2013 Merrill Lynch Japan Conference
Abenomics and Mizuho’s Progressive Development
- Group CFO’s View -
September 2013 Important Notice
Forward-looking Statements
This presentation 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 Business Plan, realize the synergy effects of the transformation into ‘One MIZUHO’ 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/ 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.
Definitions FG: Mizuho Financial Group, Inc. BK: Mizuho Bank, Ltd. TB: Mizuho Trust & Banking Co., Ltd. SC: Mizuho Securities Co., Ltd. Former BK: Mizuho Bank, Ltd. before the merger with Mizuho Corporate Bank, Ltd. in Jul. 2013 Former CB: Mizuho Corporate Bank. Ltd. Former IS: Mizuho Investors Securities Co., Ltd. BK+TB: Aggregate figures for BK and TB on a non-consolidated basis Figures before the merger between BK and CB in Jul. 2013 are aggregate figures for Former BK, Former CB and TB on a non-consolidated basis BK+TB+SC: Aggregate figures for BK, TB and SC (including major subsidiaries) on a non-consolidated basis
Unless otherwise specified, the financial figures used in this presentation are based on Japanese GAAP This presentation does not constitute a solicitation of an offer for acquisition or an offer for sale of any securities
1 Contents
1. Introduction P. 3 - Provision of Risk Money through Funds P. 26 - Highlights P. 4 - Commercialization of Mega Solar Projects P. 27 - New Initiatives in Personal Banking P. 28 2. 1Q Financial Results and Development of One MIZUHO P. 5 - Initiatives in Personal Banking (1) Reverse Mortgage Loan “Mizuho Prime Age” P. 29 - Results of 1Q FY2013 P. 6 - Initiatives in Personal Banking (2) “NISA at Mizuho” P. 30 - Medium-term Business Plan (Key Financial Numerical Figures) P. 7 - Transformation of Profit Structure (1) Overview P. 8 5. Mizuho’s Unique Overseas Strategies P. 31 - Transformation of Profit Structure (2) Loan Balance P. 9 - Mizuho’s Overseas Strategies P. 32 - Transformation of Profit Structure (3) Non-interest Income P. 10 - Overseas Business Results P. 33 - Transformation of Profit Structure (4) Securities Portfolio P. 11 - Business Strategies for - Synergy Effects - Plan and Progress P. 12 Overseas Japanese Corporate Customers P. 34 - One MIZUHO Initiatives (1) Corporate Governance P. 13 - Business Strategies for Overseas Non-Japanese Corporate Customers P. 35 - One MIZUHO Initiatives (2) Progress of Project Teams and Working Groups P. 14 - Foreign Currency Funding / Credit Risk Management P. 36 - One MIZUHO Initiatives (3) Group-wide Underlying Culture P. 15 - Global Network P. 37
3. Further Strengthening of Financial Management P. 16 6. Conclusion P. 38 - New Profit Management Platform P. 17 - Recognition of External Factors (1) Risk Factors Affecting Japan and Overseas P. 39 - Enhancement of Unit Performance Measures by FG P. 18 Recognition of External Factors (2) Portfolio Management (1) P. 19 - - Risk Factors Affecting Mizuho P. 40 - Portfolio Management (2) P. 20 - In Closing P. 41
4. Abenomics and Mizuho’s Strategies P. 21 Abenomics “Third Arrow” (1) P. 22 - (Appendices) Financial Results for 1Q FY2013 P. 42 - Abenomics “Third Arrow” (2) P. 23 - Mizuho’s Competitive Advantages and New Financial Business Opportunities P. 24 - Increase in Loan Demand P. 25
2 Introduction
1. Introduction
2. 1Q Financial Results and Development of One MIZUHO
3. Further Strengthening of Financial Management
4. Abenomics and Mizuho’s Strategies
5. Mizuho’s Unique Overseas Strategies
6. Conclusion
This chapter includes forward-looking statements within the meaning of the United States Private Securities Litigation Reform Act of 1995. See “Forward-looking Statements” on P.1 of this presentation 3 Highlights
Favorable start for 1Q Consolidated Net Income 1 with approximately 50% progress against FY2013 plan
Constructing a new financial management structure 2 for maximizing group profitability
Proactive initiatives to support revitalization of 3 the Japanese economy through Abenomics
Mizuho’s unique overseas strategy that ensures 4 sustainable growth
4 1Q Financial Results and Development of One MIZUHO
1. Introduction
2. 1Q Financial Results and Development of One MIZUHO
3. Further Strengthening of Financial Management
4. Abenomics and Mizuho’s Strategies
5. Mizuho’s Unique Overseas Strategies
6. Conclusion
This chapter includes forward-looking statements within the meaning of the United States Private Securities Litigation Reform Act of 1995. See “Forward-looking Statements” on P.1 of this presentation 5 Results of 1Q FY2013
1Q FY13 FY13 Progress 1Q FY13 Highlights BK+TB Results Plan (JPY Bn) YoY Favorable start to achieving annual plan • Consolidated Net Income amounted to JPY 247.9Bn, which was Net Business Profits -67.6 24.6% 174.8 710.0 approx. 50% progress vs. FY2013 plan • Net Business Profits (BK+TB) was approx. 25% progress Customer Groups*1 136.4 32.6 against FY2013 plan, exceeding planned figure for 1Q
*1 Progress in transformation of “quality” of Trading & Others 38.4 -100.2 profit structure • Domestic Customer Groups demonstrated YoY increase in both Credit Costs 39.7 31.3 -100.0 +139.7 Net Interest Income and Non-interest Income - Net Interest Income: JPY 151.4Bn (+JPY 0.5Bn YoY) - Non-interest Income: JPY 87.5Bn (+JPY 22.3Bn YoY) Net Gains (Losses) 20.8 95.9 0.0 +20.8 • Overseas Customer Groups also showed YoY increase in both related to Stocks Net Interest Income and Non-interest Income particularly in Asia • Net Business Profits of Trading & Others exceeded planned Net Income 220.4 61.2 450.0 48.9% figure for 1Q despite YoY decrease of JPY 100.2Bn Solid progress for One MIZUHO synergy Consolidated • Synergy effects amounted to JPY 13.0Bn, resulting in approx. (JPY Bn) 40% progress vs. FY2013 plan Difference b/w • Achieved a successful outcome by reinforcing business with *2 27.4 2.7 Consolidated and BK+TB 50.0 54.9% employees/executives of large corporate customers and strengthening sales promotion structure through “banking, trust Mizuho Securities*3 17.3 12.4 and securities functions” collaboration Steady improvement of Mizuho Securities’ performance Net Income 247.9 64.0 500.0 49.5% • Increased profits by realizing merger synergy effects mainly through strengthened domestic retail business and cost Common Equity Tier 1 Ratio*4 reduction in addition to favorable market conditions in early 1Q 8.48% 0.19% (fully-effective basis) (vs. Mar. 2013) Sufficient level of Capital Adequacy Ratio *1: Excludes expenses related to next-generation IT systems *2: Consolidated Net Income - Net Income (BK+TB) • Common Equity Tier 1 Ratio was 8.48%*4 on a fully-effective *3: Figure for 1Q FY12 is simple aggregation of SC and Former IS basis or 9.11%*4 on a phase-in basis *4: Includes Eleventh Series Class XI Preferred Stock (balance as of Jun. 2013: JPY 333.8Bn) The above information includes forward-looking statements within the meaning of the United States Private Securities Litigation Reform Act of 1995. See “Forward-looking Statements” on P.1 of this presentation 6 Medium-term Business Plan (Key Financial Numerical Targets)
Transform the profit structure: Improve the “quality” of profits and achieve Basel 3 requirements ahead of schedule
FY2015 (Plan) Gradually Promote decrease dependence “Cost structure Net Income on income from reform” (Consolidated) JPY 550.0Bn level the trading segment on a global basis ROE (Consolidated) Profitability ROE (Consolidated) Approx. 9% Approx. 9% RORA (Consolidated Net Income Approx. 0.9% on Risk-weighted Assets)
Target Figures Group 1 Mid 50% range (FY2015) Expense Ratio* Efficiency Common Equity RORA Expense Ratio (Consolidated (BK+TB)*2 Lower 50% level Tier 1 Capital Ratio Net Income on (Fully-effective basis) Risk-weighted Assets) Ratio of Stock 8% or higher Approx. 0.9% Portfolio against Approx. 25% Tier 1 Capital*3 Transform into a stable profit structure by increasing Soundness the proportion of Income from the Customer Groups Common Equity 8% or higher (Note) Assumed economic conditions towards the end of FY2015 is as follows: Tier 1 Capital Ratio (incl. Eleventh Series Interest rates (Uncollateralized overnight call rate): 0-0.1% level, 10-year JGB yield: approx. 1.20%, (Fully-effective basis) Class XI Preferred Stock) Nikkei 225: approx. JPY11,000, and USD/JPY exchange rate: approx. JPY 92 *1: BK+TB+SC *2: BK+TB *3: Basel 3 phase-in basis (including Eleventh Series Class XI Preferred Stock in the Common Equity Tier 1 Capital) The above information includes forward-looking statements within the meaning of the United States Private Securities Litigation Reform Act of 1995. See “Forward-looking Statements” on P.1 of this presentation 7 Transformation of Profit Structure (1) Overview Transformation of Profit Structure as Stated in Medium-term Business Plan ■ Transform profit structure to a stable and sustainable one by focusing on Customer Groups Transform from a Trading business dependent structure to a Customer Groups oriented one (Proportion of income from Customer Groups for 1Q: 76%) ■ Strengthen Non-interest Income to improve RORA Enhance the proportion of Non-interest Income by taking measures such as further strengthening of integrated management between “banking, trust, and securities functions” (Proportion of Non-interest Income from Customer Groups for 1Q: 47%)
Proportion of Income from Customer Groups Proportion of Non-interest Income from Customer Groups (Net Business Profits) (Gross Profits)
（BK+TB+SC, managerial accounting） （BK+TB+SC, managerial accounting） 1Q FY12 1Q FY13 1Q FY12 1Q FY13 Results Results Results Results Trading & Non- Others Net Interest interest Trading & Customer 24% Income Income Others Groups Net Interest Non-interest Customer 59% 41% Income Income 57% 43% Groups 76% 53% 47%
Aim to increase % of income from Aim to increase % of Non-interest Income from Customer Groups to over 80% in FY2015 Customer Groups to 50% level in FY2015
The above information includes forward-looking statements within the meaning of the United States Private Securities Litigation Reform Act of 1995. See “Forward-looking Statements” on P.1 of this presentation 8 Transformation of Profit Structure (2) Loan Balance Domestic loan balance increased at a faster pace than Major Banks in Japan in 1Q FY13 Overseas loan balance maintained its growth trend
Domestic Loan Balance*1 Overseas Loan Balance
(BK+TB, banking account) (BK customer loan balance at overseas offices: managerial accounting, rounded figures) *2 average balance Growth Rate period-end balance (incl. loans booked at a banking subsidiary in China) (JPY Tn) Mizuho +1.6% (USD Bn) 60 Major Banks in Japan +0.6% Europe +4.0 vs. Mar.13 +0.8 Americas vs. 2H FY12 Asia 141.2 140 137.3 131.6 30.4 119.9 31.1 120 113.5 28.0 50 27.2 100 26.4
39.7 80 38.0 39.6 35.4 54.5 54.6 33.8 53.7 53.7 53.7 60 40 Excl. loans to the Japanese 40 government 65.6 66.6 71.1 +0.2 57.2 vs. 2H FY12 53.3 20
300 0 1H FY11 2H FY11 1H FY12 2H FY12 1Q FY13 Sep.11 Mar.12 Sep.12 Mar.13 Jun.13
Aim to increase by approx. JPY 2-3Tn in FY15 (vs. FY12) Aim to increase by approx. USD 50.0Bn as of Mar. 16 (vs. Mar. 13) *1: Excludes loans to FG *2: Comparison between average balance of 2H FY12 and 1Q FY13. Growth rate of Major Banks in Japan was calculated based on BOJ statistics of deposits and loans market (Loans and Discounts/Major Banks) The above information includes forward-looking statements within the meaning of the United States Private Securities Litigation Reform Act of 1995. See “Forward-looking Statements” on P.1 of this presentation 9 Transformation of Profit Structure (3) Non-interest Income Non-interest Income increased significantly year-on-year particularly in Solution Business- related and sales of Investment Trusts Non-interest Income (Customer Groups) Syndicated Loans (Japan) (figures other than the total amounts are rounded) (BK+TB) Proceeds Market (JPY Bn) Solution Business-related (managerial accounting) (JPY Bn) Share Investment Trusts & Individual Annuities 1 Mizuho Financial Group 1,841.7 47.8% 120 Settlement & Foreign Exchange +26.4 114.4 International Business*4 Market Share Trust & Asset Management 15.0 2 SMFG 1,021.4 26.4% Overwhelmingly 100 Others 3 MUFG 723.1 18.8% 93.3 88.0 15.0 No.1 82.8 12.0 4 Crédit Agricole CIB 46.4 1.2% 9.0 80 12.0 7.0 5 Aozora Bank 43.2 1.1% 9.0 69.2 Apr. - Jun. 2013, bookrunner basis 8.0 34.0 Source: Thomson Reuters Japan Syndicated Loans 13.0 60 32.0 Sales of Investment Products 4.0 32.0 30.0 Individual Annuities (former BK) (JPY Tn) *1 *2 *3 Investment Trust (excl. MMF) 40 29.0 27.0 0.5 19.0 11.0 +72% 23.0 0.4 20 5.0 14.0 14.0 14.0 16.0 12.0 0.3 Sales Amount 2.0 9.0 10.0 10.0 0 3.0 1Q09/1Q FY09 1Q 10/1Q FY10 1Q 11/1Q FY11 1Q 12/1Q FY12 1Q 13/1Q FY13 0.2 +72% YoY *1: Certain items in expenses regarding stock transfer agency business and pension management business, which had been recorded as G&A Expenses until FY10, have been included in Non-interest Income beginning with FY11, and the aforementioned figures for 1Q FY10 were reclassified accordingly 0.1 *2: Figures for 1Q FY11 were reclassified based on the revised managerial accounting rules for FY12, following the implementation of “substantive one bank” structure (the impact for 1Q FY11: approx. +JPY 10.0Bn) *3: Figures for 1Q FY12 were reclassified based on the revised managerial accounting rules for FY13, following the implementation of “one bank” structure (the impact for 1Q FY12: approx. -JPY 6.0Bn) 0.0 *4: Profits/losses from CDS hedging by former CB’s International Business Unit and from relevant credit investments in 1Q FY12 2Q FY12 3Q FY12 4Q FY12 1Q FY13 Europe, which are the reference assets of these CDS, are not included in figures after 1Q FY11 10 Transformation of Profit Structure (4) Securities Portfolio Significantly reduced risk amount in bond portfolio Plan to continue stock portfolio reduction JGB/Foreign Bond Portfolio*1 Japanese Stock Portfolio*1
(BK+TB, acquisition cost basis) (consolidated, acquisition cost basis) (10BPV: managerial accounting (incl. off-balance transactions)) Japanese Stocks (JPY Tn) JGB (JPY Tn) (JPY Bn) Ratio of Acquisition Costs against Tier 1 Capital (right axis) *5 35 Foerign Bonds -50 10BPV (Domestic: right axis) *2 3.0 50% 10BPV (Foreign: right axis) *2 -47.4 49% 30 -40 2.55 -38.6 -36.5 2.5 2.43 25 2.35 40% -30 20 39% 2.06 -27.2 -27.8 2.04 -25.6 2.0 36% 15 32.4 -20.2 30.6 -20 29.0 -18.0 30% 27.9 31% 10 -14.4 24.5 30% 1.5 -12.2 -10 5 11.7 8.6 6.0 5.7 8.8 0 0 0 1.0 20%0% Mar.10 Mar.11 Mar.12 Mar.13 Jun.13 Mar.10 Mar.11 Mar.12 Mar.13 Jun.13 Unrealized Gains/Losses (JPY Bn) Unrealized Gains/Losses (JPY Bn) *6 JGB *3,4 45.9 -1.1 49.8 88.1 -20.8 Japanese 846.5 Stocks 340.8 205.7 156.3 710.1 Foreign*4 Bonds -4.2 -88.4 -8.2 18.3 -213.7 *1: Other securities which have readily determinable fair value *2: Sensitivity of bond portfolio to interest rate movements *3: The base amount to be recorded directly to Net Assets after tax and other necessary adjustments *4: Calculated based on the average quoted market price of the respective month *5: Basel 2 basis from Mar.10 to Mar.12. Basel 3 phase-in basis (incl. Eleventh Series Class XI Preferred Stock in Common Equity Tier 1 Capital) after Mar.13 *6: The base amount to be recorded directly to Net Assets after tax and other necessary adjustments. Calculated based on the average market price of the respective month 11 Synergy Effects - Plan and Progress
Already achieved approximately 40% against the FY13 planned figure as of the end of 1Q through One MIZUHO integrated management (rounded figures) +JPY 90.0Bn 1Q FY13 Results Progress of
approx. 40% FY13 Plan Progress Revenue Synergies Bn (against FY13 plan) +18.0Bn +10.0 56％ Revenue Synergies Banking Operations +3.0Bn +JPY 60.0Bn Retail +1.0Bn
Corporate +1.5Bn
Markets +0.5Bn 1Q results +JPY 33.0Bn +JPY 13.0Bn Securities Operations +3.0Bn Revenue Effects of Integrated +4.0Bn Synergies Group Management +JPY 18.0Bn Cost Synergies FY13 Plan Progress Cost Synergies +3.0Bn Revenue +JPY 30.0Bn +15.0Bn 20％ Synergies Cost Synergies Banking Operations +1.5Bn +JPY 10.0Bn 39％ +JPY 15.0Bn Cost Securities Operations +1.5Bn Synergies +JPY 3.0Bn 1Q FY13 FY13 FY14 FY15 FY13 Plan Progress Total +13.0Bn Results Plan Plan Plan +33.0Bn 39％ (Note) All the figures in this page are estimated synergy effects compared to FY12 results based on managerial accounting The above information includes forward-looking statements within the meaning of the United States Private Securities Litigation Reform Act of 1995. See “Forward-looking Statements” on P.1 of this presentation 12 One MIZUHO Initiatives (1) Corporate Governance Commenced the advanced group management structure following the legal consolidation between former BK and former CB in July 2013 FG (Holding Company) Structure to provide integrated banking, trust and securities services Board of Directors Nomination Committee Majority of committee members consists of independent directors Domestic and Overseas Group Independent In-house CEO Directors Directors Compensation Committee Branches/Offices
Merged Unified and group-wide strategies on 1 Jul. Banking (BK) Trust (TB) Securities (SC) formulated by holding company “Strategy Conferences” to develop group-wide Member of Executive President President President Management Committee & CEO & CEO & CEO basic strategies Group Retail Group Wholesale Corporate Planning Strategy Conference Strategy Conference and Management Group CFO Group CRO Group CHRO Group CIO Group CSO Group International Group Asset Management FG Group Head Strategy Conference Strategy Conference Group Markets Strategy Conference Unit Head Project Teams (PTs) to select and discuss Business Promotion Corporate Financial themes of next-generation businesses Personal Retail Banking Corporate Institutions & Banking Banking (Large Banking Public Sector Next-generation FG Unit Head Corporations) Business Next-generation Retail PT FG Deputy Unit Head Industry Development PT Next-generation PT for Invigoration of International Investment Transaction Asset Markets Asia Business PT Domestic Financial Assets Banking Banking Managements “Various Working Groups” to investigate important issues in an expert and intensive manner WG on Risks involved in Rise in WG on Long-term Interest Rates Foreign Currency Funding
WG on Enhancing Group Management Business Policy Committees WG on Cross Shareholdings System between Banking, Trust and Securities Functions
13 One MIZUHO Initiatives (2) Progress of Project Teams and Working Groups 4 project teams to lead “Pioneering Development” and 4 working groups to strengthen “Risk Control”
Pioneering 4 Project Teams (PTs) Risk 4 Working Groups (WGs) Development Select and discuss themes of next-generation Control Investigate key management issues and businesses that contribute to future growth concerns in an expert and intensive manner Began discussion regarding our idea of sales Conduct preemptive monitoring by channels commencing a decade from now WG on Risks scoring 40 items Next-generation ・ Study various possibilities through opinion hearing involved in Rise in ・ Promote sharing of understanding among from external experts regarding financial services management regarding hypothetical scenarios Retail PT we provide ten years from now Long-term Interest relating to potential long-term interest rate ・ Develop action plans and schedule after conducting Rates rises and leading indicators that show signs of thorough review future movements Promote case studies through sub-committee Continue to maintain a stable balance study group by theme Next-generation between our lending and investment ・ Conduct case studies regarding elder generation WG on Foreign opportunities and funding capabilities Industry related industry and medical-care, energy as well as Currency Funding ・ Monitor current conditions of foreign currency Development PT agriculture (transformation of agriculture, forestry and funding such as deposits as well as foreign fishing sector into the Sixth Industry, etc.) currency lending pipeline
Develop global retail business and Asian bond Continue initiatives to reduce stocks market ・ Consider how to choose partners and how to utilize ・ Monitor initiatives and progress of each unit Next-generation Mizuho’s customer base and knowledge, our WG on Cross across group entities aiming to obtain Asia Business PT competitive advantages Shareholdings customer’s consent to sell their stocks at the ・ Formulate and implement initiatives to capture DCM earliest timing and to realize the sales at a related business in anticipation of the development of steady pace Asian bond market Review issues to unleash flow of domestic Strengthen compliance regarding financial assets WG on Enhancing integrated management of banking, trust PT for Invigoration ・ Aim to unleash individual customers’ financial assets Group Management and securities functions of Domestic of JPY 1,500Tn System across ・ Promote establishment of framework that ・ Understand the current status of behavior patterns of enables us to understand potential compliance Financial Assets individual customers regarding domestic financial asset Banking, Trust and risks associated with the enhancement of allocation as well as consider how financial institutions Securities Functions integrated management of banking, trust and can contribute in anticipation of the next decade securities functions and take appropriate response 14 One MIZUHO Initiatives (3) Group-wide Underlying Culture
Implemented various initiatives both internally and externally to establish a group-wide underlying culture
Establishment of One MIZUHO Promotion PT Establishment of No.1 Financial Services Provider PT
Provide opportunities that enable all employees Further strengthen the Mizuho brand by improving to feel Mizuho’s progressive development and the various “services” provided across the group to think about “One MIZUHO” proactively
Bank （BK） Trust （TB） Securities （SC） My Branch/Division Vision No. 1 Financial Services Provider PT Each branch/division prepares and shares its “3-year vision” and its “action Support and promote various initiatives plan” with all staff working there across the group to become the No. 1 Financial Services Provider
Discussion Session Examples Management executives visit all domestic and overseas branches/ No.1 Financial Services Lab My ATM Campaign divisions to discuss the branch/division visions with staff ・ Solicit staff who desire to share ・ The campaign will enlist staff, as their knowledge and ideas to users, to check the status of the improve existing services as well ATM space from the “viewpoint of Live Football Match as to generate new services customers” and recommend ・ Eligible persons are chosen service improvement suggestions As a supporting company of the on a group-wide basis Japan national football team, conducted group-wide joint public ・ Through this activity, promote viewing events in Tokyo and Osaka the establishment of a Mizuho (Participants: approx. 1,000） culture willing to pioneer new fields 15 Further Strengthening of Financial Management
1. Introduction
2. 1Q Financial Results and Development of One MIZUHO
3. Further Strengthening of Financial Management
4. Abenomics and Mizuho’s Strategies
5. Mizuho’s Unique Overseas Strategies
6. Conclusion
This chapter includes forward-looking statements within the meaning of the United States Private Securities Litigation Reform Act of 1995. See “Forward-looking Statements” on P.1 of this presentation 16 New Profit Management Platform
Management Grasp business situation in a timely and proper
Framework of Group Profit manner Management Strategies - Enhance each unit’s profit management through integrated “banking, trust and securities” functions - Matching financial and managerial accounting based on single count accounting Maximize Group Profitability Medium-term Business Plan Measurement “One MIZUHO Performance Enhance motivations of business front-lines New Frontier Plan” Measures toEnhance - Promotion of cross-entity, cross-unit business
Development of Group
Strategy across Governance Banking, Trust and Enhance integrated group management of the Securities Functions “banking, trust and securities” functions - Enhance the matrix operations between units and entities Strengthening Mizuho’s Competitive Advantages - Improve even further the mind-set inside the Group across “banking, trust and securities” functions
17 Enhancement of Unit Performance Measurement by FG
Utilize as quantitative evaluation items efficiency-related indicators that are consistent with the Group’s business and financial strategies
Evaluation Items Purpose
Net Business Profits - Profit Plan REP Raise awareness of cost of capital (Risk-base Economic Profit) Æ Meet Basel 3 regulations stably
Enhance efficiency Expense Ratio Æ Operate business considering cost effectiveness Quantitative Evaluation Financial ROE (Net Income) Enhance capital efficiency Indicators Æ Satisfy profitability requirements of shareholders
Improve asset efficiency RORA (Net Income) Æ Increase Non-interest Income
KPI Set targets that cannot be covered by financial indicators Æ Expand mid- to long-term profit base
Qualitative Follow-up Items - Evaluation
18 Portfolio Management (1)
Reflection on our past portfolio management: significant impairment was generated from assets of “specific sub-portfolios” and “particular periods” such as; - recorded extensive amount of credit costs from sectors such as real estate, construction and nonbank financial sector as a result of the burst of the Japanese real estate bubble in 1990’s - recorded large-scale losses triggered by Lehman Crisis, after the rapid expansion of assets such as securitization products and LBOs mainly in Europe and US
Implemented from FY2013, portfolio management mainly based on a group-wide sub-portfolio and vintage management incl. TB and SC, by shifting from the operations based only on former BK and former CB until FY2012.
Sub-portfolio Management Vintage Management
Formulate directions regarding the balance sheet usage as well as Formulate asset accumulation plan by setting criteria for adopting organizational and operations management by classifying sub- certain assets from the perspective of both “credit” and “profitability portfolios depending on characteristics of assets (duration, sensitivity, (REP, RORA)” every fiscal year etc.) and risk control (relationship management, markets) FY12 FY13 FY14 ニューバランスNew Balance ・Loan FY12
Domestic ・Hybrid Financing portfolio toaim at Corporate/ Vintage ・Cross Shareholdings Establishing Retail ・Japanese Corporate Customers (by Region) Overseas ・Non-Japanese Corporate Customers FY13 (by Region) Vintage ・Real Estate Non-recourse Loan Products ・Project Finance FY14 ・MBO/LBO Old Balance Vintage Funds/Credit ・Marketable/Non-marketable
19 Portfolio Management (2)
Portfolio management consistent through origination to exit including monitoring on a regular basis Æ Maintaining and controlling mid- to long-term asset quality through such measures as exposure concentration control as well as strengthening initiatives to improve profitability of overall portfolio, by utilizing indicators such as RORA and REP (Risk-based Economic Profit) Æ Foreign currency asset management balanced with stable foreign currency funding Portfolio Management Operations
Origination Regular Monitoring Selling/Hedging Types of strategy and framework How to control asset accumulation to accumulate asset (1) Formulate plans and
(3) Proactively control risks Credit Markets
operations policies by sub- Credit Markets portfolio PortfolioPortfolio through more active and flexible selling/hedging Loan Loan operations (2) Analyze impact on entire portfolio and profitability after adjusting capital costs at the Pre-emptive Management time of originating large-scale deals (4) Sub-portfolio management
(5) Vintage management (monitor performance of newly Utilized for dynamic management executed large-scale deals) of existing assets
Utilized for flexible origination (6) Monitoring market trends (hold discussion meetings on market trend, etc.)
20 Abenomics and Mizuho’s Strategies
1. Introduction
2. 1Q Financial Results and Development of One MIZUHO
3. Group CEO’s View
4. Abenomics and Mizuho’s Strategies
5. Mizuho’s Unique Overseas Strategies
6. Conclusion
This chapter includes forward-looking statements within the meaning of the United States Private Securities Litigation Reform Act of 1995. See “Forward-looking Statements” on P.1 of this presentation 21 Abenomics “Third Arrow” (1)
■ Achieve around 3% nominal GDP growth and 2% real GDP growth over the next 10 years on average Target Figures ■ Increase nominal GNI per capita by more than JPY 1.5MM in 10 years (JPY 3.9MM as of FY2012)
Image of 2% of Real GDP Growth Rate Image of JPY 1.5MM per Capita Increase in GNI
Income (JPY Tn) Nominal GDP + Nominal GNI Balance 650 Additional GDP of per Capita ＝ JPY 108Tn is needed Population to achieve Real GDP 600 Growth of 2% JPY 475Tn + JPY 15Tn 550 2012 JPY 3.9MM ＝ 126MM People 500
Growth 450 GNI per Capita: 3% Nominal Double Targets +JPY 1.5MM GDP Growth Income Balance
400 JPY 638Tn + JPY 26Tn 350 2022 JPY 5.4MM ＝ 123MM People 300 - 3% Nominal GDP growth leads to increase in domestic financial 1990 2000 2010 2020 business (Note) Benchmark year: 2000 - Double Income Balance leads to increased opportunities for Source: Prepared by BK Industry Research Division based on information from websites of supporting customers to expand their overseas business and for the Cabinet Office, Japan, IPSS and MHLW capturing business with overseas Japanese corporations
22 Abenomics “Third Arrow” (2)
1. Industry Revitalization Plan 2. Strategic Market Creation Plan 3. Strategy of Global Outreach
Current 2020 Current 2020 Current 2020 JPY (1) Revitalizing JPY Expand Market JPY JPY Capex 70Tn Size of Preventive (1) TPP, Japan- Industries 63Tn (1) Expanding and Nursing Care 4Tn 10Tn in 3 yrs EU EPA, Japan- Nation’s “Healthy Trading FTA 70% Ratio 19% (2) HR Capabilities Expand Market China-ROK FTA, by 2018 Employment Rate of Life Expectancy” JPY JPY & Employment Size of Medical RCEP Women (25-44 yrs old) 68% 73% Tn Tn System Care-related Market 12 16 (2) Clean and (3) Science, Capture Market No.1 Global Economical Energy JPY JPY (2) Exporting Infrastructure JPY JPY Technology and Innovation Ranking Innovator *1 Share of Energy- Demand and Tn Tn Sales Tn Tn within the next 5 yrs related Industries 8 26 Infrastructure 10 30 Innovation Supply
(4) World’s Towards (3) Next- Install in Export JPY Driving Safety (3) Supporting JPY Leading ICT Public Data Disclosure World’s generation All Cars Amounts of Support System SMEs Export 15Tn 30Tn Society Highest Level Infrastructures by 2030 SMEs (FY2010)
JPY Market Size JPY (5) Further Expand PPP/PFI JPY Foreign Visitors 8.37 30.0 JPY Strengthening 12Tn (4) Regional MM (4) Cool Japan of Cool 8-11 Programs 4Tn to Japan MM 2Tn Japan’s Industrial in10 yrs Economies that in 2030 Japan-related Tn Competitiveness Cumulatively use their Unique Market Size of Highly Efficient Transforming Agriculture, JPY JPY (5) Encouraging JPY JPY as a Business Thermal Power JPY 4.7Tn*2 Local Resources Forestry and Fishing FDI Balance Sector into the Sixth 1Tn 10Tn FDI 18Tn 35Tn Hub Generation (Coal/LNG) by 2030 Industry Return to a growth track by pursuing 3 action plans
Incorporate Demand Enhance Competitiveness in terms of Create Domestic Demand Labor, Capital and Productivity (Industrialize strategic areas) from Overseas (Improve business environment immediately) (Expand exports)
*1: Aim to become No.1 global innovator in World Economic Forum rankings *2: Estimated by BK Industry Research Division Source: Prepared by Mizuho based on information from the Cabinet Office, Japan 23 Mizuho’s Competitive Advantages and New Financial Business Opportunities
Support the realization of the Japanese government ‘s growth strategy and generate new financial opportunities by leveraging Mizuho’s competitive advantages
Mizuho’s Competitive Advantages New financial opportunities Public-Private Collaboration Public - Strategic investments in public-private Loan demand Growth Strategy ofAbenomics Private Collaboration investment funds - e.g., Agriculture, PPP/PFI, Cool Japan for Capex in Japan
Industrial Yasuhiro Sato, Group CEO, participates as one of the Provision of risk money Competitiveness Council ten private-sector members for new growth industries Sole mega bank with Financial Institutions & Public Organizational Structure Sector Business Unit - Contribute to regional revitalization PPP/PFI through public-private collaboration and regional bank collaboration Industry Research Division with largest scale and Industry Expertise Knowledge longest history among Japanese banks Advisory - The highest quality consulting functions provided by over 180 staff
Products Predominant track record in corporate finance Transaction business Capabilities - Domestic syndicated loan market share 47.8% (Apr. to Jun. 2013) （trade finance, FX） Business Infrastructure Business Office Branch network covering all domestic prefectures Support of SMEs’ Network - Sole mega bank to have such a network overseas expansion Strong customer base in the Tokyo Metropolitan area Customer Base and with large corporations M&A（Out-In/In-Out) - 70% of listed companies in Japan are customers
Customer Designated Financial Institution of Tokyo Loan demand Base Metropolitan Government and others related to Olympics
24 Increase in Loan Demand
Our domestic loan balance could increase by JPY 3-4Tn within the next 3 years if the Abenomics effect is added
GDP and Capex Fixed Investment (incl. Land Purchasing Expenses) Capex has been stagnant since 2008 Manufacturers and large enterprises’ capex showing a recovery trend (%)(YoY) (%) (YoY) (JPY Tn) (JPY Tn) 15 15 550 80 10 10 5 5 0 0 500 -5 -5 60 -10 -10 -15 450 Real GDP -15 -20 -20 Capex (right axis) -25 All Industries -25 Large Enterprises Manufacturing 400 40 -30 Medium-sized Enterprises Non-manufacturing -30 -35 Small Enterprises 1995 1998 2001 2004 2007 2010 2013 -35 2009 2010 2011 2012 2013 2009 2010 2011 2012 2013 Source: The Cabinet Office, Japan Source: BOJ (plan) (plan) Holding Period of Production Equipment Increase in Domestic Loan Balance (Estimate)*2 Aging production equipment has become less reliable and Abenomics resulted in production problems *1 Medium-term Loan Increase Business Plan Effect (simple aggregate) < 3 yrs < 5 yrs < 10 yrs < 15 yrs 15 yrs < (estimate) 2013 9% 9% 22% 16% 45% Approx. ＋ Approx. ＝ *2 Å Invested after the Lehman collapse + JPY 2-3Tn +JPY 1Tn +JPY 3-4Tn 1994 14% 14% 22% 17% 33% In FY15 vs. FY12 In FY15 vs. FY12 In FY15 vs. FY12 Loan spread expansion can be expected due to improved supply-demand and interest rate environment 0% 25% 50% 75% 100% *1：Answer provided by 31% of respondents to the questionnaire *2: Simple estimation for the possibility of an increase in our loan balance based on the assumption that the Source: METI’s questionnaire regarding holding period of production equipment relationship between GDP and loan balance for the relevant period is similar to that from 2005 to 2Q 2008 The above information includes forward-looking statements within the meaning of the United States Private Securities Litigation Reform Act of 1995. See “Forward-looking Statements” on P.1 of this presentation 25 Provision of Risk Money through Funds
Pioneer new financial businesses by utilizing sophisticated risk-taking capabilities
Participating in funds such as public-private investment
Agriculture, Forestry and Fisheries Participation in Sixth Industry Fund for Investment in Japan Brand Fund*2 the Agriculture, Forestry and Fishing Sector • Support relevant businesses through management support and • Promote overseas expansion of “clothing”, “food”, “shelter” and investment Cool Japan content (e.g., Anime), by commercializing “Japan’s attractiveness” • Improve productivity by utilizing new technologies, cooperating with such as culture and lifestyle which receive high recognition overseas other industries, etc. • Mizuho has been deeply involved in the establishment of the Fund Fukushima Regional 6th Industry Revitalization Fund (Apr. 2013) as a representative of the founders Tohoku’s Future Support Fund (Jun. 2013) [To be established (name tentative)] Kiyo 6th Industry Fund, Hiroshima Agriculture Revitalization Fund, Hyakugo 6th Industry Fund, Tochimaru 6th Industry Growth Support Fund
Investment in PFI Promotion Corporation of Japan*2 Establishment of Mizuho ASEAN PE Fund
Infrastructure • Utilize private financing to promote infrastructure maintenance, etc. • Support Japanese companies such as SMEs’ expansion by investing
• Invest in and finance PFI projects, send experts and support to PFI ASEAN businesses, etc. in local companies in the ASEAN region • Mizuho has been deeply involved in the establishment of the Fund • (1) Support Japanese companies’ overseas expansion by jointly as a representative of the founders investing in local companies with Japanese companies, (2) promote alliance building between Japanese and local companies Japan Infrastructure Investment Partners by investing in local companies eligible for investment by Japanese companies in the future • Invested together with Mitsubishi Corporation and Japan Bank for • JBIC also invested in this fund International Cooperation (JBIC) • Conduct investment in large infrastructure projects globally *1: A sovereign investment company jointly established by the governments of the six member countries (United Arab Emirates, Bahrain, Saudi Arabia, Oman, Qatar, Kuwait) of Gulf Cooperation Council to promote their economic and industrial development *2: Subject to approval for establishment from the Competent Ministers 26 Commercialization of Mega Solar Projects
Achieved winning results in the renewable energy field by playing a leading role in the arrangement of Mega Solar projects
External Environment surrounding Mega Solar Projects and Mizuho’s Initiatives
External Environment Aug. 2011 Jul. 2012 Enactment of Act on Special Measures Concerning Enforcement of Act on Special Measures Concerning Procurement of Renewable Electric Energy Procurement of Renewable Electric Energy Estimated by Operators of Electric Utilities by Operators of Electric Utilities Impact on Economy Great East Japan Ministries and local public bodies took initiatives in creating Mega Solar projects Players (incl. foreign Earthquake enterprises) are keen to JPY 6Tn* New players (manufacturers, trading firms, etc.) enter the market 3.11 entered the market (2030)
Aug.11 Mar.12 Aug.12 Nov.12 * Estimated by Mizuho incl. renewable resources Support commercialization and arrange financing for transactions related to Mega Solar projects Participate in Industry
Make Policy Provide Loans and Mizuho’s project finance arrangement 10 Projects Recommendations Solutions, Support Commercialization for domestic Mega Solar projects Approx. JPY 130Bn : (total investment value basis)
27 New Initiatives in Personal Banking
Promote differentiation from competitors through initiatives such as “first among Japanese banks” and “first among Japanese Mega Banks”
Customer Main “Convenience” = Interaction Channels “Trust” = Proposal Capabilities Customer Class Needs “Value for Money / Product Lineup” = Products / Services
Entering
Account /Settlement Value for (1) Debit Card Cash Back Program
Early Stage Asset Building Stage Building Asset Early Stage First among School Apr.13 Money Cash back (0.5% of used amount) to debit card users Japanese Banks Asset Building Product /Insurance Asset Building Starting (2) Smartphones / Tablet Applications First among Employment Convenience Apr.13 Awarded “MCPC*1 Encourage Prize” for three consecutive years Japanese Banks Value for (3) Global Account The lowest fees Marriage May 13 Money Service*2 in the Industry
Convenience First among (4) Establishment of Mizuho Bank Insurance Call Center May 13 Japanese Mega Banks Home Purchase Service Housing Loan Housing Proposal (5) “Life Stage Supporting Plan” First among Aug.13 Product (change housing loan repayment schedule flexibly) Japanese Mega Banks Lineup
Asset Management Stage Asset Management Service Child Proposal No.1 Product Lineup Education among Japanese Product (6) NISA at Mizuho Jun.13 Lineup Mega Banks Housing Investment Product Loan Service Payoff Proposal First among Testamentary (7) Reverse Mortgage Loan “Mizuho Prime Age” Jul.13 Retirement Product Japanese Mega Banks
Trust Lineup First Japanese Service 3 Mega Bank to Inheritance Proposal (8) Strengthening of Business Promotion by utilizing iPad* Mar.13 utilize Tablet PCs for Insurance Policy Design Strategic Move Next-generation Retail Project Team for the Future Offer advanced financial services that can be utilized “at any time, any place with ease”
*1: Mobile Computing Promotion Consortium (cross-industry consortium for promotion of establishment of mobile computing environment) *2: Time deposit account for both JPY and foreign currencies, exclusively available for Mizuho Direct (Mizuho’s internet banking service) users *3: Utilize as advanced business promotion tool for insurance policy illustrations (to be released in 2H FY13) 28 Initiatives in Personal Banking (1) Reverse Mortgage Loan “Mizuho Prime Age” Initiative: To develop loan demand from the elder generation by leveraging the strength of effectively controlling the trust function within the Group
Japanese Collaboration Government’s First among Estimated between Banking Collaboration with Initiatives Japanese Mega Market Size and活用 Trust Senior Welfare to Support Banks (8 Prefectures) Functions Business Advanced Aging “New Frontier” JPY Tn Country “One MIZUHO” 5 (230K People)
Financial services, such Stimulate the market for loans Respond to elder generation’s Collaborate with business as reverse mortgage, that to the elder generation needs such as utilization of their operators of senior welfare in are expected to respond through the first initiative houses as collateral in addition order to provide an option that Target of Reverse to elder generation’s among Japanese Mega to inheritance related needs enables the elderly to enter Mortgage Loan needs through initiatives* Banks such as asset management and nursing homes Market Share of both public and private testamentary trust, through sectors collaboration between BK and No. 1 TB
Product Scheme
(Contract) (1) Individual (1) Loan Contract: set commitment line up to the value (Borrowing) Mizuho Customer (2) of collateral (house) (2) Borrowing: assume needs such as guarantee Inheritance (Inheritance) (3) Inheritance Process, (4) deposit for nursing home, house renovation, medical (Asset, Liability) Sales of BK care, on top of money for leisure Houses (3)(4) Inheritance: support inheritance process by (Repayment) TB utilizing trust functions (inheritance arrangement, etc.) Heir(s) (5) (5) Repayment: make bullet repayment through sales of houses, etc. * “The Public-Private Roundtable (FSA)”, “Study Group to Facilitate Circulation and Utilization of Used Houses (MLIT)”
29 Initiatives in Personal Banking (2) “NISA at Mizuho” Initiative: To realize the “shift from savings to investments” by taking advantage of highest quality investment advice and product lineup among Japanese banks
Collaboration Shift from No.1 among between Banking, Japanese Mega Trust and Estimated Deposits to 活用 Collaboration with Investment Banks Securities BlackRock Market Size Functions Products “New Frontier” JPY 25Tn “One MIZUHO”
Shift individual financial Among the largest product (1)Hold joint seminars World’s leading fund for between BK and SC assets of JPY 1,500Tn line-ups of index funds in the index (passive) investment Target of NISA to stock market industry (2)Introduce BK customers (no-load type products, with equity investment Account Openings available only on internet) needs to SC No.1 among (3)Introduce TB customers to BK and SC Japanese Mega Banks (BK)
Individual Savings Account (NISA) Global Comparison of Individual Financial Assets Cash and Deposits Bonds Investment Trusts Stock & Other Investments Insurance & Annuities Others (1) Tax exemption for dividends and capital gains on publicly offered stock investment trusts, Europe 36% 7% 7% 15% 32% 3% EUR 19.6Tn listed stocks, etc.
US 14% 9% 12% 34% 28% 3% USD (2) Investment amount limit: JPY 5MM 57.7Tn (3) Investment amount limit per year: JPY 1MM 2% JPY Japan 54% 8% 28% （2014-2023） 5% 4% 1,571Tn (4) Tax exemption period: max. 5 years 0% 20% 40% 60% 80% 100% (Note) US/Japan: as of Mar 13, Europe: as of Dec. 12 Source: Prepared by Mizuho based on information from BOJ 30 Mizuho’s Unique Overseas Strategies
1. Introduction
2. 1Q Financial Results and Development of One MIZUHO
3. Further Strengthening of Financial Management
4. Abenomics and Mizuho’s Strategies
5. Mizuho’s Unique Overseas Strategies
6. Conclusion
This chapter includes forward-looking statements within the meaning of the United States Private Securities Litigation Reform Act of 1995. See “Forward-looking Statements” on P.1 of this presentation 31 Mizuho’s Overseas Strategies
Aim to establish a leading position in global financial business based on “Japan and Asia”
■ Pursue differentiation from competitors by “exporting” Mizuho’s advantages and business model developed in Japan ■ Selectively choose in-organic opportunities to complement organic strategy based on strategic fit, price validity, governance, etc.
One MIZUHO Accelerate support for overseas expansion of former BK Reinforce support for customers following the merger between BK and CB and 1 Customer Strategy (1) Japanese Corporate Customers follow up on Abe Administration’s Strategy of Global Japanese Outreach
Super 30 * Deepen business with Super 30 Customers, and 2 Customer Strategy (2) Expand to “Super 50” expand blue-chip customer base in the light of Super 50 Non-Japanese
Cross Regional Develop global business Capture European and US companies’ business in “Asia” 3 Regional Strategy based on Asia as well as “Asian” companies’ business in Europe and US
Banking, Trust and Establish a collaboration model Strengthen collaboration model between banking and Securities Functions between banking and securities functions on a global basis by leveraging, in Asia, 4 knowledge and experience accumulated in Europe and US Products Strategy securities functions
Network/HR develop Strengthen global business Pursue an optimal balance between organic and in-organic, -ment/Risk mgt. appoint more local staff, and conduct sophisticated pre- 5 Infrastructure Strategy infrastructure emptive credit monitoring and diversify portfolios
* Super 30: Approx. 30 non-Japanese corporate customers selected as primary focus in each of the four overseas regions (i.e., Americas, Europe, East Asia and Asia & Oceania) 32 Overseas Business Results
Overseas Gross Profits, Loan Balance Overseas Non-interest Income
(BK incl. a banking subsidiary in China, managerial accounting, rounded figures) (BK, managerial accounting, rounded figures) (USD MM) (USD Bn) (JPY Bn) Europe 4,000 Europe Americas 30 27.0 Americas Asia 23.0 25 Asia Loan Balance (right axis) Overseas 3,500 141.2 150 19.0 9.0 137.3 20 6.0 Non-interest 15.0 Income 126.5 15 6.0 6.0 5.0 7.0 3,000 119.9 2,833 10 6.0 +180% 5.0 from 1Q FY10 5 10.0 12.0 7.0 2,500 97.1 709 6.0 2,275 100 0 1Q FY10* 1Q FY11 1Q FY12 1Q FY13 2,000 597 * Recalculated based on new managerial accounting rules applied in FY11 (Impact: approx. +JPY 4.0Bn) 1,799 +28 711 Syndicated Loan Market Share (Global) 1,500 580 610 Proceeds Market 50 (USD Bn) Share 1,000 473 1 JP Morgan 101.9 12.4% 652 680 2 Bank of America Merill Lynch 89.3 10.8% 1,414 Market Share 178 3 Wells Fargo & Co 62.7 7.6% 500 1,067 156 158 747 177 4 Citi 50.2 6.1% No.1 319 344 5 Barclays 38.4 4.7% Among 0 0 9 Mizuho FG 23.1 2.8% Japanese FY10 FY11 FY12 1Q FY12 1Q FY13 banks 10 MUFG 22.1 2.7% Aim to increase Overseas Gross Profits in FY15 16 SMFG 15.6 1.9% by approx. 30% (vs. FY12) Apr.-Jun. 2013, bookrunner basis Source: Thomson Reuters The above information includes forward-looking statements within the meaning of the United States Private Securities Litigation Reform Act of 1995. See “Forward-looking Statements” on P.1 of this presentation 33 Business Strategies for Overseas Japanese Corporate Customers
Strongly support overseas business expansion of Japanese corporate customers ranging from large companies to SMEs
Increased number of companies expanding overseas business Overseas Production Ratio of No. of Overseas Customers and following Abe Administration’s strategy of global outreach Japanese Manufactures Overseas Loan Balance at Former BK Accelerate the increase in number of overseas Japanese (Former BK, managerial accounting) (%) corporate customers following the merger between BK and CB Results Forecast (JPY Bn)Overseas Loan Balance (K) 22 1,000 No. of Overseas Customers 20 Increase Income from (rig ht axis) 20 Deepen Business Relationship Business Deepen Overseas Japanese 800 18 Corporate Customers 18 600 16
Collaboration b/w Capture deals such as M&A and DCM 16 400 14 Banking and by strengthening integrated sales Securities Functions promotion on a global basis 14 200 12 Transaction Capture money flow and deposits Business by providing tailor-made proposals for 12 0 10 settlement and solutions-related businesses FY04 FY08 FY12 FY16 FY10 FY11 FY12 Source: Prepared by Mizuho based on information from the Cabinet Office, Japan Centered on Increase approx. 1,000 Loan Business with SMEs new customers in Asia Net Gains on FX Transactions (Overseas Japanese Corporate Customers) Large Corporations in 3 years (USD MM) (BK, IBU managerial accounting) 140 Expand Customer Base 120 100 Net Gains on FX Transactions Increase No. of Aim to increase approx. 1,000 80 Customers new customers within 3 years 133 60 116 +15% 99 40 (APR) Enhance Established “International Corporate 20 Business Base Advisory Division” (Jul. 2013) 0 FY10 FY11 FY12 34 Business Strategies for Overseas Non-Japanese Corporate Customers
Deepen and expand business with blue-chip corporate customers focusing on Super 30
Focus on primary business with non-Japanese blue-chip Income from Super 30 corporate customers ( BK, IBU managerial accounting, incl. results of collaboration with securities function, etc.) Promote multifaceted relationship with customers including trade (USD MM) finance, DCM, etc., and expansion of customer base 700 Income from Super 30 5% Super 30 RORA (right axis) Increase Income from 600 Deepen Business Relationship Business Deepen Overseas Non-Japanese Corporate Customers 500 (1) Aim to enhance further by increasing 400 Non-interest Income Collaboration b/w Leverage in Asia the knowledge and experience 627 Banking and of collaboration between banking and securities 4% Securities Functions functions cultivated in Europe and US 300 513 Capture European and US companies’ 3.80% (2) Relatively higher Cross Regional business in “Asia” as well as “Asian” 200 376 IBU total RORA from Super 30 companies’ business in Europe and US RORA 100 3.40% 3.24% Specified Super 50 candidates 3.17% Initiatives 0 3% Aim to enhance Super 50’s centering on Super 50 profitability per customer to FY10 FY11 FY12 Super 30 the same level as Super 30’s in 3 years IBU Results of Collaboration with Securities Function (Non-Japanese Corporate Customers) (JPY Bn) (BK, IBU managerial accounting) Expand Customer Base 20 Results of Increase No. of From “Super 30” (approx. 120 worldwide) 15 collaboration Customers to “Super 50” (approx. 200 worldwide) with Securities 10 Function 12.9 14.7 Enhance Reinforce human resources globally 5 10.1 +21% Business Base (APR) and develop executives 0 FY10 FY11 FY12 35 Foreign Currency Funding / Credit Risk Management
Stable foreign currency funding and forward looking credit risk management
Foreign Currency-denominated Customer Deposits Overseas Loans Asia/Oceania Loan portfolio (Jun. 2013) (Jun. 2013) period-end balance (BK, managerial accounting) (BK, IBU managerial accounting, rounded figures, (BK, IBU managerial accounting, rounded figures, incl. a banking subsidiary in China) incl. banking subsidiaries in China, (USD Bn) Indonesia, Australia and Malaysia) 100 Steady Jul.13 Others Increase 90.3 China 4% Australia 10% 80 Americas 10% Hong 28% Indonesia Kong 4% 60 Total Asia Taiwan Total 22% 8% USD 50% USD 93.5 141.2Bn 86.3 India 7% 74.2Bn 40 76.8 66.4 Europe 13% 52.2 22% 10% 20 Thailand South 12% Korea Singapore 0 Mar.10 Mar.11 Mar.12 Mar.13 Jun.13
Strengthen overseas business portfolio by utilizing organic expansion and alliance strategies
Expand offices and functions mainly in Asia/Emerging countries ＋ Utilize investments and alliance strategies simultaneously Commercial Banking Investment Banking / Securities Asset Management / Others
Major Investments and Auto Loan, etc. Office Development BK 38 offices Alliance Strategies SC 6 offices Mizuho Balimor Finance Yangon Representative Office Shinhan Financial Group (South (Indonesia) (Myanmar) Korea) Strengthen Phnom Penh Representative China CITIC Bank (China) M&A Functions Asset Management Vietcombank (Vietnam) Office (Cambodia) Mizuho Asia BlackRock Heping District of Tianjin Sub- Korea Development Bank Securities branch (China) (South Korea) (Singapore) Kunshan Sub-branch (China) State Bank of India (India) Settlement Maybank (Malaysia) Business Hefei Branch (China) BPI (Philippines) Bangalore-Devanahalli Branch China BCEL (Laos) Target (1) Target (2) Target (3) UnionPay (India) TDB (Mongolia) DCM Asset Mgmt. Retail Chennai Branch (India – formal BNI (Indonesia) in Asia Business Business approval granted to open) Canadia Bank (Cambodia) in Asia in Asia Maybank (Cambodia) Americas BK 17 offices Wells Fargo Bank (US) SC 1 office TB 1 office Itau Unibanco (Brazil) M&A IB Boutique Banco Mizuho do Brasil Banco Santander (Mexico) Evercore Partners
Mashreqbank (UAE) SC offices TB office EMEA BK 14 offices 3 1 Sberbank (Russia)
Standard Bank (South Africa) Investee Akbank (Turkey) Financial Institution QNB (Qatar) Alliance Partner Other Alliance Partner (Note) The number of offices incl. overseas subsidiaries 37 Conclusion
1. Introduction
2. 1Q Financial Results and Development of One MIZUHO
3. Further Strengthening of Financial Management
4. Abenomics and Mizuho’s Strategies
5. Mizuho’s Unique Overseas Strategies
6. Conclusion
This chapter includes forward-looking statements within the meaning of the United States Private Securities Litigation Reform Act of 1995. See “Forward-looking Statements” on P.1 of this presentation 38 Recognition of External Factors (1) Risk Factors Affecting Japan and Overseas Overseas Japan
Tapering of US QE3
Rise in Excessive US Interest Rates Yen Depreciation Deceleration of Decrease in Economic Growth in Japan’s Exports China Rise in JGB Yields (Decline in Money Outflow and JGB Prices) Slowdown of Economy in Yen Emerging Countries Appreciation Uncertainties in the Middle-East Decline in Slowdown of Japanese Stock <2013> Japanese Economy Major UpcomingEvents Prices Sep. FOMC (17-18 Sep.) Oct. Decision for Consumption Tax Rate Increase (early Oct.) FOMC (29-30 Oct.) Nomination of Next FRB Chairman (Oct.) Dec. FOMC (17-18 Dec.) Increase in Deadline of TPP Negotiations (end of 2013) <2014> Japan’s Fiscal Risks Jan. Termination of Bernanke FRB Chairman’s Term (31 Jan.) Mar. China National People’s Congress (Mar.) Triple Sell-off Apr. Planned Increase of Consumption Tax Rate from 5% to 8% (1 Apr.)
39 Recognition of External Factors (2) Risk Factors Affecting Mizuho
Upside Potential Domestic Economy Downside Risks
Increase domestic loans Realization of Slowdown of Prolonged weak and further strengthen Positive Effects Japanese demand for domestic １ of Abenomics １ Non-interest Income Economy loans
Revitalization of Worsening of Exceed planned figure for Economic Sudden Increase Activities in in Long-term unrealized gains/losses ２ One MIZUHO synergy Japan and Interest Rates ２ Overseas on securities
Money Outflow Accelerate the pace of Recovery of US and Slowdown Slowdown of overseas increase in income from and European of Economy in ３ Super 30 Economies Emerging ３ profit growth Countries
Positive Factors for Mizuho Overseas Economies Risk Factors for Mizuho
40 In Closing
Establish a profit structure and management framework which enable stable and sustainable growth amid changes in the domestic and overseas economic environment
Accelerate the initiatives stated in the medium-term business plan “One MIZUHO New Frontier Plan”
Transformation from a Trading business dependent structure to a Customer Groups oriented one Forward-looking initiatives in light of Japan’s return to the path to growth Overseas strategy focusing on primary business with blue-chip corporate customers
Continue to pursue an optimal balance between “Strengthening of Stable Capital Base” and “Steady Returns to Shareholders”
Achieved Common Equity Tier 1 Capital Ratio* (fully-effective basis) of mid-8% as of Jun. 2013 Æ Aim to complete preparations for Basel 3 requirements ahead of schedule Consider both returns to shareholders and investments for future growth giving due regard to capital adequacy, sustainability of fundamental profitability, and development of regulatory framework
* Includes Eleventh Series Class XI Preferred Stock (balance as of Jun. 2013: JPY 333.8Bn)
41 (Appendices) Financial Results for 1Q FY2013
This chapter includes forward-looking statements within the meaning of the United States Private Securities Litigation Reform Act of 1995. See “Forward-looking Statements” on P.1 of this presentation 42 Overview of Financial Results and Balance Sheet
Profit and Loss Statement （1Q FY13） Balance Sheet （Jun. 2013）
(JPY Bn) (JPY Bn) 1Q FY2013 1Q FY2012 Jun. 2013 Mar. 2013 (Consolidated) YoY (Consolidated) YoY 1 Consolidated Gross Profits 516.6 -44.2 560.9 1 Total Assets 174,692.8 -2,718.2 177,411.0
2 General and Administrative Expenses -303.4 3.2 -306.7 2 Loans and Bills Discounted 67,315.3 -221.5 67,536.8
*1 3 Consolidated Net Business Profits 205.5 -45.8 251.4 3 Japan （BK+TB）*2 55,454.1 347.1 55,106.9
4 Difference b/w Consolidated and BK+TB 30.7 21.7 8.9 4 Overseas (BK+TB) 12,280.3 846.1 11,434.2 5 Consolidated Net Income 247.9 64.0 183.9 5 Securities 44,317.6 -9,154.7 53,472.3
6 Difference b/w Consolidated and BK+TB 27.4 2.7 24.6 6 Japanese Stocks （Other Securities） 2,895.8 119.8 2,776.0 (BK+TB) 7 Japanese Gov't Bonds （Other Securities） 24,620.3 -6,184.7 30,805.1 7 Gross Profits 385.8 -65.8 451.7 8 Foreign Bonds （Other Securities） 8,799.0 -3,045.7 11,844.8 8 Net Interest Income 11.5 241.7 230.2 9 Total Liabilities 166,976.3 -2,698.5 169,674.8 9 Fiduciary Income 10.4 1.0 9.4 10 Deposits 85,473.9 1,231.9 84,241.9 10 Net Fee and Commission Income 75.3 13.1 62.1 11 Negotiable Certificate of Deposit 607.3 11 Net Trading Income 9.2 -8.6 17.8 15,934.1 15,326.7 12 Net Other Operating Income 49.0 -82.9 132.0 12 Total Net Assets 7,716.5 -19.7 7,736.2 General and Administrative Expenses 13 -1.7 (excluding Non-Recurring Losses) -211.0 -209.2 13 Unrealized Gains / Losses on Securities*3 660.2 -217.9 878.1 14 Net Business Profits 174.8 -67.6 242.4
15 Credit-related Costs 39.7 31.3 8.4 14 Disclosed Claims under the FRL*4 (BK+TB)*5 1,263.9 -29.3 1,293.3
Net Gains (Losses) related to Stocks 16 20.8 95.9 -75.0 15 Non-Performing Loan Ratio (BK+TB)*5 1.64% -0.06% 1.71% 17 Ordinary Profits 235.3 80.3 154.9 Common Equity Tier 1 Ratio 16 0.39% 18 Net Income 220.4 61.2 159.2 (phase-in basis) 8.55% 8.16% *1: Consolidated Gross Profits - G&A Expenses (excluding Non-Recurring Losses) *2: Excludes loans to FG. Banking Account + Equity in Income from Investment in Affiliates and certain other consolidation adjustments *3: The base amount to be recorded directly to Net Assets after tax and other necessary adjustments *4: The Financial Reconstruction Law *5: Banking Account + Trust Account 43 Balance Sheet Control
Consolidated Total Assets: Increase in liquid deposits Increase in domestic （Jun. 2013） JPY 174.6Tn Working Group on and overseas loans Foreign Currency Funding - Aim to increase domestic loans by approx. JPY 2-3Tn mainly driven by loans to - Obtain stable deposits, mainly liquid corporate customers and housing loans deposits in JPY and foreign Loans: currencies, together with capturing - Aim to increase overseas loans by approx. settlement business and trade flow USD 50.0Bn mainly for Japanese and non- Liquid Deposits Japanese blue-chip corporate customers JPY 67.3Tn
Disclosed Claims under Deposits, Enhancement of sales Credit risk management 1 FRL* : JPY 1.3Tn NCD: promotion of investment - Implement solid credit risk products: “from savings management while taking appropriate risks JPY 101.4Tn - Credit cost ratio of approx. 15bps assumed to investments” - Promote sales of investment Securities portfolio products such as investment trusts Working Group on Risks Involved in Time Deposits and individual annuities Rise in Long-term Interest Rates JGB: JPY 27.9Tn
- Continue conservative JGB operations, preparing for the potential risk of interest rate rises in the future Stock: JPY 2.8Tn Strengthening of capital - Maintain average remaining period of shorter base through accumulation than 3 years Other Liabilities: of retained earnings Securities: JPY 65.5Tn Reduction of risks involved - Aim to steadily increase Common in stock holdings JPY 44.3Tn Equity Tier 1 Capital (CET1) Ratio*3,4 to 8% or higher by Mar. 2016 Working Group on Cross Shareholding Total Net Assets: - Continue efforts to reduce stock portfolio as Other Assets: *1: The Financial Reconstruction Law one of the most important management JPY 7.7Tn *2: Basel 3 phase-in basis issues JPY 63.0Tn *3: Basel 3 fully-effective basis - Reduce book value of stock portfolio *4: Includes Eleventh Series Class XI Preferred Stock to 25% level of Tier 1 Capital*2,4 (Balance as of Jun. 2013: JPY 333.8Bn) in the CET1 Capital The above information includes forward-looking statements within the meaning of the United States Private Securities Litigation Reform Act of 1995. See “Forward-looking Statements” on P.1 of this presentation 44 Customer Groups Net Interest Income / Loan Balance
Net Interest Income Loan Balance*2
(BK+TB) (BK+TB, banking account) (managerial accounting) average balance
FY11 FY12 FY11 FY12 800.8 770.5 62.3 64.5 ■ Overseas: 90.3 ■ Overseas: 109.6 ■ Overseas: 8.1 ■ Overseas: 10.7 ■ Domestic: 710.5 ■ Domestic: 660.9 Change ■ Domestic: 54.1 ■ Domestic: 53.7 from (JPY Tn) 2H FY12 (JPY Bn)
0 0 *4 *1 *1 1H FY11 2H FY11 1H FY12 2H FY12 1Q FY12 1Q FY13 1H FY11 2H FY11 1H FY12 2H FY12 1Q FY13 *1: New managerial accounting rules have been applied since the beginning of FY13. The figures for 1Q FY12 on this slide were recalculated based on the new rules to compare with 1Q FY13 (the impact for 1Q FY12 was approx. JPY 11.0Bn) *2: Excludes loans to FG. “Overseas” represents loans booked at overseas offices including the impact of foreign exchange translation
45 Loan Balances in Asia/Oceania period-end balance (USD Bn) (BK, managerial accounting, rounded figures, incl. banking subsidiaries in China, Indonesia, Australia and Malaysia)
中国 China 韓国South Korea Established well-balanced portfolio reflecting status of each country/region Carefully monitor future conditions of certain 5 emerging countries 5
0 0 Mar.11 Mar.12 Mar.13 Jun.13 Mar.11 Mar.12 Mar.13 Jun.13
インド 3.7% of タイ 香港 台湾 India total overseas Thailand Hong Kong Taiwan loans
5 5 5 10
0 0 0 0 Mar.11 Mar.12 Mar.13 Jun.13 Mar.11 Mar.12 Mar.13 Jun.13 Mar.11 Mar.12 Mar.13 Jun.13 Mar.11 Mar.12 Mar.13 Jun.13
1.9% of その他 インドネシア シンガポール オーストラリア (Malaysia, Philippines, Indonesia total overseas Singapore Australia Others loans Vietnam)
2 5 2 5
0 0 0 0 Mar.11 Mar.12 Mar.13 Jun.13 Mar.11 Mar.12 Mar.13 Jun.13 Mar.11 Mar.12 Mar.13 Jun.13 Mar.11 Mar.12 Mar.13 Jun.13
46 Customer Groups Loan Spread
Domestic Loan and Deposit Rate Margin* Loan Spread
(managerial accounting) (%)
(%) Return on Loans and Bills Discounted ･･･ a 1.2 Former CB overseas offices 1.04 1.04 Loan and Deposit Rate Margin ･･･ a - b 1.02 1.6 0.95 0.97 Return on Deposits and Debentures b ･･･ 1.0 Former BK corporate customers
0.94 0.92 0.8 0.90 0.89 0.87 1.39 1.4 1.37 Former CB domestic large corporate customers 1.33 0.6 1.30 0.63 0.62 0.61 0.61 0.60 1.25 1.32 1.30 0.4 1Q 1.32% 1.26 1H FY11 2H FY11 1H FY12 2H FY12 1Q FY13 1.2 3Q 1.30% 1.24 2Q 1.31% 4Q 1.30% 1Q 1.27% 1.20 2Q 1.26% 3Q 1.24% (Reference) Market Interest Rates 4Q 1.24% -4 bps (figures as of the end of each month) 1.00.4 (%) 1.0 5Y Sw ap Rate 3M TIBOR 0.8 Uncollateralized O/N Call 0.624 0.80.2 0.6 0.483 0.484 0.300 0.4 0.338 0.07 0.06 0.06 0.06 0.05 0.340 0.336 0.336 0.328 0.2 0.250 0.0 0.6 0.000 0.000 0.000 0.000 0.000 0.0 1H FY11 2H FY11 1H FY12 2H FY12 1Q FY13 Mar.11 Sep.11 Mar.12 Sep.12 Mar.13 * Aggregate figures of domestic operations of BK (former BK and former CB) after excluding loans to FG, Deposit Insurance Corporation of Japan and the Japanese government 47 Synergy Effects
Capturing business with employees/executives of 1Q FY13 Results large corporate customers (rounded figures) - Increased newly executed housing loans to employees/executives of large corporate customers FY13 Plan Progress - Increased sales of investment products to executives of Revenue Synergies +10.0Bn +18.0Bn 56％ large corporate customers - Held investment seminars for employees/executives of Banking Operations +3.0Bn large corporate customers
Retail +1.0Bn Providing sophisticated solutions - Captured M&A deals, strengthened acquisition finance Corporate +1.5Bn - Strengthened business with overseas Japanese Markets +0.5Bn corporate customers
Securities Operations +3.0Bn Merger synergies realized at SC Effects of Integrated - Increased fee income by utilizing enhanced +4.0Bn Group Management retail marketing capabilities
FY13 Plan Progress Cost Synergies +3.0Bn Steady progress in personnel downsizing, etc. +15.0Bn 20％ - Unification of HQ and operating functions (Banking Banking Operations +1.5Bn Operations)
Securities Operations +1.5Bn - IT system integration as a result of merger between SC and former IS
FY13 Plan Progress Total +13.0Bn +33.0Bn 39％ (Note) Figures above are estimated synergy effects compared to FY12 results based on managerial accounting
The above information includes forward-looking statements within the meaning of the United States Private Securities Litigation Reform Act of 1995. See “Forward-looking Statements” on P.1 of this presentation 48 Credit Portfolio / Credit Costs
Disclosed Claims under the Financial Reconstruction Law Credit Costs
(BK+TB, banking account + trust account) (BK+TB, banking account + trust account)
< > Credit Cost Ratio*2
(JPY Tn) Claims against Bankrupt and Substantially Bankrupt Obligors (%) (JPY Bn) 2.0 Claims w ith Collec tion Ris k 4 Claims for Special Attention 100 Net NPL Ratio（right axis）*1 -157.1 +16.0 +24.7 -114.1 +39.7 <22bps>
1.5 3 1.31 1.29 1.26 1.20 0 1.16
1.0 2
Below -100 1% 0.5 1
0.86%
0.0 0 -200 Mar. 10 Mar. 11 Mar. 12 Mar. 13 Jun. 13 FY09 FY10 FY11 FY12 1Q FY13
*1: (Disclosed Claims under the Financial Reconstruction Law - Reserves for Possible *2: Ratio of Credit Costs (annualized) against Total Claims (period-end balance, based on the Financial Losses on Loans) / (Total Claims - Reserves for Possible Losses on Loans) Reconstruction Law (FRL), banking account + trust account)
49 Net Gains/Losses on Securities
Net Gains/Losses on Securities Unrealized Gains/Losses on Other Securities*2
Net Gains/Losses related to Bonds (consolidated)
(BK+TB) Figures in represent aggregate figures Other (incl. foreign government bonds, securitization products, and fund investments, etc.) (JPY Bn) Japanese Bonds 300 220.4 Japanese Stocks (JPY Bn) 200 155.1 1,000 140.6 878.1 660.2 100 54.4 30.7 800 113.4 0 FY10 FY11 FY12 1Q FY13 600
Net Gains/Losses related to Stocks*1 400 846.5 710.1 (BK+TB) 0.6 91.2 200 54.8 （JPY Bn） 205.7 156.3 100 20.8 0 -12.9 -18.9 -119.9 0 -192.2 -167.4 -100 -200 -76.2 -50.3 Mar. 11 Mar. 12 Mar. 13 Jun. 13 -200 -131.2
-300 Nikkei 225 (JPY)*3 9,852 9,962 12,244 13,106 JGB 10Y 1.25% 0.99% 0.56% 0.85% Impairment -87.3 -41.5 -126.8 -0.9 USTB 10Y 3.47% 2.21% 1.85% 2.49% of Stocks *2: Other Securities which have readily determinable fair values (the base amounts to be recorded directly to FY10 FY11 FY12 1Q FY13 Net Assets after tax and other necessary adjustments). Based on the average quoted market price of the respective month for Japanese stocks. For others, based on the quoted market price if available, or other *1: Excludes “Reversal of Reserve for Possible Losses on Investment, etc.”, which were included in reasonable value, at the respective period end “Net Extraordinary Gains (Losses)” *3: The average of daily closing prices of the final month of each period 50 Securities Portfolio (JGB/Stock)
JGB Portfolio*1 Japanese Stock Portfolio*1
(BK+TB, acquisition cost basis) (Consolidated, acquisition cost basis) Treasury Discount Bills Floating-rate Notes (JPY Tn) Japanese Stocks (JPY Tn) Medium & Long-term Bonds *2 (Year) Ratio of Acquisition Cost against Tier 1 Capital (right axis) *6 3 60% 40 Ave. Remaining Period (right axis) *3 6
-JPY 6Tn 2.55 2.43 32.4 (1Q FY13) 5 2.35 30.6 30 29.0 2.06 2.04 25% 6.5 9.0 49% level of 24.5 4 2 Tier 1 Capital 40% 7.7 1.5 7.0 39% 20 1.5 1.5 Ave. 3 36% remaining period 1.5 31% 2.5-3 yrs 30% 2.5yrs 2 2.2yrs 2.2yrs 1 20% 10 1.7yrs -0.3 yrs 1 19.6 24.2 20.0 16.0 0 0 Mar. 11 Mar. 12 Mar. 13 Jun. 13 Mar. 16 Unrealized Gains 0 0% /Losses*4 -JPY 1.1Bn JPY 49.8Bn JPY 88.1Bn -JPY 20.8Bn (Plan) o/w Floating-rate Notes JPY 45.4Bn JPY 35.5Bn JPY 20.3Bn JPY 15.2Bn Mar. 10 Mar. 11 Mar. 12 Mar. 13 Jun. 13 Mar. 16 (mgmt accounting) *5 (Plan) Sensitivity of Bond Portfolio to Interest Rate Movements Reduction of Stock Portfolio (Apr. - Jun. 13) (BK+TB, managerial accounting, incl. off-balance transactions) Mar. 12 Mar. 13 Jun. 13 Reduced Amount Reduction by JPY 16.5Bn (Apr. to Jun. 13) Domestic -JPY 38.6Bn -JPY 47.4Bn -JPY 27.8Bn Results (o/w Amount sold) Approx. (JPY 16.0Bn) 10BPV *7 Foreign -JPY 27.2Bn -JPY 36.5Bn -JPY 18.0Bn Consented Amount to Sell Approx. JPY 280.0Bn (by Jun. 13) *1: Other Securities which have readily determinable fair values *2: Including bonds with remaining period of one year or less *3:Excluding Floating-rate Notes *4: The base amount to be recorded directly to Net Assets after tax and other necessary adjustments, calculated based on the quoted market price if available, or other reasonable value at the respective period end *5: Determined at reasonably calculated prices *6: For Mar. 10 to Dec. 12, Basel 2 basis, and Mar. 13 and thereafter, on a Basel 3 phase-in basis (incl. Eleventh Series Class XI Preferred Stock in Common Equity Tier 1 Capital) *7: The portion which has not been sold as of Jun. 13 The above information includes forward-looking statements within the meaning of the United States Private Securities Litigation Reform Act of 1995. See “Forward-looking Statements” on P.1 of this presentation 51 Capital Adequacy Ratio Roadmap
Common Equity Tier 1 Capital Ratio (Conceptual Illustration) Variables and Calculations
Jun. 2013 8.55% Jun. 2013 Phase-in basis : 9.11% (phase-in basis) (incl. mandatory convertible preferred stock*1)
Deduction of regulatory -0.7% adjustments, etc. 3.5% Jun. 2013 Fully-effective basis : 8.48% (incl. mandatory convertible preferred stock*1) Jun. 2013 7.8% level (fully-effective basis) Equivalent to 0.8% Unrealized Gains on Other Securities (JPY 484.9Bn) Retained earnings, etc. (-FY2015) +0.8% level Target (Medium-term business plan) 5.125% Mar. 2016 Fully-effective basis: Lower-9%*2 Mar. 2016 8.6% level (figures estimated (fully-effective basis) 8% or higher as of Jun. 2013) (incl. mandatory convertible pref. stock*1) Total • We aim to increase to a level that enables us to secure stably Mandatory conversion of +0.6% level preferred stock CET1 ratio of 8% or higher by Mar. 2016, which would complete our preparations for Basel 3 requirements ahead of schedule Retained earnings, etc. • Continue to emphasize steady returns to shareholders (-FY2018) • Annual cash dividend payments on common stock for FY2013 are estimated to be “JPY 6” per share Mar. 2019 (fully-effective basis) We believe we will be able to secure 0%2% 4% 6% 7% 8% 10% a sufficient CET1 ratio when fully effective
G-SIBs surcharge: +1.0-2.5% (when fully-effective) Figures above are estimated figures calculated by FG based on publicly-available materials issued to date *1: Eleventh Series Class XI Preferred Stock (balance as of Jun. 2013: JPY 333.8Bn, mandatory conversion date: Jul. 1, 2016) Surcharge on Mizuho: +1.0% (Bucket 1, tentative) *2: Calculated based on same assumption as that used for Mar. 13 The above information includes forward-looking statements within the meaning of the United States Private Securities Litigation Reform Act of 1995. See “Forward-looking Statements” on P.1 of this presentation 52