Mizuho's Transformation Program
Our group released the "Mizuho's Transformation Program" in May 2010, as the Medium-term Management Policy of our group over the next three fiscal years ending March 31, 2013.
Regarding its progress, please see "Progress in Mizuho's Transformation Program."
Mizuho's Transformation Program
We had conducted a fundamental review of the current profitability, financial base, and front-line business capabilities, and had identified a series of initiatives for further enhancement of these areas in order to respond promptly and appropriately to the new business environment, as well as to practice our group's "customer first policy."
This Program consists of the following three programs:
- (1)Program for Improving Profitability: Strengthen top-line profits through enhancing focused business areas, and strategically reallocate management resources and reduce costs based on a vigorous business review,
- (2)Program for Enhancing the Financial Base: Strengthen the quality and quantity of capital and improve our asset portfolio, and
- (3)Program for Strengthening Front-line Business Capabilities: Redeploy personnel to the marketing front-line through downsizing and rationalization of corporate management functions, and improve the efficiency of the business infrastructure.
Mizuho's Transformation Program
- *1.The assumptions regarding the economic environment towards March 2013 are as follows: Interest rates: Uncollateralized overnight call rate; approximately 0.1%, 10-year Japanese government bond (JGB) yield; approximately 1.3%, Nikkei 225: approximately JPY 11,000, JPY/USD exchange rate: approximately JPY 90
- *2.Figures above are on a consolidated basis except for the expense ratio, which is on the Three Banks basis.
- *3.Expense ratio (the Three Banks) = G&A expenses / gross profits
- *4.ROE (return on equity)= Net income / (((total shareholders' equity + total accumulated other comprehensive income)<at the beginning of the fiscal year> + (total shareholders' equity + total accumulated other comprehensive income)<at the end of the fiscal year>) / 2) x 100
Program for Improving Profitability
Business Strategy
Strengthen top-line profits by thoroughly enhancing business areas where Mizuho has a competitive advantage and fields where growth potential is envisaged. In addition, strengthen fundamental profitability through capturing the various needs of our customers in and outside of Japan as their strategic business partner, while facilitating their financing. Aim to increase gross profits of the Three Banks by approximately JPY 100.0 billion compared with fiscal 2009.
Strategic expansion in business areas where Mizuho has strengths, including the Tokyo metropolitan area and large corporate customers.
[The Tokyo metropolitan area: Transactions with corporate customers]
- Strengthen initiatives for small and medium-sized enterprises (SMEs) and middle-market corporations through proposing comprehensive solutions in response to the management challenges of our customers.
- Specifically, increase loans and non-interest income as well as enhance foreign exchange and remittance transactions by capturing customers' Japan-related cash inflows and outflows. Also, strengthen initiatives for business-owner customers and land and property owners, etc.
[The Tokyo metropolitan area: Transactions with individual customers]
- Strengthen initiatives for loans to individuals, including housing loans, and make Orient Corporation an affiliate of the group during the first half of fiscal 2010.
- Increase assets under management of individual customers through collaboration among banking, trust, and securities functions.
- Significantly improve services and accessibility of the retail business of Mizuho Trust & Banking through utilization of Mizuho Bank's network.
[Transactions with large corporate customers]
- Proactively be involved in corporate customers' business and financial strategies taken in response to changes in industrial structure.
- Enhance fundamental profitability, including foreign exchange, remittance and other non-interest income, as well as further strengthen the delivery of comprehensive solutions by fully utilizing the product functions of our group companies.
Strengthen initiatives for capturing business in the high-growth Asia region.
Strengthen initiatives for business in Asia, which is a strategic region for our customers in Japan, the Americas, and Europe, by leveraging Mizuho's total global network.
[Business with Japanese customers]
- Provide various solutions for global strategies of our customers, including SMEs and middle-market corporations.
- Enhance businesses focused on our customers' cash flows and trade finance.
- Promote export credit agency (ECA) finance and other businesses in capturing infrastructure projects.
- Improve capabilities for emerging currencies in Asia.
[Business with non-Japanese customers]
- Pursue lending opportunities with blue-chip customers in response to the needs of their financial strategies.
- Enhance capabilities for securities business.
Strengthen asset management business, mainly targeting individual financial assets and pension assets.
- Increase market share based on balance of investment products (assets under management) by stepping up sales activities toward individual customers mainly through group collaboration.
- Strengthen initiatives primarily for corporate pensions and public corporations through share-up and share-in in existing commissioned pension trusts, primarily among our main-bank customers.
Utilize the full range of services of the group's banking, trust, and securities functions.
- Provide sophisticated financial solutions through seamless utilization of the full-line services of banking, trust, and securities functions.
- Focus on global collaboration, marketing of M&A advisory services, capital management solicitation, etc.
Cost Reduction through Vigorous Review of Businesses and Reallocation of Management Resources to Focused Strategic Business Areas
Take measures to reduce costs through unification and optimization of the group's management infrastructure.
Aim to decrease G&A expenses of the Three Banks by approximately JPY 50.0 billion compared with fiscal 2009, and reallocate management resources, such as approximately 1,000 staff, to strategic areas, including the Tokyo metropolitan area and Customer Groups in Asia.
Program for Enhancing the Financial Base
Strengthening of the Capital Base
Maintain our current priority on "strengthening of stable capital base" in light of ongoing global discussions on the revision of capital regulations.
- Accumulate retained earnings through implementation of "Program for Improving Profitability."
- Implement appropriate capital management.
- Consider various measures in light of regulatory developments.
Improvement of the Asset Portfolio
Strategically reallocate risk-weighted assets in parallel with "improvement of asset efficiency" and "further strengthening of risk management."
- Allocate risk-weighted assets to focused strategic business areas through a thorough review of non-customer assets and low-return assets.
- Reduce equity portfolio by JPY 1 trillion compared with the end of March 2010 balance.
- Improve asset quality and streamline balance sheet.
Program for Strengthening Front-line Business Capabilities
Redeployment of Personnel to the Marketing Front-line
Consolidate and reorganize corporate planning and product functions of each of our group companies.
- Unify group planning functions, including human resources, administration, IT systems, and operations.
- Review and reorganize overlapping functions in financial product areas at Mizuho Corporate Bank and Mizuho Bank.
- Strengthen the holding company's governing function over the group, improve efficiency of management controls, and expedite decision making.
- Deploy approximately 1,000 staff currently engaged mainly in corporate management functions to the marketing front-line through unification of functions.
Improvement of Business Infrastructure Efficiency
Facilitate consolidation of the group's operational processing functions under the "consolidation and efficiency improvement" policy. At the same time, realize fundamental streamlining of cost structure with a focus on IT systems-related costs.
While implementing this program, we will position ourselves to make robust progress by strengthening focused business areas where customer needs are strong and we have a competitive advantage, improving our financial soundness and asset efficiency, and further evolving our group's organization and business infrastructure.
Note: This page contains statements that constitute forward-looking statements within the meaning of the United States Private Securities Litigation Reform Act of 1995. See the disclaimer at the bottom of this page for information regarding factors that could cause actual results to differ from those in the forward-looking statements.
All figures contained in this page are calculated using accounting principles generally accepted in Japan ("Japanese GAAP").
Forward-Looking Statements
This page contains statements that constitute forward-looking statements within the meaning of the United States Private Securities Litigation Reform Act of 1995, including estimates, forecasts, targets and plans. Such forward-looking statements do not represent any guarantee by management of future performance.
In many cases, but not all, we use such words as "aim," "anticipate," "believe," "endeavor," "estimate," "expect," "intend," "may," "plan," "probability," "project," "risk," "seek," "should," "strive," "target" and similar expressions in relation to us or our management to identify forward-looking statements. You can also identify forward-looking statements by discussions of strategy, plans or intentions. These statements reflect our current views with respect to future events and are subject to risks, uncertainties and assumptions.
We may not be successful in implementing our business strategies, and management may fail to achieve its targets, for a wide range of possible reasons, including, without limitation: incurrence of significant credit-related costs; declines in the value of our securities portfolio; changes in interest rates; foreign currency fluctuations; decrease in the market liquidity of our assets; revised assumptions or other changes related to our pension plans; a decline in our deferred tax assets; the effect of financial transactions entered into for hedging and other similar purposes; failure to maintain required capital adequacy ratio levels; downgrades in our credit ratings; our ability to avoid reputational harm; the effectiveness of our operational, legal and other risk management policies; the effect of changes in general economic conditions in Japan and elsewhere; changes to applicable laws and regulations; and our ability to implement our Medium-term Management Policy and other strategic initiatives and measures effectively.
Further information regarding factors that could affect our financial condition and results of operations is included in "Item 3.D. Key Information - Risk Factors," and "Item 5. Operating and Financial Review and Prospects" in our most recent Form 20-F filed with the U.S. Securities and Exchange Commission ("SEC"). In addition, information regarding market developments after March 31, 2010 and their effects on our financial condition and results of operations is included in the report on Form 6-K furnished to the SEC on July 30, 2010 containing financial information for the first quarter of this fiscal year under accounting principles generally accepted in Japan. These reports are available in the Financial Information section of our web page at www.mizuho-fg.co.jp/english/index.html and also at the SEC's website at www.sec.gov.
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, except as may be required by the rules of the Tokyo Stock Exchange.
