Interim Results for FY2016. November 2016

Transcription

1 Interim Results for FY2016 November 2016

2 Important Notice Forward-looking Statements This presentation contains statements that constitute forward-looking statements within the meaning of the United States Private Securities Litigation Reform Act of 1995, including estimates, forecasts, targets and plans. Such forward-looking statements do not represent any guarantee by management of future performance. In many cases, but not all, we use such words as aim, anticipate, believe, endeavor, estimate, expect, intend, may, plan, probability, project, risk, seek, should, strive, target and similar expressions in relation to us or our management to identify forward-looking statements. You can also identify forward-looking statements by discussions of strategy, plans or intentions. These statements reflect our current views with respect to future events and are subject to risks, uncertainties and assumptions. We may not be successful in implementing our business strategies, and management may fail to achieve its targets, for a wide range of possible reasons, including, without limitation: incurrence of significant credit-related costs; declines in the value of our securities portfolio; changes in interest rates; foreign currency fluctuations; decrease in the market liquidity of our assets; revised assumptions or other changes related to our pension plans; a decline in our deferred tax assets; the effect of financial transactions entered into for hedging and other similar purposes; failure to maintain required capital adequacy ratio levels; downgrades in our credit ratings; our ability to avoid reputational harm; our ability to implement our Medium-term Business Plan, realize the synergy effects of One MIZUHO, and implement other strategic initiatives and measures effectively; the effectiveness of our operational, legal and other risk management policies; the effect of changes in general economic conditions in Japan and elsewhere; and changes to applicablelaws and regulations. Further information regarding factors that could affect our financial condition and results of operations is included in Item 3.D. Key Information Risk Factors and Item 5. Operating and Financial Review and Prospects in our most recent Form 20-F filed with the U.S. Securities and Exchange Commission ( SEC ), which is available in the Financial Information section of our web page at and also at the SEC s web site at We do not intend to update our forward-looking statements. We are under no obligation, and disclaim any obligation, to update or alter our forward-looking statements, whether as a result of new information, future events or otherwise, except as may be required by the rules of the Tokyo Stock Exchange. Mizuho Financial Group, Inc. is a specified business company under "Cabinet Office Ordinance on Disclosure of Corporate Information, etc." Article clause 2 and prepares the interim consolidated and interim non-consolidated financial statements in the second quarter. Unless otherwise specified, the financial figures used in this presentation are based on Japanese GAAP This presentation does not constitute a solicitation of an offer for acquisition or an offer for sale of any securities Definitions FG: Mizuho Financial Group, Inc. BK: Mizuho Bank, Ltd. TB: Mizuho Trust & Banking Co., Ltd. SC: Mizuho Securities Co., Ltd. RBC: Retail & Business Banking Company CIC: Corporate & Institutional Company GCC: Global Corporate Company GMC: Global Markets Company AMC: Asset Management Company Net Income Attributable to FG: Profit Attributable to Owners of Parent 2 Banks: Aggregate figures for BK and TB on a non-consolidated basis (Figures of BK up to 1Q FY2013 are simple aggregate figures of former Mizuho Bank and former Mizuho Corporate Bank before the merger in Jul. 2013) Group aggregated: Aggregate figures for BK, TB, SC, Asset Management One and other major subsidiaries on a non-consolidated basis Company managerial basis: Managerial figure of the respective in-house company (managerial figures based on results of former business units up to FY2015) 1

3 Mizuho Group Holding Company Mizuho Financial Group Banking Trust Securities Asset Research & Other Major Subsidiaries *1 Management Consulting Mizuho Bank Mizuho Trust & Banking Mizuho Securities Asset Management One Mizuho Research Institute Mizuho Information & Research Institute Trust & Custody Services Bank Mizuho Private Wealth Management (Rounded Figures) One of the Broadest Customer Bases among Japanese Financial Institutions Individual Customers 24M Comprehensive Securities Accounts 1.65M SME Borrowers, etc. 100K Coverage of Listed Companies in Japan 70% Forbes Global 200 *2 (Non-Japanese Corporate Customers) 80% Credit Ratings (As of Nov. 14, 2016) S&P Moody s Fitch R&I JCR FG A- A1 A- A+ AA- BK / TB A A1 A- AA- AA *1: Also comprised of other departments such as BK Industry Research Dept. and TB Consulting Dept. *2: Top 200 corporations from Forbes Global 2000 (excl. financial institutions) 2

4 Contents 1. Interim Results for FY2016 Executive Summary Highlights P. 5 Overview of 1H FY2016 P. 6 Key Points of the Financial Results P. 7 Impact of the Negative Interest Rate Policy P. 8 Measures Against Effects of Negative Interest Rate Policy P. 9 Non-interest Income from Customer Groups P. 10 Securities Portfolio (Bond) P. 11 Securities Portfolio (Stock) P. 12 Credit Portfolio P. 13 Revised Earnings Plan of FY2016 P. 14 Net Business Profits by In-house Company P Progressive Development of One MIZUHO Summary of the New Medium-term Business Plan P. 17 Progress Against Financial Targets of P. 18 the Medium-term Business Plan KPI (Key Performance Indicators) P. 19 League Tables P Effects of Introduction of the In-house Company System P. 21 Initiatives of Each In-house Company Retail & Business Banking Company P. 23 Corporate & Institutional Company P. 25 Global Corporate Company P. 27 Asset Management Company P. 29 Global Markets Company P. 31 Global Products Unit P. 32 Research & Consulting Unit P. 33 Enhancement of Balance Sheet Control Balance Sheet Control Strategies P. 35 Foreign Currency ALM (Liquidity Management) P. 37 Cross-shareholdings Disposal P. 38 Pursue Operational Excellence Pursue Operational Excellence P. 40 Initiatives to Reduce Expenses P. 41 Transition to Next-Generation IT Systems P. 42 Responding to FinTech Developments P. 43 Creation of New Business P. 44 Embedding a Corporate Culture that Encourages P. 45 Active Participation of Our Workforce Capital Management Capital Management P. 47 Future Direction for Financial Institutions Towards Society 5.0 Financial Institutions in the Near Future P Interim Financial Results for FY2016 Overview of Financial Results P. 51 Net Interest Income from Customer Groups P. 52 G&A Expenses P. 55 Overseas Loan Portfolio P. 56 Exposure to Resource Sectors P Initiatives related to ESG Initiatives Related to ESG: Environment P. 59 Initiatives Related to ESG: Society P. 60 Initiatives Related to ESG: Corporate Governance P Initiatives for Governance System Enhancement P. 62 3

5 1. Interim Results for FY2016 Executive Summary 2. Progressive Development of One MIZUHO 3. Interim Financial Results for FY Initiatives related to ESG 4

6 Highlights 1 Net Income Attributable to FG: 59% progress against FY2016 plan Net Income Attributable to FG was JPY 358.1Bn marking a 59% progress against the FY2016 plan of JPY 600.0Bn Consolidated Net Business Profits showed a steady trend marking a 53% progress against the original FY2016 plan (JPY 750.0Bn) supported by market operations appropriately capturing market volatility and an increase in domestic Non-interest Income Profits associated with the restructuring of SC overseas corporate structure contributed to Net Income Attributable to FG 2 Steady start-up of the Medium-term Business Plan accompanied by results in various areas Penetration of the integrated group strategy based on customer segments under the in-house company system Development in efforts to improve risk-return and cost-return under in-house company ROE management. Progress shown in balance sheet control through credit risk management and cross-shareholdings disposal, etc. Promotion of operational excellence with an aim to increase added value in customer services The above information includes forward-looking statements within the meaning of the United States Private Securities Litigation Reform Act of See Forward-looking Statements on P.1 of this presentation 5

7 Overview of 1H FY2016 Consolidated Gross Profits Net Business Profits *1 Credit-related Costs (JPY Bn) Net Gains (Losses) related to Stocks *2 Ordinary Profits Net Income Attributable to FG Difference b/w consolidated and 2 Banks *3 SC (Consolidated) *4 1H FY2016 YoY 1, % % % o/w JPY 45.1Bn is intragroup transaction not affecting the consolidated results 2 Banks (JPY Bn) Net Business Profits Gross Profits % FY2016 Original Plan Progress Highlights of 1H FY2016 Consolidated Net Business Profits: 53% progress against FY2016 plan - Decrease in Gross Profits, mainly due to the implementation of the Negative Interest Rate Policy and JPY appreciation, was offset to some extent by an increase in domestic Non-interest Income and market operations appropriately managing market volatility - Although Consolidated Net Business Profits decreased by JPY 43.4Bn YoY, it marked a steady 53% progress against the original FY2016 plan Net Income Attributable to FG: 59% progress against FY2016 plan - Credit-related Costs: a reversal of JPY 13.5Bn, below original FY2016 plan - Although Net Gains (Losses) related to Stocks decreased mainly due to a decrease in Net Gains related to ETF, net gains secured through steady progress in cross-shareholding disposal - At SC, investment banking and markets mainly led to steady results. Tax effects contributed to widen differences in Net Income between Consolidated and 2 banks Sufficient Common Equity Tier 1 Capital Ratio: 10.99% *5 - Common Equity Tier 1 Capital Ratio excluding Net Unrealized Gains on Other Securities improved to 9.14% *5 Differences in Net Income b/w Consolidated and 2 Banks *3 G&A Expenses (excl. Non-Recurring Losses) Ordinary Profits Net Income % % (JPY Bn) 1H FY2016 YoY Difference SC (consolidated) * Major Overseas Subsidiaries (BK) * Mizuho Credit Guarantee Other subsidiaries & consolidation adjustment *1: Consolidated Gross Profits - G&A Expenses (excluding Non-Recurring Losses) + Equity in Income from Investments in Affiliates and certain other consolidation adjustments *2: Including Net Gains related to ETF of JPY 1.7Bn (-JPY 24.6Bn YoY) *3: Net Income Attributable to FG Net Income of 2 Banks *4: Mizuho Securities USA Inc. became the Major Subsidiary of BK after the establishment of the US Bank Holding Company in Jul Net Income of Mizuho Securities USA Inc.: JPY 3.7Bn (Jul. to Sep. 2016). *5: Fully-effective basis The above information includes forward-looking statements within the meaning of the United States Private Securities Litigation Reform Act of See Forward-looking Statements on P.1 of this presentation 6

8 Key Points of the Financial Results Steady Progress By striving against the difficult external environment, such as the negative interest rate policy, Consolidated Ordinary Profits recorded JPY 420.9Bn, 120% progress against our 1H target Impact of the Negative Interest Rate Policy (NIRP) Non-interest Income Annual impact on BK Gross Profits (estimate at the beginning of the fiscal year) Loans -JPY 30Bn Market -JPY 15Bn Derivatives -JPY 15Bn Deposits +JPY 20Bn Total -JPY 40Bn Impact on our 1H results was slightly less than 50% of fiscal year estimate Within Expectations (JPY Bn) 1H FY (Group aggregated) - Compensated the decline Forex 10 in sales of investment products by capturing large-size transactions utilizing our group 421 integrated strategy - Impact on profits due to the appreciation of Japanese Yen 1H FY16 was approximately JPY 10Bn YoY increase, after excluding the impact of changes in exchange rates Growth momentum continues Securities Portfolio Credit-related Costs JGBs Net Gains/Losses related to Bonds Balance (JPY Tn) JPY 101.5Bn (2 Banks) (1H FY16) Ave. Remaining Period (yrs) Stocks Net Gains/Losses related to Stocks Balance (JPY Bn) 1,847.1 (Consolidated) JPY 60.8Bn (1H FY16) ,798.9 Mar. 16 Sep. 16 Mar. 16 Sep. 16 Appropriate market operation adjusting to market volatility Stable Performance (JPY Bn) 1H FY (Consolidated) Revised Plan Original Plan FY16 Plan Recorded a reversal, due to of our prudent forward-looking management. There was no large credit cost either inside or outside Japan - Revised the fiscal year plan, considering the 1H result Maintained a resilient balance sheet Kept at a low level The above information includes forward-looking statements within the meaning of the United States Private Securities Litigation Reform Act of See Forward-looking Statements on P.1 of this presentation 7

9 Impact of the Negative Interest Rate Policy (NIRP) Impact Expected impact of the negative interest rate policy to be JPY 40Bn for FY2016 1H results were less than 1/2 of the fiscal year estimate Impact of Negative Interest Rates Decrease in Loan Margin -JPY 30Bn Decrease in Market Related Investment Return -JPY 15Bn The outstanding balance mainly consists of Basic Balance (with +0.1% interest) Domestic Loans (excl. loans to the Japanese Government, etc.) JPY 48Tn JGBs (Other Securities and Bonds Held to Maturity) JPY 18Tn Current Account at Bank of Japan JPY 25Tn (Mar. 2016) Domestic Deposits JPY 85Tn Others BK, managerial accounting, rounded figures Decrease in Deposit Funding Cost +JPY 20Bn Decrease in Non-interest Income (e.g. derivative transactions) -JPY 15Bn (Reference) Breakdown of JPY Loans and Deposits Individual Loans Fixed, etc. Loans Short-term prime-rate Time Deposits Corporate etc. Floating Liquid Deposits BK, Markets Unit managerial basis (Mar. 2016) Individual Deposits Corporate Negative Interest Policy Impact for FY2016: approx. -JPY 40Bn 1H FY16 Results: less than 1/2 of fiscal year estimate Liquid Deposits NCDs Time Deposits The above information includes forward-looking statements within the meaning of the United States Private Securities Litigation Reform Act of See Forward-looking Statements on P.1 of this presentation 8

10 Measures Against Effects of Negative Interest Rate Policy (NIRP) Measures Create new business opportunities through the integration of bank, trust, securities and asset management functions as a Financial Services Consulting Group Corporates Efficiently Use Surplus Funds BK TB SC AM * - Low risk type investment - Cross-border M&A - Return to shareholders Assets Cash/ Deposits, etc. Liabilities Borrowings/ Corporate Bonds Review of funding method BK TB SC - Ultra-long term funding - Subordinated funding Total Debt Restructuring Pursuit of Capital Efficiency BK TB SC - Carve out non-profitable operations Fixed Assets Retirement Benefit Liability Reconsider Pension Strategy BK - Review pension asset management TB - Review real estate portfolio Net Assets - Change of corporate pension plan Respond to Market Fluctuation Risk BK TB SC - Cross-shareholdings disposal Individuals Investment Securities Accumulated Other Comprehensive Income Review Capital Strategy BK TB SC - Returns to shareholders taking into consideration the Corporate Governance Code Low Risk Type Investment BK TB SC AM * Cash/Deposits Individual Loans Low Interest Rate and Pursuit of Convenience BK - Low risk investment products - Investment products according to risk appetite shift from savings to investment/asset building - Digital Channels - New type of borrowing utilizing FinTech * Asset Management Investment Products 9

11 Non-interest Income from Customer Groups Non-interest Income (JPY Bn) Banking (Japan) Banking (Overseas) Trust/Asset Management Related Securities Related JPY 7Bn (excl. impact of changes in exchange rate JPY +3Bn) Group aggregated, managerial accounting, rounded figures Annual Results *1 BK Domestic Non-interest Income (JPY Bn) H FY14 1H FY15 1H FY16 Investment Products (JPY Tn) *2 Solution Business-related BK, managerial accounting, rounded figures Figures in ( ) represent YoY Syndicated Loans: JPY 23Bn (+9Bn) Investment Banking related: JPY 22Bn (+6Bn) Securities-related Fees: JPY 9Bn (+2Bn) Investment Trust & Annuities Investment Trusts: JPY 9Bn (-7Bn) Individual Annuities: JPY 14Bn (-2Bn) Settlement & Foreign Exchange Settlement: JPY 35Bn (+0Bn) Foreign Exchange: JPY 37Bn (+2Bn) Others 2 Banks (left) *3 SC (right) H FY14 1H FY15 1H FY FY14 FY Amount of Equity Investment Trusts Sold Amount of Japanese Bonds Sold Amount of Foreign Bonds Sold Assets Under Management H FY14 1H FY15 1H FY16 *1: Due to the changes in managerial accounting, the figures are recalculated. The original figures before the recalculation that changed were FY14 : total JPY 870Bn, Trust / Asset Management Related JPY 120Bn, Securities Related JPY 210Bn. FY15: total JPY 910Bn, Securities Related JPY 210Bn. Other figures are unchanged. *2: Due to the changes in managerial accounting, the figures are recalculated. The original figures before the recalculation that changed were 1H FY14: Solution Business-related JPY 42Bn, others JPY 11Bn, 1H FY15: others JPY 20Bn. Other figures are unchanged. *3: Retail & Business Banking Division *4: Total of Individual Annuities, investment Trusts (excl. MMF) and foreign currency deposits Amount of Individual Annuities Sold Amount of Investment Trusts Sold (excl. MMF) Balance of Investment Products * H FY14 1H FY15 1H FY16 10

12 Securities Portfolio (Bond) Net Gains/Losses related to Bonds 2 Banks JGB Portfolio *1 2 Banks, acquisition cost basis (JPY Bn) (JPY Tn) Treasury Discount Bills Floating-rate Notes Medium & Long-term Bonds * Ave. Remaining Period * FY13 FY14 FY15 1H FY16 Unrealized Gains/Losses on Other Securities *1 *2 *3 Consolidated (JPY Bn) Mar. 14 Mar. 15 Mar. 16 Sep. 16 Japanese Stocks 1, , , ,429.8 Japanese Bonds Other * Total 1, , , ,631.9 Nikkei 225 (JPY) 14,694 19,197 16,897 16,737 JGB 10Y 0.64% 0.40% -0.05% -0.08% USTB 10Y 2.72% 1.94% 1.78% 1.60% Unrealized Gains/Losses *2 *3 o/w Floating-rate Notes * yrs 2.6yrs 2.5yrs 2.7yrs Mar. 14 Mar. 15 Mar. 16 Sep. 16 JPY 13.3Bn JPY 3.2Bn JPY 22.5Bn JPY 0.7Bn (Reference) Foreign Bond Portfolio JPY 95.8Bn *1 JPY 5.0Bn JPY 53.9Bn JPY 6.0Bn 2 Banks, acquisition cost basis Mar. 14 Mar. 15 Mar. 16 Sep. 16 Foreign Bonds (JPY Tn) Unrealized Gains/Losses (JPY Bn) *1: Other Securities which have readily determinable fair values *2: The base amount to be recorded directly to Net Assets after tax and other necessary adjustments *3: Based on the quoted average market price of the respective month for Japanese stocks and Nikkei 225. For others, calculated based on the quoted market price if available, or other reasonable value, at the respective period end *4: Foreign government bonds, fund investments, and securitization products, etc. *5: Including bonds with remaining period of one year or less *6: Excluding floating-rate notes *7: Determined at reasonably calculated prices 11

13 Securities Portfolio (Stock) Net Gains/Losses related to Stocks 2 Banks Japanese Stock Portfolio *2 Consolidated, acquisition cost basis (JPY Bn) (JPY Bn) 2, JPY 163.9Bn , ,847.1 FY13 FY14 FY15 1H FY16 1,798.9 Impairment of Stocks Unrealized Gains/Losses on Japanese Stocks *1 Consolidated Mar. 14 Mar. 15 Mar. 16 Sep. 16 Disposing of Cross-shareholdings Consolidated Mar. 14 Mar. 15 Mar. 16 Sep. 16 Japanese Stocks (JPY Bn) 1, , , ,429.8 Nikkei 225 (JPY) 14,694 19,197 16,897 16,737 Med-term Business Plan Reduce JPY 550.0Bn by Mar (from Mar balance) (Reduce approx. JPY 250Bn by Mar. 2017) *1: Other Securities which have readily determinable fair values (the base amounts to be recorded directly to Net Assets after tax and other necessary adjustments). Based on the average market price of the respective month *2: Other Securities which have readily determinable fair values *3: Managerial basis (BK, TB and SC) Disposed Amount in 1H FY16 (Amount Sold) *3 JPY 48.1Bn (JPY 47.9Bn) 12

14 Credit Portfolio Credit-related Costs (JPY Bn) <reversal> 2 Banks, banking account + trust account Figures in < > represent Credit-related Costs Ratio *1 Disclosed Claims under the Financial Reconstruction Act (JPY Tn) Claims against Bankrupt and Substantially Bankrupt Obligors Claims with Collection Risk Claims for Special Attention Net NPL Ratio Banks, banking account + trust account % 1.20% 1.00% 0.98% -7.8 <0bps> <3bps> -0.4 <0bps> +9.4 <reversal> FY13 FY14 FY15 1H FY15 1H FY16 Expenses related to Portfolio Problems Reversal of (Provision for) General Reserve for Possible Losses on Loans Gains on Reversal of Reserves for Possible Losses on Loans, and others (%) Mar. 14 Mar. 15 Mar. 16 Sep. 16 Other Watch Obligors 2 Banks, banking account Balance (JPY Tn) Reserve Ratio 6.34% 3.72% 3.66% 3.56% FY13 FY14 FY15 1H FY15 1H FY16 (Reference) EDF by Moody s Analytics *2 Probability of Default low Global average Mizuho average *1: Ratio of Credit-related Costs (annualized) against Total Claims (period-end balance, based on the Financial Reconstruction Act) *2: EDF: Expected Default Frequency (measure of the probability that a firm will default calculated by Moody s Analytics based on stock price and financial data) Average (no. of firms basis) of whole global listed companies and Mizuho s Japanese and non-japanese listed customers based on data provided by Moody s Analytics Resource related is an aggregate of mining, oil refining and oil, gas & coal exploration/production 17/10/10 10 時 31 分 Showing the soundness of Mizuho s credit portfolio 13

15 Revised Earnings Plan of FY2016 Net Income Attributable to FG for FY2016: Estimated Figure (JPY Bn) Consolidated Consolidated Net Business Profits 1H FY2016 Results vs Original Plan Credit-related Costs Net Gains (Losses) related to Stocks Ordinary Profits Net Income Attributable to FG Difference in Net Income b/w *2 Consolidated and 2 Banks (JPY Bn) 2 Banks *1 FY2015 Results FY2015 Results 1H FY2016 Results FY2016 Revised Plan FY2016 Revised Plan vs Original Plan Net Business Profits Credit-related Costs Assumptions of Earnings Plan Item Original Earnings Plan Revised Earnings Plan O/N Rate -0.1% -0.1% 3M TIBOR 0.05% 0.05% 10Y JGB 0.08% -0.15% Nikkei 225 JPY 17,000 JPY 16,000 Foreign Exchange Rate (USD/JPY) JPY 115 JPY 102 Annual Cash Dividends for FY2016 (Estimates) Common Stock: JPY 7.5 per share (dividend payout ratio: 31.6%) (interim cash dividend payments: JPY 3.75) Net Gains (Losses) related to Stocks Ordinary Profits Net Income *1: Consolidated Gross Profits - G&A Expenses (excluding Non-Recurring Losses) + Equity in Income from Investments in Affiliates and certain other consolidation adjustments *2: Net Income Attributable to FG Net Income of 2 Banks The above information includes forward-looking statements within the meaning of the United States Private Securities Litigation Reform Act of See Forward-looking Statements on P.1 of this presentation 14

16 Net Business Profits by In-house Company Net Business Profits by In-house Company Rounded figures, group aggregated, managerial accounting FY2015 Results 1H FY16 Results FY2016 Revised Plan vs Original Plan (JPY Bn) Before head office expense deduction Before head office expense deduction Before head office expense deduction Before head office expense deduction Retail & Business Banking Company Corporate & Institutional Company Global Corporate Company Global Markets Company Asset Management Company Total of In-house Companies , Consolidated Net Business Profits * * Consolidated Gross Profits - G&A Expenses (excluding Non-Recurring Losses) + Equity in Income from Investments in Affiliates and certain other consolidation adjustments The above information includes forward-looking statements within the meaning of the United States Private Securities Litigation Reform Act of See Forward-looking Statements on P.1 of this presentation 15

17 1. Interim Results for FY2016 Executive Summary 2. Progressive Development of One MIZUHO 3. Interim Financial Results for FY Initiatives related to ESG The following section of this presentation includes forward-looking statements within the meaning of the United States Private Securities Litigation Reform Act of See Forward-looking Statements on P.1 16

18 Summary of the New Medium-term Business Plan Mizuho s Objectives Financial Services Consulting Group - The most trusted partner in solving problems and supporting the sustainable growth of customers and communities - Fully Implement the Customer First Principle (Customer-Focused) Pursue Operational Excellence 5 Basic Policies Introduction of the in-house company system Selecting and focusing business areas Establishment of a resilient financial base Proactive involvement in financial innovation Embedding a corporate culture that encourages the active participation of our workforce to support a stronger Mizuho 1 Strengthening our non-interest income business focused model on a global basis Business Strategies Responding to the shift from savings to investment Strengthening our research & consulting functions Responding to FinTech 10 Basic Strategies Financial Strategies Promoting the Area One MIZUHO strategy Controlling the balance sheet strategically and reforming the cost structure Disposing of cross-shareholdings Management Foundations Completing implementation of the next generation IT system Fundamental reforms of HR management Continued initiatives towards embedding a corporate culture to support a stronger organization 17

19 Progress Against Financial Targets of the Medium-term Business Plan Financial Targets for FY2018 < > 1H FY16 Results CET1 Capital Ratio *1 Approx. 10% < 9.14% > Progress Against the Major Financial Targets CET1 Capital Ratio (Excluding Net Unrealized Gains on Other Securities ) 8.77% 9.14% Cross-shareholding Disposal (JPY Bn) Approx. 10% -JPY 163.9Bn Reduction 1,962.9 Amount Approx. 1,798.9 JPY 250Bn Reduction Amount JPY 550Bn Consolidated ROE *2 Approx. 8% < 10.2% > RORA (Net Income Attributable to Owners of FG) Approx. 0.9% < 1.1% > Mar. 16 Sep. 16 Mar. 19 Proportion of Non-interest Income Mar. 15 Sep. 16 Mar. 17 Mar. 19 Expense Ratio Group Expense Ratio *3 Approx. 60% Excluding expenses related to the next-generation IT Systems, etc.: high 50% level FY20: aim for the mid 50% range Noninterest Income 54% FY15 Net Interest Income 46% Noninterest Income 54% Net Interest Income 46% 65% 60% 55% 60.0% 62.1% Approx. 60% level Cross-shareholdings Reduction Amount JPY 550Bn *4 1H FY16 FY18 Approx.60% FY15 1H FY16 FY18 *1: Basel 3 fully-effective basis (based on current regulations), excluding Net Unrealized Gains on Other Securities *2: Excluding Net Unrealized Gains on Other Securities *3: Group aggregated *4: Shares listed on Japanese stock market, acquisition cost basis, cumulative amount from FY15 to FY18 The above information includes forward-looking statements within the meaning of the United States Private Securities Litigation Reform Act of See Forward-looking Statements on P.1 of this presentation 18

20 KPI (Key Performance Indicators) RBC Balance of Investment Products *1 Shift from Savings to Investment/ Asset Building (JPY Tn) JPY 10Tn RBC managerial basis, rounded figures 45 Mar. 16 Sep. 16 Mar. 19 RBC CIC CIC Large Corporations SMEs and Middle market Corporations M&A *2 ECM One MIZUHO Strategy 1H FY16 No. of deals: No.1 Amount: No.1 No.1 among the three Japanese mega-banks (No. of deals) No.1 FY18 No.5 or above No.1 among the three Japanese mega-banks No.3 *3 RBC CIC GCC Foreign Currency-denominated Customer Deposits Underwriting amount basis One MIZUHO Strategy No.3 No.2 FY15 1H FY16 FY18 Mar. 16 estimate (USD Bn) BK, managerial accounting Balance Sheet Control % *4 Mar. 16 Sep. 16 Mar. 19 Overseas Non-interest Income *5 GCC GCC AMC GMC Group aggregate, GCC managerial basis, rounded figures Strengthen Ancillary Transactions (USD Bn) % FY15 1H FY16 FY18 U.S.DCM *7 0.7 No.9 No.9 Underwriting amount basis One MIZUHO Strategy No.10 or above FY15 1H FY16 FY18 Net increase in publicly offered equity investment trusts (excl. ETFs), rounded figures Shift from Savings to Investment/ Asset Building (JPY Tn) 1.2 JPY 0.4Tn 0.8 Publicly Offered Investment Trusts *8 FY15 1H FY16 FY18 Sales & Trading Profits Business Promotion to Investors Progress 47% *6 Progress 58% *6 Progress 32% *6 300 GMC managerial accounting, rounded figures FY15 1H FY16 FY18 *1: Aggregate of individual and corporate customers *2: Source: Thomson Reuters (Any Japanese involvement, excl. real estate deals) *3: Source: Thomson Reuters (Total Domestic and Cross-border Equities). Deals including initial public offering, public offering, convertible bonds and REITs *4: Foreign currency-denominated customer deposits, planned amount versus Mar. 16 estimate *5: Excl. Commitment Fees and Guarantee Fees, etc. *6: Progress versus FY16 plan *7: Source: Dealogic. Bonds with issuance amount of USD 250M and above issued by investment grade U.S. corporations *8: FY15 and 1H FY16: Simple aggregate figures for Mizuho Asset Management, DIAM and Shinko Asset Management, FY18: Planned figure for Asset Management One The above information includes forward-looking statements within the meaning of the United States Private Securities Litigation Reform Act of See Forward-looking Statements on P.1 of this presentation 0.3 (JPY Bn) +25%

21 League Tables Syndicated Loans (Japan) *1 Publicly-offered Bonds (Japan) *2 M&A Advisory (Japan Corporations) *3 Rank Company Name Amount (JPY Bn) Market Share (%) Rank Company Name U/W Amount (JPY Bn) Market Share (%) Rank Company Name Amount (JPY Bn) Deals 1 Mizuho Financial Group 5, Sumitomo Mitsui FG 2, Mitsubishi UFJ FG 2, Sumitomo Mitsui Trust Holdings Development Bank of Japan Mizuho Securities 1, Mitsubishi UFJ Morgan Stanley Securities 1, Nomura Securities 1, SMBC Nikko Securities 1, Daiwa Securities 1, Mizuho Financial Group 5, Nomura Securities 1, Sumitomo Mitsui FG 1, Daiwa Securities Group 1, Plutus Consulting *1: Apr.16 - Sep.16. bookrunner basis Source: Prepared by BK based on data from Thomson Reuters Global Syndicated Loans *4 *2: Apr.16 - Sep.16, deals including Straight bonds, Investment Corporation bonds, Municipal bonds (lead manager method only), Samurai bonds, Preferred securities and excluding self-led bonds. Source: Prepared by SC based on data from I-N Information Systems *3: Apr.16 Sep.16, including publicly-disclosed deals involving Japanese corporations and deals where the parent company is a Japanese corporation, excluding real estate deals Source: Prepared by SC based on data from Thomson Reuters U.S. Debt Capital Market (DCM) *5 Total Domestic and Cross-border Equities *6 Rank Company Name Amount (USD M) Market Share (%) 1 Bank of America Merrill Lynch 234, JPMorgan 215, Citi 155, Wells Fargo & Co 139, Mizuho Financial Group 130, Mitsubishi UFJ FG 116, Barclays 81, Deutsche Bank 78, Sumitomo Mitsui FG 72, BNP Paribas SA 64, *4: Jan.16 - Sep.16, Global Loan (R1), bookrunner basis Source: Thomson Reuters Rank Company Name U/W Amount (USD M) Market Share (%) 1 JPMorgan 58, Bank of America Merrill Lynch 54, Citi 40, Goldman Sachs 36, Wells Fargo Securities 32, Barclays 28, Deutsche Bank 27, Morgan Stanley 25, Mizuho Financial Group 18, HSBC 16, *5: Jan.16 - Sep.16, bonds issued by investment grade U.S. corporations, bookrunner basis Source: Dealogic Rank Company Name U/W Amount (JPY Bn) Market Share (%) 1 Nomura Securities Sumitomo Mitsui FG Mizuho Financial Group Morgan Stanley Daiwa Securities Group *6: Apr.16- Sep.16, deals including Initial public offerings, Public offerings, Convertible bonds and REITs. Source: Prepared by SC based on data from Thomson Reuters 20

22 Effects of Introduction of the In-house Company System Introduction of the In-house Company System Full-fledged introduction of the customer segment based in-house company system allows quick and flexible execution of strategies Effects of Transition to the In-house Company System Execution of strategies beyond boundaries among legal entities led by the holding company (Heads of In-house Companies) Accelerated decision-making processes through delegation of authority to Heads of In-house Companies Strengthened initiatives to improve risk-return and cost-return through the introduction of in-house company ROE Progress in 1H FY2016 Strengthened Profitability Strengthened Profitability Strengthened Profitability Strengthened Profitability Balance Sheet Control Balance Sheet Control Balance Sheet Control Balance Sheet Control Operational Excellence Robust Non-interest Income Consistent Market Operations Forward-looking ALM Efficient Riskweighted Assets Management based on ROE Cross-shareholding Disposal Maintain Sound Loan Portfolio Cost Reduction and FinTech from P. 23 to 33 P. 31 P.37 P. 35, 36 P. 38 P. 35, 36 P.13 P. 41 P.43 Steady progress toward the establishment of a resilient financial structure 21

23 Initiatives of Each In-house Company 22

24 Retail & Business Banking Company Branches HR Products Shift from Savings to Investment Support the trend of shift from savings to investment/asset building through highly specialized consultation services of banking, trust and securities functions Strengthen initiatives related to shift from savings to investment / asset building TB Group-wide integrated proposal BK Promote sales collaboration in line with the role of each entity Customers of one company are customers of the entire Mizuho group Provide expertise mainly in succession and real estate Further progress in the joint branch model Transform all branches into joint banking, trust and securities branches with a target timeline of 2 years (incl. remote channel) Develop and increase talents with a high level of expertise <Trust banking products> Trust agency business Improved customer base Discover potential needs and foster core/upper customer segments Optimize the allocation of HR on a group basis HR seconded from BK SC Develop and increase talents with a high level of expertise Build a group-wide products provision framework Wide range of product offering from not only inside but also outside the group Increased collaboration with Asset Management One Provide highly specialized consultation mainly in investments <Securities products> Branch and assist intermediary services No. of investment customers *1 (K) 2,600 2,400 2,200 2,000 No..of banking and securities collaborated customers (right axis) , Sep. 15 Mar. 16 Sep. 16 Initiatives regarding fiduciary duty (FD) Balance of banking and securities collaborated investment products *2 (JPY Tn) JPY 2.8Tn Sep. 15 Mar. 16 Sep. 16 Feb. 2016: Announced the Policies Regarding Mizuho s FD Established a product sales system which truly address the needs and interests of customers Disclosed handling fees for life insurance (specified insurance contracts) Voluntary disclosed fees Mizuho receives from insurance companies to allow customers to make further appropriate decisions upon contract Appropriate framework for performance measurement Developed an appropriate framework for performance measurement to value initiatives that truly address the needs and interests of our customers Area One MIZUHO promotion project Banking, trust and securities branches in the same area jointly provide financial services consulting in the region Promote area based strategies based on the characteristics of the region Each area autonomously plans and executes integrated strategy among banking, trust and securities functions in the area *1: Aggregate figures for BK, TB and SC, RBC managerial basis *2: individuals, RBC managerial basis 23

25 Retail & Business Banking Company Supporting Growth Strategies Further development of the integrated support of growth strategies for both SMEs and their owners starting with consulting Support growth strategies by discovering potential needs Address needs through business strategy discussions Further address needs for overseas business expansion and M&A for business expansion following the business strategy of customers Strengthen business/asset succession consulting capabilities Support smooth succession by providing highly specialized business and asset succession consultation Address real estate transactions and business divestiture needs during business and asset succession Also address M&A and IPO needs of succession to person outside of the owner s family Promote financial consulting Solve customers financial challenges related to their financial results and other issues such as real estate due to high prices of the real estate or revision in tax laws, etc. Strengthen support toward innovative companies Expansion of membership services for IPO support Support business origination and expansion of innovative companies and strengthen business matching service as well as prospect for addressing future IPO related needs Innovative Companies From seed to middle stages Education Mentor Business Development Funding Funding support through growth support funds Provide risk money to innovative companies through funds Eco-system Supporters Supporting Companies Mentor Venture Capital Mizuho Group Companies No. of SME M&A deals *1 Real estate related profits *2 No. of IPO arranger *3 No. of IPO stock transfer agent *4 (No. of deals) 48 (JPY Bn) JPY 6.6Bn Rank Company Name Deals Rank Company Name Deals Mizuho Securities 9 22% Mizuho Trust & % 40 6 Banking 1 Daiwa Securities 9 22% 30 Sumitomo Mitsui % 3 Nomura Securities 8 20% Trust Bank SMBC Nikko Securities % Mitsubishi UFJ % Trust and Banking SBI Securities 5 12% 1H FY15 1H FY16 1H FY15 1H FY16 *1: No. of SME M&As (RBC customers only) *2: Profits from BK and TB collaboration profits (RBC customers only) *3: Apr.2016 to Sep Source: Prepared by SC based on data from CAPITAL EYE, excluding REIT and global offerings *4: Apr.2016 to Sep based on disclosure materials of each company, excluding REIT, ETF and PRO MARKET Market Share Market Share 24

26 Corporate & Institutional Company Value Chain 事例を出す Business Pursue profit maximization through creating a chain reaction of profit opportunities (value chain business) Value chain in M&A Initiative using corporate pension as an opportunity F BK PMI * A BK Business strategy discussions Cross-border M&A (incl. restructuring / carveouts) B SC M&A advisory Decrease in return Pension Assets Unfunded obligations Projected Benefit Obligation (PBO) Increase in unfunded obligations Corporate finance challenges Decrease in discount rate increase in PBO -Decrease in Net Income -Decrease in Capital -Additional funding needs E SC クロボ M&A C BK DCM ECM Distribution to investors D BK Acquisition finance Currency swaps Review asset management BK TB Financial strategy discussions Address unfunded obligations Improve Net Income * Post Merger Integration Review investment products Open retirement benefit trusts Thoroughly pursue value chain business through demonstrating industry leading financial services consulting functions Improve pension system (Implementation of the third structure of pension, DC, etc.) Dispose of real estate and securities, etc. 25

27 Corporate & Institutional Company Respond to changes 事例を出す in the environment Achievement of initiatives to capture business opportunity considering the changes in the external environment such as negative interest rates and Corporate Governance (CG) Code implementation Hybrid Finance (HBF) Global Offering Issuers' needs Total Debt Restructuring Achieve a good balance between ROE and external ratings Make the financial strategies flexible Funding at a low interest rate Expertise as the market leader Investor s environmental changes Difficulty in fund management under the negative interest environment Expanding range of investors Spreading HBF Existing shareholders 13 companies (10.7% of the issued stocks) Respond to the CG Code Sales of stocks held - Avoid impact on share prices - Expand the range of shareholders New Shareholders Domestic and global institutional investors / individual investors Global Offering Historical Trends in Hybrid Finance Balance BK SC Investor Coverage (JPY Bn) 800 JPY 719.0Bn Mar.14 Mar.15 Mar.16 Sep.16 Note: Hybrid Loans for industrial corporations and privately placed Hybrid Securities Upper row : No. of investors (rounded figures) Lower row : No. of sales personnel Europe/ Middle East 200 companies 19 employees Japan 300 companies Asia 86 employees 200 companies 18 employees (As of Oct. 1, 2016) North America 500 companies 41 employees Organize strong sales structure which fully cover the major investors in each region Co-Global Coordinator Active Bookrunner both in and outside Japan Gained top class order amount in Overseas Tranche * Acquired highly profitable transactions which secured margins and related ancillary transactions mainly from companies with high credit ratings Largely contributed to raise the presence of SC among Overseas ECM *: Comparing the total order amount gathered by each securities company 26

28 Global Corporate Company Overseas Business Continue and expand the strategy focusing on blue-chip non-japanese Companies Expand non-interest income through advisory & solutions business promotion utilizing group capabilities RORA Gross Profits Global 300 Strategy Close Relationship with Top Management Global 300 Profitability (USD M) 3.60% Expansion of Transaction Types Long term Commitment through Sharing of Business Strategy 1,123 1, % 3.31% 590 High Credit Profile *1 654 FY14 FY15 1H FY16 1H FY16 Gross Profits increased YoY No. of Company Groups FY2015 Over 250 Major M&A Deal Participation Buyer FY2018 Approx. 300 Super 30/50 Global Anheuser-Busch InBev Consumer 4 Charter Communications TMT 6 Dell TMT 7 Energy Transfer Equity Energy 8 HJ Heinz Consumer 9 Anthem Healthcare 10 Cheung Kong Conglomerate 11 Teva Healthcare 13 Avago Technologies TMT 15 Shire Healthcare 16 Aetna Healthcare 19 MPLX Energy Bookrunner Participated in 12 of top 20 deals Advisory & Solutions Business Promotion GTB (LDN) GTB Singapore (HO) *1: BK (including banking subsidiaries), GCC managerial basis including synergy effects with securities functions, etc. *2: 2015, Source: prepared by GCC based on data from Dealogic *2 Further Promote Sector Based Approach Focus on sectors undergoing reorganization through M&A Focused Sectors Global expansion of team supporting advisory & solutions business promotion - Each regional team supports the promotion of advisory & solution services based on the business/financial strategies of the respective customers Strengthening Transaction Banking Business Began one stop business promotion on a global basis - Placed key personnel to promote transaction banking in HO as well as each regional office of Global Transaction Banking Department ( GTB, HO: Singapore) - Strengthened product development such as supply chain finance GTB (China) Media & Telecom GTB (Tokyo) GTB (HK) Health care Consumer GTB (NY) 27

29 Business Advancement in the United States U.S. Business Expanded non-interest income and customer base, after acquiring North American loan portfolio as well as personnel from RBS, promoting the integrated management of banking, trust and securities functions Establishment of Bank Holding Company (BHC) Remarkable Transaction with Global 300 customer FG GCC GMC AMC GPU BK U.S. branch of BK Operation in the U.S. BHC U.S. subsidiary of BK U.S. subsidiary of TB U.S. subsidiary of SC Effectively promoting in-house company system as a group USD 6,150,000,000 Senior Notes Active Bookrunner July First time to be mandated as active bookrunner for Verizon (BoAML, DB, GS, Mizuho) - Won the transaction by demonstrating Mizuho s strong capability in DCM, on top of the strengthened relationship (uptier) after the RBS transaction - By leveraging this transaction, Mizuho subsequently participated in the initial securitization transaction for Verizon which followed Impact of acquiring the N. American loan portfolio from RBS Advancement in Capital Markets League Table Number of Top Tier Customers No. of companies which recognize Mizuho as their Top Tier Bank Strengthened Solution Providing Capabilities - Enhanced the product capability of the bank and securities, by 100 acquiring approx.100 personnel from RBS who ran the banksecurities integrated business 50 model at RBS - Improved business process, etc., to support the rapid 0 business expansion Before RBS After RBS Materializing the synergy effect from the integration with RBS: Improved the customer base as well as solution providing capabilities Transition in the DCM League Table (Jan.-Sep.) Mizuho MUFG SMFG Investment Grade, Bookrunner basis Source: Dealogic US Banks 9th Transition in the ECM League Table (Jan.-Sep.) US Banks Mizuho MUFG SMFG Investment Grade, Bookrunner basis Source: Dealogic 12th 28

30 Asset Management Company Asset Management One Aim to become a global top level asset management company as the 4 th Pillar of the One MIZUHO Strategy Establishment of Asset Management One Direction of Business Development Mizuho Trust Bank (AM functions) Shinko Asset Management Fulfill the fiduciary duties and contribute to customers by supporting their asset building Asset Under Management Evaluation of AM service (AUM) Entrusted AMs from GPIF 1 Asset Management One 22 2 SMTH 18 3 MUFG 13 4 Blackrock 12 5 State Street 8 Source: Government Pension Investment Fund (GPIF) website as of Mar. 16 Awards received from external institutions Asian Investor Fund House of the Year (Japan) 2016 and more (JPY Tn) Mizuho Asset Management DIAM AUM of the AM companies in Japan (JPY Tn) 1 Asset Management One 52 2 Nomura Asset Management 39 3 Blackrock Japan 22 4 Daiwa Asset Management 15 5 Nikko Asset Management 15 6 Mitsubishi UFJ Kokusai AM 13 7 State Street 12 8 Sumitomo Mitsui AM 12 9 PIMCO Nissay Asset Management 10 Source: The Investment Trusts Association, Japan and Japan Investment Advisers Association as of Mar. 16 To Become Global Top 20 in AUM from Asia No.1 Provide investment products through, but not limited to, group-wide channel as a Product Development Function in line with Mizuho s asset management (AM) strategy Retail Pensions Corporate Focus on publicly offered investment trusts utilizing advanced capabilities developed for pensions and institutional investors Meeting various needs under the difficult environment in managing assets Meeting needs to replace JGBs by increasingly sophisticated asset management capability under the NIRP environment (Reference) Mizuho s initiatives regarding fiduciary duties Feb Aug Announced the Policies Regarding Mizuho s FD Give top priority to addressing the customer s interests and offer products and services which truly meet the needs and interests of the customers Disclosed the Life Insurance Commission Disclosure Regime Voluntarily disclose the handling fees from insurance companies so that the customers can make more appropriate decisions when contracting life insurance 29

31 Asset Management Company Solution Providing Quickly respond to new systems and external environment changes Initiative to Address the Increase of ideco* Eligible Individuals *ideco: Individual-type Defined Contribution (DC) Pension Plan Revision of the DC Law - Address the diversified way of working - Encourage individuals to build assets on their own Substantial increase in ideco Eligible Individuals 3.7million Self-employed, Corporate Employees (w/o corporate pensions) 6.7million Civil Servants, Full-time Homemakers, Corporate Employees (with corporate pensions) Self-employed, Corporate Employees (w/o corporate pensions) Existing After Jan. 17 Providing Solutions to Address the Negative Interest Rates Environment Corporates Negative Interest Rates Financial Institutions Necessity for an alternative investment opportunity due to the decline in domestic bond yields NPOs Basic Policy Materializing the Shift from saving to investment/asset building trend as the market leader in the DC business Increase in pension liability (Decline in discount rates Increase in projected benefit obligation) 1 Most reasonable and thought out product lineup Subscription Education Program 2 Adequate support Robot Advisor (SMART FOLIO) 3 Competitive fee Telecommunication After 60 yrs old AM One* Asset Management Solution Privately placed investment trusts Investment discretion etc. Diversification of asset class Sophistication of investment strategy TB Comprehensive Pension Consulting Pension Trust etc. Revision of portfolio, pension plan/management Long term and low cost support from subscription to receipt of pension * Asset Management One Comprehensive consulting to address changing and diverse customer needs 30

32 Global Markets Company Introduction of the In-house Company System Secure both profitability and risk management capability through comprehensive group-wide One Responsibility structure JGB Investments Strengthening Sales & Trading (S&T) JGB Yield Trends and JGB Portfolio 2 Banks, acquisition cost basis Strengthen market-related profits by identifying customer needs (%) JGBs (right axis) 10 Year JGB Yield Year JGB Yield (JPY Tn) Individuals Corporate and Financial Institutions Investors (hedge funds, etc.) Provide optimal product and solution corresponding to customer segments FG Mar. 16 Jun. 16 Sep. 16 GMC: precise early warning control of market volatility FG: consistent investment strategy development GMC Strategy Meeting Share market outlook and investment strategies among subsidiaries 5 0 FG Sales Sales Sales BK S&T GM Mtg TB In-house company based management Shared market outlook and planned customer segment based strategies Trading Trading Trading Operations utilizing customer money flow SC BK TB SC Execution aligned with GMC policies Global markets Group-wide fixed income portfolio management appropriately capturing market volatility Increase market-related profits utilizing customer needs obtained from the whole group 31

33 Global Products Unit Professional Group Contribute to the realization of becoming a Financial Services Consulting Group by providing optional solutions Realize Customer First Market-driven Approach Case 1:LBO Value Chain Transaction through PE Fund Increase level of expertise and offer wide range solutions using functions across in-house companies Also focus on acquiring following transactions through value chain sales M&A EXIT TB SC Stock Transfer Agency/ Lead Manager BK TB SC Acquisition Finance Real Estate Finance Asset Finance Project Finance Syndicated Loans Domestic and overseas transactions -Cash Management -FX Global Transaction -Trade Finance Custody (for overseas customers) Real Estate Brokerage Real Estate Trust Asset Management Trust Solutions Securitization Business Using Individuals Funds Stock Transfer Agency Custody (for domestic customers) M&A Advisory Real Estate Private Fund Arrangement Asset Finance Arrangements Debt Capital Markets (Bonds Underwriting) Equity Capital Markets (Equity Underwriting) Customers BK SC FA Supplier Buyer (PE Fund) Case 2:Value Chain Transaction with prospective IPO companies SC IPO Lead Manager SC IPO Consulting BK LBO TB Stock Transfer Agency Prospective IPO companies TB Shareholder Policies Proposal IPO Trade Sales TB Consulting services for listing related process Mizuho Capital VC Investments BK SC Finance/FA (Buyer) 32

34 Research & Consulting Unit One Think Tank Aim to be the most experienced team of experts dedicated to addressing the various challenges Mizuho s customers may face, as the first full-fledged Research & Consulting Unit (One Think Tank) as a Japanese bank Launching the Research & Consulting Unit Gathering research and consulting functions into One Think Tank Initiatives to Establish the One Think Tank <Mizuho> One Think Tank & Nikkei 2020 Forum BK Industry Research Dept. Mizuho-DL Financial Technology TB Consulting Dept. SC Research & Consulting Unit Held Unit-wide forum focusing on Tokyo 2020 Olympic Games in conjunction with third party Published One Think Tank Reports Mizuho Research Institute Mizuho Mizuho Information & Research Institute Customers Published reports featuring the outlook of Japanese industries, Brexit and US presidential election utilizing the expertise within the Unit One Think Tank Navi Visualize One Think Tank functions on the intranet Image Provide optimal solutions to a wide range of customers from private to public sectors Enhanced membership function Start the enhancement of our membership function. Consider the establishment of an unified platform gathering various expertise within Mizuho, with an aim to materialize members to invite other members structure 33

35 Enhancement of Balance Sheet Control 34

36 Balance Sheet Control Strategies Balance Sheet Control Establish a resilient financial structure through sophisticated control of the balance sheet Balance Sheet Control Strategies Strengthen Asset Turnover - Reduce low profitability assets - Appropriate control of foreign currency denominated assets - Disposal of cross-shareholdings Market Related Efforts - Decrease market based funding and repo transactions - Decrease noncustomer assets / decrease fund-credit investments Develop a Resilient Balance Sheet through both Offensive and Defensive Measures Improve leverage ratio and RORA Improve CET1 ratio and leverage ratio Improve CET1 ratio and leverage ratio Consolidated Total Assets JPY 193Tn (Mar. 2016) Loans JPY 73Tn Securities JPY 39Tn Deposits and NCD JPY 117Tn Net Assets JPY 9Tn Liability Control - Shift from deposits to investment products Improve leverage ratio and RORA Capital Adequacy Improvement - Steady accumulation of retained earnings - Deliberate issuance of capital eligible securities and TLAC eligible securities Improve CET1 ratio and leverage ratio Initiatives to Improve Risk-Return Risk/return analysis according to customer segment Thorough early warning control utilizing risk maps FG Formation of Management Strategy RAF * Profit Plan Portfolio Plan * Risk Appetite Framework Infrastructure Project ROE Management Profit Management ROE ROE Target Profitability Data by Transaction by Customer by Customer Group Starting the Business Portfolio Analysis Initiatives to Rotate Assets Fund In-house Company Autonomous Improvement of Efficiency Reduce Lowprofitability Assets Improve Profitability Incorporating cost/return perspective in addition to risk/return analysis to further promote the selecting and focusing of business areas hereafter Launched Japan s first fund with a size of JPY 10.0Bn in Jul that invests in loan for infrastructure projects Mizuho will be able to reduce long term foreign currency-denominated assets, while providing a new investment opportunity to investors $ Receivables * Mizuho Global Alternative Investments Ltd. BK MGAI * Investment to BK owned infrastructure project related receivables Investment advisory Investment Institutional Investor 35

37 Balance Sheet Control Strategies Toward Strong Financial Base ROE based balance sheet control initiatives produced results in various areas Overview of Balance Sheet (as of Sep. 16) Loans: Securities: Total Assets: JPY 192Tn (-JPY 0.7Tn) JGB: JPY 13Tn (-JPY 5.6Tn) *3 Stock: JPY 3Tn (-JPY 0.2Tn) Other Assets: JPY 73Tn (-JPY 0.6Tn) Domestic Loan: JPY 50Tn (-JPY 1.5Tn) *1 Overseas Loan: USD 205.1Bn (+USD 1.5Bn) *2 JPY 32Tn (-JPY 6.8Tn) JPY 86Tn (+JPY 6.7Tn) Figures in ( ) represent change from Mar. 16 Deposits, Negotiable Certificates of Deposit (NCD): Other Liabilities: JPY 119Tn (+JPY 2.2Tn) Foreign Currency-denominated Customer Deposits: USD 180.5Bn (+USD 12.0Bn) *4 JPY 63Tn (-JPY 2.6Tn) Strengthened Balance Sheet Control - Asset rebalancing emphasizing the improvement of risk-return which is based on in-house company ROE management - Flexible ALM operations appropriately managing market volatility - Capital enhancement through accumulating internal reserves Loans - Despite lagging domestic funding demand, progress seen in rebalancing from low-profitability to high-profitability assets - Maintain the quality of loan assets through comprehensive early warning control of risk factors Securities - Decrease in JGB balance through market operations appropriately capturing market volatility - Initiatives to improve risk-return supported cross-shareholdings disposal Deposits - Addressed increased volatility of the financial market through a stable funding structure supported by the increase in foreign currency-denominated customer deposits Liquidity Coverage Ratio (LCR): 137.4% (Average from Jul. to Sep. 2016) Other Assets - BK and TB managed to avoid negative interest rate payments due to appropriate controls despite BOJ deposits increasing from the sale of JGBs and increase in Yen deposits Cash and Due from Banks: JPY 42Tn (+JPY 6.3Tn) Net Assets JPY 8Tn (-JPY 0.3Tn) *1: 2 Banks, excluding loans to FG and the Japanese Government, etc. *2: BK (including subsidiaries in China, the US, the Netherlands, Indonesia, Malaysia, Russia and Brazil) *3: 2 Banks *4: BK (including subsidiaries in China, the US, the Netherlands, Indonesia, etc.), including foreign currency deposits (domestic) *5: Fully-effective basis Net Assets - CET 1 ratio increased to 10.99% *5 through steady accumulation of internal reserves (CET1 ratio excluding Net Unrealized Gains on Other Securities: 9.14% *5 ) Leverage Ratio: 4.05% 36

38 Foreign Currency ALM (Liquidity Management) Foreign Currency Liquidity BK (including the banking subsidiaries in China, the US, the Netherlands and Indonesia, etc.), managerial accounting (USD Bn) *1 *2 Foreign Currency Loans Foreign Currency Proportion of Deposit to Loan *1 Customer Deposits 77% 71% Responded appropriately to the external environment by focusing on ALM with thorough early warning control, not only for Japanese Yen but also for foreign currencies mainly through increasing foreign currency denominated deposits Foreign Currency Loans and Deposits % (Reference) Funding from US Prime MMF (USD Bn) MUFG SMFG Mizuho 0 Foreign Currency Balance Sheet Control/ Liquidity Management FG Mar. 15 Mar. 16 Sep. 16 *1: Including foreign currency loans and deposits (domestic) *2: New managerial accounting rules have been applied in Figures for Mar.15 and Mar. 16 were recalculated based on the new rules. Portfolio Plan by each In-House Company Foreign Currency Balance Sheet Plan Plan foreign currency liquidity policies based on the market trend 0 Mar. 15 Jun. 15 Sep. 15 Dec. 15 Mar. 16 Jun. 16 Sep. 16 Source: Office of Financial Research (Reference) Historical Trend of Currency Swap Rates (bp) 100 USD/JPY Currency Basis Swap (1year) 80 Group companies Respond to the external environment appropriately and execute foreign currency liquidity measures such as securing deposits Appropriate foreign currency balance sheet management towards a sustainable foreign currency based business 0 Mar. 15 Source: Bloomberg Sep. 15 Mar. 16 Sep

39 Cross-shareholdings Disposal Crossshareholdings Disposal Promote cross-shareholdings disposal through initiatives to enhance capital efficiency by implementing in-house company ROE Basic policy of cross-shareholdings Japanese Stocks * consolidated Reflecting the potential impact on our financial position associated with the risk of stock price fluctuation, unless we consider holdings to be meaningful, we will not hold the shares of other companies as cross shareholdings -JPY 163.9Bn Reduction amount approx. JPY 250Bn Reduction amount JPY 550Bn Assessment of the objective of holdings JPY 1,962.9Bn JPY 1,798.9Bn Annual assessment of the objective of holdings (e.g. compare the profitability of each customer to our hurdle rate) Cross-shareholdings Disposal Plan Reduction Amount: JPY 550Bn Aim to reduce approx. JPY 250Bn by Mar. 17 Japanese Stocks, Acquisition Cost Basis, FY15-FY18 aggregate Mar.15 Sep.16 Mar.17 Mar.19 (Result) (Result) (Target) (Target) * Other Securities which have readily determinable fair values. Acquisition cost basis The above information includes forward-looking statements within the meaning of the United States Private Securities Litigation Reform Act of See Forward-looking Statements on P.1 of this presentation 38

40 Pursue Operational Excellence 39

41 Pursue Operational Excellence Add Value Improve operation, the execution capabilities of the strategies, and along with the differentiation of strategies centered on customer-focused" approach, lead to establishing a sustainable competitive advantage and to enhancing added value of customer services Measures for Problem Solving Type Exercise PDCA based on a detailed action plan - Downsize head office functions - Revisit products and services - Revision of domestic channels and networks - Reduction of operations by front-line personnel Approx.200 measures Efficiency Enhancement Problem Solving Type Structural Reform Type Fin Tech Measures for Structural Reform Type Substantially improve productivity through discontinuous thinking e.g. - Review the business operation based on the clarification through selection and focus - Integration of group business by using the revision of Banking Act as an opportunity - New business using big data effectively - Replacing routine work using AI/Robotics - Fundamental reform of business process using blockchain Promotion Structure Operational Excellence Promotion Committee (Chairman: Group-CEO) Review the progress of measures Monitoring KPIs Heads of In-house Companies / Units / Groups Cost reduction effect (estimate) JPY 50.0Bn ~ (FY18 - FY15) Top-down exercise of measures including FinTech, etc. The above information includes forward-looking statements within the meaning of the United States Private Securities Litigation Reform Act of See Forward-looking Statements on P.1 of this presentation 40

42 Initiatives to Reduce Expenses Expense Reduction Strengthening expense control through selective investment for strategic expenses and promotion of operational excellence Expenses Plan for the Medium-term Business Plan rounded figures, group aggregate, managerial accounting (Illustrative Purposes) Expense Amount (JPY Bn) FY2015 (Result) JPY 1.26Tn Core expenses 50~ Increase /decrease factors for FY2018 plan in comparison with FY2015 Strategic Expenses 60~ Mainly caused by increase in tax, etc., and impact of changes in currency rates Next-generation It systems, etc. 50~ Investment decision based on management environment 50~ Operational excellence effects FY2018 (Plan) FY2020 Expense Ratio 60.0% Investment Policy for Strategic Expenses Considering cost-return as a core for selective investment which helps 1) Growth in short/medium term 2) Expansion of business base In the future 1H FY16 result JPY 8.0Bn FY2018 (Plan): Approx. 60% level (excl. next-generation systems related: higher 50% level) Operational Expense Effects (examples) Front Office related 1) Reform channel strategy 2) Optimize investments/revision of outsourcing 3) Centralize overseas middle/back office operation 4) Integrate group-wide purchase/ Globally centralize contracts FY2020: Aim for mid 50% range 1H FY16 result JPY 2.5bn FY16 Target over JPY 10bn Head Office related 1) Centralize group-wide common operation 2) Reform working style by utilizing tablet device, etc. 3) Shift products/services to focus areas 4) Reform system structure/it operation processes The above information includes forward-looking statements within the meaning of the United States Private Securities Litigation Reform Act of See Forward-looking Statements on P.1 of this presentation 41

43 Transition to Next-Generation IT Systems For the next-generation IT Systems, the highest priority is placed on ensuring quality and launching the system safely. Thorough tests are currently being conducted As it is a very large scale development, multiple checks need to be conducted across various fields. Although some items may still be outstanding as of December 2016, full understanding of the current status is secured and highest priority will be placed on ensuring the quality The most critical point is a safe and steady transition, thus the preparation will be carefully conducted. The next-generation IT systems migration is planned to be implemented gradually, after migration rehearsals, etc. are prudently conducted (during the migration period, current and next-generation IT systems will be concurrently operated) Next-Generation IT Systems ahead of Competitors <Transition to the Next-Generation IT Systems (Conceptual Illustration)> Unification of Core Banking Systems of former BK/former CB/TB - Downsize and streamline IT systems - Improve response to potential system failure Independent components by business and function - Improve flexibility through simple structure - Enable flexible adaptation to new services - Shorten the lead time and reduce costs for new development Cutting edge Next-Generation Core Banking Systems - Strengthen infrastructure for providing services - Improve operations processing speed Investment amount (estimate): 投資額 Higher ( 概算 JPY ): 3, Bn 億円台前半 range (Conduct additional test, etc. to improve quality) (Existing Systems) BK Former BK System Platform for Banking Business Former CB System Platform for Banking Business TB System Platform for Banking Business Unification of IT Systems Customer Channel Systems Core Banking Systems Information Mgt Systems Outline of the Next-Generation IT Systems Internet Banking, etc. Deposit Internal Terminals Systems for External Connections, etc. Common Operational Infrastructure (in operation since FY13) Component Systems related to Products Remittance Credit Transactions Foreign Exchange Trust Business Systems related to Core Information Management The above information includes forward-looking statements within the meaning of the United States Private Securities Litigation Reform Act of See Forward-looking Statements on P.1 of this presentation 42

44 Responding to FinTech Developments Future Direction Cover most business areas related to FinTech by effectively utilizing technologies such as Blockchain and AI Pursue profit increase and cost reduction FinTech Business Areas Mizuho s Initiatives Effects Anticipated Financial Management/ AM Advisory Financial Information Financial Management Financial Management Asset Management / Advisory Financial Information Creation of new business Lending Lending Settlement Syndicated Loan Overseas Remittance Cross-Border Securities Transaction Settlement Profit increase Remittance/Settlement Other Routine Operation Balance Enquiry Enquiry and Navigation Call Center Encryption and sharing records, etc. Support for Start-ups Enhancement of business operation Cost reduction Proof of Concept Utilized Technologies Blockchain AI Big Data Robotics, etc. 43

45 Creation of New Business FinTech Enhancing business operation and creating new business by utilizing FinTech FinTech Lending Business Cross-border Settlement utilizing Blockchain Planning to launch in 1H of 2017 Completed Proof of Concept Finance Technology Foreign investors Settlement order Domestic Account Administration Agent Foreign investors Domestic Account Administration Agent Settlement order - 24 million individual customers - Expertise in finance - 43 million subscribers (accumulated basis) - Expertise in AI Agreement No administrator Settlement Agreement Register transaction information on Blockchain Settlement Scoring system utilizing Big Data and A.I. Interest rates and size of facility are decided by the score New business model clearly differentiated from traditional consumer finance Foreign Security Company Settlement order Domestic Account Administration Agent Unable to share details of the transaction Foreign Security Company Settlement order Domestic Account Administration Agent Able to share details of the transaction among the parties 1 Improve user experience utilizing pre-scoring and smartphone 1 Shortening the time for settlement (3 days same day) Merits 2 Expand high quality customer base by increasingly sophisticated credit assessment capability Merits 2 Decrease the risk of failed transaction 3 Lower cost of operation by not requiring branches 3 Lower cost 44

46 Embedding a Corporate Culture that Encourages Active Participation of Our Workforce Fundamental Reform of HR Management Reform HR management, the key to realizing the group strategy, and thoroughly differentiate from peers - Support the reform of our corporate culture through fundamental reform of HR management that will change the way of thinking and the way of working for all employees HR Management which respects individuality Development-type HR management system that respects the individuality of each and every employee, helping them to grow - An evaluation system that doesn t discourage people from challenging aggressively Multilateral-type HR management that respects various career plans Providing opportunities to all employees to develop skills regardless of their employment type Provide opportunities to grow and succeed to all employees Development of Future Leaders Introduction of Mizuho s Next-generation Leadership Training Program Selected the candidates for future leaders from group-wide and global-wide talent pool Thoroughly strengthen each person s mentality (commitment and courage) to run the company, and skills to design and envision the big picture Develop leaders who can make changes Diversity & Inclusion (D&I) Establish workplace where people can succeed irrespective of culture, sex, and nationality Create new values by aggressively utilizing innovative/diverse views and ideas Develop talent through training programs in order to promote non-japanese and women to management roles Shift from Diversity to D&I Work Life Balance Fundamental reform to establish a comfortable work environment for all staff, increasing longterm commitment - A supporting system targeting zero turnover due to nursing care - Fundamental implementation of telecommuting - Compensation plan for employees who support the people who have to limit their work - 100% of male employees to take child care leave Realization of productive and efficient way of working A virtuous cycle between all employees success/growth + Realization of Mizuho s goal = Full engagement of employees Diversity & Inclusion (Numerical Targets) Overseas Management positions outside Japan 7% Domestic General Managerequivalent 3% Manager-equivalent or above Assistant Managerequivalent or above New graduates (Generalist track) Percentage of women 10% 1.5% 10% 10% 22% 20% 30% 34% 30% Percentage of locally hired staff in management roles Management positions outside Japan 33% Percentage of paid time off taken by employees and eligible male employees who take childcare leave Employees who take paid time off 64% 70% Eligible male employees who take childcare leave Employees with disabilities Percentage of employees with disabilities The above information includes forward-looking statements within the meaning of the United States Private Securities Litigation Reform Act of See Forward-looking Statements on P.1 of this presentation 2.2% Target Results 2.3% 50% 100% 45

47 Capital Management 46

48 Capital Management Capital Management Strengthening the Capital Base towards the target of the mid-term business plan and continuing steady returns to shareholders Strengthening of Stable Capital Base Steady Returns to Shareholders Mid-term Business Plan Target CET1 Capital Ratio of approx. 10% (at March 2019) Dividend Policy Aim: steady dividend payout policy with a dividend payout ratio on a consolidated basis of approx. 30% as a guide for our consideration CET1 Capital Ratio *1 (excluding Net Unrealized Gains on Other Securities) Cash Dividend per Share of Common Stock (JPY) % 7.76% 8.77% 9.14% 6.5 Announced current dividend policy in May 2014 Mar. 14 Mar. 15 Mar. 16 Sep. 16 FY13 FY14 FY15 FY16(estimated) *2 Incl. Net Unrealized Gains on Other Securities 9.08% 10.46% 10.85% 10.99% Dividend payout ratio 23% 30% 28% 32% *1: Basel 3 fully-effective basis (based on current regulations), excluding Net Unrealized Gains on Other Securities. Including Eleventh Series Class XI Preferred Stock (the balance as of Mar. 2016: JPY 98.9Bn, mandatory conversion date: Jul. 1, 2016) up to Mar.2016 *2: Assuming Net Income Attributable to FG of JPY 600.0Bn The above information includes forward-looking statements within the meaning of the United States Private Securities Litigation Reform Act of See Forward-looking Statements on P.1 of this presentation 47

49 Future Direction for Financial Institutions Towards Society

50 Financial Institutions in the Near Future Society 5.0 Direction of financial institutions' efforts to realize "Society 5.0" Changing times Shift from the Age of Certainty to the Age of Uncertainty Social issues Aging population Declining birthrate Limited natural resources Environmental issues Limited gov t resources (funds for social security costs) Regional exhaustion Disparity/Poverty Aging infrastructure Use of technology IoT Big data AI Biotech Robotics Drones Automated vehicles Blockchain Open Innovation Future Direction for Financial Institutions The unbundling and rebundling of financial services Expand new business areas Enhancing the efficiency and sophistication of operations and services Search for Accumulation of various customer issues/needs with the development of CtoB business Increased adoption and sophistication of nonface-to-face channels Spread and progress of blockchain technology and virtual currency a new solution model Creating new value by utilizing accumulated data - Comprehensive consulting - New microfinancing - Robo advisory...etc. Transforming face-to-face customer interaction - Branch as a place offering sophisticated consulting - Revising branch strategy Reducing transaction costs -Reviewing current operations in order to improve efficiency and productivity Solve social issues -> Realize Society

51 1. Interim Results for FY2016 Executive Summary 2. Progressive Development of One MIZUHO 3. Interim Financial Results for FY Enhanced Governance System 50

52 Overview of Financial Results Net Gains and Losses Customer Groups and Trading & Others are on a managerial accounting basis Net Business Profits 2 Banks 2 Banks (JPY Bn) 1H FY16 1H FY15 YoY 1 Gross Profits Customer Groups o/w Net Interest Income o/w Non-interest Income Trading & Others G&A Expenses Net Business Profits Credit-related Costs Net Gains (Losses) related to Stocks Net Non-Recurring Gains (Losses) - Other Ordinary Profits Net Income Consolidated 13 Consolidated Net Business Profits * Difference b/w Consolidated and 2 Banks * Net Income Attributable to FG Difference b/w Consolidated and 2 Banks * Reference Pages P.52 P.10 P.55 P.13 P.12 1H FY16 1 Gross Profits Net Interest Income Fiduciary Income Net Fee and Commission Income Net Trading Income Net Other Operating Income G&A Expenses Net Business Profits Excluding Net Gains (Losses) related to Bonds (JPY Bn) 2 Banks YoY 18.1 Mizuho Credit BK Guarantee major overseas Other subsidiaries & <+2.5> consolidation subsidiaries adjustments <+6.0> <-58.4> Consolidated H FY15 Difference in Net Income b/w Consolidated and 2 Banks Difference <+42.7> *3 *4 *1: Consolidated Gross Profits - G&A Expenses (excluding Non-Recurring Losses) + Equity in Income from Investment in Affiliates and certain other consolidation adjustments *2: Consolidated Net Business Profits Net Business Profits of 2 Banks *3: Net Income Attributable to FG Net Income of 2 Banks SC Consolidated <+92.6> *4: Figures in < > represent changes from 1H FY

53 Net Interest Income from Customer Groups (Overview) Net Interest Income (JPY Bn) FY Overseas: Domestic: Loan Balance *1 *2 *3 FY Overseas: Domestic: Banks, managerial accounting 2 Banks, banking account FY16 (JPY Tn) Average Balance FY Overseas: 16.7 Domestic: 54.7 FY Overseas: 18.5 Domestic: 54.1 FY16 Overseas Domestic Overseas Domestic (loans to the Japanese Government, etc.) Domestic (excluding loans to the Japanese Government, etc.) Change from 2H FY15 <Total> -1.2 <Overseas> -0.2 <Domestic> -1.0 Excluding loans to the Japanese Government etc H FY14 2H FY14 1H FY15 2H FY15 1H FY16 1H FY14 2H FY14 1H FY15 2H FY15 1H FY16 *1: Domestic: Aggregate of Net Interest Income in BK Domestic Banking and TB/Overseas: Net Interest Income in BK International Banking *2: Due to the introduction of the In-House Company System, there are changes in the managerial accounting rules and FY2014 and FY2015 figures are recalculated. The original total figures of net interest income before the recalculation were: FY2014: JPY 782.9Bn (1H: JPY 389.6Bn and 2H: JPY 393.3Bn) and FY2015: JPY 800.3Bn (1H: JPY 398.9Bn and 2H: JPY 401.3Bn) *3: Excluding loans to FG. Overseas is calculated based on an aggregate of banking and trust account basis and represents loans booked at overseas offices, including the impact of foreign exchange translation 52

54 Net Interest Income from Customer Groups (Domestic) Domestic Loan Balance (JPY Tn) Average Balance Loans to the Japanese Government, etc. Domestic (excluding loans to the Japanese Government, etc.) Domestic Loan and Deposit Rate Margin *1 *4 2 Banks -JPY 0.7Tn Excluding loans to the Japanese Government, etc. -JPY 1.5Tn Excluding loans to the Japanese Government, etc. 1.24% 1.18% Return on Loans and Bills Discounted a Loan and Deposit Rate Margin a - b Cost of Deposits and Debentures b 1.19% 1.15% 1.14% 1.10% 1.10% 1.05% 1.05% 1.01% 1.01% 0.05% 0.04% 0.04% 0.04% 0.04% 0.03% 0.94% 0.98% 0.93% 0.01% 1H FY13 2H FY13 1H FY14 2H FY14 1H FY15 2H FY15 1H FY16 Domestic Loan Spread 1Q 1.02% 2Q 1.00% 3Q 0.98% 4Q 0.98% 2 Banks 1Q 0.95% 2Q 0.92% BK, managerial accounting Period-end Balance 1H FY13 2H FY13 1H FY14 2H FY14 1H FY15 2H FY15 1H FY16 Sep. 13 Mar. 14 Sep. 14 Mar. 15 Sep. 15 Mar. 16 Sep. 16 Domestic Large Corp., etc (o/w Japanese Gov.) (5.6) (5.6) (4.4) (3.5) (3.1) (2.2) (3.9) SMEs * Individuals * *1: Excluding loans to FG. Banking account *2: Calculated by deducting Housing and Consumer Loans from Loans to SMEs and Individual Customers *3: Housing and Consumer Loans *4: Domestic Operations, excluding loans to financial institutions (including FG) and the Japanese Government, etc. Loans to Domestic Middle Market Firms & SMEs Loans to Domestic Large Corporate Customers 0.87% 0.84% 0.82% 0.60% 0.61% 0.59% 0.57% 0.77% 0.75% 0.71% 0.70% 0.54% 0.52% 0.51% 1H FY13 2H FY13 1H FY14 2H FY14 1H FY15 2H FY15 1H FY16 53

55 Net Interest Income from Customer Groups (Overseas) Overseas Loan Balance (USD Bn) Average Balance Europe Americas Asia Overseas Loan Spread *1 *2 *1 *2 BK, managerial accounting USD 13.5Bn +USD 0Bn % 1.04% 1.04% 0.97% 0.93% 0.91% 0.90% 1H FY13 2H FY13 1H FY14 2H FY14 1H FY15 2H FY15 1H FY16 *3 Foreign Currency-denominated Customer Deposit (USD Bn) Period-end Balance BK, managerial accounting BK, managerial accounting +USD 12.0Bn 1H FY13 2H FY13 1H FY14 2H FY14 1H FY15 2H FY15 1H FY Period-end Balance +USD 1.5Bn Sep. 13 Mar. 14 Sep. 14 Mar. 15 Sep. 15 Mar. 16 Sep *1: BK (including the banking subsidiaries in China, the US, the Netherlands, Indonesia, Malaysia, Russia and Brazil) *2: New managerial accounting rules have been applied since the beginning of FY16. Figures from 1H FY13 to 2H FY15 were recalculated based on the new rules *3: BK (including the banking subsidiaries in China, the US, the Netherlands, Indonesia, etc.), including foreign currency deposits (domestic) *4: Including foreign currency bonds issued by FG and its SPC subsidiaries, excluding bilateral non-public MTNs Mar.14 Mar. 15 Mar. 16 Sep. 16 Outstanding balance of foreign currency bonds Senior Bonds Subordinated *4 Bonds (Reference) Senior Bonds issued by FG

56 G&A Expenses G&A Expenses (JPY Bn) Personnel Non-personnel Miscellaneous Taxes * Banks Figures in ( ) are Employee Retirement Benefit Expenses *2 ( + represents expenses, - represents income) Personnel +JPY 4.7Bn (YoY) Increase in staff and expenses related to Employee Retirement Benefits Non-Personnel +JPY 1.2Bn (YoY) Increase in Premium for Deposit Insurance (including overseas offices) Miscellaneous Taxes +JPY 1.7Bn (YoY) Increase in Size-based business Tax, etc Expense Ratio (+8.1) (-0.3) (-2.7) FY13 FY14 FY15 1H FY15 1H FY16 *1: Excluding non-recurring losses *2: Employee Retirement Benefit Expenses = Service Costs + Interest Expense Expected Return on Plan Assets (-2.7) (-1.3) (+0.8) 57.3% 55.7% 56.9% 55.4% 60.4% Total +JPY 7.7Bn (YoY) Controlled expenses almost in line with the plan due to Operational Excellence effect while increase in Base Expenses related to Employee Retirement Benefits etc. and Strategic Expenses (The impact of appreciation of Yen: Approx. -JPY12.5Bn) Trend of Group aggregate G&A Expenses (JPY Bn) 630 1H FY15 Base Expense +4.5 o/w the impact of appreciation of Yen: -JPY 26Bn Strategic Expense +8 YoY +10 Operational Excellence -2.5 *3: Estimate of Group aggregate Expense Ratio for FY16 is mid 60% range The above information includes forward-looking statements within the meaning of the United States Private Securities Litigation Reform Act of See Forward-looking Statements on P.1 of this presentation managerial accounting rounded figures 640 1H FY16 Expense Ratio *3 62.1% 55

57 Overseas Loan Portfolio Downside Risk Tolerance Established a stable and diversified loan portfolio Quality of Loan Portfolio * BK (including the banking subsidiary in China) GCC managerial basis Investment Grade Level Ratio NPL Ratio 75% 72% 73% 69% Overseas Loan Portfolio (Sep. 2016) Total USD 205.1Bn Asia 44% Non-Japanese 69% BK (including the banking subsidiaries in China, the US, the Netherlands Indonesia, Malaysia, Russia and Brazil), GCC managerial basis Americas 36% Japanese 31% Europe 21% 1.0% 0.9% Asia / Oceania USD 89.4Bn Hong Kong 23% Singapore 18% Australia Thailand Taiwan 9% 9% 8% China 8% India 8% SouthIndo- 7% Koreanesia 3% Others 7% 0.6% 0.5% Mar. 14 Mar. 15 Mar. 16 Sep. 16 (Preliminary) Investment Grade Level Ratio is over 70% NPL ratio declined although loan balance (period-end) increased China USD 7.5Bn Non-Japanese 47% Japanese 53% General Corporate Chinese Non-Chinese Financial Institution 0% 20% 40% 60% 80% 100% * Managerial accounting rules were changed. The original figures for Investment Grade Level were 70% for Mar. 14 and 73% for Mar. 16. All other figures remain unchanged 56

58 Exposure to Resource Sectors Exposure to Resource Sectors (Sep. 2016) BK (including banking subsidiaries in China, the US, the Netherlands, Indonesia, etc.) Managerial accounting (JPY Tn) Exposure *1 Loan Balance, etc. *3 Normal Obligor Ratio *2 Americas Europe Asia (excl. Japan) NPL Amount *4 Coverage Amount Coverage Ratio Resource Sector Total % % Non-Japanese % % Energy Resource Crude oil & natural gas mining etc. Storage & Transport Petroleum refinery & products manufacturing etc. Mineral Resource * % % % % % % % % % Japanese % % Energy Resource % % Mineral Resource * % % O/w project finance that is susceptible to price decline: approx. JPY 0.5Tn Regional breakdown of resource sector exposure: Americas (JPY 2.5Tn), Asia, excl. Japan (JPY 1.6Tn), Europe (JPY 1.1Tn) Exposure to non-resource related companies which is not included in the above figures *6 : Non-Jap. (JPY 1.1Tn), Jap. (JPY 0.2Tn) Non-Japanese % Japanese % Exposure Total (Corp.) % From this time, (1) Changed the exposure from Exposure at Default (EAD) base to total exposure base (2) Added "Storage & Transport" (JPY 0.3Tn) to the Non-Japanese resource sector Before the aforementioned change, the Resource Sector Total was JPY 6.1Tn *1: Loans, foreign exchange assets, acceptances and guarantees, commitments, etc. Resource sector excludes Japanese general trading companies, petrochemistry, iron and steel, nonferrous metal, and project finances which are not categorized as those susceptible to price decline *2: Percentage of exposure to customers having strong results and no particular problems with their financial condition *3: Outstanding balance of loans and bills discounted, foreign exchange assets, and acceptances and guarantees *4: Disclosed Claims under the Financial Reconstruction Act (net of partial direct write-offs) *5: Metal mining, coal and coal briquette, etc. Including commodity trader *6: Exposure to non-resource related companies whose parent company falls under the relevant resource sector 57

59 1. Interim Results for FY2016 Executive Summary 2. Progressive Development of One MIZUHO 3. Interim Financial Results for FY Initiatives related to ESG 58

60 Initiatives Related to ESG: Environment ESG Promotion Aim to be the most trusted partner in solving problems and supporting the sustainable growth of customers and communities as a Financial Services Consulting Group Participation in ESG related initiatives Social Responsibility Indices which include MIZUHO UN Global Compact UNEP Finance Initiative UN: Principles for Responsible Investment Ten principles addressing matters such as human rights, labor, the environment and anti-corruption Environment International partnership of financial institutions concerning sustainable development Principles which ensure ESG issues are incorporated into the investment decision-making process Environment-related Finance Results BK Smart City Project (JPY Bn) Mar. 14 Mar. 15 Mar. 16 Others All-electric housing loans Finance for environment friendly companies Environment-related Project Finance <Contents> Wind power JPY 190.2Bn Solar power / thermal JPY 310.8Bn Biomass JPY 4.0Bn Geothermal JPY 1.5Bn Hydroelectric JPY 2.0Bn Proper waste disposal / recycling business JPY 24.1Bn Others JPY 62.9Bn Support growth strategies of Japanese industries from a financial standpoint through urban development projects * Chennai, India; Tianjin, China; Hawaii, USA ; Guangzhou China; Saudi Arabia; Manchester, UK; Slovenia; Haryana, India Structure Japan-oriented environmental city projects at 8 locations* around the globe Toward the development of financial structures for the future 59

61 Initiatives Related to ESG: Society ESG Society Earthquake Disaster Recovery Support Execute financial intermediation and consulting functions by utilizing Mizuho s strengths such as industry knowledge and financial expertise, to support the recovery of stricken areas Initiatives to support recovery of the stricken areas from the Great East Japan Earthquake Contribution to the recovery of Kesennuma, one of the most prominent fisheries city in Japan Illustrative Image Ship retracted Ship on the rack Initiatives to support recovery of Kyushu Support provided in Kumamoto Prefecture recovery Arranged a syndicated loan transaction in collaboration with 7 local financial institutions for Mirai Ships Inc., a company established in September 2016, mainly by 4 ship builders based in Kesennuma City, Miyagi Prefecture, which were stricken by the Great East Japan Earthquake Signed the Agreement on the Recovery Support of Kumamoto Prefecture (Aug. 2016). Provided support in areas such as urban development or infrastructure restructuring planning not limited to finance to assist the recovery of local industries Industry Fostering Support Promote initiatives to contribute to the sustainable growth of the economy and society as well as regional empowerment by utilizing Mizuho s network Investing in the Sixth Industry and regional vitalizations related funds 17 funds invested (as of Sep. 30, 2016) Diversity and Inclusion Promotion Realize sustainable growth through enhancing employees passion for self-growth in addition to creating new values by adopting ideas and opinions from diversified employees Diversity-related awards, etc. Diversity Management Selection 100 Nadeshiko Brand Platinum Kurumin Conducted proactive initiatives such as diversity management, promotion of participation by women, childcare support and else 60