Summary Results for FY2009
Summary of Income Analysis
Consolidated Net Business Profits
Consolidated Gross Profits for fiscal 2009 increased by JPY 189.6 billion on a year-on-year basis to JPY 1,996.6 billion.
Gross Profits of the banking subsidiaries increased by JPY 107.1 billion on a year-on-year basis to JPY 1,593.1 billion, due to an increase in income derived from flexible and timely operations in the Trading segment and other factors partly offset by a decrease in income from Customer Groups mainly due to a decline in deposit income reflecting the drop in market interest rates.
Despite a year-on-year increase of JPY 37.2 billion in expenses associated with employee retirement benefits, G&A expenses of the banking subsidiaries decreased by JPY 2.0 billion on a year-on-year basis to JPY 907.2 billion, due to our overall cost reduction efforts.
Aggregated consolidated Gross Profits (Net Operating Revenues) of our two securities subsidiaries (Mizuho Securities*1 and Mizuho Investors Securities) increased by JPY 167.6 billion on a year-on-year basis to JPY 300.6 billion, mainly due to, in addition to an increase in commission income, the effect of the merger with Shinko Securities.
- *1Our financial results for fiscal 2008 did not include the results of Shinko Securities (Net Operating Revenues of JPY 93.5 billion and Ordinary Losses of JPY 14.2 billion), since Shinko Securities was an affiliate under the equity method of our group at that time.
As a result, Consolidated Net Business Profits amounted to JPY 702.6 billion, a year-on-year increase of JPY 80.0 billion.
Consolidated Net Income
Consolidated Net Income for fiscal 2009 amounted to JPY 239.4 billion due to considerably improved Credit-related Costs and Net Gains (Losses) related to Stocks from the previous fiscal year in addition to the aforementioned factors.
Consolidated Credit-related Costs decreased by JPY 317.4 billion on a year-on-year basis to JPY 219.3 billion. This was primarily due to an improvement in economic conditions and to our efforts for appropriate credit management while responding to our customers' funding needs. Credit Cost Ratio*2 of the 3 Banks was 22bps, a significant improvement from 69bps for the previous fiscal year.
- *2Credit-related Costs / Total claims under the Financial Reconstruction Law (aggregated amount of banking account and trust account)
Net Gains related to Stocks amounted to JPY 4.2 billion, a year-on-year improvement of JPY 404.5 billion, as a consequence of a significant decrease in devaluation loss reflecting the stock market recovery and recording Gains on Sales through our efforts to reduce our stock portfolio.
| FY2009 | Change from FY2008 | |
|---|---|---|
| Consolidated Gross Profits | 1,996.6 | 189.6 |
| Consolidated Net Business Profits * | 702.6 | 80.0 |
| Credit-related Costs | -219.3 | 317.4 |
| Net Gains (Losses) related to Stocks | 4.2 | 404.5 |
| Ordinary Profits | 327.1 | 722.2 |
| Net Income | 239.4 | 828.2 |
- *Consolidated Gross Profits - General and Administrative Expenses (excluding Non-Recurring Losses) + Equity in Income from Investments in Affiliates and certain other consolidation adjustments
| FY2009 | Change from FY2008 | |
|---|---|---|
| Gross Profits *1 | 1,593.1 | 107.1 |
| G&A Expenses (excluding Non-Recurring Losses) |
-907.2 | 2.0 |
| Net Business Profits | 685.9 | 109.2 |
| Credit-related Costs *2 | -157.1 | 382.1 |
| Net Gains (Losses) related to Stocks | 10.9 | 455.2 |
| Ordinary Profits | 305.6 | 825.9 |
| Net Income | 313.1 | 890.1 |
- *1Includes impacts on banking subsidiaries (JPY 77.5 billion, eliminated on a consolidated basis) of a change in the recipients of dividend payments under our schemes for capital raising through issuance of preferred debt securities by SPCs
- *2Includes impact of a review of the calculation method for reserve for possible losses on loans guaranteed by our credit guarantee subsidiary (JPY 26.8 billion, eliminated on a consolidated basis)
Net Interest Income
The average loan balance for the second half of fiscal 2009 decreased by JPY 3.7 trillion compared with the first half due to a significant decrease (JPY 1.8 trillion) in loans to Deposit Insurance Corporation of Japan and the Japanese Government as well as a decrease in loans to large corporate customers and others. Meanwhile, the loan balance as of the end of fiscal 2009 decreased by JPY 1.9 trillion from that as of the end of the first half (JPY 0.8 trillion of which was loans to Deposit Insurance Corporation of Japan and the Japanese Government).
The domestic loan-and-deposit rate margin (*2 shown on the graph below) for the fourth quarter of fiscal 2009 (three-month period from January to March 2010) was 1.39% and remained flat since the second quarter (three-month period from July to September 2009).
Net Interest Income on a consolidated basis for fiscal 2009 increased by JPY 82.8 billion on a year-on-year basis to JPY 1,151.7 billion, with an increase in Net Interest Income in the Trading segment and other factors.
- Loan Balance
- *1Aggregate average balance of the 3 Banks for the period, excluding Trust Account and loans to Mizuho Financial Group, Inc.
Balance for overseas branches includes foreign exchange translation impact. - *2Aggregate figures of domestic operations of Mizuho Bank and Mizuho Corporate Bank after excluding loans to Mizuho Financial Group, Inc., Deposit Insurance Corporation of Japan and the Japanese Government.
Non-Interest Income
Net Fee and Commission Income of the 3 Banks for fiscal 2009 amounted to JPY 289.0 billion, a year-on-year decrease of JPY 10.1 billion. This was primarily due to a decrease in fee and commission income from solution-related business and overseas business with corporate customers as well as a decrease in profits from trust and asset management business of Mizuho Trust & Banking.
Fee income associated with sales of investment trusts to individual customers increased on a year-on-year basis.
Meanwhile, Net Fee and Commission Income of the 3 Banks for the second half of fiscal 2009 increased by JPY 16.9 billion compared with the first half. This was due to increases in fee and commission income from solution-related business and overseas business with corporate customers, profits from trust and asset management business, fee income associated with sales of investment trusts and others.
- Net Fee and Commission Income
Financial Soundness
Our NPL Ratio and our Net NPL Ratio reflecting the effects of Reserves for Possible Losses on Loans remained at a low level of 1.91% and 0.79%, respectively. The balance of Disclosed Claims under the Financial Reconstruction Law decreased from that as of March 31, 2009 and we maintained sufficient financial soundness.
Unrealized Gains (Losses) on Other Securities amounted to JPY 267.6 billion driven mainly by the recovery in the stock markets.
Our Consolidated Capital Adequacy Ratio was 13.46%, an improvement of 2.93% from that as of March 31, 2009.
(JPY Bn)
| Mar 31, 2010 | Change from Mar 31, 2009 | |
|---|---|---|
| Consolidated Capital Adequacy Ratio (Total Risk-based Capital) |
13.46% (7,658.0) |
2.93% (1,434.3) |
| Tier 1 Capital Ratio (Tier 1 Capital) |
9.09% (5,173.4) |
2.72% (1,408.4) |
| Net Deferred Tax Assets (DTAs) (Consolidated) |
520.8 | -193.8 |
| Net DTAs / Tier 1 Ratio | 10.0% | -8.9% |
| Disclosed Claims under the Financial Reconstruction Law (3 Banks) | 1,319.9 | -64.8 |
| NPL Ratio (Net NPL Ratio *1) |
1.91% (0.79%) |
0.14% (0.06%) |
| Unrealized Gains (Losses) on Other Securities (Consolidated) *2 | 267.6 | 840.0 |
- *1(Disclosed Claims under the Financial Reconstruction Law - Reserves for Possible Losses on Loans) / (Total Claims - Reserves for Possible Losses on Loans) × 100
- *2The base amount to be recorded directly to Net Assets after tax and other necessary adjustments
Disciplined Capital Management
We are pursuing "strengthening of stable capital base" and "steady returns to shareholders" as our "disciplined capital management" policy. However, in light of factors such as the financial market turmoil and global economic downturn, we have been putting more priority on "strengthening of stable capital base" since the second half of fiscal 2008.
Target level of Tier 1 capital ratio and prime capital
Thus far, our medium-term target has been to keep our consolidated Tier 1 capital ratio at 8% level and to maintain our prime capital* at a level of more than half of our Tier 1 capital. As of March 31, 2010, our consolidated Tier 1 capital ratio and our prime capital ratio were 9.09% and 5.62%, respectively.
Currently, it has become increasingly important for financial institutions to strengthen capital base amid the ongoing global discussions on the revision of capital regulations, and thus, as our new medium-term target, we aim to increase our consolidated Tier 1 capital ratio to 12% level and our prime capital ratio to 8% or above.
- *Prime Capital = Tier 1 capital - preferred debt securities - preferred stock (excluding mandatory convertible preferred stock)
Increase of our prime capital
In the first half of fiscal 2009, we issued common stock for the purpose of increasing our prime capital (the number of shares issued: 3 billion shares, total amount paid: JPY 529.2 billion).
Today, our board of directors resolved to file a Shelf Registration Statement (hakkotorokusho) in Japan for the issuance of our common shares up to JPY 800.0 billion. Our decision is aimed at establishing capital base as a cornerstone for our sustainable growth for the future, in anticipation of the revision of capital regulations. This is to ensure capital flexibility for us to expand our business areas with high growth potential and to promote customer-related businesses further.
In addition, pursuant to Mizuho's Transformation Program announced today, we will strive to accumulate retained earnings through improvement in profitability.
As for Eleventh Series Class XI Preferred Stock, JPY 412.6 billion was converted into common stock during fiscal 2009, and the outstanding balance of such preferred stock as of March 31, 2010 was JPY 499.2 billion (approximately 47% out of JPY 943.7 billion of the initial amount issued has been already converted into common stock).
Meanwhile, we have no plans to submit a proposal for an increase in total number of authorized shares at the ordinary general meeting of shareholders scheduled for June 2010 (total number of shares of common stock available for issuance after considering the number of residual shares deliverable upon conversion of preferred stock or other reasons was 6.96 billion shares as of March 31, 2010).
We continue to pursue "disciplined capital management" policy, optimally balancing "strengthening of stable capital base" and "steady returns to shareholders" in accordance with changes in the business environment, our financial condition or other factors. Following this basic policy, we endeavor to strengthen our capital base through accumulating retained earnings by improvement in profitability and taking various measures in anticipation of the revision of capital regulations.
(As of May 14, 2010)
This immediate release 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; and changes to applicable laws and regulations.
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") which 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 web site 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.
