| Loans | 4. Loans
The table below presents loans outstanding by domicile and industry
of borrower at March 31, 2015 and 2016:
2015 2016
(in millions of
yen)
Domestic:
Manufacturing 8,224,361 8,344,808
Construction and real estate 7,353,826 7,733,513
Services 4,272,968 4,655,704
Wholesale and retail 5,586,533 5,408,850
Transportation and communications 3,156,855 3,267,902
Banks and other financial institutions 3,852,820 3,632,481
Government and public institutions 4,611,900 3,395,784
Other industries (Note) 5,079,922 4,619,336
Individuals:
Mortgage loans 11,021,956 10,589,646
Other 848,750 924,408
Total domestic 54,009,891 52,572,432
Foreign:
Commercial and industrial 16,688,090 17,319,284
Banks and other financial institutions 6,077,144 6,382,449
Government and public institutions 1,010,704 1,174,665
Other (Note) 425,862 273,695
Total foreign 24,201,800 25,150,093
Total 78,211,691 77,722,525
Less: Unearned income and deferred loan fees—net 163,415 167,156
Total loans before allowance for loan losses 78,048,276 77,555,369
Note: Other industries of Domestic and
Other of Foreign include trade receivables and lease receivables of
consolidated VIEs.
Net losses on sales of loans were ¥2,041 million,
¥33,291 million and ¥1,752 million, including
unrealized losses related to recording loans held for sale at the
lower of cost or fair value of ¥1,510 million,
¥34,262 million, and ¥810 million for the
fiscal years ended March 31, 2014, 2015 and 2016,
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 and pool allocations 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 pools loans with similar risk characteristics, and
the risk is assessed and managed according to such pools. The Group
generally reviews 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 the MHFG Group’s definition of
obligor ratings used by MHBK and MHTB:
Obligor category
Obligor rating
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 condition.
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.
The table below presents credit quality information of loans based
on the MHFG Group’s internal rating system at March 31,
2015 and 2016:
Normal obligors Watch obligors excluding (1) Impaired Total
A-B C-D Retail (2) Other (3) E1-E2 Retail (2) Other (3)
(in millions of
yen)
2015
Domestic:
Manufacturing 4,663,535 2,607,651 109,615 198,621 147,978 16,424 1,019 479,518 8,224,361
Construction and real estate 3,331,659 2,943,178 600,856 165,660 192,124 18,478 562 101,309 7,353,826
Services 2,298,532 1,566,359 201,354 4,150 109,677 22,273
— 70,623 4,272,968
Wholesale and retail 2,261,669 2,695,642 237,050 53,691 148,722 39,189 65 150,505 5,586,533
Transportation and communications 2,310,918 674,273 89,258 422 36,383 10,029
— 35,572 3,156,855
Banks and other financial institutions 2,986,436 830,410 2,360 4,169 23,881 129
— 5,435 3,852,820
Government and public institutions 4,505,893 6,007
— 100,000
—
—
—
— 4,611,900
Other industries 2,018,620 706,882 3,326 2,290,419 10,476 406 49,213 580 5,079,922
Individuals
— 243,904 11,212,723 133,530 32,512 102,149 2,484 143,404 11,870,706
Total domestic 24,377,262 12,274,306 12,456,542 2,950,662 701,753 209,077 53,343 986,946 54,009,891
Foreign:
Total foreign 15,153,557 5,246,343 8,428 3,160,768 344,533 22 100,018 188,131 24,201,800
Total 39,530,819 17,520,649 12,464,970 6,111,430 1,046,286 209,099 153,361 1,175,077 78,211,691
2016
Domestic:
Manufacturing 4,859,256 2,681,958 103,343 148,102 163,213 12,473 2,958 373,505 8,344,808
Construction and real estate 3,956,798 2,709,617 601,251 157,057 215,244 16,408 255 76,883 7,733,513
Services 2,611,296 1,674,328 195,140 2,380 81,704 24,846
— 66,010 4,655,704
Wholesale and retail 2,240,228 2,552,552 223,677 57,865 147,404 39,486 546 147,092 5,408,850
Transportation and communications 2,410,967 695,697 86,094 380 35,090 10,518
— 29,156 3,267,902
Banks and other financial institutions 2,719,047 881,405 2,234 3,788 22,303 264
— 3,440 3,632,481
Government and public institutions 3,181,241 4,047
— 210,496
—
—
—
— 3,395,784
Other industries 1,954,222 685,258 3,501 1,929,712 7,053 329 35,315 3,946 4,619,336
Individuals
— 259,646 10,891,538 107,131 34,744 96,729 1,659 122,607 11,514,054
Total domestic 23,933,055 12,144,508 12,106,778 2,616,911 706,755 201,053 40,733 822,639 52,572,432
Foreign:
Total foreign 15,540,347 5,748,131 8,382 3,132,856 472,696 10 80,607 167,064 25,150,093
Total 39,473,402 17,892,639 12,115,160 5,749,767 1,179,451 201,063 121,340 989,703 77,722,525
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) Amounts represent small balance,
homogeneous loans which are subject to pool allocations.
(3) Non-impaired loans held by
subsidiaries other than MHBK and MHTB constitute Other, since their
portfolio segments are not identical to those of MHBK and
MHTB.
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. 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, 2015 and 2016:
Recorded investment (1) Unpaid
Related (3) Average Interest (4)
Requiring an Not (2) Total
(in millions of
yen)
2015
Domestic:
Manufacturing 469,856 9,662 479,518 487,833 170,864 289,807 9,376
Construction and real estate 77,863 23,446 101,309 119,800 17,479 119,325 1,570
Services 60,606 10,017 70,623 78,470 18,771 77,028 1,449
Wholesale and retail 138,981 11,524 150,505 161,843 54,481 150,525 2,529
Transportation and communications 31,568 4,004 35,572 36,858 10,173 47,224 729
Banks and other financial institutions 5,373 62 5,435 5,448 2,263 7,487 98
Other industries 478 102 580 766 55 682 11
Individuals 68,337 75,067 143,404 158,344 6,202 173,726 2,553
Total domestic 853,062 133,884 986,946 1,049,362 280,288 865,804 18,315
Foreign:
Total foreign 171,852 16,279 188,131 204,575 71,943 233,123 3,197
Total 1,024,914 150,163 1,175,077 1,253,937 352,231 1,098,927 21,512
2016
Domestic:
Manufacturing 365,361 8,144 373,505 379,642 138,676 410,491 7,930
Construction and real estate 59,883 17,000 76,883 87,516 10,130 89,075 1,246
Services 56,695 9,315 66,010 72,603 19,095 69,525 1,292
Wholesale and retail 134,425 12,667 147,092 157,215 46,304 149,324 2,376
Transportation and communications 25,665 3,491 29,156 30,497 5,694 33,119 630
Banks and other financial institutions 3,390 50 3,440 3,440 1,095 5,188 42
Other industries 3,591 355 3,946 4,132 799 2,665 64
Individuals 63,367 59,240 122,607 135,325 6,085 133,015 2,058
Total domestic 712,377 110,262 822,639 870,370 227,878 892,402 15,638
Foreign:
Total foreign 148,471 18,593 167,064 180,870 61,308 186,440 2,629
Total 860,848 128,855 989,703 1,051,240 289,186 1,078,842 18,267
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.
(3) The allowance for loan losses on
impaired loans includes the allowance for groups of small balance,
homogeneous loans totaling ¥387,879 million and ¥347,839
million as of March 31, 2015 and 2016 which were collectively
evaluated for impairment, in addition to the allowance for those
loans that were individually evaluated for impairment.
(4) Amounts represent gross interest
income on impaired loans which were included in Interest income on
loans in the consolidated statements of income.
The remaining balance of impaired loans which had been partially
charged off was ¥25,980 million and ¥31,933 million
as of March 31, 2015 and 2016, respectively.
Troubled debt restructurings
The MHFG Group considers a TDR to be a restructuring in which it,
for economic or legal reasons related to the obligor’s
financial difficulties, grants a concession to the obligor that it
would not otherwise consider. The Group considers the relevant
obligor to be in financial difficulty when its obligor rating is E2
or below. The following table presents TDRs that were entered into
during the fiscal years ended March 31, 2015 and 2016:
Loan forgiveness or debt to Interest
rate
Recorded (Note ) Charge-offs
(in millions of yen)
2015
Domestic:
Manufacturing
— 1,236 380,149
Construction and real estate
—
— 31,554
Services
—
— 55,592
Wholesale and retail
—
— 153,577
Transportation and communications
—
— 25,452
Banks and other financial institutions
—
— 13,482
Other industries
—
— 2,607
Individuals
—
— 35,271
Total domestic
— 1,236 697,684
Foreign:
Total foreign
— 503 50,730
Total
— 1,739 748,414
2016
Domestic:
Manufacturing 67,058 34,081 108,395
Construction and real estate
—
— 27,078
Services
—
— 43,919
Wholesale and retail
—
— 157,651
Transportation and communications 49 279 28,244
Banks and other financial institutions
—
— 6,342
Other industries
—
— 7,120
Individuals
—
— 28,163
Total domestic 67,107 34,360 406,912
Foreign:
Total foreign
—
— 44,748
Total 67,107 34,360 451,660
Note: Amounts represent the book values of loans immediately after
the restructurings.
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, 2015 and 2016 with respect to the loans modified as
TDRs within the previous twelve months:
Recorded investment
2015
2016
(in millions of yen)
Domestic:
Manufacturing 9,719 10,669
Construction and real estate 1,673 2,195
Services 2,479 4,824
Wholesale and retail 23,979 20,522
Transportation and communications 1,151 2,361
Individuals 4,359 3,864
Total domestic 43,360 44,435
Foreign:
Total foreign 8,187 10,846
Total 51,547 55,281
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, 2015 and
2016:
30-59 days 60-89 days
90 days or Total past Current Total
(in millions of
yen)
2015
Domestic:
Manufacturing 1,407 179 10,451 12,037 8,212,324 8,224,361
Construction and real estate 2,386 2,360 46,142 50,888 7,302,938 7,353,826
Services 1,628 650 7,626 9,904 4,263,064 4,272,968
Wholesale and retail 3,000 2,250 11,196 16,446 5,570,087 5,586,533
Transportation and communications 169 3,122 2,866 6,157 3,150,698 3,156,855
Banks and other financial institutions 333
— 12 345 3,852,475 3,852,820
Government and public institutions
—
—
—
— 4,611,900 4,611,900
Other industries
— 7 979 986 5,078,936 5,079,922
Individuals 32,060 15,596 46,310 93,966 11,776,740 11,870,706
Total domestic 40,983 24,164 125,582 190,729 53,819,162 54,009,891
Foreign:
Total foreign 98 47 14,826 14,971 24,186,829 24,201,800
Total 41,081 24,211 140,408 205,700 78,005,991 78,211,691
2016
Domestic:
Manufacturing 1,555 163 9,454 11,172 8,333,636 8,344,808
Construction and real estate 2,713 1,024 35,691 39,428 7,694,085 7,733,513
Services 2,479 223 7,016 9,718 4,645,986 4,655,704
Wholesale and retail 3,193 886 8,861 12,940 5,395,910 5,408,850
Transportation and communications 594 81 2,033 2,708 3,265,194 3,267,902
Banks and other financial institutions
—
—
—
— 3,632,481 3,632,481
Government and public institutions
—
—
—
— 3,395,784 3,395,784
Other industries
—
— 29 29 4,619,307 4,619,336
Individuals 38,682 13,570 38,413 90,665 11,423,389 11,514,054
Total domestic 49,216 15,947 101,497 166,660 52,405,772 52,572,432
Foreign:
Total foreign 859 2,598 30,000 33,457 25,116,636 25,150,093
Total 50,075 18,545 131,497 200,117 77,522,408 77,722,525 |
