Summary Results for the First Quarter of FY2010
Summary of Income Analysis
Consolidated Net Business Profits
Consolidated Gross Profits for the three months ended June 30, 2010 increased by JPY 59.0 billion on a year-on-year basis to JPY 542.8 billion.
Gross Profits of the banking subsidiaries increased by JPY 45.1 billion on a year-on-year basis (increased by JPY 90.2 billion after the adjustment of the impacts for fiscal 2009 of a change in the recipients of dividend payments under our schemes for capital raising through issuance of preferred debt securities by SPCs). This is due to an increase in income from the Trading segment derived from flexible and timely operations properly interpreting market trends and other factors, in addition to an increase in income from Customer Groups, both domestic and overseas. G&A expenses decreased by JPY 5.5 billion on a year-on-year basis due to our overall cost reduction efforts and other factors.
Aggregated consolidated Gross Profits (Net Operating Revenues) of our two securities subsidiaries (Mizuho Securities and Mizuho Investors Securities) decreased by JPY 20.8 billion on a year-on-year basis.
As a result, Consolidated Net Business Profits amounted to JPY 217.5 billion, a year-on-year increase of JPY 57.3 billion.
Consolidated Net Income
Credit-related Costs of the 3 Banks amounted to a reversal of JPY 7.5 billion, an improvement of JPY 74.1 billion on a year-on-year basis, primarily due to improved obligor classifications of corporate customers backed by stabilized economic environments, both domestic and overseas.
Consolidated Credit-related Costs also improved by JPY 72.2 billion on a year-on-year basis to JPY -3.7 billion.
Net Gains related to Stocks of the 3 Banks amounted to JPY 8.9 billion. This is mainly as a consequence of recording Gains on Sales despite recording devaluation losses for certain stocks.
As a result, Consolidated Net Income for the three months ended June 30, 2010 amounted to JPY 149.8 billion. The progress on our planned net income for the first half of fiscal 2010 (JPY 180 billion) and full fiscal 2010 (JPY 430 billion) is 83% and 34%, respectively.
| 1Q of FY2010 (Apr 1 to Jun 30, 2010) | Change from 1Q of FY2009 | |
|---|---|---|
| Consolidated Gross Profits | 542.8 | 59.0 |
| Consolidated Net Business Profits * | 217.5 | 57.3 |
| Credit-related Costs | -3.7 | 72.2 |
| Net Gains (Losses) related to Stocks | 9.3 | 29.1 |
| Ordinary Profits | 211.6 | 226.8 |
| Net Income | 149.8 | 154.3 |
- *Consolidated Gross Profits - General and Administrative Expenses (excluding Non-Recurring Losses) + Equity in Income from Investments in Affiliates and certain other consolidation adjustments
| 1Q of FY2010 (Apr 1 to Jun 30, 2010) | Change from 1Q of FY2009 | |
|---|---|---|
| Gross Profits | 435.8 | *45.1 |
| G&A Expenses (excluding Non-Recurring Losses) |
-221.6 | 5.5 |
| Net Business Profits | 214.2 | *50.6 |
| Credit-related Costs | 7.5 | 74.1 |
| Net Gains (Losses) related to Stocks | 8.9 | 26.8 |
| Ordinary Profits | 191.5 | 212.0 |
| Net Income | 162.1 | 156.8 |
- *The results of "1Q of FY2009" included the impacts on banking subsidiaries (JPY 45.0 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. After the adjustment of these impacts, a change from 1Q of FY2009 for Gross Profits is JPY 90.2 billion, and that for Net Business Profits is JPY 95.7 billion, respectively.
Net Interest Income
The average loan balance for the first quarter of fiscal 2010 decreased by JPY 1.8 trillion from the second half of fiscal 2009, due to a decrease in loans to large domestic corporate customers and overseas loans (including foreign exchange translation impact).
The domestic loan-and-deposit rate margin for the same period was 1.38% and remained almost flat since the second quarter of last fiscal year.
Net Interest Income of the 3 Banks for the first quarter of fiscal 2010 increased by JPY 7.0 billion on a year-on-year basis after the adjustment of the impacts for fiscal 2009 of a change in the recipients of dividend payments under our schemes for capital raising through issuance of preferred debt securities by SPCs, mainly due to an increase in Net Interest Income in the Trading segment and other factors.
- Loan Balance
- *1Aggregate of the 3 Banks, 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
Non-interest income from Customer Groups of the 3 Banks (managerial accounting basis) for the first quarter of fiscal 2010 increased by JPY 16.1 billion on a year-on-year basis, mainly due to increases in income associated with investment trusts and individual annuities from individual customers, foreign exchange business, overseas business, and trust and asset management business of Mizuho Trust & Banking.
- Non-Interest Income from Customer Groups
Financial Soundness
NPL Ratio remained at a low level of 1.92%.
The balance of Consolidated Net Deferred Tax Assets decreased by JPY 47.6 billion from that as of March 31, 2010.
We will announce the Capital Adequacy Ratio (as of June 30, 2010) at a later date.
(JPY Bn, %)
| Jun 30, 2010 | Change from Mar 31, 2010 | |
|---|---|---|
| Net Deferred Tax Assets (DTAs) (Consolidated) |
473.1 | -47.6 |
| Disclosed Claims under the Financial Reconstruction Law (3 Banks) | 1,312.7 | -7.1 |
| NPL Ratio | 1.92% | 0.00% |
| Unrealized Gains (Losses) on Other Securities (Consolidated)* | 166.3 | -101.3 |
- *The 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.
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 July 2010, we issued common stock (the number of shares issued: 6 billion shares, total amount paid: JPY 751.6 billion). This 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 (with this capital increase, both our consolidated Tier 1 capital ratio and prime capital ratio would increase by approximately 1.3%, respectively).
The outstanding balance of Eleventh Series Class XI Preferred Stock as of June 30, 2010 was JPY 492.7 billion (47.7% out of JPY 943.7 billion of the initial amount issued has been already converted into common stock).
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 with the steady implementation of Mizuho's Transformation Program which we announced in May 2010 and taking various measures in anticipation of the revision of capital regulations.
(As of Jul 30, 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; our ability to implement our Medium-term Management Policy and other strategic initiatives and measures effectively; 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 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.
