Deferred Income Tax

12 Months Ended

Mar. 31, 2026

23	DEFERRED INCOME TAX

The changes of net deferred tax assets and liabilities for the fiscal years ended March 31, 2026 and 2025 were as follows:


	For the fiscal year ended March 31,
	2026			2025
	(In millions)
At beginning of period	¥	(202,591	)	¥	(622,259	)
Deferred tax benefit		152,515			310,959
Deferred tax relating to other comprehensive income:
Remeasurements of defined benefit plans reserve		(30,563	)		8,168
Financial instruments at fair value through other comprehensive income reserve		(121,432	)		103,410
Own credit on financial liabilities designated at fair value through profit or loss reserve		(200	)		(3,013	)
Exchange differences on translating foreign operations reserve		—			(20	)
Acquisition and disposal of subsidiaries and businesses		524			(314	)
Exchange differences and others		(1,650	)		478

At end of period	¥	(203,397	)	¥	(202,591	)

The deferred tax assets and liabilities at March 31, 2026 and 2025 were attributable to the following items:


	At March 31,
	2026			2025
	(In millions)
Deferred tax assets:
Loans and advances	¥	618,620		¥	541,431
Derivative financial instruments		161,079			48,391
Lease liabilities		96,254			103,033
Provision for interest repayment		55,923			58,601
Retirement benefits		8,547			8,743
Investment securities		6,697			2,888
Tax losses carried forward		4,612			4,368
Other deductible temporary differences		281,664			235,494

Total deferred tax assets		1,233,396			1,002,949

Deferred tax liabilities:
Investment securities		1,006,725			845,837
Right of use assets		95,719			102,853
Retirement benefits		85,974			75,700
Goodwill and intangible assets		9,264			11,904
Lease transactions		3,864			5,560
Property, plant and equipment		2,377			2,998
Other taxable temporary differences		232,870			160,688

Total deferred tax liabilities		1,436,793			1,205,540

Net deferred tax liabilities (1)	¥	(203,397	)	¥	(202,591	)

(1)

Deferred tax assets and deferred tax liabilities are offset in the consolidated statements of financial position if the entity has a legally enforceable right to set off current tax assets against current tax liabilities, and the deferred tax assets and the deferred tax liabilities relate to income taxes levied by the same taxation authority on the same taxable entity.

On March 31, 2025, the Government of Japan promulgated the Act for Partial Amendment of the Income Tax Act and Other Acts. This law imposes a 4

% corporation surtax for fiscal years beginning on or after April 1, 2026 to fund the costs for the national defense. As a result, the effective statutory tax rate of the Company which was

30.62

% during the fiscal year beginning April 1, 2025 was expected to be

31.52% for the fiscal year beginning April 1, 2026. The Group measured deferred tax assets and liabilities at the rates that were expected to apply to the period when the assets are realized or the liabilities are settled.

The Company has adopted the group aggregation system in Japan. Under the group aggregation system, each company consisting of the parent company and its wholly-owned domestic subsidiaries (an “aggregation group”) individually files its own tax return, while aggregating the taxable profits or losses on an aggregation group basis. In that aggregation, any unused tax losses carried forward, except for certain specified tax losses carried forward, by one company could be used by another company within the aggregation group for Japanese national corporation tax purposes. Therefore, the deferred tax assets relating to deductible temporary differences and tax losses carried forward were recognized on an aggregation group basis, but only to the extent that it was probable that the aggregation group’s future taxable profits would be available against which the deductible temporary differences and tax losses carried forward could be utilized.

The deferred tax assets of the Company and its wholly-owned domestic subsidiaries, which adopted the group aggregation system, consisted mainly of those for loans and advances. The deferred tax assets for loans and advances were generally related to the accumulated losses from the impairment of these assets which would be deductible for tax purposes in future periods. The Company and its wholly-owned domestic subsidiaries consider that most of the deductible temporary differences will be able to be used based mainly on future taxable profits on a consolidated basis. The future taxable profits are estimated based on forecasted results of operations, which reflect historical financial performance and the business plans that management believes to be prudent and feasible. In the Company’s other subsidiaries, deferred tax assets relating to deductible temporary differences are recognized only to the extent that it is probable that future taxable profit will be available against which the deductible temporary differences can be utilized. No deferred tax assets were recognized in certain subsidiaries of the Company for the deductible temporary differences estimated not to be realized, or for the tax losses carried forward projected to expire due to the uncertainty of sufficient future taxable profit.

The following table shows the amounts of deductible temporary differences and tax losses carried forward by expiration date at March 31, 2026 and 2025 for which no deferred tax assets were recognized.


	At March 31,
	2026		2025
	(In millions)
Deductible temporary differences	¥	27,650	¥	313,645
Tax losses carried forward which will expire in 1 year		34,664		14,653
2 years		1,073		34,369
3 years		113,237		2,540
4 years		29,676		114,096
5 years		24,742		46,323
6 years		28,238		40,580
7 years		34,365		40,090
8 years		43,150		34,383
9 years		57,614		43,006
10 years and thereafter		85,693		71,371

Total deductible temporary differences and tax losses carried forward (1)	¥	480,102	¥	755,056

(1)

Under the group aggregation system, the Company and its wholly-owned domestic subsidiaries recognized deferred tax assets relating to deductible temporary differences and tax losses carried forward on a consolidated basis for Japanese national corporation tax purposes and on a stand-alone basis for Japanese local corporation tax purposes. There are deductible temporary differences and tax losses carried forward on which deferred tax assets are recognized for Japanese national corporation tax purposes, but on which no deferred tax assets are recognized for Japanese local corporation tax purposes. These deductible temporary differences and tax losses carried forward amounted to ¥12,581 million and ¥304,322 million at March 31, 2026 and 2025, respectively.

addition to the above table, the Group does not recognize deferred tax assets for deductible temporary differences related to investments in subsidiaries, associates and joint ventures where the Company has no intention to reverse these differences in the foreseeable future. The amount of those deductible temporary differences was ¥

576

billion and ¥

703

billion at March 31, 2026 and 2025, respectively.

At March 31, 2026 and 2025, the taxable temporary differences associated with investments in subsidiaries, associates and joint ventures for which deferred tax liabilities had not been recognized amounted to ¥7,378 billion and ¥5,826 billion, respectively. The Company can control the timing of reversal of the temporary differences and it is probable that they will not be reversed in the foreseeable future.

Deferred tax benefit and expense for the fiscal years ended March 31, 2026 and 2025 were attributable to the following temporary differences and tax losses carried forward:


	For the fiscal year ended March 31,
	2026			2025
	(In millions)
Derivative financial instruments	¥	115,321		¥	142,796
Loans and advances		62,423			64,071
Investment securities		(31,809	)		46,020
Retirement benefits		20,125			6,560
Right of use assets		8,662			5,253
Lease liabilities		(8,420	)		(4,899	)
Provision for interest repayment		(2,678	)		24,415
Goodwill and intangible assets		2,639			6,690
Lease transactions		1,981			804
Property, plant and equipment		645			1,027
Tax losses carried forward		(261	)		(10,807	)
Other temporary differences—net		(16,113	)		29,029

Total deferred tax benefit	¥	152,515		¥	310,959