Summary Results for the Second Quarter of FY2008

Consolidated Gross Profits for the first half of fiscal 2008 decreased to JPY 917.3 billion on a year-on-year basis. It was mainly because of, despite increased income from our business with individual customers, decreases in income related to the business with domestic corporate customers (SMEs), fee and commission income in overseas businesses which were affected by the turmoil in the global financial markets, and income from trust and asset management business of Mizuho Trust & Banking which was affected by the domestic real estate market conditions, in Customer Groups of the banking subsidiaries.

In addition to the above, there was an increase in G&A expenses, mainly those associated with employee retirement benefits. As a result, Consolidated Net Business Profits amounted to JPY 317.4 billion, a year-on-year decrease of JPY 96.5 billion.

Consolidated Net Income for the first half of fiscal 2008 decreased by JPY 232.4 billion from the same period of the previous fiscal year to JPY 94.5 billion. This was mainly due to, together with the aforementioned factors, increased Credit-related Costs primarily associated with an increase in domestic corporate bankruptcies and the collapse of Lehman Brothers^*1, devaluation of a portion of our stock portfolio triggered by the declines in the stock markets (devaluation of JPY 95.5 billion for the 3 Banks), and continuously recorded losses on securitization products and others resulting from the global financial market dislocation.

1. *1The group's total P&L impact from the collapse of Lehman Brothers was approximately JPY -30.0 billion, including those associated with hedging transactions, market-related transactions by our overseas subsidiaries, and others.

As for the effect from our securitization products and others due to the global market dislocation, the consolidated P&L impact in the first half of fiscal 2008 was a loss of approximately JPY 72.0 billion (of which approximately JPY 45.0 billion arose in the second quarter (from July to September)).

The average loan balance for the first half of fiscal 2008 increased on a year-on-year basis mainly due to increased overseas lending.

The domestic loan-and-deposit rate margin for the same period slightly decreased from that in the second half of fiscal 2007 against the backdrop of intensified competition among banks and other factors.

Although total Net Interest Income of the 3 Banks for the first half decreased by JPY 9.6 billion on a year-on-year basis, Net Interest Income from our international operations increased by JPY 13.3 billion.

Net Fee and Commission Income of the 3 Banks for the first half of fiscal 2008 amounted to JPY 146.3 billion, a year-on-year decrease of JPY 32.8 billion.

As for our business with individual customers, fee income associated with sales of investment trusts and individual annuities decreased from the same period of the previous fiscal year, due to stagnant stock market conditions and other factors.

As for our business with corporate customers, although fee and commission income associated with domestic syndicated loans increased year-on-year, that primarily from solution-related business for SMEs, foreign exchange business, and overseas business decreased. Profits from trust and asset management business of Mizuho Trust & Banking also decreased.

1. *3Figures in brackets are the balances of Mizuho Securities including its overseas subsidiaries (all of which are held in trading accounts).

[Reference] Summary of the impact of the dislocation in the global financial market on our foreign currency denominated exposures (the group in total) (PDF/49KB)

In Jul 2008, we issued JPY 303.0 billion of preferred debt securities through an overseas special purpose subsidiary so as to increase the group's Tier 1 capital to secure the agility and to improve the flexibility of our capital strategy.
Meanwhile, we redeemed in full preferred debt securities (JPY 118.5 billion and USD 2.6 billion) which became redeemable at the issuer's option in Jun 2008.

On Nov 13, 2008, our board of directors resolved to establish an overseas special purpose subsidiary and issue preferred debt securities to further strengthen our group's capital base in light of the current financial market turmoil.

In Jul 2008, we repurchased our own shares (common shares) of JPY 150.0 billion (283,500 shares). As with the repurchases of our common shares which we have conducted since last year (the cumulative amount of repurchases: JPY 299.9 billion), they were made for the purpose of, among other things, offsetting the potential dilutive effect of our common shares from the conversion of the Eleventh Series Class XI Preferred Stock (JPY 943.7 billion in aggregate issue amount).
In Sep 2008, we cancelled all the common shares repurchased, except the shares to be assigned for the exercise of Stock Compensation-type Stock Options (Stock Acquisition Rights) that we plan to issue in the future (7,000 shares).

While our basic policy to "address the potential dilutive effects, based on market conditions, our earnings trend and other factors" remains unchanged, considering the importance of capital under the recent circumstances, we will put more priority on strengthening our capital base in this second half of fiscal 2008.

(As of Nov 13, 2008)