regulation--Japan--Capital Adequacy" and "Item 5.B.
Operating and Financial Review and Prospects--Liquidity and Capital
Resources--Capital Adequacy."

Our capital ratios may also be negatively affected by contemplated or recently
adopted regulatory changes.

Several proposed regulatory changes and market factors could have an adverse
impact on our capital ratios. In particular, the Financial System Council of
the Financial Services Agency is discussing the adoption after April 2005 of
rules that limit the amount of deferred tax assets that may be included in the
calculation of Tier I and/or total regulatory capital. The imposition of any
such limits would likely reduce our regulatory capital, perhaps materially. At
March 31, 2004, our deferred tax assets amounted to (Yen)655 billion under
Japanese GAAP, which was included in our Tier I capital of (Yen)3,859 billion
calculated in accordance with Japanese GAAP as required by the Financial
Services Agency. In addition, effective March 31, 2003, the Financial Services
Agency strongly suggested that major banks calculate loan loss reserves for
certain impaired loans by analyzing the projected cash flows from those loan
assets, discounted to present value, instead of basing reserves on historical
loan loss data. We had already been employing a methodology to calculate our
loan loss reserves for these credits based on their estimated cash flows.
However, if in the future the Financial Services Agency adopts a calculation
methodology that is different from ours, the size of our allowance for loan
losses under Japanese GAAP could increase. Because our capital ratios are
calculated under Japanese GAAP, this change may reduce our capital ratios
materially. Further regulatory changes are expected based on the new framework
relating to regulatory capital requirements which were established by the Basel
Committee on Banking Supervision and endorsed by the central bank governors and
the heads of bank supervisory authorities of the Group of Ten (G10) countries
in June 2004.

Our results of operations and capital ratios will be negatively affected if we
are required to reduce our deferred tax assets.

We and our Japanese subsidiary banks determine the amount of our net deferred
tax assets and our regulatory capital pursuant to Japanese GAAP and the
Japanese banking regulations, which differ from U.S. GAAP and U.S. regulations.
Under current Japanese banking regulations, all deferred tax assets established
pursuant to Japanese GAAP are included in regulatory capital. Currently,
Japanese GAAP generally permits the establishment of deferred tax assets for
tax benefits that are expected to be realized during a period that is
reasonably foreseeable, generally five fiscal years. The calculation of
deferred tax assets is based upon various assumptions, including assumptions
with respect to future taxable income. Actual results may differ significantly
from these assumptions. Even if our ability to include deferred tax assets in
regulatory capital is not affected by rule changes, if we conclude, based on
our projections of future taxable income, that we or our subsidiary banks will
be unable to realize a portion of the deferred tax assets, our deferred tax
assets may be reduced and, as a result, our results of operations may be
negatively affected and our capital ratios may decline.

We may not be able to refinance our subordinated debt obligations with equally
subordinated debt, and as a result our capital ratios may be adversely affected.

At March 31, 2004, subordinated debt accounted for approximately 28.9% of our
total regulatory capital, approximately 29.2% of Bank of Tokyo-Mitsubishi's
total regulatory capital and approximately 31.9% of Mitsubishi Trust Bank's
total regulatory capital (in each case, as calculated under Japanese GAAP). We
may not

                                      12



be able to refinance our subordinated debt obligations with equally
subordinated debt. The failure to refinance these subordinated debt obligations
with equally subordinated debt may reduce our total regulatory capital and, as
a result, negatively affect our capital ratios.

If the Japanese stock market declines, we may incur additional losses on our
securities portfolio and our capital ratios will be adversely affected.

We hold large amounts of marketable equity securities. The market values of
these securities are inherently volatile and have generally and substantially
been declining in recent years. The Nikkei-225 stock average declined to a
20-year low in April 2003 before recovering during fiscal 2004. We will incur
losses on our securities portfolio if the Japanese stock market declines in the
future. Material declines in the Japanese stock market may also materially
adversely affect our capital ratios. For a detailed discussion of our holdings
of marketable equity securities and the effect of market declines on our
capital ratios, see "Item 5.B. Operating and Financial Review and
Prospects--Liquidity and Capital Resources--Capital Adequacy" and "Selected
Statistical Data--Investment Portfolio."

The value of our equity portfolio could decline due to expected sales of shares
in the market by Japanese financial institutions.

Many Japanese financial institutions have traditionally held large amounts of
equity securities of their customers. In November 2001, the Japanese government
enacted a law forbidding bank holding companies and banks, including us, Bank
of Tokyo-Mitsubishi and Mitsubishi Trust Bank, from holding, after September
30, 2006, stock the aggregate value of which is in excess of their adjusted
Tier I capital. Partly in response to this legislation and partly to reduce
risk-weighted assets, we and many other financial institutions have been
selling and will continue to sell off large amounts of equity securities. The
sale of equity securities by Japanese financial institutions may depress the
value of Japanese equity securities, including those in our securities
portfolio. In order to remain compliant with the new legislation or to
otherwise reduce our risk exposure, we may sell some of our equity securities
at larger discounts than we would otherwise sell at. For a detailed discussion
of our equity securities portfolio, see "Item 5.B. Operating and Financial
Review and Prospects--Liquidity and Capital Resources--Financial
Condition--Investment Portfolio" and "Selected Statistical Data--Investment
Portfolio."

Our efforts to reduce our cross-shareholdings of equity securities may
adversely affect our relationships with customers.

A substantial portion of our equity securities portfolio is held under
cross-shareholding relationships where we hold customers' securities for
business relationship purposes. The sales of equity securities, whether to
comply with the prohibition on holding stock in excess of adjusted Tier I
capital after September 30, 2006, to reduce our risk exposure to fluctuations
in equity security prices or otherwise, will reduce our cross-shareholdings,
which may have an adverse effect on our relationships with our customers. In
addition, our plans to reduce our cross-shareholdings may encourage some of our
customers to sell their shares of our common stock, which may have a negative
impact on our stock price.

Our trading and investment activities expose us to interest rate, exchange rate
and other risks.

We undertake extensive trading and investment activities involving a variety of
financial instruments, including derivatives. Our income from these activities
is subject to volatility caused by, among other things, changes in interest
rates, foreign currency exchange rates and equity and debt prices. For example:

..   Increases in interest rates have an adverse effect on the value of our
    fixed income securities portfolio, as discussed in "--Changes in interest
    rate policy, particularly unexpected or sudden increases in interest rates,
    could adversely affect the value of our bond portfolio, problem loans and
    our results of operations" above; and

..   The strengthening of the yen against the U.S. dollar and other foreign
    currencies reduces the value, in our financial statements, of our
    substantial portfolio of foreign-currency denominated investments.

                                      13



In addition, downgrades of the credit ratings of some of the fixed income
securities in our portfolio could negatively affect our results of operations.
Our results of operations and financial condition in future periods will be
exposed to risks of loss associated with these activities. For a discussion of
our investment portfolio and related risks see "Item 5.B. Operating and
Financial Review and Prospects--Liquidity and Capital Resources--Financial
Condition--Investment Portfolio" and "Item 11. Quantitative and Qualitative
Disclosures about Credit, Market and Other Risk."

A significant downgrade of our credit ratings could have a negative effect on
us.

A significant downgrade of our credit ratings by one or more of the credit
rating agencies could have a negative effect on our treasury operations and
other aspects of our business. In the event of a downgrade of our credit
ratings, our treasury business unit may have to accept less favorable terms in
its transactions with counterparties, including capital raising activities, or
may be unable to enter into some transactions. This could have a negative
impact on the profitability of our treasury and other operations and adversely
affect our results of operations and financial condition.

We might have to pay risk premiums on borrowings from international financial
institutions or be subject to credit limitations by them.

As a result of concerns regarding asset quality and the failure of several
large Japanese financial institutions, international financial institutions
have in the past:

..   charged an additional risk premium to Japanese financial institutions for
    short-term borrowings in the interbank market; and

..   placed restrictions on the amount of credit, including interbank deposits,
    that they extend to Japanese banks.

These restrictions on credit resulted in higher operating expenses and
decreased profitability for affected Japanese banks. If conditions in the
Japanese banking and other financial sectors further deteriorate, international
markets could again impose risk premiums or credit restrictions on Japanese
banks, including us.

We may not be able to achieve the goals of our business strategies.

We are currently pursuing various business strategies to improve our
profitability. For various reasons, these strategies may be unsuccessful or
have unintended consequences. For example:

..   We may be unable to increase the volume of our loans to financially sound
    clients;

..   We may be unable to increase our lending spreads with pre-existing
    customers;

..   Greater competition or other market conditions may prevent us from
    increasing our level of fee income;

..   We may be unable to successfully implement and realize the benefits of our
    cost reduction plans and measures;

..   We may have difficulty in coordinating the operations of our subsidiaries
    and affiliates as planned due to legal restrictions, internal conflict or
    market resistance;

..   The costs of integration may be higher than we expect, and we may not
    achieve cost reductions as fully or as quickly as expected;

..   We may lose customers and business as we integrate and, in some cases,
    rebrand some of our subsidiaries' or affiliates' operations;

..   Our efforts to streamline operations may require more time than expected
    and cause some negative reactions from our customers;

..   New products and services we introduce may not gain acceptance among
    customers; and

..   We may have difficulty integrating the systems within our group.

                                      14



We will be exposed to increased risks as we expand the range of our products
and services.

As we expand the range of our products and services beyond our traditional
banking and trust businesses and as the sophistication of financial products
and management systems grows, we will be exposed to new and increasingly
complex risks. For example, we are expanding our securities business through
Mitsubishi Securities Co., Ltd., which was formed in September 2002.
Additionally, in March 2004 we entered into a strategic business and capital
alliance with ACOM CO., LTD., or ACOM, a leading Japanese consumer finance
company, to enhance our consumer finance operations. We may have only limited
experience with the risks related to the expanded range of these products and
services. To the extent we expand our product and service offerings through
acquisitions, we face risks relating to the integration of acquired businesses
with our existing operations. Moreover, some of the activities which our
subsidiaries engage in, such as derivatives and foreign currency trading,
present volatile and substantial risks. Our risk management systems may prove
to be inadequate and may not work in all cases or to the degree required. As a
result, we are subject to substantial market, credit and other risks in
relation to the expanding scope of our products and services and trading
activities, which could result in our incurring substantial losses. In
addition, our efforts to offer new services and products may not succeed if
product or market opportunities develop more slowly than expected or if the
profitability of opportunities is undermined by competitive pressures. For a
detailed discussion of our risk management systems, see "Item 11. Quantitative
and Qualitative Disclosures about Credit, Market and Other Risk."

Any adverse changes in UNBC's business could significantly affect our results
of operations.

UNBC contributes a significant portion of our net income. Any adverse change in
the business or operations of UNBC could significantly affect our results of
operations. Factors that could negatively affect UNBC's results include adverse
economic conditions in California, including the decline in the technology
sector, the state government's financial condition, a potential downturn in the
real estate and housing industries in California, substantial competition in
the California banking market, growing uncertainty over the U.S. economy due to
the threat of terrorist attacks, fluctuating oil prices and rising interest
rates, and negative trends in debt ratings and equity valuations of various
borrowers increasing the risk of corporate bankruptcy filings. For a detailed
segment discussion relating to UNBC, see "Item 5.A. Operating and Financial
Review and Prospects--Operating Results--Business Segment Analysis--Bank of
Tokyo-Mitsubishi."

We are exposed to substantial credit and market risks in Asia, Latin America,
and other regions.

We are active in Asia, Latin America and other regions through a network of
branches and subsidiaries and are thus exposed to a variety of credit and
market risks associated with countries in these regions. A decline in the value
of Asian, Latin American or other relevant currencies could adversely affect
the creditworthiness of some of our borrowers in those regions. The loans we
make to Asian, Latin American and other overseas borrowers and banks are often
denominated in yen, U.S. dollars or other foreign currencies. These borrowers
often do not hedge the loans to protect against fluctuations in the values of
local currencies. A devaluation of the local currency would make it more
difficult for a borrower earning income in that currency to pay its debts to us
and others. In addition, some countries in which we operate may attempt to
support the value of their currencies by raising domestic interest rates. If
this happens, the borrowers in these countries would have to devote more of
their resources to repaying their domestic obligations, which may adversely
affect their ability to repay their debts to us and other foreign lenders. The
limited credit availability resulting from these and related conditions may
adversely affect economic conditions in some countries. This could cause a
further deterioration of the credit quality of borrowers and banks in those
countries and cause us to incur further losses. In addition, we are active in
other regions that expose us to risks similar to the risks described above and
also risks specific to those regions, which may cause us to incur losses or
suffer other adverse effects. For a more detailed discussion of our credit
exposure to Asian, Latin American and other relevant countries, see "Item 5.B.
Operating and Financial Review and Prospects--Liquidity and Capital
Resources--Financial Condition--Allowance for Credit Losses, Nonperforming and
Past Due Loans."

                                      15



Our income and expenses relating to our international operations and our
foreign assets and liabilities are all exposed to foreign currency fluctuations.

Our international operations are subject to fluctuations in foreign currency
exchange rates against the Japanese yen. When the yen appreciates, yen amounts
for transactions denominated in foreign currencies, including a substantial
portion of UNBC's transactions, decline. In addition, a portion of our assets
and liabilities are denominated in foreign currencies. To the extent that our
foreign-currency denominated assets and liabilities are not matched in the same
currency or appropriately hedged, fluctuations in foreign currency exchange
rates against the yen may adversely affect our financial condition, including
our capital ratios. In addition, fluctuations in foreign exchange rates will
create foreign currency translation gains or losses. For a historical
discussion of the effect of changes in foreign currency exchange rates, see
"Item 5.A. Operating and Financial Review and Prospects--Operating
Results--Effect of the Change in Exchange Rates on Foreign Currency
Translation."

Losses relating to our pension plans and a decline in returns on our plan
assets may negatively affect our results of operations and financial condition.

We may incur losses if the fair value of our pension plans' assets declines, if
the rate of return on our pension assets declines or if there is a change in
the actuarial assumptions on which the calculations of the projected benefit
obligations are based. Changes in the interest rate environment and other
factors may also adversely affect the amount of unfunded pension obligations
and the resulting annual amortization expense.

We may have to compensate for losses in our loan trusts and jointly operated
designated money in trusts. This could have a negative effect on our results of
operations.

Mitsubishi Trust Bank may have to compensate for losses of principal of all
loan trusts and some jointly operated designated money in trust. Funds in those
guaranteed trusts are generally invested in loans and securities. Mitsubishi
Trust Bank is required to maintain reserves in the accounts of those guaranteed
trusts for loan losses and other impairments of principal, but the amount of
these compensation obligations does not appear as a liability on our balance
sheet. If the amount of assets and reserves held in the guaranteed trusts falls
below the principal as a result of loan losses, losses in the investment
portfolio or otherwise, which are not absorbed by the profit earned by the
trusts, Mitsubishi Trust Bank would be required to make a payment on the
guaranties. For a detailed discussion of guaranteed trusts, see "Item 5.
Operating and Financial Review and Prospects."

Trust beneficiaries of loan trusts and jointly operated designated money in
trust are entitled to a semi-annual dividend, which in practice is the
"projected rate" published semi-annually. Sharp declines in interest rates or
in the value of the securities held in its trusts' investment portfolios will
reduce partly performance-dependent trust fees that Mitsubishi Trust Bank
generates from its loan trusts and jointly operated designated money in trust
and will thus adversely affect our results of operations.

Our business and operations are exposed to various system, political and social
risks beyond our control.

As a major financial institution, our business and operations are significantly
dependent upon the domestic and world economies and are thus exposed to various
system, political and social risks beyond our control. Recent examples include
the disruption of the Internet and other information networks due to major
virus outbreaks, major terrorist activity such as the September 11 attacks, the
ongoing conflict in Iraq and other serious political instability, and major
health epidemics such as the outbreak of severe acute respiratory syndrome, or
SARS. Such incidents may directly affect our business and operations by
disrupting our operational infrastructure or internal systems. Such incidents
may also negatively impact the economic conditions, political regimes and
social infrastructure of countries and regions in which we operate, and
possibly the global economy as a whole. These various factors beyond our
control, as well as the threat of such risks or related countermeasures, may
materially and adversely affect our business, operating results and financial
condition.

                                      16



We may be subject to liability and regulatory action if we are unable to
protect personal and other confidential information.

In recent years, there have been public reports of personal information and
records in the possession of corporations and institutions being leaked or
improperly accessed. In the event that personal information in our possession
about our customers is leaked or improperly accessed and subsequently misused,
we may be subject to liability and regulatory action. The standards applicable
to us are expected to become more stringent under the new Personal Information
Protection Act, which is scheduled to take effect from April 2005. As an
institution in possession of personal information, we may have to provide
compensation for economic loss and emotional distress arising out of a failure
to protect such information in accordance with the Personal Information
Protection Act. In addition, such incidents could create a negative public
perception of our operations, systems or brand, which may in turn decrease
customer and market confidence and materially and adversely affect our
business, operating results and financial condition.

Adverse regulatory developments or changes in laws, government policies or
economic controls could have a negative impact on our results of operations.

We conduct our business subject to ongoing regulation and associated regulatory
risks, including the effects of changes in the laws, regulations, policies,
voluntary codes of practice and interpretations in Japan and the other markets
which we operate in. Future developments or changes in laws, regulations,
policies, voluntary codes of practice, fiscal or other policies and their
effects are unpredictable and beyond our control. In particular, the Financial
Services Agency announced various regulatory changes that it would consider.
The Financial Services Agency also has the authority to conduct, at any time,
inspections to review banks' accounts, including those of Bank of
Tokyo-Mitsubishi and Mitsubishi Trust Bank. Any of the changes referred to
above or any action that must be taken by us, whether as a result of regulatory
developments or changes or inspections, could negatively affect our business
and results of operations.

Our business may be adversely affected by competitive pressures, which have
increased significantly due to regulatory changes.

In recent years, the Japanese financial system has been increasingly
deregulated and barriers to competition have been reduced. In addition, the
Japanese financial industry has been undergoing significant consolidation, as a
result of which larger and more integrated financial institutions have emerged
as our competitors. If we are unable to compete effectively in this more
competitive and deregulated business environment, our business, results of
operations and financial condition will be adversely affected. For a more
detailed discussion of our competition in Japan, see "Item 4.B. Information on
the Company--Business Overview--Competition--Japan."

Restrictions on our subsidiaries' ability to pay dividends and make other
distributions could limit amounts payable to us.

As a holding company, substantially all of our cash flow comes from dividends
that our Japanese bank subsidiaries and our affiliated companies pay to us.
Under some circumstances, various statutory or contractual provisions may
restrict the amount of dividends our subsidiaries and affiliated companies can
pay to us. If our subsidiaries and affiliated companies do not have sufficient
earnings, they will be unable to pay us dividends and we, in turn, may be
unable to pay dividends.

Risks Related to Owning Our Shares

Efforts by other companies to reduce their shareholdings may adversely affect
our stock price.

Many companies in Japan that hold our shares have announced plans to reduce
their shareholdings in other companies. Our own announced plans to sell
cross-held shares in other companies may further encourage those companies and
other companies to sell our shares. If an increased number of shares of our
common stock are sold in the market, it will adversely affect the trading price
of our shares.

                                      17



Negative media coverage of Japan's banking industry may have a materially
adverse effect on our stock price.

Recently, Japan's banking industry has been covered extensively by both
Japanese and foreign media. This coverage includes Japanese banks' problem
loans and deferred tax assets, as well as issues concerning financial
institutions' reporting of the business conditions of borrowers to regulators.
Much of this coverage has been negative and some of this coverage suggests that
the amount of problem loans that Japanese banks actually hold is substantially
greater than what is disclosed and that the amount of deferred tax assets
recognized by Japanese banks is excessively high. Negative media coverage of
Japan's banking industry focusing on problem loans, deferred tax assets and
other issues, whether or not accurate and whether or not applicable to us, may
have a materially adverse effect on our stock price.

Rights of shareholders under Japanese law may be different from those under the
laws of jurisdictions within the United States and other countries.

Our Articles of Incorporation, the regulations of our board of directors and
the Japanese Commercial Code govern our corporate affairs. Legal principles
relating to such matters as the validity of corporate procedures, directors'
and officers' fiduciary duties and shareholders' rights are different from
those that would apply if we were not a Japanese corporation. Shareholders'
rights under Japanese law are different in some respects from shareholders'
rights under the laws of jurisdictions within the United States and other
countries. You may have more difficulty in asserting your rights as a
shareholder than you would as a shareholder of a corporation organized in a
jurisdiction outside of Japan. For a detailed discussion of the relevant
provisions under the Japanese Commercial Code and our Articles of
Incorporation, see "Item 10.B. Additional Information--Memorandum and Articles
of Association."

It may not be possible for investors to effect service of process within the
United States upon us or our directors, senior management or corporate
auditors, or to enforce against us or those persons judgments obtained in U.S.
courts predicated upon the civil liability provisions of the federal securities
laws of the United States.

We are a joint stock company incorporated under the laws of Japan. Almost all
of our directors, senior management and corporate auditors reside outside of
the United States. Many of our and their assets are located in Japan and
elsewhere outside the United States. It may not be possible, therefore, for
U.S. investors to effect service of process within the United States upon us or
these persons or to enforce against us or these persons judgments obtained in
the U.S. courts predicated upon the civil liability provisions of the federal
securities laws of the United States. We believe that there is doubt as to the
enforceability in Japan, in original actions or in actions to enforce judgments
of U.S. courts, of liabilities predicated solely upon the federal securities
laws of the United States.

Risks Related to Owning ADSs

As a holder of ADSs, you have fewer rights than a shareholder has and you must
act through the depositary to exercise these rights.

The rights of our shareholders under Japanese law to take actions including
voting their shares, receiving dividends and distributions, bringing derivative
actions, examining our accounting books and records and exercising appraisal
rights are available only to shareholders of record. Because the depositary,
through its custodian, is the record holder of the shares underlying the ADSs,
a holder of ADSs may not be entitled to the same rights as a shareholder. In
your capacity as an ADS holder, you are not able to bring a derivative action,
examine our accounting books and records or exercise appraisal rights, except
through the depositary.

Foreign exchange rate fluctuations may affect the U.S. dollar value of our ADSs
and dividends payable to holders of our ADSs.

Market prices for our ADSs may fall if the value of the yen declines against
the U.S. dollar. In addition, the U.S. dollar amount of cash dividends and
other cash payments made to holders of our ADSs would be reduced if the value
of the yen declines against the U.S. dollar.

                                      18



Item 4. Information on the Company.

A.  History and Development of the Company

Mitsubishi Tokyo Financial Group, Inc.

Mitsubishi Tokyo Financial Group, Inc. is a joint stock company (kabushiki
kaisha) incorporated in Japan under the Commercial Code of Japan. On April 2,
2001, Bank of Tokyo-Mitsubishi, Mitsubishi Trust Bank and Nippon Trust Bank
established Mitsubishi Tokyo Financial Group, Inc. to be a holding company for
the three of them. Before that, each of the banks had been a publicly held
company. On April 2, 2001, through a stock-for-stock exchange, they became
wholly-owned subsidiaries of Mitsubishi Tokyo Financial Group, Inc., and the
former shareholders of the three banks became shareholders of Mitsubishi Tokyo
Financial Group, Inc. Nippon Trust Bank was later merged into Mitsubishi Trust
Bank. As a result, Mitsubishi Tokyo Financial Group, Inc. now has two directly
held banking subsidiaries, Bank of Tokyo-Mitsubishi and Mitsubishi Trust Bank,
although each of these two banks also has other subsidiaries of its own. On
April 1, 2004 we introduced an integrated business group system comprising
three core business areas: Retail, Corporate, and Trust Assets (Asset
Management and Administration). Mitsubishi Tokyo Financial Group, Inc.'s
registered address is 4-1, Marunouchi 2-chome, Chiyoda-ku, Tokyo 100-6326,
Japan, and its telephone number is 81-3-3240-8111.

For a discussion of the newly introduced integrated business group system and
other recent developments, see "Item 5.A. Operating and Financial Review and
Prospects--Recent Developments."

The Bank of Tokyo-Mitsubishi, Ltd.

Bank of Tokyo-Mitsubishi is a major commercial banking organization in Japan
and provides a broad range of domestic and international banking services from
its offices in Japan and around the world. Bank of Tokyo-Mitsubishi is a "city"
bank, as opposed to a regional bank. Bank of Tokyo-Mitsubishi's registered head
office is located at 7-1, Marunouchi 2-chome, Chiyoda-ku, Tokyo 100-8388,
Japan, and its telephone number is 81-3-3240-1111. Bank of Tokyo-Mitsubishi is
a joint stock company (kabushiki kaisha) incorporated in Japan under the
Japanese Commercial Code.

Bank of Tokyo-Mitsubishi was formed through the merger, on April 1, 1996, of
The Mitsubishi Bank, Limited and The Bank of Tokyo, Ltd. The origins of
Mitsubishi Bank can be traced to the Mitsubishi Exchange Office, a money
exchange house established in 1880 by Yataro Iwasaki, a key figure in the
Japanese industrial revolution and the founder of the Mitsubishi industrial,
commercial and financial group. In 1895, the Mitsubishi Exchange Office was
succeeded by the Banking Division of the Mitsubishi Goshi Kaisha, the holding
company of the "Mitsubishi group" of companies, that began in the late 19th
century with interests in shipping and trading. Mitsubishi Bank had been a
principal bank to many of the Mitsubishi group companies, but broadened its
relationships to cover a wide range of Japanese industries, small and
medium-sized companies and individuals.

Bank of Tokyo was established in 1946 as a successor to The Yokohama Specie
Bank, Ltd., a special foreign exchange bank established in 1880. In the postwar
period, because of the need to establish a financial institution specializing
in foreign trade financing, the government of Japan promulgated the Foreign
Exchange Bank Law in 1954, and Bank of Tokyo became the only bank licensed
under that law. Because of its license, Bank of Tokyo received special
consideration from the Ministry of Finance in establishing its offices abroad
and in many other aspects relating to foreign exchange and international
finance. The worldwide network of Bank of Tokyo was more extensive than that of
any other Japanese bank, and through this network, Bank of Tokyo was engaged in
a full range of commercial banking activities, both in Japan and overseas,
serving the diverse financial requirements of its clients throughout the world.

On September 1, 2002, Bank of Tokyo-Mitsubishi completed the merger of its
securities subsidiaries and affiliate, KOKUSAI Securities Co., Ltd.,
Tokyo-Mitsubishi Securities Co., Ltd. and Tokyo-Mitsubishi Personal Securities
Co., Ltd., and Mitsubishi Trust Bank's securities affiliate, Issei Securities
Co., Ltd., to form Mitsubishi

                                      19



Securities Co., Ltd., or Mitsubishi Securities. Since the merger, Bank of
Tokyo-Mitsubishi has been consolidating various areas of its securities and
investment banking business, such as mergers and acquisitions, part of its
derivative operations, corporate advisory and securitization operations, under
Mitsubishi Securities.

Bank of Tokyo-Mitsubishi is a member of the "Mitsubishi group" of companies.
The expression "Mitsubishi group" is used to describe 29 companies with
historical links to a prewar group of companies that were under common control.
Although there are numerous, generally small, cross-shareholdings among these
companies even today and frequent organized gatherings of their chairmen and
presidents, since the end of World War II, the Mitsubishi group companies have
been managed and operated independently. The shares of 21 of the Mitsubishi
group companies are publicly listed in Japan, and these companies are engaged
in a broad range of activities including manufacturing, trading, natural
resources, transportation, real estate, banking and insurance.

The Mitsubishi Trust and Banking Corporation

Mitsubishi Trust Bank is a major trust bank in Japan, providing trust and
banking services to meet the financing and investment needs of clients in Japan
and the rest of Asia, as well as in the United States and Europe. Mitsubishi
Trust Bank's registered head office is located at 4-5, Marunouchi 1-chome,
Chiyoda-ku, Tokyo 100-8212, Japan. Its telephone number is 81-3-3212-1211.
Mitsubishi Trust Bank is also a joint stock company (kabushiki kaisha)
incorporated in Japan under the Japanese Commercial Code.

Mitsubishi Trust Bank traces its history to The Mitsubishi Trust Company,
Limited, which was founded by the leading members of the Mitsubishi group
companies in 1927. The Japanese banking and financial industry was
reconstructed after World War II and, in 1948, Mitsubishi Trust Bank was
authorized to engage in the commercial banking business, in addition to its
trust business, under the new name Asahi Trust & Banking Corporation. In 1952,
the bank changed its name again, to The Mitsubishi Trust and Banking
Corporation.

Nippon Trust Bank and The Tokyo Trust Bank, Ltd., which were previously
subsidiaries of Bank of Tokyo-Mitsubishi, were merged into Mitsubishi Trust
Bank on October 1, 2001. By combining the trust-related resources and expertise
of these three trust banks, we believe Mitsubishi Trust Bank is well-positioned
to provide clients with trust services that match their evolving needs.

Like Bank of Tokyo-Mitsubishi, Mitsubishi Trust Bank is a member of the
"Mitsubishi group" of companies.

B.  Business Overview

Mitsubishi Tokyo Financial Group, Inc. is one of the world's leading bank
holding companies. Through our two directly held subsidiary banks, Bank of
Tokyo-Mitsubishi and Mitsubishi Trust Bank, and their subsidiaries, we provide
a full range of domestic and international financial services, including
commercial banking, investment banking and asset management services, as well
as trust services, to individuals and corporate customers.

While maintaining the corporate cultures and core competencies of Bank of
Tokyo-Mitsubishi and Mitsubishi Trust Bank, Mitsubishi Tokyo Financial Group,
Inc., as the holding company, seeks to work with them to find ways to:

..   establish a more diversified financial services group operating across
    business sectors;

..   leverage the flexibility afforded by our organizational structure to expand
    our business;

..   benefit from the collective expertise of Bank of Tokyo-Mitsubishi and
    Mitsubishi Trust Bank;

..   achieve operational efficiencies and economies of scale; and

..   enhance the sophistication and comprehensiveness of the group's risk
    management expertise.

                                      20



In order to further enhance our operations and increase profits, we have begun
implementing a new three-year plan starting from fiscal 2004. As part of this
Medium-Term Business Plan, we have set an aspiration of becoming one of the
world's leading financial institutions by market capitalization. As a framework
for achieving this aspiration, in April 2004 we introduced an integrated
business group system comprising three core business areas: Retail, Corporate,
and Trust Assets (Asset Management and Administration). These three businesses
will serve as the group's core sources of net operating profit. In addition,
the role of Mitsubishi Tokyo Financial Group, Inc. as the holding company has
expanded from strategic coordination to integrated strategic management. Under
the new framework, group-wide strategies will be determined by the holding
company and executed by the subsidiary banks.

Under this integrated business group system, we aim to reduce overlapping of
functions within the group, thereby increasing efficiency and realizing the
benefits of our group resources and scale of operations. Moreover, through
greater integration of our shared expertise in the banking, trust and
securities businesses, we aim to deliver a more diverse but integrated lineup
of products and services to our customers. As part of our efforts to increase
group synergies and convenience to our customers, we will also seek to create
and develop new services and distribution channels.

For information on the strategic business and capital alliance between
Mitsubishi Tokyo Financial Group and ACOM, see "Item 5.A. Operating and
Financial Review and Prospects--Recent Developments--Strategic Business and
Capital Alliance between Mitsubishi Tokyo Financial Group and ACOM."

For information on the proposed management integration between Mitsubishi Tokyo
Financial Group, Inc. and the UFJ Group, see "Item 5.A. Operating and Financial
Review and Prospects--Recent Developments--Basic Agreement Regarding the
Management Integration of Mitsubishi Tokyo Financial Group and the UFJ Group."

Bank of Tokyo-Mitsubishi

Bank of Tokyo-Mitsubishi is a major Japanese commercial banking organization.
It provides a broad range of domestic and international banking services in
Japan and around the world. As of June 1, 2004, Bank of Tokyo-Mitsubishi's
network in Japan included 248 branches, 19 sub-branches, 57 loan plazas, 490
branch ATMs and 16,639 convenience store-based, non-exclusive ATMs. Bank of
Tokyo-Mitsubishi organizes its operations based on customer and product
segmentation, as follows:

..   retail banking;

..   commercial banking;

..   global corporate banking;

..   investment banking and asset management, and Mitsubishi Securities;

..   UNBC;

..   operations services;

..   treasury; and

..   other, including systems services and eBusiness & IT initiatives.

For a detailed analysis of financial results by business segment, which is
mainly based on our business organizations, see "Item 5.A. Operating and
Financial Review and Prospects--Operating Results--Business Segment
Analysis--Bank of Tokyo-Mitsubishi." For a detailed analysis of financial
results by geographic segment, see "Item 5.A. Operating and Financial Review
and Prospects--Operating Results--Geographic Segment Analysis."

                                      21



As discussed above, in April 2004 we introduced an integrated business group
system which combines the operations of Bank of Tokyo-Mitsubishi and Mitsubishi
Trust Bank into three core business areas: Retail, Corporate and Trust Assets.
Under the integrated business group system, each business unit of Bank of
Tokyo-Mitsubishi will further cooperate with other business units of Bank of
Tokyo-Mitsubishi and the various business groups of Mitsubishi Trust Bank. For
example,

..   Mitsubishi Securities will collaborate with the retail banking business
    unit to develop and offer products and services for our retail clients as
    part of our Integrated Retail Banking Business Group.

..   The commercial banking business unit, the global corporate banking business
    unit, the investment banking and asset management business unit and
    Mitsubishi Securities will work together to develop and provide products
    and services for our corporate clients as part of our Integrated Corporate
    Banking Business Group.

..   Our IT solution business, which is part of the eBusiness and IT initiatives
    business unit, will also offer services as part of our Integrated Corporate
    Banking Business Group.

..   Our asset management services and global custody services, which is part of
    the investment banking and asset management business unit, will collaborate
    with business groups of Mitsubishi Trust Bank to offer services and
    products as part of our Integrated Trust Assets Business Group.

The UNBC business unit, the operations services unit, the treasury unit, the
system services unit, the eBusiness & IT initiatives unit with the exception of
IT solution business, and the corporate center are not part of our integrated
business group system.

Retail Banking Business Unit

The retail banking business unit of Bank of Tokyo-Mitsubishi offers a full
range of banking products and services, including financial consulting
services, to individual customers in Japan. In addition to its branch offices
and other direct distribution channels, the retail banking business unit offers
products and services through e-net ATMs (a convenience store-based ATM network
utilized by a number of different banks), telephone and internet banking
services and mail order. Some of Bank of Tokyo-Mitsubishi's branches are joint
branches with either Mitsubishi Trust Bank or Mitsubishi Securities, or both.

Deposits and loans.  The unit offers a full range of bank deposit products. One
such product is a multiple purpose bank account that not only includes ordinary
deposits but also has overdraft privileges collateralized by time deposits,
bank debentures and public bonds held in custody. The unit also offers housing
loans, educational loans, special purpose loans, card loans and other loans to
individuals.

Individual annuity insurance.  The unit has been actively promoting the sales
of individual annuity insurance products since the Japanese government lifted
the prohibition against sales of such products by Japanese banks in October
2002. The unit's current product lineup features capital guarantee variable
annuity products and foreign currency-denominated fixed annuity insurance
products. The latter lets customers choose between US dollar and euro
denominations, and is the first such annuity insurance product introduced in
Japan. In April 2004, we also introduced the first annuity insurance in Japan
to offer an annuity capital guarantee at 110% of the basic benefit amount,
which was also the first product developed as part of an alliance with Manulife
Life Insurance Company.

Investment trusts.  The unit offers 29 equity and bond funds and a program
fund, the M-CUBE program, which is exclusively organized for Bank of
Tokyo-Mitsubishi by Frank Russell Company, and combines four specific funds. We
offer a menu of funds that allows our customers to achieve their desired
balance of risk diversification and return.

As part of the effort to realize synergies between our two Japanese bank
subsidiaries, the unit markets to its retail customers select trust products of
Mitsubishi Trust Bank under a trust agency arrangement.

                                      22



Tokyo-Mitsubishi Direct.  The unit offers a telephone and internet banking
service called Tokyo-Mitsubishi Direct. Since the service was launched in 1999,
the number of customers has risen steadily, reaching 2.4 million individual
customers at the end of March 2004, which is approximately 17% of the unit's
total customer base.

Credit cards.  The unit offers MasterCard and VISA credit cards through several
channels. Through Bank of Tokyo-Mitsubishi, it offers the Tokyo-Mitsubishi
Card. It also offers credit cards through Bank of Tokyo-Mitsubishi's
subsidiaries, DC Card Co., Ltd. and Tokyo Credit Service, Ltd.

Tokyo-Mitsubishi Cash One.  Since March 2002, the unit has offered loans to its
customers through Tokyo-Mitsubishi Cash One Ltd., a consumer credit company
established jointly by Bank of Tokyo-Mitsubishi, Mitsubishi Trust Bank and
three leading Japanese consumer credit companies: ACOM, DC Card and JACCS Co.,
Ltd.

Commercial Banking Business Unit

As part of our Integrated Corporate Banking Business Group, the commercial
banking business unit of Bank of Tokyo-Mitsubishi mainly provides banking
products and services to a wide range of business customers, from large
corporations to medium-sized and small businesses, and is responsible for
customer relationships. The unit serves these customers through 115 offices in
Japan as well as directly from its headquarters. The unit provides traditional
commercial banking services, such as deposits, settlement, foreign exchange and
loans, as well as trust products of Mitsubishi Trust Bank, electronic banking
and highly sophisticated consultancy services to meet its customers' needs. The
unit works closely with other business units, such as the global corporate
banking business unit, the treasury unit and the investment banking and asset
management business unit.

Financing and fund management.  The unit advises on financing methods for our
customers' various financing needs, including loans with derivatives, corporate
bonds, commercial paper, asset backed securities, securitization programs and
syndicated loans. The unit also offers a wide range of products to meet our
customers' fund management needs, such as deposits with derivatives, government
bonds, debenture notes and investment funds.

Advice on business expansion overseas.  The unit provides advisory services to
clients launching businesses overseas, particularly Japanese companies
expanding into other Asian countries.

Settlement services.  The unit provides electronic banking services that allow
customers to make domestic and overseas remittances electronically. The unit's
settlement and cash management services include global settlement services,
Global Cash Management Services, a global pooling/netting service, and Treasury
Station, a fund management system for group companies. These services are
particularly useful to customers who do business worldwide.

Risk management.  The unit offers swap, option and other risk-hedge programs to
customers seeking to control foreign exchange, interest rate and other business
risks.

Corporate management/financial strategies.  The unit provides advisory services
to customers in the areas of mergers and acquisitions, inheritance-related
business transfers and stock listings. The unit also helps customers develop
financial strategies to restructure their balance sheets. These strategies
include the use of credit lines, factoring services and securitization of real
estate.

Corporate welfare facilities.  The unit offers products and administrative
services to help customers with employee benefit plans. As a service to our
customers, the unit often provides housing loans to our customers' employees.
The unit also provides company-sponsored employee savings plans and defined
contribution plans.

Global Corporate Banking Business Unit

The global corporate banking business unit of Bank of Tokyo-Mitsubishi provides
banking services to large Japanese corporations and their overseas operations
as well as to non-Japanese corporations who do business on

                                      23



a global basis. The unit serves customers through corporate banking divisions
in Tokyo, a global network of 57 overseas branches and sub-branches, 16
representative offices and overseas banking subsidiaries.

Overseas business support.  The unit provides a full range of services to
support customers' overseas activities, including loans, deposits, assistance
with mergers and acquisitions and cash management services. The unit provides
financial services to customers in cooperation with other business units, such
as the treasury unit and the investment banking and asset management business
unit, and also through subsidiaries that are part of those units, such as
Mitsubishi Securities, Mitsubishi Securities International plc (formerly
Tokyo-Mitsubishi International plc) and BTM Capital Corporation.

During the fiscal year ended March 31, 2004, the unit provided advisory
services to help customers develop financial strategies, such as arranging the
issuance of asset-backed commercial paper, providing credit commitments and
securitizing real estate in Japan. Together with the investment banking and
asset management business unit, the unit also developed its investment banking
business to increase our non-interest income.

Global Cash Management Service.  Bank of Tokyo-Mitsubishi started offering
Global Cash Management Service, or GCMS, through our foreign branches. This
service allows customers to monitor their foreign accounts and make remittances
through their personal computers and Bank of Tokyo-Mitsubishi has introduced
several enhancements such as internet-based access and Chinese-language
capability. This service is now available through 21 foreign branches and the
total number of GCMS corporate customers was over 2,270 as of March 31, 2004,
an increase of about 470 customers compared to that as of March 31, 2003.

Investment Banking and Asset Management Business Unit and Mitsubishi Securities

Bank of Tokyo-Mitsubishi's investment banking business unit and asset
management business unit were merged in May 2003 to form the investment banking
and asset management business unit.

    Investment Banking

The unit provides capital markets, derivatives, securitization, syndicated
loans, structured finance and other services. Other business units of Bank of
Tokyo-Mitsubishi cooperate with the investment banking and asset management
business unit in offering services to customers. In addition, BTM Capital
Corporation and BTM Leasing & Finance, Inc. provide leasing services to their
customers.

Capital Markets.  The unit provides arrangement services relating to private
placements for mainly medium-sized enterprise issuers and institutional
investors. During the fiscal year ended March 31, 2004, we arranged 853
issuances totaling (Yen)234.5 billion.

Derivatives.  The unit develops and offers derivatives products for risk
management and other financial needs. The unit has trading desks and sales
teams specializing in derivatives in Tokyo, Singapore, Hong Kong, London and
New York.

Securitization.  In the securitization area, the unit is primarily engaged in
asset-backed commercial paper programs and has securitization teams based in
Tokyo, New York and London. It continues to develop and structure new types of
transactions.

Syndicated loans.  The unit structures and syndicates many types of loan
transactions, including term loans, revolving credit and structured
transactions. It has loan syndication operations in Tokyo, New York, London,
Hong Kong and Singapore. We arranged syndicated loans with an aggregate
principal amount totaling $44.0 billion in the year ended December 31, 2003.

Structured finance.  The unit engages in project finance, real estate finance,
lease related finance, and other types of non-recourse or limited-recourse and
structured financings. It provides customers with financial advisory services,
loan arrangements and agency services. It has teams located in Tokyo, Hong
Kong, Singapore, London, New York and Boston.


                                      24



Other investment banking services.  In the United States, the unit offers
leasing services through two subsidiaries, BTM Capital Corporation and BTM
Leasing & Finance. BTM Capital Corporation offers a wide range of leasing
services to non-Japanese customers, while BTM Leasing & Finance focuses on
providing services to the U.S. subsidiaries and affiliates of Japanese
corporations.

    Asset Management

The unit provides asset management and trust products and services mainly to
high net worth individuals, branch customers and corporate clients in Japan.
Generally, these products and services are delivered to customers of Bank of
Tokyo-Mitsubishi through the retail banking business unit and the commercial
banking business unit, and are provided by Tokyo-Mitsubishi Asset Management,
Ltd. and Mitsubishi Trust Bank.

Asset management.  Tokyo-Mitsubishi Asset Management, Ltd., a licensed
discretionary investment advisor and investment trust management company,
provides investment management and advisory services for institutional
investors, including pension funds. It also offers a wide array of investment
products which, as of March 31, 2004, are marketed by almost 60 Japanese
financial institutions, including the Bank of Tokyo-Mitsubishi and regional
banks, mainly to individual customers.

Tokyo-Mitsubishi Asset Management has continued to expand its investment
product line. In the fiscal year ended March 31, 2004, it launched a new fund
that mainly invests in fixed-income securities issued by foreign governments
and pays dividends quarterly.

Tokyo-Mitsubishi Asset Management will merge with Mitsubishi Trust Asset
Management Co., Ltd. to form Mitsubishi Asset Management Co., Ltd. on October
1, 2004. Mitsubishi Asset Management aims to become a leader in Japan's
publicly offered investment trust industry by leveraging its high-quality,
sophisticated products and services with our excellent customer base.

The Bank of Tokyo-Mitsubishi and Tokyo-Mitsubishi Asset Management also
maintain business relationships with Mellon Financial Group, Frank Russell
Company, Ltd. and Schroder Investment Management (Japan) Ltd. Tokyo-Mitsubishi
Asset Management distributes sophisticated investment products provided by
these institutions.

Advice on Defined Contribution Plans.  We provide consulting services for
defined contribution plans through Defined Contribution Plan Consulting of
Japan Co., Ltd., which was established by Bank of Tokyo-Mitsubishi in alliance
with Mitsubishi Trust Bank, Meiji Yasuda Life Insurance Company and Tokio
Marine & Fire Insurance, Ltd., following legislation introduced in October
2001. Defined Contribution Plan Consulting of Japan provides a full range of
services, such as plan administration services and advising clients in the
selection of investment products, to meet various needs for our corporate
clients and the plan participants.

Wealth management.  In 2002, two wealth management companies were established
to capitalize on our wealth management resources and capabilities. In August
2002, Mitsubishi Tokyo Wealth Management Securities, Ltd. began its operations,
and in September 2002, Mitsubishi Tokyo Wealth Management (Switzerland), Ltd.
took over the private banking business from Bank of Tokyo-Mitsubishi
(Switzerland), Ltd. These two subsidiaries provide sophisticated and broad
investment services and solutions to high net worth customers.

    Mitsubishi Securities

Mitsubishi Securities offers investment banking services, including
securities-related services and advice on mergers and acquisitions and
corporate advisory matters, to its customers.

                                      25



In September 2002, we merged Bank of Tokyo-Mitsubishi's securities subsidiaries
and affiliate, KOKUSAI Securities Co., Ltd., Tokyo-Mitsubishi Securities Co.,
Ltd. and Tokyo-Mitsubishi Personal Securities Co., Ltd., and Mitsubishi Trust
Bank's securities affiliate, Issei Securities Co., Ltd., to create Mitsubishi
Securities. As of March 31, 2004, we owned 58.38% of Mitsubishi Securities.
Mitsubishi Securities functions as the core of our securities and investment
banking business. Since the merger, we have consolidated most of our securities
business and various areas of our investment banking business, such as mergers
and acquisitions, derivatives, corporate advisory and securitization operations
that were previously conducted through Bank of Tokyo-Mitsubishi's investment
banking unit, into Mitsubishi Securities. In the fiscal year ended March 31,
2003, we started to account for Mitsubishi Securities as a separate segment for
financial management purposes. For more details, see "Item 5.A. Operating and
Financial Review and Prospects--Operating Results--Business Segment
Analysis--Bank of Tokyo-Mitsubishi."

In addition to its own branch network, Mitsubishi Securities caters to the
needs of individual investors in cooperation with Bank of Tokyo-Mitsubishi and
Mitsubishi Trust Bank through joint branches and MTFG Plazas that provide a
variety of financial products and services targeted toward individual
investors. As of March 31, 2004, Mitsubishi Securities had 69 offices, 30 of
which had been converted to joint branches with Bank of Tokyo-Mitsubishi or
Mitsubishi Trust Bank.

In the fixed income securities business, Mitsubishi Securities offers customers
a wide range of investment products. Mitsubishi Securities provides in-depth
company and strategy reports through its in-house research functions and its
equity sales staff provides services to a wide range of domestic and overseas
clients ranging from individual investors to institutional investors. Through
its derivative products, Mitsubishi Securities provides various solutions to
meet customers' risk management needs. Other services offered by Mitsubishi
Securities include bond underwriting, equity underwriting, securitization of
assets, initial public offerings, mergers and acquisitions, and support for
investor relations activities. To reinforce its global network, Mitsubishi
Securities acquired the overseas securities subsidiaries of the Bank of
Tokyo-Mitsubishi in New York, Hong Kong, and Singapore in 2003, and made
Tokyo-Mitsubishi International plc (currently Mitsubishi Securities
International plc) in London into its subsidiary in July 2004.

UNBC Business Unit

As of June 30, 2004, Bank of Tokyo-Mitsubishi owned 62.1% of UnionBanCal
Corporation, a publicly traded company listed on the New York Stock Exchange.
UnionBanCal is a U.S. commercial bank holding company. Union Bank of
California, N.A., UnionBanCal's bank subsidiary, is one of the largest
commercial banks in California based on total assets and total deposits and is
among the oldest banks on the West Coast, having roots as far back as 1864.

UNBC provides a wide range of financial services to consumers, small
businesses, middle-market companies and major corporations, primarily in
California, Oregon and Washington but also nationally and internationally.

UNBC's operations are divided into four primary groups.

The Community Banking and Investment Services Group.  This group offers its
customers a wide spectrum of financial products within its comprehensive
lineup. With a broad line of checking and savings, investment, loan and
fee-based banking products, individual and business clients, including
not-for-profit, small and institutional investors, can each have their specific
needs met. As of June 30, 2004, these products are offered in 301 full-service
branches, primarily in California, as well as in Oregon and Washington. In
addition, the group offers international and settlement services, e-banking
through its website, check cashing services at its Cash & Save locations and
loan and investment products tailored to its high net worth consumer customers
through its private banking business. Institutional customers are offered
employee benefit, 401(k) administration, corporate trust, securities lending
and custody (global and domestic) services. The group also includes a
registered broker-dealer and a registered investment advisor, which provide
investment advisory services and manage a proprietary mutual fund family.


                                      26



In accordance with its strategies to diversify earnings and broaden its branch
network, UNBC aims to expand its business through targeted acquisitions,
including banks and insurance agencies. For example, in 2001 UNBC acquired the
Fullerton, California-based Armstrong/Robitaille, Inc. UNBC then acquired the
San Diego, California-based John Burnham & Company in 2002 before acquiring two
additional regional insurance brokers, Pleasanton, California-based Tanner
Insurance Brokers, Inc., and Glendale, California-based Knight Insurance Agency
in 2003. With offices in California and Oregon, these acquisitions allow UNBC
to offer an extensive array of cost-effective risk management services and
insurance products to business and retail customers.

During 2002, UNBC acquired the Simi Valley, California-based First Western Bank
and Santa Clarita, California-based Valencia Bank & Trust, which added $490
million in assets to UNBC's balance sheet and 12 branches to its branch
network. During 2003, UNBC acquired the Watsonville, California-based Monterey
Bay Bank, which added $632 million in assets to its balance sheet and eight
branches to its branch network. In January 2004, UNBC acquired Business Bank of
California, a commercial bank headquartered in San Bernardino, California, with
$704 million in assets and 15 full-service branches. The integration of these
banks expanded UNBC's geographic footprint in both Southern and Northern
California and allows UNBC to expand its client base while offering existing
consumer and commercial customers a fuller range of financial services. In July
2004, UNBC announced that it will acquire Jackson Federal Bank, which operates
14 branches in Southern California. As of June 30, 2004, Jackson Federal Bank
had $1.2 billion in outstanding loans and $1.1 billion in deposits.

The Commercial Financial Services Group.  This group offers a variety of
commercial financial services, including commercial loans and project
financing, real estate financing, asset-based financing, trade finance and
letters of credit, lease financing, customized cash management services and
selected capital markets products. The group's customers include middle-market
companies, large corporations, real estate companies and other more specialized
industry customers. In addition, specialized depository services are offered to
title and escrow companies, retailers, domestic financial institutions,
bankruptcy trustees and other customers with significant deposit volumes.

The International Banking Group.  This group primarily provides correspondent
banking and trade finance-related products and services to financial
institutions worldwide, primarily in Asia. This group has a long and stable
history of providing these services to that market.

The Global Markets Group.  This group, in collaboration with other UNBC
business groups, offers customers a broad range of products. They include a
variety of foreign exchange products and risk management products, such as
interest rate swaps and options. The group trades money market and fixed income
securities in the secondary market and serves institutional investment needs.
The group also manages market-related risks for UNBC as part of its
responsibilities for asset/liability management, including funding UNBC's
liquidity needs and addressing its interest rate risk.

Operations Services Unit

Through its operations services unit, Bank of Tokyo-Mitsubishi provides
operations and settlement services to its other business units. The unit also
earns fee income by providing settlement and remittance services, including
correspondent banking services, to Bank of Tokyo-Mitsubishi's customers. In
addition, the unit also offers competitive operations and settlement services
to other financial institutions to meet their outsourcing needs.

Operations services.  The operations division of Bank of Tokyo-Mitsubishi's
operations services unit provides operations services for the domestic
commercial banking activities of the retail banking, commercial banking and
global corporate banking business units. Bank of Tokyo-Mitsubishi has expanded
centralized processing at its operations centers, which will increase the
efficiency of its branch offices. On March 31, 2004, Bank of Tokyo-Mitsubishi
entered into an alliance with 23 other regional banks to cooperate with regard
to logistics among domestic branches in order to achieve more efficient branch
network operations.

                                      27



The operations division also offers outsourcing services in foreign remittance,
export and import operations for Japanese financial institutions. As of March
31, 2004, 69 Japanese banks utilized Bank of Tokyo-Mitsubishi's foreign
remittance services offered under its Global Operation Automatic Link (GOAL)
service, and a number of Japanese banks outsourced their export and import
operations to Bank of Tokyo-Mitsubishi.

Correspondent banking and settlement.  The payment and clearing services
division of Bank of Tokyo-Mitsubishi's operations services unit maintains
financial institutions' accounts with correspondent arrangements. As of March
31, 2004, Bank of Tokyo-Mitsubishi had correspondent arrangements with 2,980
foreign banks and other financial institutions, of which 1,646 had yen
settlement accounts with Bank of Tokyo-Mitsubishi. Bank of Tokyo-Mitsubishi
also had correspondent arrangements with 133 Japanese financial institutions,
for which Bank of Tokyo-Mitsubishi held 142 yen and foreign currency accounts.

The Foreign Exchange Yen Clearing System in Japan introduced an entrustment
procedure for yen clearing through which banks may entrust other banks to
conduct yen clearing for them. Bank of Tokyo-Mitsubishi has the largest share
of this business in the market. As of March 31, 2004, 46 regional and foreign
banks in Japan outsourced their yen clearing operations to Bank of
Tokyo-Mitsubishi. Bank of Tokyo-Mitsubishi handled approximately 25% of these
transactions based on transaction amounts and is a market leader in the yen
settlement business.

Bank of Tokyo-Mitsubishi's payment and clearing services division is also
taking the initiative in the global implementation of the Continuous Linked
Settlement operation, which is intended to eliminate the settlement risk that
can occur when foreign exchange deals are settled.

Treasury Unit

The treasury unit of Bank of Tokyo-Mitsubishi manages Bank of
Tokyo-Mitsubishi's overall funding requirements. The unit is responsible for
Bank of Tokyo-Mitsubishi's asset liability management and manages Bank of
Tokyo-Mitsubishi's securities investment portfolio, foreign exchange and
derivatives transactions, including proprietary trading. It works with other
business units to provide various financial products such as foreign currency
forward, currency options and commercial paper.

The treasury unit is active in financial markets worldwide and has global
treasury offices in Tokyo, New York, London, Singapore and Hong Kong.

As part of its asset liability management for Bank of Tokyo-Mitsubishi, the
treasury unit seeks to control the interest rate and liquidity risks of Bank of
Tokyo-Mitsubishi and to make it possible for it to conduct its investment and
fund-raising activities within an appropriate range of risk. The treasury unit
centrally monitors and manages all interest rate risk and liquidity risk for
Bank of Tokyo-Mitsubishi.

In the international money markets, the treasury unit raises foreign currency
funds through inter-bank transactions, deposits and certificates of deposit. It
actively deals in short-term yen-denominated instruments, such as interest rate
swaps, futures and options on futures. Bank of Tokyo-Mitsubishi is a major
market maker in short-term yen interest rate swaps.

Bank of Tokyo-Mitsubishi is a leading market maker for the Tokyo foreign
exchange and over-the-counter currency option markets. Bank of Tokyo-Mitsubishi
has a large market share of transactions in the US dollar-yen sector and in
other major cross currency and currency option trading.

The unit also actively trades in the secondary market for Japanese government
bonds, local government bonds and government guaranteed bonds.

                                      28



Other Business Units

In addition to the above, Bank of Tokyo-Mitsubishi also has other business
units, including:

..   system services, which is responsible for Bank of Tokyo-Mitsubishi's
    computer systems;

..   eBusiness & IT initiatives, which is responsible for developing and
    overseeing information technology within the Bank of Tokyo-Mitsubishi as
    well as related business opportunities; and

..   the corporate center, which retains functions such as strategic planning,
    overall risk management, internal auditing and compliance within Bank of
    Tokyo-Mitsubishi.

Mitsubishi Trust Bank

Mitsubishi Trust Bank is one of the major trust banks in Japan. It engages in
the following businesses:

..   trust-banking business;

..   trust assets business;

..   real estate business;

..   stock transfer agency business; and

..   global markets business.

As discussed above, in April 2004 we introduced an integrated business group
system which combines the operations of Mitsubishi Trust Bank and Bank of
Tokyo-Mitsubishi into three core business areas: Retail, Corporate and Trust
Assets. Under the integrated business group system, each business unit of
Mitsubishi Trust Bank will further cooperate with other business groups of
Mitsubishi Trust Bank and the various business units of Bank of
Tokyo-Mitsubishi. For example,

..   The retail banking services provided by Mitsubishi Trust Bank's trust
    banking business group and the real estate services provided to individuals
    by Mitsubishi Trust Bank's real estate business group will be provided as
    part of our Integrated Retail Banking Business Group.

..   The corporate finance products and services provided by Mitsubishi Trust
    Bank's trust banking business group, the real estate services provided to
    corporate clients by Mitsubishi Trust Bank's real estate business group and
    the services provided by Mitsubishi Trust Bank's stock transfer agency
    business group will be provided as part of our Integrated Corporate Banking
    Business Group.

..   The trust assets management services and the asset administration and
    custodial services provided by Mitsubishi Trust Bank's trust assets
    business group will be provided as part of our Integrated Trust Assets
    Business Group.

With the exception of treasury-related services, services in the global markets
business group are provided as part of Mitsubishi Tokyo Financial Group, Inc.'s
integrated corporate banking business group.

As of March 31, 2004, Mitsubishi Trust Bank had a network of 47 branches and
one sub-branch in Japan. For a detailed analysis of financial results by
business segment, see "Item 5.A. Operating and Financial Review and
Prospects--Operating Results--Business Segment Analysis--Mitsubishi Trust
Bank," and for a detailed analysis of financial results by geographic segment,
see "Item 5.A. Operating and Financial Review and Prospects--Operating
Results--Geographic Segment Analysis."

Trust-Banking Business Group

The trust-banking business group of Mitsubishi Trust Bank provides retail
banking and trust services, as well as corporate financing services. The
trust-banking business group provides a full range of trust and commercial

                                      29



banking products and various financial services to individuals, corporations,
institutional investors and public organizations. Mitsubishi Trust Bank offers
some of its products and services through its trust agency arrangements with
various banks, including Bank of Tokyo-Mitsubishi.

As it serves as the first point of contact with customers, this group is
responsible for building and maintaining good relationships with retail and
corporate clients.

Retail banking services.  The trust-banking business group offers a variety of
asset-management and asset administration services to individuals. The group's
asset management products include savings instruments such as current accounts,
ordinary deposits, time deposits, deposits at notice and other deposit
facilities. It also offers trust products, such as loan trusts and money
trusts, and other investment products, such as investment trusts,
performance-based money trusts and foreign-currency deposits.

The group creates portfolios tailored to the customers' needs by combining
savings instruments and investment products. The group also provides a range of
asset management and asset administration products as well as customized trust
products for high net worth individuals. Examples of services offered include
advisory services relating to, among other things, the purchase and disposal of
real estate and effective land utilization and testamentary trusts.

Since 1999, Mitsubishi Trust Bank has offered a members-only service called the
"Excellent Club" targeted at customers who have aggregate balances of over
(Yen)10 million per household at Mitsubishi Trust Bank. As of March 31, 2004,
the Excellent Club had a membership of over 260,000 households. Members of the
Excellent Club have access to, among other things, favorable interest rates and
fee discounts, wealth management services and special products such as the
"Excellent Club time deposits."

Corporate finance products and services.  The trust-banking business group
offers a range of services which integrate trust and banking functions in order
to satisfy the financial needs of approximately 7,000 corporate clients.
Examples of traditional commercial banking services include loans, the
arrangement of syndicated loans, securitization and the establishment of loan
commitments. Leveraging Mitsubishi Trust Bank's experience and know-how
relating to the asset management business, real estate brokerage and appraisal
services, the group offers services tailored to the financial strategies of
each client, including securitization of real estate, receivables and other
assets.

With respect to securitization services, the group is engaged in the
securitization of the Government Housing Loan Corporation's housing loans and
the securitization of nonperforming loans in cooperation with Japan's
Resolution and Collection Corporation. As of March 31, 2004, the outstanding
balance of loan credits (including nonperforming loans), property, sales
credits and other credits that were securitized was over (Yen)6 trillion.

In order to meet the various needs of corporate customers, the group offers
appropriate solutions by providing trust banking that combines trust services,
such as those related to pensions and real estate, with diverse financing
options.

Trust Assets Business Group

The trust assets business group provides fiduciary asset management and
administration services. As of March 31, 2004, the balance of corporate pension
assets entrusted to Mitsubishi Trust Bank surpassed the level held by all other
trust banks in Japan.

This group is strengthening its consulting capabilities in response to an
increasing demand for specialized consulting services as more Japanese
companies seek to reform their pension and human resources systems.

Trust assets management services.  The group manages investment funds,
corporate pensions, public pensions, public sector funds and individual funds
on behalf of its clients and in accordance with their investment objectives.

                                      30



Mitsubishi Trust Asset Management Co., Ltd. will merge with Tokyo-Mitsubishi
Asset Management to form Mitsubishi Asset Management Co., Ltd. on October 1,
2004. We believe this merger will strengthen our competitiveness in Japan's
publicly offered investment trust industry by combining high-quality,
sophisticated products and services with our broad customer base.

To address the diverse needs of Mitsubishi Trust Bank's clients, the group
offers a wide range of products, including actively managed funds for investors
seeking to outperform the market as well as passively managed or index-based
funds, which are becoming increasingly popular. The group also provides
currency overlay management services and alternative investment products.

Asset administration and custodial services.  In the asset administration
business, the group provides a broad range of administrative and custodial
services to corporations, institutional investors and other clients. In May
2002, Mitsubishi Trust Bank transferred to Master Trust Bank of Japan, Ltd.
assets under management encompassing securities held by funds including pension
trusts, specified money trusts and securities investment trusts. Master Trust
Bank of Japan is a trust bank which specializes in asset administration. It was
established in May 2000 by Mitsubishi Trust Bank, Nippon Life, UFJ Trust Bank,
Meiji Yasuda Life and Deutsche Bank. In October 2002 and November 2003, UFJ
Trust Bank transferred its assets under management encompassing securities held
by funds, including pension trusts, specified money trusts, and securities
investment trusts to Master Trust Bank of Japan, increasing its trust assets to
approximately (Yen)90 trillion as of March 31, 2004.

Real Estate Business Group

In addition to its principal business of real estate brokerage operations, the
real estate business group utilizes its significant know-how relating to the
securitization of real estate and real estate development, management and
appraisal, to meet the diverse real estate-related needs of retail and
corporate clients. The group is also focused on providing services that build
on the experience and expertise of a trust bank. For example, the group offers
advice relating to clients' real estate assets in the context of the
restructuring of their businesses and financial strategies and their balance
sheets, as clients try to respond to changes in the accounting treatment of
impairment losses and the increased focus on consolidated financial statements
under Japanese GAAP. The group retains the services of a large number of highly
qualified experts, including registered architects, registered real estate
transaction managers, appraisers and associate appraisers and registered real
estate consultants.

Stock Transfer Agency Business Group

In April 2004, Mitsubishi Trust Bank upgraded the status of its stock transfer
agency business from part of the trust-banking business group to a newly
established stock transfer agency business group. Mitsubishi Trust Bank aims to
expand its stock transfer agency business by tapping into a wider client base
and working closely with Bank of Tokyo-Mitsubishi. The group offers stock
transfer agency services for corporate clients where Mitsubishi Trust Bank acts
as an agent, as designated under the Japanese Commercial Code, and handles
various administrative procedures such as stock title transfers and the
calculation and payment of dividends. The group also offers consultation
services relating to investor relations and corporate governance to listed
companies and advises companies planning to go public on how to prepare for an
initial public offering and other practical procedures involved in the issuance
of shares. The group also provides a service that enables companies to send
shareholder meeting notices to, and receive proxies from, shareholders via the
internet. As of March 31, 2004, Mitsubishi Trust Bank was serving as the stock
transfer agent for 916 companies based in Japan and overseas.

Global Markets Business Group

The global markets business group is active in various financial operations,
including banking, money and capital markets operations, securities investments
and custody operations and asset management. With the U.S., European and Asian
markets as its core foundation, the group's business, through efficient
management of its portfolio of financial products including securities, loan
receivables and derivatives, has consistently maintained a high level of
profitability and has been one of Mitsubishi Trust Bank's most important
businesses.

                                      31



In the area of international finance, the group offers loans, guarantees and
other credit facilities to multinational corporate clients, including the
overseas affiliates of Japanese corporations.

Mitsubishi Trust Bank maintains a presence in the world's major financial
markets through a network of five branches, three representative offices and
five major subsidiaries.

Competition

We face strong competition in all of our principal areas of operation. The
deregulation of the Japanese financial markets as well as structural reforms in
the regulation of the financial industry have resulted in dramatic changes in
the Japanese financial system. Structural reforms have prompted Japanese banks
to merge or reorganize their operations, thus changing the nature of the
competition from other financial institutions as well as from other types of
businesses.

Japan

Deregulation.  Competition in Japan has intensified as a result of the
relaxation of regulations relating to Japanese financial institutions.
Previously, there were various restrictions, such as foreign exchange controls,
ceilings on deposit interest rates and restrictions that compartmentalized
business sectors. These restrictions served to limit competition. However, as a
result of the deregulation of the financial sector, such as through the
"Financial Big Bang" which was announced in 1996, most of these restrictions
were lifted before 2000. Deregulation has eliminated barriers between different
types of Japanese financial institutions, which are now able to compete
directly against one another. Deregulation and market factors have also
facilitated the entry of various large foreign financial institutions into the
Japanese domestic market.

The Law Amending the Relevant Laws for the Reform of the Financial System, or
the Financial System Reform Act, which was promulgated in June 1998, provided a
framework for the reform of the Japanese financial system by reducing the
barriers between the banking, securities and insurance businesses and enabled
financial institutions to engage in businesses which they were not permitted to
conduct before. The Banking Law, as amended, now permits banks to engage in the
securities business by establishing or otherwise owning domestic and overseas
securities subsidiaries with the approval of the Financial Services Agency, an
agency of the Cabinet Office. We expect a further increase in competition among
financial institutions in these new areas of permissible activities.

In terms of new market entrants, other financial institutions, such as Orix
Corporation, and non-financial companies, such as Sony Corporation and
Ito-Yokado Co., Ltd., have also begun to offer various banking services, often
through non-traditional distribution channels. Also, in recent years, various
large foreign financial institutions have significantly expanded their presence
in the Japanese domestic market. Citigroup, for example, has expanded its
banking activities and moved aggressively to provide investment banking and
other financial services, including retail services.

In the corporate banking sector, the principal effect of these reforms has been
the increase in competition as two structural features of Japan's highly
specialized and segmented financial system have eroded:

..   the separation of banking and securities businesses in Japan; and

..   the distinctions among the permissible activities of Japan's three
    principal types of private banking institutions.

For a discussion of the three principal types of private banking institutions,
see " --The Japanese Financial System." In addition, in recent years, Japanese
corporations are increasingly raising funds by accessing the capital markets,
both within Japan and overseas, resulting in a decline in demand for loan
financing. Furthermore, as foreign exchange controls have been generally
eliminated, our customers can now have direct access to foreign financial
institutions, with which we must also compete.

                                      32



In the consumer banking sector, the deregulation of interest rates on yen
deposits and other factors have enabled our bank subsidiaries to offer
customers an increasingly attractive and diversified range of products. For
example, banks may now sell investment trusts and some types of insurance
products, with the possibility of expanding to additional types of insurance
products in the future. We face competition in this sector from other private
financial institutions as well as from Japan Post, a government-run public
services corporation established on April 1, 2003, which was formerly known as
the Postal Service Agency and which is the world's largest holder of deposits.
Recently, competition has also increased due to the development of new products
and distribution channels. For example, Japanese banks have started competing
with one another by developing innovative proprietary computer technologies
that allow them to deliver basic banking services in a more efficient manner
and to create sophisticated new products in response to customer demand.

The trust assets business is a promising growth area that is competitive and
becoming more so because of changes in the industry. In addition, there is
growing corporate demand for change in the trust regulatory environment, such
as reform of the pension system and related accounting regulations under
Japanese GAAP. However, competition may increase in the future as regulatory
barriers to entry are lowered. Currently, the Japanese Diet is considering
legislation proposing to expand the types of property that can be entrusted, to
allow non-financial companies to conduct trust business and to allow a new type
of registration to conduct only the administration type trust business. If
these changes are implemented, the trust business will expand but at the same
time there will be more competition.

Integration.  Another major reason for heightened competition in Japan is the
integration and reorganization of Japanese financial institutions. In 1998,
amendments were made to the Banking Law to allow the establishment of bank
holding companies, and this development together with various factors, such as
the decline of institutional strength caused by the bad loan crisis and
intensifying global competition, resulted in a number of integrations involving
major banks in recent years. In September 2000, The Dai-Ichi Kangyo Bank,
Limited, The Fuji Bank, Limited and The Industrial Bank of Japan, Limited
jointly established a holding company, Mizuho Holdings, Inc., to own the three
banks. In April 2002, these three banks were reorganized into two banks--Mizuho
Bank, Ltd. and Mizuho Corporate Bank, Ltd. In April 2001, The Sumitomo Bank,
Limited and The Sakura Bank, Limited were merged into Sumitomo Mitsui Banking
Corporation. In April 2001, The Sanwa Bank, Limited, The Tokai Bank, Limited
and The Toyo Trust and Banking Company, Limited jointly established a holding
company, UFJ Holdings, to own the three banks. In January 2002, the three banks
were reorganized into two banks, UFJ Bank and UFJ Trust Bank Limited. In
December 2001, The Daiwa Bank, Ltd. and two regional banks established Daiwa
Bank Holdings Inc., which in March 2002 consolidated with Asahi Bank, Ltd. and
changed its corporate name to Resona Holdings, Inc. in October 2002. For
information on the injection of public funds into Resona Bank, Ltd., a
subsidiary bank of Resona Holdings, Inc., see "--Supervision and
Regulation--Japan--Deposit Insurance and Government Investment in Financial
Institutions."

Foreign

In the United States, we face substantial competition in all aspects of our
business. We face competition from other large U.S. and foreign-owned
money-center banks, as well as from similar institutions that provide financial
services. Through Union Bank of California, we compete principally with U.S.
and foreign-owned money-center and regional banks, thrift institutions,
insurance companies, asset management companies, investment advisory companies,
consumer finance companies, credit unions and other financial institutions.

In other international markets, we face competition from commercial banks and
similar financial institutions, particularly major international banks and the
leading domestic banks in the local financial markets in which we conduct
business.

                                      33



The Japanese Financial System

Japanese financial institutions may be categorized into three types:

..   the central bank, namely the Bank of Japan;

..   private banking institutions; and

..   government financial institutions.

The Bank of Japan

The Bank of Japan's role is to maintain price stability and the stability of
the financial system to ensure a solid foundation for sound economic
development.

Private Banking Institutions

Private banking institutions in Japan are commonly classified into three
categories (the following numbers are based on currently available information
published by the Financial Services Agency) as of June 11, 2004:

..   ordinary banks (128 ordinary banks and 72 foreign commercial banks with
    ordinary banking operations);

..   trust banks (26 trust banks, including 8 Japanese subsidiaries of foreign
    financial institutions); and

..   long-term credit banks (one long-term credit bank).

Ordinary banks in turn are classified as city banks, of which there are six,
including Bank of Tokyo-Mitsubishi, and regional banks, of which there are 114.
In general, the operations of ordinary banks correspond to commercial banking
operations in the United States. City banks and regional banks are
distinguished based on head office location as well as the size and scope of
their operations.

The city banks are generally considered to constitute the largest and most
influential group of banks in Japan. Generally, these banks are based in large
cities, such as Tokyo and Osaka, and operate nationally through networks of
branch offices. City banks have traditionally emphasized their business with
large corporate clients, including the major industrial companies in Japan.
However, in light of deregulation and other competitive factors, many of these
banks, including Bank of Tokyo-Mitsubishi, in recent years have increased their
emphasis on other markets, such as small and medium-sized companies and retail
banking.

With some exceptions, the regional banks tend to be much smaller in terms of
total assets than the city banks. Each of the regional banks is based in one of
the Japanese prefectures and extends its operations into neighboring
prefectures. Their clients are mostly regional enterprises and local public
utilities, although the regional banks also lend to large corporations. In line
with the recent trend among financial institutions toward mergers or business
tie-ups, various regional banks have announced or are currently negotiating or
pursuing integration transactions, in many cases in order to be able to
undertake the huge investments required in information technology.

Trust banks, including Mitsubishi Trust Bank, provide various trust services
relating to money trusts, pension trusts and investment trusts and offer other
services relating to real estate, stock transfer agency and testamentary
services as well as banking services.

Long-term credit banks are engaged primarily in providing long-term loans to
Japanese industries, principally with funds obtained from the issue of
debentures.

In recent years, almost all of the city banks have consolidated with other city
banks and also, in some cases, with trust banks or long-term credit banks.
Integration among these banks was achieved, in most cases, through the

                                      34



use of a bank holding company as discussed in
"--Competition--Japan--Integration" and "--Supervision and
Regulation--Japan--Bank Holding Company Regulations."

In addition to ordinary banks, trust banks and long-term credit banks, other
private financial institutions in Japan, including shinkin banks or credit
associations, and credit cooperatives, are engaged primarily in making loans to
small businesses and individuals.

Government Financial Institutions

Since World War II, a number of government financial institutions have been
established. These corporations are wholly owned by the government and operate
under its supervision. Their funds are provided mainly from government sources.

Among them are the following:

..   The Development Bank of Japan, whose purpose is to contribute to the
    economic development of Japan by extending long-term loans, mainly to
    primary and secondary sector industries;

..   Japan Bank for International Cooperation, whose purpose is to supplement
    and encourage the private financing of exports, imports, overseas
    investments and overseas economic cooperation;

..   Japan Finance Corporation for Small Business, The Government Housing Loan
    Corporation and The Agriculture, Forestry and Fisheries Finance
    Corporation, the purpose of each of which is to supplement private
    financing in its relevant field of activity; and

..   The Postal Service Agency, which was reorganized in April 2003 into Japan
    Post, a government-run public services corporation.

In April 2004, the Tokyo metropolitan government acquired the Japanese
subsidiary of a foreign trust bank and relaunched it as New Bank Tokyo. Under
the Tokyo metropolitan government's plan, New Bank Tokyo is expected to focus
on loans and guarantees for small and medium-sized businesses, as well as
tie-ups with various non-financial businesses. The new bank is scheduled to
begin operations starting April 2005.

Supervision and Regulation

Japan

Supervision.  As a result of the deregulation and structural reforms in the
Japanese financial industry, Japanese financial institutions gained the
opportunity to provide a wider range of financial products and options to their
clients as discussed in "--Competition--Japan," while at the same time becoming
subject to stricter control and supervision.

After several reorganizations of Japanese governmental agencies, the Financial
Services Agency was established as an agency of the Cabinet Office in 1998. It
is responsible for supervising and inspecting financial institutions, making
policy for the overall Japanese financial system and conducting insolvency
proceedings with respect to financial institutions. The Bank of Japan, as the
central bank for financial institutions, conducts "on-site inspections," in
which its staff visits financial institutions and inspects the assets and risk
management systems of those institutions.

The Banking Law.  Among various acts that regulate financial institutions, the
Banking Law and its subordinated orders and ordinances are regarded as the
fundamental law for ordinary banks and other private financial institutions.
The Banking Law addresses bank holding companies, capital adequacy, inspections
and reporting, as well as the scope of business activities, disclosure,
accounting, limitation on granting credit and standards for arm's length
transactions.

                                      35



Bank holding company regulations.  In December 1997, the Anti-Monopoly Law was
amended to generally permit the creation and existence of holding companies,
which had been previously prohibited, except in circumstances in which the
existence of a holding company would result in an excessive concentration of
economic power. Additional legislative measures relating to holding companies
of certain types of financial institutions, such as banks, trust banks and
securities companies, were also proposed around this time and they ultimately
became effective in March 1998. In connection with those legislative measures
and amendments, in December 1997, the Fair Trade Commission amended the
guidelines under the Anti-Monopoly Law to relax the standards for approval of a
financial institution's stockholdings of more than 5% in another company,
thereby permitting a financial institution to acquire interests in other
financial institutions.

A bank holding company is prohibited from carrying on any business other than
the management of its subsidiaries and other incidental businesses. A bank
holding company may have any of the following as a subsidiary: a bank
(including a trust bank and a long-term credit bank), a securities company, an
insurance company or a foreign subsidiary that is engaged in the banking,
securities or insurance business. In addition, a bank holding company may have
as a subsidiary any company that is engaged in a business relating or
incidental to the businesses of the companies mentioned above, such as a credit
card company, a leasing company or an investment advisory company. Companies
that cultivate new business fields may also become the subsidiary of a bank
holding company.

Capital adequacy.  The capital adequacy guidelines adopted by the Financial
Services Agency that are applicable to Japanese bank holding companies and
banks with international operations closely follow the risk-weighted approach
proposed by the Basel Committee on Banking Supervision of the Bank for
International Settlements, and are intended to further strengthen the soundness
and stability of Japanese banks.

In addition to credit risks, the guidelines regulate market risks. Market risk
is defined as the risk of losses in on- and off-balance-sheet positions arising
from movements in market prices. The risks subject to these guidelines are:

..   the risks pertaining to interest rate-related instruments and equities in
    the trading book; and

..   foreign exchange risks and commodities risks of the bank.

Under the risk-based capital framework for credit risk purposes of the capital
adequacy guidelines, on-balance-sheet assets and off-balance-sheet exposures
are assessed according to broad categories of relative risk, based primarily on
the credit risk of the counterparty and country transfer risk. Five categories
of risk weights (0%, 10%, 20%, 50%, 100%) are applied to the different types of
balance sheet assets. Off-balance-sheet exposures are taken into account by
applying different categories of "credit conversion factors" to arrive at
credit-equivalent amounts, which are then weighted in the same manner as
on-balance-sheet assets involving similar counterparties, except that the
maximum risk weight is 50% for exposures relating to foreign exchange, interest
rate and other derivative contracts.

With regard to capital, the capital adequacy guidelines are in accordance with
the standards of the Bank for International Settlement for a target minimum
standard ratio of capital to modified risk-weighted assets of 8.0%. Modified
risk-weighted assets is the sum of risk-weighted assets compiled for credit
risk purposes and market risks multiplied by 12.5. The capital adequacy
guidelines place considerable emphasis on tangible common stockholders' equity
as the core element of the capital base, with appropriate recognition of other
components of capital.

Capital is classified into three tiers, referred to as Tier I, Tier II and Tier
III. Tier I capital generally consists of stockholders' equity items, including
common stock, preferred stock, capital surplus, retained earnings (which
includes deferred tax assets) and minority interests, but recorded goodwill and
other items, such as treasury stock, are deducted from Tier I capital. Tier II
capital generally consists of:

..   general reserves for credit losses, subject to a limit of 1.25% of modified
    risk-weighted assets;

                                      36



..   45% of the unrealized gains on investment securities available for sale;

..   45% of the land revaluation excess;

..   the balance of perpetual subordinated debt; and

..   the balance of subordinated term debt with an original maturity of over
    five years up to 50% of Tier I capital.

Tier III capital generally consists of short-term subordinated debt with an
original maturity of at least two years and which is subject to a "lock-in"
provision, which stipulates that neither interest nor principal may be paid if
such payment would cause the bank's overall capital amount to be less than its
minimum capital requirement. At least 50% of the minimum capital requirements
must be maintained in the form of Tier I capital.

Several regulatory changes have been proposed with respect to the calculation
of capital ratios. In particular, the Financial System Council of the Financial
Services Agency is discussing the adoption of rules limiting the amount of
deferred tax assets that may be included in the calculation of Tier I and/or
total regulatory capital.

Inspection and reporting.  By evaluating banks' systems of self-assessment,
auditing their accounts and reviewing their compliance with laws and
regulations, the Financial Services Agency monitors the financial soundness of
banks, including the status and performance of their control systems for
business activities. The inspection of banks is performed pursuant to a
Financial Inspection Manual published by the Financial Services Agency with a
view to emphasizing (i) each bank's self-assessment rather than the advice of
the governmental authority and (ii) risk management made by each bank instead
of a simple assessment of its assets. In recent years, the Financial Services
Agency has continuously conducted special inspections of major banks in Japan
regarding the grading and levels of write-offs and provisioning of some of
their borrowers.

The Financial Services Agency, if necessary in order to secure the sound and
appropriate operation of a bank's business, may request the submission of
reports or materials from, or conduct an on-site inspection of, the bank and/or
the bank holding company which holds the bank. If a bank's capital adequacy
ratio falls below a specified level, the Financial Services Agency may request
such bank to submit an improvement program and may restrict or suspend a bank's
operation when it determines that such action is necessary.

Under the amendments to the Banking Law and its subordinated orders and
ordinances, which became effective as of April 1, 2002, a person who desires to
hold 20% or, in exceptional cases 15%, or more of the voting rights of a bank
holding company or a bank is required to obtain prior approval from the Prime
Minister. In addition, the Prime Minister may request the submission of reports
or materials from, or conduct an inspection of, the person who holds 20% or
15%, as the case may be, or more of the voting rights of a bank holding company
or a bank if necessary in order to ensure the appropriate business operation of
such bank.

Furthermore, any person who becomes a holder of more than 5% of the voting
rights of a bank holding company or bank must report its ownership of voting
rights to the Director of the relevant local finance bureau within five
business days. In addition, any subsequent change of 1% or more in any
previously reported holding or any change in material matters set out in
reports previously filed must be reported, with some exceptions.

The Bank of Japan also conducts inspections of banks similar to those
undertaken by the Financial Services Agency. The amended Bank of Japan Law
provides that the Bank of Japan and financial institutions may agree as to the
form of inspection to be conducted by the Bank of Japan.

Laws limiting shareholdings of banks.  The provisions of the Anti-Monopoly Law
that prohibit a bank from holding more than 5% of another company's voting
rights do not apply to a bank holding company. However, the Banking Law
prohibits a bank holding company and its subsidiaries from holding, on an
aggregated basis, more than 15% of the voting rights of companies other than
those which can legally become subsidiaries of bank holding companies.

                                      37



In November 2001, a law which imposes a limitation on a bank's shareholding of
up to the amount equivalent to its Tier I capital was enacted. This limitation
was scheduled to become effective in September 2004, but the effective date has
been postponed to September 2006. To assist banks in complying with this
limitation while mitigating the adverse impact on the stock market, the Banks'
Shareholdings Purchase Corporation was established through the contributions of
128 financial institutions to acquire stocks from banks at market prices. The
lifespan of the Banks' Shareholdings Purchase Corporation was extended to March
31, 2017.

In October 2002, the Policy Board of the Bank of Japan issued guidelines for
the Bank of Japan's purchase of listed stocks from commercial banks whose
aggregate value of stockholdings exceed their Tier I capital. The Bank of Japan
has adopted this policy for the purpose of assisting commercial banks in
reducing the size of their share portfolios without materially adversely
affecting prevailing market prices. Under the guidelines, which were revised in
March 2003, the Bank of Japan will acquire up to (Yen)3 trillion of stock from
the portfolios of commercial banks at prevailing market prices and not sell the
acquired securities until after September 2007.

The Securities and Exchange Law.  Article 65 of the Securities and Exchange Law
of Japan generally prohibits a bank from engaging in the securities business.
Under this law, banks, including Bank of Tokyo-Mitsubishi and Mitsubishi Trust
Bank, may not engage in the securities business except for limited activities
such as dealing in, underwriting and acting as broker for, Japanese
governmental bonds, Japanese local government bonds and Japanese government
guaranteed bonds, and selling Japanese and foreign investment trust
certificates. A recent deregulation of the securities business has clarified
that banks may engage in market-inducting businesses such as providing advice
regarding public offerings or listings and that the Japanese government will
allow banks with appropriate firewalls to provide securities intermediary
services.

In general, the restrictions of the Securities and Exchange Law do not extend
directly to the subsidiaries of banks located outside Japan, which engage in
the securities business mainly in connection with capital-raising by Japanese
companies outside of Japan.

Despite the general prohibition under Article 65, the Financial System Reform
Act allows banks, trust banks, securities companies and insurance companies to
engage in the businesses of other financial sectors through their subsidiaries
in Japan.

Furthermore, banks' securities subsidiaries in Japan are now permitted to
engage in the underwriting and brokerage of not only bonds, but also equity
securities. This has enabled the securities subsidiaries of banks to offer
various securities-related services to their customers.

In addition, Mitsubishi Tokyo Financial Group, Inc. and some of its
subsidiaries are required to file with the Director of the Kanto Local Finance
Bureau of the Ministry of Finance a securities report for each fiscal period
supplemented by semi-annual and extraordinary reports pursuant to the
Securities and Exchange Law.

Anti-money laundering laws.  Under the Law for Punishment of Organized Crimes
and Regulation of Criminal Profits, banks and other financial institutions are
required to report to the competent minister, in the case of banks, the
Commissioner of the Financial Services Agency, any assets which they receive
while conducting their businesses that are suspected of being illicit profits
from criminal activity.

Law concerning trust business conducted by financial institutions.  Under the
Trust Business Law, joint stock companies that are licensed by the Prime
Minister as trust companies are allowed to conduct trust business. In addition,
under the Law Concerning Concurrent Operation for Trust Business by Financial
Institutions, banks and other financial institutions, as permitted by the Prime
Minister, are able to conduct trust business. Currently, the Japanese Diet is
considering legislation proposing to expand the types of property that can be
entrusted, to allow non-financial companies to conduct trust business and to
allow a new type of registration to conduct only the administration type trust
business.

Deposit insurance system and government investment in financial
institutions.  The Deposit Insurance Law is intended to protect depositors if a
financial institution fails to meet its obligations. The Deposit Insurance
Corporation was established in accordance with that law.

                                      38



City banks, including Bank of Tokyo-Mitsubishi, regional banks, trust banks,
including Mitsubishi Trust Bank, long-term credit banks and various other
credit institutions participate in the deposit insurance system on a compulsory
basis.

Under the Deposit Insurance Law, the maximum amount of protection is (Yen)10
million per customer within one bank. However, the deposits in some accounts
such as current accounts and ordinary accounts are fully protected without a
maximum amount limitation until the end of March 2005. From April 1, 2005, all
deposits will be subject to the (Yen)10 million cap, which is currently
applicable only to time deposits, except for non-interest bearing deposits that
are redeemable on demand and used by the depositor primarily for payment and
settlement functions. Currently, the Deposit Insurance Corporation charges
insurance premiums equal to 0.09% on the deposits in current accounts, ordinary
accounts and other similar accounts, which are fully protected as mentioned
above, and premiums equal to 0.08% on the deposits in other accounts.

Since 1998, the failure of a number of large-scale financial institutions has
led to the introduction of various measures with a view to stabilize Japan's
financial system, including financial support from the national budget.

The Law Concerning Emergency Measures for Revitalization of Financial Function,
or the Financial Revitalization Law, enacted in October 1998, provides for (i)
temporary national control of a failed financial institution, (ii) the dispatch
of a financial resolution administrator to the failed financial institution,
and (iii) the establishment of a bridge bank which takes over the business of
the failed financial institution on a temporary basis.

The Law Concerning Emergency Measures for Early Strengthening of Financial
Function, or the Financial Function Early Strengthening Law, also enacted in
October 1998, provided for government funds to be made available to financial
institutions "prior to failure" as well as to financial institutions with
"sound" management, to increase the capital ratio of such financial
institutions and to strengthen their function as financial market
intermediaries. The availability of new funds for this purpose ended on March
31, 2001. Capital injections made under the Financial Function Early
Strengthening Law amounted to approximately (Yen)10 trillion.

Starting in April 2001, amendments to the Deposit Insurance Law established a
new framework which enables the Deposit Insurance Corporation to inject capital
into a bank if the Prime Minister recognizes it must do so to guard against
financial systemic risk. In May 2003, Resona Bank, Ltd., a subsidiary bank of
Resona Holdings, Inc., was recognized by the Prime Minister to be in need of a
subscription of shares and other measures to expand its capital. Such
recognition was made in accordance with Article 102, Section 1 of the Deposit
Insurance Law. In response to such recognition, Resona Bank, Ltd. applied for
and received an injection of public funds in the total amount of (Yen)1.96
trillion.

Personal Information Protection Law.  With regards to protection of personal
information, the new Personal Information Protection Law will become fully
effective on April 1, 2005 and, accordingly, will be applicable to us. Among
other matters, the law requires us to limit the use of personal information to
its stated purpose and to properly manage the personal information in our
possession, and forbids us from providing personal information to third parties
without consent. If we violate certain provisions of the law, the Financial
Services Agency may advise or order us to take proper action. Furthermore,
stricter rules than the standards stated in the law may be introduced for
financial institutions in the near future.

United States

As a result of our operations in the United States, we are subject to extensive
U.S. federal and state supervision and regulation.

Overall supervision and regulation.  We are subject to supervision, regulation
and examination with respect to our U.S. operations by the Board of Governors
of the Federal Reserve System, or the Federal Reserve Board, pursuant to the
U.S. Bank Holding Company Act of 1956, as amended, or the BHCA, and the
International

                                      39



Banking Act of 1978, as amended, or the IBA, because we are a bank holding
company and a foreign banking organization, respectively, as defined pursuant
to those statutes.

The Federal Reserve Board functions as our "umbrella" regulator under
amendments to the BHCA effected by the Gramm-Leach-Bliley Act of 1999, which
among other things:

..   prohibited further expansion of activities in which bank holding companies,
    acting directly or through nonbank subsidiaries, may engage;

..   authorized qualifying bank holding companies to opt to become "financial
    holding companies," and thereby acquire the authority to engage in an
    expanded list of activities, including merchant banking, insurance
    underwriting and a full range of securities activities; and

..   modified the role of the Federal Reserve Board by specifying new
    relationships between the Federal Reserve Board and the functional
    regulators of nonbank subsidiaries of both bank holding companies and
    financial holding companies.

We have not elected to become a financial holding company.

The BHCA generally prohibits each of a bank holding company and a foreign
banking organization that maintains branches or agencies in the United States
from, directly or indirectly, acquiring more than 5% of the voting shares of
any company engaged in nonbanking activities in the United States unless the
bank holding company or foreign banking organization has elected to become a
financial holding company, as discussed above, or the Federal Reserve Board has
determined, by order or regulation, that such activities are so closely related
to banking as to be a proper incident thereto and has granted its approval to
the bank holding company or foreign banking organization for such an
acquisition. The BHCA also requires a bank holding company or foreign banking
organization that maintains branches or agencies in the United States to obtain
the prior approval of an appropriate federal banking authority before
acquiring, directly or indirectly, the ownership of more than 5% of the voting
shares or control of any U.S. bank or bank holding company. In addition, under
the BHCA, a U.S. bank or a U.S. branch or agency of a foreign bank is
prohibited from engaging in various tying arrangements involving it or its
affiliates in connection with any extension of credit, sale or lease of any
property or provision of any services.

U.S. branches and agencies of subsidiary Japanese banks.  Under the authority
of the IBA, our subsidiary banks in Japan, Bank of Tokyo-Mitsubishi and
Mitsubishi Trust Bank, operate seven branches, two agencies and four
representative offices in the United States. Bank of Tokyo-Mitsubishi operates
branches in Los Angeles and San Francisco, California; Chicago, Illinois; New
York, New York; Portland, Oregon; and Seattle, Washington; agencies in Atlanta,
Georgia and Houston, Texas; and representative offices in Washington, D.C;
Minneapolis, Minnesota; Dallas, Texas; and Jersey City, New Jersey. Mitsubishi
Trust Bank operates a branch in New York, New York.

The IBA provides, among other things, that the Federal Reserve Board may
examine U.S. branches and agencies of foreign banks, and that each such branch
and agency shall be subject to on-site examination by the appropriate federal
or state bank supervisor as frequently as would a U.S. bank. The IBA also
provides that if the Federal Reserve Board determines that a foreign bank is
not subject to comprehensive supervision or regulation on a consolidated basis
by the appropriate authorities in its home country, or if there is reasonable
cause to believe that the foreign bank or its affiliate has committed a
violation of law or engaged in an unsafe or unsound banking practice in the
United States, the Federal Reserve Board may order the foreign bank to
terminate activities conducted at a branch or agency in the United States.

U.S. branches and agencies of foreign banks must be licensed, and are also
supervised and regulated, by a state or by the Office of the Comptroller of the
Currency, or the OCC, the federal regulator of national banks. All of the
branches and agencies of Bank of Tokyo-Mitsubishi and Mitsubishi Trust Bank in
the United States are

                                      40



state-licensed. Under U.S. federal banking laws, state-licensed branches and
agencies of foreign banks may engage only in activities that would be
permissible for their federally-licensed counterparts, unless the Federal
Reserve Board determines that the additional activity is consistent with sound
practices. U.S. federal banking laws also subject state-licensed branches and
agencies to the single-borrower lending limits that apply to federal branches
and agencies, which generally are the same as the lending limits applicable to
national banks, but are based on the capital of the entire foreign bank.

As an example of state supervision, the branches of Bank of Tokyo-Mitsubishi
and Mitsubishi Trust Bank in New York are licensed by the New York State
Superintendent of Banks, or the Superintendent, pursuant to the New York
Banking Law. Under the New York Banking Law and the Superintendent's
Regulations, each of Bank of Tokyo-Mitsubishi and Mitsubishi Trust Bank must
maintain with banks in the State of New York eligible assets as defined and in
amounts determined by the Superintendent. These New York branches must also
submit written reports concerning their assets and liabilities and other
matters, to the extent required by the Superintendent, and are examined at
periodic intervals by the New York State Banking Department. In addition, the
Superintendent is authorized to take possession of the business and property of
Bank of Tokyo-Mitsubishi or Mitsubishi Trust Bank located in New York whenever
events specified in the New York Banking Law occur.

U.S. subsidiary banks.  We indirectly own and control three U.S. banks:

..   Bank of Tokyo-Mitsubishi Trust Company, New York, New York (through Bank of
    Tokyo-Mitsubishi, a registered bank holding company),

..   Union Bank of California, N.A. (through Bank of Tokyo-Mitsubishi and its
    subsidiary, UnionBanCal Corporation, a registered bank holding company), and

..   Mitsubishi Trust & Banking Corporation (U.S.A.), New York, New York
    (through Mitsubishi Trust Bank, a registered bank holding company).

Bank of Tokyo-Mitsubishi Trust Company and Mitsubishi Trust & Banking
Corporation (U.S.A.) are chartered by the State of New York and are subject to
the supervision, examination and regulatory authority of the Superintendent
pursuant to the New York Banking Law. Union Bank of California, N.A., is a
national bank subject to the supervision, examination and regulatory authority
of the OCC pursuant to the National Bank Act.

The Federal Deposit Insurance Corporation, or the FDIC, is the primary federal
agency responsible for the supervision, examination and regulation of the two
New York-chartered banks referred to above, and insures the deposits of all
three U.S. subsidiary banks. In the event of the failure of an FDIC-insured
bank, the FDIC is virtually certain to be appointed as receiver, and would
resolve the failure under provisions of the Federal Deposit Insurance Act.

An FDIC-insured institution that is affiliated with a failed or failing
FDIC-insured institution can be required to indemnify the FDIC for losses
resulting from the insolvency of the failed institution, even if this causes
the affiliated institution also to become insolvent. In the liquidation or
other resolution of a failed FDIC-insured depository institution, deposits in
its U.S. offices and other claims for administrative expenses and employee
compensation are afforded priority over other general unsecured claims,
including deposits in offices outside the United States, non-deposit claims in
all offices and claims of a parent company. Moreover, under long-standing
Federal Reserve Board policy, a bank holding company is expected to act as a
source of financial strength for its subsidiary banks and to commit resources
to support such banks.

Bank capital requirements and capital distributions.  Our U.S. bank
subsidiaries and UnionBanCal Corporation, our U.S. subsidiary bank holding
company, are subject to applicable risk-based and leverage capital guidelines
issued by U.S. regulators for banks and bank holding companies. All of our U.S.
subsidiary banks are "well capitalized" under those guidelines as they apply to
banks, and our U.S. subsidiary bank holding company exceeds all minimum
regulatory capital requirements applicable to domestic bank holding companies.
The

                                      41



Federal Deposit Insurance Corporation Improvement Act of 1991, or FDICIA,
provides, among other things, for expanded regulation of insured depository
institutions, including banks, and their parent holding companies. As required
by FDICIA, the federal banking agencies have established five capital tiers
ranging from "well capitalized" to "critically undercapitalized" for insured
depository institutions. As an institution's capital position deteriorates, the
federal banking regulators may take progressively stronger actions, such as
further restricting affiliate transactions, activities, asset growth or
interest payments. In addition, FDICIA generally prohibits an insured
depository institution from making capital distributions, including the payment
of dividends, or the payment of any management fee to its holding company, if
the insured depository institution would subsequently become undercapitalized.

The availability of dividends from insured depository institutions in the
United States is limited by various other statutes and regulations. The
National Bank Act and other federal laws prohibit the payment of dividends by a
national bank under various circumstances and limit the amount a national bank
can pay without the prior approval of the OCC. In addition, state-chartered
banking institutions are subject to dividend limitations imposed by applicable
federal and state laws.

Other regulated U.S. subsidiaries.  Our nonbank subsidiaries that engage in
securities or futures-related activities in the United States are regulated by
appropriate functional regulators, such as the SEC, the Commodities Futures
Trading Commission, any self-regulatory organizations of which they are
members, and the appropriate state regulatory agencies. These nonbank
subsidiaries are required to meet separate minimum capital standards as imposed
by those regulatory authorities.

The Gramm-Leach-Bliley Act removed almost all of the pre-existing statutory
barriers to affiliations between commercial banks and securities firms by
repealing Sections 20 and 32 of the Glass-Steagall Act. At the same time,
however, the so-called "push-out" provisions of the Gramm-Leach-Bliley Act
narrowed the exclusion of banks, including the U.S. branches of foreign banks,
from the definitions of "broker" and "dealer" under the Securities Exchange Act
of 1934, potentially requiring all such banks to transfer some activities to
affiliated broker-dealers. The SEC has issued rules regarding the push-out of
"dealer" functions that became effective on September 30, 2003. On June 30,
2004, the SEC issued its proposed Regulation B, which would govern the push-out
requirements for "broker" functions. The SEC has proposed to adopt Regulation B
as a final rule in January 2005, with full compliance required approximately
one year thereafter, although the final form of Regulation B and the date of
its effectiveness are still subject to change. At this time, we do not believe
that these push-out rules as adopted or as currently proposed will have a
significant impact on our business as currently conducted in the United States.

USA PATRIOT Act.  The USA PATRIOT Act of 2001 substantially broadened the scope
of U.S. anti-money laundering laws and regulations by imposing significant new
compliance and due diligence obligations, creating new crimes and penalties and
expanding the extraterritorial jurisdiction of the United States. Failure of a
financial institution to comply with the USA PATRIOT Act's requirements could
have serious legal and reputational consequences for the institution.

                                      42



C.  Organizational Structure

The following chart presents our basic corporate structure:

                                  [FLOW CHART]



Mitsubishi Tokyo Financial Group, Inc. is the direct shareholder of Bank of
Tokyo-Mitsubishi and Mitsubishi Trust Bank. The other subsidiaries and
affiliated companies are held indirectly under these two subsidiaries. In April
2004, Mitsubishi Tokyo Financial Group, Inc. acquired shares representing 13%
of the voting rights in ACOM and following this transaction, Mitsubishi Tokyo
Financial Group, Inc. and its group companies excluding shares held in the
trust account of Mitsubishi Trust Bank together hold shares representing 15% of
the voting rights in ACOM.

For information on the proposed management integration between Mitsubishi Tokyo
Financial Group, Inc. and its subsidiaries and UFJ Holdings and its
subsidiaries, see "Item 5.A. Operating and Financial Review and
Prospects--Recent Developments--Basic Agreement Regarding the Management
Integration of Mitsubishi Tokyo Financial Group and the UFJ Group."

Set forth below is a list of our significant subsidiaries at March 31, 2004.



                                                                       Proportion of  Proportion
                                                         Country of      ownership    of voting
Name                                                    incorporation  interest (%)  interest (%)
----                                                    -------------- ------------- ------------
                                                                            
The Bank of Tokyo-Mitsubishi, Ltd......................     Japan         100.00        100.00
The Mitsubishi Trust and Banking Corporation...........     Japan         100.00        100.00
Mitsubishi Securities Co., Ltd.........................     Japan          58.38         58.12
DC Card Co., Ltd.......................................     Japan          43.06         43.06
Tokyo-Mitsubishi Asset Management Ltd..................     Japan          54.69         54.69
Mitsubishi Tokyo Wealth Management Securities, Ltd.....     Japan         100.00        100.00
The Diamond Factors Limited............................     Japan          76.94         76.94
The Diamond Home Credit Company Limited................     Japan          99.66         99.66
MTB Investment Technology Institute Co., Ltd...........     Japan         100.00        100.00
Tokyo-Mitsubishi Cash One Ltd..........................     Japan          60.80         60.80
Defined Contribution Plan Consulting of Japan Co., Ltd.     Japan          70.00         70.00
BOT Lease Co., Ltd.....................................     Japan          21.06         21.06
UnionBanCal Corporation................................ United States      62.20         62.20
Union Bank of California, N.A.......................... United States      62.20         62.20
Bank of Tokyo-Mitsubishi Trust Company................. United States     100.00        100.00
Tokyo-Mitsubishi International plc/(1)/................ United Kingdom    100.00        100.00
Mitsubishi Tokyo Wealth Management (Switzerland), Ltd..  Switzerland      100.00        100.00
Mitsubishi Trust International Limited................. United Kingdom    100.00        100.00
Mitsubishi Trust & Banking Corporation (U.S.A.)........ United States     100.00        100.00
Mitsubishi Trust Finance (Ireland) PLC.................    Ireland        100.00        100.00

   -----
   (1) On July 5, 2004, Tokyo-Mitsubishi International plc changed its name to
       "Mitsubishi Securities International plc."

                                      43



D.  Property, Plants and Equipment

The following table presents our premises and equipment at cost as of March 31,
2003 and 2004:



                                                 At March 31
                                        -----------------------------
                                             2003           2004
                                        -------------- --------------
                                                (in millions)
                                                 
          Land......................... (Yen)  193,278 (Yen)  171,379
          Buildings....................        432,230        426,691
          Equipment and furniture......        489,307        443,251
          Leasehold improvements.......        234,443        228,104
          Construction in progress.....         20,134          4,136
                                        -------------- --------------
             Total.....................      1,369,392      1,273,561
          Less accumulated depreciation        725,598        693,488
                                        -------------- --------------
          Premises and equipment--net.. (Yen)  643,794 (Yen)  580,073
                                        ============== ==============


Our head office is located at 4-1, Marunouchi 2-chome, Chiyoda-ku, Tokyo, and
comprises 2,221.19 square meters of office space. At March 31, 2004, we
conducted our banking operations either in our owned premises or in leased
properties.

The following table presents the areas and book values of our material office
and other properties at March 31, 2004:



                                       Area               Book value
                           ----------------------------- -------------
                           (in thousands of square feet) (in millions)
                                                   
          Owned land......             9,550             (Yen)171,379
          Leased land.....             1,220                       --
          Owned buildings.            16,885                  180,019
          Leased buildings            11,446                       --


Our owned land and buildings are primarily used by our branches. Most of the
buildings and land owned by us are free from material encumbrances, except as
described below.

In March 1999, Bank of Tokyo-Mitsubishi sold a 50% undivided interest in each
of its head office land and building and its main office land and building and,
at the same time, Bank of Tokyo-Mitsubishi entered into an agreement to lease
back from the buyer the 50% undivided interests of the buildings sold for a
period of seven years. We accounted for these transactions as financing
arrangements.

During the fiscal year ended March 31, 2004, we invested approximately
(Yen)52.0 billion in our subsidiaries primarily for office renovations and
purchases of furniture and equipment.

                                      44



Item 5. Operating and Financial Review and Prospects.

The following discussion and analysis should be read in conjunction with "Item
3.A. Key Information--Selected Financial Data" and our consolidated financial
statements and related notes included elsewhere in this Annual Report.



                                                                                      Page
Roadmap to Reading the Discussion of Our Operating and Financial Review and Prospects ----
                                                                                   

      A.  Operating Results..........................................................  45

         Executive Summary...........................................................  45

         Recent Developments.........................................................  46

         Business Environment........................................................  49

         Critical Accounting Estimates...............................................  50

         Accounting Changes..........................................................  54

         Recently Issued Accounting Pronouncements...................................  56

         Results of Operations.......................................................  57

         Business Segment Analysis...................................................  68

         Geographic Segment Analysis.................................................  76

       Effect of the Change in Exchange Rates on Foreign Currency Translation........  77

      B.  Liquidity and Capital Resources............................................  78

         Financial Condition.........................................................  78

         Capital Adequacy............................................................  93

         Off-balance-sheet Arrangements..............................................  96

         Contractual Cash Obligations................................................ 100

         Non-exchange Traded Contracts Accounted for at Fair Value................... 100

      C.  Research and Development, Patents and Licenses, etc........................ 101

      D.  Trend Information.......................................................... 101

      E.  Off-balance-sheet Arrangements............................................. 101

      F.  Tabular Disclosure of Contractual Obligations.............................. 101

      G.  Safe Harbor................................................................ 101


A.  Operating Results

Executive Summary

Mitsubishi Tokyo Financial Group, Inc. is a holding company for Bank of
Tokyo-Mitsubishi and Mitsubishi Trust Bank. Through our subsidiaries and
affiliated companies, we engage in a broad range of financial operations,
including commercial banking, investment banking, asset management, trust
banking and securities-related businesses, and provide related services to
individual and corporate customers. The financial services industry and the
global financial markets are influenced by many unpredictable factors,
including economic conditions, monetary policy, international political events,
liquidity in global markets and regulatory developments. Our operations are
significantly affected by external factors, such as the level and volatility of
interest rates, currency exchange rates, stock and real estate markets and
other economic and market conditions. In addition, we hold a significant number
of shares in some of our customers for strategic purposes, in particular to
maintain long-term relationships. These shareholdings expose us to a risk of
losses resulting from a decline in their market prices. Accordingly, our
results of operations may vary significantly from period to period because of
unpredictable events, including unexpected failures of large corporate
borrowers, defaults in emerging markets and market volatility.

                                      45



As the Japanese and overseas economies recovered generally in the fiscal year
ended March 31, 2004, we achieved (Yen)822.2 billion of net income, an increase
of 304% compared to the previous fiscal year. Income from continuing operations
before income tax expense and cumulative effect of a change in accounting
principle for the fiscal year ended March 31, 2004 was (Yen)1,180.1 billion, an
increase of 349% compared to the previous fiscal year. These improvements were
mainly due to a reversal of allowance for credit losses and an increase in
non-interest income.

The reversal of allowance for credit losses was mainly due to an improvement in
our loan portfolio as evidenced by the reduction in our nonperforming and
impaired loans. The increase in non-interest income was primarily attributable
to an increase in net foreign exchange gains reflecting the appreciation of the
yen against foreign currencies, and an increase in net investment securities
gains mainly due to the improvement in the Japanese stock market. These
increases were partially offset by a decrease in net trading account profits,
primarily due to the rise in long-term interest rates in Japan.

These favorable changes were partially offset by a decrease in net interest
income primarily due to a decline in the average interest rate spread.

Recent Developments

Basic Agreement Regarding the Management Integration of Mitsubishi Tokyo
Financial Group and the UFJ Group

On August 12, 2004, Mitsubishi Tokyo Financial Group, Inc., UFJ Holdings, Bank
of Tokyo-Mitsubishi, UFJ Bank, Mitsubishi Trust Bank, UFJ Trust Bank Limited,
Mitsubishi Securities, and UFJ Tsubasa Securities Co., Ltd., concluded a basic
agreement with regard to the management integration of the holding companies,
banks, trust banks and securities companies of the two groups. The management
integration is subject to the approval of the shareholders and the relevant
authorities. The integration of the two groups' holding companies, banks, trust
banks and securities companies is targeted for completion by October 1, 2005.

The respective merger or other integration ratios for the holding companies,
banks, trust banks and securities companies will be decided on the basis of
forthcoming discussions considering rational assessments, including valuation
reports by outside institutions. The organization, capital, specific
integration procedures and other matters regarding the new holding company, new
bank, new trust bank and new securities company will be decided on the basis of
forthcoming discussions.

On September 17, 2004, Mitsubishi Tokyo Financial Group, Inc. purchased 3.5
billion class E preferred shares issued by UFJ Bank for (Yen)700 billion. This
capital injection to UFJ Bank is part of our proposed management integration
with the UFJ Group as outlined in the basic agreement between the two groups
announced on August 12, 2004. The preferred shares issued by UFJ Bank are
non-voting shares but convertible into voting preferred shares of UFJ Bank
subject to restrictions set forth in the separate agreement described below.
The investment is based on the assumption that the management integration of
the two groups will proceed, and is intended to maximize the benefits of the
management integration.

On September 10, 2004, Mitsubishi Tokyo Financial Group, Inc, UFJ Holdings and
UFJ Bank also entered into a separate agreement setting forth, among other
things, the following:

   (1) Restrictions on our right to convert the non-voting preferred shares
       into voting preferred shares. We may not convert the non-voting
       preferred shares into voting preferred shares unless:

      .   any person other than us or UFJ Holdings becomes a shareholder of UFJ
          Bank;

      .   any statutory merger, stock-for-stock exchange, stock transfer,
          corporate split or transfer of business between UFJ Holdings and any
          company other than us is approved by either UFJ Holdings' board of
          directors or at its general meeting of shareholders;

                                      46



      .   UFJ Holdings' board of directors approve any issuance by UFJ Holdings
          of new shares of any class, stock acquisition rights or bonds with
          stock acquisition rights;

      .   (i) any person or company owns more than one-third of UFJ Holdings'
          equity securities, or (ii) a tender offer for UFJ Holdings' equity
          securities is commenced and it has been confirmed in a public notice
          that the offeror and related persons have become owners of more than
          20% of UFJ Holdings' equity securities as a result of the tender
          offer; or

      .   the proposal for a statutory merger or other integration between us
          and UFJ Holdings is not approved at any meeting of the shareholders
          of any class of UFJ Holdings' shares (except if such proposal is also
          not approved at UFJ Holdings' general meeting of shareholders).

   (2) Restrictions on our ability to transfer the preferred shares. Neither we
       nor UFJ Holdings may, without the other's consent, transfer, pledge or
       otherwise dispose of any shares it holds of UFJ Bank to or in favor of
       any third party.

   (3) Our put option and UFJ Holdings' call option relating to the preferred
       shares. We will have the right to sell all of the preferred shares of
       UFJ Banks we hold:

      .   at a price equal to 130% of our acquisition price for the preferred
          shares if UFJ Holdings breaches certain of the representations and
          warranties, or any of its covenants or other obligations, under the
          September 10, 2004 basic agreement;

      .   at a price equal to our acquisition price for the preferred shares if
          any person or company owns more than one-third of UFJ Holdings'
          equity securities, or a tender offer commences and it has been
          confirmed in a public notice that the offeror and related persons
          have become owners of more than one-third of UFJ Holdings' equity
          securities as a result of the tender offer;

      .   at a price equal to our acquisition price for the preferred shares if
          the proposal for the integration between us and UFJ Holdings is not
          approved at two consecutive meetings of the holders of any class of
          UFJ Holdings' shares (except if such proposal is also not approved at
          UFJ Holdings' general meeting of shareholders); and

      .   at a price equal to 130% of our acquisition price for the preferred
          shares if the proposal submitted by the board of directors of UFJ
          Holdings in connection with the business integration between us and
          UFJ Holdings is not approved at UFJ Holdings' general meeting of
          shareholders to be held with respect to the fiscal year ending March
          31, 2005, and either (i) the proposal is not approved at UFJ
          Holdings' general meeting of shareholders to be held on or after
          October 1, 2005, or (ii) a proposal submitted by any person other
          than the board of directors of UFJ Holdings in connection with a
          business integration between UFJ Holdings and any company other than
          us is approved by UFJ Holdings' shareholders on or after October 1,
          2005. In this circumstance, UFJ Holdings will have the right to
          purchase, or to cause a company designated by UFJ Holdings to
          purchase, all of the preferred shares of UFJ Bank held by us at a
          price equal to 130% of our acquisition price for the preferred shares.

See "Item 3.D. Risk Factors--Risks Related to Our Business--The proposed
management integration with UFJ Holdings, Inc. and its subsidiaries and
affiliates may be delayed, materially altered or abandoned. In addition, we may
have difficulty integrating the operations of the UFJ Group."

Introduction of Our Integrated Business Groups

Effective April 1, 2004, we implemented a new integrated business group system,
which combines the operations of Bank of Tokyo-Mitsubishi and Mitsubishi Trust
Bank in the following three areas--Retail, Corporate, and Trust Assets.
Although this new measure did not change the legal entities of Mitsubishi Tokyo
Financial Group, Inc., Bank of Tokyo-Mitsubishi, and Mitsubishi Trust Bank, it
is intended to create more synergies by making collaboration of our subsidiary
banks more effective and efficient.

                                      47



Since the introduction was made subsequent to March 31, 2004, we did not
reclassify the business segment information for the fiscal years ended March
31, 2002, 2003 and 2004 to reflect this system in this Annual Report. For
further information regarding our integrated business groups, see "Item 4.B.
Business Overview."

Strategic Business and Capital Alliance between Mitsubishi Tokyo Financial
Group and ACOM

ACOM, a consumer finance company, and we reached an agreement on March 23, 2004
with respect to a strategic business and capital alliance in retail financial
services. The main elements of the business alliance will be undertaken by ACOM
and our subsidiary, Bank of Tokyo-Mitsubishi. As part of the capital alliance,
we acquired approximately 20.7 million ACOM shares for (Yen)137.9 billion in
April 2004. As a consequence of this acquisition, we own shares representing
15% of the voting rights in ACOM.

Legal Proceedings for Local Taxes

In October 2003, a number of banks, including our subsidiary banks, entered
into a settlement-at-court with the Tokyo Metropolitan Government and the Tokyo
Governor and withdrew their complaints regarding the Tokyo Metropolitan
Government's local tax on large banks. The settlement included (a) a revision
of the applicable tax rate to 0.9% from 3.0%, effective retroactive to the date
of the enactment of the local tax in the fiscal year ended March 31, 2001 and
(b) a refund representing the difference between the amount already paid by the
banks and the amount computed based on the newly enacted rate plus accrued
interest. As a result of this settlement, our subsidiary banks received an
aggregate tax refund plus accrued interest amounting to (Yen)42.0 billion.

Business Revitalization Plan of Mitsubishi Motors

On May 21, 2004, Mitsubishi Motors Corporation, or Mitsubishi Motors, announced
a business revitalization plan under which it aims to achieve positive ordinary
profit in the fiscal year ending March 2006 through sweeping business reforms.
At the request of Mitsubishi Motors, our bank subsidiaries Bank of
Tokyo-Mitsubishi and Mitsubishi Trust Bank, along with Mitsubishi Heavy
Industries, Ltd., Mitsubishi Corporation and other corporations, decided to
subscribe to a private placement of preferred shares with the view to helping
Mitsubishi Motors achieve the goals of its business revitalization plan. As a
result, Bank of Tokyo-Mitsubishi and Mitsubishi Trust Bank purchased an
aggregate of (Yen)50 billion of preferred shares and also conducted a
debt-for-equity swap relating to (Yen)130 billion aggregate principal amount of
loans previously extended to Mitsubishi Motors. For further information
regarding our transactions with Mitsubishi Motors, see note 33 to our
consolidated financial statements.

Notice Concerning Redemption of Our Class 1 Preferred Shares

On August 26, 2004, we announced that we will redeem 40,700 shares of the
81,400 issued shares of our class 1 preferred shares on a pro-rata basis at
(Yen)3 million per share on October 1, 2004, pursuant to the terms and
conditions for class 1 preferred shares set forth in our articles of
incorporation.

Diamond Computer Service to Become Our Wholly Owned Subsidiary

On August 26, 2004, we announced that Diamond Computer Service, Co. Ltd. will
become a wholly owned subsidiary of Mitsubishi Tokyo Financial Group, Inc. by
December 22, 2004 through a share exchange. The transaction is subject to
approval by Diamond Computer Service's shareholders and the relevant
authorities.

Further Integration of Investment Banking and Securities Businesses

After the creation of Mitsubishi Securities, we have been consolidating most of
our securities business and various areas of our investment banking business,
such as mergers and acquisitions, derivatives, corporate advisory and
securitization operations that were previously conducted through Bank of
Tokyo-Mitsubishi's investment banking and asset management business unit, into
Mitsubishi Securities.

                                      48



To further integrate our investment banking and securities businesses,
securities subsidiaries of Bank of Tokyo-Mitsubishi located in the United
States, Hong Kong and Singapore were transferred to Mitsubishi Securities
during the fiscal year ended March 31, 2004.

In addition, Tokyo-Mitsubishi International plc, a securities subsidiary of
Bank of Tokyo-Mitsubishi located in the United Kingdom, was transferred to
Mitsubishi Securities in July 2004 and subsequently renamed Mitsubishi
Securities International plc.

Planned Transfer to the Japanese Government of the Substitutional Portion of
Employee Pension Fund Liabilities

In June 2003, Bank of Tokyo-Mitsubishi submitted to the government an
application to transfer the obligation to pay benefits for future employee
services related to the substitutional portion in defined benefit pension plans
established under the Japanese Welfare Pension Insurance Law, and the
application was approved by the government in August 2003. Since the approval,
Bank of Tokyo-Mitsubishi has been making pension insurance payments to the
government and the government has assumed the benefit obligations arising from
future employee services. To complete the entire separation process, in August
2004 Bank of Tokyo-Mitsubishi made another application for transfer to the
government of the remaining substitutional portion related to the benefit
obligation for past services. Upon the approval of the second application, Bank
of Tokyo-Mitsubishi will transfer to a government agency its remaining
substitutional obligation and related pension plan assets, which amount will be
determined pursuant to a government formula, and in exchange will be released
from paying the remaining substitutional portion of the benefits to its
employees. For more detailed information of the transfer of pension fund
liabilities, see "Item 5.B. Liquidity and Capital Resources--Financial
Condition--Severance Indemnities and Pension Liabilities."

Dissolution of Mortgage Securities Subsidiary

In the fiscal year ended March 31, 2004, we completed the liquidation process
of our domestic mortgage securities subsidiary, The Diamond Mortgage Co., Ltd.
The dissolution was due to the adverse business environment for the domestic
mortgage securities business. For further information regarding our
discontinued operations, see note 2 to our consolidated financial statements.

Business Environment

We engage, through our subsidiaries and affiliated companies, in a wide range
of financial operations, including commercial banking, investment banking,
asset management, trust banking and securities-related businesses, and provide
related services to individual and corporate customers around the world. Our
results of operations and financial condition are exposed to changes in various
external economic factors, including:

..   General economic conditions;

..   Interest rates;

..   Currency exchange rates; and

..   Stock and real estate prices.

Economic Environment in Japan

The Japanese economy, our primary operating area, recently entered into a
recovery phase mainly due to an increase in exports and capital spending, as
well as improvements in employment and wages. The real gross domestic product
growth rate for the fiscal year ended March 31, 2004 was 3.2%, compared to a
1.2% decline for the fiscal year ended March 31, 2002 and a 1.1% increase for
the fiscal year ended March 31, 2003.

With respect to interest rates, short-term interest rates remained at near zero
percent as the Bank of Japan continued its policy to provide ample liquidity in
the money markets. The yield on 10-year government bonds, used as a

                                      49



benchmark for long-term interest rates, started in April 2003 at around 0.7%,
reached a record low of around 0.5% in June 2003, and finished in March 2004 at
around 1.4%. As of mid-September 2004, the yield was around 1.5%.

There was a significant recovery in stock prices, as exemplified by an
approximately 47% increase in the Nikkei Stock Average, an average of 225 blue
chip stocks listed on the Tokyo Stock Exchange, from (Yen)7,972.71 at March 31,
2003 to (Yen)11,715.39 at March 31, 2004. In addition, the Tokyo Stock Price
Index, or TOPIX, a composite index of all stocks listed on the First Section of
the Tokyo Stock Exchange, rose approximately 50% from 788.00 at March 31, 2003
to 1,179.23 at March 31, 2004. As of mid-September 2004, the Nikkei Stock
Average was around (Yen)11,200, and the TOPIX was around 1,100.

In the foreign exchange markets, the value of the yen against the U.S. dollar
generally appreciated during the fiscal year ended March 31, 2004. See "Item
3.A. Key Information--Selected Financial Data--Exchange Rate Information" for
the historical noon buying rates of the Federal Reserve Bank of New York.

Land prices in Japan continued to decline during the fiscal year ended March
31, 2004, but the extent of the decline was smaller than the previous fiscal
year. Based on the average government-set official land prices as of January 1,
2004, nationwide residential land prices declined 5.7%, compared to a 5.8%
decline in the previous fiscal year, and nationwide land prices for commercial
properties declined 7.4%, compared to a 8.0% decline in the previous fiscal
year.

The number of corporate bankruptcy filings during the fiscal year ended March
31, 2004 was around 15,000, representing a 17% decline compared to the previous
fiscal year.

International Financial Markets

In the beginning of the fiscal year ended March 31, 2004, the growth of
overseas economies slowed down due to the war in Iraq and the outbreak of the
SARS epidemic. However, overseas economies moved toward recovery later in the
fiscal year, particularly in the United States where a large-scale tax
reduction was implemented, and in the People's Republic of China where domestic
demand continued to increase.

In the United States, the 10-year U.S. treasury note, a benchmark for long-term
interest rates, started at around 3.9% in April 2003 and finished at around
3.8% in March 2004. As of mid-September 2004, the yield was around 4.2%. The
U.S. Federal Reserve decreased the federal funds rate by 0.25% to 1.00% in June
2003. Subsequent to March 31, 2004, the Federal Reserve raised the federal
funds rate by 0.25% respectively in June, August and September 2004 to 1.75%.

In the EU, the European Central Bank decreased its policy rate (refinancing
rate) by 0.50% to 2.00% in June 2003.

Critical Accounting Estimates

Our financial statements are prepared in accordance with US GAAP. Many of the
accounting policies require management to make difficult, complex or subjective
judgments regarding the valuation of assets and liabilities. The accounting
policies are fundamental to understanding our operating and financial review
and prospects. The notes to our consolidated financial statements provide a
summary of our significant accounting policies. The following is a summary of
the critical accounting estimates.

Allowance for Credit Losses

The allowance for credit losses represents management's estimate of probable
losses in our loan portfolio. The evaluation process involves a number of
estimates and judgments. The allowance is based on two principles of
accounting: (1) Statement of Financial Accounting Standards, or SFAS, No. 5,
"Accounting for Contingencies,"

                                      50



which requires that losses be accrued when they are probable of occurring and
can be estimated; and (2) SFAS No. 114, "Accounting by Creditors for Impairment
of a Loan" and SFAS No. 118, "Accounting by Creditors for Impairment of a
Loan--Income Recognition and Disclosures," which require that losses be accrued
based on the difference between the present value of expected future cash flows
discounted at the loan's effective interest rate, the fair value of collateral
or the loan's value that is observable in the secondary market and the loan
balance.

Our allowance for credit losses consists of an allocated allowance and an
unallocated allowance. The allocated allowance comprises (a) the allowance for
specifically identified problem loans, (b) the allowance for large groups of
smaller balance homogeneous loans, (c) the allowance for loans exposed to
specific country risk and (d) the formula allowance. Both the allowance for
loans exposed to specific country risk and formula allowance are provided to
performing loans, that are not subject to either the allowance for specifically
identified problem loans or the allowance for large groups of smaller balance
homogeneous loans. The allowance for loans exposed to specific country risk
covers transfer risk which is not specifically covered by other types of
allowance. Each of these components is determined based upon estimates that can
and do change when actual events occur.

The allowance for specifically identified problem loans, which represent
large-balance, non-homogeneous loans that have been individually determined to
be impaired, uses various techniques to arrive at an estimate of loss.
Historical loss information, discounted cash flows, fair value of collateral
and secondary market information are all used to estimate those losses.

Large groups of smaller balance homogeneous loans are collectively evaluated
for impairment, and the allowance for such loans is established through a
process that begins with estimates of probable losses inherent in the
portfolio, based upon various analyses, including historical delinquency and
credit loss experience.

The allowance for loans exposed to specific country risk is based on an
estimate of probable losses relating to our exposure to countries that we
identify as having a high degree of transfer risk. We use a country risk
grading system that assigns risk ratings to individual countries. To determine
the risk rating, we consider the instability of foreign currency and
difficulties regarding our borrowers' ability to service their debt.

The formula allowance uses a model based on historical losses as an indicator
of future probable losses and as a result could differ from losses incurred in
the future. However, since this history is updated with the most recent loss
information, the differences that might otherwise occur are mitigated.

Our actual losses could be more or less than the estimates. The unallocated
allowance captures losses that are attributable to various economic events,
industry or geographic sectors whose impact on the portfolio have occurred but
have yet to be recognized in the allocated allowance. For further information
regarding our allowance for credit losses, see "Item 5.B. Liquidity and Capital
Resources--Financial Condition--Allowance for Credit Losses, Nonperforming and
Past Due Loans."

In addition to the allowance for credit losses on our loan portfolio, we
maintain an allowance for credit losses on off-balance-sheet credit
instruments, including commitments to extend credit, a variety of guarantees
and standby letters of credit. Such allowance is included in other liabilities.
With regard to the allocated allowance for specifically identified credit
exposure and the allocated formula allowance, we apply the same methodology
that we use in determining the allowance for loan credit losses.

To the extent that actual losses differ from management's estimates, additional
provisions for credit losses may be required that would adversely impact our
operating results and financial condition in future periods.

Impairment of Investment Securities

US GAAP requires the recognition in earnings of an impairment loss on
investment securities for a decline in fair value that is other than temporary.
Determinations of whether a decline is other than temporary often involves
estimating the outcome of future events. Management judgment is required in
determining whether factors exist that indicate that an impairment loss has
been incurred at the balance sheet date. These judgments are based on
subjective as well as objective factors. We conduct a review semi-annually to
identify and evaluate investment securities that have indications of possible
impairment.

Debt and marketable equity securities. In determining whether a decline in fair
value is other than temporary for a particular security, indicators of an
other-than-temporary decline for both debt and marketable equity securities

                                      51



include the extent of decline in fair value below cost and the length of time
that the decline has continued. If a decline in fair value is 20% or more or a
decline in fair value has continued for six months or more, we generally deem
such decline as an indicator of other-than-temporary decline. We also consider
the financial condition and near-term prospects of issuers primarily based on
the credit standing of the issuers as determined by our credit rating system.

Prior to the fiscal year ended March 31, 2004, we did not take the lengths of
time that a decline continued into consideration with respect to debt
securities because a substantial majority of our investments in debt securities
are in high-grade fixed-rate bonds, including sovereign bonds such as U.S.
treasury bonds and we generally had the intent to hold such investments for a
period longer than that inherent in cyclical short-term market price
fluctuations due to market interest rate and foreign exchange rate changes.
However, in light of the recent decline in the bond market, which made it
difficult for us to hold debt securities for a period longer than that
necessary for recovery, during the fiscal year ended March 31, 2004, we
determined that the length of period that a decline in fair value continued
should be considered in identifying other-than temporary decline in fair value
of debt securities. The aggregate amount of unrealized losses at March 31, 2004
that we determined to be temporary was (Yen)54,707 million.

The determination of other-than-temporary impairment for certain securities
held by UnionBanCal Corporation, our U.S. subsidiary, which primarily consists
of securities backed by the full faith and credit of the U.S. government and
corporate asset-backed and debt securities, are made on the basis of a cash
flow analysis of securities and/or the ability of UnionBanCal Corporation to
hold such securities to maturity.
Non-marketable equity securities.  We consider the credit standing of issuers
and the extent of decline in net assets of issuers to determine whether the
decline is other than temporary. When we determine that the decline is other
than temporary, non-marketable equity securities are written down to our share
of the amount of the issuer's net assets, which approximates fair value.

The markets for equity securities and debt securities are inherently volatile,
and the values of both types of securities have fluctuated significantly in
recent years. Accordingly, our assessment of potential impairment involves
risks and uncertainties depending on the market condition. If we later conclude
that a decline is other than temporary, the impairment loss may significantly
affect our operating results and financial condition in future periods.

Valuation of Deferred Tax Assets

A valuation allowance for deferred tax assets is recognized if, based on the
weight of available evidence, it is more likely than not that some portion or
all of the deferred tax assets will not be realized. All available evidence,
both positive and negative, is considered to determine whether, based on the
weight of that evidence, a valuation allowance is needed. Future realization of
the tax benefit of existing deductible temporary differences or carryforwards
ultimately depends on the existence of sufficient taxable income in future
periods.

In determining a valuation allowance, we perform a review of future taxable
income (exclusive of reversing temporary differences and carryforwards) and
future reversals of existing taxable temporary differences. Due to losses in
recent years and continuing weak economic conditions, the determination of the
valuation allowance involves difficult judgments to estimate future taxable
income.

At March 31, 2004, we had operating loss carryforwards of (Yen)1,737.9 billion.
Future realization of the tax benefit of the carryforwards or existing
deductible temporary differences ultimately depends on the existence of
sufficient taxable income in future periods. Based on our estimates of future
taxable income, we recognized a valuation allowance for a portion of the
operating loss carryforwards.

Because the establishment of the valuation allowance is an inherently uncertain
process involving estimates, currently established allowance may not be
sufficient. If the estimated allowance is not sufficient, we will incur

                                      52



additional deferred tax expenses, which could materially affect our operating
results and financial condition in future periods.

Accounting for Goodwill

US GAAP requires us to test goodwill for impairment at least annually using a
two-step process that begins with an estimation of the fair value of a
reporting unit of our business, which is to be compared with the carrying
amount of the unit, to identify potential impairment of goodwill. The fair
value of a reporting unit is defined as the amount at which the unit as a whole
could be bought or sold in a current transaction between willing parties. Since
an observable quoted market price for units is not always available, the
estimate of fair value is based on the best information available, including
prices for comparable units and the results of using other valuation techniques
including the present value technique, which requires an estimate of future
cash flows and other assumptions. If the carrying amount of a reporting unit
exceeds its estimated fair value, the second step of the goodwill impairment
test is performed to measure the amount of impairment loss. This test requires
comparison of the implied fair value of the unit's goodwill with the carrying
amount of that goodwill. The estimate of the implied fair value of the
reporting unit's goodwill requires us to allocate the fair value of a reporting
unit to all of the assets and liabilities of that unit, including unrecognized
intangible assets, if any, since the implied fair value is determined as the
excess of the fair value of a reporting unit over the net amounts assigned to
its assets and liabilities in the allocation. Accordingly, the second step of
the impairment test also requires an estimate of the fair value of individual
assets and liabilities, including any unrecognized intangible assets that
belong to that unit. At March 31, 2004, we had goodwill of (Yen)56,690 million.

Accrued Severance Indemnities and Pension Liabilities

We have defined benefit retirement plans, including lump-sum severance
indemnities and pension plans, which cover substantially all of our employees.
Severance indemnities and pension costs are calculated based upon a number of
actuarial assumptions, including discount rates, expected long-term rates of
return on our plan assets and rates of increase in future compensation levels.
In accordance with US GAAP, actual results that differ from the assumptions are
accumulated and amortized over future periods, and affect our recognized net
periodic pension costs and accrued severance indemnities and pension
obligations in future periods. We had an unrecognized net actuarial loss for
domestic severance indemnities and pension plans of (Yen)353.8 billion at March
31, 2004. Differences in actual experience or changes in assumptions may affect
our financial condition and operating results in future periods.

The discount rates for the domestic plans are set to reflect the interest rates
of high-quality fixed-rate instruments with maturities that correspond to the
timing of future benefit payments.

In developing our assumptions for expected long-term rates of return, we refer
to the historical average returns earned by the plan assets and the rates of
return expected to be available for reinvestment of existing plan assets, which
reflect recent changes in trends and economic conditions, including market
price. We also evaluate input from our actuaries, including their reviews of
asset class return expectations.

Valuation of Financial Instruments with No Available Market Prices

Some assets and liabilities, including available-for-sale securities, trading
accounts and derivatives, are reflected at their estimated fair values in our
financial statements. Fair values for the substantial majority of our portfolio
of financial instruments with no available market prices are determined based
upon externally verifiable model inputs and quoted prices. All financial
models, which are used for independent risk monitoring, must be validated and
periodically reviewed by qualified personnel independent of the area that
created the model. The fair value of derivatives is determined based upon
liquid market prices evidenced by exchange-traded prices, broker-dealer
quotations or prices of other transactions with similarly rated counterparties.
If available, quoted market prices provide the best indication of value. If
quoted market prices are not available for fixed maturity securities and

                                      53



derivatives, we discount expected cash flows using market interest rates
commensurate with the credit quality and maturity of the investment.
Alternatively, we may use matrix or model pricing to determine an appropriate
fair value. In determining fair values, we consider various factors, including
time value, volatility factors and underlying options, warrants and derivatives.

Accounting Changes

Variable Interest Entities--In January 2003, the Financial Accounting Standards
Board, or the FASB, issued FASB Interpretation, or FIN, No. 46, "Consolidation
of Variable Interest Entities, an interpretation of ARB No. 51." FIN No. 46
addresses consolidation by business enterprises of variable interest entities,
or VIEs. The consolidation requirements of FIN No. 46 applied immediately to
VIEs created after January 31, 2003. The consolidation requirements applied to
older entities in the first fiscal year or interim period beginning after June
15, 2003.

In December 2003, the FASB issued FIN No. 46 (revised December 2003),
"Consolidation of Variable Interest Entities, an interpretation of ARB No. 51,"
or FIN No. 46R. FIN No. 46R modifies FIN No. 46 in certain respects including
the scope exception, the definition of VIEs, and other factors that would
affect the determination of VIEs and primary beneficiaries that consolidate
VIEs. FIN No. 46R applies to VIEs created before February 1, 2003 no later than
the end of the first reporting period that ends after March 15, 2004, and to
all special purpose entities no later than the first reporting period that ends
after December 15, 2003. Subsequent to the Issuance of FIN No. 46R, the SEC's
Chief Accountant confirmed in a letter to the American Institute of Certified
Public Accountants, or AICPA, dated March 3, 2004 that the SEC staff will not
object to the conclusion that FIN No. 46R need not be applied at a date earlier
than the original FIN 46 and that the reporting period in respect of which a
foreign private issuer would be required to apply FIN No. 46R would depend on
the entity's year-end and frequency of interim reporting. In accordance with
the letter, we intend to adopt FIN No. 46R for the fiscal year ending March 31,
2005. See note 25 to our consolidated financial statements for further
discussion on the VIEs in which we hold variable interests.

Accounting for Asset Retirement Obligation--Effective April 1, 2003, we adopted
SFAS No. 143, "Accounting for Asset Retirement Obligations." SFAS No. 143
addresses the financial accounting and reporting of obligations associated with
the retirement of tangible long-lived assets and the associated asset
retirement costs. SFAS No. 143 applies to the legal obligations associated with
the retirement of long-lived assets that result from the acquisition,
construction, development, and/or the normal operation of a long-lived asset. A
legal obligation is an obligation that a party is required to settle as a
result of an existing or enacted law, statute, ordinance, or written or oral
contract, or by legal construction of a contract under the doctrine of
promissory estoppel. The adoption of SFAS No. 143 did not have a material
impact on our financial position or results of operations.

Certain Financial Instruments with Characteristics of both Liabilities and
Equity--In May 2003, the FASB issued SFAS No. 150, "Accounting for Certain
Financial Instruments with Characteristics of both Liabilities and Equity."
SFAS No. 150 establishes standards for how an issuer classifies and measures
certain financial instruments with characteristics of both liabilities and
equity. SFAS No. 150 is effective for financial instruments entered into or
modified after May 31, 2003, and otherwise is effective at the beginning of the
first interim period beginning after June 15, 2003, which is our fiscal year
ending March 31, 2005. On November 7, 2003, FASB Staff Position No. 150-3,
"Effective Date, Disclosures, and Transition for Mandatorily Redeemable
Financial Instruments of Certain Nonpublic Entities and Certain Mandatorily
Redeemable Noncontrolling Interests under FASB Statement No. 150, Accounting
for Certain Financial Instruments with Characteristics of Both Liabilities and
Equity," delayed the effective date of certain provisions of SFAS No. 150 for
certain mandatorily redeemable noncontrolling interests.

We are not a party to any financial instruments entered into or modified after
May 31, 2003, to which SFAS No. 150 must be applied immediately, but we have
not completed evaluating the impact of the adoption of SFAS No. 150 to other
instruments. Accordingly, we cannot currently reasonably estimate the ultimate
impact of SFAS No. 150 on our financial position or results of operations.

                                      54



Disclosure about pension and other postretirement benefit--In December 2003,
the FASB issued SFAS No. 132 (revised 2003), "Employers' Disclosures about
Pensions and Other Postretirement Benefits, an amendment of FASB Statements No.
87, 88, and 106," or SFAS No. 132R, which replaces existing FASB disclosure
requirements for pensions. SFAS No. 132R requires disclosure of more details
about plan assets, benefit obligations, cash flows, benefit costs and other
relevant information. SFAS No. 132R is generally effective for the fiscal years
ended after December 15, 2003, and for interim periods beginning after December
15, 2003. See note 16 to our consolidated financial statements for the required
disclosure.

Impairment of securities investments--In November 2003, the FASB Emerging
Issues Task Force, or the EITF, reached a consensus on Issue No. 03-1, "The
Meaning of Other-Than-Temporary Impairment and Its Application to Certain
Investments," or EITF 03-1. EITF 03-1 requires certain additional quantitative
and qualitative disclosures in addition to the disclosures already required by
SFAS No. 115, "Accounting for Certain Investments in Debt and Equity
Securities." The new disclosure requirements are applied to financial
statements for the fiscal years ended after December 15, 2003. See note 4 to
our consolidated financial statements for the required disclosure. In March
2004, the EITF also reached a consensus on additional accounting guidance for
other-than-temporary impairments, which requires an evaluation and recognition
of other-than-temporary impairment by a three-step impairment test. The
guidance should be applied for reporting periods beginning after June 15, 2004.
We have not completed the determination as to the effect of the guidance on our
financial position or results of operations.

Guarantor's Accounting and Disclosure Requirements for Guarantees--Effective
January 1, 2003, we adopted the initial recognition and measurement provisions
of FIN No. 45, "Guarantor's Accounting and Disclosure Requirements for
Guarantees, Including Indirect Guarantees of Indebtedness of Others, an
interpretation of FASB Statements No. 5, 57, and 107 and rescission of FASB
interpretation No. 34," which requires that, for guarantees within the scope of
FIN No. 45 issued or amended after December 31, 2002, a liability for the fair
value of the obligation undertaken in issuing the guarantee be recognized. The
adoption of FIN No. 45 did not have a material impact on our financial position
or results of operations.

Costs Associated with Exit or Disposal Activities--In June 2002, the FASB
issued SFAS No. 146, "Accounting for Costs Associated with Exit or Disposal
Activities." SFAS No. 146 is effective for exit or disposal activities that are
initiated after December 31, 2002. This statement addresses financial
accounting and reporting for costs associated with exit or disposal activities
and nullifies EITF Issue No. 94-3, "Liability Recognition for Certain Employee
Termination Benefits and Other Costs to Exit an Activity (including Certain
Costs Incurred in a Restructuring)." The adoption of SFAS No. 146 did not have
a material impact on our financial position or results of operations.

Goodwill and Other Intangible Assets--Effective April 1, 2002, we adopted SFAS
No. 142, "Goodwill and Other Intangible Assets." SFAS No. 142 requires that
goodwill, formerly amortized over its useful life, no longer be amortized and
be tested for impairment at least annually. Further, SFAS No. 142 requires that
intangible assets that have finite useful lives will continue to be amortized
over their useful lives while intangible assets with indefinite lives will no
longer be amortized and are subject to impairment testing at least annually.

We performed the required transitional impairment tests of goodwill and
intangible assets with indefinite lives upon adoption of SFAS No. 142. The
initial adoption resulted in a cumulative adjustment charge to earnings of
(Yen)532 million for the fiscal year ended March 31, 2003.

Derivative Instruments and Hedging Activities--In April 1, 2001, we adopted
SFAS No. 133, "Accounting for Derivative Instruments and Hedging Activities,"
as amended by SFAS No. 137 and SFAS No. 138. SFAS No. 133 requires that all
derivatives, whether designated as a hedge or not, be recorded on the balance
sheet at fair value. SFAS No. 133 also requires that derivative instruments
used to hedge be identified specifically to assets, liabilities, firm
commitments or anticipated transactions and be expected to remain effective
throughout the life of the hedge. Derivative instruments that do not qualify as
either a fair value hedge or cash flow hedge

                                      55



are valued at fair value and classified as trading account assets or
liabilities with the resultant gain or loss recognized in current earnings. The
cumulative effect of the change in accounting principle, net of tax, was to
increase net income by (Yen)5,867 million and other changes in equity from
nonowner sources by (Yen)1,257 million, respectively, for the fiscal year ended
March 31, 2002.

In April 2003, the FASB issued SFAS No. 149, "Amendment of Statement 133 on
Derivative Instruments and Hedging Activities." SFAS No. 149 amends and
clarifies accounting for derivative instruments, including certain derivative
instruments embedded in other contracts, and for hedging activities under SFAS
No. 133. In particular, SFAS No. 149 (1) clarifies under what circumstances a
contract with an initial net investment meets the characteristics of a
derivative, (2) clarifies when a derivative contains a financing component that
warrants special reporting in the statement of cash flows, (3) amends the
definition of underlyings, one of the components of the three characteristics
of a derivative instrument, to include the occurrence or non-occurrence of a
specified event such as a scheduled payment under a contract, and (4) amends
certain other existing pronouncements, in particular, those related to the
scope of instruments that are subject to the requirements of SFAS No. 133. SFAS
No. 149 is generally effective for contracts entered into or modified after
June 30, 2003. The adoption of SFAS No. 149 did not have a material impact on
our financial position or results of operations.

Recently Issued Accounting Pronouncements

Transfer to the Japanese Government of the Substitutional Portion of Employee
Pension Fund Liabilities--In January 2003, the EITF reached a consensus on
Issue No. 03-2, "Accounting for the Transfer to the Japanese Government of the
Substitutional Portion of Employee Pension Fund Liabilities," or EITF 03-2,
which was ratified by the FASB in February 2003. EITF 03-2 addresses accounting
for a transfer to the Japanese government of a substitutional portion of an
employee pension fund and requires employers to account for the entire
separation process of a substitutional portion from an entire plan upon
completion of the transfer to the government of the substitutional portion of
the benefit obligation and related plan assets as the culmination of a series
of steps in a single settlement transaction. It also requires that the
difference between the fair value of the obligation and the assets required to
be transferred to the government, if any, should be accounted for as a subsidy
from the government, separately from gain or loss on settlement of the
substitutional portion of the obligation, upon completion of the transfer.

As noted in "--Recent Developments--Planned Transfer to the Japanese Government
of the Substitutional Portion of Employee Pension Fund Liabilities," in June
2003, Bank of Tokyo-Mitsubishi submitted to the government an application to
transfer the obligation to pay benefits for future employee service related to
the substitutional portion and the application was approved in August 2003. To
complete the entire separation process, in August 2004, Bank of
Tokyo-Mitsubishi made another application for transfer to the government of the
remaining substitutional portion, but the timing of the approval is not known
yet. Upon completion of the separation, the substitutional obligation and
related plan assets will be transferred to a government agency, and Bank of
Tokyo-Mitsubishi will be released from paying the substitutional portion of the
benefits to its employees. The impact on our consolidated financial statements
of the transfer accounted for in accordance with EITF 03-2 is not known and
cannot be reasonably estimated until the completion of the transfer.

Loans and Debt Securities Acquired in a Transfer--In December 2003, the AICPA
issued Statement of Position 03-3, "Accounting for Certain Loans or Debt
Securities Acquired in a Transfer," or SOP 03-3, which supersedes AICPA
Practice Bulletin 6, "Amortization of Discounts on Certain Acquired Loans" and
addresses accounting for differences between contractual cash flows and cash
flows expected to be collected from an investor's initial investment in loans
or debt securities acquired in a transfer if those differences are
attributable, at least, in part, to credit quality. SOP 03-3 limits accretable
yield to the excess of the investor's estimate of undiscounted cash flows over
the investor's initial investment in the loan and prohibits the recognition of
the non-accretable difference. Under SOP 03-3, subsequent increases in cash
flows expected to be collected generally should be recognized prospectively
through adjustment of the loan's yield over its remaining life while any
decreases in

                                      56



cash flows expected to be collected should be recognized as impairments. SOP
03-3 also provides guidance with regard to presentation and disclosures.

SOP 03-3 is effective for loans acquired in the fiscal years beginning after
December 15, 2004. We have not completed our assessment of the impact of SOP
03-3 on our financial position or results of operations.

Results of Operations

The following table sets forth a summary of our results of operations for the
fiscal years ended March 31, 2002, 2003 and 2004:



                                                                                    Fiscal years ended March 31,
                                                                              ----------------------------------------
                                                                                  2002          2003          2004
                                                                              ------------  ------------  ------------
                                                                                            (in billions)
                                                                                                 
Interest income.............................................................. (Yen)2,013.8  (Yen)1,582.7  (Yen)1,422.0
Interest expense.............................................................        938.2         539.2         426.5
                                                                              ------------  ------------  ------------
Net interest income..........................................................      1,075.6       1,043.5         995.5
                                                                              ------------  ------------  ------------
Provision (credit) for credit losses.........................................        598.4         438.0        (114.1)
Non-interest income..........................................................        361.6         839.8       1,306.6
Non-interest expense.........................................................      1,161.3       1,182.4       1,236.1
                                                                              ------------  ------------  ------------
Income (loss) from continuing operations before income tax expense (benefit)
  and cumulative effect of a change in accounting principle..................       (322.5)        262.9       1,180.1
Income tax expense (benefit).................................................        (98.9)         69.4         357.3
                                                                              ------------  ------------  ------------
Income (loss) from continuing operations before cumulative effect of a change
  in accounting principle....................................................       (223.6)        193.5         822.8
Income (loss) from discontinued operations--net..............................          1.2          10.3          (0.6)
Cumulative effect of a change in accounting principle, net of tax............          5.9          (0.5)           --
                                                                              ------------  ------------  ------------
Net income (loss)............................................................ (Yen) (216.5) (Yen)  203.3  (Yen)  822.2
                                                                              ============  ============  ============


We reported (Yen)822.2 billion of net income for the fiscal year ended March
31, 2004, compared to (Yen)203.3 billion of net income for the fiscal year
ended March 31, 2003. Our basic earnings per common share (net income available
to common shareholders) for the fiscal year ended March 31, 2004 was
(Yen)128,231.00 compared to an earnings per share of (Yen)33,963.40 for the
fiscal year ended March 31, 2003. Income from continuing operations before
income tax expense and cumulative effect of a change in accounting principle
for the fiscal year ended March 31, 2004 was (Yen)1,180.1 billion, compared
with (Yen)262.9 billion for the fiscal year ended March 31, 2003. The changes
in our operating results were primarily attributable to the following:

..   The reversal of allowance for credit losses of (Yen)114.1 billion was
    recorded for the fiscal year ended March 31, 2004, compared with provision
    for credit losses of (Yen)438.0 billion for the fiscal year ended March 31,
    2003. The reversal of allowance for credit losses was due mainly to
    improvement of our loan portfolio as evidenced by the reduction in our
    nonperforming and impaired loans through various measures including the
    disposal of nonperforming loans, and improving credit status of borrowers
    in Japan in general as evidenced by the decreased number of bankruptcy
    filings during the fiscal year ended March 31, 2004.

..   Non-interest income increased (Yen)466.8 billion from (Yen)839.8 billion
    for the fiscal year ended March 31, 2003 to (Yen)1,306.6 billion for the
    fiscal year ended March 31, 2004. This increase was primarily attributable
    to an increase of (Yen)388.3 billion in net foreign exchange gains
    reflecting the appreciation of the yen against foreign currencies, and to
    net investment securities gains of (Yen)118.6 billion compared to net
    investment securities losses of (Yen)21.6 billion for the fiscal year ended
    March 31, 2003 mainly due to the improvement in the Japanese stock market.
    Refund of local taxes by the Tokyo Metropolitan Government also contributed
    to the

                                      57



  increase in non-interest income. These increases were partially offset by a
   decrease of (Yen)163.7 billion in net trading account profits, primarily due
   to the rise in long-term interest rates in Japan.

These favorable changes were partially offset by a decrease of (Yen)48.0
billion in net interest income due primarily to a decline in the average
interest rate spread.

Net Interest Income

Net interest income is a function of:

..   the amount of interest-earning assets;

..   the so-called "spread," or the difference between the rate of interest
    earned on interest-earning assets and the rate of interest paid on
    interest-bearing liabilities;

..   the general level of interest rates; and

..   the proportion of interest-earning assets financed by non-interest-bearing
    liabilities and equity.

Our net interest income for the fiscal years ended March 31, 2002, 2003 and
2004 were not materially affected by gains or losses resulting from derivative
financial instruments used for hedging purposes.

The following is a summary of the interest rate spread for the fiscal years
ended March 31, 2002, 2003 and 2004:



                                              Fiscal years ended March 31,
                           ------------------------------------------------------------------
                                   2002                  2003                   2004
                           --------------------  --------------------  ----------------------
                              Average    Average    Average    Average     Average     Average
                              balance     rate      balance     rate       balance      rate
                           ------------- ------- ------------- ------- --------------- -------
                                            (in billions, except percentages)
                                                                     
Interest-earning assets:
   Domestic............... (Yen)59,700.3  1.36%  (Yen)62,623.1  1.19%  (Yen)  67,541.7  1.06%
   Foreign................      25,362.6  4.73        23,641.9  3.55          23,325.8  3.03
                           -------------         -------------         ---------------
       Total.............. (Yen)85,062.9  2.37%  (Yen)86,265.0  1.83%  (Yen)  90,867.5  1.56%
                           =============         =============         ===============
Financed by:
Interest-bearing funds:
   Domestic............... (Yen)61,089.7  0.53%  (Yen)64,827.9  0.34%  (Yen)  70,151.1  0.31%
   Foreign................      17,593.5  3.50        14,830.5  2.13          14,823.9  1.41
                           -------------         -------------         ---------------
       Total..............      78,683.2  1.19        79,658.4  0.68          84,975.0  0.50
Non-interest-bearing funds       6,379.7    --         6,606.6    --           5,892.5    --
                           -------------         -------------         ---------------
   Total.................. (Yen)85,062.9  1.11%  (Yen)86,265.0  0.62%  (Yen)  90,867.5  0.46%
                           =============         =============         ===============
Spread on:
   Interest-bearing funds.                1.18%                 1.15%                   1.06%
   Total funds............                1.26%                 1.21%                   1.10%


    Fiscal Year Ended March 31, 2004 Compared to Fiscal Year Ended March 31,
2003

Net interest income for the fiscal year ended March 31, 2004 was (Yen)995.5
billion, a decrease of (Yen)48.0 billion, or 4.6%, from (Yen)1,043.5 billion
for the fiscal year ended March 31, 2003. This decrease was due primarily to a
decline in the average interest rate spread. In addition, a decrease in average
foreign loans, which earn relatively higher yields, contributed to the decrease
in net interest income.

The average interest rate spread decreased 9 basis points from 1.15% for the
fiscal year ended March 31, 2003 to 1.06% for the fiscal year ended March 31,
2004. The average rate of both the foreign interest-earning assets and

                                      58



foreign interest-bearing liabilities declined during the fiscal year ended
March 31, 2004, primarily due to the decline in short-term interest rates in
most foreign markets. Since the average balance of foreign interest-earning
assets for the fiscal year ended March 31, 2004 was about 1.6 times larger than
the average balance of foreign interest-bearing liabilities for the same
period, the decline in the average rate had a negative effect on our net
interest income.

Net interest income as a percentage of average total interest-earning assets
decreased 11 basis points from 1.21% for the fiscal year ended March 31, 2003
to 1.10% for the fiscal year ended March 31, 2004.

The increase in average interest-earning assets for the fiscal year ended March
31, 2004 was primarily attributable to increases in average trading account
assets, average investment securities and average call loans, funds sold, and
receivables under resale agreements and securities borrowing transactions,
which yield relatively low rate of interest income. These increases were
partially offset by decreases in average interest-earning deposits and average
loans, which yield relatively high rate of interest income. The shift in
investment from relatively high yielding assets to low yielding assets more
than offset an increase in average interest-earning assets and had a negative
impact on interest income.

The increase in average interest-bearing liabilities for the fiscal year ended
March 31, 2004 primarily reflected an increase in average call money, funds
purchased, and payables under repurchase agreements and securities lending
transactions, average deposits and average other short-term borrowings and
trading account liabilities.

    Fiscal Year Ended March 31, 2003 Compared to Fiscal Year Ended March 31,
2002

Net interest income for the fiscal year ended March 31, 2003 was (Yen)1,043.5
billion, a decrease of (Yen)32.1 billion, or 3.0%, from (Yen)1,075.6 billion
for the fiscal year ended March 31, 2002. This decrease was due primarily to a
decline in the average interest rate spread in the further declining interest
rate environment. The decline in interest rate spread more than offset the
impact of a net increase in average interest-earning assets.

The average interest rate spread decreased 3 basis points from 1.18% for the
fiscal year ended March 31, 2002 to 1.15% for the fiscal year ended March 31,
2003. Net interest income as a percentage of average total interest-earning
assets decreased 5 basis points from 1.26% for the fiscal year ended March 31,
2002 to 1.21% for the fiscal year ended March 31, 2003.

Average interest-earning assets for the fiscal year ended March 31, 2003 was
(Yen)86,265.0 billion, an increase of (Yen)1,202.1 billion, or 1.4%, from
(Yen)85,062.9 billion for the fiscal year ended March 31,2002. This increase
was principally attributable to an increase of (Yen)2,689.7 billion in average
investment securities, partially offset by decreases in average
interest-earning deposits, average call loans, funds sold, and receivables
under resale agreements and securities borrowing transactions. The increase in
average investment securities was attributable primarily to increases in
Japanese government and foreign bonds, including U.S. treasury bonds, and
reflected few viable investment options due to the extremely low rates of
return in Japan. The average of interest-bearing liabilities for the fiscal
year ended March 31, 2003 was (Yen)79,658.4 billion, an increase of (Yen)975.2
billion, or 1.2%, from (Yen)78,683.2 billion for the fiscal year ended March
31, 2002. This increase was principally attributable to an increase in average
domestic deposits, which was primarily comprised of average demand deposits,
partly offset by a decrease in average debentures and a decrease in average
short-term funds in money markets, such as call money and funds purchased, and
payables under repurchase agreements.

Provision (Credit) for Credit Losses

Provision (credit) for credit losses are charged to operations to maintain the
allowance for credit losses at a level deemed appropriate by management. For a
description of the approach and methodology used to establish the allowance for
credit losses, see "Item 5.B. Liquidity and Capital Resources--Financial
Condition--Allowance for Credit Losses, Nonperforming and Past Due Loans."

                                      59



    Fiscal Year Ended March 31, 2004 Compared to Fiscal Year Ended March 31,
2003

A reversal of allowance for credit losses of (Yen)114.1 billion was recorded
for the fiscal year ended March 31, 2004, compared with a provision for credit
losses of (Yen)438.0 billion for the fiscal year ended March 31, 2003. This
change was due mainly to a decrease in our specific allowance as a result of
our reduction of nonperforming loans and a decrease in our formula allowance
reflecting a decline in loans classified as special mention or substandard. For
a further discussion of the allowance for credit losses, see "Item 5.B.
Liquidity and Capital Resources--Financial Condition--Allowance for Credit
Losses, Nonperforming and Past Due Loans."

    Fiscal Year Ended March 31, 2003 Compared to Fiscal Year Ended March 31,
2002

The provision for credit losses for the fiscal year ended March 31, 2003 was
(Yen)438.0 billion, representing a decrease of (Yen)160.4 billion from
(Yen)598.4 billion for the fiscal year ended March 31, 2002. This decrease was
attributable primarily to a decrease in the impairment allowance of (Yen)401.9
billion from (Yen)1,296.3 billion at March 31, 2002 to (Yen)894.4 billion at
March 31, 2003, which reflected a decrease of (Yen)1,426.0 billion in impaired
loans during the fiscal year ended March 31, 2003.

Non-Interest Income

The following table is a summary of our non-interest income for the fiscal
years ended March 31, 2002, 2003 and 2004:



                                                                   Fiscal years ended March 31,
                                                               -------------------------------------
                                                                  2002*        2003*        2004
                                                               -----------  ----------  ------------
                                                                           (in billions)
                                                                               
Fees and commissions:
   Trust fees................................................. (Yen) 123.6  (Yen)103.8  (Yen)   90.0
   Fees on funds transfer and service charges for collections.        58.1        58.1          59.8
   Fees and commissions on international business.............        53.5        54.5          53.8
   Fees and commissions on credit card business...............        45.0        57.1          60.5
   Service charges on deposits................................        29.8        34.6          36.2
   Fees and commissions on securities business................        52.7        68.0          99.0
   Other fees and commissions.................................       123.3       144.7         173.4
                                                               -----------  ----------  ------------
          Total...............................................       486.0       520.8         572.7
Foreign exchange gains (losses)--net..........................      (333.0)       25.6         413.9
Trading account profits--net..................................       138.5       267.6         103.9
Investment securities gains (losses)--net.....................        20.6       (21.6)        118.6
Refund of the local taxes by the Tokyo Metropolitan Government          --          --          42.0
Other non-interest income.....................................        49.5        47.4          55.5
                                                               -----------  ----------  ------------
       Total non-interest income.............................. (Yen) 361.6  (Yen)839.8  (Yen)1,306.6
                                                               ===========  ==========  ============

--------
*  Reclassified to conform to the presentation for the fiscal year ended March
   31, 2004.

Net foreign exchange gains (losses) primarily include net gains (losses) on
currency derivative instruments entered into for trading purposes and
transaction gains (losses) on the translation into Japanese yen of monetary
assets and liabilities denominated in foreign currencies. The transaction gains
(losses) on the translation into Japanese yen fluctuate from period to period
depending upon the spot rates at the end of each fiscal year. This is primarily
because the transaction gains (losses) on translation of securities available
for sale, such as bonds denominated in foreign currencies, are not included in
current earnings, but are reflected in other changes in equity from nonowner
sources, while in principle all transaction gains (losses) on translation of
monetary liabilities denominated in foreign currencies are included in current
earnings.

                                      60



Net trading account profits primarily include net gains (losses) on trading
securities and interest rate derivative instruments entered into for trading
purposes. Trading account assets or liabilities are carried at fair value and
any changes in the value of trading account assets or liabilities, including
interest rate derivatives, are recorded in net trading account profits.
Derivative instruments for trading purposes also include those used as hedges
of net exposures rather than for specifically identified assets or liabilities,
which do not meet the specific criteria for hedge accounting.

Net investment securities gains (losses) primarily include net gains on sales
of marketable securities, particularly marketable equity securities. In
addition, impairment losses are recognized as an offset of net investment
securities gains when management concludes that declines in fair value of
investment securities are other than temporary.

    Fiscal Year Ended March 31, 2004 Compared to Fiscal Year Ended March 31,
2003

Non-interest income for the fiscal year ended March 31, 2004 was (Yen)1,306.6
billion, an increase of (Yen)466.8 billion, or 55.6%, from (Yen)839.8 billion
for the fiscal year ended March 31, 2003. This increase was primarily
attributable to an increase in net foreign exchange gains of (Yen)388.3 billion
and an increase in net investment securities gains of (Yen)140.2 billion. These
gains were partially offset by a decrease in net trading account profits of
(Yen)163.7 billion.

Fees and commissions for the fiscal year ended March 31, 2004 increased
(Yen)51.9 billion from the previous fiscal year. This increase primarily
reflected an increase in fees and commissions on securities business, of which
(Yen)26.5 billion was due to an increase in fees earned by Mitsubishi
Securities. This increase was mainly because only seven months of fees and
commissions generated by Mitsubishi Securities were recorded for the previous
fiscal year, while its fees and commissions for twelve months were recorded for
the fiscal year ended March 31, 2004. In addition, fees and commissions on
securities business in Mitsubishi Securities increased for the fiscal year
ended March 31, 2004, primarily due to an increase in equity-related
commissions, which was in line with increased trading volume of the Japanese
stock markets in general during the same period. Other factors contributing to
the increase in other fees and commissions included expanding fee businesses
such as agency fees earned on the sale of annuities to individual customers at
branches of our subsidiary banks which act as sales agents for insurance
companies, and fees from investment banking activities in our subsidiary banks.
These increases were partially offset by a decrease in trust fees of (Yen)13.8
billion, which resulted primarily due to a decrease in fee income earned on
loan trust.

Net trading account profits for the fiscal year ended March 31, 2004 were
(Yen)103.9 billion, a decrease of (Yen)163.7 billion, or 61.2%, from (Yen)267.6
billion for the fiscal year ended March 31, 2003. The net trading account
profits for the fiscal years ended March 31, 2003 and 2004 consisted of the
following:



                                                                                       Fiscal years ended March 31,
                                                                                       ---------------------------
                                                                                           2003          2004
                                                                                        ----------    ----------
                                                                                           (in billions)
                                                                                               
Net profits (losses) on derivative instruments, primarily interest-rate futures, swaps
  and options......................................................................... (Yen)254.9    (Yen) (2.0)
Net profits on trading securities.....................................................       12.7         105.9
                                                                                        ----------    ----------
   Net trading account profits........................................................ (Yen)267.6    (Yen)103.9
                                                                                        ==========    ==========


Profits (losses) on derivative instruments were largely affected by the impact
of the rise in Japanese long-term interest rates on interest rate swaps
principally held for risk management purposes. Although such contracts were
entered into for risk management purposes, a majority of them did not meet the
conditions to qualify for hedge accounting under US GAAP and thus were
accounted for as trading positions.

For the fiscal year ended March 31, 2004, we generally maintained net
receive-fix and pay-variable positions in our interest rate swap portfolios for
the purpose of managing interest rate risks on domestic deposits, and our

                                      61



interest rate swap positions resulted in losses in value in a rising Japanese
long-term interest rate environment during the fiscal year ended March 31,
2004. The decrease in net profits on derivative instruments of (Yen)256.9
billion was partially offset by an increase in net profits on trading
securities of (Yen)93.2 billion, primarily reflecting improved performance of
trading in debt and equity securities at Mitsubishi Securities supported by
high interest rate volatility and improvements in the Japanese stock markets
during the fiscal year ended March 31, 2004.

Net foreign exchange gains for the fiscal year ended March 31, 2004 were
(Yen)413.9 billion, an increase of (Yen)388.3 billion from (Yen)25.6 billion
for the fiscal year ended March 31, 2003. The increase in net foreign exchange
gains primarily reflected an increase in transaction gains on translation of
monetary liabilities denominated in foreign currencies due to the appreciation
of the yen. All transaction gains or losses on translation of monetary
liabilities denominated in foreign currencies are included in current earnings.
However, the transaction gains or losses on translation of securities available
for sale, such as bonds denominated in foreign currencies, are not included in
current earnings but are reflected in other changes in equity from nonowner
sources.

Net investment securities gains for the fiscal year ended March 31, 2004 were
(Yen)118.6 billion, an increase of (Yen)140.2 billion, from a loss of (Yen)21.6
billion for the fiscal year ended March 31, 2003. Major components of net
investment securities gains for the fiscal years ended March 31, 2003 and 2004
are summarized below:



                                                          Fiscal years ended March 31,
                                                          ----------------------------
                                                              2003           2004
                                                           -----------   -----------
                                                                (in billions)
                                                                   
Net gains on sales of marketable equity securities....... (Yen) 170.5    (Yen) 371.2
Impairment losses on marketable equity securities........      (352.4)         (15.4)
Other--net, principally gains (losses) on debt securities       160.3         (237.2)
                                                           -----------   -----------
   Net investment securities gains (losses).............. (Yen) (21.6)   (Yen) 118.6
                                                           ===========   ===========


The increase in net investment securities gains during the fiscal year ended
March 31, 2004 reflected the improvement in the Japanese stock market, as net
gains on sales of marketable equity securities increased and impairment losses
on marketable equity securities decreased compared to the previous fiscal year.
These gains were partially offset by losses on debt securities, which were
mainly due to impairment losses on Japanese government bonds, reflecting the
rise in long-term interest rates in Japan.

Non-interest income also increased due to the refund of the local taxes by the
Tokyo Metropolitan Government of (Yen)42.0 billion in October 2003. For further
information regarding this refund, see "--Recent Developments--Legal
Proceedings for Local Taxes."

    Fiscal Year Ended March 31, 2003 Compared to Fiscal Year Ended March 31,
2002

Non-interest income for the fiscal year ended March 31, 2003 was (Yen)839.8
billion, an increase of (Yen)478.2 billion, or 132.2%, from (Yen)361.6 billion
for the fiscal year ended March 31, 2002. This increase was attributable to an
increase in fees and commissions of (Yen)34.8 billion, net foreign exchange
gains of (Yen)25.6 billion compared to net foreign exchange losses of
(Yen)333.0 billion for the fiscal year ended March 31, 2002, and an increase in
net trading account profits of (Yen)129.1 billion.

Fees and commissions for the fiscal year ended March 31, 2003 were (Yen)520.8
billion, an increase of (Yen)34.8 billion, or 7.2%, from (Yen)486.0 billion for
the fiscal year ended March 31, 2002. This increase primarily reflected an
increase of (Yen)21.4 billion in other fees and commissions and an increase of
(Yen)15.3 billion in fees and commissions on securities business. In other fees
and commissions for the fiscal year ended March 31, 2003, (Yen)2.8 billion in
fees and commissions were newly earned in connection with our insurance
brokerage activities. An increase of (Yen)3.4 billion in fees and commissions
at UnionBanCal Corporation also contributed to the increase in other fees and
commissions. Fees and commissions on securities business for the fiscal year
ended March 31, 2003

                                      62



included (Yen)19.4 billion of fees and commissions of Mitsubishi Securities,
which became our consolidated subsidiary on September 1, 2002. These increases
were partly offset by a decrease of (Yen)19.8 billion, or 16.0%, in trust fees.
The decrease in trust fees primarily reflected a decrease in fee income for
administration services as a result of the transfer of certain trust assets to
The Master Trust Bank of Japan, Ltd., an equity investee, in May 2002.

Net trading account profits for the fiscal year ended March 31, 2003 were
(Yen)267.6 billion, an increase of (Yen)129.1 billion, or 93.3%, from
(Yen)138.5 billion for the fiscal year ended March 31, 2002. The net trading
account profits for the fiscal years ended March 31, 2002 and 2003 consisted of
the following:



                                                                        Fiscal years ended March 31,
                                                                        ----------------------------
                                                                           2002           2003
                                                                         ----------     ----------
                                                                            (in billions)
                                                                                 
Net profits on derivative instruments, primarily interest-rate futures,
  swaps and options.................................................... (Yen)149.3     (Yen)254.9
Net profits (losses) on trading securities.............................      (10.8)          12.7
                                                                         ----------     ----------
   Net trading account profits......................................... (Yen)138.5     (Yen)267.6
                                                                         ==========     ==========


The increase in net profits on derivative instruments was due primarily to an
increase in net profits on interest rate swaps and interest rate options. In
particular, in order to manage interest rate risks on domestic deposits, we had
net receive-fix and pay-variable positions in our interest rate swap
portfolios. These portfolios gained in value in a declining interest rate
environment.

The net profits on trading securities for the fiscal year ended March 31, 2003
were (Yen)12.7 billion, compared to net losses of (Yen)10.8 billion for the
fiscal year ended March 31, 2002. This improvement in trading securities
transactions primarily reflected net profits on trading of foreign bonds.

Net foreign exchange gains for the fiscal year ended March 31, 2003 were
(Yen)25.6 billion, compared to net foreign exchange losses of (Yen)333.0
billion for the fiscal year ended March 31, 2002. Transaction gains on
translation of foreign currency long-term debt for the fiscal year ended March
31, 2003 reflected primarily the appreciation of the yen against the US dollar
and other foreign currencies. We had net losses on foreign exchange contracts
entered into for trading purposes for the fiscal year ended March 31, 2003 due
to the unfavorable foreign exchange markets. Other foreign exchange net gains
for the fiscal year ended March 31, 2003 reflected transaction gains on
translation of foreign currency-denominated borrowings used to manage the
foreign currency exposure of available-for-sale debt securities. This increase
was due primarily to the appreciation of the yen against the US dollar and
other foreign currencies while transaction losses on translation of foreign
currency-denominated available-for-sale debt securities were recorded in other
changes in equity from nonowner sources.

Net investment securities losses for the fiscal year ended March 31, 2003 were
(Yen)21.6 billion, compared to net gains of (Yen)20.6 billion for the fiscal
year ended March 31, 2002. Major components of net investment securities gains
(losses) for the fiscal years ended March 31, 2002 and 2003 are summarized
below:



                                                     Fiscal years ended March 31,
                                                     ---------------------------
                                                         2002           2003
                                                      -----------   -----------
                                                           (in billions)
                                                              
  Net gains on sales of marketable equity securities (Yen) 277.2    (Yen) 170.5
  Impairment losses on marketable equity securities.      (281.0)        (352.4)
  Other net gains...................................        24.4          160.3
                                                      -----------   -----------
     Net investment securities gains (losses)....... (Yen)  20.6    (Yen) (21.6)
                                                      ===========   ===========


Pursuant to the legislation forbidding banks, including our Japanese subsidiary
banks, from holding stocks with aggregate market values less unrealized gains
in excess of their Tier I capital after September 30, 2004, a date which

                                      63



was later extended to September 30, 2006, we actively sold our marketable
equity securities. The decrease in net gains on sales of marketable equity
securities reflected further declining stock market prices during the fiscal
year ended March 31, 2003. In addition to sales in the stock markets, in the
fiscal year ended March 31, 2003, we sold marketable equity securities to the
Bank's Shareholdings Purchase Corporation and the Bank of Japan and through
exchange traded funds.

The increase in impairment losses on marketable equity securities for the
fiscal year ended March 31, 2003 also reflected the continuing declines in
stock prices in Japan. We have determined other-than-temporary declines in fair
value of marketable equity securities primarily based on factors such as
internal credit ratings, the extent of decline in market price and the length
of time during which the decline has existed. Due to the change in the
accounting estimate reflecting the long and sustained decline in the Japanese
stock markets, we recognized additional impairment losses on investment
securities amounting to (Yen)26.5 billion for the fiscal year ended March 31,
2003.

Other net gains primarily included net gains on sales of debt securities,
including bonds. The increase in such gains resulted mainly from increased
sales of foreign bonds. The market prices of foreign bonds generally rose as
interest rates declined during the fiscal year ended March 31, 2003.

Other non-interest income decreased (Yen)2.1 billion, or 4.4%, from (Yen)49.5
billion for the fiscal year ended March 31, 2002 to (Yen)47.4 billion for the
fiscal year ended March 31, 2003. Other non-interest income was primarily
comprised of income from the lease of software, net gains on sales of various
assets, including software and other dividend income. The decrease for the
fiscal year ended March 31, 2003 reflected several small decreases in these
components.

Non-Interest Expense

The following table shows a summary of our non-interest expense for the fiscal
years ended March 31, 2002, 2003 and 2004:



                                                              Fiscal years ended March 31,
                                                         --------------------------------------
                                                            2002*        2003*         2004
                                                         ------------ ------------ ------------
                                                                      (in billions)
                                                                          
Salaries and employee benefits.......................... (Yen)  456.0 (Yen)  498.5 (Yen)  506.7
Occupancy expenses--net.................................        134.7        121.0        120.5
Losses (gains) on other real estate owned...............          6.2          0.3         (0.6)
Goodwill amortization...................................          7.9           --           --
Fees and commission expenses............................         72.2         77.2         80.3
Amortization of intangible assets.......................         36.9         46.5         63.6
Insurance premiums, including deposit insurance.........         43.5         48.3         54.4
Minority interest in income of consolidated subsidiaries         21.5          2.9         42.4
Communications..........................................         21.3         22.0         27.6
Other non-interest expenses.............................        361.1        365.7        341.2
                                                         ------------ ------------ ------------
   Total non-interest expense........................... (Yen)1,161.3 (Yen)1,182.4 (Yen)1,236.1
                                                         ============ ============ ============

--------
*  Reclassified to conform to the presentation for the fiscal year ended March
   31, 2004.

    Fiscal Year Ended March 31, 2004 Compared to Fiscal Year Ended March 31,
2003

Non-interest expense for the fiscal year ended March 31, 2004 was (Yen)1,236.1
billion, an increase of (Yen)53.7 billion from the previous fiscal year. This
increase was primarily attributable to an increase in minority interest in
income of consolidated subsidiaries of (Yen)39.5 billion. The increases in
salaries and employee benefits,

                                      64



amortization of intangible assets and insurance premiums, including deposit
insurance, also caused the increase in non-interest expense compared to the
previous fiscal year.

Salaries and employee benefits increased primarily due to an increase of
(Yen)14.4 billion in salaries and employee benefits in Mitsubishi Securities,
as only seven months of salaries and employee benefits of Mitsubishi Securities
were recorded for the previous fiscal year, while its salaries and employee
benefits for twelve months were recorded for the fiscal year ended March 31,
2004.

Amortization of intangible assets increased primarily due to an increase in the
capitalized cost of software as we continued to invest in new information
systems, such as investment in the new IT system for Bank of Tokyo-Mitsubishi's
foreign offices.

Insurance premiums including that for deposit insurance increased, reflecting
an increase in our deposits.

Minority interest in income of consolidated subsidiaries increased (Yen)39.5
billion from (Yen)2.9 billion for the fiscal year ended March 31, 2003 to
(Yen)42.4 billion for the fiscal year ended March 31, 2004. This increase was
primarily attributable to the improvement in the results of operations at
Mitsubishi Securities from a net loss for the fiscal year ended March 31, 2003
to positive net income for the fiscal year ended March 31, 2004. A significant
recovery in the stock markets during the fiscal year ended March 31, 2004
contributed primarily to the improvement.

These increases were partially offset by a decrease in other non-interest
expenses, which was partly due to the fact that other non-interest expenses for
the previous fiscal year included a (Yen)22.5 billion loss resulting from the
decrease in net assets in a subsidiary that was accounted for as having been
sold in connection with the merger of the four securities companies to form
Mitsubishi Securities on September 1, 2002.

    Fiscal Year Ended March 31, 2003 Compared to Fiscal Year Ended March 31,
2002

Non-interest expense for the fiscal year ended March 31, 2003 was (Yen)1,182.4
billion, an increase of (Yen)21.1 billion, or 1.8%, from (Yen)1,161.3 billion
for the fiscal year ended March 31, 2002. This increase was due primarily to an
increase of (Yen)42.5 billion in salaries and employee benefits, partially
offset by a decrease of (Yen)13.7 billion in net occupancy expenses.

Salaries and employee benefits for the fiscal year ended March 31, 2003 were
(Yen)498.5 billion, an increase of (Yen)42.5 billion, or 9.3%, from (Yen)456.0
billion for the fiscal year ended March 31, 2002. This increase primarily
reflected an increase of (Yen)13.2 billion in net periodic pension costs and an
increase of (Yen)24.0 billion of salaries and employee benefits of Mitsubishi
Securities, which became our consolidated subsidiary on September 1, 2002 as a
result of the merger of four securities companies. The increase in net periodic
pension costs was due primarily to an increase of (Yen)11.8 billion in
amortization of net actuarial loss. In accordance with SFAS No. 87, "Employers'
Accounting for Pensions," the minimum amortization of actuarial loss was
included as a component of net periodic pension costs for the fiscal years
ended March 31, 2002 and 2003 as the unrealized net loss exceeded 10% of the
projected benefit obligation. The net actuarial loss reflected the fact that
the actual return on plan assets fell below the expected return on plan assets
during recent fiscal years. Plan assets, which include pension funds managed by
various life insurance companies, investment advisory companies and trust
banks, consisted of interest-earning deposits at banks, Japanese government
bonds, other debt securities and marketable equity securities issued by
domestic and foreign entities. Pension assets managed by insurance companies
are included in pooled investment portfolios. Expected rates of return on plan
assets are reviewed annually and computed primarily based on the historical
average of long-term returns on such assets. The continuously depressed
Japanese economy has adversely affected domestic stock markets. As a result,
with respect to our domestic subsidiaries' plans, the actual return on the plan
assets was negative by (Yen)48.7 billion for the fiscal year ended March 31,
2002 and negative by (Yen)63.3 billion for the fiscal year ended March 31,
2003. We decreased the expected rate of return on plan assets from 4.45% for
the fiscal year ended March 31, 2002 to 3.73% for the

                                      65



fiscal year ended March 31, 2003. The increase in salaries and employee
benefits was partially offset by a decrease in salaries resulting from a
reduction in the number of employees.

Net occupancy expenses for the fiscal year ended March 31, 2003 were (Yen)121.0
billion, a decrease of (Yen)13.7 billion, or 10.2%, from (Yen)134.7 billion for
the fiscal year ended March 31, 2002. This decrease was due primarily to the
reduction and consolidation of offices as a whole, while net occupancy expenses
of Mitsubishi Securities contributed to an increase in net occupancy expenses.

Losses on other real estate owned for the fiscal year ended March 31, 2003 were
(Yen)0.3 billion, a decrease of (Yen)5.9 billion, or 95.1%, from (Yen)6.2
billion for the fiscal year ended March 31, 2002. This decrease reflected a
decrease in other real estate owned primarily through sales.

There was no goodwill amortization expense for the fiscal year ended March 31,
2003 as a result of the adoption of SFAS No. 142, which eliminated the
amortization of goodwill, effective April 1, 2002.

Amortization of intangible assets for the fiscal year ended March 31, 2003 was
(Yen)46.5 billion, an increase of (Yen)9.6 billion, or 25.9%, from (Yen)36.9
billion for the fiscal year ended March 31, 2002. This increase primarily
reflected an increase in the capitalized cost of software as we continued to
invest in new information systems.

Insurance premiums for the fiscal year ended March 31, 2003 were (Yen)48.3
billion, an increase of (Yen)4.8 billion, or 11.1%, from (Yen)43.5 billion for
the fiscal year ended March 31, 2002. This increase primarily reflected an
increase in domestic deposits.

Minority interest in income of consolidated subsidiaries for the fiscal year
ended March 31, 2003 was (Yen)2.9 billion, a decrease of (Yen)18.6 billion, or
86.6%, from (Yen)21.5 billion for the fiscal year ended March 31, 2002. This
decrease was primarily attributable to the net loss of Mitsubishi Securities
that was newly recognized as a result of the merger in the fiscal year ended
March 31, 2003.

Other non-interest expenses for the fiscal year ended March 31, 2003 were
(Yen)365.7 billion, an increase of (Yen)4.6 billion, or 1.3%, from (Yen)361.1
billion for the fiscal year ended March 31, 2002. Major items included in
the non-interest expenses for the fiscal year ended March 31, 2003 are a
(Yen)22.5 billion loss which resulted from the decrease in net assets in
Tokyo-Mitsubishi Securities, a subsidiary that was accounted for as having been
sold in connection with the merger of the four securities companies to form
Mitsubishi Securities on September 1, 2002, and the additional post-merger
expense of (Yen)10.6 billion that was incurred in completing the merger. These
increases were substantially offset by a decrease of (Yen)35.5 billion in the
provision for allowance for off-balance-sheet credit instruments. The provision
for allowance for off-balance-sheet credit instruments for the fiscal year
ended March 31, 2002 included an allocated provision of (Yen)19.6 billion
against loan commitments extended to WorldCom, Inc. We fulfilled the
commitments extended to WorldCom, Inc. and recorded charge-offs for the fiscal
year ended March 31, 2003.

Income Tax Expense (Benefit)

The following table presents a summary of our income tax expense (benefit):



                                                                              Fiscal years ended March 31,
                                                                      --------------------------------------------
                                                                          2002           2003             2004
                                                                      -----------  ----------------  -------------
                                                                                      (in billions)
                                                                                            
Income (loss) from continuing operations before income tax expense
  (benefit) and cumulative effect of a change in accounting principle (Yen)(322.5)       (Yen)262.9   (Yen)1,180.1
Income tax expense (benefit)......................................... (Yen) (98.9) (Yen)       69.4  (Yen)   357.3
Effective tax rate...................................................        30.7%             26.4%          30.3%
Normal effective statutory tax rate..................................        38.0%             39.9%          39.9%


                                      66



In September 2002, we applied to the tax authorities for approval to file our
national income tax returns based on the consolidated corporate-tax system
starting from the fiscal year ended March 31, 2003, and received the approval
in March 2003. The consolidated corporate-tax system allows companies to base
tax payments on the combined profits or losses of a parent company and its
wholly-owned domestic subsidiaries, and requires us to pay, for the fiscal
years ended March 31, 2003 and 2004, a surcharge tax of 2.0% of taxable income
in addition to the national corporate income tax rate of 30.0% applied to
separate tax returns filers. The increase in the normal effective statutory tax
rate for the fiscal year ended March 31, 2003, resulted from this surcharge
tax. This change in tax rate due to the adoption of the consolidated
corporate-tax system resulted in a decrease of (Yen)37.4 billion in income tax
expense for the fiscal year ended March 31, 2003 as a result of an increase in
deferred tax assets.

In addition, under the new local tax laws which was enacted in March 2003 for
the fiscal years beginning after March 31, 2004, new uniform local taxes become
effective. These new rules introduce value-added taxes and replace part of the
existing local taxes based on income. The new local taxes are computed based on
three components: (a) amount of profit, (b) amount of value-added (total
payroll, net interest paid or received, net rent paid and income before use of
net operating losses) and (c) amount of total paid-in capital. The taxes are
computed by adding together the totals of each of the three components which
are calculated separately.

The enactment of the new uniform local tax laws mentioned above, which will
supersede the current local taxes, including the local taxes levied by Tokyo
Metropolitan Government, resulted in a decrease of (Yen)75.1 billion in income
tax expense for the fiscal year ended March 31, 2003 through an increase in
deferred tax assets.

Reconciling items between the combined normal effective statutory tax rates and
the effective income tax rates for the fiscal years ended March 31, 2002, 2003
and 2004 are summarized as follows:



                                                                        Fiscal years ended March 31,
                                                                        ---------------------------
                                                                          2002*      2003     2004
                                                                        -------    ------   ------
                                                                                   
Combined normal effective statutory tax rate...........................   38.0%     39.9%    39.9%
Reconciling items:
   Nondeductible expenses..............................................    2.9       4.1      0.1
   Goodwill amortization...............................................    0.7        --       --
   Dividends from foreign subsidiaries.................................    1.3       3.0      0.7
   Foreign tax credit and payments.....................................   (1.9)      9.5      0.5
   Higher (lower) tax rates applicable to income of subsidiaries.......   (2.7)     (0.4)     0.1
   Foreign income exempted for income tax purpose......................   (0.5)       --       --
   Foreign tax assessment (refund).....................................   (0.7)     (3.2)    (0.1)
   Minority interest...................................................    2.5       0.6      1.2
   Change in valuation allowance.......................................   17.5      14.7    (12.7)
   Expiration of loss carryforwards of subsidiaries....................    0.1       3.3       --
   Enacted change in tax rates.........................................     --     (28.5)    (0.3)
   Realization of previously unrecognized tax benefits of subsidiaries.  (11.3)    (15.7)    (1.2)
   Other--net..........................................................   (0.6)     (0.9)     2.1
                                                                         -----     -----    -----
Effective income tax rate..............................................   30.7%     26.4%    30.3%
                                                                         =====     =====    =====

--------
*  In calculating the effective income tax rate for the fiscal year ended March
   31, 2002, the reconciling items were subtracted from the combined normal
   effective statutory tax rate since a loss before income tax benefit was
   recorded in that fiscal year.

The effective income tax rate of 30.3% for the fiscal year ended March 31, 2004
was 9.6 percentage points lower than the normal effective statutory tax rate of
39.9%. This lower tax rate primarily reflected a decrease in the valuation
allowance against deferred tax assets which accounted for 12.7 percentage
points of the reconciliation

                                      67



above. The valuation allowance decreased (Yen)184.9 billion from (Yen)318.7
billion at March 31, 2003, to (Yen)133.8 billion at March 31, 2004, as a result
of achieving taxable income for the fiscal year in excess of the amount
previously projected at March 31, 2003 and improved realizability of future tax
benefits based on increased expected taxable income in future periods.

The effective income tax rate of 26.4% for the fiscal year ended March 31, 2003
was 13.5 percentage points lower than the normal effective statutory tax rate
of 39.9%. This lower tax rate primarily reflected an enacted change in tax rate
and realization of previously unrecognized tax benefits of subsidiaries. The
enacted change in tax rate resulted from the adoption of the consolidated
corporate-tax system and the new uniform local taxes, which introduced
value-added taxes as discussed above, and accounted for 28.5% in the
reconciliation above. The realization of previously unrecognized tax benefits
of subsidiaries primarily related to the liquidation of several of our domestic
subsidiaries with accumulated losses and accounted for 15.7% in the
reconciliation above.

Business Segment Analysis

We measure the performance of each of our business segments primarily in terms
of "operating profit" in accordance with the regulatory reporting requirements
of the Financial Services Agency. Operating profit and other segment
information are based on Japanese GAAP and are not consistent with our
financial statements prepared on the basis of US GAAP. For example, operating
profit under Japanese GAAP does not reflect items such as a part of provisions
(credit) for credit losses (primarily an equivalent of formula allowance under
US GAAP), foreign exchange gains (losses) and equity investment securities
gains (losses).

Bank of Tokyo-Mitsubishi

Bank of Tokyo-Mitsubishi maintains its business unit system based on customer
and product segmentation. Bank of Tokyo-Mitsubishi's major business units
during the fiscal year ended March 31, 2004 were:

..   retail banking, which provides banking products and services to individual
    customers in Japan;

..   commercial banking, which provides banking products and services to large
    corporations and some small and medium-sized companies;

..   global corporate banking, which provides banking services to large Japanese
    corporations and their overseas operations as well as non-Japanese
    corporations who do business on a global basis, excluding UNBC's customers;

..   investment banking and asset management, which provides advisory and other
    services related to securities services of the Bank of Tokyo-Mitsubishi,
    syndicated loans, project financing, derivatives and securitization and
    other investment banking activities, and which provides asset management
    and trust products and services mainly to high net worth individuals,
    branch customers and corporate clients in Japan;

..   UNBC, which includes Bank of Tokyo-Mitsubishi's subsidiaries in California,
    UnionBanCal Corporation and Union Bank of California, N.A.;

..   operations services, which provides operations and settlement services to
    its other business units, including settlement and foreign exchange;

..   treasury, which conducts its asset and liability management and liquidity
    management; and

..   other, which consists of:

  .   systems services, which is responsible for its computer systems;

  .   eBusiness & IT Initiatives, which is responsible for developing
      information technology business opportunities;

                                      68



  .   the corporate center, which retains functions such as strategic planning,
      overall risk management, internal auditing and compliance; and

  .   the elimination of duplicated amounts of net revenue among business
      segments.

Mitsubishi Securities is presented as a separate operating segment which
includes Mitsubishi Securities and its subsidiaries that provide a broad range
of retail and corporate securities services and products including retail
brokerage, securitization, M&A advisory and derivatives. After the
incorporation of Mitsubishi Securities on September 1, 2002, Bank of
Tokyo-Mitsubishi transferred part of the investment banking business, including
securitization, M&A advisory and derivatives, to Mitsubishi Securities from its
investment banking business unit during the fiscal year ended March 31, 2003.
This transfer of business did not significantly affect the results of the
investment banking business unit or Mitsubishi Securities for the fiscal year
ended March 31, 2003. We have not reclassified the business segment information
for the fiscal year ended March 31, 2002 to reflect such transfers as such
reclassification was not practicable.

In May 2003, Bank of Tokyo-Mitsubishi integrated the investment banking
business unit and the asset management business unit into one business unit
under the name of investment banking and asset management business unit.
Therefore, we have reclassified the business segment information for the fiscal
years ended March 31, 2002 and 2003 based on the current fiscal year's
presentation.

Between May and July 2003, Bank of Tokyo-Mitsubishi transferred its overseas
securities subsidiaries, Tokyo-Mitsubishi International (Singapore) Ltd.,
Tokyo-Mitsubishi International (HK) Limited, and Tokyo-Mitsubishi Securities
(USA), Inc. to Mitsubishi Securities. These overseas subsidiaries have since
been renamed in line with the name of Mitsubishi Securities, the parent
company, to Mitsubishi Securities (Singapore) Ltd., Mitsubishi Securities (HK)
Limited, and Mitsubishi Securities (USA), Inc., respectively. We have
reclassified the business segment information for the fiscal years ended March
31, 2002 and 2003 based on the current fiscal year's presentation.

In July 2004, Bank of Tokyo-Mitsubishi transferred its overseas securities
subsidiary, Tokyo-Mitsubishi International plc, to Mitsubishi Securities.
Tokyo-Mitsubishi International plc has since been renamed in line with the name
of its new parent company to Mitsubishi Securities International plc. Since the
transfer was made subsequent to March 31, 2004, we did not reclassify the
business segment information for the fiscal years ended March 31, 2002, 2003
and 2004 to reflect this transfer.

In addition, Bank of Tokyo-Mitsubishi transferred its custody business, which
had been included in the asset management business unit, to the operations
services unit during the fiscal year ended March 31, 2004. Presentation for the
fiscal years ended March 31, 2002 and 2003 has been reclassified to conform to
the presentation for the fiscal year ended March 31, 2004.

Furthermore, in the UNBC business unit, the measurement methods used to
determine reported segment profit or loss was changed for the fiscal year ended
March 31, 2004. Presentation for the fiscal years ended March 31, 2002 and 2003
has been reclassified to conform to the presentation for the fiscal year ended
March 31, 2004.

                                      69



The following table shows the business segment information for the fiscal years
ended March 31, 2002, 2003 and 2004:



                                                              Investment
                                                    Global     Banking
                              Retail    Commercial Corporate  and Asset             Operations            Mitsubishi
                              Banking    Banking    Banking   Management    UNBC     Services   Treasury  Securities
                             ---------- ---------- ---------- ---------- ---------- ---------- ---------- ----------
                                                                               (in billions)
                                                                                  
Fiscal year ended
 March 31, 2002*:
   Net Revenue.............. (Yen)283.1 (Yen)297.7 (Yen)282.1 (Yen) 98.0 (Yen)289.5 (Yen)30.0  (Yen)207.1 (Yen) 16.9
   Operating expenses.......      230.6      126.8      134.6       55.4      157.3      22.9        28.4       25.7
                             ---------- ---------- ---------- ---------- ---------- ---------  ---------- ----------
   Operating profit (loss).. (Yen) 52.5 (Yen)170.9 (Yen)147.5 (Yen) 42.6 (Yen)132.2 (Yen) 7.1  (Yen)178.7 (Yen) (8.8)
                             ========== ========== ========== ========== ========== =========  ========== ==========
Fiscal year ended
 March 31, 2003*:
   Net Revenue.............. (Yen)280.0 (Yen)286.6 (Yen)262.9 (Yen) 82.6 (Yen)269.8 (Yen)25.6  (Yen)287.8 (Yen) 58.5
   Operating expenses.......      211.7      127.0      129.9       50.5      155.5      25.5        26.7       69.6
                             ---------- ---------- ---------- ---------- ---------- ---------  ---------- ----------
   Operating profit (loss).. (Yen) 68.3 (Yen)159.6 (Yen)133.0 (Yen) 32.1 (Yen)114.3 (Yen) 0.1  (Yen)261.1 (Yen)(11.1)
                             ========== ========== ========== ========== ========== =========  ========== ==========
Fiscal year ended
 March 31, 2004:
   Net Revenue.............. (Yen)302.9 (Yen)297.7 (Yen)246.4 (Yen)114.8 (Yen)253.5 (Yen)24.7  (Yen)186.3 (Yen)140.6
   Operating expenses.......      204.1      119.6      120.2       44.3      150.9      23.4        26.3      112.0
                             ---------- ---------- ---------- ---------- ---------- ---------  ---------- ----------
   Operating profit (loss).. (Yen) 98.8 (Yen)178.1 (Yen)126.2 (Yen) 70.5 (Yen)102.6 (Yen) 1.3  (Yen)160.0 (Yen) 28.6
                             ========== ========== ========== ========== ========== =========  ========== ==========






                                Other        Total
                             -----------  ------------

                                    
Fiscal year ended
 March 31, 2002*:
   Net Revenue.............. (Yen) (58.3) (Yen)1,446.1
   Operating expenses.......        57.0         838.7
                             -----------  ------------
   Operating profit (loss).. (Yen)(115.3) (Yen)  607.4
                             ===========  ============
Fiscal year ended
 March 31, 2003*:
   Net Revenue.............. (Yen) (88.1) (Yen)1,465.7
   Operating expenses.......        80.0         876.4
                             -----------  ------------
   Operating profit (loss).. (Yen)(168.1) (Yen)  589.3
                             ===========  ============
Fiscal year ended
 March 31, 2004:
   Net Revenue.............. (Yen) (95.1) (Yen)1,471.8
   Operating expenses.......        40.7         841.5
                             -----------  ------------
   Operating profit (loss).. (Yen)(135.8) (Yen)  630.3
                             ===========  ============

--------
*  The segment information for the fiscal years ended March 31, 2002 and 2003
   was restated (except as stated above) to conform to the presentation for the
   fiscal year ended March 31, 2004.

When Bank of Tokyo-Mitsubishi's business units work together to provide
services to customers, we assign the total amount of net revenue derived from
those services to each participating business unit without dividing the net
revenue. As a result, some items of net revenue are duplicated among the
participating segments. The duplicated amounts are eliminated in the "Other"
column. The following is a summary of the duplicated amounts between those
segments. The total of such duplicated amounts is included in "Other" in the
table above.



                                                                 Global     Total
                                            Retail   Commercial Corporate   Amount
                                            Banking   Banking    Banking  Eliminated
                                            -------- ---------- --------- ----------
                                                         (in billions)
                                                              
Fiscal year ended March 31, 2002:
   Investment Banking and Asset Management. (Yen) -- (Yen) 7.8  (Yen)30.2 (Yen)38.0
                                            ======== =========  ========= =========
Fiscal year ended March 31, 2003:
   Investment Banking and Asset Management. (Yen) -- (Yen) 9.7  (Yen)28.7 (Yen)38.4
                                            ======== =========  ========= =========
Fiscal year ended March 31, 2004:
   Investment Banking and Asset Management. (Yen)0.3 (Yen)25.3  (Yen)38.0 (Yen)63.6
                                            ======== =========  ========= =========


Fiscal Year Ended March 31, 2004 Compared to Fiscal Year Ended March 31, 2003

Total net revenue increased (Yen)6.1 billion, or 0.4%, from (Yen)1,465.7
billion for the fiscal year ended March 31, 2003 to (Yen)1,471.8 billion for
the fiscal year ended March 31, 2004. Net revenue increased (Yen)82.1 billion
at Mitsubishi Securities (reflecting, however, only seven months of fees and
commissions in the prior year) and (Yen)32.2 billion in the investment banking
and asset management business unit, while it decreased (Yen)101.5 billion in
the treasury unit.

Total operating expenses decreased (Yen)34.9 billion, or 4.0%, from (Yen)876.4
billion for the fiscal year ended March 31, 2003 to (Yen)841.5 billion for the
fiscal year ended March 31, 2004. This decrease was due mainly to a decrease of
(Yen)39.3 billion in the "Other" column, which primarily reflected a decrease
in the general provision for

                                      70



credit losses of (Yen)49.7 billion. Credit losses are allocated to the
corporate center rather than being reflected in each business segment.
Operating expenses also decreased (Yen)9.7 billion in the global corporate
banking unit. These decreases were partially offset by an increase of (Yen)42.4
billion in Mitsubishi Securities.

Net revenue of the retail banking business unit increased (Yen)22.9 billion, or
8.2%, from (Yen)280.0 billion for the fiscal year ended March 31, 2003 to
(Yen)302.9 billion for the fiscal year ended March 31, 2004. This increase was
largely due to an increase in fee income of (Yen) 11.2 billion, reflecting an
increase of fee income on insurance products and the investment trust business.

Net revenue of the commercial banking business unit increased (Yen)11.1
billion, or 3.9%, from (Yen)286.6 billion for the fiscal year ended March 31,
2003 to (Yen)297.7 billion for the fiscal year ended March 31, 2004. This
increase was due mainly to an increase of (Yen)13.6 billion in other income,
which primarily reflected an increase in derivatives sales and currency options
sales. This increase was partially offset by a decrease in net interest income
of (Yen)5.0 billion, reflecting our continued effort to reduce problem loans.

Net revenue of the global corporate banking business unit decreased (Yen)16.5
billion, or 6.3%, from (Yen)262.9 billion for the fiscal year ended March 31,
2003 to (Yen)246.4 billion for the fiscal year ended March 31, 2004. This
decrease was due mainly to the appreciation of the yen against the US dollar
and Asian currencies during the fiscal year ended March 31, 2004 compared to
that of the previous year.

Net revenue of the investment banking and asset management business unit
increased (Yen)32.2 billion, or 38.9%, from (Yen)82.6 billion for the fiscal
year ended March 31, 2003 to (Yen)114.8 billion for the fiscal year ended March
31, 2004. This increase was largely due to an increase of (Yen)16.6 billion in
other income, reflecting an increase in fees from sales of derivative products.

Net revenue of the UNBC business unit decreased (Yen)16.3 billion, or 6.0%,
from (Yen)269.8 billion for the fiscal year ended March 31, 2003 to (Yen)253.5
billion for the fiscal year ended March 31, 2004. This decrease was due mainly
to the appreciation of the yen against the US dollar at the end of UNBC's 2003
fiscal year compared to that of the previous year. In terms of the noon buying
rate of the Federal Reserve Bank of New York, the value of the yen against the
US dollar appreciated approximately 9.8%, from (Yen)118.75 on December 31, 2002
to (Yen)107.13 on December 31, 2003.

Net revenue of the operations services unit decreased (Yen)0.9 billion, or
3.6%, from (Yen)25.6 billion for the fiscal year ended March 31, 2003 to
(Yen)24.7 billion for the fiscal year ended March 31, 2004, due mainly to a
decline in revenue of our domestic subsidiaries.

Net revenue of the treasury unit decreased (Yen)101.5 billion, or 35.3%, from
(Yen)287.8 billion for the fiscal year ended March 31, 2003 to (Yen)186.3
billion for the fiscal year ended March 31, 2004. In the previous fiscal year,
the declining foreign currency interest rate environment was one of the primary
reasons for the increase in net revenue from foreign currency bond trading and
net interest income. In the fiscal year ended March 31, 2004, foreign currency
interest rates generally remained stable, causing a decline in such net revenue
compared to the previous fiscal year.

Net revenue of Mitsubishi Securities increased (Yen)82.1 billion, or 140.3%,
from (Yen)58.5 billion for the fiscal year ended March 31, 2003 to (Yen)140.6
billion for the fiscal year ended March 31, 2004. This increase was mainly
because only seven months of fees and commissions generated by KOKUSAI
Securities Co., Ltd., one of the predecessors of Mitsubishi Securities, were
recorded for the previous fiscal year, while its fees and commissions for
twelve months were recorded for the fiscal year ended March 31, 2004. In
addition, there was an increase in profits on trading of bonds and stocks and
an increase in commissions and fees in stock brokerage.

                                      71



Fiscal Year Ended March 31, 2003 Compared to Fiscal Year Ended March 31, 2002

Total net revenue increased (Yen)19.6 billion, or 1.4%, from (Yen)1,446.1
billion for the fiscal year ended March 31, 2002 to (Yen)1,465.7 billion for
the fiscal year ended March 31, 2003. This increase was due mainly to an
increase of (Yen)80.7 billion in the treasury unit and an increase of (Yen)41.6
billion at Mitsubishi Securities, principally reflecting the merger that formed
Mitsubishi Securities. This increase was partially offset by a decrease of
(Yen)19.7 billion in the UNBC business unit.

Total operating expenses increased (Yen)37.7 billion, or 4.5%, from (Yen)838.7
billion for the fiscal year ended March 31, 2002 to (Yen)876.4 billion for the
fiscal year ended March 31, 2003. This increase was due mainly to an increase
of (Yen)43.9 billion in operating expenses for Mitsubishi Securities and an
increase of (Yen)23.0 billion in operating expenses included in the "Other"
column. The increase was partially offset by a decrease of (Yen)18.9 billion in
the retail banking business unit.

Net revenue of the retail banking business unit decreased (Yen)3.1 billion, or
1.1%, from (Yen)283.1 billion for the fiscal year ended March 31, 2002 to
(Yen)280.0 billion for the fiscal year ended March 31, 2003. This decrease was
mainly due to a decrease in net interest income of (Yen) 10.9 billion,
reflecting a decline in interest margins due to declining interest rates in yen
and foreign currencies. The decrease was partially offset by an increase in net
fees of (Yen)6.1 billion, reflecting an increase in fee income on insurance
products and domestic funds transfers.

Net revenue of the commercial banking business unit decreased (Yen)11.1
billion, or 3.7%, from (Yen)297.7 billion for the fiscal year ended March 31,
2002 to (Yen)286.6 billion for the fiscal year ended March 31, 2003. This
decrease was mainly due to a decrease of (Yen)20.0 billion in net interest
income, which primarily reflected a decrease in volume of commercial loans and
a decrease in dividend income. The decrease in commercial loans was partly
attributable to the disposal of problem loans. The decrease in Bank of
Tokyo-Mitsubishi's dividend income reflected the reduction in its holdings of
strategic equity investments. These decreases were partially offset by an
increase in other income of (Yen)4.6 billion, reflecting an increase in income
on derivative products.

Net revenue of the global corporate banking business unit decreased (Yen)19.2
billion, or 6.8%, from (Yen)282.1 billion for the fiscal year ended March 31,
2002 to (Yen)262.9 billion for the fiscal year ended March 31, 2003. This
decrease was mainly due to a decrease of (Yen)11.1 billion in net interest
income and a decrease in net revenue of subsidiaries of (Yen)10.1 billion. The
decrease in net interest income reflected a decline in interest margins on
loans and deposits in the declining interest rate environment in Japan and
foreign countries and the decrease in net revenue of its subsidiaries reflected
a decrease in interest income in our overseas subsidiaries in the declining
interest rate environment.

Net revenue of the investment banking and asset management business unit
decreased (Yen)15.4 billion, or 15.7%, from (Yen)98.0 billion for the fiscal
year ended March 31, 2002 to (Yen)82.6 billion for the fiscal year ended March
31, 2003. This decrease was mainly due to a decrease of (Yen)10.1 billion in
net revenue of its subsidiaries in the former investment banking business unit,
reflecting depressed securities trading operations in its overseas
subsidiaries. This decrease was also due to a decrease of (Yen)9.7 billion in
other income of the former asset management business unit, which primarily
reflected a decrease in gains on trust funds and investment trusts due to
declining stock markets in Japan.

Net revenue of the UNBC business unit decreased (Yen)19.7 billion, or 6.8%,
from (Yen)289.5 billion for the fiscal year ended March 31, 2002 to (Yen)269.8
billion for the fiscal year ended March 31, 2003. This decrease was largely due
to the appreciation of the yen against the US dollar at the end of UNBC's 2002
fiscal year compared to that of the previous year.

Net revenue of the operations services unit decreased (Yen)4.4 billion, or
14.6%, from (Yen)30.0 billion for the fiscal year ended March 31, 2002 to
(Yen)25.6 billion for the fiscal year ended March 31, 2003, mainly due to a
decline in revenue of its domestic subsidiaries.

                                      72



Net revenue of the treasury unit increased (Yen)80.7 billion, or 39.0%, from
(Yen)207.1 billion for the fiscal year ended March 31, 2002 to (Yen)287.8
billion for the fiscal year ended March 31, 2003. This increase was mainly due
to an increase in interest income and other income, which primarily reflected
an increase in gains on investments in domestic and foreign bonds and an
increase in gains on its foreign currency asset and liability management
operations reflecting a decline in foreign currency interest rates.

Net revenue of Mitsubishi Securities increased (Yen)41.6 billion, or 245.8%,
from (Yen)16.9 billion for the fiscal year ended March 31, 2002 to (Yen)58.5
billion for the fiscal year ended March 31, 2003. This increase was mainly due
to the merger that formed Mitsubishi Securities on September 1, 2002. There was
no revenue of KOKUSAI Securities Co., Ltd. recorded for the fiscal year ended
March 31, 2002 because Bank of Tokyo-Mitsubishi accounted for its investment in
this company under the equity method and did not consolidate it.

The increase in operating expenses in the "Other" column primarily reflected a
significant decrease in the provision for credit losses. Credit losses are
allocated to the corporate center rather than being reflected in each business
segment.

Mitsubishi Trust Bank

Mitsubishi Trust Bank had the following business groups as of March 31, 2004:

..   trust-banking business, which provides retail banking and trust services,
    corporate financing services and stock transfer agency services;

..   trust assets business, which provides asset management and administration
    services;

..   real estate business, which provides brokerage, securitization, appraisal,
    advisory and other real estate services;

..   global markets business, which provides various financial operations
    including banking, money markets and capital markets operations, securities
    investments, custody operations and asset management; and

..   other, which consists of:

  .   interest and dividends on certain investment securities held for
      relationship management; and

  .   administrative divisions of the headquarters, such as personnel and
      planning.

Mitsubishi Trust Bank measures the financial performance of its subsidiaries
based on ordinary profit or loss shown in their financial statements. Because
of the limited significance of its subsidiary operations, Mitsubishi Trust Bank
does not allocate the subsidiaries' financial performance to business groups,
and manages them on an aggregate basis. The results of these subsidiaries are
included in "Other."

In April 2004, Mitsubishi Trust Bank has upgraded the status of its stock
transfer agency business from part of the trust-banking business group to a
newly established stock transfer agency business group. Since this change was
made subsequent to March 31, 2004, we did not reclassify the business segment
information for the fiscal years ended March 31, 2002, 2003 and 2004 to reflect
this change.

                                      73



The following table shows the business segment information for the fiscal years
ended March 31, 2002, 2003 and 2004:



                                   Trust-     Trust      Real     Global
                                   Banking    Assets    Estate    Markets     Other       Total
                                  ---------- --------- --------- ---------- ---------  ----------
                                                           (in billions)
                                                                     
Fiscal year ended March 31, 2002:
   Net revenue................... (Yen)116.4 (Yen)54.3 (Yen)11.7 (Yen)105.9 (Yen)27.7  (Yen)316.0
   Operating expenses............       69.1      33.2       8.1       17.9      31.5       159.8
   Subsidiaries..................         --        --        --         --      (0.3)       (0.3)
                                  ---------- --------- --------- ---------- ---------  ----------
   Operating profit (loss)....... (Yen) 47.3 (Yen)21.1 (Yen) 3.6 (Yen) 88.0 (Yen)(4.1) (Yen)155.9
                                  ========== ========= ========= ========== =========  ==========
Fiscal year ended March 31, 2003:
   Net revenue................... (Yen)120.1 (Yen)38.0 (Yen)16.7 (Yen)137.2 (Yen)22.6  (Yen)334.6
   Operating expenses............       73.4      28.0       9.7       17.6      27.5       156.2
   Subsidiaries..................         --        --        --         --       4.8         4.8
                                  ---------- --------- --------- ---------- ---------  ----------
   Operating profit (loss)....... (Yen) 46.7 (Yen)10.0 (Yen) 7.0 (Yen)119.6 (Yen)(0.1) (Yen)183.2
                                  ========== ========= ========= ========== =========  ==========
Fiscal year ended March 31, 2004:
   Net revenue................... (Yen)124.9 (Yen)38.0 (Yen)16.2 (Yen)145.7 (Yen)14.3  (Yen)339.1
   Operating expenses............       71.1      28.1       9.5       15.8      26.5       151.0
   Subsidiaries..................         --        --        --         --       5.9         5.9
                                  ---------- --------- --------- ---------- ---------  ----------
   Operating profit (loss)....... (Yen) 53.8 (Yen) 9.9 (Yen) 6.7 (Yen)129.9 (Yen)(6.3) (Yen)194.0
                                  ========== ========= ========= ========== =========  ==========


Fiscal Year Ended March 31, 2004 Compared to Fiscal Year Ended March 31, 2003

Total net revenue increased (Yen)4.5 billion, or 1.3%, from (Yen)334.6 billion
for the fiscal year ended March 31, 2003 to (Yen)339.1 billion for the fiscal
year ended March 31, 2004. This increase primarily reflected a (Yen)4.8 billion
increase in the trust-banking business group and a (Yen)8.5 billion increase in
the global markets business group. These increases were partially offset by a
decrease of (Yen)8.3 billion in "Other."

Net revenue of the trust-banking business group increased (Yen)4.8 billion, or
4.0%, from (Yen)120.1 billion for the fiscal year ended March 31, 2003 to
(Yen)124.9 billion for the fiscal year ended March 31, 2004. This increase was
due to an increase of (Yen)8.0 billion in other fees. This increase was
partially offset by a decrease of (Yen)2.8 billion in trust fees earned with
respect to jointly operated designated money in trusts, principally resulting
from a decrease in principal of loan trusts. The increase in other fee income
was mainly due to an increase in fees and commissions obtained from the sales
of investment trusts and variable annuities.

Net revenue of the trust assets business group for the fiscal year ended March
31, 2004 was mostly unchanged from the fiscal year ended March 31, 2003. Total
fees and commissions slightly decreased in the fiscal year ended March 31,
2004, as the decrease in securities related fees was slightly larger than the
increase in pension related fees.

Net revenue of the real estate business group decreased (Yen)0.5 billion, or
2.9%, from (Yen)16.7 billion for the fiscal year ended March 31, 2003 to
(Yen)16.2 billion for the fiscal year ended March 31, 2004. This decrease was
mainly due to a decrease in the real estate brokerage fees.

Net revenue of the global markets business group increased (Yen)8.5 billion, or
6.2%, from (Yen)137.2 billion for the fiscal year ended March 31, 2003 to
(Yen)145.7 billion for the fiscal year ended March 31, 2004. This increase was
mainly due to an increase in net interest income, resulting from a decrease in
funding costs. On the other hand, loan trust account fees decreased because of
lower securities balances held in trust accounts.

                                      74



Net revenue of "Other" decreased (Yen)8.3 billion, or 36.5%, from (Yen)22.6
billion for the fiscal year ended March 31, 2003 to (Yen)14.3 billion for the
fiscal year ended March 31, 2004. This decrease was mainly due to a reduction
in the volume of our investment securities.

Total operating expenses decreased (Yen)5.2 billion, or 3.3%, from (Yen)156.2
billion for the fiscal year ended March 31, 2003 to (Yen)151.0 billion for the
fiscal year ended March 31, 2004. This decrease was due to a decrease of
(Yen)2.3 billion in the trust-banking business group and a decrease of (Yen)1.8
billion in the global markets business group. The decrease in the trust-banking
business group was attributable to a decrease in personnel and other expenses.

The operating profit of subsidiaries on a combined basis increased (Yen)1.1
billion, or 25.2%, from (Yen)4.8 billion for the fiscal year ended March 31,
2003 to (Yen)5.9 billion for the fiscal year ended March 31, 2004. This
increase reflected a decrease in the general provision for credit losses. As a
result, total operating profit for the fiscal year ended March 31, 2004
amounted to (Yen)194.0 billion, an increase of (Yen)10.8 billion, or 5.9%, from
(Yen)183.2 billion for the fiscal year ended March 31, 2003.

Fiscal Year Ended March 31, 2003 Compared to Fiscal Year Ended March 31, 2002

Total net revenue increased (Yen)18.6 billion, or 5.9%, from (Yen)316.0 billion
for the fiscal year ended March 31, 2002 to (Yen)334.6 billion for the fiscal
year ended March 31, 2003. This increase primarily reflected a (Yen)5.0 billion
increase in the real estate business group and a (Yen)31.3 billion increase in
the global markets business group. These increases were partially offset by a
decrease of (Yen)16.3 billion in the trust assets business group.

Net revenue of the trust-banking business group increased (Yen)3.7 billion, or
3.2%, from (Yen)116.4 billion for the fiscal year ended March 31, 2002 to
(Yen)120.1 billion for the fiscal year ended March 31, 2003. This increase was
due to an increase of (Yen)6.3 billion in net interest income and an increase
of (Yen)3.7 billion in other fee income. These increases were partially offset
by a decrease of (Yen)6.2 billion in trust fees earned with respect to jointly
operated designated money in trusts, principally resulting from a decrease in
principal of loan trusts. The increase in net interest income was mainly
attributable to an improvement in interest margin. The increase in other fee
income was due to an increase in fees and commissions obtained for sales of
investment trusts and variable annuities.

Net revenue of the trust assets business group decreased (Yen)16.3 billion, or
30.1%, from (Yen)54.3 billion for the fiscal year ended March 31, 2002 to
(Yen)38.0 billion for the fiscal year ended March 31, 2003. This decrease was
mainly due to a decrease in fee income for asset administration services as a
result of certain trust assets transferred to Master Trust Bank of Japan Ltd.,
an equity investee of Mitsubishi Trust Bank.

Net revenue of the real estate business group increased (Yen)5.0 billion, or
43.1%, from (Yen)11.7 billion for the fiscal year ended March 31, 2002 to
(Yen)16.7 billion for the fiscal year ended March 31, 2003. This increase was
mainly due to an increase in real estate brokerage commissions.

Net revenue of the global markets business group increased (Yen)31.3 billion,
or 29.6%, from (Yen)105.9 billion for the fiscal year ended March 31, 2002 to
(Yen)137.2 billion for the fiscal year ended March 31, 2003. This increase was
mainly due to an increase in net interest income resulting from an improvement
in interest margin and an increase in debt securities, and an increase in other
income resulting from an increase in the profit on sales of Japanese government
bonds and other debt securities.

Net revenue of "Other" decreased (Yen)5.1 billion, or 18.6%, from (Yen)27.7
billion for the fiscal year ended March 31, 2002 to (Yen)22.6 billion for the
fiscal year ended March 31, 2003. This decrease was mainly due to a decrease in
dividend income resulting from a reduction in certain investment securities
held for relationship management.

Total operating expenses decreased (Yen)3.6 billion, or 2.2%, from (Yen)159.8
billion for the fiscal year ended March 31, 2002 to (Yen)156.2 billion for the
fiscal year ended March 31, 2003. This decrease was primarily due to a decrease
of (Yen)5.2 billion in the trust assets business group. The decrease was
attributable to a decrease in salaries and system

                                      75



maintenance cost for asset administration services as a result of certain trust
assets transferred to the Master Trust Bank of Japan Ltd.

The operating profit of subsidiaries on a combined basis increased (Yen)5.1
billion, from an operating loss of (Yen)0.3 billion for the fiscal year ended
March 31, 2002 to an operating profit of (Yen)4.8 billion for the fiscal year
ended March 31, 2003. The profit for the fiscal year ended March 31, 2003 was
mainly due to a decrease in credit costs, which had increased in the fiscal
year ended March 31, 2002.

As a result, total operating profit for the fiscal year ended March 31, 2003
amounted to (Yen)183.2 billion, an increase of (Yen)27.3 billion, or 17.4%,
from (Yen)155.9 billion for the fiscal year ended March 31, 2002.

Geographic Segment Analysis

The following table sets forth our total revenue, income (loss) from continuing
operations before income tax expense (benefit) and cumulative effect of a
change in accounting principle and net income (loss) on a geographic basis,
based principally on the domicile of activities for the fiscal years ended
March 31, 2002, 2003 and 2004:



                                                                                   Fiscal years ended March 31,
                                                                             ----------------------------------------
                                                                                 2002          2003          2004
                                                                             ------------  ------------  ------------
                                                                                          (in billions)
                                                                                                
Total revenue (interest income and non-interest income):
   Domestic................................................................. (Yen)1,222.1  (Yen)1,286.4  (Yen)1,650.7
                                                                             ------------  ------------  ------------
   Foreign:
       United States........................................................        541.5         611.9         575.1
       Europe...............................................................        243.9         256.0         277.2
       Asia/Oceania excluding Japan.........................................        239.0         150.6          78.1
       Other areas*.........................................................        129.0         117.7         147.5
                                                                             ------------  ------------  ------------
          Total foreign.....................................................      1,153.4       1,136.2       1,077.9
                                                                             ------------  ------------  ------------
              Total......................................................... (Yen)2,375.5  (Yen)2,422.6  (Yen)2,728.6
                                                                             ============  ============  ============
Income (loss) from continuing operations before income tax expense (benefit)
  and cumulative effect of a change in accounting principle:
   Domestic................................................................. (Yen) (385.4) (Yen)  (76.1) (Yen)  709.8
                                                                             ------------  ------------  ------------
   Foreign:
       United States........................................................        (31.4)        173.9         166.4
       Europe...............................................................          8.5          52.0         183.1
       Asia/Oceania excluding Japan.........................................         44.8          61.5          48.2
       Other areas*.........................................................         41.0          51.6          72.6
                                                                             ------------  ------------  ------------
          Total foreign.....................................................         62.9         339.0         470.3
                                                                             ------------  ------------  ------------
              Total......................................................... (Yen) (322.5) (Yen)  262.9  (Yen)1,180.1
                                                                             ============  ============  ============
Net income (loss):
   Domestic................................................................. (Yen) (236.5) (Yen)  (70.6) (Yen)  463.4
                                                                             ------------  ------------  ------------
   Foreign:
       United States........................................................        (57.0)        143.0         158.3
       Europe...............................................................          4.1          37.3         120.8
       Asia/Oceania excluding Japan.........................................         35.0          43.3          26.5
       Other areas*.........................................................         37.9          50.3          53.2
                                                                             ------------  ------------  ------------
          Total foreign.....................................................         20.0         273.9         358.8
                                                                             ------------  ------------  ------------
              Total......................................................... (Yen) (216.5) (Yen)  203.3  (Yen)  822.2
                                                                             ============  ============  ============

--------
*  Other areas primarily include Canada, Latin America and the Caribbean.

                                      76



Fiscal Year Ended March 31, 2004 Compared to Fiscal Year Ended March 31, 2003

Domestic net income for the fiscal year ended March 31, 2004 was (Yen)463.4
billion, compared to a (Yen)70.6 billion loss for the fiscal year ended March
31, 2003. This improvement primarily reflected the reversal of allowance for
credit losses and the gains in investment securities due to the improvement in
domestic stock prices.

Foreign net income for the fiscal year ended March 31, 2004 was (Yen)358.8
billion, compared to (Yen)273.9 billion for the fiscal year ended March 31,
2003. This increase primarily reflected the foreign exchange gains due to the
appreciation of the Japanese yen against the US dollar and the reversal of
allowance for credit losses.

Fiscal Year Ended March 31, 2003 Compared to Fiscal Year Ended March 31, 2002

Domestic total revenue increased (Yen)64.3 billion, or 5.3 %, from (Yen)1,222.1
billion for the fiscal year ended March 31, 2002 to (Yen)1,286.4 billion for
the fiscal year ended March 31, 2003. This increase primarily reflected an
increase in net trading account profits. The increase was partially offset by a
decrease in interest income.

Foreign total revenue decreased (Yen)17.2 billion, or 1.5%, from (Yen)1,153.4
billion for the fiscal year ended March 31, 2002 to (Yen)1,136.2 billion for
the fiscal year ended March 31, 2003. This decrease primarily reflected a
decrease in interest income. The decrease was partially offset by increases in
net foreign exchange gains and net investment securities gains.

Domestic loss from continuing operations before income tax expense (benefit)
and cumulative effect of a change in accounting principle for the fiscal year
ended March 31, 2003 was (Yen)76.1 billion, compared to a (Yen)385.4 billion
loss for the fiscal year ended March 31, 2002. This improvement primarily
reflected a decrease in the provision for credit losses and increases in net
trading account profits.

Foreign income from continuing operations before income tax expense and
cumulative effect of a change in accounting principle increased (Yen)276.1
billion from (Yen)62.9 billion for the fiscal year ended March 31, 2002 to
(Yen)339.0 billion for the fiscal year ended March 31, 2003. This increase
primarily reflected increases in net investment securities gains and net
foreign exchange gains. This increase was partially offset by an increase in
the provision for credit losses.

Effect of the Change in Exchange Rates on Foreign Currency Translation

The average exchange rate for the fiscal year ended March 31, 2004 was
(Yen)113.07 per $1.00, compared to the prior fiscal year's average exchange
rate of (Yen)121.94 per $1.00. The average exchange rate for the conversion of
the US dollar financial statements of some of our foreign subsidiaries for the
fiscal year ended December 31, 2003 was (Yen)115.98 per $1.00, compared to the
average exchange rate for the fiscal year ended December 31, 2002 of
(Yen)125.34 per $1.00.

The change in the average exchange rate of the yen against the US dollar and
other foreign currencies resulted in translation losses on total revenue of
approximately (Yen)48 billion, net interest income of approximately (Yen)23
billion and income before income taxes of approximately (Yen)18 billion for the
fiscal year ended March 31, 2004.

                                      77



B.   Liquidity and Capital Resources

Financial Condition

Total Assets

Our total assets at March 31, 2004 were (Yen)103.70 trillion, representing an
increase of (Yen)7.17 trillion, from (Yen)96.53 trillion at March 31, 2003.
This increase was due primarily to an increase of (Yen)4.40 trillion in
investment securities and an increase of (Yen)2.90 trillion in receivables
under securities borrowing transactions. This increase was partially offset by
a decrease of (Yen)1.18 trillion in cash and due from banks.

We have allocated a substantial portion of our assets to international
activities. As a result, reported amounts are affected by changes in the value
of the yen against the US dollar and other foreign currencies. Foreign assets
are denominated primarily in US dollars. The following table shows our total
assets at March 31, 2003 and 2004 by geographic region based principally on the
domicile of the obligors:



                                                  At March 31,
                                             ----------------------
                                                2003       2004
                                             ---------- -----------
                                                 (in trillions)
                                                  
            Japan........................... (Yen)69.73 (Yen) 79.66
                                             ---------- -----------
            Foreign:
               United States of America.....      13.21       12.59
               Europe.......................       7.89        6.14
               Asia/Oceania excluding Japan.       3.15        3.01
               Other areas*.................       2.55        2.30
                                             ---------- -----------
                   Total foreign............      26.80       24.04
                                             ---------- -----------
                      Total................. (Yen)96.53 (Yen)103.70
                                             ========== ===========

--------
*  Other areas primarily include Canada, Latin America and the Caribbean.

At March 31, 2004, the noon buying rate of the Federal Reserve Bank of New York
was (Yen)104.18 per $1.00, as compared with (Yen)118.07 per $1.00 at March 31,
2003. The yen equivalent amount of foreign currency denominated assets and
liabilities increases as the relevant exchange rate indicating the yen value
per one foreign currency unit becomes higher, evidencing a "weaker" yen, and
decreases as the relevant exchange rate indicating the yen value per one
foreign currency unit becomes lower, evidencing a "stronger" yen. The
appreciation of the yen against the US dollar and other foreign currencies
during the fiscal year ended March 31, 2004 decreased the yen value of our
total assets by approximately (Yen)2.47 trillion. See "Item 3.A. Key
Information--Selected Financial Data--Exchange Rate Information."

                                      78



Loan Portfolio

The following table sets forth our loans outstanding, before deduction of
allowance for credit losses, at March 31, 2003 and 2004, based on
classification by industry segment as defined by the Bank of Japan for
regulatory reporting purposes, which is not necessarily based on the use of
proceeds:



                                                          At March 31,
                                                  ---------------------------
                                                      2003           2004
                                                  ------------- -------------
                                                         (in billions)
                                                          
 Domestic:
    Manufacturing................................ (Yen) 6,034.3 (Yen) 6,000.1
    Construction.................................       1,277.4       1,010.4
    Real estate..................................       4,298.1       4,585.3
    Services.....................................       4,953.8       4,344.8
    Wholesale and retail.........................       5,458.3       4,999.0
    Banks and other financial institutions.......       3,598.0       3,834.2
    Communication and information services.......       1,516.0         874.6
    Other industries.............................       3,858.2       6,169.4
    Consumer.....................................       7,425.7       7,951.2*
                                                  ------------- -------------
        Total domestic...........................      38,419.8      39,769.0
                                                  ------------- -------------
 Foreign:
    Governments and official institutions........         235.1         183.1
    Banks and other financial institutions.......         928.1       1,043.9
    Commercial and industrial....................       8,413.5       7,239.9
    Other........................................         510.1         318.6
                                                  ------------- -------------
        Total foreign............................      10,086.8       8,785.5
                                                  ------------- -------------
 Less unearned income and deferred loan fees--net          41.0          28.6
                                                  ------------- -------------
           Total................................. (Yen)48,465.6 (Yen)48,525.9
                                                  ============= =============

--------
*  Domestic loans within the "consumer" category in the above table include
   loans to individuals who utilize loan proceeds to finance their proprietor
   activities and not for their personal financing needs. During the fiscal
   year ended March 31, 2004, our credit administration system was upgraded and
   we are now able to present a precise breakdown of the balance of such
   consumer loans at March 31, 2004 by the type of proprietor business, as
   presented below:



                                                             Banks and   Communication               Total
                                                               other          and                   included
                              Real               Wholesale   financial    information    Other         in
Manufacturing Construction   estate    Services  and retail institutions   services    industries   Consumer
------------- ------------ ---------- ---------- ---------- ------------ ------------- ---------- ------------
                                                (in billions)
                                                                          
  (Yen)28.2    (Yen)19.3   (Yen)738.4 (Yen)230.7 (Yen)52.3    (Yen)1.2     (Yen)4.1    (Yen)10.6  (Yen)1,084.8


   Since the system upgrade was effective during the fiscal year ended March
   31, 2004, no equivalent information is obtainable for prior fiscal year-end
   dates.

Loans are our primary use of funds. The average loan balance accounted for
57.6% of total interest-earning assets for the fiscal year ended March 31, 2003
and 53.9% for the fiscal year ended March 31, 2004.

At March 31, 2004, our total loans were (Yen)48.53 trillion, representing an
increase of (Yen)0.06 trillion, or 0.1%, from (Yen)48.47 trillion at March 31,
2003. Before the deduction of unearned income and deferred loan fees--net, our
loan balance at March 31, 2004, consisted of (Yen)39.77 trillion of domestic
loans and (Yen)8.79 trillion of foreign loans while the loan balance at March
31, 2003, consisted of (Yen)38.42 trillion of domestic loans and (Yen)10.09
trillion of foreign loans.

                                      79



Domestic loans increased (Yen)1.35 trillion and foreign loans decreased
(Yen)1.30 trillion. With respect to domestic loans, despite a significant
decrease in nonperforming loans due to disposal, the total loan balance
increased, reflecting an increase in consumer loans, as we promoted residential
mortgage loans, and an increase in loans to other industries mainly to the
public sector, through increasing loans to Japanese government and related
institutions, which have comparatively lower credit risk, as a part of our
effective use of funds.

Foreign loans decreased due to a decrease in the loan balance of UnionBanCal
Corporation, our largest overseas subsidiary, and due to the appreciation of
the yen against the US dollar and other foreign currencies. UnionBanCal
Corporation pursued its strategy to increase its consumer loans and increased
residential mortgage loans. However, the total loans decreased because of a
decrease in loans to industries.

Allowance for Credit Losses, Nonperforming and Past Due Loans

The following table shows a summary of the changes in the allowance for credit
losses for the fiscal years ended March 31, 2002, 2003 and 2004:



                                             Fiscal year ended March 31,
                                      ----------------------------------------
                                          2002          2003          2004
                                      ------------  ------------  ------------
                                                    (in billions)
                                                         
 Balance at beginning of fiscal year. (Yen)1,717.0  (Yen)1,735.2  (Yen)1,360.1
                                      ------------  ------------  ------------
 Provision (credit) for credit losses        598.4         438.0        (114.1)
                                      ------------  ------------  ------------
 Charge-offs:
    Domestic.........................       (513.2)       (753.8)       (294.2)
    Foreign..........................       (156.2)       (139.8)        (83.9)
                                      ------------  ------------  ------------
        Total........................       (669.4)       (893.6)       (378.1)
 Recoveries:
    Domestic.........................         42.1          57.8          17.3
    Foreign..........................         23.9          21.0          23.7
                                      ------------  ------------  ------------
        Total........................         66.0          78.8          41.0
 Net charge-offs.....................       (603.4)       (814.8)       (337.1)
 Others*.............................         23.2           1.7         (20.8)
                                      ------------  ------------  ------------
 Balance at end of fiscal year....... (Yen)1,735.2  (Yen)1,360.1  (Yen)  888.1
                                      ============  ============  ============

--------
*  Others principally include foreign currency translation and discontinued
   operations adjustments.

We have been actively working on disposing nonperforming loans. We met the
guideline for the disposal of nonperforming loans, which was based on a
Japanese regulation established under the program for financial revival
announced by the Japanese government in October 2002. Under the program, the
FSA stated that it would strive to normalize the problems with nonperforming
loans by March 31, 2005, by reducing major Japanese banks' ratio of
nonperforming loans to total loans by about half.

For the fiscal year ended March 31, 2004, we recorded a reversal allowance of
(Yen)114.1 billion due to a significant decrease in our specific allowance for
nonperforming loans reflecting a decline in such loan balances, and a gain in
connection with loan sales, as the loans' sales price exceeded the loan
balance, net of allowance.

                                      80



The following table presents comparative data in relation to the principal
amount of nonperforming loan sold and additional provision for credit losses.



                                                                               Additional
                                                                               provision
                                                                               for credit
                                          Principal    Allowance    Loans,       losses
                                            amount     for credit   net of    (reversal of
                                         of loans/(1)/ losses/(2)/ allowance   allowance)
                                         ------------  ----------  ---------- ------------
                                                          (in billions)
                                                                  
For the fiscal year ended March 31, 2002  (Yen)275.1   (Yen)160.6  (Yen)114.5  (Yen)  5.0
For the fiscal year ended March 31, 2003       653.1        317.4       335.7        40.1
For the fiscal year ended March 31, 2004       315.9        133.2       182.7       (10.2)

--------
(1) Represents principal amount after the deduction of charge-offs made before
    the sales of nonperforming loans.
(2) Represents allowance for credit losses at the latest balance-sheet date.

The sales of nonperforming loans resulted in additional provisions for credit
losses of (Yen)40.1 billion for the fiscal year ended March 31, 2003 and
reversal of allowance of (Yen)10.2 billion for the fiscal year ended March 31,
2004.

Through the sale of nonperforming loans to the Resolution and Collection
Corporation and to other third parties, additional provisions or gains may
arise from factors such as a change in the credit quality of the borrowers or
the value of the underlying collateral subsequent to the prior reporting date,
and the risk appetite and investment policy of the purchasers. For the fiscal
year ended March 31, 2003, we recorded additional provisions of (Yen)40.1
billion because the unexpected adverse change in borrowers' credit-worthiness
was severe. However, during the fiscal year ended March 31, 2004, we realized a
gain of (Yen)10.2 billion, because there was no such change and the conditions
surrounding the sales of loans improved.

Due to the inherent uncertainty of factors that may affect negotiated prices,
which reflect the borrowers' financial condition, and the value of underlying
collateral, the results during the reported periods are not necessarily
indicative of the results that we may record in the future.

In the fiscal years ended March 31, 2003 and 2004, we also sold loans that were
not recorded as nonperforming in aggregate principal amounts of (Yen)38.9
billion and (Yen)18.0 billion, respectively, and recorded additional provisions
for credit losses of (Yen)4.9 billion and (Yen)1.5 billion, respectively, in
connection with those sales. Although not categorized as nonperforming as of
the most recent balance sheet date, most of these loans had suffered a decline
in their credit quality as of the date of their sale and were sold as a
precautionary measure to avoid further declines in the value of the loans and
to avoid additional losses in the future.

We incurred additional provisions of (Yen)45.0 billion in connection with the
sale of loans including performing loans for the fiscal year ended March 31,
2003, and recorded a gain of (Yen)8.7 billion for the fiscal year ended March
31, 2004.

Charge-offs for the fiscal year ended March 31, 2004 were (Yen)378.1 billion, a
decrease of (Yen)515.5 billion, or 57.7%, from (Yen)893.6 billion for the
fiscal year ended March 31, 2003. For the fiscal year ended March 31, 2003,
charge-offs were particularly high because we accelerated the disposal of
nonperforming loans to meet the governmental policy for disposal of such loans,
and to improve our loan portfolio. However, for the fiscal year ended March 31,
2004, charge-offs significantly decreased because the amount of nonperforming
loans we disposed of was not large compared to the prior period, and because
the business environment in Japan generally improved as evidenced by the
decrease in bankruptcy filings. Charge-offs of domestic nonperforming loans
decreased in all industries, led by a decrease of (Yen)213.4 billion in real
estate, in which charge-offs were particularly large for the fiscal year ended
March 31, 2003.

                                      81



The following table summarizes the allowance for credit losses by component at
each fiscal year-end:



                                                                      At March 31,
                                                          ------------------------------------
                                                              2002         2003        2004
                                                          ------------ ------------ ----------
                                                                     (in billions)
                                                                           
Allocated allowance:
   Specific--specifically identified problem loans....... (Yen)1,301.6 (Yen)  894.4 (Yen)563.6
   Large groups of smaller balance homogeneous loans.....         38.3         38.0       38.8
   Loans exposed to specific country risk................         28.3         13.1        6.1
   Formula--substandard, special mention and other loans.        344.4        391.3      261.1
Unallocated allowance....................................         22.6         23.3       18.5
                                                          ------------ ------------ ----------
   Total allowance....................................... (Yen)1,735.2 (Yen)1,360.1 (Yen)888.1
                                                          ============ ============ ==========


Allowance policy

Our credit rating system is closely linked to the risk grading standards set by
the Japanese regulatory authorities for asset evaluation and assessment, and is
used as a basis for establishing the allowance for credit losses and
charge-offs. The categorization is based on conditions that may affect the
ability of borrowers to service their debt, such as current financial condition
and results of operations, historical payment experience, credit documentation,
other public information and current trends. For a discussion of our credit
rating system, see "Item 11. Quantitative and Qualitative Disclosures about
Credit, Market and Other Risk--Credit Risk Management--Credit Rating System."

Change in total allowance and provision for credit losses

At March 31, 2004, the total allowance for credit losses was (Yen)888.1
billion, or 1.83% of our total loan portfolio and 51.30% of our total
nonaccrual and restructured loans and accruing loans contractually past due 90
days or more. At March 31, 2003, the total allowance for credit losses was
(Yen)1,360.1 billion, or 2.81% of our total loan portfolio and 49.41% of our
total nonaccrual and restructured loans and accruing loans contractually past
due 90 days or more.

During the fiscal years ended March 31, 2002, 2003 and 2004, there were no
significant additions to the allowance for credit losses resulting from
directives, advice or counsel from governmental or regulatory bodies.

The provision for credit losses decreased consistently from the fiscal year
ended March 31, 2002 to the fiscal year ended March 31, 2004. In particular,
for the fiscal year ended March 31, 2004, we recorded a reversal of allowance
for credit losses due to a decrease of allocated allowance for specifically
identified problem loans as our nonperforming loans decreased, and due to a
decrease of formula allowance as we reduced some performing loans, for which
credit risk and percentage of allowance were comparatively high.

Allocated allowance for specifically identified problem loans

The allocated credit loss allowance for specifically identified problem loans
represents the allowance against impaired loans called for in SFAS No. 114,
"Accounting by Creditors for Impairment of a Loan." Impaired loans primarily
include nonaccrual loans and restructured loans. We generally discontinue
accrual of interest income on loans when substantial doubt exists as to the
full and timely collection of either principal or interest, or when principal
or interest is contractually past due one month or more with respect to loans
made by our banking subsidiaries, including Bank of Tokyo-Mitsubishi and
Mitsubishi Trust Bank, and 90 days or more with respect to loans of certain
foreign banking subsidiaries. Loans are classified as restructured loans when
we grant a concession to the borrowers for economic or legal reasons related to
the borrowers' financial difficulties. Detailed reviews of impaired loans are
performed on a daily basis after a borrower's annual or semi-annual

                                      82



financial statements first become available. In addition, as part of an ongoing
credit review process, our credit officers monitor changes in all customers'
creditworthiness including bankruptcy, past due principal or interest,
downgrading of external credit rating, declining stock price, business
restructuring and other events and reassesses borrowers' ratings in response to
such events. This credit monitoring process form an integral part of our
overall control process. An impaired loan is evaluated individually based on
the present value of expected future cash flows discounted at the loan's
effective interest rate, the loan's observable market price or the fair value
of the collateral if the loan is collateral-dependent at a balance-sheet date.

                                      83



The following table summarizes nonaccrual and restructured loans, and accruing
loans that are contractually past due 90 days or more as to principal or
interest payments, at March 31, 2002, 2003 and 2004:



                                                                                    At March 31,
                                                     -------------------------------------------------------------------------
                                                          2002                  2003                          2004
                                                     -------------- ----------------------------  ----------------------------
                                                          Old            Old            New            Old            New
                                                     classification classification classification classification classification
                                                     -------------- -------------- -------------- -------------- --------------
                                                                         (in billions, except percentages)
                                                                                                  
Nonaccrual loans:
   Domestic:
       Manufacturing................................ (Yen)   142.6  (Yen)   112.2  (Yen)   111.1  (Yen)   175.9  (Yen)   175.7
       Construction.................................         213.5          149.9          149.9           59.0           59.0
       Real estate..................................         841.4          266.4          266.4          154.8          154.8
       Services.....................................         214.9           85.6           87.5           68.1           73.0
       Wholesale and retail.........................         251.0          239.0          224.5          118.1          108.5
       Banks and other financial
         institutions...............................          58.6           17.8           17.8           21.4           21.4
       Communication and information
         services...................................            --             --           14.1             --            5.1
       Other industries.............................          39.7           54.3           53.9           40.0           39.8
       Consumer.....................................         166.3          151.0          151.0          141.8          141.8*
                                                     -------------  -------------  -------------  -------------  -------------
          Total domestic............................       1,928.0        1,076.2        1,076.2          779.1          779.1
   Foreign..........................................         245.6          337.4          337.4          304.0          304.0
                                                     -------------  -------------  -------------  -------------  -------------
          Total nonaccrual loans....................       2,173.6        1,413.6        1,413.6        1,083.1        1,083.1
                                                     -------------  -------------  -------------  -------------  -------------
Restructured loans:
   Domestic:
       Manufacturing................................         303.0          218.4          215.6           89.0           88.7
       Construction.................................         190.0          118.5          118.5           41.2           41.2
       Real estate..................................         422.5          264.9          264.9          131.0          131.0
       Services.....................................         248.6          146.2          164.0           79.4           87.5
       Wholesale and retail.........................         442.4          315.5          292.8          159.0          149.3
       Banks and other financial
         institutions...............................          55.4           19.9           19.9            1.6            1.6
       Communication and information
         services...................................            --             --           11.1             --            4.7
       Other industries.............................          83.5           43.0           39.6           15.2           12.4
       Consumer.....................................         113.8           86.4           86.4           61.0           61.0*
                                                     -------------  -------------  -------------  -------------  -------------
          Total domestic............................       1,859.2        1,212.8        1,212.8          577.4          577.4
   Foreign..........................................         109.2          106.2          106.2           55.0           55.0
                                                     -------------  -------------  -------------  -------------  -------------
          Total restructured loans..................       1,968.4        1,319.0        1,319.0          632.4          632.4
                                                     -------------  -------------  -------------  -------------  -------------
Accruing loans contractually past due 90 days or
  more:
   Domestic.........................................          20.3           17.5           17.5           14.7           14.7
   Foreign..........................................           2.7            2.9            2.9            0.9            0.9
                                                     -------------  -------------  -------------  -------------  -------------
          Total accruing loans contractually
            past due 90 days or more................          23.0           20.4           20.4           15.6           15.6
                                                     -------------  -------------  -------------  -------------  -------------
          Total..................................... (Yen) 4,165.0  (Yen) 2,753.0  (Yen) 2,753.0  (Yen) 1,731.1  (Yen) 1,731.1
                                                     =============  =============  =============  =============  =============
          Total loans............................... (Yen)50,229.7  (Yen)48,465.6  (Yen)48,465.6  (Yen)48,525.9  (Yen)48,525.9
                                                     =============  =============  =============  =============  =============
Nonaccrual and restructured loans, and accruing
  loans contractually past due 90 days or more as
  a percentage of total loans.......................          8.29%          5.68%          5.68%          3.57%          3.57%
                                                     =============  =============  =============  =============  =============


                                      84



--------
*  Domestic loans within the "consumer" category in the above table include
   loans to individuals who utilize loan proceeds to finance their proprietor
   activities and not for their personal financing needs. During the fiscal
   year ended March 31, 2004, our credit administration system was upgraded and
   we are now able to present a precise breakdown of the balance of such
   consumer loans at March 31, 2004 by the type of proprietor business. Such
   breakdown is presented below in accordance with our new classification:



                                                                              Banks and   Communication             Total
                                                                                other          and                 included
                                                Real              Wholesale   financial    information    Other       in
                   Manufacturing Construction  estate   Services  and retail institutions   services    industries Consumer
-                  ------------- ------------ --------- --------- ---------- ------------ ------------- ---------- ---------
                                                                 (in billions)
                                                                                        
Nonaccrual loans..   (Yen)1.6      (Yen)0.9   (Yen)52.3 (Yen)14.2  (Yen)5.8       --        (Yen)0.2        --     (Yen)75.0
Restructured loans      1.0             0.3        21.0       4.1       1.5       --              --        --          27.9


   Since the system upgrade was effective during the fiscal year ended March
   31, 2004, no equivalent information is obtainable for prior fiscal year-end
   dates.

The Bank of Japan changed its industry segment classification during the fiscal
year ended March 31, 2003. For purpose of comparison, the information as of
March 31, 2003 and 2004 includes both loans outstanding by type of industry
based on the prior fiscal years' industry segment classifications and the new
industry segment classifications.

Total nonaccrual loans were (Yen)1,083.1 billion at March 31, 2004, a decrease
of (Yen)330.5 billion, or 23.4%, from (Yen)1,413.6 billion at March 31, 2003.
This decrease was largely attributable to a decrease of (Yen)116.0 billion in
domestic nonaccrual loans to borrowers in the wholesale and retail industry and
a decrease of (Yen)111.6 billion in domestic nonaccrual loans to borrowers in
the real estate industry. These decreases principally reflected sales and
charge-offs of such loans during the fiscal year ended March 31, 2004.

Total restructured loans were (Yen)632.4 billion at March 31, 2004, a decrease
of (Yen)686.6 billion, or 52.1%, from (Yen)1,319.0 billion at March 31, 2003.
Restructured loans to most industry segments decreased substantially during the
fiscal year ended March 31, 2004. The reasons are as follows:

..   The amount of newly identified nonperforming loans significantly decreased
    because of the general upturn in the Japanese economy as evidenced by the
    decrease in bankruptcy filings.

..   Many borrowers were upgraded mainly through our policy to support the
    borrowers' revival efforts.

..   We also made efforts to reduce nonperforming loans through collection

The following table summarizes the balances of impaired loans and related
impairment allowances at March 31, 2002, 2003 and 2004, excluding
smaller-balance homogeneous loans:



                                                                         At March 31,
                                         ----------------------------------------------------------------------------
                                                    2002                      2003                     2004
                                         -------------------------- ------------------------ ------------------------
                                             Loan       Impairment      Loan      Impairment     Loan      Impairment
                                            balance     allowance      balance    allowance     balance    allowance
                                         ------------  ------------ ------------  ---------- ------------  ----------
                                                                        (in billions)
                                                                                         
Requiring an impairment allowance....... (Yen)3,556.6  (Yen)1,296.3 (Yen)2,408.5  (Yen)894.4 (Yen)1,405.8  (Yen)563.6
Not requiring an impairment
  allowance.............................        489.1            --        211.2          --        183.1          --
                                         ------------  ------------ ------------  ---------- ------------  ----------
   Total................................ (Yen)4,045.7  (Yen)1,296.3 (Yen)2,619.7  (Yen)894.4 (Yen)1,588.9  (Yen)563.6
                                         ============  ============ ============  ========== ============  ==========
Percentage of the allocated allowance to
  total impaired loans..................         32.0%                      34.1%                    35.5%
                                         ============               ============             ============


                                      85



In addition to impaired loans presented in the above table, there were loans
held for sale that were impaired of (Yen)3.2 billion, (Yen)3.8 billion and
(Yen)12.6 billion at March 31, 2002, 2003 and 2004, respectively.

Impaired loans decreased (Yen)1,030.8 billion, or 39.3%, from (Yen)2,619.7
billion at March 31, 2003 to (Yen)1,588.9 billion at March 31, 2004, reflecting
decreases in nonaccrual loans and restructured loans as set forth above.

The percentage of the allocated allowance to total impaired loans at March 31,
2004 was 35.5%, an increase of 1.4 percentage points from 34.1% at March 31,
2003. The percentage of impairment allowance allocated to nonaccrual loans at
March 31, 2004 was 39.1%, a decrease of 5.4 percentage points from 44.5% at
March 31, 2003. The percentage of impairment allowance allocated to
restructured loans at March 31, 2004 was 28.6%, an increase of 6.3 percentage
points from 22.3% at March 31, 2003.

Based upon a review of borrowers' financial status, from time to time each of
our banking subsidiaries grants various concessions to troubled borrowers at
the borrowers' request, including reductions in the stated interest rates or
the principal amount of loans, and extensions of the maturity date. According
to the policies of each of our banking subsidiaries, such modifications are
made to mitigate the near-term burden of the loans provided to the borrowers
and to better match the payment terms with the borrower's expected future cash
flows or, in cooperation with other creditors, to reduce the overall debt
burden of the borrowers so that they may normalize their operations, in each
case to improve the likelihood that the loans will be repaid in accordance with
the revised terms. The nature and amount of the concessions depend on the
particular financial condition of each borrower. In principle, however, each of
our banking subsidiaries does not modify the terms of loans to borrowers that
are considered "Likely to Become Bankrupt," "Virtually Bankrupt" or "Bankrupt"
because in these cases there is little likelihood that the modification of loan
terms would enhance recovery of the loans.

Allocated allowance for large groups of smaller-balance homogeneous loans

The allocated allowance for large groups of smaller-balance homogeneous loans
is focused on loss experience for the pool rather than on an analysis of
individual loans. Large groups of smaller-balance homogeneous loans primarily
consist of first mortgage housing loans to individuals. The allowance for
groups of performing loans is based on historical loss experience over a
period. In determining the level of the allowance for delinquent groups of
loans, we classify groups of homogeneous loans based on the risk rating and/or
the number of delinquencies. We determine the credit loss allowance for
delinquent groups of loans based on the probability of insolvency by the number
of actual delinquencies and actual loss experience. The loss experience is
usually determined by reviewing the historical loss rate. The allocated credit
loss allowance for large groups of smaller-balance homogeneous loans was
(Yen)38.8 billion at March 31, 2004, a slight increase from (Yen)38.0 billion
at March 31, 2003.

Allocated allowance for country risk exposure

The allocated credit loss allowance for country risk exposure is based on an
estimate of probable losses relating to the exposure to countries that we
identify as having a high degree of transfer risk. We use a country risk
grading system that assigns risk ratings to individual countries. To determine
the risk rating, we consider the instability of foreign currency and
difficulties regarding debt servicing. The allowance is determined based on the
assessment of individual country risks, taking into consideration various
factors such as the political and macroeconomic situation and debt repayment
capability. It is generally based on a function of default probability and
expected recovery ratios, taking external credit ratings into account. The
allocated allowance for country risk exposure decreased (Yen)7.0 billion from
(Yen)13.1 billion at March 31, 2003 to (Yen)6.1 billion at March 31, 2004. This
decrease resulted from a decrease in credit exposure to the countries,
including Argentina and Indonesia, which were subject to this allowance, and
from worldwide business recovery.

                                      86



The following is a summary of cross-border outstandings to counterparties* in
major Asian and Latin American countries at March 31, 2003 and 2004:



                                               At March 31,
                                           ---------------------
                                              2003       2004
                                           ---------- ----------
                                               (in billions)
                                                
                Hong Kong................. (Yen)224.7 (Yen)333.4
                Singapore.................      278.0      226.5
                South Korea...............      289.2      226.1
                People's Republic of China      145.0      213.6
                Thailand..................      167.4      164.1
                Malaysia..................      116.2      106.3
                Philippines...............       61.3       53.5
                Indonesia.................       33.9       28.4
                Brazil....................      120.0       82.5
                Mexico....................       76.3       46.3
                Argentina.................       34.1       18.2

--------
*  We recorded allocated allowance for country risk exposure for specific
   countries, not all of the countries above.

Formula allowance for substandard, special mention and unclassified loans

The formula allowance is calculated by applying estimated loss factors to
outstanding substandard, special mention and unclassified loans. In evaluating
of inherent loss for these loans, we rely on a statistical analysis that
incorporates a percentage of total loans based on historical loss experience.

Bank of Tokyo-Mitsubishi has computed the formula allowance based on estimated
credit losses using a methodology defined by the credit rating system.
Estimated losses inherent in the loan portfolio at the balance sheet date are
calculated by multiplying the default ratio by the irrecoverable ratio
(determined as a complement of the recovery ratio). The default ratio is
determined by each credit risk rating, taking into account the historical
number of defaults of borrowers within each credit risk rating divided by the
total number of borrowers within that credit risk rating existing at the
beginning of the five-year observation period. The recovery ratio is determined
by the historical experience of collections against loans in default.

Mitsubishi Trust Bank also computes the formula allowance based on a similar
methodology on the basis of historical loss experience except for a few
technical differences in methodology including shorter observation periods to
develop the ratio for formula allowance of each credit rating calculation and
the extent of grouping of loans in computing the allowance, reflecting the
smaller size of the loan portfolio.

UnionBanCal Corporation, our largest overseas subsidiary, calculates the
formula allowance by applying loss factors to outstanding loans and certain
unused commitments, in each case based on the internal risk grade of such
loans, leases and commitments. Changes in risk grades affect the amount of the
formula allowance. Loss factors are based on historical loss experience and may
be adjusted for significant factors that, in management's judgment, affect the
collectibility of the portfolio as of the evaluation date. Loss factors are
developed in the following ways:

..   pass graded loss factors for commercial, financial and industrial loans, as
    well as all problem graded loan loss factors, are derived from a migration
    model that tracks historical losses over a period, which we believe
    captures the inherent losses in our loan portfolio;

..   pass graded loss factors for commercial real estate loans and construction
    loans are based on the average annual net charge-off rate over a period
    reflective of a full economic cycle; and

                                      87



..   pooled loan loss factors (not individually graded loans) are based on
    expected net charge-offs for one year. Pooled loans are loans that are
    homogeneous in nature, such as consumer installment, home equity,
    residential mortgage loans and automobile leases.

Though there are a few technical differences in the methodology used for the
allowance for credit losses as mentioned above, we examine overall sufficiency
of the formula allowance periodically by back-test comparison with the actual
loss experience subsequent to the balance sheet date.

The formula allowance decreased (Yen)130.2 billion from (Yen)391.3 billion at
March 31, 2003 to (Yen)261.1 billion at March 31, 2004. This decrease was due
to a reduction of some performing loans of which credit risk and percentage of
allowance were comparatively high.

Unallocated allowance

The unallocated allowance contains amounts that are based on management's
evaluation of conditions that are not directly measured in the determination of
the formula and specific allowances. The evaluation of the inherent loss with
respect to these conditions is subject to a higher degree of uncertainty
because they are not identified with specific problem credits or portfolio
segments. The conditions include the following, as our management understood
them to exist at the balance sheet date:

..   general economic and business conditions affecting our key lending areas;

..   credit quality trends, including trends in nonperforming loans expected to
    result from existing conditions;

..   collateral values;

..   loan volumes and concentrations;

..   seasoning of the loan portfolio;

..   specific industry conditions within portfolio segments;

..   recent loss experience in particular segments of the portfolio;

..   duration of the current business cycle;

..   bank regulatory examination results; and

..   findings of our internal credit examiners.

To the extent that any of these conditions is evidenced by a specifically
identifiable problem credit as of the evaluation date, management's estimate of
the effect of the condition may be reflected as a specific allowance,
applicable to the specific credit. Where any of these conditions is not
evidenced by a specifically identifiable problem credit as of the evaluation
date, management's evaluation of the probable loss related to the condition is
first reflected in the formula allowance and then considered in the unallocated
allowance. The allowance for credit losses is based upon estimates of probable
losses inherent in the loan portfolio. Although we use methodologies that are
intended to reduce the differences between estimated and actual losses, the
actual losses can vary from the estimated amounts.

The unallocated allowance decreased (Yen)4.8 billion from (Yen)23.3 billion at
March 31, 2003 to (Yen)18.5 billion at March 31, 2004. This decrease primarily
reflected improving economic factors and identifiable improving conditions in
several specific sectors in the United States.

Allowance for Off-balance-sheet Credit Instruments

In addition to the allowance for credit losses on the loan portfolio, we
maintain an allowance for credit losses on off-balance-sheet credit
instruments, including commitments to extend credit, a variety of guarantees
and standby letters of credit. This allowance is included in other liabilities.
With regard to the specific allocated allowance for

                                      88



specifically identified credit exposure and the allocated formula allowance, we
apply the same methodology that we use in determining the allowance for loan
credit losses. The allowance for credit losses on off-balance-sheet credit
instruments was (Yen)110.7 billion at March 31, 2004, an increase of (Yen)27.4
billion, or 32.9%, from (Yen)83.3 billion at March 31, 2003. This increase is
primarily due to the accelerated restructuring and downgrades of some borrowers
to whom we had extended off-balance sheet credit.

Investment Portfolio

Our investment securities are primarily comprised of marketable equity
securities and Japanese government and Japanese government agency bonds, which
are mostly classified as available-for-sale securities. We also hold Japanese
government bonds which are classified as securities being held to maturity.

We hold equity securities of some of our customers for strategic purposes, in
particular to maintain long-term relationships with these customers. However,
our current goal is to reduce our aggregate value of equity securities to
approximately 50% of our Tier I capital by March 31, 2007, because we believe
from a risk management perspective, reducing the price fluctuation risk in our
equity portfolio is imperative. As of March 31, 2004, we already reduced the
aggregate value of marketable equity securities under Japanese GAAP to 72% of
our Tier I capital which satisfies the required level under the legislation
forbidding banks from holding equity securities in excess of their Tier I
capital after September 30, 2006. As part of our efforts to reduce our equity
securities, in addition to sales in the stock market, we will continue to take
into account other options such as sales to the Banks' Shareholdings Purchase
Corporation and transfers to the exchange traded funds. In past years, before
our equity portfolio's value was below our Tier I capital, we sold some of our
equities to the Bank of Japan, which purchases equities only in excess of a
bank's Tier I capital as a method to assist the bank to reduce its equity
portfolio.

Investment securities increased (Yen)4.41 trillion, from (Yen)24.70 trillion at
March 31, 2003 to (Yen)29.11 trillion at March 31, 2004.

Available-for-sale securities increased (Yen)3.29 trillion from (Yen)24.36
trillion at March 31, 2003 to (Yen)27.65 trillion at March 31, 2004. This
increase was due primarily to an increase in amount of Japanese government
bonds and an increase in the value of marketable equity securities. The
increase in Japanese government bonds was partly due to the fact that our
balance of deposits exceeded our loans, and Japanese government bonds were a
viable investment option for us.

Net unrealized gains on available-for-sale securities included in the
investment portfolio at March 31, 2003 and 2004 were (Yen)1.08 trillion and
(Yen)1.82 trillion, respectively. These net unrealized gains related
principally to marketable equity securities and the increase in net unrealized
gains reflected a significant improvement in the Japanese stock market at March
31, 2004, compared to March 31, 2003.

The amortized cost of securities being held to maturity increased (Yen)1.06
trillion from (Yen)0.19 trillion at March 31, 2003 to (Yen)1.25 trillion at
March 31, 2004. This increase was due primarily to an increase in investment in
Japanese government bonds.

In April 2003, we reassessed the appropriateness of the classification for the
available-for-sale securities which had been acquired subsequent to September
2000, when Bank of Tokyo-Mitsubishi transferred its held-to-maturity securities
to available-for-sale securities, and acquisitions thereafter had been
classified as either available-for-sale or trading. As a result of
reassessment, (Yen)78.3 billion of securities are reclassified as
held-to-maturity. For further information regarding the transfer of
held-to-maturity securities to available-for-sale securities in September 2000,
see note 4 to our consolidated financial statements.

In addition to the reclassification of securities from available-for-sale to
held-to-maturity as set forth above, during the fiscal year ended March 31,
2004, we started to classify a portion of our newly acquired debt securities
into the held-to-maturity category to enable more stable fund management.

                                      89



Subsequent to March 31, 2004, our bond portfolio value has experienced declines
as long-term interest rates have risen in recent months. However, since stock
and bond prices are inherently volatile, we are not able to estimate the
expected impacts of fluctuations in these market prices on our future financial
condition or results of operations.

We had an investment in shares of common stock issued by Mitsubishi Motors
Corporation of (Yen)15.0 billion at March 31, 2004. These shares were
classified as available-for-sale securities and were measured at fair value
based on the quoted market price of (Yen)263 per share as of March 31, 2004.
Subsequent to March 31, 2004, the per share quoted market price of Mitsubishi
Motors Corporation declined to a level below (Yen)80 per share, after hitting
over (Yen)300 per share in mid-April. Based on a price level around (Yen)100
per share in September 2004, a significant part of our investment has been lost
subsequent to March 31, 2004.

Cash and Due from Banks

Cash and due from banks at March 31, 2004 was (Yen)3.11 trillion, a decrease of
(Yen)1.18 trillion from (Yen)4.29 trillion at March 31, 2003. The decrease in
cash and due from banks was primarily attributable to a decrease in deposits
with the Bank of Japan at the end of the fiscal year, due to an increase in
investments in short-term Japanese government bonds at the end of the fiscal
year.

Interest-earning Deposits in Other Banks

Interest-earning deposits in other banks fluctuate significantly from day to
day depending upon financial market conditions. Interest-earning deposits in
other banks at March 31, 2004 were (Yen)3.51 trillion, a decrease of (Yen)0.50
trillion, from (Yen)4.01 trillion at March 31, 2003. This decrease primarily
reflected a decrease in foreign currency deposits.

Deferred Tax Assets

Deferred tax assets decreased (Yen)0.63 trillion, or 38.7%, from (Yen)1.64
trillion at March 31, 2003 to (Yen)1.01 trillion at March 31, 2004. This
decrease was due primarily to a decrease in existing deductible temporary
differences. The decrease in existing deductible temporary differences
reflected a decrease in allowance for credit losses and an increase in
unrealized gains on investment securities available for sale. A decrease in net
operating loss carryforwards, which is attributable to the existence of taxable
income in our domestic banking subsidiaries for the fiscal year ended March 31,
2004, also contributed to the decrease in deferred tax assets.

Total Liabilities

At March 31, 2004, total liabilities were (Yen)99.85 trillion, an increase of
(Yen)5.87 trillion, from (Yen)93.98 trillion at March 31, 2003. This increase
primarily reflected increases of (Yen)2.81 trillion in other short-term
borrowings and (Yen)2.72 trillion in total deposits. This increase was
partially offset by a decrease of (Yen)1.09 trillion in trading account
liabilities, and a decrease in the yen values for liabilities denominated in
the US dollar resulting from the appreciation of the yen as mentioned below.

The appreciation of the yen against the US dollar and other foreign currencies
during the fiscal year ended March 31, 2004 decreased the yen values for
liabilities denominated in foreign currencies by approximately (Yen)2.29
trillion.

Deposits

Deposits are our primary source of funds. Total average deposits increased
(Yen)3.61 trillion from (Yen)64.89 trillion for the fiscal year ended March 31,
2003 to (Yen)68.50 trillion for the fiscal year ended March 31, 2004. This
increase

                                      90



reflected a (Yen)2.30 trillion increase in average domestic interest-bearing
deposits and a (Yen)1.13 trillion increase in average domestic
non-interest-bearing deposits, partially offset by a (Yen)0.08 trillion
decrease in average foreign interest-bearing deposits.

Domestic deposits increased (Yen)1.30 trillion from (Yen)56.24 trillion at
March 31, 2003 to (Yen)57.54 trillion at March 31, 2004, while foreign deposits
increased (Yen)1.43 trillion from (Yen)11.06 trillion at March 31, 2003 to
(Yen)12.49 trillion at March 31, 2004.

Although the Deposit Insurance Corporation guarantees in full all current
deposits, ordinary deposits and other specified deposits until March 31, 2005,
under the Deposit Insurance Law amended in December 2002, the movements toward
the reduction of blanket deposit insurance to a (Yen)10 million maximum, have
led some depositors to transfer their deposits to more financially stable
banks. The increase in our average domestic deposits for the fiscal year ended
March 31, 2004 partly reflected such movements.

Short-term Borrowings

We use short-term borrowings as a funding source and in our management of
interest rate risk. For management of interest rate risk, short-term borrowings
are used in asset liability management operations to match interest rate risk
exposure resulting from loans and other interest-earning assets and for
managing funding costs of various financial instruments at an appropriate level
as a whole, based on our forecast of future interest rate levels. Short-term
borrowings include call money and funds purchased, payables under repurchase
agreements, payables under lending transactions, due to trust accounts and
other short-term borrowings.

The total average balance of short-term borrowings increased (Yen)3.04 trillion
from (Yen)12.94 trillion for the fiscal year ended March 31, 2003 to (Yen)15.98
trillion for the fiscal year ended March 31, 2004.

Short-term borrowings increased (Yen)2.86 billion from (Yen)13.58 trillion at
March 31, 2003 to (Yen)16.44 trillion at March 31, 2004. This increase was
primarily attributable to an increase of (Yen)2.81 trillion in other short-term
borrowings primarily due to an increase of funding from The Bank of Japan in
connection with its daily money market operations.

Severance Indemnities and Pension Liabilities

We have defined benefit pension plans in Japan and overseas, which cover
substantially all of our employees. In Japan, we have Employees' Pension Fund
plans, which are defined benefit plans established under the Japanese Welfare
Pension Insurance Law. These plans are composed of (a) a substitutional portion
based on the pay-related part of the old-age pension benefits prescribed by the
Japanese Welfare Pension Insurance Law (similar to social security benefits in
the U.S.) and (b) a corporate portion based on a contributory defined benefit
pension arrangement established at the discretion of each employer. An employer
with an Employees' Pension Fund plan and its employees are exempt from
contributions to Japanese Pension Insurance that would otherwise be required if
they had not elected to fund the substitutional portion of the benefit through
an Employees' Pension Fund plan arrangement. The Employee's Pension Fund plan,
in turn, pays both the corporate and substitutional pension benefits to retired
beneficiaries out of its plan assets. Benefits of the substitutional portion
are based on a standard remuneration scheduled as determined by the Japanese
Welfare Pension Insurance Law, but the benefits of the corporate portion are
based on a formula determined by each employer's Employees' Pension Fund plan.
In June 2001, the Japanese Welfare Insurance Law was amended to permit each
employer's Employees' Pension Fund plan to separate the substitutional portion
from its Employees' Pension Fund plan and transfer the obligation and related
assets to the government. The separation process occurs in several phases.

As mentioned in "Item 5.A. Operating Results--Recent Developments--Planned
Transfer to the Japanese Government of the Substitutional Portion of Employee
Pension Fund Liabilities," in August 2003, the government approved Bank of
Tokyo-Mitsubishi's application to transfer the obligation to pay benefits for
future

                                      91



employee service related to the substitutional portion. Upon that approval,
Bank of Tokyo-Mitsubishi began making pension insurance payments to the
government and the government assumed the benefit obligations arising from
future employee services. To complete the entire separation process, in August
2004, Bank of Tokyo-Mitsubishi made another application for transfer to the
government of the remaining substitutional portion related to the benefit
obligation for past services, but the timing of the approval is not known yet.
Upon completion of the separation, the remaining substitutional obligation and
related pension plan assets, determined pursuant to a government formula, will
be transferred to a government agency, and Bank of Tokyo-Mitsubishi will be
released from paying the remaining substitutional portion of the benefits to
its employees. After the separation, both Bank of Tokyo-Mitsubishi and its
employees will be required to make periodic contributions to the Japanese
Pension Insurance, and the Japanese government will be responsible for all
benefit payments earned under the Japanese Welfare Pension Insurance Law.

The impact on our financial statements of the transfer, which will be accounted
for in accordance with EITF 03-2, discussed in "Item 5.A. Operating
Results--Recently Issued Accounting Pronouncements," is not known and cannot be
reasonably estimated until the completion of the transfer.

Sources of Funding and Liquidity

Our primary source of liquidity is from a large balance of deposits, mainly
ordinary deposits, certificates of deposit and time deposits. Time deposits
have shown a historically high rollover rate among our corporate customers and
individual depositors. Due to the economic and financial environment in Japan,
as well as to our relatively high financial standing in Japan, our deposits
have steadily increased during recent years, from (Yen)63.66 trillion at March
31, 2002 to (Yen)70.02 trillion at March 31, 2004. As of March 31, 2004, our
deposits of (Yen)70.02 trillion exceeded our loans, net of allowance for credit
losses of (Yen)47.64 billion, by (Yen)22.38 billion. These deposits provide us
with a sizable source of stable and low-cost funds. While approximately 53% of
certificates of deposit and time deposits mature within three months, we
continuously monitor relevant interest rate characteristics of these funds and
utilize asset and liability management techniques to manage the possible impact
of the rollovers on our net interest margin and liquidity. Our average
deposits, combined with average shareholders' equity, funded 69.8% of our
average total assets of (Yen)102.8 trillion during the fiscal year ended March
31, 2004.

Most of the remaining funding was provided by short-term borrowings and
long-term senior and subordinated debt. Short-term borrowings consist of call
money and funds purchased, payables under repurchase agreements, payables under
securities lending transactions, due to trust account and other short-term
borrowings. From time to time, we have issued long-term instruments such as
straight bonds with mainly three to five years' maturity. Liquidity may also be
provided by the sale of financial assets, including securities available for
sale, trading account securities and loans. Additional liquidity may be
provided by the maturity of loans.

Shareholders' Equity

The following table presents a summary of our shareholders' equity at March 31,
2003 and 2004:



                                                                 At March 31,
                                                          --------------------------------
                                                              2003             2004
                                                           ------------     ------------
                                                          (in billions, except percentages)
                                                                     
Preferred stock.......................................... (Yen)  222.1     (Yen)  137.1
Common stock.............................................        984.7          1,069.7
Capital surplus..........................................      1,058.6          1,057.9
Retained earnings........................................        405.5          1,194.9
Accumulated other changes in equity from nonowner sources       (114.8)           389.8
Less treasury stock, at cost.............................         (3.2)            (2.4)
                                                           ------------     ------------
   Total shareholders' equity............................ (Yen)2,552.9     (Yen)3,847.0
                                                           ============     ============
Ratio of total shareholders' equity to total assets......         2.64%            3.71%


                                      92



Total shareholders' equity increased (Yen)1,294.1 billion, or 50.7%, from
(Yen)2,552.9 billion at March 31, 2003 to (Yen)3,847.0 billion at March 31,
2004, and the ratio of total shareholders' equity to total assets also showed
an increase of 1.07 percentage points from 2.64% at March 31, 2003 to 3.71% at
March 31, 2004. The increase in total shareholders' equity for the fiscal year
ended March 31, 2004, and the resulting increase in the ratio to total assets,
were principally attributable to an increase of (Yen)789.4 billion in retained
earnings, resulting from net income for the fiscal year ended March 31, 2004
and an increase of (Yen)411.0 billion in net unrealized gains on investment
securities available for sale, net of taxes, recorded as part of accumulated
other changes in equity from nonowner sources.

Due to our holdings of a large amount of marketable Japanese equity securities
and the volatility of the equity markets in Japan, changes in the fair value of
marketable equity securities have significantly affected our shareholders'
equity. The following table presents information relating to the accumulated
net unrealized gains before tax effect in respect of marketable equity
securities at March 31, 2003 and 2004:



                                                          At March 31,
                                                    --------------------------------
                                                       2003             2004
                                                      ----------      ------------
                                                    (in billions, except percentages)
                                                              
   Accumulated net unrealized gains................ (Yen)725.8      (Yen)1,688.2
   Accumulated net unrealized gains to total assets       0.75%             1.63%


The increase in accumulated net unrealized gains on marketable equity
securities at March 31, 2004 was mainly due to the improvement in the Japanese
stock market compared to the previous fiscal year.

Capital Adequacy

We are subject to various regulatory capital requirements promulgated by the
regulatory authorities of the countries in which we operate. Failure to meet
minimum capital requirements can initiate mandatory actions by regulators that,
if undertaken, could have a direct material effect on our consolidated
financial statements.

We continually monitor our risk-adjusted capital ratio closely and manage our
operations in consideration of the capital ratio requirements. These ratios are
affected not only by fluctuations in the value of our assets, including our
marketable securities and deferred tax assets, but also by fluctuations in the
value of the yen against the US dollar and other foreign currencies and by
general price levels of Japanese equity securities.

Capital Requirements for Banking Institutions in Japan

A Japanese banking institution is subject to the minimum capital adequacy
requirements both on a consolidated basis and a stand-alone basis, and is
required to maintain the minimum capital irrespective of whether it operates
independently or as a subsidiary under the control of another company. A bank
holding company is also subject to the minimum capital adequacy requirements on
a consolidated basis. Under the Financial Services Agency's guidelines, capital
is classified into three tiers, referred to as Tier I, Tier II and Tier III.
Our Tier I capital generally consists of shareholders' equity items, including
common stock, Class 1 and Class 2 non-cumulative preferred stocks, capital
surplus, minority interests and retained earnings (which includes deferred tax
assets), but recorded goodwill and other items, such as treasury stock, are
deducted from Tier I capital. Our Tier II generally consists of general
reserves for credit losses up to 1.25% of risk-weighted assets, 45% of the
unrealized gains on investment securities available for sale, 45% of the land
revaluation excess, the balance of perpetual subordinated debt and the balance
of subordinated term debt with an original maturity of over five years subject
to certain limitations, up to 50% of Tier I capital. Our Tier III capital
consists of short-term subordinated debt with an original maturity of at least
two years, subject to certain limitations. At least 50% of the minimum capital
requirements must be maintained in the form of Tier I capital.

Under the Japanese regulatory capital requirements, our consolidated capital
components, including Tier I, Tier II and Tier III and risk-weighted assets are
calculated from our consolidated financial statements prepared under

                                      93



Japanese GAAP. Also, each of the consolidated and stand-alone capital
components of our banking subsidiaries in Japan is calculated from consolidated
and non-consolidated financial statements prepared under Japanese GAAP,
respectively.

For a detailed discussion of the capital adequacy guidelines adopted by the
Financial Service Agency and proposed amendments, see "Item 4.B. Information on
the Company--Business Overview--Supervision and Regulation--Japan--Capital
Adequacy."

Capital Requirements for Banking Institutions in the United States of America

In the United States, UnionBanCal Corporation and its banking subsidiary, Union
Bank of California, N.A., our largest subsidiaries operating outside Japan, are
subject to various regulatory capital requirements administered by U.S. Federal
banking agencies, including minimum capital requirements. Under capital
adequacy guidelines and the regulatory framework for prompt corrective action,
they must meet specific capital guidelines that involve quantitative measures
of their assets, liabilities and certain off-balance-sheet items as calculated
under U.S. regulatory accounting practices. Their capital amounts and prompt
corrective action classification are also subject to qualitative judgments by
the regulators about components, risk weightings and other factors.

For a detailed discussion of the capital adequacy guidelines applicable to our
U.S. bank subsidiaries, see "Item 4.B. Information on the Company--Business
Overview--Supervision and Regulation--United States--Bank Capital Requirements
and Capital Distributions."

Capital Requirements for Securities Firms in Japan and Overseas

We have securities subsidiaries in Japan and overseas, which are also subject
to regulatory capital requirements. In Japan, the Securities and Exchange Law
of Japan and related ordinance require securities firms to maintain a minimum
capital ratio of 120% calculated by as a percentage of capital accounts less
certain illiquid assets, as determined in accordance with Japanese GAAP,
against amounts equivalent to market, counterparty credit and operations risks.
Specific guidelines are issued as a ministerial ordinance which detail the
definition of essential components of the capital ratios, including capital,
illiquid assets deductions, risks and related measures. Failure to maintain a
minimum capital ratio will trigger mandatory regulatory actions. A capital
ratio of less than 140% will call for regulatory reporting and a capital ratio
of 100% or less may lead to a suspension of all or part of the business for a
period of time and cancellation of a license. Overseas securities subsidiaries
are subject to the relevant regulatory capital requirements of the countries or
jurisdictions in which they operate. At March 31, 2004, Mitsubishi Securities's
capital accounts, less certain illiquid assets of (Yen)397.8 billion, were
403.2% of total amounts equivalent to market, counterparty credit and
operations risks.

                                      94



Mitsubishi Tokyo Financial Group Ratios

The table below presents our consolidated risk-based capital, risk-adjusted
assets and risk-based capital ratios at March 31, 2003 and 2004 (underlying
figures are calculated in accordance with Japanese banking regulations based on
information derived from our consolidated financial statements prepared in
accordance with Japanese GAAP, as required by the Financial Services Agency):



                                                              At March 31,
                                                      --------------------------------  Minimum capital
                                                           2003             2004        ratios required
                                                       -------------    -------------   ---------------
                                                      (in billions, except percentages)
                                                                               
Capital components:
   Tier I capital.................................... (Yen) 3,128.7    (Yen) 3,859.4
   Tier II capital includable as qualifying capital..       2,847.6          3,157.9
   Tier III capital includable as qualifying capital.          30.0             30.0
   Deductions from total qualifying capital..........          37.9             54.5
   Total risk-based capital..........................       5,968.4          6,992.8
Risk-weighted assets.................................      55,049.6         53,996.8
Capital ratios:
   Tier I capital....................................          5.68%            7.14%        4.00%
   Total risk-based capital..........................         10.84            12.95         8.00


Our total risk-based capital ratio increased 2.11 percentage points from 10.84%
at March 31, 2003 to 12.95% at March 31, 2004. This increase was due primarily
to an increase in Tier I capital, which primarily resulted from an increase in
retained earnings.

Capital Ratios of Our Subsidiary Banks in Japan

The table below presents the risk-based capital ratios of Bank of
Tokyo-Mitsubishi and Mitsubishi Trust Bank at March 31, 2003 and 2004
(underlying figures are calculated in accordance with Japanese banking
regulations based on information derived from their consolidated and
non-consolidated financial statements prepared in accordance with Japanese
GAAP, as required by the Financial Services Agency):



                                     At March 31,
                                     ------------  Minimum capital
                                      2003   2004  ratios required
                                     -----  -----  ---------------
                                          
Consolidated capital ratios:
   Bank of Tokyo-Mitsubishi
       Tier I capital...............  5.34%  6.52%      4.00%
       Total risk-based capital..... 10.43  11.97       8.00
   Mitsubishi Trust Bank
       Tier I capital...............  6.66   7.76       4.00
       Total risk-based capital..... 12.00  15.03       8.00
Stand-alone capital ratios:
   Bank of Tokyo-Mitsubishi
       Tier I capital...............  5.12   6.35       4.00
       Total risk-based capital..... 10.24  12.18       8.00
   Mitsubishi Trust Bank
       Tier I capital...............  6.16   7.78       4.00
       Total risk-based capital..... 11.23  15.16       8.00


At March 31, 2004, management believes that our subsidiary banks are in
compliance with all capital adequacy requirements to which they are subject.

                                      95



Capital Ratios of Subsidiary Banks in the United States

The table below presents the risk-based capital ratios of UnionBanCal
Corporation and Union Bank of California, both subsidiaries of Bank of
Tokyo-Mitsubishi, at December 31, 2002 and 2003:



                                                  At December 31,
                                                  --------------          Minimum           Ratios OCC requires
                                                   2002    2003   capital ratios required to be "well-capitalized"
                                                  -----   -----   ----------------------- ------------------------
                                                                              
UnionBanCal Corporation:
   Tier I capital (to risk-weighted assets)...... 11.18%  11.31%           4.00%                      --
   Tier I capital (to quarterly average assets)*.  9.75    9.03            4.00                       --
   Total capital (to risk-weighted assets)....... 12.93   14.14            8.00                       --
Union Bank of California:
   Tier I capital (to risk-weighted assets)...... 10.37%  10.44%           4.00%                    6.00%
   Tier I capital (to quarterly average assets)*.  9.01    8.30            4.00                     5.00
   Total capital (to risk-weighted assets)....... 11.87   11.88            8.00                    10.00

--------
*  Excludes certain intangible assets.

Management believes that, as of December 31, 2003, UnionBanCal Corporation and
Union Bank of California met all capital adequacy requirements to which they
are subject.

As of December 31, 2003, Union Bank of California was categorized as
"well-capitalized" under the regulatory framework for prompt corrective action
in accordance with the notification from the OCC. To be categorized as "well
capitalized," Union Bank of California must maintain minimum total risk-based,
Tier I risk-based and Tier I leverage ratios as set forth in the table. There
are no conditions or events since that notification that management believes
have changed Union Bank of California's category.

Off-balance-sheet Arrangements

In the normal course of our business, we engage in several types of
off-balance-sheet arrangements to meet the financing needs of our customers,
including various types of guarantees, commitments to extend credit and
commercial letters of credit. The following table summarizes these commitments
at March 31, 2004:



                                                              Amount of commitment expiration by period
                                                       --------------------------------------------------------
                                                          Less
                                                         than 1       1-3        4-5       Over 5
                                                          year       years      years      years       Total
                                                       ----------- ---------- ---------- ---------- -----------
                                                                            (in billions)
                                                                                     
Guarantees:
   Standby letters of credit and financial guarantees. (Yen) 1,074 (Yen)  365 (Yen)  260 (Yen)1,048 (Yen) 2,747
   Performance guarantees.............................         662        327        139         85       1,213
   Liquidity facilities...............................         603         --         --         --         603
   Derivative instruments.............................      16,456      2,587      1,582        580      21,205
   Guarantees for the repayment of trust principal....         349      1,389        333          9       2,080
   Liabilities of trust accounts......................       3,600         15         11        260       3,886
   Others.............................................         309         --         --         --         309
                                                       ----------- ---------- ---------- ---------- -----------
       Total guarantees...............................      23,053      4,683      2,325      1,982      32,043
                                                       ----------- ---------- ---------- ---------- -----------
Other off-balance-sheet instruments:
   Commitments to extend credit.......................      19,440      3,599      2,049        522      25,610
   Commercial letters of credit.......................         376          1         --         --         377
   Other..............................................         165          1          4         53         223
                                                       ----------- ---------- ---------- ---------- -----------
       Total other off-balance-sheet instruments......      19,981      3,601      2,053        575      26,210
                                                       ----------- ---------- ---------- ---------- -----------
       Total.......................................... (Yen)43,034 (Yen)8,284 (Yen)4,378 (Yen)2,557 (Yen)58,253
                                                       =========== ========== ========== ========== ===========


                                      96



See note 24 to our consolidated financial statements for a description of the
nature of our guarantees and other off-balance-sheet instruments.

The contractual amounts of these guarantees and other off-balance-sheet
instruments represent the amounts at risk should the contracts be fully drawn
upon with a subsequent default by our customer and a decline in the value of
the underlying collateral. Because many of these commitments expire without
being drawn upon, the total contractual or notional amounts of these
commitments do not necessarily represent our future cash requirements. At March
31, 2004, approximately 74% of these commitments will expire within one year,
22% from one year to five years and 4% after five years. Such risks are
monitored and managed as a part of our risk management system as set forth in
"Item 11. Quantitative and Qualitative Disclosures about Credit, Market and
Other Risk." In addition, in accordance with SFAS No. 5, "Accounting for
Contingencies," we evaluate off-balance-sheet arrangement in the manner
described in note 1 to our consolidated financial statements.

In the aggregate, the income generated from fees and commissions is one of our
most important sources of revenue. Such income amounted to (Yen)572.7 billion
during the fiscal year ended March 31, 2004, accounting for approximately 44%
of our non-interest income for the fiscal year. However, the fees generated
specifically from off-balance-sheet arrangements are not a dominant source of
our fees and commissions.

Some of our off-balance-sheet arrangements are related to activities of special
purpose entities, most of which are VIEs. As set out in "Item 5.A. Operating
Results--Accounting Changes--Variable Interest Entities," we have not applied
FIN No. 46 and/or FIN No. 46R to entities created before February 1, 2003.
Accordingly, such entities were not consolidated as of March 31, 2004.
Off-balance-sheet arrangements include the following types of special purpose
entities.

Asset-backed Commercial Paper Conduits

We administer several third-party owned, multi-seller finance companies
(primarily asset-backed commercial paper conduits) that purchase financial
assets, primarily pools of receivables, from third-party customers. Assets
purchased by these conduits are generally funded by issuing commercial paper,
or partly by borrowings from us or third parties. While customers basically
continue to service the transferred trade receivables, we underwrite,
distribute, make a market in commercial paper issued by the conduits, provide
liquidity and credit support facilities to the entities. These conduits earn
profits from the interest rate spread between receivables purchased and
commercial paper issued. These earnings are used to cover credit losses, taxes,
professional fees and other administrative expenses. The residual interest, if
any, is distributed to us annually in the form of back-end fees.

We provide liquidity facilities that are to be used in the event of any
disruption in the commercial paper market and/or to manage mismatches in cash
flows between the redemption of the commercial paper and the collection of the
trade receivables. In addition, we provide credit support facilities for the
full and timely payment of maturing commercial paper. We also act as a dealer
for the commercial paper program and distribute it primarily to institutional
investors. We occasionally hold the commercial paper in our trading account
portfolio before marketing them to third party investors. The average holding
period of the commercial paper before distribution to third party investors is
approximately 9 days.

The total assets of the special purpose entities to which we provide liquidity
facilities were (Yen)3,182.3 billion at March 31, 2003 and (Yen)3,105.3 billion
at March 31, 2004. We provided liquidity and credit enhancements that were
available for the redemption of outstanding commercial paper in the amounts of
(Yen)2,418.8 billion at March 31, 2003 and (Yen)2,337.7 billion at March 31,
2004. We also held in our portfolio of trading securities commercial paper
issued by these entities in the amounts of (Yen)1,058.1 billion at March 31,
2003 and (Yen)1,423.6 at March 31, 2004. Moreover, we provided liquidity
advance fund in the amount of (Yen)151.7 billion at March 31, 2004.

                                      97



Securitization of Client Properties

We administer several third-party owned conduits that purchase clients assets,
primarily buildings and lands, from third-party customers. Assets purchased by
these conduits are generally funded by investments under partnership agreements
from customers or by borrowings from us or third-parties. While the customers
basically continue to use the transferred real estate by lease-back agreements,
the customers that invest in conduits absorb the expected losses of the
conduits. With regard to transactions with these entities, we earn fee in
return for administration and interest on loan to the entities.

We, as a non-primary beneficiary, had variable interests in this type of
entities, with total assets of (Yen)1,031.3 billion as of March 31, 2004, and
are exposed to maximum loss of (Yen)282.0 billion, which will realize in case
our loan to entities are not collected unexpectedly.

Investment Funds

We hold equity or other forms of interest in various investment funds that
invest in equity and debt securities, including listed Japanese securities and
investment grade bonds and, to a limited extent, other types of assets. In
addition to such interests, we have commitments to provide additional
investments to these funds as stipulated in the applicable investment
agreements. We intend to seek gain on our investment into such funds, while we
are exposed to the risk of losing the value of our investment.

We occasionally sell assets such as nonperforming loans to these funds, in
particular the Corporate Recovery Fund, when we believe that such sale may
improve our asset quality.

Corporate Recovery Fund.  We have non-controlling equity interests in corporate
recovery funds whose principal business purpose is to generate profits by
investing in companies in the process of restructuring and then, typically,
selling these investments after the companies complete their restructurings.
Such funds purchase nonperforming loans from us or others and in some cases
acquire majority ownership in the borrower companies by means of a
debt-for-equity swap. Our non-voting interests in these funds amounted to
(Yen)7.3 billion at March 31, 2003 and (Yen)35.9 billion at March 31, 2004,
respectively. In addition, at March 31, 2004, we had commitments to make
additional contributions of up to (Yen)20.3 billion to these funds.

The total assets of the corporate recovery funds in which we have interests
were approximately (Yen)21.1 billion at March 31, 2003 and (Yen)127.6 billion
at March 31, 2004. We sold to corporate recovery funds nonperforming loans with
an aggregate net book value of (Yen)7.0 billion for (Yen)4.1 billion during the
fiscal year ended March 31, 2003 and an aggregate net book value of (Yen)2.2
billion for (Yen)1.6 billion during the fiscal year ended March 31, 2004. For a
detailed discussion on additional provisions for credit losses associated with
the sale of such loans, see "--Financial Condition--Allowance for Credit
Losses, Nonperforming and Past Due Loans."

Venture Capital Fund.  We own non-controlling equity interests in investment
funds managed by fund management companies who have discretionary investment
powers. These funds seek to invest in start-up companies or companies that are
rapidly developing. The aggregate assets of these funds were approximately
(Yen)1,900.1 billion at March 31, 2004. We made contributions to these funds
amounting to (Yen)93.2 billion at March 31, 2004. At March 31, 2004, in
accordance with the applicable limited partnership agreements, we had
commitments to make additional contributions of up to (Yen)28.4 billion when
required by the fund management companies.

Investment Trust.  We purchase the share units of investment trusts as mid- to
long-term investments. These investment trusts are managed by investment
advisory companies with the objective of investing in a diversified portfolio
consisting of equity and debt securities, primarily shares of Japanese public
companies. At March 31, 2004, our share units in investment trusts amounted to
approximately (Yen)596.2 billion, which is equal to our maximum loss exposure.
Generally, we are not obligated to invest in or extend funds by purchasing
additional

                                      98



share units and our off-balance-sheet exposures or commitments relating to this
type of special purpose entity were not material.

Special Purpose Entities Created for Structured Financing

We extend non-recourse asset-backed loans to special purpose entities, which
hold beneficial interests in real properties, to provide financing for special
purpose projects including real estate development and natural resource
development managed by third parties. We generally act as a member of a lending
group and do not have any equity investment in the entities, which is typically
provided by project owners. We earn profit by arrangement fee and interest on
non-recourse asset-backed loans to these entities.

We, as a non-primary beneficiary, had variable interests in this type of
entities, with total assets of (Yen)10,960.1 billion, as of March 31, 2004, and
are exposed to maximum loss of (Yen)650.2 billion, which will possibly realize
if our loans to entities are not collected in accordance with the contractual
terms.

Trust Products

We offer a variety of trust products and manage and administer a wide range of
trust arrangements including securities investment trusts, pension trusts and
trusts used in the securitization of assets originated by and transferred to
third parties. In a typical trust arrangement, we manage and administer the
assets on behalf of the customers in an agency, fiduciary and trust capacity.
In principle, we do not assume the risks associated with the entrusted assets,
which are borne by the customers. However, in limited cases we assume risks
through guarantees or certain protections as provided in the applicable trust
agreement. Fees on trust products that we offer for the fiscal years ended
March 31, 2003 and 2004 were (Yen)103.8 billion and (Yen)90.0 billion,
respectively.

See notes 14, 24 and 27 to our consolidated financial statements for further
details.

Repackaged Instruments

We repackage financial instruments to create new financial instruments with
features that match our customers' needs and preferences. We purchase financial
instruments such as bonds and transfer them to special purpose entities which
then issue new instruments. The special purpose entities may enter into
derivative transactions including interest rate and currency swaps with us or
other financial institutions to modify the cash flows of the underlying
financial instruments. We underwrite and market to our customers the new
instruments issued by the special purpose entities. With regard to transactions
with these entities, we earn revenues by sales of securities, derivative
transactions or arrangement fee. In addition, we may purchase asset-backed
securities and credit linked notes issued by entities managed by third parties.
At March 31, 2004, the total assets of these entities were estimated as
(Yen)5,333.7 billion and our maximum exposure to loss as a result of its
involvement with such entities were estimated as (Yen)575.8 billion.

                                      99



Contractual Cash Obligations

In the normal course of our business, we enter into contractual agreements
whereby we commit to future purchases of products or services from unaffiliated
parties. The following table shows a summary of our contractual cash
obligations at March 31, 2004:



                                               Payments due by period
                              --------------------------------------------------------
                               Less than                          Over 5
                                1 year    1-3 years  4-5 years    years       Total
                              ----------- ---------- ---------- ---------- -----------
                                                   (in billions)
                                                            
Contractual cash obligations:
   Time deposits............. (Yen)26,701 (Yen)6,975 (Yen)1,658 (Yen)   57 (Yen)35,391
   Debentures................         266         --         --         --         266
   Long-term debt............         590      1,365        813      2,840       5,608
   Capital lease obligations.          18         25          6          3          52
   Operating leases..........          24         44         36         56         160
   Purchase obligations......         145          7          4         35         191
                              ----------- ---------- ---------- ---------- -----------
       Total................. (Yen)27,744 (Yen)8,416 (Yen)2,517 (Yen)2,991 (Yen)41,668
                              =========== ========== ========== ========== ===========


Purchase obligations include any legally binding contractual obligations that
require us to spend more than (Yen)100 million annually under the contract.
Purchase obligations in the table primarily include commitments to make
investments into a partner of our strategic business alliance and corporate
recovery or private equity investment funds.

Non-exchange Traded Contracts Accounted for at Fair Value

The use of non-exchange traded or over-the-counter contracts provides us with
the ability to adapt to the varied requirements of a wide customer base while
mitigating market risks. Non-exchange traded contracts are accounted for at
fair value, which is generally based on pricing models or quoted market prices
for instruments with similar characteristics. Gains or losses on non-exchange
traded contracts are included in "Trading account profits--net" in our
consolidated statements of operations. These contracts consist primarily of
crude oil commodity contracts. The following table summarizes the changes in
fair value of non-exchange traded contracts for the fiscal years ended March
31, 2003 and 2004:



                                                                                  Fiscal years ended March 31,
                                                                                  ---------------------------
                                                                                      2003           2004
                                                                                   -----------   -----------
                                                                                        (in millions)
                                                                                           
Net fair value of contracts outstandings at beginning of fiscal year............. (Yen)  (568)   (Yen)10,275
Changes attributable to contracts realized or otherwise settled during the fiscal
  year...........................................................................      (3,599)        (8,467)
Fair value of new contracts when entered into during the fiscal year.............          (8)           (23)
Other changes in fair value, principally revaluation at end of fiscal year.......      14,450         10,269
                                                                                   -----------   -----------
Net fair value of contracts outstandings at end of fiscal year................... (Yen)10,275    (Yen)12,054
                                                                                   ===========   ===========


During the fiscal years ended March 31, 2003 and 2004, the fair value of
non-exchange traded contracts increased primarily due to an increase in the
fair value of oil commodity contracts indexed to the Brent crude oil and WTI
crude oil prices, reflecting political factors in the Middle East and other
factors.

                                      100



The following table summarizes the maturities of non-exchange traded contracts
at March 31, 2004:



                                       Net fair value of contracts--
                                             unrealized gains
                             -------------------------------------------------
                                                    Prices based on models and
                             Prices actively quoted  other valuation methods
                             ---------------------- --------------------------
                                               (in millions)
                                              
  Maturity less than 1 year.      (Yen) 5,415                (Yen)167
  Maturity less than 3 years            2,284                     238
  Maturity less than 5 years            1,321                     189
  Maturity 5 years or more..            2,440                      --
                                  -----------                --------
     Total fair values......      (Yen)11,460                (Yen)594
                                  ===========                ========


C.  Research and Development, Patents and Licenses, etc.

Not applicable.

D.  Trend Information

See the discussions under Items 5.A. and 5.B. of this Annual Report.

E.  Off-balance-sheet Arrangements

See the discussion under "Item 5.B. Operating and Financial Review and
Prospects--Liquidity and Capital Resources."

F.  Tabular Disclosure of Contractual Obligations

See the discussion under "Item 5.B. Operating and Financial Review and
Prospects--Liquidity and Capital Resources."

G.  Safe Harbor

See the discussion under "Forward-Looking Statements."

                                      101



Item 6. Directors, Senior Management and Employees.

A.  Directors and Senior Management

The following table sets forth the members of our board of directors as of
August 6, 2004, together with their respective dates of birth and positions.



      Name          Date of Birth          Position at MTFG           Previous or Current Position
      ----          -------------          ----------------           ----------------------------
                                                          
Haruya Uehara     July 25, 1946      Director, Chairman and        President of Mitsubishi Trust Bank
                                       Co-Chief Executive Officer
Nobuo Kuroyanagi  December 18, 1941  Director, President and Chief President of Bank of Tokyo-
                                       Executive Officer             Mitsubishi
Tatsunori Imagawa October 15, 1943   Director, Deputy President    Former Senior Managing Director
                                       and Chief Planning Officer    of Bank of Tokyo-Mitsubishi
Asataro Miyake    July 10, 1944      Senior Managing Director and  Director of Mitsubishi Trust Bank
                                       Chief Risk Management
                                       Officer
Hajime Sugizaki   April 3, 1945      Senior Managing Director and  Director of Bank of Tokyo-
                                       Chief Financial Officer       Mitsubishi
Shigemitsu Miki   April 4, 1935      Director                      Chairman of Bank of Tokyo-
                                                                     Mitsubishi
Akio Utsumi       September 7, 1942  Director                      Chairman of Mitsubishi Trust
                                                                     Bank
Tetsuo Iwata      April 30, 1948     Director                      Managing Director of Bank of
                                                                     Tokyo-Mitsubishi
Kinya Okauchi     September 10, 1951 Director                      Managing Director of Mitsubishi
                                                                     Trust Bank
Ryotaro Kaneko    June 20, 1941      Director                      President of Meiji Yasuda Life
                                                                     Insurance Company
Takuma Otoshi     October 17, 1948   Director                      President of IBM Japan, Ltd.


The following is a brief biography of each of our directors:

Haruya Uehara has been the chairman of the board of directors and co-chief
executive officer since June 2004. He has been a director since June 2003. He
has also been the president of Mitsubishi Trust Bank since April 2004. He
served as a deputy president of Mitsubishi Trust Bank from June 2002 to April
2004 and as a senior managing director of Mitsubishi Trust Bank from June 2001
to June 2002. Mr. Uehara served as a managing director of Mitsubishi Trust Bank
from June 1998 to June 2001 and as a director of Mitsubishi Trust Bank from
June 1996 to June 1998.

Nobuo Kuroyanagi has been the president and chief executive officer since June
2004. He has been a director since June 2003. He has also been the president of
Bank of Tokyo-Mitsubishi since June 2004. He served as a deputy president of
Bank of Tokyo-Mitsubishi from June 2002 to June 2004 and as a managing director
of Bank of Tokyo-Mitsubishi from June 1996 to June 2002, during which period he
also served as a board member from June 1996 to June 2001. Mr. Kuroyanagi
served as a director of Bank of Tokyo-Mitsubishi from June 1992 to June 1996.

Tatsunori Imagawa has been a director, deputy president and chief planning
officer since April 2004. He served previously as a senior managing director
and chief planning officer from May 2003 to April 2004 and as a director from
April 2001 to May 2003. He served as a senior managing director of Bank of
Tokyo-Mitsubishi from June 2002 to May 2003 and as a managing director of Bank
of Tokyo-Mitsubishi from May 1997 to June 2002. Mr. Imagawa served as a
director of Bank of Tokyo-Mitsubishi from June 1993 to May 1997.

                                      102



Asataro Miyake has been a senior managing director and chief risk management
officer since June 2003. Before that date, he served as a managing director of
Bank of Tokyo-Mitsubishi since June 1998, during which period he also served as
a board member from June 1998 to June 2001 and from June 2002 to June 2003. He
has also served as a director of Mitsubishi Trust Bank since June 2004. Mr.
Miyake served as a director of Bank of Tokyo-Mitsubishi from June 1995 to June
1998.

Hajime Sugizaki has been a senior managing director and chief financial officer
since April 2004. He served as a director from April 2001 to March 2004. He has
also served as a director of Bank of Tokyo-Mitsubishi since June 2004. He
served as a senior managing director of Mitsubishi Trust Bank from June 2001 to
March 2004 and as a managing director of Mitsubishi Trust Bank from June 1999
to June 2001. Mr. Sugizaki served as a director of Mitsubishi Trust Bank from
June 1997 to June 1999.

Shigemitsu Miki has been a director since April 2001. He served as the
president from April 2001 to June 2004, during which period he also served as
the chief executive officer from April 2002 to June 2004 and as co-chief
executive officer from April 2001 to April 2002. He has also been the chairman
of Bank of Tokyo-Mitsubishi since June 2004. He served as the president of Bank
of Tokyo-Mitsubishi from June 2000 to June 2004 and as a deputy president of
Bank of Tokyo-Mitsubishi from May 1997 to June 2000. He served as a senior
managing director of Bank of Tokyo-Mitsubishi from June 1994 to May 1997 and as
a managing director of Bank of Tokyo-Mitsubishi from June 1989 to June 1994.
Mr. Miki served as a director of Bank of Tokyo-Mitsubishi from June 1986 to
June 1989.

Akio Utsumi has been a director since April 2001. He served as the chairman of
the board of directors and co-chief executive officer from April 2001 to June
2004. He has also been the chairman of Mitsubishi Trust Bank since April 2004.
He served as the president of Mitsubishi Trust Bank from June 1999 to March
2004 and as a deputy president of Mitsubishi Trust Bank from June 1998 to June
1999. He served as a senior managing director of Mitsubishi Trust Bank from
June 1995 to June 1998 and as a managing director of Mitsubishi Trust Bank from
June 1993 to June 1995. Mr. Utsumi served as a director of Mitsubishi Trust
Bank from June 1991 to June 1993.

Tetsuo Iwata has been a director since June 2003. He has also been a managing
director of Bank of Tokyo-Mitsubishi since May 2004 and has served as a board
member since June 2003. Mr. Iwata served as a director of Bank of
Tokyo-Mitsubishi from June 1999 to May 2003, during which period he also served
as a board member from June 1999 to June 2001.

Kinya Okauchi has been a director since June 2004. He has also been a managing
director of Mitsubishi Trust Bank since April 2003 and a board member of
Mitsubishi Trust Bank since March 2004. Mr. Okauchi served as a director of
Mitsubishi Trust Bank from June 2001 to April 2003.

Ryotaro Kaneko has been a director since April 2001. He has also been the
president of Meiji Yasuda Life Insurance Company since January 2004. Mr. Kaneko
served as the president of Meiji Life Insurance Company from April 1998 to
December 2003 and as a senior managing director of Meiji Life Insurance Company
from April 1997 to April 1998. Mr. Kaneko served as a managing director of
Meiji Life Insurance Company from April 1994 to April 1997.

Takuma Otoshi has been a director since June 2004. He has also been the
president of IBM Japan, Ltd. since December 1999 and CEO of IBM Japan, Ltd.
since March 2003. He served as a Managing Director of IBM Japan, Ltd. from
March 1997 to December 1999 and as a director of IBM Japan, Ltd. from March
1994 to March 1997.

                                      103



The following table sets forth our corporate auditors as of August 6, 2004,
together with their respective dates of birth and positions.



     Name         Date of Birth   Position at MTFG       Previous or Current Position
     ----         -------------   ----------------       ----------------------------
                                           
Setsuo Uno      April 29, 1942    Corporate Auditor Corporate Auditor of Bank of Tokyo-
                                                      Mitsubishi
Yosuke Serizawa September 9, 1943 Corporate Auditor Corporate Auditor of Mitsubishi Trust
                                                      Bank
Mitsuo Minami   November 5, 1933  Corporate Auditor Professor, Department of Business
                                                      Administration, Bunkyo Gakuin
                                                      University (Former Chairman & Chief
                                                      Executive Officer of Tohmatsu & Co.)
Takeo Imai      January 29, 1942  Corporate Auditor Attorney-at-law
Kunio Ishihara  October 17, 1943  Corporate Auditor President of The Tokio Marine & Fire
                                                      Insurance Co., Ltd.
                                                    President of Millea Holdings, Inc.


The following is a brief biography of each of our corporate auditors:

Setsuo Uno has been a corporate auditor since June 2003. He has also been a
corporate auditor of Bank of Tokyo-Mitsubishi since June 2003. He served as a
senior managing director from April 2001 to June 2003. He served as a managing
director of Bank of Tokyo-Mitsubishi from May 1997 to March 2001. Mr. Uno
served as a director of Bank of Tokyo-Mitsubishi from June 1992 to May 1997.

Yosuke Serizawa has been a corporate auditor since April 2001. He has also been
a corporate auditor of Mitsubishi Trust Bank since June 1999. Mr. Serizawa
served as a director of Mitsubishi Trust Bank from June 1995 to June 1999.

Mitsuo Minami has been a corporate auditor since April 2001. He served as a
corporate auditor of Bank of Tokyo-Mitsubishi from June 2001 to June 2004. He
has also been a professor in the Department of Business Administration at
Bunkyo Gakuin University since April 1999. Mr. Minami served as chairman and
chief executive officer of Tohmatsu & Co. (currently Deloitte Touche Tohmatsu
(a Japanese member firm of Deloitte Touche Tohmatsu, Swiss Verein)) from May
1995 to May 1997.

Takeo Imai has been a corporate auditor since April 2001. He has been a partner
of the law firm Miyake, Imai & Ikeda since January 1972.

Kunio Ishihara has been a corporate auditor since June 2004. He served as a
director from June 2002 to June 2004. He has also been the president of The
Tokio Marine & Fire Insurance Co., Ltd. since June 2001, and the president of
Millea Holdings, Inc. since April 2002. Mr. Ishihara served as a senior
managing director of The Tokio Marine & Fire Insurance Co., Ltd., from June
2000 to June 2001 and served as a managing director of The Tokio Marine & Fire
Insurance Co., Ltd., from June 1998 to June 2000.

                                      104



The following table sets forth our executive officers as of August 6, 2004,
together with their respective dates of birth and positions.



       Name          Date of Birth           Position at MTFG          Previous or Current Position
       ----          -------------           ----------------          ----------------------------
                                                             
Katsunori Nagayasu April 6, 1947      Managing Officer,               Managing Director of Bank of
                                        Group Head of Integrated        Tokyo-Mitsubishi,
                                        Corporate Banking Business      Chief Executive of
                                        Group                           Commercial Banking Business
                                                                        Unit
Ryuichi Murata     April 12, 1948     Managing Officer,               Managing Director of Bank of
                                        Group Head of Integrated        Tokyo-Mitsubishi,
                                        Retail Banking Business Group   Chief Executive of Retail
                                                                        Banking Business Unit
Toshio Goto        March 8, 1952      Managing Officer,               Managing Director of Mitsubishi
                                        Group Head of Integrated        Trust Bank
                                        Trust Assets Business Group
Yoshihiro Watanabe July 26, 1947      Managing Officer,               Managing Director of Bank of
                                        Deputy Group Head of            Tokyo-Mitsubishi,
                                        Integrated Corporate Banking    Chief Executive of Global
                                        Business Group                  Corporate Banking Business
                                                                        Unit
Noriaki Hanamizu   September 11, 1947 Managing Officer,               Senior Managing Director of
                                        Deputy Group Head of            Mitsubishi Trust Bank
                                        Integrated Retail Banking
                                        Business Group
Shinichi Ono       July 4, 1949       Managing Officer,               Managing Director of Mitsubishi
                                        Deputy Group Head of            Trust Bank
                                        Integrated Corporate Banking
                                        Business Group
Fumiyuki Akikusa   October 9, 1949    Managing Officer,               Managing Director of Bank of
                                        Deputy Group Head of            Tokyo-Mitsubishi,
                                        Integrated Trust Assets         Chief Executive of Investment
                                        Business Group                  Banking & Asset Management
                                                                        Business Unit
Izumi Tamai        May 5, 1949        Executive Officer,              Non-board member Managing
                                        General Manager of              Director of Bank of Tokyo-
                                        Comprehensive Card Division     Mitsubishi,
                                        of Integrated Retail Banking    General Manager of
                                        Business Group                  Strategical Comprehensive
                                                                        Card&Credit Division
Hajime Mita        December 15, 1950  Executive Officer,              Non-board member Director of
                                        General Manager of              Mitsubishi Trust Bank,
                                        Retail Business Development     General Manager of Personal
                                        Division and Deputy General     Banking Division
                                        Manager of Comprehensive
                                        Card Division of Integrated
                                        Retail Banking Business Group
Junichi Ito        November 26, 1950  Executive Officer,              Non-board member Director of
                                        General Manager of              Bank of Tokyo-Mitsubishi,
                                        Credit & Investment             General Manager of Credit
                                        Management Planning Division    Policy Office


                                      105





      Name          Date of Birth           Position at MTFG          Previous or Current Position
      ----          -------------           ----------------          ----------------------------
                                                            
Yukio Muro        January 13, 1953   Executive Officer,              Non-board member Director of
                                       General Manager of              Mitsubishi Trust Bank,
                                       Trust Business Planning         General Manager of Corporate
                                       Division and Co-General         Finance Strategy Division
                                       Manager of Corporate
                                       Business Planning Division of
                                       Integrated Corporate Banking
                                       Business Group
Masami Mizuno     March 19, 1953     Executive Officer,              Non-board member Director of
                                       General Manager of              Bank of Tokyo-Mitsubishi,
                                       Corporate Business              General Manager of Corporate
                                       Development Division No.2 of    Business Development
                                       Integrated Corporate Banking    Division No.2
                                       Business Group
Tetsuya Wada      March 1, 1954      Executive Officer,              Non-board member Director of
                                       General Manager of              Bank of Tokyo-Mitsubishi,
                                       Retail Business Planning        General Manager of Retail
                                       Division of Integrated Retail   Banking Planning Office
                                       Banking Business Group
Masaaki Tanaka    April 1, 1953      Executive Officer,              Non-board member Director of
                                       General Manager of              Bank of Tokyo-Mitsubishi,
                                       Corporate Business              General Manager of Corporate
                                       Development Division No.1 of    Business Development
                                       Integrated Corporate Banking    Division No.1 and General
                                       Business Group                  Manager of Corporate Banking
                                                                       Division No.3, Corporate
                                                                       Banking Group
Takashi Kimura    September 1, 1954  Executive Officer,              Non-board member Director of
                                       General Manager of              Bank of Tokyo-Mitsubishi,
                                       Corporate Business Planning     General Manager of Corporate
                                       Division and Co-General         Business Planning Division
                                       Manager of Trust Business
                                       Planning Division of
                                       Integrated Corporate Banking
                                       Business Group
Nobuyuki Hirano   October 23, 1951   Executive Officer,              Non-board member Director of
                                       Co-General Manager of           Bank of Tokyo-Mitsubishi,
                                       Corporate Policy Division       General Manager of Corporate
                                                                       Planning Office
Kazuhiko Hasegawa June 5, 1952       Executive Officer,              Non-board member Director of
                                       Co-General Manager of           Bank of Tokyo-Mitsubishi,
                                       Retail Business Development     General Manager of Retail
                                       Division of Integrated Retail   Banking Development
                                       Banking Business Group          Division
Norio Kuroiwa     September 26, 1952 Executive Officer,              Non-board member Director of
                                       Co-General Manager of           Bank of Tokyo-Mitsubishi,
                                       Corporate Risk Management       General Manager of Corporate
                                       Division                        Risk Management Office
Tatsuo Taki       October 7, 1952    Executive Officer,              Non-board member Director of
                                       Co-General Manager of           Mitsubishi Trust Bank,
                                       Corporate Risk Management       General Manager of Corporate
                                       Division                        Risk Management Division


                                      106





      Name        Date of Birth         Position at MTFG         Previous or Current Position
      ----        -------------         ----------------         ----------------------------
                                                       
Toshiaki Kajiura April 8, 1953   Executive Officer,             Non-board member Director of
                                   Co-General Manager of          Mitsubishi Trust Bank,
                                   Asset Management and           General Manager of
                                   Administration Planning        Investment Research &
                                   Division of Integrated Trust   Planning Division
                                   Assets Business Group
Taihei Yuki      October 3, 1952 Executive Officer,             Non-board member Director of
                                   Co-General Manager of          Mitsubishi Trust Bank,
                                   Corporate Policy Division      General Manager of Corporate
                                                                  Planning Division


The following is a brief biography of each of our executive officers:

Katsunori Nagayasu has been a managing officer and group head of the Integrated
Corporate Banking Business Group since April 2004. He served as a director from
April 2001 to June 2004. He has also been a managing director of Bank of
Tokyo-Mitsubishi since June 2002 and has been a chief executive of the
Commercial Banking Business Unit of Bank of Tokyo-Mitsubishi since May 2004. He
served as a managing director of Nippon Trust Bank from June 2000 to September
2001, then as a managing director of Mitsubishi Trust Bank from October 2001 to
June 2002 after the merger of Nippon Trust Bank into Mitsubishi Trust Bank.
Mr. Nagayasu served as a director of Bank of Tokyo-Mitsubishi from June 1997 to
June 2000.

Ryuichi Murata has been a managing officer and group head of the Integrated
Retail Banking Business Group since April 2004. He has also been a managing
director of Bank of Tokyo-Mitsubishi since June 2003 and a chief executive of
the Retail Banking Business Unit of Bank of Tokyo-Mitsubishi since May 2003. He
served as a non-board member managing director of Bank of Tokyo-Mitsubishi from
May 2002 to June 2003. Mr. Murata served as a director of Bank of
Tokyo-Mitsubishi from June 1998 to May 2002, during which period he also served
as a board member from June 1998 to June 2001.

Toshio Goto has been a managing officer and group head of the Integrated Trust
Assets Business Group since April 2004. He has also been a managing director of
Mitsubishi Trust Bank since March 2004. Mr. Goto served as a non-board director
of Mitsubishi Trust Bank from June 2002 to March 2004.

Yoshihiro Watanabe has been a managing officer and deputy group head of the
Integrated Corporate Banking Business Group since April 2004. He has also been
a managing director of Bank of Tokyo-Mitsubishi since June 2004 and a chief
executive of the Global Corporate Banking Business Unit since May 2004. He
served as a non-board member managing director of Bank of Tokyo-Mitsubishi from
June 2001 to June 2004 and as a managing director of Bank of Tokyo-Mitsubishi
from May 2001 to June 2001. Mr. Watanabe served as a director of Bank of
Tokyo-Mitsubishi from June 1997 to May 2001.

Noriaki Hanamizu has been a managing officer and deputy group head of the
Integrated Retail Banking Business Group since April 2004. He has also been a
senior managing director of Mitsubishi Trust Bank since March 2004. He served
as a non-board member managing director of Mitsubishi Trust Bank from June 2001
to March 2004. Mr. Hanamizu served as a director of Mitsubishi Trust Bank from
June 1998 to June 2001.

Shinichi Ono has been a managing officer and deputy group head of the
Integrated Corporate Banking Business Group since April 2004. He has also been
a managing director of Mitsubishi Trust Bank since March 2004. He has served as
a non-board member managing director of Mitsubishi Trust Bank from June 2002 to
March 2004. Mr. Ono served as a director of Mitsubishi Trust Bank from June
2000 to June 2002, during which period he also served as a board member of
Mitsubishi Trust Bank from June 2000 to June 2001.

Fumiyuki Akikusa has been a managing officer and deputy group head of the
Integrated Trust Assets Business Group since April 2004. He has also been a
managing director of Bank of Tokyo-Mitsubishi since June 2004 and

                                      107



a chief executive of the Investment Banking & Asset Management Business Unit
since May 2004. He served as a non-board member managing director of
Tokyo-Mitsubishi from May 2003 to May 2004. Mr. Akikusa served as a director of
Bank of Tokyo-Mitsubishi from June 2000 to May 2003, during which period he
also served as a board member of Bank of Tokyo-Mitsubishi from June 2000 to
June 2001.

Izumi Tamai has been an executive officer and general manager of the
Comprehensive Card Division of the Integrated Retail Banking Business Group
since April 2004. He has also been a non-board member managing director of Bank
of Tokyo-Mitsubishi since May 2004 and a general manager of the Strategical
Comprehensive Card&Credit Division since November 2003. Mr. Tamai served as a
director of Bank of Tokyo-Mitsubishi from June 2000 to May 2004, during which
period he also served as a board member of Tokyo-Mitsubishi Bank from June 2000
to June 2001.

Hajime Mita has been an executive officer, manager of the Retail Business
Development Division and deputy general manager of the Comprehensive Card
Division of the Integrated Retail Banking Business Group since April 2004. He
has also been a non-board member director of Mitsubishi Trust Bank since June
2003. Mr. Mita has been a general manager of the Personal Banking Division of
Mitsubishi Trust Bank since April 2003.

Junichi Ito has been an executive officer and general manager of the Credit &
Investment Management Division since April 2004. He has also been a non-board
member director of Bank of Tokyo-Mitsubishi since June 2002. Mr. Ito has been a
general manager of the Credit Policy Office of Tokyo-Mitsubishi Bank since May
2003.

Yukio Muro has been an executive officer, general manager of the Trust Business
Planning Division and co-general manager of the Corporate Business Planning
Division of the Integrated Corporate Banking Business Group since April 2004.
He has also been a non-board member director of Mitsubishi Trust Bank since
June 2003. Mr. Muro has been a general manager of the Corporate Finance
Strategy Division of Mitsubishi Trust Bank since April 2003.

Masami Mizuno has been an executive officer and general manager of Corporate
Business Development Division No.2 of the Integrated Corporate Banking Business
Group since April 2004. He has also been a non-board member director of Bank of
Tokyo-Mitsubishi since June 2002. Mr. Mizuno has been a general manager of
Corporate Business Development Division No.2 of Bank of Tokyo-Mitsubishi since
April 2004.

Tetsuya Wada has been an executive officer and general manager of the Retail
Business Planning Division of the Integrated Retail Banking Business Group
since April 2004. He has also been a non-board member director of Bank of
Tokyo-Mitsubishi since June 2003. Mr. Wada has been a general manager of the
Retail Banking Planning Office of Bank of Tokyo-Mitsubishi since June 2001.

Masaaki Tanaka has been an executive officer since June 2004 and a general
manager of Corporate Business Development Division No.1 of the Integrated
Corporate Banking Business Group since May 2004. He has also been a general
manager of Corporate Business Development Division No.1 of Bank of
Tokyo-Mitsubishi since May 2004 and a general manager of Corporate Banking
Division No.3 of the Corporate Banking Group of Bank of Tokyo-Mitsubishi since
July 2004. Mr. Tanaka has been a non-board member director of Bank of
Tokyo-Mitsubishi since June 2004.

Takashi Kimura has been an executive officer since June 2004 and a general
manager of the Corporate Business Planning Division and co-general manager of
the Trust Business Planning Division of the Integrated Corporate Banking
Business Group since April 2004. He has also been a non-board member director
of Bank of Tokyo-Mitsubishi since June 2004. Mr. Kimura has been a general
manager of the Corporate Business Planning Division of Bank of Tokyo-Mitsubishi
since April 2004.

Nobuyuki Hirano has been an executive officer and co-general manager of the
Corporate Policy Division since July 2004. He has also been a non-board member
director of Bank of Tokyo-Mitsubishi since June 2001. Mr. Hirano has been a
general manager of the Corporate Planning Office of Bank of Tokyo-Mitsubishi
since May 2004.

                                      108



Kazuhiko Hasegawa has been an executive officer and co-general manager of the
Retail Business Development Division of the Integrated Retail Banking Business
Group since April 2004. He has also been a non-board member director of Bank of
Tokyo-Mitsubishi since June 2002. Mr. Hasegawa has been a general manager of
the Retail Banking Development Division of Bank of Tokyo-Mitsubishi since
November 2003.

Norio Kuroiwa has been an executive officer and co-general manager of the
Corporate Risk Management Division since April 2004. He has also been a
non-board member director of Bank of Tokyo-Mitsubishi since June 2003. Mr.
Kuroiwa has been a general manager of the Corporate Risk Management Office of
Bank of Tokyo-Mitsubishi since May 2002.

Tatsuo Taki has been an executive officer since June 2004 and a co-general
manager of the Corporate Risk Management Division since May 2004. He has also
been a non-board member director of Mitsubishi Trust Bank since June 2004. Mr.
Taki has been a general manager of the Corporate Risk Management Division of
Mitsubishi Trust Bank since May 2004.

Toshiaki Kajiura has been an executive officer since June 2004 and a co-general
manager of the Asset Management and Administration Planning Division of the
Integrated Trust Assets Business Group since April 2004. He has also been a
non-board member director of Mitsubishi Trust Bank since June 2004. Mr. Kajiura
has been a general manager of the Investment Research & Planning Division of
Mitsubishi Trust Bank since March 2004.

Taihei Yuki has been an executive officer and co-general manager of the
Corporate Policy Division since July 2004. He has also been a non-board member
director of Mitsubishi Trust Bank since June 2004. Mr. Yuki has been a general
manager of the Corporate Planning Division of Mitsubishi Trust Bank since April
2003.

The board of directors, executive officers and corporate auditors may be
contacted through our headquarters at Mitsubishi Tokyo Financial Group, Inc.,
4-1, Marunouchi 2-chome, Chiyoda-ku, Tokyo 100-6326, Japan.

All directors and corporate auditors were elected at a general meeting of
shareholders. All executive officers were appointed by resolution of the board
of directors. The regular term of office of a director and an executive officer
is two years and that of a corporate auditor is four years from the date of
assumption of office. However, the term of office of a corporate auditor
elected before the general meeting of shareholders held on June 2003 is three
years. Directors, executive officers and corporate auditors may serve their
terms until the close of the annual general meeting of shareholders held in the
last year of their terms. Directors, executive officers and corporate auditors
may serve any number of consecutive terms. There is no regular term of office
for other corporate officers. None of our directors is party to a service
contract with Mitsubishi Tokyo Financial Group, Inc. or any of its subsidiaries
that provides for benefits upon termination of employment.

B.  Compensation

The aggregate amount of remuneration, including bonuses but excluding
retirement allowances, paid by Mitsubishi Tokyo Financial Group, Inc. and its
subsidiaries during the year ended March 31, 2004 to our directors and
corporate auditors was (Yen)310 million and (Yen)77 million, respectively.

In accordance with customary Japanese practice, when a director or corporate
auditor retires, a proposal to pay a retirement allowance is submitted at the
annual ordinary general meeting of shareholders for approval. After the
shareholders' approval is obtained, the retirement allowance for a director or
corporate auditor is fixed by the board of directors or by consultation among
the corporate auditors in accordance with our internal regulations and practice
and generally reflects the position of the director or corporate auditor at the
time of retirement, the length of his service as a director or corporate
auditor and his contribution to our performance. Mitsubishi Tokyo Financial
Group, Inc. does not set aside reserves for any such retirement payments for
directors and corporate auditors. The aggregate amount of allowance paid by
Mitsubishi Tokyo Financial Group, Inc. and our subsidiaries during the fiscal
year ended March 31, 2004 to our directors and corporate auditors who have
retired was (Yen)334 million and (Yen)201 million, respectively.

                                      109



Mitsubishi Tokyo Financial Group, Inc. has not implemented a stock option plan.
Two of Mitsubishi Tokyo Financial Group, Inc.'s subsidiaries, Mitsubishi
Securities and UNBC, have several stock-based compensation plans. Mitsubishi
Tokyo Financial Group, Inc. does not have a pension foundation, although each
of Bank of Tokyo-Mitsubishi and Mitsubishi Trust Bank does have a pension
foundation.

As of August 6, 2004, our directors, corporate auditors and senior management
held the following numbers of shares of our common stock:



                                                   Number of Shares
Directors                                             Registered
---------                                          ----------------
                                                
Haruya Uehara.....................................        13
Nobuo Kuroyanagi..................................        26
Tatsunori Imagawa.................................        25
Asataro Miyake....................................        16
Hajime Sugizaki...................................        11
Shigemitsu Miki...................................        49
Akio Utsumi.......................................        12
Tetsuo Iwata......................................         9
Kinya Okauchi.....................................         6
Ryotaro Kaneko....................................        --
Takuma Otoshi.....................................         3

                                                   Number of Shares
Corporate Auditors                                    Registered
------------------                                 ----------------
Setsuo Uno........................................        24
Yosuke Serizawa...................................        12
Mitsuo Minami.....................................        10
Takeo Imai........................................        --
Kunio Ishihara....................................        --

                                                   Number of Shares
Executive Officers                                    Registered
------------------                                 ----------------
Katsunori Nagayasu................................         4
Ryuichi Murata....................................         6
Toshio Goto.......................................         5
Yoshihiro Watanabe................................        24
Noriaki Hanamizu..................................        12
Shinichi Ono......................................         5
Fumiyuki Akikusa..................................         8
Izumi Tamai.......................................         9
Hajime Mita.......................................         1
Junichi Ito.......................................         3
Yukio Muro........................................         5
Masami Mizuno.....................................         6
Tetsuya Wada......................................        --
Masaaki Tanaka....................................         1
Takashi Kimura....................................        11
Nobuyuki Hirano...................................        12
Kazuhiko Hasegawa.................................        10
Norio Kuroiwa.....................................         9
Tatsuo Taki.......................................         1
Toshiaki Kajiura..................................         2
Taihei Yuki.......................................         7


                                      110



C.  Board Practices

Our Articles of Incorporation provide for a board of directors of not more than
fifteen members and not more than six corporate auditors. Our corporate
officers are responsible for executing our business operations, and our
directors oversee these officers and set our fundamental strategies.

We currently have eleven directors. Our board of directors has ultimate
responsibility for the administration of our affairs. Our board of directors is
empowered to appoint by resolution representative directors from among the
directors who may represent us severally. Our board of directors may also
appoint from their members by resolution a chairman, a president, deputy
presidents, senior managing directors and managing directors. Senior managing
directors and the managing directors assist the president and deputy
presidents, if any, in the management of our day-to-day business.

Under the Commercial Code of Japan, directors must refrain from engaging in any
business that is in competition with us unless approved by a board resolution,
and no director may vote on a proposal, arrangement or contract in which that
director is deemed to be materially interested.

Neither the Commercial Code nor our Articles of Incorporation contain special
provisions as to the borrowing power exercisable by a director, to the
retirement age of our directors and corporate auditors or to a requirement of
our directors and corporate auditors to hold any shares of our capital stock.

The Commercial Code requires a resolution of the board of directors for a
company to acquire or dispose of material assets, to borrow substantial amounts
of money, to employ or discharge important employees, such as executive
officers, and to establish, change or abolish material corporate organizations,
such as a branch office.

We currently have five corporate auditors, including two external corporate
auditors. Our corporate auditors, who are not required to be certified public
accountants, have various statutory duties, including principally:

..   the examination of the financial statements, business reports, proposals
    and other documents which our board of directors prepares and submits to a
    general meeting of shareholders;

..   the examination of our directors' administration of our affairs; and

..   the preparation and submission of a report on their examination to a
    general meeting of shareholders.

Our corporate auditors are obliged to attend meetings of our board of
directors. They may make statements at the meetings if they deem necessary,
although they are not entitled to vote at the meetings. The Law Concerning
Special Exceptions from the Commercial Code Relating to Audit, etc. of
Joint-Stock Corporations provides that there may not be less than three
corporate auditors. One or more corporate auditors, who are required to serve
on a full-time basis, must be designated by the corporate auditors from among
their members. At least one of the corporate auditors must be a person who has
not been an employee or a director of Mitsubishi Tokyo Financial Group, Inc. or
any of its subsidiaries within the previous five years. After the close of the
annual ordinary general meeting of shareholders to be held in June 2006, at
least half of our corporate auditors must be "external corporate auditors" who
have not been an employee or a director of Mitsubishi Tokyo Financial Group,
Inc. or any of its subsidiaries within the previous five years.

For additional information on our board practices, see "Item 6.A. Directors and
Senior Management."

                                      111



D.  Employees

As of March 31, 2004, we had approximately 43,600 employees, compared to
approximately 44,500 as of March 31, 2003 and 43,020 as of March 31, 2002. In
addition, as of March 31, 2004, we had approximately 13,500 part-time and
temporary employees. The following tables show the percentages of our employees
in our different business units and geographically, as of March 31, 2004. Most
of our employees are members of our employee's union, which negotiates on
behalf of employees in relation to remuneration and working conditions. In
general, we consider labor relations with our employees to be good.



Business unit
-------------
                                                
Bank of Tokyo-Mitsubishi:
   Retail Banking.................................  17%
   Commercial Banking.............................   8
   Global Corporate Banking.......................  12
   Investment Banking and Asset Management........  12
   UnionBanCal Corporation........................  24
   Operation Services.............................   4
   Treasury.......................................   1
   Other units....................................   6

Business unit
-------------
Mitsubishi Trust Bank:
   Trust-Banking..................................   7
   Trust Assets...................................   3
   Real Estate....................................   1
   Global Markets.................................   2
   Administration and subsidiaries................   3
                                                   ---
                                                   100%




Location
--------
                                                
Bank of Tokyo-Mitsubishi:
   Japan..........................................  51%
   United States..................................  25
   Europe.........................................   2
   Asia/Oceania excluding Japan...................   5
   Other areas....................................   1
Mitsubishi Trust Bank:
   Japan..........................................  15
   United States..................................   0
   Europe.........................................   0
   Asia/Oceania excluding Japan...................   0
                                                   ---
                                                   100%


E.  Share Ownership

The information required by this item is set forth in "Item 6.B. Compensation."

                                      112



Item 7. Major Shareholders and Related Party Transactions.

A.  Major Shareholders

Common Stock

As of March 31, 2004, we had 169,784 registered shareholders of common stock.
The ten largest holders of our common stock appearing on the register of
shareholders as of March 31, 2004, and the number and the percentage of such
shares held by them, were as follows:



                                                   Number of shares Percentage of total
Name                                                     held         shares in issue
----                                               ---------------- -------------------
                                                              
Japan Trustee Services Bank, Ltd./(1)/............      409,587             6.32%
Master Trust Bank of Japan, Ltd./(1)/.............      309,743             4.78
State Street Bank and Trust Company...............      214,610             3.31
Hero & Co./(2)/...................................      178,419             2.75
Meiji Yasuda Life Insurance Company/(3)/..........      175,000             2.70
The Tokio Marine and Fire Insurance Co., Ltd......      146,859             2.26
Nippon Life Insurance Company.....................      127,869             1.97
Mitsubishi Heavy Industries, Ltd./(4)/............      118,740             1.83
The Chase Manhattan Bank, N.A. London Secs Lending
  Omnibus Account.................................       80,619             1.24
Mellon Bank Treaty Clients Omnibus................       66,536             1.02
                                                      ---------            -----
   Total..........................................    1,827,982            28.22%
                                                      =========            =====

--------
(1) Includes the shares held in trust accounts, which do not disclose the names
    of beneficiaries.
(2) An owner of record for American Depositary Shares of the company.
(3) These shares are those held in a pension trust account with Master Trust
    Bank of Japan, Ltd. for the benefit of retirement plans with voting rights
    retained by Meiji Yasuda Life Insurance Company.
(4) These shares are those held in a pension trust account with Master Trust
    Bank of Japan, Ltd. for the benefit of retirement plans with voting rights
    retained by Mitsubishi Heavy Industries, Ltd.

At March 31, 2004, 230.38 shares, representing less than 0.01% of the
outstanding common stock, were held by our directors and corporate auditors.

At March 31, 2004, 775,888.64 shares, representing 11.98% of our outstanding
common stock, were owned by 221 U.S. shareholders of record who are residents
of the United States (and a non-resident of Japan), one of whom is the ADR
depository's nominee holding 178,419.00 shares, or 2.75% of our outstanding
common stock.

Preferred Shares

The ten largest holders of our class 1 preferred shares, which are non-voting,
appearing on the register of shareholders as of March 31, 2004, and the number
and the percentage of such shares held by them, were as follows:



                                            Number of shares Percentage of total
Name                                              held         shares in issue
----                                        ---------------- -------------------
                                                       
The Tokio Marine & Fire Insurance Co., Ltd.      16,700             20.51%
Mitsubishi Corporation.....................      16,700             20.51
Meiji Yasuda Life Insurance Company........      16,700             20.51
Kirin Brewery Co., Ltd.....................      10,000             12.28
Asahi Glass Co., Ltd.......................       3,400              4.17
Diamond Lease Company Limited..............       3,400              4.17
Tokyu Corporation..........................       3,400              4.17
Honda Motor Co., Ltd.......................       3,400              4.17
Mitsubishi Chemical Corporation............       2,000              2.45
Mitsubishi Electric Corporation............       1,700              2.08
                                                 ------             -----
   Total...................................      77,400             95.08%
                                                 ======             =====


                                      113



The holders of our class 2 preferred shares, which are non-voting, appearing on
the register of shareholders as of March 31, 2004, and the number and the
percentage of such shares held by them, were as follows:



                                        Number of shares Percentage of total
    Name                                      held         shares in issue
    ----                                ---------------- -------------------
                                                   
    Meiji Yasuda Life Insurance Company      10,000             66.66%
    Asahi Glass Co., Ltd...............       2,500             16.66
    Tokyu Corporation..................       2,500             16.66
                                             ------            ------
       Total...........................      15,000            100.00%
                                             ======            ======


B.  Related Party Transactions

We and our subsidiary banks had, and expect to have in the future, banking
transactions and other transactions in the ordinary course of business with our
related parties. Although for the fiscal year ended March 31, 2004, such
transactions included, but were not limited to, call money, loans, electronic
data processing, leases and management of properties, those transactions were
immaterial and were made at prevailing market rates, terms and conditions and
do not involve more than the normal risk of collectibility or present other
unfavorable features.

None of our directors or executive officers or corporate auditors, and none of
the close members of their respective families, has had any transactions or has
any presently proposed transactions that are material or any transactions that
are unusual in their nature or conditions, involving goods, services or
tangible or intangible assets, to which we were, are or will be a party.

No loans have been made to our directors or executive officers or corporate
auditors other than in the normal course of business, on normal commercial
terms and conditions. In addition, since July 2002, no loans have been made to
our directors or executive officers or corporate auditors other than as
permitted under Section 13(k) of the U.S. Securities Exchange Act and Rule
13k-1 promulgated thereunder.

No family relationship exists among any of our directors or executive officers
or corporate auditors. No arrangement or understanding exists between any of
our directors or executive officers or corporate auditors and any other person
pursuant to which any director or executive officers or corporate auditor was
elected to their position at Mitsubishi Tokyo Financial Group, Inc.

C.  Interests of Experts and Counsel

Not applicable.

Item 8. Financial Information.

A.  Consolidated Statements and Other Financial Information

The information required by this item is set forth in our consolidated
financial statements starting on page F-1 of this Annual Report and in
"Selected Statistical Data" starting on page A-1 of this Annual Report.

Legal Proceedings

From time to time, we are involved in various litigation matters. Based on our
current knowledge and consultation with legal counsel, we believe the current
litigation matters, when ultimately determined, will not have a material
adverse effect on our results of operations and financial position.

Distributions

Our board of directors submits a recommendation for an annual dividend for our
shareholders' approval at the ordinary general meeting of shareholders
customarily held in June of each year. The annual dividend is usually
distributed immediately following shareholders' approval to holders of record
at the end of the preceding fiscal

                                      114



year. In addition to annual dividends, we may make cash distributions by way of
interim dividends to shareholders of record as of September 30 of each year
from our retained earnings as of the end of the preceding fiscal year by
resolution of our board of directors. On June 29, 2004, we paid an annual
dividend of (Yen)6,000 per share of common stock for the fiscal year ended
March 31, 2004.

Under the Japanese foreign exchange regulations currently in effect, dividends
paid on shares held by non-residents of Japan may be converted into any foreign
currency and repatriated abroad. Under the terms of the deposit agreement
pursuant to which ADSs are issued, the depositary is required, to the extent
that in its judgment it can convert Japanese yen on a reasonable basis into US
dollars and transfer the resulting US dollars to the United States, to convert
all cash dividends that it receives in respect of deposited shares into US
dollars and to distribute the amount received, after deduction of any
applicable withholding taxes, to the holders of ADSs. See "Item 10.D.
Additional Information--Exchange Controls--Foreign Exchange and Foreign Trade
Law."

B.  Significant Changes

No significant changes have occurred since the date of our consolidated
financial statements included in this Annual Report.

Item 9. The Offer and Listing.

A.  Offer and Listing Details

Market Price Information

The following table shows, for the periods indicated, the reported high and low
sale prices for shares of our common stock on the Tokyo Stock Exchange and of
the ADSs on the New York Stock Exchange. The table also includes high and low
market price quotations from the Tokyo Stock Exchange translated in each case
into US dollars per ADS at the Federal Reserve Bank of New York's noon buying
rate on the relevant date.



                                                                        Translated into US   Price per ADS on the
                                        Price per share on the TSE     dollars per ADS/(1)/      NYSE
                                     -------------------------------- -----------------      --------------------
                                            High             Low         High        Low      High       Low
                                     --------------      ------------ ------      -----        ------     -----
                                                  (yen)                       (US$)             (US$)
                                                                                      
Fiscal year ended March 31, 2002.... (Yen)1,350,000/(2)/ (Yen)688,000 $11.13/(3)/ $5.15      $11.27     $5.15
Fiscal year ended March 31, 2003
   First quarter.................... (Yen)1,060,000      (Yen)770,000 $ 8.52      $6.43      $ 8.31     $5.91
   Second quarter...................        925,000           700,000   7.80       5.93        7.64      5.98
   Third quarter....................        901,000           620,000   7.31       5.13        7.34      5.08
   Fourth quarter...................        737,000           438,000   6.25/(4)/  3.74        6.20      3.65
Fiscal year ended March 31, 2004
   First quarter....................        548,000           351,000   4.57       2.92        4.63      2.98
   Second quarter...................        747,000           475,000   6.44       3.99        6.60      4.04
   Third quarter....................        929,000           672,000   8.48       6.22/(5)/   8.42      6.31
   Fourth quarter...................      1,080,000           770,000  10.24       7.30       10.11      7.34
Fiscal year ending March 31, 2005
   March............................      1,080,000           842,000  10.24       7.73       10.11      7.79
   April............................      1,110,000           945,000  10.22       8.71       10.40      8.64
   May..............................        997,000           800,000   9.10       7.01        9.21      7.12
   June.............................      1,030,000           880,000   9.41       7.91        9.37      8.08
   July.............................      1,230,000           900,000  11.23       8.30       10.40      8.38
   August...........................      1,080,000           911,000   9.75       8.24        9.55      8.31
   September (through September 21).        996,000           938,000   9.09       8.53        9.10      8.56


                                      115



--------
(1) US dollar amounts have been translated, for your convenience, from yen at
    the Federal Reserve Bank of New York's noon-buying rate as of the relevant
    high and low market quotation dates.
(2) (Yen)1,350,000 is the high market price quotation for both May 2 and May 7,
    2001.
(3) The US dollar amount has been translated, for your convenience, from yen at
    the rate of (Yen)121.34 = $1.00, which is the Federal Reserve Bank of New
    York's noon-buying rate as of May 7, 2001.
(4) There was no Federal Reserve Bank of New York noon-buying rate available as
    of the relevant high market quotation date of January 20, due to a holiday.
    For your convenience, the US dollar amount has been translated from yen at
    the rate of (Yen)117.88 = $1.00 which is the noon-buying rate as of January
    17, 2003.
(5) There was no Federal Reserve Bank of New York noon-buying rate available as
    of the relevant low market quotation date of November 11, due to a holiday.
    For your convenience, the US dollar amount has been translated from yen at
    the rate of (Yen)107.98 = $1.00 which is the noon-buying rate as of
    November 10, 2003.

B.  Plan of Distribution

Not applicable.

C.  Markets

The primary market for our common stock is the Tokyo Stock Exchange, or the
TSE. Our common stock is also listed on the Osaka Securities Exchange in Japan
and on the Official List of the UK Listing Authority and traded on the market
for listed securities on the London Stock Exchange in the United Kingdom. ADSs,
each representing one one-thousandth of a share of common stock, are quoted on
the New York Stock Exchange, or NYSE, under the symbol, "MTF."

D.  Selling Shareholders

Not applicable.

E.  Dilution

Not applicable.

F.  Expenses of the Issue

Not applicable.

Item 10.Additional Information.

A.   Share Capital

Not applicable.

B.  Memorandum and Articles of Association

Our Corporate Purpose

Article 2 of our Articles of Incorporation provides that our corporate purpose
is to carry on the following businesses:

..   administration and management of banks, trust banks, specialized securities
    companies, insurance companies or other companies which we may own as our
    subsidiaries under the Japanese Banking Law; and

..   any other business incidental to, or relating to any of, the businesses
    mentioned in the preceding clause.

                                      116



Board of Directors

For discussion of the provisions of our Articles of Incorporation as they apply
to our directors, see "Item 6.C. Directors, Senior Management and
Employees--Board Practices."

Common Stock

We summarize below the material provisions of our Articles of Incorporation,
our share handling regulations and the Commercial Code of Japan (Law No. 48 of
1899) as they relate to joint stock companies, also known as kabushiki kaisha.
Because it is a summary, this discussion should be read together with our
Articles of Incorporation and share handling regulations, which have been filed
as exhibits to this Annual Report.

General

A joint stock company is a legal entity incorporated under the Commercial Code.
The investment and rights of the shareholders of a joint stock company are
represented by shares of stock in the company and shareholders' liability is
limited to the amount of the subscription for the shares.

Our authorized common share capital is 22,000,000 shares of common stock with
no par value. As of March 31, 2004, a total of 6,476,099.77 shares of common
stock (including 2,714 shares of common stock held by Mitsubishi Tokyo
Financial Group, Inc. and its consolidated subsidiaries as treasury stock) were
issued. Each of the shares issued and outstanding is fully paid and
non-assessable. As of March 31, 2004, we were authorized to issue 336,400
shares of preferred stock, including 81,400 class 1 preferred shares, 15,000
class 2 preferred shares, 120,000 class 3 preferred shares and 120,000 class 4
preferred shares. As of March 31, 2004, we had 81,400 class 1 preferred shares,
15,000 class 2 preferred shares and no class 3 or class 4 preferred shares
issued and outstanding. In July 2004, 15,000 shares of class 2 preferred stock
were converted into 43,047.89 shares of common stock, resulting in our
outstanding class 2 preferred shares to become nil. For a discussion of a
recently announced plan to redeem a portion of our preferred shares, see "Item
5.A. Operating and Financial Review and Prospects--Operating Results--Recent
Developments--Notice Concerning Redemption of Our Class 1 Preferred Shares."

We may issue shares from our authorized but unissued share capital following a
resolution to that effect by our board of directors. An increase in our
authorized share capital is only possible by amendment of our Articles of
Incorporation, which generally requires shareholders' approval.

Under the Commercial Code, shares must be registered and are transferable by
delivery of share certificates. In order to assert shareholders' rights against
us, a shareholder must have its name and address registered on our register of
shareholders, in accordance with our share handling regulations. The registered
holder of deposited shares underlying the ADSs is the depositary for the ADSs,
or its nominee. Accordingly, holders of ADSs will not be able to assert
shareholders' rights other than as provided in the agreement between us, the
depositary and the holders of the ADSs.

A holder of shares may choose, at its discretion, to participate in the central
clearing system for share certificates under the Law Concerning Central
Clearing of Share Certificates and Other Securities of Japan. Participating
shareholders must deposit certificates representing the shares to be included
in this clearing system with the Japan Securities Depository Center, Inc. If a
holder is not a participating institution in the Japan Securities Depositary
Center, it must participate through a participating institution, such as a
securities company or bank having a clearing account with the Japan Securities
Depositary Center. All shares deposited with the Japan Securities Depositary
Center will be registered in the name of the Japan Securities Depositary Center
on our register of shareholders. Each participating shareholder will in turn be
registered on our register of beneficial shareholders and be treated in the
same way as shareholders registered on our register of shareholders. Delivery
of share certificates is not required to transfer deposited shares. Entry of
the share transfer in the books maintained by the Japan Securities Depositary
Center for participating institutions, or in the books maintained by a
participating institution for its customers, has the same effect as delivery of
share certificates. This central clearing system is intended to reduce
paperwork required in connection with transfers of shares. Beneficial owners
may at any time withdraw their shares from deposit and receive share
certificates.

                                      117



Dividends

Dividends are distributed in proportion to the number of shares owned by each
shareholder on the record date for the dividend. Dividends for each financial
period may be distributed following shareholders' approval at an ordinary
general meeting of shareholders.

Payment of dividends on common stock is subject to the preferential dividend
rights of holders of preferred stock.

Under our Articles of Incorporation, our financial accounts are closed on March
31 of each year, and dividends, if any, are paid to shareholders of record at
March 31 following shareholders' approval at an ordinary general meeting of
shareholders. In addition to year-end dividends, our board of directors may by
resolution declare an interim cash dividend to shareholders of record as of
September 30 of each year. Under the Commercial Code and the Banking Law, we
may distribute annual or interim dividends only if:

..   we have set aside in our legal reserve an amount equal to at least
    one-tenth of the annual dividend and any other amount paid by us as an
    appropriation of retained earnings or of any interim dividend, as the case
    may be; or

..   the sum of the amount in our legal reserve and additional paid-in capital
    is at least one-quarter of our stated capital.

We may distribute annual or interim dividends out of the excess of our net
assets, on a non-consolidated basis, over the aggregate of:

(1) our stated capital;

(2) our additional paid-in capital;

(3) our accumulated legal reserve;

(4) the legal reserve to be set aside in respect of the dividend concerned and
    any other proposed payment by way of appropriation of retained earnings;

(5) the excess, if any, of unamortized expenses incurred in preparation for the
    commencement of business and in connection with research and development
    over the aggregate of the amounts referred to in (2), (3) and (4) above;

(6) subscription money for new shares, or security money to be applied to such
    subscription money, if any, recorded on our balance sheet;

(7) if assets are stated at market value on our balance sheet, the excess, if
    any, of the aggregate market value over the aggregate acquisition cost of
    those assets; and

(8) the balance, if any, recorded on our balance sheet as a result of
    reevaluating land which we own for business purposes.

In the case of interim dividends, if we decrease our stated capital or our
legal reserve after the preceding fiscal year end, such decreased figures shall
be applied to (1) and (3) above.

In the case of interim dividends, net assets are calculated by reference to the
balance sheet as of the end of the preceding fiscal year, adjusted to reflect:

(a) any subsequent payment by way of appropriation of retained earnings and
    transfer to legal reserve in respect of such payment;

(b) any subsequent transfer of retained earnings to stated capital; and

                                      118



(c) if we have been authorized, pursuant to a resolution of an ordinary general
    meeting of shareholders or the board of directors, to repurchase our own
    shares, the total amount of the repurchase price for those shares that may
    be paid by us.

Interim dividends may not be paid if there is a risk that at the end of the
fiscal year, there may not be any excess of net assets over the aggregate of
the amounts referred to in (1) through (8) above.

In Japan, the "ex-dividend" date and the record date for any dividends precede
the date of determination of the amount of the dividend to be paid. The market
price of shares generally becomes ex-dividend on the third business day prior
to the record date. Under our Articles of Incorporation, we are not obligated
to pay any dividends which are left unclaimed for a period of five years after
the date on which they first became payable.

Stock Splits

Stock splits of our outstanding stock may be effected at any time by resolution
of the board of directors. When a stock split is to be effected, we may
increase the amount of the authorized share capital to cover the stock split by
amending our Articles of Incorporation by resolution of the board of directors
without approval by special resolution of the general meeting of shareholders,
unless more than one class of stock is issued and outstanding. Shareholders
will not be required to exchange stock certificates for new stock certificates,
but certificates representing the additional stock resulting from the stock
split will be issued to shareholders. We must give public notice of the stock
split, specifying a record date at least two weeks prior to the record date
and, in addition, promptly after the stock split takes effect, give notice to
each shareholder specifying the number of shares to which such shareholder is
entitled by virtue of the stock split.

Fractional Shares

Fractional shares may arise from, among other things, a stock split or a
combination of outstanding shares into a smaller number of shares. A holder of
fractional shares constituting one-hundredth of one share or any integral
multiple of one-hundredth of one share will be registered in our register of
fractional shares. Fractional shares will carry no voting rights, but, pursuant
to the Commercial Code and our Articles of Incorporation, the holders of
fractional shares will have the right to receive dividends and interim
dividends, if any, on their fractional shares. No certificates for fractional
shares will be issued and therefore fractional shares will not normally be
transferable. However, the registered holders of fractional shares may at any
time require us to purchase the fractional shares at the shares' current market
price. Also, registered holders of fractional shares may require us to sell
them a number of fractional shares, of which number, when combined with the
number already held by such holder, shall become one share; provided that such
request is met only when we own the necessary number of our shares.

New Unit Share System

Currently, we do not use the new unit share system (tan-gen kabu) which was
introduced on October 1, 2001. However, we may use the new unit share system by
amending our Articles of Incorporation, which requires shareholders' approval.
Under the new unit share system, a company may provide in its articles of
incorporation that a unit comprises a specified number of shares that is equal
to or less than 1,000 and that does not exceed one-two hundredth of the number
of issued shares. A company may provide in its articles of incorporation that
the company will not issue certificates representing a number of shares less
than a unit. Under the new unit share system, one unit of shares has one voting
right. A holder of less than one unit of shares has no voting right. If we
adopt the new unit share system, shareholders may require us to purchase shares
constituting less than a unit at the current market price. Our board of
directors may reduce the number of shares constituting a unit or cease to use
the unit share system by amendments to our Articles of Incorporation even
though amendments to the Articles of Incorporation generally require a special
resolution of the general meeting of shareholders.

                                      119



General Meeting of Shareholders

The ordinary general meeting of our shareholders is usually held in June of
each year in Chiyoda-ku, Tokyo. In addition, we may hold an extraordinary
general meeting of shareholders whenever necessary by giving at least two
weeks' advance notice to shareholders. The record date for ordinary general
meetings of our shareholders is March 31.

Any shareholder holding at least 300 voting rights or 1% of the total number of
voting rights for six consecutive months or longer may propose a matter to be
considered at a general meeting of shareholders by submitting a written request
to a representative director at least eight weeks prior to the date of the
meeting.

Voting Rights

A shareholder has one voting right for each whole share. However, a corporate
shareholder may not exercise its voting rights if we hold more than one quarter
of the total voting rights with respect to that shareholder. Under our Articles
of Incorporation, except as otherwise provided by law or by other provisions of
our Articles of Incorporation, a resolution can be adopted at a shareholders'
meeting by the holders of a majority of the voting rights represented at the
meeting. The Commercial Code and our Articles of Incorporation require a quorum
of not less than one third of the total number of voting rights for election of
our directors and corporate auditors.

The Commercial Code and our Articles of Incorporation provide that a quorum of
not less than one-third of outstanding voting rights, excluding those owned by
our subsidiaries and affiliates of which we own, directly or indirectly, more
than 25 percent, must be present at a shareholders' meeting to approve
specified corporate actions, such as:

..   the amendment of our Articles of Incorporation, except in some limited
    cases;

..   the removal of a director or corporate auditor;

..   a dissolution, merger or consolidation, except for certain types of mergers;

..   a stock-for-stock exchange or stock-for-stock transfer, except in some
    limited circumstances;

..   the transfer of the whole or an important part of our business;

..   a reduction of stated capital;

..   a corporate split, except in some limited circumstances;

..   the acquisition of the whole business of another company, except in some
    limited circumstances;

..   the offering to persons other than shareholders of stock at a specially
    favorable price, or of stock acquisition rights or bonds or notes with
    stock acquisition rights with specially favorable conditions; and

..   the repurchase of our own stock from a specific party.

At least two-thirds of the voting rights represented at the meeting must
approve these actions.

There is no cumulative voting for the election of directors or corporate
auditors.

Subscription Rights

Holders of shares have no preemptive rights under our Articles of
Incorporation. Under the Commercial Code, however, our board of directors may
determine that shareholders be given subscription rights in connection with a
particular issue of new shares. In this case, these subscription rights must be
given on uniform terms to all shareholders as of a specified record date by
public notice at least two weeks prior to the record date. A notification to
each individual shareholder must also be given at least two weeks prior to the
date of expiration of the subscription rights.

                                      120



Rights to subscribe for new shares may be transferable or non-transferable, as
determined by our board of directors. If subscription rights are not
transferable, a purported transfer by a shareholder will not be enforceable
against us.

Stock Acquisition Rights

We may issue stock acquisition rights (shinkabu yoyakuken), which in the United
States are often in the form of warrants, or bonds with stock acquisition
rights that cannot be detached (shinkabu yoyakuken-tsuki shasai), which in the
United States are often in the form of convertible bonds or bonds with
non-detachable warrants. Except where the issuance would be on "specially
favorable" terms, the issuance of stock acquisition rights or bonds with stock
acquisition rights may be authorized by a resolution of our board of directors.
Upon exercise of the stock acquisition rights, the holder of such rights may
either acquire shares by paying the applicable exercise price or, if so
determined by a resolution of our board of directors, by making a substitute
payment, such as having the convertible bonds redeemed for no cash in lieu of
the exercise price.

Liquidation Rights

Upon our liquidation, the assets remaining after payment of all debts,
liquidation expenses, taxes and preferred distributions to holders of shares of
our preferred stock will be distributed among the holders of our common stock
in proportion to the number of shares they own.

Transfer Agent

Mitsubishi Trust Bank is the transfer agent for our common stock. The office of
Mitsubishi Trust Bank for this purpose is located at 4-5, Marunouchi 1-chome,
Chiyoda-ku, Tokyo, 100-8212, Japan. Mitsubishi Trust Bank maintains our
register of shareholders and our register of lost share certificates, and
records transfers of ownership upon presentation of share certificates.

Reports to Shareholders

We furnish to our shareholders notices, in Japanese, of shareholders' meetings,
annual business reports, including our financial statements, and notices of
resolutions adopted at our shareholders' meetings.

Record Dates and Closing of Shareholders' Register

As stated above, March 31 is the record date for the payment of annual
dividends, if any, and the determination of shareholders entitled to vote at
ordinary general meetings of our shareholders. September 30 is the record date
for the payment of interim dividends, if any. In addition, by a resolution of
our board of directors and after giving at least two weeks' prior public
notice, we may at any time set a record date or close the shareholders'
register temporarily, for a period not in excess of three months, in order to
determine the shareholders who are entitled to the rights pertaining to our
shares. The trading of our shares and the delivery of certificates may continue
even while the shareholders' register is closed.

Repurchase of Our Shares of Common Stock

We may repurchase our own shares:

..   through the Tokyo Stock Exchange or other stock exchanges on which our
    shares are listed, if authorized by a resolution of the board of directors;

..   by way of a tender offer, if authorized by a resolution of the board of
    directors;

..   from a specific party, if authorized by a special resolution of an ordinary
    general meeting of shareholders; or

                                      121



..   from subsidiaries, if authorized by a resolution of the board of directors.

When the repurchase is made by us from a specific party, as authorized by a
special resolution of an ordinary general meeting of shareholders, any
shareholder may make a demand to a director, five days or more prior to the
relevant shareholders' meeting, that we also repurchase the shares held by that
shareholder.

Repurchase of our own shares pursuant to an authorization of our board of
directors must satisfy various specified requirements, including the
requirement that the total amount of the repurchase price may not exceed the
amount of the retained earnings available for interim dividend payments minus
the amount of interim dividends, if paid. If it is anticipated that the net
assets on our balance sheet as at the end of the relevant fiscal year will be
less than the aggregate amount of the stated capital, additional paid-in
capital and other items as described in (1) through (8) in the fourth paragraph
under "--Common Stock--Dividends," we may not repurchase our own shares. In
case we purchase our own shares pursuant to an authorization of our board of
directors, we are required to report the reason by which the repurchase is
considered necessary, type and number of shares and the aggregate amount of the
repurchases carried out at the first ordinary shareholders' meeting after the
repurchase(s) in question.

We may hold our own shares so repurchased without restrictions. In addition, we
may cancel or dispose of our own shares that we hold by a resolution of our
board of directors. As of March 31, 2004, Mitsubishi Tokyo Financial Group,
excluding its subsidiaries, owned 2,061.16 treasury shares.

Preferred Stock

The following is a summary of information concerning the shares of our
preferred stock, including brief summaries of the relevant provisions of our
Articles of Incorporation, the share handling regulations and the Commercial
Code as currently in effect. The detailed rights of our preferred shares are
set out in our Articles of Incorporation and the resolutions of our board of
directors relating to the issuance of the relevant stock.

General

Under our Articles of Incorporation, we are authorized to issue four classes of
preferred shares. Our preferred shares have equal preference over shares of
common stock in respect of dividend entitlements and distribution upon our
liquidation, but holders of the preferred shares are not entitled to vote at
general meetings of shareholders, subject to the exceptions provided under the
Commercial Code. As of March 31, 2004, 81,400 shares of class 1 and 15,000
shares of class 2 preferred shares were outstanding, but there were no class 3
or class 4 preferred shares outstanding. We may, at any time, purchase and
redeem, at fair value, any shares of preferred stock outstanding out of
earnings available for distribution to shareholders. For a discussion of a
recently announced plan to redeem a portion of our preferred shares, see "Item
5.A. Operating and Financial Review and Prospects--Operating Results--Recent
Developments--Notice Concerning Redemption of Our Class 1 Preferred Shares."

Class 1 and class 3 preferred shares are not convertible into our common stock
but are redeemable at our discretion. We may redeem shares of class 1 preferred
shares at (Yen)3,000,000 per share, in whole or in part, on or after January
21, 2004. The redemption terms of class 3 preferred shares will be determined
by the board of directors at the time of issuance of class 3 preferred shares.
Class 2 and class 4 preferred shares are convertible into our common stock at
the option of the holder during a conversion period. At the option of the
holders, class 2 preferred shares are convertible into common stock from July
31, 2003 to July 31, 2008 at the conversion price of (Yen)1,357,559.2 per share
for July 31, 2003 and (Yen)696,898.5 per share from August 1, 2003 to July 31,
2008. The conversion price will be revised annually on August 1 of each year
from 2003 through 2007 to reflect, subject to certain adjustments, the average
market closing price of our common stock on the TSE for the 30 business days
starting from the 45th business day prior to the date of revision of the
conversion price. The conversion price will not exceed the initial conversion
price of (Yen)1,357,559.2 nor be below (Yen)696,898.5 unless certain events or
circumstances arise. Class 2 preferred shares which are not converted at the
option of the holders will be mandatorily converted into common stock on August
1, 2008, at the conversion price determined based on the average market closing
price of the common stock traded on the TSE for the 30 business days

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starting from the 45th business day prior to the date of mandatory conversion.
In the event the average market closing price is below (Yen)714,285, the
conversion price will be (Yen)714,285. The conversion terms of class 4
preferred shares will be determined by the board of directors at the time of
issuance of class 4 preferred shares.

Preferred Dividends

In priority to the payment of dividends to holders of our common stock, the
amount of preferred dividends for class 1 preferred shares is (Yen)82,500 per
share per fiscal year and for class 2 preferred shares is (Yen)16,200 per share
per fiscal year. The amounts of the preferred dividends for class 3 and class 4
preferred shares are to be set by resolution of our board of directors at the
time of issuance. The annual dividend per share may not exceed (Yen)250,000 per
share per fiscal year for class 3 preferred shares and (Yen)125,000 per share
per fiscal year for class 4 preferred shares. In the event that our board of
directors determines to pay an interim dividend to holders of our common stock,
we will, in priority to the payment of that interim dividend, pay a preferred
interim dividend to holders of our preferred shares and the amount of that
preferred interim dividend will be deducted from the preferred dividend payable
on preferred shares in respect of the same fiscal year.

No payment of dividends on our preferred shares or any other shares can be made
unless we have sufficient retained earnings and, in the case of annual
preferred dividends, the shareholders at the relevant ordinary general meeting
of shareholders or, in the case of preferred interim dividends, the board of
directors, resolves to distribute the retained earnings.

Dividends on our preferred shares are non-cumulative. If the full amount of any
dividend is not declared on our preferred shares in respect of any fiscal year,
holders of our preferred shares do not have any right to receive dividends in
respect of the deficiency in any subsequent fiscal year, and we will have no
obligation to pay the deficiency or to pay any interest whether or not
dividends are paid in respect of any subsequent fiscal year. The holders of our
preferred shares are not entitled to any further dividends or other
participation in or distribution of our profits.

Liquidation Rights

In the event of our voluntary or involuntary liquidation, holders of our
preferred shares will be entitled, equally in rank as among themselves, to
receive out of our residual assets upon liquidation a distribution of
(Yen)3,000,000 per share for class 1 preferred shares, (Yen)2,000,000 per share
for class 2 preferred shares and (Yen)2,500,000 per share in the case of each
of the class 3 preferred shares and class 4 preferred shares before any
distribution of assets is made to holders of our common stock. The holders of
our preferred shares are not entitled to any further dividends or other
participation in or distribution of our residual assets upon our liquidation.

Voting Rights

No holder of our preferred shares has the right to receive notice of, or to
vote at, a general meeting of shareholders, except as otherwise specifically
provided under the Commercial Code or other applicable law. Under the
Commercial Code, holders of our preferred shares will be entitled to receive
notice of, and have one voting right per preferred share at, our general
meetings of shareholders:

..   from the commencement of our ordinary general meeting of shareholders if an
    agenda for approval to declare a preferred dividend is not submitted to
    such meeting; or

..   from the close of any ordinary general meeting of shareholders if a
    proposed resolution to declare a preferred dividend is not approved at such
    meeting until such time as a resolution of an ordinary general meeting of
    shareholders declaring a preferred dividend is passed.

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American Depositary Shares

The Bank of New York will issue the American depositary receipts, or ADRs. Each
ADR will represent ownership interests in American depositary shares, or ADSs.
Each ADS represents one thousandth of a share of our common stock. Each ADS is
held by Bank of Tokyo-Mitsubishi, acting as custodian, at its principal office
in Tokyo, on behalf of The Bank of New York, acting as depositary. Each ADS
will also represent securities, cash or other property deposited with The Bank
of New York but not distributed to ADS holders. The Bank of New York's
corporate trust office is located at 101 Barclay Street, New York, New York
10286 and its principal executive office is located at One Wall Street, New
York, New York 10286, U.S.A.

You may hold ADSs either directly or indirectly through your broker or other
financial institution. If you hold ADSs directly, you are an ADS holder. This
description assumes you hold your ADSs directly. If you hold the ADSs
indirectly, you must rely on the procedures of your broker or other financial
institution to assert the rights of ADS holders described in this section. You
should consult with your broker or financial institution to find out what those
procedures are.

The Bank of New York will actually be the registered holder of the common
stock, so you will have to rely on it to exercise your rights as a shareholder.
Our obligations and the obligations of The Bank of New York are set out in a
deposit agreement among us, The Bank of New York and you, as an ADS holder. The
deposit agreement and the ADSs are governed by New York law.

The following is a summary of the material terms of the deposit agreement.
Because it is a summary, it does not contain all the information that may be
important to you. For more complete information, you should read the entire
deposit agreement and the form of ADR.

Share Dividends and Other Distributions

The Bank of New York has agreed to pay to you the cash dividends or other
distributions it or the custodian receives on shares of common stock or other
deposited securities, after deducting its fees and expenses. You will receive
these distributions in proportion to the number of shares your ADSs represent.

Cash.  The Bank of New York will convert any cash dividend or other cash
distribution we pay on our common stock into US dollars, if it can do so on a
reasonable basis and can transfer the US dollars to the United States. If that
is not possible or if any approval from the Japanese government is needed and
cannot be obtained, the deposit agreement allows The Bank of New York to
distribute the yen only to those ADS holders to whom it is possible to do so.
The Bank of New York will hold the yen it cannot convert for the account of the
ADS holders who have not been paid. It will not invest the yen and it will not
be liable for any interest.

Before making a distribution, any withholding taxes that must be paid under
Japanese law will be deducted. See "--Taxation--Japanese Taxation." The Bank of
New York will distribute only whole US dollars and cents and will round
fractional cents to the nearest whole cent. If the relevant exchange rates
fluctuate during a time when The Bank of New York cannot convert the Japanese
currency, you may lose some or all of the value of the distribution.

Shares.  The Bank of New York may distribute new ADSs representing any shares
we may distribute as a dividend or free distribution, if we furnish The Bank of
New York promptly with satisfactory evidence that it is legal to do so. The
Bank of New York will only distribute whole ADSs. It will sell shares which
would require it to issue a fractional ADS and distribute the net proceeds in
the same way as it distributes cash dividends. If The Bank of New York does not
distribute additional ADSs, each ADS will also represent the new shares.

Rights to receive additional shares.  If we offer holders of our common stock
any rights to subscribe for additional shares of common stock or any other
rights, The Bank of New York may, after consultation with us,

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make those rights available to you. We must first instruct The Bank of New York
to do so and furnish it with satisfactory evidence that it is legal to do so.
If we do not furnish this evidence and/or do not give these instructions, and
The Bank of New York decides that it is practical to sell the rights, The Bank
of New York will sell the rights and distribute the proceeds in the same way as
it distributes cash dividends. The Bank of New York may allow rights that are
not distributed or sold to lapse. In that case, you will receive no value for
them.

If The Bank of New York makes rights available to you, upon instruction from
you it will exercise the rights and purchase the shares on your behalf. The
Bank of New York will then deposit the shares and issue ADSs to you. It will
only exercise the rights if you pay it the exercise price and any other charges
the rights require you to pay.

U.S. securities laws may restrict the sale, deposit, cancellation and transfer
of the ADSs issued after the exercise of the rights. For example, you may not
be able to trade the ADSs freely in the United States. In this case, The Bank
of New York may issue the ADSs under a separate restricted deposit agreement
which will contain the same provisions as the deposit agreement, except for
changes needed to put the restrictions in place. The Bank of New York will not
offer you rights unless those rights and the securities to which the rights
relate are either exempt from registration or have been registered under the
U.S. Securities Act with respect to a distribution to you. We will have no
obligation to register under the Securities Act those rights or the securities
to which they relate.

Other distributions.  The Bank of New York will send to you anything else we
distribute on deposited securities by any means it thinks is legal, fair and
practical. If it cannot make the distribution in that way, The Bank of New York
has a choice. It may decide to sell what we distributed and distribute the net
proceeds, in the same way as it does with cash. Or, it may decide to hold what
we distributed, in which case ADSs will also represent the newly distributed
property.

The Bank of New York is not responsible if it decides that it is unlawful or
impractical to make a distribution available to any ADS holders. We have no
obligation to register ADSs, shares, rights or other securities under the
Securities Act. We also have no obligation to take any other action to permit
the distribution of ADSs, shares, rights or anything else to ADS holders. This
means that you may not receive the distributions we make on our shares or any
value for them if it is illegal or impractical for us or The Bank of New York
to make them available to you.

Deposit, Withdrawal and Cancellation

The Bank of New York will issue ADSs if you or your broker deposits shares or
evidence of rights to receive shares with the custodian. Upon payment of its
fees and expenses and of any taxes or charges, such as stamp taxes or stock
transfer taxes or fees, The Bank of New York will register the appropriate
number of ADSs in the names you request and will deliver the ADSs at its
corporate trust office to the persons you request.

In certain circumstances, subject to the provisions of the deposit agreement,
The Bank of New York may issue ADSs before the deposit of the underlying
shares. This is called a pre-release of ADSs. A pre-release is closed out as
soon as the underlying shares are delivered to the depositary. The depositary
may receive ADSs instead of the shares to close out a pre-release. The
depositary may pre-release ADSs only on the following conditions:

..   Before or at the time of the pre-release, the person to whom the
    pre-release is made must represent to the depositary in writing that it or
    its customer, as the case may be, owns the shares to be deposited;

..   The pre-release must be fully collateralized with cash or collateral that
    the depositary considers appropriate;

..   The depositary must be able to close out the pre-release on not more than
    five business days' notice.

The pre-release will be subject to whatever indemnities and credit regulations
that the depositary considers appropriate. In addition, the depositary will
limit the number of ADSs that may be outstanding at any time as a result of a
pre-release.

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You may turn in your ADSs at the Corporate Trust Office of The Bank of New
York's office. Upon payment of its fees and expenses and of any taxes or
charges, such as stamp taxes or stock transfer taxes or fees, The Bank of New
York will deliver (1) the underlying shares to an account designated by you and
(2) any other deposited securities underlying the ADS at the office of the
custodian. Or, at your request, risk and expense, The Bank of New York will
deliver the deposited securities at its Corporate Trust Office.

The ADSs may only be presented for cancellation and release of the underlying
shares of common stock or other deposited securities in multiples of 1,000
ADSs. Holders of ADRs evidencing less than 1,000 ADSs will not be entitled to
delivery of any underlying shares or other deposited securities unless such
ADRs, together with other ADRs presented by the same holder at the same time,
represent in the aggregate at least 1,000 ADSs. If any ADSs are surrendered but
not cancelled pursuant to the preceding sentence, The Bank of New York will
execute and deliver an ADR or ADRs evidencing the balance of ADSs not so
cancelled to the person or persons surrendering the same.

Voting Rights

If you are an ADS holder on a record date fixed by The Bank of New York, you
may instruct The Bank of New York to vote the shares underlying your ADSs at a
meeting of our shareholders in accordance with the procedures set forth in the
deposit agreement.

The Bank of New York will notify you of the upcoming meeting and arrange to
deliver our voting materials to you. The notice shall contain (a) such
information as is contained in such notice of meeting, (b) a statement that as
of the close of business on a specified record date you will be entitled,
subject to any applicable provision of Japanese law and our Articles of
Incorporation, to instruct The Bank of New York as to the exercise of the
voting rights, if any, pertaining to the amount of shares or other deposited
securities represented by your ADSs, and (c) a brief statement as to the manner
in which such instructions may be given, including an express indication that
instructions may be given to The Bank of New York to give a discretionary proxy
to a person designated by us. Upon your written request, received on or before
the date established by The Bank of New York for such purpose, The Bank of New
York shall endeavor in so far as practicable to vote or cause to be voted the
amount of shares or other deposited securities represented by your ADSs in
accordance with the instructions set forth in your request. So long as Japanese
law provides that votes may only be cast with respect to one or more whole
shares or other deposited securities, The Bank of New York will aggregate
voting instructions to the extent such instructions are the same and vote such
whole shares or other deposited securities in accordance with your
instructions. If, after aggregation of all instructions to vote received by The
Bank of New York, any portion of the aggregated instructions constitutes
instructions with respect to less than a whole share or other deposited
securities, The Bank of New York will not vote or cause to be voted the shares
or other deposited securities to which such portion of the instructions apply.
The Bank of New York will not vote or attempt to exercise the right to vote
that attaches to the shares or other deposited securities, other than in
accordance with the instructions of the ADS holders.

We cannot assure you that you will receive the voting materials in time to
ensure that you can instruct The Bank of New York to vote your shares. In
addition, The Bank of New York is not responsible for failing to carry out
voting instructions or for the manner of carrying out voting instructions as
long as it has acted in good faith. This means that you may not be able to
exercise your right to vote and there may be nothing you can do if your shares
are not voted as you requested.

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Fees and Expenses



                 ADR holders must pay:                                           For:
                 ---------------------                                           ----
                                                     

$5.00 (or less) per 100 ADSs (or portion thereof)...... Each issuance of an ADS, including as a result of a
                                                        distribution of shares or rights or other property

                                                        Each cancellation of an ADS, including if the
                                                        agreement terminates

$0.02 (or less) per ADSs............................... To the extent permitted by securities exchange on
                                                        which the ADSs may be listed for trading any cash
                                                        payment

Registration or transfer fees.......................... Transfer and registration of shares on the share
                                                        register of the foreign registrar from your name to the
                                                        name of The Bank of New York or its agent when
                                                        you deposit or withdraw shares

Expenses of The Bank of New York....................... Conversion of foreign currency to US dollars cable,
                                                        telex and facsimile transmission expenses

Taxes and other governmental charges The Bank of
  New York or Bank of Tokyo-Mitsubishi, as
  custodian, have to pay on any ADS or share
  underlying an ADS, for example, stock transfer taxes,
  stamp duty or withholding taxes...................... As necessary


Payment of Taxes

You will be responsible for any taxes or other governmental charges payable on
your ADSs or on the deposited securities underlying your ADSs. The Bank of New
York may refuse to transfer your ADSs or allow you to withdraw the deposited
securities underlying your ADSs until those taxes or other charges are paid. It
may apply payments owed to you or sell deposited securities underlying your
ADSs to pay any taxes owed and you will remain liable for any deficiency. If it
sells deposited securities, it will, if appropriate, reduce the number of ADSs
to reflect the sale and pay to you any property remaining after it has paid the
taxes.

Reclassifications, Recapitalizations and Mergers

If we:

..   reclassify, split up or consolidate any of our shares or the deposited
    securities,

..   recapitalize, reorganize, merge, liquidate, consolidate or sell all or
    substantially all of our assets or take any similar action, or

..   distribute securities on the shares that are not distributed to you,

then,

(1) the cash, shares or other securities received by The Bank of New York will
    become deposited securities and each ADS will automatically represent its
    equal share of the new deposited securities unless additional ADSs are
    issued; and

(2) The Bank of New York may, and will if we request, issue new ADSs or ask you
    to surrender your outstanding ADSs in exchange for new ADSs, identifying
    the new deposited securities.

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Amendment and Termination

We may agree with The Bank of New York to amend the deposit agreement and the
ADSs without your consent for any reason. If the amendment adds or increases
fees or charges, except for taxes and other governmental charges, registration
fees, cable, telex or facsimile transmission costs, delivery costs or other
such expenses, or prejudices an important right of ADS holders, it will only
become effective three months after The Bank of New York notifies you of the
amendment. At the time an amendment becomes effective, you are considered, by
continuing to hold your ADS, to agree to the amendment and to be bound by the
ADSs and the deposit agreement as amended. However, no amendment will impair
your right to receive the deposited securities in exchange for your ADSs.

The Bank of New York will terminate the deposit agreement if we ask it to do
so, in which case it must notify you at least 30 days before termination. The
Bank of New York may also terminate the deposit agreement if The Bank of New
York has told us that it would like to resign and we have not appointed a new
depositary bank within 60 days.

If any ADSs remain outstanding after termination, The Bank of New York will
stop registering the transfers of ADSs, will stop distributing dividends to ADS
holders and will not give any further notices or do anything else under the
deposit agreement other than:

(1) collect dividends and distributions on the deposited securities,

(2) sell rights and other property offered to holders of deposited securities,
    and

(3) deliver shares and other deposited securities in exchange for ADSs
    surrendered to The Bank of New York.

At any time after one year following termination, The Bank of New York may sell
any remaining deposited securities. After that, The Bank of New York will hold
the money it received on the sale, as well as any other cash it is holding
under the deposit agreement for the pro rata benefit of the ADS holders that
have not surrendered their ADSs. It will not invest the money and has no
liability for interest. The Bank of New York's only obligations will be to
account for the money and other cash and with respect to indemnification and to
retain depositary documents. After termination, our only obligations will be
with respect to indemnification and to pay certain amounts to The Bank of New
York.

Limitations on Obligations and Liability to ADS Holders

The deposit agreement expressly limits our obligations and the obligations of
The Bank of New York. It also limits our liability and the liability of The
Bank of New York. We and The Bank of New York:

..   are only obligated to take the actions specifically set forth in the
    deposit agreement without negligence or bad faith;

..   are not liable if either is prevented or delayed by law, any provision of
    our Articles of Incorporation or circumstances beyond their control from
    performing their obligations under the deposit agreement;

..   are not liable if either exercises or fails to exercise discretion
    permitted under the deposit agreement;

..   have no obligation to become involved in a lawsuit or other proceeding
    related to the ADSs or the deposit agreement on your behalf or on behalf of
    any other party unless indemnified to their satisfaction; and

..   may rely upon any advice of or information from legal counsel, accountants,
    any person depositing shares, any ADS holder or any other person believed
    in good faith to be competent to give them that advice or information.

In the deposit agreement, we and The Bank of New York agree to indemnify each
other for liabilities arising out of acts performed or omitted by the other
party in accordance with the deposit agreement.

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Requirements for Depositary Actions

Before The Bank of New York will issue or register transfer of an ADS, make a
distribution on an ADS, or permit withdrawal of shares, it may require:

..   payment of stock transfer or other taxes or other governmental charges and
    transfer or registration fees charged by third parties for the transfer of
    any shares or other deposited securities,

..   production of satisfactory proof of the identity and genuineness of any
    signature or other information it deems necessary, and

..   compliance with regulations it may establish, from time to time, consistent
    with the deposit agreement, including presentation of transfer documents.

The Bank of New York may refuse to deliver, transfer, or register transfers of
ADSs generally when its transfer books are closed, when our transfer books are
closed or at any time if it or we think it advisable to do so.

You have the right to cancel your ADSs and withdraw the underlying shares at
any time except:

..   when temporary delays arise because: (1) The Bank of New York has closed
    its transfer books or we have closed our transfer books; (2) the transfer
    of shares is blocked to permit voting at a shareholders' meeting; or (3) we
    are paying a dividend on the shares;

..   when you or other ADS holders seeking to withdraw shares owe money to pay
    fees, taxes and similar charges; or

..   when it is necessary to prohibit withdrawals in order to comply with any
    laws or governmental regulations that apply to ADSs or to the withdrawal of
    shares or other deposited securities.

This right of withdrawal may not be limited by any other provision of the
deposit agreement.

Reports and Other Communications

The Bank of New York will make available for your inspection at its corporate
trust office any reports and communications, including any proxy soliciting
material, that it receives from us, if those reports and communications are
both (a) received by The Bank of New York as the holder of the deposited
securities and (b) made generally available by us to the holders of the
deposited securities. If we ask it to, The Bank of New York will also send you
copies of those reports it receives from us.

Inspection of Transfer Books

The Bank of New York will keep books for the registration and transfer of ADSs,
which will be open for your inspection at all reasonable times. You will only
have the right to inspect those books if the inspection is for the purpose of
communicating with other owners of ADSs in connection with our business or a
matter related to the deposit agreement or the ADSs.

C.  Material Contracts

Other than as described in this Annual Report, all contracts entered into by us
since our establishment on April 2, 2001 were entered into in the ordinary
course of business.

D.  Exchange Controls

Foreign Exchange and Foreign Trade Law

The Foreign Exchange and Foreign Trade Law of Japan, including related cabinet
orders and ministerial ordinances, governs several aspects of the issuance of
our shares and equity-related securities. It also applies in

                                      129



some cases to the acquisition and holding of our shares or ADSs representing
such shares by non-residents of Japan and by foreign investors. Generally, the
Foreign Exchange and Foreign Trade Law currently in effect does not affect the
right of a non-resident of Japan to purchase or sell an ADR outside Japan for
non-Japanese currency.

"Non-residents of Japan" are defined as individuals who are not resident in
Japan and corporations whose principal offices are located outside Japan.
Branches and other offices of Japanese corporations located outside Japan are
treated as non-residents of Japan, but branches and other offices located
within Japan of non-resident corporations are regarded as residents of Japan.

"Foreign investors" are defined as:

..   individuals not resident in Japan;

..   corporations which are organized under the laws of foreign countries or
    whose principal offices are located outside Japan;

..   corporations of which 50% or more of the shares are held by individuals not
    resident of Japan and corporations which are organized under the laws of
    foreign countries or whose principal offices are located outside Japan; and

..   corporations, a majority of officers (or a majority of officers having the
    power of representation) of which are non-resident individuals.

Acquisitions of Shares

Under the Foreign Exchange and Foreign Trade Law, if a foreign investor
acquires shares of stock of a Japanese company listed on any stock exchange in
Japan or traded on the over-the-counter market in Japan, referred to as listed
shares, from a resident of Japan, and, as a result of such acquisition, the
foreign investor and related parties directly or indirectly hold 10% or more of
the then total outstanding shares of the subject corporation, the foreign
investor is generally required to file a report after the fact with the
Minister of Finance and any other Ministers sharing jurisdiction over the
business of the corporation. If the acquisition concerns national security or
meets other conditions specified in the Foreign Exchange and Foreign Trade Law,
the foreign investor must file a prior notification in respect of the proposed
acquisition with the Ministers, and the Ministers may request a modification or
prohibition of the proposed acquisition. If the foreign investor does not agree
with the request, the Ministers may issue an order for the modification or
prohibition of such acquisition.

A non-resident of Japan is generally not required to make prior notification or
obtain prior approval of acquisitions of listed shares, although the Foreign
Exchange and Foreign Trade Law provides the Ministry of Finance with the power,
in exceptional circumstances, to require prior approval for any such
acquisition from resident(s) by a non-resident of Japan.

The acquisition of shares by non-resident shareholders by way of stock splits
is not subject to any of these notification and confirmation requirements.

Dividends and Proceeds of Sales

Under Japanese foreign exchange regulations currently in effect, dividends paid
on, and the proceeds of sales in Japan of, shares held by non-residents of
Japan may be converted into any foreign currency and repatriated abroad.

Deposits and Withdrawals under American Depositary Facility

The deposit of shares with us, in our capacity as custodian and agent for the
depositary, in Tokyo, the issuance of ADSs by the depositary to a non-resident
of Japan in respect of the deposit and the withdrawal of the underlying

                                      130



shares upon the surrender of the ADSs are not subject to any of the formalities
or restrictions referred to above. However, where as a result of a deposit or
withdrawal the aggregate number of shares held by the depositary, including
shares deposited with us as custodian for the depositary, or the holder
surrendering ADSs, as the case may be, would be 10% or more of the total
outstanding shares, a report will be required, and in specified circumstances,
a prior notification may be required, as noted above.

Reporting of Substantial Shareholdings

Under Japan's Securities and Exchange Law, any person who becomes, beneficially
and solely or jointly, a holder of more than 5% of the total issued shares of
capital stock of a company which is listed on any Japanese stock exchange or
whose shares are traded on the over-the-counter market in Japan generally must
report his or its share ownership to the Director of a relevant local finance
bureau within 5 business days. A similar report must also be made in respect of
any subsequent change of 1% or more in any previously reported holding or any
change in material matters set out in reports previously filed, with some
exceptions. For this purpose, shares issuable to such person upon conversion of
convertible securities or exercise of warrants (including stock acquisition
rights) are taken into account in determining both the number of shares held by
such holder and the issuer's total issued share capital. Copies of each
ownership report must also be furnished to the issuer of such shares and to all
Japanese stock exchanges on which the shares are listed or, in the case of
shares traded over-the-counter, the Japan Securities Dealers Association.

E.  Taxation

Japanese Taxation

The following sets forth the material Japanese tax consequences to owners of
shares or ADSs who are non-resident individuals or non-Japanese corporations
without a permanent establishment in Japan to which the relevant income is
attributable, which we refer to as "non-resident holders" in this section. The
statements regarding Japanese tax laws below are based on the laws in force and
as interpreted by the Japanese taxation authorities as at the date of this
Annual Report and are subject to changes in the applicable Japanese laws,
double taxation treaties, conventions or agreements or interpretations thereof
occurring after that date. This summary is not exhaustive of all possible tax
considerations that may apply to a particular investor, and potential investors
are advised to satisfy themselves as to the overall tax consequences of the
acquisition, ownership and disposition of shares or ADSs, including
specifically the tax consequences under Japanese law, the laws of the
jurisdiction of which they are resident and any tax treaty between Japan and
their country of residence, by consulting their own tax advisers.

For the purpose of Japanese tax law and the Tax Convention (as defined below),
a U.S. holder of ADSs will be treated as the owner of the shares underlying the
ADSs evidenced by the ADRs.

Generally, a non-resident holder of shares or ADSs is subject to Japanese
withholding tax on dividends paid by us. In the absence of any applicable tax
treaty, convention or agreement reducing the maximum rate of withholding tax,
the rate of Japanese withholding tax applicable to dividends paid by us to
non-resident holders is 7% for dividends to be paid on or before March 31, 2008
and 15% thereafter, except for dividends paid to any individual non-resident
holder who holds 5% or more of our issued shares for which the applicable rate
is 20%. Japan has income tax treaties, conventions or agreements whereby this
withholding tax rate is set at, in most cases, 15% for portfolio investors,
with, among other countries, Australia, Belgium, Canada, Denmark, Finland,
France, Germany, Ireland, Italy, Luxembourg, The Netherlands, New Zealand,
Norway, Singapore, Spain, Sweden, Switzerland, the United Kingdom and the
United States. Japanese tax law provides in general that if the Japanese
statutory rate is lower then the maximum rate applicable under tax treaties,
conventions or agreements, the Japanese statutory rate shall be applicable.

On March 30, 2004, the Convention between the Government of the United States
of America and Japan for the Avoidance of Double Taxation and the Prevention of
Fiscal Evasion with Respect to Taxes on Income, which we

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refer to as the Tax Convention, has been signed to replace its predecessor,
which was signed on March 8, 1971 (the "Prior Treaty"). The Tax Convention
applies in place of the Prior Treaty, (i) with respect to taxes withheld at
source, for amounts taxable on or after July 1, 2004, and (ii) with respect to
taxes on income which are not withheld at source and the enterprise taxes, as
regards income for any taxable year beginning on or after January 1, 2005
(subject to certain transitional rules with respect to both items (i) and (ii)
above). The Tax Convention establishes the maximum rate of Japanese withholding
tax which may be imposed on dividends paid to a United States resident not
having a permanent establishment in Japan. Under the Tax Convention, the
maximum withholding rate for U.S. holders (as defined below) is generally set
at 10% of the gross amount distributed. However, the maximum rate is 5% of the
gross amount distributed if the recipient is a corporation and owns directly or
indirectly, on the date on which entitlement to the dividends is determined, at
least 10% of the voting shares of the paying corporation. Furthermore, the
amount distributed shall not be taxed if the recepient is (i) a pension fund
which is a United States resident, provided that such dividends are not derived
from the carrying on of a business, directly or indirectly, by such pension
fund or (ii) a parent company with a controlling interest in the paying
company. In situations where an Eligible U.S. holder (as defined below) would
be entitled to greater benefits under the Prior Treaty than under the Tax
Convention, at the election of such Eligible U.S. holder, the Prior Treaty
shall continue to have effect for a period of twelve months after the relevant
provisions of the Tax Convention would otherwise have gone into effect. U.S.
holders (as defined below) are urged to consult their own tax advisors with
respect to their eligibility for benefits under the Prior Treaty and the Tax
Convention.

Non-resident holders of shares who are entitled to a reduced rate of Japanese
withholding tax on payments of dividends on the shares by us are required to
submit an Application Form for the Income Tax Convention regarding Relief from
Japanese Income Tax on Dividends in advance through us to the relevant tax
authority before the payment of dividends. A standing proxy for non-resident
holders may provide this application service for the non-resident holders.
Non-resident holders who do not submit an application in advance will generally
be entitled to claim a refund from the relevant Japanese tax authority of
withholding taxes withheld in excess of the rate of an applicable tax treaty.

Gains derived from the sale or other disposition of shares or ADSs within or
outside Japan by a non-resident holder are not, in general, subject to Japanese
income or corporation taxes or other Japanese taxes.

Any deposits or withdrawals of shares by a non-resident holder in exchange for
ADSs are not subject to Japanese income or corporation tax.

Japanese inheritance and gift taxes, at progressive rates, may be payable by an
individual who has acquired shares or ADSs as legatee, heir or donee, even if
neither the individual nor the decedent nor the donor is not a Japanese
resident.

U.S. Taxation

The following sets forth the material United States federal income tax
consequences of the ownership of shares and ADSs by a U.S. holder, as defined
below. This summary is based on United States federal income tax laws,
including the United States Internal Revenue Code of 1986, or the Code, its
legislative history, existing and proposed Treasury regulations thereunder,
published rulings and court decisions, and on the Tax Convention, all of which
are subject to change, possibly with retroactive effect.

The following summary is not a complete analysis or description of all
potential United States federal income tax consequences to a particular U.S.
holder. It does not address all United States federal income tax considerations
that may be relevant to all categories of potential purchasers, certain of
which (such as banks or other financial institutions, insurance companies,
dealers in securities, tax-exempt entities, non-U.S. persons, persons holding a
share or an ADS as part of a "straddle," "hedge," conversion or integrated
transaction, holders whose "functional currency" is not the US dollar, holders
liable for alternative minimum tax and holders of 10% or more of our voting
shares) are subject to special tax treatment. This summary does not address any
foreign, state, local or other tax consequences of investments in our shares or
ADSs.

                                      132



This summary addresses only shares or ADSs held as capital assets.

As used herein, a "U.S. holder" is a beneficial owner of shares or ADSs, as the
case may be, that is, for U.S. federal income tax purposes:

..   a citizen or resident of the United States,

..   a corporation created or organized under the laws of the United States or
    any political subdivision thereof,

..   an estate, the income of which is subject to U.S. federal income tax
    regardless of its source, or

..   a trust

  .   the administration of which is subject to the supervision of a court
      within the United States and the control of one or more United States
      persons as described in Section 7701(a)(30) of the Code; or

  .   that has a valid election in effect under applicable U.S. Treasury
      regulations to be treated as a United States person.

An "Eligible U.S. holder" is a U.S. holder that:

..   is a resident of the United States for purposes of the Prior Treaty or the
    Tax Convention, as applicable from time to time,

..   does not maintain a permanent establishment or fixed base in Japan to which
    the shares or ADSs are attributable and through which the U.S. holder
    carries on or has carried on business (or, in the case of an individual,
    performs or has performed independent personal services), and

..   is otherwise eligible for benefits under the Prior Treaty or the Tax
    Convention, as applicable, with respect to income and gain derived in
    connection with the shares or ADSs.

A "Non-U.S. holder" is any beneficial holder of shares or ADSs that is not a
U.S. holder.

We urge U.S. holders to consult their own tax advisors concerning the United
States federal, state and local and other tax consequences to them of the
purchase, ownership and disposition of shares or ADSs.

This summary is based in part on representations by the depositary and assumes
that each obligation under the deposit agreement and any related agreement will
be performed in accordance with their respective terms. For United States
federal income tax purposes, holders of ADSs will be treated as the owners of
the shares represented by the ADSs. The U.S. Treasury has expressed concerns
that parties to whom ADSs are pre-released may be taking actions that are
inconsistent with the claiming of foreign tax credits by U.S. holders of ADSs.
Accordingly, the discussion on the creditability of Japanese taxes described
below could be affected by future actions that may be taken by the U.S.
Treasury.

Special adverse United States federal income tax rules apply if a U.S. holder
holds shares or ADSs of a company that is treated as a "passive foreign
investment company" (a "PFIC") for any taxable year during which the U.S.
holder held shares or ADSs. Based upon proposed Treasury regulations which are
not yet in effect but are proposed to become effective for taxable years
beginning after December 31, 1994 or, for electing taxpayers, for taxable years
beginning after December 31, 1986, and upon certain management estimates, we do
not expect Mitsubishi Tokyo Financial Group, Inc. to be a PFIC for United
States federal income tax purposes in the current year or in future years.
However, there can be no assurance that the described proposed regulations will
be finalized in their current form, and the determination of whether Mitsubishi
Tokyo Financial Group, Inc. is a PFIC is based upon, among other things, the
composition of our income and assets and the value of our assets from time to
time.

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Taxation of Dividends

U.S. holders will include the gross amount of any distribution received with
respect to shares or ADSs (before reduction for Japanese withholding taxes), to
the extent paid out of the current or accumulated earnings and profits (as
determined for United States federal income tax purposes) of Mitsubishi Tokyo
Financial Group, Inc., as ordinary income in their gross income. The amount of
distribution of property other than cash will be the fair market value of such
property on the date of the distribution. Dividends received by a U.S. holder
will not be eligible for the "dividends-received deduction" allowed to United
States corporations in respect of dividends received from other United States
corporations. To the extent that an amount received by a U.S. holder exceeds
such holder's allocable share of our current earnings and profits, such excess
will be applied first to reduce such holder's tax basis in its shares or ADSs,
thereby increasing the amount of gain or decreasing the amount of loss
recognized on a subsequent disposition of the shares or ADSs. Then, to the
extent such distribution exceeds such U.S. holder's tax basis, such excess will
be treated as capital gain. The amount of the dividend will be the US dollar
value of the Japanese yen payments received. This value will be determined at
the spot Japanese yen/US dollar rate on the date the dividend is received by
the depositary in the case of U.S. holders of ADSs, or by the shareholder in
the case of U.S. holders of shares, regardless of whether the dividend payment
is in fact converted into US dollars at that time. If the Japanese yen received
as a dividend are not converted into US dollars on the date of receipt, a U.S.
holder will have basis in such Japanese yen equal to their dollar value on the
date of receipt, and any foreign currency gains or losses resulting from the
conversion of the Japanese yen will generally be treated as U.S. source
ordinary income or loss.

Subject to certain limitations, the Japanese tax withheld will be creditable
against the U.S. holder's United States federal income tax liability. For
foreign tax credit limitation purposes, the dividend will be income from
sources outside the United States. The limitation on foreign taxes eligible for
credit is calculated separately with respect to specific classes of income. For
this purpose, dividends we pay will constitute "passive income" or, in the case
of certain U.S. holders, "financial services income."

The Jobs and Growth Tax Relief Reconciliation Act of 2003 (the "Act") affects
the taxation of dividends. The Act eliminates the tax rate difference between
"qualified dividends" and capital gains for United States individual investors.
Qualified dividends include dividends received from both domestic corporations
and "qualified foreign corporations." Qualified foreign corporations include
those corporations eligible for the benefits of a comprehensive income tax
treaty with the U.S.; both the Prior Treaty and the Tax Convention are such
treaties. Dividends received by U.S. investors from a foreign corporation that
was a foreign investment company (under Section 1246(b) of the Code), a passive
foreign investment company (under Section 1297 of the Code) or a foreign
personal holding company (under Section 552 of the Code) in either the taxable
year of the distribution or the preceding taxable year are not qualified
dividends. We believe that Mitsubishi Tokyo Financial Group, Inc. is a
qualified foreign corporation and that dividends received by U.S. investors
with respect to shares or ADSs of Mitsubishi Tokyo Financial Group, Inc. will
be qualified dividends. Note that these provisions do not effect dividends
received by Non-U.S. holders.

Taxation of Capital Gains

Upon a sale or other disposition of shares or ADSs, a U.S. holder will
recognize gain or loss in an amount equal to the difference between the US
dollar value of the amount realized and the U.S. holder's tax basis, determined
in US dollars, in such shares or ADSs. Such gain or loss will be capital gain
or loss and will be long-term capital gain or loss if the U.S. holder's holding
period for such shares or ADSs exceeds one year. A U.S. holder's adjusted tax
basis in its shares or ADSs will generally be the cost to the holder of such
shares or ADSs. Any such gain or loss realized by a U.S. holder upon disposal
of the shares or ADSs will generally be income or loss from sources within the
United States for foreign tax credit limitation purposes.

Any deposits and/or withdrawals of shares made with respect to ADSs are not
subject to United States federal income tax.

                                      134



Information Reporting and Backup Withholding

Dividends paid on shares or ADSs to a U.S. holder, or proceeds from a U.S.
holder's sale or other disposition of shares or ADS, may be subject to
information reporting requirements. Those dividends or proceeds from sale or
disposition may also be subject to backup withholding unless the U.S. holder:

..   is a corporation or comes within some other categories of exempt
    recipients, and, when required, demonstrates this fact, or

..   provides a correct taxpayer identification number on a properly completed
    U.S. Internal Revenue Service Form W-9 or substitute form, certifies that
    the U.S. holder is not subject to backup withholding, and otherwise
    complies with applicable requirements of the backup withholding rules.

Any amount withheld under these rules will be creditable against the U.S.
holder's United States federal income tax liability or refundable to the extent
that it exceeds such liability if the U.S. holder provides the required
information to the Internal Revenue Service. If a U.S. holder is required to
and does not provide a correct taxpayer identification number, the U.S. holder
may be subject to penalties imposed by the Internal Revenue Service.

F.  Dividends and Paying Agents

Not applicable.

G.  Statement by Experts

Not applicable.

H.  Documents on Display

We file periodic reports and other information with the SEC. You may read and
copy any document that we file with the SEC at the SEC's public reference room
at Room 1024, Judiciary Plaza, 450 Fifth Street, N.W., Washington, D.C. 20549
and at the SEC's regional offices. Please call the SEC at 1-800-732-0330 for
further information on the operation of its public reference rooms. The SEC
also maintains a web site that contains reports, proxy and information
statements and other information regarding registrants that file electronically
with the SEC (http://www.sec.gov). You may also inspect our SEC reports and
other information at the New York Stock Exchange, Inc., 20 Broad Street, New
York, New York 10005. Some of this information may also be found on our website
at http://www.mtfg.co.jp.

I.  Subsidiary Information

Please refer to discussion under "Item 4.C. Information on the
Company--Organizational Structure."

Item 11.Quantitative and Qualitative Disclosures about Credit, Market and Other
        Risk.

Rapid and extensive changes in the Japanese banking environment make risk
management a continual challenge. Many of these changes arise from continuing
economic and financial globalization and further advances in information
technology. Our business opportunities are expanding and competition is
increasing. We are affected by ongoing reforms in the Japanese financial
system, such as changes that allow for the integration of operations, business
alliances across different industries and new entrants into the industries in
which we participate. These and other changes contribute to the risks we face.

We face credit risks, market risks, liquidity risks, operations risks,
information security risks and other risks. We manage these risks through our
risk management system. The risks we face may be broadly divided into two
types. One type consists of credit and market risks that are inherent in our
profit-seeking activities. The second

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type involves risks associated with our own operations. Our management goal is
to achieve a balance between earnings and risks. For this purpose, we have
instituted an integrated risk management policy throughout our group to
identify, quantify, control, monitor and manage risk using consistent standards
and techniques in each of our businesses.

Risk Management System

We have an integrated risk management framework. The holding company and each
of the subsidiary banks have their own chief risk officers and risk management
divisions, which are independent of their respective operational segments.

We determine our group-wide risk management policy at the holding company
level, and our subsidiary banks implement the policy accordingly. The holding
company seeks to raise group-wide risk awareness, integrate and improve the
group's risk management framework, allocate risk capital appropriately and
eliminate specific concentrations of risk. Our board of directors is
responsible for our group-wide risk management and control principles, and the
boards of directors of our subsidiary banks are responsible for the respective
bank's risk management and control principles.

At the holding company level, the following subcommittees of our executive
committee review and evaluate key risks relating to the group: corporate risk
management committee and credit & investment committee. Our corporate risk
management division and credit & investment management division, which report
directly to the chief risk management officer and these committees, monitor the
risks in the day-to-day operations of the group as a whole. Other committees,
offices and divisions at each of our subsidiary banks monitor and manage their
own risks.

Integrated Risk Management

We employ a capital allocation system that assists us in managing our risks in
relation to our profit targets and expected returns. We allocate economic
capital to each of our subsidiary banks based on quantitative risk, type of
risk and business group. Economic capital is calculated from credit risk,
market risk, operational risk and equity portfolio risk. Capital allocation
decisions are made semiannually in consultation with our subsidiary banks, and
we monitor and manage these allocations constantly. We adopted a risk adjusted
performance measurement as our management tool. This measurement enables us to
better assess our profitability and efficiency relative to our risks.

Credit Risk Management

Credit risk is the risk that we will be unable to collect the amount due to us
on the due date of a particular obligation as a result of the deterioration of
the borrower's financial condition. Credit risk is realized when a credit
instrument previously extended to a borrower loses part or all of its value.
This in turn exposes us to financial loss. We have established an internal
framework to maintain our asset quality, manage credit risk exposure and
achieve earnings commensurate with the risks undertaken by us.

Quantitative Analysis of Credit Risk

Using a highly complex model, we analyze our credit risk quantitatively. This
model measures credit risk based on historical data relating to credit amounts,
default rates and recovery rates that we have collected from our subsidiary
banks and takes into account the correlation among borrowers' default
probabilities. We manage our credit risk based upon this analysis.

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Portfolio Management

We work to achieve earnings commensurate with the risk levels undertaken by us.
Our strategy is to price our products based upon expected losses, as determined
in accordance with our internal credit rating system. At the same time, by
monitoring loan amounts and credit exposure by credit rating, type of business
and region, we seek to avoid a concentration of our credit risks in specific
categories. We regulary hold a committee to specifically discuss issues
relating to credit concentration.

We have a specialized unit that sets credit ceilings by country to address and
manage country risk. We regularly review these credit ceilings and adjust them
when credit conditions change materially in any country.

Credit Risk Management System

We closely monitor and supervise the credit portfolios of our subsidiary banks.
We seek to identify problem credits at an early stage. We use the same credit
rating and self-assessment system for our subsidiary banks, Bank of
Tokyo-Mitsubishi and Mitsubishi Trust Bank.

Under our credit risk management system, each subsidiary bank manages its own
credit risk on a global consolidated basis, and we oversee and manage credit
risks on a group-wide basis.

At each of our subsidiary banks, we have in place a system of checks and
balances in which a credit administration section that is independent of the
business development sections screens individual transactions and manages the
extension of credit. Additionally, our management regularly holds investment
and financial meetings and credit and investment council meetings to review
important matters related to credit risk management.

Credit Rating System

We use a credit rating system with a scale of 1 to 15 to evaluate credit risk,
as set out in the table below. Based on this system, we conduct a
self-assessment of our assets and a quantitative risk measurement of credit
risk, manage our loan portfolio and determine our pricing strategy. The credit
rating system, which is based on the concept of probabilities of default, is
consistent with both the method of evaluating credit risk under the new Basel
Capital Accord and those of third-party credit rating agencies. Our credit
rating system is also designed to conform to the regulatory authorities' risk
grading standards for classified loans. Our subsidiary banks constantly monitor
changes in all of our customers' creditworthiness and change ratings if
necessary, so that they perform accurate assessment of their own assets. With
respect to country risk, we assess each country using ten alphanumeric grades
and determine a country risk rating.



                                                      Credit rating
               ---------------------------------------------------------------------------------------
                1-9        10-12                     13                         14                 15
               ------ -----------      -------------------------      ------------------      --------
                                                                               
Borrower grade Normal Close Watch/(1)/ Likely to Become Bankrupt/(2)/ Virtually Bankrupt/(3)/ Bankrupt/(3)/

--------
(1) Borrowers classified as "Close Watch" require close scrutiny because their
    business performance is unstable or their financial condition is
    unfavorable. Borrowers ranked 10, 11, and 12 correspond with "Needs
    Attention" and borrowers ranked 12 also correspond with "Special
    Attention," a subcategory of "Needs Attention," under the Financial
    Services Agency's classification.
(2) Borrowers classified as "Likely to Become Bankrupt" are not yet bankrupt,
    but are in financial difficulty with poor progress in achieving their
    business restructuring plans or are likely to become bankrupt in the
    future. Borrowers ranked 13 correspond with "In Danger of Bankruptcy" under
    the Financial Service Agency's classification.
(3) Borrowers classified as "Virtually Bankrupt" and "Bankrupt" are considered
    to be virtually bankrupt or are legally bankrupt. Borrowers ranked 14 and
    15 correspond with "De Facto Bankrupt" and "Bankrupt," respectively, under
    the Financial Services Agency's classification.

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Risk Management of Strategic Equity Portfolio

Through our banking subsidiaries, we hold shares in some of our clients for
strategic purposes, in particular to maintain long-term relationships with
these clients. These investments have the potential to increase business
revenues and to appreciate in value.

At the same time, there is a risk that we will suffer losses on shares held for
strategic purposes. Price fluctuation is an inherent risk in equity investment.
We regard the management of this risk as essential. We are seeking to lower our
exposure to this risk by reducing the amount of shares we hold for strategic
purposes.

Reducing the amount of shares held for strategic purposes and thereby
minimizing the risk of price declines has become a pressing issue for banks in
Japan. Reductions have become necessary to manage risks effectively and to
comply with the law to limit the shareholdings of banks. The law requires banks
to reduce the balance of their shares to a level below the level of their Tier
I capital by September 2006. We achieved this target as of September 30, 2003,
and have continued to maintain such levels as of March 31, 2004.

In addition to the disposition of shares undertaken to satisfy legal
requirements, we carry out a quantitative analysis of the risks related to our
strategically-held shares from a risk management viewpoint. According to our
calculations, the market value of our total strategically-held shares as of
March 31, 2004 increases or decreases approximately (Yen)3.2 billion when the
TOPIX Index moves one percentage point upward or downward.

We monitor the amount of strategically-held shares to maintain quantitative
risks at an appropriate level in relation to our Tier I capital and to achieve
earnings that compensate for the risks undertaken by us.

Market Risk Management

Market risk is the risk that the value of our assets and liabilities could be
adversely affected by changes in market variables such as interest rates,
securities prices, or foreign exchange rates.

Market Risk Management System

Through our market risk management system, we monitor our overall market risk
and coordinate important matters at the holding company level, while our
subsidiary banks manage the market risks related to their own trading and
non-trading activities on a global consolidated basis.

Market Risk Management Process at Subsidiary Banks

At each of our subsidiary banks, we maintain checks and balances through a
system in which back and middle offices operate independently from front
offices. In addition, ALM committee/ALM council meetings are held at Bank of
Tokyo-Mitsubishi and Mitsubishi Trust Bank, respectively, every month to review
important matters related to market risk and control.

Our subsidiary banks have established quantitative limits relating to market
risk based on their allocated economic capital. In addition, in order to keep
losses within predetermined limits, our subsidiary banks have established
stop-loss rules which set limits for the maximum amount of losses arising from
market activities.

Market Risk Management and Control

Market risk is managed quantitatively through methods such as value at risk, or
VaR, interest rate sensitivity and stress testing as well as qualitatively by
ensuring that appropriate processes and systems are in place for data
management, reporting and evaluation. Various risk profiles are analyzed and
evaluated and findings are reported to the executive committee and the
corporate risk management committee of the holding company.

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Our subsidiary banks set the quantitative limits for market risk and stop loss
and their middle offices monitor these limits on a daily basis. The middle
office of the holding company monitors our subsidiary banks' control over their
limits and reports to its chief risk management officer on a daily basis as
well. We also monitor total loss levels on a consolidated basis.

In addition with respect to the operation of each of the business units, each
of our subsidiary banks manage the market risks relating to our assets and
liabilities, such as interest rate risk and exchange rate risk, by entering
into various hedging transactions using marketable securities and derivatives,
including futures, options and swaps. For a detailed discussion of the
financial instruments employed as part of our risk management strategy,
see note 23 to our consolidated financial statements.

Market Risk Measurement

Market risks consist of general risks and specific risks. General market risks
result from changes in entire markets, while specific risks relate to changes
in the prices of individual stocks and bonds which are independent of the
overall direction of the market.

To measure general market risk, we use the VaR technique to estimate changes in
the market value of portfolios within a certain period by statistically
analyzing past market data. We use the VaR technique to monitor and manage
market risks quantitatively on a daily basis, taking into account risk
diversification effects among all of our portfolios.

We enhanced the methodology used in VaR risk calculation and introduced a
historical simulation model (HS model) from October 2003. This new approach is
based on 10-day holding period, with a 99% confidence interval based on an
observation period consisting of the preceding 701 business days. (The former
approach was based on a variance/covariance (VC) matrix with a 10-day holding
period, with a 99% confidence interval based on three years of historical
data.) This approach assumes that historical changes in market value are
representative of future changes. We adopted the historical simulation model
because it involves fewer assumptions about the distribution of portfolio
losses than parameter-based methodologies, e.g, VC models. The VC model assumes
that changes in risk factors follow a normal distribution, which may differ
from actual events, while the HS model is capable of capturing certain
statistically infrequent movements, e.g., a fat tail. In addition, the HS model
accounts for the characteristics of instruments with non-linear behavior.

The internal market risk model used by the holding company and subsidiary banks
has been verified by external auditors as meeting the qualitative and
quantitative criteria set forth in Section B of the January 1996 Amendment to
the Capital Accord to Incorporate Market Risks and the Japanese Banking Law. We
have begun using the historical simulation model to calculate our capital
adequacy ratios starting from fiscal 2004.

We also conduct stress testing and backtesting. Some market situations are
extremely difficult to predict and some events are statistically very
infrequent. Stress testing uses scenarios that estimate the amount of loss
likely to be incurred by a portfolio in such situations or as a result of such
events. Backtesting is a method that verifies the reliability of
risk-calculation models by retrospectively comparing estimates of risk with the
gains and losses produced by actual market movements.

Illustrations of Market Risks in the Fiscal Year Ended March 31, 2004

Trading activities

The VaR (historical simulation model) for our total trading activities in the
fiscal year ended March 31, 2004 is presented in the table below. Total amount
of VaR as of March 31, 2004 were slightly lower compared to those as of March
31,2003. As of March 31, 2004, market risks related to foreign exchange rate
had decreased slightly, while interest rate risks related to yen or US dollar,
equities and commodities increased. On a daily average basis,

                                      139



interest rate risks related to the US dollar and to foreign exchange rates had
decreased, while risks related to the yen, interest rate, equities and
commodities increased.

Historical Simulation Model




                                             (April 2002--March 2003)
                                  ----------------------------------------------
                                                   (in billions)
                                                       
VaR for Trading Activities
   Risk category                  Daily avg.     High       Low    March 31, 2003
   -------------                  ----------  ---------- --------- --------------
   Interest rate................. (Yen) 4.72  (Yen) 9.92 (Yen)1.63   (Yen) 2.70
       Of which, yen.............       1.75        4.78      0.63         1.59
       Of which, U.S. dollar.....       3.00        7.65      0.66         1.19
   Foreign exchange..............       2.20        5.61      0.58         0.79
   Equities......................       0.63        2.71      0.31         0.33
   Commodities...................       0.25        0.52      0.00         0.26
   Diversification effect........      (2.25)         --        --        (1.06)
                                  ----------  ---------- ---------   ----------
       Total..................... (Yen) 5.55  (Yen)11.12 (Yen)2.76   (Yen) 3.04
                                  ==========  ========== =========   ==========

                                             (April 2003--March 2004)
                                  ----------------------------------------------
                                                   (in billions)
VaR for Trading Activities
   Risk category                  Daily avg.     High       Low    March 31, 2004
   -------------                  ----------  ---------- --------- --------------
   Interest rate................. (Yen) 3.59  (Yen) 9.00 (Yen)1.20   (Yen) 2.69
       Of which, yen.............       2.20        9.00      0.71         1.92
       Of which, U.S. dollar.....       1.55        5.34      0.34         1.53
   Foreign exchange..............       1.49        3.84      0.38         0.73
   Equities......................       0.69        1.34      0.28         0.86
   Commodities...................       0.36        0.81      0.07         0.69
   Diversification effect........      (1.84)         --        --        (1.72)
                                  ----------  ---------- ---------   ----------
       Total..................... (Yen) 4.29  (Yen) 9.39 (Yen)2.05   (Yen) 3.24
                                  ==========  ========== =========   ==========

--------
Note: Based on a 10-day holding period, with a confidence interval of 99% based
      on 701 business days of historical data. The highest and lowest VaR were
      taken from different days. A simple summation of VaR by risk category is
      not equal to total VaR due to the effect of diversification.

The average daily VaR by quarter in the fiscal year ended March 31, 2004 was as
follows:



                   Quarter                 Daily average VaR
                   -------                 -----------------
                                        
                   April - June 2003...... (Yen)5.50 billion
                   July - September 2003.. (Yen)4.45 billion
                   October - December 2003 (Yen)3.84 billion
                   January - March 2004... (Yen)3.34 billion


Quantitative market risks fluctuate throughout the year, reflecting the
reaction of trading activities to market volatility. Although market conditions
were often volatile during the fiscal year ended March 31, 2004, our
trading-related revenue was relatively stable, with positive trading-related
revenue recorded for 203 of 261 trading days during the period. Furthermore,
the amount of trading-related revenue per day was kept within a stable range,
with 34 days of positive revenue and only five days of negative revenue
exceeding (Yen)1 billion.

                                      140



The VaR measured by our former model (variance/covariance model) for our total
trading activities in the fiscal year ended March 31, 2004 is as follows.

Variance/Covariance Model



                                             (April 2002--March 2003)
                                  ---------------------------------------------
                                                  (in billions)
                                                      
VaR for Trading Activities
   Risk category                  Daily avg.    High       Low    March 31, 2003
   -------------                  ----------  --------- --------- --------------
   Interest rate................. (Yen) 1.46  (Yen)2.52 (Yen)0.93   (Yen) 1.01
       Of which, yen.............       0.52       1.05      0.19         0.39
       Of which, U.S. dollar.....       0.66       1.39      0.33         0.40
   Foreign exchange..............       0.80       1.56      0.20         1.04
   Equities......................       0.63       1.44      0.27         0.31
   Commodities...................       0.14       0.28      0.05         0.08
   Diversification effect........      (0.48)        --        --        (0.38)
                                  ----------  --------- ---------   ----------
       Total..................... (Yen) 2.55  (Yen)3.59 (Yen)1.73   (Yen) 2.06
                                  ==========  ========= =========   ==========




                                             (April 2003--March 2004)
                                  ---------------------------------------------
                                                  (in billions)
                                                      
VaR for Trading Activities
   Risk category                  Daily avg.    High       Low    March 31, 2004
   -------------                  ----------  --------- --------- --------------
   Interest rate................. (Yen) 1.46  (Yen)2.25 (Yen)0.98   (Yen) 1.46
       Of which, yen.............       0.77       1.40      0.28         1.00
       Of which, U.S. dollar.....       0.51       1.18      0.22         0.49
   Foreign exchange..............       0.63       1.09      0.31         0.93
   Equities......................       0.52       1.09      0.22         0.65
   Commodities...................       0.14       0.29      0.02         0.21
   Diversification effect........      (0.39)        --        --        (0.59)
                                  ----------  --------- ---------   ----------
       Total..................... (Yen) 2.36  (Yen)3.40 (Yen)1.59   (Yen) 2.65
                                  ==========  ========= =========   ==========

--------
Note: Based on a one-day holding period, with a confidence interval of 99%
      based on three years of historical data. The highest and lowest VaR were
      taken from different days. A simple summation of VaR by risk category is
      not equal to total VaR due to the effect of diversification.

The holding period for the variance/covariance model differs from that of the
historical simulation method.

Backtesting

We conduct backtesting in which estimated quantitative risks are compared with
actual realized and unrealized losses to verify the accuracy of our VaR
measurement model. Actual losses never exceeded VaR in our backtesting of
trading days in the fiscal year ended March 31, 2004. This means that our VaR
model provided reasonably accurate measurements during the fiscal year ended
March 31, 2004.

Stress Testing

We calculate, on a daily basis, the predicted losses of our current positions
in each market sector, applying the worst ten-day volatility recorded during
the observation period of 701 business days. As of March 31, 2004, we held a
total trading activity position of (Yen)4.7 billion of predicted loss of
trading positions, while (Yen)3.6 billion as of March 31, 2003.

                                      141



Capital Charges for Market Risk

The market risk regulations stipulated in the Basel Capital Accord require us
to include the effects of market risk in calculating capital adequacy ratios.
Holding company and both subsidiary banks use an internal model approach to
calculate general market risk, and a standardized approach to calculate
specific risk. In applying the internal model approach, we are required to meet
qualitative and quantitative criteria. Internal and external examinations have
demonstrated that our systems have been able to meet these strict requirements.

Non-trading Activities

VaR for our total non-trading activities as of March 31, 2004, excluding market
risks related to our strategic equity portfolio and measured using the same
standard as used for trading activities, was (Yen)133.07 billion, a
(Yen)3.81 billion increase from March 31, 2003. In the fiscal year ended March
31, 2004, interest rate risks and equities-related risks increased (Yen)11.85
billion and (Yen)27.47 billion respectively, while forex-related market risks
declined (Yen)3.69 billion as a result of the decrease in exposure.

Interest rate risks accounted for approximately 77% of our total non-trading
activity market risks, consisting of interest rate risk, foreign exchange rate
risk, equities risk and commodities risk. In the fiscal year ended March 31,
2004, the daily average interest rate VaR totaled (Yen)133.01 billion, with the
highest recorded VaR being (Yen)168.44 billion and the lowest being (Yen)103.24
billion.

The daily average interest rate VaR by quarter in the fiscal year ended March
31, 2004 was as follows:



                  Quarter                  Daily average VaR
                  -------                 -------------------
                                       
                  April - June 2003...... (Yen)148.90 billion
                  July - September 2003.. (Yen)135.78 billion
                  October - December 2003 (Yen)113.05 billion
                  January - March 2004... (Yen)134.60 billion


We analyze interest rate risks by major currencies compared to the previous
fiscal year. The Japanese yen interest rate risk ratio as of March 31, 2004
increased significantly from 29% to 50%, while US dollar-related interest rate
risk ratio decreased from 53% to 35% and euro-related interest rate risk
decreased from 17% to 14%, each as compared to March 31, 2003.

Operational Risk Management

Operational risk refers to losses sustained due to defective internal control
systems and disasters and other external factors. The need for the
establishment of an operational risk management system is growing as
operational risk loss incidents continue to occur not only at financial
institutions but at other companies as well. In response to this need, the
Basel Committee on Banking Supervision requires banks to charge operational
risks to capital in the New Basel Capital Accord. We deal with a wide variety
of risks including those related to liquidity, operations, information
security, staff management, criminal activity, transactions with customers,
legal and compliance matters, disasters, strategy and business management,
regulation changes and business reputation. To manage group-wide operational
risk, we are developing a risk management system that includes operational risk
identification, assessment, control and monitoring.

Liquidity Risk Management

Liquidity risk is mainly the risk of incurring losses if a poor financial
position hampers our subsidiaries' ability to cover funding requirements. Our
subsidiary banks maintain appropriate liquidity in both Japanese yen and
foreign currencies. Our subsidiary banks manage the daily funding mechanism and
the funding sources, such as liquidity gap, liquidity-supplying products such
as commitment lines and buffer assets.

                                      142



In relation to our total liquidity risk, we have established the following
categories to assess group-wide liquidity risks: Normal, With-Concern, and
Critical. The front offices and risk management offices of the holding company
and of our subsidiary banks exchange information and data on cash flows even at
the Normal stage. At higher alert stages, we centralize group-wide information
about liquidity risk. We have also established a system for liaison and
consultation on funding in preparation for emergencies, such as catastrophes,
wars and terrorist attacks.

Operations Risk Management

Operations risk is the risk that we will incur losses because our management or
our employees fail to perform their jobs properly, cause accidents or engage in
improprieties. To reduce operations risk, our subsidiary banks endeavor to
ensure the strict observance of procedures and rules, use automation and
systems to reduce manual work and enhance systems for the management of cash
and other instruments that require physical handling. They also provide
operational counseling and have implemented cross-checking measures such as
internal audits. We share data on operational incidents internally to prevent
the recurrence of similar events.

Information Security Risk Management

Information security risk management refers to information systems designed to
protect the group from losses that could result from the alteration, wrongful
use, loss or unauthorized disclosure of information and from the destruction,
malfunction or wrongful use of information systems. When developing any
information system, we perform tests designed to prevent breakdowns. In
addition, we have in place measures designed to minimize the effects of a
system breakdown, including contingency plans, failsafe mechanisms and disaster
prevention training. To safeguard customer information, we have taken steps to
prevent unauthorized infiltration of our computer systems and to strictly guard
confidentiality. We share data on system breakdowns and information security
incidents internally to help prevent the recurrence of similar events.

Compliance

We consider compliance to be one of the most important considerations in
conducting our businesses. As such, we regularly review our compliance systems
and seek enhancements throughout our organization. Our holding company actively
participates in the planning of our overall compliance efforts and continuously
monitors and supervises the status of these efforts. We have a committee, which
includes directors in charge of compliance at the holding company and our
subsidiary banks, that holds quarterly meetings and considers items needed to
improve and strengthen our overall compliance framework. In addition, the
holding company's compliance advisory committee, which is composed of external
experts in the fields of law and accounting, also aims to improve the
effectiveness and transparency of our compliance efforts by making relevant
proposals to the board of directors of our holding company.

Our subsidiary banks each maintain an office dedicated to the coordination of
compliance-related activities. These offices seek to raise staff awareness of
compliance issues by implementing compliance programs and issuing and updating
compliance manuals that explain relevant legal requirements and internal rules,
as well as through various staff training sessions. Compliance committee
meetings are held at regular intervals to confirm the bank's compliance status
and to discuss related topics. Compliance officers are appointed at all of our
domestic and overseas headquarters and branch offices to perform periodic
self-assessment and training. Independent checks are performed by separate
internal audit sections to assess the effectiveness of our compliance measures.

Internal Audit

Internal audit is a process by which the internal auditing sections
independently verify the adequacy and effectiveness of internal control
systems. The audit office of Bank of Tokyo-Mitsubishi and the audit division of

                                      143



Mitsubishi Trust Bank play a major role in the internal audit activities of our
group. They monitor the risk management process in business operations and
independently evaluate the effectiveness of internal control systems. These
sections also seek to improve and correct any problems or issues identified.

In establishing efficient and effective audit work schedules, the type and
magnitude of risks involved are considered in determining the frequency and
depth of the audit activities. In the audit and compliance division of the
holding company, we have a monitoring group which evaluates and verifies
appropriateness and effectiveness of internal control structures including our
risk management structure, mainly by monitoring internal audit activities of
our subsidiary banks. As a core component of its activities, we utilize
process-oriented audits advocated by the Committee of Sponsoring Organizations
of the Treadway Commission in a way that ensures the effectiveness and
efficiency of operations, reliability of financial reporting and compliance
with applicable laws and regulations. We have planned and carried out
audit-related joint projects with subsidiary banks, including cooperative
audits, establishment of general audit guidelines, and joint training programs.

We have a committee, which includes directors in charge of internal audit and
compliance at the holding company and our subsidiary banks, that discusses our
internal audit structure and important policies for the group. This committee,
which holds quarterly meetings, also reviews various audit-related projects
and, if appropriate, promotes them group-wide.

Item 12.Description of Securities Other than Equity Securities.

Not applicable.

                                      144



                                    PART II

Item 13.Defaults, Dividend Arrearages and Delinquencies.

None.

Item 14.Material Modifications of the Rights of Security Holders and Use of
        Proceeds.

None.

Item 15.Controls and Procedures.

An evaluation was carried out under the supervision and with the participation
of our management, including the Chief Executive Officer, or CEO, the Co-Chief
Executive Officer, or Co-CEO, and Chief Financial Officer, or CFO, of the
effectiveness of our disclosure controls and procedures as of the end of the
period covered by this Annual Report. Based on that evaluation, the CEO, Co-CEO
and CFO have concluded that our disclosure controls and procedures are
effective to ensure that information required to be disclosed by us in reports
that we file or submit under the U.S. Securities Exchange Act of 1934 is
recorded, processed, summarized and reported within the time periods specified
in SEC rules and forms. During the period covered by this Annual Report, there
were no significant changes in our internal controls or in other factors that
could materially affect, or is reasonably likely to materially affect, the
disclosure controls, including any corrective actions with regard to
significant deficiencies and material weaknesses.

Item 16A. Audit Committee Financial Expert.

Our board of corporate auditors has determined that Mr. Mitsuo Minami is an
"audit committee financial expert" as defined in Item 16A. of Form 20-F. Mr.
Minami, a corporate auditor, has spent most of his business career auditing
major Japanese corporations as a certified public accountant, and he is
currently a professor of accounting at Bunkyo Gakuin University.

Item 16B. Code of Ethics.

We have adopted a code of ethics, compliance rules and a compliance manual,
each of which applies to our principal executive officer, principal financial
officer, principal accounting officer and persons performing similar functions.

Our compliance rules set forth the necessity of adherence to our code of ethics
by our directors, executive officers and employees. These rules also set forth
the roles and responsibilities of our employees, compliance officers, Audit
Division Compliance Group and others in the event of a breach of the compliance
rules.

Our compliance manual was created to identify, and to promote compliance by our
directors, executive officers and employees with, the relevant laws and
regulations in conjunction with our code of ethics and compliance rules. This
manual also sets forth the procedures regarding the handling of conflicts of
interest for our directors and the promotion of conduct that meets our code of
ethics and compliance rules for employees.

A copy of the sections of our code of ethics, compliance rules and compliance
manual relating to the "code of ethics" (as defined in paragraph (b) of Item
16B. of Form 20-F) is attached as Exhibit 11 to this Annual Report. No
amendments to those sections of our code of ethics, compliance rules and
compliance manual have been made, and no waivers of the code of ethics,
compliance rules and compliance manual have been granted to our principal
executive officer, principal financial officer, principal accounting officer,
directors and corporate auditors, during the fiscal year ending March 31, 2004.

                                      145



Item 16C. Principal Accountant Fees and Services.

Fees and Services of Deloitte Touche Tohmatsu

The aggregate fees billed by Deloitte Touche Tohmatsu, our independent auditor,
for the fiscal years ended March 31, 2003 and 2004 are presented in the
following table.



                                                           2003       2004
                                                        ---------- ----------
                                                            (in millions)
                                                             
Audit fees............................................. (Yen)1,680 (Yen)1,719
Audit-related fees.....................................         83        137
Tax fees...............................................        156        106
All other fees.........................................        789        127
                                                        ---------- ----------
   Total............................................... (Yen)2,708 (Yen)2,089
                                                        ========== ==========


The description of our fees billed for each categories described above is as
follows:

Audit fees--Audit fees are primarily for annual audit of our financial
statements, review of our semi-annual condensed financial statements, statutory
audit of our financial statements and audits of our subsidiary financial
statements. Audit fees also include comfort letters related to a global
offering of our common stock in March 2003.

Audit-related fees--Audit-related fees primarily include due diligence
services, accounting consultations, agreed upon procedures on internal controls
and employee benefit plan audit. Audit-related fees also include advisory
services relating to the implementation of Section 404 of the Sarbanes-Oxley
Act.

Tax fees--Tax fees relate primarily to tax compliance including preparation of
tax return filings, tax advisory and tax planning services. Tax fees also
include consultation fees to introduce the consolidated corporate-tax system we
adopted for the fiscal year ended March 31, 2003.

All other fees--All other fees primarily include agreed upon procedures related
to our bulk sales of loans or securitizations and operational audits of our
overseas branches.

Pre-Approval Policies and Procedures for Services by Deloitte Touche Tohmatsu

Our board of corporate auditors performs the pre-approval function required by
applicable SEC rules and regulations. Effective May 1, 2003, our board of
corporate auditors has established pre-approval policies and procedures that
Mitsubishi Tokyo Financial Group, Inc. and its subsidiaries must follow before
engaging Deloitte Touche Tohmatsu to perform audit and permitted non-audit
services.

When Mitsubishi Tokyo Financial Group, Inc. or a subsidiary intends to engage
Deloitte Touche Tohmatsu to perform audit and permitted non-audit services, it
must make an application for pre-approval on either a periodic or case-by-case
basis.

..   Periodic application is an application for pre-approval made each fiscal
    year for services that are expected to be provided by Deloitte Touche
    Tohmatsu during the next fiscal year.

..   Case-by-case application is an application for pre-approval made on a
    case-by-case basis for services to be provided by Deloitte Touche Tohmatsu
    that are not otherwise covered by the relevant periodic application.

Pre-approval is resolved in principle by our board of corporate auditors prior
to engagement, although if necessary a full-time corporate auditor may consider
any case-by-case application for pre-approval on behalf of the board of
corporate auditors prior to the next scheduled board meeting. Such decisions
made individually by a full-time corporate auditor are reported to and ratified
by the board of corporate auditors as appropriate at the next scheduled board
meeting.

                                      146



None of the services billed for the fiscal year ended March 31, 2003 was
subject to pre-approval requirements. For the fiscal year ended March 31, 2004,
all services subject to pre-approval, which were entered into after May 6,
2003, were pre-approved either by the board of corporate auditors or a
full-time corporate auditor in accordance with the pre-approval policies and
procedures described above, except that approximately 0.6% of total tax fees
were approved by the board of corporate auditors pursuant to Regulation S-X
2-01(c)(7)(ii)(c).

                                      147



                                   PART III

Item 17.Financial Statements.

In lieu of responding to this item, we have responded to Item 18 of this Annual
Report.

Item 18.Financial Statements.

The information required by this item is set forth in our consolidated
financial statements starting on page F-1 of this Annual Report.

Item 19.Exhibits.



Exhibit                                               Description
-------                                               -----------
     

   1(a) Articles of Incorporation of Mitsubishi Tokyo Financial Group, Inc., as amended and restated on
        June 29, 2004. (English Translation)

   1(b) Corporation Meetings Regulations of Mitsubishi Tokyo Financial Group, Inc., as amended on April 1,
        2004. (English Translation)

   1(c) Board of Directors Regulations of Mitsubishi Tokyo Financial Group, Inc., as amended on July 29,
        2004. (English Translation)

   1(d) Share Handling Regulations of Mitsubishi Tokyo Financial Group, Inc., as amended and restated on
        June 29, 2004. (English Translation)

   2(a) Form of stock certificates.

   2(b) Form of American Depositary Receipt.*

   2(c) Deposit Agreement, dated as of April 2, 2001, among Mitsubishi Tokyo Financial Group, Inc., The
        Bank of New York and the holders from time to time of American Depositary Receipts issued
        thereunder.*

   8    Subsidiaries of the Company--see "Item 4.C. Information on the Company--Organizational Structure."

  11    Code of ethics, compliance rules and compliance manual of Mitsubishi Tokyo Financial Group, Inc.
        applicable to its directors and managing officers, including its principal executive officer, principal
        financial officer, principal accounting officer or controller, or persons performing similar functions.
        (English translation of relevant sections)

  12    Certifications required by Rule 13a-14(a) (17 CFR 240.13a-14(a)) or Rule 15d-14(a) (17 CFR
        240.15d-14(a)).

  13    Certifications required by Rule 13a-14(b) (17 CFR 240.13a-14(b)) or Rule 15d-14(b) (17 CFR
        240.15d-14(b)) and Section 1350 of Chapter 63 of Title 18 of the United States Code (18 U.S.C.
        1350).

  15    Consent of Auditors.

--------
*  Incorporated by reference from the Registration Statement on Form F-6 (Reg.
   No. 333-13338) filed on April 2, 2001.

                                      148



                           SELECTED STATISTICAL DATA

Due to close integration of foreign and domestic activities, it is difficult to
make a precise determination of assets, liabilities, income and expenses of our
foreign operations. The foreign operations as presented include the business
conducted by overseas subsidiaries and branches, and the international business
conducted by the several international banking related divisions headquartered
in Japan. Our management believes that the results appropriately represent our
domestic and foreign activities.

During the fiscal year ended March 31, 2003, the Bank of Japan changed the
industry segment loan classification. Such change primarily includes an
introduction of a new "Communication and information services" category. Due to
the introduction of the new category, certain businesses previously included in
"Manufacturing," "Services," and "Other" industries were reclassified into
"Communication and information services." This change is expected to provide a
more transparent and detailed description of the loan portfolio. In response to
the change, we modified the loan reporting system. For comparative purposes, we
provide the information by industry segment as of March 31, 2003 and 2004,
including III. Loan Portfolio and IV. Summary of Loan Loss Experience, based on
both the old and new industry segment classifications.

In the fiscal year ended March 31, 2004, certain operations including domestic
mortgage securities business were discontinued and certain figures in prior
fiscal years were reclassified to discontinued operations to conform to the
presentation for the fiscal year ended March 31, 2004.

                                      A-1



I.  Distribution of Assets, Liabilities and Shareholders' Equity; Interest
Rates and Interest Differential

Average Balance Sheets, Interest and Average Rates

The following table shows our average balances, interest and average interest
rates for the fiscal years ended March 31, 2002, 2003 and 2004. Average
balances are generally based on a daily average while a month-end average is
used for certain average balances when it is not practicable to obtain
applicable daily averages. The average balances determined by such methods are
considered to be representative of our operations.



                                                                                       Fiscal years ended March 31,
                                     ------------------------------------------------------------------------------------------
                                                        2002                                          2003
                                     ------------------------------------------   -------------------------------------------
                                           Average                        Average        Average                        Average
                                           balance            Interest     rate          balance            Interest     rate
                                     --------------------  -------------- ------- --------------------   -------------- -------
                                                                                     (in millions, except percentages)
                                                                                                      
Assets:
Interest-earning assets:
 Interest-earning deposits in other
  banks:
   Domestic......................... (Yen)        471,966  (Yen)    8,690  1.84%  (Yen)        365,166   (Yen)    3,773  1.03%
   Foreign..........................            4,862,738         151,078  3.11              3,199,131           68,837  2.15
                                     --------------------  --------------         --------------------   --------------
    Total...........................            5,334,704         159,768  2.99              3,564,297           72,610  2.04
                                     --------------------  --------------         --------------------   --------------
 Call loans, funds sold, and
  receivables under resale
  agreements and securities
  borrowing transactions:
   Domestic.........................            2,008,863           6,341  0.32              1,504,164            4,518  0.30
   Foreign..........................            2,890,112         159,084  5.50              2,483,718           56,857  2.29
                                     --------------------  --------------         --------------------   --------------
    Total...........................            4,898,975         165,425  3.38              3,987,882           61,375  1.54
                                     --------------------  --------------         --------------------   --------------
 Trading account assets:
   Domestic.........................            3,165,218          11,525  0.36              3,753,237           10,330  0.28
   Foreign..........................              720,614           3,619  0.50                634,006            1,710  0.27
                                     --------------------  --------------         --------------------   --------------
    Total...........................            3,885,832          15,144  0.39              4,387,243           12,040  0.27
                                     --------------------  --------------         --------------------   --------------
 Investment securities (see Note 1):
   Domestic.........................           16,142,282         128,312  0.79             17,975,160          122,601  0.68
   Foreign..........................            5,794,785         271,039  4.68              6,651,616          268,790  4.04
                                     --------------------  --------------         --------------------   --------------
    Total...........................           21,937,067         399,351  1.82             24,626,776          391,391  1.59
                                     --------------------  --------------         --------------------   --------------
 Loans (see Note 2):
   Domestic.........................           37,911,969         659,223  1.74             39,025,438          602,899  1.54
   Foreign..........................           11,094,350         614,917  5.54             10,673,412          442,431  4.15
                                     --------------------  --------------         --------------------   --------------
    Total...........................           49,006,319       1,274,140  2.60             49,698,850        1,045,330  2.10
                                     --------------------  --------------         --------------------   --------------
 Total interest-earning assets:
   Domestic.........................           59,700,298         814,091  1.36             62,623,165          744,121  1.19
   Foreign..........................           25,362,599       1,199,737  4.73             23,641,883          838,625  3.55
                                     --------------------  --------------         --------------------   --------------
    Total...........................           85,062,897       2,013,828  2.37             86,265,048        1,582,746  1.83
                                     --------------------  --------------         --------------------   --------------
Non-interest-earning assets:
 Cash and due from banks............            1,487,498                                    1,978,884
 Other non-interest-earning assets..            7,422,477                                    8,822,974
 Allowance for credit losses........          (1,716,475)                                   (1,668,959)
                                     --------------------                         --------------------
    Total non-interest-earning
     assets.........................            7,193,500                                    9,132,899
                                     --------------------                         --------------------
Total assets from discontinued
 operations.........................              119,603                                       80,280
                                     --------------------                         --------------------
Total average assets................      (Yen)92,376,000                              (Yen)95,478,227
                                     ====================                         ====================




                                     --------------------------------------
                                                       2004
                                     ---------------------------------------
                                          Average                     Average
                                          balance         Interest     rate
                                     ----------------  -------------- -------

                                                             
Assets:
Interest-earning assets:
 Interest-earning deposits in other
  banks:
   Domestic......................... (Yen)    314,643  (Yen)    4,072  1.29%
   Foreign..........................        2,804,134          44,021  1.57
                                     ----------------  --------------
    Total...........................        3,118,777          48,093  1.54
                                     ----------------  --------------
 Call loans, funds sold, and
  receivables under resale
  agreements and securities
  borrowing transactions:
   Domestic.........................        3,436,564           3,130  0.09
   Foreign..........................        2,392,079          38,145  1.59
                                     ----------------  --------------
    Total...........................        5,828,643          41,275  0.71
                                     ----------------  --------------
 Trading account assets:
   Domestic.........................        5,455,464          23,005  0.42
   Foreign..........................          555,837           5,446  0.98
                                     ----------------  --------------
    Total...........................        6,011,301          28,451  0.47
                                     ----------------  --------------
 Investment securities (see Note 1):
   Domestic.........................       19,006,877         112,027  0.59
   Foreign..........................        7,951,162         270,497  3.40
                                     ----------------  --------------
    Total...........................       26,958,039         382,524  1.42
                                     ----------------  --------------
 Loans (see Note 2):
   Domestic.........................       39,328,149         572,157  1.45
   Foreign..........................        9,622,611         349,509  3.63
                                     ----------------  --------------
    Total...........................       48,950,760         921,666  1.88
                                     ----------------  --------------
 Total interest-earning assets:
   Domestic.........................       67,541,697         714,391  1.06
   Foreign..........................       23,325,823         707,618  3.03
                                     ----------------  --------------
    Total...........................       90,867,520       1,422,009  1.56
                                     ----------------  --------------
Non-interest-earning assets:
 Cash and due from banks............        4,217,976
 Other non-interest-earning assets..        8,930,265
 Allowance for credit losses........       (1,210,948)
                                     ----------------
    Total non-interest-earning
     assets.........................       11,937,293
                                     ----------------
Total assets from discontinued
 operations.........................           21,183
                                     ----------------
Total average assets................ (Yen)102,825,996
                                     ================

--------
Notes:
1. Tax-exempt income of tax-exempt investment securities has not been
   calculated on a tax equivalent basis because the effect of such calculation
   would not be material.
2. Average balances on loans outstanding include all nonaccrual and
   restructured loans. See "III. Loan Portfolio." The amortized portion of net
   loan origination fees (costs) is included in interest income on loans,
   representing an adjustment to the yields with insignificant impact.

                                      A-2





                                                                         Fiscal years ended March 31,
                              ----------------------------------------------------------------------------------------------
                                               2002                                   2003
                              -------------------------------------  -------------------------------------  ----------------
                                  Average                    Average     Average                    Average     Average
                                  balance        Interest     rate       balance        Interest     rate       balance
                              --------------- -------------- ------- --------------- -------------- ------- ----------------
                                                                       (in millions, except percentages)
                                                                                       
Liabilities and shareholders'
 equity:
Interest-bearing liabilities:
  Deposits:
   Domestic.................. (Yen)44,807,025 (Yen)  157,484  0.35%  (Yen)50,445,839 (Yen)   86,460  0.17%  (Yen) 52,741,521
   Foreign...................      10,982,859        328,159  2.99         8,964,019        157,295  1.75          8,883,246
                              --------------- --------------         --------------- --------------         ----------------
    Total....................      55,789,884        485,643  0.87        59,409,858        243,755  0.41         61,624,767
                              --------------- --------------         --------------- --------------         ----------------
  Debentures--Domestic.......       2,931,103         20,491  0.70         1,343,078          8,508  0.63            498,518
                              --------------- --------------         --------------- --------------         ----------------
  Call money, funds
   purchased, and payables
   under repurchase
   agreements and securities
   lending transactions:
   Domestic..................       5,383,197         23,926  0.44         4,839,272         13,402  0.28          6,729,173
   Foreign...................       3,598,158        176,010  4.89         3,647,691         93,553  2.56          4,199,303
                              --------------- --------------         --------------- --------------         ----------------
    Total....................       8,981,355        199,936  2.23         8,486,963        106,955  1.26         10,928,476
                              --------------- --------------         --------------- --------------         ----------------
  Due to trust account--
   Domestic..................       2,940,975         16,683  0.57         1,691,359          8,673  0.51          1,326,313
                              --------------- --------------         --------------- --------------         ----------------
  Other short-term
   borrowings and trading
   account liabilities:
   Domestic..................       2,032,642         15,519  0.76         2,825,797         13,853  0.49          4,536,380
   Foreign...................       1,001,886         30,783  3.07           624,089         17,287  2.77            558,848
                              --------------- --------------         --------------- --------------         ----------------
    Total....................       3,034,528         46,302  1.53         3,449,886         31,140  0.90          5,095,228
                              --------------- --------------         --------------- --------------         ----------------
  Long-term debt:
   Domestic..................       2,994,708         88,908  2.97         3,682,571         92,213  2.50          4,319,231
   Foreign...................       2,010,632         80,311  3.99         1,594,637         48,026  3.01          1,182,522
                              --------------- --------------         --------------- --------------         ----------------
    Total....................       5,005,340        169,219  3.38         5,277,208        140,239  2.66          5,501,753
                              --------------- --------------         --------------- --------------         ----------------
Total interest-bearing
 liabilities:
   Domestic..................      61,089,650        323,011  0.53        64,827,916        223,109  0.34         70,151,136
   Foreign...................      17,593,535        615,263  3.50        14,830,436        316,161  2.13         14,823,919
                              --------------- --------------         --------------- --------------         ----------------
    Total....................      78,683,185        938,274  1.19        79,658,352        539,270  0.68         84,975,055
                              --------------- --------------         --------------- --------------         ----------------
Non-interest-bearing
 liabilities.................      10,580,038                             13,337,356                              14,547,857
                              ---------------                        ---------------                        ----------------
Total liabilities from
 discontinued operations.....          67,169                                 50,991                                  15,155
                              ---------------                        ---------------                        ----------------
Shareholders' equity.........       3,045,608                              2,431,528                               3,287,929
                              ---------------                        ---------------                        ----------------
Total average liabilities and
 shareholders' equity........      92,376,000                             95,478,227                        (Yen)102,825,996
                              ===============                        ===============                        ================
Net interest income and
 average interest rate
 spread......................                 (Yen)1,075,554  1.18%                  (Yen)1,043,476  1.15%
                                              ==============  ====                   ==============  ====
Net interest income as a
 percentage of average
 total interest-earning
 assets......................                                 1.26%                                  1.21%
                                                              ====                                   ====




                              --------------------
                              2004
                              --------------------
                                           Average
                                Interest    rate
                              ------------ -------

                                     
Liabilities and shareholders'
 equity:
Interest-bearing liabilities:
  Deposits:
   Domestic.................. (Yen) 67,115  0.13%
   Foreign...................      111,434  1.25
                              ------------
    Total....................      178,549  0.29
                              ------------
  Debentures--Domestic.......        4,035  0.81
                              ------------
  Call money, funds
   purchased, and payables
   under repurchase
   agreements and securities
   lending transactions:
   Domestic..................       20,792  0.31
   Foreign...................       63,161  1.50
                              ------------
    Total....................       83,953  0.77
                              ------------
  Due to trust account--
   Domestic..................        4,950  0.37
                              ------------
  Other short-term
   borrowings and trading
   account liabilities:
   Domestic..................       26,997  0.60
   Foreign...................        7,265  1.30
                              ------------
    Total....................       34,262  0.67
                              ------------
  Long-term debt:
   Domestic..................       93,891  2.17
   Foreign...................       26,874  2.27
                              ------------
    Total....................      120,765  2.20
                              ------------
Total interest-bearing
 liabilities:
   Domestic..................      217,780  0.31
   Foreign...................      208,734  1.41
                              ------------
    Total....................      426,514  0.50
                              ------------
Non-interest-bearing
 liabilities.................

Total liabilities from
 discontinued operations.....

Shareholders' equity.........

Total average liabilities and
 shareholders' equity........

Net interest income and
 average interest rate
 spread...................... (Yen)995,495  1.06%
                              ============  ====
Net interest income as a
 percentage of average
 total interest-earning
 assets......................               1.10%
                                            ====


The percentage of average total assets attributable to foreign activities was
33.6%, 29.3% and 27.2%, respectively, for the fiscal years ended March 31,
2002, 2003 and 2004.

The percentage of average total liabilities attributable to foreign activities
was 33.9%, 29.9% and 27.9%, respectively, for the fiscal years ended March 31,
2002, 2003 and 2004.

                                      A-3



Analysis of Net Interest Income

The following table shows changes in our net interest income between changes in
volume and changes in rate for the fiscal year ended March 31, 2003 compared to
the fiscal year ended March 31, 2002 and the fiscal year ended March 31, 2004
compared to the fiscal year ended March 31, 2003.



                                          Fiscal year ended March 31, 2002 versus     Fiscal year ended March 31, 2003 versus
                                             fiscal year ended March 31, 2003            fiscal year ended March 31, 2004
                                        ------------------------------------------  ------------------------------------------
                                          Increase (decrease) due                     Increase (decrease) due
                                               to changes in                               to changes in
                                        ---------------------------                 ---------------------------
                                           Volume          Rate        Net change      Volume          Rate        Net change
                                        ------------  -------------  -------------  ------------  -------------  -------------
                                                                             (in millions)
                                                                                               
Interest income:
Interest-earning deposits in other
  banks:
   Domestic............................ (Yen) (1,338) (Yen)  (3,579) (Yen)  (4,917) (Yen)   (522) (Yen)     821  (Yen)     299
   Foreign.............................      (44,369)       (37,872)       (82,241)       (6,834)       (17,982)       (24,816)
                                        ------------  -------------  -------------  ------------  -------------  -------------
       Total...........................      (45,707)       (41,451)       (87,158)       (7,356)       (17,161)       (24,517)
                                        ------------  -------------  -------------  ------------  -------------  -------------
Call loans, funds sold, and receivables
  under resale agreements and
  securities borrowing transactions:
   Domestic............................       (1,583)          (240)        (1,823)        1,760         (3,148)        (1,388)
   Foreign.............................      (10,667)       (91,560)      (102,227)       (1,513)       (17,199)       (18,712)
                                        ------------  -------------  -------------  ------------  -------------  -------------
       Total...........................      (12,250)       (91,800)      (104,050)          247        (20,347)       (20,100)
                                        ------------  -------------  -------------  ------------  -------------  -------------
Trading account assets:
   Domestic............................        1,618         (2,813)        (1,195)        5,832          6,843         12,675
   Foreign.............................         (261)        (1,648)        (1,909)         (211)         3,947          3,736
                                        ------------  -------------  -------------  ------------  -------------  -------------
       Total...........................        1,357         (4,461)        (3,104)        5,621         10,790         16,411
                                        ------------  -------------  -------------  ------------  -------------  -------------
Investment securities (see Note 2):
   Domestic............................       12,501        (18,212)        (5,711)        6,081        (16,655)       (10,574)
   Foreign.............................       34,624        (36,873)        (2,249)       44,210        (42,503)         1,707
                                        ------------  -------------  -------------  ------------  -------------  -------------
       Total...........................       47,125        (55,085)        (7,960)       50,291        (59,158)        (8,867)
                                        ------------  -------------  -------------  ------------  -------------  -------------
Loans:
   Domestic............................       17,202        (73,526)       (56,324)        4,404        (35,146)       (30,742)
   Foreign.............................      (18,065)      (154,421)      (172,486)      (40,517)       (52,405)       (92,922)
                                        ------------  -------------  -------------  ------------  -------------  -------------
       Total...........................         (863)      (227,947)      (228,810)      (36,113)       (87,551)      (123,664)
                                        ------------  -------------  -------------  ------------  -------------  -------------
Total interest income:
   Domestic............................       28,400        (98,370)       (69,970)       17,555        (47,285)       (29,730)
   Foreign.............................      (38,738)      (322,374)      (361,112)       (4,865)      (126,142)      (131,007)
                                        ------------  -------------  -------------  ------------  -------------  -------------
       Total........................... (Yen)(10,338) (Yen)(420,744) (Yen)(431,082) (Yen) 12,690  (Yen)(173,427) (Yen)(160,737)
                                        ============  =============  =============  ============  =============  =============

--------
Notes:
1. Rate/volume variance is allocated based on the percentage relationship of
   changes in volume and changes in rate to the total "net change."
2. Tax-exempt income of tax-exempt investment securities has not been
   calculated on a tax equivalent basis because the effect of such calculation
   would not be material.

                                      A-4





                                        Fiscal year ended March 31, 2002              Fiscal year ended March 31, 2003
                                     versus fiscal year ended March 31, 2003      versus fiscal year ended March 31, 2004
                                   ------------------------------------------    -----------------------------------------
                                       Increase (decrease)                           Increase (decrease)
                                        due to changes in                             due to changes in
                                   ---------------------------                   --------------------------
                                      Volume            Rate        Net change      Volume           Rate        Net change
                                   ------------    -------------  -------------  -----------    -------------  -------------
                                                                       (in millions)
                                                                                             
Interest expense:
Deposits:
   Domestic....................... (Yen)  9,664    (Yen) (80,688) (Yen) (71,024)  (Yen)2,921    (Yen) (22,266) (Yen) (19,345)
   Foreign........................      (41,467)        (129,397)      (170,864)      (1,022)         (44,839)       (45,861)
                                   ------------    -------------  -------------  -----------    -------------  -------------
       Total......................      (31,803)        (210,085)      (241,888)       1,899.         (67,105)       (65,206)
                                   ------------    -------------  -------------  -----------    -------------  -------------
Debentures--Domestic..............      (11,018)            (965)       (11,983)      (5,350)             877         (4,473)
                                   ------------    -------------  -------------  -----------    -------------  -------------
Call money, funds purchased, and
  payables under repurchase
  agreements and securities
  lending transactions:
   Domestic.......................       (1,649)          (8,875)       (10,524)       5,701.           1,689          7,390
   Foreign........................        1,270          (83,727)       (82,457)       8,297.         (38,689)       (30,392)
                                   ------------    -------------  -------------  -----------    -------------  -------------
       Total......................         (379)         (92,602)       (92,981)      13,998.         (37,000)       (23,002)
                                   ------------    -------------  -------------  -----------    -------------  -------------
Due to trust account--Domestic....       (7,003)          (1,007)        (8,010)      (1,578)          (2,145)        (3,723)
                                   ------------    -------------  -------------  -----------    -------------  -------------
Other short-term borrowings and
  trading account liabilities:
   Domestic.......................        3,888           (5,554)        (1,666)       9,712            3,432         13,144
   Foreign........................      (11,433)          (2,063)       (13,496)        (938)          (9,084)       (10,022)
                                   ------------    -------------  -------------  -----------    -------------  -------------
       Total......................       (7,545)          (7,617)       (15,162)       8,774           (5,652)         3,122
                                   ------------    -------------  -------------  -----------    -------------  -------------
Long-term debt:
   Domestic.......................       17,224          (13,919)         3,305       13,840.         (12,162)         1,678
   Foreign........................      (14,345)         (17,940)       (32,285)     (10,941)         (10,211)       (21,152)
                                   ------------    -------------  -------------  -----------    -------------  -------------
       Total......................        2,879          (31,859)       (28,980)       2,899.         (22,373)       (19,474)
                                   ------------    -------------  -------------  -----------    -------------  -------------
Total interest expense:
   Domestic.......................       11,106         (111,008)       (99,902)      25,246.         (30,575)        (5,329)
   Foreign........................      (65,975)        (233,127)      (299,102)      (4,604)        (102,823)      (107,427)
                                   ------------    -------------  -------------  -----------    -------------  -------------
       Total...................... (Yen)(54,869)   (Yen)(344,135) (Yen)(399,004) (Yen)20,642    (Yen)(133,398) (Yen)(112,756)
                                   ============    =============  =============  ===========    =============  =============
Net interest income:
   Domestic....................... (Yen) 17,294    (Yen)  12,638  (Yen)  29,932  (Yen)(7,691)   (Yen) (16,710) (Yen) (24,401)
   Foreign........................       27,237          (89,247)       (62,010)        (261)         (23,319)       (23,580)
                                   ------------    -------------  -------------  -----------    -------------  -------------
       Total...................... (Yen) 44,531    (Yen) (76,609) (Yen) (32,078) (Yen)(7,952)   (Yen) (40,029) (Yen) (47,981)
                                   ============    =============  =============  ===========    =============  =============

--------
Note--Rate/volume variance is allocated based on the percentage relationship of
changes in volume and changes in rate to the total "net change."

                                      A-5



II. Investment Portfolio

The following table shows information as to the value of our investment
securities available for sale and being held to maturity at March 31, 2002,
2003 and 2004.



                                                                                                      At March 31,
                                      ------------------------------------------------------------------------------
                                                           2002                                           2003
                                      ---------------------------------------------- -------------------------------
                                                                           Net
                                         Amortized      Estimated       unrealized      Amortized      Estimated
                                           cost        market value       gains           cost        market value
                                      --------------- --------------- -------------- --------------- ---------------
                                                                                                     (in millions)
                                                                                      
Securities available
 for sale:
 Domestic:
   Japanese national government and
    Japanese government agency
    bonds............................ (Yen) 9,887,613 (Yen) 9,951,250 (Yen)   63,637 (Yen)10,912,961 (Yen)11,023,887
   Corporate bonds...................       1,341,079       1,353,028         11,949       1,179,487       1,185,335
   Marketable equity securities......       3,695,451       5,279,562      1,584,111       2,718,804       3,428,344
   Other securities..................         844,695         854,358          9,663         824,975         834,750
                                      --------------- --------------- -------------- --------------- ---------------
    Total domestic...................      15,768,838      17,438,198      1,669,360      15,636,227      16,472,316
                                      --------------- --------------- -------------- --------------- ---------------
 Foreign:
   U.S. Treasury and other U.S.
    government agencies bonds........       1,004,277       1,031,942         27,665       2,524,559       2,559,314
   Other governments and official
    institutions bonds...............       1,706,593       1,790,712         84,119       2,705,042       2,853,815
   Mortgage-backed securities........       1,444,359       1,523,026         78,667       1,195,741       1,211,111
   Other securities..................       1,432,354       1,498,938         66,584       1,222,506       1,267,510
                                      --------------- --------------- -------------- --------------- ---------------
    Total foreign....................       5,587,583       5,844,618        257,035       7,647,848       7,891,750
                                      --------------- --------------- -------------- --------------- ---------------
     Total........................... (Yen)21,356,421 (Yen)23,282,816 (Yen)1,926,395 (Yen)23,284,075 (Yen)24,364,066
                                      =============== =============== ============== =============== ===============
Securities being held to maturity
 Domestic:
   Japanese national government and
    Japanese government agency
    bonds............................ (Yen)    89,945 (Yen)    94,266 (Yen)    4,321 (Yen)    70,208 (Yen)    74,095
   Other securities..................         107,544         112,296          4,752          95,904         101,833
                                      --------------- --------------- -------------- --------------- ---------------
    Total domestic...................         197,489         206,562          9,073         166,112         175,928
                                      --------------- --------------- -------------- --------------- ---------------
 Foreign:
   U.S. Treasury and other U.S.
    government agencies bonds........              --              --             --              --              --
   Other governments and official
    institutions bonds...............          69,529          72,822          3,293          25,020          27,596
   Other securities..................           5,145           5,340            195              --              --
                                      --------------- --------------- -------------- --------------- ---------------
    Total foreign....................          74,674          78,162          3,488          25,020          27,596
                                      --------------- --------------- -------------- --------------- ---------------
     Total........................... (Yen)   272,163 (Yen)   284,724 (Yen)   12,561 (Yen)   191,132 (Yen)   203,524
                                      =============== =============== ============== =============== ===============




                                      --------------------------------------------------------------
                                                                          2004
                                      -------------------------------------------------------------
                                           Net                                            Net
                                        unrealized      Amortized      Estimated       unrealized
                                          gains           cost        market value       gains
                                      -------------- --------------- --------------- --------------

                                                                         
Securities available
 for sale:
 Domestic:
   Japanese national government and
    Japanese government agency
    bonds............................ (Yen)  110,926 (Yen)14,651,744 (Yen)14,677,458 (Yen)   25,714
   Corporate bonds...................          5,848       1,355,202       1,357,784          2,582
   Marketable equity securities......        709,540       2,186,548       3,855,522      1,668,974
   Other securities..................          9,775         581,848         584,837          2,989
                                      -------------- --------------- --------------- --------------
    Total domestic...................        836,089      18,775,342      20,475,601      1,700,259
                                      -------------- --------------- --------------- --------------
 Foreign:
   U.S. Treasury and other U.S.
    government agencies bonds........         34,755       2,853,379       2,855,529          2,150
   Other governments and official
    institutions bonds...............        148,773       1,635,547       1,668,420         32,873
   Mortgage-backed securities........         15,370       1,127,467       1,153,570         26,103
   Other securities..................         45,004       1,440,665       1,501,190         60,525
                                      -------------- --------------- --------------- --------------
    Total foreign....................        243,902       7,057,058       7,178,709        121,651
                                      -------------- --------------- --------------- --------------
     Total........................... (Yen)1,079,991 (Yen)25,832,400 (Yen)27,654,310 (Yen)1,821,910
                                      ============== =============== =============== ==============
Securities being held to maturity
 Domestic:
   Japanese national government and
    Japanese government agency
    bonds............................ (Yen)    3,887 (Yen) 1,050,931 (Yen) 1,053,611 (Yen)    2,680
   Other securities..................          5,929         109,881         113,227          3,346
                                      -------------- --------------- --------------- --------------
    Total domestic...................          9,816       1,160,812       1,166,838          6,026
                                      -------------- --------------- --------------- --------------
 Foreign:
   U.S. Treasury and other U.S.
    government agencies bonds........             --           5,584           5,584             --
   Other governments and official
    institutions bonds...............          2,576          32,577          33,551            974
   Other securities..................             --          51,786          51,928            142
                                      -------------- --------------- --------------- --------------
    Total foreign....................          2,576          89,947          91,063          1,116
                                      -------------- --------------- --------------- --------------
     Total........................... (Yen)   12,392 (Yen) 1,250,759 (Yen) 1,257,901 (Yen)    7,142
                                      ============== =============== =============== ==============


                                      A-6



Nonmarketable equity securities, presented in Other investment securities in
the consolidated financial statements, were carried at costs of (Yen)129,498
million, (Yen)145,431 million and (Yen)200,557 million, at March 31, 2002, 2003
and 2004, respectively. The corresponding estimated fair values at those dates
were not readily determinable.

The following table presents the book values, maturities and weighted average
yields of investment securities available for sale and being held to maturity,
excluding equity securities, at March 31, 2004. Weighted average yields are
calculated based on amortized cost. Yields on tax-exempt obligations have not
been calculated on a tax equivalent basis because the effect of such
calculation would not be material:



                                                            Maturities after      Maturities after
                                   Maturities within          one year but         five years but      Maturities after
                                       one year             within five years     within ten years        ten years
                               ------------------------   --------------------  -------------------  -------------------
                                     Amount         Yield     Amount      Yield     Amount     Yield     Amount     Yield
                               -------------------  ----- --------------- ----- -------------- ----- -------------- -----
                                                                      (in millions, except percentages)
                                                                                            
Securities available for sale:
  Domestic:
   Japanese national
    government and
    Japanese government
    agency bonds.............. (Yen)     7,889,064  0.06% (Yen) 4,809,907 0.74% (Yen)  847,996 1.47% (Yen)1,130,491 0.85%
   Corporate bonds............             227,361  1.69        1,013,050 0.98         109,254 0.88           8,119 0.85
   Other securities...........             328,976  1.24          147,496 2.41          59,791 1.32          48,574 0.73
                               -------------------  ----  --------------- ----  -------------- ----  -------------- ----
    Total domestic............           8,445,401  0.15        5,970,453 0.83       1,017,041 1.40       1,187,184 0.85
                               -------------------  ----  --------------- ----  -------------- ----  -------------- ----
  Foreign:
   U.S. Treasury and other
    U.S. government
    agencies bonds............             433,195  3.46        2,272,734 2.51         109,385 4.12          40,215 4.02
   Other governments and
    official institutions
    bonds.....................             277,289  2.00        1,250,698 3.25         130,831 4.30           9,602 5.31
   Mortgage-backed
    securities................              44,957  2.50            2,695 6.57         111,589 3.88         994,329 3.63
   Other securities...........             155,397  2.64          818,412 2.67         179,025 3.96          96,694 3.63
                               -------------------  ----  --------------- ----  -------------- ----  -------------- ----
    Total foreign.............             910,838  2.83        4,344,539 2.75         530,830 4.06       1,140,840 3.66
                               -------------------  ----  --------------- ----  -------------- ----  -------------- ----
      Total...................      (Yen)9,356,239  0.40% (Yen)10,314,992 1.63% (Yen)1,547,871 2.29% (Yen)2,328,024 2.21%
                               ===================  ====  =============== ====  ============== ====  ============== ====
Securities being held to
 maturity:
  Domestic:
   Japanese national
    government and
    Japanese government
    agency bonds.............. (Yen)        13,353  2.22% (Yen) 1,026,733 0.48% (Yen)   10,845 1.90% (Yen)       --   --
   Other securities...........              14,080  2.07           40,925 1.86          53,879 1.55             997 1.50
                               -------------------  ----  --------------- ----  -------------- ----  -------------- ----
    Total domestic............              27,433  2.14        1,067,658 0.53          64,724 1.61             997 1.50
                               -------------------  ----  --------------- ----  -------------- ----  -------------- ----
  Foreign:
   U.S. Treasury and other
    U.S. government
    agencies bonds............                  --    --            1,168 7.96              --   --           4,416 7.90
   Other governments and
    official institutions
    bonds.....................              24,409  6.56            8,168 4.85              --   --              --   --
   Other securities...........               2,263  2.30           43,672 2.37           5,851 1.04              --   --
                               -------------------  ----  --------------- ----  -------------- ----  -------------- ----
    Total foreign.............              26,672  6.20           53,008 2.88           5,851 1.04           4,416 7.90
                               -------------------  ----  --------------- ----  -------------- ----  -------------- ----
      Total................... (Yen)        54,105  4.14% (Yen) 1,120,666 0.64% (Yen)   70,575 1.56% (Yen)    5,413 6.72%
                               ===================  ====  =============== ====  ============== ====  ============== ====





                                       Total
                               --------------------
                                   Amount      Yield
                               --------------- -----

                                         
Securities available for sale:
  Domestic:
   Japanese national
    government and
    Japanese government
    agency bonds.............. (Yen)14,677,458 0.42%
   Corporate bonds............       1,357,784 1.09
   Other securities...........         584,837 1.50
                               --------------- ----
    Total domestic............      16,620,079 0.52
                               --------------- ----
  Foreign:
   U.S. Treasury and other
    U.S. government
    agencies bonds............       2,855,529 2.73
   Other governments and
    official institutions
    bonds.....................       1,668,420 3.13
   Mortgage-backed
    securities................       1,153,570 3.62
   Other securities...........       1,249,528 2.92
                               --------------- ----
    Total foreign.............       6,927,047 3.01
                               --------------- ----
      Total................... (Yen)23,547,126 1.24%
                               =============== ====
Securities being held to
 maturity:
  Domestic:
   Japanese national
    government and
    Japanese government
    agency bonds.............. (Yen) 1,050,931 0.51%
   Other securities...........         109,881 1.73
                               --------------- ----
    Total domestic............       1,160,812 0.63
                               --------------- ----
  Foreign:
   U.S. Treasury and other
    U.S. government
    agencies bonds............           5,584 7.92
   Other governments and
    official institutions
    bonds.....................          32,577 6.13
   Other securities...........          51,786 2.22
                               --------------- ----
    Total foreign.............          89,947 3.99
                               --------------- ----
      Total................... (Yen) 1,250,759 0.87%
                               =============== ====


                                      A-7



Excluding U.S. Treasury and other U.S. government agencies bonds and Japanese
national government bonds, the following table sets forth the securities of
individual issuers held in our investment securities portfolio which exceeded
10% of our consolidated shareholders' equity at March 31, 2004.



                                                                             Amortized
                                                                               cost       Fair value
                                                                            ------------ ------------
                                                                                  (in millions)
                                                                                   
Germany government bonds................................................... (Yen)728,561 (Yen)752,006
Mortgage-backed securities issued by Federal National Mortgage Association.      559,474      557,761
Mortgage-backed securities issued by Federal Home Loan Mortgage Corporation      544,111      542,793


III.  Loan Portfolio

The following table shows our loans outstanding, before deduction of allowance
for credit losses, by domicile and type of industry of borrower at March 31 of
each of the five fiscal years ended March 31, 2004. Classification of loans by
industry is based on the industry segment loan classification as defined by the
Bank of Japan for regulatory reporting purposes and is not necessarily based on
use of proceeds:



                                                                                      At March 31,
                        ----------------------------------------------------------------------------------------------
                             2000            2001               2002                           2003
                        --------------- --------------- ---------------      ------------------------------------
                             Old             Old                Old                  Old                  New
                        classification  classification     classification       classification       classification
                        --------------- --------------- ---------------      ---------------      ---------------
                                                                           (in millions)
                                                                                   
Domestic:
   Manufacturing....... (Yen) 6,877,734 (Yen) 6,451,672 (Yen) 6,394,459      (Yen) 6,119,502      (Yen) 6,034,347
   Construction........       1,816,338       1,726,278       1,535,191            1,277,407            1,277,407
   Real estate.........       5,045,318       5,272,787       4,923,688            4,297,718            4,298,146
   Services............       5,010,678       4,763,938       4,549,692            5,062,035            4,953,830
   Wholesale and
    retail.............       6,926,200       6,592,660       5,983,958            5,634,752            5,458,337
   Banks and other
    financial
    institutions/(1)/..       3,947,735       4,069,828       4,271,182            3,598,028            3,598,028
   Communication
    and information
    services...........              --              --              --                   --            1,516,020
   Other industries....       3,837,809       2,797,419       3,850,153            5,004,704            3,858,031
   Consumer............       7,141,689       6,934,440       7,049,095            7,425,702            7,425,702
                        --------------- --------------- ---------------      ---------------      ---------------
      Total
       domestic........      40,603,501      38,609,022      38,557,418           38,419,848           38,419,848
                        --------------- --------------- ---------------      ---------------      ---------------
Foreign:
   Governments and
    official
    institutions.......         244,172         315,321         326,086              235,093              235,093
   Banks and other
    financial
    institutions/(1)/..         692,322         783,501         680,449              928,059              928,059
   Commercial and
    industrial.........       7,652,750       8,820,141       9,708,102            8,413,452            8,413,452
   Other...............         887,507       1,173,223       1,000,044              510,179              510,179
                        --------------- --------------- ---------------      ---------------      ---------------
      Total
       foreign.........       9,476,751      11,092,186      11,714,681           10,086,783           10,086,783
                        --------------- --------------- ---------------      ---------------      ---------------
         Total.........      50,080,252      49,701,208      50,272,099           48,506,631           48,506,631
Less unearned income
 and deferred loan
 fees--net.............          30,868          30,305          42,374               41,062               41,062
                        --------------- --------------- ---------------      ---------------      ---------------
         Total......... (Yen)50,049,384 (Yen)49,670,903 (Yen)50,229,725/(2)/ (Yen)48,465,569/(2)/ (Yen)48,465,569/(2)/
                        =============== =============== ===============      ===============      ===============




                        -------------------------------------
                                          2004
                        ------------------------------------
                                Old                  New
                           classification       classification
                        ---------------      ---------------

                                       
Domestic:
   Manufacturing....... (Yen) 6,073,182      (Yen) 6,000,095
   Construction........       1,010,439            1,010,439
   Real estate.........       4,584,882            4,585,299
   Services............       4,630,528            4,344,833
   Wholesale and
    retail.............       5,149,173            4,998,952
   Banks and other
    financial
    institutions/(1)/..       3,834,178            3,834,178
   Communication
    and information
    services...........              --              874,564
   Other industries....       6,535,434            6,169,456
   Consumer............       7,951,205            7,951,205/(3)/
                        ---------------      ---------------
      Total
       domestic........      39,769,021           39,769,021
                        ---------------      ---------------
Foreign:
   Governments and
    official
    institutions.......         183,117              183,117
   Banks and other
    financial
    institutions/(1)/..       1,043,904            1,043,904
   Commercial and
    industrial.........       7,239,896            7,239,896
   Other...............         318,543              318,543
                        ---------------      ---------------
      Total
       foreign.........       8,785,460            8,785,460
                        ---------------      ---------------
         Total.........      48,554,481           48,554,481
Less unearned income
 and deferred loan
 fees--net.............          28,625               28,625
                        ---------------      ---------------
         Total......... (Yen)48,525,856/(2)/ (Yen)48,525,856/(2)/
                        ===============      ===============

--------
Notes:
(1) Loans to the so-called non-bank finance companies are generally included in
    the "Banks and other financial institutions" category. Non-bank finance
    companies are primarily engaged in consumer lending, factoring and credit
    card businesses.
(2) The above table includes loans held for sale of (Yen)3,178 million,
    (Yen)3,965 million and (Yen)12,893 million at March 31, 2002, 2003 and
    2004, respectively.
(3) Domestic loans within the "consumer" category in the above table include
    loans to individuals who utilize loan proceeds to finance their proprietor
    activities and not for their personal financing needs. During the fiscal
    year ended March 31, 2004, our credit administration

                                      A-8



   system was upgraded and we are now able to present a precise breakdown of
   the balance of such consumer loans at March 31, 2004 by the type of
   proprietor business. This breakdown is presented below in accordance with
   our new classification:



                                                                  Banks and   Communication
                                                                    other          and                      Total
                               Real                  Wholesale    financial    information    Other      included in
Manufacturing Construction    estate      Services   and retail  institutions   services    industries    Consumer
------------- ------------ ------------ ------------ ----------- ------------ ------------- ----------- --------------
                                                    (in millions)
                                                                                
 (Yen)28,229  (Yen)19,283  (Yen)738,377 (Yen)230,730 (Yen)52,253  (Yen)1,200   (Yen)4,121   (Yen)10,620 (Yen)1,084,813


   Since the system upgrade was effective during the fiscal year ended March
   31, 2004, no equivalent information is obtainable for prior fiscal year-end
   dates.

Maturities and Sensitivities of Loans to Changes in Interest Rates

The following table shows the maturities of our loan portfolio at March 31,
2004:

Old Classification



                                                                          Maturity
                                             ------------------------------------------------------------------
                                             One year or less One to five years Over five years      Total
                                             ---------------- ----------------- --------------- ---------------
                                                                       (in millions)
                                                                                    
Domestic:
   Manufacturing............................ (Yen) 4,056,239   (Yen) 1,816,167  (Yen)   200,776 (Yen) 6,073,182
   Construction.............................         711,640           237,073           61,726       1,010,439
   Real estate..............................       1,560,232         1,600,730        1,423,920       4,584,882
   Services.................................       2,617,043         1,480,844          532,641       4,630,528
   Wholesale and retail.....................       3,418,176         1,538,584          192,413       5,149,173
   Banks and other financial institutions...       2,409,860           864,335          559,983       3,834,178
   Other industries.........................       4,733,981         1,301,092          500,361       6,535,434
   Consumer:
       Installment loans to individuals.....          94,819         1,623,938        5,554,380       7,273,137
       Other................................         553,090            49,148           75,830         678,068
                                             ---------------   ---------------  --------------- ---------------
          Total domestic....................      20,155,080        10,511,911        9,102,030      39,769,021
Foreign.....................................       4,510,332         2,502,149        1,772,979       8,785,460
                                             ---------------   ---------------  --------------- ---------------
          Total............................. (Yen)24,665,412   (Yen)13,014,060  (Yen)10,875,009 (Yen)48,554,481
                                             ===============   ===============  =============== ===============


New Classification



                                                                          Maturity
                                             ------------------------------------------------------------------
                                             One year or less One to five years Over five years      Total
                                             ---------------- ----------------- --------------- ---------------
                                                                       (in millions)
                                                                                    
Domestic:
   Manufacturing............................ (Yen) 4,005,442   (Yen) 1,803,598  (Yen)   191,055 (Yen) 6,000,095
   Construction.............................         711,640           237,073           61,726       1,010,439
   Real estate..............................       1,560,613         1,600,766        1,423,920       4,585,299
   Services.................................       2,411,446         1,412,402          520,985       4,344,833
   Wholesale and retail.....................       3,341,428         1,483,058          174,466       4,998,952
   Banks and other financial institutions...       2,409,860           864,335          559,983       3,834,178
   Communication and information services...         532,932           280,691           60,941         874,564
   Other industries.........................       4,533,810         1,156,902          478,744       6,169,456
   Consumer:
       Installment loans to individuals.....          94,819         1,623,938        5,554,380       7,273,137
       Other................................         553,090            49,148           75,830         678,068
                                             ---------------   ---------------  --------------- ---------------
          Total domestic....................      20,155,080        10,511,911        9,102,030      39,769,021
Foreign.....................................       4,510,332         2,502,149        1,772,979       8,785,460
                                             ---------------   ---------------  --------------- ---------------
          Total............................. (Yen)24,665,412   (Yen)13,014,060  (Yen)10,875,009 (Yen)48,554,481
                                             ===============   ===============  =============== ===============


                                      A-9



The above loans due after one year which had predetermined interest rates and
floating or adjustable interest rates at March 31, 2004 are shown below.



                                  Domestic        Foreign          Total
                               --------------- -------------- ---------------
                                               (in millions)
                                                     
   Predetermined rate......... (Yen) 8,328,003 (Yen)1,625,910 (Yen) 9,953,913
   Floating or adjustable rate      11,285,938      2,649,218      13,935,156
                               --------------- -------------- ---------------
      Total................... (Yen)19,613,941 (Yen)4,275,128 (Yen)23,889,069
                               =============== ============== ===============


Nonaccrual, Past Due and Restructured Loans

We generally discontinue accrual of interest income on loans when substantial
doubt exists as to the full and timely collection of either principal or
interest, or when principal or interest is contractually past due one month or
more with respect to loans of banking subsidiaries, including Bank of
Tokyo-Mitsubishi and Mitsubishi Trust Bank, and 90 days or more with respect to
loans of certain foreign banking subsidiaries.

The following table shows the distribution of our nonaccrual loans,
restructured loans and accruing loans which are contractually past due 90 days
or more as to principal or interest payments at March 31 of each of the five
fiscal years ended March 31, 2004, based on the domicile and type of industry
of the borrowers:



                                                                                   At March 31,
                                   -----------------------------------------------------------------------------------------
                                        2000           2001           2002                  2003
                                   -------------- -------------- -------------- ----------------------------- --------------
                                        Old            Old            Old            Old            New            Old
                                   classification classification classification classification classification classification
                                   -------------- -------------- -------------- -------------- -------------- --------------
                                                                                   (in millions)
                                                                                            
Nonaccrual loans:
   Domestic:
     Manufacturing................ (Yen)  112,245 (Yen)  118,935 (Yen)  142,572 (Yen)  112,152 (Yen)  111,107 (Yen)  175,904
     Construction.................        226,170        202,506        213,491        149,918        149,918         59,031
     Real estate..................        829,616        939,267        841,414        266,408        266,408        154,776
     Services.....................        290,286        247,697        214,877         85,602         87,492         68,085
     Wholesale and retail.........        389,262        229,965        251,061        238,986        224,468        118,058
     Banks and other financial
      institutions................        140,928        125,649         58,568         17,794         17,794         21,367
     Communication and
      information services........             --             --             --             --         14,081             --
     Other industries.............         23,921         39,963         39,687         54,330         53,922         40,022
     Consumer.....................         56,206        163,076        166,333        150,989        150,989        141,844
                                   -------------- -------------- -------------- -------------- -------------- --------------
       Total domestic.............      2,068,634      2,067,058      1,928,003      1,076,179      1,076,179        779,087
                                   -------------- -------------- -------------- -------------- -------------- --------------
   Foreign:
     Governments and official
      institutions................          1,032          2,336          3,341          1,747          1,747            877
     Banks and other financial
      institutions................         14,458          8,403          9,119          8,387          8,387         87,162
     Commercial and industrial....        167,271        180,760        226,054        271,090        271,090        153,477
     Other........................         26,604         32,345          7,059         56,156         56,156         62,521
                                   -------------- -------------- -------------- -------------- -------------- --------------
       Total foreign..............        209,365        223,844        245,573        337,380        337,380        304,037
                                   -------------- -------------- -------------- -------------- -------------- --------------
       Total......................      2,277,999      2,290,902      2,173,576      1,413,559      1,413,559      1,083,124
                                   ============== ============== ============== ============== ============== ==============
Restructured loans:
   Domestic.......................        449,673      1,855,616      1,859,176      1,212,832      1,212,832        577,348
   Foreign........................         53,206         98,879        109,190        106,236        106,236         55,015
                                   -------------- -------------- -------------- -------------- -------------- --------------
       Total......................        502,879      1,954,495      1,968,366      1,319,068      1,319,068        632,363
                                   ============== ============== ============== ============== ============== ==============
Accruing loans contractually
  past due 90 days or more:
   Domestic.......................         62,286         24,005         20,276         17,533         17,533         14,696
   Foreign........................          1,751          3,392          2,764          2,866          2,866            900
                                   -------------- -------------- -------------- -------------- -------------- --------------
       Total......................         64,037         27,397         23,040         20,399         20,399         15,596
                                   ============== ============== ============== ============== ============== ==============
       Total...................... (Yen)2,844,915 (Yen)4,272,794 (Yen)4,164,982 (Yen)2,753,026 (Yen)2,753,026 (Yen)1,731,083
                                   ============== ============== ============== ============== ============== ==============




                                   ---------------
                                    2004
                                   ---------------
                                          New
                                     classification
                                   --------------

                                
Nonaccrual loans:
   Domestic:
     Manufacturing................ (Yen)  175,691
     Construction.................         59,031
     Real estate..................        154,776
     Services.....................         72,951
     Wholesale and retail.........        108,516
     Banks and other financial
      institutions................         21,367
     Communication and
      information services........          5,128
     Other industries.............         39,783
     Consumer.....................        141,844/(2)/
                                   --------------
       Total domestic.............        779,087
                                   --------------
   Foreign:
     Governments and official
      institutions................            877
     Banks and other financial
      institutions................         87,162
     Commercial and industrial....        153,477
     Other........................         62,521
                                   --------------
       Total foreign..............        304,037
                                   --------------
       Total......................      1,083,124
                                   ==============
Restructured loans:
   Domestic.......................        577,348
   Foreign........................         55,015
                                   --------------
       Total......................        632,363
                                   ==============
Accruing loans contractually
  past due 90 days or more:
   Domestic.......................         14,696
   Foreign........................            900
                                   --------------
       Total......................         15,596
                                   ==============
       Total...................... (Yen)1,731,083
                                   ==============


                                     A-10



--------
Notes:
(1) The above table does not include real estate acquired in full or partial
    satisfaction of debt and certain assets under the management of the
    Cooperative Credit Purchasing Company which are recorded at estimated fair
    value less estimated cost to sell.
(2) Domestic nonaccrual loans within the "consumer" category in the above table
    include loans to individuals who utilize loan proceeds to finance their
    proprietor activities and not for their personal financing needs. During
    the fiscal year ended March 31, 2004, our credit administration system was
    upgraded and we are now able to present a precise breakdown of the balance
    of such consumer loans at March 31, 2004 by the type of proprietor
    business. This breakdown is presented below in accordance with our new
    classification:



                                                               Banks and   Communication              Total
                                                                 other          and                  included
                              Real                 Wholesale   financial    information    Other        in
Manufacturing Construction   estate     Services   and retail institutions   services    industries  Consumer
------------- ------------ ----------- ----------- ---------- ------------ ------------- ---------- -----------
                                                 (in millions)
                                                                            
 (Yen)1,566     (Yen)877   (Yen)52,271 (Yen)14,203 (Yen)5,765   (Yen)21      (Yen)264        --     (Yen)74,967


   Since the system upgrade was effective during the fiscal year ended March
   31, 2004, no equivalent information is obtainable for prior fiscal year-end
   dates.

Gross interest income which would have been accrued at the original terms on
domestic nonaccrual and restructured loans outstanding during the fiscal year
ended March 31, 2004 was approximately (Yen)29.5 billion, of which (Yen)22.9
billion was included in the results of operations for the fiscal year. Gross
interest income which would have been accrued at the original terms on foreign
nonaccrual and restructured loans outstanding for the fiscal year ended March
31, 2004 was approximately (Yen)15.7 billion, of which (Yen)9.7 billion was
included in the results of operations for the fiscal year.

Foreign Loans Outstanding

Cross-border outstandings are defined, for this purpose, as loans (including
accrued interest), acceptances, interest-earning deposits with other banks,
other interest-earning investments and any other monetary assets denominated in
Japanese yen or other non-local currencies. Material local currency loans
outstanding which are neither hedged nor funded by local currency borrowings
are included in cross-border outstandings.

At March 31, 2002 and 2004, we had no cross-border outstandings to borrowers in
any foreign country which in total exceeded 0.75% of consolidated total assets.
The following table sets forth our cross-border outstandings for the country in
which the total was between 0.75% and 1% of consolidated total assets at March
31, 2003.



                                  Cross-border  Percentage of
                                  outstandings  total assets
                                  ------------- -------------
                                  (in millions)
                                          
                   United Kingdom (Yen)810,668      0.84%


Guarantees of outstandings of borrowers of other countries are considered to be
outstandings of the guarantor. Loans made to, or deposits placed with, a branch
of a foreign bank located outside the foreign bank's home country are
considered to be loans to, or deposits with, the foreign bank. Outstandings of
a country do not include principal or interest amounts of which are supported
by written, legally enforceable guarantees by guarantors of other countries or
the amounts of outstandings to the extent that they are secured by tangible,
liquid collateral held and realizable by Bank of Tokyo-Mitsubishi, Mitsubishi
Trust Bank and their subsidiaries outside the country in which they operate.

In addition to credit risk, cross-border outstandings are subject to country
risk that as a result of political or economic conditions in a country,
borrowers may be unable or unwilling to pay principal and interest according to
contractual terms. Other risks related to cross-border outstandings include the
possibility of insufficient foreign exchange and restrictions on its
availability.

In order to manage country risk, we establish various risk management measures
internally. Among other things, we first regularly monitor economic conditions
and other factors globally and assess country risk in each country where we
have cross-border exposure. For purposes of monitoring and controlling the
amount of credit exposed

                                     A-11



to country risk, we set a country limit, the maximum amount of credit exposure
for an individual country, in consideration of the level of country risk and
our ability to bear such potential risk. We also determine our credit policy
for each country in accordance with its country risk level and our business
plan with regard to the country. Assessment of country risk, establishment of
country limits, and determination of country credit policies are subject to
review and approval by our senior management and are updated periodically.

Exposure to East Asia

We maintain a substantial network of branches and subsidiaries in East Asia and
the region has been an important market for our financial services. Certain
economies in this region are growing at a rapid pace, while the economy is not
always stable and exposed to country risk to a greater extent than developed
countries. In response to on-going and possible developments in the regional
economy, we regularly reassess the country risk of each country in the region,
to adjust exposure levels, and to review and revise country credit policies.

The following table represents our cross-border outstandings and unused
commitments at March 31, 2003 and 2004, to certain East Asian countries:



                                               At March 31,
                             -------------------------------------------------
                                       2003                     2004
                             ------------------------ ------------------------
                             Cross-border   Unused    Cross-border   Unused
                             outstanding  commitments outstanding  commitments
                             ------------ ----------- ------------ -----------
                                               (in billions)
                                                       
  South Korea...............  (Yen)289.2   (Yen) 1.3   (Yen)226.1   (Yen)0.5
  Indonesia.................        33.9        34.0         28.4        0.2
  Thailand..................       167.4         8.8        164.1        4.4
  Malaysia..................       116.2         2.2        106.3        1.0
  Philippines...............        61.3         3.6         53.5         --
  Hong Kong.................       224.7         0.6        333.4         --
  People's Republic of China       145.0         8.8        213.6        0.7
  Singapore.................       278.0        17.8        226.5        2.7


Exposure to Latin America

Similar to economies in East Asia, growth of economy is expected while
unstability is observed in Latin American region. The following is a summary of
cross-border outstandings to counterparties in major Latin American countries
at March 31, 2003 and 2004:



                                       At March 31,
                                   --------------------
                                      2003      2004
                                   ---------- ---------
                                      (in billions)
                                        
                         Brazil... (Yen)120.0 (Yen)82.5
                         Mexico...       76.3      46.3
                         Argentina       34.1      18.2


Loan Concentrations

At March 31, 2004, there were no concentrations of loans to a single industry
group of borrowers, as defined by the Bank of Japan industry segment loan
classifications, which exceeded 10% of our consolidated total loans, except for
loans in a category disclosed in the table of loans outstanding above.

Credit Risk Management

We have a credit rating system, under which borrowers and transactions are
graded on a worldwide basis. We calculate probability of default by statistical
means and manage our credit portfolio based on this credit rating

                                     A-12



system. For a detailed description of this system and other elements of our
risk management structure, see "Item 11. Quantitative and Qualitative
Disclosures about Credit, Market and Other Risk--Credit Risk Management."

IV.   Summary of Loan Loss Experience

The following table shows an analysis of our loan loss experience by type of
borrowers' business for each of the five fiscal years ended March 31, 2004:



                                                                               Fiscal years ended March 31,
                                    -------------------------------------------------------------------------------
                                         2000            2001            2002                    2003
                                    --------------  --------------  --------------  ------------------------------
                                         Old             Old             Old             Old             New
                                    classification  classification  classification  classification  classification
                                    --------------  --------------  --------------  --------------  --------------
                                                                             (in millions, except percentages)
                                                                                     
Allowance for credit losses at
 beginning of fiscal year.......... (Yen)1,813,680  (Yen)1,486,212  (Yen)1,716,984  (Yen)1,735,180  (Yen)1,735,180
                                    --------------  --------------  --------------  --------------  --------------
Provision (credit) for credit
 losses............................        355,724         783,855         598,412         437,972         437,972
                                    --------------  --------------  --------------  --------------  --------------
Charge-offs:
   Domestic:
    Manufacturing..................         25,537          31,386          55,916          75,430          75,278
    Construction...................         77,878          82,078          35,365          60,837          60,837
    Real estate....................         98,201         154,887         150,684         332,264         332,414
    Services.......................         53,877          72,673          51,803          82,478          87,573
    Wholesale and retail...........        191,839         152,723          96,745         117,138         109,257
    Banks and other financial
     institutions..................         67,782          22,453          64,615          20,817          20,817
    Communication and
     information services..........             --              --              --              --           5,002
    Other industries...............         47,209           6,069          11,500          25,304          23,090
    Consumer.......................         39,827          34,291          46,550          39,594          39,594
                                    --------------  --------------  --------------  --------------  --------------
      Total domestic...............        602,150         556,560         513,178         753,862         753,862
      Total foreign................        121,882          87,879         156,203         139,776         139,776
                                    --------------  --------------  --------------  --------------  --------------
      Total........................        724,032         644,439         669,381         893,638         893,638
                                    --------------  --------------  --------------  --------------  --------------
Recoveries:
   Domestic........................         25,244          26,666          42,112          57,790          57,790
   Foreign.........................         19,052          19,411          23,865          21,037          21,037
                                    --------------  --------------  --------------  --------------  --------------
      Total........................         44,296          46,077          65,977          78,827          78,827
                                    --------------  --------------  --------------  --------------  --------------
Net charge-offs....................        679,736         598,362         603,404         814,811         814,811
                                    --------------  --------------  --------------  --------------  --------------
Others/(1)/........................         (3,456)         45,279          23,188           1,795           1,795
                                    --------------  --------------  --------------  --------------  --------------
Allowance for credit losses at end
 of fiscal year.................... (Yen)1,486,212  (Yen)1,716,984  (Yen)1,735,180  (Yen)1,360,136  (Yen)1,360,136
                                    ==============  ==============  ==============  ==============  ==============
Allowance for credit losses
 applicable to foreign activities:
  Balance at beginning of
   fiscal year..................... (Yen)  295,131  (Yen)  190,571  (Yen)  243,716  (Yen)  244,650  (Yen)  244,650
                                    ==============  ==============  ==============  ==============  ==============
  Balance at end of fiscal year.... (Yen)  190,571  (Yen)  243,716  (Yen)  244,650  (Yen)  263,929  (Yen)  263,929
                                    ==============  ==============  ==============  ==============  ==============
  Provision (credit) for credit
   losses.......................... (Yen)   25,661  (Yen)  105,664  (Yen)  127,348  (Yen)  151,783  (Yen)  151,783
                                    ==============  ==============  ==============  ==============  ==============
Ratio of net charge-offs during the
 fiscal year to average loans
 outstanding during the
 fiscal year.......................           1.30%           1.21%           1.23%           1.64%           1.64%




                                    -------------------------------
                                                   2004
                                    ------------------------------
                                         Old               New
                                    classification    classification
                                    --------------  --------------

                                              
Allowance for credit losses at
 beginning of fiscal year.......... (Yen)1,360,136  (Yen)1,360,136
                                    --------------  --------------
Provision (credit) for credit
 losses............................       (114,109)       (114,109)
                                    --------------  --------------
Charge-offs:
   Domestic:
    Manufacturing..................         18,726          18,644
    Construction...................         35,612          35,612
    Real estate....................        119,005         119,005
    Services.......................         17,019          17,647
    Wholesale and retail...........         47,010          44,282
    Banks and other financial
     institutions..................          1,516           1,516
    Communication and
     information services..........             --           2,256
    Other industries...............          6,114           6,040
    Consumer.......................         49,162          49,162/(2)/
                                    --------------  --------------
      Total domestic...............        294,164         294,164
      Total foreign................         83,930          83,930
                                    --------------  --------------
      Total........................        378,094         378,094
                                    --------------  --------------
Recoveries:
   Domestic........................         17,299          17,299
   Foreign.........................         23,671          23,671
                                    --------------  --------------
      Total........................         40,970          40,970
                                    --------------  --------------
Net charge-offs....................        337,124         337,124
                                    --------------  --------------
Others/(1)/........................        (20,776)        (20,776)
                                    --------------  --------------
Allowance for credit losses at end
 of fiscal year.................... (Yen)  888,127  (Yen)  888,127
                                    ==============  ==============
Allowance for credit losses
 applicable to foreign activities:
  Balance at beginning of
   fiscal year..................... (Yen)  263,929  (Yen)  263,929
                                    ==============  ==============
  Balance at end of fiscal year.... (Yen)  245,842  (Yen)  245,842
                                    ==============  ==============
  Provision (credit) for credit
   losses.......................... (Yen)   55,796  (Yen)   55,796
                                    ==============  ==============
Ratio of net charge-offs during the
 fiscal year to average loans
 outstanding during the
 fiscal year.......................           0.69%           0.69%


                                     A-13



--------
Notes:
(1) Others primarily include foreign exchange translation and discontinued
    operations adjustments.
(2) Charge-offs of domestic loans within the "consumer" category in the above
    table include charge-offs of loans to individuals who utilize loan proceeds
    to finance their proprietor activities and not for their personal financing
    needs. During the fiscal year ended March 31, 2004, our credit
    administration system was upgraded and we are now able to present a precise
    breakdown of charge-offs of such consumer loans for the fiscal year ended
    March 31, 2004 by the type of proprietor business. This breakdown is
    presented below in accordance with our new classification:



                                                             Banks and   Communication
                                                               other          and                    Total
                              Real               Wholesale   financial    information    Other    included in
Manufacturing Construction   estate    Services  and retail institutions   services    industries  Consumer
------------- ------------ ---------- ---------- ---------- ------------ ------------- ---------- -----------
                                                (in millions)
                                                                          
   (Yen)39         --      (Yen)9,481 (Yen)2,270  (Yen)486       --           --        (Yen)108  (Yen)12,384


   Since the system upgrade during effective for the fiscal year ended March
   31, 2004, no equivalent information is obtainable for prior fiscal years.

The following table shows an allocation of our allowance for credit losses at
March 31 of each of the five fiscal years ended March 31, 2004:




                           --------------------------------------------------
                                     2000                     2001
                           -----------------------  ------------------------
                                     Old                       Old
                                classification           classification
                           -----------------------  ------------------------
                                             % of                      % of
                                           loans in                  loans in
                                             each                      each
                                           category                  category
                                           to total                  to total
                               Amount       loans        Amount       loans
                           --------------  -------- ---------------  --------

                                                         
Domestic:
 Manufacturing............ (Yen)   98,296    13.73%  (Yen)  159,387    12.98%
 Construction.............        124,352     3.63          133,752     3.47
 Real estate..............        429,928    10.07          505,479    10.61
 Services.................        178,237    10.01          172,568     9.59
 Wholesale and retail.....        221,466    13.83          203,814    13.26
 Banks and other
  financial
  institutions............         64,934     7.88           86,470     8.19
 Communication and
  information
  services................             --       --               --       --
 Other industries.........         57,684     7.67           47,607     5.63
 Consumer.................        104,139    14.26          106,031    13.95
Foreign:
 Governments and official
  institutions............         14,769     0.49           18,571     0.63
 Banks and other
  financial
  institutions............          9,328     1.38           11,322     1.58
 Commercial and
  industrial..............        144,028    15.28          192,484    17.75
 Other....................         22,446     1.77           21,339     2.36
Unallocated...............         16,605       --           58,160       --
                           --------------   ------  ---------------   ------
  Total................... (Yen)1,486,212   100.00%  (Yen)1,716,984   100.00%
                           ==============   ======  ===============   ======
Allowance as a percentage
 of loans.................           2.97%                     3.46%
Allowance as a percentage
 of nonaccrual and
 restructured loans and
 accruing loans
 contractually past due 90
 days or more.............          52.24%                    40.18%



                                                           At March 31,
                           ----------------------------------------------------------------------------
                                     2002                                   2003
                           ------------------------  --------------------------------------------------
                                      Old                       Old                       New
                                classification            classification            classification
                           ------------------------  ------------------------  ------------------------
                                              % of                      % of                      % of
                                            loans in                  loans in                  loans in
                                              each                      each                      each
                                            category                  category                  category
                                            to total                  to total                  to total
                                Amount       loans        Amount       loans        Amount       loans
                           ---------------  -------- ---------------  -------- ---------------  --------
                                (in millions, except percentages)
                                                                              
Domestic:
 Manufacturing............  (Yen)  162,828    12.72%  (Yen)  143,262    12.62%  (Yen)  141,549    12.44%
 Construction.............         168,595     3.05          139,662     2.63          139,662     2.63
 Real estate..............         541,093     9.79          231,686     8.86          231,686     8.86
 Services.................         175,281     9.05          124,182    10.44          129,678    10.21
 Wholesale and retail.....         216,510    11.90          209,594    11.62          198,053    11.25
 Banks and other
  financial
  institutions............          59,971     8.50           51,204     7.42           51,204     7.42
 Communication and
  information
  services................              --       --               --       --           19,385     3.13
 Other industries.........          48,466     7.67           74,060    10.32           62,433     7.97
 Consumer.................          95,156    14.02           99,247    15.31           99,247    15.31
Foreign:
 Governments and official
  institutions............          33,304     0.65            2,298     0.48            2,298     0.48
 Banks and other
  financial
  institutions............           6,847     1.35            6,366     1.91            6,366     1.91
 Commercial and
  industrial..............         189,332    19.31          216,058    17.34          216,058    17.34
 Other....................          15,167     1.99           39,207     1.05           39,207     1.05
Unallocated...............          22,630       --           23,310       --           23,310       --
                           ---------------   ------  ---------------   ------  ---------------   ------
  Total...................  (Yen)1,735,180   100.00%  (Yen)1,360,136   100.00%  (Yen)1,360,136   100.00%
                           ===============   ======  ===============   ======  ===============   ======
Allowance as a percentage
 of loans.................            3.45%                     2.81%                     2.81%
Allowance as a percentage
 of nonaccrual and
 restructured loans and
 accruing loans
 contractually past due 90
 days or more.............           41.66%                    49.41%                    49.41%




                           -----------------------------------------------
                                                2004
                           ----------------------------------------------
                                     Old                     New
                               classification          classification
                           ----------------------  ----------------------
                                            % of                    % of
                                          loans in                loans in
                                            each                    each
                                          category                category
                                          to total                to total
                               Amount      loans       Amount      loans
                           -------------  -------- -------------  --------

                                                      
Domestic:
 Manufacturing............  (Yen)124,735    12.51%  (Yen)124,262    12.36%
 Construction.............        31,908     2.08         31,908     2.08
 Real estate..............       111,628     9.44        111,629     9.44
 Services.................        77,589     9.54         82,236     8.95
 Wholesale and retail.....       112,178    10.60        103,577    10.30
 Banks and other
  financial
  institutions............        33,944     7.90         33,944     7.90
 Communication and
  information
  services................            --       --          6,395     1.80
 Other industries.........        46,543    13.45         44,574    12.69
 Consumer.................        85,232    16.38         85,232*   16.38
Foreign:
 Governments and official
  institutions............         1,428     0.38          1,428     0.38
 Banks and other
  financial
  institutions............        60,064     2.15         60,064     2.15
 Commercial and
  industrial..............       148,894    14.91        148,894    14.91
 Other....................        35,456     0.66         35,456     0.66
Unallocated...............        18,528       --         18,528       --
                           -------------   ------  -------------   ------
  Total...................  (Yen)888,127   100.00%  (Yen)888,127   100.00%
                           =============   ======  =============   ======
Allowance as a percentage
 of loans.................          1.83%                   1.83%
Allowance as a percentage
 of nonaccrual and
 restructured loans and
 accruing loans
 contractually past due 90
 days or more.............         51.30%                  51.30%


                                     A-14



--------
 * The credit loss allowance for domestic loans within the "consumer" category
   in the above table include the credit loss allowance for loans to
   individuals who utilize loan proceeds to finance their proprietor activities
   and not for their personal financing needs. During the fiscal year ended
   March 31, 2004, our credit administration system was upgraded and we are now
   able to present a precise breakdown of the balance of the credit loss
   allowance for such consumer loans at March 31, 2004 by the type of
   proprietor business. This breakdown is presented below in accordance with
   our new classification:



                                                             Banks and   Communication
                                                               other          and                    Total
                              Real               Wholesale   financial    information    Other    included in
Manufacturing Construction   estate    Services  and retail institutions   services    industries  Consumer
------------- ------------ ---------- ---------- ---------- ------------ ------------- ---------- -----------
                                                (in millions)
                                                                          
  (Yen)292      (Yen)196   (Yen)7,671 (Yen)2,371  (Yen)554    (Yen)13       (Yen)42     (Yen)104  (Yen)11,243


   Since the system upgrade was effective during the fiscal year ended March
   31, 2004, no equivalent information is obtainable for prior fiscal year-end
   dates.

While the allowance for credit losses contains amounts allocated to components
of specifically identified loans as well as a group on portfolio of loans, the
allowance for credit losses is available for credit losses in the entire loan
portfolio and the allocations shown above are not intended to be restricted to
the specific loan category. Accordingly, as the evaluation of credit risks
changes, allocations of the allowance will be changed to reflect current
conditions and various other factors.

V. Deposits

The following table shows the average amount of, and the average rate paid on,
the following deposit categories for the fiscal years ended March 31, 2002,
2003 and 2004:



                                                             Fiscal years ended March 31,
                                        ----------------------------------------------------------------------
                                                 2002                    2003                    2004
                                        ----------------------  ----------------------  ----------------------
                                            Average     Average     Average     Average     Average     Average
                                            amount       rate       amount       rate       amount       rate
                                        --------------- ------- --------------- ------- --------------- -------
-                                                          (in millions, except percentages)
                                                                                      
Domestic offices:
   Non-interest-bearing demand
     deposits.......................... (Yen) 2,621,296    --%  (Yen) 3,427,440    --%  (Yen) 4,557,564    --%
   Interest-bearing demand
     deposits..........................      14,385,013  0.04        21,255,898  0.02        23,616,838  0.02
   Deposits at notice..................       1,800,904  1.01         1,504,532  0.75         1,697,565  0.60
   Time deposits.......................      26,272,795  0.49        24,734,506  0.29        24,344,515  0.22
   Certificates of deposit.............       2,348,313  0.14         2,950,903  0.03         3,082,603  0.02
Foreign offices, principally from banks
  located in foreign countries:
   Non-interest-bearing demand
     deposits..........................       1,654,887    --         2,053,080    --         2,321,091    --
   Interest-bearing deposits,
     principally time deposits and
     certificates of deposit...........      10,982,859  2.99         8,964,019  1.75         8,883,246  1.25
                                        ---------------         ---------------         ---------------
       Total........................... (Yen)60,066,067         (Yen)64,890,378         (Yen)68,503,422
                                        ===============         ===============         ===============


Deposits at notice represent interest-bearing demand deposits which require the
depositor to give two or more days notice in advance of withdrawal.

                                     A-15



The average amounts of total deposits by foreign depositors included in
domestic offices for the fiscal years ended March 31, 2002, 2003 and 2004 were
(Yen)485,399 million, (Yen)667,129 million and (Yen)945,755 million,
respectively.

At March 31, 2004, the balance and remaining maturities of time deposits and
certificates of deposit issued by domestic offices in amounts of (Yen)10
million (approximately US$96 thousand at the Federal Reserve Bank of New York's
noon buying rate on March 31, 2004) or more and total foreign deposits issued
in amounts of US$100,000 or more are shown in the following table.



                                                           Certificates
                                           Time deposits    of deposit        Total
                                          --------------- -------------- ---------------
-                                                         (in millions)
                                                                
Domestic offices:
   Three months or less.................. (Yen) 6,246,584 (Yen)2,190,275 (Yen) 8,436,859
   Over three months through six months..       2,025,283        219,186       2,244,469
   Over six months through twelve months.       2,250,229        147,703       2,397,932
   Over twelve months....................       2,690,897         10,000       2,700,897
                                          --------------- -------------- ---------------
       Total............................. (Yen)13,212,993 (Yen)2,567,164 (Yen)15,780,157
                                          =============== ============== ===============
Foreign offices..........................                                (Yen) 7,080,451
                                                                         ===============


                                     A-16



VI.  Short-Term Borrowings

The following table shows certain additional information with respect to our
short-term borrowings for the fiscal years ended March 31, 2002, 2003 and 2004:



                                                                      Fiscal years ended March 31,
                                                            ------------------------------------------------
                                                                 2002             2003             2004
                                                            --------------  ---------------  ---------------
                                                                    (in millions, except percentages)
                                                                                    
Call money, funds purchased, and payables under repurchase
  agreements and securities lending transactions:
   Average balance outstanding during the fiscal year...... (Yen)8,981,355  (Yen) 8,486,963  (Yen)10,928,476
   Maximum balance outstanding at any month-end during the
     fiscal year...........................................      9,252,127       17,520,365       12,891,989
   Balance at end of fiscal year...........................      9,243,032        9,319,870        9,397,338
   Weighted average interest rate during the fiscal year...           2.23%            1.26%            0.77%
   Weighted average interest rate on balance at end of
     fiscal year...........................................           1.09%            1.18%            0.65%
Due to trust account:
   Average balance outstanding during the fiscal year...... (Yen)2,940,975  (Yen) 1,691,359  (Yen) 1,326,313
   Maximum balance outstanding at any month-end during the
     fiscal year...........................................      3,353,489        2,188,326        1,403,734
   Balance at end of fiscal year...........................      2,282,225        1,401,618        1,380,269
   Weighted average interest rate during the fiscal year...           0.57%            0.51%            0.37%
   Weighted average interest rate on balance at end of
     fiscal year...........................................           0.51%            0.51%            0.30%
Other short-term borrowings:
   Average balance outstanding during the fiscal year...... (Yen)2,038,669  (Yen) 2,763,028  (Yen) 3,727,461
   Maximum balance outstanding at any month-end during the
     fiscal year...........................................      3,318,634        2,870,339        5,663,067
   Balance at end of fiscal year...........................      3,318,634        2,854,028        5,663,067
   Weighted average interest rate during the fiscal year...           2.24%            1.02%            0.40%
   Weighted average interest rate on balance at end of
     fiscal year...........................................           1.09%            0.48%            0.12%


                                     A-17



                  INDEX TO CONSOLIDATED FINANCIAL STATEMENTS



                                                                                                    Page
                                                                                                    ----
                                                                                                 
Report of Independent Registered Public Accounting Firm............................................ F-2
Consolidated Balance Sheets as of March 31, 2003 and 2004.......................................... F-3
Consolidated Statements of Operations for the Fiscal Years ended March 31, 2002, 2003 and 2004..... F-4
Consolidated Statements of Changes in Equity from Nonowner Sources for the Fiscal Years ended
  March 31, 2002, 2003 and 2004.................................................................... F-5
Consolidated Statements of Shareholders' Equity for the Fiscal Years ended March 31, 2002, 2003 and
  2004............................................................................................. F-6
Consolidated Statements of Cash Flows for the Fiscal Years ended March 31, 2002, 2003 and 2004..... F-7
Notes to Consolidated Financial Statements......................................................... F-8


                                      F-1



            REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

Mitsubishi Tokyo Financial Group, Inc.
(Kabushiki Kaisha Mitsubishi Tokyo Financial Group):

We have audited the accompanying consolidated balance sheets of Mitsubishi
Tokyo Financial Group, Inc. (Kabushiki Kaisha Mitsubishi Tokyo Financial Group)
("MTFG") and subsidiaries as of March 31, 2003 and 2004, and the related
consolidated statements of operations, changes in equity from nonowner sources,
shareholders' equity, and cash flows for each of the three years in the period
ended March 31, 2004 (all expressed in Japanese Yen). These financial
statements are the responsibility of MTFG's management. Our responsibility is
to express an opinion on these financial statements based on our audits.

We conducted our audits in accordance with the standards of the Public Company
Accounting Oversight Board (United States). Those standards require that we
plan and perform the audit to obtain reasonable assurance about whether the
financial statements are free of material misstatement. An audit includes
examining, on a test basis, evidence supporting the amounts and disclosures in
the financial statements. An audit also includes assessing the accounting
principles used and significant estimates made by management, as well as
evaluating the overall financial statement presentation. We believe that our
audits provide a reasonable basis for our opinion.

In our opinion, such consolidated financial statements present fairly, in all
material respects, the financial position of MTFG and subsidiaries at March 31,
2003 and 2004, and the results of their operations and their cash flows for
each of the three years in the period ended March 31, 2004, in conformity with
accounting principles generally accepted in the United States of America.

As discussed in Note 1 to the consolidated financial statements, MTFG changed
its method of accounting for derivative financial instruments and hedging
activities in the fiscal year ended March 31, 2002, and its method of
accounting for goodwill and other intangible assets in the fiscal year ended
March 31, 2003.

/s/ Deloitte Touche Tohmatsu
DELOITTE TOUCHE TOHMATSU

Tokyo, Japan
September 22, 2004

                                      F-2



            MITSUBISHI TOKYO FINANCIAL GROUP, INC. AND SUBSIDIARIES

                          CONSOLIDATED BALANCE SHEETS
                            MARCH 31, 2003 AND 2004



                                                                                          2003             2004
                                                                                    ---------------  ----------------
                                                                                              (in millions)
                                                                                               
                                    ASSETS
Cash and due from banks (Note 10).................................................. (Yen) 4,288,581  (Yen)  3,111,967
Interest-earning deposits in other banks (Note 10).................................       4,009,986         3,509,044
Call loans and funds sold (Note 13)................................................         595,567           877,277
Receivables under resale agreements................................................       1,169,479         2,237,666
Receivables under securities borrowing transactions................................       1,848,124         4,751,909
Trading account assets (including assets pledged that secured parties are
 permitted to sell or repledge of (Yen)1,807,819 million in 2003 and
 (Yen)2,252,489 million in 2004) (Notes 3 and 10)..................................       8,363,383         8,378,752
Investment securities (Notes 4 and 10):
 Securities available for sale--carried at estimated fair value (including
  assets pledged that secured parties are permitted to sell or repledge of
  (Yen)3,049,692 million in 2003 and (Yen)2,352,234 million in 2004)...............      24,364,066        27,654,310
 Securities being held to maturity--carried at amortized cost (estimated fair
  value of (Yen)203,524 million in 2003 and (Yen)1,257,901 million in 2004)........         191,132         1,250,759
 Other investment securities.......................................................         145,431           200,557
                                                                                    ---------------  ----------------
  Total investment securities......................................................      24,700,629        29,105,626
                                                                                    ---------------  ----------------
Loans, net of unearned income and deferred loan fees (including assets pledged
 that secured parties are permitted to sell or repledge of (Yen)864,978 million
 in 2003 and (Yen)713,068 million in 2004) (Notes 5 and 10)........................      48,465,569        48,525,856
Allowance for credit losses (Notes 5 and 6)........................................      (1,360,136)         (888,127)
                                                                                    ---------------  ----------------
 Net loans.........................................................................      47,105,433        47,637,729
                                                                                    ---------------  ----------------
Premises and equipment--net (Note 7)...............................................         643,794           580,073
Accrued interest...................................................................         173,351           149,066
Customers' acceptance liability....................................................          28,261            30,149
Intangible assets (Note 8).........................................................         186,898           234,139
Goodwill (Note 8)..................................................................          48,143            56,690
Deferred tax assets (Note 9).......................................................       1,640,046         1,005,965
Other assets (Notes 5 and 17)......................................................       1,730,038         2,035,028
                                                                                    ---------------  ----------------
     Total......................................................................... (Yen)96,531,713  (Yen)103,701,080
                                                                                    ===============  ================
                     LIABILITIES AND SHAREHOLDERS' EQUITY
Deposits (Notes 10 and 11):
 Domestic offices:
  Non-interest-bearing............................................................. (Yen) 3,987,854  (Yen)  5,082,701
  Interest-bearing.................................................................      52,257,085        52,452,342
 Overseas offices:
  Non-interest-bearing.............................................................       2,434,297         2,413,053
  Interest-bearing.................................................................       8,624,442        10,076,156
                                                                                    ---------------  ----------------
     Total deposits................................................................      67,303,678        70,024,252
Debentures (Note 12)...............................................................         636,060           265,957
Call money and funds purchased (Notes 10 and 13)...................................       2,689,892         2,871,851
Payables under repurchase agreements (Note 10).....................................       4,424,035         5,068,369
Payables under securities lending transactions (Note 10)...........................       2,205,943         1,457,118
Due to trust account (Note 14).....................................................       1,401,618         1,380,269
Other short-term borrowings (Notes 10 and 15)......................................       2,854,028         5,663,067
Trading account liabilities (Note 3)...............................................       3,603,153         2,510,966
Obligations to return securities received as collateral............................         950,138         2,329,600
Bank acceptances outstanding.......................................................          28,261            30,149
Accrued interest...................................................................         132,655           103,411
Long-term debt (Notes 10 and 15)...................................................       5,159,132         5,659,877
Other liabilities (Notes 9, 16 and 17).............................................       2,590,183         2,489,242
                                                                                    ---------------  ----------------
     Total liabilities.............................................................      93,978,776        99,854,128
                                                                                    ---------------  ----------------
Commitments and contingent liabilities (Notes 24 and 26)
Shareholders' equity (Note 21):
 Capital stock (Notes 18 and 19) :
  Preferred stock:
     Class 1--authorized, 81,400 shares; issued and outstanding, 81,400 shares
      in 2003 and 2004, with no stated value (aggregate liquidation preference
      of (Yen)244,200 million).....................................................         122,100           122,100
     Class 2--convertible: authorized, 100,000 shares in 2003 and 15,000 shares
      in 2004; outstanding 100,000 shares in 2003 and 15,000 shares in 2004
      with no stated value (aggregate liquidation preference of (Yen)200,000
      million in 2003 and (Yen)30,000 million in 2004 )............................         100,000            15,000
     Class 3--authorized, 120,000 shares; no shares issued or outstanding..........              --                --
     Class 4--convertible: authorized, 120,000 shares; no shares issued or
      outstanding..................................................................              --                --
  Common stock--authorized, 22,000,000 shares; issued, 6,232,162 shares in 2003
    and 6,476,100 shares in 2004, with no stated value.............................         984,708         1,069,708
 Capital surplus (Note 19).........................................................       1,058,611         1,057,900
 Retained earnings (Notes 20 and 33):
  Appropriated for legal reserve...................................................         237,474           239,571
  Unappropriated...................................................................         168,036           955,291
 Accumulated other changes in equity from nonowner sources, net of taxes...........        (114,790)          389,751
                                                                                    ---------------  ----------------
  Total............................................................................       2,556,139         3,849,321
  Less treasury stock, at cost--3,226 common shares in 2003 and 2,714 common
    shares in 2004.................................................................           3,202             2,369
                                                                                    ---------------  ----------------
  Shareholders' equity--net........................................................       2,552,937         3,846,952
                                                                                    ---------------  ----------------
     Total......................................................................... (Yen)96,531,713  (Yen)103,701,080
                                                                                    ===============  ================


       See the accompanying notes to Consolidated Financial Statements.

                                      F-3



            MITSUBISHI TOKYO FINANCIAL GROUP, INC. AND SUBSIDIARIES

                     CONSOLIDATED STATEMENTS OF OPERATIONS
           FOR THE FISCAL YEARS ENDED MARCH 31, 2002, 2003 AND 2004



                                                                                       2002            2003
                                                                                 ---------------  --------------
                                                                                                   (in millions)
                                                                                            
Interest income:
Loans, including fees (Note 5).................................................. (Yen) 1,274,140  (Yen)1,045,330
Deposits in other banks.........................................................         159,768          72,610
Investment securities:
  Interest......................................................................         336,238         344,422
  Dividends.....................................................................          63,113          46,969
Trading account assets..........................................................          15,144          12,040
Call loans and funds sold.......................................................          19,318           7,320
Receivables under resale agreements and securities borrowing transactions.......         146,107          54,055
                                                                                 ---------------  --------------
     Total......................................................................       2,013,828       1,582,746
                                                                                 ---------------  --------------
Interest expense:
Deposits........................................................................         485,643         243,755
Debentures......................................................................          20,491           8,508
Call money and funds purchased..................................................          17,853          12,708
Payables under repurchase agreements and securities lending transactions........         182,083          94,247
Due to trust account............................................................          16,683           8,673
Other short-term borrowings and trading account liabilities.....................          46,302          31,140
Long-term debt..................................................................         169,219         140,239
                                                                                 ---------------  --------------
     Total......................................................................         938,274         539,270
                                                                                 ---------------  --------------
Net interest income.............................................................       1,075,554       1,043,476
Provision (credit) for credit losses (Notes 5 and 6)............................         598,412         437,972
                                                                                 ---------------  --------------
Net interest income after provision (credit) for credit losses..................         477,142         605,504
                                                                                 ---------------  --------------
Non-interest income:
Fees and commissions (Note 27)..................................................         485,977         520,767
Foreign exchange gains (losses)--net (Notes 1 and 3)............................        (333,034)         25,558
Trading account profits--net (Notes 1 and 3)....................................         138,460         267,610
Investment securities gains (losses)--net (Notes 1 and 4).......................          20,604         (21,574)
Refund of the local taxes by the Tokyo Metropolitan Government (Note 9).........              --              --
Other non-interest income.......................................................          49,628          47,465
                                                                                 ---------------  --------------
     Total......................................................................         361,635         839,826
                                                                                 ---------------  --------------
Non-interest expense:
Salaries and employee benefits (Note 16)........................................         456,010         498,467
Occupancy expenses--net (Notes 7 and 26)........................................         134,667         120,979
Losses (gains) on other real estate owned.......................................           6,233             305
Goodwill amortization (Note 8)..................................................           7,862              --
Fees and commission expenses....................................................          72,232          77,243
Amortization of intangible assets (Note 8)......................................          36,932          46,505
Insurance premiums, including deposit insurance.................................          43,452          48,259
Minority interest in income of consolidated subsidiaries........................          21,510           2,891
Communications..................................................................          21,266          22,038
Other non-interest expenses.....................................................         361,130         365,719
                                                                                 ---------------  --------------
     Total......................................................................       1,161,294       1,182,406
                                                                                 ---------------  --------------
Income (loss) from continuing operations before income tax expense (benefit)
 and cumulative effect of a change in accounting principle......................        (322,517)        262,924
Income tax expense (benefit) (Note 9)...........................................         (98,881)         69,474
                                                                                 ---------------  --------------
Income (loss) from continuing operations before cumulative effect of a change
 in accounting principle........................................................        (223,636)        193,450
Income (loss) from discontinued operations--net (Note 2)........................           1,235          10,370
Cumulative effect of a change in accounting principle, net of tax (Note 1)......           5,867            (532)
                                                                                 ---------------  --------------
Net income (loss)............................................................... (Yen)  (216,534) (Yen)  203,288
                                                                                 ===============  ==============
Income allocable to preferred shareholders...................................... (Yen)     4,168  (Yen)   12,504
                                                                                 ---------------  --------------
Net income (loss) available to common shareholders.............................. (Yen)  (220,702) (Yen)  190,784
                                                                                 ===============  ==============

                                                                                                     (in Yen)
Amounts per share (*) (Notes 20 and 22):
Basic earnings (loss) per common share--income (loss) from continuing
 operations available to common shareholders before cumulative effect of a
 change in accounting principle................................................. (Yen)(41,011.91) (Yen)32,212.04
Basic earnings (loss) per common share--net income (loss) available to common
 shareholders...................................................................      (39,733.32)      33,963.40
Diluted earnings (loss) per common share--income (loss) from continuing
 operations available to common shareholders before cumulative effect of a
 change in accounting principle.................................................      (41,011.91)      29,459.67
Diluted earnings (loss) per common share--net income (loss) available to common
 shareholders...................................................................      (39,733.32)      31,137.71



                                                                                       2004
                                                                                 ---------------

                                                                              
Interest income:
Loans, including fees (Note 5).................................................. (Yen)   921,666
Deposits in other banks.........................................................          48,093
Investment securities:
  Interest......................................................................         341,062
  Dividends.....................................................................          41,462
Trading account assets..........................................................          28,451
Call loans and funds sold.......................................................           5,384
Receivables under resale agreements and securities borrowing transactions.......          35,891
                                                                                 ---------------
     Total......................................................................       1,422,009
                                                                                 ---------------
Interest expense:
Deposits........................................................................         178,549
Debentures......................................................................           4,035
Call money and funds purchased..................................................           9,910
Payables under repurchase agreements and securities lending transactions........          74,043
Due to trust account............................................................           4,950
Other short-term borrowings and trading account liabilities.....................          34,262
Long-term debt..................................................................         120,765
                                                                                 ---------------
     Total......................................................................         426,514
                                                                                 ---------------
Net interest income.............................................................         995,495
Provision (credit) for credit losses (Notes 5 and 6)............................        (114,109)
                                                                                 ---------------
Net interest income after provision (credit) for credit losses..................       1,109,604
                                                                                 ---------------
Non-interest income:
Fees and commissions (Note 27)..................................................         572,668
Foreign exchange gains (losses)--net (Notes 1 and 3)............................         413,911
Trading account profits--net (Notes 1 and 3)....................................         103,903
Investment securities gains (losses)--net (Notes 1 and 4).......................         118,648
Refund of the local taxes by the Tokyo Metropolitan Government (Note 9).........          41,989
Other non-interest income.......................................................          55,465
                                                                                 ---------------
     Total......................................................................       1,306,584
                                                                                 ---------------
Non-interest expense:
Salaries and employee benefits (Note 16)........................................         506,710
Occupancy expenses--net (Notes 7 and 26)........................................         120,507
Losses (gains) on other real estate owned.......................................            (579)
Goodwill amortization (Note 8)..................................................              --
Fees and commission expenses....................................................          80,252
Amortization of intangible assets (Note 8)......................................          63,582
Insurance premiums, including deposit insurance.................................          54,392
Minority interest in income of consolidated subsidiaries........................          42,404
Communications..................................................................          27,623
Other non-interest expenses.....................................................         341,149
                                                                                 ---------------
     Total......................................................................       1,236,040
                                                                                 ---------------
Income (loss) from continuing operations before income tax expense (benefit)
 and cumulative effect of a change in accounting principle......................       1,180,148
Income tax expense (benefit) (Note 9)...........................................         357,314
                                                                                 ---------------
Income (loss) from continuing operations before cumulative effect of a change
 in accounting principle........................................................         822,834
Income (loss) from discontinued operations--net (Note 2)........................            (585)
Cumulative effect of a change in accounting principle, net of tax (Note 1)......              --
                                                                                 ---------------
Net income (loss)............................................................... (Yen)   822,249
                                                                                 ===============
Income allocable to preferred shareholders...................................... (Yen)     7,981
                                                                                 ---------------
Net income (loss) available to common shareholders.............................. (Yen)   814,268
                                                                                 ===============


Amounts per share (*) (Notes 20 and 22):
Basic earnings (loss) per common share--income (loss) from continuing
 operations available to common shareholders before cumulative effect of a
 change in accounting principle................................................. (Yen)128,323.13
Basic earnings (loss) per common share--net income (loss) available to common
 shareholders...................................................................      128,231.00
Diluted earnings (loss) per common share--income (loss) from continuing
 operations available to common shareholders before cumulative effect of a
 change in accounting principle.................................................      125,006.95
Diluted earnings (loss) per common share--net income (loss) available to common
 shareholders...................................................................      124,917.18

--------
(*) For the fiscal year ended March 31, 2003 and 2004, Class 2 Preferred Stock
    was included in the computation of the diluted amounts based on the
    conversion price as of year-end (see Notes 18 and 22).

       See the accompanying notes to Consolidated Financial Statements.

                                      F-4



            MITSUBISHI TOKYO FINANCIAL GROUP, INC. AND SUBSIDIARIES

      CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY FROM NONOWNER SOURCES
           FOR THE FISCAL YEARS ENDED MARCH 31, 2002, 2003 AND 2004



                                                                               Gains (Losses)                 Gains (Losses)
                                                                               before income     Income tax   net of income
                                                                                tax expense      (expense)     tax expense
                                                                                 (benefit)        benefit       (benefit)
                                                                               --------------  -------------  --------------
                                                                                               (in millions)
                                                                                                     
Fiscal year ended March 31, 2002:
Net loss......................................................................                                (Yen) (216,534)
                                                                                                              --------------
Other changes in equity from nonowner sources:
   Net unrealized holding losses on investment securities available for sale.. (Yen)(558,583)  (Yen) 211,868        (346,715)
   Reclassification adjustment for gains included in net loss.................       (46,325)         18,075         (28,250)
                                                                               -------------   -------------  --------------
      Total...................................................................      (604,908)        229,943        (374,965)
                                                                               -------------   -------------  --------------
   Cumulative effect of a change in accounting principle......................         2,065            (808)          1,257
   Net unrealized gains on derivatives qualifying for cash flow hedges........         7,982          (2,916)          5,066
   Reclassification adjustment for gains included in net loss.................        (4,254)          1,627          (2,627)
                                                                               -------------   -------------  --------------
      Total...................................................................         5,793          (2,097)          3,696
                                                                               -------------   -------------  --------------
   Minimum pension liability adjustments......................................      (122,746)         30,815         (91,931)
                                                                               -------------   -------------  --------------
   Foreign currency translation adjustments...................................        84,355          (5,444)         78,911
   Reclassification adjustment for losses included in net loss................           115              --             115
                                                                               -------------   -------------  --------------
      Total...................................................................        84,470          (5,444)         79,026
                                                                               -------------   -------------  --------------
Total changes in equity from nonowner sources.................................                                (Yen) (600,708)
                                                                                                              ==============
Fiscal year ended March 31, 2003:
Net income....................................................................                                (Yen)  203,288
                                                                                                              --------------
Other changes in equity from nonowner sources:
   Net unrealized holding losses on investment securities available for sale.. (Yen)(846,396)  (Yen) 337,697        (508,699)
   Reclassification adjustment for gains included in net income...............         1,553            (288)          1,265
                                                                               -------------   -------------  --------------
      Total...................................................................      (844,843)        337,409        (507,434)
                                                                               -------------   -------------  --------------
   Net unrealized gains on derivatives qualifying for cash flow hedges........        10,885          (4,164)          6,721
   Reclassification adjustment for gains included in net income...............        (9,545)          3,651          (5,894)
                                                                               -------------   -------------  --------------
      Total...................................................................         1,340            (513)            827
                                                                               -------------   -------------  --------------
   Minimum pension liability adjustments......................................      (132,113)         51,265         (80,848)
                                                                               -------------   -------------  --------------
   Foreign currency translation adjustments...................................       (54,698)          3,599         (51,099)
   Reclassification adjustment for losses included in net income..............           591             (77)            514
                                                                               -------------   -------------  --------------
      Total...................................................................       (54,107)          3,522         (50,585)
                                                                               -------------   -------------  --------------
Total changes in equity from nonowner sources.................................                                (Yen) (434,752)
                                                                                                              ==============
Fiscal year ended March 31, 2004:
Net income....................................................................                                (Yen)  822,249
                                                                                                              --------------
Other changes in equity from nonowner sources:
   Net unrealized holding gains on investment securities available for sale... (Yen) 838,294   (Yen)(343,827)        494,467
   Reclassification adjustment for gains included in net income...............      (138,371)         54,917         (83,454)
                                                                               -------------   -------------  --------------
      Total...................................................................       699,923        (288,910)        411,013
                                                                               -------------   -------------  --------------
   Net unrealized gains on derivatives qualifying for cash flow hedges........         4,286          (1,740)          2,546
   Reclassification adjustment for gains included in net income...............        (9,227)          3,529          (5,698)
                                                                               -------------   -------------  --------------
      Total...................................................................        (4,941)          1,789          (3,152)
                                                                               -------------   -------------  --------------
   Minimum pension liability adjustments......................................       167,510         (46,395)        121,115
                                                                               -------------   -------------  --------------
   Foreign currency translation adjustments...................................       (38,863)          5,056         (33,807)
   Reclassification adjustment for losses included in net income..............         9,839            (467)          9,372
                                                                               -------------   -------------  --------------
      Total...................................................................       (29,024)          4,589         (24,435)
                                                                               -------------   -------------  --------------
Total changes in equity from nonowner sources.................................                                (Yen)1,326,790
                                                                                                              ==============


       See the accompanying notes to Consolidated Financial Statements.

                                      F-5



            MITSUBISHI TOKYO FINANCIAL GROUP, INC. AND SUBSIDIARIES

                CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY
           FOR THE FISCAL YEARS ENDED MARCH 31, 2002, 2003 AND 2004



                                                                                      2002            2003            2004
                                                                                 --------------  --------------  --------------
                                                                                                  (in millions)
                                                                                                        
Preferred stock (Class 1) (Note 18):
Balance at beginning of fiscal year............................................. (Yen)  122,100  (Yen)  122,100  (Yen)  122,100
                                                                                 --------------  --------------  --------------
Balance at end of fiscal year................................................... (Yen)  122,100  (Yen)  122,100  (Yen)  122,100
                                                                                 ==============  ==============  ==============
Preferred stock (Class 2) (Note 18):
Balance at beginning of fiscal year............................................. (Yen)  100,000  (Yen)  100,000  (Yen)  100,000
Conversion of Class 2 preferred stock to common stock...........................             --              --         (85,000)
                                                                                 --------------  --------------  --------------
Balance at end of fiscal year................................................... (Yen)  100,000  (Yen)  100,000  (Yen)   15,000
                                                                                 ==============  ==============  ==============
Common stock (Note 19):
Balance at beginning of fiscal year............................................. (Yen)  856,664  (Yen)  873,156  (Yen)  984,708
Issuance of new shares of common stock..........................................             --         111,552              --
Issuance of new shares of common stock in exchange for the minority shares of
 Nippon Trust Bank Limited......................................................         16,492              --              --
Issuance of new shares of common stock by conversion of Class 2 preferred stock.             --              --          85,000
                                                                                 --------------  --------------  --------------
Balance at end of fiscal year................................................... (Yen)  873,156  (Yen)  984,708  (Yen)1,069,708
                                                                                 ==============  ==============  ==============
Capital surplus (Note 19):
Balance at beginning of fiscal year............................................. (Yen)  831,105  (Yen)  850,835  (Yen)1,058,611
Issuance of new shares of common stock..........................................             --         110,620              --
Recognition of tax benefit arising from treasury stock held by subsidiaries.....             --          54,008              --
Issuance of new shares of common stock in exchange for the minority shares of
 Nippon Trust Bank Limited......................................................         16,120              --              --
Gains (losses) on sales of shares of treasury stock, net of taxes...............          3,610          43,148            (711)
                                                                                 --------------  --------------  --------------
Balance at end of fiscal year................................................... (Yen)  850,835  (Yen)1,058,611  (Yen)1,057,900
                                                                                 ==============  ==============  ==============
Retained earnings appropriated for legal reserve (Note 20):
Balance at beginning of fiscal year............................................. (Yen)  221,689  (Yen)  236,537  (Yen)  237,474
Transfer from unappropriated retained earnings..................................         14,848             937           2,097
                                                                                 --------------  --------------  --------------
Balance at end of fiscal year................................................... (Yen)  236,537  (Yen)  237,474  (Yen)  239,571
                                                                                 ==============  ==============  ==============
Unappropriated retained earnings (Note 20):
Balance at beginning of fiscal year............................................. (Yen)  271,246  (Yen)   11,593  (Yen)  168,036
Net income (loss)...............................................................       (216,534)        203,288         822,249
                                                                                 --------------  --------------  --------------
    Total.......................................................................         54,712         214,881         990,285
                                                                                 --------------  --------------  --------------
Deduction:
 Cash dividends (Note 1):
  Common share--(Yen)4,127.63 in 2002, (Yen)6,000.00 in 2003 and (Yen)4,000.00
    in 2004 per share...........................................................        (24,103)        (33,404)        (24,916)
  Preferred share (Class 1)--(Yen)41,250.00 in 2002, (Yen)123,750.00 in 2003
    and (Yen)82,500.00 in 2004 per share........................................         (3,358)        (10,074)         (6,716)
  Preferred share (Class 2)--(Yen)8,100.00 in 2002, (Yen)24,300.00 in 2003 and
    (Yen)16,200.00 in 2004 per share............................................           (810)         (2,430)         (1,265)
 Transfer to retained earnings appropriated for legal reserve...................        (14,848)           (937)         (2,097)
                                                                                 --------------  --------------  --------------
    Total.......................................................................        (43,119)        (46,845)        (34,994)
                                                                                 --------------  --------------  --------------
Balance at end of fiscal year (Note 33)......................................... (Yen)   11,593  (Yen)  168,036  (Yen)  955,291
                                                                                 ==============  ==============  ==============
Accumulated other changes in equity from nonowner sources, net of taxes:
Net unrealized gains on investment securities available for sale (Note 4):
 Balance at beginning of fiscal year............................................ (Yen)1,202,245  (Yen)  827,280  (Yen)  319,846
 Net change during the fiscal year..............................................       (374,965)       (507,434)        411,013
                                                                                 --------------  --------------  --------------
 Balance at end of fiscal year.................................................. (Yen)  827,280  (Yen)  319,846  (Yen)  730,859
                                                                                 --------------  --------------  --------------
Net unrealized gains on derivatives qualifying for cash flow hedges (Note 23):
 Balance at beginning of fiscal year............................................ (Yen)       --  (Yen)    3,696  (Yen)    4,523
 Cumulative effect of a change in accounting principle..........................          1,257              --              --
 Net change during the fiscal year..............................................          2,439             827          (3,152)
                                                                                 --------------  --------------  --------------
 Balance at end of fiscal year.................................................. (Yen)    3,696  (Yen)    4,523  (Yen)    1,371
                                                                                 --------------  --------------  --------------
Minimum pension liability adjustments (Note 16):
 Balance at beginning of fiscal year............................................ (Yen)  (90,364) (Yen) (182,295) (Yen) (263,143)
 Net change during the fiscal year..............................................        (91,931)        (80,848) (Yen)  121,115
                                                                                 --------------  --------------  --------------
 Balance at end of fiscal year.................................................. (Yen) (182,295) (Yen) (263,143) (Yen) (142,028)
                                                                                 --------------  --------------  --------------
Foreign currency translation adjustments:
 Balance at beginning of fiscal year............................................ (Yen) (204,457) (Yen) (125,431) (Yen) (176,016)
 Net change during the fiscal year..............................................         79,026         (50,585)        (24,435)
                                                                                 --------------  --------------  --------------
 Balance at end of fiscal year.................................................. (Yen) (125,431) (Yen) (176,016) (Yen) (200,451)
                                                                                 --------------  --------------  --------------
Balance at end of fiscal year................................................... (Yen)  523,250  (Yen) (114,790) (Yen)  389,751
                                                                                 ==============  ==============  ==============
Treasury stock:
Balance at beginning of fiscal year............................................. (Yen) (108,932) (Yen)  (90,974) (Yen)   (3,202)
Purchases of shares of treasury stock...........................................         (7,381)           (965)           (467)
Sales of shares of treasury stock...............................................         25,339          89,976           1,081
Net increase resulting from changes in consolidated subsidiaries................             --          (1,239)            219
                                                                                 --------------  --------------  --------------
Balance at end of fiscal year................................................... (Yen)  (90,974) (Yen)   (3,202) (Yen)   (2,369)
                                                                                 ==============  ==============  ==============
Total shareholders' equity...................................................... (Yen)2,626,497  (Yen)2,552,937  (Yen)3,846,952
                                                                                 ==============  ==============  ==============

       See the accompanying notes to Consolidated Financial Statements.

                                      F-6



            MITSUBISHI TOKYO FINANCIAL GROUP, INC. AND SUBSIDIARIES

                     CONSOLIDATED STATEMENTS OF CASH FLOWS
           FOR THE FISCAL YEARS ENDED MARCH 31, 2002, 2003 AND 2004



                                                                                        2002              2003
                                                                                  ----------------  ----------------
                                                                                                      (in millions)
                                                                                              
Cash flows from operating activities:
 Net income (loss)............................................................... (Yen)   (216,534) (Yen)    203,288
 Adjustments to reconcile net income (loss) to net cash provided by (used in)
   operating activities:
   Loss (income) from discontinued operations--net...............................           (1,235)          (10,370)
   Depreciation and amortization.................................................          105,052           109,520
   Goodwill amortization.........................................................            7,862                --
   Provision (credit) for credit losses..........................................          598,412           437,972
   Investment securities losses (gains)--net.....................................          (20,604)           21,574
   Foreign exchange losses (gains)--net..........................................          524,272          (302,967)
   Provision for deferred income tax expense (benefit)...........................         (126,195)            7,869
   Increase in trading account assets, excluding foreign exchange contracts......         (196,044)       (1,116,568)
   Increase (decrease) in trading account liabilities, excluding foreign
    exchange contracts...........................................................       (1,604,006)        1,390,349
   Decrease in accrued interest receivable and other receivables.................          128,646            35,053
   Decrease in accrued interest payable and other payables.......................         (190,986)          (80,862)
   Other--net....................................................................           68,617            86,124
                                                                                  ----------------  ----------------
     Net cash provided by (used in) operating activities.........................         (922,743)          780,982
                                                                                  ----------------  ----------------
Cash flows from investing activities:
 Proceeds from sales of investment securities available for sale.................       34,164,318        27,063,999
 Proceeds from maturities of investment securities available for sale............        8,495,287        15,897,034
 Purchases of investment securities available for sale...........................      (45,404,685)      (44,832,560)
 Proceeds from maturities of investment securities being held to maturity........           36,970            73,279
 Purchases of investment securities being held to maturity.......................               --                --
 Proceeds from sales of other investment securities..............................           53,872            26,950
 Purchases of other investment securities........................................          (19,111)          (62,782)
 Net decrease (increase) in loans................................................         (552,865)          215,607
 Net decrease in interest-earning deposits in other banks........................        1,920,108            69,379
 Net decrease (increase) in call loans, funds sold, and receivables under
   resale agreements
   and securities borrowing transactions.........................................          927,975         1,116,562
 Proceeds from sales of premises and equipment...................................           49,036            70,248
 Capital expenditures for premises and equipment.................................         (110,391)          (50,596)
 Other--net......................................................................         (107,402)           13,107
                                                                                  ----------------  ----------------
     Net cash used in investing activities.......................................         (546,888)         (399,773)
                                                                                  ----------------  ----------------
Cash flows from financing activities:
 Net increase in deposits........................................................        2,274,803         4,751,481
 Net decrease in debentures......................................................       (1,136,959)       (1,633,157)
 Net increase in call money, funds purchased, and payables under repurchase
   agreements and securities lending transactions................................           88,080           129,750
 Net decrease in due to trust account............................................       (1,390,493)         (880,607)
 Net increase (decrease) in other short-term borrowings..........................        1,355,660          (621,985)
 Proceeds from issuance of long-term debt........................................          884,991         1,072,400
 Repayment of long-term debt.....................................................         (767,312)       (1,084,018)
 Proceeds from issuance of new shares of common stock, net of stock issue
   expenses......................................................................               --           222,172
 Proceeds from sales of treasury stock...........................................           32,577            82,944
 Payments to acquire treasury stock..............................................           (7,381)             (965)
 Dividends paid..................................................................          (28,275)          (45,904)
 Other--net......................................................................          202,481           132,497
                                                                                  ----------------  ----------------
     Net cash provided by financing activities...................................        1,508,172         2,124,608
                                                                                  ----------------  ----------------
Effect of exchange rate changes on cash and cash equivalents.....................           64,190           (49,635)
                                                                                  ----------------  ----------------
Net increase (decrease) in cash and cash equivalents.............................          102,731         2,456,182
Cash and cash equivalents at beginning of fiscal year............................        1,729,668         1,832,399
                                                                                  ----------------  ----------------
Cash and cash equivalents at end of fiscal year.................................. (Yen)  1,832,399  (Yen)  4,288,581
                                                                                  ================  ================
Supplemental disclosure of cash flow information:
Cash paid during the fiscal year for:
Interest......................................................................... (Yen)  1,127,034  (Yen)    619,903
Income taxes, net of refunds.....................................................           98,197            50,464
Non-cash investing activities:
Loans transferred to other real estate owned.....................................            7,605               124
Available-for-sale securities transferred to held-to-maturity category (Note 4)..               --                --
Marketable equity securities transferred to employee retirement benefit trusts...          133,158            24,611



                                                                                         2004
                                                                                  ----------------

                                                                               
Cash flows from operating activities:
 Net income (loss)............................................................... (Yen)    822,249
 Adjustments to reconcile net income (loss) to net cash provided by (used in)
   operating activities:
   Loss (income) from discontinued operations--net...............................              585
   Depreciation and amortization.................................................          119,381
   Goodwill amortization.........................................................               --
   Provision (credit) for credit losses..........................................         (114,109)
   Investment securities losses (gains)--net.....................................         (118,648)
   Foreign exchange losses (gains)--net..........................................         (486,898)
   Provision for deferred income tax expense (benefit)...........................          308,039
   Increase in trading account assets, excluding foreign exchange contracts......         (430,353)
   Increase (decrease) in trading account liabilities, excluding foreign
    exchange contracts...........................................................          440,857
   Decrease in accrued interest receivable and other receivables.................           17,699
   Decrease in accrued interest payable and other payables.......................          (28,195)
   Other--net....................................................................           87,319
                                                                                  ----------------
     Net cash provided by (used in) operating activities.........................          617,926
                                                                                  ----------------
Cash flows from investing activities:
 Proceeds from sales of investment securities available for sale.................       29,334,674
 Proceeds from maturities of investment securities available for sale............       15,361,761
 Purchases of investment securities available for sale...........................      (47,106,706)
 Proceeds from maturities of investment securities being held to maturity........           59,790
 Purchases of investment securities being held to maturity.......................       (1,051,591)
 Proceeds from sales of other investment securities..............................           36,239
 Purchases of other investment securities........................................         (115,637)
 Net decrease (increase) in loans................................................       (1,240,290)
 Net decrease in interest-earning deposits in other banks........................          260,128
 Net decrease (increase) in call loans, funds sold, and receivables under
   resale agreements
   and securities borrowing transactions.........................................       (4,380,801)
 Proceeds from sales of premises and equipment...................................           38,441
 Capital expenditures for premises and equipment.................................          (51,965)
 Other--net......................................................................         (267,635)
                                                                                  ----------------
     Net cash used in investing activities.......................................       (9,123,592)
                                                                                  ----------------
Cash flows from financing activities:
 Net increase in deposits........................................................        4,061,827
 Net decrease in debentures......................................................         (370,103)
 Net increase in call money, funds purchased, and payables under repurchase
   agreements and securities lending transactions................................          338,173
 Net decrease in due to trust account............................................          (21,349)
 Net increase (decrease) in other short-term borrowings..........................        2,833,091
 Proceeds from issuance of long-term debt........................................        1,300,373
 Repayment of long-term debt.....................................................         (712,984)
 Proceeds from issuance of new shares of common stock, net of stock issue
   expenses......................................................................               --
 Proceeds from sales of treasury stock...........................................              942
 Payments to acquire treasury stock..............................................             (467)
 Dividends paid..................................................................          (32,840)
 Other--net......................................................................            5,761
                                                                                  ----------------
     Net cash provided by financing activities...................................        7,402,424
                                                                                  ----------------
Effect of exchange rate changes on cash and cash equivalents.....................          (73,372)
                                                                                  ----------------
Net increase (decrease) in cash and cash equivalents.............................       (1,176,614)
Cash and cash equivalents at beginning of fiscal year............................        4,288,581
                                                                                  ----------------
Cash and cash equivalents at end of fiscal year.................................. (Yen)  3,111,967
                                                                                  ================
Supplemental disclosure of cash flow information:
Cash paid during the fiscal year for:
Interest......................................................................... (Yen)    454,540
Income taxes, net of refunds.....................................................           58,833
Non-cash investing activities:
Loans transferred to other real estate owned.....................................              750
Available-for-sale securities transferred to held-to-maturity category (Note 4)..           78,343
Marketable equity securities transferred to employee retirement benefit trusts...           87,586


       See the accompanying notes to Consolidated Financial Statements.

                                      F-7



            MITSUBISHI TOKYO FINANCIAL GROUP, INC. AND SUBSIDIARIES

                  NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

1.   BASIS OF FINANCIAL STATEMENTS AND SUMMARY OF SIGNIFICANT ACCOUNTING
POLICIES

Basis of Financial Statements

On April 2, 2001, Mitsubishi Tokyo Financial Group, Inc. (Kabushiki Kaisha
Mitsubishi Tokyo Financial Group) ("MTFG") was established, as a bank holding
company, through which The Bank of Tokyo-Mitsubishi, Ltd. ("BTM"), The
Mitsubishi Trust and Banking Corporation ("Mitsubishi Trust"), and Nippon Trust
Bank Limited ("NTB"), a former subsidiary of BTM, have become wholly-owned
subsidiaries pursuant to stock-for-stock exchanges. NTB was later merged into
Mitsubishi Trust. The business combination was accounted for as a pooling of
interests and, accordingly, the historical information has been restated as if
the combination had been in effect for all periods presented.

On October 1, 2001, as part of the business combination, NTB and The Tokyo
Trust Bank, Ltd. ("TTB"), which was another one of the trust subsidiaries,
merged with and into Mitsubishi Trust through a stock-for-stock exchange. This
merger was recorded at historical cost as transfers and exchanges among
entities under common control.

The accompanying consolidated financial statements are stated in Japanese yen,
the currency of the country in which MTFG is incorporated and principally
operates. The accompanying consolidated financial statements have been prepared
on the basis of accounting principles generally accepted in the United States
of America ("US GAAP"). In certain respects, the accompanying consolidated
financial statements reflect adjustments which are not included in the
consolidated financial statements issued by MTFG and certain of its
subsidiaries in accordance with applicable statutory requirements and
accounting practices in the countries of incorporation. The major adjustments
include those relating to (1) investment securities, (2) derivative financial
instruments, (3) allowance for credit losses, (4) income taxes, (5) foreign
currency translation, (6) premises and equipment, (7) transfer of financial
assets, (8) pension liability, (9) goodwill, and (10) lease transactions.

Fiscal periods of certain subsidiaries, which ended on or after December 31,
and MTFG's fiscal year, which ended on March 31, have been treated as
coterminous. For the fiscal years ended March 31, 2002, 2003 and 2004, the
effect of recording intervening events for the three-month periods ended March
31 on MTFG's proportionate equity in net income of subsidiaries with fiscal
periods ending on December 31, would have resulted in a decrease of (Yen)2.29
billion, an increase of (Yen)3.18 billion and an increase of (Yen)2.64 billion,
respectively, to net income. No intervening events occurred during each of the
three-month periods ended March 31, 2002, 2003 and 2004 which, if recorded,
would have had effects of more than 1% of total assets, loans, total
liabilities, deposits or shareholders' equity as of March 31, 2002, 2003 and
2004.

Description of Business

MTFG and its subsidiaries (together, the "MTFG Group") conduct domestic and
international financial business through BTM and Mitsubishi Trust, each of the
principal subsidiaries of MTFG having domestic and international networks of
branches, offices and subsidiaries in Japan and around the world. BTM is a
major commercial banking institution, providing a broad range of financial
services to consumers and corporations through commercial banking, investment
banking and other activities. Mitsubishi Trust is a trust and banking
subsidiary whose primary business encompasses banking, asset management and
administration, fiduciary and agency services, and real estate services. MTFG
management recognizes that BTM and Mitsubishi Trust, including their
subsidiaries, conducting each of their business with substantial autonomy,
constitute principal segments of the MTFG Group. See Note 28 for more
information by business segment.

                                      F-8



            MITSUBISHI TOKYO FINANCIAL GROUP, INC. AND SUBSIDIARIES

            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)


Use of Estimates

The preparation of consolidated financial statements in conformity with US GAAP
requires management to make estimates and assumptions that affect the reported
amounts of assets and liabilities and disclosures of contingent assets and
liabilities at the date of the consolidated financial statements and the
reported amounts of revenues and expenses during the reporting period. Actual
results could differ from those estimates. Material estimates that are
particularly susceptible to significant change in the near term primarily
relate to the allowance for credit losses on loans and off-balance-sheet credit
instruments, deferred tax assets, derivative financial instruments, goodwill,
investment securities and accrued severance indemnities and pension liabilities.

Summary of Significant Accounting Policies

Significant accounting policies applied in the accompanying consolidated
financial statements are summarized below:

Consolidation--The consolidated financial statements include the accounts of
MTFG and its subsidiaries over which control is exercised through either
majority ownership of voting stock and/or other means, including, but not
limited to, the possession of the power to direct or cause the direction of the
management and policies of entities. In situations in which the MTFG Group has
less than 100% but greater than 50% of ownership in entities, such entities are
consolidated and minority interests are also recorded in Other liabilities.
Intercompany items have been eliminated. Investments in affiliated companies
(companies over which the MTFG Group has the ability to exercise significant
influence) are accounted for by the equity method of accounting and are
reported in Other assets. MTFG's equity interests in the earnings of these
equity investees and gains or losses realized on disposition of such
investments are reported in Other non-interest income.

Assets that the MTFG Group holds in an agency, fiduciary or trust capacity are
not assets of the MTFG Group and, accordingly, are not included in the
accompanying consolidated balance sheets.

Variable interest entities created after January 31, 2003 for which MTFG is
deemed to be the primary beneficiary are consolidated when the MTFG Group has a
variable interest that will absorb a majority of the entity's expected losses,
receive a majority of the entity's expected returns, or both. See Accounting
Changes--Variable Interest Entities and Note 25.

Cash Flows--For the purposes of reporting cash flows, cash and cash equivalents
are defined as those amounts included in the consolidated balance sheets under
the caption Cash and due from banks with original maturities of 90 days or
less. Cash flows from qualified hedging activities are classified in the same
category as the items being hedged.

Translation of Foreign Currency Financial Statements and Foreign Currency
Transactions--Financial statements of overseas entities are translated into
Japanese yen using the respective year-end exchange rates for assets and
liabilities. Income and expense items are translated at average rates of
exchange for the respective periods.

Except for overseas entities located in highly inflationary economies, foreign
currency translation gains and losses related to the financial statements of
overseas entities of the MTFG Group, net of related income tax effects, are
credited or charged directly to Foreign currency translation adjustments, a
component of accumulated other changes in equity from nonowner sources. Tax
effects of gains and losses on foreign currency translation of financial
statements of overseas entities are not recognized unless it is apparent that
the temporary differences

                                      F-9



            MITSUBISHI TOKYO FINANCIAL GROUP, INC. AND SUBSIDIARIES

            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)

will reverse in the foreseeable future. If applicable, foreign exchange
translation gains and losses pertaining to entities located in highly
inflationary economies are recorded in Foreign exchange gains (losses)--net, as
appropriate. For these entities, premises and equipment and the related
depreciation and amortization thereof are translated at exchange rates
prevailing at dates of acquisition.

Foreign currency denominated assets and liabilities are translated into
Japanese yen at the respective year-end foreign exchange rates. Foreign
currency denominated income and expenses are translated using average rates of
exchange for the respective periods. Gains and losses from such translation are
included in Foreign exchange gains (losses)--net, as appropriate.

Repurchase Agreements, Securities Lending and Other Secured Financing
Transactions--Securities sold with agreements to repurchase ("repurchase
agreements"), securities purchased with agreements to resell ("resale
agreements") and securities lending and borrowing transactions are accounted
for as sales of securities with related off-balance-sheet forward repurchase
commitments or purchases of securities with related off-balance-sheet forward
resale commitments, if they meet the relevant conditions for the surrender of
control as provided by Statement of Financial Accounting Standards ("SFAS") No.
140, "Accounting for Transfers and Servicing of Financial Assets and
Extinguishments of Liabilities, a replacement of FASB Statement No. 125." If
the conditions are not met, the transactions are treated as secured financing
or lending.

Collateral--For secured lending transactions, including resale agreements,
securities borrowing transactions, commercial lending and derivative
transactions, the MTFG Group, as a secured party, has generally the right to
require the counterparties to provide collateral, including letters of credit,
cash, securities and other financial assets. For most securities lending
transactions, the MTFG Group maintains strict levels of collateralization
governed by daily mark-to-market analysis. Financial assets pledged as
collateral are generally negotiable financial instruments and are permitted to
be sold or repledged by secured parties. If the MTFG Group sells these
financial assets received as collateral, it recognizes the proceeds from the
sale and its obligation to return the collateral. For secured borrowing
transactions, principally repurchase agreements and securities lending
transactions and derivative transactions, where the secured party has the right
to sell or repledge financial assets pledged as collateral, the MTFG Group
separately discloses those financial assets pledged as collateral in the
consolidated balance sheets.

Trading Account Securities--Securities and money market instruments held in
anticipation of short-term market movements and for resale to customers are
included in Trading account assets, and short trading positions of these
instruments are included in Trading account liabilities. Trading positions are
carried at fair value on the consolidated balance sheets and recorded on a
trade date basis. Changes in the fair value of trading positions are recognized
currently in Trading account profits--net, as appropriate.

Investment Securities--Debt securities for which the MTFG Group has both the
positive intent and ability to hold to maturity are classified as Securities
being held to maturity and carried at amortized cost. Debt securities that the
MTFG Group may not hold to maturity and marketable equity securities, other
than those classified as trading account securities, are classified as
Securities available for sale, and are carried at their fair values, with
unrealized gains and losses reported on a net-of-tax basis within accumulated
other changes in equity from nonowner sources, which is a component of
shareholders' equity. Nonmarketable equity securities are stated at cost as
Other investment securities.

Individual debt and equity securities are written down to fair value with the
resulting losses charged to operations when, in the opinion of management, a
decline in estimated fair value below the cost of such securities is other than
temporary. Such impairment loss is included in Investment securities gains
(losses)--net in the statement of

                                     F-10



            MITSUBISHI TOKYO FINANCIAL GROUP, INC. AND SUBSIDIARIES

            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)

operations. In determining other than temporary declines in fair value to be
recognized as an impairment loss on investment securities, the MTFG Group
generally considers factors such as the financial condition of the issuer, the
extent of decline in fair value, and the length of period that the decline in
fair value below cost has existed. See Note 4 for a further discussion of
other-than-temporary impairment. Interest and dividends on investment
securities are reported in Interest Income. Dividends are recognized when the
shareholders' right to receive the dividend is established. Gains and losses on
disposition of investment securities are computed using the average cost method
and are recognized on the trade date.

Derivative Financial Instruments--The MTFG Group engages in derivative
activities involving swaps, forwards and options, and other types of derivative
contracts. Derivatives are used in trading activities to generate trading
revenues and fee income for its own account and to respond to the customers'
financial needs. Derivatives are also used to manage its exposures to
fluctuations in interest and foreign exchange rates, equity and commodity
prices.

Derivatives entered into for trading purposes are carried at fair value and are
reported as Trading account assets or Trading account liabilities. Fair values
are based on market or broker-dealer quotes when available. Valuation models
such as present value and pricing models are applied to current market
information to estimate fair values when such quotes are not available. The
MTFG Group defers trade date gains or losses on derivatives where the fair
values of those derivatives are not obtained from a quoted market price,
supported by comparison to other observable market transactions, or based upon
a valuation technique incorporating observable market data. The fair values of
derivative contracts executed with the same counterparty under legally
enforceable master netting agreements are presented on a net basis. Changes in
the fair value of such contracts are recognized currently in Foreign exchange
gains (losses)--net with respect to foreign exchange contracts and in Trading
account profits--net with respect to interest rate contracts and other types of
contracts.

Embedded derivatives that are not clearly and closely related to the host
contracts and meet the definition of derivatives are separated from the host
contracts and measured at fair value unless the contracts embedding the
derivatives are measured at fair value in their entirety.

Derivatives are also used for asset and liability management to manage
exposures to fluctuations in interest and foreign exchange rates arising from
mismatches of asset and liability positions. Such derivatives may include
contracts that qualify for hedge accounting. At inception of hedge accounting,
each derivative is designated as a hedging instrument and documented with
related information such as the risk management objective and strategy for the
hedge, which includes the hedged item, the risk being hedged and the method
used to assess the hedge's effectiveness. Derivatives are evaluated in order to
determine if they qualify for hedge accounting. The hedging derivative
instruments must be highly effective in achieving offsetting changes in fair
values or variable cash flows from the hedged items attributable to the risk
being hedged. Any ineffectiveness, which arises during the hedging
relationship, is recognized in Non-interest income or expense in the period in
which it arises. All qualifying hedging derivatives are valued at fair value
and included in Other assets or Other liabilities. For fair value hedges of
interest-bearing assets or liabilities, the change in the fair value of the
hedged item and the hedging instruments is recognized in net interest income to
the extent that it is effective. For all other fair value hedges, the change in
the fair value of the hedged item and change in fair value of the derivative
are recognized in non-interest income or expense. For cash flow hedges, the
unrealized changes in fair value to the extent effective are recognized in
accumulated other changes in equity from nonowner sources. Amounts realized on
cash flow hedges related to variable rate loans are recognized in net interest
income in the period when the cash flow from the hedged item is realized. The
fair value of cash flow hedges related to forecasted transactions, if

                                     F-11



            MITSUBISHI TOKYO FINANCIAL GROUP, INC. AND SUBSIDIARIES

            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)

any, is recognized in non-interest income or expense in the period when the
forecasted transaction occurs. Any difference that arises from gains or losses
on hedging derivatives offsetting corresponding gains or losses on the hedged
items, and gains and losses on derivatives attributable to the risks excluded
from the assessment of hedge effectiveness are currently recognized in
non-interest income or expense. Derivatives that do not qualify for hedge
accounting are considered trading positions and are accounted for as such.

Loans--Loans are carried at the principal amount outstanding, adjusted for
unearned income and deferred net nonrefundable loan fees and costs. Loans held
and intended for dispositions or sales in secondary markets are transferred to
the held-for-sale classification and carried at the lower of cost or estimated
fair value generally on an individual loan basis. Loan origination fees, net of
certain direct origination costs are deferred and recognized over the
contractual life of the loan as an adjustment of yield using the method that
approximates the interest method. Interest income on loans that are not
impaired is accrued and credited to interest income as it is earned. Unearned
income and discounts or premiums on purchased loans are deferred and recognized
over the life of the loan using a method that approximates the interest method.

Loans are considered impaired when, based on current information and events, it
is probable that the MTFG Group will be unable to collect the scheduled
payments of principal or interest when due according to the contractual terms
of the loan agreement. Factors considered by management in determining
impairment include payment status, collateral value, and the probability of
collecting scheduled principal and interest payments when due. Loans that
experience insignificant payment delays and payment shortfalls generally are
not classified as impaired. Management determines the significance of payment
delays and payment shortfalls on a case-by-case basis, taking into
consideration all of the circumstances surrounding the loan and the borrower,
including the length of the delay, the reasons for the delay, the borrower's
prior payment record, and the amount of the shortfall in relation to the
principal and interest owed. Impairment is measured on a loan by loan basis by
either the present value of expected future cash flows discounted at the loan's
effective interest rate, the loan's obtainable market price, or the fair value
of the collateral if the loan is collateral dependent.

Loans are generally placed on nonaccrual status when substantial doubt exists
as to the full and timely collection of either principal or interest, or when
principal or interest is contractually past due one month or more with respect
to loans of domestic banking subsidiaries, including BTM and Mitsubishi Trust,
and 90 days or more with respect to loans of certain foreign banking
subsidiaries. A nonaccrual loan may be restored to an accrual basis when
interest and principal payments are current and management expects that the
borrower will make future contractual payments as scheduled. When a loan is
placed on nonaccrual status, interest accrued but not received is generally
reversed against interest income. Cash receipts on nonaccrual loans, for which
the ultimate collectibility of principal is uncertain, are applied as principal
reductions; otherwise, such collections are credited to income. The MTFG Group
does not capitalize any accrued interest in its principal balances of impaired
loans at each balance sheet date.

Loan Securitization--The MTFG Group securitizes and services commercial and
industrial loans in the normal course of business. The MTFG Group accounts for
a transfer of loans in a securitization transaction as a sale if it meets
relevant conditions for the surrender of control in accordance with SFAS No.
140. Otherwise, the transfer is accounted for as a collateralized borrowing
transaction. Interests in loans sold through a securitization accounted for as
a sale may be retained in the form of subordinated tranches or beneficial
interests. These retained interests are primarily recorded in Securities
available for sale. The previous carrying amount of the loans involved in the
transfer is allocated between the loans sold and the retained interests based
on their relative fair values at the date of the securitization. Since quoted
market prices are generally not available, the MTFG Group usually estimates
fair value of these retained interests based on the present value of future
expected cash flows by using modeling techniques that involve management's best
estimates of key assumptions, which may

                                     F-12



            MITSUBISHI TOKYO FINANCIAL GROUP, INC. AND SUBSIDIARIES

            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)

include default rates, recovery rates, and discount rates. Retained interests
that can contractually be prepaid or otherwise settled in such a way that the
MTFG Group would not recover substantially all of its investment are accounted
for as investment securities available for sale.

Allowance for Credit Losses--The MTFG Group maintains an allowance for credit
losses to absorb losses inherent in the loan portfolio. Actual credit losses
(amounts deemed uncollectible, in whole or in part), net of recoveries, are
deducted from the allowance for credit losses, as net charge-offs, generally
based on detailed loan reviews and a credit assessment by management at each
balance-sheet date. The MTFG Group generally applies its charge-off policy to
all loans in its portfolio regardless of the type of borrower. A provision for
credit losses, which is a charge against earnings, is added to bring the
allowance to a level which, in management's opinion, is appropriate to absorb
probable losses inherent in the credit portfolio.

A key element relating to policies and discipline used in determining the
allowance for credit losses is the credit classification and the related
borrower categorization process. The categorization is based on conditions that
may affect the ability of borrowers to service their debt, taking into
consideration current financial information, historical payment experience,
credit documentation, public information, analyses of relevant industry
segments and current trends. In determining the appropriate level of the
allowance, the MTFG Group evaluates the probable loss by category of loan based
on its type and characteristics.

The allowance for credit losses for non-homogeneous loans consists of an
allocated allowance for specifically identified problem loans, an allocated
allowance for country risk exposure, a formula allowance and an unallocated
allowance. An allocated allowance is also established for large groups of
smaller-balance homogeneous loans. Non-homogeneous loans such as commercial
loans are evaluated individually and the allowance for such loans is comprised
of specific, country risk, formula and unallocated allowances.

The credit loss allowance for individual customers represents the impairment
allowance determined in accordance with SFAS No. 114, "Accounting by Creditors
for Impairment of a Loan." The MTFG Group measures the impairment of a loan,
with the exception of large groups of smaller-balance homogeneous loans that
are collectively evaluated for impairment, based on the present value of
expected future cash flows discounted at the loan's effective interest rate, or
on the loan's observable market price, or based on the fair value of the
collateral if the loan is collateral dependent, when it is probable that the
MTFG Group will be unable to collect all amounts due according to the
contractual terms of the loan agreement. For certain subsidiaries, some
impaired loans are aggregated for the purpose of measuring impairment using
historical loss factors. Generally, the MTFG Group's impaired loans include
nonaccrual loans, restructured loans and other loans specifically identified as
impaired.

The credit loss allowance for country risk exposure is a country-specific
allowance for substandard, special mention and unclassified loans. The
allowance is established to supplement the formula allowance for these loans,
based on an estimate of probable losses relating to the exposure to countries
that are identified by management to have a high degree of transfer risk. The
measure is generally based on a function of default probability and the
recovery ratio with reference to external credit ratings. For the allowance for
specifically identified cross-border problem loans, the MTFG Group incorporates
transfer risk in its determination of related allowance for credit losses.

The formula allowance is calculated for groups of loans collectively evaluated
for unidentified impairment by applying loss factors to outstanding
substandard, special mention and unclassified loans. The evaluation of inherent
loss for these loans involves a high degree of uncertainty, subjectivity and
judgment because probable credit losses are not easily identifiable or
measurable. In determining the formula allowance, the MTFG Group,

                                     F-13



            MITSUBISHI TOKYO FINANCIAL GROUP, INC. AND SUBSIDIARIES

            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)

therefore, relies on a statistical analysis that incorporates loss factor
percentages of total loans outstanding based on historical experience.
Corresponding to the periodical impairment identification and self-assessment
process, the estimation of the formula allowance is back-tested by comparing
the allowance with the actual results subsequent to the balance sheet date.

The unallocated allowance represents an estimate of additional losses inherent
in the loan portfolio and is composed of attribution factors, which are based
upon management's evaluation of various conditions that are not directly or
indirectly measured in the determination of the allocated allowance. The
conditions evaluated in connection with the unallocated allowance may include
existing general economic and business conditions affecting the key lending
areas of the MTFG Group, credit quality trends, collateral values, loan volumes
and concentrations, seasoning of the loan portfolio, specific industry
conditions within portfolio segments, recent loss experience in particular
segments of the portfolio, duration of the current business cycle, bank
regulatory examination results and findings of the MTFG Group's internal credit
examiners.

The credit loss allowance for large groups of smaller-balance homogeneous loans
is focused on loss experience for the pool rather than on a detailed analysis
of individual loans. The allowance is determined primarily based on probable
net charge-offs and the probability of insolvency based on the number of
delinquencies.

Allowance for Off-Balance-Sheet Credit Instruments--The MTFG Group maintains an
allowance for credit losses on off-balance-sheet credit instruments, including
commitments to extend credit, guarantees, standby letters of credit and other
financial instruments. The allowance is recorded as a liability and includes
the specific allowance for specifically identified credit exposure and the
allocated formula allowance. With regard to the specific allowance for
specifically identified credit exposure and allocated formula allowance, the
MTFG Group adopts the same methodology used in determining the allowance for
loan credit losses. Potential credit losses related to derivatives are
considered in the fair valuation of the derivatives.

Net changes in the allowance for off-balance-sheet credit instruments are
accounted for as Other non-interest expenses.

Premises and Equipment--Premises and equipment are stated at cost less
accumulated depreciation and amortization. Depreciation is charged to
operations over the estimated useful lives of the related assets. Leasehold
improvements are depreciated over the terms of the respective leases or the
estimated useful lives of the improvements, whichever are shorter. Depreciation
of premises and equipment is computed under the declining-balance method with
respect to premises and equipment of BTM, Mitsubishi Trust and certain other
subsidiaries, and under the straight-line method with respect to premises and
equipment of other subsidiaries, at rates principally based on the following
estimated useful lives:



                                                 Years
                                                --------
                                             
                        Buildings.............. 15 to 50
                        Equipment and furniture  4 to 15
                        Leasehold improvements.  3 to 39


Maintenance, repairs and minor improvements are charged to operations as
incurred. Major improvements are capitalized. Net gains or losses on
dispositions of premises and equipment are included in Other non-interest
income or expense, as appropriate.

Long-lived assets are reviewed for impairment whenever events or changes in
circumstances indicate that the carrying amount of an asset may not be
recoverable. Recoverability of an asset to be held and used is measured

                                     F-14



            MITSUBISHI TOKYO FINANCIAL GROUP, INC. AND SUBSIDIARIES

            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)

by a comparison of the carrying amount to future undiscounted net cash flows
expected to be generated by the asset. If an asset is considered to be
impaired, the impairment to be recognized is measured by the amount by which
the carrying amount of the asset exceeds the fair value. For purposes of
recognition and measurement of an impairment loss, a long-lived asset or assets
are grouped with other assets and liabilities at the lowest level with
independent and identifiable cash flows. Assets to be disposed of by sale are
reported at the lower of the carrying amount or fair value less estimated cost
to sell.

Other Real Estate Owned--Real estate assets acquired in full or partial
satisfaction of debt are held for sale, and are initially recorded at fair
value less estimated cost to sell at the date of acquisition and classified as
Other assets. After acquisition, valuations are periodically performed by
management and the real estate assets are carried at the lower of the carrying
amount or fair value less estimated cost to sell. Routine holding costs,
subsequent declines in appraisal value, and net gains or losses on disposal are
included in Losses (gains) on other real estate owned as incurred.

Goodwill--The MTFG Group has classified as goodwill the excess of the cost of
the MTFG Group's investments in subsidiaries over the MTFG Group's share of net
assets at dates of acquisition in purchase transactions. Goodwill related to
the investments in affiliated companies is included in the investments
accounted for by the equity method. On April 1, 2002, the MTFG Group adopted
SFAS No. 142, "Goodwill and Other Intangible Assets," which provides goodwill
acquired in a purchase business combination should not be amortized and is
subject to an impairment test. Goodwill is recorded at a designated reporting
unit level for the purpose of assessing impairment. An impairment loss, if any,
is recognized to the extent that the carrying amount of goodwill exceeds its
implied fair value. Prior to the adoption of SFAS No. 142, in accordance with
Accounting Principles Board Opinion ("APB") No. 17, goodwill was amortized over
periods not exceeding 10 years.

Software--The MTFG Group capitalizes certain costs associated with the
acquisition or development of internal-use software. Costs subject to
capitalization are salaries and employee benefits for employees who are
directly associated with and who devote time to the internal-use computer
software project, to the extent of the time spent directly on the project. Once
the software is ready for its intended use, the MTFG Group begins to amortize
capitalized costs on a straight-line basis over its estimated useful life.

Accrued Severance and Pension Liabilities--BTM, Mitsubishi Trust and certain
other subsidiaries have defined benefit retirement plans, including lump-sum
severance indemnities plans. The costs of the plans, based on actuarial
computations of current and future employee benefits, are charged to Salaries
and employee benefits.

Debentures and Long-Term Debt--Premiums, discounts and issuance costs of
debentures and long-term debt are amortized based on the method that
approximates the interest method over the terms of the debentures and long-term
debt.

Obligations under Guarantees--The MTFG Group provides customers with a variety
of guarantees and similar arrangements, including standby letters of credit,
financial and performance guarantees, credit protections, and liquidity
facilities. The MTFG Group recognizes guarantee fee income over the guarantee
period. It is MTFG's dominant business practice to receive such a guarantee fee
at the inception of the guarantee, which approximates market value of the
guarantee and is initially recorded as a liability, which is then recognized as
guarantee fee income ratably over the guarantee period.

Fees and Commissions--Revenue recognition of major components of fees and
commissions is as follows:

..   Fees on funds transfer and collection services and fees from investment
    banking services are generally recognized as revenue when the related
    services are performed.

                                     F-15



            MITSUBISHI TOKYO FINANCIAL GROUP, INC. AND SUBSIDIARIES

            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)


..   Fees from trade-related financing services are recognized over the period
    of the financing.

..   Trust fees are recognized on an accrual basis, generally based on the
    volume of trust assets under management and/or the operating performance
    for the accounting period of each trust account. With respect to trust
    accounts with guarantee of trust principal, trust fees are determined based
    on the profits earned by individual trust account during the trust
    accounting period, less deductions, including provision for reserve,
    impairment for individual investments and dividends paid to beneficiary
    certificate holders. The trust fees for these trust accounts are accrued
    based on the amounts expected to be earned during the accounting period of
    each trust account.

..   Annual fees and royalty and other service charges related to the credit
    card business are recorded on a straight-line basis as services are
    provided.

..   Interchange income from the credit card business is recognized as billed.

..   Service charges on deposit accounts and fees and commissions from other
    services are generally recognized over the period that the service is
    provided.

..   Fees on guarantees are generally recognized over the contractual periods of
    the respective guarantees. Amounts initially recorded as a liability
    corresponding to the obligations at fair value are generally recognized as
    revenue over the terms of the guarantees as the MTFG Group is deemed to be
    released from the risk under guarantees.

Income Taxes--The provision for income taxes is determined using the asset and
liability method of accounting for income taxes. Under this method, deferred
income taxes reflect the net tax effects of (1) temporary differences between
the carrying amounts of assets and liabilities for financial reporting purposes
and the amounts used for income tax purposes, and (2) operating loss and tax
credit carryforwards. A valuation allowance is recognized for any portion of
the deferred tax assets where it is considered more likely than not that it
will not be realized. The provision for deferred taxes is based on the change
in the net deferred tax asset or liability from period to period.

Free Distributions of Common Shares--As permitted by the Commercial Code of
Japan (the "Code"), Japanese companies, upon approval by the Board of
Directors, may make a free distribution of shares, in the form of a "stock
split" as defined, to shareholders. In accordance with generally accepted
accounting practice in Japan, such distribution does not give rise to any
change in capital stock or capital surplus accounts. Common shares distributed
are recorded as shares issued on the distribution date. See Note 19.

Amounts per Common Share--Basic earnings per share ("EPS") excludes dilutive
effects of potential common shares and is computed by dividing income available
to common stock shareholders by the weighted average number of common shares
outstanding for the period, while diluted EPS gives effect to all dilutive
potential common shares that were outstanding during the period. See Note 22
for the computation of basic and diluted EPS.

Comprehensive Income (Loss)--The MTFG Group's comprehensive income includes net
income or loss and other changes in equity from nonowner sources. All changes
in unrealized gains and losses on investment securities available for sale,
unrealized gains and losses on derivatives qualifying for cash flow hedges,
minimum pension liability adjustments and foreign currency translation
adjustments constitute the MTFG Group's changes in equity from nonowner sources
and are presented, with related income tax effects, in the consolidated
statements of changes in equity from nonowner sources.

Stock-Based Compensation--In December 2002, the Financial Accounting Standards
Board (the "FASB") issued SFAS No. 148, "Accounting for Stock-Based
Compensation--Transition and Disclosure, an amendment of FASB Statement No.
123," which amends SFAS No. 123, "Accounting for Stock-Based Compensation," to

                                     F-16



            MITSUBISHI TOKYO FINANCIAL GROUP, INC. AND SUBSIDIARIES

            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)

provide alternative methods of transition for a voluntary change to the fair
value based method of accounting for stock-based employee compensation. It also
amends the disclosure requirements to require prominent disclosure in both
annual and interim financial statements about the method of accounting for
stock-based employee compensation and the effect of the method used on reported
results. The transition and annual disclosure requirements under this Statement
are effective for financial statements for fiscal years ending after December
15, 2002.

Two subsidiaries of MTFG have several stock-based compensation plans, which are
described more fully in Note 31. As permitted by the provisions of SFAS No.
123, they account for those stock-based compensation plans by the intrinsic
value-based method prescribed in APB No. 25, "Accounting for Stock Issued to
Employees" and related Interpretations. Under the intrinsic value-based method,
compensation expense is measured as the amount by which quoted market price of
these subsidiaries' stock at the date of grant exceeds the stock option
exercise price.

Had the stock-based compensation plans been accounted for under the fair value
method of SFAS No. 123, the MTFG Group's compensation expense, net income
(loss), and net income (loss) per share would have been the pro forma amounts
indicated in the following table.



                                                                                 Fiscal years ended March 31,
                                                                       ------------------------------------------------
                                                                             2002            2003             2004
-                                                                      ---------------  --------------  ---------------
                                                                                         (in millions)
                                                                                               
Reported net income (loss)............................................ (Yen)  (216,534) (Yen)  203,288  (Yen)   822,249
Stock-based employee compensation expense (determined under fair
  value based method for all awards, net of tax)......................          (1,369)         (2,019)          (1,965)
                                                                       ---------------  --------------  ---------------
Pro forma net income (loss), after stock-based employee compensation
  expense............................................................. (Yen)  (217,903) (Yen)  201,269  (Yen)   820,284
                                                                       ===============  ==============  ===============
Basic earnings (loss) per common share--net income (loss) available to
  common shareholders:                                                                     (in Yen)
   Reported........................................................... (Yen)(39,733.32) (Yen)33,963.40  (Yen)128,231.00
   Pro forma..........................................................      (39,979.72)      33,603.94       127,921.59
Diluted earnings (loss) per common share--net income (loss) available
  to common shareholders:
   Reported...........................................................      (39,733.32)      31,137.71       124,917.18
   Pro forma..........................................................      (39,979.72)      30,793.30       124,615.64


Stock-based compensation expense included in net income for the fiscal years
ended March 31, 2002, 2003 and 2004 was not significant.

Accounting Changes


Variable Interest Entities--In January 2003, the FASB issued FASB
Interpretation ("FIN") No. 46, "Consolidation of Variable Interest Entities, an
interpretation of ARB No. 51." FIN No. 46 addresses consolidation by business
enterprises of variable interest entities ("VIEs"). The consolidation
requirements of FIN No. 46 apply immediately to VIEs created after January 31,
2003. The consolidation requirements apply to older entities in the first
fiscal year or interim period beginning after June 15, 2003, which has been
amended by the FASB as described below.

In December 2003, the FASB issued FIN No. 46 (revised December 2003),
"Consolidation of Variable Interest Entities, an interpretation of ARB No. 51"
("FIN No. 46R"). FIN No. 46R modifies FIN No. 46 in certain

                                     F-17



            MITSUBISHI TOKYO FINANCIAL GROUP, INC. AND SUBSIDIARIES

            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)

respects including the scope exception, the definition of VIEs, and other
factors that would affect the determination of VIEs and primary beneficiaries
that must consolidate VIEs. FIN No. 46R, as written, applies to VIEs created
before February 1, 2003 no later than the end of the first reporting period
that ends after March 15, 2004, and to all special purpose entities no later
than the first reporting period that ends after December 15, 2003. Subsequent
to the Issuance of FIN No. 46R, the Chief Accountant of the U.S. Securities and
Exchange Commission ("SEC") stated the SEC staff's position in a letter to the
American Institute of Certified Public Accountants ("AICPA") dated March 3,
2004, that the SEC staff does not object to the conclusion that FIN No. 46R
should not be required to be applied at a date earlier than the original FIN
No. 46 and that foreign private issuers would be required to apply FIN No. 46R
at various dates depending on the entity's year-end and the frequency of
interim reporting. In accordance with the letter, MTFG is required to adopt FIN
No. 46R in the fiscal year ending March 31, 2005. MTFG has applied, as
required, FIN No. 46 to all VIE's created after January 31, 2003. See Note 25
for further discussion of variable interest entities in which the Group holds
variable interests.

Accounting for Asset Retirement Obligations--Effective April 1, 2003, the MTFG
Group adopted SFAS No. 143, "Accounting for Asset Retirement Obligations." SFAS
No. 143 addresses the financial accounting and reporting for obligations
associated with the retirement of tangible long-lived assets and the associated
asset retirement costs. SFAS No. 143 applies to the legal obligations
associated with the retirement of long-lived assets that result from the
acquisition, construction, development, and/or the normal operation of a
long-lived asset. A legal obligation is an obligation that a party is required
to settle as a result of an existing or enacted law, statute, ordinance,
written or oral contract, or by legal construction of a contract under the
doctrine of promissory estoppel. The adoption of SFAS No. 143 did not have a
material impact on the MTFG Group's financial position or results of operations.

Certain Financial Instruments with Characteristics of both Liabilities and
Equity--In May 2003, the FASB issued SFAS No. 150, "Accounting for Certain
Financial Instruments with Characteristics of both Liabilities and Equity."
SFAS No. 150 establishes standards for how an issuer classifies and measures
certain financial instruments with characteristics of both liabilities and
equity. SFAS No. 150 is effective for financial instruments entered into or
modified after May 31, 2003, and otherwise is effective at the beginning of the
first interim period beginning after June 15, 2003, which is the MTFG Group's
fiscal year ending March 31, 2005. On November 7, 2003, FASB Staff Position No.
150-3, "Effective Date, Disclosures, and Transition for Mandatorily Redeemable
Financial Instruments of Certain Nonpublic Entities and Certain Mandatorily
Redeemable Noncontrolling Interests under FASB Statement No. 150, Accounting
for Certain Financial Instruments with Characteristics of Both Liabilities and
Equity," delayed the effective date of certain provisions of SFAS No. 150 for
certain mandatorily redeemable noncontrolling interests.

The MTFG Group is not a party to any financial instruments entered into after
May 31, 2003, to which SFAS No. 150 must be applied immediately, but has not
completed evaluating the impact of the adoption of SFAS No. 150 to other
instruments. Accordingly, the MTFG Group cannot reasonably estimate the
ultimate impact of SFAS No. 150 on its financial position or results of
operations.

Disclosure about pension and other postretirement benefit--In December 2003,
the FASB issued SFAS No. 132 (revised 2003), "Employers' Disclosures about
Pensions and Other Postretirement Benefits, an amendment of FASB Statements No.
87, 88, and 106" ("SFAS No. 132R"), which replaces existing FASB disclosure
requirements for pensions. SFAS No. 132R requires disclosure of more details
about plan assets, benefit obligations, cash flows, benefit costs and other
relevant information. SFAS No. 132R is generally effective for the fiscal years
ending after December 15, 2003, and for interim periods beginning after
December 15, 2003. See Note 16 for the required disclosure.

                                     F-18



            MITSUBISHI TOKYO FINANCIAL GROUP, INC. AND SUBSIDIARIES

            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)


Impairment of securities investments--In November 2003, the FASB Emerging
Issues Task Force (the "EITF") reached a consensus on Issue No. 03-1, "The
Meaning of Other-Than-Temporary Impairment and Its Application to Certain
Investments" ("EITF 03-1"). EITF 03-1 requires certain additional quantitative
and qualitative disclosures in addition to the disclosures already required by
SFAS No. 115, "Accounting for Certain Investments in Debt and Equity
Securities." The new disclosure requirements are applied to financial
statements for the fiscal years ending after December 15, 2003. See Note 4 for
the required disclosures. In March 2004, the EITF also reached a consensus on
additional accounting guidance for other-than-temporary impairments, which
requires an evaluation and recognition of other-than-temporary impairment by a
three-step impairment test. The guidance should be applied for reporting
periods beginning after June 15, 2004. The MTFG Group has not completed its
study of what effect the guidance will have on its financial position or
results of operations.

Guarantor's Accounting and Disclosure Requirements for Guarantees--Effective
January 1, 2003, the MTFG Group adopted the initial recognition and measurement
provisions of FIN No. 45, "Guarantor's Accounting and Disclosure Requirements
for Guarantees, Including Indirect Guarantees of Indebtedness of Others, an
interpretation of FASB Statements No. 5, 57, and 107 and rescission of FASB
interpretation No. 34," which requires that, for guarantees within the scope of
FIN No. 45 issued or amended after December 31, 2002, a liability for the fair
value of the obligation undertaken in issuing the guarantee be recognized. The
adoption of FIN No. 45 did not have a material impact on the MTFG Group's
financial position or results of operations.

Costs Associated with Exit or Disposal Activities--In June 2002, the FASB
issued SFAS No. 146, "Accounting for Costs Associated with Exit or Disposal
Activities." SFAS No. 146 is effective for exit or disposal activities that are
initiated after December 31, 2002. This statement addresses financial
accounting and reporting for costs associated with exit or disposal activities
and nullifies EITF Issue No. 94-3, "Liability Recognition for Certain Employee
Termination Benefits and Other Costs to Exit an Activity (including Certain
Costs Incurred in a Restructuring)." The adoption of SFAS No. 146 did not have
a material impact on the MTFG Group's financial position or results of
operations.

Goodwill and Other Intangible Assets--Effective April 1, 2002, the MTFG Group
adopted SFAS No. 142, "Goodwill and Other Intangible Assets." SFAS No. 142
requires that goodwill, formerly amortized over its useful life, no longer be
amortized but rather tested for impairment at least annually. Further, SFAS No.
142 requires that intangible assets that have finite useful lives will continue
to be amortized over their useful lives while intangible assets with indefinite
lives will no longer be amortized and are subject to impairment testing at
least annually.

The MTFG Group performed the required transitional impairment tests of goodwill
and intangible assets with indefinite lives upon adoption of SFAS No. 142. The
initial adoption resulted in a cumulative adjustment charge to earnings of
(Yen)532 million.

Derivative Instruments and Hedging Activities--On April 1, 2001, the MTFG Group
adopted SFAS No. 133, "Accounting for Derivative Instruments and Hedging
Activities," as amended by SFAS No. 137 and SFAS No. 138. SFAS No. 133 requires
that all derivatives, whether designated as a hedge or not, be recorded on the
balance sheet at fair value. SFAS No. 133 also requires that derivative
instruments used to hedge be identified specifically to assets, liabilities,
firm commitments or anticipated transactions and be expected to remain
effective throughout the life of the hedge. Derivative instruments that do not
qualify as either a fair value hedge or cash flow hedge are valued at fair
value and classified as trading account assets or liabilities with the
resultant gain or loss recognized in current earnings. The cumulative effect of
the change in accounting principle, net of tax, was to increase net income by
(Yen)5,867 million and other changes in equity from nonowner sources by
(Yen)1,257 million, respectively, in 2002.

                                     F-19



            MITSUBISHI TOKYO FINANCIAL GROUP, INC. AND SUBSIDIARIES

            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)


In April 2003, the FASB issued SFAS No. 149, "Amendment of Statement 133 on
Derivative Instruments and Hedging Activities." SFAS No. 149 amends and
clarifies accounting for derivative instruments, including certain derivative
instruments embedded in other contracts, and for hedging activities under SFAS
No. 133. In particular, SFAS No. 149 (1) clarifies under what circumstances a
contract with an initial net investment meets the characteristics of a
derivative, (2) clarifies when a derivative contains a financing component that
warrants special reporting in the statement of cash flows, (3) amends the
definition of underlyings, one of three characteristics of derivatives, to
include the occurrence or non-occurrence of a specified event such as scheduled
payments under a contract, and (4) amends certain other existing
pronouncements, in particular, those related to the scope of instruments that
are subject to the requirements of SFAS No. 133. SFAS No. 149 is generally
effective for contracts entered into or modified after June 30, 2003. The
adoption of SFAS No. 149 did not have a material impact on the MTFG Group's
financial position or results of operations.

Reclassifications

Certain reclassifications and format changes of the financial statements for
the fiscal years ended March 31, 2002 and 2003 have been made to conform to the
current year presentation.

Recently Issued Accounting Pronouncements

Transfer to the Japanese Government of the Substitutional Portion of Employee
Pension Fund Liabilities--In January 2003, the EITF reached a consensus on
Issue No. 03-2, "Accounting for the Transfer to the Japanese Government of the
Substitutional Portion of Employee Pension Fund Liabilities" ("EITF 03-2"),
which was ratified by the FASB in February 2003. EITF 03-2 addresses accounting
for a transfer to the Japanese government of a substitutional portion of an
employee pension fund and requires employers to account for the entire
separation process of the substitutional portion from an entire plan upon
completion of the transfer to the government of the substitutional portion of
the benefit obligation and related plan assets as the culmination of a series
of steps in a single settlement transaction. It also requires that the
difference between the fair value of the obligation and the assets required to
be transferred to the government, if any, should be accounted for as a subsidy
from the government, separately from gain or loss on settlement of the
substitutional portion of the obligation, upon completion of the transfer.

In June 2003, BTM submitted to the government an application to transfer the
obligation to pay benefits for future employee service related to the
substitutional portion and the application was approved in August 2003.
To complete the entire separation process, in August 2004, BTM made another
application for transfer to the government of the remaining substitutional
portion, but the timing of the approval is not known yet. Upon completion of
the separation, the substitutional obligation and related plan assets will be
transferred to a government agency, and BTM will be released from paying the
substitutional portion of the benefits to its employees. The impact on MTFG's
consolidated financial statements of the transfer accounted for in accordance
with EITF 03-2 is not known and cannot be reasonably estimated until the
completion of the transfer.

Loans and Debt Securities Acquired in a Transfer--In December 2003, AICPA
issued Statement of Position 03-3, "Accounting for Certain Loans or Debt
Securities Acquired in a Transfer" ("SOP 03-3"), which supersedes AICPA
Practice Bulletin 6, "Amortization of Discounts on Certain Acquired Loans" and
addresses accounting for differences between contractual cash flows and cash
flows expected to be collected from an investor's initial investment in loans
or debt securities acquired in a transfer if those differences are
attributable, at least, in part, to credit quality. SOP 03-3 limits accretable
yield to the excess of the investor's estimate of undiscounted cash flows over
the investor's initial investment in the loan and prohibits the recognition of
the non-accretable difference. Under SOP 03-3, subsequent increases in cash
flows expected to be collected generally should be

                                     F-20



            MITSUBISHI TOKYO FINANCIAL GROUP, INC. AND SUBSIDIARIES

            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)

recognized prospectively through adjustment of the loan's yield over its
remaining life while any decreases in such cash flows should be recognized as
impairments. SOP 03-3 also provides guidance with regard to presentation and
disclosures.

SOP 03-3 is effective for loans acquired in fiscal years beginning after
December 15, 2004. The MTFG Group has not completed the study of what effect
SOP 03-3 will have on its financial position and results of operations.

2.  DISCONTINUED OPERATIONS

During the fiscal year ended March 31, 2004, the MTFG Group completed the
liquidation process of its domestic mortgage securities subsidiary, The Diamond
Mortgage Co., Ltd. The dissolution was due to the adverse business environment
for the domestic mortgage securities business, whose results were reported as a
part of the Commercial Banking business unit of BTM and its subsidiaries ("BTM
Group"). In addition, during the fiscal year ended March 31, 2004, as a part of
the MTFG Group's efforts to streamline its securities business, Mitsubishi
Securities, which itself constitutes a reportable operating segment of BTM
Group, sold certain domestic subsidiaries to third parties. BTM also sold its
securities subsidiary in Europe to third parties.

In accordance with SFAS No. 144, "Accounting for Impairment or Disposal of
Long-Lived Assets," MTFG presents the results of discontinued operations as a
separate line item in the consolidated statements of operations. Amounts
presented in the consolidated statements of operations and the consolidated
statements of cash flows for the prior fiscal years related to the discontinued
operations were reclassified to conform the presentation for the fiscal year
ended March 31, 2004.

The following table shows the results of discontinued operations for the fiscal
years ended March 31, 2002, 2003 and 2004:



                                                        2002         2003          2004
                                                    -----------  ------------  -----------
                                                                 (in millions)
                                                                      
Total revenue...................................... (Yen) 3,330  (Yen)  3,077  (Yen) 3,240
                                                    -----------  ------------  -----------
Income (loss) from discontinued operations......... (Yen)(1,716) (Yen)(16,227) (Yen) 2,185
Loss on disposal...................................          --            --       (2,026)
Income tax expense (benefit).......................      (2,951)      (26,597)         744
                                                    -----------  ------------  -----------
   Income (loss) from discontinued operations--net. (Yen) 1,235  (Yen) 10,370  (Yen)  (585)
                                                    ===========  ============  ===========


The following is a summary of the assets and liabilities of discontinued
operations at March 31, 2003:




                                                      (in millions)
            -                                         -------------
                                                   
            Cash.....................................  (Yen) 8,326
            Receivables under resale agreements......        3,841
            Loans, net of allowance for credit losses       11,612
            Other assets.............................       15,092
                                                       -----------
               Total assets..........................  (Yen)38,871
                                                       ===========

            Payables under repurchase agreements.....  (Yen) 3,820
            Other short-term borrowings..............       10,820
            Other liabilities........................        1,001
                                                       -----------
               Total liabilities.....................  (Yen)15,641
                                                       ===========


                                     F-21



            MITSUBISHI TOKYO FINANCIAL GROUP, INC. AND SUBSIDIARIES

            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)


3.  TRADING ACCOUNT ASSETS AND LIABILITIES

The following table shows trading account assets and liabilities, carried at
estimated fair value, at March 31, 2003 and 2004. For trading derivative
contracts executed under legally enforceable master netting agreements, related
assets and liabilities are bilaterally offset and reported net by counterparty.



                                                                               2003             2004
                                                                         ---------------  ---------------
                                                                                   (in millions)
                                                                                    
Trading account assets:
   Trading securities:
       Japanese government, prefectural and municipal bonds............. (Yen) 1,833,922  (Yen) 1,605,551
       Commercial paper.................................................       2,492,950        3,142,364
       Foreign governments bonds and other securities...................         462,120        1,182,408
                                                                         ---------------  ---------------
          Total.........................................................       4,788,992        5,930,323
                                                                         ---------------  ---------------
   Trading derivative assets:
     Interest rate contracts:
       Forward and futures..............................................          28,660           13,763
       Swap and swap-related products...................................       4,297,090        3,197,178
       Options purchased................................................         126,987           94,561
                                                                         ---------------  ---------------
          Total.........................................................       4,452,737        3,305,502
                                                                         ---------------  ---------------
     Foreign exchange contracts:
       Forward and futures..............................................         565,006          592,904
       Swaps............................................................         471,308          309,959
       Options purchased................................................          58,214           88,037
                                                                         ---------------  ---------------
          Total.........................................................       1,094,528          990,900
                                                                         ---------------  ---------------
     Other contracts, mainly equity and credit-related contracts........          39,256           26,858
     Bilateral netting of derivatives under master netting agreements...      (2,012,130)      (1,874,831)
                                                                         ---------------  ---------------
Total................................................................... (Yen) 8,363,383  (Yen) 8,378,752
                                                                         ===============  ===============
Trading account liabilities:
   Trading securities sold, not yet purchased........................... (Yen)   205,708  (Yen)   220,283
   Trading derivative liabilities:
     Interest rate contracts:
       Forward and futures..............................................          35,283           11,904
       Swap and swap-related products...................................       4,036,752        3,045,986
       Options written..................................................         115,595          100,551
                                                                         ---------------  ---------------
          Total.........................................................       4,187,630        3,158,441
                                                                         ---------------  ---------------
     Foreign exchange contracts:
       Forward and futures..............................................         512,864          534,521
       Swaps............................................................         608,237          327,710
       Options written..................................................          67,852           87,570
                                                                         ---------------  ---------------
          Total.........................................................       1,188,953          949,801
                                                                         ---------------  ---------------
     Other contracts, mainly equity and credit-related contracts........          32,992           57,272
     Bilateral netting of derivatives under master netting agreements...      (2,012,130)      (1,874,831)
                                                                         ---------------  ---------------
Total................................................................... (Yen) 3,603,153  (Yen) 2,510,966
                                                                         ===============  ===============


See Note 30 for the methodologies and assumptions used to estimate fair values.

                                     F-22



            MITSUBISHI TOKYO FINANCIAL GROUP, INC. AND SUBSIDIARIES

            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)


The MTFG Group performs trading activities through market-making, sales and
arbitrage, while maintaining risk levels within appropriate limits in
accordance with its risk management policy. Net trading gains for the fiscal
years ended March 31, 2002, 2003 and 2004 comprised the following:



                                                      2002           2003          2004
                                                  ------------  -------------  ------------
                                                                (in millions)
                                                                      
Interest rate and other derivative contracts..... (Yen)149,301  (Yen) 254,895  (Yen) (1,999)
Trading account securities, excluding derivatives      (10,841)        12,715       105,902
                                                  ------------  -------------  ------------
Trading account profits--net.....................      138,460        267,610       103,903
Foreign exchange derivative contracts............      (78,020)      (100,277)       68,674
                                                  ------------  -------------  ------------
Net trading gains................................ (Yen) 60,440  (Yen) 167,333  (Yen)172,577
                                                  ============  =============  ============


4.  INVESTMENT SECURITIES

The amortized costs and estimated fair values of investment securities
available for sale and being held to maturity at March 31, 2003 and 2004 were
as follows:



                                                           2003
                                ---------------------------------------------------------- ---------------
                                                    Gross        Gross        Estimated
                                   Amortized      unrealized   unrealized       fair          Amortized
                                     cost           gains        losses         value           cost
-                               --------------- -------------- ----------- --------------- ---------------
                                                                                    (in millions)
                                                                            
Securities available for sale:
  Debt securities:
   Japanese national
    government and Japanese
    government agency
    bonds...................... (Yen)10,912,961 (Yen)  112,885 (Yen) 1,959 (Yen)11,023,887 (Yen)14,651,744
   Japanese prefectural and
    municipal bonds............         463,387          9,798          25         473,160         248,044
   Foreign governments and
    official institutions
    bonds......................       5,229,601        193,058       9,530       5,413,129       4,488,926
   Corporate bonds.............       2,014,766         43,320       8,377       2,049,709       2,345,679
   Mortgage-backed
    securities.................       1,203,359         21,678       6,360       1,218,677       1,148,801
   Other debt securities.......         594,725            503         786         594,442         530,201
  Marketable equity securities.       2,865,276        772,706      46,920       3,591,062       2,419,005
                                --------------- -------------- ----------- --------------- ---------------
Total.......................... (Yen)23,284,075 (Yen)1,153,948 (Yen)73,957 (Yen)24,364,066 (Yen)25,832,400
                                =============== ============== =========== =============== ===============
Securities being held to
 maturity--debt securities:
  Japanese national government
   and Japanese government
   agency bonds................ (Yen)    70,208 (Yen)    3,887 (Yen)    -- (Yen)    74,095 (Yen) 1,050,931
  Japanese prefectural and
   municipal bonds.............          95,904          5,929          --         101,833         108,884
  Foreign governments and
   official institutions bonds.          25,020          2,576          --          27,596          38,161
  Corporate bonds..............              --             --          --              --          37,620
  Other debt securities........              --             --          --              --          15,163
                                --------------- -------------- ----------- --------------- ---------------
Total.......................... (Yen)   191,132 (Yen)   12,392 (Yen)    -- (Yen)   203,524 (Yen) 1,250,759
                                =============== ============== =========== =============== ===============



                                            2004
                                -------------------------------------------
                                    Gross        Gross        Estimated
                                  unrealized   unrealized       fair
                                    gains        losses         value
-                               -------------- ----------- ---------------

                                                  
Securities available for sale:
  Debt securities:
   Japanese national
    government and Japanese
    government agency
    bonds...................... (Yen)   36,143 (Yen)10,429 (Yen)14,677,458
   Japanese prefectural and
    municipal bonds............          2,757          40         250,761
   Foreign governments and
    official institutions
    bonds......................         64,990      29,967       4,523,949
   Corporate bonds.............         48,452       3,966       2,390,165
   Mortgage-backed
    securities.................         30,746       4,632       1,174,915
   Other debt securities.......          2,347       2,670         529,878
  Marketable equity securities.      1,689,819       1,640       4,107,184
                                -------------- ----------- ---------------
Total.......................... (Yen)1,875,254 (Yen)53,344 (Yen)27,654,310
                                ============== =========== ===============
Securities being held to
 maturity--debt securities:
  Japanese national government
   and Japanese government
   agency bonds................ (Yen)    3,898 (Yen) 1,218 (Yen) 1,053,611
  Japanese prefectural and
   municipal bonds.............          3,348           2         112,230
  Foreign governments and
   official institutions bonds.            974          --          39,135
  Corporate bonds..............            273           3          37,890
  Other debt securities........             12         140          15,035
                                -------------- ----------- ---------------
Total.......................... (Yen)    8,505 (Yen) 1,363 (Yen) 1,257,901
                                ============== =========== ===============


                                     F-23



            MITSUBISHI TOKYO FINANCIAL GROUP, INC. AND SUBSIDIARIES

            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)


Investment securities other than securities available for sale or being held to
maturity (i.e., nonmarketable equity securities presented in Other investment
securities) were carried at cost of (Yen)145,431 million and (Yen)200,557
million, at March 31, 2003 and 2004, respectively. The corresponding estimated
fair values at those dates were not readily determinable. The MTFG Group
periodically monitors the status of each investee including the credit ratings
and changes in the MTFG Group's share of net assets in the investees as
compared with its shares at the time of investment, to determine if impairment
losses, if any, are to be recognized on these nonmarketable securities.

See note 30 for the methodologies and assumptions used to estimate the fair
values.

The amortized cost and estimated fair values of debt securities being held to
maturity and the estimated fair values of debt securities available for sale at
March 31, 2004 by contractual maturity are shown below. Expected maturities may
differ from contractual maturities because borrowers may have the right to call
or prepay obligations with or without penalties. Securities not due at a single
maturity date and securities embedded with call or prepayment options, such as
mortgage-backed securities, are included in the table below based on their
original final maturities.



                                                                Available-for-
                                        Held-to-maturity             sale
                                  ----------------------------- ---------------
                                    Amortized      Estimated    Estimated fair
                                      cost         fair value       value
 -                                -------------- -------------- ---------------
                                                  (in millions)
                                                       
 Due in one year or less......... (Yen)   54,105 (Yen)   55,325 (Yen) 9,356,239
 Due from one year to five years.      1,120,666      1,124,719      10,314,992
 Due from five years to ten years         70,575         72,665       1,547,871
 Due after ten years.............          5,413          5,192       2,328,024
                                  -------------- -------------- ---------------
 Total........................... (Yen)1,250,759 (Yen)1,257,901 (Yen)23,547,126
                                  ============== ============== ===============


For the fiscal years ended March 31, 2002, 2003 and 2004, proceeds from sales
of securities available for sale were (Yen)34,164,318 million, (Yen)27,063,999
million and (Yen)29,334,674 million, respectively. For the fiscal years ended
March 31, 2002, 2003 and 2004, gross realized gains on those sales were
(Yen)492,145 million, (Yen)576,442 million and (Yen)620,413 million,
respectively, and gross realized losses on those sales were (Yen)172,421
million, (Yen)208,023 million and (Yen)260,624 million, respectively. In
September 2000, BTM changed its intent to hold securities originally classified
as held-to-maturity and transferred such securities to the available-for-sale
category while Mitsubishi Trust maintained its positive intent and ability to
hold its held-to-maturity securities without any sales or transfers of such
securities during the fiscal year ended March 31, 2001. As a result of the
transfer, unrealized gains on securities available for sale were recorded
against shareholders' equity and were not significant. The MTFG Group
classified subsequent acquisitions of securities as either available for sale
or trading until the fiscal year ended March 31, 2003. On April 1, 2003, the
MTFG Group reassessed the appropriateness of the classification of the
securities which had been classified as available for sale and reclassified
(Yen)78,343 million of such securities into the held-to-maturity category. The
transfer did not have a material impact on its financial position or results of
operations.

For the fiscal years ended March 31, 2002, 2003 and 2004, losses resulting from
write-downs of investment securities that are classified as available-for-sale
to reflect the decline in value considered to be other than temporary were
(Yen)293,861 million, (Yen)395,481 million and (Yen)230,074 million,
respectively, which were included in Investment securities gains (losses)--net
in the consolidated statements of operations.

                                     F-24



            MITSUBISHI TOKYO FINANCIAL GROUP, INC. AND SUBSIDIARIES

            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)


The following table shows the unrealized gross losses and fair values of
investment securities available for sale and being held to maturity at March
31, 2004, by length of time that individual securities in each category have
been in continuous loss position:



                                          Less than 12 months       12 months or more                    Total
-                                     --------------------------- ---------------------- --------------------------------------
                                                      Unrealized              Unrealized                 Unrealized  Number of
                                        Fair value      losses    Fair value    losses     Fair value      losses    securities
                                      --------------- ----------- ----------- ---------- --------------- ----------- ----------
                                                                            (in millions)
                                                                                                
Securities available for sale:
  Debt securities:...................
   Japanese national government
    and Japanese government
    agency bonds..................... (Yen) 8,642,589 (Yen)10,429 (Yen)    -- (Yen)   -- (Yen) 8,642,589 (Yen)10,429     62
   Japanese prefectural and
    municipal bonds..................           3,969          40          --         --           3,969          40     19
   Foreign governments and
    official institutions bonds......       1,454,035      29,967          --         --       1,454,035      29,967    137
   Corporate bonds...................         267,327       3,966          --         --         267,327       3,966    146
   Mortgage-backed securities........         356,098       4,632          14         --         356,112       4,632     98
   Other debt securities.............         101,907         345      13,746      2,325         115,653       2,670    100
  Marketable equity securities.......          24,571       1,640          --         --          24,571       1,640      7
                                      --------------- ----------- ----------- ---------- --------------- -----------    ---
Total................................ (Yen)10,850,496 (Yen)51,019 (Yen)13,760 (Yen)2,325 (Yen)10,864,256 (Yen)53,344    569
                                      =============== =========== =========== ========== =============== ===========    ===
Securities being held to maturities--
 debt securities:
   Japanese national government
    and Japanese government
    agency bonds..................... (Yen)   349,118 (Yen) 1,218 (Yen)    -- (Yen)   -- (Yen)   349,118 (Yen) 1,218      3
   Japanese prefectural and
    municipal bonds..................           1,431           2          --         --           1,431           2      5
   Corporate bonds...................           1,414           3          --         --           1,414           3      2
   Other debt securities.............          10,305         140          --         --          10,305         140      5
                                      --------------- ----------- ----------- ---------- --------------- -----------    ---
Total................................ (Yen)   362,268 (Yen) 1,363 (Yen)    -- (Yen)   -- (Yen)   362,268 (Yen) 1,363     15
                                      =============== =========== =========== ========== =============== ===========    ===


The MTFG Group holds various type of debt and equity securities as shown in the
table of investment securities in the beginning part of this Note. Although, as
shown in that table, dominant part of such investments are with unrealized
gains at March 31, 2004, certain security investments, primarily debt
securities available for sale, were with unrealized losses, most of which have
been in continuous loss for a period less than 12 months.

The MTFG Group has determined that unrealized losses on investments as of March
31, 2004 are temporary in nature based on its ability and intent to hold the
investment for a period of time sufficient to allow for any anticipated
recovery and the results of its review conducted to identify and evaluate
investments that have indications of possible impairments. The MTFG Group's
review included consideration of the following criteria:

The length of time that fair value of the investment has been below cost--The
MTFG Group generally deems continued decline of fair value below cost for six
months or more to be other than temporary. Certain securities held by
UnionBanCal Corporation ("UNBC"), a U.S. subsidiary of BTM, which primarily
consists of securities backed by the full faith and credit of the U.S.
government and corporate asset-backed and debt securities, were determined not
to be impaired in some cases, on the basis of a cash flow analysis of
securities and/or UNBC's ability to hold such securities to maturity.

As shown in the table above, there was no material unrealized losses that have
been in continuous loss position for 12 months or more, except for unrealized
losses on certain "Other debt securities" at March 31, 2004. "Other

                                     F-25



            MITSUBISHI TOKYO FINANCIAL GROUP, INC. AND SUBSIDIARIES

            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)

debt securities" with unrealized loss position for 12 months or more were
primarily consisted of collateralized loan obligations held by UNBC. Unrealized
losses on such securities arise from rising interest rates, widening credit
spreads, credit quality of the underlying collateral, and the market's opinion
of the performance of the fund managers. Based on the cash flow analysis set
out above, such unrealized losses are determined temporary in nature.

The extent to which the fair value of investments has been below cost as of the
end of the reporting period--The MTFG Group's investment portfolio is exposed
to volatile equity prices affected by many factors including investors'
perspectives as to future economic factors and the issuers' performance, as
well as cyclical market price fluctuation due to changes in market interest
rates, foreign exchange rates, and changes in credit spreads etc. In view of
the diversity and volume of equity investments as well as the fact that the
majority of investments in debt securities are in high-grade fixed-rate bonds,
including sovereign bonds, the MTFG Group generally deems the decline of fair
value below cost of 20% or more is a critical indicator of other-than-temporary
decline in fair value.

The financial condition and near-term prospects of the issuer--The MTFG Group
considers the financial condition and near-term prospects of the issuer
primarily based on the credit standing of the issuers as determined by its
credit rating system.

Exchange Traded Fund

For the fiscal years ended March 31, 2002, 2003 and 2004, BTM transferred
marketable equity securities to an exchange traded fund ("ETF"), sponsored by a
securities firm. BTM concurrently entered into sales agreements for marketable
equity securities and purchase agreements for the fund units of the ETF with
the securities firm. BTM transferred its marketable equity securities to the
securities firm with an aggregate cost of (Yen)325,749 million for (Yen)391,698
million, an aggregate cost of (Yen)163,861 million for (Yen)240,574 million and
an aggregate cost of (Yen)54,366 million for (Yen)76,385 million for the fiscal
years ended March 31, 2002, 2003 and 2004, respectively. The securities firm
contributed these marketable equity securities and additional securities
purchased from the market to the ETF in order to link the ETF performance to
the TOPIX (a composite index of all stocks listed on the First Section of the
Tokyo Stock Exchange ("TSE")). Certificates issued by the ETF (the "ETF
certificates") are linked to the TOPIX and have been listed on the TSE. BTM
purchased the ETF certificates at the fair value of (Yen)527,967 million,
(Yen)361,782 million and (Yen)113,930 million for the fiscal years ended March
31, 2002, 2003 and 2004, respectively, with an intention to sell them in the
market or to the securities firm in the near future.

The MTFG Group accounted for the ETF certificates purchased from the securities
firm as retained interests in the marketable equity securities transferred to
the securities firm. The MTFG Group accounted for the transfer of marketable
equity securities as a sale when the MTFG Group received cash or financial
instruments other than the ETF certificates. For the fiscal years ended March
31, 2002, 2003 and 2004, the MTFG Group recognized gains of (Yen)35,442
million, (Yen)41,883 million and (Yen)89,581 million, respectively, on the
sales of the ETF certificates. The MTFG Group held ETF certificates with fair
values of (Yen)148,646 million at March 31, 2003 and nil at March 31, 2004 in
Securities available for sale. The ETF certificates are carried at fair value
based on the market prices observed in the TSE and the fair value change is
closely linked with the movement of the TOPIX.

Banks' Shareholdings Purchase Corporation

Under a law forbidding banks from holding marketable equity securities in
excess of their Tier I capital after September 30, 2006, the Banks'
Shareholdings Purchase Corporation ("BSPC") was established in January 2002 in
order to soften the impact on the stock market of sales of cross-shareholdings.
BSPC began accepting share offers from financial institutions on February 15,
2002. It has been funded by financial institutions, including BTM and
Mitsubishi Trust, which made initial contributions of (Yen)2,000 million
("preferred contributions"). BSPC

                                     F-26



            MITSUBISHI TOKYO FINANCIAL GROUP, INC. AND SUBSIDIARIES

            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)

will be disbanded when it sells all shares that it purchased from financial
institutions, or by March 31, 2017, at the latest.

BSPC has two accounts to purchase stock from financial institutions; the
General Account and the Special Account. In the General Account, each selling
financial institution funds the amount of purchase by BSPC without guarantees
by the Japanese government, and the financial institution will assume any gains
or losses on sales by BSPC of the stocks. In the Special Account, each selling
financial institution was required to make contributions of 8% of the selling
prices to BSPC for purchases made prior to the effective date of the amendment
to the above-mentioned law to fund any future losses ("subordinated
contributions"). Effective in August 2003, the requirement of subordinated
contributions was eliminated under the amendment to legislation. The purchase
amount in the Special Account is funded by borrowings guaranteed by the
Japanese government with a limit of (Yen)2.0 trillion. The cumulative net loss
on sales of stocks in the Special Account, which will not be determined and
finalized before the liquidation of BSPC, will be compensated first by the
subordinated contributions, and then by the preferred contributions. If there
is a remaining loss, the government, as a guarantor, will be liable for the
loss. On the other hand, if there is a cumulative net asset at the time of the
liquidation, the asset is first used to repay the preferred contributions and
then to repay the subordinated contributions. After that, if any remaining net
assets after repayment of subordinated contributions exist, such net assets
will be paid out and the amounts will be determined based on the amounts of
both contributions. Any remaining net assets in excess of double the amount of
the contributions will belong to the Japanese government.

At the establishment of BSPC in January 2002, BTM and Mitsubishi Trust
collectively paid (Yen)2,000 million to BSPC as preferred contributions. BTM
and Mitsubishi Trust sold marketable equity securities with aggregate market
values of (Yen)20,647 million, (Yen)2,289 million and (Yen)135,636 million,
respectively, for the fiscal years ended March 31, 2002, 2003 and 2004. At the
time of the sales, BTM and Mitsubishi Trust made subordinated contribution to
the Special Account of (Yen)1,652 million and (Yen)183 million, respectively,
for the fiscal years ended March 31, 2002 and 2003. Also, BTM and Mitsubishi
Trust made loans to BSPC to fund its purchases of marketable equity securities.
Such loans to BSPC, which are guaranteed by the Japanese government, amounted
to (Yen)35,600 million, (Yen)79,735 million and (Yen)7,398 million,
respectively, at March 31, 2002, 2003 and 2004. For the fiscal year ended March
31, 2003, the MTFG Group evaluated its preferred contributions of (Yen)2,000
million and subordinated contributions of (Yen)1,835 million for impairment,
and recognized an impairment loss of (Yen)3,835 million.

The MTFG Group accounts for the transfers of marketable equity securities to
the General Account, if any, as secured borrowings. With respect to the
transfers of marketable equity securities to the Special Account with the
requirement of subordinated contributions, if the fair value of the securities
sold to the Special Account is greater than 10% of the fair value of all
securities held by the special account, the MTFG Group accounts for the
subordinated contributions as a partial retained interest in the sale. For all
period presented, the MTFG Group made no sales of securities whose fair value
was greater than 10% of the fair value of all securities held by the Special
Account. For the fiscal years ended March 31, 2002, 2003 and 2004, the MTFG
Group recognized a gain of (Yen)5,913 million, a loss of (Yen)10 million and a
gain of (Yen)27,797 million, respectively, on the sale of marketable equity
securities to the Special Account.

The Bank of Japan

The Bank of Japan began purchasing marketable equity securities at fair value
from banks, including BTM and Mitsubishi Trust, from November 2002, aiming to
enhance the stability of the Japanese financial system by reducing the amount
of marketable equity securities on the balance sheets of banks. Transfers of
securities to the Bank of Japan are sales transactions without transferors'
continuing involvement. BTM and Mitsubishi Trust sold marketable equity
securities to the Bank of Japan with aggregate market values of (Yen)181,570
million and (Yen)81,835 million for the fiscal years ended March 31, 2003 and
2004, respectively.

                                     F-27



            MITSUBISHI TOKYO FINANCIAL GROUP, INC. AND SUBSIDIARIES

            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)


5.  LOANS

Loans at March 31, 2003 and 2004 by domicile and type of industry of borrower
are summarized below:

Classification of loan by industry is based on the industry segment loan
classification as defined by the Bank of Japan.



                                                          2003                 2004
                                                  ---------------      ---------------
                                                                (in millions)
                                                                 
Domestic:
   Manufacturing................................. (Yen) 6,034,347      (Yen) 6,000,095
   Construction..................................       1,277,407            1,010,439
   Real estate...................................       4,298,146            4,585,299
   Services......................................       4,953,830            4,344,833
   Wholesale and retail..........................       5,458,337            4,998,952
   Banks and other financial institutions........       3,598,028            3,834,178
   Communication and information services........       1,516,020              874,564
   Other industries..............................       3,858,031            6,169,456
   Consumer......................................       7,425,702            7,951,205/(2)/
                                                  ---------------      ---------------
       Total domestic............................      38,419,848           39,769,021
                                                  ---------------      ---------------
Foreign:
   Governments and official institutions.........         235,093              183,117
   Banks and other financial institutions........         928,059            1,043,904
   Commercial and industrial.....................       8,413,452            7,239,896
   Other.........................................         510,179              318,543
                                                  ---------------      ---------------
       Total foreign.............................      10,086,783            8,785,460
                                                  ---------------      ---------------
Less unearned income and deferred loan fees - net          41,062               28,625
                                                  ---------------      ---------------
       Total..................................... (Yen)48,465,569/(1)/ (Yen)48,525,856/(1)/
                                                  ===============      ===============

--------
Notes:
(1) The above table includes loans held for sale of (Yen)3,965 million and
    (Yen)12,893 million at March 31, 2003 and 2004, respectively.
(2) Domestic loans within the "consumer" category in the above table include
    loans to individuals who utilize loan proceeds to finance their proprietor
    activities and not for their personal financing needs. During the fiscal
    year ended March 31, 2004, the MTFG Group's credit administration system
    was upgraded and the MTFG Group is now able to present a precise breakdown
    of the balance of such consumer loans at March 31, 2004 by the type of
    proprietor business, as presented below:



                                                                  Banks and   Communication                 Total
                                                                    other          and                     included
                               Real                  Wholesale    financial    information    Other           in
Manufacturing Construction    estate      Services   and retail  institutions   services    industries     Consumer
------------- ------------ ------------ ------------ ----------- ------------ ------------- ----------- --------------
                                                    (in millions)
                                                                                
 (Yen)28,229  (Yen)19,283  (Yen)738,377 (Yen)230,730 (Yen)52,253  (Yen)1,200   (Yen)4,121   (Yen)10,620 (Yen)1,084,813


    Since the system upgrade was effective during the fiscal year ended March
    31, 2004, no equivalent information is obtainable for prior fiscal year-end
    dates.

Substantially all domestic loans are made under agreements which, as is
customary in Japan, provide that a bank may, under certain conditions, require
the borrower to provide collateral (or additional collateral) or guarantees
with respect to the loans, and that the bank may treat any collateral, whether
furnished as security for loans or

                                     F-28



            MITSUBISHI TOKYO FINANCIAL GROUP, INC. AND SUBSIDIARIES

            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)

otherwise, as collateral for all indebtedness to the bank. At March 31, 2003
and 2004, such collateralized loans originated by the MTFG Group, which were
principally collateralized by real estate, marketable securities and accounts
receivable, amounted to (Yen)8,514,286 million and (Yen)8,396,452 million,
respectively, which represented 22% and 21%, respectively, of the total
domestic loans at March 31, 2003 and 2004.

Nonaccrual and restructured loans were (Yen)2,732,627 million and
(Yen)1,715,487 million at March 31, 2003 and 2004, respectively. Had interest
on these loans been accrued at the original terms of agreement, gross interest
income on such loans for the fiscal years ended March 31, 2003 and 2004 would
have been approximately (Yen)77.0 billion and (Yen)45.2 billion, respectively,
of which approximately (Yen)57.6 billion and (Yen)32.6 billion, respectively,
were included in interest income on loans in the accompanying consolidated
statements of operations. Accruing loans contractually past due 90 days or more
were (Yen)20,399 million and (Yen)15,596 million at March 31, 2003 and 2004,
respectively.

Impaired Loans

The MTFG Group's impaired loans primarily include nonaccrual loans and
restructured loans. A summary of the recorded balances of impaired loans and
related impairment allowance at March 31, 2003 and 2004 is shown below:



                                                 2003                        2004
                                      --------------------------- ---------------------------
                                         Recorded     Impairment     Recorded     Impairment
                                       loan balance   allowance    loan balance   allowance
                                      -------------- ------------ -------------- ------------
                                                           (in millions)
                                                                     
Requiring an impairment allowance.... (Yen)2,408,523 (Yen)894,380 (Yen)1,405,761 (Yen)563,560
Not requiring an impairment allowance        211,193           --        183,135           --
                                      -------------- ------------ -------------- ------------
Total................................ (Yen)2,619,716 (Yen)894,380 (Yen)1,588,896 (Yen)563,560
                                      ============== ============ ============== ============

--------
Note: In addition to impaired loans presented in the above table, there were
      loans held for sale that were impaired of (Yen)3,790 million and
      (Yen)12,637 million at March 31, 2003 and 2004, respectively.

The average recorded investments in impaired loans were approximately
(Yen)4,158 billion, (Yen)3,345 billion and (Yen)2,083 billion, respectively,
for the fiscal years ended March 31, 2002, 2003 and 2004.

For the fiscal years ended March 31, 2002, 2003 and 2004, the MTFG Group
recognized interest income of approximately (Yen)76.8 billion, (Yen)67.4
billion and (Yen)38.2 billion, respectively, on impaired loans. Interest income
on nonaccrual loans was recognized on a cash basis when ultimate collectibility
of principal is certain; otherwise, cash receipts are applied as principal
reductions. Interest income on accruing impaired loans, including restructured
loans, was recognized on an accrual basis to the extent that the collectibility
of interest income was reasonably certain based on management's assessment.

Lease Receivable

As part of its financing activities, the MTFG Group enters into leasing
arrangements with customers. The MTFG Group's leasing operations are performed
through leasing subsidiaries and consist principally of direct financing leases
involving various types of data processing equipment, office equipment and
transportation equipment.

As of March 31, 2003 and 2004, the components of the investment in direct
financing leases were as follows:



                                                     2003          2004
                                                 ------------  ------------
                                                        (in millions)
                                                         
    Minimum lease payment receivable............ (Yen)683,034  (Yen)594,974
    Estimated residual values of leased property       64,537        61,100
    Less--unearned income.......................      (61,222)      (49,920)
                                                 ------------  ------------
    Net investment in direct financing leases... (Yen)686,349  (Yen)606,154
                                                 ============  ============


                                     F-29



            MITSUBISHI TOKYO FINANCIAL GROUP, INC. AND SUBSIDIARIES

            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)


Future minimum lease payment receivables under noncancelable leasing agreements
as of March 31, 2004 are as follows:



                                                        Direct
                                                       financing
                                                        leases
                                                     -------------
                                                     (in millions)
                                                  
             Fiscal year ending March 31:
                2005................................ (Yen)152,191
                2006................................      122,076
                2007................................       86,377
                2008................................       56,331
                2009................................       30,128
                2010 and thereafter.................      147,871
                                                     ------------
             Total minimum lease payment receivables (Yen)594,974
                                                     ============


Government-led Loan Restructuring Program

Under the legislation enacted by the Japanese Diet in June 1996, which
incorporates the restructuring program for the loans of seven failed
housing-loan companies (the "Jusen"), the Deposit Insurance Corporation ("DIC")
established a Housing Loan Corporation ( "HLAC") to collect and dispose of the
loans of the liquidated Jusen. In 1999, HLAC merged with the Resolution and
Collection Bank Limited to create the Resolution and Collection Corporation
("RCC"), which is wholly owned by the DIC.

Financial institutions, including the MTFG Group, waived the repayment of
substantial amounts of the loans to the Jusen and transferred the remaining
balances to HLAC. Financial institutions were requested to make loans to HLAC
to finance its collection activities, and in the fiscal year ended March 31,
1997, the MTFG Group made loans of (Yen)407,078 million with an original
maturity term of 15 years, which were included in the loan portfolio as of
March 31, 2003 and 2004. The 15-year term loans to HLAC, which are guaranteed
by the DIC under the legislation and the loan agreements, mature in 2011 and
earn interest at TIBOR (Tokyo Interbank Offered Rate) plus 0.125%.

Under this restructuring program, a Financial Stabilization Fund (the "Special
Fund") was established within the DIC, and the Bank of Japan and other
financial institutions established another fund (the "New Fund"). These funds
are principally invested in Japanese government bonds. The MTFG Group made
non-interest-earning deposits of (Yen)176,089 million with the Special Fund and
the New Fund in the fiscal year ended March 31, 1997. The deposit balances as
of March 31, 2003 and 2004, which are included in Other Assets, were
(Yen)136,681 million and (Yen)140,828 million, respectively, reflecting a
present value discount and subsequent amortization of the discount during the
period until the expected maturity date. The non-interest-earning deposits with
these funds are expected to mature in 15 years from the deposit dates, which
coincides with the planned operational lifespan of HLAC.

It is uncertain what losses (so-called "stage two loss"), if any, may
ultimately be incurred by RCC through the collection of the Jusen loans during
the 15-year term. If any such losses ultimately occur, the Japanese government
will be liable for half of such losses, and the investment income to be earned
by the Special Fund during the 15 years is to be used to cover the remaining
half of the losses. The investment income to be earned by the New Fund during
the 15 years is used to compensate for a portion of the public funds used for
the Jusen restructuring.

                                     F-30



            MITSUBISHI TOKYO FINANCIAL GROUP, INC. AND SUBSIDIARIES

            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)


At this time management believes all loans and deposits will be collectible
according to their respective terms.

Sales of Loans

The MTFG Group originates various types of loans to corporate and individual
customers in Japan and overseas in the normal course of its business. The
Financial Services Agency of Japan (the "FSA") announced in October 2002 that
it will strive to reduce the aggregate ratio of nonperforming credits to total
credits of major Japanese banks, including MTFG's domestic banking
subsidiaries, by approximately half by March 31, 2005. Pursuant to the FSA's
policy and in order to improve its loan quality, BTM and Mitsubishi Trust
actively disposed of nonperforming loans. Most of such nonperforming loans were
disposed of by sales to third party purchasers including RCC without any
continuing involvement. Management of BTM and Mitsubishi Trust generally decide
on approvals for disposals after significant sales terms, including prices, are
negotiated. As such, loans are disposed of by sales shortly after the loans are
transferred to the held-for-sale classification. For the fiscal years ended
March 31, 2002 and 2003, the losses on sales of loans, which represents an
additional provision for credit losses on, were (Yen)12,632 million and
(Yen)45,004 million, respectively. The gain on sales of loan was (Yen)8,678
million for the fiscal year ended March 31, 2004. Such losses and gain are
included in the provision for credit losses in the accompanying consolidated
statements of operations.

Loan Securitization

The MTFG Group had no significant transfers of loans in securitization
transactions accounted for as sales for the fiscal years ended March 31, 2002,
2003 and 2004, and did not retain any significant interests associated with
loans transferred in securitizations at March 31, 2003 and 2004.

Related Party Loans

In some cases, the banking subsidiaries of MTFG make loans to related parties,
including their directors and executive officers, in the course of their normal
commercial banking business. At March 31, 2003 and 2004, outstanding loans to
such related parties were not significant.

In the opinion of management, these related party loans were made on
substantially the same terms, including interest rates and collateral
requirements, as those terms prevailing at the date these loans were made. For
the fiscal years ended March 31, 2002, 2003 and 2004, there were no loans to
related parties that were charged-off. Additionally, at March 31, 2003 and
2004, there were no loans to related parties that were impaired.

                                     F-31



            MITSUBISHI TOKYO FINANCIAL GROUP, INC. AND SUBSIDIARIES

            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)


6.  ALLOWANCE FOR CREDIT LOSSES

Changes in the allowance for credit losses for the fiscal years ended March 31,
2002, 2003 and 2004 are shown below:



                                          2002           2003           2004
                                     -------------- -------------- --------------
                                                     (in millions)
                                                          
Balance at beginning of fiscal year. (Yen)1,716,984 (Yen)1,735,180 (Yen)1,360,136
                                     -------------- -------------- --------------
Provision (credit) for credit losses        598,412        437,972       (114,109)
                                     -------------- -------------- --------------
Charge-offs.........................        669,381        893,638        378,094
Less--Recoveries....................         65,977         78,827         40,970
                                     -------------- -------------- --------------
Net charge-offs.....................        603,404        814,811        337,124
                                     -------------- -------------- --------------
Others..............................         23,188          1,795        (20,776)
                                     -------------- -------------- --------------
Balance at end of fiscal year....... (Yen)1,735,180 (Yen)1,360,136 (Yen)  888,127
                                     ============== ============== ==============

--------
Note: Others principally include foreign exchange translation and discontinued
      operations adjustments.

As explained in Note 5, nonperforming loans were actively disposed of by sales
during recent years. The allocated allowance for credit losses for such loans
were removed from the allowance for credit losses and transferred to the
valuation allowance for loans held for sale upon a decision to sell. Net
charge-offs in the above table include the decrease in the allowance for credit
losses due to loan disposal activity amounting to (Yen)174.0 billion,
(Yen)369.6 billion and (Yen)124.6 billion for the fiscal years ended March 31,
2002, 2003 and 2004, respectively.

7.  PREMISES AND EQUIPMENT

Premises and equipment at March 31, 2003 and 2004 consisted of the following:



                                             2003           2004
                                        -------------- --------------
                                                (in millions)
                                                 
          Land......................... (Yen)  193,278 (Yen)  171,379
          Buildings....................        432,230        426,691
          Equipment and furniture......        489,307        443,251
          Leasehold improvements.......        234,443        228,104
          Construction in progress.....         20,134          4,136
                                        -------------- --------------
             Total.....................      1,369,392      1,273,561
          Less accumulated depreciation        725,598        693,488
                                        -------------- --------------
          Premises and equipment--net.. (Yen)  643,794 (Yen)  580,073
                                        ============== ==============


Premises and equipment include capitalized leases, principally related to data
processing equipment, which amounted to (Yen)38,750 million and (Yen)40,595
million at March 31, 2003 and 2004, respectively. Accumulated depreciation on
such capitalized leases at March 31, 2003 and 2004 amounted to (Yen)22,517
million and (Yen)26,752 million, respectively.

Depreciation expense of premises and equipment for the fiscal years ended March
31, 2002, 2003 and 2004 was (Yen)68,120 million, (Yen)63,015 million and
(Yen)55,799 million, respectively.

In March 1999, BTM sold a 50% undivided interest in its head office land and
building (including structure and equipment) for (Yen)91,500 million and in its
main office land and building (including structure and equipment) for

                                     F-32



            MITSUBISHI TOKYO FINANCIAL GROUP, INC. AND SUBSIDIARIES

            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)

(Yen)9,100 million to a real estate company. At the same time, BTM entered an
agreement to lease back the 50% undivided interest in the buildings sold from
the buyer over a period of 7 years. BTM accounted for these transactions as
financing arrangements, and recorded the total proceeds of (Yen)100,600 million
as a financing obligation. Under the lease agreement, BTM made
non-interest-bearing deposits of (Yen)8,000 million with the buyer-lessor in
March 1999. The lease payments are determined each year upon negotiations with
the buyer-lessor, based on future market conditions and expenditures for
significant improvements and the related expenses of the buildings to be born
by the buyer-lessor. The lease agreement is noncancelable during the lease
period of 7 years. At the end of the lease, BTM has no obligations or options
specified in the lease agreement.

At March 31, 2003 and 2004, the financing obligation was (Yen)102,208 million
and (Yen)102,795 million, respectively, and total rental payments amounted to
(Yen)6,190 million and (Yen)6,371 million, respectively, for the fiscal years
ended March 31, 2003 and 2004.

For the fiscal years ended at March 31, 2003 and 2004, the MTFG Group
recognized (Yen)13,004 million and (Yen)5,822 million of impairment losses for
long-lived assets, primarily domestic real estate which was either assets
formerly used for its domestic banking operations that are no longer used or
assets that are used without recoverability of carrying amount. In addition,
(Yen)2,619 million and (Yen)8,661 million of impairment losses were recognized
for real estate held for sale for the fiscal years ended March 31, 2003 and
2004. These losses are included in Other non-interest expenses. In computing
the amount of impairment losses, fair value was determined primarily based on
market prices, if any, or the estimated price based on an appraisal.

8.  GOODWILL AND OTHER INTANGIBLE ASSETS

As discussed in Note 1, on April 1, 2002, the MTFG Group adopted SFAS No. 142
which requires that goodwill, formerly subject to amortization, no longer be
amortized and be tested for impairment at least annually. Further, SFAS No. 142
requires that intangible assets with finite useful lives continue to be
amortized over their useful lives while intangible assets with indefinite lives
no longer be amortized but rather are subject to impairment testing at least
annually.

On April 1, 2002, the MTFG Group has performed the required transitional
impairment tests of goodwill and intangible assets with indefinite lives upon
adoption of SFAS No. 142. The initial adoption resulted in a cumulative
adjustment charge to earnings of (Yen)532 million related to the impairment of
goodwill. Such cumulative adjustment primarily resulted from an impairment of
goodwill related to a U.S. leasing business and was measured using the
discounted future cash flow method. Intangible assets with indefinite lives,
which were amortized in the prior periods, were immaterial.

                                     F-33



            MITSUBISHI TOKYO FINANCIAL GROUP, INC. AND SUBSIDIARIES

            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)


Goodwill

The changes in the carrying amount of goodwill by business segment during the
fiscal years ended March 31, 2003 and 2004 were as follows:



                                                        BTM                                 Mitsubishi Trust
                                ---------------------------------------------------  -------------------------------
                                         Global
                                Retail  Corporate Investment Mitsubishi               Trust    Trust        Real
                                Banking  Banking   Banking   Securities     UNBC     Banking   Assets      Estate       Total
                                ------- --------- ---------- ---------- -----------  ------- ----------- ----------- -----------
                                                                          (in millions)
                                                                                          
For the fiscal year ended
 March 31, 2003
Balance at March 31, 2002...... (Yen)-- (Yen) 23  (Yen) 509  (Yen)  --  (Yen)11,169  (Yen)-- (Yen)14,735 (Yen)14,950 (Yen)41,386
Impairment recognized by the
 transitional impairment test..      --      (23)      (509)        --           --       --          --          --        (532)
Goodwill acquired during the
 fiscal year...................      --       --         --        408        9,646       --          --          --      10,054
Reclassified to core deposit
 intangible....................      --       --         --         --       (1,799)      --          --          --      (1,799)
Foreign currency translation
 adjustments and other.........      --       --         --         --         (966)      --          --          --        (966)
                                ------- --------  ---------  ---------  -----------  ------- ----------- ----------- -----------
Balance at March 31, 2003...... (Yen)-- (Yen) --  (Yen)  --  (Yen) 408  (Yen)18,050  (Yen)-- (Yen)14,735 (Yen)14,950 (Yen)48,143
                                ======= ========  =========  =========  ===========  ======= =========== =========== ===========

For the fiscal year ended
 March 31, 2004
Balance at March 31, 2003...... (Yen)-- (Yen) --  (Yen)  --  (Yen) 408  (Yen)18,050  (Yen)-- (Yen)14,735 (Yen)14,950 (Yen)48,143
Goodwill acquired during the
 fiscal year...................       9       --         --         --       10,876       61          --          --      10,946
Goodwill written off related to
 sale of subsidiaries..........      --       --         --       (280)          --       --          --          --        (280)
Foreign currency translation
 adjustments and other.........      --       --         --         --       (2,119)      --          --          --      (2,119)
                                ------- --------  ---------  ---------  -----------  ------- ----------- ----------- -----------
Balance at March 31, 2004...... (Yen) 9 (Yen) --  (Yen)  --  (Yen) 128  (Yen)26,807  (Yen)61 (Yen)14,735 (Yen)14,950 (Yen)56,690
                                ======= ========  =========  =========  ===========  ======= =========== =========== ===========


See Note 28 for business segment information of the MTFG Group.

Net income (loss) and amounts per common share for the fiscal years ended March
31, 2002, 2003 and 2004 adjusted to exclude amortization expense related to
goodwill were as follows:



                                                                                 2002            2003            2004
                                                                           ---------------  -------------- ---------------
                                                                                                  
Net income (loss) (in millions):
Reported income (loss).................................................... (Yen)  (216,534) (Yen)  203,288 (Yen)   822,249
Goodwill amortization.....................................................           7,877              --              --
                                                                           ---------------  -------------- ---------------
Adjusted net income (loss)................................................ (Yen)  (208,657) (Yen)  203,288 (Yen)   822,249
                                                                           ===============  ============== ===============
Basic earnings (loss) per share (in yen):
Reported basic earnings (loss) per share--net income (loss) available to
 common shareholders...................................................... (Yen)(39,733.32) (Yen)33,963.40 (Yen)128,231.00
Goodwill amortization.....................................................        1,418.11              --              --
                                                                           ---------------  -------------- ---------------
Adjusted basic earnings (loss) per share--net income (loss) available to
 common shareholders...................................................... (Yen)(38,315.21) (Yen)33,963.40 (Yen)128,231.00
                                                                           ===============  ============== ===============
Diluted earnings (loss) per share (in yen):
Reported diluted earnings (loss) per share--net income (loss) available to
 common shareholders...................................................... (Yen)(39,733.32) (Yen)31,137.71 (Yen)124,917.18
Goodwill amortization.....................................................        1,418.11              --              --
                                                                           ---------------  -------------- ---------------
Adjusted diluted earnings (loss) per share--net income (loss) available to
 common shareholders...................................................... (Yen)(38,315.21) (Yen)31,137.71 (Yen)124,917.18
                                                                           ===============  ============== ===============


                                     F-34



            MITSUBISHI TOKYO FINANCIAL GROUP, INC. AND SUBSIDIARIES

            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)


Other intangible assets

The table below presents the gross carrying amount, accumulated amortization
and net carrying amount, in total and by major class of intangible assets at
March 31, 2003 and 2004:



                                                     2003                                   2004
                                    -------------------------------------- --------------------------------------
                                       Gross                      Net         Gross                      Net
                                      carrying   Accumulated    carrying     carrying   Accumulated    carrying
                                       amount    amortization    amount       amount    amortization    amount
                                    ------------ ------------ ------------ ------------ ------------ ------------
                                                                    (in millions)
                                                                                   
Intangible assets subject to
  amortization:
   Software........................ (Yen)354,692 (Yen)196,611 (Yen)158,081 (Yen)396,504 (Yen)181,948 (Yen)214,556
   Core deposit intangible.........        5,486        3,886        1,600        4,041        1,672        2,369
   Other...........................        7,565        3,163        4,402        9,482        5,455        4,027
                                    ------------ ------------ ------------ ------------ ------------ ------------
       Total....................... (Yen)367,743 (Yen)203,660      164,083 (Yen)410,027 (Yen)189,075      220,952
                                    ============ ============              ============ ============
Intangible assets recorded in
  connection with the additional
  minimum pension liabilities under
  SFAS No. 87 (See Note 16)........                                 14,568                                  5,063
Intangible assets not subject to
  amortization.....................                                  8,247                                  8,124
                                                              ------------                           ------------
Total..............................                           (Yen)186,898                           (Yen)234,139
                                                              ============                           ============


Intangible assets subject to amortization acquired during the fiscal year ended
March 31, 2004 amounted (Yen)119,260 million, which primarily consist of
capitalized cost of software. The weighted average amortization period for
capitalized software is five years, and the amount of its residual value is
immaterial.

The estimated aggregate amortization expense for intangible assets for the next
five years is as follows:



                                                (in millions)
                                                -------------
                                             
                   Fiscal year ending March 31,
                      2005.....................  (Yen)63,283
                      2006.....................       56,179
                      2007.....................       41,026
                      2008.....................       27,899
                      2009.....................       13,122


                                     F-35



            MITSUBISHI TOKYO FINANCIAL GROUP, INC. AND SUBSIDIARIES

            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)


9.  INCOME TAXES

The detail of current and deferred income tax expense (benefit) for the fiscal
years ended March 31, 2002, 2003 and 2004 was as follows:



                                                                                2002           2003           2004
                                                                           -------------  -------------  ------------
                                                                                          (in millions)
                                                                                                
Current:
   Domestic............................................................... (Yen)  (8,617) (Yen)  17,971  (Yen) (3,689)
   Foreign................................................................        39,454         43,634        52,964
                                                                           -------------  -------------  ------------
       Total..............................................................        30,837         61,605        49,275
                                                                           -------------  -------------  ------------
Deferred:
   Domestic...............................................................      (115,402)       (26,548)      291,854
   Foreign................................................................       (14,316)        34,417        16,185
                                                                           -------------  -------------  ------------
       Total..............................................................      (129,718)         7,869       308,039
                                                                           -------------  -------------  ------------
   Income tax expense (benefit)...........................................       (98,881)        69,474       357,314
                                                                           -------------  -------------  ------------
Income tax expense (benefit) from discontinued operations.................        (2,951)       (26,597)          744
                                                                           -------------  -------------  ------------
Income tax expense reported in cumulative effect of a change in accounting
  principle...............................................................         3,523             --            --
                                                                           -------------  -------------  ------------
Income tax expense (benefit) reported in shareholders' equity relating to:
   Investment securities available for sale...............................      (229,943)      (337,409)      288,910
   Cumulative effect of a change in accounting principle..................           808             --            --
   Derivatives qualifying for cash flow hedges............................         1,289            513        (1,789)
   Minimum pension liability adjustments..................................       (30,815)       (51,265)       46,395
   Foreign currency translation adjustments...............................         5,444         (3,522)       (4,589)
                                                                           -------------  -------------  ------------
       Total..............................................................      (253,217)      (391,683)      328,927
                                                                           -------------  -------------  ------------
Total..................................................................... (Yen)(351,526) (Yen)(348,806) (Yen)686,985
                                                                           =============  =============  ============


Income taxes in Japan applicable to the MTFG Group are imposed by the national,
prefectural and municipal governments, and in the aggregate resulted in a
normal effective statutory rate of approximately 38.0%, 39.9% and 39.9%,
respectively, for the fiscal years ended March 31, 2002, 2003 and 2004. Foreign
subsidiaries are subject to income taxes of the countries in which they operate.

In March 2003, MTFG's application to file its tax returns under the
consolidated corporate-tax system was approved by the Japanese tax authorities,
and the consolidated corporate-tax system has become effective for the fiscal
year ended March 31, 2003. The new consolidated system allows companies to base
tax payments on the combined profits or losses of a parent company and its
wholly owned domestic subsidiaries. Due to the adoption of the consolidated
corporate-tax system, companies are required to pay, for the fiscal years ended
March 31, 2003 and 2004, a surcharge tax of 2.0% of taxable income in addition
to the national corporate income tax rate. As a result, the combined normal
effective statutory tax rate changed from approximately 38.0% to 39.9% for the
fiscal year ended March 31, 2003. The change in tax rate due to adoption of the
consolidated-tax system decreased income tax expense by (Yen)37,352 million for
the fiscal year ended March 31, 2003.

On March 30, 2000, the Tokyo Metropolitan Assembly passed a new tax rule that
changed the basis on which it taxes large banks conducting business in Tokyo.
BTM and Mitsubishi Trust are subject to the new rule. The new

                                     F-36



            MITSUBISHI TOKYO FINANCIAL GROUP, INC. AND SUBSIDIARIES

            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)

rule requires large banks to pay a 3.0% local tax on their gross operating
income derived from their Tokyo operations for a period of five years
commencing April 1, 2000.

On May 30, 2000, the Osaka Prefectural Assembly also passed a new tax rule that
is substantially the same as the rule approved by the Tokyo Metropolitan
Assembly. The new rule requires large banks to pay a 3.0% local tax on their
gross operating income derived from Osaka operations for a period of five years
commencing April 1, 2001.

The banks subject to the new tax rule, including BTM and Mitsubishi Trust,
filed a complaint in October 2000 with the Tokyo District Court, calling for
nullification of the new tax, which they claimed, unfairly targets banks. On
March 26, 2002, the Tokyo District Court rejected the new tax enacted by the
Tokyo Metropolitan Assembly. The court ordered the Tokyo Metropolitan
Government to refund (Yen)72.4 billion in tax payments to 18 major banks and to
pay an additional (Yen)1.8 billion in compensation.

On March 29, 2002, the Metropolitan Government lodged an appeal at the Tokyo
High Court. Following the decision of the Tokyo District Court, 16 major banks
filed a lawsuit on April 4, 2002 with the Osaka District Court against the
Osaka Prefectural Government, seeking to nullify the new tax rule. In response
to the lawsuit, on May 30, 2002, the Osaka Prefectural Government enacted a
revised tax rule that changed the taxation for the fiscal year ended March 31,
2002 and the fiscal years subject to the new tax rule. Under the revised tax
rule, for the fiscal years ended March 31, 2002 and 2003, large banks became
subject to local taxes based on the lower of the 3.0% local tax on their gross
operating income or the local tax computed based on net income. As a result of
the revisions, BTM and Mitsubishi Trust did not pay any local taxes to the
Osaka Prefectural Government for the fiscal years ended March 31, 2002 and
2003. BTM and Mitsubishi Trust incurred new local taxes to the Tokyo
Metropolitan Government of (Yen)18.4 billion, (Yen)18.6 billion and (Yen)19.6
billion for the fiscal years ended March 31, 2001, 2002 and 2003, respectively.
Had BTM and Mitsubishi Trust paid the local taxes based on net income under the
former rule, tax expense would have been (Yen)6.6 billion for the fiscal year
ended March 31, 2001, and zero for the fiscal years ended March 31, 2002 and
2003.

On January 30, 2003, the Tokyo High Court also rejected the new tax rule and
ordered the Tokyo Metropolitan Government to refund tax payments that the banks
had paid over the past two years, which represents the difference between the
3.0% tax on the gross operating profits paid by the banks and the amount
computed based on net income under the former rule. The order includes the
refund of (Yen)30.4 billion to BTM and Mitsubishi Trust. However, the Tokyo
High Court reversed the lower court on the issue of additional compensation.
The Tokyo Metropolitan Government appealed this decision to the Supreme Court
of Japan.

On October 8, 2003, BTM and Mitsubishi Trust made a settlement-at-court with
the Tokyo Metropolitan Government and the Tokyo Governor and withdrew their
complaints regarding the Tokyo Metropolitan Government's tax on large banks.
The settlement included (a) a revision of the applicable tax rate to 0.9% from
3.0%, effective retroactive to the date of the enactment of the local tax in
the fiscal year ended March 31, 2001 and (b) a refund representing the
difference between the amount already paid by the banks and the amount computed
based on the newly enacted rate plus accrued interest. On October 7, 2003, the
MTFG Group received a tax refund plus accrued interest amounting to (Yen)42.0
billion.

In March 2003, the Japanese government amended the local tax law. Under the
amended local tax law, a corporation size-based enterprise tax will be
effective, which will supersede the current enterprise tax, including the local
taxes levied by the Tokyo Metropolitan Government and Osaka Prefectural
Government, from the fiscal year ending March 31, 2005. As a result, the normal
effective statutory tax rate for the fiscal year ending March 31, 2005 will be
approximately 40.5%. The newly enacted rates were used in calculating the
future expected tax effects of temporary differences as of March 31, 2003 that
are expected to reverse during and

                                     F-37



            MITSUBISHI TOKYO FINANCIAL GROUP, INC. AND SUBSIDIARIES

            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)

subsequent to the fiscal year ending March 31, 2005. The change in tax rate
resulted in a decrease of (Yen)75,121 million in income tax expense for the
fiscal year ended March 31, 2003.

Furthermore, in October 2003, the Tokyo Metropolitan Government and the Osaka
Prefectural Government enacted a surcharge tax on the corporation sized based
enterprise tax under the local tax law amended in March 2003. As a result, the
normal effective statutory tax rate will increase approximately 0.1% to
approximately 40.6% effective for the fiscal year ending March 31, 2005. The
change in tax rate, used in calculating the future expected tax effects of
temporary differences, resulted in a decrease of (Yen)3,404 million in income
tax expense for the fiscal year ended March 31, 2004.

A reconciliation of the effective income tax rate reflected in the accompanying
consolidated statements of operations to the combined normal effective
statutory tax rate for the fiscal years ended March 31, 2002, 2003 and 2004 was
as follows:



                                                                         2002   2003   2004
                                                                        -----  -----  -----
                                                                             
Combined normal effective statutory tax rate...........................  38.0%  39.9%  39.9%
Increase (decrease) in taxes resulting from:
   Nondeductible expenses..............................................   2.9    4.1    0.1
   Goodwill amortization...............................................   0.7     --     --
   Dividends from foreign subsidiaries.................................   1.3    3.0    0.7
   Foreign tax credit and payments.....................................  (1.9)   9.5    0.5
   Higher (lower) tax rates applicable to income of subsidiaries.......  (2.7)  (0.4)   0.1
   Foreign income exempted for income tax purpose......................  (0.5)    --     --
   Foreign tax assessment (refund).....................................  (0.7)  (3.2)  (0.1)
   Minority interest...................................................   2.5    0.6    1.2
   Change in valuation allowance.......................................  17.5   14.7  (12.7)
   Expiration of loss carryforwards of subsidiaries....................   0.1    3.3     --
   Enacted change in tax rates.........................................    --  (28.5)  (0.3)
   Realization of previously unrecognized tax benefits of subsidiaries. (11.3) (15.7)  (1.2)
   Other--net..........................................................  (0.6)  (0.9)   2.1
                                                                        -----  -----  -----
Effective income tax rate..............................................  30.7%  26.4%  30.3%
                                                                        =====  =====  =====


In calculating the effective income tax rate for the fiscal year ended March
31, 2002, the reconciling items were subtracted from the combined normal
effective statutory tax rate since the loss before income tax benefit was
recorded in that year.

                                     F-38



            MITSUBISHI TOKYO FINANCIAL GROUP, INC. AND SUBSIDIARIES

            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)


Deferred tax assets and liabilities are computed for each tax jurisdiction
using currently enacted tax rates applicable to periods when the temporary
differences are expected to reverse. The tax effects of the items comprising
the MTFG Group's net deferred tax assets at March 31, 2003 and 2004 were as
follows:



                                                                                   2003            2004
                                                                              --------------  --------------
                                                                                       (in millions)
                                                                                        
Deferred tax assets:
   Allowance for credit losses............................................... (Yen)  694,972  (Yen)  492,269
   Net operating loss carryforwards..........................................        893,459         751,591
   Accrued severance indemnities and pension liabilities.....................        177,602         112,937
   Investment securities.....................................................        149,622              --
   Non-interest-earning deposits with the Special Fund and the New Fund (See
     Note 5).................................................................         16,431          14,329
   Other real estate owned...................................................            227             205
   Accrued liabilities and other.............................................         64,670          77,747
   Sale-and-leaseback transactions...........................................         38,893          38,975
   Derivative financial instruments..........................................             --          11,794
   Depreciation..............................................................         18,622          23,038
   Valuation allowance.......................................................       (318,709)       (133,803)
                                                                              --------------  --------------
       Total deferred tax assets.............................................      1,735,789       1,389,082
                                                                              --------------  --------------
Deferred tax liabilities:
   Investment securities.....................................................             --         331,438
   Deferred profit on property for income tax purposes.......................         15,720          12,771
   Equipment and auto leasing................................................         96,769          81,676
   Derivative financial instruments..........................................         34,934              --
   Other.....................................................................          9,186          14,793
                                                                              --------------  --------------
       Total deferred tax liabilities........................................        156,609         440,678
                                                                              --------------  --------------
Net deferred tax assets...................................................... (Yen)1,579,180  (Yen)  948,404
                                                                              ==============  ==============


The valuation allowance was provided primarily against deferred tax assets
recorded at the MTFG Group's domestic subsidiaries with operating loss
carryforwards. The net changes in the valuation allowance for deferred income
tax assets were an increase of (Yen)62,130 million and a decrease of
(Yen)184,906 million for the fiscal years ended March 31, 2003 and 2004,
respectively, which primarily reflected an increase or a decrease in such
operating loss carryforwards of these subsidiaries.

                                     F-39



            MITSUBISHI TOKYO FINANCIAL GROUP, INC. AND SUBSIDIARIES

            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)


At March 31, 2004, the MTFG Group had operating loss carryforwards of
(Yen)1,737,926 million and tax credit carryforwards of (Yen)489 million for tax
purposes. Such carryforwards, if not utilized, are scheduled to expire as
follows:



                                        Operating loss  Tax credit
                                        carryforwards  carryforwards
                                        -------------- -------------
                                               (in millions)
                                                 
           Fiscal year ending March 31:
              2005..................... (Yen)    1,535   (Yen) --
              2006.....................         45,075         --
              2007.....................             41         --
              2008.....................            128         --
              2009.....................         64,043         --
              2010.....................      1,549,025         --
              2011 and thereafter......         56,794        386
           No definite expiration date.         21,285        103
                                        --------------   --------
                  Total................ (Yen)1,737,926   (Yen)489
                                        ==============   ========


In March 2004, the Japanese government extended the period for operating loss
carryforwards from 5 years to 7 years under the corporate tax law. This applied
retroactively to operating loss carryforwards since fiscal years beginning on
or after April 1, 2001.

Income taxes are not provided on undistributed earnings of foreign
subsidiaries, which are considered to be indefinitely reinvested in the
operations of such subsidiaries. At March 31, 2004, such undistributed earnings
of foreign subsidiaries amounted to approximately (Yen)298 billion.
Determination of the amount of unrecognized deferred tax liabilities with
respect to these undistributed earnings is not practicable because of the
complexity associated with the hypothetical calculation including foreign
withholding taxes and foreign tax credits. MTFG has neither plans nor the
intention of disposing of investments in foreign subsidiaries and, accordingly,
does not expect to record capital gains or losses, or otherwise monetize its
foreign subsidiaries' undistributed earnings. Rather, MTFG will receive a
return on investments in foreign subsidiaries by way of dividends.

Income (loss) from continuing operations before income tax expense (benefit)
and cumulative effect of a change in accounting principle for the fiscal years
ended March 31, 2002, 2003 and 2004 was as follows:



                                   2002          2003          2004
                              -------------  ------------ --------------
                                            (in millions)
                                                 
       Domestic income (loss) (Yen)(384,676) (Yen)144,551 (Yen)1,045,975
       Foreign income........        62,159       118,373        134,173
                              -------------  ------------ --------------
          Total.............. (Yen)(322,517) (Yen)262,924 (Yen)1,180,148
                              =============  ============ ==============


10.  PLEDGED ASSETS AND COLLATERAL

Pledged Assets

At March 31, 2004, assets mortgaged, pledged, or otherwise subject to lien were
as follows:



                                               (in millions)
                                              ---------------
                                           
                   Due from banks............ (Yen)        76
                   Trading account securities       2,268,147
                   Investment securities.....       3,461,860
                   Loans.....................       4,420,923
                   Other.....................          41,593
                                              ---------------
                      Total.................. (Yen)10,192,599
                                              ===============


                                     F-40



            MITSUBISHI TOKYO FINANCIAL GROUP, INC. AND SUBSIDIARIES

            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)


The above pledged assets are classified by type of liabilities to which they
relate as follows:



                                                                          (in millions)
                                                                         ---------------
                                                                      
Deposits................................................................ (Yen)   265,636
Call money and funds purchased..........................................         473,600
Payables under repurchase agreements and securities lending transactions       4,711,077
Other short-term borrowings and long-term debt..........................       4,731,714
Other...................................................................          10,572
                                                                         ---------------
   Total................................................................ (Yen)10,192,599
                                                                         ===============


In addition, at March 31, 2004, certain investment securities, principally
Japanese national government and Japanese government agency bonds, aggregating
(Yen)5,490,444 million were pledged as collateral for acting as a collection
agent of public funds, for settlement of exchange at the Bank of Japan and
Tokyo Bankers Association, for derivative transactions and for certain other
purposes.

Under Japanese law, Japanese banks are required to maintain certain minimum
reserves on deposit with the Bank of Japan based on the amount of deposit
balances and certain other factors. There are similar reserve deposit
requirements for foreign offices engaged in banking businesses in foreign
countries. At March 31, 2003 and 2004, the reserve funds maintained by the MTFG
Group, which are included in Cash and Due from Banks and Interest-earning
Deposits in Other Banks, were (Yen)2,879,345 million and (Yen)1,946,932
million, respectively. Average reserves during the fiscal years ended March 31,
2003 and 2004 were (Yen)1,302,729 million and (Yen)3,343,265 million,
respectively.

Collateral

The MTFG Group accepts and provides financial assets as collateral for
transactions, principally commercial loans, repurchase agreements and
securities lending transactions, call money, and derivatives. Financial assets
eligible for such collateral include, among others, marketable equity
securities, trade and note receivables and certificates of deposit.

Secured parties, including creditors and counterparties to certain transactions
with the MTFG Group, may sell or repledge financial assets provided as
collateral. Certain contracts, however, may not be specific about the secured
party's right to sell or repledge collateral under the applicable statutes and,
therefore, whether or not the secured party is permitted to sell or repledge a
collateral would differ depending on the interpretations of specific provisions
of the existing statutes, contract or certain market practices. If the MTFG
Group determines, based on available information, that a financial asset
provided as collateral might not be sold or repledged by the secured parties,
such collateral is not separately reported in the consolidated balance sheets.
If a secured party is permitted to sell or repledge financial assets provided
as collateral by contract or custom under the existing statutes, the MTFG Group
reports such pledged financial assets separately on the face of the
consolidated balance sheets. At March 31, 2004, the MTFG Group pledged
(Yen)10,247 billion of collateral that may not be sold or repledged by the
secured parties.

Certain banking subsidiaries accept collateral for commercial loans and certain
banking transactions under a standardized agreement with customers, which
provides that these banking subsidiaries may require the customers to provide
collateral or guarantees with respect to the loans and other banking
transactions. Financial assets pledged as collateral are generally negotiable
and transferable instruments, and such negotiability and transferability is
authorized by applicable legislation. In principle, Japanese legislation
permits these banking subsidiaries to repledge financial assets accepted as
collateral unless otherwise prohibited by contract or relevant

                                     F-41



            MITSUBISHI TOKYO FINANCIAL GROUP, INC. AND SUBSIDIARIES

            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)

statutes. Nevertheless, the MTFG Group did not sell or repledge nor does it
plan to sell or repledge such collateral accepted in connection with commercial
loans before a debtor's default or other credit events specified in the
agreements as it is not customary within the banking industry in Japan to
dispose of collateral before a debtor's default and other specified credit
events. Derivative agreements commonly used in the marketplace do not prohibit
a secured party's disposition of financial assets received as collateral, and
in resale agreements and securities borrowing transactions, securities accepted
as collateral may be sold or repledged by the secured parties. At March 31,
2004, the fair value of the collateral accepted by the MTFG Group that is
permitted to be sold or repledged was approximately (Yen)10,322 billion, of
which approximately (Yen)4,356 billion was sold or repledged. The amount
includes the collateral that may be repledged under the current Japanese
legislation but the MTFG Group does not dispose of before counterparties'
default in accordance with the customary practice within the Japanese banking
industry.

11.  DEPOSITS

The balances of time deposits, including certificates of deposit ("CDs"),
issued in amounts of (Yen)10 million (approximately US$96 thousand at the
Federal Reserve Bank of New York's noon buying rate on March 31, 2004) or more
with respect to domestic deposits and issued in amounts of US$100,000 or more
with respect to foreign deposits were (Yen)17,439,570 million and
(Yen)5,344,997 million, respectively, at March 31, 2003, and (Yen)15,780,157
million and (Yen)7,080,451 million, respectively, at March 31, 2004.

The maturity information at March 31, 2004 for domestic and foreign time
deposits, including CDs, is summarized as follows:



                                                Domestic        Foreign
                                             --------------- --------------
                                                     (in millions)
                                                       
    Due in one year or less................. (Yen)17,859,043 (Yen)8,841,974
    Due after one year through two years....       3,903,980        104,497
    Due after two years through three years.       2,927,944         38,698
    Due after three years through four years         685,514         16,482
    Due after four years through five years.         944,082         11,793
    Due after five years....................          54,436          2,683
                                             --------------- --------------
       Total................................ (Yen)26,374,999 (Yen)9,016,127
                                             =============== ==============


12.  DEBENTURES

In Japan, certain banks, including BTM, were authorized to issue discount and
coupon debentures in the domestic market under applicable banking laws. The
Bank of Tokyo, Ltd., which merged with The Mitsubishi Bank, Limited to create
BTM, was authorized to issue such debentures and, after the merger in 1996, BTM
was also permitted to issue discount and coupon debentures in the domestic
market through March 2002 under the Law concerning the Merger and Conversion of
Financial Institutions of Japan.

                                     F-42



            MITSUBISHI TOKYO FINANCIAL GROUP, INC. AND SUBSIDIARIES

            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)


Debentures at March 31, 2003 and 2004 were comprised of the following:



                                                                 2003         2004
                                                             ------------ ------------
                                                                   (in millions)
                                                                    
Three-year coupon debentures with interest of 0.02% to 0.06%
  (0.02% to 0.30% in 2003).................................. (Yen)260,880 (Yen) 76,427
Five-year coupon debentures with interest of 0.80% to 1.30%
  (0.80% to 1.70% in 2003)..................................      375,180      189,530
                                                             ------------ ------------
   Total.................................................... (Yen)636,060 (Yen)265,957
                                                             ============ ============


All debentures of (Yen)265,957 million at March 31, 2004 will mature in the
fiscal year ending March 31, 2005.

13.  CALL LOANS AND FUNDS SOLD, AND CALL MONEY AND FUNDS PURCHASED

A summary of funds transactions for the fiscal years ended March 31, 2002, 2003
and 2004 was as follows:



                                                            2002                   2003                   2004
                                                   ---------------------  ---------------------  ---------------------
                                                                              (in millions)
                                                                                        
Average balance during the fiscal year:
   Call money and funds purchased................. (Yen)       1,968,252  (Yen)       2,175,394  (Yen)       2,492,308
   Call loans and funds sold......................             1,230,103                597,004                585,506
                                                   ---------------------  ---------------------  ---------------------
Net funds purchased position...................... (Yen)         738,149  (Yen)       1,578,390  (Yen)       1,906,802
                                                   =====================  =====================  =====================
Call money and funds purchased:
   Outstanding at end of fiscal year:
       Amount..................................... (Yen)       2,542,489  (Yen)       2,689,892  (Yen)       2,871,851
       Principal range of maturities..............      1 day to 30 days       1 day to 30 days       1 day to 30 days
       Weighted average interest rate.............                  0.61%                  0.30%                  0.26%
   Maximum balance at any month-end during the
     fiscal year.................................. (Yen)       2,542,489  (Yen)       2,981,442  (Yen)       4,437,982
   Weighted average interest rate paid during the
     fiscal year..................................                  0.91%                  0.58%                  0.40%


Average balances are generally based on a daily average while a month-end
average is used for certain average balances when it is not practicable to
obtain applicable daily averages.

14.  DUE TO TRUST ACCOUNT

Mitsubishi Trust holds assets on behalf of its customers in an agent, fiduciary
or trust capacity. Such trust account assets are not the MTFG Group's
proprietary assets and are managed and accounted for separately.

                                     F-43



            MITSUBISHI TOKYO FINANCIAL GROUP, INC. AND SUBSIDIARIES

            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)


However, excess cash funds of individual trust accounts are often placed with
Mitsubishi Trust that manages the funds together with its own funds in its
proprietary account. Due to trust account reflects a temporary placement of the
excess funds from individual trust accounts and, in view of the MTFG Group's
funding, due to trust account is similar to short-term funding, including
demand deposits and other overnight funds purchased. The balance changes in
response to the day-to-day changes in the excess funds placed by the trust
accounts. A summary of due to trust account transactions for the fiscal years
ended March 31, 2002, 2003 and 2004 is as follows:



                                                             2002            2003            2004
                                                        --------------  --------------  --------------
                                                                         (in millions)
                                                                               
Average balance outstanding during the fiscal year..... (Yen)2,940,975  (Yen)1,691,359  (Yen)1,326,313
Maximum balance at any month-end during the fiscal year      3,533,489       2,188,326       1,403,734
Weighted average interest rate during the fiscal year..           0.57%           0.51%           0.37%


15.  SHORT-TERM BORROWINGS AND LONG-TERM DEBT

At March 31, 2003 and 2004, the MTFG Group had unused lines of credit amounting
to (Yen)3,431,430 million and (Yen)3,773,476 million, respectively. The amounts
principally consist of the lines of collateralized intraday overdrafts without
interest charges and collateralized overnight loans on bills at the official
discount rate granted by the Bank of Japan, which are used to cover shortages
in the Bank of Japan account and to meet liquidity needs. The MTFG Group may
borrow from the Bank of Japan on demand up to the total amount of collateral
eligible for credit extension.

Other short-term borrowings at March 31, 2003 and 2004 were comprised of the
following:



                                                                                 2003            2004
                                                                            --------------  --------------
                                                                                     (in millions)
                                                                                      
Domestic offices:
   Loans on notes and acceptances transferred with recourse (rediscount)... (Yen)1,227,170  (Yen)4,029,196
   Commercial paper........................................................        466,000         736,200
   Borrowings from financial institutions..................................        626,000         448,500
   Other...................................................................        221,416         211,440
                                                                            --------------  --------------
       Total domestic offices..............................................      2,540,586       5,425,336
                                                                            --------------  --------------
Foreign offices:
   Commercial paper........................................................        221,209         193,838
   Other...................................................................         92,599          44,208
                                                                            --------------  --------------
       Total foreign offices...............................................        313,808         238,046
                                                                            --------------  --------------
       Total...............................................................      2,854,394       5,663,382
Less unamortized discount..................................................            366             315
                                                                            --------------  --------------
Other short-term borrowings--net........................................... (Yen)2,854,028  (Yen)5,663,067
                                                                            ==============  ==============
Weighted average interest rate on outstanding balance at end of fiscal year           0.48%           0.12%


                                     F-44



            MITSUBISHI TOKYO FINANCIAL GROUP, INC. AND SUBSIDIARIES

            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)


A summary of other short-term borrowing transactions for the fiscal years ended
March 31, 2002, 2003 and 2004 was as follows:



                                                             2002            2003            2004
                                                        --------------  --------------  --------------
                                                                         (in millions)
                                                                               
Average balance outstanding during the fiscal year..... (Yen)2,038,669  (Yen)2,763,028  (Yen)3,727,461
Maximum balance at any month-end during the fiscal year      3,318,634       2,870,339       5,663,067
Weighted average interest rate during the fiscal year..           2.24%           1.02%           0.40%


Long-term debt (with original maturities of more than one year) at March 31,
2003 and 2004 was comprised of the following:



                                                                                         2003           2004
                                                                                    -------------- --------------
                                                                                            (in millions)
                                                                                             
BTM:
   Obligations under capital leases................................................ (Yen)   22,407 (Yen)   21,194
   Obligation under sale-and-leaseback transactions................................        102,208        102,795
   Unsubordinated debt:
      Insurance companies and other institutions, maturing serially through
        2035, principally 0.25%-7.49%..............................................        350,427        506,286
      Fixed rate bonds, payable in Japanese yen, due 2004-2022, principally
        0.22%-3.00%................................................................      1,730,000      2,001,860
   Subordinated debt:
      Fixed rate notes, payable in United States dollars, due 2010, 8.40%..........        240,250        211,267
      Fixed rate bonds, payable in Japanese yen, due 2006-2013, principally
        0.55%-2.39%................................................................        200,000        320,000
      Fixed rate borrowings, payable in Japanese yen, due 2004-2012,
        principally 1.69%- 6.20%...................................................        402,650        386,150
      Adjustable rate bonds, payable in Japanese yen, due 2011-2012,
        principally 0.56%- 1.05%...................................................         33,000         33,000
      Adjustable rate borrowings, payable in Japanese yen, due 2005-2018,
        principally 0.69%-3.75%....................................................        202,500        176,500
      Adjustable rate borrowings, payable in Yuan, due 2006, principally
        2.80%-3.96%................................................................             --            683
      Floating rate borrowings, payable in Japanese yen, due 2005-2010,
        principally 0.06%- 0.42%...................................................         12,900          9,000
                                                                                    -------------- --------------
         Total.....................................................................      3,296,342      3,768,735
                                                                                    -------------- --------------
Mitsubishi Trust:
   Obligation under capital leases.................................................            585            206
   Unsubordinated debt:
      Insurance companies and other institutions, due 2004-2035, principally
        0.00%-4.75%................................................................         45,947         60,185
   Subordinated debt:
      Fixed rate borrowings, payable in Japanese yen, due 2004-2013,
        principally 1.25%- 4.92%...................................................         53,000         91,000
      Adjustable rate borrowings, payable in Japanese yen, due 2010-2012,
        principally 0.61%-3.25%....................................................         34,000         34,000
      Floating rate borrowings, payable in Japanese yen, due 2006, 0.85%...........         64,000         10,000
      Perpetual bonds, payable in Japanese yen, principally 1.11%-2.25%............         65,600         96,400
      Fixed rate bonds, payable in Japanese yen, due 2010, 2.70%...................         30,000         30,000
      Adjustable rate bonds, payable in Japanese yen, due 2010-2016,
        principally 0.76%- 2.45%...................................................        116,400        116,400
                                                                                    -------------- --------------
         Total.....................................................................        409,532        438,191
                                                                                    -------------- --------------


                                     F-45



            MITSUBISHI TOKYO FINANCIAL GROUP, INC. AND SUBSIDIARIES

            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)




                                                                                          2003           2004
                                                                                     -------------- --------------
                                                                                             (in millions)
                                                                                              
Other subsidiaries:
   Unsubordinated debt:
      Insurance companies and other institutions, due 2004-2011, principally
        0.32%-11.62%................................................................ (Yen)  225,343 (Yen)  202,599
      0.25% Convertible Bonds due 2014, payable in Japanese yen.....................         51,295         50,700
      Fixed rate bonds and notes, payable in United States dollars, due
        2004-2018, principally 2.20%-6.53%..........................................         38,013         36,380
      Fixed rate bonds and notes, payable in Japanese yen, due 2004-2017,
        principally 0.17%- 4.40%....................................................         98,588        107,045
      Adjustable rate bonds and notes, payable in United States dollars, due
        2007-2023, principally 6.46%-8.44%..........................................          8,744          8,135
      Adjustable rate bonds and notes, payable in Japanese yen, due 2007-2021,
        principally 1.34%-4.71%.....................................................         21,645         10,088
      Floating rate bonds and notes, payable in United States dollars, due
        2005-2010, principally 1.97%-5.10%..........................................          3,585          3,386
      Floating rate bonds and notes, payable in Japanese yen, due 2004-2023,
        principally 0.13%-4.71%.....................................................         65,865         67,386
      Floating rate notes, payable in Euro, due 2017, 4.59%.........................          1,254             --
      Obligations under capital leases and other miscellaneous debt.................         40,476         31,262
                                                                                     -------------- --------------
         Total unsubordinated debt..................................................        554,808        516,981
                                                                                     -------------- --------------
   Subordinated debt:
      Insurance companies and other institutions, due 2005-2010, principally
        3.10%-3.39%.................................................................          4,335          4,605
      Undated notes, payable in Japanese yen, principally 0.40%-4.90%...............         58,000         58,000
      Fixed rate undated notes, payable in Japanese yen, principally 1.40%-2.60%....          9,791         38,967
      Perpetual Bonds, payable in Japanese yen, principally 1.11%-3.15%.............         20,300         20,300
      Fixed rate bonds and notes, payable in United States dollars, due
        2007-2029, principally 5.25%-7.35%..........................................          6,418         49,222
      Fixed rate bonds and notes, payable in Japanese yen, due 2006-2028,
        principally 0.37%- 5.10%....................................................         95,407         89,451
      Adjustable rate undated notes, payable in United States dollars, 3.04%........          4,796             --
      Adjustable rate undated notes, payable in Japanese yen, principally
        0.77%-3.16%.................................................................        335,809        299,448
      Adjustable rate bonds and notes, payable in United States dollars, due
        2009, 2.00%.................................................................          3,556          3,166
      Adjustable rate bonds and notes, payable in Japanese yen, due 2006-2014,
        principally 0.12%-5.93%.....................................................        193,871        180,042
      Floating rate undated notes, payable in Japanese yen, principally
        1.27%-1.57%.................................................................         53,697         91,323
      Floating rate bonds and notes, payable in United States dollars, due
        2006-2013, principally 1.98%-5.12%..........................................          5,996          6,421
      Floating rate bonds and notes, payable in Japanese yen, due 2004-2027,
        principally 0.04%-5.61%.....................................................         60,318         50,556
      Other miscellaneous debt......................................................          2,657          5,480
                                                                                     -------------- --------------
         Total subordinated debt....................................................        854,951        896,981
   Mandatorily redeemable preferred securities of subsidiary grantor trust..........         43,499             --
   Junior subordinated debt payable to subsidiary grantor trust.....................             --         38,989
                                                                                     -------------- --------------
         Total......................................................................      1,453,258      1,452,951
                                                                                     -------------- --------------
Total............................................................................... (Yen)5,159,132 (Yen)5,659,877
                                                                                     ============== ==============

--------
Notes:
1. Adjustable rate debts are debts where interest rates are reset in accordance
   with the terms of the debt agreements, and floating rate debts are debts
   where interest rates are repriced in accordance with movements of market
   indices.
2. 0.25% Convertible Bonds of (Yen)50,700 million, unsubordinated debt of other
   subsidiaries, can be convertible into common stock of Mitsubishi Securities.
3. Mandatorily redeemable preferred securities of subsidiary grantor trust and
   Junior subordinated debt payable to subsidiary grantor trust were issued by
   a wholly owned subsidiary of UNBC (see Notes 23 and 25). On February 19,
   2004, they were redeemed by UNBC.

                                     F-46



            MITSUBISHI TOKYO FINANCIAL GROUP, INC. AND SUBSIDIARIES

            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)


Certain unsubordinated bonds and notes (aggregating (Yen)43,680 million at
March 31, 2004), and certain subordinated bonds and notes (aggregating
(Yen)819,948 million at March 31, 2004) issued by subsidiaries are guaranteed,
on a subordinated basis, by MTFG, BTM, Mitsubishi Trust or a subsidiary as to
payment of principal and interest.

BTM, Mitsubishi Trust and certain other subsidiaries entered into interest rate
and currency swaps for certain debt in order to manage exposure to interest
rate and currency exchange rate movements. As a result of these swap
arrangements, the effective interest rates may differ from the coupon rates
reflected in the above table. The interest rates for the adjustable and
floating rate debt shown in the above table are those in effect at March 31,
2003 and 2004. Certain interest rates are determined by formulas and may be
subject to certain minimum and maximum rates. Floating and adjustable rate debt
agreements may provide for interest rate floors to prevent negative interest
payments (i.e., receipts).

Certain debt agreements permit BTM, Mitsubishi Trust and some other
subsidiaries to redeem the related debt, in whole or in part, prior to maturity
at the option of the issuer on terms specified in the respective agreements.

The following is a summary of maturities of long-term debt subsequent to March
31, 2004:



                                             Mitsubishi      Other
                                  BTM          Trust      subsidiaries      Total
                             -------------- ------------ -------------- --------------
                                                  ( in millions )
                                                            
Fiscal year ending March 31:
   2005..................... (Yen)  474,045 (Yen) 20,237 (Yen)  113,597 (Yen)  607,879
   2006.....................        567,630       30,706        140,305        738,641
   2007.....................        508,059       23,130        119,775        650,964
   2008.....................        289,628          131         48,398        338,157
   2009.....................        368,299          145        112,984        481,428
   2010 and thereafter......      1,561,074      363,842        917,892      2,842,808
                             -------------- ------------ -------------- --------------
       Total................ (Yen)3,768,735 (Yen)438,191 (Yen)1,452,951 (Yen)5,659,877
                             ============== ============ ============== ==============


16.  SEVERANCE INDEMNITIES AND PENSION PLANS

All employees of MTFG are loaned from BTM and Mitsubishi Trust. The employees
are subject to severance indemnities and pension plans of each of these
subsidiaries as described below, and included in the calculation of pension
costs and liabilities of BTM and Mitsubishi Trust.

Domestic Subsidiaries

BTM, Mitsubishi Trust, and certain other domestic subsidiaries have severance
indemnities plans under which their employees in Japan, other than those who
are directors, are entitled, under most circumstances, upon mandatory
retirement at normal retirement age or earlier termination of employment, to
lump-sum severance indemnities. Under the severance indemnities plans, benefit
payments in the form of lump-sum cash payment without allowing a benefit payee
an option to receive annuity payments, upon mandatory retirement at normal
retirement age or earlier termination of employment, are provided. When a
benefit is paid in a single payment to a benefit payee under the plans, the
payment represents final relief of the obligation.

BTM, Mitsubishi Trust, and certain other domestic subsidiaries also have funded
contributory defined benefit pension plans (private plans) which cover
substantially all of their employees in Japan and provide for lifetime

                                     F-47



            MITSUBISHI TOKYO FINANCIAL GROUP, INC. AND SUBSIDIARIES

            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)

annuity payments commencing at age 65 based on eligible compensation at the
time of severance, years of service and other factors. These domestic
subsidiaries have Employees' Pension Fund plans ("EPF"s), which are defined
benefit pension plans established under the Japanese Welfare Pension Insurance
Law ("JWPIL"). These plans are composed of (a) substitutional portion based on
the pay-related part of the old-age pension benefits prescribed by JWPIL
(similar to social security benefits in the United States) and (b) a corporate
portion based on a contributory defined benefit pension arrangement established
at the discretion of each subsidiary. The subsidiaries with an EPF and their
employees are exempted from contributions to Japanese Pension Insurance ("JPI")
that would otherwise be required if they had not elected to fund the
substitutional portion of the benefit through an EPF arrangement. The EPF, in
turn, pays both the corporate and substitutional pension benefits to retired
beneficiaries out of its plan assets. Benefits of the substitutional portion
are based on a standard remuneration schedule as determined by the JWPIL, but
the benefits of the corporate portion are based on a formula determined by each
employer/EPF. Pension benefits and plan assets applicable to the substitutional
portion are included with the corporate portion of these domestic subsidiaries
in the determination of net periodic costs and funded status.

In June 2001, the JWPIL was amended to permit each employer/EPF to separate the
substitutional portion from its EPF and transfer the obligation and related
assets to the government. The separation process occurs in several phases.

In June 2003, BTM submitted to the government an application to transfer the
obligation to pay benefits for future employee service related to the
substitutional portion, and the application was approved by the government in
August 2003. Upon that approval, BTM began making pension insurance payments to
the government and the government assumes the benefit obligations arising from
future employee services. To complete the entire separation process, in August
2004, BTM made another application for transfer of the remaining substitutional
portion (benefit obligation related to past services), but the timing of the
approval is not known yet. Upon the approval of the second application, BTM
will transfer to a government agency some of its plan assets and, in exchange,
be released from paying the remaining substitutional portion of the benefit
obligations for past employee services. The impact on MTFG's consolidated
financial statements of the transfers accounted for in accordance with EITF
03-2 is not known and cannot be reasonably estimated until the completion of
the transfer, as explained in Note 1 to the consolidated financial statements.

BTM and Mitsubishi Trust also have closed Tax-Qualified Pension Plans ("closed
TQPPs"), funded non-contributory defined benefit pension plans, providing
benefits to certain retired employees, excluding directors, in Japan, based on
eligible compensation at the time of severance, years of service and other
factors. BTM's plan covers retired employees whose service period with BTM was
5 years or more, and provides for lifetime or certain limited period annuity
payments commencing at age 60. Mitsubishi Trust's plan covers retired employees
whose service period with Mitsubishi Trust was 20 years or more, and provides
for a 10-year period annuity payment commencing in the month following
retirement or, at the option of each eligible employee, at age 60.

                                     F-48



            MITSUBISHI TOKYO FINANCIAL GROUP, INC. AND SUBSIDIARIES

            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)


Net periodic cost of the severance indemnities and pension plans, net of
contributions made by employees, for the fiscal years ended March 31, 2002,
2003 and 2004 included the following components:



                                                                               2002          2003          2004
                                                                           ------------  ------------  ------------
                                                                                         (in millions)
                                                                                              
Service cost--benefits earned during the fiscal year...................... (Yen) 22,741  (Yen) 25,295  (Yen) 25,486
Interest costs on projected benefit obligation............................       25,166        24,200        20,126
Expected return on plan assets............................................      (24,403)      (25,450)      (18,547)
Amortization of unrecognized net obligation at transition.................        4,199         4,086         3,943
Amortization of unrecognized prior service cost...........................        3,405         2,132        (1,047)
Amortization of net actuarial loss........................................       10,998        22,506        34,873
Loss on settlements.......................................................        5,240         6,373         4,292
                                                                           ------------  ------------  ------------
Net periodic benefit cost................................................. (Yen) 47,346  (Yen) 59,142  (Yen) 69,126
                                                                           ============  ============  ============
Weighted-average assumptions used:
   Discount rates in determining expense..................................         2.88%         2.47%         1.88%
   Discount rates in determining benefit obligation.......................         2.47          1.88          2.10
   Rates of increase in future compensation level for determining expense.         3.12          3.09          2.96
   Rates of increase in future compensation level for determining benefit
     obligation...........................................................         3.09          2.96          3.12
   Expected rates of return on plan assets................................         4.45          3.73          2.67


                                     F-49



            MITSUBISHI TOKYO FINANCIAL GROUP, INC. AND SUBSIDIARIES

            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)


The following table sets forth the combined funded status and amounts
recognized in the accompanying consolidated balance sheets at March 31, 2003
and 2004 for the plans of BTM, Mitsubishi Trust and certain other domestic
subsidiaries. BTM and some of its domestic subsidiaries have measured plan
assets and benefit obligations at December 31 each fiscal year for the purpose
of financial statements, whereas Mitsubishi Trust has used March 31 each year
for the measurement date. Accordingly, funded status and amounts recognized in
the table below shows the combined amounts of those presented in the
consolidated financial statements of these subsidiaries.



                                                                                2003
                                                            --------------------------------------------  --------------
                                                              Severance                                     Severance
                                                             indemnities                                   indemnities
                                                            plans and non-                                plans and non-
                                                             contributory  Contributory                    contributory
                                                            pension plans  pension plans       Total      pension plans
                                                            -------------- -------------  --------------  --------------
                                                                                                   (in millions)
                                                                                              
Change in benefit obligation:
  Benefit obligation at beginning of fiscal year........... (Yen) 143,065  (Yen) 835,942  (Yen)  979,007   (Yen)178,619
   Service cost............................................         7,976         17,319          25,295          9,198
   Interest cost...........................................         3,887         20,313          24,200          3,067
   Plan participants' contributions........................            --          2,934           2,934             --
   Amendments..............................................        (3,447)       (44,027)        (47,474)         1,795
   Acquisitions............................................        28,106             --          28,106             --
   Divestitures............................................            --             --              --            (37)
   Actuarial loss (gain)...................................        16,205         90,182         106,387          2,499
   Benefits paid...........................................        (1,893)       (21,299)        (23,192)        (3,449)
   Lump-sum payment........................................       (15,280)            --         (15,280)       (14,637)
                                                            -------------  -------------  --------------   ------------
  Benefit obligation at end of fiscal year.................       178,619        901,364       1,079,983        177,055
                                                            -------------  -------------  --------------   ------------
Change in plan assets:
  Fair value of plan assets at beginning of fiscal year....        78,602        580,511         659,113         77,392
   Actual return (negative return) on plan assets..........       (14,057)       (49,214)        (63,271)        21,036
   Acquisitions............................................        12,248             --          12,248             --
   Divestitures............................................            --             --              --            (24)
   Employer contributions..................................         2,492         85,909          88,401         21,299
   Plan participants' contributions........................            --          2,934           2,934             --
   Benefits paid...........................................        (1,893)       (21,299)        (23,192)        (3,449)
                                                            -------------  -------------  --------------   ------------
  Fair value of plan assets at end of fiscal year..........        77,392        598,841         676,233        116,254
                                                            -------------  -------------  --------------   ------------
  Projected benefit obligation in excess of plan assets at
   end of fiscal year......................................      (101,227)      (302,523)       (403,750)       (60,801)
   Contributions to or benefits paid from plan assets
    during three months ended March 31, 2003 and
    2004...................................................         5,034         10,289          15,323          3,824
   Unrecognized net actuarial loss.........................        75,634        435,413         511,047         48,911
   Unrecognized prior service cost.........................        (2,015)       (26,205)        (28,220)          (289)
   Unrecognized net (asset) obligation at transition.......          (841)        12,115          11,274           (210)
                                                            -------------  -------------  --------------   ------------
   Net amount recognized................................... (Yen) (23,415) (Yen) 129,089  (Yen)  105,674   (Yen) (8,565)
                                                            =============  =============  ==============   ============
Amounts recognized in the balance sheets:
   Prepaid pension cost.................................... (Yen)     334  (Yen)      --  (Yen)      334   (Yen)  8,770
   Accrued pension liability...............................       (75,766)      (245,008)       (320,774)       (50,535)
   Intangible assets.......................................         1,710         12,843          14,553          3,285
   Accumulated other changes in equity from
    nonowner sources.......................................        50,307        361,254         411,561         29,915
                                                            -------------  -------------  --------------   ------------
   Net amount recognized................................... (Yen) (23,415) (Yen) 129,089  (Yen)  105,674   (Yen) (8,565)
                                                            =============  =============  ==============   ============



                                                                  2004
                                                            ------------------------------



                                                            Contributory
                                                            pension plans       Total
                                                            -------------  --------------

                                                                     
Change in benefit obligation:
  Benefit obligation at beginning of fiscal year........... (Yen) 901,364  (Yen)1,079,983
   Service cost............................................        16,288          25,486
   Interest cost...........................................        17,059          20,126
   Plan participants' contributions........................         2,447           2,447
   Amendments..............................................        (2,570)           (775)
   Acquisitions............................................            --              --
   Divestitures............................................            --             (37)
   Actuarial loss (gain)...................................       (30,345)        (27,846)
   Benefits paid...........................................       (23,226)        (26,675)
   Lump-sum payment........................................            --         (14,637)
                                                            -------------  --------------
  Benefit obligation at end of fiscal year.................       881,017       1,058,072
                                                            -------------  --------------
Change in plan assets:
  Fair value of plan assets at beginning of fiscal year....       598,841         676,233
   Actual return (negative return) on plan assets..........        87,756         108,792
   Acquisitions............................................            --              --
   Divestitures............................................            --             (24)
   Employer contributions..................................       114,641         135,940
   Plan participants' contributions........................         2,447           2,447
   Benefits paid...........................................       (23,226)        (26,675)
                                                            -------------  --------------
  Fair value of plan assets at end of fiscal year..........       780,459         896,713
                                                            -------------  --------------
  Projected benefit obligation in excess of plan assets at
   end of fiscal year......................................      (100,558)       (161,359)
   Contributions to or benefits paid from plan assets
    during three months ended March 31, 2003 and
    2004...................................................         5,134           8,958
   Unrecognized net actuarial loss.........................       304,843         353,754
   Unrecognized prior service cost.........................       (27,658)        (27,947)
   Unrecognized net (asset) obligation at transition.......         7,581           7,371
                                                            -------------  --------------
   Net amount recognized................................... (Yen) 189,342  (Yen)  180,777
                                                            =============  ==============
Amounts recognized in the balance sheets:
   Prepaid pension cost.................................... (Yen)  98,489  (Yen)  107,259
   Accrued pension liability...............................      (124,404)       (174,939)
   Intangible assets.......................................         1,772           5,057
   Accumulated other changes in equity from
    nonowner sources.......................................       213,485         243,400
                                                            -------------  --------------
   Net amount recognized................................... (Yen) 189,342  (Yen)  180,777
                                                            =============  ==============

--------
Note: The aggregated accumulated benefit obligations of these plans were
      (Yen)1,012,330 million and (Yen)1,000,965 million, respectively, as of
      March 31, 2003 and 2004. The severance indemnities plans generally employ
      a multi-variable, non-linear formula based upon compensation at the time
      of severance, rank and years of service. Employees with service in excess
      of one year are qualified to receive lump-sum severance indemnities.

                                     F-50



            MITSUBISHI TOKYO FINANCIAL GROUP, INC. AND SUBSIDIARIES

            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)


The projected benefit obligations, accumulated benefit obligations and fair
value of plan assets for the plans of BTM and Mitsubishi Trust and certain
domestic subsidiaries with accumulated benefit obligations in excess of plan
assets were (Yen)1,079,983 million, (Yen)1,012,330 million and (Yen)676,233
million, respectively at March 31, 2003 and (Yen)802,134 million, (Yen)767,077
million and (Yen)583,180 million, respectively at March 31, 2004.

Pension plans are not fully integrated among subsidiaries of the MTFG Group and
plan assets are managed separately by each plan:

BTM

Asset allocation

BTM's contributory pension plan asset allocations at December 31, 2002 and
2003, by asset category were as follows:



                                                            Contributory Pension Plan Assets at
                                                              December 31,
                                                            ----------------------------------
                      Asset Category                            2002              2003
                      --------------                        --------          --------
                                                                        
   EPF assets..............................................   89.66%            88.90%
      Fund for corporate portion...........................   89.66             68.98
          Japanese equity securities.......................   20.39             18.51
          Japanese debt securities.........................   26.12             27.71
          General account of life insurance companies*.....   26.62             11.12
          Non-Japanese equity securities...................    8.26              5.92
          Non-Japanese debt securities.....................    7.04              5.48
          Short-term assets................................    1.23              0.24
      Fund for substitutional portion......................      --             19.92
          Japanese short-term monetary assets**............      --              6.06
          General account of life insurance companies*.....      --             13.86
   Assets retained in employee retirement benefit trust....   10.34             11.10
          Japanese equity securities.......................   10.34             11.10
                                                             ------            ------
                                                             100.00%           100.00%
                                                             ======            ======


Japanese equity securities include the MTFG Group's common stock in the amounts
of (Yen)1,047 million (0.24% of contributory pension plan assets) and
(Yen)1,330 million (0.27% of contributory pension plan assets) at December 31,
2002 and 2003, respectively.

Japanese debt securities include the MTFG Group's debt securities in the
amounts of (Yen)274 million (0.06% of contributory pension plan assets) and
(Yen)617 million (0.12% of contributory pension plan assets) at December 31,
2002 and 2003, respectively.

The contributory pension plan assets consisted of EPF and an employee
retirement benefit trust. BTM is in the process of transferring to the Japanese
Government the substitutional portion of EPF liabilities, and the assets will
be delivered to the Employees' Pension Insurance when the transfer procedure is
completed. Therefore, the EPF assets are separated into a fund for the
corporate portion (hereafter called "fund for the corporate portion"), and a
fund for the substitutional portion of EPF (hereafter called "fund for the
substitutional portion").
--------
Notes:
*  "General account of life insurance companies" is a contract with life
   insurance companies that guarantees a return of approximately 0.75% (from
   April 2003 to March 2004), which is mainly invested in assets with low
   market risk such as Japanese debt securities. In terms of pension plan asset
   allocation, BTM regards the general account in the same category as Japanese
   debt securities, because it is generally believed that there is a high
   degree of correlation between their performances. BTM carefully monitors
   life insurance companies by credit rating and other assessments.
** Includes bank deposit for benefit payments at December 31, 2003.

                                     F-51



            MITSUBISHI TOKYO FINANCIAL GROUP, INC. AND SUBSIDIARIES

            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)


The asset allocations of BTM and certain domestic subsidiaries in severance
indemnities plans and non-contributory pension plans are as follows.



                                         Asset ratio at December 31,
                                         --------------------------
                        Asset category     2002          2003
                        --------------   ------        ------
                                                 
                       Equity securities  71.03%        74.23%
                       Debt securities..  21.42         18.26
                       Others...........   7.55          7.51
                                            ------        ------
                          Total......... 100.00%       100.00%
                                            ======        ======

--------
Note: BTM's severance indemnities plan assets are an employee retirement
benefit trust invested in Japanese equity securities.

Investment policies

BTM's target asset allocation for funds for the corporate portion in
contributory pension plans, which is the EPF funds not including the funds for
the substitutional portion, is as follows:



                                                Asset ratio at
                        Asset Category         December 31, 2003
                        --------------         -----------------
                                            
                Japanese equity securities....        25.3%
                Japanese debt securities......        57.1
                Non-Japanese equity securities        10.2
                Non-Japanese debt securities..         7.4
                                                     -----
                   Total......................       100.0%
                                                     =====


BTM regards that the purpose of contributory pension plan investments is to
achieve assured benefits and stable contributions through proper risk control
and return maximization. BTM attaches a great deal of importance to the
long-term performance of its contributory pension plan investments to achieve
assured benefits. BTM fixes the long-term asset allocation, which will be
maintained for approximately five years, for efficient long-term investment
return. The long-term asset allocation is based on optimal portfolios, which
are estimated by expected return and risk according to each asset class, while
considering BTM's risk tolerance.

BTM invests the fund for the substitutional portion in assets with high
liquidity and low market risk, because these assets will be delivered to the
Employees' Pension Insurance when the refund procedure is completed. As a
general rule, BTM reviews its investment policies approximately every five
years. Additionally, a review is made in the following situations: large
fluctuations in pension plan liabilities caused by modifications of pension
plans, or changes in the market environment. BTM carefully examines investment
in alternative assets, such as derivatives or hedge funds, while considering
BTM's investment administration structure. BTM controls risk on its pension
plan portfolio by standard deviation analysis. Additionally, BTM requires and
checks that investment companies tracks errors in each asset class within a
designated range.

BTM regards that the purpose of employee retirement benefit trust investment is
to achieve assured benefits by contribution of assets to the trust. Employee
retirement benefit trust assets are invested in Japanese equity securities.
This asset allocation will be held for the mid-term, but it is undecided
whether it will be held in the long term.

                                     F-52



            MITSUBISHI TOKYO FINANCIAL GROUP, INC. AND SUBSIDIARIES

            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)


BTM's severance indemnities plan consists of an employee retirement benefit
trust. The trust's purpose and basic policy is described above. BTM's TQPPs has
closed and there are no more new beneficiaries. Therefore, to achieve assured
benefit, the fund is invested in assets with low market risk.

Basis and procedure for estimating long-term return of each asset class

The expected long-term return on the fund for the corporate portion of the
contributory pension plan is 3.7% for each asset class. The expected rate of
return for each asset class is based on long-term prospects for the economy,
historical performance, market environment, and some other factors. The
expected rate of return on the fund for the substitutional portion of the
contributory pension plan is estimated as 0.6% based on historical performance.

The expected rate of return on the employee retirement benefit trust is
estimated as 1.0% based on the expected dividend yield on Japanese equity
securities. Expected capital return is not taken into account, because the
long-term asset allocation is undecided.

BTM's severance indemnities plan consists of an employee retirement benefit
trust. The trust's expected return is as described above.

Expected rate of return on closed TQPPs is estimated as 2.73% based on the
performance over the last three fiscal years.

Cash flows

BTM and certain other domestic subsidiaries expect to contribute approximately
(Yen)21 billion to pension plans in the fiscal year ending March 31, 2005 based
upon their current funded status and expected asset return assumptions.

Mitsubishi Trust

Asset allocation

The asset allocations of Mitsubishi Trust's severance indemnities plans,
contributory pension plans and non-contributory pension plans are as follows.



                          Asset category         Asset ratio at March 31,
                          --------------         -----------------------
                                                   2003         2004
                                                 ------       ------
                                                        
                  Japanese equity securities....  36.9%        60.9%
                  Japanese debt securities......  17.0         12.7
                  Non-Japanese equity securities  10.4          6.6
                  Non-Japanese debt securities..  10.1         11.7
                  Real estate...................   3.5          2.3
                  Others........................  22.1          5.8
                                                 -----        -----
                     Total...................... 100.0%       100.0%
                                                 =====        =====

--------
Note: Others include mainly short term deposit, short term money market
      product, and short term investment products.

Equity securities include the MTFG Group's common stock in the amounts of
(Yen)205 million (0.12 % of total plan assets) and (Yen)514 million (0.16 % of
total plan assets) at March 31, 2003 and 2004, respectively.

Debt securities include the MTFG Group's debt securities in the amounts of
(Yen)63 million (0.04 % of total plan assets) and (Yen)154 million (0.05 % of
total plan assets) at March 31, 2003 and 2004, respectively.

                                     F-53



            MITSUBISHI TOKYO FINANCIAL GROUP, INC. AND SUBSIDIARIES

            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)


Investment policies

Mitsubishi Trust's target asset allocation for funds is as follows:



                                                Asset ratio at
                         Asset category         March 31, 2004
                         --------------         --------------
                                             
                 Japanese equity securities....      57.3%
                 Japanese debt securities......      14.4
                 Non-Japanese equity securities       7.5
                 Non-Japanese debt securities..      11.2
                 Others........................       9.6
                                                    -----
                    Total......................     100.0%
                                                    =====


The investment policy for the pension plan assets is based on an asset
liability strategy which is intended to maintain adequate liquidity for benefit
payments and achieve long-term returns on assets allocation. Mitsubishi Trust
does not rebalance the proportion of pension plan assets, periodically.
Mitsubishi Trust rebalances the allocation of pension plan assets only when it
is necessary to adjust the gap between actual return and short-term return
target.

Plan assets are well diversified to reduce exposure to risks and the
diversification of countries and currencies are taken into account specifically
in investing in foreign assets. Furthermore, Mitsubishi Trust's plan assets are
intended to avoid speculative investments in the case of investing in
derivative instruments.

Basis and procedure for estimating long-term return of each asset class

The expected rate of return on plan assets is based on building-block method,
which calculates total pension assets' rate of return by aggregating the
weighted rate of return of each plan asset.

Mitsubishi Trust decided the expected rate of return for each asset class as
below:

..   Japanese equity securities: the rate for Japanese debt securities plus a
    premium for the risk associated with Japanese equity securities

..   Japanese debt securities: economic growth rate of Japan

..   Non-Japanese equity securities: the rate for non-Japanese debt securities
    plus a premium for the risk associated with non-Japanese equity securities

..   Non-Japanese debt securities: global economic growth rate

..   Others: the rate for Japanese debt securities minus interest rate spread

Cash flows

Mitsubishi Trust expects to contribute approximately (Yen)13 billion to pension
plans in the fiscal year ending March 31, 2005 based upon their current funded
status and expected asset return assumptions.

In accordance with the provisions of SFAS No. 87, the MTFG Group has recorded
an additional minimum liability representing the excess of the accumulated
benefit obligation over the fair value of plan assets and accrued pension
liabilities previously recorded. A corresponding amount is recognized as an
intangible asset to the extent of unrecognized net obligation at transition and
prior service costs, with the remaining balance recorded as a separate
reduction of shareholders' equity, net of income taxes.

                                     F-54



            MITSUBISHI TOKYO FINANCIAL GROUP, INC. AND SUBSIDIARIES

            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)


In accordance with BTM's, Mitsubishi Trust's and certain domestic subsidiaries'
employment practices, certain early-terminated employees are entitled to
special lump-sum termination benefits. The amounts charged to operations for
such early termination benefits for the fiscal years ended March 31, 2002, 2003
and 2004 were (Yen)9,914 million, (Yen)14,150 million and (Yen)12,536 million,
respectively.

In accordance with amendments to the relevant welfare pension legislation, BTM
amended its contributory defined benefit pension plans to change the age of
commencement of lifetime annuity payments from 60 to 65 in January 2002, which
was reflected in the consolidated financial statements for the fiscal year
ended March 31, 2003 because of BTM's measurement date of December 31, 2001.
Furthermore, in November 2002, BTM amended its pension plan to reduce employee
pension benefits by amounts ranging from 7% to 20%, which will be payable to
employees who retire on or after April 1, 2003. The effect of the negative
amendments was a decrease of (Yen)44,027 million in the projected benefit
obligation. Mitsubishi Securities, one of BTM's securities subsidiaries,
amended its pension plan to change the lifetime annuity payments to limited
period annuity payments. The amendment resulted in a decrease of (Yen)3,447
million in the projected benefit obligation.

For the fiscal year ended March 31, 2004, Mitsubishi Trust integrated the
pension plans of Mitsubishi Trust, former NTB and former TTB. The severance
indemnities plan and the government-sponsored contributory pension plan of NTB
and TTB were integrated into and succeeded by the respective Mitsubishi Trust's
plans (NTB and TTB did not have tax-qualified contributory pension plans). The
integration increases prior service costs of NTB and TTB employees and, at the
same time, Mitsubishi Trust's plans were amended to reduce pension benefits.
Former employees of NTB and TTB had been treated as if they had joined the
Mitsubishi Trust's plan for years of service. The net effect of the integration
and amendment is recognition of (Yen)775 million of negative prior service cost
and a decrease in the projected benefit obligation in the aggregate.

During the fiscal years ended March 31, 2002, 2003 and 2004, BTM and Mitsubishi
Trust entered into retirement benefit trust agreements with a domestic trust
bank and contributed marketable equity securities with a fair value of
(Yen)133,158 million, (Yen)24,612 million and (Yen)87,586 million,
respectively, to the trusts designated to pay benefits for their severance
indemnities plans and contributory pension plans. The contributions were
accounted for as sales with an aggregate gain of (Yen)26,225 million, a loss of
(Yen)1,175 million and a gain of (Yen)14,452 million, respectively, recognized
for the years then ended. Such contributions were accounted for as sales
because the transfer met the sale accounting criteria of SFAS No. 140, and the
securities placed into the trust were qualified as plan assets as defined by
SFAS No. 87.

Foreign Offices and Subsidiaries

Foreign offices and subsidiaries also have defined contribution plans and/or
defined benefit plans. The cost of such plans charged to operations for the
fiscal years ended March 31, 2002, 2003 and 2004 were (Yen)5,682 million,
(Yen)7,140 million and (Yen)8,285 million, respectively, including (Yen)2,584
million, (Yen)3,487 million and (Yen)3,635 million, respectively, for defined
contribution plans.

Foreign offices and subsidiaries have postemployment and/or postretirement
plans for eligible employees and retirees. The costs charged to operations for
the fiscal years ended March 31, 2002, 2003 and 2004 were (Yen)1,373 million,
(Yen)1,962 million and (Yen)3,164 million, respectively.

Certain of MTFG's subsidiaries in the United States of America maintain
employees' retirement plans, which are qualified retirement plans covering
substantially all of the employees of such subsidiaries. The plans are
non-contributory defined benefit plans, which provide benefits upon retirement
based on years of service and average compensation. The plans are funded on a
current basis in compliance with the requirement of the Employee

                                     F-55



            MITSUBISHI TOKYO FINANCIAL GROUP, INC. AND SUBSIDIARIES

            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)

Retirement Income Security Act of the United States of America. These
subsidiaries also provide certain post employment benefits and postretirement
benefits other than pensions for employees. Plan assets are generally invested
in U.S. government securities, corporate bonds and mutual funds.

The net periodic cost of the employees' retirement and other benefit plans of
certain offices and subsidiaries in the United States of America for the fiscal
years ended March 31, 2002, 2003 and 2004 include the following components:



                                                                               2002         2003         2004
                                                                           -----------  -----------  -----------
                                                                                       (in millions)
                                                                                            
Service cost--benefits earned during the fiscal year...................... (Yen) 3,521  (Yen) 4,492  (Yen) 5,060
Interest costs on projected benefit obligation............................       6,317        7,550        7,567
Expected return on plan assets............................................      (7,462)      (9,167)      (9,769)
Amortization of unrecognized net obligation at transition.................         233          455          307
Amortization of unrecognized prior service cost...........................         (30)         (31)         (89)
Amortization of net actuarial loss........................................         378          722        1,866
                                                                           -----------  -----------  -----------
Net periodic benefit cost................................................. (Yen) 2,957  (Yen) 4,021  (Yen) 4,942
                                                                           ===========  ===========  ===========
Weighted-average assumptions used:
   Discount rates in determining expense..................................        7.53%        7.30%        6.79%
   Discount rates in determining benefit obligation.......................        7.30         6.79         6.23
   Rates of increase in future compensation level for determining expense.        5.00         4.89         4.90
   Rates of increase in future compensation level for determining benefit
     obligation...........................................................        4.89         4.90         5.03
   Expected rates of return on plan assets................................        8.30         8.35         8.24


                                     F-56



            MITSUBISHI TOKYO FINANCIAL GROUP, INC. AND SUBSIDIARIES

            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)


The following table sets forth the funded status and amounts recognized in the
accompanying consolidated balance sheets at March 31, 2003 and 2004 for the
employees' retirement and other benefit plans of certain offices and
subsidiaries in the United States of America:



                                                                                 2003          2004
                                                                             ------------  ------------
                                                                                    (in millions)
                                                                                     
Change in benefit obligation:
 Benefit obligation at beginning of fiscal year............................. (Yen)107,916  (Yen)119,451
   Service cost.............................................................        4,492         5,060
   Interest cost............................................................        7,550         7,567
   Plan participants' contributions.........................................          202           228
   Amendments...............................................................       (1,071)         (682)
   Actuarial loss...........................................................       15,836         7,774
   Benefits paid............................................................       (4,678)       (4,983)
   Translation adjustments..................................................      (10,796)      (13,963)
                                                                             ------------  ------------
 Benefit obligation at end of fiscal year...................................      119,451       120,452
                                                                             ------------  ------------
Change in plan assets:
 Fair value of plan assets at beginning of fiscal year......................       94,787        96,448
   Actual return (negative return) on plan assets...........................       (9,015)       21,741
   Employer contributions...................................................       24,154        14,755
   Plan participants' contributions.........................................          202           228
   Benefits paid............................................................       (4,577)       (4,925)
   Translation adjustments..................................................       (9,103)      (12,764)
                                                                             ------------  ------------
 Fair value of plan assets at end of fiscal year............................       96,448       115,483
                                                                             ------------  ------------
 Projected benefit obligation in excess of plan assets at end of fiscal year      (23,003)       (4,969)
   Unrecognized net actuarial loss..........................................       47,866        36,826
   Unrecognized prior service cost..........................................          156          (412)
   Unrecognized net obligation at transition................................        3,343         2,599
                                                                             ------------  ------------
     Net amount recognized.................................................. (Yen) 28,362  (Yen) 34,044
                                                                             ============  ============
Amounts recognized in the balance sheets:
   Prepaid pension cost..................................................... (Yen) 30,645  (Yen) 37,147
   Accrued pension liability................................................       (3,375)       (3,559)
   Intangible assets........................................................           15             6
   Accumulated other changes in equity from nonowner sources................        1,077           450
                                                                             ------------  ------------
     Net amount recognized.................................................. (Yen) 28,362  (Yen) 34,044
                                                                             ============  ============


                                     F-57



            MITSUBISHI TOKYO FINANCIAL GROUP, INC. AND SUBSIDIARIES

            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)


17.  OTHER ASSETS AND LIABILITIES

Major components of other assets and liabilities at March 31, 2003 and 2004
were as follows:



                                                                                             2003           2004
                                                                                        -------------- --------------
                                                                                                (in millions)
                                                                                                 
Other assets:
   Accounts receivable:
       Receivables from brokers, dealers and customers for securities transactions..... (Yen)  445,617 (Yen)  267,155
       Other...........................................................................        227,669        255,988
   Investments in affiliated companies.................................................         60,814         83,705
   Other real estate owned, net........................................................          7,337          3,577
   Non-interest-earning deposits with the Special Fund and the New Fund (See
     Note 5)...........................................................................        136,681        140,828
   Other...............................................................................        851,920      1,283,775
                                                                                        -------------- --------------
          Total........................................................................ (Yen)1,730,038 (Yen)2,035,028
                                                                                        ============== ==============
Other liabilities:
   Accounts payable:
       Payables to brokers, dealers and customers for securities transactions.......... (Yen)  706,899 (Yen)  734,636
       Other...........................................................................        471,274        409,455
   Deferred tax liabilities............................................................         60,866         57,561
   Allowance for off-balance-sheet credit instruments..................................         83,274        110,671
   Accrued pension liability...........................................................        330,942        190,237
   Minority interest...................................................................        338,728        363,948
   Accrued and other liabilities.......................................................        580,520        601,168
   Guarantees and indemnifications.....................................................         17,680         21,566
                                                                                        -------------- --------------
          Total........................................................................ (Yen)2,590,183 (Yen)2,489,242
                                                                                        ============== ==============


At March 31, 2003 and 2004, the valuation allowance to write down the carrying
amounts of other real estate owned to their estimated fair value less estimated
cost to sell was (Yen)5,814 million and (Yen)499 million, respectively. The
valuation allowance decreased by (Yen)26,461 million, (Yen)5,381 million and
(Yen)5,315 million, respectively, during the fiscal years ended March 31, 2002,
2003 and 2004.

Investments in affiliated companies, which are accounted for using the equity
method, include marketable equity securities carried at (Yen)11,743 million and
(Yen)13,275 million, respectively, at March 31, 2003 and 2004. Corresponding
aggregated market values were (Yen)17,975 million and (Yen)43,171 million,
respectively.

18.  PREFERRED STOCK

By the Articles of Incorporation, MTFG was originally authorized to issue
81,400 shares of Class 1 Preferred Stock, 100,000 shares of Class 2 Preferred
Stock, 120,000 shares of Class 3 Preferred Stock and 120,000 shares of Class 4
Preferred Stock, without par value.

All classes of preferred stock to be issued are non-voting and have equal
preference with MTFG's common stock for the payment of dividends and the
distribution of assets in the event of a liquidation or dissolution of MTFG.
They are all non-cumulative and non-participating with respect to dividend
payments. Shareholders of Class 1, Class 2, Class 3 and Class 4 Preferred Stock
receive a liquidation distribution at (Yen)3,000 thousand, (Yen)2,000 thousand,
(Yen)2,500 thousand and (Yen)2,500 thousand per share, respectively, and do not
have the right to participate in any further liquidation distributions.

                                     F-58



            MITSUBISHI TOKYO FINANCIAL GROUP, INC. AND SUBSIDIARIES

            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)


Class 1 Preferred Stock

Class 1 Preferred Stock is redeemable at the option of MTFG. An annual dividend
(not to exceed (Yen)82,500 per share) and redemption terms, including a
redemption price, are stipulated by the Articles of Incorporation.

On January 21, 1999, BTM issued 81,400 thousand shares of Class 1 preferred
stock at (Yen)3,000 per share ((Yen)244,200 million in the aggregate). On April
2, 2001, MTFG issued 81,400 shares of Class 1 Preferred Stock in exchange for
Class 1 preferred stock of BTM at an exchange ratio of one share of MTFG's
Class 1 Preferred Stock for each 1,000 shares of BTM Class 1 preferred stock.

MTFG may redeem shares of Class 1 Preferred Stock at (Yen)3,000 thousand per
share, in whole or in part and proposes to appropriate (Yen)244.2 billion of
capital surplus to use in redeeming the shares of Class 1 Preferred Stock
through a resolution of the Board of Directors as provided for in the Code and
the Articles of Incorporation of MTFG.

Class 2 Preferred Stock

Class 2 Preferred Stock is convertible into common stock at the option of the
shareholders during a conversion period. The conversion is mandatory on the
date immediately following the closing date of the conversion period. At the
time of issuance, the Board of Directors determines an issue price, an annual
dividend (not to exceed (Yen)16,200 per share), and conversion terms, including
a conversion period.

On March 31, 1999, Mitsubishi Trust issued 100,000 thousand shares of Class 1
preferred stock at (Yen)2,000 per share ((Yen)200,000 million in the
aggregate). On April 2, 2001, MTFG issued 100,000 shares of Class 2 Preferred
Stock in exchange for Class 1 preferred stock of Mitsubishi Trust at an
exchange ratio of one share of MTFG's Class 2 Preferred Stock for each 1,000
shares of Mitsubishi Trust's Class 1 preferred stock.

At the option of the shareholders, Class 2 Preferred Stock is convertible into
common stock during the period from July 31, 2003 to July 31, 2008 at the
initial conversion price of (Yen)1,357,559.2 per share. The conversion price is
to be revised annually on August 1 of each year from 2003 through 2007 to
reflect, with certain adjustments, as defined, the average market closing price
of the common stock of MTFG traded on the Tokyo Stock Exchange for the 30
business days starting from the 45th business day prior to the date of revision
of the conversion price. The conversion price will not exceed the initial
conversion price of (Yen)1,357,559.2 nor be below (Yen)696,878.5 unless certain
events or circumstance, as defined, arise after the issuance of Class 2
Preferred Stock shares.

Class 2 Preferred Stock shares which are not converted at the option of the
shareholders will be mandatorily converted into common stock on August 1, 2008,
at the conversion price determined based on the average market closing price of
the common stock traded on the Tokyo Stock Exchange for the 30 business days
starting from the 45th business day prior to the date of mandatory conversion.
In the event that the average market closing price is below the (Yen)714,285.0,
the conversion price will be (Yen)714,285.0.

During the fiscal year ended at March 31, 2003, MTFG issued 489,694 of new
shares of common stock at the price of (Yen)475,000 per share. As a result of
the issuance of new shares of common stock, the initial conversion price of
Class 2 Preferred Stock has been adjusted from (Yen)1,391,428.0 to
(Yen)1,357,559.2, and the upper limit and the lower limit of the conversion
price that will be revised annually has been adjusted from (Yen)1,391,428.0 to
(Yen)1,357,559.2 and from (Yen)714,285.0 to (Yen)696,898.5, respectively.

                                     F-59



            MITSUBISHI TOKYO FINANCIAL GROUP, INC. AND SUBSIDIARIES

            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)


On July 10, 2003, MTFG announced that, pursuant to the terms and conditions of
Class 2 Preferred Stock provided in the Articles of Incorporation, the
conversion price of the Class 2 Preferred Stock has been reset from
(Yen)1,357,559.2 to (Yen)696,898.5 reflecting the low average market price of
MTFG's common stock during the period before July 10, 2003. The reset
conversion price is effective from August 1, 2003 to July 31, 2004.

On July 9, 2004, MTFG announced that, pursuant to the terms and conditions of
Class 2 Preferred Stock provided in the Articles of Incorporation, the
conversion price of the Class 2 Preferred Stock has been reset from
(Yen)696,898.5 to (Yen)971,415.0 reflecting the high average market price of
MTFG's common stock during the period before July 9, 2004. The reset conversion
price is effective on and after August 1, 2004.

For the fiscal year ended March 31, 2004, 85,000 shares of Class 2 Preferred
Stock were converted into 243,938 shares of common stock at the option of the
shareholders and the outstanding Class 2 Preferred Stock was 15,000 shares at
March 31, 2004.

As a consequence of the conversion Class 2 Preferred Stock decreased by
(Yen)85,000 million from (Yen)100,000 million at March 31, 2003 to (Yen)15,000
million at March 31, 2004 and common stock increased by (Yen)85,000 million
from (Yen)984,708 million at March 31, 2003 to (Yen)1,069,708 million at March
31, 2004.

For the fiscal years ended March 31, 2003 and 2004, Class 2 Preferred Stock was
determined to be dilutive securities and was included in the computation of
diluted earnings per common share.

Class 3 Preferred Stock

Class 3 Preferred Stock is redeemable at the option of MTFG. At the time of
issuance, the Board of Directors determines an issue price, an annual dividend
(not to exceed (Yen)250,000 per share), and redemption terms, including a
redemption price. No shares of the Class 3 Preferred Stock were issued and
outstanding at March 31, 2003 and 2004.

Class 4 Preferred Stock

Class 4 Preferred Stock is convertible into common stock at the option of
preferred stock shareholders during the conversion period. The conversion is
mandatory required on the date immediately following the closing date of the
conversion period. At the time of issuance, the Board of Directors determines
an issue price, an annual dividend (not to exceed (Yen)125,000 per share), and
conversion terms, including the conversion period. No shares of the Class 4
Preferred Stock were issued and outstanding at March 31, 2003 and 2004.

MTFG may, at any time, repurchase and retire, at fair value, any Classes of
Preferred Stock out of earnings available for distribution to shareholders.

                                     F-60



            MITSUBISHI TOKYO FINANCIAL GROUP, INC. AND SUBSIDIARIES

            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)


19.  COMMON STOCK AND CAPITAL SURPLUS

The changes in the number of issued shares of common stock during the fiscal
years ended March 31, 2002, 2003 and 2004 were as follows:



                                                                               2002      2003      2004
                                                                             --------- --------- ---------
                                                                                       (shares)
                                                                                        
Balance at beginning of fiscal year......................................... 5,587,068 5,742,468 6,232,162
Issuance of new shares of common stock......................................        --   489,694        --
Issuance of new shares of common stock in exchange for the shares of NTB....   155,400        --        --
Issuance of new shares of common stock in exchange for the shares of Class 2
  Preferred Stock...........................................................        --        --   243,938
                                                                             --------- --------- ---------
Balance at end of fiscal year............................................... 5,742,468 6,232,162 6,476,100
                                                                             ========= ========= =========


Under the Code, issuances of common stock, including conversions of bonds and
notes, are required to be credited to the common stock account for at least 50%
of the proceeds and to the legal capital surplus account ("legal capital
surplus") for the remaining amounts.

The Code permits Japanese companies, upon approval by the Board of Directors,
to issue shares in the form of a "stock split," as defined in the Code (see
Note 1). Also, the Code prior to April 1, 1991 permitted Japanese companies to
issue free share distributions. BTM and Mitsubishi Trust from time to time made
free share distributions. These free distributions usually were from 5% to 10%
of outstanding common stock and publicly-owned corporations in the United
States issuing shares in similar transactions would be required to account for
them as stock dividends as of the shareholders' record date by reducing
retained earnings and increasing the appropriate capital accounts by an amount
equal to the fair value of the shares issued. The application of such United
States accounting practice to the cumulative free distributions made by BTM and
Mitsubishi Trust at March 31, 2004, would have increased capital accounts by
(Yen)1,910,106 million with a corresponding decrease in unappropriated retained
earnings. MTFG did not issue shares in the form of "stock split" in any of
three years in the period ended March 31, 2004.

The Code permits, upon approval of the Board of Directors, the transfer of
amounts from the legal capital surplus to the capital stock account.

The Code, as amended effective on October 1, 2001 (the "Code Amendments")
permits Japanese companies to effect purchases of their own shares pursuant to
a resolution by the shareholders at an annual general meeting until the
conclusion of the following ordinary general meeting of shareholders, and to
hold such shares as its treasury shares indefinitely regardless of purpose.
However, the Code requires the amount of treasury stock purchased be within the
amount of retained earnings available for dividends. Disposition of treasury
stock is subject to the approval of the Board of Directors and is to follow the
procedures similar to a public offering of shares for subscription. Prior to
the amendment, in principle, reacquisition of treasury shares was prohibited
with the exception of reacquisition for retirement and certain limited
purposes, as specified by the Code. Any treasury shares were required to be
disposed of in the near term.

Parent Company Shares Held by Subsidiaries

At March 31, 2004, certain subsidiaries owned shares of common stock of MTFG.
Such shares are included in treasury stock in the accompanying consolidated
balance sheets and deducted from MTFG's shareholders' equity. For the fiscal
year ended March 31, 2003, MTFG shares held by BTM were written down for tax
purposes. The tax consequence of such write-down was treated as a capital
transaction and credited to capital surplus.

                                     F-61



            MITSUBISHI TOKYO FINANCIAL GROUP, INC. AND SUBSIDIARIES

            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)


20.  RETAINED EARNINGS, LEGAL RESERVE AND DIVIDENDS

In addition to the Code, Japanese banks, including BTM and Mitsubishi Trust,
are required to comply with the Banking Law of Japan (the "Banking Law").

Legal Reserve Set Aside as Appropriation of Retained Earnings and Legal Capital
Surplus

Under the Code

Effective October 1, 2001, the Code Amendments provide that an amount at least
equal to 10% of the aggregate amount of cash dividends and certain
appropriations of retained earnings associated with cash outlays applicable to
each period shall be appropriated and set aside as a legal reserve until the
aggregate amount of legal reserve set aside as appropriation of retained
earnings and the legal capital surplus equals 25% of stated capital as defined
in the Code.

Prior to the Code Amendments, the Code provided that an amount at least equal
to 10% of the aggregate amount of cash dividends and certain appropriations of
retained earnings associated with cash outlays applicable to each period shall
be appropriated and set aside as a legal reserve until such reserve equals 25%
of common stock. The retained earnings so appropriated may be used to eliminate
or reduce a deficit by resolution of the shareholders or may be transferred to
capital stock by resolution of the Board of Directors.

Under the Banking Law

In line with the Code Amendments, on June 29, 2001, amendments to the Banking
Law (the "Banking Law Amendments") were promulgated and became effective on
October 1, 2001. The Banking Law Amendments provide that an amount at least
equal to 20% of the aggregate amount of cash dividends and certain
appropriations of retained earnings associated with cash outlays applicable to
each fiscal period shall be appropriated and set aside as a legal reserve until
the aggregate amount of legal reserve set aside as appropriation of retained
earnings and the legal capital surplus equals 100% of stated capital as defined
in the Code.

Prior to the Banking Law Amendments, the Banking Law provided that an amount at
least equal to 20% of the aggregate amount of cash dividends and certain
appropriations of retained earnings associated with cash outlays applicable to
each fiscal period shall be appropriated and set aside as a legal reserve until
such reserve equals 100% of stated capital as defined in the Code. The retained
earnings so appropriated may be used to eliminate or reduce a deficit by
resolution of the shareholders or may be transferred to capital stock by
resolution of the Board of Directors.

Transfer of Legal Reserve

Under the Code Amendments

Effective October 1, 2001, under the Code Amendments, Japanese companies,
including MTFG, are permitted, pursuant to a resolution by the shareholders at
a general meeting, to make legal reserve set aside as appropriation of retained
earnings and legal capital surplus available for dividends until the aggregate
amount of the legal reserve and legal capital surplus equals 25% of stated
capital as defined in the Code, which were formerly permitted only to reduce
deficit and to transfer to stated capital as defined in the Code.

Under the Banking Law Amendments

Effective October 1, 2001, under the Banking Law Amendments, Japanese banks,
including BTM and Mitsubishi Trust, are permitted, pursuant to a resolution by
the shareholders at a general meeting, to make legal reserve set

                                     F-62



            MITSUBISHI TOKYO FINANCIAL GROUP, INC. AND SUBSIDIARIES

            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)

aside as appropriation of retained earnings and legal capital surplus available
for dividends until the aggregate amount of the legal reserve and legal capital
surplus equals 100% of stated capital as defined in the Code.

The Code permits the transfer, upon approval of the shareholders, of a portion
of unappropriated retained earnings available for dividends to stated capital
as defined in the Code.

Unappropriated Retained Earnings and Dividends

Under the Code, the amount available for dividends is based on the amount
recorded in MTFG's general books of account maintained in accordance with
accounting principles generally accepted in Japan ("Japanese GAAP"). The
adjustments included in the accompanying consolidated financial statements but
not recorded in MTFG's general books of account as explained in Note 1 have no
effect on the determination of retained earnings available for dividends under
the Code. In addition to the provision that requires an appropriation for legal
reserve as described above, the Code and the Banking Law impose certain
limitations on the amount available for dividends. Under the Banking Law, MTFG,
BTM and Mitsubishi Trust have to meet the minimum capital adequacy requirements
and distributions of retained earnings of MTFG, BTM and Mitsubishi Trust, which
are otherwise distributable to shareholders, are restricted in order to
maintain the minimum 4.0% Tier I capital for capital adequacy purpose.

MTFG was established on April 2, 2001 with common stock of (Yen)924,400
million, preferred stock of (Yen)222,100 million, legal capital surplus of
(Yen)2,838,693 million and no retained earnings in accordance with the Code and
accounting principles generally accepted in Japan.

MTFG's amount available for dividends, as of March 31, 2004, is (Yen)674,250
million, which is based on the amount recorded in MTFG's general books of
account under Japanese GAAP. MTFG's amount available for dividends increased by
(Yen)31,241 million compared with (Yen)643,009 million as of March 31, 2003.

Annual dividends, including those for preferred stock, are approved by the
shareholders at an annual general meeting held subsequent to the fiscal year to
which the dividends are applicable. In addition, a semi-annual interim dividend
payment may be made by resolution of the Board of Directors, subject to
limitations imposed by the Code and the Banking Law.

In the accompanying consolidated statements of shareholders' equity, dividends
and appropriations to legal reserve shown for each fiscal year represent
dividends approved and paid during the fiscal year and the related
appropriation to legal reserve.

21.  REGULATORY CAPITAL REQUIREMENTS

Japan

MTFG, BTM and Mitsubishi Trust are subject to various regulatory capital
requirements promulgated by the regulatory authorities of the countries in
which they operate. Failure to meet minimum capital requirements will initiate
certain mandatory actions by regulators that, if undertaken, could have a
direct material effect on MTFG's consolidated financial statements.

In Japan, MTFG, BTM, and Mitsubishi Trust are subject to regulatory capital
requirements administered by the FSA in accordance with the provisions of the
Banking Law and related regulations. A banking institution is subject to the
minimum capital adequacy requirements both on a consolidated basis and a
stand-alone basis, and is required to maintain the minimum capital irrespective
of whether it operates independently or as a subsidiary

                                     F-63



            MITSUBISHI TOKYO FINANCIAL GROUP, INC. AND SUBSIDIARIES

            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)

under the control of another company. When a bank holding company manages
operations of its banking subsidiaries, it is required to maintain the minimum
capital adequacy ratio on a consolidated basis in the same manner as its
subsidiary banks. The FSA provides two sets of capital adequacy guidelines. One
is a set of guidelines applicable to Japanese banks and bank holding companies
with foreign offices conducting international operations, as defined, and the
other is applicable to Japanese banks and bank holding companies that are not
engaged in international operations.

Under the capital adequacy guidelines applicable to a Japanese banking
institution with international operations conducted by foreign offices, the
minimum target capital ratio of 8.0% is required. The capital adequacy
guidelines adopt the approach of risk-weighted capital measure based on the
framework developed and proposed by the Basel Committee on Banking Supervision
of the Bank for International Settlements and involve quantitative credit
measures of the assets and certain off-balance-sheet items as calculated under
accounting principles generally accepted in Japan. The MTFG Group's proprietary
assets do not include trust assets under management and administration in a
capacity of agent or fiduciary and, accordingly trust account assets are
generally not included in the capital measure. However, guarantees for trust
principal are counted as off-balance-sheet items requiring a capital charge in
accordance with the capital adequacy guidelines. Also, a banking institution
engaged in certain qualified trading activities, as defined, is required to
calculate an additional capital charge for market risk using either the
institution's own internal risk measurement model or a standardized process
proposed and defined by the Bank for International Settlements. Capital is
classified into three tiers, referred to as Tier I, Tier II and Tier III. Tier
I generally consists of shareholders' equity (including common stock, preferred
stock, capital surplus, minority interests and retained earnings) less any
recorded goodwill. Tier II generally consists of general reserves for credit
losses up to 1.25% of risk-weighted assets, 45% of the unrealized gains on
investment securities available for sale, 45% of the land revaluation excess,
the balance of perpetual subordinated debt and the balance of subordinated term
debt with an original maturity of over five years subject to some limitations,
up to 50% of Tier I capital. Preferred stocks are includable in Tier I capital
unless the preferred stocks have a fixed maturity, in which case, such
preferred stocks will be components of Tier II capital. Tier III capital
generally consists of short-term subordinated debt with an original maturity of
at least two years, subject to certain limitations. At least 50% of the minimum
capital requirements must be maintained in the form of Tier I capital.

If a banking institution is not engaged in international operations conducted
by foreign offices, it is subject to the other set of capital adequacy
requirements with a minimum target capital ratio of 4.0%. Such guidelines
incorporate measures of risk under the risk-weighted approach similar to the
guidelines applicable to banking institutions with international operations.
Qualifying capital is classified into Tier I and Tier II capital.

The Banking Law and related regulations require that one of three categories be
assigned to banks and bank holding companies, based on its risk-adjusted
capital adequacy ratio if the bank fails to meet the minimum target capital
adequacy ratio. These categories indicate capital deterioration, which may be
subject to certain prompt corrective action by the FSA.

MTFG, BTM and Mitsubishi Trust have international operations conducted by
foreign offices, as defined, and are subject to the 8.0% capital adequacy
requirement. For the purpose of calculating the additional charge for market
risk, MTFG, BTM and Mitsubishi Trust have adopted the internal risk measurement
model approach for general market risk calculations.

                                     F-64



            MITSUBISHI TOKYO FINANCIAL GROUP, INC. AND SUBSIDIARIES

            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)


The risk-adjusted capital amounts and ratios of MTFG, BTM and Mitsubishi Trust
presented in the following table are based on amounts calculated in accordance
with accounting principles generally accepted in Japan as required by the FSA.



                                                                                For capital
                                                             Actual          adequacy purposes
                                                      --------------------  -------------------
                                                          Amount     Ratio      Amount     Ratio
                                                      -------------- -----  -------------- -----
                                                           (in millions except percentages)
                                                                               
Consolidated:
   At March 31, 2003:
       Total capital (to risk-weighted assets):
          MTFG....................................... (Yen)5,968,401 10.84% (Yen)4,403,971 8.00%
          BTM........................................      4,687,703 10.43       3,592,242 8.00
          Mitsubishi Trust...........................      1,237,273 12.00         824,583 8.00
       Tier I capital (to risk-weighted assets):
          MTFG.......................................      3,128,681  5.68       2,201,985 4.00
          BTM........................................      2,400,251  5.34       1,796,121 4.00
          Mitsubishi Trust...........................        686,719  6.66         412,291 4.00
   At March 31, 2004:
       Total capital (to risk-weighted assets):
          MTFG....................................... (Yen)6,992,757 12.95% (Yen)4,319,742 8.00%
          BTM........................................      5,279,586 11.97       3,527,511 8.00
          Mitsubishi Trust...........................      1,520,957 15.03         809,370 8.00
       Tier I capital (to risk-weighted assets):
          MTFG.......................................      3,859,428  7.14       2,159,871 4.00
          BTM........................................      2,876,007  6.52       1,763,756 4.00
          Mitsubishi Trust...........................        785,997  7.76         404,685 4.00
Stand-alone:
   At March 31, 2003:
       Total capital (to risk-weighted assets):
          BTM........................................ (Yen)3,979,265 10.24% (Yen)3,107,780 8.00%
          Mitsubishi Trust...........................      1,242,201 11.23         884,313 8.00
       Tier I capital (to risk-weighted assets):
          BTM........................................      1,991,981  5.12       1,553,890 4.00
          Mitsubishi Trust...........................        681,916  6.16         442,157 4.00
   At March 31, 2004:
       Total capital (to risk-weighted assets):
          BTM........................................ (Yen)4,677,718 12.18% (Yen)3,070,027 8.00%
          Mitsubishi Trust...........................      1,512,477 15.16         797,631 8.00
       Tier I capital (to risk-weighted assets):
          BTM........................................      2,437,541  6.35       1,535,014 4.00
          Mitsubishi Trust...........................        776,068  7.78         398,816 4.00


The MTFG Group has securities subsidiaries in Japan and overseas, which are
also subject to regulatory capital requirements. In Japan, the Securities and
Exchange Law and related ordinance require securities firms to maintain a
minimum capital ratio of 120% calculated as a percentage of capital accounts
less certain fixed assets, as determined in accordance with Japanese GAAP,
against amounts equivalent to market, counterparty credit and operations risks.
Specific guidelines are issued as a ministerial ordinance which details the
definition of essential components of the capital ratios, including capital,
deductible fixed asset items and risks, and related measures. Failure to
maintain a minimum capital ratio will trigger mandatory regulatory actions. A
capital ratio of less than 140% will call for regulatory reporting and a
capital ratio of 100% or less may lead to a suspension of all or part of

                                     F-65



            MITSUBISHI TOKYO FINANCIAL GROUP, INC. AND SUBSIDIARIES

            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)

the business for a period of time and cancellation of a license. Overseas
securities subsidiaries are subject to the relevant regulatory capital
requirements of the countries or jurisdictions in which they operate.

Management believes, as of March 31, 2004, that MTFG, BTM, Mitsubishi Trust and
other regulated securities subsidiaries meet all capital adequacy requirements
to which they are subject.

United States of America

In the United States of America, UnionBanCal Corporation ("UNBC") and its
banking subsidiary Union Bank of California, N.A. ("UBOC"), BTM's largest
subsidiaries operating outside Japan, are subject to various regulatory capital
requirements administered by U.S. Federal banking agencies, including minimum
capital requirements. Under the capital adequacy guidelines and the regulatory
framework for prompt corrective action, UNBC and UBOC must meet specific
capital guidelines that involve quantitative measures of UNBC's and UBOC's
assets, liabilities, and certain off-balance-sheet items as calculated under
U.S. regulatory accounting practices. UNBC's and UBOC's capital amounts and
UBOC's prompt corrective action classification are also subject to qualitative
judgments by the regulators about components, risk weightings and other factors.

Quantitative measures established by regulation to ensure capital adequacy
require UNBC and UBOC to maintain minimum amounts and ratios (set forth in the
table below) of total and Tier I capital (as defined in the regulations) to
risk-weighted assets (as defined) and of Tier I capital (as defined) to
quarterly average assets (as defined).

UNBC's and the UBOC's actual capital amounts and ratios are presented as
follows:



                                                                         For capital
                                                            Actual       adequacy purposes
                                                         ------------    ----------------
                                                         Amount   Ratio  Amount    Ratio
                                                         ------   -----  ------    -----
                                                         (in millions, except percentages)
                                                                       
UNBC:
   At December 31, 2002:
       Total capital (to risk-weighted assets).......... $4,241   12.93% $2,625    8.00%
       Tier I capital (to risk-weighted assets).........  3,667   11.18   1,312    4.00
       Tier I capital (to quarterly average assets).....  3,667    9.75   1,504    4.00
   At December 31, 2003:
       Total capital (to risk-weighted assets).......... $4,684   14.14% $2,651    8.00%
       Tier I capital (to risk-weighted assets).........  3,748   11.31   1,325    4.00
       Tier I capital (to quarterly average assets).....  3,748    9.03   1,660    4.00




                                                                                          Ratios OCC
                                                                       For capital       requires to be
                                                            Actual     adequacy purposes "well capitalized"
                                                         ------------  ----------------  -----------------
                                                         Amount Ratio  Amount    Ratio   Amount    Ratio
                                                         ------ -----  ------    -----   ------    -----
                                                            (in millions, except percentages)
                                                                                 
UBOC:
   At December 31, 2002:
       Total capital (to risk-weighted assets).......... $3,819 11.87% $2,573    8.00%   $3,216    10.00%
       Tier I capital (to risk-weighted assets).........  3,335 10.37   1,286    4.00     1,930     6.00
       Tier I capital (to quarterly average assets).....  3,335  9.01   1,481    4.00     1,851     5.00
   At December 31, 2003:
       Total capital (to risk-weighted assets).......... $3,863 11.88% $2,602    8.00%   $3,253    10.00%
       Tier I capital (to risk-weighted assets).........  3,396 10.44   1,301    4.00     1,952     6.00
       Tier I capital (to quarterly average assets).....  3,396  8.30   1,637    4.00     2,046     5.00


                                     F-66



            MITSUBISHI TOKYO FINANCIAL GROUP, INC. AND SUBSIDIARIES

            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)


Management believes, as of December 31, 2003, that UNBC and UBOC met all
capital adequacy requirements to which they are subject.

As of December 31, 2002 and 2003, the most recent notification from the U.S.
Office of the Comptroller of the Currency ("OCC") categorized UBOC as "well
capitalized" under the regulatory framework for prompt corrective action. To be
categorized as "well capitalized," UBOC must maintain minimum total risk-based,
Tier I risk-based, and Tier I leverage ratios as set forth in the table. There
are no conditions or events since that notification that management believes
have changed UBOC's category.

22.  EARNINGS (LOSS) PER COMMON SHARE

Reconciliations of net income (loss) and weighted average number of common
shares outstanding used for the computation of basic earnings (loss) per common
share to the adjusted amounts for the computation of diluted earnings (loss)
per common share for the fiscal years ended March 31, 2002, 2003 and 2004 were
as follows:



                                                                                       2002            2003           2004
                                                                                 ---------------  -------------  -------------
                                                                                                 (in millions)
                                                                                                        
Income (Numerator):
Income (loss) from continuing operations before cumulative effect of a change in
 accounting principle........................................................... (Yen)  (223,636) (Yen) 193,450  (Yen) 822,834
Income (loss) from discontinued operations......................................           1,235         10,370           (585)
Cumulative effect of a change in accounting principle...........................           5,867           (532)            --
                                                                                 ---------------  -------------  -------------
Net income (loss)...............................................................        (216,534)       203,288        822,249
Income allocable to preferred shareholders......................................          (4,168)       (12,504)        (7,981)
                                                                                 ---------------  -------------  -------------
Income (loss) available to common shareholders.................................. (Yen) (220,702)  (Yen) 190,784  (Yen) 814,268
Effect of dilutive securities:
Convertible preferred stock (Class 2)........................................... (Yen)        --  (Yen)   2,430    (Yen) 1,265
3% Exchangeable Guaranteed Notes redeemed on November 30, 2002..................              --        (10,660)            --
Convertible debt--Mitsubishi Securities.........................................              --             --           (939)
Stock option--Mitsubishi Securities ............................................              --             --             (8)
Stock option--UnionBanCal Corporation...........................................              --             --           (554)
                                                                                 ---------------  -------------  -------------
Income (loss) available to common shareholders and assumed conversions.......... (Yen) (220,702)  (Yen) 182,554  (Yen) 814,032
                                                                                 ===============  =============  =============

                                                                                       2002            2003           2004
                                                                                 ---------------  -------------  -------------
                                                                                             (thousands of shares)
Shares (Denominator):
Weighted average common shares outstanding......................................           5,555          5,617          6,350
Effect of dilutive securities:
Convertible preferred stock (Class 2)...........................................              --            147            167
3% Exchangeable Guaranteed Notes redeemed on November 30, 2002..................              --             99             --
                                                                                 ---------------  -------------  -------------
Weighted average common shares for diluted computation..........................           5,555          5,863          6,517
                                                                                 ===============  =============  =============


                                     F-67



            MITSUBISHI TOKYO FINANCIAL GROUP, INC. AND SUBSIDIARIES

            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)



                                                                                           2002              2003
                                                                                    -----------------  ---------------
                                                                                                         (in yen )
                                                                                                 
Amounts per share:
Basic earnings (loss) per common share:
    Income (loss) from continuing operations available to common shareholders
     before cumulative effect of a change in accounting principle.................. (Yen) (41,011.91)  (Yen) 32,212.04

    Income (loss) from discontinued operations.....................................            222.34         1,846.07
                                                                                    -----------------  ---------------
    Income (loss) available to common shareholders before cumulative effect of
     a change in accounting principle..............................................        (40,789.57)       34,058.11
    Cumulative effect of a change in accounting principle..........................          1,056.25           (94.71)
                                                                                    -----------------  ---------------
    Net income (loss) available to common shareholders............................. (Yen) (39,733.32)  (Yen) 33,963.40
                                                                                    =================  ===============
Diluted earnings (loss) per common share:
    Income (loss) from continuing operations available to common shareholders
     before cumulative effect of a change in accounting principle.................. (Yen) (41,011.91)  (Yen) 29,459.67
    Income (loss) from discontinued operations.....................................            222.34         1,768.78
                                                                                    -----------------  ---------------
    Income (loss) available to common shareholders before cumulative effect of a
     change in accounting principle................................................        (40,789.57)       31,228.45
    Cumulative effect of a change in accounting principle .........................          1,056.25           (90.74)
                                                                                    -----------------  ---------------
    Net income (loss) available to common shareholders............................. (Yen) (39,733.32)  (Yen) 31,137.71
                                                                                    =================  ===============



                                                                                          2004
                                                                                    ---------------

                                                                                 
Amounts per share:
Basic earnings (loss) per common share:
    Income (loss) from continuing operations available to common shareholders
     before cumulative effect of a change in accounting principle.................. (Yen)128,323.13

    Income (loss) from discontinued operations.....................................          (92.13)
                                                                                    ---------------
    Income (loss) available to common shareholders before cumulative effect of
     a change in accounting principle..............................................      128,231.00
    Cumulative effect of a change in accounting principle..........................              --
                                                                                    ---------------
    Net income (loss) available to common shareholders............................. (Yen)128,231.00
                                                                                    ===============
Diluted earnings (loss) per common share:
    Income (loss) from continuing operations available to common shareholders
     before cumulative effect of a change in accounting principle.................. (Yen)125,006.95
    Income (loss) from discontinued operations.....................................          (89.77)
                                                                                    ---------------
    Income (loss) available to common shareholders before cumulative effect of a
     change in accounting principle................................................      124,917.18
    Cumulative effect of a change in accounting principle .........................              --
                                                                                    ---------------
    Net income (loss) available to common shareholders............................. (Yen)124,917.18
                                                                                    ===============


For the fiscal year ended March 31, 2002, 3% Exchangeable Guaranteed Notes due
2002 and Class 2 Preferred Stock could have potentially diluted earnings per
common share but were not included in the computation of diluted earnings per
common share due to their antidilutive effects. For the fiscal year ended March
31, 2003,
Class 2 Preferred Stock and 3% Exchangeable Guaranteed Notes due 2002 that had
been redeemed in November 2002 were included in the computation of diluted
earnings per common share. For the fiscal year ended March 31, 2004, Class 2
Preferred Stock, convertible securities and stock options issued by the
subsidiaries that could potentially dilute earnings per common share in the
future were included in the computation of earnings per common share. The
convertible securities are 11/4% Convertible Bonds due 2013 and 1/4%
Convertible Bonds due 2014 issued by Mitsubishi Securities. The stock options
are based on the stock-based compensation plans of Mitsubishi Securities and
UNBC.

In computing the number of the dilutive potential common shares for the fiscal
year ended March 31, 2003 and 2004, Class 2 Preferred Stock has been based at
the conversion price as of year-end (i.e., (Yen)1,357,559.2 and (Yen)696,898.5,
respectively).

Subsequent to March 31, 2004, MTFG has reset the conversion price of Class 2
Preferred Stock from (Yen)696,898.5 to (Yen)971,415 as described in Note 18.
Based on the reset conversion price of (Yen)971,415 for the fiscal year ended
March 31, 2004, the effect of dilutive convertible preferred stock (Class 2)
would be 154 thousand shares and weighted average common shares for the diluted
computation would be 6,504 thousand shares. Based on the reset conversion
price, the amounts in each column of diluted earnings per common share is as
follows:



                                                                                                     2004
-                                                                                              ---------------
                                                                                                   (in yen)
                                                                                            
Diluted earnings per common share:
   Income from continuing operations available to common shareholders before cumulative
     effect of a change in accounting principle............................................... (Yen)125,240.75

   Loss from discontinued operations..........................................................          (89.94)
                                                                                               ---------------

   Income available to common shareholders before cumulative effect of a change in accounting
     principle................................................................................      125,150.81

   Cumulative effect of a change in accounting principle......................................              --
                                                                                               ---------------

   Net income available to common shareholders ............................................... (Yen)125,150.81
                                                                                               ===============


                                     F-68



            MITSUBISHI TOKYO FINANCIAL GROUP, INC. AND SUBSIDIARIES

            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)


23.  DERIVATIVE FINANCIAL INSTRUMENTS

The MTFG Group uses various derivative financial instruments both for trading
purposes and for purposes other than trading (primarily risk management
purposes) in the normal course of business to meet the financial needs of its
customers, as a source of revenue and to manage its exposures to a variety of
risks. The MTFG Group is a party to derivatives, including swaps, forwards,
options and other types of derivatives, dealing primarily with market risk
associated with interest rate, foreign currency, equity and commodity prices,
and credit risk associated with counterparty's nonperformance of transactions.

Market risk is the possibility that future changes in market indices make the
financial instruments less valuable. Credit risk is the possibility that a loss
may result from a counterparty's failure to perform according to the terms and
conditions of the contract, which may exceed the value of underlying
collateral. To reduce credit risk, the MTFG Group may require collateral or
guaranties based on a case-by-case assessment of creditworthiness of each
customer and evaluation of the instrument. The MTFG Group also uses master
netting agreements in order to mitigate overall counterparty credit risk.

Trading Activities

The MTFG Group's trading activities include dealing and other activities
measured at fair value with gains and losses recognized currently in earnings.
As part of its trading activities, the MTFG Group offers a variety of
derivative financial instruments and debt instruments for managing interest
rate and foreign exchange risk to its domestic and foreign corporate and
financial institution customers. The MTFG Group also enters into other types of
derivative transactions, including equity and credit-related contracts, for its
own account.

Risk Management Activities

As part of risk management activities, the MTFG Group uses certain derivative
financial instruments to manage its interest rate and currency exposures. The
MTFG Group maintains an overall interest rate risk management strategy that
incorporates the use of interest rate contracts to minimize significant
unplanned fluctuations in earnings that are caused by interest rate volatility.
The MTFG Group's goal is to manage interest rate sensitivity so that movements
in interest rates do not adversely affect net interest income. As a result of
interest rate fluctuations, hedged fixed-rate assets and liabilities appreciate
or depreciate in market value. Gains or losses on the derivative instruments
that are linked to the hedged fixed-rate assets and liabilities are expected to
substantially offset this unrealized appreciation or depreciation. Interest
income and interest expense on hedged variable-rate assets and liabilities,
respectively, increase or decrease as a result of interest rate fluctuations.
Gains and losses on the derivative instruments that are linked to these hedged
assets and liabilities are expected to substantially offset this variability in
earnings.

The MTFG Group enters into interest rate swaps and other contracts as part of
its interest rate risk management strategy primarily to alter the interest rate
sensitivity of its loans, investment securities and deposit liabilities. The
MTFG Group's principal objectives in risk management include asset and
liability management. Asset and liability management is viewed as one of the
methods for the MTFG Group to manage its interest rate exposures on
interest-bearing assets and liabilities. Interest rate contracts, which are
generally non-leveraged generic interest rate and basis swaps, options and
futures, allow the MTFG Group to effectively manage its interest rate risk
position. Option contracts primarily consist of caps, floors, swaptions and
options on index futures. Futures contracts used for asset and liability
management activities are primarily index futures providing for cash payments
based upon the movement of an underlying rate index. The MTFG Group enters into
forward exchange contracts, currency swaps and other contracts in response to
currency exposures resulting from on-balance-sheet assets and liabilities
denominated in foreign currencies in order to limit the net foreign exchange
position by currency to an appropriate level.

                                     F-69



            MITSUBISHI TOKYO FINANCIAL GROUP, INC. AND SUBSIDIARIES

            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)


The risk management activities reduce the MTFG Group's risk exposures
economically, however, derivatives used for the risk management activities
often fail to meet certain conditions to qualify for hedge accounting and the
MTFG Group accounts for such derivatives as trading positions.

For the fiscal years ended March 31, 2003 and 2004, except for derivative
transactions conducted by certain foreign subsidiaries, the MTFG Group accounts
for derivatives held for risk management purposes as trading positions and
measured them at fair value.

Embedded Derivatives

Derivative features embedded in other non-derivative host contracts are
separated from the host contracts and measured at fair value when they are not
clearly and closely related to the host contract and meet the definition of a
derivative. The change in the fair value of such an embedded derivative is
recognized currently in earnings, unless it is qualified as a hedge. The
carrying amount is reported on the consolidated balance sheet with the host
contract. The MTFG Group accounts for credit-linked notes as host contracts
with embedded derivatives and measures the entire contracts at fair value.

UnionBanCal Corporation ("UNBC")

Derivative positions are integral components of the UNBC's designated asset and
liability management activities. UNBC uses interest rate derivatives to manage
the sensitivity of the UNBC's net interest income to changes in interest rates.
These instruments are used to manage interest rate risk relating to specified
groups of assets and liabilities, primarily LIBOR-based commercial loans,
certificates of deposit, trust notes, medium-term notes and subordinated debt.

Cash Flow Hedges--Hedging Strategies for Variable Rate Loans and Certificates
of Deposit

UNBC engages in several types of cash flow hedging strategies for which the
hedged transactions are forecasted future loan interest payments, and the
hedged risk is the variability in those payments due to changes in the
designated benchmark rate, e.g., US dollar LIBOR. In these strategies, the
hedging instruments are matched with groups of variable rate loans such that
the tenor of the variable rate loans and that of the hedging instrument is
identical. Cash flow hedging strategies include the utilization of purchased
floor, cap, corridor options and interest rate swaps. At December 31, 2003, the
weighted average life of these cash flow hedges is approximately 1.5 years.

UNBC uses purchased interest rate floors to hedge the variable cash flows
associated with 1-month LIBOR or 3-month LIBOR indexed loans. Payments received
under the floor contract offset the decline in loan interest income caused by
the relevant LIBOR index falling below the floor's strike rate.

UNBC uses interest rate floor corridors to hedge the variable cash flows
associated with 1-month LIBOR or 3-month LIBOR indexed loans. Net payments to
be received under the floor corridor contracts offset the decline in loan
interest income caused by the relevant LIBOR index falling below the corridor's
upper strike rate, but only to the extent the index falls to the lower strike
rate. The corridor will not provide protection from declines in the relevant
LIBOR index to the extent it falls below the corridor's lower strike rate.

UNBC uses interest rate collars to hedge the variable cash flows associated
with 1-month LIBOR or 3-month LIBOR indexed loans. Net payments to be received
under the collar contracts offset the decline in loan interest income caused by
the relevant LIBOR index falling below the collar's strike rate while net
payments to be paid will reduce the increase in loan interest income caused by
the LIBOR index rising above the collar's cap strike rate.

                                     F-70



            MITSUBISHI TOKYO FINANCIAL GROUP, INC. AND SUBSIDIARIES

            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)


UNBC uses interest rate swaps to hedge the variable cash flows associated with
1-month LIBOR or 3-month LIBOR indexed loans. Payments to be received (or paid)
under the swap contracts will offset the fluctuations in loan interest income
caused by changes in the relevant LIBOR index. As such, these instruments hedge
all fluctuations in the loans' interest income caused by changes in the
relevant LIBOR index.

UNBC uses purchased interest rate caps to hedge the variable interest cash
flows associated with the forecasted issuance and rollover of short-term, fixed
rate negotiable certificates of deposit (CD). In these hedging relationships,
UNBC hedges the LIBOR component of the CD rates, which is either 3-month LIBOR
or 6-month LIBOR, based on the CDs' original term to maturity, which reflects
their repricing frequency. Net payments to be received under the cap contract
offset the increase in interest expense caused by the relevant LIBOR index
rising above the cap's strike rate.

UNBC uses interest rate cap corridors to hedge the variable cash flows
associated with the forecasted issuance and roll-over of short-term, fixed
rate, negotiable CDs. In these hedging relationships, UNBC hedges the LIBOR
component of the CD rates, either 1-month LIBOR, 3-month LIBOR, or 6-month
LIBOR, based on the original term to maturity of the CDs, which reflects their
repricing frequency. Net payments to be received under the cap corridor
contracts offset the increase in deposit interest expense caused by the
relevant LIBOR index rising above the corridor's lower strike rate, but only to
the extent the index rises to the upper strike rate. The corridor will not
provide protection from increases in the relevant LIBOR index to the extent it
rises above the corridor's upper strike rate.

Hedging transactions are structured at inception so that the notional amounts
of the hedge are matched with an equal principal amount of loans or CDs, the
index and repricing frequencies of the hedge matches those of the loans or CDs,
and the period in which the designated hedged cash flows occurs is equal to the
term of the hedge. As such, most of the ineffectiveness in the hedging
relationship results from the mismatch between the timing of reset dates on the
hedge versus those of the loans or CDs. In 2003, UNBC recognized a net gain of
$0.5 million due to ineffectiveness, which is recognized in Non-interest
expense, compared to a net gain of $0.4 million in 2002.

For cash flow hedges, based upon amounts included in accumulated other
comprehensive income at March 31, 2004, the MTFG Group expects to include
approximately (Yen)2.7 billion in net interest income for the fiscal year
ending March 31, 2005. This amount could differ from amounts actually realized
due to changes in interest rates and the addition of other hedges subsequent to
March 31, 2004.

Fair Value Hedges--Hedging Strategy for Mandatorily Redeemable Preferred
Securities of Subsidiary Grantor Trust

UNBC engages in an interest rate hedging strategy in which an interest rate
swap is associated with a specific interest bearing liability, Mandatorily
Redeemable Preferred Securities of Subsidiary Grantor Trust ("Trust Preferred
Securities"), in order to convert the liability from a fixed rate to a floating
rate instrument. This strategy mitigates the changes in fair value of the
hedged liability caused by changes in the designated benchmark interest rate,
US dollar LIBOR. Fair value hedging transactions are structured at inception so
that the notional amounts of the swap match an associated principal amount of
the Trust Preferred Securities. The interest payment dates, the expiration
date, and the embedded call option of the swap match those of the Trust
Preferred Securities. The ineffectiveness on the fair value hedges during 2003
was a net loss of $0.1 million, compared to a net gain of $0.6 million in 2002.

                                     F-71



            MITSUBISHI TOKYO FINANCIAL GROUP, INC. AND SUBSIDIARIES

            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)


24.  OBLIGATIONS UNDER GUARANTEES AND OTHER OFF-BALANCE-SHEET INSTRUMENTS

Obligations under Guarantees

The MTFG Group provides customers with a variety of guarantees and similar
arrangements, including standby letters of credit, financial and performance
guarantees, credit protections, liquidity facilities, other off-balance- sheet
credit-related supports and similar instruments, in order to meet the
customers' financial and business needs. The table below summarizes the
contractual or notional amounts with regard to obligations under guarantees and
similar arrangements at March 31, 2003 and 2004. The contractual or notional
amounts of these instruments represent the maximum potential amounts of future
payments without consideration of possible recoveries under recourse provisions
or from collateral held or pledged.

For certain types of derivatives, such as written interest rate options and
written currency options, the maximum potential future payments are unlimited.
Accordingly, it is impracticable to estimate such maximum potential amount of
future payments. As such, the notional amounts of the related contracts, other
than the maximum potential payments, are included in the table.

The MTFG Group mitigates credit risk exposure resulting from guarantees by
utilizing various techniques, including collateralization in the form of cash,
securities, and real properties based on management's credit assessment of the
guaranteed parties and the related credit profile. In order to manage the
credit risk exposure, the MTFG Group also enters into sub-participation
contracts with third parties who will fund a portion of the credit facility and
bear its share of the loss to be incurred in the event that the borrower fails
to fulfill its obligations. The following table includes unfunded commitments
of (Yen)70.9 billion and (Yen)112.1 billion, respectively, at March 31, 2003
and 2004, which are participated out to third parties. Contractual or notional
amounts summarized in the following table may not necessarily bear any direct
relationship to the future actual credit exposure, primarily because of those
risk management techniques.



                                                     Maximum
                                                   potential/
                                                   Contractual               Amount by expiration period
                                                       or      -------------------------------------------------------
                                                    Notional    Less than     1-2        2-3        3-5       Over 5
At March 31, 2003                                    amount      1 year      years      years      years      years
-----------------                                  ----------- ----------- ---------- ---------- ---------- ----------
                                                                              (in billions)
                                                                                          
Standby letters of credit and financial guarantees (Yen) 4,021 (Yen) 1,655 (Yen)  235 (Yen)  297 (Yen)  399 (Yen)1,435
Performance guarantees............................       1,092         742        151         85         62         52
Liquidity facilities..............................       1,361       1,361         --         --         --         --
Derivative instruments............................      29,054      23,839      1,359      1,228      1,954        674
Guarantees for the repayment of trust principal...       2,411         531        740        567        379        194
Liabilities of trust accounts.....................       3,078       2,819          7          2          9        241
Other.............................................           2           2         --         --         --         --
                                                   ----------- ----------- ---------- ---------- ---------- ----------
Total............................................. (Yen)41,019 (Yen)30,949 (Yen)2,492 (Yen)2,179 (Yen)2,803 (Yen)2,596
                                                   =========== =========== ========== ========== ========== ==========


                                     F-72



            MITSUBISHI TOKYO FINANCIAL GROUP, INC. AND SUBSIDIARIES

            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)




                                                     Maximum
                                                   potential/
                                                   Contractual               Amount by expiration period
                                                       or      -------------------------------------------------------
                                                    Notional    Less than     1-2        2-3        3-5       Over 5
At March 31, 2004                                    amount      1 year      years      years      years      years
-----------------                                  ----------- ----------- ---------- ---------- ---------- ----------
                                                                              (in billions)
                                                                                          
Standby letters of credit and financial guarantees (Yen) 2,747 (Yen) 1,074 (Yen)  201 (Yen)  164 (Yen)  260 (Yen)1,048
Performance guarantees............................       1,213         662        199        128        139         85
Liquidity facilities..............................         603         603         --         --         --         --
Derivative instruments............................      21,205      16,456      1,447      1,140      1,582        580
Guarantees for the repayment of trust principal...       2,080         349      1,107        282        333          9
Liabilities of trust accounts.....................       3,886       3,600         10          5         11        260
Other.............................................         309         309         --         --         --         --
                                                   ----------- ----------- ---------- ---------- ---------- ----------
Total............................................. (Yen)32,043 (Yen)23,053 (Yen)2,964 (Yen)1,719 (Yen)2,325 (Yen)1,982
                                                   =========== =========== ========== ========== ========== ==========


Nature of guarantee contracts

Standby letters of credit and financial guarantees generally include an
obligation of an issuer or a designated third party to guarantee the
performance of the customer to the beneficiary under the terms of contracts
such as lending contracts and other similar financial transactions. The MTFG
Group is required to make payments to the guaranteed parties in the events that
the customers fail to fulfill the obligations under the contracts. The
guarantees whose contractual maturities are over 5 years are mainly comprised
of guarantees of housing loans.

Performance guarantees are the contracts that contingently require the MTFG
Group to make payments to the guaranteed party based on another party's failure
to perform under an obligating agreement, except financial obligation. For
example, performance guarantees include guarantees of completion of
construction projects.

Liquidity facilities may include a provision of guarantees of collection of
contractual cash flows under an asset securitization structure, involving
variable interest entities. Such guarantee provisions protect beneficiary of
assets securitization from negative returns relating to shortfalls of cash
collections on the underlying assets held by the securitization vehicle. See
Note 25 for additional information on the MTFG Group's operations regarding
variable interest entities.

Derivative instruments that are deemed to be included within the definition of
guarantees as prescribed in FIN No. 45 include certain written options and
credit default swaps. In order for the MTFG Group to determine if those
derivative instruments meet the definition of guarantees as prescribed in FIN
No. 45, the MTFG Group has to track whether the counterparties are actually
exposed to the losses that will result from the adverse change in the
underlyings. Accordingly, the MTFG Group has disclosed information on all
credit default swaps and certain written options that have possibilities to
meet the definition of guarantees as prescribed in FIN No. 45, regardless of
whether the counterparties have assets or liabilities related to the
underlyings of the derivatives.

Guarantees for the repayment of trust principal include guarantees which the
MTFG Group provides for the repayment of principal of certain types of trust
products, including certain jointly operated designated money in trusts and
loan trusts. The MTFG Group manages and administers trust assets in a capacity
of agent or fiduciary on behalf of its customers and trust assets are
segregated from the assets of the MTFG Group, who keeps records for the trust
activities separately. The MTFG Group, in principle, does not assume any risks
associated with the trust assets under management, however, as permitted by
applicable laws, the MTFG Group provides guarantees for the repayment of
principal of such trust products. At March 31, 2003 and 2004, the contract
amounts of such guarantees for repayment of trust principal were (Yen)2,411
billion and (Yen)2,080 billion, respectively. The accounting methods used for
the segregated records of trust activities are different from financial
accounting principles and

                                     F-73



            MITSUBISHI TOKYO FINANCIAL GROUP, INC. AND SUBSIDIARIES

            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)

practices. However, the MTFG Group follows an approach similar to those used
for its own assets to identify an impairment of an asset included in the trusts
with guaranteed principal, with inherent variations peculiar to trust
accounting. Amounts of loans deemed to be impaired are written off directly and
are charged to the trust account profits earned during the trust accounting
period. Write-downs of securities are also directly charged to the trust
account profits. The amounts of trust assets written-off in the segregated
records were (Yen)5,740 million and (Yen)9,406 million, respectively, for the
fiscal years ended March 31, 2003 and 2004. These amounts of write-offs were
reflected in the segregated records as deductions before net profits earned by
trust accounts for the accounting period. In addition, part of trust account
profits are set aside as a reserve to absorb losses in the trust asset
portfolios in the segregated records in accordance with relevant legislation
concerning the trust business and/or trust agreements. Statutory reserves for
loan trusts are established at a rate of 4.0% of the trust fees up to the
amounts of 0.5% of the trust principal in accordance with the legislation.
Reserves for jointly operated designated money in trusts are established at a
rate of 0.3% of the balance of loans and other assets in the trust account
assets in accordance with the related trust agreement. The amounts of such
reserves set aside in the segregated records were (Yen)9,427 million and
(Yen)6,934 million, respectively, at March 31, 2003 and 2004. The MTFG Group is
required to provide an allowance for off-balance-sheet instruments on such
guarantees in the financial statements only when aggregate losses on trust
assets are judged to exceed the reserve and the profit earned by the trust
account, and the principal is deemed to be impaired. Management believes that
the MTFG Group will not incur any losses on the guarantees.

Liabilities of trust accounts represent the trustee's potential responsibility
for temporary payments to creditors of liabilities of trust accounts making use
of funds of the MTFG Group, except for the certain trust agreements that have
provisions limiting the MTFG Group's responsibility as a trustee to the trust
account assets. A trust may incur external liabilities to finance its
activities and obtain certain services during the terms of the trust
arrangement. While, in principle, any liabilities of a trust are payable by the
trust account and its beneficiaries, a trustee's responsibility may be
interpreted to encompass temporary payments for the trust account liabilities
when the trust account has insufficient liquidity available for such
liabilities. At March 31, 2003 and 2004, there were liabilities of (Yen)3,078
billion and (Yen)3,886 billion, respectively, in the segregated records of
trust accounts including the amounts related to liabilities with provisions
limiting of trustee responsibility. Liabilities of trust accounts principally
included obligations to return collateral under security lending transactions.
The MTFG Group has experienced no significant losses on such responsibilities
and its exposure to the risk associated with the temporary payments is judged
to be remote because trust account liabilities are covered by the corresponding
trust account assets generally; the MTFG Group continuously monitors the
liabilities of trust accounts and assesses the trust account's ability to
perform its obligations to prevent any unfavorable outcomes; and the MTFG Group
claims its recourse for its temporary payments against the trust account assets
and the beneficiaries.

Other includes contingent consideration agreements and security lending
indemnifications. Contingent consideration agreements provide guarantees on
additional payments to acquired insurance agencies' shareholders based on the
agencies' future performance in excess of established revenue and/or earnings
before interest, taxes, depreciation and amortization thresholds. Security
lending indemnifications are the indemnifications for institutional customers
of securities lending transactions against counterparty default. All lending
transactions are collateralized, primarily by cash.

Carrying amount

At March 31, 2003 and 2004, the carrying amounts of the liabilities related to
guarantees and similar instruments set forth above were (Yen)211,058 million
and (Yen)240,465 million, respectively, which are included in Other liabilities
and Trading account liabilities. In addition, Other liabilities also include an
allowance for off-balance-sheet instruments of (Yen)62,840 million and
(Yen)86,688 million, respectively, related to these transactions.

                                     F-74



            MITSUBISHI TOKYO FINANCIAL GROUP, INC. AND SUBSIDIARIES

            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)


Other Off-Balance-Sheet Instruments

In addition to obligations under guarantees set forth above, the MTFG Group
issues other off-balance-sheet instruments for purposes other than trading.
Such off-balance-sheet instruments consist of lending-related commitments,
including commitments to extend credit and commercial letters of credit that
the MTFG Group provides to meet the financing needs of its customers. Once the
MTFG Group issues these financial instruments, the MTFG Group is required to
extend credit to or make certain payments to the customers or beneficiaries
specified pursuant to the underlying contracts unless otherwise provided in the
contracts. Since many of these commitments expire without being drawn upon, the
total commitment amounts do not necessarily represent future cash requirements.
At March 31, 2004, approximately 76% of these commitments will expire within
one year, 22% from one year to five years and 2% after five years. The table
below summarizes the contractual amounts with regard to these commitments at
March 31, 2003 and 2004.



                                                2003        2004
                                             ----------- -----------
                                                  (in billions)
                                                   
            Commitments to extend credit.... (Yen)25,591 (Yen)25,610
            Commercial letters of credit....         387         377
            Resale and repurchase agreements         631         165
            Securities lending transactions.          83          --
            Commitments to make investments.          46          58


Commitments to extend credit, which generally have fixed expiration dates or
other termination clauses, are legally binding agreements to lend to customers.
Commitments are different from guarantees in that the commitments are generally
revocable or have provisions that enable the MTFG Group to avoid payments in
the event of violations of any conditions of the contracts and certain
deterioration of the potential borrowers' financial condition. Commitments to
extend credit may expire without being drawn upon. Therefore, the total
commitment amounts do not necessarily represent future cash requirements.

Commercial letters of credit, used for facilitating trade transactions, are
generally secured by underlying goods. The MTFG Group continually monitors the
type and amount of collateral and other security, and requires counterparties
to provide additional collateral or guarantors as necessary.

Repurchase and resale transactions are collateralized financing agreements. In
a sale of securities or other financial instruments with agreement to
repurchase them, the MTFG Group sells securities or other financial instruments
at a stated price to a counterparty and agrees to repurchase identical
financial instruments from the same counterparty at a later date at the
predetermined price which reflect the principal amount and interest. In a
purchase of securities or other financial instruments with agreement to resell
them, the MTFG Group receives securities or other financial instruments for a
stated price from a counterparty and agrees to sell them to the same
counterparty at a later date at the predetermined price reflecting the
principal amount and interest. When certain conditions specified in SFAS No.
140 are met, the MTFG Group accounts for resale agreements as purchase of
financial instruments with related off-balance-sheet forward resale commitments
and repurchase agreements as sale of financial instruments with related
off-balance-sheet forward repurchase agreements. The MTFG Group bears the
off-balance-sheet risk related to the forward resale and repurchase
commitments, including credit risk and market risk.

Securities lending transactions involve the lending of securities borrowed from
other financial institutions or customers' securities held in custody to third
party borrowers. The MTFG Group generally obtains collateral from borrowers,
including cash and securities, with similar fair value. The MTFG Group follows
strict levels of collateralization governed by daily mark-to-market analyses
and a review of the creditworthiness of borrowers to

                                     F-75



            MITSUBISHI TOKYO FINANCIAL GROUP, INC. AND SUBSIDIARIES

            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)

control exposure to credit losses resulting from a reduction in the underlying
collateral value and nonperformance by borrowers.

Commitments to make investments are legally binding contracts to make
additional contributions to corporate recovery or private equity investment
funds in accordance with limited partnership agreements. Some of these funds,
in which the MTFG Group has significant variable interests, are described in
Note 25.

Concentration of Credit Risk

Although the MTFG Group's portfolio of financial instruments, including
on-balance-sheet instruments, is widely diversified along industry and
geographic lines, a significant portion of the transactions with
off-balance-sheet risk are entered into with other financial institutions.

25.  VARIABLE INTEREST ENTITIES

A variable interest entity ("VIE") is defined as an entity with the following
characteristics; (1) equity investment at risk is not sufficient to permit the
entity to finance its activities without additional subordinated financial
support from other parties, or (2) providers of equity investment at risk lack
significant decision making ability or do not absorb the expected losses or
receive the expected residual returns. Variable interests in a variable
interest entity are contractual, ownership, or other pecuniary interests in an
entity that change with changes in the fair value of the entity's net assets
exclusive of variable interests. An enterprise shall consolidate a variable
interest entity if that enterprise has a variable interest that will absorb a
majority of the entity's expected losses, receive a majority of the entity's
expected returns, or both. An enterprise that consolidates a VIE is referred to
as the primary beneficiary.

In the normal course of its business, the MTFG Group is a party to various
entities which may be deemed to be variable interest entities such as
asset-backed commercial paper conduits, securitization of client properties,
various investment funds and project finances.

Asset-backed Commercial Paper Conduits

The MTFG Group administers several third-party owned, multi-seller finance
companies (primarily commercial paper conduits) that purchase financial assets,
primarily pools of receivables, from third-party customers. Assets purchased by
these conduits are generally funded by issuing commercial paper, or partly by
borrowings from the MTFG Group or third parties. While customers basically
continue to service the transferred trade receivables, the MTFG Group
underwrites, distributes, makes a market in commercial paper issued by the
conduits, and also provides liquidity and credit support facilities to the
entities.

In accordance with the requirement to apply FIN No. 46 immediately to VIEs
created after January 31, 2003, the MTFG Group consolidated commercial paper
conduits with total assets of (Yen)129,001 million as of March 31, 2004. The
consolidation did not have material impact on the MTFG Group's results of
operations. In addition to such consolidated VIEs, the MTFG Group, as not
deemed to be the primary beneficiary, had variable interests in certain other
conduits with total assets of (Yen)372,175 million as of March 31, 2004, and is
exposed to a maximum loss of (Yen)32,131 million, excluding older entities
created before February 1, 2003, set out below.

It is expected that MTFG would be required to consolidate additional conduits
as FIN No. 46R becomes effective to older entities in the fiscal year ending
March 31, 2005. Total assets of older entities expected to be consolidated upon
adoption of FIN No.46R are estimated as (Yen)3,347,929 million and the MTFG
Group's maximum exposure to loss as a result of its involvement with such
conduits is estimated at (Yen)2,666,884 million.

                                     F-76



            MITSUBISHI TOKYO FINANCIAL GROUP, INC. AND SUBSIDIARIES

            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)


Securitization of Client Properties

The MTFG Group administers several third-party owned conduits that purchase
clients assets, primarily real estate, from third-party customers. Assets
purchased by these conduits are generally funded by investments under
partnership agreements from customers or by borrowings from the MTFG Group or
third-parties. While customers basically continue to use the transferred real
estate by lease-back agreements, the customers that invest in conduits absorb
the expected losses of the conduits.

The MTFG Group, as a non-primary beneficiary, had variable interests in this
type of VIEs, with total assets of (Yen)993,461 million as of March 31, 2004,
and is exposed to a maximum loss of (Yen)244,117 million, excluding the older
entities created before February 1, 2003, set out below.

It is expected that the MTFG Group would be required to consolidate additional
entities as FIN No. 46R becomes effective to older entities in the fiscal year
ending March 31, 2005. Total assets of older entities expected to be
consolidated upon adoption of FIN No. 46R are estimated as (Yen)37,916 million
and the MTFG Group's maximum exposure to loss as a result of its involvement
with such funds is estimated at (Yen)37,916 million.

Investment Funds

The MTFG Group holds investments in various investment funds that collectively
invest in equity and debt securities including listed Japanese securities and
investment grade bonds, and, to a limited extent, securities and other
interests issued by companies in a start-up or restructuring stage. Such
investment funds are managed by investment advisory companies or fund
management companies that make investment decisions and administer the funds.

In accordance with the requirement to apply FIN No. 46 immediately to VIEs
created after January 31, 2003, the MTFG Group consolidated investment funds
with total assets of (Yen)129,642 million as of March 31, 2004. The
consolidation did not have material impact on the MTFG Group's results of
operations. In addition to such consolidated VIEs, the MTFG Group, as a
non-primary beneficiary, had variable interests in this type of VIEs, with
total assets of (Yen)20,861,298 million as of March 31, 2004, and is exposed to
a maximum loss of (Yen)574,886 million, excluding the older entities set out
below.

It is expected that the MTFG Group would be required to consolidate additional
investment funds as FIN No. 46R becomes effective in the fiscal year ending
March 31, 2005. Total assets of older entities expected to be consolidated upon
adoption of FIN No. 46R are estimated as (Yen)305,594 million and the MTFG
Group's maximum exposure to loss as a result of its involvement with such funds
is estimated at (Yen)282,942 million.

Special Purpose Entities Created for Structured Financing

The MTFG Group extends non-recourse asset-backed loans to special purpose
entities, which hold beneficial interests in real properties, to provide
financing for special purpose projects including real estate development and
natural resource development managed by third parties. The MTFG Group generally
acts as a member of a lending group and does not have any equity investment in
the entities, which is typically provided by project owners. For most of these
financings, the equity provided by the project owners is of sufficient level to
absorb expected losses, while expected returns to the owners are arranged to be
the most significant among all returns. Accordingly, the MTFG Group determined
that the MTFG Group is not the primary beneficially of most of these entities.
However, in transactions with entities whose investment at risk is
exceptionally thin and the MTFG Group's share of financing is dominant, the
MTFG Group is ultimately required to consolidate this type of entity.

The MTFG Group, as a non-primary beneficiary, had variable interests in this
type of VIEs, with total assets of (Yen)10,903,504 million as of March 31,
2004, and is exposed to a maximum loss of (Yen)617,110 million, excluding the
older entities created before February 1, 2003 set out below.

It is expected that the MTFG Group would be required to consolidate additional
entities as FIN No. 46R becomes effective in the fiscal year ending March 31,
2005. Total assets of older entities expected to be consolidated upon

                                     F-77



            MITSUBISHI TOKYO FINANCIAL GROUP, INC. AND SUBSIDIARIES

            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)

adoption of FIN No. 46R are estimated as (Yen)56,504 million and the MTFG
Group's maximum exposure to loss as a result of its involvement with such funds
is estimated at (Yen)33,065 million.

Trust Products

The MTFG Group offers a variety of trust products and manages and administers a
wide range of trust arrangements including securities investment trusts,
pension trusts and trusts used in the securitization of assets originated by
and transferred to third parties. In a typical trust arrangement, the MTFG
Group manages and administers the assets on behalf of the customers in an
agency, fiduciary and trust capacity. In principle, the MTFG Group does not
assume risks associated with the entrusted assets, which are borne by the
customers, although in limited cases the MTFG Group may assume risks through
guarantees or certain protections as provided in the trust agreement. For most
trust arrangements, expected returns and losses to be received and assumed by
the customers depend on the performance and operations of the trusts.
Generally, the expected returns are larger than the fees received by the MTFG
Group. Accordingly, the MTFG Group expects that it will not ultimately be
determined to be the primary beneficiary or that its interests in a trust
arrangement will not be significant in most cases.

Repackaged Instruments

The MTFG Group repackages financial instruments to create new financial
instruments with features that match the customer's needs and preferences. The
MTFG Group purchases financial instruments such as bonds and transfers them to
special purpose entities which then issue new instruments. The special purpose
entities may enter into derivative transactions including interest rate and
currency swaps with the MTFG Group or other financial institutions to modify
the cash flows of the underlying financial instruments. The MTFG Group
underwrites and markets to the MTFG Group's customers the new instruments
issued by the special purpose entities.

In accordance with the requirement to apply FIN No. 46 immediately to VIEs
created after January 31, 2003, the MTFG Group consolidated these special
purpose entities with total assets of (Yen)96,895 million as of March 31, 2004.
The consolidation did not have material impact on the MTFG Group's results of
operations. In addition to such consolidated VIEs, the MTFG Group, as a
non-primary beneficiary, had variable interests in this type of VIE, with total
assets of (Yen)5,041,956 million as of March 31, 2004, and is exposed to a
maximum loss of (Yen)296,346 million, excluding the older entities created
before February 1, 2003, set out below.

It is expected that the MTFG Group would be required to consolidate additional
conduits as FIN No.46R become effective to older entities in the fiscal year
ending March 31, 2005. Total assets of older entities expected to be
consolidated upon adoption of FIN No.46R are estimated as (Yen)291,789 million
and the MTFG Group's maximum exposure to loss as a result of its involvement
with such conduits is estimated at (Yen)279,417 million.

Financing Vehicle

UNBC Finance Trust I ("grantor trust") is wholly owned by UNBC, a U.S.
subsidiary of BTM and a public company. Prior to December 31, 2003, the grantor
trust's notes and related investment in the grantor trust's notes were
eliminated in consolidation and the preferred securities were reflected as a
liability in the accompanying financial statements.
UNBC deconsolidated the grantor trust upon adoption of FIN No. 46 in UNBC's
fiscal year ended December 31, 2003. The MTFG Group consolidated UNBC's
financial statements as of December 31, 2003 in MTFG's fiscal year ended March
31, 2004. As a result, FIN No. 46 is partially applied to VIEs created before
February 1, 2003 with regard to the grantor trust of UNBC in the MTFG's
consolidated financial statements. The impact of this change in accounting
principles was to increase other assets by (Yen)1,157 million and to reflect
the full amount of the liability of the grantor trust's notes, which increased
liabilities by (Yen)1,157 million.

                                     F-78



            MITSUBISHI TOKYO FINANCIAL GROUP, INC. AND SUBSIDIARIES

            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)

Management is evaluating whether the MTFG Group shall deconsolidate similar
financing vehicles as FIN No. 46R becomes effective to older entities in the
fiscal year ending March 31, 2005.

Other Type of VIEs

The MTFG Group is also a party to other type of VIEs, such as special purpose
entities created to hold assets on behalf of the MTFG Group as an intermediary.
The MTFG Group, as a non-primary beneficiary, had variable interests in such
VIEs, with total assets of (Yen)5,537 million as of March 31, 2004, and is
exposed to a maximum loss of (Yen)4,380 million, excluding the older entities
set out below.

It is expected that the MTFG Group would be required to consolidate additional
entities as FIN No. 46R becomes effective to older entities in the fiscal year
ending March 31, 2005. Total assets of older entities expected to be
consolidated upon adoption of FIN No. 46R are estimated as (Yen)10,339 million
and the MTFG Group's maximum exposure to loss as a result of its involvement
with such VIEs is estimated at (Yen)11,441 million.

The MTFG Group has consolidated certain special purpose entities, which may be
variable interest entities, under current accounting guidance. At March 31,
2004, total assets of such consolidated entities were immaterial. As the MTFG
intends to continue assessing and analyzing the impact of FIN No. 46R for
future and existing arrangements and interests in various entities. Such
assessment and analysis may result in additional entities that will need to be
consolidated or disclosed by the MTFG Group in the fiscal year ending March 31,
2005.

26.  COMMITMENTS AND CONTINGENT LIABILITIES

The MTFG Group leases certain office space and equipment under noncancelable
agreements expiring through the fiscal year 2015.

Future minimum rental commitments for noncancelable leases at March 31, 2004
were as follows:



                                                Capitalized   Operating
                                                  leases       leases
                                                -----------  ------------
                                                      (in millions)
                                                       
       Fiscal year ending March 31:
          2005................................. (Yen)17,959  (Yen) 23,538
          2006.................................      14,480        22,325
          2007.................................      10,530        21,442
          2008.................................       5,023        18,696
          2009.................................       1,354        17,334
          2010 and thereafter..................       2,981        56,458
                                                -----------  ------------
              Total minimum lease payments.....      52,327  (Yen)159,793
                                                             ============
       Amount representing interest............      (1,812)
                                                -----------
       Present value of minimum lease payments. (Yen)50,515
                                                ===========


Total rental expense for the fiscal years ended March 31, 2002, 2003 and 2004
was (Yen)47,610 million, (Yen)52,641 million and (Yen)51,798 million,
respectively.

The MTFG Group is involved in various litigation matters. Managements, based
upon their current knowledge and results of consultation with counsel, make
appropriate level of litigation reserve. The amounts of the MTFG Group's
liabilities when ultimately determined will not have a material adverse effect
on the MTFG Group's results of operations and financial position.

                                     F-79



            MITSUBISHI TOKYO FINANCIAL GROUP, INC. AND SUBSIDIARIES

            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)


27.  FEES AND COMMISSIONS INCOME

Details of fees and commissions income for the fiscal years ended March 31,
2002, 2003 and 2004 were as follows:



                                                                 2002            2003         2004
                                                           ----------------- ------------ ------------
                                                                          (in millions)
                                                                                 
Trust fees................................................ (Yen)     123,645 (Yen)103,803 (Yen) 90,037
Fees on funds transfer and service charges for collections            58,132       58,146       59,826
Fees and commissions on international business............            53,469       54,537       53,787
Fees and commissions on credit card business..............            44,959       57,083       60,456
Service charges on deposits...............................            29,791       34,626       36,210
Fees and commissions on securities business...............            52,689       68,020       98,961
Other fees and commissions................................           123,292      144,552      173,391
                                                           ----------------- ------------ ------------
       Total.............................................. (Yen)485,977      (Yen)520,767 (Yen)572,668
                                                           ================= ============ ============



Trust fees consist of fees earned primarily by fiduciary asset management and
administration services for corporate pension plans, investment funds, etc.
Fees on funds transfer and service charges for collection are earned by
providing settlement services such as domestic fund remittances and domestic
collection services. Fees and commissions on international business primarily
consist of fees from international fund transfer and collection services, and
trade-related financing services. Fees and commissions on credit card business
are composed of interchange income, annual fees, royalty and other service
charges from franchisees. Service charges on deposits are fees charged for
deposits such as checking account deposits. Other fees and commissions include
fees from fees on guarantees, investment banking services including
underwriting, brokerage and advisory services, and arrangement fees on
securitizations.

28.  BUSINESS SEGMENTS

MTFG conducts its business through its principal subsidiaries, BTM and
Mitsubishi Trust, which have been granted substantial autonomy in conducting
their business, and, therefore, management currently recognizes each of BTM and
Mitsubishi Trust as a principal business segment of the MTFG Group.

The business segment information of BTM and its subsidiaries ("BTM Group") and
Mitsubishi Trust and its subsidiaries ("Mitsubishi Trust Group"), set forth
below, is derived from the internal management reporting system used by
management to measure the performance of the business segments. Unlike
financial accounting, there is no authoritative body of guidance for management
accounting. The business segment information, set forth below, is based on the
financial information prepared in accordance with Japanese GAAP along with
internal management accounting rules and practices. Accordingly, the format and
information is presented primarily on the basis of Japanese GAAP and is not
consistent with the consolidated financial statements prepared on the basis of
US GAAP. A reconciliation is provided for the total amounts of segments' total
operating profits of BTM Group and Mitsubishi Trust Group with income (loss)
from continuing operations before income tax expense (benefit) and cumulative
effect of a change in accounting principle under US GAAP.

See Note 29 for financial information relating to the MTFG Group's operations
by geographic area. The geographic financial information is consistent with the
basis of the accompanying consolidated financial statements.

                                     F-80



            MITSUBISHI TOKYO FINANCIAL GROUP, INC. AND SUBSIDIARIES

            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)


Effective April 1, 2004, the MTFG Group implemented a new consolidated business
unit system, which combines the operations of BTM and Mitsubishi Trust in the
following three areas - retail financial services, corporate financial
services, and trust and asset management business. Although this new measure
did not change the legal entity structure of MTFG, BTM, and MTB, it is intended
to create more synergies by making collaboration of two domestic banking
subsidiaries more effective and efficient.

The MTFG Group did not measure the performance of operating segments under the
new consolidated business unit for the fiscal year ended March 31, 2004, which
was prior to the effective date of this new measure. Accordingly, the following
segment information is based on the segmentation used by the MTFG group
management, prior to April 1, 2004.

BTM Group

BTM Group was organized based on a business unit system during the fiscal year
ended March 31, 2004 as follows:

..   The Retail Banking business unit provides banking products and services to
    individual customers in Japan.

..   The Commercial Banking business unit provides banking products and services
    to large corporations and some small and medium-sized companies.

..   The Global Corporate Banking business unit provides banking services to
    large Japanese corporations and their overseas operations as well as
    non-Japanese corporations who do business on a global basis, excluding
    UNBC's customers.

..   The Investment Banking and Asset Management business unit provides advisory
    and other services related to mergers and acquisitions, securities services
    of BTM, syndicated loans, project financing, derivatives and securitization
    and other investment banking activities, and asset management and trust
    products and services mainly to high net worth individuals, branch
    customers and corporate clients in Japan.

..   The UNBC business unit includes BTM's subsidiaries in California,
    UnionBanCal Corporation and Union Bank of California, N.A.

..   The Operations Services unit provides operations and settlement services to
    BTM Group's other business units, including settlement and foreign exchange.

..   The Treasury unit conducts BTM Group's asset and liability management, and
    liquidity management.

The Mitsubishi Securities segment includes Mitsubishi Securities and its
subsidiaries that provide a broad range of retail and corporate securities
services and products including retail brokerage, securitization, M&A advisory
and derivatives.

In May 2003, BTM integrated the investment banking business unit and asset
management business unit into one business unit under the name of investment
banking and asset management business unit. Accordingly, BTM presented the
investment banking and asset management business unit as a single operating
segment for the fiscal year ended March 31, 2004. Presentation for the fiscal
years ended March 31, 2002 and 2003 has been reclassified to conform to the
presentation for the fiscal year ended March 31, 2004.

Certain securities subsidiaries of BTM's investment banking and asset
management business unit located in the United States, Hong Kong and Singapore
were transferred to Mitsubishi Securities during the fiscal year ended March
31, 2004. Accordingly, these securities subsidiaries have been included in
Mitsubishi Securities for the fiscal year ended March 31, 2004. Presentation
for the fiscal years ended March 31, 2002 and 2003 has been reclassified to
conform to the presentation for the fiscal year ended March 31, 2004.

In July 2004, BTM transferred its overseas securities subsidiary,
Tokyo-Mitsubishi International plc, to Mitsubishi Securities. Tokyo-Mitsubishi
International plc has since been renamed in line with the name of its new
parent company to Mitsubishi Securities International plc. Since the transfer
was made subsequent to March 31, 2004, the business segment information was not
reclassified for the fiscal years ended March 31, 2002, 2003 and 2004 to
reflect this transfer.

                                     F-81



            MITSUBISHI TOKYO FINANCIAL GROUP, INC. AND SUBSIDIARIES

            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)


In addition, BTM transferred its custody business, which had been included in
the asset management business unit, to the operations services unit during the
fiscal year ended March 31, 2004. Presentation for the fiscal years ended March
31, 2002 and 2003 has been reclassified to conform to the presentation for the
fiscal year ended March 31, 2004.

Furthermore, in the UNBC business unit, the measurement methods used to
determine reported segment profit or loss were changed during the fiscal year
ended March 31, 2004. Presentation for the fiscal years ended March 31, 2002
and 2003 has been reclassified to conform to the presentation for the fiscal
year ended March 31, 2004.

The financial performances of BTM Group's major business units and Mitsubishi
Securities, derived from the internal management reporting system, are
summarized below. Management does not use information on segments' total assets
to allocate resources and assess performance and has not prepared information
on segment assets. Accordingly, business segments' information on total assets
is not available.



                                                                   Investment
                                                        Global     Banking and
                              Retail      Commercial   Corporate      Asset                  Operations
                              Banking      Banking      Banking    Management       UNBC      Services     Treasury
                            ------------ ------------ ------------ ------------ ------------ ----------- ------------
                                                                                        (in millions)
                                                                                    
Fiscal year ended March 31,
 2002:
 Net revenue:
   BTM:
    Net interest
     income................ (Yen)176,297 (Yen)216,041 (Yen)136,872 (Yen)  3,784 (Yen)     -- (Yen)   663 (Yen)152,008
    Net fees...............       23,314       43,631       68,365       31,820           --       8,934       (5,009)
    Other..................       10,737       26,723       18,956       21,833           --       1,137       57,811
   BTM's subsidiaries......       72,787       11,342       57,887       40,605      289,520      19,231        2,265
                            ------------ ------------ ------------ ------------ ------------ ----------- ------------
     Total.................      283,135      297,737      282,080       98,042      289,520      29,965      207,075
 Operating expenses........      230,602      126,834      134,559       55,444      157,263      22,913       28,370
                            ------------ ------------ ------------ ------------ ------------ ----------- ------------
 Operating profit (loss)... (Yen) 52,533 (Yen)170,903 (Yen)147,521 (Yen) 42,598 (Yen)132,257 (Yen) 7,052 (Yen)178,705
                            ============ ============ ============ ============ ============ =========== ============
Fiscal year ended March 31,
 2003:
 Net revenue:
   BTM:
    Net interest
     income................ (Yen)165,407 (Yen)196,033 (Yen)125,811 (Yen)  5,961 (Yen)     -- (Yen)   558 (Yen)180,127
    Net fees...............       29,383       46,250       65,040       28,369           --       7,339       (6,222)
    Other..................       12,645       31,337       24,273       16,800           --         841      111,863
   BTM's subsidiaries......       72,534       12,964       47,787       31,500      269,755      16,845        2,068
                            ------------ ------------ ------------ ------------ ------------ ----------- ------------
     Total.................      279,969      286,584      262,911       82,630      269,755      25,583      287,836
 Operating expenses........      211,695      126,995      129,945       50,491      155,506      25,502       26,712
                            ------------ ------------ ------------ ------------ ------------ ----------- ------------
 Operating profit (loss)... (Yen) 68,274 (Yen)159,589 (Yen)132,966 (Yen) 32,139 (Yen)114,249 (Yen)    81 (Yen)261,124
                            ============ ============ ============ ============ ============ =========== ============
Fiscal year ended March 31,
 2004:
 Net revenue:
   BTM:
    Net interest
     income................ (Yen)169,252 (Yen)191,071 (Yen)119,182 (Yen) 11,443 (Yen)     -- (Yen)   646 (Yen)116,822
    Net fees...............       40,623       49,994       70,304       35,262           --       7,316       (4,194)
    Other..................       19,902       44,939       25,257       33,415           --         752       72,522
   BTM's subsidiaries......       73,113       11,661       31,609       34,687      253,456      15,942        1,174
                            ------------ ------------ ------------ ------------ ------------ ----------- ------------
     Total.................      302,890      297,665      246,352      114,807      253,456      24,656      186,324
 Operating expenses........      204,065      119,574      120,199       44,292      150,877      23,400       26,253
                            ------------ ------------ ------------ ------------ ------------ ----------- ------------
 Operating profit (loss)... (Yen) 98,825 (Yen)178,091 (Yen)126,153 (Yen) 70,515 (Yen)102,579 (Yen) 1,256 (Yen)160,071
                            ============ ============ ============ ============ ============ =========== ============





                             Mitsubishi
                             Securities       Other*         Total
                            ------------  -------------  --------------

                                                
Fiscal year ended March 31,
 2002:
 Net revenue:
   BTM:
    Net interest
     income................ (Yen)     --  (Yen) (21,416) (Yen)  664,249
    Net fees...............           --        (40,522)        130,533
    Other..................           --         (4,960)        132,237
   BTM's subsidiaries......       16,922          8,571         519,130
                            ------------  -------------  --------------
     Total.................       16,922        (58,327)      1,446,149
 Operating expenses........       25,739         57,001         838,725
                            ------------  -------------  --------------
 Operating profit (loss)... (Yen) (8,817) (Yen)(115,328) (Yen)  607,424
                            ============  =============  ==============
Fiscal year ended March 31,
 2003:
 Net revenue:
   BTM:
    Net interest
     income................ (Yen)     --  (Yen) (49,935) (Yen)  623,962
    Net fees...............           --        (37,185)        132,974
    Other..................           --         (6,972)        190,787
   BTM's subsidiaries......       58,521          6,022         517,996
                            ------------  -------------  --------------
     Total.................       58,521        (88,070)      1,465,719
 Operating expenses........       69,572         80,008         876,426
                            ------------  -------------  --------------
 Operating profit (loss)... (Yen)(11,051) (Yen)(168,078) (Yen)  589,293
                            ============  =============  ==============
Fiscal year ended March 31,
 2004:
 Net revenue:
   BTM:
    Net interest
     income................ (Yen)     --  (Yen)   5,830  (Yen)  614,246
    Net fees...............           --        (45,908)        153,397
    Other..................           --        (59,133)        137,654
   BTM's subsidiaries......      140,621          4,247         566,510
                            ------------  -------------  --------------
     Total.................      140,621        (94,964)      1,471,807
 Operating expenses........      112,008         40,848         841,516
                            ------------  -------------  --------------
 Operating profit (loss)... (Yen) 28,613  (Yen)(135,812) (Yen)  630,291
                            ============  =============  ==============

--------
*  Other includes the Systems Services unit, the eBusiness & IT Initiatives
   unit and the Corporate Center, and eliminates overlapping allocation.

Management measures performance of each business unit by "operating profit,"
which includes profits or losses of BTM's subsidiaries. Financial information
of each of BTM's subsidiaries is assigned to only one business unit, based on
its major products or services provided and its major type of customers.
"Operating profit" is a defined term in BTM's regulatory reporting to the FSA.

                                     F-82



            MITSUBISHI TOKYO FINANCIAL GROUP, INC. AND SUBSIDIARIES

            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)


"Net revenue" above includes net interest income, net fees (that is, fees and
commissions received, net of fees paid and other related expenses), and other
gains, such as net trading gains, net foreign exchange gains, and net gains
from sales of debt investment securities measured under Japanese GAAP. Interest
income and expenses between business units are determined using an internal
transfer pricing system, based on current market rates.

"Operating expenses" include salaries and employee benefits, occupancy, and
certain other non-interest expenses. In determining operating profit, BTM Group
does not assign to each business unit certain income and expense items such as
specific provisions for loan loss reserve, equity investment securities gains
or losses, minority interest in earnings or losses of BTM's subsidiaries,
equity in earnings or losses of BTM's affiliated companies, goodwill
amortization and impairment, net gains or losses from disposition of premises
and equipment, and other non-interest income and expense items.

Frequently, the business units work together in connection with providing
services to customers. In accordance with BTM Group's internal management
accounting policies, BTM Group does not apportion the net revenue relating to a
particular transaction among the participating business units. Instead, BTM
Group assigns the total amount of net revenue relating to each of these
transactions to each participating business unit. As a result, some items of
net revenue are recorded as part of the operating results of more than one
business unit. Any overlapping allocations are eliminated in the "Other"
column. The following is a summary of the aggregate amounts of this overlapping
allocation of net revenue for the business units for the fiscal years ended
March 31, 2002, 2003 and 2004:



                                                                 Global      Total
                                          Retail   Commercial   Corporate    amount
                                          Banking   Banking      Banking   eliminated
                                          -------- ----------- ----------- -----------
                                                         (in millions)
                                                               
Fiscal year ended March 31, 2002:
  Investment Banking and Asset Management (Yen) -- (Yen) 7,837 (Yen)30,157 (Yen)37,994
Fiscal year ended March 31, 2003:
  Investment Banking and Asset Management       --       9,722      28,709      38,431
Fiscal year ended March 31, 2004:
  Investment Banking and Asset Management      319      25,282      37,970      63,571


Mitsubishi Trust Group

Principal business activities of each operating group as of March 31, 2004,
were as follows:

..   The Trust-Banking business group provides retail banking and trust
    services, corporate financing services, and stock transfer agent services

..   The Trust Assets business group provides asset management and
    administration services

..   The Real Estate business group provides brokerage, securitization,
    appraisal, advisory and other real estate services

..   The Global Markets business group provides various financial operations
    including banking, money markets and capital markets operations, securities
    investments, custody operations and asset management.

In April 2004, Mitsubishi Trust has upgraded the status of its stock transfer
agency business from part of the trust-banking business group to a newly
established stock transfer agency business group. Since this change was made
subsequent to March 31, 2004, we did not reclassify the business segment
information for the fiscal years ended March 31, 2002, 2003 and 2004 to reflect
this change.

On April 2, 2001, NTB became a wholly owned subsidiary of MTFG and has been
excluded from BTM's consolidation. On October 1, 2001, NTB and TTB merged with
and into Mitsubishi Trust and, accordingly, their post-merger financial
performance is reflected in Mitsubishi Trust's segment information. NTB's
operation principally includes pension trust services, securities operations,
real estate services, property management

                                     F-83



            MITSUBISHI TOKYO FINANCIAL GROUP, INC. AND SUBSIDIARIES

            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)

services and stock transfer agency services. TTB's principal business includes
securities lending transactions, asset securitizations and other financial
securities. The following is a summary of financial performance of NTB and TTB
for the six months ended September 30, 2001, derived from the internal
management systems of these banks without any adjustments.



                                         Six months ended
                                        September 30, 2001
                                        ------------------
                                          (in millions)
                                     
                     Net revenue.......    (Yen)12,100
                     Operating expenses         14,341
                                           -----------
                     Operating loss....    (Yen)(2,241)
                                           ===========


The financial performance of the Mitsubishi Trust Group's business groups,
derived from the internal management reporting system, is summarized below.
Management does not use information on segments' total assets to allocate
resources and assess performance, and has not prepared information on segment
assets. Accordingly, business segments' information on total assets is not
available.



                                                                   Trust-          Trust        Real        Global
                                                                   Banking         Assets      Estate       Markets
                                                               ----------------  ----------- ----------- ------------
                                                                                                 (in millions)
                                                                                             
Fiscal year ended March 31, 2002:
   Mitsubishi Trust:
   Net revenue:
      Net interest income..................................... (Yen)     72,706  (Yen)    -- (Yen)    -- (Yen) 96,072
      Fees on jointly operated designated money in trusts.....           16,563           --          --       27,910
      Other fees..............................................           27,017       54,334      11,683       (3,306)
      Other...................................................              105           --          --      (14,768)
                                                               ----------------  ----------- ----------- ------------
         Total................................................          116,391       54,334      11,683      105,908
   Operating expenses.........................................           69,139       33,249       8,083       17,858
   Mitsubishi Trust's subsidiaries............................               --           --          --           --
                                                               ----------------  ----------- ----------- ------------
   Operating profit (loss).................................... (Yen)     47,252  (Yen)21,085 (Yen) 3,600 (Yen) 88,050
                                                               ================  =========== =========== ============
Fiscal year ended March 31, 2003:
   Mitsubishi Trust:
   Net revenue:
      Net interest income..................................... (Yen)     79,025  (Yen)    -- (Yen)    -- (Yen)108,988
      Fees on jointly operated designated money in trusts.....           10,382           --          --       21,971
      Other fees..............................................           30,708       37,986      16,720       (5,012)
      Other...................................................               31           --          --       11,301
                                                               ----------------  ----------- ----------- ------------
      Total...................................................          120,146       37,986      16,720      137,248
   Operating expenses.........................................           73,456       27,986       9,710       17,684
   Mitsubishi Trust's subsidiaries............................               --           --          --           --
                                                               ----------------  ----------- ----------- ------------
   Operating profit (loss).................................... (Yen)     46,690  (Yen)10,000 (Yen) 7,010 (Yen)119,564
                                                               ================  =========== =========== ============
Fiscal year ended March 31, 2004:
   Mitsubishi Trust:
   Net revenue:
      Net interest income.....................................      (Yen)78,539  (Yen)    -- (Yen)    -- (Yen)119,328
      Fees on jointly operated designated money in trusts.....            7,590           --          --       19,956
      Other fees..............................................           38,741       37,977      16,231       (5,666)
      Other...................................................                9           --          --       12,079
                                                               ----------------  ----------- ----------- ------------
         Total................................................          124,879       37,977      16,231      145,697
   Operating expenses.........................................           71,069       28,089       9,501       15,797
   Mitsubishi Trust's subsidiaries............................               --           --          --           --
                                                               ----------------  ----------- ----------- ------------
   Operating profit (loss)....................................      (Yen)53,810  (Yen) 9,888 (Yen) 6,730 (Yen)129,900
                                                               ================  =========== =========== ============




                                                                  Other*        Total
                                                               -----------  ------------

                                                                      
Fiscal year ended March 31, 2002:
   Mitsubishi Trust:
   Net revenue:
      Net interest income..................................... (Yen)10,711  (Yen)179,489
      Fees on jointly operated designated money in trusts.....      17,016        61,489
      Other fees..............................................          --        89,728
      Other...................................................         (50)      (14,713)
                                                               -----------  ------------
         Total................................................      27,677       315,993
   Operating expenses.........................................      31,421       159,750
   Mitsubishi Trust's subsidiaries............................        (293)         (293)
                                                               -----------  ------------
   Operating profit (loss).................................... (Yen)(4,037) (Yen)155,950
                                                               ===========  ============
Fiscal year ended March 31, 2003:
   Mitsubishi Trust:
   Net revenue:
      Net interest income..................................... (Yen) 6,180  (Yen)194,193
      Fees on jointly operated designated money in trusts.....      16,463        48,816
      Other fees..............................................          --        80,402
      Other...................................................        (117)       11,215
                                                               -----------  ------------
      Total...................................................      22,526       334,626
   Operating expenses.........................................      27,377       156,213
   Mitsubishi Trust's subsidiaries............................       4,738         4,738
                                                               -----------  ------------
   Operating profit (loss).................................... (Yen)  (113) (Yen)183,151
                                                               ===========  ============
Fiscal year ended March 31, 2004:
   Mitsubishi Trust:
   Net revenue:
      Net interest income..................................... (Yen) 5,001  (Yen)202,868
      Fees on jointly operated designated money in trusts.....       9,905        37,451
      Other fees..............................................          --        87,283
      Other...................................................        (591)       11,497
                                                               -----------  ------------
         Total................................................      14,315       339,099
   Operating expenses.........................................      26,584       151,040
   Mitsubishi Trust's subsidiaries............................       5,930         5,930
                                                               -----------  ------------
   Operating profit (loss).................................... (Yen)(6,339) (Yen)193,989
                                                               ===========  ============

--------
*  Other includes certain divisions of the corporate headquarters (e.g.,
   personnel and planning) and adjustments.

                                     F-84



            MITSUBISHI TOKYO FINANCIAL GROUP, INC. AND SUBSIDIARIES

            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)


Management measures performance of each business group by "operating profit."
"Operating profit" is a defined term in Mitsubishi Trust's regulatory reporting
to the FSA. The financial performance of subsidiaries are measured by ordinary
profit or loss derived from the financial statements of Mitsubishi Trust's
subsidiaries. Because of the limited significance of subsidiary operations,
Mitsubishi Trust does not assign the subsidiary financial performances to
business groups but manages them on an aggregate basis.

"Net revenue" above includes net interest income, net fees (that is, fees and
commissions received, net of fees paid and other related expenses), and other
gains, such as net trading gains, net foreign exchange gains, and net gains
from sales of investment debt securities measured under Japanese GAAP.
"Operating expenses" include salaries and employee benefits, occupancy and
certain other non-interest expenses. In determining operating profit, the
Mitsubishi Trust Group does not assign to each business group certain income
and expense items such as provisions for loan loss reserve, equity investment
securities gains or losses, minority interest in earnings or losses of
Mitsubishi Trust's subsidiaries, equity in earnings or losses of Mitsubishi
Trust's affiliated companies, goodwill amortization and impairment, net gains
or losses from disposition of premises and equipment, and other non-interest
income and expense items.

"Fees on jointly operated designated money in trusts" include trust fees,
accounted for on a cash basis, which are associated with loan trusts and other
types of jointly operated designated money in trusts, including certain money
trusts with guarantee for the repayment of principal. The amounts assigned to
the Trust-Banking business group are fees associated with the return on lending
activities and the amounts assigned to the Global Markets business group are
fees resulting from the management of investment securities included in the
trust accounts. Amounts of write-downs for trust assets recorded within each
trust account, which eventually reduce the trust fees to be recognized in
Mitsubishi Trust's financial statements, are excluded from the business group's
performance measure on jointly operated designated money in trusts, and the fee
amounts are before provision for credit losses on individual trust assets. Such
credit losses, recognized within each trust account, are shown in the
reconciliations of the business segments' total operating profit to income or
loss before income tax expense or benefit and cumulative effect of a change in
accounting principle. Fees on such trusts are determined at the end of
respective accounting periods of individual trust accounts and Mitsubishi Trust
recognizes such fees, on a cash basis, in its Japanese GAAP financial
statements. For measuring the performance of the Trust-Banking and Global
Markets business groups, Mitsubishi Trust focuses on the results of performance
during the term corresponding to the fiscal period. Since the trust accounting
periods do not necessarily correspond with Mitsubishi Trust's fiscal period,
fee amounts shown in the Japanese GAAP financial statements would not meet the
objective of management reporting without certain adjustments. Accordingly,
Mitsubishi Trust allocates amounts to the business group to show the fee
amounts that would have been earned, on an accrual basis, if each trust
accounting period had corresponded with Mitsubishi Trust's fiscal period.

"Other fees" include trust fees other than fees on certain jointly operated
designated money in trusts, such as retirement benefit trusts and
securities-related trusts, including specified money trusts and independently
operated designated money in trust, and fiduciary and custodial services
related to asset management and administration. Fees and commissions on
securitizations, stock transfer agency services and real estate businesses are
also included in this line.

"Net revenue" included in the "Other" column includes interest and dividends on
certain investment securities held for relationship management. "Fees on
jointly operated designated money in trusts" under "Other" include the amounts
representing the recoveries of trust assets previously written off and reversal
of the statutory reserve, both of which are accounted for as a reduction of the
trust fees. Also, included in the amounts under "Other" are the adjustments for
the amounts of the Trust-Banking business group based on Mitsubishi Trust's
fiscal period to the segments' total amounts, which are determined, based on
the accounting periods of the trust accounts.

                                     F-85



            MITSUBISHI TOKYO FINANCIAL GROUP, INC. AND SUBSIDIARIES

            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)


Reconciliation

As set forth above, the measurement bases and the income and expenses items
covered are very different between the internal management reporting system and
the accompanying consolidated statements of operations. Therefore, it is
impracticable to present reconciliations of the business segments' total
information, other than operating profit, to corresponding items in the
accompanying consolidated statements of operations.

Reconciliations of the total amounts of total operating profits of BTM Group
and Mitsubishi Trust Group under the internal management reporting system for
the fiscal years ended March 31, 2002, 2003 and 2004 above to income (loss)
from continuing operations before income tax expense (benefit) and cumulative
effect of a change in accounting principle shown on the consolidated statements
of operations are as follows:



                                                                                    2002       2003       2004
                                                                                 ---------  ---------  ----------
                                                                                           (in billions)
                                                                                              
Operating profit:
   BTM Group.................................................................... (Yen) 607  (Yen) 589  (Yen)  630
   Mitsubishi Trust Group.......................................................       156        183         194
                                                                                 ---------  ---------  ----------
       Total....................................................................       763        772         824
   Trust fees adjusted for credit losses of trust assets........................       (19)        (8)        (10)
   Credit (provision) for credit losses.........................................      (577)      (386)        114
   Trading account profits (losses)--net........................................        12         47        (117)
   Equity investment securities gains (losses)--net.............................       (23)      (270)        346
   Debt investment securities gains (losses)--net...............................        21        162        (204)
   Foreign exchange gains (losses)--net.........................................      (275)        84         355
   Gains (losses) on other real estate owned....................................        (6)        --           1
   Goodwill amortization........................................................        (8)        --          --
   Minority interest............................................................       (22)        (1)        (42)
   Other--net...................................................................      (189)      (137)        (87)
                                                                                 ---------  ---------  ----------
Income (loss) from continuing operations before income tax expense (benefit) and
  cumulative effect of a change in accounting principle......................... (Yen)(323) (Yen) 263  (Yen)1,180
                                                                                 =========  =========  ==========


29.  FOREIGN ACTIVITIES

Foreign operations include the business conducted by overseas offices, as well
as international business conducted from domestic offices, principally several
international banking-related divisions of BTM's and Mitsubishi Trust's Head
Office in Tokyo, and involve various transactions with debtors and customers
residing outside Japan. Close integration of the MTFG Group's foreign and
domestic activities makes precise estimates of the amounts of assets,
liabilities, income and expenses attributable to foreign operations difficult
and necessarily subjective. Assets, income and expenses attributable to foreign
operations are allocated to geographical areas based on the domiciles of the
debtors and customers.

Generally, interest rates with respect to funds borrowed and loaned between
domestic and foreign operations are based on prevailing money market rates
appropriate for the transactions. In general, the MTFG Group has allocated all
direct expenses and a proportionate share of general and administrative
expenses to income derived from foreign loans and other transactions by the
MTFG Group's foreign operations. The following table sets forth estimated total
assets at March 31, 2002, 2003 and 2004, and estimated total revenue, total
expenses, income (loss) from continuing operations before income tax expense
(benefit) and cumulative effect of a change in accounting principle and net
income (loss) for the respective years then ended.

                                     F-86



            MITSUBISHI TOKYO FINANCIAL GROUP, INC. AND SUBSIDIARIES

            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)




                                                      Domestic                                Foreign
                                                  ---------------  --------------------------------------------------------------
                                                                       United
                                                                      States of                     Asia/Oceania       Other
                                                       Japan           America          Europe     excluding Japan     areas*
                                                  ---------------  ---------------  -------------- --------------- --------------
                                                                                            (in millions)
                                                                                                    
Fiscal year ended March 31, 2002:
   Total revenue................................. (Yen) 1,222,132  (Yen)   541,485  (Yen)  243,910 (Yen)  239,004  (Yen)  128,932
   Total expenses................................       1,607,527          572,926         235,430        194,189          87,908
   Income (loss) from continuing operations
    before income tax expense (benefit) and
    cumulative effect of a change in accounting
    principle....................................        (385,395)         (31,441)          8,480         44,815          41,024
   Net income (loss).............................        (236,546)         (57,036)          4,131         34,984          37,933
   Total assets at end of fiscal year............      69,162,382       12,346,379       6,668,616      3,297,980       2,889,757
Fiscal year ended March 31, 2003:
   Total revenue.................................       1,286,442          611,937         255,959        150,580         117,654
   Total expenses................................       1,362,508          438,082         203,947         89,056          66,055
   Income (loss) from continuing operations
    before income tax expense and cumulative
    effect of a change in accounting principle...         (76,066)         173,855          52,012         61,524          51,599
   Net income (loss).............................         (70,636)         142,954          37,273         43,315          50,382
   Total assets at end of fiscal year............      69,731,714       13,210,140       7,893,478      3,154,016       2,542,365
Fiscal year ended March 31, 2004:
   Total revenue.................................       1,650,727          575,077         277,183         78,054         147,552
   Total expenses................................         940,903          408,651          94,054         29,914          74,923
   Income from continuing operations before
    income tax expense and cumulative effect of
    a change in accounting principle.............         709,824          166,426         183,129         48,140          72,629
   Net income....................................         463,503          158,275         120,751         26,485          53,235
   Total assets at end of fiscal year............      79,655,825       12,585,539       6,141,837      3,015,416       2,302,463







                                                        Total
                                                  ----------------

                                               
Fiscal year ended March 31, 2002:
   Total revenue................................. (Yen)  2,375,463
   Total expenses................................        2,697,980
   Income (loss) from continuing operations
    before income tax expense (benefit) and
    cumulative effect of a change in accounting
    principle....................................         (322,517)
   Net income (loss).............................         (216,534)
   Total assets at end of fiscal year............       94,365,114
Fiscal year ended March 31, 2003:
   Total revenue.................................        2,422,572
   Total expenses................................        2,159,648
   Income (loss) from continuing operations
    before income tax expense and cumulative
    effect of a change in accounting principle...          262,924
   Net income (loss).............................          203,288
   Total assets at end of fiscal year............       96,531,713
Fiscal year ended March 31, 2004:
   Total revenue.................................        2,728,593
   Total expenses................................        1,548,445
   Income from continuing operations before
    income tax expense and cumulative effect of
    a change in accounting principle.............        1,180,148
   Net income....................................          822,249
   Total assets at end of fiscal year............      103,701,080

--------
*  Other areas primarily include Canada, Latin America and the Caribbean.

The following is an analysis of certain asset and liability accounts related to
foreign activities at March 31, 2003 and 2004:



                                                                                                    2003            2004
                                                                                               --------------- ---------------
                                                                                                        (in millions)
                                                                                                         
Cash and due from banks....................................................................... (Yen)   452,142 (Yen)   348,670
Interest-earning deposits in other banks......................................................       3,234,017       2,999,248
                                                                                               --------------- ---------------
       Total.................................................................................. (Yen) 3,686,159 (Yen) 3,347,918
                                                                                               =============== ===============
Trading account assets........................................................................ (Yen) 1,825,919 (Yen) 1,737,706
                                                                                               =============== ===============
Investment securities......................................................................... (Yen) 7,926,797 (Yen) 7,276,364
                                                                                               =============== ===============
Loans--net of unearned income and deferred loan fees.......................................... (Yen)10,051,649 (Yen) 8,756,846
                                                                                               =============== ===============
Deposits, principally time deposits and certificates of deposit by foreign banks.............. (Yen)11,135,306 (Yen)13,779,317
                                                                                               =============== ===============
Funds borrowed:
    Call money, funds purchased, and receivables under repurchase agreements and securities
     lending transactions..................................................................... (Yen) 2,924,532 (Yen) 3,188,960
    Other short-term borrowings...............................................................         422,061         238,060
    Long-term debt............................................................................       1,206,093       1,185,060
                                                                                               --------------- ---------------
       Total.................................................................................. (Yen) 4,552,686 (Yen) 4,612,080
                                                                                               =============== ===============
Trading account liabilities................................................................... (Yen) 1,274,334 (Yen) 1,427,407
                                                                                               =============== ===============


                                     F-87



            MITSUBISHI TOKYO FINANCIAL GROUP, INC. AND SUBSIDIARIES

            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)


At 2004, the MTFG Group had no cross-border outstandings, as defined in the
Securities Act Industry Guides 3, in any foreign country, which exceeded 0.75%
of consolidated total assets.

The table below shows cross-border outstandings for the country in respect of
which such outstandings totaled between 0.75% and 1% of consolidated total
assets at March 31, 2003.



                                  Cross-border  Percentage of
                                  Outstandings  Total Assets
                                  ------------- -------------
                                  (in millions)
                                          
                   United Kingdom (Yen)810,668      0.84%


30.  ESTIMATED FAIR VALUE OF FINANCIAL INSTRUMENTS

Quoted market prices, when available, are used to estimate fair values of
financial instruments. However, quoted market prices are not available for a
substantial portion of financial instruments and, therefore, fair values for
such financial instruments are estimated using discounted cash flow models or
other valuation techniques. Although management uses its best judgment in
estimating fair values of financial instruments, estimation methodologies and
assumptions used to estimate fair values are inherently subjective.
Accordingly, the estimates presented herein are not necessarily indicative of
net realizable or liquidation values. The use of different estimation
methodologies and/or market assumptions may have a significant effect on the
estimated fair values. The estimated fair values of financial instruments do
not include valuations of related intangible assets such as core deposits.

The following is a summary of carrying amounts and estimated fair values of
financial instruments at March 31, 2003 and 2004:



                                                                                          2003                    2004
                                                                                 ----------------------- -----------------------
                                                                                  Carrying   Estimated    Carrying   Estimated
                                                                                   amount    fair value    amount    fair value
                                                                                 ----------- ----------- ----------- -----------
                                                                                                  (in billions)
                                                                                                         
Financial assets:
   Cash, due from banks, call loans and funds sold, and receivables under
     resale agreements and securities borrowing transactions.................... (Yen)11,912 (Yen)11,912 (Yen)14,488 (Yen)14,488
   Trading account assets, excluding derivatives................................       4,789       4,789       5,930       5,930
   Investment securities........................................................      24,555      24,567      28,905      28,912
   Loans, net of allowance for credit losses....................................      47,105      47,483      47,638      47,880
   Other financial assets.......................................................       1,898       1,898       2,121       2,121
   Derivative financial instruments:
      Trading activities........................................................       3,574       3,574       2,448       2,448
      Activities qualifying for hedges..........................................          15          15           5           5
Financial liabilities:
   Non-interest-bearing deposits, call money and funds purchased, and payables
     under repurchase agreements and securities lending transactions............      15,742      15,742      16,893      16,893
   Interest-bearing deposits....................................................      60,882      60,900      62,528      62,512
   Debentures...................................................................         636         638         266         266
   Trading account liabilities, excluding derivatives...........................         206         206         220         220
   Obligations to return securities received as collateral......................         950         950       2,330       2,330
   Due to trust account.........................................................       1,402       1,402       1,380       1,380
   Other short-term borrowings..................................................       2,854       2,854       5,663       5,663
   Long-term debt...............................................................       5,159       5,378       5,660       5,791
   Other financial liabilities..................................................       1,878       1,878       1,871       1,871
   Derivative financial instruments:
      Trading activities........................................................       3,397       3,397       2,291       2,291


                                     F-88



            MITSUBISHI TOKYO FINANCIAL GROUP, INC. AND SUBSIDIARIES

            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)


The methodologies and assumptions used to estimate the fair value of the
financial instruments are summarized below.

Cash, due from banks, call loans and funds sold, and receivables under resale
agreements and securities borrowing transactions--For cash, due from banks
including interest-earning deposits, and call loans and funds sold, the
carrying amounts are a reasonable estimate of the fair values because of their
short-term nature and limited credit risk. For receivables under resale
agreements and securities borrowing transactions, the fair values are based on
quoted market prices, when available, or estimated with reference to quoted
market prices for similar instruments when quoted market prices are not
available.

Trading account securities--Trading account securities and short trading
positions of securities are carried at fair value, which is principally based
on quoted market prices, when available. If the quoted market prices are not
available, fair values are based on quoted market prices of comparable
instruments.

Investment securities--The fair values of investment securities, where quoted
market prices or secondary market prices are available, are equal to such
market prices. For investment securities, when quoted market prices or
secondary market prices are not available, the fair values are estimated using
quoted market prices for similar securities or based on appraised value as
deemed appropriate by management. The fair value of investment securities other
than those classified as available for sale or being held to maturity (i.e.,
nonmarketable equity securities) at March 31, 2003 and 2004 were not readily
determinable. Therefore, the above summary does not include the carrying
amounts of such investment securities amounting to (Yen)145 billion and
(Yen)201 billion at March 31, 2003 and 2004, respectively.

Loans--The fair values of loans are estimated for groups of similar
characteristics, including type of loan, credit quality and remaining maturity.
In incorporating the credit risk factor, management concluded that the
allowance for credit losses adequately adjusts the related book values for
credit risk. For floating- or adjustable-rate loans, which mature or are
repriced within a short period of time, the carrying values are considered to
be a reasonable estimate of fair values. For fixed-rate loans, market prices
are not generally available and the fair values are estimated by discounting
the estimated future cash flows based on the contracted maturity of the loans.
The discount rates are based on the current market rates corresponding to the
applicable maturity. Where quoted market prices or estimated fair values are
available, primarily for loans to refinancing countries, loans held for
dispositions or sales and certain other foreign loans, the fair values are
based on such market prices and estimated fair values, including secondary
market prices. For nonperforming loans, the fair values are generally
determined on an individual basis by discounting the estimated future cash
flows and may be based on the appraisal value of underlying collateral as
appropriate.

Other financial assets--The estimated fair values of other financial assets,
which primarily include accrued interest receivable, customers' acceptance
liabilities and accounts receivable, approximate their carrying amounts.

Derivative financial instruments--The estimated fair values of derivative
financial instruments are the amounts the MTFG Group would receive or pay to
terminate the contracts at the balance-sheet date, taking into account the
current unrealized gains or losses on open contracts. They are based on market
or dealer quotes when available. Valuation models such as present value and
option pricing models are applied to current market information to estimate
fair values when such quotes are not available.

Non-interest-bearing deposits, call money and funds purchased, payables under
repurchase agreements and securities lending transactions, and obligations to
return securities received as collateral--The fair values of
non-interest-bearing deposits are equal to the amounts payable on demand. For
call money and funds purchased,

                                     F-89



            MITSUBISHI TOKYO FINANCIAL GROUP, INC. AND SUBSIDIARIES

            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)

the carrying amounts are a reasonable estimate of the fair values because of
their short-term nature. For payables under repurchase agreements and
securities lending transactions and obligations to return securities received
as collateral, the fair values are generally based on quoted market prices,
when available, or estimated using quoted market prices for similar instruments
when quoted market prices are not available.

Interest-bearing deposits--The fair values of demand deposits, deposits at
notice, and certificates of deposit maturing within a short period of time are
the amounts payable on demand. Fair values of time deposits and certificates of
deposit maturing after a short period of time are estimated by discounting the
estimated cash flows using the rates currently offered for deposits of similar
remaining maturities or the applicable current market rates.

Debentures--The fair values of debentures are estimated using a discounted cash
flow model based on quoted market rates or, if available, secondary market
rates currently available for debentures with similar terms and remaining
maturities.

Due to trust account--For due to trust account, which reflects a temporary
placement of excess fund from individual trust accounts managed by the trust
banking subsidiary in their fiduciary and trust capacity, the carrying amount
is a reasonable estimate of the fair value due to its nature similar to
short-term funding, including demand deposits and other overnight funds
purchased, in a manner that the balance changes in response to the day-to-day
changes in excess funds placed by the trust accounts.

Other short-term borrowings--For most other short-term borrowings, the carrying
amounts are a reasonable estimate of the fair values because of their
short-term nature. For certain borrowings, fair values are estimated by
discounting the estimated future cash flows using applicable current market
interest rates or comparable rates for similar instruments, which represent the
MTFG Group's cost to raise funds with a similar remaining maturity.

Long-term debt--For convertible bonds and certain subordinated debt, the fair
values are estimated based on quoted market prices of the instruments. The fair
value of other long-term debt are estimated using a discounted cash flow model
based on rates applicable to the MTFG Group for debt with similar terms and
remaining maturities.

Other financial liabilities--The estimated fair values of other financial
liabilities, which primarily include accrued interest payable, bank
acceptances, accounts payable and obligations under standby letters of credit
and guarantees, approximate their carrying amounts. Effective January 1, 2003,
the MTFG Group adopted the initial recognition and measurement provisions of
FIN No. 45, which requires that, for guarantees within the scope of FIN No. 45
issued or amended after December 31, 2002, liability for the fair value of the
obligations undertaken in issuing the guarantees be initially measured at fair
value. The fair values of obligations under standby letters of credit and
guarantees are based on fees received or receivable by the MTFG Group.

The fair values of certain off-balance-sheet financial instruments held for
purposes other than trading, including commitments to extend credit and
commercial letters of credit, are estimated using the fees currently charged to
enter into similar agreements, taking into account the remaining terms of the
agreements and the credit quality. The aggregate fair value of such instruments
at March 31, 2003 and 2004 was not material.

The fair value estimates presented herein are based on pertinent information
available to management as of March 31, 2003 and 2004. These amounts have not
been comprehensively revalued since that date and, therefore, current estimates
of fair values may have changed significantly from the amounts presented herein.

                                     F-90



            MITSUBISHI TOKYO FINANCIAL GROUP, INC. AND SUBSIDIARIES

            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)


31.  STOCK-BASED COMPENSATION

Two subsidiaries of MTFG, Mitsubishi Securities and UNBC, have several
stock-based compensation plans.

Mitsubishi Securities

Under the Code, companies are permitted to purchase their own shares in the
market in order to implement a stock option plan when approved by the
shareholders.

Pursuant to resolutions approved at the general shareholders' meetings,
Mitsubishi Securities offers stock option plans which provide directors,
executive officers, eligible employees and certain other persons with options
to purchase shares (at the respective exercise prices stipulated in each plan)
as follows:



Date of approval at the shareholders' meeting Exercise period                            Shares
--------------------------------------------- -----------------------------              ---------
                                                                                   
                June 29, 2000................ July 1, 2002 to June 30, 2005              2,057,000
                June 28, 2001................ July 1, 2003 to June 30, 2006              2,272,000
                                                                                         ---------
Total................................................................................... 4,329,000
                                                                                         =========


The plans provide for the granting of stock options having an exercise price
not less than the market value of Mitsubishi Securities' common stock on the
date of grant. Following is the option activity for the period from September
1, 2002 to March 31, 2003 and for the fiscal year ended March 31, 2004:



                                                      2003                        2004
                                           -------------------------- ----------------------------
                                           Number of Weighted-average  Number of  Weighted-average
                                            shares    exercise price    shares     exercise price
                                           --------- ---------------- ----------  ----------------
                                                                      
Options outstanding, September 1, 2002, or
  beginning of fiscal year................ 5,512,000    (Yen)1,278     5,512,000     (Yen)1,278
   Granted................................        --            --            --             --
   Exercised..............................        --            --      (831,000)           812
   Forfeited..............................        --            --    (1,528,000)         1,568
                                           ---------                  ----------
Options outstanding, end of fiscal year... 5,512,000    (Yen)1,278     3,153,000     (Yen)1,260
                                           =========                  ==========
Options exercisable, end of fiscal year... 3,403,000    (Yen)1,566     3,153,000     (Yen)1,260
                                           =========                  ==========


The following table details the distribution of stock options outstanding at
March 31, 2004:



                                                                          Options exercisable at
                             Options outstanding at March 31, 2004            March 31, 2004
                         --------------------------------------------- ----------------------------
                                     Weighted-average
                           Number       remaining     Weighted-average   Number    Weighted-average
Range of exercise prices outstanding contractual life  exercise price  exercisable  exercise price
------------------------ ----------- ---------------- ---------------- ----------- ----------------
                                                                    
    (Yen)812--1,546       3,153,000     1.64 years       (Yen)1,260     3,153,000     (Yen)1,260


UNBC

UNBC has two management stock plans. The Year 2000 UnionBanCal Corporation
Stock Plan, effective January 1, 2000 (the "2000 Stock Plan"), and the
UnionBanCal Corporation Management Stock Plan, restated

                                     F-91



            MITSUBISHI TOKYO FINANCIAL GROUP, INC. AND SUBSIDIARIES

            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)

effective June 1, 1997 (the "1997 Stock Plan"), have 16.0 million and 6.6
million shares, respectively, of the UNBC's common stock authorized to be
awarded to key employees and outside directors of UNBC at the discretion of the
Executive Compensation and Benefits Committee of the Board of Directors (the
"Committee"). Employees on rotational assignment from BTM are not eligible for
stock awards.

The Committee determines the term of each stock option grant, up to a maximum
of ten years from the date of grant. The exercise price of the options issued
under the Stock Plans shall not be less than the fair market value on the date
the option is granted. Unvested restricted stock issued under the Stock Plans
is shown as a reduction to retained earnings. The value of the restricted
shares at the date of grant is amortized to compensation expense over its
vesting period. All cancelled or forfeited options and restricted stock become
available for future grants.

In 2001, 2002 and 2003, UNBC granted options to non-employee directors and
various key employees, including policy-making officers under the 2000 Stock
Plan. Under both Stock Plans, options granted to employees vest pro-rata on
each anniversary of the grant date and become fully exercisable three years
from the grant date, provided that the employee has completed the specified
continuous service requirement. The options vest earlier if the employee dies,
is permanently disabled, or retires under certain grant, age, and service
conditions. Options granted to non-employee directors are fully vested on the
grant date and exercisable 33 1/3 percent on each anniversary under the 1997
Stock Plan, and fully vested and exercisable on the grant date under the 2000
Stock Plan. The following is a summary of stock option transactions under the
Stock Plans.



                                                       Fiscal years ended December 31,
                            -------------------------------------------------------------------------------------
                                       2001                         2002                         2003
                            --------------------------- ---------------------------- ----------------------------
                            Number of  Weighted-average  Number of  Weighted-average  Number of  Weighted-average
                             shares     exercise price    shares     exercise price    shares     exercise price
                            ---------  ---------------- ----------  ---------------- ----------  ----------------
                                                                               
Options outstanding,
  beginning of fiscal
  year..................... 5,191,899       $28.47       7,939,271       $29.79       8,515,469       $34.71
   Granted................. 3,448,242        30.03       2,911,652        43.49       2,517,023        40.32
   Exercised...............  (557,597)       19.02      (2,187,170)       28.57      (1,912,323)       30.52
   Forfeited...............  (143,273)       29.91        (148,284)       34.05        (112,158)       38.96
                            ---------                   ----------                   ----------
Options outstanding, end of
  fiscal year.............. 7,939,271       $29.79       8,515,469       $34.71       9,008,011       $37.12
                            =========                   ==========                   ==========
Options exercisable, end of
  fiscal year.............. 3,009,555       $29.53       3,031,478       $31.08       3,845,520       $33.99
                            =========                   ==========                   ==========


The weighted-average fair value of options granted was $10.38 during 2001,
$16.67 during 2002 and $12.92 during 2003.

The fair value of each option grant is estimated on the date of grant using the
Black-Scholes option pricing model with the following weighted-average
assumptions used for grants made in 2001, 2002 and 2003:



                                         2001     2002     2003
                                       -------  -------  -------
                                                
              Risk-free interest rate.     4.9%     4.9%     2.9%
              Expected lives.......... 5 years  5 years  5 years
              Expected volatility.....      45%      46%      43%
              Expected dividend yields     3.4%     2.3%     2.8%


                                     F-92



            MITSUBISHI TOKYO FINANCIAL GROUP, INC. AND SUBSIDIARIES

            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)


The following table summarizes information about stock options outstanding.



                        Options outstanding at December 31, 2003    Options exercisable at December 31, 2003
                      --------------------------------------------- ----------------------------------------
                                  Weighted-average
    Range of            Number       remaining     Weighted-average   Number          Weighted-average
 exercise prices      outstanding contractual life  exercise price  exercisable        exercise price
------------------    ----------- ---------------- ---------------- -----------       ----------------
                                                                       
     $ 18.29-25.00       113,269     4.5 years          $22.47         113,269             $22.47
       27.56-40.50     6,067,111     7.4                 34.29       2,818,885              31.33
       42.40-57.50     2,827,631     8.1                 43.77         913,366              43.65
                       ---------                                     ---------
                       9,008,011                                     3,845,520
                       =========                                     =========


In each of 2001, 2002 and 2003, UNBC also granted 6,000 shares of restricted
stock with weighted average grant date fair values of $37.10, $45.00 and
$46.95, respectively, to key officers, including policy-making officers, under
the 2000 Stock Plan. The awards of restricted stock vest pro-rata on each
anniversary of the grant date and become fully vested four years from the grant
date, provided that the employee has completed the specified continuous service
requirement. They vest earlier if the employee dies, is permanently and totally
disabled, or retires under certain grant, age, and service conditions.
Restricted shareholders have the right to vote their restricted shares and
receive dividends.

At December 31, 2001, 2002 and 2003, 4,556,724 shares, 1,764,414 shares and
5,347,715 shares, respectively, were available for future grants as either
stock options or restricted stock under the 2000 Stock Plan.

Effective January 1, 1997, UNBC established a Performance Share Plan. Eligible
participants may earn performance share awards to be redeemed in cash three
years after the date of grant. Performance shares are linked to shareholder
value in two ways: (1) the market price of the UNBC's common stock; and (2)
return on equity, a performance measure closely linked to value creation.
Eligible participants generally receive grants of performance shares annually.
The total number of performance shares granted under the plan cannot exceed
600,000. UNBC granted 72,000 shares in 2001, 61,500 shares in 2002, and 43,500
shares in 2003. No performance shares were forfeited in 2002 or 2003. In 2001,
7,250 performance shares were forfeited. The value of a performance share is
equal to the market price of UNBC's common stock. All cancelled or forfeited
performance shares become available for future grants. Expenses related to
these shares were $3.3 million each in both 2001 and 2002, and $6.6 million in
2003.

                                     F-93



            MITSUBISHI TOKYO FINANCIAL GROUP, INC. AND SUBSIDIARIES

            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)


32.  PARENT COMPANY ONLY FINANCIAL INFORMATION

Distributions of retained earnings of BTM and Mitsubishi Trust are restricted
in order to meet the minimum capital adequacy requirements under the Banking
Law. Also, retained earnings of these banking subsidiaries are restricted in
accordance with the statutory reserve requirements under the Code (see Notes 20
and 21).

The following table presents the parent company only financial information of
MTFG.

Condensed Balance Sheets



                                                            2003           2004
                                                       -------------- --------------
                                                               (in millions)
                                                                
Assets:
   Cash and interest-earning deposits with banks...... (Yen)   34,359 (Yen)   57,571
   Investments in subsidiaries........................      2,512,591      3,775,210
   Other assets.......................................         18,764         53,013
                                                       -------------- --------------
       Total assets................................... (Yen)2,565,714      3,885,794
                                                       ============== ==============
Liabilities and shareholders' equity:
   Other liabilities.................................. (Yen)   12,777 (Yen)   38,842
                                                       -------------- --------------
   Total liabilities..................................         12,777         38,842
                                                       -------------- --------------
Shareholders' equity..................................      2,552,937      3,846,952
                                                       -------------- --------------
       Total liabilities and shareholders' equity..... (Yen)2,565,714 (Yen)3,885,794
                                                       ============== ==============


Condensed Statements of Operations



                                                               2002          2003         2004
                                                          -------------  ------------ ------------
                                                                       (in millions)
                                                                             
Income:
   Dividends from subsidiaries........................... (Yen)  67,523  (Yen) 22,067 (Yen) 64,549
   Management fees from subsidiaries.....................         4,967         3,814        4,773
   Interest income.......................................         7,145         4,736            4
   Other income..........................................           191           126           30
                                                          -------------  ------------ ------------
Total income.............................................        79,826        30,743       69,356
                                                          -------------  ------------ ------------
Expense:
   Operating expenses....................................         5,426         3,159        4,418
   Interest expense......................................         7,166         4,730           --
   Other expense.........................................            49           366          203
                                                          -------------  ------------ ------------
       Total expense.....................................        12,641         8,255        4,621
                                                          -------------  ------------ ------------
Equity in undistributed net income (loss) of subsidiaries      (283,855)      181,750      757,589
                                                          -------------  ------------ ------------
Income (loss) before income tax expense or benefit.......      (216,670)      204,238      822,324
Income tax expense (benefit).............................          (136)          950           75
                                                          -------------  ------------ ------------
Net income (loss)........................................ (Yen)(216,534) (Yen)203,288 (Yen)822,249
                                                          =============  ============ ============


                                     F-94



            MITSUBISHI TOKYO FINANCIAL GROUP, INC. AND SUBSIDIARIES

            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)


Condensed Statements of Cash Flows



                                                                           2002           2003           2004
                                                                      -------------  -------------  -------------
                                                                                     (in millions)
                                                                                           
Operating activities:
   Net income (loss)................................................. (Yen)(216,534) (Yen) 203,288  (Yen) 822,249
   Adjustments and other.............................................       283,365       (181,203)      (766,676)
                                                                      -------------  -------------  -------------
Net cash provided by operating activities............................        66,831         22,085         55,573
                                                                      -------------  -------------  -------------
Investing activities:
   Proceeds from maturities of investments in convertible bonds of a
     subsidiary......................................................            --        243,804             --
   Net decrease (increase) in interest-earning deposits with banks...       (38,700)         5,873        (20,473)
   Purchase of equity investment in a subsidiary.....................       (12,827)      (210,277)            --
   Other.............................................................       (14,639)        (3,830)         1,047
                                                                      -------------  -------------  -------------
Net cash provided by (used in) investing activities..................       (66,166)        35,570        (19,426)
                                                                      -------------  -------------  -------------
Financing activities:
   Proceeds from sales of treasury stock.............................         6,998             --            137
   Payments to acquire treasury stock................................        (7,381)          (965)          (467)
   Proceeds from issuance of new shares of common stock..............            --        222,172             --
   Repayment of convertible bonds....................................            --       (243,804)            --
   Dividends paid....................................................            --        (46,915)       (32,847)
   Other.............................................................           230         12,877           (231)
                                                                      -------------  -------------  -------------
Net cash used in financing activities................................          (153)       (56,635)       (33,408)
                                                                      -------------  -------------  -------------
Net increase in cash and cash equivalents............................           512          1,020          2,739
Cash and cash equivalents at beginning of fiscal year................            --            512          1,532
                                                                      -------------  -------------  -------------
Cash and cash equivalents at end of fiscal year...................... (Yen)     512  (Yen)   1,532  (Yen)   4,271
                                                                      =============  =============  =============


33.  EVENTS SINCE MARCH 31, 2004

Approval of Dividends

On June 29, 2004, the shareholders approved payment of cash dividends to the
shareholders of record on March 31, 2004 of (Yen)41,250 per share of Class 1
preferred stock, totaling (Yen)3,357 million, of (Yen)8,100 per share of Class
2 preferred stock, totaling (Yen)121 million, and of (Yen)6,000 per share of
common stock, totaling (Yen)38,844 million.

Strategic Business and Capital Alliance Between ACOM CO., LTD ("ACOM") and MTFG

MTFG agreed to enter into strategic business and capital alliance with ACOM on
March 23, 2004. Pursuant to the agreement, MTFG acquired 20,732,340 shares of
common stock of ACOM for (Yen)137,870 million on April 20, 2004. After the
acquisition of ACOM's share, the MTFG Group held shares equivalent to 15% of
the voting rights of ACOM's outstanding shares.

Mitsubishi Motors Corporation

Mitsubishi Motors Corporation ("MMC") is a major automotive manufacturing
company in Japan. In April 2004, Daimler Chrysler, the largest shareholders of
MMC, announced to withdraw from providing any financial

                                     F-95



            MITSUBISHI TOKYO FINANCIAL GROUP, INC. AND SUBSIDIARIES

            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Concluded)

support to MMC and its consolidated subsidiaries (the "MMC Group"). In May
2004, MMC released a new business revitalization plan without the support by
Daimler Chrysler, which contains a reduction in costs and financial support
from other shareholders including the MTFG Group. Under its business
revitalization plan, MMC received payments totaling (Yen)295 billion for the
issue of preferred stocks during June 2004. The payments included (Yen)180
billion in the aggregate from domestic subsidiary banks of the MTFG Group.

The MTFG Group had an investment in shares of common stock issued by MMC of
(Yen)15.0 billion at March 31, 2004. These shares were classified as
available-for-sale securities and were measured at fair value based on the
quoted market price as of March 31, 2004, in accordance with SFAS No. 115,
"Accounting for Certain Investments in Debt and Equity Securities." Per share
quoted market price of MMC was at (Yen)263 as of March 31, 2004, but declined
to a price level below (Yen)80 per share in August 2004, after hitting over
(Yen)300 per share in mid April. Based on a price level around (Yen)100 per
share in September 2004, significant part of the MTFG Group's investment in
MMC's common stock has been lost subsequent to March 31, 2004.

Planned Management Integration with the UFJ Group

In August 2004, four companies of the MTFG Group, MTFG, BTM, Mitsubishi Trust
and Mitsubishi Securities, concluded a basic agreement with four companies of
the UFJ Group, UFJ Holdings, Inc. ("UFJ"), UFJ Bank Limited ("UFJ Bank"), UFJ
Trust Bank Limited and UFJ Tsubasa Securities Co., Ltd., regarding the
management integration of the holding companies, banks, trust banks and
securities companies of the two groups, subject to the approval by the
shareholders and the relevant authorities. On September 10, 2004, MTFG, UFJ and
UFJ Bank entered into an agreement with regard to the MTFG Group's cooperation
in strengthening the UFJ Group's capital. Pursuant to the terms of the
agreement, on September 17, 2004, UFJ Bank issued 3.5 billion preferred shares
and MTFG purchased those shares for (Yen)700 billion.

Notice Concerning Redemption of Class 1 Preferred Stock

On August 26, 2004, MTFG announced that MTFG will redeem 40,700 shares of the
81,400 issued shares of its Class 1 Preferred stock on a pro-rata basis at
(Yen)3 million per share on October 1, 2004, pursuant to the terms and
conditions for Class 1 Preferred stock set forth in the articles of
incorporation.

Diamond Computer Service to Become MTFG's Wholly Owned Subsidiary

On August 26, 2004, MTFG announced that Diamond Computer Service, Co. Ltd., an
equity method investee, will become a wholly owned subsidiary of MTFG by
December 22, 2004 through a share exchange, subject to approval by Diamond
Computer Service's shareholders and the relevant authorities.

                                   * * * * *

                                     F-96



                                   Signature

The registrant hereby certifies that it meets all of the requirements for
filing on Form 20-F and that it has duly caused and authorized the undersigned
to sign this Annual Report on its behalf.

                                           MITSUBISHI TOKYO FINANCIAL
                                             GROUP, INC.

                                           By:        /s/  NOBUO KUROYANAGI
                                                  -----------------------------
                                           Name:        Nobuo Kuroyanagi
                                           Title: President and Chief Executive
                                                             Officer

Date: September 28, 2004



                                 EXHIBIT INDEX



Exhibit                                               Description
-------                                               -----------
     

   1(a) Articles of Incorporation of Mitsubishi Tokyo Financial Group, Inc., as amended and restated on
        June 29, 2004. (English Translation)

   1(b) Corporation Meetings Regulations of Mitsubishi Tokyo Financial Group, Inc., as amended on April 1,
        2004. (English Translation)

   1(c) Board of Directors Regulations of Mitsubishi Tokyo Financial Group, Inc., as amended on July 29,
        2004. (English Translation)

   1(d) Share Handling Regulations of Mitsubishi Tokyo Financial Group, Inc., as amended and restated on
        June 29, 2004. (English Translation)

   2(a) Form of stock certificates.

   2(b) Form of American Depositary Receipt.*

   2(c) Deposit Agreement, dated as of April 2, 2001, among Mitsubishi Tokyo Financial Group, Inc., The
        Bank of New York and the holders from time to time of American Depositary Receipts issued
        thereunder.*

   8    Subsidiaries of the Company--see "Item 4.C. Information on the Company--Organizational Structure."

  11    Code of ethics, compliance rules and compliance manual of Mitsubishi Tokyo Financial Group, Inc.
        applicable to its directors and managing officers, including its principal executive officer, principal
        financial officer, principal accounting officer or controller, or persons performing similar functions.
        (English translation of relevant sections)

  12    Certifications required by Rule 13a-14(a) (17 CFR 240.13a-14(a)) or Rule 15d-14(a) (17 CFR
        240.15d-14(a)).

  13    Certifications required by Rule 13a-14(b) (17 CFR 240.13a-14(b)) or Rule 15d-14(b) (17 CFR
        240.15d-14(b)) and Section 1350 of Chapter 63 of Title 18 of the United States Code (18 U.S.C.
        1350).

  15    Consent of Auditors.

--------
*  Incorporated by reference from the Registration Statement on Form F-6 (Reg.
   No. 333-13338) filed on April 2, 2001.