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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

Form 6-K

Report of Foreign Issuer

Pursuant to Rule 13a-16 or 15d-16 of

the Securities Exchange Act of 1934

For the month of March, 2003

MITSUBISHI TOKYO FINANCIAL GROUP, INC.

(Translation of registrant’s name into English)

4 -1, Marunouchi 2-chome, Chiyoda-ku

Tokyo 100-6326, Japan

(Address of principal executive offices)

[Indicate by check mark whether the registrant files or

will file annual reports under cover Form 20-F or Form 40-F.]

Form 20-F     X         Form 40-F           

[Indicate by check mark whether the registrant by furnishing the

information contained in this Form is also thereby furnishing

the information to the Commission pursuant to Rule 12g3-2(b)

under the Securities Exchange Act of 1934.]

Yes                No     X    

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SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

Date: March 20, 2003

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INTERIM

FINANCIAL

STATEMENT

April 2002 –

September 2002

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Mitsubishi Tokyo Financial Group, Inc.

Mitsubishi Tokyo Financial Group, Inc., is a holding company established to oversee the operations of The Bank of Tokyo-Mitsubishi, Ltd. (BTM), and The Mitsubishi Trust and Banking Corporation (MTBC) and their subsidiaries. Its primary responsibilities center on facilitating business synergies among the entities of the Mitsubishi Tokyo Financial Group (MTFG), on setting the Group’s overall strategic directions, and on managing the Group’s risk globally. Shares of the holding company trade on the Tokyo, Osaka, New York (NYSE ticker: MTF), and London stock exchanges.

Group member banks BTM and MTBC are leading commercial and trust banks, respectively. BTM offers an extensive scope of commercial and investment banking products and services. It also provides trust and asset management services in close cooperation with MTBC. The BTM Group’s global network, spanning 43 countries, is unrivaled among its Japanese peers. MTBC provides a full array of trust and banking offerings to meet the financing and investment needs of retail and corporate clients in Japan and around the world. These include pension, asset management, fiduciary, real estate, stock transfer agency, financing, and other services.

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Mitsubishi Tokyo Financial Group, Inc., and Subsidiaries

Contents

All figures contained in this report are calculated according to U.S. GAAP, unless otherwise noted.

This document contains statements that constitute forward-looking statements within the meaning of the United States Private Securities Litigation Reform Act of 1995. Such forward-looking statements do not represent any guarantee by management of future performance. In addition, certain forward-looking statements represent targets that management will strive to achieve by implementing MTFG’s business strategies. Such targets are not projections, do not represent management’s current estimates, and may not be achieved.

All forward-looking statements involve risks and uncertainties. MTFG may not be successful in implementing its business strategies, and management may fail to achieve its targets, for a wide range of possible reasons, including adverse economic conditions in Japan, the United States, or other markets; declining real estate or stock prices; additional corporate bankruptcies or additional problems in business sectors to which MTFG companies lend; difficulties or delays in integrating MTFG’s businesses and achieving desired cost savings; increased competitive pressures; changes in laws and regulations applicable to MTFG’s businesses; and adverse changes in Japanese economic policies.

Please see the annual report on Form 20-F for the fiscal year ended March 31, 2002, filed by MTFG, for additional information regarding the risks in our businesses.

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Financial Highlights and Ratios (Unaudited)

Mitsubishi Tokyo Financial Group, Inc., and Subsidiaries

*For the convenience of readers, US dollar amounts are presented as translations of Japanese yen amounts at the rate of ¥121.74=US$1.00, the noon buying rate on September 30, 2002 in New York City for cable transfers in Japanese yen as certified for customs purposes by the Federal Reserve Bank of New York.

**Annualized.

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Message from Management

Mitsubishi Tokyo Financial Group, Inc. is pleased to report on its performance and progress for the six-month period ended September 30, 2002. The environment in which we and other financial institutions face has become increasingly challenging as economic conditions both domestically and abroad have become more difficult to predict and stock prices continue to remain at low levels. On October 30, 2002, the government of Japan announced its decision to implement a plan entitled “Comprehensive Measures to Accelerate Reforms” to work toward an accelerated revival of the financial and industrial sectors. As a part of this plan, the Financial Services Agency (FSA) established the “Program for Financial Revival” to focus on addressing the problem loan issue in order to restore confidence in the Japanese financial system.

Amidst these developments, MTFG is taking steady steps toward realizing its management goals of reducing the aggregate ratio of non-performing loans to total outstanding loans by about half by March 31, 2005 in accordance with the FSA guidance to major banks, and limiting exposure to market fluctuation by reducing its equity portfolio. In addition, we are making progress in strengthening the foundations of our profitability.

Interim Financial Results

In this interim period ended September 30, 2002, MTFG recorded ¥103.7 billion of net income, compared to a ¥1.8 billion loss for the six months ended September 30, 2001. This significant change in our operating results was primarily attributable to a decrease in provision for credit losses, an increase in non-interest income and a decrease in non-interest expense.

MTFG’s consolidated net interest income for this interim period was ¥532.7 billion, a decrease of ¥8.4 billion, or 1.6%, from ¥541.1 billion for the interim period ended September 30, 2001. This slight decrease primarily reflected a decrease in average foreign interest-earning assets with relatively high interest rates.

Provision for credit losses was ¥232.6 billion, a decrease of ¥76.8 billion, or 24.8%, from ¥309.4 billion for the same period in fiscal 2001. The decrease was due primarily to a decrease in impaired loans, which in turn resulted mainly from bulk sales and charge-offs of domestic nonaccrual loans.

Fees and commissions, a key growth area for MTFG, were ¥251.8 billion, an increase of ¥6.7 billion, or 2.8%, from ¥245.1 billion for the same period in fiscal 2001. This performance was due primarily to an increase in service charges on deposits of overseas offices and an increase in other fees and commissions, partially offset by a decrease in trust fees.

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Our net trading account profits increased ¥39.4 billion, or 37.1%, to ¥145.5 billion during the interim period, due primarily to an increase in net profits on derivative instruments which included gains on interest rate swaps principally held for risk management purposes. Net foreign exchange gains were ¥113.5 billion, an increase of ¥50.9 billion, or 81.5%, from ¥62.6 billion for the same period in fiscal 2001. The increase primarily reflected an increase in transaction gains on translation of monetary liabilities denominated in foreign currencies due to Japanese yen appreciation. Net investment securities gains were ¥28.9 billion, compared to net losses of ¥92.9 billion for the same period in fiscal 2001. The change was due primarily to a decrease in impairment losses on marketable equity securities and an increase in net gains on sales of bonds.

Non-interest expense for the interim period was ¥603.7 billion, a decrease of ¥79.8 billion, or 11.7%, from ¥683.5 billion for the same period the previous year. This decrease primarily reflected the fact that there were no net investment securities losses during the period, which was partially offset by an increase in salaries and employee benefits.

MTFG’s risk-adjusted capital ratios, calculated under accounting principles generally accepted in Japan, increased to 10.49% at September 30, 2002, from 10.30% at March 31, 2002. Our Tier 1 capital ratio stood at 5.33% at September 30, 2002, compared with 5.27% at March 31, 2002.

Business Strategy

On September 1, 2002, we completed the merger of our securities subsidiaries and affiliates to form Mitsubishi Securities Co., Ltd. At the same time, a part of BTM’s derivatives, corporate advisory and securitization operations were transferred to the newly formed company. We believe that the new company is well-positioned to expand our investment banking and securities businesses.

On February 7, 2003, MTFG announced the launch of a global offering of common stock which would include newly issued shares and shares to be sold by its subsidiary banks, BTM and MTBC. The primary purpose of this offering is to further increase our capital base which will enable us to turn to our aggressive growth strategy. To address the extraordinary challenges facing us, we have developed a business strategy designed to:

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Message from Management (cont.)

As we continue our efforts to complete the strengthening of our financial base through the reduction of our problem loans and equity portfolio and focus on improving our profit structure, we will build on our solid position within the Japanese financial sector to emerge as a globally competitive, diversified financial service group. By offering a broad range of value-added financial products and services based on our commercial, trust, investment and other banking capabilities and moving aggressively ahead of our competitors to bolster our financial position, we seek to further enhance customer confidence, leverage our competitive advantages to expand our businesses and enhance shareholder value.

Strengthen our balance sheet for future growth—In light of the serious structural challenges facing the Japanese financial sector, we believe that a strong balance sheet is the key to maintaining the trust of our customers and enabling us to focus more aggressively on the future growth of our businesses. Building on our efforts to strengthen our balance sheet to date, we will continue our strategy to reduce the volume of problem loans on our balance sheet and the size of our equity portfolio.

Improve our profit structure—In addition to the key initiatives advanced by MTFG during this interim period, MTFG seeks to increase its profitability by increasing loan volume to creditworthy borrowers, improving the risk-adjusted returns on its lending business, expanding its fee-generating value-added financial services, and achieving cost efficiency through further streamlining of its branch network and personnel structure. At the same time, to enhance customer convenience, we will seek to expand alternative service delivery channels to both retail and corporate clients by continuing to invest in our information technology.

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Capture the benefits of operating as an integrated, diversified financial group—Building upon BTM’s solid customer base, global network and expertise, MTBC’s strengths in trust banking products and services and most recently Mitsubishi Securities’ growing capabilities in the securities business, we have sought to build a financial group that is diversified in the products we offer and markets we serve, but integrated in terms of management vision and financial discipline.

We have implemented a consistent strategic management direction which has helped us establish our current competitive advantage. We have taken rigorous measures to solve the problems we face as a part of the Japanese banking sector and are moving forward with an aggressive growth strategy to cement our leadership position. With the offering of MTFG’s common stock and by implementing these strategic initiatives at a time when many of our competitors are downsizing their domestic assets and pulling back from international markets, we believe that we can build upon our already solid market position to further our competitive position within Japan as well as to enhance shareholder value.

We are excited as we believe that the time has come to execute our aggressive growth strategy, and we offer our most sincere thanks to you, our shareholders and clients, for your continued support.

February 2003

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Topics

Formation of Mitsubishi Securities

On September 1, 2002, MTFG completed the merger of our securities subsidiaries and affiliates, KOKUSAI Securities Co., Ltd., Tokyo-Mitsubishi Securities Co., Ltd., Tokyo-Mitsubishi Personal Securities Co., Ltd. and Issei Securities Co., Ltd., to form Mitsubishi Securities Co., Ltd. At the same time, we transferred BTM’s derivatives, corporate advisory and securitization operations to Mitsubishi Securities. At the time of its formation, Mitsubishi Securities had approximately 4,400 employees.

Following its formation, Mitsubishi Securities announced a “Retail Revival Plan” that includes the formation of joint branches with BTM and a broad review of its current branch network. Through these measures, we aim to significantly reduce fixed costs and strengthen our ability to generate profits. Through this “Retail Revival Plan,” Mitsubishi Securities intends to reduce its domestic branch network from 95 to 65-70 branches by March 2004. Approximately 35 of those branches will be operated as joint branches with BTM.

In October 2002, Mitsubishi Securities increased its ownership in Tokyo-Mitsubishi TD Waterhouse Securities Co., Ltd., an on-line brokerage company jointly set up by BTM and TD Waterhouse Group in March 2000, from 21.8% to 50.8%. Effective November 1, 2002, the on-line brokerage company changed its name to Me Net Securities Co., Ltd.

Opening of Joint Branches

As of September 30, 2002, we have three joint branches shared by BTM and MTBC. At these joint branches, BTM and MTBC aim to cross-sell their products and services. In addition, we plan to open approximately 35 joint branches shared by BTM and Mitsubishi Securities by the end of 2003. At the joint branches, BTM expects to accept deposits and sell investment trusts, while Mitsubishi Securities expects to sell stocks and bonds. We believe the joint branches will enable us to improve the efficiency of our branch operations and better attract individual customers to our products and services. In addition, we are currently developing advanced automated contracting machines that will allow customers to access both their bank accounts and their brokerage accounts.

Establishment of Diamond Private Office

In June 2002, BTM, MTBC, Meiji Life Insurance Company, The Tokio Marine and Fire Insurance Co., Ltd. and Mitsubishi Estate Co., Ltd. jointly founded Diamond Private Office Co., Ltd., a wealth management consulting firm. Diamond Private Office provides comprehensive financial consulting, from investment management, business succession and asset management to estate planning services for wealthy individuals.

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Top Banking Awards in 2002

MTFG was named by The Banker, a well-known financial magazine published worldwide, as Bank of the Year 2002 for Japan. The magazine cited our aggressive stance toward balance sheet management, a factor that has enhanced our ability to offer clients a full range of competitive financial services. The Banker furthermore noted our ongoing investments in state-of-the-art technology, including broadband branch networking and more efficient and accurate trading systems.

Euromoney also recognized us in 2002, when it named BTM the year’s Best Bank in Japan. The magazine stressed that BTM is highly successful in a range of key businesses, including forex, credit derivatives, custody, and retail banking.

Continued Strength in Foreign Exchange

MTFG is an acknowledged leader in the global foreign exchange markets, and in 2002 we built on this distinction. For the third consecutive year, BTM was named the number one foreign exchange house in the 2002 Euromoney Tokyo FX poll. BTM was commended by the survey for a wide variety of qualities, including a full range of services, strong risk management, and controlled response during market turmoil. MTBC also ranked favorably in the poll, climbing two positions to 10th in the same poll.

Alliance with China Development Bank

In August 2002, BTM entered into an alliance with China Development Bank, a Chinese government affiliated financial institution. Through the alliance, China Development Bank will focus on offering mid-term and long-term loans in China, primarily to corporate customers establishing operations in China who are recommended by BTM. Under the alliance arrangement, the repayment of those loans will generally be guaranteed by BTM.

Master Trust Bank of Japan

In May 2002, MTBC transferred to The Master Trust Bank of Japan, Ltd. its assets under management encompassing marketable 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 MTBC, Nippon Life Insurance Company, The Toyo Trust and Banking Company, Limited (now UFJ Trust Bank Limited), Meiji Life Insurance Company and Deutsche Bank AG. In October 2002, UFJ Trust Bank also transferred a part of its assets under management to Master Trust Bank of Japan, bringing the total assets under management to more than ¥60 trillion.

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Financial Review

Introduction

We are a holding company for BTM and MTBC. Through our subsidiary banks, we provide a broad range of financial services, including commercial banking, investment banking, and trust banking and asset management services, to individual and corporate customers. The banking 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, securities and real estate markets, and other economic and market conditions. In particular, serious problems with nonperforming assets and depressed equity and real estate markets resulting from prolonged severe economic conditions in Japan have significantly affected our operations in recent years. Japanese financial institutions have experienced and in some cases are still experiencing protracted asset quality problems. 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 equity securities expose us to a risk of losses resulting from a decline in the prices of marketable securities. 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.

Recent Developments

Acquisition and Merger of Securities Companies

On September 1, 2002, KOKUSAI Securities Co., Ltd., a former equity method investee and one of the major securities firms in Japan, Tokyo-Mitsubishi Securities Co., Ltd., a former subsidiary, Tokyo-Mitsubishi Personal Securities Co., Ltd., a former subsidiary, and Issei Securities Co., Ltd., a former equity method investee, were merged, with KOKUSAI Securities continuing as the surviving corporation under the new name of Mitsubishi Securities Co., Ltd. The merger was consummated through a stock-for-stock exchange, and as a result of the merger, we have an equity interest of 56.76% in Mitsubishi Securities. Our additional acquisitions of the net assets of KOKUSAI Securities, Issei Securities and Tokyo-Mitsubishi Personal Securities were accounted for using the purchase method. The cost of acquisition was determined based on the quoted market price of KOKUSAI Securities’ common stock for a certain period before and after April 8, 2002 when the terms of the acquisition were agreed to and announced. As a result of the merger, no goodwill was recognized. The decrease in net assets in Tokyo-Mitsubishi Securities was accounted for as a sale of investment in a subsidiary, resulting in a ¥22.5 billion loss for the six months ended September 30, 2002, which was included in non-interest expense-other.

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Application of Consolidated Corporate-Tax System

On September 30, 2002, we applied to the Japanese tax authorities to file our tax returns under the consolidated corporate-tax system. We have not received any notice on the application from the tax authorities. If we do not receive a notice that denies our application before March 31, 2003, the consolidated corporate-tax system will be viewed as approved by the tax authorities and will be retroactively applied to the fiscal year beginning on April 1, 2002. During the six months ended September 30, 2002, however, we accounted for current and deferred income taxes under the previous individual corporate-tax system, as the change in tax status to the new consolidated tax status is viewed as effective as of the date approval is received (or as of March 31, 2003, if we do not receive any notice from the tax authorities). 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. When a company elects the consolidated corporate-tax system, it is required to pay, until the fiscal year ending March 31, 2004, a surcharge tax of 2.0% of taxable income in addition to the national corporate income tax rate, which is currently 30.0%. Although we believe that the election of the consolidated corporate-tax system will contribute to tax savings in the future, it is impracticable to estimate the likely impact on our results of operations for the year ending March 31, 2003 because such savings are dependent upon future operating results.

Pension Plan Amendment

In November 2002, one of our subsidiary banks, BTM, as part of a cost-cutting program, amended its pension plan to reduce employee pension benefits by amounts ranging from 7% to 20% commencing with employees who will retire on and after April 1, 2003. This plan amendment is expected to lower our periodic pension costs and decrease our pension obligations.

Government Plan to Revive Financial Sector

In recent months, the Financial Services Agency of Japan, the Bank of Japan and other elements of the government of Japan have taken steps intended to restore confidence in the Japanese financial system, address the asset quality problems faced by many Japanese financial institutions, strengthen the capital base and improve governance of major Japanese banks and bring greater stability to the financial system. These steps announced or taken by the government include more rigorous assessment of assets, improvement of capital ratios, improvement of governance, extension of deposit guarantees, government support of distressed financial institutions, improvement of the Financial Services Agency monitoring system, and a new framework for corporate revival.

The government plan primarily features acceleration of disposals of nonperforming loans held by major banks, including BTM and MTBC, and rehabilitation of companies in financial difficulty. Under the Program for Financial Revival, the Financial Services Agency states that it will strive to

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Financial Review (cont.)

normalize the problems with nonperforming loans by March 31, 2005, by reducing the major banks’ ratios of nonperforming to total loans by about half, and will aim to create a stronger financial system that can support the structural reforms. In connection with the acceleration of disposals of nonperforming loans, the Resolution and Collection Corporation, which is wholly owned by the Deposit Insurance Corporation, is expected to play an important role as a purchaser of nonperforming loans. The revised Financial Rehabilitation Law, which became effective January 11, 2002, substantially strengthened the function of the Resolution and Collection Corporation and has enabled the Resolution and Collection Corporation to raise the prices at which it will buy out problem loans to their estimated fair values. We increased the sales of nonperforming loans to the Resolution and Collection Corporation from ¥5.0 billion for the six months ended September 30, 2001 to ¥326.7 billion for the six months ended September 30, 2002 on a principal-amount basis.

Under the government plan, in order to assist commercial banks to reduce the size of their equity share portfolios without materially adversely affecting prevailing market prices, the Bank of Japan began purchasing stocks held by banks. Seeking to comply with the legislation forbidding banks from holding stocks with aggregate market values less unrealized gains in excess of their Tier I capital after September 30, 2004, we have substantially reduced our holdings of strategic equity investments. In addition to the sale of our equity holdings in the market and transfer to the Banks’ Shareholdings Purchase Corporation established in January 2002, we expect that purchases by the Bank of Japan will increase our alternatives to dispose of our equity holdings.

On December 11, 2002, the Deposit Insurance Law and other related laws were amended. Prior to the amendment, guarantees of liquid deposits, such as ordinary deposits and current deposits were set to be capped at ¥10 million per customer within one bank from April 1, 2003. Under the amended deposit insurance system, the Deposit Insurance Corporation will guarantee in full all current deposits, ordinary deposits and other specified deposits until March 31, 2005. From April 1, 2005, all deposits will be subject to the ¥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. The termination of the Deposit Insurance Corporation’s guarantee on time deposits at the end of March 2002 had led some depositors to transfer their deposits to banks that are perceived to be more financially stable. Also, within the same bank, some depositors had transferred deposits from accounts that did not qualify for full protection, such as time deposits, to accounts that qualified for full protection, such as ordinary deposits.

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Legal Proceedings for Local Taxes

In April 2000, the Tokyo Metropolitan Government began imposing a tax of 3.0% on the gross operating profits of banks conducting business within its jurisdiction. In May 2000, the Osaka Prefecture introduced a similar tax on operating profits of banks conducting business within its jurisdiction. Banks subject to the newly imposed tax, including our subsidiary banks, filed a complaint in October 2000 challenging the new Tokyo local tax legislation. In March 2002, the Tokyo District Court overturned the Tokyo local tax and ordered the Tokyo Metropolitan Government to refund the tax payments previously paid by the banks and to pay additional compensation. On March 29, 2002, the Tokyo Metropolitan Government lodged an appeal to the Tokyo High Court.

After the decision of the Tokyo District Court, 16 major banks filed a lawsuit in April 2002 with the Osaka District Court against the Osaka Prefectural Government, seeking to nullify the new Osaka tax rule. In response to the lawsuit, on May 30, 2002, the Osaka Prefectural Government revised its tax rule for the fiscal year ended March 31, 2002 and the fiscal years subject to the rule. Under the revised tax rule, large banks are required to pay the lower of the 3.0% local tax on their gross operating income or the local tax computed based on their net income.

On January 30, 2003, the Tokyo High Court upheld the Tokyo District Court’s ruling and ordered the Tokyo Metropolitan Government to refund tax payments that the banks had paid over the past two fiscal 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 ¥30.4 billion to our subsidiary banks. 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. To date, there have been no decisions made by the Osaka District Court.

Given the fact that the legal process has not been completed, we have not recorded any gain in our consolidated financial statements. If the lawsuits reach a final decision, we expect to receive the refund of ¥30.4 billion from the Tokyo Metropolitan Government. In addition, we would adjust our net deferred tax assets based on the revised effective tax rate.

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Financial Review (cont.)

Business Environment

Economic Environment in Japan

There have been growing concerns over the prospects for Japan’s fragile economic recovery, in part, due to unresolved issues with nonperforming assets held by financial institutions. In the continuing weak economy in Japan, the Japanese stock markets have experienced a significant downturn during the six months ended September 30, 2002 and thereafter. The Nikkei Stock Average, which is an average of 225 stocks listed on the Tokyo Stock Exchange, declined 14.9% from 11,024.94 at March 29, 2002 to 9,383.29 at September 30, 2002. After September 30, 2002, the Nikkei Stock Average has further declined, mostly staying at 8,000 levels, and ended calendar 2002 at a 20-year low of 8,578.95. High levels of corporate bankruptcy filings continued during the six months ended September 30, 2002 although the number and the total liability amount slightly decreased as compared with the corresponding period in the previous fiscal year. The Bank of Japan maintained a policy of near zero interest rates during the six months ended September 30, 2002. In the foreign exchange market, foreign exchange rate movements were volatile, as the noon buying rates were ¥132.70 per $1.00 at March 29, 2002 and ¥121.74 per $1.00 at September 30, 2002.

Despite the severe conditions in the Japanese financial markets discussed above, in response to the measures and steps taken by the government, we substantially decreased nonperforming loans through bulk sales or by other means, and sold marketable equity securities in the market, including through the use of exchange-traded funds, for the six months ended September 30, 2002. In addition, a number of Japanese companies have recently announced or commenced negotiations for corporate restructuring measures, including debt restructurings.

International Financial Markets

The weakness in international financial markets continued during the six months ended September 30, 2002. Most equity markets worldwide experienced a significant loss during the six months ended September 30, 2002. In particular, U.S. equity indices were down sharply for the six months ended September 30, 2002. The Dow Jones Industrial Average was down 27.0% from 10,403.94 at March 29, 2002 to 7,591.93 at September 30, 2002, and the Nasdaq composite Index decreased 36.5% from 1,845.35 at March 29, 2002 to 1,172.06 at September 30, 2002. The United States and major European countries continued maintaining easy-monetary policies. During the six months ended September 30, 2002, the U.S. Federal Reserve maintained its discount rate of 1.25% and federal funds rate of 1.75%. Subsequent to September 30, 2002, the U.S. Federal Reserve reduced its discount rate to 0.75% and federal funds rate to 1.25%.

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Results of Operations

The following table sets forth a summary of our results of operations for the six months ended September 30, 2001 and 2002:

We recorded ¥103.7 billion of net income for the six months ended September 30, 2002, compared to a ¥1.8 billion loss for the six months ended September 30, 2001. Our earnings per share for the six months ended September 30, 2002 were ¥17,096.50 (basic) and ¥15,057.33 (diluted), compared to a net loss per share of ¥1,075.90 (basic and diluted) for the six months ended September 30, 2001. Income before income tax expense and cumulative effect of a change in accounting principle for the six months ended September 30, 2002 was ¥267.9 billion, compared with a ¥9.1 billion loss for the six months ended September 30, 2001. This significant change in our operating results was primarily attributable to the following:

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Financial Review (cont.)

 to investment securities losses-net of ¥92.9 billion for the six months ended September 30, 2001.

Because of severe weakness in several Japanese business sectors, recent declines in the Japanese stock market and foreign currency exchange fluctuations, our net income for the six months ended September 30, 2002 may not be indicative of our full-year results, which could be a net loss. For a detailed discussion of recent trends in the economic environment in Japan, please see “—Business Environment—Economic Environment in Japan.”

Net Interest Income

The following is a summary of the interest rate spread for the six months ended September 30, 2001 and 2002:

Net interest income for the six months ended September 30, 2002 was ¥532.7 billion, a decrease of ¥8.4 billion, or 1.6%, from ¥541.1 billion for the six months ended September 30, 2001. Interest income and interest expense both decreased during the six months ended September 30, 2002 due to the declining interest rate environment in Japan and overseas. The slight decrease in net interest income primarily reflected a decrease in average foreign interest-earning assets with relatively high interest rates. Average foreign interest-earning assets decreased ¥2,065.9 billion, or 8.0%, to ¥23,681.3 billion for

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the six months ended September 30, 2002 while average domestic interest-earning assets increased ¥2,408.3 billion, or 4.0%, to ¥61,874.2 billion. The decrease in average foreign interest-earning assets for the six months ended September 30, 2002 primarily reflected a decrease in average foreign interest-earning deposits of ¥2,304.6 billion. Average foreign interest-bearing liabilities decreased ¥3,683.8 billion, or 20.2%, to ¥14,575.6 billion for the six months ended September 30, 2002 while average domestic interest-bearing liabilities increased ¥3,264.8 billion, or 5.4%, to ¥63,963.1 billion. The decrease in foreign interest-earning assets was not matched by the decrease in foreign interest-bearing funds. During this period, we often used foreign currency swaps to manage a portion of our foreign currency exposures associated with foreign currency investments funded by yen-denominated liabilities.

Net interest income as a percentage of average total interest-earning assets decreased 3 basis points from 1.27% for the six months ended September 30, 2001 to 1.24% for the six months ended September 30, 2002. The average interest rate spread on interest-bearing funds increased 1 basis point from 1.17% for the six months ended September 30, 2001 to 1.18% for the six months ended September 30, 2002. The average interest rate spread between foreign interest-earning assets and foreign interest-bearing liabilities for the six months ended September 30, 2002 increased 4 basis points, and the average interest rate spread between domestic interest-earning assets and domestic interest-bearing liabilities increased 9 basis points. The increase in the average domestic interest rate spread was primarily due to the decrease in average interest rates on deposits resulting from lower interest rates on demand deposits.

Provision for Credit Losses

The provision for credit losses for the six months ended September 30, 2002 was ¥232.6 billion, a decrease of ¥76.8 billion, or 24.8%, from ¥309.4 billion for the six months ended September 30, 2001. The decrease in the provision for credit losses was due primarily to a decrease in impaired loans, in particular nonaccrual loans. Impaired loans decreased ¥570.0 billion, or 14.1%, for the six months ended September 30, 2002 while impaired loans increased ¥149.9 billion, or 3.6%, for the six months ended September 30, 2001. The decrease in impaired loans for the six months ended September 30, 2002 primarily resulted from bulk sales and charge-offs of domestic nonaccrual loans. See “—Financial Condition—Allowance for Credit Losses, Nonperforming Loans and Past Due Loans” for a detailed discussion of impaired loans.

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Financial Review (cont.)

Non-Interest Income

The following table is a summary of our non-interest income for the six months ended September 30, 2001 and 2002:

Non-interest income for the six months ended September 30, 2002 was ¥571.5 billion, an increase of ¥128.8 billion, or 29.1%, from ¥442.7 billion for the six months ended September 30, 2001. The increase in non-interest income was primarily attributable to an increase in foreign exchange gains—net of ¥50.9 billion, an increase in net trading account profits of ¥39.4 billion, and investment securities gains—net of ¥28.9 billion for the six months ended September 30, 2002 compared to investment securities losses—net of ¥92.9 billion for the six months ended September 30, 2001.

Fees and commissions for the six months ended September 30, 2002 were ¥251.8 billion, an increase of ¥6.7 billion, or 2.8%, from ¥245.1 billion for the six months ended September 30, 2001. The increase in fees and commissions was due primarily to an increase of ¥7.1 billion in service charges on deposits of overseas offices and an increase of ¥5.6 billion in other fees and commissions, offset by a decrease in trust fees of ¥7.9 billion.

Trading account profits-net increased ¥39.4 billion, or 37.1%, to ¥145.5 billion for the six months ended September 30, 2002. The net trading account profits for the six months ended September 30, 2001 and 2002 consisted of the following:

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The increase in net profits on derivative instruments was due primarily to an increase in gains on interest rate swaps principally held for risk management purposes. We use interest rate derivatives and manage our interest rate positions to mitigate the exposures arising from mismatches in our asset and liability positions and capitalize on interest rate movements prevailing in the market. For the six months ended September 30, 2002, we generally accumulated net receive-fix and pay-variable positions in our interest rate swap portfolios in response to the increases in deposit liabilities, and our interest rate swap positions resulted in gains in value under the declining interest rate environment.

Net foreign exchange gains for the six months ended September 30, 2002 were ¥113.5 billion, an increase of ¥50.9 billion, or 81.5%, from ¥62.6 billion for the six months ended September 30, 2001. 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 yen appreciation. 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, while in principle all transaction gains or losses on translation of monetary liabilities denominated in foreign currencies are included in current earnings.

Net investment securities gains for the six months ended September 30, 2002 were ¥28.9 billion, compared to net losses of ¥92.9 billion for the six months ended September 30, 2001. Major components of net investment securities gains or losses for the six months ended September 30, 2001 and 2002 are summarized below:

The change to net investment securities gains of ¥28.9 billion for the six months ended September 30, 2002 from net investment securities losses of ¥92.9 billion for the six months ended September 30, 2001 was due primarily to a decrease in impairment losses on marketable equity securities and an increase in net gains on sales of bonds as discussed below.

Net gains on sales of marketable equity securities decreased ¥25.8 billion from ¥132.6 billion for the six months ended September 30, 2001 to ¥106.8 billion for the six months ended September 30, 2002. The decrease in net gains on sales of marketable equity securities primarily reflected declining market prices. Partly in response to the legislation forbidding banks, including our subsidiary banks, from holding stocks in excess of their Tier I capital after

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September 30, 2004 and partly to reduce risk-weighted assets, we sold large amounts of equity securities, including through the use of an exchange-traded fund.

Impairment losses on marketable equity securities decreased ¥99.1 billion from ¥275.6 billion for the six months ended September 30, 2001 to ¥176.5 billion for the six months ended September 30, 2002. The decrease in impairment losses primarily reflected a decrease in marketable equity securities resulting from sales and lesser declines in market prices of equity securities for the six months ended September 30, 2002 than for the six months ended September 30, 2001. The Nikkei Stock Average declined 14.9% from 11,024.94 at March 29, 2002 to 9,383.29 at September 30, 2002 while it declined 24.8% from 12,999.70 at March 30, 2001 to 9,774.68 at September 28, 2001. The Tokyo Stock Price Index, or TOPIX, which is a composite index of all stocks listed on the First Section of the Tokyo Stock Exchange, declined 13.1% from 1,060.19 at March 29, 2002 to 921.05 at September 30, 2002 while it declined 19.9% from 1,277.27 at March 30, 2001 to 1,023.42 at September 28, 2001.

Other net gains for the six months ended September 30, 2001 and 2002 primarily consisted of net gains on our sales of bonds. The increase in other gains of ¥48.5 billion from ¥50.1 billion for the six months ended September 30, 2001 to ¥98.6 billion for the six months ended September 30, 2002 was mainly attributable to an increase in net gains on sales of bonds issued by foreign entities. The prices of such bonds generally increased in a declining interest rate environment during the six months ended September 30, 2002.

Other non-interest income consists primarily of lease income under operating lease agreements. Other non-interest income for the six months ended September 30, 2002 was substantially unchanged, representing an increase of ¥2.9 billion, or 9.6%, from ¥28.9 billion for the six months ended September 30, 2001 to ¥31.8 billion for the six months ended September 30, 2002.

Non-Interest Expense

The following table shows a summary of our non-interest expense for the six months ended September 30, 2001 and 2002:

Non-interest expense for the six months ended September 30, 2002 was ¥603.7 billion, a decrease of ¥79.8 billion, or 11.7%, from ¥683.5 billion for the six months ended September 30, 2001. The decrease primarily reflected no investment securities losses—net for the six months ended September 30,

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2002 compared to investment securities losses—net of ¥92.9 billion for the six months ended September 30, 2001. The decrease was partly offset by an increase of ¥13.2 billion in salaries and employee benefits. For a discussion of the change in investment securities gains (losses)—net, see non-interest income above.

Salaries and employee benefits for the six months ended September 30, 2002 were ¥241.7 billion, an increase of ¥13.2 billion, or 5.8%, from ¥228.5 billion for the six months ended September 30, 2001. The increase in salaries and employee benefits primarily reflected an increase in net periodic pension costs and an increase in salaries and employee benefits at UnionBanCal Corporation and its subsidiaries. The increase in net periodic pension costs was due mainly to an increase in amortization of unrecognized loss. The increase in salaries and employee benefits at UnionBanCal Corporation and subsidiaries was primarily attributable to increases in staff reflecting their strategy of expanding key businesses. These increases were partially offset by a decrease in salary expense resulting from a reduction in the number of employees in Japan.

Net occupancy expenses for the six months ended September 30, 2002, were ¥60.4 billion, a decrease of ¥7.0 billion, or 10.3%, from ¥67.4 billion for the six months ended September 30, 2001. The decrease was due primarily to a decrease in depreciation and lease expenses resulting from the closing and consolidation of offices.

Other non-interest expense for the six months ended September 30, 2002 was ¥301.6 billion, an increase of ¥6.9 billion, or 2.3%, from ¥294.7 billion for the six months ended September 30, 2001. Other non-interest expense for the six months ended September 30, 2002 included a ¥22.5 billion loss resulting from the decrease in our equity investment in a subsidiary that was accounted for as a sale in connection with the merger of the four securities companies described under “—Recent Developments—Acquisition and Merger of Securities Companies.” Excluding the loss of ¥22.5 billion, other non-interest expense decreased ¥15.6 billion for the six months ended Sep-tember 30, 2002. The decrease was due primarily to a decrease in provision for credit losses on off-balance sheet financial instruments.

Income Tax Expense (Benefit)

The following table presents a summary of our income tax expense (benefit) for the six months ended September 30, 2001 and 2002:

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The combined normal effective statutory tax was 38.0% for the six months ended September 30, 2001 and 2002. For the six months ended September 30, 2002, income tax expense as a percentage of income before income tax expense and cumulative effect of a change in accounting principle was 61.1%, which was 23.1% higher than the statutory tax rate of 38.0%. The higher tax rate was due principally to an increase in the valuation allowance against deferred tax assets and nondeductible expenses, including the ¥22.5 billion loss resulting from the decrease in our equity investment in a subsidiary discussed above. The valuation allowance increased ¥69.9 billion from ¥256.6 billion at March 31, 2002, to ¥326.5 billion at September 30, 2002. These effects were partially offset by nontaxable dividends received and foreign tax credits.

Business Segment Analysis

We measure the performance of each business segment in terms of “operating profit” in accordance with the Japanese banks’ regulatory reporting requirements to the Financial Services Agency. Operating profit and other segment information is based on Japanese GAAP and is 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 most of the provisions for credit losses, foreign exchange gains (losses) and equity investment securities gains (losses).

Nippon Trust Bank Limited and The Tokyo Trust Bank, Ltd., both former subsidiaries of BTM, were merged with and into MTBC on October 1, 2001. The segment information for BTM Group for the six months ended September 30, 2001 has been restated and does not include the operating results of Nippon Trust Bank and Tokyo Trust Bank. The segment information for MTBC Group has not been restated although it reflects the combined results of operations after the merger on October 1, 2001. The operating results of Nippon Trust Bank and Tokyo Trust Bank are separately presented following the segment information of BTM Group and MTBC Group.

BTM Group

The following table shows the business segment information for BTM Group for the six months ended September 30, 2001 and 2002:

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When BTM Group’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 table sets forth the amounts that were assigned to each business unit for the same services and the total duplicated amount that is eliminated for each period:

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Total net revenue decreased ¥3.4 billion, or 0.5%, from ¥724.2 billion for the six months ended September 30, 2001 to ¥720.8 billion for the six months ended September 30, 2002. The decrease primarily reflected a ¥28.4 billion decrease in “Other” column, a ¥9.7 billion decrease in the global corporate banking business unit, a ¥9.0 billion decrease in the commercial banking business unit and a ¥7.1 billion decrease in the retail banking business unit, while the treasury unit showed an increase of ¥53.2 billion in net revenue.

Total operating expenses of all segments increased ¥42.2 billion, or 10.0%, from ¥422.8 billion for the six months ended September 30, 2001 to ¥465.0 billion for the six months ended September 30, 2002. The increase in total operating expenses was mainly attributable to an increase of ¥35.8 billion in operating expenses included in the “Other” column and an increase of ¥6.1 billion in the global corporate banking business unit.

Net revenue of the retail banking business unit decreased ¥7.1 billion, or 5.0%, from ¥142.1 billion for the six months ended September 30, 2001 to ¥135.0 billion for the six months ended September 30, 2002. The decrease was mainly attributable to a decrease in net interest income of ¥9.2 billion, reflecting a decline in interest margin, which primarily consists of a spread of interest rate applied for lending over interest rates offered to the depositors. The decline in interest margin was mainly because the decrease of interest rates offered to depositors was not as substantial as the corresponding decrease of interest rates applied for lending.

Net revenue of the commercial banking business unit decreased ¥9.0 billion, or 5.9%, from ¥151.1 billion for the six months ended September 30, 2001 to ¥142.1 billion for the six months ended September 30, 2002. The decrease was mainly attributable to a decrease of ¥13.3 billion in net interest income, which resulted mainly from the continuing decline of interest rates and a decrease of dividend income resulting from the absence of the effect of a change in Japanese GAAP, which was made for the six months ended September 30, 2001, applied for recognizing dividends receivable, partially offset by an increase of ¥3.6 billion in other income, such as gains on derivative transactions.

Net revenue of the global corporate banking business unit decreased ¥9.7 billion, or 7.0%, from ¥138.3 billion for the six months ended September 30, 2001 to ¥128.6 billion for the six months ended September 30, 2002. The decrease was mainly attributable to a decrease of ¥7.2 billion in net interest income, which resulted mainly from the continuing decline of interest rates, a decrease of dividend income resulting from the absence of the effect of a change in Japanese GAAP, which was made for the six months ended September 30, 2001, applied for recognizing dividends receivable and a decrease of ¥3.3 billion in other income (including a ¥5.4 billion decrease in gains on foreign currency and foreign bonds transactions principally resulting from the appreciation of the yen against the US dollar).

Net revenue of the investment banking business unit increased ¥3.2 billion, or 5.4%, from ¥59.1 billion for the six months ended September 30, 2001 to

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¥62.3 billion for the six months ended September 30, 2002. The increase was mainly attributable to an increase of ¥3.5 billion in other income relating to gains on derivative transactions.

Net revenue of the asset management business unit decreased ¥3.3 billion, or 159.5%, from a loss of ¥2.0 billion for the six months ended September 30, 2001 to a loss of ¥5.3 billion for the six months ended September 30, 2002. The decrease was mainly attributable to a decrease of ¥1.7 billion in other income, which primarily resulted from a decline in the value of investment trusts.

Net revenue of the UNBC business unit decreased ¥1.9 billion, or 1.4%, from ¥136.5 billion for the six months ended September 30, 2001 to ¥134.6 billion for the six months ended September 30, 2002. The decrease was largely due to appreciation of the US dollar against the yen at the end of the first half of UNBC’s 2002 fiscal year compared to that of the previous year.

Net revenue of the operations services unit decreased ¥0.4 billion, or 3.5%, from ¥10.6 billion for the six months ended September 30, 2001 to ¥10.2 billion for the six months ended September 30, 2002.

Net revenue of the treasury unit increased ¥53.2 billion, or 51.8%, from ¥102.8 billion for the six months ended September 30, 2001 to ¥156.0 billion for the six months ended September 30, 2002. The increase was mainly attributable to an increase of ¥28.0 billion in interest income and an increase of ¥25.4 billion in other income. The increase in interest income primarily reflected an increase in profits from our management of interest rate swap portfolios, generally creating net receive-fix and pay-variable positions which achieved favorable results under the declining interest rate environment. An increase of other income primarily reflected an increase in gains on sales of domestic and foreign bonds resulting from the continual decline of interest rates.

Net revenue included in “Other” decreased ¥28.4 billion, or 199.9%, from a loss of ¥14.3 billion for the six months ended September 30, 2001 to a loss of ¥42.7 billion for the six months ended September 30, 2002. The decrease was mainly attributable to a decrease in dividend income resulting from the absence of the effect of a change of Japanese GAAP, which was made for the six months ended September 30, 2001, applied for recognizing dividends receivable and an increase in foreign exchange losses resulting from forward exchange contracts used for mitigating the foreign currency risk of convertible bonds. Under Japanese GAAP, convertible bonds which are determined to have no possibility of conversion are translated at the current rate. For the six months ended September 30, 2002, some of the convertible bonds were translated at the current rate and those translation gains were not included in this segment measure of performance.

The increase in operating expenses of “Other” column primarily reflected a significant increase in the general provision for credit loss reserves, amounting to ¥40.6 billion for the six months ended September 30, 2002. Most of the general provision for credit loss reserves is reflected in the corporate center rather than being allocated to each business segment.

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MTBC Group

As mentioned above, Nippon Trust Bank and Tokyo Trust Bank were merged with and into MTBC on October 1, 2001. However, it is not practicable to restate the business segment information for the six months ended September 30, 2001 to reflect the effect of the merger because the differences in the policies and processes of compiling and summarizing segment information among MTBC, Nippon Trust Bank and Tokyo Trust Bank made it impractical to precisely and reasonably allocate the financial performance of Nippon Trust Bank and Tokyo Trust Bank to each of the relevant business groups of MTBC.

The following table shows the business segment information for MTBC Group for the six months ended September 30, 2001 and 2002:

Total net revenue increased ¥1.6 billion, or 1.1%, from ¥150.2 billion for the six months ended September 30, 2001 to ¥151.8 billion for the six months ended September 30, 2002. The increase primarily reflected a ¥4.1 billion increase in net revenue of the real estate business group and a ¥2.9 billion increase in the global markets business group, partially offset by a decrease of ¥5.4 billion in “Other.”

Net revenue of the trust-banking business group increased ¥1.6 billion, or 2.8%, from ¥58.2 billion for the six months ended September 30, 2001 to ¥59.8 billion for the six months ended September 30, 2002. The increase was due to an increase of ¥3.2 billion in net interest income and an increase of ¥2.1 billion in fee income. These increases were partially offset by a decrease of ¥3.7 billion in trust fees earned with respect to jointly operated designated money trusts. Fees on jointly operated designated money 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 guarantees for repayment of principal. The increase in net interest income was mainly attributable to an improvement in interest spread margin, which reflected a decrease in funding costs resulting from a decline in market interest rates. The increase in fee income was due to an increase in fees and commissions on sales of investment trusts.

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Net revenue of the trust assets business group decreased ¥1.6 billion, or 8.3%, from ¥18.4 billion for the six months ended September 30, 2001 to ¥16.8 billion for the six months ended September 30, 2002. The decrease was mainly due to a decrease in fee income for asset administration services resulting from transferring certain trust assets to Master Trust Bank of Japan Ltd., an equity investee of MTBC.

Net revenue of the real estate business group increased ¥4.1 billion, or 116.6%, from ¥3.6 billion for the six months ended September 30, 2001 to ¥7.7 billion for the six months ended September 30, 2002. The increase was mainly due to an increase in real estate brokerage commissions.

Net revenue of the global markets business group increased ¥2.9 billion, or 5.3%, from ¥55.2 billion for the six months ended September 30, 2001 to ¥58.1 billion for the six months ended September 30, 2002. The increase was mainly due to an increase in net interest income, which reflected a decrease in funding costs resulting from a decline in short-term foreign currency interest rates. The increase was partially offset by a decrease in other income resulting from a decrease in net gains on debt securities.

Net revenue reflected in “Other” decreased ¥5.4 billion, or 37.1%, from ¥14.8 billion for the six months ended September 30, 2001 to ¥9.4 billion for the six months ended September 30, 2002. The decrease was mainly due to a decrease in dividend income resulting from a reduction in investment equity securities held to maintain long-term customer relationships.

Total operating expenses increased ¥3.6 billion, or 4.8%, from ¥75.2 billion for the six months ended September 30, 2001 to ¥78.8 billion for the six months ended September 30, 2002. The increase was primarily due to the addition of personnel following the October 2001 merger with Nippon Trust Bank and Tokyo Trust Bank.

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For the six months ended September 30, 2002, subsidiaries on a combined basis recorded an operating profit of ¥3.5 billion, a ¥1.2 billion increase from an operating profit of ¥2.3 billion for the six months ended September 30, 2001. The increase was mainly due to an increase in their operating profit following the October 2001 merger with Nippon Trust Bank and Tokyo Trust Bank.

As a result of the foregoing, total operating profit for the six months ended September 30, 2002 amounted to ¥76.5 billion, a decrease of ¥0.8 billion, or 0.9%, from ¥77.3 billion for the six months ended September 30, 2001.

Nippon Trust Bank and Tokyo Trust Bank

As discussed above, operating results of Nippon Trust Bank and Tokyo Trust Bank for the six months ended September 30, 2001 are not included in the segment information for BTM Group or MTBC Group. The following is a summary of net revenue, operating expenses and operating profit of these companies for the period, derived from the internal management systems of Nippon Trust Bank and Tokyo Trust Bank without any adjustments:

Financial Condition

The following discussion of financial condition as of September 30, 2002 primarily focuses on changes and developments since March 31, 2002.

Total Assets

Our total assets at September 30, 2002 were ¥92.32 trillion, representing a decrease of ¥2.05 trillion, or 2.2%, from ¥94.37 trillion at March 31, 2002. The decrease was primarily attributable to a decrease in total loans of ¥2.14 trillion.

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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, 2002 and September 30, 2002. 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.