Edgar Filing: MIZUHO FINANCIAL GROUP INC

Annual Report

UNITED STATES SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 20-F

(Mark One)

¨	REGISTRATION STATEMENT PURSUANT TO SECTION 12(b) OR (g) OF THE SECURITIES EXCHANGE ACT OF 1934

x	ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the fiscal year ended March 31, 2010

¨	TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

¨	SHELL COMPANY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

Date of event requiring this shell company report

For the transition period from to

Commission file number 001-33098

Kabushiki Kaisha Mizuho Financial Group

(Exact name of Registrant as specified in its charter)

Mizuho Financial Group, Inc.

(Translation of Registrant’s name into English)

Japan

(Jurisdiction of incorporation or organization)

5-1, Marunouchi 2-chome

Chiyoda-ku, Tokyo 100-8333

Japan

(Address of principal executive offices)

Tatsuya Yamada, +81-3-5224-1111, +81-3-5224-1059, address is same as above

(Name, Telephone, Facsimile number and Address of Company Contact Person)

Securities registered or to be registered pursuant to Section 12(b) of the Act.


Title of each class		Name of each exchange on which registered
Common Stock, without par value		The New York Stock Exchange*
American depositary shares, each of which represents two shares of common stock		The New York Stock Exchange

Securities registered or to be registered pursuant to Section 12(g) of the Act.

None

(Title of Class)

Securities for which there is a reporting obligation pursuant to Section 15(d) of the Act:

None

(Title of Class)

Indicate the number of outstanding shares of each of the issuer’s classes of capital or common stock as of the close of the period covered by the annual report.

At March 31, 2010, the following shares of capital stock were issued: (1) 15,494,397,690 shares of common stock (including 9,397,093 shares of common stock held by the registrant as treasury stock), (2) 914,752,000 shares of eleventh series class XI preferred stock(including 415,471,000 shares of eleventh series class XI preferred stock held by the registrant as treasury stock), and (3) 36,690,000 shares of thirteenth series class XIII preferred stock.

Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act.

Yes x No ¨

If this report is an annual or transition report, indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934.

Yes ¨ No x

Note—Checking the box above will not relieve any registrant required to file reports pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 from their obligations under those Sections.

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.

Yes x No ¨

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).

Yes ¨ No ¨

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, or a non-accelerated filer. See definition of “accelerated filer and large accelerated filer” in Rule 12b-2 of the Exchange Act. (Check one):


Large accelerated filer x		Accelerated filer ¨		Non-accelerated filer ¨

Indicate by check mark which basis of accounting the registrant has used to prepare the financial statements included in this filing:


U.S. GAAP x		International Financial Reporting Standards as issued by the International Accounting Standards Board ¨		Other ¨

If “Other” has been checked in response to the previous question, indicate by check mark which financial statement item the registrant has elected to follow.

Item 17 ¨ Item 18 ¨

If this is an annual report, indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).

Yes ¨ No x

(APPLICABLE ONLY TO ISSUERS INVOLVED IN BANKRUPTCY PROCEEDINGS DURING THE PAST FIVE YEARS)

Indicate by check mark whether the registrant has filed all documents and reports required to be filed by Section 12, 13 or 15(d) of the Securities Exchange Act of 1934 subsequent to the distribution of securities under a plan confirmed by a court.

Yes ¨ No ¨

*	Not for trading, but only in connection with the registration and listing of the ADSs.

MIZUHO FINANCIAL GROUP, INC.

ANNUAL REPORT ON FORM 20-F

Table of Contents


			Page
Presentation of Financial and Other Information			3
Forward-Looking Statements			3
ITEM 1.	Identity of Directors, Senior Management and Advisers		5
ITEM 2.	Offer Statistics and Expected Timetable		5
ITEM 3.	Key Information		5
	3.A.	Selected Financial Data	5
	3.B.	Capitalization and Indebtedness	10
	3.C.	Reasons for the Offer and Use of Proceeds	10
	3.D.	Risk Factors	11
ITEM 4.	Information on the Company		19
	4.A.	History and Development of the Company	19
	4.B.	Business Overview	20
	4.C.	Organizational Structure	41
	4.D.	Property, Plant and Equipment	43
ITEM 4A.	Unresolved Staff Comments		43
ITEM 5.	Operating and Financial Review and Prospects		44
ITEM 6.	Directors, Senior Management and Employees		120
	6.A.	Directors and Senior Management	120
	6.B.	Compensation	129
	6.C.	Board Practices	131
	6.D.	Employees	132
	6.E.	Share Ownership	133
ITEM 7.	Major Shareholders and Related Party Transactions		134
	7.A.	Major Shareholders	134
	7.B.	Related Party Transactions	136
	7.C.	Interests of Experts and Counsel	136
ITEM 8.	Financial Information		137
	8.A.	Consolidated Statements and Other Financial Information	137
	8.B.	Significant Changes	137
ITEM 9.	The Offer and Listing		138
	9.A.	Listing Details	138
	9.B.	Plan of Distribution	139
	9.C.	Markets	140
	9.D.	Selling Shareholders	140
	9.E.	Dilution	140
	9.F.	Expenses of the Issue	140
ITEM 10.	Additional Information		141
	10.A.	Share Capital	141
	10.B.	Memorandum and Articles of Association	141
	10.C.	Material Contracts	151
	10.D.	Exchange Controls	152
	10.E.	Taxation	153
	10.F.	Dividends and Paying Agents	158
	10.G.	Statement by Experts	158
	10.H.	Documents on Display	159
	10.I.	Subsidiary Information	159


			Page
ITEM 11.	Quantitative and Qualitative Disclosures about Market Risk		160
ITEM 12.	Description of Securities Other than Equity Securities		179
	12.A.	Debt Securities	179
	12.B.	Warrants and Rights	179
	12.C.	Other Securities	179
	12.D.	American Depository Shares	179
ITEM 13.	Defaults, Dividend Arrearages and Delinquencies		180
ITEM 14.	Material Modifications to the Rights of Securities Holders and Use of Proceeds		180
ITEM 15.	Controls and Procedures		180
ITEM 16A.	Audit Committee Financial Expert		181
ITEM 16B.	Code of Ethics		181
ITEM 16C.	Principal Accountant Fees and Services		181
ITEM 16D.	Exemptions from the Listing Standards for Audit Committees		182
ITEM 16E.	Purchase of Equity Securities by the Issuer and Affiliated Purchasers		183
ITEM 16F.	Change in Registrant’s Certifying Accountant		183
ITEM 16G.	Corporate Governance		183
ITEM 17.	Financial Statements		186
ITEM 18.	Financial Statements		186
ITEM 19.	Exhibits		186
Selected Statistical Data			A-1
Index to Consolidated Financial Statements			F-1

PRESENTATION OF FINANCIAL AND OTHER INFORMATION

In this annual report, “we,” “us,” and “our” refer to Mizuho Financial Group, Inc. and, unless the context indicates otherwise, its consolidated subsidiaries. “Mizuho Financial Group” refers to Mizuho Financial Group, Inc. Furthermore, unless the context indicates otherwise, these references are intended to refer to us as if we had been in existence in our current form for all periods referred to herein.

In this annual report, “our principal banking subsidiaries” refer to Mizuho Corporate Bank, Ltd., Mizuho Bank, Ltd. and Mizuho Trust & Banking Co., Ltd. (or with respect to references as of a date, or fiscal year ending, before April 1, 2002, to The Dai-Ichi Kangyo Bank, Limited, The Fuji Bank, Limited, The Industrial Bank of Japan, Limited, Mizuho Trust & Banking and The Yasuda Trust and Banking Co., Ltd.).

In this annual report, references to “U.S. dollars,” “dollars” and “$” refer to the lawful currency of the United States and those to “yen” and “¥” refer to the lawful currency of Japan.

In this annual report, all yen figures and percentages have been rounded to the figures shown, except for those yen figures and percentages in “Item 3.A. Key Information—Selected Financial Data—Japanese GAAP Selected Consolidated Financial Information,” which have been truncated to the figures shown, and unless otherwise specified. Accordingly, the total of each column of figures may not be equal to the total of the individual items.

Our fiscal year end is March 31. References to years not specified as being fiscal years are to calendar years.

Unless otherwise specified, for purposes of this annual report, we have presented our financial information in accordance with accounting principles generally accepted in the United States, or U.S. GAAP. Unless otherwise stated or the context otherwise requires, all amounts in our financial statements are expressed in Japanese yen.

We usually hold the ordinary general meeting of shareholders of Mizuho Financial Group in June of each year in Chiyoda-ku, Tokyo.

FORWARD-LOOKING STATEMENTS

We may from time to time make written or oral forward-looking statements. Written forward-looking statements may appear in documents filed with the Securities and Exchange Commission, including this annual report, and other reports to shareholders and other communications.

The U.S. Private Securities Litigation Reform Act of 1995 provides a “safe harbor” for forward-looking information to encourage companies to provide prospective information about themselves. We rely on this safe harbor in making these forward-looking statements.

This annual report contains forward-looking statements regarding the intent, belief or current expectations of our management with respect to our financial condition and future results of operations. 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. Should one or more of these risks or uncertainties materialize, or should underlying assumptions prove incorrect, our actual results may vary materially from those we currently anticipate. Potential risks and uncertainties include, without limitation, the following:

•

incurrence of significant credit-related costs;

•

declines in the value of our securities portfolio, including as a result of the declines in stock markets and the impact of the dislocation in the global financial markets;

•

changes in interest rates;

•

foreign exchange rate fluctuations;

•

decrease in the market liquidity of our assets;

•

revised assumptions or other changes related to our pension plans;

•

a decline in our deferred tax assets;

•

the effect of financial transactions entered into for hedging and other similar purposes;

•

failure to maintain required capital adequacy ratio levels;

•

downgrades in our credit ratings;

•

our ability to avoid reputational harm;

•

our ability to implement our Medium-term Management Policy and other strategic initiatives and measures effectively;

•

the effectiveness of our operation, legal and other risk management policies;

•

the effect of changes in general economic conditions in Japan and elsewhere; and

•

amendments and other changes to the laws and regulations that are applicable to us.

Our forward-looking statements are not guarantees of future performance and involve risks and uncertainties. Actual results may differ from those in the forward-looking statements as a result of various factors. We identify in this annual report in “Item 3.D. Key Information—Risk Factors,” “Item 4.B. Information on the Company—Business Overview,” “Item 5. Operating and Financial Review and Prospects” and elsewhere, some, but not necessarily all, of the important factors that could cause these differences.

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.

PART I

ITEM 1. IDENTITY OF DIRECTORS, SENIOR MANAGEMENT AND ADVISERS

Not applicable.

ITEM 2. OFFER STATISTICS AND EXPECTED TIMETABLE

Not applicable.

ITEM 3. KEY INFORMATION

3.A. Selected Financial Data

The following tables set forth our selected consolidated financial data.

The first table below sets forth selected consolidated financial data of Mizuho Financial Group as of and for the fiscal years ended March 31, 2006, 2007, 2008, 2009 and 2010 which have been derived from the audited consolidated financial statements of Mizuho Financial Group prepared in accordance with U.S. GAAP included in this annual report.

The second table below sets forth selected consolidated financial data of Mizuho Financial Group as of and for the fiscal years ended March 31, 2006, 2007, 2008, 2009 and 2010 derived from Mizuho Financial Group’s consolidated financial statements prepared in accordance with accounting principles generally accepted in Japan, or Japanese GAAP.

The consolidated financial statements of Mizuho Financial Group as of and for the fiscal years ended March 31, 2008, 2009 and 2010 prepared in accordance with U.S. GAAP have been audited in accordance with the standards of the Public Company Accounting Oversight Board (United States) by Ernst & Young ShinNihon LLC, independent registered public accounting firm.

You should read the U.S. GAAP selected consolidated financial information presented below together with the information included in “Item 5. Operating and Financial Review and Prospects” and the audited consolidated financial statements, including the notes thereto, included in this annual report. The information presented below is qualified in its entirety by reference to that information.

U.S. GAAP Selected Consolidated Financial Information


	As of and for the fiscal years ended March 31,
	2006			2007		2008			2009			2010
	(in millions of yen, except per share data and percentages)
Statement of income data:
Interest and dividend income	¥	1,957,907		¥	2,639,307	¥	3,110,260		¥	2,384,191		¥	1,632,282
Interest expense		944,895			1,571,389		1,911,522			1,102,015			528,159

Net interest income		1,013,012			1,067,918		1,198,738			1,282,176			1,104,123
Provision (credit) for loan losses		(157,666	)		182,115		(57,766	)		567,396			222,102

Net interest income after provision (credit) for loan losses		1,170,678			885,803		1,256,504			714,780			882,021
Noninterest income		995,156			1,195,948		1,094,943			452,227			1,330,847
Noninterest expenses		1,385,253			1,266,857		1,504,309			1,525,101			1,526,413
Income (loss) before income tax expense (benefit)		780,581			814,894		847,138			(358,094	)		686,455
Income tax expense (benefit)		(374,142	)		163,221		672,176			761,908			(360,195	)

Net income (loss)	¥	1,154,723		¥	651,673	¥	174,962		¥	(1,120,002	)	¥	1,046,650
Less: Net income (loss) attributable to noncontrolling interests⁽¹⁾		69,051			27,791		(53,656	)		(61,555	)		46,961

Net income (loss) attributable to MHFG shareholders		1,085,672			623,882		228,618			(1,058,447	)		999,689

Net income (loss) attributable to common shareholders		1,047,719			600,408		208,643			(1,077,787	)		988,603
Amounts per share⁽²⁾:
Basic earnings per common share—net income (loss) attributable to common shareholders	¥	93.78		¥	51.73	¥	18.17		¥	(95.96	)	¥	70.55
Diluted earnings per common share—net income (loss) attributable to common shareholders	¥	82.75		¥	48.71	¥	16.77		¥	(95.96	)	¥	61.64
Number of shares used to calculate basic earnings per common share (in thousands)		11,172,246			11,607,550		11,479,942			11,231,269			14,013,058
Number of shares used to calculate diluted earnings per common share (in thousands)		12,889,532			12,713,841		13,568,015			11,231,269			16,200,812
Cash dividends per share declared during the fiscal year⁽³⁾:
Common stock	¥	3.50		¥	4.00	¥	7.00		¥	10.00		¥	10.00
	$	0.03		$	0.03	$	0.07		$	0.10		$	0.11
Second series class II preferred stock	¥	8.20			—		—			—			—
	$	0.07			—		—			—			—
Third series class III preferred stock	¥	14.00			—		—			—			—
	$	0.12			—		—			—			—
Fourth series class IV preferred stock	¥	47.60		¥	47.60		—			—			—
	$	0.41		$	0.40		—			—			—
Sixth series class VI preferred stock	¥	42.00		¥	42.00		—			—			—
	$	0.36		$	0.36		—			—			—
Seventh series class VII preferred stock	¥	11.00			—		—			—			—
	$	0.09			—		—			—			—
Eighth series class VIII preferred stock	¥	8.00			—		—			—			—
	$	0.07			—		—			—			—
Tenth series class X preferred stock	¥	5.38			—		—			—			—
	$	0.05			—		—			—			—
Eleventh series class XI preferred stock	¥	20.00		¥	20.00	¥	20.00		¥	20.00		¥	20.00
	$	0.17		$	0.17	$	0.20		$	0.20		$	0.21
Thirteenth series class XIII preferred stock	¥	30.00		¥	30.00	¥	30.00		¥	30.00		¥	30.00
	$	0.26		$	0.26	$	0.30		$	0.30		$	0.32


	As of and for the fiscal years ended March 31,
	2006		2007			2008			2009			2010
	(in millions of yen, except per share data and percentages)
Balance sheet data:
Total assets	¥145,522,392		¥	147,381,279		¥	151,317,756		¥	155,083,031		¥	158,351,456
Loans, net of allowance	67,898,640			68,236,720			67,572,004			71,787,309			62,903,418
Total liabilities	140,880,392			142,376,976			147,749,599			154,045,851			155,019,438
Deposits	82,703,690			83,751,304			86,429,065			87,075,727			86,776,251
Long-term debt	5,384,991			7,073,936			7,618,910			8,017,770			8,482,434
Common stock	3,547,726			3,532,492			3,437,420			3,386,792			4,324,705
Total MHFG shareholders’ equity	4,345,714			4,662,700			3,268,800			846,047			2,966,215
Other financial data:
Return on equity and assets:
Net income (loss) attributable to common shareholders as a percentage of total average assets	0.74	%		0.42	%		0.14	%		(0.73	)%		0.66	%
Net income (loss) attributable to common shareholders as a percentage of average MHFG shareholders’ equity	27.40	%		14.69	%		5.20	%		(48.50	)%		54.09	%
Dividends per common share as a percentage of basic earnings per common share	4.27	%		13.53	%		55.02	%		(10.42	)%		11.34	%
Average MHFG shareholders’ equity as a percentage of total average assets	2.71	%		2.87	%		2.73	%		1.51	%		1.22	%
Net interest income as a percentage of total average interest-earning assets	0.77	%		0.79	%		0.86	%		0.92	%		0.78	%

Notes:

(1)

Net income (loss) attributable to noncontrolling interests was relocated from minority interest in consolidated subsidiaries included within noninterest expenses in the fiscal year ended March 31, 2010 as we adopted ASC 810. For purposes of comparability, the figures of the previous fiscal years are adjusted accordingly.

(2)

Under the central book-entry transfer system in Japan, which became effective in January 2009, fractional shares are not eligible for book-entry transfer. Accordingly, an allotment of shares or fractions of a share without consideration was made to all shareholders and holders of fractional shares at the rate of 999 shares per 1 share and 9.99 shares per every 0.01 of a share, effective on January 4, 2009. The amounts per share for the fiscal years ended March 31, 2006, 2007, 2008 and 2009 have been adjusted to reflect such allotment.

(3)

Yen amounts for cash dividends per share for the fiscal years ended March 31, 2006, 2007, 2008, 2009 and 2010 are expressed in U.S. dollars at the rate of ¥117.48 = $1.00, ¥117.56 = $1.00, ¥99.85 = $1.00, ¥99.15 = $1.00 and ¥93.40 = $1.00, respectively. These rates are the noon buying rates on March 31, 2006, 2007, 2008, 2009 and 2010 in New York City for cable transfers in yen as certified for customs purposes by the Federal Reserve Bank of New York.

Japanese GAAP Selected Consolidated Financial Information


	As of and for the fiscal years ended March 31,
	2006		2007		2008			2009			2010
	(in millions of yen, except per share data and percentages)
Statement of income data:
Interest income	¥	1,935,048	¥	2,562,642	¥	2,864,796		¥	2,144,436		¥	1,571,994
Interest expense		872,403		1,472,378		1,801,156			1,075,584			420,287

Net interest income		1,062,645		1,090,264		1,063,639			1,068,851			1,151,707
Fiduciary income		78,843		66,958		64,355			55,891			49,100
Net fee and commission income		555,935		551,124		494,526			416,653			466,040
Net trading income		204,941		261,544		56,149			301,521			312,330
Net other operating income (loss)		100,073		147,507		(17,737	)		(35,951	)		17,436
General and administrative expenses		1,095,243		1,091,602		1,124,527			1,192,701			1,317,247
Other income		502,212		522,816		579,737			260,568			266,125
Other expenses		429,265		573,714		630,079			1,280,711			567,728

Income (loss) before income taxes and minority interests		980,142		974,898		486,062			(405,877	)		377,765
Income taxes:
Current⁽¹⁾	¥	64,038	¥	43,267	¥	32,212		¥	48,247		¥	18,040
Deferred		185,035		223,699		118,546			109,103			25,108
Income (loss) before minority interests⁽²⁾		731,068		707,931		335,304			(563,227	)		334,617
Minority interests in net income		81,164		86,965		24,079			25,586			95,212

Net income (loss)	¥	649,903	¥	620,965	¥	311,224		¥	(588,814	)	¥	239,404

Net income (loss) per share⁽³⁾:
Basic	¥	55,157.14	¥	51,474.49	¥	25,370.25		¥	(54.14	)	¥	16.29
Diluted		46,234.51		48,803.07		24,640.00			—	⁽⁴⁾		15.57
Cash dividends per share declared during the fiscal year⁽³⁾⁽⁵⁾:
Common stock⁽⁶⁾	¥	3,500	¥	4,000	¥	7,000		¥	10,000		¥	10
	$	29.79	$	34.03	$	70.11		$	100.86		$	0.11
Second series class II preferred stock	¥	8,200		—		—			—			—
	$	69.80		—		—			—			—
Third series class III preferred stock	¥	14,000		—		—			—			—
	$	119.17		—		—			—			—
Fourth series class IV preferred stock	¥	47,600	¥	47,600		—			—			—
	$	405.18	$	404.90		—			—			—
Sixth series class VI preferred stock	¥	42,000	¥	42,000		—			—			—
	$	357.51	$	357.26		—			—			—
Seventh series class VII preferred stock	¥	11,000		—		—			—			—
	$	93.63		—		—			—			—
Eighth series class VIII preferred stock	¥	8,000		—		—			—			—
	$	68.10		—		—			—			—
Tenth series class X preferred stock	¥	5,380		—		—			—			—
	$	45.80		—		—			—			—
Eleventh series class XI preferred stock⁽⁶⁾	¥	20,000	¥	20,000	¥	20,000		¥	20,000		¥	20
	$	170.24	$	170.13	$	200.30		$	201.71		$	0.21
Thirteenth series class XIII preferred stock⁽⁶⁾	¥	30,000	¥	30,000	¥	30,000		¥	30,000		¥	30
	$	255.36	$	255.19	$	300.45		$	302.57		$	0.32


	As of and for the fiscal years ended March 31,
	2006			2007			2008			2009			2010
	(in millions of yen, except per share data and percentages)
Balance sheet data:
Total assets	¥	149,612,794		¥	149,880,031		¥	154,412,105		¥	152,723,070		¥	156,253,572
Loans and bills discounted⁽⁷⁾		65,408,672			65,964,301			65,608,705			70,520,224			62,164,579
Securities		37,702,957			36,049,983			33,958,537			30,173,632			43,096,460
Deposits⁽⁸⁾		82,367,125			83,608,304			86,264,041			86,539,020			86,627,588
Shareholders’ equity⁽⁹⁾		4,804,993			—			—			—			—
Net assets⁽⁹⁾		—			6,724,408			5,694,159			4,186,606			5,837,053
Risk-adjusted capital data⁽¹⁰⁾:
Tier 1 capital	¥	4,555,947		¥	4,933,561		¥	4,880,188		¥	3,765,045		¥	5,173,496
Total risk-based capital		8,993,255			8,841,383			7,708,341			6,223,693			7,658,062
Risk-weighted assets		77,534,548			70,795,493			65,872,866			59,056,218			56,863,252
Tier 1 capital ratio		5.87	%		6.96	%		7.40	%		6.37	%		9.09	%
Capital adequacy ratio		11.59	%		12.48	%		11.70	%		10.53	%		13.46	%

Notes:

(1)

Under Japanese GAAP, refund of income taxes formerly included within current income taxes is separately presented from the fiscal year ended March 31, 2010 due to increased materiality. Current income taxes for the fiscal year ended March 31, 2010 in the above table include refund of income taxes for purposes of comparability with figures from previous years.

(2)

In accordance with certain amendments to Regulation on Terminology, Forms and Preparation of Financial Statements and other regulations which may be applied at our option from the fiscal year ended March 31, 2010, based on “Accounting Standard for Consolidated Financial Statements” (ASBJ Statement No. 22, December 26, 2008), we have started to present “Income before minority interests” from the fiscal year ended March 31, 2010. For reference purposes, we have also included the figures of the same for the fiscal years ended March 31, 2006, 2007, 2008 and 2009 in the table above.

(3)

Under the central book-entry transfer system in Japan, which became effective in January 2009, fractional shares are not eligible for book-entry transfer. Accordingly, an allotment of shares or fractions of a share without consideration was made to all shareholders and holders of fractional shares at the rate of 999 shares per 1 share and 9.99 shares per every 0.01 of a share, effective on January 4, 2009. Net income (loss) per share through the fiscal year ended March 31, 2008, and cash dividends per share declared through the fiscal year ended March 31, 2009, in the table above do not reflect such allotment.

(4)	Diluted net income per share is not shown due to net loss per share for the fiscal year ended March 31, 2009.

(5)

Yen amounts are expressed in U.S. dollars at the rate of, ¥117.48 = $1.00, ¥117.56 = $1.00, ¥99.85 = $1.00, ¥99.15 = $1.00 and ¥93.40 = $1.00 for the fiscal years ended March 31, 2006, 2007, 2008, 2009 and 2010, respectively. These rates are the noon buying rates on the respective fiscal year-end dates in New York City for cable transfers in yen as certified for customs purposes by the Federal Reserve Bank of New York.

(6)	In June 2010, we declared and paid annual dividends of ¥8 per share of common stock, ¥20 per share of eleventh series class XI preferred stock and ¥30 per share of thirteenth series class XIII preferred stock for the fiscal year ended March 31, 2010.

(7)	Bills discounted refers to a form of financing in Japan under which promissory notes obtained by corporations through their regular business activities are purchased by banks prior to their payment dates at a discount based on prevailing interest rates.

(8)	Includes negotiable certificates of deposit.

(9)

On December 9, 2005, the Accounting Standards Board of Japan issued a new accounting standard for presentation of net assets in the balance sheet, which is effective for fiscal years ending on or after May 1, 2006. Under the new accounting standard, the line item previously presented as “shareholders’ equity” is now presented as “net assets,” and the line items “minority interests” and “net deferred hedge gains or losses, net of taxes” are now presented as components of net assets. Accordingly, the presentations of net assets in the balance sheets as of March 31, 2007, 2008, 2009 and 2010 are not directly comparable to the presentation of shareholders’ equity in the balance sheet as of March 31, 2006.

(10)

Risk-adjusted capital data for the fiscal years ended March 31, 2007, 2008, 2009 and 2010 were calculated under Basel II basis while those through the fiscal year ended March 31, 2006 were calculated under Basel I basis. We adopted the advanced internal ratings-based approach (the “AIRB approach”) for the calculation of risk-weighted assets associated with credit risk from the fiscal year ended March 31, 2009. We also adopted the advanced measurement approach (the “AMA”) for the calculation of operational risk from the fiscal year ended March 31, 2010. For more details on capital adequacy requirements set by the Bank for International Settlements (“BIS”), and the guideline implemented by the FSA in compliance thereto, see “Item 5. Operating and Financial Review and Prospects—Capital Adequacy.”

There are certain differences between U.S. GAAP and Japanese GAAP. The differences between U.S. GAAP and Japanese GAAP applicable to us primarily relate to the accounting for derivative financial instruments and hedging activities, investments, loans, allowances for loan losses and off-balance-sheet instruments, premises and equipment, real estate sales and leasebacks, land revaluation, business combinations, non-interest-earning deposits made under government-led restructuring, pension liabilities, consolidation of variable interest entities and deferred taxes. See “Item 5. Operating and Financial Review and Prospects—Reconciliation with Japanese GAAP.” In addition, under Japanese GAAP, a restatement of prior year financial statements reflecting the effect of a change in accounting principles is not permitted, unlike under U.S. GAAP, which generally requires a restatement upon a voluntary change in accounting principles.

Exchange Rate Information

The following table sets forth, for each period indicated, the noon buying rate in New York City for cable transfers in yen as certified for customs purposes by the Federal Reserve Bank of New York, expressed in Japanese yen per $1.00. The exchange rates are reference rates and are not necessarily the rates used to calculate ratios or the rates used to convert yen to U.S. dollars in the financial statements contained in this annual report.


Fiscal years ended March 31,	High	Low	Average⁽¹⁾	Period end
	(yen per dollar)
2006	120.93	104.41	113.67	117.48
2007	121.81	110.07	116.55	117.56
2008	124.09	96.88	113.61	99.85
2009	110.48	87.80	100.85	99.15
2010	100.71	86.12	92.49	93.40
2011 (through July 23)	94.68	86.40	90.21	87.31

Calendar year 2010
January	93.31	89.41	—	—
February	91.94	88.84	—	—
March	93.40	88.43	—	—
April	94.51	92.03	—	—
May	94.68	89.89	—	—
June	92.33	88.39	—	—
July (through July 23)	88.59	86.40	—	—

Note:

(1)	Calculated by averaging the exchange rates on the last business day of each month during the respective periods. The noon buying rate as of July 23, 2010 was ¥87.31 = $1.00.

3.B. Capitalization and Indebtedness

Not applicable.

3.C. Reasons for the Offer and Use of Proceeds

Not applicable.

3.D. Risk Factors

Investing in our securities involves a high degree of risk. You should carefully consider the risks described below as well as the other information in this annual report, including our consolidated financial statements and related notes, “Item 5. Operating and Financial Review and Prospects,” “Item 11. Quantitative and Qualitative Disclosures about Market Risk” and “Selected Statistical Data.”

Our business, financial condition and operating results could be materially adversely affected by any of the factors discussed below. The trading price of our securities could decline due to any of these factors. This annual report also contains forward-looking statements that involve risks and uncertainties. Our actual results could differ materially from those anticipated in these forward-looking statements as a result of various factors, including the risks faced by us described below and elsewhere in this annual report. See “Forward-Looking Statements.”

Risks Relating to Our Business

We may incur significant credit-related and other costs in the future due to problem loans.

We are the primary bank lender for a large number of our corporate customers, and the amount of our loans and other claims to each of our major customers is significant. In addition, while we have made efforts to diversify our credit exposure along industry lines, the proportion of credit exposure to customers in the construction and real estate, banks and other financial institutions, and wholesale and retail industries is relatively high. We manage our credit portfolio by regularly monitoring the credit profile of each of our customers, the progress made on restructuring plans and credit exposure concentrations in particular industries or corporate groups, and we also utilize credit derivatives for hedging and credit risk mitigation purposes. In addition, we regularly assess the value of collateral and guarantees. However, depending on trends in the domestic and global economic environment, the business environment in particular industries and other factors, the amount of our problem loans and other claims could increase significantly, including as a result of the deterioration in the credit profile of customers for which we are the primary bank lender, other major customers or customers belonging to industries to which we have significant credit exposure, and the value of collateral and guarantees could decline. For example, in the fiscal year ended March 31, 2009, our credit-related costs increased as a result of the deteriorating performance of our corporate customers in and outside of Japan due to the worsening economic environment and the effects of the dislocation in global financial markets as well as the provision for loan losses based on revised assumptions amid the uncertainty regarding the future economic environment. There can be no assurance that credit-related and other costs will not increase in the future as a result of the foregoing or otherwise.

Our equity investment portfolio exposes us to market risks that could adversely affect our financial condition and results of operations.

We hold substantial investments in marketable equity securities, mainly common stock of Japanese listed companies. In addition to the partial hedges that we apply as we deem necessary in recent years, we sold a portion of such investments, and we may make further sales in the future. However, significant declines in Japanese stock prices in the future would lead to unrealized losses, losses on impairment and losses from sales of equity securities which could have a material adverse effect on our financial condition and results of operations. For example, in the fiscal year ended March 31, 2009, we incurred significant impairment and other losses as a result of the decline in Japanese and other stock markets. In addition, net unrealized gains and losses on such investments, based on Japanese GAAP, are taken into account when calculating the amount of capital for purposes of the calculation of our capital adequacy ratios, and as a result, a decline in the value of such investments would negatively affect such ratios. As a result, our financial condition and results of operations could be materially and adversely affected.

Changes in interest rates could adversely affect our financial condition and results of operations.

We hold a significant amount of bonds, consisting mostly of Japanese government bonds, and other instruments primarily for the purpose of investment. As a result of such holdings, an increase in interest rates,

primarily yen interest rates, could lead to unrealized losses of bonds or losses from sales of bonds. In addition, due mainly to differences in maturities between financial assets and liabilities, changes in interest rates could have an adverse effect on our average interest rate spread. We manage interest rate risk under our risk management policies, which provide for adjustments in the composition of our bond portfolio and the utilization of derivatives and other hedging methods to reduce our exposure to interest rate risk. However, in the event of significant changes in interest rates, including as a result of a change in Japanese monetary policy and market trends, our financial condition and results of operations could be materially and adversely affected.

Our financial condition and results of operations could be adversely affected by foreign exchange rate fluctuations.

A portion of our assets and liabilities is denominated in foreign currencies, mainly the U.S. dollar. The difference between the amount of assets and liabilities denominated in foreign currencies leads to foreign currency translation gains and losses in the event of fluctuations in foreign exchange rates. Although we hedge a portion of our exposure to foreign exchange rate fluctuation risk, our financial condition and results of operations could be materially and adversely affected if future foreign exchange rate fluctuations significantly exceed our expectations.

We may incur further losses relating to decreases in the market liquidity of assets that we hold.

The market liquidity of the various marketable assets that we hold may decrease significantly due to turmoil in financial markets and other factors, and the value of such assets could decline as a result. For example, in the fiscal years ended March 31, 2008 and 2009, we incurred significant losses related to declines in the value of our investments in securitization products and other assets as a result of significant decrease in the market liquidity amidst the dislocation in global financial markets. See “Item 5. Operating and Financial Review and Prospects—Overview—Business Trends.” If the market liquidity of our assets decreases significantly in the future, including as a result of the dislocation in global financial markets mentioned above, our financial condition and results of operations could be materially and adversely affected.

Our pension-related costs could increase as a result of revised assumptions or changes in our pension plans.

Our pension-related costs and projected benefit obligations are calculated based on assumptions regarding projected returns on pension plan assets and various actuarial assumptions relating to the plans. If actual results differ from our assumptions or we revise our assumptions in the future, due to changes in the stock markets, interest rate environment or otherwise, our pension-related costs and projected benefit obligations could increase. In addition, any future changes to our pension plans could also lead to increases in our pension-related costs and projected benefit obligations. As a result, our financial condition and results of operations could be materially and adversely affected.

A decline in deferred tax assets due to a change in our estimation of future taxable income could adversely affect our financial condition and results of operations.

We recorded deferred tax assets based on a reasonable estimation of future taxable income in accordance with applicable accounting standards. Our financial condition and results of operations could be materially and adversely affected if our deferred tax assets decline due to a change in our estimation of future taxable income and other factors.

Financial transactions entered into for hedging and other similar purposes could adversely affect our financial condition and results of operations.

The accounting and valuation methods applied to credit and equity derivatives and other financial transactions that we enter into for hedging and credit risk mitigation purposes are not always consistent with the

accounting and valuation methods applied to the assets that are being hedged. Consequently, in some cases, due to changes in the market or otherwise, losses related to such financial transactions during a given period may adversely affect net income, while the corresponding increases in the value of the hedged assets do not have an effect on net income for such period. As a result, our financial condition and results of operations could be materially and adversely affected during the period.

Failure to maintain capital adequacy ratios above minimum required levels, as a result of the materialization of risks or regulatory changes, could result in restrictions on our business activities.

We endeavor to maintain sufficient levels of capital adequacy ratios, which are calculated pursuant to standards set forth by Japan’s Financial Services Agency and based on Japanese GAAP, taking into account our plans for investments in risk-weighted assets, the efficiency of our capital structure and other factors. However, our capital adequacy ratios could decline in the future, including as a result of the materialization of any of the risks enumerated in these “Risk Factors” and changes to the methods we use to calculate capital adequacy ratios. Also, the maximum amount of net deferred tax assets that can be recorded for the purpose of calculating capital adequacy ratios without diminishing the amount of Tier 1 capital under Japanese capital adequacy regulations is 20% of Tier 1 capital. Our or our banking subsidiaries’ regulatory capital and capital adequacy ratios could decline due to such regulations.

In addition, if the framework set by the Basel Committee on Banking Supervision, upon which the Financial Services Agency’s rules concerning banks’ capital adequacy ratios are based, is changed or if the Financial Services Agency otherwise changes its banking regulations, we might not be able to meet the minimum regulatory requirements for capital adequacy ratios. For example, in December 2009, the Basel Committee on Banking Supervision announced a package of proposals to strengthen global capital and liquidity regulations. See “Item 5. Operating and Financial Review and Prospects—Capital Adequacy.”

If the capital adequacy ratios of us and our banking subsidiaries fall below specified levels, the Financial Services Agency could require us to take corrective actions, including, depending on the level of deficiency, submission of an improvement plan that would strengthen our capital base, a reduction of our total assets or a suspension of a portion of our business operations. In addition, some of our banking subsidiaries are subject to capital adequacy regulations in foreign jurisdictions such as the United States, and our business could be adversely affected if their capital adequacy ratios fall below specified levels.

Downgrades in our credit ratings could have negative effects on our funding costs and business operations.

Credit ratings are assigned to Mizuho Financial Group, our banking subsidiaries and a number of our other subsidiaries by major domestic and international credit rating agencies. The credit ratings are based on information furnished by us or obtained by the credit rating agencies from independent sources and are also influenced by credit ratings of Japanese government bonds and general views regarding the Japanese financial system as a whole. The credit ratings are subject to revision, suspension or withdrawal by the credit rating agencies at any time. A downgrade in our credit ratings could result in, among other things, the following:

•

increased funding costs and other difficulties in raising funds;

•

the need to provide additional collateral in connection with financial market transactions; and

•

the termination or cancellation of existing agreements.

As a result, our business, financial condition and results of operations could be materially and adversely affected.

Our business will be adversely affected if we encounter difficulties in raising funds.

We rely principally on deposits and debentures as our funding sources. In addition, we also raise funds in the financial markets. Our efforts to maintain stable funding, such as setting maximum limits on financial market funding and monitoring our liquidity position to apply appropriate funding policies, may not be sufficient to

prevent significant increases in our funding costs or cash flow problems if we encounter difficulties in attracting deposits or otherwise raising funds. Such difficulties could result, among other things, from any of the following:

•

adverse developments with respect to our financial condition and results of operations;

•

downgrading of our credit ratings or damage to our reputation; or

•

a reduction in the size and liquidity of the debt markets due for example to the decline in the domestic and global economy, concerns regarding the financial system or turmoil in financial markets and other factors.

Our Medium-term Management Policy and other strategic initiatives and measures may not result in the anticipated outcome.

We have been implementing strategic initiatives and measures in various areas. In May 2010, we announced our new Medium-term Management Policy for the three fiscal years ending March 31, 2013, in which we set forth various strategic initiatives and measures and also established a number of key target figures that we aim to achieve by the end of the fiscal year ending March 31, 2013. See “Item 4.B. Business Overview—General.” However, we may not be successful in implementing such initiatives and measures, or even if we are successful in implementing them, the implementation of such initiatives and measures may not have their anticipated effects. In addition, we may not be able to meet the key target figures announced in the Medium-term Management Policy due to these or other factors, including, but not limited to, differences in the actual economic environment compared to our assumptions underlying the Medium-term Management Policy as well as the risks enumerated in these “Risk Factors.”

We will be exposed to new or increased risks as we expand the range of our products and services.

We offer a broad range of financial services, including banking, securities, trust and other services. As the needs of our customers become more sophisticated and broader in scope, and as the Japanese financial industry continues to be deregulated, we have been entering into various new areas of business, including through various business and equity alliances, which expose us to new risks. While we have developed and intend to maintain risk management policies that we believe are appropriate to address such risks, if a risk materializes in a manner or to a degree outside of our expectations, our business, financial condition and results of operations could be materially and adversely affected.

We are subject to various laws and regulations, and violations could result in penalties and other regulatory actions.

Our business and employees in Japan are subject to various laws and regulations, including those applicable to financial institutions as well as general laws applicable to our business activities, and we are under the regulatory oversight of the Financial Services Agency. Our businesses outside of Japan are also subject to the laws and regulations of the jurisdictions in which they operate and are subject to oversight by the regulatory authorities of those jurisdictions.

Our compliance and legal risk management structures are designed to prevent violations of such laws and regulations, but they may not be effective in preventing all future violations. For example, in October 2007, Mizuho Securities Co., Ltd. received a business improvement order from the Financial Services Agency relating to the receipt of non-public information from its parent bank and the use of such information for customer solicitation. Future violations of laws and regulations could result in regulatory action and harm our reputation, and our business, financial condition and results of operations could be materially and adversely affected.

Employee errors and misconduct could subject us to losses and reputational harm.

Because we process a large number of transactions in a broad range of businesses, we are subject to the risk of various operational errors and misconduct, including those caused by employees. Our measures to reduce

employee errors, including establishment of operational procedures, regular reviews regarding compliance with these procedures, employee training and automation of our operations, may not be effective in preventing all employee errors and misconduct. Significant operational errors and misconduct in the future could result in losses, regulatory actions or harm to our reputation. As a result, our business, financial condition and results of operations could be materially and adversely affected.

Problems relating to our information technology systems could significantly disrupt our business operations.

We depend significantly on information technology systems with respect to almost all aspects of our business operations. Our information technology systems network, including those relating to bank accounting and cash settlement systems, interconnects our branches and other offices, our customers and various clearing and settlement systems located worldwide. Our efforts to sustain stable daily operations and development of contingency plans for unexpected events, including the implementation of backup and redundancy measures, may not be effective in preventing significant disruptions to our information technology systems caused by, among other things, human error, accidents, hacking, computer viruses and development and renewal of computer systems. In the event of any such disruption, our business, financial condition and results of operations could be materially and adversely affected due to disruptions in our business operations, liability to customers and others, regulatory actions or harm to our reputation.

Our reputation could be harmed and we may be subject to liabilities and regulatory actions if we are unable to protect personal and other confidential information.

We handle various confidential or non-public information, including those of our individual and corporate customers, in the ordinary course of our business. The information management policies we maintain and enforce to prevent information leaks and improper access to such information, including those designed to meet the strict requirements of the Personal Information Protection Law of Japan, may not be effective in preventing all such problems. Leakage of important information in the future could result in liabilities and regulatory actions and may also lead to significant harm to our reputation. As a result, our business, financial condition and results of operations could be materially and adversely affected.

Our business would be harmed if we are unable to attract and retain skilled employees.

Many of our employees possess skills and expertise that are important to maintain our competitiveness and to operate our business efficiently. We may not be successful in attracting and retaining sufficient skilled employees through our hiring efforts and training programs aimed to maintain and enhance the skills and expertise of our employees, in which event our competitiveness and efficiency could be significantly impaired. As a result, our business, financial condition and results of operations could be materially and adversely affected.

Our failure to establish, maintain and apply adequate internal controls over financial reporting could negatively impact investor confidence in the reliability of our financial statements.

As a New York Stock Exchange-listed company and an SEC registrant, we have developed disclosure controls and procedures and internal control over financial reporting pursuant to the requirements of the Sarbanes-Oxley Act of 2002 and rules and regulations of the SEC promulgated pursuant thereto. Our management reports on, and our independent registered public accounting firm attests to, the effectiveness of our internal controls over financial reporting, as required, in our annual report on Form 20-F. In addition, our management is required to report on our internal control over financial reporting, and our independent registered public accounting firm is required to provide its opinion concerning the report of our management, in accordance with the Financial Instruments and Exchange Law of Japan. To the extent any issues are identified through the foregoing processes, there can be no assurance that we will be able to address them in a timely manner or at all. Furthermore, even if our management concludes that our internal control over financial reporting are effective,

our independent registered public accounting firm may still be unable to issue a report that concludes that our internal control over financial reporting are effective. In either case, we may lose investor confidence in the reliability of our financial statements.

We are subject to risk of litigation and other legal proceedings.

As a financial institution engaging in banking and other financial businesses in and outside of Japan, we are subject to the risk of litigation for damages and other legal proceedings in the ordinary course of our business. Adverse developments related to future legal proceedings could have a material adverse effect on our financial condition and results of operations.

Our risk management policies and procedures may not adequately address unidentified or unanticipated risks.

We devote significant resources to strengthening our risk management policies and procedures. Despite this, and particularly in light of the rapid evolution of our operations, our policies and procedures designed to identify, monitor and manage risks may not be fully effective. Some of our methods of managing risks are based upon our use of observed historical market behavior. As a result, these methods may not accurately predict future risk exposures, which could be significantly greater than the historical measures indicate. If our risk management policies and procedures do not function effectively, our financial condition and results of operations could be materially and adversely affected.

Transactions with counterparties in Iran and other countries designated by the U.S. Department of State as state sponsors of terrorism may lead some potential customers and investors to avoid doing business with us or investing in our securities.

U.S. law generally prohibits U.S. persons from doing business with countries designated by the U.S. Department of State as state sponsors of terrorism (the “Designated Countries”), which includes Iran, Cuba, Sudan and Syria, and we maintain policies and procedures to comply with U.S. law. Our non-U.S. offices engage in transactions relating to the Designated Countries on a limited basis and in compliance with applicable laws and regulations, including trade financing with respect to our customers’ export or import transactions, maintenance of correspondent banking accounts and interbank money market transactions. In addition, we maintain a representative office in Iran and provide project financing to entities in Iran. We also maintain correspondent banking accounts for and with, a number of Iranian banks that the U.S. Office of Foreign Assets Control identifies as “specially designated nationals.” We do not believe our operations relating to the Designated Countries are material to our business, financial condition or results of operations. We maintain policies and procedures to ensure compliance with applicable Japanese and U.S. laws and regulations.

We are aware of initiatives by U.S. governmental entities and U.S. institutional investors, such as pension funds, to adopt laws, regulations or policies prohibiting transactions with or investment in, or requiring divestment from, entities doing business with Iran and other Designated Countries. It is possible that such initiatives may result in our being unable to retain or acquire entities that are subject to such prohibitions as customers or investors in our securities. In addition, depending on socio-political developments, our reputation may suffer due to our association with the Designated Countries. The above circumstances could have a significant adverse effect on our business or the price of our securities.

Our common stock may be subject to dilution as a result of conversion of our convertible preferred stock.

Holders of our eleventh series class XI preferred stock may convert their shares to common stock by requesting us to acquire such shares and issue or transfer common stock to them at any time between July 1, 2008 and June 30, 2016, with mandatory conversion on July 1, 2016. Due to the dilution of our common stock that occurs as a result of the increase in the number of outstanding shares of common stock upon such conversion, the price of our common stock could decline.

We may be subject to risks related to dividend distributions.

As a holding company, we rely on dividend payments from our banking and other subsidiaries for almost all of our income. As a result of restrictions, such as those on distributable amounts under Japan’s Company Law, or otherwise, our banking and other subsidiaries may decide not to pay dividends to us. In addition, we may experience difficulty in making, or become unable to make, dividend payments to our shareholders and dividend payments on the preferred securities issued by our overseas special purpose companies due to the deterioration of our results of operations and financial condition and/or the restrictions under the Company Law or due to the strengthening of bank capital regulations. For more information on restrictions to dividend payments under the Company Law, see “Item 10.B. Additional Information—Memorandum and Articles of Association.”

We may be adversely affected if economic or market conditions in Japan or elsewhere deteriorate.

We conduct business operations in Japan as well as overseas, including in the United States, Europe and Asia. If general economic conditions in Japan or other regions were to deteriorate or if the financial markets become subject to turmoil, we could experience weakness in our business, as well as deterioration in the quality of our assets. For example, in recent years, we incurred significant losses related to declines in the value of our investments in securitization products, an increase in credit-related costs, an increase in impairment of equity securities and others as a result of the impact of the dislocation in global financial markets and the worsening economic environment. Future deterioration in general economic conditions or financial market turmoil could materially and adversely affect our financial condition and results of operations.

Amendments and other changes to the laws and regulations that are applicable to us could have an adverse effect on us.

We are subject to general laws, regulations and accounting rules applicable to our business activities in and outside of Japan. We are also subject to various laws and regulations applicable to financial institutions such as the Banking Law, including capital adequacy requirements, in and outside of Japan. If the laws and regulations that are applicable to us are amended or otherwise changed, such as in a way that restricts us from engaging in business activities that we currently conduct, our business, financial condition and results of operations could be materially and adversely affected. For example, in December 2009, the Basel Committee on Banking Supervision announced a package of proposals to strengthen global capital and liquidity regulations, which could materially and adversely affect our business, financial condition and results of operations. See “Item 5. Operating and Financial Review and Prospects—Capital Adequacy.”

The market for financial services in Japan is increasingly competitive.

Ongoing deregulation in Japan has significantly lowered the barriers to entry with respect to the provision of banking, securities, trust and other financial services. While such deregulation has the effect of increasing our own business opportunities, it also allows other major financial groups, foreign financial institutions, non-bank finance companies, government-affiliated entities such as Japan Post Bank and other financial services providers to enter into new business areas or expand existing businesses. As a result, competition in the financial services industry has been intensifying in recent years and could intensify further in the future. If we are unable to respond effectively to current or future competition, our business, financial condition and results of operations could be adversely affected.

Our business could be significantly disrupted due to natural disasters, accidents or other causes.

Our headquarters, branch offices, information technology centers, computer network connections and other facilities are subject to the risk of damage from natural disasters such as earthquakes and typhoons as well as from acts of terrorism and other criminal acts. In addition, our business could be materially disrupted as a result of an epidemic such as influenza A (H1N1). Our business, financial condition and results of operations could be adversely affected if our recovery efforts, including our implementation of contingency plans that we have developed such as establishing back-up offices, are not effective in preventing significant disruptions to our business operations caused by natural disasters and criminal acts.

Negative rumors about us could have an adverse effect on us.

Our business depends on maintaining the trust of depositors and other customers and market participants. Negative rumors about us, spread through media coverage, communications between market participants, Internet postings or otherwise, could lead to our customers and market participants believing factually incorrect information about us and harm our reputation. In the event we are unable to dispel such rumors or otherwise restore our reputation, our business, financial condition, results of operations and the price of our securities could be materially and adversely affected.

Risks Related to Owning Our Shares

Rights of shareholders under Japanese law may be more limited than under the law of other jurisdictions.

Our articles of incorporation, our regulations of board of directors and Japan’s Company Law govern our corporate affairs. Legal principles relating to such matters as the validity of corporate procedures, directors’ and officers’ fiduciary duties and shareholders’ rights may be different from or less clearly defined than those that would apply if we were incorporated in another jurisdiction. For example, under the Company Law, only holders of 3% or more of the total voting rights or total outstanding shares are entitled to examine our accounting books and records. Shareholders’ rights under Japanese law may not be as extensive as shareholders’ rights under the law of jurisdictions within the United States or other countries. For more information on the rights of shareholders under Japanese law, see “Item 10.B. Additional Information—Memorandum and Articles of Association.”

It may not be possible for investors to effect service of process within the United States upon us or our directors, senior management or corporate auditors, or to enforce against us or those persons judgments obtained in U.S. courts predicated upon the civil liability provisions of the federal securities laws of the United States.

We are a joint stock corporation incorporated under the laws of Japan. Almost all of our directors, senior management and corporate auditors reside outside the United States. Many of the assets of us and these persons are located in Japan and elsewhere outside the United States. It may not be possible, therefore, for U.S. investors to effect service of process within the United States upon us or these persons or to enforce, against us or these persons, judgments obtained in the U.S. courts predicated upon the civil liability provisions of the federal securities laws of the United States. We believe that there is doubt as to the enforceability in Japan, in original actions or in actions to enforce judgments of U.S. courts, of claims predicated solely upon the federal securities laws of the United States.

Risks Related to Owning Our ADSs

As a holder of ADSs, you have fewer rights than a shareholder and you must act through the depositary to exercise these rights.

The rights of our shareholders under Japanese law to take actions such as voting their shares, receiving dividends and distributions, bringing derivative actions, examining our accounting books and records and exercising appraisal rights are available only to shareholders of record. Because the depositary, through its custodian, is the record holder of the shares underlying the ADSs, a holder of ADSs may not be entitled to the same rights as a shareholder. In your capacity as an ADS holder, you are not able to bring a derivative action, examine our accounting books and records or exercise appraisal rights, except through the depositary.

Foreign exchange rate fluctuations may affect the U.S. dollar value of our ADSs and dividends payable to holders of our ADSs.

Market prices for our ADSs may fall if the value of the yen declines against the U.S. dollar. In addition, the U.S. dollar amount of cash dividends and other cash payments made to holders of our ADSs would be reduced if the value of the yen declines against the U.S. dollar.

ITEM 4. INFORMATION ON THE COMPANY

4.A. History and Development of the Company

The Mizuho Group

The Mizuho group was created on September 29, 2000 through the establishment of Mizuho Holdings, Inc. as a holding company of our three predecessor banks, The Dai-Ichi Kangyo Bank, The Fuji Bank and The Industrial Bank of Japan. On October 1, 2000, the respective securities subsidiaries of the predecessor banks merged to form Mizuho Securities, and the respective trust bank subsidiaries merged on the same date to form Mizuho Trust & Banking.

A further major step in the Mizuho group’s development occurred in April 2002 when the operations of our three predecessor banks were realigned through a corporate split and merger process under Japanese law into a wholesale banking subsidiary, Mizuho Corporate Bank, and a banking subsidiary serving primarily retail and small and medium-sized enterprise customers, Mizuho Bank. As an additional step for realigning the group structure, Mizuho Financial Group was established on January 8, 2003 as a corporation organized under the laws of Japan, and on March 12, 2003, it became the holding company for the Mizuho group through a stock-for-stock exchange with Mizuho Holdings, which became an intermediate holding company focused on management of the Mizuho group’s banking and securities businesses. The legal and commercial name of the company is Mizuho Financial Group, Inc.

In May 2003, we initiated a project to promote early corporate revitalization of customers in need of revitalization or restructuring and to separate the oversight of restructuring borrowers from the normal credit origination function. In July 2003, our three principal banking subsidiaries, Mizuho Corporate Bank, Mizuho Bank and Mizuho Trust & Banking each transferred loans, equity securities and other claims outstanding relating to approximately 950 companies to new subsidiaries that they formed. In October 2005, based on the significant reduction in the balance of impaired loans held by these new subsidiaries, which we call the “revitalization subsidiaries,” we deemed the corporate revitalization project to be complete, and each of the revitalization subsidiaries was merged into its respective banking subsidiary parent.

In the fiscal year ended March 31, 2006, we realigned our entire business operations into a Global Corporate Group, Global Retail Group and Global Asset and Wealth Management Group. In October 2005, in connection with this realignment, we established Mizuho Private Wealth Management Co., Ltd., a private banking subsidiary, and converted Mizuho Holdings on October 1, 2005 from an intermediate holding company into Mizuho Financial Strategy Co., Ltd., an advisory company that provides advisory services to financial institutions.

In May 2009, Mizuho Securities and Shinko Securities Co., Ltd. completed a merger. The merged entity, Mizuho Securities, is our subsidiary and listed on the Tokyo Stock Exchange and other Japanese stock exchanges. Through the merger, we aim to improve our service-providing capabilities to our clients and to offer competitive cutting-edge financial services on a global basis.

Principal Capital Expenditures and Divestitures

Since 2007, Mizuho Bank has been purchasing common stock of Credit Saison from time to time, in furtherance of our aim to promote the alliance with Credit Saison. Mizuho Bank and Mizuho Corporate Bank together owned 13.36% of the total outstanding shares of common stock of Credit Saison as of March 25, 2010.

Other Information

Our registered address is 5-1, Marunouchi 2-chome, Chiyoda-ku, Tokyo 100-8333, Japan, and our telephone number is 81-3-5224-1111.

4.B. Business Overview

General

We offer a variety of financial services, including banking, securities, trust and asset management services.

We align our businesses into the following three Global Groups organized based on our customers’ needs: the Global Corporate Group; the Global Retail Group; and the Global Asset & Wealth Management Group. Each group conducts its business by taking advantage of its strengths. The following summarizes the business activities of each of our three Global Groups:

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The Global Corporate Group provides sophisticated banking and securities products and services that meet the various needs of large corporations and other customers in and outside of Japan, utilizing global collaboration between our corporate banking business and securities business as well as our comprehensive financial expertise.

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The Global Retail Group provides high-quality financial products and services that meet the diverse needs of individuals, SMEs and middle-market corporations in Japan by enhancing collaborations with our group companies.

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The Global Asset & Wealth Management Group provides trust, asset management and private banking products and services that meet the diversified and sophisticated needs of our customers.

We have also worked on establishing a stable internal management system, promoting corporate social responsibility (CSR) and strengthening our brand strategy.

In terms of the internal management system, we enhanced the internal control system based on the Financial Instruments and Exchange Law of Japan and Sarbanes Oxley Act of the United States. We further promoted the protection of customers through the maintenance of a structure to manage conflicts of interests and enhanced our compliance system.

We promote CSR by conducting lectures established by us at universities, supporting financial education by conducting joint research with a university and promoting environmental conservation.

In addition, as our brand strategy, we actively conveyed our brand slogan, “Channel to Discovery,” to promote it within and outside the group.

We will endeavor to strengthen our profitability by providing our customers with high-quality financial services through taking advantage of the strengths of each group company as well as enhancing collaboration among them. In addition, we will always recognize the social responsibilities and public mission as financial institutions and will facilitate financing on a group-wide basis pursuant to the Law Concerning Temporary Measures to Facilitate Financing for Small and Medium-Sized Enterprises (SMEs), etc. We strive to win the trust of our customers in and outside of Japan through continuously working on establishing a stable legal compliance system and a sophisticated risk management system.

In May 2010, we announced our new Medium-term Management Policy named Transformation Program for the three fiscal years ending March 31, 2013, in which we set forth various strategic initiatives and measures to enhance our profitability, financial base and front-line business capabilities.

The Transformation Program (Aiming at Sustainable Growth)

In May 2010, we set our future vision to become the most trusted financial institution by our customers by focusing on the core function of a financial institution which is to contribute to social and economic development. In order to realize this vision, we will strive to further increase our corporate value through the implementation of the Transformation Program, which consists of the following initiatives:

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Program for Improving Profitability: “Strengthen our competitive advantage”

We plan to strengthen growth of top-line profits through strategic allocation of management resources, reduce costs and pursue efficiency through a vigorous business review.

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Program for Enhancing Financial Base: “Strengthen capital base and improve asset efficiency”

We plan to strengthen the quality and quantity of capital and improve our asset portfolio.

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Program for Strengthening Front-line Business Capabilities: “Strengthen front-line business capabilities through improving efficiency and optimization”

We plan to downsize corporate management functions, improve efficiency of our business infrastructure, and strengthen our marketing front-line that engages in customer relations.

Each of these initiatives is described in more detail below.

Program for Improving Profitability

This program aims to establish competitive advantage through the strengthening of focused business areas and strategic allocation of management resources. The program consists of the following two parts:

Business strategy

We aim to strengthen top-line profits by thoroughly enhancing business areas where we have a competitive advantage and fields where growth potential is envisaged. In addition, we aim to strengthen fundamental profitability through capturing the various needs of our customers in and out of Japan as a strategic business partner while facilitating financing. We will focus on the following:

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Strategic expansion in business areas where we have strengths, including the Tokyo Metropolitan Area and transactions with large corporate customers:

The Tokyo Metropolitan Area: Transactions with corporate customers

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Strengthen initiatives for SME business through proposing comprehensive solutions in response to the management challenges of our customers; and

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Strengthen initiatives for business-owner customers and blue-chip land and property owners and similar customers.

The Tokyo Metropolitan Area: Transactions with individual customers

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Strengthen initiatives for loans to individuals, including housing loans, and make Orico an affiliate of ours;

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Increase assets under management of individual customers through collaboration among banking, trust and securities functions; and

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Improve the services and accessibility of the retail business of MizuhoTrust & Banking through utilization of Mizuho Bank’s network.

Transactions with Large Corporate Customers

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Proactively be involved in corporate customers’ business and financial strategies taken in response to changes in industrial structure.

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Strengthening of initiatives for the “Asia” region which we believe has high growth potential:

Japanese customers

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Provide various solutions for global strategies of our customers, including SMEs.

Non-Japanese customers

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Pursue lending opportunities with blue-chip customers in response to their financial strategy needs; and

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Enhance capabilities for our securities business.

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Strengthening of asset management business, mainly targeting individual financial assets and pension assets:

Individuals

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Increase market share based on balance of investment products (AUM) by increasing sales mainly through group collaboration.

Pension and related businesses

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Strengthen initiatives primarily for corporate pensions and public corporations through share-up and share-in in existing commissioned pension trusts primarily among our main bank customers.

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Provision of sophisticated financial solutions through seamless utilization of the full-line services of banking, trust and securities functions, and focus on global collaboration, M&A marketing and capital management solicitation.

Cost reduction through vigorous review of our businesses and reallocation of management resources to focused strategic business areas

We aim to reduce costs through unification and optimization of our group’s management infrastructure (general and administrative expenses of principal banking subsidiaries on a combined basis (Japanese GAAP): aim to decrease by approximately ¥50 billion compared with the fiscal year ended March 31, 2010) and reallocate management resources, such as human resources (approximately 1,000 staff), to strategic areas, such as the Tokyo Metropolitan Area and customer groups in Asia.

Program for Enhancing Financial Base

This program aims to strengthen the quality and quantity of capital and improve asset efficiency, including significant reduction of our equity portfolio. The program consists of the following two parts:

Strengthening of capital base

We aim to maintain our current priority on the strengthening of a stable capital base in light of on-going global discussions on the revision of capital regulations. We will focus on the following:

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Accumulation of retained earnings through implementation of “Program for Improving Profitability;”

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Implementation of appropriate capital management; and

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Consideration of various measures in light of regulatory developments.

Improvement of asset portfolio

We aim to strategically reallocate risk-weighted assets together with improving our asset efficiency and further strengthening our risk management. We plan to:

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Allocate risk-weighted assets to focused strategic business areas through thorough review of non-customer assets and low-return assets;

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Aim to reduce our equity portfolio by ¥1 trillion compared with the balance as of March 31, 2010 on an acquisition cost basis (Japanese GAAP); and

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Improve our asset quality and streamline our balance sheet.

Program for Strengthening Front-line Business Capabilities

This program aims to strengthen front-line business capabilities through downsizing and rationalization of corporate management functions and improving efficiency of our business infrastructure. The program consists of the following two parts:

Redeployment of personnel to the marketing front-line

We seek to consolidate and reorganize corporate planning and product functions of each of our group companies. We seek to strengthen our governing function, as a holding company, over the group, improve efficiency of management controls and expedite our decision making and deploy approximately 1,000 staff currently engaged mainly in corporate management functions to the marketing front-line through a unification of functions. We will focus on the following:

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Unification of our group’s planning functions, including human resources, administration, IT systems and operations; and

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Review and reorganization of overlapping functions in financial product areas at Mizuho Bank and Mizuho Corporate Bank.

Improvement of business infrastructure efficiency

We seek to facilitate consolidation of operational processing functions under the “consolidation and efficiency improvement policy.” At the same time, we seek to realize fundamental streamlining of cost structure with a focus on IT systems-related costs. We will focus on the following:

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Unification of our group’s IT systems and operations units, such as budgeting functions, with the aim to maximize investment returns;

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Pursuit of higher efficiency through consolidation of operations across group entities, including consolidation among operational centers and within joint branches of Mizuho Bank, Mizuho Corporate Bank and Mizuho Trust & Banking; and

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Facilitation of the unification of group-wide IT systems by releasing a new IT systems platform with the goal of lower future costs.

Group Operations

The Global Corporate Group

Mizuho Corporate Bank

Mizuho Corporate Bank provides various sophisticated financial products and services to large Japanese corporations such as corporations listed on Japanese stock exchanges and their affiliates, financial institutions, public sector entities and foreign corporations, including foreign subsidiaries of Japanese corporations. We meet

the needs of our customers by utilizing our strengths such as our broad customer base, comprehensive financial expertise and office network which covers major cities in and outside Japan. As of March 31, 2010, customers of Mizuho Corporate Bank and our other group companies included approximately 70% of all companies listed on the Tokyo, Osaka and Nagoya stock exchanges.

Mizuho Corporate Bank engages in customer relationship management through its Corporate Banking Unit and International Banking Unit, while individual financial products and services are developed and provided by the Global Investment Banking Unit, the Global Transaction Banking Unit and the Global Markets Unit and the Global Asset Management Unit. We offer innovative financial products and services to our customers by integrating these two functions.

Corporate Banking Unit

The Corporate Banking Unit engages in relationship management for large Japanese corporations and their affiliates, Japanese financial institutions and public sector entities and businesses relating to the issuance of bonds.

In the area of transactions with large Japanese corporations and their affiliates, we offer financial products and services on a global basis by utilizing the expertise of our group companies to meet the increasingly diverse and sophisticated needs of our customers. For example, we make proposals related to mergers and acquisitions and business restructuring of our customers in cooperation with sections specializing in those businesses. We also offer suitable financing and optimal solutions for our customers by enhancing cooperation with our group companies including Mizuho Bank, Mizuho Securities and Mizuho Trust & Banking. In particular, we have introduced a double-hat structure with Mizuho Securities to further enhance and deepen our cooperation in banking and securities business.

For financial institution customers in Japan, we offer advisory services and solutions by concentrating our various financial expertise, such as financial strategy and risk management, from each Group company to meet the increasingly sophisticated and varied needs of customers.

We aim to provide the ideal solutions to the increasingly diverse needs of Japanese public sector entities. We actively arrange private finance initiatives and syndicated loans to meet their financing needs and propose new finance schemes such as securitization of business assets as well as advisory services related to managerial issues.

Regarding our bond-related businesses, with our extensive experience and achievements as a leading bank in this area, we support our customers’ financing needs by underwriting bonds issued by public sector entities and working as the commissioned bank or fiscal agent for bonds issued by corporations, financial institutions and public sector entities.

International Banking Unit

The International Banking Unit engages in relationship management for foreign corporations, including foreign subsidiaries of Japanese corporations.

We support our Japanese customers to expand their foreign operations, utilizing our financial expertise as well as alliances with foreign financial institutions. In particular, we are promoting our support for Japanese corporate customers in connection with their entry into the Chinese market by offering advisory and other services. We also actively provide financial services to foreign corporations that are not affiliated with Japanese corporations through our global network.

In addition, we endeavor to meet the diverse needs of our overseas customers with respect to, among others, project finance and trade finance.

We have strengthened our support for Japanese and non-Japanese customers through the enhancement of the Group’s international network. We have also promoted stronger relationships with major foreign financial institutions to supplement regions or product areas that our group is unable to cover. In the fiscal year ended March 31, 2010, we have entered into alliance agreements with financial institutions in Brazil and Russia, and cooperation under such agreements have commenced. Also, in order to enhance our support for our customers that are developing businesses outside Japan, we continue to cultivate cooperative working relationships with foreign government agencies.

In December 2006, Mizuho Financial Group and Mizuho Corporate Bank obtained Financial Holding Company status from the U.S. regulatory authorities, which enabled our securities company subsidiary in the United States to engage in comprehensive investment banking businesses, such as the underwriting and dealing of corporate bonds, equities and other types of securities. We are promoting our full line of financial services through a collaboration between our banking and securities operations of U.S. subsidiaries.

Global Investment Banking Unit

The Global Investment Banking Unit promotes investment banking businesses, mainly loan syndication business and financial products business, and provides our customers with sophisticated financial solutions to meet their global needs.

In the loan syndication business, we offer syndicated loan services to meet the various financing needs of our customers, and we take a leading role in the growth of the Japanese syndicated loan market. During the fiscal year ended March 31, 2010, despite the intensified competition among banks, our group arranged, based on amount of principal, approximately 32% of all syndicated loans arranged in Japan and maintained the top position on the domestic league table (according to Thomson Reuters, for the fiscal year ended March 31, 2010). Mizuho Corporate Bank is arranging new types of syndicated loans such as those related to mergers and acquisitions and corporate reorganizations.

Geographically, we maintain staff at branches and offices in New York, London and Asia to promote our syndicated loan business on a global basis. For example, we arrange syndicated loans in Japan for foreign corporations and sell syndicated loans arranged in overseas markets to Japanese investors.

We also conduct activities to help grow the Japanese secondary loan market, including by exchanging our loan portfolio with those of other financial institutions, broadening the investor base and enhancing our cooperation with regional financial institutions.

In the financial products business area such as structured finance, acquisition finance, real estate finance and project finance, we have been promoting the provision of comprehensive products for business strategies and financial issues, etc., to respond to our customers’ further diversifying needs. We are further expanding our range of services through cooperation with our group companies, including Mizuho Securities, Mizuho Corporate Advisory Co., Ltd. and Mizuho Capital Partners Co., Ltd.

Global Transaction Banking Unit

The Global Transaction Banking Unit engages in businesses related to cash management, foreign exchange, trade finance and custody services. With respect to cash management services, we provide online solutions such as domestic and global cash management services to our customers.

We offer foreign exchange and trade finance products and services in cooperation with our overseas branches and offices.

We offer custody services as well as yen settlement and clearing services and outsourced continuous linked settlement services.

Global Markets Unit

The Global Markets Unit engages in the business of sales and trading of financial products related to, among others, interest rates, foreign exchange, commodities and credit, as well as investments in interest rates, equities, credit, etc.

We continue to enhance the sophistication of our portfolio management methods and diversify our investments to make our portfolio more sound and profitable.

Global Asset Management Unit

The Global Asset Management Unit provides products and services that correspond to the needs of customers, mainly institutional investors such as pension funds and financial institutions, through the synergy effects arising from the integrated operation of the planning, development and sales of businesses relating to the asset management.

Specifically, we offer a hedge fund developed and operated by our investment management company named Mizuho Alternative Investments, LLC in the United States and also provide various products.

In the pension related business, we provide “comprehensive pension proposals” that include services and products related to defined contribution as well as defined benefit pension plans to meet the needs of customers by collaborating with Mizuho Trust & Banking and other asset management group companies in promoting the business.

Mizuho Securities

Mizuho Securities closely collaborates with Mizuho Corporate Bank and other group companies and aims to be “the global investment bank most trusted by customers.”

Investment Banking Business

We provide comprehensive support for customers in establishing their management strategies and financing by engaging in businesses related to equity underwriting, support for initial public offerings, investor relations consulting and provision of solutions such as advisory services for financial and capital strategies in addition to the bond underwriting and structured finance businesses, regarding which we obtained the position of market leader in Japan, and the mergers and acquisitions and financial advisory business, regarding which we established a top-class market presence in Japan.

We have also introduced a double-hat structure with Mizuho Corporate Bank to further enhance and intensify the cooperation between our companies and aim to provide to our corporate customers sophisticated banking and securities’ solutions as well as financial services best suited to our customers’ needs making the most of our financial capabilities.

Product Development and Sales Business

In the product development and sales business, we mainly engage in sales and trading of stocks and bonds, research and funds (investment trusts) and offer value-added product solutions by providing quality information in a timely manner in response to the various investment needs of domestic and international customers. We also focus on globally integrating our business by utilizing our network of overseas subsidiaries.

Global Retail Group

Mizuho Bank

Mizuho Bank provides financial services mainly to individual customers, SMEs, middle-market corporations and local governmental entities in Japan. As of March 31, 2010, Mizuho Bank had approximately 25 million individual deposit accounts and made loans to approximately 100,000 SMEs and middle-market

corporations. In addition to our broad customer base, we maintain one of the largest branch and ATM networks in Japan and a broad range of Internet banking services.

Mizuho Bank has the following three principal business groups and three business divisions:

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the Personal Banking Group;

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the Corporate Banking Group;

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the Trading and ALM Group;

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the Securities Division;

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the Innovation Business Division; and

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the “Takarakuji” Lottery Division.

Personal Banking Group

The Personal Banking Group offers a broad range of financial products and services to individual customers, including various types of loans and deposits as well as consulting and credit card services in Japan.

We are enhancing our relationship marketing efforts by offering products and services that meet the diverse needs of our customers, establishing convenient access points for customers and providing specialized consulting services by utilizing the comprehensive expertise of our group companies.

We have been enhancing the sophistication of our marketing strategies to maximize lifetime income, aiming at establishing stable revenue sources from present to future. We provide services corresponding to the needs of each life stage and circumstance of customers. For example, we offer convenient transactions through “Mizuho Direct” for busy customers who have difficulty visiting bank branches and offices; we offer detailed services and convenience through seamless correspondences at “Mizuho Direct” and with the “Teller” for customers in a period with many life events such as home purchase, school enrollment of children and asset planning after retirement; and we make proposals after a thorough consultation with the “Teller” for customers planning the investment in assets after their retirement.

In order to provide specialized consulting services, we have increased the number of financial consultants over the years to 3,392, as of March 31, 2010, that make proposals regarding investments such as investment trusts, foreign currency deposits, individual annuities and Japanese government bonds sold to individuals, provided weekend consultation meetings and enhanced our infrastructure such as our Relationship Marketing Database. By implementing these measures, the aggregate number of customers with financial assets of more than ¥10 million increased over the years to approximately 1.01 million as of March 31, 2010, and customers that purchased investment products have also increased. The balance of investment trusts (excluding MMF) was ¥1.20 trillion, individual annuities was ¥1.83 trillion, foreign currency deposits was ¥0.50 trillion and Japanese government bonds sold to individuals was ¥1.65 trillion, each on a managerial accounting basis as of March 31, 2010. We also handle trust products at all Mizuho Bank branches as agents of Mizuho Trust & Banking and promote the joint operation of branch offices by Mizuho Bank, Mizuho Trust & Banking and Mizuho Investors Securities Co., Ltd. to meet our customers’ one-stop shopping needs for banking, trust and securities services. The consulting booths jointly operated with Mizuho Investors Securities, which we call “Planet Booths,” are located in the lobbies of 150 branches and offices of Mizuho Bank as of March 31, 2010. Through these measures, we are strengthening our consulting capabilities and endeavoring to grow assets under management.

In our housing loan business, we offer various products and services such as weekend consultation meetings and products such as “Flat 35,” a housing loan product with a fixed interest rate for a maximum of 35 years offered in cooperation with and securitized by the Japan Housing Finance Agency, in addition to our own housing loan products.

With respect to unsecured loan products, we cooperate with Orient Corporation to develop unsecured loan products such as “Captive Loans,” a card loan product that our customers can apply for through our ATM network, and “Mizuho Bank Card Loan” with a growing number of users due to effective promoting activities. In July 2009, we launched “Mizuho Bank New Car Loan,” “Mizuho Bank Education Loan” and “Mizuho Bank Home Renovation Loan,” which have lower interest levels compared to our existing products.

As of March 31, 2010, our Mizuho Mileage Club had approximately 7.4 million members and credit card members also increased to approximately 2.5 million. In order to make them more simple, comprehensive and attractive, we significantly changed the services in spring 2009. For example, we reorganized the eligibility requirements for free ATM usage during off-business hours and other special benefits by the amount of credit card usage, balances of assets under management and housing loans, and we also lowered the required amount for balances of assets under management. We have also ceased charging fees to transfer monies to other banks under certain conditions.

With our 431 staffed branches throughout Japan as of March 31, 2010, we have been and will continue to expand our convenient and efficient points of contact for individual customers by promoting “Mizuho Personal Square,” a branch designed to focus on serving individual customers (156 locations as of March 31, 2010). In addition, we aim to expand our ATM network, enhance our Internet banking, telephone banking and mobile-phone banking systems, introduce a remittance service through “docomo Keitai Soukin^TM” (Mobile Remittance Service) and strengthen marketing through call centers.

We provide directors and employees of corporate clients of Mizuho Bank and Mizuho Corporate Bank with products and services to address the needs of customers relating to their life events such as preparation of accounts to receive salaries upon employment, consultation regarding housing loans upon home purchases, post-retirement planning and comprehensive proposals regarding the investment of retirement allowances.

Corporate Banking Group

The Corporate Banking Group provides products and services mainly to SMEs and middle-market corporations as well as to local governmental entities and other public sector entities.

Also, in response to the recent challenging economic environment, we conduct thorough credit management in our loan operations and have enhanced our support services for our customers’ restructuring efforts.

We provide our SME and middle-market corporate customers with suitable financing arrangements together with sophisticated advisory and other services that are appropriate in light of the customers’ business strategies.

Through our marketing efforts for loan products, including the allocation of dedicated staff at branches to engage in finding new customers, applying different marketing strategies for different customer segments based on the size of the customers’ annual sales, developing new strategic loan products and utilizing “Mizuho Business Financial Centers” which primarily engage in loans to smaller enterprises, we provide affluent and stable financing to SMEs and middle-market corporations with appropriate interest rates according to each borrower’s risk profile.

We offer our SME and middle-market corporate customers syndicated loans, advisory services related to overseas expansions, mergers and acquisitions-related services, business matching services, financial products acting as sales agent for securities companies, services related to defined contribution pension plans and support for start-up companies in cooperation with Mizuho Capital Co., Ltd. We call our provision of these services our “solutions business.”

We provide comprehensive financial services to meet the various needs of local governmental entities and other public sector entities, including services related to bank and capital markets financing to diversify their funding sources and various investment products and advisory services related to organizational restructuring and streamlining. We will continue to promote business with local governmental entities through our network of branches and offices, which is one of the largest in Japan.

We provide comprehensive financial services and comprehensive consultation services based on needs of both corporations and individuals as well as through collaboration with Mizuho Trust & Banking and other group companies. We provide specialized consulting services that transcend traditional boundaries between “corporate” and “individual” services, such as proposing solutions related to corporate management issues as well as business and real estate succession issues. As a sales agent of Mizuho Trust & Banking, we also provide a variety of trust products as a solution for various needs of our corporate and individual customers. We are also promoting an exchange of personnel between Mizuho Trust & Banking and Mizuho Bank in order to provide professional consulting services in trust-related businesses to Mizuho Bank customers. In addition, we provide specialized private banking services to high net worth individuals such as business and land owners.

Trading and ALM Group

The Trading and ALM Group engages in investing in, and sales and trading of, financial instruments related to, among others, interest rates, foreign exchange and securities, including derivative instruments. We are diversifying our various investing activities under our risk management structure for the purpose of achieving more stable profits and risk diversification. We also satisfy various customer needs by providing a wide variety of financial instruments and solutions.

Securities Division

The Securities Division supports various methods of accessing capital markets to meet the financial needs of our customers. In cooperation with group securities companies, including Mizuho Investors Securities, we endeavor to satisfy the investment and financing needs of SMEs and middle-market corporations and the investment needs of individuals. For example, we have introduced a double-hat structure with Mizuho Investors Securities to enhance our consulting capabilities for customers’ initial public offerings.

Innovation Business Division

The Innovation Business Division provides products and services related to information technology such as offering cash management services and new banking services utilizing the Internet, mobile phones and IC cards.

“Takarakuji” Lottery Division

The Takarakuji Lottery Division engages in the business of acting as an administrative bank for the Takarakuji lottery, the principal public lottery program in Japan.

Mizuho Investors Securities

Mizuho Investors Securities focuses on the needs of mainly individual customers, SMEs and middle-market corporations and aims to be “the closest, most trustworthy securities company for customers,” by establishing a strong collaboration network with Mizuho Bank and enhancing collaboration with each of our group companies. Mizuho Investors Securities, through its “Planet Booth” locations which are operated together with Mizuho Bank, is actively promoting cooperation with group companies, such as its financial product sales agent business with Mizuho Bank and trust sales agent business with Mizuho Trust & Banking. We have also introduced a double-hat structure with Mizuho Bank with an aim to provide various financial services to corporate customers with needs related to initial public offerings, making the most of our financial capabilities.

With the above business base, Mizuho Investors Securities provides quality products and securities services, such as various securities products that meet its customers’ investment needs and the underwriting of equities and bonds and consulting services regarding capital strategy in connection with its customers’ financing needs, on an individualized and swift basis.

Global Asset and Wealth Management Group

Mizuho Trust & Banking

Mizuho Trust & Banking is a trust bank that provides individual and corporate customers with financial services utilizing trusts. We provide our customers with distinct products and services developed based on our specialized expertise, consulting capabilities and abundant know-how cultivated over the years. We respond promptly and appropriately to the diversified and sophisticated needs of our customers by enhancing collaborations with Mizuho Bank, Mizuho Corporate Bank and other group companies including asset management companies.

Asset Management Business

We provide mainly corporate customers with a wide range of services and solutions in the following business areas:

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real estate business, including real estate sales agent services and real estate securitizations;

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structured product business, including securitization transactions that utilize trusts;

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asset management business relating to various assets, including pension plans;

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pension plan business, including acting as trustee, providing consulting services, actuarial services and administration services;

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asset administration business, including trustee services for investment trusts and management and administration of investments in securities; and

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equity strategy business, including acting as a securities agent and providing advice on practical issues related to stock.

Wealth Management Business

We provide primarily individual customers with the following services related to wealth management:

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consulting services regarding investment and management of customer assets;

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businesses relating to the succession of assets such as testamentary trusts;

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loan products such as apartment loans;

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deposits, investment trusts and other investment products that utilize trusts; and

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real estate business such as brokerage of housing sales and land development.

Others

We provide deposit and loan services to our corporate customers and engage in treasury business.

Mizuho Private Wealth Management

Mizuho Private Wealth Management offers comprehensive, integrated and continuous private banking services to meet the various financial and non-financial needs of our ultra high net worth customers.

Trust & Custody Services Bank

Trust & Custody Services Bank, Ltd., as a trust bank specialized in asset administration, provides a wide range of products, including trust services and various custody services, to promptly meet the diversifying needs of customers such as financial institutions and institutional investors.

Asset Management Companies

Our asset management companies, Mizuho Asset Management Co., Ltd. and DIAM Co., Ltd. (an equity method affiliate of ours), provide investment management services for our group companies and customers. Each company offers a variety of investment trust products that meet the increasingly sophisticated and diverse needs of our customers.

Others

Mizuho Information & Research Institute

Mizuho Information & Research Institute, Inc. mainly provides our corporate customers with the following three services:

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system integration services;

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outsourcing services that support the operation of information technology systems of our customers; and

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consulting services related to, among others, environmental issues.

We are able to provide customers with a combination of the above services to meet their respective needs.

Mizuho Research Institute

Mizuho Research Institute Ltd. offers information and services mainly to corporations, financial institutions and public sector entities to meet their increasingly diverse and sophisticated needs by integrating its research, funded research and membership services that provide various information related to, among others, managerial and economic issues.

Mizuho Financial Strategy

Mizuho Financial Strategy engages in advisory services for financial institutions regarding their management and revitalization of their borrowers.

Competition

During the past several years, competition in the Japanese financial market has increased as the Japanese government has enhanced deregulation, such as reducing the separation of banking, securities and insurance businesses and promoting new entry into the financial businesses.

Our major competitors in Japan include:

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Japan’s other major banking groups: Mitsubishi UFJ Financial Group and Sumitomo Mitsui Financial Group.

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Other banking institutions: These include city banks, trust banks, regional banks, shinkin banks (or credit associations), credit cooperatives, agricultural cooperatives, foreign banks and retail-oriented online banks.

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Securities companies and investment banks: These include both domestic securities companies and the Japanese affiliates of global investment banks.

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Government financial institutions: These include Japan Finance Corporation, Japan Post Bank and Development Bank of Japan.

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Non-bank finance companies: These include credit card issuers, installment shopping credit companies and other non-bank finance companies.

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Other financial services providers: We also compete with private equity funds and other types of investors.

In global markets, we face competition with other commercial banks and other financial institutions, particularly major global banks and the leading domestic banks in those financial markets outside Japan in which we conduct business.

Japanese Banking and Securities Industry

Private banking institutions in Japan are normally classified into two categories (the following numbers are based on information published by the Financial Services Agency, available as of July 27, 2010): (i) ordinary banks, of which there were 127, not including foreign commercial banks with banking operations in Japan; and (ii) trust banks, of which there were 19, including Japanese subsidiaries of foreign financial institutions and subsidiaries of Japanese financial institutions.

Ordinary banks consist mainly of city banks and regional banks. City banks, including Mizuho Corporate Bank and Mizuho Bank, are based in large cities, operate domestically on a nation-wide scale through networks of branch offices and have strong links with large corporate customers in Japan. In light of deregulation and other competitive factors, however, many of these banks have placed increasing emphasis on other markets, including retail banking, small and medium-sized enterprise banking, international operations and investment banking. Regional banks are based in one of the prefectures of Japan and are generally much smaller in terms of total assets than city banks. In recent years, some regional banks have allied with each other and formed holding companies to operate in several prefectures. Customers of regional banks, other than local retail customers, include mostly regional enterprises and local public utilities, although the regional banks also lend to large corporations. In addition to these types of banks, new retail-oriented banks have emerged in recent years, including Internet banks and banks specializing in placing their ATMs in convenience stores and supermarkets without maintaining a branch network.

Trust banks, including Mizuho Trust & Banking, are engaged in trust services in relation to, among others, money trust, pension trust and real estate trust services, in addition to banking business.

As of June 28, 2010, there were 58 foreign banks operating banking businesses in Japan. These banks are subject to a statutory framework similar to the regulations applicable to Japanese domestic banks. Their principal sources of funds come from their overseas head offices or other branches.

A number of government financial institutions, organized in order to supplement the activities of the private banking institutions, have been in the process of business and organizational restructuring in recent years. In October 2008, some of the government financial institutions were consolidated to form Japan Finance Corporation, which mainly provides financing for small and medium-sized enterprises and those engaged in agriculture, forestry and fishery, and also provides export financing for Japanese corporations. In October 2008, Development Bank of Japan, which mainly engages in corporate financing, and Shoko Chukin Bank, which mainly engages in financing for small and medium-sized enterprises, were transformed into joint stock corporations. Japan Housing Finance Agency supports housing loans of private institutions through the securitization of such loans.

Another distinctive element of the Japanese banking system was the role of the postal savings system. Postal savings deposits were gathered through the network of governmental post offices scattered throughout Japan, and their balance of deposits totaled over 200 trillion yen in the past. In recent years, the governmental postal business has been in the process of organizational restructuring. In 2003, the governmental postal business was transferred to Japan Post, a government-owned entity established in the same year, and in 2007, Japan Post was transformed into a joint stock corporation holding four operating companies including Japan Post Bank, which currently operates as an ordinary bank. Privatization of banking and insurance subsidiaries, which was originally planned to be completed by 2017, was suspended in December 2009.

In the Japanese securities market, a large number of registered entities are engaged in securities businesses, such as sales and underwriting of securities, investment advisory and investment management services. As

deregulation of the securities market progressed, several of the country’s banking groups have entered into this market through their subsidiaries. In addition, foreign financial institutions have been active in this market.

Supervision and Regulation

Japan

Pursuant to the Banking Law (Ginkou Hou) (Law No. 59 of 1981, as amended), the Prime Minister of Japan has authority to supervise banks in Japan and delegates certain supervisory control over banks in Japan to the Commissioner of the Financial Services Agency. The Bank of Japan also has supervisory authority over banks in Japan, based primarily on its contractual agreements and transactions with the banks.

Financial Services Agency

Although the Prime Minister has supervisory authority over banks in Japan, except for matters prescribed by government order, this authority is generally entrusted to the Commissioner of the Financial Services Agency. Additionally, the position of Minister for Financial Services was established by the Cabinet to direct the Commissioner of the Financial Services Agency and to support the Prime Minister.

Under the Banking Law, the Prime Minister’s authority over banks and bank holding companies in Japan extends to various areas, including granting and cancellation of licenses, ordering the suspension of business in whole or in part and requiring submission of business reports or materials. Under the prompt corrective action system, the Financial Services Agency, acting on behalf of the Prime Minister, may take corrective action in the case of capital deterioration of banks, their subsidiaries and companies having special relationships prescribed by the cabinet order. These actions include requiring a financial institution to formulate and implement reform measures, requiring it to reduce assets or take other specific actions and issuing an order to suspend all or part of its business operations.

Under the prompt warning system introduced in December 2002, the Financial Services Agency may take precautionary measures to maintain and promote the sound operations of financial institutions, even before those financial institutions become subject to the prompt corrective action system. These measures require a financial institution to reform profitability, credit risk management, stability and cash flow.

The Bank of Japan

The Bank of Japan is Japan’s central bank and serves as the principal instrument for the execution of Japan’s monetary policy. The principal measures by which the Bank of Japan implements monetary policy are the adjustment of its discount rate, its operations in the open market and the imposition of deposit reserve requirements. Banks in Japan are allowed to obtain borrowings from, and rediscounting bills with, the Bank of Japan. Moreover, most banks in Japan maintain current accounts under agreements with the Bank of Japan pursuant to which the Bank of Japan is entitled to supervise, examine and audit the banks. The supervisory functions of the Bank of Japan are intended to enable it to ensure smooth settlement of funds among banks and other financial institutions, thereby contributing to the maintenance of an orderly financial system, whereas the supervisory practices of the Prime Minister or the Commissioner of the Financial Services Agency are intended to maintain the sound operations of banks and promote the security of depositors.

Examination of Banks

The Banking Law authorizes the Prime Minister to inspect banks and bank holding companies in Japan at any time. By evaluating banks’ systems of self-assessment, auditing their accounts and reviewing their compliance with laws and regulations, the Financial Services Agency monitors the financial soundness of banks, including the status and performance of their control systems for business activities. The inspection of banks is performed pursuant to a Financial Inspection Manual published by the Financial Services Agency. Currently, the Financial Services Agency takes the “better regulation” approach in its financial regulation and supervision. This consists of four pillars: optimal combination of rules-based and principles-based supervisory approaches; timely recognition of priority issues and effective response; encouraging voluntary efforts by financial institutions and

placing greater emphasis on providing them with incentives; and improving the transparency and predictability of regulatory actions, in pursuit of improvement of the quality of financial regulation and supervision. In addition to individual financial institutions, the Financial Services Agency also supervises financial groups as financial conglomerates based on its Guidelines for Financial Conglomerates Supervision that focus on management, financial soundness and operational appropriateness of a financial conglomerate as a whole.

The Bank of Japan also conducts examinations of banks similar to those undertaken by the Financial Services Agency. The examinations are normally conducted once every few years, and involve such matters as examining asset quality, risk management and reliability of operations. Through these examinations, the Bank of Japan seeks to identify problems at an early stage and give corrective guidance where necessary.

In addition, the Securities and Exchange Surveillance Commission examines banks in connection with their financial instruments business activities in accordance with the Financial Instruments and Exchange Law of Japan (Kinyu Shouhin Torihiki Hou) (Law No. 25 of 1948, as amended).

Examination and Reporting Applicable to Shareholders

Under the Banking Law, a person who intends to hold 20% (in certain exceptional cases, 15%) or more of the voting rights of a bank is required to obtain prior approval of the Commissioner of the Financial Services Agency. In addition, the Financial Services Agency may request reports or submission of materials from, or inspect, any principal shareholder who holds 20% (in certain exceptional cases, 15%) or more of the voting rights of a bank, if necessary in order to secure the sound and appropriate operation of the business of such bank. Under limited circumstances, the Financial Services Agency may order such principal shareholder to take such measures as the Financial Services Agency deems necessary.

Furthermore, under the Banking Law, any person who becomes a holder of more than 5% of the voting rights of a bank holding company or bank must report its ownership of voting rights to the director of the relevant local finance bureau within five business days. In addition, a similar report must be made in respect of any subsequent change of 1% or more in any previously reported holding or any change in material matters set forth in reports previously filed, with some exceptions.

Deposit Insurance System

Under the Deposit Insurance Law (Yokin Hoken Hou) (Law No. 34 of 1971, as amended), depositors are protected through the Deposit Insurance Corporation in cases where financial institutions fail to meet their obligations. The Deposit Insurance Corporation is supervised by the Prime Minister and the Minister of Finance. Subject to limited exceptions, the Prime Minister’s authority is entrusted to the Commissioner of the Financial Services Agency.

The Deposit Insurance Corporation receives annual insurance premiums from insured banks, the amount of which is, from April 2010, equivalent to 0.107% of the deposits that bear no interest, are redeemable upon demand and are used by depositors primarily for payment and settlement purposes, and 0.082% of other deposits. The insurance money may be paid out in case of a suspension of deposits repayments, banking license revocation, dissolution or bankruptcy of the bank. Pay outs are generally limited to a maximum of ¥10 million of principal amount, together with any interest accrued with respect to each depositor. Only non-interest bearing deposits, redeemable on demand and used by depositors primarily for payment and settlement functions are protected in full.

Participation in the deposit insurance system is compulsory for city banks (including Mizuho Corporate Bank and Mizuho Bank), regional banks, long-term credit banks, trust banks (including Mizuho Trust & Banking), credit associations and co-operatives, labor banks and other financial institutions.

Governmental Measures to Treat Troubled Institutions

Under the Deposit Insurance Law, a Financial Reorganization Administrator can be appointed by the Prime Minister if the bank is unable to fully perform its obligations with its assets or may suspend or has suspended repayment of deposits. The Financial Reorganization Administrator will take control of the assets of the bank, dispose of the assets and search for another institution willing to take over its business. Its business may also be transferred to a “bridge bank” established by the Deposit Insurance Corporation for the purpose of the temporary maintenance and continuation of operations of these types of institutions, and the bridge bank will seek to transfer the bank’s assets to another financial institution or dissolve the bank. The financial aid provided by the Deposit Insurance Corporation may take the form of a monetary grant, loan or deposit of funds, purchase of assets, guarantee or assumption of debts, subscription of preferred stock, or loss sharing. Where it is anticipated that the failure of a bank may cause an extremely grave problem in maintaining the financial order in Japan or the area where such bank is operating, the following measures may be taken: (i) the Deposit Insurance Corporation may subscribe for the shares or other instruments of the relevant bank in order to enhance capital adequacy of the bank; (ii) if the bank fails or suffers a capital deficit, financial aid exceeding the pay-off cost may be available to such bank; and (iii) in the case where the systematic risk cannot be avoided by the measure mentioned in (ii) above, the Deposit Insurance Corporation may acquire the bank’s shares.

Capital Injection by the Government

The Strengthening Financial Functions Law (Kinyu Kinou no Kyouka no tame no Tokubetsu Sochi ni kansuru Houritsu) (Law No. 128 of 2004) was enacted on June 18, 2004 in order to establish a scheme of public money injection into financial institutions and thereby enhance the soundness of such financial institutions on or prior to March 31, 2008 and revitalize economic activities in the regions where they do business. On December 17, 2008, certain amendments to the Strengthening Financial Functions Law took effect. These amendments relaxed certain requirements for public money injection into Japanese banks and bank holding companies and other financial institutions under the prior scheme and extended the period of application therefor, which had expired on March 31, 2008, to March 31, 2012. These amendments aim to promote not only the soundness of such financial institutions but also loans or other forms of credit extended to small and medium-sized enterprises in order to revitalize local economies.

Bank Holding Companies

Under the Banking Law, a bank holding company is prohibited from carrying out businesses other than administrating the businesses of its subsidiaries and matters incidental to such businesses. Business activities for subsidiaries of bank holding companies are limited to finance-related businesses and incidental businesses.

The Anti-Monopoly Law (Shiteki Dokusen no Kinshi oyobi Kousei Torihiki no Kakuho ni kansuru Houritsu) (Law No. 54 of 1947, as amended) prohibits a bank from holding more than 5% of another company’s voting rights. This does not apply to a bank holding company, although the bank holding company is subject to general shareholding restrictions under the Anti-Monopoly Law. The Banking Law does, however, prohibit a bank holding company and its subsidiaries, on an aggregate basis, from holding more than 15% (in contrast to 5% in the case of a bank and its subsidiaries) of the voting rights of certain types of companies not permitted to become subsidiaries of bank holding companies.

Financial Instruments and Exchange Law

The Financial Instruments and Exchange Law (Kinyu Shouhin Torihiki Hou) requires Mizuho Financial Group to file with the Director General of the Kanto Local Finance Bureau an annual securities report including consolidated and non-consolidated financial statements in respect of each financial period, supplemented by quarterly and extraordinary reports.

Under the Financial Instruments and Exchange Law, registered Financial Instruments Business Operators (kinyu-shouhin torihiki gyousha), such as Mizuho Securities, as well as Registered Financial Institutions (touroku kinyu kikan), such as Mizuho Bank, Mizuho Corporate Bank and Mizuho Trust & Banking, are required to provide customers with detailed disclosure regarding the financial products they offer and take other measures to protect investors, including a delivery of explanatory documents to such customers prior to and upon the conclusion of transactional agreements.

Financial Instrument Business Operators and Registered Financial Institutions are subject to the supervision of the Financial Services Agency pursuant to delegation by the Prime Minister of Japan. Some of the supervisory authority of the Financial Services Agency is further delegated to the Securities and Exchange Surveillance Commission, which exercises its supervisory power over such registered institutions by conducting site inspections and requesting information necessary for such inspections. Non-compliance or interference with such inspection may result in such registrants being subject to criminal penalty under the Financial Instruments and Exchange Law.

Certain amendments to the Financial Instruments and Exchange Law and the Banking Law, which came into effect on June 1, 2009, revamped the firewall regulations regarding the holding of concurrent offices or posts among banks, securities firms and insurance firms and required banks, securities firms and insurance firms to establish systems for managing conflicts of interest in order to protect customers’ interests and expanded business services that banks and certain other financial firms can provide.

Sales of Financial Products

As a result of financial deregulation, more financial products, including highly structured and complicated products, can now be more freely marketed to customers. In response to this, the Law of Sales of Financial Products (Kinyu Shouhin no Hanbai tou ni kansuru Houritsu) (Law No. 101 of 2000, as amended), effective from April 2001, introduced measures to protect financial service customers by: requiring financial service providers to provide customers with certain important information, including risks with respect to deficit of principal associated with the financial products they offer and any restrictions on the period for exercising rights or the period for rescission, unless the customers fall within the ambit of professional investors or express their intent to the contrary; and holding financial service providers liable for damages caused by a failure to follow those requirements. The amount of loss of principal is refutably presumed to be the amount of damages. Additionally, the law requires financial service providers to follow certain regulations on solicitation measures as well as to endeavor to solicit customers in an appropriate manner and formulate and publicize a solicitation policy.

Self-Assessment and Reserves

The prompt corrective action system requires financial institutions to establish a self-assessment program that complies with the Inspection Manual issued by the Financial Services Agency and related laws such as the Financial Reconstruction Law (Kinyu Kinou no Saisei no tameno Kinkyu Sochi ni kansuru Houritsu) (Law No. 132 of 1998, as amended). Financial institutions are required to analyze their assets, giving due consideration to accounting principles and other applicable rules and to classify their assets into four categories according to asset recovery risk and risk of impairment based on the classification of the obligor (normal obligors, watch obligors, intensive control obligors, substantially bankrupt obligors and bankrupt obligors) taking into account the likelihood of repayment and the risk of impairment to the value of the assets. The results of self-assessment should be reflected in the write-off and allowance according to the standard established by financial institutions pursuant to the guidelines issued by the Japanese Institute of Certified Public Accountants and Inspection Manual issued by the Financial Services Agency. Based on the results of the self-assessment, financial institutions may establish reserve amounts for their loan portfolio as may be considered adequate at the relevant balance sheet date, even if all or part of such reserves may not be immediately tax deductible under Japanese tax law.

Based on the accounting standards for banks issued by the Japanese Bankers Association, a bank is required to establish general reserves, specific reserves and reserves for probable losses on loans relating to restructuring countries.

Credit Limits

The Banking Law restricts the aggregate amount of loans to any single customer or customer group for the purposes of avoiding excessive concentration of credit risks and promoting the fair and extensive utilization of bank credit. The limits applicable to a bank holding company and bank with respect to their aggregate lending to any single customer or customer group are established by a cabinet order and by the Banking Law. The current limits are 25% of the total qualifying capital of the bank holding company or bank and its subsidiaries and affiliates with respect to a single customer and 40% of the total qualifying capital of the bank holding company or bank and its subsidiaries and affiliates with respect to a customer group.

Restriction on Shareholdings

The Law Concerning Restriction on Shareholdings by Banks (Ginkou tou no Kabushiki tou no Hoyu no Seigen tou ni kansuru Houritsu) (Law No. 131 of 2001, as amended) requires Japanese banks (including bank holding companies) and their subsidiaries to limit the aggregate market value (excluding unrealized gains, if any) of their holdings in equity securities to an amount equal to 100% of their Tier 1 capital in order to reduce exposure to stock price fluctuations.

Share Purchase Program

The Banks’ Shareholdings Purchase Corporation was established in January 2002 in order to purchase shares from banks and other financial institutions until September 30, 2006 pursuant to the Law Concerning Restriction on Shareholdings by Banks. This law was further amended effective March 10, 2009 to allow the Bank’s Shareholdings Purchase Corporation to resume purchases of shares held by financial institutions as well as shares of financial institutions held by non-financial institutions, up to a maximum amount of ¥20 trillion between March 12, 2009 and March 31, 2012. The Bank’s Shareholdings Purchase Corporation purchased ¥449.2 billion of shares during the period from March 12, 2009 through June 30, 2010. The Bank’s Shareholdings Purchase Corporation will dispose of the purchased shares by March 31, 2022 by taking into consideration the effects on the stock market.

The Bank of Japan also purchased ¥387.8 billion of shares held by banks and other financial institutions during the period from February 23, 2009 through April 30, 2010. The Bank of Japan generally will not sell the purchased shares until March 31, 2012. The Bank of Japan will dispose of the purchased shares by September 30, 2017 by taking into consideration the effects on the stock market.

Capital Adequacy

The capital adequacy guidelines applicable to Japanese banks and bank holding companies with international operations supervised by the Financial Services Agency closely follow the risk-adjusted approach proposed by the Bank for International Settlements and are intended to further strengthen the soundness and stability of Japanese banks. Under the risk-based capital framework of these guidelines, balance sheet assets and off-balance-sheet exposures are assessed according to broad categories of relative risk, based primarily on the credit risk of the counterparty, country transfer risk and the risk regarding the category of transactions.

With regard to capital, these guidelines are in accordance with the standards of the Bank for International Settlements for a target minimum standard capital adequacy ratio of 8% (at least half of which must consist of Core Capital (Tier 1), a Core Capital ratio of 4%) on both a consolidated and non-consolidated basis for banks with international operations, such as Mizuho Corporate Bank, or on a consolidated basis for bank holding companies with international operations, such as Mizuho Financial Group.

Banks and bank holding companies are required to measure and apply capital charges with respect to their market risks in addition to their credit risks. Market risk is defined as the risk of losses in on- and off-balance sheet positions arising from movements in market prices such as the risks pertaining to interest rate related instruments and equities.

Japanese banks with only domestic operations, such as Mizuho Bank, and bank holding companies the subsidiaries of which operate only within Japan are subject to Japanese capital adequacy requirements that are similar to those discussed above, except that those banks and holding companies are required to have a minimum capital adequacy ratio of 4%, at least half of which must consist of Tier 1 capital and are not required to apply capital charges to their market risks.

Under the capital adequacy guidelines, the maximum amount of net deferred tax assets under Japanese GAAP that major Japanese banks, including bank holding companies, can record without diminishing the amount of Tier 1 capital for purposes of calculating capital adequacy is 20% of Tier 1 capital.

In June 2004, the Basel Committee on Banking Supervision announced amended rules with respect to minimum capital requirements, which include amended risk weight calculations that introduce an internal ratings-based approach and the inclusion of operational risk in the calculations, as well as an emphasis on supervisory review and market discipline through effective disclosure. The amendments adopt variable risk weights according to the credit rating given to the obligor of the risk-weighted assets. The better the credit rating of an obligor is, the lower the risk weight applicable to the risk-weighted assets owed by it. Also, the new rules require financial institutions to establish an internal risk management system, to make thorough disclosure of relevant information and to set an appropriate reserve against the operational risk based upon fair evaluation thereof. The new Financial Services Agency guidelines, which follow the amended rules, became effective on March 31, 2007, except for the introduction of the advanced methodologies to calculate capital requirements for risks which took effect on March 31, 2008. Under the new guidelines, banks and bank holding companies have several choices for the methodologies to calculate their capital requirements for credit risk, market risk and operational risk. Approval of the Financial Services Agency is necessary to adopt advanced methodologies for calculation, and Mizuho Financial Group started to apply the AIRB approach for the calculation of credit risk from the fiscal year ended March 31, 2009 and also apply the AMA for the calculation of operational risk from September 30, 2009.

In December, 2009, the Basel Committee on Banking Supervision announced a package of proposals to strengthen global capital and liquidity regulations with the goal of promoting a more resilient banking sector.

The Basel Committee on Banking Supervision’s proposals cover the following key areas:

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Raising the quality, consistency and transparency of the capital base;

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Strengthening the risk coverage of the capital framework;

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Introducing a leverage ratio as a supplementary measure to the Basel II risk-based framework with a view to migrating to a minimum capital requirements treatment based on appropriate review and calibration;

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Introducing a series of measures to promote the build-up of capital buffers in good times that can be drawn upon in periods of stress; and

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Introducing a global minimum liquidity standard for internationally active banks that includes a 30-day liquidity coverage ratio requirement underpinned by a longer-term structural liquidity ratio.

The fully calibrated set of standards will be developed by the end of 2010 to be phased in as financial conditions improve and the economic recovery is assured, with the aim of implementation by the end of 2012. For further information of the proposals, see “Item 5. Operating and Financial Review and Prospects—Capital Adequacy—Regulatory Capital Requirements.”

Protection of Personal Information

The Personal Information Protection Law (Kojin Jouhou no Hogo ni kansuru Houritsu) (Law No. 57 of 2003, as amended) and related guidelines impose various requirements on businesses, including us, that use databases containing personal information, such as appropriate custody of such information and restrictions on information sharing with third parties. Non-compliance with the order issued by the Financial Services Agency to take necessary measures to comply with the law subjects us to criminal and/or administrative sanctions.

Prevention of Money Laundering

Under the Law Preventing Transfer of Profits Generated from Crime (Hanzai ni yoru Syueki no Iten Boushi ni kansuru Houritsu) (Law No. 22 of 2007, as amended), which addresses money laundering and terrorism concerns, financial institutions and other entities such as credit card companies are required to perform customer identification, submit suspicious transaction reports and maintain records of transactions.

Law Concerning Protection of Depositors from Illegal Withdrawals Made by Forged or Stolen Cards

The Law Concerning Protection of Depositors from Illegal Withdrawals Made by Forged or Stolen Cards (Gizou Kaado tou oyobi Tounan Kaado tou wo Mochiite Okonawareru Fuseina Kikaishiki Yochokin Haraimodoshi tou karano Yochokinsha no Hogo tou ni kansuru Houritsu) (Law No. 94 of 2005, as amended), requires financial institutions to establish internal systems to prevent illegal withdrawals of deposits made using forged or stolen bank cards. The law also requires financial institutions, among other matters, to compensate depositors for any amount illegally withdrawn using forged bankcards, unless the financial institution can verify that it acted in good faith without negligence and that there was gross negligence on the part of the relevant account holder.

Law Concerning Temporary Measures to Facilitate Financing for Small and Medium-Sized Enterprises (SMEs), etc.

The Law Concerning Temporary Measures to Facilitate Financing for Small and Medium-Sized Enterprises (SMEs), etc. (Chuushoukigyousha tou ni taisuru Kinyuu no Enkatsuka wo Hakaru tameno Rinjisochi ni kansuru Houritsu) (Law No. 96 of 2009) was enacted on November 30, 2009. The legislation requires financial institutions, among other things, to make an effort to reduce their customers’ burden of loan repayments by employing methods such as modifying the terms of loans at the request of eligible borrowers including SMEs and individual home loan borrowers. The legislation also requires financial institutions to internally establish a system to implement the requirements of the legislation and periodically make disclosure of and report to the relevant authority on the status of implementation. These measures are effective until March 2011.

United States

As a result of our operations in the United States, we are subject to extensive U.S. federal and state supervision and regulation. We engage in U.S. banking activities through Mizuho Corporate Bank’s New York, Chicago and Los Angeles branches and Houston and Atlanta representative offices. We also own two banks in the United States, Mizuho Corporate Bank (USA) and Mizuho Corporate Bank of California, as well as controlling interests in several other subsidiaries, including Mizuho Trust & Banking Co. (USA), which is engaged primarily in the trust and custody business, and Mizuho Securities USA Inc., a U.S. broker dealer engaged in the securities business.

The USA PATRIOT Act of 2001 (the “PATRIOT Act”) contains measures to prevent, detect and prosecute terrorism and international money laundering by imposing significant compliance and due diligence obligations, creating new crimes and penalties and expanding the extraterritorial jurisdiction of the United States. The enactment of the PATRIOT Act and other events have resulted in heightened scrutiny of compliance with the Bank Secrecy Act and anti-money laundering rules by federal and state regulatory and law enforcement authorities.

Mizuho Financial Group and Mizuho Corporate Bank are financial holding companies (“FHCs”), and Mizuho Trust & Banking is a bank holding company, within the meaning of the U.S. Bank Holding Company Act of 1956, as amended (the “BHCA”), and are subject to regulation and supervision thereunder by the Board of Governors of the Federal Reserve System (the “Federal Reserve Board”). Under current Federal Reserve Board policy, these three companies are expected to act as a source of financial strength to Mizuho Corporate Bank (USA), Mizuho Corporate Bank of California, and Mizuho Trust & Banking Co. (USA). The BHCA generally prohibits us from acquiring, directly or indirectly, the ownership or control of more than 5% of any class of voting shares of any

company engaged in the United States in activities other than banking or activities that are financial in nature or incidental or complementary to financial activity. This general prohibition is subject to certain exceptions, including an exception that permits us to acquire up to 100% of the voting interests in any company engaged in nonfinancial activities under our merchant banking authority. In addition, U.S. regulatory approval is generally required for us to acquire more than 5% of any class of voting shares of a U.S. bank or savings association.

Mizuho Financial Group and Mizuho Corporate Bank became FHCs in December 2006. FHC status under the BHCA permits banking groups in the United States to engage in comprehensive investment banking businesses, such as the underwriting of and dealing in corporate bonds, equities and other types of securities. FHC status enables our group to promote our investment banking business on a broader basis in the United States.

As a financial holding company, we are also subject to additional regulatory requirements. For example, each of our U.S. insured depository institution subsidiaries with operations in the United States must be “well capitalized,” meaning a Tier 1 risk-based capital ratio of at least 6% and a total risk-based capital ratio of at least 10%. Our U.S. insured depository institution subsidiaries must also be “well managed,” including that they maintain examination ratings that are at least satisfactory. Further, Mizuho Corporate Bank must also meet such capital standards as calculated under its home country standards (which must be comparable to the capital required for a U.S. bank) and must be well managed under standards comparable to those required for a U.S. bank. Failure to comply with such requirements would require us to prepare a remediation plan, and we would not be able to undertake new business activities or acquisitions based on our status as a financial holding company during any period of noncompliance without the prior approval of the Federal Reserve Board, and divestiture or termination of certain business activities, or termination of our U.S. branches and agencies, may be required as a consequence of failing to correct such conditions within 180 days.

U.S. branches, agencies and representative offices of foreign banks must be licensed, and are also supervised and regulated, by either a state banking authority or by the Office of the Comptroller of the Currency, the federal bank regulatory agency that charters and regulates national banks and federal branches and agencies of foreign banks. Each branch and representative office in the United States of Mizuho Corporate Bank is state-licensed. Under U.S. federal banking laws, state-licensed branches and agencies of foreign banks may engage only in activities that would be permissible for their federally-licensed counterparts, unless the Federal Reserve Board determines that the additional activity is consistent with sound practices. U.S. federal banking laws also subject state-licensed branches and agencies to the single-borrower lending limits that apply to federal branches and agencies, which generally are the same as the lending limits applicable to national banks, but are based on the capital of the entire foreign bank.

The New York branch of Mizuho Corporate Bank is subject to supervision, examination and regulation by the New York State Banking Department as well as by the Federal Reserve Board. Except for the prohibition on such branch accepting retail deposits, a state-licensed branch generally has the same powers as a state-chartered bank in such state. New York State has an asset pledge requirement for branches equal to 1% of third party liabilities with a cap of $400 million, provided that an institution designated as a “well-rated foreign banking corporation” is permitted to maintain a reduced asset pledge with a cap of $100 million. The New York State Banking Department may require higher amounts for supervisory reasons. Each U.S. branch and representative office of Mizuho Corporate Bank is subject to regulation and examination by the state banking authority of the state in which it is located.

The deposits of Mizuho Corporate Bank (USA) are insured by the Federal Deposit Insurance Corporation (FDIC), and it is a state-chartered bank that is a member of the Federal Reserve System. As such, Mizuho Corporate Bank (USA) is subject to regulation, supervision and examination by the Federal Reserve Board and the New York State Banking Department, as well as to relevant FDIC regulation. The deposits of Mizuho Corporate Bank of California are FDIC-insured, and it is a state-chartered bank that is not a member of the Federal Reserve System. As such, Mizuho Corporate Bank of California is subject to regulation, supervision and

examination by the FDIC and the California Department of Financial Institutions. The deposits of Mizuho Trust & Banking Co. (USA) are also FDIC-insured, and it is a state-chartered bank and trust company that is not a member of the Federal Reserve System. As such, Mizuho Trust & Banking Co. (USA) is subject to regulation, supervision and examination by the FDIC and the New York State Banking Department.

In the United States, U.S.-registered broker-dealers are regulated by the U.S. Securities and Exchange Commission. As a U.S.-registered broker-dealer, Mizuho Securities USA is subject to regulations that cover all aspects of the securities business, including sales methods, trade practices among broker-dealers, use and safekeeping of customers’ funds and securities, capital structure, recordkeeping, the financing of customers’ purchases and the conduct of directors, officers and employees.

In the United States, comprehensive financial regulatory reform legislation, titled the Dodd-Frank Wall Street Reform and Consumer Protection Act (the “Dodd Frank Act”), was signed into law by President Obama on July 21, 2010. The Dodd-Frank Act will have far-reaching implications across the financial services industry. Among other things, the Dodd-Frank Act directs the federal banking regulators to establish minimum leverage and risk-based capital requirements for insured depository institutions and depository institution holding companies. The Dodd-Frank Act also creates a Bureau of Consumer Financial Protection with broad authority to regulate consumer financial products and services and imposes new regulation of the over-the-counter derivatives market.

Other Jurisdictions

Our operations elsewhere in the world are subject to regulation and control by local supervisory authorities, including local central banks.

4.C. Organizational Structure

The following diagram shows our basic corporate structure as of March 31, 2010:

LOGO

Notes:

(1)	Mizuho Securities and Mizuho Investors Securities and Mizuho Trust & Banking are listed on the Tokyo Stock Exchange.

(2)	Two asset management companies consist of Mizuho Asset Management and DIAM. DIAM, in which we have a 50.0% equity interest, is an equity-method affiliate of ours.

The following table sets forth information with respect to our principal consolidated subsidiaries as of March 31, 2010:


Name	Country of organization	Main business	Proportion of ownership interest (%)		Proportion of voting interest (%)
Domestic
Mizuho Bank, Ltd.	Japan	Banking	100.0	%	100.0	%
Mizuho Corporate Bank, Ltd.	Japan	Banking	100.0	%	100.0	%
Mizuho Securities Co., Ltd.	Japan	Securities	57.9	%	59.5	%
Mizuho Trust & Banking Co., Ltd.	Japan	Trust and banking	74.8	%	74.8	%
Mizuho Investors Securities Co., Ltd.	Japan	Securities	66.5	%	66.8	%
Trust & Custody Services Bank, Ltd.	Japan	Trust and banking	54.0	%	54.0	%
Mizuho Asset Management Co., Ltd.	Japan	Investment management	98.7	%	98.7	%
Mizuho Research Institute Ltd.	Japan	Research and consulting	98.4	%	98.6	%
Mizuho Information & Research Institute Inc.	Japan	Information technology	91.5	%	91.5	%
Mizuho Financial Strategy Co., Ltd.	Japan	Consulting	100.0	%	100.0	%
Mizuho Private Wealth Management Co., Ltd.	Japan	Consulting	100.0	%	100.0	%
Mizuho Factors, Limited	Japan	Factoring	100.0	%	100.0	%
Mizuho Credit Guarantee Co., Ltd.	Japan	Credit guarantee	100.0	%	100.0	%
Mizuho Capital Co., Ltd.	Japan	Venture capital	50.0	%	50.0	%
Defined Contribution Plan Services Co., Ltd.	Japan	Pension plan-related business	60.0	%	60.0	%

Overseas
Mizuho Bank (Switzerland) Ltd.	Switzerland	Trust and banking	100.0	%	100.0	%
Mizuho Capital Markets Corporation	U.S.A.	Derivatives	100.0	%	100.0	%
Mizuho Corporate Bank (China), Ltd.	China	Banking	100.0	%	100.0	%
Mizuho Corporate Bank (USA)	U.S.A.	Banking	100.0	%	100.0	%
Mizuho Corporate Bank Nederland N.V.	Netherlands	Banking and securities	100.0	%	100.0	%
Mizuho International plc	U.K.	Securities and banking	100.0	%	100.0	%
Mizuho Securities USA Inc.	U.S.A.	Securities	100.0	%	100.0	%
Mizuho Trust & Banking (Luxembourg) S.A.	Luxembourg	Trust and banking	100.0	%	100.0	%
Mizuho Trust & Banking Co. (USA)	U.S.A.	Trust and banking	100.0	%	100.0	%
PT. Bank Mizuho Indonesia	Indonesia	Banking	99.0	%	99.0	%

4.D. Property, Plant and Equipment

The following table shows the breakdown of our premises and equipment at cost as of March 31, 2009 and 2010:


	At March 31,
	2009		2010
	(in millions of yen)
Land	¥	177,311	¥	242,056
Buildings		598,411		675,630
Equipment and furniture		457,419		461,359
Leasehold improvements		110,432		90,004
Construction in progress		19,932		22,421
Software		545,078		645,321

Total		1,908,583		2,136,791
Less accumulated depreciation		1,008,835		1,088,874

Premises and equipment—net	¥	899,748	¥	1,047,917

Our head office is located at 5-1, Marunouchi 2-chome, Chiyoda-ku, Tokyo, Japan with 13,185 square meters of office space. The headquarter buildings of Mizuho Financial Group, Mizuho Corporate Bank and Mizuho Bank are each leased from third parties.

The total area of land related to our material office and other properties at March 31, 2010 was approximately 830,000 square meters for owned land and approximately 21,000 square meters for leased land.

Our owned land and buildings are primarily used by our branches. Most of the buildings and land owned by us are free from material encumbrances.

ITEM 4A. UNRESOLVED STAFF COMMENTS

None.

ITEM 5. OPERATING AND FINANCIAL REVIEW AND PROSPECTS

The following discussion and analysis should be read in conjunction with “Item 3.A. Key Information—Selected Financial Data,” “Selected Statistical Data” and our consolidated financial statements, including the notes thereto, included elsewhere in this annual report.

Table of Contents for Item 5.


		Page
Overview		44
Critical Accounting Estimates		64
Operating Results		66
Business Segments Analysis		81
Geographical Segment Analysis		90
Financial Condition		93
Liquidity		102
Capital Adequacy		103
Off-balance-sheet Arrangements		111
Tabular Disclosure of Contractual Obligations		114
Recent Accounting Pronouncements		114
Reconciliation with Japanese GAAP		116

Overview

The Mizuho Group

We provide a broad range of financial services in domestic and overseas markets through three Global Groups: the Global Corporate Group; the Global Retail Group; and the Global Asset & Wealth Management Group. The principal activities and subsidiaries of the three Global Groups are the following:

•

The Global Corporate Group provides wholesale and international banking and securities services, principally through Mizuho Corporate Bank and Mizuho Securities;

•

The Global Retail Group provides retail and SME and middle-market corporation banking and securities services in Japan, principally through Mizuho Bank and Mizuho Investors Securities; and

•

The Global Asset & Wealth Management Group provides trust and asset management services and private banking products and services, principally through Mizuho Trust & Banking, Trust & Custody Services Bank, our asset management companies, namely Mizuho Asset Management and DIAM (an equity method affiliate of ours) and Mizuho Private Wealth Management.

We also provide other services such as research services through Mizuho Research Institute, information technology-related services through Mizuho Information & Research Institute and advisory services for financial institutions through Mizuho Financial Strategy.

The former Shinko Securities (a former equity method affiliate of ours) and the former Mizuho Securities (a former consolidated subsidiary of ours) merged on May 7, 2009. The surviving entity was the former Shinko Securities which changed its name to Mizuho Securities upon the merger. Our proportion of voting interest in the new Mizuho Securities as of March 31, 2010 was 59.5%.

In May 2010, we announced that Mizuho Bank and Mizuho Corporate Bank will convert preferred shares of Orient Corporation (“Orico”) that they own into common shares during the first half of the fiscal year ending March 31, 2011 and make Orico an equity method affiliate of ours. See “Item 4.B. Information on the Company—Business Overview.”

For a further discussion of our business and group organization, see “Item 4.B. Information on the Company—Business Overview.”

Principal Sources of Income and Expenses

Net Interest Income

Net interest income arises principally from the lending and deposit-taking and securities investment activities of our banking subsidiaries and is a function of:

•

the amount of interest-earning assets and interest-bearing liabilities;

•

the average interest rate spread (the difference between the average yield of interest earned on interest-earning assets and the average rate of interest paid on interest-bearing liabilities); and

•

the general level of interest rates.

Principal items constituting interest-earning assets include loans, investments, trading account assets, receivables under resale agreements and receivables under securities borrowing transactions. Principal items constituting interest-bearing liabilities include deposits, trading account liabilities, short-term borrowings (such as payables under repurchase agreements and payables under securities lending transactions) and debentures.

Provision (Credit) for Loan Losses

Provision (credit) for loan losses is charged against or credited to income to keep the allowance for loan losses at a level that is appropriate to absorb probable losses inherent in the credit portfolio. For a description of the approach and methodology used to establish the allowance for loan losses, see “—Financial Condition—Allowance for loan losses.”

Noninterest Income

Noninterest income consists mainly of fees and commissions, investment gains (losses)—net, trading account gains—net and foreign exchange gains (losses)—net.

Fees and commissions include the following:

•

fees and commissions from deposits, debentures and lending business, which consist mostly of fees and commissions related to our loan businesses, including fees related to the arrangement of syndicated loans and other financing transactions such as arrangement fees related to management buy-out transactions and fees related to deposits such as account transfer charges;

•

fees and commissions from remittance business, including service charges for domestic and international funds transfers and collections;

•

fees and commissions from securities-related business, including brokerage fees and commissions related to securities underwriting and other securities-related activities;

•

trust fees, including trust fees earned primarily through fiduciary asset management and administration services for corporate pension plans and investment funds; and

•

fees for other customer services, including fees related to our agency businesses, such as administration fees related to Japan’s principal public lottery program, as well as guarantee fees and others.

Investment gains (losses)—net include primarily net gains on sales of marketable securities, such as equity and bond investments. In addition, impairment losses are recognized when management concludes that declines in fair value of investments are other-than-temporary.

Trading account gains—net include gains and losses from transactions undertaken for trading purposes, including both market making for customers and proprietary trading, or transactions through which we seek to capture gains arising from short-term changes in market value. Trading account gains—net also include gains and losses related to changes in the fair value of derivatives and other financial instruments not eligible for hedge accounting under U.S. GAAP that are utilized to offset mainly interest rate risk related to our various assets and liabilities, as well as gains and losses related to changes in the fair value of foreign currency-denominated available-for-sale securities that are elected for fair value treatment under ASC 825. For further information on the fair value option, see note 29 to our consolidated financial statements included elsewhere in this annual report.

Foreign exchange gains (losses)—net include mainly translation gains and losses related to our foreign currency-denominated assets and liabilities and gains and losses related to foreign exchange trading activities, including market making for customers and proprietary trading.

Noninterest Expenses

Noninterest expenses include primarily salaries and employee benefits, general and administrative expenses, occupancy expenses and fees and commission expenses.

Salaries and employee benefits include expenses incurred for salaries, bonuses and compensation to directors and employees. They also include expenses related to pension and other employee retirement benefit plans.

The principal items included in general and administrative expenses are amortization of software, tax expenses such as consumption tax and property tax that are not income taxes and other expenses, including premiums for deposit insurance.

The principal items included in occupancy expenses are expenses related to premises and equipment, including depreciation, losses on disposal and lease expenses.

The principal items included in fees and commission expenses are fees and commission expenses for remittance services, which include mainly commission expenses paid in connection with remittance transactions and securities-related businesses, which include mainly transactions costs such as brokerage fees paid.

Operating Environment

We operate principally in Japan, and our performance has generally tracked the macro economy of Japan. After years of persistent weakness beginning in the 1990s, the Japanese economy had gradually improved over the years by confronting structural issues such as deflationary pressures, excess capacity, excess employment and excess leverage. However, since the fiscal year ended March 31, 2008, the global economy has weakened due mainly to the effects of the dislocation in the global financial markets. The global economy continued to worsen in the fiscal year ended March 31, 2009, and financial results in the financial and industrial sectors deteriorated significantly.

In the fiscal year ended March 31, 2010, the actions taken to stabilize the financial system and stimulate the economy by major countries in cooperation with each other in response to the financial crisis have been effective, and the global economy has emerged from its worst and is maintaining a gradual recovery. As for the Japanese economy, it has entered a mild deflationary state with a severe employment and income environment continuing, and prospects of a self-sustaining recovery in domestic private-sector demand remain weak. However, exports and personal consumption, especially of durable goods, continue to strengthen, reflecting improvements in the foreign economic environment and the effectiveness of economic stimulus packages, and the economy is beginning to recover, with a return to positive real gross domestic product growth from the second quarter of

calendar year 2009 compared to the preceding quarter. Although the annualized real gross domestic product increased by 5.0% in the first quarter of calendar year 2010, compared to the preceding quarter (seasonally adjusted), in a situation where causes for concern exist, such as the effects of the cessation of economic stimulus packages, worsening employment and the aggravation of the financial condition of certain nations in Europe and other areas, it remains uncertain whether the global economy will be capable of maintaining growth going forward as the risk that the global economy will continue to stagnate still remains. Key indicators of economic conditions in recent periods include the following:

•

Japan’s real gross domestic product on a year-on-year basis continued to increase by 2.3%, 2.3%, 1.8% in the fiscal years ended March 31, 2006, 2007 and 2008, respectively, but decreased by 3.7% and 2.0% in the fiscal years ended March 31, 2009 and 2010, respectively. After showing a gradual reduction in the rate of decline in each quarter of calendar 2009, Japan’s real gross domestic product on a quarterly basis, compared to the corresponding period of the previous year, increased by 4.6% in the first quarter of calendar 2010. The Japanese Government stated in its monthly economic reports for January and February 2010 that although the economy has been picking up, it is short of autonomous factors and remains in a difficult situation such as a high unemployment rate. From March through May 2010, the reports began to reflect improvement of the economic situation and stated that, although the economy has been picking up steadily, it is only weakly self-sustaining and remains in a difficult situation such as a high unemployment rate. In the June 2010 report, it added that a foundation for a self-sustaining recovery is being laid, although the difficult situation such as the high unemployment rate remains. Japan’s core nationwide consumer price index increased by 0.1%, 0.1%, 0.3% and 1.2% in the fiscal years ended March 31, 2006, 2007, 2008 and 2009, respectively but decreased by 1.6% in the fiscal year ended March 31, 2010. The Japanese Government stated in its monthly economic reports from November 2009 onwards that the Japanese economy is in a mild deflationary phase. The following chart shows the growth rates of Japan’s gross domestic product on a year-on-year basis and Japan’s core nationwide consumer price indices from the first quarter of 2005 through the first quarter of 2010:

LOGO

•

The Bank of Japan, following its announcement on March 9, 2006 to end its “quantitative easing” monetary policy that it had maintained since March 2001, announced on July 14, 2006 and on February 21, 2007 that it raised its target for the uncollateralized overnight call rate from 0% to 0.25% and from 0.25% to 0.5%, respectively, but it lowered its target for the uncollateralized overnight call rate from 0.5% to 0.3% in October 2008 and to 0.1% in December 2008. In December 2009, the Bank of Japan announced that it would provide approximately ¥10 trillion in short-term funds to commercial banks at a low fixed rate in order to boost liquidity and recover stability in the financial markets and that it would increase the amount to approximately ¥20 trillion in March 2010. In addition, in June 2010, the Bank of Japan announced that it would introduce a fund-provisioning measure under which it would provide long-term funds to commercial banks at a low fixed rate in order to support the strengthening of the foundations for economic growth. The measure is expected to be implemented beginning around the end of August 2010. The following charts show movements in long-term rates from January 2007 through June 2010, represented by the yield on newly issued 10-year Japanese government bonds, and in short-term interest rates from January 2007 through June 2010, represented by the three-month Tokyo interbank offered rate, or TIBOR, and the uncollateralized overnight call rate used in the interbank market:

LOGO

•

According to the Bank of Japan, after a prolonged period of generally declining demand for bank loans in Japan, the aggregate monthly average balance of bank loans compared with that of the previous year started to increase in August 2005. The growth generally peaked in December 2008 and began showing a declining trend beginning December 2009.

•

The CDS index called iTraxx Japan 50, which is composed of 50 of the most liquid investment grade CDSs for Japanese entities, fell to 113.1 basis points as of March 31, 2010 from 421.7 basis points as of March 31, 2009, reflecting improved market environment for credit products, but rose to 139.8 basis points as of June 30, 2010. For information on financial transactions for hedging in relation to credit derivatives, see “Item 3.D. Key Information—Risk Factors—Risks Relating to Our Business—Financial transactions entered into for hedging and other similar purposes could adversely affect our financial condition and results of operations.”

•

According to Teikoku Databank, a Japanese research institution, there were approximately 11,300 corporate bankruptcies in Japan in the fiscal year ended March 31, 2008, involving approximately ¥5.5 trillion in total liabilities, approximately 13,200 corporate bankruptcies in the fiscal year ended March 31, 2009, involving approximately ¥13.7 trillion in total liabilities, and approximately 12,900 corporate bankruptcies in the fiscal year ended March 31, 2010, involving approximately ¥7.2 trillion in total liabilities.

•

According to the Tokyo Stock Exchange, or the TSE, the aggregate ordinary profits and net income of all companies listed on the TSE with a March 31 fiscal year end, excluding financial institutions and companies newly listed during the relevant fiscal year, decreased from ¥35.9 trillion and ¥20.0 trillion, respectively, for the fiscal year ended March 31, 2008 to ¥13.5 trillion and ¥0.2 trillion, respectively, for the fiscal year ended March 31, 2009 and increased to ¥17.1 trillion and ¥7.5 trillion, respectively, for the fiscal year ended March 31, 2010.

•

According to the Bank of Japan, total financial assets of households decreased from ¥1,464.9 trillion as of March 31, 2008 to ¥1,408.9 trillion as of March 31, 2009 and increased to ¥1,452.8 trillion as of March 31, 2010. The following chart shows the amount of total financial assets of households and breakdown based on type of financial asset as of the ends of the first quarter of 2006 through the first quarter of 2010:

LOGO

•

The Nikkei Stock Average, which is an average of the price of 225 stocks listed on the Tokyo Stock Exchange, decreased by 27.5% to ¥12,525.54 during the fiscal year ended March 31, 2008 and decreased again by 35.3% to ¥8,109.53 during the fiscal year ended March 31, 2009, but increased by 36.8% to ¥11,089.94 during the fiscal year ended March 31, 2010. Thereafter, the Nikkei Stock Average decreased to ¥9,382.64 as of June 30, 2010. The following chart shows the daily closing price of the Nikkei Stock Average from January 2007 through June 2010:

LOGO

•

The Japanese yen to U.S. dollar spot exchange rate, according to the Bank of Japan, was ¥99.37 to $1.00 as of March 31, 2008, ¥98.31 to $1.00 as of March 31, 2009 and ¥93.27 to $1.00 as of March 31, 2010. The following chart shows the yen/dollar spot rate of 5 p.m. Tokyo time published by the Bank of Japan from January 2007 through June 2010:

LOGO

•

According to the Ministry of Land, Infrastructure and Transport of Japan, housing starts in Japan increased by 2.9% in the fiscal year ended March 31, 2007, decreased by 19.4% in the fiscal year ended March 31, 2008, increased by 0.3% in the fiscal year ended March 31, 2009 and decreased by 25.4% in the fiscal year ended March 31, 2010.

•

According to the Ministry of Land, Infrastructure and Transport, the average published land prices in Japan rose by 0.1% during calendar year 2006, which was the first increase in 16 years, rose again by 1.3% during calendar year 2007, but decreased by 3.2% and 4.2% during calendar year 2008 and 2009, respectively.

Capital Improvements

All yen figures in this subsection are truncated. Accordingly, the total of each column of figures may not be equal to the total of the individual items.

Our basic policy is to pursue “disciplined capital management,” by which we pursue an optimal balance between “strengthening of stable capital base” and “steady returns to shareholders” in accordance with changes in the business environment, our financial condition and other factors.

Shift of Priority

While our basic policy remains unchanged, we have been putting more priority on strengthening our stable capital base from the second half of the fiscal year ended March 31, 2009, having recognized the importance of capital during the financial dislocation and global economic downturn. Measures we took for responding to the above priority include the following:

•

We suspended repurchases and cancellation of shares of our common stock since the second half of the fiscal year ended March 31, 2009.

•

We paid cash dividends for the fiscal year ended March 31, 2010 of ¥8 per share of common stock, a year-on-year decrease of ¥2 per share.

•

In June, August and September 2009, we issued ¥139.5 billion, ¥72.5 billion and ¥25.0 billion, respectively, of non-dilutive preferred securities through our overseas special purpose companies to enhance our Tier 1 capital and improve the flexibility of our future capital strategy.

•

In July and August 2009, we issued an aggregate of ¥529.2 billion in common stock through a global offering to strengthen our “prime capital,” as such term is defined in “—Capital Adequacy—Prime Capital,” in order to build a solid and sufficient capital buffer.

Announcement of Proposals Regarding New Bank Capital Regulations

In December 2009, the Basel Committee announced a package of proposals, covering key areas such as raising the quality of the capital base, establishing a countercyclical capital framework and introducing a global minimum liquidity standard, with the goal of promoting a more resilient banking sector. The proposals are subject to further discussion of details. The proposal regarding raising the quality of the capital base aims to ensure that the banking system is in a better position to absorb losses. The specific levels of minimum regulatory capital requirement including that for the “Common Equity” component of Tier 1 capital, together with the fully calibrated set of standards, are currently scheduled to be determined by the end of calendar year 2010 after a comprehensive impact assessment, with the aim of implementation by the end of 2012 as financial conditions improve and the economic recovery is assured. The Basel Committee also stated that it will consider appropriate phase-in measures and grandfathering arrangements for a sufficiently long period to ensure a smooth transition to the new standards.

While closely monitoring the ongoing global discussions with respect to capital, we took the following measures to further strengthen our capital base:

•

In April 2010, we redeemed all of the $1.5 billion of perpetual subordinated bonds.

•

In May 2010, we announced our plan to reduce dividends on our common stock for the fiscal year ending March 31, 2011 by ¥2 per share compared to the previous fiscal year to ¥6 per share. The foregoing statement constitutes a forward-looking statement and is subject to risks, uncertainties and assumptions. See “Forward-looking Statements” and “Item 3.D. Key Information—Risk Factors.”

•

In addition to the above measures, in July 2010, we issued an aggregate of ¥751.62 billion in common stock (including the shares to be issued pursuant to the exercise of the over-allotment option in Japan) through a global offering to establish capital base as a cornerstone for our sustainable growth for the future, in anticipation of the revision of capital regulations, and thereby ensuring capital flexibility for us to expand our business areas with high growth potential and to promote customer-related businesses further.

We will continue to pursue optimal balance between “strengthening of stable capital base” and “steady returns to shareholders.” Following this basic policy, we will take various measures in anticipation of the revision of capital regulations. See “Item 4.B. Information on the Company—Business Overview—The Transformation Program (Aiming at Sustainable Growth).”

Business Trends

Based on our current operating environment and management focus, we believe that the trends that are most significant to our current and future results of operations include the following:

Loans and Deposits

Loan volume

Our total loan balance decreased on a year-on-year basis in the fiscal year ended March 31, 2010 due mainly to decreases in loans to Deposit Insurance Corporation of Japan, the Japanese government, overseas borrowers and large Japanese corporations despite our continuing efforts to meet the financing needs of domestic borrowers.

Margins between loans and deposits

The Bank of Japan announced on July 14, 2006 and on February 21, 2007 that it raised its target for the uncollateralized overnight call rate from 0% to 0.25% and from 0.25% to 0.5%, respectively. Reflecting these raises, the average yield on domestic loans increased from 1.54% in the fiscal year ended March 31, 2007 to 1.77% in the fiscal year ended March 31, 2008, and the average rate on domestic interest-bearing deposits increased from 0.38% to 0.52%. The increase of 0.23% in average yield on domestic loans in the fiscal year ended March 31, 2008 compared to the previous fiscal year was larger than the increase of 0.14% in the average rate on domestic interest-bearing deposits over the same period, resulting in a widening of the difference between such average yield and average rate. In response to the weakening economic environment, the Bank of Japan announced a reduction of its target for the uncollateralized overnight call rate from 0.5% to 0.3% in October 2008 and to 0.1% in December 2008. Reflecting these reductions, the average yield on domestic loans decreased from 1.72% in the fiscal year ended March 31, 2009 to 1.51% in the fiscal year ended March 31, 2010, and the average rate on domestic interest-bearing deposits decreased from 0.43% to 0.21%. In the fiscal year ended March 31, 2010, the difference between the decrease of 0.21% in the average yield on domestic loans and the decrease of 0.22% in the average rate on domestic interest-bearing deposits was not significant.

Provision (credit) for loan losses

Provision for loan losses decreased by ¥345 billion from the previous fiscal year to ¥222 billion for the fiscal year ended March 31, 2010. The decrease in provision for loan losses was due mainly to an improvement in economic conditions and our efforts for appropriate credit management. The amount of provision for loan losses in future fiscal years will depend largely on trends in the credit quality of borrowers, which in turn will be

affected by the domestic and global economic environment and other factors, and changes in the value of collateral on our loans. If worldwide demand for Japanese products and services declines and if weakness in the Japanese and global economy worsens or if another financial crisis develops, there can be no assurance that the amount of provision for loan losses will not increase significantly in future periods due to further declines in the credit quality of our customers both in and outside of Japan.

Fees and Commissions

Fees and commissions from corporate and retail customers have been significantly affected by the domestic and global economic environment. Until the fiscal year ended March 31, 2006, we experienced a period of significant increases in fees and commissions due to an expansion in various fee businesses that we offer to our corporate customers, such as fees from syndicated loans, other forms of financing arrangements and various advisory services, as demand for such products and services grew among Japanese corporations. Fees and commissions from retail customers had also increased due to growth in sales commissions related to various investment products as Japanese individuals increased the proportion of investments other than deposits within their total financial assets as interest rates on deposits maintained historically low levels. Despite our expectation at the time for continued growth in fees and commissions, a weak economic environment and turmoil in the global financial market, as well as increased competition within the domestic financial services industry, drove a decline in fees and commissions in the fiscal year ended March 31, 2008, and the decline accelerated in the fiscal year ended March 31, 2009. Fees and commissions earned from businesses involving corporate customers decreased in the fiscal year ended March 31, 2009 due to increased competition and the dislocation in the global financial markets which negatively impacted areas such as overseas leveraged buyout and other financings. Under unstable market conditions, sales of investment products to retail customers were negatively affected due mainly to the growing risk aversion of individuals. Although this trend may continue while the current global and domestic economic uncertainty continues, we do not believe that the general trend in recent years of Japanese individuals to shift their financial assets from savings to investments was only short term and instead believe that the trend will return over the long term.

Fees and commissions income increased by ¥25 billion from the previous fiscal year to ¥586 billion in the fiscal year ended March 31, 2010 due mainly to an increase at Mizuho Securities, while those of our principal banking subsidiaries continued to decrease. However, the rate of decrease of our principal banking subsidiaries’ fees and commissions has slowed as the Japanese economy has begun to recover.

Debt and Equity Securities Portfolio

The amount of our funding through deposits and debentures significantly exceeds our total loans. As a result, we allocate a significant portion of such excess among investments in debt securities, including Japanese government bonds and credit and alternative investments, which we promote to diversify our risks and to expand our income sources, and we also hold investments in equity securities consisting mainly of common stock of Japanese listed company customers.

The fair value of available-for-sale marketable equity securities within our investments was ¥3,284 billion, or ¥2,007 billion based on cost, as of March 31, 2010. Because the size of our portfolio of marketable equity securities is substantial, we are subject to significant equity market risk, as increases in unrealized gains and losses related to changes in the fair value of available-for-sale marketable equity securities are reflected in accumulated other comprehensive income, net of tax in equity or, in the case of other-than-temporary impairments to fair value, charged to income as an impairment loss. Although we expect the size of our portfolio of marketable equity securities to continue to be significant, we are reducing our holdings of marketable equity securities and have achieved our former medium-term target to lower the acquisition cost of marketable equity securities to 50% of our Tier 1 capital as of March 31, 2010 (the ratio of the acquisition cost to Tier 1 capital as of March 31, 2010 was 49%). We will continue to make efforts to lower the acquisition cost of marketable equity securities. See “Item 4.B. Information on the Company—Business Overview—The Transformation Program (Aiming at Sustainable Growth).”

Increases in long-term interest rates generally lead to a decline in the fair value of our portfolio of debt securities, a vast majority of which consists of Japanese government bonds, while decreases in long-term interest rates generally lead to an increase in fair value of the portfolio. As of March 31, 2010, we had a total of ¥34,517 billion of available-for-sale debt securities within our investments, of which ¥28,229 billion was Japanese government bonds. Changes in fair value of such available-for-sale debt securities are reflected in accumulated other comprehensive income, net of tax in equity or, in the case of other-than-temporary impairments, charged to income as an impairment loss. We had ¥24,685 billion and ¥34,517 billion of available-for-sale debt securities as of March 31, 2009 and 2010, respectively, and unrealized losses of ¥26 billion and unrealized gains of ¥9 billion were reflected in accumulated other comprehensive income, net of tax as of such dates, respectively. In the fiscal year ended March 31, 2010, we incurred investment losses related to bonds of ¥2 billion compared to losses of ¥178 billion in the fiscal year ended March 31, 2009. The decrease was due mainly to the absence of impairment losses on Japanese government bonds as we adopted ASC 320 which amends the other-than-temporary impairment model for debt securities.

Trading Account Gains—Net

Trading account gains—net increased by ¥300 billion from the previous fiscal year to ¥422 billion in the fiscal year ended March 31, 2010. The increase was due mainly to the gains earned by consolidated VIEs, such as stock investment trusts, as a result of a positive change in market conditions, an increase in gains related to changes in the fair value of derivative financial instruments used to hedge market risks, mainly interest rate risk, that are not eligible for hedge accounting under U.S. GAAP and an increase in gains related to changes in the fair value of foreign currency denominated available-for-sale securities for which the fair value option was elected.

Costs and Expenses

In the fiscal year ended March 31, 2010, salaries and employee benefits increased by ¥96 billion from the previous fiscal year to ¥592 billion due mainly to the effect of increased employee retirement benefit expenses as a result of a decline in expected return on plan assets, which reflects various aspects of long-term prospects for the economy, historical performance of investments of plan assets and the market environment, including stock market conditions, at the beginning of the fiscal period, and the amortization of net actuarial loss, which primarily reflects past declines in the value of plan assets. Occupancy expenses and general and administrative expenses decreased by ¥6 billion and ¥2 billion, respectively, due mainly to our efforts to enhance our cost efficiency through detailed reviews. Although expenses related to employee retirement benefits reflect the market environment including stock markets conditions, we plan to continue our efforts to reduce general and administrative expenses and occupancy expenses through detailed reviews for the entire group. See “Item 4.B. Information on the Company—Business Overview—The Transformation Program (Aiming at Sustainable Growth).”

Impact of the Dislocation in the Global Financial Markets

All figures in this subsection are approximate amounts used for risk monitoring purposes that are managerial accounting compilations of Japanese GAAP-based figures.

The global financial market dislocation, which had caused not only significant liquidity problems and declines in value with respect to securitization products such as residential mortgage backed securities (RMBS) and collateralized debt obligations (CDOs) backed by RMBS but also adverse impacts on various markets, had thereby adversely affected our financial condition and results of operations in recent years. However, in the fiscal year ended March 31, 2010, due primarily to our efforts to reduce the balances of our securitization products through sales and other measures and to reinforce our risk management platform for securitization products and the gradual market recovery, the negative impact of the dislocation became more limited, and the losses incurred decreased significantly compared to the previous fiscal year. This subsection sets forth information relating to such impact.

In the fiscal years ended March 31, 2009 and 2010, our principal banking subsidiaries, Mizuho Corporate Bank, Mizuho Bank and Mizuho Trust & Banking (including their overseas subsidiaries, but excluding subsidiaries of Mizuho Securities) and Mizuho Securities (including its overseas subsidiaries) recorded the following gains and losses:


	Fiscal years ended March 31,
	2009			2010
	(in billions of yen)
Principal banking subsidiaries (including their overseas subsidiaries, but excluding subsidiaries of Mizuho Securities):
Gains (losses) on sales of securitization products, etc. (including devaluation and provision of reserve for possible losses on investments)	¥	(126	)	¥	(3	)
Gains (losses) associated with ABCP programs		(4	)		0
Net gains from reversal of (losses on provision of) reserve for possible losses on sales of loans		(12	)		0
Gains (losses) from hedging of securitization products exposure with credit default swaps		23			(13	)

Subtotal		(119	)		(16	)
Mizuho Securities (including its overseas subsidiaries):⁽¹⁾
Trading gains (losses) (net of hedges) on securitization products		(16	)		2

Subtotal		(16	)		2

Total	¥	(135	)	¥	(14	)

Note:

(1)

Our other principal securities subsidiary, Mizuho Investors Securities, held only a negligible amount of securitization products as of March 31, 2009 and 2010, and its related gains (losses) were also negligible. The figures do not include reserves for counterparty risks associated with the amount to be claimed at settlement of the CDS related to securitization products described in the table titled “Credit default swaps related to foreign currency-denominated securitization products held by Mizuho Securities (including its overseas subsidiaries)” on page 58.

Securitization Products

We continue to hold a significant amount of securitization products. The balance (fair value) (banking account) of securitization products held by our principal banking subsidiaries (including their overseas subsidiaries, but excluding subsidiaries of Mizuho Securities) was approximately ¥2,469 billion, of which approximately ¥487 billion was foreign currency-denominated as of March 31, 2010. Similarly, the net balance (fair value) (trading account) held by Mizuho Securities (including its overseas subsidiaries) was approximately ¥149 billion, of which approximately ¥21 billion was foreign currency-denominated as of March 31, 2010.

We reduced significantly the amount of securitization products, in particular, foreign currency-denominated securitization products held by Mizuho Securities (including its overseas subsidiaries), in recent years. The following table shows a breakdown of foreign currency-denominated securitization products held by (i) our principal banking subsidiaries (including their overseas subsidiaries, but excluding subsidiaries of Mizuho Securities (banking account)) and (ii) Mizuho Securities (including its overseas subsidiaries (trading account)), respectively, as of March 31, 2010:


	Principal banking subsidiaries (including their overseas subsidiaries, but excluding subsidiaries of Mizuho Securities) Banking Account												Mizuho Securities (including its overseas subsidiaries) Trading Account
	As of or for the fiscal year ended March 31, 2010												As of or for the fiscal year ended March 31, 2010
Foreign currency-denominated securitization products	Balance⁽¹⁾⁽²⁾ (fair value)		Marks (%) (fair value)/ (face value)		Unrealized gains (Losses)⁽²⁾			Realized gains (Losses)⁽¹⁾⁽²⁾			(Reference) Hedged proportions⁽³⁾		Balance (fair value)		Marks (%) (fair value)/ (face value)		Realized gains (losses)
	(in billions of yen, except percentages)
ABSCDOs, CDOs	¥	30	15	%	¥	2		¥	(2	)	40	%	¥	0	0	%	¥	(0	)
CDOs backed by RMBS		6	4			3			0		—			0	0			(0	)
CDOs backed by CMBS		—	—			—			—		—			0	0			(0	)
CDOs backed by claims against corporations⁽⁴⁾		24	41			(1	)		(2	)	60			—	—			—
RMBS⁽⁵⁾		183	71			(6	)		(1	)	70			0	0			0
RMBS with underlying assets outside the U.S., mainly in Europe		183	71			(6	)		(1	)	70			—	—			—
RMBS with underlying assets in the U.S.		—	—			—			—		—			0	0			0
ABS, CLOs and others		274	84			(7	)		(1	)	50			21	75			2
CLOs		185	98			(3	)		(0	)	50			21	77			(1	)
ABS		43	73			(1	)		2		60			—	—			—
CMBS		46	75			(3	)		(3	)	70			0	2			(0	)
SIV-related		—	—			—			—		—			—	—			3

Total	¥	487	63		¥	(11	)	¥	(4	)	60		¥	21	9		¥	2

Notes:

(1)

Except for the securitization products which were the reference assets of our securitization schemes for transferring credit risk to third parties (hedged portion), a reserve for possible losses on investments has been provided 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 the reserve was approximately ¥15 billion as of March 31, 2010. Since securities were recognized at fair value on the consolidated balance sheet, the balances as of March 31, 2010 were those after being offset by the amount of reserve for possible losses on investments.

(2)

With respect to the vast majority of credit investments in securitization products made as an alternative to loans by the European, North American and other offices, we have been applying reasonably calculated prices based on the reasonable estimates of our management as fair value since the fiscal year ended March 31, 2009.

(3)

The approximate proportions of balances (fair value) of the securitization products, as of March 31, 2010, which were the reference assets of our securitization schemes (with CDS and other means) for transferring credit risk to third parties until maturity. In some of the securitization schemes, a portion of credit risk of the reference assets remained with us through our retaining a small first loss position and a portion of senior tranches.

<Reference> Status of CDS counterparties (notional amount basis; ratings were based on the lowest external ratings as of March 31, 2010): Financial services subsidiary (A-rating) of a multi-line insurance company: approximately ¥144 billion; Government-affiliated financial institution (AA-rating): approximately ¥91 billion.

(4)	All of them were securitization products backed by original assets (non-securitized assets).

(5)	Excluding U.S. government-owned corporation bonds and government-sponsored enterprise bonds. As of March 31, 2010, U.S. government-owned corporation bonds and government-sponsored enterprise bonds held by us were as follows:

Principal banking subsidiaries (including their overseas subsidiaries, but excluding subsidiaries of Mizuho Securities): U.S. government-owned corporation (Ginnie Mae) bonds and government-sponsored enterprise (Fannie Mae and Freddie Mac) bonds were approximately ¥583 billion (fair value), of which almost all consisted of RMBS guaranteed by Ginnie Mae, with approximately ¥9 billion of unrealized gains. Mizuho Securities (including its overseas subsidiaries): approximately ¥40 billion (fair value) of RMBS issued or guaranteed by Ginnie Mae or government-sponsored enterprise (Fannie Mae and Freddie Mac) and approximately ¥171 billion (fair value) of corporate bonds issued by Fannie Mae and Freddie Mac were held for the purpose of, among other things, market-making activities in the U.S.

The following table shows a breakdown of credit ratings of the counterparties and reference assets of credit default swaps related to foreign currency-denominated securitization products held by Mizuho Securities (including its overseas subsidiaries), respectively, as of March 31, 2010:


	As of March 31, 2010
	Notional amount (A)		Fair value of reference asset (B)		Amount to be claimed at settlement (Net present value) (A) – (B) = (C)		Reserves for (C)
	(in billions of yen)
Credit default swaps related to foreign currency-denominated securitization products held by Mizuho Securities (including its overseas subsidiaries):
AAA⁽¹⁾	¥	—	¥	—	¥	—	¥	—
CDOs backed by RMBS		—		—		—		—
CDOs backed by claims against corporations		—		—		—		—
AA⁽¹⁾		107		105		2		0
CDOs backed by RMBS		—		—		—		—
CDOs backed by claims against corporations		107		105		2		0
of which counterparties are U.S. monoline insurers		20		19		1		0
A to BBB⁽¹⁾		18		7		11		0
CDOs backed by RMBS		18		7		11		0
CDOs backed by claims against corporations		—		—		—		—
Non-investment grade or no ratings⁽¹⁾		—		—		—		—
CDOs backed by RMBS		—		—		—		—
CDOs backed by claims against corporations		—		—		—		—

Total	¥	126	¥	112	¥	13	¥	0

Of which counterparties are U.S. monoline insurers	¥	20	¥	19	¥	1	¥	0

Note:

(1)	Categorized by the lowest external credit ratings as of March 31, 2010. When the counterparty was guaranteed by third parties, categorized by the higher external credit ratings of either of them.

The following table shows a breakdown of yen-denominated securitization products held by (i) our principal banking subsidiaries (including their overseas subsidiaries, but excluding subsidiaries of Mizuho Securities) and (ii) Mizuho Securities (including its overseas subsidiaries) as of March 31, 2010:


	Principal banking subsidiaries (including their overseas subsidiaries, but excluding subsidiaries of Mizuho Securities) Banking Account					Mizuho Securities (including its overseas subsidiaries) Trading Account
	As of or for the fiscal year ended March 31, 2010					As of or for the fiscal year ended March 31, 2010
	Balance (fair value)		Unrealized gains (losses)			Balance (fair value)		Realized gains (losses)
	(in billions of yen)
Japanese yen-denominated securitization products
ABSCDOs, CDOs	¥	85	¥	5		¥	17	¥	9
CDOs backed by RMBS		—		—			1		(0	)
CDOs backed by CMBS		1		(0	)		—		—
CDOs backed by claims against corporations		84		5			16		9
RMBS⁽²⁾		972		(1	)		5		(0	)
ABS, CLOs and others		926		(15	)		105		(8	)
CLOs		39		(0	)		5		1
ABS		236		1			89		(9	)
CMBS		651		(16	)		11		(0	)

Total	¥	1,982	¥	(12	)⁽¹⁾	¥	128	¥	0

Notes:

(1)	Realized gains for the principal banking subsidiaries (including their overseas subsidiaries, but excluding subsidiaries of Mizuho Securities) for the fiscal year ended March 31, 2010 was approximately ¥1 billion.

(2)	Represents RMBS originated by Japanese financial institutions and others. Japan Housing Finance Agency Bonds were excluded. Balance of Japan Housing Finance Agency Bonds as of March 31, 2010 was as follows:

Principal banking subsidiaries (including their overseas subsidiaries, but excluding subsidiaries of Mizuho Securities)

Balance (fair value): approximately ¥476 billion, Unrealized gains: approximately ¥3 billion

Mizuho Securities (including its overseas subsidiaries)

Balance (fair value): approximately ¥1 billion, Realized gains (losses): negligible

Loans Held for Sale for which Reserve for Possible Losses on Sales of Loans was Recorded (the Principal Banking Subsidiaries (including their Overseas Subsidiaries, but excluding Subsidiaries of Mizuho Securities))

As of March 31, 2010, we had a total of approximately ¥61 billion in loans held for sale. We recorded approximately ¥15 billion of reserve for possible losses on sales of loans against these loans held for sale as of March 31, 2010 at a reserve ratio of approximately 25%. These figures exclude those related to intensive control obligors classification or below. The reserve ratio would be approximately 25%, 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.

The total balance of leveraged loans, primarily including LBO financing and MBO financing, including loans held for sale and loans held within our loan portfolio, was approximately ¥1.0 trillion of which

approximately ¥0.05 trillion was included in loans held for sale as of March 31, 2010. The balances include commitments that had not been drawn but for which documentation had been concluded.

Overseas Asset-backed Commercial Paper Programs (the Principal Banking Subsidiaries (including their Overseas Subsidiaries, but excluding Subsidiaries of Mizuho Securities))

As of March 31, 2010, the balance of the total assets acquired by overseas asset-backed commercial paper conduits was approximately ¥59 billion, which included approximately ¥32 billion of securitization products backed by credit card receivables and account receivables. Of the total balance of ¥59 billion, credit card receivables constituted 31%, account receivable constituted 29%, loans against auto dealers constituted 25% and others constituted 15%.

Loans Guaranteed by U.S. Monoline Insurers (the Principal Banking Subsidiaries (including their Overseas Subsidiaries, but excluding Subsidiaries of Mizuho Securities))

As of March 31, 2010, approximately ¥16 billion of loan commitments to overseas infrastructure projects (of which approximately ¥8 billion was drawn) was guaranteed by U.S. monoline insurers.

Outstanding Loan Balances to U.S. Mortgage Lenders (the Principal Banking Subsidiaries (including their Overseas Subsidiaries, but excluding Subsidiaries of Mizuho Securities))

As of March 31, 2010, we had a total of approximately ¥10 billion in outstanding loans to U.S. mortgage lenders.

As shown in this subsection, we continue to hold a significant amount of assets that are exposed to the risk of further declines in value or that may otherwise lead to further losses. While we will endeavor to continue reducing the amount of foreign currency-denominated securitization products through sales or other measures, our exposure to assets that are subject to such risks may increase in the future depending on market conditions and other factors.

Our Special Purpose Entities

Our use of special purpose entities relates mainly to variable interest entities, or VIEs, and qualifying special purpose entities, or QSPEs. The following sets forth information regarding our VIEs and QSPEs.

Variable Interest Entities (VIEs)

Our VIEs are distinguished between those that are consolidated for purposes of our consolidated financial statements and those that are not. VIEs are consolidated if we are deemed to be the primary beneficiary of those VIEs. With respect to certain unconsolidated VIEs, we determined that, while we were not the primary beneficiary, they were “significant or sponsored unconsolidated variable interest entities” due to our significant variable interests. In the normal course of business, we are involved with VIEs primarily through the following types of transactions:

•

asset-backed commercial paper/loan programs;

•

asset-backed securitizations;

•

investments in securitization products;

•

investment funds; and

•

trust arrangements and other.

The following table shows the amount of assets held by consolidated VIEs and total assets and maximum exposure to loss for our significant or sponsored unconsolidated VIEs related to each type of transaction:


	As of March 31, 2010
	Total assets of consolidated and significant or sponsored unconsolidated VIEs		Consolidated VIEs		Significant or sponsored unconsolidated VIEs
			Consolidated assets		Total assets		Maximum exposure to loss⁽¹⁾
	(in billions of yen)
Asset-backed commercial paper/loan programs	¥	2,024	¥	2,024	¥	—	¥	—
Asset-backed securitizations		1,608		355		1,253		40
Single-seller programs		81		66		15		15
Investments in securitization products		101		101		—		—
Investment funds		3,345		568		2,777		401
Trust arrangements and other		933		—		933		381

Total	¥	8,011	¥	3,048	¥	4,963	¥	822

Note:

(1)	Maximum exposure to loss is the contractual or notional amounts of liquidity facilities and other off-balance-sheet credit related support or principal amount of financing or investments, and is not indicative of the ongoing exposure which is managed within our risk management framework.

Asset-backed commercial paper/loan programs in the above table consist of multi-seller programs that we manage, which provide our clients with off-balance-sheet and/or cost-effective financing. Asset-backed securitizations in the above table consist of non-multi-seller programs that we arrange, which include various types of structured financings to meet clients’ various off-balance-sheet financing needs (referred to as single-seller programs in this subsection) and CDOs, CLOs or other repackaged instruments that are issued by VIEs to meet clients’ or investors’ financial needs.

We generally provide liquidity and credit support facilities and other financing to VIEs related to the multi- and single-seller programs, and as a result, these VIEs are generally treated as consolidated VIEs.

See note 27 in our consolidated financial statements included elsewhere in this annual report for further descriptions regarding the above transaction types including those other than the two described above.

Asset-backed commercial paper/loan programs

VIEs categorized under asset-backed commercial paper/loan programs consist of conduits for multi-seller programs. These VIEs purchase receivables from participating clients and other financial assets to meet off-balance-sheet or liquidity needs. The following tables show certain information related to such multi-seller asset-backed commercial paper/loan programs and their acquired assets as of March 31, 2010. All figures in the tables below and in the accompanying footnotes are approximate amounts based on a managerial accounting basis used for risk monitoring purposes.


	As of March 31, 2010
	(in billions of yen)
Consolidated multi-seller asset-backed commercial paper/loan programs:
Total assets held by conduits	¥	2,024
Total commercial paper issued by conduits		144
Liquidity, credit support facilities and other financing⁽¹⁾		5,344

Note:

(1)	Liquidity, credit support facilities and other financing include conditional and unconditional liquidity and credit facilities as well as loans actually provided.


	Geographic distribution as of March 31, 2010
	Japan		United States		Total
Consolidated multi-seller asset-backed commercial paper/loan programs:
Type of acquired assets:
Credit cards	2	%	1	%	3	%
Residential mortgage loans	0		0		0
Auto loans	3		0		3
Lease payment receivables	7		0		7
Account and note receivables	82		1		83
Others	3		1		4

Total	97	%	3	%	100	%


	As of March 31, 2010
	Credit ratings⁽¹⁾												Balances by expected maturity
	AAA		AA		A		BBB		BB or lower; no ratings		Total		Less than 1 year		1 to 5 years		Over 5 years		Total
Consolidated multi-seller asset-backed commercial paper/loan programs of which acquired assets are in Japan:
Type of acquired assets:
Credit cards	0	%	0	%	2	%	0	%	0	%	2	%	2	%	0	%	0	%	2	%
Residential mortgage loans	0		0		0		0		0		0		0		0		0		0
Auto loans	0		0		0		0		3		3		2		1		0		3
Lease payment receivables	0		0		5		1		1		7		3		4		0		7
Account and note receivables	1		3		22		20		36		82		81		1		0		82
Others	0		0		1		1		1		3		2		1		0		3

Total	1	%	3	%	30	%	22	%	41	%	97	%	90	%	7	%	0	%	97	%

Note:

(1)	Credit ratings are based on internal credit ratings.


	As of March 31, 2010
	Credit ratings⁽¹⁾												Balances by expected maturity
	AAA		AA		A		BBB		BB or lower; no ratings		Total		Less than 1 year		1 to 5 years		Over 5 years		Total
Consolidated multi-seller asset-backed commercial paper/loan programs of which acquired assets are located overseas:
Type of acquired assets:
Credit cards	0	%	0	%	1	%	0	%	0	%	1	%	0	%	1	%	0	%	1	%
Residential mortgage loans	0		0		0		0		0		0		0		0		0		0
Auto loans	0		0		0		0		0		0		0		0		0		0
Lease payment receivables	0		0		0		0		0		0		0		0		0		0
Account and note receivables	0		0		0		0		1		1		1		0		0		1
Others	0		0		0		1		0		1		1		0		0		1

Total	0	%	0	%	1	%	1	%	1	%	3	%	2	%	1	%	0	%	3	%

Note:

(1)	Credit ratings are based on internal credit ratings.

Asset-backed securitizations

VIEs categorized under asset-backed securitizations include several single-seller programs used for the purpose of off-balance-sheet financing for our corporate customers, to which we provide liquidity and credit support facilities and other financing and are thus generally consolidated. Typically, VIEs related to single-seller programs purchase corporate claims such as account receivables from our corporate customers and provide factoring services. Those claims are generally generated in the normal course of the on-going businesses of our Japanese corporate customers in Japan, and thus we view the risks related to our providing liquidity and credit support facilities and other financing to be relatively limited under current circumstances. The aggregate amount of assets of such single-seller VIEs was ¥81 billion as of March 31, 2010.

VIEs categorized under asset-backed securitizations also include VIEs that issue CDOs, CLOs or other repackaged instruments that we arrange. The aggregate amounts of assets held by VIEs that issue CDOs categorized as consolidated VIEs and significant or sponsored unconsolidated VIEs were ¥12 billion and ¥77 billion, respectively. Our maximum exposure to loss with respect to such significant or sponsored unconsolidated VIEs was negligible.

Losses relating to VIEs that issue such CDOs, CLOs or other repackaged instruments due to the dislocation in the global financial markets in the fiscal year ended March 31, 2010 are generally reflected in our financial statements either through consolidation in the case of consolidated VIEs or through a decline in the value of our interest in VIEs in the case of unconsolidated VIEs.

Qualifying Special Purpose Entities (QSPEs)

QSPEs are passive entities designed to purchase assets and pass through the cash flows from those assets to the investors and, subject to specified conditions, are generally exempt from consolidation pursuant to ASC 810. The total assets of our QSPEs were ¥308 billion as of March 31, 2010. The acquired assets of such QSPEs were primarily residential mortgage loans in Japan.

Critical Accounting Estimates

Note 1 to our consolidated financial statements included elsewhere in this annual report contains a summary of our significant accounting policies. These accounting policies are essential to understanding our financial condition and results of operations. Certain of these accounting policies require management to make critical accounting estimates that involve complex and subjective judgments and the use of assumptions, some of which may be for matters that are inherently uncertain and susceptible to change. Such critical accounting estimates are based on information available to us as of the date of the financial statements and could change from period to period. Critical accounting estimates could also involve estimates for which management could have reasonably used another estimate for the relevant accounting period. The use of different estimates could have a material impact on our financial condition and results of operations. The following is a discussion of significant accounting policies for which critical accounting estimates are used.

Allowance for Loan Losses and Allowance for Losses on Off-Balance-Sheet Instruments

The allowance for loan losses is based on management’s estimate of probable credit losses existing in our lending portfolio, and the allowance for losses on off-balance-sheet instruments is based on management’s estimate of probable losses related to off-balance-sheet arrangements such as guarantees and commitments to extend credit.

The allowance for loan losses is categorized and evaluated using the following methods:

•

Allowance based on ASC 310. In accordance with ASC 310, “Receivables” (“ASC 310”), we measure the value of specifically identified impaired loans based on the expected cash flows discounted at the loans’ initial effective interest rates, or as a practical expedient, using the observable market prices or the fair value of collateral if the loan is collateral dependent, when it is probable that we will be unable to collect all amounts due according to the contractual terms of the loan agreement. Management identifies impaired loans through the credit quality review process, in which the debtor’s ability to service its debt is assessed. The difference between our evaluation of the value of the impaired loan and its principal amount is the amount of the impairment which is recorded in the allowance for loan losses. Estimation of future cash flows is based on a comprehensive analysis of the borrower’s ability to service the debt, any progress made on the borrower’s rehabilitation program and the assumptions used therein.

•

Allowance based on ASC 450. In accordance with ASC 450, “Contingencies” (“ASC 450”), a formula-based allowance utilizing historical loss factors is applied to certain impaired loans which are aggregated for purposes of measuring impairment, groups of small balance, homogeneous loans and other non-homogenous loans which have not been identified as impaired. The determination of expected losses is based on a statistical analysis of our historical default and loan loss data, as well as data from third-party sources. The estimation of the formula allowance is back-tested on a periodic basis by comparing the allowance with the actual results subsequent to the balance sheet date.

•

Adjustment of ASC 450 Allowance. In addition to the allowance for loan losses based on historical loss factors, the historical loss rate is adjusted, where appropriate, to reflect current factors, such as general economic and business conditions affecting key lending areas, credit quality trends, specific industry conditions and recent loss experience in the segments of the loan portfolio. For loans which are not deemed to be impaired under ASC 310 but to which special isolated risks apply, management assesses each loan individually to determine appropriate allowance amounts in lieu of mechanically applying the ASC 450 formula-based allowance.

We assess probable loss amounts for guarantees using the same categories and evaluation methods as loans. We similarly assess probable loss amounts for loan commitments, taking into account the probability of drawdowns.

The determination of the allowance for loan losses and the allowance for losses on off-balance-sheet instruments requires a great deal of judgment and the use of estimates as discussed above. Furthermore,

information available at the time of the determination is limited, and it is not possible to eliminate uncertainty. Significant changes in any of the factors underlying our determination of the allowances could materially affect our financial condition and results of operations. For example, if our current judgment with respect to expected future cash flows differ from actual results, including as a result of an unexpected adverse change in the economic environment in Japan or a sudden and unanticipated failure of a large borrower, or if the value of collateral declines, we may need to increase the allowances with additional charges to earnings.

Valuation of Financial Instruments

ASC 820, “Fair Value Measurements and Disclosures” (“ASC 820”) specifies a hierarchy of valuation techniques based on whether the inputs to those valuation techniques are observable or unobservable. The standard describes the following three levels of inputs that may be used to measure fair value:


Level 1		Quoted prices in active markets for identical assets or liabilities. Level 1 assets and liabilities include debt and equity securities and derivative contracts that are traded in an active exchange market.

Level 2		Observable inputs other than Level 1 prices, such as quoted prices for similar assets or liabilities; quoted prices in markets that are not active; or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the assets or liabilities. Level 2 assets and liabilities include debt securities with quoted prices that are traded less frequently than exchange-traded instruments. If no quoted market price is available, the fair values of debt securities and over-the-counter derivative contracts in this category are determined using a pricing model with inputs that are observable in the market or can be derived principally from or corroborated by observable market data.

Level 3		Unobservable inputs that are supported by little or no market activity and that are significant to the fair value of the assets or liabilities. Level 3 assets and liabilities include financial instruments whose value is determined using pricing models, discounted cash flow methodologies, or similar techniques.

For assets and liabilities classified in Level 1 and 2 of the hierarchy, where inputs are principally based on observable market data, there is less judgment or estimate in determining fair value, while the determination of fair value of Level 3 assets and liabilities involves more significant management judgments and estimates. For further information, including valuation methodologies and the use of management estimates and judgments in connection therewith, see note 29 to the consolidated financial statements included elsewhere in this annual report.

Valuation of Deferred Income Taxes

Deferred income taxes reflect the net tax effects of (1) temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for income tax purposes, and (2) operating loss and tax credit carryforwards. Pursuant to ASC 740, “Income Taxes” (“ASC 740”), a valuation allowance is recognized for any portion of the deferred tax assets where it is considered more likely than not that it will not be realized, based on projected future income and future reversals of existing taxable temporary differences. Because we have not opted to be subject to consolidated taxation, deferred tax assets and liabilities are calculated separately for each member of our consolidated group.

The determination of a valuation allowance is an inherently uncertain process due to the use of projected future taxable income and subjective assessments in the effectiveness of our available tax planning strategies provided for under ASC 740. For example, variances in future projected operating performance or tax law changes that impact our tax planning strategies could result in a change in the valuation allowance. If we are not able to realize all or part of our net deferred tax assets in the future, an adjustment to our valuation allowance would be charged to income tax expense in the period such determination is made, and this could materially and adversely affect our financial condition and results of operations.

Pension and Other Employee Benefit Plans

Mizuho Financial Group, its principal banking subsidiaries and certain other subsidiaries sponsor severance indemnities and pension plans, which provide defined benefits to retired employees. Periodic expense and accrued liabilities are computed based on a number of actuarial assumptions, including mortality, withdrawals, discount rates, expected long-term rates of return on our plan assets and rates of increase in future compensation levels.

Actual results that differ from the assumptions are accumulated and amortized over future periods and therefore generally affect future pension expenses. While management believes that the assumptions used are appropriate, differences in actual experience or changes in assumptions may adversely affect pension expenses in the future.

In estimating the discount rates, we use interest rates on high-quality fixed-income governmental and corporate bonds that received a rating of AA(Aa) or higher from rating agencies. The durations of such bonds closely match that of the pension benefit obligation. Assumed discount rates were reevaluated at each measurement date.

The expected rate of return for each asset category is based primarily on various aspects of the long-term prospects for the economy that include historical performance and the market environment.

For further information on our pension benefits, see note 22 to the consolidated financial statements included elsewhere in this annual report.

Operating Results

The following table shows certain information as to our income, expenses and net income (loss) attributable to MHFG shareholders for the fiscal years ended March 31, 2008, 2009 and 2010:


	Fiscal years ended March 31,
	2008			2009			2010
	(in billions of yen)
Interest and dividend income	¥	3,110		¥	2,384		¥	1,632
Interest expense		1,912			1,102			528

Net interest income		1,198			1,282			1,104
Provision (credit) for loan losses		(58	)		567			222

Net interest income after provision (credit) for loan losses		1,256			715			882
Noninterest income		1,095			452			1,331
Noninterest expenses		1,504			1,525			1,526

Income (loss) before income tax expense (benefit)		847			(358	)		687
Income tax expense (benefit)		672			762			(360	)

Net income (loss)		175			(1,120	)		1,047
Less: Net income (loss) attributable to noncontrolling interests⁽¹⁾		(54	)		(62	)		47

Net income (loss) attributable to MHFG shareholders	¥	229		¥	(1,058	)	¥	1,000

Note:

(1)

Net income (loss) attributable to noncontrolling interests was relocated from minority interest in consolidated subsidiaries included within noninterest expenses in the fiscal year ended March 31, 2009 as we adopted ASC 810. For further information, see note 2 to our consolidated financial statements included elsewhere in this report.

Executive Summary

Fiscal Year Ended March 31, 2010 Compared to Fiscal Year Ended March 31, 2009

Net interest income decreased by ¥178 billion, or 13.9%, from the previous fiscal year to ¥1,104 billion in the fiscal year ended March 31, 2010 due to a decrease in net foreign interest and dividend income of ¥186 billion. The decrease was due mainly to a decrease of ¥521 billion in foreign interest and dividend income offset in part by a decrease of ¥335 billion in foreign interest expense. The decrease in foreign interest and dividend income was due mainly to decreases in interest from foreign loans and income from foreign call loans and funds sold, and receivables under resale agreements and securities borrowing transactions, both of which reflect general declines in U.S. dollar and euro interest rate levels. The decrease in foreign interest expense was due mainly to decreases in interest expense on foreign short-term borrowings and foreign interest-bearing deposits. These decreases were due mainly to the decrease in average interest rates, reflecting general declines in U.S. dollar and euro interest rate levels. Domestic interest and dividend income and domestic interest expense both declined significantly due to declines in yen interest rate levels, but net domestic interest and dividend income showed a slight increase due to the amounts of decline being similar.

Noninterest income increased by ¥879 billion from the previous fiscal year to ¥1,331 billion in the fiscal year ended March 31, 2010. The increase was due mainly to gains in investment gains (losses)—net of ¥67 billion in the fiscal year ended March 31, 2010, compared to losses in investment gains (losses)—net of ¥462 billion in the fiscal year ended March 31, 2009 and an increase in trading account gains—net of ¥300 billion. The increase in investment gains (losses)—net was due mainly to investment gains related to bonds and investment gains related to equity securities. Investment gains related to bonds in the fiscal year ended March 31, 2010 were due mainly to an absence of impairment losses on Japanese government bonds as we adopted ASC 320 which amends the other-than-temporary impairment model for debt securities. Investment gains related to equity securities were due mainly to a decrease in impairment losses on equity securities as a result of a recovery in the stock markets. The increase in trading account gains—net was due mainly to the gains earned by consolidated VIEs, such as stock investment trusts, as a result of a positive change in market conditions, an increase in gains related to changes in the fair value of derivative financial instruments used to hedge market risks, mainly interest rate risk, that are not eligible for hedge accounting under U.S. GAAP and an increase in gains related to changes in the fair value of foreign currency denominated available-for-sale securities for which the fair value option was elected.

Noninterest expenses in the fiscal year ended March 31, 2010 was almost the same level compared to the previous fiscal year. Salaries and employee benefits increased by ¥96 billion in the fiscal year ended March 31, 2010, offset in part by provision (credit) for losses on off-balance-sheet instruments being a credit of ¥24 billion in the fiscal year ended March 31, 2010 compared to a provision of ¥84 billion in the previous fiscal year. The increase in salaries and employee benefits were due mainly to the effect of increased employee retirement benefit expenses as a result of a decline in expected return on plan assets, which reflects various aspects of long-term prospects for the economy, historical performance of investments of plan assets and the market environment, including stock market conditions, at the beginning of the fiscal period, and the amortization of net actuarial loss, which primarily reflects past declines in the value of plan assets. The decrease was due mainly to a decrease in allowance for losses on off-balance-sheet transactions primarily as a result of the decrease in the balance of guarantees to overseas obligors.

As a result of the foregoing, income (loss) before income tax expense (benefit) was income of ¥687 billion in the fiscal year ended March 31, 2010 compared to a loss of ¥358 billion in the fiscal year ended March 31, 2009. We had an income tax benefit of ¥360 billion in the fiscal year ended March 31, 2010 compared to an income tax expense of ¥762 billion in the fiscal year ended March 31, 2009. The benefit was the result of an increase in deferred tax assets.

Net income (loss) was income of ¥1,047 billion in the fiscal year ended March 31, 2010 compared to a loss of ¥1,120 billion in the fiscal year ended March 31, 2009. Net income (loss) attributable to noncontrolling

interests was income of ¥47 billion in the fiscal year ended March 31, 2010 compared to a loss of ¥62 billion in the fiscal year ended March 31, 2009. As a result, net income (loss) attributable to MHFG shareholders was income of ¥1,000 billion in the fiscal year ended March 31, 2010 compared to a loss of ¥1,058 billion in the fiscal year ended March 31, 2009.

Fiscal Year Ended March 31, 2009 Compared to Fiscal Year Ended March 31, 2008

Net interest income increased by ¥84 billion, or 7.0%, from the previous fiscal year to ¥1,282 billion in the fiscal year ended March 31, 2009 due to an increase in net foreign interest and dividend income of ¥47 billion and an increase in net domestic interest and dividend income of ¥37 billion. The increase in net foreign interest and dividend income was due mainly to decreases in interest expense on foreign short-term borrowings and foreign interest-bearing deposits as a result of decrease in the average interest rates, offset in part by a decrease in interest and dividend income from foreign call loans and funds sold, and receivables under resale agreements and securities borrowing transactions as a result of decrease in the average yields, both of which reflect general declines in U.S. dollar and euro interest rate levels. The increase in net domestic interest and dividend income was due mainly to a decrease in interest expense on domestic interest-bearing deposits, reflecting a decrease in the average interest rate as a result of a decline in yen interest rate levels, offset in part by a decrease in interest and dividend income from domestic investments and a decrease in interest income from interest-bearing deposits in other banks. The decrease in interest and dividend income from domestic investments was due to a decrease in the average balance of domestic investments due mainly to the decrease in the balance of equity securities reflecting declines in domestic stock prices and the balance of debt securities as a result of the turmoil in the financial markets, and the decrease in interest income from interest-bearing deposits in other banks was due mainly to a decrease in average yields as a result of a decline in yen interest rate levels. We had a provision for loan losses of ¥567 billion compared to a credit of ¥58 billion in the previous fiscal year due mainly to declines in the financial condition of domestic SMEs and middle-market corporations, the effect of the collapse of Lehman Brothers on our exposures to related entities and the weakening credit status of overseas loans reflecting the global economic downturn, as well as increased estimated loss rates related to normal obligors.

Noninterest income decreased by ¥643 billion, or 58.7%, from the previous fiscal year to ¥452 billion in the fiscal year ended March 31, 2009 due mainly to a decrease in foreign exchange gains—net, an increase in investment losses—net and a decrease in fees and commissions. The decrease in foreign exchange gains—net was due mainly to translation gains with respect to foreign currency-denominated liabilities in the fiscal year ended March 31, 2008 that were funded and incurred to offset foreign exchange risk related to foreign currency-denominated available-for-sale securities. The increase in investment losses—net was due mainly to investment losses related to equity securities in the fiscal year ended March 31, 2009, compared to investment gains related to equity securities in the previous fiscal year, as a result of an increase in impairment losses on and a decrease in gains on sales of equity securities reflecting declines in domestic and overseas stock markets. The decrease in fees and commissions was due mainly to a decrease in fees for other customer services and a decrease in fees and commissions from securities-related business. The decrease in fees for other customer services was due mainly to a decrease in trust business-related fees other than those included in trust fees such as brokerage fees related to real estate transactions and other fees and commissions such as sales agency fees related to insurance products including individual annuities. The decrease in fees and commissions from securities-related business was due mainly to decreases in underwriting commissions related to private offerings of debt securities and sales commissions related to investment trusts which were negatively impacted by adverse market conditions, including declines in domestic stock markets.

Noninterest expenses increased by ¥21billion, or 1.4%, from the previous fiscal year to ¥1,525 billion in the fiscal year ended March 31, 2009 due mainly to an increase in the provision for losses on off-balance-sheet instruments and an increase in salaries and employee benefits, offset in part by a decrease in impairment of goodwill and a decrease in other noninterest expenses. The increase in provision for losses on off-balance-sheet instruments was due mainly to an increase in allowance for losses on off-balance-sheet transactions primarily as a result of downgrades in credit ratings of some obligors reflecting declines in their financial condition. The

increase in salaries and employee benefits was due mainly to the effect of increased employee retirement benefit expenses as a result of a decline in expected return on plan assets and the amortization of net actuarial loss in the fiscal year ended March 31, 2009 compared to the amortization of net actuarial gain in the previous fiscal year. The decrease in impairment of goodwill was due to impairment of goodwill incurred in the fiscal year ended March 31, 2008 as a result of the carrying amount of Mizuho Investors Securities and Mizuho Securities exceeding their fair value. The decrease in other noninterest expenses was due mainly to the decrease in valuation losses related to loans held for sale mainly in connection with overseas leveraged buyout financings.

As a result of the foregoing, income (loss) before income tax expense was a loss of ¥358 billion in the fiscal year ended March 31, 2009 compared to income of ¥847 billion in the previous fiscal year. Income tax expense increased by ¥90 billion to ¥762 billion in the fiscal year ended March 31, 2009 due mainly to an increase in deferred income tax expense. Income (loss) attributable to noncontrolling interests was a loss of ¥62 billion. As a result, net income (loss) attributable to MHFG shareholders was a loss of ¥1,058 billion in the fiscal year ended March 31, 2009 compared to income of ¥229 billion in the previous fiscal year.

Net Interest Income

The following table shows the average balance of interest-earning assets and interest-bearing liabilities, interest amounts and the average interest rates on such assets and liabilities for the fiscal years ended March 31, 2008, 2009 and 2010:


	Fiscal years ended March 31,
	2008						2009							2010
	Average balance		Interest amount		Interest rate		Average balance			Interest amount		Interest rate		Average balance			Interest amount		Interest rate
	(in billions of yen, except percentages)
Domestic:
Interest-bearing deposits in other banks	¥	779	¥	25	3.18	%	¥	1,903		¥	12	0.63	%	¥	176		¥	1	0.56	%
Call loans and funds sold, and receivables under resale agreements and securities borrowing transactions		7,544		49	0.65			6,988			40	0.57			5,712			10	0.17
Trading account assets		7,389		34	0.46			5,972			37	0.63			6,547			37	0.57
Investments		27,900		282	1.01			26,472			264	1.00			32,349			229	0.71
Loans		57,662		1,020	1.77			59,387			1,019	1.72			57,074			864	1.51

Total interest-earning assets		101,274		1,410	1.39			100,722			1,372	1.36			101,858			1,141	1.12

Deposits		64,296		337	0.52			67,047			287	0.43			66,946			137	0.21
Debentures		3,965		24	0.60			2,755			18	0.64			1,938			12	0.62
Short-term borrowings⁽¹⁾		19,043		158	0.83			21,299			150	0.71			21,684			48	0.22
Trading account liabilities		4,233		8	0.19			2,442			7	0.27			2,242			10	0.46
Long-term debt		7,548		188	2.48			8,010			178	2.22			9,063			194	2.14

Total interest-bearing liabilities		99,085		715	0.72			101,553			640	0.63			101,873			401	0.39

Net		2,189		695	0.67			(831	)		732	0.73			(15	)		740	0.73

Foreign:
Interest-bearing deposits in other banks		1,439		53	3.72			942			26	2.76			1,056			8	0.78
Call loans and funds sold, and receivables under resale agreements and securities borrowing transactions		11,260		535	4.75			8,739			169	1.93			8,412			38	0.45
Trading account assets		4,337		50	1.16			14,180			250	1.76			17,034			167	0.98
Investments		9,840		447	4.54			3,623			103	2.83			3,261			49	1.50
Loans		10,861		615	5.66			10,670			464	4.35			10,206			229	2.25

Total interest-earning assets		37,737		1,700	4.50			38,154			1,012	2.65			39,969			491	1.23

Deposits		9,349		417	4.46			7,250			200	2.75			7,794			58	0.74
Short-term borrowings⁽¹⁾		15,539		738	4.75			11,871			225	1.89			11,600			34	0.30
Trading account liabilities		3,361		19	0.56			7,357			11	0.16			10,134			21	0.20
Long-term debt		785		23	2.97			889			26	2.92			842			14	1.63

Total interest-bearing liabilities		29,034		1,197	4.12			27,367			462	1.69			30,370			127	0.42

Net		8,703		503	0.38			10,787			550	0.96			9,599			364	0.81

Total:
Total interest-earning assets		139,011		3,110	2.24			138,876			2,384	1.72			141,827			1,632	1.15
Total interest-bearing liabilities		128,119		1,912	1.49			128,920			1,102	0.85			132,243			528	0.40

Net	¥	10,892	¥	1,198	0.75		¥	9,956		¥	1,282	0.87		¥	9,584		¥	1,104	0.75

Note:

(1)	Short-term borrowings consist of due to trust accounts, call money and funds purchased, payables under repurchase agreements and securities lending transactions, commercial paper and other short-term borrowings.

Fiscal Year Ended March 31, 2010 Compared to Fiscal Year Ended March 31, 2009

Interest and dividend income decreased by ¥752 billion, or 31.5%, from the previous fiscal year to ¥1,632 billion in the fiscal year ended March 31, 2010. Domestic interest and dividend income accounted for ¥1,141 billion of the total amount, a decrease of ¥231 billion from the previous fiscal year, and foreign interest and dividend income accounted for ¥491 billion, a decrease of ¥521 billion from the previous fiscal year.

The decrease in domestic interest and dividend income was due mainly to the decrease in interest income from domestic loans. The decrease in interest income from domestic loans was due mainly to the decrease in average yield, reflecting a decline in yen interest rate levels. Changes in average yields on domestic interest-earning assets contributed to an overall decrease in interest and dividend income of ¥222 billion, and changes in average balances of domestic interest-earning assets contributed to an overall decrease in interest and dividend income of ¥9 billion, resulting in the ¥231 billion decrease in domestic interest and dividend income.

The decrease in foreign interest and dividend income was due mainly to decreases in interest from foreign loans and income from foreign call loans and funds sold, and receivables under resale agreements and securities borrowing transactions. The decreases in interest income from foreign loans and from foreign call loans and funds sold, and receivables under resale agreements and securities borrowing transactions were due mainly to a decrease in average yields, reflecting general declines in U.S. dollar and euro interest rate levels. Changes in average yields on foreign interest-earning assets contributed to an overall decrease in interest and dividend income of ¥515 billion, and changes in average balances of foreign interest-earning assets contributed to an overall decrease in interest and dividend income of ¥6 billion, resulting in the ¥521 billion decrease in foreign interest and dividend income.

Interest expense decreased by ¥574 billion, or 52.1%, from the previous fiscal year to ¥528 billion in the fiscal year ended March 31, 2010. Domestic interest expense accounted for ¥401 billion of the total amount, a decrease of ¥239 billion from the previous fiscal year, and foreign interest expense accounted for ¥127 billion of the total amount, a decrease of ¥335 billion from the previous fiscal year.

The decrease in domestic interest expense was due mainly to decreases in interest expense on domestic interest-bearing deposits and short-term borrowings. The decreases in interest expense on domestic interest-bearing deposits and short-term borrowings were due mainly to a decrease in the average interest rate, reflecting a decline in yen interest rate levels. The changes in average interest rates on domestic interest-bearing liabilities contributed to an overall decrease in interest expense of ¥256 billion, and the changes in average balances of domestic interest-bearing liabilities contributed to an overall increase in interest expense of ¥17 billion, resulting in the ¥239 billion decrease in domestic interest expense.

The decrease in foreign interest expense was due mainly to decreases in interest expense on foreign short-term borrowings and foreign interest-bearing deposits. These decreases were due mainly to the decrease in average interest rates, reflecting general declines in U.S. dollar and euro interest rate levels. The changes in average interest rates on foreign interest-bearing liabilities contributed to an overall decrease in interest expense of ¥338 billion, and the changes in average balances of foreign interest-bearing liabilities contributed to an overall increase in interest expense of ¥3 billion, resulting in the ¥335 billion decrease in foreign interest expense.

The decrease of 0.49% in the average yield on loans in the fiscal year ended March 31, 2010 compared to the fiscal year ended March 31, 2009 was larger than the decrease of 0.40% in the average rate on interest-bearing deposits over the same period. Taking into account only domestic loans and domestic deposits, the difference between the decrease of 0.21% in the average yield on domestic loans and the decrease of 0.22% in the average rate on domestic interest-bearing deposits was not significant.

As a result of the foregoing, net interest income decreased by ¥178 billion, or 13.9%, from the previous fiscal year to ¥1,104 billion. Average interest rate spread decreased by 0.12% to 0.75%, with the domestic

average interest rate spread remaining unchanged due mainly to a comparable decrease in the average interest rate on deposits and the decrease in average yield on loans, both of which reflect declining yen interest rate levels, and foreign average interest rate spread decreasing by 0.15% due mainly to the effect of the decrease in average yield on loans exceeding the effect of the decrease in average interest rate on deposits, both of which reflects declining U.S. dollar and euro interest rate levels.

Fiscal Year Ended March 31, 2009 Compared to Fiscal Year Ended March 31, 2008

Interest and dividend income decreased by ¥726 billion, or 23.3%, from the previous fiscal year to ¥2,384 billion in the fiscal year ended March 31, 2009. Domestic interest and dividend income accounted for ¥1,372 billion of the total amount, a decrease of ¥38 billion from the previous fiscal year, and foreign interest and dividend income accounted for ¥1,012 billion, a decrease of ¥688 billion from the previous fiscal year.

The decrease in domestic interest and dividend income was due mainly to the decrease in interest and dividend income from domestic investments and interest-bearing deposits in other banks. The decrease in interest and dividend income from domestic investments was due to a decrease in the average balance of domestic investments of ¥1,428 billion, due mainly to the decrease in the balance of equity securities reflecting declines in domestic stock prices and the balance of debt securities as a result of the turmoil in the financial markets. The decrease in interest income from domestic interest-bearing deposits in other banks was due mainly to the decrease in average yield, reflecting a decline in yen interest rate levels. The changes in the average yields on domestic interest-earning assets contributed to an overall decrease in interest and dividend income of ¥50 billion, and the changes in average balances of domestic interest-earning assets contributed to an overall increase in interest and dividend income of ¥12 billion, resulting in the ¥38 billion decrease in domestic interest and dividend income.

The decrease in foreign interest and dividend income was due mainly to decreases in interest and dividend income from foreign call loans and funds sold, and receivables under resale agreements and securities borrowing transactions and foreign investments, offset in part by an increase in interest income from foreign trading account assets. The decrease in interest income from foreign call loans and funds sold, and receivables under resale agreements and securities borrowing transactions was due mainly to a decrease in average yields, reflecting general declines in U.S. dollar and euro interest rate levels. The decrease in interest and dividend income from foreign investments and the increase in interest income from foreign trading account assets was due mainly to the reclassification from investments to trading account assets of foreign currency denominated available-for-sale securities that were elected for fair value treatment under ASC 825 as of April 1, 2008. For further information on the fair value option, see note 29 to our consolidated financial statements included elsewhere in this annual report. The changes in average yields on foreign interest-earning assets contributed to an overall decrease in interest and dividend income of ¥508 billion, and the changes in average balances of foreign interest-earning assets contributed to an overall decrease in interest and dividend income of ¥180 billion, resulting in the ¥688 billion decrease in foreign interest and dividend income.

Interest expense decreased by ¥810 billion, or 42.3%, from the previous fiscal year to ¥1,102 billion in the fiscal year ended March 31, 2009. Domestic interest expense accounted for ¥640 billion of the total amount, a decrease of ¥75 billion from the previous fiscal year, and foreign interest expense accounted for ¥462 billion of the total amount, a decrease of ¥735 billion from the previous fiscal year.

The decrease in domestic interest expense was due mainly to a decrease in interest expense on domestic interest-bearing deposits. The decrease in interest expense on domestic interest-bearing deposits was due to a decrease in the average interest rate, reflecting a decline in yen interest rate levels. The changes in average interest rates on domestic interest-bearing liabilities contributed to an overall decrease in interest expense of ¥102 billion, and the changes in average balances of domestic interest-bearing liabilities contributed to an overall increase in interest expense of ¥27 billion, resulting in the ¥75 billion decrease in domestic interest expense.

The decrease in foreign interest expense was due mainly to decreases in interest expense on foreign short-term borrowings and foreign interest-bearing deposits. These decreases were due mainly to the decrease in average interest rates, reflecting general declines in U.S. dollar and euro interest rate levels. The changes in average interest rates on foreign interest-bearing liabilities contributed to an overall decrease in interest expense of ¥519 billion, and the changes in average balances of foreign interest-bearing liabilities contributed to an overall decrease in interest expense of ¥216 billion, resulting in the ¥735 billion decrease in foreign interest expense.

The decrease of 0.27% in the average yield on loans in the fiscal year ended March 31, 2009 compared to the fiscal year ended March 31, 2008 was smaller than the decrease of 0.36% in the average rate on interest-bearing deposits over the same period. Taking into account only domestic loans and domestic deposits, the difference between the decrease of 0.05% in the average yield on domestic loans and the decrease of 0.09% in the average rate on domestic interest-bearing deposits was not significant.

As a result of the foregoing, net interest income increased by ¥84 billion, or 7.0%, from the previous fiscal year to ¥1,282 billion. Average interest rate spread rose by 0.12% to 0.87%, with domestic average interest rate spread rising by 0.06%, due mainly to a decrease in average interest rate on deposits, which more than offset the effect of a decrease in average yield on loans, both of which reflect declining yen interest rate levels, and foreign average interest rate spread rising by 0.58% due mainly to the effect of the decrease in average interest rate on deposits exceeding the effect of the decrease in average yield on loans, both of which reflects declining U.S. dollar and euro interest rate levels.

Provision (Credit) for Loan Losses

Fiscal Year Ended March 31, 2010 Compared to Fiscal Year Ended March 31, 2009

Provision for loan losses decreased by ¥345 billion, or 60.8%, from the previous fiscal year to ¥222 billion in the fiscal year ended March 31, 2010. The decrease was due mainly to an improvement in economic conditions and our efforts for appropriate credit management. See “—Financial Condition—Assets—Allowance for Loan Losses—Provision for loan losses.”

Fiscal Year Ended March 31, 2009 Compared to Fiscal Year Ended March 31, 2008

We had a provision for loan losses of ¥567 billion in the fiscal year ended March 31, 2009 compared to a credit for loan losses of ¥58 billion in the previous fiscal year. The provision for loan losses was due mainly to declines in the financial condition of domestic SMEs and middle-market corporations, the effect of the collapse of Lehman Brothers on our exposures to related entities and the weakening credit status of overseas loans reflecting the global economic downturn, as well as increased estimated loss rates related to normal obligors. See “—Financial Condition—Assets—Allowance for Loan Losses—Provision (credit) for loan losses.”

Noninterest Income

The following table shows a breakdown of noninterest income for the fiscal years ended March 31, 2008, 2009 and 2010:


	Fiscal years ended March 31,
	2008			2009			2010
	(in billions of yen)
Fees and commissions	¥	633		¥	561		¥	586
Fees and commissions from securities-related business		95			57			115
Fees and commissions from remittance business		117			112			105
Fees and commissions from deposits, debentures and lending business		88			110			95
Trust fees		64			56			49
Fees for other customer services		269			226			222
Foreign exchange gains (losses)—net		297			24			(2	)
Trading account gains—net		136			122			422
Investment gains (losses)—net		(191	)		(462	)		67
Investment losses related to bonds		(314	)		(178	)		(2	)
Investment gains (losses) related to equity securities		121			(282	)		55
Others		2			(2	)		14
Gains on disposal of premises and equipment		37			23			28
Other noninterest income		183			184			230