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MFG Mizuho Financial

Filed: 27 Nov 20, 6:07am

 

 

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 2020

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NO. 333-233354) AND TO BE A PART OF SUCH PROSPECTUS FROM THE DATE ON WHICH THIS REPORT IS FURNISHED, TO THE EXTENT NOT SUPERSEDED BY DOCUMENTS OR REPORTS SUBSEQUENTLY FILED OR FURNISHED.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 27, 2020
Mizuho Financial Group, Inc.
By: 

/s/ Makoto Umemiya

Name: Makoto Umemiya
Title: Senior Managing Executive Officer / Group CFO


UNAUDITED INTERIM CONSOLIDATED JAPANESE GAAP FINANCIAL STATEMENTS

AS OF AND FOR THE SIX MONTHS ENDED SEPTEMBER 30, 2020

On November 27, 2020, we published our unaudited interim consolidated financial statements as of and for the six months ended September 30, 2020 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).

The interim consolidated financial statements for the six months ended September 30, 2020 are prepared in accordance with the revised “Ordinance on the Terminology, Forms, and Preparation Methods of Interim Consolidated Financial Statements”, pursuant to the proviso of Article 6, Paragraph 1 of the Supplementary Provisions of the “Cabinet Office Ordinance for Partial Revision of the Ordinance on the Terminology, Forms, and Preparation Methods of the financial statements” (Cabinet Office Ordinance No. 9 of March 6, 2020).

 

3.

Ernst & Young ShinNihon LLC conducted a semiannual audit on the interim consolidated financial statements of MHFG for the six months ended September 30, 2020, 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, 2020

  

As of
September 30, 2020

 

Assets

       

Cash and Due from Banks

  *8   41,069,745  *8   42,498,278 

Call Loans and Bills Purchased

     584,686     243,267 

Receivables under Resale Agreements

     18,581,488     12,666,551 

Guarantee Deposits Paid under Securities Borrowing Transactions

     2,243,161     2,190,799 

Other Debt Purchased

     2,688,273     2,676,047 

Trading Assets

  *8   13,248,734  *8   14,564,434 

Money Held in Trust

     411,847     471,782 

Securities

  *1, *2, *8, *15   34,907,234  *1, *2, *8, *15   43,314,534 

Loans and Bills Discounted

  *3, *4, *5, *6, *7, *8, *9   83,468,185  *3, *4, *5, *6, *7, *8, *9   86,501,633 

Foreign Exchange Assets

  *7   2,044,415  *7   1,936,636 

Derivatives other than for Trading Assets

     1,944,060     1,439,293 

Other Assets

  *8   5,206,121  *8   4,413,001 

Tangible Fixed Assets

  *10, *11   1,103,622  *10, *11   1,101,614 

Intangible Fixed Assets

     636,139     619,695 

Net Defined Benefit Asset

     846,782     924,167 

Deferred Tax Assets

     32,493     23,368 

Customers’ Liabilities for Acceptances and Guarantees

     6,066,527     5,938,130 

Reserves for Possible Losses on Loans

     (424,446    (477,516

Reserve for Possible Losses on Investments

     —       (0
  

 

  

 

 

Total Assets

     214,659,077     221,045,717 
  

 

  

 

 

 

- 2 -


   

(Millions of yen)

 
   

As of
March 31, 2020

  

As of
September 30, 2020

 

Liabilities

       

Deposits

  *8   131,189,673  *8   134,665,825 

Negotiable Certificates of Deposit

     13,282,561     14,201,308 

Call Money and Bills Sold

     2,263,076     1,903,686 

Payables under Repurchase Agreements

  *8   17,971,098  *8   19,326,350 

Guarantee Deposits Received under Securities Lending Transactions

  *8   1,108,255  *8   1,244,440 

Commercial Paper

     411,089     921,282 

Trading Liabilities

     9,604,890     8,487,342 

Borrowed Money

  *8, *12   5,209,947  *8, *12   7,275,166 

Foreign Exchange Liabilities

     509,405     402,476 

Short-term Bonds

     373,658     331,447 

Bonds and Notes

  *13   8,906,432  *13   9,639,781 

Due to Trust Accounts

     1,055,510     1,336,263 

Derivatives other than for Trading Liabilities

     1,619,151     1,274,444 

Other Liabilities

     6,111,195     4,815,831 

Reserve for Bonus Payments

     75,175     55,860 

Reserve for Variable Compensation

     2,559     1,467 

Net Defined Benefit Liability

     62,113     71,950 

Reserve for Director and Corporate Auditor Retirement Benefits

     944     635 

Reserve for Possible Losses on Sales of Loans

     637     1,142 

Reserve for Contingencies

     6,443     4,180 

Reserve for Reimbursement of Deposits

     27,851     25,205 

Reserve for Reimbursement of Debentures

     18,672     17,663 

Reserves under Special Laws

     2,509     2,506 

Deferred Tax Liabilities

     53,150     133,564 

Deferred Tax Liabilities for Revaluation Reserve for Land

  *10   62,695  *10   62,555 

Acceptances and Guarantees

     6,066,527     5,938,130 
  

 

  

 

 

Total Liabilities

     205,995,229     212,140,512 
  

 

  

 

 

Net Assets

       

Common Stock

     2,256,767     2,256,767 

Capital Surplus

     1,136,467     1,135,948 

Retained Earnings

     4,174,190     4,260,606 

Treasury Stock

     (6,414    (7,025
  

 

  

 

 

Total Shareholders’ Equity

     7,561,010     7,646,297 
  

 

  

 

 

Net Unrealized Gains (Losses) on Other Securities

     823,085     1,038,781 

Deferred Gains or Losses on Hedges

     72,081     66,262 

Revaluation Reserve for Land

  *10   136,655  *10   137,834 

Foreign Currency Translation Adjustments

     (133,178    (170,773

Remeasurements of Defined Benefit Plans

     94,317     84,475 
  

 

  

 

 

Total Accumulated Other Comprehensive Income

     992,960     1,156,580 
  

 

  

 

 

Stock Acquisition Rights

     213     134 

Non-controlling Interests

     109,662     102,192 
  

 

  

 

 

Total Net Assets

     8,663,847     8,905,205 
  

 

  

 

 

Total Liabilities and Net Assets

     214,659,077     221,045,717 
  

 

  

 

 

 

- 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, 2019

  

For the six months ended

September 30, 2020

 

Ordinary Income

                                        1,987,425                                        1,576,761 

Interest Income

    1,062,855    693,651 

Interest on Loans and Bills Discounted

    646,722    490,811 

Interest and Dividends on Securities

    138,351    122,600 

Fiduciary Income

    27,756    27,143 

Fee and Commission Income

    360,492    397,087 

Trading Income

    194,433    238,219 

Other Operating Income

    224,188    156,922 

Other Ordinary Income

  *1  117,699  *1  63,736 

Ordinary Expenses

    1,590,953    1,309,150 

Interest Expenses

    686,238    253,522 

Interest on Deposits

    261,393    91,376 

Fee and Commission Expenses

    84,392    77,475 

Trading Expenses

    2,533    1,455 

Other Operating Expenses

    65,839    68,248 

General and Administrative Expenses

    670,592    681,287 

Other Ordinary Expenses

  *2  81,357  *2  227,161 
  

 

  

 

 

Ordinary Profits

    396,471    267,610 
  

 

  

 

 

Extraordinary Gains

  *3  1,252  *3  72,735 

Extraordinary Losses

  *4  6,252  *4  6,955 
  

 

  

 

 

Income before Income Taxes

    391,471    333,391 
  

 

  

 

 

Income Taxes:

     

Current

    85,576    74,186 

Deferred

    10,593     41,813 
  

 

  

 

 

Total Income Taxes

    96,169    116,000  
  

 

  

 

 

Profit

    295,302    217,390 
  

 

  

 

 

Profit Attributable to Non-controlling Interests

    7,633    1,867 
  

 

  

 

 

Profit Attributable to Owners of Parent

           287,668           215,523 
  

 

  

 

 

 

- 4 -


      Interim Consolidated Statement of Comprehensive Income

 

   

(Millions of yen)

 
   

For the six months ended

September 30, 2019

  

For the six months ended

September 30, 2020

 

Profit

                                      295,302                                           217,390 

Other Comprehensive Income

    (104,853         158,782 

Net Unrealized Gains (Losses) on Other Securities

          (122,173   212,348 

Deferred Gains or Losses on Hedges

    74,719    (5,843

Foreign Currency Translation Adjustments

    (34,547   (36,529

Remeasurements of Defined Benefit Plans

    (20,957   (9,851

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

    (1,894   (1,341
  

 

  

 

 

Comprehensive Income

           190,448           376,172 
  

 

  

 

 

(Breakdown)

     

Comprehensive Income Attributable to Owners of Parent

    184,486    377,963 

Comprehensive Income Attributable to Non-controlling Interests

    5,962    (1,791

 

- 5 -


(3) Interim Consolidated Statement of Changes in Net Assets

      For the six months ended September 30, 2019

 

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

Equity
 

Balance as of the beginning of the period

   2,256,767    1,138,449   3,915,521   (7,703  7,303,034 

Changes during the period

       

Cash Dividends

      (95,197   (95,197

Profit Attributable to Owners of Parent

      287,668    287,668 

Repurchase of Treasury Stock

       (1,850  (1,850

Disposition of Treasury Stock

     (625   2,744   2,119 

Transfer from Revaluation Reserve for Land

      55    55 

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

     (885    (885

Transfer from Retained Earnings to Capital Surplus

     611   (611   —   

Net Changes in Items other than Shareholders’ equity

       
  

 

 

   

 

 

  

 

 

  

 

 

  

 

 

 

Total Changes during the period

   —      (899  191,915   893   191,910 
  

 

 

   

 

 

  

 

 

  

 

 

  

 

 

 

Balance as of the end of the period

   2,256,767    1,137,550   4,107,437   (6,809  7,494,945 
  

 

 

   

 

 

  

 

 

  

 

 

  

 

 

 

 

  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

  1,186,401   (22,282  137,772   (111,057  254,936   1,445,770   707   444,525   9,194,038 

Changes during the period

         

Cash Dividends

          (95,197

Profit Attributable to Owners of Parent

          287,668 

Repurchase of Treasury Stock

          (1,850

Disposition of Treasury Stock

          2,119 

Transfer from Revaluation Reserve for Land

          55 

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

          (885

Transfer from Retained Earnings to Capital Surplus

          —   

Net Changes in Items other than Shareholders’ equity

  (119,652  74,670   (55  (37,096  (21,104  (103,238  (493  (308,279  (412,010
 

 

 

  

 

 

  

 

 

  

 

 

  

 

 

  

 

 

  

 

 

  

 

 

  

 

 

 

Total Changes during the period

  (119,652  74,670   (55  (37,096  (21,104  (103,238  (493  (308,279  (220,100
 

 

 

  

 

 

  

 

 

  

 

 

  

 

 

  

 

 

  

 

 

  

 

 

  

 

 

 

Balance as of the end of the period

  1,066,749   52,387   137,716   (148,153  233,831   1,342,532   213   136,245   8,973,937 
 

 

 

  

 

 

  

 

 

  

 

 

  

 

 

  

 

 

  

 

 

  

 

 

  

 

 

 

 

- 6 -


      For the six months ended September 30, 2020

 

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

Equity
 

Balance as of the beginning of the period

   2,256,767    1,136,467   4,174,190   (6,414  7,561,010 

Cumulative Effects of Changes in Accounting Policies

      (32,639   (32,639

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

   2,256,767    1,136,467   4,141,550   (6,414  7,528,370 

Changes during the period

       

Cash Dividends

      (95,208   (95,208

Profit Attributable to Owners of Parent

      215,523    215,523 

Repurchase of Treasury Stock

       (1,995  (1,995

Disposition of Treasury Stock

     (80   1,385   1,305 

Transfer from Revaluation Reserve for Land

      (1,178   (1,178

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

     (519    (519

Transfer from Retained Earnings to Capital Surplus

     80   (80   —   

Net Changes in Items other than Shareholders’ equity

       
  

 

 

   

 

 

  

 

 

  

 

 

  

 

 

 

Total Changes during the period

   —      (519  119,056   (610  117,926 
  

 

 

   

 

 

  

 

 

  

 

 

  

 

 

 

Balance as of the end of the period

   2,256,767    1,135,948   4,260,606   (7,025  7,646,297 
  

 

 

   

 

 

  

 

 

  

 

 

  

 

 

 

 

  Accumulated Other Comprehensive Income          
  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
  Stock
Acquisition
Rights
  Non-
controlling
Interests
  Total Net
Assets
 

Balance as of the beginning of the period

  823,085   72,081   136,655   (133,178  94,317   992,960   213   109,662   8,663,847 

Cumulative Effects of Changes in Accounting Policies

       —       (32,639

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

  823,085   72,081   136,655   (133,178  94,317   992,960   213   109,662   8,631,208 

Changes during the period

         

Cash Dividends

          (95,208

Profit Attributable to Owners of Parent

          215,523 

Repurchase of Treasury Stock

          (1,995

Disposition of Treasury Stock

          1,305 

Transfer from Revaluation Reserve for Land

          (1,178

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

          (519

Transfer from Retained Earnings to Capital Surplus

          —   

Net Changes in Items other than Shareholders’ equity

  215,696   (5,819  1,178     (37,594  (9,842  163,619   (79  (7,469  156,070 
 

 

 

  

 

 

  

 

 

  

 

 

  

 

 

  

 

 

  

 

 

  

 

 

  

 

 

 

Total Changes during the period

  215,696    (5,819  1,178   (37,594  (9,842  163,619    (79  (7,469  273,997 
 

 

 

  

 

 

  

 

 

  

 

 

  

 

 

  

 

 

  

 

 

  

 

 

  

 

 

 

Balance as of the end of the period

  1,038,781     66,262   137,834   (170,773    84,475   1,156,580    134    102,192   8,905,205 
 

 

 

  

 

 

  

 

 

  

 

 

  

 

 

  

 

 

  

 

 

  

 

 

  

 

 

 

 

- 7 -


(4) Interim Consolidated Statement of Cash Flows

 

   (Millions of yen) 
   For the six months ended
September 30, 2019
  For the six months ended
September 30, 2020
 

Cash Flow from Operating Activities

       

Income before Income Taxes

     391,471     333,391 

Depreciation

     69,160     80,450 

Losses on Impairment of Fixed Assets

     4,010     1,391 

Amortization of Goodwill

     2,033     1,869 

Equity in Loss (Gain) from Investments in Affiliates

     (19,109    (11,559

Increase (Decrease) in Reserves for Possible Losses on Loans

     (7,637    53,470 

Increase (Decrease) in Reserve for Possible Losses on Investments

     —       0 

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

     (89    504 

Increase (Decrease) in Reserve for Contingencies

     258     (1,028

Increase (Decrease) in Reserve for Bonus Payments

     (17,352    (18,630

Increase (Decrease) in Reserve for Variable Compensation

     (1,532    (1,092

Decrease (Increase) in Net Defined Benefit Asset

     (42,534    (31,468

Increase (Decrease) in Net Defined Benefit Liability

     1,026     1,180 

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

     (334    (308

Increase (Decrease) in Reserve for Reimbursement of Deposits

     (3,180    (2,646

Increase (Decrease) in Reserve for Reimbursement of Debentures

     (4,834    (1,009

Interest Income - accrual basis

     (1,062,855    (693,651

Interest Expenses - accrual basis

     686,238     253,522 

Losses (Gains) on Securities

     (154,961    (1,779

Losses (Gains) on Money Held in Trust

     (94    (1,565

Foreign Exchange Losses (Gains) - net

     149,143     190,646 

Losses (Gains) on Disposition of Fixed Assets

     990     (588

Losses (Gains) on Revision of Retirement Benefit Plan

     —       (58,684

Losses (Gains) on Cancellation of Employee Retirement Benefit Trust

     —       (7,895

Decrease (Increase) in Trading Assets

     (2,475,270    (1,348,924

Increase (Decrease) in Trading Liabilities

     1,915,340     (1,148,807

Decrease (Increase) in Derivatives other than for Trading Assets

     (272,093    513,769 

Increase (Decrease) in Derivatives other than for Trading Liabilities

     136,276     (356,773

Decrease (Increase) in Loans and Bills Discounted

     (2,166,571    (3,180,082

Increase (Decrease) in Deposits

     2,340,667     3,706,210 

Increase (Decrease) in Negotiable Certificates of Deposit

     603,216     887,125 

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

     (1,186,947    2,040,630 

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

     (73,018    58,994 

Decrease (Increase) in Call Loans, etc.

     (1,150,293    6,119,257 

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

     (492,325    52,362 

Increase (Decrease) in Call Money, etc.

     2,460,640     1,321,413 

Increase (Decrease) in Commercial Paper

     (260,467    521,600 

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

     92,478     136,184 

Decrease (Increase) in Foreign Exchange Assets

     103,819     96,730 

Increase (Decrease) in Foreign Exchange Liabilities

     (122,722    (107,635

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

     (5,788    (42,210

Increase (Decrease) in Bonds and Notes

     142,827     506,833 

Increase (Decrease) in Due to Trust Accounts

     12,427     280,752 

Interest and Dividend Income - cash basis

     1,081,614     768,705 

Interest Expenses - cash basis

           (711,379          (333,961

Other - net

     472,110     (200,012
  

 

 

  

 

 

 

Subtotal

     434,358     10,376,684 
  

 

 

  

 

 

 

Cash Refunded (Paid) in Income Taxes

     (40,759    (131,734
  

 

 

  

 

 

 

Net Cash Provided by (Used in) Operating Activities

            393,599       10,244,949 
  

 

 

  

 

 

 

 

- 8 -


   (Millions of yen) 
   For the six months ended
September 30, 2019
  For the six months ended
September 30, 2020
 

Cash Flow from Investing Activities

       

Payments for Purchase of Securities

     (41,534,948    (48,153,087

Proceeds from Sale of Securities

     29,904,670     24,703,651 

Proceeds from Redemption of Securities

     10,050,392     14,798,919 

Payments for Increase in Money Held in Trust

     (20,952    (63,426

Proceeds from Decrease in Money Held in Trust

     25,375     4,841 

Payments for Purchase of Tangible Fixed Assets

     (34,074    (36,629

Payments for Purchase of Intangible Fixed Assets

     (46,876    (47,263

Proceeds from Sale of Tangible Fixed Assets

     3,605     12,855 

Proceeds from Sale of Intangible Fixed Assets

     3,144     —   

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

     —       497 
  

 

 

  

 

 

 

Net Cash Provided by (Used in) Investing Activities

     (1,649,665    (8,779,640
  

 

 

  

 

 

 

Cash Flow from Financing Activities

       

Proceeds from Subordinated Borrowed Money

     —       30,000 

Proceeds from Issuance of Subordinated Bonds

     325,000     287,000 

Payments for Redemption of Subordinated Bonds

     (118,000    (50,000

Proceeds from Investments by Non-controlling Shareholders

     2,530     2,543 

Repayments to Non-controlling Shareholders

     (303,000    —   

Cash Dividends Paid

     (95,165    (95,242

Cash Dividends Paid to Non-controlling Shareholders

     (10,011    (4,074

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

     (4,653    —   

Payments for Repurchase of Treasury Stock

     (1,435    (1,503

Proceeds from Sale of Treasury Stock

     1,515     838 

Payments for Repurchase of Treasury Stock of Subsidiaries

     —       (5,414
  

 

 

  

 

 

 

Net Cash Provided by (Used in) Financing Activities

     (203,220    164,147 
  

 

 

  

 

 

 

Effect of Foreign Exchange Rate Changes on Cash and Cash Equivalents

     (254,539    (120,684
  

 

 

  

 

 

 

Net Increase (Decrease) in Cash and Cash Equivalents

     (1,713,824    1,508,771 
  

 

 

  

 

 

 

Cash and Cash Equivalents at the beginning of the period

     44,254,874     39,863,604 
  

 

 

  

 

 

 

Cash and Cash Equivalents at the end of the period

   *1      42,541,050   *1      41,372,376 
  

 

 

  

 

 

 

 

- 9 -


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: 153

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, 2020, Mizuho After Corona Business Succession Assist Fund Limited Partnership and thirty-eight other companies were newly included in the scope of consolidation as a result of establishment.

During the six months ended September 30, 2020, Mizuho Operation Service Ltd. and eleven other companies were excluded from the scope of consolidation as a result of decrease in share ownership 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: 26

Names of principal companies:

Custody Bank of Japan, Ltd.

Orient Corporation

Mizuho Leasing Company, Limited

Change in scope of equity method

During the six months ended September 30, 2020, One Tap BUY Co., Ltd. and one other company were newly included in the scope of equity method as a result of increase in share ownership and other factor.

During the six months ended September 30, 2020, JTC Holdings, Ltd. and one other company were excluded from the scope of consolidation as a result of merger.

 

(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.

 

- 10 -


3.

Interim Balance Sheet Dates of Consolidated Subsidiaries

 

(1)

Interim balance sheet dates of consolidated subsidiaries are as follows:

 

January 31  1 company  
June 30  41 companies  
September 30  111 companies  

 

(2)

A consolidated subsidiary with the interim balance sheet date of January 31 was consolidated based on its tentative interim financial statements 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, 2020, 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, 2020, are recognized in Other Operating Income and Other Operating Expenses on the interim consolidated statement 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, 2020, 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, 2020, 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, 2020, assuming they were settled at the end of the six months ended September 30, 2020.

For financial derivatives, fair value is calculated on the basis of net assets or liabilities after offsetting financial assets and liabilities with respect to specific market risks and specific credit risk.

 

- 11 -


(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. Other Securities are stated at market price (cost of securities sold is calculated primarily by the moving average method). Stocks and others without a quoted market price 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 described in (a) above.

 

(4)

Derivative Transactions

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

Fair value is calculated on the basis of net assets or liabilities after offsetting financial assets and liabilities with respect to specific market risks and specific credit risk.

 

(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.

 

- 12 -


(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 for the next one year or three years are maintained at rates derived from historical credit loss experience or historical bankruptcy experience for one or three years and making necessary adjustments such as future prospects and others. 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 ¥109,898 million (¥89,216 million at the end of the fiscal year ended March 31, 2020).

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.

(Additional Information)

In light of the principles set forth in the report entitled “Japanese Financial Services Agency (“JFSA”)’s supervisory approaches to lending business and loan loss provisioning” published by JFSA in December 18, 2019, we have reflected the potential impact of the spread of COVID-19 and its prolongation on Reserves for Possible Losses on Loans for some credit. More specifically, we have identified certain industries and certain obligors that are expected to be significantly impacted by the COVID-19. For these identified industries and obligors, we have updated the estimated expected loss amount by incorporating certain assumptions such as the future recovery periods and the forecasted GDP growth rate in Japan. Among the major assumptions applied to the relevant estimates, we have adopted the prospect that the period for the settling down of COVID-19 would be longer than we had expected at the end of the previous fiscal year.

 

(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, 2020, based on the estimated future payments.

 

- 13 -


(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 and executive 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, 2020 among the estimated payments based on the standard amount regarding variable compensation of the fiscal year ending March 31, 2020 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, 2020, 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, 2020. Unrecognized prior service cost and unrecognized actuarial differences are recognized as follows:

Unrecognized prior service cost: Recognized mainly as income or expenses in the period of occurrence.

Unrecognized actuarial difference: 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, 2020 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 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 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.

 

- 15 -


 (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.

 

(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.

Changes in Accounting Policies

(Accounting Standard for Fair Value Measurement and Others)

MHFG has applied “Accounting Standard for Fair Value Measurement” (ASBJ Statement No.30 July 4, 2019) and others from the beginning of the interim period ended September 30, 2020.

In accordance with Article 8 of “Accounting Standard for Fair Value Measurement”, the fair value adjustment method used to determine the fair value of derivatives is revised to maximize the use of relevant observable inputs estimated from derivatives and others traded in the market.

In accordance with Article 20 of “Accounting Standard for Fair Value Measurement”, the cumulative effects arising from the retroactive application of these new accounting policies to all the previous fiscal years were reflected in Retained Earnings as of April 1, 2020.

As a result, Retained Earnings decreased by ¥32,639 million, Trading Assets decreased by ¥50,380 million, Derivatives other than for Trading Assets decreased by ¥6,379 million, Trading Liabilities decreased by ¥6,529 million, Derivatives other than for Trading Liabilities decreased by ¥3,184 million, Deferred Tax Assets increased by ¥14,405 million, and Net Assets per Share decreased by ¥12.87 as of April 1, 2020. The share consolidation was taken place at a ratio of ten pre-consolidation shares to one post-consolidation share on October 1, 2020. Net Asset per share is calculated under the assumption that the share consolidation had been taken place at the beginning of fiscal 2019.

And in accordance with the transitional treatment set forth in Article 19 of “Accounting Standard for Fair Value Measurement” and Article 44-2 of “Accounting Standard for Financial Instruments” (ASBJ Statement No. 10, July 4, 2019), MHFG has applied a new accounting policy prescribed by “Accounting Standard for Fair Value Measurement” and others from the interim period ended September 30, 2020.

As a result, in principle, while fair value of Japanese stocks was previously determined based on the average quoted market price over the month preceding the interim consolidated balance sheet date, from the end of the interim period ended September 30, 2020, fair value of Japanese stocks is determined based on the quoted market price as of the interim consolidated balance sheet date.

Additional Information

The Board Benefit Trust (“BBT”) Program

Since MHFG operates its business to contribute to the creation of value for diverse stakeholders and realize 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 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 framework consists of the stock compensation program based on the Company Group Officer’s position in their respective company (“Stock Compensation I”) and the stock compensation program based on the performance evaluation of the Company Group (“Stock Compensation II”).

 

- 16 -


Stock Compensation I will be paid at the time of retirement in the form of shares of MHFG calculated based on their position. A system is adopted which enables a decrease or forfeiture of the amount depending on the performance of the company or the individual.

Stock Compensation II will be paid in the form of shares of MHFG and will be deferred over three years, which is calculated based on the status of achieving our Five-Year Business Plan. A system is adopted which enables a decrease or forfeiture of the amount depending on the performance of the company or the individual.

Upon the payment of stock compensation under the Program, MHFG may, for a certain portion, pay a monetary amount equivalent to the market value of its stock in lieu of stock compensation in accordance with the Rules on Distribution of Shares.

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, 2020 was ¥4,148 million for 25,564 thousand shares (the carrying amount as of March 31, 2020 was ¥3,485 million for 19,636 thousand shares).

Application of tax-effect accounting to the Transition from the Consolidated Taxation System to the Group Aggregation System

Some domestic consolidated subsidiaries of the Group record amounts of deferred tax assets and deferred tax liabilities based on the provisions of tax laws prior to amendment under the treatment in Paragraph 3 of “Treatment of the application of the tax-effect accounting in relation to the transition from the consolidated tax system to the aggregate group system” (Practical Solutions No.39 March 31, 2020), without applying the provisions of Paragraph 44 of “Guidance on Accounting Standard for tax-effect accounting” (Implementation Guidance No.28 February 16, 2018), regarding the tax items for which review of the non-consolidated Tax Payment System was implemented in accordance with the transition to the aggregated group system established under the “Act for Partial Revision of the Income Tax Act, etc.” (Act No. 8 of 2020) and the transition to the aggregated group system.

 

- 17 -


Notes to Interim Consolidated Balance Sheet

 

*1.

The total amount of shares and investments in affiliates

 

   

 

   (Millions of yen) 
   As of March 31, 2020   As of September 30, 2020 

Shares

        331,855         339,807 

Investments

   534    530 

 

*2.

Unsecured loaned securities, which are included in Japanese Government Bonds under Securities, are as follows:

 

   

 

   (Millions of yen) 
   As of March 31, 2020   As of September 30, 2020 
          80,056                —   

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, 2020   As of September 30, 2020 

Securities repledged

   19,960,803    12,779,574 

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

   1,998,251    2,589,760 

 

*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, 2020   As of September 30, 2020 

Loans to Bankrupt Obligors

   15,938    32,552 

Non-Accrual Delinquent Loans

        401,016         412,673 

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, 2020   As of September 30, 2020 

Loans Past Due for Three Months or More

               1,468                559 

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, 2020   As of September 30, 2020 

Restructured Loans

        256,429         311,710 

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, 2020   As of September 30, 2020 

Total

        674,853         757,496 

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, 2020   As of September 30, 2020 
        1,341,367         1,506,793 

 

- 19 -


*8.

Breakdown of assets pledged as collateral is as follows:

 

   (Millions of yen) 
   As of March 31, 2020   As of September 30, 2020 

The following assets are pledged as collateral:

    

Trading Assets

   1,281,698    3,999,815 

Securities

   5,551,273    7,332,423 

Loans and Bills Discounted

   3,584,065    10,317,944 
  

 

 

   

 

 

 

Total

   10,417,037    21,650,183 

The following liabilities are collateralized by the above assets:

    

Deposits

   1,057,282    897,471 

Payables under Repurchase Agreements

   5,479,619    5,834,309 

Guarantee Deposits Received under Securities Lending Transactions

   778,766    2,530,502 

Borrowed Money

   4,073,507    6,208,639 

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, 2020   As of September 30, 2020 

Cash and Due from Banks

   65,745    58,225 

Trading Assets

   124,676    182,628 

Securities

     2,454,991      3,528,216 

Loans and Bills Discounted

   142,757    141,975 

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, 2020   As of September 30, 2020 

Margins for Futures Transactions

   500,066    230,434 

Guarantee Deposits

   113,053    113,963 

Collateral Pledged for Financial Instruments and Others

     1,925,993      1,765,477 

 

- 20 -


*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 a 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, 2020   As of September 30, 2020 

Unutilized balance

   90,835,753    100,471,308 

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

   68,937,304    75,058,069 

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.

 

*11.

Accumulated Depreciation of Tangible Fixed Assets

 

   (Millions of yen) 
   As of March 31, 2020   As of September 30, 2020 

Accumulated Depreciation

        894,792         897,854 

 

*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, 2020   As of September 30, 2020 

Subordinated Borrowed Money

        168,000         198,000 

 

- 21 -


*13.

Bonds and Notes includes subordinated bonds.

 

   (Millions of yen) 
   As of March 31, 2020   As of September 30, 2020 

Subordinated Bonds

     3,594,804      3,820,534 

 

  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, 2020   As of September 30, 2020 

Money trusts

        883,781         839,565 

 

*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, 2020   As of September 30, 2020 

    

     1,548,136      1,468,519 

 

- 22 -


Notes to Interim Consolidated Statement of Income

 

*1.

Other Ordinary Income includes the following:

 

   (Millions of yen) 
   For the six months ended
September 30, 2019
   For the six months ended
September 30, 2020
 

Gains on Sales of Stocks

     86,698      44,129 

Share of profit of entities accounted for using equity method

   19,109    11,559 

 

*2.

Other Ordinary Expenses includes the following:

 

   (Millions of yen) 
   For the six months ended
September 30, 2019
   For the six months ended
September 30, 2020
 

Provision for Reserves for Possible Losses on Loans

   7,387    76,704 

Impairment Losses of Stocks

     10,030      62,682 

Stock-related Derivatives Expenses

   8,246    26,929 

Losses on Sales of Stocks

   21,004    24,008 

 

*3.

Extraordinary Gains includes the following:

 

   (Millions of yen) 
   For the six months ended
September 30, 2019
   For the six months ended
September 30, 2020
 

Accumulation (Amortization) of Unrecognized Prior Service Cost

          —        62,004 

Gains on Cancellation of Employee Retirement Benefit Trust

   —      7,895 

“Accumulation (Amortization) of Unrecognized Prior Service Cost” resulted from prior service cost incurred in connection with the revision of the retirement benefit plan.

 

*4.

Extraordinary Losses is as follows:

 

   (Millions of yen) 
   For the six months ended
September 30, 2019
   For the six months ended
September 30, 2020
 

Losses on Transfer to Defined Contribution Pension Plan

   —      3,320 

Losses on Disposition of Fixed Assets

   2,242    2,243 

Losses on Impairment of Fixed Assets

       4,010        1,391 

“Losses on Transfer to Defined Contribution Pension Plan” resulted from the transfer of part of the defined benefit pension plan to the defined contribution pension plan.

 

- 23 -


Notes to Interim Consolidated Statement of Changes in Net Assets

For the six months ended September 30, 2019

 

1.

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

 

   (Thousands of shares) 
   As of
April 1, 2019
   Increase during
the period
   Decrease during
the period
   As of
September 30, 2019
   Remarks 

Issued Shares

          

Common Stock

   25,392,498    —      —      25,392,498   
  

 

 

   

 

 

   

 

 

   

 

 

   

Total

   25,392,498    —      —      25,392,498   
  

 

 

   

 

 

   

 

 

   

 

 

   

Treasury Stock

          

Common Stock

   33,962    11,788    11,273    34,477    (Note
  

 

 

   

 

 

   

 

 

   

 

 

   

Total

   33,962    11,788    11,273    34,477   
  

 

 

   

 

 

   

 

 

   

 

 

   

 

(Note)   Increases are due to acquisition of treasury stock by BBT trust account (9,030 thousand shares), and repurchase of shares constituting less than one unit and other factors (2,758 thousand shares). Decreases are due to distribution and sale of treasury stock through BBT trust account (8,303 thousand shares), exercise of stock acquisition rights (stock options) (2,968 thousand shares) and other factors. The number of shares as of September 30, 2019 includes the number of treasury stock held by BBT trust account (19,643 thousand shares).

 

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,
2019

(Millions of yen)
  Remarks 
  As of
April 1,
2019
  Increase
during the
period
  Decrease
during the
period
  As of
September 30,
2019
 

MHFG

  Stock acquisition rights (Treasury stock acquisition rights)   —      

—  

(—  

 

  

—  

(—  

 

  

—  

(—  

 

  

—  

(—  

 

  

—  

(—  

 

 
  Stock acquisition rights as stock option             —       213  

Consolidated subsidiaries (Treasury stock acquisition rights)

               —       

—  

(—  

 

 
          

 

 

  

Total

             —       

213

(—  

 

 
   

 

 

  

 

- 24 -


3.

Cash dividends distributed by MHFG are as follows:

 

(1)

Cash dividends paid during the six months ended September 30, 2019

 

Resolution

 

Type

 

Cash Dividends

(Millions of yen)

 Cash
Dividends

per Share
(Yen)
  

Record Date

 

Effective Date

May 15, 2019

 

The Board of Directors

 Common Stock  95,197  3.75  March 31, 2019 June 4, 2019

 

(Notes)   1.  Cash dividends based on the resolution of the Board of Directors held on May 15, 2019 include ¥70 million of cash dividends on treasury stock held by BBT trust account.
   2.      MHFG adopted the share consolidation of the shares of common stock on the basis of one post-consolidation share per ten pre-consolidation shares effective as of October 1, 2020. Cash Dividends per Share is recorded at the amount before the share consolidation.

 

(2)

Cash dividends with record dates falling in the six months ended September 30, 2019 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, 2019

 

The Board of Directors

 Common Stock 95,208 Retained Earnings  3.75  September 30, 2019 December 6, 2019

 

(Notes)   1.  Cash dividends based on the resolution of the Board of Directors held on November 14, 2019 include ¥73 million of cash dividends on treasury stock held by BBT trust account.
   2.      MHFG adopted the share consolidation of the shares of common stock on the basis of one post-consolidation share per ten pre-consolidation shares effective as of October 1, 2020. Cash Dividends per Share is recorded at the amount before the share consolidation.

 

- 25 -


For the six months ended September 30, 2020

 

1.

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

 

   (Thousands of shares) 
   As of
April 1, 2020
   Increase during
the period
   Decrease during
the period
   As of
September 30, 2020
   Remarks 

Issued Shares

          

Common Stock

   25,392,498    —      —      25,392,498   
  

 

 

   

 

 

   

 

 

   

 

 

   

Total

   25,392,498    —      —      25,392,498   
  

 

 

   

 

 

   

 

 

   

 

 

   

Treasury Stock

          

Common Stock

   32,106    14,344    7,768    38,683    (Note
  

 

 

   

 

 

   

 

 

   

 

 

   

Total

   32,106    14,344    7,768    38,683   
  

 

 

   

 

 

   

 

 

   

 

 

   

 

(Note)

   Increases are due to acquisition of treasury stock by BBT trust account (10,958 thousand shares), and repurchase of shares constituting less than one unit and other factors (3,386 thousand shares). Decreases are due to distribution and sale of treasury stock through BBT trust account (5,030 thousand shares), exercise of stock acquisition rights (stock options) (420 thousand shares) and other factors. The number of shares as of September 30, 2020 includes the number of treasury stock held by BBT trust account (25,564 thousand shares).

 

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,
2020

(Millions of yen)
  Remarks 
  As of
April 1,
2020
  Increase
during the
period
  Decrease
during the
period
  As of
September 30,
2020
 

MHFG

  Stock acquisition rights (Treasury stock acquisition rights)   —      

—  

(—  

 

  

—  

(—  

 

  

—  

(—  

 

  

—  

(—  

 

  

—  

(—  

 

 
  Stock acquisition rights as stock option             —       134  

Consolidated subsidiaries (Treasury stock acquisition rights)

               —       

—  

(—  

 

 
          

 

 

  

Total

               —       

134

(—  

 

 
          

 

 

  

 

- 26 -


3.

Cash dividends distributed by MHFG are as follows:

 

(1)

Cash dividends paid during the six months ended September 30, 2020

 

Resolution

 

Type

 

Cash Dividends

(Millions of yen)

 

Cash

Dividends

per Share

(Yen)

 

Record Date

 

Effective Date

May 15, 2020

 

The Board of Directors

 Common Stock  95,208 3.75 March 31, 2020 June 8, 2020

 

(Notes)

  1.  Cash dividends based on the resolution of the Board of Directors held on May 15, 2020 include ¥73 million of cash dividends on treasury stock held by BBT trust account.
  2.  MHFG adopted the share consolidation of the shares of common stock on the basis of one post-consolidation share per ten pre-consolidation shares effective as of October 1, 2020. Cash Dividends per Share is recorded at the amount before the share consolidation.

 

(2)

Cash dividends with record dates falling in the six months ended September 30, 2020 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 12, 2020

 

The Board of Directors

 Common Stock 95,209 Retained Earnings 3.75 September 30, 2020 December 7, 2020

 

(Notes)

  1.  Cash dividends based on the resolution of the Board of Directors held on November 12, 2020 include ¥95 million of cash dividends on treasury stock held by BBT trust account.
  2.  MHFG adopted the share consolidation of the shares of common stock on the basis of one post-consolidation share per ten pre-consolidation shares effective as of October 1, 2020. Cash Dividends per Share is recorded at the amount before the share consolidation.

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, 2019
   For the six months ended
September 30, 2020
 

Cash and Due from Banks

   43,444,902    42,498,278 

Due from Banks excluding central banks

   (903,852   (1,125,902
  

 

 

   

 

 

 

Cash and Cash Equivalents

   42,541,050    41,372,376 
  

 

 

   

 

 

 

 

- 27 -


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, 2020   As of September 30, 2020 

Due in One Year or Less

   51,062    53,852 

Due after One Year

   241,446    277,002 
  

 

 

   

 

 

 

Total

   292,508    330,855 
  

 

 

   

 

 

 

 

(2)

Lessors:

 

   (Millions of yen) 
   As of March 31, 2020   As of September 30, 2020 

Due in One Year or Less

   790    1,070 

Due after One Year

   6,867    7,896 
  

 

 

   

 

 

 

Total

       7,657        8,967 
  

 

 

   

 

 

 

 

- 28 -


Financial Instruments

 

1.

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. Stocks and others without a quoted market price and Investments in Partnerships and others are excluded from the table below (see (Note 1)). In addition, notes concerning Cash and Due from Banks, Call Loans and Bills Purchased, Receivables under Resale Agreements, Guarantee Deposits Paid under Securities Borrowing Transactions, Call Money and Bills Sold, Payables under Repurchase Agreements, Guarantee Deposits Received under Securities Lending Transactions, and Due to Trust Accounts are omitted since these instruments are mainly settled in the short term and the fair values approximate the book values.

As of March 31, 2020

 

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

(1)   Other Debt Purchased

   2,688,273   2,688,383    109 

(2)   Trading Assets

     

     Trading Securities

   5,377,182   5,377,182    —   

(3)   Money Held in Trust

   409,524   409,524    —   

(4)   Securities

     

     Bonds Held to Maturity

   860,233   875,329    15,096 

     Other Securities

   33,026,789   33,026,789    —   

(5)   Loans and Bills Discounted

   83,468,185    

     Reserves for Possible Losses on Loans (*1)

   (386,686   
  

 

 

  

 

 

   

 

 

 
   83,081,498   84,254,484    1,172,985 
  

 

 

  

 

 

   

 

 

 

Total Assets

   125,443,502   126,631,694    1,188,191 
  

 

 

  

 

 

   

 

 

 

(1)   Deposits

   131,189,673   131,196,960    7,287 

(2)   Negotiable Certificates of Deposit

   13,282,561   13,281,929    (632

(3)   Trading Liabilities

     

     Securities Sold, Not yet Purchased

   2,213,074   2,213,074    —   

(4)   Borrowed Money

   5,209,947   5,148,053    (61,894

(5)   Bonds and Notes

   8,906,432   8,847,784    (58,647
  

 

 

  

 

 

   

 

 

 

Total Liabilities

   160,801,689   160,687,801    (113,887
  

 

 

  

 

 

   

 

 

 

 

- 29 -


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

Derivative Transactions (*2)

     

Derivative Transactions not Qualifying for Hedge Accounting

   367,402                      

Derivative Transactions Qualifying for Hedge Accounting

   357,953    
  

 

 

  

 

 

   

 

 

 

Total Derivative Transactions

           725,356           725,356    —    
  

 

 

  

 

 

   

 

 

 

 

(*1)

General and specific reserves for possible losses on loans relevant to Loans and Bills Discounted are excluded.

(Change in Presentation)

While the reserves for items other than Loans and Bills Discounted were directly written off against the consolidated balance sheet amounts due to immateriality in the fiscal year ended March 31, 2020, these items are recorded at the consolidated balance sheet amounts without write-off of the reserves from the interim period ended September 30, 2020.

(*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.

 

- 30 -


As of September 30, 2020

 

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

(1)   Other Debt Purchased

   2,676,047   2,676,228    180 

(2)   Trading Assets

     

     Trading Securities

   7,798,622   7,798,622    —   

(3)   Money Held in Trust

   469,518   469,518    —   

(4)   Securities

     

     Bonds Held to Maturity

   788,395   812,148    23,753 

     Other Securities

   41,297,399   41,297,399    —   

(5)   Loans and Bills Discounted

   86,501,633    

     Reserves for Possible Losses on Loans (*1)

   (437,494   
  

 

 

  

 

 

   

 

 

 
   86,064,138   87,273,084    1,208,946 
  

 

 

  

 

 

   

 

 

 

Total Assets

   139,094,121   140,327,002    1,232,880 
  

 

 

  

 

 

   

 

 

 

(1)   Deposits

   134,665,825   134,679,962    14,136 

(2)   Negotiable Certificates of Deposit

   14,201,308   14,201,351    42 

(3)   Trading Liabilities

     

     Securities Sold, Not yet Purchased

   2,339,729   2,339,729    —   

(4)   Borrowed Money

   7,275,166   7,264,578    (10,587

(5)   Bonds and Notes

   9,639,781   9,878,597    238,815 
  

 

 

  

 

 

   

 

 

 

Total Liabilities

   168,121,811   168,364,219    242,407 
  

 

 

  

 

 

   

 

 

 

Derivative Transactions (*2)

     

Derivative Transactions not Qualifying for Hedge Accounting

   376,295    

Derivative Transactions Qualifying for Hedge Accounting

   261,065    
  

 

 

  

 

 

   

 

 

 

Total Derivative Transactions

          637,360           637,360              —    
  

 

 

  

 

 

   

 

 

 

 

(*1)

General and specific reserves for possible losses on loans relevant to Loans and Bills Discounted are excluded. Items other than Loans and Bills Discounted are recorded at the interim consolidated balance sheet amounts due to immateriality of their reserves.

(*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.

 

- 31 -


(Note 1)

The following are the interim consolidated balance sheet amounts (the consolidated balance sheet amounts) of Stocks and others without a quoted market price, and Investments in Partnerships and others. These amounts are not included in Money Held in Trust and Other Securities in fair value information of financial instruments.

 

(Millions of yen)

 

Category

  As of March 31, 2020   As of September 30, 2020 

Stocks and others without a quoted market price (*1)

   451,348    634,234 

Investments in Partnerships and others (*2)

   238,797    256,431 

 

 *1

Stocks and others without a quoted market price include unlisted stocks and others and in accordance with Article 5 of “Implementation Guidance on Disclosures about Fair Value of Financial Instruments” (ASBJ Guidance No.19, July 4, 2019), these items are not subject to disclosure of the fair value.

 *2

Investments in Partnerships and others are mainly silent partnership, investment partnership, and money held in trust with the investment in a silent partnership as the component of the trust property. In accordance with Article 27 of “Implementation Guidance on Accounting Standard for Fair Value Measurement” (ASBJ Guidance No.31, July 4, 2019), these items are not subject to disclosure of the fair value.

   3

During the fiscal year ended March 31, 2020, the amount of impairment (devaluation) was ¥2,221 million on a consolidated basis. During the six months ended September 30, 2020, the amount of impairment (devaluation) was ¥1,780 million on a consolidated basis.

 

2.

Matters relating to breakdown of fair value of financial instruments by level

Fair values of financial instruments are categorized into three levels as below on the basis of the observability and the materiality of the valuation inputs used in fair value measurements.

Fair values of Level 1: Fair values measured by quoted prices of the assets or liabilities being measured which are given in active markets among observable valuation inputs

Fair values of Level 2: Fair values measured by inputs other than inputs included within Level 1 among observable valuation inputs

Fair values of Level 3: Fair values measured by unobservable valuation inputs

When several inputs that have significant impact on fair value measurement are used and those inputs are categorized into different levels, the fair value is categorized into the lowest priority level for fair value measurement among the levels in which each of the inputs belongs.

 

- 32 -


(1)

Financial instruments recorded at fair value in the interim consolidated balance sheet

As of September 30, 2020

 

   (Millions of yen) 

Category

  Fair Value 
  Level 1   Level 2   Level 3   Total 

Other Debt Purchased

   —      50,322    207,558    257,880 

Trading Assets

        

Trading Securities

        

Japanese Government Bonds

   3,141,936    10,640    —      3,152,577 

Japanese Local Government Bonds

   —      129,250    —      129,250 

Japanese Corporate Bonds

   2,268    1,477,064    798    1,480,132 

Stocks

   132,496    —      225    132,722 

Other

   766,015    1,891,751    78,154    2,735,920 

Money Held in Trust

   —      463,260    3    463,263 

Securities

        

Other Securities

        

Stocks

   2,573,746    —      8,052    2,581,799 

Japanese Government Bonds

   19,600,482    319,880    —      19,920,362 

Japanese Local Government Bonds

   —      407,183    —      407,183 

Japanese Corporate Bonds

   —      635,737    2,144,487    2,780,224 

Foreign Bonds

   6,312,706    6,109,046    877,711    13,299,464 

Other

   43,822    2,756    15,868    62,447 

Derivative Transactions

        

Interest Rate and Bond-Related Transactions

   23,041    6,134,610    16,301    6,173,952 

Currency-Related Transactions

   —      2,123,994    20,925    2,144,920 

Stocks-Related Transactions

   95,299    286,614    74,522    456,436 

Commodity-Related Transactions

   —      11,293    15,221    26,515 

Credit Derivative Transactions

   —      52,836    4,234    57,071 
  

 

 

   

 

 

   

 

 

   

 

 

 

Total Assets

   32,691,816      20,106,243      3,464,066    56,262,125 
  

 

 

   

 

 

   

 

 

   

 

 

 

Trading Liabilities

        

Securities Sold, Not yet Purchased

   1,871,259    258,637    19,574    2,149,472 

Derivative Transactions

        

Interest Rate and Bond-Related Transactions

   19,189    5,688,575    10,702    5,718,467 

Currency-Related Transactions

   —      2,157,441    1,219    2,158,661 

Stocks-Related Transactions

   110,016    109,143    24,831    243,992 

Commodity-Related Transactions

   1,093    7,836    14,088    23,018 

Credit Derivative Transactions

   —      75,182    2,214    77,396 
  

 

 

   

 

 

   

 

 

   

 

 

 

Total Liabilities

   2,001,558    8,296,817    72,631      10,371,007 
  

 

 

   

 

 

   

 

 

   

 

 

 

 

(*)

Investment trust and others applying the transitional measures set forth in Article 6, Item 6 of “Cabinet Office Ordinance for Partial Revision of the Ordinance on the Terminology, Forms, and Preparation Methods of the financial statements” (Cabinet Office Ordinance No. 9 March 6, 2020) are not included in above table. The financial assets and liabilities of the relevant investment trust and others in the interim consolidated balance sheet is ¥2,413,937 million and ¥190,256 million.

 

- 33 -


(2)

Financial instruments other than financial instruments recorded at fair value in the interim consolidated balance sheet

As of September 30, 2020

 

   (Millions of yen) 

Category

  Fair Value 
  Level 1   Level 2   Level 3   Total 

Other Debt Purchased

   —      9,515    2,408,831    2,418,347 

Money Held in Trust

   —      —      6,254    6,254 

Securities

        

Bonds Held to Maturity

        

Japanese Government Bonds

        491,452    —      —      491,452 

Foreign Bonds

   —      320,696    —      320,696 

Loans and Bills Discounted

   —      —      87,273,084    87,273,084 

Total Assets

   491,452    330,212    89,688,171    90,509,835 

Deposits

   —      134,679,962    —      134,679,962 

Negotiable Certificates of Deposit

   —      14,201,351    —      14,201,351 

Borrowed Money

   —      7,179,075    85,503    7,264,578 

Bonds and Notes

   —      9,147,421    731,175    9,878,597 

Total Liabilities

   —      165,207,810    816,679    166,024,489 

 

- 34 -


(Note 1)

Explanation of valuation techniques and valuation inputs used in fair value measurements

Assets

Other Debt Purchased

Fair values of securitized products 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 and are categorized as Level 3 when significant unobservable valuation inputs are used for the obtained price and as Level 2 when other inputs are used.

With respect to other debt purchased other than those described above, when the present values of the expected future cash flows are considered to be fair values, those other debt purchased are mainly categorized as Level 3 since the discount rate and other significant valuation inputs are unobservable. When those are short term in nature and the book values are considered to be fair values, those other debt purchased are categorized as Level 3.

Trading Assets

Fair values of trading assets for which unadjusted quoted market prices in active markets are available are categorized as Level 1, which includes mainly government bonds.

In the case the market is inactive even if the quoted market price is available, those trading assets are categorized as Level 2, which includes mainly local government bonds and corporate bonds.

When fair vales are measured at the present value of the expected future cash flows and others using significant unobservable inputs, those trading assets are categorized as Level 3, which includes mainly bonds with warrants and trust beneficiary rights.

Money Held in Trust

With respect 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 stocks are measured at the price in stock exchanges and bonds are measured at market price or valuation price obtained from brokers or financial information vendors and are categorized as Level 2 or Level 3 based on the level of components.

The notes to Money Held in Trust based on holding purpose are stated in “Money Held in Trust.”

Securities

Fair values of securities for which unadjusted quoted market prices in active markets are available are categorized as Level 1 which includes mainly stocks and government bonds. In the case the market is inactive even if the quoted market price is available, those securities are categorized as Level 2, which includes mainly local government bonds and corporate bonds.

Fair values of investment trusts are measured at the disclosed net asset value and others. Those are not categorized into Levels by applying the transitional measures set forth in Article 26 of “Implementation Guidance on Accounting Standard for Fair Value Measurements.”

Fair values of private placement bonds are measured 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 based on the internal ratings and terms and are categorized as Level 3 since the discount rate is unobservable.

Fair values of securitized products are based on valuations obtained from brokers and others, and reasonably measured prices based on the reasonable estimates of our management and are categorized as Level 3 when significant unobservable valuation inputs are used and as Level 2 when other inputs are used. In deriving reasonably measured 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, prepayment rates, and discount rates.

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

Loans and Bills Discounted

Fair values of loans and bills discounted are measured 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 types, internal ratings and terms of the loans and bills discounted and are categorized as Level 3 since the discount rate is unobservable.

In addition, fair values of claims against bankrupt obligors, substantially bankrupt obligors, and intensive control obligors whose bad debts are measured at the present value of the expected future cash flows or the estimated amounts calculated based on the recoverability from collateral and guarantees approximate the amount of claims 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 those amount are considered to be fair values which are categorized as Level 3.

 

- 35 -


Among 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, book values are considered to be fair values since fair values are expected to approximate book values based on the estimated loan periods, interest rates and other conditions. Fair values of those loans and bills discounted are categorized as Level 3.

Liabilities

Deposits and Negotiable Certificates of Deposit

For demand deposits, the payment amounts required on the interim consolidated balance sheet date (the consolidated balance sheet date) (i.e., book values) are considered to be fair values.

In addition, fair values of time 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 market interest rates. Since fair values of those whose deposit terms are short (i.e., within six months) approximate book values, the book values are considered to be fair values and those fair values are categorized as Level 2.

Trading Liabilities

Fair values of trading liabilities for which unadjusted quoted market prices in active markets are available are categorized as Level 1, which includes mainly listed stocks and government bonds.

In the case the market is inactive even if the quoted market price is available, those trading liabilities are categorized as Level 2, which includes mainly corporate bonds.

When significant unobservable inputs are used, those trading liabilities are categorized as Level 3.

Borrowed Money

Fair values of borrowed money are measured mainly by discounting the total amount of the principal and interest of such borrowed money classified by period lengths at the interest rates considered to be applicable to similar loans and are categorized as Level 3 when the impact from unobservable valuation inputs is significant and as Level 2 when it is not significant.

Bonds and Notes

With respect to bonds and notes issued by MHFG and its consolidated subsidiaries, fair values of bonds and notes with market prices are measured at the market prices and fair values of those without market prices are calculated by discounting the total amount of the principal and interest at the interest rates considered to be applicable to similar bonds and notes. Bonds and notes with market prices are categorized as Level 2. Those without market prices are categorized as Level 3 when the impact from unobservable valuation inputs is significant and as Level 2 when it is not significant.

Derivative Transactions

Derivative transactions that can be measured at unadjusted quoted prices in active markets are categorized as Level 1, which includes such transactions as bonds futures and interest rate futures.

However, since most derivative transactions are over-the-counter transactions and there are no quoted market prices, market values are measured using valuation techniques such as the discounted cash flow method and the Black-Scholes model, depending on the type of transaction and the maturity period. The main inputs which are used in those valuation techniques are interest rate, currency rate, volatility and others. In addition, price adjustments based on counterparty’s credit risk and consolidated subsidiary’s own credit risk and price adjustments for unsecured funding are made. When unobservable inputs are not used or impact of unobservable inputs are not material, transactions are categorized as Level 2, which includes such transactions as plain vanilla interest rate swaps and foreign exchange forwards. When significant unobservable inputs are used, transactions are categorized as Level 3, which includes transactions such as commodity related transactions.

 

- 36 -


(Note 2)

Information relating to fair values of Level 3 among the financial instruments recorded at fair value in the interim consolidated balance sheet

 

(1)

Quantitative information of significant unobservable valuation inputs

As of September 30, 2020

 

Category

  

Principal valuation
technique

  

Significant unobservable
valuation input

  

Range of valuation
input

   

Weighted average

 

Other Debt Purchased

        

Securitized products

  Discounted cash flow method  Prepayment rate   0.9% — 15.6%    6.2% 
  Default rate   0.0% — 1.1%    0.8% 
  Discount rate   0.0% — 1.7%    0.3% 

Trading Assets

        

Trading Securities

  Discounted cash flow method  Discount rate   0.9% — 6.9%    4.4% 

Securities

        

Japanese Corporate Bonds

        

Private placement bonds

  Discounted cash flow method  Discount rate   0.0% — 6.5%    0.7% 

Foreign Bonds

        

Securitized products

  Discounted cash flow method  Prepayment rate   5.2% — 22.1%    21.9% 
  Default rate   0.4% — 2.5%    1.2% 
  Recovery rate   10.0% — 69.1%    67.1% 
  Discount rate   0.5% — 1.7%    1.4% 

Other

  Discounted cash flow method  Discount rate   0.0% — 5.0%    0.3% 

Trading Liabilities

        

Securities Sold, Not yet Purchased

  Discounted cash flow method  Discount rate   1.5%    1.5% 

Derivative Transactions

        

Interest Rate and Bond-Related Transactions

  Option valuation model  IR — IR correlation   23.1% — 100.0%    —   
  Default rate   0.0% — 62.6%    —   

Currency-Related Transactions

  Option valuation model  FX — IR correlation   (26.6)% — 51.7%    —   
  FX — FX correlation   46.0% — 63.2%    —   
  Default rate   0.0% — 62.6%    —   

Stocks-Related Transactions

  Option valuation model  Equity — IR correlation   25.0%    —   
  Equity —FX correlation   (32.5)% — 100.0%    —   
  Equity correlation   0.0% — 100.0%    —   
  Equity volatility   11.6% — 96.2%    —   

Commodity-Related Transactions

  Option valuation model  Commodity volatility   0.0% — 57.0%    —   

Credit Derivative Transactions

  Discounted cash flow method  Default rate   0.0% — 6.9%    —   
  Credit correlation   18.1% — 100.0%    —   

 

- 37 -


(2)

Adjustment sheet from beginning balance to ending balance as of interim period and unrealized gains (losses) recognized as gains (losses) for the period

As of September 30, 2020

 

  (Millions of yen) 
  Beginning
balance
  

 

Gains(losses) for the period/ other
comprehensive income

  Net amount
of purchase,
sale, issue,
and
settlement
  Transfer to
fair values

of Level 3
(*3)
  Transfer from
fair values of
Level 3

(*4)
  Ending
balance as of
interim period
  Unrealized
gains (losses)
on financial
assets and
liabilities

held as of
the interim
consolidated
balance sheet

date among
the amount
recorded to

gains (losses)
for the period
(*1)
 
  Recorded to
gains(losses) for
the period (*1)
  Recorded to other
comprehensive
income

(*2)
 

Other Debt Purchased

  151,219   (1  468   55,871   —     —     207,558   —   

Trading Assets

        

Trading Securities

        

Japanese Corporate Bonds

  797   1   —     —     —     —     798   1 

Stocks

  206   —     —     19   —     —     225   (172

Other

  156,666   947   —     (78,461  —     (999  78,154   761 

Money Held in Trust

  3   —     (0  0   —     —     3   —   

Securities

        

Other Securities

        

Stocks

  6,317   —     284   1,450   —     —     8,052   —   

Japanese Corporate Bonds

  2,201,133   (1,205  4,020   (59,462  —     —     2,144,487   —   

Foreign Bonds

  847,601   456   23,178   6,474   —     —     877,711   —   

Other

  18,663   (1,226  (308  (1,260  —     —     15,868   —   

Trading Liabilities

        

Securities Sold, Not yet Purchased

  232   (19  —     19,362   —     —     19,574   —   

Derivative Transactions

        

Interest Rate and Bond-Related Transactions

  7,696   (8,862  —     6,765   —     —     5,598   (6,441

Currency-Related Transactions

  16,277   4,177   —     (748  —     —     19,706   5,361 

Stocks-Related Transactions

  69,571   (27,236  —     7,355   —     —     49,690   (12,925

Commodity-Related Transactions

  1,240   182   —     (289  —     —     1,133   (325

Credit Derivative Transactions

  3,516   (1,790  —     6   1,052   (764  2,020   (2,660

 

- 38 -


(*1)

Those amounts are included in Other Operating Income and Other Operating Expenses in the interim consolidated statement of income.

(*2)

Those amounts are included in Net Unrealized Gains (Losses) on Other Securities of Other Comprehensive Income in the interim consolidated statement of comprehensive income.

(*3)

Those are the transfers from Level 2 to Level 3, due to changes in observability of valuation inputs which are used in fair value measurements based on market liquidity. The transfer was made on the beginning of the accounting period.

(*4)

Those are the transfers from Level 2 to Level 3, due to changes in observability of valuation inputs which are used in fair value measurements based on market liquidity. The transfer was made on the beginning of the accounting period.

 

- 39 -


(3)

Explanation of the process of fair value measurement

In MHFG, middle-offices and back-offices have established policies and procedures related to the measurement of fair values and procedures related to usage of the valuation model. For the fair values and the level categories, the validity of the valuation techniques and valuation inputs used in fair value measurement are verified.

In fair value measurement, valuation models in which the nature, characteristics and risks of individual assets are most appropriately reflected are used. In addition, when quoted prices obtained from third parties are used, the validity of the prices is verified by appropriate methods such as confirmation of valuation techniques and used valuation inputs and comparison with the fair values of similar financial instruments.

 

(4)

Explanation of the impact on fair values in the case where significant unobservable inputs are varied

Prepayment rate

The prepayment rate is the estimated rate at which voluntary unscheduled repayments of the principal of the underlying assets are expected to occur. The movement of the prepayment rate is generally negatively correlated with borrower delinquency. A significant change in the prepayment rate would significantly impact the valuation of the fair values of financial instruments either positively or negatively, depending on the structure of financial instruments.

Default rate

The default rate is an estimate of the likelihood of not collecting contractual payments. A significant increase (decrease) in the default rate would generally be accompanied by a decrease (increase) in the recovery rate and an increase (decrease) in the discount rate. It would also generally significantly impact the valuation of the fair values of financial instruments negatively (positively).

Recovery rate

The recovery rate is an estimate of the percentage of contractual payments that would be collected in the event of a default. A significant increase (decrease) in recovery rate would generally be accompanied by a decrease (increase) in the default rate. It would also generally significantly impact the valuation of the fair values of financial instruments positively (negatively).

Discount rate

The discount rate is an adjustment rate to a benchmark market interest rate such as LIBOR or swap rates. It primarily consists of a risk premium component which is the amount of compensation that market participants require due to the uncertainty inherent in the financial instruments’ cash flows resulting from credit risk. A significant increase (decrease) in discount rate would generally significantly impact the valuation of the fair values of financial instruments negatively (positively).

Correlation

Correlation is the likelihood of the movement of one input relative to another based on an established relationship. A significant change in correlation would significantly impact the valuation of derivatives either positively or negatively, depending on the nature of the underlying assets.

Volatility

Volatility is a measure of the expected change in variables over a fixed period of time. Some financial instruments benefit from an increase in volatility and others benefit from a decrease in volatility. Generally, a significant increase (decrease) in volatility would result in a significant increase (decrease) in option values and, for a long position in an option, it would result in a significant increase (decrease) in the fair values of financial instruments.

 

- 40 -


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, 2020

 

(Millions of yen)

   

Type

  

Consolidated Balance

Sheet Amount

  

Fair Value

  

Difference

Bonds Whose Fair Values Exceed the Consolidated Balance Sheet Amount

  Japanese Government Bonds  479,936  493,293  13,356 
  Foreign Bonds  263,600  265,711  2,110 
    

 

  

 

  

 

  

Sub-total

  743,537  759,004  15,467 
    

 

  

 

  

 

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

  Japanese Government Bonds  —    —    —    
  Foreign Bonds  116,696  116,325  (370)
    

 

  

 

  

 

  

Sub-total

  116,696  116,325  (370)
    

 

  

 

  

 

Total

  860,233  875,329  15,096 
    

 

  

 

  

 

 

As of September 30, 2020

 

        

(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  479,947  491,452  11,504 
  Foreign Bonds  308,447  320,696  12,248 
    

 

  

 

  

 

  

Sub-total

  788,395  812,148  23,753 
    

 

  

 

  

 

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

  Japanese Government Bonds  —    —    —    
  Foreign Bonds  —    —    —    
    

 

  

 

  

 

  

Sub-total

  —    —    —    
    

 

  

 

  

 

Total

  788,395  812,148  23,753 
    

 

  

 

  

 

 

- 41 -


2.

Other Securities

As of March 31, 2020

 

(Millions of yen)

 
   

Type

  Consolidated Balance
      Sheet Amount      
   Acquisition Cost   Difference 

Other Securities Whose Consolidated Balance Sheet Amount Exceeds Acquisition Cost

  Stocks   2,021,965    854,061          1,167,903 
  

Bonds

   5,670,266    5,640,229    30,037 
  

Japanese Government Bonds

   4,029,441    4,022,901    6,540 
  

Japanese Local Government Bonds

   73,989    73,340    649 
  

Japanese Corporate Bonds

   1,566,835    1,543,988    22,847 
  

Other

         12,003,615          11,657,947    345,668 
  

Foreign Bonds

   10,833,455    10,587,358    246,097 
  

Other Debt Purchased

   60,832    59,442    1,389 
  

Other

   1,109,326    1,011,146    98,180 
    

 

 

   

 

 

   

 

 

 
  

Sub-total

   19,695,847    18,152,237    1,543,609 
    

 

 

   

 

 

   

 

 

 

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

  Stocks   316,463    418,007    (101,543
  

Bonds

   10,032,246    10,116,384    (84,137
  

Japanese Government Bonds

   8,572,492    8,623,055    (50,562
  

Japanese Local Government Bonds

   198,578    199,072    (494
  

Japanese Corporate Bonds

   1,261,175    1,294,256    (33,081
  

Other

   3,293,071    3,479,852    (186,781
  

Foreign Bonds

   1,868,757    1,913,900    (45,142
  

Other Debt Purchased

   140,256    140,407    (150
  

Other

   1,284,056    1,425,544    (141,487
    

 

 

   

 

 

   

 

 

 
  

Sub-total

   13,641,781    14,014,244    (372,462
    

 

 

   

 

 

   

 

 

 

Total

   33,337,628    32,166,482    1,171,146 
    

 

 

   

 

 

   

 

 

 

 

(Note)

Unrealized Gains (Losses) includes ¥5,191 million which was recognized in the statement of income by applying the fair-value hedge method.

 

- 42 -


As of September 30, 2020

 

(Millions of yen)

 
  

Type

  Interim Consolidated
Balance Sheet Amount
   Acquisition Cost   Difference 

Other Securities Whose Interim Consolidated Balance Sheet Amount Exceeds Acquisition Cost

 Stocks   2,327,891    899,022          1,428,868 
 

Bonds

   12,797,854    12,769,584    28,270 
 

Japanese Government Bonds

         10,898,764         10,896,156    2,607 
 

Japanese Local Government Bonds

   177,107    176,350    756 
 

Japanese Corporate Bonds

   1,721,982    1,697,076    24,906 
 

Other

   10,609,376    10,385,648    223,728 
 

Foreign Bonds

   9,427,109    9,242,592    184,516 
 

Other Debt Purchased

   194,497    192,782    1,714 
 

Other

   987,769    950,272    37,497 
   

 

 

   

 

 

   

 

 

 
 

Sub-total

   25,735,122    24,054,254    1,680,867 
   

 

 

   

 

 

   

 

 

 

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

 Stocks   253,908    312,568    (58,660
 

Bonds

   10,309,916    10,388,748    (78,831
 

Japanese Government Bonds

   9,021,598    9,068,866    (47,268
 

Japanese Local Government Bonds

   230,076    230,522    (446
 

Japanese Corporate Bonds

   1,058,241    1,089,358    (31,116
 

Other

   5,421,575    5,503,408    (81,833
 

Foreign Bonds

   3,872,354    3,885,371    (13,016
 

Other Debt Purchased

   63,383    63,506    (123
 

Other

   1,485,836    1,554,529    (68,693
   

 

 

   

 

 

   

 

 

 
 

Sub-total

   15,985,399    16,204,725    (219,325
   

 

 

   

 

 

   

 

 

 

Total

    41,720,521    40,258,979    1,461,541 
   

 

 

   

 

 

   

 

 

 

 

(Note)

Unrealized Gains (Losses) includes ¥1,301 million which was recognized in the statement of income by applying the fair-value hedge method.

 

- 43 -


3.

Impairment (“Devaluation”) of Securities

Certain Securities other than Trading Securities (excluding Stocks and others without a quoted market price and Investments in Partnerships and others) are devalued to the fair value, and the difference between the acquisition cost and the fair value is treated as a loss for the six months ended September 30, 2020 (the fiscal year ended March 31, 2020) (impairment (devaluation)), if the fair value 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, 2020 was ¥41,655 million.

The amount of impairment (devaluation) for the six months ended September 30, 2020 was ¥63,950 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

 

- 44 -


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, 2020

 

   (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

   7,125    7,125    —      —      —   

 

(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, 2020

 

   (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

   8,018    8,018    —      —      —   

 

(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.”

 

- 45 -


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, 2020

 

   (Millions of yen) 
   Amount 

Difference between Acquisition Cost and Fair Value

   1,177,927 

Other Securities

   1,177,927 

(–) Deferred Tax Liabilities

   338,232 

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

   839,695 

(–) Amount Corresponding to Non-controlling Interests

   18,922 

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

   2,311 
  

 

 

 

Net Unrealized Gains (Losses) on Other Securities

   823,085 
  

 

 

 

 

(Notes)

  1.  The difference between acquisition cost and fair value excludes ¥5,191 million in losses which were recognized in the statement of income for the fiscal year ended March 31, 2020 by applying the fair-value hedge method.
  

2.

  “Other Securities” includes translation differences regarding Stocks and others without a quoted market price and Investments in Partnerships and others.

As of September 30, 2020

 

   (Millions of yen) 
   Amount 

Difference between Acquisition Cost and Fair Value

   1,464,873 

Other Securities

   1,464,873 

(–) Deferred Tax Liabilities

   412,842 

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

   1,052,030 

(–) Amount Corresponding to Non-controlling Interests

   16,199 

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

   2,950 
  

 

 

 

Net Unrealized Gains (Losses) on Other Securities

   1,038,781 
  

 

 

 

 

(Notes)

   1.   The difference between acquisition cost and fair value excludes ¥1,301 million in losses which were recognized in the statement of income for six months ended September 30, 2020 by applying the fair-value hedge method.
   2.   “Other Securities” includes translation differences regarding Stocks and others without a quoted market price and Investments in Partnerships and others.

 

- 46 -


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 and Bond-Related Transactions

As of March 31, 2020

 

(Millions of yen)

 

Classification

  

Type

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

Listed

  Interest Rate Futures                                                                                                               
  

Sold

   5,529,634    1,591,823    (31,113  (31,113
  

Bought

   5,887,309    2,471,820    35,315   35,315 
  Interest Rate Options       
  

Sold

   419,803    40,353    (1,901  (767
  

Bought

   757,178    29,771    2,961   1,352 
  Bond Futures       
  

Sold

   624,565    —      (11,223  (11,223
  

Bought

   625,248    —      6,551   6,551 
  Bond Futures Options       
  

Bought

   —      —      —     —   

Over-the-Counter

  FRAs       
  

Sold

   43,095,911    108,830    (27,342  (27,342
  

Bought

   39,476,804    108,830    29,903   29,903 
  Interest Rate Swaps       
  

Receive Fixed / Pay Float

   444,709,861    336,523,057    (9,755,139  (9,755,139
  

Receive Float / Pay Fixed

   431,142,776    326,305,878    10,260,575   10,260,575 
  

Receive Float / Pay Float

   121,038,451    95,223,531    46,160   46,160 
  

Receive Fixed / Pay Fixed

   329,536    313,093    (1,072  (1,072
  Interest Rate Options       
  

Sold

   13,056,382    7,542,710    (255,511  (255,511
  

Bought

   12,156,026    7,821,714    192,734   192,734 
  Bond Options       
  

Sold

   579,001    145,808    (2,593  (851
  

Bought

   577,602    145,808    4,993   3,096 
  Bond Other       
  

Sold

   —      —      —     —   
  

Bought

   15,585    —      422   422 

Inter-Company or Internal Transactions

  Interest Rate Swaps       
  

Receive Fixed / Pay Float

   4,718,469    4,347,933    131,693   131,693 
  

Receive Float / Pay Fixed

   13,413,792    12,916,374    (273,174  (273,174
    

 

 

   

 

 

   

 

 

  

 

 

 

Total

   —      —      352,242   351,611 
    

 

 

   

 

 

   

 

 

  

 

 

 

 

(Note)

  The above transactions are marked to market, and changes in unrealized gains (losses) are included in the consolidated statement of income.

 

- 47 -


As of September 30, 2020

 

(Millions of yen)

 

Classification

  

Type

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

Listed

  Interest Rate Futures                                                                                                               
  

Sold

   6,976,734    4,101,340    (19,483  (19,483
  

Bought

   6,797,910    3,279,414    23,119   23,119 
  Interest Rate Options       
  

Sold

   303,477    3,792    (121  21 
  

Bought

   956,823    —      218   (271
  Bond Futures       
  

Sold

   850,602    —      (1,728  (1,728
  

Bought

   657,830    —      1,410   1,410 
  Bond Futures Options       
  

Bought

   40,290    —      46   (3

Over-the-Counter

  FRAs       
  

Sold

   38,313,903    105,810    (7,974  (7,974
  

Bought

   37,730,831    105,810    8,035   8,035 
  Intersest Rate Swaps       
  

Receive Fixed / Pay Float

   417,242,767    314,341,563    5,811,145   5,811,145 
  

Receive Float / Pay Fixed

   411,283,772    306,587,930    (5,321,319  (5,321,319
  

Receive Float / Pay Float

   132,765,273    106,307,283    (11,009  (11,009
  

Receive Fixed / Pay Fixed

   339,849    285,230    (3,939  (3,939
  Interest Rate Options       
  

Sold

   13,347,258    9,082,714    (134,214  (134,214
  

Bought

   13,369,597    9,712,138    91,234   91,234 
  Bond Options       
  

Sold

   530,411    149,654    (3,809  (2,654
  

Bought

   563,199    149,654    3,751   2,285 
  Bond Other       
  

Sold

   2,126    —      (0  (0
  

Bought

   2,378    —      2   2 

Inter-Company or Internal Transactions

  Interest Rate Swaps       
  

Receive Fixed / Pay Float

   4,576,668    4,091,405    133,038   133,038 
  

Receive Float / Pay Fixed

   13,570,172    11,267,691    (275,248  (275,248
    

 

 

   

 

 

   

 

 

  

 

 

 

Total

   —      —      293,154   292,446 
  

 

 

   

 

 

   

 

 

  

 

 

 

 

(Note)

  The above transactions are marked to market, and changes in unrealized gains (losses) are included in the interim consolidated statement of income.

(Changes in Presentation)

With the enactment of “Accounting Standard for Fair Value Measurement” (ASBJ Statement No. 30, July 4, 2019) and other standards, interest rate-related transactions and bond-related transactions are presented as Interest Rate and Bond-Related Transactions from the interim period ended September 30, 2020.

 

- 48 -


(2)

Currency-Related Transactions

As of March 31, 2020

 

(Millions of yen)

 

Classification

  

Type

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

Listed

  Futures                                                                                                               
  

Sold

   13,092    329    —     —   
  

Bought

   48,893    14,608    —     —   

Over-the-Counter

  Swaps   57,638,817    43,894,609    1,219   (68,637
  Forwards       
  

Sold

   75,494,594    3,175,535    (199,399  (199,399
  

Bought

   37,624,376    1,697,421    242,910   242,910 
  Options       
  

Sold

   5,145,203   ��1,383,542    (82,922  (36,588
  

Bought

   4,805,185    1,114,200    67,035   13,026 

Inter-Company or Internal Transactions

  Swaps   2,858,190    1,991,772    (151,891  8,698 
  Forwards       
  

Sold

   101    —      0   0 
  

Bought

   7,026    —      19   19 
    

 

 

   

 

 

   

 

 

  

 

 

 

Total

   —      —      (123,027  (39,970
  

 

 

   

 

 

   

 

 

  

 

 

 

 

(Note)  The above transactions are marked to market, and changes in unrealized gains (losses) are included in the consolidated statement of income.

As of September 30, 2020

 

(Millions of yen)

 

Classification

  

Type

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

Listed

  Futures                                                                                                               
  

Sold

   13,297    1,085    —     —   
  

Bought

   51,854    16,438    —     —   

Over-the-Counter

  Swaps   60,774,685    46,332,699    37,928   (59,449
  Forwards       
  

Sold

   63,725,403    3,390,130    101,973   101,973 
  

Bought

   38,313,929    1,704,570    (118,994  (118,994
  Options       
  

Sold

   4,023,603    1,536,387    (47,327  (4,074
  

Bought

   3,496,863    1,386,418    41,267   (12,221

Inter-Company or Internal Transactions

  Swaps   2,476,136    1,942,018    (108,963  15,741 
  Forwards       
  

Sold

   —      —      —     —   
  

Bought

   977    —      (13  (13
    

 

 

   

 

 

   

 

 

  

 

 

 

Total

   —      —      (94,129  (77,038
  

 

 

   

 

 

   

 

 

  

 

 

 

 

(Note)  The above transactions are marked to market, and changes in unrealized gains (losses) are included in the interim consolidated statement of income.

 

- 49 -


(3)

Stock-Related Transactions

As of March 31, 2020

 

(Millions of yen)

 

Classification

  

Type

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

Listed

  Index Futures                                                                                                               
  

Sold

   251,436    22,541    (3,119  (3,119
  

Bought

   425,430    22,852    10,721   10,721 
  Index Futures Options       
  

Sold

   2,170,366    464,262    (155,113  (49,255
  

Bought

   1,906,816    383,082    146,827   40,266 

Over-the-Counter

  Equity Linked Swaps   471,137    374,198    91,888   91,888 
  Options       
  

Sold

   476,111    217,740    (50,480  (50,480
  

Bought

   225,048    59,822    57,065   57,065 
  Other       
  

Sold

   13,676    13,676    237   237 
  

Bought

   429,384    296,005    28,439   28,439 
    

 

 

   

 

 

   

 

 

  

 

 

 

Total

   —      —      126,467   125,764 
  

 

 

   

 

 

   

 

 

  

 

 

 

 

(Note)

  The above transactions are marked to market, and changes in unrealized gains (losses) are included in the consolidated statement of income.

As of September 30, 2020

 

(Millions of yen)

 

Classification

  

Type

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

Listed

  Index Futures                                                                                                               
  

Sold

   583,790    90,718    (6,181  (6,181
  

Bought

   736,780    —      (1,201  (1,201
  Index Futures Options       
  

Sold

   1,733,397    610,298    (139,391  (42,652
  

Bought

   1,468,631    527,200    111,388   26,366 

Over-the-Counter

  Equity Linked Swaps   739,288    535,233    60,003   60,003 
  Options       
  

Sold

   406,023    236,246    (61,417  (61,417
  

Bought

   193,545    76,826    78,086   78,086 
  Other       
  

Sold

   147,557    147,557    (20,586  (20,586
  

Bought

   589,886    467,594    173,399   173,399 
    

 

 

   

 

 

   

 

 

  

 

 

 

Total

   —      —      194,098   205,815 
  

 

 

   

 

 

   

 

 

  

 

 

 

 

(Note)

  The above transactions are marked to market, and changes in unrealized gains (losses) are included in the interim consolidated statement of income.

 

- 50 -


(4)

Commodity-Related Transactions

As of March 31, 2020

 

(Millions of yen)

 

Classification

  

Type

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

Listed

  Futures                                                                                                               
  

Sold

   13,086    6,097    3,098   3,098 
  

Bought

   24,556    13,371    (5,794  (5,794

Over-the-Counter

  Options       
  

Sold

   172,561    73,050    30,337   30,337 
  

Bought

   161,781    65,707    (25,017  (25,017
    

 

 

   

 

 

   

 

 

  

 

 

 

Total

     —      —      2,623   2,623 
  

 

 

   

 

 

   

 

 

  

 

 

 

 

(Notes)  1.  The above transactions are marked to market, and changes in unrealized gains (losses) are included in the consolidated statement of income.
  2.  Commodities include oil, copper, aluminum and others.

As of September 30, 2020

 

(Millions of yen)

 

Classification

  

Type

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

Listed

  Futures                                                                                                               
  

Sold

   29,355    11,723    1,880   1,880 
  

Bought

   37,034    21,960    (2,973  (2,973

Over-the-Counter

  Options       
  

Sold

   161,001    70,415    11,084   11,084 
  

Bought

   148,729    60,095    (6,493  (6,493
    

 

 

   

 

 

   

 

 

  

 

 

 

Total

     —      —      3,497   3,497 
  

 

 

   

 

 

   

 

 

  

 

 

 

 

(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.  Commodities include oil, copper, aluminum and others.

 

- 51 -


(5)

Credit Derivative Transactions

As of March 31, 2020

 

(Millions of yen)

 

Classification

  

Type

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

Over-the-Counter

  Credit Derivatives                                                                                                               
  

Sold

   1,815,742    1,545,558    (4,725  (4,725
  

Bought

   3,022,474    2,712,677    13,821   13,821 
    

 

 

   

 

 

   

 

 

  

 

 

 

Total

     —      —      9,096   9,096 
    

 

 

   

 

 

   

 

 

  

 

 

 

 

(Notes)  1.  The above transactions are marked to market, and changes in unrealized gains (losses) are included in the consolidated statement of income.
  2.  “Sold” and “Bought” indicate assumption and cession of credit risk, respectively.

As of September 30, 2020

 

(Millions of yen)

 

Classification

  

Type

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

Over-the-Counter

  Credit Derivatives                                                                                                               
  

Sold

   3,217,071    2,983,790    44,705   44,705 
  

Bought

   4,688,649    4,385,439    (65,030  (65,030
    

 

 

   

 

 

   

 

 

  

 

 

 

Total

     —      —      (20,325  (20,325
    

 

 

   

 

 

   

 

 

  

 

 

 

 

(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.  “Sold” and “Bought” indicate assumption and cession of credit risk, respectively.

 

- 52 -


Business Segment Information, etc.

Business Segment Information

 

1.

Summary of reportable segment

MHFG has introduced an in-house company system based on the group’s diverse customer segments. The aim of this system is to leverage MHFG’s strengths and competitive advantage, which is the seamless integration of MHFG’s banking, trust and securities functions under a holding company structure, to speedily provide high-quality financial services that closely match customer needs.

Specifically, the company system is classified into the following five in-house companies, each based on a customer segment: the Retail & Business Banking Company, the Corporate & Institutional Company, the Global Corporate Company, the Global Markets Company, and the Asset Management Company.

The services that each in-house company is in charge of are as follows:

Retail & Business Banking Company:

Services for individual customers, small and medium-sized enterprises and middle market firms in Japan

Corporate & Institutional Company:

Services for large corporations, financial institutions and public corporations in Japan

Global Corporate Company:

Services for Japanese overseas affiliated corporate customers and non-Japanese corporate customers, etc.

Global Markets Company:

Investment services with respect to interest rates, equities and credits, etc. and other services

Asset Management Company:

Development of products and provision of services that match the asset management needs of its wide range of customers from individuals to institutional investors

The reportable segment information, set forth below, is derived from the internal management reporting systems used by management to measure the performance of the Group’s operating segments. Management measures the performance of each of the operating segments in accordance with internal managerial accounting rules and practices.

 

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2.

Calculating method of Gross profits (excluding the amounts of credit costs of trust accounts) + Net gains or losses related to ETFs and others, Net business profits or losses (excluding the amounts of credit costs of trust accounts, before reversal of (provision for) general reserve for losses on loans) + Net gains or losses related to ETFs and others, and Fixed assets by reportable segment

The following information of reportable segment is based on internal management reporting.

Gross profits (excluding the amounts of credit costs of trust accounts) + Net gains or losses related to ETFs and others is the total amount of Interest Income, Fiduciary Income, Fee and Commission Income, Trading Income, Other Operating Income and Net gains or losses related to ETFs and others.

Net business profits or losses (excluding the amounts of credit costs of trust accounts, before reversal of (provision for) general reserve for losses on loans) + Net gains or losses related to ETFs and others is the amount of which General and administrative expenses (excluding non-recurring expenses and others), Equity in income from investments in affiliates, Amortization of goodwill and others (including amortization of intangible assets), and Others (consolidation adjustments) are deducted from, or added to, Gross profits (excluding the amounts of credit costs of trust accounts) + Net gains or losses related to ETFs and others.

Gross profits (excluding the amounts of credit costs of trust accounts) + Net gains or losses related to ETFs and others relating to transactions between segments is based on the current market price.

Fixed assets disclosed as asset information by segment are the total amount of tangible fixed assets and intangible fixed assets. Fixed assets pertaining to Mizuho Bank, Ltd., Mizuho Trust & Banking Co., Ltd., and Mizuho Securities Co.,Ltd. have been allocated to each segment.

 

- 54 -


3.

Gross profits (excluding the amounts of credit costs of trust accounts) + Net gains or losses related to ETFs and others, Net business profits or losses (excluding the amounts of credit costs of trust accounts, before reversal of (provision for) general reserve for losses on loans) + Net gains or losses related to ETFs and others, and Fixed assets by reportable segment

For the six months ended September 30, 2019

 

   (Millions of yen) 
   MHFG (Consolidated) 
  Retail &
Business
Banking
Company
  Corporate &
Institutional
Company
   Global
Corporate
Company
   Global
Markets
Company
   Asset
Management
Company
   Others
(Note 2)
    

Gross profits: (excluding the amounts of credit costs of trust accounts) + Net gains or losses related to ETFs and others

   321,978   220,192    203,855    235,061    25,448    16,231     1,022,765 

General and administrative expenses (excluding Non-Recurring Losses and others)

   330,705   104,026    118,613    101,394    16,402    17,291   688,431 

Equity in income from investments in affiliates

   6,430   1,076    6,034    —      532    5,037   19,109 

Amortization of goodwill and others

   1,413   62    180    525    3,887    554   6,621 

Others

   —     —      —      —      —      (5,942  (5,942

Net business profits or losses (excluding the amounts of credit costs of trust accounts, before reversal of (provision for) general reserve for losses on loans) + Net gains or losses related to ETFs and others

   (3,710  117,180    91,096    133,142    5,691    (2,519  340,879 

Fixed assets

   508,243   208,438    160,151    92,751    87    731,964   1,701,634 

 

(Notes)  1.  “Gross profits (excluding the amounts of credit costs of trust accounts) + Net gains or losses related to ETFs and others” is reported instead of sales reported by general corporations. Net gains or losses related to ETFs and others amounted to ¥ (7,956) million, of which ¥ (11,208) million is included in the Global Markets Company.
  2.  “Others” includes items which should be eliminated as internal transactions between each segment on a consolidated basis.
  3.  

“Others” in Fixed assets includes assets of headquarters that have not been allocated to each segment, Fixed assets pertaining to consolidated subsidiaries that are not subject to allocation, consolidated adjustments, and others.

Among Fixed assets that have not been allocated to each segment, some related expenses are allocated to each segment using reasonable criteria of allocation.

  4.  Following the change in allocation method for transactions between each segment and “Others” made in April, 2020, reclassification was made on the above table to reflect the relevant change.

 

- 55 -


For the six months ended September 30, 2020

 

   (Millions of yen) 
   MHFG (Consolidated) 
  Retail &
Business
Banking
Company
  Corporate &
Institutional
Company
   Global
Corporate
Company
   Global
Markets
Company
   Asset
Management
Company
   Others
(Note 2)
    

Gross profits: (excluding the amounts of credit costs of trust accounts) + Net gains or losses related to ETFs and others

   307,377   234,191    222,567    291,551    23,597    14,035     1,093,318  

General and administrative expenses (excluding Non-Recurring Losses and others)

   314,962   104,666    121,433    105,631    15,664    16,980   679,336 

Equity in income from investments in affiliates

   3,613   2,402    5,905    —      382    (742  11,559 

Amortization of goodwill and others

   1,128   50    180    419    3,821    500   6,098 

Others

   —     —      —      —      —      —     —   

Net business profits or losses (excluding the amounts of credit costs of trust accounts, before reversal of (provision for) general reserve for losses on loans) + Net gains or losses related to ETFs and others

   (5,100  131,877    106,859    185,501    4,494    (4,187  419,443 

Fixed assets

   518,507   186,331    157,043    90,866    86    768,477   1,721,310 

 

(Notes)

   1.   “Gross profits (excluding the amounts of credit costs of trust accounts) + Net gains or losses related to ETFs and others” is reported instead of sales reported by general corporations. Net gains or losses related to ETFs and others amounted to ¥ (19,005) million, of which ¥ (20,380) million is included in the Global Markets Company.
   2.   “Others” includes items which should be eliminated as internal transactions between each segment on a consolidated basis.
   3.   

“Others” in Fixed assets includes assets of headquarters that have not been allocated to each segment, Fixed assets pertaining to consolidated subsidiaries that are not subject to allocation, consolidated adjustments, and others.

Among Fixed assets that have not been allocated to each segment, some related expenses are allocated to each segment using reasonable criteria of allocation.

 

- 56 -


4.

The difference between the total amounts of reportable segments and the recorded amounts in the Interim Consolidated Statement of Income, and the contents of the difference (Matters relating to adjustment to difference)

The above amount of Gross profits (excluding the amounts of credit costs of trust accounts) + Net gains or losses related to ETFs and others and that of Net business profits (excluding the amounts of credit costs of trust accounts, before reversal of (provision for) general reserve for losses on loans) + Net gains or losses related to ETFs and others derived from internal management reporting by reportable segment are different from the amounts recorded in the Interim Consolidated Statement of Income.

The contents of the difference for the period are as follows:

 

 (1)

The total of Gross profits (excluding the amounts of credit costs of trust accounts) + Net gains or losses related to ETFs and others of Segment Information and Ordinary Profits

 

   (Millions of yen) 
   For the six months ended
September 30, 2019
   For the six months ended
September 30, 2020
 

Gross profits: (excluding the amounts of credit costs of trust accounts) + Net gains or losses related to ETFs and others

   1,022,765    1,093,318 

Net gains or losses related to ETFs and others

   7,956    19,005 

Other Ordinary Income

   117,699    63,736 

General and Administrative Expenses

   (670,592   (681,287

Other Ordinary Expenses

   (81,357   (227,161
  

 

 

   

 

 

 

Ordinary Profits

   396,471    267,610 
  

 

 

   

 

 

 

 

 (2)

The total of Net business profits (excluding the amounts of credit costs of trust accounts, before reversal of (provision for) general reserve for losses on loans) + Net gains or losses related to ETFs and others of Segment Information and Income before Income Taxes Recorded in Interim Consolidated Statement of Income

 

   (Millions of yen) 
   For the six months ended
September 30, 2019
   For the six months ended
September 30, 2020
 

Net Business Profits (excluding the amounts of credit costs of trust accounts, before reversal of (provision for) general reserve for losses on loans) + Net Gains (Losses) related to ETFs and others

      340,879       419,443 

Credit Costs for Trust Accounts

   —      —   

General and Administrative Expenses (non-recurring losses)

   24,461    4,146 

Expenses related to Portfolio Problems (including reversal of (provision for) general reserve for losses on loans)

   (19,142   (84,777

Gains on Reversal of Reserves for Possible Losses on Loans, and others

   7,915    3,555 

Net Gains (Losses) related to Stocks—Net Gains (Losses) related to ETFs and others

   55,375    (50,485

Net Extraordinary Gains (Losses)

   (5,000   65,780 

Others

   (13,017   (24,271
  

 

 

   

 

 

 

Income before Income Taxes recorded in
Interim Consolidated Statement of Income

   391,471    333,391 
  

 

 

   

 

 

 

 

- 57 -


Related Information

For the six months ended September 30, 2019

 

1.

Information about Geographic Areas

 

(1)

Ordinary Income

 

(Millions of yen)

 

Japan

  Americas   Europe   Asia/Oceania
excluding Japan
   Total 
1,138,373   425,585    132,382    291,083    1,987,425 

 

(Notes)  1.  The above table shows Ordinary Income instead of sales of non-financial companies.
  2.  Ordinary income is segmented by country and region based on the location of our group office in consideration of geographical proximity, similarity of economic activities, and interrelationship of business activities.

 

(2)

Tangible Fixed Assets

Information on tangible fixed assets by geographical areas as of September 30, 2019 is not disclosed since tangible fixed assets in Japan accounted for more than 90% of tangible fixed assets.

 

2.

Information about Major Customers

Information about major customers is not disclosed since there are no outside customers that accounted for more than 10% of Ordinary Income of the Company.

For the six months ended September 30, 2020

 

1.

Information about Geographic Areas

 

(1)

Ordinary Income

 

(Millions of yen)

 

Japan

  Americas   Europe   Asia/Oceania
excluding Japan
   Total 
1,029,703   249,775    102,413    194,868    1,576,761 

 

(Notes)  1.  The above table shows Ordinary Income instead of sales of non-financial companies.
  2.  Ordinary income is segmented by country and region based on the location of our group office in consideration of geographical proximity, similarity of economic activities, and interrelationship of business activities.

 

(2)

Tangible Fixed Assets

Information on tangible fixed assets by geographical areas as of September 30, 2020 is not disclosed since tangible fixed assets in Japan accounted for more than 90% of tangible fixed assets.

 

2.

Information about Major Customers

Information about major customers is not disclosed since there are no outside customers that accounted for more than 10% of Ordinary Income of the Company.

 

- 58 -


Information about Impairment Loss on Tangible Fixed Assets by Reportable Segment

For the six months ended September 30, 2019

 

   (Millions of yen) 
   MHFG (Consolidated) 
  Retail &
Business
Banking
Company
   Corporate &
Institutional
Company
   Global
Corporate
Company
   Global
Markets
Company
   Asset
Management
Company
   Others     

Impairment Loss

   1,985    805    123    140    2    955    4,010 
For the six months ended September 30, 2020              
   (Millions of yen) 
   MHFG (Consolidated) 
  Retail &
Business
Banking
Company
   Corporate &
Institutional
Company
   Global
Corporate
Company
   Global
Markets
Company
   Asset
Management
Company
   Others     

Impairment Loss

   586    1    —      10    —      793    1,391 
Information about Amortization and Unamortized Balance of Goodwill by Reportable Segment

 

  
For the six months ended September 30, 2019

 

  
   (Millions of yen) 
   MHFG (Consolidated) 
  Retail &
Business
Banking
Company
   Corporate &
Institutional
Company
   Global
Corporate
Company
   Global
Markets
Company
   Asset
Management
Company
   Others     

Amortization of Goodwill

   —      —      180    —      1,335    518    2,033 

Unamortized Balance of Goodwill

   —      —      4,210    —      45,354    13,823    63,387 

For the six months ended September 30, 2020

 

   (Millions of yen) 
   MHFG (Consolidated) 
  Retail &
Business
Banking
Company
   Corporate &
Institutional
Company
   Global
Corporate
Company
   Global
Markets
Company
   Asset
Management
Company
   Others     

Amortization of Goodwill

   —      —      180    —      1,335    354    1,869 

Unamortized Balance of Goodwill

   —      —      2,764    —      42,686    12,678    58,128 

Information about Gain on Negative Goodwill Incurred by Reportable Segment

For the six months ended September 30, 2019

There is no applicable information.

For the six months ended September 30, 2020

There is no applicable information.

 

-59-


Per Share Information

 

1.

Net Assets per Share of Common Stock and its basis used for calculation

 

      As of March 31, 2020      As of September 30, 2020 

Net Assets per Share of Common Stock

 Yen   3,372.96    3,472.01 

(The basis used for calculating Net Assets per Share of Common Stock)

    

Total Net Assets

 Millions of yen   8,663,847    8,905,205 

Deductions from Total Net Assets

 Millions of yen   109,876    102,327 

Stock Acquisition Rights

 Millions of yen   213    134 

Non-Controlling Interests

 Millions of yen   109,662    102,192 

Net Assets related to Common Stock at the end of the period/the fiscal year

 Millions of yen   8,553,971    8,802,877 

Outstanding Shares of Common Stock, based on which Total Net Assets per Share of Common Stock was calculated, at the end of the period/the fiscal year

 Thousands of shares   2,536,039    2,535,381 

 

(Note)  MHFG adopted the share consolidation of the shares of common stock on the basis of one post-consolidation share per ten pre-consolidation shares effective as of October 1, 2020. Net Assets per Share of Common Stock is calculated under the assumption that the share consolidation had been adopted at the beginning of fiscal 2019.

 

- 60 -


2.

Net Income per Share of Common Stock and Diluted Net Income per Share of Common Stock are based on the following information:

 

   For the six months ended
September 30, 2019
   For the six months ended
September 30, 2020
 

(1)   Net Income per Share of Common Stock

 Yen   113.43    84.99 

(The basis used for calculating Net Income per Share of Common Stock)

    

Profit Attributable to Owners of Parent

 Millions of yen   287,668    215,523 

Amount not attributable to Common Stock

 Millions of yen   —      —   

Profit Attributable to Owners of Parent related to Common Stock

 Millions of yen   287,668    215,523 

Average Outstanding Shares of Common Stock (during the period)

 Thousands of shares   2,535,955    2,535,837 

(2)   Diluted Net Income per Share of Common Stock

 Yen   113.42    84.98 

(The basis used for calculating Diluted Net Income per Share of Common Stock)

    

Adjustment to Profit Attributable to Owners of Parent

 Millions of yen   —      —   

Increased Number of Shares of Common Stock

 Thousands of shares   188    92 

Stock Acquisition Rights

 Thousands of shares   188    92 

Description of dilutive securities which were not included in the calculation of Diluted Net Income per Share of Common Stock as they have no dilutive effects

    —      —   

 

(Notes)  1.  MHFG adopted the share consolidation of the shares of common stock on the basis of one post-consolidation share per ten pre-consolidation shares effective as of October 1, 2020. Net Income per Share of Common Stock and Diluted Net Income per Share of Common Stock are calculated under the assumption that the share consolidation had been adopted at the beginning of fiscal 2019.
  2.  In the calculation of Net Assets per share, MHFG shares outstanding in BBT trust account that were recognized as Treasury Stock in Shareholders’ Equity are included in Treasury Stock shares deducted from the total number of issued shares at the end of the period/the fiscal year. The number of such Treasury Stock shares deducted at the end of the previous fiscal year (March 31, 2020) was 1,963 thousand, and the number of such Treasury Stock shares deducted at the end of the period (September 30, 2020) was 2,556 thousand.
    In the calculation of Net Income per Share of Common Stock and Diluted Net Income per Share of Common Stock, such Treasury Stock shares are included in Treasury Stock shares deducted in the calculation of the Average Outstanding Shares of Common Stock during the period. The average number of such Treasury Stock shares deducted during the six months ended September 30, 2019 was 1,887 thousand, and the average number of such Treasury Stock shares deducted during the six months ended September 30, 2020 was 2,146 thousand.

 

- 61 -


Subsequent Events

The Board of Directors of the MHFG resolved in a meeting held on May 15, 2020 to include the following share consolidation in the agenda for the 18th Ordinary General Meeting of Shareholders held on June 25, 2020 and the agenda gained the approval in the Ordinary General Meeting of Shareholders. The share consolidation is effective as of October 1, 2020.

The influence on Per Share Information is described in “Notes to Interim Consolidated Financial Statements - Per Share Information.

 

(1)

Purpose of the share consolidation

MHFG’s current share price was significantly below the desirable Trading Unit range of 50,000 yen to 500,000 yen designated by the Securities Listing Regulations of the Tokyo Stock Exchange.

In order to address this situation, we resolved to include the following share consolidation of common stock on the basis of one post-consolidation share per ten pre-consolidation shares in the agenda for the Ordinary General Meeting of Shareholders.

 

(2)

Details of the share consolidation

 

 i.

Class of shares to be consolidated

Common Stock

 

 ii.

Consolidation rate

One post-consolidation share per ten pre-consolidation shares based on the shares owned by the shareholders recorded in the shareholder register as of September 30, 2020.

 

 iii.

Effective date

October 1, 2020

 

 iv.

Total number of Authorized Shares

5,130,000,000 shares

Changing on the effective date of the share consolidation pursuant to Article 182, Paragraph 2 of Japan’s Companies Act

 

 v.

Number of shares to be reduced by the consolidation (Number of shares to be reduced could be changed)

 

Total number of issued shares before the consolidation as of September 30 2020

   25,392,498,945 

Number of shares to be reduced by the consolidation

   22,853,249,051 

Total number of issued shares after the consolidation

   2,539,249,894 

 

- 62 -


II. Others

There is no applicable information.

 

- 63 -