Form 6-K

 

 

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 6-K

REPORT OF FOREIGN PRIVATE ISSUER

PURSUANT TO RULE 13a-16 OR 15d-16

UNDER THE SECURITIES EXCHANGE ACT OF 1934

For the month of November 2008.

Commission File Number 001-33098

Mizuho Financial Group, Inc.

(Translation of registrant’s name into English)

5-1, Marunouchi 2-chome

Chiyoda-ku, Tokyo 100-8333

Japan

(Address of principal executive office)

Indicate by check mark whether the registrant files or will file annual reports under cover of Form 20-F or Form 40-F.

Form 20-F  x        Form 40-F  ¨

Indicate by check mark if the registrant is submitting the Form 6-K in paper as permitted by Regulation S-T Rule 101(b)(1):  ¨

Indicate by check mark if the registrant is submitting the Form 6-K in paper as permitted by Regulation S-T Rule 101(b)(7):  ¨

Indicate by check mark whether the registrant by furnishing the information contained in this Form is also thereby furnishing the information to the Commission pursuant to Rule 12g3-2(b) under the Securities Exchange Act of 1934.    Yes  ¨    No  x

If “Yes” is marked, indicate below the file number assigned to the registrant in connection with Rule 12g3-2(b):82-            .

 

 

 


SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

 

Date: November 13, 2008
Mizuho Financial Group, Inc.
By:  

/s/ Takashi Tsukamoto

Name:   Takashi Tsukamoto
Title:   Deputy President / CFO


 

For Immediate Release:

 

  

November 13, 2008

 

   LOGO

Financial Statements for the Second Quarter of Fiscal 2008

(Six months ended September 30, 2008)

<under Japanese GAAP>

 

Company Name:                    

   Mizuho Financial Group, Inc. (“MHFG”)
Stock Code Number (Japan):                        8411
Stock Exchanges (Japan):    Tokyo Stock Exchange (First Section), Osaka Securities Exchange (First Section)
URL:    http://www.mizuho-fg.co.jp/english/
Representative:    Terunobu Maeda
   President & CEO
For Inquiry:    Mamoru Kishida
   General Manager, Accounting
   Phone: +81-3-5224-2030
Filing of Shihanki Hokokusho (scheduled):    November 28, 2008
Trading Accounts:    Established

Amounts less than one million yen are rounded down.

1. Financial Highlights for the Second Quarter (First Half) of Fiscal 2008 (for the six months ended September 30, 2008)

(1) Consolidated Results of Operations

 

     (%: Changes from the previous first half)
     Ordinary Income     Ordinary Profits     Net Income     Net Income
per Share of
Common Stock
   Diluted Net Income
per Share of
Common Stock
     ¥ million    %     ¥ million    %     ¥ million    %     ¥    ¥

1H F2008

   1,903,592    (15.6 )   56,788    (85.7 )   94,577    (71.0 )   8,373.41    7,078.95

1H F2007

   2,256,140    21.0     399,184    (24.7 )   327,061    (16.6 )   28,272.51    25,804.83

(2) Consolidated Financial Conditions

 

     Total Assets    Total Net Assets    Own Capital Ratio    Total Net Assets
per Share of
Common Stock
   Consolidated
Capital Adequacy Ratio
(BIS Standard)
 
     ¥ million    ¥ million    %    ¥    %  

1H F2008

   153,222,014    4,968,143    2.1    211,407.06    11.45 *

Fiscal 2007

   154,412,105    5,694,159    2.5    254,722.01    11.70  
               *Preliminary  

 

Reference:       Own Capital:
     

As of September 30, 2008: ¥3,309,600 million; As of March 31, 2008: ¥3,902,114 million

Notes    1:    Own Capital Ratio was calculated as follows: (Total Net Assets - Minority Interests) / Total Assets × 100
   2:    Consolidated Capital Adequacy Ratio (BIS Standard) is based on the “Standards for Bank Holding Company to Consider the Adequacy of Its Capital Based on Assets and Others Held by It and Its Subsidiaries Pursuant to Article 52-25 of the Banking Law” (Financial Services Agency Ordinance Announcement No. 20 March 27, 2006).

2. Cash Dividends for Shareholders of Common Stock

 

     Cash Dividends per Share

(Record Date)

   First Quarter-end    Second Quarter-end    Third Quarter-end    Fiscal Year-end    Annual
     ¥    ¥    ¥    ¥    ¥

Fiscal 2007

   —      0.00    —      10,000.00    10,000.00

Fiscal 2008

   —      0.00         

Fiscal 2008 (estimate)

         —      10,000.00    10,000.00

 

Note 1:    Revision of estimates for cash dividends for shareholders of common stock during this quarter: No
Note 2:    Please refer to p. 1-3 for cash dividends for shareholders of classified stock (unlisted), the rights of which are different from those of common stock.

3. Consolidated Earnings Estimates for Fiscal 2008 (for the fiscal year ending March 31, 2009)

     (%: Changes from the previous fiscal year)
     Ordinary Income     Ordinary Profits     Net Income     Net Income
per Share of
Common Stock
     ¥ million    %     ¥ million    %     ¥ million    %     ¥

Fiscal 2008

   3,800,000    (15.9 )   350,000    (11.8 )   250,000    (19.6 )   20,537.22

 

Note 1:    Revision of the earnings estimates during this quarter: No
Note 2:    Of the released information, only Net Income per Share of Common Stock is revised. Ordinary Income, Ordinary Profits and Net Income are the same as the information announced on October 31, 2008.
Note 3:    The average number of shares of outstanding common stock for fiscal 2008 used in calculating the above Net Income per Share of Common Stock is based on the following:
  

•      The average number of “the average number of shares during the interim period” and “the number of shares as of September 30, 2008 (which is assumed to be the average number of shares during the third and the fourth quarter of fiscal 2008)” is used.

•      The increase/decrease during the third and fourth quarters of fiscal 2008, such as the increase in the number of shares of common stock due to the request for acquisition (conversion) of the Eleventh Series Class XI Preferred Stock, is not taken into consideration.

 

1-1


Mizuho Financial Group, Inc.

 

4. Others

 

(1) Changes in Significant Subsidiaries during the Period

 

   (changes in specified subsidiaries accompanying changes in scope of consolidation): No

 

(2) Changes of Accounting Methods and Presentation of Consolidated Financial Statements

 

   (To be described in changes of fundamental and important matters for the preparation of Interim Consolidated Financial Statements)

 

  (a) Changes due to revisions of accounting standards etc.: Yes

 

  (b) Changes other than (a) above: No

Please refer to [Qualitative Information and Financial Statements] 4. Others on page 1-6 for details.

(3) Issued Shares of Common Stock

 

(a) Period-end issued shares (includes treasury stock) :

    

As of September 30, 2008: 11,178,846 shares,

As of March 31, 2008: 11,396,254 shares

(b) Period-end treasury stock :     

As of September 30, 2008: 11,252 shares,

As of March 31, 2008: 4,585 shares

(c) Average outstanding shares :     

1st Half Fiscal 2008: 11,294,954 shares,

1st Half Fiscal 2007: 11,568,165 shares

Non-consolidated Financial Statements

1. Financial Highlights for the Second Quarter (First Half) of Fiscal 2008 (for the six months ended September 30, 2008)

 

(1) Non-Consolidated Results of Operations

 

     (%: Changes from the previous first half)
     Operating Income     Operating Profits     Ordinary Profits     Net Income     Net Income
per Share of
Common Stock
   ¥ million    %     ¥ million    %     ¥ million    %     ¥ million    %     ¥

1H F2008

   426,950    (29.4 )   417,265    (29.9 )   411,268    (30.0 )   454,600    (27.4 )   40,246.61

1H F2007

   604,926    (50.9 )   595,884    (51.3 )   588,255    (51.7 )   626,454    (49.5 )   53,772.60

 

(2) Non-Consolidated Financial Conditions

 

     Total Assets    Total Net Assets    Own Capital Ratio    Total Net Assets
per Share of
Common Stock
     ¥ million    ¥ million    %    ¥

1H F2008

   4,550,820    3,683,398    80.9    244,878.70

Fiscal 2007

   4,658,922    3,512,845    75.4    220,538.65

 

Reference:

  

1.      Own Capital:

  

         As of September 30, 2008: ¥ 3,683,398 million; As of March 31, 2008: ¥3,512,845 million

  

2.      Maximum amount available for dividends as of September 30, 2008: ¥1,298,118 million, As of March 31, 2008: ¥1,582,289 million

  

         (note)  “Maximum amount available for dividends” is calculated pursuant to Article 461, Paragraph 2 of the Company Law.

 

2. Earnings Estimates for Fiscal 2008 (for the fiscal year ending March 31, 2009)

 

 

     (%: Changes from the previous fiscal year)
     Operating Income     Operating Profits     Ordinary Profits     Net Income     Net Income
per Share of
Common Stock
     ¥ million    %     ¥ million    %     ¥ million    %     ¥ million    %     ¥

Fiscal 2008

   450,000    (44.2 )   430,000    (45.3 )   410,000    (46.9 )   450,000    (44.5 )   38,343.93

 

Note 1:

  

Revision of the earnings estimates during this quarter: No

 

Note 2:   

Of the released information, only Net Income per Share of Common Stock is revised.

Operating Income, Operating Profits, Ordinary Profits and Net Income are the same as the information announced on May 15, 2008.

Note 3:    The average number of shares of outstanding common stock for fiscal 2008 used in calculating the above Net Income per Share of Common Stock is based on the following:

 

   

The average number of “the average number of shares during the interim period” and “the number of shares as of September 30, 2008 (which is assumed to be the average number of shares during the third and the fourth quarter of fiscal 2008)” is used.

 

   

The increase/decrease during the third and fourth quarters of fiscal 2008, such as the increase in the number of shares of common stock due to the request for acquisition (conversion) of the Eleventh Series Class XI Preferred Stock, is not taken into consideration.

 

 

This immediate release contains statements that constitute forward-looking statements within the meaning of the United States Private Securities Litigation Reform Act of 1995, including estimates, forecasts, targets and plans. Such forward-looking statements do not represent any guarantee by management of future performance.

In many cases, but not all, we use such words as “aim,” “anticipate,” “believe,” “endeavor,” “estimate,” “expect,” “intend,” “may,” “plan,” “probability,” “project,” “risk,” “seek,” “should,” “strive,” “target” and similar expressions in relation to us or our management to identify forward-looking statements. You can also identify forward-looking statements by discussions of strategy, plans or intentions. These statements reflect our current views with respect to future events and are subject to risks, uncertainties and assumptions.

We may not be successful in implementing our business strategies, and management may fail to achieve its targets, for a wide range of possible reasons, including, without limitation, incurrence of significant credit-related costs; declines in the value of our securities portfolio, including as a result of the impact of the dislocation in the global financial markets stemming from U.S. subprime loan issues; changes in interest rates; foreign currency fluctuations; revised assumptions or other changes related to our pension plans; failure to maintain required capital adequacy ratio levels; downgrades in our credit ratings; the effectiveness of our operational, legal and other risk management policies; our ability to avoid reputational harm; and effects of changes in general economic conditions in Japan.

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.

MHFG is a specified business company under “Cabinet Office Ordinance on Disclosure of Corporate Information, etc.” Article 17-15 clause 2 and prepares the interim consolidated and interim non-consolidated financial statements in the second quarter.

 

 

 

1-2


Mizuho Financial Group, Inc.

 

Cash Dividends for Shareholders of Classified Stock

Breakdown of cash dividends per share related to classified stock, the rights of which are different from those of common stock is as follows:

 

     Cash Dividends per Share

(Record Date)

   First Quarter-end    Second Quarter-end    Third Quarter-end    Fiscal Year-end    Annual
     ¥    ¥    ¥    ¥    ¥

Eleventh Series Class XI Preferred Stock

              

Fiscal 2007

   —      0.00    —      20,000.00    20,000.00

Fiscal 2008

   —      0.00         

Fiscal 2008 (estimate)

         —      20,000.00    20,000.00

Thirteenth Series Class XIII Preferred Stock

              

Fiscal 2007

   —      0.00    —      30,000.00    30,000.00

Fiscal 2008

   —      0.00         

Fiscal 2008 (estimate)

         —      30,000.00    30,000.00

 

* As for 2. Cash Dividends for Shareholders of Common Stock

As a result of Abolishment of the Fractional Share System and Lowering of the Minimum Investment Amount announced on May 15, 2008, if we conduct the allotment of shares or fractions of a share without consideration that will be effective on January 4, 2009, after such allotment, the year-end cash dividend per share of common stock will be ¥10, the cash dividend per share for the Eleventh Series Class XI Preferred Stock will be ¥20, and the cash dividend per share for the Thirteenth Series Class XIII Preferred Stock will be ¥30.

 

1-3


Mizuho Financial Group, Inc.

 

Notes to XBRL

Please note that the names of the English accounts contained in XBRL data, which are available through EDINET and TDNet, may be different from those of the English accounts in our financial statements.

 

Reference:   For example, in the EDINET website, it is stated that “any information in English contained in this XBRL data that may be downloaded from the list is provided for reference purpose only, and the accuracy of the information is not assured”.
  The examples of English account names, which are different in our financial statements and XBRL, include:
  Mizuho: Reserves for Possible Losses on Loans    XBRL: Allowance for loan losses
  Mizuho: Common Stock and Preferred Stock    XBRL: Capital Stock
 

Mizuho: Net Unrealized Gains on Other Securities, net of Taxes

   XBRL: Valuation difference on available-for-sale
                        securities
  Mizuho: Other Operating Income (Expenses)    XBRL: Other ordinary income (expenses)
  Mizuho: Other Ordinary Income (Expenses)    XBRL: Other income (expenses)
  Please note that the names of the English accounts, including but not limited to, those other than the above examples, may be subject to changes in the future.

 

1-4


Mizuho Financial Group, Inc.

 

QUALITATIVE INFORMATION AND FINANCIAL STATEMENTS

(Please refer to Summary Results for the Second Quarter (First Half) of Fiscal 2008 (Six months ended September 30, 2008) on page 2-1 for more information)

1. Qualitative Information related to the Consolidated Results of Operations

Looking back over the economic climate during the six months ended September 30, 2008, tension in financial markets has noticeably risen including the spread of a credit crunch on a global scale resulting from a decline in the intermediary function of financial institutions, after some financial institutions experienced a shortfall of capital and severe management difficulties mainly in the U.S. and Europe, reflecting the turmoil in the securitized products markets stemming from the subprime loan problem. Under these circumstances, various measures are being taken in the global financial markets to stabilize the situation, such as large-scale re-organizations of financial institutions and injections of public funds by governments of major economic countries to resolve capital shortfalls.

The turmoil in the financial markets is having a great influence on the actual economy. The U.S. economy has become increasingly severe with, for example, a substantial decline in housing prices and a worsening in the employment situation. Europe has also seen a worsening in business confidence. In addition, economies of developing countries and countries rich in natural resources are also slowing.

As for the Japanese economy, domestic and foreign demand are weak and the risk of economic downside is increasing as the slowing in exports becomes clear and personal consumption stagnates with a decline in real wages and a global slump in share prices over the end of the period.

The global economic downside and the turmoil in the financial markets are likely to continue for the time being. Therefore it is even more important for Mizuho Financial Group to strengthen profitability further by applying management resources flexibly and providing superior financial services that meet our customers’ needs, while maintaining financial soundness and enhancing corporate governance such as risk management.

With the above economic environment, Net Income for the six months ended September 30, 2008 amounted to ¥94.5 billion, decreasing by ¥232.4 billion from the corresponding period of the previous fiscal year.

Taking segment information by type of business for MHFG and its consolidated subsidiaries categorized under banking business (banking and trust banking business), securities business and other, Ordinary Profits before excluding inter-segment Ordinary Profits was ¥64.2 billion for banking business, ¥(11.5) billion for securities business and ¥8.2 billion for other. Looking at segment information by geographic area categorized under Japan, the Americas, Europe and Asia/Oceania, Ordinary Profits before excluding inter-segment Ordinary Profits was ¥58.8 billion for Japan, ¥47.2 billion for the Americas, ¥(63.2) billion for Europe and ¥19.6 billion for Asia/Oceania.

2. Qualitative Information related to the Consolidated Financial Conditions

Consolidated total assets as of September 30, 2008 amounted to ¥153,222.0 billion, decreasing by ¥1,190.0 billion from the end of the previous fiscal year. Net Assets amounted to ¥4,968.1 billion, decreasing by ¥726.0 billion from the end of the previous fiscal year. Shareholders’ Equity amounted to ¥3,237.1 billion, Valuation and Translation Adjustments amounted to ¥72.4 billion and Minority Interests amounted to ¥1,658.5 billion.

In Assets, the balance of Loans and Bills Discounted amounted to ¥67,590.6 billion, increasing by ¥1,981.9 billion from the end of the previous fiscal year while Securities were ¥32,537.0 billion, decreasing by ¥1,421.4 billion from the end of the previous fiscal year. In Liabilities, Deposits amounted to ¥75,480.6 billion, decreasing by ¥694.6 billion from the end of the previous fiscal year.

 

1-5


Mizuho Financial Group, Inc.

 

The Consolidated Capital Adequacy Ratio (Basel II BIS Standard) was 11.45% (Preliminary).

 

     March 31, 2007     March 31, 2008     September 30, 2008  

Basel II

   12.48 %   11.70 %   11.45 %

3. Qualitative Information related to the Consolidated Earnings Estimates

As for the consolidated earnings estimates for fiscal 2008, there is no revision of the earnings estimates which were announced on October 31, 2008. MHFG estimates Ordinary Income of ¥3,800.0 billion, Ordinary Profits of ¥350.0 billion and Net Income of ¥250.0 billion for fiscal year ending March 31, 2009.

The above estimates constitute forward-looking statements within the meaning of the United States Private Securities Litigation Reform Act of 1995. Please see the “forward-looking statements” legend on page 1-2 for a description of the factors that could affect our ability to meet these estimates.

4. Others

 

(1) Changes in Significant Subsidiaries during the Period (changes in specified subsidiaries accompanying changes in scope of consolidation)

None.

 

(2) Changes of Accounting Methods and Presentation of Consolidated Financial Statements

(Accounting Standard for Lease Transactions)

As “Accounting Standard for Lease Transactions” (ASBJ Statement No.13, March 30, 2007) and “Guidance on Accounting Standard for Lease Transactions,” (ASBJ Guidance No.16) are applied from the fiscal year beginning on or after April 1, 2008, MHFG has applied the new accounting standard and guidance beginning with this interim period.

Although MHFG accounted for finance leases that do not involve transfer of ownership to lessee as operating leases, by this application, MHFG accounts for them as normal trade transactions, including the transactions that started before the end of fiscal 2007.

The amount of accumulated impact until the end of fiscal 2007 on Income before Income Taxes and Minority Interests is recorded in Extraordinary Losses.

This change increases Lease Assets in Tangible Fixed Assets by ¥9,394 million, Lease Assets in Intangible Fixed Assets by ¥1,000 million, Lease Obligation in Other Liabilities by ¥19,930 million, Extraordinary Losses by ¥10,804 million, and decreases Income before Income Taxes and Minority Interests by ¥9,349 million.

 

1-6


Mizuho Financial Group, Inc.

 

5. Consolidated Financial Statements

(1) BASIS FOR PRESENTATION AND PRINCIPLES OF CONSOLIDATION

1. Scope of Consolidation

 

a) Number of consolidated subsidiaries: 147

Names of principal companies:

Mizuho Bank, Ltd.

Mizuho Corporate Bank, Ltd.

Mizuho Trust & Banking Co., Ltd.

Mizuho Securities Co., Ltd.

During the period, Mizuho Capital Investment (JPY) 3 Ltd. and three other companies were newly consolidated as a result of their establishment and other factors.

During the period, Mizuho Credit Co., Ltd. and two other companies were excluded from the scope of consolidation as a result of dissolution and other factors.

 

b) Number of non-consolidated subsidiaries: 0

2. Application of the Equity Method

 

a) Number of non-consolidated subsidiaries under the equity method: 0

 

b) Number of affiliates under the equity method: 22

Names of principal companies:

The Chiba Kogyo Bank, Ltd.

Shinko Securities Co., Ltd.

During the period, Japan Stockholders Data Service Co., Ltd. and one other company were newly included in the scope of the equity method as a result of their establishment.

During the period, Mizuho Corporate Leasing (Thailand) Co., Ltd. was excluded from the scope of the equity method as a result of the disposal of its shares.

 

c) Number of non-consolidated subsidiaries not under the equity method: 0

 

d) Affiliates not under the equity method:

Name of principal company:

Asian-American Merchant Bank Limited

Non-consolidated subsidiaries and affiliates not under the equity method are excluded from the scope of the equity method since such exclusion has no material effect on MHFG’s consolidated financial statements in terms of Net Income/Net Loss (amount corresponding to MHFG’s equity position), Retained Earnings (amount corresponding to MHFG’s equity position), Net Deferred Hedge Gains (Losses), net of Taxes (amount corresponding to MHFG’s equity position) and others.

 

1-7


Mizuho Financial Group, Inc.

 

3. Balance Sheet Dates of Consolidated Subsidiaries

 

a) Balance sheet dates of consolidated subsidiaries are as follows:

 

April 30

     1 company

The day before the last business day of June

     4 companies

June 30

   58 companies

September 30

   61 companies

The day before the last business day of December

   23 companies

 

b) Consolidated subsidiaries with interim balance sheet dates of April 30, the day before the last business day of June and the day before the last business day of December were consolidated based on their tentative financial statements as of and for the period ended June 30. Other consolidated subsidiaries were consolidated based on their financial statements as of and for the interim period ended their respective balance sheet dates.

The necessary adjustments have been made to the financial statements for any significant transactions that took place between their respective balance sheet dates and the date of the consolidated financial statements.

 

1-8


Mizuho Financial Group, Inc.

 

(2) CONSOLIDATED BALANCE SHEETS

 

     Millions of yen  
     As of
September 30, 2007
    As of
September 30, 2008
    As of
March 31, 2008
(Selected Items)
 

Assets

      

Cash and Due from Banks

   ¥ 3,234,898     ¥ 4,171,640     ¥ 3,483,802  

Call Loans and Bills Purchased

     406,491       265,068       248,728  

Receivables under Resale Agreements

     10,312,578       9,348,124       7,233,199  

Guarantee Deposits Paid under Securities Borrowing Transactions

     7,291,739       7,876,720       9,069,138  

Other Debt Purchased

     3,348,693       3,015,030       3,388,461  

Trading Assets

     12,481,601       12,282,278       13,856,237  

Money Held in Trust

     32,410       44,322       32,827  

Securities

     36,153,905       32,537,063       33,958,537  

Loans and Bills Discounted

     66,056,468       67,590,699       65,608,705  

Foreign Exchange Assets

     766,307       787,036       803,141  

Other Assets

     6,117,328       9,339,495       10,984,529  

Tangible Fixed Assets

     792,866       803,714       802,692  

Intangible Fixed Assets

     253,354       293,992       284,825  

Deferred Debenture Charges

     3       —         —    

Deferred Tax Assets

     438,617       850,185       607,920  

Customers’ Liabilities for Acceptances and Guarantees

     4,807,434       4,704,366       4,733,852  

Reserves for Possible Losses on Loans

     (782,653 )     (687,701 )     (684,465 )

Reserve for Possible Losses on Investments

     (142 )     (23 )     (30 )
                        

Total Assets

   ¥ 151,711,905     ¥ 153,222,014     ¥ 154,412,105  
                        

 

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Mizuho Financial Group, Inc.

 

     Millions of yen  
     As of
September 30, 2007
    As of
September 30, 2008
    As of
March 31, 2008
(Selected Items)
 

Liabilities

      

Deposits

   ¥ 74,167,419     ¥ 75,480,661     ¥ 76,175,319  

Negotiable Certificates of Deposit

     8,572,632       10,350,995       10,088,721  

Debentures

     3,919,564       2,719,624       3,159,443  

Call Money and Bills Sold

     6,473,059       7,047,585       6,693,712  

Payables under Repurchase Agreements

     13,700,034       13,348,752       11,511,019  

Guarantee Deposits Received under Securities Lending Transactions

     6,754,515       6,435,649       6,927,740  

Commercial Paper

     —         —         30,000  

Trading Liabilities

     7,978,672       7,427,337       8,313,072  

Borrowed Money

     5,298,957       5,310,414       4,818,895  

Foreign Exchange Liabilities

     186,481       264,737       222,652  

Short-term Bonds

     1,046,363       694,587       787,784  

Bonds and Notes

     3,556,844       4,385,279       4,052,189  

Due to Trust Accounts

     1,211,478       1,012,753       1,119,946  

Other Liabilities

     7,445,823       8,796,570       9,795,054  

Reserve for Bonus Payments

     32,368       31,160       43,375  

Reserve for Employee Retirement Benefits

     36,154       36,493       36,019  

Reserve for Director and Corporate Auditor Retirement Benefits

     5,779       1,853       7,057  

Reserve for Possible Losses on Sales of Loans

     23,468       54,231       50,895  

Reserve for Contingencies

     16,542       15,839       14,095  

Reserve for Frequent Users Services

     6,196       9,837       8,349  

Reserve for Reimbursement of Deposits

     9,420       9,699       9,614  

Reserves under Special Laws

     2,670       1,750       2,680  

Deferred Tax Liabilities

     127,249       9,136       11,354  

Deferred Tax Liabilities for Revaluation Reserve for Land

     105,803       104,549       105,096  

Acceptances and Guarantees

     4,807,434       4,704,366       4,733,852  
                        

Total Liabilities

     145,484,934       148,253,870       148,717,945  
                        

Net Assets

      

Common Stock and Preferred Stock

     1,540,965       1,540,965       1,540,965  

Capital Surplus

     411,093       411,227       411,093  

Retained Earnings

     1,490,943       1,291,244       1,476,129  

Treasury Stock

     (2,426 )     (6,270 )     (2,507 )
                        

Total Shareholders’ Equity

     3,440,575       3,237,166       3,425,680  
                        

Net Unrealized Gains on Other Securities, net of Taxes

     1,180,567       48,718       401,375  

Net Deferred Hedge Losses, net of Taxes

     (91,961 )     (39,498 )     5,985  

Revaluation Reserve for Land, net of Taxes

     148,501       146,715       147,467  

Foreign Currency Translation Adjustments

     (36,728 )     (83,501 )     (78,394 )
                        

Total Valuation and Translation Adjustments

     1,200,379       72,433       476,434  
                        

Minority Interests

     1,586,015       1,658,543       1,792,045  
                        

Total Net Assets

     6,226,971       4,968,143       5,694,159  
                        

Total Liabilities and Net Assets

   ¥ 151,711,905     ¥ 153,222,014     ¥ 154,412,105  
                        

 

1-10


Mizuho Financial Group, Inc.

 

(3) CONSOLIDATED STATEMENTS OF INCOME

 

     Millions of yen
     For the six months
ended

September 30, 2007
   For the six months
ended

September 30, 2008
    For the fiscal year
ended

March 31, 2008
(Selected Items)

Ordinary Income

   ¥ 2,256,140    ¥ 1,903,592     ¥ 4,523,510

Interest Income

     1,520,768      1,217,613       2,864,796

Interest on Loans and Bills Discounted

     755,864      723,683       1,507,449

Interest and Dividends on Securities

     361,921      262,586       671,783

Fiduciary Income

     33,115      29,749       64,355

Fee and Commission Income

     295,737      254,606       596,759

Trading Income

     140,298      114,998       249,076

Other Operating Income

     108,598      173,392       294,356

Other Ordinary Income

     157,621      113,231       454,165

Ordinary Expenses

     1,856,956      1,846,804       4,126,390

Interest Expenses

     982,867      694,209       1,801,156

Interest on Deposits

     313,654      236,118       581,601

Interest on Debentures

     13,008      9,420       23,746

Fee and Commission Expenses

     57,057      54,473       102,233

Trading Expenses

     18,264      62,078       192,927

Other Operating Expenses

     52,453      62,276       312,094

General and Administrative Expenses

     559,564      604,469       1,124,527

Other Ordinary Expenses

     186,749      369,296       593,450
                     

Ordinary Profits

     399,184      56,788       397,120
                     

Extraordinary Gains

     28,656      17,008       125,571

Extraordinary Losses

     5,069      16,468       36,629
                     

Income before Income Taxes and Minority Interests

     422,770      57,328       486,062
                     

Income Taxes:

       

Current

     19,121      12,295       32,212

Deferred

     37,983      (63,141 )     118,546

Total Income Taxes

     —        (50,845 )     —  

Minority Interests in Net Income

     38,604      13,597       24,079
                     

Net Income

   ¥ 327,061    ¥ 94,577     ¥ 311,224
                     

 

1-11


Mizuho Financial Group, Inc.

 

(4) CONSOLIDATED STATEMENTS OF CHANGES IN NET ASSETS

 

     Millions of yen  
     For the six months
ended
September 30, 2007
    For the six months
ended
September 30, 2008
    For the fiscal year
ended
March 31, 2008
 

Shareholder’s Equity

      

Common Stock and Preferred Stock

      

Balance as of the end of the previous period

   ¥ 1,540,965     ¥ 1,540,965     ¥ 1,540,965  

Changes during the period

      

Total Changes during the period

     —         —         —    
                        

Balance as of the end of the period

     1,540,965       1,540,965       1,540,965  
                        

Capital Surplus

      

Balance as of the end of the previous period

     411,110       411,093       411,110  

Changes during the period

      

Disposition of Treasury Stock

     9       133       —    

Cancellation of Treasury Stock

     (9 )     —         —    

Effect of Exclusion of an Affiliate from the Scope of the Equity Method

     (16 )     —         (16 )

Effect of Decrease in the Equity Position of an Affiliate

     (0 )     —         (0 )
                        

Total Changes during the period

     (16 )     133       (16 )
                        

Balance as of the end of the period

     411,093       411,227       411,093  
                        

Retained Earnings

      

Balance as of the end of the previous period

     1,440,310       1,476,129       1,440,310  

Effect of Unification of Accounting Policies Applied to Foreign Subsidiaries

     2,867       —         2,867  

Changes during the period

      

Cash Dividends

     (101,229 )     (133,898 )     (101,229 )

Net Income

     327,061       94,577       311,224  

Disposition of Treasury Stock

     —         (26 )     (1 )

Cancellation of Treasury Stock

     (180,180 )     (146,308 )     (180,189 )

Transfer from Revaluation Reserve for Land, net of Taxes

     2,114       771       3,148  
                        

Total Changes during the period

     47,765       (184,884 )     32,951  
                        

Balance as of the end of the period

     1,490,943       1,291,244       1,476,129  
                        

Treasury Stock

      

Balance as of the end of the previous period

     (32,330 )     (2,507 )     (32,330 )

Changes during the period

      

Repurchase of Treasury Stock

     (150,327 )     (150,272 )     (150,464 )

Disposition of Treasury Stock

     41       140       100  

Cancellation of Treasury Stock

     180,189       146,308       180,189  

Increase in Stock issued by MHFG held by Equity-Method Affiliates

     —         —         (3 )

Decrease in Stock issued by MHFG held by Equity-Method Affiliates

     0       60       —    
                        

Total Changes during the period

     29,904       (3,762 )     29,822  
                        

Balance as of the end of the period

   ¥ (2,426 )   ¥ (6,270 )   ¥ (2,507 )
                        

 

1-12


Mizuho Financial Group, Inc.

 

     Millions of yen  
     For the six months
ended
September 30, 2007
    For the six months
ended
September 30, 2008
    For the fiscal year
ended
March 31, 2008
 

Total Shareholders’ Equity

      

Balance as of the end of the previous period

   ¥ 3,360,055     ¥ 3,425,680     ¥ 3,360,055  

Effect of Unification of Accounting Policies Applied to Foreign Subsidiaries

     2,867       —         2,867  

Changes during the period

      

Cash Dividends

     (101,229 )     (133,898 )     (101,229 )

Net Income

     327,061       94,577       311,224  

Repurchase of Treasury Stock

     (150,327 )     (150,272 )     (150,464 )

Disposition of Treasury Stock

     51       248       98  

Cancellation of Treasury Stock

     —         —         —    

Transfer from Revaluation Reserve for Land, net of Taxes

     2,114       771       3,148  

Effect of Exclusion of an Affiliate from the Scope of the Equity Method

     (16 )     —         (16 )

Effect of Decrease in the Equity Position of an Affiliate

     (0 )     —         (0 )

Increase in Stock issued by MHFG held by Equity-Method Affiliates

     —         —         (3 )

Decrease in Stock issued by MHFG held by Equity-Method Affiliates

     0       60       —    
                        

Total Changes during the period

     77,652       (188,513 )     62,757  
                        

Balance as of the end of the period

     3,440,575       3,237,166       3,425,680  
                        

Valuation and Translation Adjustments

      

Net Unrealized Gains on Other Securities, net of Taxes

      

Balance as of the end of the previous period

     1,550,628       401,375       1,550,628  

Changes during the period

      

Net Changes in Items other than Shareholders’ Equity

     (370,061 )     (352,656 )     (1,149,253 )
                        

Total Changes during the period

     (370,061 )     (352,656 )     (1,149,253 )
                        

Balance as of the end of the period

     1,180,567       48,718       401,375  
                        

Net Deferred Hedge Losses, net of Taxes

      

Balance as of the end of the previous period

     (111,042 )     5,985       (111,042 )

Changes during the period

      

Net Changes in Items other than Shareholders’ Equity

     19,081       (45,484 )     117,028  
                        

Total Changes during the period

     19,081       (45,484 )     117,028  
                        

Balance as of the end of the period

     (91,961 )     (39,498 )     5,985  
                        

Revaluation Reserve for Land, net of Taxes

      

Balance as of the end of the previous period

     150,616       147,467       150,616  

Changes during the period

      

Net Changes in Items other than Shareholders’ Equity

     (2,114 )     (752 )     (3,148 )
                        

Total Changes during the period

     (2,114 )     (752 )     (3,148 )
                        

Balance as of the end of the period

   ¥ 148,501     ¥ 146,715     ¥ 147,467  
                        

 

1-13


Mizuho Financial Group, Inc.

 

     Millions of yen  
     For the six months
ended
September 30, 2007
    For the six months
ended
September 30, 2008
    For the fiscal year
ended
March 31, 2008
 

Foreign Currency Translation Adjustments

      

Balance as of the end of the previous period

   ¥ (38,964 )   ¥ (78,394 )   ¥ (38,964 )

Changes during the period

      

Net Changes in Items other than Shareholders’ Equity

     2,236       (5,107 )     (39,429 )
                        

Total Changes during the period

     2,236       (5,107 )     (39,429 )
                        

Balance as of the end of the period

     (36,728 )     (83,501 )     (78,394 )
                        

Total Valuation and Translation Adjustments

      

Balance as of the end of the previous period

     1,551,237       476,434       1,551,237  

Changes during the period

      

Net Changes in Items other than Shareholders’ Equity

     (350,857 )     (404,000 )     (1,074,803 )
                        

Total Changes during the period

     (350,857 )     (404,000 )     (1,074,803 )
                        

Balance as of the end of the period

     1,200,379       72,433       476,434  
                        

Minority Interests

      

Balance as of the end of the previous period

     1,813,115       1,792,045       1,813,115  

Changes during the period

      

Net Changes in Items other than Shareholders’ Equity

     (227,100 )     (133,502 )     (21,070 )
                        

Total Changes during the period

     (227,100 )     (133,502 )     (21,070 )
                        

Balance as of the end of the period

     1,586,015       1,658,543       1,792,045  
                        

Total Net Assets

      

Balance as of the end of the previous period

     6,724,408       5,694,159       6,724,408  

Effect of Unification of Accounting Policies Applied to Foreign Subsidiaries

     2,867       —         2,867  

Changes during the period

      

Cash Dividends

     (101,229 )     (133,898 )     (101,229 )

Net Income

     327,061       94,577       311,224  

Repurchase of Treasury Stock

     (150,327 )     (150,272 )     (150,464 )

Disposition of Treasury Stock

     51       248       98  

Cancellation of Treasury Stock

     —         —         —    

Transfer from Revaluation Reserve for Land, net of Taxes

     2,114       771       3,148  

Effect of Exclusion of an Affiliate from the Scope of the Equity Method

     (16 )     —         (16 )

Effect of Decrease in the Equity Position of an Affiliate

     (0 )     —         (0 )

Increase in Stock issued by MHFG held by Equity-Method Affiliates

     —         —         (3 )

Decrease in Stock issued by MHFG held by Equity-Method Affiliates

     0       60       —    

Net Changes in Items other than Shareholders’ Equity

     (577,957 )     (537,502 )     (1,095,873 )
                        

Total Changes during the period

     (500,305 )     (726,016 )     (1,033,116 )
                        

Balance as of the end of the period

   ¥ 6,226,971     ¥ 4,968,143     ¥ 5,694,159  
                        

 

1-14


Mizuho Financial Group, Inc.

 

(5) CONSOLIDATED STATEMENTS OF CASH FLOWS

 

     Millions of yen  
     For the six months
ended

September 30, 2007
    For the six months
ended

September 30, 2008
    For the fiscal year
ended

March 31, 2008
 

Cash Flow from Operating Activities

      

Income before Income Taxes and Minority Interests

   ¥ 422,770     ¥ 57,328     ¥ 486,062  

Depreciation

     63,372       70,664       132,721  

Losses on Impairment of Fixed Assets

     1,009       1,015       2,698  

Amortization of Goodwill

     —         (1 )     27,688  

Equity in Income from Investments in Affiliates

     (5,886 )     (2,347 )     (9,083 )

Increase (Decrease) in Reserves for Possible Losses on Loans

     (74,008 )     3,475       (163,096 )

Increase (Decrease) in Reserve for Possible Losses on Investments

     (32 )     (7 )     (144 )

Increase (Decrease) in Reserve for Possible Losses on Sales of Loans

     23,468       3,335       50,895  

Increase (Decrease) in Reserve for Contingencies

     3,495       1,744       1,048  

Increase (Decrease) in Reserve for Bonus Payments

     (8,096 )     (11,386 )     5,152  

Increase (Decrease) in Reserve for Employee Retirement Benefits

     (595 )     478       (655 )

Increase (Decrease) in Reserve for Director and Corporate Auditor Retirement Benefits

     (705 )     (5,204 )     565  

Increase (Decrease) in Reserve for Frequent Users Services

     2,422       1,488       4,575  

Increase (Decrease) in Reserve for Reimbursement of Deposits

     9,420       84       9,614  

Interest Income—accrual basis

     (1,520,768 )     (1,217,613 )     (2,864,796 )

Interest Expenses—accrual basis

     982,867       694,209       1,801,156  

Losses (Gains) on Securities

     (116,628 )     56,376       (180,014 )

Losses (Gains) on Money Held in Trust

     (58 )     (61 )     (238 )

Foreign Exchange Losses (Gains)—net

     28,435       23,691       998,555  

Losses (Gains) on Disposition of Fixed Assets

     644       2,456       (1,700 )

Decrease (Increase) in Trading Assets

     (2,057,483 )     1,496,982       (3,723,814 )

Increase (Decrease) in Trading Liabilities

     (337,569 )     (825,760 )     299,439  

Decrease (Increase) in Loans and Bills Discounted

     (9,700 )     (2,222,493 )     (590,397 )

Increase (Decrease) in Deposits

     (685,180 )     (476,076 )     2,299,855  

Increase (Decrease) in Negotiable Certificates of Deposit

     (217,252 )     265,361       1,528,780  

Increase (Decrease) in Debentures

     (804,883 )     (439,818 )     (1,563,995 )

Increase (Decrease) in Borrowed Money (excluding Subordinated Borrowed Money)

     719,171       512,528       225,338  

Decrease (Increase) in Due from Banks (excluding Due from Central Banks)

     39,775       (366,574 )     (523,301 )

Decrease (Increase) in Call Loans, etc.

     (1,047,841 )     (1,755,289 )     845,166  

Decrease (Increase) in Guarantee Deposits Paid under Securities Borrowing Transactions

     1,332,471       1,192,417       (444,926 )

Increase (Decrease) in Call Money, etc.

     530,486       2,211,282       266,469  

Increase (Decrease) in Commercial Paper

     (30,000 )     (30,000 )     —    

Increase (Decrease) in Guarantee Deposits Received under Securities Lending Transactions

     807,733       (492,090 )     980,959  

Decrease (Increase) in Foreign Exchange Assets

     129,220       6,540       51,635  

Increase (Decrease) in Foreign Exchange Liabilities

     (153,725 )     42,053       (99,831 )

Increase (Decrease) in Short-term Bonds (Liabilities)

     204,492       (93,196 )     (54,086 )

Increase (Decrease) in Bonds and Notes

     379,969       330,643       825,207  

Increase (Decrease) in Due to Trust Accounts

     76,119       (107,193 )     (15,412 )

Interest and Dividend Income—cash basis

     1,544,883       1,236,316       2,922,168  

Interest Expenses—cash basis

     (983,235 )     (729,443 )     (1,803,557 )

Other—net

     133,182       464,138       (1,603,353 )
                        

Subtotal

     (618,240 )     (99,943 )     123,352  
                        

Cash Refunded (Paid) in Income Taxes

     106,562       59,161       47,362  
                        

Net Cash Provided by (Used in) Operating Activities

   ¥ (511,678 )   ¥ (40,782 )   ¥ 170,714  
                        

 

1-15


Mizuho Financial Group, Inc.

 

     Millions of yen  
     For the six months
ended

September 30, 2007
    For the six months
ended
September 30, 2008
    For the fiscal year
ended

March 31, 2008
 

Cash Flow from Investing Activities

      

Payments for Purchase of Securities

   ¥ (40,795,981 )   ¥ (39,217,450 )   ¥ (83,933,854 )

Proceeds from Sale of Securities

     29,396,607       30,614,217       66,532,713  

Proceeds from Redemption of Securities

     11,775,122       9,443,083       16,585,885  

Payments for Increase in Money Held in Trust

     (15,000 )     (31,700 )     (23,000 )

Proceeds from Decrease in Money Held in Trust

     32,145       20,193       39,869  

Payments for Purchase of Tangible Fixed Assets

     (32,915 )     (27,548 )     (84,804 )

Payments for Purchase of Intangible Fixed Assets

     (54,665 )     (20,291 )     (128,392 )

Proceeds from Sale of Tangible Fixed Assets

     7,109       5,525       18,450  

Proceeds from Sale of Intangible Fixed Assets

     386       643       10,216  

Payments for Purchase of Stocks of Subsidiaries (affecting the scope of consolidation)

     —         —         (136,627 )

Proceeds from Sales of Stocks of Subsidiaries (affecting the scope of consolidation)

     838       —         838  
                        

Net Cash Provided by (Used in) Investing Activities

     313,647       786,674       (1,118,704 )
                        

Cash Flow from Financing Activities

      

Proceeds from Subordinated Borrowed Money

     74,000       230       129,859  

Repayments of Subordinated Borrowed Money

     (58,062 )     —         (83,000 )

Proceeds from Issuance of Subordinated Bonds

     80,500       26,500       239,704  

Payments for Redemption of Subordinated Bonds

     (136,489 )     (12,100 )     (142,589 )

Proceeds from Investments by Minority Shareholders

     7,343       306,359       288,196  

Repayments to Minority Shareholders

     (185,500 )     (387,938 )     (185,500 )

Cash Dividends Paid

     (101,041 )     (133,203 )     (101,115 )

Cash Dividends Paid to Minority Shareholders

     (59,100 )     (53,022 )     (80,277 )

Payments for Repurchase of Treasury Stock

     (150,327 )     (150,272 )     (150,464 )

Proceeds from Sale of Treasury Stock

     51       114       98  
                        

Net Cash Provided by (Used in) Financing Activities

     (528,627 )     (403,331 )     (85,087 )
                        

Effect of Foreign Exchange Rate Changes on Cash and Cash Equivalents

     1,448       (423 )     (160 )
                        

Net Increase (Decrease) in Cash and Cash Equivalents

     (725,210 )     342,135       (1,033,237 )
                        

Cash and Cash Equivalents at the beginning of the period

     3,089,030       2,055,793       3,089,030  

Decrease in Cash and Cash Equivalents for Exclusion from Scope of Consolidation

     —         (0 )     —    
                        

Cash and Cash Equivalents at the end of the period

   ¥ 2,363,820     ¥ 2,397,928     ¥ 2,055,793  
                        

(6) NOTE FOR THE ASSUMPTION OF GOING CONCERN

There is no applicable information.

 

1-16


Mizuho Financial Group, Inc.

 

(7) NOTES

Amounts less than one million yen are rounded down.

 

I. Standards of Accounting Method

 

1. Trading Assets & Liabilities and Trading Income & Expenses

Trading transactions intended to take advantage of short-term fluctuations and arbitrage opportunities in interest rates, currency exchange rates, market prices of securities and related indices are recognized on a trade date basis and recorded in Trading Assets or Trading Liabilities on the consolidated balance sheet. Income or expenses generated on the relevant trading transactions are recorded in Trading Income or Trading Expenses on the consolidated statement of income.

Securities and other monetary claims held for trading purposes are stated at fair value at the consolidated balance sheet date. Derivative financial products, such as swaps, futures and option transactions, are stated at fair value, assuming that such transactions are terminated and settled at the consolidated balance sheet date.

Trading Income and Trading Expenses include the interest received and the interest paid during the interim period, the gains or losses resulting from any change in the value of securities and other monetary claims between the beginning and the end of the interim period, and the gains or losses resulting from any change in the value of financial derivatives between the beginning and the end of the interim period, assuming they were settled at the end of the interim period.

 

2. Securities

(i) Bonds held to maturity are stated at amortized cost (straight-line method) and determined by the moving average method. Investments in non-consolidated subsidiaries and affiliates, which are not under the equity method, are stated at acquisition cost and determined by the moving average method. Other Securities which have readily determinable fair value are stated at fair value. Fair value of Japanese stocks with a quoted market price is determined based on the average quoted market price over the month preceding the consolidated balance sheet date. Fair value of securities other than Japanese stocks is determined at the quoted market price if available, or other reasonable value at the consolidated balance sheet date (cost of securities sold is calculated primarily by the moving average method). Other Securities which do not have readily determinable fair value are stated at acquisition cost or amortized cost and determined by the moving average method.

The net unrealized gains on Other Securities are included directly in Net Assets, net of applicable income taxes after excluding gains and losses as a result of the fair-value hedge method.

(ii) Securities which are held as trust assets in Money Held in Trust accounts are valued in the same way as given in (i) above.

 

3. Derivative Transactions

Derivative transactions (other than transactions for trading purposes) are valued at fair value.

 

4. Depreciation

 

  (1) Tangible Fixed Assets (Except for Lease Assets)

Depreciation of buildings is computed mainly by the straight-line method, and that of others is computed mainly by the declining-balance method. The depreciation cost for the period is recorded by the proportional distribution of the estimated annual depreciation costs by the length of the period. The range of useful lives is as follows.

 

Buildings:

  3 years to 50 years

Others:

  2 years to 20 years

 

  (2) Intangible Fixed Assets (Except for Lease Assets)

Amortization of Intangible Fixed Assets is computed by the straight-line method. Development costs for internally-used software are capitalized and amortized over their estimated useful lives of mainly five years as determined by MHFG and consolidated subsidiaries.

 

  (3) Lease Assets

Depreciation of lease assets booked in Tangible Fixed Assets and Intangible Fixed Assets which are concerned with finance lease transactions that do not transfer ownership is mainly computed by the same method as the one applied to fixed assets owned by themselves.

 

1-17


Mizuho Financial Group, Inc.

 

5. Deferred Assets

 

  (1) Bond issuance costs

Bond issuance costs are expensed as incurred.

 

  (2) Debenture issuance costs

Debenture issuance costs are expensed as incurred.

 

  (3) Bond discounts

Bonds are stated at amortized costs computed by the straight-line method on the consolidated balance sheet. Bond discounts booked on the consolidated balance sheet as of March 31, 2006 are amortized under the straight-line method over the term of the bond by applying the previous accounting method and the unamortized balance is directly deducted from bonds, based on the tentative measure stipulated in the “Tentative Solution on Accounting for Deferred Assets” (ASBJ Report No. 19, August 11, 2006).

 

6. Reserves for Possible Losses on Loans

Reserves for Possible Losses on Loans of major domestic consolidated subsidiaries are maintained in accordance with internally established standards for write-offs and reserve provisions.

For claims extended to obligors that are legally bankrupt under the Bankruptcy Law, Special Liquidation under the Company Law or other similar laws (“Bankrupt Obligors”), and to obligors that are effectively in similar conditions (“Substantially Bankrupt Obligors”), reserves are maintained at the amounts of claims net of direct write-offs described below and expected amounts recoverable from the disposition of collateral and the amounts recoverable under guarantees. For claims extended to obligors that are not yet legally or formally bankrupt but are likely to be bankrupt (“Intensive Control Obligors”), reserves are maintained at the amounts deemed necessary based on overall solvency analyses of the amounts of claims net of expected amounts recoverable from the disposition of collateral and the amounts recoverable under guarantees.

For claims extended to Intensive Control Obligors and Obligors with Restructured Loans and others, if the exposure to an obligor exceeds a certain specific amount, reserves are provided as follows: (i) if future cash flows of the principal and interest can be reasonably estimated, the discounted cash flow method is applied, under which the reserve is determined as the difference between the book value of the loan and its present value of future cash flows discounted using the contractual interest rate before the loan was classified as a Restructured Loan, and (ii) if future cash flows of the principal and interest cannot be reasonably estimated, reserves are provided for the losses estimated for each individual loan.

For claims extended to other obligors, reserves are maintained at rates derived from historical credit loss experience and other factors. Reserve for Possible Losses on Loans to Restructuring Countries is maintained in order to cover possible losses based on analyses of the political and economic climates of the countries.

All claims are assessed by each claim origination department in accordance with the internally established “Self-assessment Standard,” and the results of the assessments are verified and examined by the independent examination departments. Reserves for Possible Losses on Loans are provided for on the basis of such verified assessments.

In the case of claims to Bankrupt Obligors and Substantially Bankrupt Obligors, which are collateralized or guaranteed by a third party, the amounts deemed uncollectible (calculated by deducting the anticipated proceeds from the sale of collateral pledged against the claims and amounts that are expected to be recovered from guarantors of the claims) are written off against the respective claims balances. The total directly written-off amount was ¥468,518 million.

The claims above include corporate bonds which are issued by private placement (Article 2, Paragraph 3 of the Financial Instruments and Exchange Law) and others.

Other consolidated subsidiaries provide the amount necessary to cover the loan losses based upon past experience and other factors for general claims and the assessment for each individual loan for other claims.

 

1-18


Mizuho Financial Group, Inc.

 

7. Reserve for Possible Losses on Investments

Reserve for Possible Losses on Investments is maintained to provide against possible losses on investments in securities, after taking into consideration the financial condition and other factors concerning the investee company. Except for securitization products which are included as reference assets of another securitization schemes of the Group’s domestic banking subsidiary, Reserve for Possible Losses on Investments is provided against unrealized losses on securitization products related with the discontinuation of business regarding credit investments primarily in Europe which was made as an alternative to loans by the Group’s domestic banking subsidiary. Since securities are recognized at fair value on the consolidated balance sheet, the balance of Securities is offset against that of Reserve for Possible Losses on Investments by ¥49,717 million.

 

8. Reserve for Bonus Payments

Reserve for Bonus Payments, which is provided for future bonus payments to employees, is maintained at the amount accrued at the end of the interim period, based on the estimated future payments.

 

9. Reserve for Employee Retirement Benefits

Reserve for Employee Retirement Benefits (including Prepaid Pension Cost), which is provided for future benefit payments to employees, is recorded at the amount deemed accrued at the end of the interim period, based on the projected benefit obligation and the estimated plan asset amounts at the end of the fiscal year. Unrecognized actuarial differences are recognized as income or expenses from the following fiscal year under the straight-line method over a certain term within the average remaining service period of the employees of the respective fiscal year.

 

10. Reserve for Director and Corporate Auditor Retirement Benefits

Reserve for Director and Corporate Auditor Retirement Benefits, which is provided for future retirement benefit payments to directors, corporate auditors, and executive officers, is recognized at the amount deemed accrued for this interim period, based on the internally established standards.

 

11. Reserve for Possible Losses on Sales of Loans

Reserve for Possible Losses on Sales of Loans is provided for possible future losses on sales of loans at the amount deemed necessary based on a reasonable estimate of possible future losses.

 

12. Reserve for Contingencies

Reserve for Contingencies is maintained to provide against possible losses from contingencies, which are not covered by other specific reserves in off-balance transactions, trust transactions and others. The balance is an amount deemed necessary based on an estimate of possible future loss on each transaction.

 

13. Reserve for Frequent Users Services

Reserve for Frequent Users Services is provided mainly to meet the future use of points of Mizuho Mileage Club at the amount deemed necessary based on the reasonable estimate of the future usage of points.

 

1-19


Mizuho Financial Group, Inc.

 

14. Reserve for Reimbursement of Deposits

Reserve for Reimbursement of Deposits is provided for the deposits derecognized from the liabilities at the estimated amount of future claims for withdrawal.

 

15. Reserve under Special Laws

Reserve under Special Laws is Reserve for Contingent Liabilities from Financial Instruments and Exchange. This is the reserve pursuant to Article 46-5, Paragraph 1 and Article 48-3, Paragraph 1 of the Financial Instruments and Exchange Law to indemnify the losses incurred from accidents in the purchase and sale of securities, other transactions or derivative transactions.

 

16. Assets and Liabilities denominated in foreign currencies

Assets and Liabilities denominated in foreign currencies and accounts of overseas branches of domestic consolidated banking subsidiaries and a domestic consolidated trust banking subsidiary are translated into Japanese yen primarily at the exchange rates in effect at the consolidated balance sheet date, with the exception of the investments in non-consolidated subsidiaries and affiliates not under the equity method, which are translated at historical exchange rates.

Assets and Liabilities denominated in foreign currencies of the consolidated subsidiaries, except for the transactions mentioned above, are translated into Japanese yen primarily at the exchange rates in effect at the respective balance sheet dates.

 

17. Hedge Accounting

 

  (1) Interest Rate Risk

The deferred method, the fair-value hedge method or the exceptional accrual method for interest rate swaps are applied as hedge accounting methods.

The portfolio hedge transaction for a large volume of small-value monetary claims and liabilities of domestic consolidated banking subsidiaries and domestic consolidated trust banking subsidiaries is accounted for in accordance with the method stipulated in the “Accounting and Auditing Treatment relating to Adoption of Accounting Standards for Financial Instruments for Banks” (JICPA Industry Audit Committee Report No.24).

The effectiveness of hedging activities for the portfolio hedge transaction for a large volume of small-value monetary claims and liabilities is assessed as follows:

 

  (i) as for hedging activities to offset market fluctuation risks, the effectiveness is assessed by bracketing both the hedged instruments, such as deposits and loans, and the hedging instruments, such as interest-rate swaps, in the same maturity bucket.

 

  (ii) as for hedging activities to fix the cash flows, the effectiveness is assessed based on the correlation between a base interest rate index of the hedged instrument and that of the hedging instrument.

The effectiveness of the individual hedge is assessed based on the comparison of the fluctuation in the market or of cash flows of the hedged instruments with that of the hedging instruments.

Among Net Deferred Hedge Losses, net of Taxes recorded on the consolidated balance sheet, those deferred hedge losses are included that are resulted from the application of the macro-hedge method based on the “Tentative Accounting and Auditing Treatment relating to Adoption of Accounting Standards for Financial Instruments for Banks” (JICPA Industry Audit Committee Report No.15), under which the overall interest rate risks inherent in loans, deposits and others are controlled on a macro-basis using derivatives transactions. The deferred hedge gains/losses are amortized as interest income or interest expenses over the remaining maturity and average remaining maturity of the respective hedging instruments. The unamortized amounts of gross deferred hedge losses and gross deferred hedge gains on the macro-hedges, before net of applicable income taxes were ¥118,112 million and ¥110,583 million, respectively.

 

1-20


Mizuho Financial Group, Inc.

 

  (2) Foreign Exchange Risk

Domestic consolidated banking subsidiaries and a domestic consolidated trust banking subsidiary apply the deferred method of hedge accounting to hedge foreign exchange risks associated with various financial assets and liabilities denominated in foreign currencies as stipulated in the “Accounting and Auditing Treatment relating to Adoption of Accounting Standards for Foreign Currency Transactions for Banks” (JICPA Industry Audit Committee Report No.25). The effectiveness of the hedge is assessed by confirming that the amount of the foreign currency position of the hedged monetary claims and liabilities is equal to or larger than that of currency-swap transactions, exchange swap transactions, and similar transactions designated as the hedging instruments of the foreign exchange risk.

In addition to the above methods, these subsidiaries apply the deferred method or the fair-value hedge method to portfolio hedges of the foreign exchange risks associated with investments in subsidiaries and affiliates in foreign currency and Other Securities in foreign currency (except for bonds) identified as hedged items in advance, as long as the amount of foreign currency payables of spot and forward foreign exchange contracts exceeds the amount of acquisition cost of the hedged foreign securities in foreign currency.

 

  (3) Inter-company Transactions

Inter-company interest rate swaps, currency swaps and similar derivatives among consolidated companies or between trading accounts and other accounts, which are designated as hedges, are not eliminated and related gains and losses are recognized in the statement of income or deferred under hedge accounting, because these inter-company derivatives are executed according to the criteria for appropriate outside third-party cover operations which are treated as hedge transactions objectively in accordance with JICPA Industry Audit Committee Reports Nos. 24 and 25.

 

18. Consumption Taxes and other

With respect to MHFG and its domestic consolidated subsidiaries, Japanese consumption taxes and local consumption taxes are excluded from transaction amounts.

 

II. Scope of Cash and Cash Equivalents on Consolidated Statements of Cash Flows

For the purpose of the consolidated statement of cash flows, Cash and Cash Equivalents consists of cash and due from central banks included in Cash and Due from Banks on the consolidated balance sheet.

 

III. Changes of fundamental and important matters for the preparation of Interim Consolidated Financial Statements

(Accounting Standard for Lease Transactions)

As “Accounting Standard for Lease Transactions” (ASBJ Statement No.13, March 30, 2007) and “Guidance on Accounting Standard for Lease Transactions,” (ASBJ Guidance No.16) are applied from the fiscal year beginning on or after April 1, 2008, MHFG has applied the new accounting standard and guidance beginning with this interim period.

Although MHFG accounted for finance leases that do not involve transfer of ownership to lessee as operating leases, by this application, MHFG accounts for them as normal trade transactions, including the transactions that started before the end of fiscal 2007.

The amount of accumulated impact until the end of fiscal 2007 on Income before Income Taxes and Minority Interests is recorded in Extraordinary Losses.

This change increases Lease Assets in Tangible Fixed Assets by ¥9,394 million, Lease Assets in Intangible Fixed Assets by ¥1,000 million, Lease Obligation in Other Liabilities by ¥19,930 million, Extraordinary Losses by ¥10,804 million, and decreases Income before Income Taxes and Minority Interests by ¥9,349 million.

 

1-21


Mizuho Financial Group, Inc.

 

(NOTES TO CONSOLIDATED BALANCE SHEET)

 

1. Securities includes shares of ¥116,715 million and investments of ¥421 million in non-consolidated subsidiaries and affiliates.

 

2. Unsecured loaned securities which the borrowers have the right to sell or repledge amounted to ¥4,596 million and are included in trading securities under Trading Assets. MHFG has the right to sell or repledge some of unsecured borrowed securities, securities purchased under resale agreements and securities borrowed with cash collateral. Among them, the total of securities repledged was ¥9,472,847 million, securities re-loaned was ¥57 million and securities neither repledged nor re-loaned was ¥5,335,905 million, respectively.

 

3. Loans and Bills Discounted includes Loans to Bankrupt Obligors of ¥72,072 million and Non-Accrual Delinquent Loans of ¥519,918 million.

Loans to Bankrupt Obligors are loans, excluding loans written-off, on which delinquencies in payment of principal and/or interest have continued for a significant period of time or for some other reason there is no prospect of collecting principal and/or interest (“Non-Accrual Loans”), as per Article 96 Paragraph 1 Item 3, Subsections 1 to 5 or Item 4 of the Corporate Tax Law Enforcement Ordinance (Government Ordinance No. 97, 1965).

Non-Accrual Delinquent Loans represent Non-Accrual Loans other than (i) Loans to Bankrupt Obligors and (ii) loans on which interest payments have been deferred in order to assist or facilitate the restructuring of the obligors.

 

4. Balance of Loans Past Due for Three Months or More: ¥8,282 million

Loans Past Due for Three Months or More are loans on which payments of principal and/or interest have not been made for a period of three months or more since the next day following the last due date for such payments, and which are not included in Loans to Bankrupt Obligors, or Non-Accrual Delinquent Loans.

 

5. Balance of Restructured Loans: ¥525,983 million

Restructured Loans represent loans of which contracts were amended in favor of obligors (e.g. reduction of, or exemption from stated interest, deferral of interest payments, extension of maturity dates and renunciation of claims) in order to assist or facilitate the restructuring of the obligors. Loans to Bankrupt Obligors, Non-Accrual Delinquent Loans and Loans Past Due for Three Months or More are not included.

 

6. Total balance of Loans to Bankrupt Obligors, Non-Accrual Delinquent Loans, Loans Past Due for Three Months or More and Restructured Loans: ¥1,126,256 million.

The amounts given in Notes 3 through 6 are gross amounts before deduction of amounts for the Reserves for Possible Losses on Loans.

 

7. In accordance with JICPA Industry Audit Committee Report No. 24, bills discounted are accounted for as financing transactions. The banking subsidiaries have rights to sell or pledge these bankers’ acceptances, commercial bills, documentary bills and foreign exchange bills. The face value of these bills amounted to ¥749,200 million.

 

8. The following assets were pledged as collateral:

 

Trading Assets:

   ¥ 4,803,455 million

Securities:

   ¥ 12,225,465 million

Loans and Bills Discounted:

   ¥ 6,323,523 million

Other Assets:

   ¥ 3,015 million

Tangible Fixed Assets:

   ¥ 321 million

The following liabilities were collateralized by the above assets:

  

Deposits:

   ¥ 919,936 million

Call Money and Bills Sold:

   ¥ 2,107,316 million

Payables under Repurchase Agreements:

   ¥ 5,535,298 million

Guarantee Deposits Received under Securities Lending Transactions:

   ¥ 5,637,754 million

Borrowed Money:

   ¥ 3,520,547 million

In addition to the above, the settlement accounts of foreign and domestic exchange transactions or derivatives transactions and others were collateralized, and margins for futures transactions were substituted by Cash and Due from Banks of ¥8,350 million, Trading Assets of ¥571,561 million, Securities of ¥2,357,417 million and Loans and Bills Discounted of ¥833,992 million.

None of the assets was pledged as collateral in connection with borrowings by the non-consolidated subsidiaries and affiliates.

Other Assets includes guarantee deposits of ¥123,186 million, collateral pledged for derivatives transactions of ¥803,479 million, margins for futures transactions of ¥28,159 million and other guarantee deposits of ¥24,734 million.

 

1-22


Mizuho Financial Group, Inc.

 

9. Overdraft protection on current accounts and contracts of the commitment line for loans are contracts by which banking subsidiaries are bound to extend loans up to the prearranged amount, at the request of customers, unless the customer is in breach of contract conditions. The unutilized balance of these contracts amounted to ¥56,294,674 million. Of this amount, ¥47,298,851 million relates to contracts of which the original contractual maturity is one year or less, or which are unconditionally cancelable at any time.

Since many of these contracts expire without being exercised, the unutilized balance itself does not necessarily affect future cash flows. A provision is included in many of these contracts that entitles the banking subsidiaries to refuse the execution of loans, or reduce the maximum amount under contracts when there is a change in the financial situation, necessity to preserve a claim or other similar reasons. The banking subsidiaries require collateral such as real estate and securities when deemed necessary at the time the contract is entered into. In addition, they periodically monitor customers’ business conditions in accordance with internally established standards and take necessary measures to manage credit risks such as amendments to contracts.

 

10. In accordance with the Land Revaluation Law (Proclamation No.34 dated March 31, 1998), land used for business operations of domestic consolidated banking subsidiaries was revalued. The applicable income taxes on the entire excess of revaluation are included in Deferred Tax Liabilities for Revaluation Reserve for Land under Liabilities, and the remainder, net of applicable income taxes, is stated as Revaluation Reserve for Land, net of Taxes included in Net Assets.

Revaluation date: March 31, 1998

Revaluation method as stated in Article 3 Paragraph 3 of the above law: Land used for business operations was revalued by calculating the value on the basis of the valuation by road rating stipulated in Article 2 Paragraph 4 of the Enforcement Ordinance relating to the Land Revaluation Law (Government Ordinance No.119 promulgated on March 31, 1998) with reasonable adjustments to compensate for sites with long depth and other factors, and also on the basis of the appraisal valuation stipulated in Paragraph 5.

 

11. Accumulated Depreciation of Tangible Fixed Assets amounted to ¥746,827 million.

 

12. Borrowed Money includes subordinated borrowed money of ¥790,942 million with a covenant that performance of the obligation is subordinated to that of other obligations.

 

13. Bonds and Notes includes subordinated bonds of ¥2,157,641 million.

 

14. The principal amounts of money trusts and loan trusts with contracts indemnifying the principal amounts, which are entrusted to domestic consolidated trust banking subsidiaries, are ¥903,742 million and ¥63,494 million, respectively.

 

15. Liabilities for guarantees on corporate bonds included in Securities, which were issued by private placement (Article 2, Paragraph 3 of the Financial Instruments and Exchange Law) amounted to ¥1,325,026 million.

 

16. Net Assets per share of common stock: ¥211,407.06

 

1-23


Mizuho Financial Group, Inc.

 

(NOTES TO CONSOLIDATED STATEMENT OF INCOME)

 

1. Other Ordinary Income includes gains on sales of stocks of ¥72,418 million and profits of ¥17,396 million related to credit risk mitigation transactions at some of the Group’s domestic banking subsidiaries.

 

2. Other Ordinary Expenses includes losses on write-offs of loans of ¥110,063 million, losses on devaluation of stocks of ¥ 96,884 million, provision for reserves for possible losses on loans of ¥45,740 million, losses of ¥27,685 million related with the discontinuation of business regarding credit investments primarily in Europe which was made as an alternative to loans by the Group’s domestic banking subsidiary and losses of ¥17,614 million related with other securitized products which were decided to be disposed of.

 

3. Extraordinary Gains includes gains on recovery of written-off claims of ¥13,886 million and gains on disposition of fixed assets of ¥2,191 million.

 

4. Extraordinary Losses includes an amount of ¥10,804 million resulting from the adoption of accounting standards for lease transactions mentioned in changes of fundamental and important matters for the preparation of interim consolidated financial statements and losses on disposition of fixed assets of ¥4,648 million.

 

5. Net Income per share of common stock for the interim period : ¥8,373.41

 

6. Diluted Net Income per share of common stock for the interim period : ¥7,078.95

 

1-24


Mizuho Financial Group, Inc.

 

(NOTES TO CONSOLIDATED STATEMENT OF CHANGES IN NET ASSETS)

1. Types and number of issued shares and of treasury stock are as follows:

 

     Thousands of Shares
     As of
March 31,
2008
   Increase
during
interim period
   Decrease
during
interim period
   As of
September 30,
2008
   Remarks

Issued shares

              

Common stock

   11,396    59    276    11,178    *1

Eleventh Series Class XI Preferred Stock

   943    —      28    914    *2

Thirteenth Series Class XIII Preferred Stock

   36    —      —      36   
                      

Total

   12,376    59    305    12,130   
                      

Treasury stock

              

Common stock

   4    284    277    11    *3

Eleventh Series Class XI Preferred Stock

   —      31    28    2    *2
                      

Total

   4    315    306    14   
                      
*1. Increases are due to request for acquisition (conversion) of preferred stock and decreases are due to cancellation of treasury stock (common stock).

 

*2. Increases are due to request for acquisition (conversion) of preferred stock and decreases are due to cancellation of treasury stock (preferred stock).

 

*3. Increases are due to repurchase of treasury stock (283 thousand shares of common stock) and repurchase of fractional shares (0 thousand shares), and decreases are due to cancellation of treasury stock (276 thousand shares of common stock) and additional purchase of fractional shares (0 thousand shares) among others.

2. Cash dividends distributed by MHFG are as follows (non-consolidated basis):

Cash dividends paid during the six months ended September 30, 2008

 

   

    Resolution    

      

Types

   Cash Dividends
(Millions of yen)
   Cash Dividends
per Share

(Yen)
   Record Date    Effective Date
  June 26, 2008

 

    

Common Stock

 

   113,922

 

   10,000

 

   March 31, 2008

 

  
    Ordinary
General
Meeting of
Shareholders
       Eleventh Series Class XI Preferred Stock    18,874    20,000    March 31, 2008    June 26, 2008
       Thirteenth Series Class XIII Preferred Stock    1,100    30,000    March 31, 2008   
                    
                    
  Total         133,898         
                    

 

1-25


Mizuho Financial Group, Inc.

 

(NOTES TO CONSOLIDATED STATEMENT OF CASH FLOWS)

 

1. Cash and Cash Equivalents at the end of the period on the consolidated statement of cash flows reconciles to Cash and Due from Banks on the consolidated balance sheet as follows:

 

     Millions of yen  

Cash and Due from Banks

   ¥ 4,171,640  

Due from Banks excluding central banks

     (1,773,711 )
        

Cash and Cash Equivalents

   ¥ 2,397,928  

 

1-26


Mizuho Financial Group, Inc.

 

(NOTES TO SECURITIES)

In addition to “Securities” on the consolidated balance sheet, NCDs in “Cash and Due from Banks,” certain items in “Other Debt Purchased” and certain items in “Other Assets” are also included.

 

1. Bonds Held to Maturity which have readily determinable fair value:

 

      Millions of yen  

As of September 30, 2008

   Amount on
Consolidated
BS
   Fair Value    Unrealized
Gains /Losses
(Net)
 

Japanese Government Bonds

   ¥ 130,065    ¥ 129,938    ¥ (127 )

Japanese Local Government Bonds

     40,995      40,889      (106 )

Other

     248,673      250,800      2,127  
                      

Total

   ¥ 419,734    ¥ 421,628    ¥ 1,893  
                      

 

*1. Fair value is primarily based on the market price at the consolidated balance sheet date.

 

2. Other Securities which have readily determinable fair value:

 

      Millions of yen  

As of September 30, 2008

   Acquisition
Cost
   Amount on
Consolidated
BS
   Unrealized
Gains /Losses

(Net)
 

Japanese Stocks

   ¥ 3,094,392    ¥ 3,862,888    ¥ 768,496  

Japanese Bonds

     18,794,109      18,611,616      (182,493 )

Japanese Government Bonds

     17,544,290      17,369,182      (175,107 )

Japanese Local Government Bonds

     64,300      64,370      69  

Japanese Short-term Bonds

     4,996      4,995      (0 )

Japanese Corporate Bonds

     1,180,522      1,173,068      (7,454 )

Other

     9,311,329      8,901,050      (410,279 )

Foreign Bonds

     5,841,193      5,670,252      (170,940 )

Other Debt Purchased

     2,189,754      2,175,189      (14,565 )

Other

     1,280,381      1,055,608      (224,773 )
                      

Total

   ¥ 31,199,831    ¥ 31,375,555    ¥ 175,723  
                      

 

*1. Net Unrealized Gains include ¥50,163 million, which was recognized in the consolidated statement of income by applying the fair-value hedge method and others.
*2. Fair value of Japanese stocks is determined based on the average quoted market price over the month preceding the consolidated balance sheet date. Fair value of securities other than Japanese stocks is determined at the quoted market price if available, or other reasonable value at the consolidated balance sheet date.
*3. Certain Other Securities which have readily determinable fair value are devalued to the fair value, and the difference between the acquisition cost and the fair value is treated as the loss for the interim period (“devaluation”), if the fair value (primarily the closing market price at the consolidated balance sheet date) has significantly deteriorated compared with the acquisition cost (including amortized cost), and unless it is deemed that there is a possibility of a recovery in the fair value. The amount of devaluation for the interim period was ¥122,463 million.

The criteria for determining whether a security’s fair value has “significantly deteriorated” are outlined as follows:

Securities whose fair value is 50% or less of the acquisition cost

Securities whose fair value exceeds 50% but is 70% or less of the acquisition cost and the quoted market price maintains a certain level or lower.

 

1-27


Mizuho Financial Group, Inc.

 

3. Components of major securities not stated at fair value and their amount on the consolidated balance sheet:

 

      Millions of yen
          As of September 30, 2008    Amount

Other Securities:

  

Non-publicly Offered Bonds

   ¥ 1,800,584

Unlisted Stocks

     419,103

Unlisted Foreign Securities

     553,902

Other

     261,949

(NOTES TO MONEY HELD IN TRUST)

 

1. Money Held in Trust Held to Maturity: (As of September 30, 2008)

There was no Money Held in Trust held to maturity.

 

2. Other (other than for investment purposes and held to maturity purposes)

 

      Millions of yen  
          As of September 30, 2008    Acquisition
Cost
   Amount on
Consolidated
BS
   Unrealized
Gains/Losses

(Net)
 

Other

   ¥ 1,325    ¥ 1,295    ¥ (29 )

 

*1. Fair value of Other is determined at the quoted market price if available, or other reasonable value at the consolidated balance sheet date and other.

 

1-28


Mizuho Financial Group, Inc.

 

(8) SEGMENT INFORMATION

Segment Information by Type of Business

 

      Millions of yen
For the six months ended September 30, 2007    Banking
Business
   Securities
Business
    Other    Total    Elimination     Consolidated
Results

Ordinary Income

               

(1) Ordinary Income from outside customers

   1,816,163    371,361     68,615    2,256,140    —       2,256,140

(2) Inter-segment Ordinary Income

   22,302    49,853     53,659    125,815    (125,815 )   —  
                               

Total

   1,838,466    421,214     122,275    2,381,956    (125,815 )   2,256,140
                               

Ordinary Expenses

   1,441,606    425,594     108,946    1,976,146    (119,189 )   1,856,956
                               

Ordinary Profits

   396,860    (4,379 )   13,329    405,809    (6,625 )   399,184
                               

 

Notes:  

1.      Ordinary Income and Ordinary Profits are presented in lieu of Sales and Operating Profits as utilized by non-financial companies.

 

2.      Major components of type of business are as follows:

 

(1)    Banking Business: banking and trust banking business

 

(2)    Securities Business: securities business

 

(3)    Other: investment advisory business and others

 

3.      In accordance with the revision of the Corporate Tax Law of 2007, depreciation of the tangible fixed assets acquired on or after April 1, 2007 is computed by the procedure stipulated in the revised law. As a result, Ordinary Profits decreased by ¥444 million, ¥78 million and ¥17 million for Banking Business, Securities Business and Other, respectively, compared with the corresponding amounts under the previously applied method. As for the tangible fixed assets acquired before April 1, 2007 and depreciated to their final depreciable limit, the salvage values of them are depreciated using the straight-line method in the following five fiscal years. As a result, Ordinary Profits decreased by ¥1,075 million, ¥15 million and ¥18 million for Banking Business, Securities Business and Other, respectively, compared with the corresponding amounts under the previously applied method.

 

      Millions of yen
For the six months ended September 30, 2008    Banking
Business
   Securities
Business
    Other    Total    Elimination     Consolidated
Results

Ordinary Income

               

(1) Ordinary Income from outside customers

   1,572,028    267,870     63,694    1,903,592    —       1,903,592

(2) Inter-segment Ordinary Income

   22,433    37,492     65,484    125,410    (125,410 )   —  
                               

Total

   1,594,461    305,362     129,178    2,029,003    (125,410 )   1,903,592
                               

Ordinary Expenses

   1,530,251    316,893     120,893    1,968,038    (121,234 )   1,846,804
                               

Ordinary Profits

   64,210    (11,530 )   8,284    60,964    (4,175 )   56,788
                               

 

Notes:

 

1.      Ordinary Income and Ordinary Profits are presented in lieu of Sales and Operating Profits as utilized by non-financial companies.

 

2.      Major components of type of business are as follows:

 

(1)    Banking Business: banking and trust banking business

 

(2)    Securities Business: securities business

 

(3)    Other: investment advisory business and others

 

      Millions of yen
For the fiscal year ended March 31, 2008    Banking
Business
   Securities
Business
    Other    Total    Elimination     Consolidated
Results

Ordinary Income

               

(1) Ordinary Income from outside customers

   3,950,412    428,488     144,609    4,523,510    —       4,523,510

(2) Inter-segment Ordinary Income

   38,719    88,094     140,531    267,345    (267,345 )   —  
                               

Total

   3,989,132    516,583     285,141    4,790,856    (267,345 )   4,523,510
                               

Ordinary Expenses

   3,215,067    917,178     255,372    4,387,618    (261,228 )   4,126,390
                               

Ordinary Profits

   774,064    (400,595 )   29,768    403,237    (6,117 )   397,120
                               

 

Notes:  

1.      Ordinary Income and Ordinary Profits are presented in lieu of Sales and Operating Profits as utilized by non-financial companies.

 

2.      Major components of type of business are as follows:

 

(1)    Banking Business: banking and trust banking business

 

(2)    Securities Business: securities business

 

(3)    Other: investment advisory business and others

 

3.      In accordance with the revision of the Corporate Tax Law of 2007, depreciation of the tangible fixed assets acquired on or after April 1, 2007 is computed by the procedure in the revised law. As a result, Ordinary Profits decreased by ¥1,749 million, ¥363 million and ¥97 million for Banking Business, Securities Business and Other, respectively, compared with the corresponding amounts under the previously applied method. As for the tangible fixed assets acquired before April 1, 2007 and depreciated to their final depreciable limit, the salvage values of them are depreciated using the straight-line method in the following five fiscal years. As a result, Ordinary Profits decreased by ¥1,621 million, ¥30 million and ¥35 million for Banking Business, Securities Business and Other, respectively, compared with the corresponding amounts under the previously applied method.

 

1-29


Mizuho Financial Group, Inc.

 

Segment Information by Geographic Area

 

     Millions of yen
For the six months ended September 30, 2007    Japan    Americas    Europe     Asia/Oceania
excluding Japan
   Total    Elimination     Consolidated
Results

Ordinary Income

                  

(1) Ordinary Income from outside customers

   1,469,729    353,915    311,241     121,254    2,256,140    —       2,256,140

(2) Inter-segment Ordinary Income

   26,041    120,061    40,582     893    187,578    (187,578 )   —  
                                    

Total

   1,495,770    473,976    351,824     122,147    2,443,719    (187,578 )   2,256,140
                                    

Ordinary Expenses

   1,164,591    411,815    360,502     96,903    2,033,813    (176,856 )   1,856,956
                                    

Ordinary Profits

   331,178    62,160    (8,677 )   25,244    409,905    (10,721 )   399,184
                                    

 

Notes:

  

1.      Geographic analyses are presented based on geographic contiguity, similarities in economic activities and correlation between business operations. Ordinary Income and Ordinary Profits are presented in lieu of Sales and Operating Profits as utilized by non-financial companies.

  

2.      Americas includes the United States of America and Canada, etc., Europe includes the United Kingdom, etc. and Asia/Oceania includes Hong Kong and the Republic of Singapore, etc.

 

 

      Millions of yen
For the six months ended September 30, 2008    Japan    Americas    Europe     Asia/Oceania
excluding Japan
   Total    Elimination     Consolidated
Results

Ordinary Income

                  

(1) Ordinary Income from outside customers

   1,253,414    226,278    316,381     107,517    1,903,592    —       1,903,592

(2) Inter-segment Ordinary Income

   36,587    61,812    22,469     889    121,758    (121,758 )   —  
                                    

Total

   1,290,002    288,091    338,850     108,406    2,025,351    (121,758 )   1,903,592
                                    

Ordinary Expenses

   1,231,166    240,799    402,067     88,780    1,962,814    (116,010 )   1,846,804
                                    

Ordinary Profits

   58,835    47,292    (63,217 )   19,625    62,536    (5,747 )   56,788
                                    

 

Notes:

  

1.      Geographic analyses are presented based on geographic contiguity, similarities in economic activities, and correlation between business operations. Ordinary Income and Ordinary Profits are presented in lieu of Sales and Operating Profits as utilized by non-financial companies.

  

2.      Americas includes the United States of America and Canada, etc., Europe includes the United Kingdom, etc. and Asia/Oceania includes Hong Kong and the Republic of Singapore, etc.

 

 

      Millions of yen
For the fiscal year ended March 31, 2008    Japan    Americas    Europe     Asia/Oceania
excluding Japan
   Total    Elimination     Consolidated
Results

Ordinary Income

                  

(1) Ordinary Income from outside customers

   3,301,156    642,019    368,397     211,937    4,523,510    —       4,523,510

(2) Inter-segment Ordinary Income

   39,867    174,985    61,875     2,232    278,960    (278,960 )   —  
                                    

Total

   3,341,023    817,004    430,273     214,170    4,802,471    (278,960 )   4,523,510
                                    

Ordinary Expenses

   2,659,266    783,432    784,035     167,553    4,394,287    (267,897 )   4,126,390
                                    

Ordinary Profits

   681,756    33,571    (353,761 )   46,616    408,183    (11,063 )   397,120
                                    

 

Notes:

  

1.      Geographic analyses are presented based on geographic contiguity, similarities in economic activities, and correlation between business operations. Ordinary Income and Ordinary Profits are presented in lieu of Sales and Operating Profits as utilized by non-financial companies.

  

2.      Americas includes the United States of America and Canada, etc., Europe includes the United Kingdom, etc. and Asia/Oceania includes Hong Kong and the Republic of Singapore, etc.

 

1-30


Mizuho Financial Group, Inc.

 

Ordinary Income from Overseas Entities

For the six months ended September 30, 2007

 

        Millions of yen
Ordinary Income from Overseas Entities     786,411
Total Ordinary Income     2,256,140
Ordinary Income of Overseas Entities’ Ratio (%)     34.8

 

Notes:   

1.      Ordinary Income from Overseas Entities is presented in lieu of Sales as utilized by non-financial companies.

  

2.      Ordinary Income from Overseas Entities represents Ordinary Income recorded by overseas branches of domestic subsidiaries and overseas subsidiaries excluding inter-segment Ordinary Income. Geographical analyses of Ordinary Income from Overseas Entities are not presented as no such information is available.

For the six months ended September 30, 2008

 

        Millions of yen
Ordinary Income from Overseas Entities     650,177
Total Ordinary Income     1,903,592
Ordinary Income of Overseas Entities’ Ratio (%)     34.1

 

Notes:   

1.      Ordinary Income from Overseas Entities is presented in lieu of Sales as utilized by non-financial companies.

  

2.      Ordinary Income from Overseas Entities represents Ordinary Income recorded by overseas branches of domestic subsidiaries and overseas subsidiaries excluding inter-segment Ordinary Income. Geographical analyses of Ordinary Income from Overseas Entities are not presented as no such information is available.

For the fiscal year ended March 31, 2008

 

        Millions of yen
Ordinary Income from Overseas Entities
    1,222,354
Total Ordinary Income     4,523,510
Ordinary Income of Overseas Entities’ Ratio (%)     27.0

 

Notes:   

1.      Ordinary Income from Overseas Entities is presented in lieu of Sales as utilized by non-financial companies.

  

2.      Ordinary Income from Overseas Entities represents Ordinary Income recorded by overseas branches of domestic subsidiaries and overseas subsidiaries excluding inter-segment Ordinary Income. Geographical analyses of Ordinary Income from Overseas Entities are not presented as no such information is available.

 

1-31


Mizuho Financial Group, Inc.

 

6. NON-CONSOLIDATED FINANCIAL STATEMENTS

(1) NON-CONSOLIDATED BALANCE SHEETS

 

     Millions of yen  
     As of
September 30,
2007
    As of
September 30,
2008
    As of
March 31,
2008
(Selected Items)
 

Assets

      

Current Assets

      

Cash and Due from Banks

   ¥ 7,959     ¥ 8,683     ¥ 10,440  

Accounts Receivable

     124,418       89,928       160,990  

Other Current Assets

     6,655       3,446       4,663  

Total Current Assets

     139,033       102,058       176,094  

Fixed Assets

      

Tangible Fixed Assets

     1,019       1,540       1,283  

Intangible Fixed Assets

     3,799       4,424       3,972  

Investments

     4,479,762       4,442,796       4,477,571  

Investments in Subsidiaries and Affiliates

     4,474,686       4,436,376       4,471,185  

Other Investments

     5,076       6,420       6,385  

Total Fixed Assets

     4,484,581       4,448,761       4,482,828  
                        

Total Assets

   ¥ 4,623,615     ¥ 4,550,820     ¥ 4,658,922  
                        

Liabilities

      

Current Liabilities

      

Short-term Borrowings

   ¥ 1,130,000     ¥ 720,000     ¥ 1,000,000  

Short-term Bonds

     160,000       140,000       140,000  

Lease Liabilities

     —         4       —    

Accrued Corporate Taxes

     —         70       —    

Reserve for Bonus Payments

     236       260       248  

Other Current Liabilities

     2,214       3,107       2,027  

Total Current Liabilities

     1,292,450       863,442       1,142,276  

Non-Current Liabilities

      

Reserve for Employee Retirement Benefits

     824       1,108       963  

Reserve for Director and Corporate Auditor Retirement Benefits

     414       —         527  

Other Non-Current Liabilities

     1,505       2,870       2,308  

Total Non-Current Liabilities

     2,745       3,978       3,800  
                        

Total Liabilities

     1,295,195       867,421       1,146,076  
                        

Net Assets

      

Shareholders’ Equity

      

Common Stock and Preferred Stock

     1,540,965       1,540,965       1,540,965  

Capital Surplus

      

Capital Reserve

     385,241       385,241       385,241  

Total Capital Surplus

     385,241       385,241       385,241  

Retained Earnings

      

Appropriated Reserve

     4,350       4,350       4,350  

Other Retained Earnings

     1,400,226       1,759,131       1,584,764  

Retained Earnings Brought Forward

     1,400,226       1,759,131       1,584,764  

Total Retained Earnings

     1,404,576       1,763,481       1,589,114  

Treasury Stock

     (2,369 )     (6,270 )     (2,447 )
                        

Total Shareholders’ Equity

     3,328,414       3,683,417       3,512,873  
                        

Valuation and Translation Adjustments

      

Net Unrealized Gains on Other Securities, net of Taxes

     5       (19 )     (27 )
                        

Total Valuation and Translation Adjustments

     5       (19 )     (27 )
                        

Total Net Assets

     3,328,419       3,683,398       3,512,845  
                        

Total Liabilities and Net Assets

   ¥ 4,623,615     ¥ 4,550,820     ¥ 4,658,922  
                        

 

1-32


Mizuho Financial Group, Inc.

 

(2) NON-CONSOLIDATED STATEMENTS OF INCOME

 

     Millions of yen  
     For the six months
ended
September 30, 2007
    For the six months
ended
September 30, 2008
    For the fiscal year
ended

March 31, 2008
(Selected Items)
 

Operating Income

   ¥ 604,926     ¥426,950     ¥806,519  

Operating Expenses

      

General and Administrative Expenses

   9,042     9,685     19,364  

Total Operating Expenses

   9,042     9,685     19,364  
                  

Operating Profits

   595,884     417,265     787,155  
                  

Non-Operating Income

   258     189     306  

Non-Operating Expenses

   7,887     6,186     14,825  
                  

Ordinary Profits

   588,255     411,268     772,635  
                  

Extraordinary Gains

   38,377     44,675     38,616  

Extraordinary Losses

   254     1,426     370  
                  

Income before Income Taxes

   626,378     454,517     810,882  
                  

Income Taxes:

      

Current

   9     2     11  

Deferred

   (84 )   (85 )   (131 )
                  

Total Income Taxes

   (75 )   (82 )   (120 )
                  

Net Income

   ¥626,454     ¥454,600     ¥811,002  
                  

 

1-33


Mizuho Financial Group, Inc.

 

(3) NON-CONSOLIDATED STATEMENTS OF CHANGES IN NET ASSETS

 

 

     Millions of yen  
     For the six months
ended
September 30, 2007
    For the six months
ended
September 30, 2008
    For the fiscal year
ended
March 31, 2008
 

Shareholders’ Equity

      

Common Stock and Preferred Stock

      

Balance as of the end of the previous period

   ¥ 1,540,965     ¥ 1,540,965     ¥ 1,540,965  

Changes during the period

      

Total Changes during the period

     —         —         —    
                        

Balance as of the end of the period

     1,540,965       1,540,965       1,540,965  
                        

Capital Surplus

      

Capital Reserve

      

Balance as of the end of the previous period

     385,241       385,241       385,241  

Changes during the period

      

Total Changes during the period

     —         —         —    
                        

Balance as of the end of the period

     385,241       385,241       385,241  
                        

Other Capital Surplus

      

Balance as of the end of the previous period

     —         —         —    

Changes during the period

      

Disposition of Treasury Stock

     9       —         —    

Cancellation of Treasury Stock

     (9 )     —         —    
                        

Total Changes during the period

     —         —         —    
                        

Balance as of the end of the period

     —         —         —    
                        

Total Capital Surplus

      

Balance as of the end of the previous period

     385,241       385,241       385,241  

Changes during the period

      

Disposition of Treasury Stock

     9       —         —    

Cancellation of Treasury Stock

     (9 )     —         —    
                        

Total Changes during the period

     —         —         —    
                        

Balance as of the end of the period

     385,241       385,241       385,241  
                        

Retained Earnings

      

Appropriated Reserve

      

Balance as of the end of the previous period

     4,350       4,350       4,350  

Changes during the period

      

Total Changes during the period

     —         —         —    
                        

Balance as of the end of the period

     4,350       4,350       4,350  
                        

Other Retained Earnings

      

Retained Earnings Brought Forward

      

Balance as of the end of the previous period

     1,247,876       1,584,764       1,247,876  

Changes during the period

      

Cash Dividends

     (103,056 )     (133,898 )     (103,056 )

Net Income

     626,454       454,600       811,002  

Disposition of Treasury Stock

     —         (26 )     (1 )

Cancellation of Treasury Stock

     (371,046 )     (146,308 )     (371,055 )
                        

Total Changes during the period

     152,350       174,367       336,888  
                        

Balance as of the end of the period

     1,400,226       1,759,131       1,584,764  
                        

Total Retained Earnings

      

Balance as of the end of the previous period

     1,252,226       1,589,114       1,252,226  

Changes during the period

      

Cash Dividends

     (103,056 )     (133,898 )     (103,056 )

Net Income

     626,454       454,600       811,002  

Disposition of Treasury Stock

     —         (26 )     (1 )

Cancellation of Treasury Stock

     (371,046 )     (146,308 )     (371,055 )
                        

Total Changes during the period

     152,350       174,367       336,888  
                        

Balance as of the end of the period

   ¥ 1,404,576     ¥ 1,763,481     ¥ 1,589,114  
                        

 

1-34


Mizuho Financial Group, Inc.

 

     Millions of yen  
     For the six months
ended
September 30, 2007
    For the six months
ended
September 30, 2008
    For the fiscal year
ended

March 31, 2008
 

Treasury Stock

      

Balance as of the end of the previous period

   ¥ (2,037 )   ¥ (2,447 )   ¥ (2,037 )

Changes during the period

      

Repurchase of Treasury Stock

     (371,429 )     (150,272 )     (371,565 )

Disposition of Treasury Stock

     41       140       100  

Cancellation of Treasury Stock

     371,055       146,308       371,055  
                        

Total Changes during the period

     (331 )     (3,822 )     (409 )
                        

Balance as of the end of the period

     (2,369 )     (6,270 )     (2,447 )
                        

Total Shareholders’ Equity

      

Balance as of the end of the previous period

     3,176,394       3,512,873       3,176,394  

Changes during the period

      

Cash Dividends

     (103,056 )     (133,898 )     (103,056 )

Net Income

     626,454       454,600       811,002  

Repurchase of Treasury Stock

     (371,429 )     (150,272 )     (371,565 )

Disposition of Treasury Stock

     51       114       98  
                        

Total Changes during the period

     152,019       170,544       336,478  
                        

Balance as of the end of the period

     3,328,414       3,683,417       3,512,873  
                        

Valuation and Translation Adjustments

      

Net Unrealized Gains on Other Securities, net of Taxes

      

Balance as of the end of the previous period

     9       (27 )     9  

Changes during the period

      

Net Changes in Items other than Shareholders’ Equity

     (4 )     8       (37 )
                        

Total Changes during the period

     (4 )     8       (37 )
                        

Balance as of the end of the period

     5       (19 )     (27 )
                        

Total Net Assets

      

Balance as of the end of the previous period

     3,176,404       3,512,845       3,176,404  

Changes during the period

      

Cash Dividends

     (103,056 )     (133,898 )     (103,056 )

Net Income

     626,454       454,600       811,002  

Repurchase of Treasury Stock

     (371,429 )     (150,272 )     (371,565 )

Disposition of Treasury Stock

     51       114       98  

Net Changes in Items other than Shareholders’ Equity

     (4 )     8       (37 )
                        

Total Changes during the period

     152,014       170,552       336,441  
                        

Balance as of the end of the period

   ¥ 3,328,419     ¥ 3,683,398     ¥ 3,512,845  
                        

(4) NOTE FOR THE ASSUMPTION OF GOING CONCERN

There is no applicable information.

 

1-35


 

 

 

 

 

 

 

 

 

 

 

 

SUMMARY OF FINANCIAL RESULTS

 

For the Second Quarter (First Half) of Fiscal 2008

(Six months ended September 30, 2008)

 

<under Japanese GAAP>

 

 

LOGO

 


Summary Results for the Second Quarter (First Half) of Fiscal 2008

(Six months ended September 30, 2008)

 

I. Summary of Income Analysis

 

·  

Consolidated Net Business Profits (Apr.1-Sep.30, 2008)

 

   

Consolidated Gross Profits for the first half of fiscal 2008 decreased to JPY 917.3 billion on a year-on-year basis. It was mainly because of, despite increased income from our business with individual customers, decreases in income related to the business with domestic corporate customers (SMEs), fee and commission income in overseas businesses which were affected by the turmoil in the global financial markets, and income from trust and asset management business of Mizuho Trust & Banking which was affected by the domestic real estate market conditions, in Customer Groups of the banking subsidiaries.

 

   

In addition to the above, there was an increase in G&A expenses, mainly those associated with employee retirement benefits. As a result, Consolidated Net Business Profits amounted to JPY 317.4 billion, a year-on-year decrease of JPY 96.5 billion.

 

·  

Consolidated Net Income (Apr.1-Sep.30, 2008)

 

   

Consolidated Net Income for the first half of fiscal 2008 decreased by JPY 232.4 billion from the same period of the previous fiscal year to JPY 94.5 billion. This was mainly due to, together with the aforementioned factors, increased Credit-related Costs primarily associated with an increase in domestic corporate bankruptcies and the collapse of Lehman Brothers*1, devaluation of a portion of our stock portfolio triggered by the declines in the stock markets (devaluation of JPY 95.5 billion for the 3 Banks), and continuously recorded losses on securitization products and others resulting from the global financial market dislocation.

 

  *1: The group’s total P&L impact from the collapse of Lehman Brothers was approximately JPY -30.0 billion, including those associated with hedging transactions, market-related transactions by our overseas subsidiaries, and others.

 

   

As for the effect from our securitization products and others due to the global market dislocation, the consolidated P&L impact in the first half of fiscal 2008 was a loss of approximately JPY 72.0 billion (of which approximately JPY 45.0 billion arose in the second quarter (from July to September)).

[Breakdown of the P&L impact of JPY 72.0 billion (including overseas subsidiaries)]

3 Banks

 

  Losses on sales of securitization products, etc. (incl. devaluation): approx. JPY -59.0 Bn

 

  Net losses on provision of Reserve for Possible Losses on Sales of Loans*: approx. JPY -7.0 Bn

 

  Profits from hedging by CDS: approx. JPY 7.0 Bn

Mizuho Securities

 

  Trading losses on securitization products: approx. JPY -13.0 Bn
     (of which foreign currency denominated: approx. JPY -9.0 Bn)

 

  * Separately recorded approximately JPY -16.0 billion of Credit-related Costs in the first half due to downgrading of some obligors to the Intensive Control Obligors classification or below.

(Consolidated)

 

     1H of FY2008
(Apr. 1 - Sep. 30, 2008)
          Change from
1H of FY2007
          (JPY Bn)

Consolidated Gross Profits

   917.3    -70.5

Consolidated Net Business Profits *1

   317.4    -96.5

Credit-related Costs

   -142.8    -98.1

Net Gains (Losses) related to Stocks

   -39.5    -124.7

Ordinary Profits

   56.7    -342.3

Net Income

   94.5    -232.4

 

*1 Consolidated Gross Profits - General and Administrative Expenses (excluding Non-Recurring Losses) + Equity in Income from Investments in Affiliates and certain other consolidation adjustments

(Reference) 3 Banks

 

     1H of FY2008
(Apr. 1 - Sep. 30, 2008)
          Change from
1H of FY2007
          (JPY Bn)

Gross Profits

   765.6    -83.3

G&A Expenses (excluding Non-Recurring Losses)

   -456.5    -21.8

Net Business Profits

   309.0    -105.1

Credit-related Costs

   -130.4    -76.6

Net Gains (Losses) related to Stocks

   -40.7    -114.6

Ordinary Profits

   9.8    -309.8

Net Income *2

   169.4    -156.6

 

*2 Includes gains on reversal of reserve for possible losses on investments in subsidiaries of JPY 83.6 billion (eliminated as an intercompany gain on a consolidated basis)

(Consolidated)

 

      1H of FY2008
(Apr. 1 - Sep. 30, 2008)
 
           Change from
1H of FY2007
 

EPS *3 (JPY)

   7,078     -18,725  

ROE *4

   5.2 %   -8.4 %

 

*3: Fully diluted EPS: Diluted Net Income for 1H per Share of Common Stock*

[*Calculated under the assumption that all dilutive convertible securities are converted at the price calculated based on the market price at the beginning of the fiscal year]

 

*4: Return on Equity = Annualized Net Income**/ [{(Total Shareholders’ Equity + Total Valuation and Translation Adjustments) <Beginning of 1H> + (Total Shareholders’ Equity + Total Valuation and Translation Adjustments) <End of 1H>} /2 ] X 100

[** Net Income for 1H of FY2008 (Apr.1-Sep.30, 2008) x 365 / 183]

 

2-1


II. Enhancement of Profitability

 

·  

Net Interest Income

 

   

The average loan balance for the first half of fiscal 2008 increased on a year-on-year basis mainly due to increased overseas lending.

 

   

The domestic loan-and-deposit rate margin for the same period slightly decreased from that in the second half of fiscal 2007 against the backdrop of intensified competition among banks and other factors.

 

   

Although total Net Interest Income of the 3 Banks for the first half decreased by JPY 9.6 billion on a year-on-year basis, Net Interest Income from our international operations increased by JPY 13.3 billion.

 

LOGO

*1:

  

Aggregate average balance of the 3 Banks for the period, excluding Trust Account and loans to Mizuho Financial Group, Inc. Balance for overseas branches includes foreign exchange translation impact.

*2:

  

Aggregate figures of domestic operations of Mizuho Bank and Mizuho Corporate Bank after excluding loans to Mizuho Financial Group, Inc., Deposit Insurance Corporation of Japan and the Japanese Government.

 

 

 

·  

Non-Interest Income

 

   

Net Fee and Commission Income of the 3 Banks for the first half of fiscal 2008 amounted to JPY 146.3 billion, a year-on-year decrease of JPY 32.8 billion.

 

   

As for our business with individual customers, fee income associated with sales of investment trusts and individual annuities decreased from the same period of the previous fiscal year, due to stagnant stock market conditions and other factors.

 

   

As for our business with corporate customers, although fee and commission income associated with domestic syndicated loans increased year-on-year, that primarily from solution-related business for SMEs, foreign exchange business, and overseas business decreased. Profits from trust and asset management business of Mizuho Trust & Banking also decreased.

LOGO

 

2-2


III. Financial Soundness

 

·  

Although our Unrealized Gains on Other Securities decreased and Net Deferred Tax Assets increased due primarily to the declines in the stock markets, we maintained our financial soundness at a sufficient level as indicated by our Capital Adequacy Ratio and others.

 

     September 30, 2008  
           Change from
March 31, 2008
 
           (JPY Bn)  

Consolidated Capital Adequacy Ratio

   11.45 %   -0.25 %

(Total Risk-based Capital)

   (7,381.2 )   (-327.0 )

Tier 1 Capital Ratio

   7.36 %   -0.04 %

(Tier 1 Capital)

   (4,747.0 )   (-133.1 )

Net Deferred Tax Assets (DTAs) (Consolidated)

   841.0     244.4  

Net DTAs / Tier 1 Ratio

   17.7 %   5.4 %

Disclosed Claims under the Financial Reconstruction Law (3 Banks)

   1,145.8     -57.3  

NPL Ratio

   1.50 %   -0.11 %

(Net NPL Ratio *1)

   (0.73 %)   (-0.09 %)

Unrealized Gains on Other Securities *2 (Consolidated)

   125.5     -515.1  

 

*1: (Disclosed Claims under the Financial Reconstruction Law - Reserves for Possible Losses on Loans) / (Total Claims - Reserves for Possible Losses on Loans) X 100
*2: The base amount to be recorded directly to Net Assets after tax and other necessary adjustments

 

·  

The total balance of securitization products and details as of September 30, 2008 are shown below. Please refer to the attached, “Summary of the impact of the dislocation in the global financial markets on our foreign currency denominated exposures”.

(The group in total)

[balances on managerial accounting and fair value basis]

 

     September 30, 2008*3  

Foreign currency denominated

   JPY 0.7Tn (JPY 40Bn )

RMBS, CDO

   JPY 0.3Tn (JPY 14Bn )

Yen denominated

   JPY 3.1Tn (JPY 216Bn )

Securitization Products

   JPY 3.8Tn (JPY 256Bn )

 

*3 Figures in brackets are the balances of Mizuho Securities including its overseas subsidiaries (all of which are held in trading accounts).

IV. Disciplined Capital Management

 

·  

Issuance of “Non-Dilutive” Preferred Securities

 

   

In July 2008, we issued JPY 303.0 billion of preferred debt securities through an overseas special purpose subsidiary so as to increase the group’s Tier 1 capital to secure the agility and to improve the flexibility of our capital strategy.

Meanwhile, we redeemed in full preferred debt securities (JPY 118.5 billion and USD 2.6 billion) which became redeemable at the issuer’s option in June 2008.

 

   

On November 13, 2008, our board of directors resolved to establish an overseas special purpose subsidiary and issue preferred debt securities to further strengthen our group’s capital base in light of the current financial market turmoil.

 

·  

Repurchase and Cancellation of Own Shares (Common Shares)

[For the Purpose of Offsetting Potential Dilutive Effect of Convertible Preferred Stock]

 

   

In July 2008, we repurchased our own shares (common shares) of JPY 150.0 billion (283,500 shares). As with the repurchases of our common shares which we have conducted since last year (the cumulative amount of repurchases: JPY 299.9 billion), they were made for the purpose of, among other things, offsetting the potential dilutive effect of our common shares from the conversion of the Eleventh Series Class XI Preferred Stock (JPY 943.7 billion in aggregate issue amount).

In September 2008, we cancelled all the common shares repurchased, except the shares to be assigned for the exercise of Stock Compensation-type Stock Options (Stock Acquisition Rights) that we plan to issue in the future (7,000 shares).

 

   

While our basic policy to “address the potential dilutive effects, based on market conditions, our earnings trend and other factors” remains unchanged, considering the importance of capital under the recent circumstances, we will put more priority on strengthening our capital base in this second half of fiscal 2008.

 

2-3


Earnings Estimates for Fiscal 2008

(Figures below are on a consolidated basis)

 

·  

We estimate Consolidated Net Business Profits for fiscal 2008 to be JPY 780.0 billion, an increase of JPY 268.8 billion compared with the previous fiscal year.

This is because, amid the ongoing severe environment for earnings including the financial market turmoil and worsening business sentiment, while we have to estimate a decrease in income from our banking subsidiaries’ Customer Groups and the Trading segment, of which the latter showed a good performance during the previous fiscal year, we assume the performance of Mizuho Securities will move toward recovery from the significant losses in fiscal 2007.

 

·  

We estimate Credit-related Costs and Net Gains/Losses related to Stocks to be JPY -250.0 billion and JPY -110.0 billion, respectively, mainly in light of the recent developments of the corporate performance and the stock markets.

 

·  

Based on the above, we estimate Consolidated Net Income to be JPY 250.0 billion, a decrease of JPY 61.2 billion year-on-year.

 

·  

We plan to make cash dividend payments of JPY 10,000 per share of common stock for the fiscal year ending March 31, 2009, unchanged from our plan announced in May 2008 (the same amount as the previous fiscal year, and JPY 10 per share of common stock after allotment of shares or fractions of a share without consideration in January 2009). We plan to make dividend payments on preferred stock as prescribed.

(Consolidated)

 

      FY2008 (Estimates)
           Change from
FY2007
           (JPY Bn)

Consolidated Net Business Profits *1

   780.0     268.8

Credit-related Costs

   -250.0     -166.9

Net Gains (Losses) related to Stocks

   -110.0     -363.3

Ordinary Profits

   350.0     -47.1

Net Income

   250.0     -61.2

 

*1 Consolidated Gross Profits - General and Administrative Expenses (excluding Non-Recurring Losses) + Equity in Income from Investments in Affiliates and certain other consolidation adjustments

(Reference) 3 Banks

 

     FY2008 (Estimates)  
          Change from
FY2007
 
          (JPY Bn)  

Net Business Profits

  710.0     -151.7  

Credit-related Costs

  -235.0     -142.4  

Net Gains (Losses) related to Stocks

  -110.0     -350.1  

Ordinary Profits

  208.5     -463.8  

Net Income

  *2    300.0     *3    -366.6  

 

*2 Includes gains on reversal of reserve for possible losses on investments in subsidiaries of JPY 83.6 billion (eliminated as an intercompany gain on a consolidated basis)
*3 Excludes the effect of losses on devaluation of stocks of Mizuho Securities (JPY 473.1 billion) in the previous fiscal year

 

 

This immediate release contains statements that constitute forward-looking statements within the meaning of the United States Private Securities Litigation Reform Act of 1995, including estimates, forecasts, targets and plans. Such forward-looking statements do not represent any guarantee by management of future performance.

In many cases, but not all, we use such words as “aim,” “anticipate,” “believe,” “endeavor,” “estimate,” “expect,” “intend,” “may,” “plan,” “probability,” “project,” “risk,” “seek,” “should,” “strive,” “target” and similar expressions in relation to us or our management to identify forward-looking statements. You can also identify forward-looking statements by discussions of strategy, plans or intentions. These statements reflect our current views with respect to future events and are subject to risks, uncertainties and assumptions.

We may not be successful in implementing our business strategies, and management may fail to achieve its targets, for a wide range of possible reasons, including, without limitation, incurrence of significant credit-related costs; declines in the value of our securities portfolio, including as a result of the impact of the dislocation in the global financial markets stemming from U.S. subprime mortgage loan issues; changes in interest rates; foreign currency fluctuations; revised assumptions or other changes related to our pension plans; failure to maintain required capital adequacy ratio levels; downgrades in our credit ratings; the effectiveness of our operational, legal and other risk management policies; our ability to avoid reputational harm; and effects of changes in general economic conditions in Japan.

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 latest annual report on Form 20-F filed with the U.S. Securities and Exchange Commission (“SEC”) which is available in the Financial Information section of our web page at www.mizuho-fg.co.jp/english/ 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.

 

 

 

2-4


Attachment

 

[Reference]

   Summary of the impact of the dislocation in the global financial markets on our foreign currency denominated exposures (the group in total)

(Managerial accounting basis)

 

(Note) This material is prepared basically in view of the “Leading-Practice Disclosures for Selected Exposures” included in the Financial Stability Forum (FSF) report.

 

1. Breakdown of foreign currency denominated securitization products

Banking Subsidiaries

(JPY Bn, round figures)

3 Banks (including overseas subsidiaries)

= Banking account

 

      
     Balances as of
Mar. 31, 2008*1
  Marks (%) as of
Mar. 31, 2008
  Balances as of
Sep. 30, 2008*1
  Marks (%) as of
Sep. 30, 2008
  Unrealized
Gains/Losses as of
Sep. 30, 2008
  Realized
Gains/Losses for
1H FY2008

(Apr.1-
Sep. 30, 2008)*1
  (Reference)
Hedged
proportions*2
    (Fair Value)   (=Fair Value/
Face Value)
  (Fair Value)  

(=Fair Value/

Face Value)

           

1

 

Foreign currency denominated securitization products

  889   78   *3    693   68   -87   -59   approx.50%

2

 

ABSCDOs, CDOs

  126   51   79   34   -9   -24   approx.20%

3

 

CDOs backed by RMBS

  36   28   *4      17   12   0   -20   —  

4

 

CDOs except above

  *5      90   77   *5      62   65   -9   -4   approx.30%

5

 

CDOs backed by claims against corporations

  *6      90   *6      77   *6      62   *6      65   *6      -9   *6    -4   approx.30%

6

 

CDOs backed by CMBS

  —     —     —     —     —     —     —  

7

 

RMBS

  319   86   240   72   -30   -29   approx.60%

8

 

RMBS with underlying assets in US

  *7    —     *7     —     *7    —     *7    —     *7   —     *7  —     —  

9

 

RMBS except above (RMBS with underlying assets mainly in Europe)

  319   86   240   72   -30   -29   approx.60%

10

 

ABS, CLOs and others

  444   85   374   81   -49   -6   approx.40%

11

 

CLOs

  *6    195   *6      86   *6    186   *6     84   *6    -35   *6    -2   approx.50%

12

 

ABS

  169   93   119   87   -8   -3   approx.30%

13

 

CMBS

  79   89   70   84   -6   -1   approx.50%

14

 

SIV-related

  —     —     —     —     —     -0   —  

 

*1 Except for the securitization products which were the reference assets of our securitization schemes for transferring credit risks to third parties (hedged portion), a Reserve for Possible Losses on Investments has been provided since the end of fiscal 2007 against unrealized losses on securitization products related to the discontinuation of business regarding credit investments primarily in Europe, which had been made as an alternative to loans.

The balance of reserve was approximately JPY 50 billion as of Sep. 30, 2008 (the difference from the March-end balance of approximately JPY 46 billion was included in the above Realized Gains/Losses for the first half of fiscal 2008).

Since securities were recognized at fair value on the consolidated balance sheet, the relevant balances as of Mar. 31, 2008 and Sep. 30, 2008 were those after being offset by the amount of Reserve for Possible Losses on Investments.

 

*2 The proportions of balances (fair value) of the securitization products, as of Sep. 30, 2008, which were the reference assets of our securitization schemes (with CDS and other means) for transferring credit risks to third parties until maturity

In some of the securitization schemes, a portion of credit risk of the reference assets remained with Mizuho Financial Group through our retaining a small first loss position and a portion of senior tranches.

(Reference) CDS counterparties†1:

Financial services subsidiary (A- rating†2) of a multi-line insurance company: approximately JPY 194 billion

Government-affiliated financial institution (AA- rating): approximately JPY 104 billion

 

  †1: Notional amount basis. Ratings were based on the lowest external ratings as of Sep. 30, 2008.
  †2: The rating was under review for possible downgrade as of Nov. 10, 2008.

 

*3 The change in balance from Mar. 31, 2008 (approximately JPY -196 billion) included approximately JPY 22 billion decrease in balance due to foreign exchange translation impact primarily caused by appreciation of Japanese yen against European currencies.

 

*4 The proportion of US subprime mortgage loan-related assets to the total underlying assets of this CDO was up to approximately 30%. The entire balance (fair value) consisted of Super Senior tranche.

 

*5 The entire balance consisted of securitization products backed by original assets (non-securitized assets).

 

*6 Re-classified a part of the securitization products, which had been categorized in line 5 in the above table as of Mar. 31, 2008, to line 11 after a review of the definition of each category since our first quarter disclosure.

 

*7 Excluded US government-owned corporation bonds and government-sponsored enterprise bonds (please refer to page 2-8 for the balances of those bonds held by Mizuho Financial Group).

 

2-5


Securities Subsidiaries

(JPY Bn, round figures)

Mizuho Securities (including overseas subsidiaries)

=Trading account

 

          Balances as of
Mar. 31, 2008
   Marks (%) as of
Mar. 31, 2008
   Balances as of
Sep. 30, 2008
   Marks (%) as of
Sep. 30, 2008
   Realized
Gains/Losses for
1H FY2008
(Apr. 1-
Sep. 30, 2008)
          (Fair Value)   

(=Fair Value/

Face Value)

   (Fair Value)   

(=Fair Value/

Face Value)

    

1

  

Foreign currency denominated securitization products

   105    22    *1        40    12    -9

2

  

ABSCDOs, CDOs

   50    18    11    4    -7

3

  

CDOs backed by RMBS

   24    10    *2        11    4    -7

4

  

Hedged by CDS with a non-investment grade financial guarantor

   *3       11    *3      17    *3      —      *3      —      *3      —  

5

  

CDOs except above

   *4, 5    26    *5      83    *5      —      *5      —      *5          0

6

  

CDOs backed by claims against corporations

   16    92    —      —      —  

7

  

Hedged by CDS with a non-investment grade financial guarantor

   *3    —      *3    —      *3      —      *3      —      *3      —  

8

  

CDOs backed by CMBS

   0    8    —      —      0

9

  

RMBS

   53    27    3    6    0

10

  

RMBS backed by US subprime mortgage loans

   15    31    0    8    0

11

  

RMBS except above (RMBS backed by mid-prime loans, prime loans and others)

   *6      38    *6      26    *6        3    *6        5    *6          0

12

  

RMBS backed by mid-prime loans (Alt-A)

   19    26    1    6   

13

  

ABS, CLOs and others

   2    67    26    86    -2

14

  

CLOs

   *5        2    *5      73    *5      26    *5        87    *5        -2

15

  

CMBS

   0    43    0    42    -0

 

*1 The change in balance from Mar. 31, 2008 (approximately JPY -65 billion) included approximately JPY 4 billion increase in balance due to foreign exchange translation impact primarily caused by depreciation of Japanese yen against US dollars.

 

*2 The proportion of US subprime mortgage loan-related assets to the total underlying assets was approximately 10%. Approximately 50% of the balance (fair value) consisted of Super Senior tranche.

 

*3

CDO exposures hedged by CDS with a non-investment grade US financial guarantor (monoline), net of allowances. (The hedging transaction was terminated in Aug. 2008.)

† based on external ratings as of Mar. 31, 2008

 

*4 The entire balance consisted of securitization products backed by original assets (non-securitized assets).

 

*5 Re-classified the securitization products, which had been categorized in line 5 in the above table as of Mar. 31, 2008, to line 14 after a review of the definition of each category since our first quarter disclosure.

 

*6 Excluded US government-owned corporation bonds and government-sponsored enterprise bonds (please refer to page 2-8 for the balances of those bonds held by Mizuho Financial Group).

(Reference) Credit Default Swaps related to securitization products (as of Sep. 30, 2008)

 

The notional amount of credit default swaps (CDS†1) referring to securitization products at Mizuho Securities was approximately JPY 370 billion (JPY 366 billion as of Mar. 31, 2008), and the fair value of the relevant reference assets (securitization products) was approximately JPY 298 billion (JPY 302 billion as of Mar. 31, 2008). NPV, or the estimated amount claimable for the settlement of the CDS, was approximately JPY 52 billion, which was the difference between the notional amount and the fair value (excluding approximately JPY 21 billion that had already been received in cash from a CDS protection seller). The net estimated amount claimable for the settlement of the CDS after deducting reserves for counterparty risks was approximately JPY 41 billion.

(The above included CDS contracts with a US monoline (external ratings as of Sep. 30, 2008: AAA †2), of which the notional amount was approximately JPY 85 billion and the fair value of the relevant reference assets was approximately JPY 76 billion.)

 

  †1 Excluded CDS shown in line 4 and 7 of the above table
  †2 The rating was under review for possible downgrade as of Nov. 10, 2008.

 

The vast majority of the above CDS contracts were with counterparties with external ratings of “AA” range or higher (as of Sep. 30, 2008), and the relevant reference assets were securitization products backed mainly by claims against corporations.

 

2-6


2. Other relevant information (September 30, 2008)

(The figures below are rounded to JPY 1 Bn)

Banking Subsidiaries

 

·  

Loans held for sale (for which Reserve for Possible Losses on Sales of Loans was recorded)

 

   

Approximately JPY 54 billion of Reserve for Possible Losses on Sales of Loans was recorded against approximately JPY 618 billion of loans held for sale associated with overseas LBO and other transactions (Reserve ratio: 8.7%)

 

  (Note) The figures shown above exclude those related to Intensive Control Obligors or below. The reserve ratio would be 10.9%, if including the balances of loans held for sale to such obligors and the amounts of both Reserves for Possible Losses on Loans and Reserve for Contingencies in relation to the relevant balances.

 

   

Out of the above-mentioned JPY 618 billion, the LBO/MBO related loans held for sale amounted to approximately JPY 566 billion, and the relevant reserve ratio was 9.1%.

 

  (Note) The figures shown above exclude those related to Intensive Control Obligors or below. The reserve ratio would be 11.4%, if including the balances of loans held for sale to such obligors and the amounts of both Reserves for Possible Losses on Loans and Reserve for Contingencies in relation to the relevant balances.

 

·  

Overseas ABCP program related

 

   

The total assets of approximately JPY 206 billion acquired by overseas ABCP conduits, for which Mizuho Corporate Bank acted as a sponsor, included approximately JPY 97 billion of securitization products that were backed by credit card receivables, auto lease receivables, and others (of which approximately JPY 22 billion was guaranteed by US monolines as described below). No US subprime mortgage loan-related assets were included.

 

   

The change in balance of the above-mentioned securitization products from Mar. 31, 2008 (approximately JPY -73 billion) was primarily due to the redemption at maturity of those backed by credit card receivables (of which approximately JPY -8 billion was attributable to the redemption of those guaranteed by US monolines as described below).

 

·  

Securitization products and loans guaranteed by US financial guarantors (monolines)

Securitization products guaranteed by US monolines

 

   

Approximately JPY 22 billion of securitization products backed by auto lease receivables included in the acquired assets of the above-mentioned overseas ABCP conduits sponsored by Mizuho Corporate Bank.

 

   

The change in balance from Mar. 31, 2008 (approximately JPY -8 billion) was due to the redemption at maturity of those backed by credit card receivables.

Loans guaranteed by US monolines

 

   

Approximately JPY 16 billion of Mizuho Corporate Bank’s loan commitments to overseas infrastructure projects (of which approximately JPY 7 billion was drawn down). No US subprime mortgage loan-related exposures were included.

Although some of the monolines which provided the above guarantees were rated non-investment grade (based on external ratings), there were no particular concerns about the credit conditions of the above-mentioned underlying assets or the projects as of Sep. 30, 2008.

 

  (Note) For the purpose of reference to the Mizuho Financial Group’s exposures related to US monolines, page 2-6 describes our securities subsidiaries’ exposures to such counterparties of credit default swaps (CDS) referring to securitization products, in addition to the above-mentioned transactions of the banking subsidiaries.

 

·  

Investments and loans associated with SIVs

 

   

All exposures had already been written-off in FY2007.

 

·  

Warehousing loan business* related to US subprime mortgage loans

 

   

Nil

  * Loans provided to other financial institutions in connection with their structuring of securitization products until such products are sold

 

·  

Loans to mortgage lenders in US (working capital, etc.)

 

   

Approximately JPY 48 billion (All of the lenders concerned had investment grade ratings, of which approximately 40% had external ratings of “A” range or higher).

 

2-7


(The figures below are rounded to JPY 1 Bn)

Banking and Securities Subsidiaries

 

·  

US government-owned corporation (Ginnie Mae) bonds and GSE (government-sponsored enterprises: Fannie Mae, Freddie Mac) bonds

Banking Subsidiaries (Banking Account)

 

   

The total balance of the above bonds held was approximately JPY 871 billion, with approximately JPY 4 billion of unrealized losses. Out of the total balance, approximately JPY 868 billion was RMBS guaranteed by the Government National Mortgage Association (Ginnie Mae), a corporation wholly-owned by the US government.

 

(Reference)    Balance held as of Mar. 31, 2008: approximately JPY 1.2 trillion

Securities Subsidiaries (Trading Account)

 

   

The total balance of RMBS, which were issued or guaranteed by the US government-owned corporation or GSE, was minimal (a few hundred million JPY).

 

   

Approximately JPY 154 billion of the corporate bonds issued by Fannie Mae and Freddie Mac was held for the purpose of, among other things, market-making activities in the US, and all the bonds were subject to mark-to-market accounting so that there were no unrealized losses (the recorded losses in the first half of fiscal 2008 were minimal).

There was no holding of stocks of these entities.

 

2-8


SELECTED FINANCIAL INFORMATION

For the Second Quarter (First Half) of Fiscal 2008

(Six months ended September 30, 2008)

<under Japanese GAAP>

 

 

LOGO


C O N T E N T S

 

 

Notes:

“CON”: Consolidated figures of Mizuho Financial Group, Inc. (“MHFG”).

“NON(B)”: Non-consolidated figures of Mizuho Bank, Ltd. (“MHBK”), Mizuho Corporate Bank, Ltd. (“MHCB”) and Mizuho Trust & Banking Co., Ltd. (“MHTB”).

“NON(B&R)”: Aggregated figures of the relevant banks including past figures for their former financial subsidiaries for corporate revitalization.

*MHBK, MHCB and MHTB merged with their own financial subsidiaries for corporate revitalization respectively, as of October 1, 2005.

“HC”: Non-consolidated figures of Mizuho Financial Group, Inc.

 

 

I. FINANCIAL DATA FOR THE FIRST HALF OF FISCAL 2008

   See above Notes    Pages

1. Income Analysis

   CON   NON(B)    3- 1

2. Interest Margins (Domestic Operations)

   NON(B)      3- 6

3. Use and Source of Funds

   NON(B)      3- 7

4. Net Gains /Losses on Securities

   NON(B)      3- 11

5. Unrealized Gains /Losses on Securities

   CON   NON(B)    3- 13

6. Projected Redemption Amounts for Securities

   NON(B)      3- 15

7. Overview of Derivative Transactions Qualifying for Hedge Accounting

   NON(B)      3- 16

8. Employee Retirement Benefits

   NON(B)   CON    3- 17

9. Capital Adequacy Ratio

   CON      3- 19

II. REVIEW OF CREDITS

   See above Notes    Pages

1. Status of Non-Accrual, Past Due & Restructured Loans

   CON   NON(B)    3- 21

2. Status of Reserves for Possible Losses on Loans

   CON   NON(B)    3- 23

3. Reserve Ratios for Non-Accrual, Past Due & Restructured Loans

   CON   NON(B)    3- 24

4. Status of Disclosed Claims under the Financial Reconstruction Law (“FRL”)

   CON   NON(B)    3- 25

5. Coverage on Disclosed Claims under the FRL

   NON(B)      3- 27

6. Overview of Non-Performing Loans(“NPLs”)

   NON(B)      3- 30

7. Results of Removal of NPLs from the Balance Sheet

   NON(B&R)      3- 31

8. Status of Loans by Industry

       

(1) Outstanding Balances and Non-Accrual, Past Due & Restructured Loans by Industry

   NON(B)      3- 33

(2) Disclosed Claims under the FRL and Coverage Ratio by Industry

   NON(B)      3- 35

9. Housing and Consumer Loans & Loans to Small and Medium-Sized Enterprises (“SMEs”) and Individual Customers

       

(1) Balance of Housing and Consumer Loans

   NON(B)      3- 36

(2) Loans to SMEs and Individual Customers

   NON(B)      3- 36

10. Status of Loans by Region

       

(1) Balance of Loans to Restructuring Countries

   NON(B)      3- 37

(2) Outstanding Balances and Non-Accrual, Past Due & Restructured Loans by Region

   NON(B)      3- 37

III. DEFERRED TAXES

   See above Notes    Pages

1. Change in Deferred Tax Assets, etc.

   CON   NON(B)    3- 38

2. Estimation of Deferred Tax Assets, etc.

       

(1) Calculation Policy

   NON(B)      3- 39

(2) Estimation for Calculating Deferred Tax Assets

   NON(B)      3- 40


IV. OTHERS

   See above Notes    Pages

1. Breakdown of Deposits (Domestic Offices)

   NON (B)        3- 44

2. Number of Directors and Employees

   HC     NON (B)      3- 45

3. Number of Branches and Offices

   NON (B)        3- 46

4. Earnings Estimates for Fiscal 2008