Form 6-K

 

 

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 6-K

REPORT OF FOREIGN PRIVATE ISSUER

PURSUANT TO RULE 13a-16 OR 15d-16

UNDER THE SECURITIES EXCHANGE ACT OF 1934

For the month of November 2018

Commission File Number 001-33098

Mizuho Financial Group, Inc.

(Translation of registrant’s name into English)

5-5, Otemachi 1-chome

Chiyoda-ku, Tokyo 100-8176

Japan

(Address of principal executive office)

Indicate by check mark whether the registrant files or will file annual reports under cover of Form 20-F or Form 40-F. Form 20-F  ☒    Form 40-F  ☐

Indicate by check mark if the registrant is submitting the Form 6-K in paper as permitted by Regulation S-T Rule 101(b)(1):  ☐

Indicate by check mark if the registrant is submitting the Form 6-K in paper as permitted by Regulation S-T Rule 101(b)(7):  ☐

Indicate by check mark whether the registrant by furnishing the information contained in this Form is also thereby furnishing the information to the Commission pursuant to Rule 12g3-2(b) under the Securities Exchange Act of 1934.

Yes  ☐    No  ☒

If “Yes” is marked, indicate below the file number assigned to the registrant in connection with Rule 12g3-2(b):82-                    .

 

 

 


THIS REPORT ON FORM 6-K SHALL BE DEEMED TO BE INCORPORATED BY REFERENCE INTO THE PROSPECTUS FORMING A PART OF MIZUHO FINANCIAL GROUP, INC.’S REGISTRATION STATEMENT ON FORM F-3 (FILE NO. 333-213187) AND TO BE A PART OF SUCH PROSPECTUS FROM THE DATE ON WHICH THIS REPORT IS FURNISHED, TO THE EXTENT NOT SUPERSEDED BY DOCUMENTS OR REPORTS SUBSEQUENTLY FILED OR FURNISHED.


SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

 

Date: November 28, 2018
Mizuho Financial Group, Inc.
By:  

/s/ Makoto Umemiya

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


UNAUDITED INTERIM CONSOLIDATED JAPANESE GAAP FINANCIAL STATEMENTS

AS OF AND FOR THE SIX MONTHS ENDED SEPTEMBER 30, 2018

On November 28, 2018, we published our unaudited interim consolidated financial statements as of and for the six months ended September 30, 2018 prepared in accordance with Japanese GAAP as part of our interim securities report (shihanki hokokusho) for the same period filed by us with the relevant Japanese authorities. We have included in this report on Form 6-K an English translation of the unaudited interim consolidated financial statements and the notes thereto included in such interim securities report. Japanese GAAP differs in certain respects from U.S. GAAP. For a description of certain differences between U.S. GAAP and Japanese GAAP, see “Item 5. Operating and Financial Review and Prospects - Reconciliation with Japanese GAAP” in our most recent annual report on Form 20-F filed with the U.S. Securities Exchange Commission.


Financial Information

 

1.

Mizuho Financial Group, Inc. (“MHFG”) is a specified business company under Article 17-15, Paragraph 2 of the Cabinet Office Ordinance on Disclosure of Corporate Information, etc. and prepares the interim consolidated financial statements in the second quarter.

 

2.

The interim consolidated financial statements of MHFG are prepared in accordance with the “Ordinance on the Terminology, Forms, and Preparation Methods of Interim Consolidated Financial Statements” (Ordinance of the Ministry of Finance No. 24 of 1999). The classification of assets and liabilities and that of income and expenses are in accordance with the “Ordinance for Enforcement of the Banking Act” (Ordinance of the Ministry of Finance No. 10 of 1982).

 

3.

Ernst & Young ShinNihon LLC conducted a semiannual audit on the interim consolidated financial statements of MHFG for the six months ended September 30, 2018, pursuant to Article 193-2, Paragraph 1 of the Financial Instruments and Exchange Act.

 

- 1 -


I. Interim Consolidated Financial Statements

(1) Interim Consolidated Balance Sheet

 

    

(Millions of yen)

 
    

As of

March 31, 2018

   

As of

September 30, 2018

 

Assets

          

Cash and Due from Banks

   *8      47,725,360     *8      46,579,445  

Call Loans and Bills Purchased

        715,149          336,548  

Receivables under Resale Agreements

        8,080,873          10,275,017  

Guarantee Deposits Paid under Securities Borrowing Transactions

        4,350,527          2,709,640  

Other Debt Purchased

        2,713,742          2,577,593  

Trading Assets

   *8      10,507,133     *8      12,274,307  

Money Held in Trust

        337,429          409,725  

Securities

   *1, *8, *15      34,183,033     *1, *8, *15      34,975,299  

Loans and Bills Discounted

   *3, *4, *5, *6, *7, *8, *9      79,421,473     *3, *4, *5, *6, *7, *8, *9      80,516,017  

Foreign Exchange Assets

   *7      1,941,677     *7      2,229,807  

Derivatives other than for Trading Assets

        1,807,999          1,428,605  

Other Assets

   *8      4,588,484     *8      4,342,091  

Tangible Fixed Assets

   *10, *11      1,111,128     *10, *11      1,093,635  

Intangible Fixed Assets

        1,092,708          1,074,255  

Net Defined Benefit Asset

        996,173          983,445  

Deferred Tax Assets

        47,839          42,924  

Customers’ Liabilities for Acceptances and Guarantees

        5,723,186          5,964,576  

Reserves for Possible Losses on Loans

        (315,621        (252,177
  

 

   

 

 

Total Assets

        205,028,300          207,560,759  
  

 

   

 

 

 

- 2 -


    

(Millions of yen)

 
    

As of

March 31, 2018

   

As of

September 30, 2018

 

Liabilities

          

Deposits

   *8      125,081,233     *8      120,819,088  

Negotiable Certificates of Deposit

        11,382,590          12,500,325  

Call Money and Bills Sold

        2,105,293          5,736,053  

Payables under Repurchase Agreements

   *8      16,656,828     *8      17,488,448  

Guarantee Deposits Received under Securities Lending Transactions

   *8      1,566,833     *8      1,838,150  

Commercial Paper

        710,391          683,390  

Trading Liabilities

        8,121,543          7,682,367  

Borrowed Money

   *8, *12      4,896,218     *8, *12      4,817,339  

Foreign Exchange Liabilities

        445,804          473,194  

Short-term Bonds

        362,185          303,302  

Bonds and Notes

   *13      7,544,256     *13      8,696,783  

Due to Trust Accounts

        4,733,131          4,725,740  

Derivatives other than for Trading Liabilities

        1,514,483          1,397,924  

Other Liabilities

        3,685,585          4,174,229  

Reserve for Bonus Payments

        66,872          49,284  

Reserve for Variable Compensation

        3,242          1,500  

Net Defined Benefit Liability

        58,890          59,466  

Reserve for Director and Corporate Auditor Retirement Benefits

        1,460          1,308  

Reserve for Possible Losses on Sales of Loans

        1,075          1,153  

Reserve for Contingencies

        5,622          4,750  

Reserve for Reimbursement of Deposits

        20,011          19,802  

Reserve for Reimbursement of Debentures

        30,760          28,197  

Reserves under Special Laws

        2,361          2,358  

Deferred Tax Liabilities

        421,002          353,680  

Deferred Tax Liabilities for Revaluation Reserve for Land

   *10      66,186     *10      65,732  

Acceptances and Guarantees

        5,723,186          5,964,576  
  

 

   

 

 

Total Liabilities

        195,207,054          197,888,149  
  

 

   

 

 

Net Assets

          

Common Stock and Preferred Stock

        2,256,548          2,256,767  

Capital Surplus

        1,134,922          1,138,434  

Retained Earnings

        4,002,835          4,268,037  

Treasury Stock

        (5,997        (7,888
  

 

   

 

 

Total Shareholders’ Equity

        7,388,309          7,655,351  
  

 

   

 

 

Net Unrealized Gains (Losses) on Other Securities

        1,392,392          1,335,533  

Deferred Gains or Losses on Hedges

        (67,578        (123,418

Revaluation Reserve for Land

   *10      144,277     *10      143,248  

Foreign Currency Translation Adjustments

        (85,094        (90,790

Remeasurements of Defined Benefit Plans

        293,536          277,466  
  

 

   

 

 

Total Accumulated Other Comprehensive Income

        1,677,534          1,542,038  
  

 

   

 

 

Stock Acquisition Rights

        1,163          714  

Non-controlling Interests

        754,239          474,506  
  

 

   

 

 

Total Net Assets

        9,821,246          9,672,610  
  

 

   

 

 

Total Liabilities and Net Assets

        205,028,300          207,560,759  
  

 

   

 

 

 

- 3 -


(2) Interim Consolidated Statement of Income and

      Interim Consolidated Statement of Comprehensive Income

      Interim Consolidated Statement of Income

 

 

                                                                                                                                                                           
    

(Millions of yen)

 
    

For the six months ended

September 30, 2017

   

For the six months ended

September 30, 2018

 

Ordinary Income

       1,764,841         1,994,087  

Interest Income

       797,177         994,826  

Interest on Loans and Bills Discounted

       494,710         604,086  

Interest and Dividends on Securities

       142,667         163,560  

Fiduciary Income

       27,690         28,023  

Fee and Commission Income

       344,211         366,778  

Trading Income

       130,953         156,449  

Other Operating Income

       177,376         178,133  

Other Ordinary Income

   *1     287,431     *1     269,875  

Ordinary Expenses

       1,333,535         1,527,175  

Interest Expenses

       389,759         586,633  

Interest on Deposits

       152,774         217,934  

Fee and Commission Expenses

       80,493         81,850  

Other Operating Expenses

       47,347         44,155  

General and Administrative Expenses

       733,194         717,467  

Other Ordinary Expenses

   *2     82,740     *2     97,067  
  

 

   

 

 

Ordinary Profits

       431,306         466,912  
  

 

   

 

 

Extraordinary Gains

   *3     2,164     *3     10,271  

Extraordinary Losses

   *4     4,388     *4     3,551  
  

 

   

 

 

Income before Income Taxes

       429,082         473,632  
  

 

   

 

 

Income Taxes:

        

Current

       107,634         116,078  

Deferred

       (12,364       (14,319
  

 

   

 

 

Total Income Taxes

       95,270           101,759  
  

 

   

 

 

Profit

       333,812         371,872  
  

 

   

 

 

Profit Attributable to Non-controlling Interests

       17,166         12,511  
  

 

   

 

 

Profit Attributable to Owners of Parent

       316,645         359,360  
  

 

   

 

 

 

- 4 -


                                                                                                                                                                           
      Interim Consolidated Statement of Comprehensive Income

 

                                                                                                                                                                           
    

(Millions of yen)

 
    

For the six months ended

September 30, 2017

   

For the six months ended

September 30, 2018

 

Profit

        333,812           371,872  

Other Comprehensive Income

       98,082         (135,899

Net Unrealized Gains (Losses) on Other Securities

       118,017         (58,557

Deferred Gains or Losses on Hedges

       (17,318       (55,862

Revaluation Reserve for Land

       (2       —    

Foreign Currency Translation Adjustments

       (161       (3,401

Remeasurements of Defined Benefit Plans

                   8,116               (15,346

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

       (10,569       (2,732
  

 

   

 

 

Comprehensive Income

       431,894            235,972  
  

 

   

 

 

(Breakdown)

        

Comprehensive Income Attributable to Owners of Parent

       416,654         224,894  

Comprehensive Income Attributable to Non-controlling Interests

       15,240         11,078  

 

- 5 -


(3) Interim Consolidated Statement of Changes in Net Assets

      For the six months ended September 30, 2017

 

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

Equity
 

Balance as of the beginning of the period

     2,256,275        1,134,416       3,615,449       (4,849     7,001,291  

Changes during the period

           

Issuance of New Shares

     273        273           546  

Cash Dividends

          (95,173       (95,173

Profit Attributable to Owners of Parent

          316,645         316,645  

Repurchase of Treasury Stock

            (2,447     (2,447

Disposition of Treasury Stock

        (43       821       778  

Transfer from Revaluation Reserve for Land

          788         788  

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

        122           122  

Net Changes in Items other than Shareholders’ equity

           
  

 

 

    

 

 

   

 

 

   

 

 

   

 

 

 

Total Changes during the period

     273        352       222,260       (1,625     221,260  
  

 

 

    

 

 

   

 

 

   

 

 

   

 

 

 

Balance as of the end of the period

     2,256,548        1,134,768       3,837,710       (6,475     7,222,552  
  

 

 

    

 

 

   

 

 

   

 

 

   

 

 

 

 

    Accumulated Other Comprehensive Income     Stock
Acquisition
Rights
    Non-
controlling
Interests
    Total  Net
Assets
 
    Net Unrealized
Gains (Losses)
on Other
Securities
    Deferred Gains
or Losses on
Hedges
    Revaluation
Reserve for
Land
    Foreign
Currency
Translation
Adjustments
    Remeasurements
of Defined
Benefit Plans
    Total
Accumulated
Other
Comprehensive
Income
 

Balance as of the beginning of the period

    1,289,985       10,172       145,609       (69,657     144,866       1,520,976       1,754       749,339       9,273,361  

Changes during the period

                 

Issuance of New Shares

                    546  

Cash Dividends

                    (95,173

Profit Attributable to Owners of Parent

                    316,645  

Repurchase of Treasury Stock

                    (2,447

Disposition of Treasury Stock

                    778  

Transfer from Revaluation Reserve for Land

                    788  

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

                    122  

Net Changes in Items other than Shareholders’ equity

    119,780       (17,886     (791     (5,922     4,039       99,220       (580     487       99,127  
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total Changes during the period

    119,780         (17,886     (791     (5,922     4,039       99,220       (580     487       320,388  
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Balance as of the end of the period

    1,409,766        (7,714     144,817        (75,579     148,906        1,620,196        1,173        749,827          9,593,750   
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

 

- 6 -


      For the six months ended September 30, 2018

 

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

Equity
 

Balance as of the beginning of the period

     2,256,548        1,134,922       4,002,835       (5,997     7,388,309  

Changes during the period

           

Issuance of New Shares

     218        218           437  

Cash Dividends

          (95,186       (95,186

Profit Attributable to Owners of Parent

          359,360         359,360  

Repurchase of Treasury Stock

            (2,856     (2,856

Disposition of Treasury Stock

        (15       965       950  

Transfer from Revaluation Reserve for Land

          1,028         1,028  

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

        3,307           3,307  

Net Changes in Items other than Shareholders’ equity

           
  

 

 

    

 

 

   

 

 

   

 

 

   

 

 

 

Total Changes during the period

     218        3,511       265,202       (1,891     267,041  
  

 

 

    

 

 

   

 

 

   

 

 

   

 

 

 

Balance as of the end of the period

     2,256,767        1,138,434       4,268,037       (7,888     7,655,351  
  

 

 

    

 

 

   

 

 

   

 

 

   

 

 

 

 

    Accumulated Other Comprehensive Income     Stock
Acquisition
Rights
    Non-
controlling
Interests
    Total  Net
Assets
 
    Net Unrealized
Gains (Losses)
on Other
Securities
    Deferred Gains
or Losses on
Hedges
    Revaluation
Reserve for
Land
    Foreign
Currency
Translation
Adjustments
    Remeasurements
of Defined
Benefit Plans
    Total
Accumulated
Other
Comprehensive
Income
 

Balance as of the beginning of the period

    1,392,392       (67,578     144,277       (85,094     293,536       1,677,534       1,163       754,239       9,821,246  

Changes during the period

                 

Issuance of New Shares

                    437  

Cash Dividends

                    (95,186

Profit Attributable to Owners of Parent

                    359,360  

Repurchase of Treasury Stock

                    (2,856

Disposition of Treasury Stock

                    950  

Transfer from Revaluation Reserve for Land

                    1,028  

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

                    3,307  

Net Changes in Items other than Shareholders’ equity

    (56,859     (55,840     (1,028     (5,696     (16,070     (135,495     (449     (279,732     (415,678
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total Changes during the period

    (56,859     (55,840     (1,028     (5,696     (16,070     (135,495     (449     (279,732     (148,636
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Balance as of the end of the period

    1,335,533       (123,418     143,248       (90,790     277,466       1,542,038          714       474,506         9,672,610  
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

 

- 7 -


(4) Interim Consolidated Statement of Cash Flows

 

     (Millions of yen)  
      For the six months  ended
September 30, 2017
    For the six months  ended
September 30, 2018
 

Cash Flow from Operating Activities

          

Income before Income Taxes

        429,082          473,632  

Depreciation

        86,319          85,504  

Losses on Impairment of Fixed Assets

        2,375          2,384  

Amortization of Goodwill

        2,073          2,042  

Equity in Loss (Gain) from Investments in Affiliates

        (10,553        (19,397

Increase (Decrease) in Reserves for Possible Losses on Loans

        (147,147        (65,629

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

        (173        78  

Increase (Decrease) in Reserve for Contingencies

        94          26  

Increase (Decrease) in Reserve for Bonus Payments

        (22,170        (19,153

Increase (Decrease) in Reserve for Variable Compensation

        (1,404        (1,742

Decrease (Increase) in Net Defined Benefit Asset

        (15,384        (28,578

Increase (Decrease) in Net Defined Benefit Liability

        1,381          1,152  

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

        0          (151

Increase (Decrease) in Reserve for Reimbursement of Deposits

        306          (208

Increase (Decrease) in Reserve for Reimbursement of Debentures

        (4,588        (2,563

Interest Income - accrual basis

        (797,177        (994,826

Interest Expenses - accrual basis

        389,759          586,633  

Losses (Gains) on Securities

        (151,687        (196,500

Losses (Gains) on Money Held in Trust

        (79        (79

Foreign Exchange Losses (Gains) - net

        (84,088        (329,418

Losses (Gains) on Disposition of Fixed Assets

        (145        (1,653

Losses (Gains) on Cancellation of Employee Retirement Benefit Trust

        —            (7,448

Decrease (Increase) in Trading Assets

        (2,007,232        (1,678,766

Increase (Decrease) in Trading Liabilities

        (199,022        (479,891

Decrease (Increase) in Derivatives other than for Trading Assets

        342,036          402,307  

Increase (Decrease) in Derivatives other than for Trading Liabilities

        (142,490        (140,197

Decrease (Increase) in Loans and Bills Discounted

        (1,056,197        (340,433

Increase (Decrease) in Deposits

        4,201,080          (4,878,384

Increase (Decrease) in Negotiable Certificates of Deposit

        1,232,086          893,395  

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

        (931,781        (56,079

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

        278,728          430,004  

Decrease (Increase) in Call Loans, etc.

        6,089          (1,320,540

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

        (235,157        1,640,886  

Increase (Decrease) in Call Money, etc.

        1,680,784          3,669,830  

Increase (Decrease) in Commercial Paper

        (453,719        (75,866

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

        961,006          271,316  

Decrease (Increase) in Foreign Exchange Assets

        (105,355        (232,411

Increase (Decrease) in Foreign Exchange Liabilities

        (99,855        26,473  

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

        (103,781        (58,882

Increase (Decrease) in Bonds and Notes

        (46,218        615,711  

Increase (Decrease) in Due to Trust Accounts

        (91,686        (7,390

Interest and Dividend Income - cash basis

        785,022          979,986  

Interest Expenses - cash basis

        (396,480        (592,508

Other - net

        128,548          130,315  
  

 

 

   

 

 

 

Subtotal

        3,423,198          (1,317,022
  

 

 

   

 

 

 

Cash Refunded (Paid) in Income Taxes

        (81,537        (90,848
  

 

 

   

 

 

 

Net Cash Provided by (Used in) Operating Activities

        3,341,661          (1,407,871
  

 

 

   

 

 

 

 

- 8 -


     (Millions of yen)  
      For the six months  ended
September 30, 2017
    For the six months  ended
September 30, 2018
 

Cash Flow from Investing Activities

          

Payments for Purchase of Securities

        (32,915,966        (29,178,381

Proceeds from Sale of Securities

        23,065,371          19,492,567  

Proceeds from Redemption of Securities

        10,325,499          10,014,840  

Payments for Increase in Money Held in Trust

        (58,705        (87,740

Proceeds from Decrease in Money Held in Trust

        33,247          15,401  

Payments for Purchase of Tangible Fixed Assets

        (19,358        (16,170

Payments for Purchase of Intangible Fixed Assets

        (103,021        (44,682

Proceeds from Sale of Tangible Fixed Assets

        12,607          6,763  

Proceeds from Sale of Intangible Fixed Assets

        0          —    

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

        1,337          —    
  

 

 

   

 

 

 

Net Cash Provided by (Used in) Investing Activities

        341,010          202,598  
  

 

 

   

 

 

 

Cash Flow from Financing Activities

          

Proceeds from Subordinated Borrowed Money

        30,000          —    

Repayments of Subordinated Borrowed Money

        (49,000        (25,000

Proceeds from Issuance of Subordinated Bonds

        574,000          510,000  

Payments for Redemption of Subordinated Bonds

        (50,000        (5,000

Proceeds from Issuance of Common Stock

        3          2  

Proceeds from Investments by Non-controlling Shareholders

        712          3,370  

Repayments to Non-controlling Shareholders

        —            (274,500

Cash Dividends Paid

        (95,139        (95,162

Cash Dividends Paid to Non-controlling Shareholders

        (14,080        (16,313

Payments for Repurchase of Treasury Stock

        (1,604        (2,101

Proceeds from Sale of Treasury Stock

        0          933  
  

 

 

   

 

 

 

Net Cash Provided by (Used in) Financing Activities

        394,891          96,228  
  

 

 

   

 

 

 

Effect of Foreign Exchange Rate Changes on Cash and Cash Equivalents

        (6,214        (21,421
  

 

 

   

 

 

 

Net Increase (Decrease) in Cash and Cash Equivalents

        4,071,349          (1,130,466
  

 

 

   

 

 

 

Cash and Cash Equivalents at the beginning of the period

        45,523,663          46,334,334  
  

 

 

   

 

 

 

Cash and Cash Equivalents at the end of the period

     *1        49,595,013       *1        45,203,867  
  

 

 

   

 

 

 

 

- 9 -


Notes to Interim Consolidated Financial Statements

Fundamental and Important Matters for the Preparation of Interim Consolidated Financial Statements

 

1.

Scope of Consolidation

 

(1)

Number of consolidated subsidiaries: 125

Names of principal companies:

Mizuho Bank, Ltd.

Mizuho Trust & Banking Co., Ltd.

Mizuho Securities Co., Ltd.

Change in scope of consolidation

During the six months ended September 30, 2018, Mizuho Americas Services LLC and three other companies were newly included in the scope of consolidation as a result of establishment.

During the six months ended September 30, 2018, Mizuho Tohoku Industry Development Limited Partnership and two other companies were excluded from the scope of consolidation as a result of dissolution and other factors.

 

(2)

Number of non-consolidated subsidiaries: 0

 

2.

Application of the Equity Method

 

(1)

Number of non-consolidated subsidiaries under the equity method: 0

 

(2)

Number of affiliates under the equity method: 19

Names of principal companies:

Orient Corporation

The Chiba Kogyo Bank, Ltd.

Joint Stock Commercial Bank for Foreign Trade of Vietnam

 

(3)

Number of non-consolidated subsidiaries not under the equity method: 0

 

(4)

Affiliates not under the equity method:

Pec International Leasing Co., Ltd.

Affiliates not under the equity method are excluded from the scope of the equity method since such exclusion has no material effect on MHFG’s interim consolidated financial statements in terms of Net Income (Loss) (amount corresponding to MHFG’s equity position), Retained Earnings (amount corresponding to MHFG’s equity position), Accumulated Other Comprehensive Income (amount corresponding to MHFG’s equity position) and others.

 

- 10 -


3.

Interim Balance Sheet Dates of Consolidated Subsidiaries

 

(1)

Interim balance sheet dates of consolidated subsidiaries are as follows:

 

January 31    1 company   
June 29    6 companies   
June 30    49 companies   
September 30    69 companies   

 

(2)

Consolidated subsidiaries with interim balance sheet dates of June 29 were consolidated based on their tentative interim financial statements as of and for the period ended June 30. The consolidated subsidiary with the interim balance sheet date of January 31 was consolidated based on its tentative interim financial statement as of and for the period ended the interim consolidated balance sheet date. Other consolidated subsidiaries were consolidated based on their interim financial statements as of and for the period ended their respective interim balance sheet dates.

The necessary adjustments have been made to the interim financial statements for any significant transactions that took place between their respective interim balance sheet dates and the date of the interim consolidated financial statements.

 

4.

Standards of Accounting Method

 

(1)

Credited Loans pursuant to Trading Securities and Trading Income & Expenses

Credited loans held for the purpose of trading are, in line with trading securities, recognized on a trade date basis and recorded in Other Debt Purchased on the interim consolidated balance sheet. Other Debt Purchased related to the relevant credited loans is stated at fair value at the interim consolidated balance sheet date. Interest received and the gains or losses on the sale of the relevant credited loans during the six months ended September 30, 2018, including the gains or losses resulting from any change in the value between the beginning and the end of the six months ended September 30, 2018, are recognized in Other Operating Income and Other Operating Expenses on the interim consolidated statements of income.

 

(2)

Trading Assets & Liabilities and Trading Income & Expenses

Trading transactions intended to take advantage of short-term fluctuations and arbitrage opportunities in interest rates, currency exchange rates, market prices of securities and related indices are recognized on a trade date basis and recorded in Trading Assets or Trading Liabilities on the interim consolidated balance sheet. Income or expenses generated on the relevant trading transactions are recorded in Trading Income or Trading Expenses on the interim consolidated statement of income.

Securities and other monetary claims held for trading purposes are stated at fair value at the interim consolidated balance sheet date. Derivative financial products, such as swaps, futures and option transactions, are stated at fair value, assuming that such transactions are terminated and settled at the interim consolidated balance sheet date.

Trading Income and Trading Expenses include the interest received and the interest paid during the six months ended September 30, 2018, the gains or losses resulting from any change in the value of securities and other monetary claims between the beginning and the end of the six months ended September 30, 2018, and the gains or losses resulting from any change in the value of financial derivatives between the beginning and the end of the six months ended September 30, 2018, assuming they were settled at the end of the six months ended September 30, 2018.

 

- 11 -


(3)

Securities

 

  (a)

Bonds held to maturity are stated at amortized cost (straight-line method) and determined by the moving average method. Investments in affiliates not under the equity method are stated at acquisition cost and determined by the moving average method. As to Other Securities, in principle, fair value of Japanese stocks is determined based on the average quoted market price over the month preceding the interim consolidated balance sheet date. Fair value of securities other than Japanese stocks is determined at the quoted market price if available, or other reasonable value at the interim consolidated balance sheet date (cost of securities sold is calculated primarily by the moving average method). Other Securities, the fair values of which are extremely difficult to determine, are stated at acquisition cost and determined by the moving average method.

The net unrealized gains (losses) on Other Securities are included directly in Net Assets, net of applicable income taxes after excluding gains and losses as a result of the fair-value hedge method.

 

  (b)

Securities which are held as trust assets in Money Held in Trust accounts are valued in the same way as given in (a) above.

 

(4)

Derivative Transactions

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

 

(5)

Depreciation of Fixed Assets

 

  1)

Tangible Fixed Assets (Except for Lease Assets)

Depreciation of buildings is computed mainly by the straight-line method, and that of others is computed mainly by the declining-balance method. The amount based on estimated annual depreciation expenses is allocated to each period.

The range of useful lives is as follows:

 

Buildings

   3 years to 50 years   

Others

   2 years to 20 years   

 

  2)

Intangible Fixed Assets (Except for Lease Assets)

Amortization of Intangible Fixed Assets is computed by the straight-line method. Development costs for internally-used software are capitalized and amortized over their estimated useful lives of mainly from five to ten years as determined by MHFG and consolidated subsidiaries.

 

  3)

Lease Assets

Depreciation of lease assets booked in Tangible Fixed Assets and Intangible Fixed Assets which are concerned with finance lease transactions that do not transfer ownership is mainly computed by the same method as the one applied to fixed assets owned by us.

 

(6)

Deferred Assets

Bond issuance costs are expensed as incurred.

 

- 12 -


(7)

Reserves for Possible Losses on Loans

Reserves for Possible Losses on Loans of major domestic consolidated subsidiaries are maintained in accordance with internally established standards for write-offs and reserve provisions.

For claims extended to obligors that are legally bankrupt under the Bankruptcy Law, Special Liquidation under the Company Law or other similar laws (“Bankrupt Obligors”), and to obligors that are effectively in similar conditions (“Substantially Bankrupt Obligors”), reserves are maintained at the amounts of claims net of direct write-offs described below and the expected amounts recoverable from the disposition of collateral and the amounts recoverable under guarantees. For claims extended to obligors that are not yet legally or formally bankrupt but are likely to be bankrupt (“Intensive Control Obligors”), reserves are maintained at the amounts deemed necessary based on overall solvency analyses of the amounts of claims net of expected amounts recoverable from the disposition of collateral and the amounts recoverable under guarantees.

For claims extended to Intensive Control Obligors and Obligors with Restructured Loans and others, if the exposure to an obligor exceeds a certain specific amount, reserves are provided as follows: (i) if future cash flows of the principal and interest can be reasonably estimated, the discounted cash flow method is applied, under which the reserve is determined as the difference between the book value of the loan and its present value of future cash flows discounted using the contractual interest rate before the loan was classified as a Restructured Loan, and (ii) if future cash flows of the principal and interest cannot be reasonably estimated, reserves are provided for the losses estimated for each individual loan.

For claims extended to other obligors, reserves are maintained at rates derived from historical credit loss experience and other factors. Reserve for Possible Losses on Loans to Restructuring Countries is maintained in order to cover possible losses based on analyses of the political and economic climates of the countries.

All claims are assessed by each claim origination department in accordance with the internally established “Self-assessment Standard,” and the results of the assessments are verified and examined by the independent examination departments.

In the case of claims to Bankrupt Obligors and Substantially Bankrupt Obligors, which are collateralized or guaranteed by a third party, the amounts deemed uncollectible (calculated by deducting the anticipated proceeds from the sale of collateral pledged against the claims and amounts that are expected to be recovered from guarantors of the claims) are written off against the respective claims balances. The total directly written-off amount was ¥96,924 million (¥97,112 million at the end of the fiscal year ended March 31, 2018).

Other consolidated subsidiaries provide the amount necessary to cover the loan losses based upon past experience and other factors for general claims and the assessment for each individual loan for other claims.

 

(8)

Reserve for Possible Losses on Investments

Reserve for Possible Losses on Investments is maintained to provide against possible losses on investments in securities, after taking into consideration the financial condition and other factors concerning the investee company.

 

(9)

Reserve for Bonus Payments

Reserve for Bonus Payments, which is provided for future bonus payments to employees, is maintained at the amount accrued at the end of the six months ended September 30, 2018, based on the estimated future payments.

 

- 13 -


(10)

Reserve for Variable Compensation

To prepare for the payments of performance payments and stock compensation to be paid as variable compensation within compensation for directors, executive officers and specialist officers of Mizuho Financial Group, Inc., Mizuho Bank, Ltd., Mizuho Trust & Banking Co., Ltd., and Mizuho Securities Co., Ltd., the amount accrued at the end of the six months ended September 30, 2018 among the estimated payment based on the standard amount regarding variable compensation of the fiscal year ending March 31, 2018 is provided.

 

(11)

Reserve for Director and Corporate Auditor Retirement Benefits

Reserve for Director and Corporate Auditor Retirement Benefits, which is provided for future retirement benefit payments to directors, corporate auditors, and executive officers, is recognized at the amount accrued by the end of the six months ended September 30, 2018, based on the internally established standards.

 

(12)

Reserve for Possible Losses on Sales of Loans

Reserve for Possible Losses on Sales of Loans is provided for possible future losses on sales of loans at the amount deemed necessary based on a reasonable estimate of possible future losses.

 

(13)

Reserve for Contingencies

Reserve for Contingencies is maintained to provide against possible losses from contingencies which are not covered by other specific reserves. The balance is an estimate of possible future losses considered to require a reserve.

 

(14)

Reserve for Reimbursement of Deposits

Reserve for Reimbursement of Deposits is provided against the losses for the deposits derecognized from liabilities at the estimated amount of future claims for withdrawal by depositors.

 

(15)

Reserve for Reimbursement of Debentures

Reserve for Reimbursement of Debentures is provided for the debentures derecognized from liabilities at the estimated amount for future claims.

 

(16)

Reserve under Special Laws

Reserve under Special Laws is Reserve for Contingent Liabilities from Financial Instruments and Exchange. This is the reserve pursuant to Article 46-5 of the Financial Instruments and Exchange Law and Article 175 of the Cabinet Office Ordinance regarding Financial Instruments Business, etc. to indemnify the losses incurred from accidents in the purchase and sale of securities, other transactions or derivative transactions.

 

(17)

Accounting Method for Retirement Benefits

In calculating retirement benefit obligations, a benefit formula basis is used as a method of attributing expected retirement benefits to the period up to the end of the six months ended September 30, 2018. Unrecognized actuarial differences are recognized as income or expenses from the following fiscal year under the straight-line method over a certain term within the average remaining service period of the employees (mainly 10 years) of the respective fiscal years.

Certain consolidated subsidiaries apply the simplified method that assumes the amount required for voluntary resignation at the end of the six months ended September 30, 2018 to be retirement benefit obligations in computing net defined benefit liability and retirement benefit expenses.

 

- 14 -


(18)

Assets and Liabilities denominated in foreign currencies

Assets and liabilities denominated in foreign currencies and accounts of overseas branches of domestic consolidated banking subsidiaries and a domestic consolidated trust banking subsidiary are translated into Japanese yen primarily at the exchange rates in effect at the interim consolidated balance sheet date, with the exception of the investments in affiliates not under the equity method, which are translated at historical exchange rates.

Assets and liabilities denominated in foreign currencies of the consolidated subsidiaries, except for the transactions mentioned above, are translated into Japanese yen primarily at the exchange rates in effect at the respective interim balance sheet dates.

 

(19)

Hedge Accounting

 

  (a)

Interest Rate Risk

The deferred method, the fair-value hedge method or the exceptional accrual method for interest rate swaps are applied as hedge accounting methods.

The portfolio hedge transaction for a large volume of small-value monetary claims and liabilities of domestic consolidated banking subsidiaries and some of domestic consolidated trust banking subsidiaries is accounted for in accordance with the method stipulated in the “Accounting and Auditing Treatment relating to Adoption of Accounting Standards for Financial Instruments for Banks” (JICPA Industry Audit Committee Report No. 24, February 13, 2002).

The effectiveness of hedging activities for the portfolio hedge transaction for a large volume of small-value monetary claims and liabilities is assessed as follows:

 

  i)

as for hedging activities to offset market fluctuation risks, the effectiveness is assessed by bracketing both the hedged instruments, such as deposits and loans, and the hedging instruments, such as interest-rate swaps, in the same maturity bucket.

 

  ii)

as for hedging activities to fix the cash flows, the effectiveness is assessed based on the correlation between a base interest rate index of the hedged instrument and that of the hedging instrument.

The effectiveness of the individual hedge is assessed based on the comparison of the fluctuation in the market or of cash flows of the hedged instruments with that of the hedging instruments.

 

  (b)

Foreign Exchange Risk

Domestic consolidated banking subsidiaries and some of domestic consolidated trust banking subsidiaries apply the deferred method of hedge accounting to hedge foreign exchange risks associated with various financial assets and liabilities denominated in foreign currencies as stipulated in the “Accounting and Auditing Treatment relating to Adoption of Accounting Standards for Foreign Currency Transactions for Banks” (JICPA Industry Audit Committee Report No. 25, July 29, 2002). The effectiveness of the hedge is assessed by confirming that the amount of the foreign currency position of the hedged monetary claims and liabilities is equal to or larger than that of currency-swap transactions, exchange swap transactions, and similar transactions designated as the hedging instruments of the foreign exchange risk.

In addition to the above methods, these subsidiaries apply the deferred method or the fair-value hedge method to portfolio hedges of the foreign exchange risks associated with investments in subsidiaries and affiliates in foreign currency and Other Securities in foreign currency (except for bonds) identified as hedged items in advance, as long as the amount of foreign currency payables of spot and forward foreign exchange contracts exceeds the amount of acquisition cost of the hedged foreign securities in foreign currency.

 

- 15 -


  (c)

Inter-company Transactions

Inter-company interest rate swaps, currency swaps and similar derivatives among consolidated companies or between trading accounts and other accounts, which are designated as hedges, are not eliminated and related gains and losses are recognized in the statement of income or deferred under hedge accounting, because these inter-company derivatives are executed according to the criteria for appropriate outside third-party cover operations which are treated as hedge transactions objectively in accordance with JICPA Industry Audit Committee Reports No. 24 and 25.

As for certain assets and liabilities of MHFG and its consolidated subsidiaries, the deferred method, the fair-value hedge method or the exceptional accrual method for interest rate swaps are applied.

 

(20)

Scope of Cash and Cash Equivalents on Interim Consolidated Statements of Cash Flows

In the interim consolidated statements of cash flows, Cash and Cash Equivalents consist of cash and due from central banks included in “Cash and Due from Banks” on the interim consolidated balance sheet.

 

(21)

Consumption Taxes and other

With respect to MHFG and its domestic consolidated subsidiaries, Japanese consumption taxes and local consumption taxes are excluded from transaction amounts.

Additional Information

The Board Benefit Trust (“BBT”) Program

Since MHFG operates its business giving due regard to creating value for diverse stakeholders and realizing improved corporate value through the continuous and stable growth of MHFG group pursuant to MHFG’s basic management policy defined under the Mizuho Financial Group’s Corporate Identity, MHFG has introduced a stock compensation program using a trust (the “Program”) that functions as an incentive for each Director, Executive Officer, and Specialist Officer to exert maximum effort in performing his or her duties, and also as consideration for such exertion of effort.

 

(1)

Outline of the Program

The Program has adopted the Board Benefit Trust (“BBT”) framework. MHFG’s shares on the stock market will be acquired through a trust established based on the underlying funds contributed by MHFG, and MHFG’s shares will be distributed to Directors, Executive Officers, and Specialist Officers of MHFG, Mizuho Bank, Ltd., Mizuho Trust & Banking Co., Ltd., and Mizuho Securities Co., Ltd. (the “Company Group”) in accordance with the Rules on Distribution of Shares to be prescribed in advance. The framework consists of the stock compensation program based on the Company Group Officer’s position in their respective company (“Stock Compensation I”) and the stock compensation program based on the performance evaluation of the Company Group (“Stock Compensation II”).

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

Stock Compensation II will be paid in the form of shares of MHFG and will be deferred over three years, which is calculated based on the Company Group’s performance, the performance of organizations (in-house companies and units, etc.) that each Company Group Officer is in charge of and the performance of each Company Group Officer. A system is adopted which enables a decrease or forfeiture of the amount depending on the performance of the company or the individual.

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

Voting rights related to MHFG’s shares belonging to the trust assets under the trust shall not be exercised.

 

- 16 -


(2)

MHFG’s Shares Outstanding in the Trust

MHFG’s shares outstanding in the trust are recognized as Treasury Stock under Net Assets at the carrying amount (excluding the amount of incidental expenses) in the trust. The carrying amount of such Treasury Stock as of September 30, 2018 was ¥3,588 million for 19,018 thousand shares (the carrying amount as of March 31, 2018 was ¥2,424 million for 13,319 thousand shares).

 

- 17 -


Notes to Interim Consolidated Balance Sheet

 

*1.

The total amount of shares and investments in affiliates

 

     (Millions of yen)  
     As of March 31, 2018      As of September 30, 2018  

Shares

          254,828             267,044  

Investments

     557        557  

 

2.

MHFG does not have unsecured loaned securities which the borrowers have the right to sell or repledge.

In certain transactions, MHFG has the right to sell or repledge the following unsecured borrowed securities, securities purchased under resale agreements and securities borrowed with cash collateral.

 

     (Millions of yen)  
     As of March 31, 2018      As of September 30, 2018  

Securities repledged

     12,656,065        12,741,295  

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

     1,048,102        1,251,512  

 

*3.

Loans to Bankrupt Obligors and Non-Accrual Delinquent Loans, which are included in Loans and Bills Discounted, are as follows:

 

     (Millions of yen)  
     As of March 31, 2018      As of September 30, 2018  

Loans to Bankrupt Obligors

     21,271        21,458  

Non-Accrual Delinquent Loans

          332,702             297,276  

Loans to Bankrupt Obligors are loans, excluding loans written-off, on which delinquencies in payment of principal and/or interest have continued for a significant period of time or for some other reason there is no prospect of collecting principal and/or interest (“Non-Accrual Loans”), as per Article 96, Paragraph 1, Item 3, Subsections 1 to 5 or Item 4 of the Corporate Tax Law Enforcement Ordinance (Government Ordinance No. 97, 1965).

Non-Accrual Delinquent Loans represent Non-Accrual Loans other than (i) Loans to Bankrupt Obligors and (ii) loans on which interest payments have been deferred in order to assist or facilitate the restructuring of the obligors.

 

*4.

Balance of Loans Past Due for Three Months or More, which is included in Loans and Bills Discounted, is as follows:

 

     (Millions of yen)  
     As of March 31, 2018      As of September 30, 2018  

Loans Past Due for Three Months or More

                 617                    905  

Loans Past Due for Three Months or More are loans on which payments of principal and/or interest have not been made for a period of three months or more since the next day following the first due date without such payments, and which are not included in Loans to Bankrupt Obligors, or Non-Accrual Delinquent Loans.

 

- 18 -


*5.

Balance of Restructured Loans, which is included in Loans and Bills Discounted, is as follows:

 

     (Millions of yen)  
     As of March 31, 2018      As of September 30, 2018  

Restructured Loans

          240,777             207,697  

Restructured Loans represent loans whose contracts were amended in favor of obligors (e.g. reduction of, or exemption from, stated interest, deferral of interest payments, extension of maturity dates and renunciation of claims) in order to assist or facilitate the restructuring of the obligors. Loans to Bankrupt Obligors, Non-Accrual Delinquent Loans and Loans Past Due for Three Months or More are not included.

 

*6.

Total balance of Loans to Bankrupt Obligors, Non-Accrual Delinquent Loans, Loans Past Due for Three Months or More, and Restructured Loans is as follows:

 

     (Millions of yen)  
     As of March 31, 2018      As of September 30, 2018  

Total

          595,369             527,338  

The amounts given in *3 through *6 above are gross amounts before deduction of amounts for the Reserves for Possible Losses on Loans.

 

*7.

In accordance with “Accounting and Auditing Treatment Relating to Adoption of Accounting Standards for Financial Instruments for Banks” (JICPA Industry Audit Committee Report No. 24, February 13, 2002), bills discounted are accounted for as financing transactions. The banking subsidiaries have rights to sell or pledge these commercial bills, foreign exchange bills purchased and others. The face values of these bills are as follows:

 

     (Millions of yen)  
     As of March 31, 2018      As of September 30, 2018  
       1,405,238          1,701,872  

 

- 19 -


*8.

Breakdown of assets pledged as collateral is as follows:

 

     (Millions of yen)  
     As of March 31, 2018      As of September 30, 2018  

The following assets are pledged as collateral:

     

Trading Assets

     1,590,718        2,118,447  

Securities

     6,712,488        7,600,326  

Loans and Bills Discounted

     4,976,680        4,280,083  
  

 

 

    

 

 

 

Total

     13,279,886        13,998,857  

The following liabilities are collateralized by the above assets:

     

Deposits

     256,027        342,967  

Payables under Repurchase Agreements

     5,518,102        6,003,580  

Guarantee Deposits Received under Securities Lending Transactions

     984,830        1,708,713  

Borrowed Money

     3,524,825        3,481,156  

In addition to the above, the following items are pledged as collateral in connection with the settlement accounts of foreign and domestic exchange transactions or derivatives transactions and others or as a substitute for margins for futures transactions and others:

 

     (Millions of yen)  
     As of March 31, 2018      As of September 30, 2018  

Cash and Due from Banks

     33,434        54,707  

Trading Assets

     53,750        74,377  

Securities

       3,270,531          3,263,266  

Loans and Bills Discounted

     154,190        147,722  

Other Assets includes margins for futures transactions, guarantee deposits, and collateral pledged for financial instruments and others as follows:

 

     (Millions of yen)  
     As of March 31, 2018      As of September 30, 2018  

Margins for Futures Transactions

     140,600        162,835  

Guarantee Deposits

     132,084        132,579  

Collateral Pledged for Financial Instruments and Others

       1,686,720          1,650,139  

 

- 20 -


*9.

Overdraft protection on current accounts and contracts of the commitment line for loans are contracts by which banking subsidiaries are bound to extend loans up to the prearranged amount, at the request of customers, unless the customer is in breach of contract conditions. The unutilized balance of these contracts amounts is as follows:

 

     (Millions of yen)  
     As of March 31, 2018      As of September 30, 2018  

Unutilized balance

     92,936,908        97,315,021  

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

     73,190,124        76,058,424  

Since many of these contracts expire without being exercised, the unutilized balance itself does not necessarily affect future cash flows. A provision is included in many of these contracts that entitles the banking subsidiaries to refuse the execution of loans, or reduce the maximum amount under contracts when there is a change in the financial situation, necessity to preserve a claim or other similar reasons. The banking subsidiaries require collateral such as real estate and securities when deemed necessary at the time the contract is entered into. In addition, they periodically monitor customers’ business conditions in accordance with internally established standards and take necessary measures to manage credit risks such as amendments to contracts.

 

*10.

In accordance with the Land Revaluation Law (Proclamation No. 34 dated March 31, 1998), land used for business operations of domestic consolidated banking subsidiaries was revalued. The applicable income taxes on the entire excess of revaluation are included in Deferred Tax Liabilities for Revaluation Reserve for Land under Liabilities, and the remainder, net of applicable income taxes, is stated as Revaluation Reserve for Land included in Net Assets.

Revaluation date: March 31, 1998

Revaluation method as stated in Article 3, Paragraph 3 of the above law: Land used for business operations was revalued by calculating the value on the basis of the valuation by road rating stipulated in Article 2, Paragraph 4 of the Enforcement Ordinance relating to the Land Revaluation Law (Government Ordinance No. 119 promulgated on March 31, 1998) with reasonable adjustments to compensate for sites with long depth and other factors, and also on the basis of the appraisal valuation stipulated in Paragraph 5.

 

*11.

Accumulated Depreciation of Tangible Fixed Assets

 

     (Millions of yen)  
     As of March 31, 2018      As of September 30, 2018  

Accumulated Depreciation

          879,497             898,450  

 

*12.

Borrowed Money includes subordinated borrowed money with a covenant that performance of the obligation is subordinated to that of other obligations.

 

     (Millions of yen)  
     As of March 31, 2018      As of September 30, 2018  

Subordinated Borrowed Money

          218,000             193,000  

 

- 21 -


*13.

Bonds and Notes includes subordinated bonds.

 

     (Millions of yen)  
     As of March 31, 2018      As of September 30, 2018  

Subordinated Bonds

       2,810,028          3,342,456  

 

14.

The principal amounts of money trusts with contracts indemnifying the principal amounts, which are entrusted to domestic consolidated trust banking subsidiaries, are as follows:

 

     (Millions of yen)  
     As of March 31, 2018      As of September 30, 2018  

Money trusts

       1,470,677          1,534,404  

 

*15.

Liabilities for guarantees on corporate bonds included in “Securities,” which are issued by private placement (Article 2, Paragraph 3 of the Financial Instruments and Exchange Act)

 

     (Millions of yen)  
     As of March 31, 2018      As of September 30, 2018  
       1,309,432          1,367,250  

 

- 22 -


Notes to Interim Consolidated Statement of Income

 

*1.

Other Ordinary Income includes the following:

 

     (Millions of yen)  
     For the six months  ended
September 30, 2017
     For the six months  ended
September 30, 2018
 

Gains on Sales of Stocks

     123,397        181,076  

Reversal of Reserves for Possible

Losses on Loans

     132,487        48,292  

 

*2.

Other Ordinary Expenses includes the following:

 

     (Millions of yen)  
     For the six months  ended
September 30, 2017
     For the six months  ended
September 30, 2018
 

System Migration-related Expenses

      29,110         18,288  

Losses on Write-offs of Loans

     9,744        17,942  

Stock-related Derivatives Expenses

     8,448        17,314  

Losses on Sales of Stocks

     6,432        12,609  

 

*3.

Extraordinary Gains includes the following:

 

     (Millions of yen)  
     For the six months  ended
September 30, 2017
     For the six months  ended
September 30, 2018
 

Gains on Cancellation of Employee

Retirement Benefit Trust

     —          7,448  

Gains on Disposition of Fixed Assets

        2,158           2,820  

 

*4.

Extraordinary Losses is as follows:

 

     (Millions of yen)  
     For the six months  ended
September 30, 2017
     For the six months  ended
September 30, 2018
 

Losses on Impairment of Fixed Assets

     2,375        2,384  

Losses on Disposition of Fixed Assets

        2,013           1,167  

 

- 23 -


Notes to Interim Consolidated Statement of Changes in Net Assets

For the six months ended September 30, 2017

 

1.

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

 

     (Thousands of shares)  
     As of
April 1, 2017
     Increase during
the period
     Decrease during
the period
     As of
September 30, 2017
     Remarks  

Issued Shares

              

Common Stock

     25,386,307        3,337        —          25,389,644        (Note 1
  

 

 

    

 

 

    

 

 

    

 

 

    

Total

     25,386,307        3,337        —          25,389,644     
  

 

 

    

 

 

    

 

 

    

 

 

    

Treasury Stock

              

Common Stock

     19,992        11,979        4,800        27,171        (Note 2
  

 

 

    

 

 

    

 

 

    

 

 

    

Total

     19,992        11,979        4,800        27,171     
  

 

 

    

 

 

    

 

 

    

 

 

    

 

(Notes)     1.    Increases are due to exercise of stock acquisition rights (stock options) (3,337 thousand shares).
    2.        Increases are due to acquisition of treasury stock by BBT trust account (8,130 thousand shares), and repurchase of shares constituting less than one unit and other factors (3,849 thousand shares). Decreases are due to distribution of treasury stock through BBT trust account (3,810 thousand shares), exercise of stock acquisition rights (stock options) (212 thousand shares) and repurchase of shares constituting less than one unit and other factors (778 thousand shares). The number of shares as of September 30, 2017, includes the number of treasury stock held by BBT trust account (13,319 thousand shares).

 

2.

Stock acquisition rights and treasury stock acquisition rights are as follows:

 

Category

  

Breakdown

of stock

acquisition

rights

   Class of shares
to be issued or
transferred upon
exercise of
stock acquisition
rights
     Number of shares to be issued or transferred upon
exercise of stock acquisition rights
(Shares)
    Balance as of
September 30,
2017

(Millions of yen)
    Remarks  
   As of
April 1,
2017
    Increase
during the
period
    Decrease
during the
period
    As of
September 30,
2017
 

MHFG

   Stock acquisition rights (Treasury stock acquisition rights)      —         

—  

(—  

 

   

—  

(—  

 

   

—  

(—  

 

   

—  

(—  

 

   

—  

(—  

 

 
   Stock acquisition rights as stock option             —         1,173    

Consolidated subsidiaries (Treasury stock acquisition rights)

               —        

—  

(—  

 

 
       

 

 

   

Total

            —        

1,173

(—  

 

 
    

 

 

   

 

- 24 -


3.

Cash dividends distributed by MHFG are as follows:

 

(1)

Cash dividends paid during the six months ended September 30, 2017

 

Resolution

 

Type

 

Cash Dividends

(Millions of yen)

 

Cash
Dividends

per Share

(Yen)

 

Record Date

 

Effective Date

May 15, 2017

 

The Board of Directors

  Common Stock     95,173   3.75   March 31, 2017   June 5, 2017

 

(Note)

Cash dividends based on the resolution of the Board of Directors held on May 15, 2017 include ¥33 million of cash dividends on treasury stock held by BBT trust account.

 

(2)

Cash dividends with record dates falling in the six months ended September 30, 2017 and effective dates coming after the end of the period

 

Resolution

 

Type

 

Cash Dividends

(Millions of yen)

 

Resource
of
Dividends

 

Cash

Dividends

per Share

(Yen)

 

Record
Date

 

Effective
Date

November 13, 2017   Common Stock   95,186   Retained Earnings   3.75   September 30, 2017   December 5, 2017

 

The Board of Directors

 

(Note)

Cash dividends based on the resolution of the Board of Directors held on November 13, 2017 include ¥49 million of cash dividends on treasury stock held by BBT trust account.

 

- 25 -


For the six months ended September 30, 2018

 

1.

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

 

     (Thousands of shares)  
     As of
April 1, 2018
     Increase during
the period
     Decrease during
the period
     As of
September 30, 2018
     Remarks  

Issued Shares

              

Common Stock

     25,389,644        2,854        —          25,392,498        (Note 1
  

 

 

    

 

 

    

 

 

    

 

 

    

Total

     25,389,644        2,854        —          25,392,498     
  

 

 

    

 

 

    

 

 

    

 

 

    

Treasury Stock

              

Common Stock

     24,829        14,542        5,057        34,314        (Note 2
  

 

 

    

 

 

    

 

 

    

 

 

    

Total

     24,829        14,542        5,057        34,314     
  

 

 

    

 

 

    

 

 

    

 

 

    

 

(Notes)     1.   Increases are due to exercise of stock acquisition rights (stock options) (2,854 thousand shares).
    2.       Increases are due to acquisition of treasury stock by BBT trust account (10,676 thousand shares), and repurchase of shares constituting less than one unit and other factors (3,865 thousand shares). Decreases are due to distribution and sale of treasury stock through BBT trust account (4,977 thousand shares), exercise of stock acquisition rights (stock options) (79 thousand shares) and other factors. The number of shares as of September 30, 2018, includes the number of treasury stock held by BBT trust account (19,018 thousand shares).

 

2.

Stock acquisition rights and treasury stock acquisition rights are as follows:

 

Category

  

Breakdown

of stock

acquisition

rights

   Class of shares
to be issued or

transferred upon
exercise of
stock acquisition
rights
     Number of shares to be issued or transferred  upon
exercise of stock acquisition rights (Shares)
    Balance as  of
September 30,
2018

(Millions of yen)
    Remarks  
   As of
April 1,
2018
    Increase
during the
period
    Decrease
during the
period
    As of
September 30,
2018
 

MHFG

   Stock acquisition rights (Treasury stock acquisition rights)      —         

—  

(—  

 

   

—  

(—  

 

   

—  

(—  

 

   

—  

(—  

 

   

—  

(—  

 

 
   Stock acquisition rights as stock option             —         714    

Consolidated subsidiaries (Treasury stock acquisition rights)

               —        

—  

(—  

 

 
       

 

 

   

Total

            —        

714

(—  

 

 
    

 

 

   

 

- 26 -


3.

Cash dividends distributed by MHFG are as follows:

 

(1)

Cash dividends paid during the six months ended September 30, 2018

 

Resolution

 

Type

 

Cash Dividends

(Millions of yen)

 

Cash
Dividends

per Share

(Yen)

 

Record Date

 

Effective Date

May 15, 2018

 

The Board of Directors

  Common Stock     95,186   3.75   March 31, 2018   June 4, 2018

 

(Note)

Cash dividends based on the resolution of the Board of Directors held on May 15, 2018 include ¥49 million of cash dividends on treasury stock held by BBT trust account.

 

(2)

Cash dividends with record dates falling in the six months ended September 30, 2018 and effective dates coming after the end of the period

 

Resolution

 

Type

 

Cash Dividends

(Millions of yen)

 

Resource of
Dividends

 

Cash
Dividends

per Share

(Yen)

 

Record

Date

 

Effective Date

November 14, 2018

 

The Board of Directors

  Common Stock   95,197   Retained Earnings   3.75   September 30, 2018   December 6, 2018

 

(Note)

Cash dividends based on the resolution of the Board of Directors held on November 14, 2018 include ¥71 million of cash dividends on treasury stock held by BBT trust account.

Notes to Interim Consolidated Statement of Cash Flows

 

*1.

Cash and Cash Equivalents at the end of the period on the Interim Consolidated Statement of Cash Flows reconciles to Cash and Due from Banks on the Interim Consolidated Balance Sheet as follows:

 

     (Millions of yen)  
     For the six months  ended
September 30, 2017
     For the six months  ended
September 30, 2018
 

Cash and Due from Banks

     50,982,819        46,579,445  

Due from Banks excluding central banks

     (1,387,806      (1,375,577
  

 

 

    

 

 

 

Cash and Cash Equivalents

     49,595,013        45,203,867  
  

 

 

    

 

 

 

 

- 27 -


Lease Transactions

 

1.

Finance Leases (Lessees)

Finance lease transactions that do not transfer ownership:

 

  1)

Lease Assets:

 

  (a)

Tangible fixed assets: mainly equipment

 

  (b)

Intangible fixed assets: software

 

  2)

The method for computing the amount of depreciation is described in “4. Standards of Accounting Method (5) Depreciation of Fixed Assets.”

 

2.

Operating Leases

The future lease payments subsequent to the end of the fiscal year for non-cancelable operating lease transactions are summarized as follows:

 

(1)

Lessees:

 

     (Millions of yen)  
     As of March 31, 2018      As of September 30, 2018  

Due in One Year or Less

     51,996        51,499  

Due after One Year

     193,996        181,418  
  

 

 

    

 

 

 

Total

     245,992        232,918  
  

 

 

    

 

 

 

 

(2)

Lessors:

 

     (Millions of yen)  
     As of March 31, 2018      As of September 30, 2018  

Due in One Year or Less

     632        549  

Due after One Year

     7,267        6,551  
  

 

 

    

 

 

 

Total

         7,899            7,100  
  

 

 

    

 

 

 

 

- 28 -


Financial Instruments

Matters relating to fair value of financial instruments and others

The following are the interim consolidated balance sheet amounts (the consolidated balance sheet amounts), fair values and differences between them. Unlisted stocks and others, the fair values of which are extremely difficult to determine, are excluded from the table below (see (Note 2)).

As of March 31, 2018

 

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

(1)   Cash and Due from Banks (*1)

     47,723,757       47,723,757        —    

(2)   Call Loans and Bills Purchased (*1)

     714,870       714,870        —    

(3)   Receivables under Resale Agreements

     8,080,873       8,080,873        —    

(4)   Guarantee Deposits Paid under Securities Borrowing Transactions

     4,350,527       4,350,527        —    

(5)   Other Debt Purchased (*1)

     2,713,345       2,713,347        1  

(6)   Trading Assets

       

     Trading Securities

     5,188,400       5,188,400        —    

(7)   Money Held in Trust (*1)

     336,203       336,203        —    

(8)   Securities

       

     Bonds Held to Maturity

     2,515,830       2,521,846        6,016  

     Other Securities

     31,103,130       31,103,130        —    

(9)   Loans and Bills Discounted

     79,421,473       

     Reserves for Possible Losses on Loans (*1)

     (275,439     
  

 

 

   

 

 

    

 

 

 
     79,146,034       80,053,839        907,804  
  

 

 

   

 

 

    

 

 

 

Total Assets

     181,872,972       182,786,795        913,822  
  

 

 

   

 

 

    

 

 

 

(1)   Deposits

     125,081,233       125,063,500        (17,733

(2)   Negotiable Certificates of Deposit

     11,382,590       11,382,089        (500

(3)   Call Money and Bills Sold

     2,105,293       2,105,293        —    

(4)   Payables under Repurchase Agreements

     16,656,828       16,656,828        —    

(5)   Guarantee Deposits Received under Securities Lending Transactions

     1,566,833       1,566,833        —    

(6)   Trading Liabilities

       

     Securities Sold, Not yet Purchased

     3,185,101       3,185,101        —    

(7)   Borrowed Money

     4,896,218       4,886,962        (9,256

(8)   Bonds and Notes

     7,544,256       7,591,266        47,009  

(9)   Due to Trust Accounts

     4,733,131       4,733,131        —    
  

 

 

   

 

 

    

 

 

 

Total Liabilities

     177,151,488       177,171,007        19,519  
  

 

 

   

 

 

    

 

 

 

 

- 29 -


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

Derivative Transactions (*2)

       

Derivative Transactions not Qualifying for Hedge Accounting

     267,784       

Derivative Transactions Qualifying for Hedge Accounting

     234,783       

Reserves for Derivative Transactions (*1)

     (1,355     
  

 

 

   

 

 

    

 

 

 

Total Derivative Transactions

            501,212              501,212               —     
  

 

 

   

 

 

    

 

 

 

 

(*1)

General and specific reserves for possible losses on loans relevant to Loans and Bills Discounted and reserves for derivative transactions are excluded. Reserves for Cash and Due from Banks, Call Loans and Bills Purchased, Other Debt Purchased, Money Held in Trust and others are directly written off against the consolidated balance sheet amount due to immateriality.

(*2)

Derivative Transactions recorded in Trading Assets, Trading Liabilities, Derivatives other than for Trading Assets, Derivatives other than for Trading Liabilities, and others are presented as a lump sum.

Net claims and debts that arose from derivative transactions are presented on a net basis, and the item that is net debts in total is presented in brackets.

 

- 30 -


As of September 30, 2018

 

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

(1)   Cash and Due from Banks (*1)

     46,578,347       46,578,347        —    

(2)   Call Loans and Bills Purchased (*1)

     336,133       336,133        —    

(3)   Receivables under Resale Agreements

     10,275,017       10,275,017        —    

(4)   Guarantee Deposits Paid under Securities Borrowing Transactions

     2,709,640       2,709,640        —    

(5)   Other Debt Purchased (*1)

     2,577,405       2,577,407        1  

(6)   Trading Assets

       

     Trading Securities

     6,852,713       6,852,713        —    

(7)   Money Held in Trust (*1)

     408,326       408,326        —    

(8)   Securities

       

     Bonds Held to Maturity

     2,135,128       2,132,276        (2,852

     Other Securities

     32,257,147       32,257,147        —    

(9)   Loans and Bills Discounted

     80,516,017       

     Reserves for Possible Losses on Loans (*1)

     (218,806     
  

 

 

   

 

 

    

 

 

 
     80,297,210       81,194,514        897,303  
  

 

 

   

 

 

    

 

 

 

Total Assets

     184,427,071       185,321,524        894,453  
  

 

 

   

 

 

    

 

 

 

(1)   Deposits

     120,819,088       120,797,489        (21,599

(2)   Negotiable Certificates of Deposit

     12,500,325       12,499,313        (1,011

(3)   Call Money and Bills Sold

     5,736,053       5,736,053        —    

(4)   Payables under Repurchase Agreements

     17,488,448       17,488,448        —    

(5)   Guarantee Deposits Received under Securities Lending Transactions

     1,838,150       1,838,150        —    

(6)   Trading Liabilities

       

     Securities Sold, Not yet Purchased

     2,807,925       2,807,925        —    

(7)   Borrowed Money

     4,817,339       4,809,018        (8,321

(8)   Bonds and Notes

     8,696,783       8,697,836        1,053  

(9)   Due to Trust Accounts

     4,725,740       4,725,740        —    
  

 

 

   

 

 

    

 

 

 

Total Liabilities

     179,429,854       179,399,976        (29,878
  

 

 

   

 

 

    

 

 

 

 

- 31 -


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

Derivative Transactions (*2)

       

Derivative Transactions not Qualifying for Hedge Accounting

     493,414       

Derivative Transactions Qualifying for Hedge Accounting

     39,104       

Reserves for Derivative Transactions (*1)

     (1,163     
  

 

 

   

 

 

    

 

 

 

Total Derivative Transactions

            531,355              531,355               —     
  

 

 

   

 

 

    

 

 

 

 

(*1)

General and specific reserves for possible losses on loans relevant to Loans and Bills Discounted and reserves for derivative transactions are excluded. Reserves for Cash and Due from Banks, Call Loans and Bills Purchased, Other Debt Purchased, Money Held in Trust and others are directly written off against the interim consolidated balance sheet amount due to immateriality.

(*2)

Derivative Transactions recorded in Trading Assets, Trading Liabilities, Derivatives other than for Trading Assets, Derivatives other than for Trading Liabilities, and others are presented as a lump sum.

Net claims and debts that arose from derivative transactions are presented on a net basis, and the item that is net debts in total is presented in brackets.

 

- 32 -


(Note 1)

Calculation method of fair value of financial instruments

Assets

 

  (1)

Cash and Due from Banks

For Due from Banks which have no maturity, since fair values of these items approximate book values, we deem the book values to be fair values. For Due from Banks which have maturity, since contractual terms of these items are mainly short (i.e., within six months) and fair values of these items approximate book values, we deem the book values to be fair values.

 

  (2)

Call Loans and Bills Purchased, (3) Receivables under Resale Agreements and (4) Guarantee Deposits Paid under Securities Borrowing Transactions

Since contractual terms of these items are mainly short (i.e., within six months) and fair values of these items approximate book values, we deem the book values to be fair values.

 

  (5)

Other Debt Purchased

Fair values of Other Debt Purchased are based on the values deemed as market prices obtained by the reasonable estimate such as those obtained from brokers and financial information vendors.

 

  (6)

Trading Assets

Fair values of securities held for trading, such as bonds held for trading, are based on the market prices and others.

 

  (7)

Money Held in Trust

As to securities managed as trust assets in a directed money trust for separate investment with the management of securities as its primary purpose, fair values of these items are calculated using the method stated in (8). For other Money Held in Trust, since fair values of these items approximate book values, we deem the book values to be fair values. The notes to Money Held in Trust based on holding purpose are stated in “Money Held in Trust.”

 

  (8)

Securities

Fair values of stocks are based on the prices on securities exchanges, and those of bonds and others are based on the market prices, valuations obtained from brokers and information vendors and others. Fair values of investment trusts are based on the disclosed net asset value and others. Fair values of private placement bonds are calculated by discounting the total amount of principal and interest and others at interest rates based on the discount rate reflecting expected loss and various risk factors by categories according to the internal ratings and terms.

Fair values of securitized products are based on valuations obtained from brokers and others, and reasonably calculated prices based on the reasonable estimates of our management. In deriving reasonably calculated prices based on the reasonable estimates of our management mentioned above, we used the discounted cash flow method. The price decision variables include default rates, recovery rates, pre-payment rates, and discount rates.

Fair values of Floating-rate Japanese Government Bonds, according to our determination that current market prices may not reflect the fair value, are based on the reasonably calculated prices as book value as of September 30, 2018 (as of March 31, 2018). In deriving the reasonably calculated prices, we used the discount cash flow method as well as other methods. The price decision variables include the yield of 10-year Japanese Government Bonds and the volatilities of interest rate swap options for 10-year Japanese Government Bonds as underlying assets.

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

 

  (9)

Loans and Bills Discounted

Fair values of Loans and Bills Discounted are calculated by the total amount of principal and interest and others at interest rates based on the discount rate reflecting expected loss and various risk factors by categories according to the types, internal ratings and terms of the Loans and Bills Discounted. In addition, as to claims against bankrupt obligors, substantially bankrupt obligors and intensive control obligors, since the estimated amount of bad debts is calculated based on the present value of the expected future cash flows or the estimated amounts that we would be able to collect from collateral and guarantees, fair values approximate the amount of Debentures and others minus the amount of Reserves for Possible Losses on Loans in the interim consolidated balance sheet (the consolidated balance sheet) as of the interim consolidated balance sheet date (the consolidated balance sheet date) and we thus deem such amount to be fair values.

Of the Loans and Bills Discounted, for those without a fixed maturity due to loan characteristics such as limiting loans to within the value of pledged assets, we deem book values to be fair values since fair values are expected to approximate book values based on the estimated loan periods, interest rates and other conditions.

 

- 33 -


Liabilities

 

  (1)

Deposits (2) Negotiable Certificates of Deposit

For demand deposits, we deem the payment amounts required on the interim consolidated balance sheet date (the consolidated balance sheet date) (i.e., book values) to be fair values. In addition, fair values of fixed deposits and negotiable certificates of deposits are calculated by classifying them based on their terms and by discounting the future cash flows. The discount rates used in such calculations are the interest rates. Since fair values of those whose deposit terms are short (i.e., within six months) approximate book values, we mainly deem the book values to be fair values.

 

  (3)

Call Money and Bills Sold, (4) Payables under Repurchase Agreements and (5) Guarantee Deposits Received under Securities Lending Transactions

Since contractual terms of these financial instruments are mainly short (i.e., within six months) and fair values approximate book values, we deem the book values to be fair values.

 

  (6)

Trading Liabilities

Fair values of Securities Sold, Not yet Purchased in Trading Liabilities are based on the market prices and others.

 

  (7)

Borrowed Money

Fair values of Borrowed Money are calculated mainly by discounting the total amount of the principal and interest of such Borrowed Money classified by certain period at the interest rates considered to be applicable to similar loans.

 

  (8)

Bonds and Notes

Fair values of Bonds and Notes issued by MHFG and its consolidated subsidiaries are based on the market prices for Bonds and Notes which have market prices, and calculated by discounting the total amount of principal and interest by the interest rates considered to be applicable to similar Bonds and Notes for those which do not have market prices.

 

  (9)

Due to Trust Accounts

Due to Trust Accounts of consolidated trust banking subsidiaries is used for transactions in which consolidated trust banking subsidiaries manage fund entrusted to them in bank accounts of consolidated trust banking subsidiaries. As the purpose is considered to approximate demand deposit, we deem the book values to be fair values.

Derivative Transactions

Derivative Transactions are stated in “Derivatives Information.”

 

(Note 2)

Interim consolidated balance sheet (consolidated balance sheet) amounts of financial instruments whose fair values are deemed to be extremely difficult to determine are indicated below, and are not included in “Assets (7) Money Held in Trust” and “Assets (8) Other Securities” in fair value information of financial instruments.

 

(Millions of yen)

 

Category

   As of March 31, 2018      As of September 30, 2018  

(i) Unlisted Stocks (*1)

     204,081      210,705

(ii)  Investments in Partnerships and others (*2)

     104,569      104,679

(iii)  Other

     1,263        1,434  
  

 

 

    

 

 

 

Total (*3)

     309,913        316,819  
  

 

 

    

 

 

 

 

  (*1)

We do not treat Unlisted Stocks as being subject to disclosure of fair values as there are no market prices and they are deemed extremely difficult to determine fair values.

  (*2)

Of the Investments in Partnerships and others, we do not treat those whose assets consist of unlisted stocks and other financial instruments that are deemed extremely difficult to determine fair values as being subject to disclosure of fair values.

  (*3)

During the fiscal year ended March 31, 2018, the amount of impairment (devaluation) was ¥3,794 million on a consolidated basis.

      

During the six months ended September 30, 2018, the amount of impairment (devaluation) was ¥673 million on a consolidated basis.

 

- 34 -


Securities

In addition to “Securities” on the interim consolidated balance sheet (the consolidated balance sheet), Negotiable Certificates of Deposit in “Cash and Due from Banks,” certain items in “Other Debt Purchased” and certain items in “Other Assets” are also included.

 

1.

Bonds Held to Maturity

As of March 31, 2018

 

(Millions of yen)

 
    

Type

   Consolidated Balance
Sheet Amount
     Fair Value      Difference  

Bonds Whose Fair Values Exceed the Consolidated Balance Sheet Amount

   Japanese Government Bonds      1,959,909        1,984,382        24,472  
   Foreign Bonds      —          —          —    
     

 

 

    

 

 

    

 

 

 
  

Sub-total

     1,959,909            1,984,382             24,472  
     

 

 

    

 

 

    

 

 

 

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

   Japanese Government Bonds      —          —          —    
   Foreign Bonds      555,920        537,464        (18,455
     

 

 

    

 

 

    

 

 

 
  

Sub-total

     555,920        537,464        (18,455
     

 

 

    

 

 

    

 

 

 

Total

     2,515,830        2,521,846        6,016  
     

 

 

    

 

 

    

 

 

 

 

As of September 30, 2018

 

           

(Millions of yen)

 
    

Type

   Interim Consolidated
Balance  Sheet Amount
     Fair Value      Difference  

Bonds Whose Fair Values Exceed the Interim Consolidated Balance Sheet Amount

   Japanese Government Bonds      1,599,900        1,619,318        19,417  
   Foreign Bonds      —          —          —    
     

 

 

    

 

 

    

 

 

 
  

Sub-total

     1,599,900             1,619,318             19,417  
     

 

 

    

 

 

    

 

 

 

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

   Japanese Government Bonds      —          —          —    
   Foreign Bonds      535,228        512,958        (22,269
     

 

 

    

 

 

    

 

 

 
  

Sub-total

     535,228        512,958        (22,269
     

 

 

    

 

 

    

 

 

 

Total

     2,135,128        2,132,276        (2,852
     

 

 

    

 

 

    

 

 

 

 

- 35 -


2.

Other Securities

As of March 31, 2018

 

(Millions of yen)

 
    

Type

   Consolidated Balance
       Sheet Amount      
     Acquisition Cost      Difference  

Other Securities Whose Consolidated Balance Sheet Amount Exceeds Acquisition Cost

   Stocks      3,402,250        1,351,285        2,050,964  
   Bonds      7,512,070        7,474,247        37,822  
  

Japanese Government Bonds

     5,786,004        5,775,747        10,257  
  

Japanese Local Government Bonds

     151,508        148,605        2,903  
  

Short-term Bonds

     —          —          —    
  

Japanese Corporate Bonds

     1,574,556        1,549,894        24,662  
   Other      3,346,841        3,176,946        169,894  
  

Foreign Bonds

     2,641,061        2,629,413        11,647  
  

Other Debt Purchased

     74,171        72,973        1,198  
  

Other

     631,608        474,559        157,048  
     

 

 

    

 

 

    

 

 

 
  

Sub-total

     14,261,162         12,002,479        2,258,682  
     

 

 

    

 

 

    

 

 

 

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

   Stocks      179,989        213,582        (33,592
   Bonds      9,023,533        9,055,945        (32,411
  

Japanese Government Bonds

     7,546,089        7,555,729        (9,640
  

Japanese Local Government Bonds

     87,824        88,105        (280
  

Short-term Bonds

     99        99        —    
  

Japanese Corporate Bonds

     1,389,519        1,412,009        (22,489
   Other      8,116,452        8,354,904        (238,451
  

Foreign Bonds

     5,688,079        5,865,823        (177,743
  

Other Debt Purchased

     112,361        112,641        (279
  

Other

     2,316,011        2,376,439        (60,428
     

 

 

    

 

 

    

 

 

 
  

Sub-total

     17,319,975        17,624,431        (304,455
     

 

 

    

 

 

    

 

 

 

Total

     31,581,138        29,626,911        1,954,226  
     

 

 

    

 

 

    

 

 

 

 

(Note)

Unrealized Gains (Losses) includes ¥28,273 million which was recognized in the statement of income by applying the fair-value hedge method.

 

- 36 -


As of September 30, 2018

 

(Millions of yen)

 
    

Type

   Interim Consolidated
Balance  Sheet Amount
     Acquisition Cost      Difference  

Other Securities Whose Interim Consolidated Balance Sheet Amount Exceeds Acquisition Cost

   Stocks      3,341,596        1,287,972        2,053,623  
   Bonds      6,301,096        6,278,931        22,165  
  

Japanese Government Bonds

     4,863,256        4,861,754        1,501  
  

Japanese Local Government Bonds

     64,339        63,425        913  
  

Short-term Bonds

     —          —          —    
  

Japanese Corporate Bonds

     1,373,500        1,353,750        19,749  
   Other      3,683,982        3,512,889        171,092  
  

Foreign Bonds

     2,504,280        2,497,738        6,541  
  

Other Debt Purchased

     44,520        43,657        863  
  

Other

     1,135,181        971,493        163,687  
     

 

 

    

 

 

    

 

 

 
  

Sub-total

     13,326,674        11,079,793        2,246,881  
     

 

 

    

 

 

    

 

 

 

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

   Stocks      175,640        213,321        (37,680
   Bonds      10,403,691        10,452,604        (48,913
  

Japanese Government Bonds

     8,587,167        8,609,261        (22,093
  

Japanese Local Government Bonds

     176,115        176,767        (651
  

Short-term Bonds

     99        99        —    
  

Japanese Corporate Bonds

     1,640,308        1,666,475        (26,167
   Other      8,816,026        9,104,809        (288,782
  

Foreign Bonds

     6,898,242        7,127,883        (229,641
  

Other Debt Purchased

     103,185        103,619        (434
  

Other

     1,814,598        1,873,305        (58,707
     

 

 

    

 

 

    

 

 

 
  

Sub-total

     19,395,358        19,770,735        (375,376
     

 

 

    

 

 

    

 

 

 

Total

        32,722,033        30,850,528        1,871,505  
     

 

 

    

 

 

    

 

 

 

 

(Note)

Unrealized Gains (Losses) includes ¥26,133 million which was recognized in the statement of income by applying the fair-value hedge method.

 

- 37 -


3.

Impairment (“Devaluation”) of Securities

Certain Securities other than Trading Securities (excluding Securities for which it is deemed to be extremely difficult to determine the fair value) are devalued to the fair value, and the difference between the acquisition cost and the fair value is treated as the loss for the six months ended September 30, 2018 (the fiscal year ended March 31, 2018) (impairment (devaluation)), if the fair value (primarily the closing market price as of September 30, 2018 (March 31, 2018)) has significantly deteriorated compared with the acquisition cost (including amortized cost), and unless it is deemed that there is a possibility of a recovery in the fair value.

The amount of impairment (devaluation) for the fiscal year ended March 31, 2018 was ¥3,424 million.

The amount of impairment (devaluation) for the six months ended September 30, 2018 was ¥1,456 million.

The criteria for determining whether a security’s fair value has “significantly deteriorated” are outlined as follows:

 

   

Securities whose fair value is 50% or less of the acquisition cost

 

   

Securities whose fair value exceeds 50% but is 70% or less of the acquisition cost and the quoted market price maintains a certain level or lower

 

- 38 -


Money Held in Trust

 

1.

Money Held in Trust Held to Maturity

There was no Money Held in Trust held to maturity.

 

2.

Other in Money Held in Trust (other than for investment purposes and held to maturity purposes)

As of March 31, 2018

 

     (Millions of yen)  
     Consolidated
Balance  Sheet
Amount
     Acquisition Cost      Difference      Other in Money
Held in Trust
Whose
Consolidated
Balance Sheet
Amount Exceeds
Acquisition Cost
     Other in Money
Held in Trust
Whose
Consolidated
Balance Sheet
Amount Does  Not
Exceed
Acquisition Cost
 

Other in Money Held in Trust

     3,199        3,199        —          —          —    

 

(Note)

“Other in Money Held in Trust Whose Consolidated Balance Sheet Amount Exceeds Acquisition Cost” and “Other in Money Held in Trust Whose Consolidated Balance Sheet Amount Does Not Exceed Acquisition Cost” are components of “Difference.”

As of September 30, 2018

 

     (Millions of yen)  
     Interim
Consolidated
Balance Sheet
Amount
     Acquisition Cost      Difference      Other in Money
Held in Trust
Whose Interim
Consolidated
Balance Sheet
Amount Exceeds
Acquisition Cost
     Other in Money
Held in Trust
Whose Interim
Consolidated
Balance Sheet
Amount Does  Not
Exceed
Acquisition Cost
 

Other in Money Held in Trust

     3,815        3,815        —          —          —    

 

(Note)

“Other in Money Held in Trust Whose Interim Consolidated Balance Sheet Amount Exceeds Acquisition Cost” and “Other in Money Held in Trust Whose Interim Consolidated Balance Sheet Amount Does Not Exceed Acquisition Cost” are components of “Difference.”

 

- 39 -


Unrealized Gains (Losses) on Other Securities

Details of Unrealized Gains (Losses) on Other Securities on the interim consolidated balance sheet (consolidated balance sheet) are as follows:

As of March 31, 2018

 

     (Millions of yen)  
     Amount  

Difference between Acquisition Cost and Fair Value

     1,925,837  

Other Securities

     1,925,837  

(–) Deferred Tax Liabilities

     518,090  

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

     1,407,747  

(–) Amount Corresponding to Non-controlling Interests

     20,790  

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

     5,436  
  

 

 

 

Net Unrealized Gains (Losses) on Other Securities

     1,392,392  
  

 

 

 

 

(Notes)

     1.      The difference between acquisition cost and fair value excludes ¥28,273 million (gains) which was recognized in the statement of income for the fiscal year ended March 31, 2018 by applying the fair-value hedge method.
    
2.
 
   “Other Securities” includes translation differences regarding securities which do not have readily determinable fair value.

As of September 30, 2018

 

     (Millions of yen)  
     Amount  

Difference between Acquisition Cost and Fair Value

     1,845,221  

Other Securities

     1,845,221  

(–) Deferred Tax Liabilities

     496,364  

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

     1,348,856  

(–) Amount Corresponding to Non-controlling Interests

     19,222  

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

     5,899  
  

 

 

 

Net Unrealized Gains (Losses) on Other Securities

     1,335,533  
  

 

 

 

 

(Notes)

     1.      The difference between acquisition cost and fair value excludes ¥26,133 million (gains) which was recognized in the statement of income for six months ended September 30, 2018 by applying the fair-value hedge method.
     2.      “Other Securities” includes translation differences regarding securities which do not have readily determinable fair value.

 

- 40 -


Derivatives Information

Derivative Transactions not Qualifying for Hedge Accounting

With regard to derivative transactions not qualifying for hedge accounting, contract value or contractual principal equivalents, fair values and unrealized gains (losses), and fair value calculation method by type of transaction as of the interim consolidated balance sheet date (consolidated balance sheet date) are as follows. Contract value amounts do not indicate the market risk related to derivative transactions.

 

(1)

Interest Rate-Related Transactions

As of March 31, 2018

 

(Millions of yen)

 

Classification

  

Type

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

Listed

   Futures                                                                                                                               
  

Sold

     7,629,009        2,781,286        24,873       24,873  
  

Bought

     7,382,738        2,527,389        (26,372     (26,372
   Options           
  

Sold

     148,802        38,606        (157     119  
  

Bought

     318,186        —          715       22  

Over-the-Counter

   FRAs           
  

Sold

     29,881,631        657,637        (6,103     (6,103
  

Bought

     28,470,832        641,350        4,272       4,272  
   Swaps           
  

Receive Fixed / Pay Float

     408,239,583        335,944,031        3,331,370       3,331,370  
  

Receive Float / Pay Fixed

     404,255,318        328,525,087        (3,350,175     (3,350,175
  

Receive Float / Pay Float

     89,307,829        68,275,480        42,651       42,651  
  

Receive Fixed / Pay Fixed

     613,586        556,686        5,675       5,675  
   Options           
  

Sold

     6,348,557        4,448,904        (20,162     (20,162
  

Bought

     3,925,710        2,669,122        19,766       19,766  

Inter-Company or Internal Transactions

   Swaps           
  

Receive Fixed / Pay Float

     5,802,848        5,629,482        (42,404     (42,404
  

Receive Float / Pay Fixed

     10,811,184        9,824,803        114,074       114,074  
     

 

 

    

 

 

    

 

 

   

 

 

 

Total

     —          —          98,024       97,607  
     

 

 

    

 

 

    

 

 

   

 

 

 

 

(Notes)   1.    The above transactions are marked to market, and changes in unrealized gains (losses) are included in the consolidated statement of income.
  2.    Fair values of listed contracts are based on the closing prices of the Tokyo Financial Exchange and others.
     Fair values of over-the-counter contracts and inter-company or internal transactions are based on the discounted value of future cash flows, option pricing models and others.

 

- 41 -


As of September 30, 2018

 

(Millions of yen)

 

Classification

  

Type

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

Listed

   Futures                                                                                                                               
  

Sold

     7,736,447        2,737,357        29,094       29,094  
  

Bought

     6,904,377        2,702,031        (29,366     (29,366
   Options           
  

Sold

     423,607        97,635        (209     57  
  

Bought

     493,419        95,643        373       120  

Over-the-Counter

   FRAs           
  

Sold

     29,556,250        379,230        3,755       3,755  
  

Bought

     27,798,991        196,607        (1,496     (1,496
   Swaps           
  

Receive Fixed / Pay Float

     434,433,970        353,413,223        1,928,917       1,928,917  
  

Receive Float / Pay Fixed

     429,762,808        347,523,064        (1,864,964     (1,864,964
  

Receive Float / Pay Float

     92,264,071        69,403,819        45,270       45,270  
  

Receive Fixed / Pay Fixed

     563,411        503,951        3,264       3,264  
   Options           
  

Sold

     6,870,878        4,951,226        (3,347     (3,347
  

Bought

     4,553,467        2,774,200        15,728       15,728  

Inter-Company or Internal Transactions

   Swaps           
  

Receive Fixed / Pay Float

     6,522,682        6,379,184        (46,233     (46,233
  

Receive Float / Pay Fixed

     11,737,011        10,473,625        136,407       136,407  
     

 

 

    

 

 

    

 

 

   

 

 

 

Total

     —          —          217,192       217,206  
     

 

 

    

 

 

    

 

 

   

 

 

 

 

(Notes)   1.    The above transactions are marked to market, and changes in unrealized gains (losses) are included in the interim consolidated statement of income.
  2.    Fair values of listed contracts are based on the closing prices of the Tokyo Financial Exchange and others.
     Fair values of over-the-counter contracts and inter-company or internal transactions are based on the discounted value of future cash flows, option pricing models and others.

 

- 42 -


(2)

Currency-Related Transactions

As of March 31, 2018

 

(Millions of yen)

 

Classification

  

Type

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

Listed

   Futures                                                                                                                               
  

Sold

     21,239        1,860        —         —    
  

Bought

     92,245        22,828        —         —    

Over-the-Counter

   Swaps      49,506,179        34,820,751        245,294       164,945  
   Forwards           
  

Sold

     67,299,060        2,966,015        537,765       537,765  
  

Bought

     30,337,434        1,229,813        (469,341     (469,341
   Options           
  

Sold

     2,451,245        1,087,293        (39,530     14,894  
  

Bought

     2,308,666        919,460        66,225       8,218  

Inter-Company or Internal Transactions

   Swaps      3,190,555        2,362,942        (250,755     18,009  
   Forwards           
  

Bought

     165,472        —          (2,090     (2,090
     

 

 

    

 

 

    

 

 

   

 

 

 

Total

     —          —          87,568       272,402  
     

 

 

    

 

 

    

 

 

   

 

 

 

 

(Notes)    1.    The above transactions are marked to market, and changes in unrealized gains (losses) are included in the consolidated statement of income.
   2.    Fair values of listed contracts are based on the closing prices of the Tokyo Financial Exchange and others.
      Fair values of over-the-counter contracts and inter-company or internal transactions are based on the discounted value of future cash flows, option pricing models and others.

 

- 43 -


As of September 30, 2018

 

(Millions of yen)

 

Classification

  

Type

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

Listed

   Futures                                                                                                                               
  

Sold

     11,917        330        —         —    
  

Bought

     60,894        17,143        —         —    

Over-the-Counter

   Swaps      51,268,630        36,972,762        200,199       169,066  
   Forwards           
  

Sold

     58,645,843        2,760,872        (654,038     (654,038
  

Bought

     31,960,052        1,218,971        667,610       667,610  
   Options           
  

Sold

     3,159,199        1,165,017        (43,337     157  
  

Bought

     3,271,538        989,013        59,965       9,104  

Inter-Company or Internal Transactions

   Swaps      2,807,868        2,298,720        (84,738     17,026  
   Forwards           
  

Bought

     10,607        —          410       410  
     

 

 

    

 

 

    

 

 

   

 

 

 

Total

     —          —          146,072       209,338  
     

 

 

    

 

 

    

 

 

   

 

 

 

 

(Notes)    1.    The above transactions are marked to market, and changes in unrealized gains (losses) are included in the interim consolidated statement of income.
   2.    Fair values of listed contracts are based on the closing prices of the Tokyo Financial Exchange and others.
      Fair values of over-the-counter contracts and inter-company or internal transactions are based on the discounted value of future cash flows, option pricing models and others.

 

- 44 -


(3)

Stock-Related Transactions

As of March 31, 2018

 

(Millions of yen)

 

Classification

  

Type

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

Listed

   Index Futures                                                                                                                               
  

Sold

     345,159        10,570        1,986       1,986  
  

Bought

     677,676        —          8,524       8,524  
   Index Futures Options           
  

Sold

     1,788,049        422,988        (78,493