Summary Results for the Third Quarter of FY2011
Summary of Income Analysis
Consolidated Net Business Profits
Consolidated Gross Profits for the nine months ended December 31, 2011 decreased by JPY 87.4 billion on a year-on-year basis to JPY 1,473.6 billion.
Gross Profits of the 3 Banks decreased by JPY 55.7 billion on a year-on-year basis. This was mainly due to a decrease of JPY 45.0 billion in income from Trading and Others. Income from Customer Groups, including domestic business, decreased by JPY 10.7 billion in total, despite an increase in income from overseas business, particularly from Asia.
G&A Expenses of the 3 Banks increased by JPY 3.3 billion on a year-on-year basis mainly due to an increase in expenses associated with employee retirement benefits, offset in part by our continued overall cost reduction efforts.
Aggregated Consolidated Gross Profits (Net Operating Revenues) of our two securities subsidiaries (Mizuho Securities and Mizuho Investors Securities) decreased by JPY 50.6 billion on a year-on-year basis.
As a result, Consolidated Net Business Profits amounted to JPY 518.7 billion, a year-on-year decrease of JPY 92.0 billion.
Consolidated Net Income
Credit-related Costs of the 3 Banks amounted to a net reversal of JPY 3.3 billion, primarily due to improved obligor classifications through our business revitalization support to corporate customers and other factors. Consolidated Credit-related Costs also amounted to a net reversal of JPY 10.3 billion, an improvement of JPY 10.2 billion on a year-on-year basis.
Net Losses related to Stocks of the 3 Banks amounted to JPY 115.5 billion. This was mainly due to recording impairment losses for certain stocks reflecting a decline in stock prices.
Meanwhile, the impact of the tax rate amendment following the corporate tax reform amounted to JPY -24.4 billion for the nine months ended December 31, 2011 on a 3 banks basis.
As a result, Consolidated Net Income for the nine months ended December 31, 2011 amounted to JPY 270.9 billion.
| 3Q of FY2011 (Apr 1 to Dec 31, 2011) | Change from 3Q of FY2010 | |
|---|---|---|
| Consolidated Gross Profits*1 | 1,473.6 | -87.4 |
| Consolidated Net Business Profits*2 | 518.7 | -92.0 |
| Credit-related Costs | 10.3 | 10.2 |
| Net Gains (Losses) related to Stocks | -108.6 | -101.1 |
| Ordinary Profits | 366.8 | -189.5 |
| Net Income | 270.9 | -151.1 |
| 3Q of FY2011 (Apr 1 to Dec 31, 2011) | Change from 3Q of FY2010 | |
|---|---|---|
| Gross Profits*1 | 1,182.0 | -55.7 |
| G&A Expenses*1 (excluding Non-Recurring Losses) |
-652.7 | -3.3 |
| Net Business Profits | 529.3 | -59.1 |
| Credit-related Costs | 3.3 | -18.4 |
| Net Gains (Losses) related to Stocks | -115.5 | -101.3 |
| Ordinary Profits | 309.4 | -155.6 |
| Net Income*3 | 190.4 | -248.2 |
- *1Certain items in expenses regarding stock transfer agency business and pension management business, which had been recorded as General and Administrative Expenses (excluding Non-Recurring Losses) until the previous period, have been included in Gross Profits beginning with this period, and reclassification of the figures for 3Q of FY2010 has been made accordingly.
- *2Consolidated Gross Profits - General and Administrative Expenses (excluding Non-Recurring Losses) + Equity in Income from Investments in Affiliates and certain other consolidation adjustments.
- *3Includes JPY -27.2 billion impact of turning the three listed subsidiaries into wholly-owned subsidiaries. Excluding this impact, Net Income was JPY 217.6 billion.
| 3Q of FY2011 (Apr 1 to Dec 31, 2011) | Change from 3Q of FY2010 | ||
|---|---|---|---|
| Customer Groups | Gross Profits* | 888.1 | -10.7 |
| G&A Expenses* | -522.1 | -0.9 | |
| 366.0 | -11.5 | ||
| Trading & Others | Gross Profits | 293.8 | -45.0 |
| G&A Expenses | -130.5 | -2.5 | |
| 163.2 | -47.5 | ||
| Net Business Profits | Gross Profits* | 1,182.0 | -55.7 |
| G&A Expenses* | -652.7 | -3.3 | |
| 529.3 | -59.1 | ||
- *Certain items in expenses regarding stock transfer agency business and pension management business, which had been recorded as General and Administrative Expenses until the previous period, have been included in Gross Profits beginning with this period, and reclassification of the figures for 3Q of FY2010 has been made accordingly.
Net Interest Income
The average loan balance for the three-month period from October to December 2011 increased by JPY 1.6 trillion from that for the first half of fiscal 2011. Meanwhile, the period end loan balance as of December 31, 2011 increased by JPY 3.6 trillion compared with that as of September 30, 2011.
This was primarily due to an increase in overseas loans particularly to Asia, loans to large corporate customers and to the Japanese Government.
The domestic loan-and-deposit rate margin for the three-month period from October to December 2011 was 1.30%, a decrease of 0.01% from that for the three-month period from July to September 2011.
- 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 (on a managerial accounting basis) for the nine months ended December 31, 2011 increased by JPY 3.5 billion on a year-on-year basis.
This was mainly due to a year-on-year increase in income associated with investment trusts and individual annuities from individual customers, solution-related income from corporate customers and non-interest income from overseas business.
- Non-interest Income from Customer Groups
- *Certain items in expenses regarding stock transfer agency business and pension management business, which had been recorded as General and Administrative Expenses until the previous period, have been included in Non-interest Income beginning with this period, and reclassification of the figures for FY 2010 has been made accordingly. The impact of the reclassification is JPY -4.4 billion for 1H of FY2010, JPY -2.0 billion for 3Q of FY2010, JPY -4.0 billion for 1H of FY2011 and JPY -2.0 billion for 3Q of FY2011, respectively.
Financial Soundness
NPL Ratio was 1.63%, an improvement of 0.07% from that as of September 30, 2011.
The balance of Consolidated Net Deferred Tax Assets decreased by JPY 34.1 billion from that as of September 30, 2011.
Unrealized Losses on Other Securities on a consolidated basis amounted to JPY 158.8 billion, mainly due to the impact of a decline in stock prices.
We will announce our Consolidated Capital Adequacy Ratio as of December 31, 2011 at a later date.
(JPY Bn, %)
| Dec 31, 2011 | Change from Sep 30, 2011 | |
|---|---|---|
| Disclosed Claims under the Financial Reconstruction Law (3 Banks) | 1,180.3 | 14.2 |
| NPL Ratio | 1.63% | -0.07% |
| Net Deferred Tax Assets (DTAs) (Consolidated) | 404.1 | -34.1 |
| Unrealized Gains (Losses) on Other Securities (Consolidated)* | -158.8 | -13.6 |
- *The base amount to be recorded directly to Net Assets after tax and other necessary adjustments
Disciplined Capital Management
We continue to pursue "strengthening of stable capital base" and "steady returns to shareholders" as our "disciplined capital management" policy. However, considering the ongoing revision of global capital regulations, uncertainty over the economy and market trends, and other factors, we are placing a higher priority on "strengthening of stable capital base."
We aim to increase, as our medium-term target, our Consolidated Tier 1 Capital Ratio (under Basel II) to 12% or above and our Common Equity Capital Ratio* (under Basel III) as of the end of fiscal 2012, when the new capital regulations are scheduled to be implemented, to the mid-8% level.
We will strive to strengthen further our financial base mainly by accumulating retained earnings and improving asset efficiency through our initiatives such as the steady implementation of Mizuho's Transformation Program that we announced in May 2010, and the realization in advance of the synergy effects of the integrated group-wide business operations including the transformation into 'one bank'. Accordingly, we believe we will be able sufficiently to meet the new capital regulations including the framework to identify G-SIFIs.
- *The calculation of our Common Equity Capital Ratio includes the outstanding balance of the Eleventh Series Class XI Preferred Stock that will be mandatorily convertible into common stock in July 2016.
Our Common Equity Capital Ratio is the estimated figure that Mizuho Financial Group calculates based on the publicly-available materials that have been issued to date. - (Note)The outstanding balance of the Eleventh Series Class XI Preferred Stock as of December 31, 2011 (excluding treasury stock) amounted to JPY 380.6 billion (59.6% of the initial amount issued of JPY 943.7 billion had already been converted into common stock as of such date).
(As of Jan 31, 2012)
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, realize the synergy effects of the transformation into 'one bank,' and implement 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.
