0001335730 us-gaap:SecuritiesSoldNotYetPurchasedMember 2019-04-01 2020-03-31

Table of Contents
UNITED STATES SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM
20-F

(Mark One)

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

OR

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

        For the fiscal year ended March 31, 2018

2020

OR

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

OR

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

        Date of event requiring this shell company report

                      For the transition period from             to            

Commission file number
001-33098

Kabushiki Kaisha Mizuho Financial Group

(Exact name of Registrant as specified in its charter)

Mizuho Financial Group, Inc.

(Translation of Registrant’s name into English)

Japan

(Jurisdiction of incorporation or organization)

1-5-5 Otemachi

Chiyoda-ku,
Tokyo
100-8176

Japan

(Address of principal executive offices)

Masahiro Kosugi,

Tomomichi Fujita,
+81-3-5224-1111,
+81-3-5224-1059,
address is same as above

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

Securities registered or to be registered pursuant to Section 12(b)Section12(b) of the Act.

Title of each class

 

Trading Symbols
Name of each exchange on which registered

Common Stock, without par value

The New York Stock Exchange*

American depositary shares, each of which represents two shares of common stock
 
MFG
The New York Stock Exchange
Common Stock, without par value*

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

None

(Title of Class)

Securities for which there is a reporting obligation pursuant to Section 15(d)Section15(d) of the Act:

None

(Title of Class)

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

At March 31, 2018,2020, the following shares of capital stock were issued: 25,389,644,94525,392,498,945 shares of common stock (including 6,487,2343,622,415 shares of common stock held by the registrant as treasury stock).

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

Yes  
☒
    No  
☐

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

Yes  
☐
    No  
☒

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

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

Yes  
☒
    No  
☐

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

Yes  
☒
    No  
☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a
non-accelerated
filer, or an emerging growth company. See definition of “large accelerated filer, “accelerated filer,” and “emerging growth company” in Rule
12b-2
of the Exchange Act.

Large accelerated filer  
☒
 
Accelerated filer  
☐
 
Non-accelerated filer  
☐
 Emerging growth company  ☐

If an emerging growth company that prepares its financial statements in accordance with U.S. GAAP, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards† provided pursuant to Section 13(a)Section13(a) of the Exchange Act.  
☐

†The term “new or revised financial accounting standard” refers to any update issued by the Financial Accounting Standards Board to its Accounting Standards Codification after April 5, 2012.

Indicate by check mark whether the registrant has filed a report on and attestation to its management’s assessment of the effectiveness of its internal control over financial reporting under Section 404(b) of the Sarbanes-Oxley Act (15 U.S.C. 7262(b)) by the registered public accounting firm that prepared or issued its audit report.  
☒
Indicate by check mark which basis of accounting the registrant has used to prepare the financial statements included in this filing:

U.S. GAAP  ☒ 
U.S. GAAP  
☒
International Financial Reporting Standards as issued by the International Accounting Standards Board  
☐
 
Other  
☐

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

Item 17  
☐
    Item 18  
☐

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

Yes  
☐
    No  ☒

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

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

☐  

Yes  
☐
    No

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

Table of Contents

MIZUHO FINANCIAL GROUP, INC.

ANNUAL REPORT ON FORM
20-F

Table of Contents

    Page 

Page
  
3
 

  
3
 

ITEM 1.

  
5
 

ITEM 2.

  
5
 

ITEM 3.

  
6
 
 3.A.

Selected Financial Data

3.A.
  
6
 
 3.B.Capitalization and Indebtedness
3.B.
  11
10
 
 
3.C.
 
  11
10
 
 3.D.Risk Factors
3.D.
  11
10
 

ITEM 4.

  22
24
 
 
4.A.
 
  22
24
 
 4.B.Business Overview
4.B.
  23
26
 
 4.C.Organizational Structure
4.C.
  50
55
 
 
4.D.
 
  51
57
 

ITEM 4A.

  51
57
 

ITEM 5.

  52
58
 

ITEM 6.

  103
105
 
 
6.A.
 
  103
105
 
 6.B.Compensation
6.B.
  106
109
 
 6.C.Board Practices
6.C.
  113
114
 
 6.D.Employees
6.D.
  117
119
 
 6.E.Share Ownership
6.E.
  118
121
 

ITEM 7.

  120
123
 
 7.A.Major Shareholders
7.A.
  120
123
 
 7.B.Related Party Transactions
7.B.
  120
123
 
 
7.C.
 
  120
123
 

ITEM 8.

  121
124
 
 
8.A.
 
  121
124
 
 8.B.Significant Changes
8.B.
  121
124
 

ITEM 9.

  122
125
 
 9.A.Listing Details
9.A.
  122
125
 
 9.B.Plan of Distribution
9.B.
  123
125
 
 9.C.Markets
9.C.
  123
125
 
 9.D.Selling Shareholders
9.D.
  124
125
 
 9.E.Dilution
9.E.
  124
125
 
 
9.F.
 
  124
125
 

ITEM 10.

  
125
 
 10.A.Share Capital
10.A.
  
125
 
 
10.B.
 
  
125
 
 10.C.Material Contracts
10.C.
  137
138
 
 10.D.Exchange Controls
10.D.
  137
138
 
 10.E.Taxation
10.E.
  138
142
 
 
10.F.
 
  144
148
 
 10.G.Statement by Experts
10.G.
  144
148
 
 10.H.Documents on Display
10.H.
  144
148
 
 10.I.Subsidiary Information
10.I.
  144
149
 

1
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    Page 

ITEM 11.

 
Page
ITEM 11.
 145
150
 

ITEM 12.

  165
169
 
 12.A.Debt Securities
12.A.
  165
169
 
 12.B.Warrants and Rights
12.B.
  165
169
 
 12.C.Other Securities
12.C.
  165
169
 
 12.D.American Depositary Shares
12.D.
  165
169
 

ITEM 13.

  166
170
 

ITEM 14.

  166
170
 

ITEM 15.

  166
170
 

ITEM 16A.

  167
171
 

ITEM 16B.

  167
171
 

ITEM 16C.

  167
171
 

ITEM 16D.

  168
172
 

ITEM 16E.

  169
173
 

ITEM 16F.

 
173
ITEM 16G.
173
ITEM 16H.
175
ITEM 17.
176
ITEM 18.
176
ITEM 19.
176
  169
A-
1
 

ITEM 16G.

Corporate Governance169

ITEM 16H.

Mine Safety Disclosure171

ITEM 17.

Financial Statements172

ITEM 18.

Financial Statements172

ITEM 19.

Exhibits172

Selected Statistical Data

A-1

  F-1
F-
1
 

2
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PRESENTATION OF FINANCIAL AND OTHER INFORMATION

In this annual report, the terms “Mizuho Financial Group,” the “Group,“Mizuho group,” “we,” “us” and “our” generally refer to Mizuho Financial Group, Inc. and its consolidated subsidiaries, but from time to time as appropriate to the context, those terms refer to Mizuho Financial Group, Inc. as an individual legal entity. Furthermore, unless the context indicates otherwise, these references are intended to refer to us as if we had been in existence in our current form for all periods referred to herein.

On July 1, 2013, a merger between the former Mizuho Bank, Ltd. and the former Mizuho Corporate Bank, Ltd. came into effect with the former Mizuho Corporate Bank as the surviving entity, which was renamed Mizuho Bank upon the merger. In this annual report, “Mizuho Bank” refers to the post-merger entity, while the “former Mizuho Bank” and the “former Mizuho Corporate Bank” refer to
pre-merger
Mizuho Bank and
pre-merger
Mizuho Corporate Bank, respectively.

In this annual report, “our principal banking subsidiaries” refer to Mizuho Bank and Mizuho Trust & Banking Co., Ltd. (or with respect to references as of a date, or for periods ended, before July 1, 2013, to the former Mizuho Bank, the former Mizuho Corporate Bank and Mizuho Trust & Banking).

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

In this annual report, yen figures and percentages have been rounded to the figures shown. However, in some cases, figures presented in tables have been adjusted to match the sum of the figures with the total amount, and such figures may also be referred to in the related text. In addition, yen figures and percentages in “Item 3.A. Key Information—Selected Financial Data—Japanese GAAP Selected Consolidated Financial Information” and others that are specified have been truncated to the figures shown.

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

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

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

FORWARD-LOOKING STATEMENTS

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

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

This annual report contains forward-looking statements regarding the intent, belief, current expectations and targets of our management with respect to our financial condition and future results of operations. In many cases, but not all, we use such words as “aim,” “anticipate,” “believe,” “endeavor,” “estimate,” “expect,” “intend,” “may,” “plan,” “probability,” “project,” “risk,” “seek,” “should,” “strive,” “target” and similar expressions in relation to us or our management to identify forward-looking statements. You can also identify forward-looking

statements by discussions of strategy, plans or intentions. These statements reflect our current views with respect

3
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to future events and are subject to risks, uncertainties and assumptions. Should one or more of these risks or uncertainties materialize, or should underlying assumptions prove incorrect, our actual results may vary materially from those we currently anticipate. Potential risks and uncertainties include, without limitation, the following:

the recent outbreak of the novel coronavirus;
increase in allowance for loan losses and incurrence of significant credit-related costs;

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

changes in interest rates;

foreign exchange rate fluctuations;

decrease in the market liquidity of our assets;

revised assumptions or other changes related to our pension plans;

a decline in our deferred tax assets;

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

failure to maintain required capital adequacy ratio levels;

downgrades in our credit ratings;

our ability to avoid reputational harm;

our ability to implement our Medium-termFive-Year Business Plan and other strategic initiatives and measures effectively;

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

the effect of changes in general economic conditions in Japan and elsewhere;
problems related to our information technology systems and cyber attacks; and

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

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

We do not intend to update our forward-looking statements. We are under no obligation, and disclaim any obligation, to update or alter our forward-looking statements, whether as a result of new information, future events or otherwise.

4
Table of Contents
PART I

ITEM 1.
IDENTITY OF DIRECTORS, SENIOR MANAGEMENT AND ADVISERS

Not applicable.

ITEM 2.
OFFER STATISTICS AND EXPECTED TIMETABLE

Not applicable.

5
Table of Contents
ITEM 3.
KEY INFORMATION

3.A. Selected Financial Data

The following tables set forth our selected consolidated financial data.

The first table below sets forth selected consolidated financial data of Mizuho Financial Group as of and for the fiscal years ended March 31, 2014, 2015, 2016, 2017, 2018, 2019 and 20182020 derived from the audited consolidated financial statements of Mizuho Financial Group prepared in accordance with U.S. GAAP.

The second table below sets forth selected consolidated financial data of Mizuho Financial Group as of and for the fiscal years ended March 31, 2014, 2015, 2016, 2017, 2018, 2019 and 20182020 derived from Mizuho Financial Group’s consolidated financial statements prepared in accordance with accounting principles generally accepted in Japan, or Japanese GAAP.

The consolidated financial statements of Mizuho Financial Group as of and for the fiscal years ended March 31, 2016, 2017, 2018, 2019 and 20182020 prepared in accordance with U.S. GAAP have been audited in accordance with the standards of the Public Company Accounting Oversight Board (United States) by Ernst & Young ShinNihon LLC, an independent registered public accounting firm.

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

6
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U.S. GAAP Selected Consolidated Financial Information

   As of and for the fiscal years ended March 31, 
   2014  2015  2016  2017  2018 
   

 

(in millions of yen, except per share data, share number information and  percentages)

 

Statement of income data:

      

Interest and dividend income

  ¥1,422,799 ¥1,457,659 ¥1,500,171 ¥1,509,030 ¥1,761,886

Interest expense

   401,565   411,982   495,407   601,712   889,936 
  

 

 

  

 

 

  

 

 

  

 

 

  

 

 

 

Net interest income

   1,021,234   1,045,677   1,004,764   907,318   871,950 

Provision (credit) for loan losses

   (126,230)   (60,223)   34,560   37,668   (126,362) 
  

 

 

  

 

 

  

 

 

  

 

 

  

 

 

 

Net interest income after provision (credit) for loan losses

   1,147,464   1,105,900   970,204   869,650   998,312 

Noninterest income

   1,082,834   1,801,215   1,883,894   1,368,032   1,604,663 

Noninterest expenses

   1,503,955   1,639,462   1,657,493   1,757,307   1,763,677 
  

 

 

  

 

 

  

 

 

  

 

 

  

 

 

 

Income before income tax expense

   726,343   1,267,653   1,196,605   480,375   839,298 

Income tax expense

   226,108   437,420   346,542   91,244   237,604 
  

 

 

  

 

 

  

 

 

  

 

 

  

 

 

 

Net income

   500,235   830,233   850,063   389,131   601,694 

Less: Net income (loss) attributable to noncontrolling interests

   1,751   27,185   (429)   26,691   24,086 
  

 

 

  

 

 

  

 

 

  

 

 

  

 

 

 

Net income attributable to MHFG shareholders

  ¥498,484  ¥803,048  ¥850,492  ¥362,440  ¥577,608 
  

 

 

  

 

 

  

 

 

  

 

 

  

 

 

 

Net income attributable to common shareholders

  ¥491,739  ¥798,138  ¥848,062  ¥362,440  ¥577,608 

Amounts per share:

      

Basic earnings per common share—net income attributable to common shareholders

  ¥20.33  ¥32.75  ¥34.19  ¥14.33  ¥22.77 

Diluted earnings per common share—net income attributable to common shareholders

  ¥19.64  ¥31.64  ¥33.50  ¥14.28  ¥22.76 

Number of shares used to calculate basic earnings per common share (in thousands)

   24,189,670   24,368,116   24,806,161   25,285,899   25,366,345 

Number of shares used to calculate diluted earnings per common share (in thousands)

   25,371,252   25,381,047   25,387,033   25,380,302   25,373,931 

Cash dividends per share (1)(2):

      

Common stock

  ¥6.50  ¥7.50  ¥7.50  ¥7.50  ¥7.50 
  $0.06  $0.06  $0.07  $0.07  $0.07 

Eleventh series class XI preferred stock(3)

  ¥20.00  ¥20.00  ¥20.00  ¥—  ¥— 
  $0.19  $0.17  $0.18  $—  $— 

                     
 
As of and for the fiscal years ended March 31,
 
 
2016
  
2017
  
2018
  
2019
  
2020
 
 
(in millions of yen, except per share data, share number information and percentages)
 
Statement of income data:
  
   
   
   
   
 
Interest and dividend income
 ¥
1,500,171
  ¥
1,509,030
  ¥
1,761,886
  ¥
2,207,443
  ¥
2,151,172
 
Interest expense
  
495,407
   
601,712
   
889,936
   
1,313,476
   
1,271,381
 
                     
Net interest income
  
1,004,764
   
907,318
   
871,950
   
893,967
   
879,791
 
Provision (credit) for loan losses
  
34,560
   
37,668
   
(126,362
)  
32,459
   
156,200
 
                     
Net interest income after provision (credit) for loan losses
  
970,204
   
869,650
   
998,312
   
861,508
   
723,591
 
Noninterest income
  
1,883,894
   
1,368,032
   
1,604,663
   
1,222,371
   
1,307,740
 
Noninterest expenses
  
1,657,493
   
1,757,307
   
1,763,677
   
1,998,819
   
1,877,841
 
                     
Income before income tax expense
  
1,196,605
   
480,375
   
839,298
   
85,060
   
153,490
 
Income tax expense
  
346,542
   
91,244
   
237,604
   
9,335
   
47,175
 
                     
Net income
  
850,063
   
389,131
   
601,694
   
75,725
   
106,315
 
Less: Net income (loss) attributable to noncontrolling interests
  
(429
)  
26,691
   
24,086
   
(8,746
)  
(43,880
)
                     
Net income attributable to MHFG shareholders
 ¥
850,492
  ¥
362,440
  ¥
577,608
  ¥
84,471
  ¥
150,195
 
                     
Net income attributable to common shareholders
 ¥
848,062
  ¥
362,440
  ¥
577,608
  ¥
84,471
  ¥
150,195
 
Amounts per share:
  
   
   
   
   
 
Basic earnings per common share—net income attributable to common shareholders
 ¥
34.19
  ¥
14.33
  ¥
22.77
  ¥
3.33
  ¥
5.92
 
Diluted earnings per common share—net income attributable to common shareholders
 ¥
33.50
  ¥
14.28
  ¥
22.76
  ¥
3.33
  ¥
5.92
 
Number of shares used to calculate basic earnings per common share (in thousands)
  
24,806,161
   
25,285,899
   
25,366,345
   
25,362,376
   
25,373,681
 
Number of shares used to calculate diluted earnings per common share (in thousands)
  
25,387,033
   
25,380,302
   
25,373,931
   
25,366,898
   
25,375,264
 
Cash dividends per share
(1)(2)
:
  
   
   
   
   
 
Common stock
 ¥
7.50
  ¥
7.50
  ¥
7.50
  ¥
7.50
  ¥
7.50
 
 $
0.07
  $
0.07
  $
0.07
  $
0.07
  $
0.07
 
Eleventh series class XI preferred stock
(3)
 ¥
20.00
  ¥
—  
  ¥
—  
  ¥
—  
  ¥
—  
 
 $
0.18
  $
—  
  $
—  
  $
—  
  $
—  
 
   As of and for the fiscal years ended March 31, 
   2014  2015  2016  2017  2018 
   

 

(in millions of yen, except per share data, share number information and  percentages)

 

Balance sheet data:

      

Total assets

  ¥175,697,452(4)  ¥190,114,354(4)  ¥193,810,151(4)  ¥200,456,304  ¥204,255,642 

Loans, net of allowance

   72,858,777   77,528,017   77,104,122   81,804,233   83,204,742 

Total liabilities

   169,076,081(4)   181,924,510(4)   185,626,960(4)   191,684,247   194,751,942 

Deposits

   102,610,154   114,206,441   117,937,722   131,184,953   136,884,006 

Long-term debt

   9,852,048(4)   14,576,861(4)   14,765,527(4)   14,529,414   12,955,230 

Common stock

   5,489,295   5,590,396   5,703,144   5,826,149   5,826,383 

Total MHFG shareholders’ equity

   6,378,470   7,930,338   8,014,551   8,261,357   8,868,421 

Other financial data:

      

Return on equity and assets:

      

Net income attributable to common shareholders as a percentage of total average assets

   0.27%   0.42%   0.43%   0.18%   0.28% 

Net income attributable to common shareholders as a percentage of average MHFG shareholders’ equity

   9.64%   13.86%   13.33%   5.25%   8.26% 

Dividends per common share as a percentage of basic earnings per common share

   31.97%   22.90%   21.94%   52.34%   32.94% 

Average MHFG shareholders’ equity as a percentage of total average assets

   2.84%   3.04%   3.23%   3.38%   3.35% 

Net interest income as a percentage of total average interest-earning assets

   0.64%   0.63%   0.58%   0.51%   0.47% 

7
Table of Contents
                     
 
As of and for the fiscal years ended March 31,
 
 
2016
  
2017
  
2018
  
2019
  
2020
 
 
(in millions of yen, except per share data, share number information and percentages)
 
Balance sheet data:
  
   
   
   
   
 
Total assets
 ¥
193,810,151
(4)  
¥
200,456,304
  ¥
204,255,642
  ¥
197,611,195
  ¥
211,218,760
 
Loans, net of allowance
  
77,104,122
   
81,804,233
   
83,204,742
   
82,492,742
   
87,087,233
 
Total liabilities
  
185,626,960
(4)  
191,684,247
   
194,751,942
   
188,109,702
   
202,043,136
 
Deposits
  
117,937,722
   
131,184,953
   
136,884,006
   
138,296,916
   
144,948,667
 
Long-term debt
  
14,765,527
(4)  
14,529,414
   
12,955,230
   
11,529,400
   
10,346,152
 
Common stock
  
5,703,144
   
5,826,149
   
5,826,383
   
5,829,657
   
5,827,500
 
Total MHFG shareholders’ equity
  
8,014,551
   
8,261,357
   
8,868,421
   
8,726,519
   
8,512,365
 
Other financial data:
  
   
   
   
   
 
Return on equity and assets:
  
   
   
   
   
 
Net income attributable to common shareholders as a percentage of total average assets
  
0.43
%  
0.18
%  
0.28
%  
0.04
%  
0.07
%
Net income attributable to common shareholders as a percentage of average MHFG shareholders’ equity
  
13.33
%  
5.25
%  
8.26
%  
1.11
%  
1.90
%
Dividends per common share as a percentage of basic earnings per common share
  
21.94
%  
52.34
%  
32.94
%  
225.23
%  
126.69
%
Average MHFG shareholders’ equity as a percentage of total average assets
  
3.23
%  
3.38
%  
3.35
%  
3.71
%  
3.91
%
Net interest income as a percentage of total average interest-earning assets
  
0.58
%  
0.51
%  
0.47
%  
0.48
%  
0.48
%
Notes:

(1)Yen amounts are expressed in U.S. dollars at the rate of ¥102.98¥112.42 = $1.00, ¥119.96¥111.41 = $1.00, ¥112.42=¥106.20= $1.00, ¥111.41=¥110.68= $1.00 and ¥106.20=¥107.53= $1.00 for the fiscal years ended March 31, 2014, 2015, 2016, 2017, 2018, 2019 and 2018,2020, respectively. These rates are the noon buying rates on the respective fiscal
year-end
dates in New York City for cable transfers in yen as certified for customs purposes by the Federal Reserve Bank of New York.
(2)Figures represent cash dividends per share with respect to the applicable fiscal year. Dividends with respect to a fiscal year include
year-end
dividends and interim dividends. Declaration and payment of dividends are conducted during the immediately following fiscal year, in the case of
year-end
dividends, or immediately following interim period, in the case of interim dividends.
(3)On July 1, 2016, we acquired ¥75.1 billion of eleventh series class XI preferred stock, in respect of which a request for acquisition was not made by June 30, 2016, and delivered shares of our common stock, pursuant to Article 20, Paragraph 1 of our articles of incorporation and a provision in the terms and conditions of the preferred stock concerning mandatory acquisition in exchange for common stock. On July 13, 2016, we cancelled all of our treasury shares of eleventh series class XI preferred stock.
(4)Total assets, total liabilities and long-term debt have been recalculated to reflect the retrospective adoption of ASU
No.2015-03. See note 2 to our consolidated financial statements included elsewhere in this annual report.

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Japanese GAAP Selected Consolidated Financial Information

  As of and for the fiscal years ended March 31, 
  2014  2015  2016  2017  2018 
  

 

(in millions of yen, except per share data and percentages)

 

Statement of income data:

     

Interest income

 ¥1,417,569  ¥1,468,976  ¥1,426,256  ¥1,445,555  ¥1,622,354 

Interest expense

  309,266   339,543   422,574   577,737   814,988 
 

 

 

  

 

 

  

 

 

  

 

 

  

 

 

 

Net interest income

  1,108,303   1,129,433   1,003,682   867,818   807,366 

Fiduciary income

  52,014   52,641   53,458   50,627   55,400 

Net fee and commission
income

  560,768   593,360   607,551   603,542   614,349 

Net trading income

  187,421   262,963   310,507   325,332   275,786 

Net other operating income

  126,774   209,340   246,415   245,419   162,454 

General and administrative expenses

  1,258,227   1,351,611   1,349,593   1,467,221   1,488,973 

Other income

  344,275   301,652   365,036   438,042   565,683 

Other expenses

  135,962   207,147   228,807   279,368   192,113 
 

 

 

  

 

 

  

 

 

  

 

 

  

 

 

 

Income before income taxes(1)

  985,366   990,632   1,008,252   784,193   799,953 

Income taxes:

     

Current(2)

  137,010   260,268   213,289   196,535   190,158 

Deferred

  77,960   44,723   69,260   (58,800)   1,469 

Profit(1)

  770,396   685,640   725,702   646,457   608,326 

Profit attributable tonon-controlling interests(1)

  81,980   73,705   54,759   42,913   31,778 
 

 

 

  

 

 

  

 

 

  

 

 

  

 

 

 

Profit attributable to owners of parent(1)

 ¥688,415  ¥611,935  ¥670,943  ¥603,544  ¥576,547 
 

 

 

  

 

 

  

 

 

  

 

 

  

 

 

 

Net income per share:

     

Basic

 ¥28.18  ¥24.91  ¥26.94  ¥23.86  ¥22.72 

Diluted

  27.12   24.10   26.42   23.78   22.72 

Balance sheet data:

     

Total assets

 ¥175,822,885  ¥189,684,749  ¥193,458,580  ¥200,508,610  ¥205,028,300 

Loans and bills discounted(3)

  69,301,405   73,415,170   73,708,884   78,337,793   79,421,473 

Securities

  43,997,517   43,278,733   39,505,971   32,353,158   34,183,033 

Deposits(4)

  101,811,282   113,452,451   117,456,604   130,676,494   136,463,824 

Net assets

  8,304,549   9,800,538   9,353,244   9,273,361   9,821,246 

Risk-adjusted capital data (Basel III)(5):

     

Common Equity Tier 1 capital

 ¥5,304,412  ¥6,153,141  ¥6,566,488  ¥7,001,664  ¥7,437,048 

Tier 1 capital

  6,844,746   7,500,349   7,905,093   8,211,522   9,192,244 

Total capital

  8,655,990   9,508,471   9,638,641   10,050,953   10,860,440 

Risk-weighted assets

  60,274,087   65,191,951   62,531,174   61,717,158   59,528,983 

Common Equity Tier 1 capital ratio

  8.80%   9.43%   10.50%   11.34%   12.49% 

Tier 1 capital ratio

  11.35   11.50   12.64   13.30   15.44 

Total capital ratio

  14.36   14.58   15.41   16.28   18.24 

                     
 
As of and for the fiscal years ended March 31,
 
 
2016
  
2017
  
2018
  
2019
  
2020
 
 
(in millions of yen, except per share data and percentages)
 
Statement of income data:
  
   
   
   
   
 
Interest income
 ¥
1,426,256
  ¥
1,445,555
  ¥
1,622,354
  ¥
2,056,327
  ¥
2,014,440
 
Interest expense
  
422,574
   
577,737
   
814,988
   
1,293,846
   
1,280,897
 
                     
Net interest income
  
1,003,682
   
867,818
   
807,366
   
762,480
   
733,542
 
Fiduciary income
  
53,458
   
50,627
   
55,400
   
55,153
   
58,565
 
Net fee and commission income
  
607,551
   
603,542
   
614,349
   
610,427
   
619,243
 
Net trading income
  
310,507
   
325,332
   
275,786
   
297,367
   
391,299
 
Net other operating income
  
246,415
   
245,419
   
162,454
   
87,306
   
259,567
 
General and administrative expenses
  
1,349,593
   
1,467,221
   
1,488,973
   
1,430,850
   
1,378,398
 
Other income
  
365,036
   
438,042
   
565,683
   
447,300
   
318,438
 
Other expenses
  
228,807
   
279,368
   
192,113
   
712,927
   
383,542
 
                     
Income before income taxes
  
1,008,252
   
784,193
   
799,953
   
116,259
   
618,717
 
Income taxes:
  
   
   
   
   
 
Current
(1)
  
213,289
   
196,535
   
190,158
   
161,376
   
150,088
 
Deferred
  
69,260
   
(58,800
)  
1,469
   
(163,879
)  
11,408
 
Profit
  
725,702
   
646,457
   
608,326
   
118,762
   
457,221
 
Profit attributable to non- controlling interests
  
54,759
   
42,913
   
31,778
   
22,196
   
8,652
 
                     
Profit attributable to owners of parent
 ¥
670,943
  ¥
603,544
  ¥
576,547
  ¥
96,566
  ¥
448,568
 
                     
Net income per share:
  
   
   
   
   
 
Basic
 ¥
26.94
  ¥
23.86
  ¥
22.72
  ¥
3.80
  ¥
17.68
 
Diluted
  
26.42
   
23.78
   
22.72
   
3.80
   
17.68
 
Balance sheet data:
  
   
   
   
   
 
Total assets
 ¥
193,458,580
  ¥
200,508,610
  ¥
205,028,300
  ¥
200,792,226
  ¥
214,659,077
 
Loans and bills discounted
(2)
  
73,708,884
   
78,337,793
   
79,421,473
   
78,456,935
   
83,468,185
 
Securities
  
39,505,971
   
32,353,158
   
34,183,033
   
29,774,489
   
34,907,234
 
Deposits
(3)
  
117,456,604
   
130,676,494
   
136,463,824
   
137,649,596
   
144,472,235
 
Net assets
  
9,353,244
   
9,273,361
   
9,821,246
   
9,194,038
   
8,663,847
 
Risk-adjusted capital data (Basel III)
(4)
:
  
   
   
   
   
 
Common Equity Tier 1 capital
 ¥
6,566,488
  ¥
7,001,664
  ¥
7,437,048
  ¥
7,390,058
  ¥
7,244,776
 
Tier 1 capital
  
7,905,093
   
8,211,522
   
9,192,244
   
9,232,160
   
9,024,404
 
Total capital
  
9,638,641
   
10,050,953
   
10,860,440
   
10,917,507
   
10,722,278
 
Risk-weighted assets
  
62,531,174
   
61,717,158
   
59,528,983
   
57,899,567
   
62,141,217
 
Common Equity Tier 1 capital ratio
  
10.50
%  
11.34
%  
12.49
%  
12.76
%  
11.65
%
Tier 1 capital ratio
  
12.64
   
13.30
   
15.44
   
15.94
   
14.52
 
Total capital ratio
  
15.41
   
16.28
   
18.24
   
18.85
   
17.25
 

Notes:

(1)We have applied “Revised Accounting Standard for Business Combinations” (ASBJ Statement No.21, September 13, 2013) and others and presentation of net income and others has been changed and presentation of minority interests has been changed tonon-controlling interests from the fiscal year ended March 31, 2016.
(2)Includes refund of income taxes.
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(3)(2)Bills discounted refer to a form of financing in Japan under which promissory notes obtained by corporations through their regular business activities are purchased by banks prior to their payment dates at a discount based on prevailing interest rates.
(4)(3)Includes negotiable certificates of deposit.
(5)(4)Risk-adjusted capital data are calculated on a Basel III basis. We adoptedutilize the advanced internal ratings-based approach (the “AIRB approach”) for the calculation of risk-weighted assets associated with credit risk from the fiscal year ended March 31, 2009. We also adoptedand the advanced measurement approach (the “AMA”) for the calculation of operational risk from the fiscal year ended March 31, 2010.risk. For more details on capital adequacy requirements set by the Bank for International Settlements (“BIS”), and the guideline implemented by the Financial Services Agency in compliance thereto, see “Item 5. Operating and Financial Review and Prospects—Capital Adequacy.”

There are certain differences between U.S. GAAP and Japanese GAAP. The differences between U.S. GAAP and Japanese GAAP applicable to us primarily relate to the accounting for derivative financial instruments and hedging activities, investments, loans, allowances for loan losses and
off-balance-sheet
instruments, premises and equipment, land revaluation, business combinations, pension liabilities, consolidation of variable interest entities, deferred taxes and foreign currency translation. See “Item 5. Operating and Financial Review and Prospects—Reconciliation with Japanese GAAP.”

��

Exchange Rate Information

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

Fiscal years ended (ending) March 31,

  High   Low   Average(1)   Period
end		 
   

 

(yen per dollar)

 

2014

  ¥105.25   ¥92.96   ¥100.46   ¥102.98 

2015

   121.50    101.26    110.78    119.96 

2016

   125.58    111.30    120.13    112.42 

2017

   118.32    100.07    108.31    111.41 

2018

   114.25    104.83    110.70    106.20 

2019 (through May 31)

   111.08    105.99    109.01    108.73 

Calendar year 2017

    
                 

December

  ¥113.62   ¥111.88    —     —  

Calendar year 2018

    
                 

January

  ¥113.18   ¥108.38    —     —  

February

   110.40    106.10    —     —  

March

   106.91    104.83    —     —  

April

   109.33    105.99    —     —  

May

   111.08    108.62    —     —  

Note:

(1)Calculated by averaging the exchange rates on the last business day of each month during the respective periods. The noon buying rate as of May 31, 2018 was ¥108.73 = $1.00.

3.B. Capitalization and Indebtedness

Not applicable.

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

Not applicable.

3.D. Risk Factors

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

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

Risks Relating to Our Business

The recent outbreak of the novel coronavirus could have a significant negative impact on our business, results of operations and financial condition.
Due to a novel strain of a virus called
SARS-CoV-2
(severe acute respiratory syndrome coronavirus 2), or coronavirus, which causes coronavirus disease, or
COVID-19,
various activities across the world have been restricted and the global economy, including that of Japan, is under severe pressure. If the coronavirus pandemic and its effects on the economy are prolonged, many business fields could be more widely adversely affected. Financial and monetary easing measures taken by governments and central banks have been preventing severe liquidity crises in the global financial system to date, and financial markets have been maintaining a temporary lull. In addition, certain economic activities have resumed inside and outside of Japan. However, it is expected
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that a significant deterioration in the global economy will be inevitable and volatility in financial markets could rise. As a result, we may incur significantly increased credit costs, increased valuation losses and impairment of our assets, and our liquidity could also decline. If the coronavirus pandemic recurs, the adverse effects of such recurrence could be prolonged and greater than those experienced so far. As a result of any of the foregoing, our business, financial condition and results of operations may be materially and adversely affected. We consider the novel coronavirus as a risk event that has a broad implication on the various risks to which we are subject.
We may be required to increase allowance for loan losses and/or incur significant credit-related and other costs in the future due to problem loans.

We are the primary bank lender for a large number of our corporate customers, and the amount of our loans and other claims to each of our major customers is significant. In addition, while we have made efforts to diversify our credit exposure along industry lines, the proportion of credit exposure to customers in the manufacturing and real estate industries as well as banks and other financial institutions manufacturing and real estate industries is relatively high. We manage our credit portfolio by regularly monitoring the credit profile of each of our customers, the progress made on restructuring plans and credit exposure concentrations in particular industries or corporate groups that are expected to be affected when risk events occur, and we also utilize credit derivatives for hedging and credit risk mitigation purposes. We provide an allowance for loan losses taking into consideration the borrower’s situation, the value of relevant collateral and guarantee, which we periodically
re-evaluate,
and economic trends based on our self-assessment standards as well as applicable
charge-off
and allowance standards. However, depending on trends in the status of domestic and global economic environment,credit cycles, the business environment in particular industries, prices of real estate assets and other factors, the amount of our problem loans and other claims could increase significantly, including as a result of the deterioration in the credit profile of customers for which we are the primary bank lender, other major customers or customers belonging to industries to which we have significant credit exposure, and the value of collateral and guarantees could decline. There can be no assurance that credit-related and other costs, including provision for loan losses and charge-offs of loans, will not increase in the future as a result of the foregoing or otherwise.

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

We hold substantial investments in marketable equity securities, mainly common stock of Japanese listed companies. We have established the “Policy Regarding Cross-holding of Shares of Other Listed Companies” and, in light of the potential material adverse impact on our financial position associated with stock market volatility risk, we have decided to hold the shares of other companies as cross–shareholdingscross-shareholdings only when these holdings are meaningful, and we have accordingly sold a portion of such investments. In addition, in order to lower the risk of stock market volatility, we have been applying partial hedges as we deem necessary. However, significant declines in Japanese stock prices in the future would lead to unrealized losses, losses on impairment and losses from sales of equity securities. In addition, net unrealized gains and losses on such investments, based on Japanese GAAP, are taken into account when calculating the amount of capital for purposes of the calculation of our capital adequacy ratios, and as a result, a decline in the value of such investments would negatively affect such ratios. Accordingly, our financial condition and results of operations could be materially and adversely affected.

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

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

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

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

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

The market liquidity of the various marketable assets that we hold may decrease significantly due to turmoil in financial markets and other factors, and the value of such assets could decline as a result. If factors such as turmoil in global financial markets or the deterioration of economic or financial conditions cause the market liquidity of our assets to decrease significantly, our financial condition and results of operations could be materially and adversely affected.

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

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

A decrease in deferred tax assets, net of valuation allowance, due to a change in our estimation of future taxable income or change in Japanese tax policy could adversely affect our financial condition and results of operations.

We recorded deferred tax assets, net of valuation allowance, based on a reasonable estimation of future taxable income in accordance with applicable accounting standards. Our financial condition and results of operations could be materially and adversely affected if our deferred tax assets decrease due to a change in our estimation of future taxable income, a change in tax rate as a result of tax system revisions or other factors. Because we consider the sale of
available-for-sale
securities and equity securities to be a qualifying
tax-planning
strategy, turmoil in financial markets such as significant declines in stock prices could lead to a decrease in our estimated future taxable income.

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

The accounting and valuation methods applied to credit and equity derivatives and other financial transactions that we enter into for hedging and credit risk mitigation purposes are not always consistent with the accounting and valuation methods applied to the assets that are being hedged. Consequently, in some cases, due to changes in the market or otherwise, losses related to such financial transactions during a given period may
12
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adversely affect net income, while the corresponding increases in the value of the hedged assets do not have an effect on net income for such period. As a result, our financial condition and results of operations could be materially and adversely affected during the period.

Failure to maintain capital adequacy ratios above minimum required levels, as a result

Impairment of the materializationcarrying value of risksour long-lived assets could materially and adversely affect our financial condition and results of operations.
We periodically review our long-lived assets that are held for use for events or regulatory changes in circumstances that indicate possible impairment. Our impairment review is based on an undiscounted cash flow analysis of a group of assets, combined with associated liabilities, at the lowest level for which identifiable cash flows exist. Impairment occurs when the carrying value of the asset group exceeds the future undiscounted cash flows that the asset group is expected to generate. When impairment is identified, the future cash flows are then discounted to determine the estimated fair value of the asset group and an impairment charge is recorded for the difference between the carrying value and the estimated fair value of the asset group. We cannot accurately predict the amount and timing of any impairment of long-lived assets. Should these assets not generate sufficient cash flows to justify their carrying value and we recognize impairment losses thereon, there could result in restrictionsbe a material adverse effect on our business activities.

We endeavor to maintain sufficient levelsfinancial condition and results of capital adequacy ratios, which are calculated pursuant to standards set forth by Japan’s Financial Services Agency and based on Japanese GAAP, taking into account our plans for investments in risk-weighted assets, the efficiency of our capital structure and other factors. However, our capital adequacy ratios could decline in the future, including as a result of the materialization of any of the risks enumerated in these “Risk Factors” and changes to the methods we use to calculate capital adequacy ratios. Also, there are regulatory adjustments such as goodwill and other intangibles, deferred tax assets, investments in the capital of banking, financial and insurance entities etc., that are deducted from our regulatory capital under certain conditions. Our or our banking subsidiaries’ regulatory capital and capital adequacy ratios could decline due to such regulations.

In addition, if the framework set by the Basel Committee on Banking Supervision, upon which the Financial Services Agency’s rules concerning banks’ capital adequacy ratios are based, is changed or if the Financial Services Agency otherwise changes its banking regulations, we might not be able to meet the minimum regulatory requirements for capital adequacy ratios.operations. For example, in December 2010, the Basel Committee on Banking Supervision issued its Basel III rules text, which presents the details of global regulatory standards on bank capital adequacy and liquidity. In March 2012, the Financial Services Agency published revisions to its capital adequacy guidelines which generally reflect rules in the BaselIII- text and began phasing them in fromfiscal year ended March 31, 2013.2019, we recorded ¥500.7 billion of impairment losses under Japanese GAAP, which unlike U.S. GAAP allows for the option of allocating entity-wide long-lived assets among individual divisions within an entity. The Basel Committee on Banking Supervision reviewedabove losses involved entity-wide long-lived assets, consisting primarily of internally developed software allocated to the risk measurement method and other rules and publisheddomestic retail business division for the finalized Basel III reforms in December 2017. Regulations based on the review are expected to be phased in from 2022.

Furthermore, we have been named onepurpose of the global systemically important banks(“G-SIBs”) and have become subject to additional capital requirements since March 2016. The group ofG-SIBsimpairment test under Japanese GAAP.

Our business will be updated annually and published by the Financial Stability Board (“FSB”) each November. The FSB published the final standard requiringG-SIBs to maintain total loss-absorbing capacity (“TLAC”) in November 2015, andG-SIBs will be required to meet the minimum TLAC requirement from 2019.In addition, the Financial Services Agency published a policy to develop a framework in connection with such requirements in Japan in April 2016, and a revised version of this document was published in April 2018. Based on this policy, the Financial Services Agency intends that Mizuho Financial Group be subject to the TLAC regulations from March 31, 2019.

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

We rely principally on deposits and bonds as our funding sources. In addition, we also raise funds in the financial markets. In particular, our foreign currency funding structure relies more on capital adequacy ratios fall below specified levels.

markets compared to our

yen-based
funding. Our efforts to maintain stable funding, such as setting maximum limits on financial market funding and monitoring our liquidity position to apply appropriate funding policies, may not be sufficient to prevent significant increases in our funding costs or, in the case mainly of foreign currencies, cash flow problems if we encounter difficulties in attracting deposits or otherwise raising funds. Such difficulties could result, among other things, from any of the following:
a reduction in the size and liquidity of the debt markets due for example to the decline in the domestic and global economy, concerns regarding the financial system or turmoil in financial markets and other factors;
adverse developments with respect to our financial condition and results of operations; or
downgrading of our credit ratings or damage to our reputation.
As a result, our business, financial condition and results of operations could be materially and adversely affected.
Downgrades in our credit ratings could have negative effects on our funding costs and business operations.

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

increased funding costs and other difficulties in raising funds;

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

the termination or cancellation of existing agreements.

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

For example, assuming a downgrade occurred on March 31, 2020, the additional collateral requirement in connection with our derivative contracts absentif other changes, assuming a downgrade occurred on March 31, 2018,conditions remain unchanged, would have been approximately ¥3.0¥5.5 billion for a
one-notch
downgrade and approximately ¥6.3¥30.2 billion for a
two-notch
downgrade.

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

We rely principally on deposits and bonds as our funding sources. In addition, we also raise funds in the financial markets. Our efforts

Failure to maintain stable funding, suchcapital adequacy ratios and other regulatory standards above minimum required levels could have material adverse effects.
Capital adequacy regulations
We are subject to capital adequacy regulations as setting maximum limitsprescribed by the Financial Services Agency based on financial market fundingthe Basel III rules text issued by the Basel Committee on Banking Supervision, both on a consolidated basis and monitoring our liquidity position to apply appropriate funding policies, may not be sufficient to prevent significant increases in our funding costs or, in the case mainly of foreign currencies, cash flow problems if we encounter difficulties in attracting deposits or otherwise raising funds. Such difficulties could result, among other things, from any of the following:

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

downgradingeach of our credit ratings or damageprincipal banking subsidiaries. The capital adequacy ratio rules was initially scheduled to our reputation; or

be applied in stages over several years from January 1, 2022, with full application scheduled to commence in January 1, 2027 under the finalized Basel III reforms published by the Basel Committee on Banking Supervision in December 2017. However, in March 2020, the Basel Committee’s oversight body, the Group of Central Bank Governors and Heads of Supervision (“GHOS”), announced a reductiondeferral of the implementation date of the finalized Basel III reform by one year to increase operational capacity of banks and supervisors to respond to
COVID-19.
Following this announcement, the Financial Services Agency announced that the finalized Basel III reform is scheduled to be implemented in Japan from March 2023. Furthermore, we have been named by the Financial Stability Board as a “global systemically important bank”
(G-SIB),
and a higher level of capital adequacy ratio is applicable to us as a result. In addition, the list of
G-SIBs,
including their categorization regarding the level of additional required capital, is updated annually, and there is a possibility that we will be required to have a higher level of capital in the sizefuture. See “Item 5. Operating and liquidityFinancial Review and Prospects—Capital Adequacy” and “Item 4.B. Business Overview—Supervision and Regulation—Capital Adequacy.”
We endeavor to maintain our capital adequacy ratios at an appropriate and sufficient level in light of our risk-asset management plan that is integrated with our business strategy, capital efficiency needs and the debt markets due for example to the decline in the domestic and global economy, concerns regarding the financial system or turmoil in financial markets and other factors.

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

We have been implementing strategic initiatives and measures in various areas. In May 2016, we announced our Medium-term Business Plan for the three fiscal years ending March 31, 2019. Also, in November 2017, with the aimstatus of achieving sustainable growth and maintaining and strengthening our competitive advantages over the long term, we developed a basic principle of structural reforms.

However, we may not be successful in implementing such initiatives and measures, or even if we are successful in implementing them, the implementation of such initiatives and measures may not have their anticipated effects. In addition, we may not be able to meet the key targets announced due to these or other factors, including, but not limited to, differences in the actual economic environment compared to our assumptions, as well as the risks enumerated in these “Risk Factors.”

For further information However, our and our principal banking subsidiaries’ capital adequacy ratios could decline in the future, including as a result of the materialization of any of the risks enumerated in these “Risk Factors” and changes to the methods of calculating capital adequacy ratios and other factors. Also, there are regulatory adjustments, such as those related to goodwill and other intangibles, deferred tax assets and investments in the capital of banking, financial and insurance entities, that are deducted from regulatory capital under certain conditions. Our or our principal banking subsidiaries’ regulatory capital and capital adequacy ratios could decline due to such regulations.

If the capital adequacy ratios of us or our principal banking subsidiaries fall below specified levels, the Financial Services Agency could require us to take corrective actions, including, depending on the level of deficiency, the submission of a plan to limit the outflow of capital or an improvement plan that would strengthen the capital base, a reduction (or slowing of increase) of total assets, a reduction in the size of business operations, a disposition of subsidiary shares and a suspension of all or a portion of business operations. In addition, some of our Medium-term Business Plan, see “Item 4. Business Overview –General and structural reforms.”

We will be exposedbanking subsidiaries are subject to new or increased risks as we expand the range of our products and services.

We offer a broad range of financial services, including banking, trust, securities and other services. As the needs of our customers become more sophisticated and broadercapital adequacy regulations in scope, andforeign jurisdictions such as the Japanese financial industry continuesUnited States, and in the event of a breach of these regulations, they could be subject to be deregulated, we have been entering into various new areas of business, including through various businessrestrictions and equity alliances, which expose us to new risks. While we have developed and intend to maintain risk management policies that we believe are appropriate to address such risks, if a risk materializes in a manner or to a degree outside of our expectations,orders from local authorities. Such events could adversely affect our business, financial condition and results of operations could be materiallyoperations.

Leverage ratio regulations
In December 2017, the Basel Committee on Banking Supervision published the finalized Basel III reforms in which the framework for the leverage ratio requirements was finalized, and adversely affected.

the phased application of the requirements, as prescribed by the Financial Services Agency, commenced on March 31, 2019, with full

We are subject

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application scheduled to various lawstake effect from January 2022 under the finalized Basel III reforms published by the Basel Committee on Banking Supervision in December 2017. In June 2020, under concerns regarding the increasing impact of the coronavirus pandemic, to maintain harmonization with the monetary policy implemented by the Bank of Japan and the prudent regulations and violations could result in penaltiesfor banks and other regulatory actions.

Our business and employees in Japan are subject to various laws and regulations, including those applicable to financial institutions, as well as general laws applicablethe Financial Services Agency published amendments to our business activities, and we are under the regulatory oversightleverage ratio regulations which will exclude amounts of deposits to the Bank of Japan from the total exposure, which is the denominator, in calculating leverage ratio when a ratio, which is separately determined by the Commissioner of the Financial Services Agency. Our businesses outsideAgency taking into account an exceptional macroeconomic condition, applies as minimum regulatory requirements for leverage ratio. The regulation requires bank holding companies and banks to maintain their leverage ratio, which is a supplementary indicator of the capital adequacy ratio, at a certain level or above. See “Item 5. Operating and Financial Review and Prospects—Capital Adequacy” and “Item 4.B. Business Overview—Supervision and Regulation—Capital Adequacy.” If the leverage ratio falls below a certain ratio, the Financial Services Agency could require us to take corrective actions, including the submission of an improvement plan that would strengthen the capital base, a reduction (or slowing of increase) of total assets, a reduction in the size of some business operations, a disposition of subsidiary shares and a suspension of all or a portion of business operations. Such events could adversely affect our business, financial condition and results of operations.

Total Loss Absorbing Capacity (TLAC) regulations
In November 2015, the Financial Stability Board released a final document requiring
G-SIBs
to have a certain minimum total loss absorbing capacity (TLAC).The phased application by the Financial Services Agency of TLAC regulations in Japan to Japanese
G-SIBs,
including us, began on March 31, 2019 with full application, with certain limited exception, to take effect from March 31, 2022. In June 2020, the Financial Services Agency published amendments to the leverage ratio regulations which will exclude amounts of deposits to the Bank of Japan in calculating leverage ratio when a ratio, which is separately determined by the Commissioner of the Financial Services Agency taking into account an exceptional macroeconomic condition, applies as minimum regulatory requirements for such leverage ratio. If excluding such amounts of deposits in calculating leverage ratio, such amounts of deposits are also subjectexcluded from the total exposure, which is the denominator, in calculating external TLAC ratio on total exposure basis and minimum internal TLAC. These regulations are applicable to
G-SIBs
such as us, in addition to capital adequacy regulations. See “Item 5. Operating and Financial Review and Prospects—Capital Adequacy” and “Item 4.B. Business Overview—Supervision and Regulation—Capital Adequacy.” If the lawsTLAC of us or our material subsidiaries fall below a certain threshold, the Financial Services Agency could require the submission of a plan to improve TLAC or may issue a business improvement order which could include various restrictions on, or suspension of portions of, our business. Such events could adversely affect our business, financial condition and regulationsresults of operations.
Capital procurement
The capital raising that we conduct in light of our regulatory capital requirements, including those conducted in response to TLAC requirements but excluding Common Equity Tier 1 capital requirements, consists primarily of the jurisdictionsissuance of debt instruments. However, in which they operate and are subjectthe event of a deterioration in our financial condition or results of operations, a downgrade in our credit rating, or the spread of negative rumors or other reputational damage, an economic downturn in Japan or overseas, financial system instability or financial market turmoil, we may become unable to oversight by the regulatory authorities of those jurisdictions.

Our compliance and legal risk management structures are designedraise capital at commercially reasonable costs, or at all. This could negatively affect our ability to prevent violations of such laws and regulations, but they may not be effectivemaintain or improve our capital adequacy ratios in preventing all violations.

Violations of laws and regulations could result in regulatory action and harmaccordance with our reputation,plans, and our business, financial condition and results of operations could be materially and adversely affected.

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

Because we process a large number of transactions in a broad range of businesses, we are subject to the risk of various operational errors and misconduct, including those caused by employees. Our measures to reduce employee errors, including establishment of operational procedures, regular reviews regarding compliance with these procedures, employee training and automation of our operations, may not be effective in preventing all employee errors and misconduct. Significant operational errors and misconduct could result in losses, regulatory actions or harm to our reputation. As a result, our business, financial condition and results of operations could be materially and adversely affected.

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

We depend significantly on information technology systems with respect to almost all aspects of our business operations. Our information technology systems network, including those relating to bank accounting
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and cash settlement systems, interconnects our branches and other offices, our customers and various clearing and settlement systems located worldwide. Our effortsWe endeavor to sustain stable daily operations and development ofdevelop contingency plans for unexpected events, including the implementation of backup and redundancy measures. Mizuho Bank, Ltd. and Mizuho Trust & Banking Co., Ltd. are working on shifting to our next-generation accounting system for the purpose of improving our customer service capabilities. In shifting to this new system, we plan to progress gradually from the viewpoint of ensuring safety and a steady transition, such as multiple temporary suspensions of our online services.
However, we may not be able to prevent significant disruptions to our information technology systems caused by, among other things, human error, accidents and development and renewal of computer systems. In the event of any such disruption, our business, financial condition and results of operations could be materially and adversely affected due to information leaks, malfunctions or disruptions in our business operations, liability to customers and others, regulatory actions or harm to our reputation.

Problems relating to cyber attacks could significantly impair our ability to protect our customer’s private information and disrupt our business operations.

Our business depends on the secure processing, storage and transmission of confidential and other information within our global IT systems. There have been a number of highly publicized cases involving financial services companies, consumer-based companies, governmental agencies and other organizations reporting the unauthorized disclosure of client, customer or other confidential information in recent years, as well as cyber attacks involving the dissemination, theft and destruction of corporate information or other assets, as a result of failure by employees or contractors to follow procedures or as a result of actions by third parties, including actions by foreign governments.

As we and our outside contractors continue to be the target of unauthorized access attacks, mishandling or misuse of information, computer viruses or malware, cyber attacks designed to obtain confidential information, destroy data, disrupt or degrade service, sabotage systems or cause other damage, denial of service attacks, data breaches and other events, there can be no assurance that we will not suffer any losses or other consequences in the future as a result of significant incidents due to these cyber attacks. Although our Cyber Incident Response Team (CIRT) has led the implementation of, and continuously endeavors to upgrade, our protective measures using advanced technologies, our IT systems, software and computer networks may be vulnerable to unauthorized access, misuse, computer viruses or other malicious code and other events that could have a security impact. Due to the complexity and interconnectedness of our global IT systems, these protective measures may be ineffective, and the process of enhancing our protective measures can itself create a risk of system disruption and security issues, and there can be no assurance that our current or future countermeasures will be sufficient to prevent or mitigate the impact of such incidents.

A cyber attack, information or security breach or a technology failure that involves us or our outside contractors could jeopardize our or our customers’, employees’, partners’, vendors’ or counterparties’ personal, confidential, proprietary or other information processed and stored in, and transmitted through, our and our outside contractors’ IT systems. Furthermore, such events could cause interruptions or malfunctions in our, our customers’, employees’, partners’, vendors’, counterparties’ or outside contractor’s operations, as well as the unauthorized release, gathering, monitoring, misuse, loss or destruction of confidential, proprietary and other information of ours, our employees, our customers or of other third parties. Any of these events could result in reputational damage with our customers and the market, customer dissatisfaction or financial losses, any of which could adversely affect our financial condition and results of operations.

Our reputation could be harmed and we may be subject to liabilities and regulatory actions if we are unable to protect personal and other confidential information, including as a result of cyber attacks.

We handle various confidential or
non-public
information, including those of our individual and corporate customers, in the ordinary course of our business. The information management policies we maintain and enforce to prevent information leaks and improper access to such information, including those that we require of our outside contractors and those designed to meet the strict requirements of the Personal Information Protection LawAct of Japan, may not be effective in preventing all such problems. Leakage of important information in the future,
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including as a result of cyber attacks, could result in liabilities and regulatory actions and may also lead to significant harm to our reputation. In addition, recent or future regulatory changes, such as the Japan Amended Act on thePersonal Information Protection of Personal Information,Act, the EU General Data Protection Regulation and the UK Competition and Markets Authority’s Open Banking standard, increase the risks relating to our ability to comply with rules that impact our ability to protect information.
Non-compliance
with such regulations could result in regulatory proceedings, litigation, enforcement or the imposition of fines or penalties. As a result, our business, financial condition and results of operations could be materially and adversely affected.

Inadequacies in anti-money laundering and counter-terrorism financing measures could subject us to regulatory actions and harm our reputation.
As financial crimes become more diverse and sophisticated, and incidents of terrorism continue to occur around the world, the importance of anti-money laundering measures and the need to counter the financing of terrorism is rapidly increasing and is a key priority for financial authorities worldwide, including Japan. We have developed a system to comply with applicable laws and regulations in Japan and overseas, and we are continuously implementing measures to further strengthen measures against money laundering. However, there can be no assurance that such measures will be effective in preventing all violations, and failure to comply with regulations and requirements can result in enforcement and/or regulatory proceedings. If we fail to meet the regulatory requirements to which we are subject, or to maintain risk and control procedures and processes that meet the heightened standards established by our regulators and other government agencies, we could be required to enter into settlements, comply with orders, pay additional fines, penalties or judgments, or accept material regulatory restrictions on our businesses. As a result, our business, financial condition and results of operations may be materially and adversely affected.
Transactions with counterparties in Iran and other countries designated by the U.S. Department of State as state sponsors of terrorism may lead some potential customers and investors to avoid doing business with us or investing in our securities or have other adverse effects.
U.S. law generally prohibits U.S. persons from doing business with countries designated by the U.S. Department of State as state sponsors of terrorism (the “Designated Countries”), which currently includes Iran, Sudan (prohibitions partially lifted in October 2017), Syria and North Korea, and we maintain policies and procedures to comply with applicable U.S. laws. Our
non-U.S.
offices engage in transactions relating to the Designated Countries on a limited basis and in compliance with applicable laws and regulations, including trade financing with respect to our customers’ export or import transactions and maintenance of correspondent banking accounts. In addition, we maintain a representative office in Iran. We do not believe our operations relating to the Designated Countries are material to our business, financial condition or results of operations. We maintain policies and procedures to ensure compliance with applicable Japanese and U.S. laws and regulations.
The laws and regulations applicable to dealings involving the Designated Countries are subject to further strengthening or changes. If the U.S. government considers that our compliance measures are inadequate, we may be subject to regulatory action which could materially and adversely affect our business. In addition, we may become unable to retain or acquire customers or investors in our securities, or our reputation may suffer, potentially having adverse effects on our business or the price of our securities.
Violations of laws and regulations related to financial market activities could subject us to adverse consequences such as regulatory actions and reputational harm.
In conducting our market operations in Japan and overseas, we are subject to the application of the laws and regulations of Japan and other countries and stock exchange rules, as well as being under the supervision of various financial authorities.
While we maintain compliance measures and endeavor to manage compliance risks, there can be no assurance that such measures will be effective in preventing all violations. Misconduct by employees, including
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improper or illegal conduct, can cause significant reputational harm as well as litigation and regulatory action. As a result, our business, financial condition and results of operations could be materially and adversely affected due to such regulatory actions and reputational damage.
We are subject to various laws and regulations, and violations could result in penalties and other regulatory actions.
Our business and employees in Japan are subject to various laws and regulations, including those applicable to financial institutions as well as general laws applicable to our business activities, and we are under the regulatory oversight of the Financial Services Agency. Our businesses outside of Japan are also subject to the laws and regulations of the jurisdictions in which they operate and are subject to oversight by the regulatory authorities of those jurisdictions.
Our compliance and legal risk management structures are designed to prevent violations of such laws and regulations, but they may not be effective in preventing all violations.
Violations of laws and regulations could result in regulatory action and harm our reputation, and our business, financial condition and results of operations could be materially and adversely affected.
Our Five-Year Business Plan and other strategic initiatives and measures may not result in the anticipated outcome.
We have been implementing strategic initiatives and measures in various areas. In May 2019, we announced our Five-Year Business Plan for the five fiscal years ending March 31, 2023. However, we may not be successful in implementing such initiatives and measures, or even if we are successful in implementing them, the implementation of such initiatives and measures may not have their anticipated effects. In addition, we may not be able to meet the key targets announced due to these or other factors, including, but not limited to, differences in the actual economic environment compared to our assumptions, as well as the risks enumerated in these “Risk Factors.”
For further information of our Five-Year Business Plan, see “Item 4. Business Overview—General and structural reforms.”
We will be exposed to new or increased risks as we expand the range of our products and services.
We offer a broad range of financial services, including banking, trust banking, securities and other services. As the needs of our customers become more sophisticated and broader in scope, and as the Japanese financial industry continues to be deregulated, we have been entering into various new areas of business, including through various business and equity alliances, which expose us to new risks. While we have developed and intend to maintain risk management policies that we believe are appropriate to address such risks, if a risk materializes in a manner or to a degree outside of our expectations, our business, financial condition and results of operations could be materially and adversely affected.
Employee errors and misconduct could subject us to losses and reputational harm.
Because we process a large number of transactions in a broad range of businesses, we are subject to the risk of various operational errors and misconduct, including those caused by employees. Our measures to reduce employee errors, including establishment of operational procedures, regular reviews regarding compliance with these procedures, employee training and automation of our operations, may not be effective in preventing all employee errors and misconduct. Significant operational errors and misconduct could result in losses, regulatory actions or harm to our reputation. As a result, our business, financial condition and results of operations could be materially and adversely affected.
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Our business would be harmed if we are unable to attract and retain skilled employees.

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

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

As a New York Stock Exchange-listed company and an SEC registrant, we have developed disclosure controls and procedures and internal control over financial reporting pursuant to the requirements of the

Sarbanes-Oxley Act of 2002 and rules and regulations of the SEC promulgated pursuant thereto. Our management reports on, and our independent registered public accounting firm attests to, the effectiveness of our internal controls over financial reporting, as required, in our annual report on Form

20-F.
In addition, our management is required to report on our internal control over financial reporting, and our independent registered public accounting firm is required to provide its opinion concerning the report of our management, in accordance with the Financial Instruments and Exchange Act of Japan. To the extent any issues are identified through the foregoing processes, there can be no assurance that we will be able to address them in a timely manner or at all. Furthermore, even if our management concludes that our internal control over financial reporting are effective, our independent registered public accounting firm may still be unable to issue a report that concludes that our internal control over financial reporting are effective. In either case, we may lose investor confidence in the reliability of our financial statements.

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

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

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

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

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

U.S. law generally prohibits U.S. persons from doing business with countries designated by the U.S. Department of State as state sponsors of terrorism (the “Designated Countries”), which currently includes Iran, Sudan, Syria and North Korea and we maintain policies and procedures to comply with applicable U.S. laws. Ournon-U.S. offices engage in transactions relating to the Designated Countries on a limited basis and in compliance with applicable laws and regulations, including trade financing with respect to our customers’ export or import transactions and maintenance of correspondent banking accounts. In addition, we maintain a representative office in Iran. We do not believe our operations relating to the Designated Countries are material to our business, financial condition or results of operations. We maintain policies and procedures to ensure compliance with applicable Japanese and U.S. laws and regulations.

The laws and regulations applicable to dealings involving the Designated Countries are subject to further strengthening or changes. If the U.S. government considers that our compliance measures are inadequate, we may be subject to regulatory action which could materially and adversely affect our business. In addition, we may become unable to retain or acquire customers or investors in our securities, or our reputation may suffer, potentially having adverse effects on our business or the price of our securities.

We may be subject to risks related to dividend distributions.

As a holding company, we rely on dividend payments from our banking and other subsidiaries for almost all of our income. As a result of restrictions, such as those on distributable amounts under Japan’s Companies Act,

or otherwise, our banking and other subsidiaries may decide not to pay dividends to us. In addition, we may experience difficulty in making, or become unable to make, dividend payments to our shareholders and dividend or interest payments on capital securities issued by our group due to the deterioration of our results of operations and financial condition and/or the restrictions under the Companies Act or due to the strengthening of bank capital regulations. For more information on restrictions to dividend payments under the Companies Act and bank capital regulations, see “Item 10.B. Additional Information—Memorandum and Articles of Association” and “Item 4.B. Business Overview—Supervision and Regulation—Japan.”

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

We conduct a wide variety of business operations in Japan as well as overseas, including in the United States, Europe and Asia. If general economic conditions in Japan or other regions were to deteriorate or if the financial markets become subject to turmoil, we could experience weakness in our business, as well as deterioration in the quality of our assets. We are currently facing significant uncertainties in the economic environment such as U.S. governmental policies, political concerns in Europe, the economic outlook for China and heightening geopolitical risks. Significant changes in general economic conditions or financial markets due to the effect of changes in these risks could materially and adversely affectAs a result, our financial condition and results of operations.

operations could be materially and adversely affected.

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

We are subject to general laws, regulations and accounting rules applicable to our business activities in and outside of Japan. We are also subject to various laws and regulations applicable to financial institutions such as the Banking Act, including capital adequacy requirements, in and outside of Japan. If the laws and regulations that are applicable to us are amended or otherwise changed, such as in a way that restricts us from engaging in business activities that we currently conduct or that requires us to incur additional costs related to our IT systems, our business, financial condition and results of operations could be materially and adversely affected.

Uncertainties regarding the future of LIBOR as an interest rate benchmark and any successor thereto subjects us to various risks.
Many of our products and services refer to benchmark interest rates such as the London Interbank Offered Rate (“LIBOR”) in many currencies, including the U.S. dollar. We also utilize such benchmark interest rates for our own evaluation of financial instruments and various other internal management purposes.
In light of the LIBOR manipulation scandal that surfaced in 2012, many financial authorities around the world have commented on a transition to the risk-free rate as the benchmark interest rate to improve reliability and transparency. In addition, in July 2017, the Chief Executive of the Financial Conduct Authority of the United Kingdom (“FCA”), which regulates LIBOR, announced that the FCA will no longer persuade or compel banks to present rates for the calculation of the LIBOR benchmark after 2021, raising the possibility that the continuation of LIBOR on the current basis cannot be guaranteed after 2021, and there is a substantial risk that LIBOR will be discontinued or modified by 2021.
We have established a special division tasked to prepare us for the suspension of publication of LIBOR and the shift to a successor interest rate benchmark. Many unresolved issues remain, such as market practices regarding successor benchmarks, the timing for the introduction of and the transition of a particular benchmark to a replacement rate, all of which could result in wide spread dislocation in the financial markets, engender volatility in the pricing of securities, derivatives and other instruments, and suppress capital markets activities. As a result, the transition could, for example, cause hedging accounting items to be derecognized and increase litigation risks regarding our existing products and services, which could adversely impact our profitability. There can be no assurance that a change in the benchmark interest rate and related valuation methods will not have a material adverse effect on our financial condition and results of operations. We may also be adversely affected if the change restricts our ability to provide products and services or if it necessitates the development of additional information technology systems.
Our reputation could be adversely affected if our business operations are perceived as being harmful to the environment and society.
As concerns regarding environmental and social issues such as climate change have heightened in recent years, we believe that our stakeholders as well as the society at large expect that we, as a financial services provider, give increasing consideration to such issues. While we are strengthening our efforts to reduce environmental and social risks, including establishing policies for engaging with sectors that are likely to
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exacerbate negative impacts on the environment and society, the expectations placed upon us continue to heighten day by day, and our reputation may be harmed if our efforts fall short of such expectations. As a result, our business, financial condition and results of operations could be materially and adversely affected.
Climate change could have an adverse effect on us.
Following the adoption of the Paris Agreement in 2015, measures to reduce greenhouse gases that are seen as the cause of climate change have been accelerating globally, and the importance of addressing climate change risks, among various environmental and social issues, has been increasing.
We believe climate change is a threat to our environment, society, daily lives and the activities of companies, and view it as one of the most important global issues which may affect the stability of financial markets. Climate change risks include transition risks caused by changes in a wide range of policies, laws and regulations, technologies and markets due to moving to a low carbon economy. Typical examples of such transition risks include
mid-
to long-term credit cost increases for business sectors that emit more greenhouse gases. We may also suffer a deterioration of our reputation due to our financing of businesses that, for example, handle fossil fuels such as coal-fired power generation businesses. Climate change risks may also include physical risks, such as direct damages to assets, or indirect effects, such as the severance of supply chains. Examples of physical risks include credit cost increases due to the deterioration of our customers’ performance as a result of their businesses stagnating or decreases in the value of collateral assets caused by changes in climate and the effects thereof.
We have implemented a review of our strategy and risk management structure in order to manage the aforementioned risks, while paying attention to global trends. However, if our initiatives do not have their anticipated effects and climate change risks, whether or not contemplated above, materialize, our business operations, results and financial conditions could be materially and adversely affected.
Intensification of competition in the market for financial services in Japan could have an adverse effect on us.

We offer comprehensive financial services globally, centered on Banking, Trust Bankingbanking, trust banking and Securitiessecurities, and are subject to intense competition both domestically and internationally with large financial institutions,
non-bank
financial institutions and others. In addition, as a result of technological advances called “FinTech,” an increasing number of companies have recently been crossing industry lines and entering the field of finance, and it is possible that the competitive environment surrounding us may further intensify. Moreover, due to the reforms to financial regulations made in recent years, it may become difficult to differentiate strategies between us and our competitors, resulting in the intensification of competition in specific businesses.

If we are unable to respond effectively to current or future competition, our business, financial condition and results of operations could be adversely affected. In addition, intensifying competition and other factors could lead to reorganization within the financial services industry, and this could have an adverse effect on our competitive position or otherwise adversely affect the price of our securities.

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

Our headquarters, branch offices, information technology centers, computer network connections and other facilities are subject to the risk of damage from natural disasters such as earthquakes and typhoons as well as from acts of terrorism and other criminal acts. In addition, our business could be materially disrupted as a result of an epidemic such as new or reemerging influenza infections. Our business, financial condition and results of operations could be adversely affected if our recovery efforts, including our implementation of contingency plans

that we have developed such as establishing

back-up
offices, are not effective in preventing significant
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disruptions to our business operations caused by such natural disasters and criminal acts. Additionally,For example, massive natural disasters such as the March 2011 Great East Japan Earthquake may have various adverse effects, including a deterioration in economic conditions, declines in the business performance of many of our corporate customers and declines in stock prices. As a result, our financial condition and results of operations could be materially and adversely affected due to an increase in the amount of problem loans and credit-related costs as well as an increase in unrealized losses on, or losses from sales of, equity securities and financial products.

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

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

Risks Related to Owning Our Shares

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

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

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

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

Risks Related to Owning Our ADSs

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

The rights of our shareholders under Japanese law to take actions such as voting their shares, receiving dividends and distributions, bringing derivative actions, examining our accounting books and records and exercising appraisal rights are available only to shareholders of record. Because the depositary, through its

custodian, is the record holder of the shares underlying the ADSs, a holder of ADSs may not be entitled to the

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same rights as a shareholder. In your capacity as an ADS holder, you are not able to bring a derivative action, examine our accounting books and records or exercise appraisal rights, except through the depositary.

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

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

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ITEM 4.
INFORMATION ONOF THE COMPANY

4.A. History and Development of the Company

The Mizuho Group

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

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

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

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

In May 2009, Mizuho Securities and Shinko Securities Co., Ltd. conducted their merger, with the aim of improving our service-providing capabilities to our clients and to offer competitive cutting-edge financial services on a global basis.

In September 2011, Mizuho Trust & Banking became a wholly-owned subsidiary of Mizuho Financial Group, Mizuho Securities became an unlisted subsidiary of the former Mizuho Corporate Bank, and Mizuho Investors Securities became a wholly-owned subsidiary of the former Mizuho Bank, through their respective
stock-for-stock
exchanges. The purpose of these
stock-for-stock
exchanges is to further enhance the “group collective capabilities” by integrating group-wide business operations and optimizing management resources such as workforce and branch network.

In January 2013, Mizuho Securities and Mizuho Investors Securities merged in order to provide integrated securities services as the full-line securities company of the Mizuho group. Mizuho Securities aims to further strengthen collaboration among banking, trust banking and securities businesses of the group, expand the company’s customer base to enhance the domestic retail business, and rationalize and streamline management infrastructure.

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In April 2013, we turned Mizuho Securities, a consolidated subsidiary of Mizuho Financial Group, into a directly-held subsidiary of Mizuho Financial Group, whereby we moved to a new group capital structure, placing banking, trust banking, securities and other major group companies under the direct control of the holding company.

In July 2013, the former Mizuho Bank and the former Mizuho Corporate Bank merged, and the former Mizuho Corporate Bank, the surviving company,entity, changed its trade name to Mizuho Bank, Ltd. The purpose of the merger iswas to become able to provide directly and promptly diverse and functional financial services to both the former Mizuho Bank and the former Mizuho Corporate Bank customers, utilizing the current “strengths” and “advantages” of the former Mizuho Bank and the former Mizuho Corporate Bank, and to continue to improve customer services by further enhancing group collaboration among the banking, trust banking and securities functions and, at the same time, to realize further enhancement of the consolidation of group-wide business operations and optimization of management resources, such as workforce and branch network, by strengthening group governance and improving group management efficiency.

In July 2016, with consideration of the rule of the Board of Governors of the Federal Reserve System (the “Federal Reserve Board”) regarding the operations of foreign banking organizations with U.S. operations, we established a bank holding company, Mizuho Americas LLC, which holds our primary U.S.–basedU.S.-based banking, securities and institutional custody services (trust banking) entities together under it, with the aim to proactively strengthen corporate governance and expand our profit base through the consistent implementation of our collaborative corporate and investment banking, securities and institutional custody services strategy in the United States in line with the global operation of our new in–house
in-house
company system.

In December 2017, two subsidiaries of Mizuho Americas LLC, the former Mizuho Bank (USA) and the Mizuho Trust & Banking Co. (USA), merged. The merged entity, Mizuho Bank (USA), provides both banking services and trust services.

In October 2016, with a view to strengthening our respective asset management businesses, we and The
Dai-ichi
Life Insurance Company, Limited integrated the asset management functions of both groups, namely, DIAM Co., Ltd., the asset management function of Mizuho Trust & Banking, Mizuho Asset Management Co., Ltd. and Shinko Asset Management Co., Ltd., and formed a new company named Asset Management One Co., Ltd., a consolidated subsidiary of Mizuho Financial Group.

In March 2017, we, Sumitomo Mitsui Trust Holdings, Inc., Resona Bank, Limited as a subsidiary of Resona Holdings, Inc. and The
Dai-ichi
Life Insurance Company, Limited as a subsidiary of
Dai-ichi
Life Holdings, Inc. executed a memorandum of understanding to commence detailed analysis and negotiations in preparation for the management integration of Japan Trustee Services Bank, Ltd. (“JTSB”) and Trust & Custody Services Bank, Ltd. (“TCSB”)., which was a consolidated subsidiary of Mizuho Financial Group. In March 2018, TCSB executed a management integration agreement with JTSB to carry out the management integration through incorporation of a holding company by joint share transfer. In October 2018, TCSB and JTSB incorporated JTC Holdings, Ltd. (“JTC Holdings”) by joint share transfer. After the joint share transfer, TCSB and JTSB became wholly-owned subsidiaries of JTC Holdings, and JTC Holdings, TCSB and JTSB became equity-method affiliates of Mizuho Financial Group. In January 2020, JTC Holdings, TCSB and JTSB executed a merger agreement scheduled to be effective in July 2020 with JTSB as the surviving entity, which will change its trade name to Custody Bank of Japan, Ltd. The purpose of the integration is to contribute to further growth in the domestic securities settlement market and domestic investment chain by realizing more stable and higher quality operations and strengthening its system development capabilities by seeking the benefits of scale.

In May 2020, we decided to integrate three consolidated subsidiaries of Mizuho Financial Group, Mizuho Information & Research Institute, Inc., Mizuho Research Institute Ltd. and Mizuho Trust Systems Company, Limited in April 2021 with Mizuho Information & Research Institute, Inc. as the surviving entity. The purpose of the integration is to significantly improve the ability of Mizuho Information & Research Institute, Inc. as the
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non-financial
business core company in Mizuho group to provide “New value beyond the conventional boundaries of finance” by organically combining and amalgamating each company’s research, consulting, and IT development capabilities.
Other Information

Our registered address is
1-5-5,
Otemachi,
Chiyoda-ku,
Tokyo
100-8176,
Japan, and our telephone number is
81-3-5224-1111.

The SEC maintains an Internet site that contains reports, proxy and information statements, and other information regarding issuers that file electronically with the SEC at www.sec.gov. As a foreign private issuer, we are exempt from the rules under the Exchange Act that prescribe the furnishing and content of proxy statements to shareholders. Our corporate website is
www.mizuho-fg.co.jp/index.html.
4.B. Business Overview

General

We engage in banking, trust banking, securities and other businesses related to financial services.

We launched our three-year medium-term business plan the “Progressive Development of “One MIZUHO”—The Path tospanning a Financial Services Consulting Group,” formulated for the three years beginningfive-year period starting from the fiscal year ended March 31, 2017. This2019. The plan aims for (i) further reinforcementis titled

“5-Year
Business Plan: Transitioning to the Next Generation of Financial Services.” In the first year of the “customer-focused” perspectiveplan, we worked together under our management policy through which, by accelerating our three group-wide forward-looking structural reforms, which described in more details below in
“—Implementing the 5-Year Business Plan”
, we aim to revise our conventional way of doing business and build a firm foundations for forging new partnerships with our customers and creating various types of value.
First, with respect to our business structure reforms, we have worked to fully draw on our strengths that we have been promotingcultivated thus far and (ii)go beyond the pursuitconventional boundaries of “operational excellence,” as part of our effort to promote greater business improvement and efficiency. Through these efforts, we aim to further develop the “One MIZUHO” strategy by establishing a new business model as a “Financial Services Consulting Group.”

We are positioning our asset management function and our research and consulting functions as new pillars that supplement the banking, trust and securities functions, and by strivingfinance in order to provide the best possible and optimal services to customers for their improved satisfaction, we aim to become an indispensable partner for achieving sustainable growth of corporate customers and securing a promising future of retail customers.

With the aim of establishing this new business model,solutions. For more information on initiatives that we have set forth five basic policiestaken in the medium-term business plan. The five basic policies are supported by ten basic strategies, which are classified into business strategies, financial strategies and management foundations.

Our Objectives Under the Medium-Term Business Plan

By establishing a customer-focused business platform, we will form deeper relationships with our customers via our financial intermediary functions and our ability to take highly measured risks and build a future in economies and communities as a trusted financial partner in providing solutions for our customers. In the interest of building this new business model, we have established the following objectives in the medium-term business plan.

A Financial Services Consulting Group—The most trusted partner in solving problems and supporting the sustainable growth of customers and communities

Five Basic Policies

Introduction of thein-house company system

Selecting and focusing on certain areas of business

Establishment of a resilient financial base

Proactive involvement in financial innovation

Embedding a corporate culture that encourages the active participation of our workforce to support a stronger Mizuho

Ten Basic Strategies

Business strategies

Strengthening our noninterest income business model on a global basis

Responding to the shift from savings to investment

Strengthening our research and consulting functions

Responding to FinTech

Promoting the “Area One MIZUHO” strategy (i.e., the implementation of the One MIZUHO strategy in each geographical area through collaboration of banking, trust and securities functions, under which the business offices independently design and implement their respective strategies)

Financial strategies

Controlling the balance sheet and reforming the cost structure

Disposing of cross-shareholdings

Management foundations

Completing implementation of the next generation IT systems

Fundamental reforms of HR management

Continued initiatives towards embedding a corporate culture to support the creation of a stronger organization

In the fiscal year ended March 31, 2018,2020, see “—Group Operations—Group Management Structure.”

Second, with respect to our finance structure reforms, we have worked to reallocate corporate resources and strengthen our stable revenue base in order to enable us to accelerate the second yeartransformation of our business portfolio to make it more efficient and capable of capturing stable revenue streams. While thoroughly proceeding to reduce cross-shareholdings, streamline our workforce, reevaluate and enhance the efficiency of our IT systems and taking other measures, we prioritized allocation of the medium-termcorporate resources, such as capital and expenses, that are freed up through these efforts, into new business plan,areas, fields where there is potential to capture stable revenue streams and other growth fields.
Third, in terms of corporate foundations reforms, we adopted “acceleratinghave completed the One MIZUHOmigration to our new core banking system, MINORI, which we consider one of our top management priorities. Using this new IT system in addition to our existing IT systems, we embarked on initiatives for transformation into next-generation branches aiming at streamlining operations at branches and strengthening
face-to-face
consulting capabilities, etc. In addition, we have made steady progress in the transition to a new personnel strategy, including introducing concurrent assignments or part-time work at other positions within or outside the group company. Furthermore, we worked to accelerate the unification of group company operations, including the strengthening of the framework for
“dual-hat”
appointments of directors and executive officers between our holding company and group companies.
In addition to the above-mentioned initiatives, we have proceeded with initiatives such as the creation of new business opportunities and the expansion of solution domains through commitmentthe use of digital technology and open collaboration with third parties, including those in other industries.
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In the
5-Year
Business Plan, we have defined sustainability as “achieving sustainable and stable growth for the Mizuho group, and through this growth, contributing to customer-focusedthe sustainable development and prosperity of the economy, industry, and society around the world” and strengthened our stance on advancing group-wide sustainability initiatives. We have also defined key sustainability areas in four business operationsareas (a declining birth rate and fundamentalaging population, plus good health and lengthening lifespans; industrial development and innovation; sound economic development; and environmental considerations) and three areas of corporate foundations (corporate governance; human capital; and environment and society) and advanced our sustainability initiatives by incorporating such initiatives in the strategy of each
in-house
company, unit and group. In addition, we strengthened our stance on advancing sustainability initiatives as one of our management priorities and strived to bolster such initiatives through, among other means, discussions at the Executive Management Committee, Risk Committee, and the Board of Directors.
Amid the increasing expectations of stakeholders over the social and environmental impact of business decisions and business activities, we formally signed the Principles for Responsible Banking, a framework created by the United Nations Environment Programme Finance Initiative*, which was launched in September 2019.
*The United Nations Environment Programme Finance Initiative was established in 1992 by the United Nations Environment Programme (founded in 1972 as a UN subsidiary organ) to promote a shift to a financial system under which environmental, social and governance (ESG) impacts are fully considered.
Response to
COVID-19
The worldwide and rapid spread of
COVID-19
is causing great disruption to the economy and financial markets, in addition to affecting the daily lives and working styles of individuals. We place the highest priority on the safety and health of our customers and our employees and their families. We aim to fulfill our social mission as a financial institution essential to maintaining economic and social functions, such as supporting the settlement of funds and assisting with business financing.
At this time, it is difficult to accurately predict the ultimate scale of the economic and financial impact of
COVID-19,
the timing of when the situation will return to normal, and what further measures will be necessary to deal with the crisis. While it can be well expected that economic activities will recover promptly after the lapse of a certain period of time, there is a concern that the stages of the crisis will gradually progress due to the deterioration of the real economy, and we will need to respond on the assumption that the impact will last for a significant period of time. On the other hand, we have sufficient resilience to overcome this crisis as a result of various initiatives we have implemented, such as improvement of the quality of our asset portfolios, sophistication of risk management structures, and enhancement of productivity”capital and foreign currency liquidity. We will ascertain the actual circumstances of our customers and prepare for potential risk events, and we will aim to fully respond to our customers’ needs, such as by providing funds, by focusing on strengthening relationships with our operational policycustomers and have worked togethercapturing business opportunities.
Implementing the
5-Year
Business Plan
In the
5-Year
Business Plan, we are aiming to transition to the next generation of financial services by building new forms of partnerships with our customers so that we can respond to their needs as the times change. Our objective is to build a stronger and more resilient financial group on which our customers can depend in the coming era. In addition to the megatrends such as digitalization, an aging society with a low birthrate, globalization, and now the global spread of
COVID-19
has challenged people’s lifestyles, the state of the economy and societies to change greatly and at a rapid speed. In order to be a company that provides new value that goes beyond the conventional boundaries of finance in the coming era, we aim to steadily implement three forward-looking structural reforms.
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Priority business domains
Business structural reforms
We intend to implement business structural reforms focused on the following initiatives to better enable us to respond to structural shifts occurring in the economy, industry and society while drawing on our strengths:
Be a partner that helps customers design their lives in a changing society.
Assist customers with asset building to support their life design in an era of lengthening lifespans, and develop professionals capable of providing this assistance.
Provide sophisticated solutions for business succession needs and assist clients with needs regarding identifying candidates for senior management roles.
Create next-generation branches focused on consulting that combine physical locations and digital channels.
Appeal to new customer demographics and create new demand through the application of technology and open collaboration.
Be a strategic partner for business development under a changing industrial structure.
Open collaboration for growth acceleration, including financing the growth of startups and forming industry-government-academia partnerships.
Utilize our industry knowledge and other insights to build new forms of partnerships that share business risks.
Leveraging our Asian client base and networks in order to support the business development of global clients.
Be a partner with expert knowledge of market mechanisms and the ability to draw on a range of intermediary functions.
By strengthening our global network and products framework, draw on a broad range of intermediary functions to connect investors with other investors and connect issuers with investors.
Enhance the sophistication of our ALM and portfolio management through flexible asset allocation while maintaining a focus on achieving a balance between realized gains and unrealized gains/losses.
Financial structure reforms
We intend to implement financial structure reforms focused on the following initiatives to transition to a flexible business/earnings structure that can better respond to changes in the business and competitive environments:
Identify business/earnings structure issues in each business domain, focusing on the following four perspectives:
Risk and return (gross profits ROE)
Cost and return (expense ratio)
Growth potential
Stability
Based on the above factors, streamline certain areas and
concentrate/re-allocate
corporate resources to growth areas.
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After establishing a stable profit base, transition to an earnings structure centered on proactively pursuing earnings streams with upside potential.
Corporate foundations reforms
We intend to implement the following initiatives in order to strengthen our corporate foundations as a means of supporting continued competitive advantages:
Transform our approach to new business and our working style.
Focus on the areas of personnel/workplace, IT systems/digital, sales channels and group companies.
Revise our human resources management in this direction.

First,line with an approach that prioritizes employees’ professional growth and career preferences and promote a new human resources management strategy focused on maximizing our workforce value in a manner that is universally recognizable.

Strengthen group governance.
Expand the use of
“dual-hat”
appointments of executive officers between our holding company and group companies and other methods of strengthening unified management of the group, including group companies other than banking, trust banking and securities subsidiaries. This will enhance our ability to implement key strategies and structural reforms.
Cultivate a new corporate culture centered on communication.
Sustainability initiatives
In April 2020, we revised our Basic Policy on Sustainability Initiatives in order to further promote the evolution of integrated, group-wide operations across banking, trust and securities functions to ensure that the business is managed on a customer-focused basis, we have enhanced our front-line capabilities, implemented prompt decision-making processes, increased the efficiency of group management and worked to strengthen our noninterest income business on a group-wide basis by providing solutions to issues that customers may face.

In addition, with respect to the fulfillment of fiduciary duties, in addition to our policies and action plans for each group company regarding the asset management-related business, we set and published quantitative key performance indicators to confirm the extent to which our fiduciary duties are being fulfilled and implemented various kinds of customer-focused measures.

Secondly, we have promoted “operational excellence” in order to improve productivity. With the aim of “improving operational efficiency” and “enhancing service value for customers by raising the sophistication of our operations,” we have streamlined head office operations and advanced our business process reform through the utilization of digital technologies such as robotic process automation (i.e., software that is capable of inputting, processing, collecting and checking data that requires simple judgment, which can be utilized for the automation of routine manual tasks) and employeemind-set reforms, etc.

Thirdly, we have actively worked on improving innovation. Under a new structure for promoting innovation, which the CDIO (Chief Digital Innovation Officer) is exclusively in charge of, we have advanced ourdrive initiatives by establishing Blue Lab Co., Ltd. for the purposes of creating next-generation business models and actual commercialization related businesses, and commenced“AI-based Score Lending,” (i.e., an individual consumer financing service that provides reference values for lending terms, such as interest rates and borrowing limits, based onAI-based score levels), one of the first FinTech services in Japan, provided by J.Score CO., LTD.

Fourthly, in order to contribute to the sustainable development of society and to create new corporate value, we have pursued a CSR initiative regarding environmental, societal and governance (ESG) issues. With respect to environment and society, we issued green bonds and developed a human rights policy in line with international standards, among other initiatives. With respect to governance, we became the first Japanese bank holding company for which the Chairman of the Board of Directors and the chairmen of the three legally-required committees are all outside directors, and each of Mizuho Bank, Ltd., Mizuho Trust & Banking Co., Ltd. and Mizuho Securities Co., Ltd. (the “Three Core Companies”) changed its corporate governance system from the “Company with Board of Company Auditors” structure to the “Company with Audit and Supervisory Committee” structure.

Finally, with respect to legal compliance, we continued our various efforts, including severing transactions with anti-social elements and our countermeasures against money laundering and terrorist financing.

The business environment surrounding financial institutions continues to be challenging, and we anticipate it will undergo major structural changes over time. Under these circumstances, we will undertake fundamental structural reforms in our business structure, and, based on aten-year time horizon, we will strive to secure our sustainable growth and continued competitive advantage.

We will utilize advanced technologies in accordance with the expectations of society, our concept of open innovation to further developstrategy and the Principles for Responsible Banking. With our “One MIZUHO strategy” by, for example, (i) endeavoring to increase profit through actively pursuing collaborative engagement with other companies, not limited to financial activities, in order to create new business opportunities and (ii) endeavoring to strengthen cost competitiveness and enhance productivity while striving to optimize organization and staffing, restructure branch strategies and accomplish other related tasks.

In the fiscal year ending March 31, 2019, in order to address three material issues, “launching and implementing fundamental structural reforms,” “achieving the medium-term business plan” and “completing implementation of our next generation IT systems,” we are focusing our attention on progressively developing our “One MIZUHO strategy” by implementing changes to the structure and foundations of our business, further integrating our “customer first” principle into everything we do and fundamentally increasing productivity, andsustainability initiatives, we will work to advance such strategy by placing emphasisfurther emphasize the perspective of environmental conservation and promote initiatives on key sustainability areas based on the points described below.

Increasing Our Earning Capacity through Fully Implementing Our Customer First Principle

Through strengthening customer contacts, ensuring awareness of customer needsfollowing approaches set out in the policy:

Regarding the economy, industry, society and accomplishing other related tasks,the environment, we will work to further develop our “One MIZUHO strategy” by which group-wide operations are integrated and workendeavor to increase our earnings capacitypositive impacts and reduce our negative impacts, both direct and indirect.
We, as a financial group, will especially focus on a group-wide basisthe indirect impacts generated by solving issues that need to be addressed.our provision of financial and other services and through dialogue with clients (engagement). We will also work to fulfillprovide our fiduciary dutiesclients with respect to the asset management-related business and incorporate customers’ voices and evaluations into the process of following our business plan in order to reflect them in our strategies and measures.

Selecting and Focusing on Certain Areas of Business

By improving the reasonable allocation of management resources in relation to the focus and streamline areas by which targets and markets are narrowed, we will work to make efficient use of our limited management resources and increase our earnings capacity. In the focus areas, we will work to expand the area and breadth of risk taking and will commence strengthening new and growing businesses.

Establishment of a Resilient Financial Base

By capturing signs of changes in the business environment and exercising flexible and effective control over our balance sheets, we will seek to optimize risk and return. With respect to the disposal of cross-shareholdings, we will work to achieve targets set forth in the medium-term business plan. In addition, by thoroughly reviewing our business processes through the pursuit of “operational excellence” and other similar efforts and by reviewing our working style, we will reform our cost structure.

Utilization of Technology and Data

We will strengthen our ability to develop and promote group-wide digital innovation strategies and will promote efforts towards the utilization of technology and data, and theco-creation of value through collaboration with other companies in each area of productivity enhancement through upgraded business processes, the reform of business foundation and the creation of new businesses.

Transforming Our Corporate Culture into One that Encourages the Active Participation of Our Workforce to Support a Stronger Mizuho

We will seek to establish and spread the “fundamental reform of HR management” by promoting, among other matters, HR management that respects employees’ individuality, active participation of a diverse workforce, a work-life balance initiative to provide flexible and varied work arrangements and the “health and productivity management” initiative. We will also proceed withmultifaceted support for initiatives toward the transformation of our corporate culture, such asmind-set reforms that encourage employees to take on challenges and eliminate inward-facing energy.

Completion of Implementation of our Next Generation IT Systems

As our most important and largest systems project, we will take all possible measures to complete the implementation of our next-generation IT systems in a safe and steady manner.

In addition to the foregoing efforts, we will also continue to endeavor to upgrade our risk appetite framework and strengthen our attitude toward governance and compliance with laws and regulations, including severance of business relations with anti-social elements.

As already announced, Trust & Custody Services Bank, Ltd., which is our consolidated subsidiary, has executed a management integration agreement with Japan Trustee Services Bank, Ltd. to the effect that both parties will carry out management integration. The integrated company will aim to be the top trust bank in Japan specializing in asset administration services that meet a wide variety of customer needs regarding asset administration services.

We will also continue to consider the possibility of consolidation between Mizuho Bank and Mizuho Trust & Banking.

We will contribute to the sustainable development of society by pursuing a CSR initiative toward addressing social challenges, such as the Sustainable Development Goals (i.e.,(SDGs) and environmental, social and governance (ESG) concerns.

In the international goals from 2016 to 2030 that were set forthevent of a conflict of interest or differences in opinion among stakeholders regarding the “2030 Agendaimpacts and timeframe for Sustainable Development” adopted by the UN Summit held in September 2015), on a group-wide basis and further promote our corporate values.

In addition,implementation, we will continue to implement measures to further improvemake a comprehensive decision by taking into account the value of our brand through means suchcircumstances and situations as positive communicationwell as international frameworks, agreements or consensus, with various stakeholdersa long-term perspective towards harmony with the economy, industry, society and extending support to the Olympic and Paralympic Games Tokyo 2020 (Mizuho is a Tokyo 2020 Gold Banking Partner).

environment.

Group Operations

Group Management Structure

We operate our group through five
in-house
companies, which determine and promote strategies group-wide across banking, trust banking, securities and other business areas according to the attributes of customers, and two units that support all of the
in-house
companies.

Retail & Business Banking Company

The Retail & Business Banking Company is in chargeresponsible for customer segments consisting of the services for individual customers, small- andmedium-sized enterprisesSMEs and middle-market firms.

corporations, engages in consulting services that integrate banking, trust banking, securities and other functions within the Mizuho group, as well as providing convenient financial services by leveraging advanced technologies and forming alliances with other companies.

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For individual customers, the Retail & Business Banking Company will strive to improve our capacity to provide consulting services, including asset management and asset succession, while working on the development and provision of convenient services by leveraging advanced technologies and forming alliances with other companies and institutions.

While fulfilling our fiduciary duties, to promote the change “from savings to investments”As a reliable partner in an era of lengthening lifespans, we support customers who have concerns about their long term plans, and in addition to the consulting services that combine banking, trust banking and securities functions, we offer our customers asset formation support that utilizes advanced technologies, such as

AI-powered
asset management advisory services and asset management support utilizing remote channels, etc. Accordingly, in addition to strengthening our efforts related to NISA, a tax exemption program for small investments, and iDeCo, an individual-type defined contribution pension plan, we will strengthen financial education through seminars.

Furthermore, to support the smooth asset succession, we provide services such as inheritance distribution service and testamentary-trust that utilize trust function. We have also expanded our line of products and services such as family trustsMultifunctional Safety Trust and annual fund giving trusts.

a web based app that can be used to manage inheritance.

With respect to the loan business, we have expanded our line of housing loan and card loan products and offer various products and services in response to each customer’s life stage, including firstly products that meet a diverse range of needs, internet-based services and the development of a new internet-based services.

business model that utilizes advanced technology.

We also provide products/services to officers and employees of our corporate clients, such as opening account for payrolls, providing housing loans, management of retirement payments, etc.

In addition, in an effort to increase customer convenience, we have expandedenhanced the efficiency of our branch network throughout Japan (Mizuho Bank: 465;464; Mizuho Trust & Banking: 60; Mizuho Securities: 275;256; each as of March 31, 2018)2020) and our ATM network (approximately 7,200 locations as of March 31, 2018,2020, including ATMs shared with AEON Bank). We also have 166147 of Mizuho Securities “Planet Booths,” which are located in the branches and offices of Mizuho Bank, and 23 of Mizuho Trust& Banking “Trust Lounges,” which are located in the branches and offices of Mizuho Bank, as of March 31, 2018.

2020.

Moreover, with the aim of constructing a convenient and efficient channel network that responds to changes in customer needs, we are promoting the next generation of branches and offices which serve as consulting spaces along with a reduction of the number of branches and offices through reorganization and consolidation.
We have also made efforts to enhance customer convenience by offeringconvenience. For example, we are engaging in collaboration with other companies and are utilizing advanced technologies to offer new financial and other services that utilize advanced scientific and digital technologies, as well as by enhancingto enhance the quality of our internet and smart phone services.

services, in light of changing customer needs due to ongoing digitalization.

In the fiscal year ended March 31, 2020, we have also strengthened our efforts to enter into new business areas, including the launch of Mizuho Smart Business Loans, an online lending service utilizing big data and AI technologies targeted at small and
medium-sized
enterprises, and receipt of certification as an information bank by J.Score Co., Ltd.
Further, we undertake thea business related to lottery tickets, such as the sales of lottery tickets issued by prefectures and ordinance-designated cities.

For small- and
medium-sized
enterprises and middle-market firms, the Retail & Business Banking Company provides solutions with respect to both types of needs: management issues such as business development, and personal issues of customers who are business owners, such as asset inheritance and management, etc.

Starting from consulting services,

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In response to increasing customer needs related to their growth strategy or business succession in an unclear business environment, we offer multi-layered solutions in response to the various development stages of our customers’ businesses through the combined strength of our banking, trust banking, securities, asset management and research and consulting functions, based on a customer-focused approach.

Specifically, we offer syndicated loans, advisory services related to overseas expansions, mergers and acquisitions-related services, and business matching services, depending on the customers’ business strategies, in addition to brokering financial products and expanding the customer base for trustee business for defined contribution pension plans, combining traditional financial services and advanced advisory services.

Furthermore, due to the aging of Japanese business owners, business succession and asset inheritance has become a matter of urgency. Using our succession and property
know-how,
we actively offer solutions for optimal and smooth business succession and asset inheritance, including the inheritance of business ownership and corporate stock as well as corporate reorganization, addressing both individual and corporate needs.

Moreover, we leverage our existing customer base to support the growth of innovative companies that show future promise by means of finance and other solutions.

In this manner,light of structural changes in customer needs against the backdrop of further progress in digitalization, an aging society with a low birthrate and other factors, we aim to growenhance the efficiency of sales channels, including physical storefronts, and expand new business areas to realize the wants and desires of individual customers as well as the sustainable growth of corporate customers.
In order to achieve this goal, we intend to take advantage of our broad customer base, trustworthiness and dependability, as well as our consulting capabilities. At the same time, we intend to collaborate openly with our customers intothose both inside and outside the Mizuho group to provide new value incorporating both financial and
non-financial
products and services, as a “Financial Services Consulting Company.”

partner for individual customers’ life design and corporate customers’ growth strategies and business succession.

Corporate & Institutional Company

The Corporate & Institutional Company engages in relationship managementis responsible for our customers that arecustomer segments consisting of large corporations, financial institutions and public sector businessespublic-sector entities in Japan.

Japan, provides custom-designed solutions for each client on a group-wide basis to meet their capital raising, asset management and business/financial strategy related needs.

For large corporate customers, based on our solid customer relationships and utilizing our global industry knowledge, we offer group-wide financial solutions that are tailored for each customer, such as syndicated loans,fund management, underwriting of equity and bonds, and M&A advisory and risk hedging products, etc., on a global basis to meet their needs in fund-raising, investment, management and financial strategies.

Mizuho Bank and Mizuho Securities have introduced the
dual-hat
structure in several offices in Japan. They collaborate toThrough the global inter-sectoral group collaboration, they provide our customers with solutions based on their capital management, business strategy and financial strategy on a global basis.

Mizuho Bank and Mizuho Trust & Banking together provide solutions related to real estate, where we have a leading track record in the industry in Japan. They also work together in the areas of pension, asset securitization, securities management, stock transfer agent, consulting, etc., in response to our customers’ diversified needs for investment and asset optimization.

We are also strengthening business structures across the group by increasing personnel and reframing the business structure

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Table of Mizuho Securities, as well as strengthening the consulting functions of Mizuho Trust & Banking.

Further, we are proactively providing risk money to develop next-generation industries and growth industries.

Contents

For financial institutions, we offer advisory services and solutions, such as advice on financial strategy and proposals on various investment products, by concentrating our various financial expertise from each group company to meet the increasingly sophisticated and diversified needs of customers.

For public sector customers, as a leading bank with a wealth of experience and a solid track record, we provide optimal financial services group-wide that include funding support as a trustee and underwriter of public bonds and services as a designated financial institution. In addition, in the field of revitalizing rural regions in Japan, an important matter to the Japanese economy, we engage in Public Private Partnerships/Private Finance Initiatives (PPP and PFI) projects in collaboration with regional financial institutions, national and regional government entities and their affiliates.

Through these endeavors,

We will build new relationships with customers and endeavor to realize value
co-creation
and
co-prosperity
based on changes in customer needs in response to changes in social and industrial structures.
The environment surrounding corporate management is changing rapidly due to such factors as the progress of industry transformation and the heightened interest in sustainability. Under such circumstances, business portfolio reclassification, expansion of businesses in growing foreign markets and others have become issues for our clients. By leveraging our industry expertise that is at the highest level among Japanese banks, strong consulting skills and diverse intermediary functions, we aimwill contribute to bethe formulation and implementation of financial and capital strategies of our customers’ most trusted partner.

clients as a strategic partner for our clients’ business development, and build new relationships with clients and realize value

co-creation
and
co-prosperity.
Global Corporate Company

The Global Corporate Company servesnon-Japanese companies andis responsible for customer segments consisting of both Japanese companies operating outside Japan.

Japan and

non-Japanese
companies, provides various solutions by taking advantage of our deep understanding of our clients’ businesses and our strengths in corporate finance and transaction banking, such as lending and corporate bond underwriting.
For our Japanese corporate customers, we provide integrated support both in and outside Japan to help them expand their overseas operations. We offer highly specialized services that use our advanced financial technologies and expertise. Particularly in Asia, we support Japanese corporate customers developing new markets by offering advisory and other services.

We

In addition, through our Global 300 Strategy, which involves focusing on a group of approximately 300 blue-chip
non-Japanese
companies, we are also expanding business with
non-Japanese
corporate customers. We use our global network to support U.S. and European global companies developing business in Asia as well as Asian multinational enterprises expanding within Asia. For ournon-Japanese corporate customers, we are pursuing the Global 300

Strategy, which involves focusing on a group of approximately 300 blue-chip companies around the world. Taking the characteristics of each industry sector into consideration, we take a focused approach based on ourknow-how and insight on the business and financial aspects. Through a close relationship with top management, weWe will aim to develop long-term relationships withprovide enhanced financial services by utilizing our customers. Our markethigh presence within the United States continues to grow, including in the area of investment-grade corporate debt underwriting, based on the enhanced sophisticationU.S. capital markets and network in the collaboration between our banking and securities functions.

Asian economic regions that have been growing rapidly.

Meanwhile, we are enhancing our supportchannels with customers in order to clients by expanding our global office network and strengtheningstrengthen the framework to support our customers’their business outside Japan. We have recently opened the Mizuho Bank Phnom Penh Branch (under the Bangkok Branch), Washington, D.C. Representative Office, and Dallas Representative Office (under the New York Branch) as well as the Mizuho Bank Mexico, S.A., Leon Office, the Mizuho Securities Asia Limited, Seoul Branch and the Mizuho International plc, Dubai Branch.

We are forming business alliances with government-affiliatedlocal financial institutions and financialgovernment-affiliated institutions to provide

up-to-date
local information to our customers. We are also enhancing our service framework to address the diverse business needs of customers, including post-entry support.

As we see major changes in the global economy and the regulatory framework, wecustomers. We will aim to achieve sustainable growthbuild long-term relationships with customers by improvingutilizing business and financial consulting and our close relationships with the top management of corporate customers based on our

know-how
and insight regarding each country and industry sector.
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We will adjust our business portfolio promoting cross-sellingin anticipation of future growth constraints, such as the phased implementation of Basel regulations and our foreign currency funding capabilities in order to expand stable profit bases and make our profit structure more muscular. In order to achieve this goal, we will continue our initiatives such as raise our profit capabilities by strengthening current business bases and adjustment of our business portfolio through selection and management base.

concentration.

Global Markets Company

The Global Markets Company operatesis responsible for market-related businesses, engages in sales and trading business to meet the risk hedging and investment needs ofservices for a wide range of customers, from individuals to institutional investors, by offering a comprehensive range of market-related products. Wemarket products to meet their risk hedging and asset management needs and also operate asset liability managementconducts ALM and investment business, with respectincluding stable capital raising and balance sheet management as well as management of portfolios of fixed income, equity and other securities.
To become a
top-class
Asian player in the global markets, our basic strategy is to bondsenhance our presence in the market so that we can develop the most suitable products and equities.

organizational structure based on arising customer needs.

With respect to the sales and trading business, through a management structure based on customer segments, we offer detailed products and services based on our sophisticated knowledge, experience and expertise to meet the diverse needs of our customers and support their global business by integrating our banking, trust banking and securities functions as well as our broad customer base, network and utilizing our global network.

presence in the financial market.

Specifically, we are strengthening our contact with customers at branches for our customers that are small and
medium-sized
enterprises and middle market firms, and we are providing ideas that reflect market perspectives for transactions involving large corporations and financial institutions. For investors such as hedge funds and asset managers, we use our comprehensive strength in the banking and securities to provide products that meet our customers’ needs.

With respect to our asset liability management, we contribute to efficient balance sheet management on a global basis through the stabilization of domestic currency and foreign currency liquidity management. Also, as for the investment business, we earn stable revenue by constructing wella diversified portfolio in interest rates, equity and changingcredit markets, and appropriate asset allocation appropriately with using our early warning control to reflect the changes of market environment flexibly.

We will engage in investment decision incorporating portfolio management, focusing on the balance between realized gains and valuation gains and losses and axes of ESG and SDGs.

In addition, we are also activelyhave been working on the advancementmaintaining and strengthening our competitiveness by enhancing our infrastructure, including next generation trading rooms in anticipation of technological progress, our market system and back office for market business based on strategic management resources allocation and reducing costs, and further strengthening digital literacy of personnel for market business and developing personnel with highly specialized knowledge.
We aim to realize a stable earnings structure in ALM and the investment business and to improve sales and trading services with clearly defined focus areas which enable us to draw on diverse intermediary functions through the usemarket and create diverse value for our customers.
In order to achieve this goal, as a partner with expert knowledge of advanced technology such as AI.

The Global Markets Company is aimingmarket mechanisms that has insight into markets, we will aim to becomeenhance our asset allocation and product lineup and aim to establish atop-class Asian player in stable profit base. At the global market by utilizing its capacitysame time, we will strive to offer a wide rangeprovide appropriate investment opportunities to investors with different risk appetite.

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Table of products based on the collaboration among the banking, trust and securities functions.

Contents

Asset Management Company

The Asset Management Company works withis responsible for businesses related to asset management, provides products and services that meet the asset management needs of our wide range of customers, from individuals to institutional investors, through the collaboration between the group’s banking, trust banking and securities functions as well as Asset Management One to meet the needs of a wide range of customers, from individuals to institutional investors, by providing products and services while fulfilling its fiduciary duties.

Co., Ltd.

For individual customers, we offer investment products that contribute to their medium- to long-term asset formation.

formation in order to meet their various needs.

For institutional investors such as pension funds, we make our asset management capabilities more sophisticated and offer consultingcomprehensive solution services to meet their diversified and sophisticated asset management needs.

We offer our customers investment products that are best suited to them through Mizuhoby strengthening our asset management capabilities in collaboration with our group companies and affiliates such as the New York subsidiary and other foreign subsidiaries of Asset Management One that are established for diversified global investments, Asset Management One Alternative Investments, our New York-basedLtd. located in Tokyo that selects and offers hedge fund manager, Mizuho Global Alternative Investments, our Tokyo-based financial gatekeeper, Eurekahedge, our Singapore-based hedge fund database provider,funds, and Matthews Asia, an independent, privately owned firm and the largest dedicated Asia investment specialist in the U.S.

United States.

In addition, in various product fields, we are focusing on developing and offering products through collaboration with BlackRock, Inc. and Partner Group AG.

The Asset Management Company aims

By providing these solutions, addressing ESG issues through engagement in responsible investment and seeking efficiency and innovativeness through innovation and operating process reforms, we aim to contribute to the revitalization of domestic financial assets through the foregoing approaches.

in Japan and realize medium- to long-term growth of our asset management business.

Global Products Unit

The Global Products Unit cooperates with eachis in charge of thein-house companies in providing solutionssolution services to customers such as advicein a wide range of segments, including individual customers, corporate clients and investors. We aim to respond to customer needs that are becoming sophisticated and diverse by drawing on business and financial strategies, financing support,our high level of expertise in each area, including M&A, real estate, project finance, domestic and foreign exchangepayments, asset management and settlement, by making full use of its expertise.

stock transfer agency.

In the investment banking business we provide sophisticated financial solutions mainly in the business areas of mergers and acquisitions, real estate, asset finance, project finance and corporate finance.

as follows:

In the mergers and acquisitions business, with an aim to increase the corporate value of our customers, we offer sophisticated solutions in response to our customers’ needs, mainly in the areas of cross-border mergers and acquisitions, business succession and management buyouts.

In the real estate business, by taking full advantage of our extensive knowledge and skills developed through the collaboration of our group companies, we offer various real estate-backed financing methods and real estate-related investment strategy support.

In the asset finance business, by strengthening the collaboration between banking, trust banking and securities functions and by arranging customers’ asset securitization, we satisfy their demands such as diversification of fund-raising sources and improvement of financial indices achieved by removing assets from their balance sheet.

In the project finance business, we provide various financial products and services internationally, including long-term loan facilities for large-scale mining and public infrastructure development, and domestically, including loans for renewable energy-related projects and arrangement
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Table of PFI/PPP deals. In addition, we offer investment opportunities to institutional investors through our managed infrastructure debt funds.

Contents

domestically, including loans for renewable energy-related projects and arrangement of PFI/PPP deals. In addition, we offer investment opportunities to institutional investors through our managed infrastructure debt funds.
In the corporate finance business, we proactively provide a wide variety of fund raising solutions in the syndicated loan and debt and equity capital markets.

In the transaction business we provide various solutions related to domestic exchange settlement, foreign exchange, cash management, trade finance, yen correspondence settlementin accordance with customer needs and yen securities custody, global custody, asset management and stock transfer agent services.

the character of their business:

For our corporate customers in the transaction business, we offer various financial services and products such as online banking, cash management solutions, Renminbi-denominated services and trade finance on a global basis.

For financial institutions and institutional investors, we promote custody, global custody and yen correspondence settlement, asset management and stock transfer agent services.

In addition, we are further expanding our range of services in collaboration with our group companies and leveraging the latest technological innovations.

The Global Products Unit aims

As uncertainty increases in the environment surrounding customers and our society, we will strive to capture the changes in the environment in a timely manner to provide the best support in order for our customers to create added value and increase corporate value.
Furthermore, we will closely collaborate with offices in Japan and around the group-wide goalworld to respond to the needs of becomingglobal investors, especially for cash management, settlements and other transaction banking services, as well as services in the area of project finance. In addition, we are working to strategically develop a “Financial Services Consulting Group” by building a solid products platform.

larger pool of specialists in each area to further increase our expertise.

Research & Consulting Unit

The Research & Consulting Unit the fifth pillar for becomingoffers a “Financial Services Consulting Group,” offers bothin-house and customerwide variety of solutions with research functions that provide deep analysis, spanning from industrial to macroeconomic analysis and consulting functions through “One Think Tank,” in collaboration with each of thein-house companies.

that cover many fields, including business strategy.

In the research field, we conduct deep investigations and wide-ranging analyses widely ranging from macro-economics to industry and business trends, and we also offer public policy advice based on such investigationslink research and analyses.

business origination function.

In the consulting field, we also offer a wide range of functions to help solve various issues that companies face, including those regarding management/financialmanagement /HR planning/IT strategy business/asset succession and IT systems,creation of new businesses, as well as social issues within the public sector, including the environment, energy, infrastructure and health care.

With increased globalcare by utilizing financial engineering and digital knowledge.

In addition to the megatrends of digitalization, globalization and an aging society with low birthrate, uncertainties with respect to the spread of
COVID-19
are greatly changing economic and social uncertainties,environments. By taking initiatives such as well asenhancing the diversificationsophistication of management issuesresearch and expansion of consultation, we will itend to further contribute to creating new value for our customers and social challenges, our customers’ expectations of the unit’s research and consulting functions are rising. To better meet such a business environment, we will focus on the following two areas:

Creating new value through sharpeningsociety by utilizing our expertise, including industry expertise that can better respond to structural shifts occurring in the researcheconomy and consulting fieldssociety, and combining it with digital technology.

Helping boostby becoming the Mizuho group’s underlying profitability by disseminating the Research & Consulting Unit’s knowledge, skills and value-added to the entire group through strengthened collaboration with thein-house companies.

Through such efforts, our “One Think Tank” teamsstarting point of experts are tackling a variety of new areas and further strengthening intra-group collaboration in order to contribute to the further developmentvalue chains of our customers and society as the “source of value creation.”

Competition

We engage in banking, trust banking, securities and other businesses related to financial services and face strong competition in all of those areas of businesses partly due to deregulationbusinesses.
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Table of the Japanese financial industry.

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Our major competitors in Japan include:

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

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

Other banking institutions: These include city banks, trust banks, regional banks, shinkin banks (or credit associations), credit cooperatives, agricultural cooperatives, foreign banks and retail-oriented banks.
Securities companies and investment banks: These include both domestic securities companies and the Japanese affiliates of global investment banks.

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

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

Asset management companies.

Other financial services providers: We also compete with financial services providers that utilize “FinTech.”

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

Japanese Banking and Securities Industry

Private banking institutions in Japan are normally classified into two categories (the following numbers are based on information published by the Financial Services Agency, available as of June 28, 2018)19, 2020): (i) ordinary banks, of which there were 122, not including foreign commercial banks with banking operations in Japan; and (ii) trust banks, of which there were 15,14, including Japanese subsidiaries of foreign financial institutions and subsidiaries of Japanese financial institutions.

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

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

Based on information published by the Financial Services Agency, available as of [May 8], 2018,June 19, 2020, there were 5655 foreign banks operating banking businesses in Japan. These banks are subject to a statutory framework similar to the regulations applicable to Japanese domestic banks. Their principal sources of funds come from their overseas head offices or other branches.

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

In April 2012, Japan Bank for International Cooperation, which provides policy-based finance with a mission to contribute to the sound development of Japan and the international economy and society, was spun off from Japan Finance Corporation and was established as a joint stock companycorporation wholly owned by the Japanese government.

Another distinctive element of the Japanese banking system is the role of the postal savings system. Postal savings deposits are gathered through the network of governmental post offices scattered throughout Japan, and their balance of deposits totaled over 200 trillion yen in the past. In recent years, the governmental postal business has been in the process of organizational restructuring. In 2003, the governmental postal business was transferred to Japan Post, a government-owned entity established in the same year, and in 2007, Japan Post was transformed into a government-owned joint stock corporation holding four operating companies including Japan Post Bank, which currently operates as an ordinary bank. In November 2015, the shares of three main companies of the Japan Post group were listed on the Tokyo Stock Exchange, with Japan Post Holdings disposing of approximately 11% of its ownership in the two subsidiaries, while the Japanese government disposed of approximately 11% of its ownership in Japan Post Holdings. “In September 2017, the government further sold down approximately 22% of Japan Post Holdings shares.” Japan Post Holdings plans to initially dispose of its two subsidiaries shares gradually down to approximately 50% ownership.

In April 2019, the maximum deposit amount that Japan Post Bank Co., Ltd. may accept increased from 13 million yen in aggregate for ordinary deposits and time deposits to a total of 26 million yen, 13 million yen each for ordinary deposits and time deposits.

In recent years, as a result of technological advances in the digital field called ”FinTech,” entry from different industries into areas considered to be the inherent business of financial institutions such as settlement services has been increasing.

In the Japanese securities market, a large number of registered entities are engaged in securities businesses, such as sales and underwriting of securities, investment advisory and investment management services. As deregulation of the securities market progressed, several of the country’s banking groups have entered into this market through their subsidiaries. In addition, foreign financial institutions have been active in this market.

Supervision and Regulation

Japan

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

Financial Services Agency

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

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

In addition, under the capital distribution constraints system introduced in March 2016, the Financial Services Agency, acting on behalf of the Prime Minister, may order a bank holding company or bank to submit and carry out a capital distribution constraints plan. See “Capital Adequacy” below. The capital distribution constraints plan is required to be considered reasonable to restore the capital buffer and include restrictions on capital distributions, such as dividends, share buybacks and bonuses payments, up to a certain amount as determined depending on the level of the capital buffer.

Furthermore, under the Japanese TLAC regulations introduced in March 2019, the Financial Services Agency, acting on behalf of the Prime Minister, may order the bank holding company of a

G-SIB
in Japan to be designated as the domestic resolution entity of such
G-SIB
to submit reports related to improvement of TLAC or may issue a business improvement order to such domestic resolution entity if the external TLAC ratio of the domestic resolution entity or the internal TLAC of its material subsidiaries in Japan fall below the minimum requirements. See “Total Loss Absorbing Capacity” below.
Under the prompt warning system introduced in December 2002, the Financial Services Agency may take precautionary measures to maintain and promote the sound operations of financial institutions, even before those financial institutions become subject to the prompt corrective action system. These measures require a financial institution to reform profitability, credit risk management, stability and cash flow.

The Bank of Japan

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

Examination of Banks

The Banking Act authorizes the Prime Minister to inspect banks and bank holding companies in Japan at any time. By evaluating banks’ systems of self-assessment, auditing their accounts and reviewing their compliance with laws and regulations, the Financial Services Agency monitors the financial soundness of banks, including the status and performance of their control systems for business activities.
The inspection of banks ishad been performed pursuant to a Financial Inspection Manual published by the Financial Services Agency. Currently, the Financial Services Agency, takes the “better regulation” approach in its financial regulation and supervision. This consists of four pillars: optimal combination of rules-based and principles-based supervisory approaches; timely recognition of priority issues and effective response; encouraging voluntary efforts by financial institutions and placing greater emphasisbut on providing them with incentives; and improving the transparency and predictability of regulatory actions, in pursuit of improvement of the quality of financial regulation and supervision. On December 15, 2017 the Financial Services Agency announced a plan to repeal the Financial Inspection Manual after April 1, 2019 and establish a new framework for bank supervision. In order
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to upgrade the quality of its newsupervisory activities, strengthen Japan’s financial infrastructure, and to enable the Japanese economy to realize its full potential, the Financial Services Agency embarked on the review of the supervisory approaches. The Financial Services Agency announced the “JFSA’s supervisory approaches—Replacing checklists with engagement” in June 2018, and is committed to continuous improvement of the supervisory approaches through dialogue with financial institutions, etc. by using theme-specific reports, etc. Based on this, the Financial Services Agency repealed the Financial Inspection Manual, including the appendix that was referred to for self-assessment and determining the
write-off
and allowance.
In addition to individual financial institutions, the Financial Services Agency also supervises financial groups as financial conglomeratesa whole based on its Guidelines for Financial Conglomerates Supervision that focus on management, financial soundness and operational appropriateness of a financial conglomerate as a whole.

Guidelines.

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

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

Examination and Reporting Applicable to Shareholders

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

limited circumstances, the Financial Services Agency may order such principal shareholder to take such measures as the Financial Services Agency deems necessary.

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

Deposit Insurance System

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

The Deposit Insurance Corporation receives annual insurance premiums from insured banks. The effective premium rate from April 2018,2019, which is the weighted average of the rates for deposits that bear no interest, are redeemable upon demand and are used by depositors primarily for payment and settlement purposes, and for other deposits, is 0.034%0.033%.

The insurance money may be paid out in case of a suspension of deposit repayments, banking license revocation, dissolution or bankruptcy of the bank. Pay outs are generally limited to a maximum of ¥10 million of principal amount, together with any interest accrued with respect to each depositor. Only
non-interest
bearing deposits, redeemable on demand and used by depositors primarily for payment and settlement functions are protected in full.

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

Governmental Measures to Treat Troubled Institutions

Under the Deposit Insurance Act, a Financial Reorganization Administrator can be appointed by the Prime Minister if the bank is unable to fully perform its obligations with its assets or may suspend or has suspended repayment of deposits. The Financial Reorganization Administrator will take control of and dispose of the assets of the bank and search for another institution willing to take over its business. Its business may also be transferred to a “bridge bank” established by the Deposit Insurance Corporation for the purpose of the temporary maintenance and continuation of operations of these types of institutions, and the bridge bank will seek to transfer the bank’s assets to another financial institution or dissolve the bank. The financial aid provided by the Deposit Insurance Corporation to assist another financial institution with succeeding the failed bank’s business may take the form of a monetary grant, loan or deposit of funds, purchase of assets, guarantee or assumption of debts, subscription of preferred stock or subordinated bonds, lending of subordinated loans, or loss sharing.

Where the Prime Minister recognizes that the failure of a bank which falls into any of (i) through (iii) below may cause an extremely grave problem in maintaining the financial order in Japan or the region where such bank is operating (“systemic risk”), without taking any of the measures described in (i) through (iii) below, the Prime Minister may confirm (nintei) to take any of the following measures, after the deliberation at the Financial Crisis Management Meeting: (i) if the bank does not fall into either of the banks described in (ii) or (iii), the Deposit Insurance Corporation may subscribe for shares or subordinated bonds of, or lend subordinated loans to the bank,

or subscribe for shares of the bank holding company of the bank, in order to enhance capital adequacy of the bank (item 1 measures (dai ichigo sochi)); (ii) if the bank is likely to suspend or has suspended repayment of deposits or is unable to fully perform its obligations with its assets, financial aid exceeding the

pay-off
cost may be available to such bank (item 2 measures (dai nigo sochi)); and (iii) if the bank is likely to suspend or has suspended repayment of deposits and is unable to fully perform its obligations with its assets, and the systemic risk cannot be avoided by the measure mentioned in (ii) above, the Deposit Insurance Corporation may acquire all of the bank’s shares (item 3 measures (dai sango sochi)). The expenses for implementation of the above measures will be borne by the bank industry, with an exception under which the Government of Japan may provide partial subsidies for such expenses.

New orderly and effective resolution regimes for financial institutions have been discussed internationally and “Key Attributes of Effective Resolution Regimes for Financial Institutions” was published by the Financial Stability Board in November 2011 and endorsed by the G20 leaders at the Cannes summit held in November 2011. Reflecting this global trend, pursuant to certain amendments to the Deposit Insurance Act that were promulgated in June 2013 and became effective on March 6, 2014, a new resolution regime was introduced in Japan.

Under the new resolution regime stipulated in the amendments to the Deposit Insurance Act and implementing ordinances thereunder, which became effective on March 6, 2014, financial institutions including banks, insurance companies and securities companies and their holding companies, are subject to the regime.

Further, under the new resolution regime, among other things, where the Prime Minister recognizes that the failure of a financial institution which falls into either (a) or (b) below may cause significant disruption in the financial markets or other financial systems in Japan without taking any of the measures described in (a) (specified item 1 measures)(tokutei dai ichigo sochi) stipulated in Article
126-2,
Paragraph 1, Item 1 of the Deposit Insurance Act or the measures described in (b) (specified item 2 measures)(tokutei dai nigo sochi) stipulated in Article
126-2,
Paragraph 1, Item 2 of the Deposit Insurance Act, the Prime Minister may confirm (specified confirmation)(tokutei nintei) to take any of the following measures, after the deliberation at the Financial Crisis Management Meeting; (a) if the financial institution does not fall into a financial institution
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which is unable to fully perform its obligations with its assets, the Deposit Insurance Corporation shall supervise the operation of the business of and the management and disposal of assets of that financial institution (tokubetsu kanshi), and may provide it with loans or guarantees necessary to avoid the risk of significant disruption in the financial systems in Japan (shikin no kashitsuke tou), or subscribe for shares or subordinated bonds of, or lend subordinated loans to the financial institutions (tokutei kabushiki tou no hikiuke tou) , in each case to be taken as necessary taking into consideration of the financial conditions of the financial institution; and (b) if the financial institution is or is likely to be unable to fully perform its obligations with its assets or has suspended or is likely to suspend repayment of its obligations, the Deposit Insurance Corporation shall supervise that financial institution (tokubetsu kanshi), and may provide financial aid necessary to assist merger, business transfer, corporate split or other reorganization in respect to such failed financial institution (tokutei shikin enjo). The expenses for implementation of the measures under this regime will be borne by the financial industry, with an exception under which the Government of Japan may provide partial subsidies for such expenses. If a measure set out in (b) above is determined to be taken with respect to a financial institution, the Prime Minister may order that the financial institution’s operation and assets be under the special control (tokutei kanri) of the Deposit Insurance Corporation. The business or liabilities of the financial institution subject to the special supervision (tokubetsu kanshi) or special control (tokutei kanri) by the Deposit Insurance Corporation as set forth above may also be transferred to a “bridge bank” established by the Deposit Insurance Corporation for the purpose of the temporary maintenance and continuation of operations of, or repayment of the liabilities of, such financial institutions, and the bridge bank will seek to transfer the bank’s business or liabilities to another financial institution or dissolve the bank. The financial aid provided by the Deposit Insurance Corporation to assist merger, business transfer, corporate split or other reorganization in respect to the financial institution set out in (b) above may take the form of a monetary grant, loan or deposit of funds, purchase of assets, guarantee or assumption of debts, subscription of preferred stock or subordinated bonds, lending of subordinated loan, or loss sharing.

If the Deposit Insurance Corporation has provided such financial assistance, the Prime Minister may designate the movable assets and claims of the failed financial institution as not subject to attachment under Article

126-16
of the Deposit Insurance Act, and such merger, business transfer, corporate split or other reorganization may be conducted outside of the court-administrated insolvency proceedings.

If the financial institution subject to the special supervision or the special control by the Deposit Insurance Corporation as set forth above is or is likely to be unable to fully perform its obligations with its assets or has suspended or is likely to suspend repayment of its obligations, the financial institution may transfer all or a material portion of its business or all or a portion of shares of its subsidiaries or implement corporate split or certain other corporate actions with court permission in lieu of any shareholder resolutions under Article
126-13
of the Deposit Insurance Act which permission may be granted by the court in accordance with the Deposit Insurance Act if (i) the financial institution is under special supervision by, or under special control of, the Deposit Insurance Corporation pursuant to the Deposit Insurance Act and (ii) the financial institution is, or is likely to be, unable to fully perform its obligations with its assets, or the financial institution has suspended, or is likely to suspend, repayment of its obligations.Act. In addition, the Deposit Insurance Corporation must request other financial institution creditors of the failed financial institution to refrain from exercising their rights against the failed financial institution until measures necessary to avoid the risk of significant disruption to the financial system in Japan have been taken, if it is recognized that such exercise of their rights is likely to make it difficult to conduct an orderly resolution of the failed financial institution.

According to the announcement made by the Financial Services Agency in March 2014, (i) Additional Tier 1 instruments and Tier 2 instruments under Basel III issued by a bank must be written down or converted into common shares when the Prime Minister confirms that item 2 measures (dai nigo sochi), item 3 measures (dai sango sochi) or specified item 2 measures (tokutei dai nigo sochi) need to be applied to the bank, and (ii) Additional Tier 1 instruments and Tier 2 instruments under Basel III issued by a bank holding company must be written down or converted into common shares when the Prime Minister confirms that specified item 2 measures (tokutei dai nigo sochi) need to be applied to the bank holding company.

Further, under a possible model of Single Point of Entry (“SPE”) resolution described in the Japanese TLAC regulations published by the Financial Services Agency in March 2019, if the Financial Services Agency determines that a material subsidiary in Japan of a Japanese financial institution that is a
G-SIB
is
non-viable
due to material deterioration of its financial condition after recognizing that it is or is likely to be unable to fully
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perform its obligations with its assets, or that it has suspended, or is likely to suspend, repayment of its obligations, and issues an order concerning restoration of financial soundness, including recapitalization and restoration of liquidity of such material subsidiary, to the resolution entity in Japan of such financial institution, the material subsidiary’s internal TLAC instruments will be written off or, if applicable, converted into equity in accordance with the applicable terms of such internal TLAC instruments. Following the
write-off
or conversion of internal TLAC instruments, if the Prime Minister recognizes that the resolution entity in Japan of the financial institution is or is likely to be unable to fully perform its obligations with its assets, or that it has suspended or is likely to suspend, repayment of its obligations, as a result of the resolution entity’s loans to, or other investment in, its material subsidiaries that are designated by the Financial Services Agency as being systemically important or that are subject to TLAC requirements or similar requirements imposed by a relevant foreign authority, becoming subject to loss absorption or otherwise, and further recognizes that the failure of such resolution entity is likely to cause a significant disruption to the Japanese financial market or system, the Prime Minister may, following deliberation by the Financial Crisis Management Meeting, confirm that specified item 2 measures (tokutei dai nigo sochi) need to be applied to the resolution entity for its orderly resolution.
Recovery and Resolution Plan

In November 2017,2019, the Financial Stability Board published the latest list of
G-SIBs.
The list is annually updated by the Financial Stability Board in each November, and the list as of November 20172019 includes us. A recovery and resolution plan must be put in place for each
G-SIB
and be regularly reviewed and updated. In Japan, under the Comprehensive Guidelines for Supervision of Financial Instruments Business Operators,Major Banks, etc., as part of crisis management, financial institutions identified as
G-SIBs
must prepare and submit a recovery plan, which includes the triggers to implement the recovery plan and an analysis of recovery options, to the Financial Services Agency, and the Financial Services Agency must prepare a resolution plan for each
G-SIB.

Capital Injection by the Government

The Strengthening Financial Functions Act (Kinyu Kinou no Kyouka no tame no Tokubetsu Sochi ni kansuru Houritsu) (Act No. 128 of 2004) was enacted on June 18, 2004 in order to establish a scheme of public money injection into financial institutions and thereby enhance the soundness of such financial institutions on or prior to March 31, 2008 and revitalize economic activities in the regions where they do business. On December 17, 2008, certain amendments to the Strengthening Financial Functions Act took effect. These amendments relaxed certain requirements for public money injection into Japanese banks and bank holding companies and other financial institutions under the prior scheme and extended the period of application therefor, which had expired on March 31, 2008, to March 31, 2012. These amendments aim to promote not only the soundness of such financial institutions but also the extension of loans or other forms of credit to small and
medium-sized
enterprises in order to revitalize local economies. In response to the Great East Japan Earthquake, the law was amended in June 2011 to extend the period for application to March 31, 2017 and to include special

exceptions for disaster-affected financial institutions. In 2016, the law was further amended to extend the period for application to March 31, 2022. Furthermore, in order to strengthen business bases of financial institutions by addressing the effects resulting from

COVID-19
preventive measures against the coronavirus pandemic, the law was amended in June 2020 to extend the period for application to March 31, 2026 and special exceptions were established for financial institutions that need to improve their capital adequacy due to the adverse effects of
COVID-19.
None of the financial institutions within the Mizuho group are subject to such special exceptions.

Bank Holding Companies

Under the amendments to the Banking Act, which became effective from April 2017, a bank holding company is required to administrate the businesses of the bank holding company group and is, in principle, prohibited from carrying out businesses other than administrating such businesses and matters incidental to such businesses; however, a bank holding company may, withgiven prior approval of the Prime Minister, a bank holding company may carry out certain operations common operations ofto its group companies so as to improve the efficiency of their operations. Business activities for subsidiaries of bank holding companies are limited to finance-related businesses and incidental businesses.

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The Anti-Monopoly Act (Shiteki Dokusen no Kinshi oyobi Kousei Torihiki no Kakuho ni kansuru Houritsu) (Act No. 54 of 1947, as amended) prohibits a bank from holding more than 5% of another company’s voting rights. This does not apply to a bank holding company, although the bank holding company is subject to general shareholding restrictions under the Anti-Monopoly Act. The Banking Act does, however, in principle, prohibit a bank holding company and its subsidiaries, on an aggregate basis, from holding more than 15% (in contrast to 5% in the case of a bank and its subsidiaries) of the voting rights of certain types of companies not permitted to become subsidiaries of bank holding companies. Despite the foregoing shareholding restrictions, under the amendments to the Banking Act, which became effective from April 2017, bank holding companies and banks, with prior approval of the Prime Minister, can acquire and own voting rights of companies whose businesses contribute or are expected to contribute to the increased sophistication of the banking business or the enhancement of customer convenience by utilizing information and communication technology that exceed the threshold of the voting rights described above.

Financial Instruments and Exchange Act

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

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

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

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

Sales of Financial Products

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

In June 2020, certain amendments to the law were promulgated, and will become effective within one and a half years from the date of promulgation, by which amendments the name of the law will be changed to “the Act of Provision of Financial Services (Kinyu Sabisu no Teikyou ni kansuru Houritsu)” and the “financial services intermediary business” will be newly introduced thereunder. Under a single registration for financial services intermediary business, registrants will become able to provide intermediary services of each of banking, securities and insurance. The amendments to the law will not require any provider of financial services intermediary business to belong to a specific financial institution, but will impose certain regulations to protect customers, including limitations on the type of services that they may provide, prohibitions on the acceptance of assets of customers and the lodging of a security deposit.
Self-Assessment and Reserves

The prompt corrective action system requires financial

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

Based on

A bank is, in principle, required to determine probable losses by multiplying the accounting standards for banks issuedamount of claims by the Japanese Bankers Association, a bank is required toclassification of obligors by probable loss ratio, and establish general reserves equivalent to such probable losses for normal obligors and watch obligors (including control obligors). For intensive control obligors, substantially bankrupt obligors and bankrupt obligors, specific reserves corresponding to the amount of bad debt of each obligor are required to be established.
In addition, in December 2019, the Financial Services Agency announced the “JFSA’s supervisory approaches to lending business and loan loss provisioning,” which sets forth fundamental policies concerning estimates that more accurately reflects recognized credit risks to establish reserves for probable losses on loans relating to restructuring countries.

taking into account the lending policy of each bank and actual financial status of each obligor, using the aforementioned reserves practice as a starting point.

Credit Limits

The Banking Act restricts the aggregate amount of exposure to any single customer or customer group for the purposes of avoiding excessive concentration of credit risks and promoting the fair and extensive utilization of bank credit. The limits applicable to a bank holding company and bank with respect to their aggregate exposure to any single customer or customer group are established by the Banking Act and regulations thereunder. The Banking Act and the related regulations were amended, which became effective from December 2014, to tighten the previous restrictions to meet international standards. As a result of these amendments, the current credit limit for a single customer or a customer group iswas set at 25% of the total qualifying capital, with certain adjustments, of the bank holding company or bank and its subsidiaries and affiliates.

In addition, in light of the Basel Committee on Banking Supervision’s final standard regarding the larger exposure framework published in April 2014, further amendments to the cabinet order and related regulations under the Banking Act became

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effective in April 2020, which tighten the credit limit applicable to (i) the bank holding companies and banks with international operations for a single customer or a customer group at 25% of the Tier 1 capital, instead of the total qualifying capital, and (ii) a Japanese
G-SIBs
such as us for another
G-SIB
at 15% of its Tier 1 capital, and introduced a look-through approach concerning credit to funds and securitized products, and require recognition of the amount of exposures reduced by credit risk mitigation methods as exposures to credit risk mitigation providers.
Restriction on Shareholdings

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

Share Purchase Program

The Banks’ Shareholdings Purchase Corporation was established in January 2002 in order to purchase shares from banks and other financial institutions until September 30, 2006 pursuant to the Act Concerning Restriction on Shareholdings by Banks. The Bank’sBanks’ Shareholdings Purchase Corporation is allowed to resume purchases of shares held by financial institutions as well as shares of financial institutions held by
non-financial
institutions, up to a maximum amount of ¥20 trillion between March 12, 2009 and March 31, 2022. The Bank’sBanks’ Shareholdings Purchase Corporation purchased ¥1,305.3¥1,510.8 billion of shares during the period from March 12, 2009 through March 31, 2017.2020. The Bank’sBanks’ Shareholdings Purchase Corporation will dispose of the purchased shares by March 31, 2032 by taking into consideration the effects on the stock market.

The Bank of Japan also purchased ¥387.8 billion of shares held by banks and other financial institutions during the period from February 23, 2009 through April 30, 2010. The Bank of Japan generally will not sell the purchased shares until March 31, 2016. The Bank of Japan will dispose of the purchased shares by March 31, 2026 by taking into consideration the effects on the stock market.

Capital Adequacy

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

In December 2010, the Basel Committee on Banking Supervision issued its Basel III rules text, which builds on the International Convergence of Capital Measurement and Capital Standards document (“Basel II”), to strengthen the regulation, supervision, and risk management of the banking sector. Basel III text presents the details of global regulatory standards on bank capital adequacy and liquidity. The rules text sets out higher and better-quality capital, better risk coverage, the introduction of a leverage ratio as a backstop to the risk-based requirement, measures to promote the
build-up
of capital that can be drawn down in periods of stress, and the introduction of two global liquidity standards. For further information of the leverage ratio and the two global liquidity standards, see ”Leverage“Leverage Ratio” and “Liquidity” below, respectively.

The Financial Services Agency’s revisions to its capital adequacy guidelines became effective from March 31, 2013, which generally reflect rules in the Basel III text that have been applied from January 1, 2013.

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Under the revised guidelines, the minimum capital adequacy ratio is 8% on both a consolidated and
non-consolidated
basis for banks with international operations, such as Mizuho Bank and Mizuho Trust & Banking or on a consolidated basis for bank holding companies with international operations, such as Mizuho Financial Group. Within the minimum capital adequacy ratio, the Common Equity Tier 1 capital requirement is 4.5% and the Tier 1 capital requirement is 6.0%.

Japanese banks with only domestic operations and bank holding companies the subsidiaries of which operate only within Japan are subject to the revised capital adequacy guidelines that have been applied from March 31, 2014, and those banks and bank holding companies are required to have a minimum Core Capital ratio of 4%. However, those banks and bank holding companies that apply the internal rating based approach are required to have a minimum Common Equity Tier 1 ratio of 4.5% on both a consolidated and
non-consolidated
basis, calculated on the assumption that the banks and bank holding companies are those with international operations.

Under the revised capital adequacy guidelines based on the Basel III rules that have been applied to banks and bank holding companies each with international operations from March 31, 2013, there are regulatory

adjustments such as goodwill and other intangibles, deferred tax assets, investments in the capital of banking, financial and insurance entities etc. shall be deducted under certain conditions for the purpose of calculating capital adequacy ratios, and the requirements of regulatory adjustments were enhanced under the revised capital adequacy guidelines. For example, under the capital adequacy guidelines prior to the revision thereto under the Basel III rules, the maximum amount of net deferred tax assets under Japanese GAAP that major Japanese banks, including bank holding companies, could record without diminishing the amount of Tier 1 capital for purposes of calculating capital adequacy ratio was 20% of Tier 1 capital. Under the revised capital adequacy guidelines based on the Basel III rules, deferred tax assets that arise from temporary differences will be recognized as part of Common Equity Tier 1 capital, with recognition capped at 10% of Common Equity Tier 1 capital under certain conditions, while other deferred tax assets, such as those relating to net loss carryforwards, will be deducted in full from Common Equity Tier 1 capital net of deferred tax liabilities. These regulatory adjustments based on the Basel III rules began at 20% of the required deductions in the calculation of Common Equity Tier 1 capital in March 2014 and were increased by 20% increments per year, and became fully effective in March 2018.

In November 2015, the Financial Services Agency published revised capital adequacy guidelines and related ordinances to introduce the capital buffer requirements under the Basel III rules for Japanese banks and bank holding companies with international operations, which include the capital conservation buffer, the countercyclical buffer and the additional loss absorbency requirements for
G-SIBs
and domestic systemically important banks
(“D-SIBs”).
These guidelines have become effective on March 31, 2016. The capital conservation buffer, the countercyclical capital buffer and the additional loss absorption capacity requirement for
G-SIBs
and
D-SIBs
must be met with Common Equity Tier 1 capital under the revised guidelines, and if such buffer requirements are not satisfied, a capital distribution constraints plan is required to be submitted to the Financial Services Agency and carried out. The capital conservation buffer is being phased in starting in2.5% from March 2016 at 0.625% until becoming fully effective in March 2019 at 2.5%.2019. In addition, subject to national discretion by the respective regulatory authorities, if the relevant national authority judges a period of excess credit growth to be leading to the
build-up
of system-wide risk, a countercyclical capital buffer ranging from 0% to 2.5% would also be imposed on banking organizations. The countercyclical capital buffer is a weighted average of the buffers deployed across all the jurisdictions to which the banking organization has credit exposures. Further, we were designated as both a
G-SIB
and
D-SIB,
and the additional loss absorption capacity requirement applied to us was 1.0%. The additional loss absorption capacity requirement was the same as that imposed by the Financial Stability Board, which is being phased1.0% from March 2019. The Basel Committee on Banking Supervision (“BCBS”) published the newsletter with regard to the usability of these buffers and emphasized that these buffers are designed to be usable. While each of these buffers seek to mitigate specific risks, they share similar design features and are all underpinned by the following objectives: (i) absorbing losses in startingtimes of stress by having an additional overlay of capital that is above minimum requirements and that can be drawn down; and (ii) helping to maintain the provision of key financial services to the real economy in March 2016 at 0.25% until becoming fully effective in March 2019 at 1.0%.

a downturn by reducing incentives for banks to deleverage abruptly and excessively.

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Under the capital adequacy guidelines, banks and bank holding companies each with international operations are required to measure and apply capital charges with respect to their credit risk, market risk and operational risk.

Under the guidelines, banks and bank holding companies have several choices for the methodologies to calculate their capital requirements for credit risk, market risk and operational risk. Approval of the Financial Services Agency is necessary to adopt advanced methodologies for calculation, and Mizuho Financial Group started to apply the AIRB approach for the calculation of credit risk from the fiscal year ended March 31, 2009 and also apply the AMA for the calculation of operational risk from September 30, 2009.

In December 2017, the Basel Committee on Banking Supervision (“BCBS”)BCBS published the finalized Basel III reforms endorsed by the Group of Central Bank Governors and Heads of Supervision. The finalized reforms complement the initial phase of Basel III reforms set forth above, seek to restore credibility in the calculation of risk-weighted assets and improve the comparability of banks’ capital ratios. Such reforms include the following elements:

a revised standardized approach for credit risk, which is designed to improve the robustness and risk sensitivity of the existing approach;

revisions to the internal ratings-based approach for credit risk, where the use of the most advanced internally modelled approaches for
low-default
portfolios will be limited;

revisions to the credit valuation adjustment (CVA) framework, including the removal of the internally modelled approach and the introduction of a revised standardized approach;

a revised standardized approach for operational risk, which will replace the existing standardized approaches and the advanced measurement approaches;

revisions to the capital floor, under which banks’ risk-weighted assets generated by internal models must be no lower than 72.5% of the total risk-weighted assets as calculated using only the standardized approaches under the revised Basel III framework; and

requirements to disclose their risk-weighted assets based on the standardized approaches.

In addition, under the finalized Basel III reforms,
G-SIBs
are required to meet a leverage ratio buffer, which will take the form of a Tier 1 capital buffer set at 50% of the applicable
G-SIB’s
risk-weighted capital buffer, and various refinements are made to the definition of the leverage ratio exposure measure based on the text of the leverage ratio framework issued by the BCBS in January 2014.

The revised framework

In March 2020, the Basel Committee’s oversight body, the Group of Central Bank Governors and Heads of Supervision (“GHOS”), announced a deferral of the implementation date of the finalized Basel III reform by one year to increase operational capacity of banks and supervisors to respond to
COVID-19.
As a result, it will mainly take effect from January 1, 2022,2023, and the revisions to the capital floor will be phased in from January 1, 2022,2023, with the initial capital floor of 50%, and will be fully implemented at 72.5% from January 1, 2027.

2028. Following such announcement, the Financial Services Agency announced on March 30, 2020 that the Basel III finalisation framework is scheduled to be implemented in Japan from March 2023.

For further information regarding capital adequacy, see “Item 5. Operating and Financial Review and Prospects—Capital Adequacy—Regulatory Capital Requirements.”

Leverage Ratio

The leverage ratio framework is critical and complementary to the risk-based capital framework that will help ensure broad and adequate capture of both
on-
and
off-balance
sheet sources of banks’ leverage. This simple,
non-risk-based
measure will restrict the
build-up
of excessive leverage in the banking sector to avoid destabilizing deleveraging processes that can damage the broader financial system and the economy.
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Implementation of the leverage ratio requirements began with bank-level reporting to national supervisors of the leverage ratio and its components, and public disclosure is required from January 2015. Basel III’s leverage ratio is defined as the “capital measure” (numerator) divided by the “exposure measure” (denominator) and is expressed as a percentage. The capital measure is defined as Tier 1 capital, and the minimum leverage ratio is defined as 3%.

The Financial Services Agency applied the requirement from March 31, 2019 to meet the minimum leverage ratio for bank holding companies and banks with international operations.

The implementation of the leverage ratio requirements under the finalized definition of the leverage ratio exposure measure and the leverage ratio buffer requirement for
G-SIBs,
were deferred for one year according to the deferral of Basel III implementation announced by GHOS described above. They will take effect from January 1, 2022.

2023.

In June 2020, in coordination with the monetary policy of the Bank of Japan in response to the impact of the
COVID-19,
the Financial Services Agency published amendments to the leverage ratio regulations which will exclude amounts of deposits to the Bank of Japan from calculation of the leverage ratio from June 30, 2020 to March 31, 2021.
For further information regarding the leverage ratio, see “Item 5. Operating and Financial Review and Prospects—Capital Adequacy—Regulatory Capital Requirements.”

Liquidity

Two minimum standards for funding liquidity will be introduced. The liquidity coverage ratio (“LCR”) is intended to promote resilience to potential liquidity disruptions over a
thirty-day
horizon and help ensure that global banks have sufficient, unencumbered, high-quality liquid assets (“HQLA”) to offset the net cash outflows it could encounter under an acute short-term stress scenario. The Group of Governors and Heads of SupervisionGHOS agreed on a revised LCR standard on January 6, 2013, and the BCBS issued the text of the revised LCR standard on January 7, 2013. The LCR guidelines of the Financial Services Agency, which reflect the rules in such text, have been applied to banks and bank holding companies with international operations from March 31, 2015, under the LCR guidelines, LCR is defined as the ratio obtained by dividing the sum of the amounts of High-Quality liquid assetsHQLA by the amount of net cash outflows, each as defined in and calculated pursuant to such

guidelines. In accordance with the LCR standard under the LCR guidelines, the stock of unencumbered HQLA is to constitute “level 1” assets, which include cash, central bank reserves and certain marketable securities backed by sovereigns and central banks, and “Level 2” assets, which include certain government securities covered bonds, corporate debt securities and, to a limited extent, lower-rated corporate bonds, residential mortgage-backed securities and equities that meet certain conditions. “Level 2” assets are subject to certain haircuts based on types of securities and credit ratings. The minimum LCR under the LCR guidelines is 100% on both a consolidated and

non-consolidated
basis for banks with international operations or on a consolidated basis for bank holding companies with international operations. LCR is subject tophase-in arrangements pursuant to which the LCR rises in equal annual steps of 10 percentage points to reach 100% on January 1, 2019, with a minimum requirement of 90% during the period from January 1 to December 31, 2018. The BCBS issued final requirements for
LCR-related
disclosures on January 12, 2014, and the LCR disclosure guidelines of the Financial Services Agency, which reflect such requirements, have been applied to banks and bank holding companies with international operations from June 30, 2015. The LCR disclosure guidelines require such banks and bank holding companies to disclose their LCR in common templates starting from information as of June 30, 2015.

The net stable funding ratio (“NSFR”) requires a minimum amount of stable sources of funding at a bank relative to the liquidity profiles of the assets, as well as the potential for contingent liquidity needs arising from
off-balance
sheet commitments, over a
one-year
horizon. The BCBS finalized the NSFR framework in October 2014, and the NSFR iswas scheduled to be introduced as a minimum standard on March 31, 2019 by the Financial Services Agency.

However, it has decided not to introduce the NSFR until March 2021 after two postponements of the introduction in March 2019 and March 2020.

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Total Loss Absorbing Capacity

Related to regulatory capital requirements, in November 2015, the FSB issued the final TLAC standard for
G-SIBs.
The TLAC standard has been designed so that failing
G-SIBs
will have sufficient loss-absorbing and recapitalization capacity available in resolution for authorities to implement an orderly resolution.
G-SIBs
will be required to meet the TLAC requirement alongside the minimum regulatory requirements set out in the Basel III framework. Specifically,G-SIBs will be required to meet a Minimum TLAC requirement of at least 16% of the resolution group’s risk-weighted assets as from January 1, 2019 and at least 18% as from January 1, 2022. Minimum TLAC must also be at least 6% of the Basel III leverage ratio denominator from January 1, 2019, and at least 6.75% from January 1, 2022.

Following the publication of the final TLAC standards for
G-SIBs
by the FSB, in April 2016, the Financial Services Agency published an explanatory paper outlining its approach for the introduction of the TLAC framework in Japan, and a revised version of this document was published in April 2018. In March 2019, the Financial Services Agency published regulatory notices and related materials to implement the TLAC requirements in Japan, which is being phased in for Japanese
G-SIBs
beginning March 31, 2019. According to the Financial Services Agency’s approach above, which is subject to change based on future international discussions, the preferred resolution strategy for
G-SIBs
in Japan as well as a domestic systematically important bank in Japan which is deemed ofto be in particular need forof a cross-border resolution arrangement and to be of particular systemic significance to the Japanese financial system if it failsin the event of its failure (together with
G-SIBs
in Japan, the “Covered SIBs”) is Single Point of Entry (“SPE”)SPE resolution, in which resolution tools are applied to the ultimate holding company of a group by a single national resolution authority, although the actual measures to be taken will be determined on a
case-by-case
basis considering the actual condition of the relevant Covered SIB in crisis. To implement this SPE resolution strategy effectively, the Financial Services Agency plans to requirerequires the resolution entitiesultimate holding company in Japan of the relevant Covered SIBs, which will be typicallySIB designated as the ultimate holding companyresolution entity in Japan of such Covered SIB by the group,Financial Services Agency to (i) meet the minimum external TLAC requirements, provided under the FSB’s TLAC standard, and (ii) cause their material subsidiaries or material
sub-groups
that are designated as systemically important by the Financial Services Agency or that are subject to TLAC requirements or similar requirements by the relevant foreign authority to maintain a certain level of capital and debt recognized as having loss-absorbing and recapitalization capacity, or Internalinternal TLAC. Under the Japanese TLAC regulations, the Financial Services Agency designated Mizuho Financial Group as the resolution entity in Japan for our group, which is subject to the external TLAC requirements in Japan, and designated Mizuho Bank, Mizuho Trust & Banking and Mizuho Securities as Mizuho Financial Group’s material subsidiaries in Japan which are subject to Japan’s internal TLAC requirements. In addition, under the approach, the Financial Services Agency plansJapanese TLAC regulations,
G-SIBs
are required to apply themeet a minimum TLAC requirement for JapaneseG-SIBsof at least 16% of the resolution group’s risk-weighted assets from March 31, 2019 and at least 18% from March 31, 2022. Minimum TLAC must also be at least 6% of the Basel III leverage ratio denominator from March 31, 2019, and at least 6.75% from March 31, 2022. Japanese
G-SIBs would be
are allowed to count the Japanese Deposit Insurance Fund Reserves in an amount equivalent to 2.5% of their consolidated risk-weighted assets from March 31, 2019, and 3.5% of their consolidated risk-weighted assets from March 31, 2022, as their external TLAC.

Protection of Personal Information

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

Prevention of Money Laundering

Under the Act Preventing Transfer of Profits Generated from Crime (Hanzai ni yoru Syueki no Iten Boushi ni kansuru Houritsu) (Act No. 22 of 2007, as amended), which addresses money laundering and terrorism concerns, financial institutions and other entities such as credit card companies are required to perform customer
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identification, submit suspicious transaction reports and maintain records of transactions. Certain amendments to the law became effective in April 2013, which tightened, among other things, customer identification requirements. Further amendments to the law were promulgated in November 2014 and became effective on October 1, 2016 for clarification of the judgment method of suspicious transactions, strict verification at the time of the conclusion of correspondence contracts and expansion of the obligation for business operators to make efforts to develop necessary systems.

In February 2018, the Financial Services Agency issued “Guidelines for Anti-Money Laundering and Combating the Financing of Terrorism” to clarify the basic stance on risk management practices against money laundering and terrorists financing in order to encourage financial institutions to improve their regimes to effectively prevent money laundering and terrorists financing.

The guidelines were partially revised on April 10, 2019, intending to further enhance financial institutions’ risk management for anti-money laundering and combating the financing of terrorism.

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

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

United States

As a result of our operations in the United States, we are subject to extensive U.S. federal and state supervision and regulation. We engage in U.S. banking activities through Mizuho Bank’s New York, Chicago, Los Angeles and Park Avenue (New York)1251 Building branches and Houston, Atlanta, Dallas, San Francisco and Washington, D.C. representative offices. We also own one bank in the United States, Mizuho Bank (USA), which is engaged primarily in the banking services, trust services and custody business, and Mizuho Securities USA LLC, a U.S. broker dealer engaged in the securities business.

The Bank Secrecy Act, as amended by the USA PATRIOT Act of 2001 (the “PATRIOT Act”), contains measures to prevent, detect and prosecute terrorism and international money laundering by imposing significant compliance and due diligence obligations, creating new crimes and penalties and expanding the extraterritorial jurisdiction of the United States. The Bank Secrecy Act, as amended, imposes anti-money laundering compliance obligations on U.S. financial institutions, including the U.S. offices of foreign banks. In recent years, federal and state regulatory and law enforcement authorities have closely scrutinized the compliance by financial institutions with the Bank Secrecy Act and anti-money laundering rules.

Mizuho Financial Group, Mizuho Bank and Mizuho Americas are financial holding companies (“FHCs”) within the meaning of the U.S. Bank Holding Company Act of 1956, as amended (the “BHCA”), and are subject to regulation and supervision thereunder by the Federal Reserve. As a matter of law, these three companies are required to act as a source of financial strength to Mizuho Bank (USA). The BHCA generally prohibits us from acquiring, directly or indirectly, the ownership or control of more than 5% of any class of voting shares of any company engaged in the United States in activities other than banking or activities that are financial in nature or incidental or complementary to financial activity. This general prohibition is subject to certain exceptions, including an exception that permits us to acquire up to 100% of the voting interests in any company engaged in nonfinancial activities that we do not routinely manage, generally for a period of up to 10 years, under our merchant banking authority. In addition, U.S. regulatory approval is generally required for us to acquire more than 5% of any class of voting shares of a U.S. bank, savings association or bank holding company.

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Mizuho Financial Group and the former Mizuho Corporate Bank, now Mizuho Bank, became FHCs in December 2006, and Mizuho Americas became an FHC in July 2016. As FHCs, we, Mizuho Bank, and Mizuho Americas and the companies under their control are permitted to engage in a broader range of activities in the U.S. and abroad than permitted for bank holding companies and their subsidiaries. For example, FHC status under the BHCA permits banking groups in the United States to engage in comprehensive investment banking businesses, such as the underwriting of and dealing in corporate bonds, equities and other types of securities, and therefore enables our group to promote our investment banking business on a broader basis in the United States.

As FHC status also permits banking groups in the United States to engage in merchant banking activities, as described above.

To retain our status as an FHC, we aremust also subject tocomply with certain additional regulatory requirements. For example, we and each of our U.S. insured depository institution subsidiaries with operations in the United States must be “well capitalized,” meaning maintenance of a common equity Tier 1 risk-based capital ratio of at least 6%6.5%, a Tier 1 risk-based capital ratio of at least 8%, a total risk-based capital ratio of at least 10% and a leverage ratio of at least 5%. We and each of our U.S. insured depository institution subsidiaries must also be “well managed,” including that we and they maintain examination ratings that are at least satisfactory. Further, Mizuho Financial Group and Mizuho Bank must also meet such capital standards as calculated under their home country standards (which must be comparable to the capital required for a U.S. bank) and must be well managed under standards comparable to those required for a U.S. bank. Failure to comply with such requirements would require us to prepare a remediation plan, and we would not be able to undertake new business activities or acquisitions based on our status as an FHC during any period of noncompliance without the prior approval of the Federal Reserve Board, and divestiture or termination of certain business activities, or termination of our U.S. branches and agencies, may be required as a consequence of failing to correct such conditions within 180 days.

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

The New York branch of Mizuho Bank is subject to supervision, examination and regulation by the New York State Department of Financial Services (“NYDFS”) as well as by the Federal Reserve. Except for a prohibition on such branch accepting retail deposits, a state-licensed branch generally has the same powers as a state-chartered bank in such state. New York State has an asset pledge requirement for branches equal to the greater of 1% of average total liabilities for the previous month or $2 million, provided that an institution designated as a “well-rated foreign banking corporation” is permitted to maintain a reduced asset pledge with a cap of $100 million. The NYDFS may require higher amounts for supervisory reasons. Each other U.S. branch

and representative office of Mizuho Bank is also subject to regulation and examination by the state banking authority of the state in which such branch or representative office is located. The deposits of Mizuho Bank’s U.S. branches are not insured by the Federal Deposit Insurance Corporation (“FDIC”)

.

Mizuho Bank (USA) is a New York state-chartered bank that is a member of the Federal Reserve System whose deposits are insured by the FDIC. As such, Mizuho Bank (USA) is subject to regulation, supervision and examination by the Federal Reserve and the NYDFS, as well as to relevant FDIC regulation.

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

In the United States, comprehensive financial regulatory reform legislation, titled the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010 (the “Dodd-Frank Act”), provides a broad framework for significant regulatory changes across most areas of U.S. financial regulation. Among other things, the Dodd-Frank Act addresses systemic risk oversight, minimum leverage and risk-based capital requirements for insured depository institutions and depository institution holding companies, and the resolution of failing systemically significant financial institutions.

The Dodd-Frank Act provides regulators with tools to impose greater capital, leverage and liquidity requirements and other prudential standards, particularly for financial institutions that pose significant systemic risk and bank holding companies with $50 billion or more insignificant consolidated assets. In imposing such heightened prudential standards on foreign banking organizations such as Mizuho Bank, the Federal Reserve Board is directed to take into account the principle of national treatment and equality of competitive opportunity, and the extent to which the foreign banking organization is subject to comparable home country standards. In February 2014, the Federal Reserve Board finalized rules (the “FBO Rules”) under Regulation YY that impose enhanced prudential standards on certain large foreign banking organizations having a U.S. presence, such as Mizuho Bank. Under the FBO Rules, large foreign banking organizations, including us, and their U.S. operations are subject to risk management requirements, risk-based capital and leverage limits, capital stress testing requirements, liquidity requirements and, in certain circumstances, asset management requirements. Additionally, in August 2018, the Federal Reserve Board expects to finalizefinalized single counterparty credit limits and early remediation requirements for large foreign banking organizations at a later date.with respect to their U.S. operations. In addition, under the FBO Rules, foreign banking organizations with consolidated U.S. assets of $50 billion or more (excluding the assets of U.S. branches and agencies) are, as of July 1, 2016, required to establish or designate a separately capitalized
top-tier
U.S. intermediate holding company (“IHC”) that would hold all of its U.S. subsidiaries and be subject to certain capital, liquidity and other enhanced prudential standards on an IHC consolidated basis. In consideration of certain enhanced prudential requirements under the FBO Rules, we established a new U.S. bank holding company, Mizuho Americas, a wholly owned direct subsidiary of Mizuho Bank as of July 1, 2016. Mizuho Americas is currently the holding company for our U.S. bank subsidiary, Mizuho Bank (USA), our U.S. securities broker dealer,broker-dealer, Mizuho Securities USA LLC, and certain other of our U.S. subsidiaries. The establishment of Mizuho Americas was part of a larger internal corporate reorganization, which was taken with the aim of, among other things, strengthening corporate governance practices and operations.

On May 24, 2018, the U.S. Economic Growth, Regulatory Relief and Consumer Protection Act (the “EGRRCPA”) was signed into law. Among other regulatory changes, the EGRRCPA raised the threshold for automatic application of enhanced prudential standards to foreign banking organizations (“FBOs”) under the Dodd-Frank Act. The EGRRCPA, however, did not require the Federal Reserve Board to change the enhanced prudential standards applicable to FBOs with more than $100 billion in total consolidated assets, such as us.
In October 2019, the Federal Reserve Board finalized a rule to implement the EGRRCPA’s changes to the application of enhanced prudential standards for large U.S. banking organizations and FBOs (the “Tailoring Rule”). The Tailoring Rule delineates three categories, Category II, Category III and Category IV, of enhanced prudential standards applicable to FBOs based on an FBO’s asset size and other factors such as the degree of the cross-jurisdictional activity, reliance on short-term wholesale funding, nonbank assets, and
off-balance
sheet exposures of an FBO’s U.S. operations. The Tailoring Rule generally determines the stringency of enhanced prudential standards applicable to FBOs based on the risk profile of the FBO’s U.S. operations, rather than its global footprint, with most enhanced prudential standards applying only to FBOs with combined U.S. assets of at least $100 billion. FBOs with global assets of $100 billion or more and relatively limited U.S. presence will be subject to certain minimum standards, with the Federal Reserve Board relying primarily on compliance with comparable home-country prudential standards with respect to such FBOs.
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We are subject to enhanced prudential standards tailored by the Tailoring Rule.
Also in October 2019, the Federal Reserve Board and the FDIC finalized a rule (the “Resolution Planning Rule”) that modifies resolution plan requirements according to the EGRRCPA. The Resolution Planning Rule tailors those requirements based on the category as determined by the Tailoring Rule.
Under Section 61913 of the Dodd-FrankBank Holding Company Act, as amended by the EGRRCPA, also known as the “Volcker Rule,” any insured depository institution;institution (subject to certain exceptions including for depository institutions that do not have, and are not controlled by a company that has, more than $10 billion in total consolidated assets and significant trading assets and liabilities), any insured depositorycompany that controls such an institution, holding company; any
non-U.S.
bank with branches in the United States, such as Mizuho Bank;Bank, and any affiliate or subsidiary of such entities (each, a “banking entity”) is prohibited from engaging in proprietary trading or from investing in or sponsoring private equity or hedge funds, subject to certain limited exceptions. In December 2013, U.S. financial regulators approved final rules implementing Section 619 of the Dodd-Frank Act,Volcker Rule, and established a deadline of July 21, 2015 for banking entities to conform their activities and investments to the requirements of the final rules. In December 2014, the

Federal Reserve Board extended the conformance period to July 21, 2017 for investments in and relationships with certain funds that were in place prior to December 31, 2013. In addition, prior to the expiration of the general conformance period, banking entities with investments in or relationships with certain “illiquid” funds” were permitted to seek an additional

one-time
extension by the Federal Reserve Board of up to five years. All investments in and relationships with funds covered by the Volcker Rule made after December 31, 2013 must have been divested or restructured by July 21, 2015.

In July 2019, U.S. federal regulatory agencies adopted amendments to the Volcker Rule regulations to implement the Volcker Rule amendments included in the EGRRCPA, and also in 2019 such U.S. federal regulatory agencies adopted certain targeted amendments to the Volcker Rule regulations to simplify and tailor certain compliance requirements relating to the Volcker Rule. In January 2020, U.S. federal regulatory agencies proposed additional revisions to the Volcker Rule’s current restrictions on banking entities sponsoring and investing in certain covered hedge funds and private equity funds, including by proposing new exemptions allowing banking entities to sponsor and invest without limit in credit funds, venture capital funds, customer facilitation funds and family wealth management vehicles. The proposal would also loosen certain other restrictions on extraterritorial fund activities and direct parallel or

co-investments
made alongside covered funds.
The current regulatory environment in the United States may be impacted by future legislative developments, such as amendments to key provisions of the Dodd-Frank Act. For example, on May 24, 2018, the U.S. Economic Growth, Regulatory Relief and Consumer Protection Act (the “Reform Act”“EGRRCPA”) was signed into law. Among other regulatory changes, the Reform ActEGRRCPA amends various sections of the Dodd-Frank Act, including by modifying the Volcker Rule.Rule to exempt depository institutions that do not have, and are not controlled by a company that has, more than $10 billion in total consolidated assets or significant trading assets and liabilities, and by raising the threshold for automatic application of enhanced prudential standards to FBOs under the Dodd-Frank Act. The ultimate consequencesscope of the Reform Act on us and our U.S. operations remain uncertain. The scope any additional future legislation is not possible to determine at this time, and we cannot predict what impact, if any, such future legislative developments will have on us if and when such legislation is enacted.

Cybersecurity and privacy developments in Europe and the U.S.

The European Union General Data Protection Regulation (“GDPR”) will replacereplaced the existing E.U. Data Protection Directive and, as a regulation, will have directtook effect in all EU member states from May 25, 2018. Although a number of the existing principles for the protection of personal data will remain,remains, the GDPR is designed to harmonize data privacy laws across Europe and reshape the way organizations approach data privacy. The GDPR introducesintroduced new obligations and expandsexpanded its territorial reach. It will applyapplies to all organizations processing or holding personal data of EU ‘data subjects’ (regardless of the organization’s location) as well as to organizations outside the EU that offer goods or services in the EU, or that monitor the behavior of EU data subjects. Personal data is information that can be used to identify a natural person, including a name, a photo, an email address, or a
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computer IP address. Compliance with the GDPR will requirerequires companies to analyze and evaluate how they handle data in the ordinary course of their business, from processes to technology. It imposes a prescriptive approach to compliance requiring organizations to demonstrate and record compliance and to provide much more detailed information to data subjects regarding processing. EU data subjects will need to be given full disclosure about how their personal data will beis used and stored. In that connection, consent must be explicit and companies must be in a position to delete information from their global systems permanently if consent were withdrawn. Financial regulators and data protection authorities throughout the EU will have significantly increased audit and investigatory powers under GDPR to probe how personal data is being used and processed. Penalties for
non-compliance
are material. Serious breaches of GDPR includemay result in antitrust-like fines on companies of up to the greater of €20
€
20 million or 4% of global group turnover in the preceding year, regulatory action and reputational risk.

In the United States, federal and state regulators, including the Financial Industry Regulatory Authority (“FINRA”) and the NYDFS, have increasingly focused on cybersecurity risks and responses for regulated entities. For example, on March 1, 2017, the revised NYDFS cybersecurity regulation became effective. The regulation applies to any person licensed or chartered by the NYDFS, including New York state-chartered banks and NYDFS-licensed branches of
non-U.S.
banks such as Mizuho Bank (USA) and the New York branch of Mizuho Bank, and requires each company to assess its specific risk profile periodically and design a program that addresses its risks “in a robust fashion”, including addressing risks posed by third-party service providers, training and retention of specialized staff to address cybersecurity risks, maintaining systems designed to reconstruct material financial transactions and complying with security requirements for
non-public
information. Each covered entity must monitor its systems and networks and notify the superintendent of the NYDFS within 72 hours after it is determined that a material cybersecurity event has occurred. Senior management of the covered entity ishas been required to file an annual certification confirming compliance with the NYDFS regulations beginningsince February 15, 2018. Similarly, FINRA has identified cybersecurity as a significant risk and will assessassesses firms’ programs to mitigate those risks.

Disclosure Pursuant to Section 219 of the Iran Threat Reduction and Syria Human Rights Act

Section 219 of the Iran Threat Reduction and Syria Human Rights Act of 2012 (“Section 219”) added Section 13(r) to the U.S. Securities Exchange Act of 1934, requiring each SEC reporting issuer to disclose in its annual and, if applicable, quarterly reports whether it or any of its affiliates have knowingly engaged in specified activities, transactions or dealings relating to Iran or with the Government of Iran or certain designated persons or entities involved in terrorism or the proliferation of weapons of mass destruction during the period covered by such filing. Section 219 requires disclosure even of certain activities not prohibited by U.S. or other law and even if such activities were conducted outside the United States by
non-U.S.
affiliates in compliance with local law.

Our affiliate Mizuho Bank is our only affiliate to have engaged in activity that is relevant for this purpose. Mizuho Bank maintains compliance policies and procedures to conform its operations to all applicable economic sanctions laws and regulations, and is increasing resources dedicated to this effort. In that context, and only after confirming that such transactions diddo not involve prohibited or sanctionable activity under U.S. or other economic sanctions,
non-U.S.
branches of Mizuho Bank engagedengage in a limited number of activities reportable under Section 219 during the period covered by this annual report, as described below. 219.
No U.S. branches of Mizuho Bank were involved in any of these activities.

Legacy guarantees

Duringactivities in the period covered by this disclosure, Mizuho Bank was a party to a legacy counter guarantee that was opened in connection with activity of its customer for the benefit of an Iranian bank. When the guarantee was entered into, the bank in question, which is related to the Government of Iran, had not been designated under U.S. Executive Orders (“E.O.”) 13224 or 13382, although it was subsequently so designated. Mizuho Bank maintained this guarantee post-designation only after confirming that such a transaction did not involve prohibited or sanctionable activity under U.S. or other economic sanctions. As contractual obligations, this guarantee cannot be exited by Mizuho Bank unilaterally. fiscal year ended March 31, 2020.

Activities through correspondent banking accounts
In the fiscal year ended March 31, 2018,2020, Mizuho Bank received fees of less than ¥1 million attributablecontinued to this guarantee and earned net profits of less than that amount. Mizuho Bank continues to seek to terminate the counter guarantee to the extent permitted under applicable laws.

Activities through correspondent bankingmaintain accounts

In the fiscal year ended March 31, 2018, Mizuho Bank conducted a limited number of fund transfers through accounts it maintains for or at a limited number of Iranian banks related to the Government of Iran and a bank designated under E.O. 13224, but conducted no funds transfers through these accounts or through other correspondent banking accounts on behalf of such Iranian banks. These transfers were mainly associated with requests by our customers after the relaxation of applicable sanctions pursuant to the Joint Comprehensive Plan of Action. Mizuho Bank has policies and procedures to process transfers through these accounts only after confirming that such

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transactions do not involve prohibited or sanctionable activity under U.S. or other economic sanctions and obtaining licenses issued by Japan’s Ministry of Finance where necessary. Estimated gross revenue to Mizuho Bank in the fiscal year ended March 31, 2018 attributable to fees for these activities was less than ¥50 million, with a net profit of less than that amount. Mizuho Bank intends to continue engaging in these activities but will process transfers through these accounts only under the limited circumstances where Mizuho Bank believes the transfer would conform to its compliance policies and procedures, applicable international sanctions laws, and after obtaining a license issued by Japan’s Ministry of Finance where necessary.

Other Jurisdictions

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

4.C. Organizational Structure

The following diagram shows our basic corporate structure as of March 31, 2018:

LOGO

2020:

Note:
(1)JTC Holdings, in which we have a 27.0% equity interest, is an equity-method affiliate of ours. JTC Holdings, Japan Trustee Services Bank, Ltd. and Trust & Custody Services Bank, Ltd., which are
equity-method
affiliates of ours, plan to merge as of July 27, 2020 and to change the trade name of the merged entity to “Custody Bank of Japan, Ltd.”
(2)Mizuho Information & Research Institute, Inc., Mizuho Research Institute Ltd. and Mizuho Trust Systems Company, Limited are scheduled to merge in April 2021.
(3)Mizuho Financial Group has a 35.0% equity interest in Mizuho Operation Service, Ltd. and has added it to the core group companies as an equity-method affiliate as of June 30, 2020.
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The following table sets forth information with respect to our principal consolidated subsidiaries as of March 31, 2018:

Name

 

Country of
organization

 

Main business

 Proportion of
ownership
interest
(%)		  Proportion of
voting
interest
(%)		 

Domestic

    

Mizuho Bank, Ltd.

 Japan Banking  100.0%   100.0% 

Mizuho Trust & Banking Co., Ltd.

 Japan Trust and banking  100.0%   100.0% 

Mizuho Securities Co., Ltd.

 Japan Securities  95.8%   95.8% 

Mizuho Research Institute Ltd.

 Japan Research and consulting  98.6%   98.6% 

Mizuho Information & Research Institute, Inc.

 Japan Information technology  91.5%   91.5% 

Asset Management One Co., Ltd.

 Japan Investment management  70.0%   51.0% 

Trust & Custody Services Bank, Ltd.

 Japan Trust and banking  54.0%   54.0% 

Mizuho Private Wealth Management Co., Ltd.

 Japan Consulting  100.0%   100.0% 

Mizuho Credit Guarantee Co., Ltd.

 Japan Credit guarantee  100.0%   100.0% 

Mizuho Realty Co., Ltd.

 Japan Real estate agency  100.0%   100.0% 

Mizuho Factors, Limited

 Japan Factoring  100.0%   100.0% 

Mizuho Realty One Co., Ltd.

 Japan Holding company  100.0%   100.0% 

Defined Contribution Plan Services Co., Ltd.

 

Japan

 

Pension plan-related business

 

 

60.0

% 

 

 

60.0

% 

Mizuho-DL Financial Technology Co., Ltd.

 

Japan

 

Application and Sophistication of Financial Technology

 

 

60.0

% 

 

 

60.0

% 

UC Card Co., Ltd.

 Japan Credit card  51.0%   51.0% 

J.Score CO., LTD

 Japan Lending  50.0%   50.0% 
2020:

         
Name
 
Country of
organization
 
Main business
 
Proportion of
ownership
interest
(%)
 
Proportion of
voting
interest
(%)
Domestic
    
Mizuho Bank, Ltd
 
Japan
 
Banking
 
100.0%
 
100.0%
Mizuho Trust & Banking Co., Ltd.
 
Japan
 
Trust and banking
 
100.0%
 
100.0%
Mizuho Securities Co., Ltd.
 
Japan
 
Securities
 
95.8%
 
95.8%
Mizuho Research Institute Ltd
 
Japan
 
Research and consulting
 
100.0%
 
100.0%
Mizuho Information & Research Institute, Inc
 
Japan
 
Information technology
 
100.0%
 
100.0%
Asset Management One Co., Ltd.
 
Japan
 
Investment management
 
70.0%
 
51.0%
Mizuho Private Wealth Management Co., Ltd
 
Japan
 
Consulting
 
100.0%
 
100.0%
Mizuho Credit Guarantee Co., Ltd.
 
Japan
 
Credit guarantee
 
100.0%
 
100.0%
Mizuho Realty Co., Ltd.
 
Japan
 
Real estate agency
 
100.0%
 
100.0%
Mizuho Factors, Limited
 
Japan
 
Factoring
 
100.0%
 
100.0%
UC Card Co., Ltd.
 
Japan
 
Credit card
 
100.0%
 
100.0%
Mizuho Realty One Co., Ltd.
 
Japan
 
Holding company
 
100.0%
 
100.0%
Mizuho Business Service Co., Ltd.
 
Japan
 
Subcontracted operations
 
100.0%
 
100.0%
Defined Contribution Plan Services Co., Ltd
 
Japan
 
Pension plan-related business
 
60.0%
 
60.0%
Mizuho-DL
Financial Technology Co., Ltd
 
Japan
 
Application and Sophistication of Financial Technology
 
60.0%
 
60.0%
J.Score Co., Ltd.
 
Japan
 
Lending
 
50.0%
 
50.0%
Mizuho Trust Systems Company, Limited
 
Japan
 
Subcontracted calculation services, software development
 
50.0%
 
50.0%
Mizuho Capital Co., Ltd.
 
Japan
 
Venture capital
 
50.0%
 
50.0%
         
Overseas
    
Mizuho Americas LLC
 
USA
 
Holding company
 
100.0%
 
100.0%
Mizuho Bank (China), Ltd
 
China
 
Banking
 
100.0%
 
100.0%
Mizuho International plc
 
UK
 
Securities and banking
 
100.0%
 
100.0%
Mizuho Securities Asia Limited
 
China
 
Securities
 
100.0%
 
100.0%
Mizuho Securities USA LLC
 
USA
 
Securities
 
100.0%
 
100.0%
Mizuho Capital Markets LLC
 
USA
 
Derivatives
 
100.0%
 
100.0%
Mizuho Bank Europe N.V.
 
Netherlands
 
Banking and securities
 
100.0%
 
100.0%
Banco Mizuho do Brasil S.A.
 
Brazil
 
Banking
 
100.0%
 
100.0%
Mizuho Trust & Banking (Luxembourg) S.A.
 
Luxembourg
 
Trust and banking
 
100.0%
 
100.0%
Mizuho Bank (USA)
 
USA
 
Banking and trust
 
100.0%
 
100.0%
Mizuho Securities Europe GmbH
 
Germany
 
Securities
 
100.0%
 
100.0%
PT. Bank Mizuho Indonesia
 
Indonesia
 
Banking
 
99.0%
 
99.0%

Name

 

Country of
organization

 

Main business

 Proportion of
ownership
interest
(%)		  Proportion of
voting
interest
(%)		 

Mizuho Trust Systems Company, Limited

 

Japan

 

Subcontracted calculation services, software development

 

 

50.0

% 

 

 

50.0

% 

Mizuho Capital Co., Ltd.

 Japan Venture capital  50.0%   50.0% 

Overseas

    

Mizuho Americas LLC

 U.S.A. Holding company  100.0%   100.0% 

Mizuho Bank (China), Ltd.

 China Banking  100.0%   100.0% 

Mizuho International plc

 U.K. Securities and banking  100.0%   100.0% 

Mizuho Securities Asia Limited

 China Securities  100.0%   100.0% 

Mizuho Securities USA LLC

 U.S.A. Securities  100.0%   100.0% 

Mizuho Bank Europe N.V.

 Netherlands Banking and securities  100.0%   100.0% 

Banco Mizuho do Brasil S.A.

 Brazil 

Banking

  100.0%   100.0% 

Mizuho Trust & Banking (Luxembourg) S.A.

 Luxembourg Trust and banking  100.0%   100.0% 

Mizuho Bank (USA)

 U.S.A. Banking and trust  100.0%   100.0% 

Mizuho Bank (Switzerland) Ltd

 Switzerland Banking and trust  100.0%   100.0% 

Mizuho Capital Markets LLC

 U.S.A. Derivatives  100.0%   100.0% 

PT. Bank Mizuho Indonesia

 Indonesia Banking  99.0%   99.0% 

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4.D. Property, Plant and Equipment

The following table shows the breakdown of our premises and equipment at cost as of March 31, 20172019 and 2018:

   As of March 31, 
   2017   2018 
   

 

(in millions of yen)

 

Land

  ¥575,054   ¥566,040 

Buildings

   807,312    811,911 

Equipment and furniture

   485,407    484,102 

Leasehold improvements

   93,967    97,066 

Construction in progress

   23,093    25,849 

Software

   1,308,292    1,463,786 
  

 

 

   

 

 

 

Total

   3,293,125    3,448,754 

Less: Accumulated depreciation and amortization

   1,251,852    1,332,570 
  

 

 

   

 

 

 

Premises and equipment—net

  ¥2,041,273   ¥2,116,184 
  

 

 

   

 

 

 

2020:

         
 
As of March 31,
 
 
2019
  
2020
 
 
(in millions of yen)
 
Land
 ¥
563,032
  ¥
557,943
 
Buildings
  
826,781
   
657,774
 
Equipment and furniture
  
472,186
   
442,302
 
Leasehold improvements
  
97,508
   
228,383
 
Construction in progress
  
37,174
   
73,164
 
Software
  
1,366,481
   
1,359,120
 
         
Total
  
3,363,162
   
3,318,686
 
Less: Accumulated depreciation and amortization
  
1,462,210
   
1,462,438
 
         
Premises and equipment—net
 ¥
1,900,952
  ¥
1,856,248
 
         
Our head office is located at
1-5-5
Otemachi,
Chiyoda-ku,
Tokyo, Japan. The headquarter building is leased from a third party.

The total area of land related to our material office and other properties atas of March 31, 20182020 was approximately 661,000626,000 square meters for owned land and approximately 13,000 square meters for leased land.

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

ITEM 4A.UNRESOLVED STAFF COMMENTS

None.

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ITEM 5.    OPERATING AND FINANCIAL REVIEW AND PROSPECTS

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

Table of Contents for Item 5.

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69
 

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75
 

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79
 

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92
 

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Overview

The Mizuho Group

We provide a broad range of financial services in domestic and overseas markets. TheOur principal activities and subsidiaries are the following:

Mizuho Bank provides a wide range of financial products and services mainly in relation to deposits, lending and exchange settlement to individuals, small and
medium-sized
enterprises (“SME”s)SMEs”), large corporations, financial institutions, public sector entities and foreign corporations, including foreign subsidiaries of Japanese corporations;

Mizuho Trust & Banking provides products and services related to trust, real estate, securitization and structured finance, pension and asset management and stock transfer agency; and

Mizuho Securities provides full-line securities services to individuals, corporations, financial institutions and public sector entities.

We also provide products and services such as those related to trust and custody, asset management, private banking, research services, information technology-related services and advisory services for financial institutions through various subsidiaries and affiliates.

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

Principal Sources of Income and Expenses

Net Interest Income

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

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

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

the general level of interest rates.

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

Provision (Credit) for Loan Losses

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

Noninterest Income

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

Fee and commission include the following:

fee and commission from securities-related business, including brokerage fee and commission related to securities underwriting, feethe execution of customer transactions and sales commission related toof investment trusts and individual annuities and other securities-related activities;asset-based revenue, which mainly include fees received from investment trust management companies in return for administration services, such as record keeping services, of investment trusts;

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

transactions;
fee and commission from remittance business, including service charges for domestic and international funds transfers and collections;

fee and commission from asset management business, including investment trust management fees and investment advisory fees;fees for investment trusts;

trust fees,
fee and commission from trust-related business, including trust fees earned primarily through fiduciary asset management and administration servicesservice for corporate pension plans and investment funds;funds and other trust-related fees such as brokerage commissions of real estate property, sales commissions of beneficial interest in real estate trust and charges for stock transfer agent services;

fee and commission from agency business, including administration service fees related to our agency business such as Japan’s principal public lottery program and revenue from standing proxy services; and
fees for other customer services, including fees related to our agency businesses,various revenues such as administration fees related to Japan’s principal public lottery program, as well as guarantee fees, sales commissions of life insurance, service charges for electronic banking, financial advisory fees and others.service charges for software development.

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

Trading account gains (losses)—net include gains and losses from transactions undertaken for trading purposes, including both market making for customers and proprietary trading, or transactions through which we
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seek to capture gains arising from short-term changes in market value. Trading account gains (losses)—net also include gains and losses related to changes in the fair value of derivatives and other financial instruments not eligible for hedge accounting under U.S. GAAP that are utilized to offset mainly interest rate risk related to our various assets and liabilities, as well as gains and losses related to changes in the fair value of foreign currency-

denominatedavailable-for-salecurrency-denominated debt securities that are elected for fair value treatment under ASC 825. For further information on the fair value option, see note 28 to our consolidated financial statements included elsewhere in this annual report.

reported as Trading securities.

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

Noninterest Expenses

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

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

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

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

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

Operating Environment

We operate principally in Japan, and our performance has generally tracked the macro economy of Japan.

As to the recent economic environment, the gradual recoveryglobal economy showed a slowdown, primarily in the manufacturing industry, due to factors such as uncertainty related to the trade disputes between the United States and China. Furthermore, toward the end of the fiscal year ended March 31, 2020, the global economy has continued backed by such factors asbegan to show signs indicative of a state of crisis due to the pickupworldwide spread of
COVID-19.
In Japan, the real gross domestic product growth rate fell sharply negative in the Chinese economy, the improvement relatedfourth quarter of calendar year 2019, partly due to the IT cycleimpact of the consumption tax increase amid the sluggishness in export and improvements in business confidence particularly in major industrialized countries.

production activities. In response to the spread of

COVID-19,
the Bank of Japan decided to expand financial support measures for businesses and increase purchases of exchange-traded funds and corporate bonds, and the government has also taken a series of emergency measures. However, economic activities are contracting at an accelerating pace.
In the United States, the economy continuedhad been expanding, but the economic base began to recoverdeteriorate rapidly, including a substantial decline in the rate of employment due to such factors as strong consumer spending resulting from improvements in employment and income conditions and the wealth effect due to increases in stock prices and capital investment resulting from expectation regardingimpact of the tax reduction measures by the United States administration. Underspread of
COVID-19.
In light of such circumstances, the Federal Reserve Board (“FRB”) pursued an exit strategy from monetary easing whereby, among other measures, the FRB raisedcut interest rates as an emergency measure twice in June 2017, September 2017, March 20182020, and June 2018 and began implementingthe Trump administration implemented $2 trillion worth of economic measures. However, concerns about a policyfurther decline in the economy have not been dispelled.
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Contents

In Europe, despite the downward pressure from the further appreciation of the euro,where the economy continued to recover, backed by the continued expansion of consumer spending due to an increase in employment, in addition to the actualization of demand for capital investment that had been put off due to political uncertainty surrounding the presidential election in France. Given these conditions,remained weak, the European Central Bank (“ECB”) determineddecided to decrease monthly asset purchases by halfpurchase assets and steered itselfexpand long-term refinancing operations in response to the directionspread of pursuing an exit strategy from monetary easing, while leaving key interest rates unchanged.

COVID-19
throughout Europe. However, the economic situation is becoming increasingly serious.
In Asia, the Chinese economy remained strong, despite continued sluggishness in capitalstagnant. The growth of production, investment and consumption has slowed as economic activities have contracted since the beginning of 2020 due to tighter financial regulations and policies
COVID-19,
in addition to control real estate speculation, supported by such factors as strong

consumer spending and expansionthe impact of exports, which were backed by income growth and governmental policies to supporttrade friction with the economy adopted in preparation for the National Congress of the Communist Party of China in Fall 2017. The economies inUnited States.

In emerging countries, continued to recover due to such factors as China’s enduring economycurrency depreciation and expansion of exports.

In Japan, the economy continued to recover due to such factors as overseas economic expansion and strong domestic demand. Regarding domestic demand, the improvement of the inventory cycle, the rise of capital investment related to the 2020 Tokyo Olympic Games and productivity improvements, as well as the implementation of public investment in connection with Japan’s economic stimulus measures, served to bolster growth. Consumer spending continued to pick upoutflows have been observed, partly due to the replacement of durable goods and the effect of wage increases especially in SMEs. Under such circumstances, stock prices trended upward and the exchange rate continued to trend sideways; however, since February 2018, stock prices have entered a correction phase with a stronger yen due to the rise in long-term interest ratesfall in the United Statesprices of crude oil and concerns regarding the protectionist policies of the United States administration. On the other hand, long-term interest rates in Japan continued to remain low at around zero percent under the Bank of Japan’s “quantitative and qualitative monetary easing with yield curve control.”

resources.

As for the future outlook of the global economy, negative growth is expected due to the recoveryimpact of the spread of
COVID-19.
While monetary easing and economic stimulus measures implemented in each country are expected to have a positive effect on the economy, there is a concern that, if the impact becomes prolonged, demand will decrease further due to worsening employment and income situations. The Japanese economy is expected to continue particularlyremain in a difficult situation for the time being, due to factors such as decreased consumption, primarily in the United States, but it remains necessary to further monitor downturn risks such as the United States’ policy direction under its presidency, the political concerns in Europe, the economic outlook for China and heightening geopolitical risks. As for the future outlook of the Japanese economy, it is expected to continue on its gradual recovery path, supported by the effects of government economic measures and growth in consumer spendingservice-related sector, and capital investment. However, the potential impact of increasing uncertainty in overseas economies on Japan requires monitoring.

investments.

Key indicators of Japanese economic conditions in recent periods include the following:

The following chart shows the growth rates of Japan’s gross domestic product on ayear-on-year basis and Japan’s core nationwide consumer price indices from the first quarter of 2015 through the first quarter of 2018:

LOGO

Japan’s real gross domestic product on a

year-on-year
basis increased by 1.4%, 1.2% and 1.6%0.3% in the fiscal yearsyear ended March 31, 2016, 20172019 and 2018, respectively. Japan’s real gross domestic product on a quarterly basis, compared to the corresponding period of the previous year, increased consecutively from the first quarter of calendar year 2015 through the first quarter of calendar year 2018. Japan’s core nationwide consumer price index wasalmost unchanged in the fiscal year ended March 31, 2016, decreased by 0.2% in2020. During the fiscal year ended March 31, 20172020, the
year-on-year
growth rates were 0.9%, 1.7%, minus 0.7%, and minus 1.7%, for the quarters ended June 30, September 30, December 31 and March 31, respectively. Japan’s core nationwide consumer price index increased by 0.7%, 0.8% and 0.6% in the fiscal yearyears ended March 31, 2018.

2018, 2019 and 2020, respectively.
In September 2016, the Bank of Japan decided to introduce “quantitative and qualitative monetary easing with yield curve control” by strengthening its two previous policy frameworks, namely “quantitative and qualitative monetary easing (“QQE”)” and “QQE with a negative interest rate.” The new policy framework consists of two major components: (1) “yield curve control” in which the Bank of Japan will control short-term and long-term interest rates; and (2) an “inflation-overshooting commitment” in which the Bank of Japan commits itself to expand the monetary base until the
year-on-year
rate of increase in the observed consumer price index exceeds the price stability target of 2% and stays above the target in a stable manner. Under the new policy framework, the Bank of Japan decided to set the guideline for market operations under which, regarding short-term interest rates, the Bank of Japan will apply a negative interest rate of minus 0.1% to certain excess balances in current accounts held by financial institutions at the Bank of Japan, while for long-term interest rates, it would purchase Japanese government bonds to control long-term interest rates so that the yield of
10-year
Japanese government bonds will remain at around 0%. In addition, the Bank of Japan decided to introduce the following new tools of market operations so as to control the yield curve smoothly: (i) outright purchases of Japanese government bonds with yields designated by the Bank of Japan; and (ii) fixed-rate funds-supplying operations for a period of up to ten years (thereby extending the longest maturity of the operation of one year).

The following chart shows movements in

In July 2018, the Bank of Japan decided to strengthen its commitment to achieving its price stability target by introducing forward guidance for policy rates, and to enhance the sustainability of “quantitative and qualitative monetary easing with yield curve control.” In its forward guidance, the Bank of Japan stated its intention to maintain the current extremely low levels of short-term and long-term interest rates from January 2015for an extended period of time, taking into account uncertainties regarding economic activity and prices, including the effects of the consumption tax hike scheduled to May 2018, represented bytake place in October 2019. The Bank of Japan also indicated its aim to ease the yield curve, stating that it would purchase Japanese government bonds so that the yield of
10-year
Japanese government bonds will remain at
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around 0%, although such yield could move upward and downward to some extent mainly depending on newly issued10-yeardevelopments in economic activity and prices, and the Bank of Japan would purchase the Japanese government bonds in a flexible manner with regard to the purchase amount. In addition, the Bank of Japan decided to reduce the size of the excess balances in financial institutions’ current account to which a negative interest rate is applied under the condition that yield curve control can be conducted appropriately.
In April 2019, the Bank of Japan decided upon the clarification of forward guidance for policy rates and implementation of measures contributing to the continuation of powerful monetary easing, including the expansion of eligible collateral for the bank’s provision of credit, with a view to making clearer its policy stance to persistently continue with powerful monetary easing. The Bank of Japan stated its intention to maintain the current extremely low levels of short-term and long-term interest rates for an extended period of time, at least through around spring 2020, taking into account uncertainties regarding economic activity and prices, including developments in overseas economies and the effects of the scheduled consumption tax hike.
In October 2019, the Bank of Japan judged that, although there had been no further increase in the possibility that the momentum toward achieving the price stability target would be lost, it was necessary to continue to pay close attention to the possibility. With a view to clarifying this recognition, the Bank of Japan decided on a new forward guidance for policy rates, in respect of which, the Bank of Japan stated its expectation that short-term and long-term interest rates will remain at their present or lower levels as long as it is necessary to pay close attention to the possibility that the momentum toward achieving the price stability target will be lost.
In March 2020, in light of the impact of the spread of
COVID-19,
the Bank of Japan judged it appropriate to enhance monetary easing through (1) the further ample supply of funds by conducting various operations including purchases of Japanese government bonds and the U.S. dollar funds-supplying operations, (2) measures to facilitate corporate financing including the introduction of the “special funds-supplying operations to facilitate corporate financing regarding the novel coronavirus
(COVID-19)”,
and (3) active purchases of exchange-traded funds and Japan real estate investment trusts.
Furthermore, in short-termApril 2020, the Bank of Japan judged it appropriate to enhance monetary easing through (1) an increase in purchases of commercial paper and corporate bonds, (2) strengthening of the “special funds-supplying operations to facilitate corporate financing regarding the novel coronavirus
(COVID-19)”,
and (3) further active purchases of Japanese government bonds and treasury discount bills.
The yields on newly issued
10-year
Japanese government bonds, which is a key long-term interest ratesrate indicator, were 0.049%, minus 0.081% and 0.022% as of March 30, 2018, March 29, 2019 and March 31, 2020, respectively. The yield fluctuated between minus 0.285% and 0.083% during the same period, represented byfiscal year ended March 31, 2020. Thereafter, the uncollateralized overnight call rate used in the interbank market:

LOGO

yield decreased to 0.005% as of May 29, 2020.

According to Teikoku Databank, a Japanese research institution, there were 8,4088,285 corporate bankruptcies in the fiscal year ended March 31, 2016,2018, involving approximately ¥1.9¥2.6 trillion in total liabilities, 8,1538,057 corporate bankruptcies in the fiscal year ended March 31, 2017,2019, involving approximately ¥1.9¥1.6 trillion in total liabilities, and 8,2858,480 corporate bankruptcies in the fiscal year ended

March 31, 2018, involving approximately ¥1.7 March 31, 2020, involving approximately ¥1.2 trillion in total liabilities. The number of corporate bankruptcies showed annual decreases for eight consecutive years until the most recent fiscal year which showed an increase from the previous year, while the amount of total liabilities decreased by approximately ¥0.3 trillion from the previous fiscal year.

The following chart showsnumber of corporate bankruptcies showed an increase from the daily closing priceprevious fiscal year for the first time in two years. The amount of total liabilities decreased by approximately ¥0.3 trillion from the Nikkei Stock Average from January 2015 to May 2018:previous fiscal year.

LOGO

The Nikkei Stock Average, which is an average of the price of 225 stocks listed on the Tokyo Stock Exchange, decreasedincreased by 12.7% to ¥16,758.67 during the fiscal year ended March 31, 2016, followed by a 12.8% increase to ¥18,909.26 during the fiscal year ended March 31, 2017 and a 13.5% increase to ¥21,454.30 during the fiscal year ended March 31, 2018.2018, followed by a 1.2% decrease to ¥21,205.81 during the fiscal year ended March 31, 2019 and a 10.8% decrease to ¥18,917.01 during the fiscal year ended March 31, 2020. Thereafter, the Nikkei Stock Average increased to ¥22,201.82¥21,877.89 as of May 31, 2018.

29, 2020.
The following chart shows the yen/dollar spot rate
62
Table of 5 p.m. Tokyo time published by the Bank of Japan from January 2015 to May 2018:Contents

LOGO

The yen to U.S. dollar spot exchange rate, according to the Bank of Japan, was ¥112.43 to $1.00 as of March 31, 2016, ¥111.80 to $1.00 as of March 31, 2017, and ¥106.19 to $1.00 as of March 30, 2018.2018, ¥110.75 to $1.00 as of March 29, 2019 and ¥108.42 to $1.00 as of March 31, 2020. The rate fluctuated between ¥102.24 and ¥112.02 to $1.00 during the fiscal year ended March 31, 2020. Thereafter, the yen weakenedstrengthened to ¥108.77¥107.21 to $1.00 as of May 31, 2018.

29, 2020.
According to the Ministry of Land, Infrastructure, Transport and Tourism of Japan, housing starts in Japan increased by 4.6% and 5.8% in the fiscal years ended March 31, 2016 and 2017, respectively and decreased by 2.8% in the fiscal year ended March 31, 2018.2018, increased by 0.7% in the fiscal year ended March 31, 2019 and decreased by 7.3% in the fiscal year ended March 31, 2020.

According to the Ministry of Land, Infrastructure, Transport and Tourism of Japan, the average published housing land prices in Japan decreasedincreased by 0.2%0.3%, 0.6% and 0.8% in calendar year 2015, was unchanged in calendar year 2016years 2017, 2018 and increased by 0.3% in calendar year 2017.2019, respectively.

Capital Improvements

All yen figures and percentages in this subsection are truncated.

We have been implementing disciplined capital management by pursuing the optimal balance between strengthening of stable capital base and steady returns to shareholders as described below.

Strengthening of Stable Capital Base

In the fiscal year ended

Common Equity Tier1 capital as of March 31, 2018, we strengthened our capital base2020 decreased slightly compared to March 31, 2019 due mainly to a decrease in net unrealized gains (losses) on other securities as a result of earning ¥576.5 billion ofthe declines in the stock market, partly offset by profit attributable to owners of parent (under Japanese GAAP).

With respect to redemptions of previously issued securities, since April 2017, we have redeemed various securities that are eligible regulatory capital instruments subject to
phase-out
arrangements under Basel III upon their respective initial optional redemption dates or their respective maturity dates. With respect to Tier 1 capital, in June 2018,2019, we redeemed ¥274.5¥303.0 billion of
non-dilutive
Tier 1 preferred securities issued by our overseas special purpose company in JanuaryJuly 2008. With respect to Tier 2 capital, in April 2017, January 2018June 2019, September 2019 and March 2018,October 2019, we redeemed ¥50.0¥54.0 billion, ¥70.0¥33.0 billion and ¥50.0¥80.0 billion of dated subordinated bonds issued by our subsidiary bank in April 2007, January 2008June 2009, September 2009 and March 2008,October 2012, respectively.

In July 2019, December 2019 and June 2020, we redeemed ¥20.0 billion, ¥15.0 billion and ¥10.0 billion of dated subordinated bonds with a write-down feature that are Basel

III-eligible
Tier 2 capital instruments issued by Mizuho Financial Group in July 2014, December 2014 and June 2015, respectively.
With respect to new issuances of Additional Tier 1 capital, new issuances, in July 2017,2019, we issued ¥460.0¥235.0 billion of perpetual subordinated bonds with optional-redemptionan optional redemption clause and a write-down clause that are Basel
III-eligible
Additional Tier 1 capital instruments through public offerings to wholesale investors in Japan. With respect to new issuances of Tier 2 capital, new issuances, in June 2017,2019 and October 2019, we issued ¥114.0¥90.0 billion and ¥158.0 billion, respectively, of dated subordinated bonds with a write-down feature that are Basel
III-eligible Tier 2 capital instruments through public offerings to retail investors in Japan. In June 2018, we issued ¥40.0 billion and ¥70.0 billion of dated subordinated bonds with a write-down feature that are BaselIII-eligible
Tier 2 capital instruments through public offerings to wholesale and retail investors respectively, in Japan.

Our Common Equity Tier 1 capital ratio under Basel III was 11.34%12.76% and 12.49%11.65% as of March 31, 20172019 and 2018,2020, respectively.

Steady Returns to Shareholders

Annual cash dividends for the fiscal year ended March 31, 20182020 were ¥7.5 per share of common stock (including interim dividend payments of ¥3.75 per share), which was the same amount as the annual cash dividend per share for the previous fiscal year.

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We continuously consider the optimal balance between strengthening of stable capital base and steady returns to shareholders. We will comprehensively consider the business environment such as the Mizuho group’s business results, profit base, capital and domestic and international regulationregulatory trends such as the Basel framework and determine cash dividend payments for each term.

Business Trends

See “Item 4.B. Information on the Company—Business Overview,” “Item 5. Operating and Financial Review and Prospects—Operating Results” and “Item 5. Operating and Financial Review and Prospects—Financial Condition.”

Others

Creation

Impact of New Businessthe COVID-19 pandemic
The ongoing COVID-19 pandemic has put pressure on the global economy, including Japan. This challenging market environment adversely affected our financial results for the fiscal year ended March 31, 2020, resulting in a significant increase in credit-related costs as well as an increase in impairment losses related to Japanese stocks (based on Japanese GAAP). The increase in credit-related costs was due mainly to the impact of the COVID-19 pandemic, including additional reserves recorded from a forward-looking perspective (based on Japanese GAAP). For more information, refer to “Item 3.D. Key Information—Risk Factors.”
We currently expect that the COVID-19 pandemic will continue to have a negative impact on our consolidated earnings and profitability through the fiscal year ending March 31, 2021 based on Digital Innovation

In July 2017, Mizuho Bankmanagement’s expectation that the global economy will experience the greatest pressure from the pandemic in the first half of the fiscal year and WiL, LLC establishedthen move into a joint venture named Blue Lab, Co., Ltd.recovery stage towards the end of the fiscal year. The extent to drivewhich COVID-19 impacts our business, generation through innovative technological advances. Blue Labclient and borrowers will depend on future developments, which are highly uncertain and cannot be predicted. Among many potential factors from the COVID-19 pandemic that may impact negatively our future results of operations, there is focuseda high likelihood that credit-related costs for the fiscal year ending March 31, 2021 (based on Japanese GAAP) will be even larger than those in the creation and commercialization of next-generation business models through open innovation. In September 2017, J. Score CO., Ltd, which was establishedfiscal year ended March 31, 2020.

We also expect a temporary increase in risk-weighted assets as a 50/50 joint companyresult of downgrades in borrowers’ credit ratings and an increase in loans to support our customers with liquidity needs, which would apply downward pressure on our common equity tier 1 capital ratio and other capital adequacy ratios, and that such impact will recede gradually as the economic environment recovers from the effects of the pandemic.
The outlook for the fiscal year ending March 31, 2021 set forth above is based on earnings estimates that we prepared under Japanese GAAP, which is the basis of accounting that we use for financial reporting purposes in Japan and Japanese bank regulatory purposes. We do not prepare estimates of our results of operations based on U.S. GAAP, and it is uncertain whether our outlook for the fiscal year ending March 31, 2021 would be substantially different if it had been based on 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.”
Our current expectations of the impact of the COVID-19 pandemic are forward-looking statements within the meaning of Section 27A of the Securities Act and Section 21E of the Exchange Act. Such forward-looking statements are based on management’s current views with respect to future events and are subject to risks, uncertainties and assumptions. The forward-looking statements are based on specific estimates, judgments and assumptions, including prospective assumptions about the operating environment, macroeconomic conditions and the financial and operating conditions of our customers and counterparties. Due to the significant risks and uncertainties associated with these estimates, judgments and assumptions, as well as the continuously evolving
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nature of the COVID-19 pandemic, there can be no assurance that the actual impact of the COVID-19 pandemic on our financial condition, results of operations and capital adequacy ratios will be in line with our estimates or current expectations. We expressly disclaim any obligation or undertaking to release any update or revision to any forward-looking statement contained herein to reflect any change in our expectations with regard thereto or any change in events, conditions or circumstances on which any statement is based.
See “Forward-Looking Statements” and “Item 3.D. Key Information—Risk Factors” for a further discussion of risks and uncertainties, including risks specifically related to the impact of the COVID-19 pandemic on our business, financial condition and results of operations, and other factors that could cause actual results to differ materially because of those risks and uncertainties.
Integration of our three consolidated subsidiaries
In May 2020, we decided to integrate three consolidated subsidiaries of Mizuho Bank and Softbank Corp. and is a subsidiary ofFinancial Group, Mizuho Bank, began operations as Japan’s first score-based lending business based on big data and artificial intelligence technologies.

Merger ofInformation & Research Institute, Inc., Mizuho Bank (USA)Research Institute Ltd. and Mizuho Trust Systems Company, Limited in April 2021 with Mizuho Information & Banking Co. (USA)

In December 2017, two subsidiaries of Mizuho Americas LLC, namelyResearch Institute, Inc. as the former Mizuho Bank (USA) and the Mizuho Trust & Banking Co. (USA), merged. The merged entity, Mizuho Bank (USA), provides both banking services and trust services. This merger streamlines Mizuho’s corporate operations in the United States, reinforcing its governance structure, while providing enhanced support to clients investing and expanding businesses in the United States.

Execution of Agreement Concerning the Integration of Trust Banks Specializing in Asset Administration Services (Joint Share Transfer)

In March 2018, Trust & Custody Services Bank, Ltd., a subsidiary of ours, executed a management integration agreement with Japan Trustee Services Bank, Ltd. to carry out the management integration through incorporation of a holding company by joint share transfer.surviving entity. The purpose of the integration is to contributesignificantly improve the ability of Mizuho Information & Research Institute, Inc. as the

non-financial
business core company in Mizuho group to further growth inprovide “New value beyond the domestic securities settlement marketconventional boundaries of finance” by organically combining and domestic investment chain by realizing more stableamalgamating each company’s research, consulting and higher quality operations and strengthening its systemIT development capabilities by seeking the benefits of scale.

Fundamental Structural Reforms

The business environment surrounding financial institutions continues to be difficult, and we anticipate it will undergo major structural changes over time. Under these circumstances, we will undertake fundamental structural reforms in our business structure, and, based on aten-year time horizon, we will strive to secure our sustainable growth and continued competitive advantage. We will utilize advanced technologies in accordance with our concept of open innovation to further develop our “One MIZUHO strategy” by, for example, (i) endeavoring to increase profit through actively pursuing collaborative engagement with other companies, not limited to financial activities, in order to create new business opportunities and (ii) endeavoring to strengthen cost competitiveness and enhance productivity while striving to optimize organization and staffing, restructure branch strategies and accomplish other related tasks.

capabilities.

Disposing of Our Cross-shareholdings

Reflecting the potential impact on our financial position associated with the risk of stock price fluctuation, as a basic policy, unless we consider holdings to be meaningful, we will not hold the shares of other companies as cross-shareholdings. We promote cross-shareholdings disposal through initiatives to enhance capital efficiency by implementing
in-house
company return on equity as an internal performance indicator. Under Japanese GAAP on an acquisition cost basis, our total Japanese stock portfolio (included within other securities which have readily determinable fair value) as of March 31, 20152019 was ¥1,962.9¥1,419.8 billion, and we have reduced such amount by ¥398.0¥147.8 billion as of March 31, 2018.

2020.

Critical Accounting Estimates

Note 1 to our consolidated financial statements included elsewhere in this annual report contains a summary of our significant accounting policies. These accounting policies are essential to understanding our financial

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

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

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

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

•Allowance based on ASC 310.In accordance with ASC 310, “Receivables” (“ASC 310”), we measure the value of specifically identified impaired loans based on the present value of expected cash flows discounted at the loans’ initial effective interest rate, or as a practical expedient, using the observable market price or the fair value of collateral if the loan is collateral dependent, when it is probable that we will be unable to collect all amounts due according to the contractual terms of the loan agreement. The collateral that we obtain for loans consists primarily of real estate. In obtaining the collateral, we evaluate the value of the collateral and its legal enforceability, and we also perform subsequentre-evaluations at least once a year. As to collateral of loans that are collateral dependent, in the case of real estate, valuation is generally performed by an appraising subsidiary that is independent from our loan origination sections by using generally accepted valuation techniques such as (i) the replacement cost approach, or (ii) the sales comparison approach or (iii) the income approach, although in the case of large real estate collateral, we generally engage third-party appraisers to perform the valuation. Management identifies impaired loans through the credit quality review process, in which the ability of borrowers to service their debt is assessed. The difference between our evaluation of the value of the impaired loan and its principal amount is the amount of the impairment which is recorded in the allowance for loan losses. Estimation of future cash flows is based on a comprehensive analysis of the borrower’s ability to service the debt, any progress made on the borrower’s rehabilitation program and the assumptions used therein.

•Allowance based on ASC 450. In accordance with ASC 450, “Contingencies” (“ASC 450”), a formula-based allowance utilizing historical loss factors is applied to groups of loans that are collectively evaluated for impairment. The determination of expected losses is based on a statistical analysis of our historical default and loan loss data, as well as data from third-party sources. The estimation of the formula allowance is back-tested on a periodic basis by comparing the allowance with the actual results subsequent to the balance sheet date.

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

Allowance based on ASC 310.
In accordance with ASC 310, “Receivables” (“ASC 310”), we measure the value of specifically identified impaired loans based on the present value of expected cash flows discounted at the loans’ initial effective interest rate, or as a practical expedient, using the observable market price or the fair value of collateral if the loan is collateral dependent, when it is probable that we will be unable to collect all amounts due according to the contractual terms of the loan agreement. The collateral that we obtain for loans consists primarily of real estate. In obtaining the collateral, we evaluate the value of the collateral and its legal enforceability, and we also perform subsequent
re-evaluations
at least once a year. As to collateral of loans that are collateral dependent, in the case of real estate, valuation is generally performed by an appraising subsidiary that is independent from our loan origination sections by using generally accepted valuation techniques such as (i) the replacement cost approach, or (ii) the sales comparison approach, or (iii) the income approach, although in the case of large real estate collateral, we generally engage third-party appraisers to perform the valuation. Management identifies impaired loans through the credit quality review process, in which the ability of borrowers to service their debt is assessed. The difference between our evaluation of the value of the impaired loan and its principal amount is the amount of the impairment which is recorded in the allowance for loan losses. Estimation of future cash flows is based on a comprehensive analysis of the borrower’s ability to service the debt, any progress made on the borrower’s rehabilitation program and the assumptions used therein.
Allowance based on ASC 450.
In accordance with ASC 450, “Contingencies” (“ASC 450”), a formula-based allowance utilizing historical loss factors is applied to groups of loans that are collectively evaluated for impairment. The determination of expected losses is based on a statistical analysis of our historical default and loan loss data, as well as data from third-party sources. The estimation of the formula allowance is back-tested on a periodic basis by comparing the allowance with the actual results subsequent to the balance sheet date.
Adjustment of allowance based on ASC 450.
In addition to the allowance for loan losses based on historical loss factors, the allowance amounts are adjusted, where appropriate, to reflect current factors, such as general economic and business conditions affecting key lending areas, credit quality trends, specific industry conditions and recent loss experience in the segments of the loan portfolio. Additionally, the allowance for loan losses is adjusted, where appropriate, to reflect significant uncertain economic and business conditions, such as the COVID-19 pandemic. For March 31, 2020, we have incorporated the estimated impact of the COVID-19 pandemic into the allowance for loan losses by adjusting its ASC 450 collective allowance; specifically, we identified the industries and obligors which are most likely to be affected by the COVID-19 pandemic and adjusted our historical loss formula-based allowance for these loan groups, using assumptions such as anticipated business recovery period and current forecast for the growth rate of gross domestic product. For loans which are not deemed to be impaired under ASC 310 but to which special isolated risks apply, management assesses each loan individually to determine appropriate allowance amounts in lieu of mechanically applying the ASC 450 formula-based allowance.
We assess probable loss amounts for guarantees by using the same categories and evaluation methods as loans. We similarly assess probable loss amounts for loan commitments, taking into account the probability of drawdowns.

The determination of the allowance for loan losses and the allowance for losses on
off-balance-sheet
instruments requires a great deal of judgment and the use of estimates as discussed above. Furthermore, information available at the time of the determination is limited, and it is not possible to eliminate uncertainty. Significant changes in any of the factors underlying our determination of the allowances could materially affect our financial condition and results of operations. For example, if our current judgment with respect to expected future cash flows differs from actual results, including as a result of an unexpected adverse change in the
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economic environment in Japan or a sudden and unanticipated failure of a large borrower, or if the value of collateral declines, we may need to increase the allowances with additional charges to earnings.

Valuation of Financial Instruments

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

Level 1

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

Level 2

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

Level 3

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

For assets and liabilities classified in Level 1 and 2 of the hierarchy, where inputs are principally based on observable market data, there is less judgment or estimate in determining fair value, while the determination of fair value of Level 3 assets and liabilities involves more significant management judgments and estimates. For further information, including valuation methodologies and the use of management estimates and judgments in connection therewith, see note 28 to the consolidated financial statements included elsewhere in this annual report.

Valuation of Deferred Income Taxes

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

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The determination of a valuation allowance is an inherently uncertain process due to the use of projected future taxable income and subjective assessments in the effectiveness of our available
tax-planning
strategies provided for under ASC 740. Variances in future projected operating performance or tax law changes could result in a change in the valuation allowance. Variances in the net unrealized gains on
available-for-sale
securities could also affect a change in the valuation allowance, because we consider the sales of
available-for-sale
securities to be a qualifying
tax-planning
strategy that is a possible source of future taxable income mainly with respect to our principal banking subsidiaries in Japan. Although we evaluate that this
tax-planning
strategy is prudent and feasible, it has limitations and risks such as the decrease in net unrealized gains on
available-for-sale
securities that are available to be utilized in the future. If we are not able to realize all or part of our net deferred tax assets in the future, an adjustment to our valuation allowance would be charged to income tax expense in the period when such determination is made, and this could materially and adversely affect our financial condition and results of operations.

Pension and Other Employee Benefit Plans

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

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

In estimating the discount rates, we use interest rates on high-quality fixed-income government and corporate bonds. The durations of such bonds closely match those of the benefit obligations. Assumed discount rates are reevaluated at each measurement date.

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

For further information on our pension and other employee benefits, see note 2120 to the consolidated financial statements included elsewhere in this annual report.

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Operating Results

The following discussion relates to our operating results for the fiscal years ended March 31, 2019 and 2020. For the discussion on our operating results for the fiscal year ended March 31, 2019,
including certain comparative discussion on our operating results for the fiscal years ended March 31, 2018 and 2019,
please refer to “Item 5. Operating and Financial Review and Prospects—Operating Results” in our annual report on Form 20-F for the fiscal year ended March 31, 2019, filed with the SEC on July 5, 2019.
The following table shows certain information as to our income, expenses and net income for the fiscal years ended March 31, 2016, 20172019 and 2018:

   Fiscal years ended March 31, 
   2016   2017   2018 
   

 

(in billions of yen)

 

Interest and dividend income

  ¥1,500   ¥1,509   ¥1,762 

Interest expense

   495    602    890 
  

 

 

   

 

 

   

 

 

 

Net interest income

   1,005    907    872 

Provision (credit) for loan losses

   35    38    (126) 
  

 

 

   

 

 

   

 

 

 

Net interest income after provision (credit) for loan losses

   970    869    998 

Noninterest income

   1,884    1,368    1,605 

Noninterest expenses

   1,657    1,757    1,764 
  

 

 

   

 

 

   

 

 

 

Income before income tax expense

   1,197    480    839 

Income tax expense

   347    91    237 
  

 

 

   

 

 

   

 

 

 

Net income

   850    389    602 

Less: Net income (loss) attributable to noncontrolling interests

   —      27    24 
  

 

 

   

 

 

   

 

 

 

Net income attributable to MHFG shareholders

  ¥850   ¥362   ¥578 
  

 

 

   

 

 

   

 

 

 
2020:

         
 
Fiscal years ended March 31,
 
 
    2019    
  
    2020    
 
 
(in billions of yen)
 
Interest and dividend income
 ¥
2,207
  ¥
2,150
 
Interest expense
  
1,313
   
1,271
 
         
Net interest income
  
894
   
879
 
Provision (credit) for loan losses
  
32
   
156
 
         
Net interest income after provision (credit) for loan losses
  
862
   
723
 
Noninterest income
  
1,222
   
1,308
 
Noninterest expenses
  
1,999
   
1,878
 
         
Income before income tax expense
  
85
   
153
 
Income tax expense
  
9
   
47
 
         
Net income
  
76
   
106
 
Less: Net income (loss) attributable to noncontrolling interests
  
(9
)  
(44
)
         
Net income attributable to MHFG shareholders
 ¥
85
  ¥
150
 
         

The following is a discussion of major components of our net income attributable to MHFG shareholders for the fiscal years ended March 31, 2016, 20172019 and 2018.

2020.

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Net Interest Income

The following table shows the average balances of interest-earning assets and interest-bearing liabilities, interest amounts and the average interest rates on such assets and liabilities for the fiscal years ended March 31, 2016, 20172019 and 2018:

  Fiscal years ended March 31, 
  2016  2017  2018 
  Average
balance		  Interest
amount		  Interest
rate		  Average
balance		  Interest
amount		  Interest
rate		  Average
balance		  Interest
amount		  Interest
rate		 
  

 

(in billions of yen, except percentages)

 

Domestic:

         

Interest-bearing deposits in other banks

 ¥29,485  ¥30   0.10%  ¥37,389  ¥27   0.07%  ¥39,812  ¥27   0.07% 

Call loans and funds sold, and receivables under resale agreements and securities borrowing transactions

  4,309   10   0.22   5,079   18   0.35   5,283   23   0.43 

Trading account assets

  5,262   16   0.31   4,408   27   0.62   4,654   50   1.07 

Investments

  25,625   88   0.34   20,357   78   0.38   21,267   97   0.46 

Loans

  52,866   565   1.07   53,930   510   0.95   58,049   511   0.88 
 

 

 

  

 

 

   

 

 

  

 

 

   

 

 

  

 

 

  

Total interest-earning assets

  117,547   709   0.60   121,163   660   0.54   129,065   708   0.55 
 

 

 

  

 

 

   

 

 

  

 

 

   

 

 

  

 

 

  

Deposits

  81,090   60   0.07   83,293   51   0.06   90,078   60   0.07 

Short-term borrowings(1)

  15,139   22   0.15   14,177   27   0.19   13,678   43   0.31 

Trading account liabilities

  2,092   13   0.61   1,697   14   0.82   1,454   27   1.87 

Long-term debt

  14,236   176   1.23   14,523   178   1.22   13,032   197   1.51 
 

 

 

  

 

 

   

 

 

  

 

 

   

 

 

  

 

 

  

Total interest-bearing liabilities

  112,557   271   0.24   113,690   270   0.24   118,242   327   0.28 
 

 

 

  

 

 

   

 

 

  

 

 

   

 

 

  

 

 

  

Net

  4,990   438   0.36   7,473   390   0.30   10,823   381   0.27 
 

 

 

  

 

 

   

 

 

  

 

 

   

 

 

  

 

 

  

Foreign:

         

Interest-bearing deposits in other banks

  6,639   38   0.57   7,671   48   0.63   8,363   94   1.13 

Call loans and funds sold, and receivables under resale agreements and securities borrowing transactions

  10,465   50   0.48   9,213   79   0.85   9,251   132   1.43 

Trading account assets

  11,602   135   1.16   10,335   136   1.31   10,821   152   1.41 

Investments

  3,058   102   3.34   3,915   87   2.24   3,544   77   2.18 

Loans

  24,279   466   1.92   25,412   499   1.96   24,822   599   2.41 
 

 

 

  

 

 

   

 

 

  

 

 

   

 

 

  

 

 

  

Total interest-earning assets

  56,043   791   1.41   56,546   849   1.50   56,801   1,054   1.86 
 

 

 

  

 

 

   

 

 

  

 

 

   

 

 

  

 

 

  

Deposits

  20,958   154   0.73   23,173   214   0.92   24,567   323   1.32 

Short-term borrowings(1)

  18,982   58   0.31   17,112   109   0.63   16,385   222   1.35 

Trading account liabilities

  1,195   8   0.69   1,049   7   0.71   1,235   14   1.16 

Long-term debt

  1,441   4   0.26   655   2   0.32   732   4   0.49 
 

 

 

  

 

 

   

 

 

  

 

 

   

 

 

  

 

 

  

Total interest-bearing liabilities

  42,576   224   0.53   41,989   332   0.79   42,919   563   1.31 
 

 

 

  

 

 

   

 

 

  

 

 

   

 

 

  

 

 

  

Net

  13,467   567   0.88   14,557   517   0.71   13,882   491   0.55 
 

 

 

  

 

 

   

 

 

  

 

 

   

 

 

  

 

 

  

Total:

         

Total interest-earning assets

  173,590   1,500   0.86   177,709   1,509   0.85   185,866   1,762   0.95 

Total interest-bearing liabilities

  155,133   495   0.32   155,679   602   0.39   161,161   890   0.55 
 

 

 

  

 

 

   

 

 

  

 

 

   

 

 

  

 

 

  

Net

 ¥18,457  ¥1,005   0.54  ¥22,030  ¥907   0.46  ¥24,705  ¥872   0.40 
 

 

 

  

 

 

   

 

 

  

 

 

   

 

 

  

 

 

  

2020:

                         
 
Fiscal years ended March 31,
 
 
2019
  
2020
 
 
Average
balance
  
Interest
amount
  
Interest
rate
  
Average
balance
  
Interest
amount
  
Interest
rate
 
 
(in billions of yen, except percentages)
 
Domestic:
  
   
   
   
   
   
 
Interest-bearing deposits in other banks
 ¥
38,914
  ¥
26
   
0.07
% ¥
34,333
  ¥
26
   
0.08
%
Call loans and funds sold, and receivables under resale agreements and securities borrowing transactions
  
6,201
   
32
   
0.51
   
9,322
   
27
   
0.30
 
Trading account assets
  
5,930
   
71
   
1.19
   
7,753
   
72
   
0.93
 
Investments
  
20,109
   
137
   
0.68
   
16,532
   
85
   
0.51
 
Loans
  
55,897
   
531
   
0.95
   
54,777
   
535
   
0.98
 
                         
Total interest-earning assets
  
127,051
   
797
   
0.63
   
122,717
   
745
   
0.61
 
                         
Deposits
  
87,168
   
94
   
0.11
   
87,143
   
90
   
0.10
 
Short-term borrowings
(1)
  
14,011
   
69
   
0.49
   
10,918
   
63
   
0.58
 
Trading account liabilities
  
1,735
   
34
   
1.93
   
1,591
   
41
   
2.59
 
Long-term debt
  
12,285
   
217
   
1.77
   
9,631
   
198
   
2.05
 
                         
Total interest-bearing liabilities
  
115,199
   
414
   
0.36
   
109,283
   
392
   
0.36
 
                         
Net
  
11,852
   
383
   
0.27
   
13,434
   
353
   
0.25
 
                         
Foreign:
  
   
   
   
   
   
 
Interest-bearing deposits in other banks
  
5,951
   
95
   
1.59
   
5,716
   
79
   
1.39
 
Call loans and funds sold, and receivables under resale agreements and securities borrowing transactions
  
9,924
   
228
   
2.30
   
11,301
   
249
   
2.21
 
Trading account assets
  
9,197
   
141
   
1.53
   
8,859
   
150
   
1.69
 
Investments
  
4,471
   
95
   
2.13
   
4,096
   
81
   
1.98
 
Loans
  
28,037
   
851
   
3.03
   
28,827
   
846
   
2.94
 
                         
Total interest-earning assets
  
57,580
   
1,410
   
2.45
   
58,799
   
1,405
   
2.39
 
                         
Deposits
  
26,693
   
519
   
1.95
   
27,507
   
526
   
1.91
 
Short-term borrowings
(1)
  
15,094
   
357
   
2.37
   
15,112
   
334
   
2.21
 
Trading account liabilities
  
1,249
   
16
   
1.29
   
1,009
   
12
   
1.16
 
Long-term debt
  
701
   
7
   
0.95
   
678
   
7
   
1.13
 
                         
Total interest-bearing liabilities
  
43,737
   
899
   
2.06
   
44,306
   
879
   
1.98
 
                         
Net
  
13,843
   
511
   
0.39
   
14,493
   
526
   
0.41
 
                         
Total:
  
   
   
   
   
   
 
Total interest-earning assets
  
184,631
   
2,207
   
1.20
   
181,516
   
2,150
   
1.19
 
Total interest-bearing liabilities
  
158,936
   
1,313
   
0.83
   
153,589
   
1,271
   
0.83
 
                         
Net
 ¥
25,695
  ¥
894
   
0.37
  ¥
27,927
  ¥
879
   
0.36
 
                         
Note:

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

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Fiscal Year Ended March 31, 20182020 Compared to Fiscal Year Ended March 31, 2017

2019

Interest and dividend income increaseddecreased by ¥253¥57 billion, or 16.8%2.6%, from the previous fiscal year to ¥1,762¥2,150 billion in the fiscal year ended March 31, 2018.2020. Domestic interest and dividend income accounted for ¥708¥745 billion of the total amount, an increasea decrease of ¥48¥52 billion from the previous fiscal year, and foreign interest and dividend income accounted for ¥1,054¥1,405 billion, an increasea decrease of ¥205¥5 billion from the previous fiscal year.

Long-term interest rates continued to be in the vicinity of 0% under the Bank of Japan’s “Quantitative and Qualitative Monetary Easing with Yield Curve Control.” Short-term interest rates also continued to be in the vicinity of 0%. Under such circumstances, the average yield on domestic loans decreasedslightly increased by 0.070.03 percentage points from the previous fiscal year to 0.88%0.98% in the fiscal year ended March 31, 2018,2020, and the average rate on domestic deposits remained at a low level and slightly increaseddecreased by 0.01 percentage points from the previous fiscal year to 0.07%0.10% in the fiscal year ended March 31, 2018.2020. The average yield on foreign loans increaseddecreased by 0.450.09 percentage points from the previous fiscal year to 2.41%2.94% in the fiscal year ended March 31, 2018,2020, and the average rate on foreign deposits increasedslightly decreased by 0.400.04 percentage points from the previous fiscal year to 1.32%1.91% in the fiscal year ended March 31, 2018.

2020.

The increasedecrease in domestic interest and dividend income was due mainly to an increasea decrease in interest income from investments. The decrease in interest income from investments was due mainly to the absence of income related to the redemption of a portion of our holdings of preferred stock of a Japanese corporation in the average balance.previous fiscal year. Changes in the average yields on domestic interest-earning assets contributed to an overall increasea decrease in interest and dividend income of ¥4¥43 billion, and changes in the average balances of domestic interest-earning assets contributed to an overall increase in interest and dividend incomea decrease of ¥44¥9 billion, resulting in the ¥48¥52 billion increasedecrease in domestic interest and dividend income.

The increasedecrease in foreign interest and dividend income was due mainly to increasesdecreases in interest income from foreign loansinterest-bearing deposits from other banks and investments. The decrease in interest income from foreign call loansinterest-bearing deposits from other banks and funds sold, and receivable under resale agreements and securities borrowing transactions. The increase in interest income from foreign loans and the increase in interest income from foreign call loans and funds sold, and receivable under resale agreements and securities borrowing transactionsinvestments were due mainly to an increasea decrease in the average yield. Changes in the average yield on foreign interest-earning assets contributed to an increasea decrease in interest and dividend income of ¥213¥41 billion, and changes in the average balance of foreign interest-earning assets contributed to a decreasean increase of ¥8¥36 billion, resulting in the ¥205¥5 billion overall billion increasedecrease in foreign interest and dividend income.

Interest expense increaseddecreased by ¥288¥42 billion, or 47.8%3.2%, from the previous fiscal year to ¥890¥1,271 billion in the fiscal year ended March 31, 2018.2020. Domestic interest expense accounted for ¥327¥392 billion of the total amount, an increasea decrease of ¥57¥22 billion from the previous fiscal year, and foreign interest expense accounted for ¥563¥879 billion of the total amount, an increasea decrease of ¥231¥20 billion from the previous fiscal year.

The changes in the average interest rates on domestic interest-bearing liabilities contributed to an increase in interest expense of ¥74¥43 billion, and the changes in the average balance of domestic interest-bearing liabilities contributed to a decrease in interest expense of ¥17¥65 billion, resulting in the ¥57¥22 billion overall increasedecrease in domestic interest expense.

The increasedecrease in foreign interest expense was due mainly to an increasesdecreases in the average interest rates on foreign deposits and short-term borrowings. The changes in the average interest rates on foreign interest-bearing liabilities contributed to an increasea decrease in interest expense of ¥221¥33 billion, and the changes in the average balance of foreign interest-bearing liabilities contributed to an increase in interest expense of ¥10¥13 billion, resulting in the ¥231¥20 billion overall increasedecrease in foreign interest expense.

As a result of the foregoing, net interest income decreased by ¥35¥15 billion, or 3.9%1.7%, from the previous fiscal year to ¥872¥879 billion. The average interest rate spread declined by 0.060.01 percentage points from the previous fiscal year to 0.40%0.36% in the fiscal year ended March 31, 2018.2020. The decline of the average interest rate spread was not significant because both the average yields on total interest-earning assets and the average interest rates on total interest-bearing liabilities generally leveled out between these periods.

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Table of Contents
Provision (Credit) for Loan Losses
Fiscal Year Ended March 31, 20172020 Compared to Fiscal Year Ended March 31, 2016

Interest and dividend income increased by ¥9 billion, or 0.6%, from the previous fiscal year to ¥1,509 billion in the fiscal year ended March 31, 2017. Domestic interest and dividend income accounted for ¥660 billion of the total amount, a decrease of ¥49 billion from the previous fiscal year, and foreign interest and dividend income accounted for ¥849 billion, an increase of ¥58 billion from the previous fiscal year.

Due to the monetary policies of the Bank of Japan, such as continuous monetary easing and the negative interest rate policy that began in February 2016, our domestic loan and deposit rate margin has become narrower. Reflecting a decline in short-term interest rate levels of the yen, the average yield on domestic loans decreased by 0.12 percentage points from the previous fiscal year to 0.95% in the fiscal year ended March 31, 2017, and the average rate on domestic interest-bearing deposits decreased by 0.01 percentage points from the previous fiscal year to 0.06% in the fiscal year ended March 31, 2017. Our domestic funding structure is stable, primarily consisting of individual customer deposits. The average yield on foreign loans increased by 0.04 percentage points from the previous fiscal year to 1.96% in the fiscal year ended March 31, 2017, and the average rate on foreign interest-bearing deposits increased by 0.19 percentage points from the previous fiscal year to 0.92% in the fiscal year ended March 31, 2017. We place further emphasis on the importance of profitability in the lending business and look to counter the effects of negative impact of negative interest rates and others.

The decrease in domestic interest and dividend income was due mainly to a decrease in interest income from domestic loans. The decrease in interest income from domestic loans was due mainly to a decrease in the average yield, reflecting a decline in yen interest rate levels. Changes in the average yields on domestic interest-earning assets contributed to an overall decrease in interest and dividend income of ¥46 billion, and changes in the average balances of domestic interest-earning assets contributed to an overall decrease in interest and dividend income of ¥3 billion, resulting in the ¥49 billion decrease in domestic interest and dividend income.

The increase in foreign interest and dividend income was due mainly to increases in interest income from foreign loans and in interest income from foreign call loans and funds sold, and receivable under resale agreements and securities borrowing transactions. The increase in interest income from foreign loans was due mainly to an increase in the average balance as well as an increase in the average yields. The increase in interest income from foreign call loans and funds sold, and receivable under resale agreements and securities borrowing transactions was due mainly to an increase in the average yield. Changes in the average yields on foreign interest-earning assets contributed to an overall increase in interest and dividend income of ¥31 billion, and changes in the average balance of foreign interest-earning assets contributed to an overall increase of ¥27 billion, resulting in the ¥58 billion increase in foreign interest and dividend income.

Interest expense increased by ¥107 billion, or 21.6%, from the previous fiscal year to ¥602 billion in the fiscal year ended March 31, 2017. Domestic interest expense accounted for ¥270 billion of the total amount, a decrease of ¥1 billion from the previous fiscal year, and foreign interest expense accounted for ¥332 billion of the total amount, an increase of ¥108 billion from the previous fiscal year.

The changes in the average interest rates on domestic interest-bearing liabilities contributed to an overall decrease in interest expense of ¥3 billion, and the changes in the average balance of domestic interest-bearing liabilities contributed to an overall increase in interest expense of ¥2 billion, resulting in the ¥1 billion decrease in domestic interest expense.

The increase in foreign interest expense was due mainly to increases in interest expense on foreign deposits and foreign short-term borrowings. The increase in foreign interest expense on foreign deposits was due mainly to an increase in the average rates, reflecting a rise in short-term interest rate levels of the U.S. dollar as well as an increase in the average balance of foreign deposits. The increase in foreign interest expense on foreign short-term borrowings was due mainly to an increase in the average rates, reflecting a rise in short-term interest rate levels of the U.S. dollar. The changes in the average interest rates on foreign interest-bearing liabilities

2019

contributed to an overall increase in interest expense of ¥99 billion, and the changes in the average balance of foreign interest-bearing liabilities contributed to an overall increase in interest expense of ¥9 billion, resulting in the ¥108 billion increase in foreign interest expense.

As a result of the foregoing, net interest income decreased by ¥98 billion, or 9.8%, from the previous fiscal year to ¥907 billion. The average interest rate spread declined by 0.08 percentage points from the previous fiscal year to 0.46% in the fiscal year ended March 31, 2017. The decline of the average interest rate spread was not significant because both the average yields on total interest-earning assets and the average interest rates on total interest-bearing liabilities generally leveled out between these periods.

Provision (Credit) for Loan Losses

Fiscal Year Ended March 31, 2018 Compared to Fiscal Year Ended March 31, 2017

We recorded a credit for loan losses of ¥126 billion in the fiscal year ended March 31, 2018 compared to a provision for loan losses of ¥38 billion in the fiscal year ended March 31, 2017. The change was due mainly to improvements in the credit condition of some borrowers in the domestic manufacturing industry as well as the gradual recovery in the economic environment.

Fiscal Year Ended March 31, 2017 Compared to Fiscal Year Ended March 31, 2016

Provision for loan losses increased by ¥3¥124 billion from March 31, 20162019 to ¥38¥156 billion at March 31, 2017. Although obligor categories improved as a whole, reflecting the gradual recovery in the economic environment, provision for loan losses increased2020. The increase was due mainly to reflection of the impact of

COVID-19
pandemic as well as the deterioration of credit status of certain domestic borrowers.

Noninterest Income

The following table shows a breakdown of noninterest income for the fiscal years ended March 31, 2016, 20172019 and 2018:

   Fiscal years ended March 31, 
   2016   2017  2018 
   

 

(in billions of yen)

 

Fee and commission

  ¥805   ¥826  ¥866 

Fee and commission from securities-related business

   176    166   180 

Fee and commission from deposits and lending business

   144    165   156 

Fee and commission from remittance business

   110    108   110 

Fee and commission from asset management business

   62    79   101 

Trust fees

   50    47   52 

Fees for other customer services

   263    261   267 

Foreign exchange gains (losses)—net

   114    69   92 

Trading account gains (losses)—net

   559    (42)   237 

Investment gains (losses)—net

   264    333   297 

Investment gains (losses) related to bonds

   66    61   7 

Investment gains (losses) related to equity securities

   192    272   283 

Others

   6    —     7 

Equity in earnings (losses) of equity method investees—net

   29    27   24 

Gains on disposal of premises and equipment

   10    6   8 

Other noninterest income

   103    149   81 
  

 

 

   

 

 

  

 

 

 

Total noninterest income

  ¥1,884   ¥1,368  ¥1,605 
  

 

 

   

 

 

  

 

 

 

2020:

         
 
Fiscal years ended March 31,
 
 
        2019        
  
        2020        
 
 
(in billions of yen)
 
Fee and commission
 ¥
853
  ¥
868
 
Fee and commission from deposits and lending business
  
152
   
158
 
Fee and commission from securities-related business
  
145
   
139
 
Fee and commission from trust related business
  
125
   
129
 
Fee and commission from remittance business
  
110
   
112
 
Fee and commission from asset management business
  
98
   
99
 
Fee and commission from agency business
  
36
   
32
 
Fee and commission from guarantee related business
  
29
   
29
 
Fees for other customer services
  
158
   
170
 
Foreign exchange gains (losses)—net
  
94
   
44
 
Trading account gains (losses)—net
  
329
   
746
 
Investment gains (losses)—net
  
(160
)  
(526
)
Debt securities
  
(4
)  
31
 
Equity securities
  
(156
)  
(557
)
Equity in earnings (losses) of equity method investees—net
  
29
   
34
 
Gains on disposal of premises and equipment
  
5
   
3
 
Other noninterest income
  
72
   
139
 
         
Total noninterest income
 ¥
1,222
  ¥
1,308
 
         
Fiscal Year Ended March 31, 20182020 Compared to Fiscal Year Ended March 31, 2017

2019

Noninterest income increased by ¥237¥86 billion, or 17.3%7.0%, from the previous fiscal year to ¥1,605¥1,308 billion in the fiscal year ended March 31, 2018. The increase was due mainly to trading account gains—net of ¥237 billion

compared to trading account losses—net of ¥42 billion in the previous fiscal year, offset in part by a decrease in other noninterest income of ¥68 billion and a decrease in investment gains—net of ¥36 billion.

Fee and commission

Fee and commission increased by ¥40 billion, or 4.8%, from the previous fiscal year to ¥866 billion in the fiscal year ended March 31, 2018.2020. The increase was due mainly to an increase in fee and commission from asset management businesstrading account gains—net of ¥22¥417 billion, or 27.8%, and fee and commission from securities-related business of ¥14 billion, or 8.4%. The increaseoffset in fee and commission from asset management business was due mainly topart by an increase in fees related to investment trust management and investment advisory management businesses. The increase in feelosses—net of ¥366 billion.

Fee and commission from securities-related business was due mainly to the relative strength in market conditions in the fiscal year ended March 31, 2018 compared to the previous fiscal year.

Foreign exchange gains (losses)—net

Foreign exchange gains—net

Fee and commission increased by ¥23¥15 billion, or 33.3%1.8%, from the previous fiscal year to ¥92¥868 billion in the fiscal year ended March 31, 2018. The change was due mainly to fluctuations in foreign exchange rates in the fiscal year ended March 31, 2018.

Trading account gains (losses)—net

Trading account gains (losses)—net was a gain of ¥237 billion in the fiscal year ended March 31, 2018 compared to a loss of ¥42 billion in the previous fiscal year. The increase in trading account gains (losses)—net was due mainly to an increase in gains related to changes in the fair value of foreign currency-denominated securities for which the fair value option was elected. Long-term interest rates rose and unrealized losses of fair value increased during the previous fiscal year. The fluctuation range of long-term interest rates narrowed, unrealized losses decreased, and unrealized profit increased.

For further information on the fair value option, see note 28 to our consolidated financial statements included elsewhere in this annual report.

Investment gains (losses)—net

Investment gains—net decreased by ¥36 billion, or 10.8 %, from the previous fiscal year to ¥297 billion in the fiscal year ended March 31, 2018. The decrease was due mainly to a decrease in investment gains related to bonds of ¥54 billion, or 88.5%, from the fiscal year to ¥7 billion in the fiscal year ended March 31, 2018. The decrease in investment gains related to bonds was due mainly to a decrease in gains on sales of investment account bonds and an increase in losses on sales of investment account bonds in the fiscal year ended March 31, 2018.

Fiscal Year Ended March 31, 2017 Compared to Fiscal Year Ended March 31, 2016

Noninterest income decreased by ¥516 billion, or 27.4%, from the previous fiscal year to ¥1,368 billion in the fiscal year ended March 31, 2017. The decrease was due mainly to trading account losses—net of ¥42 billion compared to trading account gains—net of ¥559 billion in the previous fiscal year, offset in part by an increase in investment gains—net of ¥69 billion.

Fee and commission

Fee and commission increased by ¥21 billion, or 2.6%, from the previous fiscal year to ¥826 billion in the fiscal year ended March 31, 2017.2020. The increase was due mainly to an increase in fee and commission from deposits and lending business of ¥21¥6 billion, or 3.9%, offset in part by a decrease in fee and commission from securities-related business of ¥10 billion.

¥6 billion, or 4.1%.

Foreign exchange gains (losses)—net

Foreign exchange gains—net decreased by ¥45¥50 billion, or 39.5%53.2%, from the previous fiscal year to ¥69¥44 billion in the fiscal year ended March 31, 2017.2020. The changedecrease was due mainly to fluctuations in foreign exchange rates in the fiscal year ended March 31, 2017.

2020.

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Trading account gains (losses)—net

Trading account gains (losses)—gains—net was a loss of ¥42increased by ¥417 billion, or 126.7%, from the previous fiscal year to ¥746 billion in the fiscal year ended March 31, 2017 compared to a gain of ¥559 billion in the previous fiscal year.2020. The changeincrease in trading account gains (losses)—gains—net was due mainly to an increase in lossesgains related to a reductionchanges in marketthe fair value of receive-fixed,
pay-variable
interest-rate swaps reflecting a risedecline in long-term interest rates and an increase in gains related to changes in the fair value of foreign currency-denominated securities.
Investment gains (losses)—net
Investment losses—net increased by ¥366 billion, or 228.8%, from the previous fiscal year to ¥526 billion in the fiscal year ended March 31, 2020, among which investment losses—net related to equity securities increased by ¥401 billion, or 257.4%, from the previous fiscal year to ¥557 billion in the fiscal year ended March 31, 2020. The increase in investment losses related to equity securities was due mainly to an increase in losses related to changes in the fair value of foreign currency-denominatedJapanese equity securities forin the fiscal year ended March 31, 2020, which mostly reflected the fair value option was elected, reflecting an increaserelative weakness in losses of foreign currency-denominated bonds due to the effect of a rise in long-term interest rates.market conditions. For further information, on the fair value option, see note 283 to our consolidated financial statements included elsewhere in this annual report.

Investment gains (losses)—net

Investment gains—net increased by ¥69 billion, or 26.1 %, from the previous fiscal year to ¥333 billion in the fiscal year ended March 31, 2017. The increase was due mainly to an increase in investment gains related to equity securities of ¥80 billion, or 41.7%, from the fiscal year to ¥272 billion in the fiscal year ended March 31, 2017. The increase in investment gains related to equity securities was due mainly to an increase in gains on sales of investment account equity securities in the fiscal year ended March 31, 2017, reflecting our continued efforts to decrease our cross-shareholdings. We continue our reallocation of management resources to key strategies while mitigating the risk of stock price fluctuation.

Noninterest Expenses

The following table shows a breakdown of noninterest expenses for the fiscal years ended March 31, 2016, 20172019 and 2018:

   Fiscal years ended March 31, 
   2016  2017   2018 
   

 

(in billions of yen)

 

Salaries and employee benefits

  ¥634  ¥663   ¥688 

General and administrative expenses

   548   571    586 

Impairment of goodwill

   6   —      —   

Occupancy expenses

   196   195    192 

Fee and commission expenses

   164   177    189 

Provision (credit) for losses onoff-balance-sheet instruments

   (16)   19    (30) 

Other noninterest expenses

   125   132    139 
  

 

 

  

 

 

   

 

 

 

Total noninterest expenses

  ¥1,657  ¥1,757   ¥1,764 
  

 

 

  

 

 

   

 

 

 

2020:

         
 
Fiscal years ended March 31,
 
 
        2019        
  
        2020        
 
 
(in billions of yen)
 
Salaries and employee benefits
 ¥
683
  ¥
677
 
General and administrative expenses
  
762
   
649
 
Occupancy expenses
  
208
   
215
 
Fee and commission expenses
  
190
   
194
 
Provision (credit) for losses on
off-balance-sheet
instruments
  
(9
)  
19
 
Other noninterest expenses
  
165
   
124
 
         
Total noninterest expenses
 ¥
1,999
  ¥
1,878
 
         
Fiscal Year Ended March 31, 20182020 Compared to Fiscal Year Ended March 31, 2017

2019

Noninterest expenses increaseddecreased by ¥7¥121 billion, or 0.4%6.1%, from the previous fiscal year to ¥1,764¥1,878 billion in the fiscal year ended March 31, 2018.2020. The increasedecrease was due mainly to an increasea decrease in salaries and employee benefits of ¥25 billion, or 3.8%, and general and administrative expenses of ¥15¥113 billion, or 2.6%14.8%, offset in part by credit for losses onoff-balance-sheet instruments of ¥30 billion compared toan increase in provision for losses on
off-balance-sheet instruments of ¥19 billion in the previous fiscal year.

We will continue to aim to achieve sustainable growth of the group looking ahead ten years and to secure future competitive superiority. These efforts include organization and personnel optimization, system structural reform, channel reconstruction and strengthening of earnings.

Salaries and employee benefits

Salaries and employee benefits increased by ¥25 billion, or 3.8%, from the previous fiscal year to ¥688 billion in the fiscal year ended March 31, 2018 due mainly to an increase in personnel expenses reflecting an increase in domestic personnel and an increase in bonuses at overseas branches. Additional information regarding pension and other employee benefit plans is included in note 21 to our consolidated financial statements included elsewhere in this annual report.

Provision (credit) for losses onoff-balance-sheet instruments

Provision (credit) for losses onoff-balance-sheet instruments was a credit of ¥30 billion in the fiscal year ended March 31, 2018 compared to a provision of ¥19 billion in the previous fiscal year. The change was due mainly to an increase in reversal of allowance for losses on guarantees.

Fiscal Year Ended March 31, 2017 Compared to Fiscal Year Ended March 31, 2016

Noninterest expenses increased by ¥100 billion, or 6.0%, from the previous fiscal year to ¥1,757 billion in the fiscal year ended March 31, 2017. The increase was due mainly to provision for losses onoff-balance-sheetinstruments of ¥19 billion compared to credit for losses on

off-balance-sheet
instruments of ¥16¥9 billion in the previous fiscal year, an increase in salaries and employee benefits of ¥29 billion and an increase in generalyear.
General and administrative expenses of ¥23 billion.

As the result of an increase in

General and administrative expenses associated with strategic investments and an increase in domestic salaries and employee benefits, our costs and expenses exceeded our plan for the fiscal year ended March 31, 2017. Going forward, we aim to promote further structural reformdecreased by strengthening cost competitiveness through fundamental structural reform such as reviewing branch strategies, improvements to achieve advanced and efficient operations utilizing technology, streamlining and optimizing the organization, and information systems structural reform.

Salaries and employee benefits

Salaries and employee benefits increased by ¥29¥113 billion, or 4.6%14.8%, from the previous fiscal year to ¥663¥649 billion in the fiscal year ended March 31, 2017 due mainly2020. Depreciation of the next-generation IT systems started from the previous fiscal year. In the previous fiscal year, the software related to an increase in personnel expenses and an increase in employee retirement benefit expenses. The increase in personnel expensesthe system migration, which is related to the next-generation IT systems, was due mainly to an increase in domestic personnel expenses. The increase in employee retirement benefit expensesimmediately depreciated. There was due mainly to an increaseno such charge in the amortization of net actuarial losses. Additional information regarding pension and other employee benefit plans is included in note 21 to our consolidated financial statements included elsewhere in this annual report.

fiscal year ended March 31, 2020.

Provision (credit) for losses on
off-balance-sheet
instruments

Provision (credit) for losses on
off-balance-sheet
instruments was a provision of ¥19 billion in the fiscal year ended March 31, 20172020 compared to a credit of ¥16¥9 billion in the previous fiscal year. The change was due mainly to an increase in allowance for losses on guarantees.

guarantees related to the impact of the COVID-19 pandemic on the credit quality of obligors.

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Table of Contents
Income Tax Expense

The following table shows the components of income tax expense (benefit) for the fiscal years ended March 31, 2016, 20172019 and 2018:

   Fiscal years ended March 31, 
     2016        2017        2018     
   

 

(in billions of yen)

 

Current:

    

Domestic

  ¥163  ¥130  ¥130 

Foreign

   61   68   47 
  

 

 

  

 

 

  

 

 

 

Total current tax expense

   224   198   177 

Deferred:

    

Domestic

   127   (100)   58 

Foreign

   (4)   (7)   2 
  

 

 

  

 

 

  

 

 

 

Total deferred tax expense (benefit)

   123   (107)   60 
  

 

 

  

 

 

  

 

 

 

Total income tax expense

  ¥347  ¥91  ¥237 
  

 

 

  

 

 

  

 

 

 

2020:

         
 
Fiscal years ended March 31,
 
 
        2019        
  
        2020        
 
 
(in billions of yen)
 
Current:
  
   
 
Domestic
 ¥
116
  ¥
96
 
Foreign
  
50
   
53
 
         
Total current tax expense
  
166
   
149
 
Deferred:
  
   
 
Domestic
  
(162
)  
(111
)
Foreign
  
5
   
9
 
         
Total deferred tax expense (benefit)
  
(157
)  
(102
)
         
Total income tax expense
 ¥
9
  ¥
47
 
         
Fiscal Year Ended March 31, 20182020 Compared to Fiscal Year Ended March 31, 2017

2019

Income tax expense increased by ¥146¥38 billion, or 160.4%422.2%, from the previous fiscal year to ¥237¥47 billion in the fiscal year ended March 31, 20182020 due to a decrease in current tax expense of ¥21¥17 billion and an increasea decrease in deferred tax expense of ¥167 billion related to a deferred tax expense of ¥60 billion in the current fiscal year as compared to a deferred tax benefit of ¥107 billion in the previous fiscal year.¥55 billion. The decrease in current tax expense was due mainly to a decrease in the taxable income of principal banking subsidiaries.MHFG. The changedecrease in deferred tax expense (benefit)benefit was due mainly to decreases in deferred tax assets inliabilities of principal banking subsidiaries.

We consider the sales of
available-for-sale
securities and equity securities to be a qualifying
tax-planning
strategy that is a possible source of future taxable income to the extent necessary in the future mainly with respect to our principal banking subsidiaries in Japan. The reliance on this
tax-planning
strategy of our subsidiaries in Japan was unchanged at approximatelyone-thirdimmaterial.
74
Table of overall deferred tax assets during the fiscal year ended March 31, 2018.

Fiscal Year Ended March 31, 2017 Compared to Fiscal Year Ended March 31, 2016

Income tax expense decreased by ¥256 billion, or 73.8%, from the previous fiscal year to ¥91 billion in the fiscal year ended March 31, 2017 due to a decrease in current tax expense of ¥26 billion and deferred tax benefit of ¥107 billion compared to deferred tax expense of ¥123 billion in the previous fiscal year. The decrease in current tax expense was due mainly to a decrease in the taxable income of a principal banking subsidiary. The change in deferred tax expense (benefit) was due mainly to an increase in deferred tax assets in principal banking subsidiaries and an increase in deferred tax assets related to security subsidiary’s net operating loss carryforwards resulting mainly from organizational restructuring of certain foreign security subsidiaries in the fiscal year ended March 31, 2017.

We consider the sales ofavailable-for-sale securities to be a qualifyingtax-planning strategy that is a possible source of future taxable income to the extent necessary in the future mainly with respect to our principal banking subsidiaries in Japan. The reliance on thistax-planning strategy of our subsidiaries in Japan was increased from at immaterial levels to approximatelyone-third of overall deferred tax assets during the fiscal year ended March 31, 2017.

Contents

The following table shows the components of deferred tax assets (liabilities) as of March 31, 2016, 20172019 and 2018:

   As of March 31, 
   2016  2017  2018 
   

 

(in billions of yen)

 

Deferred tax assets:

    

Investments

  ¥522  ¥498  ¥454 

Allowance for loan losses

   179   184   127 

Derivative financial instruments

   —     14   53 

Premises and equipment

   —     4   5 

Trading securities

   —     31   2 

Net operating loss carryforwards

   342   452   178 

Other

   170   190   204 
  

 

 

  

 

 

  

 

 

 

Gross deferred tax assets

   1,213   1,373   1,023 
  

 

 

  

 

 

  

 

 

 

Valuation allowance

   (340)   (438)   (163) 
  

 

 

  

 

 

  

 

 

 

Deferred tax assets, net of valuation allowance

   873   935   860 

Deferred tax liabilities:

    

Available-for-sale securities

   711   724   764 

Prepaid pension cost and accrued pension liabilities

   175   195   255 

Undistributed earnings of subsidiaries

   12   17   15 

Derivative financial instruments

   57   —     —   

Trading securities

   23   —     —   

Premises and equipment

   1   —     —   

Other

   39   75   75 
  

 

 

  

 

 

  

 

 

 

Gross deferred tax liabilities

   1,018   1,011   1,109 
  

 

 

  

 

 

  

 

 

 

Net deferred tax assets (liabilities)

  ¥(145)  ¥(76)  ¥(249) 
  

 

 

  

 

 

  

 

 

 

2020:

         
 
As of March 31,
 
 
    2019    
  
    2020    
 
 
(in billions of yen)
 
Deferred tax assets:
  
   
 
Lease liabilities
 ¥
—  
  ¥
192
 
Allowance for loan losses
  
123
   
166
 
Premises and equipment
  
74
   
78
 
Available-for-sale
securities
  
—  
   
6
 
Derivative financial instruments
  
48
   
5
 
Investments
  
—  
   
4
 
Net operating loss carryforwards
  
168
   
163
 
Other
  
216
   
201
 
         
Gross deferred tax assets
  
629
   
815
 
         
Valuation allowance
  
(158
)  
(165
)
         
Deferred tax assets, net of valuation allowance
  
471
   
650
 
Deferred tax liabilities:
  
   
 
Prepaid pension cost and accrued pension liabilities
  
248
   
203
 
ROU assets
  
—  
   
189
 
Trading securities
  
9
   
58
 
Investments
  
198
   
—  
 
Available-for-sale
securities
  
12
   
—  
 
Other
  
62
   
89
 
         
Gross deferred tax liabilities
  
529
   
539
 
         
Net deferred tax assets (liabilities)
 ¥
(58
) ¥
111
 
         
Net Income (Loss)Loss Attributable to Noncontrolling Interests

Fiscal Year Ended March 31, 20182020 Compared to Fiscal Year Ended March 31, 2017

2019

Net income (loss)loss attributable to noncontrolling interests decreasedincreased by ¥3¥35 billion, or 388.9%, from the previous fiscal year to ¥24¥44 billion in the fiscal year ended March 31, 2018.

2020.

Net Income Attributable to MHFG Shareholders
Fiscal Year Ended March 31, 20172020 Compared to Fiscal Year Ended March 31, 2016

Net income (loss) attributable to noncontrolling interests increased by ¥27 billion from the previous fiscal year to ¥27 billion in the fiscal year ended March 31, 2017.

Net Income Attributable to MHFG Shareholders

Fiscal Year Ended March 31, 2018 Compared to Fiscal Year Ended March 31, 2017

2019

As a result of the foregoing, net income attributable to MHFG shareholders increased by ¥216¥65 billion, or 59.7%76.5%, from the previous fiscal year to ¥578¥150 billion in the fiscal year ended March 31, 2018.

Fiscal Year Ended2020.

Business Segments Analysis
The following discussion relates to our business segment analysis for the fiscal years ended March 31, 2017 Compared to Fiscal Year Ended March 31, 2016

As a result of2019 and 2020. For the foregoing, net income attributable to MHFG shareholders decreased by ¥488 billion, or 57.4%, from the previous fiscal year to ¥362 billion indiscussion on our business segment analysis for the fiscal year ended March 31, 2017.

2019, including certain comparative discussion on our operating results for the fiscal years ended March 31, 2018 and 2019, please refer to “Item 5. Operating and Financial Review and Prospects—Business Segments Analysis

Segment Analysis” in our annual report on Form

20-F
for the fiscal year ended March 31, 2019, filed with the SEC on July 5, 2019.
We introducedmanage our group under an
in-house
company system based on our diverse customer segments in April 2016.segments. The aim of this system is to leverage our strengths and competitive advantage, which is the seamless integration of our banking, trust banking and securities functions under a holding company structure, to speedily provide high-quality financial services that closely match customer needs.

75
Table of Contents
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. We regard these customer segments as our operating segments.

In line with the aforementioned system, we changed the reportable segments from those based on the relevant principal consolidated subsidiaries to the fivein-house companies.

For a brief description of our each business segment, see note 3231 to our consolidated financial statements included elsewhere in this annual report.

Results of Operations by Business Segment

Consolidated Results of Operations

Consolidated gross profits + net gains related to ETFs and others for the fiscal year ended March 31, 20182020 were ¥1,915.4¥2,072.8 billion, a decreasean increase of ¥177.3¥245.1 billion compared to the fiscal year ended March 31, 2017.2019. Consolidated general and administrative expenses for the fiscal year ended March 31, 20182020 were ¥1,458.1¥1,411.5 billion, an increasea decrease of ¥37.6¥29.1 billion compared to the fiscal year ended March 31, 2017.2019. Consolidated equity in earnings of equity method investees—net business profits for the fiscal year ended March 31, 2018 were ¥457.82020 was ¥30.4 billion, a decrease of ¥205.6¥20.8 billion compared to the fiscal year ended March 31, 2017.

  Mizuho Financial Group (Consolidated) 
Fiscal year ended March 31, 2016(3): Retail &
Business
Banking
Company		  Corporate &
Institutional
Company		  Global
Corporate
Company		  Global
Markets
Company		  Asset
Management
Company		  Others(2)(4)  Total 
  

 

(in billions of yen)

 
       

Gross profits

 ¥754.8  ¥425.0  ¥400.6  ¥577.7  ¥51.0  ¥12.5  ¥2,221.6 

General and administrative expenses

  702.4   187.0   236.2   170.4   28.1   20.9   1,345.0 

Equity in earnings (losses) of equity method investees—net

  20.9   1.2   0.2   —     1.1   0.8   24.2 

Others

  —     —     —     —     —     (48.0)   (48.0) 
 

 

 

  

 

 

  

 

 

  

 

 

  

 

 

  

 

 

  

 

 

 

Net business profits (losses)(1)

 ¥73.3  ¥239.2  ¥164.6  ¥407.3  ¥24.0  ¥(55.6)  ¥852.8 
 

 

 

  

 

 

  

 

 

  

 

 

  

 

 

  

 

 

  

 

 

 

  Mizuho Financial Group (Consolidated) 
Fiscal year ended March 31, 2017: Retail &
Business
Banking
Company		  Corporate &
Institutional
Company		  Global
Corporate
Company		  Global
Markets
Company		  Asset
Management
Company		  Others(2)(4)  Total 
  

 

(in billions of yen)

 
       

Gross profits

 ¥717.2  ¥434.1  ¥358.3  ¥539.9  ¥48.9  ¥(5.7)  ¥2,092.7 

General and administrative expenses

  719.7   194.0   244.3   193.8   29.3   39.4   1,420.5 

Equity in earnings (losses) of equity method investees—net

  14.9   1.0   1.0   —     0.4   1.6   18.9 

Others

  —     —     —     —     —     (27.7)   (27.7) 
 

 

 

  

 

 

  

 

 

  

 

 

  

 

 

  

 

 

  

 

 

 

Net business profits (losses)(1)

 ¥12.4  ¥241.1  ¥115.0  ¥346.1  ¥20.0  ¥(71.2)  ¥663.4 
 

 

 

  

 

 

  

 

 

  

 

 

  

 

 

  

 

 

  

 

 

 
2019. Consolidated net business profits + net gains related to ETFs and others for the fiscal year ended March 31, 2020 were ¥672.6 billion, an increase of ¥264.2 billion compared to the fiscal year ended March 31, 2019.

                             
 
Mizuho Financial Group (Consolidated)
 
Fiscal year ended March 31, 2019
(5)
:
 
Retail &
Business
Banking
Company
  
Corporate &
Institutional
Company
  
Global
Corporate
Company
  
Global
Markets
Company
  
Asset
Management
Company
  
Others
(4)
  
Total
 
 
(in billions of yen)
 
Gross profits + Net gains (losses) related to ETFs and others
(1)
 ¥
705.9
  ¥
473.4
  ¥
400.3
  ¥
192.4
  ¥
49.6
  ¥
6.1
  ¥
1,827.7
 
General and administrative expenses
(2)
  
713.5
   
205.7
   
237.9
   
207.5
   
27.3
   
48.7
   
1,440.6
 
Equity in earnings (losses) of equity method investees—net
  
18.1
   
0.9
   
7.2
   
—  
   
1.3
   
23.7
   
51.2
 
Amortization of goodwill and others
  
0.4
   
0.4
   
0.4
   
2.3
   
8.0
   
2.1
   
13.6
 
Others
  
—  
   
—  
   
—  
   
—  
   
—  
   
(16.3
)  
(16.3
)
                             
Net business profits (losses)
(3)
+ Net gains (losses) related to ETFs and others
 ¥
10.1
  ¥
268.2
  ¥
169.2
  ¥
(17.4
) ¥
15.6
  ¥
(37.3
) ¥
408.4
 
                             
Fixed assets
(6)
 ¥
499.3
  ¥
225.8
  ¥
176.9
  ¥
92.6
  ¥
0.1
  ¥
662.5
  ¥
1,657.2
 
                             
  Mizuho Financial Group (Consolidated) 
Fiscal year ended March 31, 2018: Retail &
Business
Banking
Company		  Corporate &
Institutional
Company		  Global
Corporate
Company		  Global
Markets
Company		  Asset
Management
Company		  Others(2)  Total 
  

 

(in billions of yen)

 
       

Gross profits

 ¥726.2  ¥433.0  ¥352.6  ¥381.7  ¥50.2  ¥(28.3)  ¥1,915.4 

General and administrative expenses

  723.3   197.7   254.8   200.9   27.6   53.8   1,458.1 

Equity in earnings (losses) of equity method investees—net

  12.7   1.0   2.4   —     3.1   2.3   21.5 

Others

  —     —     —     —     —     (21.0)   (21.0) 
 

 

 

  

 

 

  

 

 

  

 

 

  

 

 

  

 

 

  

 

 

 

Net business profits (losses)(1)

 ¥15.6  ¥236.3  ¥100.2  ¥180.8  ¥25.7  ¥(100.8)  ¥457.8 
 

 

 

  

 

 

  

 

 

  

 

 

  

 

 

  

 

 

  

 

 

 

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Table of Contents
                             
 
Mizuho Financial Group (Consolidated)
 
Fiscal year ended March 31, 2020:
 
Retail &
Business
Banking
Company
  
Corporate &
Institutional
Company
  
Global
Corporate
Company
  
Global
Markets
Company
  
Asset
Management
Company
  
Others
(4)
  
Total
 
 
(in billions of yen)
 
Gross profits + Net gains (losses) related to ETFs and others
(1)
 ¥
673.6
  ¥
462.4
  ¥
417.8
  ¥
410.1
  ¥
48.4
  ¥
60.5
  ¥
2,072.8
 
General and administrative expenses
(2)
  
668.5
   
215.1
   
249.0
   
208.9
   
29.0
   
41.0
   
1,411.5
 
Equity in earnings (losses) of equity method investees—net
  
11.8
   
2.0
   
10.3
   
—  
   
1.3
   
5.0
   
30.4
 
Amortization of goodwill and others
  
0.4
   
0.4
   
0.4
   
2.3
   
7.8
   
1.9
   
13.2
 
Others
  
—  
   
—  
   
—  
   
—  
   
—  
   
(5.9
)  
(5.9
)
                             
Net business profits (losses)
(3)
+ Net gains (losses) related to ETFs and others
 ¥
16.5
  ¥
248.9
  ¥
178.7
  ¥
198.9
  ¥
12.9
  ¥
16.7
  ¥
672.6
 
                             
Fixed assets
(6)
 ¥
503.7
  ¥
204.1
  ¥
173.0
  ¥
91.5
  ¥
0.1
  ¥
767.4
  ¥
1,739.8
 
                             
Notes:

(1)“Gross profits + Net gains (losses) related to ETFs and others” is reported instead of sales reported by general corporations. Gross profits is defined as the sum of net interest income, fiduciary income, net fee and commission income, net trading income and net other operating income. Net gains (losses) related to ETFs and others consist of net gains (losses) on ETFs held by Mizuho Bank and Mizuho Trust & Banking on their
non-consolidated
basis and net gains (losses) on operating investment securities of Mizuho Securities on its consolidated basis. For the fiscal years ended March 31, 2019 and 2020, net gains (losses) related to ETFs and others amounted to ¥15.0 billion and ¥10.6 billion, respectively, of which ¥7.3 billion and ¥7.3 billion are included in “Global Markets Company,” respectively.
(2)“General and administrative expenses” excludes
non-allocated
gains (losses), net.
(3)Net business profits (losses) is used in Japan as a measure of the profitability of core banking operations, and is defined as gross profits (or the sum of net interest income, fiduciary income, net fee and commission income, net trading income and net other operating income)(as defined above) less general and administrative expenses plus equity in earnings (losses) of equity method investees—net and others. Measurement of net business profits (losses) is required for regulatory reporting to the Financial Services Agency.Agency of Japan.
(2)(4)“Others” includes items which should be eliminated as internal transactionsthe following items:
profits and expenses pertaining to consolidated subsidiaries that are not subject to allocation;
consolidating adjustments, including eliminating internal transaction between each segment;
equity in earnings (losses) of equity method
investees-net
that are not subject to allocation; and
profits and losses pertaining to derivative transactions that reflect the counterparty risk of the individual parties and other factors in determining fair market value.
(5)Income and expenses of foreign branches of Mizuho Bank and foreign subsidiaries with functional currencies other than Japanese Yen have been translated for purposes of segment reporting using the budgeted foreign currency rates. Prior period comparative amounts for such foreign currency income and expenses have been translated using current period budgeted foreign currency rates.
(6)“Fixed assets” is presented based on Japanese GAAP and corresponds to the total amount of the following U.S. GAAP accounts: Premises and
equipment-net;
Goodwill; Intangible assets; and
right-of-use
assets related to operating leases included in Other assets. The above table does not include other asset amounts because “Fixed assets” is the only balance sheet metric that management uses when evaluating and making decisions pertaining to the operating segments. “Fixed assets” has been allocated to each segment on a consolidated basis.
(3)Following the introduction of anin-house company system based on customer segmentsstarting in April 2016, segment information for the fiscal year ended March 31, 2016 was restated2019 to reflectenhance management’s analysis of the relevant changes.
(4)Beginning on April 1, 2017, new allocation methods for transactions betweenGroup’s operations. “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, consolidating adjustments,
77
Table of Contents
and “Others”others. Certain “Fixed assets” expenses have been applied. Figures for the fiscal years ended March 31, 2016 and 2017 have been restated for the newallocated to each segment using reasonable allocation methods and “Equity in earnings (losses) of equity method investees—net” has been presented as a new item in connection with the use of the new allocation methods.criteria.

Fiscal Year Ended March 31, 20182020 Compared to Fiscal Year Ended March 31, 2017

2019

Retail & Business Banking Company

Gross profits + net gains related to ETFs and others for the fiscal year ended March 31, 20182020 were ¥726.2¥673.6 billion, an increasea decrease of ¥9.0¥32.3 billion, or 1.3%4.6%, compared to the fiscal year ended March 31, 2017.2019. The increasedecrease was attributable mainly to an increase ofnon-interestdecreases in net interest income such as solution-related revenue and asset management-related revenue which more than offset a decrease of interest income.

revenue.

General and administrative expenses for the fiscal year ended March 31, 2018 increased2020 decreased by ¥3.6¥45.0 billion, or 0.5%6.3%, compared to the fiscal year ended March 31, 20172019 to ¥723.3¥668.5 billion.

As The decrease was attributable mainly to the implementation in the previous fiscal year of our structural reform initiatives which led to a result, netwrite-down of certain fixed assets in such fiscal year, including software attributable to the domestic retail business profitsdivision and closing of branches.

Equity in earnings of equity method investees—net for the fiscal year ended March 31, 2018 increased2020 decreased by ¥3.2¥6.3 billion, or 25.8%34.8%, compared to the fiscal year ended March 31, 20172019 to ¥15.6¥11.8 billion.

Corporate & Institutional Company

Gross

As a result, net business profits + net gains related to ETFs and others for the fiscal year ended March 31, 2018 were ¥433.0 billion, a decrease of ¥1.12020 increased by ¥6.4 billion, or 0.3%63.4%, compared to the fiscal year ended March 31, 2017.2019 to ¥16.5 billion.
Corporate & Institutional Company
Gross profits + net gains related to ETFs and others for the fiscal year ended March 31, 2020 were ¥462.4 billion, a decrease of ¥11.0 billion, or 2.3%, compared to the fiscal year ended March 31, 2019. The decrease was attributable mainly to a decrease in M&Adividend income which was offset in part by increases in loan interest income and equity capital markets-relatedsolution-related revenue.

General and administrative expenses for the fiscal year ended March 31, 20182020 increased by ¥3.7¥9.4 billion, or 1.9%4.6%, compared to the fiscal year ended March 31, 20172019 to ¥197.7¥215.1 billion.

As a result,

Equity in earnings of equity method investees—net business profits for the fiscal year ended March 31, 2018 decreased2020 increased by ¥4.8¥1.1 billion, or 2.0%122.2%, compared to the fiscal year ended March 31, 20172019 to ¥236.3¥2.0 billion.

Global Corporate Company

Gross

As a result, net business profits + net gains related to ETFs and others for the fiscal year ended March 31, 2018 were ¥352.6 billion, a decrease of ¥5.72020 decreased by ¥19.3 billion, or 1.6%7.2%, compared to the fiscal year ended March 31, 2017.2019 to ¥248.9 billion.
Global Corporate Company
Gross profits + net gains related to ETFs and others for the fiscal year ended March 31, 2020 were ¥417.8 billion, an increase of ¥17.5 billion, or 4.4%, compared to the fiscal year ended March 31, 2019. The decreaseincrease was attributable mainly to the stagnation of our solution related-business such as M&Aincreases in the Americas.

loan interest income and debt capital markets-related revenue.

General and administrative expenses for the fiscal year ended March 31, 20182020 increased by ¥10.5¥11.1 billion, or 4.3%4.7%, compared to the fiscal year ended March 31, 20172019 to ¥254.8¥249.0 billion.

As a result,

Equity in earnings of equity method investees—net business profits for the fiscal year ended March 31, 2018 decreased2020 increased by ¥14.8¥3.1 billion, or 12.9%43.1%, compared to the fiscal year ended March 31, 20172019 to ¥100.2¥10.3 billion.

Global Markets Company

Gross

As a result, net business profits + net gains related to ETFs and others for the fiscal year ended March 31, 2018 were ¥381.7 billion, a decrease of ¥158.22020 increased by ¥9.5 billion, or 29.3%5.6%, compared to the fiscal year ended March 31, 2017.2019 to ¥178.7 billion.
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Table of Contents
Global Markets Company
Gross profits + net gains related to ETFs and others for the fiscal year ended March 31, 2020 were ¥410.1 billion, an increase of ¥217.7 billion, or 113.1%, compared to the fiscal year ended March 31, 2019. The decreaseincrease was attributable mainly to an increase of net gains related to bonds in light of declining U.S. interest rates and the decreaselack of bond-related revenue under adverse market conditions.

the effects of the restructuring of our securities portfolio in respect of past investments in foreign bonds that we conducted in the previous fiscal year.

General and administrative expenses for the fiscal year ended March 31, 20182020 increased by ¥7.1¥1.4 billion, or 3.7%0.7%, compared to the fiscal year ended March 31, 20172019 to ¥200.9¥208.9 billion.

As a result, we recorded net business profits + net gains related to ETFs and others of ¥198.9 billion for the fiscal year ended March 31, 20182020 compared to net business losses + net gains related to ETFs and others of ¥17.4 billion for the fiscal year ended March 31, 2019.
Asset Management Company
Gross profits + net gains related to ETFs and others for the fiscal year ended March 31, 2020 decreased by ¥165.3¥1.2 billion, or 47.8%2.4%, compared to the fiscal year ended March 31, 20172019 to ¥180.8¥48.4 billion.

Asset Management Company

Gross profits for the fiscal year ended March 31, 2018 were ¥50.2 billion, an increase of ¥1.3 billion, or 2.7%, compared to the fiscal year ended March 31, 2017. The increasedecrease was attributable mainly to the increasea decrease in the balance of asset formation products.

dividend income.

General and administrative expenses for the fiscal year ended March 31, 2018 decreased2020 increased by ¥1.7 billion, or 5.8%6.2%, compared to the fiscal year ended March 31, 20172019 to ¥27.6¥29.0 billion.

As a result,

Equity in earnings of equity method investees—net business profits for the fiscal year ended March 31, 2018 increased2020 was ¥1.3 billion, unchanged from the fiscal year ended March 31, 2019.
As a result, net business profits + net gains related to ETFs and others for the fiscal year ended March 31, 2020 decreased by ¥5.7¥2.7 billion, or 28.5%17.3%, compared to the fiscal year ended March 31, 20172019 to ¥25.7¥12.9 billion.

Fiscal Year Ended

Geographical Segment Analysis
The following discussion relates to our geographical segment analysis for the fiscal years ended March 31, 2017 Compared to Fiscal Year Ended March 31, 2016

Retail & Business Banking Company

Gross profits2019 and 2020. For the discussion on our geographical segment analysis for the fiscal year ended March 31, 2017 were ¥717.2 billion, a decrease of ¥37.6 billion, or 5.0%, compared to2019, including certain comparative discussion on our operating results for the fiscal yearyears ended March 31, 2016. The decrease was attributable mainly2018 and 2019, please refer to a decrease of net interest income as a result of the effects of the negative interest rate policy“Item 5. Operating and Financial Review and Prospects—Geographical Segment Analysis” in Japan and a decrease in income related to investment products.

General and administrative expenses our annual report on Form

20-F
for the fiscal year ended March 31, 2017 increased by ¥17.3 billion, or 2.5%, compared to2019, filed with the fiscal year ended March 31, 2016 to ¥719.7 billion. The increase was attributable mainly to an increase in personnel expenses, including employee retirement benefit expenses.

As a result, net business profits for the fiscal year ended March 31, 2017 decreased by ¥60.9 billion, or 83.1%, compared to the fiscal year ended March 31, 2016 to ¥12.4 billion.

SEC on July 5, 2019.

Corporate & Institutional Company

Gross profits for the fiscal year ended March 31, 2017 were ¥434.1 billion, an increase

79
Table of ¥9.1 billion, or 2.1%, compared to the fiscal year ended March 31, 2016. The increase was attributable mainly to an increase innon-interest income, reflecting an improvement in our solution-related business.

General and administrative expenses for the fiscal year ended March 31, 2017 increased by ¥7.0 billion, or 3.7%, compared to the fiscal year ended March 31, 2016 to ¥194.0 billion.

As a result, net business profits for the fiscal year ended March 31, 2017 increased by ¥1.9 billion, or 0.8%, compared to the fiscal year ended March 31, 2016 to ¥241.1 billion.

Global Corporate Company

Gross profits for the fiscal year ended March 31, 2017 were ¥358.3 billion, a decrease of ¥42.3 billion, or 10.6%, compared to the fiscal year ended March 31, 2016. The decrease was attributable mainly to the appreciation of the yen against the dollar and other major currencies and the slowdown in business related tonon-Japanese customers in Asia, which reflected regional economic trends.

General and administrative expenses for the fiscal year ended March 31, 2017 increased by ¥8.1 billion, or 3.4%, compared to the fiscal year ended March 31, 2016 to ¥244.3 billion. The increase was attributable mainly to an increase in premiums for deposit insurance of foreign branches of Mizuho Bank.

As a result, net business profits for the fiscal year ended March 31, 2017 decreased by ¥49.6 billion, or 30.1%, compared to the fiscal year ended March 31, 2016 to ¥115.0 billion.

Global Markets Company

Gross profits for the fiscal year ended March 31, 2017 were ¥539.9 billion, a decrease of ¥37.8 billion, or 6.5%, compared to the fiscal year ended March 31, 2016. The decrease was attributable mainly to the decrease in income related to the selling of foreign bonds under a volatile market environment.

General and administrative expenses for the fiscal year ended March 31, 2017 increased by ¥23.4 billion, or 13.7%, compared to the fiscal year ended March 31, 2016 to ¥193.8 billion.

As a result, net business profits for the fiscal year ended March 31, 2017 decreased by ¥61.2 billion, or 15.0%, compared to the fiscal year ended March 31, 2016 to ¥346.1 billion.

Asset Management Company

Gross profits for the fiscal year ended March 31, 2017 were ¥48.9 billion, a decrease of ¥2.1 billion, or 4.1%, compared to the fiscal year ended March 31, 2016. The decrease was attributable mainly to the sluggish growth of assets under management, reflecting weakness in market conditions.

General and administrative expenses for the fiscal year ended March 31, 2017 increased by ¥1.2 billion, or 4.3%, compared to the fiscal year ended March 31, 2016 to ¥29.3 billion.

As a result, net business profits for the fiscal year ended March 31, 2017 decreased by ¥4.0 billion, or 16.7%, compared to the fiscal year ended March 31, 2016 to ¥20.0 billion.

Contents

Geographical Segment Analysis

The following table presents consolidated income statement and total assets information by major geographic area. Foreign activities are defined as business transactions that involve customers residing outside of Japan. However, as our operations are highly integrated globally, we have made estimates and assumptions for the allocation of assets, liabilities, income and expenses among the geographic areas.

     

 

Americas

     Asia/Oceania
excluding
Japan,
and others		    
  Japan  

United
States

  Others  Europe   Total 
  

 

(in billions of yen)

 

Fiscal year ended March 31, 2016:

      

Total revenue(1)

 ¥2,288  ¥434  ¥46  ¥188  ¥428  ¥3,384 

Total expenses(2)

  1,534   282   29   126   216   2,187 
 

 

 

  

 

 

  

 

 

  

 

 

  

 

 

  

 

 

 

Income before income tax expense

  754   152   17   62   212   1,197 
 

 

 

  

 

 

  

 

 

  

 

 

  

 

 

  

 

 

 

Net income

 ¥465  ¥137  ¥15  ¥51  ¥182  ¥850 
 

 

 

  

 

 

  

 

 

  

 

 

  

 

 

  

 

 

 

Total assets at end of fiscal year

 ¥133,156  ¥28,985  ¥4,228  ¥11,617  ¥15,824  ¥193,810 

Fiscal year ended March 31, 2017:

      

Total revenue(1)

 ¥1,748  ¥500  ¥70  ¥191  ¥368  ¥2,877 

Total expenses(2)

  1,712   303   29   136   216   2,396 
 

 

 

  

 

 

  

 

 

  

 

 

  

 

 

  

 

 

 

Income before income tax expense

  36   197   41   55   152   481 
 

 

 

  

 

 

  

 

 

  

 

 

  

 

 

  

 

 

 

Net income

 ¥6  ¥168  ¥39  ¥39  ¥137  ¥389 
 

 

 

  

 

 

  

 

 

  

 

 

  

 

 

  

 

 

 

Total assets at end of fiscal year

 ¥138,832  ¥30,262  ¥4,203  ¥10,629  ¥16,530  ¥200,456 

Fiscal year ended March 31, 2018:

      

Total revenue(1)

 ¥2,003  ¥655  ¥64  ¥197  ¥448  ¥3,367 

Total expenses(2)

  1,583   479   38   173   255   2,528 
 

 

 

  

 

 

  

 

 

  

 

 

  

 

 

  

 

 

 

Income before income tax expense

  420   176   26   24   193   839 
 

 

 

  

 

 

  

 

 

  

 

 

  

 

 

  

 

 

 

Net income

 ¥231  ¥153  ¥24  ¥21  ¥173  ¥602 
 

 

 

  

 

 

  

 

 

  

 

 

  

 

 

  

 

 

 

Total assets at end of fiscal year

 ¥142,588  ¥28,136  ¥4,380  ¥11,678  ¥17,474  ¥204,256 

                         
   
Americas
    
Asia/Oceania
excluding
Japan,
and others
   
 
Japan
  
United
States
  
Others
  
Europe
 
Total
 
 
(in billions of yen)
 
Fiscal year ended March 31, 2019:
  
   
   
   
   
   
 
Total revenue
(1)
 ¥
1,705
  ¥
792
  ¥
66
  ¥
250
  ¥
616
  ¥
3,429
 
Total expenses
(2)
  
2,082
   
697
   
46
   
203
   
316
   
3,344
 
                         
Income (loss) before income tax expense
  
(377
)  
95
   
20
   
47
   
300
   
85
 
                         
Net income (loss)
 ¥
(331
) ¥
85
  ¥
17
  ¥
35
  ¥
270
  ¥
76
 
                         
Total assets at end of fiscal year
 ¥
133,443
  ¥
25,913
  ¥
4,825
  ¥
15,323
  ¥
18,107
  ¥
197,611
 
Fiscal year ended March 31, 2020:
  
   
   
   
   
   
 
Total revenue
(1)
 ¥
1,681
  ¥
801
  ¥
95
  ¥
270
  ¥
611
  ¥
3,458
 
Total expenses
(2)
  
2,009
   
679
   
41
   
239
   
337
   
3,305
 
                         
Income (loss) before income tax expense
  
(328
)  
122
   
54
   
31
   
274
   
153
 
                         
Net income (loss)
 ¥
(313
) ¥
100
  ¥
51
  ¥
24
  ¥
244
  ¥
106
 
                         
Total assets at end of fiscal year
 ¥
137,471
  ¥
34,650
  ¥
4,137
  ¥
15,487
  ¥
19,474
  ¥
211,219
 
Notes:

(1)Total revenue includes interest and dividend income and noninterest income.
(2)Total expenses include interest expense, provision (credit) for loan losses and noninterest expenses.

Fiscal Year Ended March 31, 20182020 Compared to Fiscal Year Ended March 31, 2017

2019

In the fiscal year ended March 31, 2018, 38.5%2020, we recorded a net loss in Japan. Among the geographical regions in which we recorded net income, 24.0% of ourthe net income was derived from Japan, 25.4% from the United States, 3.9%12.3% from the Americas excluding the United States, 3.5%5.6% from Europe and 28.7%58.1% from Asia/Oceania excluding Japan, and others. At March 31, 2018, 69.8%2020, 65.1% of total assets were allocated to Japan, 13.8%16.4% to the United States, 2.1%2.0% to the Americas excluding the United States, 5.7%7.3% to Europe and 8.6%9.2% to Asia/Oceania excluding Japan, and others.

In Japan, total revenue increaseddecreased by ¥255¥24 billion from the previous fiscal year due primarily to an increase in investment losses related to equity securities, offset in part by an increase in trading account gains—net. The increase in trading account gains—netinvestment losses related to equity securities was due mainly to an increase in gains

losses related to changes in the fair value of foreign currency-denominatedJapanese equity securities forin the fiscal year ended March 31, 2020, which mostly reflected the relative weakness in market conditions. The increase in trading account gains —net was due mainly to an increase in gains related to changes in the fair value option was elected.of receive-fixed,

pay-variable
interest-rate swaps reflecting a decline in long-term interest rates. Total expenses decreased by ¥129¥73 billion from the previous fiscal year due mainly to a change fromdecrease in general and administrative expenses, offset in part by an increase in provision to credit for loan losses. In addition, income tax expense increasedbenefit decreased by ¥159¥31 billion from the previous fiscal year to ¥189¥15 billion in the fiscal year ended March 31, 2018.2020. As a result, net incomeloss in Japan increaseddecreased by ¥225¥18 billion. Total assets in Japan increased by ¥3,756¥4,028 billion due primarily to an increaseincreases in investment securities.

receivables under resale agreements and loans, offset in part by a decrease in interest-bearing deposits.

In the United States, total revenue increased by ¥155¥9 billion due primarily to increases in interest income from receivables under resale agreements and securities lendingborrowing transactions interest-bearing deposits and loans. The increaseloans, including fees, offset in part by a decrease in interest income from resale agreements and securities lending transactions, interest-bearing deposits and loans wasin other banks. Total expenses decreased by ¥18 billion due
80
Table of Contents
mainly to an increase in market interest rates. Total expenses increased by ¥176 billion due mainly to increasesa decrease in expenses on payables under resalerepurchase agreements and securities lending transactions and deposits.transactions. As a result, net income in the United States decreasedincreased by ¥15 billion. Total assets in the United States decreasedincreased by ¥2,126¥8,737 billion due primarily to a decreaseincreases in trading account assets offset in part by an increase in interest-bearing deposits.

and loans.

In the Americas excluding the United States, total revenue decreasedincreased by ¥6¥29 billion due primarily to a decrease in other noninterest income, including foreign exchange gains (losses)—change from trading account losses—net offset in part by an increase into trading account gains—net. Total expenses increaseddecreased by ¥9¥5 billion due mainly to an increasea decrease in expenses on deposits. As a result, net income in the Americas excluding the United States decreasedincreased by ¥15¥34 billion. Total assets in the Americas excluding the United States increaseddecreased by ¥177¥688 billion due primarily to an increasedecreases in other assets and trading account assets, offset in part by a decreasean increase in loans.

In Europe, total revenue increased by ¥6¥20 billion due primarily to an increase in interest from loans, offset in part bytrading account assets and a decrease in interestchange from trading account assets.losses—net to trading account gains—net. Total expenses increased by ¥37¥36 billion due mainly to increases in expenses on deposits anda change from credit to provision for loan losses. As a result, net income in Europe decreased by ¥18¥11 billion. Total assets in Europe increased by ¥1,049 billion due primarily to increases in trading account assets and loans.

In Asia/Oceania excluding Japan, and others, total revenue increased by ¥80¥164 billion due primarily to an increase in interest income from loans. Total expenses increased by ¥39 billion due mainly to an increase in expenses on deposits. As a result, net income in Asia/Oceania excluding Japan, and others increased by ¥36 billion. Total assets in Asia/Oceania excluding Japan, and others increased by ¥944 billion due primarily to an increase in loans.

Fiscal Year Ended March 31, 2017 Compared to Fiscal Year Ended March 31, 2016

In the fiscal year ended March 31, 2017, 1.6% of our net income was derived from Japan, 43.2% from the United States, 10.0% from the Americas excluding the United States, 10.0% from Europe and 35.2% from Asia/Oceania excluding Japan, and others. At March 31, 2017, 69.3% of total assets were allocated to Japan, 15.1% to the United States, 2.1% to the Americas excluding the United States, 5.3% to Europe and 8.2% to Asia/Oceania excluding Japan, and others.

In Japan, total revenue decreased by ¥540 billion from the previous fiscal year due primarily to a decrease in trading account gains—net. The decrease in trading account gains—net was due mainly to a decrease in gains related to changes in the fair value of derivative financial instruments with interest rate swap received/fixed and paid/floating, which resulted from increases in market interest rates. Total expenses increased by ¥178 billion from the previous fiscal year due mainly to an increase in provision for loan losses. In addition, income tax expense decreased by ¥259 billion from the previous fiscal year to ¥30 billion in the fiscal year ended March 31, 2017, reflecting the decline in taxable income. As a result, net income in Japan decreased by ¥459 billion. Total assets in Japan increased by ¥5,676 billion due primarily to increases in interest-bearing deposits in other banks and domestic loans, offset in part by a decrease in investment securities.

In the United States, total revenue increased by ¥66 billion due primarily to increases in interest income from loans, resale agreements and securities lending transactions. The increase in interest income from loans and resale agreements was due mainly to an increase in market interest rates. Total expenses increased by ¥21 billion due mainly to increases in expenses on payables under resale agreements and securities lending transactions and deposits, offset in part by a decrease in provision for loan losses. As a result, net income in the United States increased by ¥31 billion. Total assets in the United States increased by ¥1,277 billion due primarily to an increase in interest-bearing deposits.

In the Americas excluding the United States, total revenue increased by ¥24 billion due primarily to an increase in other noninterest income, including foreign exchange gains (losses)—net while total expenses were flat. As a result, net income in the Americas excluding the United States increased by ¥24 billion. Total assets in the Americas excluding the United States decreased by ¥25 billion due primarily to a decrease in loans.

In Europe, total revenue increased by ¥3 billion due primarily to increases in interest from loans and trading account assets, offset in part by a decrease in other noninterest income including foreign exchange gains (losses)—net. Total expenses increased by ¥10 billion due mainly to an increase in expenses on deposits. As a result, net income in Europe decreased by ¥12 billion. Total assets in Europe decreased by ¥988 billion due primarily to a decrease in trading account assets, offset in part by an increase in interest-bearing deposits in other banks.

In Asia/Oceania excluding Japan, and others, total revenue decreased by ¥60¥5 billion due primarily to a decreasedecreases in other noninteresttrading account gains—net and interest income includingfrom loans, offset in part by an increase in foreign exchange gains (losses)—net while totalgains—net. Total expenses were flat.increased by ¥21 billion due mainly to a change from credit to provision for loan losses. As a result, net income in Asia/Oceania excluding Japan, and others decreased by ¥45¥26 billion. Total assets in Asia/Oceania excluding Japan, and others increased by ¥706¥1,367 billion due primarily to anincreases in trading account assets and cash and due from banks.
Financial Condition
Assets
Our assets as of March 31, 2019 and 2020 were as follows:
             
 
As of March 31,
  
Increase
(decrease)
 
 
2019
  
2020
 
 
(in billions of yen)
 
Cash and due from banks
 ¥
1,404
  ¥
2,325
  ¥
921
 
Interest-bearing deposits in other banks
  
44,269
   
39,626
   
(4,643
)
Call loans and funds sold
  
763
   
1,007
   
244
 
Receivables under resale agreements
  
12,997
   
18,581
   
5,584
 
Receivables under securities borrowing transactions
  
2,578
   
2,216
   
(362
)
Trading account assets
  
21,018
   
28,093
   
7,075
 
Investments
  
24,163
   
23,676
   
(487
)
Loans
  
82,800
   
87,528
   
4,728
 
Allowance for loan losses
  
(307
)  
(441
)  
(134
)
             
Loans, net of allowance
  
82,493
   
87,087
   
4,594
 
Premises and equipment—net
  
1,901
   
1,856
   
(45
)
Due from customers on acceptances
  
187
   
168
   
(19
)
Accrued income
  
343
   
324
   
(19
)
Goodwill
  
95
   
93
   
(2
)
Intangible assets
  
74
   
65
   
(9
)
Deferred tax assets
  
50
   
137
   
87
 
Other assets
  
5,276
   
5,965
   
689
 
             
Total assets
 ¥
197,611
  ¥
211,219
  ¥
13,608
 
             
81
Table of Contents
Total assets increased by ¥13,608 billion from March 31, 2019 to ¥211,219 billion as of March 31, 2020. This increase was due mainly to increases of ¥7,075 billion in trading account assets, ¥5,584 billion in receivables under resale agreements and ¥4,594 billion in loans, net of allowance, offset by a decrease of ¥4,643 billion in interest-bearing deposits in other banks.

Financial Condition

Assets

Our assets as of March 31, 2017 and 2018 were as follows:

   As of March 31,  Increase
(decrease)		 
   2017  2018  
   

 

(in billions of yen)

 

Cash and due from banks

  ¥1,592  ¥1,686  ¥94 

Interest-bearing deposits in other banks

   45,995   46,485   490 

Call loans and funds sold

   1,038   720   (318) 

Receivables under resale agreements

   8,968   8,081   (887) 

Receivables under securities borrowing transactions

   3,350   4,409   1,059 

Trading account assets

   24,998   24,303   (695) 

Investments

   24,969   26,770   1,801 

Loans

   82,284   83,515   1,231 

Allowance for loan losses

   (480)   (310)   170 
  

 

 

  

 

 

  

 

 

 

Loans, net of allowance

   81,804   83,205   1,401 

Premises and equipment—net

   2,041   2,116   75 

Due from customers on acceptances

   184   213   29 

Accrued income

   271   301   30 

Goodwill

   95   95   —   

Intangible assets

   94   84   (10) 

Deferred tax assets

   64   57   (7) 

Other assets

   4,993   5,731   738 
  

 

 

  

 

 

  

 

 

 

Total assets

  ¥200,456  ¥204,256  ¥3,800 
  

 

 

  

 

 

  

 

 

 

Total assets increased by ¥3,800 billion from March 31, 2017 to ¥204,256 billion as of March 31, 2018. This increase was due mainly to an increase of ¥1,801 billion in investments and an increase of ¥1,401 billion in loans, net of allowance.

Loans

Loans

Loans outstanding

The following table shows our loans outstanding as of March 31, 20172019 and 20182020 based on classifications by domicile and industry segment:

   As of March 31,  Increase
(decrease)		 
   2017  2018  
   

 

(in billions of yen, except percentages)

 

Domestic(1):

       

Manufacturing

  ¥8,740   10.6%  ¥8,156   9.7%  ¥(584)   (0.9)% 

Construction and real estate

   7,772   9.4   8,102   9.7   330   0.3 

Services

   4,749   5.8   5,024   6.0   275   0.2 

Wholesale and retail

   5,140   6.2   5,113   6.1   (27)   (0.1) 

Transportation and communications

   3,491   4.2   3,565   4.3   74   0.1 

Banks and other financial institutions

   4,006   4.9   4,471   5.3   465   0.4 

Government and public institutions

   8,532   10.3   8,882   10.6   350   0.3 

Other industries(2)

   4,427   5.4   5,018   6.0   591   0.6 

Individuals

   10,800   13.1   10,329   12.4   (471)   (0.7) 

Mortgage loans

   9,960   12.1   9,445   11.3   (515)   (0.8) 

Other

   840   1.0   884   1.1   44   0.1 
  

 

 

  

 

 

  

 

 

  

 

 

  

 

 

  

 

 

 

Total domestic

   57,657   69.9   58,660   70.1   1,003   0.2 

Foreign:

       

Commercial and industrial

   16,872   20.5   17,095   20.4   223   (0.1) 

Banks and other financial institutions

   6,760   8.2   6,740   8.1   (20)   (0.1) 

Government and public institutions

   960   1.2   1,128   1.3   168   0.1 

Other

   191   0.2   38   0.1   (153)   (0.1) 
  

 

 

  

 

 

  

 

 

  

 

 

  

 

 

  

 

 

 

Total foreign

   24,783   30.1   25,001   29.9   218   (0.2) 
  

 

 

  

 

 

  

 

 

  

 

 

  

 

 

  

 

 

 

Subtotal

   82,440   100.0%   83,661   100.0%   1,221   —   
   

 

 

   

 

 

   

Less: Unearned income and deferred loan fees—net

   (156)    (146)    10  
  

 

 

   

 

 

   

 

 

  

Total loans before allowance for loan losses

  ¥82,284   ¥83,515   ¥1,231  
  

 

 

   

 

 

   

 

 

  

                         
 
As of March 31,
  
Increase
(decrease)
 
 
2019
  
2020
   
 
(in billions of yen, except percentages)
 
Domestic:
  
   
   
   
   
   
 
Manufacturing
 ¥
9,554
   
11.5
% ¥
9,731
   
11.1
% ¥
177
   
(0.4
)%
Construction and real estate
  
8,950
   
10.8
   
9,603
   
11.0
   
653
   
0.2
 
Services
  
5,017
   
6.0
   
5,993
   
6.8
   
976
   
0.8
 
Wholesale and retail
  
5,159
   
6.2
   
5,220
   
6.0
   
61
   
(0.2
)
Transportation and communications
  
3,693
   
4.5
   
3,833
   
4.4
   
140
   
(0.1
)
Banks and other financial institutions
  
4,346
   
5.2
   
4,635
   
5.3
   
289
   
0.1
 
Government and public institutions
  
2,359
   
2.8
   
2,199
   
2.5
   
(160
)  
(0.3
)
Other industries
(1)
  
5,473
   
6.7
   
5,389
   
6.0
   
(84
)  
(0.7
)
Individuals
  
9,858
   
11.9
   
9,428
   
10.8
   
(430
)  
(1.1
)
Mortgage loans
  
8,950
   
10.8
   
8,567
   
9.8
   
(383
)  
(1.0
)
Other
  
908
   
1.1
   
861
   
1.0
   
(47
)  
(0.1
)
                         
Total domestic
  
54,409
   
65.6
   
56,031
   
63.9
   
1,622
   
(1.7
)
Foreign:
  
   
   
   
   
   
 
Commercial and industrial
  
19,126
   
23.1
   
20,819
   
23.7
   
1,693
   
0.6
 
Banks and other financial institutions
  
9,087
   
11.0
   
10,475
   
11.9
   
1,388
   
0.9
 
Government and public institutions
  
297
   
0.3
   
317
   
0.4
   
20
   
0.1
 
Other
  
33
   
0.0
   
35
   
0.1
   
2
   
0.1
 
                         
Total foreign
  
28,543
   
34.4
   
31,646
   
36.1
   
3,103
   
1.7
 
                         
Subtotal
  
82,952
   
100.0
%  
87,677
   
100.0
%  
4,725
   
—  
 
                         
Less: Unearned income and deferred loan fees—net
  
(152
)  
   
(149
)  
   
3
   
 
                         
Total loans before allowance for loan losses
 ¥
82,800
   
  ¥
87,528
   
  ¥
4,728
   
 
                         
Notes:

(1)Certain loans were reclassified primarily from Other of Individuals to Construction and real estate to align with current period presentation.
(2)Other industries of Domestic includesunder domestic include trade receivables and lease receivables of consolidated variable interest entities.

(2)Certain loans of domestic and foreign were reclassified in order to conform to the current year’s presentation.
Total loans before allowance for loan losses increased by ¥1,231¥4,728 billion from March 31, 20172019 to ¥83,515¥87,528 billion as of March 31, 2018.2020. Loans to domestic borrowers increased by ¥1,003¥1,622 billion to ¥58,660¥56,031 billion due mainly to increases in loans to other industries, bankservices and other financial institutionsconstruction and government and public institutions,real estate, offset in part by decreasesa decrease in manufacturing and mortgage loans of individuals.

Loans to foreign borrowers increased by ¥218¥3,103 billion from March 31, 20172019 to ¥25,001¥31,646 billion as of March 31, 2018.2020. The increase in loans to foreign borrowers was due mainly to increases in loans to commercial and industrial and governmentbanks and public institutions, offset in part by a decrease in other industries.

financial institutions.

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Within our loan portfolio, the proportion of loans to domestic borrowers against gross total loans increaseddecreased from 69.9%65.6% to 70.1%63.9%, while that of loans to foreign borrowers against gross total loans decreasedincreased from 30.1%34.4% to 29.9%, and loans36.1%. Loans to foreign borrowers were regionally diversified.

Impaired Loans

General

In accordance with our group’s credit risk management policies, we use an internal rating system that consists of credit ratings for the corporate portfolio segment and pool allocations for the retail portfolio segment as the basis of our risk management infrastructure. Credit ratings consist of obligor ratings which represent the level of credit risk of the obligor, and transaction ratings which represent the ultimate possibility of incurring losses on individual loans by taking into consideration various factors such as collateral or guarantees involved. In principle, obligor ratings are applied to all obligors except those to which pool allocations are applied, and are subject to regular review at least once a year as well as special review which is required whenever the obligor’s credit standing changes. Pool allocations are applied to groups of small balance, homogeneous loans. We poolloans that are less than a specified amount by pooling customers and loans with similar risk characteristics, and the risk is assessed mainly based on past due status and managed according to such pools. We generally review the appropriateness and effectiveness of the approach to obligor ratings and pool allocations once a year in accordance with predetermined policies and procedures. The table below presents our definition of obligor ratings used by Mizuho Bank and Mizuho Trust & Banking:

Obligor category(1)(2)

 

Obligor rating

 

Definition

Normal

Obligor category
(1)(2)
 A
Obligor rating
(3)
 
Definition
Normal
A
Obligors whose certainty of debt fulfillment is very high, hence their level of credit risk is very low.
 
B
 
Obligors whose certainty of debt fulfillment poses no problems for the foreseeable future, and their level of credit risk is low.
 
C
 
Obligors whose certainty of debt fulfillment and their level of credit risk pose no problems for the foreseeable future.
 
D
 
Obligors whose current certainty of debt fulfillment poses no problems, however, their resistance to future economic environmental changes is low.

Watch

 
E1
 
Obligors that require observation going forward because of either minor concerns regarding their financial position, or their somewhat weak or unstable business conditions.
 
E2
 
Obligors that require special observation going forward because of problems with their borrowings such as reduced or suspended interest payments, problems with debt fulfillment such as failure to make principal or interest payments, or problems with their financial position as a result of their weak or unstable business conditions.

Intensive control

 
F
 
Obligors that are not yet bankrupt but are in financial difficulties and are deemed likely to become bankrupt in the future because of insufficient progress in implementing their management improvement plans or other measures (including obligors that are receiving ongoing support from financial institutions).
Substantially bankrupt
 
G
 
Obligors that have not yet become legally or formally bankrupt but are substantially insolvent because they are in serious financial difficulties and are deemed to be incapable of being restructured.

Bankrupt

 
H
 
Obligors that have become legally or formally bankrupt.

Notes:

(1)Special attention obligors are watch obligors with debt in troubled debt restructuring or 90 days or more delinquent debt. Loans to such obligors are considered impaired.
(2)We classify loans to special attention, intensive control, substantially bankrupt and bankrupt obligors as impaired loans.

(3)Equivalent obligor ratings are determined for the other portfolio segment.
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We consider loans to be impaired when it is probable that we will be unable to collect all the scheduled payments of principal and interest when due according to the contractual terms of the loans. We classify loans to special attention, intensive control, substantially bankrupt and bankrupt obligors as impaired loans, and all of our impaired loans are designated as nonaccrual loans. We do not have any loans to borrowers that cause management to have serious doubts as to the ability of such borrowers to comply with the present loan repayment

terms for the periods presented other than those already designated as impaired loans. See “Item 11. Quantitative and Qualitative Disclosures about Credit, Market and Other Risk—Credit Risk Management” for descriptions of our self-assessment procedures and our internal credit rating system.

Our credit management activities consist of activities such as efforts to provide management consultation to support borrowers’ business initiatives, to increase the quantity and enhance the quality of loan collateral, and to adjust loan balances to an appropriate level, when the borrower’s credit quality is showing a decline. These activities can lead to improvements in obligor classifications through improvements in the business and financial condition of borrowers and, as a result, a reduction in allowance for loan losses.

We endeavor to remove impaired loans from our balance sheet within three years from the time when they are categorized through methods such as collection, charge-offs, disposal and improving the borrowers’ credit rating through restructuring efforts.

Loan modifications

Restructuring efforts are made through our various business revitalization support measures conducted based on requests from borrowers that are in a weakened state that require some form of support. When confronted with the decision of whether to agree to business revitalization support, which includes forgiveness of debt (including debt to equity swaps), reductions in stated interest rates to below market levels and postponement of payment of principal and/or interest (other than insignificant extensions), we carefully consider whether it is beneficial to our shareholders and depositors based on various factors such as whether (i) a legal reorganization process would significantly damage the obligor’s business value so that there is a fear that the obligor will not be able to restructure its business, (ii) the restructuring plan is appropriate and is economically rational from the viewpoint of minimizing Mizuho’s losses compared to other processes, (iii) both the management and shareholders of the obligor will clearly bear responsibility, and (iv) the allocation of losses among creditors is rational and highly justifiable. The triggers and factors that we review to identify restructured loans are modifications imposed by law or a court of law and alterations based on agreement with the borrower such as the reduction of the stated interest rate and forgiveness of debt (including debt to equity swaps), and we consider restructured loans, with respect to which concessions that it would not otherwise consider were granted to obligors in financial difficulty, as “troubled debt restructuring.” We consider the relevant obligor to be in financial difficulty when its rating based on our internal rating system is E2 or below. The types of concessions that we would not otherwise consider include the various forms of business revitalization support described above. In general, troubled debt restructurings will return to
non-impaired
loans, as well as accrual status, when we determine that the borrower poses no problems regarding current certainty of debt fulfillment, i.e., the borrower qualifies for a rating of D or above based on our internal rating system. Based on our historical experience, it typically takes approximately 1.5 years for the troubled debt restructuring loans in nonaccrual status to be returned to accrual status.

We determine whether restructured loans other than troubled debt restructurings are impaired loans based on the application of our internal rating system as we do generally with respect to all obligors. We determine whether restructured loans are past due or current by comparing the obligors’ payments with the modified contract terms. The effect of the restructuring on the obligors is considered in developing the allowance based on the restructuring’s effect on the estimation of future cash flows of such loans. At March 31, 2018,2020, the balance of restructurings that are troubled debt restructurings was ¥316¥380 billion, and the balance of restructurings that are not troubled debt restructurings was ¥32¥11 billion. Also, nothe amount of charge-offs were recorded as a result of troubled debt restructurings that were made during the fiscal year ended March 31, 2018.

2020 was ¥9 billion.

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While we maintain basic guidelines covering restructured loans, we do not have any standardized modification programs. Instead, we apply various modifications as is appropriate for the specific circumstances of the obligor in question. We do not have a policy that specifically limits the number of modifications that can be performed for a specific loan.

Balance of impaired loans

The following table shows our impaired loans as of March 31, 20172019 and 20182020 based on classifications by domicile and industry segment:

   As of March 31,  Increase (decrease) 
   2017  2018  
   Impaired
loans		   Ratio to gross
total loans by
industry(1)		  Impaired
loans		   Ratio to gross
total loans by
industry		  Impaired
loans		  Ratio to gross
total loans by
industry		 
   

 

(in billions of yen, except percentages)

 

Domestic:

         

Manufacturing

  ¥379    4.3%  ¥142    1.7%  ¥(237)   (2.6)% 

Construction and real estate

   57    0.7   41    0.5   (16)   (0.2) 

Services

   66    1.4   58    1.2   (8)   (0.2) 

Wholesale and retail

   147    2.9   131    2.6   (16)   (0.3) 

Transportation and communications

   23    0.6   28    0.8   5   0.2 

Banks and other financial institutions

   6    0.2   12    0.3   6   0.1 

Other industries

   7    0.1   4    0.0   (3)   (0.1) 

Individuals

   105    1.0   90    0.9   (15)   (0.1) 
  

 

 

    

 

 

    

 

 

  

Total domestic

   790    1.4   506    0.9   (284)   (0.5) 

Foreign

   191    0.8   109    0.4   (82)   (0.4) 
  

 

 

    

 

 

    

 

 

  

Total impaired loans

  ¥981    1.2  ¥615    0.7  ¥(366)   (0.5) 
  

 

 

    

 

 

    

 

 

  

Note:

(1)Certain ratio to gross total loans by industry information as of March 31, 2017 was changed due to reclassification of loans to align with current presentation.

                         
 
As of March 31,
  
Increase (decrease)
 
 
2019
  
2020
   
 
Impaired
loans
  
Ratio to gross
total loans by
industry
  
Impaired
loans
  
Ratio to gross
total loans by
industry
  
Impaired
loans
  
Ratio to gross
total loans by
industry
 
 
(in billions of yen, except percentages)
 
Domestic:
  
   
   
   
   
   
 
Manufacturing
 ¥
109
   
1.1
% ¥
159
   
1.6
% ¥
50
   
0.5
%
Construction and real estate
  
46
   
0.5
   
55
   
0.6
   
9
   
0.1
 
Services
  
74
   
1.5
   
81
   
1.4
   
7
   
(0.1
)
Wholesale and retail
  
135
   
2.6
   
148
   
2.8
   
13
   
0.2
 
Transportation and communications
  
31
   
0.8
   
23
   
0.6
   
(8
)  
(0.2
)
Banks and other financial institutions
  
10
   
0.2
   
12
   
0.3
   
2
   
0.1
 
Other industries
  
9
   
0.1
   
19
   
0.3
   
10
   
0.2
 
Individuals
  
81
   
0.8
   
84
   
0.9
   
3
   
0.1
 
                         
Total domestic
  
495
   
0.9
   
581
   
1.0
   
86
   
0.1
 
Foreign
  
151
   
0.5
   
135
   
0.4
   
(16
)  
(0.1
)
                         
Total impaired loans
 ¥
646
   
0.8
  ¥
716
   
0.8
  ¥
70
   
0.0
 
                         
Impaired loans decreasedincreased by ¥366¥70 billion from March 31, 20172019 to ¥615¥716 billion as of March 31, 2018.2020. Impaired loans to domestic borrowers decreasedincreased by ¥284¥86 billion due mainly to improvements in the credit condition ofdowngrades related to some borrowers in the manufacturing industry as well as the gradual recovery in the economic environment.industry. Impaired loans to foreign borrowers decreased by ¥82¥16 billion, and the relative impact of foreign currency fluctuations on the decreasesuch amount was immaterial.

Reflecting the aforementioned change, the percentage of impaired loans within gross total loans decreased from 1.2% as of March 31, 2017 to 0.7%2020 was unchanged from that as of March 31, 2018 due to a decrease in impaired loans.2019. The percentage of impaired loans net of allowance for loan losses to gross total loans net of allowance for loan losses decreased from 0.61%0.41% as of March 31, 20172019 to 0.37%0.32% as of March 31, 20182020 due to a decrease in impaired loans net of allowance for loan losses whereasand an increase in gross total loans net of allowance for loan losses increased.

losses.

Allowance for Loan Losses

Calculation of allowance for loan losses

Our self-assessment and credit-rating procedures serve as the basis for determining the amount of the allowance for loan losses. The specific methods of calculating the allowance for each category of obligors are as follows:

Normal and watch obligors

A formula allowance is calculated separately for obligors with small balance, homogeneous loans and for each credit rating category of corporate obligors by multiplying the loan balance with the applicable

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default ratio (based on internal historical data as well as data provided by third-party credit rating agencies) and the applicable average impairment ratio on defaulted loans (based on internal historical data).

default ratio (based on internal historical data as well as data provided by third-party credit rating agencies) and the applicable average impairment ratio on defaulted loans (based on internal historical data).

Special attention obligors

The allowance for special attention obligors is generally calculated individually based on the present value of expected future cash flows discounted at the loan’s initial effective interest rate. A formula allowance for certain special attention obligors is calculated by grouping the loans to such obligors and applying the formula described above for normal and watch obligors but using the default ratio and average impairment ratio specific to this category.

Intensive control obligors

The allowance for intensive control obligors is generally calculated individually based on the present value of expected future cash flows discounted at the loan’s initial effective interest rate, based on the loan’s observable market price, or based on the fair value of the collateral if the loan is collateral dependent. The allowance for certain intensive control obligors is calculated by grouping the loans to such obligors and multiplying the amount of loans less estimated collateral value by the default ratio and average impairment ratio specific to this category.

Substantially bankrupt and bankrupt obligors

The allowance is calculated individually and is equal to loan balance, less estimated collateral value.

Balance of allowance for loan losses

The following table summarizes the allowance for loan losses by component and as a percentage of the corresponding loan balance as of March 31, 20172019 and 2018:

   As of March 31,  Increase
(decrease)		 
         2017              2018        
   

 

(in billions of yen, except percentages)

 

Allowance for loan losses on impaired loans(1) (A)

  ¥303  ¥153  ¥(150) 

Allowance for loan losses onnon-impaired loans (B)

   177   157   (20) 
  

 

 

  

 

 

  

 

 

 

Total allowance for loan losses (C)

  ¥480  ¥310  ¥(170) 
  

 

 

  

 

 

  

 

 

 

Impaired loans requiring an allowance for loan losses (D)

  ¥851  ¥478  ¥(373) 

Impaired loans not requiring an allowance for loan losses (E)

   130   137   7 

Non-impaired loans(2) (F)

   81,459   83,046   1,587 
  

 

 

  

 

 

  

 

 

 

Gross total loans (G)

  ¥82,440  ¥83,661  ¥1,221 
  

 

 

  

 

 

  

 

 

 

Percentage of allowance for loan losses on impaired loans against the balance of impaired loans requiring an allowance (A)/(D) x100

   35.55%   31.87%   (3.68)% 

Percentage of allowance for loan losses onnon-impaired loans against the balance ofnon-impaired loans (B)/(F) x100

   0.22   0.19   (0.03) 

Percentage of total allowance for loan losses against gross total loans
(C)/(G) x100

   0.58   0.37   (0.21) 
2020:

             
 
As of March 31,
  
Increase
(decrease)
 
 
2019
  
2020
 
 
(in billions of yen, except percentages)
 
Allowance for loan losses on impaired loans
(1)
(A)
 ¥
169
  ¥
231
  ¥
62
 
Allowance for loan losses on
non-impaired
loans (B)
  
138
   
210
   
72
 
             
Total allowance for loan losses (C)
 ¥
307
  ¥
441
  ¥
134
 
             
Impaired loans requiring an allowance for loan losses (D)
 ¥
529
  ¥
596
  ¥
67
 
Impaired loans not requiring an allowance for loan losses (E)
  
117
   
120
   
3
 
Non-impaired
loans
(2)
(F)
  
82,306
   
86,961
   
4,655
 
             
Gross total loans (G)
 ¥
82,952
  ¥
87,677
  ¥
4,725
 
             
Percentage of allowance for loan losses on impaired loans against the balance of impaired loans requiring an allowance (A)/(D) x100
  
31.99
%  
38.76
%  
6.77
%
Percentage of allowance for loan losses on
non-impaired
loans against the balance of
non-impaired
loans (B)/(F) x100
  
0.17
   
0.24
   
0.07
 
Percentage of total allowance for loan losses against gross total loans (C)/(G) x100
  
0.37
   
0.50
   
0.13
 

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Notes:

(1)The allowance for loan losses on impaired loans includes the allowance for groups of loans totaling ¥302¥257 billion and ¥246¥261 billion as of March 31, 20172019 and 20182020, which were collectively evaluated for impairment, in addition to the allowance for those loans that were individually evaluated for impairment.
(2)
Non-impaired
loans refer to loans categorized as “normal obligors” and “watch obligors (excluding special attention obligors)” under our internal rating system.

Allowance for loan losses decreasedincreased by ¥170¥134 billion from March 31, 20172019 to ¥310¥441 billion as of March 31, 20182020 due mainly to a decreaseincreases in allowance for loan losses on both impaired loans and
non-impaired
loans. The allowance for loan losses on impaired loans increased due mainly to an increase in allowance for loan losses on domestic impaired loans. The allowance for loan losses on
non-impaired
loans increased due mainly to the impact of the
COVID-19
pandemic on the credit quality of the borrowers. As a result, the percentage of total allowance for loan losses against gross total loans increased by 0.13 percentage points to 0.50%. The percentage of allowance for loan losses on impaired loans against the balance of impaired loans requiring an allowance decreasedincreased by 3.686.77 percentage points to 31.87%38.76%.

In the fiscal year ended March 31, 2018,2020, impaired loans decreasedincreased by 37.3%10.8% due mainly to a decreasean increase in domestic impaired loans. Allowance for loan losses on impaired loans decreasedincreased by 49.6%36.5%.

The coverage ratio for impaired loans, calculated as the percentage of total allowance for loan losses against total impaired loans, increased by 1.5%14.01 percentage points as of March 31, 20182020 compared to the previous fiscal year. The increase was due to a larger percentage decreaseincrease in impaired loanstotal allowance for loan losses than the percentage decreaseincrease in allowance for loan losses.

total impaired loans.

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Provision (credit) for loan losses

The following table summarizes changes in our allowance for loan losses, including a breakdown of charge-offs and recoveries by domicile and industry segment, in the fiscal years ended March 31, 20172019 and 2018:

  Fiscal years ended March 31,  Increase
(decrease)		 
      2017          2018      
  

 

(in billions of yen)

 

Allowance for loan losses at beginning of fiscal year

 ¥451  ¥480  ¥29 

Provision (credit) for loan losses

  38   (126)   (164) 

Charge-offs:

   

Domestic:

   

Manufacturing

  (2)   (9)   (7) 

Construction and real estate

  (1)   —     1 

Services

  (3)   (5)   (2) 

Wholesale and retail

  (6)   (13)   (7) 

Transportation and communications

  (1)   (1)   —   

Individuals

  (7)   (5)   2 
 

 

 

  

 

 

  

 

 

 

Total domestic charge-offs

  (20)   (33)   (13) 

Foreign

  (11)   (23)   (12) 
 

 

 

  

 

 

  

 

 

 

Total charge-offs

  (31)   (56)   (25) 
 

 

 

  

 

 

  

 

 

 

Recoveries:

   

Domestic:

   

Manufacturing

  1   1   —   

Construction and real estate

  2   1   (1) 

Services

  1   2   1 

Wholesale and retail

  5   1   (4) 

Transportation and communications

  4   —     (4) 

Banks and other financial institutions

  —     1   1 

Individuals

  3   2   (1) 
 

 

 

  

 

 

  

 

 

 

Total domestic recoveries

  16   8   (8) 

Foreign

  10   7   (3) 
 

 

 

  

 

 

  

 

 

 

Total recoveries

  26   15   (11) 
 

 

 

  

 

 

  

 

 

 

Net charge-offs

  (5)   (41)   (36) 

Others(1)

  (4)   (3)   1 
 

 

 

  

 

 

  

 

 

 

Balance at end of fiscal year

 ¥480  ¥310  ¥(170) 
 

 

 

  

 

 

  

 

 

 

2020:

             
 
Fiscal years ended March 31,
  
Increase
(decrease)
 
 
    2019    
  
    2020    
 
 
(in billions of yen)
 
Allowance for loan losses at beginning of fiscal year
 ¥
310
  ¥
307
  ¥
(3
)
Provision (credit) for loan losses
  
32
   
156
   
124
 
Charge-offs:
  
   
   
 
Domestic:
  
   
   
 
Manufacturing
  
(4
)  
(6
)  
(2
)
Construction and real estate
  
(1
)  
(1
)  
—  
 
Services
  
(2
)  
(2
)  
—  
 
Wholesale and retail
  
(10
)  
(16
)  
(6
)
Transportation and communications
  
—  
   
(1
)  
(1
)
Other industries
  
(2
)  
—  
   
2
 
Individuals
  
(5
)  
(5
)  
—  
 
             
Total domestic charge-offs
  
(24
)  
(31
)  
(7
)
Foreign
  
(24
)  
(13
)  
11
 
             
Total charge-offs
  
(48
)  
(44
)  
4
 
             
Recoveries:
  
   
   
 
Domestic:
  
   
   
 
Manufacturing
  
1
   
1
   
—  
 
Construction and real estate
  
1
   
20
   
19
 
Services
  
1
   
1
   
—  
 
Wholesale and retail
  
3
   
4
   
1
 
Individuals
  
1
   
1
   
—  
 
             
Total domestic recoveries
  
7
   
27
   
20
 
Foreign
  
7
   
1
   
(6
)
             
Total recoveries
  
14
   
28
   
14
 
             
Net charge-offs
  
(34
)  
(16
)  
18
 
Others
(1)
  
(1
)  
(6
)  
(5
)
             
Balance at end of fiscal year
 ¥
307
  ¥
441
  ¥
134
 
             
Note:

(1)“Others” includes primarily foreign exchange translation.

We recorded a credit

Provision for loan losses of ¥126increased by ¥124 billion in the fiscal year endedfrom March 31, 2018 compared2019 to a provision for loan losses of ¥38¥156 billion in the fiscal year endedat March 31, 2017.2020. The changeincrease was due mainly to improvements inreflection of the credit conditionimpact of some borrowers in the domestic manufacturing industry
COVID-19
pandemic as well as the gradual recovery in the economic environment.

deterioration of credit status of certain domestic borrowers.

Charge-offs increaseddecreased by ¥25¥4 billion from the previous fiscal year to ¥56¥44 billion for the fiscal year ended March 31, 2018.2020. The increasedecrease was due mainly to similar amounts of increasesa decrease in charge-offs of bothforeign loans, offset in part by an increase in charge-offs of domestic loans and foreign loans.

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Investments

The majority of our investments are
available-for-sale
and
held-to-maturity
securities, which at March 31, 20172019 and 20182020 were as follows:

  As of March 31,  Increase (decrease) 
  2017  2018  
  Amortized
cost		  Fair
value		  Net
unrealized
gains
(losses)		  Amortized
cost		  Fair
value		  Net
unrealized
gains
(losses)		  Amortized
cost		  Fair
value		  Net
unrealized
gains
(losses)		 
  

 

(in billions of yen)

 

Available-for-sale  securities:

         

Debt securities

 ¥16,684  ¥16,756  ¥72  ¥19,587  ¥19,633  ¥46  ¥2,903  ¥2,877  ¥(26) 

Japanese government bonds

  10,257   10,263   6   13,334   13,332   (2)   3,077   3,069   (8) 

Other than Japanese government bonds

  6,427   6,493   66   6,253   6,301   48   (174)   (192)   (18) 

Equity securities (marketable)

  1,530   3,801   2,271   1,595   4,033   2,438   65   232   167 
 

 

 

  

 

 

  

 

 

  

 

 

  

 

 

  

 

 

  

 

 

  

 

 

  

 

 

 

Total

 ¥18,214  ¥20,557  ¥2,343  ¥21,182  ¥23,666  ¥2,484  ¥2,968  ¥3,109  ¥141 
 

 

 

  

 

 

  

 

 

  

 

 

  

 

 

  

 

 

  

 

 

  

 

 

  

 

 

 

Held-to-maturity  securities:

         

Debt securities:

         

Japanese government bonds

 ¥3,060  ¥3,097  ¥37  ¥1,960  ¥1,984  ¥24  ¥(1,100)  ¥(1,113)  ¥(13) 

Agency mortgage-backed securities

  757   750   (7)   558   538   (20)   (199)   (212)   (13) 
 

 

 

  

 

 

  

 

 

  

 

 

  

 

 

  

 

 

  

 

 

  

 

 

  

 

 

 

Total

 ¥3,817  ¥3,847  ¥30  ¥2,518  ¥2,522  ¥4  ¥(1,299)  ¥(1,325)  ¥(26) 
 

 

 

  

 

 

  

 

 

  

 

 

  

 

 

  

 

 

  

 

 

  

 

 

  

 

 

 

                                     
 
As of March 31,
  
Increase (decrease)
 
 
2019
  
2020
     
 
Amortized
cost
  
Fair
value
  
Net
unrealized
gains
(losses)
  
Amortized
cost
  
Fair
value
  
Net
unrealized
gains
(losses)
  
Amortized
cost
  
Fair
value
  
Net
unrealized
gains
(losses)
 
 
(in billions of yen)
 
Available-for-sale
 securities:
  
   
   
   
   
   
   
   
   
 
Debt securities:
  
   
   
   
   
   
   
   
   
 
Japanese government bonds
 ¥
11,889
  ¥
11,897
  ¥
8
  ¥
12,652
  ¥
12,603
  ¥
(49
) ¥
763
  ¥
706
  ¥
(57
)
Other than Japanese government bonds
  
6,205
   
6,236
   
31
   
6,481
   
6,510
   
29
   
276
   
274
   
(2
)
                                     
Total
 ¥
18,094
  ¥
18,133
  ¥
39
  ¥
19,133
  ¥
19,113
  ¥
(20
) ¥
1,039
  ¥
980
  ¥
(59
)
                                     
Held-to-maturity
 securities:
  
   
   
   
   
   
   
   
   
 
Debt securities:
  
   
   
   
   
   
   
   
   
 
Japanese government bonds
 ¥
1,120
  ¥
1,140
  ¥
20
  ¥
480
  ¥
493
  ¥
13
  ¥
(640
) ¥
(647
) ¥
(7
)
Agency mortgage-backed securities
  
484
   
470
   
(14
)  
382
   
382
   
—  
   
(102
)  
(88
)  
14
 
                                     
Total
 ¥
1,604
  ¥
1,610
  ¥
6
  ¥
862
  ¥
875
  ¥
13
  ¥
(742
) ¥
(735
) ¥
7
 
                                     
Available-for-sale
securities measured at fair value increased by ¥3,109¥980 billion from March 31, 20172019 to ¥23,666¥19,113 billion at March 31, 2018.2020. This increase was due primarily to an increase in Japanese government bonds.
Held-to-maturity
securities measured at amortized cost decreased by ¥1,299¥742 billion from March 31, 20172019 to ¥2,518¥862 billion at March 31, 2018.2020. This decrease was due primarily to a decrease in Japanese government bonds due to their maturity.redemptions. See note 43 to our consolidated financial statements included elsewhere in this annual report for details of other investments included within investments.

The amount of our funding through deposits significantly exceeds our total loans. As a result, we allocate a significant portion of such excess among investments in debt securities, including Japanese government bonds and investments in equity securities consisting mainly of common stock of Japanese listed company customers. We will continue our efforts to dispose of cross-shareholdings in order to decrease the potential impact on our financial position due to fluctuations in stock prices, and to be able to fully perform financial intermediary functions even under periods of stress.

Fluctuations in long-term interest rates lead to changes in the fair value of our portfolio of debt securities, a majority of which consists of Japanese government bonds. As of March 31, 2018,2020, we had a total of ¥19,633¥19,113 billion of
available-for-sale debt
securities within our investments, of which ¥13,332¥12,603 billion was Japanese government bonds. We had ¥16,756¥18,133 billion and ¥19,633¥19,113 billion of
available-for-sale debt
securities measured at fair value as of March 31, 20172019 and 2018,2020, respectively, and net unrealized gains of ¥72¥39 billion and ¥46net unrealized losses of ¥20 billion were reflected in accumulated other comprehensive income, net of tax as of such dates, respectively. As the negative interest rate policy of the Bank of Japan started in February 2016 and the resulting fluctuations in interest rates may have a substantial impact on the value of our Japanese government bond portfolio, in order to prepare for the risk of sudden and significant future interest rate change, we continue to manage our Japanese government bond portfolio conservatively by managing the average remaining period of our portfolio and strengthening risk management, including through the use of internal stress tests. Average remaining period of our Japanese government bond portfolio as of March 31, 20182020 was approximately 2.5 years.

2.4 years compared to 2.1 years as of March 31, 2019.

Risk management related to our securities portfolio continues to be a key focus in light of the increase in instability and uncertainty in the global economy in recent years.

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Table of Contents
Trading Account Assets
Trading account assets increased by ¥7,075 billion from March 31, 2019 to ¥28,093 billion at March 31, 2020. The increase was due mainly to increases in the market value of receive-fixed,
pay-variable
interest-rate swaps, reflecting a decline in long-term interest rates and in U.S. treasury bonds and other foreign government bonds for which the fair value option was elected due to purchases.
Liabilities

The following table shows our liabilities as of March 31, 20172019 and 2018:

   As of March 31,   Increase
(decrease)		 
   2017   2018   
   

 

(in billions of yen)

 

Deposits

  ¥131,185   ¥136,884   ¥5,699 

Due to trust accounts

   4,123    3,993    (130) 

Call money and funds purchased

   1,255    2,105    850 

Payables under repurchase agreements

   17,970    16,657    (1,313) 

Payables under securities lending transactions

   1,919    1,833    (86) 

Other short-term borrowings

   1,477    1,688    211 

Trading account liabilities

   13,592    13,115    (477) 

Bank acceptances outstanding

   184    213    29 

Income taxes payable

   74    65    (9) 

Deferred tax liabilities

   140    306    166 

Accrued expenses

   209    233    24 

Long-term debt

   14,529    12,955    (1,574) 

Other liabilities

   5,027    4,705    (322) 
  

 

 

   

 

 

   

 

 

 

Total liabilities

  ¥191,684   ¥194,752   ¥3,068 
  

 

 

   

 

 

   

 

 

 

2020:

             
 
As of March 31,
  
Increase
(decrease)
 
 
2019
  
2020
 
 
(in billions of yen)
 
Deposits
 ¥
138,297
  ¥
144,948
  ¥
6,651
 
Due to trust accounts
  
312
   
250
   
(62
)
Call money and funds purchased
  
2,842
   
2,263
   
(579
)
Payables under repurchase agreements
  
14,640
   
17,971
   
3,331
 
Payables under securities lending transactions
  
1,798
   
1,424
   
(374
)
Other short-term borrowings
  
1,995
   
4,914
   
2,919
 
Trading account liabilities
  
10,121
   
12,417
   
2,296
 
Bank acceptances outstanding
  
187
   
168
   
(19
)
Income taxes payable
  
59
   
69
   
10
 
Deferred tax liabilities
  
108
   
26
   
(82
)
Accrued expenses
  
289
   
249
   
(40
)
Long-term debt
  
11,529
   
10,346
   
(1,183
)
Other liabilities
  
5,933
   
6,998
   
1,065
 
             
Total liabilities
 ¥
188,110
  ¥
202,043
  ¥
13,933
 
             
Total liabilities increased by ¥3,068¥13,933 billion from March 31, 20172019 to ¥194,752¥202,043 billion atas of March 31, 2018.2020. This increase was due primarily to an increaseincreases of ¥5,699¥6,651 billion in deposits, ¥5,235 billion in short-term borrowings and ¥2,296 billion in trading account liabilities, offset in part by a decrease of ¥1,574¥1,183 billion in
long-term debt, a decrease of ¥477 billion in trading account liabilities and a decrease of ¥468 billion in short-term borrowings.
debt. We analyze short-term borrowings, consisting of due to trust accounts, call money and funds purchased, payables under repurchase agreements, payables under securities lending transactions and other
short-term
borrowings, on a combined basis.

Deposits

The following table shows a breakdown of our deposits as of March 31, 20172019 and 2018:

   As of March 31,   Increase
(decrease)		 
   2017   2018   
   

 

(in billions of yen)

 

Domestic:

      

Noninterest-bearing deposits

  ¥19,064   ¥21,069   ¥2,005 

Interest-bearing deposits

   87,359    91,207    3,848 
  

 

 

   

 

 

   

 

 

 

Total domestic deposits

   106,423    112,276    5,853 
  

 

 

   

 

 

   

 

 

 

Foreign:

      

Noninterest-bearing deposits

   1,996    2,257    261 

Interest-bearing deposits

   22,766    22,351    (415) 
  

 

 

   

 

 

   

 

 

 

Total foreign deposits

   24,762    24,608    (154) 
  

 

 

   

 

 

   

 

 

 

Total deposits

  ¥131,185   ¥136,884   ¥5,699 
  

 

 

   

 

 

   

 

 

 

2020:

             
 
As of March 31,
  
Increase
(decrease)
 
 
2019
  
2020
 
 
(in billions of yen)
 
Domestic:
  
   
   
 
Noninterest-bearing deposits
 ¥
23,845
   
28,110
  ¥
4,265
 
Interest-bearing deposits
  
84,019
   
86,651
   
2,632
 
             
Total domestic deposits
  
107,864
   
114,761
   
6,897
 
             
Foreign:
  
   
   
 
Noninterest-bearing deposits
  
1,794
   
2,186
   
392
 
Interest-bearing deposits
  
28,639
   
28,001
   
(638
)
             
Total foreign deposits
  
30,433
   
30,187
   
(246
)
             
Total deposits
 ¥
138,297
  ¥
144,948
  ¥
6,651
 
             
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Deposits increased by ¥5,699¥6,651 billion from March 31, 20172019 to ¥136,884¥144,948 billion at March 31, 2018.2020. Domestic deposits increased by ¥5,853¥6,897 billion from March 31, 20172019 to ¥112,276¥114,761 billion at March 31, 2018.2020. Domestic interest-bearing deposits increased by ¥3,848¥2,632 billion from March 31, 20172019 to ¥91,207¥86,651 billion at March 31, 20182020 due mainly to an increaseincreases in ordinary deposits and certificates of deposit, offset in part by a decrease in time deposits, and domesticdeposits. Domestic noninterest-bearing deposits increased by ¥2,005¥4,265 billion to ¥21,069¥28,110 billion at March 31, 20182020 due mainly to

increases in ordinary deposits and current accounts. Foreign deposits decreased by ¥154¥246 billion from March 31, 20172019 to ¥24,608¥30,187 billion at March 31, 2018 due mainly to a decrease in time deposits, offset in part by an increase in certificates of deposit.

2020.

Short-term Borrowings

The following table shows a breakdown of our short-term borrowings as of March 31, 20172019 and 2018:

  As of March 31,  Increase (decrease) 
  2017  2018  
  Domestic  Foreign  Total  Domestic  Foreign  Total  Domestic  Foreign  Total 
  

 

(in billions of yen)

 

Due to trust accounts

 ¥4,123  ¥—    ¥4,123  ¥3,993  ¥—    ¥3,993  ¥(130)  ¥—    ¥(130) 

Call money and funds purchased, and payables under repurchase agreements and securities lending transactions

  5,727   15,417   21,144   6,724   13,871   20,595   997   (1,546)   (549) 

Other short-term borrowings

  587   890   1,477   827   861   1,688   240   (29)   211 
 

 

 

  

 

 

  

 

 

  

 

 

  

 

 

  

 

 

  

 

 

  

 

 

  

 

 

 

Total short-term borrowings

 ¥10,437  ¥16,307  ¥26,744  ¥11,544  ¥14,732  ¥26,276  ¥1,107  ¥(1,575)  ¥(468) 
 

 

 

  

 

 

  

 

 

  

 

 

  

 

 

  

 

 

  

 

 

  

 

 

  

 

 

 

2020:

                                     
 
As of March 31,
  
Increase (decrease)
 
 
2019
  
2020
     
 
Domestic
  
Foreign
  
Total
  
Domestic
  
Foreign
  
Total
  
Domestic
  
Foreign
  
Total
 
 
(in billions of yen)
 
Due to trust accounts
 ¥
312
  ¥
—  
  ¥
312
  ¥
250
  ¥
—  
  ¥
250
  ¥
(62
) ¥
—  
  ¥
(62
)
Call money and funds purchased, and payables under repurchase agreements and securities lending transactions
  
7,294
   
11,986
   
19,280
   
6,616
   
15,042
   
21,658
   
(678
)  
3,056
   
2,378
 
Other short-term borrowings
  
926
   
1,069
   
1,995
   
4,442
   
472
   
4,914
   
3,516
   
(597
)  
2,919
 
                                     
Total short-term borrowings
 ¥
8,532
  ¥
13,055
  ¥
21,587
  ¥
11,308
  ¥
15,514
  ¥
26,822
  ¥
2,776
  ¥
2,459
  ¥
5,235
 
                                     
Short-term borrowings decreasedincreased by ¥468¥5,235 billion from March 31, 20172019 to ¥26,276¥26,822 billion at March 31, 2018.2020. Domestic short-term borrowings increased by ¥1,107¥2,776 billion due mainly to increasesan increase in call money and funds purchased, and payables under repurchase agreements.other short-term borrowings. Foreign short-term borrowings decreasedincreased by ¥1,575¥2,459 billion due mainly to a decreasean increase in payables under repurchase agreements.

Trading Account Liabilities
Trading account liabilities increased by ¥2,296 billion from March 31, 2019 to ¥12,417 billion at March 31, 2020. The increase was due mainly to an increase in the market value of receive-variable,
pay-fixed
interest-rate swaps reflecting a decline in long-term interest rates.
Equity

The following table shows a breakdown of equity as of March 31, 20172019 and 2018:

   As of March 31,  Increase
(decrease)		 
   2017  2018  
   

 

(in billions of yen)

 

MHFG shareholders’ equity:

    

Common stock

  ¥5,826  ¥5,826  ¥—   

Retained earnings

   919   1,306   387 

Accumulated other comprehensive income, net of tax

   1,521   1,742   221 

Treasury stock, at cost

   (5)   (6)   (1) 
  

 

 

  

 

 

  

 

 

 

Total MHFG shareholders’ equity

   8,261   8,868   607 

Noncontrolling interests

   511   636   125 
  

 

 

  

 

 

  

 

 

 

Total equity

  ¥8,772  ¥9,504  ¥732 
  

 

 

  

 

 

  

 

 

 

2020:

             
 
As of March 31,
  
Increase
(decrease)
 
 
2019
  
2020
 
 
(in billions of yen)
 
MHFG shareholders’ equity:
  
   
   
 
Common stock
 ¥
5,830
  ¥
5,827
  ¥
(3
)
Retained earnings
  
2,741
   
2,700
   
(41
)
Accumulated other comprehensive income (loss), net of tax
  
164
   
(9
)  
(173
)
Treasury stock, at cost
  
(8
)  
(6
)  
2
 
             
Total MHFG shareholders’ equity
  
8,727
   
8,512
   
(215
)
Noncontrolling interests
  
774
   
664
   
(110
)
             
Total equity
 ¥
9,501
  ¥
9,176
  ¥
(325
)
             
Total equity increaseddecreased by ¥732¥325 billion from March 31, 20172019 to ¥9,504¥9,176 billion due mainly to increases in retained earnings andthe change from accumulated other comprehensive income, net of tax.

tax to accumulated other comprehensive loss, net of tax and a decrease in noncontrolling interests.

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Table of Contents
Retained earnings increaseddecreased by ¥387¥41 billion from March 31, 20172019 to ¥1,306¥2,700 billion at March 31, 2018.2020. This increasedecrease was due primarily to dividend payments of ¥190 billion, offset in part by net income attributable to MHFG shareholders for the fiscal year ended March 31, 20182020 of ¥578¥150 billion.
We recorded accumulated other comprehensive loss, net of tax of ¥9 billion offset in part by dividend paymentsas of ¥190 billion.

AccumulatedMarch 31, 2020 compared to accumulated other comprehensive income, net of tax increased by ¥221of ¥164 billion fromas of March 31, 20172019. The change was due primarily to ¥1,742 billion at March 31, 2018 due to an increase in pension liability adjustments of ¥155¥127 billion an increase in net unrealized gains onavailable-for-sale securities of ¥95 billion and a decrease in foreign currency translation adjustments of ¥30¥50 billion.

Noncontrolling interests increaseddecreased by ¥125¥110 billion from March 31, 20172019 to ¥636¥664 billion at March 31, 2018.2020. The increasedecrease was due mainly to a new consolidation of an investment funddecreases in net assets and an increase in the share of noncontrolling shareholders of somecertain investment funds that we consolidate and deconsolidation of certain investment funds.

Liquidity

We continuously endeavor to enhance the management of our liquidity profile to meet our customers’ loan demand and deposit withdrawals and respond to unforeseen situations such as adverse movements in stock, foreign currencies, interest rates and other markets or changes in general domestic or international conditions. We manage our liquidity profile through the continuous monitoring of our cash flow situation, the enforcement of upper limits on funds raised in financial markets and other means as further set forth in “Item 11. Quantitative and Qualitative Disclosures about Credit, Market and Other Risk—Liquidity Risk Management.”

Deposits, based on our broad customer base and brand recognition in Japan, have been our primary source of liquidity. Our total deposits increased by ¥5,699¥6,651 billion, or 4.3%4.8%, from the end of the previous fiscal year to ¥136,884¥144,948 billion as of March 31, 2018.2020. Our average balance of deposits for the fiscal year ended March 31, 20182020 of ¥136,532¥139,962 billion exceeded our average balance of loans for the same period by ¥53,661¥56,358 billion. We invested the excess portion primarily in marketable securities and other high liquidity assets.

Secondary sources of liquidity include short-term borrowings such as call money and funds purchased and payables under repurchase agreements. We also issue long-term debt, including both senior and subordinated debt, as additional sources for liquidity. We utilize short-term borrowings to diversify our funding sources and to manage our funding costs. We raise subordinated long-term debt for the purpose of improving our capital adequacy ratios, which also enhances our liquidity profile. We believe we are able to access such sources of liquidity on a stable and flexible basis based on our current credit ratings. The following table shows credit ratings assigned to us and to our principal banking subsidiaries by S&P and Moody’s as of May 31, 2018:

2020:
  
As of May 31, 20182020
S&P
  S&P
Moody’s
 Moody’s
Long-term
  Long-term
Short-term
Stand-alone
credit profile		Long-termShort-termBaseline credit
assessment

Mizuho Financial Group

A-—    —  
Stand-alone

credit profile
 A1
Long-term
 P-1
Short-term
 —
Baseline credit
assessment
 

Mizuho Bank

Financial Group
 A
A-
 A-1 a-
—  
 A1 P-1
  —  
 baa1
A1
P-1
—  

Mizuho Bank
A
A-1
a
A1
P-1
baa1
Mizuho Trust & Banking

 
A
 A-1 a-
A-1
 A1 P-1
a
 
A1
P-1
baa1

We source our funding in foreign currencies primarily from corporate customers, foreign governments, financial institutions and institutional investors, through short-term and long-term financing, under terms and pricing commensurate with our credit ratings above, and customer deposits. In the event of future declines in our credit quality or that of Japan in general, we expect to be able to purchase foreign currencies in sufficient amounts using the yen funds raised through our domestic customer base. As further measures to support our foreign currency liquidity, we hold foreign debt securities, maintain credit lines and swap facilities denominated in foreign currencies.

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Table of Contents
In order to maintain appropriate funding liquidity, our principal banking subsidiaries hold highly liquid investment assets such as Japanese government bonds as liquidity reserve assets. We monitor the amount of liquidity reserve assets and report such amount to the Risk Management Committee, the Balance Sheet Management Committee, the Executive Management Committee and the President & Group CEO on a regular basis. Minimum regulatory reserve amounts, or the reserve amount deposited with the Bank of Japan pursuant to applicable regulations that is calculated as a specified percentage of the amount of deposits held by our principal banking subsidiaries, are excluded in connection with our management of liquidity reserve asset levels. We established and apply classifications for the cash flow conditions affecting the group, including the amount of liquidity reserve assets, that range from “Normal” to “Anxious” and “Crisis” categories, and take appropriate

actions based on such conditions. As of March 31, 2018,2020, the balance of Japanese government bonds included within our investments and measured at fair value was ¥13.3¥12.6 trillion (excluding

held-to-maturity
securities), and a majority of this amount, which has historically not fluctuated significantly over the course of a fiscal year, was classified as the principal component of liquidity reserve assets.

Related to regulatory liquidity requirements, the liquidity coverage ratio (“LCR”) standard has been introduced in Japan. The minimum LCR under the LCR guidelines is 100% on both a consolidated andnon-consolidated basis for banks with international operations or on a consolidated basis for bank holding companies with international operations, while it is subject tophase-in arrangements pursuant to which the LCR rises in equal annual steps of 10 percentage points to reach 100% on January 1, 2019, with a minimum requirement of 90% applicable for the period between January 1 and December 31, 2018. The LCR disclosure guidelines of the Financial Service Agency require banks and bank holding companies with international operations to disclose the three-month averages of daily LCR.

Set forth below are the averages of the daily end balances of consolidated LCR data of Mizuho Financial Group, and consolidated and
non-consolidated
LCR data of our principal banking subsidiaries, for the fourth quarter of the fiscal year ended March 31, 2018.2020. The figures are calculated based on our financial statements prepared in accordance with Japanese GAAP and the LCR guidelines established by the Financial Services Agency. All yen figures in this table are truncated.

  Fourth Quarter of Fiscal Year
Ended March 31, 2018		 
 

Fourth quarter of fiscal year
ended March 31, 2020
(in billions of yen,

except percentages)

 

Mizuho Financial Group (Consolidated)

 

Total high-quality liquid assets (“HQLA”) allowed to be included in the calculation (weighted)

 ¥60,159
60,112
 

Net cash outflows (weighted)

  50,079
43,816
 

LCR

  120.1
137.3
%

Mizuho Bank (Consolidated)

 

Total HQLA allowed to be included in the calculation (weighted)

 ¥53,720
56,118
 

Net cash outflows (weighted)

  38,199
41,302
 

LCR

  140.7
136.0
%

Mizuho Bank
(Non-consolidated)

 

Total HQLA allowed to be included in the calculation (weighted)

 ¥53,116
55,298
 

Net cash outflows (weighted)

  37,555
40,214
 

LCR

  141.5
137.7
%

Mizuho Trust and Banking (Consolidated)

 

Total HQLA allowed to be included in the calculation (weighted)

 ¥2,538
2,546
 

Net cash outflows (weighted)

  1,601
1,691
 

LCR

  160.3
151.2
%

Mizuho Trust and Banking
(Non-consolidated)

 

Total HQLA allowed to be included in the calculation (weighted)

 ¥2,509
2,489
 

Net cash outflows (weighted)

  1,576
1,599
 

LCR

  161.1
156.2
%

For more information on LCR, see “Item 4. Information on the Company—Supervision and Regulation—Liquidity.”

Capital Adequacy

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

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Regulatory Capital Requirements

Mizuho Financial Group and its principal banking subsidiaries are subject to regulatory capital requirements administered by the Financial Services Agency in accordance with the provisions of the Banking Act and related

regulations. Failure to meet minimum capital requirements may initiate certain mandatory actions by regulators that, if undertaken, could have a direct material effect on our financial condition and results of operations.

The capital adequacy guidelines applicable to Japanese banks and bank holding companies with international operations supervised by the Financial Services Agency closely follow the risk-adjusted approach proposed by BCBS and are intended to further strengthen the soundness and stability of Japanese banks. In December 2010, BCBS issued the Basel III rules text (later revised in June 2011, January 2013, October 2014 and December 2017), which presents the details of global regulatory standards on bank capital adequacy and liquidity agreed by the Governors and Heads of Supervision, which is the oversight body of BCBS, and endorsed by the G20 Leaders at the Seoul summit in November 2010. The rules text sets out higher and better-quality capital, better risk coverage, the introduction of a leverage ratio as a backstop to the risk-based requirement, and the introduction of the capital conservation buffer and countercyclical capital buffer as measures to promote the
build-up
of capital that can be drawn down in periods of stress, and the introduction of two global liquidity standards. The Financial Services Agency’s revisions to its capital adequacy guidelines became effective from March 31, 2013, which generally reflect the rules in the Basel III rules text that have been applied from January 1, 2013. The framework of Basel III is based on the following three pillars: minimum capital requirements; supervisory review; and market discipline. Under the first pillar, the capital ratio is calculated by dividing regulatory capital, or risk-based capital, by risk-weighted assets. Under the second pillar, banks are required to maintain adequate capital to support all of the major risks in their business and are encouraged to develop and use better risk management techniques in monitoring and managing such risks. Under the third pillar, banks are required to enhance disclosure, including disclosure of details of the capital adequacy ratio, the amount of each type of risk and the method of calculation used so that the market may make more effective evaluations.

With regard to risk-based capital, the guidelines based on Basel III set out higher and better-quality capital standards compared to those under Basel II, which had been effective until Basel III was applied. The guidelines based on Basel III require a target minimum standard capital adequacy ratio of 8%, Tier 1 capital ratio of 6% and Common Equity Tier 1 capital ratio of 4.5%, on both a consolidated and
non-consolidated
basis for banks with international operations, such as Mizuho Bank and Mizuho Trust & Banking, or on a consolidated basis for bank holding companies with international operations, such as Mizuho Financial Group.

Risk-based capital, calculated from financial statements prepared under Japanese GAAP, is classified into the following two tiers: Tier 1 capital; and Tier 2 capital. Tier 1 capital consists of Common Equity Tier 1 capital and Additional Tier 1 capital. Common Equity Tier 1 capital generally consists of common stock, capital surplus, retained earnings, accumulated other comprehensive income and other disclosed reserves and others less any regulatory adjustments. Additional Tier 1 capital generally consists of instruments issued by a bank or its holding company that meet the criteria for inclusion in Additional Tier 1 capital and others less any regulatory adjustments. Tier 2 capital generally consists of instruments issued by a bank or its holding company such as subordinated debt that meet the criteria for inclusion in Tier 2 capital, general reserve for possible losses on loans (equaling the sum of (i) the excess of the amount of qualified reserves over the amount of expected losses and (ii) the amount of general reserves calculated based on the standardized approach) and others less any regulatory adjustments.

Regulatory adjustments such as goodwill and other intangibles, and defined benefit pension fund assets and liabilities, are to be applied mainly to the calculation of Common Equity Tier 1 capital in the form of deductions.

Under Basel III, capital instruments that no longer qualify as Additional Tier 1 capital or Tier 2 capital are being phased out beginning March 2013 by increments of 10% until becoming fully effective in March 2022. Our existing preferred securities (the amounts thereof included within Additional Tier 1 capital as of March 31, 2018 being ¥577.5 billion) and existing subordinated debt issued before March 2013 (the amounts thereof included within Tier 2 capital as of March 31, 20182020 being ¥674.8¥337.4 billion) are subject to the
phase-out
arrangements.

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In November 2011, the Financial Stability Board (“FSB”) published policy measures to address the systemic and moral hazard risks associated with systemically important financial institutions. The policy measures include

requirements for

G-SIBs
to have additional loss absorption capacity tailored to the impact of their default, ranging from 1% to 2.5% of risk-weighted assets, to be met with Common Equity Tier 1 capital, which would be in addition to the 7.0%minimum Common Equity Tier 1 capital requirement (includingratio of 4.5%, the capital conservation buffer). The requirements began phasing in from January 2016buffer of 2.5% and will be fully implemented by January 2019.the countercyclical capital buffer. We were included in the list of
G-SIBs
updated in November 20172019 and were allocated to the category that would require 1.0% of additional loss absorbency.

In November 2015, the Financial Services Agency published the revised capital adequacy guidelines to introduce the Basel III rules text regarding the capital conservation buffer, the countercyclical capital buffer and the additional loss absorption capacity requirement for
G-SIBs
and domestic systemically important banks
(“D-SIBs”).
These guidelines became effective on March 31, 2016. The capital conservation buffer, the countercyclical capital buffer and the additional loss absorption capacity requirement for
G-SIBs
and
D-SIBs
must be met with Common Equity Tier l capital under the revised guidelines, and if such buffer and requirement are not satisfied, a capital distribution constraints plan is required to be submitted to the Financial Services Agency and carried out. The capital conservation buffer is being phased in starting in March 2016 at 0.625% until becomingbecame fully effective in March 2019 at 2.5%. In addition, subject to national discretion by the respective regulatory authorities, if the relevant national authority judges a period of excess credit growth to be leading to the
build-up
of system-wide risk, a countercyclical capital buffer ranging from 0% to 2.5% would also be imposed on banking organizations. The countercyclical capital buffer is a weighted average of the buffers deployed across all the jurisdictions to which the banking organization has credit exposures.

In December 2015, the Financial Services Agency published a capital adequacy guideline regarding the designation of
G-SIBs
and
D-SIBs
in Japan. We were designated as both a
G-SIB
and a
D-SIB,
and the additional loss absorption capacity requirement applicable to us was 1.0% on a fully effective basis. The additional loss absorption capacity requirement was the same as that imposed by the FSB, which is being phased in starting in March 2016 at 0.25% until becomingbecame fully effective in March 2019 at 1.0%.

The Leverage Ratio framework is critical and complementary to the risk-based capital framework that will help ensure broad and adequate capture of both
on-
and
off-balance
sheet sources of banks’ leverage. This simple,
non-risk-based
measure is intended to restrict the
build-up
of excessive leverage in the banking sector to avoid destabilizing deleveraging processes that can damage the broader financial system and the economy. Implementation of the leverage ratio requirements began with bank-level reporting to national supervisors of the leverage ratio and its components, and public disclosure is required from January 2015. Basel III’s leverage ratio is defined as the “capital measure” (numerator) divided by the “exposure measure” (denominator) and is expressed as a percentage. The capital measure is defined as Tier 1 capital, and the minimum leverage ratio is defined as 3%.

Regulatory adjustments

The Financial Services Agency applied the requirement to meet the minimum leverage ratio for bank holding companies and banks with international operations from March 31, 2019. The minimum leverage ratio is defined as 3% on a consolidated basis for bank holding companies with international operations, such as goodwillMizuho Financial Group, or on both a consolidated and other intangibles,
non-consolidated
basis for banks with international operations, such as Mizuho Bank and defined benefit pension fund assetsMizuho Trust & Banking.
Related to regulatory capital requirements, in November 2015, the FSB issued the final TLAC standard for
G-SIBs.
The TLAC standard has been designed so that failing
G-SIBs
will have sufficient loss-absorbing and liabilities, recapitalization capacity available in resolution for authorities to implement an orderly resolution.
G-SIBs
are required to meet the TLAC requirement alongside the minimum regulatory requirements set out in the Basel III framework.
Following the publication of the final TLAC standards for
G-SIBs
by the FSB, in April 2016, the Financial Services Agency published an explanatory paper outlining its approach for the introduction of the TLAC
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framework in Japan, and a revised version of this document was published in April 2018. In March 2019, the Financial Services Agency published regulatory notices and related materials to implement the TLAC requirements in Japan, which is phased in for Japanese
G-SIBs
from March 31, 2019. According to the Financial Services Agency’s approach above, which is subject to change based on future international discussions, the preferred resolution strategy for Covered SIBs is SPE resolution, in which resolution tools are applied to the ultimate holding company of a group by a single national resolution authority, although the actual measures to be applied mainlytaken will be determined on a
case-by-case
basis considering the actual condition of the relevant Covered SIB in crisis. To implement this SPE resolution strategy effectively under the FSB’s final TLAC standards and the Japanese TLAC requirements, the ultimate holding company in Japan of the relevant Covered SIB designated as the resolution entity in Japan of such Covered SIB by the Financial Services Agency (the “Domestic Resolution Entity”) are required to (i) meet the minimum external TLAC requirements, and (ii) cause their material subsidiaries or material
sub-groups
that are designated as systemically important by the Financial Services Agency or that are subject to TLAC requirements or similar requirements by the relevant foreign authority to maintain a certain level of capital and debt recognized as having loss-absorbing and recapitalization capacity, or internal TLAC. Under the Japanese TLAC regulations, the Financial Services Agency designated Mizuho Financial Group as the Domestic Resolution Entity, and designated Mizuho Bank, Mizuho Trust & Banking and Mizuho Securities as Mizuho Financial Group’s material subsidiaries in Japan. External TLAC eligible instruments generally consist of instruments issued by the Domestic Resolution Entity of the relevant Covered SIB that meet the criteria for inclusion in external TLAC requirements and others less any regulatory adjustments. Internal TLAC eligible instruments generally consist of instruments issued by the material subsidiaries of the relevant Covered SIBs as systemically important by the Financial Services Agency, which are subject to the internal TLAC requirements such as subordinated debt that meet the criteria for inclusion in internal TLAC requirements and others less any regulatory adjustments.
Under the Japanese TLAC regulations,
G-SIBs
are required to meet a minimum TLAC requirement of at least 16% of the resolution group’s risk-weighted assets as from March 31, 2019 and at least 18% as from March 31, 2022. Minimum TLAC must also be at least 6% of the Basel III leverage ratio denominator from March 31, 2019, and at least 6.75% from March 31, 2022. In addition, Japanese
G-SIBs
are allowed to count the Japanese Deposit Insurance Fund Reserves in an amount equivalent to 2.5% of their consolidated risk-weighted assets from March 31, 2019, and 3.5% of their consolidated risk-weighted assets from March 31, 2022, as their external TLAC. For more information regarding the Japanese TLAC regulations, see “Item 4. Information on the Company—Supervision and Regulation—Total Loss Absorbing Capacity.”
In December 2017, the BCBS published the finalized Basel III reforms endorsed by the GHOS. The finalized reforms complement the initial phase of Basel III reforms, seek to restore credibility in the calculation of Common Equityrisk-weighted assets and improve the comparability of banks’ capital ratios. In addition, under the finalized Basel III reforms,
G-SIBs
are required to meet a leverage ratio buffer, which will take the form of a Tier 1 capital buffer set at 50% of the applicable
G-SIB’s
risk-weighted capital buffer, and various refinements are made to the definition of the leverage ratio exposure measure based on the text of the leverage ratio framework issued by the BCBS in January 2014. Furthermore, in January 2019, the formGHOS endorsed the finalized market risk capital framework that was scheduled to take effect as of deductions,January 1, 2022, concurrent with the implementation of the finalized Basel III reforms. The revised framework was initially scheduled to mainly take effect from January 1, 2022. In March 2020, however, the GHOS announced that, in order to provide additional operational capacity for banks and became fully effective in March 2018.

supervisors to respond to the immediate financial stability priorities resulting from the impact of the coronavirus disease
(COVID-19)

Theon the global banking system, it endorsed a set of measures, including the deferral of the implementation date of the finalized Basel III reforms by one year to January 1, 2023, and the extension of the accompanying transitional arrangements for the output floor by one year to January 1, 2028, as well as the implementation date of the finalized market risk capital requirements and regulatory adjustments are beingframework by one year to January 1, 2023. As a result, under the finalized Basel III reforms, the revisions to the capital floor will be phased in over a transitional period as follows (italicized percentages indicate those stillfrom January 1, 2023, with the initial capital floor of 50%, and will be fully implemented at 72.5% from January 1, 2028, and the leverage ratio requirements under the finalized definition of the leverage ratio exposure measure and the leverage ratio buffer requirement for

G-
SIBs will take effect from January 1, 2023.
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Following the announcement by the GHOS described above, on March 30, 2020, the Financial Sevices Agency also announced that the Basel III finalization framework is scheduled to be implemented in transition periods):

  March
2017		  March
2018		  March
2019		  March
2020		  March
2021		  March
2022		 

Minimum Common Equity Tier 1 capital

  4.5%   4.5%   4.5%   4.5%   4.5%   4.5% 

Minimum Tier 1 capital

  6.0%   6.0%   6.0%   6.0%   6.0%   6.0% 

Minimum total capital

  8.0%   8.0%   8.0%   8.0%   8.0%   8.0% 

Phase-in of deductions from capital

  80.0%   100.0%   100.0%   100.0%   100.0%   100.0% 

Phase out of recognition of capital instruments that no longer qualify as capital

  50.0%   40.0%   30.0%   20.0%   10.0%   0.0% 

Capital conservation buffer

  1.25%   1.875%   2.5%   2.5%   2.5%   2.5% 

Countercyclical capital buffer(1)

  0.00%   0.01%   0.01%   0.01%   0.01%   0.01% 

Additional loss absorbency requirements forG-SIBs andD-SIBs(2)

  0.50%   0.75%   1.0%   1.0%   1.0%   1.0% 

Notes:

(1)Figures assume that the countercyclical capital buffer will continue to be 0.01% after March 2018.
(2)Figures assume that the additional loss absorbency requirements applied to us as aG-SIB andD-SIB continue to be 1.0% on a fully effective basis.

Japan from March 2023. In June 2020, in coordination with the monetary policy of the Bank of Japan in response to the impact of the

COVID-19,
the Financial Sevices Agency amended the leverage ratio regulations and TLAC regulations which will exclude amounts of deposits to the Bank of Japan from calculation of the leverage ratio and external TLAC ratio on total exposure basis from June 30, 2020 to March 31, 2021. In addition, due to the uncertainty on the impact of
COVID-19,
the Financial Sevices Agency announced that the current minimum leverage ratio of 3% and the current minimum external TLAC ratio on total exposure basis of 6% will be maintained from June 30, 2020 until March 31, 2021. For more information, see “Item 4. Information on the Company—Supervision and Regulation—Capital Adequacy” and “Item 4. Information on the Company—Supervision and Regulation—Leverage Ratio.”
If the capital adequacy ratio or the leverage ratio of a financial institution falls below the required level, the Financial Services Agency may, depending upon the extent of capital deterioration, take certain corrective action, including requiring the financial institution to submit an improvement plan to strengthen its capital base, reduce its total assets, restrict its business operations or other actions that could have a material effect on its financial condition and results of operations.

If the capital conservation buffer, the countercyclical capital buffer and the additional loss absorption capacity requirement for

G-SIBs
and
D-SIBs
are not satisfied, a capital distribution constraints plan is required to be submitted to the Financial Services Agency and carried out. The capital distribution constraints plan is required to be considered reasonable to restore the capital buffer and include restrictions on capital distributions, such as dividends, share buybacks and bonuses payments, up to a certain amount as determined depending on the level of the capital buffer.
Unless otherwise specified, the regulatory capital information set forth in this “—Capital Adequacy” is based on the current Basel III rules.

Consolidated Capital Adequacy Ratios and Leverage Ratios

Our capital adequacy ratios and leverage ratios as of March 31, 20172019 and 2018,2020, calculated in accordance with Japanese GAAP and the guidelines established by the Financial Services Agency, were as set forth in the following table:

   As of March 31,  Increase
(decrease)		 
   2017  2018  
   

 

(in billions of yen, except percentages)

 

Common Equity Tier 1 capital

  ¥7,001.6  ¥7,437.0  ¥435.3 

Additional Tier 1 capital

   1,209.8   1,755.1   545.3 
  

 

 

  

 

 

  

 

 

 

Tier 1 capital

   8,211.5   9,192.2   980.7 

Tier 2 capital

   1,839.4   1,668.1   (171.2) 
  

 

 

  

 

 

  

 

 

 

Total capital

  ¥10,050.9  ¥10,860.4  ¥809.4 
  

 

 

  

 

 

  

 

 

 

Risk-weighted assets

  ¥61,717.1  ¥59,528.9  ¥(2,188.1) 

Common Equity Tier 1 capital ratio

   11.34%   12.49%   1.15% 

Required Common Equity Tier 1 capital ratio(1)

   6.25   7.135   0.885 

Tier 1 capital ratio

   13.30   15.44   2.14 

Required Tier 1 capital ratio(1)

   7.75   8.635   0.885 

Total capital ratio

   16.28   18.24   1.96 

Required total capital ratio(1)

   9.75   10.635   0.885 

CET1 available after meeting the bank’s minimum capital requirements

   6.84   7.99   1.15 

Leverage ratio

   3.95   4.28   0.33 

             
 
As of
   
 
March 31,
2019
  
March 31,
2020
  
Increase
(decrease)
 
 
(in billions of yen, except percentages)
 
Common Equity Tier 1 capital
 ¥
7,390.0
  ¥
7,244.7
  ¥
(145.2
)
Additional Tier 1 capital
  
1,842.1
   
1,779.6
   
(62.4
)
             
Tier 1 capital
  
9,232.1
   
9,024.4
   
(207.7
)
Tier 2 capital
  
1,685.3
   
1,697.8
   
12.5
 
             
Total capital
 ¥
10,917.5
  ¥
10,722.2
  ¥
(195.2
)
             
Risk-weighted assets
 ¥
57,899.5
  ¥
62,141.2
  ¥
4,241.6
 
Common Equity Tier 1 capital ratio
  
12.76
%  
11.65
%  
(1.11
)%
Required Common Equity Tier 1 capital ratio
(1)
  
8.05
%  
8.01
%  
—  
 
Tier 1 capital ratio
  
15.94
%  
14.52
%  
(1.42
)%
Required Tier 1 capital ratio
(1)
  
9.55
%  
9.51
%  
—  
 
Total capital ratio
  
18.85
%  
17.25
%  
(1.60
)%
Required total capital ratio
(1)
  
11.55
%  
11.51
%  
—  
 
CET1 available after meeting the bank’s minimum capital requirements
  
8.26
%  
7.15
%  
(1.11
)%
Leverage ratio
  
4.42
%  
4.08
%  
(0.34
)%

Note:

(1)The required ratios discloseddiscribed above, atas of March 31, 20172019 and 2018,2020, include the transitional capital conservation buffer of 1.25% and 1.875%2.5%, respectively, the countercyclical capital buffer of 0%0.05% and 0.01%, respectively, and the transitional additional
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loss absorbency requirements for
G-SIBs
and
D-SIBs
of 0.5% and 0.75%1.00%, respectively, which are all in addition to the regulatory minima. The respective required amounts are determined by applying the ratios to the sum of the risk weightedrisk-weighted assets and certain other risk amounts. These buffers and additional loss absorbency requirements are applied to us but not to our banking subsidiaries.

Our total capital ratio as of March 31, 20182020 was 18.24%17.25%, an increasea decrease of 1.961.60 percentage points compared to March 31, 2017.2019. Our Tier 1 capital ratio as of March 31, 20182020 was 15.44%14.52%, an increasea decrease of 2.141.42 percentage points compared to March 31, 2017.2019. Our Common Equity Tier 1 capital ratio as of March 31, 20182020 was 12.49%11.65%, an increasea decrease of 1.151.11 percentage points compared to March 31, 2017. The increases in each2019. Our total capital ratio, were due mainly to a decrease in risk-weighted assetsTier 1 capital ratio and to an increase in Common Equity Tier 1 capital and Additional Tier 1 capital. Our Common Equity Tier 1 capital increased due mainly to an increase in retained earnings, and our Additional Tier 1 capital increased due mainly to an increase in directly-issued qualifying Additional Tier 1 instruments. Our risk-weighted assetsratio decreased due mainly to a decrease in credit riskthe net unrealized gains (losses) on other securities and an increase in the risk-weighted assets. We believe that we were in compliance with all capital adequacy requirements to which we were subject as of March 31, 2018.

2020.

Principal Banking Subsidiaries

Capital adequacy ratios and leverage ratios of our principal banking subsidiaries, on a consolidated basis, as of March 31, 20172019 and 2018,2020, calculated in accordance with Japanese GAAP and the guidelines established by the Financial Services Agency, were as set forth in the following table:

   As of March 31,  Increase
(decrease)		 
   2017  2018  

Mizuho Bank

    

Common Equity Tier 1 capital ratio

   11.16%   12.34%   1.18% 

Tier 1 capital ratio

   13.34   15.61   2.27 

Total capital ratio

   16.20   18.52   2.32 

Leverage ratio

   4.16   4.53   0.37 

Mizuho Trust & Banking

    

Common Equity Tier 1 capital ratio

   18.73   19.99   1.26 

Tier 1 capital ratio

   18.73   20.05   1.32 

Total capital ratio

   19.47   20.28   0.81 

Leverage ratio

   6.74   7.03   0.29 

             
 
As of
  
Increase
(decrease)
 
 
March 31,
2019
  
March 31,
2020
 
Mizuho Bank
  
   
   
 
Common Equity Tier 1 capital ratio
  
12.60
%  
11.39
%  
(1.21
)%
Tier 1 capital ratio
  
16.06
%  
14.50
%  
(1.56
)%
Total capital ratio
  
19.02
%  
17.29
%  
(1.73
)%
Leverage ratio
  
4.44
%  
4.02
%  
(0.42
)%
Mizuho Trust & Banking
  
   
   
 
Common Equity Tier 1 capital ratio
  
23.67
%  
23.64
%  
(0.03
)%
Tier 1 capital ratio
  
23.70
%  
23.66
%  
(0.04
)%
Total capital ratio
  
23.87
%  
23.74
%  
(0.13
)%
Leverage ratio
  
6.55
%  
6.79
%  
0.24
%
We believe each of our principal banking subsidiaries was in compliance with all capital adequacy requirements to which it was subject as of March 31, 2018.

2020.

Our securities subsidiariessubsidiary in Japan areis also subject to the capital adequacy requirement under the Financial Instruments and Exchange Act. Under this requirement, securities firms must maintain a minimum capital adequacy ratio of 120% calculated as a percentage of capital accounts less certain assets, as determined in accordance with Japanese GAAP, against amounts equivalent to market, counterparty and basic risks. Specific guidelines are issued as a ministerial ordinance that details the definition of essential components of the capital ratios, including capital, disallowed assets and risks, and related measures. Failure to maintain a minimum capital ratio will trigger mandatory regulatory actions. A capital ratio of less than 140% will call for regulatory reporting and a capital ratio of less than 100% may lead to a temporary suspension of all or part of the business operations and further, to the cancellation of the license to act as a securities broker and dealer. We believe, as of March 31, 2018,2020, that our securities subsidiariessubsidiary in Japan werewas in compliance with all capital adequacy requirements to which they wereit was subject.

Off-balance-sheet
Arrangements

We engage in various types of
off-balance-sheet
arrangements in the ordinary course of our business to meet the financing needs of our customers. These arrangements include various guarantees and commitments. The
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following tables show the contractual or notional amounts of our guarantees and undrawn commitments as of March 31, 20172019 and 2018:

   As of March 31,   Increase
(decrease)		 
   2017   2018   
   

 

(in billions of yen)

 

Guarantees:

      

Performance guarantees

  ¥2,243   ¥2,165   ¥(78) 

Guarantees on loans

   278    241    (37) 

Guarantees on securities

   175    164    (11) 

Other guarantees

   1,823    2,210    387 

Guarantees for the repayment of trust principal

   730    709    (21) 

Liabilities of trust accounts

   15,177    13,861    (1,316) 

Derivative financial instruments

   14,415    11,654    (2,761) 

   As of March 31,   Increase
(decrease)		 
   2017   2018   
   

 

(in billions of yen)

 

Commitments:

      

Commitments to extend credit

  ¥76,678   ¥78,448   ¥1,770 

Commercial letters of credit

   522    690    168 
  

 

 

   

 

 

   

 

 

 

Total commitments

  ¥77,200   ¥79,138   ¥1,938 
  

 

 

   

 

 

   

 

 

 

2020:

             
 
As of March 31,
  
Increase
(decrease)
 
 
2019
  
2020
 
 
(in billions of yen)
 
Guarantees:
  
           
   
           
   
           
 
Performance guarantees
 ¥
2,307
  ¥
2,456
  ¥
149
 
Guarantees on loans
  
289
   
301
   
12
 
Guarantees on securities
  
145
   
110
   
(35
)
Other guarantees
  
2,324
   
2,314
   
(10
)
Guarantees for the repayment of trust principal
  
65
   
59
   
(6
)
Liabilities of trust accounts
  
362
   
446
   
84
 
Derivative financial instruments
  
14,170
   
21,756
   
7,586
 
             
 
As of March 31,
  
Increase
(decrease)
 
 
2019
  
2020
 
 
(in billions of yen)
 
Commitments:
  
           
   
           
   
           
 
Commitments to extend credit
 ¥
76,857
  ¥
76,633
   
(224
¥)
Commercial letters of credit
  
778
   
690
   
(88
)
             
Total commitments
 ¥
77,635
  ¥
77,323
   
(312
¥)
             
See note 2423 to our consolidated financial statements included elsewhere in this annual report for the description of the nature of the various types of guarantees and commitments.

The contractual or notional amounts of these instruments generally represent the maximum potential amounts of future payments without consideration of possible recoveries under recourse provisions or from collateral held. For example, the amount under commitments to extend credit does not necessarily equal the impact that such commitment will have on our future cash flow, because many of these commitments expire without our making actual credit extensions up to the full commitment amount or at all. Also, many of the agreements related to the commitments to extend credit include terms that allow us to refuse, or reduce the amount of, credit extensions based on changes in the financial environment, declines in the obligor’s credit quality and other reasons. Finally, we receive collateral such as real estate and securities at the time of the contract as we deem necessary, and we regularly review the credit quality of the customer based on the internal guidelines and revise the terms of the contract as we deem necessary to manage credit risks.

Some of our
off-balance-sheet
arrangements are related to activities of special purpose entities, most of which are variable interest entities. For further information, see note 2524 to our consolidated financial statements included elsewhere in this annual report.

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Tabular Disclosure of Contractual Obligations

In the normal course of business, we enter into contractual obligations that require future cash payments. The following table sets forth a summary of our contractual cash obligations as of March 31, 2018:

   Due in one
year or less		   Due from
one year to
two years		   Due from
two years to
three years		   Due from
three years to
four years		   Due from
four years to
five years		   Due after
five years		   Total 
   

 

(in billions of yen)

 

Time deposits

  ¥35,724   ¥1,689   ¥1,285   ¥329   ¥362   ¥137   ¥39,526 

Certificates of deposit

   11,021    297    61    4    —      —      11,383 

Long-term debt

   2,492    1,607    1,314    1,205    1,068    5,269    12,955 

Capitalized leases

   12    10    7    4    2    1    36 

Operating leases

   52    44    38    32    23    57    246 
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total(1)(2)

  ¥49,289   ¥3,637   ¥2,698   ¥1,570   ¥1,453   ¥5,463   ¥64,110 
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

2020:

                             
 
Due in one
year or less
  
Due from
one year to
two years
  
Due from
two years to
three years
  
Due from
three years to
four years
  
Due from
four years to
five years
  
Due after
five years
  
Total
 
 
(in billions of yen)
 
Time deposits
 ¥
37,596
  ¥
1,736
  ¥
1,169
  ¥
342
  ¥
400
  ¥
216
  ¥
41,459
 
Certificates of deposit
  
12,984
   
221
   
11
   
—  
   
67
   
—  
   
13,283
 
Long-term debt
  
560
   
1,430
   
1,235
   
697
   
1,023
   
5,401
   
10,346
 
Capitalized leases
  
7
   
5
   
3
   
1
   
—  
   
—  
   
16
 
Operating leases
  
94
   
68
   
54
   
48
   
42
   
347
   
653
 
                             
Total
(1)(2)
 ¥
51,234
  ¥
3,455
  ¥
2,469
  ¥
1,087
  ¥
1,532
  ¥
5,964
  ¥
65,741
 
                             
Notes:

(1)A contribution paid to our pension plans, which is not included in the above table, is expected to be approximately ¥52¥50 billion in the fiscal year ending March 31, 2019,2021, based on the current funded status and expected asset return assumptions. For further information, see note 2120 to our consolidated financial statements included elsewhere in this annual report.
(2)The amount of unrecognized tax benefits, which is not included in the above table, was ¥2.3¥3.4 billion, of which ¥0.9¥1.5 billion was interest and penalties, atas of March 31, 2018.2020. For further information, see note 2019 to our consolidated financial statements included elsewhere in this annual report.

Recent Accounting Pronouncements

See note 2 to our consolidated financial statements included elsewhere in this annual report.

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Reconciliation with Japanese GAAP

Our consolidated financial statements are prepared in accordance with accounting principles and policies as summarized in note 1 to our consolidated financial statements included elsewhere in this annual report. These principles and policies differ in some respects from Japanese GAAP. For reporting based on Japanese banking regulations, we prepare our annual financial results using financial statements in accordance with Japanese GAAP. In addition, pursuant to the Japanese securities law and the requirements of the Tokyo Stock Exchange, we prepare quarterly financial statements which are also under Japanese GAAP. To show the major reconciling items between our U.S. GAAP financial statements and our Japanese GAAP financial statements, we have provided below, with respect to our most recent fiscal year, a reconciliation of consolidated net income and shareholders’ equity under U.S. GAAP with those amounts under Japanese GAAP.

   As of and for the fiscal
year ended March 31, 2018		 
   Total MHFG
shareholders’
equity		  Net income
attributable
to MHFG
shareholders		 
   

 

(in billions of yen)

 

U.S. GAAP

  ¥8,868.4  ¥577.6 

Differences arising from different accounting for:

   

1.  Derivative financial instruments and hedging activities

   64.0   107.8 

2.  Investments

   (97.7)   (101.7) 

3.  Loans

   158.2   2.4 

4.  Allowances for loan losses andoff-balance-sheet instruments

   79.6   (6.8) 

5.  Premises and equipment

   (119.6)   (35.4) 

6.  Land revaluation

   178.4   (2.9) 

7.  Business combinations

   (86.9)   (15.4) 

8.  Pension liabilities

   117.1   4.4 

9.  Consolidation of variable interest entities

   54.9   13.2 

10. Deferred taxes

   (160.3)   47.2 

11. Foreign currency translation

   —     (10.8) 

12. Other

   10.9   (3.1) 
  

 

 

  

 

 

 

Japanese GAAP

  ¥9,067.0(1)  ¥576.5 
  

 

 

  

 

 

 

         
 
As of and for the fiscal
 
year ended March 31, 2020
 
 
Total MHFG
shareholders’
equity
  
Net income
attributable
to MHFG
shareholders
 
 
(in billions of yen)
 
U.S. GAAP
 ¥
8,512.4
  ¥
150.2
 
Differences arising from different accounting for:
  
   
 
1.   Derivative financial instruments and hedging activities
  
74.7
   
(113.1
)
2.   Investments
  
(134.4
)  
484.4
 
3.   Loans
  
173.7
   
3.0
 
4.   Allowances for loan losses and
off-balance-sheet
instruments
  
84.7
   
(0.7
)
5.   Premises and equipment
  
(327.0
)  
96.7
 
6.   Land revaluation
  
169.5
   
(1.5
)
7.   Business combinations
  
(79.0
)  
(6.0
)
8.   Pension liabilities
  
136.0
   
57.0
 
9.   Consolidation of variable interest entities
  
66.4
   
(89.2
)
10. Deferred taxes
  
(138.1
)  
(115.3
)
11. Foreign currency translation
  
—  
   
(16.4
)
12. Other
  
15.3
   
(0.5
)
         
Japanese GAAP
 ¥
8,554.2
(1)  ¥
448.6
 
         
Note:

(1)Includes total accumulated other comprehensive income and stock acquisition rights

The following is a summary of the significant adjustments made to consolidated shareholders’ equity and net income, as shown in the above table, to reconcile the U.S. GAAP results with the Japanese GAAP results. The paragraphs below refer to the corresponding items set forth in the table above.

1.    Derivative financial instruments and hedging activities

Under U.S. GAAP, for a derivative to qualify for hedge accounting, it must be highly effective in achieving offsetting changes in fair values or variable cash flows of the hedged items attributable to the particular risk being hedged. The hedging relationship must be designated and formally documented at inception. Such documentation must include the particular risk management objective and strategy for the hedge, the identification of the derivative used as the hedging instrument, the hedged item and the risk exposure being hedged and the method for assessing the hedge effectiveness. The criteria for designation and measurement of hedge effectiveness under U.S. GAAP are more rigorous than under Japanese GAAP. As a result, most of the eligible hedge derivatives under Japanese GAAP are accounted for as trading account assets or liabilities under U.S. GAAP with changes in fair value of the derivatives recognized in earnings.

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Requirements for bifurcation of embedded derivatives differ between Japanese GAAP and U.S. GAAP. Embedded derivatives that are deemed to be clearly and closely related to their host contracts are not bifurcated under U.S. GAAP, while Japanese GAAP allows an entity to bifurcate embedded derivatives if the entity manages the risk of the embedded derivatives and host contracts separately. Bifurcated derivatives are recorded on the balance sheet at fair value with changes in fair value recognized in earnings under both Japanese GAAP and U.S. GAAP.

2.    Investments

The cost basis of certain investments differs between Japanese GAAP and U.S. GAAP primarily due to the following reasons:

Certain sales and subsequent repurchases

Under U.S. GAAP, equity securities (except those accounted for under the equity method ofavailable-for-sale securities accounting or those that result in consolidation of the investee) are measured at fair value with changes in fair value recognized in earnings, while under Japanese GAAP, do not meet sales criteria underthose securities are measured at fair value with changes in fair value recognized in other comprehensive income.
Under U.S. GAAP. These salesGAAP, we report foreign currency denominated debt securities as trading securities, and subsequent repurchases resultedthe entire amount of changes in realized gains or losses beingtheir fair values are recognized in earnings, while under Japanese GAAP. Under U.S. GAAP, these gains or lossesonly the changes attributable to movements in foreign currency exchange rates are recognized as unrealized gains or losses within accumulated other comprehensive income, net of tax.

in earnings.

Under U.S. GAAP, declines in the fair value of
available-for-sale
securities below cost that are deemed to be “other-than-temporary” are recorded in earnings. Both quantitative and qualitative factors are considered to determine whether the impairment is “other-than-temporary,“other-than-temporary.” including the duration and extent of the decline, near-term prospects of the issuer, as well as our ability and intent to hold the investments until a forecasted recovery of fair value or maturity. Regarding debt securities, we consider additional factors such as whether we have the intent to sell or more likely than not will be required to sell before recovery to determine whether the impairment is “other-than-temporary.” In other cases, we evaluate expected cash flows to be received and determine if a credit loss exists, and if so, the amount of an other-than-temporary impairment related to the credit loss is recognized in earnings. Under Japanese GAAP, significant declines in the fair value of securities below cost that are deemed to be “other-than-temporary” are recorded in earnings unless short term recovery is reasonably expected. A decline in the fair value of a security of 50% or more of its cost is a strong indicator of an other-than-temporary decline, which requires compelling evidence to prove otherwise. A decline in the fair value of 30% or more but less than 50% of its cost is an indicator of an other-than-temporary decline, in which case the probability of recovery must be evaluated to determine whether an other-than-temporary decline has occurred. Generally, if the decline in the fair value is less than 30%, it is not considered to be an other-than-temporary decline.

Under U.S. GAAP, the election of the fair value option for financial assets and liabilities is permitted according to ASC 825, while it is not permitted under Japanese GAAP. As we elected the fair value option for foreign currency denominatedavailable-for-sale securities under U.S. GAAP, these securities were reclassified as trading securities, and the entire amount of changes in their fair values are recognized in earnings, while under Japanese GAAP, only the changes attributable to movements in foreign currency exchange rates are recognized in earnings.

3.    Loans

Under U.S. GAAP, loan origination fees, net of certain direct origination costs, are deferred and recognized in interest income over the contractual life of the relevant loan using the interest method, while certain fees and costs are recognized in earnings at the time the loan is originated under Japanese GAAP.

In addition, certain loan participations and sales of loans to special purpose vehicles in connection with asset securitization transactions under Japanese GAAP do not meet sales criteria under U.S. GAAP due to different applicable criteria, and therefore the relevant loans are recognized on the balance sheet under U.S. GAAP.

4.    Allowances for loan losses and
off-balance-sheet
instruments

Under both Japanese GAAP and U.S. GAAP, the allowance for loan losses for specifically identified impaired loans is based on the present value of expected future cash flows discounted at the loan’s initial

effective interest rate or, as a practical expedient, the loan’s observable market price or the fair value of the collateral if the loan is collateral dependent. For certain impaired loans that are aggregated for the purpose of

measuring impairment, pools of smaller balance homogeneous loans and other
non-homogeneous
loans that have not been identified as impaired, the allowance for loan losses is determined based on a formula allowance utilizing historical loss factors, as adjusted, considering recent trends.

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The differences between Japanese GAAP and U.S. GAAP arise from the difference in the scope of the loans that are subject to the individual and portfolio impairment analysis. In addition to these effects based on differences between Japanese GAAP and U.S. GAAP, provision (credit) for loan losses may differ between Japanese GAAP and U.S. GAAP due to the difference in the timing of accounting closingspublic filings between our consolidated financial statements under U.S. GAAP and those under Japanese GAAP.

This reconciling item also includes the differences between U.S. GAAP and Japanese GAAP relating to the allowance for
off-balance-sheet
instruments. We generally use the same methodology to reserve for losses on these instruments as we do for loans.

5.    Premises and equipment

Under Japanese GAAP, a company can elect to allocate entity-wide long-lived assets that do not have identifiable cash flows that are largely independent of the cash flows of other assets and liabilities, among individual divisions within an entity, whereas U.S. GAAP does not have such an election. Under Japanese GAAP, we have been making this election since the fiscal year ended March 31, 2019.
Under U.S. GAAP, the fair value of a
non-monetary
asset acquired in exchange for another
non-monetary
asset is generally deemed to be the new cost of the asset acquired in the exchange, and a gain or loss is recognized on the exchange. Under Japanese GAAP, the cost of the asset surrendered is assigned to the newly acquired asset in certain types of exchange transactions, resulting in no gains or losses.

With regard to
internal-use
software, under U.S. GAAP, the costs to develop or obtain software that allow for access to or conversion of old data by new systems are capitalized and amortized once the software is ready for its intended use, while they are expensed when it occursafter full implementation across the company under Japanese GAAP. On the other hand, the general and administrative costs and the overhead costs are expensed as the costs of
internal-use
software under U.S. GAAP, but they are capitalized under Japanese GAAP.

6.    Land revaluation

Under Japanese GAAP, we revalued our holdings of land during the fiscal year ended March 31, 1998 pursuant to the Act Concerning Revaluation of Land (Act No. 34 of 1998). The revaluation gains are recorded directly in equity, and the related deferred tax liabilities are also recognized. Under U.S. GAAP, there is no applicable provision that allows for the revaluation of land other than for impairments, and accordingly the revaluation gains are reversed.

7.    Business combinations

Under U.S. GAAP, goodwill is not amortized and an impairment loss is recorded to the extent the carrying amount of the goodwill exceeds its estimated fair value at the measurement date. Under Japanese GAAP, goodwill is amortized over an appropriate period not to exceed 20 years and an impairment loss is recorded only if the effects of the goodwill are no longer expected.

8.    Pension liabilities

Under Japanese GAAP, we adopted as of April 1, 2000 pension accounting that is based on the actuarial present value of accrued benefit obligations. The cumulative effect of the accounting change was amortized over a specified number of years, and actuarial gains and losses are amortized over a specified number of years. Under
U.S. GAAP, we recalculated the benefit obligation at April 1, 2004 and accounted for the obligation as if we had adopted the accounting method in accordance with ASC 715, “Compensation—Retirement Benefits,” beginning in the fiscal year ended March 31, 1990, as permitted for a foreign private issuer. The cumulative effect of the accounting change, as well as actuarial gains and losses since the adoption, had been fully amortized by April 1, 2004.

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Under both Japanese GAAP and U.S. GAAP, an employer is required to recognize the overfunded or underfunded status of a defined benefit plan as an asset or liability in its consolidated balance sheets. Actuarial gains or losses and prior service costs or benefits that have not yet been recognized through earnings as net periodic benefit cost are recognized in other comprehensive income, net of tax, until they are amortized as a component of net periodic benefit cost. Actuarial gains or losses are amortized based on the corridor approach according to ASC 715 under U.S. GAAP, while they are amortized over a specified number of years under Japanese GAAP. Due mainly to the differences in the balances of actuarial gains or losses and prior service costs or benefits and in amortization methods, there are differences in the amounts of shareholders’ equity and net income between U.S. GAAP and Japanese GAAP.

Under U.S. GAAP, we enhanced the calculation of the benefit obligations by refining the anticipated future mortality rate assumption improvement in the calculation.

During the fiscal yearyears ended March 31, 2018,2019 and 2020, a subsidiary of MHFGours partially withdrew assets from employee retirement benefit trusts, which were established for the payment of employees’ severance pay and retirement pensions. Under U.S. GAAP, no gains or losses have been recognized as a consequence of this transaction.

See note 2120 to our consolidated financial statements included elsewhere in this annual report for further discussion.

9.    Consolidation of variable interest entities

Under U.S. GAAP, variable interest entities are to be consolidated if we are deemed to be the primary beneficiary of the variable interest entity. Under Japanese GAAP, consolidation is not based on variable interests. We consolidate certain variable interest entities, such as entities related to asset-backed securitizations, investments in securitization products and investment funds. See note 2524 to our consolidated financial statements included elsewhere in this annual report for further discussion.

10.    Deferred taxes

Under U.S. GAAP, all available evidence, both positive and negative, must be considered to determine whether, based on the weight of that evidence, deferred tax assets are realizable or whether a valuation allowance is needed. Possible sources of taxable income, which are considered to determine whether deferred tax assets are realizable, include net unrealized gains on
available-for-sale
securities. Under Japanese GAAP, the assessment as to whether deferred tax assets are realizable is primarily based on estimates of future taxable income.

Additionally, differences in the carrying amount of assets and liabilities between U.S. GAAP and Japanese GAAP create temporary differences that result in differences in deferred tax assets and liabilities.

11.    Foreign currency translation

Under Japanese GAAP, the income statement items of our foreign entities are translated into yen, our presentation currency, using the respective
fiscal-year-end
exchange rates, while under U.S. GAAP, they are translated into the presentation currency using the average rates of exchange for the respective fiscal years.

12.    Other

This adjustment reflects the effects of miscellaneous items.

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ITEM 6.DIRECTORS, SENIOR MANAGEMENT AND EMPLOYEES

6.A. Directors and Senior Management

Directors

Shown below areis information regarding the directors of Mizuho Financial Group as of June 30, 2018:

2020:

Name

Age

Director Type

Chair /

Deputy Chair
of the Board

Committee Membership

    

Nominating

Compensation

Audit

Risk(4)

Tatsufumi Sakai

  58  Executive(1)—  —  —  —  —  

Takanori Nishiyama

  56  Executive(1)—  —  —  —  —  

Makoto Umemiya

  53  Executive(1)—  —  —  —  —  

Yasuyuki Shibata

  55  Executive(1)
Name
 —  —  —  —  —  

Hisashi Kikuchi

Age
  52
Director Type
  Executive(1)—  —  —  —  —  

Yasuhiro Sato

Chair
of the Board
  66
Committee Membership
Nominating
  Non-executive(2)—  —  —  —  —  

Ryusuke Aya

Compensation
  58
Audit
  Non-executive(2)
Risk
(4)
 Deputy Chair—  —  MemberChair

Nobukatsu Funaki

Tatsufumi Sakai
  59
60
  Non-executive(2)—  —  —  Member—  

Tetsuo Seki

Executive
(1)
  79
—  
  Independent(3)
—  
MemberMemberChair—  

Takashi Kawamura

  78
—  
  Independent(3)
—  
ChairMember—  —  

Tatsuo Kainaka

  78
—  
Satoshi Ishii
  Independent(3)—  MemberChairMember—  

Hirotake Abe

56
  73
Executive
(1)
  Independent(3)
—  
—  MemberMember—  

Hiroko Ota

  64
—  
  Independent(3)ChairMember
—  
—  —  

Izumi Kobayashi

  59
—  
  Independent(3)
—  
Motonori Wakabayashi
 —  
55
 Member —  
Executive
(1)
 —  
—  
—  
—  
—  
—  
Makoto Umemiya
55
Executive
(1)
—  
—  
—  
—  
—  
Hiroaki Ehara
55
Executive
(1)
—  
—  
—  
—  
—  
Yasuhiro Sato
68
Non-executive
(2)
—  
—  
—  
—  
—  
Hisaaki Hirama
57
Non-executive
(2)
—  
—  
—  
Member
Chair
Tetsuo Seki
81
Independent
(3)
—  
Member
Member
Chair
—  
Tatsuo Kainaka
80
Independent
(3)
—  
Chair
Member
Member
—  
Yoshimitsu Kobayashi
73
Independent
(3)
—  
Member
—  
—  
—  
Ryoji Sato
73
Independent
(3)
—  
—  
—  
Member
—  
Masami Yamamoto
66
Independent
(3)
—  
Member
Chair
—  
—  
Izumi Kobayashi
61
Independent
(3)
Chair
Member
—  
—  
Member

Notes:

(1)Directors concurrently serving as executive officers.
(2)Directors not concurrently serving as executive officers, specialist officers, employees or executive directors of Mizuho Financial Group or its subsidiaries.
(3)Directors satisfying the requirements for outside directors, as defined in the Companies Act of Japan, and those for independent directors, as defined both by the Tokyo Stock Exchange and by Mizuho Financial Group.
(4)Risk Committee consists of the two directors and antwo outside expert,experts, who isare not a director.directors.

The directors’ current positions, key business experiences in the past and major concurrent offices (if any) are as follows:

Mr. Tatsufumi Sakai
has been Member of the Board of Directors and the President & Group CEO (Representative Executive Officer) since June 2018. Previously, he had been President & CEO of Mizuho Securities from April 2016 to April 2018; Head of International Banking Unit from April 2014 to April 2016; and Head of Investment Banking Unit from April 2013 to April 2014. He concurrently serves as Member of the Board of Directors at each of Mizuho Bank, Mizuho Trust & Banking, and Mizuho Securities.

Mr. Takanori Nishiyama Satoshi Ishii
has been Member of the Board of Directors and Senior Managing Executive Officer / Chief Digital Innovation Officer (CDIO), Head of ComplianceIT & Systems Group (Group CCO)CIO) and Head of Operations Group (Group COO) since June 2017.2019 and has been Representative Director since April 2020. Previously, he had been in chargeHead of business promotionBusiness Promotion of Mizuho Bank from April 2017 to April 2019; and Head of Human Resources Group (Group CHRO) from April 2015 to April 2017; and General Manager of Omiya Branch from April 2014 to April 2015.2017. He concurrently serves as Deputy President & Executive Managing DirectorOfficer of Mizuho Bank.

Mr. Makoto Umemiya Motonori Wakabayashi
has been Member of the Board of Directors and Senior Managing Executive Officer / Head of Risk Management Group (Group CRO) since June 2019. Previously, he had been Head of Research & Consulting Unit or in charge of similar responsibilities from April 2016 to April 2020; and in charge of business promotion of Mizuho Bank from April 2016 to April 2018. He concurrently serves as Deputy President & Executive Officer of Mizuho Bank and Mizuho Trust & Banking.
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Table of Contents
Mr. Makoto Umemiya
has been Member of the Board of Directors and Senior Managing Executive Officer / Head of Financial Control & Accounting Group (Group CFO) since June 2017. Previously, he had been General Manager of Financial Planning Department from April 2014 to April 2017; and General Manager of Osaka Branch from April 2012 to April 2014.2017. He concurrently serves as Deputy President & Executive Managing DirectorOfficer of Mizuho Bank.

Bank and Mizuho Trust & Banking.

Mr. Yasuyuki Shibata Hiroaki Ehara
has been Member of the Board of Directors and Managing Executive Officer / Head of Risk ManagementHuman Resources Group (Group CRO)CHRO) since June 2017.2019. Previously, he had been Executive Managing Director / Head of Human Resources Group and Head of Internal Audit Group of Mizuho Trust & Banking from April 2016 to April 2019; and Executive Officer, General Manager of Risk ManagementTrust Business Department from July 2016 to June 2017; and General ManagerVI of Americas Treasury DivisionMizuho Trust & Banking from April 20142015 to JulyApril 2016. He concurrently serves as Executive Managing Director of Mizuho Bank.

Mr. Hisashi Kikuchi has been Member of the Board of Directors and Managing Executive Officer / Head of Strategic Planning Group (Group CSO) since June 2018. Previously, he had been General Manager of Corporate Secretariat from April 2015 to June 2018; and General Manager of Tokyo Corporate Banking Division from July 2013 to April 2015. He concurrently serves as Executive Managing Director of Mizuho Bank.

Bank and Mizuho Trust & Banking.

Mr. Yasuhiro Sato
has been a
non-executive
Member of the Board of Directors and Chairman (
Kaicho
) since June 2018. Previously, he had been President & Group CEO from June 2011 to April 2018; and President & CEO of Mizuho Bank / the former Mizuho Corporate Bank from April 2009 to April 2014.

Note: Chairman (Kaicho) Sato engages in the company’s external activities, but does not chair the Board meetings. The Board meetings are chaired by the independent director chair Ota.

Izumi Kobayashi.

Mr. Ryusuke Aya Hisaaki Hirama
has been a
non-executive
Member of the Board of Directors since June 2017.2019. Previously, he had been anon-executive MemberHead of the Board of Directors (Audit & Supervisory Committee Member)Internal Audit Group of Mizuho Bank from JuneApril 2017 to April 2018; and Head2019; Executive Officer, General Manager of Risk Management Group (Group CRO) from November 2013 to June 2017.

Mr. Nobukatsu Funaki has been Member of the Board of Directors since June 2014. Previously, he had been Audit & Supervisory Board Member at eachNagoya Corporate Branch of Mizuho Financial Group (from June 2013Bank from April 2015 to June 2014),April 2017; and Executive Officer, General Manager of Marunouchi-Chuo Branch Division No.1 of Mizuho Securities (April 2013Bank from April 2014 to June 2014) and the former Mizuho Corporate Bank (from March 2010 to June 2013)

April 2015.

Mr. Tetsuo Seki
has been Member of the Board of Directors since June 2015. Previously, he had been Representative Director and Executive Vice President of Nippon Steel Corporation; and President (Representative Director) of theThe Shoko Chukin Bank, Ltd. He concurrently serves as Audit & Supervisory Board Member of Sapporo Holdings Limited.

Mr. Takashi Kawamura has been Member of the Board of Directors since June 2014. Previously, he had been Representative Executive Officer, Chairman, President and Chief Executive Officer and Director of Hitachi, Ltd. He concurrently serves as Outside Audit & Supervisory Board Member of Nikkei Inc.; and Chairman of the Board of Directors (Outside Director) of Tokyo Electric Power Company Holdings, Inc.

Mr. Tatsuo Kainaka

has been Member of the Board of Directors since June 2014. Previously, he had been Superintending Prosecutor of the Tokyo High Public Prosecutors Office and Justice of the Supreme Court. He concurrently serves as
Attorney-at-law
at Takusyou Sogo Law Office; President of the Life Insurance Policyholders Protection Corporation of Japan; and Corporate Auditor (External) of Oriental Land Co., Ltd.

Mr. Hirotake Abe Yoshimitsu Kobayashi
has been Member of the Board of Directors since June 2015.2020. Previously, he had been CEORepresentative Director, President of Tohmatsu & Co.Mitsubishi Chemical Holdings Corporation. He concurrently serves as Certified Public Accountant at Certified Public Accountant Hirotake Abe Office.

Ms. Hiroko OtaMember of the Board, Chairperson of Mitsubishi Chemical Holdings Corporation; Outside Director of Toshiba Corporation; and Member of the Board, Chairman of The KAITEKI Institute, Inc.

Mr. Ryoji Sato
has been Member of the Board of Directors since June 2014.2020. Previously, shehe had been MinisterCEO of State for Economic and Fiscal Policy of the Cabinet Office. SheDeloitte Touche Tohmatsu LLC. He concurrently serves as ProfessorAudit & Supervisory Board Member of National Graduate Institute for Policy Studies; OutsideNippon Life Insurance Company.
Mr. Masami Yamamoto
has been Member of the Board of Directors since June 2019. Previously, he had been Representative Director, Chairman / President of JXTG Holdings, Inc.;FUJITSU LIMITED. He concurrently serves as Director, Senior Advisor of FUJITSU LIMITED and Outside Director of Panasonic Corporation.

JFE Holdings, Inc.

Ms. Izumi Kobayashi
has been Member of the Board of Directors since June 2017. Previously, she had been President and Representative Director of Merrill Lynch Japan Securities Co., Ltd.; and Executive Vice

President of the Multilateral Investment Guarantee Agency of the World Bank Group. She concurrently serves as Outside Director of ANA HOLDINGS INC.; Outside Director of MitsuiMITSUI & Co.CO., Ltd.LTD.; and MemberOutside Director of the BoardOMRON Corporation.

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Table of Governors of Japan Broadcasting Corporation.

Contents

Executive Officers

Shown below are information regarding the executive officers of Mizuho Financial Group as of June 30, 2018:

2020:

Name

Age  

Title

Area of Oversight

Tatsufumi Sakai(1)

  58
Name
Age
  President & Group CEO(2)
Title
 
Area of Oversight

Toshitsugu Okabe

Tatsufumi Sakai
(1)
  62
60
  Deputy
President & Executive OfficerCEO
(2)
 Head
Chief Executive Officer of Retail & Business Banking CompanyMizuho group
(Group CEO)

Daisaku Abe

Seiji Imai
  61
58
  Deputy President &
Senior Managing Executive Officer
(2)
 

Head of Corporate & Institutional Company /
Head of Global Products Unit
Satoshi Ishii
(1)
56
Senior Managing Executive Officer
(2)
Chief Digital Innovation Officer (CDIO),
Head of IT & Systems Group (Group CIO) and

Head of Operations Group (Group COO)

Junichi Kato

Masahiro Otsuka
  60
58
  
Senior Managing Executive Officer
 
Head of Global MarketsRetail & Business Banking Company

Katsunobu Motohashi

Naofumi Fuke
  60
62
  
Senior Managing Executive Officer
 Head
Co-Head
of Asset ManagementRetail & Business Banking Company

Akira Nakamura

Hiroshi Nagamine
  57
56
  
Senior Managing Executive Officer
 Head of Corporate & Institutional Company

Seiji Imai

56Senior Managing Executive Officer
Head of Global Corporate Company

Tsutomu Nomura

59Managing Executive OfficerHead of Internal Audit Group (Group CA)

Takanori Nishiyama(1)

56Managing Executive OfficerHead of Compliance Group (Group CCO)

Motonori Wakabayashi

53Managing Executive OfficerHead of Research & Consulting Unit

Goji Fujishiro

53Managing Executive Officer / Deputy Head of Global Products Unit

Shuji Kojima

Motonori Wakabayashi
(1)
  53
55
  
Senior Managing Executive Officer
 
Head of Human ResourcesRisk Management Group (Group CHRO)CRO)

Makoto Umemiya
(1)

  53
55
  
Senior Managing Executive Officer
 
Head of Financial Control & Accounting Group (Group CFO)

Yasuyuki Shibata(1)

Hisashi Kikuchi
  55
54
  
Managing Executive Officer
 
Head of Risk ManagementInternal Audit Group (Group CRO)CA)

Hisashi Kikuchi

Hiroaki Ehara
(1)

  52
55
  
Managing Executive Officer
 
Head of Human Resources Group (Group CHRO)
Masatoshi Yoshihara
57
Managing Executive Officer
Co-Head
of Global Markets Company
Yasuhiro Shibata
56
Managing Executive Officer
Co-Head
of Global Markets Company
Masamichi Ishikawa
56
Managing Executive Officer
Head of Asset Management Company / In charge of Specific Business of Strategic Planning Group
Yasuhiko Ushikubo
53
Managing Executive Officer
Head of Research & Consulting Unit
Naoshi Inomata
53
Managing Executive Officer
Head of Strategic Planning Group (Group CSO) / In charge of Specially Assigned Matters
Masaomi Takada
53
Managing Executive Officer
Head of Compliance Group (Group CCO)

Notes:

(1)Executive officers concurrently serving as directors.
(2)Representative Executive Officer.

The executive officers’ current positions, key business experiences in the past and major concurrent offices (if any) are as follows:

For information on
Messrs. Tatsufumi Sakai, Takanori Nishiyama,Satoshi Ishii, Motonori Wakabayashi, Makoto Umemiya, Yasuyuki Shibata and Hisashi Kikuchi, Hiroaki Ehara,
see “—Directors.”

Mr. Toshitsugu Okabe Seiji Imai
has been Deputy PresidentSenior Managing Executive Officer (Representative Executive Officer) / Head of Corporate & Institutional Company and Head of Global Products Unit since April 2020. Previously, he had been Head of Global Corporate Company from April 2018 to April 2020; Head of Asia & Oceania from April 2016 to April 2018; and Executive Officer, General Manager of Seoul Branch of Mizuho Bank from April 2014 to April 2016.
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Mr. Masahiro Otsuka
has been Senior Managing Executive Officer / Head of Retail & Business Banking Company since April 2016.2019. Previously, he had been Deputy President of Mizuho Research Institute Ltd. from May 2017 to April 2019; Deputy Head of Retail & Business Banking UnitCompany or in charge of similar responsibilities from April 20092015 to April 2016.

2017; and General Manager of Retail Banking Coordination Division from April 2012 to April 2015.

Mr. Daisaku Abe Naofumi Fuke
has been Deputy President &Senior Managing Executive Officer / Head
Co-Head
of ITRetail & Systems Group (Group CIO)Business Banking Company since April 2020 and Head of Operations Group (Group COO) since April 2013. Previously, he had beenRetail & Business Banking Division of Mizuho Securities or in charge of similar responsibilities since May 2016. Previously, he had been Chairman (Representative Director) of Nikko Systems Solutions, Ltd. from April 20092014 to April 2013;2016; and HeadSenior Executive Managing Director of Strategic Planning GroupNikko Cordial Securities Inc. / SMBC Nikko Securities Inc. from April 2009December 2008 to April 2012.2014. He concurrently serves as Deputy President & Executive Officer of Mizuho Bank.

Securities.

Mr. Junichi Kato has been Senior Managing Executive Officer / Head of Global Markets Company since April 2016. Previously, he had been in charge of similar responsibilities from April 2009 to April 2016; and President & CEO of Mizuho Bank (Switzerland), Ltd.

Mr. Katsunobu Motohashi has been Senior Managing Executive Officer / Head of Asset Management Company since April 2016. Previously, he had been in charge of similar responsibilities from April 2010 to April 2016; and General Manager of Treasury Department of Mizuho Trust & Banking from April 2007 to April 2010. He concurrently serves as Senior Managing Executive Officer of Mizuho Bank.

Mr. Akira Nakamura has been Senior Managing Executive Officer / Head of Corporate & Institutional Company since April 2018. Previously, he had been in charge of similar responsibilities from April 2016 to April 2018; and Head of Telecom Media Technology Group and in charge of Investment Banking Business of Mizuho Securities from April 2015 to April 2016. He concurrently serves as Senior Managing Executive Officer of Mizuho Bank.

Mr. Seiji Imai Hiroshi Nagamine

has been Senior Managing Executive Officer / Head of Global Corporate Company / Deputy Head of Global Products Unit since April 2018.May 2020. Previously, he had been Head of Asia & OceaniaEurope, Middle East and Africa or in charge of similar responsibilities from April 2016 to April 2018;May 2020; and General Manager of Seoul BranchCorporate Banking Division No.13 of Mizuho Bank from April 2014 to April 2016. He concurrently serves as Senior Managing Executive Officer of Mizuho Bank.

Mr. Tsutomu Nomura Hisashi Kikuchi
has been Managing Executive Officer / Head of Internal Audit Group (Group CA) since April 2017.2020. Previously, he had beenCo-head Head of CreditStrategic Planning Group (Group CSO) from April 2018 to April 2020; Member of the Board of Directors from June 2018 to June 2019; and General Manager of Corporate Secretariat from April 2015 to June 2018. He concurrently serves as Member of the Board of Directors (Audit & Supervisory Committee Member) of Mizuho Bank, Mizuho Trust & Banking and Mizuho Securities.
Mr. Masatoshi Yoshihara
has been Managing Executive Officer /
Co-Head
of Global Markets Company since April 2020. Previously, he had been Deputy Head of Global Markets Company or in charge of similar responsibilities; and Executive Officer, General Manager of International Treasury Division of Mizuho Bank.
Mr. Yasuhiro Shibata
has been Managing Executive Officer /
Co-Head
of Global Markets Company since April 2020. Previously, he had been Head of Global Markets Division of Mizuho Securities from April 2019 to April 2020; Deputy President of Mizuho Securities USA LLC from December 2017 to April 2019; and
Co-Head
of Fixed Income Business Division of Mizuho Securities from April 2016 to December 2017. He concurrently serves as Managing Executive Officer of Mizuho Bank.
Mr. Masamichi Ishikawa
has been Managing Executive Officer / Head of Asset Management Company since April 2020. Previously, he had been Director, Managing Executive Officer of Asset Management One Co., Ltd. from October 2016 to April 2020; and General Manager of Asset Management Coordination Division or in charge of similar responsibilities from April 20142015 to April 2017.

October 2016. He concurrently serves as Managing Executive Officer of Mizuho Bank.

Mr. Motonori Wakabayashi Yasuhiko Ushikubo
has been Managing Executive Officer / Head of Research & Consulting Unit since April 2018.2020. Previously, he had been in chargeDeputy Head of similar responsibilities and business promotionResearch & Consulting Unit from April 20162019 to April 2018;2020; and General Manager of Industry Research DivisionDepartment from April 20132016 to April 2016.2019. He concurrently serves as Managing Executive Officer of Mizuho Bank.

Bank and President & CEO of Mizuho Research Institute Ltd.

Mr. Goji Fujishiro Naoshi Inomata
has been Managing Executive Officer / Head of Global Products UnitStrategic Planning Group (Group CSO) since April 2018. Previously, he had been in2020 and In charge of business promotion fromSpecially Assigned Matters since April 2016 to April 2018; and General Manager of Executive Secretariat from April 2014 to April 2016.2019. He concurrently serves as Managing Executive Officer of Mizuho Bank.

Bank and Mizuho Trust & Banking.

Mr. Shuji Kojima Masaomi
Takada has been Managing Executive Officer / Head of Human ResourcesCompliance Group (Group CHRO)CCO) since April 2017.2020. Previously, he had been Deputy HeadGeneral Manager of Internal Audit Group or in charge of similar responsibilitiesExecutive Secretariat from April 2016 to April 2017; and General Manager of Compliance Division from November 2013 to April 2016.2020. He concurrently serves as Managing Executive Officer of Mizuho Bank.

Bank and Mizuho Trust & Banking.

No family relationship exists among any of the directors and executive officers.

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6.B. Compensation

Mizuho Financial Group transformed from a Company with Audit & Supervisory Board into a Company with Three Committees on June 24, 2014. The following provides information before and after the transformation.

Before the transformation, in accordance with the Companies Act, as a Company with Audit & Supervisory Board, compensation for directors and audit & supervisory board members, including bonuses, retirement allowances and incentive stock options, needed to be approved at general meetings of shareholders, as the articles

of incorporation did not specify otherwise. The shareholders’ approval specified the upper limit of the aggregate amount of compensation and included the description of benefits in kind. Compensation for a director or audit & supervisory board member was fixed by the Board of Directors or by consultation among audit & supervisory board members in accordance with Mizuho Financial Group’s internal regulations and practice and, in the case of retirement allowances, generally reflected the position of the director or audit & supervisory board member at the time of retirement, the length of his service as a director or audit & supervisory board member and his contribution to the company’s performance.

After the transformation, in accordance with the Companies Act, as a Company with Three Committees, compensation for each individual director and executive officer as defined in the Companies Act, including bonuses, retirement allowances, incentive stock options, performance payments and stock compensation, needs to be determined at the Compensation Committee, which is required to consist of at least three directors and the majority of which is required to consist of outside directors. See “Item 6. C. Board Practices” for more information regarding Mizuho Financial Group’s corporate governance.

The aggregate compensation paid by Mizuho Financial Group and its subsidiaries to the directors and executive officers as defined in the Companies Act of Mizuho Financial Group for the fiscal years ended March 31, 20182020 (basic salaries, stock compensation I (paid or expected to be paid at the time of retirement) and others) and March 31, 20172019 (performance payments and stock compensation II paid or determined during the following fiscal year)term in office) are shown on the following table:

Classification

 Number of
Persons
(Note 2)		  Aggregate
Amount of
Compensation
(in millions of
yen)
(Note 3)		  Aggregate Amounts of Compensation by Type (in millions of yen) 
   For the fiscal year ended
March 31, 2018		  For the fiscal year ended
March 31, 2017		 
   Basic Salaries  Other  Performance
Payments		  Stock
Compensation		 
   Number
of
Persons		  Amount  Number
of
Persons		  Amount  Number
of
Persons		  Amount  Number
of
Persons		  Amount 

Directors

  10   289   10   270   8   0   1   9   1   9 

Executive officers as defined in the Companies Act

  19   1,299   19   827   19   1   19   236   19   234 

                                                 
Classification
 
Number of
Persons
(Note 2)
  
Aggregate
Amount of
Compensation
(in millions of
yen)
(Note 3)
  
Aggregate Amounts of Compensation by Type (in millions of yen)
 
For the fiscal year ended
March 31, 2020
  
For the fiscal year ended
March 31, 2019
 
Basic Salaries
  
Stock
Compensation I
(paid or
expected to be
paid at the time
of retirement)
  
Other
  
Performance
Payments
  
Stock
Compensation II
(paid during the
term in office)
 
Number
of
Persons
  
Amount
  
Number
of
Persons
  
Amount
  
Number
of
Persons
  
Amount
  
Number
of
Persons
  
Amount
  
Number
of
Persons
  
Amount
 
Directors
  
12
   
302
   
12
   
263
   
9
   
38
   
12
   
0
   
—  
   
—  
   
—  
   
—  
 
Executive officers as defined in the Companies Act
  
16
   
588
   
12
   
410
   
12
   
106
   
12
   
0
   
11
   
34
   
11
   
36
 
Notes:

(1)Fractions are rounded down.
(2)With respect to the number of persons, the directors and executive officers as defined in the Companies Act who were actually paid or expected to be paid for the fiscal years ended March 31, 20172019 and 20182020 are stated.
(3)With respect to the amounts, the aggregate amounts paid or expected to be paid for the fiscal years ended March 31, 20172019 and 20182020 are stated.
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(4)The aggregate compensation paid to directors who concurrently serve as executive officers as defined in the Companies Act is included in the above table as those of “Executive officers as defined in the Companies Act.”
(5)FiveThree executive officers who resigned as of April 1, 2017, two directors who retired as of June 23, 2017 and one executive officerdefined in the Companies Act who resigned as of June 23, 201721, 2019 are included in the above.number of executive officers in the “Basic Salaries” and “Other” columns for the fiscal year ended March 31, 2020. Four executive officers as defined in the Comapnies Act who retired as of April 1, 2019 are included in the number of executive officers in the “Performance Payments” and “Stock Compensation II” columns for the fiscal year ended March 31, 2019.
(6)With respect to the performance paymentsStock Compensation I for the executive officers, the amounts decided by the Compensation Committee of Mizuho Financial Group in July 2017 as the performance payments for the fiscal year ended March 31, 2017 are stated. The portions that exceed a certain amount are expected to be paid as deferred payments over three years from the fiscal year ending March 31, 2019.
(7)

With respect to the stock compensation for the directors (excluding the outside directors) and the executive officers as defined in the Companies Act, the amounts given are obtained by multiplying the stock ownership points granted by the Compensation Committee of Mizuho Financial Group in July 20172019 based on each position, as the stock ownership points granted for the fiscal year ended March 31, 20172020 (one (1) point translates into one (1) share of common stock of Mizuho Financial

Group) by the book value of Mizuho Financial Group stock (196.9447(¥158.2734 per share) are stated. .

(7)The stock compensation forcondolence money premiums subsidies concerning the fiscal year ended March 31, 2017 is expected to be paid2020 are included in the above table as deferred payments over three years from“Other,” both of which are based on the fiscal year ending March 31, 2019.

decision by the Compensation Committee.
(8)Because the amount of the performance payments and stock compensation II to be paid with respect to the fiscal year ended March 31, 20182020 has not yet been determined at present, the aggregate compensation above does not include the amount of thesuch performance payments and stock compensation;compensation II; however, the necessary reserve is recorded for accounting purposes.
(9)The condolence money premiumsmetric for such performance payments and life insurance premiums subsidies concerningstock compensation II for the fiscal year ended March 31, 2018 are included2020 was our consolidated net business profits and net gains or losses related to ETFs and others. The target amount and result of such metric were ¥600 billion and ¥672.5 billion, respectively.
(9)With respect to the performance payments for executive officers as defined in the above table as “Other”, both of which are based onCompanies Act, the decisionamounts decided by the Compensation Committee.Committee of Mizuho Financial Group in July 2019 as the performance payments for the fiscal year ended March 31, 2019 are stated.

(10)With respect to the Stock Compensation II for the executive officers as defined in the Companies Act, the amounts given are obtained by multiplying the stock ownership points granted by the Compensation Committee of Mizuho Financial Group in July 2019 based on each position and performance, as the stock ownership points granted for the fiscal year ended March 31, 2019 by the book value of Mizuho Financial Group stock (¥158.2734 per share). Stock Compensation for the fiscal year 2018 is expected to be paid as deferred payments over three years from the fiscal year 2020.
Listed companies in Japan are required under Cabinet Office Ordinance on Disclosure of Corporate Affairs, etc., to disclose the compensation provided to their directors, audit & supervisory board members and executive officers as defined in the Companies Act for the relevant fiscal year if the aggregate annual compensation per the director / audit & supervisory board member / executive officer as defined in the Companies Act equals or exceeds ¥100 million (including any compensation provided by major subsidiaries of such listed company as directors and audit & supervisory board members of such subsidiaries). The following table sets forthNone of our directors, audit & supervisory board members and executive officers as defined in the relevant informationCompanies Act received compensation that Mizuho Financial Group has disclosed pursuant to such regulations:

      Aggregate Amounts of Compensation by Type (in millions of yen)
  Aggregate
Amount of
Compensation
(in millions of yen)		   For the fiscal year ended
March 31, 2018		 For the fiscal year ended
March 31, 2017

Name

(Classification)

  

Company

 Basic
Salary		 Other Performance
Payments		 Stock
Compensation

 

Yasuhiro Sato (Executive officer as defined in the Companies Act)

 126 

 

Mizuho Financial Group

 69 0 22 22
  

Mizuho Bank

 3 —   1 1
  

Mizuho Trust & Banking

 1 —   0 0
  

Mizuho Securities

 2 —   0 0

Note:

(1)Fractions are rounded down.

equaled or exceeded the foregoing amount in the fiscal year ended March 31, 2020.

Mizuho Financial Group and some of its subsidiaries, including the former Mizuho Bank and the former Mizuho Corporate Bank, abolished their respective retirement allowance programs for directors, audit & supervisory board members and officers. At the ordinary general meeting of shareholders held in June 2008, Mizuho Financial Group and such subsidiaries obtained shareholders’ approval for a payment of lump sum retirement allowances for directors and audit & supervisory board members (other than those elected after such shareholders’ meeting) at the time of their respective retirement.

In conjunction with the abolishment of the retirement allowance program, Mizuho Financial Group obtained shareholders’ approval for the introduction of stock acquisition rights for directors (excluding outside directors) at the ordinary general meeting of shareholders held on June 26, 2008. On January 30, 2009, the Board of
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Directors resolved to issue stock acquisition rights to directors and executive officers and subsequently allotted an aggregate of 5,409 stock acquisition rights on February 16, 2009. As the directors of Mizuho Financial Group, the directors received 435 stock acquisition rights. Each stock acquisition right represents a right to purchase 1,000 shares of the common stock at ¥1 per share of common stock. The period during which the stock acquisition rights may be exercised shall be until February 16, 2029. Their exercise is conditioned on the holder losing his or her status as director or executive officer. The book value of each stock acquisition right was ¥190,910 as of March 31, 2018.

2020.

On September 3, 2009, the Board of Directors resolved to issue stock acquisition rights to directors and executive officers and subsequently allotted an aggregate of 5,835 stock acquisition rights on September 25, 2009. As the directors of Mizuho Financial Group, the directors received 500 stock acquisition rights. Each stock acquisition right represents a right to purchase 1,000 shares of the common stock at ¥1 per share of common stock. The period during which the stock acquisition rights may be exercised shall be until September 25, 2029. Their exercise is conditioned on the holder losing his or her status as director or executive officer. The book value of each stock acquisition right was ¥168,690 as of March 31, 2018.

2020.

On July 30, 2010, the Board of Directors resolved to issue stock acquisition rights to directors and executive officers and subsequently allotted an aggregate of 6,808 stock acquisition rights on August 26, 2010. As the directors of Mizuho Financial Group, the directors received 500 stock acquisition rights. Each stock acquisition right represents a right to purchase 1,000 shares of the common stock at ¥1 per share of common stock. The period during which the stock acquisition rights may be exercised shall be until August 26, 2030. Their exercise is conditioned on the holder losing his or her status as director or executive officer. The book value of each stock acquisition right was ¥119,520 as of March 31, 2018.

2020.

On November 18, 2011, the Board of Directors resolved to issue stock acquisition rights to directors and executive officers, and subsequently allotted an aggregate of 12,452 stock acquisition rights on December 8, 2011. As the directors of Mizuho Financial Group, the directors received 500 stock acquisition rights. Each stock acquisition right represents a right to purchase 1,000 shares of the common stock at ¥1 per share of common stock. The period during which the stock acquisition rights may be exercised shall be until December 8, 2031. Their exercise is conditioned on the holder losing his or her status as director or executive officer. The book value of each stock acquisition right was ¥91,840 as of March 31, 2018.

2020.

On July 31, 2012, the Board of Directors resolved to issue stock acquisition rights to directors and executive officers, and subsequently allotted an aggregate of 11,776 stock acquisition rights on August 31, 2012. As the directors of Mizuho Financial Group, the directors received 498 stock acquisition rights. Each stock acquisition right represents a right to purchase 1,000 shares of the common stock at ¥1 per share of common stock. The period during which the stock acquisition rights may be exercised shall be until August 31, 2032. Their exercise is conditioned on the holder losing his or her status as director or executive officer. The book value of each stock acquisition right was ¥113,250 as of March 31, 2018.

2020.

On January 31, 2014, the Board of Directors resolved to issue stock acquisition rights to directors and executive officers, and subsequently allotted an aggregate of 7,932 stock acquisition rights on February 17, 2014. As the directors of Mizuho Financial Group, the directors received 184 stock acquisition rights. Each stock acquisition right represents a right to purchase 1,000 shares of the common stock at ¥1 per share of common stock. The period during which the stock acquisition rights may be exercised shall be until February 17, 2034. Their exercise is conditioned on the holder losing his or her status as director or executive officer. The book value of each stock acquisition right was ¥192,610 as of March 31, 2018.

2020.

On May 14, 2014, the Board of Directors determined to delegate to the President & CEO the authority to determine to issue stock acquisition rights to directors and executive officers, provided that Mizuho Financial Group would transform from a Company with Audit & Supervisory Board into a Company with Three Committees. Later, on June 24, 2014, the transformation was approved at the ordinary general meeting of shareholders.

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On November 14, 2014, the President & CEO determined to issue stock acquisition rights to directors and executive officers and subsequently allotted an aggregate of 9,602 stock acquisition rights on December 1, 2014. As the directors of Mizuho Financial Group, the directors received 126 stock acquisition rights. Each stock acquisition right represents a right to purchase 1,000 shares of the common stock at ¥1 per share of common stock. The period during which the stock acquisition rights may be exercised shall be until December 1, 2034. Their exercise is conditioned on the holder losing his or her status as director or executive officer. The book value of each stock acquisition right was ¥186,990 as of March 31, 2018.

2020.

Mizuho Financial Group’s Compensation Committee resolved, at the meeting held on May 15, 2015, to discontinue the incentive stock option program along with the introduction of performance payments and stock compensation for directors and officers. In addition, the Compensation Committee resolved, at the meeting held on June 14, 2018, to amend the compensation system in order to further clarify the linkage between business performance and compensation. For further information on the current compensation system, including performance payments and stock compensation, see “Mizuho Financial Group Compensation Policy” below.

“Mizuho Financial Group Compensation Policy”

Mizuho Financial Group set out the “Mizuho Financial Group Compensation Policy” concerning the determination of compensation for each individual director, executive officer and specialist officer (“Officers, etc.”) of Mizuho Financial Group as well as Mizuho Bank, Mizuho Trust & Banking and Mizuho Securities (“Three Core Companies”).

Philosophy and Objectives

Executive compensation for Mizuho Financial Group and the Three Core Companies pursuant to such policy is determined based on appropriate governance and control, and aims to function as incentive and compensation for each Officer, etc., to exercise their designated function to the fullest in our efforts to realize management that contributes to value creation for various stakeholders and improve corporate value through continuous and stable corporate growth based on our basic management policies under our Corporate Identity.

Basic Policy

The basic policy with respect to the determination concerning the individual compensation of Officers, etc., of Mizuho Financial Group and the Three Core Companies is set forth below:

 1)The executive compensation shall be determined based on appropriate governance and control, and function as an appropriate incentive in order to realize management that contributes to value creation for various stakeholders and improve corporate value through continuous and stable corporate growth based on our basic management policies under our Corporate Philosophy.

 2)The executive compensation shall be based on the function and responsibility assigned to and the performance of each Officer, etc.

 3)The executive compensation shall contribute to suppressing excessive risk-taking, improving corporate value and creating value for various stakeholders not only in the short-term, but also over the medium- to long-term.

 4)The executive compensation shall reflect the management environment and business performance of our group.

 5)The executive compensation shall enable compensation for securing expert personnel such as professionals with a competitive edge in the market.

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 6)The compensation system and standards shall be timely and appropriately reevaluated and set at a competitive and appropriate standard based on such factors as the economic and social conditions and survey data with respect to management compensation provided by external specialized organizations.

 7)Regulations and guidelines, etc., concerning executive compensation, both in Japan and overseas, shall be complied with.

Compensation System

Compensation for Officers, etc., shall, in principle, consist of a “Basic Salary,” “Performance Payment” and “Stock Compensation.”

 1)“Basic Salaries” shall factor in the function and responsibility of each Officer, etc., in addition to the standard amount for each position and payment will be made monthly in cash.

 2)“Performance Payments” shall be made as a monetary incentive for Officers, etc., to achieve the annual budget and as compensation for their achievement. The payment thereof shall reflect our group-wide results of operations, the results of organizations (our
in-house
companies and units, etc.) that each Officer, etc., is in charge of and the performance orof each Officer, etc., in addition to the standard amount for each position. A system shall be adopted which, based on resolution by the Compensation Committee, etc., enables certain amount of deferred payments of the performance payments over three years, as well as a decrease or forfeiture of the deferred amount depending on performance, etc., of the company or the individual.

 3)“Stock Compensation” shall be paid in the form of shares of common stock of Mizuho Financial Group consisting of “Stock Compensation I” and “Stock Compensation II,” (together “Stock Compensation I and II”) acquired from the stock market through a trust with an aim to align the interests of Officers, etc., with those of the shareholders and increase the incentive to enhance corporate value.

 (a)“Stock Compensation I” shall be paid at the time of retirement of each Officer, etc., in the form of shares of common stock of Mizuho Financial Group calculated based on each position. A system shall be adopted which enables a decrease or forfeiture of the amount by resolution of the Compensation Committee, etc., depending on performance of the company or the individual.

 (b)“Stock Compensation II” shall be paid in accordance with the status of achieving our group-wide results of operations, the results of organizations (ourin-house companies and units, etc.) that each Officer, etc., is in charge of and the performance of each Officer, etc.,Five-Year Business Plan in addition to the standard amount for each position. A system shall be adopted which enables the entire amount of deferred payments over three years, as well as a decrease or forfeiture of the deferred amount by resolution of the Compensation Committee, etc., depending on performance of the company or the individual.

Among the Officers, etc., the compensation system for the directors, the executive officers as defined in the Companies Act, the executive officers as defined in our internal regulations and the specialist officers responsible for business execution (the “Officers Responsible for Business Execution”) shall be separate from the compensation system for the directors responsible for management supervision
(“Non-Executive
Officers Responsible for Management Supervision”).

 1)The basic compensation system for Officers Responsible for Business Execution shall be a “Basic Salary,” “Performance Payment” and “Stock Compensation I and II.”

 (a)The composition of the compensation shall, in principle, be 50%, 17.5% and 32.5% for “Basic Salary,” “Performance Payment” and “Stock Compensation I and II” respectively.

 (b)The upper limit of “Performance“Performance Payment” and “Stock Compensation II” shall be decided* in accordance with our annual group-wide results of our operations taking into account the traits of our business activities as a Financial Services Group. The payment to each officer shall reflect the performance of each officer and the results of organizations (ourin-house companies and units, etc.) that each Officer, etc., is in charge of, and be,paid, in principle, within the range of 0% to 150%170% of the standard amount for each position.

*The amount of funds for “Performance Payment” and “Stock Compensation II” is decided for each fiscal year by multiplying the standard amount for each position in a respective year with the total number of officers in that year and a coefficient based on the result from the fiscal year’s

results of operations. The evaluation metric for this coefficient is decided by setting metrics based on our Consolidated Net Business Profits, and using such evaluation metrics for the reference year and the current fiscal year (provided that, for Mizuho Securities Co., Ltd., the system is linked to Ordinary Income, which is a metric that is equivalent to Consolidated Net Business Profits based on the traits of business activities and financial structure of securities companies).

(c)“Stock Compensation II” shall be paid, in principle, within the range of 0% to 130% of the standard amount for each position.
 2)The compensation for
Non-Executive
Officers Responsible for Management Supervision, in principle, shall be in the form of fixed compensation from the perspective of ensuring the effectiveness of the
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supervisory function. The compensation system shall consist of “Basic Salaries” and “Stock Compensation” and the composition shall, in principle, be 85% and 15% for “Basic Salaries” and “Stock Compensation,” respectively.

There are cases where compensation for some personnel, including those officers recruited locally in countries other than Japan, may be designed individually in compliance with local compensation regulations while taking into consideration local compensation practices and the responsibilities, business characteristics and market value, etc., of each respective officer. For cases where compensation is designed individually, payment of compensation is also made in accordance with the performance of the company or the individual. Payment of compensation is designed to avoid excessive risk-taking through a system which enables certain amount or a portion of deferred payments and
non-monetary
payments such as stock, as well as a decrease or forfeiture of the deferred amount depending on the performance, etc., of the company or the individual.

Compensation Determination Process

The Compensation Committee shall determine the determination policy of executive compensation for Mizuho Financial Group and the Three Core Companies and the executive compensation system including the compensation system set out in “Compensation System” in order to effectively secure the transparency and objectivity of compensation, etc., for individual Officers, etc. In addition, the Compensation Committee shall determine the compensation for each individual director and executive officer as defined in the Companies Act of Mizuho Financial Group; and approve at Mizuho Financial Group the compensation of each individual director of the Three Core Companies.

The President & CEO, pursuant to this policy and regulations and detailed rules, etc., shall determine the compensation for each executive officer as defined in our internal regulations and specialist officer of Mizuho Financial Group; and approve at Mizuho Financial Group the compensation of each individual executive officer and specialist officer of the Three Core Companies.

The Compensation Committee shall verify the validity of the compensation system and standards based on economic and social conditions and survey data with respect to management compensation provided by external specialized organizations.

All members of the Compensation Committee shall be in principle appointed from among outside directors (or at least
non-executive
directors) and the Chairman thereof shall be an outside director.

The Compensation Committee may have officers who are not members of the committee (including officers of the Three Core Companies) such as the President & CEO and external experts, etc., attend its meetings and provide their opinion in order to facilitate adequate and appropriate discussions and determinations.

Revision and Abolishment of the Policy

Revision and abolishment of the Policy shall be resolved by the Compensation Committee of Mizuho Financial Group.

6.C. Board Practices

Under the Companies Act, Companies with Three Committees are required to establish a nominating committee, a compensation committee and an audit committee and the majority of the respective committee members must be outside directors, as defined under the Companies Act. Such companies are also required to appoint executive officers under the Companies Act.

Mizuho Financial Group transformed into a Company with Three Committees from a Company with Audit & Supervisory Board in June 2014. The company believesWe believe that, under the current legal system, a Company with Three
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Committees is the most effective as a system to realize the basic policy regarding our corporate governance system for the following reasons:

To allow executive officers to make swift and flexible decisions on business execution delegated by the Board of Directors and to implement business execution, and to allow the Board of Directors to focus on determining matters such as basic management policies and effectively supervising management.

To secure to the fullest extent possible a checks and balances function that fully utilizes the viewpoints of outside parties and objectively secure appropriateness and fairness in decision-making through members of the Nominating Committee, the Compensation Committee and the Audit Committee, which consist mainly of outside directors.

To make possible the creation of systems that are necessary to realize the fundamental perspectives regarding our corporate governance in a form that takes into account what we aim to be and our challenges.

To be in line with governance systems that are required globally with a strong recognition that we operate globally and are in a position in which we should play a leading role in the industry as a financial group that is a
G-SIFI
to continue constructing an even stronger governance system that will agilely respond to domestic and global structural changes and overcome a highly competitive environment; and as a result, to allow us to fulfill our social role and mission, which is to realize continuous and stable corporate growth and improved corporate value and shareholder interests and contribute to domestic and global economic and industrial development and prosperity of society, in response to the demands of our stakeholders.

Pursuant to its articles of incorporation, Mizuho Financial Group has established general meetings of shareholders, individual directors, the Board of Directors, the Nominating Committee, the Compensation Committee, the Audit Committee and an independent accounting auditor as the primary components of its corporate governance system.

Board of Directors

Under the Companies Act, directors are elected by resolution of the general meetings of shareholders, and their term of office ends at the close of the ordinary general meeting of shareholders relating to the fiscal year ending within a year following their appointment.

In addition, under the Companies Act, the duties of the board of directors include making decisions on business execution and supervision of the execution of duties of directors and executive officers, and by its resolution, it may delegate making decisions on business execution (excluding certain specified matters) to the executive officers.

The main roles of the Board of Directors are making decisions on business execution such as basic management policies, which are legally matters to be determined solely by the Board of Directors, and supervising the execution of duties by directors and executive officers. In order to fulfill the roles mentioned above, the Board of Directors shall appropriately establish and supervise the operation of the internal control

systems (regarding matters such as risk management, compliance and internal auditing) and risk governance systems of our group. The Board of Directors shall, in principle, delegate to the President & CEO, who is also the Group CEO, decisions on business execution (excluding matters that are legally required to be determined solely by the Board of Directors), for the purpose of realizing swift and flexible decision-making and expeditious corporate management and strengthening the supervision of directors and executive officers by the Board of Directors.

Pursuant to the articles of incorporation, Mizuho Financial Group has no more than 15 directors anddirectors. Mizuho Financial Group maintains the following structure in order to manage the Board of Directors in an effective and
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stable manner. In light of the role of the Board of Directors to supervise management, (i) outside directors and internal directors who do not concurrently serve as persons performing executive roles (“Internal
Non-Executive
Directors,” and together with outside directors,
“Non-Executive
Directors”) comprise a majority of the directors in the Board of Directors and (ii) at least a third of the members of the Board of Directors are outside directors. Currently, the Board of Directors consists of a total of 1413 directors (six outside directors, threetwo Internal
Non-Executive
Directors and five directors concurrently serving as executive officers).

The Chairman of the Board of Directors shall, in principle, be an outside director (or at least a
Non-Executive
Director) in light of the role of the Board of Directors to supervise management. Currently, Ms. Hiroko OtaIzumi Kobayashi serves as the Chairman of the Board of Directors.

The Board of Directors held 10 meetings in the fiscal year ended March 31, 2020. In particular, the Board had discussions for the progress of the
5-Year
Business Plan and our sustainability initiatives. The average attendance rate was 100%.
Nominating Committee

Under the Companies Act, the nominating committee is required to consist of at least three directors, and the majority of its members is required to consist of outside directors. The duties of the nominating committee include the determination of the contents of proposals regarding the appointment and dismissal of directors to be submitted to the general meetings of shareholders.

The main roles of the Nominating Committee of Mizuho Financial Group are determining the contents of proposals regarding the appointment and dismissal of directors of Mizuho Financial Group to be submitted to the general meetings of shareholders, exercising the approval rights held by Mizuho Financial Group with respect to the appointment and dismissal of directors of each of Mizuho Bank, Mizuho Trust & Banking and Mizuho Securities (the “Threethe Three Core Companies”),Companies, and exercising the approval rights held by Mizuho Financial Group with respect to the appointment and removal of representative directors and senior directors of the Three Core Companies. For your reference, succession planning is also deliberated by the Nominating Committee.

The Chairman of the Nominating Committee shall be an outside director, and in principle its members shall be appointed from among outside directors (or at least
Non-Executive
Directors) in order to ensure objectivity and transparency in the appointment of directors. Currently, all members of the Nominating Committee, including the Chairman, are outside directors. As of June 22, 2018,25, 2020, the members of the Nominating Committee are Mr. Takashi KawamuraTatsuo Kainaka (Chairman), Mr. Tetsuo Seki, Mr. Tatsuo Kainaka, Ms. Hiroko OtaYoshimitsu Kobayashi, Mr. Masami Yamamoto and Ms. Izumi Kobayashi.

The Nominating Committee held 10 meetings in the fiscal year ended March 31, 2020. In particular, the Committee received reports on the status of formulation and operation of the succession plan as well as the human resources development and had discussions on director nomination and appointment for the fiscal year ending March 31, 2021 at Mizuho Financial Group and the Three Core Companies. The average attendance rate was 100%.
Compensation Committee

Under the Companies Act, the compensation committee is required to consist of at least three directors, and the majority of its members is required to consist of outside directors. The duties of the compensation committee include the determination of the compensation for each individual director and executive officer.

The main roles of the Compensation Committee of Mizuho Financial Group are determining the compensation for each individual director and executive officer of Mizuho Financial Group, exercising the approval rights held by Mizuho Financial Group regarding compensation of each individual director of the Three Core Companies, and determining the basic policies and compensation system for directors and executive officers of Mizuho Financial Group and the Three Core Companies.

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The Chairman of the Compensation Committee shall be an outside director, and in principle its members shall be appointed from among the outside directors (or at least
Non-Executive
Directors) in order to ensure objectivity and transparency in the compensation of directors and executive officers. Currently, all members of the Compensation Committee, including the Chairman, are outside directors. As of June 22, 2018,25, 2020, the members of the Compensation Committee are Mr. Tatsuo KainakaMasami Yamamoto (Chairman), Mr. Tetsuo Seki Mr. Takashi Kawamura and Mr. Hirotake Abe.

Tatsuo Kainaka.

The Compensation Committee held three meetings in the fiscal year ended March 31, 2020. In particular, the Committee discussed the ideal form of executive compensation in order to maximize the roles that each director and executive officer should fulfill. The average attendance rate was 100%.
Audit Committee

Under the Companies Act, the audit committee is required to consist of at least three
Non-Executive
Directors, and the majority of its members is required to consist of outside directors. The duties of the audit committee include the audit of the execution of duties by directors and executive officers and preparation of audit reports.

The main roles of the Audit Committee of Mizuho Financial Group are auditing the execution of duties by the directors and executive officers, monitoring and inspecting the establishment and management of the internal control system of Mizuho Financial Group and its subsidiaries, monitoring and inspecting the condition of the execution of duties with respect to corporate management of subsidiaries and others by executive officers, preparing audit reports, and determining the contents of proposals regarding the appointment, dismissal and
non-reappointment
of independent accounting auditors to be submitted to the general meetings of shareholders, and adopting resolutions regarding the approval of basic internal audit plans, andas well as the Internal Audit Group’s budget, commission of the Group Chief Auditor.

Auditor, and appointment of the General Manager of the Internal Audit Group.

Given that it is necessary for the Audit Committee to gather information through internal directors who are familiar with the financial business and related regulations, share information among the Audit Committee and to have sufficient coordination with internal control departments, Mizuho Financial Group shall in principle appoint one or two Internal
Non-Executive
Directors as full-time members of the Audit Committee. The majority of its members including the Chairman shall be outside directors. Currently, among the fivefour members of the Audit Committee, two members areone member is appointed among Internal
Non-Executive
Directors as full-time members of the Audit Committee, and three members including the Chairman are appointed among outside directors. As of June 22, 2018,25, 2020 the members of the Audit Committee are Mr. Tetsuo Seki (Chairman), Mr. Tatsuo Kainaka, Mr. Hirotake Abe, Mr. Ryusuke AyaRyoji Sato and Mr. Nobukatsu Funaki.

AllHisaaki Hirama.

The Audit Committee held 16 meetings in the fiscal year ended March 31, 2020. In particular, the Committee confirmed the effectiveness of the Structure for Ensuring Appropriate Conduct of Operations (internal control system) and provided relevant opinions. The average attendance rate was 100%.
The members of the Audit Committee shall be independentmeet independence requirements under the provisions ofU.S. securities laws and regulations as may from time to time be applicable to the United States Securities and Exchange Commission and the rules of the New York Stock Exchange.Company. Further, at least one member of the Audit Committee shall be a “financial expert” as defined under U.S. laws and regulations.

laws.

Mizuho Financial Group has established committees and other organizations on a voluntary basis in addition to the above legally-required three committees as set forth below:

Risk Committee

The Risk Committee shall advise the Board of Directors regarding decision-making and supervision relating to risk governance and supervision of matters such as the status of risk management.

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The Risk Committee shall, in principle, comprise no less than three members who shall be
Non-Executive
Directors or outside experts and evaluate the consistency among our basic policy concerning management, basic policy concerning risk strategy and the execution of that strategy, and the adequacy of our risk profile and other status of risk management, andexperts. Currently, the Risk Committee shall report tocomprises Internal
Non-Executive
Director, who serves as the Board of Directors thereon.

Chairman, an outside director, and two outside experts.
The Risk Committee held eight meetings in the fiscal year ended March 31, 2020. In particular, the Committee had discussions on evaluation on risks surrounding the business operation in the fiscal year ending March 31, 2021 and climate change. The average attendance rate was 100%.
Human Resources Review Meeting

The Human Resources Review Meeting shall deliberate over plans for the appointment and dismissal of Mizuho Financial Group’s executive officers as defined in the Companies Act and plans for the

appointment and removal of or commission to Mizuho Financial Group’s executive officers (as defined in the Companies Act or our internal regulations) with special titles, such plans to be decided upon by the Board of Directors. Additionally, the Human Resources Review Meeting shall deliberate over plans for the appointment and removal of or commission to the Three Core Companies’ executive officers as defined in our internal regulations with special titles, such plans to be approved by the Board of Directors.

The Human Resources Review Meeting shall comprise the members of the Nominating Committee, the members of the Compensation Committee, and the Group CEO from the perspective of ensuring transparency and fairness in the appointment of executive officers.

The Human Resources Review Meeting was held eight times in the fiscal year ended March 31, 2020. In particular, the Meeting received reports on the status of formulation and operation of the succession plan and had discussions on the appointment of executive officers for the fiscal year ending March 31, 2021 at Mizuho Financial Group and the Three Core Companies. The average attendance rate was 100%.
Outside Director Session

The Outside Director Session shall comprise only outside directors and exchange information and share understanding with each other and provide objective and candid opinions to management based on the outside directors’ perspectives as outsiders.

The Outside Director Session shall meet at leastwas held twice eachin the fiscal year shall discuss matters such as issues facing management,ended March 31, 2020. In particular, the operationSession had discussions on the evaluation of the Boardprogress of Directors and the governance systems, and shall provide opinions as appropriate to the Group CEO.

5-Year
Business Plan. The average attendance rate was 100%.
Executive Officers

Under the Companies Act, Companies with Three Committees are required to appoint at least one executive officer by resolution of the board of directors, and its term of office ends at the close of the meeting of the board of directors initially convened following the close of the ordinary general meeting of shareholders relating to the fiscal year ending within a year following appointment. Executive officers shall decide on the business execution delegated by a resolution of the board of directors and implement business execution.

Executive officers of Mizuho Financial Group take charge of making decisions on business execution delegated by a resolution of the Board of Directors and implementing business execution of Mizuho Financial Group.

Mizuho Financial Group shall appoint as executive officers the Group CEO and, in principle, all heads of
In-house
Companies, Units and Groups based on the policy that it is necessary to appoint as executive officers people who make decisions on business execution delegated by the Board of Directors as managers of Mizuho Financial Group and who assume a comprehensive role of business execution.

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While the President & CEO is responsible for business execution at Mizuho Financial Group, after the President & CEO makes decisions on matters delegated by the Board of Directors, determined matters shall be reported to the Board of Directors at least once every three months as part of the status of the execution of duties.

Agreements with Directors, etc.

None of the directors has service contracts with Mizuho Financial Group providing for benefits upon termination of service.

Mizuho Financial Group’s articles of incorporation, in accordance with the Companies Act, allows the company to enter into an agreement with outside directors that limits their liabilities incurred in connection with their service. The limitation of liabilities under such agreement, if the outside director performed his/her duty in good faith without gross negligence, must be the higher of either (i) a
pre-determined
amount not less than ¥20 million or (ii) the amount prescribed in laws and regulations, which is currently equivalent to two times the annual compensation of such outside director. Pursuant to the provisions in its articles of incorporation, Mizuho Financial Group has entered into such agreements with all of its outside directors that are in office.

Based on the rules of the Tokyo Stock Exchange, listed companies are required to have at least one member of the board of directors or one member of the audit & supervisory board to be “independent.” Further, listed companies that have less than two independent outside directors must disclose the reason for it. Currently, all of Mizuho Financial Group’s outside directors meet such independence requirements.

For additional information on directors and the board practices, see “Item 6.A. Directors and Senior Management—Directors” and “Item 10.B. Additional Information—Memorandum and Articles of Association” in this annual report.

The rights of holders of American Depositary Receipts, or ADRs, which evidence ADSs, including such ADR holders’ rights relating to corporate governance practices, are governed by the deposit agreement, which is included as Exhibit 2.2 to this annual report.

Corporate Governance Practices

Companies listed on the New York Stock Exchange, or NYSE, must comply with certain standards regarding corporate governance under Section 303A of the NYSE Listed Company Manual. However, NYSE-listed companies that are foreign private issuers meeting certain criteria, such as Mizuho Financial Group, are permitted to follow home country practices in lieu of certain provisions of Section 303A, and the company is relying on this exemption. See “Item 16.G. Corporate Governance” for a summary of significant ways in which corporate governance practices of Mizuho Financial Group differ from those followed by NYSE-listed U.S. companies.

6.D. Employees

As of March 31, 2016, 20172018, 2019 and 2018,2020, we had 56,375, 59,17960,051,59,132 and 60,05157,264 employees, respectively, on a consolidated basis, including overseas local staff but excluding advisers and temporary employees. We also had an average of approximately 20,07617,010 temporary employees during the fiscal year ended March 31, 2018.

2020.

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The following tables show our full-time employees as of March 31, 20182020 and the average number of temporary employees for the fiscal year ended March 31, 2018,2020, each broken down based on business segment and geographical location:

Business segment

  Number of
full-time employees		  Average number of
temporary employees		 

Retail & Business Banking Company

   24,526   12,417 

Corporate &Institutional Company

   2,145   354 

Global Corporate Company

   8,645   67 

Global Markets Company

   1,591   115 

Asset Management Company

   1,669   147 

Others

   21,475   6,976 
  

 

 

  

 

 

 

Total

   60,051   20,076 
  

 

 

  

 

 

 

Location

  Percentage of
full-time employees		  Average percentage of
temporary employees		 

Japan

   91.5%   99.8% 

Americas

   2.3   0.0 

Europe

   1.4   0.1 

Asia/Oceania (excluding Japan) and others

   4.8   0.1 
  

 

 

  

 

 

 

Total

   100.0%   100.0% 
  

 

 

  

 

 

 

         
Business segment
 
Number of
full-time
 employees
  
Average number of
temporary employees
 
Retail & Business Banking Company
  
24,067
   
10,614
 
Corporate & Institutional Company
  
2,206
   
313
 
Global Corporate Company
  
8,873
   
43
 
Global Markets Company
  
1,545
   
77
 
Asset Management Company
  
1,592
   
127
 
Others
  
18,981
   
5,836
 
         
Total
  
57,264
   
17,010
 
         
       
Location
 
Percentage of
full-time employees
  
Average percentage of
temporary employees
 
Japan
  
90.4
%  
99.9
%
Americas
  
2.8
   
0.0
 
Europe
  
1.5
   
0.1
 
Asia/Oceania (excluding Japan) and others
  
5.3
   
0.0
 
         
Total
  
100.0
%  
100.0
%
         

Most of our full-time
non-management
employees in Japan are members of a labor union. Outside Japan, some of our employees are members of local unions. We consider our labor relations with employees to be good.

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6.E. Share Ownership

Shown below are two types of numbers of shares of Mizuho Financial Group’s common stock held by its directors and executive officers as of June 30, 2018:2020: One column shows the actual number of shares held; Theand the other shows the potential number of additional shares to be held (i.e., the number of shares that isare scheduled to be delivered equivalent to the stock ownership points granted by the current stock compensation system and the stock acquisition rights granted by the former stock option system).

Directors

  Actual number of
shares held		   Potential number of
additional shares to be held		 

Tatsufumi Sakai

   308,538    120,388 

Takanori Nishiyama

   130,925    73,857 

Makoto Umemiya

   34,755    74,124 

Yasuyuki Shibata

   49,500    69,070 

Hisashi Kikuchi

   48,200    37,868 

Yasuhiro Sato

   890,412    677,640 

Ryusuke Aya

   218,192    123,454 

Nobukatsu Funaki

   77,115    198,422 

Tetsuo Seki

   33,400    —   

Takashi Kawamura

   130,000    —   

Tatsuo Kainaka

   22,400    —   

Hirotake Abe

   33,400    —   

Hiroko Ota

   5,000    —   

Izumi Kobayashi

   4,500    —   

Executive Officers

  Actual number of
shares held		   Potential number of
additional shares to be held		 

Tatsufumi Sakai

   See above    See above 

Toshitsugu Okabe

   688,495    262,923 

Daisaku Abe

   308,457    458,450 

Junichi Kato

   611,011    127,745 

Katsunobu Motohashi

   249,365    199,015 

Akira Nakamura

   191,062    99,651 

Seiji Imai

   52,600    134,497 

Tsutomu Nomura

   305,794    91,940 

Takanori Nishiyama

   See above    See above 

Motonori Wakabayashi

   14,040    81,381 

Goji Fujishiro

   31,692    79,879 

Shuji Kojima

   65,796    81,544 

Makoto Umemiya

   See above    See above 

Yasuyuki Shibata

   See above    See above 

Hisashi Kikuchi

   See above    See above 

         
Directors
 
Actual number of
shares held
  
Potential number of
additional shares to be held
 
Tatsufumi Sakai
  
374,216
   
226,016
 
Satoshi Ishii
  
288,511
   
166,997
 
Motonori Wakabayashi
  
61,965
   
150,211
 
Makoto Umemiya
  
77,804
   
124,674
 
Hiroaki Ehara
  
94,213
   
132,338
 
Yasuhiro Sato
  
1,020,160
   
578,794
 
Hisaaki Hirama
  
171,834
   
82,646
 
Tetsuo Seki
  
61,959
   
23,700
 
Tatsuo Kainaka
  
31,200
   
23,700
 
Yoshimitsu Kobayashi
  
—  
   
—  
 
Ryoji Sato
  
5,000
   
—  
 
Masami Yamamoto
  
28,555
   
12,500
 
Izumi Kobayashi
  
18,735
   
23,700
 
         
Executive Officers
 
Actual number of
shares held
  
Potential number of
additional shares to be held
 
Tatsufumi Sakai
  
See above
   
See above
 
Seiji Imai
  
180,627
   
161,943
 
Satoshi Ishii
  
See above
   
See above
 
Masahiro Otsuka
  
155,769
   
62,400
 
Naofumi Fuke
  
70,124
   
226,845
 
Hiroshi Nagamine
  
40,007
   
85,074
 
Motonori Wakabayashi
  
See above
   
See above
 
Makoto Umemiya
  
See above
   
See above
 
Hisashi Kikuchi
  
77,150
   
130,076
 
Hiroaki Ehara
  
See above
   
See above
 
Masatoshi Yoshihara
  
148,198
   
119,364
 
Yasuhiro Shibata
  
—  
   
107,581
 
Masamichi Ishikawa
  
79,845
   
—  
 
Yasuhiko Ushikubo
  
6,216
   
99,775
 
Naoshi Inomata
  
—  
   
34,700
 
Masaomi Takada
  
5,920
   
79,812
 
None of the directors or executive officers is the owner of more than one percent of Mizuho Financial Group’s common stock, and no director or executive officer has voting rights with respect to our common stock that are different from any other holder of our common stock.

For information on our incentive stock options (stock acquisition rights) and performance-based stock compensation for directors and executive officers, see “Item 6.B Compensation.”

We maintain an employee stock ownership plan under which participating employees of the companies listed below are able to purchase our shares withcontribute funds deducted from their salary and bonus payments.payments to purchase our shares. The plan administrator makes open-market purchases of our shares for the account of the plan on a monthly
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basis. The companies contribute matching funds equivalent to 5% of the amounts contributed.contributed by the participating employees. The following table shows the numbersnumber of shares that thisthe plan held as of March 31, 2018:

2020:
As of March 31, 2020
Plan
Employer companies
Number of
shares owned
Mizuho Employee Stock Ownership Plan
Mizuho Financial Group
Mizuho Bank
Mizuho Trust & Banking
Mizuho Research Institute
Mizuho Information & Research Institute
  

As of March 31, 2018

 

Plan

Employer companies

Number of
shares owned

Mizuho Employee Stock Ownership Plan

Mizuho Financial Group

Mizuho Bank

Mizuho Trust & Banking

Mizuho Asset Management

Mizuho Research Institute Mizuho Information & Research Institute

Total

   111,318,229
116,088,567
 
  

 

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ITEM 7.MAJOR SHAREHOLDERS AND RELATED PARTY TRANSACTIONS

7.A. Major Shareholders

The following table sets forth information about the ten largest holders of shares of our common stock appearing on the register of shareholders as of March 31, 2018:

   As of March 31, 2018 

Name

  Number of
shares owned		   Percentage of
outstanding shares		 

The Master Trust Bank of Japan, Ltd. (trustee account)

   1,070,043,700    4.22% 

Japan Trustee Services Bank, Ltd. (trustee account)

   1,054,777,400    4.16 

Japan Trustee Services Bank, Ltd. (trustee account 5)

   512,108,700    2.02 

Japan Trustee Services Bank, Ltd. (trustee account 9)

   479,711,500    1.89 

State Street Bank West Client – Treaty 505234

   453,273,840    1.79 

Japan Trustee Services Bank, Ltd. (trustee account 1)

   381,129,200    1.50 

Japan Trustee Services Bank, Ltd. (trustee account 2)

   374,905,000    1.48 

JP Morgan Chase Bank 385151

   341,932,527    1.35 

Japan Trustee Services Bank, Ltd. (trustee account 7)

   325,656,600    1.28 

Japan Trustee Services Bank, Ltd. (trustee account 4)

   308,675,100    1.22 
  

 

 

   

 

 

 

Total

   5,302,213,567    20.89% 
  

 

 

   

 

 

 

2020:

         
 
As of March 31, 2020
 
Name
 
Number of
shares owned
  
Percentage of
outstanding shares
 
The Master Trust Bank of Japan, Ltd. (trustee account)
  
1,642,845,500
   
6.47
%
Japan Trustee Services Bank, Ltd. (trustee account)
  
1,109,233,400
   
4.37
 
Japan Trustee Services Bank, Ltd. (trustee account 5)
  
545,964,100
   
2.15
 
Japan Trustee Services Bank, Ltd. (trustee account 9)
  
522,476,800
   
2.06
 
JP Morgan Chase Bank 385151
  
443,776,306
   
1.75
 
State Street Bank West Client – Treaty 505234
  
423,565,756
   
1.67
 
Japan Trustee Services Bank, Ltd. (trustee account 7)
  
384,499,000
   
1.51
 
State Street Bank And Trust Company 505103
  
293,537,902
   
1.16
 
Japan Trustee Services Bank, Ltd. (trustee account 1)
  
280,082,100
   
1.10
 
Japan Trustee Services Bank, Ltd. (trustee account 4)
  
263,338,400
   
1.04
 
         
Total
  
5,909,319,264
   
23.28
%
         
As of March 31, 2018,2020, there were 220206 record holders of our common stock with addresses in the United States, whose shareholdings represented approximately 10%9% of our outstanding common stock on that date. Because some of these shares were held by brokers or other nominees, the number of record holders with addresses in the United States might not fully reflect the number of beneficial owners in the United States.

7.B. Related Party Transactions

We and our subsidiary banks had, and expect to have in the future, banking transactions and other transactions in the ordinary course of business with our related parties. Although, for the fiscal year ended March 31, 2018,2020, such transactions included, but were not limited to, call money, loans, deposits, guarantees and foreign exchange transactions, those transactions were immaterial and were made on substantially the same terms, including interest rates and collateral, as those prevailing at the time for comparable transactions with other persons and did not involve more than the normal risk of collectability or present other unfavorable features.

During the fiscal year ended March 31, 2018,2020, none of the directors or executive officers, and none of the close members of their respective families, had any transactions that are material or any transactions that are unusual in their nature or conditions, involving goods, services or tangible or intangible assets, to which we were, are or will be a party, and there were no such transactions proposed as of March 31, 2018.

2020.

During the fiscal year ended March 31, 2018,2020, no loans were made to the directors or executive officers other than loans in the ordinary course of business, on substantially the same terms, including interest rates and collateral, as those prevailing at the time for comparable transactions with other persons, and involving no more than the normal risk of collectability or presenting other unfavorable features.

7.C. Interests of Experts and Counsel

Not applicable.

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ITEM 8.FINANCIAL INFORMATION

8.A. Consolidated Statements and Other Financial Information

Financial Statements

Our consolidated financial statements are set forth in this annual report under “Item 18. Financial Statements.”

Legal Proceedings

We are involved in normal collection proceedings initiated by us and other legal proceedings in the ordinary course of our business. In addition, we are involved in the following legal proceeding.

An Indonesian subsidiarybusiness, none of ours acts as collateral agent for the trustee of bond issuances made by subsidiaries of Asia Pulp & Paper Company Ltd. (“APP”). In that role, the subsidiarywhich is involved in a dispute between the bondholders and such APP subsidiaries in their capacities as the issuers, guarantors and/or pledgors of security for the bonds relatingcurrently expected to foreclosure proceedings on the collateral and has been named as a defendant in a lawsuit brought by the obligors under the bonds in Indonesia. Our consolidated financial statements do not include a reserve in relation to this dispute because we do not believe the resolution of this matter will have a significant impactmaterial adverse effect on our consolidated financial condition or results of operations, althoughoperations.

However, there can be no assurance as to the foregoing.

that an adverse decision in one or more of these lawsuits will not have a material adverse effect.

Dividend Policy

We have been implementing disciplined capital management by pursuing the optimal balance between strengthening of stable capital base and steady returns to shareholders.

Based on the above policy, annual cash dividends for the fiscal year ended March 31, 20182020 were ¥7.5 per share of common stock (interim (each of interim and
year-end
cash dividends of ¥3.75 per share of common stock andyear-end cash dividends ofwas ¥3.75 per share of common stock), which was the same amount as the annual cash dividends per share of common stock of theprevious fiscal year ended March 31, 2017.

year.

We intend to distributeissue dividends twice per year to shareholders of recordrecorded in the shareholder register as of March 31 and September 30 in each year as
year-end
dividends and as interim dividends, respectively, to return profits to shareholders in a timely way.

In accordance with our articles of incorporation, we determine dividend payments of surplusdecide to issue dividends not by a resolution at a general meeting of shareholders but by a resolution of our Board of Directors, unless otherwise provided for instipulated by laws or regulations.

Annual cash dividends for the fiscal year ended March 31, 2020 were decided by a resolution of our Board of Directors. However, with the approval by our shareholders at the 18th Ordinary general meeting of shareholders held in June 2020, our articles of incorporation was amended such that, unless otherwise stipulated by laws and regulations, the Board of Directors remains as the organization to make decisions on issuing dividends, but the general meeting of shareholders may also make decisions on such matters in the event a shareholder’s proposal is presented. For more information on such amendment to our articles of incorporation, see “Item 10.B. Memorandum and Articles of Association—Common Stock—Distribution of Surplus”.

We continuously consider the optimal balance between strengthening of stable capital base and steady returns to shareholders. We will comprehensively consider the business environment such as the Mizuho group’s business results, profit base, status of capital adequacy, and domestic and international regulationregulatory trends, such asincluding the Basel framework, and determine cash dividend payments for each term.

in determining the amounts of dividends payment.

8.B. Significant Changes

Except as described in this annual report, no significant change in our financial position has occurred since the date of the financial statements included in this annual report.

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ITEM 9.
THE OFFER AND LISTING

9.A. Listing Details

Market Price Information for Our American Depositary Shares

Our ADSs are listed on the New York Stock Exchange.

The following table sets forth, for the periods indicated, the high and low trading prices and average daily trading volume on the New York Stock Exchange for our ADSs:

Fiscal years ended March 31,

  Price per ADS   Average daily
trading volume		 
  High   Low   
           

 

(shares)

 

2014

   4.55    3.62    556,105 

2015

   4.17    3.22    352,911 

2016

   4.51    2.72    608,446 

2017

   3.87    2.69    426,812 

2018

   4.00    3.37    285,536 

2017:

      

First quarter

   3.30    2.69    814,598 

Second quarter

   3.71    2.76    293,004 

Third quarter

   3.87    3.17    334,969 

Fourth quarter

   3.85    3.56    257,964 

2018:

      

First quarter

   3.76    3.47    349,014 

Second quarter

   3.72    3.37    251,729 

Third quarter

   3.76    3.46    181,256 

Fourth quarter

   4.00    3.54    362,590 

Most recent six months:

      

December

   3.76    3.57    200,194 

January

   4.00    3.62    433,467 

February

   3.87    3.54    383,575 

March

   3.77    3.59    272,728 

April

   3.69    3.53    333,099 

May

   3.70    3.46    253,515 

Market Prices Information for Our Shares

See “Item 9.C. The Offer and Listing—Markets” for information on the stock exchanges on which our common stock is listed.

The following table sets forth, for the periods indicated, the high and low trading prices and average daily trading volume on the First Section of the Tokyo Stock Exchange for our common stock:

Fiscal years ended March 31,

  Price per share(1)   Average daily
trading volume		 
  High   Low   
           

 

(shares)

 

2014

   240    180    186,546,095 

2015

   226.6    178.1    132,018,080 

2016

   280.4    149.3    200,523,432 

2017

   225.3    142.0    162,921,802 

2018

   220.7    185.4    127,920,473 

2017:

      

First quarter

   185.7    142.6    160,817,541 

Second quarter

   186.4    142.0    160,435,263 

Third quarter

   225.3    163.5    201,903,957 

Fourth quarter

   217.3    204.0    128,571,211 

2018:

      

First quarter

   210.7    186.7    115,420,966 

Second quarter

   208.9    185.4    108,518,360 

Third quarter

   210.0    194.7    141,275,285 

Fourth quarter

   220.7    189.1    147,410,341 

Most recent six months:

      

December

   208.6    199.8    129,917,095 

January

   220.7    205.2    147,543,079 

February

   211.5    193.8    157,500,153 

March

   198.3    189.1    138,161,367 

April

   200.6    188.0    102,114,325 

May

   203.3    189.1    97,854,567 

Note:

(1)Since July 22, 2014, Tokyo Stock Exchange has introduced sub-yen tick sizes for the shares of TOPIX 100 constituents, which contain decimals. Our shares are included in the TOPIX 100 constituents.

9.B. Plan of Distribution

Not applicable.

9.C. Markets

The principal trading market for our shares of common stock is the First Section of the Tokyo Stock Exchange. Our shares have been listed on the First Section of the Tokyo Stock Exchange, under the code “8411,” since our establishment as the holding company of the Mizuho group on March 12, 2003, as the successor to Mizuho Holdings.

Our ADSs have been listed on the New York Stock Exchange since November 8, 2006 and are quoted under the ticker symbol “MFG.”

9.B. Plan of Distribution
Not applicable.
9.C. Markets
See “Item 9.A. The Offer and Listing—Listing Details.”
9.D. Selling Shareholders

Not applicable.

9.E. Dilution

Not applicable.

9.F. Expenses of the Issue

Not applicable.

ITEM 10.
ADDITIONAL INFORMATION

10.A. Share Capital

Not applicable.

10.B. Memorandum and Articles of Association

Objects and Purposes in our Articles of Incorporation

Our corporate purpose, as specified in article 2 of our articles of incorporation, which is included in this annual report as Exhibit 1.1, is to engage in the following businesses as a bank holding company:

operation and management of bank holding companies, banks, specialized securities companies and other companies which we may own as our subsidiaries under the Banking Act, and any other business incidental thereto; and

any other business that a bank holding company may engage in under the Banking Act.

Our Board of Directors

Under the Companies Act (Kaisha Hou) (Act No. 86 of 2005, as amended), because we have adopted the “Company with Three Committees” system, our directors have no power to execute our business except in limited circumstances as permitted by law. If a director also serves concurrently as an executive officer, then he or she can execute our business in the capacity of executive officer. There is no provision in our articles of incorporation as to our directors’ power to vote on a proposal, arrangement or contract in which a director is materially interested. The Companies Act, however, requires such director to refrain from voting on such matters at meetings of the board of directors.

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The amount of compensation to each our director is determined by the Compensation Committee, which consists of our directors, the majority of whom are outside directors (See “Item 6.C. Board Practices”).

The borrowing powers have been delegated to the executive officers by the Board of Directors in accordance with the Companies Act.

Neither the Companies Act nor our articles of incorporation set a mandatory retirement age for our directors.

There is no requirement concerning the number of shares an individual must hold to qualify as a director under the Companies Act or our articles of incorporation.

Common Stock

General

Set

Unless otherwise specified,set forth below is information concerning our shares of common stock as of the date hereof, including brief summaries of certain provisions of our articles of incorporation, our share handling regulations and the Companies Act relating to joint stock corporations (kabushiki kaisha) and certain related legislation, all as currently in effect.

Under our articles of incorporation, we are authorized to issue 48,000,000,000 shares of common stock.

As of March 31, 2018, 25,389,644,9452020, 25,392,498,945 shares of common stock were issued.

The Ordinary General Meeting of Shareholders held on June 25, 2020 approved the share consolidation in respect of common stock on the basis of one post-consolidation share per ten
pre-consolidation
shares and a partial amendment to the articles of incorporation to decrease the number of shares of common stock authorized to be issued to 4,800,000,000, and such share consolidation and the decrease of the number of shares of common stock authorized to be issued shall become effective on October 1, 2020.
Where relevant to the common stock, provisions of our preferred stock are also described below.

Distribution of Surplus

General

Under the Companies Act, distribution of cash or other assets by a joint stock corporation to its shareholders, including dividends, takes the form of distribution of Surplus (as defined in “—Restriction on Distribution of Surplus”). We are permitted to make distributions of Surplus to our shareholders any number of times per fiscal year, subject to certain limitations described in “—Restriction on Distribution of Surplus.” Under the Companies Act and our articles of incorporation, distributions of Surplus are in principle permitted by a resolution of the Board of Directors as long as our
non-consolidated
annual financial statements and certain documents for the latest fiscal year fairly present our assets and profit and loss, as required by an ordinance of the Ministry of Justice. DistributionsJustice.Distributions of Surplus are, however, required to be authorized by a resolution of a general meeting of shareholders if the aforementioned condition is not met.

We adopted this process based on the idea that our Board of Directors, with its high level of supervisory function and extensive expertise, would maximize

medium-to-long
term shareholder value by deciding distribution of Surplus and other related matters and enhancing shareholder return while improving capital adequacy ratios to meet the international financial regulations. Meanwhile, the way companies interact with their shareholders and investors has been changing in Japan. Moreover, the Basel III international financial regulatory framework was finalized in December 2017 and the uncertainty surrounding the tightening of industry-related regulations has decreased. In light of these incidents, we proposed an amendment to our articles of incorporation so that the general meeting of shareholders
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may also make decisions on distribution of Surplus, even in the case where the aforementioned condition is met, at the ordinary general meeting of shareholders held in June 2020, and our proposal was approved at such meeting. After the amendment becomes effective on June 26, 2020, not only the Board of Directors (subject to the aforementioned condition set by an ordinance of the Ministry of Justice.) but also the general meeting of shareholders, even in the case where the aforementioned condition is met, will be able to decide distribution of Surplus.
Distributions of Surplus may be made in cash or in kind in proportion to the number of shares of common stock held by each shareholder. A resolution of the Board of Directors or a general meeting of shareholders authorizing a distribution of Surplus must specify the kind and aggregate book value of the assets to be distributed, the manner of allocation of such assets to shareholders, and the effective date of the distribution. If a distribution of Surplus is to be made in kind, we may, pursuant to a resolution of the Board of Directors or (as the case may be) a general meeting of shareholders, grant the right to our shareholders to require us to make such distribution in cash instead of in kind. If no such right is granted to shareholders, the relevant distribution of Surplus must be approved by a special resolution of a general meeting of shareholders (see “—Voting Rights” with respect to a “special resolution”).

Under our articles of incorporation, the record date for annual dividends and interim dividends is March 31 and September 30, respectively, in each year. In Japan, the
“ex-dividend
date” (the date from which purchasers of shares through Japanese stock exchanges will not be entitled to the dividends to be paid to registered shareholders as of any record date) and the record date for dividends precede the date of determination of the amount of the dividend to be paid. Thepaid.After the settlement period of share at Tokyo Stock Exchange was shortened in July 2019, the
ex-dividend
date of the shares of common stock is generally the secondfirst business day prior to the record date. Under our articles of incorporation, we are not obligated to pay any distribution of Surplus to be made in cash which has not been received after the lapse of five years from the commencement date of such distribution.

Restriction on Distribution of Surplus

Payment of annual dividends on shares of common stock is subject to the prior payment of annual preferred dividends on the shares of any series of preferred stock. Payment of an interim dividend on shares of our common stock is also subject to the prior payment of an interim preferred dividend of
one-half
the annual preferred dividend amount on the shares of any series of preferred stock. In making a distribution of Surplus, we must set aside in our additional
paid-in
capital and/or legal reserve an amount equal to
one-tenth
of the amount of Surplus so distributed, until the sum of its additional
paid-in
capital and legal reserve reaches
one-quarter
of its stated capital.

The amount of Surplus at any given time must be calculated in accordance with the following formula:

A + B + C + D - (E + F + G)

In the above formula:

“A” = the total amount of other capital surplus and other retained earnings, each such amount being that appearing on ournon-consolidated balance sheet as of the end of the last fiscal year

“B” = (if we have disposed of our treasury stock after the end of the last fiscal year) the amount of the consideration for such treasury stock received by us less the book value thereof

“C” = (if we have reduced our stated capital after the end of the last fiscal year) the amount of such reduction less the portion thereof that has been transferred to additional

paid-in
capital or legal reserve (if any)

“D” = (if we have reduced our additional
paid-in
capital or legal reserve after the end of the last fiscal year) the amount of such reduction less the portion thereof that has been transferred to stated capital (if any)

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“E” = (if we have cancelled our treasury stock after the end of the last fiscal year) the book value of such treasury stock

“F” = (if we have distributed Surplus to our shareholders after the end of the last fiscal year) the total book value of the Surplus so distributed

“G” = certain other amounts set forth in an ordinance of the Ministry of Justice, including:

if we have reduced Surplus and increased our stated capital, additional
paid-in
capital or legal reserve after the end of the last fiscal year, the amount of such reduction; and

if we have distributed Surplus to shareholders after the end of the last fiscal year, the amount set aside in our additional
paid-in
capital or legal reserve, if any, as required by ordinances of the Ministry of Justice.

The aggregate book value of Surplus distributed by us may not exceed a prescribed distributable amount (the “Distributable Amount”), as calculated on the effective date of such distribution. The Distributable Amount at any given time shall be the amount of Surplus less the aggregate of (a) the book value of our treasury stock, (b) the amount of consideration for any of our treasury stock disposed of by us after the end of the last fiscal year and (c) certain other amounts set forth in an ordinance of the Ministry of Justice, including (if the sum of
one-half
of our goodwill and deferred assets exceeds the total of the stated capital, additional
paid-in
capital and legal reserve, each such amount being the amount in our
non-consolidated
balance sheet as of the end of the last fiscal year) all or certain part of such exceeding amount as calculated in accordance with the ordinances of the Ministry of Justice.

If we have become at our option a company with respect to which its consolidated balance sheet should also be considered in the calculation of the Distributable Amount (
renketsu haito kisei tekiyo kaisha
), we shall further deduct from the amount of Surplus the excess amount, if any, of (x) the total amount of the shareholders’ equity appearing on our
non-consolidated
balance sheet as of the end of the last fiscal year and certain other amounts set forth by an ordinance of the Ministry of Justice over (y) the total amount of the shareholders’ equity and certain other amounts set forth by an ordinance of the Ministry of Justice appearing on our consolidated balance sheet as of the end of the last fiscal year. We did not opt for becoming such a company with respect to the fiscal year ended March 31, 2018.

2020.

If we have prepared interim financial statements as described below, and if such interim financial statements have been approved by the Board of Directors or (if so required by the Companies Act) by a general meeting of shareholders, then the Distributable Amount must be adjusted to take into account the amount of profit or loss, and the amount of consideration for any of our treasury stock disposed of by us, during the period in respect of which such interim financial statements have been prepared. We may prepare
non-consolidated
interim financial statements consisting of a balance sheet as of any date subsequent to the end of the last fiscal year and an income statement for the period from the first day of the current fiscal year to the date of such balance sheet. Interim financial statements so prepared by us must be audited by our corporate auditors and/or outside accounting auditor, as required by an ordinance of the Ministry of Justice.

Capital and Reserves

We may reduce our additional
paid-in
capital or legal reserve generally by resolution of a general meeting of shareholders and, if so decided by the same resolution, may account for the whole or any part of the amount of such reduction as stated capital. On the other hand, we may reduce our stated capital generally by special

resolution of a general meeting of shareholders and, if so decided by the same resolution, may account for the whole or any part of the amount of such reduction as additional

paid-in
capital or legal reserve. In addition, we may reduce our Surplus and increase either (i) stated capital or (ii) additional
paid-in
capital and/or legal reserve by the same amount, in either case by resolution of a general meeting of shareholders.

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Stock Splits

We may at any time split shares of common stock into a greater number of shares of common stock by determination by executive officers under the authority delegated by resolution of the Board of Directors. When a stock split is to be made, so long as our only class of outstanding stock is the common stock, we may increase the number of authorized shares in the same ratio as that of such stock split by amending our articles of incorporation, of which amendment may be effected by resolution of the Board of Directors without approval by shareholders.

Share consolidation
As of March 31, 2020, the total number of issued shares of our common stock was 25,392,498,945, which is not only the greatest number among Japanese banks but also among all companies listed on the First Section of the Tokyo Stock Exchange (“TSE”). The current share price of 119.8 yen, and its Trading Unit, which is the number of shares that is used as the acceptable quantity for trading on the TSE, of 11,980 yen (as of May14, 2020), was far below the desirable Trading Unit range of 50,000 yen to 500,000 yen designated by the TSE’s Securities Listing Regulations. In order to address this situation, we decided to consolidate the shares on the basis of one post-consolidation share per ten
pre-consolidation
shares, and such share consolidation was approved at the Ordinary General Meeting of Shareholders held on June 25, 2020. As a result, the shares of our common stock held by the shareholders recorded in the shareholder register as of September 30, 2020 will be consolidated on October 1, 2020.
After the share consolidation, shareholders who own fewer than 10 shares will lose their status as shareholders. In addition, shareholders who own 100 to fewer than 1000 shares will become owners of shares, though each of them will own less than one unit of shares. See “—Common Stock—Unit Share System.”
Unit Share System

We have adopted the unit share system under which shareholders will have one voting right for each unit of shares consisting of 100 shares held by them at general meetings of shareholders or at meetings of holders of a particular class of shares, and shares constituting less than a full unit will carry no voting rights. See “—Preferred Stock—Voting Rights” for information on the voting rights that holders of preferred stock may have at general meetings of shareholders. Our articles of incorporation provide that the holders of shares constituting less than a full unit will not have shareholder rights, except for those specified in an ordinance of the Ministry of Justice which include rights (i) to receive dividends, (ii) to receive cash or other assets in case of a consolidation or split of shares, share exchange or share transfer, or merger or (iii) to be allotted rights to subscribe for free for new shares and stock acquisition rights when such rights are granted to shareholders. Holders of shares constituting less than a full unit may at any time request us to purchase such shares constituting less than a full unit (a) at the current market price as determined pursuant to the Companies Act in cases of such shares having a market price (such as our common stock) or (b) at the price as determined through negotiations between the holders of shares constituting less than a full unit and us in cases where such shares have no market price (such as our preferred stock), which request may not be withdrawn without our consent. In addition, holders of shares constituting less than a full unit may require us to sell them such number of shares, which, when combined with the number of shares already held by such holder, shall constitute a whole unit of shares; provided that we will be obliged to comply with such request only when we own a sufficient number of shares to accommodate such request. As prescribed in our share handling regulations, such requests shall be made through an account managing institution at which such shareholder has its account and Japan Securities Depository Center, Inc. (“JASDEC”) pursuant to the rules of JASDEC, without going through the notification procedure required for the exercise of shareholders’ rights entitled regardless of record dates as described in “—Transfer of Shares.” The executive officers under the authority delegated by the Board of Directors may reduce the number of shares constituting one unit of shares or cease to use the unit share system by amendments to the articles of incorporation without a special resolution of the general meeting of shareholders which would otherwise be required.

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General Meetings of Shareholders

The ordinary general meeting of shareholders shall be held no later than three months from the last day of each business year and is normally held in June of each year. In addition, we may hold an extraordinary general meeting of shareholders whenever necessary. Notice of a general meeting of shareholders stating the place, the time and the purpose thereof must be given to each shareholder having voting rights (or, in the case of a
non-resident
shareholder, to its standing proxy or mailing address in Japan) at least two weeks prior to the date set for the meeting. The record date for an ordinary general meeting of shareholders is March 31 of each year.

Any shareholder holding at least 300 voting rights or 1% of the total number of voting rights for six months or longer may propose a matter to be considered at a general meeting of shareholders by submitting a request to a

representative director at least eight weeks prior to the date of such meeting. Any of the minimum percentages, time periods and number of voting rights necessary for exercising the minority shareholder rights described above may be decreased or shortened if our articles of incorporation so provide.

Voting Rights

Our shareholders have one voting right for each unit of shares held by them (regarding the voting rights held by holders of preferred stock, see “—Preferred Stock—Voting Rights”).

Except as otherwise provided by law or in our articles of incorporation, a resolution shall be adopted at a general meeting of shareholders by a majority of the voting rights held by the shareholders present at the meeting. Our articles of incorporation provide that the quorum for election of directors is
one-third
of the total number of voting rights. Our shareholders are not entitled to cumulative voting in the election of directors. A shareholder may exercise its voting rights in writing or through a proxy, provided that the proxy shall also be a holder of our shares having voting rights at such meeting.

The Companies Act provides that certain important matters shall be approved by a “special resolution” of a general meeting of shareholders. Under our articles of incorporation, the quorum for a special resolution is
one-third
of the total number of voting rights, and the approval of not less than
two-thirds
of the voting rights held by the shareholders present at the meeting is required for adopting a special resolution. Such important matters include:

 1.any amendment to our articles of incorporation (except for such amendments that may be authorized by executive officers under the authority delegated by the board of directors under the Companies Act such as (i) an increase of the number of authorized shares in the same ratio as that of a stock split, (ii) a reduction of the number of shares per unit of shares and (iii) abolishing the unit share system);

 2.our dissolution, merger or consolidation requiring shareholders’ approval;

 3.establishment of a parent and wholly-owned subsidiary relationship by way of a share transfer (
kabushiki-iten
) or share exchange (
kabushiki-kokan
) requiring shareholders’ approval;

 4.transfer of the whole or a substantial part of our business;

 5.transfer of the whole or a part of our shares in any of our subsidiaries requiring shareholders’ approval;

 6.taking over of the whole of the business of another company requiring shareholders’ approval;

 7.our corporate split requiring shareholders’ approval;

 8.consolidation of shares of common stock;

 9.acquisition of shares of common stock by us from a specific shareholder other than our subsidiary;

 10.distribution of Surplus in kind (except when shareholders are granted the right to require to make such distribution in cash instead of in kind);

 11.issuance or transfer of new shares or existing shares held by us as treasury stock to persons other than the shareholders at a “specially favorable” price; and

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12.issuance of stock acquisition rights (including those incorporated in bonds with stock acquisition rights) to persons other than the shareholders at a “specially favorable” price or under “specially favorable” conditions.

Liquidation Rights

In the event of our liquidation, the assets remaining after payment of all debts, liquidation expenses, taxes and distributions of residual assets relating to the then outstanding preferred stock will be distributed among holders of common stock in proportion to the respective numbers of shares held by them. See “—Preferred Stock—Liquidation Rights.”

Issue of Additional Shares and
Pre-emptive
Rights

Holders of the common stock have no
pre-emptive
rights. Authorized but unissued shares of common stock may be issued at such times and upon such terms as executive officers under the authority delegated by the Board of Directors determine, subject to the limitations as to the issuance of new shares of common stock at a “specially favorable” price mentioned in “—Voting Rights.”

In the case of an issuance or transfer of shares or stock acquisition rights by way of an allotment to a third party whereby the third party will hold more than 50% of the voting rights of all shareholders, we shall give notice (including a public notice) to our shareholders in advance, and if shareholders who hold
one-tenth
or more of the voting rights of all shareholders dissent from the third-party allotment, the approval by an ordinary resolution of a general meeting of shareholders is generally required before the payment date for such issuance or transfer pursuant to the Companies Act. In addition, pursuant to the regulations of the stock exchanges in Japan, in the case of an issuance or transfer of shares or stock acquisition rights by way of an allotment to a third party which would dilute the outstanding voting shares by 25% or more or change the controlling shareholder, in addition to a determination by the executive officers, the approval of the shareholders or an affirmative opinion from a person independent of our management is generally required.

Executive officers under the authority delegated by the Board of Directors may, however, determine that shareholders of a particular class of stock shall be given subscription rights to new shares of the same class, in which case they must be given on uniform terms to all shareholders of that class as of a record date of which not less than two weeks’ prior public notice must be given. Each of the shareholders to whom such rights are given must also be given at least two weeks’ prior notice of the date on which such rights expire (but see “—Preferred Stock—Issue of Additional Shares and
Pre-emptive
Rights” regarding our preferred stock).

Stock Acquisition Rights

We may issue stock acquisition rights (
shinkabu yoyakuken
). Holders of stock acquisition rights are entitled to acquire shares from us, upon payment of the applicable exercise price, and subject to other terms and conditions thereof. We may also issue bonds with stock acquisition rights (
shinkabu yoyakuken-tsuki shasai
). The issuance of stock acquisition rights and bonds with stock acquisition rights may be authorized by executive officers under the authority delegated by the Board of Directors unless it is made at a “specially favorable” price or under “specially favorable” conditions, as described in “—Voting Rights” and subject to the approval of the shareholders or an affirmative opinion from an independent person in certain cases, as described in “—Issue of Additional Shares and
Pre-emptive
Rights.”

Record Date

As mentioned above, March 31 is the record date for the payment of annual dividends and the determination of shareholders entitled to vote at the ordinary general meeting of shareholders. September 30 is the record date for the payment of interim dividends. In addition, by a determination by executive officers under the authority delegated by the Board of Directors and after giving at least two week’sweeks’ prior public notice, we may at any time set a record date in order to determine the shareholders who are entitled to certain rights pertaining to our stock.

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JASDEC is required to give us notice of the names and addresses of our shareholders, the numbers of shares held by them and other relevant information as of such record date promptly after we set each record date.

Acquisition by Us of Common Stock

We may acquire shares of common stock:

 1.

by way of purchase on any Japanese stock exchange on which the shares of our common stock are listed or by way of tender offer (in either case pursuant to a resolution of the Board of Directors as long

as our

non-consolidated
annual financial statements and certain documents for the latest fiscal year fairly present our assets and profit and loss, as required by an ordinance of the Ministry of Justice);

 2.from a specific shareholder other than any of our subsidiaries (pursuant to a special resolution of a general meeting of shareholders); or

 3.from any of our subsidiaries (pursuant to a determination by executive officers under the authority delegated by the Board of Directors).

In the case of 2. above, any other shareholder may make a request to us to be included as a seller in the proposed purchase, unless the purchase price or any other consideration to be received by the relevant specific shareholder will not exceed the last trading price of the shares on the relevant stock exchange on the day immediately preceding the date on which the resolution mentioned in 2. above was adopted (or, if there is no trading in the shares on the stock exchange or if the stock exchange is not open on such day, the price at which the shares are first traded on such stock exchange thereafter).

The total amount of the purchase price of shares of common stock may not exceed the Distributable Amount, as described in “—Distribution of Surplus—Restriction on Distribution of Surplus.”

We may hold the shares of common stock acquired, and may generally transfer or cancel such shares by a determination by executive officers under the authority delegated by the Board of Directors.

Disposal of Shares of Common Stock Held by Shareholders whose Location is Unknown

We are not required to send notices to a shareholder if notices given by us to such shareholder fail to arrive for five consecutive years or more at its address registered in our register of shareholders or otherwise notified to us.

In the above case, if the relevant shareholder also fails to receive dividends on the shares continuously for five years or more at its address registered in our register of shareholders or otherwise notified to us, then we may in general dispose of such shares at their then market price and hold or deposit the proceeds of such disposition on behalf of the relevant shareholder.

Reporting of Substantial Shareholders

The Financial Instruments and Exchange Act and its related regulations require any person who has become, beneficially and solely or jointly, a holder of more than 5% of the total issued shares of capital stock of a company that is listed on any Japanese stock exchange to file a report with the Director of the relevant Local Finance Bureau of the Ministry of Finance within five business days. With certain exceptions, a similar report must also be filed in respect of any subsequent change of 1% or more in the holding or of any change in material matters set forth in any previously filed reports. For this purpose, shares issuable to such person upon conversion of convertible securities or exercise of share subscription warrants or stock acquisition rights are taken into account in determining both the number of shares held by the holder and the company’s total issued share capital. Any such report shall be filed with the Director of the relevant Local Finance Bureau of the Ministry of Finance through the Electronic Disclosure for Investors’ Network (EDINET) system.

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There are other reporting requirements under the Banking Act. See “Item 4.B. Information on the Company—Business Overview—Supervision and Regulation—Japan—Examination and Reporting Applicable to Shareholders.”

Holding of Shares of Our Common Stock by Foreign Investors

There are no limitations imposed by the laws of Japan, our articles of incorporation or our other constituent documents on the rights of
non-residents
or foreign shareholders to hold or exercise voting rights on our shares of common stock or preferred stock.

Transfer of Shares

At present, JASDEC is the only institution that is designated by the relevant authorities as a clearing house which is permitted to engage in the clearing operations of listed shares under the Act on Book-Entry Transfer of
Corporate Bonds, Stocks, etc. (Act No. 75 of 2001, including regulations promulgated thereunder; the “Book-entry Act”). Under the clearing system above, in order for any person to hold, sell or otherwise dispose of listed shares, such person must have an account at an account managing institution unless such person has an account at JASDEC. “Account managing institutions” are financial instruments business operators (i.e., securities companies), banks, trust companies and certain other financial institutions which meet the requirements prescribed by the Book-entry Act, and only those financial institutions that meet further stringent requirements of the Book-entry Act can open accounts directly at JASDEC. Under the Book-entry Act, any transfer of shares is effected through book entry, and title to the shares passes to the transferee at the time when the transferred number of the shares is recorded at the transferee’s account at an account managing institution. The holder of an account at an account managing institution is presumed to be the legal owner of the shares held in such account. Under the Companies Act and the Book-entry Act, in order to assert shareholders’ rights to which shareholders as of record dates are entitled (such as the rights to vote at a general meeting of shareholders or receive dividends) against us, a shareholder must have its name and address registered in our register of shareholders. Under the clearing system, such registration is made upon our receipt of necessary information from JASDEC. On the other hand, in order to assert shareholders’ rights to which shareholders are entitled regardless of record dates such as minority shareholders’ rights including the right to propose a matter to be considered at a general meeting of shareholders, except for shareholders’ rights to request us to purchase or sell shares constituting less than a full unit (as described in “—Unit Share System”), upon the shareholder’s request, JASDEC shall issue a notice of certain information, including the name and address of such shareholder, to us. Thereafter, such shareholder is required to present us a receipt of the request of the notice in accordance with our share handling regulations. Under the Book-entry Act, the shareholder shall exercise such shareholders’ right within four weeks after the notice above.
Non-resident
shareholders are required to appoint a standing proxy in Japan or provide a mailing address in Japan. Each such shareholder must give notice of such standing proxy or mailing address to the relevant account managing institution. Such notice will be forwarded to us through JASDEC. Japanese securities companies and commercial banks customarily act as standing proxies and provide related services for standard fees. Notices from us to
non-resident
shareholders are delivered to such standing proxies or mailing addresses.

Under the clearing system, shares constituting less than one unit are transferable. Under the rules of the Japanese stock exchanges, however, shares constituting less than one unit do not comprise a trading unit, except in limited circumstances, and accordingly may not be sold on Japanese stock exchanges.

Our transfer agent is Mizuho Trust & Banking, located at
2-1,
Yaesu
1-chome,
Chuo-ku,
Tokyo
103-8670,
Japan.

The registered holder of deposited shares underlying the ADSs is the depositary for the ADSs. Accordingly, holders of ADSs will not be able to directly assert their shareholders’ rights against us.

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Preferred Stock

The

Unless otherwise specified, the following is a summary of information concerning the shares of our preferred stock includingas of the date hereof ,including brief summaries of the relevant provisions of our articles of incorporation, our share handling regulations and the Companies Act and certain related legislation, all as currently in effect. The detailed rights of our preferred stock are set forth in our articles of incorporation and the resolutions of our Board of Directors or a determination by executive officer(s) under the authority delegated by the Board of Directors relating to the issuance of the relevant series of preferred stock.

General

Under our articles of incorporation, we are authorized to issue 900,000,000 shares of each of the first to fourth series of class XIV preferred stock (provided that the aggregate number of shares authorized to be issued with respect to the four series of class XIV preferred stock may not exceed 900,000,000 shares), 900,000,000 shares of each of the first to fourth series of class XV preferred stock (provided that the aggregate number of shares authorized to be issued with respect to the four series of class XV preferred stock may not exceed 900,000,000 shares), 1,500,000,000 shares of each of the first to fourth series of class XVI preferred stock (provided that the aggregate number of shares authorized to be issued with respect to the four series of class XVI preferred stock may not exceed 1,500,000,000 shares).

The Ordinary General Meeting of Shareholders held on June 25, 2020 approved a partial amendment to the articles of incorporation to reduce the number of shares of each of the first to fourth series of class XIV and XV preferred stock authorized to be issued (and the aggregate number of shares authorized to be issued with respect to the four series of each of class XIV and XV preferred stock) to 90,000,000 shares, and the number of shares of each of the first to fourth series of class XVI preferred stock authorized to be issued (and the aggregate number of shares authorized to be issued with respect to the four series of each of class XVI preferred stock) to 150,000,000 shares, to reflect the share consolidation in respect of common stock on the basis of one post-consolidation share per ten
pre-consolidation
shares, and such reduction of the number of shares of preferred stock authorized to be issued shall become effective on October 1, 2020.
As of March 31, 2018,2020, there was no outstanding preferred stock.

Preferred Dividends

Payment of annual dividends on shares of common stock is subject to the prior payment of the annual preferred dividends on shares of preferred stock. The amount of preferred dividends for each series of the preferred stock is as follows:

Each of the first to fourth series of class XIV preferred stock (currently not in issue) bears an annual
non-cumulative
dividend of the amount to be determined by resolution of the Board of Directors or determination by executive officer(s) under the authority delegated by the Board of Directors at the time of issuance, up to a maximum of ¥100 per share, and in the event we pay an interim dividend, holders are entitled to receive one half of such amount per share in preference to common stock.

Each of the first to fourth series of class XV preferred stock (currently not in issue) bears an annual
non-cumulative
dividend of the amount to be determined by resolution of the Board of Directors or determination by executive officer(s) under the authority delegated by the Board of Directors at the time of issuance, up to a maximum of ¥100 per share, and in the event we pay an interim dividend, holders are entitled to receive one half of such amount per share in preference to common stock.

Each of the first to fourth series of class XVI preferred stock (currently not in issue) bears an annual
non-cumulative
dividend of the amount to be determined by resolution of the Board of Directors or determination by executive officer(s) under the authority delegated by the Board of Directors at the time of issuance, up to a maximum of ¥100 per share, and in the event we pay an interim dividend, holders are entitled to receive one half of such amount per share in preference to common stock.

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The Ordinary General Meeting of Shareholders held on June 25, 2020 approved a partial amendment to the articles of incorporation to increase the maximum amount of preferred dividends for each series of the preferred stock from ¥100 per share to ¥1,000 per share, to maintain effectively the amount of the preferred dividend prescribed in the article of incorporation applicable before the amendment to shares of preferred stock after the share consolidation of common stock on the basis of one post-consolidation share per ten
pre-consolidation
shares, and such amendment shall become effective on October 1, 2020.
The amount of any interim preferred dividend will be deducted from the annual preferred dividend payable on preferred stock in respect of the same fiscal year.

No payment of dividends on our preferred stock or any other stock may be made unless we have sufficient Distributable Amount and a resolution to pay such dividend is obtained at the Board of Directors or at the relevant general meeting of shareholders, as the case may be.

Dividends on our preferred stock are
non-cumulative.
If the full amount of any dividend is not declared on our preferred stock in respect of any fiscal year, holders of our preferred stock do not have any right to receive dividends in respect of the deficiency in any subsequent fiscal year, and we will have no obligation to pay the deficiency or to pay any interest regardless of whether or not dividends are paid in respect of any subsequent fiscal year. The holders of our preferred stock are not entitled to any further dividends or other participation in or distribution of surplus.

Liquidation Rights

In the event of our voluntary or involuntary liquidation, holders of our preferred stock will be entitled, equally in rank as among themselves and in preference over shares of common stock, to receive a distribution of ¥1,000 per share out of our residual assets upon our liquidation.

The Ordinary General Meeting of Shareholders held on June 25, 2020 approved a partial amendment to the articles of incorporation to increase the amount of liquidation distribution to which holders of our preferred stock will be entitled from ¥1,000 per share to ¥10,000 per share, to maintain effectively the amount of the preferred liquidation distribution prescribed in the articles of incorporation before the amendment to shares of preferred stock after the share consolidation of common stock on the basis of one post-consolidation share per ten
pre-consolidation
shares, and such amendment shall become effective on October 1, 2020.
Holders of our preferred stock are not entitled to any further dividends or other participation in or distribution of our residual assets upon our liquidation.

Voting Rights

No holder of preferred stock has a right to receive notice of, or to vote at, a general meeting of shareholders, except as otherwise specifically provided under the Companies Act or other applicable law or our articles of incorporation. Under our articles of incorporation, holders of units of our preferred stock will be entitled to receive notice of, and to vote at, general meetings of shareholders:

from the commencement of any ordinary general meeting of shareholders if an agenda for approval to declare a preferred dividend is not submitted to such meeting (except in the case where a resolution of the Board of Directors to pay the preferred dividends is made pursuant to our articles of incorporation between the last day of the business year and the date of such meeting); or

from the close of any ordinary general meeting of shareholders if a proposed resolution to declare a preferred dividend is not approved at such meeting,

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until such time as a resolution of the Board of Directors to pay the preferred dividends is made pursuant to our articles of incorporation or a resolution of an ordinary general meeting of shareholders declaring a preferred dividend is approved.

A separate resolution of a meeting of the holders of the preferred stock is required in order to approve the following matters which would prejudice the interests of the holders of the relevant preferred stock:

 (i)an amendment to the articles of incorporation to add new classes of shares to be issued, alter the terms of the shares or increase the number of authorized number of shares or authorized number of any class of shares, with certain exceptions;

 (ii)consolidation or split of shares;

 (iii)pro rated allocation of shares or stock acquisition rights to shareholders without any consideration;

 (iv)granting
pre-emptive
rights for new shares or stock acquisition rights to shareholders;

 (v)amalgamations or mergers;

 (vi)certain corporate splits;

 (vii)share exchanges;

 (viii)share transfers; and

 (ix)other matters set forth in the articles of incorporation.

Such separate resolution is not required when the articles of incorporation so provide, except in the case of (i) above.

A separate resolution of a meeting of the holders of the common stock is also required in cases where the above matters would prejudice the interests of the holders of the common stock.

Under our articles of incorporation, in cases where a matter to be resolved at an ordinary general meeting of shareholders is required to be approved by such separate resolution, the record date for the relevant meeting of

the holders of the common stock or the preferred stock, as the case may be, is the same date as the record date for the ordinary general meeting of shareholders, when is March 31 of each year.

Ranking

We will not (unless the requisite sanction has been given by holders of preferred stock) create or issue any other shares ranking, as regards order of participation in the profits or assets of us on a liquidation or otherwise, in priority to the preferred stock in issue, but we may issue, without obtaining the consent of holders of the preferred stock in issue, other preferred stock ranking pari passu with the preferred stock in issue as regards the order of such participation in profits or assets of us and carrying such rights as to rates of preferred dividends or terms of conversion as the Board of Directors may determine, subject to the limitations set forth in our articles of incorporation and the Companies Act.

Acquisition of Preferred Stock

We may, if required, subject to regulatory approval, acquire any shares of the preferred stock then outstanding at any time out of the Distributable Amount (as defined in “—Common Stock—Restriction on Distribution of Surplus”). On or after the date to be determined by a resolution of the Board of Directors or a determination by executive officer(s) under the authority delegated by the Board of Directors relating to the issuance of the relevant preferred stock, we may also acquire all or a portion of each series of the first to fourth series of class XV (currently not in issue) or the first to fourth series of class XVI preferred stock (currently not in issue) at the acquisition price to be determined by a resolution of the Board of Directors or a determination by executive officer(s) under the authority delegated by the Board of Directors relating to the issuance of the relevant preferred stock on the date separately determined by a resolution of the Board of Directors or a
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determination by executive officer(s) under the authority delegated by the Board of Directors, without consent of the holders of such preferred stock. When a portion of a certain class of preferred stock is acquired, such acquisition shall be made from each holder thereof in number of shares determined by way of a lot or pro rata allocation.

Stock Splits

Our articles of incorporation provide that no stock split, stock consolidation or free distribution of stock shall be made in respect of the preferred stock unless otherwise provided for in any law or regulation.

Issue of Additional Shares and
Pre-emptive
Rights

Our articles of incorporation provide that no holder of our preferred stock has any
pre-emptive
right to subscribe for or purchase shares, stock acquisition rights or bonds with stock acquisition rights in the event of an issuance of additional shares or bonds and that no free distribution of stock acquisition rights may be made to the holders of our preferred stock.

Conversion

Our articles of incorporation provide that holders of the first to fourth series of class XIV (currently not in issue) or the first to fourth series of class XV (currently not in issue) preferred stock may, at their option, convert their shares to common stock by requesting us to acquire such shares and issue or transfer common stock to them. Other classes of our preferred stock are
non-convertible.

Our articles of incorporation also provide that the first to fourth series of class XIV (currently not in issue) or the first to fourth series of class XV (currently not in issue) preferred stock outstanding on the last day of the acquisition period will be mandatorily acquired by us on the immediately following day (the “mandatory conversion date”) in consideration of shares of common stock of which number shall be calculated at the then-current market price per share of our common stock (the “mandatory conversion price”).

Acquisition of Preferred Stock without Consideration or in Exchange for Common Stock

In order to enable the relevant preferred stock to meet the criteria for inclusion in Additional Tier 1 capital under the capital adequacy guidelines of the Financial Services Agency under the Basel III rules, the first to fourth series of class XIV (currently not in issue), the first to fourth series of class XV (currently not in issue) and the first to fourth series of class XVI (currently not in issue) preferred stock have the following feature.

In respect of the first and second series of class XIV (currently not in issue), the first and second series of class XV (currently not in issue) and the first and second series of class XVI (currently not in issue) preferred stock, upon the occurrence of an event determined by a resolution of the Board of Directors or a determination by executive officer(s) under the authority delegated by the Board of Directors relating to the issuance of the relevant preferred stock as an event where a
write-off
of the relevant preferred stock or a conversion of the relevant preferred stock into common stock, or financial support or other similar measures taken by a public sector, without which we would become
non-viable,
is determined to be necessary, we shall mandatorily acquire the relevant preferred stock, in whole, free of consideration, on a date which falls after the occurrence of such event as determined by the resolution of the Board of Directors or a determination by executive officer(s) under the authority delegated by the Board of Directors relating to the issuance of the relevant preferred stock and which date shall be separately determined by a resolution of the Board of Directors or a determination by executive officer(s) under the authority delegated by the Board of Directors after the issuance of the relevant preferred stock, or a date which falls after the occurrence of the relevant certain event and which date shall be determined by the resolution of the Board of Directors or a determination by executive officer(s) under the authority delegated by the Board of Directors relating to the issuance of the relevant preferred stock, giving due consideration to the capital adequacy requirements applicable to us and other factors.

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In respect of the third and fourth series of class XIV (currently not in issue), the third and fourth series of class XV (currently not in issue) and the third and fourth series of class XVI (currently not in issue) preferred stock, upon the occurrence of an event determined by a resolution of the Board of Directors or a determination by executive officer(s) under the authority delegated by the Board of Directors relating to the issuance of the relevant preferred stock as an event where a
write-off
of the relevant preferred stock or a conversion of the relevant preferred stock into common stock, or financial support or other similar measures taken by a public sector, without which we would become
non-viable,
is determined to be necessary, we shall mandatorily acquire the relevant preferred stock, in whole, on a date which falls after the occurrence of such event as determined by the resolution of the Board of Directors or a determination by executive officer(s) under the authority delegated by the Board of Directors relating to the issuance of the relevant preferred stock and which date shall be separately determined by a resolution of the Board of Directors or a determination by executive officer(s) under the authority delegated by the Board of Directors after the issuance of the relevant preferred stock, or a date which falls after the occurrence of the relevant certain event and which date shall be determined by the resolution of the Board of Directors or a determination by executive officer(s) under the authority delegated by the Board of Directors relating to the issuance of the relevant preferred stock, giving due consideration to the capital adequacy requirements applicable to us and other factors, and instead, we shall deliver our own common stock to holders of the relevant preferred stock. In this case, the terms of acquisition, including the number of shares of the common stock to be delivered in exchange for the acquisition of one (1) share of the relevant preferred stock, shall be determined by the resolution of the relevant Board of Directors or the determination by relevant executive officer(s) under the authority delegated by the Board of Directors relating to the issuance of the relevant preferred stock, giving due consideration to the market price of common stock, the subscription price of the relevant preferred stock and other factors.

10.C. Material Contracts

There were no material contracts entered into by us for the two years preceding the filing of this annual report that were not entered into in the ordinary course of business.

10.D. Exchange Controls

Foreign Exchange and Foreign Trade Act

The following is a general summary of major Japanese foreign exchange controls regulations applicable to holders of our shares, voting rights or ADSs who are
non-residents
of Japan or foreign investors, each as described below. The statements regarding Japanese foreign exchange control regulations set forth below are based on the laws and regulations in force and as interpreted by the Japanese authorities as of the date of this annual report and are subject to subsequent changes in the applicable Japanese laws or interpretations thereof. This summary is not exhaustive of all possible foreign exchange controls considerations that may apply to a particular investor, and potential investors are advised to satisfy themselves as to the overall foreign exchange controls consequences of the acquisition, ownership and disposition of our shares, voting rights or ADSs by consulting their own advisors.
The Foreign Exchange and Foreign Trade Act of Japan (Act No. 228 of 1949, as amended) and the cabinet orders and ministerial ordinances incidental thereto, collectively the Foreign Exchange Act, set forth, among other matters, the regulations relating to the receipt by
non-residents
of Japan of payment with respect to shares to be issued by us and the acquisition and holding of our shares and voting rights by
non-residents
of Japan and the inward direct investment by foreign investors, botheach as described below. After amendments to the Foreign Exchange Act in 2019 and 2020 (collectively, the “Amendments”), the definition of foreign investors and inward direct investment and the scope of the Designated Business (as defined below) were broadened, and the requirements and procedures regarding prior notification and post facto reporting were amended, each as described below. It also applies in some cases to the acquisition and holding of ADSs representing such shares acquired and held bynon-residents of Japan andauthority to exercise our voting rights by foreign investors.investors that constitutes an inward direct investment. Generally, the Foreign Exchange
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Act currently in effect does not affect the right of a
non-resident
of Japan to purchase or sell ADSs outside Japan for
non-Japanese currency.

currency unless such transaction constitutes an inward direct investment and requires prior notification filing.
“Non-residents
of Japan” are defined as individuals who are not resident in Japan and corporations whose principal offices are located outside Japan. Generally, the branches and offices of
non-resident
corporations that are located in Japan are regarded as residents of Japan while the branches and offices of Japanese corporations located outside Japan are regarded as
non-residents
of Japan.

“Foreign investors” are the following persons who make certain prescribed investments:

“inward direct investments,” which is described below:
individuals not resident in Japan;

judicial persons or other organizations that are organized under the laws of foreign countries or whose principal offices are located outside Japan;

corporations of which 50% or more of the sharesvoting rights are held by (i) individuals not resident in Japan, and/or(ii) judicial persons or other organizations that are organized under the laws of foreign countries or whose principal offices are located outside Japan;Japan, (iii) corporations of which 50% or more of the voting rights are held by such individuals falling within (i) above and/or judicial persons or other organizations falling within (ii) above, and/or (iv) subsidiary corporations (as defined under the Japan’s Companies Act, but excluding judicial persons or other organizations that are organized under the laws of foreign countries or whose principal offices are located outside Japan) of such corporation falling within (iii) above;
partnerships under the Civil Code of Japan (Act No. 89 of 1896, as amended) established to invest in corporations, limited partnerships for investment under the Limited Partnership Act for Investment of Japan (Act No. 90 of 1998, as amended) or any other similar partnerships under the laws of foreign countries of which (i) 50% or more of the contributions are made by individuals not resident in Japan, judicial persons or other organizations that are organized under the laws of foreign countries or whose principal offices are located outside Japan and/or any other persons or organizations prescribed in the Foreign Exchange Act, or (ii) a majority of the general partners are individuals not resident in Japan, judicial persons or other organizations that are organized under the laws of foreign countries or whose principal offices are located outside Japan and/or any other persons or organizations prescribed in Foreign Exchange Act; and

judicial persons or other organizations, a majority of officers (or a majority of officers having the power of representation) of which are not resident in Japan.

An “inward direct investment” is a certain action defined in the Foreign Exchange Act and includes the following actions conducted by a foreign investor:
acquisition of shares or voting rights of a corporation listed on a Japanese stock exchange (the “listed corporation”), including authority to exercise, either directly or through instructions, such voting rights owned by others, that result in such foreign investor, together with parties that have a special relationship with that foreign investor, holding or having authority to exercise 1% or more of the total issued shares or voting rights;
acceptance of authority to exercise proxy voting rights on behalf of another shareholder of a listed corporation in respect of certain matters controlling or having material influence on its management (as prescribed in the Foreign Exchange Act), including election or removal of directors or transfer of its business, that result in such foreign investor, together with parties that have a special relationship with that foreign investor, holding or having authority to exercise 10% or more of the total voting rights;
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obtaining consent from another foreign investor holding the voting rights of a listed corporation to exercise, either directly or through instructions, voting rights jointly, that result in such foreign investor obtaining such consent and such other foreign investor making such consent, together with parties that have a special relationship with those foreign investors, respectively, holding or having authority to exercise 10% or more of the total voting rights;
making consents at the general meeting of shareholders of a listed corporation to certain proposals having material influence on its management (as prescribed in the Foreign Exchange Act), including (a) election of the foreign investor making such consent or its related persons (as defined in the Foreign Exchange Act) as its directors or corporate auditors, or (b) transfer or discontinuation of its business, if such foreign investor, together with parties that have a special relationship with that foreign investor, holds or has authority to exercise 1% or more of the total voting rights.
Dividends and Proceeds of Sales

Under the Foreign Exchange Act, dividends paid on, and the proceeds of sales in Japan of, shares held by
non-residents
of Japan may in general be converted into any foreign currency and repatriated abroad. The acquisition of our shares by
non-residents
of Japan by way of a stock split is not subject to any notification or reporting requirements.

Acquisition of Shares

In general, a
non-resident
of Japan who acquires shares from a resident of Japan is not subject to any prior filing requirement, although the Foreign Exchange Act empowers the Minister of Finance of Japan to require prior approval for any such acquisition in certain limited circumstances. While such prior approval is not required in general, in the case where a resident of Japan transfers shares of a Japanese company for consideration exceeding ¥100100 million yen to a
non-resident
of Japan, the resident of Japan that transfers the shares is required to report the transfer to the Minister of Finance of Japan within 20 days from the date of the transfer or the date of the payment for such transfer, whichever is later, unless the transfer is made through a bank or financial instruments business operator licensed or registered under Japanese law.

Inward Direct Investment
Prior Notification Requirements
If a foreign investor acquires our shares and, together with parties who haveintends to consummate an action in respect of a special relationship withlisted corporation that foreign investor, holds 10% or more of our issued sharesconstitutes an inward direct investment as a result ofdescribed above, in certain circumstances, such acquisition,as where the foreign investor must fileis in a report of such acquisition withcountry that is not listed on an exemption schedule in the Minister of Finance and any other competent Minister onForeign Exchange Act, or beforewhere that listed corporation is engaged in certain businesses designated by the 15th day of the month following the month in which the acquisition was made, in principle. In certain limited circumstances, however, aForeign Exchange Act (the “Designated Businesses”), prior notification of such acquisitionthe relevant inward direct investment must be filed with the Minister of Finance and any other competent Minister, who may modify or prohibit the proposed acquisition. IfMinisters.
However, a foreign investor requiredseeking to file suchacquire shares or voting rights, including authority to exercise, either directly or through instructions, voting rights owned by others, of a listed corporation that constitutes an inward direct investment may be eligible for the exemptions newly introduced by the Amendments if certain conditions as described below are met. In the case of an acquisition of shares or voting rights, including authority to exercise, either directly or through instructions, voting rights owned by others, of a listed corporation engaged in certain Designated Businesses designated by the Foreign Exchange Act as core sector businesses (the “Core Sector Designated Businesses”), the foreign investor may be exempted from the prior notification acquires ourrequirement if, as a result of such acquisition, the foreign investor, together with parties that have a special relationship with that foreign investor, holds or has authority to exercise less than 10% of the total issued shares without complianceor voting rights of such corporation, and such foreign investor complies with the following conditions (the “Exemption Conditions”):
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the foreign investor or its closely-related persons (as defined in the Foreign Exchange Act) will not become directors or corporate auditors of such corporation;
the foreign investor will not make certain proposals (as prescribed in the Foreign Exchange Act) at the general meeting of shareholders, including transfer or discontinuation of the Designated Businesses of such corporation;
the foreign investor will not access
non-public
technical information in relation to the Designated Businesses of such corporation, or take certain other actions that may lead to the leak of such
non-public
technical information (as prescribed in the Foreign Exchange Act);
the foreign investor will not attend, or not cause any persons designated by it to attend, meetings of such corporation’s board of directors, or meetings of committees having authority to make important decisions, in respect of the Core Sector Designated Businesses of such corporation; and
the foreign investor will not make, or not cause any persons designated by it to make, proposals to such board or committees or their members in writing or electronic form requesting any response or actions by certain deadlines in respect of the Core Sector Designated Businesses of such corporation.
Notwithstanding the above, if a foreign investor falls under a category of disqualified investors designated by the Foreign Exchange Act (including (a) investors who have records of certain sanctions due to violations of the Foreign Exchange Act and (b) certain investors who are state-owned enterprises or other related entities excluding those who are accredited by the Minister of Finance), in no event may such foreign investor be eligible for the exemptions described above. On the other hand, if a foreign investor, excluding the disqualified investors described in the foregoing sentence, falls under a category of certain foreign financial institutions (as prescribed in the Foreign Exchange Act) and complies with the first three conditions included in the Exemption Conditions, such foreign investor may be eligible for the exemptions, even if, as a result of acquisition of shares or voting rights, including authority to exercise, either directly or through instructions, voting rights owned by others, such foreign investor, together with parties that have a special relationship with that foreign investor, holds or has authority to exercise 10% or more of the total issued shares or voting rights of a listed corporation engaged in the Core Sector Designated Businesses, which would have required prior notification requirementsbefore the Amendments.
A subsidiary of ours currently engages in the businesses of software designed for cybersecurity business, and, in connection with the expansion of scope of the Designated Businesses under the Amendments, such businesses fall into the category of the Core Sector Designated Businesses. For reference purposes only, the Minister of Finance publishes, and may update from time to time, a list that classifies listed corporations into the following categories: (i) corporations engaged only in businesses other than the Designated Businesses; (ii) corporations engaged in the Designated Businesses other than the Core Sector Designated Businesses; and (iii) corporations engaged in the Core Sector Designated Businesses. According to the list published by the Minister of Finance as of June 5, 2020, we are classified within category (iii) above.
In addition, if a foreign investor intends to (i) accept authority to exercise proxy voting rights on behalf of another shareholder of a listed corporation engaged in the Designated Businesses, or (ii) obtain consent from another foreign investor holding the ordervoting rights of modificationsuch corporation to exercise voting rights jointly, or (iii) consent to a proposal at the general meeting of or prohibition onshareholders of such corporation, in each case, that constitutes an inward direct investment as described above, prior notification of the proposed acquisition,relevant inward direct investment must be filed with the Minister of Finance and any other competent ministerMinisters. In such cases, the newly introduced exemptions from the prior notification requirements may not be available, except for cases where a foreign investor obtains consent from another foreign investor holding the voting rights of such corporation to exercise voting rights jointly in respect of matters other than certain matters controlling or having a material influence on the management of such corporation (as prescribed in the Foreign Exchange Act), including election or removal of directors or transfer of business, which would have required prior notification before the Amendments.
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If such prior notification is filed, the proposed inward direct investment may not be consummated until after 30 days have passed from the date of filing, although this screening period may be shortened to two weeks unless the Minister of Finance and any other competent Ministers deem it necessary to review the proposed inward direct investment. The Ministers may extend the screening period up to five months if they deem it necessary to review the proposed inward direct investment and may recommend any modification or prohibition of the proposed inward direct investment and, if the foreign investor does not accept such recommendation, the Ministers may order the modification or prohibition of such inward direct investment. In addition, if a foreign investor (i) consummates such inward direct investment without filing the prior notification described above, (ii) consummates such inward direct investment before the expiration of the screening period described above, (iii) makes false statements in the prior notification described above or (iv) does not follow the recommendation or order issued by the Ministers to modify or prohibit such inward direct investment, the Ministers may order such foreign investor to dispose of all or part of the shares acquired or take other necessary measures.

If a foreign investor who consummated an inward direct investment without filing the prior notification due to the exemptions from such prior notification requirements as described above does not comply with any Exemption Conditions, the Ministers may recommend to take necessary measures and, if the foreign investor does not accept such recommendation, the Ministers may order to take such measures. If such foreign investor does not follow the order issued by the Ministers to take such measures, the Ministers may order such foreign investor to dispose of all or part of the shares acquired or take other necessary measures.
Post Facto Reporting Requirements
A foreign investor who consummates an inward direct investment as described above through an acquisition of shares or voting rights, including authority to exercise, either directly or through instructions, voting rights owned by others, of a listed corporation engaged in the Designated Businesses, including us (as of the date of this annual report), but is not subject to the prior notification requirements described above due to the exemptions from such prior notification requirements, in general, must file a report of the relevant inward direct investment with the Minister of Finance and any other competent Ministers within 45 days of the date when, as a result of such acquisition, the foreign investor (excluding, in the cases of (i) and (ii) below, a foreign investor who falls under a category of certain foreign financial institutions (as prescribed in the Foreign Exchange Act)), together with parties that have a special relationship with that foreign investor, holds or has authority to exercise (i) 1% or more but less than 3% of the total issued shares or voting rights, for the first time, (ii) 3% or more but less than 10% of the total issued shares or voting rights, for the first time, or (iii) 10% or more of the total issued shares or voting rights.
Acquisition of ADSs and Deposit and Withdrawal under American Depositary Facility

The

In respect of the acquisition of ADSs upon the deposit of shares with Mizuho Bank, in its capacity as custodian and agent for the depositary, in Tokyo, the issuance of ADSs by the depositary to anon-resident of Japan in respect of the deposit andor otherwise, or the withdrawal of the underlying shares upon the surrender of the ADR, are not subject to anyin each case by a foreign investor, where such acquisition of ADSs or withdrawal of the formalities or restrictions referredunderlying shares constitutes an inward direct investment, in general, a prior notification will be required unless the newly introduced exemption is available, as noted above, and if such prior notification is not required due to above. However, where as a result of a deposit or withdrawal the aggregate number of shares held by the depositary, including shares deposited with Mizuho Bank as custodian for the depositary, or the holder surrendering the ADR, as the case may be, would be 10% or more of the total outstanding shares,exemption, a report will be required, and in specified circumstances, a prior notification may be required, as noted above.

10.E. Taxation

Japanese Taxation

The following is a general summary of major Japanese tax consequences (limited to national tax) to holders of shares of our common stock or ADSs representing shares of our common stock who are
non-residents
of Japan or
non-Japanese
corporations without a permanent establishment in Japan, which we refer to as
“non-resident
holders” in this section. The statements regarding Japanese tax laws set forth below are based on the laws and
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treaties in force and as interpreted by the Japanese tax authorities as at the date of this Annual Report and are subject to changes in the applicable Japanese laws or tax treaties, conventions or agreements, or interpretations thereof, occurring after that date. This summary is not exhaustive of all possible tax considerations that may apply to a particular investor, and potential investors are advised to satisfy themselves as to the overall tax consequences of the acquisition, ownership and disposition of shares of our common stock or ADSs, including specifically the tax consequences under Japanese law, the laws of the jurisdiction of which they are resident, and any tax treaty, convention or agreement between Japan and their country of residence, by consulting their own tax advisers.

For the purpose of Japanese tax law and the tax treaty between the United States and Japan, a U.S. holder of ADSs will generally be treated as the owner of the shares underlying the ADSs evidenced by the ADRs.

Generally, a
non-resident
holder of shares of our common stock or ADSs is subject to Japanese income tax collected by way of withholding on dividends paid by us, and such tax will be withheld prior to payment of dividends. Stock splits are, in general, not a taxable event.

In the absence of any applicable tax treaty, convention or agreement reducing the maximum rate of Japanese withholding tax or allowing exemption from Japanese withholding tax, the rate of Japanese withholding tax applicable to dividends paid by Japanese corporations on their shares of stock to
non-resident
holders is generally 20.42% under Japanese tax law. However, with respect to dividends paid on listed shares issued by a Japanese corporation (such as shares of our common stock or ADSs) to
non-resident
holders, other than any individual shareholder who holds 3% or more of the total number of shares issued by the relevant Japanese corporation, the aforementioned 20.42% withholding tax rate is reduced to 15.315% for dividends due and payable on or before December 31, 2037. Due to the imposition of a special additional withholding tax (2.1% of the original withholding tax amount) to secure funds for reconstruction from the Great East Japan Earthquake, the original

withholding tax rate of 15% and 20%, as applicable, has been effectively increased, respectively, to 15.315% and 20.42%, during the period beginning on January 1, 2013 and ending on December 31, 2037.

Under the income tax treaty between the United States and Japan, the maximum rate of Japanese withholding tax which may be imposed on dividends paid to a qualified United States resident eligible to enjoy treaty benefits that is either a corporation owning, directly or indirectly, less than 10% of the voting stock of a Japanese corporation or an individual is generally reduced to 10% of the gross amount actually distributed, except where such United States resident conducts business in Japan through a permanent establishment situated therein and the holding in respect of which the dividends are paid is effectively connected with such permanent establishment. Dividends paid to pension funds which are qualified United States residents eligible to enjoy treaty benefits are exempt from Japanese income taxation by way of withholding or otherwise unless such dividends are derived from the carrying on of a business, directly or indirectly, by such pension funds. Under Japanese tax law, any reduced maximum rate applicable under a tax treaty shall be available when such maximum rate is below the rate otherwise applicable under the Japanese tax law referred to in the preceding paragraph with respect to the dividends to be paid by us on shares of our common stock or ADSs. A
non-resident
holder of shares of our common stock who is entitled, under any applicable tax treaty, to a reduced rate of Japanese withholding tax, or exemption therefrom, as the case may be, is required to submit an Application Form for Income Tax Convention Regarding Relief from Japanese Income Tax and Special Income Tax for Reconstruction on Dividends (together with any other required forms and documents) in advance, through the withholding agent, to the relevant tax authority before payment of dividends. A standing proxy for a
non-resident
holder may provide such application service. In addition, a certain simplified special filing procedure is available for
non-resident
holders to claim treaty benefits of exemption from or reduction of Japanese withholding tax, by submitting a Special Application Form for Income Tax Convention Regarding Relief from Japanese Income Tax and Special Income Tax for Reconstruction on Dividends of Listed Stocks (together with any other required forms and documents). With respect to ADSs, this reduced rate or exemption will be applicable to
non-resident
holders of ADSs if the depositary or its Agent submits two Application Forms (one before payment of dividends and the other within eight months after the record date concerning such payment of dividends), together with
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certain other documents. To claim this reduced rate or exemption,
non-resident
holders of ADSs will be required to file a proof of taxpayer status, residence and beneficial ownership, as applicable, and to provide other information or documents as may be required by the depositary.
Non-resident
holders who are entitled, under any applicable tax treaty, to a reduced rate of Japanese withholding tax below the rate otherwise applicable under Japanese tax law, or exemption therefrom, as the case may be, but fail to submit the required application in advance may nevertheless be entitled to claim a refund from the relevant Japanese tax authority of withholding taxes withheld in excess of the rate under an applicable tax treaty (if such
non-resident
holders are entitled to a reduced treaty rate under the applicable tax treaty) or the full amount of tax withheld (if such
non-resident
holders are entitled to an exemption under the applicable tax treaty), as the case may be, by complying with a certain subsequent filing procedure.

We do not assume any responsibility to ensure withholding at the reduced rate, or exemption therefrom, for
non-resident
holders who would be so eligible under an applicable tax treaty but where the required procedures as stated above are not followed.

Gains derived from the sale or other disposition of shares of our common stock or ADSs outside Japan by a
non-resident
holder, who is a portfolio investor, are not, in general, subject to Japanese income tax or corporation tax.

Any deposits or withdrawals of shares of our common stock by a
non-resident
holder in exchange for ADSs are, in general, not subject to Japanese income or corporation tax.

Japanese inheritance and gift taxes, at progressive rates, may be payable by an individual who has acquired our shares of our common stock or ADSs from an individual, as a legatee, heir or donee, even if none of the acquiring individual, the decedent or the donor is a Japanese resident.

U.S. Taxation

The following sets forth the material United States federal income tax consequences of the ownership of shares and ADSs as of the date hereof. The discussion set forth below is applicable to U.S. holders (as defined below) (i) who are residents of the United States for purposes of the current income tax treaty between Japan and the United States (the “Treaty”), (ii) whose shares or ADSs are, for purposes of the Treaty, neither effectively connected with nor attributable to a permanent establishment in Japan and (iii) who otherwise qualify for the full benefits of the Treaty.

The following summary is not a complete analysis or description of all potential U.S. federal income tax consequences to a particular U.S. holder. It does not address all U.S. federal income tax considerations that may be relevant to all categories of potential purchasers, certain of which (such as banks or other financial institutions, insurance companies, dealers in securities or currencies,
tax-exempt
entities,
non-U.S.
persons, persons holding a share or an ADS as part of a “straddle,” “hedge,” conversion or integrated transaction, partnerships or other pass-through entities for U.S. federal income tax purposes, traders in securities who have elected the
mark-to-market
method of accounting for their securities, regulated investment companies, real estate investment trusts, holders whose “functional currency” is not the U.S. dollar, holders liable for alternative minimum tax, persons required to accelerate the recognition of any item of gross income with respect to shares or ADSs as a result of such income being recognized on an applicable financial statement and holders of 10% or more of our shares by vote or value) are subject to special tax treatment. This summary does not address the Medicare tax on net investment income or any foreign, state, local or other tax consequences of investments in our shares or ADSs.

This summary addresses only shares or ADSs held as capital assets.

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As used herein, a “U.S. holder” is a beneficial owner of shares or ADSs, as the case may be, that is, for U.S. federal income tax purposes:

an individual citizen or resident of the United States;

a corporation (or other entity treated as a corporation for U.S. federal income tax purposes) created or organized in or under the laws of the United States or any political subdivision thereof;

an estate, the income of which is subject to U.S. federal income tax regardless of its source; or

a trust if it (1) is subject to the primary supervision of a court within the United States and the control of one or more U.S. persons as described in Section 7701(a)(30) of the Code or (2) has a valid election in effect under applicable U.S. Treasury regulations to be treated as a U.S. person.

If a partnership holds shares or ADSs, the tax treatment of a partner will generally depend on the status of the partner and the activities of the partnership. If you are a partner of a partnership holding shares or ADSs, you should consult your tax advisor.

The discussion below is based upon the provisions of the Internal Revenue Code of 1986, as amended (the “Code”), and regulations, rulings and judicial decisions thereunder as of the date hereof, and such authorities may be replaced, revoked or modified so as to result in U.S. federal income tax consequences different from those discussed below. In addition, this summary is based, in part, upon representations made by the depositary to us and assumes that the deposit agreement, and all other related agreements, will be performed in accordance with their terms.

We urge U.S. holders to consult their own tax advisors concerning the U.S. federal, state and local and other tax consequences to them of the purchase, ownership and disposition of shares or ADSs.

ADSs

If a U.S. holder holds ADSs, for U.S. federal income tax purposes, such holder will generally be treated as the owner of the underlying shares that are represented by such ADSs. Accordingly, deposits or withdrawals of shares in exchange for ADSs are not subject to U.S. federal income tax.

Taxation of Dividends

Subject to the discussion under “—U.S. Taxation—Passive Foreign Investment Company Rules” below, the gross amount of any distribution received with respect to our shares or ADSs (including amounts withheld to reflect Japanese withholding taxes) will be taxable as dividends, to the extent paid out of our current or accumulated earnings and profits (as determined for U.S. federal income tax purposes). The amount of distribution of property other than cash will be the fair market value of such property on the date of the distribution. Such cash or
non-cash
income, including withheld taxes, will be includable in a U.S. holder’s gross income as ordinary income on the day actually or constructively received by such U.S. holder in the case of shares, or by the depositary in the case of ADSs. Such dividends received by a U.S. holder will not be eligible for the “dividends-received deduction” allowed to U.S. corporations in respect of dividends received from other U.S. corporations. To the extent that an amount received by a U.S. holder exceeds such holder’s allocable share of our current and accumulated earnings and profits, such excess will be applied first to reduce such holder’s tax basis in its shares or ADSs, thereby increasing the amount of gain or decreasing the amount of loss recognized on a subsequent disposition of the shares or ADSs. Then, to the extent such distribution exceeds such U.S. holder’s tax basis, such excess will be treated as capital gain. However, we do not expect to keep earnings and profits in accordance with U.S. federal income tax principles. Therefore, U.S. holders should expect that a distribution will generally be treated as a dividend.

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The amount of the dividend paid in yen will be the U.S. dollar value of the yen payments received. This value will be determined at the spot yen/U.S. dollar rate on the date the dividend is received by the depositary in the case of U.S. holders of ADSs, or by the shareholder in the case of U.S. holders of shares, regardless of whether the dividend payment is in fact converted into U.S. dollars at that time. If the yen received as a dividend are not converted into U.S. dollars on the date of receipt, a U.S. holder will have basis in such yen equal to their dollar value on the date of receipt, and any foreign currency gains or losses resulting from the conversion of the yen will generally be treated as U.S. source ordinary income or loss.

The maximum rate of withholding tax on dividends paid to you pursuant to the Treaty is 10%. As discussed under “—Japanese Taxation” above, if the Japanese statutory rate applicable to you is higher than the maximum Treaty rate, you will be required to properly demonstrate to the Japanese tax authorities your entitlement to the reduced withholding rate under the Treaty. Subject to certain limitations, the Japanese tax withheld may be creditable against the U.S. holder’s U.S. federal income tax liability or may be claimed as a deduction from the U.S. holder’s federal adjusted gross income provided that the U.S. holder elects to deduct all foreign taxes paid or accrued in the same taxable year. For foreign tax credit limitation purposes, the dividend will be income from sources outside the United States. The limitation on foreign taxes eligible for credit is calculated separately with respect to specific classes of income. For this purpose, dividends we pay will generally constitute “passive category income.” Further, in certain circumstances, if a U.S. holder:

has held shares or ADSs for less than a specified minimum period during which such U.S. holder is not protected from the risk of loss; or

is obligated to make payments related to the dividends,

such U.S. holder will not be allowed a foreign tax credit for foreign taxes imposed on dividends paid on shares or ADSs. The rules governing U.S. foreign tax credits are very complex and U.S. holders should consult their tax advisors regarding the availability of foreign tax credits under their particular circumstances.

With respect to
non-corporate
U.S. investors, certain dividends received from a qualified foreign corporation may be subject to reduced rates of taxation. A qualified foreign corporation includes a corporation that is eligible for the benefits of a comprehensive income tax treaty with the United States which the U.S. Treasury Department determines to be satisfactory for these purposes and which includes an exchange of information provision. The U.S. Treasury Department has determined that the Treaty meets these requirements. In addition, it is expected that we will be eligible for the benefits of the Treaty. A foreign corporation is also

treated as a qualified foreign corporation with respect to dividends paid by that corporation on shares (or ADSs backed by such shares) that are readily tradable on an established securities market in the United States. United States Treasury Department guidance indicates that our ADSs (which are listed on the New York Stock Exchange), but not the shares, are readily tradable on an established securities market in the United States. There can be no assurance that our ADSs will be considered readily tradable on an established securities market in later years.

Non-corporate
holders who do not meet a minimum holding period requirement during which they are not protected from a risk of loss or that elect to treat the dividend income as “investment income” pursuant to Section 163(d)(4) of the Code will not be eligible for the reduced rates of taxation. In addition, the rate reduction
will not apply to dividends if the recipient of a dividend is obligated to make related payments with respect to positions in substantially similar or related property. This disallowance applies even if the minimum holding period has been met. U.S. holders should consult their own tax advisors regarding the application of the foregoing rules to their particular circumstances.

Taxation of Capital Gains

Upon a sale or other disposition of shares or ADSs, a U.S. holder will recognize gain or loss in an amount equal to the difference between the U.S. dollar value of the amount realized and the U.S. holder’s tax basis, determined in U.S. dollars, in such shares or ADSs. Subject to the discussion under “—U.S. Taxation—Passive Foreign Investment Company Rules” below, such gain or loss will be capital gain or loss and will be long-term
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capital gain or loss if the U.S. holder’s holding period for such shares or ADSs exceeds one year. A U.S. holder’s tax basis in its shares or ADSs will generally be the cost to the holder of such shares or ADSs. Any such gain or loss realized by a U.S. holder upon disposal of the shares or ADSs will generally be income or loss from sources within the United States for foreign tax credit limitation purposes. The deductibility of capital losses is subject to limitations.

Passive Foreign Investment Company Rules

Based on our past and projected composition of income and assets and the valuation of our assets, including goodwill, we do not believe that we were a passive foreign investment company (“PFIC”) for our most recent taxable year and do not expect to become one in the current taxable year or the foreseeable future, although there can be no assurance in this regard. However, PFIC status is a factual determination that is made annually. Accordingly, it is possible that we may become a PFIC in the current or any future taxable year due to changes in the composition of our income or assets or the valuation of our assets. In addition, this determination is based in part upon certain proposed U.S. Treasury regulations that are not yet in effect (the “Proposed Regulations”) and are subject to change in the future. The Proposed Regulations and other administrative pronouncements from the Internal Revenue Service (the “IRS”) provide special rules for determining the character of income and assets derived in the banking business for purposes of the PFIC rules. Although we believe we have adopted a reasonable interpretation of the Proposed Regulations and administrative pronouncements, there can be no assurance that the IRS will follow the same interpretation.

In general, a foreign corporation is considered a PFIC for any taxable year if either:

at least 75% of its gross income is passive income; or

at least 50% of the value of its assets is attributable to assets that produce or are held for the production of passive income.

The 50% of value test is based on the average of the value of our assets for each quarter during the taxable year. If we own at least 25% by value of another company’s stock, we will be treated, for purposes of the PFIC rules, as owning the proportionate share of the assets and receiving our proportionate share of the income of that company.

If we are a PFIC for any taxable year during which a U.S. holder holds shares or ADSs, the U.S. holder will be subject to special tax rules with respect to any “excess distribution” that the U.S. holder receives and any gain the U.S. holder realizes from the sale or other disposition (including a pledge) of shares or ADSs. Additionally,

non-corporate
U.S. holders will not be eligible for reduced rates of taxation on any dividends received from us if we are a PFIC in the taxable year in which such dividends are paid or in the preceding taxable year.

These special tax rules generally will apply even if we cease to be a PFIC in future years. Distributions U.S. holders receive in a taxable year that are greater than 125% of the average annual distributions they received during the shorter of the three preceding taxable years or their holding period for shares or ADSs will be treated as excess distributions. Under these special tax rules:

the excess distribution or gain will be allocated ratably over the U.S. holder’s holding period for shares or ADSs;

the amount allocated to the current taxable year, and any taxable year prior to the first taxable year in which we were a PFIC, will be treated as ordinary income; and

the amount allocated to each other year will be subject to tax at the highest tax rate in effect for that year, and the interest charge generally applicable to underpayments of tax will be imposed on the resulting tax attributable to each such year.

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Alternatively, a U.S. holder could make a
mark-to-market
election provided that shares or ADSs are regularly traded on a qualified exchange. Under current law, the
mark-to-market
election may be available to U.S. holders of ADSs because the ADSs are listed on the New York Stock Exchange which constitutes a qualified exchange, although there can be no assurance that the ADSs will be “regularly traded” for purposes of the
mark-to-market
election. Under current law, the
mark-to-market
election may be available to U.S. holders of shares because the shares are listed on the Tokyo Stock Exchange, which constitutes a qualified exchange, although there can be no assurance that the shares will be “regularly traded” for purposes of the
mark-to-market
election. U.S. holders should consult their own tax advisors regarding the potential availability and consequences of a
mark-to-market
election. In addition, a U.S. holder of shares or ADSs in a PFIC can sometimes avoid the rules described above by electing to treat the company as a “qualified electing fund” under Section 1295 of the Code. This option is not available to U.S. holders of shares or ADSs because we do not intend to comply with the requirements necessary to permit U.S. holders to make this election.

If a U.S. holder holds shares or ADSs in any year in which we are classified as a PFIC, such holder may be required to file IRS Form 8621.

U.S. holders should consult their own tax advisors concerning the determination of our PFIC status and the U.S. federal income tax consequences of holding shares or ADSs if we are considered a PFIC in any taxable year.

Information Reporting and Backup Withholding

In general, information reporting requirements will apply to dividends in respect of the shares or ADSs or the proceeds from the sale, exchange or redemption of the shares or ADSs paid within the United States, and, in some cases, outside of the United States, to you, unless you are an exempt recipient. In addition, backup withholding tax may apply to those amounts if you fail to provide an accurate taxpayer identification number or fail either to report interest and dividends required to be shown on your U.S. federal income tax returns or make certain certifications. The amount of any backup withholding from a payment to you will be allowed as a refund or credit against your U.S. federal income tax liability, provided you furnish the required information to the IRS.

Certain U.S. holders are required to report information with respect to their investment in shares or ADSs not held in an account maintained by certain financial institutions to the IRS. Investors who fail to report required

information by attaching a complete IRS Form 8938, Statement of Specified Foreign Financial Assets, on their tax return for each year in which they hold shares or ADSs could become subject to substantial penalties. Potential investors are urged to consult with their own tax advisors regarding the possible implications of these rules on their investment in shares or ADSs.

10.F. Dividends and Paying Agents

Not applicable.

10.G. Statement by Experts

Not applicable.

10.H. Documents on Display

We file annual reports on Form
20-F
with, and furnish periodic reports on Form
6-K
to, the U.S. Securities and Exchange Commission. These reports, including this annual report on Form
20-F
and the exhibits thereto, and other information can be inspected without charge at the Commission’s Public Reference Room at 100 F Street, N.E., Washington, D.C. 20549. You can also obtain copies of such materials by mail, at prescribed fees, from the Commission’s Public Reference Room or from commercial document retrieval services. You may obtain information on the operation of the Commission’s Public Reference Room by calling the U.S. Securities and Exchange Commission at
1-800-SEC-0330.
You can also access to the documents filed via the Electronic Data Gathering, Analysis, and Retrieval system on the Commission’s website (http://www.sec.gov).

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10.I. Subsidiary Information

Not applicable.

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ITEM 11.
QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT CREDIT, MARKET AND OTHER RISK

Amid the growing diversity and complexity of banking operations, financial institutions are exposed to various risks, including credit, market, operations, information technology, legal, settlement and other risks. We recognize the conducting of operations tailored to the risks and managing such risks as a key issue relating to overall management. In order to implement our business strategy while maintaining our financial stability, we maintain comprehensive risk management and control measures. Mizuho Financial Group maintains basic policies for risk management established by our Board of Directors that are applicable to the entire Mizuho group. These policies clearly define the kinds of risks to be managed, set forth the organizational structure and provide for the human resources training necessary for appropriate levels of risk management. The policies also provide for audits to measure the effectiveness and suitability of the risk management structure. In line with these basic policies, we maintain various measures to strengthen and enhance the sophistication of our risk management system.

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

Overview of Risk Management

Risk Management Structure

Each of our subsidiaries adopts appropriate risk management measures for its business based on the size and nature of its risk exposures, while Mizuho Financial Group controls risk management for the Mizuho group as a whole. At Mizuho Financial Group, the Risk Management Committee, which is one of the Business Policy Committees of Mizuho Financial Group and chaired by the Group Chief Risk Officer, provides integrated monitoring and management of the overall risk for the Mizuho group. The Group Chief Risk Officer reports the risk management situation to the Board of Directors, the Risk Committee and the Executive Management Committee, etc., on a regular basis and as needed. Mizuho Financial Group regularly receives reports and applications concerning the risk management situation from our principal banking subsidiaries and other core group companies and gives them appropriate instructions concerning risk management. Our principal banking subsidiaries and other core group companies each maintain their own systems for managing various types of risk, receiving reports on the status of risk at their respective subsidiaries, and gives them appropriate instructions concerning risk management as necessary.

Basic Approach

We classify the risks arising from the group’s businesses into different types of risk such as credit risk, market risk, liquidity risk and operational risk according to their risk factors, and manage each type of risk depending on its characteristics. Furthermore, each group entity manages such risks according to the characteristics of its business operations (i.e., management of risks associated with settlement and trust businesses, etc.). In addition to managing each type of risk individually, we have established a comprehensive risk management structure to identify and evaluate overall risk and to keep risk within limits that are managerially acceptable. In line with the basic policies relating to overall risk management laid down by Mizuho Financial Group, companies within the Mizuho group identify risk broadly and take a proactive and sophisticated approach to risk management.

Risk Capital Allocation

We endeavor to obtain a clear grasp of the group’s risk exposure and have implemented measures to control such risks within the group’s financial base in accordance with the risk capital allocation framework. More specifically, we allocate risk capital to our principal banking subsidiaries, including their respective subsidiaries, and other core group companies to control risk within the limits set for each company. We also control risk

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within managerially acceptable limits by working to ensure that the overall risk we hold on a consolidated basis does not exceed our financial strength. To ensure the ongoing financial soundness of Mizuho Financial Group, our principal banking subsidiaries and other core group companies, we regularly monitor the manner in which risk capital is being used in order to obtain a proper grasp of the risk profile within this framework. Reports are also submitted to the Board of Directors and other committees of each company. Risk capital is allocated to Mizuho Bank, Mizuho Trust & Banking, Mizuho Securities and Mizuho Americas by risk category, and is further allocated within their respective business units based on established frameworks.

Stress Testing

For the purpose of verifying the appropriateness of the Mizuho group’s risk appetite and the adequacy of its business plans, we carry out stress testing on our entire portfolio by measuring and assessing the impacts on our capital ratio and financial performance of the stress events assumed in the main and risk scenarios set by the group. Stress testing is carried out to confirm that the required capital ratio and financial performance can be secured on the occurrence of any of the assumed stress events. When our capital ratio or financial performance falls below the required level, we will consider and carry out a revision of our risk appetite and business plans. We also calculate the impacts of assumed stress events on risk volumes, including interest rate risk related to our banking book that is not covered by regulatory capital, to confirm whether the risk volumes balance with the group’s capital when a risk event occurs. The calculated risk volumes are used for assessing the group’s internal capital adequacy. Risk scenarios are set considering the current and projected economic conditions, as well as vulnerabilities in the group’s business and financial structure. Moreover, we have established a robust risk management framework under which stress testing is respectively carried out for each risk category, including market risk. Through such stress testing, we deepen our understanding of the distinctive features of our businesses and portfolios, and proactively determine action to be taken if a stress event happens. In this way, we are committed to enhancing our risk management capabilities on a continued basis.

Credit Risk Management

We define credit risk as the Mizuho group’s exposure to the risk of losses that may be incurred due to a decline in, or total loss of, the value of assets (including
off-balance-sheet
instruments), as a result of deterioration in obligors’ financial position. Mizuho Financial Group has established the methods and structures necessary for grasping and managing credit risk. Mizuho Financial Group manages credit risk for the Mizuho group as a whole. Specifically, Mizuho Financial Group establishes the group’s fundamental credit risk policy to manage major group companies, and monitors and manages the credit risks of the group as a whole.

Credit Risk Management Structure

Credit Risk Management of the Mizuho Group

Our Board of Directors determines the Mizuho group’s basic matters pertaining to credit risk management. In addition, the Risk Management Committee broadly discusses and coordinates matters relating to basic policies and operations in connection with credit risk management and matters relating to credit risk monitoring for the Mizuho group. Under the control of the Group Chief Risk Officer of Mizuho Financial Group, the Credit Risk Management Department and the Risk Management Department jointly monitor, analyze and submit suggestions concerning credit risk and formulate and execute plans in connection with basic matters pertaining to credit risk management.

Credit Risk Management at Our Principal Banking Subsidiaries and Other Core Group Companies

Our principal banking subsidiaries and other core group companies manage their credit risk according to the scale and nature of their exposures in line with basic policies set forth by Mizuho Financial Group. The Board of Directors of each company determines key matters pertaining to credit risk management.

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The Balance Sheet & Risk Management Committee and the Credit Committee, each of which is a Business Policy Committee of our principal banking subsidiaries, are responsible for discussing and coordinating overall management of their individual credit portfolios and transaction policies towards obligors. The respective Chief Risk Officers of our principal banking subsidiaries are responsible for matters relating to planning and implementing credit risk management. The credit risk management departments of our principal banking subsidiaries are in charge of planning and administering credit risk management and conducting credit risk measuring and monitoring. The departments regularly present reports regarding their risk management situation to Mizuho Financial Group. The credit departments of our principal banking subsidiaries determine policies and approve/disapprove individual transactions in terms of credit review, credit management and collection from customers in accordance with the lines of authority set forth respectively by our principal banking subsidiaries. In addition, our principal banking subsidiaries have established internal audit groups that are independent of the business departments in order to ensure appropriate credit risk management.

Method of Credit Risk Management

We have adopted two different but mutually complementary approaches to credit risk management. The first approach is “individual credit management,” in which we manage the process for each individual transaction and individual obligor from execution until collection, based on our assessment of the credit quality of the customer. Through this process, we curb losses in the case of a credit event. The second is “credit portfolio management,” in which we utilize statistical methods to assess the potential for losses related to credit risk. Through this process, we identify credit risks and respond appropriately.

Individual Credit Management

Credit Codes

The basic code of conduct for all of our officers and employees engaged in the credit business is set forth in our credit code. Seeking to fulfill the bank’s mission and social responsibilities, our basic policy for credit business is determined in light of fundamental principles focusing on public welfare, safety, growth and profitability.

Internal Rating System

One of the most important elements of the risk management infrastructure of our principal banking subsidiaries is the use of an internal rating system that consists of credit ratings and pool allocations. Credit ratings consist of obligor ratings which represent the level of credit risk of the obligor, and transaction ratings which represent the possibility of ultimately incurring losses related to each individual claim by taking into consideration the nature of any collateral or guarantee and the seniority of the claim. In principle, obligor ratings apply to all obligors and are subject to regular reviews at least once a year to reflect promptly the fiscal period end financial results of the obligors, as well as special reviews as required whenever a obligor’s credit standing changes. This enables our principal banking subsidiaries to monitor both individual obligors and the status of the overall portfolio in a timely fashion. Because we consider obligor ratings to be an initial phase of the self-assessment process regarding the quality of our loans and
off-balance-sheet
instruments, such obligor ratings are closely linked to the obligor classifications and are an integral part of the process for determining the provision for loan losses and charge-offs in our self-assessment of loans and
off-balance-sheet
instruments.

To assign obligor ratings, we have a quantitative evaluation system (rating model) in place to enable proper assessment of an obligor’s credit standing. The system gives a quantitative rating to an obligor based on obligor-specific characteristics such as type of business (corporation or individual) and geography (in Japan or outside Japan). We categorize our rating models for companies in Japan into those for large companies and those for small and
medium-sized
companies. The former consist of 13 models according to industry-specific factors, while the latter consist of three models. For companies outside Japan, we utilize nine models.

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These were developed by the Credit Risk Management Department based on a statistical methodology and approved by the Chief Risk Officer.

Pool allocations are applied to small claims that are less than a specified amount by pooling customers and claims with similar risk characteristics and assessing and managing the risk for each such pool. Our principal banking subsidiaries efficiently manage credit risk and credit screening by dispersing a sufficient number of small claims within each pool. Our principal banking subsidiaries generally review the appropriateness and effectiveness of our approach to obligor ratings and pool allocations once a year in accordance with predetermined procedures, which is audited by the Internal Audit Group.

Mizuho Financial Group defines a Restructured Loan as a loan extended to a Customer with Special Attention when the following conditions are met: we are aiming for business reconstruction or financial support; and lending conditions were amended favorably to the customer such as allowing interest rate reduction, postponement of principal repayment/interest payment, debt forgiveness, etc.

An overdue loan is defined as a loan for a Customer with Special Attention of which the loan principal or interest is overdue for three months or more following the contractual payment date.

Self-assessment, Provision for Loan Losses and
Off-Balance-Sheet
Instruments and Charge-Offs

We conduct self-assessment of assets to ascertain the status of assets both as an integral part of credit risk management and in preparation for appropriate accounting treatment, including provision for loan losses and
off-balance-sheet
instruments and charge-offs. During the process of self-assessment, obligors are categorized into certain groups taking into consideration their financial condition and their ability to make payments, and credit ratings are assigned to all obligors, in principle, to reflect the extent of their credit risks. The related assets are then categorized into certain classes based on the risk of impairment. This process allows us to identify and control the actual quality of assets and determine the appropriate accounting treatment, including provision for loan losses and
off-balance-sheet
instruments and charge-offs. Specifically, the credit risk management department of each of our principal subsidiaries is responsible for the overall control of the self-assessment of assets of the respective banking subsidiaries, cooperating with the administrative departments specified for each type of asset, including loan portfolios and securities, in executing and managing self-assessments. In our assessment of the probability of obligor bankruptcy, we deem an obligor that is rated as being insolvent or lower as being bankrupt.

Credit Review

Prevention of new impaired loans through routine credit management is important in maintaining the quality of our overall loan assets. Credit review involves analysis and screening of each potential transaction within the relevant business department. In case the screening exceeds the authority of the department, the credit department in charge at headquarters carries out the review. The credit group has specialist departments for different industries, business sizes and regions, carries out timely and specialized examinations based on the characteristics of the customer and its market, and provides appropriate advice to the business department. In addition, in the case of obligors with low credit ratings and high downside risks, the business department and credit department jointly clarify their credit policy and in appropriate cases assist the obligors at an early stage in working towards credit soundness.

Credit Portfolio Management

Risk Measurement

We use statistical methodologies that involve a risk measurement system (enterprise value corporate valuation model, holding period of one year) to manage the possibility of losses by measuring the expected

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average loss for a
one-year
risk horizon (“Expected Loss”) and the maximum loss within a certain confidence interval (“credit VAR”). The difference between expected loss and credit VAR is measured as the credit risk amount (“Unexpected Loss”). The risk measurement system covers the following account items reported by each Mizuho Financial Group company: credit transactions including loans and discounts; securities; customer’s liabilities for acceptances and guarantees; deposits and foreign exchange; derivatives including swaps and options;
off-balance
sheet items including commitments; and other assets involving credit risk.

In establishing transaction spread guidelines for credit transactions, we aim to ensure an appropriate return from the transaction in light of the level of risk by utilizing credit cost data as a reference. Also, we monitor our credit portfolio from various perspectives and set guidelines noted below so that losses incurred through a hypothetical realization of the full credit VAR would be within the amount of risk capital and loan loss reserves.

Risk Control Methods

Our principal banking subsidiaries recognize two types of risk arising from allowing unexpected losshave established guidelines to become too large. One type ismanage “credit concentration risk,” which stems from granting excessive credit to certain individual counterparties or corporate groups. The other type is “chain-reaction default risk,” which arises from granting excessive credit to certain areas, industrial sectors and other groupings. Our principal banking subsidiaries manage these risks in line with our specific guidelines for each. Our principal banking subsidiaries also set the credit limit based on verification of status of capital adequacy. In cases where the limit is exceeded, our principal banking subsidiaries will formulate a handling policy and/or action plan. In addition to the above, our principal banking subsidiaries monitor total credit exposure, credit exposure per rating, credit concentration per individual company, corporate group, geography, countrygeographic area and business sector to make a periodical report to the Balance Sheet & Risk Management Committee and the Credit Committee.

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The following diagram shows our risk management structure:

LOGO

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Market Risk Management

We define market risk as the risk of losses incurred by the group due to fluctuations in interest rates, stock prices, and foreign exchange rates.rates, etc. Market risk includes market liquidity risk; i.e., the risk that we will suffer a loss due to market disruptions or other disorders that prevent us from conducting transactions in the market or require us to pay significantly higher prices than normal to conduct transactions. Mizuho Financial Group manages market risk for the Mizuho group as a whole. Specifically, Mizuho Financial Group establishes the fundamental risk management policy for the entire group, manages the market risk of our principal banking subsidiaries and other core group companies and monitors how the group’s market risk is being managed as a whole.

Market Risk Management Structure

Our Board of Directors determines basic matters pertaining to market risk management policies. The Risk Management Committee of Mizuho Financial Group broadly discusses and coordinates matters relating to basic policies in connection with market risk management, market risk operations and market risk monitoring. The Chief Risk Officer of Mizuho Financial Group is responsible for matters relating to market risk management planning and operations.

The Risk Management Department of Mizuho Financial Group is responsible for monitoring market risk, reporting and analysing,analyzing, making proposals, setting limits and guidelines, and formulating and implementing plans relating to market risk management.

As for the situation of market risk, the

The Risk Management Department submits reports regarding status of market risk to the President and Group CEO on a daily basis and to the Board of Directors on a regular basis. For the purpose of managing the market risk of our principal banking subsidiaries and other core group companies, the Department regularly receives reports from each of them to properly identify and manage their market risk. These subsidiaries and core group companies, which account for most of the Mizuho group’s exposure to market risk, establish their basic policies based on ours, and their Boards of Directors determine important matters relating to market risk management.

Market Risk Management Method

To manage market risk, we set limits that correspond to risk capital allocations according to the risk profile of each of our principal banking subsidiaries and other core group companies and thereby prevent the overall market risk we hold from exceeding our financial strength represented by capital, etc. The amount of risk capital allocated to market risk corresponds to
value-at-risk (the
(the “VAR”) and additional costs that may arise in order to close relevant positions.

Setting Limits

When the said limits are set, various factors are taken into account, including business strategies, historical limit usage ratios, risk-bearing capacity (profits, equity capital and risk management framework), profit targets and the market liquidity of the products involved. The limits are discussed and coordinated by the Risk Management Committee, discussed further by the Executive Management Committee and then determined by the President & Group CEO. For trading and banking activities, we set limits for VAR and for losses. For banking activities, we set position limits based on interest rate sensitivity (10 BPV) as needed. An excess over any of these limits is immediately reported and addressed according to a
pre-determined
procedure.

Monitoring

To provide a system of mutual checks and balances in market operations, we have established middle offices specializing in risk management that are independent of front offices which engage in market transactions
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and of back offices which are responsible for book entries and settlements. When VAR is not adequate to control

risk, the middle offices manage risk using additional risk indices, carry out stress testing and set stop loss limits as needed. We monitor market liquidity risk for individual financial products in the market while taking turnover and other factors into consideration.

Value-at-Risk

We use the VAR method, supplemented with stress testing, as our principal tool to measure market risk. The VAR method measures the maximum possible loss that could be incurred due to market movements within a certain time period (or holding period) and degree of probability (or confidence interval).

Trading Activities

VAR related to our trading activities is based on the following:

historical simulation method;

confidence interval:
one-tailed
99.0%;

holding period of one day; and

historical observation period of three years.

The following tables show the VAR related to our trading activities by risk category for the fiscal years ended March 31, 2016, 20172018, 2019 and 20182020 and as of March 31, 2016, 20172018, 2019 and 2018:

   Fiscal year ended March 31, 2016   As of
March 31, 2016		 

Risk category

  Daily average   Maximum   Minimum   
   

 

(in billions of yen)

 

Interest rate

  ¥1.8   ¥3.7   ¥0.6   ¥1.1 

Foreign exchange

   0.9    2.3    0.2    0.3 

Equities

   0.6    2.5    0.1    0.3 

Commodities

   0.0    0.0    0.0    0.0 
  

 

 

   

 

 

   

 

 

   

 

 

 

Total

  ¥2.9   ¥4.5   ¥1.8   ¥2.0 
  

 

 

   

 

 

   

 

 

   

 

 

 

   Fiscal year ended March 31, 2017   As of
March 31, 2017		 

Risk category

  Daily average   Maximum   Minimum   
   

 

(in billions of yen)

 

Interest rate

  ¥2.0   ¥3.6   ¥1.0   ¥1.0 

Foreign exchange

   0.5    1.6    0.1    0.1 

Equities

   0.4    3.2    0.1    0.9 

Commodities

   0.0    0.0    0.0    0.0 
  

 

 

   

 

 

   

 

 

   

 

 

 

Total

  ¥3.3   ¥5.8   ¥2.3   ¥2.6 
  

 

 

   

 

 

   

 

 

   

 

 

 

   Fiscal year ended March 31, 2018   As of
March 31, 2018		 

Risk category

  Daily average   Maximum   Minimum   
   

 

(in billions of yen)

 

Interest rate

  ¥1.7   ¥2.5   ¥1.0   ¥2.2 

Foreign exchange

   0.4    1.2    0.1    0.1 

Equities

   0.6    2.4    0.3    0.5 

Commodities

   0.0    0.0    0.0    0.0 
  

 

 

   

 

 

   

 

 

   

 

 

 

Total

  ¥3.0   ¥6.2   ¥2.2   ¥3.0 
  

 

 

   

 

 

   

 

 

   

 

 

 
2020:

                 
 
Fiscal year ended March 31, 2018
  
As of
March 31, 2018
 
Risk category
 
Daily average
  
Maximum
  
Minimum
 
 
(in billions of yen)
 
Interest rate
 ¥
1.7
  ¥
2.5
  ¥
1.0
  ¥
2.2
 
Foreign exchange
  
0.4
   
1.2
   
0.1
   
0.1
 
Equities
  
0.6
   
2.4
   
0.3
   
0.5
 
Commodities
  
0.0
   
0.0
   
0.0
   
0.0
 
  
 
 
  
 
 
  
 
 
  
 
 
 
Total
 ¥
3.0
  ¥
6.2
  ¥
2.2
  ¥
3.0
 
                 

                 
 
Fiscal year ended March 31, 2019
  
As of
March 31, 2019
 
Risk category
 
Daily average
  
Maximum
  
Minimum
 
 
(in billions of yen)
 
Interest rate
 ¥
2.0
  ¥
2.9
  ¥
1.3
  ¥
2.0
 
Foreign exchange
  
0.8
   
2.8
   
0.1
   
0.3
 
Equities
  
0.6
   
7.7
   
0.2
   
0.5
 
Commodities
  
0.0
   
0.0
   
0.0
   
0.0
 
  
 
 
  
 
 
  
 
 
  
 
 
 
Total
 ¥
3.4
  ¥
9.2
  ¥
2.4
  ¥
2.6
 
                 
                 
 
Fiscal year ended March 31, 2020
  
As of
March 31, 2020
 
Risk category
 
Daily average
  
Maximum
  
Minimum
 
 
(in billions of yen)
 
Interest rate
 ¥
2.7
  ¥
7.2
  ¥
1.3
  ¥
6.7
 
Foreign exchange
  
0.4
   
1.1
   
0.1
   
0.8
 
Equities
  
0.6
   
4.5
   
0.2
   
1.7
 
Commodities
  
0.0
   
0.0
   
0.0
   
0.0
 
  
 
 
  
 
 
  
 
 
  
 
 
 
Total
 ¥
3.8
  ¥
11.8
  ¥
2.3
  ¥
8.3
 
                 
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The following graph shows VAR figures of our trading activities for the fiscal year ended March 31, 2018:

LOGO

2020:

(VAR : billions of yen)
The following table shows VAR figures of our trading activities for the fiscal years indicated:

   Fiscal years ended March 31, 
   2016   2017   2018   Change 
   (in billions of yen) 

As of fiscal year end

  ¥2.0   ¥2.6   ¥3.0   ¥0.4 

Maximum

   4.5    5.8    6.2    0.3 

Minimum

   1.8    2.3    2.2    (0.1) 

Average

   2.9    3.3    3.0    (0.3) 

                 
 
Fiscal years ended March 31,
 
 
2018
  
2019
  
2020
  
Change
 
 
(in billions of yen)
 
As of fiscal year end
 ¥
3.0
  ¥
2.6
  ¥
8.3
  ¥
5.6
 
Maximum
  
6.2
   
9.2
   
11.8
   
2.5
 
Minimum
  
2.2
   
2.4
   
2.3
   
(0.1
)
Average
  
3.0
   
3.4
   
3.8
   
0.4
 
Non-trading
Activities

The VAR related to our banking activities is based on the same conditions as those of trading activities, but the holding period is one month. In addition, as for risk management of banking activities, it is important to properly measure interest rate risk so that we calculate interest risk using appropriate methods such as recognizing demand deposits as “core deposits.”

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The following graph shows the VAR related to our banking activities excluding our cross-shareholdings portfolio for the year ended March 31, 2018:

LOGO

2020:

(VAR : billions of yen)
The following table shows the VAR figures relating to our banking activities for the fiscal years indicated:

   Fiscal years ended March 31, 
   2016   2017   2018   Change 
   

 

(in billions of yen)

 

As of fiscal year end

  ¥321.5   ¥292.7   ¥268.4   ¥(24.3) 

Maximum

   360.6    397.5    307.2    (90.2) 

Minimum

   190.0    247.4    210.8    (36.6) 

Average

   284.9    331.0    267.8    (63.2) 

                 
 
Fiscal years ended March 31,
 
 
2018
  
2019
  
2020
  
Change
 
 
(in billions of yen)
 
As of fiscal year end
 ¥
268.4
  ¥
194.4
  ¥
361.4
  ¥
166.9
 
Maximum
  
307.2
   
298.5
   
361.4
   
62.8
 
Minimum
  
210.8
   
194.4
   
167.9
   
(26.4
)
Average
  
267.8
   
255.5
   
215.7
   
(39.8
)
VAR is a commonly used market risk management technique. However, VAR models have the following shortcomings:

By its nature as a statistical approach, VAR estimates possible losses over a certain period at a particular confidence level using past market movement data. Past market movement, however, is not necessarily a good indicator of future events, particularly potential future events that are extreme in nature.

VAR may underestimate the probability of extreme market movements.

The use of a 99.0% confidence level does not take account of, nor makes any statement about, any losses that might occur beyond this confidence level.

VAR does not capture all complex effects of various risk factors on the value of positions and portfolios and could underestimate potential losses.

Cross-shareholdings Portfolio Management Activities

We take the market risk management approach with use of VAR and risk indices for cross-shareholdings portfolio management activities to properly manage stock price risk. Specifically, we monitor VAR
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measurements and the state of risk capital on a daily basis. Moreover, in order to control stock price risk, we are working on the reduction in cross-shareholdings through careful negotiations with counterparties.

Back Testing

In order to evaluate the effectiveness of market risk measurements calculated using the VAR method, we carry out regular back tests to compare VAR with assumptive profits and losses. Assumptive profits and losses accounts for general market risk. The graph below shows daily VAR of trading activities for the fiscal year ended March 31, 20182020 and the corresponding paired distribution of profits and losses. We had zero casethree cases where losses exceeded VAR during the period. In addition, we conduct evaluations of the assumptions related to the VAR models. Based on the number of times losses exceeded VAR through back testing and the results of the evaluation of the model assumptions, we will make adjustments to the models as appropriate. Changes to fundamental portions of the VAR models are subject to the approval of our Group Chief Risk Officer.

LOGO

Note: 
Note:
We conduct our back testing and assess the number of cases where losses exceed VAR based on a 250 business day year. The expected average number of instances where
one-day
trading losses exceeded VAR at the 99% confidence level is 2.5.

Stress Testing

Because the VAR method is based on statistical assumptions, we conduct stress testing to simulate the levels of losses that could be incurred in cases where the market moves suddenly to levels that exceed these assumptions. The stress testing methods we use include the calculation of losses under scenarios in which stresses are applied to interest rate risk and stock price risk based on current and projected economic conditions, historical market events, etc.

Liquidity Risk Management

We define liquidity risk as the risk of losses arising from funding difficulties due to a deterioration in our financial position that makes it difficult for us to raise necessary funds or that forces us to raise funds at significantly higher interest rates than usual. Mizuho Financial Group manages liquidity risk for the Mizuho group as a whole. Specifically, Mizuho Financial Group establishes the fundamental liquidity risk management policy for the entire group, manages the liquidity risk of our principal banking subsidiaries and other core group companies and monitors how the group’s liquidity risk is being managed as a whole.

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Liquidity Risk Management Structure

Our Board of Directors determines basic matters pertaining to liquidity risk management policies. The Risk Management Committee of Mizuho Financial Group broadly discusses and coordinates matters relating to basic policies in connection with liquidity risk management, operations, monitoring and proposes responses to emergencies such as sudden market changes. The Group Chief Risk Officer of Mizuho Financial Group is responsible for matters relating to liquidity risk management planning and operations. The Risk Management Department of Mizuho Financial Group is responsible for monitoring liquidity risk, reporting and analysing,analyzing making proposals, and formulating and implementing plans relating to liquidity risk management. In addition, the Group Chief Financial Officer of Mizuho Financial Group is additionally responsible for matters relating to planning and running cash flow management operations, and the Financial Planning Department is responsible for monitoring and adjusting cash flow management situation and for planning and implementing cash flow management to maintain appropriate funding liquidity. Reports on the liquidity risk management are submitted to the Risk Management Committee and the Balance Sheet Management Committee (each of which is a Business Policy Committee), the Executive Management Committee and the President & Group CEO on a regular basis.

Our principal banking subsidiaries and other core group companies also establish their basic policies on liquidity risk management to properly identify and manage liquidity risk.

Liquidity Risk Management Method

We manage liquidity risk with the use of “Liquidity Risk Management Indicators” and “Liquidity Categorization.” The former is determined for the purpose of managing limits on funds raised in the market considering our fund raising capabilities, and the latter is determined based on our funding conditions. We also carry out liquidity stress testing to verify the sufficiency of liquidity reserve assets and the effectiveness of countermeasures against a possible outflow of funds during a stress event. The results of stress testing are used for cash flow management operations.

Liquidity Risk Management Indicators

Limits on funds raised in the market are set based on a number of time horizons taking into account characteristics and strategies of each of our principal banking subsidiaries and other core group companies. Such limits are discussed and coordinated by the Risk Management Committee, discussed further by the Executive Management Committee and determined by the President & Group CEO. An excess over any of these limits is immediately reported and addressed according to a
pre-determined
procedure.

Liquidity Categorization

We have established a group-wide framework of liquidity risk stages such as “Normal,” “Anxious” and “Crisis,” which reflects funding conditions. In addition, we set Early Warning Indicators (“EWIs”) and monitor on a daily basis to manage funding conditions. As EWIs, we select stock prices, credit ratings, amount of liquidity reserve assets such as Japanese government bonds, our funding situations and others.

Liquidity Stress Testing

We carry out stress testing regularly based on market-wide factors, idiosyncratic factors of the group and a combination of both types of factors to verify the sufficiency of liquidity reserve assets and the effectiveness of our liquidity contingency funding plans. Furthermore, we utilize stress testing for evaluating the appropriateness of our annual funding plan.

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Operational Risk Management

We define operational risk as the risk of loss that we may incur resulting from inadequate or failed internal processes, people and systems or from external events. We control operational risk management for the Mizuho group as a whole. Considering that operational risk includes information technology risk, operations risk, legal risk, human resources risk, tangible asset risk, regulatory change risk and reputational risk, we have separately determined the fundamental risk management policies for these different types of risk. We manage the operational risk associated with our principal banking subsidiaries and other core group companies while monitoring the state of group-wide operational risk.

Operational Risk Management Structure

Our Board of Directors determines basic matters pertaining to operational risk management policies. The Risk Management Committee of Mizuho Financial Group broadly discusses and coordinates matters relating to basic policies in connection with operational risk management, operational risk operations and operational risk monitoring. The Group Chief Risk Officer of Mizuho Financial Group is responsible for matters relating to operational risk management planning and operations. The Risk Management Department of Mizuho Financial Group is responsible for monitoring market risk, reporting and analysing,analyzing making proposals, setting limits and guidelines, and formulating and implementing plans relating to operational risk management.

Our principal banking subsidiaries and core group companies establish their basic policies on operational risk management, and their Boards of Directors determine important matters relating to operational risk management.

Operational Risk Management Method

To manage operational risk, we set common rules for data gathering to develop various databases shared by the group and measure operational risk as operational VAR on a regular basis, taking into account possible future loss events and changes in the business environment and internal management.

We have established and are strengthening management methods and systems to appropriately identify, assess, measure, monitor and control the operational risks that arise from the growing sophistication and diversification of financial operations and developments relating to information technology by utilizing control self-assessments and improving measurement methods.

Definition of Risks and Risk Management Methods

As shown in the table below, we have defined each component of operational risk, and we apply appropriate risk management methods in accordance with the scale and nature of each risk.

  

Definition

 

Definition
Principal Risk Management Methods

Information Technology Risk
 
Information technology risk (“IT risk”) shall refer to the risk that problems (e.g. malfunctions, disruptions, etc.) with the computer systems or improper use of the computers in these systems, which cause disruptions of the services provided to customers, or have significant impact on settlement systems, etc., will result in losses for customers, and the incurrence of losses (tangible or intangible) by our group companies.
 

•
Identify and evaluate the risk by setting specific standards that need to be complied with and implementing measures tailored based on evaluation results to reduce the risk.

•
Ensure ongoing project management in systems development and quality control.

•
Strengthen security to prevent information leaks.

•
Strengthen capabilities for rapidly and effectively dealing with cyberattacks.

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Definition
Principal Risk Management Methods
•
Improve effectiveness of emergency responses by improving backup systems and holding drills.

  

Definition

 

Principal Risk Management Methods

Operations Risk
 Risk that
The risk of customers may suffer service disruptions, as well asincurring a loss or the risk thatof the Company Group incurring tangible and/or intangible losses due to the disruption of services to customers or the group may incur losses because seniormajor incidents affecting settlement systems, etc., as a result of inadequate operations caused by fraudulent acts, errors or negligence, etc., of (senior executives or employees fail to fulfill their tasks properly, cause accidentsemployees), or otherwise act improperly.inadequacies in the operational structure itself.
 

•
Establish clearly defined procedures for handling operations.

•
Periodically check the status of operational processes.

•
Conduct training and development programs by headquarters.

•
Introduce information technology, office automation and centralization for operations.

•
Improve the effectiveness of emergency responses by holding drills.

Legal Risk 
Legal Risk
Risk that the group may incur losses due to violation of laws and regulations, breach of contract, entering into improper contracts or
other legal factors.
 

•
Review and confirm legal issues, including the legality of material decisions, agreements and external documents, etc.

•
Collect and distribute legal information and conduct internal training programs.

•
Analyze and manage issues related to lawsuits.

Human Resources Risk
 
Risk that the group may incur losses due to drain or loss of personnel, deterioration of morale, inadequate development of human resources, inappropriate working schedule, inappropriate working and safety environment, inequality or inequity in human resource management or discriminatory conduct.
 

•
Conduct employee satisfaction surveys.

•
Understand the status of working hours.

•
Understand the status of vacation days taken by personnel.

•
Understand the status of voluntary resignations.

•
Understand the status of the stress check system.

Tangible Asset Risk
 
Risk that the group may incur losses from damage to tangible assets or a decline in the quality of working environment as a result of disasters, criminal actions or defects in asset maintenance.
 

•
Manage the planning and implementation of construction projects related to the repair and replacement of facilities.

•
Identify and evaluate the status of damage to tangible assets caused by natural disasters, etc., and respond appropriately to such damage.

Regulatory Change Risk
 
Risk that the group may incur losses due to changes in various regulations or systems, such as those related to law, taxation and accounting.
 

•
Understand important changes in regulations or systems that have significant influence on our business operations or financial condition in a timely and accurate manner.

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Definition
Principal Risk Management Methods
•
Analyze degree of influence of regulatory changes and establish countermeasures.

•
Continuously monitor our regulatory change risk management mentioned above.

Reputational
Risk
 

Definition

Principal Risk Management Methods

Reputational Risk
Risk that the group may incur losses due to damage to our credibility or the value of the “Mizuho” brand when market participants or others learn about, or the media reports on, various adverse events, including actual materialization of risks or false rumors.
 

•
Establish framework to identify and manage, on an integrated basis, information that may have a serious impact on group management and respond to such risk in a manner appropriate to its scale and nature.

•
Swiftly identify rumors and devise appropriate responses depending on the urgency and possible impact of the situation to minimize possible losses.

We also recognize and manage “Information Security Risk” and “Compliance Risk,” which constitute a combination of more than one of the above components of operational risk, as operational risk.

Measurement of operational risk equivalent

Implementation of the AMA/Advanced Measurement Approach (“AMA”)

We have adopted the AMA for the calculation of operational risk equivalent in association with capital adequacy ratios based on Basel Regulation. However, we use the Basic Indicator Approach for entities that are deemed to be less important in the measurement of operational risk equivalent. Entities within our group that use the AMA include the following: Mizuho Financial Group; Mizuho Bank., Ltd., Mizuho Trust & Banking Co., Ltd.; Mizuho Securities; Mizuho Information & Research Institute Corporation Inc.; Trust & Custody Services Bank Ltd.; Mizuho Operation Service, Ltd.; Mizuho Credit Guarantee Co., Ltd.; Mizuho Business Service Co., Ltd.; Mizuho Trust Operations Co., Ltd.; Mizuho Trust Systems Co., Ltd.; Mizuho Trust Business Operations Co., Ltd.; Mizuho Trust Retail Support Co., Ltd.; Mizuho Bank Europe N.V.; and Mizuho International plc.

The measurement results under the AMA are used not only as the operational risk equivalent in the calculation of capital adequacy ratios based on Basel Regulation, but also as operational VAR for internal risk management purposes for implementing action plans to reduce operational risk, etc.

Outline of the AMA

Outline of measurement system

We have established the model by taking account of four elements: internal loss data; external loss data; scenario analysis andanalysis; business environment;environment and internal control factors (BEICFs). We calculate the operational risk amount by estimating the maximum loss, using a 99.9th percentile
one-tailed
confidence interval and a
one-year
holding period, etc., as operational risk equivalent, employing both internal loss data (i.e., actually experienced operational loss events) and scenario data to reflect unexperienced potential future loss events in the measurement.

In the measurement of operational risk equivalent as of March 31, 2018,2020, we did not exclude expected losses and also did not recognize the risk mitigating impact of insurance. In addition, we did not take into account the events related to credit risk in measuring operational risk equivalent.

Outline of measurement model

Operational risk equivalent is calculated as a simple sum of those risk amounts related to the seven loss event types defined in the FSA’s Capital Adequacy Notice, large-scale natural disasters and litigation. In the measurement of operational risk equivalent as of March 31, 2018,2020, we did not reflect the correlation effects among operational risk related to each of the seven loss event types.

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Operational risk by loss event type

Loss Distribution (Compound Poisson Distribution) Approach (LDA) is adopted for the calculation of operational risk. LDA is based on the assumption that Poisson Distribution applies to the occurrence frequency of operational risk events, and loss severity is expressed through a separate distribution. Operational risk is calculated for each of the seven loss event types employing both internal loss data, based on our actual experience as operational loss events and scenario data. Scenario data, expressed as numerical values of occurrence frequency and loss severity, reflects external loss data and BEICFs, in order to estimate unexperienced potential future loss events (of low frequency and high severity).

“Frequency Distribution” and “Severity Distribution” are estimated employing the above mentioned internal loss data and scenario data, and Monte-Carlo simulations are then applied to these distributions to measure operational risk. The detailed steps of creation of scenario data are explained later in “Scenario Analysis.”

Estimation of “Frequency Distribution” and “Loss Severity Distribution”

“Frequency Distribution” is estimated by applying information on occurrence frequency of both internal loss data and scenario data to Poisson Distribution. “Loss Severity Distribution” is generated as the

result of combining, through a statistical approach (Extreme Value Theory), of the actual distribution for the low severity distribution portion created by internal loss data and another loss distribution

(Log-normal
Distribution or Generalized Pareto Distribution) for the high severity distribution portion created by scenario data.

Operational risk of large-scale natural disasters

Monte-Carlo simulation is applied to the datasets expressed as a combination of the probability of occurrence of large-scale natural disasters and the probable loss amount in case of such occurrence, as opposed to estimating “Frequency Distribution” and “Loss Severity Distribution.”

Operational risk of litigation

Each litigation is converted into data according to the profile of the individual litigation to which Monte-Carlo simulation is applied, as opposed to estimating “Frequency Distribution” and “Loss Severity Distribution.” In the measurement process, we assume that final decisions will be made on all litigation within one year.

Verification

We confirm the appropriateness of the measurement model by verifying it, in principle, semi-annually.

Scenario Analysis

Outline of scenario analysis

In the process of scenario analysis, scenario data is created as numerical values of occurrence frequency and loss severity reflecting external loss data and BEICFs, in order to estimate unexperienced potential future operational risk events (of low frequency and high severity).

As for external loss data, we refer to data publicly reported by domestic and overseas media, and such data are reflected in the estimation of occurrence frequency and loss severity distribution in the process of scenario analysis. In addition, BEICFs are utilized as indices to adjust occurrence frequency and loss severity distribution in the process of scenario analysis.

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We categorize scenario analysis into four approaches in accordance with the characteristics of each loss event type and risk management structures.

Approach

 

Approach
Loss event type(s) to be applied

A

 
Internal fraud / External fraud / Clients, products and business practices / Execution, delivery and process management

B

 
Employment practices and workplace safety

C

 
Damage to physical assets

D

 
Business disruption and system failure

At Mizuho Financial Group, loss event types to which Approach A is applied account for a considerable amount of operational risk. The detailed process of Approach A is explained below as a typical example of scenario analysis.

Setting units for scenario analysis

In order to ensure completeness and sufficiency, we set units that are commonly applied across group entities that adopt AMA (the “Group Entities”) by referencing and categorizing risk scenarios recognized through control self-assessment, internal loss data of the Group Entities and external loss data, etc. Then each of the Group Entities selects the unit on which scenario analysis is conducted from the units established on a group-wide basis in accordance with its business activities and operational risk profile.

Estimation of occurrence frequency

Basic occurrence frequency (once a year) is calculated for each scenario analysis unit. If a certain scenario analysis unit has relevant internal loss data of a
pre-determined
threshold amount or above, its basic occurrence frequency is calculated based on such data, and if not, the basic occurrence frequency (the occurrence frequency per year of losses at or above a
pre-determined
threshold) is calculated with reference to the situation of occurrence of internal loss data of less than the threshold amount and/or external loss data. The basic occurrence frequency is then adjusted within a
pre-determined
range for the purpose of reflecting the most recent BEICFs to determine the final occurrence frequency.

Estimation of loss severity distribution

In order to estimate loss severity distribution, we use a
pre-determined
series of severity ranges. Basic loss severity distribution is calculated for each scenario analysis unit as an occurrence ratio (in percentile figures) of loss at each severity range when losses at or above a
pre-determined
threshold occurred, with reference to transaction amount data, external loss data, etc. Then the basic severity distribution is adjusted, if necessary, from the viewpoint of statistical data processing to determine the final loss severity distribution.

Creation of scenario data

For each scenario analysis unit, scenario data is generated as a series of combinations of occurrence frequency per year at each severity range, based on the final occurrence frequency and the final loss severity distribution.

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Compliance

As a leading Japanese financial services group with a global presence and a broad customer base, we remain conscious of the importance of our social responsibilities and public mission at all times. We define compliance as “the strict observance of all laws and regulations and the pursuit of fair and honest corporate activities that conform to the norms accepted by society” and view ongoing compliance as one of the basic principles of sound business management. Each of our group companies maintains its own compliance structure in line with the basic policies established by Mizuho Financial Group.

Compliance Structure

The chief executive officerofficers of Mizuho Financial Group, Mizuho Bank, Mizuho Trust & Banking and Mizuho Securities each generally overseesoversee compliance matters of their respective companies, and the chief executive officer, etc., also head their respective compliance committees at which important matters concerning compliance are discussed. The four companies also have individual compliance divisions under their respective chief compliance officers. These divisions are responsible for compliance planning and implementation and control overall compliance management at their respective companies. At the level of each organizational unit level of (such as branches and divisions) at each of the four companies, the head of the unit is responsible for guidance and implementation related to compliance matters within such unit, and the compliance officer or the compliance administrator at each unit reviews the status of compliance.

compliance within such unit.

Other core group companies have also established compliance structures adapted to the characteristics of their respective businesses.

Mizuho Financial Group monitors the status of compliance of the Mizuho group through reports submitted by our principal banking subsidiaries and other core group companies and adopts appropriate responses when necessary.

Compliance at subsidiaries of our principal banking subsidiaries and other core group companies is monitored and managed by their respective parents.

Compliance Activities

We have established the “Mizuho Code of Conduct,” which sets forth clear and concrete standards of ethical behavior, and have distributed it to all directors, senior management and employees of the Mizuho group so that they are well aware of its content and act accordingly.

Each of our group companies has also prepared a compliance manual, which serves as a practical guidebook for rigorous compliance enforcement and clarifies the laws and regulations that the group companies must observe in pursuing their business activities and the compliance activities they are required to follow.

We conduct compliance training for directors, senior management and employees so that they are fully acquainted with the contents of the compliance manual.

We monitor the status of compliance levels through self assessmentsself-assessments conducted by individual organizational units and monitoring conducted by the compliance division of each group company.

Every fiscal year, each of our group companies establishes a compliance program, which contains concrete measures for compliance enforcement such as measures related to the management of the compliance framework, training and assessments. Progress regarding the implementation of the compliance program is monitored every six months.

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Internal Audit

Internal audits are designed as an integrated process, independentaudit refers to the series of activities, ranging from other business operations, for evaluating the extent to which internal control achieves its objectives in key areas, including appropriate risk management, efficient and effective business operations, reliable financial reporting and compliance with laws, regulations and internal rules. We conduct internal audits from an objective and comprehensive evaluation of the effectiveness and appropriateness of each process relating to governance, risk management and control, to providing recommendations and corrective guidance, etc., toward the resolution of problems from an independent standpoint independent of operational reporting lines,the departments and offer advice and remedial recommendations in connection with any problemsbusiness processes that may be identified.are subject to the audit, based on a plan approved by the board of directors of each of our group companies. Through this process,these series of activities, internal audits assist the boardsboard of directors of each of our group companies to fulfill their managerial duties efficiently and effectively.

In line with the Basic Policy for Internal Audit established by Mizuho Financial Group, our principal banking subsidiaries and other core group companies conduct internal audits, which include the internal auditing of their respective subsidiaries. In addition, with respect to the management of risks applicable across the Mizuho group, we coordinate internal audits throughout the group to assess the risk management status of the group as a whole.

Internal Audit Management Structure

Mizuho Financial Group

Our internal audit committeeInternal Audit Committee determines all important matters concerning internal audits. The committee is chaired by our President & Group CEO and is independent of our other business operations.

The Head of the Internal Audit Group reports the progress of individual audits and plans to the Audit Committee, responds to requests for inspections, and receives specific instructions from the committee. Our internal audit committeeInternal Audit Committee monitors and manages internal audits at our principal banking subsidiaries and other core group companies through internal audit reports submitted by such subsidiaries. Our internal audit committeeInternal Audit Committee discusses and makes decisions regarding internal audits at our principal banking subsidiaries and other core group companies and submits the results, together with the results of their examination of the internal audit reports, to the Audit Committee and our Board of Directors.

Mizuho Bank and Mizuho Trust & Banking

Mizuho Bank and Mizuho Trust & Banking have also established internal audit committees that are independent of their other business operations.

operations and a framework under which their internal audit committees coordinate with their respective audit & supervisory committees.

Both banks have established internal audit departments to conduct internal audits at their respective domestic and overseas business offices, head office departments and group companies. Specifically, the internal audit departments assess the suitability and effectiveness of business activities associated with compliance and risk management.

Other Core Group Companies

Other core group companies have also established effective and efficient internal audit structures adapted to the characteristics of their respective businesses.

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ITEM 12.DESCRIPTION OF SECURITIES OTHER THAN EQUITY SECURITIES

12.A. Debt Securities

Not applicable.

12.B. Warrants and Rights

Not applicable.

12.C. Other Securities

Not applicable.

12.D. American Depositary Shares

The depositary collects its fees for delivery and surrender of ADSs directly from investors depositing shares or surrendering ADSs for the purpose of withdrawal or from intermediaries acting for them. The table below sets out such fees payable to the depositary:

depositary as of the date of this annual report:

Persons depositing or withdrawing shares must pay:

 

For:

$5.00 (or less) per 100 ADSs (or portion of 100 ADSs)

 
– Delivery of ADRs and the surrender of ADRs

$.05 (or less) per ADS(1)

 
– Any cash distribution to ADS registered holders

A fee equivalent to the fee that would be payable if securities distributed to you had been shares and the shares had been deposited for issuance of ADSs

 
– Distribution of securities distributed to holders of deposited securities that are distributed by the depositary to ADS registered holders

$.05 (or less) per ADS(2)

 
– General depositary services

Registration or transfer fees

 
– Transfer and registration of shares on our share register to or from the name of the depositary or its agent when you deposit or withdraw shares

Expenses of the depositary

 

– Cable, telex and facsimile transmissions expenses
(as are expressly provided in the deposit agreement)

– Converting foreign currency to U.S. dollars

Taxes and other governmental charges

 
– As necessary

Any other charge incurred by the depositary or its agents in connection with the servicing of the deposited securities

 
– As necessary

Notes:

(1)Based on the amendments to the Deposit Agreement that became effective April 2, 2018, fees for cash distribution to ADS registered holders were changed from $.02 (or less) per ADS to $.05 (or less) per ADS.

(2)Based on the amendments to the Deposit Agreement that became effective April 2, 2018, fees for general depositary services were newly added.

The Bank of New York Mellon (“BNYM”), as depositary, has agreed to reimburse us annually for expenses related to the administration and maintenance of the depositary receipt facility including, but not limited to, investor relations expenses, legal fees, New York Stock Exchange continue listing fees or any other direct or
non-direct
depositary receipt program related expenses. There are limits on the amount of expenses for which the depositary will reimburse us. In the fiscal year ended March 31, 2018,2020, the depositary reimbursed us $75,000$500,000 for such expenses.

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PART II

ITEM 13.DEFAULTS, DIVIDEND ARREARAGES AND DELINQUENCIES

None.

ITEM 14.MATERIAL MODIFICATIONS TO THE RIGHTS OF SECURITY HOLDERS AND USE OF PROCEEDS

None.

ITEM 15.CONTROLS AND PROCEDURES

Disclosure Controls and Procedures

We carried out an evaluation under the supervision and with the participation of our management, including our Chief Executive Officer and Chief Financial Officer, of the effectiveness of the design and operation of our disclosure controls and procedures (as defined in Rule
13a-15(e)
under the Securities Exchange Act of 1934) as of March 31, 2018.2020. There are inherent limitations to the effectiveness of any system of disclosure controls and procedures, including the possibility of human error and the circumvention or overriding of the controls and procedures. Accordingly, even effective disclosure controls and procedures can only provide reasonable, not absolute, assurance of achieving their control objectives. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate. Based upon the evaluation referred to above, our Chief Executive Officer and Chief Financial Officer concluded that the design and operation of our disclosure controls and procedures as of March 31, 20182020 were effective to provide reasonable assurance that information required to be disclosed in the reports that we file or submit under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms.

Management’s Annual Report on Internal Control over Financial Reporting

Our management is responsible for establishing and maintaining adequate internal control over financial reporting, as defined in Rule
13a-15(f)
under the Securities Exchange Act of 1934. Our internal control over financial reporting is designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with applicable generally accepted accounting principles. Our internal control over financial reporting includes those policies and procedures that:

 (i)pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of our assets;

 (ii)provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that our receipts and expenditures are being made only in accordance with authorizations of management and directors; and

 (iii)provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use or disposition of our assets that could have a material effect on the financial statements.

Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

Our management evaluated the effectiveness of our internal control over financial reporting as of March 31, 20182020 based on the criteria established in “Internal Control—Integrated Framework” issued by the Committee of

Sponsoring Organizations of the Treadway Commission (2013 framework) (COSO). Based on the evaluation, management has concluded that we maintained effective internal control over financial reporting as of March 31, 2018.

2020.

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Our independent registered public accounting firm, Ernst & Young ShinNihon LLC has issued an attestation report on our internal control over financial reporting as of March 31, 2018,2020, which appears on page
F-3.

Attestation Report of the Registered Public Accounting Firm

See the attestation report of our independent registered public accounting firm, Ernst & Young ShinNihon LLC, which appears on page
F-3.

Changes in Internal Control over Financial Reporting

During the period covered by this annual report, there were no changes in our internal control over financial reporting that have materially affected, or that are reasonably likely to materially affect, our internal control over financial reporting.

reporting other than noted below.

Since June 11, 2018, Mizuho Bank and Mizuho Trust & Banking havehad been engaging in thea multi-stage process of migration to, and the implementation of, our next-generation IT systems, including accounting system.

As of July, 2019, we completed all of the required phases. This implementation includes changes to processes that constitute a part of our internal control over financial reporting.
ITEM 16A.
AUDIT COMMITTEE FINANCIAL EXPERT

Our board of directors has determined that Messrs. Tetsuo Seki, Hirotake AbeRyoji Sato and Nobukatsu FunakiHisaaki Hirama each qualifies as an “audit committee financial expert” as defined in Item 16A of Form
20-F
under the Securities Exchange Act of 1934, as amended. In addition, all threeMessrs. Tetsuo Seki and Ryoji Sato are determined to be independent as defined under the New York Stock Exchange (“NYSE”) Corporate Governance Standards.

ITEM 16B.
CODE OF ETHICS

Mizuho Financial Group has adopted a code of ethics, titled “Code of Ethics for Financial Professionals,” which is applicable to all directors and executive officers, as well as all managersspecialist officers and other employees of Mizuho Financial Group who engage in financial reporting, accounting or disclosure. The code of ethics of Mizuho Financial Group is included in this annual report as Exhibit 11.

ITEM 16C.
PRINCIPAL ACCOUNTANT FEES AND SERVICES

Fees for Services provided by Ernst & Young ShinNihon LLC

The aggregate fees billed by Ernst & Young ShinNihon LLC, our independent registered public accounting firm, and its affiliates, for the fiscal years ended March 31, 20172019 and 20182020 are presented in the following table:

   Fiscal years ended March 31, 
   2017   2018 
   

 

(in millions of yen)

 

Audit fees(1)

  ¥4,800   ¥4,951 

Audit-related fees(2)

   406    306 

Tax fees(3)

   117    213 

All other fees(4)

   42    13 
  

 

 

   

 

 

 

Total

  ¥5,365   ¥5,483 
  

 

 

   

 

 

 

         
 
Fiscal years ended March 31,
 
 
        2019        
  
        2020        
 
 
(in millions of yen)
 
Audit fees
(1)
 ¥
5,253
  ¥
4,962
 
Audit-related fees
(2)
  
273
   
248
 
Tax fees
(3)
  
102
   
80
 
All other fees
(4)
  
4
   
3
 
         
Total
 ¥
5,632
  ¥
5,293
 
         
Notes:

(1)Audit fees include primarily fees related to the audit of U.S. GAAP financial statements as well as Japanese GAAP financial statements used for home-country reporting purposes.
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(2)Audit-related fees include fees for services relating to agreed-upon procedures on internal controls and due diligence services related to our securitization business and services related to the implementation of Section 404 of the Sarbanes-Oxley Act.business.

(3)Tax fees include fees for services relating to the preparation of tax returns and tax advice.
(4)All other fees include fees for services relating to education to improve the financial business knowledge of our employees.

Pre-Approval
Policies and Procedures

We established the
pre-approval
policies and procedures required by the Sarbanes-Oxley Act on April 1, 2006. Under the procedures, Mizuho Financial Group and its subsidiaries must apply to our audit committee members for
pre-approval
before entering into an agreement regarding audit and permitted
non-audit
services with Ernst & Young ShinNihon LLC.

We follow two types of
pre-approval
policies and procedures:

General pre-approval

 
General
pre-approval
General
pre-approval
is required for services which are expected to be performed during a given fiscal year. Our audit committee reviews the specific maximum fee amount for new services and the maximum amount of increase/decrease from previous fee amounts for the same type of services as those performed in the past and authorizes
pre-approval
at the beginning of each fiscal year.

Specific pre-approval

 
Specific
pre-approval
For those services which have not been approved pursuant to the general
pre-approval
procedure, specific
pre-approval
by our audit committee members is required prior to each engagement. With respect to such services, two full-time audit committee members must provide
pre-approval
and report such
pre-approval
at the monthly meeting of the audit committee.

ITEM 16D.
EXEMPTIONS FROM THE LISTING STANDARDS FOR AUDIT COMMITTEES

Not applicable

applicable.

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ITEM 16E.
PURCHASE OF EQUITY SECURITIES BY THE ISSUER AND AFFILIATED PURCHASERS

The following table sets forth purchases of our common stock by us and our affiliated purchasers during the fiscal year ended March 31, 2018:

   Total number of
shares purchased		   Average price
paid per share		   Total number of
shares purchased
as part of publicly
announced plans
or programs		   Maximum
number of shares
that may yet be
purchased under
the plans
or programs		 

April 1 to April 30, 2017

   2,478   ¥195.5    —    — 

May 1 to May 31, 2017

   3,681    204.8    —    — 

June 1 to June 30, 2017

   3,265    198.3    —    — 

July 1 to July 31, 2017

   4,639    202.4    —    — 

August 1 to August 31, 2017

   2,468    192.0    —    — 

September 1 to September 30, 2017

   2,122    189.8    —    — 

October 1 to October 31, 2017

   2,573    198.8    —    — 

November 1 to November 30, 2017

   3,189    203.0    —    — 

December 1 to December 31, 2017

   10,012    204.7    —    — 

January 1 to January 31, 2018

   7,645    212.6    —    — 

February 1 to February 28, 2018

   4,207    203.9    —    — 

March 1 to March 31, 2018

   2,783    196.0    —    — 
  

 

 

   

 

 

   

 

 

   

 

 

 

Total

   49,062   ¥202.5    —    — 
  

 

 

   

 

 

   

 

 

   

 

 

 

2020:

                 
 
Total number of
shares purchased
  
Average price
paid per share
  
Total number of
shares purchased
as part of publicly
announced plans
or programs
  
Maximum
number of shares
that may yet be
purchased under
the plans
or programs
 
April 1 to April 30, 2019
  
19,244
  ¥
173.9
   
—
   
—
 
May 1 to May 31, 2019
  
10,057
   
169.9
   
—
   
—
 
June 1 to June 30, 2019
  
3,115
   
153.3
   
—
   
—
 
July 1 to July 31, 2019
  
3,291
   
157.3
   
—
   
—
 
August 1 to August 31, 2019
  
1,805
   
155.3
   
—
   
—
 
September 1 to September 30, 2019
  
2,092
   
163.1
   
—
   
—
 
October 1 to October 31, 2019
  
932
   
164.8
   
—
   
—
 
November 1 to November 30, 2019
  
2,740
   
170.4
   
—
   
—
 
December 1 to December 31, 2019
  
3,204
   
169.8
   
—
   
—
 
January 1 to January 31, 2020
  
4,286
   
165.4
   
—
   
—
 
February 1 to February 29, 2020
  
15,325
   
162.2
   
—
   
—
 
March 1 to March 31, 2020
  
7,056
   
134.3
   
—
   
—
 
  
 
 
  
 
 
  
 
 
  
 
 
 
Total
  
  73,147
  ¥
163.8
   
—
   
—
 
                 
Note:

(1)A total of 49,06273,147 shares were purchased other than through publicly announced plans or programs during the fiscal year ended March 31, 2018,2020, due to our purchase of shares constituting less than one (1) unit from holders of shares constituting less than one (1) unit at the current market price of those shares.

ITEM 16F.
CHANGE IN REGISTRANT’S CERTIFYING ACCOUNTANT

None.

ITEM 16G.
CORPORATE GOVERNANCE

Mizuho Financial Group’s corporate governance practices are governed by applicable Japanese laws, specifically the Companies Act and Financial Instruments and Exchange Act of Japan, and its articles of incorporation and corporate governance guidelines. The company transformed itself from a Company with Audit & Supervisory Board to a Company with Three Committees as of June 24, 2014.

Because Mizuho Financial Group’s shares are registered with the U.S. Securities and Exchange Commission and are listed on the New York Stock Exchange (“NYSE”), the company is also subject to corporate governance requirements applicable to NYSE-listed foreign private issuers. NYSE-listed companies that are foreign private issuers meeting certain criteria are permitted to follow home country practices in lieu of certain provisions of Section 303A, and Mizuho Financial Group is relying on this exemption.

A NYSE-listed foreign private issuer is required to provide to its U.S. investors a brief, general summary of the significant differences of corporate governance practices that differ from those followed by NYSE-listed U.S. companies. The following is a summary of the significant ways in which Mizuho Financial Group’s corporate governance practices differ from NYSE listing standards followed by U.S. companies:

A NYSE-listed U.S. company is required to have a majority of directors that meet the independence requirements under Section 303A of the NYSE’s Listed Company Manual. The Companies Act does not require Mizuho Financial Group to have a majority
173
Table of “independent” directors on the board; rather, it requires the company to have a majority of “outside” directors on each of the Nominating Committee, the Compensation Committee and the Audit Committee, each established as a committee, pursuant to the requirements that apply to a Company with Three Committees. An outside director is defined under the Companies Act as a director who meets all of the following requirements: (a) a person who is not currently, and has not been in the ten years prior to his or her assumption of office as outside director, an executive director, an executive officer, a manager, or any other type of employee (“Executive Director, etc.”) of the company or its subsidiaries; (b) if a person has been a non-executive director, an audit & supervisory board member, or an accounting adviser of the company or its subsidiaries within the ten years prior to his or her assumption of office as outside director, a person who was not an Executive Director, etc., of the company or its subsidiaries in the ten years prior to his or her assumption of office as such; (c) a person who is not (i) a person who controls the company (including the company’s parent company) (“Parent Company, etc.”) and who is a natural person or (ii) a director, an executive officer, a manager or any other type of employee of a Parent Company, etc.; (d) a person who is not an Executive Director, etc., of another subsidiary of a Parent Company, etc.; and (e) a person who is not a spouse or a family member within the second degree of kinship of (i) a director, an executive officer, a manager, or any other type of important employee of the company or (ii) a Parent Company, etc., who is a natural person. In addition to the requirements under the Companies Act, Mizuho Financial Group’s independence standards for outside directors set forth additional independence requirements on a voluntary basis. Such additional requirements include, but are not limited to, restrictions against persons that are related to a principal business counterparty of Mizuho Financial Group and its Three Core Companies, entities to which Mizuho Financial Group and its Three Core Companies are a principal business counterparty, entities that receive more than a specified amount of donations from Mizuho Financial Group or its Three Core Companies, entities to which directors have been transferred from us, our accounting auditor, law firms and consulting firms that receive more than a specified amount of fees from Mizuho Financial Group or its Three Core Companies, as well as persons who otherwise are likely to give rise to consistent substantive conflicts of interest in relation to general shareholders. Mizuho Financial Group may, however, appoint a person as an outside director who does not satisfy the additional independence requirements but who it believes to be suitable for the position with sufficient independence in consideration of such person’s character and insight, provided that it externally provides an explanation as to the reason it believes such person qualifies as an outside director with sufficient independence.Contents

not require Mizuho Financial Group to have a majority of “independent” directors on the board; rather, it requires the company to have a majority of “outside” directors on each of the Nominating Committee, the Compensation Committee and the Audit Committee, each established as a committee, pursuant to the requirements that apply to a Company with Three Committees. An outside director is defined under the Companies Act as a director who meets all of the following requirements: (a) a person who is not currently, and has not been in the ten years prior to his or her assumption of office as outside director, an executive director, an executive officer, a manager, or any other type of employee (“Executive Director, etc.”) of the company or its subsidiaries; (b) if a person has been a
non-executive
director, an audit & supervisory board member, or an accounting adviser of the company or its subsidiaries within the ten years prior to his or her assumption of office as outside director, a person who was not an Executive Director, etc., of the company or its subsidiaries in the ten years prior to his or her assumption of office as such; (c) a person who is not (i) a person who controls the company (including the company’s parent company) (“Parent Company, etc.”) and who is a natural person or (ii) a director, an executive officer, a manager or any other type of employee of a Parent Company, etc.; (d) a person who is not an Executive Director, etc., of another subsidiary of a Parent Company, etc.; and (e) a person who is not a spouse or a family member within the second degree of kinship of (i) a director, an executive officer, a manager, or any other type of important employee of the company or (ii) a Parent Company, etc., who is a natural person. In addition to the requirements under the Companies Act, Mizuho Financial Group’s independence standards for outside directors set forth additional independence requirements on a voluntary basis. Such additional requirements include, but are not limited to, restrictions against persons that are related to a principal business counterparty of Mizuho Financial Group and its Three Core Companies, entities to which Mizuho Financial Group and its Three Core Companies are a principal business counterparty, entities that receive more than a specified amount of donations from Mizuho Financial Group or its Three Core Companies, entities to which directors have been transferred from us, our accounting auditor, law firms and consulting firms that receive more than a specified amount of fees from Mizuho Financial Group or its Three Core Companies, as well as persons who otherwise are likely to give rise to consistent substantive conflicts of interest in relation to general shareholders. Mizuho Financial Group may, however, appoint a person as an outside director who does not satisfy the additional independence requirements but who it believes to be suitable for the position with sufficient independence in consideration of such person’s character and insight, provided that it externally provides an explanation as to the reason it believes such person qualifies as an outside director with sufficient independence.
Currently, Mizuho Financial Group has six outside directors among the fourteenthirteen directors.

A NYSE-listed U.S. company is required to have an audit committee composed entirely of independent directors. Currently, among the fivefour members of the Audit Committee, three members including the Chairman are outside directors and two members areone member is internal
non-executive directors
director in compliance with the requirements under the Companies Act, and all such committee members are independent under Rule
10A-3
under the U.S. Securities Exchange Act of 1934 with three members qualified as audit committee financial experts.

A NYSE-listed U.S. company is required to have a nominating/corporate governance committee and a compensation committee, both of which must be composed entirely of independent directors. Currently, the Nominating Committee and the Compensation Committee consist solely of outside directors in compliance with the requirements under the Companies Act.

A NYSE-listed U.S. company must hold regularly scheduled executive sessions where participants are limited to
non-executive
directors. Currently, the Outside Director Session consists solely of outside directors and is held at least twiceonce a year, where the outside directors discuss matters such as issues facing management, the operation of the Board of Directors and the governance systems, and provide opinions as appropriate to the Group CEO.

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Table of Contents
A NYSE-listed U.S. company must adopt corporate governance guidelines and a code of business conduct and ethics and must post those on its website. While Mizuho Financial Group is not required to adopt such guidelines and code under applicable Japanese laws or the rules of the stock exchange in Japan on which it is listed, the company established in June 2014 and has been updating its corporate governance guidelines that sets forth the basic policy, framework and governing policies regarding the corporate governance system in Mizuho Financial Group and also maintains the “Mizuho Code of Conduct” as its standard for corporate conduct to be observed by the directors, officers and employees.

ITEM 16H.
MINE SAFETY DISCLOSURE

Not applicable.

175
Table of Contents
PART III

ITEM 17.
FINANCIAL STATEMENTS

We have elected to provide the financial statements and related information specified in Item 18.

ITEM 18.
FINANCIAL STATEMENTS

The information required by this item is set forth in our consolidated financial statements starting onpage
 F-1
of this annual report.

ITEM 19.
EXHIBITS

Exhibit

Number

 

Exhibit
Number
Description of Exhibits

 
1.1    
 
Articles of Incorporation of Mizuho Financial Group, Inc., dated June 23, 201725, 2020 (English Translation)*
 1.2     
    1.2    
Regulations of the Board of Directors of Mizuho Financial Group, Inc., as amended on April 1, 20182020 (English Translation)
 1.3     
    1.3    
Share Handling Regulations of Mizuho Financial Group, Inc., dated April 1, 2018 (English Translation)
*
 2.1     
    2.1    
Form of American Depositary Receipt
Receipt*
 2.2     
    2.2    
Form of Deposit Agreement, amended and restated as of April 2, 2018, among the registrant, The Bank of New York Mellon as Depositary and all owners and holders from time to time of American Depositary Receipts issued thereunderthereunder*
8 
    2.3    
Description of Our Shares of Common Stock and Preferred Stock—see “Item 10.B. Memorandum and Articles of Association.”
    2.4    
Description of Our American Depositary Shares
8
List of significant subsidiaries of Mizuho Financial Group, Inc.—see “Item 4.C. Information on the Company—Organizational Structure.”
11 
11
Code of Ethics for Financial Professionals of Mizuho Financial Group, Inc. (English Translation)**
 12.1     
  12.1    
CEO Certification required by Rule
13a-14(a) (17
(17 CFR
240.13a-14(a)).
 12.2     
  12.2    
CFO Certification required by Rule
13a-14(a) (17
(17 CFR
240.13a-14(a)).
 13.1     
  13.1    
Certification required by Rule
13a-14(b) (17
(17 CFR
240.13a-14(b))
and Section 1350 of Chapter 63 of Title 18 of the United States Code (18 U.S.C. 1350).
15 
15
Consent of Independent Registered Public Accounting Firm
101.INS XBRL Instance Document
101.SCH 
101.INS
Inline XBRL Instance Document—the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document
101.SCH
Inline XBRL Taxonomy Extension Schema
101.CAL 
101.CAL
Inline XBRL Taxonomy Extension Calculation Linkbase
101.DEF 
101.DEF
Inline XBRL Taxonomy Extension Definition Linkbase
101.LAB 
101.LAB
Inline XBRL Taxonomy Extension Label Linkbase
101.PRE 
101.PRE
Inline XBRL Taxonomy Extension Presentation Linkbase
104
The cover page for the Company’s Annual Report on From
20-F
for the year ended March 31, 2020, has been formatted in Inline XBRL

*Incorporated by reference to our annual report on Form
20-F (No.
(No.
001-33098)
filed on July 7, 2017.3, 2018.
**Incorporated by reference to our annual report on Form
20-F (No.
(No.
001-33098)
filed on July 21, 2016.

176
Table of Contents
SELECTED STATISTICAL DATA

In preparing the selected statistical data set forth below, foreign activities are defined as business transactions that involve customers residing outside of Japan. However, as the operations of Mizuho Financial Group, Inc. and its subsidiaries (“the MHFG Group” or “the Group”) are highly and globally integrated, the MHFG Group has made certain estimates and assumptions in allocating assets, liabilities, income and expense between domestic and foreign operations. The Group considers domestic and foreign activities determined by such methods to be representative of the Group’s operations.

A-1
Table of Contents
I. Distribution of assets, liabilities and equity; interest rates and interest differential

Average balances of balance sheet items, interest and dividend income, interest expense and average yields and rates

The following tables show the MHFG Group’s average balances of balance sheet items, Interest and dividend income, Interest expense, average yields on interest-earning assets, and average rates on interest-bearing liabilities for the fiscal years ended March 31, 2016, 20172018, 2019 and 2018.2020. Average balances are generally based on a daily average.
Month-end
or
quarter-end
averages are used for certain average balances where it is not practicable to obtain applicable daily averages. The average balances determined by such methods are considered to be representative of the MHFG Group’s operations.

  2016  2017  2018 
  Average
balance		  Interest and
dividend
income		  Average
yield		  Average
balance		  Interest and
dividend
income		  Average
yield		  Average
balance		  Interest and
dividend
income		  Average
yield		 
  

 

(in billions of yen, except percentages)

 

Assets:

         

Interest-earning assets:

         

Interest-bearing deposits in other banks:

         

Domestic

  29,485   30   0.10%   37,389   27   0.07%   39,812   27   0.07% 

Foreign

  6,639   38   0.57%   7,671   48   0.63%   8,363   94   1.13% 
 

 

 

  

 

 

   

 

 

  

 

 

   

 

 

  

 

 

  

Total

  36,124   68   0.19%   45,060   75   0.17%   48,175   121   0.25% 
 

 

 

  

 

 

   

 

 

  

 

 

   

 

 

  

 

 

  

Call loans and funds sold, and receivables under resale agreements and securities borrowing transactions:

         

Domestic

  4,309   10   0.22%   5,079   18   0.35%   5,283   23   0.43% 

Foreign

  10,465   50   0.48%   9,213   79   0.85%   9,251   132   1.43% 
 

 

 

  

 

 

   

 

 

  

 

 

   

 

 

  

 

 

  

Total

  14,774   60   0.41%   14,292   97   0.68%   14,534   155   1.07% 
 

 

 

  

 

 

   

 

 

  

 

 

   

 

 

  

 

 

  

Trading account assets:

         

Domestic

  5,262   16   0.31%   4,408   27   0.62%   4,654   50   1.07% 

Foreign

  11,602   135   1.16%   10,335   136   1.31%   10,821   152   1.41% 
 

 

 

  

 

 

   

 

 

  

 

 

   

 

 

  

 

 

  

Total

  16,864   151   0.90%   14,743   163   1.11%   15,475   202   1.31% 
 

 

 

  

 

 

   

 

 

  

 

 

   

 

 

  

 

 

  

Investments:

         

Domestic

  25,625   88   0.34%   20,357   78   0.38%   21,267   97   0.46% 

Foreign

  3,058   102   3.34%   3,915   87   2.24%   3,544   77   2.18% 
 

 

 

  

 

 

   

 

 

  

 

 

   

 

 

  

 

 

  

Total

  28,683   190   0.66%   24,272   165   0.68%   24,811   174   0.70% 
 

 

 

  

 

 

   

 

 

  

 

 

   

 

 

  

 

 

  

Loans (1):

         

Domestic

  52,866   565   1.07%   53,930   510   0.95%   58,049   511   0.88% 

Foreign

  24,279   466   1.92%   25,412   499   1.96%   24,822   599   2.41% 
 

 

 

  

 

 

   

 

 

  

 

 

   

 

 

  

 

 

  

Total

  77,145   1,031   1.34%   79,342   1,009   1.27%   82,871   1,110   1.34% 
 

 

 

  

 

 

   

 

 

  

 

 

   

 

 

  

 

 

  

Total interest-earning assets:

         

Domestic

  117,547   709   0.60%   121,163   660   0.54%   129,065   708   0.55% 

Foreign

  56,043   791   1.41%   56,546   849   1.50%   56,801   1,054   1.86% 
 

 

 

  

 

 

   

 

 

  

 

 

   

 

 

  

 

 

  

Total

  173,590   1,500   0.86%   177,709   1,509   0.85%   185,866   1,762   0.95% 
 

 

 

  

 

 

   

 

 

  

 

 

   

 

 

  

 

 

  

Noninterest-earning assets:

         

Cash and due from banks

  2,285     3,312     3,076   

Other noninterest-earning assets (2)

  21,443     23,320     19,896   

Allowance for loan losses

  (478)     (456)     (380)   
 

 

 

    

 

 

    

 

 

   

Total noninterest-earning assets

  23,250     26,176     22,592   
 

 

 

    

 

 

    

 

 

   

Total average assets

  196,840     203,885     208,458   
 

 

 

    

 

 

    

 

 

   

                                     
 
2018
  
2019
  
2020
 
 
Average
balance
  
Interest and
dividend
income
  
Average
yield
  
Average
balance
  
Interest and
dividend
income
  
Average
yield
  
Average
balance
  
Interest and
dividend
income
  
Average
yield
 
 
(in billions of yen, except percentages)
 
Assets:
  
   
   
   
   
   
   
   
   
 
Interest-earning assets:
  
   
   
   
   
   
   
   
   
 
Interest-bearing deposits in other banks:
  
   
   
   
   
   
   
   
   
 
Domestic
  
39,812
   
27
   
0.07
%  
38,914
   
26
   
0.07
%  
34,333
   
26
   
0.08
%
Foreign
  
8,363
   
94
   
1.13
%  
5,951
   
95
   
1.59
%  
5,716
   
79
   
1.39
%
                                     
Total
  
48,175
   
121
   
0.25
%  
44,865
   
121
   
0.27
%  
40,049
   
105
   
0.26
%
                                     
Call loans and funds sold, and receivables under resale agreements and securities borrowing transactions:
  
   
   
   
   
   
   
   
   
 
Domestic
  
5,283
   
23
   
0.43
%  
6,201
   
32
   
0.51
%  
9,322
   
27
   
0.30
%
Foreign
  
9,251
   
132
   
1.43
%  
9,924
   
228
   
2.30
%  
11,301
   
249
   
2.21
%
                                     
Total
  
14,534
   
155
   
1.07
%  
16,125
   
260
   
1.62
%  
20,623
   
276
   
1.34
%
                                     
Trading account assets:
  
   
   
   
   
   
   
   
   
 
Domestic
  
4,654
   
50
   
1.07
%  
5,930
   
71
   
1.19
%  
7,753
   
72
   
0.93
%
Foreign
  
10,821
   
152
   
1.41
%  
9,197
   
141
   
1.53
%  
8,859
   
150
   
1.69
%
                                     
Total
  
15,475
   
202
   
1.31
%  
15,127
   
212
   
1.40
%  
16,612
   
222
   
1.34
%
                                     
Investments:
  
   
   
   
   
   
   
   
   
 
Domestic
  
21,267
   
97
   
0.46
%  
20,109
   
137
   
0.68
%  
16,532
   
85
   
0.51
%
Foreign
  
3,544
   
77
   
2.18
%  
4,471
   
95
   
2.13
%  
4,096
   
81
   
1.98
%
                                     
Total
  
24,811
   
174
   
0.70
%  
24,580
   
232
   
0.95
%  
20,628
   
166
   
0.80
%
                                     
Loans
(1)
:
  
   
   
   
   
   
   
   
   
 
Domestic
  
58,049
   
511
   
0.88
%  
55,897
   
531
   
0.95
%  
54,777
   
535
   
0.98
%
Foreign
  
24,822
   
599
   
2.41
%  
28,037
   
851
   
3.03
%  
28,827
   
846
   
2.94
%
                                     
Total
  
82,871
   
1,110
   
1.34
%  
83,934
   
1,382
   
1.65
%  
83,604
   
1,381
   
1.65
%
                                     
Total interest-earning assets:
  
   
   
   
   
   
   
   
   
 
Domestic
  
129,065
   
708
   
0.55
%  
127,051
   
797
   
0.63
%  
122,717
   
745
   
0.61
%
Foreign
  
56,801
   
1,054
   
1.86
%  
57,580
   
1,410
   
2.45
%  
58,799
   
1,405
   
2.39
%
                                     
Total
  
185,866
   
1,762
   
0.95
%  
184,631
   
2,207
   
1.20
%  
181,516
   
2,150
   
1.19
%
                                     
Noninterest-earning assets:
  
   
   
   
   
   
   
   
   
 
Cash and due from banks
  
3,076
   
   
   
3,832
   
   
   
3,465
   
   
 
Other noninterest-earning assets
(2)
  
19,896
   
   
   
17,646
   
   
   
18,146
   
   
 
Allowance for loan losses
  
(380
)  
   
   
(297
)  
   
   
(346
)  
   
 
                                     
Tota noninterest-earning assets
  
22,592
   
   
   
21,181
   
   
   
21,265
   
   
 
                                     
Total average assets
  
208,458
   
   
   
205,812
   
   
   
202,781
   
   
 
                                     
Notes:

(1)Average balances of loans include all nonaccrual loans. The amortized portion of net loan origination fees (costs) is included in interest income on loans.
(2)The fair value carrying amounts of derivative contracts are reported in Other noninterest-earning assets.

A-2
Table of Contents
Within total average assets, the percentage attributable to foreign activities was 33.2%31.2%, 32.7%31.3% and 31.2%32.5%, respectively, for the fiscal years ended March 31, 2016, 20172018, 2019 and 2018.

   2016  2017  2018 
   Average
balance		  Interest
expense		  Average
rate		  Average
balance		  Interest
expense		  Average
rate		  Average
balance		  Interest
expense		  Average
rate		 
   

 

(in billions of yen, except percentages)

 

Liabilities and equity:

          

Interest-bearing liabilities:

          

Deposits:

          

Domestic

   81,090   60   0.07%   83,293   51   0.06%   90,078   60   0.07% 

Foreign

   20,958   154   0.73%   23,173   214   0.92%   24,567   323   1.32% 
  

 

 

  

 

 

   

 

 

  

 

 

   

 

 

  

 

 

  

Total

   102,048   214   0.21%   106,466   265   0.25%   114,645   383   0.33% 
  

 

 

  

 

 

   

 

 

  

 

 

   

 

 

  

 

 

  

Short-term borrowings (1):

          

Domestic

   15,139   22   0.15%   14,177   27   0.19%   13,678   43   0.31% 

Foreign

   18,982   58   0.31%   17,112   109   0.63%   16,385   222   1.35% 
  

 

 

  

 

 

   

 

 

  

 

 

   

 

 

  

 

 

  

Total

   34,121   80   0.24%   31,289   136   0.43%   30,063   265   0.88% 
  

 

 

  

 

 

   

 

 

  

 

 

   

 

 

  

 

 

  

Trading account liabilities:

          

Domestic

   2,092   13   0.61%   1,697   14   0.82%   1,454   27   1.87% 

Foreign

   1,195   8   0.69%   1,049   7   0.71%   1,235   14   1.16% 
  

 

 

  

 

 

   

 

 

  

 

 

   

 

 

  

 

 

  

Total

   3,287   21   0.64%   2,746   21   0.78%   2,689   41   1.54% 
  

 

 

  

 

 

   

 

 

  

 

 

   

 

 

  

 

 

  

Long-term debt:

          

Domestic

   14,236   176   1.23%   14,523   178   1.22%   13,032   197   1.51% 

Foreign

   1,441   4   0.26%   655   2   0.32%   732   4   0.49% 
  

 

 

  

 

 

   

 

 

  

 

 

   

 

 

  

 

 

  

Total

   15,677   180   1.15%   15,178   180   1.18%   13,764   201   1.46% 
  

 

 

  

 

 

   

 

 

  

 

 

   

 

 

  

 

 

  

Total interest-bearing
liabilities:

          

Domestic

   112,557   271   0.24%   113,690   270   0.24%   118,242   327   0.28% 

Foreign

   42,576   224   0.53%   41,989   332   0.79%   42,919   563   1.31% 
  

 

 

  

 

 

   

 

 

  

 

 

   

 

 

  

 

 

  

Total

   155,133   495   0.32%   155,679   602   0.39%   161,161   890   0.55% 
  

 

 

  

 

 

   

 

 

  

 

 

   

 

 

  

 

 

  

Noninterest-bearing liabilities (2)

   35,176     40,992     39,758   
  

 

 

    

 

 

    

 

 

   

Equity

   6,531     7,214     7,539   
  

 

 

    

 

 

    

 

 

   

Total average liabilities and equity

   196,840     203,885     208,458   
  

 

 

    

 

 

    

 

 

   

Net interest income and average interest rate spread

    1,005   0.54%    907   0.46%    872   0.40% 
   

 

 

    

 

 

    

 

 

  

Net interest income as a percentage of average total interest-earning assets

     0.58%     0.51%     0.47% 

2020.

                                     
 
2018
  
2019
  
2020
 
 
Average
balance
  
Interest
expense
  
Average
rate
  
Average
balance
  
Interest
expense
  
Average
rate
  
Average
balance
  
Interest
expense
  
Average
rate
 
 
(in billions of yen, except percentages)
 
Liabilities and equity:
  
   
   
   
   
   
   
   
   
 
Interest-bearing liabilities:
  
   
   
   
   
   
   
   
   
 
Deposits:
  
   
   
   
   
   
   
   
   
 
Domestic
  
90,078
   
60
   
0.07
%  
87,168
   
94
   
0.11
%  
87,143
   
90
   
0.10
%
Foreign
  
24,567
   
323
   
1.32
%  
26,693
   
519
   
1.95
%  
27,507
   
526
   
1.91
%
                                     
Total
  
114,645
   
383
   
0.33
%  
113,861
   
613
   
0.54
%  
114,650
   
616
   
0.54
%
                                     
Short-term borrowings
(1)
:
  
   
   
   
   
   
   
   
   
 
Domestic
  
13,678
   
43
   
0.31
%  
14,011
   
69
   
0.49
%  
10,918
   
63
   
0.58
%
Foreign
  
16,385
   
222
   
1.35
%  
15,094
   
357
   
2.37
%  
15,112
   
334
   
2.21
%
                                     
Total
  
30,063
   
265
   
0.88
%  
29,105
   
426
   
1.47
%  
26,030
   
397
   
1.53
%
                                     
Trading account liabilities:
  
   
   
   
   
   
   
   
   
 
Domestic
  
1,454
   
27
   
1.87
%  
1,735
   
34
   
1.93
%  
1,591
   
41
   
2.59
%
Foreign
  
1,235
   
14
   
1.16
%  
1,249
   
16
   
1.29
%  
1,009
   
12
   
1.16
%
                                     
Total
  
2,689
   
41
   
1.54
%  
2,984
   
50
   
1.66
%  
2,600
   
53
   
2.04
%
                                     
Long-term debt:
  
   
   
   
   
   
   
   
   
 
Domestic
  
13,032
   
197
   
1.51
%  
12,285
   
217
   
1.77
%  
9,631
   
198
   
2.05
%
Foreign
  
732
   
4
   
0.49
%  
701
   
7
   
0.95
%  
678
   
7
   
1.13
%
                                     
Total
  
13,764
   
201
   
1.46
%  
12,986
   
224
   
1.72
%  
10,309
   
205
   
1.99
%
                                     
Total interest-bearing liabilities:
  
   
   
   
   
   
   
   
   
 
Domestic
  
118,242
   
327
   
0.28
%  
115,199
   
414
   
0.36
%  
109,283
   
392
   
0.36
%
Foreign
  
42,919
   
563
   
1.31
%  
43,737
   
899
   
2.06
%  
44,306
   
879
   
1.98
%
                                     
Total
  
161,161
   
890
   
0.55
%  
158,936
   
1,313
   
0.83
%  
153,589
   
1,271
   
0.83
%
                                     
Noninterest-bearing liabilities
(2)
  
39,758
   
   
   
38,548
   
   
   
40,803
   
   
 
                                     
Equity
  
7,539
   
   
   
8,328
   
   
   
8,389
   
   
 
                                     
Total average liabilities and equity
  
208,458
   
   
   
205,812
   
   
   
202,781
   
   
 
                                     
Net interest income and average interest rate spread
  
   
872
   
0.40
%  
   
894
   
0.37
%  
   
879
   
0.36
%
                                     
Net interest income as a percentage of average total interest-earning assets
  
   
   
0.47
%  
   
   
0.48
%  
   
   
0.48
%
Notes:

(1)Short-term borrowings consist of Due to trust accounts, Call money and funds purchased, Payables under repurchase agreements and securities lending transactions, and Other short-term borrowings.
(2)The fair value carrying amounts of derivative contracts are reported in Noninterest-bearing liabilities.

Within total average liabilities, which is the total of interest-bearing liabilities and noninterest-bearing liabilities shown in the above table, the percentage attributable to foreign activities was 28.2%26.9%, 28.4%27.6% and 26.9%29.2%, respectively, for the fiscal years ended March 31, 2016, 20172018, 2019 and 2018.

2020.

A-3
Table of Contents
Analysis of net interest income

The following tables show changes in the MHFG Group’s Interest and dividend income, Interest expense, and Net interest income based on changes in volume and changes in rate for the fiscal year ended March 31, 20172019 compared to the fiscal year ended March 31, 20162018 and the fiscal year ended March 31, 20182020 compared to the fiscal year ended March 31, 2017.2019. Changes attributable to the combined impact of changes in rate and volume have been allocated proportionately to the changes due to volume changes and changes due to rate changes.

   Fiscal year ended March 31, 2017
versus
fiscal year ended March 31, 2016		  Fiscal year ended March 31, 2018
versus
fiscal year ended March 31, 2017		 
   Increase (decrease)
due to changes in		  Net
change		  Increase (decrease)
due to changes in		  Net
change		 
   Volume  Yield   Volume  Yield  
   

 

(in billions of yen)

 

Interest and dividend income:

       

Interest-bearing deposits in other banks:

       

Domestic

   6   (9)   (3)   1   (1)   —   

Foreign

   6   4   10   5   41   46 
  

 

 

  

 

 

  

 

 

  

 

 

  

 

 

  

 

 

 

Total

   12   (5)   7   6   40   46 
  

 

 

  

 

 

  

 

 

  

 

 

  

 

 

  

 

 

 

Call loans and funds sold, and receivables under resale agreements and securities borrowing transactions:

       

Domestic

   2   6   8   1   4   5 

Foreign

   (6)   35   29   —     53   53 
  

 

 

  

 

 

  

 

 

  

 

 

  

 

 

  

 

 

 

Total

   (4)   41   37   1   57   58 
  

 

 

  

 

 

  

 

 

  

 

 

  

 

 

  

 

 

 

Trading account assets:

       

Domestic

   (3)   14   11   2   21   23 

Foreign

   (14)   15   1   6   10   16 
  

 

 

  

 

 

  

 

 

  

 

 

  

 

 

  

 

 

 

Total

   (17)   29   12   8   31   39 
  

 

 

  

 

 

  

 

 

  

 

 

  

 

 

  

 

 

 

Investments:

       

Domestic

   (18)   8   (10)   4   15   19 

Foreign

   19   (34)   (15)   (8)   (2)   (10) 
  

 

 

  

 

 

  

 

 

  

 

 

  

 

 

  

 

 

 

Total

   1   (26)   (25)   (4)   13   9 
  

 

 

  

 

 

  

 

 

  

 

 

  

 

 

  

 

 

 

Loans:

       

Domestic

   10   (65)   (55)   36   (35)   1 

Foreign

   22   11   33   (11)   111   100 
  

 

 

  

 

 

  

 

 

  

 

 

  

 

 

  

 

 

 

Total

   32   (54)   (22)   25   76   101 
  

 

 

  

 

 

  

 

 

  

 

 

  

 

 

  

 

 

 

Total interest and dividend income:

       

Domestic

   (3)   (46)   (49)   44   4   48 

Foreign

   27   31   58   (8)   213   205 
  

 

 

  

 

 

  

 

 

  

 

 

  

 

 

  

 

 

 

Total

   24   (15)   9   36   217   253 
  

 

 

  

 

 

  

 

 

  

 

 

  

 

 

  

 

 

 

                         
 
Fiscal year ended March 31, 2019
versus
fiscal year ended March 31, 2018
  
Fiscal year ended March 31, 2020
versus
fiscal year ended March 31, 2019
 
 
Increase (decrease) due to
changes in
  
Net
change
  
Increase (decrease) due to
changes in
  
Net
change
 
 
Volume
  
Yield
 
Volume
  
Yield
 
 
(in billions of yen)
 
Interest and dividend income:
  
   
   
   
   
   
 
Interest-bearing deposits in other banks:
  
   
   
   
   
   
 
Domestic
  
(1
)  
—  
   
(1
)  
(3
)  
3
   
—  
 
Foreign
  
(27
)  
28
   
1
   
(4
)  
(12
)  
(16
)
                         
Total
  
(28
)  
28
   
—  
   
(7
)  
(9
)  
(16
)
                         
Call loans and funds sold, and receivables under resale agreements and securities borrowing transactions:
  
   
   
   
   
   
 
Domestic
  
4
   
5
   
9
   
9
   
(14
)  
(5
)
Foreign
  
10
   
86
   
96
   
30
   
(9
)  
21
 
                         
Total
  
14
   
91
   
105
   
39
   
(23
)  
16
 
                         
Trading account assets:
  
   
   
   
   
   
 
Domestic
  
15
   
6
   
21
   
17
   
(16
)  
1
 
Foreign
  
(23
)  
12
   
(11
)  
(5
)  
14
   
9
 
                         
Total
  
(8
)  
18
   
10
   
12
   
(2
)  
10
 
                         
Investments:
  
   
   
   
   
   
 
Domestic
  
(5
)  
45
   
40
   
(22
)  
(30
)  
(52
)
Foreign
  
20
   
(2
)  
18
   
(8
)  
(6
)  
(14
)
                         
Total
  
15
   
43
   
58
   
(30
)  
(36
)  
(66
)
                         
Loans:
  
   
   
   
   
   
 
Domestic
  
(19
)  
39
   
20
   
(10
)  
14
   
4
 
Foreign
  
84
   
168
   
252
   
23
   
(28
)  
(5
)
                         
Total
  
65
   
207
   
272
   
13
   
(14
)  
(1
)
                         
Total interest and dividend income:
  
   
   
   
   
   
 
Domestic
  
(6
)  
95
   
89
   
(9
)  
(43
)  
(52
)
Foreign
  
64
   
292
   
356
   
36
   
(41
)  
(5
)
                         
Total
  
58
   
387
   
445
   
27
   
(84
)  
(57
)
                         
   Fiscal year ended March 31, 2017
versus
fiscal year ended March 31, 2016		  Fiscal year ended March 31, 2018
versus
fiscal year ended March 31, 2017		 
   Increase (decrease)
due to changes in		  Net
change		  Increase (decrease)
due to changes in		  Net
change		 
   Volume  Rate   Volume  Rate  
   

 

(in billions of yen)

 

Interest expense:

       

Deposits:

       

Domestic

   1   (10)   (9)   4   5   9 

Foreign

   18   42   60   14   95   109 
  

 

 

  

 

 

  

 

 

  

 

 

  

 

 

  

 

 

 

Total

   19   32   51   18   100   118 
  

 

 

  

 

 

  

 

 

  

 

 

  

 

 

  

 

 

 

Short-term borrowings:

       

Domestic

   (1)   6   5   (1)   17   16 

Foreign

   (6)   57   51   (5)   118   113 
  

 

 

  

 

 

  

 

 

  

 

 

  

 

 

  

 

 

 

Total

   (7)   63   56   (6)   135   129 
  

 

 

  

 

 

  

 

 

  

 

 

  

 

 

  

 

 

 

Trading account liabilities:

       

Domestic

   (2)   3   1   (2)   15   13 

Foreign

   (1)   —     (1)   1   6   7 
  

 

 

  

 

 

  

 

 

  

 

 

  

 

 

  

 

 

 

Total

   (3)   3   —     (1)   21   20 
  

 

 

  

 

 

  

 

 

  

 

 

  

 

 

  

 

 

 

Long-term debt:

       

Domestic

   4   (2)   2   (18)   37   19 

Foreign

   (2)   —     (2)   —     2   2 
  

 

 

  

 

 

  

 

 

  

 

 

  

 

 

  

 

 

 

Total

   2   (2)   —     (18)   39   21 
  

 

 

  

 

 

  

 

 

  

 

 

  

 

 

  

 

 

 

Total interest expense:

       

Domestic

   2   (3)   (1)   (17)   74   57 

Foreign

   9   99   108   10   221   231 
  

 

 

  

 

 

  

 

 

  

 

 

  

 

 

  

 

 

 

Total

   11   96   107   (7)   295   288 
  

 

 

  

 

 

  

 

 

  

 

 

  

 

 

  

 

 

 

Net interest income:

       

Domestic

   (5)   (43)   (48)   61   (70)   (9) 

Foreign

   18   (68)   (50)   (18)   (8)   (26) 
  

 

 

  

 

 

  

 

 

  

 

 

  

 

 

  

 

 

 

Total

   13   (111)   (98)   43   (78)   (35) 
  

 

 

  

 

 

  

 

 

  

 

 

  

 

 

  

 

 

 

A-4
Table of Contents
                         
 
Fiscal year ended March 31, 2019
versus
fiscal year ended March 31, 2018
  
Fiscal year ended March 31, 2020
versus
fiscal year ended March 31, 2019
 
 
Increase (decrease) due to
changes in
  
Net
change
  
Increase (decrease) due to
changes in
  
Net
change
 
 
Volume
  
Rate
 
Volume
  
Rate
 
 
(in billions of yen)
 
Interest expense:
  
   
   
   
   
   
 
Deposits:
  
   
   
   
   
   
 
Domestic
  
(2
)  
36
   
34
   
—  
   
(4
)  
(4
)
Foreign
  
30
   
166
   
196
   
16
   
(9
)  
7
 
                         
Total
  
28
   
202
   
230
   
16
   
(13
)  
3
 
                         
Short-term borrowings:
  
   
   
   
   
   
 
Domestic
  
1
   
25
   
26
   
(15
)  
9
   
(6
)
Foreign
  
(18
)  
153
   
135
   
—  
   
(23
)  
(23
)
                         
Total
  
(17
)  
178
   
161
   
(15
)  
(14
)  
(29
)
                         
Trading account liabilities:
  
   
   
   
   
   
 
Domestic
  
6
   
1
   
7
   
(3
)  
10
   
7
 
Foreign
  
—  
   
2
   
2
   
(3
)  
(1
)  
(4
)
                         
Total
  
6
   
3
   
9
   
(6
)  
9
   
3
 
                         
Long-term debt:
  
   
   
   
   
   
 
Domestic
  
(11
)  
31
   
20
   
(47
)  
28
   
(19
)
Foreign
  
—  
   
3
   
3
   
—  
   
—  
   
—  
 
                         
Total
  
(11
)  
34
   
23
   
(47
)  
28
   
(19
)
                         
Total interest expense:
  
   
   
   
   
   
 
Domestic
  
(6
)  
93
   
87
   
(65
)  
43
   
(22
)
Foreign
  
12
   
324
   
336
   
13
   
(33
)  
(20
)
                         
Total
  
6
   
417
   
423
   
(52
)  
10
   
(42
)
                         
Net interest income:
  
   
   
   
   
   
 
Domestic
  
—  
   
2
   
2
   
56
   
(86
)  
(30
)
Foreign
  
52
   
(32
)  
20
   
23
   
(8
)  
15
 
                         
Total
  
52
   
(30
)  
22
   
79
   
(94
)  
(15
)
                         
A-5
Table of Contents
II. Investment portfolio

The following table shows the amortized cost, fair value and net unrealized gains (losses) of
available-for-sale
and
held-to-maturity
securities at March 31, 2016, 20172018, 2019 and 2018:

  2016  2017  2018 
  Amortized
cost		  Fair
value		  Net
unrealized
gains
(losses)		  Amortized
cost		  Fair
value		  Net
unrealized
gains
(losses)		  Amortized
cost		  Fair
value		  Net
unrealized
gains
(losses)		 
  

 

(in billions of yen)

 

Available-for-sale securities:

         

Domestic:

         

Japanese government bonds

  15,672   15,763   91   10,257   10,263   6   13,334   13,332   (2) 

Agency mortgage-backed securities (1)

  751   780   29   694   709   15   730   743   13 

Corporate bonds and other debt securities

  2,696   2,721   25   2,597   2,654   57   2,743   2,789   46 

Equity securities (marketable)

  1,610   3,726   2,116   1,452   3,722   2,270   1,478   3,915   2,437 
 

 

 

  

 

 

  

 

 

  

 

 

  

 

 

  

 

 

  

 

 

  

 

 

  

 

 

 

Total domestic

  20,729   22,990   2,261   15,000   17,348   2,348   18,285   20,779   2,494 
 

 

 

  

 

 

  

 

 

  

 

 

  

 

 

  

 

 

  

 

 

  

 

 

  

 

 

 

Foreign:

         

U.S. Treasury bonds and federal agency securities

  436   438   2   1,148   1,144   (4)   689   686   (3) 

Other foreign government bonds

  940   942   2   934   935   1   1,058   1,058   —   

Agency mortgage-backed securities (2)

  169   169   —     139   134   (5)   153   146   (7) 

Corporate bonds and other debt securities

  852   859   7   915   917   2   880   879   (1) 

Equity securities (marketable)

  54   55   1   78   79   1   117   118   1 
 

 

 

  

 

 

  

 

 

  

 

 

  

 

 

  

 

 

  

 

 

  

 

 

  

 

 

 

Total foreign

  2,451   2,463   12   3,214   3,209   (5)   2,897   2,887   (10) 
 

 

 

  

 

 

  

 

 

  

 

 

  

 

 

  

 

 

  

 

 

  

 

 

  

 

 

 

Total

  23,180   25,453   2,273   18,214   20,557   2,343   21,182   23,666   2,484 
 

 

 

  

 

 

  

 

 

  

 

 

  

 

 

  

 

 

  

 

 

  

 

 

  

 

 

 

Held-to-maturity securities:

         

Domestic:

         

Japanese government bonds

  3,760   3,817   57   3,060   3,097   37   1,960   1,984   24 
 

 

 

  

 

 

  

 

 

  

 

 

  

 

 

  

 

 

  

 

 

  

 

 

  

 

 

 

Total domestic

  3,760   3,817   57   3,060   3,097   37   1,960   1,984   24 
 

 

 

  

 

 

  

 

 

  

 

 

  

 

 

  

 

 

  

 

 

  

 

 

  

 

 

 

Foreign:

         

Agency mortgage-backed securities (3)

  1,059   1,056   (3)   757   750   (7)   558   538   (20) 
 

 

 

  

 

 

  

 

 

  

 

 

  

 

 

  

 

 

  

 

 

  

 

 

  

 

 

 

Total foreign

  1,059   1,056   (3)   757   750   (7)   558   538   (20) 
 

 

 

  

 

 

  

 

 

  

 

 

  

 

 

  

 

 

  

 

 

  

 

 

  

 

 

 

Total

  4,819   4,873   54   3,817   3,847   30   2,518   2,522   4 
 

 

 

  

 

 

  

 

 

  

 

 

  

 

 

  

 

 

  

 

 

  

 

 

  

 

 

 

2020:

                                     
 
2018
  
2019
  
2020
 
 
Amortized
cost
  
Fair
value
  
Net
unrealized
gains
(losses)
  
Amortized
cost
  
Fair
value
  
Net
unrealized
gains
(losses)
  
Amortized
cost
  
Fair
value
  
Net
unrealized
gains
(losses)
 
 
(in billions of yen)
 
Available-for-sale
securities:
  
   
   
   
   
   
   
   
   
 
Domestic:
  
   
   
   
   
   
   
   
   
 
Japanese government bonds
  
13,334
   
13,332
   
(2
)  
11,889
   
11,897
   
8
   
12,652
   
12,603
   
(49
)
Agency mortgage-backed securities
(1)
  
730
   
743
   
13
   
503
   
517
   
14
   
495
   
505
   
10
 
Corporate bonds and other debt securities
  
2,743
   
2,789
   
46
   
2,546
   
2,560
   
14
   
2,801
   
2,807
   
6
 
Equity securities (marketable)
(2)
  
1,478
   
3,915
   
2,437
   
—  
   
—  
   
—  
   
—  
   
—  
   
—  
 
                                     
Total domestic
  
18,285
   
20,779
   
2,494
   
14,938
   
14,974
   
36
   
15,948
   
15,915
   
(33
)
                                     
Foreign:
  
   
   
   
   
   
   
   
   
 
U.S. Treasury bonds and federal agency securities
  
689
   
686
   
(3
)  
1,009
   
1,009
   
—  
   
927
   
935
   
8
 
Other foreign government bonds
  
1,058
   
1,058
   
—  
   
1,342
   
1,342
   
—  
   
1,408
   
1,411
   
3
 
Agency mortgage-backed securities
(3)
  
153
   
146
   
(7
)  
27
   
27
   
—  
   
—  
   
—  
   
—  
 
Corporate bonds and other debt securities
  
880
   
879
   
(1
)  
778
   
781
   
3
   
850
   
852
   
2
 
Equity securities (marketable)
(2)
  
117
   
118
   
1
   
—  
   
—  
   
—  
   
—  
   
—  
   
—  
 
                                     
Total foreign
  
2,897
   
2,887
   
(10
)  
3,156
   
3,159
   
3
   
3,185
   
3,198
   
13
 
                                     
Total
  
21,182
   
23,666
   
2,484
   
18,094
   
18,133
   
39
   
19,133
   
19,113
   
(20
)
                                     
Held-to-maturity
securities:
  
   
   
   
   
   
   
   
   
 
Domestic:
  
   
   
   
   
   
   
   
   
 
Japanese government bonds
  
1,960
   
1,984
   
24
   
1,120
   
1,140
   
20
   
480
   
493
   
13
 
                                     
Total domestic
  
1,960
   
1,984
   
24
   
1,120
   
1,140
   
20
   
480
   
493
   
13
 
                                     
Foreign:
  
   
   
   
   
   
   
   
   
 
Agency mortgage-backed securities
(4)
  
558
   
538
   
(20
)  
484
   
470
   
(14
)  
382
   
382
   
—  
 
                                     
Total foreign
  
558
   
538
   
(20
)  
484
   
470
   
(14
)  
382
   
382
   
—  
 
                                     
Total
  
2,518
   
2,522
   
4
   
1,604
   
1,610
   
6
   
862
   
875
   
13
 
                                     
Notes:

(1)All domestic agency mortgage-backed securities are issued by Japan Housing Finance Agency, a Japanese government-sponsored enterprise.
(2)The MHFG Group adopted ASU
No.2016-01
on April 1, 2018, resulting in a cumulative-effect adjustment from AOCI to Retained earnings for net unrealized gains on equity securities (marketable). The
available-for-sale
category was eliminated for equity securities effective April 1, 2018. See Note 2 “Issued accounting pronouncements” for further details.
(3)Foreign agency mortgage-backed securities primarily consist of Government National Mortgage Association (“Ginnie Mae”) securities, which are guaranteed by the United States government.
(3)(4)All foreign agency mortgage-backed securities presented in this line are Ginnie Mae securities.

A-6
Table of Contents
The following table shows the book values, contractual maturities and weighted average yields of
available-for-sale
and
held-to-maturity
debt securities at March 31, 2018.2020. Fair value and amortized cost are the basis of the book value for
available-for-sale
and
held-to-maturity
debt securities, respectively. Weighted average yields are calculated based on amortized cost for all debt securities.

  Maturity 
  One year or less  After one year
through
five years		  After five years
through
ten years		  After ten years  Total 
  Amount  Yield  Amount  Yield  Amount  Yield  Amount  Yield  Amount  Yield 
  

 

(in billions of yen, except percentages)

 

Available-for-sale securities:

          

Domestic:

          

Japanese government bonds

  6,286   (0.22)%   5,026   (0.11)%   1,921   (0.02)%   99   0.52%   13,332   (0.15)% 

Agency mortgage-backed securities

  —     —     —     —     —     —     743   0.93%   743   0.93% 

Corporate bonds and other debt securities

  345   0.21%   1,359   2.82%   722   0.39%   363   0.52%   2,789   1.56% 
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

  

Total domestic

  6,631   (0.20)%   6,385   0.50%   2,643   0.10%   1,205   0.77%   16,864   0.18% 
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

  

Foreign:

          

U.S. Treasury bonds and federal agency securities

  611   1.61%   —     —     75   2.16%   —     —     686   1.67% 

Other foreign government bonds

  842   1.83%   208   2.14%   8   0.35%   —     —     1,058   1.88% 

Agency mortgage-backed securities

  —     —     —     —     —     —     146   2.89%   146   2.89% 

Corporate bonds and other debt securities

  503   1.29%   312   1.33%   61   1.22%   3   0.15%   879   1.29% 
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

  

Total foreign

  1,956   1.62%   520   1.66%   144   1.67%   149   2.84%   2,769   1.70% 
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

  

Total

  8,587   0.21%   6,905   0.59%   2,787   0.18%   1,354   1.01%   19,633   0.39% 
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

  

Held-to-maturity securities:

          

Domestic:

          

Japanese government bonds

  840   0.22%   740   0.21%   380   0.69%   —     —     1,960   0.31% 
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

  

Total domestic

  840   0.22%   740   0.21%   380   0.69%   —     —     1,960   0.31% 
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

  

Foreign:

          

Agency mortgage-backed securities

  —     —     —     —     —     —     558   3.72%   558   3.72% 
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

  

Total foreign

  —     —     —     —     —     —     558   3.72%   558   3.72% 
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

  

Total

  840   0.22%   740   0.21%   380   0.69%   558   3.72%   2,518   1.06% 
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

  

                                         
 
Maturity
 
 
One year or less
  
After one year
through
five years
  
After five years
through
ten years
  
After ten years
  
Total
 
 
Amount
  
Yield
  
Amount
  
Yield
  
Amount
  
Yield
  
Amount
  
Yield
  
Amount
  
Yield
 
 
(in billions of yen, except percentages)
 
Available-for-sale
securities:
  
   
   
   
   
   
   
   
   
   
 
Domestic:
  
   
   
   
   
   
   
   
   
   
 
Japanese government bonds
  
5,873
   
(0.18
)%  
4,963
   
(0.30
)%  
1,722
   
(0.27
)%  
45
   
0.21
%  
12,603
   
(0.24
)%
Agency mortgage-backed securities
  
—  
   
—  
   
—  
   
—  
   
—  
   
—  
   
505
   
0.99
%  
505
   
0.99
%
Corporate bonds and other debt securities
  
127
   
0.34
%  
1,244
   
0.25
%  
1,023
   
0.33
%  
413
   
1.27
%  
2,807
   
0.43
%
                                         
Total domestic
  
6,000
   
(0.17
)%  
6,207
   
(0.19
)%  
2,745
   
(0.05
)%  
963
   
1.07
%  
15,915
   
(0.08
)%
                                         
Foreign:
  
   
   
   
   
   
   
   
   
   
 
U.S. Treasury bonds and federal agency securities
  
890
   
1.95
%  
45
   
1.71
%  
—  
   
—  
   
—  
   
—  
   
935
   
1.93
%
Other foreign government bonds
  
1,031
   
2.27
%  
380
   
1.68
%  
—  
   
—  
   
—  
   
—  
   
1,411
   
2.11
%
Agency mortgage-backed securities
  
—  
   
—  
   
—  
   
—  
   
—  
   
—  
   
—  
   
6.00
%  
—  
   
6.00
%
Corporate bonds and other debt securities
  
378
   
1.67
%  
329
   
2.25
%  
142
   
2.06
%  
3
   
0.09
%  
852
   
1.95
%
                                         
Total foreign
  
2,299
   
2.05
%  
754
   
1.93
%  
142
   
2.06
%  
3
   
0.22
%  
3,198
   
2.02
%
                                         
Total
  
8,299
   
0.44
%  
6,961
   
0.03
%  
2,887
   
0.05
%  
966
   
1.07
%  
19,113
   
0.27
%
                                         
Held-to-maturity
securities:
  
   
   
   
   
   
   
   
   
   
 
Domestic:
  
   
   
   
   
   
   
   
   
   
 
Japanese government bonds
  
—  
   
—  
   
480
   
0.67
%  
—  
   
—  
   
—  
   
—  
   
480
   
0.67
%
                                         
Total domestic
  
—  
   
—  
   
480
   
0.67
%  
—  
   
—  
   
—  
   
—  
   
480
   
0.67
%
                                         
Foreign:
  
   
   
   
   
   
   
   
   
   
 
Agency mortgage-backed securities
  
—  
   
—  
   
—  
   
—  
   
—  
   
—  
   
382
   
3.72
%  
382
   
3.72
%
                                         
Total foreign
  
—  
   
—  
   
—  
   
—  
   
—  
   
—  
   
382
   
3.72
%  
382
   
3.72
%
                                         
Total
  
—  
   
—  
   
480
   
0.67
%  
—  
   
—  
   
382
   
3.72
%  
862
   
2.02
%
                                         
Other than Japanese government bonds, the MHFG Group did not have any securities of individual issuers with respect to which their aggregate book value exceeded 10% of the Group’s shareholders’ equity at March 31, 2018.

2020.

In addition to
Available-for-sale
securities and
Held-to-maturity
securities, the MHFG Group’s Investments also include Equity securities and Other investments. See Note 43 “Investments” to the consolidated financial statements included elsewhere in this annual report for information regarding Equity securities and Other investments.

A-7
Table of Contents
III. Loan portfolio

Types of loans

The following table shows loans outstanding by domicile and industry of borrower at March 31, 2014, 2015, 2016, 2017, 2018, 2019 and 2018:

   2014   2015   2016   2017   2018 
   

 

(in billions of yen)

 

Domestic (2):

          

Manufacturing

   8,026    8,224    8,345    8,740    8,156 

Construction and real estate

   7,238    7,416    7,822    7,772    8,102 

Services

   3,953    4,267    4,648    4,749    5,024 

Wholesale and retail

   5,350    5,586    5,407    5,140    5,113 

Transportation and communications

   3,247    3,157    3,268    3,491    3,565 

Banks and other financial institutions

   3,460    3,853    3,632    4,006    4,471 

Government and public institutions

   6,734    4,612    3,395    8,532    8,882 

Other industries(1)

   4,983    5,079    4,618    4,427    5,018 

Individuals:

          

Mortgage loans

   11,184    11,018    10,585    9,960    9,445 

Other

   763    798    852    840    884 
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total domestic

   54,938    54,010    52,572    57,657    58,660 
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Foreign:

          

Commercial and industrial

   12,938    16,688    17,320    16,872    17,095 

Banks and other financial institutions

   4,610    6,077    6,382    6,760    6,740 

Government and public institutions

   883    1,011    1,175    960  �� 1,128 

Other

   255    426    274    191    38 
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total foreign

   18,686    24,202    25,151    24,783    25,001 
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total

   73,624    78,212    77,723    82,440    83,661 

Less: Unearned income and deferred loan fees—net

   139    164    168    156    146 
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total loans before allowance for loan losses

   73,485    78,048    77,555    82,284    83,515 
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

2020:

                     
 
2016
  
2017
  
2018
  
2019
  
2020
 
 
(in billions of yen)
 
Domestic:
  
   
   
   
   
 
Manufacturing
  
8,334
   
8,730
   
8,150
   
9,554
   
9,731
 
Construction and real estate
  
7,802
   
7,751
   
8,095
   
8,950
   
9,603
 
Services
  
4,524
   
4,633
   
4,924
   
5,017
   
5,993
 
Wholesale and retail
  
5,399
   
5,131
   
5,108
   
5,159
   
5,220
 
Transportation and communications
  
3,349
   
3,567
   
3,632
   
3,693
   
3,833
 
Banks and other financial institutions
  
3,713
   
4,087
   
4,527
   
4,346
   
4,635
 
Government and public institutions
  
3,396
   
8,532
   
8,882
   
2,359
   
2,199
 
Other industries
(1)
  
4,618
   
4,426
   
5,013
   
5,473
   
5,389
 
Individuals:
  
   
   
   
   
 
Mortgage loans
  
10,585
   
9,960
   
9,445
   
8,950
   
8,567
 
Other
  
852
   
840
   
884
   
908
   
861
 
                     
Total domestic
  
52,572
   
57,657
   
58,660
   
54,409
   
56,031
 
                     
Foreign:
  
   
   
   
   
 
Commercial and industrial
  
17,453
   
16,972
   
17,225
   
19,126
   
20,819
 
Banks and other financial institutions
  
7,120
   
7,403
   
7,435
   
9,087
   
10,475
 
Government and public institutions
  
304
   
217
   
303
   
297
   
317
 
Other
  
274
   
191
   
38
   
33
   
35
 
                     
Total foreign
  
25,151
   
24,783
   
25,001
   
28,543
   
31,646
 
                     
Total
  
77,723
   
82,440
   
83,661
   
82,952
   
87,677
 
Less: Unearned income and deferred loan fees—net
  
168
   
156
   
146
   
152
   
149
 
                     
Total loans before allowance for loan losses
  
77,555
   
82,284
   
83,515
   
82,800
   
87,528
 
                     
Notes:

(1)Other industries of Domesticdomestic includes trade receivables and lease receivables of consolidated variable interest entities.
(2)Certain loans of domestic and foreign were reclassified primarily from Other of Individualsin order to Construction and real estateconform to align withthe current periodyear’s presentation.

There were no concentrations of loans exceeding 10% of total loans which are not disclosed as a category of loans in the table above.

A-8
Table of Contents
Maturities and sensitivities of loans to changes in interest rates

The following table shows the maturities of loan portfolio by domicile and industry of borrower at March 31, 2018:

   Maturity 
   One year
or less		   After one year
through
five years		   After
five years		   Total 
   

 

(in billions of yen)

 

Domestic:

        

Manufacturing

   3,837    3,177    1,142    8,156 

Construction and real estate

   1,604    3,239    3,259    8,102 

Services

   2,116    2,173    735    5,024 

Wholesale and retail

   2,964    1,664    485    5,113 

Transportation and communications

   1,018    1,623    924    3,565 

Banks and other financial institutions

   1,844    1,884    743    4,471 

Government and public institutions

   8,155    422    305    8,882 

Other industries

   3,143    1,159    716    5,018 

Individuals

   1,328    2,134    6,867    10,329 
  

 

 

   

 

 

   

 

 

   

 

 

 

Total domestic

   26,009    17,475    15,176    58,660 

Foreign:

        

Total foreign

   12,460    10,315    2,226    25,001 
  

 

 

   

 

 

   

 

 

   

 

 

 

Total

   38,469    27,790    17,402    83,661 
  

 

 

   

 

 

   

 

 

   

 

 

 

2020:

                 
 
Maturity
 
 
One year
or less
  
After one year
through
five years
  
After
five years
  
Total
 
 
(in billions of yen)
 
Domestic:
  
   
   
   
 
Manufacturing
  
4,011
   
4,102
   
1,618
   
9,731
 
Construction and real estate
  
1,810
   
3,615
   
4,178
   
9,603
 
Services
  
2,564
   
2,569
   
860
   
5,993
 
Wholesale and retail
  
3,079
   
1,713
   
428
   
5,220
 
Transportation and communications
  
1,177
   
2,037
   
619
   
3,833
 
Banks and other financial institutions
  
1,944
   
1,712
   
979
   
4,635
 
Government and public institutions
  
1,616
   
315
   
268
   
2,199
 
Other industries
  
3,086
   
1,267
   
1,036
   
5,389
 
Individuals
  
1,206
   
1,933
   
6,289
   
9,428
 
                 
Total domestic
  
20,493
   
19,263
   
16,275
   
56,031
 
Foreign:
  
   
   
   
 
Total foreign
  
15,359
   
13,638
   
2,649
   
31,646
 
                 
Total
  
35,852
   
32,901
   
18,924
   
87,677
 
                 
Of the above loans due after one year, loans which hadhave floating rates and fixed rates at March 31, 2018 were2020 are as follows:

  (in billions of yen) 

Floating rates

34,299

Fixed rates

10,893 
 

(in billions of yen)
 

Total

Floating rates
  45,192
39,184
 
Fixed rates
 

12,641
Total
51,825
 

A-9
Table of Contents
Impaired loans

The MHFG Group considers loans to be impaired when it is probable that the Group will be unable to collect all the scheduled payments of principal and interest when due according to the contractual terms of the loans. The Group classifies loans to special attention, intensive control, substantially bankrupt and bankrupt obligors as impaired loans. Impaired loans include loans past due for 90 days or more and restructured loans that meet the definition of troubled debt restructuring in accordance with ASC 310, “Receivables”(“ASC 310”). All of the Group’s impaired loans are designated as nonaccrual loans. There are no loans that are ninety days past due and still accruing. The Group does not have any loans to borrowers that cause management to have serious doubts as to the ability of such borrowers to comply with the present loan repayment terms for the periods presented other than those already designated as impaired loans. The following table shows the distribution of impaired loans at March 31, 2014, 2015, 2016, 2017, 2018, 2019 and 20182020 by domicile and industry of borrower:

   2014   2015   2016   2017   2018 
   

 

(in billions of yen)

 

Domestic:

          

Manufacturing

   229    480    374    379    142 

Construction and real estate

   138    101    77    57    41 

Services

   79    71    66    66    58 

Wholesale and retail

   156    150    147    147    131 

Transportation and communications

   48    36    29    23    28 

Banks and other financial institutions

   11    5    3    6    12 

Other industries

   1    1    4    7    4 

Individuals

   195    143    123    105    90 
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total domestic

   857    987    823    790    506 

Foreign:

          

Total foreign

   288    188    167    191    109 
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total impaired loans

   1,145    1,175    990    981    615 
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

                     
 
2016
  
2017
  
2018
  
2019
  
2020
 
 
(in billions of yen)
 
Domestic:
  
   
   
   
   
 
Manufacturing
  
374
   
379
   
142
   
109
   
159
 
Construction and real estate
  
77
   
57
   
41
   
46
   
55
 
Services
  
66
   
66
   
58
   
74
   
81
 
Wholesale and retail
  
147
   
147
   
131
   
135
   
148
 
Transportation and communications
  
29
   
23
   
28
   
31
   
23
 
Banks and other financial institutions
  
3
   
6
   
12
   
10
   
12
 
Other industries
  
4
   
7
   
4
   
9
   
19
 
Individuals
  
123
   
105
   
90
   
81
   
84
 
                     
Total domestic
  
823
   
790
   
506
   
495
   
581
 
Foreign:
  
   
   
   
   
 
Total foreign
  
167
   
191
   
109
   
151
   
135
 
                     
Total impaired loans
  
990
   
981
   
615
   
646
   
716
 
                     
Had interest on nonaccrual loans been accrued at the original contractual terms, gross interest income on domestic and foreign nonaccrual loans outstanding during the fiscal year ended March 31, 20182020 would have been ¥8 billion and ¥2¥4 billion, respectively. The MHFG group recognized interest income on these domestic and foreign loans of ¥7¥8 billion and ¥1¥3 billion, respectively, in the consolidated statements of income for the fiscal year ended March 31, 2018.

2020.

A-10
Table of Contents
Cross-border outstandings

Cross-border outstandings are defined as loans (including accrued interest), acceptances, interest-bearing deposits with other banks, other interest-bearing investments and any other monetary assets denominated in Japanese yen or other
non-local
currencies. This cross-border disclosure is based on the reports to the Bank of Japan required under Japanese foreign exchange-related law. Local currency outstandings are netted out from cross-border outstandings.

The following table sets forth the cross-border outstandings to borrowers in countries with respect to which the total of such outstandings exceeded 0.75% of consolidated total assets at March 31, 2016, 20172018, 2019 and 2018:

   Public
institutions		   Banks   Others   Total   % of total
assets		  Undrawn
commitments		 
   

 

(in billions of yen, except percentages)

 

2016

           

United States

   3,928    261    4,352    8,541    4.41%   8,531 

Germany

   1,392    224    266    1,882    0.97%   338 

France

   1,276    304    214    1,794    0.93%   540 

United Kingdom

   15    264    1,258    1,537    0.79%   954 

Korea

   212    340    932    1,484    0.77%   92 

2017

           

United States

   2,827    254    4,950    8,031    4.01%   8,279 

Germany

   1,243    190    305    1,738    0.87%   833 

United Kingdom

   82    309    1,332    1,723    0.86%   1,223 

2018

           

United States

   3,090    340    4,231    7,661    3.75%   7,137 

United Kingdom

   9    374    1,821    2,204    1.08%   1,006 

Germany

   1,518    275    355    2,148    1.05%   728 
2020:

                         
 
Public
institutions
  
Banks
  
Others
  
Total
  
% of total
assets
  
Undrawn
commitments
 
 
(in billions of yen, except percentages)
 
2
018
  
   
   
   
   
   
 
United States
  
3,090
   
340
   
4,231
   
7,661
   
3.75
%  
7,137
 
United Kingdom
  
9
   
374
   
1,821
   
2,204
   
1.08
%  
1,006
 
Germany
  
1,518
   
275
   
355
   
2,148
   
1.05
%  
728
 
                         
2019
  
   
   
   
   
   
 
United States
  
1,440
   
352
   
3,966
   
5,758
   
2.91
%  
7,847
 
United Kingdom
  
10
   
664
   
2,829
   
3,503
   
1.77
%  
1,210
 
France
  
1,475
   
177
   
955
   
2,607
   
1.32
%  
619
 
                         
2020
  
   
   
   
   
   
 
United States
  
5,085
   
621
   
7,324
   
13,030
   
6.17
%  
7,014
 
United Kingdom
  
6
   
570
   
3,815
   
4,391
   
2.08
%  
893
 
France
  
734
   
278
   
1,406
   
2,418
   
1.15
%  
629
 

A-11
Table of Contents
IV. Summary of loan loss experience

The following table shows an analysis of loan loss experience by domicile and industry of borrower for the fiscal years ended March 31, 2014, 2015, 2016, 2017, 2018, 2019 and 2018:

   2014  2015  2016  2017  2018 
   

 

(in billions of yen, except percentages)

 

Allowance for loan losses at beginning of fiscal year

   773   626   520   451   480 

Provision (credit) for loan losses

   (126)   (60)   35   38   (126) 
  

 

 

  

 

 

  

 

 

  

 

 

  

 

 

 

Charge-offs:

      

Domestic:

      

Manufacturing

   20   8   37   2   6 

Construction and real estate

   1   3   2   1   —   

Services

   3   2   4   3   5 

Wholesale and retail

   13   15   14   6   12 

Transportation and communications

   7   1   5   1   1 

Individuals

   13   10   8   7   5 
  

 

 

  

 

 

  

 

 

  

 

 

  

 

 

 

Total domestic

   57   39   70   20   29 

Total foreign

   8   40   42   11   27 
  

 

 

  

 

 

  

 

 

  

 

 

  

 

 

 

Total charge-offs

   65   79   112   31   56 
  

 

 

  

 

 

  

 

 

  

 

 

  

 

 

 

Recoveries:

      

Domestic:

      

Manufacturing

   6   2   2   1   1 

Construction and real estate

   5   4   1   2   1 

Services

   3   2   2   1   2 

Wholesale and retail

   3   3   8   5   1 

Transportation and communications

   3   1   1   4   —   

Banks and other financial institutions

   —     —     —     —     1 

Other industries

   1   1   —     —     —   

Individuals

   3   3   2   3   2 
  

 

 

  

 

 

  

 

 

  

 

 

  

 

 

 

Total domestic

   24   16   16   16   8 

Total foreign

   2   7   5   10   7 
  

 

 

  

 

 

  

 

 

  

 

 

  

 

 

 

Total recoveries

   26   23   21   26   15 
  

 

 

  

 

 

  

 

 

  

 

 

  

 

 

 

Net charge-offs

   39   56   91   5   41 
  

 

 

  

 

 

  

 

 

  

 

 

  

 

 

 

Others(Note)

   18   10   (13)   (4)   (3) 

Balance at end of fiscal year

   626   520   451   480   310 
  

 

 

  

 

 

  

 

 

  

 

 

  

 

 

 

Ratio of net charge-offs to average loans outstanding

   0.05%   0.07%   0.12%   0.01%   0.05% 
  

 

 

  

 

 

  

 

 

  

 

 

  

 

 

 

Note:Others includes primarily foreign exchange translation.
2020:

                     
 
2016
  
2017
  
2018
  
2019
  
2020
 
 
(in billions of yen, except percentages)
 
Allowance for loan losses at beginning of fiscal year
  
520
   
451
   
480
   
310
   
307
 
Provision (credit) for loan losses
  
35
   
38
   
(126
)  
32
   
156
 
                     
Charge-offs:
  
   
   
   
   
 
Domestic:
  
   
   
   
   
 
Manufacturing
  
37
   
2
   
6
   
4
   
6
 
Construction and real estate
  
2
   
1
   
—  
   
1
   
1
 
Services
  
4
   
3
   
5
   
2
   
2
 
Wholesale and retail
  
14
   
6
   
12
   
10
   
16
 
Transportation and communications
  
5
   
1
   
1
   
—  
   
1
 
Other industries
  
—  
   
—  
   
—  
   
2
   
—  
 
Individuals
  
8
   
7
   
5
   
5
   
5
 
                     
Total domestic
  
70
   
20
   
29
   
24
   
31
 
Total foreign
  
42
   
11
   
27
   
24
   
13
 
                     
Total charge-offs
  
112
   
31
   
56
   
48
   
44
 
                     
Recoveries:
  
   
   
   
   
 
Domestic:
  
   
   
   
   
 
Manufacturing
  
2
   
1
   
1
   
1
   
1
 
Construction and real estate
  
1
   
2
   
1
   
1
   
20
 
Services
  
2
   
1
   
2
   
1
   
1
 
Wholesale and retail
  
8
   
5
   
1
   
3
   
4
 
Transportation and communications
  
1
   
4
   
—  
   
—  
   
—  
 
Banks and other financial institutions
  
—  
   
—  
   
1
   
—  
   
—  
 
Individuals
  
2
   
3
   
2
   
1
   
1
 
                     
Total domestic
  
16
   
16
   
8
   
7
   
27
 
Total foreign
  
5
   
10
   
7
   
7
   
1
 
                     
Total recoveries
  
21
   
26
   
15
   
14
   
28
 
                     
Net charge-offs
  
91
   
5
   
41
   
34
   
16
 
                     
Others
(Note)
  
(13
)  
(4
)  
(3
)  
(1
)  
(6
)
Balance at end of fiscal year
  
451
   
480
   
310
   
307
   
441
 
                     
Ratio of net charge-offs to average loans outstanding
  
0.12
%  
0.01
%  
0.05
%  
0.04
%  
0.02
%
                     

Note: Others includes primarily foreign exchange translation.
A-12
Table of Contents
The following table shows an allocation of the MHFG Group’s allowance for loan losses by domicile and industry of borrower at March 31, 2014, 2015, 2016, 2017, 2018, 2019 and 2018:

  2014  2015  2016  2017  2018 
  Amount  % of
loans in
each
category
to total
loans		  Amount  % of
loans in
each
category
to total
loans		  Amount  % of
loans in
each
category
to total
loans		  Amount  % of
loans in
each
category
to total
loans		  Amount  % of
loans in
each
category
to total
loans		 
  

 

(in billions of yen, except percentages)

 

Domestic:

          

Manufacturing

  177   10.90%   187   10.52%   154   10.74%   201   10.60%   85   9.75% 

Construction and real estate

  51   9.79%   33   9.40%   25   9.95%   20   9.28%   17   9.68% 

Services

  30   5.37%   26   5.46%   26   5.99%   28   5.77%   20   6.01% 

Wholesale and retail

  65   7.27%   66   7.14%   58   6.96%   63   6.24%   52   6.11% 

Transportation and communications

  22   4.41%   14   4.04%   9   4.20%   10   4.23%   10   4.26% 

Banks and other financial institutions

  21   4.70%   18   4.93%   14   4.67%   13   4.86%   20   5.34% 

Other industries(Note)

  5   15.92%   5   12.39%   5   10.31%   6   15.72%   7   16.62% 

Individuals

  95   16.26%   59   15.18%   42   14.82%   34   13.24%   25   12.35% 

Mortgage loans

  74   15.19%   51   14.09%   35   13.63%   27   12.10%   19   11.29% 

Other

  21   1.07%   8   1.09%   7   1.19%   7   1.14%   6   1.06% 
 

 

 

  

 

 

  

 

 

  

 

 

  

 

 

  

 

 

  

 

 

  

 

 

  

 

 

  

 

 

 

Total domestic

  466   74.62%   408   69.06%   333   67.64%   375   69.94%   236   70.12% 

Total foreign

  160   25.38%   112   30.94%   118   32.36%   105   30.06%   74   29.88% 
 

 

 

  

 

 

  

 

 

  

 

 

  

 

 

  

 

 

  

 

 

  

 

 

  

 

 

  

 

 

 

Total allowance for loan losses

  626   100.00%   520   100.00%   451   100.00%   480   100.00%   310   100.00% 
 

 

 

  

 

 

  

 

 

  

 

 

  

 

 

  

 

 

  

 

 

  

 

 

  

 

 

  

 

 

 

2020:
                                         
 
2016
  
2017
  
2018
  
2019
  
2020
 
 
Amount
  
% of
loans in
each
category
to total
loans
  
Amount
  
% of
loans in
each
category
to total
loans
  
Amount
  
% of
loans in
each
category
to total
loans
  
Amount
  
% of
loans in
each
category
to total
loans
  
Amount
  
% of
loans in
each
category
to total
loans
 
 
(in billions of yen, except percentages)
 
Domestic:
  
   
   
   
   
   
   
   
   
   
 
Manufacturing
  
154
   
10.72
%  
201
   
10.59
%  
85
   
9.74
%  
75
   
11.52
%  
135
   
11.10
%
Construction and real estate
  
25
   
10.04
%  
20
   
9.40
%  
17
   
9.68
%  
18
   
10.79
%  
40
   
10.95
%
Services
  
26
   
5.82
%  
28
   
5.62
%  
20
   
5.88
%  
23
   
6.05
%  
34
   
6.84
%
Wholesale and retail
  
58
   
6.94
%  
63
   
6.22
%  
52
   
6.11
%  
48
   
6.22
%  
69
   
5.95
%
Transportation and communications
  
9
   
4.31
%  
10
   
4.33
%  
10
   
4.34
%  
17
   
4.45
%  
12
   
4.37
%
Banks and other financial institutions
  
14
   
4.78
%  
13
   
4.96
%  
20
   
5.41
%  
4
   
5.24
%  
6
   
5.29
%
Other industries
(Note)
  
5
   
10.31
%  
6
   
15.72
%  
7
   
16.61
%  
11
   
9.44
%  
14
   
8.66
%
Individuals
  
42
   
14.72
%  
34
   
13.10
%  
25
   
12.35
%  
20
   
11.88
%  
20
   
10.75
%
Mortgage loans
  
35
   
13.62
%  
27
   
12.08
%  
19
   
11.29
%  
15
   
10.79
%  
13
   
9.77
%
Other
  
7
   
1.10
%  
7
   
1.02
%  
6
   
1.06
%  
5
   
1.09
%  
7
   
0.98
%
                                         
Total domestic
  
333
   
67.64
%  
375
   
69.94
%  
236
   
70.12
%  
216
   
65.59
%  
330
   
63.91
%
Total foreign
  
118
   
32.36
%  
105
   
30.06
%  
74
   
29.88
%  
91
   
34.41
%  
111
   
36.09
%
                                         
Total allowance for loan losses
  
451
   
100.00
%  
480
   
100.00
%  
310
   
100.00
%  
307
   
100.00
%  
441
   
100.00
%
                                         
Notes:
Note:(1)Other industries includes government and public institutions.

(2)Certain loans of domestic and foreign were reclassified in order to conform to the current year’s presentation.
A-13
Table of Contents
V. Deposits

The following table shows the average amount of, and the average rate on, the following deposit categories for the fiscal years ended March 31, 2016, 20172018, 2019 and 2018:

   2016  2017  2018 
   Average
amount		   Average
rate		  Average
amount		   Average
rate		  Average
amount		   Average
rate		 
   

 

(in billions of yen, except percentages)

 

Domestic offices:

          

Noninterest-bearing demand deposits

   13,268    —  %   17,310    —  %   19,643    —  % 

Interest-bearing demand deposits

   38,928    0.02%   48,986    0.01%   56,478    0.01% 

Time deposits

   30,658    0.14%   27,929    0.16%   27,035    0.19% 

Certificates of deposit

   11,504    0.08%   6,378    0.01%   6,565    0.01% 
  

 

 

    

 

 

    

 

 

   

Foreign offices:

          

Noninterest-bearing demand deposits

   1,429    —  %   2,321    —  %   2,244    —  % 

Interest-bearing deposits, principally time deposits

   16,276    0.77%   18,313    0.93%   19,161    1.33% 

Certificates of deposit

   4,682    0.60%   4,860    0.91%   5,406    1.25% 
  

 

 

    

 

 

    

 

 

   

Total

   116,745    0.18%   126,097    0.21%   136,532    0.28% 
  

 

 

    

 

 

    

 

 

   

2020:

                         
 
2018
  
2019
  
2020
 
 
Average
amount
  
Average
rate
  
Average
amount
  
Average
rate
  
Average
amount
  
Average
rate
 
 
(in billions of yen, except percentages)
 
Domestic offices:
  
   
   
   
   
   
 
Noninterest-bearing demand deposits
  
19,643
   
—  
%  
22,116
   
—  
%  
23,219
   
—  
%
Interest-bearing demand deposits
  
56,478
   
0.01
%  
53,700
   
0.02
%  
57,080
   
0.02
%
Time deposits
  
27,035
   
0.19
%  
26,424
   
0.31
%  
21,943
   
0.36
%
Certificates of deposit
  
6,565
   
0.01
%  
7,044
   
0.01
%  
8,120
   
0.01
%
                         
Foreign offices:
  
   
   
   
   
   
 
Noninterest-bearing demand deposits
  
2,244
   
—  
%  
1,750
   
—  
%  
2,093
   
—  
%
Interest-bearing deposits, principally time deposits
  
19,161
   
1.33
%  
20,169
   
1.93
%  
20,957
   
1.90
%
Certificates of deposit
  
5,406
   
1.25
%  
6,524
   
1.99
%  
6,550
   
1.93
%
                         
Total
  
136,532
   
0.28
%  
137,727
   
0.45
%  
139,962
   
0.44
%
                         
The total amounts of deposits by foreign depositors in domestic offices at March 31, 2016, 20172018, 2019 and 20182020 were ¥719¥779 billion, ¥645¥1,625 billion and ¥779¥1,512 billion, respectively.

At March 31, 2018,2020, the balance and remaining maturities of time deposits and certificates of deposit issued by domestic offices in amounts of ¥10 million (approximately US$9493 thousand at the Federal Reserve Bank of New York’s noon buying rate on March 31, 2018)2020) or more and the balances of these deposits issued by foreign offices in amounts of US$100,000 or more are shown in the following table:

   Time
deposits		   Certificates of
deposit		   Total 
   

 

(in billions of yen)

 

Domestic offices:

      

Due in three months or less

   9,046    5,025    14,071 

Due after three months through six months

   3,576    238    3,814 

Due after six months through twelve months

   3,412    395    3,807 

Due after twelve months

   1,161    120    1,281 
  

 

 

   

 

 

   

 

 

 

Total

   17,195    5,778    22,973 

Foreign offices

   13,427    5,604    19,031 
  

 

 

   

 

 

   

 

 

 

Total

   30,622    11,382    42,004 
  

 

 

   

 

 

   

 

 

 

             
 
Time
deposits
  
Certificates of
deposit
  
Total
 
 
(in billions of yen)
 
Domestic offices:
  
   
   
 
Due in three months or less
  
7,560
   
6,563
   
14,123
 
Due after three months through six months
  
2,690
   
416
   
3,106
 
Due after six months through twelve months
  
3,207
   
440
   
3,647
 
Due after twelve months
  
1,227
   
140
   
1,367
 
             
Total
  
14,684
   
7,559
   
22,243
 
Foreign offices
  
18,009
   
5,724
   
23,733
 
             
Total
  
32,693
   
13,283
   
45,976
 
             

A-14
Table of Contents
VI. Short-term borrowings

The following table shows certain additional information with respect to the MHFG Group’s short-term borrowings for the fiscal years ended March 31, 2016, 20172018, 2019 and 2018:

   2016  2017  2018 
   

 

(in billions of yen, except percentages)

 

Due to trust accounts:

    

Average balance outstanding during the fiscal year

   1,239   3,941   4,016 

Maximum balance outstanding at anymonth-end during the fiscal year

   4,467   4,123   4,094 

Balance at end of fiscal year

   4,467   4,123   3,993 

Weighted average interest rate during the fiscal year

   0.09%   0.02%   0.02% 

Weighted average interest rate on balance at end of fiscal year

   0.02%   0.02%   0.02% 

Call money and funds purchased, and payables under repurchase agreements and securities lending transactions:

    

Average balance outstanding during the fiscal year

   31,009   25,629   24,692 

Maximum balance outstanding at anymonth-end during the fiscal year

   35,541   25,968   25,470 

Balance at end of fiscal year

   22,199   21,144   20,595 

Weighted average interest rate during the fiscal year

   0.24%   0.48%   1.01% 

Weighted average interest rate on balance at end of fiscal year

   0.35%   0.58%   1.07% 

Other short-term borrowings:

    

Average balance outstanding during the fiscal year

   1,873   1,719   1,355 

Maximum balance outstanding at anymonth-end during the fiscal year

   2,391   2,135   1,736 

Balance at end of fiscal year

   2,080   1,477   1,688 

Weighted average interest rate during the fiscal year

   0.31%   0.66%   1.13% 

Weighted average interest rate on balance at end of fiscal year

   0.43%   0.91%   1.35% 
2020:

             
 
2018
  
2019
  
2020
 
 
(in billions of yen, except percentages)
 
Due to trust accounts:
  
   
   
 
Average balance outstanding during the fiscal year
  
4,016
   
2,534
   
377
 
Maximum balance outstanding at any
month-end
during the fiscal year
  
4,094
   
4,125
   
452
 
Balance at end of fiscal year
  
3,993
   
312
   
250
 
Weighted average interest rate during the fiscal year
  
0.02
%  
0.02
%  
0.15
%
Weighted average interest rate on balance at end of fiscal year
  
0.02
%  
0.21
%  
0.22
%
             
Call money and funds purchased, and payables under repurchase agreements and securities lending transactions:
  
   
   
 
Average balance outstanding during the fiscal year
  
24,692
   
24,609
   
23,691
 
Maximum balance outstanding at any
month-end
during the fiscal year
  
25,470
   
27,694
   
22,616
 
Balance at end of fiscal year
  
20,595
   
19,280
   
21,658
 
Weighted average interest rate during the fiscal year
  
1.01
%  
1.60
%  
1.55
%
Weighted average interest rate on balance at end of fiscal year
  
1.07
%  
1.53
%  
1.15
%
             
Other short-term borrowings:
  
   
   
 
Average balance outstanding during the fiscal year
  
1,355
   
1,962
   
1,962
 
Maximum balance outstanding at any
month-end
during the fiscal year
  
1,736
   
2,091
   
4,914
 
Balance at end of fiscal year
  
1,688
   
1,995
   
4,914
 
Weighted average interest rate during the fiscal year
  
1.13
%  
1.67
%  
1.49
%
Weighted average interest rate on balance at end of fiscal year
  
1.35
%  
1.99
%  
0.63
%

A-15
Table of Contents
MIZUHO FINANCIAL GROUP, INC.

Index to Consolidated Financial Statements

  Page 

Page
Consolidated Financial Statements of Mizuho Financial Group, Inc. and Subsidiaries

Report of Independent Registered Public Accounting Firm

  F-2
 

  F-5
F-7
 

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F-9
 

  F-8
F-10
 

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F-11
 

  F-11
F-12
 

  F-13
F-14
 

F-1
Table of Contents
Report of Independent Registered Public Accounting Firm

To the Shareholders and the Board of Directors

of Mizuho Financial Group, Inc.

Opinion on the Financial Statements

We have audited the accompanying consolidated balance sheets of Mizuho Financial Group, Inc. and subsidiaries (the “Company”) as of March 31, 20182020 and 2017,2019, the related consolidated statements of income, comprehensive income, equity and cash flows for each of the three years in the period ended March 31, 2018,2020, and the related notes (collectively referred to as the “consolidated financial statements”). In our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of the Company at March 31, 20182020 and 2017,2019, and the results of its operations and its cash flows for each of the three years in the period ended March 31, 2018,2020, in conformity with U.S. generally accepted accounting principles.

We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the Company’s internal control over financial reporting as of March 31, 2018,2020, based on criteria established in Internal Control-Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (2013 framework) and our report dated July 3, 20182, 2020 expressed an unqualified opinion thereon.

Basis for Opinion

These financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on the Company’s financial statements based on our audits. We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audits provide a reasonable basis for our opinion.

Critical Audit Matters
The critical audit matters communicated below are matters arising from the current period audit of the financial statements that were communicated or required to be communicated to the audit committee and that: (1) relate to accounts or disclosures that are material to the financial statements and (2) involved our especially challenging, subjective or complex judgments. The communication of critical audit matters does not alter in any way our opinion on the consolidated financial statements, taken as a whole, and we are not, by communicating the critical audit matters below, providing separate opinions on the critical audit matters or on the accounts or disclosures to which they relate.
F-2
Table of Contents
Allowance for Loan Losses—Corporate loans
Description of the Matter
The Company provides an allowance for corporate loan losses of JPY 395,209 million as of March 31, 2020. As described in Notes 1 and 5 to the consolidated financial statements, management applies significant judgment in determining the obligor ratings used to segment the corporate loan portfolio and in estimating the expected future cash flows of impaired loans. Additionally, management applies significant judgment in adjusting the allowance to reflect significant uncertain economic and business conditions affecting key lending areas of the Company that are not reflected in the historical loss rates. Specifically, as of March 31, 2020, the Company identified certain industries and obligors which are most likely to be affected by the
COVID-19
pandemic and adjusted its historical loss formula-based allowance for these loan groups, using assumptions such as anticipated business recovery period and current forecast for the growth rate of gross domestic product (“macroeconomic data”).
Auditing the allowance for corporate loan losses is challenging because determining obligor ratings, where the Company has a quantitative evaluation system (rating model) in place and where the obligor ratings are used to segment the corporate loan portfolio, requires significant judgment. Additionally, the assumptions used in determining the macroeconomic data used for the adjustment and estimates related to the expected future cash flows that are developed when measuring the allowance for corporate loan losses on impaired loans require significant judgment.
How We Addressed the Matter in Our Audit
We obtained an understanding, evaluated the design and tested the operating effectiveness of the controls over the Company’s allowance for loan losses process for corporate loans. The controls tested included, but were not limited to, controls over the validation and monitoring process that covers the models used to determine the obligor ratings, controls that management periodically reviews and challenges the obligor ratings, controls that evaluates the expected future cash flows used to determine loan impairment amounts and controls that evaluates the reasonableness of significant assumptions and judgments used in adjusting the allowance.
Our audit procedures included, among others, selecting a sample of borrowers and evaluating the obligor ratings for corporate loans within each segment, inspecting the evidence supporting these ratings and comparing the ratings and the related supporting evidence to management’s obligor rating definitions. We also evaluated the reasonableness of macroeconomic data used by management in estimating the adjustment of the allowance for loan losses. We involved our specialists to evaluate a sample of rating models the Company used to develop the obligor ratings and to evaluate the reasonableness of the macroeconomic data used by management in estimating the adjustment. For a sample of loans, we compared the expected future cash flows used to determine loan impairment amounts to actual past performance and the borrower’s future performance plans, when available. We also considered and evaluated relevant market and industry information, when available, that corroborated or contradicted management’s assumptions used in the adjustment, expected cash flows and obligor ratings.
F-3
Table of Contents
Fair Value of Certain Level 3 Financial Instruments
Description of the Matter
The Company carries various types of
over-the-counter
derivatives (equity related contracts, interest rate contracts, foreign exchange contracts, credit-related contracts and other contracts) and long-term debt instruments with embedded derivatives measured at fair value. The Company carried JPY 74 billion, JPY 81 billion and JPY 621 billion of derivative assets, derivative liabilities and long-term debt with embedded derivatives measured at fair value, respectively. These financial instruments are categorized within Level 3 of the fair value hierarchy, which is defined as unobservable inputs that are supported by little or no market activity and that are significant to the fair value of the assets or liabilities, as of March 31, 2020. As described in Notes 1 and 27 to the consolidated financial statements, management utilizes internally developed valuation models and unobservable inputs to estimate the fair value of certain level 3 financial instruments. The unobservable inputs used by management to estimate the fair value of these financial instruments include correlation and volatility.
Auditing management’s determination of the fair value of certain level 3 financial instruments is challenging because the determination of certain significant unobservable inputs requires significant judgment and effort in performing procedures related to the fair value of these instruments.
How We Addressed the Matter in Our Audit
We obtained an understanding, evaluated the design and tested the operating effectiveness of the controls over the Company’s derivatives and debt fair valuation processes. The controls tested included, but were not limited to, controls over significant inputs included in the fair value measurements and controls over the appropriateness of the valuation techniques utilized within the internally developed valuation models.
Our audit procedures included, among others, evaluating the valuation techniques used, testing certain significant unobservable inputs used, comparing the Company’s valuation inputs to independent, third-party market information, where available, and testing the mathematical accuracy of the Company’s valuation calculation. We involved our specialists to evaluate certain significant unobservable inputs, the sensitivity of the inputs and the valuation techniques utilized within the internally developed valuation models.
/s/ Ernst & Young ShinNihon LLC

We have served as the Company’s auditor for SEC reporting purposes since 2006, and as its Japanese statutory auditor since 2000, which included the years we served as joint auditors.

Tokyo, Japan

July 3, 2018

2, 2020

F-4
Table of Contents
Report of Independent Registered Public Accounting Firm

To the Shareholders and the Board of Directors

of Mizuho Financial Group, Inc.

Opinion on Internal Control overOver Financial Reporting

We have audited Mizuho Financial Group, Inc. and subsidiaries’ internal control over financial reporting as of March 31, 2018,2020, based on criteria established in Internal Control—Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (2013 framework) (the “COSO criteria”)COSO criteria). In our opinion, Mizuho Financial Group, Inc. and subsidiaries (the “Company”)Company) maintained, in all material respects, effective internal control over financial reporting as of March 31, 2018,2020, based on the COSO criteria.

We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the consolidated balance sheets of the Company as of March 31, 20182020 and 2017,2019, the related consolidated statements of income, comprehensive income, equity and cash flows for each of the three years in the period ended March 31, 2018,2020, and the related notes and our report dated July 3, 20182, 2020 expressed an unqualified opinion thereon.

Basis for Opinion

The Company’s management is responsible for maintaining effective internal control over financial reporting and for its assessment of the effectiveness of internal control over financial reporting included in the accompanying Management’s Annual Report on Internal Control over Financial Reporting. Our responsibility is to express an opinion on the Company’s internal control over financial reporting based on our audit. We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audit in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether effective internal control over financial reporting was maintained in all material respects.

Our audit included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, testing and evaluating the design and operating effectiveness of internal control based on the assessed risk, and performing such other procedures as we considered necessary in the circumstances. We believe that our audit provides a reasonable basis for our opinion.

Definition and Limitations of Internal Control Over Financial Reporting

A company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A company’s internal control over financial reporting includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company’s assets that could have a material effect on the financial statements.

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Table of Contents
Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

/s/ Ernst & Young ShinNihon LLC

Tokyo, Japan

July 3, 2018

2, 2020

F-6
Table of Contents
MIZUHO FINANCIAL GROUP, INC. AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS

MARCH 31, 20172019 AND 2018

   2017  2018 
   

 

(in millions of yen)

 

Assets:

   

Cash and due from banks

   1,592,191   1,685,835 

Interest-bearing deposits in other banks

   45,994,780   46,485,086 

Call loans and funds sold

   1,037,986   720,461 

Receivables under resale agreements

   8,967,712   8,080,927 

Receivables under securities borrowing transactions

   3,350,052   4,408,508 

Trading account assets (including assets pledged that secured parties are permitted to sell or repledge of ¥5,861,942 million in 2017 and ¥4,897,190 million in 2018)

   24,998,493   24,302,543 

Investments (Note 4):

   

Available-for-sale securities (including assets pledged that secured parties are permitted to sell or repledge of ¥442,775 million in 2017 and ¥932,302 million in 2018)

   20,557,118   23,665,628 

Held-to-maturity securities (including assets pledged that secured parties are permitted to sell or repledge of ¥1,050,714 million in 2017 and ¥677,046 million in 2018)

   3,817,360   2,517,551 

Other investments

   595,069   585,896 

Loans (Notes 5 and 6)

   82,283,906   83,514,644 

Allowance for loan losses

   (479,673)   (309,902) 
  

 

 

  

 

 

 

Loans, net of allowance

   81,804,233   83,204,742 

Premises and equipment—net (Note 7)

   2,041,273   2,116,184 

Due from customers on acceptances

   184,171   212,596 

Accrued income

   270,694   301,332 

Goodwill (Note 8)

   95,176   95,184 

Intangible assets (Note 8)

   94,147   84,447 

Deferred tax assets

   63,520   57,088 

Other assets (Note 13)

   4,992,329   5,731,634 
  

 

 

  

 

 

 

Total assets

   200,456,304   204,255,642 
  

 

 

  

 

 

 

 

The following table presents the assets of consolidated variable interest entities (“VIE”s), which are included in the consolidated balance sheets above. The assets in the table below can be used only to settle obligations of consolidated VIEs.

 

 

   2017  2018 
   

 

(in millions of yen)

 

Assets of consolidated VIEs:

   

Cash and due from banks

   96,077   31,435 

Interest-bearing deposits in other banks

   81,807   95,048 

Trading account assets

   2,099,890   2,558,186 

Investments

   46,180   48,565 

Loans, net of allowance

   2,149,321   2,323,081 

All other assets

   772,290   811,453 
  

 

 

  

 

 

 

Total assets

       5,245,565       5,867,768 
  

 

 

  

 

 

 

2020

         
  
2019
   
2020
 
 
 
(in millions of yen)
 
Assets:
  
   
 
Cash and due from banks
  
1,404,008
   
2,325,139
 
Interest-bearing deposits in other banks
  
44,268,731
   
39,625,975
 
Call loans and funds sold
  
763,453
   
1,006,991
 
Receivables under resale agreements
  
12,997,424
   
18,580,919
 
Receivables under securities borrowing transactions
  
2,578,134
   
2,216,059
 
Trading account assets (including assets pledged that secured parties are permitted to sell or repledge of ¥3,244,305 million in 2019 and ¥4,978,497 million in 2020)
  
21,018,230
   
28,092,871
 
Investments (Note 3):
  
   
 
Available-for-sale
securities (including assets pledged that secured parties are permitted to sell or repledge of ¥1,132,602 million in 2019 and ¥1,036,534 million in 2020)
  
18,133,916
   
19,112,952
 
Held-to-maturity
securities (including assets pledged that secured parties are permitted to sell or repledge of ¥476,146 million in 2019 and ¥297,240 million in 2020)
  
1,604,104
   
862,031
 
Equity securities
  
4,034,609
   
3,256,717
 
Other investments
  
389,740
   
443,951
 
Loans (Notes 4 and 5)
  
82,799,943
   
87,528,088
 
Allowance for loan losses
  
(307,201
)  
(440,855
)
         
Loans, net of allowance
  
82,492,742
   
87,087,233
 
Premises and equipment—net (Note 6)
  
1,900,952
   
1,856,248
 
Due from customers on acceptances
  
187,137
   
167,764
 
Accrued income
  
342,845
   
323,632
 
Goodwill (Note 7)
  
95,151
   
92,997
 
Intangible assets (Note 7)
  
74,240
   
64,689
 
Deferred tax assets
  
49,775
   
136,713
 
Other assets (Note 12)
  
5,276,004
   
5,965,879
 
         
Total assets
  
197,611,195
   
211,218,760
 
         
  
The following table presents the assets of consolidated variable interest entities (“VIE”s), which are included in the consolidated balance sheets above. The assets in the table below can be used only to settle obligations of consolidated VIEs.
 
       
 
2019
  
2020
 
 
 
(in millions of yen)
 
Assets of consolidated VIEs:
  
   
 
Cash and due from banks
  
29,972
   
8,749
 
Interest-bearing deposits in other banks
  
31,676
   
61,439
 
Call loans and funds sold
  
115,199
   
422,304
 
Trading account assets
  
2,456,198
   
2,438,607
 
Investments
  
52,493
   
62,262
 
Loans, net of allowance
  
2,359,669
   
2,285,831
 
All other assets
  
1,003,133
   
535,954
 
         
Total assets
  
6,048,340
   
5,815,146
 
         
See the accompanying Notes to the Consolidated Financial Statements.

F-
7
Table of Contents
MIZUHO FINANCIAL GROUP, INC. AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS—(Continued)

MARCH 31, 20172019 AND 2018

   2017  2018 
   

 

(in millions of yen)

 

Liabilities and equity:

   

Deposits :

   

Domestic:

   

Noninterest-bearing deposits

   19,063,774   21,068,569 

Interest-bearing deposits

   87,358,504   91,206,963 

Foreign:

   

Noninterest-bearing deposits

   1,996,450   2,257,350 

Interest-bearing deposits

   22,766,225   22,351,124 

Due to trust accounts

   4,123,088   3,992,544 

Call money and funds purchased

   1,255,172   2,105,294 

Payables under repurchase agreements (Note 30)

   17,969,941   16,656,930 

Payables under securities lending transactions (Note 30)

   1,919,249   1,832,870 

Other short-term borrowings (Note 12)

   1,476,612   1,688,018 

Trading account liabilities

   13,591,740   13,115,270 

Bank acceptances outstanding

   184,171   212,596 

Income taxes payable

   73,598   64,501 

Deferred tax liabilities

   140,475   306,203 

Accrued expenses

   209,309   232,885 

Long-term debt (including liabilities accounted for at fair value of ¥1,496,488 million in 2017, and ¥1,955,636million in 2018) (Notes 12 and 28)

   14,529,414   12,955,230 

Other liabilities (Note 13)

   5,026,525   4,705,595 
  

 

 

  

 

 

 

Total liabilities

   191,684,247   194,751,942 
  

 

 

  

 

 

 

Commitments and contingencies (Note 24)

   

Equity:

   

MHFG shareholders’ equity:

   

Common stock (Note 15)—no par value, authorized 48,000,000,000 shares in 2017 and 2018, and issued 25,386,307,945 shares in 2017, and 25,389,644,945 shares in 2018

   5,826,149   5,826,383 

Retained earnings

   918,894   1,306,141 

Accumulated other comprehensive income, net of tax (Note 17)

   1,521,163   1,741,894 

Less: Treasury stock, at cost—Common stock 19,992,754 shares in 2017, and 24,829,446 shares in 2018

   (4,849)   (5,997) 
  

 

 

  

 

 

 

Total MHFG shareholders’ equity

   8,261,357   8,868,421 

Noncontrolling interests

   510,700   635,279 
  

 

 

  

 

 

 

Total equity

   8,772,057   9,503,700 
  

 

 

  

 

 

 

Total liabilities and equity

   200,456,304   204,255,642 
  

 

 

  

 

 

 

2020

         
       
 
2019
  
2020
 
 
 
(in millions of yen)
 
Liabilities and equity:
  
   
 
Deposits:
  
   
 
Domestic:
  
   
 
Noninterest-bearing deposits
  
23,844,639
   
28,109,943
 
Interest-bearing deposits
  
84,019,038
   
86,651,036
 
Foreign:
  
   
 
Noninterest-bearing deposits
  
1,793,803
   
2,186,203
 
Interest-bearing deposits
  
28,639,436
   
28,001,485
 
Due to trust accounts
  
312,347
   
249,737
 
Call money and funds purchased
  
2,841,932
   
2,263,076
 
Payables under repurchase agreements (Note 29)
  
14,640,369
   
17,970,662
 
Payables under securities lending transactions (Note 29)
  
1,797,737
   
1,423,638
 
Other short-term borrowings (Note 11)
  
1,994,826
   
4,914,485
 
Trading account liabilities
  
10,120,968
   
12,416,785
 
Bank acceptances outstanding
  
187,137
   
167,764
 
Income taxes payable
  
58,688
   
68,557
 
Deferred tax liabilities
  
108,120
   
25,874
 
Accrued expenses
  
288,556
   
249,344
 
Long-term debt (including liabilities accounted for at fair value of ¥2,433,294 million in 2019, and ¥2,537,082 million in 2020) (Notes 11 and 27)
  
11,529,400
   
10,346,152
 
Other liabilities (Note 12)
  
5,932,706
   
6,998,395
 
         
Total liabilities
  
188,109,702
   
202,043,136
 
         
Commitments and contingencies (Note 23)
  
   
 
         
Equity:
  
   
 
MHFG shareholders’ equity:
  
   
 
Common stock (Note 14)—0 par value, authorized 48,000,000,000 shares in 2019 and 2020, and issued 25,392,498,945 shares in 2019 and 2020
  
5,829,657
   
5,827,500
 
Retained earnings
  
2,740,545
   
2,700,774
 
Accumulated other comprehensive income
 
(loss),
net of tax (Note 16)
  
164,021
   
(9,494
)
Less: Treasury stock, at cost—Common stock 33,962,404 shares in 2019, and 32,106,811 shares in 2020
  
(7,704
)  
(6,415
)
         
Total MHFG shareholders’ equity
  
8,726,519
   
8,512,365
 
Noncontrolling interests
  
774,974
   
663,259
 
         
Total equity
  
9,501,493
   
9,175,624
 
         
Total liabilities and equity
  
197,611,195
   
211,218,760
 
         
The following table presents the liabilities of consolidated VIEs, which are included in the consolidated balance sheets above. The creditors or investors of the consolidated VIEs have no recourse to the MHFG Group, except where the Group provides credit enhancement through guarantees or other means.

   2017  2018 
   

 

(in millions of yen)

 

Liabilities of consolidated VIEs:

   

Other short-term borrowings

   60,575   31,392 

Trading account liabilities

   7,723   22 

Long-term debt

   431,190   419,649 

All other liabilities

   1,147,895   1,305,640 
  

 

 

  

 

 

 

Total liabilities

       1,647,383        1,756,703  
  

 

 

  

 

 

 

         
 
2019
  
2020
 
 
 
(in millions of yen)
 
Liabilities of consolidated VIEs:
  
   
 
Payables under securities lending transactions
  
108,038
   
138,094
 
Other short-term borrowings
  
23,495
   
60,086
 
Trading account liabilities
  
—  
   
34,205
   
Long-term debt
  
344,526
     
330,863
 
All other liabilities
  
    1,523,791
   
948,715
 
         
Total liabilities
  
1,999,850
   
    1,511,963
 
         
See the accompanying Notes to the Consolidated Financial Statements.

F-
8
Table of Contents
MIZUHO FINANCIAL GROUP, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF INCOME

FOR THE FISCAL YEARS ENDED MARCH 31, 2016, 20172018, 2019 AND 2018

   2016  2017  2018 
   

 

(in millions of yen)

 

Interest and dividend income:

    

Loans, including fees

   1,030,802   1,009,094   1,109,776 

Investments:

    

Interest

   110,411   88,311   88,319 

Dividends

   79,600   77,343   86,066 

Trading account assets

   151,278   163,114   202,125 

Call loans and funds sold

   6,983   5,068   5,699 

Receivables under resale agreements and securities borrowing transactions

   53,007   91,453   149,197 

Deposits

   68,090   74,647   120,704 
  

 

 

  

 

 

  

 

 

 

Total interest and dividend income

   1,500,171   1,509,030   1,761,886 
  

 

 

  

 

 

  

 

 

 

Interest expense:

    

Deposits

   213,601   264,748   382,706 

Trading account liabilities

   21,031   21,399   41,514 

Call money and funds purchased

   7,830   3,173   5,031 

Payables under repurchase agreements and securities lending transactions

   66,579   120,578   243,569 

Other short-term borrowings

   6,791   12,175   16,166 

Long-term debt

   179,575   179,639   200,950 
  

 

 

  

 

 

  

 

 

 

Total interest expense

   495,407   601,712   889,936 
  

 

 

  

 

 

  

 

 

 

Net interest income

   1,004,764   907,318   871,950 

Provision (credit) for loan losses (Note 6)

   34,560   37,668   (126,362) 
  

 

 

  

 

 

  

 

 

 

Net interest income after provision (credit) for loan losses

   970,204   869,650   998,312 
  

 

 

  

 

 

  

 

 

 

Noninterest income:

    

Fee and commission income (Note 26)

   804,756   825,963   865,711 

Foreign exchange gains (losses)—net (Note 27)

   113,553   69,453   91,793 

Trading account gains (losses)—net (Note 27)

   559,139   (42,481)   236,982 

Investment gains (losses)—net

   263,793   333,270   297,157 

Equity in earnings (losses) of equity method investees—net

   28,969   26,785   24,342 

Gains on disposal of premises and equipment

   10,223   5,638   8,225 

Other noninterest income

   103,461   149,404   80,453 
  

 

 

  

 

 

  

 

 

 

Total noninterest income

   1,883,894   1,368,032   1,604,663 
  

 

 

  

 

 

  

 

 

 

Noninterest expenses:

    

Salaries and employee benefits

   633,557   663,166   688,481 

General and administrative expenses

   548,027   570,897   585,992 

Impairment of goodwill (Note 8)

   6,222   —     —   

Occupancy expenses

   195,898   194,955   191,592 

Fee and commission expenses

   164,039   177,006   189,187 

Provision (credit) for losses on off-balance-sheet instruments

   (16,447)   19,464   (30,244) 

Other noninterest expenses

   126,197   131,819   138,669 
  

 

 

  

 

 

  

 

 

 

Total noninterest expenses

   1,657,493   1,757,307   1,763,677 
  

 

 

  

 

 

  

 

 

 

Income before income tax expense

   1,196,605   480,375   839,298 

Income tax expense (Note 20)

   346,542   91,244   237,604 
  

 

 

  

 

 

  

 

 

 

Net income

   850,063   389,131   601,694 

Less: Net income (loss) attributable to noncontrolling interests

   (429)   26,691   24,086 
  

 

 

  

 

 

  

 

 

 

Net income attributable to MHFG shareholders

   850,492   362,440   577,608 
  

 

 

  

 

 

  

 

 

 
Earnings per common share (Note 19):  (in yen) 

Basic net income per common share

   34.19   14.33   22.77 
  

 

 

  

 

 

  

 

 

 

Diluted net income per common share

   33.50   14.28   22.76 
  

 

 

  

 

 

  

 

 

 

2020

             
 
2018
  
2019
  
2020
 
 
 
(in millions of yen)
 
Interest and dividend income:
  
   
   
 
Loans, including fees
  
1,109,776
   
1,381,553
   
1,380,828
 
Investments:
  
   
   
 
Interest
  
88,319
   
144,199
   
89,749
 
Dividends
  
86,066
   
88,289
   
76,150
 
Trading account assets
  
202,125
   
211,749
   
221,983
 
Call loans and funds sold
  
5,699
   
5,547
   
5,434
 
Receivables under resale agreements and securities borrowing transactions
  
149,197
   
254,862
   
271,598
 
Deposits in other banks
  
120,704
   
121,244
   
105,430
 
             
Total interest and dividend income
  
1,761,886
   
2,207,443
   
2,151,172
 
             
Interest expense:
  
   
   
 
Deposits
  
382,706
   
613,570
   
615,785
 
Trading account liabilities
  
41,514
   
49,660
   
52,955
 
Call money and funds purchased
  
5,031
   
11,121
   
8,830
 
Payables under repurchase agreements and securities lending transactions
  
243,569
   
382,045
   
358,862
 
Other short-term borrowings
  
16,166
   
33,313
   
29,813
 
Long-term debt
  
200,950
   
223,767
   
205,136
 
             
Total interest expense
  
889,936
   
1,313,476
   
1,271,381
 
             
Net interest income
  
871,950
   
893,967
   
879,791
 
Provision (credit) for loan losses (Note 5)
  
(126,362
)  
32,459
   
156,200
 
             
Net interest income after provision (credit) for loan losses
  
998,312
   
861,508
   
723,591
 
             
Noninterest income (Note 25):
  
   
   
 
Fee and commission income
  
865,711
   
853,290
   
867,885
 
Foreign exchange gains (losses)—net (Note 26)
  
91,793
   
93,577
   
44,345
 
Trading account gains (losses)—net (Note 26)
  
236,982
   
328,841
   
745,692
 
Investment gains (losses)—net (Note 2):
  
   
   
 
Debt securities
  
7,757
   
(3,842
)  
31,032
 
Equity securities
  
289,400
   
(155,947
)  
(557,391
)
Equity in earnings (losses) of equity method investees—net
  
24,342
   
29,172
   
34,012
 
Gains on disposal of premises and equipment
  
8,225
   
5,145
   
2,583
 
Other noninterest income
  
80,453
   
72,135
   
139,582
 
             
Total noninterest income
  
1,604,663
   
1,222,371
   
1,307,740
 
             
Noninterest expenses:
  
   
   
 
Salaries and employee benefits
  
688,481
   
682,645
   
677,332
 
General and administrative expenses
  
585,992
   
761,528
   
649,498
 
Occupancy expenses
  
191,592
   
207,814
   
214,851
 
Fee and commission expenses
  
189,187
   
189,722
   
194,010
 
Provision (credit) for losses on
off-balance-sheet
instruments
  
(30,244
)  
(8,969
)  
19,262
 
Other noninterest expenses
  
138,669
   
166,079
   
122,888
 
             
Total noninterest expenses
  
1,763,677
   
1,998,819
   
1,877,841
 
             
Income before income tax expense
  
839,298
   
85,060
   
153,490
 
Income tax expense (Note 19)
  
237,604
   
9,335
   
47,175
 
             
Net income
  
601,694
   
75,725
   
106,315
 
Less: Net income (loss) attributable to noncontrolling interests
  
24,086
   
(8,746
)  
(43,880
)
             
Net income attributable to MHFG shareholders
  
577,608
   
84,471
   
150,195
 
             
    
Earnings per common share (Note 18):
 
(in yen)
 
Basic net income per common share
  
22.77
   
3.33
   
5.92
 
             
Diluted net income per common share
  
22.76
   
3.33
   
5.92
 
             
Dividends per share:
  
   
   
 
Class XI preferred stock
  
—  
   
—  
   
—  
 
Common stock
  
7.50
   
7.50
   
7.50
 
             
See the accompanying Notes to the Consolidated Financial Statements.

F-
9
Table of Contents
MIZUHO FINANCIAL GROUP, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

FOR THE FISCAL YEARS ENDED MARCH 31, 2016, 20172018, 2019 AND 2020
             
 
2018
  
2019
  
2020
 
 
(in millions of yen)
 
Net income
(1)
  
601,694
   
      75,725
   
    106,315
 
             
Other comprehensive income (loss), net of tax:
  
   
   
 
Net unrealized gains (losses) on
available-for-sale
securities, net of tax
  
97,428
   
(9,472
)  
(41,483
)
Foreign currency translation adjustments, net of tax
  
(29,934
)  
(23,781
)  
(50,576
)
Pension liability adjustments, net of tax
  
155,044
   
(24,168
)  
(126,915
)
Own credit risk adjustments, net of tax
(2)
  
—  
   
14,476
   
46,919
 
             
Total other comprehensive income (loss), net of tax
  
222,538
   
(42,945
)  
(172,055
)
             
Total comprehensive income (loss)
  
824,232
   
32,780
   
(65,740
)
Less: Total comprehensive income (loss) attributable to noncontrolling interests
  
25,893
   
(8,960
)  
(43,472
)
             
Total comprehensive income
(loss)
 
attributable to MHFG shareholders
  
    798,339
   
    41,740
   
(22,268
)
             
Notes:
(1)The amounts that have been reclassified out of Accumulated other comprehensive income (loss), net of tax into net income are presented in Note 16 “Accumulated other comprehensive income (loss), net of tax.”
(2)
The MHFG Group adopted ASU
No.2016-01
on April 1, 2018. The ASU requires an entity to present separately in other comprehensive income the portion of the total change in the fair value of a liability resulting from a change in the instrument-specific credit risk when the entity has elected to measure the liability at fair value in accordance with the fair value option for financial instruments. See Note 2 “Issued accounting pronouncements” for further details.
See the accompanying Notes to the Consolidated Financial Statements.
F-
10
Table of Contents
MIZUHO FINANCIAL GROUP, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF EQUITY
FOR THE FISCAL YEARS ENDED MARCH 31, 2018,

   2016  2017  2018 
   

 

(in millions of yen)

 

Net income

   850,063   389,131   601,694 
  

 

 

  

 

 

  

 

 

 

Other comprehensive income (loss), net of tax:

    

Net unrealized gains (losses) onavailable-for-sale securities, net of tax

   (338,822)   51,957   97,428 

Foreign currency translation adjustments, net of tax

   (123,221)   (12,322)   (29,934) 

Pension liability adjustments, net of tax

   (111,599)   11,922   155,044 
  

 

 

  

 

 

  

 

 

 

Total other comprehensive income (loss), net of tax

   (573,642)   51,557   222,538 
  

 

 

  

 

 

  

 

 

 

Total comprehensive income

   276,421   440,688   824,232 

Less: Total comprehensive income (loss) attributable to noncontrolling interests

   (2,373)   26,724   25,893 
  

 

 

  

 

 

  

 

 

 

Total comprehensive income attributable to MHFG shareholders

   278,794   413,964   798,339 
  

 

 

  

 

 

  

 

 

 

2019 AND 2020
             
 
2018
  
2019
  
2020
 
 
(in millions of yen)
 
Common stock:
  
   
   
 
Balance at beginning of fiscal year
  
5,826,149
   
5,826,383
   
5,829,657
 
Issuance of new shares of common stock due to exercise of stock acquisition rights
  
546
   
438
   
—  
 
Performance-based stock compensation program
  
(326
)  
(282
)  
(178
)
Other
  
14
   
3,118
   
(1,979
)
             
Balance at end of fiscal year
  
5,826,383
   
5,829,657
   
5,827,500
 
             
Retained earnings:
  
   
   
 
Balance at beginning of fiscal year, previously reported
  
918,894
   
1,306,141
   
2,740,545
 
Cumulative effect of change in accounting principles, net of tax (Note 2)
  
—  
   
1,540,317
   
1,052
 
Balance at beginning of fiscal year, adjusted
  
918,894
   
2,846,458
   
2,741,597
 
Net income attributable to MHFG shareholders
  
577,608
   
84,471
   
150,195
 
Dividends declared
  
(190,361
)  
(190,384
)  
(190,406
)
Other
  
—  
   
—  
   
(612
)
             
Balance at end of fiscal year
  
1,306,141
   
2,740,545
   
2,700,774
 
             
Accumulated other comprehensive income
 
(loss)
,
 net of tax (Note 16):
  
   
   
 
Balance at beginning of fiscal year, previously reported
  
1,521,163
   
1,741,894
   
164,021
 
Cumulative effect of change in accounting principles (Note 2)
  
—  
   
(1,535,142
)  
(1,052
)
Balance at beginning of fiscal year, adjusted
  
1,521,163
   
206,752
   
162,969
 
Change during year
  
220,731
   
(42,731
)  
(172,463
)
             
Balance at end of fiscal year
  
1,741,894
   
164,021
   
(9,494
)
             
Treasury stock, at cost:
  
   
   
 
Balance at beginning of fiscal year
  
(4,849
)  
(5,997
)  
(7,704
)
Purchases of treasury stock
  
(2,431
)  
(3,002
)  
(1,908
)
Disposal of treasury stock
  
1,283
   
1,295
   
3,197
 
             
Balance at end of fiscal year
  
(5,997
)  
(7,704
)  
(6,415
)
             
Total MHFG shareholders’ equity
  
8,868,421
   
8,726,519
   
8,512,365
 
             
Noncontrolling interests:
  
   
   
 
Balance at beginning of fiscal year, previously reported
  
510,700
   
635,279
   
774,974
 
Cumulative effect of change in accounting principles
  
—  
   
(616
)  
—  
 
Balance at beginning of fiscal year, adjusted
  
510,700
   
634,663
   
774,974
 
Transactions between the MHFG Group and the noncontrolling interest shareholders
  
106,740
   
166,145
   
(52,521
)
Dividends paid to noncontrolling interests
  
(8,054
)  
(16,874
)  
(15,722
)
Net income (loss) attributable to noncontrolling interests
  
24,086
   
(8,746
)  
(43,880
)
Other
  
1,807
   
(214
)  
408
 
             
Balance at end of fiscal year
  
635,279
   
774,974
   
663,259
 
             
Total equity
  
9,503,700
   
9,501,493
   
9,175,624
 
             
Note:The amounts that have been reclassified out of Accumulated other comprehensive income
(loss),
net of tax into net income are presented in Note 1716 “Accumulated other comprehensive income”.income
(loss), net of tax.”

See the accompanying Notes to the Consolidated Financial Statements.

F-
11
Table of Contents
MIZUHO FINANCIAL GROUP, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF EQUITY

CASH FLOWS

FOR THE FISCAL YEARS ENDED MARCH 31, 2016, 20172018, 2019 AND 2018

   2016  2017  2018 
   

 

(in millions of yen)

 

Preferred stock:

    

Balance at beginning of fiscal year

   213,121   98,924   —   

Conversion to common stock

   (114,197)   (98,924)   —   
  

 

 

  

 

 

  

 

 

 

Balance at end of fiscal year

   98,924   —     —   
  

 

 

  

 

 

  

 

 

 

Common stock:

    

Balance at beginning of fiscal year

   5,590,396   5,703,144   5,826,149 

Issuance of new shares of common stock due to conversion of preferred stock

   114,197   98,924   —   

Issuance of new shares of common stock due to exercise of stock acquisition rights

   772   969   546 

Gains (losses) on disposal of treasury stock

   82   (56)   (53) 

Stock-based compensation related to stock option

   (1,058)   (1,009)   (590) 

Performance-based stock compensation program

   —     354   264 

Change in ownership interests in consolidated subsidiaries

   (1,245)   23,824   67 

Cancellation of treasury stock

   —     (1)   —   
  

 

 

  

 

 

  

 

 

 

Balance at end of fiscal year

   5,703,144   5,826,149   5,826,383 
  

 

 

  

 

 

  

 

 

 

Retained earnings:

    

Balance at beginning of fiscal year, previously reported

   89,432   746,785   918,894 

Cumulative effect of change in accounting principles, net of tax

   —     (329)   —   

Balance at beginning of fiscal year, adjusted

   89,432   746,456   918,894 

Net income attributable to MHFG shareholders

   850,492   362,440   577,608 

Dividends declared

   (195,265)   (190,002)   (190,361) 

Other

   2,126   —     —   
  

 

 

  

 

 

  

 

 

 

Balance at end of fiscal year

   746,785   918,894   1,306,141 
  

 

 

  

 

 

  

 

 

 

Accumulated other comprehensive income, net of tax (Note 17):

    

Balance at beginning of fiscal year, previously reported

   2,041,005   1,469,308   1,521,163 

Cumulative effect of change in accounting principles

   —     330   —   

Balance at beginning of fiscal year, adjusted

   2,041,005   1,469,638   1,521,163 

Change during year

   (571,697)   51,525   220,731 
  

 

 

  

 

 

  

 

 

 

Balance at end of fiscal year

   1,469,308   1,521,163   1,741,894 
  

 

 

  

 

 

  

 

 

 

Treasury stock, at cost:

    

Balance at beginning of fiscal year

   (3,616)   (3,610)   (4,849) 

Purchases of treasury stock

   (653)   (1,903)   (2,431) 

Disposal of treasury stock

   659   663   1,283 

Cancellation of treasury stock

   —     1   —   
  

 

 

  

 

 

  

 

 

 

Balance at end of fiscal year

   (3,610)   (4,849)   (5,997) 
  

 

 

  

 

 

  

 

 

 

Total MHFG shareholders’ equity

   8,014,551   8,261,357   8,868,421 
  

 

 

  

 

 

  

 

 

 

2020

             
 
2018
  
2019
  
  2020  
 
 
 
(in millions of yen)
 
Cash flows from operating activities:
  
   
   
 
Net income
  
601,694
   
75,725
   
106,315
 
Less: Net income (loss) attributable to noncontrolling interests
  
24,086
   
(8,746
)  
(43,880
)
             
Net income attributable to MHFG shareholders
  
577,608
   
84,471
   
150,195
 
Adjustments to reconcile net income to net cash provided by (used in) operating activities:
  
   
   
 
Depreciation and amortization
  
179,158
   
355,164
   
243,724
 
Provision (credit) for loan losses
  
(126,362
)  
32,459
   
156,200
 
Investment losses (gains)—net
  
(297,157
)  
159,789
   
526,359
 
Equity in losses (earnings) of equity method investees—net
  
(24,342
)  
(29,172
)  
(34,012
)
Foreign exchange losses (gains)—net
  
(251,613
)  
155,104
   
(139,900
)
Deferred income tax expense (benefit)
  
60,011
   
(157,231
)  
(101,941
)
Net change in trading account assets
  
992,084
   
2,776,764
   
(7,460,802
)
Net change in trading account liabilities
  
(518,339
)  
(2,979,299
)  
2,599,090
 
Net change in loans held for sale
  
(54,530
)  
26,659
   
(60,189
)
Net change in accrued income
  
(31,842
)  
(44,519
)  
14,060
 
Net change in accrued expenses
  
16,517
   
45,653
   
(24,345
)
Other—net
  
(682,269
)  
235,177
   
90,489
 
             
Net cash provided by (used in) operating activities
  
(161,076
)  
661,019
   
(4,041,072
)
             
Cash flows from investing activities:
  
   
   
 
Proceeds from sales of
Available-for-sale
securities
(1)
  
32,908,551
   
21,132,162
   
21,153,866
 
Proceeds from sales of Equity securities
(2)
  
—  
   
3,973,437
   
3,123,341
 
Proceeds from maturities of
Available-for-sale
securities
(1)
  
13,819,828
   
15,673,340
   
15,350,105
 
Proceeds from maturities of
Held-to-maturity
securities
  
1,261,607
   
939,397
   
731,686
 
Purchases of
Available-for-sale
securities
(1)
  
(49,722,644
)  
(34,327,798
)  
(37,445,206
)
Purchases of
Held-to-maturity
securities
  
(2,982
)  
(2,042
)  
—  
 
Purchases of Equity securities
(2)
  
—  
   
(3,429,923
)  
(2,900,020
)
Proceeds from sales of loans
  
296,260
   
1,184,160
   
1,729,513
 
Net change in loans
  
(1,971,210
)  
(3,852,757
)  
(7,512,885
)
Net change in call loans and funds sold, and receivables under resale agreements and securities borrowing transactions
  
54,786
   
(2,971,007
)  
(5,812,860
)
Proceeds from sales of premises and equipment
  
22,302
   
7,812
   
16,825
 
Purchases of premises and equipment
  
(292,201
)  
(157,714
)  
(243,022
)
Proceeds from sales of investments in subsidiaries (affecting the scope of consolidation)
  
948
   
220
   
1,068
 
Cash outflow from deconsolidation of a subsidiary
  
—  
   
(4,943,059
)  
—
 
             
Net cash used in investing activities
  
(3,624,755
)  
(6,773,772
)  
(11,807,589
)
             
Cash flows from financing activities:
  
   
   
 
Net change in deposits
  
6,083,800
   
3,065,826
   
7,920,701
 
Net change in call money and funds purchased, and payables under repurchase agreements and securities lending transactions
  
(67,508
)  
1,703,606
   
2,754,646
 
Net change in due to trust accounts
  
(130,544
)  
(59,373
)  
(62,610
)
Net change in other short-term borrowings
  
257,774
   
270,560
   
2,936,677
 
Proceeds from issuance of long-term debt
  
1,956,007
   
1,659,412
   
2,303,803
 
Repayment of long-term debt
  
(3,310,804
)  
(3,241,799
)  
(3,273,353
)
Proceeds from noncontrolling interests
  
76,894
   
219,187
   
131,795
 
Payments to noncontrolling interests
  
(12,949
)  
(579
)  
(148,673
)
Proceeds from issuance of common stock
  
3
   
3
   
—
 
Proceeds from sales of treasury stock
  
1
   
953
   
1,517
 
Purchases of treasury stock
  
(1,611
)  
(2,124
)  
(1,441
)
Dividends paid
  
(190,382
)  
(190,413
)  
(190,386
)
Dividends paid to noncontrolling interests
  
(8,054
)  
(16,874
)  
(15,722
)
             
Net cash provided by financing activities
  
4,652,627
   
3,408,385
   
12,356,954
 
             
Effect of exchange rate changes on cash and cash equivalents
  
(282,846
)  
206,186
   
(229,918
)
             
Net increase (decrease) in cash and cash equivalents
  
583,950
   
(2,498,182
)  
(3,721,625
)
Cash and cash equivalents at beginning of fiscal year
  
47,586,971
   
48,170,921
   
45,672,739
 
             
Cash and cash equivalents at end of fiscal year
  
48,170,921
   
45,672,739
   
41,951,114
 
             
F-
12
See the accompanying Notes to the Consolidated Financial Statements.

Table of Contents
MIZUHO FINANCIAL GROUP, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF EQUITY—CASH FLOWS—(Continued)

FOR THE FISCAL YEARS ENDED MARCH 31, 2016, 20172018, 2019 AND 2018

   2016  2017  2018 
   

 

(in millions of yen)

 

Noncontrolling interests:

    

Balance at beginning of fiscal year, previously reported

   259,506   168,640   510,700 

Cumulative effect of change in accounting principles

   —     (10,441)   —   

Balance at beginning of fiscal year, adjusted

   259,506   158,199   510,700 

Effect of other increase (decrease) in consolidated subsidiaries

   (85,809)   328,692   106,740 

Dividends paid to noncontrolling interests

   (2,683)   (2,914)   (8,054) 

Net income (loss) attributable to noncontrolling interests

   (429)   26,691   24,086 

Net unrealized gains (losses) on available-for-sale securities attributable to noncontrolling interests

   (674)   29   2,145 

Foreign currency translation adjustments attributable to noncontrolling interests

   (352)   (62)   (393) 

Pension liability adjustments attributable to noncontrolling interests

   (919)   65   55 
  

 

 

  

 

 

  

 

 

 

Balance at end of fiscal year

   168,640   510,700   635,279 
  

 

 

  

 

 

  

 

 

 

Total equity

   8,183,191   8,772,057   9,503,700 
  

 

 

  

 

 

  

 

 

 

2020
             
 
2018
  
2019
  
  2020  
 
 
 
(in millions of yen)
 
Supplemental disclosure of cash flow information:
      
Interest paid
  
818,593
   
1,268,412
   
1,321,358
 
Income taxes paid
  
172,891
   
175,615
   
97,630
 
Noncash investing activities:
  
   
   
 
Transfer of loans into loans
held-for-sale
  
35,166
   
2,728
   
29,953
 
Deconsolidation of Trust & Custody Services Bank, Ltd.:
  
   
   
 
Decrease in total assets
  
—  
   
8,990,604
   
—  
 
of which Cash and cash equivalents
  
—  
   
4,943,059
   
—  
 
Decrease in total liabilities
  
—  
   
8,958,535
   
—  
 
of which Due to trust accounts
  
—  
   
3,620,825
   
—  
 
Noncash assets acquired at fair value in an equity method investee
(3)
  
—  
   
25,311
   
—  
 
Notes:
Note:(1)TheProceeds from sales and maturities of
Available-for-sale
securities as well as Purchases of
Available-for-sale
securities include cash activity related to Other investments for the fiscal year ended March 31, 2018, the amounts that have been reclassified out of Accumulated other comprehensive income, net of tax into net incomewhich are presented in Note 17 “Accumulated other comprehensive income”.not significant.

(2)Proceeds from sales of Equity securities as well as Purchases of Equity securities include cash activity related to Other investments for the fiscal years ended March 31, 2019 and 2020, the amounts of which are not significant.
(3)Noncash assets acquired at fair value in an equity method investee was from deconsolidation of Trust & Custody Services Bank, Ltd.
See the accompanying Notes to the Consolidated Financial Statements.

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MIZUHO FINANCIAL GROUP, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS

FOR THE FISCAL YEARS ENDED MARCH 31, 2016, 2017 AND 2018

   2016  2017  2018 
   

 

(in millions of yen)

 

Cash flows from operating activities:

    

Net income

   850,063   389,131   601,694 

Less: Net income (loss) attributable to noncontrolling interests

   (429)   26,691   24,086 
  

 

 

  

 

 

  

 

 

 

Net income attributable to MHFG shareholders

   850,492   362,440   577,608 

Adjustments to reconcile net income to net cash provided by (used in) operating activities:

    

Depreciation and amortization

   167,930   171,202   179,158 

Provision (credit) for loan losses

   34,560   37,668   (126,362) 

Investment losses (gains)—net

   (263,793)   (333,270)   (297,157) 

Equity in losses (earnings) of equity method investees—net

   (28,969)   (26,785)   (24,342) 

Foreign exchange losses (gains)—net

   (225,130)   22,812   (251,613) 

Deferred income tax expense (benefit)

   123,125   (107,432)   60,011 

Net change in trading account assets

   (778,204)   4,867,508   992,084 

Net change in trading account liabilities

   916,958   (3,267,060)   (518,339) 

Net change in loans held for sale

   (27,347)   (5,574)   (54,530) 

Net change in accrued income

   (2,441)   7,087   (31,842) 

Net change in accrued expenses

   (26,425)   4,485   16,517 

Other—net

   (499,046)   (519,773)   (678,854) 
  

 

 

  

 

 

  

 

 

 

Net cash provided by (used in) operating activities

   241,710   1,213,308   (157,661) 
  

 

 

  

 

 

  

 

 

 

Cash flows from investing activities:

    

Proceeds from sales of investments

   19,830,288   31,139,716   32,908,551 

Proceeds from maturities of investments

   8,669,730   8,099,488   15,081,435 

Purchases of investments

   (25,046,188)   (34,137,270)   (49,725,626) 

Proceeds from sales of loans

   197,898   291,782   296,260 

Net change in loans

   (1,923,627)   (5,606,627)   (1,971,210) 

Net change in interest-bearing deposits in other banks

   (7,750,251)   (10,688,447)   (762,722) 

Net change in call loans and funds sold, and receivables under resale agreements and securities borrowing transactions

   385,134   (1,481,661)   54,786 

Proceeds from sales of premises and equipment

   47,506   12,059   22,302 

Purchases of premises and equipment

   (388,565)   (430,913)   (292,201) 

Cash and due from banks acquired in business combination

   —     301   —   

Proceeds from sales of investments in subsidiaries (affecting the scope of consolidation)

   —     —     948 
  

 

 

  

 

 

  

 

 

 

Net cash used in investing activities

   (5,978,075)   (12,801,572)   (4,387,477) 
  

 

 

  

 

 

  

 

 

 

Cash flows from financing activities:

    

Net change in deposits

   5,441,731   14,005,565   6,083,800 

Net change in call money and funds purchased, and payables under repurchase agreements and securities lending transactions

   (3,900,502)   (771,368)   (67,508) 

Net change in due to trust accounts

   3,226,204   (344,217)   (130,544) 

Net change in other short-term borrowings

   571,901   (589,512)   257,774 

Proceeds from issuance of long-term debt

   2,723,168   4,496,041   1,956,007 

Repayment of long-term debt

   (2,307,082)   (4,734,010)   (3,310,804) 

Proceeds from noncontrolling interests

   1,354   3,323   76,894 

Payments to noncontrolling interests

   (86)   (1,696)   (12,949) 

Proceeds from issuance of common stock

   5   6   3 

Proceeds from sales of treasury stock

   3   1   1 

Purchases of treasury stock

   (13)   (1,435)   (1,611) 

Dividends paid

   (195,283)   (190,031)   (190,382) 

Dividends paid to noncontrolling interests

   (2,683)   (2,914)   (8,054) 
  

 

 

  

 

 

  

 

 

 

Net cash provided by financing activities

   5,558,717   11,869,753   4,652,627 
  

 

 

  

 

 

  

 

 

 

Effect of exchange rate changes on cash and due from banks

   (28,061)   (11,895)   (13,845) 
  

 

 

  

 

 

  

 

 

 

Net increase (decrease) in cash and due from banks

   (205,709)   269,594   93,644 

Cash and due from banks at beginning of fiscal year

   1,528,306   1,322,597   1,592,191 
  

 

 

  

 

 

  

 

 

 

Cash and due from banks at end of fiscal year

   1,322,597   1,592,191   1,685,835 
  

 

 

  

 

 

  

 

 

 

See the accompanying Notes to the Consolidated Financial Statements.

MIZUHO FINANCIAL GROUP, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS—(Continued)

FOR THE FISCAL YEARS ENDED MARCH 31, 2016, 2017 AND 2018

   2016   2017   2018 
   

 

(in millions of yen)

 

Supplemental disclosure of cash flow information:

      

Interest paid

   435,584    582,947    818,593 

Income taxes paid

   269,364    246,802    172,891 

Noncash investing activities:

      

Transfer of loans into other investments

   63,420    —      —   

Investment in capital leases

   16,123    12,467    6,586 

Noncash assets acquired and liabilities assumed at fair value in business combination (Note 3):

      

Noncash assets acquired at fair value

   —      93,049    —   

Noncash liabilities assumed at fair value

   —      25,893    —   

See the accompanying Notes to the Consolidated Financial Statements.

MIZUHO FINANCIAL GROUP, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

1. Basis of presentation and summary of significant accounting policies

Basis of presentation

Mizuho Financial Group, Inc. (“MHFG”) is a joint stock corporation with limited liability under the laws of Japan. MHFG is a holding company for Mizuho Bank, Ltd. (“MHBK”), Mizuho Trust & Banking Co., Ltd. (“MHTB”), Mizuho Securities Co., Ltd. (“MHSC”), Trust & Custody Services Bank, Ltd. (“TCSB”), Asset Management One Co., Ltd. (“Asset Management One”), and other subsidiaries.MHFG,subsidiaries. MHFG, through its subsidiaries (“the MHFG Group”,Group,” or “the Group”), provides domestic and international financial services in Japan and other countries. The MHFG Group has introduced anin-house company system based on its diverse customer segments as of April 2016. See Note 32 “Business segment information” for furtherFor a discussion of the Group’s segment information, see Note 31 “Business segment information.

”

MHFG and its domestic subsidiaries as well as its foreign subsidiaries maintain their accounting records in accordance with the accounting standards of Japan and those standards of the countries in which they are domiciled. Certain adjustments and reclassifications have been incorporated in the accompanying consolidated financial statements to conform them to the accounting principles generally accepted in the United States of America (“U.S. GAAP”).The. The consolidated financial statements are stated in Japanese yen, the currency of the country in which MHFG is incorporated and principally operates.

The accompanying consolidated financial statements include the accounts of MHFG and its subsidiaries. MHFG’s fiscal year ends on March 31 and31. MHFG’s subsidiaries fiscal year end is determined by each subsidiary. If the fiscal year end of certaina subsidiary has more than three months discrepancy from the MHFG’s fiscal year end, the subsidiary executes provisional financial closing. For those subsidiaries endswhere the fiscal year end is not on December 31. The necessary adjustments have been made toMarch 31 and where the subsidiaries do not execute provisional financial close, the effect on the MHFG Group’s consolidated financial statements of all material events through the date of each of the periods presented in the consolidated financial statements if significant transactions took place during the three-month period.has been considered for adjustment and/or disclosure. When determining whether to consolidate investee entities, the MHFG Group performedperforms an analysis of the facts and circumstances of the particular relationships between the MHFG Group and the investee entities as well as the ownership of voting shares. The consolidated financial statements also include the accounts of the VIEs for which MHFG or its subsidiaries have been determined to be the primary beneficiary in accordance with the Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) 810, “Consolidation” (“ASC 810”). All significant intercompany transactions and balances have been eliminated upon consolidation. The MHFG Group accounts for investments in entities over which it has significant influence by using the equity method of accounting. These investments are included in Other investments and the Group’s proportionate share of income or loss is included in Equity in earnings (losses) of equity method investees—net.

The amounts of asset management business fee income and expenses for the fiscal years ended March 31, 2016 and 2017 have been reclassified from Other noninterest income and Other noninterest expenses to Fee and commission income and Fee and commission expenses, respectively, in order to conform to the current year’s presentation. Such reclassifications had no effect on net income or shareholder’s equity. In addition, certain other

Certain comparative amounts for the prior period have been reclassified in order to conform to the current year’speriod’s presentation.

Use of estimates

The preparation of the consolidated financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect reported amounts and related disclosures. Specific areas, among others, requiring the application of management’s estimates and judgment include assumptions pertaining to the allowance for loan losses, allowance for losses on
off-balance-sheet
instruments, valuation of deferred tax assets, valuation of derivative financial instruments, valuation of investments and valuation of pension and other employee benefits. ActualDuring times of pandemics and dislocated markets, such as COVID-19, estimates become more sensitive and it is reasonably possible that actual results could differ from estimates and assumptions made.

made

.

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MIZUHO FINANCIAL GROUP, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

Definition of cash and due from banks

cash equivalents

For purposes of the consolidated statements of cash flows, Cash and cash equivalents consists of Cash and due from banks includesand Interest-bearing deposits in other banks. Cash deposited with central banks that must be maintained to meet minimum regulatory requirements is classified as restricted cash and included in Cash and cash equivalents. See Note 8 “Pledged assets and collateral” for more information on hand, cash items in the process of collection and noninterest-bearing deposits with banks.

restricted cash.

Translation of foreign currency financial statements and foreign currency transactions

Financial statements of overseas entities are prepared using the functional currency of each entity and translated into Japanese yen for consolidation purposes. Assets and liabilities are translated using the
fiscal-year-end
exchange rate of each functional currency, and income and expenses are translated using the average rate of each functional currency for the period.

Foreign currency translation gains and losses related to the financial statements of overseas entities of the MHFG Group, net of related income tax effects, are credited or charged directly to Foreign currency translation adjustments, a component of Accumulated other comprehensive income (loss), net of tax (“AOCI”). The tax effects of gains and losses related to the foreign currency translation of financial statements of overseas entities are not recognized unless it is apparent that the temporary differences will reverse in the foreseeable future.

Assets and liabilities of domestic and overseas entities denominated in foreign currencies are translatedremeasured into Japanese yenthe functional currency of the respective entity at thefiscal-year-end fiscal
year-end
foreign exchange rates, and gains and losses resulting from such translationremeasurement are included in Foreign exchange gains (losses)—net. Foreign currency denominated income and expenses are translatedremeasured using the average exchange rates for the period.

Call loans and call money

Call loans and call money represent lending/borrowing, primarily through the Japanese short-term money market, to/from other financial institutions such as banks, insurance companies, and securities brokerage houses.

Repurchase and resale agreements, securities lending and borrowing and other secured financing transactions

Securities sold under agreements to repurchase (“repurchase agreements”), securities purchased under agreements to resell (“resale agreements”) and securities lending and borrowing transactions are accounted for as secured financing or lending transactions when control over the underlying securities is not deemed to be surrendered by the transferor. Otherwise, they are recorded as sales of securities with related forward repurchase commitments or purchases of securities with related forward resale commitments in accordance with ASC 860, “Transfers and Servicing” (“ASC 860”).

Under resale agreements, securities borrowing and certain derivatives transactions, the MHFG Group receives collateral in the form of securities. In many cases, the MHFG Group is permitted to sell or repledge the securities obtained as collateral. Disclosures in respect of such collateral are presented in Note 98 “Pledged assets and collateral”.collateral.” With respect to repurchase agreements, securities lending, and certain derivative transactions, counterparties may have the right to sell or repledge securities that the MHFG Group has pledged as collateral. The MHFG Group separately discloses these pledged securities in the consolidated balance sheets.

The MHFG Group monitors credit exposure arising from resale agreements, repurchase agreements, securities borrowing and securities lending transactions on a dailyregular basis, and additional collateral is obtained from or returned to counterparties, as appropriate.

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MIZUHO FINANCIAL GROUP, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

Trading securities and trading securities sold, not yet purchased

Trading securities consist of securities and money market instruments that are bought and held principally for the purpose of reselling in the near term with the objective of generating profits on short-term fluctuations in price. Trading securities sold, not yet purchased, are securities and money market instruments sold to third parties that the MHFG Group does not own and is obligated to purchase at a later date to cover the short position. Trading securities and trading securities sold, not yet purchased, are recorded on the trade date. Trading securities and trading securities sold, not yet purchased, are recorded at fair value in the consolidated balance sheets in Trading account assets and Trading account liabilities with realized and unrealized gains and losses recorded on a trade date basis in Trading account gains (losses)—net in the consolidated statements of income. Interest and dividends on trading securities, including securities sold, not yet purchased, are recorded in Interest and dividend income or Interest expense on an accrual basis.

Investments

Debt securities that the MHFG Group has both the positive intent and ability to hold to maturity are classified as
Held-to-maturity
securities and carried at amortized cost. Debt securities that the MHFG Group may not hold to maturity, and any marketable equity securities, other than those classified as trading securities, are classified as
Available-for-sale
securities, and are carried at fair value, with unrealized gains and losses reported in AOCI.

Equity securities that do not meet the classification of trading securities are measured at fair value with unrealized gains and losses reported in Investment gains (losses)—net Equity securities.

The credit component of an other-than-temporary impairment of a debt security is reported in Investment gains (losses)—net, and the noncredit component is reported in Other comprehensive income (loss). See Note 43 “Investments” for further discussion of impairment. Interest and dividends, as well as amortization of premiums and accretion of discounts, are reported in Interest and dividend income. Amortization of premiums and accretion of discounts on debt securities are recognized over their remaining maturities under the interest method. Gains and losses on disposition of investments are computed using thefirst-infirst-out
first-in
first-out
method for debt securities and the average method for equity securities, and are recorded on the trade date.

Other investments include marketable and
non-marketable
equity securities accounted for using the equity method and marketable and
non-marketable
investments held by consolidated investment companies carried at fair value under specialized industry accounting principles for investment companies, and othernon-marketable equity securities carried at cost, less other-than-temporary impairment, if any.

companies.

Derivative financial instruments

Derivative financial instruments are bought and held principally for the purpose of market making for customers, proprietary trading in order to generate trading revenues and fee income, and also to manage the MHFG Group’s exposure to interest rate, credit and market risks related to asset and liability management. Such derivative financial instruments include interest rate, foreign currency, equity, commodity and credit default swap agreements, options, caps and floors, and financial futures and forward contracts.

Derivatives bought and held for trading purposes are recorded in the consolidated balance sheets at fair value in Trading account assets and Trading account liabilities. The fair values of derivatives in a gain position and a loss position are reported as Trading account assets and Trading account liabilities, respectively.

Derivatives used for asset and liability management include contracts that qualify for hedge accounting under ASC 815, “Derivatives and Hedging” (“ASC 815”). To be eligible for hedge accounting, derivative instruments must be highly effective in achieving offsetting changes in fair values or variable cash flows of the hedged items
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MIZUHO FINANCIAL GROUP, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
attributable to the particular risk being hedged. All qualifying hedging derivatives are valued at fair value and

MIZUHO FINANCIAL GROUP, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

included in Trading account assets or Trading account liabilities. Derivatives that do not qualify for hedge accounting under ASC 815 are treated as trading positions and are accounted for as such. The fair value amounts recognized for all derivatives are presented on a gross basis and not offset against the amounts recognized for the right to reclaim cash collateral or the obligation to return cash collateral under the master netting agreement with the same counterparty.

The fair values of derivative financial instruments are determined based on quoted market prices or broker-dealer quotes, if available. If not available, the fair values are estimated using quoted market prices for similar instruments, option or binomial pricing models or a present value cash flow analysis, utilizing current observable market information, where available. In determining the fair values, the Group considers various factors such as exchange or
over-the-counter
market quotes, time value of money and volatility factors for options and warrants, observed prices for similar or synthetic instruments, and counterparty credit quality including potential exposure.

Changes in the fair values of all derivatives are recorded in earnings, except for derivatives qualifying as net investment hedges under ASC 815 which are recorded in AOCI. The changes in the fair values of all derivatives relating to foreign currency exchange rates are included in Foreign exchange gains (losses)—net and Trading account gains (losses)—net. Other elements of the changes in the fair values, including interest rate, equity and credit related components, except these of certain credit derivatives hedging the credit risk in the corporate loan portfolio, are recognized in Trading account gains (losses)—net. The net gain (loss) resulting from changes in the fair values of certain credit derivatives where the Group purchases protection to mitigate its credit risk exposure related to its corporate loan portfolio is recorded in Other noninterest income (expenses).

Certain financial and hybrid instruments often contain embedded derivative instruments that possess implicit or explicit contract terms similar to those of a derivative instrument. Such derivative instruments are required to be fair-valued separately from the host contracts if they meet the bifurcation criteria of an embedded derivative. Such criteria include that the entire instrument is not marked to market through earnings, the economic characteristics and risks of the embedded contract terms are not clearly and closely related to those of the host contract and the embedded contract terms would meet the definition of a derivative on a stand-alone basis.

Loans

Loans are generally carried at the principal amount adjusted for unearned income and deferred net nonrefundable loan fees and costs. Loan origination fees, net of certain direct origination costs, are deferred and recognized over the contractual life of the loan as an adjustment of yield using a method that approximates the interest method. Interest income on performing loans is accrued and credited to income as it is earned. Unearned income and discounts or premiums on purchased loans are deferred and recognized over the life of the loan using a method that approximates the interest method.

Loans are considered impaired when, based on current information and events, it is probable that the MHFG Group will be unable to collect all the scheduled payments of principal and interest when due according to the contractual terms of the loans. Factors considered by management in determining if a loan is impaired include delinquency status and the ability of the debtor to make payments of the principal and interest when due. Impaired loans include loans past due for 90 days or more and restructured loans that meet the definition of a troubled debt restructuring (“TDR”) in accordance with ASC 310, “Receivables” (“ASC 310”).

The majority of impaired loans have no contractual delinquency due to interest reductions and/or postponement of principal and interest.

In March 2020
,
the Coronavirus, Aid, Relief, and Economic Security Act (“the CARES Act”) was
approved
. The CARES Act and U.S. banking agencies have among other items, provided optional, temporary relief related to
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MIZUHO FINANCIAL GROUP, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
accounting for certain TDRs. The temporary TDR relief is available to banks for loan
modifications
related to obligors who were adversely impacted by COVID-19. As of March 31, 2020
,
the MHFG Group has elected not to apply the temporary TDR relief provided by the CARES Act and U.S. banking agencies. Additionally the MHFG Group has elected not to apply any of the other provisions provided by the CARES Act.
All of the MHFG Group’s impaired loans are designated as nonaccrual loans and thus interest accruals and the amortization of net origination fees are suspended and capitalized interest is written off. Cash received on nonaccrual loans is accounted for as a reduction of the loan principal if the ultimate collectibilitycollectability of the principal

MIZUHO FINANCIAL GROUP, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

amount is in doubt, otherwise, as interest income. Loans are not restored to accrual status until interest and principal payments are current and future payments are reasonably assured. Impaired loans are restored to

non-impaired
loans and accrual status, when the MHFG Group determines that the borrower poses no concerns regarding current certainty of debt fulfillment. In general, such determination is made if the borrower qualifies for an obligor rating of E2 or above and is not classified as a special attention obligor. With respect to loans restructured in a TDR, in general, such loans are restored to
non-impaired
loans, and accrual status, when the borrower qualifies for an obligor rating of D or above. See Note 54 “Loans” for the definitions of obligor ratings.

Loans that have been identified for sale are classified as loans held for sale within Other assets and are accounted for at the lower of cost or fair value on an individual loan basis. If management decides to retain certain loans held for sale for the foreseeable future or until maturity or payoff, such items are transferred to Loans at the lower of cost or fair value.

Allowance and provision (credit) for loan losses

The MHFG Group maintains an appropriate allowance for loan losses to absorb probable losses inherent in the loan portfolio and makes adjustments to such allowance through Provision (credit) for loan losses in the consolidated statements of income. Loan principal that management judges to be uncollectible, based on detailed loan reviews and a credit quality assessment, is charged off against the allowance for loan losses. In general, the MHFG Group charges off loans when the Group determines that the obligor should be classified as substantially bankrupt or bankrupt. See Note 54 “Loans” for the definitions of obligor categories. Obligors in the retail portfolio segment are generally determined to be substantially bankrupt when they are past due for more than six months, and as for obligors in the corporate and other obligors,portfolio segments, the Group separately monitors the credit quality of each obligor without using time-based triggers. Subsequent recoveries of previously
charged-off
loan balances are recorded as an increase to the allowance for loan losses as the recoveries are received.

The

For the corporate portfolio segment, the credit quality review process and the credit rating process serve as the basis for determining the allowance for loan losses. Through such processes loans are categorized into groups to reflect the probability of default, whereby the MHFG Group’s management assesses the ability of borrowers to service their debt, taking into consideration current financial information, ability to generate cash, historical payment experience, analysis of relevant industry segments and current trends. InFor the retail portfolio segment, the different categories of past due status of loans are primarily utilized in the credit quality review and the credit rating processes as the basis for determining the appropriate levelallowance for loan losses. The other portfolio segment consists of loans of subsidiaries other than MHBK and MHTB, such as consolidated VIEs and overseas subsidiaries. MHFG Group’s accounting policies and the methodology used to estimate the allowance for loan losses for the MHFG Group evaluatesother portfolio segment are equivalent to the probable loss by category of loan based on its risk typepolicies and characteristics.

methodology used for the corporate portfolio segment.

The allowance for loan losses is determined in accordance with ASC 310 and ASC 450, “Contingencies” (“ASC 450”). The MHFG Group measures the impairment of a loan when it is probable that the Group will be unable to collect all amounts due according to the contractual terms of the loan agreement, based on (1) the
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MIZUHO FINANCIAL GROUP, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
present value of expected future cash flows, after considering the restructuring effect and subsequent payment default with respect to TDRs, discounted at the loan’s initial effective interest rate, or (2) the loan’s observable market price, or (3) the fair value of the collateral if the loan is collateral dependent. The collateral that the Group obtains for loans consists primarily of real estate. In obtaining the collateral, the Group evaluates the fair value of the collateral and its legal enforceability. The Group also performs subsequent
re-evaluations
at least once a year. As it pertains to real estate collateral, valuation is generally performed by an appraising subsidiary which is independent from the Group’s loan origination departments by using generally accepted valuation techniques such as (1) the replacement cost approach, or (2) the sales comparison approach or (3) the income approach. In the case of large real estate collateral, the Group generally engages third-party appraisers to perform the valuation.

MIZUHO FINANCIAL GROUP, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

The formula allowance is applied to groups of loans that are collectively evaluated for impairment. The evaluation of the inherent loss in respect of these loans involves a high degree of uncertainty, subjectivity and judgment because probable loan losses are not easily identifiable or measurable. In determining the formula allowance, the MHFG Group therefore relies on a statistical analysis that incorporates loss rates based on its own historical loss experience and third-party data such as the number of corporate default cases which is updated once a year. In determining the allowance amount, the Group analyzes (1) the probability of default: (a) by using the most recently available data from April 2008 for the corporate portfolio segment, and the most recently available data for the past six years for the retail portfolio segment, in the case of normal obligors; and (b) by using the most recently available data from April 2002 for the corporate and retail portfolio segments, in the case of watch obligors; and (2) the loss given default by using the most recently available data for the past six years.years for the corporate and retail portfolio segments. As it pertains to TDR loans in the retail portfolio segment, which are subject to collective evaluation for impairment, the restructuring itself, as well as subsequent payment defaults, if any, are considered in determining obligor ratings.

categories.

The historical loss rate is adjusted, where appropriate, to reflect current factors, such as general economic and business conditions affecting the key lending areas of the MHFG Group, credit quality trends, specific industry conditions withinby portfolio segments, and recent loss experience in particular segments of the portfolio. When determining the length of the period to calculate the probability of default, the Group considers the uncertainty in the economic and business conditions. The estimation of the formula allowance is back-testedanalyzed on a periodic basis by comparing the allowance with the actual results subsequent to the balance sheet date.

Additionally, the allowance for loan losses is adjusted, where appropriate, to reflect significant uncertain economic and business conditions, such as COVID-19 pandemic. For March 31, 2020, the Group has incorporated the estimated impact of COVID-19 pandemic by adjusting its ASC 450 collective allowance; specifically by identifying impacted industries and obligors and adjusted its historical loss formula-based allowance for these loan groups, using assumptions such as anticipated business recovery period and current forecast for the growth rate of gross domestic product.

Allowance and provision (credit) for losses on
off-balance-sheet
instruments

The MHFG Group maintains an allowance for losses on
off-balance-sheet
credit instruments, such as guarantees and standby letters of credit in the same manner as the allowance for loan losses. The Group similarly assesses probable loss amounts for commitments to invest in securities and commitments to extend credit, taking into account the probability of drawdowns. The allowance is recorded in Other liabilities. Net changes in the allowance for losses on
off-balance-sheet
instruments are accounted for in Provision (credit) for losses on
off-balance-sheet
instruments in the consolidated statements of income.

Premises and equipment

Premises and equipment are stated at historical cost, and depreciation and amortization are recorded over the estimated useful lives of the assets, except for leasehold improvements, which are amortized over the shorter of
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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
the estimated useful lives of the assets or the lease term. Depreciation and amortization are principally computed in accordance with the straight-line method with respect to buildings and leasehold improvements and in accordance with the declining-balance method with respect to other premises and equipment.

The useful lives of premises and equipment are as follows:

  Years

Buildings

 

Years
Buildings
3 to 50

Equipment and furniture

 
2 to 20

Leasehold improvements

 3 to 50

Regular repairs and maintenance costs that do not extend the estimated useful life of an asset are charged to expense as incurred. Upon sale or disposition of premises and equipment, the cost and related accumulated depreciation or amortization are removed
from
the accounts, and any gains or losses on disposal are included in Gains on
disposal
of premises and equipment or Occupancy expenses.

MIZUHO FINANCIAL GROUP, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

Impairment of long-lived assets

The MHFG Group’s long-lived assets that are held for use are reviewed periodically for events or changes in circumstances that indicate possible impairment. The Group’s impairment review is based on an undiscounted cash flow analysis of a group of assets, combined with associated liabilities, at the lowest level for which identifiable cash flows exist. Impairment occurs when the carrying value of the asset group exceeds the future undiscounted cash flows that the asset group is expected to generate. When impairment is identified, the future cash flows are then discounted to determine the estimated fair value of the asset group and an impairment charge is recorded for the difference between the carrying value and the estimated fair value of the asset group. The long-lived assets to be disposed of by sale are carried at the lower of the carrying amount or fair value, less estimated cost to sell.

Software

Internal and external costs incurred in connection with developing and obtaining software for internal use during the application development stage are capitalized. Such costs include salaries and benefits for employees directly involved with and who devote time to the project, to the extent such time is incurred directly on the internal use software project. The capitalization of software ceases when the software project has been substantially completed. The capitalized software is amortized on a straight-line basis over the estimated useful life, generally 5 to 10 years. Internal use software is reviewed for impairment when triggeringwhenever events occur.

or changes in circumstances indicate that its carrying amount may not be recoverable.

Goodwill

Goodwill represents the excess of the total fair value of the acquired company, which consists of the consideration transferred, the fair value of any interest in the acquiree already held by the acquirer and the fair value of any noncontrolling interest in the acquiree over the fair value of net identifiable assets acquired at the date of acquisition in a business combination. The MHFG Group accounts for goodwill in accordance with ASC 350, “Intangibles—Goodwill and Other” (“ASC 350”). Goodwill is recorded at a designated reporting unit level for the purpose of assessing impairment. Goodwill is not amortized but is tested for impairment at least annually or more often if events or circumstances indicate there may be impairment. For both the annual and interim tests, the Group has the option to either (a) perform a quantitative impairment test or (b) first perform a qualitative assessment to determine whether it is more likely than not that the fair value of a reporting unit is less than its carrying amount, in which case the Group would perform the quantitative test. An impairment loss is recorded to the extent the carrying amount of goodwill exceeds its estimated fair value.

The estimated fair value of the reporting units is derived based on valuation techniques that the Group believes market participants would use for each of the reporting units. The 

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
Group generally determines the estimated fair value by utilizing a discounted cash flow methodology or methodologies that incorporate
price-to-book
multiples of certain comparable companies.
Intangible assets

Intangible assets having definite useful lives are amortized over their estimated useful lives on either a straight-line basis or the method that reflects the pattern in which the economic benefits of the intangible assets are
consumed. Intangible assets acquired in connection with the merger of MHSC and Shinko Securities Co., Ltd. (“Shinko”) and the integration amongof asset management companiesfunctions of DIAM Co., Ltd. (“DIAM”), MHTB, Mizuho Asset Management Co., Ltd. (“MHAM”) and Shinko Asset Management Co., Ltd. (“Shinko Asset Management”) consist primarily of customer relationship intangibles, and are amortized over weighted-average amortization periods of 16 years and 16.9 years, respectively. See Note 3 “Business Combination” for further details of the integration among asset management companies. Intangible assets having indefinite useful lives are not amortized and are subject to impairment tests. An impairment loss is recorded to the extent that the carrying amount of the indefinite-lived intangible asset exceeds its estimated fair value. For intangible assets subject to amortization, an impairment loss is recorded if the carrying amount is not recoverable and exceeds its estimated fair value.

Leases
The MHFG Group, as a lessee, recognizes liabilities to make lease payments and
right-of-use
(“ROU”) assets representing its right to use the underlying assets for the lease term. The lease terms include periods covered by options to extend or terminate the lease that the Group is reasonably certain to exercise. The Group uses its incremental borrowing rates at the lease commencement to determine the lease liability, which is measured at the present value of future lease payments, when the rate implicit in the lease is not readily determinable. The Group has elected not to separate lease and
non-lease
components of a contract that is or contains a lease for its equipment leases. The Group has elected not to recognize ROU assets and liabilities for leases with terms of twelve months or less. For operating leases, the ROU assets and related liabilities are included in Other assets and Other liabilities, respectively, on the consolidated balance sheets. Expenses are recognized on a straight-line basis over the lease term and are included in Occupancy expenses on the consolidated statements of income. Variable lease payments not included in the ROU assets or the lease liabilities are recognized as incurred in Occupancy expenses. For finance leases, ROU assets and related liabilities are included in Premises and equipment and Long-term debt, respectively, on the consolidated balance sheets.
Pension and other employee benefits

MHFG and certain subsidiaries sponsor severance indemnities and pension plans which provide defined benefits to retired employees.employees and other postretirement benefit plans, including severance indemnities. Severance indemnities are amounts payable to eligible employees upon termination of employment and are payable as
a
lump sum. Periodic expense and accrued liabilities are computed based on the actuarial present value

MIZUHO FINANCIAL GROUP, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

of benefits, net of investment returns expected from plan assets and their fair values at the balance sheet date. Net periodic expense is charged to Salaries and employee benefits. Net actuarial gains and losses that arise from differences between actual experience and assumptions are generally amortized over the average remaining service period of participating employees if they exceed the corridor, which is defined as the greater of 10% of plan assets or the projected benefit obligation.

Stock-based compensation

The

MHFG, MHBK, MHTB and MHSC have a position-based stock compensation cost with regard to theprogram for Directors (“Stock Compensation I”) and a performance-based stock compensation program for Directors (“Stock Compensation II”). For both programs, the stock-based compensation cost is determined based uponon the fair value
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of MHFG’s common stock as of grant date. For Stock Compensation I and II, the liability related to the cash-based compensation cost is remeasured at each reporting date based on the fair value of MHFG’s common stock. For Stock Compensation II, the shares of MHFG common stockstock-based compensation costs are recognized evenly over the graded-vesting period, which is three years. For Stock Compensation I, as ofthe program is effectively vested on the grant date, andthe stock-based compensation cost is recognized overon the three year deferral period on a straight-line basis.

grant date.

See Note 2221 “Stock-based compensation” for further details of the stock options and the performance-based stock compensation.

compensation programs.

Long-term debt

Premiums, discounts and issuance costs of long-term debt are amortized based on a method that approximates the interest method over the respective terms of the long-term debt.

Obligations under guarantees

The MHFG Group provides customers with a variety of guarantees and similar arrangements, including standby letters of credit, financial and performance guarantees, credit protection, and liquidity facilities. The MHFG Group recognizes guarantee fee income over the guarantee period. The MHFG Group receives such a guarantee fee at the inception of the guarantee or in installments and, in either case, the present value of the total fees approximates the fair value of the guarantee.

Fair Value Measurements

The MHFG Group carries certain of its financial assets and liabilities at fair value on a recurring basis. These financial assets and liabilities are primarily composed of trading account assets, trading account liabilities and
available-for-sale
securities. In addition, the Group measures certain financial assets and liabilities, at fair value on a
non-recurring
basis. Those assets and liabilities primarily include items that are measured at the lower of cost or fair value such as loans held for sale, and items that were initially measured at cost and have been written down to fair value due to impairments, such as loans and other investments.

equity securities without readily determinable fair values.

Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. In accordance with ASC 820, “Fair Value Measurement” (“ASC 820”), the Group classifies its financial assets and liabilities into the fair value hierarchy (Level 1, 2, and 3). See Note 2827 “Fair value” for the detailed definition of each level.

When determining fair value, the MHFG Group considers the principal or most advantageous market in which the Group would transact and considers assumptions that market participants would use when pricing the asset or

MIZUHO FINANCIAL GROUP, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

liability. The Group maximizes the use of observable inputs and minimizes the use of unobservable inputs when measuring fair value. See Note 2827 “Fair value” for descriptions of valuation methodologies used for its assets and liabilities by product.

Fee and commission income

Fee

The MHFG Group recognizes revenue from contracts with customers in an amount that reflects the consideration to which the Group expects to be entitled in exchange for transferring control of a promised service. The timing of revenue recognition is recognized when alldependent on whether the Group satisfies a performance obligation by transferring control of the following criteria have been met: persuasive evidence of an agreement exists, services have been rendered, the price is fixedservice to a customer over time or determinable, and collectibility is reasonably assured. Feesat a point in respect of securities-related business and fees on funds transfer and collection services are generally recognized as revenue when the related services are performed. Fees on credit-related business, excluding loan origination fees which are deferred and recognized over the loan period as a yield adjustment, are generally recognized either at one time when the service is rendered or over the related transaction period.time. Fee and commission income is presented on a gross basis and exclusive of consumption taxes.

The major components of fee and commission income are as follows.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
Securities-related business fees mainly consist of brokerage fees and commissions, and asset-based revenues. Brokerage fees and commissions mainly include fees earned from the execution of customer transactions and sales commissions of investment trusts. Brokerage fees and commissions are recognized at the point in time on transaction date. Asset-based revenues mainly include fees received from investment trust management companies in return for administration services, such as record keeping services, of investment trusts. The amounts of asset-based revenues are calculated based on customer’s net asset value and recognized over time in the period when the related service is provided.
Deposit-related fees include service charges on consumer and commercial deposit accounts such as account transfer charges. Deposit-related fees are recognized at the point in time when the transactions occur or the related service is provided.
Lending-related fees include fees for lending business such as commitment fees and arrangement fees.
Remittance business fees include service charges for domestic and international funds transfers and collections. These fees are recognized at the point in time when the related service is provided.
Asset management business fees consist of investment trust management fees and investment advisory fees for investment trusts. These fees are received from investment trusts in return for asset management services and/or investment advisory services on behalf of customers. The amounts of these fees are calculated based on a percentage of customer’s net asset value. These fees are recognized over time in the period when the management and/or advisory service is provided and the amount is fixed.
Trust related business fees consist of trust fees earned primarily through fiduciary asset management and administrative service and other trust-related fees. Fees for fiduciary asset management and administration services for corporate pension plans and investment funds are recognized over time in the period when the related service is provided. Other trust-related fees mainly include brokerage commissions of real estate property, sales commissions of beneficial interest in real estate trust and charges for stock transfer agent services. These fees are mainly earned on a transaction basis and recognized at the point in time when the related service is provided.
Agency business fees mainly include administration service fees related to the MHFG Group’s agency business such as Japan’s principal public lottery program and revenues from standing proxy services. These fees are recognized at the point in time when the related service is provided.
Fees for other customer services include various revenues such as sales commissions of life insurance, service charges for electronic banking, financial advisory fees, and service charges for software development. Sales commissions from life insurance sales are received from insurance companies in return for selling insurance products and recognized when the insurance product is sold to customers. Service charges for electronic banking are mainly monthly basic usage fees and recognized over the related transaction period. Financial advisory fees are recognized over time in the period when the related advisory service based on the contract is rendered. Service charges for software development are recognized over time according to the progress of the development.
Fee and commission expenses
The principal items included in fee and commission expenses are fee and
commission
expenses for remittance services and brokerages fees paid for securities transactions. These expenses are generally recognized on an incurred basis.
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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
Income taxes

Income taxes are accounted for in accordance with ASC 740, “Income Taxes” (“ASC 740”). Deferred income taxes reflect the net tax effects of (1) temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the corresponding amounts used for income tax purposes, and (2) operating loss and tax credit carryforwards. A valuation allowance is recorded for any portion of the deferred tax assets unless it is more likely than not that the deferred tax assets will be realized.
Deferred income tax benefit or expense is recognized for the changes in the net deferred tax asset or liability between periods.

Earnings per common share

Basic earnings per common share are computed by dividing net income attributable to MHFG common shareholders by the weighted average number of common shares outstanding during the fiscal year. Diluted earnings per common share reflect all dilutive potential common shares such as stock options and convertible preferred stock.the common shares of MHFG under the stock compensation programs. See Note 1918 “Earnings per common share” for the computation of basic and diluted earnings per common share.

2. Recently issuedIssued accounting pronouncements

Recently adopted

Adopted accounting pronouncements

In June 2014, the FASB issued ASU No.2014-11, “Transfers and Servicing (Topic 860)—Repurchase-to-Maturity Transactions, Repurchase Financings, and Disclosures” (“ASU No.2014-11”). The ASU changes the accounting for repurchase-to-maturity transactions to secured borrowing accounting. For repurchase financing arrangements, the ASU requires separate accounting for a transfer of a financial asset executed contemporaneously with a repurchase agreement with the same counterparty, which will result in secured borrowing accounting for the repurchase agreement. The ASU requires disclosures for certain transactions comprising (1) a transfer of a financial asset accounted for as a sale and (2) an agreement with the same transferee entered into in contemplation of the initial transfer that results in the transferor retaining substantially all of the exposure to the economic return on the transferred financial asset throughout the term of the transaction. The ASU also requires an entity to disclose certain information, including risks related to collateral pledged, for repurchase agreements, securities lending transactions, and repurchase-to-maturity transactions that are accounted for as secured borrowings. The ASU is effective for the first interim or annual period beginning after December 15, 2014, except for interim disclosure requirements related to secured borrowings, which are

MIZUHO FINANCIAL GROUP, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

effective for interim periods beginning after March 15, 2015.The adoption of ASU No.2014-11 did not have a material impact on the MHFG Group’s consolidated results of operations or financial condition.

In November 2014, the FASB issued ASU No.2014-16, “Derivatives and Hedging (Topic 815)—Determining Whether the Host Contract in a Hybrid Financial Instrument Issued in the Form of a Share Is More Akin to Debt or to Equity” (“ASU No.2014-16”). The ASU clarifies that an entity that issues or invests in a hybrid financial instrument should determine the nature of the host contract by considering the economic characteristics and risks of the entire hybrid financial instrument, including the embedded derivative feature that is being evaluated for bifurcation. The ASU also clarifies that an entity should assess the substance of the relevant terms and features in evaluating the nature of a host contract when considering how to weight those terms and features. Specifically, the assessment of the substance of the relevant terms and features should incorporate a consideration of (1) the characteristics of the terms and features themselves, (2) the circumstances under which the hybrid financial instrument was issued or acquired, and (3) the potential outcomes of the hybrid financial instrument, as well as the likelihood of those potential outcomes. The ASU is effective for fiscal years and interim periods within those fiscal years, beginning after December 15, 2015. The adoption of ASU No.2014-16 did not have a material impact on the MHFG Group’s consolidated results of operations or financial condition.

In February 2015, the FASB issued ASU No.2015-02, “Consolidation (Topic 810)—Amendments to the Consolidation Analysis” (“ASU No.2015-02”). The ASU amends the current accounting for consolidation of certain legal entities. Specifically the amendments: (1) modify the evaluation of whether limited partnerships and similar legal entities are VIEs or voting interest entities, (2) eliminate the presumption that a general partner should consolidate a limited partnership, (3) affect the consolidation analysis of reporting entities that are involved with VIEs, particularly those that have fee arrangements and related party relationships, and (4) provide a scope exception from consolidation guidance for reporting entities with interests in legal entities that are required to comply with or operate in accordance with requirements that are similar to those in Rule 2a-7 of the Investment Company Act of 1940 for registered money market funds. On April 1, 2016, the MHFG Group adopted ASU No.2015-02 using a modified retrospective approach. The adoption of the ASU resulted in a decrease to the beginning balance of Retained earnings of ¥329 million and an increase to the beginning balance of AOCI of ¥330 million, respectively. See Note 25 “Variable interest entities and securitizations” for further information.

In April 2015, the FASB issued ASU No.2015-03, “Interest—Imputation of Interest (Subtopic 835-30)—Simplifying the Presentation of Debt Issuance Costs” (“ASU No.2015-03”). The ASU requires that debt issuance costs related to a recognized debt liability be presented in the balance sheet as a direct deduction from the carrying amount of that debt liability, consistent with debt discounts. The ASU is effective for financial statements issued for fiscal years beginning after December 15, 2015 and interim periods within those fiscal years, and should be applied retrospectively. The adoption of ASU No.2015-03 did not have a material impact on the MHFG Group’s consolidated results of operations or financial condition.

In May 2015, the FASB issued ASU No.2015-07, “Fair Value Measurement (Topic 820)—Disclosures for Investments in Certain Entities That Calculate Net Asset Value per Share (or Its Equivalent)” (“ASU No.2015-07”). The ASU removes the requirement to categorize within the fair value hierarchy all investments for which fair value is measured using the net asset value per share practical expedient. The ASU also removes the requirement to make certain disclosures for all investments that are eligible to be measured at fair value using the net asset value per share practical expedient. Rather, those disclosures are limited to investments for which the entity has elected to measure the fair value using that practical expedient. The ASU is effective for fiscal years beginning after December 15, 2015, and interim periods within those fiscal years, and should be applied retrospectively to all periods presented. The adoption of ASU No.2015-07 did not have a material impact on the MHFG Group’s consolidated results of operations or financial condition.

MIZUHO FINANCIAL GROUP, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

Accounting pronouncements issued but not yet effective

In May 2014, the FASB issued ASU No.2014-09, “Revenue from Contracts with Customers (Topic 606)” (“ASU No.2014-09”). The ASU, as amended, provides comprehensive guidance in respect of revenue recognition, in convergence with International Financial Reporting Standards (“IFRS”), to improve financial reporting in U.S. GAAP by replacing the current complex guidance for recognizing revenue. The core principle of this ASU is that an entity should recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. The ASU is effective for annual periods and interim reporting periods within those annual periods, beginning after December 15, 2017 under a modified retrospective approach or retrospectively to all periods presented. Early application is permitted only as of annual reporting periods beginning after December 15, 2016, including interim reporting periods within that reporting period. The MHFG Group adopted ASU No.2014-09 on April 1, 2018 using the modified retrospective approach. Since there is no material change in timing and amount of revenue or the related cost recognition associated with the adoption, the adoption of ASU No.2014-09 and any subsequent amendments will not have a material impact on the Group’s consolidated results of operations and financial condition. However, beginning prospectively in the fiscal year ending March 31, 2019, the Group’s presentation of certain costs related to securities underwriting will change from a net basis to a gross basis under the new standard. The change in presentation will not have a material impact on the Group’s results of operations. In addition, the Group will expand qualitative and quantitative disclosures pursuant to the new requirements.

In January 2016, the FASB issued ASU

No.2016-01, “Financial
“Financial Instruments—Overall (Subtopic
825-10)—
Recognition and Measurement of Financial Assets and Financial Liabilities” (“ASU
No.2016-01”).
The ASU requires equity investments (except those accounted for under the equity method of accounting or those that result in consolidation of the investee) to be measured at fair value with changes in fair value recognized in net income. The ASU also requires an entity to present separately in other comprehensive income the portion of the total change in the fair value of a liability resulting from a change in the instrument-specific credit risk when the entity has elected to measure the liability at fair value in accordance with the fair value option for financial instruments. Before the adoption of ASU
No.2016-01,
marketable equity securities were reported as Trading account assets and
Available-for-sale
securities whereas other equity interests, which primarily consisted of
non-marketable
equity securities, were reported as Other investments. After the adoption of ASU
No.2016-01,
all of these securities are reported as Equity securities. In connection with the adoption of ASU
No.2016-01,
Investment gains (losses)—net of Equity securities and Debt securities are presented separately in the MHFG Group’s consolidated results of operations. The ASU is effectiveamounts for fiscal years beginning after December 15, 2017, and interimthe prior periods within those fiscal years, and should be applied using a cumulative-effect adjustmenthave been reclassified in order to conform to the balance sheet as of the beginning of the fiscal year of adoption. Early application by public business entities is permitted for financial statements of fiscal years or interim periods that have not yet been issued.current year’s presentation. The MHFG Group adopted the ASU No.2016-01 on April 1, 2018. The Group had ¥2,4382018 and increased Retained earnings by ¥1,545 billion, of pre-tax, net unrealized gains on equity securities at March 31, 2018. This amount, net of tax, was reclassifiedincluding any stranded tax amounts from prior periods, on the date of adoption. The majority of this amount related to marketable equity securities which increased Retained earnings by ¥1,530 billion, net of tax, including any stranded tax amounts from prior periods, as cumulative-effect adjustment out of AOCI into Retained earnings. For additional information, see Note 3 “Investments,” Note 16 “Accumulated other comprehensive income
 (loss)
, net of tax,” Note 22 “Derivative financial instruments” and Note 27 “Fair value.” The impact of the adoption resulted in a cumulative-effect adjustment out of Retained earnings on April 1, 2018. Concerningto AOCI related to the instrument-specific credit risk for liabilities for which the fair value option has beenwas elected, which increased Retained earnings by ¥10 billion, net of tax, on April 1, 2018. For additional information, see Note 16 “Accumulated other comprehensive income
(loss)
, net of tax,” Note 19 “Income taxes” and Note 27 “Fair value.” The remaining ¥5 billion, net of tax, on April 1, 2018, related to equity securities that qualify for the adoptionpractical expedient to estimate fair value using the net asset value per share (or its equivalent), which were previously measured at cost.
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Table of ASU No.2016-01 will not have a material impact on the Group’s consolidated results of operations or financial condition.

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MIZUHO FINANCIAL GROUP, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
In February 2016, the FASB issued ASU
No.2016-02, “Leases
“Leases (Topic 842)” (“ASU
No.2016-02”).
The ASU requires lessees to recognize the assets and liabilities arising from leases on the balance sheet. Lessees should recognize liabilities to make lease payments and right-of-useROU assets representing its right to use the underlying assets for the lease term. This recognition applies to leases classified as operating leases and finance leases, and the update retains a distinction between finance leases and operating leases. However, the ASU has not changed the recognition, measurement, and presentation of expenses and cash flows arising from a lease by a lessee significantly. The ASU also requires qualitative disclosures along with specific quantitative disclosures including the amount, timing, and uncertainty of cash flows arising from leases. On April 1, 2019, the MHFG Group adopted ASU
No.2016-02
prospectively without adjustments to the comparative periods presented. The Group elected the package of practical expedients which permit an entity to not reassess whether existing contracts contain leases, lease classification for any existing leases, or initial direct costs for existing leases. At adoption, the Group recognized ROU assets and lease liabilities of approximately ¥0.6 trillion. The adoption of the ASU did not have material impact to the Group’s consolidated shareholders’ equity. See Note 1 “Basis of presentation and summary of significant accounting policies” and Note 23 “Commitments and contingencies” for further information.
In January 2017, the FASB issued ASU No.2017-04, “Intangibles—Goodwill and Other (Topic 350)—Simplifying the Test for Goodwill Impairment” (“ASU No.2017-04”). The ASU eliminates Step 2, under which an entity had to perform procedures to determine the fair value at the impairment testing date of its assets and liabilities, from the goodwill impairment test. Instead, under the ASU, an entity should perform its annual, or interim, goodwill impairment test by comparing the fair value of a reporting unit with its carrying amount and should recognize an impairment charge for the amount by which the carrying amount exceeds the reporting unit’s fair value. The MHFG Group early adopted ASU No.2017-04 in the second half of the fiscal year ended March 31, 2020. The adoption of ASU No.2017-04 did not have a material impact on the results of the Group’s goodwill impairment test.
In August 2017, the FASB issued ASU
No.2017-12,
“Derivatives and Hedging (Topic 815)—Targeted Improvements to Accounting for Hedging Activities” (“ASU
No.2017-12”).
The ASU amends the current accounting for derivatives and hedging to enable entities to better portray the economic results of risk management activities in the financial statements. Specifically, the amendments: (1) eliminate the separate measurement and reporting of hedge ineffectiveness, (2) expand the ability to hedge nonfinancial and financial risk components, and (3) provide an alternative method for measuring the hedged item in fair value hedges of interest rate risk. On April 1, 2019, the MHFG Group adopted ASU
No.2017-12
using a cumulative-effect adjustment to the balance sheet as of April 1, 2019. The adoption of ASU
No.2017-12
did not have a material impact on the Group’s consolidated results of operations or financial condition.
In February 2018, the FASB issued an exposure draft proposing an amendmentASU
No.2018-02,
“Income Statement—Reporting Comprehensive Income (Topic 220)—Reclassification of Certain Tax Effects from Accumulated Other Comprehensive Income” (“ASU
No.2018-02”).
The ASU allows a reclassification from accumulated other comprehensive income to retained earnings for stranded tax effects resulting from the Tax Cuts and Jobs Act. The MHFG Group adopted ASU
No.2018-02
on April 1, 2019. The adoption of ASU
No.2018-02
did not have a material impact on the Group’s consolidated results of operations or financial condition.
In October 2018, the FASB issued ASU
No.2018-16,
“Derivatives and Hedging (Topic 815)—Inclusion of the Secured Overnight Financing Rate (“SOFR”) Overnight Index Swap (“OIS”) Rate as a Benchmark Interest Rate for Hedge Accounting Purposes” (“ASU
No.2018-16”).
The ASU permits use of the OIS rate based on SOFR as a U.S. benchmark interest rate for hedge accounting purposes under Topic 815 in addition to the ASU that, if approved, would permit companies the option to apply the provisionsinterest rates on direct Treasury obligations of the ASU either prospectively asU.S. government (“UST”), the London Interbank Offered Rate (“LIBOR”)
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Table of the effective date, without adjusting comparative periods presented, or using a modified retrospective transition applicable to all prior periods presented. The ASU is effective for fiscal years beginning after December 15, 2018, including interim periods within those fiscal

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years. Early application is permitted.

swap rate, the OIS rate based on the Federal Funds Effective Rate, and the Securities Industry and Financial Markets Association (“SIFMA”) Municipal Swap Rate. The MHFG Group expects to adopt theadopted ASU and subsequent amendments
No.2018-16
on April 1, 2019 on a prospective basis. The adoption of ASU
No.2018-16
did not have a material impact on the Group’s consolidated results of operations or financial condition.
In March 2020, the FASB issued ASU
No.2020-04,
“Reference Rate Reform (Topic 848)—Facilitation of the Effects of Reference Rate Reform on Financial Reporting” (“ASU
No.2020-04”).
The ASU provides optional expedients and exceptions for contracts, hedging relationships, and other transactions affected by reference rate reform. The ASU is effective as of March 12, 2020 through December 31, 2022. The MHFG Group has not elected the relief; however, the Group expects to elect the relief prior to December 31, 2022 and is currently evaluating the potential impact that the adoptionrelief will have on itsthe Group’s consolidated results of operations andor financial condition,condition.
Accounting pronouncements issued but not yet effective as well as on its disclosures. The Group expects to gross up its consolidated balance sheets upon recognition of the right-of-use assets and lease liabilities, which will initially be measured using the present value of the remaining lease payments.

March 31, 2020

In June 2016, the FASB issued ASU
No.2016-13, “Financial
“Financial Instruments—Credit Losses (Topic 326)—Measurement of Credit Losses on Financial Instruments” (“ASU
No.2016-13”).
The ASU replaces the incurred loss impairment methodology in current U.S. GAAP with a methodology that reflects expected credit losses and requires consideration of a broader range of information such as relevant information about past events including historical experience, current conditions and reasonable and supportable forecasts that affect the collectability of the reported amount, for the purpose of informing credit loss estimates. The ASU requires a financial asset (or a group of financial assets) measured at amortized cost basis to be presented at the net amount expected to be collected. The income statement reflects the measurement of credit losses for newly recognized financial assets, as well as the expected increases or decreases of expected credit losses that have taken place during the period. The ASU also requires that credit losses on
available-for-sale
debt securities be presented as an allowance for credit losses rather than as a write-down, and limits the amount of the allowance for credit losses to the amount by which fair value is below amortized cost. In April 2019, the FASB issued ASU
No.2019-04,
“Codification Improvements to Topic 326, Financial Instruments—Credit Losses” (“ASU
No.2019-04”).
The ASU is effectiveclarifies the scope of the credit losses standard and address issues related to accrued interest receivable balances, recoveries, variable interest rates and prepayments, among other things. In May 2019, the FASB issued ASU
No.2019-05,
“Financial Instruments—Credit Losses (Topic 326)—Targeted Transition Relief” (“ASU
No.2019-05”).
The ASU provides an option to irrevocably elect the fair value option for fiscal years beginning after December 15,certain financial assets previously measured at amortized cost basis. In November 2019, the FASB issued ASU
No.2019-11,
“Codification Improvements to Topic 326, Financial Instruments—Credit Losses (Topic 326)” (“ASU
No.2019-11”).
The ASU clarifies or addresses specific issues about certain aspects of the amendments in ASU
No.2016-13,
such as expected recoveries for purchased financial assets with credit deterioration and financial assets secured by collateral maintenance provisions. The MHFG Group adopted ASU
No.2016-13,
2019-04,
2019-05,
and
2019-11
on April 1, 2020 using a modified retrospective approach. The Group anticipates an increase to the Allowance for credit losses (previously Allowance for loan losses) of approximately 40% with a corresponding charge to
R
etained earnings upon adoption of the ASUs on April 1, 2020. The Group continues to refine its estimate, including interim periods within those fiscal years,further consideration of potential impact of COVID-19, and the Group continues to implement post adoption operational processes and internal controls. Additionally, as of April 1, 2020
,
the
Group did not elect the fair value option for certain financial assets measured at amortized cost basis.
In August 2018, the FASB issued ASU
No.2018-13,
“Fair Value Measurement (Topic 820)—Disclosure Framework—Changes to the Disclosure Requirements for Fair Value Measurement” (“ASU
No.2018-13”).
The ASU modifies the disclosure requirements for fair value measurements in order to improve the effectiveness of the notes to financial statements. The ASU mainly adds the disclosure requirements to report the changes in unrealized gains and losses for the period included in other comprehensive income for recurring Level 3 fair value measurements held at the end of the reporting period and the range and weighted average or other 
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Table of Contents
MIZUHO FINANCIAL GROUP, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
quantitative information of significant unobservable inputs used to develop Level 3 fair value measurements. The MHFG Group adopted ASU
No.2018-13
on April 1, 2020. The amendments require additional disclosure on changes in unrealized gains and losses, the range and weighted average of significant unobservable inputs used to develop Level 3 fair value measurements, and the narrative description of measurement uncertainty. Certain of the requirements will be applied prospectively, and other amendments will be applied retrospectively. The adoption of the ASU did not have a material impact on the Group.
In August 2018, the FASB issued ASU
No.2018-14,
“Compensation—Retirement Benefits—Defined Benefit Plans—General (Subtopic
715-20)—Disclosure
Framework—Changes to the Disclosure Requirements for Defined Benefit Plans” (“ASU
No.2018-14”).
The amendments in this update remove disclosures that no longer are considered cost beneficial, clarify the specific requirements of disclosures, and add disclosure requirements identified as relevant. Mainly, the ASU removes the disclosure requirement of the amounts in accumulated other comprehensive income expected to be recognized as components of net periodic benefit cost over the next fiscal year, and adds the disclosure requirement of the weighted-average interest crediting rates for cash balance plans and other plans with promised interest crediting rates. The MHFG Group adopted ASU
No.2018-14
on April 1, 2020. The requirements will be applied retrospectively on the Group’s disclosures for the fiscal year end
e
d
 March 31, 2020. The adoption of ASU
No.2018-14
did not have a material impact on the Group.
In October 2018, the FASB issued ASU
No.2018-17,
“Consolidation (Topic 810)—Targeted Improvements to Related Party Guidance for Variable Interest Entities” (“ASU
No.2018-17”).
The ASU requires indirect interests held through related parties in common control arrangements to be considered on a proportional basis for determining whether fees paid to decision makers and service providers are variable interests. The MHFG Group adopted ASU
No.2018-17
on April 1, 2020 using a cumulative-effect adjustment to retainedRetained earnings as of the beginning of the first reporting period in which the guidance is effective. Early application is permitted as of the fiscal years beginning after December 15, 2018, including interim periods within those fiscal years. The MHFG Group is currently evaluating the potential impact that the adoption of ASU No.2016-13 will have on its consolidated results of operations and financial condition.

In October 2016, the FASB issued ASU No.2016-16, “Income Taxes (Topic 740)—Intra-Entity Transfers of Assets Other Than Inventory” (“ASU No.2016-16”). The ASU requires recognition of current and deferred income taxes in an intra-entity transfer of an asset other than inventory when the transfer occurs although current U.S. GAAP has prohibited the recognition of income tax consequences of the transfer until the asset has been sold to an outside party. The ASU does not include new disclosure requirements; however, existing disclosure requirements might be applicable when accounting for the current and deferred income taxes for an intra-entity transfer of an asset other than inventory. The ASU is effective for fiscal years beginning after December 15, 2017, and interim periods within those fiscal years, and should be applied using a cumulative-effect adjustment to retained earnings as of the beginning of the fiscal year of adoption. Early application is permitted for all entities as of the beginning of a fiscal year for which financial statements (interim or annual) have not been issued or made available for issuance. The MHFG Group adopted ASU No.2016-16 on April 1, 2018.2020. The adoption of ASU No. 2016-16 will

No.2018-17
did not have a material impact on the Group’s consolidated results of operations or financial condition.

In January 2017, the FASB issued ASU No.2017-04, “Intangibles—Goodwill and Other (Topic 350)—Simplifying the Test for Goodwill Impairment” (“ASU No.2017-04”). The ASU eliminates Step 2, under which an entity had to perform procedures to determine the fair value at the impairment testing date

F-
27
Table of its assets and liabilities, from the goodwill impairment test. Instead, under the ASU, an entity should perform its annual, or interim, goodwill impairment test by comparing the fair value of a reporting unit with its carrying amount. The ASU is effective for annual or interim goodwill impairment tests in fiscal years beginning after December 15, 2019. Early application is permitted for interim or annual goodwill impairment tests performed on testing dates after January 1, 2017. The MHFG Group is currently evaluating the potential impact that the adoption of ASU No. 2017-04 will have on its consolidated results of operations and financial condition.

In May 2017, the FASB issued ASU No.2017-09, “Compensation—Stock Compensation (Topic 718)—Scope of Modification Accounting” (“ASU No.2017-09”). The ASU provides clarity and reduces both (1) diversity in

Contents

MIZUHO FINANCIAL GROUP, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

practice and (2) cost and complexity when applying the guidance in Topic 718, Compensation—Stock Compensation, to a change to the terms or conditions of a share-based payment award. The ASU provides guidance about which changes to the terms or conditions of a share-based payment award require an entity to apply modification accounting in Topic 718. An entity should account for the effects of a modification unless all the following factors of the award are the same before and after the modification: (1) the fair value, (2) the vesting conditions and (3) the classification as an equity or a liability instrument. The current disclosure requirements in Topic 718 apply regardless of whether an entity is required to apply modification accounting under the ASU. The ASU is effective for all entities for annual periods, and interim periods within those annual periods, beginning after December 15, 2017, and should be applied prospectively to an award modified on or after the adoption date. Early application is permitted, including adoption in any interim period, for reporting periods for which financial statements have not yet been issued. The MHFG Group adopted ASU No.2017-09 on April 1, 2018. The adoption of ASU No. 2017-09 will not have a material impact on the Group’s consolidated results of operations or financial condition.

In August 2017, the FASB issued ASU No.2017-12, “Derivatives and Hedging (Topic 815)—Targeted Improvements to Accounting for Hedging Activities” (“ASU No.2017-12”). The ASU amends the current accounting for derivatives and hedging to enable entities to better portray the economic results of risk management activities in the financial statements. Specifically, the amendments: (1) eliminate the separate measurement and reporting of hedge ineffectiveness, (2) expand the ability to hedge nonfinancial and financial risk components, and (3) provide an alternative method for measuring the hedged item in fair value hedges of interest rate risk. The ASU is effective for fiscal years beginning after December 15, 2018, and interim periods within those fiscal years, and should be applied using a cumulative-effect adjustment to the balance sheet as of the beginning of the fiscal year of adoption. Early application is permitted, including adoption in any interim period. The MHFG Group is currently evaluating the potential impact that the adoption of ASU No.2017-12 will have on its consolidated results of operations and financial condition.

In February 2018, the FASB issued ASU No.2018-02, “Income Statement—Reporting Comprehensive Income (Topic 220)—Reclassification of Certain Tax Effects from Accumulated Other Comprehensive Income” (“ASU No.2018-02”). The ASU allows a reclassification from accumulated other comprehensive income to retained earnings for stranded tax effects resulting from the Tax Cuts and Jobs Act. The ASU is effective for fiscal years beginning after December 15, 2018, and interim periods within those fiscal years, and should be applied either in the period of adoption or retrospectively to each period (or periods) in which the effect of the change in the U.S. federal corporate income tax rate in the Tax Cuts and Jobs Act is recognized. Early application is permitted, including adoption in any interim period, for reporting periods for which financial statements have not yet been issued. The MHFG Group does not expect that the adoption of ASU No. 2018-02 will have a material impact on its consolidated results of operations or financial condition.

3. Business combination

Integration among asset management companies

On October 1, 2016, DIAM Co., Ltd. (“DIAM”), MHTB, Mizuho Asset Management Co., Ltd. (“MHAM”) Investments

Available-for-sale
and Shinko Asset Management Co., Ltd. (“Shinko Asset Management”) (collectively, the “Integrating Companies”) integrated their asset management functions pursuant to an integration agreement signed on July 13, 2016. The integration was implemented through the following steps: (i) a merger between MHAM as surviving company and Shinko Asset Management as absorbed company; (ii) a company split between MHTB and MHAM (after the merger in (i) above) as successor company whereby rights and obligations attributed to Asset Management Division of MHTB were transferred to MHAM; and (iii) a merger between DIAM as surviving company and MHAM as absorbed company. After the integration, DIAM was renamed Asset Management One.

held-to-maturity

securities

MIZUHO FINANCIAL GROUP, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

As of September 30, 2016, MHAM was a wholly-owned subsidiary of MHFG and DIAM was an equity method affiliate of the MHFG Group which owned 50.0% of the voting equity interests. DIAM was a joint venture of MHFG and Dai-ichi Life Holdings, Inc. (“Dai-ichi Life”, formerly The Dai-ichi Life Insurance Company, Limited), and the rest of the interests of DIAM was owned by Dai-ichi Life. On October 1, 2016, MHFG exchanged 30.0% of the voting equity interests in MHAM (after the split in (ii) above) for voting equity interests and non-voting equity interests in DIAM. As a result of the exchange, MHFG acquired 51.0% of the voting rights and 70.0% of the economic interests in Asset Management One, which became a consolidated subsidiary of the Group.

Based on the strong commitment of MHFG and Dai-ichi Life to strengthen and develop their respective asset management businesses, Asset Management One aims to achieve significant development as a global asset management company, providing its customers with high-quality solutions by combining the asset management-related knowledge and experience accumulated and developed by each of the Integrating Companies over many years, and by taking full advantage of collaboration with both the MHFG Group and the Dai-ichi Life group. The MHFG Group recognized goodwill at the acquisition date. The goodwill was not allocated to the reportable segments in Note 32 “Business segment information”. The MHFG Group allocated the entire amount of the goodwill to the Asset Management One reporting unit for the purpose of assessing impairment. None of the goodwill recognized is deductible for tax purposes.

MIZUHO FINANCIAL GROUP, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

The following table summarizes the consideration paid for DIAM and the amounts of the acquired assets and assumed liabilities recognized at the acquisition date, as well as the fair value at the acquisition date of the noncontrolling interest in DIAM. There were no material acquisition-related costs that were recognized separately from the acquisition of the assets and the assumption of the liabilities.

At October 1,
2016

(in millions of yen)

Consideration:

Equity instruments (1,038,408 common shares of MHAM)

28,842

Fair value of total consideration transferred

28,842

Fair value of equity interests in DIAM held by MHFG before the business combination

72,106

100,948

Recognized amounts of identifiable assets acquired:

Cash and due from banks

831

Interest-bearing deposits in other banks

12,873

Trading account assets

266

Investments

12,234

Premises and equipment-net

3,546

Accrued income

7,882

Intangible assets(Note)

53,037

Deferred tax assets

1,003

Other assets

2,208

Recognized amounts of identifiable liabilities assumed:

Trading account liabilities

304

Income taxes payable

918

Deferred taxes liabilities

16,238

Accrued expenses

5,392

Other liabilities

3,041

Total identifiable net assets

67,987

Goodwill

76,225

Noncontrolling interest in DIAM

43,264

100,948

Note:Amount represents customer relationships subject to amortization, of which the weighted-average amortization period is 16.9 years.

The fair value of the equity interests in DIAM held by MHFG before the business combination (¥72,106 million), the fair value of the 1,038,408 common shares of MHAM as the consideration paid for DIAM (¥28,842 million) and the fair value of the noncontrolling interest in DIAM (¥43,264 million) were determined with reference to an independent third-party appraisal by applying the income approach and the market approach. The income approach was based on the discounted future cash flows of DIAM and MHAM and the market approach was based on market values, earnings and revenues of public companies comparable to DIAM and MHAM. A discount for lack of control was not considered in determining the fair value of the noncontrolling interest, which

MIZUHO FINANCIAL GROUP, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

is entirely held by Dai-Ichi Life, as the economic benefits of DIAM are expected to be divided proportionately between MHFG and Dai-Ichi Life based on their respective economic interests.

On October 1, 2016, the MHFG Group recognized a gain of ¥56,226 million as a result of remeasuring to fair value its 50.0% of the voting equity interests in DIAM held before the business combination. The gain is included in Other noninterest income in the Group’s consolidated statement of income for the fiscal year ended March 31, 2017. In addition, the MHFG Group recognized an increase in Common stock of ¥23,829 million as a result of remeasuring to fair value its 30.0% of the voting equity interests in MHAM held before the business combination due to the change in the voting equity interests in MHAM on October 1, 2016.

The revenue and earnings of Asset Management One since the acquisition date included in the Group’s consolidated statement of income for the fiscal year ended March 31, 2017 are not material. Other than the gain of ¥56,226 million described above, the revenue and earnings of the MHFG Group would not have differed significantly from those reported in the consolidated statements of income for the fiscal years ended March 31, 2016 and 2017 if the business combination had occurred as of the beginning of the fiscal year ended March 31, 2016.

4. Investments

Available-for-sale andheld-to-maturity securities

The amortized cost, gross unrealized gains and losses, and fair value of

available-for-sale
and
held-to-maturity
securities at March 31, 20172019 and 20182020 are as follows:

  Amortized cost  Gross unrealized
gains		  Gross unrealized
losses		  Fair value 
  

 

(in millions of yen)

 

2017

    

Available-for-sale securities:

    

Debt securities:

    

Japanese government bonds

  10,256,512   22,782   16,408   10,262,886 

Japanese local government bonds

  279,864   4,841   233   284,472 

U.S. Treasury bonds and federal agency securities

  1,148,389   10   4,578   1,143,821 

Other foreign government bonds

  933,942   1,246   236   934,952 

Agency mortgage-backed securities (1)

  832,738   15,500   5,441   842,797 

Residential mortgage-backed securities

  142,879   1,838   558   144,159 

Commercial mortgage-backed securities

  223,105   1,092   282   223,915 

Japanese corporate bonds and other debt securities (2)

  1,958,472   52,046   2,286   2,008,232 

Foreign corporate bonds and other debt securities (3)

  909,052   3,377   1,643   910,786 

Equity securities (marketable)

  1,528,808   2,273,883   1,593   3,801,098 
 

 

 

  

 

 

  

 

 

  

 

 

 

Total

  18,213,761   2,376,615   33,258   20,557,118 
 

 

 

  

 

 

  

 

 

  

 

 

 

Held-to-maturity securities:

    

Debt securities:

    

Japanese government bonds

  3,059,976   37,168   —     3,097,144 

Agency mortgage-backed securities(4)

  757,384   121   7,931   749,574 
 

 

 

  

 

 

  

 

 

  

 

 

 

Total

  3,817,360   37,289   7,931   3,846,718 
 

 

 

  

 

 

  

 

 

  

 

 

 

                 
 
Amortized cost
 
  
Gross unrealized
gains
 
  
Gross unrealized
losses
 
  
Fair value
 
 
 
 
(in millions of yen)
 
2019
  
   
   
   
 
Available-for-sale
securities:
  
   
   
   
 
Debt securities:
  
   
   
   
 
Japanese government bonds
  
11,888,510
   
11,259
   
2,998
   
11,896,771
 
Japanese local government bonds
  
208,308
   
1,671
   
87
   
209,892
 
U.S. Treasury bonds and federal agency securities
  
1,008,903
   
644
   
231
   
1,009,316
 
Other foreign government bonds
  
1,341,564
   
758
   
455
   
1,341,867
 
Agency mortgage-backed securities
(1)
  
530,540
   
14,524
   
593
   
544,471
 
Residential mortgage-backed securities
  
99,904
   
1,420
   
191
   
101,133
 
Commercial mortgage-backed securities
  
495,313
   
4,914
   
104
   
500,123
 
Japanese corporate bonds and other debt securities
  
1,743,309
   
7,686
   
1,561
   
1,749,434
 
Foreign corporate bonds and other debt securities
(2)
  
778,088
   
3,047
   
226
   
780,909
 
                 
Total
  
18,094,439
   
45,923
   
6,446
   
18,133,916
 
                 
Held-to-maturity
securities:
  
   
   
   
 
Debt securities:
  
   
   
   
 
Japanese government bonds
  
1,119,899
   
19,907
   
—  
   
1,139,806
 
Agency mortgage-backed securities
(3)
  
484,205
   
—  
   
14,423
   
469,782
 
                 
Total
  
1,604,104
   
19,907
   
14,423
   
1,609,588
 
                 
             
 
Amortized cost
  
Gross unrealized
gains
  
Gross unrealized
losses
  
Fair value
 
 
 
(in millions of yen)
 
2020
  
   
   
   
 
Available-for-sale
securities:
  
   
   
   
 
Debt securities:
  
   
   
   
 
Japanese government bonds
  
12,651,677
   
1,319
   
50,224
   
12,602,772
 
Japanese local government bonds
  
272,412
   
649
   
494
   
272,567
 
U.S. Treasury bonds and federal agency securities
  
927,172
   
7,733
   
—  
   
934,905
 
Other foreign government bonds
  
1,408,009
   
3,273
   
202
   
1,411,080
 
Agency mortgage-backed securities
(1)
  
494,958
   
10,490
   
434
   
505,014
 
Residential mortgage-backed securities
  
83,077
   
1,405
 �� 
151
   
84,331
 
Commercial mortgage-backed securities
  
609,559
   
5,551
   
106
   
615,004
 
Japanese corporate bonds and other debt securities
  
1,836,540
   
7,489
   
8,772
   
1,835,257
 
Foreign corporate bonds and other debt securities
(2)
  
849,595
   
2,595
   
168
   
852,022
 
                 
Total
  
19,132,999
   
40,504
   
60,551
   
19,112,952
 
                 
Held-to-maturity
securities:
  
   
   
   
 
Debt securities:
  
   
   
   
 
Japanese government bonds
  
479,936
   
13,357
   
—  
   
493,293
 
Agency mortgage-backed securities
(3)
  
382,095
   
1,245
   
1,303
   
382,037
 
                 
Total
  
862,031
   
14,602
   
1,303
   
875,330
 
                 

MIZUHO FINANCIAL GROUP, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

  Amortized cost  Gross unrealized
gains		  Gross unrealized
losses		  Fair value 
  

 

(in millions of yen)

 

2018

    

Available-for-sale securities:

    

Debt securities:

    

Japanese government bonds

  13,334,619   7,332   9,656   13,332,295 

Japanese local government bonds

  236,711   2,903   280   239,334 

U.S. Treasury bonds and federal agency securities

  689,297   109   3,557   685,849 

Other foreign government bonds

  1,057,852   1,043   1,102   1,057,793 

Agency mortgage-backed securities (1)

  882,686   13,356   7,628   888,414 

Residential mortgage-backed securities

  117,870   1,264   281   118,853 

Commercial mortgage-backed securities

  437,115   4,132   323   440,924 

Japanese corporate bonds and other debt securities (2)

  1,950,947   40,290   1,410   1,989,827 

Foreign corporate bonds and other debt securities (3)

  879,506   1,927   2,082   879,351 

Equity securities (marketable)

  1,595,106   2,449,173   11,291   4,032,988 
 

 

 

  

 

 

  

 

 

  

 

 

 

Total

  21,181,709   2,521,529   37,610   23,665,628 
 

 

 

  

 

 

  

 

 

  

 

 

 

Held-to-maturity securities:

    

Debt securities:

    

Japanese government bonds

  1,959,910   24,472   —     1,984,382 

Agency mortgage-backed securities(4)

  557,641   —     20,177   537,464 
 

 

 

  

 

 

  

 

 

  

 

 

 

Total

  2,517,551   24,472   20,177   2,521,846 
 

 

 

  

 

 

  

 

 

  

 

 

 

Notes :

Notes:
(1)Agency mortgage-backed securities presented in this line consist of Japanese and Foreign agency mortgage-backed securities, of which the fair values were ¥708,557¥517,330 million and ¥134,240¥27,141 million, respectively, at March 31, 2017,2019, and ¥742,565¥504,953 million and ¥145,849¥61 million, respectively, at March 31, 2018.2020. All Japanese agency mortgage-backed securities are issued by Japan Housing Finance Agency, a Japanese government-sponsored enterprise. Foreign agency mortgage-backed securities primarily consist of Government National Mortgage Association (“Ginnie Mae”) securities, which are guaranteed by the United States government.
(2)Other debt securities presented in this line primarily consist of Foreign negotiable certificates of deposit (“CDs”NCDs”), of which the total fair values were ¥155,138 million at March 31, 2017, and ¥106,101 million at March 31, 2018.
(3)Other debt securities presented in this line primarily consist of CDs and asset-backed securities (“ABS”), of which the total fair values were ¥258,059¥246,503 million at March 31, 2017,2019, and ¥313,164¥271,387 million at March 31, 2018.2020.
(4)(3)All Agency mortgage-backed securities presented in this line are Ginnie Mae securities.

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28
Table of Contents
MIZUHO FINANCIAL GROUP, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
Contractual maturities

The amortized cost and fair value of
available-for-sale
and
held-to-maturity debt
securities at March 31, 2018 by contractual maturity2020 are shown in the table below.below based on their contractual maturities. Expected maturities may differ from contractual maturities because borrowers may have the right to call or prepay obligations with or without penalties. Allsome securities including securitiesare not due at a single maturity date, and some securities, embedded with call or prepayment options, such as mortgage-backed securities, are included in the table below based on their contractual maturities.

contain embedded call or prepayment options.

                     
Amortized cost
 
Due in one
year or less
  
Due after one
year through
five years
  
Due after five
years through
ten years
  
Due after
ten years
  
Total
 
 
 
(in millions of yen)
 
Available-for-sale
securities:
  
   
   
   
   
 
Debt securities:
  
   
   
   
   
 
Japanese government bonds
  
5,872,058
   
4,980,539
   
1,753,300
   
45,780
   
12,651,677
 
Japanese local government bonds
  
11,530
   
171,825
   
84,528
   
4,529
   
272,412
 
U.S. Treasury bonds and federal agency securities
  
883,432
   
43,740
   
—  
   
—  
   
927,172
 
Other foreign government bonds
  
1,029,641
   
378,368
   
—  
   
—  
   
1,408,009
 
Agency mortgage-backed securities
  
—  
   
—  
   
—  
   
494,958
   
494,958
 
Residential mortgage-backed securities
  
—  
   
—  
   
—  
   
83,077
   
83,077
 
Commercial mortgage-backed securities
  
16,372
   
202,044
   
390,343
   
800
   
609,559
 
Japanese corporate bonds and other debt securities
  
98,532
   
868,704
   
545,320
   
323,984
   
1,836,540
 
Foreign corporate bonds and other debt securities
  
377,642
   
327,312
   
141,755
   
2,886
   
849,595
 
                     
Total
  
8,289,207
   
6,972,532
   
2,915,246
   
956,014
   
19,132,999
 
                     
Held-to-maturity
securities:
  
   
   
   
   
 
Debt securities:
  
   
   
   
   
 
Japanese government bonds
  
—  
   
479,936
   
—  
   
—  
   
479,936
 
Agency mortgage-backed securities
  
—  
   
—  
   
—  
   
382,095
   
382,095
 
                     
Total
  
—  
   
479,936
   
—  
   
382,095
   
862,031
 
                     
                
Fair value
 
Due in one
year or less
  
Due after one
year through
five years
  
Due after five
years through
ten years
  
Due after
ten years
  
Total
 
 
(in millions of yen)
 
Available-for-sale
securities:
  
   
   
   
   
 
Debt securities:
  
   
   
   
   
 
Japanese government bonds
  
5,872,485
   
4,963,282
   
1,722,090
   
44,915
   
12,602,772
 
Japanese local government bonds
  
11,537
   
172,052
   
84,443
   
4,535
   
272,567
 
U.S. Treasury bonds and federal agency securities
  
890,367
   
44,538
   
—  
   
—  
   
934,905
 
Other foreign government bonds
  
1,031,189
   
379,891
   
—  
   
—  
   
1,411,080
 
Agency mortgage-backed securities
  
—  
   
—  
   
—  
   
505,014
   
505,014
 
Residential mortgage-backed securities
  
—  
   
—  
   
—  
   
84,331
   
84,331
 
Commercial mortgage-backed securities
  
16,396
   
203,233
   
394,561
   
814
   
615,004
 
Japanese corporate bonds and other debt securities
  
98,589
   
868,675
   
544,559
   
323,434
   
1,835,257
 
Foreign corporate bonds and other debt securities
  
378,464
   
328,918
   
141,754
   
2,886
   
852,022
 
                     
Total
  
8,299,027
   
6,960,589
   
2,887,407
   
965,929
   
19,112,952
 
                     
Held-to-maturity
securities:
  
   
   
   
   
 
Debt securities:
  
   
   
   
   
 
Japanese government bonds
  
—  
   
493,293
   
—  
   
—  
   
493,293
 
Agency mortgage-backed securities
  
—  
   
—  
   
—  
   
382,037
   
382,037
 
                     
Total
  
—  
   
493,293
   
—  
   
382,037
   
875,330
 
                     

F-
29
Table of Contents
MIZUHO FINANCIAL GROUP, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

Amortized cost Due in one
year or less		  Due after one
year through
five years		  Due after five
years through
ten years		  Due after
ten years		  Total 
  

 

(in millions of yen)

 

Available-for-sale securities:

     

Debt securities:

     

Japanese government bonds

  6,288,570   5,024,258   1,922,141   99,650   13,334,619 

Japanese local government bonds

  31,962   118,445   81,541   4,763   236,711 

U.S. Treasury bonds and federal agency securities

  610,995   —     78,302   —     689,297 

Other foreign government bonds

  842,041   207,604   8,207   —     1,057,852 

Agency mortgage-backed securities

  —     —     —     882,686   882,686 

Residential mortgage-backed securities

  —     —     —     117,870   117,870 

Commercial mortgage-backed securities

  858   137,409   224,548   74,300   437,115 

Japanese corporate bonds and other debt securities

  312,046   1,067,186   409,419   162,296   1,950,947 

Foreign corporate bonds and other debt securities

  503,309   312,257   60,998   2,942   879,506 
 

 

 

  

 

 

  

 

 

  

 

 

  

 

 

 

Total

  8,589,781   6,867,159   2,785,156   1,344,507   19,586,603 
 

 

 

  

 

 

  

 

 

  

 

 

  

 

 

 

Held-to-maturity securities:

     

Debt securities:

     

Japanese government bonds

  840,030   740,103   379,777   —     1,959,910 

Agency mortgage-backed securities

  —     —     —     557,641   557,641 
 

 

 

  

 

 

  

 

 

  

 

 

  

 

 

 

Total

  840,030   740,103   379,777   557,641   2,517,551 
 

 

 

  

 

 

  

 

 

  

 

 

  

 

 

 

Fair value Due in one
year or less		  Due after one
year through
five years		  Due after five
years through
ten years		  Due after
ten years		  Total 
  

 

(in millions of yen)

 

Available-for-sale securities:

     

Debt securities:

     

Japanese government bonds

  6,286,075   5,026,020   1,920,660   99,540   13,332,295 

Japanese local government bonds

  32,020   119,496   82,991   4,827   239,334 

U.S. Treasury bonds and federal agency securities

  610,406   —     75,443   —     685,849 

Other foreign government bonds

  842,068   207,593   8,132   —     1,057,793 

Agency mortgage-backed securities

  —     —     —     888,414   888,414 

Residential mortgage-backed securities

  —     —     —     118,853   118,853 

Commercial mortgage-backed securities

  859   137,554   227,413   75,098   440,924 

Japanese corporate bonds and other debt securities

  312,303   1,102,032   411,127   164,365   1,989,827 

Foreign corporate bonds and other debt securities

  503,219   312,047   61,172   2,913   879,351 
 

 

 

  

 

 

  

 

 

  

 

 

  

 

 

 

Total

  8,586,950   6,904,742   2,786,938   1,354,010   19,632,640 
 

 

 

  

 

 

  

 

 

  

 

 

  

 

 

 

Held-to-maturity securities:

     

Debt securities:

     

Japanese government bonds

  841,850   746,088   396,444   —     1,984,382 

Agency mortgage-backed securities

  —     —     —     537,464   537,464 
 

 

 

  

 

 

  

 

 

  

 

 

  

 

 

 

Total

  841,850   746,088   396,444   537,464   2,521,846 
 

 

 

  

 

 

  

 

 

  

 

 

  

 

 

 

Other-than-temporary impairment

The MHFG Group performs periodic reviews to identify impaired securities in accordance with ASC 320, “Investments—Debt and Equity Securities” (“ASC 320”). For debt securities, in the cases where the MHFG Group has the intent to sell a debt security or more likely than not will be required to sell a debt security before the recovery of its amortized cost basis, the full amount of an other-than-temporary impairment loss is

MIZUHO FINANCIAL GROUP, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

recognized immediately through earnings. In other cases, the MHFG Group evaluates expected cash flows to be received and determines if a credit loss exists, and if so, the amount of an other-than-temporary impairment related to the credit loss is recognized in earnings, while the remaining decline in fair value is recognized in other comprehensive income, net of applicable taxes. ForEffective April 1, 2018, the

available-for-sale
category was eliminated for equity securities and, therefore, the other-than-temporary impairment review is not required for these securities. See Note 2 “Issued accounting pronouncements” for further details. Before the adoption of ASU
No.2016-01,
for equity securities, impairment iswas evaluated considering the length of time and extent to which the fair value hashad been below cost, the financial condition and near-term prospects of the issuers, as well as the MHFG Group’s ability and intent to hold these investments for a reasonable period of time sufficient for a forecasted recovery of fair value. If an equity security iswas deemed other-than-temporarily impaired, it shall bewas written down to fair value, with the full decline recognized in earnings.

The following table shows the other-than-temporary impairment losses on
available-for-sale
securities for the fiscal years year
s
ended March 31, 2016, 20172018, 2019 and 2018. No2020 were not significant. NaN impairment losses were recognized on
held-to-maturity
securities for the periods.

   2016   2017   2018 
   

 

(in millions of yen)

 

Available-for-sale securities:

      

Debt securities

   4,020    138    1,015 

Equity securities

   34,041    12,029    3,080 
  

 

 

   

 

 

   

 

 

 

Total

   38,061    12,167    4,095 
  

 

 

   

 

 

   

 

 

 

For the fiscal year ended March 31, 2018, the other-than-temporary impairment losses on debt securities were attributable to the decline in the fair value

F-
30
Table of certain Japanese corporate bonds in respect of which the MHFG Group determined credit losses existed. In accordance with ASC320-10-35-33A and ASC320-10-35-34B, the other-than-temporary impairment on these securities was recognized in earnings. The total other-than-temporary impairment met the criteria to be immediately recorded in earnings and no portion was recognized in other comprehensive income.

The other-than-temporary impairment losses on equity securities were mainly attributable to the decline in the fair value of certain Japanese equity securities.

Contents

MIZUHO FINANCIAL GROUP, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

Continuous unrealized loss position

The following table shows the gross unrealized losses and fair value of
available-for-sale
and
held-to-maturity
securities, aggregated by the length of time that individual securities have been in a continuous unrealized loss position, at March 31, 20172019 and 2018:

  Less than 12 months  12 months or more  Total 
  Fair
value		  Gross
unrealized
losses		  Fair
value		  Gross
unrealized
losses		  Fair
value		  Gross
unrealized
losses		 
  

 

(in millions of yen)

 

2017

 

Available-for-sale securities:

      

Debt securities:

      

Japanese government bonds

  5,574,649   15,796   95,612   612   5,670,261   16,408 

Japanese local government bonds

  58,700   233   —     —     58,700   233 

U.S. Treasury bonds and federal agency securities

  1,013,962   4,578   —     —     1,013,962   4,578 

Other foreign government bonds

  334,300   230   8,327   6   342,627   236 

Agency mortgage-backed securities (1)

  195,887   3,705   42,501   1,736   238,388   5,441 

Residential mortgage-backed securities

  5,873   3   28,994   555   34,867   558 

Commercial mortgage-backed securities

  8,314   218   17,634   64   25,948   282 

Japanese corporate bonds and other debt securities

  470,602   2,062   158,713   224   629,315   2,286 

Foreign corporate bonds and other debt securities

  202,347   1,353   77,699   290   280,046   1,643 

Equity securities (marketable)

  30,688   383   4,117   1,210   34,805   1,593 
 

 

 

  

 

 

  

 

 

  

 

 

  

 

 

  

 

 

 

Total

  7,895,322   28,561   433,597   4,697   8,328,919   33,258 
 

 

 

  

 

 

  

 

 

  

 

 

  

 

 

  

 

 

 

Held-to-maturity securities:

      

Debt securities:

      

Agency mortgage-backed securities (2)

  460,882   3,518   259,466   4,413   720,348   7,931 
 

 

 

  

 

 

  

 

 

  

 

 

  

 

 

  

 

 

 

Total

  460,882   3,518   259,466   4,413   720,348   7,931 
 

 

 

  

 

 

  

 

 

  

 

 

  

 

 

  

 

 

 

2018

 

Available-for-sale securities:

      

Debt securities:

      

Japanese government bonds

  8,052,820   3,716   2,868,078   5,940   10,920,898   9,656 

Japanese local government bonds

  28,827   139   58,998   141   87,825   280 

U.S. Treasury bonds and federal agency securities

  515,005   3,557   —     —     515,005   3,557 

Other foreign government bonds

  419,648   1,030   68,359   72   488,007   1,102 

Agency mortgage-backed securities (1)

  45,434   1,116   188,326   6,512   233,760   7,628 

Residential mortgage-backed securities

  11,336   14   16,129   267   27,465   281 

Commercial mortgage-backed securities

  68,723   242   7,835   81   76,558   323 

Japanese corporate bonds and other debt securities

  563,831   933   403,069   477   966,900   1,410 

Foreign corporate bonds and other debt securities

  358,410   888   87,472   1,194   445,882   2,082 

Equity securities (marketable)

  338,243   11,249   366   42   338,609   11,291 
 

 

 

  

 

 

  

 

 

  

 

 

  

 

 

  

 

 

 

Total

  10,402,277   22,884   3,698,632   14,726   14,100,909   37,610 
 

 

 

  

 

 

  

 

 

  

 

 

  

 

 

  

 

 

 

Held-to-maturity securities:

      

Debt securities:

      

Agency mortgage-backed securities (2)

  30,589   766   506,875   19,411   537,464   20,177 
 

 

 

  

 

 

  

 

 

  

 

 

  

 

 

  

 

 

 

Total

  30,589   766   506,875   19,411   537,464   20,177 
 

 

 

  

 

 

  

 

 

  

 

 

  

 

 

  

 

 

 

Notes:
2020:
                         
 
Less than 12 months
  
12 months or more
  
Total
 
 
Fair
value
  
Gross
unrealized
losses
  
Fair
value
  
Gross
unrealized
losses
  
Fair
value
  
Gross
unrealized
losses
 
 
(in millions of yen)
 
2019
 
 
Available-for-sale
securities:
  
   
   
   
   
   
 
Debt securities:
  
   
   
   
   
   
 
Japanese government bonds
  
2,296,536
   
1,441
   
1,332,688
   
1,557
   
3,629,224
   
2,998
 
Japanese local government bonds
  
9,752
   
32
   
38,873
   
55
   
48,625
   
87
 
U.S. Treasury bonds and federal agency securities
  
506,176
   
231
   
—
   
—
   
506,176
   
231
 
Other foreign government bonds
  
438,771
   
321
   
26,782
   
134
   
465,553
   
455
 
Agency mortgage-backed securities
(1)
  
466
   
2
   
37,706
   
591
   
38,172
   
593
 
Residential mortgage-backed securities
  
—
   
—
   
16,729
   
191
   
16,729
   
191
 
Commercial mortgage-backed securities
  
11,256
   
44
   
36,760
   
60
   
48,016
   
104
 
Japanese corporate bonds and other debt securities
  
417,825
   
924
   
440,937
   
637
   
858,762
   
1,561
 
Foreign corporate bonds and other debt securities
  
129,164
   
142
   
79,716
   
84
   
208,880
   
226
 
                         
Total
  
3,809,946
   
3,137
   
2,010,191
   
3,309
   
5,820,137
   
6,446
 
                         
Held-to-maturity
securities:
  
   
   
   
   
   
 
Debt securities:
  
   
   
   
   
   
 
Agency mortgage-backed securities
(2)
  
—
   
—
   
469,782
   
14,423
   
469,782
   
14,423
 
                         
Total
  
—
   
—
   
469,782
   
14,423
   
469,782
   
14,423
 
                         
    
2020
 
 
Available-for-sale
securities:
  
   
   
   
   
   
 
Debt securities:
  
   
   
   
   
   
 
Japanese government bonds
  
10,339,320
   
43,204
   
283,561
   
7,020
   
10,622,881
   
50,224
 
Japanese local government bonds
  
162,665
   
418
   
34,114
   
76
   
196,779
   
494
 
U.S. Treasury bonds and federal agency securities
  
—  
   
—  
   
—  
   
—  
   
—  
   
—  
 
Other foreign government bonds
  
196,990
   
202
   
—  
   
—  
   
196,990
   
202
 
Agency mortgage-backed securities
(1)
  
30,913
   
227
   
9,504
   
207
   
40,417
   
434
 
Residential mortgage-backed securities
  
9,524
   
62
   
5,450
   
89
   
14,974
   
151
 
Commercial mortgage-backed securities
  
15,115
   
85
   
7,478
   
21
   
22,593
   
106
 
Japanese corporate bonds and other debt securities
  
669,572
   
5,507
   
608,361
   
3,265
   
1,277,933
   
8,772
 
Foreign corporate bonds and other debt securities
  
152,058
   
165
   
5,564
   
3
   
157,622
   
168
 
                         
Total
  
11,576,157
   
49,870
   
954,032
   
10,681
   
12,530,189
   
60,551
 
                         
Held-to-maturity
securities:
  
   
   
   
   
   
 
Debt securities:
  
   
   
   
   
   
 
Agency mortgage-backed securities
(2)
  
—  
   
—  
   
191,244
   
1,303
   
191,244
   
1,303
 
                         
Total
  
—  
   
—  
   
191,244
   
1,303
   
191,244
   
1,303
 
                         
F-
31
Table of Contents
MIZUHO FINANCIAL GROUP, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
Notes:
(1)Agency mortgage-backed securities presented in this line consist of Japanese and Foreign agency mortgage-backed securities, of which the fair values were ¥104,270¥11,107 million and ¥134,118¥27,065 million, respectively, at March 31, 2017,2019, and ¥88,017¥40,417 million and ¥145,743¥0 million, respectively, at March 31, 2018.2020. All Japanese agency mortgage-backed securities are issued by Japan Housing Finance Agency, a Japanese government-sponsored enterprise. Foreign agency mortgage-backed securities primarily consist of Ginnie Mae securities, which are guaranteed by the United States government.
(2)All Agency mortgage-backed securities presented in this line are Ginnie Mae securities.

MIZUHO FINANCIAL GROUP, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

At March 31, 2018,2020, the MHFG Group did not intend to sell the debt securities in an unrealized loss position and it was not more likely than not that the MHFG Group would be required to sell them before the recovery of their amortized cost bases. For Japanese government bonds U.S. Treasury bonds and federal agency securities and Agency mortgage-backed securities, their entire amortized cost bases were expected to be recovered since the unrealized losses had not resulted from credit deterioration, but primarily from changes in interest rates. For the debt securities other than those described above, including Japanese corporate bonds with similarexcept for the securities for which credit risks as the other-than-temporarily impaired securities,losses have been recognized in income, the MHFG Group determined that their entire amortized cost bases were expected to be recovered, after considering various factors such as the extent to which their fair values were below their amortized cost bases, the external and/or internal ratings and the present values of cash flows expected to be collected. Based on the aforementioned evaluation, except for the securities for which credit losses have been recognized in income, the MHFG Group determined that the debt securities in an unrealized loss position were not considered other-than-temporarily impaired.

The equity securities in an unrealized loss position were determined not to be other-than-temporarily impaired based on the evaluation of the following factors: (1) the severity and duration of the impairments, (2) the financial condition and near-term prospects of the issuers, and (3) the MHFG Group’s ability and intent to hold these investments for a reasonable period of time sufficient for a forecasted recovery of fair value.

Realized gains and losses

The following table shows the realized gains and losses on sales of
available-for-sale
securities for the fiscal years ended March 31, 2016, 20172018, 2019 and 2018.2020. See “Consolidated Statements of Cash Flows for the fiscal years ended March 31, 2016, 20172018, 2019 and 2018”2020” for the proceeds from sales of investments,investments.
             
 
2018
  
2019
(Note)
  
2020
(Note)
 
 
 
(in millions of yen)
 
Gross realized gains
  
 314,948
   
   23,777
   
   41,903
 
Gross realized losses
  
(41,044
)  
(26,299
)  
(13,398
)
             
Net realized gains (losses) on sales of
available-for-sale
securities
  
273,904
   
(2,522
)  
28,505
 
             
Note:Effective April 1, 2018, the
available-for-sale
category was eliminated for equity securities, and gains and losses on these securities are not included for the fiscal years ended March 31, 2019 and 2020 columns in this table. See Note 2 “Issued accounting pronouncements” for further details.
Equity securities
Equity securities include securities which have readily determinable fair values, securities which qualify for the vast majoritypractical expedient to estimate fair value using the net asset value per share (or its equivalent), and securities which are without readily determinable fair values. Equity securities which have readily determinable fair values mainly consist of which consistscommon stock of Japanese listed companies. Equity securities without readily determinable fair values include
non-marketable
stock including preferred stock issued by equity method investees.
F-
32
Table of Contents
MIZUHO FINANCIAL GROUP, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
Net gains and losses
The following table shows the details of the proceedsnet gains and losses on Equity securities for the fiscal years ended March 31, 2019 and 2020:
         
 
2019
  
2020
 
 
(in millions of yen)
 
Net gains (losses) recognized during the period on equity securities
  
(155,947
)  
(557,391
)
Less: Net gains (losses) recognized during the period on equity securities sold during the period
  
34,034
   
1,710
 
         
Unrealized gains (losses) recognized during the reporting period on equity securities still held at the reporting period
  
(189,981
)  
(559,101
)
         
Equity securities without readily determinable fair values
The following table shows carrying amounts of equity securities without readily determinable fair values, for which the measurement alternative is used, and cumulative amounts due to downward adjustments and impairments and upward adjustments, at March 31, 2019 and 2020:
         
 
2019
  
2020
 
 
(in millions of yen)
 
Carrying amounts at the end of the period
  
 212,270
     
 419,775
   
Downward adjustments and impairments
  
1,413
   
2,435
 
Upward adjustments
  
2,373
   
9,128
 
The following table shows amounts recognized in earnings during the period due to downward adjustments and impairments and upward adjustments for equity securities without readily determinable fair values.
         
 
2019
  
2020
 
 
(in millions of yen)
 
Downward adjustments and impairments
  
     1,413
     
     1,272
   
Upward adjustments
  
2,373
   
6,928
 
The MHFG Group elected to measure all equity securities without readily determinable fair values, which do not qualify for the practical expedient to estimate fair value, using the measurement alternative, which is made on an
instrument-by-instrument
basis. Under the measurement alternative, equity securities are carried at cost plus or minus changes resulting from salesobservable price changes in orderly transactions for the identical or similar securities ofavailable-for-sale securities.

   2016  2017  2018 
   

 

(in millions of yen)

 

Gross realized gains

   297,344   353,036   314,948 

Gross realized losses

   (45,376)   (21,163)   (41,044) 
  

 

 

  

 

 

  

 

 

 

Net realized gains (losses) on sales ofavailable-for-sale securities

   251,968   331,873   273,904 
  

 

 

  

 

 

  

 

 

 

the same issuer. In addition, the MHFG Group assesses whether these equity securities are impaired. Impairment is primarily based on a liquidation value technique that considers the financial condition, credit ratings, and near-term prospects of the issuers. When observable price changes or impairments exist, the securities are adjusted to fair value, with the full difference between the fair value of the security and its carrying amount recognized in earnings.

F-
33
Table of Contents
MIZUHO FINANCIAL GROUP, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
Other investments

The following table summarizes the composition of Other investments at March 31, 20172019 and 2018:

   2017   2018 
   

 

(in millions of yen)

 

Equity method investments

   249,679    280,666 

Investments held by consolidated investment companies

   37,462    37,735 

Other equity interests

   307,928    267,495 
  

 

 

   

 

 

 

Total

   595,069    585,896 
  

 

 

   

 

 

 

2020:

         
 
2019
  
2020
 
 
(in millions of yen)
 
Equity method investments
  
354,268
   
404,513
 
Investments held by consolidated investment companies
  
35,472
   
39,438
 
         
Total
  
     389,740
   
     443,951
 
         
Equity method investments

Investments in investees over which the MHFG Group has the ability to exert significant influence are accounted for using the equity method of accounting. Such investments included marketable equity securities with carrying values of ¥132,817¥201,034 million and ¥152,445¥213,243 million, at March 31, 20172019 and 2018,2020, respectively. The aggregate market values of these marketable equity securities were ¥273,249¥308,137 million and ¥324,239¥287,488 million, respectively.

MIZUHO FINANCIAL GROUP, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

The majority of the aggregate market values of these marketable equity securities are related toinclude Orient Corporation, the Chiba Kogyo Bank, Ltd.

,
 Joint Stock Commercial Bank for Foreign Trade of Vietnam
and
Mizuho
 Leas
ing Company, Limi
t
ed
of which the MHFG Group’s proportionate share of the total outstanding common stock waswere 49.0%, 16.89%
, 15.00%
and 23.52%, respectively, as of March 31, 2018.

2020. In addition, equity method investments include

non-marketable
equity securities such as Matthews International Capital Management, LLC
 and
 JTC Holdings, Ltd. of which the MHFG Group’s proportionate share of the total outstanding common stock were 16.25%
 and
 27.00%, respectively, as of March 31, 2020.
Investments held by consolidated investment companies

The MHFG Group consolidates certain investment companies over which it has control through either ownership or other means. Investment companies are subject to specialized industry accounting which requires investments to be carried at fair value, with changes in fair value recorded in earnings. The MHFG Group maintains this specialized industry accounting for investments held by consolidated investment companies, which consist of marketable and
non-marketable
investments.

Other equity interests

Other equity interests primarily consist ofnon-marketable equity securities outside the scope

F-
34
Table of ASC 320, of which the fair values are not readily determinable, nor practicable to estimate. Each of these securities is stated at acquisition cost, with an other-than-temporary impairment, if any, included in earnings. The MHFG Group monitors the status of each investee, including its credit rating, to determine whether impairment losses should be recognized.

5.Contents

MIZUHO FINANCIAL GROUP, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
4. Loans

The table below presents loans outstanding by domicile and industry of borrower at March 31, 20172019 and 2018:

   2017   2018 
   

 

(in millions of yen)

 

Domestic:

    

Manufacturing

   8,740,097    8,156,341 

Construction and real estate

   7,772,006    8,101,668 

Services

   4,748,974    5,024,018 

Wholesale and retail

   5,140,202    5,112,673 

Transportation and communications

   3,490,378    3,564,869 

Banks and other financial institutions

   4,006,387    4,471,423 

Government and public institutions

   8,532,246    8,882,125 

Other industries(Note)

   4,426,233    5,018,387 

Individuals:

    

Mortgage loans

   9,960,176    9,445,286 

Other

   839,841    883,724 
  

 

 

   

 

 

 

Total domestic

   57,656,540    58,660,514 
  

 

 

   

 

 

 

Foreign:

    

Commercial and industrial

   16,872,448    17,095,604 

Banks and other financial institutions

   6,759,921    6,739,846 

Government and public institutions

   959,948    1,127,740 

Other

   190,724    37,636 
  

 

 

   

 

 

 

Total foreign

   24,783,041    25,000,826 
  

 

 

   

 

 

 

Total

   82,439,581    83,661,340 

Less: Unearned income and deferred loan fees—net

   155,675    146,696 
  

 

 

   

 

 

 

Total loans before allowance for loan losses

   82,283,906    83,514,644 
  

 

 

   

 

 

 
2020:

         
 
2019
  
2020
 
 
(in millions of yen)
 
Domestic:
  
   
 
Manufacturing
  
9,553,854
   
9,731,028
 
Construction and real estate
  
8,950,577
   
9,603,433
 
Services
  
5,016,971
   
5,992,511
 
Wholesale and retail
  
5,159,356
   
5,219,727
 
Transportation and communications
  
3,693,491
   
3,832,884
 
Banks and other financial institutions
  
4,345,589
   
4,634,442
 
Government and public institutions
  
2,358,904
   
2,198,805
 
Other industries
(Note)
  
5,472,597
   
5,389,347
 
Individuals:
  
   
 
Mortgage loans
  
8,950,216
   
8,567,099
 
Other
  
907,589
   
861,235
 
         
Total domestic
  
54,409,144
   
56,030,511
 
         
Foreign:
  
   
 
Commercial and industrial
  
19,126,182
   
20,818,709
 
Banks and other financial institutions
  
9,086,721
   
10,475,277
 
Government and public institutions
  
296,872
   
317,284
 
Other
  
33,171
   
35,388
 
         
Total foreign
  
28,542,946
   
31,646,658
 
         
Total
  
82,952,090
   
87,677,169
 
Less: Unearned income and deferred loan fees—net
  
152,147
   
149,081
 
         
Total loans before allowance for loan losses
  
82,799,943
   
87,528,088
 
       

MIZUHO FINANCIAL GROUP, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

Note:Other industries of Domestic
d
omestic includes trade receivables and lease receivables of consolidated VIEs.

Net losses on sales of loans were ¥1,752¥87 million, ¥919¥2,018 million and ¥87 ¥1,036
million including unrealized losses related to recording loans held for sale at the lower of cost or fair value for the fiscal years ended March 31, 2016, 20172018, 2019 and 2018,2020, respectively. The gains and losses on sales of loans are recorded in Other noninterest income and expenses, respectively.

Credit quality information

In accordance with the MHFG Group’s credit risk management policies, the Group uses an internal rating system that consists of credit ratings for the corporate portfolio segment and pool allocations for the retail portfolio segment as the basis of its risk management infrastructure. Credit ratings consist of obligor ratings which represent the level of credit risk of the obligor, and transaction ratings which represent the ultimate possibility of incurring losses on individual loans by taking into consideration various factors such as collateral or guarantees involved. In principle, obligor ratings are applied to all obligors except those to which pool allocations are applied, and are subject to regular review at least once a year as well as special review which is required whenever the obligor’s credit standing changes. Pool allocations are applied to groups of small balance, homogeneous loans. The Group poolsloans that are less than a specified amount by pooling customers and loans with similar risk characteristics, and the risk is assessed mainly based on past due status and managed according to such pools. The Group generally reviews the appropriateness
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Table of Contents
MIZUHO FINANCIAL GROUP, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
and effectiveness of the approach to obligor ratings and pool allocations once a year in accordance with predetermined policies and procedures.

MIZUHO FINANCIAL GROUP, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

The table below presents the MHFG Group’s definition of obligor ratings used by MHBK and MHTB:

Obligor category (1)(2)

 Obligor rating 

Definition

Normal

 A
Obligor category
(1)(2)
 
Obligor rating
(3)
Definition
Normal
A
Obligors whose certainty of debt fulfillment is very high, hence their level of credit risk is very low.
 
B
 
Obligors whose certainty of debt fulfillment poses no problems for the foreseeable future, and their level of credit risk is low.
 
C
 
Obligors whose certainty of debt fulfillment and their level of credit risk pose no problems for the foreseeable future.
 
D
 
Obligors whose current certainty of debt fulfillment poses no problems, however, their resistance to future economic environmental changes is low.

Watch

 E1 
Watch
E1
Obligors that require observation going forward because of either minor concerns regarding their financial position, or their somewhat weak or unstable business conditions.
 
E2
 
Obligors that require special observation going forward because of problems with their borrowings such as reduced or suspended interest payments, problems with debt fulfillment such as failure to make principal or interest payments, or problems with their financial position as a result of their weak or unstable business conditions.

Intensive control

 F 
Intensive control
F
Obligors that are not yet bankrupt but are in financial difficulties and are deemed likely to become bankrupt in the future because of insufficient progress in implementing their management improvement plans or other measures (including obligors that are receiving ongoing support from financial institutions).

Substantially bankrupt

 G 
Substantially bankrupt
G
Obligors that have not yet become legally or formally bankrupt but are substantially insolvent because they are in serious financial difficulties and are deemed to be incapable of being restructured.

Bankrupt

 H 
Bankrupt
H
Obligors that have become legally or formally bankrupt.

Notes:
Notes:
(1)Special attention obligors are watch obligors with debt in TDR or 90 days or more delinquent debt. Loans to such obligors are considered impaired.
(2)The Group classifies loans to special attention, intensive control, substantially bankrupt and bankrupt obligors as impaired loans.

(3)Equivalent obligor ratings are determined for the other portfolio segment.
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MIZUHO FINANCIAL GROUP, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

The table below presents credit quality information of loans based on the MHFG Group’s internal rating system at March 31, 20172019 and 2018:

  Normal obligors  Watch obligors excluding
special attention obligors (1)		  Impaired
loans		  Total 
  Corporate  Retail (2)  Other (3)  Corporate  Retail (2)  Other (3)   
  

 

(in millions of yen)

 
2017                        

Domestic:

        

Manufacturing

  7,912,872   90,761   67,734   276,771   11,589   1,314   379,056   8,740,097 

Construction and real estate

  6,926,963   586,984   15,585   168,619   16,062   317   57,476   7,772,006 

Services

  4,381,342   181,525   910   95,434   23,189   204   66,370   4,748,974 

Wholesale and retail

  4,612,668   199,590   22,785   124,846   32,911   501   146,901   5,140,202 

Transportation and communications

  3,324,148   82,506   1,092   50,319   9,698   —     22,615   3,490,378 

Banks and other financial institutions

  3,938,132   1,880   37,907   21,574   353   —     6,541   4,006,387 

Government and public institutions

  4,060,949   —     4,471,297   —     —     —     —     8,532,246 

Other industries(4)

  2,463,390   3,275   1,906,756   4,613   410   41,179   6,610   4,426,233 

Individuals

  211,328   10,288,916   80,566   24,044   89,027   1,434   104,702   10,800,017 
 

 

 

  

 

 

  

 

 

  

 

 

  

 

 

  

 

 

  

 

 

  

 

 

 

Total domestic

  37,831,792   11,435,437   6,604,632   766,220   183,239   44,949   790,271   57,656,540 
 

 

 

  

 

 

  

 

 

  

 

 

  

 

 

  

 

 

  

 

 

  

 

 

 

Foreign:

        

Commercial and industrial

  14,125,338   173   2,153,757   312,275   —     90,722   190,183   16,872,448 

Banks and other financial institutions

  6,220,767   —     480,806   58,348   —     —     —     6,759,921 

Government and public institutions

  956,036   —     1,082   2,801   —     —     29   959,948 

Other

  6,535   9,439   173,464   124   8   753   401   190,724 
 

 

 

  

 

 

  

 

 

  

 

 

  

 

 

  

 

 

  

 

 

  

 

 

 

Total foreign

  21,308,676   9,612   2,809,109   373,548   8   91,475   190,613   24,783,041 
 

 

 

  

 

 

  

 

 

  

 

 

  

 

 

  

 

 

  

 

 

  

 

 

 

Total

  59,140,468   11,445,049   9,413,741   1,139,768   183,247   136,424   980,884   82,439,581 
 

 

 

  

 

 

  

 

 

  

 

 

  

 

 

  

 

 

  

 

 

  

 

 

 
2018                        

Domestic:

        

Manufacturing

  7,705,495   77,947   23,343   197,465   9,775   246   142,070   8,156,341 

Construction and real estate

  7,317,972   541,778   13,332   172,287   15,466   —     40,833   8,101,668 

Services

  4,535,793   172,045   141,718   95,223   21,109   55   58,075   5,024,018 

Wholesale and retail

  4,636,236   177,965   17,305   121,832   27,975   476   130,884   5,112,673 

Transportation and communications

  3,414,781   76,532   1,774   35,339   8,916   —     27,527   3,564,869 

Banks and other financial institutions

  4,244,101   1,640   196,431   16,716   194   —     12,341   4,471,423 

Government and public institutions

  3,010,708   —     5,871,417   —     —     —     —     8,882,125 

Other industries(4)

  2,716,502   3,536   2,170,442   2,708   259   121,201   3,739   5,018,387 

Individuals

  222,410   9,822,244   88,044   23,491   81,550   1,109   90,162   10,329,010 
 

 

 

  

 

 

  

 

 

  

 

 

  

 

 

  

 

 

  

 

 

  

 

 

 

Total domestic

  37,803,998   10,873,687   8,523,806   665,061   165,244   123,087   505,631   58,660,514 
 

 

 

  

 

 

  

 

 

  

 

 

  

 

 

  

 

 

  

 

 

  

 

 

 

Foreign:

        

Commercial and industrial

  14,093,375   209   2,432,189   398,231   —     64,950   106,650   17,095,604 

Banks and other financial institutions

  6,223,742   —     487,978   28,126   —     —     —     6,739,846 

Government and public institutions

  1,125,921   —     —     —     —     —     1,819   1,127,740 

Other

  1,906   9,245   23,730   242   6   1,347   1,160   37,636 
 

 

 

  

 

 

  

 

 

  

 

 

  

 

 

  

 

 

  

 

 

  

 

 

 

Total foreign

  21,444,944   9,454   2,943,897   426,599   6   66,297   109,629   25,000,826 
 

 

 

  

 

 

  

 

 

  

 

 

  

 

 

  

 

 

  

 

 

  

 

 

 

Total

  59,248,942   10,883,141   11,467,703   1,091,660   165,250   189,384   615,260   83,661,340 
 

 

 

  

 

 

  

 

 

  

 

 

  

 

 

  

 

 

  

 

 

  

 

 

 

Notes:
2020:
                                 
 
Normal obligors
  
Watch obligors excluding
special attention obligors
(1)
  
Impaired
loans
  
Total
 
 
Corporate
  
Retail
(2)
  
Other
(3)
  
Corporate
  
Retail
(2)
  
Other
(3)
 
 
 
(in millions of yen)
 
2019
                
                                 
Domestic:
  
   
   
   
   
   
   
   
 
Manufacturing
  
9,205,542
   
69,080
   
19,805
   
141,202
   
8,278
   
1,303
   
108,644
   
9,553,854
 
Construction and real estate
  
8,182,062
   
505,142
   
15,920
   
186,753
   
14,490
   
25
   
46,185
   
8,950,577
 
Services
  
4,665,709
   
165,643
   
3,281
   
90,178
   
18,586
   
1
   
73,573
   
5,016,971
 
Wholesale and retail
  
4,682,630
   
161,392
   
26,881
   
127,695
   
25,553
   
591
   
134,614
   
5,159,356
 
Transportation and communications
  
3,543,952
   
71,934
   
934
   
37,993
   
7,472
   
—  
   
31,206
   
3,693,491
 
Banks and other financial institutions
  
4,304,483
   
1,534
   
72
   
28,881
   
319
   
—  
   
10,300
   
4,345,589
 
Government and public institutions
  
2,358,899
   
5
   
—  
   
—  
   
—  
   
—  
   
—  
   
2,358,904
 
Other industries
(4)
  
3,126,217
   
2,450
   
2,323,197
   
7,725
   
421
   
3,633
   
8,954
   
5,472,597
 
Individuals
  
233,986
   
9,384,955
   
64,974
   
21,127
   
70,427
   
1,168
   
81,168
   
9,857,805
 
                                 
Total domestic
  
40,303,480
   
10,362,135
   
2,455,064
   
641,554
   
145,546
   
6,721
   
494,644
   
54,409,144
 
                                 
Foreign:
  
   
   
   
   
   
   
   
 
Commercial and industrial
  
16,101,326
   
182
   
2,488,800
   
347,060
   
—  
   
38,404
   
150,410
   
19,126,182
 
Banks and other financial institutions
  
8,583,432
   
—  
   
492,831
   
10,458
   
—  
   
—  
   
—  
   
9,086,721
 
Government and public institutions
  
296,870
   
—  
   
—  
   
—  
   
—  
   
—  
   
2
   
296,872
 
Other
  
1,480
   
9,713
   
19,690
   
333
   
—  
   
879
   
1,076
   
33,171
 
                                 
Total foreign
  
24,983,108
   
9,895
   
3,001,321
   
357,851
   
—  
   
39,283
   
151,488
   
28,542,946
 
                                 
Total
  
65,286,588
   
10,372,030
   
5,456,385
   
999,405
   
145,546
   
46,004
   
646,132
   
82,952,090
 
                                 
                                 
2020
  
   
   
   
   
   
   
   
 
                                 
Domestic:
  
   
   
   
   
   
   
   
 
Manufacturing
  
9,007,095
   
62,921
   
17,445
   
475,983
   
7,474
   
684
   
159,426
   
9,731,028
 
Construction and real estate
  
8,849,784
   
473,339
   
12,710
   
201,384
   
10,928
   
—  
   
55,288
   
9,603,433
 
Services
  
5,600,528
   
159,657
   
2,943
   
131,783
   
16,602
   
15
   
80,983
   
5,992,511
 
Wholesale and retail
  
4,766,460
   
145,568
   
17,156
   
119,778
   
22,363
   
873
   
147,529
   
5,219,727
 
Transportation and communications
  
3,692,025
   
65,535
   
395
   
44,250
   
7,664
   
303
   
22,712
   
3,832,884
 
Banks and other financial institutions
  
4,595,441
   
1,593
   
347
   
24,686
   
429
   
—  
   
11,946
   
4,634,442
 
Government and public institutions
  
2,198,796
   
9
   
—  
   
—  
   
—  
   
—  
   
—  
   
2,198,805
 
Other industries
(4)
  
3,106,282
   
2,684
   
2,230,748
   
15,238
   
372
   
15,038
   
18,985
   
5,389,347
 
Individuals
  
208,832
   
8,989,113
   
63,185
   
20,990
   
60,128
   
2,279
   
83,807
   
9,428,334
 
                                 
Total domestic
  
42,025,243
   
9,900,419
   
2,344,929
   
1,034,092
   
125,960
   
19,192
   
580,676
   
56,030,511
 
                                 
Foreign:
  
   
   
   
   
   
   
   
 
Commercial and industrial
  
17,806,263
   
284
   
2,526,317
   
314,273
   
—  
   
36,593
   
134,979
   
20,818,709
 
Banks and other financial institutions
  
9,745,247
   
—  
   
726,823
   
3,207
   
—  
   
—  
   
—  
   
10,475,277
 
Government and public institutions
  
303,393
   
—  
   
13,129
   
762
   
—  
   
—  
   
—  
   
317,284
 
Other
  
1,333
   
10,406
   
20,558
   
1,684
   
15
   
843
   
549
   
35,388
 
                                 
Total foreign
(5)
  
27,856,236
   
10,690
   
3,286,827
   
319,926
   
15
   
37,436
   
135,528
   
31,646,658
 
                                 
Total
  
69,881,479
   
9,911,109
   
5,631,756
   
1,354,018
   
125,975
   
56,628
   
716,204
   
87,677,169
 
                                 
Notes:
(1)Special attention obligors are watch obligors with debt in TDR or 90 days or more delinquent debt. Loans to such obligors are considered impaired.

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MIZUHO FINANCIAL GROUP, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

(2)Amounts represent small balance, homogeneousThe primary component of the retail portfolio segment is mortgage loans to individuals which are subjectobligor category is classified based on past due status. The trigger to pool allocations.reclassify obligors from normal obligors to watch obligors excluding special attention obligors is when the past due status is more than 30 days.
(3)
Non-impaired
loans held by subsidiaries other than MHBK and MHTB constitute Other,other, since their portfolio segments are not identical to those of MHBK and MHTB.
(4)Other industries of Domesticdomestic includes trade receivables and lease receivables of consolidated VIEs.

(5)Impaired loans to foreign borrowers decreased by ¥15,960 million due mainly to the sale of certain loans, partly offset by deterioration of credit status of certain other borrowers.
Impaired loans

The MHFG Group considers loans to be impaired when it is probable that the Group will be unable to collect all the scheduled payments of principal and interest when due according to the contractual terms of the loans. The Group classifies loans to special attention, intensive control, substantially bankrupt and bankrupt obligors as impaired loans, and all of the Group’s impaired loans are designated as nonaccrual loans. There are no loans that are ninety days past due and still accruing. The Group does not have any loans to borrowers that cause management to have serious doubts as to the ability of such borrowers to comply with the present loan repayment terms for the periods presented other than those already designated as impaired loans. The table below presents impaired loans information at March 31, 20172019 and 2018:

  Recorded investment (1)  Unpaid
principal
balance 		  Related
allowance (3)		  Average
recorded
investment		  Interest
income
recognized (4)		 
  Requiring an
allowance for
loan losses		  Not
requiring an
allowance
for loan
losses(2)		  Total     
  

 

(in millions of yen)

 

2017

                     

 

Domestic:

       

Manufacturing

  372,241   6,815   379,056   383,812   148,777   375,895   2,859 

Construction and real estate

  46,130   11,346   57,476   66,006   6,367   66,796   877 

Services

  58,366   8,004   66,370   72,261   20,122   66,050   1,173 

Wholesale and retail

  133,466   13,435   146,901   155,023   52,341   148,865   2,261 

Transportation and communications

  19,386   3,229   22,615   23,568   5,968   24,035   371 

Banks and other financial institutions

  2,601   3,940   6,541   6,873   962   5,305   50 

Other industries

  6,484   126   6,610   6,740   1,999   6,053   91 

Individuals

  51,893   52,809   104,702   114,880   4,935   114,104   1,696 
 

 

 

  

 

 

  

 

 

  

 

 

  

 

 

  

 

 

  

 

 

 

Total domestic

  690,567   99,704   790,271   829,163   241,471   807,103   9,378 
 

 

 

  

 

 

  

 

 

  

 

 

  

 

 

  

 

 

  

 

 

 

Foreign:

       

Total foreign (5)

  160,563   30,050   190,613   209,129   61,102   169,192   2,040 
 

 

 

  

 

 

  

 

 

  

 

 

  

 

 

  

 

 

  

 

 

 

Total

  851,130   129,754   980,884   1,038,292   302,573   976,295   11,418 
 

 

 

  

 

 

  

 

 

  

 

 

  

 

 

  

 

 

  

 

 

 

2018

                     

 

Domestic:

       

Manufacturing

  135,083   6,987   142,070   146,857   45,750   218,899   1,869 

Construction and real estate

  31,557   9,276   40,833   48,752   4,411   49,926   516 

Services

  48,691   9,384   58,075   64,348   13,305   60,198   919 

Wholesale and retail

  119,463   11,421   130,884   139,556   42,798   139,333   1,842 

Transportation and communications

  25,019   2,508   27,527   28,480   6,862   25,672   370 

Banks and other financial institutions

  8,392   3,949   12,341   12,341   3,176   8,648   78 

Other industries

  3,650   89   3,739   3,869   3,563   4,537   53 

Individuals

  43,326   46,836   90,162   95,338   4,315   97,404   1,402 
 

 

 

  

 

 

  

 

 

  

 

 

  

 

 

  

 

 

  

 

 

 

Total domestic

  415,181   90,450   505,631   539,541   124,180   604,617   7,049 
 

 

 

  

 

 

  

 

 

  

 

 

  

 

 

  

 

 

  

 

 

 

Foreign:

       

Total foreign (5)

  63,346   46,283   109,629   125,329   28,333   151,588   1,042 
 

 

 

  

 

 

  

 

 

  

 

 

  

 

 

  

 

 

  

 

 

 

Total

  478,527   136,733   615,260   664,870   152,513   756,205   8,091 
 

 

 

  

 

 

  

 

 

  

 

 

  

 

 

  

 

 

  

 

 

 

2020:

                             
 
Recorded investment
(1)
  
Unpaid
principal
balance
  
Related
allowance
(3)
  
Average
recorded
investment
  
Interest
income
recognized
(4)
 
 
Requiring an
allowance for
loan losses
  
Not
requiring an
allowance
for loan
losses
(2)
  
Total
 
 
(in millions of yen)
 
2019
  
   
   
   
   
   
   
 
Domestic:
  
   
   
   
   
   
   
 
Manufacturing
  
103,039
   
5,605
   
108,644
   
111,533
   
39,301
   
122,764
   
1,404
 
Construction and real estate
  
36,873
   
9,312
   
46,185
   
51,158
   
4,661
   
42,224
   
487
 
Services
  
64,021
   
9,552
   
73,573
   
79,736
   
16,311
   
67,679
   
1,058
 
Wholesale and retail
  
124,911
   
9,703
   
134,614
   
147,665
   
38,763
   
130,860
   
1,814
 
Transportation and communications
  
28,297
   
2,909
   
31,206
   
32,139
   
13,146
   
29,864
   
412
 
Banks and other financial institutions
  
6,473
   
3,827
   
10,300
   
10,300
   
1,327
   
10,671
   
109
 
Other industries
  
8,867
   
87
   
8,954
   
9,149
   
5,761
   
6,042
   
29
 
Individuals
  
37,488
   
43,680
   
81,168
   
88,331
   
2,630
   
86,082
   
1,326
 
                             
Total domestic
  
409,969
   
84,675
   
494,644
   
530,011
   
121,900
   
496,186
   
6,639
 
                             
Foreign:
  
   
   
   
   
   
   
 
Total foreign
(5)
  
119,079
   
32,409
   
151,488
   
164,984
   
47,345
   
113,559
   
1,518
 
                             
Total
  
529,048
   
117,084
   
646,132
   
694,995
   
169,245
   
609,745
   
8,157
 
                             
                             
2020
  
   
   
   
   
   
   
 
Domestic:
  
   
   
   
   
   
   
 
Manufacturing
  
152,865
   
6,561
   
159,426
   
162,742
   
62,879
   
139,123
   
2,292
 
Construction and real estate
  
47,413
   
7,875
   
55,288
   
62,064
   
8,366
   
50,343
   
593
 
Services
  
71,358
   
9,625
   
80,983
   
85,565
   
20,117
   
78,583
   
973
 
Wholesale and retail
  
139,338
   
8,191
   
147,529
   
158,933
   
48,582
   
139,042
   
1,845
 
Transportation and communications
  
20,203
   
2,509
   
22,712
   
23,555
   
7,318
   
25,549
   
383
 
Banks and other financial institutions
  
8,193
   
3,753
   
11,946
   
11,946
   
1,541
   
10,565
   
129
 
Other industries
  
18,709
   
276
   
18,985
   
20,716
   
8,606
   
14,512
   
194
 
Individuals
  
42,632
   
41,175
   
83,807
   
88,315
   
6,382
   
82,456
   
1,253
 
                             
Total domestic
  
500,711
   
79,965
   
580,676
   
613,836
   
163,791
   
540,173
   
7,662
 
                             
Foreign:
  
   
   
   
   
   
   
 
Total foreign
(5)
  
95,289
   
40,239
   
135,528
   
151,212
   
67,235
   
123,313
   
3,032
 
                             
Total
  
596,000
   
120,204
   
716,204
   
765,048
   
231,026
   
663,486
   
10,694
 
                             
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MIZUHO FINANCIAL GROUP, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
Notes:

(1)Amounts represent the outstanding balances of nonaccrual loans. The MHFG Group’s policy for placing loans in nonaccrual status corresponds to the Group’s definition of impaired loans.
(2)These impaired loans do not require an allowance for loan losses because the MHFG Group has sufficient collateral to cover probable loan losses.

MIZUHO FINANCIAL GROUP, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

(3)The allowance for loan losses on impaired loans includes the allowance for groups of loans which were collectively evaluated for impairment, in addition to the allowance for those loans that were individually evaluated for impairment. The total carrying amount of the groups of loans which were collectively evaluated for impairment at March 31, 20172019 and 20182020 was ¥302,251¥257,099 million and ¥245,809¥260,596 million, respectively.
(4)Amounts represent the amount of interest income on impaired loans recognized on a cash basis and included in Interest income on loans in the consolidated statements of income.
(5)The majority of Totaltotal foreign consist of Commercialcommercial and Industrialindustrial loans.

The remaining balance of impaired loans whichthat have been partially charged off, was ¥26,513¥25,097 million and ¥29,037¥20,378 million as of March 31, 20172019 and 2018,2020, respectively.

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MIZUHO FINANCIAL GROUP, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
Troubled debt restructurings

The MHFG Group considers a TDRloan modification to be a restructuring in which it,TDR when, for economic or legal reasons related to the obligor’s financial difficulties, it grants a concession to the obligor that it would not otherwise consider. The Group considers the relevant obligor to be in financial difficulty generally when its obligor rating is E2 or below. The following table presents modified loans that were determined to be TDRs during the fiscal years ended March 31, 20172019 and 2018:

Loan forgiveness or debt to
equity swaps		Interest rate
reduction and/or
postponement of
principal and/or
interest
Recorded
investment (1)		Charge-offs

(in millions of yen)

2017

Domestic:

Manufacturing

—  —  106,697

Construction and real estate

—  —  18,818

Services

—  —  45,287

Wholesale and retail

—  —  159,649

Transportation and communications

—  —  17,417

Banks and other financial institutions

—  —  7,933

Other industries

—  —  2,518

Individuals

—  —  17,067

Total domestic

—  —  375,386

Foreign:

Total foreign (2)

—  —  35,685

Total

—  —  411,071

2018

Domestic:

Manufacturing

—  —  110,624

Construction and real estate

—  —  13,430

Services

—  —  40,774

Wholesale and retail

—  —  148,560

Transportation and communications

—  —  27,294

Banks and other financial institutions

—  —  8,529

Other industries

—  —  246

Individuals

—  —  14,960

Total domestic

—  —  364,417

Foreign:

Total foreign (2)

—  —  44,010

Total

—  —  408,427

2020:

                                                                                                                                                         
 
Loan forgiveness or debt to
equity swaps
  
Interest rate
reduction and/or
postponement of
principal and/or
interest
 
 
Recorded
investment
(1)
  
Charge-offs
 
 
 
(in millions of yen)
 
2019
      
Domestic:
  
   
   
 
Manufacturing
  
—  
   
—  
   
134,544
 
Construction and real estate
  
—  
   
—  
   
39,254
 
Services
  
—  
   
—  
   
87,468
 
Wholesale and retail
  
—  
   
—  
   
167,299
 
Transportation and communications
  
—  
   
—  
   
33,991
 
Banks and other financial institutions
  
—  
   
—  
   
17,286
 
Other industries
  
—  
   
—  
   
120
 
Individuals
  
—  
   
—  
   
42,330
 
             
Total domestic
  
—  
   
—  
   
522,292
 
             
Foreign:
  
   
   
��
Total foreign
(2)
  
984
   
1,964
   
44,033
 
             
Total
  
984
   
1,964
   
566,325
 
             
          
2020
      
Domestic:
  
   
   
 
Manufacturing
  
689
   
3,806
   
148,564
 
Construction and real estate
  
—  
   
—  
   
31,803
 
Services
  
—  
   
—  
   
78,211
 
Wholesale and retail
  
—  
   
196
   
169,224
 
Transportation and communications
  
—  
   
—  
   
18,700
 
Banks and other financial institutions
  
—  
   
—  
   
16,962
 
Other industries
  
—  
   
—  
   
1,366
 
Individuals
  
—  
   
—  
   
14,000
 
             
Total domestic
  
689
   
4,002
   
478,830
 
             
Foreign:
  
   
   
 
Total foreign
(2)
  
466
   
4,906
   
114,159
 
             
Total
  
1,155
   
8,908
   
592,989
 
             

MIZUHO FINANCIAL GROUP, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

Notes:

(1)Amounts represent the book values of loans immediately after the restructurings.
(2)The majority of Totaltotal foreign consist of Commercialcommercial and Industrialindustrial loans.

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MIZUHO FINANCIAL GROUP, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
Payment default is deemed to occur when the loan becomes three months past due or the obligor is downgraded to the category of substantially bankrupt or bankrupt. The following table presents payment defaults which occurred during the fiscal years ended March 31, 20172019 and 20182020 with respect to the loans modified as TDRs within the previous twelve months:

   Recorded investment 
       2017           2018     
   

 

(in millions of yen)

 

Domestic:

    

Manufacturing

   5,164    4,019 

Construction and real estate

   2,887    80 

Services

   4,471    4,469 

Wholesale and retail

   10,116    25,710 

Transportation and communications

   795    264 

Other industries

   14    130 

Individuals

   2,288    1,819 
  

 

 

   

 

 

 

Total domestic

   25,735    36,491 
  

 

 

   

 

 

 

Foreign:

    

Total foreign

   3,213    4,588 
  

 

 

   

 

 

 

Total

   28,948    41,079 
  

 

 

   

 

 

 

                                                                                                      
 
Recorded investment
 
 
 
    2019    
  
    2020    
 
 
 
(in millions of yen)
 
Domestic:
  
   
 
Manufacturing
  
1,173
   
3,752
 
Construction and real estate
  
121
   
345
 
Services
  
1,335
   
3,822
 
Wholesale and retail
  
15,087
   
19,018
 
Transportation and communications
  
878
   
824
 
Banks and other financial institutions
  
66
   
66
 
Other industries
  
1,650
   
—  
 
Individuals
  
2,152
   
2,545
 
         
Total domestic
  
22,462
   
30,372
 
         
Foreign:
  
   
 
Total foreign
  
5,418
   
11,442
 
         
Total
  
27,880
   
41,814
 
         

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MIZUHO FINANCIAL GROUP, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

Age analysis of past due loans

The table below presents an analysis of the age of the recorded investment in loans that are past due at March 31, 20172019 and 2018:

   30-59 days
past due		   60-89 days
past due		   90 days or
more past due		   Total past
due		   Current   Total 
   

 

(in millions of yen)

 

2017

  

Domestic:

            

Manufacturing

   1,938    360    7,767    10,065    8,730,032    8,740,097 

Construction and real estate

   3,061    947    32,523    36,531    7,735,475    7,772,006 

Services

   917    217    5,914    7,048    4,741,926    4,748,974 

Wholesale and retail

   1,330    2,834    5,585    9,749    5,130,453    5,140,202 

Transportation and communications

   384    322    1,859    2,565    3,487,813    3,490,378 

Banks and other financial institutions

   —      —      —      —      4,006,387    4,006,387 

Government and public institutions

   —      —      —      —      8,532,246    8,532,246 

Other industries

   —      —      69    69    4,426,164    4,426,233 

Individuals

   32,752    12,291    34,846    79,889    10,720,128    10,800,017 
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total domestic

   40,382    16,971    88,563    145,916    57,510,624    57,656,540 
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Foreign:

            

Total foreign(Note)

   546    216    95,719    96,481    24,686,560    24,783,041 
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total

   40,928    17,187    184,282    242,397    82,197,184    82,439,581 
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

2018

  

Domestic:

            

Manufacturing

   585    470    8,037    9,092    8,147,249    8,156,341 

Construction and real estate

   1,641    474    28,633    30,748    8,070,920    8,101,668 

Services

   1,977    1,142    5,051    8,170    5,015,848    5,024,018 

Wholesale and retail

   1,704    1,083    6,639    9,426    5,103,247    5,112,673 

Transportation and communications

   356    639    1,828    2,823    3,562,046    3,564,869 

Banks and other financial institutions

   —      1,301    —      1,301    4,470,122    4,471,423 

Government and public institutions

   —      —      —      —      8,882,125    8,882,125 

Other industries

   33    12    37    82    5,018,305    5,018,387 

Individuals

   31,566    12,426    31,444    75,436    10,253,574    10,329,010 
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total domestic

   37,862    17,547    81,669    137,078    58,523,436    58,660,514 
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Foreign:

            

Total foreign(Note)

   897    450    41,316    42,663    24,958,163    25,000,826 
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total

   38,759    17,997    122,985    179,741    83,481,599    83,661,340 
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

2020:
                         
 
30-59
 days
past due
  
60-89
 days
past due
  
90 days or
more past due
  
Total past
due
  
Current
  
Total
 
 
 
(in millions of yen)
 
2019
 
 
Domestic:
  
   
   
   
   
   
 
Manufacturing
  
2,210
   
513
   
7,036
   
9,759
   
9,544,095
   
9,553,854
 
Construction and real estate
  
1,010
   
1,054
   
31,092
   
33,156
   
8,917,421
   
8,950,577
 
Services
  
633
   
196
   
3,494
   
4,323
   
5,012,648
   
5,016,971
 
Wholesale and retail
  
1,614
   
1,415
   
7,868
   
10,897
   
5,148,459
   
5,159,356
 
Transportation and communications
  
363
   
256
   
2,119
   
2,738
   
3,690,753
   
3,693,491
 
Banks and other financial institutions
  
3
   
484
   
6
   
493
   
4,345,096
   
4,345,589
 
Government and public institutions
  
—  
   
—  
   
—  
   
—  
   
2,358,904
   
2,358,904
 
Other industries
  
2
   
—  
   
57
   
59
   
5,472,538
   
5,472,597
 
Individuals
  
27,139
   
11,013
   
28,965
   
67,117
   
9,790,688
   
9,857,805
 
                         
Total domestic
  
32,974
   
14,931
   
80,637
   
128,542
   
54,280,602
   
54,409,144
 
                         
Foreign:
  
   
   
   
   
   
 
Total foreign
(Note)
  
668
   
211
   
26,316
   
27,195
   
28,515,751
   
28,542,946
 
                         
Total
  
33,642
   
15,142
   
106,953
   
155,737
   
82,796,353
   
82,952,090
 
                         
    
2020
 
 
Domestic:
  
   
   
   
   
   
 
Manufacturing
  
1,109
   
386
   
10,997
   
12,492
   
9,718,536
   
9,731,028
 
Construction and real estate
  
1,266
   
687
   
21,518
   
23,471
   
9,579,962
   
9,603,433
 
Services
  
792
   
548
   
6,714
   
8,054
   
5,984,457
   
5,992,511
 
Wholesale and retail
  
1,748
   
2,446
   
11,972
   
16,166
   
5,203,561
   
5,219,727
 
Transportation and communications
  
56
   
35
   
2,051
   
2,142
   
3,830,742
   
3,832,884
 
Banks and other financial institutions
  
—  
   
—  
   
109
   
109
   
4,634,333
   
4,634,442
 
Government and public institutions
  
—  
   
—  
   
—  
   
—  
   
2,198,805
   
2,198,805
 
Other industries
  
28
   
20
   
1,326
   
1,374
   
5,387,973
   
5,389,347
 
Individuals
  
21,376
   
10,876
   
34,793
   
67,045
   
9,361,289
   
9,428,334
 
                         
Total domestic
  
26,375
   
14,998
   
89,480
   
130,853
   
55,899,658
   
56,030,511
 
                         
Foreign:
  
   
   
   
   
   
 
Total foreign
(Note)
  
1,214
   
181
   
28,722
   
30,117
   
31,616,541
   
31,646,658
 
                         
Total
  
27,589
   
15,179
   
118,202
   
160,970
   
87,516,199
   
87,677,169
 
                         
Note:The majority of Totaltotal foreign consist of Commercialcommercial and Industrialindustrial loans.

6.

5. Allowance for loan losses

In accordance with ASC 450, a formula-based allowance utilizing historical loss factors, after adjusting for existing economic conditions where appropriate, is applied to groups of
non-homogeneous
loans and small balance, homogeneous loans which have not been identified as impaired. At MHBK and MHTB, when management estimates probable credit losses to determine the allowance for loan losses, small balance, homogeneous loans are classified in the retail portfolio segment, to which pool allocations apply, and loans other than these classified in the retail portfolio segment are classified in the corporate portfolio segment. The corporate portfolio segment consists of loans originated by MHBK and MHTB, and includes mainly business

MIZUHO FINANCIAL GROUP, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

loans such as those used for working capital and capital expenditure, as well as loans for which the primary source of repayment of the obligation is income generated by the relevant assets such

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Table of Contents
MIZUHO FINANCIAL GROUP, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
as project finance, asset finance and real estate finance. The retail portfolio segment consists mainly of residential mortgage loans, originated by MHBK. The other portfolio segment consists of loans of subsidiaries other than MHBK and MHTB, such as consolidated VIEs and overseas subsidiaries. See Note 1 “Basis of presentation and summary of significant accounting policies” for further details of the methodology used to determine the allowance for loan losses and Note 54 “Loans” for further details of obligor ratings and pool allocations.

Changes in Allowance for loan losses by portfolio segment for the fiscal years ended March 31, 2016, 20172018, 2019 and 20182020 are shown below:

   Corporate  Retail  Other  Total 
   

 

(in millions of yen)

 

2016

     

Balance at beginning of fiscal year

   423,177   60,469   36,613   520,259 
  

 

 

  

 

 

  

 

 

  

 

 

 

Provision (credit) for loan losses

   33,532   (15,474)   16,502   34,560 
  

 

 

  

 

 

  

 

 

  

 

 

 

Charge-offs

   (97,536)   (2,173)   (12,610)   (112,319) 

Recoveries

   17,232   1,399   2,034   20,665 
  

 

 

  

 

 

  

 

 

  

 

 

 

Net charge-offs

   (80,304)   (774)   (10,576)   (91,654) 
  

 

 

  

 

 

  

 

 

  

 

 

 

Others(Note)

   (8,666)   —     (3,252)   (11,918) 
  

 

 

  

 

 

  

 

 

  

 

 

 

Balance at end of fiscal year

   367,739   44,221   39,287   451,247 
  

 

 

  

 

 

  

 

 

  

 

 

 

2017

     

Balance at beginning of fiscal year

   367,739   44,221   39,287   451,247 
  

 

 

  

 

 

  

 

 

  

 

 

 

Provision (credit) for loan losses

   45,059   (10,666)   3,275   37,668 
  

 

 

  

 

 

  

 

 

  

 

 

 

Charge-offs

   (22,901)   (1,754)   (6,597)   (31,252) 

Recoveries

   18,320   5,122   2,158   25,600 
  

 

 

  

 

 

  

 

 

  

 

 

 

Net charge-offs

   (4,581)   3,368   (4,439)   (5,652) 
  

 

 

  

 

 

  

 

 

  

 

 

 

Others(Note)

   (890)   —     (2,700)   (3,590) 
  

 

 

  

 

 

  

 

 

  

 

 

 

Balance at end of fiscal year

   407,327   36,923   35,423   479,673 
  

 

 

  

 

 

  

 

 

  

 

 

 

2018

     

Balance at beginning of fiscal year

   407,327   36,923   35,423   479,673 
  

 

 

  

 

 

  

 

 

  

 

 

 

Provision (credit) for loan losses

   (123,470)   (7,427)   4,535   (126,362) 
  

 

 

  

 

 

  

 

 

  

 

 

 

Charge-offs

   (44,621)   (2,118)   (9,123)   (55,862) 

Recoveries

   12,924   814   1,482   15,220 
  

 

 

  

 

 

  

 

 

  

 

 

 

Net charge-offs

   (31,697)   (1,304)   (7,641)   (40,642) 
  

 

 

  

 

 

  

 

 

  

 

 

 

Others(Note)

   (3,088)   —     321   (2,767) 
  

 

 

  

 

 

  

 

 

  

 

 

 

Balance at end of fiscal year

   249,072   28,192   32,638   309,902 
  

 

 

  

 

 

  

 

 

  

 

 

 

                 
 
Corporate
  
Retail
  
Other
  
Total
 
 
 
(in millions of yen)
 
2018
  
   
   
   
 
Balance at beginning of fiscal year
  
407,327
   
36,923
   
35,423
   
479,673
 
                 
Provision (credit) for loan losses
  
(123,470
)  
(7,427
)  
4,535
   
(126,362
)
                 
Charge-offs
  
(44,621
)  
(2,118
)  
(9,123
)  
(55,862
)
Recoveries
  
12,924
   
814
   
1,482
   
15,220
 
                 
Net charge-offs
  
(31,697
)  
(1,304
)  
(7,641
)  
(40,642
)
                 
Others
(Note)
  
(3,088
)  
—  
   
321
   
(2,767
)
                 
Balance at end of fiscal year
  
249,072
   
28,192
   
32,638
   
309,902
 
                 
                 
2019
  
   
   
   
 
Balance at beginning of fiscal year
  
249,072
   
28,192
   
32,638
   
309,902
 
                 
Provision (credit) for loan losses
  
31,693
   
(2,658
)  
3,424
   
32,459
 
                 
Charge-offs
  
(39,728
)  
(2,856
)  
(4,940
)  
(47,524
)
Recoveries
  
11,019
   
552
   
2,532
   
14,103
 
                 
Net charge-offs
  
(28,709
)  
(2,304
)  
(2,408
)  
(33,421
)
                 
Others
(Note)
  
847
   
—  
   
(2,586
)  
(1,739
)
                 
Balance at end of fiscal year
  
252,903
   
23,230
   
31,068
   
307,201
 
                 
                 
2020
  
   
   
   
 
Balance at beginning of fiscal year
  
252,903
   
23,230
   
31,068
   
307,201
 
                 
Provision (credit) for loan losses
  
155,576
   
760
   
(136
)  
156,200
 
                 
Charge-offs
  
(33,971
)  
(3,840
)  
(6,547
)  
(44,358
)
Recoveries
  
26,155
   
700
   
1,061
   
27,916
 
                 
Net charge-offs
  
(7,816
)  
(3,140
)  
(5,486
)  
(16,442
)
                 
Others
(Note)
  
(5,454
)  
—  
   
(650
)  
(6,104
)
                 
Balance at end of fiscal year
  
     395,209
   
       20,850
   
       24,796
   
     440,855
 
                 
Note:Others includes primarily foreign exchange translation.

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MIZUHO FINANCIAL GROUP, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

The table below presents Allowance for loan losses and loans outstanding by portfolio segment disaggregated on the basis of impairment method at March 31, 20172019 and 2018:

   Corporate   Retail   Other   Total 
   

 

(in millions of yen)

 

2017

        

Allowance for loan losses

   407,327    36,923    35,423    479,673 
  

 

 

   

 

 

   

 

 

   

 

 

 

of which individually evaluated for impairment

   272,714    2,922    13,306    288,942 

of which collectively evaluated for impairment

   134,613    34,001    22,117    190,731 
  

 

 

   

 

 

   

 

 

   

 

 

 

Loans(Note)

   61,120,654    11,722,726    9,596,201    82,439,581 
  

 

 

   

 

 

   

 

 

   

 

 

 

of which individually evaluated for impairment

   772,647    23,422    65,075    861,144 

of which collectively evaluated for impairment

   60,348,007    11,699,304    9,531,126    81,578,437 
  

 

 

   

 

 

   

 

 

   

 

 

 

2018

        

Allowance for loan losses

   249,072    28,192    32,638    309,902 
  

 

 

   

 

 

   

 

 

   

 

 

 

of which individually evaluated for impairment

   129,789    2,602    7,383    139,774 

of which collectively evaluated for impairment

   119,283    25,590    25,255    170,128 
  

 

 

   

 

 

   

 

 

   

 

 

 

Loans(Note)

   60,837,559    11,133,862    11,689,919    83,661,340 
  

 

 

   

 

 

   

 

 

   

 

 

 

of which individually evaluated for impairment

   593,053    21,364    61,023    675,440 

of which collectively evaluated for impairment

   60,244,506    11,112,498    11,628,896    82,985,900 
  

 

 

   

 

 

   

 

 

   

 

 

 

2020:
                 
 
Corporate
  
Retail
  
Other
  
Total
 
 
 
(in millions of yen)
 
2019
  
   
   
   
 
Allowance for loan losses
  
252,903
   
23,230
   
31,068
   
307,201
 
                 
of which individually evaluated for impairment
  
139,472
   
2,122
   
8,933
   
150,527
 
of which collectively evaluated for impairment
  
113,431
   
21,108
   
22,135
   
156,674
 
             ��   
                 
Loans
(Note)
  
66,804,088
   
10,596,994
   
5,551,008
   
82,952,090
 
                 
of which individually evaluated for impairment
  
539,893
   
20,886
   
54,319
   
615,098
 
of which collectively evaluated for impairment
  
66,264,195
   
10,576,108
   
5,496,689
   
82,336,992
 
                 
                 
2020
  
   
   
   
 
Allowance for loan losses
  
395,209
   
20,850
   
24,796
   
440,855
 
                 
of which individually evaluated for impairment
  
231,941
   
1,704
   
5,443
   
239,088
 
of which collectively evaluated for impairment
  
163,268
   
19,146
   
19,353
   
201,767
 
                 
                 
Loans
(Note)
  
71,840,922
   
10,112,617
   
5,723,630
   
87,677,169
 
                 
of which individually evaluated for impairment
  
971,153
   
19,279
   
44,244
   
1,034,676
 
of which collectively evaluated for impairment
  
70,869,769
     
10,093,338
     
  5,679,386
     
86,642,493
   
                 
Note:Amounts represent loan balances before deducting unearned income and deferred loan fees.

7.

6. Premises and equipment

Premises and equipment at March 31, 20172019 and 20182020 consist of the following:

   2017   2018 
   

 

(in millions of yen)

 

Land

   575,054    566,040 

Buildings

   807,312    811,911 

Equipment and furniture

   485,407    484,102 

Leasehold improvements

   93,967    97,066 

Construction in progress

   23,093    25,849 

Software

   1,308,292    1,463,786 
  

 

 

   

 

 

 

Total

   3,293,125    3,448,754 

Less: Accumulated depreciation and amortization

   1,251,852    1,332,570 
  

 

 

   

 

 

 

Premises and equipment—net

   2,041,273    2,116,184 
  

 

 

   

 

 

 

         
 
2019
  
2020
 
 
 
(in millions of yen)
 
Land
  
563,032
   
557,943
 
Buildings
  
826,781
   
657,774
 
Equipment and furniture
  
472,186
   
442,302
 
Leasehold improvements
  
97,508
   
228,383
 
Construction in progress
  
37,174
   
73,164
 
Software
  
1,366,481
   
1,359,120
 
         
Total
  
3,363,162
   
3,318,686
 
Less: Accumulated depreciation and amortization
  
1,462,210
   
1,462,438
 
         
Premises and equipment—net
  
1,900,952
   
1,856,248
 
         
Depreciation and amortization expense for premises and equipment for the fiscal years ended March 31, 2016, 20172018, 2019 and 20182020 was ¥162,676¥169,346 million, ¥163,769¥345,560 million and ¥169,346¥234,457 million, respectively.

Premises and equipment under capital leases, which is primarily comprised of data processing equipment, amounted to ¥80,430 million and ¥83,734 million at March 31, 2017 and 2018, respectively. Accumulated

MIZUHO FINANCIAL GROUP, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

depreciation and amortization on such premises and equipment at March 31, 2017 and 2018 amounted to ¥40,155 million and ¥42,158 million, respectively.

Depreciation and amortization expense related to Software
s
oftware was reported in General and administrative expenses, and all other depreciation and amortization expense was reported in Occupancy expenses.

8.

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MIZUHO FINANCIAL GROUP, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
The MHFG Group recognized impairment losses of ¥27,428 million on premises and equipment for the fiscal year ended March 31, 2019, of which ¥8,910 million was recorded in General and administrative expenses and ¥18,518 million was recorded in Occupancy expenses. Such losses included ¥15,761 million of impairment losses primarily on real estate of certain branches
recognized in Retail & Business Banking Company. In relation to the Group’s branch network strategy, these branches are either no longer being used for its banking operations or the carrying amounts are not recoverable because of the Group’s intention to close these branches.
The MHFG Group recognized impairment losses of ¥13,490 million on premises and equipment for the fiscal year ended March 31, 2020, of which ¥6,813 million was recorded in General and administrative expenses and ¥6,677 million was recorded in Occupancy expenses. Such losses included ¥6,774 million of impairment losses related mainly to entity-wide software that are no longer to be used. In addition, ¥5,587 million of impairment losses were recognized on real estate used mainly as the entity-wide assets and certain branches in Retail & Business Banking Company. These real estates are either no longer being used or the carrying amounts are not recoverable.
7. Goodwill and intangible assets

Goodwill

The changes in Goodwill during the fiscal years ended March 31, 2016, 20172018, 2019 and 20182020 are as follows:

   2016  2017  2018   

 

 
   

 

(in millions of yen)

     

Balance at beginning of fiscal year

   11,703   19,097   95,176   

Goodwill acquired

   16,470 (1)   76,225 (2)   —     

Impairment losses recognized

   (6,222)   —     —     

Foreign exchange translation

   (2,854)   (146)   8   

Balance at end of fiscal year

   19,097   95,176   95,184   
  

 

 

  

 

 

  

 

 

   

 

 

 

Gross amount of goodwill(3)

   94,473   171,432   170,926   

Accumulated impairment losses

   75,376   76,256   75,742   

Notes:

             
 
2018
  
2019
  
2020
 
 
 
(in millions of yen)
 
Balance at beginning of fiscal year
  
95,176
   
95,184
   
95,151
 
Impairment losses recognized
  
—
   
—
   
(2,155
)
Foreign exchange translation
  
8
   
(33
)  
1
 
Balance at end of fiscal year
  
95,184
   
95,151
   
92,997
 
             
Gross amount of goodwill
(Note)
  
170,926
   
169,489
   
169,313
 
Accumulated impairment losses
  
75,742
   
74,338
   
76,316
 
(1)Goodwill acquired is entirely related to the acquisition of Mizuho Real Estate Management Co., Ltd. (formerly Simplex Real Estate Management Inc.) and Mizuho REIT Management Co., Ltd. (formerly Simplex REIT Partners Inc.).
(2)Goodwill acquired is entirely related to the acquisition of Asset Management One (see Note 3 “Business combination”).
(3)Note:Goodwill is recorded at a designated reporting unit level for the purpose of assessing impairment. Goodwill is not allocated to the reportable segments in Note 3231 “Business segment information”.information.”

Due to the prolonged severe business environment for Banco Mizuho do Brasil S.A., it was determined that the carrying amount of the Banco Mizuho do Brasil S.A. reporting unit exceeded its fair value, which is based on the market approach. Therefore, a goodwill impairment loss of ¥6,222 million was recognized during the fiscal year ended March 31, 2016.

MIZUHO FINANCIAL GROUP, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

Intangible assets

The table below presents the gross carrying amount, accumulated amortization and net carrying amount of intangible assets, at March 31, 20172019 and 2018:

  2017  2018 
  Gross
carrying
amount		  Accumulated
amortization		  Net
carrying
amount		  Gross
carrying
amount		  Accumulated
amortization		  Net
carrying
amount		 
  

 

(in millions of yen)

 

Intangible assets subject to amortization:

      

Customer relationships (Note)

  126,979   42,517   84,462   126,979   52,237   74,742 

Other

  2,814   2,190   624   1,847   1,341   506 
 

 

 

  

 

 

  

 

 

  

 

 

  

 

 

  

 

 

 

Total

  129,793   44,707   85,086   128,826   53,578   75,248 
 

 

 

  

 

 

  

 

 

  

 

 

  

 

 

  

 

 

 

Intangible assets not subject to amortization:

      

Total

  9,061   —    9,061   9,199   —    9,199 
 

 

 

  

 

 

  

 

 

  

 

 

  

 

 

  

 

 

 

Total

  138,854   44,707   94,147   138,025   53,578   84,447 
 

 

 

  

 

 

  

 

 

  

 

 

  

 

 

  

 

 

 

2020:
                         
 
2019
  
2020
 
 
Gross
carrying
amount
  
Accumulated
amortization
  
Net
carrying
amount
  
Gross
carrying
amount
  
Accumulated
amortization
  
Net
carrying
amount
 
 
 
(in millions of yen)
 
Intangible assets subject to amortization:
  
   
   
   
   
   
 
Customer relationships
(Note)
  
126,882
   
61,630
   
65,252
   
126,979
   
70,904
   
56,075
 
Other
  
1,698
   
1,412
   
286
   
1,693
   
1,460
   
233
 
                         
Total
  
128,580
   
63,042
   
65,538
   
128,672
   
72,364
   
56,308
 
                         
Intangible assets not subject to amortization:
  
   
   
   
   
   
 
Total
  
8,702
   
—
   
8,702
   
8,381
   
—  
   
8,381
 
                         
Total
  
137,282
   
63,042
   
74,240
   
137,053
   
72,364
   
64,689
 
                         
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MIZUHO FINANCIAL GROUP, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
Note:Customer relationships were acquired in connection with the merger of MHSC and Shinko on May 7, 2009 and the integration among asset management companies on October 1, 2016, see Note 3 “Business combination” for further details of the integration among asset management companies.2016. See Note 1 “Basis of presentation and summary of significant accounting policies” for further information.

For the fiscal years ended March 31, 2016, 2017,2018, 2019 and 2018,2020, the MHFG Group recognized ¥5,254¥9,812 million, ¥7,433¥9,604 million and ¥9,812¥9,267 million, respectively, of amortization expense in respect of intangible assets, reported in Other noninterest expenses.

The table below presents the estimated aggregate amortization expense in respect of intangible assets for the next five years:

   (in millions of yen) 

Fiscal year ending March 31:

  

2019

   9,288 

2020

   8,950 

2021

   8,230 

2022

   7,697 

2023

   7,180 

     
 
(in millions of yen)
 
Fiscal year ending March 31:
  
 
2021
  
8,237
 
2022
  
7,702
 
2023
  
7,184
 
2024
  
6,666
 
2025
  
6,154
 

MIZUHO FINANCIAL GROUP, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

9.

8. Pledged assets and collateral

The following amounts, by balance sheet classification, have been pledged as collateral for borrowings and for other purposes at March 31, 20172019 and 2018:

   2017   2018 
   

 

(in billions of yen)

 

Interest-bearing deposits in other banks

   51    37 

Trading account assets

   6,577    5,611 

Investments

   8,213    6,500 

Loans

   7,468    5,229 

Other assets

   1,588    2,099 
  

 

 

   

 

 

 

Total

   23,897    19,476 
  

 

 

   

 

 

 

2020:

         
 
2019
  
2020
 
 
 
(in billions of yen)
 
Interest-bearing deposits in other banks
  
68
   
69
 
Trading account assets
  
4,137
   
5,705
 
Investments
  
6,076
   
4,155
 
Loans
  
4,055
   
3,887
 
Other assets
  
1,886
   
2,786
 
         
Total
  
       16,222
   
       16,602
 
         
The associated liabilities collateralized by the above assets at March 31, 20172019 and 20182020 are summarized below:

   2017   2018 
   

 

(in billions of yen)

 

Deposits

   919    256 

Payables under repurchase agreements

   6,109    5,518 

Payables under securities lending transactions

   1,460    1,193 

Other short-term borrowings

   686    441 

Long-term debt

   4,220    3,179 
  

 

 

   

 

 

 

Total

   13,394    10,587 
  

 

 

   

 

 

 

         
 
2019
  
2020
 
 
 
(in billions of yen)
 
Deposits
  
386
   
1,057
 
Payables under repurchase agreements
  
3,435
   
5,480
 
Payables under securities lending transactions
  
1,675
   
1,094
 
Other short-term borrowings
  
519
   
4,014
 
Long-term debt
  
1,431
   
213
 
         
Total
  
         7,446
   
       11,858
 
         
The Bank of Japan (“the BOJ”) requires private depository institutions to maintain a certain amount of funds as reserves in current accounts with the BOJ, based on average deposit balances and certain other factors. There are similar reserve deposit requirements for foreign branches and subsidiaries engaged in banking businesses in
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MIZUHO FINANCIAL GROUP, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
foreign countries. These amounts are deemed to be restricted cash. At March 31, 20172019 and 2018,2020, the deposit amounts maintained with the BOJ and foreign central banks, which were included in Cash and due from banks and Interest-bearing deposits in other banks, were ¥44,741¥43,552 billion and ¥45,325¥38,808 billion, respectively. These balances included the reserve funds required to be maintained by the MHFG Group, which amounted to ¥1,462¥1,583 billion and ¥1,589¥1,507 billion at March 31, 20172019 and 2018,2020, respectively.

At March 31, 20172019 and 2018,2020, the MHFG Group had received collateral that can be sold or repledged, with a fair value of ¥13,395¥16,114 billion and ¥13,419¥20,663 billion, respectively, of which ¥12,988¥12,264 billion and ¥12,655¥18,824 billion, respectively, was sold and repledged. Such collateral was primarily obtained in connection with resale or securities borrowing agreements, and was generally used as collateral for repurchase or securities lending agreements, or to cover short sales.

This collateral received isn’t recognized on balance sheet.

MIZUHO FINANCIAL GROUP, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

10.

9. Deposits

The balances of time deposits and certificates of deposit issued by domestic offices in amounts of ¥10 million (approximately US$9493 thousand at the Federal Reserve Bank of New York’s noon buying rate on March 31, 2018)2020) or more and the balances of these deposits issued by foreign offices in amounts of US$100,000 or more at March 31, 20172019 and 20182020 are as follows:

   2017   2018 
   

 

(in millions of yen)

 

Domestic offices:

    

Time deposits

   17,763,052    17,194,707 

Certificates of deposit

   5,877,100    5,778,430 
  

 

 

   

 

 

 

Total

   23,640,152    22,973,137 
  

 

 

   

 

 

 

Foreign offices:

    

Time deposits

   14,862,230    13,426,554 

Certificates of deposit

   4,754,170    5,604,160 
  

 

 

   

 

 

 

Total

   19,616,400    19,030,714 
  

 

 

   

 

 

 

         
 
2019
  
2020
 
 
 
(in millions of yen)
 
Domestic offices:
  
   
 
Time deposits
  
16,578,642
   
14,684,619
 
Certificates of deposit
  
5,643,303
   
7,558,770
 
         
Total
  
22,221,945
   
22,243,389
 
         
Foreign offices:
  
   
 
Time deposits
  
17,606,520
   
18,008,751
 
Certificates of deposit
  
7,695,240
   
5,723,792
 
         
Total
  
25,301,760
   
23,732,543
 
         
The aggregate amount of demand deposits in overdraft status that have been reclassified as loan balances at March 31, 20172019 and 20182020 was ¥718¥810 billion and ¥792¥696 billion, respectively.

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MIZUHO FINANCIAL GROUP, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
The balance and remaining maturities of time deposits and certificates of deposit issued by domestic and foreign offices at March 31, 20182020 are shown in the following table:

   Time
deposits		   Certificates of
deposit		   Total 
   

 

(in millions of yen)

 

Domestic offices:

      

Due in one year or less

   22,363,333    5,658,280    28,021,613 

Due after one year through two years

   1,635,033    120,150    1,755,183 

Due after two years through three years

   1,282,400    —      1,282,400 

Due after three years through four years

   328,518    —      328,518 

Due after four years through five years

   361,730    —      361,730 

Due after five years

   122,211    —      122,211 
  

 

 

   

 

 

   

 

 

 

Total

   26,093,225    5,778,430    31,871,655 
  

 

 

   

 

 

   

 

 

 

Foreign offices:

      

Due in one year or less

   13,360,155    5,362,543    18,722,698 

Due after one year through two years

   53,837    176,331    230,168 

Due after two years through three years

   2,902    61,224    64,126 

Due after three years through four years

   764    4,062    4,826 

Due after four years through five years

   748    —      748 

Due after five years

   14,620    —      14,620 
  

 

 

   

 

 

   

 

 

 

Total

   13,433,026    5,604,160    19,037,186 
  

 

 

   

 

 

   

 

 

 

Total

   39,526,251    11,382,590    50,908,841 
  

 

 

   

 

 

   

 

 

 

             
 
Time
deposits
  
Certificates of
deposit
  
Total
 
 
(in millions of yen)
 
Domestic offices:
  
   
   
 
Due in one year or less
  
19,660,222
   
7,418,470
   
27,078,692
 
Due after one year through two years
  
1,676,056
   
140,300
   
1,816,356
 
Due after two years through three years
  
1,159,144
   
—  
   
1,159,144
 
Due after three years through four years
  
335,659
   
—  
   
335,659
 
Due after four years through five years
  
397,591
   
—  
   
397,591
 
Due after five years
  
212,416
   
—  
   
212,416
 
             
Total
  
23,441,088
   
7,558,770
   
30,999,858
 
             
Foreign offices:
  
   
   
 
Due in one year or less
  
17,936,190
   
5,565,541
   
23,501,731
 
Due after one year through two years
  
59,530
   
80,747
   
140,277
 
Due after two years through three years
  
9,536
   
11,224
   
20,760
 
Due after three years through four years
  
6,624
   
—  
   
6,624
 
Due after four years through five years
  
2,788
   
66,280
   
69,068
 
Due after five years
  
3,268
   
—  
   
3,268
 
             
Total
  
18,017,936
   
5,723,792
   
23,741,728
 
             
Total
  
41,459,024
   
13,282,562
   
54,741,586
 
             

MIZUHO FINANCIAL GROUP, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

11.

10. Due to trust accounts

MHTB and TCSB, which are MHFG’s trust bank subsidiaries, holdholds assets on behalf of theirits customers in an agent, fiduciary or trust capacity. Such trust account assets are not the MHFG Group’s proprietary assets and are managed and accounted for separately. However, the cash in individual trust accounts is often placed with MHTB and TCSB for the customers’ short-term investment needs. These amounts which MHTB and TCSB oweowes to the trust accounts are recorded as Due to trust accounts.

The MHFG Group consolidates certain guaranteed principal money trusts. See Note 25 “Variable interest entities and securitizations” for further discussion of the guaranteed principal money trusts.

12.

11. Short-term borrowings andlong-term debt

Short-term borrowings

Short-term borrowings consist of Due to trust accounts, Call money and funds purchased, Payables under repurchase agreements and securities lending transactions, and Other short-term borrowings.

Details of Other short-term borrowings at March 31, 20172019 and 20182020 are as follows:

   2017   2018 
   

 

(in millions of yen)

 

Commercial paper and short-term notes issued by consolidated VIEs of asset-backed commercial paper programs(1) (2)

   59,607    27,985 

Commercial paper and short-term notes issued by MHFG and its subsidiaries (1) (3)

   956,447    1,044,591 

Borrowings from the Bank of Japan

   355,255    432,328 

Other

   105,303    183,114 
  

 

 

   

 

 

 

Total

   1,476,612    1,688,018 
  

 

 

   

 

 

 

Notes:
         
 
2019
  
2020
 
 
(in millions of yen)
 
Short-term notes issued by consolidated VIEs of asset-backed commercial paper programs
(1)
  
22,339
   
54,658
 
Commercial paper and short-term notes issued by MHFG’s subsidiaries
(1)(2)
  
1,274,382
   
730,089
 
Borrowings from the Bank of Japan
  
508,627
   
4,002,781
 
Other
  
189,478
   
126,957
 
         
Total
  
  1,994,826
   
  4,914,485
 
         
F-4
8
Table of Contents
MIZUHO FINANCIAL GROUP, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
Notes:
(1)Short-term notes are issued under the laws of Japan in the form of dematerialized commercial paper, whose characteristics are economically the same as commercial paper.
(2)CommercialThe amounts of commercial paper and short-term notes issued by consolidated VIEs of asset-backed commercial paper programs in the above table consist of commercial paper and short-term notes, of which the amountsMHFG’s subsidiaries were ¥24,559¥941,182 million and ¥35,048¥333,200 million, respectively, at March 31, 2017. At March 31, 2018, all the amounts represent the outstanding balances of short-term notes.
(3)Commercial paper2019, and short-term notes issued by MHFG and its subsidiaries in the above table consist of commercial paper and short-term notes, of which the amounts were ¥765,147¥411,089 million and ¥191,300¥319,000 million, respectively, at March 31, 2017, and ¥710,391 million and ¥334,200 million, respectively, at March 31, 2018.2020.

MIZUHO FINANCIAL GROUP, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

Long-term debt

Long-term debt with original maturities of more than one year at March 31, 20172019 and 20182020 is comprised of the following:

   2017   2018 
   

 

(in millions of yen)

 

Obligations under capital leases

   40,947    36,010 

Loan participation borrowings

   90,639    89,353 

Senior borrowings and bonds

   11,119,136    9,184,075 

Subordinated borrowings and bonds

   3,278,692    3,645,792 
  

 

 

   

 

 

 

Total

   14,529,414    12,955,230 
  

 

 

   

 

 

 

         
 
2019
  
2020
 
 
(in millions of yen)
 
Obligations under finance leases
  
25,020
   
16,250
 
Loan participation borrowings
  
142,838
   
149,398
 
Senior borrowings and bonds
  
7,503,032
   
6,402,157
 
Subordinated borrowings and bonds
  
3,858,510
   
3,778,347
 
         
Total
  
11,529,400
   
10,346,152
 
         
The following table presents the interest rates and maturities of senior borrowings and bonds, and subordinated borrowings and bonds:

  Interest rates (1)  Maturities (2)  2017  2018 
  (%)     

 

(in millions of yen)

 

Senior borrowings and bonds:

    

fixed rate denominated in Japanese yen

  0.00-5.00   Apr. 2018-Dec. 2046   6,011,939   4,146,989 

fixed rate denominated in U.S. dollars

  0.00-7.49   Apr. 2018-Mar. 2048   2,533,715   2,519,845 

fixed rate denominated in other currencies

  0.01-9.29   Apr. 2018-May. 2037   172,370   233,842 

floating rate denominated in Japanese yen

  0.00-19.00   Apr. 2018-Mar. 2048   717,056   662,751 

floating rate denominated in U.S. dollars

  0.00-5.70   Apr. 2018-Jul. 2033   1,557,288   1,469,248 

floating rate denominated in other currencies

  0.00-9.40   Jun. 2018-Sep. 2035   126,768   151,400 
   

 

 

  

 

 

 

Total

    11,119,136   9,184,075 
   

 

 

  

 

 

 

Subordinated borrowings and bonds:

    

fixed rate denominated in Japanese yen

  0.47-4.26   Apr. 2018- Perpetual   2,858,445   3,247,639 

fixed rate denominated in U.S. dollars

  4.30-4.70   Jul. 2022-Oct. 2025   420,247   398,153 
   

 

 

  

 

 

 

Total

    3,278,692   3,645,792 
   

 

 

  

 

 

 

Total

    14,397,828   12,829,867 
   

 

 

  

 

 

 

               
 
Interest rates
(1)
  
Maturities
(2)
 
2019
  
2020
 
 
(%)
   
(in millions of yen)
 
Senior borrowings and bonds:
  
    
   
 
fixed rate denominated in Japanese yen
  
0.00-8.10
  
Apr.2020-Jan.2050
  
2,057,156
   
549,647
 
fixed rate denominated in U.S. dollars
  
0.00-8.25
  
Apr.2020-Mar.2048
  
2,765,247
   
2,744,713
 
fixed rate denominated in other currencies
  
0.02-12.40
  
Apr.2020-Sep.2039
  
324,162
   
609,346
 
floating rate denominated in Japanese yen
  
0.00-51.60
  
Apr.2020-Mar.2050
  
656,029
   
606,095
 
floating rate denominated in U.S. dollars
  
0.00-37.20
  
Apr.2020-Dec.2059
  
1,493,617
   
1,682,540
 
floating rate denominated in other currencies
  
0.00-25.00
  
Jun.2020-Oct.2030
  
206,821
   
209,816
 
               
Total
  
    
7,503,032
   
6,402,157
 
               
Subordinated borrowings and bonds:
  
    
   
 
fixed rate denominated in Japanese yen
  
0.39-4.26
  
Aug.2020-Perpetual
  
3,442,438
   
3,370,234
 
fixed rate denominated in U.S. dollars
  
4.30-4.70
  
Jul.2022-Oct.2025
  
416,072
   
408,113
 
               
Total
  
    
3,858,510
   
3,778,347
 
               
Total
  
    
11,361,542
   
10,180,504
 
               
Notes:

(1)The interest rates disclosed reflect the range of contractual rates in effect at March 31, 2018.2020.
(2)Maturity information disclosed is the range of maturities at March 31, 2018.2020.
(3)None of the long-term debt issuances above are convertible to common stock.
(4)Certain debt agreements permit the MHFG Group to redeem the related debt, in whole or in part, prior to maturity at the MHFG Group’s option on terms specified in the respective agreements.

F-4
9
Table of Contents
MIZUHO FINANCIAL GROUP, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

The following is a summary of contractual maturities of long-term debt subsequent to March 31, 2018:

   (in millions of yen) 

Fiscal year ending March 31:

  

2019

   2,492,058 

2020

   1,606,863 

2021

   1,314,403 

2022

   1,204,785 

2023

   1,068,077 

2024 and thereafter

   5,269,044 
  

 

 

 

Total

   12,955,230 
  

 

 

 

13.2020:

     
 
(in millions of yen)
 
Fiscal year ending March 31:
  
 
2021
  
559,447
 
2022
  
1,430,157
 
2023
  
1,234,962
 
2024
  
697,214
 
2025
  
1,023,243
 
2026 and thereafter
  
5,401,129
 
     
Total
  
10,346,152
 
     
12. Other assets and liabilities

The following table sets
forth
the details of other assets and liabilities at March 31, 20172019 and 2018:

   2017    2018 
   

 

(in millions of yen)

 

Other assets:

    

Accounts receivable:

    

Receivables from brokers, dealers and customers for securities transactions (1)

   1,564,295    1,578,952 

Other

   324,135    368,030 

Collateral pledged:

    

Collateral pledged for derivative transactions

   973,404    981,390 

Margins provided for futures contracts

   276,398    142,156 

Other

   336,538    965,137 

Prepaid pension cost

   682,592    874,191 

Security deposits

   122,858    126,001 

Loans held for sale

   26,689    86,153 

Other

   685,420   609,624 
  

 

 

   

 

 

 

Total

   4,992,329   5,731,634 
  

 

 

   

 

 

 

Other liabilities:

    

Accounts payable:

    

Payables to brokers, dealers and customers for securities transactions (1)

   1,400,141    1,410,785 

Other

   481,809    455,789 

Guaranteed trust principal (2)

   683,324    761,685 

Collateral accepted:

    

Collateral accepted for derivative transactions

   671,691    598,524 

Margins accepted for futures contracts

   307,066    325,038 

Unearned income (3)

   134,666    130,916 

Factoring amounts owed to customers

   53,488    —   

Other

   1,294,340    1,022,858 
�� 

 

 

   

 

 

 

Total

   5,026,525   4,705,595 
  

 

 

   

 

 

 

Notes:
2020:
         
 
2019
  
2020
 
 
(in millions of yen)
 
Other assets:
  
   
 
Accounts receivable:
  
   
 
Receivables from brokers, dealers and customers for securities transactions
(1)
  
1,517,235
   
783,439
 
Other
  
400,676
   
358,702
 
Collateral pledged:
  
   
 
Collateral pledged for derivative transactions
  
856,439
   
1,246,026
 
Margins provided for futures contracts
  
159,747
   
602,039
 
Other
  
857,814
   
941,167
 
Prepaid pension cost
  
850,472
   
711,981
 
ROU assets
(2)
  
—  
   
613,068
 
Security deposits
  
123,317
   
107,294
 
Loans held for sale
  
24,921
   
60,084
 
Other
  
485,383
   
542,079
 
         
Total
  
5,276,004
   
5,965,879
 
         
Other liabilities:
  
   
 
Accounts payable:
  
   
 
Payables to brokers, dealers and customers for securities transactions
(1)
  
2,572,315
   
2,161,075
 
Other
  
442,776
   
375,127
 
Guaranteed trust principal
(3)
  
809,450
   
824,431
 
Lease liabilities
(2)
  
—  
   
627,250
 
Collateral accepted:
  
   
 
Collateral accepted for derivative transactions
  
589,411
   
846,426
 
Margins accepted for futures contracts
  
339,863
   
797,317
 
Unearned income
(4)
  
126,594
   
122,072
 
Other
  
1,052,297
   
1,244,697
 
         
Total
  
5,932,706
   
6,998,395
 
         

F-
50
Table of Contents
MIZUHO FINANCIAL GROUP, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
Notes:
(1)

Receivables from brokers, dealers and customers for securities transactions include ¥315,870included ¥555,938 million and ¥372,395¥3,136 million of such receivables of consolidated VIEs at March 31, 20172019 and 2018,2020, respectively.

MIZUHO FINANCIAL GROUP, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

Payables to brokers, dealers and customers for securities transactions include ¥325,090included ¥620,766 million and ¥422,060¥3,225 million of such payables of consolidated VIEs at March 31, 20172019 and 2018,2020, respectively.
(2)
ROU assets and lease liabilities were initially recognized in connection with the adoption of ASU
No.2016-02
on April 1, 2019. See Note 1 “Basis of presentation and summary of significant accounting policies” and Note 2 “Issued accounting pronouncements” for further information.
(3)Guaranteed trust principal, included in All other liabilities in the disclosure about consolidated VIEs in the accompanying balance sheets, is thea liability of certain consolidated trust arrangements that meet the definition of a VIE for which the MHFG Group provides guarantees for the repayment of principal. See Note 2524 “Variable interest entities and securitizations” for further discussion of the guaranteed principal money trusts.
(3)(4)Unearned income is primarily comprised of refundable loan fees received from consumer loan customers when loans are made. This income is being deferred and recognized in earnings over the life of the loan.

14.

13. Preferred stock

The composition of preferred stock at March 31, 2016, 20172018, 2019 and 20182020 is as follows:

2016

  Aggregate amount  Number of shares  Liquidation
value per share		  Convertible
or not		 

Class of stock

   Authorized (1)  Issued  In treasury   
   

 

(in millions of yen)

           (in yen)    

Eleventh series class XI preferred stock (2)

   914,752   914,752,000   914,752,000   815,828,400   1,000   Yes 

First series class XIV preferred stock(3)

   —     900,000,000   —     —     —     —   

Second series class XIV preferred stock(3)

   —     900,000,000   —     —     —     —   

Third series class XIV preferred stock(3)

   —     900,000,000   —     —     —     —   

Fourth series class XIV preferred stock(3)

   —     900,000,000   —     —     —     —   

First series class XV preferred stock(4)

   —     900,000,000   —     —     —     —   

Second series class XV preferred stock(4)

   —     900,000,000   —     —     —     —   

Third series class XV preferred stock(4)

   —     900,000,000   —     —     —     —   

Fourth series class XV preferred stock(4)

   —     900,000,000   —     —     —     —   

First series class XVI preferred stock(5)

   —     1,500,000,000   —     —     —     —   

Second series class XVI preferred stock(5)

               —     1,500,000,000   —                     —     —     —   

Third series class XVI preferred stock(5)

   —     1,500,000,000                   —     —         —     —   

Fourth series class XVI preferred stock(5)

   —     1,500,000,000   —     —     —     —   
  

 

 

  

 

 

  

 

 

  

 

 

   

Total

   914,752    914,752,000   815,828,400   
  

 

 

   

 

 

  

 

 

   

                         
 
March 31, 2018
  
March 31, 2019
  
March 31, 2020
 
Class of stock
 
Authorized
  
Issued
  
Authorized
  
Issued
  
Authorized
  
Issued
 
 
(number of shares)
 
Class XIV preferred stock
  
900,000,000
   
—
   
900,000,000
   
—
   
900,000,000
   
—
 
Class XV preferred stock
  
900,000,000
   
—
   
900,000,000
   
—
   
900,000,000
   
—
 
Class XVI preferred stock
  
1,500,000,000
   
—
   
1,500,000,000
   
—
   
1,500,000,000
   
—
 

MIZUHO FINANCIAL GROUP, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

2017

Aggregate amountNumber of sharesLiquidation
value per share		Convertible
or not

Class of stock

Authorized (1)IssuedIn treasury

(in millions of yen)

(in yen)

Class XI preferred stock

—  914,752,000—  —  —  —  

First series class XIV preferred stock(3)

—  900,000,000—  —  —  —  

Second series class XIV preferred stock(3)

—  900,000,000—  —  —  —  

Third series class XIV preferred stock(3)

            —  900,000,000—                  —      —  —  

Fourth series class XIV preferred stock(3)

—  900,000,000                —  —  —  —  

First series class XV preferred stock(4)

—  900,000,000—  —  —  —  

Second series class XV preferred stock(4)

—  900,000,000—  —  —  —  

Third series class XV preferred stock(4)

—  900,000,000—  —  —  —  

Fourth series class XV preferred stock(4)

—  900,000,000—  —  —  —  

First series class XVI preferred stock(5)

—  1,500,000,000—  —  —  —  

Second series class XVI preferred stock(5)

—  1,500,000,000—  —  —  —  

Third series class XVI preferred stock(5)

—  1,500,000,000—  —  —  —  

Fourth series class XVI preferred stock(5)

—  1,500,000,000—  —  —  —  

Total

—  —  —  

MIZUHO FINANCIAL GROUP, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

2018

Aggregate amountNumber of sharesLiquidation
value per share		Convertible
or not

Class of stock

Authorized (1)IssuedIn treasury

(in millions of yen)

(in yen)

First series class XIV preferred stock(3)

        —  900,000,000              —                —     —  —  

Second series class XIV preferred stock(3)

—  900,000,000—  —  —  —  

Third series class XIV preferred stock(3)

—  900,000,000—  —  —  —  

Fourth series class XIV preferred stock(3)

—  900,000,000—  —  —  —  

First series class XV preferred stock(4)

—  900,000,000—  —  —  —  

Second series class XV preferred stock(4)

—  900,000,000—  —  —  —  

Third series class XV preferred stock(4)

—  900,000,000—  —  —  —  

Fourth series class XV preferred stock(4)

—  900,000,000—  —  —  —  

First series class XVI preferred stock(5)

—  1,500,000,000—  —  —  —  

Second series class XVI preferred stock(5)

—  1,500,000,000—  —  —  —  

Third series class XVI preferred stock(5)

—  1,500,000,000—  —  —  —  

Fourth series class XVI preferred stock(5)

—  1,500,000,000—  —  —  —  

Total

—  —  —  

Notes:
(1)The total number of shares authorized to be issued was 4,214,752,000 shares at March 31, 2016 and 2017, and 3,300,000,000 shares at March 31, 2018.
(2)The aggregate amount and number of issued shares include the preferred stock in treasury which has been converted into common stock but not yet cancelled.
(3)The total number of authorized shares for each series of class XIV preferred stock cannot exceed 900,000,000.
(4)The total number of authorized shares for each series of class XV preferred stock cannot exceed 900,000,000.
(5)The total number of authorized shares for each series of class XVI preferred stock cannot exceed 1,500,000,000.

Holders or registered pledgees of preferred stock are entitled to receive annual dividends, and distribution of residual assets of MHFG as set out above at the liquidation value per share, prior to holders of common stock but pari passu among themselves. MHFG may pay up to
one-half
of the annual dividend payable on each class of preferred stock as an interim dividend. Dividends on preferred stock are not cumulative. Holders of preferred stock are not entitled to vote at a general meeting of shareholders except where the articles of incorporation entitle holders of preferred stock to vote.

MIZUHO FINANCIAL GROUP, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

In June 2013, MHFG newly authorized class XIV preferred stock, class XV preferred stock and class XVI preferred stock to meet the requirements of Basel III. Under Basel III,

There was no change in order for preferred stock issued by a bank holding company to be included as its regulatory capital under the capital adequacy requirements, the terms and conditionsbalance of the preferred stock are required to include a provision that in the event the bank holding company is considered to benon-viable, (1) awrite-off of the relevant preferred stock or (2) a conversion of the relevant preferred stock into common stock shall be effected (loss-absorption clause). In respect of class XI preferred stock, which was authorized before the implementation of Basel III in the articles of incorporation of MHFG, it was not possible to include the foregoing loss-absorption clause in the terms and conditions of that preferred stock under the current provisions of the articles of incorporation. Therefore, class XIV preferred stock, class XV preferred stock and class XVI preferred stock were newly authorized so that the foregoing loss-absorption clause can be included in the terms and conditions of class XIV preferred stock, class XV preferred stock and class XVI preferred stock by a resolution of the board of directors relating to the issuance of the relevant preferred stock. Besides the foregoing loss-absorption clause, provisions regarding the preferred stock dividends, distribution of residual assets, acquisition clause and rights to request acquisition in respect of class XIV preferred stock, class XV preferred stock and class XVI preferred stock were newly established. In addition, each of class XIV preferred stock, class XV preferred stock and class XVI preferred stock was established in multiple series as a separate class of shares in order to enable MHFG to issue that preferred stock in multiple series.

The following table shows the changes in the number of shares and the aggregate amount of preferred stock during the fiscal years ended March 31, 2016, 20172018, 2019 and 2018:

Class of stock

 Issued
shares at
March 31,
2015		  Net
change		  Issued
shares at
March 31,
2016		  Net
change		  Issued
shares at
March 31,
2017		  Net
change		  Issued
shares at
March 31,
2018		 
  

 

(number of shares)

 

Eleventh series class XI preferred stock(Note)

  914,752,000   —     914,752,000   (914,752,000)   —     —     —   
 

 

 

  

 

 

  

 

 

  

 

 

  

 

 

  

 

 

  

 

 

 

Total

  914,752,000   —     914,752,000   (914,752,000)   —     —     —   
 

 

 

  

 

 

  

 

 

  

 

 

  

 

 

  

 

 

  

 

 

 

Class of stock

 Aggregate
amount at
March 31,
2015		  Net
change		  Aggregate
amount at
March 31,
2016		  Net
change		  Aggregate
amount at
March 31,
2017		  Net
change		  Aggregate
amount at
March 31,
2018		 
  

 

(in millions of yen)

 

Eleventh series class XI preferred stock(Note)

  914,752   —     914,752   (914,752)   —     —     —   
 

 

 

  

 

 

  

 

 

  

 

 

  

 

 

  

 

 

  

 

 

 

Total

  914,752   —     914,752   (914,752)   —     —     —   
 

 

 

  

 

 

  

 

 

  

 

 

  

 

 

  

 

 

  

 

 

 

Note:In July 2016, all shares of the eleventh series class XI preferred stock were converted into common stock and cancelled.
2020.

MIZUHO FINANCIAL GROUP, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

15.

14. Common stock

The following table shows the changes in the number of issued shares of common stock during the fiscal years ended March 31, 2016, 20172018, 2019 and 2018:

   2016   2017   2018 
   

 

(shares)

 

Balance at beginning of fiscal year

   24,621,897,967    25,030,525,657    25,386,307,945 

Issuance of new shares of common stock due to conversion of Eleventh series class XI preferred stock

   403,667,690    349,677,288    —   

Issuance of new shares of common stock due to exercise of stock acquisition rights

   4,960,000    6,105,000    3,337,000 
  

 

 

   

 

 

   

 

 

 

Balance at end of fiscal year

   25,030,525,657    25,386,307,945    25,389,644,945 
  

 

 

   

 

 

   

 

 

 

16.2020:

             
 
2018
  
2019
  
2020
 
 
(shares)
 
Balance at beginning of fiscal year
  
25,386,307,945
   
25,389,644,945
   
25,392,498,945
 
Issuance of new shares of common stock due to exercise of stock acquisition rights
  
3,337,000
   
2,854,000
   
—
 
             
Balance at end of fiscal year
  
25,389,644,945
   
25,392,498,945
   
25,392,498,945
 
             
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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
15. Dividends

The amount available for dividends under Japan’s Companies Act is based on the amount recorded in MHFG’s
non-consolidated
general books of account, maintained in accordance with accounting principles generally accepted in Japan (“Japanese GAAP”) and adjusted by post
period-end
changes. Therefore, the consolidated shareholders’ equity under U.S. GAAP has no effect on the determination of the amount available for dividends. On March 31, 2018,2020, MHFG’s capital stock, capital surplus and retained earnings were ¥2,256,549¥2,256,768 million, ¥1,196,478¥1,196,660 million and ¥1,906,557¥1,913,788 million, respectively, under Japanese GAAP.

Pursuant to the Companies Act, in making a distribution of retained earnings, an entity must set aside in its legal reserve an amount equal to one-tenth of the amount of retained earnings so distributed, until its legal reserve reaches one-quarter of its capital stock. MHFG’s legal reserve at March 31, 20182020 was ¥1,200,791¥1,201,010 million, of which ¥1,196,441¥1,196,660 million was included in capital surplus and ¥4,350 million in retained earnings.

In addition to the provision that requires an appropriation for the legal reserve, the Companies Act and Japan’s Banking Act impose certain limitations on the amount available for dividends. Under the Companies Act, MHFG’s maximum amount available for dividends, at March 31, 2018,2020, was ¥1,897,194¥1,904,452 million, based on the amount recorded in MHFG’s general books of account under Japanese GAAP. Under the Banking Act and related regulations, MHFG has to meet the minimum capital adequacy requirements. Distributions of retained earnings, which are otherwise distributable to shareholders, are restricted in order to maintain the minimum Common Equity Tier 1 capital ratio of 4.5% for capital adequacy purposes under the rules in Basel III. See Note 1817 “Regulatory matters” for further discussion of regulatory capital requirements.

Payment of dividends on shares of common stock is also subject to the prior payment of dividends on shares of preferred stock.

stock, if any are outstanding.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

The following table shows dividends on preferred stock and common stock during the fiscal years ended March 31, 2016, 2017 and 2018:

2016

  Cash dividends 

Class of stock

  Per share   In aggregate 
   (in yen)   

 

(in millions of yen)

 

Eleventh series class XI preferred stock

   20    3,572 

Common stock

   7.75    191,693 
    

 

 

 

Total

     195,265 
    

 

 

 

2017

  Cash dividends 

Class of stock

  Per share   In aggregate 
   (in yen)   

 

(in millions of yen)

 

Eleventh series class XI preferred stock (Note)

   10    989 

Common stock

   7.50    189,013 
    

 

 

 

Total

     190,002 
    

 

 

 

2018

  Cash dividends 

Class of stock

  Per share   In aggregate 
   (in yen)   

 

(in millions of yen)

 

Common stock

   7.50    190,361 
    

 

 

 

Note:In July 2016, all shares of the eleventh series class XI preferred stock were converted into common stock and cancelled. Consequently, the amount for the fiscal year does not include interim dividends.

MIZUHO FINANCIAL GROUP, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

17.

16. Accumulated other comprehensive income

(loss), net of tax

Changes in each component of AOCI for the fiscal years ended March 31, 2016, 20172018, 2019 and 20182020 are as follows:

   2016  2017  2018 
   

 

(in millions of yen)

 

AOCI, balance at beginning of fiscal year, previously reported

   2,041,005   1,469,308   1,521,163 

Cumulative effect of change in accounting principles

   —     330   —   

AOCI, balance at beginning of fiscal year, adjusted

   2,041,005   1,469,638   1,521,163 

Net unrealized gains (losses) on available-for-sale securities:

    

Balance at beginning of fiscal year, previously reported

   1,747,607   1,409,459   1,461,302 

Cumulative effect of change in accounting principles

   —   (85)   — 

Balance at beginning of fiscal year, adjusted

   1,747,607   1,409,374   1,461,302 

Unrealized holding gains (losses) during year

   (189,479)   273,844   282,141 

Less: reclassification adjustments for losses (gains) included in net income

   (148,669)   (221,916)   (186,858) 
  

 

 

  

 

 

  

 

 

 

Change during year

   (338,148)   51,928   95,283 
  

 

 

  

 

 

  

 

 

 

Balance at end of fiscal year

   1,409,459   1,461,302   1,556,585 

Foreign currency translation adjustments:

    

Balance at beginning of fiscal year, previously reported

   129,179   6,310   (5,535) 

Cumulative effect of change in accounting principles

   —     415   —   

Balance at beginning of fiscal year, adjusted

   129,179   6,725   (5,535) 

Foreign currency translation adjustments during year

   (122,081)   (11,920)   (26,936) 

Less: reclassification adjustments for losses (gains) included in net income

   (788)   (340)   (2,605) 
  

 

 

  

 

 

  

 

 

 

Change during year

   (122,869)   (12,260)   (29,541) 
  

 

 

  

 

 

  

 

 

 

Balance at end of fiscal year

   6,310   (5,535)   (35,076) 

Pension liability adjustments:

    

Balance at beginning of fiscal year

   164,219   53,539   65,396 

Unrealized gains (losses) during year

   (107,497)   11,561   157,737 

Less: reclassification adjustments for losses (gains) included in net income

   (3,183)   296   (2,748) 
  

 

 

  

 

 

  

 

 

 

Change during year

   (110,680)   11,857   154,989 
  

 

 

  

 

 

  

 

 

 

Balance at end of fiscal year

   53,539   65,396   220,385 

Total other comprehensive income (loss), net of tax attributable to MHFG shareholders

   (571,697)   51,525   220,731 
  

 

 

  

 

 

  

 

 

 

AOCI, balance at end of fiscal year

   1,469,308   1,521,163   1,741,894 
  

 

 

  

 

 

  

 

 

 

             
 
2018
  
2019
  
2020
 
 
(in millions of yen)
 
AOCI, balance at beginning of fiscal year, previously reported
  
1,521,163
   
1,741,894
   
164,021
 
Cumulative effect of change in accounting principles
(1)
  
—  
   
(1,535,142
)  
(1,052
)
AOCI, balance at beginning of fiscal year, adjusted
  
1,521,163
   
206,752
   
162,969
 
             
Net unrealized gains (losses) on
available-for-sale
securities:
  
   
   
 
Balance at beginning of fiscal year, previously reported
  
1,461,302
   
1,556,585
   
22,019
 
Cumulative effect of change in accounting principles
(1)
  
—  
   
(1,525,064
)  
—  
 
Balance at beginning of fiscal year, adjusted
  
1,461,302
   
31,521
   
22,019
 
Unrealized holding gains (losses) during year
  
282,141
   
(11,358
)  
(22,566
)
Less: reclassification adjustments for losses (gains) included in net income
  
(186,858
)  
1,856
   
(19,045
)
             
Change during year
  
95,283
   
(9,502
)  
(41,611
)
             
Balance at end of fiscal year
  
1,556,585
   
22,019
   
(19,592
)
             
Foreign currency translation adjustments:
  
   
   
 
Balance at beginning of fiscal year, previously reported
  
(5,535
)  
(35,076
)  
(58,558
)
Cumulative effect of change in accounting principles
(1)
  
—  
   
—  
   
(1,052
)
Balance at beginning of fiscal year, adjusted
  
(5,535
)  
(35,076
)  
(59,610
)
Foreign currency translation adjustments during year
  
(26,936
)  
(22,737
)  
(49,888
)
Less: reclassification adjustments for losses (gains) included in net income
  
(2,605
)  
(745
)  
(374
)
             
Change during year
  
(29,541
)  
(23,482
)  
(50,262
)
             
Balance at end of fiscal year
  
(35,076
)  
(58,558
)  
(109,872
)
             
Pension liability adjustments:
  
   
   
 
Balance at beginning of fiscal year
  
65,396
   
220,385
   
196,446
 
Unrealized gains (losses) during year
  
157,737
   
(17,243
)  
(122,219
)
Less: reclassification adjustments for losses (gains) included in net income
  
(2,748
)  
(6,696
)  
(4,772
)
             
Change during year
  
154,989
   
(23,939
)  
(126,991
)
             
Balance at end of fiscal year
  
220,385
   
196,446
   
69,455
 
             
Own credit risk adjustments
(2)
:
  
   
   
 
Balance at beginning of fiscal year, previously reported
  
—  
   
—  
   
4,114
 
Cumulative effect of change in accounting principles
(1)
  
—  
   
(10,078
)  
—  
 
Balance at beginning of fiscal year, adjusted
  
—  
   
(10,078
)  
4,114
 
Unrealized gains (losses) during year
  
—  
   
14,293
   
45,560
 
Less: reclassification adjustments for losses (gains) included in net income
  
—  
   
(101
)  
841
 
             
Change during year
  
—  
   
14,192
   
46,401
 
             
Balance at end of fiscal year
  
—  
   
4,114
   
50,515
 
Total other comprehensive income (loss), net of tax attributable to MHFG shareholders
  
220,731
   
(42,731
)  
(172,463
)
             
AOCI, balance at end of fiscal year
  
1,741,894
   
164,021
   
(9,494
)
             

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MIZUHO FINANCIAL GROUP, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

Notes:
(1)See Note 2 “Issued accounting pronouncements” for further details of the cumulative-effect adjustment for AOCI.
(2)The MHFG Group adopted ASU
No.2016-01
on April 1, 2018. The ASU requires an entity to present separately in other comprehensive income the portion of the total change in the fair value of a liability resulting from a change in the instrument-specific credit risk when the entity has elected to measure the liability at fair value in accordance with the fair value option for financial instruments. See Note 2 “Issued accounting pronouncements” for further details.
The following table shows the amounts reclassified out of AOCI into net income during the fiscal year ended March 31, 2018:

  Before
tax(1)		  Tax
effect(2)		  Net of tax
before
allocation to
noncontrolling
interests		  Net of tax
attributable to
noncontrolling
interests(2)		  Net of tax
attributable
to MHFG
shareholders		    
  

 

(in millions of yen)

    

Amounts reclassified out of AOCI into net income:

       

Affected line items in the consolidated statements of income:

Net unrealized gains (losses) on available-for-sale securities

  269,808   (82,828)   186,980   (122)   186,858   

Investment gains (losses)—net

Foreign currency translation adjustments

  2,605   —     2,605   —     2,605   

Investment gains (losses)—net

Pension liability adjustments

  2,560   190   2,750   (2)   2,748   

Salaries and employee benefits

 

 

 

  

 

 

  

 

 

  

 

 

  

 

 

   

Total

  274,973   (82,638)   192,335   (124)   192,211   
 

 

 

  

 

 

  

 

 

  

 

 

  

 

 

   

2020:

                       
 
Before
tax
(1)
  
Tax
effect
(2)
  
Net of tax
before
allocation to
noncontrolling
interests
  
Net of tax
attributable to
noncontrolling
interests
(2)
  
Net of tax
attributable
to MHFG
shareholders
  
 
(in millions of yen)
  
Amounts reclassified out of AOCI into net income:
  
   
   
   
   
  
Affected line items in the consolidated statements of income:
Net unrealized gains (losses) on
available-for-sale
securities
  
27,449
   
(8,410
)  
19,039
   
6
   
19,045
  
Investment gains (losses)—net
Foreign currency translation adjustments
  
374
   
—  
   
374
   
—  
   
374
  
Investment gains (losses)—net
Pension liability adjustments
  
6,618
   
(1,765
)  
4,853
   
(81
)  
4,772
  
Salaries and employee benefits
Own credit risk adjustments
  
(1,265
)  
387
   
(878
)  
37
   
(841
) 
Other noninterest income (expenses)
                       
Total
  
33,176
   
(9,788
)  
23,388
   
(38
)  
23,350
  
                       
Notes:

(1)The financial statement line item in which the amounts in the Before tax column are recordedreported in each account presented under the heading “AffectedConsolidated statements of income is listed to the right of the table.
(2)The financial statement line items in which the consolidated statements of income”.
(2)The amounts in the Tax effect column and the Net of tax attributable to noncontrolling interests columninterest columns are recordedreported in the consolidated statements of income are Income tax expense and Net income, attributable to noncontrolling interests in the consolidated statements of income, respectively.

18.

17. Regulatory matters

Regulatory capital requirements

MHFG, MHBK, and MHTB are subject to regulatory capital requirements administered by the Financial Services Agency in accordance with the provisions of theJapan’s Banking Act and related regulations. Certain foreign banking subsidiaries are subject to regulation and control by local supervisory authorities, including central banks. Failure to meet minimum capital requirements may initiate certain mandatory actions by regulators that, if undertaken, could have a direct material effect on the MHFG Group’s consolidated financial condition and results of operations.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
The capital adequacy guidelines applicable to Japanese banks and bank holding companies with international operations supervised by the Financial Services Agency closely follow the risk-adjusted approach proposed by the Basel Committee on Banking Supervision (“BCBS”)Bank for International Settlements and are intended to further strengthen the soundness and stability of Japanese banks.
In December 2010, BCBSBasel Committee on Banking Supervision (“BCBS”) issued the Basel III rules text, (later revised in June 2011, January 2013, October 2014which builds on the International Convergence of Capital Measurement and December 2017)Capital Standards document (“Basel II”), whichto strengthen the regulation, supervision and risk management of the banking sector. Basel III text presents the details of global regulatory standards on bank capital adequacy and liquidity agreed by the Governors and Heads of Supervision, which is the oversight body of BCBS, and endorsed by the G20 Leaders at the Seoul summit in November 2010.liquidity. The rules text sets out higher and better-quality capital, better risk coverage, the introduction of a leverage ratio as a backstop to the risk-based requirement, and the introduction of the capital conservation buffer and countercyclical capital buffer as measures to promote the
build-up
of capital that can be drawn down in periods of stress, and the introduction of two global liquidity standards.
The Financial Services Agency’s revisions to its capital adequacy guidelines

MIZUHO FINANCIAL GROUP, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

became effective from March 31, 2013, which generally reflect the rules in the Basel III rules text that have been applied from January 1, 2013. The framework of Basel III is based on the following

There are three pillars: minimum capital requirements; supervisory review; and market discipline. Under the first pillar, the capital ratio is calculated by dividingprimary regulatory capital orratios used to assess capital adequacy: Common Equity Tier 1, Tier 1 and Total risk-based capital by risk-weighted assets. Under the second pillar, banksratios. The ratios are required to maintain adequate capital to support allcomprised of the major risks in their business and are encouraged to develop and use better risk management techniques in monitoring and managing such risks. Under the third pillar, banks are required to enhance disclosure, including disclosure of details of the capital adequacy ratio, the amount of each type of risk and the method of calculation used so that the market may make more effective evaluations.

With regard to risk-based capital, the guidelines based on Basel III set out higher and better-quality capital standards compared to those under Basel II, which had been effective until Basel III was applied. The guidelines based on Basel III require a target minimum standard capital adequacy ratio of 8%, Tier 1 capital ratio of 6% and Common Equity Tier 1 capital, Tier 1 capital (Common Equity Tier 1 capital and Additional Tier 1 capital) and total risk-based capital (Tier 1 and Tier 2 capital) divided by risk-weighted assets. Common Equity Tier 1 capital primarily consists of common stock, capital surplus, retained earnings and AOCI. Regulatory adjustments including certain intangible fixed assets, such as goodwill, and defined-benefit pension fund assets will be deducted from Common Equity Tier 1. Additional Tier 1 capital generally consists of Basel III compliant preferred securities and other capital that meets Tier 1 requirements under Basel II standards, net of regulatory adjustments. Tier 2 capital generally consists of Basel III compliant deferred obligations, such as subordinated debts, capital that meets Tier 2 requirements under Basel II standards, certain allowances for credit losses and noncontrolling interests in subsidiaries’ Tier 2 instruments.

Under the revised guidelines, the minimum capital adequacy ratio of 4.5%,is 8% on both a consolidated and
non-consolidated
basis for banks with international operations, such as MHBK and MHTB, or on a consolidated basis for bank holding companies with international operations, such as MHFG.

Risk-based Within the minimum capital calculated from financial statements prepared under Japanese GAAP, is classified intoadequacy ratio, the following two tiers: Tier 1 capital; and Tier 2 capital. Tier 1 capital consists of Common Equity Tier 1 capital requirement is 4.5% and Additional Tier 1 capital. Common Equitythe Tier 1 capital generally consists of common stock, capital surplus, retained earnings, accumulated other comprehensive income and other disclosed reserves and others less any regulatory adjustments. Additional Tier 1 capital generally consists of instruments issued by a bank or its holding company that meet the criteria for inclusion in Additional Tier 1 capital and others less any regulatory adjustments. Tier 2 capital generally consists of instruments issued by a bank or its holding company such as subordinated debt that meet the criteria for inclusion in Tier 2 capital, general reserve for possible losses on loans (equaling the sum of (i) the excess of the amount of qualified reserves over the amount of expected losses and (ii) the amount of general reserves calculated based on the standardized approach) and others less any regulatory adjustments.

requirement is 6.0%.

Under Basel III, capital instruments that no longer qualify as Additional Tier 1 capital or Tier 2 capital are being phased out beginning March 2013 by increments of 10% until becoming fully effective in March 2022. The MHFG Group’s existing preferred securities (the amounts thereof included within Additional Tier 1 capital as of March 31, 2018 being ¥577.5 billion) and existing subordinated debt issued before March 2013 (the amounts thereof included within Tier 2 capital as of March 31, 20182020 being ¥674.8¥337.4 billion) are subject to the
phase-out
arrangements.

In November 2011, the Financial Stability Board (“FSB”) published policy measures to address the systemic and moral hazard risks associated with systemically important financial institutions. The policy measures include requirements for global systemically important banks (“G-SIBs”) to have additional loss absorption capacity tailored to the impact of their default, ranging from 1% to 2.5% of risk-weighted assets, to be met with Common Equity Tier 1 capital, which would be in addition to the 7.0% Common Equity Tier 1 capital requirement (including capital conservation buffer). The requirements began phasing in from January 2016 and will be fully implemented by January 2019. The Group was included in the list of G-SIBs updated in November 2017 and was allocated to the category that would require 1.0% of additional loss absorbency.

In November 2015, the Financial ServiceServices Agency published the revised capital adequacy guidelines and related ordinances to introduce the capital buffer requirements under the Basel III rules text regardingfor Japanese banks and bank holding companies with international operations, which include the capital conservation buffer, the countercyclical capital buffer and the additional loss absorption capacity requirementabsorbency requirements for G-SIBs global systemically important banks
(“G-SIBs”)
and domestic systemically important banks

MIZUHO FINANCIAL GROUP, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

(“D-SIBs”).

These guidelines becamehave become effective on March 31, 2016. The capital conservation buffer, the countercyclical capital buffer and the additional loss absorption capacity requirement for
G-SIBs
and
D-SIBs
must be met with Common Equity Tier l capital under the
revised
guidelines, and if such buffer and requirementrequirements are not satisfied, a capital distribution constraints plan is required to be submitted to the Financial ServiceServices Agency and carried out. The capital conservation buffer is being phased in starting in March 2016 at 0.625% until becomingbecame fully effective in March 2019 at 2.5%. In addition, subject to national discretion by the respective
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MIZUHO FINANCIAL GROUP, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
regulatory authorities, if the relevant national authority judges a period of excess credit growth to be leading to the
build-up
of system-wide risk, a countercyclical capital buffer ranging from 0% to 2.5% would also be imposed on banking organizations. The countercyclical capital buffer is a weighted average of the buffers deployed across all the jurisdictions to which the banking organization has credit exposures.

In December 2015, the Financial Service Agency published a capital adequacy guideline regarding the designation of G-SIBs and D-SIBs in Japan. The Group was Further, MHFG is currently designated as both a

G-SIB
and a
D-SIB,
and the additional loss absorption capacity requirement applicableapplied to the GroupMHFG was 1.0% on a fully effective basis.. The additional loss absorption capacity
requirement
was the same as that imposed by the FSB,Financial Stability Board, which is beingwas phased in starting in March 2016 at 0.25% until becomingand became fully effective in March 2019 at 1.0%.

Regulatory adjustments such as goodwill

Leverage ratio
The Leverage Ratio framework is critical and other intangibles, and defined benefit pension fund assets and liabilities, are to be applied mainlycomplementary to the calculationrisk-based capital framework that will help ensure broad and adequate capture of Common Equityboth
on-
and
off-balance
sheet sources of banks’ leverage.
Basel III’s leverage ratio is defined as the capital measure (numerator) divided by the exposure measure (denominator) and is expressed as a percentage. The capital measure for the leverage ratio is the Tier 1 capital in the form of the deductions,risk-based capital framework, and became fully effective inthe exposure measure is the sum of the
on-balance
sheet exposures, derivative exposures, securities financing transaction exposures and
off-balance
sheet items.
In March 2018.

2019, the Financial Services Agency published the revised leverage ratio framework and the minimum leverage ratio is defined as 3% on both a consolidated and

non-consolidated
basis for banks with international operations, such as MHBK and MHTB, or on a consolidated basis for bank holding companies with international operations, such as MHFG.
The capital requirements and regulatory adjustments are being phased in over a transitional period as follows (italicized percentages indicate those still in transition periods):

   March
2017		  March
2018		  March
2019		  March
2020		  March
2021		  March
2022		 

Minimum Common Equity Tier 1 capital

   4.5%   4.5%   4.5%   4.5%   4.5%   4.5% 

Minimum Tier 1 capital

   6.0%   6.0%   6.0%   6.0%   6.0%   6.0% 

Minimum total capital

   8.0%   8.0%   8.0%   8.0%   8.0%   8.0% 

Phase-in of deductions from capital

   80.0%   100.0%   100.0%   100.0%   100.0%   100.0% 

Phase out of recognition of capital instruments that no longer qualify as capital

   50.0%   40.0%   30.0%   20.0%   10.0%   0.0% 

Capital conservation buffer

   1.25%   1.875%   2.5%   2.5%   2.5%   2.5% 

Countercyclical capital buffer (1)

   0.00%   0.01%   0.01%   0.01%   0.01%   0.01% 

Additional loss absorbency requirements for G-SIBs andD-SIBs (2)

   0.50%   0.75%   1.0%   1.0%   1.0%   1.0% 

                     
 
March
2019
  
March
2020
  
March
2021
  
March
2022
  
March
2023
 
Minimum Common Equity Tier 1 capital
  
4.5
%  
4.5
%  
4.5
%  
4.5
%  
4.5
%
Minimum Tier 1 capital
  
6.0
%  
6.0
%  
6.0
%  
6.0
%  
6.0
%
Minimum total capital
  
8.0
%  
8.0
%  
8.0
%  
8.0
%  
8.0
%
Phase out of recognition of capital instruments that no longer qualify as capital
  
30.0
%  
20.0
%  
10.0
%  
0.0
%  
0.0
%
Capital conservation buffer
  
2.5
%  
2.5
%  
2.5
%  
2.5
%  
2.5
%
Countercyclical capital buffer
(1)
  
0.05
%  
0.01
%  
0.01
%  
0.01
%  
0.01
%
Additional loss absorbency requirements for
G-SIBs
and
D-SIBs
(2)
  
1.0
%  
1.0
%  
1.0
%  
1.0
%  
1.0
%
Minimum Leverage Ratio
  
3.0
%  
3.0
%  
3.0
%  
3.0
%  
3.5
%
(3)
Notes:

(1)Figures assume that the countercyclical capital buffer will continue to be 0.01% after March 2018.2020.
(2)Figures assume that the additional loss absorbency requirements applied to the Group as a
G-SIB
and
D-SIB
continue to be 1.0% on a fully effective basis.basis in future years.

(3)This figure includes a leverage ratio buffer required to be met at 50% of the additional loss absorbency requirements applied to the Group as a
G-SIB
under the finalized Basel III reforms.
If the capital adequacy ratio and leverage ratio of a financial institution falls below the required level, the Financial Services Agency may, depending upon the extent of capital
deterioration
, take certain corrective action, including requiring the financial institution to submit an improvement plan to strengthen its capital base, reduce
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MIZUHO FINANCIAL GROUP, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
its total assets, restrict its business operations or other actions that could have a material effect on its financial condition and results of operations.

MIZUHO FINANCIAL GROUP, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

Capital adequacy ratios and leverage
ratios
of MHFG, MHBK, and MHTB as of March 31, 20172019 and 20182020 calculated in
accordance
with Japanese GAAP and the guidelines established by the Financial Services Agency are set forth in the following table:

   2017   2018 
   Amount    Ratio    Amount    Ratio  
   

 

(in billions of yen, except percentages)

 

Consolidated:

        

MHFG:

        

Common Equity Tier 1 capital:

        

Required (Note)

   3,857    6.25    4,247    7.135 

Actual

   7,002    11.34    7,437    12.49 

Tier 1 capital:

        

Required (Note)

   4,783    7.75    5,140    8.635 

Actual

   8,212    13.30    9,192    15.44 

Total risk-based capital:

        

Required(Note)

   6,017    9.75    6,331    10.635 

Actual

   10,051    16.28    10,860    18.24 

MHBK:

        

Common Equity Tier 1 capital:

        

Required

   2,541    4.50    2,400    4.50 

Actual

   6,304    11.16    6,584    12.34 

Tier 1 capital:

        

Required

   3,388    6.00    3,200    6.00 

Actual

   7,536    13.34    8,330    15.61 

Total risk-based capital:

        

Required

   4,517    8.00    4,267    8.00 

Actual

   9,149    16.20    9,881    18.52 

MHTB:

        

Common Equity Tier 1 capital:

        

Required

   112    4.50    112    4.50 

Actual

   466    18.73    498    19.99 

Tier 1 capital:

        

Required

   149    6.00    149    6.00 

Actual

   466    18.73    499    20.05 

Total risk-based capital:

        

Required

   199    8.00    199    8.00 

Actual

   485    19.47    505    20.28 

Non-consolidated:

        

MHBK:

        

Common Equity Tier 1 capital:

        

Required

   2,432    4.50    2,312    4.50 

Actual

   6,057    11.20    6,330    12.32 

Tier 1 capital:

        

Required

   3,243    6.00    3,082    6.00 

Actual

   7,316    13.53    8,081    15.73 

Total risk-based capital:

        

Required

   4,324    8.00    4,109    8.00 

Actual

   8,938    16.53    9,619    18.72 

MHTB:

        

Common Equity Tier 1 capital:

        

Required

   113    4.50    112    4.50 

Actual

   475    18.98    504    20.28 

Tier 1 capital:

        

Required

   150    6.00    149    6.00 

Actual

   475    18.98    504    20.28 

Total risk-based capital:

        

Required

   200    8.00    199    8.00 

Actual

   493    19.70    509    20.50 

 
2019
  
2020
 
 
Amount
  
Ratio
  
Amount
  
Ratio
 
 
(in billions of yen, except percentages)
 
Consolidated:
  
   
   
   
 
MHFG:
  
   
   
   
 
Common Equity Tier 1 capital:
  
   
   
   
 
Required
(Note)
  
4,661
   
8.05
   
4,978
   
8.01
 
Actual
  
7,390
   
12.76
   
7,245
   
11.65
 
Tier 1 capital:
  
   
   
   
 
Required
(Note)
  
5,529
   
9.55
   
5,910
   
9.51
 
Actual
  
9,232
   
15.94
   
9,024
   
14.52
 
Total risk-based capital:
  
   
   
   
 
Required
(Note)
  
6,687
   
11.55
   
7,152
   
11.51
 
Actual
  
10,918
   
18.85
   
10,722
   
17.25
 
Leverage Ratio:
  
   
   
   
 
Required
  
6,257
   
3.00
   
6,629
   
3.00
 
Actual
  
9,232
   
4.42
   
9,024
   
4.08
 
MHBK:
  
   
   
   
 
Common Equity Tier 1 capital:
  
   
   
   
 
Required
  
2,388
   
4.50
   
2,567
   
4.50
 
Actual
  
6,690
   
12.60
   
6,501
   
11.39
 
Tier 1 capital:
  
   
   
   
 
Required
  
3,184
   
6.00
   
3,422
   
6.00
 
Actual
  
8,527
   
16.06
   
8,275
   
14.50
 
Total risk-based capital:
  
   
   
   
 
Required
  
4,246
   
8.00
   
4,563
   
8.00
 
Actual
  
10,098
   
19.02
   
9,865
   
17.29
 
Leverage Ratio:
  
   
   
   
 
Required
  
5,758
   
3.00
   
6,160
   
3.00
 
Actual
  
8,527
   
4.44
   
8,275
   
4.02
 
MHTB:
  
   
   
   
 
Common Equity Tier 1 capital:
  
   
   
   
 
Required
  
95
   
4.50
   
93
   
4.50
 
Actual
  
500
   
23.67
   
489
   
23.64
 
Tier 1 capital:
  
   
   
   
 
Required
  
127
   
6.00
   
124
   
6.00
 
Actual
  
501
   
23.70
   
489
   
23.66
 
Total risk-based capital:
  
   
   
   
 
Required
  
169
   
8.00
   
165
   
8.00
 
Actual
  
505
   
23.87
   
491
   
23.74
 
Leverage Ratio:
  
   
   
   
 
Required
  
229
   
3.00
   
216
   
3.00
 
Actual
  
501
   
6.55
   
489
   
6.79
 
Non-consolidated:
  
   
   
   
 
MHBK:
  
   
   
   
 
Common Equity Tier 1 capital:
  
   
   
   
 
Required
  
2,272
   
4.50
   
2,403
   
4.50
 
Actual
  
6,363
   
12.60
   
6,130
   
11.47
 
Tier 1 capital:
  
   
   
   
 
Required
  
3,029
   
6.00
   
3,204
   
6.00
 
Actual
  
8,199
   
16.23
   
7,905
   
14.80
 
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MIZUHO FINANCIAL GROUP, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
 
2019
  
2020
 
 
Amount
  
Ratio
  
Amount
  
Ratio
 
 
(in billions of yen, except percentages)
 
Total risk-based capital:
  
   
   
   
 
Required
  
4,039
   
8.00
   
4,272
   
8.00
 
Actual
  
  9,757
   
19.32
   
  9,482
   
17.75
 
Leverage Ratio:
  
   
   
   
 
Required
  
5,517
   
3.00
   
5,884
   
3.00
 
Actual
  
8,199
   
4.45
   
7,905
   
4.03
 
MHTB:
  
   
   
   
 
Common Equity Tier 1 capital:
  
   
   
   
 
Required
  
94
   
4.50
   
93
   
4.50
 
Actual
  
494
   
23.58
   
475
   
23.10
 
Tier 1 capital:
  
   
   
   
 
Required
  
126
   
6.00
   
123
   
6.00
 
Actual
  
494
   
23.58
   
475
   
23.10
 
Total risk-based capital:
  
   
   
   
 
Required
  
168
   
8.00
   
165
   
8.00
 
Actual
  
498
   
23.75
   
477
   
23.18
 
Leverage Ratio:
  
   
   
   
 
Required
  
227
   
3.00
   
214
   
3.00
 
Actual
  
494
   
6.53
   
475
   
6.66
 
Note:
The required ratios disclosed above, at March 31, 20172019 and 2018,2020, include the transitional capital conservation buffer
of 1.25% and 1.875%2.5%, respectively, the countercyclical capital buffer of 0%0.05% and 0.01%, respectively, and the transitional additional loss absorbency requirements for
G-SIBs
and
D-SIBs
of 0.5% and 0.75%1.0%, respectively, which are all both in addition to the regulatory minima. The respective required amounts are determined by applying the ratios to the sum of the risk weighted assets and certain other risk amounts.

MIZUHO FINANCIAL GROUP, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

MHFG’s securities subsidiariessubsidiary in Japan areis also subject to the capital adequacy requirement under theJapan’s Financial Instruments and Exchange Act. Under this requirement, securities firms must maintain a minimum capital adequacy ratio of 120% calculated as a percentage of capital accounts less certain assets, as determined in accordance withcalculated using Japanese GAAP figures, against amounts equivalent to market, counterparty, and basic risks. Specific guidelines are issued as a ministerial ordinance that details the definition of essential components of the capital ratios, including capital, disallowed assets and risks, and related measures. Failure to maintain a minimum capital ratio will trigger mandatory regulatory actions. A capital ratio of less than 140% will call for regulatory reporting and a capital ratio of less than 100% may lead to a temporary suspension of all or part of the business operations and further, to the cancellation of the license to act as a securities broker and dealer.

Management believes, as of March 31, 2018,each latest balance sheet date, that MHFG, MHBK, MHTB, and their securities subsidiariessubsidiary in Japan and foreign banking subsidiaries were in compliance with all capital adequacy requirements to which they were subject.

19.

F-
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MIZUHO FINANCIAL GROUP, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
18. Earnings per common share

The following table sets forth the computation of basic and diluted earnings per common share for the fiscal years ended March 31, 2016, 20172018, 2019 and 2018:

   2016   2017   2018 
   

 

(in millions of yen)

 

Net income:

      

Net income attributable to MHFG shareholders

   850,492    362,440    577,608 

Less: Net income attributable to preferred shareholders

   2,430    —      —   
  

 

 

   

 

 

   

 

 

 

Net income attributable to common shareholders

   848,062    362,440    577,608 
  

 

 

   

 

 

   

 

 

 

Effect of dilutive securities:

      

Convertible preferred stock

   2,430    —      —   
  

 

 

   

 

 

   

 

 

 

Net income attributable to common shareholders after assumed conversions

   850,492    362,440    577,608 
  

 

 

   

 

 

   

 

 

 
   2016   2017   2018 
   

 

(thousands of shares)

 

Shares:

      

Weighted average common shares outstanding

   24,806,161    25,285,899    25,366,345 
  

 

 

   

 

 

   

 

 

 

Effect of dilutive securities:

      

Convertible preferred stock (Note)

   563,044    82,993    —   

Stock options

   17,828    11,410    7,586 
  

 

 

   

 

 

   

 

 

 

Weighted average common shares after assumed conversions

   25,387,033    25,380,302    25,373,931 
  

 

 

   

 

 

   

 

 

 
   2016   2017   2018 
   

 

(in yen)

 

Amounts per common share:

      

Basic net income per common share

   34.19    14.33    22.77 
  

 

 

   

 

 

   

 

 

 

Diluted net income per common share

   33.50    14.28    22.76 
  

 

 

   

 

 

   

 

 

 

2020:
             
 
2018
  
2019
  
2020
 
 
(in millions of yen)
 
Net income:
  
   
   
 
Net income attributable to MHFG common shareholders
  
577,608
   
84,471
   
150,195
 
             
Effect of dilutive securities
  
—  
   
—  
   
—  
 
             
Net income attributable to common shareholders after assumed conversions
  
577,608
   
84,471
   
150,195
 
             
          
 
2018
  
2019
  
2020
 
 
(thousands of shares)
 
Shares:
  
   
   
 
Weighted average common shares outstanding
  
25,366,345
   
25,362,376
   
25,373,681
 
             
Effect of dilutive securities:
  
   
   
 
Stock options and the common shares of MHFG under the stock compensation programs
(Note)
  
7,586
   
4,522
   
1,583
 
             
Weighted average common shares after assumed conversions
  
25,373,931
   
25,366,898
   
25,375,264
 
             
          
 
2018
  
2019
  
2020
 
 
(in yen)
 
Earnings per common share:
  
   
   
 
Basic net income per common share
  
22.77
   
3.33
   
5.92
 
             
Diluted net income per common share
(Note)
  
22.76
   
3.33
   
5.92
 
             
Note:The numberFor the fiscal year ended March 31, 2020, the performance-based plan under the stock compensation programs could potentially dilute earnings per common share but were not included in the computation of diluted earnings per common shares after assumed conversion of the convertible preferred stock is based on the applicable conversion prices.share due to their antidilutive effects.

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MIZUHO FINANCIAL GROUP, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

20.

19. Income taxes

Income tax expense

The following table presents the components of Income tax expense for the fiscal years ended March 31, 2016, 20172018, 2019 and 2018:

   2016  2017  2018 
   

 

(in millions of yen)

 

Current:

    

Domestic

   162,408   130,164   130,573 

Foreign

   61,009   68,512   47,020 
  

 

 

  

 

 

  

 

 

 

Total current tax expense

   223,417   198,676   177,593 
  

 

 

  

 

 

  

 

 

 

Deferred:

    

Domestic

   127,185   (99,831)   58,078 

Foreign

   (4,060)   (7,601)   1,933 
  

 

 

  

 

 

  

 

 

 

Total deferred tax expense (benefit)

   123,125   (107,432)   60,011 
  

 

 

  

 

 

  

 

 

 

Total income tax expense

   346,542   91,244   237,604 
  

 

 

  

 

 

  

 

 

 

2020:

             
 
2018
  
2019
  
2020
 
 
(in millions of yen)
 
Current:
  
                  
   
                  
   
                  
 
Domestic
  
130,573
      
116,695
      
96,231
    
Foreign
  
47,020
   
49,871
   
52,885
 
             
Total current tax expense
  
177,593
   
166,566
   
149,116
 
             
Deferred:
  
   
   
 
Domestic
  
58,078
   
(162,475
)  
(111,341
)
Foreign
  
1,933
   
5,244
   
9,400
 
             
Total deferred tax expense (benefit)
  
60,011
   
(157,231
)  
(101,941
)
             
Total income tax expense
  
237,604
   
9,335
   
47,175
 
             
The preceding table does not reflect the tax effects of items recorded directly in Equity for the fiscal years ended March 31, 2016, 20172018, 2019 and 2018.2020. The detailed amounts recorded directly in Equity are as follows:

   2016  2017  2018 
   

 

(in millions of yen)

 

Net unrealized gains (losses) on available-for-sale securities:

    

Unrealized gains (losses)

   (97,339)   112,467   123,186 

Less: reclassification adjustments

   (65,207)   (97,729)   (82,828) 
  

 

 

  

 

 

  

 

 

 

Total

   (162,546)   14,738   40,358 
  

 

 

  

 

 

  

 

 

 

Foreign currency translation adjustments:

    

Unrealized gains (losses)

   126   —     —   

Less: reclassification adjustments

   —     —     —   
  

 

 

  

 

 

  

 

 

 

Total

   126   —     —   
  

 

 

  

 

 

  

 

 

 

Pension liability adjustments:

    

Unrealized gains (losses)

   (51,661)   4,785   66,331 

Less: reclassification adjustments

   (1,317)   178   190 
  

 

 

  

 

 

  

 

 

 

Total

   (52,978)   4,963   66,521 
  

 

 

  

 

 

  

 

 

 

Total tax effect before allocation to noncontrolling interests

   (215,398)   19,701   106,879 
  

 

 

  

 

 

  

 

 

 

             
 
2018
  
2019
  
2020
 
 
 
(in millions of yen)
 
Net unrealized gains (losses) on
available-for-sale
securities:
  
                  
   
                  
   
                  
 
Unrealized gains (losses)
  
123,186
   
(3,940
)  
(10,012
)
Less: reclassification adjustments
  
(82,828
)  
889
   
(8,410
)
             
Total
  
40,358
   
(3,051
)  
(18,422
)
             
Pension liability adjustments:
  
   
   
 
Unrealized gains (losses)
  
66,331
   
(6,558
)  
(52,888
)
Less: reclassification adjustments
  
190
   
(2,370
)  
(1,765
)
             
Total
  
66,521
   
(8,928
)  
(54,653
)
             
Own credit risk adjustments
(Note)
:
  
   
   
 
Unrealized gains (losses)
  
—  
   
3,033
      
5,052
    
Less: reclassification adjustments
  
—  
   
(47
)  
387
 
             
Total
  
—  
   
2,986
   
5,439
 
             
Total tax effect before allocation to noncontrolling interests
  
106,879
      
(8,993
)  
(67,636
)
             

Note:The MHFG Group adopted ASU
No.2016-01
on April 1, 2018. The ASU requires an entity to present separately in other comprehensive income the portion of the total change in the fair value of a liability resulting from a change in the instrument-specific credit risk when the entity has elected to measure the liability at fair value in accordance with the fair value option for financial instruments. See Note 2 “Issued accounting pronouncements” for further details.
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60
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MIZUHO FINANCIAL GROUP, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

Reconciliation of Income tax expense

The following table shows a reconciliation of Income tax expense at the effective statutory tax rate to the actual income tax expense for the fiscal years ended March 31, 2016, 20172018, 2019 and 2018:

   2016   2017   2018 
   

 

(in millions of yen, except tax rates)

 

Income before income tax expense

   1,196,605    480,375    839,298 

Effective statutory tax rate

   33.06%    30.86%    30.86% 
  

 

 

   

 

 

   

 

 

 

Income tax calculated at the statutory tax rate

   395,598    148,244    259,007 

Income not subject to tax

   (12,888)    (7,521)    (9,312) 

Expenses not deductible for tax purposes

   1,521    1,483    1,421 

Tax rate differentials of subsidiaries

   (2,208)    (2,165)    (2,696) 

Change in valuation allowance

   (1,897)    112,781  (2)    (9,102) 

Change in undistributed earnings of subsidiaries

   (16,112)    5,217    (1,972) 

Change in net operating loss carryforwards resulting from intercompany capital transactions

   (1,446)    647    —   

Effect of enacted change in tax rates

   (7,976) (1)    —      6,863  (3) 

Reversal of outside basis differences

   —      (159,119) (2)    —   

Other

   (8,050)    (8,323)    (6,605) 
  

 

 

   

 

 

   

 

 

 

Income tax expense

   346,542    91,244    237,604 
  

 

 

   

 

 

   

 

 

 

2020:

             
 
2018
  
2019
  
2020
 
 
(in millions of yen, except tax rates)
 
Income before income tax expense
  
839,298
      
85,060
      
153,490
    
Effective statutory tax rate
  
30.86
%  
30.62
%  
30.62
%
             
Income tax calculated at the statutory tax rate
  
     259,007
   
       26,045
   
       46,999
 
Income not subject to tax
  
(9,312
)  
(8,861
)  
(7,758
)
Expenses not deductible for tax purposes
  
1,421
   
1,389
   
1,290
 
Tax rate differentials of subsidiaries
  
(2,696
)  
(3,522
)  
(5,756
)
Change in valuation allowance
  
(9,102
)  
(2,444
)  
5,984
 
Noncontrolling interest income (loss) of consolidated VIEs
  
(5,928
)  
3,475
   
14,796
 
Effect of enacted change in tax rates
  
6,863
(1)   
(11
)  
(210
)
Change in unrecognized tax benefits
  
—  
   
9,420
   
—  
 
Other
(2)
  
(2,649
)  
(16,156
)
(3)
  
(8,170
)
             
Income tax expense
  
237,604
   
9,335
   
47,175
 
             
Notes:

(1)On March 29, 2016, the National Diet of Japan approved a bill affecting the statutory tax rates of MHFG and its domestic subsidiaries. As a result, the statutory tax rate in respect of MHFG’s tax returns for the fiscal year ended March 31, 2017 was reduced to 30.86% from the previous rate of 32.26%, and the statutory tax rate for the fiscal year ended March 31, 2018 was the same rate. In addition, the tax rate for the fiscal years ending March 31, 2019 and thereafter will be 30.62%. The decrease in the Group’s balance of net deferred tax liabilities, reflecting such tax rate reductions, was recognized as a reduction to Income tax expense in the fiscal year ended March 31, 2016.
(2)These amounts for the fiscal year ended March 31, 2017 represent mainly the reversal of an outside basis difference related to certain foreign subsidiaries due to their organizational restructuring and the related increase in the valuation allowance.
(3)On December 22, 2017, the President of the United States signed into law the Tax Cuts and Jobs Act, which includes a reduction in the U.S. federal corporate income tax rate from 35% to 21%. The decrease in the Group’s balance of net deferred tax assets, reflecting such tax rate reductions, was recognized as an increase to Income tax expense in the fiscal year ended March 31, 2018. On the same day, the U.S. SecuritiesThe MHFG Group has completed its analysis and Exchange Commission issuedaccounting under Staff Accounting Bulletin No. 118 which specifies, among other things, that reasonable estimatesfor the effects of the income tax effectsAct.
(2)Change in undistributed earnings of tax legislation should be used, if determinable,subsidiaries of ¥(1,972) million and provides¥(21,347) million have been reclassified to Other for a measurement period notthe fiscal years ended March 31, 2018 and 2019, respectively, in order to exceed 12 months for those estimates to be finalized. Modificationsconform to the Group’s estimates may occur.current period’s presentation.

(3)In the fiscal year ended March 31, 2019, the MHFG Group derecognized the majority of deferred tax liabilities for undistributed earnings of foreign subsidiaries because the Group has intent and ability to reinvest those earnings indefinitely in certain foreign subsidiaries.
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MIZUHO FINANCIAL GROUP, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

Deferred tax assets and liabilities

The components of net deferred tax assets (liabilities) at March 31, 20172019 and 20182020 are as follows:

   2017  2018 
   

 

(in millions of yen)

 

Deferred tax assets:

   

Investments

   497,629   453,880 

Allowance for loan losses

   184,366   126,977 

Derivative financial instruments

   14,537   53,336 

Premises and equipment

   3,594   4,896 

Trading securities

   30,841   1,988 

Net operating loss carryforwards(1) (2)

   452,166   178,256 

Other

   190,083   204,005 
  

 

 

  

 

 

 
   1,373,216   1,023,338 

Valuation allowance(1) (2)

   (438,344)   (163,358) 
  

 

 

  

 

 

 

Deferred tax assets, net of valuation allowance

   934,872   859,980 
  

 

 

  

 

 

 

Deferred tax liabilities:

   

Available-for-sale securities

   724,160   764,497 

Prepaid pension cost and accrued pension liabilities

   195,620   255,239 

Undistributed earnings of subsidiaries

   17,161   15,189 

Other

   74,886   74,170 
  

 

 

  

 

 

 

Deferred tax liabilities

   1,011,827   1,109,095 
  

 

 

  

 

 

 

Net deferred tax assets (liabilities)

   (76,955)   (249,115) 
  

 

 

  

 

 

 

         
 
2019
  
2020
 
 
 
(in millions of yen)
 
Deferred tax assets:
  
   
 
Lease liabilities
(1)
  
—
   
191,873
 
Allowance for loan losses
  
122,585
   
165,665
 
Premises and equipment
  
73,944
   
77,513
 
Available-for-sale
securities
  
—
   
5,532
 
Derivative financial instruments
  
48,487
   
4,647
 
Investments
  
—
   
3,563
 
Net operating loss carryforwards
(2)
  
167,755
   
163,264
 
Other
  
216,568
   
203,004
 
         
  
629,339
   
815,061
 
Valuation allowance
(
2
)
  
(158,581
)  
(165,278
)
         
Deferred tax assets, net of valuation allowance
  
470,758
   
649,783
 
         
Deferred tax liabilities:
  
   
 
Prepaid pension cost and accrued pension liabilities
  
247,694
   
202,930
 
ROU assets
(1)
  
—
   
188,591
 
Trading securities
  
9,158
   
58,266
 
Investments
  
198,495
   
—  
 
Available-for-sale
securities
  
12,426
   
—  
 
Other
  
61,330
   
89,157
 
         
Deferred tax liabilities
  
529,103
   
538,944
 
         
Net deferred tax assets (liabilities)
  
(58,345
)  
110,839
 
         
Notes:

(1)The amount includes ¥271,266 million related to MHFG’s net operating loss carryforwards resulting mainly from intercompany capital transactions as
ROU assets and lease liabilities were initially recognized in connection with the adoption of March 31, 2017. The tax effectASU
No.2016-02
on April 1, 2019. See Note 1 “Basis of the net operating loss carryforwards is offset by a full valuation allowance because MHFG experienced apresentation and summary of significant expiration of net operating loss carryforwards of ¥1,262 billion in March 2013, which is negative evidence outweighing any positive evidence. Furthermore, MHFG is a holding company whose primary sources of future taxable income are management fees from subsidiaries that are not sufficient to realize deferred tax assets related to the net operating loss carryforwards. A portion of the net operating loss carryforwards of ¥264,234 million that expired as of March 31, 2018, resulted in a significant decrease in the deferred tax asset on the net operating loss carryforward.accounting policies” and Note 2 “Issued accounting pronouncements” for further information.
(2)The amount includes ¥115,698¥107,246 million and ¥110,729¥101,498 million related to MHSC’s net operating loss carryforwards resulting mainly from the organizational restructuring of certain foreign subsidiaries as of March 31, 20172019 and 2018,2020, respectively. The tax effect of the net operating loss carryforwards is substantially offset by ¥90,204¥88,294 million and ¥86,189¥86,591 million, respectively, of valuation allowance as a result of considering all available evidence regarding sources of future taxable income including historical trends in taxable income in the preceding periods and forecasted taxable income.

Deferred tax assets and deferred tax liabilities within the same tax jurisdiction have been netted for presentation purposes in the consolidated balance sheets.

As of March 31, 2020, the accumulated amount of undistributed earnings that will be indefinitely reinvested and the unrecognized deferred tax liabilities related to such subsidiaries are approximately ¥220 billion and ¥21 billion, respectively.
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MIZUHO FINANCIAL GROUP, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

The following table and accompanying footnotes provide a breakdown of deferred tax assets and the valuation allowance recognized in respect of net operating loss carryforwards by tax jurisdiction and by year of expiration as of March 31, 20172019 and 2018:

   Deferred tax assets   Valuation allowance  Deferred tax assets,
net of valuation allowance		 
   

 

(in billions of yen)

 

2017

     

Japan(1)

   388    (362)   26 

The United States

   15    (3)   12 

The United Kingdom(2)

   46    (46)   —   

Others

   3    (3)   —   
  

 

 

   

 

 

  

 

 

 

Total

   452    (414)   38 
  

 

 

   

 

 

  

 

 

 
     

2018

     

Japan(3)

   117    (88)   29 

The United States

   10    (1)   9 

The United Kingdom(2)

   48    (48)   —   

Others

   3    (2)   1 
  

 

 

   

 

 

  

 

 

 

Total

   178    (139)   39 
  

 

 

   

 

 

  

 

 

 

2020:

             
 
Deferred tax assets
  
Valuation allowance
  
Deferred tax assets,
net of valuation allowance
 
 
 
(in billions of yen)
 
2019
  
   
   
 
Japan
(1)
  
111
   
(92
)  
19
 
The United States
  
8
   
—
   
8
 
The United Kingdom
(2)
  
46
   
(46
)  
—
 
Others
  
3
   
(2
)  
1
 
  
 
 
  
 
 
  
 
 
 
Total
  
168
   
(140
)  
28
 
             
  
   
   
 
2020
  
   
   
 
Japan
(3)
  
110
   
(92
)  
18
 
The United States
  
3
   
—  
   
3
 
The United Kingdom
(2)
  
47
   
(47
)  
—  
 
Others
  
3
   
(2
)  
1
 
  
 
 
  
 
 
  
 
 
 
Total
  
163
   
(141
)  
22
 
             
Notes:

(1)¥265107 billion of the Japan deferred tax assets of ¥388¥111 billion is related to MHFG, which is offset by a full valuation allowance, and expired during the fiscal year ended March 31, 2018. In addition, ¥116 billion of the Japan deferred tax assets is related to MHSC, which is substantially offset by a valuation allowance, and will expire during the fiscal year ending March 31, 2026.
(2)The United Kingdom net operating loss carryforwards may be carried forward indefinitely for tax purposes.
(3)¥4101 billion of the Japan deferred tax assets of ¥117¥110 billion is related to MHFG, the significant decrease in gross deferred tax and corresponding valuation allowance from the prior year is due to an expiration of the net operating loss carryforwards. ¥111 billion of the Japan deferred tax assets is related to MHSC, which is substantially offset by a valuation allowance, and will expire during the fiscal year ending March 31, 2026.

Determination of valuation allowance

In accordance with ASC 740, when the MHFG Group determines whether and to what extent a valuation allowance is needed, the Group considers all available evidence, both positive and negative, to estimate future taxable income. In this regard, the Group considers reversals of existing taxable temporary differences, projected future taxable income (exclusive of reversals of existing temporary differences) and qualifying
tax-planning
strategies to be possible sources of future taxable income. The Group considers the specific pattern and timing of future reversals of existing taxable and deductible temporary differences on
available-for-sale
securities and equity securities to constitute a prudent and feasible
tax-planning
strategy and strong positive evidence. The Group has the ability to control when its
available-for-sale
securities and equity securities with unrealized gains and losses are sold in order to accelerate or decelerate taxable or deductible amounts. The Group also has a long history of effecting such sales as necessary in order to utilize net operating loss carryforwards or otherwise realize deferred tax assets.

Positive evidence includes the Group’s results of operations for the current and preceding years on an overall consolidated basis and for most of the principal subsidiaries. In particular, the strong results of operations in recent years of MHFG’s principal banking subsidiaries in Japan represent positive evidence that can be objectively verified.

MIZUHO FINANCIAL GROUP, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

Negative evidence includes the existence of significant amounts of net operating loss carryforwards or cumulative losses recorded at certain entities, and the expiration of unused net operating loss carryforwards in recent years.

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MIZUHO FINANCIAL GROUP, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
A valuation allowance is recorded against deferred tax assets as of the balance sheet date to the extent the Group estimates it is more likely than not that sufficient future taxable income is not available to realize such deferred tax assets. As the Group does not apply a consolidated taxation system, with a few exceptions of certain subsidiaries, deferred tax assets and liabilities are calculated separately for each legal entity. Therefore, changes in the valuation allowance are primarily due to changes in deductible temporary differences, net operating loss carryforwards and the estimated availability of future taxable income sources of each entity.

In general, a valuation allowance is recognized against deferred tax assets related to entities that have accumulated significant net operating loss carryforwards. As of March 31, 2018,2020, the Group’s valuation allowance was primarily related to entities in Japan, the United States and the United Kingdom. The valuation allowance was partially recognized in Japan and in the United States, while the valuation allowance was fully recognized in the United Kingdom.

The Group determined whether cumulative losses were recognized by aggregating pretax results for the recent three years as part of the analysis of potential indicators of negative evidence. In each tax jurisdiction, certain entities recognized a cumulative loss on the basis of the most recent three years’ pretax results as of March 31, 2018.2020. As it pertains to each entity with a cumulative loss, a valuation allowance was fully recognized against the deferred tax assets if the Group determined there was no positive evidence that overcame the negative evidence. As of March 31, 2020, MHFG’s securities subsidiary in the United Kingdom recorded cumulative losses on the basis of the recent three years’ pretax results and recognized a full valuation allowance, as there was no positive evidence to overcome the negative evidence. MHFG and its principal banking subsidiaries in Japan did not record cumulative losses in the periods presented.

Change in valuation allowance

The following table presents a roll-forward of the valuation allowance for the fiscal years ended March 31, 2016, 20172018, 2019 and 2018:

   2016  2017  2018 
   

 

(in millions of yen)

 

Balance at beginning of fiscal year

   388,551   339,922   438,344 

Changes that directly affected Income tax expense

   (1,897)   112,781   (9,102) 

Changes that did not affect Income tax expense:

    

Expiration of net operating loss carryforwards

   —     —     (264,234) 

Others

   (46,732)   (14,359)   (1,650) 
  

 

 

  

 

 

  

 

 

 

Total

   (46,732)   (14,359)   (265,884) 
  

 

 

  

 

 

  

 

 

 

Balance at end of fiscal year

   339,922   438,344   163,358 
  

 

 

  

 

 

  

 

 

 

2020:

             
 
2018
  
2019
  
2020
 
 
(in millions of yen)
 
Balance at beginning of fiscal year
  
438,344
   
163,358
   
158,581
 
Changes that directly affected Income tax expense
  
(9,102
)  
(2,444
)  
5,984
 
Changes that did not affect Income tax expense:
  
   
   
 
Expiration of net operating loss carryforwards
  
(264,234
)  
—
   
—  
 
Others
  
(1,650
)  
(2,333
)  
713
 
             
Total
  
(265,884
)  
(2,333
)  
713
 
             
Balance at end of fiscal year
  
163,358
   
158,581
   
165,278
 
             
The decrease in the fiscal yearyears ended March 31, 20162018 and 2019 of ¥1,897¥9,102 million and ¥2,444 million, respectively, in the valuation allowance that directly affected Income tax expense was primarily related to an increase of the realizability of deferred tax assets of MHFG’s subsidiaries. The decrease in the fiscal year ended March 31, 2016 of ¥46,732 million in others was primarily related to a decrease in the valuation allowance that is fully recognized against the MHFG Group’s net operating loss carryforwards due to tax rate reductions and the anticipated liquidation of one of MHFG’s subsidiaries.

The increase in the fiscal year ended March 31, 20172020 of ¥112,781 million in the valuation allowance that directly affected Income tax expense was a result of an assessment of realizability of deferred tax assets related to the net

MIZUHO FINANCIAL GROUP, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

operating loss carryforwards, primarily related to the reversal of an outside basis difference related to certain foreign subsidiaries due to their organizational restructuring. The decrease in the fiscal year ended March 31, 2017 of ¥14,359 million in others was primarily related to a decrease in the valuation allowance that is fully recognized against the MHFG Group’s net operating loss carryforwards due to tax rate reductions and foreign currency rate reductions of MHFG’s foreign subsidiaries.

The decrease in the fiscal year ended March 31, 2018 of ¥9,102¥5,984 million in the valuation allowance that directly affected Income tax expense was primarily related to an increasea decrease of the realizability of deferred tax assets of MHFG’sMHFG and its subsidiaries.

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MIZUHO FINANCIAL GROUP, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
Net operating loss carryforwards

At March 31, 2018,2020, the MHFG Group had net operating loss carryforwards totaling ¥723¥637 billion. These carryforwards are scheduled to expire as follows:

   Net operating loss
carryforwards		 
   

 

(in billions of yen)

 

Fiscal year ending March 31:

  

2019

               4 

2020

   — 

2021

   — 

2022

   — 

2023

   16 

2024 and thereafter(Note)

   703 
  

 

 

 

Total

   723 
  

 

 

 

     
 
Net operating loss
carryforwards
 
 
(in billions of yen)
 
Fiscal year ending March 31:
  
 
2021
  
            —  
 
2022
  
—  
 
2023
  
6
 
2024
  
3
 
2025
  
—  
 
2026 and thereafter
(Note)
  
628
 
     
Total
  
637
 
     
Note:Including the net operating loss carryforwards which may be carried forward indefinitely in the United Kingdom.

In addition, included in the net operating loss carryforwards in the above table are MHSC’s net operating loss carryforwards of ¥362¥333 billion resulting mainly from the reversal of an outside basis difference related to certain foreign subsidiaries due to their organizational restructuring. The tax loss was recorded at MHSC in accordance with Japanese tax law. The net operating loss carryforwards due to this restructuring are towill expire induring the fiscal year ending March 31, 2026.

MIZUHO FINANCIAL GROUP, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

Uncertainty in income tax

The following table is a roll-forward of unrecognized tax benefits for the fiscal years ended March 31, 2016, 20172018, 2019 and 2018:

   2016  2017  2018 
   

 

(in millions of yen)

 

Total unrecognized tax benefits at beginning of fiscal year

   1,632   1,300   1,867 
  

 

 

  

 

 

  

 

 

 

Gross amount of increases (decreases) related to positions taken during prior years

   (415)   167   224 

Gross amount of increases related to positions taken during the current year

   181   409   351 

Amount of decreases related to settlements

   —     —     —   

Foreign exchange translation

   (98)   (9)   (97) 
  

 

 

  

 

 

  

 

 

 

Total unrecognized tax benefits at end of fiscal year

   1,300   1,867   2,345 
  

 

 

  

 

 

  

 

 

 

2020:

             
 
2018
  
2019
  
2020
 
 
(in millions of yen)
 
Total unrecognized tax benefits at beginning of fiscal year
  
1,867
   
2,345
   
12,323
 
             
Gross amount of increases related to positions taken during prior years
  
224
   
9,550
   
199
 
Gross amount of increases related to positions taken during the current year
  
351
   
330
   
328
 
Amount of decreases related to settlements
  
—  
   
—  
   
(9,420
)
Foreign exchange translation
  
(97
)  
98
   
(56
)
             
Total unrecognized tax benefits at end of fiscal year
  
2,345
   
12,323
   
3,374
 
             
The total amount of unrecognized tax benefits including ¥506¥888 million, ¥675¥2,164 million and ¥888¥1,477 million of interest and penalties was ¥1,300¥2,345 million, ¥1,867¥12,323 million and ¥2,345¥3,374 million at March 31, 2016, 20172018, 2019 and 2018,2020, respectively, which would, if recognized, affect the Group’s effective tax rate. The Group classifies interest and penalties accrued relating to unrecognized tax benefits as Income tax expense.

The MHFG Group is currently subject to ongoing tax audits in some jurisdictions. The oldest years open to tax audits in Japan, the United States and the United Kingdom are 2009,2011, 2002 and 2015, respectively.2016,
respectively
. The Group does not anticipate that increases or decreases of unrecognized tax benefits within the next twelve months would have a material effect on its consolidated results of operations or financial condition.

21.

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MIZUHO FINANCIAL GROUP, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
20. Pension and other employee benefit plans

Severance indemnities and pension plans

MHFG and certain subsidiaries sponsor and offer their employees, other than directors and corporate auditors, contributory and
non-contributory
defined benefit plans. Under these plans, employees are provided with
lump-sum
cash payments upon leaving the company. The amount of benefits under each plan is principally determined based on the position,positions in career, the length of service and the reason for retirement.severance. When employees meet certain conditions including the length of service, they may opt to receive annuity payments instead of
lump-sum payments at retirement.
payments. MHFG and certain subsidiaries also offer special termination benefits to former employees whose contributions during their careers were deemed meritorious and to those with particular circumstances.

Certain foreign offices and subsidiaries have defined contribution plans and/or defined benefit plans, of which disclosures are combined with those for domestic benefit plans, as they are not significant.

significant and those plans don’t use significantly different assumptions.

MHFG and certain subsidiaries have several defined contribution plans. The costs recognized in respect of contributions to the plans for the fiscal years ended March 31, 2016, 20172018, 2019 and 20182020 were ¥2,820¥2,511 million, ¥3,141¥3,217 million and ¥2,511¥3,142 million, respectively.

Pension plans are not fully integrated among subsidiaries of MHFG and plan assets are managed separately by each plan.

MIZUHO FINANCIAL GROUP, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

Net periodic benefit cost and funded status

The following table presents the components of net periodic cost of the severance indemnities and pension plans for the fiscal years ended March 31, 2016, 20172018, 2019 and 2018:

   2016  2017  2018 
   

 

(in millions of yen)

 

Service cost-benefits earned during the fiscal year

   38,032   44,367   43,649 

Interest costs on projected benefit obligations

   10,479   5,724   7,471 

Expected return on plan assets

   (40,603)   (35,969)   (34,916) 

Amortization of prior service cost (benefits)

   (195)   (195)   214 

Amortization of net actuarial loss (gain)

   (4,108)   780   411 

Special termination benefits

   4,456   3,857   3,960 
  

 

 

  

 

 

  

 

 

 

Net periodic benefit cost

   8,061   18,564   20,789 
  

 

 

  

 

 

  

 

 

 

2020:

             
 
2018
  
2019
  
2020
 
 
(in millions of yen)
 
Service cost-benefits earned during the fiscal year
  
43,649
   
43,698
   
45,697
 
Interest costs on projected benefit obligations
  
7,471
   
6,933
   
5,590
 
Expected return on plan assets
  
(34,916
)  
(38,518
)  
(40,551
)
Amortization of prior service cost (benefits)
  
214
   
152
   
121
 
Amortization of net actuarial loss (gain)
  
411
   
(7,886
)  
(5,873
)
Special termination benefits
  
3,960
   
2,929
   
9,793
 
             
Net periodic benefit cost
  
20,789
   
7,308
   
   14,777
 
             
Other changes in plan assets and benefit obligations recognized in other comprehensive income (loss)
before-tax
for the fiscal years ended March 31, 20172019 and 20182020 are summarized as follows:

   2017  2018 
   

 

(in millions of yen)

 

Net actuarial gain (loss)

   15,645   216,777 

Amortization of net actuarial loss (gain)

   780   411 

Prior service benefits (cost)

   —     (348) 

Amortization of prior service cost (benefits)

   (195)   214 
  

 

 

  

 

 

 

Total recognized in other comprehensive income (loss)before-tax

   16,230   217,054 
  

 

 

  

 

 

 

         
 
2019
  
2020
 
 
(in millions of yen)
 
Net actuarial gain (loss)
  
(21,300
)  
(169,963
)
Amortization of net actuarial loss (gain)
  
(7,886
)  
(5,873
)
Prior service benefits (cost)
  
(109
)  
(2,734
)
Amortization of prior service cost (benefits)
  
152
   
121
 
         
Total recognized in other comprehensive income (loss)
before-tax
  
(29,143
)  
(178,449
)
         

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MIZUHO FINANCIAL GROUP, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
As of March 31, 2018,2020, the amounts in Accumulated other comprehensive income (loss), which will be amortized as prior service costs and actuarial gainloss over the next fiscal year, are estimated to be ¥152¥409 million and ¥7,879¥1,642 million, respectively.

Weighted-average assumptions used to determine benefit obligations and net periodic benefit cost are as follows:

   2016  2017  2018 

Weighted-average assumptions used to determine benefit obligations at fiscal year end:

    

Discount rates

   0.37%   0.47%   0.43% 

Rates of increase in future compensation levels

   1.80-4.80%   1.80-4.80%   1.80-4.80% 

Weighted-average assumptions used to determine net periodic benefit cost during the year:

    

Discount rates

   0.76%   0.37%   0.47% 

Rates of increase in future compensation levels

   2.00-4.80%   1.80-4.80%   1.80-4.80% 

Expected rates of return on plan assets

   1.95%   1.73%   1.58% 

             
 
2018
  
2019
  
2020
 
Weighted-average assumptions used to determine benefit obligations at fiscal year end:
  
   
   
 
Discount rates
  
0.43
%  
0.34
%  
0.37
%
Rates of increase in future compensation levels
  
1.80-4.80
%  
1.80-4.80
%  
1.80-4.80
%
Weighted-average assumptions used to determine net periodic benefit cost during the year:
  
   
   
 
Discount rates
  
0.47
%  
0.43
%  
0.34
%
Rates of increase in future compensation levels
  
1.80-4.80
%  
1.80-4.80
%  
1.80-4.80
%
Expected rates of return on plan assets
  
1.58
%  
1.60
%  
1.68
%
In estimating the discount rates, the MHFG Group uses interest rates on high-quality fixed-income government and corporate bonds. The durations of suchthese bonds closely match those of the benefit obligations. Assumed discount rates are reevaluated at each measurement date. The expected rate of return for each asset category is based primarily on various aspects of the long-term prospects for the economy that include historical performance and the
market
environment.

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MIZUHO FINANCIAL GROUP, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

The following table sets forth the combined funded status and amounts recognized in the accompanying consolidated balance sheets at March 31, 20172019 and 20182020 for the plans of MHFG and its subsidiaries:

   2017  2018 
   

 

(in millions of yen)

 

Change in benefit obligations:

   

Benefit obligations at beginning of fiscal year

   1,495,208   1,545,893 

Service cost

   44,367   43,649 

Interest cost

   5,724   7,471 

Plan participants’ contributions

   1,215   1,233 

Amendments

   —     348 

Actuarial loss (gain)

   67,335   30,633 

Foreign exchange translation

   (2,159)   (32) 

Benefits paid

   (51,899)   (53,167) 

Lump-sum payments

   (13,898)   (16,672) 
  

 

 

  

 

 

 

Benefit obligations at end of fiscal year

   1,545,893   1,559,356 
  

 

 

  

 

 

 

Change in plan assets:

   

Fair value of plan assets at beginning of fiscal year

   2,082,996   2,200,812 

Actual return (negative return) on plan assets

   118,714   280,251 

Foreign exchange translation

   (3,273)   (113) 

Partial withdrawal of assets from employee retirement benefits trusts(Note)

   —     (66,565) 

Employer contributions

   53,059   43,279 

Plan participants’ contributions

   1,215   1,233 

Benefits paid

   (51,899)   (53,167) 
  

 

 

  

 

 

 

Fair value of plan assets at end of fiscal year

   2,200,812   2,405,730 
  

 

 

  

 

 

 

Funded status

   654,919   846,374 
  

 

 

  

 

 

 

Amounts recognized in the consolidated balance sheets consist of:

   

Prepaid pension cost

   682,592   874,191 

Accrued pension liability

   (27,673)   (27,817) 
  

 

 

  

 

 

 

Net amount recognized

   654,919   846,374 
  

 

 

  

 

 

 

Amounts recognized in Accumulated other comprehensive income (loss)before-tax consist of:

   

Prior service benefits (cost)

   (1,220)   (1,352) 

Net actuarial gain (loss)

   74,044   291,230 
  

 

 

  

 

 

 

Net amount recognized

   72,824   289,878 
  

 

 

  

 

 

 

         
 
2019
  
2020
 
 
(in millions of yen)
 
Change in benefit obligations:
  
   
 
Benefit obligations at beginning of fiscal year
  
1,559,356
   
1,590,818
 
Service cost
  
43,698
   
45,697
 
Interest cost
  
6,933
   
5,590
 
Plan participants’ contributions
  
1,229
   
1,200
 
Amendments
  
109
   
2,734
 
Actuarial loss (gain)
  
49,085
   
4,507
 
Foreign exchange translation
  
(817
)  
(5,605
)
Benefits paid
  
(52,618
)  
(52,902
)
Lump-sum
payments
  
(16,157
)  
(20,743
)
         
Benefit obligations at end of fiscal year
  
1,590,818
   
1,571,296
 
         
Change in plan assets:
  
   
 
Fair value of plan assets at beginning of fiscal year
  
2,405,730
   
2,413,556
 
Actual return (negative return) on plan assets
  
66,652
   
(125,549
)
Foreign exchange translation
  
(390
)  
(4,268
)
Partial withdrawal of assets from employee retirement benefits trusts
(Note)
  
(27,534
)  
—  
 
Employer contributions
  
20,487
   
20,587
 
Plan participants’ contributions
  
1,229
   
1,200
 
Benefits paid
  
(52,618
)  
(52,902
)
         
Fair value of plan assets at end of fiscal year
  
2,413,556
   
2,252,624
 
         
Funded status
  
822,738
   
681,328
 
         
Amounts recognized in the consolidated balance sheets consist of:
  
   
 
Prepaid pension cost
  
850,472
   
711,981
 
Accrued pension liability
  
(27,734
)  
(30,653
)
         
Net amount recognized
  
822,738
   
681,328
 
         
Amounts recognized in Accumulated other comprehensive income (loss)
before-tax
consist of:
  
   
 
Prior service benefits (cost)
  
(1,309
)  
(3,914
)
Net actuarial gain (loss)
  
262,044
   
86,200
 
         
Net amount recognized
  
260,735
   
82,286
 
         
Note:During the fiscal year ended March 31, 2018,2019, a subsidiary of MHFG partially withdrew assets from employee retirement benefit trusts, which were established for the payment of employees’ severance pay and retirement pensions. Overall, the trusts remain in overfunded status as of March 31, 2018. No2019. NaN gains or losses have been recognized as a result of this transaction.

The aggregated accumulated benefit obligations of these plans were ¥1,544,039¥1,590,818 million and ¥1,559,356¥1,571,296 million, as of March 31, 20172019 and 2018,2020, respectively. The defined benefit plans generally employ a multi-variable and
non-linear
formula based upon rank and years of service. Employees with service in excess of one year are qualified to receive lump-sum severance indemnities.

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MIZUHO FINANCIAL GROUP, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

In the fiscal year ended March 31, 2017, the Group incorporated employee-level improvements in the mortality indicators used in the pension benefit calculation, which resulted in an increase of the benefit obligations of ¥79,861 million.

The following table shows the projected benefit obligations and the fair value of plan assets for the plans of MHFG and its subsidiaries with projected benefit obligations in excess of plan assets, and the accumulated benefit obligations and the fair value of plan assets for the plans with accumulated benefit obligations in excess of plan assets at March 31, 20172019 and 2018:

   2017   2018 
   

 

(in millions of yen)

 

Plans with projected benefit obligations in excess of plan assets:

    

Projected benefit obligations

   57,980    59,319 

Fair value of plan assets

   30,306    31,503 

Plans with accumulated benefit obligations in excess of plan assets:

    

Accumulated benefit obligations

   56,125    59,319 

Fair value of plan assets

   30,306    31,503 

2020:
         
 
2019
  
2020
 
 
(in millions of yen)
 
Plans with projected benefit obligations in excess of plan assets:
  
   
 
Projected benefit obligations
  
61,579
   
63,619
 
Fair value of plan assets
  
33,845
   
32,966
 
Plans with accumulated benefit obligations in excess of plan assets:
  
   
 
Accumulated benefit obligations
  
61,579
   
63,619
 
Fair value of plan assets
  
33,845
   
32,966
 
Note:The plans with projected benefit obligations in excess of plan assets include those with accumulated benefit obligations in excess of plan assets.

Investment policies and asset allocation

In managing plan assets, the MHFG Group determines the appropriate levels of risk that the Group can assume under the given circumstances to maximize the investment returns from a long-term perspective while ensuring that the sufficient funds will be available to plan participants and beneficiaries. Generally, the investment returns are relative to the risks involved. In considering the maximum levels of risk that the MHFG Group can assume, it primarily considers the following factors;factors: the employers’ burden of maintaining the benefit plans based on the design of the plans and future plan contributions, the age distribution of the plan participants and beneficiaries, the financial conditions of the employers, and the employers’ ability to absorb future variability in plan premiums. The long-term asset allocation to each asset category such as Japanese equity securities, Japanese debt securities, foreign equity securities and foreign debt securities is determined based upon the optimal portfolio, which is estimated to yield the maximum return within the range of an acceptable level of risk. Additionally, the asset allocation is reviewed whenever there are large fluctuations in pension plan liabilities caused by modifications of pension plans, or there are changes in the market environment. When selecting an investment in each asset category, the MHFG Group takes into consideration credit standing of an investee, concentration of credit risk to a certain investee and liquidity of a financial instrument among other things. The investments in each asset category are further diversified across funds, strategies and sectors along with other things. There is no significant investment in a single investee except Japanese government bonds.

Certain subsidiaries of MHFG established employee retirement benefit trusts and transferred their assets to the trusts as plan assets. These assets are separated from the employer’s proprietary assets for the payment to the plan beneficiaries. The assets held in these trusts are primarily Japanese equity securities and have been entrusted directly to qualified trustees including trust banks.

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MIZUHO FINANCIAL GROUP, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

MHFG and certain subsidiaries’ target allocation for the plan assets, excluding those of the employee retirement benefit trusts, at March 31, 20182020 is as follows:

Asset category

Asset ratio

Japanese equity securities

  5.00% 

Asset category
Asset ratio
Japanese debtequity securities

  34.00
5.00
%

Foreign equity

Japanese debt securities

  25.00
34.00
%

Foreign debtequity securities

  23.00
25.00
%

Foreign debt securities
23.00
%
General account of life insurance companies

  
11.00
%

Other

  
2.00
%

Total

  100.00% 
Total
 

100.00
%
 

Note:General account of life insurance companies is a contract with life insurance companies which guarantees payments of principal and predetermined interest rates.payments.

Fair value of plan assets

The following table presents the fair value of plan assets of MHFG and its subsidiaries at March 31, 20172019 and 2018,2020, by asset class. For the detailed information on fair value measurements, including descriptions of Level 1, 2 and 3 of the fair value hierarchy and the valuation methodologies, see Note 2827 “Fair value”.

   2017   2018 
   Level 1  Level 2   Level 3   Total   Level 1  Level 2   Level 3   Total 
   

 

(in billions of yen)

 

Japanese equity securities:

              

Common stocks(1)

   1,162   —      —      1,162    1,330   —      —      1,330 

Pooled funds(2)

   10   —      —      10    10   9    —      19 

Japanese debt securities:

              

Government bonds

   254   —      —      254    184   —      —      184 

Pooled funds(2)

   —     2    —      2    —     4    —      4 

Other

   —     25    —      25    —     25    —      25 

Foreign equity securities:

              

Common stocks

   111   —      —      111    108   —      —      108 

Pooled funds(2)

   —     2    —      2    —     5    —      5 

Foreign debt securities:

              

Government bonds

   68   3    —      71    175   6    —      181 

Pooled funds(2)

   —     7    —      7    —     9    —      9 

Other

   —     16    —      16    —     16    —      16 

General account of life insurance companies (3)

   —     124    —      124    —     110    —      110 

Other

   78(4)   1    —      79    92(4)   —      —      92 

Plan assets measured at net asset value (5)

        338         323 
  

 

 

  

 

 

   

 

 

   

 

 

   

 

 

  

 

 

   

 

 

   

 

 

 

Total assets at fair value

   1,683   180    —      2,201    1,899   184    —      2,406 
  

 

 

  

 

 

   

 

 

   

 

 

   

 

 

  

 

 

   

 

 

   

 

 

 

value.”

                                 
 
2019
  
2020
 
 
Level 1
  
Level 2
  
Level 3
  
Total
  
Level 1
  
Level 2
  
Level 3
  
Total
 
 
 
(in billions of yen)
 
Japanese equity securities:
  
   
   
   
   
   
   
   
 
Common stocks
(1)
  
1,317
   
—
   
—
   
1,317
   
1,194
   
—  
   
—  
   
1,194
 
Pooled funds
(2)
  
11
   
4
   
—
   
15
   
10
   
4
   
—  
   
14
 
Japanese debt securities:
  
   
   
   
   
   
   
   
 
Government bonds
  
190
   
—
   
—
   
190
   
196
   
—  
   
—  
   
196
 
Pooled funds
(2)
  
—
   
10
   
—
   
10
   
—  
   
9
   
—  
   
9
 
Other
  
—
   
24
   
—
   
24
   
—  
   
23
   
—  
   
23
 
Foreign equity securities:
  
   
   
   
   
   
   
   
 
Common stocks
  
120
   
—
   
—
   
120
   
101
   
—  
   
—  
   
101
 
Pooled funds
(2)
  
—
   
5
   
—
   
5
   
—  
   
4
   
—  
   
4
 
Foreign debt securities:
  
   
   
   
   
   
   
   
 
Government bonds
  
178
   
6
   
—
   
184
   
188
   
7
   
—  
   
195
 
Pooled funds
(2)
  
—
   
10
   
—
   
10
   
—  
   
11
   
—  
   
11
 
Other
  
—
   
18
   
—
   
18
   
—  
   
20
   
—  
   
20
 
General account of life insurance companies
(3)
  
—
   
111
   
—
   
111
   
—  
   
111
   
—  
   
111
 
Other
  
79
(4)   
4
   
—
   
83
   
68
(4)   
1
   
—  
   
69
 
Plan assets measured at net asset value
(5)
  
   
   
   
327
   
   
   
   
306
 
                                 
Total assets at fair value
  
1,895
   
192
   
—
   
2,414
   
1,757
   
190
   
—  
   
2,253
 
                                 
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MIZUHO FINANCIAL GROUP, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
Notes:

(1)This class represents equity securities held in the employee retirement benefit trusts of ¥1,162¥1,317 billion and ¥1,330¥1,194 billion carried at fair value at March 31, 20172019 and 2018,2020, respectively, which are well-diversified across industries.

MIZUHO FINANCIAL GROUP, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

(2)These classes primarily include pension investment fund trusts. Investments in these classes are generally measured at fair value and can be redeemed within a short-term period upon request.
(3)Investments in this class are measured at conversion value, which is equivalent to fair value.
(4)Amounts primarily include cash and short-term assets carried at fair value.
(5)In accordance with ASC 820, certain plan assets that are measured at fair value using the net asset value per share (or its equivalent) practical expedient have not been classified in the fair value hierarchy.

There were no returns on and purchases and sales of Level 3 assets during the fiscal years ended March 31, 20172019 and 2018.

2020.

Contributions

The total contribution of approximately ¥52¥50 billion is expected to be paid to the pension plans during the fiscal year ending March 31, 2019,2021, based on the current funded status and expected asset return assumptions.

Estimated future benefit payments

The following table presents forecasted benefit payments including the effect of expected future service for the fiscal years indicated:

   (in millions of yen) 

Fiscal year ending March 31:

  

2019

   67,291 

2020

   69,087 

2021

   70,332 

2022

   71,041 

2023

   71,662 

2024-2028

   353,649 

22.

     
 
(in millions of yen)
 
Fiscal year ending March 31:
  
 
2021
  
70,325
 
2022
  
70,623
 
2023
  
71,165
 
2024
  
72,469
 
2025
  
73,118
 
2026-2030
  
346,908
 
21. Stock-based compensation

Stock options

MHFG, MHBK, MHTB and MHSC have stock options, in the form of stock acquisition rights, for directors (excluding the outside directors) and executive officers of the respective companies (hereinafter referred to collectively as the “Directors”).

In this plan (“MHFG Stock Plan”), 1,000 shares of MHFG common stock shall be issued or transferred upon exercise of each of the stock acquisition rights. The exercise price is 1 yen per share. The contractual term of the stock acquisition rights is 20 years. A holder may exercise the stock acquisition rights only after the date on which such holder loses the status as a Director of MHFG, MHBK, MHTB or MHSC.

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MIZUHO FINANCIAL GROUP, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

The following is a roll-forward of MHFG Stock Plan for the fiscal year ended March 31, 2018:

   Number of
shares		   Weighted-average
exercise price		   Weighted-average
remaining
contractual term		   Aggregate
intrinsic value		 
       

 

(in yen)

   (in years)   (in millions of yen) 

Outstanding at beginning of fiscal year

   10,819,000    1     

Exercised during fiscal year

   3,603,000    1     
  

 

 

       

Outstanding at end of fiscal year

   7,216,000    1    15.36    1,374 
  

 

 

       

Exercisable at end of fiscal year

   —      —      —      —   
  

 

 

       

2020:

                 
 
Number of
shares
  
Weighted-average
exercise price
  
Weighted-average
remaining
contractual term
  
Aggregate
intrinsic value
 
   
(in yen)
  
(in years)
  
(in millions of yen)
 
Outstanding at beginning of fiscal year
  
4,245,000
   
1
         
Exercised during fiscal year
  
2,968,000
   
1
         
                 
Outstanding at end of fiscal year
  
1,277,000
   
1
   
13.91
   
157
 
                 
Exercisable at end of fiscal year
  
—  
   
—  
   
—  
   
—  
 
                 
There were no 0
non-vested
stock options remaining as of March 31, 2018.

2020.

In May 2015, MHFG discontinued the stock option program. Thereafter, MHFG has not issued any new stock options.

Performance-based stock

Stock compensation

programs

MHFG, MHBK, MHTB and MHSC introduced a newposition-based stock compensation program for Directors (“Stock Compensation I”) in July 2018 and a performance-based stock compensation program for Directors on(“Stock Compensation II”) in May 2015 using a trust.2015. The program utilizes the Board Benefit Trust framework. The performance-based stock compensation is paid in the form of shares of common stock of MHFG, acquired from the stock market through a trust, with the aim of aligning the officers’Directors’ interests with those of the shareholders and increasing the incentive to enhance corporate value. Stock Compensation I, in principle, is paid at the time of retirement of the individual Directors in the form of common stock of MHFG and cash, calculated based on their position. Stock Compensation II is calculated and then paid to the Directors based on MHFG Group’s immediate, prior period-performance, the recent performance of organizations that the Directors are in charge of, and the performance of each Director. The payment thereof is a reflectionin the form of each officer’s performance. The entire amountcommon stock of the payment in respect of the performance-based stock compensationMHFG and cash is deferred over three yearsa three-year, graded-vesting period. The amount of Stock Compensation I and the deferred portionII is subject to reduction or forfeiture depending on certain factors, including the performanceforfeiture.
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Table of the MHFG group or the relevant Directors.

Contents

MIZUHO FINANCIAL GROUP, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
The following table presents activities related to the performance-based stock compensation for the fiscal year ended March 31, 2018:

   Number of shares   Weighted-average
grant-date fair value		 
       

 

(per share in yen)

 

Outstanding as of March 31, 2017

   9,000,000    158.68 

Granted during fiscal year

   8,130,000    196.94 

Vested during fiscal year

   3,810,594    158.68 

Forfeited during fiscal year

   —      —   

Outstanding as of March 31, 2018

   13,319,406    182.04 
  

 

 

   

 

 

 

The weighted average grant date fair value of the performance-based stock compensationprograms for the fiscal years ended March 31, 20172019 and 2018 were ¥158.68 and ¥196.94, respectively.

2020:

                 
 
Stock Compensation I
  
Stock Compensation II
 
2019
 
Number of
shares
  
Weighted-average
grant-date fair
value
  
Number of
shares
  
Weighted-average
grant-date fair
value
 
   
(per share in yen)
    
(per share in yen)
 
Nonvested at the beginning of the year
  
—  
   
—  
   
13,319,406
   
182.04
 
Granted during fiscal year
  
3,770,065
   
189.24
   
6,906,635
   
189.24
 
Vested during fiscal year
  
3,770,065
   
189.24
   
5,068,949
   
187.48
 
Forfeited during fiscal year
  
—  
   
—  
   
—  
   
—  
 
                 
Nonvested at the end of the year
  
—  
   
—  
   
15,157,092
   
183.50
 
                 
       
 
Stock Compensation I
  
Stock Compensation II
 
2020
 
Number of
shares
  
Weighted-average
grant-date fair
value
  
Number of
shares
  
Weighted-average
grant-date fair
value
 
   
(per share in yen)
    
(per share in yen)
 
Nonvested at the beginning of the year
  
—  
   
—  
   
15,157,092
   
183.50
 
Granted during fiscal year
  
5,748,997
   
159.59
   
3,281,003
   
159.59
 
Vested during fiscal year
  
5,748,997
   
159.59
   
7,014,809
   
182.07
 
Forfeited during fiscal year
  
—  
   
—  
   
—  
   
—  
 
                 
Nonvested at the end of the year
  
—  
   
—  
   
11,423,286
   
177.51
 
                 
The following table presents the total fair value of the performance-based stock compensation that vested forand the fiscal year ended March 31, 2018 was ¥782 million. There was no performance-based stock compensation that vested prior tototal amount of the fiscal year ended March 31, 2018.

The shares of MHFG common stock were acquired from the stock market by the trustee by using the money entrusted to the Compensation Committee. The total amount of the common stock was ¥2,425 million.

MIZUHO FINANCIAL GROUP, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

The compensation cost with regard to the performance-based stock compensation is determined based upon the fair value of shares of MHFG common stock as of grant date and is recognized over three year deferral period on a straight-line basis. The compensation cost recognized in this performance-based stock compensation program for the fiscal years ended March 31, 20172019 and 2018 were ¥354 million2020:

                 
 
2019
  
2020
 
 
Stock
Compensation I
  
Stock
Compensation II
  
Stock
Compensation I
  
Stock
Compensation II
 
 
(in millions of yen)
 
Fair value of vested shares
  
713
   
930
   
917
   
1,090
 
Common stock shares acquired
  
713
   
1,307
   
917
   
524
 
For both programs, the stock-based compensation cost is determined based on the fair value of MHFG’s common stock as of grant date. For Stock Compensation I and ¥868 million, respectively.

AsII, the liability related to the cash-based compensation cost is remeasured at each reporting date based on the fair value of MHFG’s common stock. For Stock Compensation II, the stock-based compensation costs are recognized evenly over the graded-vesting period, which is three years. For Stock Compensation I, as the program is effectively vested on the grant date, the stock-based compensation cost is recognized on the grant date. The following table presents the compensation cost recognized in the stock compensation programs for the fiscal yearyears ended March 31, 2018, 2019 and 2020:

             
 
    2018    
  
    2019    
  
    2020    
 
 
(in millions of yen)
 
Stock Compensation I
  
—  
   
713
   
917
 
Stock Compensation II
  
868
   
1,287
   
1,247
 
With regard to Stock Compensation II, the total compensation cost related to
non-vested
awards not yet recognized is ¥1,806¥1,175 million, and this cost will be recognized over 1.92 years.

23.1.56 years as of the fiscal year ended March 31, 2020.

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MIZUHO FINANCIAL GROUP, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
22. Derivative financial instruments

The MHFG Group enters into derivative financial instruments in response to the diverse needs of customers, to controlmanage the risk related to the assets and liabilities of the MHFG Group, as part of its asset and liability management, and for proprietary trading purposes. The MHFG Group is exposed primarily to market risk associated with interest rate, commodity, foreign currency, and equity products. Market risk arises from changes in market prices or indices, interest rates and foreign exchange rates that may result in an adverse change in the market value of the financial instrument or an increase in its funding costs. Exposure to market risk is managed by imposing position limits and monitoring procedures and by initiating hedging transactions. In addition to market risk, the MHFG Group is exposed to credit risk associated with counterparty default or nonperformance in respect of transactions. CreditCounterparty credit risk arises when a counterparty fails to perform according to the terms and conditions of the contract and the value of the underlying collateral held, if applicable, is not sufficient to recover resulting losses. The exposure to counterparty credit risk is measured by the fair value of all derivatives in a gain position and its potential increaseexposure at the balance sheet dates. The exposure to counterparty credit risk is managed by entering into legally enforceable master netting agreements to mitigate the overall counterparty credit risk, requiring underlying collateral and guarantees based on an individual credit analysis of each obligor and evaluating the credit features of each instrument. In addition, credit approvals, limits and monitoring procedures are also imposed.

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MIZUHO FINANCIAL GROUP, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
Notional and fair value amounts of derivative instruments

The following table summarizes the notional and fair value amounts of derivative instruments outstanding as of March 31, 20172019 and 2018.2020. The fair values of derivatives are presented on a gross basis
;
 derivative receivables and payables are not offset. In addition, they are not offset against the amounts recognized for the right to reclaim cash collateral or the obligation to return cash collateral under master netting agreements in the consolidated balance sheets, or the table below.

       Fair value 
       Derivative receivables (2)   Derivative payables (2) 

2017

  Notional amount (1)   Designated
as hedges		   Not designated
as hedges		   Designated
as hedges		   Not designated
as hedges		 
   

 

(in billions of yen)

 

Interest rate contracts

   961,518    —      8,506    —      8,473 

Foreign exchange contracts

   167,698    2   2,743    —      2,611 

Equity-related contracts

   4,177    —      134    5    224 

Credit-related contracts

   3,696    —      35    —      36 

Other contracts

   360    —      23    —      22 
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total

   1,137,449    2   11,441    5    11,366 
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

                     
   
Fair value
 
   
Derivative receivables
(2)
  
Derivative payables
(2)
 
2019
 
Notional amount
(1)
  
Designated
as hedges
  
Not designated
as hedges
  
Designated
as hedges
  
Not designated
as hedges
 
 
 
(in billions of yen)
 
Interest rate contracts
  
1,052,267
   
—  
   
5,786
   
—  
   
5,610
 
Foreign exchange contracts
  
166,383
   
—  
   
1,959
   
—  
   
1,758
 
Equity-related contracts
  
5,181
   
—  
   
125
   
—  
   
142
 
Credit-related contracts
  
2,939
   
—  
   
18
   
—  
   
17
 
Other contracts
  
438
   
—  
   
16
   
—  
   
14
 
                     
Total
  
1,227,208
   
—  
   
7,904
   
—  
   
7,541
 
                     

MIZUHO FINANCIAL GROUP, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

       Fair value 
       Derivative receivables (2)   Derivative payables (2) 

2018

  Notional amount (1)   Designated
as hedges		   Not designated
as hedges		   Designated
as hedges		   Not designated
as hedges		 
   

 

(in billions of yen)

 

Interest rate contracts

   1,004,169    —      7,176    —      7,143 

Foreign exchange contracts

   155,832    2   2,695    —      2,382 

Equity-related contracts

   6,189    —      197    9    142 

Credit-related contracts

   2,708    —      18    —      21 

Other contracts

   335    —      23    —      19 
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total

   1,169,233    2   10,109    9      9,707 
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

                     
   
Fair value
 
   
Derivative receivables
(2)
  
Derivative payables
(2)
 
2020
 
Notional amount
(1)
  
Designated
as hedges
  
Not designated
as hedges
  
Designated
as hedges
  
Not designated
as hedges
 
 
 
(in billions of yen)
 
Interest rate contracts
  
1,123,546
   
—  
   
7,232
   
—  
   
6,788
 
Foreign exchange contracts
  
185,359
   
—  
   
2,926
   
—  
   
2,899
 
Equity-related contracts
  
6,684
   
—  
   
310
   
—  
   
266
 
Credit-related contracts
  
4,676
   
—  
   
30
   
—  
   
29
 
Other contracts
  
400
   
—  
   
38
   
—  
   
39
 
                     
Total
  
1,320,665
   
—  
   
10,536
   
—  
   
10,021
 
                     
Notes:

(1)Notional amount includes the sum of gross long and gross short third-party contracts.
(2)Derivative receivables and payables are recorded in Trading account assets and Trading account liabilities, respectively.

The MHFG Group provided and/or accepted cash collateral for derivative transactions under master netting agreements. The cash collateral, which was not offset against derivative positions, was included in Other assets and Other liabilities, respectively, of which the amounts were ¥973¥856 billion and ¥672¥589 billion at March 31, 2017,2019, and ¥981¥1,246 billion and ¥599¥846 billion at March 31, 2018,2020, respectively.

Hedging activities

In order to qualify for hedge accounting, a derivative must be considered highly effective at reducing the risk associated with the exposure being hedged. Each derivative must be designated as a hedge, with documentation of the risk management objective and strategy, including identification of the hedging instrument, the hedged item and the risk exposure, and how effectiveness is to be assessed prospectively and retrospectively. The extent to which a hedging instrument is effective at achieving offsetting changes in fair value or cash flows must be assessed at least quarterly. Any ineffectiveness must be reported immediately in earnings. The MHFG Group’s hedging activities include fair value and net investment hedges.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
Fair value hedges

The MHFG Group primarily uses forward contracts to modify exposure to changes in the fair value ofavailable-for-sale Equity securities. ForThe Group adopted ASU
No.2016-01
on April 1, 2018. The ASU requires equity investments (except those accounted for under the equity method of accounting or those that result in consolidation of the investee) to be measured at fair value with changes in fair value recognized in net income. Therefore, after the adoption of the ASU, these forward contracts are not eligible to be hedging instruments. See Note 2 “Issued accounting pronouncements” for further details.
Before the adoption of the ASU, for qualifying fair value hedges, all changes in the fair value of the derivative and the corresponding hedged item relating to the risk being hedged arewere recognized in earnings in Investment gains (losses)—net. The change in fair value of the portion of the hedging instruments excluded from the assessment of hedge effectiveness iswas recorded in Trading account gains (losses)—net. No ineffectiveness existsexisted because the MHFG Group chooseschose to exclude changes in the differences between the spot and the forward prices from the effectiveness test. If the hedge relationship iswas terminated, the fair value adjustment to the hedged item continuescontinued to be reported as part of the basis of the item. The fair value adjustment iswas recognized in earnings upon the sale of the hedged item.

MIZUHO FINANCIAL GROUP, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

The following table summarizes gains and losses information related to fair value hedges for the fiscal yearsyear ended March 31, 2016, 2017 and 2018:

   Gains (losses) recorded in income 

2016

  Derivatives  Hedged
items		  Hedge
ineffectiveness		   Net gain (loss) excluded
from assessment of
effectiveness		 
   

 

(in millions of yen)

 

Equity-related contracts

   14,623   (18,224)   —      (3,601) 
  

 

 

  

 

 

  

 

 

   

 

 

 

Total

   14,623   (18,224)   —      (3,601) 
  

 

 

  

 

 

  

 

 

   

 

 

 
   Gains (losses) recorded in income 

2017

  Derivatives  Hedged
items		  Hedge
ineffectiveness		   Net gain (loss) excluded
from assessment of
effectiveness		 
   

 

(in millions of yen)

 

Equity-related contracts

   (14,747)   11,393   —      (3,354) 
  

 

 

  

 

 

  

 

 

   

 

 

 

Total

   (14,747)   11,393   —      (3,354) 
  

 

 

  

 

 

  

 

 

   

 

 

 
   Gains (losses) recorded in income 

2018

  Derivatives  Hedged
items		  Hedge
ineffectiveness		   Net gain (loss) excluded
from assessment of
effectiveness		 
   

 

(in millions of yen)

 

Equity-related contracts

   (23,832)   19,631           —      (4,201) 
  

 

 

  

 

 

  

 

 

   

 

 

 

Total

   (23,832)   19,631   —      (4,201) 
  

 

 

  

 

 

  

 

 

   

 

 

 

                 
 
Gains (losses) recorded in income
 
2018
 
Derivatives
  
Hedged
items
  
Hedge
ineffectiveness
  
Net gain (loss) excluded
from assessment of
effectiveness
 
 
(in millions of yen)
 
Equity-related contracts
  
(23,832
)  
19,631
   
        —  
   
(4,201
)
                 
Total
  
(23,832
)  
19,631
   
—  
   
(4,201
)
                 
Net investment hedges

The MHFG Group uses forward foreign exchange contracts and foreign currency-denominated debt instruments to protect the value of net investments in
non-Japanese
subsidiaries from foreign currency exposure. Under net investment hedges, both derivatives and nonderivative financial instruments qualify as hedging instruments. The foreign currency-denominated debt instruments qualifying as hedging instruments include deposits and long-term debt, of which the carrying amounts of the portion designated as net investment hedges are included within the respective items in the consolidated balance sheets as well as relevant accompanying notes. For net investment hedges, the entire change in the fair value of a hedging derivative instrument or nonderivative hedging financial instrument is recorded in Foreign currency translation adjustments within Accumulated other comprehensive income, provided that the hedging instrument is designated and is effective as a hedge of the net investment. The change in fair value of the ineffective portion is recorded in Foreign exchange gains (losses)—net in earnings. No amount is excluded from the assessment of hedge effectiveness of net investment hedges.

MIZUHO FINANCIAL GROUP, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

The following table summarizes gains and losses information related to net investment hedges for the fiscal years ended March 31, 2016, 20172018, 2019 and 2018:

  Gains (losses) recorded in income and other comprehensive income (“OCI”) 
  2016  2017  2018 
  Effective portion
recorded in OCI		  Ineffective portion
recorded in
income		  Effective portion
recorded in OCI		  Ineffective portion
recorded in
income		  Effective portion
recorded in OCI		  Ineffective portion
recorded in
income		 
  

 

(in millions of yen)

 

Financial instruments hedging foreign exchange risk

  46,697   696   16,767   47   (30)   90 
 

 

 

  

 

 

  

 

 

  

 

 

  

 

 

  

 

 

 

Total

  46,697   696   16,767   47   (30)   90 
 

 

 

  

 

 

  

 

 

  

 

 

  

 

 

  

 

 

 

2020:
             
 
Gains (losses) recorded in other comprehensive income (“OCI”)
 
 
2018
  
2019
  
2020
 
 
(in millions of yen)
 
Financial instruments hedging foreign exchange risk
  
60
   
7,512
   
418
 
             
Total
  
60
   
7,512
   
418
 
             
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MIZUHO FINANCIAL GROUP, INC. AND
SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(
Continued
)
Note:Related to the effective portion of net investment hedges, gains (losses) of ¥345¥186 million and ¥41¥(1,336) million were reclassified from Accumulated other comprehensive income to earnings for the fiscal years ended March 31, 20162019 and 2017,2020, respectively. NoNaN amount related to the effective portion of net investment hedges was reclassified from Accumulated other comprehensive income to earnings for the fiscal year ended March 31, 2018.

Derivative instruments not designated or qualifying as hedges

The MHFG Group enters into the following derivative transactions that do not qualify for hedge accounting with a view to implementing risk management hedging strategies: (1) interest-rate swap transactions for the purpose of hedgingeconomically managing the interest-rate risks in deposits, loans etc., (2) currency swap transactions for the purpose of hedgingeconomically managing the foreign exchange risk of these assets, and (3) credit derivatives for the purpose of hedgingeconomically managing the credit risk in loans, residential mortgage-backed securities (“RMBS”), commercial mortgage-backed securities (“CMBS”), collateralized loan obligations (“CLO”) and other similar assets. Such derivatives are accounted for as trading positions. The changes in fair value of these instruments are primarily recorded in Trading account gains (losses)—net, even though they are used to mitigate or transform the risk of exposures arising from banking activities. The net gain (loss)gains (losses) resulting from changes in the fair value of certain credit derivatives where the Group purchases protection to mitigate its credit risk exposure, related to its corporate loan portfolio, is recorded in Other noninterest income (expenses).

The following table summarizes gains and losses on derivatives not designated or qualifying as hedges during the fiscal years ended March 31, 2016, 20172018, 2019 and 2018:

   Gains (losses) recorded in income 
   2016  2017  2018 
   

 

(in millions of yen)

 

Interest rate contracts

   319,225   (209,361)   (63,260) 

Foreign exchange contracts

   65,101   37,129   61,046 

Equity-related contracts(1)

   21,571   5,131   (94,607) 

Credit-related contracts(2)

   (6,960)   (6,694)   (2,830) 

Other contracts

   2,015   742   6,330 
  

 

 

  

 

 

  

 

 

 

Total

   400,952   (173,053)   (93,321) 
  

 

 

  

 

 

  

 

 

 

2020:

             
 
Gains (losses) recorded in income
 
 
2018
  
2019
  
2020
 
 
(in millions of yen)
 
Interest rate contracts
  
(63,260
)  
127,242
   
388,289
 
Foreign exchange contracts
  
61,046
   
6,748
   
(111,920
)
Equity-related contracts
(1)
  
(94,607
)  
37,875
   
217,744
 
Credit-related contracts
(2)
  
(2,830
)  
(467
)  
8,046
 
Other contracts
  
6,330
   
(1,455
)  
(21,143
)
             
Total
  
(93,321
)  
169,943
   
481,016
 
             
Notes:

(1)The net gain (loss)gains (losses) excluded from the assessment of the effectiveness of fair value hedges is not included in the above table.

MIZUHO FINANCIAL GROUP, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

(2)Amounts include the net lossgains (losses) of ¥5,230¥(754
)
 million, ¥7,594 ¥(736
)
million and ¥754¥2,838 million on the credit derivatives hedgingeconomically managing the credit risk of loans during the fiscal years ended March 31, 2016, 20172018, 2019 and 2018,2020, respectively.

Credit derivatives

A credit derivative is a bilateral contract between a seller and a buyer of protection against the credit risk of a particular entity. Credit derivatives generally require that the seller of credit protection make payments to the buyer upon the occurrence of predefined credit events, which include bankruptcy, dissolution or insolvency of the referenced entity. The MHFG Group either purchases or writes protection on either a single name or a portfolio of reference credits. The Group enters into credit derivatives to help mitigate credit risk in its corporate loan portfolio and other cash positions, to take proprietary trading positions, and to facilitate client transactions.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
The notional amount of credit derivatives represents the maximum potential amount of future payments the seller could be required to make. If the predefined credit event occurs, the seller will generally have a right to collect on
the underlying reference credit and the related cash flows, while being liable for the full notional amount of credit protection to the buyer. The Group manages credit risk associated with written protection by purchasing protection with identical or similar underlying reference credits, which substantially offsets its exposure. Thus, the notional amount is not necessarily a reliable indicator of the Group’s actual loss exposure.

The following table summarizes the notional and fair value amounts of credit derivatives at March 31, 20172019 and 2018:

   2017  2018 
   Notional amount   Fair value  Notional amount   Fair value 
   

 

(in billions of yen)

 

Credit protection written:

       

Investment grade

   1,546    21   1,105    15 

Non-investment grade

   298    1   197    4 
  

 

 

   

 

 

  

 

 

   

 

 

 

Total

   1,844    22   1,302    19 
  

 

 

   

 

 

  

 

 

   

 

 

 

Credit protection purchased

   1,994    (23)   1,541    (22) 
  

 

 

   

 

 

  

 

 

   

 

 

 

2020:
                 
 
2019
  
2020
 
 
Notional amount
  
Fair value
  
Notional amount
  
Fair value
 
 
(in billions of yen)
 
Credit protection written:
  
   
   
   
 
Investment grade
  
1,266
   
12
   
1,400
   
(5
)
Non-investment
grade
  
199
   
3
   
416
   
—
 
                 
Total
  
1,465
   
15
   
1,816
   
(5
)
                 
Credit protection purchased
  
1,628
   
(14
)  
3,028
   
6
 
                 
Note:The rating scale is based upon either the external ratings or the internal ratings of the underlying reference credit. The lowest investment grade rating is considered to be BBB
-
, while anything below or unrated is considered to be
non-investment
grade.
Non-investment
grade credit derivatives primarily consist of unrated credit default swap indices such as CDX and iTraxx.

The following table shows the maximum potential amount of future payments for credit protection written by expiration period at March 31, 20172019 and 2018:

   Maximum payout/Notional amount 
   2017   2018 
   

 

(in billions of yen)

 

One year or less

   507    329 

After one year through five years

   1,020    831 

After five years

   317    142 
  

 

 

   

 

 

 

Total

   1,844    1,302 
  

 

 

   

 

 

 
2020:

         
 
Maximum payout/Notional amount
 
 
2019
  
2020
 
 
(in billions of yen)
 
One year or less
  
326
   
270
 
After one year through five years
  
1,057
   
1,368
 
After five years
  
82
   
178
 
         
Total
  
1,465
   
1,816
 
         

MIZUHO FINANCIAL GROUP, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

Note:The maximum potential amount of future payments is the aggregate notional amount of the credit derivatives where the Group wrote the credit protection, and it has not been reduced by the effect of any amounts that the Group may possibly collect on the underlying assets and the related cash flows, nor netted against that of credit protection purchased.

Credit-related contingent features

Certain of the MHFG Group’s derivative instruments contain provisions that require the Group’s debt to maintain an investment grade credit rating from the major credit rating agencies. If the Group’s debt credit rating were to fall below investment grade, the counterparties to the derivative instruments could request immediate payment or demand immediate and ongoing full overnight collateralization on derivative instruments which are in net liability positions for the Group.

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MIZUHO FINANCIAL GROUP, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
The following table shows the quantitative information about derivative instruments with credit-risk-related contingent features at March 31, 20172019 and 2018:

   2017   2018 
   

 

(in billions of yen)

 

Aggregate fair value of derivative instruments with credit-risk-related contingent features in net liability positions

   698    572 

Collateral provided to counterparties in the normal course of business

   658    593 

Amount required to be posted as collateral or settled immediately if credit-risk-related contingent features were triggered(Note)

   40    —   

Note:There was no amount that the Group would be required to post as collateral or settle immediately on March 31, 2018.

24.2020:

         
 
2019
  
2020
 
 
 
(in billions of yen)
 
Aggregate fair value of derivative instruments with credit-risk-related contingent features in net liability positions
  
511
   
888
 
Collateral provided to counterparties in the normal course of business
  
489
   
818
 
Amount required to be posted as collateral or settled immediately if credit-risk-related contingent features were triggered
  
22
   
70
 
23. Commitments and contingencies

Obligations under guarantees

The MHFG Group provides guarantees or indemnifications to counterparties to enhance their credit standing and enable them to complete a variety of business transactions. A guarantee represents an obligation to make payments to third parties if the counterparty fails to fulfill its obligation under a borrowing arrangement or other contractual obligation.

The types of guarantees under ASC 460, “Guarantees” (“ASC 460”) provided by the MHFG Group are described below.

Performance guarantees

Performance guarantees are issued to guarantee customers’ performance under contractual arrangements such as a tender bid on a construction project or the completion of a construction project.

Guarantees on loans

Guarantees on loans include obligations to guarantee the customers’ borrowing contracts. The MHFG Group is required to make payments to the guaranteed parties in the event that customers fail to fulfill obligations under the contracts.

MIZUHO FINANCIAL GROUP, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

Guarantees on securities

Guarantees on securities include obligations to guarantee securities, such as bonds issued by customers.

Other guarantees

Other guarantees include obligations to guarantee customers’ payments, such as tax payments.

Guarantees for the repayment of trust principal

The MHFG Group provides certain trust
products
with guarantees for the repayment of trust principal, e.g., loan trusts and certain jointly operated designated money trusts. Pursuant to Japanese trust-related laws, trustees are prohibited from compensating beneficiaries for any loss in the beneficial interests in each trust. However, under a special condition of the Japanese trust-related laws, trust banks as trustees are allowed to enter into an agreement to provide compensation for any loss in the principal of the trust. The MHFG Group manages and administers the
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MIZUHO
FINANCIAL
GROUP, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
trust assets to minimize exposures against losses from the guarantees for the repayment of trust principal, including
writing-off
impaired loans and charging it to the trust account profits. In performing its fiduciary duties, the MHFG Group also manages the trust assets separately from its own proprietary assets on behalf of customers and keeps separate records for the trust activities. The MHFG Group consolidates certain guaranteed principal money trusts. See Note 2524 “Variable interest entities and securitizations” for further discussion of the guaranteed principal money trusts. The contract amounts of guarantees for repayment of unconsolidated trust principal are presented in the tables below.

Part of the trust account profits is set aside as a reserve in trust accounts to absorb losses in the trust asset portfolios in accordance with relevant Japanese laws concerning the trust business and/or trust agreements. Statutory reserves for loan trusts and reserves for jointly operated designated money trusts are calculated based on the trust principal or the balance of loans and other assets in the trust accounts. Since the probability of principal indemnification is considered to be remote, the MHFG Group had no related reserve for credit losses recorded in its consolidated financial statements.

Liabilities of trust accounts

The MHFG Group, as trustee, may enter into an agreement with a third party who is not the party to the relevant trust agreement to the extent necessary to handle the trust affairs for the purpose of fulfilling the objectives of the trust and, as such, the trustee shall be allowed to assume certain liabilities. Pursuant to Japanese trust-related laws, the trustee is ultimately liable to pay those liabilities out of its proprietary assets in the event that the trust assets are insufficient to cover those liabilities. The amount of trust liabilities rarely exceeds the amount of trust assets and, therefore, those liabilities are generally covered by the corresponding trust assets. To avoid the demand for payment out of the proprietary assets, the trustee can enter into a special covenant of limited liability under which the trust creditors agree to limit the trustee’s liability to the value of the trust assets and to waive the right for compulsory execution against the trustee’s proprietary assets. The MHFG Group regularly monitors the condition of trust accounts to minimize exposures against making payment.

The amounts of such liabilities in the trust accounts, excluding those with the special covenant of limited liability, are presented in the tables below. Liabilities of trust accounts principally include obligations to return collateral under security lending transactions and other transactions.

MIZUHO FINANCIAL GROUP, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

Derivative financial instruments

Certain written options and credit default swaps are deemed guarantees pursuant to the definition of guarantees in ASC 460 if these contracts require the MHFG Group to make payments to counterparties based on changes in an underlying instrument or index that is related to an asset, a liability, or an equity security of the counterparties. The MHFG Group’s payments could involve a gross settlement or a net settlement. Because it is difficult in practice to determine whether the counterparty has the asset, the liability or the equity security relating to the underlying, the MHFG Group has decided to include all credit default swaps and written options, excluding written options outside the scope of ASC 460, in the guarantee disclosures.

Carrying amount

The MHFG Group records all guarantees and similar obligations subject to ASC 460 at fair value in the consolidated balance sheets at the inception of the guarantee. The total carrying amount of guarantees and similar obligations at March 31, 20172019 and 20182020 was ¥249¥109 billion and ¥82¥521 billion, respectively, and was included in Other liabilities and Trading account liabilities. The total includes the carrying amounts of derivatives that are deemed to be guarantees, which amounted to ¥228¥90 billion and ¥62¥502 billion at March 31, 20172019 and 2018,2020, respectively.

Maximum exposure under guarantee contracts

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MIZUHO FINANCIAL GROUP, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
The table below summarizes the remaining term and
maximum
potential amount of future payments by type of guarantee at March 31, 20172019 and 2018.2020. The maximum potential amount of future payments disclosed below represents the contractual amounts that could be required to be repaid in the event of the guarantees being executed, without consideration of possible recoveries under recourse provisions or from collateral held. With respect to written options included in derivative financial instruments in the table below, in theory, the MHFG Group is exposed to unlimited losses; therefore, the table shows the notional amounts of the contracts as a substitute for the maximum exposure.

The MHFG Group, when necessary, requires collateral such as cash, investment securities and real estate or third-party guarantees depending on the amount of credit risk involved, and employs means such as
sub-participation
to reduce the credit risk associated with guarantees. The maximum exposure or notional amount below does not represent the expected losses from the execution of the guarantees.

2017

  Maximum
potential/Contractual
or Notional amount		   Amount by expiration period 
    One year or less   After one year
through
five years		   After five years 
   

 

(in billions of yen)

 

Performance guarantees

   2,243    1,246    828    169 

Guarantees on loans

   278    147    20    111 

Guarantees on securities

   175    37    138    —   

Other guarantees

   1,823    1,246    513    64 

Guarantees for the repayment of trust principal

   730    654    52    24 

Liabilities of trust accounts

   15,177    14,927    82    168 

Derivative financial instruments

   14,415    6,066    6,603    1,746 

                 
2019
 
Maximum
potential/Contractual
or Notional amount
  
Amount by expiration period
 
One year or less
  
After one year
through
five years
  
After five years
 
 
(in billions of yen)
 
Performance guarantees
  
2,307
   
1,265
   
878
   
164
 
Guarantees on loans
  
289
   
164
   
46
   
79
 
Guarantees on securities
  
145
   
91
   
54
   
—  
 
Other guarantees
  
2,324
   
1,447
   
834
   
43
 
Guarantees for the repayment of trust principal
  
65
   
—  
   
47
   
18
 
Liabilities of trust accounts
  
362
   
61
   
148
   
153
 
Derivative financial instruments
  
14,170
   
5,807
   
6,434
   
1,929
 

MIZUHO FINANCIAL GROUP, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

2018

  Maximum
potential/Contractual
or Notional amount		   Amount by expiration period 
    One year or less   After one year
through
five years		   After five years 
   

 

(in billions of yen)

 

Performance guarantees

   2,165    1,084    908    173 

Guarantees on loans

   241    123    28    90 

Guarantees on securities

   164    32    132    —   

Other guarantees

   2,210    1,555    614    41 

Guarantees for the repayment of trust principal

   709    639    49    21 

Liabilities of trust accounts

   13,861    13,546    149    166 

Derivative financial instruments

   11,654    4,911    4,996    1,747 

                 
2020
 
Maximum
potential/Contractual
or Notional amount
  
Amount by expiration period
 
One year or less
  
After one year
through
five years
  
After five years
 
 
(in billions of yen)
 
Performance guarantees
  
2,456
   
1,511
   
735
   
210
 
Guarantees on loans
  
301
   
204
   
34
   
63
 
Guarantees on securities
  
110
   
22
   
88
   
—  
 
Other guarantees
  
2,314
   
1,925
   
319
   
70
 
Guarantees for the repayment of trust principal
  
59
   
—  
   
42
   
17
 
Liabilities of trust accounts
  
446
   
80
   
201
   
165
 
Derivative financial instruments
  
21,756
   
11,045
   
7,951
   
2,760
 
The table below presents the maximum potential amount of future payments of performance guarantees, guarantees on loans, guarantees on securities and other guarantees classified based on internal ratings at March 31, 20172019 and 2018:

   2017    2018  
   

 

(in billions of yen)

 

Investment grade

   3,477    3,930 

Non-investment grade

   1,042    850 
  

 

 

   

 

 

 

Total

   4,519    4,780 
  

 

 

   

 

 

 

2020:
         
 
2019
  
2020
 
 
(in billions of yen)
 
Investment grade
  
4,124
   
4,233
 
Non-investment
grade
  
941
   
948
 
         
Total
  
  5,065
   
  5,181
 
         
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Note:
Investment grade in the internal rating scale generally corresponds to
BBB-
or above in the external rating scale.

Other
off-balance-sheet
instruments

In addition to guarantees, the MHFG Group issues other
off-balance-sheet
instruments to its customers, such as lending-related commitments and commercial letters of credit. Under the terms of these arrangements, the MHFG Group is required to extend credit or make certain payments upon the customers’ requests.

Commitments to extend credit

Commitments to extend credit are legally binding agreements to lend to customers on demand. They usually have set maturity dates. These agreements differ from guarantees in that they are generally revocable or contain provisions that enable the MHFG Group to avoid payment or reduce the amount of credit extended under certain conditions, such as the deterioration of the borrower’s financial condition or other reasonable conditions. The MHFG Group monitors the financial condition of the potential borrowers throughout the commitment period to determine whether additional collateral or changes in the terms of the commitment are necessary. Since many of these commitments to extend credit expire without being drawn upon, the total commitment amounts do not necessarily represent future cash requirements.

Commitments to invest in securities

Commitments to invest in securities include legally binding contracts to make additional contributions to investment funds, such as private equity funds in accordance with the terms of investment agreements.

MIZUHO FINANCIAL GROUP, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

Commercial letters of credit

Commercial letters of credit are issued in connection with customers’ trade transactions. Normally, the customers cannot receive the goods until they make payment to a bank, and therefore these commercial letters of credit are collateralized by the underlying goods. Upon issuance of commercial letters of credit, the MHFG Group monitors the credit risk associated with these transactions to determine if additional collateral is required.

The table below summarizes the contractual amounts with regard to these undrawn commitments at March 31, 20172019 and 2018:

   2017    2018  
   

 

(in billions of yen)

 

Commitments to extend credit(Note)

   76,678    78,448 

Commercial letters of credit

   522    690 
  

 

 

   

 

 

 

Total

   77,200    79,138 
  

 

 

   

 

 

 

Note:Commitments to extend credit include commitments to invest in securities.

2020:

         
 
2019
  
2020
 
 
(in billions of yen)
 
Commitments to extend credit
(Note)
  
76,857
   
76,633
 
Commercial letters of credit
  
778
   
690
 
         
Total
  
77,635
   
77,323
 
         
Note: Commitments to extend credit include commitments to invest in securities.
Allowance for losses on
off-balance-sheet
instruments

The amounts of allowance for losses on
off-balance-sheet
instruments at March 31, 20172019 and 20182020 were ¥120¥80 billion and ¥90¥99 billion, respectively, and were included in Other liabilities.

Leases

The MHFG Group leases certain office space and equipment under noncancelable agreements. The lease periods for these leases range from less than 1 year to around 30 years. These leases include cancellation clauses with penalties

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Table of a maximum of approximately 5 years-worth of rentals and/or periodic adjustment clauses of rentals. The table below shows future minimum lease payments for capitalized leases and future minimum rental payments for operating leases at March 31, 2018:

   Capitalized leases   Operating leases 
   

 

(in millions of yen)

 

Fiscal year ending March 31:

    

2019

   11,974    51,996 

2020

   9,879    44,413 

2021

   7,233    37,896 

2022

   4,307    32,233 

2023

   2,496    22,558 

2024 and thereafter

   991    56,897 
  

 

 

   

 

 

 

Total minimum lease/rental payments

   36,880    245,993 
  

 

 

   

 

 

 

Amount representing interest

   870   
  

 

 

   

Present value of minimum lease payments

   36,010   
  

 

 

   

Total rental expense for the fiscal years ended March 31, 2016, 2017 and 2018 was ¥118,400 million, ¥113,991 million and ¥117,270 million, respectively.

MHFG leases its head office from a third party and accounts for the lease arrangement as an operating lease.

Contents

MIZUHO FINANCIAL GROUP, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

During prior years, the MHFG Group’s major banking subsidiaries sold their head offices (including land, buildings, facilities

Legal proceedings and equipment) to third parties. Concurrent with the sales, these subsidiaries leased the properties back for periods of 5 and 10 years for total rental payments for these periods of ¥214,690 million. The terms of certain lease agreements were changed during the fiscal years ended March 31, 2009, 2011, 2012 and 2014, and the total rental payments for these periods increased to ¥282,832 million, as a consequence. The MHFG Group accounted for the transactions as operating leases. The future minimum rental payments under the terms of the related lease agreements were ¥49,883 million, ¥41,430 million and ¥32,977 million at March 31, 2016, 2017 and 2018, respectively.

Legal proceedings

investigations

The MHFG Group is involved in normal collection proceedings initiated by the Group, and other legal proceedings and investigations in the ordinary course of business.

The Group’s Indonesian subsidiary acts as In accordance with ASC 450, the collateral agentGroup recognizes a liability for loss contingencies arising from such proceedings and investigations when a loss is probable and the trustee of bond issuances made by subsidiaries of Asia Pulp & Paper Company Ltd. (“APP”). In that role,loss amount or the subsidiary is involved in a dispute between the bondholders and such APP subsidiaries in their capacities as the issuers, guarantors and/or pledgors of security for the bonds relating to foreclosure proceedings in respectrange of the collateral and the subsidiary has been named asloss can be reasonably estimated. If a defendant in a lawsuit brought by the obligors under the bonds in Indonesia. The Group’s consolidated financial statements doloss does not include a reserve in relation tomeet this dispute andcondition but is reasonably possible, the Group does not believerecognize a liability but discloses the detail of such proceedings and investigations. Based on the information available as of the date of the consolidated financial statements, the Group believes that the resolutionoutcome of this matterthe collection, legal proceedings and investigations will not have a significant impactadverse effect on the consolidated financial condition or resultsstatements.

Leases
The MHFG Group is obligated under a number of operationslease arrangements. The Group’s lessee arrangements mainly consist of operating leases for real estate, such as office space, including its head office, and branches. Finance leases are not significant. Some of the Group, although there can be no assuranceGroup’s operating leases include variable lease payments.
The following table presents the consolidated balance sheet information related to operating leases as of March 31, 2020:
As of March 31, 2020
(in millions of yen, except for remaining
lease term and discount rate)
ROU assets
(Note)
613,068
Lease liabilities
(Note)
627,250
Weighted average:
Remaining lease term
15.7
 years
Discount rate
0.55
%
Note:ROU assets and lease liabilities are included in Other assets and Other liabilities, respectively, on the consolidated balance sheets.
The following table presents lease cost and supplemental information related to operating leases for the foregoing.

25.fiscal year ended March 31, 2020:

Fiscal year ended March 31, 2020
(in millions of yen)
Lease cost
(Note)
126,840
ROU assets obtained in exchange for new lease liabilities
60,047
Operating cash flows
102,066
Note:
Lease cost for operating leases are included in Occupancy
expenses
on the consolidated statements of income. The Group’s variable lease costs and costs for leases with terms of twelve months or less are not significant. Total rental expense for the fiscal years ended March 31, 2018 and 2019 prior to the adoption of ASU No.2016-02 was ¥117,270 million and ¥115,239 million, respectively.
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The following table shows future lease payments under operating leases as of March 31, 2020:
     
 
As of March 31, 2020
 
 
(in millions of yen)
 
Fiscal year ending March 31:
  
 
2021
  
93,997
 
2022
  
68,268
 
2023
  
54,377
 
2024
  
47,608
 
2025
  
41,539
 
2026 and thereafter
  
346,741
 
     
Total lease payments
  
652,530
 
     
Amount representing interest
  
25,280
 
     
Total lease liabilities for operating leases
  
627,250
 
     
24. Variable interest entities and securitizations

Variable interest entities

In the normal course of business, the MHFG Group is involved with VIEs primarily through the following types of transactions: asset-backed commercial paper/loan programs, asset-backed securitizations, investments in securitization products, investment funds, trust arrangements, structured finance, and funding vehicles. The Group consolidates certain of these VIEs, where the Group is deemed to be the primary beneficiary because it has both (1) the power to direct the activities of the VIE that most significantly impact the VIE’s economic performance and (2) the obligation to absorb losses or the right to receive benefits that could potentially be significant to the VIE. The MHFG Group reassesses whether it is the primary beneficiary on an ongoing basis as long as the Group has any continuing involvement with the VIE. There are also other VIEs, where the Group has determined that it is not the primary beneficiary but has significant variable interests. In evaluating the significance of the variable interests, the Group comprehensively takes into consideration the extent of its involvement with each VIE, such as the seniority of its investments, the share of its holding in each tranche and the variability it expects to absorb, as well as other relevant facts and circumstances. The likelihood of loss is not necessarily relevant to the determination of significance, and therefore, “significant” does not imply that there is high likelihood of loss. The maximum exposure to loss that is discussed in this section refers to the maximum loss that the Group could possibly be required to record in its consolidated statements of income as a result of its involvement with the VIEs. This represents exposures associated with both
on-balance-sheet
assets and
off-balance-sheet
liabilities related to the VIEs. Further, this maximum potential loss is disclosed regardless of the probability of such losses and, therefore, it is not indicative of the ongoing exposure which is managed within the Group’s risk management framework.

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The table below shows the consolidated assets of the Group’s consolidated VIEs as well as total assets and maximum exposure to loss for its significant unconsolidated VIEs, in which the Group has determined that its maximum exposure to loss is greater than specific thresholds or meets certain other criteria as of March 31, 20172019 and 2018:

   Consolidated VIEs   Significant
unconsolidated VIEs		 

2017

  Consolidated assets   Total assets   Maximum
exposure to loss		 
   

 

(in billions of yen)

 

Asset-backed commercial paper/loan programs

   2,031    —      —   

Asset-backed securitizations

   629    108    11 

Investments in securitization products

   375    445    154 

Investment funds

   2,188    3,895    463 

Trust arrangements and other

   23    —      —   
  

 

 

   

 

 

   

 

 

 

Total

   5,246    4,448    628 
  

 

 

   

 

 

   

 

 

 

   Consolidated VIEs   Significant
unconsolidated VIEs		 

2018

  Consolidated assets   Total assets   Maximum
exposure to loss		 
   

 

(in billions of yen)

 

Asset-backed commercial paper/loan programs

   2,185    —      —   

Asset-backed securitizations

   627    78    5 

Investments in securitization products

   374    —      —   

Investment funds

   2,661    1,891    533 

Trust arrangements and other

   21    —      —   
  

 

 

   

 

 

   

 

 

 

Total

   5,868    1,969    538 
  

 

 

   

 

 

   

 

 

 

2020:

             
 
Consolidated VIEs
  
Significant
unconsolidated VIEs
 
2019
 
Consolidated assets
  
Total assets
  
Maximum
exposure to loss
 
 
 
(in billions of yen)
 
Asset-backed commercial paper/loan programs
  
2,249
   
—  
   
—  
 
Asset-backed securitizations
  
571
   
70
   
8
 
Investments in securitization products
  
372
   
—  
   
—  
 
Investment funds
  
2,836
   
1,280
   
410
 
Trust arrangements and other
  
20
   
—  
   
—  
 
             
Total
  
6,048
   
1,350
   
418
 
             
             
 
Consolidated VIEs
  
Significant
unconsolidated VIEs
 
2020
 
Consolidated assets
  
Total assets
  
Maximum
exposure to loss
 
 
(in billions of yen)
 
Asset-backed commercial paper/loan programs
  
2,160
   
—  
   
—  
 
Asset-backed securitizations
  
572
   
77
   
7
 
Investments in securitization products
  
370
   
—  
   
—  
 
Investment funds
  
2,694
   
2,299
   
514
 
Trust arrangements and other
  
19
   
—  
   
—  
 
             
Total
  
5,815
   
2,376
   
521
 
             
As of March 31, 2019 and 2020, the noncontrolling interests in consolidated VIEs amounted to ¥621 billion and ¥541 billion, respectively, and included in the Group’s equity-classified noncontrolling interests.
The Group has not provided financial or other support to consolidated or unconsolidated VIEs that the Group was not previously contractually required to provide.

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The tables below present the carrying amounts and classification of assets and liabilities on the MHFG Group’s balance sheets that relate to its variable interests in significant unconsolidated VIEs, as of March 31, 20172019 and 2018:

Assets on balance sheets related to unconsolidated VIEs:

      2017           2018     
   

 

(in billions of yen)

 

Trading account assets

   85    89 

Investments

   254    210 

Loans

   237    163 
  

 

 

   

 

 

 

Total

   576    462 
  

 

 

   

 

 

 

Liabilities on balance sheets and maximum exposure to loss related to unconsolidated VIEs:

      2017           2018     
   

 

(in billions of yen)

 

Payables under securities lending transactions

   31    38 

Trading account liabilities

   1    1 
  

 

 

   

 

 

 

Total

   32    39 
  

 

 

   

 

 

 

Maximum exposure to loss(Note)

   628    538 
  

 

 

   

 

 

 
2020:

         
Assets on balance sheets related to unconsolidated VIEs:
 
2019
  
2020
 
 
 
(in billions of yen)
 
Trading account assets
  
104
   
108
 
Investments
  
168
   
267
 
Loans
  
71
   
55
 
         
Total
  
343
   
430
 
         

MIZUHO FINANCIAL GROUP, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

         
Liabilities on balance sheets and maximum exposure to loss related to unconsolidated VIEs:
 
2019
  
2020
 
 
 
(in billions of yen)
 
Payables under securities lending transactions
  
47
   
47
 
Trading account liabilities
  
1
   
2
 
         
Total
  
48
   
49
 
         
Maximum exposure to loss
(Note)
  
418
   
521
 
         
Note:This represents the maximum amount the Group could possibly be required to record in its consolidated statements of income associated with
on-balance-sheet
exposures and
off-balance-sheet
liabilities such as undrawn commitments.

In the table above the nature of the Group’s variable interest can take different forms, as described further in the notes below. Additionally the Group’s exposure to the obligations of VIEs is generally limited to its interest in these entities. In certain instances the Group provides undrawn commitments to the VIEs.
The Group’s maximum exposure to loss presented in the table above does not include the benefit of offsetting financial instruments that are held to mitigate the risks associated with these variable interests. Furthermore, the Group’s maximum exposure to loss presented in the table above is not reduced by the amount of collateral held as part of the transaction with the VIE or any party to the VIE directly against a specific exposure to loss.
Asset-backed commercial paper/loan programs

The MHFG Group manages several asset-backed commercial paper/loan programs that provide its clients with
off-balance-sheet
and/or cost-effective financing. The VIEs used in the programs purchase financial assets, primarily receivables, from clients participating in the programs and provide liquidity through the issuance of commercial paper or borrowings from the MHFG Group backed by the financial assets. While customers normally continue to service the transferred receivables, the MHFG Group underwrites, distributes, and makes a market in commercial paper issued by the conduits. The MHFG Group typically provides program-wide liquidity and credit support facilities and, in some instances, financing to the VIEs. The MHFG Group has the power to determine which assets will be held by the VIEs and has an obligation to monitor these assets. The Group is also responsible for liability management. In addition, through the liquidity and credit support facilities provided to the VIEs, the Group has the obligation to absorb losses that could potentially be significant to the VIEs. Therefore, the Group consolidates such VIEs.

Asset-backed securitizations

The MHFG Group acts as an arranger of various types of structured finance schemes to meet its clients’ needs for
off-balance-sheet
financing. In substantially all of these structured financing transactions, the transfer of the
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financial asset by the client is structured to be bankruptcy remote by use of a bankruptcy remote entity, which is deemed to be a VIE because its equity holder does not have decision making rights. The MHFG Group receives fees for structuring and/or distributing the securities sold to investors. In some cases, the MHFG Group itself purchases the securities issued by the entities and/or provides loans to the VIEs.

In addition, the MHFG Group establishes several single-issue and multi-issue special purpose entities that issue collateralized debt obligations (“CDO”) or CLO, synthetic CDO/CLO or other repackaged instruments to meet clients’ and investors’ financial needs. The MHFG Group also arranges securitization transactions including CMBS, RMBS and others. In these transactions, the MHFG Group acts as an underwriter, placement agent, asset manager, derivatives counterparty, and/or investor in debt and equity instruments.

In these cases above, the MHFG Group consider that these variable interests are not significant as the MHFG Group does not have material balance sheet or
off-balance
exposure at risk related to these variable interests. However, when the MHFG Group has invested in securities issued by the VIEs and/or provides loans to the VIEs and its investment is most part of shares, such variable interests are deemed to be “significant.” In certain VIEs, where the MHFG Group provides liquidity and credit support facilities, writes credit protection or invests in debt or equity instruments in its role as an arranger, servicer, administrator or asset manager, etc., the Group has the power to determine which assets will be held by the VIEs or to manage and monitor these assets. In addition, through the variable interests above, the Group has the obligation to absorb losses and the right to receive benefits that could potentially be significant to the VIEs. Therefore, the Group consolidates such VIEs.

The MHFG Group established certain VIEs to securitize its own mortgage loans. The Group provides servicing for and holds retained subordinated beneficial interests in the securitized mortgage loans. In addition, the Group retains credit exposure in the form of guarantees on these loans. In its role as a servicer, the Group has the power to direct the entity’s activities that most significantly impact the entity’s economic performance by managing defaulted mortgage loans. In addition, through its retained interests and its aforementioned involvement as a guarantor, the Group has the obligation to absorb losses and the right to receive benefits that could potentially be significant to the entity. Therefore, the Group consolidates such VIEs.

MIZUHO FINANCIAL GROUP, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

The MHFG Group has started Tender Option Bond (“TOB”) programs in the fiscal year ended March 31, 2020, which is associated with trusts that hold highly-rated, fixed-rate and

tax-exempt
municipal bond. The trust finances the purchase of their municipal bonds by issuing two types of certificates: (1) short-term puttable and floating-rate certificates (“floaters”), typically purchased by money market funds and (2) certificates that earn all excess cash flow received by trust after floaters and fees are paid (“residuals”), purchased by the transferor of the municipal bond to the trust as a sponsor. The Group is engaged in two types of TOB trusts: Customer TOB trusts and
Non-Customer
TOB trusts. Customer TOB trusts are those for which the residuals are purchased by customers of the Group, whereas the residuals issued by
Non-Customer
TOB trusts are purchased by the Group. Both of two types of TOB trusts are deemed to be a VIEs because its equity holder does not have decision making rights. The MHFG Group considers that it is a “significant” variable interest when the Group has the residuals as a sponsor and/or provides liquidity and credit support facilities. In
Non-Customer
TOB trusts, where MHFG Group holds the residuals as a sponsor, the Group has the power to determine which assets will be held by the VIEs or to manage and monitor these assets. In addition, through the variable interests above, the Group has the obligation to absorb losses and the right to receive benefits that could potentially be significant to the VIEs. Therefore, the Group consolidates such VIEs. Customer TOB trusts are not consolidated in the financial statements of the Group, as the residuals are held by customers.
Investments in securitization products

The MHFG Group invests in, among other things, various types of CDO/CLO, synthetic CDO/CLO and repackaged instruments, CMBS and RMBS arranged by third parties for the purpose of generating current
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income or capital appreciation, which all utilize entities that are
deemed
to be VIEs. By design, such investments were investment grade at issuance and held by a diverse group of investors. The potential loss amounts of the securities and the loans are generally limited to the amounts invested because the Group has no contractual involvement in such VIEs beyond its investments. Since the Group is involved in these VIEs only as an investor, the Group does not ordinarily have the power to direct the VIEs’ activities that most significantly impact the VIEs’ economic performance. However,Similar to the criteria noted in the asset-backed securitization section, the Group views this investment activity to be “significant” when it has a large investment share and / or provides loans to the VIEs. The Group consolidates VIEs, where the transactions are tailored by the third party arrangers to meet the Group’s needs as a main investor, who is ultimately deemed to have the power to determine which assets are to be held by the VIEs. The Group also invests in certain beneficial interests issued by VIEs which hold real estate that the Group utilizes. In addition to these variable interests, when the Group has the power including the sole unilateral ability to liquidate the VIEs, the Group consolidates such VIEs.

Investment funds

The MHFG Group invests in various investment funds, including securities investment trusts, which collectively invest in equity and debt securities that include listed Japanese securities and investment grade bonds. Investment advisory companies or fund management companies, including the Group’s subsidiaries and affiliates, administer and make investment decisions about such investment funds. The Group considers that it is a “significant” variable interest when the Group’s investment share is greater than threshold. The Group consolidates certain investment funds where it is deemed to be the primary beneficiary.

Prior to April 1, 2016, the Group determined that certain investment funds managed by the Group that had attributes of an investment company (or similar entity) qualified for the deferral from certain requirements of ASC 810 that originated from Statement of Financial Accounting Standards (“SFAS”) No.167 “Amendments to FASB Interpretation No.46(R)” (“SFAS No.167”). For these funds, the Group determined whether it was the primary beneficiary by evaluating whether it absorbed the majority of expected losses, received the majority of expected residual returns, or both.

On April 1, 2016, the Group adopted ASU No.2015-02 which eliminated the deferral.

The Group determines whether it is the primary beneficiary by evaluating whether it has both (1) the power to make investment decisions about the investment funds and (2) the obligation to absorb losses or the right to receive benefits that could potentially be significant to the investment funds.

Upon the adoption of ASU No.2015-02, the The Group newly consolidatedconsolidates certain investment funds that had not been consolidated priorwhere it is deemed to April 1, 2016, which hadbe the impact of increasing total assets primarily consisting of Trading account assets by ¥16 billion, and noncontrolling interests by ¥16 billion, respectively. On the other hand, the Group deconsolidated certain investment funds that had been consolidated prior to April 1, 2016, which had the impact of decreasing total assets by ¥54 billion, total liabilities by ¥27 billion, and noncontrolling interests by ¥27 billion, respectively. In addition, the Group determined that certain limited partnerships and similar entities that had been voting interest entities prior to April 1, 2016 are significant unconsolidated VIEs. The amounts relating to significant unconsolidated VIEs as of March 31, 2017 and 2018 in the tables above include the amounts of these limited partnerships and similar entities.

primary beneficiary.

MIZUHO FINANCIAL GROUP, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

Trust arrangements

The MHFG Group offers a variety of asset management and administration services under trust arrangements including security investment trusts, pension trusts and trusts used in the securitization of assets originated by and transferred to third parties. The Group receives trust fees for providing services as an agent or fiduciary on behalf of beneficiaries.

In these cases, the MHFG Group consider that these variable interests are not significant other than specific involvements such as followings;

With respect to guaranteed principal money trust products, the MHFG Group assumes certain risks by providing guarantees for the repayment of principal as required by the trust agreements or relevant Japanese legislation. The MHFG Group manages entrusted funds primarily through the origination of high quality loans and other credit-related products, investing in investment grade marketable securities such as Japanese government bonds and placing cash with the MHFG Group’s subsidiary trust banks. The Group has the power to determine which assets will be held by the VIEs or to manage these assets. In addition, through the principal guarantee agreements, the Group has the obligation to absorb losses that could potentially be significant to the VIEs. Therefore, the Group consolidates such VIEs. However, the MHFG Group does not consolidate certain guaranteed principal money trusts, which invest all the entrusted funds in the MHFG Group itself, as the Group has determined that it has no variable interests (Refer to Note 11 “Due to trust accounts”).interests. See Note 2423 “Commitments and contingencies” for the balances of guaranteed trust principal that are not consolidated at March 31, 20172019 and 2018.

2020.

With respect to
non-guaranteed
trust arrangements, the MHFG Group manages and administers assets on behalf of its customers (trust beneficiaries) in the capacity of a trustee and fiduciary. For substantially all
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non-guaranteed
trust arrangements, the Group generally does not have the power to direct the activities of the VIEs that most significantly impact the VIEs’ economic performance or has neither the obligation to absorb losses nor the right to receive benefits that could potentially be significant to the VIEs. Therefore, such trust accounts are not included in the consolidated financial statements of the MHFG Group.

Special purpose entities created for structured finance

The MHFG Group is involved in real estate, commercial aircraft and other vessel and machinery and equipment financing to VIEs.VIEs and financing in securitized receivable As the Group typically only provides senior financing with credit enhanced by subordinated interests and may sometimes act as an interest rate swap counterparty, the Group has determined that it does not have the power to direct the activities of the VIEs that most significantly impact the VIEs’ economic performance, or it does not have significant“significant” variable interests.

Therefore the Group does not consolidate such VIEs.

Funding Vehicles

The MHFG Group has established several wholly-owned
off-shore
vehicles which issue securities, typically preferred stock that is fully guaranteed by the MHFG Group, to investors unrelated to the MHFG Group to fund purchases of debt instruments issued by the MHFG Group. These entities are considered VIEs because they lack sufficient equity to finance their activities; however, the MHFG Group’s investment in the vehicles’ equity is not a variable interest because the investment is not considered to be at risk as the entire amount raised by the vehicles was used to purchase debt instruments issued by the MHFG Group. Because the MHFG Group does not have variable interests in these vehicles, the MHFG Group does not consolidate these entities. Debt instruments issued by the MHFG Group, which are included in Long-term debt, were ¥970¥681 billion and ¥950¥356 billion at March 31, 20172019 and 2018,2020, respectively.

Securitization

The MHFG Group engages in securitization activities and securitizes mortgage loans, other loans, government and corporate securities and other types of financial assets in the normal course of business. In these

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securitization transactions, the Group records the transfer of a financial asset as a sale when all the accounting criteria for a sale under ASC

860 are met. These criteria are (1) the transferred financial assets are legally isolated from the Group’s creditors, (2) the transferee or beneficial interest holder has the right to pledge or exchange the transferred financial assets, and (3) the Group does not maintain effective control over the transferred financial assets. If all the criteria are not met, the transfer is accounted for as a secured borrowing.

For the fiscal years ended March 31, 2016, 20172018, 2019 and 2018,2020, the MHFG Group neither made significant transfers of financial assets nor recognized significant gains or losses in securitization transactions accounted for as sales. The Group did not retain significant interests in securitization transactions accounted for as sales as of March 31, 20172019 and 2018.

2020.

There are certain transactions where transfers of financial assets do not qualify for the aforementioned sales criteria and are accounted for as secured borrowings. These transferred assets continue to be carried on the consolidated balance sheets of the MHFG Group. Such assets are associated with securitization transactions and loan participation transactions, which amounted to ¥244¥207 billion and ¥91¥143 billion as of March 31, 2017,2019, and ¥208¥176 billion and ¥89¥153 billion as of March 31, 2018,2020, respectively. Liabilities associated with securitization and loan participation transactions are presented as Payables under securities lending transactions and Other short-term borrowings or Long-term debt, respectively, on the consolidated balance sheets.

26. Fee and commission

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25. Noninterest income

Details of Fee and commissionNoninterest income for the fiscal years ended March 31, 2016, 20172018, 2019 and 20182020 are as follows:

   2016   2017   2018 
   

 

(in millions of yen)

 

Securities-related business

   175,723    165,857    180,122 

Deposits and lending business

   143,763    164,573    156,426 

Remittance business

   109,859    108,368    110,054 

Asset management business

   61,803    79,426    100,765 

Trust fees

   50,496    47,379    51,868 

Fees for other customer services

   263,112    260,360    266,476 
  

 

 

   

 

 

   

 

 

 

Total

   804,756    825,963    865,711 
  

 

 

   

 

 

   

 

 

 

Securities-related

             
 
2018
  
2019
  
2020
 
 
(in millions of yen)
 
Fee and commission income:
  
  
 
Securities-related business
(1)
  
180,122
   
145,270
   
139,124
 
Deposits and lending business
(2)
  
156,426
   
152,283
   
157,420
 
Remittance business
(1)
  
110,054
   
110,382
   
112,275
 
Asset management business
(1)
  
100,765
   
97,852
   
98,720
 
Trust related business
(1)
  
121,808
   
124,843
   
129,298
 
Agency business
(1)
  
37,397
   
36,466
   
31,879
 
Guarantee related business
(3)
  
28,258
   
28,582
   
28,974
 
Fees for other customer services
(1)
  
130,881
   
157,612
   
170,195
 
             
Total Fee and commission income
  
865,711
   
853,290
   
867,885
 
             
Foreign exchange gains (losses)—net
(3)
  
91,793
   
93,577
   
44,345
 
Trading account gains (losses)—net
(2)
  
236,982
   
328,841
   
745,692
 
Investment gains (losses)—net:
  
   
   
 
Debt securities
(3)
  
7,757
   
(3,842
)  
31,032
 
Equity securities
(3)
  
289,400
   
(155,947
)  
(557,391
)
Equity in earnings (losses) of equity method investees—net
(3)
  
24,342
   
29,172
   
34,012
 
Gains on disposal of premises and equipment
(3)
  
8,225
   
5,145
   
2,583
 
Other noninterest income
(2)
(4)
  
80,453
   
72,135
   
139,582
 
             
Total
  
1,604,663
   
1,222,371
   
1,307,740
 
             
Notes:
(1)These amounts are revenues from contracts within the scope of ASC 606, “Revenue from contracts with customers ” (“ASC 606”).
(2)Part of these amounts are considered to be revenues from contracts that are within the scope of ASC 606.
(3)These amounts are revenues from contracts that do not meet the scope of ASC 606.
(4)These amounts include the net unrealized gains resulting from changes in fair values of structured notes that contain embedded derivatives. See Note 27 “Fair value” for further details.
Certain Fee and commission income, Trading account gains (losses)—net and Other noninterest income outlined in the table above are considered to be revenues from contracts that are within the scope of ASC 606. The MHFG Group disaggregates Fee and commission income, which is the main part of revenues within the scope of ASC 606, by type of business or service in the table above.
Fee and commission income
For the MHFG Group’s accounting policy for the recognition of Fee and commission income, see Note 1 “Basis of presentation and summary of significant accounting policies.”
Deposits and lending business fees consist of broker’sdeposit-related fees and markups on securities underwriting and other securities related activities. Remittance businesslending-related fees. Deposit-related fees, consistwhich amounted to ¥14 billion for the fiscal year ended March 31, 2020, are within the scope of service chargesASC
606. Lending-related fees amounted to ¥143 billion for funds transfer and collections. Asset management businessthe fiscal year ended March 31, 2020. Most of the lending-related fees consist of investment trust managementsuch as commitment fees and investment advisory fees. Trustarrangement fees are earned primarily by fiduciary asset management and administration services for corporate pension plans, investment funds, and other. Fees for other customer services include fees related tonot within the MHFG Group’s agency business, guarantee related business, and other.

scope of ASC 606.

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27.

Trust related business fees consist of trust fees earned primarily through fiduciary asset management and administrative service and other trust-related fees, which amounted to ¥51 billion and ¥74 billion for the fiscal year ended March 31, 2019, respectively, and ¥54 billion and ¥75 billion for the fiscal year ended March 31, 2020, respectively.
Trading account gains (losses)—net and Other noninterest income
In addition to Fee and commission income, Trading account gains (losses)—net and Other noninterest income include certain revenues within the scope of ASC 606. Underwriting fees from trading securities, which amounted to ¥68 billion and ¥60 billion for the fiscal years ended March 31, 2019 and 2020, respectively, are within the scope of ASC 606 and accounted for in Trading account gains (losses)—net. Underwriting fees are primarily recognized at the point in time and all considerations of the transaction are fixed on trade date or pricing date . For the fiscal years ended March 31, 2019 and 2020, approximately ¥26 billion and ¥24 billion, respectively, of Other noninterest income were within the scope of ASC 606. Credit card interchange fees are within the scope of ASC 606 and accounted for in Other noninterest income. Credit card interchange fees are earned on credit card transactions conducted through payment networks and recognized upon settlement of the credit card payment transactions.
Contract balances relating to revenues from contracts with customers subject to ASC 606
Contract assets and receivables from contracts with customers subject to ASC 606 are recognized in Accrued income or accounts receivable of Other assets. As of March 31, 2019 and 2020, the balance of contract assets was not material. Contract liabilities are recognized in unearned income of Other liabilities. As of March 31, 2019 and 2020, the balance of contract liabilities was not material.
Remaining performance obligations relating to revenues from contracts with customers subject to ASC 606
Remaining performance obligations are services that the MHFG Group has committed to provide in the future in connection with its contracts with customers. As of March 31, 2019 and 2020, the amount of expected revenues from current obligations to provide services in the future is not material. It excludes revenues from contracts less than one year or contracts that have provisions that allow the Group to recognize revenue at the amount it has the right to invoice.
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26. Trading account gains and losses

The MHFG Group performs trading activities through market making, sales, and arbitrage. Accordingly, Trading account gains (losses)—net include gains and losses from transactions undertaken for trading purposes, including both market making for customers and proprietary trading, or transactions through which the Group seeks to capture gains arising from short-term changes in market value. Trading account gains (losses)—net also include gains and losses related to changes in the fair value of derivatives and other financial instruments not eligible for hedge accounting under U.S. GAAP that are utilized to offset mainly interest rate risk related to the Group’s various assets and liabilities, as well as gains and losses related to changes in the fair value of foreign currency-denominated available-for-saledebt securities for which the fair value option has been elected in accordance with ASC 825, “Financial Instruments” (“ASC 825”).reported as Trading securities. Net trading gains (losses) for the fiscal years ended March 31, 2016, 20172018, 2019 and 20182020 are comprised of the following:

   2016  2017  2018 
   

 

(in millions of yen)

 

Trading account gains (losses)—net:

   

Trading securities

   156,559   126,332   333,749 

Derivative contracts:

    

Interest rate contracts

   319,225   (209,361)   (63,260) 

Foreign exchange contracts(1)

   65,101   37,129   61,046 

Equity-related contracts(2)

   17,970   1,777   (98,807) 

Credit-related contracts(3)

   (1,731)   900   (2,076) 

Other contracts

   2,015   742   6,330 
  

 

 

  

 

 

  

 

 

 

Total

   559,139   (42,481)   236,982 

Foreign exchange gains (losses)—net(4)

   113,553   69,453   91,793 
  

 

 

  

 

 

  

 

 

 

Net trading gains (losses)

   672,692   26,972   328,775 
  

 

 

  

 

 

  

 

 

 

             
 
2018
  
2019
  
2020
 
 
 
(in millions of yen)
 
Trading account gains (losses)—net:
  
   
   
 
Trading securities
  
333,749
   
158,162
   
267,514
 
Derivative contracts:
  
   
   
 
Interest rate contracts
  
(63,260
)  
127,242
   
388,289
 
Foreign exchange contracts
(1)
  
61,046
   
6,748
   
(111,920
)
Equity-related contracts
(2)
  
(98,807
)  
37,875
   
217,744
 
Credit-related contracts
(3)
  
(2,076
)  
269
   
5,208
 
Other contracts
  
6,330
   
(1,455
)  
(21,143
)
             
Total
  
236,982
   
328,841
   
745,692
 
Foreign exchange gains (losses)—net
(4)
  
91,793
   
93,577
   
44,345
 
             
Net trading gains (losses)
  
328,775
   
422,418
   
790,037
 
             
Notes:

(1)Amounts include gains and losses on currency swaps.
(2)The net gain (loss)gains (losses) excluded from the assessment of the effectiveness of fair value hedges is included in the above table.
(3)Amounts do not include the net lossgains (losses) of ¥5,230¥(754) million, ¥7,594¥(736) million and ¥754¥2,838 million on the credit derivatives hedgingeconomically managing the credit risk of loans during the fiscal years ended March 31, 2016, 20172018, 2019 and 2018,2020, respectively. The net lossgains (losses) is recorded in Other noninterest expenses.income (expenses).
(4)Amounts include realized and unrealized gains and losses on both derivative instruments and nonderivative instruments. Amounts on derivative instruments include gains and losses on forward foreign exchange contracts and currency options. Amounts on nonderivative instruments include translation gains and losses related to foreign currency-denominated available-for-saledebt securities for which the fair value option has been elected in accordance with ASC 825.reported as Trading securities.

28.

27. Fair value

Fair value measurements

ASC 820 defines fair value as the exchange price that would be received for an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date. ASC 820 also establishes a fair value hierarchy which requires an entity to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value. In addition, ASC 820 precludes (1) the deferral of gains and losses at inception of certain

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derivative contracts whose fair value was not evidenced by market-observable data, and (2) the use of block

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discounts when measuring the fair value of instruments traded in an active market,
which
were previously applied to large holdings of publicly traded financial instruments.

Fair value hierarchy

ASC 820 specifies a hierarchy of valuation techniques based on whether the inputs to those valuation techniques are observable or unobservable. The standard describes three levels of inputs that may be used to measure fair value:

Level 1

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

Level 2

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

Level 3

 
Level 3
Unobservable inputs that are supported by little or no market activity and that are significant to the fair value of the assets or liabilities. Level 3 assets and liabilities include financial instruments whose values are determined using pricing models, discounted cash flow methodologies, or similar techniques, as well as instruments for which the determination of fair value requires significant management judgment or estimation.

Valuation process

The MHFG Group has established valuation policies which govern the principles of fair value measurements and the authority and duty of each department. The Group has also established procedure manuals which describe valuation techniques and related inputs for determining the fair values of various financial instruments. The policies require that the measurement of fair values be carried out in accordance with the procedures performed by the risk management departments or the back offices which are independent from the front offices. The policies also require the risk management departments to check and verify whether the valuation methodologies defined in the procedure manuals are fair and proper and the internal audit departments to periodically review the compliance with the procedures throughout the Group. Although the valuation methodologies and related inputs are consistently used from period to period, a change in the market environment sometimes leads to a change in the valuation methodologies and the inputs. For instance, a change in market liquidity due to a delisting or a new listing is one of the key drivers of revisions to the valuation methodologies and the inputs. The key drivers also include the availability or the lack of market observable inputs and the development of new valuation methodologies. Price verification performed through the Group’s internal valuation process has an important role in identifying whether the valuation methodologies and the inputs need to be changed. The internal valuation process over the prices broker-dealers provide, primarily for Japanese securitization products, is described in more detail below in “
Available-for-sale securities”. securities.
A change in the
valuation
methodologies and/or the inputs requires the revision of the valuation policies and procedure manuals, which is required to be approved by the appropriate authority, either the CEO, the head of risk management, and/or the head of accounting, depending on the nature and characteristics of the change.

The following is a description of valuation methodologies and inputs used for assets and liabilities measured at fair value on a recurring basis, including the general classification of such instruments pursuant to the fair value

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hierarchy and the MHFG Group’s valuation techniques used to measure fair values. During the fiscal year ended March 31, 2018,2020, there were no significant changes made to the Group’s valuation techniques and related inputs.

Trading securities and trading securities sold, not yet purchased

When quoted prices for identical securities are available in an active market, the Group uses the quoted prices to measure the fair values of securities and such securities are classified in Level 1 of the fair value hierarchy. Level 1 securities include highly liquid government bonds.bonds and equity securities. When quoted prices for identical securities are available, but not actively traded, such securities are classified in Level 2 of the fair value hierarchy. When no quoted market prices are available, the Group estimates fair values by using pricing models with inputs that are observable in the market and such securities are classified in Level 2 of the fair value hierarchy. Level 2 securities include Japanese local government bonds, corporate bonds, and commercial paper. When less liquid market conditions exist for securities, the quoted prices are stale or the prices from independent sources vary significantly, such securities are generally classified in Level 3 of the fair value hierarchy. The fair values of securitization products such as RMBS, CMBS, ABS, and CLO are determined primarily by using a discounted cash flow model. The key inputs used for the model include default rates, recovery rates, prepayment rates, and discount rates. In the event that certain key inputs are unobservable or cannot be corroborated by observable market data, these financial instruments are classified in Level 3.

As it pertains to investment funds, exchange-traded funds (“ETF”) are generally classified in Level 1.

Hedge funds the Group invests in are primarily multi strategy funds that employ a fundamental
bottom-up
investment approach across various asset classes globally. Hedge funds are measured at the net asset value (“NAV”) per share and the Group has the ability to redeem its investment with the investees at the NAV per share at the measurement date or within the near term. Private equity funds have specific investment objectives in connection with their acquisition of equity interests in new and emerging firms in need of capital. Employing venture capital strategies, they provide financing and other support to
start-up
businesses, medium and small entities in particular geographical areas, and to companies with certain technologies or companies in high-growth industries. Real estate funds invest globally and primarily in real estate companies, debt recapitalizations and direct property. Private equity funds and real estate funds are measured atusing the NAV per share practical expedient and the Group does not have the ability to redeem its investment in the investees at the NAV per share at the measurement date or within the near term. It is estimated that the underlying assets of the funds would be liquidated within aten-year period.

Derivative financial instruments

Exchange-traded derivatives are valued using quoted market prices and consequently are classified in Level 1 of the fair value hierarchy. However, the majority of derivatives entered into by the Group are executed
over-the-counter
and are valued using internal valuation techniques as no quoted market prices are available for such instruments. The valuation techniques depend on the type of derivatives. The principal techniques used to value these instruments are discounted cash flow models and the Black-Scholes option pricing model, which are widely accepted in the financial services industry. The key inputs vary by the type of derivatives and the nature of the underlying instruments and include interest rate yield curves, foreign
exchange
rates, the spot price of the underlying, volatility and correlation. Each item is classified in either Level 2 or Level 3 depending on the observability of the significant inputs to the model. Level 2 derivatives include plain vanilla interest rate and currency swaps and option contracts. Derivative contracts valued using significant unobservable correlation or volatility are classified in Level 3 of the fair value hierarchy.

In addition, the Group records credit-risk valuation adjustments on
over-the-counter

derivatives to reflect the credit quality of its counterparties. The Group calculates these credit-risk valuation adjustments using modeled expected exposure, and default probabilities and severity factors that are developed from market credit spreads and other related market information. Also, the

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Group implemented funding valuation adjustments in the fourth quarter to reflect the impact of funding on uncollateralized
over-the-counter
derivatives and derivatives where the Group is not permitted to use the collateral received, and is recognized where there is evidence that a market participant would incorporate the adjustment into the transfer of the instrument. The Group incorporated funding valuation adjustments into the fair value measurements due to what it believes to be an industry trend toward incorporating the Japanese market’s view of funding risk premium in
over-the-counter
derivatives. The Group calculates these funding valuation adjustments incorporating the expected future funding requirements arising from the Group’s positions and the estimated
market
funding cost which considers the Group’s credit risk.
Available-for-sale
securities

The fair values of
available-for-sale
securities are determined primarily using the same procedures described forunder trading securities above. Since private placement bonds have no quoted market prices, the fair values of such bonds are estimated based on a discounted cash flow model using interest rates approximating the current rates for instruments with similar maturities and credit risk. Private placement bonds are classified in either Level 2 or Level 3 depending on the observability of the significant inputs to the model, such as credit risk. The fair values of securitization products such as RMBS, CMBS ABS, and CLOABS are generally based upon single
non-binding
quoted prices from broker-dealers. Such quotes are validated through the Group’s internal processes and controls. In rare instances where the Group finds the quoted prices to be invalid through its internal valuation process, it adjusts those prices or alternatively estimates their fair values by using a discounted cash flow model to incorporate the Group’s estimates of key inputs such as the most recent value of each underlying asset, cash flows of the underlying assets, and discount margin. The validation of such prices varies depending on the nature and type of the products. For the majority of RMBS ABS, and CLO,ABS, broker quotes are validated by investigating significant unusual monthly valuation fluctuations and comparing to prices internally computed through discounted cash flow models using assumptions and parameters provided by brokers such as the cash flows of underlying assets, yield curve, prepayment speed and credit spread. For the majority of CMBS, the Group validates broker quotes through a review process that includes the investigation of significant unusual monthly valuation fluctuations and/or a review of underlying assets with significant differences between the valuations of the Group and the broker-dealers being identified. Though most Japanese securitization products are classified in Level 3, certain securitization products such as Japanese RMBS are classified in Level 2, if the quoted prices are verified through either recent market transactions or a pricing model that can be corroborated by observable market data.

Equity securities
Equity securities mainly consist of marketable equity securities. The fair values of the marketable equity securities are based upon quoted market prices for identical equity securities trading as securities in an active market. Equity securities also include investments in certain investment funds measured using the NAV per share practical expedient including private equity funds and real estates funds. These securities are determined primarily using the same procedures described under
Trading securities and trading securities sold, not yet purchased
above.
Other investments

Other investments consist of investments held by consolidated investment companies. These companies typically hold investments in marketable andnon-marketable
non
-marketable
equity securities and debt securities. The fair value of the marketable equity securities is based upon quoted market prices. The fair value of the
non-marketable
equity securities is based upon significant management judgment, as very limited quoted prices exist. When evaluating
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such securities, the Group firstly considers recent market transactions of identical securities, if applicable. Thereafter, the Group uses commonly accepted valuation techniques such as earnings multiples based on comparable public securities.
Non-marketable
equity securities are generally classified in Level 3 of the fair value hierarchy. The fair value of the debt securities is estimated using a discounted cash flow model, since they have no quoted market prices. Those debt securities are classified in Level 3, because the credit risk is unobservable.

Long-term debt

Fair value accounting is elected for certain long-term debt instruments. For a portion of these instruments fair value is based on quoted prices for identical debt trading as a security in inactive markets. These instruments are classified in Level 2 of the fair value hierarchy. For the remaining instruments, thewith embedded derivatives. The fair values are determined using a discounted cash flow model that considers the embedded derivatives and the terms and payment structures of the notes. The fair values of the derivatives embedded in such notes are primarily derived by using the same procedures described in“
Derivative financial instruments”instruments
above. Such notes are classified in Level 2 or Level 3 depending on the observability of the significant inputs into the model used to determine the fair value of the embedded derivatives.

The Group also measures certain notes that contain embedded derivatives at fair value under the practicability exception. For these instruments, fair value is based on quoted prices for identical debt traded as a security in inactive markets. These instruments are classified in Level 2 of the fair value hierarchy.

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Items measured at fair value on a recurring basis

Assets and liabilities measured at fair value on a recurring basis at March 31, 20172019 and 2018,2020, including those for which the MHFG Group has elected the fair value option, are summarized below:

2017

  Level 1   Level 2   Level 3   Assets/
Liabilities
measured
at fair value		 
   

 

(in billions of yen)

 

Assets:

        

Trading securities(1):

        

Japanese government bonds

   1,485    23    —      1,508 

Japanese local government bonds

   —      69    —      69 

U.S. Treasury bonds and federal agency securities

   2,883    80    —      2,963 

Other foreign government bonds

   1,127    457    —      1,584 

Agency mortgage-backed securities

   —      1,973    —      1,973 

Residential mortgage-backed securities

   —      —      15    15 

Commercial mortgage-backed securities

   —      3    —      3 

Certificates of deposit and commercial paper

   —      554    —      554 

Corporate bonds and other

   3    1,449    1,052    2,504 

Equity securities

   1,661    20    23    1,704 

Trading securities measured at net asset value(2)

         678 

Derivative financial instruments:

        

Interest rate contracts

   37    8,442    27    8,506 

Foreign exchange contracts

   28    2,709    8    2,745 

Equity-related contracts

   31    89    14    134 

Credit-related contracts

   —      33    2    35 

Other contracts

   1    11    11    23 

Available-for-sale securities:

        

Japanese government bonds

   9,543    720    —      10,263 

Japanese local government bonds

   —      284    —      284 

U.S. Treasury bonds and federal agency securities

   1,144    —      —      1,144 

Other foreign government bonds

   346    589    —      935 

Agency mortgage-backed securities

   —      843    —      843 

Residential mortgage-backed securities

   —      67    77    144 

Commercial mortgage-backed securities

   —      —      224    224 

Japanese corporate bonds and other debt securities

   —      1,834    174    2,008 

Foreign corporate bonds and other debt securities

   —      801    110    911 

Equity securities (marketable)

   3,717    84    —      3,801 

Other investments

   —      —      37    37 
  

 

 

   

 

 

   

 

 

   

 

 

 

Total assets measured at fair value on a recurring basis

   22,006    21,134    1,774    45,592 
  

 

 

   

 

 

   

 

 

   

 

 

 

Liabilities:

        

Trading securities sold, not yet purchased

   1,993    228    —      2,221 

Derivative financial instruments:

        

Interest rate contracts

   46    8,426    1    8,473 

Foreign exchange contracts

   20    2,591    —      2,611 

Equity-related contracts

   129    61    39    229 

Credit-related contracts

   —      34    2    36 

Other contracts

   1    10    11    22 

Long-term debt(3)

   —      903    593    1,496 
  

 

 

   

 

 

   

 

 

   

 

 

 

Total liabilities measured at fair value on a recurring basis

   2,189    12,253    646    15,088 
  

 

 

   

 

 

   

 

 

   

 

 

 

                 
2019
 
Level 1
  
Level 2
  
Level 3
  
Assets/
Liabilities
measured
at fair value
 
 
(in billions of yen)
 
Assets:
  
   
   
   
 
Trading securities
(1)
:
  
   
   
   
 
Japanese government bonds
  
1,829
   
33
   
—  
   
1,862
 
Japanese local government bonds
  
—  
   
134
   
—  
   
134
 
U.S. Treasury bonds and federal agency securities
  
1,069
   
138
   
—  
   
1,207
 
Other foreign government bonds
  
2,417
   
553
   
—  
   
2,970
 
Agency mortgage-backed securities
  
—  
   
1,041
   
—  
   
1,041
 
Residential mortgage-backed securities
  
—  
   
—  
   
11
   
11
 
Certificates of deposit and commercial paper
  
—  
   
1,047
   
—  
   
1,047
 
Corporate bonds and other
(2)
  
36
   
1,806
   
1,044
   
2,886
 
Equity securities
  
1,297
   
—  
   
28
   
1,325
 
Trading securities measured at net asset value
(3)
  
   
   
   
631
 
Derivative financial instruments:
  
   
   
   
 
Interest rate contracts
  
36
   
5,729
   
21
   
5,786
 
Foreign exchange contracts
  
9
   
1,927
   
23
   
1,959
 
Equity-related contracts
  
58
   
63
   
4
   
125
 
Credit-related contracts
  
—  
   
16
   
2
   
18
 
Other contracts
  
2
   
4
   
10
   
16
 
Available-for-sale
securities:
  
   
   
   
 
Japanese government bonds
  
10,902
   
995
   
—  
   
11,897
 
Japanese local government bonds
  
—  
   
210
   
—  
   
210
 
U.S. Treasury bonds and federal agency securities
  
1,009
   
—  
   
—  
   
1,009
 
Other foreign government bonds
  
456
   
886
   
—  
   
1,342
 
Agency mortgage-backed securities
  
—  
   
544
   
—  
   
544
 
Residential mortgage-backed securities
  
—  
   
61
   
40
   
101
 
Commercial mortgage-backed securities
  
—  
   
—  
   
500
   
500
 
Japanese corporate bonds and other debt securities
  
—  
   
1,629
   
120
   
1,749
 
Foreign corporate bonds and other debt securities
  
—  
   
678
   
103
   
781
 
Equity securities
:
  
   
   
   
 
Equity securities with readily determinable fair values
  
3,633
   
135
   
—  
   
3,768
 
Equity securities measured at net asset value
(3)
  
   
   
   
53
 
Other investments
  
—  
   
—  
   
35
   
35
 
                 
Total assets measured at fair value on a recurring basis
  
22,753
   
17,629
   
1,941
   
43,007
 
                 
Liabilities:
  
   
   
   
 
Trading securities sold, not yet purchased
  
2,380
   
199
   
1
   
2,580
 
Derivative financial instruments:
  
   
   
   
 
Interest rate contracts
  
38
   
5,564
   
8
   
5,610
 
Foreign exchange contracts
  
11
   
1,746
   
1
   
1,758
 
Equity-related contracts
  
82
   
51
   
9
   
142
 
Credit-related contracts
  
—  
   
16
   
1
   
17
 
Other contracts
  
1
   
4
   
9
   
14
 
Long-term debt
(4)
  
—  
   
1,778
   
655
   
2,433
 
                 
Total liabilities measured at fair value on a recurring basis
  
2,512
   
9,358
   
684
   
12,554
 
                 

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MIZUHO FINANCIAL GROUP, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

2018

  Level 1   Level 2   Level 3   Assets/
Liabilities
measured
at fair value		 
   

 

(in billions of yen)

 

Assets:

        

Trading securities(1):

        

Japanese government bonds

   1,375    43    —      1,418 

Japanese local government bonds

   —      107    —      107 

U.S. Treasury bonds and federal agency securities

   2,442    209    —      2,651 

Other foreign government bonds

   1,682    480    —      2,162 

Agency mortgage-backed securities

   —      1,799    —      1,799 

Residential mortgage-backed securities

   —      —      12    12 

Certificates of deposit and commercial paper

   —      643    —      643 

Corporate bonds and other

   25    1,992    1,013    3,030 

Equity securities

   1,642    —      23    1,665 

Trading securities measured at net asset value(2)

         705 

Derivative financial instruments:

        

Interest rate contracts

   39    7,089    48    7,176 

Foreign exchange contracts

   17    2,667    13    2,697 

Equity-related contracts

   82    110    5    197 

Credit-related contracts

   —      16    2    18 

Other contracts

   6    8    9    23 

Available-for-sale securities:

        

Japanese government bonds

   12,435    897    —      13,332 

Japanese local government bonds

   —      239    —      239 

U.S. Treasury bonds and federal agency securities

   686    —      —      686 

Other foreign government bonds

   355    703    —      1,058 

Agency mortgage-backed securities

   —      889    —      889 

Residential mortgage-backed securities

   —      65    54    119 

Commercial mortgage-backed securities

   —      —      441    441 

Japanese corporate bonds and other debt securities

   —      1,827    163    1,990 

Foreign corporate bonds and other debt securities

   —      799    80    879 

Equity securities (marketable)

   3,912    121    —      4,033 

Other investments

   —      —      38    38 
  

 

 

   

 

 

   

 

 

   

 

 

 

Total assets measured at fair value on a recurring basis

   24,698    20,703    1,901    48,007 
  

 

 

   

 

 

   

 

 

   

 

 

 

Liabilities:

        

Trading securities sold, not yet purchased

   2,777    618    4    3,399 

Derivative financial instruments:

        

Interest rate contracts

   42    7,074    27    7,143 

Foreign exchange contracts

   11    2,370    1    2,382 

Equity-related contracts

   81    69    1    151 

Credit-related contracts

   —      20    1    21 

Other contracts

   4    6    9    19 

Long-term debt(3)

   —      1,395    561    1,956 
  

 

 

   

 

 

   

 

 

   

 

 

 

Total liabilities measured at fair value on a recurring basis

   2,915    11,552    604    15,071 
  

 

 

   

 

 

   

 

 

   

 

 

 

                 
2020
 
Level 1
  
Level 2
  
Level 3
  
Assets/
Liabilities
measured
at fair value
 
 
(in billions of yen)
 
Assets:
  
   
   
   
 
Trading securities
(1)
:
  
   
   
   
 
Japanese government bonds
  
1,516
   
22
   
—
   
1,538
 
Japanese local government bonds
  
—
   
170
   
—
   
170
 
U.S. Treasury bonds and federal agency securities
  
4,580
   
461
   
—
   
5,041
 
Other foreign government bonds
  
1,128
   
547
   
—
   
1,675
 
Agency mortgage-backed securities
  
—
   
3,390
   
—
   
3,390
 
Residential mortgage-backed securities
  
—
   
—
   
10
   
10
 
Certificates of deposit and commercial paper
  
—
   
1,036
   
—
   
1,036
 
Corporate bonds and other
(2)
  
41
   
1,398
   
1,115
   
2,554
 
Equity securities
  
1,000
   
650
   
30
   
1,680
 
Trading securities measured at net asset value
(3)
  
   
   
   
462
 
Derivative financial instruments:
  
   
   
   
 
Interest rate contracts
  
153
   
7,070
   
9
   
7,232
 
Foreign exchange contracts
  
9
   
2,900
   
17
   
2,926
 
Equity-related contracts
  
169
   
125
   
16
   
310
 
Credit-related contracts
  
—
   
22
   
8
   
30
 
Other contracts
  
3
   
11
   
24
   
38
 
Available-for-sale
securities:
  
   
   
   
 
Japanese government bonds
  
11,950
   
653
   
—
   
12,603
 
Japanese local government bonds
  
—
   
273
   
—
   
273
 
U.S. Treasury bonds and federal agency securities
  
935
   
—
   
—
   
935
 
Other foreign government bonds
  
436
   
975
   
—
   
1,411
 
Agency mortgage-backed securities
  
—
   
505
   
—
   
505
 
Residential mortgage-backed securities
  
—
   
53
   
31
   
84
 
Commercial mortgage-backed securities
  
—
   
—
   
615
   
615
 
Japanese corporate bonds and other debt securities
  
—
   
1,678
   
157
   
1,835
 
Foreign corporate bonds and other debt securities
  
—
   
678
   
174
   
852
 
Equity securities
:
  
   
   
   
 
Equity securities with readily determinable fair values
  
2,670
   
95
   
—
   
2,765
 
Equity securities measured at net asset value
(3)
  
   
   
   
72
 
Other investments
  
—
   
—
   
39
   
39
 
                 
Total assets measured at fair value on a recurring basis
  
24,590
   
22,712
   
2,245
   
50,081
 
                 
Liabilities:
  
   
   
   
 
Trading securities sold, not yet purchased
  
1,880
   
515
   
—
   
2,395
 
Derivative financial instruments:
  
   
   
   
 
Interest rate contracts
  
163
   
6,611
   
14
   
6,788
 
Foreign exchange contracts
  
8
   
2,890
   
1
   
2,899
 
Equity-related contracts
  
186
   
47
   
33
   
266
 
Credit-related contracts
  
—
   
19
   
10
   
29
 
Other contracts
  
6
   
10
   
23
   
39
 
Long-term debt
(4)
  
—
   
1,916
   
621
   
2,537
 
                 
Total liabilities measured at fair value on a recurring basis
  
2,243
   
12,008
   
702
   
14,953
 
                 
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MIZUHO FINANCIAL GROUP, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
Notes:

(1)Trading securities include foreign currency denominated securities for which the MHFG Group elected the fair value option.
(2)The amount includes CLO and convertible bonds, which are classified in Level 3
.
(3)In accordance with ASC 820, certain investments that are measured at fair value using the net asset value per share (or its equivalent) practical expedient have not been classified in the fair value hierarchy. The fair value amounts presented for these classes of assets are intended to permit the reconciliation of the fair value hierarchy to the amounts presented in the statements of financial position. The amounts of unfunded commitments related to these investments at March 31, 20172019 and 20182020 were ¥33¥37 billion and ¥31¥47 billion, respectively.
(3)(4)Amounts represent items for which the Group elected the fair value option.option or for which it applied the practicability exception.

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MIZUHO FINANCIAL GROUP, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

Items measured at fair value on a recurring basis using significant unobservable inputs (Level 3)

The following table presents a reconciliation for all assets and liabilities measured at fair value on a recurring basis using significant unobservable inputs (Level 3) for the fiscal years ended March 31, 20172019 and 2018:

2017

 April 1,
2016		  Gains
(losses) in
Earnings		  Gains
(losses)
in OCI		  Transfers
into
Level 3		  Transfers
out of
Level 3		  Purchases  Sales  Issuances  Settle-
ments		  March 31,
2017		  Change in
unrealized
gains
(losses)
still held (6)		 
  

 

(in billions of yen)

 

Assets:

           

Trading securities:

           

Residential mortgage-backed securities

  21   (1)(2)   —     —     —     —     —     —     (5)   15   (1) 

Commercial mortgage-backed securities

  2   —  (2)   —     —     —     —     —     —     (2)   —     —   

Corporate bonds and other

  720   12(2)   —     296   (39)   875   (555)   —     (257)   1,052   19 

Equity securities

  21   1(2)   —     —     —     3   (2)   —     —      23   —   

Derivative financial instruments, net (1):

           

Interest rate contracts

  26   (2)(2)   —     —     —     —     —      —     2   26   2 

Foreign exchange contracts

  7   7(2)   —     —     —     —     —     —     (6)   8   1 

Equity-related contracts

  5   (31)(2)   —     —     —     —     —      —     1   (25)   (35) 

Credit-related contracts

  (1)   1(2)   —     —     —     —     —      —     —      —      —   

Other contracts

  1   —  (2)   —     —     —     —     —      —     (1)   —      —   

Available-for-sale securities:

           

Residential mortgage-backed securities

  123   —  (3)   (1)(4)   —     —     —     (7)   —     (38)   77   —   

Commercial mortgage-backed securities

  187   —  (3)   1(4)   —     —     63   (12)   —     (15)   224   —   

Japanese corporate bonds and other debt securities

  174   (1)(3)   43(4)   —     —     10   (19)   —     (33)   174   —   

Foreign corporate bonds and other debt securities

  108   1(3)   (1)(4)   —     (2)   10   —     —     (6)   110   —   

Other investments

  42   —  (3)   —     —     —     12   (3)   —     (14)   37   —   

Liabilities:

           

Trading securities sold, not yet purchased

  —     —  (2)   —     1   —     (54)   53   —     —     —     —   

Long-term debt

  623   20(5)   —     21   (12)   (2)   1   278   (296)   593   18 
2020:

                                             
2019
 
April 1,
2018
  
Gains
(losses) in
Earnings
  
Gains
(losses)
in OCI
  
Transfers
into
Level 3
  
Transfers
out of
Level 3
  
Purchases
  
Sales
  
Issuances
  
Settle-
ments
  
March 31,
2019
  
Change in
unrealized
gains
(losses)
still held
(6)
 
 
 
(in billions of yen)
 
Assets:
  
   
   
   
   
   
   
   
   
   
   
 
Trading securities:
  
   
   
   
   
   
   
   
   
   
   
 
Residential mortgage-backed securities
  
12
   
—  
(2)   
—  
   
—  
   
—  
   
—  
   
—  
   
—  
   
(1
)  
11
   
—  
 
Corporate bonds and other
  
1,013
   
1
(2)   
—  
   
—  
   
—  
   
762
   
(378
)  
—  
   
(354
)  
1,044
   
8
 
Equity securities
  
23
   
1
(2)   
—  
   
—  
   
—  
   
7
   
(3
)  
—  
   
—  
   
28
   
(1
)
Derivative financial instruments, net
(1)
:
  
   
   
   
   
   
   
   
   
   
   
 
Interest rate contracts
  
21
   
(11
)
(2)
  
—  
   
—  
   
—  
   
—  
   
—  
   
—  
   
3
   
13
   
(5
)
Foreign exchange contracts
  
12
   
15
(2)   
—  
   
—  
   
—  
   
—  
   
—  
   
—  
   
(5
)  
22
   
14
 
Equity-related contracts
  
4
   
(15
)
(2)
  
—  
   
—  
   
—  
   
—  
   
—  
   
—  
   
6
   
(5
)  
3
 
Credit-related contracts
  
1
   
(2
)
(2)
  
—  
   
—  
   
—  
   
—  
   
—  
   
—  
   
2
   
1
   
1
 
Other contracts
  
—  
   
1
(2)   
—  
   
—  
   
—  
   
—  
   
—  
   
—  
   
—  
   
1
   
1
 
Available-for-sale
securities:
  
   
   
   
   
   
   
   
   
   
   
 
Residential mortgage-backed securities
  
54
   
—  
(3)   
—  
(4)   
—  
   
—  
   
—  
   
—  
   
—  
   
(14
)  
40
   
—  
 
Commercial mortgage-backed securities
  
441
   
—  
(3)   
1
(4)   
—  
   
—  
   
144
   
(72
)  
—  
   
(14
)  
500
   
—  
 
Japanese corporate bonds and other debt securities
  
163
   
37
(3)   
(33
)
(4)
  
—  
   
—  
   
29
   
(7
)  
—  
   
(69
)  
120
   
19
 
Foreign corporate bonds and other debt securities
  
80
   
—  
(3)   
(1
)
(4)
  
61
   
(42
)  
27
   
—  
   
—  
   
(22
)  
103
   
—  
 
Other investments
  
38
   
5
(3)   
—  
   
—  
   
—  
   
13
   
(6
)  
—  
   
(15
)  
35
   
(2
)
                                             
Liabilities:
  
   
   
   
   
   
   
   
   
   
   
 
Trading securities sold, not yet purchased
  
4
   
1
(2)   
—  
   
—  
   
—  
   
(35
)  
33
   
—  
   
—  
   
1
   
—  
 
Long-term debt
  
561
   
(6
)
(5)
  
10
(4)   
7
   
—  
   
—  
   
—  
   
192
   
(101
)  
655
   
5
 

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MIZUHO FINANCIAL GROUP, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

2018

 April 1,
2017		  Gains
(losses)
in
Earnings		  Gains
(losses)
in OCI		  Transfers
into
Level 3		  Transfers
out of
Level 3		  Purchases  Sales  Issuances  Settle-
ments		  March 31,
2018		  Change in
unrealized
gains
(losses)
still held (6)		 
  

 

(in billions of yen)

 

Assets:

           

Trading securities:

           

Residential mortgage-backed securities

  15   —  (2)   —     —     —     —     —     —     (3)   12   —   

Corporate bonds and other

  1,052   (20)(2)   —     123   (241)   1,082   (631)   —     (352)   1,013   (19) 

Equity securities

  23   (1)(2)   —     —     —     2   (1)   —     —     23   —   

Derivative financial instruments, net(1):

           

Interest rate contracts

  26   (6)(2)   —     —     —     —     —     —     1   21   (1) 

Foreign exchange contracts

  8   2(2)   —     —     —     —     —     —     2   12   5 

Equity-related contracts

  (25)   1(2)   —     —     —     —     —     —     28   4   12 

Credit-related contracts

  —     —  (2)   —     —     —     —     —     —     1   1   —   

Other contracts

  —     (1)(2)   —     —     —     —     —     —     1   —     —   

Available-for-sale securities:

           

Residential mortgage-backed securities

  77   —  (3)   —  (4)   —     —     3   (6)   —     (20)   54   —   

Commercial mortgage-backed securities

  224   —  (3)   3(4)   —     —     286   (69)   —     (3)   441   —   

Japanese corporate bonds and other debt securities

  174   11(3)   (10)(4)   —     —     17   —     —     (29)   163   11 

Foreign corporate bonds and other debt securities

  110   —  (3)   (1)(4)   15   (46)   2   —     —     —     80   —   

Other investments

  37   —  (3)   —     —     —     14   (3)   —     (10)   38   —   

Liabilities:

           

Trading securities sold, not yet purchased

  —     —  (2)   —     —     —     (146)   150   —     —     4   —   

Long-term debt

  593   3(5)   —     1   (10)   —     —     151   (171)   561   5 

                                             
2020
 
April 1,
2019
  
Gains
(losses) in
Earnings
  
Gains
(losses)
in OCI
  
Transfers
into
Level 3
  
Transfers
out of
Level 3
  
Purchases
  
Sales
  
Issuances
  
Settle-
ments
  
March 31,
2020
  
Change in
unrealized
gains
(losses)
still held
(6)
 
 
 
(in billions of yen)
 
Assets:
  
   
   
   
   
   
   
   
   
   
   
 
Trading securities:
  
   
   
   
   
   
   
   
   
   
   
 
Residential mortgage-backed securities
  
11
   
—  
(2)   
—  
   
—  
   
—  
   
—  
   
—  
   
—  
   
(1
)  
10
   
—  
 
Corporate bonds and other
  
1,044
   
(52
)
(2)
  
—  
   
—  
   
—  
   
802
   
(297
)  
—  
   
(382
)  
1,115
   
(52
)
Equity securities
  
28
   
(1
)
(2)
  
—  
   
—  
   
—  
   
6
   
(2
)  
—  
   
(1
)  
30
   
(1
)
Derivative financial instruments, net
(1)
:
  
   
   
   
   
   
   
   
   
   
   
 
Interest rate contracts
  
13
   
(6
)
(2)
  
—  
   
1
   
—  
   
—  
   
—  
   
—  
   
(13
)  
(5
)  
(16
)
Foreign exchange contracts
  
22
   
(4
)
(2)
  
—  
   
—  
   
—  
   
—  
   
—  
   
—  
   
(2
)  
16
   
(3
)
Equity-related contracts
  
(5
)  
(8
)
(2)
  
—  
   
—  
   
—  
   
—  
   
—  
   
—  
   
(4
)  
(17
)  
(10
)
Credit-related contracts
  
1
   
(2
)
(2)
  
—  
   
(1
)  
(1
)  
—  
   
—  
   
—  
   
1
   
(2
)  
(1
)
Other contracts
  
1
   
2
(2)   
—  
   
—  
   
—  
   
—  
   
—  
   
—  
   
(2
)  
1
   
1
 
Available-for-sale
securities:
  
   
   
   
   
   
   
   
   
   
   
 
Residential mortgage-backed securities
  
40
   
—  
(3)   
—  
(4)   
—  
   
—  
   
3
   
—  
   
—  
   
(12
)  
31
   
—  
 
Commercial mortgage-backed securities
  
500
   
—  
(3)   
1
(4)   
—  
   
—  
   
201
   
(77
)  
—  
   
(10
)  
615
   
—  
 
Japanese corporate bonds and other debt securities
  
120
   
2
(3)   
—  
(4)   
—  
   
—  
   
106
   
—  
   
—  
   
(71
)  
157
   
—  
 
Foreign corporate bonds and other debt securities
  
103
   
—  
(3)   
(11
)
(4)
  
—  
   
—  
   
94
   
—  
   
—  
   
(12
)  
174
   
—  
 
Other investments
  
35
   
3
(3)   
—  
   
—  
   
—  
   
15
   
—  
   
—  
   
(14
)  
39
   
3
 
                                             
Liabilities:
  
   
   
   
   
   
   
   
   
   
   
 
Trading securities sold, not yet purchased
  
1
   
—  
(2)   
—  
   
—  
   
—  
   
(18
)  
17
   
—  
   
—  
   
—  
   
—  
 
Long-term debt
  
655
   
53
(5)   
17
(4)   
77
   
(8
)  
—  
   
—  
   
312
   
(345
)  
621
   
79
 
Notes:

(1)Total Level 3 derivative exposures have been netted on the table for presentation purposes only.
(2)Gains (losses) in Earnings are reported in Trading account gains (losses)—net, Foreign exchange gains (losses)—net or Other noninterest income (expenses).
(3)Gains (losses) in Earnings are reported in Investment gains (losses)—net.
(4)Gains (losses) in OCI are reported in Other comprehensive income (loss).
(5)Gains (losses) in Earnings are reported in Other noninterest income (expenses).
(6)Amounts represent total gains or losses recognized in earnings during the period. These gains or losses were attributable to the change in fair value relating to assets and liabilities classified as Level 3 that were still held at March 31, 20172019 and 2018.2020.

Transfers between levels

Transfers of assets or liabilities between levels of the fair value hierarchy are assumed to occur at the beginning of the period.

During the fiscal year ended March 31, 2017,2019, the transfers into Level 3 included ¥296¥61 billion of Trading
Available-for-sale
securities ¥1 billion of Trading securities sold, not yet purchased and ¥21¥7 billion of Long-term debt. Transfers into Level 3 for Trading securities and Trading securities sold, not yet purchased were primarily due to decreased liquidity for certain Japanese and foreign corporate bonds. Transfers into Level 3 for Long-term debt were primarily due to changes in the impact of unobservable inputs on the value of certain structured notes. During the fiscal year ended March 31, 2017, the transfers out of Level 3 included ¥39 billion of Trading securities, ¥2 billion of
Available-for-sale securities and ¥12 billion of Long-term debt. Transfers out of Level 3 for Trading securities were primarily due to increased price transparency for certain Japanese and foreign corporate bonds. Transfers out of Level 3 forAvailable-for-sale securities were primarily due to increased liquidity for certain Foreign corporate bonds and other debt securities. Transfers out of Level 3 for Long-term debt were primarily due to changes in the impact of unobservable inputs on the value of certain structured notes.

MIZUHO FINANCIAL GROUP, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

During the fiscal year ended March 31, 2018, the transfers into Level 3 included ¥123 billion of Trading securities, ¥15 billion ofAvailable-for-sale securities and ¥1 billion of Long-term debt. Transfers into Level 3 for Trading securities andAvailable-for-salesecurities were primarily due to decreased liquidity for certain Foreign corporate bonds. Transfers into Level 3 for Long-term debt were primarily due to changes in the impact of unobservable inputs on the value of certain structured notes. During the fiscal year ended March 31, 2018,2019, the transfers out of Level 3 included ¥241¥42 billion of Trading securities, ¥46 billion of

Available-for-sale securities and ¥10 billion of Long-term debt.
securities. Transfers out of Level 3 for Trading securities were primarily due to increased price transparency for certain Japanese and foreign corporate bonds. Transfers out of Level 3 for
Available-for-sale
securities were primarily due to increased liquidity for certain Foreign corporate bonds and other debt securities.
During the fiscal year ended March 31, 2020, the transfers into Level 3 included ¥1 
billion of net Derivative assets, ¥1 billion of net Derivative liabilities and
¥77 
billion of Long-term debt. Transfers into Level 3 for net Derivative assets and liabilities were primarily due to changes in the observability of the inputs used to measure
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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
fair value of certain interest rate derivatives and credit-related derivatives. Transfers into Level 3 for Long-term debt were primarily due to changes in the observability of the
default rate
when valuing certain structured notes. During the fiscal year ended March 31, 2020, the transfers out of Level 3 included
¥1 
billion of net Derivative assets and ¥8 billion of Long-term debt. Transfers out of Level 3 for net Derivative assets were primarily due to changes in the observability of the inputs used to measure fair value of certain credit-related derivatives. Transfers out of Level 3 for Long-term debt were primarily due to changes in the impactobservability of unobservable inputs on the value of
default rate
when valuing certain structured notes.

Quantitative information about Level 3 fair value measurements

The following table presents information about significant unobservable inputs related to the MHFG Group’s material classes of Level 3 assets and liabilities at March 31, 20172019 and 2018:

2017

 

Products/Instruments

 Fair value  

Principal valuation technique

 

Unobservable inputs

 Range of input values  

Weighted average (5)

 

 

(in billions of yen, except for percentages and basis points)

 

Trading securities andAvailable-for-sale securities:

     

Residential mortgage-backed securities

  92  Discounted cash flow Prepayment rate  0%–18%   7% 
  Price-based Default rate  0%–1%   0% 
   Recovery rate  100%–100%   100% 
   Discount margin  15bps–170bps   55bps 

 

 

 

 

  

 

 

 

 

 

 

  

 

 

 

Commercial mortgage-backed securities

  224  

Discounted cash flow

Price-based

 Discount margin  4bps–205bps   28bps 

 

 

 

 

  

 

 

 

 

 

 

  

 

 

 

Corporate bonds and other debt securities

  1,336  Discounted cash flow Prepayment rate (1)  16%–30%   29% 
  Price-based Default rate (1)  1%–2%   2% 
   Recovery rate (1)  60%–68%   68% 
   Discount margin (1)  8bps–1,181bps   131bps 
   Discount margin (2)  10bps–939bps   359bps 

 

 

 

 

  

 

 

 

 

 

 

  

 

 

 

Derivative financial instruments, net:

     

Interest rate contracts

  26  Internal valuation model (3) IR – IR correlation  23%–100%  
   Default rate (4)  0%–63%  

 

 

 

 

  

 

 

 

 

 

 

  

Foreign exchange contracts

  8  Internal valuation model (3) FX – IR correlation  5%–52%  
   FX – FX correlation  55%–55%  
   Default rate (4)  0%–63%  

 

 

 

 

  

 

 

 

 

 

 

  

Equity-related contracts

  (25)  Internal valuation model (3) Equity – IR correlation  25%–25%  
   Equity – FX correlation  55%–55%  
   Equity volatility  6%–59%  

 

 

 

 

  

 

 

 

 

 

 

  

Credit-related contracts

  —    Internal valuation model (3) Default rate  0%–5%  
   Credit correlation  30%–100%  

 

 

 

 

  

 

 

 

 

 

 

  

Long-term debt

  593  Internal valuation model (3) IR – IR correlation  23%–100%  
   FX – IR correlation  5%–52%  
   FX – FX correlation  55%–55%  
   Equity – IR correlation  25%–25%  
   Equity – FX correlation  55%–55%  
   Equity correlation  20%–100%  
   Equity volatility  5%–40%  
   Default rate  0%–3%  
   Credit correlation  33%–100%  
2020:

2019
Products/Instruments
Fair value
Principal valuation technique
Unobservable inputs
Range of input values
Weighted average
(5)
(in billions of yen, except for percentages and basis points)
Trading securities and
Available-for-sale
securities:
Residential mortgage-backed securities
51
Discounted cash flow
Price-based
Prepayment rate
Default rate
Recovery rate
Discount margin
4%–19%
0%–1%
100%–100%
18bps–170bps
8%
0%
100%
51bps
Commercial mortgage-backed securities
500
Discounted cash flow
Price-based
Discount margin
9bps–161bps
24bps
Corporate bonds and other debt securities
1,267
Discounted cash flow
Price-based
Prepayment rate
(1)
Default rate
(1)
Recovery rate
(1)
Discount margin
(1)
Discount margin
(2)
22%–22%
2%–2%
69%–69%
48bps–1,173bps
4bps–1,063bps
22%
2%
69%
134bps
295bps
Derivative financial instruments, net:
Interest rate contracts
13
Internal valuation model
(3)
IR – IR correlation
Default rate
(4)
23%–100%
0%–63%
Foreign exchange contracts
22
Internal valuation model
(3)
FX – IR correlation
FX – FX correlation
Default rate
(4)
9%–55%
63%–63%
0%–63%
Equity-related contracts
(5
)
Internal valuation model
(3)
Equity – IR correlation
Equity correlation
Equity volatility
25%–25%
40%–100%
5%–36%
Credit-related contracts
1
Internal valuation model
(3)
Default rate
Credit correlation
0%–5%
29%–100%
Long-term debt
655
Internal valuation model
(3)
IR – IR correlation
23%–100%
FX – IR correlation
9%–55%
FX – FX correlation
63%–63%
Equity – IR correlation
25%–25%
Equity – FX correlation
55%–88%
Equity correlation
12%–100%
Equity volatility
5%–49%
Default rate
0%–4%
Credit correlation
20%–100%

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

2018

 

Products/Instruments

 Fair value  

Principal valuation technique

 

Unobservable inputs

 Range of input values  

Weighted  average (5)

 

 

(in billions of yen, except for percentages and basis points)

 

Trading securities andAvailable-for-sale securities:

     

Residential mortgage-backed securities

  66  Discounted cash flow Prepayment rate  3%–17%   7% 
  Price-based Default rate  0%–1%   0% 
   Recovery rate  100%–100%   100% 
   Discount margin  17bps–170bps   50bps 

 

 

 

 

  

 

 

 

 

 

 

  

 

 

 

Commercial mortgage-backed securities

  441  Discounted cash flow Discount margin  9bps – 141bps   28bps 
  Price-based   
     

 

 

 

 

  

 

 

 

 

 

 

  

 

 

 

Corporate bonds and other debt securities

  1,256  Discounted cash flow Prepayment rate (1)  26%–37%   36% 
  Price-based Default rate (1)  1%–2%   2% 
   Recovery rate (1)  60%–69%   68% 
   Discount margin (1)  12bps–1,165bps   115bps 
   Discount margin (2)  5bps–1,064bps   379bps 

 

 

 

 

  

 

 

 

 

 

 

  

 

 

 

Derivative financial instruments, net:

     

Interest rate contracts

  21  Internal valuation model (3) IR – IR correlation  23%–100%  
   Default rate (4)  0%–63%  

 

 

 

 

  

 

 

 

 

 

 

  

Foreign exchange contracts

  12  Internal valuation model (3) FX – IR correlation  16%–53%  
   FX – FX correlation  61%–61%  
   Default rate (4)  0%–63%  

 

 

 

 

  

 

 

 

 

 

 

  

Equity-related contracts

  4  Internal valuation model (3) Equity – IR correlation  25%–25%  
   Equity volatility  12%–41%  

 

 

 

 

  

 

 

 

 

 

 

  

Credit-related contracts

  1  Internal valuation model (3) Default rate  0%–3%  
   Credit correlation  27%–100%  

 

 

 

 

  

 

 

 

 

 

 

  

Long-term debt

  561  Internal valuation model (3) IR – IR correlation  23%–100%  
   FX – IR correlation  9%–53%  
   FX – FX correlation  61%–61%  
   Equity – IR correlation  25%–25%  
   Equity – FX correlation  55%–70%  
   Equity correlation  24%–100%  
   Equity volatility  13%–56%  
   Default rate  0%–2%  
   Credit correlation  28%–100%  

2020
Products/Instruments
Fair value
Principal valuation technique
Unobservable inputs
Range of input values
Weighted average
(5)
(in billions of yen, except for percentages and basis points)
Trading securities and
Available-for-sale
securities:
Residential mortgage-
backed securities
41
Discounted cash flow
Price-based
Prepayment rate
Default rate
Recovery rate
Discount margin
4%–16%
0%–1%
100%–100%
5bps–170bps
7%
0%
100%
52bps
Commercial mortgage-backed securities
615
Discounted cash flow
Price-based
Discount margin
7bps–185bps
22bps
Corporate bonds and other debt securities
1,446
Discounted cash flow
Price-based
Prepayment rate
(1)
Default rate
(1)
Recovery rate
(1)
Discount margin
(1)
Discount margin
(2)
13%–21%
0%–2%
10%–70%
61bps–1,160bps
5bps–1,528bps
21%
2%
67%
256bps
58bps
Derivative financial instruments, net:
Interest rate contracts
(5
)
Internal valuation model
(3)
IR – IR correlation
Default rate
(4)
23%–100%
0%–63%
Foreign exchange contracts
16
Internal valuation model
(3)
FX – IR correlation
FX – FX correlation
Default rate
(4)
-37%–49%
56%–65%
0%–63%
Equity-related contracts
(17
)
Internal valuation model
(3)
Equity – IR correlation
Equity correlation
Equity volatility
25%–25%
0%–100%
13%–157%
Credit-related contracts
(2
)
Internal valuation model
(3)
Default rate
Credit correlation
0%–15%
30%–100%
Long-term debt
621
Internal valuation model
(3)
IR – IR correlation
23%–100%
FX – IR correlation
-37%–50%
FX – FX correlation
56%–65%
Equity – IR correlation
25%–25%
Equity – FX correlation
-33%–100%
Equity correlation
0%–100%
Equity volatility
15%–157%
Default rate
0%–12%
Credit correlation
15%–100%
Notes:

(1)These inputs are mainly used for determining the fair values of securitization products such as CDO, CLO and ABS, other than RMBS and CMBS.
(2)This input is mainly used for determining the fair values of Japanese corporate bonds and foreign corporate bonds.
(3)Internal valuation model includes discounted cash flow models and the Black-Scholes option pricing model.
(4)This input represents the counterparty default rate derived from the MHFG Group’s own internal credit analyses.
(5)Weighted averages are calculated by weighting each input by the relative fair value of the respective financial instruments.

IR = Interest rate

FX = Foreign exchange

Sensitivities to unobservable inputs and interrelationships between unobservable inputs

The following is a description of the sensitivities and interrelationships of the significant unobservable inputs used to measure the fair values of Level 3 assets and liabilities.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

(1) 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 change in prepayment rate would impact the valuation of the fair values of financial instruments either positively or negatively, depending on the structure of financial instruments.

(2) Default rate

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

(3) Recovery rate

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

(4) Discount margin

The discount margin is the portion of the interest rate over 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. An increase in discount margin would generally impact the valuation of the fair values of financial instruments negatively.

(5) Correlation

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

(6) 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, for a long position in an option, an increase in volatility would result in an increase in the fair values of financial instruments.

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MIZUHO FINANCIAL GROUP, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

Items measured at fair value on a nonrecurring basis

Certain assets and liabilities are measured at fair value on a nonrecurring basis. These assets and liabilities primarily include items that are measured at the lower of cost or fair value, and items that were initially measured at cost and have been written down to fair value as a result of impairment. The following table shows the fair value hierarchy for these items as of March 31, 20172019 and 2018:

2017

  Total   Level 1   Level 2   Level 3   Aggregate cost 
   

 

(in billions of yen)

 

Assets:

          

Loans

   124   —      —      124   194

Loansheld-for-sale

   7   —      7   —      8

Other investments

   7   6   —      1   11

Premises and equipment—net

   7   —      6   1   11
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total assets measured at fair value on a nonrecurring basis

   145   6   13   126   224
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

2018

  Total   Level 1   Level 2   Level 3   Aggregate cost 
   

 

(in billions of yen)

 

Assets:

          

Loans

   113   —      —      113   164

Loansheld-for-sale

   60   —      60   —      74

Other investments

   1   —      —      1   3

Premises and equipment—net

   —      —      —      —      4
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total assets measured at fair value on a nonrecurring basis

   174   —      60   114   245
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

2020:
                     
                
2019
 
Total
  
Level 1
  
Level 2
  
Level 3
  
Aggregate cost
 
 
 
(in billions of yen)
 
Assets:
  
   
   
   
   
 
Loans
  
125
   
—  
   
41
   
84
   
177
 
Loans
held-for-sale
  
3
   
—  
   
3
   
—  
   
3
 
Equity securities (without readily determinable fair values)
  
1
   
—  
   
—  
   
1
   
1
 
Other investments
  
98
   
98
   
—  
   
—  
   
104
 
Premises and equipment—net
  
9
   
—  
   
4
   
5
   
34
 
Intangible assets
  
—  
   
—  
   
—  
   
—  
   
1
 
                     
Total assets measured at fair value on a nonrecurring basis
  
236
   
98
   
48
   
90
   
320
 
                     
                     
                
2020
 
Total
  
Level 1
  
Level 2
  
Level 3
  
Aggregate cost
 
 
 
(in billions of yen)
 
Assets:
  
   
   
   
   
 
Loans
  
90
   
—
   
—
   
90
   
136
 
Loans
held-for-sale
  
26
   
—
   
20
   
6
   
26
 
Equity securities (without readily determinable fair values)
  
2
   
—
   
—
   
2
   
2
 
Premises and equipment—net
  
1
   
—
   
1
   
—
   
12
 
Other
assets
  
—
   
—
   
—
   
—
   
3
 
Good
 
w
ill
  
—
   
—
   
—
   
—
   
2
 
                     
Total assets measured at fair value on a nonrecurring basis
  
119
   
—
   
21
   
98
   
181
 
                     
Note:The fair values may not be current as of the dates indicated, but rather as of the date the fair value change occurred. Accordingly, the carrying values may not equal current fair value.

Loans in the table above have been impaired and measured based upon the observable market price of the loan or the fair value of the underlying collateral.

Loans
held-for-sale
in the table above are accounted for at the lower of cost or fair value at the end of the period. The items for which fair values are determined by using actual or contractually determined selling price data are classified as Level 2. Due to the lack of current observable market information, the determination of the fair values for items other than the aforementioned requires significant adjustment based upon management judgment and estimation, which results in such items being classified in Level 3 of the hierarchy.

Equity securities (without readily determinable fair values) in the table above consist of
non-marketable
equity securities which are measured at fair value on a nonrecurring basis, using the measurement alternative for
non-marketable
equity securities. These equity securities are on a nonrecurring basis either (1) written down to
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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
fair value as a result of impairment or (2) adjusted upward or downward to fair value as a result of transactions observed for the identical or similar securities of the same issuer. The fair values of the impaired
non-marketable
equity securities are determined primarily by using a liquidation value technique. As significant management judgment or estimation is required in the determination of the fair values of
non-marketable
equity securities, they are classified as Level 3.
Other investments in the table above which consist ofinclude certain equity method investments andnon-marketable equity securities,which have been impaired and written down to fair value. The fair values of the impaired marketable equity method investments are determined by their quoted market prices. As the securities are traded on an active exchange market, they are classified as Level 1. The fair values of the impairednon-marketable equity securities, which includenon-marketable equity method investments, are determined primarily by using a liquidation value technique. As significant management judgment or estimation is required in the determination of the fair values ofnon-marketable equity securities, they are classified as Level 3.

Premises and equipment—net , Intangible assets and Other assets in the table above have been impaired and written down to fair value.

MIZUHO FINANCIAL GROUP, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

Goodwill in the table above is due to the decline in the fair
value
of the reporting unit, the carrying amount of the goodwill was reduced to its fair value.
Fair value option

The MHFG Group elected the fair value option for certain eligible financial instruments described below.

Foreign currency denominatedavailable-for-sale debt securities

The MHFG Group elected the fair value option for foreign currency denominatedavailable-for-sale debt securities to mitigate the volatility in earnings due to the difference in the recognition of foreign exchange risk betweenavailable-for-sale foreign currency denominated debt securities and financial liabilities. Following the election of the fair value option, these debt securities are reported as trading securities in Trading account assets.

On April 1, 2018, the Group adopted ASU

No.2016-01.
Before the adoption of the ASU, the fair value option was elected for foreign currency denominated equity securities, which were reported as trading securities, but after the adoption of the ASU, the Group no longer elected the fair value option for these equity securities.
Certain hybrid financial instruments

The MHFG Group issues structured notes as part of its client-driven activities. Structured notes are debt instruments that contain embedded derivatives. The Group elected the fair value option for certain structured notes to mitigate accounting mismatches and to achieve operational simplifications. In addition, the Group measures certain notes that contain embedded derivatives at fair value under the practicability exception. These notes continue to be reported in Long-term debt and interest on these notes continues to be reported in Interest expense on long-term debt based on the contractual rates. The differences between the aggregate fair value of these notes and the aggregate unpaid principal balance of such instruments were ¥36¥21 billion and ¥21¥112 billion at March 31, 20172019 and 2018,2020, respectively. The net unrealized gains (losses) resulting from changes in fair values of these notes of ¥16 billion and ¥(15) billion, which included the fair value changes attributable to changes in the Group’s own credit risk, were recorded in Other noninterest income (expenses) were of ¥(17) billion and ¥56 billion for the fiscal years ended March 31, 20172019 and 2018,2020, respectively.

The Group records changes in fair value on these notes attributable to the instrument-specific credit risk in AOCI in accordance with ASU

No.2016-01,
which was adopted on April 1, 2018. Changes in fair value resulting from changes in instrument-specific credit risk were estimated by incorporating the Company’s current credit spreads observable in the bond market.
Fair value of financial instruments

ASC 825 requires the disclosure of the estimated fair value of financial instruments. The fair value of financial instruments is the amount that would be exchanged between willing parties, other than in a forced sale or 
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liquidation. Quoted market prices, if available, are best utilized as estimates of the fair values of financial instruments. However, since no quoted market prices are available for certain financial instruments, fair values for such financial instruments have been estimated based on management’s assumptions, discounted cash flow models or other valuation techniques. Such estimation methods are described in more detail below. These estimates could be significantly affected by different sets of assumptions. There are certain limitations to management’s best judgment in estimating fair values of financial instruments and inherent subjectivity involved
in estimation methodologies and assumptions used to
estimate
fair value. Accordingly, the net realizable or liquidation values could be materially different from the estimates presented below.

ASC 825 does not require the disclosure of the fair value of nonfinancial instruments.

The following is a description of the valuation methodologies used for estimating the fair value of financial assets and liabilities not carried at fair value on the MHFG Group’s consolidated balance sheets.

Cash and due from banks, interest-bearing deposits in other banks, call loans and funds sold, and receivables under resale agreements and securities borrowing transactions

The carrying value of short-term financial assets, such as cash and due from banks, interest-bearing deposits in other banks, call loans and funds sold, and receivables under resale agreements and securities borrowing transactions approximates the fair value of these assets since they generally involve limited losses from credit risk or have short-term maturities with interest rates that approximate market rates.

MIZUHO FINANCIAL GROUP, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

Investments

The fair value of
held-to-maturity
securities is determined primarily by using the same procedures and techniques described for trading securities and
available-for-sale
securities aforementioned in this Note. The fair value of other equity interests, which primarily comprises
non-marketable
equity securities is not readily determinable, nor practicable to estimate, due to the lack of available information. Their carrying amounts of ¥308¥212 billion and ¥267¥420 billion at March 31, 20172019 and 2018,2020, respectively, were not included in the disclosure.

Loans

Loans have been fair valued based on the type of loan, credit quality, prepayment assumptions and remaining maturity. The fair value of loans is determined based on discounted cash flows using interest rates approximating the MHFG Group’s current rates for similar loans. The fair value of collateral dependent impaired loans is determined based on the fair value of the underlying collateral.

Other financial assets

The carrying value of other financial assets, which primarily consist of accounts receivable from brokers, dealers, and customers for securities transactions, accrued income and collateral provided for derivative transactions, approximates the fair value of these assets since they generally involve limited losses from credit risk or have short-term maturities with interest rates that approximate market rates. The majority of other financial assets is classified as Level 2, and included in the table in Note 1312 “Other assets and liabilities”.

liabilities.”

Noninterest-bearing deposits, call money and funds purchased, and payables under repurchase agreements and securities lending transactions

The carrying value of short-term financial liabilities, such as noninterest-bearing deposits, call money and funds purchased, and payables under repurchase agreements and securities lending transactions approximates the fair value of these liabilities since they generally have short-term maturities with interest rates that approximate market rates.

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Interest-bearing deposits

The carrying value of demand deposits approximates the fair value since it represents the amount payable on demand at the balance sheet date. The fair value of time deposits and certificates of deposit is primarily estimated
based on discounted cash flow analysis using current interest rates for instruments with similar maturities. The carrying value of short-term certificates of deposit approximates the fair value.

Due to trust accounts

The carrying value of due to trust accounts approximates the fair value since they generally have short-term maturities with interest rates that approximate market rates.

Other short-term borrowings

The carrying value of the majority of other short-term borrowings approximates the fair value since they generally have short-term maturities with interest rates that approximate market rates. The fair value of certain borrowings is estimated based on discounted cash flow analysis using interest rates approximating the MHFG Group’s incremental borrowing rates for instruments with similar maturities.

MIZUHO FINANCIAL GROUP, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

Long-term debt

Long-term debt is fair valued using quoted market prices, if available. Otherwise, the fair value of long-term debt is estimated based on discounted cash flow analysis using interest rates approximating the MHFG Group’s incremental borrowing rates for instruments with similar maturities.

Other financial liabilities

The carrying value of other financial liabilities, which primarily consist of accounts payable to brokers, dealers, and customers for securities transactions, accrued expenses and collateral accepted for derivative transactions, approximates the fair value since they generally have short-term maturities with interest rates that approximate market rates. The majority of other financial liabilities is classified as Level 2, and included in the table in Note 1312 “Other assets and liabilities”.

liabilities.”

The fair value of certain
off-balance-sheet
financial instruments, such as commitments to extend credit and commercial letters of credit, was not considered material to the consolidated balance sheets at March 31, 2017201
9
 and 2018.

20

20
.
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The following table shows the carrying amounts and fair values at March 31, 20172019 and 2018,2020, of certain financial instruments, excluding financial instruments which are carried at fair value on a recurring basis and those outside the scope of ASC 825 such as equity method investments as defined in ASC 323, “Investments—Equity Method and Joint Ventures” (“ASC 323”) and lease contracts as defined in ASC 840,842, “Leases” (“ASC 840”842”):

   2017 
   Carrying
amount		   Estimated fair value 
     Total   Level 1   Level 2   Level 3 
   

 

(in billions of yen)

 

Financial assets:

          

Cash and due from banks, interest-bearing deposits in other banks, call loans and funds sold, and receivables under resale agreements and securities borrowing transactions

   60,943    60,943    1,063    59,880    —   

Investments

   3,817    3,846    3,097    749    —   

Loans, net of allowance for loan losses(Note)

   81,662    82,696    —      —      82,696 

Financial liabilities:

          

Noninterest-bearing deposits, call money and funds purchased, and payables under repurchase agreements and securities lending transactions

   42,205    42,205    20,544    21,661    —   

Interest-bearing deposits

   110,125    110,124    56,738    53,386    —   

Due to trust accounts

   4,123    4,123    —      4,123    —   

Other short-term borrowings

   1,477    1,477    —      1,477    —   

Long-term debt

   13,009    13,078    —      12,120    958 

                     
 
2019
 
 
Carrying
amount
  
Estimated fair value
 
Total
  
Level 1
  
Level 2
  
Level 3
 
 
(in billions of yen)
 
Financial assets:
  
   
   
   
   
 
Cash and due from banks, interest-bearing deposits in other banks, call loans and funds sold, and receivables under resale agreements and securities borrowing transactions
  
62,012
   
62,012
   
873
   
61,139
   
—  
 
Investments
  
1,604
   
1,609
   
1,140
   
469
   
—  
 
Loans, net of allowance for loan losses
(Note)
  
82,382
   
83,490
   
—  
   
—  
   
83,490
 
Financial liabilities:
  
   
   
   
   
 
Noninterest-bearing deposits, call money and funds purchased, and payables under repurchase agreements and securities lending transactions
  
44,918
   
44,918
   
24,983
   
19,935
   
—  
 
Interest-bearing deposits
  
112,658
   
112,655
   
55,542
   
57,113
   
—  
 
Due to trust accounts
  
312
   
312
   
—  
   
312
   
—  
 
Other short-term borrowings
  
1,995
   
1,995
   
—  
   
1,995
   
—  
 
Long-term debt
  
9,096
   
9,178
   
—  
   
8,336
   
842
 
    
 
2020
 
 
Carrying
amount
  
Estimated fair value
 
Total
  
Level 1
  
Level 2
  
Level 3
 
 
(in billions of yen)
 
Financial assets:
  
   
   
   
   
 
Cash and due from banks, interest-bearing deposits in other banks, call loans and funds sold, and receivables under resale agreements and securities borrowing transactions
  
63,755
   
63,755
   
1,318
   
62,437
   
—
 
Investments
  
862
   
875
   
493
   
382
   
—
 
Loans, net of allowance for loan losses
(Note)
  
86,914
   
88,124
   
—
   
—
   
88,124
 
                     
Financial liabilities:
  
   
   
   
   
 
Noninterest-bearing deposits, call money and funds purchased, and payables under repurchase agreements and securities lending transactions
  
51,954
   
51,954
   
29,812
   
22,142
   
—
 
Interest-bearing deposits
  
114,653
   
114,659
   
58,935
   
55,724
   
—
 
Due to trust accounts
  
250
   
250
   
—
   
250
   
—
 
Other short-term borrowings
  
4,914
   
4,914
   
—
   
4,914
   
—
 
Long-term debt
  
7,821
   
7,708
   
—
   
6,813
   
895
 

MIZUHO FINANCIAL GROUP, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

   2018 
   Carrying
amount		   Estimated fair value 
     Total   Level 1   Level 2   Level 3 
   

 

(in billions of yen)

 

Financial assets:

          

Cash and due from banks, interest-bearing deposits in other banks, call loans and funds sold, and receivables under resale agreements and securities borrowing transactions

   61,381    61,381    1,206    60,175    —   

Investments

   2,518    2,522    1,984    538    —   

Loans, net of allowance for loan losses(Note)

   83,088    84,041    —      —      84,041 

Financial liabilities:

          

Noninterest-bearing deposits, call money and funds purchased, and payables under repurchase agreements and securities lending transactions

   43,921    43,921    22,898    21,023    —   

Interest-bearing deposits

   113,558    113,540    61,719    51,821    —   

Due to trust accounts

   3,993    3,993    —      3,993    —   

Other short-term borrowings

   1,688    1,688    —      1,688    —   

Long-term debt

   10,970    10,995    —      10,098    897 

Note:Loans, net of allowance for loan losses include items measured at fair value on a nonrecurring basis.

29.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
28. Offsetting of financial assets and financial liabilities

Derivatives

The MHFG Group enters into master netting arrangements such as International Swaps and Derivatives Association, Inc. (“ISDA”) or similar agreements with counterparties to manage mainly credit risks associated with counterparty default. If the predetermined events including counterparty default occur, these enforceable master netting arrangements or similar agreements give the Group the right to offset derivative receivables and derivative payables and related financial collateral such as cash and securities with the same counterparty.

Repurchase and resale agreements and securities lending and borrowing transactions

Repurchase and resale agreements and securities lending and borrowing transactions are generally covered by industry standard master repurchase agreements and industry standard master securities lending agreements with netting terms to manage mainly credit risks associated with counterparty default. In the event of default by the counterparty, these agreements with netting terms provide the Group with the right to offset receivables and payables related to such transactions with the same counterparty, and to liquidate the collateral held.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

The following table provides information about the offsetting of financial assets and financial liabilities at March 31, 20172019 and 2018.2020. The table includes derivatives, repurchase and resale agreements, and securities lending and borrowing transactions that are subject to enforceable master netting arrangements or similar agreements irrespective of whether or not they are offset on the Group’s consolidated balance sheets.

     Amounts not offset on
the balance sheet (3)		    
  Gross amounts
recognized		  Gross amounts
offset on the
balance sheet		  Net amounts
presented on the
balance sheet (2)		  Financial
instruments (4)		  Cash
collateral		  Net
amounts		 
  

 

(in billions of yen)

 

2017

      

Assets (1):

      

Derivatives

  10,608   —     10,608   (8,966)   (620)   1,022 

Receivables under resale agreements

  8,698   —     8,698   (8,662)   —     36 

Receivables under securities borrowing transactions

  3,127   —     3,127   (3,116)   —     11 
 

 

 

  

 

 

  

 

 

  

 

 

  

 

 

  

 

 

 

Total

  22,433   —     22,433   (20,744)   (620)   1,069 
 

 

 

  

 

 

  

 

 

  

 

 

  

 

 

  

 

 

 

Liabilities (1):

      

Derivatives

  10,405   —     10,405   (8,866)   (901)   638 

Payables under repurchase agreements

  17,446   —     17,446   (17,391)   —     55 

Payables under securities lending transactions

  1,458   —     1,458   (1,455)   —     3 
 

 

 

  

 

 

  

 

 

  

 

 

  

 

 

  

 

 

 

Total

  29,309   —     29,309   (27,712)   (901)   696 
 

 

 

  

 

 

  

 

 

  

 

 

  

 

 

  

 

 

 

2018

      

Assets (1):

      

Derivatives

  9,341   —     9,341   (7,751)   (520)   1,070 

Receivables under resale agreements

  7,804   —     7,804   (7,763)   —     41 

Receivables under securities borrowing transactions

  3,904   —     3,904   (3,874)   —     30 
 

 

 

  

 

 

  

 

 

  

 

 

  

 

 

  

 

 

 

Total

  21,049   —     21,049   (19,388)   (520)   1,141 
 

 

 

  

 

 

  

 

 

  

 

 

  

 

 

  

 

 

 

Liabilities (1):

      

Derivatives

  9,013   —     9,013   (7,758)   (884)   371 

Payables under repurchase agreements

  15,964   —     15,964   (15,847)   —     117 

Payables under securities lending transactions

  1,181   —     1,181   (1,179)   —     2 
 

 

 

  

 

 

  

 

 

  

 

 

  

 

 

  

 

 

 

Total

  26,158   —     26,158   (24,784)   (884)   490 
 

 

 

  

 

 

  

 

 

  

 

 

  

 

 

  

 

 

 

                         
   
Amounts not offset on
the balance sheet
(3)
   
 
Gross amounts
recognized
  
Gross amounts
offset on the
balance sheet
  
Net amounts
presented on the
balance sheet
(2)
  
Financial
instruments
(4)
  
Cash
collateral
  
Net
amounts
 
 
(in billions of yen)
 
2019
  
   
   
   
   
   
 
Assets
(1)
:
  
   
   
   
   
   
 
Derivatives
  
7,403
   
—  
   
7,403
   
(5,903
)  
(528
)  
972
 
Receivables under resale agreements
  
12,589
   
—  
   
12,589
   
(12,579
)  
—  
   
10
 
Receivables under securities borrowing transactions
  
1,921
   
—  
   
1,921
   
(1,894
)  
—  
   
27
 
                         
Total
  
21,913
   
—  
   
21,913
   
(20,376
)  
(528
)  
1,009
 
                         
Liabilities
(1)
:
  
   
   
   
   
   
 
Derivatives
  
6,978
   
—  
   
6,978
   
(5,766
)  
(769
)  
443
 
Payables under repurchase agreements
  
14,312
   
—  
   
14,312
   
(14,309
)  
—  
   
3
 
Payables under securities lending transactions
  
932
   
—  
   
932
   
(931
)  
—  
   
1
 
                         
Total
  
22,222
   
—  
   
22,222
   
(21,006
)  
(769
)  
447
 
                         
2020
  
   
   
   
   
   
 
Assets
(1)
:
  
   
   
   
   
   
 
Derivatives
  
9,819
   
—  
   
9,819
   
(7,723
)  
(629
)  
1,467
 
Receivables under resale agreements
  
17,347
   
—  
   
17,347
   
(17,197
)  
—  
   
150
 
Receivables under securities borrowing transactions
  
1,753
   
—  
   
1,753
   
(1,709
)  
—  
   
44
 
                         
Total
  
28,919
   
—  
   
28,919
   
(26,629
)  
(629
)  
1,661
 
                         
Liabilities
(1)
:
  
   
   
   
   
   
 
Derivatives
  
9,220
   
—  
   
9,220
   
(7,519
)  
(1,215
)  
486
 
Payables under repurchase agreements
  
17,542
   
—  
   
17,542
   
(17,191
)  
—  
   
351
 
Payables under securities lending transactions
  
626
   
—  
   
626
   
(623
)  
—  
   
3
 
                         
Total
  
27,388
   
—  
   
27,388
   
(25,333
)  
(1,215
)  
840
 
                         
Notes:

(1)Amounts relating to master netting arrangements or similar agreements where the MHFG Group does not have the legal right of
set-off
or where uncertainty exists as to the enforceability of these agreements are excluded. For derivatives, the table includes amounts relating to
over-the-counter
(“OTC”) and
OTC-cleared
derivatives that are subject to enforceable master netting arrangements or similar agreements.
(2)Derivative assets and liabilities are recorded in Trading account assets and Trading account liabilities, respectively.
(3)Amounts do not exceed the net amounts presented on the balance sheet and do not include the effect of overcollateralization, where it exists.
(4)For derivatives, amounts include derivative assets or liabilities and securities collateral that are eligible for offsetting under enforceable master netting arrangements or similar agreements.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

30.

29. Repurchase agreements and securities lending transactions accounted for as secured borrowings

The following table shows the gross amounts of liabilities associated with repurchase agreements and securities lending transactions, by remaining contractual maturity at March 31, 20172019 and 2018:

   Overnight and
continuous		   Up to 30 days   31-90 days   Greater than
90 days		   Total 
   

 

(in billions of yen)

 

2017

  

Repurchase agreements

   249    12,700    3,897    1,124    17,970 

Securities lending transactions

   320    1,359    —      240    1,919 
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total

   569    14,059    3,897    1,364    19,889 
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

2018

  

Repurchase agreements

   255    11,669    3,676    1,057    16,657 

Securities lending transactions

   1,270    355    —      208    1,833 
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total

   1,525    12,024    3,676    1,265    18,490 
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

2020:

                     
 
Overnight and
continuous
  
Up to 30 days
  
31-90
 days
  
Greater than
90 days
  
Total
 
 
(in billions of yen)
 
2019
  
   
   
   
   
 
Repurchase agreements
  
2,596
   
8,537
   
2,403
   
1,104
   
14,640
 
Securities lending transactions
  
1,012
   
473
   
—  
   
313
   
1,798
 
                     
Total
  
3,608
   
9,010
   
2,403
   
1,417
   
16,438
 
                     
2020
  
   
   
   
   
 
Repurchase agreements
  
6,357
   
5,467
   
4,867
   
1,280
   
17,971
 
Securities lending transactions
  
877
   
231
   
—  
   
316
   
1,424
 
                     
Total
  
7,234
   
5,698
   
4,867
   
1,596
   
19,395
 
                     
The following table shows the gross amounts of liabilities associated with repurchase agreements and securities lending transactions, by class of underlying collateral at March 31, 20172019 and 2018:

   Repurchase
agreements		   Securities lending
transactions		 
   

 

(in billions of yen)

 

2017

  

Japanese government bonds and Japanese local government bonds

   1,127    1,152 

Foreign government bonds and foreign agency mortgage-backed securities

   15,782    375 

Commercial paper and corporate bonds

   294    47 

Equity securities

   578    320 

Other

   189    25 
  

 

 

   

 

 

 

Total(Note)

   17,970    1,919 
  

 

 

   

 

 

 

2018

  

Japanese government bonds and Japanese local government bonds

   1,358    592 

Foreign government bonds and foreign agency mortgage-backed securities

   14,426    303 

Commercial paper and corporate bonds

   328    48 

Equity securities

   406    869 

Other

   139    21 
  

 

 

   

 

 

 

Total(Note)

   16,657    1,833 
  

 

 

   

 

 

 

2020:
         
 
Repurchase
agreements
  
Securities lending
transactions
 
 
(in billions of yen)
 
2019
  
   
 
Japanese government bonds and Japanese local government bonds
  
2,118
   
430
 
Foreign government bonds and foreign agency mortgage-backed securities
  
11,613
   
396
 
Commercial paper and corporate bonds
  
223
   
52
 
Equity securities
  
492
   
902
 
Other
  
194
   
18
 
         
Total
(Note)
  
14,640
   
1,798
 
         
2020
  
   
 
Japanese government bonds and Japanese local government bonds
  
1,790
   
269
 
Foreign government bonds and foreign agency mortgage-backed securities
  
15,218
   
359
 
Commercial paper and corporate bonds
  
273
   
50
 
Equity securities
  
542
   
730
 
Other
  
148
   
16
 
         
Total
(Note)
  
17,971
   
1,424
 
         
Note:Amounts exceeded the gross amounts recognized in Note 2928 “Offsetting of financial assets and financial liabilities” by ¥985¥1,194 billion and ¥1,345¥1,227 billion, at March 31, 20172019 and 2018,2020, respectively, which excluded the amounts relating to master netting agreements or similar agreements where the MHFG Group did not have the legal right of
set-off
or where uncertainty exists as to the enforceability.

The MHFG Group is required to post securities as collateral with a fair value equal to or in excess of the principal amount of the cash borrowed under repurchase agreements. For securities lending transactions, the Group receives collateral in the form of cash. These contracts involve risks, including (1) the counterparty may fail to return the securities at maturity and (2) the fair value of the securities posted may decline below the

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

amount of the Group’s obligation and therefore the counterparty may require additional amounts. The Group attempts to mitigate these risks by entering into transactions mainly with central counterparty clearing houses which revalue assets and perform margin
maintenance
activities on a dailyregular basis, diversifying the maturities and counterparties, and using mainly highly liquid securities.

31.

30. Related party transactions

The banking subsidiaries of MHFG make loans to the MHFG Group’s directors, executive officers, and other related parties. At March 31, 20172019 and 2018,2020, the aggregate loans to the Group’s equity method investees amounted to ¥473 billion and ¥497 billion, respectively, and outstanding loans to suchMHFG Group’s directors, executive officers, and other related parties were not considered significant. At March 31, 2017 and 2018, thereThere were no0 loans to these related parties that were considered impaired.

32.

Summarized Financial Information of the MHFG Group’s Equity Method Investees
Summarized financial information of the MHFG Group’s equity method investees as of March 31, 2019 and 2020, and for each of the three years ended March 31, 2020, is as follows:
         
 
2019
  
2020
 
 
(in billions of yen)
 
L
oans
  
7,954
   
7,268
 
Total assets
  
28,674
   
27,036
 
Deposits
  
10,167
   
8,665
 
Total liabilities
  
26,387
   
25,014
 
Total equity
  
2,287
   
2,022
 
Noncontrolling interests
  
615
   
11
 
             
 
2018
  
2019
  
2020
 
 
(in billions of yen)
 
Total interest and dividend income
  
458
   
503
   
586
 
Total interest expense
  
153
   
165
   
198
 
Provision (credit) for loan losses
  
66
   
84
   
81
 
Net interest income after provision (credit) for loan losses
  
239
   
254
   
307
 
Income before income tax expense
  
149
   
229
   
196
 
Net income
  
132
   
201
   
150
 
31. Business segment information

The MHFG Group introduced an in-house company system based on its diverse customer segments in April 2016. The aim of this system is to leverage the Group’s strengths and competitive advantage, which is the seamless integrationconsists of the Group’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 5

in-house
companies eachwhich are categorized 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. These customer segments are regarded as operating segments.

In line with the aforementioned system, the Group changed thesegments and constitute reportable segments from those based on the relevant principal consolidated subsidiaries to the five in-house companies. segments.

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

Retail & Business Banking Company

This company provides financial services for individual customers, small and
medium-sized
enterprises and middle market firms in Japan.

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Corporate & Institutional Company

This company provides financial services for large corporations, financial institutions and public corporations in Japan.

Global Corporate Company

This company provides financial services for Japanese overseas affiliated corporate customers and
non-Japanese
corporate customers, etc.

customers.

Global Markets Company

This company invests in financial products with market risk, such as interest rate risk, equity risk, and credit risk.

Asset Management Company

This company develops financial products and provides financial services that match the asset management needs of its wide range of customers from individuals to institutional investors.

MIZUHO FINANCIAL GROUP, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

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. In addition, the format and information are presented primarily on the basis of Japanese GAAP.
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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
Therefore, they are not consistent with the consolidated financial statements prepared in accordance with U.S. GAAP. A reconciliation is provided for the total amount of eachall business segment’s netsegments’ “Net business profits (losses) + Net gains (losses) related to ETFs and others” with income before income tax expense under U.S. GAAP.

Management does not use information onGAAP, and the total amount of all business segment’ssegments’ “Fixed assets” with the total amount of Premises and

equipment-net,
Goodwill, Intangible assets, and ROU assets related to allocate resourcesoperating leases included in Other assets reported under U.S. GAAP. “Fixed assets” pertaining to MHBK, MHTB, and assess performance and has not prepared information on the segment’s assets. Accordingly, information on the segment’s assets is not available.

  MHFG (Consolidated) 

2016(3)

 Retail &
Business
Banking
Company		   Corporate &
Institutional
Company		   Global
Corporate
Company		   Global
Markets
Company		   Asset
Management
Company		   Others (2)(4)  Total 
  

 

(in billions of yen)

 

Gross profits

  754.8    425.0    400.6    577.7    51.0    12.5   2,221.6 

General and administrative expenses

  702.4    187.0    236.2    170.4    28.1    20.9   1,345.0 

Equity in earnings (losses) of equity method investees—net

  20.9    1.2    0.2    —      1.1    0.8   24.2 

Others

  —      —      —      —      —      (48.0)   (48.0) 
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

  

 

 

 

Net business profits (losses) (1)

  73.3    239.2    164.6    407.3    24.0    (55.6)   852.8 
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

  

 

 

 
  MHFG (Consolidated) 

2017

 Retail &
Business
Banking
Company		   Corporate &
Institutional
Company		   Global
Corporate
Company		   Global
Markets
Company		   Asset
Management
Company		   Others (2)(4)  Total 
  

 

(in billions of yen)

 

Gross profits

  717.2    434.1    358.3    539.9    48.9    (5.7)   2,092.7 

General and administrative expenses

  719.7    194.0    244.3    193.8    29.3    39.4   1,420.5 

Equity in earnings (losses) of equity method investees—net

  14.9    1.0    1.0    —      0.4    1.6   18.9 

Others

  —      —      —      —      —      (27.7)   (27.7) 
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

  

 

 

 

Net business profits (losses) (1)

  12.4    241.1    115.0    346.1    20.0    (71.2)   663.4 
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

  

 

 

 
MHSC have been allocated to each segment.

                             
 
MHFG (Consolidated)
 
2018
(5)
 
Retail &
Business
Banking
Company
  
Corporate &
Institutional
Company
  
Global
Corporate
Company
  
Global
Markets
Company
  
Asset
Management
Company
  
Others
(4)
  
Total
 
 
 
(in billions of yen)
 
Gross profits + Net gains (losses) related to ETFs and others
(1)
  
725.7
   
431.0
   
327.3
   
387.2
   
50.0
   
74.4
   
1,995.6
 
General and administrative
expenses
(2)
  
724.3
   
208.4
   
239.6
   
204.7
   
27.6
   
39.6
   
1,444.2
 
Equity in earnings (losses) of equity method investees—net
  
12.7
   
1.0
   
2.3
   
—  
   
2.9
   
2.6
   
21.5
 
Amortization of goodwill and others
  
0.4
   
0.4
   
0.4
   
2.3
   
8.0
   
2.4
   
13.9
 
Others
  
—  
   
—  
   
—  
   
—  
   
—  
   
(21.0
)  
(21.0
)
                             
Net business profits (losses)
(3)
+ Net gains (losses) related to ETFs and others
  
13.7
   
223.2
   
89.6
   
180.2
   
17.3
   
14.0
   
538.0
 
                             

                             
 
MHFG (Consolidated)
 
2019
(5)
 
Retail &
Business
Banking
Company
  
Corporate &
Institutional
Company
  
Global
Corporate
Company
  
Global
Markets
Company
  
Asset
Management
Company
  
Others
(4)
  
Total
 
 
 
(in billions of yen)
 
Gross profits + Net gains (losses) related to ETFs and others
(1)
  
705.9
   
473.4
   
400.3
   
192.4
   
49.6
   
6.1
   
1,827.7
 
General and administrative
expenses
(2)
  
713.5
   
205.7
   
237.9
   
207.5
   
27.3
   
48.7
   
1,440.6
 
Equity in earnings (losses) of equity method investees—net
  
18.1
   
0.9
   
7.2
   
—  
   
1.3
   
23.7
   
51.2
 
Amortization of goodwill and others
  
0.4
   
0.4
   
0.4
   
2.3
   
8.0
   
2.1
   
13.6
 
Others
  
—  
   
—  
   
—  
   
—  
   
—  
   
(16.3
)  
(16.3
)
                             
Net business profits (losses)
(3)
+ Net gains (losses) related to ETFs and others
  
10.1
   
268.2
   
169.2
   
(17.4
)  
15.6
   
(37.3
)  
408.4
 
                             
Fixed assets
(6)
  
499.3
   
225.8
   
176.9
   
92.6
   
0.1
   
662.5
   
1,657.2
 
                             
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  MHFG (Consolidated) 

2018

 Retail &
Business
Banking
Company		   Corporate &
Institutional
Company		   Global
Corporate
Company		   Global
Markets
Company		   Asset
Management
Company		     Others (2)    Total 
  

 

(in billions of yen)

 

Gross profits

  726.2    433.0    352.6    381.7    50.2    (28.3)   1,915.4 

General and administrative expenses

  723.3    197.7    254.8    200.9    27.6    53.8   1,458.1 

Equity in earnings (losses) of equity method investees—net

  12.7    1.0    2.4    —      3.1    2.3   21.5 

Others

  —      —      —      —      —      (21.0)   (21.0) 
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

  

 

 

 

Net business profits (losses) (1)

  15.6    236.3    100.2    180.8    25.7    (100.8)   457.8 
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

  

 

 

 

                             
 
MHFG (Consolidated)
 
2020
 
Retail &
Business
Banking
Company
  
Corporate &
Institutional
Company
  
Global
Corporate
Company
  
Global
Markets
Company
  
Asset
Management
Company
  
Others
(4)
  
Total
 
 
(in billions of yen)
 
Gross profits + Net gains (losses) related to ETFs and others
(1)
  
673.6
   
462.4
   
417.8
   
410.1
   
48.4
   
60.5
   
2,072.8
 
General and administrative expenses
(2)
  
668.5
   
215.1
   
249.0
   
208.9
   
29.0
   
41.0
   
1,411.5
 
Equity in earnings (losses) of equity method investees—net
  
11.8
   
2.0
   
10.3
   
—  
   
1.3
   
5.0
   
30.4
 
Amortization of goodwill and others
  
0.4
   
0.4
   
0.4
   
2.3
   
7.8
   
1.9
   
13.2
 
Others
  
—  
   
—  
   
—  
   
—  
   
—  
   
(5.9
)  
(5.9
)
                             
Net business profits (losses)
(3)
+ Net gains (losses) related to ETFs and others
  
16.5
   
248.9
   
178.7
   
198.9
   
12.9
   
16.7
   
672.6
 
                             
Fixed assets
(6)
  
503.7
   
204.1
   
173.0
   
91.5
   
0.1
   
767.4
   
1,739.8
 
                             
Notes:

(1)“Gross profits + Net gains (losses) related to ETFs and others” is reported instead of sales reported by general corporations. Gross profits is defined as the sum of net interest income, fiduciary income, net fee and commission income, net trading income and net other operating income. Net gains (losses) related to ETFs and others consist of net gains (losses) on ETFs held by MHBK and MHTB on their
non-consolidated
basis and net gains (losses) on operating investment securities of MHSC on its consolidated basis. For the fiscal years ended March 31, 2018, 2019 and 2020, net gains (losses) related to ETFs and others amounted to ¥80.2 billion, ¥15.0 billion and ¥10.6 billion, respectively, of which ¥70.1 billion, ¥7.3 billion and ¥7.3 billion are included in “Global Markets Company,” respectively.
(2)“General and administrative expenses” excludes
non-allocated
gains (losses), net.
(3)Net business profits (losses) is used in Japan as a measure of the profitability of core banking operations, and is defined as gross profits (or the sum of net interest income, fiduciary income, net fee and commission income, net trading income and net other operating income)(as defined above) less general and administrative expenses plus equity in earnings (losses) of equity method investees—net and others. Measurement of net business profits (losses) is required for regulatory reporting to the Financial Services Agency.Agency of Japan.
(2)(4)“Others” includes items which should be eliminated as internal transactions between each segment on a consolidated basis.the following items:
profits and expenses pertaining to consolidated subsidiaries that are not subject to allocation;
consolidating adjustments, including eliminating internal transaction between each segment;
equity in earnings (losses) of equity method
investees-net
that are not subject to allocation; and
profits and losses pertaining to derivative transactions that reflect the counterparty risk of the individual parties and other factors in determining fair market value.
(3)Following the introduction of an in-house company system based on customer segments in April 2016, segment information for the fiscal year ended March 31, 2016 was restated to reflect the relevant changes.
(4)(5)Beginning on April 1, 2017,2018, new allocation methods for income and expense transactions between each segment and “Others” have been applied. Figures for the fiscal years ended March 31, 2016 and 2017 have been restated for the new allocation methods and “Equity in earnings (losses) of equity method investees—net” has been presented as a new item inIn connection with the use of the new allocation methods, the presentation of “Net business profits” has changed to “Net business profits (losses) + Net gains (losses) related to ETFs and others.” Before the change, “Net gains (losses) related to ETFs and others” were included in “Gross profits” of each segment and eliminated in “Others.” In addition, “Amortization of goodwill and others” has been presented as a new item. Figures for the fiscal year ended March 31, 2018 have been restated for the new allocation methods. These changes more appropriately reflect the performance of each of the operating segments in accordance with internal managerial accounting rules and

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

practices. Income and expenses of foreign branches of MHBK and foreign subsidiaries with functional currencies other than Japanese Yen have been translated for purposes of segment reporting using the budgeted foreign currency rates. Prior period comparative amounts for such foreign currency income and expenses have been translated using current period budgeted foreign currency rates.
(6)“Fixed assets” is presented based on Japanese GAAP and corresponds to the total amount of the following U.S. GAAP accounts: Premises and
equipment-net;
Goodwill; Intangible assets; and ROU assets related to operating leases included in Other assets. The above table does not include other asset amounts because “Fixed assets” is the only balance sheet metric that management uses when evaluating and making decisions pertaining to the operating segments. “Fixed assets” has been allocated to each segment starting in the fiscal year ended March 31, 2019 to enhance management’s analysis of the Group’s operations. “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, consolidating adjustments, and others. Certain “Fixed assets” expenses have been allocated to each segment using reasonable allocation criteria.
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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
Reconciliation

As explained above, the measurement bases of the internal management reporting systems and the income and expenses items included are different from the accompanying consolidated statements of income. Therefore, it is impracticable to present reconciliations of all the business segment’s information, other than net business profits (losses), to the corresponding items in the accompanying consolidated statements of income. A reconciliation of total net“Net business profits under the internal management reporting systems(losses) + Net gains (losses) related to ETFs and others” for the fiscal years ended March 31, 2016, 20172018, 2019 and 20182020 presented above to income before income tax expense shown on the consolidated statements of income isand a reconciliation of “Fixed assets” at March 31, 2019 and 2020 to the total amount of Premises and
equipment-net,
Goodwill, Intangible assets, and ROU assets related to operating leases included in Other assets are as follows:

   2016  2017  2018 
   

 

(in billions of yen)

 

Net business profits

   852.8   663.4   457.8 
  

 

 

  

 

 

  

 

 

 

U.S. GAAP adjustments

   201.3   (387.8)   17.8 

(Provision) credit for loan losses

   (34.6)   (37.7)   126.4 

Net gains (losses) related to equity investments

   188.4   259.6   278.2 

Non-recurring personnel expense

   (3.9)   (8.8)   (7.4) 

Gains on disposal of premises and equipment

   10.2   5.6   8.2 

(Provision) credit for losses on off-balance-sheet instruments

   16.4   (19.5)   30.2 

Others—net

   (34.0)   5.6   (71.9) 
  

 

 

  

 

 

  

 

 

 

Income before income tax expense

   1,196.6   480.4   839.3 
  

 

 

  

 

 

  

 

 

 

             
 
2018
  
2019
  
2020
 
    
 
(in billions of yen)
 
Net business profits (losses) + Net gains (losses) related to ETFs and others
  
538.0
   
408.4
   
672.6
 
             
Adjustment to reconcile management reporting to Japanese GAAP:
  
   
   
 
General and administrative expenses:
non-allocated
gains (losses), net
  
(30.9
)  
23.3
   
46.3
 
Expenses related to portfolio problems (including reversal of (provision for) general reserve for losses on loans)
  
(17.0
)  
(30.7
)  
(183.3
)
Gains on reversal of reserves for possible losses on loans, and others
  
173.3
   
11.2
   
11.6
 
Net gains (losses) related to stocks—Net gains (losses) related to ETFs and others
  
191.9
   
259.9
   
126.6
 
Net extraordinary gains (losses)
  
17.5
   
(497.9
)  
(19.2
)
Others
  
(72.8
)  
(57.9
)  
(35.9
)
             
Income before income tax expense under Japanese GAAP
  
800.0
   
116.3
   
618.7
 
Adjustment to reconcile Japanese GAAP to U.S. GAAP:
  
   
   
 
Derivative financial instruments and hedging activities
  
(110.2
)  
45.3
   
111.2
 
Investments
  
98.1
   
(273.3
)  
(480.9
)
Loans
  
(2.4
)  
(11.9
)  
(3.0
)
Allowances for loan losses and
off-balance-sheet
instruments
  
6.8
   
(5.8
)  
0.7
 
Premises and equipment
  
35.4
   
303.6
   
(96.1
)
Land revaluation
  
3.4
   
10.2
   
2.1
 
Business combinations
  
15.6
   
(12.8
)  
6.0
 
Pension liabilities
  
(4.4
)  
(32.2
)  
(56.7
)
Consolidation of variable interest entities
  
2.7
   
(39.0
)  
39.3
 
Foreign currency translation
  
12.1
   
1.7
   
17.3
 
Others
  
(17.8
)  
(17.0
)  
(5.1
)
             
Income before income tax expense under U.S. GAAP
  
839.3
   
85.1
   
153.5
 
             

         
 
2019
  
2020
 
 
(in billions of yen)
 
Fixed assets
  
1,657.2
   
1,739.8
 
         
U.S. GAAP adjustments
(Note)
  
413.1
   
887.2
 
         
Premises and
equipment-net,
Goodwill, Intangible assets, and ROU assets related to operating leases included in Other assets
  
2,070.3
   
2,627.0
 
         
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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

33.

Note:The U.S. GAAP adjustments are primarily comprised of GAAP differences mainly from ROU assets related to operating leases not recognized under Japanese GAAP; internally developed software, which was impaired under Japanese GAAP; land, which was revalued under Japanese GAAP; and the consolidation of certain variable interest entities, which are not consolidated under Japanese GAAP. ROU assets are recognized on balance sheets in connection with the adoption of ASU
No.2016-02
on April 1, 2019.
32. Foreign activities

The following table presents consolidated income statement and total assets information by major geographic area. Foreign activities are defined as business transactions that involve customers residing outside of Japan. However, as the MHFG Group’s operations are highly integrated globally, estimates and assumptions have been made for an allocation among the geographic areas.

       Americas             
   Japan   United
States of
America		   Others   Europe   Asia/Oceania
excluding
Japan,
and others		   Total 
   

 

(in billions of yen)

 

Fiscal year ended March 31, 2016:

            

Total revenue(1)

   2,288.5    434.4    45.7    187.5    428.0    3,384.1 

Total expenses(2)

   1,534.2    282.6    28.7    126.2    215.8    2,187.5 
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Income before income tax expense

   754.3    151.8    17.0    61.3    212.2    1,196.6 
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Net income

   464.7    136.9    15.4    51.1    182.0    850.1 
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total assets at end of fiscal year

   133,157.1    28,985.3    4,227.5    11,616.9    15,823.4    193,810.2 
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Fiscal year ended March 31, 2017:

            

Total revenue(1)

   1,748.3    500.3    70.3    190.7    367.5    2,877.1 

Total expenses(2)

   1,712.3    303.2    29.1    136.2    215.9    2,396.7 
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Income before income tax expense

   36.0    197.1    41.2    54.5    151.6    480.4 
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Net income

   5.7    167.6    38.8    39.5    137.5    389.1 
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total assets at end of fiscal year

   138,832.3    30,262.0    4,203.3    10,629.1    16,529.6    200,456.3 
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Fiscal year ended March 31, 2018:

            

Total revenue(1)

   2,002.4    654.9    64.0    197.4    447.8    3,366.5 

Total expenses(2)

   1,582.5    478.8    38.5    172.6    254.8    2,527.2 
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Income before income tax expense

   419.9    176.1    25.5    24.8    193.0    839.3 
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Net income

   231.3    152.7    23.7    21.3    172.7    601.7 
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total assets at end of fiscal year

   142,587.8    28,135.9    4,380.4    11,677.8    17,473.7    204,255.6 
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

                         
   
Americas
       
 
Japan
  
United
States of
America
  
Others
  
Europe
  
Asia/Oceania
excluding
Japan,
and others
  
Total
 
 
 
(in billions of yen)
 
Fiscal year ended March 31, 2018:
  
   
   
   
   
   
 
Total revenue
(1)
  
2,002.4
   
654.9
   
64.0
   
197.4
   
447.8
   
3,366.5
 
Total expenses
(2)
  
1,582.5
   
478.8
   
38.5
   
172.6
   
254.8
   
2,527.2
 
                         
Income before income tax expense
  
419.9
   
176.1
   
25.5
   
24.8
   
193.0
   
839.3
 
                         
Net income
  
231.3
   
152.7
   
23.7
   
21.3
   
172.7
   
601.7
 
                         
Total assets at end of fiscal year
  
142,587.8
   
28,135.9
   
4,380.4
   
11,677.8
   
17,473.7
   
204,255.6
 
                         
Fiscal year ended March 31, 2019:
  
   
   
   
   
   
 
Total revenue
(1)
  
1,705.5
   
792.1
   
66.0
   
249.7
   
616.5
   
3,429.8
 
Total expenses
(2)
  
2,082.6
   
696.5
   
46.1
   
203.2
   
316.3
   
3,344.7
 
                         
Income (loss) before income tax expense
  
(377.1
)  
95.6
   
19.9
   
46.5
   
300.2
   
85.1
 
                         
Net income (loss)
  
(331.4
)  
85.3
   
17.0
   
34.6
   
270.2
   
75.7
 
                         
Total assets at end of fiscal year
  
133,443.5
   
25,913.5
   
4,824.7
   
15,322.5
   
18,107.0
   
197,611.2
 
                         
Fiscal year ended March 31, 2020:
  
   
   
   
   
   
 
Total revenue
(1)
  
1,681.0
   
801.5
   
95.1
   
270.4
   
610.9
   
3,458.9
 
Total expenses
(2)
  
2,008.9
   
679.2
   
41.5
   
239.1
   
336.7
   
3,305.4
 
                         
Income (loss) before income tax expense
  
(327.9
)  
122.3
   
53.6
   
31.3
   
274.2
   
153.5
 
                         
Net income (loss)
  
(312.8
)  
100.4
   
51.5
   
23.6
   
243.6
   
106.3
 
                         
Total assets at end of fiscal year
  
137,470.4
   
34,650.4
   
4,137.3
   
15,487.0
   
19,473.7
   
211,218.8
 
                         
Notes:

(1)Total revenue is comprised of Interest and dividend income and Noninterest income.
(2)Total expenses are comprised of Interest expense, Provision (credit) for loan losses and Noninterest expenses.

F-
119
Table of Contents
MIZUHO FINANCIAL GROUP, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

34.

33. Mizuho Financial Group, Inc., parent company

The following tables present the parent company only financial information of MHFG:

Condensed balance sheets

   2017   2018 
   

 

(in millions of yen)

 

Assets:

    

Cash and due from banks

   15,912    22,264 

Interest-bearing deposits in other banks

   4,278    1,227 

Trading account assets

   131,996    176,593 

Investments in subsidiaries and affiliated companies

   8,993,388    9,501,633 

Long-term loans receivable from subsidiaries

   2,697,250    3,969,015 

Other

   345,379    344,065 
  

 

 

   

 

 

 

Total

   12,188,203    14,014,797 
  

 

 

   

 

 

 

Liabilities and shareholders’ equity:

    

Short-term borrowings

   1,156,100    1,083,135 

Long-term debt

   2,697,250    3,969,015 

Other liabilities

   73,496    94,226 

Shareholders’ equity

   8,261,357    8,868,421 
  

 

 

   

 

 

 

Total

   12,188,203    14,014,797 
  

 

 

   

 

 

 

Condensed statements

         
 
2019
  
2020
 
 
 
(in millions of yen)
 
Assets:
  
   
 
Cash and due from banking subsidiaries
  
99,209
   
43,016
 
Interest-bearing deposits in banking subsidiaries
  
1,158
   
218
 
Investments in subsidiaries and affiliated companies:
  
   
 
Banking subsidiaries
  
7,905,018
   
8,104,662
 
Non-banking subsidiaries and affiliated companies
  
1,412,369
   
1,139,694
 
Long-term loans receivable from a banking subsidiary
  
5,110,248
   
6,539,819
 
Other
  
351,951
   
471,225
 
         
Total
  
14,879,953
   
16,298,634
 
         
Liabilities and shareholders’ equity:
  
   
 
Short-term borrowings from a banking subsidiary
  
945,505
   
860,000
 
Long-term debt
  
5,145,286
   
6,555,053
 
Other liabilities
  
62,643
   
371,216
 
Shareholders’ equity
  
8,726,519
   
8,512,365
 
         
Total
  
14,879,953
   
16,298,634
 
         
F-
120
Table of income

   2016   2017   2018 
   

 

(in millions of yen)

 

Income:

      

Dividends from subsidiaries and affiliated companies:

      

Banking subsidiaries

      272,070         300,530       227,057 

Non-banking subsidiaries and affiliated companies

   20,814    27,618    28,987 

Management fees from subsidiaries

   39,267    48,594    47,945 

Interest income on loans and discounts

   9,630    39,359    68,869 

Other income

   1,855    21,054    52,672 
  

 

 

   

 

 

   

 

 

 

Total

   343,636    437,155    425,530 
  

 

 

   

 

 

   

 

 

 

Expenses:

      

Operating expenses

   31,063    38,927    38,661 

Interest expense

   15,144    48,594    74,227 

Other expense

   5,973    7,708    6,329 
  

 

 

   

 

 

   

 

 

 

Total

   52,180    95,229    119,217 
  

 

 

   

 

 

   

 

 

 

Equity in undistributed net income of subsidiaries

   559,553    21,251    272,852 
  

 

 

   

 

 

   

 

 

 

Income before income tax expense

   851,009    363,177    579,165 

Income tax expense

   517    737    1,557 
  

 

 

   

 

 

   

 

 

 

Net income

   850,492    362,440    577,608 
  

 

 

   

 

 

   

 

 

 
Contents

MIZUHO FINANCIAL GROUP, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

Condensed statements of cash flows

   2016  2017  2018 
   

 

(in millions of yen)

 

Cash flows from operating activities:

    

Net income

      850,492        362,440     577,608 

Adjustments and other

   (546,946)   (40,595)   (302,109) 
  

 

 

  

 

 

  

 

 

 

Net cash provided by operating activities

   303,546   321,845   275,499 
  

 

 

  

 

 

  

 

 

 

Cash flows from investing activities:

    

Net change in loans

   (479,948)   (2,022,860)   (1,344,323) 

Purchases of premises and equipment

   (165)   (40,362)   (6,649) 

Payments for purchases of securities of subsidiaries

   (2,249)   (65,269)   —   

Proceeds from withdrawal of securities of subsidiaries

   —     13,359   —   

Net change in other investing activities

   1,872   6,691   (1,063) 
  

 

 

  

 

 

  

 

 

 

Net cash used in investing activities

   (480,490)   (2,108,441)   (1,352,035) 
  

 

 

  

 

 

  

 

 

 

Cash flows from financing activities:

    

Net change in short-term borrowings

   (10,000)   (30,000)   (70,000) 

Proceeds from issuance of long-term debt

   479,948   2,022,860   1,344,323 

Repayment of long-term debt

   (98,800)   —     —   

Proceeds from issuance of common stock

   5   6   3 

Purchases of treasury stock

   (13)   (1,435)   (1,611) 

Dividends paid

   (195,283)   (190,031)   (190,382) 

Net change in other financing activities

   1,001   971   555 
  

 

 

  

 

 

  

 

 

 

Net cash provided by financing activities

   176,858   1,802,371   1,082,888 
  

 

 

  

 

 

  

 

 

 

Net increase (decrease) in cash and due from banks

   (86)   15,775   6,352 

Cash and due from banks at beginning of fiscal year

   223   137   15,912 
  

 

 

  

 

 

  

 

 

 

Cash and due from banks at end of fiscal year

   137   15,912   22,264 
  

 

 

  

 

 

  

 

 

 
income

             
 
2018
  
2019
  
2020
 
 
 
(in millions of yen)
 
Income:
  
   
   
 
Dividends from subsidiaries and affiliated companies:
  
   
   
 
Banking subsidiaries
  
    227,057
   
    267,724
   
      23,824
 
Non-banking
subsidiaries and affiliated companies
  
28,987
   
23,392
   
12,850
 
Management fees from subsidiaries
  
47,945
   
39,292
   
38,004
 
Interest income on loans and discounts
  
68,869
   
106,920
   
123,354
 
Gains on disposal of premises and equipment
  
—  
   
—  
   
10,866
 
Other income
  
52,672
   
9,575
   
7,088
 
             
Total
  
425,530
   
446,903
   
215,986
   
             
Expenses:
  
   
   
 
Operating expenses
  
38,661
   
40,680
   
38,951
 
Interest expense
  
74,227
   
110,861
   
126,516
 
Other expense
  
28,123
     
59,049
   
25,313
 
             
Total
  
141,011
   
210,590
   
190,780
 
             
Equity in undistributed net income (loss) of subsidiaries
  
309,210
   
(173,142
)  
130,930
 
             
Income before income tax expense
  
593,729
   
63,171
   
156,136
 
Income tax expense (benefit)
  
16,121
   
(21,300
)  
5,941
 
             
Net income
  
577,608
   
84,471
   
150,195
 
             

F-
1
21
Table of Contents
MIZUHO FINANCIAL GROUP, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

35.

Condensed statements of cash flows
             
 
2018
  
2019
  
2020
 
 
 
(in millions of yen)
 
Cash flows from operating activities:
  
   
   
 
Net income
  
577,608
   
84,471
   
150,195
 
Adjustments and other
  
(302,109
)  
197,193
   
(92,059
)
             
Net cash provided by operating activities
  
275,499
   
281,664
   
58,136
 
             
Cash flows from investing activities:
  
   
   
 
Proceeds from sales of Equity securities
  
—  
   
139,719
   
—  
 
Net change in loans
  
(1,344,323
)  
(1,075,059
)  
(1,496,047
)
Purchases of premises and equipment
  
(6,649
)  
(11,640
)  
(43,406
)
Proceeds from sales of premises and equipment
  
—  
   
—  
   
209,657
 
Net change in other investing activities
  
(4,114
)  
(1,310
)  
(5,150
)
             
Net cash used in investing activities
  
(1,355,086
)  
(948,290
)  
(1,334,946
)
             
Cash flows from financing activities:
  
   
   
 
Net change in short-term borrowings
  
(70,000
)  
(140,000
)  
(85,505
)
Proceeds from issuance of long-term debt
  
1,344,323
   
1,075,059
   
1,531,047
 
Repayment of long-term debt
  
—  
   
—  
   
(35,000
)
Proceeds from issuance of common stock
  
3
   
3
   
—  
 
Purchases of treasury stock
  
(1,611
)  
(2,124
)  
(1,441
)
Dividends paid
  
(190,382
)  
(190,413
)  
(190,386
)
Net change in other financing activities
  
555
   
437
   
962
 
             
Net cash provided by financing activities
  
1,082,888
   
742,962
   
1,219,677
 
             
Effect of exchange rate changes on cash and cash equivalents
  
—  
   
540
   
—  
 
             
Net increase (decrease) in cash and cash equivalents
  
3,301
   
76,876
   
(57,133
)
Cash and cash equivalents at beginning of fiscal year
  
20,190
   
23,491
   
100,367
 
             
Cash and cash equivalents at end of fiscal year
  
23,491
   
100,367
   
43,234
 
             
34. Subsequent events

Redemption

Share consolidation of preferred securities

MHFG’s common stock

On June 30, 2018, preferred securities, issued25, 2020, a 1-for-10 share consolidation was approved at the Ordinary General Meeting of Shareholders. It will become effective on October 1, 2020 based on the shares owned by the MHFG Group’s overseas special purpose company, were redeemed in full. The special purpose company is not consolidated in accordance with ASC 810 since the Group is not the primary beneficiary. Thus, the redemption of preferred securities did not reduce Noncontrolling interests in consolidated subsidiaries, but reduced Long-term debtshareholders recorded in the Group’s consolidated balance sheets. The following table describes the detailsshareholder register as of the redeemed preferred securities:

September 30, 2020.
F-122
Table of Contents
EXHIBIT INDEX

Issuer

Aggregate
redemption amount

Reason for the redemption

  

(in millions)

   

Mizuho Capital Investment (JPY) 2 Limited

¥274,500
Exhibit
Number
  Arrival
Description of optional redemption date
Exhibits

EXHIBIT INDEX

Exhibit

Number

1.1
 

Description of Exhibits

1.1

1.2 
1.2
1.3 
1.3
2.1 
2.1
2.2 
2.2
8 
2.3
2.4
8
11 
11
12.1 
12.1
12.2 
12.2
13.1 
13.1
15 
15
101.INS XBRL Instance Document
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104
The cover page for the Company’s Annual Report on From 20-F for the year ended March 31, 2020, has been formatted in Inline XBRL

*Incorporated by reference to our annual report on Form 20-F (No. 001-33098) filed on July 7, 2017.3, 2018.
**Incorporated by reference to our annual report on Form 20-F (No. 001-33098) filed on July 21, 2016.

Table of Contents

Signature

The registrant hereby certifies that it meets all of the requirements for filing on Form 20-F and that it has duly caused and authorized the undersigned to sign this annual report on its behalf.

MIZUHO FINANCIAL GROUP, INC.
By: 

    /s/

By:
/s/ Tatsufumi Sakai

Name:
Tatsufumi Sakai
Title:
President & Group CEO

July 3, 2018

2, 2020