Right-of-use assets of finance leases, which are principally related to data processing equipment and included in Premises and equipment in the accompanying consolidated balance sheets, amounted to ¥21,035 million and ¥23,137 million at March 31, 2025 and 2026, respectively. Lease liabilities of these finance leases, which are included in Long-term debt in the accompanying consolidated balance sheets, amounted to ¥21,460 million and ¥26,088 million at March 31, 2025 and 2026, respectively.

Right-of-use assets of operating leases, which are principally related to office space and equipment are included in Other assets in the accompanying consolidated balance sheets, amounted to ¥247,221 million and ¥282,736 million at March 31, 2025 and 2026, respectively. Lease liabilities of these operating leases, which are included in Other liabilities in the accompanying consolidated balance sheets, amounted to ¥341,499 million and ¥370,365 million at March 31, 2025 and 2026, respectively.

For the fiscal years ended March 31, 2025 and 2026, the MUFG Group recognized ¥19,520 million and ¥15,968 million, respectively, of impairment losses for Right-of-use assets of operating leases, where recovery of the carrying amount is doubtful. The losses are included in Other non-interest expenses.

The discount rates used in determining the present value of leases are the MUFG Group’s incremental borrowing rate, developed based upon each lease’s term and currency of payment. The lease term includes options to extend the lease when it is reasonably certain that the MUFG Group will exercise that option. The MUFG Group has elected to exclude leases with original terms of less than one year from the operating lease right-of-use assets and lease liabilities. The MUFG Group’s lease arrangements that have not yet commenced as of March 31, 2026 are not material. Variable lease costs did not have a material impact on the MUFG Group’s results of operations.

The following table presents profit or loss of lease transactions as a lessee for the fiscal years ended March 31, 2024, 2025 and 2026:


	2024		2025		2026
	(in millions)
Finance lease cost:
Amortization of right-of-use assets	¥	6,352	¥	6,277	¥	5,509
Interest on lease liabilities	341		373		304
Operating lease cost	65,719		67,281		74,065


	2025			2026
	(in millions, except years and percentages)
Cash paid for amounts included in the measurement of lease liabilities:
Operating cash flows from finance leases	¥	372		¥	305
Operating cash flows from operating leases	89,159			91,236
Financing cash flows from finance leases	9,240			8,349
Right-of-use assets obtained in exchange for new finance lease liabilities	4,657			12,115
Right-of-use assets obtained in exchange for new operating lease liabilities	40,608			74,817
Weighted-average remaining lease term:
Finance leases	3.5 years			3.6 years
Operating leases	6.8 years			6.5 years
Weighted-average discount rate:
Finance leases	1.26		%	1.19		%
Operating leases	1.93		%	2.36		%


	Finance leases		Operating leases
	(in millions)
2027	¥	8,672	¥	91,812
2028	7,311		79,875
2029	5,087		59,388
2030	3,093		42,233
2031	1,981		32,294
2032 and thereafter	354		95,954
Total undiscounted cash flows	26,498		401,556
Difference between undiscounted and discounted cash flows	(410)		(31,191)
Amount on balance sheet	¥	26,088	¥	370,365

As part of its financing activities, the MUFG Group enters into leasing arrangements with customers. The MUFG Group’s leasing operations are conducted through leasing subsidiaries and consist principally of various types of data processing equipment, office equipment and transportation equipment. Sales type and direct financing lease are presented in loans. In certain case, the MUFG Group requests lessees to deposit in advance an amount nearly equal or equal to the residual value of leased assets.

The following table presents profit or loss of lease transactions as a lessor for the fiscal years ended March 31, 2024, 2025 and 2026:


	2024		2025		2026
	(in millions)
Sales type and direct financing leases:
Finance income on net investment	¥	145,433	¥	147,667	¥	152,658
Operating leases:
Lease income	8,546		10,780		12,375
Total	¥	153,979	¥	158,447	¥	165,033

Finance income on net investment is included in Interest income—Loans, including fees in the consolidated statements of income. Lease income from operating lease transactions is included in Other non-interest income in the consolidated statements of income.


	2025		2026
	(in millions)
Lease receivables (undiscounted)	¥	2,202,205	¥	2,440,023
Adjustments:
Discounted unguaranteed residual value	7,772		7,509
Initial direct cost on sales type and direct financing leases	32,822		29,949
Deferred selling profit	(366,108)		(380,677)
Net investment in sales type and direct financing leases	¥	1,876,691	¥	2,096,804

The following table presents maturity of the lease receivables of sales type and direct financing lease transactions including a reconciliation of undiscounted cash flows to the lease receivables recognized on balance sheet, and the lease payments of operating lease transactions as of March 31, 2026:


	Lease receivables of sales type and direct financing lease		Lease payments of operating leases
	(in millions)
2027	¥	672,206	¥	14,386
2028	560,711		12,477
2029	462,607		10,879
2030	323,265		7,593
2031	227,376		6,359
2032 and thereafter	193,858		88,980
Total undiscounted cash flows	2,440,023		140,674
Difference between undiscounted cash flows and the lease receivables recognized on balance sheet	(343,219)
Amount on balance sheet	¥	2,096,804

The carrying amounts of the underlying assets under operating leases as of March 31, 2025 and 2026 were ¥142,964 million and ¥280,099 million, respectively.