Mizuho Financial Group, Inc. Q2 FY2022 earnings call

• Apologized for Mizuho Bank systems failures and are reviewing the event. - Outlined first half financial results, including consolidated net business profits, breakdown by customer groups (individual investment strong, non-Japanese loans up; markets: bonds and sales down, banking ST revenue down), credit-related costs, net gains on stocks, net extraordinary gains. - Company-based performance: Retail & Business Banking had individual asset formation success and real estate noninterest income up; Corporate and Institutional had loan balance increase, loan spread improvement; Global Corporate and Asset Management had record highs. - Balance sheet outline: Total assets JPY227 trillion, non-Japanese yen loans and deposits changes, loan spreads, etc. - Noninterest income for customer growth by in-house companies increased JPY34.5 billion y-o-y. - Credit portfolio: Credit-related costs minus JPY49.6 billion, nonperforming loans flat. - Securities portfolio: Unrealized gains up due to Japanese stock prices, gross shareholdings reduction progress. - Basel regulatory capital: CET1 ratio increased to 12.27%, Basel III fully effective CET1 ratio 9.6% exceeding target. - Revised fiscal year 2021 plan: Consolidated net business profit revised up by JPY30 billion, markets group revised down, credit-related costs unchanged, net gains/losses on stocks revised down, net income attributable to SG revised up by JPY20 billion, dividend per share increased.

Consolidated net business profits and net gains related to Eves and others increased by JPY40.9 billion year-on-year to JPY460.3 billion, which is 58% of the fiscal plan of JPY790 billion. Individual investment was strong, and non-Japanese loan deposits revenue increased. Banking ST revenue declined due to stabilization of market volatility. Credit-related costs ended at minus JPY49.6 billion, a year-on-year decrease of JPY31.5 billion. Net gains related to stocks recorded minus JPY6.8 billion. Net extraordinary gains declined by JPY18.4 billion. Net income attributable to financial group was JPY385.6 billion, 75% of the fiscal plan target of JPY510 billion.

• Consolidated net business profit revised up to JPY820 billion. - Markets group revised down due to market trends. - Credit-related costs unchanged in the second half. - Net gains/losses on stocks revised down to a loss of JPY10 billion. - Net income attributable to SG revised up to JPY530 billion. - Interim and year-end dividends set at JPY40 per share, first increase in seven years based on 40% payout ratio and confidence in earnings achievement.

• Systems failures at Mizuho Bank causing inconvenience; ongoing review of event recurrence. - Concerns about market conditions affecting markets group performance, including rising inflation and unrealized losses management. - Risks from COVID-19 resurgence, supply chain constraints, energy price increases impacting credit costs.

Q: Elaborate on system failure impact on management performance, cost expenses, and reason for dividend increase.

A: System failure had JPY3 billion impact on gross profit, JPY10 billion+ earmarked for expenses with possible increase; dividend increase due to confidence in achieving earnings target with 40% payout ratio.

Q: Revision of full-year forecast, credit-related costs, bear fund cancellation.

A: Credit-related costs to be set aside similarly in second half; bear fund cancellation depends on market conditions, using cross-shareholding gains to unwind bear fund losses; markets group expected to have JPY100 billion decrease in business profit due to conservative approach.

Q: Retail business G&A expenses room for improvement, loan spread outlook.

A: Still room for G&A expense improvement; GCC loan spread likely to subside but has sustainability.

Q: Credit-related costs by industry and large exposures.

A: Need to be vigilant about sectors impacted by COVID-19, supply chain, energy prices; forward-looking credit costs set aside with ongoing review.