To Our Shareholders and Customers issues we faceinfiscal2000. policies implementedinfiscal 1999andthekey The following sectionssummarize thespecific becoming aleadingbankinthe21st century. ment ofourchallengingmanagementgoal tinued towork attopspeedtoward theachieve- this businessenvironment. and todosowithspeed,isthekey tosucceedin our abilitytoanticipateandadaptchange, ferent sectorsandindustries.We believe that based strategic allianceswere formedacross dif- financial business,andanumberofInternet- from othersectorsstarted to move intothe expand theirpresence inJapan,companies financial institutionsbeganinearnestto sector changeddramatically asforeign-owned one formoranother. tions announcedmergers and consolidationsof several othermajorJapanesefinancialinstitu- lowing sixmonthsafterthe announcement, called theMizuhoFinancialGroup. Inthefol- a comprehensive financialservicesgroup tobe agreement toconsolidatetheir operations into Industrial BankofJapan,Limited,reached full The Dai-IchiKangyo ,Limited,andThe tory offinanceinJapan. marked thestartofatotallynew era inthehis- For theJapanesefinancialsector, fiscal1999 — TheDawn ofaNew Era — In keeping withthis, infiscal1999,we con- At thesametime, conditionsinthefinancial In August 1999,TheFujiBank,Limited, Our Shareholders Customers and To 2 Fuji Mobile Banking servicebasedon mobile the FujiCyberBank.We alsointroduced the of Internetbankingservices provided through of ourservicechannelswas the enhancement tomer convenience through thediversification small andmedium-sizedenterprises. needs ofourcustomersespeciallyfocusingon were expanded tomeetthechangingfinancial tion, oursalesorganization andloanproducts tems forassetmanagementservices.Inaddi- made furtherenhancementstomarketing sys- in thestrategic area ofhousingloans.We also member customers,andonourproduct lineup reward program thatoffersspecialbenefitsto members oftheFujiFirstClub, amembership services, we focusedonservices provided to nology todiversify ourservicechannels. tomer convenience by usinginformationtech- needs ofourcustomers,andtoimprove cus- products andservicestomeetthewide-ranging Our goalsinthesemarkets are toenhanceour retail markets asourprioritybusinessareas. We have identifiedthedomesticcorporate and • Improving BusinessPerformance under astronger group strategy. and managingconsolidatedbusinessactivities ing operations, strengthening riskmanagement by improving businessperformance, restructur- agement infrastructure andcorporate structure During fiscal1999,we strengthened ourman- Review ofFiscal1999 One key focusofoureffortsto improve cus- With respect toenhancingproducts and To Our Shareholders and Customers under Stronger Group Strategy Strategy Group under Stronger Division and the Internal Audit Division as Division Internal Audit Division and the of our asset part of a major enhancement and the auditing system for assessment system We companies and other organizations. group the compliance system in further strengthened overseas domestic and the head office, companies. and group branches, Business Activities Managing Consolidated • our consolidated busi- to strengthen worked We ability to pro- ness management to enhance our services vide customers with the best possible brought We resources. based on our total group groups affiliated companies into our business the among cooperation and strengthened we the same time, units. At business various the management and continued to improve on to a con- performance of group evaluation the position of solidated footing and created Chief Financial Officer (CFO). As part of our fostered we strategy, efforts to bolster group Trust The Yasuda between closer cooperation and Banking Co., Ltd. (YTB) and The Dai-Ichi Fuji Trust and Banking Co., Ltd. The Kangyo former became a consolidated subsidiary in YTB’s 1999, and the latter took over March opera- asset management and administration tions, including pension trust, custody and services, on October 1, agency transfer recapital- 1999. Fuji Securities Co., Ltd. was for a full-scale involvement ized in preparation its fully underwrote in the equity business. We ¥30 billion rights issue. 3 telephones connected to NTT DoCoMo’s telephones connected Another enhancement was “i-mode” system. Bank, which Fuji Everyday the launch of the to access banking services on customers allows fully through public holidays and weekends began also We branches. functioning in-store services. of debit card full-scale development Operations • Restructuring and cost cutting our restructuring exceeded We such areas efforts in increased through targets of and the reduction rationalization as branch members and exec- board including our payroll, our of the efficiency improved We utives. closing and amalgamating by network branch while in and overseas, manned branches to maintain customer convenience. taking care approximately by force work our reduced We expenses to reduce 400 people and worked of informa- while maintaining a sufficient level tion technology (IT) investment. Management Risk • Strengthening of strong consider the development Because we risk management an essential aspect of the our further reinforced banking business, we we the same time, risk management system. At Committee and spe- established the Executive cialist committees to deal with particular types risk. To and market of risk, including the entire across management overall provide established the position spectrum of risk, we addition, we In of Chief Risk Officer (CRO). Assessment and Audit the Credit created (Formation of the ) and functional expertise in various business In August 1999, , Dai-Ichi Kangyo areas, and integrating and building on its vari- Bank and reached ous strengths. Its activities as a provider of agreement on forming the Mizuho Financial will be based on a total com- Group. mitment to putting the customer first, and on Japan’s financial institutions are entering a recognition of the importance of “heart to new era with the globalization of the economy heart” relationship with customers and busi- and the powerful impact of “Big Bang” finan- ness partners. cial reforms, as well as environmental changes In preparation for establishing a holding that include dramatic advances in financial and company in September 2000, the three information technology. In order to be success- are developing new, common products and ful in the face of escalating competition in an services, including the following: increasingly borderless world and establish • Introduction of the “Spark Card,” which themselves as major international players, integrates cash cards and credit cards, was launched in March 2000 by Fuji Bank and Japanese financial institutions will need to Dai-Ichi Kangyo Bank. improve themselves in two areas. First, • In April, the three banks made their cash dis- enhance their ability to respond quickly and penser and ATM networks available to each appropriately to the increasingly sophisticated other’s customers so customers would not be financial needs of their customers. Second, charged interbank transaction fees. enhance creditworthiness supported by solid • In May, the three banks established the financial strength. In the 21st century, a pow- Mizuho Venture Fund, the largest of its type in Japan. erful leader of the Japanese financial services • Plans were announced in May for the devel- industry is needed that will serve as an anchor opment of the “em-town” business, under for the stabilized financial system, contributing which the three banks will jointly develop to the development of the economy and the new Internet businesses that transcend tradi- enhancement of the international competitive- tional business format boundaries with the participation of more than 60 leading compa- ness of Japanese industry.

To Our Shareholders and Customers To nies in Japan. It was with this view of the financial envi- • In May, the three banks, together with Itochu ronment as a backdrop that Fuji Bank, Dai-Ichi Corporation and Corporation, Kangyo Bank and Industrial Bank of Japan announced the establishment of a new com- decided to form the Mizuho Financial Group, pany to provide trading-related business-to- business e-commerce services. an integrated financial services group with the • In May, we announced a decision to create a aim of becoming a mainstay of the Japanese real estate fund jointly with Mitsui Fudosan financial system, and to earn the full confi- Co., Ltd. dence of the Japanese public. • Kankaku Securities Co., Ltd. announced in The Mizuho Financial Group intends to May that it would change its name to The become a leading Japanese player in global Mizuho Investors Securities Co., Ltd. in financial markets and to establish itself as one October this year, and plans to develop its business as a retail securities company assum- of the top five financial groups in the world. It ing a role of developing the middle/retail busi- will achieve this goal by improving its business ness of the Mizuho Financial Group. efficiency, taking full advantage of its sectoral

4 The three banks will continue to promote We are committed to continuing our efforts to numerous joint projects designed to realize as optimize our business performance. rapidly as possible the benefits of the formation As in the previous fiscal year, the annual of the Mizuho Financial Group. dividend for common shares was set at ¥7 per share. The annual dividend for preferred (Financial Results) shares was maintained at the level set previ- To Our Shareholders and Customers In fiscal 1999, Core Net Business Profits, the ously by the Board of Directors according to the amount after subtracting Net Gains Related to various types of preferred shares issued. Bonds from Net Business Profits, increased by ¥24.6 billion to ¥251.7 billion, although Net Issues for Fiscal 2000 Business Profits (before Provision of General The environment in which the financial indus- Reserve for Possible Loan Losses) amounted to try operates is changing rapidly. The current ¥258.6 billion, a decline of ¥48.0 billion from year will be an extremely important turning the previous year’s level. We continued to point, both as the final year of our Strategic Plan make appropriate provisions and write off 120, and as the year in which the Mizuho problem loans as part of our ongoing efforts to Financial Group will be created. The issues we build a solid financial base. Expenses Related must tackle during this fiscal year are as follows. to Portfolio Problems in fiscal 1999 amounted First, we will strive to maximize our earn- to ¥344.0 billion, a reduction of ¥257.3 billion ings by expanding our portfolio of high-quality compared with the previous year’s total. In loan assets, increasing assets under manage- line with our policy of reducing the stock port- ment, and pursuing a wide range of earning folio, we continued to sell off shares, resulting opportunities. We will place particular empha- in a Net Gains on of ¥338.0 billion. sis on supporting venture businesses and start- Unrealized Gains on Stock at the end of fiscal up companies and on lending to small and 1999 amounted to ¥548.2 billion, an increase of medium-sized enterprises. We will work to ¥364.2 billion over the position at the end of achieve substantial growth in our assets under the previous fiscal year. management by offering asset management Ordinary Profits increased by ¥812.2 billion products that meet a wide range of customer to ¥223.3 billion, and Net Income increased by needs. We will also seek to diversify our earn- ¥495.0 billion to ¥102.1 billion. These figures ing opportunities by maximizing synergies with exceeded initial forecasts for the year by ¥133.3 affiliated companies. billion and ¥42.1 billion, respectively. Our con- Second, we will develop markets and accel- solidated Capital Adequacy Ratio (uniform erate expansion in new business areas by pro- international standard) remained high at 11%. viding leading-edge products and services in

5 strategic areas set down in our Strategic Plan including its financial technology and special- 120. In particular, these include investment ized knowledge. banking, asset management, information tech- The future concept is to aim to be an innova- nology and the Internet. tive financial services group that will lead the Third, we will further strengthen our man- new era through cutting-edge comprehensive agement structure and risk management sys- financial services. We are determined to make a tems. The management structure will be powerful start as one of Japan’s leading compre- enhanced by the acceleration of decision- hensive financial groups and to earn strong sup- making under the Executive Director system, port from customers in Japan and overseas by which was introduced in June 2000. In the offering superior services that anticipate change area of risk management, we will further in the financial and economic environment. enhance our risk management system relating to specific types of risk, such as credit risk, In Conclusion market risk and operational risk. Another pri- This year will be the first year of a new era in ority will be the reinforcement of our compli- which the true value of Fuji Bank will become ance procedures. increasingly apparent as we take the first steps The Mizuho Financial Group will com- toward a new phase of growth and success as mence integrated operations under Mizuho part of the Mizuho Financial Group. At this Holdings, Inc., which will be established time of dramatic change in our economic and through a stock-for-stock exchange (kabushiki- social structures, speed must remain a priority iten) on September 29, 2000. By the spring of as we build a new future for the Mizuho 2002, we intend to reorganize operations into Financial Group. We are committed to contin- legally separate subsidiaries according to cus- uing our efforts to achieve our management tomer segments and business lines. goals, and we look forward to the continuing With the establishment of the holding support of our shareholders, customers and company, all three banks will be linked by a friends. business-unit structure based on customer mar- To Our Shareholders and Customers To ket segments and business lines. This structure July 2000 will allow the group to capitalize on the strengths and characteristics of each business unit, which will use various sales channels to provide products and services designed to meet the increasingly diverse and sophisticated needs of customers, as well as opportunities for Yoshiro Yamamoto cross-selling. In addition, the Mizuho President and Chief Executive Officer Financial Group will create and develop new business areas by taking full advantage of its comprehensive financial service capabilities,

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