Form 6-K

 

 

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 6-K

REPORT OF FOREIGN PRIVATE ISSUER

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

UNDER THE SECURITIES EXCHANGE ACT OF 1934

For the month of November 2016

Commission File Number 001-33098

Mizuho Financial Group, Inc.

(Translation of registrant’s name into English)

5-5, Otemachi 1-chome

Chiyoda-ku, Tokyo 100-8176

Japan

(Address of principal executive office)

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

Form 20-F  ☒    Form 40-F  ☐

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

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

Indicate by check mark whether the registrant by furnishing the information contained in this Form is also thereby furnishing the information to the Commission pursuant to Rule 12g3-2(b) under the Securities Exchange Act of 1934.

Yes  ☐    No  ☒

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

 

 

 


THIS REPORT ON FORM 6-K SHALL BE DEEMED TO BE INCORPORATED BY REFERENCE INTO THE PROSPECTUS FORMING A PART OF MIZUHO FINANCIAL GROUP, INC.’S REGISTRATION STATEMENT ON FORM F-3 (FILE NO. 333-213187) AND TO BE A PART OF SUCH PROSPECTUS FROM THE DATE ON WHICH THIS REPORT IS FURNISHED, TO THE EXTENT NOT SUPERSEDED BY DOCUMENTS OR REPORTS SUBSEQUENTLY FILED OR FURNISHED.


SIGNATURES

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

 

Date: November 28, 2016
Mizuho Financial Group, Inc.
By:  

/s/ Koichi Iida

Name:   Koichi Iida
Title:   Managing Executive Officer / Group CFO


UNAUDITED INTERIM CONSOLIDATED JAPANESE GAAP FINANCIAL STATEMENTS AS

OF AND FOR THE SIX MONTHS ENDED SEPTEMBER 30, 2016

On November 28, 2016, we published our unaudited interim consolidated financial statements as of and for the six months ended September 30, 2016 prepared in accordance with Japanese GAAP as part of our interim securities report (shihanki hokokusho) for the same period filed by us with the relevant Japanese authorities. We have included in this report on Form 6-K an English translation of the unaudited interim consolidated financial statements and the notes thereto included in such interim securities report. Japanese GAAP differs in certain respects from U.S. GAAP. For a description of certain differences between U.S. GAAP and Japanese GAAP, see “Item 5. Operating and Financial Review and Prospects - Reconciliation with Japanese GAAP” in our most recent annual report on Form 20-F filed with the U.S. Securities Exchange Commission.


Financial Information

 

1. Mizuho Financial Group, Inc. (“MHFG”) is a specified business company under Article 17-15, Paragraph 2 of the Cabinet Office Ordinance on Disclosure of Corporate Information, etc. and prepares the interim consolidated financial statements in the second quarter.

 

2. The interim consolidated financial statements of MHFG are prepared in accordance with the “Ordinance on the Terminology, Forms, and Preparation Methods of Interim Consolidated Financial Statements” (Ordinance of the Ministry of Finance No. 24 of 1999). The classification of assets and liabilities and that of income and expenses are in accordance with the “Ordinance for Enforcement of the Banking Act” (Ordinance of the Ministry of Finance No. 10 of 1982).

 

3. Ernst & Young ShinNihon LLC conducted a semiannual audit on the interim consolidated financial statements of MHFG for the six months ended September 30, 2016, pursuant to Article 193-2, Paragraph 1 of the Financial Instruments and Exchange Act.

 

- 1 -


I. Interim Consolidated Financial Statements

(1) Interim Consolidated Balance Sheet

 

    

(Millions of yen)

 
    

As of

March 31, 2016

   

As of

September 30, 2016

 

Assets

          

Cash and Due from Banks

   *8      36,315,471      *8      42,715,384   

Call Loans and Bills Purchased

        893,545           899,865   

Receivables under Resale Agreements

        7,805,798           9,258,984   

Guarantee Deposits Paid under Securities Borrowing Transactions

        3,407,390           3,195,977   

Other Debt Purchased

        2,979,797           2,527,270   

Trading Assets

   *8      13,004,522      *8      12,511,953   

Money Held in Trust

        175,638           227,975   

Securities

   *1, *8, *15      39,505,971      *1, *8, *15      32,705,104   

Loans and Bills Discounted

   *3, *4, *5, *6, *7, *8, *9      73,708,884      *3, *4, *5, *6, *7, *8, *9      73,030,669   

Foreign Exchange Assets

   *7      1,447,743      *7      1,452,483   

Derivatives other than for Trading Assets

        3,157,752           2,957,197   

Other Assets

   *8      4,144,131      *8      4,272,085   

Tangible Fixed Assets

   *10, *11      1,085,791      *10, *11      1,071,524   

Intangible Fixed Assets

        804,567           869,070   

Net Defined Benefit Asset

        646,428           673,562   

Deferred Tax Assets

        36,517           77,011   

Customers’ Liabilities for Acceptances and Guarantees

        4,798,158           4,675,296   

Reserves for Possible Losses on Loans

        (459,531        (441,438
  

 

   

 

 

Total Assets

        193,458,580           192,679,978   
  

 

   

 

 

 

- 2 -


    

(Millions of yen)

 
    

As of

March 31, 2016

   

As of

September 30, 2016

 

Liabilities

          

Deposits

   *8      105,629,071      *8      110,171,994   

Negotiable Certificates of Deposit

        11,827,533           9,568,325   

Call Money and Bills Sold

        2,521,008           1,791,651   

Payables under Repurchase Agreements

   *8      16,833,346      *8      17,739,258   

Guarantee Deposits Received under Securities Lending Transactions

   *8      2,608,971      *8      1,314,573   

Commercial Paper

        1,010,139           827,552   

Trading Liabilities

        10,276,133           9,878,751   

Borrowed Money

   *8, *12      7,503,543      *8, *12      7,243,394   

Foreign Exchange Liabilities

        492,473           582,971   

Short-term Bonds

        648,381           408,033   

Bonds and Notes

   *13      6,120,928      *13      7,131,121   

Due to Trust Accounts

        5,067,490           4,053,768   

Derivatives other than for Trading Liabilities

        2,571,597           2,001,471   

Other Liabilities

        5,532,596           5,755,737   

Reserve for Bonus Payments

        62,171           47,174   

Reserve for Variable Compensation

        2,836           1,488   

Net Defined Benefit Liability

        51,514           52,668   

Reserve for Director and Corporate Auditor Retirement Benefits

        1,685           1,376   

Reserve for Possible Losses on Sales of Loans

        267           3   

Reserve for Contingencies

        5,271           4,889   

Reserve for Reimbursement of Deposits

        16,154           15,828   

Reserve for Reimbursement of Debentures

        39,245           35,273   

Reserves under Special Laws

        2,024           2,219   

Deferred Tax Liabilities

        414,799           337,644   

Deferred Tax Liabilities for Revaluation Reserve for Land

   *10      67,991      *10      67,247   

Acceptances and Guarantees

        4,798,158           4,675,296   
  

 

   

 

 

Total Liabilities

        184,105,335           183,709,717   
  

 

   

 

 

Net Assets

          

Common Stock and Preferred Stock

        2,255,790           2,256,275   

Capital Surplus

        1,110,164           1,111,299   

Retained Earnings

        3,197,616           3,464,082   

Treasury Stock

        (3,609        (5,098
  

 

   

 

 

Total Shareholders’ Equity

        6,559,962           6,826,558   
  

 

   

 

 

Net Unrealized Gains (Losses) on Other Securities

        1,296,039           1,134,348   

Deferred Gains or Losses on Hedges

        165,264           167,078   

Revaluation Reserve for Land

   *10      148,483      *10      146,794   

Foreign Currency Translation Adjustments

        (53,689        (85,900

Remeasurements of Defined Benefit Plans

        51,752           65,055   
  

 

   

 

 

Total Accumulated Other Comprehensive Income

        1,607,851           1,427,376   
  

 

   

 

 

Stock Acquisition Rights

        2,762           1,754   

Non-controlling Interests

        1,182,668           714,572   
  

 

   

 

 

Total Net Assets

        9,353,244           8,970,260   
  

 

   

 

 

Total Liabilities and Net Assets

        193,458,580           192,679,978   
  

 

   

 

 

 

- 3 -


(2) Interim Consolidated Statement of Income and

      Interim Consolidated Statement of Comprehensive Income

      Interim Consolidated Statement of Income

 

 

                                                                                                                                                                           
    

(Millions of yen)

 
    

For the six months ended
September 30, 2015

   

For the six months ended
September 30, 2016

 

Ordinary Income

       1,637,697          1,563,262   

Interest Income

       720,592          678,188   

Interest on Loans and Bills Discounted

       463,500          442,430   

Interest and Dividends on Securities

       158,508          129,547   

Fiduciary Income

       26,399          24,729   

Fee and Commission Income

       369,856          359,011   

Trading Income

       145,813          213,872   

Other Operating Income

       186,370          165,262   

Other Ordinary Income

   *1     188,664      *1     122,198   

Ordinary Expenses

       1,063,107          1,142,318   

Interest Expenses

       197,081          241,807   

Interest on Deposits

       77,722          92,531   

Fee and Commission Expenses

       76,897          76,101   

Trading Expenses

       1,686          1,467   

Other Operating Expenses

       41,511          32,009   

General and Administrative Expenses

       673,456          704,164   

Other Ordinary Expenses

   *2     72,475      *2     86,766   
  

 

   

 

 

Ordinary Profits

       574,590          420,944   
  

 

   

 

 

Extraordinary Gains

   *3     19,573      *3     1,426   

Extraordinary Losses

   *4     2,233      *4     3,245   
  

 

   

 

 

Income before Income Taxes

       591,930          419,125   
  

 

   

 

 

Income Taxes:

        

Current

       134,814          101,907   

Deferred

       38,853           (63,140
  

 

   

 

 

Total Income Taxes

       173,667          38,766   
  

 

   

 

 

Profit

       418,262          380,358   
  

 

   

 

 

Profit Attributable to Non-controlling Interests

       34,064          22,175   
  

 

   

 

 

Profit Attributable to Owners of Parent

       384,198          358,183   
  

 

   

 

 

 

- 4 -


      Interim Consolidated Statement of Comprehensive Income

 

                                                                                                                                                                           
    

(Millions of yen)

 
    

For the six months ended
September 30, 2015

   

For the six months ended
September 30, 2016

 

Profit

        418,262            380,358   

Other Comprehensive Income

       (321,442         (180,505

Net Unrealized Gains (Losses) on Other Securities

         (349,353       (161,503

Deferred Gains or Losses on Hedges

            32,591          1,814   

Revaluation Reserve for Land

       10          (5

Foreign Currency Translation Adjustments

            (3,313       (21,853

Remeasurements of Defined Benefit Plans

       (1,109       13,420   

Share of Other Comprehensive Income of Associates Accounted for Using Equity Method

       (267       (12,377
  

 

   

 

 

Comprehensive Income

       96,820             199,853   
  

 

   

 

 

(Breakdown)

        

Comprehensive Income Attributable to Owners of Parent

       63,060          179,392   

Comprehensive Income Attributable to Non-controlling Interests

       33,759          20,461   

 

- 5 -


(3) Interim Consolidated Statement of Changes in Net Assets

      For the six months ended September 30, 2015

 

     (Millions of yen)  
     Shareholders’ Equity  
     Common Stock
and Preferred
Stock
     Capital Surplus      Retained Earnings     Treasury Stock     Total
Shareholders’
Equity
 

Balance as of the beginning of the period

     2,255,404         1,110,006         2,769,371        (3,616     6,131,166   

Cumulative Effects of Changes in Accounting Policies

        935         (48,999       (48,063

Balance as of the beginning of the period reflecting Changes in Accounting Policies

     2,255,404         1,110,942         2,720,371        (3,616     6,083,102   

Changes during the period

            

Issuance of New Shares

     386         386             772   

Cash Dividends

           (100,584       (100,584

Profit Attributable to Owners of Parent

           384,198          384,198   

Repurchase of Treasury Stock

             (683     (683

Disposition of Treasury Stock

        82           268        350   

Transfer from Revaluation Reserve for Land

           983          983   

Net Changes in Items other than Shareholders’ equity

            
  

 

 

    

 

 

    

 

 

   

 

 

   

 

 

 

Total Changes during the period

     386         468         284,597        (415     285,036   
  

 

 

    

 

 

    

 

 

   

 

 

   

 

 

 

Balance as of the end of the period

     2,255,790         1,111,410         3,004,969        (4,031     6,368,139   
  

 

 

    

 

 

    

 

 

   

 

 

   

 

 

 

 

    Accumulated Other Comprehensive Income     Stock
Acquisition
Rights
    Non-
controlling
Interests
    Total Net
Assets
 
    Net Unrealized
Gains (Losses)
on Other
Securities
    Deferred Gains
or Losses on
Hedges
    Revaluation
Reserve for
Land
    Foreign
Currency
Translation
Adjustments
    Remeasurements
of Defined
Benefit Plans
    Total
Accumulated
Other
Comprehensive
Income
       

Balance as of the beginning of the period

    1,737,348        26,635        146,419        (40,454     160,005        2,029,955        3,820        1,635,595        9,800,538   

Cumulative Effects of Changes in Accounting Policies

                    (48,063

Balance as of the beginning of the period reflecting Changes in Accounting Policies

    1,737,348        26,635        146,419        (40,454     160,005        2,029,955        3,820        1,635,595        9,752,474   

Changes during the period

                 

Issuance of New Shares

                    772   

Cash Dividends

                    (100,584

Profit Attributable to Owners of Parent

                    384,198   

Repurchase of Treasury Stock

                    (683

Disposition of Treasury Stock

                    350   

Transfer from Revaluation Reserve for Land

                    983   

Net Changes in Items other than Shareholders’ equity

    (350,726     32,469        (972     (3,297     404        (322,121     (1,057     (449,501     (772,680
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total Changes during the period

    (350,726     32,469        (972     (3,297     404        (322,121     (1,057     (449,501     (487,643
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Balance as of the end of the period

    1,386,622        59,105        145,446        (43,751     160,410        1,707,834        2,762        1,186,094        9,264,830   
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

 

- 6 -


      For the six months ended September 30, 2016

 

     (Millions of yen)  
     Shareholders’ Equity  
     Common Stock
and Preferred
Stock
     Capital Surplus     Retained Earnings     Treasury Stock     Total
Shareholders’
Equity
 

Balance as of the beginning of the period

     2,255,790         1,110,164        3,197,616        (3,609     6,559,962   

Cumulative Effects of Changes in Accounting Policies

          1,426          1,426   

Balance as of the beginning of the period reflecting Changes in Accounting Policies

     2,255,790         1,110,164        3,199,042        (3,609     6,561,388   

Changes during the period

           

Issuance of New Shares

     484         484            969   

Cash Dividends

          (94,827       (94,827

Profit Attributable to Owners of Parent

          358,183          358,183   

Repurchase of Treasury Stock

            (1,869     (1,869

Disposition of Treasury Stock

        (55       380        324   

Cancellation of Treasury Stock

        (1       1        —     

Transfer from Revaluation Reserve for Land

          1,683          1,683   

Change in Treasury Shares of Parent Arising from Transactions with Non-controlling Shareholders

        706            706   

Net Changes in Items other than Shareholders’ equity

           
  

 

 

    

 

 

   

 

 

   

 

 

   

 

 

 

Total Changes during the period

     484         1,134        265,039        (1,488     265,170   
  

 

 

    

 

 

   

 

 

   

 

 

   

 

 

 

Balance as of the end of the period

     2,256,275         1,111,299        3,464,082        (5,098     6,826,558   
  

 

 

    

 

 

   

 

 

   

 

 

   

 

 

 

 

- 7 -


    Accumulated Other Comprehensive Income     Stock
Acquisition
Rights
    Non-
controlling
Interests
    Total  Net
Assets
 
    Net Unrealized
Gains (Losses)
on Other
Securities
    Deferred Gains
or Losses on
Hedges
    Revaluation
Reserve for
Land
    Foreign
Currency
Translation
Adjustments
    Remeasurements
of Defined
Benefit Plans
    Total
Accumulated
Other
Comprehensive
Income
       

Balance as of the beginning of the period

    1,296,039        165,264        148,483        (53,689     51,752        1,607,851        2,762        1,182,668        9,353,244   

Cumulative Effects of Changes in Accounting Policies

                    1,426   

Balance as of the beginning of the period reflecting Changes in Accounting Policies

    1,296,039        165,264        148,483        (53,689     51,752        1,607,851        2,762        1,182,668        9,354,670   

Changes during the period

                 

Issuance of New Shares

                    969   

Cash Dividends

                    (94,827

Profit Attributable to Owners of Parent

                    358,183   

Repurchase of Treasury Stock

                    (1,869

Disposition of Treasury Stock

                    324   

Cancellation of Treasury Stock

                    —     

Transfer from Revaluation Reserve for Land

                    1,683   

Change in Treasury Shares of Parent Arising from Transactions with Non-controlling Shareholders

                    706   

Net Changes in Items other than Shareholders’ equity

    (161,691     1,814        (1,689     (32,211     13,302        (180,475     (1,008     (468,096     (649,579
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total Changes during the period

    (161,691     1,814        (1,689     (32,211     13,302        (180,475     (1,008     (468,096     (384,409
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Balance as of the end of the period

    1,134,348        167,078        146,794        (85,900     65,055        1,427,376        1,754        714,572        8,970,260   
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

 

- 8 -


(4) Interim Consolidated Statement of Cash Flows

 

     (Millions of yen)  
      For the six months ended
September 30, 2015
    For the six months ended
September 30, 2016
 

Cash Flow from Operating Activities

          

Income before Income Taxes

        591,930           419,125   

Depreciation

        79,352           79,135   

Losses on Impairment of Fixed Assets

        390           1,474   

Amortization of Goodwill

        364           713   

Equity in Loss (Gain) from Investments in Affiliates

        (16,529        (11,327

Increase (Decrease) in Reserves for Possible Losses on Loans

        (60,659        1,903   

Increase (Decrease) in Reserve for Possible Losses on Investments

        (2        —     

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

        207           (263

Increase (Decrease) in Reserve for Contingencies

        (228        (463

Increase (Decrease) in Reserve for Bonus Payments

        (15,974        (11,575

Increase (Decrease) in Reserve for Variable Compensation

        —             (1,347

Decrease (Increase) in Net Defined Benefit Asset

        (32,114        (8,289

Increase (Decrease) in Net Defined Benefit Liability

        2,130           1,868   

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

        40           (308

Increase (Decrease) in Reserve for Reimbursement of Deposits

        833           (325

Increase (Decrease) in Reserve for Reimbursement of Debentures

        (5,972        (3,971

Interest Income - accrual basis

        (720,592        (678,188

Interest Expenses - accrual basis

        197,081           241,807   

Losses (Gains) on Securities

        (187,912        (171,007

Losses (Gains) on Money Held in Trust

        (89        (99

Foreign Exchange Losses (Gains) - net

        (24,695        753,515   

Losses (Gains) on Disposition of Fixed Assets

        (5,149        149   

Decrease (Increase) in Trading Assets

        (763,919        70,442   

Increase (Decrease) in Trading Liabilities

        201,078           (14,437

Decrease (Increase) in Derivatives other than for Trading Assets

        576,930           82,284   

Increase (Decrease) in Derivatives other than for Trading Liabilities

        (819,395        (456,069

Decrease (Increase) in Loans and Bills Discounted

        (1,202,333        (1,841,494

Increase (Decrease) in Deposits

        2,924,036           6,618,771   

Increase (Decrease) in Negotiable Certificates of Deposit

        (207,062        (1,530,518

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

        335,347           (213,945

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

        (39,839        (289,039

Decrease (Increase) in Call Loans, etc.

        283,540           (2,021,502

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

        158,928           211,413   

Increase (Decrease) in Call Money, etc.

        715,253           1,862,232   

Increase (Decrease) in Commercial Paper

        91,277           (78,875

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

        (129,975        (1,294,398

Decrease (Increase) in Foreign Exchange Assets

        (49,208        (121,055

Increase (Decrease) in Foreign Exchange Liabilities

        87,258           91,160   

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

        (40,408        (240,348

Increase (Decrease) in Bonds and Notes

        (84,193        481,825   

Increase (Decrease) in Due to Trust Accounts

        173,921           (1,013,722

Interest and Dividend Income - cash basis

        761,229           698,368   

Interest Expenses - cash basis

        (195,709        (245,866

Other - net

        1,151,799           1,191,287   
  

 

 

   

 

 

 

Subtotal

        3,730,964           2,559,035   
  

 

 

   

 

 

 

Cash Refunded (Paid) in Income Taxes

        (178,197        (127,391
  

 

 

   

 

 

 

Net Cash Provided by (Used in) Operating Activities

        3,552,766           2,431,643   
  

 

 

   

 

 

 

 

- 9 -


     (Millions of yen)  
      For the six months ended
September 30, 2015
    For the six months ended
September 30, 2016
 

Cash Flow from Investing Activities

          

Payments for Purchase of Securities

        (22,984,289        (24,230,237

Proceeds from Sale of Securities

        19,029,866           24,406,300   

Proceeds from Redemption of Securities

        7,047,764           4,238,938   

Payments for Increase in Money Held in Trust

        (1,820        (51,470

Proceeds from Decrease in Money Held in Trust

        13,609           92   

Payments for Purchase of Tangible Fixed Assets

        (27,991        (22,537

Payments for Purchase of Intangible Fixed Assets

        (153,480        (169,275

Proceeds from Sale of Tangible Fixed Assets

        10,515           3,883   
  

 

 

   

 

 

 

Net Cash Provided by (Used in) Investing Activities

        2,934,175           4,175,694   
  

 

 

   

 

 

 

Cash Flow from Financing Activities

          

Proceeds from Subordinated Borrowed Money

        —             25,000   

Repayments of Subordinated Borrowed Money

        (124,000        (60,000

Proceeds from Issuance of Subordinated Bonds

        350,000           615,000   

Payments for Redemption of Subordinated Bonds

        (47,600        (14,000

Proceeds from Issuance of Common Stock

        4           6   

Proceeds from Investments by Non-controlling Shareholders

        282           361   

Repayments to Non-controlling Shareholders

        (452,500        (460,672

Cash Dividends Paid

        (100,658        (94,782

Cash Dividends Paid to Non-controlling Shareholders

        (30,831        (20,400

Payments for Purchase of Stocks of Subsidiaries (not affecting the scope of consolidation)

        —             (216

Payments for Repurchase of Treasury Stock

        (8        (1,430

Proceeds from Sale of Treasury Stock

        2           0   
  

 

 

   

 

 

 

Net Cash Provided by (Used in) Financing Activities

        (405,309        (11,134
  

 

 

   

 

 

 

Effect of Foreign Exchange Rate Changes on Cash and Cash Equivalents

        5,511           (63,536
  

 

 

   

 

 

 

Net Increase (Decrease) in Cash and Cash Equivalents

        6,087,143           6,532,667   
  

 

 

   

 

 

 

Cash and Cash Equivalents at the beginning of the period

        27,840,775           35,089,122   
  

 

 

   

 

 

 

Cash and Cash Equivalents at the end of the period

     *1         33,927,919        *1         41,621,790   
  

 

 

   

 

 

 

 

- 10 -


Notes to Interim Consolidated Financial Statements

Fundamental and Important Matters for the Preparation of Interim Consolidated Financial Statements

 

1. Scope of Consolidation

 

(1) Number of consolidated subsidiaries: 142

Names of principal companies:

Mizuho Bank, Ltd.

Mizuho Trust & Banking Co., Ltd.

Mizuho Securities Co., Ltd.

Change in scope of consolidation

During the six months ended September 30, 2016, Mizuho Americas LLC and four other companies were newly included in the scope of consolidation as a result of establishment.

During the six months ended September 30, 2016, BLUE HEAVEN FUNDING CORPORATION and five other companies were excluded from the scope of consolidation as a result of merger and other factors.

 

(2) Number of non-consolidated subsidiaries: 0

 

2. Application of the Equity Method

 

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

 

(2) Number of affiliates under the equity method: 22

Names of principal companies:

Orient Corporation

The Chiba Kogyo Bank, Ltd.

Joint Stock Commercial Bank for Foreign Trade of Vietnam

Change in scope of equity method

During the six months ended September 30, 2016, Energy & Environment Investment, Inc. and four other companies were excluded from the scope of equity method as a result of the sale of shares.

 

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

 

(4) Affiliates not under the equity method:

Pec International Leasing Co., Ltd.

Affiliates not under the equity method are excluded from the scope of the equity method since such exclusion has no material effect on MHFG’s interim consolidated financial statements in terms of Net Income (Loss) (amount corresponding to MHFG’s equity position), Retained Earnings (amount corresponding to MHFG’s equity position), Accumulated Other Comprehensive Income (amount corresponding to MHFG’s equity position) and others.

 

3. Interim Balance Sheet Dates of Consolidated Subsidiaries

 

(1) Interim balance sheet dates of consolidated subsidiaries are as follows:

 

January 31    1 company   
June 29    12 companies   
June 30    53 companies   
September 30    76 companies   

 

- 11 -


(2) Consolidated subsidiaries with interim balance sheet dates of June 29 were consolidated based on their tentative interim financial statements as of and for the period ended June 30. The consolidated subsidiary with the interim balance sheet date of January 31 was consolidated based on its tentative interim financial statement as of and for the period ended the interim consolidated balance sheet date. Other consolidated subsidiaries were consolidated based on their interim financial statements as of and for the period ended their respective interim balance sheet dates.

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

 

4. Standards of Accounting Method

 

(1) Credited Loans pursuant to Trading Securities and Trading Income & Expenses

Credited loans held for the purpose of trading are, in line with trading securities, recognized on a trade date basis and recorded in Other Debt Purchased on the interim consolidated balance sheet. Other Debt Purchased related to the relevant credited loans is stated at fair value at the interim consolidated balance sheet date. Interest received and the gains or losses on the sale of the relevant credited loans during the six months ended September 30, 2016, including the gains or losses resulting from any change in the value between the beginning and the end of the six months ended September 30, 2016, are recognized in Other Operating Income and Other Operating Expenses on the interim consolidated statements of income.

 

(2) Trading Assets & Liabilities and Trading Income & Expenses

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

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

Trading Income and Trading Expenses include the interest received and the interest paid during the six months ended September 30, 2016, the gains or losses resulting from any change in the value of securities and other monetary claims between the beginning and the end of the six months ended September 30, 2016, and the gains or losses resulting from any change in the value of financial derivatives between the beginning and the end of the six months ended September 30, 2016, assuming they were settled at the end of the six months ended September 30, 2016.

 

(3) Securities

 

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

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

 

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

 

(4) Derivative Transactions

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

 

- 12 -


(5) Depreciation of Fixed Assets

 

  1) Tangible Fixed Assets (Except for Lease Assets)

Depreciation of buildings is computed mainly by the straight-line method, and that of others is computed mainly by the declining-balance method. The amount based on estimated annual depreciation expenses is allocated to each period.

The range of useful lives is as follows:

 

Buildings

   3 years to 50 years   

Others

   2 years to 20 years   

 

  2) Intangible Fixed Assets (Except for Lease Assets)

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

 

  3) Lease Assets

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

 

(6) Deferred Assets

Bond issuance costs are expensed as incurred.

 

(7) Reserves for Possible Losses on Loans

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

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

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

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

All claims are assessed by each claim origination department in accordance with the internally established “Self-assessment Standard,” and the results of the assessments are verified and examined by the independent examination departments.

In the case of claims to Bankrupt Obligors and Substantially Bankrupt Obligors, which are collateralized or guaranteed by a third party, the amounts deemed uncollectible (calculated by deducting the anticipated proceeds from the sale of collateral pledged against the claims and amounts that are expected to be recovered from guarantors of the claims) are written off against the respective claims balances. The total directly written-off amount was ¥115,422 million (¥157,807 million at the end of the fiscal year ended March 31, 2016).

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

 

- 13 -


(8) Reserve for Possible Losses on Investments

Reserve for Possible Losses on Investments is maintained to provide against possible losses on investments in securities, after taking into consideration the financial condition and other factors concerning the investee company.

 

(9) Reserve for Bonus Payments

Reserve for Bonus Payments, which is provided for future bonus payments to employees, is maintained at the amount accrued at the end of the six months ended September 30, 2016, based on the estimated future payments.

 

(10) Reserve for Variable Compensation

To prepare for the payments of performance payments and stock compensation to be paid as variable compensation within compensation for directors, executive officers and specialist officers of Mizuho Financial Group, Inc., Mizuho Bank, Ltd., Mizuho Trust & Banking Co., Ltd., and Mizuho Securities Co., Ltd., the amount accrued at the end of the six months ended September 30, 2016 among the estimated payment based on the standard amount regarding variable compensation of the fiscal year ending March 31, 2017 is provided.

 

(11) Reserve for Director and Corporate Auditor Retirement Benefits

Reserve for Director and Corporate Auditor Retirement Benefits, which is provided for future retirement benefit payments to directors, corporate auditors, and executive officers, is recognized at the amount accrued by the end of the six months ended September 30, 2016, based on the internally established standards.

 

(12) Reserve for Possible Losses on Sales of Loans

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

 

(13) Reserve for Contingencies

Reserve for Contingencies is maintained to provide against possible losses from contingencies which are not covered by other specific reserves. The balance is an estimate of possible future losses considered to require a reserve.

 

(14) Reserve for Reimbursement of Deposits

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

 

(15) Reserve for Reimbursement of Debentures

Reserve for Reimbursement of Debentures is provided for the debentures derecognized from liabilities at the estimated amount for future claims.

 

(16) Reserve under Special Laws

Reserve under Special Laws is Reserve for Contingent Liabilities from Financial Instruments and Exchange. This is the reserve pursuant to Article 46-5 of the Financial Instruments and Exchange Law and Article 175 of the Cabinet Office Ordinance regarding Financial Instruments Business, etc. to indemnify the losses incurred from accidents in the purchase and sale of securities, other transactions or derivative transactions.

 

(17) Accounting Method for Retirement Benefits

In calculating retirement benefit obligations, a benefit formula basis is used as a method of attributing expected retirement benefits to the period up to the end of the six months ended September 30, 2016. Unrecognized actuarial differences are recognized as income or expenses from the following fiscal year under the straight-line method over a certain term within the average remaining service period of the employees (mainly 10 years) of the respective fiscal years.

Certain consolidated subsidiaries apply the simplified method that assumes the amount required for voluntary resignation at the end of the six months ended September 30, 2016 to be retirement benefit obligations in computing net defined benefit liability and retirement benefit expenses.

 

- 14 -


(18) Assets and Liabilities denominated in foreign currencies

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

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

 

(19) Hedge Accounting

 

  (a) Interest Rate Risk

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

The portfolio hedge transaction for a large volume of small-value monetary claims and liabilities of domestic consolidated banking subsidiaries and some of domestic consolidated trust banking subsidiaries is accounted for in accordance with the method stipulated in the “Accounting and Auditing Treatment relating to Adoption of Accounting Standards for Financial Instruments for Banks” (JICPA Industry Audit Committee Report No. 24, February 13, 2002).

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

 

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

 

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

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

 

  (b) Foreign Exchange Risk

Domestic consolidated banking subsidiaries and some of domestic consolidated trust banking subsidiaries apply the deferred method of hedge accounting to hedge foreign exchange risks associated with various financial assets and liabilities denominated in foreign currencies as stipulated in the “Accounting and Auditing Treatment relating to Adoption of Accounting Standards for Foreign Currency Transactions for Banks” (JICPA Industry Audit Committee Report No. 25, July 29, 2002). The effectiveness of the hedge is assessed by confirming that the amount of the foreign currency position of the hedged monetary claims and liabilities is equal to or larger than that of currency-swap transactions, exchange swap transactions, and similar transactions designated as the hedging instruments of the foreign exchange risk.

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

 

  (c) Inter-company Transactions

Inter-company interest rate swaps, currency swaps and similar derivatives among consolidated companies or between trading accounts and other accounts, which are designated as hedges, are not eliminated and related gains and losses are recognized in the statement of income or deferred under hedge accounting, because these inter-company derivatives are executed according to the criteria for appropriate outside third-party cover operations which are treated as hedge transactions objectively in accordance with JICPA Industry Audit Committee Reports No. 24 and 25.

As for certain assets and liabilities of MHFG and its consolidated subsidiaries, the deferred method, the fair-value hedge method or the exceptional accrual method for interest rate swaps are applied.

 

- 15 -


(20) Scope of Cash and Cash Equivalents on Interim Consolidated Statements of Cash Flows

In the interim consolidated statements of cash flows, Cash and Cash Equivalents consist of cash and due from central banks included in “Cash and Due from Banks” on the interim consolidated balance sheet.

 

(21) Consumption Taxes and other

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

 

- 16 -


Changes in Accounting Policies

Application of “Revised Implementation Guidance on Recoverability of Deferred Tax Assets”

MHFG has applied “Revised Implementation Guidance on Recoverability of Deferred Tax Assets” (ASBJ Guidance No. 26, March 28, 2016) (hereinafter, the “Recoverability Implementation Guidance”) from this interim period ended September 30, 2016 and partially revised the accounting method of recoverability of deferred tax assets.

The Recoverability Implementation Guidance has been applied in accordance with the transitional treatment set forth in Article 49(4) of the Recoverability Implementation Guidance. The differences between (i) the amounts of Deferred Tax Assets and Deferred Tax Liabilities when provisions applicable from ① to ③ of Article 49(3) of the Recoverability Implementation Guidance were applied as of April 1, 2016, and (ii) the amounts of Deferred Tax Assets and Deferred Tax Liabilities at the end of the fiscal year ended March 31, 2016, were added to Retained Earnings as of April 1, 2016.

As a result, Deferred Tax Assets (before offset) and Retained Earnings each increased by ¥1,426 million as of April 1, 2016.

As a result of reflection of the effects on the Net Assets as of April 1, 2016, Retained Earnings increased by ¥1,426 million as of April 1, 2016 in the interim consolidated statement of changes in net assets.

Additional Information

The Board Benefit Trust (“BBT”) Program

Since MHFG operates its business giving due regard to creating value for diverse stakeholders and realizing improved corporate value through the continuous and stable growth of MHFG group pursuant to MHFG’s basic management policy defined under the Mizuho Financial Group’s Corporate Identity, MHFG has introduced a performance-based stock compensation program using a trust (the “Program”) that functions as an incentive for each Director, Executive Officer, and Specialist Officer to exert maximum effort in performing his or her duties, and also as consideration for such exertion of effort.

 

(1) Outline of the Program

The Program has adopted the Board Benefit Trust (“BBT”) framework. MHFG’s shares on the stock market will be acquired through a trust established based on the underlying funds contributed by MHFG, and MHFG’s shares will be distributed to Directors, Executive Officers, and Specialist Officers of MHFG, Mizuho Bank, Ltd., Mizuho Trust & Banking Co., Ltd., and Mizuho Securities Co., Ltd. (the “Company Group”) in accordance with the Rules on Distribution of Shares to be prescribed in advance. The number of MHFG’s shares to be distributed will be determined pursuant to a performance evaluation based on the annual business plan.

A structure has been introduced for the distribution of MHFG’s shares under the Program, whereby the distribution will be deferred over three years, and the deferred portion will be subject to reduction or forfeiture depending on certain factors, including the performance of the Company Group or the relevant Directors, Executive Officers, and Specialist Officers.

Voting rights related to MHFG’s shares belonging to the trust assets under the trust shall not be exercised.

 

(2) MHFG’s Shares Outstanding in the Trust

MHFG’s shares outstanding in the trust are recognized as Treasury Stock under Net Assets at the carrying amount (excluding the amount of incidental expenses) in the trust. The carrying amount of such Treasury Stock as of September 30, 2016 was ¥1,428 million for 9,000 thousand shares.

 

- 17 -


Notes to Interim Consolidated Balance Sheet

 

*1. The total amount of shares and investments in affiliates

 

                                                                                     
     (Millions of yen)  
     As of March 31, 2016      As of September 30, 2016  

Shares

          318,803              315,535   

Investments

     607         557   

 

2. MHFG does not have unsecured loaned securities which the borrowers have the right to sell or repledge.

In certain transactions, MHFG has the right to sell or repledge the following unsecured borrowed securities, securities purchased under resale agreements and securities borrowed with cash collateral.

 

                                                                                     
     (Millions of yen)  
     As of March 31, 2016      As of September 30, 2016  

Securities repledged

     11,479,189         12,096,781   

Securities neither repledged nor re-loaned at the end of the period/the fiscal year

     798,317         998,996   

 

*3. Loans to Bankrupt Obligors and Non-Accrual Delinquent Loans, which are included in Loans and Bills Discounted, are as follows:

 

                                                                                     
     (Millions of yen)  
     As of March 31, 2016      As of September 30, 2016  

Loans to Bankrupt Obligors

     24,315         30,309   

Non-Accrual Delinquent Loans

          396,720              377,554   

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

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

 

*4. Balance of Loans Past Due for Three Months or More, which is included in Loans and Bills Discounted, is as follows:

 

                                                                                     
     (Millions of yen)  
     As of March 31, 2016      As of September 30, 2016  

Loans Past Due for Three Months or More

                 907                     781   

Loans Past Due for Three Months or More are loans on which payments of principal and/or interest have not been made for a period of three months or more since the next day following the first due date without such payments, and which are not included in Loans to Bankrupt Obligors, or Non-Accrual Delinquent Loans.

 

- 18 -


*5. Balance of Restructured Loans, which is included in Loans and Bills Discounted, is as follows:

 

                                                                                     
     (Millions of yen)  
     As of March 31, 2016      As of September 30, 2016  

Restructured Loans

          463,108              436,229   

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

 

*6. Total balance of Loans to Bankrupt Obligors, Non-Accrual Delinquent Loans, Loans Past Due for Three Months or More, and Restructured Loans is as follows:

 

                                                                                     
     (Millions of yen)  
     As of March 31, 2016      As of September 30, 2016  

Total

          885,052              844,874   

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

 

*7. In accordance with “Accounting and Auditing Treatment Relating to Adoption of Accounting Standards for Financial Instruments for Banks” (JICPA Industry Audit Committee Report No. 24, February 13, 2002), bills discounted are accounted for as financing transactions. The banking subsidiaries have rights to sell or pledge these commercial bills, foreign exchange bills purchased and others. The face values of these bills are as follows:

 

                                                                                     
     (Millions of yen)  
     As of March 31, 2016      As of September 30, 2016  
       1,304,681           1,040,352   

 

*8. Breakdown of assets pledged as collateral is as follows:

 

                                                                                     
     (Millions of yen)  
      As of March 31, 2016      As of September 30, 2016  

The following assets are pledged as collateral:

     

Trading Assets

     2,674,897         1,292,388   

Securities

     10,631,675         8,202,942   

Loans and Bills Discounted

     5,475,195         7,486,347   

Other Assets

     1,015         1,105   
  

 

 

    

 

 

 

Total

     18,782,784         16,982,783   

The following liabilities are collateralized by the above assets:

     

Deposits

     813,050         868,183   

Payables under Repurchase Agreements

     6,090,727         5,845,612   

Guarantee Deposits Received under Securities Lending Transactions

     2,553,436         1,213,523   

Borrowed Money

     6,115,880         5,837,153   

 

- 19 -


In addition to the above, the following items are pledged as collateral in connection with the settlement accounts of foreign and domestic exchange transactions or derivatives transactions and others or as a substitute for margins for futures transactions and others:

 

                                                                                     
     (Millions of yen)  
     As of March 31, 2016      As of September 30, 2016  

Cash and Due from Banks

     45,101         44,231   

Trading Assets

     98,922         110,880   

Securities

       4,323,535           4,029,788   

Loans and Bills Discounted

     307,997         236,556   

Other Assets includes margins for futures transactions, guarantee deposits, and collateral pledged for financial instruments and others as follows:

 

                                                                                     
     (Millions of yen)  
     As of March 31, 2016      As of September 30, 2016  

Margins for Futures Transactions

     192,188         159,343   

Guarantee Deposits

     119,149         118,301   

Collateral Pledged for Financial Instruments and Others

          930,999           1,096,119   

 

*9. Overdraft protection on current accounts and contracts of the commitment line for loans are contracts by which banking subsidiaries are bound to extend loans up to the prearranged amount, at the request of customers, unless the customer is in breach of contract conditions. The unutilized balance of these contracts amounts is as follows:

 

                                                                                     
     (Millions of yen)  
     As of March 31, 2016      As of September 30, 2016  

Unutilized balance

     88,290,896         86,709,503   

Amount relating to contracts of which the original contractual maturity is one year or less, or which are unconditionally cancelable at any time

     68,209,392         68,464,023   

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

 

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

Revaluation date: March 31, 1998

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

 

- 20 -


*11. Accumulated Depreciation of Tangible Fixed Assets

 

                                                                                     
     (Millions of yen)  
     As of March 31, 2016      As of September 30, 2016  

Accumulated Depreciation

          857,628              845,409   

 

*12. Borrowed Money includes subordinated borrowed money with a covenant that performance of the obligation is subordinated to that of other obligations.

 

                                                                                     
     (Millions of yen)  
     As of March 31, 2016      As of September 30, 2016  

Subordinated Borrowed Money

          307,000              272,000   

 

*13. Bonds and Notes includes subordinated bonds.

 

                                                                                     
     (Millions of yen)  
     As of March 31, 2016      As of September 30, 2016  

Subordinated Bonds

       1,713,478           2,271,207   

 

14. The principal amounts of money trusts with contracts indemnifying the principal amounts, which are entrusted to domestic consolidated trust banking subsidiaries, are as follows:

 

                                                                                     
     (Millions of yen)  
     As of March 31, 2016      As of September 30, 2016  

Money trusts

       1,765,076           1,083,927   

 

*15. Liabilities for guarantees on corporate bonds included in “Securities,” which are issued by private placement (Article 2, Paragraph 3 of the Financial Instruments and Exchange Act)

 

                                                                                     
     (Millions of yen)  
     As of March 31, 2016      As of September 30, 2016  
       1,039,783           1,081,871   

 

- 21 -


Notes to Interim Consolidated Statement of Income

 

*1. Other Ordinary Income includes the following:

 

                                                                                     
     (Millions of yen)  
      For the six months ended
September 30, 2015
     For the six months ended
September 30, 2016
 

Gains on Sales of Stocks

          133,199                76,772   

Recovery on Written-off Loans

     10,322         18,560   

 

*2. Other Ordinary Expenses includes the following:

 

                                                                                     
     (Millions of yen)  
      For the six months ended
September 30, 2015
     For the six months ended
September 30, 2016
 

System Migration-related Expenses

            17,343                19,367   

Losses on Write-offs of Loans

     14,220         10,480   

 

*3. Extraordinary Gains is as follows:

 

                                                                                     
     (Millions of yen)  
      For the six months ended
September 30, 2015
     For the six months ended
September 30, 2016
 

Gains on Disposition of Fixed Assets

              6,751                  1,426   

Indemnity Receipt from the Erroneous Stock Order in the Securities Subsidiary

     12,822         —     

 

*4. Extraordinary Losses includes the following:

 

                                                                                     
     (Millions of yen)  
      For the six months ended
September 30, 2015
     For the six months ended
September 30, 2016
 

Losses on Disposition of Fixed Assets

              1,602                  1,576   

Losses on Impairment of Fixed Assets

     390         1,474   

 

- 22 -


Notes to Interim Consolidated Statement of Changes in Net Assets

For the six months ended September 30, 2015

 

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

 

     (Thousands of shares)  
     As of
April 1,  2015
     Increase during
the period
     Decrease during
the period
     As of
September 30,  2015
     Remarks  

Issued Shares

              

Common Stock

     24,621,897         249,031         —           24,870,929         (Note 1

Eleventh Series Class XI Preferred Stock

     914,752         —           —           914,752      
  

 

 

    

 

 

    

 

 

    

 

 

    

Total

     25,536,649         249,031         —           25,785,681      
  

 

 

    

 

 

    

 

 

    

 

 

    

Treasury Stock

              

Common Stock

     11,649         2,839         2,092         12,395         (Note 2

Eleventh Series Class XI Preferred Stock

     701,631         69,047         —           770,678         (Note 3
  

 

 

    

 

 

    

 

 

    

 

 

    

Total

     713,280         71,886         2,092         783,074      
  

 

 

    

 

 

    

 

 

    

 

 

    

 

(Notes)   

1.      Increases are due to request for acquisition (conversion) of preferred stock (244,071 thousand shares) and exercise of stock acquisition rights (stock options) (4,960 thousand shares).

  

2.      Increases are due to repurchase of shares constituting less than one unit and other factors. Decreases are due to exercise of stock acquisition rights (stock options) (1,808 thousand shares) and repurchases of shares constituting less than one unit and other factors (284 thousand shares).

  

3.      Increases are due to request for acquisition (conversion) of preferred stock.

 

2. Stock acquisition rights and treasury stock acquisition rights are as follows:

 

Category

  

Breakdown

of stock

acquisition

rights

   Class of shares
to be issued or
transferred upon
exercise of
stock acquisition
rights
     Number of shares to be issued or transferred upon
exercise of stock acquisition rights (Shares)
    Balance as of
September 30,
2015

(Millions of yen)
    Remarks  
            
            
         As of
April 1,
2015
    Increase
during the
period
    Decrease
during the
period
    As of
September 30,
2015
     

MHFG

   Stock acquisition rights (Treasury stock acquisition rights)      —          

 

—  

(—  

  

   

 

—  

(—  

  

   

 

—  

(—  

  

   

 

—  

(—  

  

   

 

—  

(—  

  

 
   Stock acquisition rights as stock option             —          2,762     

Consolidated subsidiaries (Treasury stock acquisition rights)

               —         

 

—  

(—  

  

 
       

 

 

   

Total

            —         

 

2,762

(—  

  

 
    

 

 

   

 

- 23 -


3. Cash dividends distributed by MHFG are as follows:

 

(1) Cash dividends paid during the six months ended September 30, 2015

 

Resolution

 

Type

  Cash Dividends
(Millions of yen)
    Cash
Dividends
per  Share

(Yen)
    Record Date   Effective Date

May 15,

2015

  Common Stock     98,452        4      March 31,
2015
  June 4, 2015
The Board of
Directors
 

Eleventh Series Class XI

Preferred Stock

    2,131        10      March 31,
2015
  June 4, 2015

 

(2)    Cash dividends with record dates falling in the six months ended September 30, 2015 and effective dates coming after the end of the period

 

Resolution

 

Type

 

Cash Dividends
(Millions of yen)

  Resource
of
Dividends
    Cash
Dividends
per  Share

(Yen)
    Record
Date
  Effective
Date

November 13,

2015

  Common Stock   93,240    
 
Retained
Earnings
  
  
    3.75      September 30,
2015
  December 4,
2015
The Board of
Directors
  Eleventh Series Class XI
Preferred Stock
  1,440    
 
Retained
Earnings
  
  
    10      September 30,
2015
  December 4,
2015

 

- 24 -


For the six months ended September 30, 2016

 

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

 

     (Thousands of shares)  
     As of
April 1, 2016
     Increase during
the period
     Decrease during
the period
     As of
September 30,  2016
     Remarks  

Issued Shares

              

Common Stock

     25,030,525         355,782         —           25,386,307         (Note 1

Eleventh Series Class XI Preferred Stock

     914,752         —           914,752         —           (Note 2
  

 

 

    

 

 

    

 

 

    

 

 

    

Total

     25,945,277         355,782         914,752         25,386,307      
  

 

 

    

 

 

    

 

 

    

 

 

    

Treasury Stock

              

Common Stock

     10,929         12,166         1,199         21,895         (Note 3

Eleventh Series Class XI Preferred Stock

     815,828         98,923         914,752         —           (Note 4
  

 

 

    

 

 

    

 

 

    

 

 

    

Total

     826,757         111,089         915,951         21,895      
  

 

 

    

 

 

    

 

 

    

 

 

    

 

(Notes)

  

1.      Increases are due to request for acquisition (conversion) of preferred stock (349,677 thousand shares) and exercise of stock acquisition rights (stock options) (6,105 thousand shares).

  

2.      Decreases are due to cancellation of treasury stock (preferred stock).

  

3.      Increases are due to acquisition of MHFG shares by BBT trust account (9,000 thousand shares), and repurchase of shares constituting less than one unit and other factors (3,166 thousand shares). Decreases are due to exercise of stock acquisition rights (stock options) (266 thousand shares) and repurchase of shares constituting less than one unit and other factors (933 thousand shares). The number of shares as of September 30, 2016 includes the number of shares held by BBT trust account (9,000 thousand shares).

  

4.      Increases are due to acquisition (conversion) of treasury stock (preferred stock) (75,091 thousand shares) and request for acquisition (conversion) of preferred stock (23,832 thousand shares). Decreases are due to cancellation of treasury stock (preferred stock).

 

2. Stock acquisition rights and treasury stock acquisition rights are as follows:

 

Category

  

Breakdown
of stock
acquisition
rights

   Class of shares
to be issued or
transferred upon
exercise of
stock acquisition
rights
     Number of shares to be issued or transferred upon
exercise of stock acquisition rights (Shares)
    Balance as of
September 30,
2016

(Millions of yen)
    Remarks  
            
            
         As of
April 1,
2016
    Increase
during the
period
    Decrease
during the
period
    As of
September 30,
2016
     

MHFG

   Stock acquisition rights (Treasury stock acquisition rights)      —          

 

—  

(—  

  

   

 

—  

(—  

  

   

 

—  

(—  

  

   

 

—  

(—  

  

   

 

—  

(—  

  

 
   Stock acquisition rights as stock option             —          1,754     

Consolidated subsidiaries (Treasury stock acquisition rights)

               —         

 

—  

(—  

  

 
       

 

 

   

Total

            —         

 

1,754

(—  

  

 
    

 

 

   

 

- 25 -


3. Cash dividends distributed by MHFG are as follows:

 

(1) Cash dividends paid during the six months ended September 30, 2016

 

Resolution

 

Type

  Cash Dividends
(Millions of yen)
    Cash
Dividends
per  Share

(Yen)
   

Record Date

 

Effective Date

May 13,

2016

  Common Stock     93,838        3.75     

March 31,

2016

 

June 3,

2016

The Board of
Directors
  Eleventh Series Class XI
Preferred Stock
    989        10     

March 31,

2016

 

June 3,

2016

 

(2)    Cash dividends with record dates falling in the six months ended September 30, 2016 and effective dates coming after the end of the period

 

Resolution

 

Type

 

Cash Dividends

(Millions of yen)

  Resource of
Dividends
    Cash
Dividends

per  Share
(Yen)
   

Record

Date

 

Effective

Date

November 14,

2016

 

The Board of

Directors

  Common Stock   95,173    
 
Retained
Earnings
  
  
    3.75     

September 30,

2016

 

December 6,

2016

 

(Note) Cash dividends based on the resolution of the Board of Directors on November 14, 2016 include ¥33 million of cash dividends on MHFG shares held by BBT trust account.

Notes to Interim Consolidated Statement of Cash Flows

 

*1. Cash and Cash Equivalents at the end of the period on the Interim Consolidated Statement of Cash Flows reconciles to Cash and Due from Banks on the Interim Consolidated Balance Sheet as follows:

 

     (Millions of yen)  
     For the six months  ended
September 30, 2015
     For the six months  ended
September 30, 2016
 

Cash and Due from Banks

     35,194,504         42,715,384   

Due from Banks excluding central banks

     (1,266,585      (1,093,594
  

 

 

    

 

 

 

Cash and Cash Equivalents

     33,927,919         41,621,790   
  

 

 

    

 

 

 

 

- 26 -


Lease Transactions

 

1. Finance Leases (Lessees)

Finance lease transactions that do not transfer ownership:

 

  1) Lease Assets:

 

  (a) Tangible fixed assets: mainly equipment

 

  (b) Intangible fixed assets: software

 

  2) The method for computing the amount of depreciation is described in “4. Standards of Accounting Method (5) Depreciation of Fixed Assets.”

 

2. Operating Leases

The future lease payments subsequent to the end of the fiscal year for non-cancelable operating lease transactions are summarized as follows:

 

(1) Lessees:

 

     (Millions of yen)  
     As of March 31, 2016      As of September 30, 2016  

Due in One Year or Less

     53,116         50,783   

Due after One Year

     223,770         202,883   
  

 

 

    

 

 

 

Total

     276,887         253,667   
  

 

 

    

 

 

 

 

(2) Lessors:

 

     (Millions of yen)  
     As of March 31, 2016      As of September 30, 2016  

Due in One Year or Less

     692         473   

Due after One Year

     3,684         2,366   
  

 

 

    

 

 

 

Total

         4,376             2,839   
  

 

 

    

 

 

 

 

- 27 -


Financial Instruments

Matters relating to fair value of financial instruments and others

The following are the interim consolidated balance sheet amounts (the consolidated balance sheet amounts), fair values and differences between them. Unlisted stocks and others, the fair values of which are extremely difficult to determine, are excluded from the table below (see (Note 2)).

As of March 31, 2016

 

     (Millions of yen)  
     Consolidated Balance
Sheet Amount
    Fair Value      Difference  

(1)    Cash and Due from Banks (*1)

     36,314,173        36,314,173         —     

(2)    Call Loans and Bills Purchased (*1)

     892,781        892,781         —     

(3)    Receivables under Resale Agreements

     7,805,798        7,805,798         —     

(4)    Guarantee Deposits Paid under Securities Borrowing Transactions

     3,407,390        3,407,390         —     

(5)    Other Debt Purchased (*1)

     2,979,413        2,979,419         6   

(6)    Trading Assets

       

         Trading Securities

     5,467,948        5,467,948         —     

(7)    Money Held in Trust (*1)

     175,135        175,135         —     

(8)    Securities

       

         Bonds Held to Maturity

     4,817,574        4,873,209         55,634   

         Other Securities

     34,083,510        34,083,510         —     

(9)    Loans and Bills Discounted

     73,708,884        

         Reserves for Possible Losses on Loans (*1)

     (411,319     
  

 

 

   

 

 

    

 

 

 
     73,297,564        74,465,870         1,168,305   
  

 

 

   

 

 

    

 

 

 

Total Assets

     169,241,291        170,465,237         1,223,946   
  

 

 

   

 

 

    

 

 

 

(1)    Deposits

     105,629,071        105,635,132         6,061   

(2)    Negotiable Certificates of Deposit

     11,827,533        11,827,239         (293

(3)    Call Money and Bills Sold

     2,521,008        2,521,008         —     

(4)    Payables under Repurchase Agreements

     16,833,346        16,833,346         —     

(5)    Guarantee Deposits Received under Securities Lending Transactions

     2,608,971        2,608,971         —     

(6)    Trading Liabilities

       

         Securities Sold, Not yet Purchased

     2,630,040        2,630,040         —     

(7)    Borrowed Money

     7,503,543        7,510,534         6,990   

(8)    Bonds and Notes

     6,120,928        6,222,223         101,295   

(9)    Due to Trust Accounts

     5,067,490        5,067,490         —     
  

 

 

   

 

 

    

 

 

 

Total Liabilities

     160,741,933        160,855,987         114,053   
  

 

 

   

 

 

    

 

 

 

Derivative Transactions (*2)

       

Derivative Transactions not Qualifying for Hedge Accounting

     19,666        

Derivative Transactions Qualifying for Hedge Accounting

     481,660        

Reserves for Derivative Transactions (*1)

     (8,086     
  

 

 

   

 

 

    

 

 

 

Total Derivative Transactions

     493,240        493,240         —     
  

 

 

   

 

 

    

 

 

 

 

(*1) General and specific reserves for possible losses on loans relevant to Loans and Bills Discounted and reserves for derivative transactions are excluded. Reserves for Cash and Due from Banks, Call Loans and Bills Purchased, Other Debt Purchased, Money Held in Trust and others are directly written off against the consolidated balance sheet amount due to immateriality.
(*2) Derivative Transactions recorded in Trading Assets, Trading Liabilities, Derivatives other than for Trading Assets, Derivatives other than for Trading Liabilities, and others are presented as a lump sum.

Net claims and debts that arose from derivative transactions are presented on a net basis, and the item that is net debts in total is presented in brackets.

 

- 28 -


As of September 30, 2016

 

     (Millions of yen)  
     Interim Consolidated
Balance Sheet Amount
    Fair Value      Difference  

(1)    Cash and Due from Banks (*1)

     42,713,577        42,713,577         —     

(2)    Call Loans and Bills Purchased (*1)

     899,099        899,099         —     

(3)    Receivables under Resale Agreements

     9,258,984        9,258,984         —     

(4)    Guarantee Deposits Paid under Securities Borrowing Transactions

     3,195,977        3,195,977         —     

(5)    Other Debt Purchased (*1)

     2,527,040        2,527,046         5   

(6)    Trading Assets

       

         Trading Securities

     5,215,172        5,215,172         —     

(7)    Money Held in Trust (*1)

     227,473        227,473         —     

(8)    Securities

       

         Bonds Held to Maturity

     4,258,676        4,317,918         59,242   

         Other Securities

     27,864,070        27,864,070         —     

(9)    Loans and Bills Discounted

     73,030,669        

         Reserves for Possible Losses on Loans (*1)

     (395,250     
  

 

 

   

 

 

    

 

 

 
     72,635,419        73,745,613         1,110,194   
  

 

 

   

 

 

    

 

 

 

Total Assets

     168,795,492        169,964,934         1,169,442   
  

 

 

   

 

 

    

 

 

 

(1)    Deposits

     110,171,994        110,182,857         10,863   

(2)    Negotiable Certificates of Deposit

     9,568,325        9,567,877         (448

(3)    Call Money and Bills Sold

     1,791,651        1,791,651         —     

(4)    Payables under Repurchase Agreements

     17,739,258        17,739,258         —     

(5)    Guarantee Deposits Received under Securities Lending Transactions

     1,314,573        1,314,573         —     

(6)    Trading Liabilities

       

         Securities Sold, Not yet Purchased

     2,676,523        2,676,523         —     

(7)    Borrowed Money

     7,243,394        7,232,531         (10,862

(8)    Bonds and Notes

     7,131,121        7,266,821         135,700   

(9)    Due to Trust Accounts

     4,053,768        4,053,768         —     
  

 

 

   

 

 

    

 

 

 

Total Liabilities

     161,690,611        161,825,864         135,252   
  

 

 

   

 

 

    

 

 

 

Derivative Transactions (*2)

       

Derivative Transactions not Qualifying for Hedge Accounting

     134,725        

Derivative Transactions Qualifying for Hedge Accounting

     786,359        

Reserves for Derivative Transactions (*1)

     (13,514     
  

 

 

   

 

 

    

 

 

 

Total Derivative Transactions

     907,570        907,570         —     
  

 

 

   

 

 

    

 

 

 

 

(*1) General and specific reserves for possible losses on loans relevant to Loans and Bills Discounted and reserves for derivative transactions are excluded. Reserves for Cash and Due from Banks, Call Loans and Bills Purchased, Other Debt Purchased, Money Held in Trust and others are directly written off against the interim consolidated balance sheet amount due to immateriality.
(*2) Derivative Transactions recorded in Trading Assets, Trading Liabilities, Derivatives other than for Trading Assets, Derivatives other than for Trading Liabilities, and others are presented as a lump sum.

Net claims and debts that arose from derivative transactions are presented on a net basis, and the item that is net debts in total is presented in brackets.

 

- 29 -


(Note 1) Calculation method of fair value of financial instruments

Assets

 

  (1) Cash and Due from Banks

For Due from Banks which have no maturity, since fair values of these items approximate book values, we deem the book values to be fair values. For Due from Banks which have maturity, since contractual terms of these items are mainly short (i.e., within six months) and fair values of these items approximate book values, we deem the book values to be fair values.

 

  (2) Call Loans and Bills Purchased, (3) Receivables under Resale Agreements and (4) Guarantee Deposits Paid under Securities Borrowing Transactions

Since contractual terms of these items are mainly short (i.e., within six months) and fair values of these items approximate book values, we deem the book values to be fair values.

 

  (5) Other Debt Purchased

Fair values of Other Debt Purchased are based on the values deemed as market prices obtained by the reasonable estimate such as those obtained from brokers and financial information vendors.

 

  (6) Trading Assets

Fair values of securities held for trading, such as bonds held for trading, are based on the market prices and others.

 

  (7) Money Held in Trust

As to securities managed as trust assets in a directed money trust for separate investment with the management of securities as its primary purpose, fair values of these items are calculated using the method stated in (8). For other Money Held in Trust, since fair values of these items approximate book values, we deem the book values to be fair values. The notes to Money Held in Trust based on holding purpose are stated in “Money Held in Trust.”

 

  (8) Securities

Fair values of stocks are based on the prices on securities exchanges, and those of bonds and others are based on the market prices, valuations obtained from brokers and information vendors and others. Fair values of investment trusts are based on the disclosed net asset value and others. Fair values of private placement bonds are calculated by discounting the total amount of principal and interest and others at interest rates based on the discount rate reflecting expected loss and various risk factors by categories according to the internal ratings and terms.

Fair values of securitized products are based on valuations obtained from brokers and others, and reasonably calculated prices based on the reasonable estimates of our management. In deriving reasonably calculated prices based on the reasonable estimates of our management mentioned above, we used the discounted cash flow method. The price decision variables include default rates, recovery rates, pre-payment rates, and discount rates.

Fair values of Floating-rate Japanese Government Bonds, according to our determination that current market prices may not reflect the fair value, are based on the reasonably calculated prices as book value as of September 30, 2016 (as of March 31, 2016). In deriving the reasonably calculated prices, we used the discount cash flow method as well as other methods. The price decision variables include the yield of 10-year Japanese Government Bonds and the volatilities of interest rate swap options for 10-year Japanese Government Bonds as underlying assets.

The notes to Securities based on holding purpose are stated in “Securities.”

 

  (9) Loans and Bills Discounted

Fair values of Loans and Bills Discounted are calculated by the total amount of principal and interest and others at interest rates based on the discount rate reflecting expected loss and various risk factors by categories according to the types, internal ratings and terms of the Loans and Bills Discounted. In addition, as to claims against bankrupt obligors, substantially bankrupt obligors and intensive control obligors, since the estimated amount of bad debts is calculated based on the present value of the expected future cash flows or the estimated amounts that we would be able to collect from collateral and guarantees, fair values approximate the amount of Debentures and others minus the amount of Reserves for Possible Losses on Loans in the interim consolidated balance sheet (the consolidated balance sheet) as of the interim consolidated balance sheet date (the consolidated balance sheet date) and we thus deem such amount to be fair values.

Of the Loans and Bills Discounted, for those without a fixed maturity due to loan characteristics such as limiting loans to within the value of pledged assets, we deem book values to be fair values since fair values are expected to approximate book values based on the estimated loan periods, interest rates and other conditions.

 

- 30 -


Liabilities

 

  (1) Deposits (2) Negotiable Certificates of Deposit

For demand deposits, we deem the payment amounts required on the interim consolidated balance sheet date (the consolidated balance sheet date) (i.e., book values) to be fair values. In addition, fair values of fixed deposits and negotiable certificates of deposits are calculated by classifying them based on their terms and by discounting the future cash flows. The discount rates used in such calculations are the interest rates. Since fair values of those whose deposit terms are short (i.e., within six months) approximate book values, we mainly deem the book values to be fair values.

 

  (3) Call Money and Bills Sold, (4) Payables under Repurchase Agreements and (5) Guarantee Deposits Received under Securities Lending Transactions

Since contractual terms of these financial instruments are mainly short (i.e., within six months) and fair values approximate book values, we deem the book values to be fair values.

 

  (6) Trading Liabilities

Fair values of Securities Sold, Not yet Purchased in Trading Liabilities are based on the market prices and others.

 

  (7) Borrowed Money

Fair values of Borrowed Money are calculated mainly by discounting the total amount of the principal and interest of such Borrowed Money classified by certain period at the interest rates considered to be applicable to similar loans.

 

  (8) Bonds and Notes

Fair values of Bonds and Notes issued by MHFG and its consolidated subsidiaries are based on the market prices for Bonds and Notes which have market prices, and calculated by discounting the total amount of principal and interest by the interest rates considered to be applicable to similar Bonds and Notes for those which do not have market prices.

 

  (9) Due to Trust Accounts

Due to Trust Accounts of consolidated trust banking subsidiaries is used for transactions in which consolidated trust banking subsidiaries manage fund entrusted to them in bank accounts of consolidated trust banking subsidiaries. As the purpose is considered to approximate demand deposit, we deem the book values to be fair values.

Derivative Transactions

Derivative Transactions are stated in “Derivatives Information.”

 

(Note 2) Interim consolidated balance sheet (consolidated balance sheet) amounts of financial instruments whose fair values are deemed to be extremely difficult to determine are indicated below, and are not included in “Assets (5) Other Debt Purchased,” “Assets (7) Money Held in Trust,” and “Assets (8) Other Securities” in fair value information of financial instruments.

 

(Millions of yen)

 

Category

   As of March 31, 2016      As of September 30, 2016  

(i)     Unlisted Stocks (*1)

     216,329        189,965  

(ii)    Investments in Partnerships and others (*2)

     69,076        76,264  

(iii)   Other

     571         535   
  

 

 

    

 

 

 

Total (*3)

     285,977         266,765   
  

 

 

    

 

 

 

 

  (*1) We do not treat Unlisted Stocks as being subject to disclosure of fair values as there are no market prices and they are deemed extremely difficult to determine fair values.
  (*2) Of the Investments in Partnerships and others, we do not treat those whose assets consist of unlisted stocks and other financial instruments that are deemed extremely difficult to determine fair values as being subject to disclosure of fair values.
  (*3) During the fiscal year ended March 31, 2016, the amount of impairment (devaluation) was ¥1,696 million on a consolidated basis.
       During the six months ended September 30, 2016, the amount of impairment (devaluation) was ¥1,270 million on a consolidated basis.

 

- 31 -


Securities

In addition to “Securities” on the interim consolidated balance sheet (the consolidated balance sheet), Negotiable Certificates of Deposit in “Cash and Due from Banks,” certain items in “Other Debt Purchased” and certain items in “Other Assets” are also included.

 

1. Bonds Held to Maturity

As of March 31, 2016

 

(Millions of yen)

 
    

Type

   Consolidated Balance
Sheet Amount
     Fair Value      Difference  

Bonds Whose Fair Values Exceed the Consolidated Balance Sheet Amount

   Japanese Government Bonds      3,760,032         3,816,652         56,619   
   Foreign Bonds      642,788         647,182         4,393   
     

 

 

    

 

 

    

 

 

 
  

Sub-total

     4,402,821         4,463,834         61,012   
     

 

 

    

 

 

    

 

 

 

Bonds Whose Fair Values Do Not Exceed the Consolidated Balance Sheet Amount

   Japanese Government Bonds      —           —           —     
   Foreign Bonds      414,753         409,375         (5,378
     

 

 

    

 

 

    

 

 

 
  

Sub-total

     414,753         409,375         (5,378
     

 

 

    

 

 

    

 

 

 

Total

     4,817,574         4,873,209         55,634   
     

 

 

    

 

 

    

 

 

 

As of September 30, 2016

 

(Millions of yen)

 
    

Type

   Interim Consolidated
Balance Sheet Amount
     Fair Value      Difference  

Bonds Whose Fair Values Exceed the Interim Consolidated Balance Sheet Amount

   Japanese Government Bonds      3,459,999         3,514,851         54,851   
   Foreign Bonds      542,436         547,856         5,420   
     

 

 

    

 

 

    

 

 

 
  

Sub-total

     4,002,435         4,062,707         60,271   
     

 

 

    

 

 

    

 

 

 

Bonds Whose Fair Values Do Not Exceed the Interim Consolidated Balance Sheet Amount

   Japanese Government Bonds      —           —           —     
   Foreign Bonds      256,240         255,211         (1,029
     

 

 

    

 

 

    

 

 

 
  

Sub-total

     256,240         255,211         (1,029
     

 

 

    

 

 

    

 

 

 

Total

     4,258,676         4,317,918         59,242   
     

 

 

    

 

 

    

 

 

 

 

- 32 -


2. Other Securities

As of March 31, 2016

 

                                                                                                                                                                   

(Millions of yen)

 
    

Type

   Consolidated Balance
Sheet Amount
     Acquisition Cost      Difference  

Other Securities Whose Consolidated Balance Sheet Amount Exceeds Acquisition Cost

   Stocks      3,119,477         1,437,513         1,681,963   
   Bonds      18,155,225         18,007,215         148,010   
  

Japanese Government Bonds

     15,649,388         15,553,141         96,247   
  

Japanese Local Government Bonds

     237,247         231,149         6,097   
  

Short-term Bonds

     —           —           —     
  

Japanese Corporate Bonds

     2,268,589         2,222,924         45,665   
   Other      7,489,460         7,259,780         229,679   
  

Foreign Bonds

     6,775,953         6,708,016         67,936   
  

Other Debt Purchased

     143,593         139,690         3,903   
  

Other

     569,913         412,074         157,839   
     

 

 

    

 

 

    

 

 

 
  

Sub-total

     28,764,163          26,704,510         2,059,653   
     

 

 

    

 

 

    

 

 

 

Other Securities Whose Consolidated Balance Sheet Amount Does Not Exceed Acquisition Cost

   Stocks      338,149         409,668         (71,518
   Bonds      719,259         730,762         (11,502
  

Japanese Government Bonds

     116,484         116,890         (406
  

Japanese Local Government Bonds

     3,433         3,436         (3
  

Short-term Bonds

     99         99         —     
  

Japanese Corporate Bonds

     599,241         610,334         (11,093
   Other      4,854,122         4,948,886         (94,764
  

Foreign Bonds

     2,943,644         2,970,512         (26,867
  

Other Debt Purchased

     205,326         205,917         (591
  

Other

     1,705,151         1,772,456         (67,305
     

 

 

    

 

 

    

 

 

 
  

Sub-total

     5,911,531         6,089,317         (177,785
     

 

 

    

 

 

    

 

 

 

Total

     34,675,695         32,793,827         1,881,867   
     

 

 

    

 

 

    

 

 

 

 

(Note) Unrealized Gains (Losses) includes ¥26,715 million which was recognized in the statement of income by applying the fair-value hedge method.

 

- 33 -


As of September 30, 2016

 

                                                                                                                                                                   

(Millions of yen)

 
    

Type

   Interim Consolidated
Balance Sheet Amount
     Acquisition Cost      Difference  

Other Securities Whose Interim Consolidated Balance Sheet Amount Exceeds Acquisition Cost

   Stocks      2,904,416         1,391,989         1,512,427   
   Bonds      10,359,951         10,255,793         104,157   
  

Japanese Government Bonds

     7,917,280         7,860,349         56,931   
  

Japanese Local Government Bonds

     273,128         266,679         6,449   
  

Short-term Bonds

     —           —           —     
  

Japanese Corporate Bonds

     2,169,542         2,128,764         40,777   
   Other      6,719,343         6,499,216         220,127   
  

Foreign Bonds

     6,014,514         5,949,564         64,950   
  

Other Debt Purchased

     106,739         103,814         2,924   
  

Other

     598,089         445,837         152,252   
     

 

 

    

 

 

    

 

 

 
  

Sub-total

     19,983,712         18,146,999         1,836,712   
     

 

 

    

 

 

    

 

 

 

Other Securities Whose Interim Consolidated Balance Sheet Amount Does Not Exceed Acquisition Cost

   Stocks      322,668         407,000         (84,331
   Bonds      3,135,439         3,151,263         (15,824
  

Japanese Government Bonds

     2,457,536         2,460,476         (2,939
  

Japanese Local Government Bonds

     8,182         8,210         (28
  

Short-term Bonds

     99         99         —     
  

Japanese Corporate Bonds

     669,620         682,476         (12,855
   Other      4,961,948         5,051,514         (89,565
  

Foreign Bonds

     2,938,260         2,955,907         (17,647
  

Other Debt Purchased

     181,510         181,981         (471
  

Other

     1,842,178         1,913,626         (71,447
     

 

 

    

 

 

    

 

 

 
  

Sub-total

     8,420,056         8,609,778         (189,721
     

 

 

    

 

 

    

 

 

 

Total

        28,403,769         26,756,777         1,646,991   
     

 

 

    

 

 

    

 

 

 

 

(Note) Unrealized Gains (Losses) includes ¥15,052 million which was recognized in the statement of income by applying the fair-value hedge method.

 

- 34 -


3. Impairment (“Devaluation”) of Securities

Certain Securities other than Trading Securities (excluding Securities for which it is deemed to be extremely difficult to determine the fair value) are devalued to the fair value, and the difference between the acquisition cost and the fair value is treated as the loss for the six months ended September 30, 2016 (the fiscal year ended March 31, 2016) (impairment (devaluation)), if the fair value (primarily the closing market price as of September 30, 2016 (March 31, 2016)) has significantly deteriorated compared with the acquisition cost (including amortized cost), and unless it is deemed that there is a possibility of a recovery in the fair value.

The amount of impairment (devaluation) for the fiscal year ended March 31, 2016 was ¥9,161 million.

The amount of impairment (devaluation) for the six months ended September 30, 2016 was ¥4,475 million.

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

 

   

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

 

   

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

 

- 35 -


Money Held in Trust

 

1. Money Held in Trust Held to Maturity

There was no Money Held in Trust held to maturity.

 

2. Other in Money Held in Trust (other than for investment purposes and held to maturity purposes)

As of March 31, 2016

 

     (Millions of yen)  
     Consolidated
Balance Sheet
Amount
     Acquisition Cost      Difference      Other in Money
Held in Trust
Whose
Consolidated
Balance Sheet
Amount Exceeds
Acquisition Cost
     Other in Money
Held in Trust
Whose
Consolidated
Balance Sheet
Amount Does Not
Exceed
Acquisition Cost
 

Other in Money Held in Trust

     2,578         2,578         —           —           —     

 

(Note) “Other in Money Held in Trust Whose Consolidated Balance Sheet Amount Exceeds Acquisition Cost” and “Other in Money Held in Trust Whose Consolidated Balance Sheet Amount Does Not Exceed Acquisition Cost” are components of “Difference.”

As of September 30, 2016

 

     (Millions of yen)  
     Interim
Consolidated
Balance Sheet
Amount
     Acquisition Cost      Difference      Other in Money
Held in Trust
Whose Interim
Consolidated
Balance Sheet
Amount Exceeds
Acquisition Cost
     Other in Money
Held in Trust
Whose Interim
Consolidated
Balance Sheet
Amount Does Not
Exceed
Acquisition Cost
 

Other in Money Held in Trust

     3,053         3,053         —           —           —     

 

(Note) “Other in Money Held in Trust Whose Interim Consolidated Balance Sheet Amount Exceeds Acquisition Cost” and “Other in Money Held in Trust Whose Interim Consolidated Balance Sheet Amount Does Not Exceed Acquisition Cost” are components of “Difference.”

 

- 36 -


Unrealized Gains (Losses) on Other Securities

Details of Unrealized Gains (Losses) on Other Securities on the interim consolidated balance sheet (consolidated balance sheet) are as follows:

As of March 31, 2016

 

     (Millions of yen)  
     Amount  

Difference between Acquisition Cost and Fair Value

     1,855,281   

Other Securities

     1,855,281   

(–) Deferred Tax Liabilities

     508,389   

Difference between Acquisition Cost and Fair Value, net of Taxes (Before adjusting for amount corresponding to Non-controlling Interests)

     1,346,892   

(–) Amount Corresponding to Non-controlling Interests

     56,046   

(+) Amount Corresponding to Net Unrealized Gains (Losses) on Other Securities Owned by Affiliated Companies, which is attributable to MHFG

     5,193   
  

 

 

 

Net Unrealized Gains (Losses) on Other Securities

     1,296,039   
  

 

 

 

 

(Notes)

     1.       The difference between acquisition cost and fair value excludes ¥26,715 million (gains) which was recognized in the statement of income for the fiscal year ended March 31, 2016 by applying the fair-value hedge method.
     2.       “Other Securities” includes translation differences regarding securities which do not have readily determinable fair value.

As of September 30, 2016

 

     (Millions of yen)  
     Amount  

Difference between Acquisition Cost and Fair Value

     1,631,865   

Other Securities

     1,631,865   

(–) Deferred Tax Liabilities

     446,973   

Difference between Acquisition Cost and Fair Value, net of Taxes (Before adjusting for amount corresponding to Non-controlling Interests)

     1,184,891   

(–) Amount Corresponding to Non-controlling Interests

     54,764   

(+) Amount Corresponding to Net Unrealized Gains (Losses) on Other Securities Owned by Affiliated Companies, which is attributable to MHFG

     4,221   
  

 

 

 

Net Unrealized Gains (Losses) on Other Securities

     1,134,348   
  

 

 

 

 

(Notes)

     1.       The difference between acquisition cost and fair value excludes ¥15,052 million (gains) which was recognized in the statement of income for six months ended September 30, 2016 by applying the fair-value hedge method.
     2.       “Other Securities” includes translation differences regarding securities which do not have readily determinable fair value.

 

- 37 -


Derivatives Information

Derivative Transactions not Qualifying for Hedge Accounting

With regard to derivative transactions not qualifying for hedge accounting, contract value or contractual principal equivalents, fair values and unrealized gains (losses), and fair value calculation method by type of transaction as of the interim consolidated balance sheet date (consolidated balance sheet date) are as follows. Contract value amounts do not indicate the market risk related to derivative transactions.

 

(1) Interest Rate-Related Transactions

As of March 31, 2016    

 

(Millions of yen)

 

Classification

  

Type

   Contract Value      Fair Value     Unrealized Gains
(Losses)
 
      Total      Over One Year       

Listed

   Futures           
  

Sold

     15,846,181         5,404,223         (101,255     (101,255
  

Bought

     15,329,146         5,440,259         93,252        93,252   
   Options           
  

Sold

     266,618         35,363         (684     221   
  

Bought

     659,242         140,726         636        (413

Over-the-Counter

   FRAs           
  

Sold

     16,516,064         2,486,927         (7,427     (7,427
  

Bought

     8,747,790         —           321        321   
   Swaps           
  

Receive Fixed / Pay Float

     450,204,501         348,348,352         10,989,099        10,989,099   
  

Receive Float / Pay Fixed

     445,186,117         338,980,895         (10,832,435     (10,832,435
  

Receive Float / Pay Float

     77,852,071         57,764,275         40,572        40,572   
  

Receive Fixed / Pay Fixed

     769,835         740,715         22,623        22,623   
   Options           
  

Sold

     9,510,832         6,160,305         (157,337     (157,337
  

Bought

     6,157,532         4,019,060         62,094        62,094   

Inter-Company or Internal Transactions

   Swaps           
  

Receive Fixed / Pay Float

     4,188,380         4,012,121         77,460        77,460   
  

Receive Float / Pay Fixed

     11,761,887         10,348,763         (209,539     (209,539
     

 

 

    

 

 

    

 

 

   

 

 

 

Total

     —           —           (22,617     (22,760
     

 

 

    

 

 

    

 

 

   

 

 

 

 

(Notes)   1.    The above transactions are marked to market, and changes in unrealized gains (losses) are included in the consolidated statement of income.
  2.    Fair values of listed contracts are based on the closing prices of the Tokyo Financial Exchange and others.
     Fair values of over-the-counter contracts and inter-company or internal transactions are based on the discounted value of future cash flows, option pricing models and others.

 

 

 

- 38 -


As of September 30, 2016

 

(Millions of yen)

 

Classification

  

Type

   Contract Value      Fair Value     Unrealized Gains
(Losses)
 
      Total      Over One Year       

Listed

   Futures           
  

Sold

     14,363,359         4,955,742         (78,011     (78,011
  

Bought

     13,856,810         4,955,239         72,396        72,396   
   Options           
  

Sold

     850,904         —           (730     174   
  

Bought

     1,306,210         50,418         691        (58

Over-the-Counter

   FRAs           
  

Sold

     22,365,786         811,262         (12,705     (12,705
  

Bought

     17,018,004         35,533         6,178        6,178   
   Swaps           
  

Receive Fixed / Pay Float

     406,596,701         311,829,874         13,170,048        13,170,048   
  

Receive Float / Pay Fixed

     397,851,585         303,821,250         (12,782,678     (12,782,678
  

Receive Float / Pay Float

     78,188,397         59,774,298         38,880        38,880   
  

Receive Fixed / Pay Fixed

     760,790         665,608         25,064        25,064   
   Options           
  

Sold

     8,396,402         5,244,340         (182,424     (182,424
  

Bought

     5,767,951         3,375,223         69,860        69,860   

Inter-Company or Internal Transactions

   Swaps           
  

Receive Fixed / Pay Float

     3,199,742         3,088,782         53,652        53,652   
  

Receive Float / Pay Fixed

     10,034,008         9,196,449         (188,816     (188,816
     

 

 

    

 

 

    

 

 

   

 

 

 

Total

     —           —           191,407        191,562   
     

 

 

    

 

 

    

 

 

   

 

 

 

 

(Notes)   1.    The above transactions are marked to market, and changes in unrealized gains (losses) are included in the interim consolidated statement of income.
  2.    Fair values of listed contracts are based on the closing prices of the Tokyo Financial Exchange and others.
     Fair values of over-the-counter contracts and inter-company or internal transactions are based on the discounted value of future cash flows, option pricing models and others.

 

- 39 -


(2) Currency-Related Transactions

As of March 31, 2016

 

(Millions of yen)

 

Classification

  

Type

   Contract Value      Fair Value     Unrealized Gains
(Losses)
 
      Total      Over One Year       

Listed

   Futures           
  

Sold

     20,867         120         (61     (61
  

Bought

     73,227         36,677         41        41   

Over-the-Counter

   Swaps      42,725,365         27,770,539         81,081        67,031   
   Forwards           
  

Sold

     61,814,420         3,398,506         516,292        516,292   
  

Bought

     26,644,388         1,077,489         (360,548     (360,548
   Options           
  

Sold

     3,159,248         1,138,887         (148,426     (47,789
  

Bought

     2,857,596         938,677         100,894        (2,122

Inter-Company or Internal Transactions

   Swaps      4,031,159         3,332,541         (183,406     (17,723
   Forwards           
  

Bought

     149,337         —           869        869   
     

 

 

    

 

 

    

 

 

   

 

 

 

Total

     —           —           6,736        155,987   
     

 

 

    

 

 

    

 

 

   

 

 

 

 

(Notes)    1.    The above transactions are marked to market, and changes in unrealized gains (losses) are included in the consolidated statement of income.
   2.    Fair values of listed contracts are based on the closing prices of the Tokyo Financial Exchange and others.
      Fair values of over-the-counter contracts and inter-company or internal transactions are based on the discounted value of future cash flows, option pricing models and others.

As of September 30, 2016

 

(Millions of yen)

 

Classification

  

Type

   Contract Value      Fair Value     Unrealized Gains
(Losses)
 
      Total      Over One Year       

Listed

   Futures           
  

Sold

     19,736         309         (0     (0
  

Bought

     83,389         38,939         0        0   

Over-the-Counter

   Swaps      42,273,588         28,234,682         189,786        140,719   
   Forwards           
  

Sold

     57,774,572         3,201,837         742,846        742,846   
  

Bought

     25,469,472         1,034,440         (556,996     (556,996
   Options           
  

Sold

     2,680,831         1,074,307         (96,773     (5,503
  

Bought

     2,374,047         911,380         107,675        15,249   

Inter-Company or Internal Transactions

   Swaps      3,896,195         2,617,597         (455,543     (8,090
   Forwards           
  

Bought

     133,038         —           (2,695     (2,695
     

 

 

    

 

 

    

 

 

   

 

 

 

Total

     —           —           (71,699     325,529   
     

 

 

    

 

 

    

 

 

   

 

 

 

 

(Notes)    1.    The above transactions are marked to market, and changes in unrealized gains (losses) are included in the interim consolidated statement of income.
   2.    Fair values of listed contracts are based on the closing prices of the Tokyo Financial Exchange and others.
      Fair values of over-the-counter contracts and inter-company or internal transactions are based on the discounted value of future cash flows, option pricing models and others.

 

- 40 -


(3) Stock-Related Transactions

As of March 31, 2016

 

(Millions of yen)

 

Classification

  

Type

   Contract Value      Fair Value     Unrealized Gains
(Losses)
 
      Total      Over One Year       

Listed

   Index Futures           
  

Sold

          339,684         19,677         (133     (133
  

Bought

     34,398