Summary Results for the Third Quarter of FY2009
Summary of Income Analysis
Consolidated Net Business Profits (Apr 1 to Dec 31, 2009)
Consolidated Gross Profits for the nine months ended Dec 31, 2009 increased by JPY 134.3 billion on a year-on-year basis to JPY 1,493.2 billion.
Gross Profits of the banking subsidiaries for the same period increased by JPY 93.2 billion on a year-on-year basis to JPY 1,208.0 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 27.9 billion in expenses associated with employee retirement benefits, G&A expenses increased slightly by JPY 3.3 billion on a year-on-year basis to JPY 674.8 billion, due to our overall cost reduction efforts.
Aggregated consolidated Gross Profits (Net Operating Revenues) of our two securities subsidiaries (Mizuho Securities* and Mizuho Investors Securities) increased by JPY 125.2 billion on a year-on-year basis to JPY 231.1 billion, mainly due to, in addition to an increase in commission income, the effect of the merger with Shinko Securities.
- * Our financial results for the nine-month period from Apr to Dec 2008 did not include the results of Shinko Securities (Net Operating Revenues of JPY 73.5 billion and Ordinary Losses of JPY 8.3 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 527.5 billion, a year-on-year increase of JPY 45.6 billion.
| 3Q of FY2009 (Apr 1 to Dec 31, 2009) | Change from 3Q of FY2008 | |
|---|---|---|
| Consolidated Gross Profits | 1,493.2 | 134.3 |
| Consolidated Net Business Profits * | 527.5 | 45.6 |
| Credit-related Costs | -216.4 | 20.0 |
| Net Gains (Losses) related to Stocks | -16.8 | 179.9 |
| Ordinary Profits | 159.7 | 178.9 |
| Net Income | 126.2 | 176.8 |
- *Consolidated Gross Profits - General and Administrative Expenses (excluding Non-Recurring Losses) + Equity in Income from Investments in Affiliates and certain other consolidation adjustments
Consolidated Net Income (Apr 1 to Dec 31, 2009)
Consolidated Net Income for the nine months ended Dec 31, 2009 amounted to JPY 126.2 billion, a year-on-year increase of JPY 176.8 billion due to an improvement in Credit-related Costs and Net Gains (Losses) related to Stocks in addition to the aforementioned factors.
Consolidated Credit-related Costs amounted to JPY 216.4 billion, and Credit Cost Ratio of the 3 Banks was 31bps*, an improvement from 69bps for the full fiscal 2008.
- * Credit-related Costs for the 3Q of fiscal 2009 (Apr 1 to Dec 31, 2009) x (4/3) / Total claims under the Financial Reconstruction Law as of Dec 31, 2009 (aggregated amount of banking account and trust account)
Despite a gain of JPY 20.2 billion for the first half of fiscal 2009, Net Gains (Losses) related to Stocks recorded a loss in the amount of JPY 16.8 billion for the third quarter of fiscal 2009 (Apr 1 to Dec 31, 2009), mainly as a consequence of recording devaluation in the amount of JPY 46.5 billion for the three-month period from Oct to Dec 2009.
| 3Q of FY2009 (Apr 1 to Dec 31, 2009) | Change from 3Q of FY2008 | |
|---|---|---|
| Gross Profits *1 | 1,208.0 | 93.2 |
| G&A Expenses (excluding Non-Recurring Losses) | -674.8 | -3.3 |
| Net Business Profits | 533.2 | 89.8 |
| Credit-related Costs *2 | -165.1 | 53.9 |
| Net Gains (Losses) related to Stocks | -15.5 | 204.6 |
| Ordinary Profits | 161.0 | 267.8 |
| Net Income | 200.4 | 203.9 |
- *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 three-month period from Oct to Dec 2009 decreased by JPY 2.9 trillion compared with the first half of fiscal 2009 mainly due to a decrease of JPY 1.5 trillion in loans to Deposit Insurance Corporation of Japan and the Japanese Government. Meanwhile, the loan balance as of the end of the third quarter of fiscal 2009 (Dec 31, 2009) was JPY 63.8 trillion, a decrease of JPY 0.4 trillion from that as of the end of the first half of fiscal 2009 (Sep 30, 2009; JPY 0.3 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 three-month period from Oct to Dec 2009 was 1.40% with an improvement of 0.01% from that for the previous quarter (three-month period from Jul to Sep 2009).
Net Interest Income on a consolidated basis for the nine months ended Dec 31, 2009 increased by JPY 95.3 billion on a year-on-year basis to JPY 863.6 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 the nine months ended Dec 31, 2009 amounted to JPY 201.1 billion, a year-on-year decrease of JPY 6.7 billion. In a weak economic environment, 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.
Net Fee and Commission Income of the 3 Banks for the three-month period from Oct to Dec 2009 amounted to JPY 65.0 billion, a year-on-year increase of JPY 3.5 billion due to an increase in fee income associated with sales of investment trusts and individual annuities with individual customers and other factors.
- Net Fee and Commission Income
Financial Soundness
With respect to our financial soundness, our NPL Ratio remained at a low level of 1.93% (a decrease of 0.07% from Sep 30, 2009).
Unrealized Gains (Losses) on Other Securities amounted to JPY 75.0 billion.
We will announce our Consolidated Capital Adequacy Ratio (as of Dec 31, 2009) at a later date.
(JPY Bn, %)
| Dec 31, 2009 | Change from Sep 30, 2009 | |
|---|---|---|
| Net Deferred Tax Assets (DTAs) (Consolidated) |
610.4 | -4.7 |
| Disclosed Claims under the Financial Reconstruction Law (3 Banks) | 1,370.9 | -60.2 |
| NPL Ratio | 1.93% | -0.07% |
| Unrealized Gains (Losses) on Other Securities (Consolidated) * | 75.0 | -85.1 |
- *The base amount to be recorded directly to Net Assets after tax and other necessary adjustments.
For Floating-rate Japanese Government Bonds and the vast majority of foreign currency denominated securitization products, we applied reasonably calculated prices based on the reasonable estimates of our management as fair value.
Disciplined Capital Management
In light of factors including the financial market turmoil and global economic downturn, we have been putting more priority on "strengthening of stable capital base".
Specifically, our medium-term target is to keep our consolidated Tier 1 capital ratio at 8% level, and we aim to maintain our prime capital* at a level of more than half of our Tier 1 capital. (Reference: As of Sep 30, 2009, our consolidated Tier 1 capital ratio and our prime capital ratio were 8.71% and 5.37%, respectively.)
- * Prime Capital = Tier 1 capital - preferred securities - preferred stock (excluding mandatory convertible preferred stock)
We continue to pursue "disciplined capital management", 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, and in light of on-going global discussions on capital.
[Reference] Conversion of mandatory convertible preferred stock
During the three-month period from Oct to Dec 2009, the number of shares of our common stock increased by 154 million through requests for conversion of 46.8 million shares (JPY 46.8 billion) of Eleventh Series Class XI Preferred Stock. The outstanding balance of such preferred stock as of Dec 31, 2009 was JPY 547.4 billion (as a result, approximately 42% out of JPY 943.7 billion of the initial amount issued has been already converted into common stock).
(As of Jan 29, 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, including as a result of the impact of the dislocation in the global financial markets; 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; the effect of changes in general economic conditions in Japan and elsewhere; our ability to avoid reputational harm; and the effectiveness of our operational, legal and other risk management policies.
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 annual report on Form 20-F filed with the U.S. Securities and Exchange Commission ("SEC"), which is 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.
Definition
3 Banks: Aggregate figures for Mizuho Bank, Mizuho Corporate Bank and Mizuho Trust & Banking on a non-consolidated basis.
