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Mizuho Financial Group 6-K 2007

Documents found in this filing:

  1. 6-K
  2. Graphic
  3. Graphic
  4. Graphic
  5. Graphic
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 June, 2007.

Commission File Number 001-33098

Mizuho Financial Group, Inc.

(Translation of registrant’s name into English)

5-5, Otemachi 1-chome

Chiyoda-ku, Tokyo 100-0004

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 x    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 x

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

 



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: June 7, 2007
Mizuho Financial Group, Inc.
By:  

/s/ Satoru Nishibori

Name:   Satoru Nishibori
Title:   Managing Director / CFO


[Translation]

(Securities Code: 8411)

June 7, 2007

To: Shareholders

Terunobu Maeda

President & CEO

Mizuho Financial Group, Inc.

5-5, Otemachi 1-chome, Chiyoda-ku, Tokyo

CONVOCATION NOTICE OF

THE 5TH ORDINARY GENERAL MEETING OF SHAREHOLDERS

Dear Sirs/Madams:

Notice is hereby given that the 5th Ordinary General Meeting of Shareholders of Mizuho Financial Group, Inc. (the “Company”) will be held as set forth below. You are cordially invited to attend the meeting.

If you are not able to attend the meeting, we request that you exercise your voting rights in one of the following ways. After examining the reference materials for the ordinary general meeting of shareholders set forth below, please refer to the “Guidance Notes on the Exercise of the Voting Rights” (pages 3 through 4) and exercise your voting rights no later than 5:00 p.m. on Monday, June 25, 2007.

[Exercise of Voting Rights in Writing]

By returning to us the voting form enclosed herewith on which your approval or disapproval is indicated.

[Exercise of Voting Rights by Electromagnetic Method (Using the Internet, etc.)]

By accessing the website for exercising voting rights specified by the Company (http://www.it-soukai.com/) and exercising your voting rights using the “Code for the Exercise of Voting Rights” and the “Password” provided on the voting form enclosed herewith in accordance with the directions on the screen.

 

 

 

                     Description
1.    Date and Time:                   10:00 a.m. on Tuesday, June 26, 2007
2.    Place:                   Hall A, Tokyo International Forum
                     5-1, Marunouchi 3-chome, Chiyoda-ku, Tokyo

 

1


3.

   Purpose:   
   Report Item 1:    Report on the Business Report for the 5th fiscal year (from April 1, 2006 to March 31, 2007), on the consolidated financial statements, and on the Results of Audit of the Consolidated Financial Statements by the Independent Auditors and the Board of Corporate Auditors
                       2:    Report on the non-consolidated financial statements for the 5th fiscal year (from April 1, 2006 to March 31, 2007)
   Matters to be Resolved:   
       Proposal 1:    Disposal of surplus
       Proposal 2:    Partial amendment to the Articles of Incorporation
       Proposal 3:    Appointment of eight (8) Directors
       Proposal 4:    Appointment of two (2) Corporate Auditors
       Proposal 5:    Grant of the retirement allowances to the retiring Directors and the retiring Corporate Auditor

– End of Notice –

 

 

 

 

*         *         *         *         *        *

 

§ Upon arrival at the meeting, please submit the voting form enclosed herewith to the reception at the entrance to the meeting place.

 

§ Any corrections made to the reference materials for the ordinary general meeting of shareholders and the attached documents shall be notified by being posted on the Company’s website (http://www.mizuho-fg.co.jp/investors/stock/meeting.html).

 

2


Guidance Notes on the Exercise of the Voting Rights

This is to introduce the procedure to exercise voting rights of shareholders of the Company in writing or by electromagnetic method (using the Internet, etc.).

[Exercise of Voting Rights in Writing]

Please indicate your approval or disapproval for the proposals on the voting form enclosed herewith and return the voting form to us so that it reaches us by no later than 5:00 p.m. on Monday, June 25, 2007. No indication on the voting form of your approval or disapproval for any proposal shall be treated as an indication of approval.

[Exercise of Voting Rights by Electromagnetic Method (using the Internet, etc.)]

 

1. Items Required to be Agreed on for the Exercise of Voting Rights via the Internet

If you wish to exercise your voting rights via the Internet, please make sure to exercise your voting rights by no later than 5:00 p.m. on Monday, June 25, 2007 pursuant to the following terms:

 

  (1) You may exercise your voting rights via the Internet only through the website for exercising voting rights specified by the Company (see 2.(1) below).

 

  (2) When exercising your voting rights via the Internet, the “Code for the Exercise of Voting Rights” and the “Password” described in the voting form enclosed with this convocation notice are required. The “Code for the Exercise of Voting Rights” and the “Password” will be renewed and sent to you for every general meeting of shareholders to be held in the future.

 

  (3) If you exercise your voting rights twice, in writing and via the Internet, we will only accept the exercise of your voting rights via the Internet as effective.

 

  (4) If you exercise your voting rights more than once via the Internet, we will only accept the last exercise of your voting rights as effective.

 

  (5) The cost of Internet access (access fees to providers, telecommunications fees, etc.) will be borne by the shareholders.

 

2. Specific Procedures to Exercise Your Voting Rights via the Internet

 

  (1) Access the website for exercising voting rights specified by the Company (http://www.it-soukai.com/ or https://daiko.mizuho-tb.co.jp/). Please note that you will not be able to access the above URL between 3:00 a.m. and 5:00 a.m. during the exercise period.

 

*

   You may access the website for exercising voting rights by scanning the “QR Code” (shown to the right) with the bar-code scanner of your cellular phone. For the details for this operation, please refer to the instruction manual of your cellular phone.       Image of
the “QR

Code”

 

  (2) Enter the “Code for the Exercise of Voting Rights” and the “Password” and click on the “Log-in” button.

 

  (3) Exercise your voting rights by following the directions on the screen.

 

3. System Requirements

 

  (1) If Using a Personal Computer

 

  § Personal Computer

Windows computer, Macintosh computer (PDAs and game machines are not supported.)

 

3


  § Browser

Microsoft® Internet Explorer 5.5 or higher, or Netscape Communicator 4.7 or higher

 

  § Internet Environment

It is a requirement that you have Internet access such as through a contract with an Internet service provider.

 

  § Monitor Resolution

1024 × 768 pixels or higher is recommended.

 

  (2) If Using a Cellular Phone

 

  § Cellular Phone

Phone types capable of 128bitSSL telecommunications (encrypted communication) and able to provide one of the following three services: “i-mode”; “EZweb”; or “Yahoo! Keitai”. (Some phone types do not have this capability.)

 

  * Microsoft and Windows are registered trademarks or trademarks of Microsoft Corporation in the United States and other countries.

 

  * Macintosh is a trademark of Apple Inc.

 

  * Netscape is a registered trademark of Netscape Communications Corporation in the United States and other countries. Netscape Communicator is a trademark of Netscape Communications Corporation and may be a registered trademark in some countries.

 

  * “i-mode” is a registered trademark of NTT DoCoMo, Inc.

 

  * “EZweb” is a registered trademark of KDDI CORPORATION.

 

  * “Yahoo!” is a registered trademark or a trademark of Yahoo! Inc. of the United States.

 

  * “QR Code®” is a registered trademark of DENSO WAVE INCORPORATED.

 

4. Security

You may exercise your voting rights safely due to the encryption technology (SSL128bit) used to protect your voting information from tampering and interception.

In addition, the code for the exercise of voting rights and the password described in the voting form are very important to authenticate shareholders, so please ensure that you do not disclose them to other people. Please note that the Company does not and will not make any inquiries regarding your password.

 

5. For Inquiries with respect to the Exercise of Voting Rights via the Internet

Please contact:

Internet Help Dial

Stock Transfer Agency Department

Mizuho Trust & Banking Co., Ltd.

Telephone:0120-768-524 (toll-free number)

Operating Hours: 9:00 a.m. to 9:00 p.m. (excluding Saturdays, Sundays and national holidays)

[To Institutional Investors]

The electronic voting platform for institutional investors operated by Investor Communications Japan Inc., which was established by the Tokyo Stock Exchange, Inc., etc., is available for custodian banks and any other nominal shareholders (including standing proxies) that have applied to use such platform in advance.

 

4


[Translation]

(Materials Attached to the Notice of Convocation of the Ordinary General Meeting of Shareholders)

Business Report for the 5th Fiscal Year

(from April 1, 2006 to March 31, 2007)

1. Matters Regarding the Current State of the Company

(1) Developments and Results of Operations, etc. of Mizuho Financial Group

Financial and Economic Environment

Looking back over the global economic climate during the fiscal year ended March 31, 2007, the overall trend in the worldwide economy, including the U.S., Europe and Asia, was improving steadily as a whole. The Japanese economy showed sustained growth, supported by robust exports and continuous strength in capital expenditures against a backdrop of steady improvement in corporate performance. Consumer prices remained positive with a rise in domestic corporate goods prices due to stronger global commodity markets. To that end, the Bank of Japan, meanwhile, decided to follow-up on its ending of zero interest rates in July 2006 by raising the operating target of money market operations (the uncollateralized overnight call rate) by another 0.25% to around 0.5% in February 2007.

As for the Japanese financial and capital markets, stock prices held firm backed by robust corporate performance. In spite of a temporary rise in long-term interest rates early in the fiscal year in the wake of the lifting of the quantitative easing policy, rates remained on a downward trend during the latter half of the period in response to the declining trends in U.S. interest rates, etc.

Financial institutions continue to develop individual strategies utilizing their respective strengths to the full. In response to the changing economic environment, the ability of Mizuho Financial Group (the “Group”) to secure a competitive edge over our rivals and to consolidate profitability even further are likely to become ever more important.

Main Businesses of the Group

The Group is composed of Mizuho Financial Group, Inc. (“MHFG”), 133 consolidated subsidiaries and 19 affiliates under the equity method. The Group engages in banking, securities, trust, asset management and other financial businesses.

 

5


Developments and Results of Operations

The Group has steadily developed its “Business Portfolio Strategy” and “Corporate Management Strategy” as action programs under its business strategy, the “Channel to Discovery” Plan, in order to gain recognition as a global financial group. Through these efforts, our ADRs are now listed on the New York Stock Exchange, and we have acquired status as a U.S. Financial Holding Company. Moreover, as of July 2006, we have completed repayment of the public funds extended in March 1998 and March 1999.

[Business Portfolio Strategy]

The three global groups established on the basis of customer needs (the Global Corporate Group, Global Retail Group, and Global Asset & Wealth Management Group) worked to further improve profitability by utilizing their respective characteristics.

(Global Corporate Group)

Mizuho Corporate Bank, Ltd. (“MHCB”) strongly expanded its global reach in order to establish a complete support system to meet various customer needs both in Japan and overseas. To further reinforce its overseas network, MHCB proceeded to deploy overseas business bases by opening branches in New Delhi, Wuxi, Brussels (*1) and Ho Chi Minh City while entering into strategic alliances with influential foreign financial institutions in Thailand, South Korea, Kazakhstan, Mexico and other countries. Next, in pursuing syndicated loan transactions, a field in which the Group leads the market in Japan, MHCB made efforts to arrange syndicated loans for foreign corporations raising funds in Japan and improved its business operations on a global scale through the deployment of staff dedicated to syndicated loans in New York, London and Hong Kong. Further, in December 2006, MHCB together with MHFG acquired the status as a “Financial Holding Company” (“FHC”) under the U.S. Bank Holding Company Act from the regulatory authority so that we can engage in comprehensive investment banking businesses such as underwriting and dealing corporate bonds, equities and other types of securities through subsidiaries, etc.

Mizuho Securities Co., Ltd. (“MHSC”) improved its internal controls through organizational changes, etc. and developed advanced services based on the three pillars of its operations, which are, corporate bonds, equities and investment banking. MHSC also strengthened its domestic sales network through collaborations with regional banks in the area of securities brokerage. Further, in March 2007, MHSC entered into an agreement to merge with Shinko Securities Co., Ltd. in January 2008, subject to approval at the general shareholders meeting and clearance from the relevant authorities, in order to offer competitive cutting-edge financial services on a global basis.


*1 Brussels Branch

Branch of Mizuho Corporate Bank Nederland N.V.

 

6


LOGO

 

7


(Global Retail Group)

In order to provide individual customers with ample convenience and security, Mizuho Bank, Ltd. (“MHBK”) launched a new settlement service using mobile phones and increased the number of corporate partners for the “Mizuho Mileage Club”

(a membership service with more than three million members) and introduced a biometric authentication system (finger vein pattern authentication) for ATM transactions. MHBK also commenced deployment of “Mizuho Personal Squares,” a new type of small branch based on needs of individual customers. To further enhance its consulting business, MHBK started providing comprehensive services for investments of retirement allowances, trained and deployed more financial consultants to offer various proposals and increased the number of “Premium Salons,” booths in branches that specialize in private consultations, to 250 in total. In addition to developing trust agency functions, MHBK increased the number of “Planet Booths,” joint branches with Mizuho Investors Securities Co., Ltd., to 100 and thereby further developed a one-stop service structure capable of responding to customer needs in banking, trusts and securities. MHBK endeavored to implement the utmost measures to meet the diverse needs of housing loan customers by expanding housing loan centers to sell loans in collaboration with real estate agents, holding frequent weekday after hours and weekend consultations, working proactively to shorten screening periods and offering housing loans with a sickness security rider covering the three major life-threatening diseases. Concerning card loans, MHBK began accepting applications via the Internet in order to improve customer service.

For corporate customers, MHBK proactively responded to the financial requirements of customers by assigning more staff with expertise in working with new loans, by using the “Mizuho Business Financial Center,” an entity that primarily engages in loans for small-scale enterprises, etc. Further, in collaboration with other group companies, MHBK offered wide-ranging solutions for customer business strategies such as successions of business, M&A, business-to-business matching services and advisory services on overseas expansion.

(Global Asset & Wealth Management Group)

Mizuho Trust & Banking Co., Ltd. (“MHTB”) focused further on the strengthening of its Trust & Asset management businesses such as pensions, asset management, real estate, securitization, trust & custody, and stock transfer agency businesses. As a result, gross profits from its Trust & Asset management businesses exceeded JPY 100 billion. MHTB maintained strong performance particularly in its real estate, trust and custody, and pensions and asset management businesses by providing highly specialized products and cooperating with other group companies.

Mizuho Private Wealth Management Co., Ltd., a company established to provide customers in Japan with full-fledged private banking services, has been providing comprehensive and integrative services comparable to those found in the U.S. and Europe in compliance with Japanese legal regulations.

In March 2007, Dai-Ichi Kangyo Asset Management Co., Ltd. and Fuji Investment Management Co., Ltd., our two asset management subsidiaries, entered into an agreement to merge in July 2007, subject to clearance from relevant authorities and other relevant procedures. The merger is expected to enable them to more appropriately respond to diversifying and ever more sophisticated customer needs.

 

8


[Corporate Management Strategy]

As part of the corporate management strategy outlined in the “Channel to Discovery” Plan, we listed our ADRs (American Depositary Receipts) (*2) on the New York Stock Exchange in November 2006 as a means of enhancing the transparency of our corporate governance and raising investor confidence in our company to a higher level. While preparing for the listing, we sought not only to comply with disclosure standards in Japan, but also to develop a system for financial disclosure based on U.S. GAAP, one of the global standards for leading global companies, and established disclosure and internal control practices in compliance with the U.S. Sarbanes-Oxley Act, recognized as the strictest accounting and reporting standards in the world today.

As for CSR (corporate social responsibility) activities, MHFG has been providing support for financial education through activities such as Mizuho-sponsored courses and lectures organized by key personnel dispatched from group companies to Waseda University, Hitotsubashi University and Keio University. We also carried out joint research in financial education with Tokyo Gakugei University. Further, we agreed to establish and start Mizuho-sponsored courses and lectures at Tokyo University and Kyoto University in fiscal 2007. MHCB also decided to become the first overseas company to establish a scholarship system for junior high schools in China, as a means of assisting fundamental education. MHCB readopted the now reinforced Equator Principles (*3), a set of international standards voluntarily adopted by banks that engage in large-scale international development projects, to monitor and assess whether impacts on the environment and local communities have been duly considered in plans for project finance transactions. Aiming to become “a bank that is easy for anyone to use regardless of age, gender or disability,” MHBK made its branches barrier-free, placed whiteboards at teller windows for the speech-impaired, and trained its officers and employees to respond more effectively to aged and handicapped customers.

Under our brand strategy, we actively promoted our brand slogan, “Channel to Discovery,” both internally and externally. The slogan represents the role the Group will play, not only to realize today’s dreams, but also to discover new possibilities that lie ahead and to create a better future.


*2 ADR (American Depositary Receipt)

ADRs are securities of foreign companies issued for trading in the U.S. market in place of the companies’ underlying stocks. As ADRs are registered with the SEC (Securities and Exchange Commission) as U.S. securities, they are traded, settled and held in custody in substantively the same manner as shares of U.S. companies.

 

*3 Equator Principles

The Equator Principles are international standards uniformly employed by private banks, in their role as lenders, to monitor and assess whether project finance transactions have taken into consideration the impact they may have on the local natural environment and community.

 

9


[Results of Operations for fiscal 2006]

Implementation of various measures to enhance profitability have led to steady increases in income from Customer Groups, including the priority areas such as our retail and international sector businesses. Meanwhile, as a result of an increase in credit-related costs and the recording of a loss related to stocks, with respect to the consolidated figures (133 consolidated subsidiaries and 19 affiliates under the equity method) for this fiscal year although Ordinary Income increased from the previous fiscal year to JPY 4,099.6 billion, Ordinary Profits and Net Income decreased to JPY 748.1 billion and JPY 620.9 billion, respectively.

LOGO

Results of operations for the major subsidiaries were as follows:

 

    

(JPY billion)

Company Name

  

Ordinary Income

(Operating Income)

   Ordinary Profits    Net Income

Consolidated Results of MHFG

   4,099.6    748.1    620.9

MHBK

   1,264.2    179.0    206.2

MHCB

   1,804.2    313.6    323.1

MHTB

   241.5    79.7    68.8

MHSC

   135.9    45.2    27.8

(Note)

The calculated figures for the major subsidiaries are on a non-consolidated basis.

 

10


The Group maintains its financial soundness at a high level, as our consolidated capital adequacy ratio (BIS Capital Ratio) as of March 31, 2007 was maintained at a sufficient level of 12.48%(*4) and the non-performing loan ratio for the three banks (MHBK, MHCB and MHTB combined) was at a low level as of the same date.

In accordance with our capital policy, in July 2006, we repaid in full the public funds and repurchased and cancelled MHFG’s common stock held by Mizuho Financial Strategy Co., Ltd. (approximately JPY 130.0 billion). In January 2007, we issued JPY 400.0 billion of non-dilutive preferred debt securities through an overseas special purpose subsidiary to reinforce the capital base.

In view of our consolidated financial results, the level of Retained Earnings and other factors, we proposed increasing the year-end cash dividends per share of common stock for fiscal 2006 to JPY 7,000. We also proposed making dividend payments on preferred stock as prescribed.

In the future, we will place our management emphasis on ROE (*5) from the perspective of effective utilization of our capital and consider returning profits to the shareholders while maintaining and strengthening our capital base.

Based on market conditions, our earnings trend and other factors, we will set up a limit for repurchasing our common stock and start repurchasing those shares for the purpose of, among other things, offsetting the potential dilutive effect of the conversion of the Eleventh Series Class XI Preferred Stock in consideration of the possibility that the number of shares of our common stock will increase after the commencement of the conversion period from July, 2008. We plan to cancel all the common stock repurchased.


*4 12.48%

This is calculated in accordance with the Basel II regulations (new standard). (If calculated in accordance with the Basel I (former standard), 11.58%)

 

*5 ROE (Return on Equity)

A financial measure of the effectiveness with which a company uses its equity, etc. to acquire profits.

 

11


Issues to be Addressed by the Group

In order to achieve total and final completion of its “Channel to Discovery” Plan, promoted as a business strategy since fiscal 2005, and to increase corporate value significantly, the Group will further advance its Business Portfolio Strategy in which the three global groups established based on the basis of customer needs within the Group strive to improve profitability by exploiting their respective characteristics. We will strive also to win the further confidence of domestic and overseas customers by developing a Corporate Management Strategy by careful consideration of customer perspectives and by establishing a solid compliance structure and advanced risk management system.

[Business Portfolio Strategy]

(The Global Corporate Group)

MHCB will continue to reinforce the global strategy it has pursued to date, in order to respond more promptly and sophisticatedly to the increasingly advanced and global management and financial issues engaging our customers. More specifically, having acquired its status as a FHC under the U.S. Bank Holding Company Act in December 2006, MHCB intends to strengthen further its operations in the Americas and expand its comprehensive investment banking business by combining banking and securities services. MHCB will also move forward with preparations for establishing banking subsidiaries in China now that it has acquired approval from local authorities (granted in December 2006), while striving to expand further its branch networks in the Americas, Asia, Europe, Middle East and other regions. MHCB will also accelerate efforts for full-scale deployment of forefront asset management services targeting domestic and foreign institutional investors.

MHSC will aim to become a market leader in securities and investment banking businesses offering the most suitable solutions to a wide range of customer needs and intensively pursuing group synergy by actively promoting mutual collaboration within the group. In addition, by virtue of its merger with Shinko Securities Co., Ltd. scheduled for January 2008, MHSC intends quickly to attain the highest capabilities in product development, financial technology and marketing.

(The Global Retail Group)

MHBK will actively deploy “Personal Squares” (branches based on needs of individual customers) in order to increase the strength of its products and services, further improve the “Mizuho Mileage Club” membership service, expand channels and develop new products for personal loans, and reinforce its asset management consulting functions to meet a wide range of customer needs. In the small and medium-sized enterprise market, MHBK aims to offer the most suitable solutions tailored to ever more diverse and sophisticated customer needs by reinforcing its M&A and business inheritance advisory functions, support for initial public stock offerings and customers’ overseas business operations and so on. In addition to taking these measures, MHBK continuously strives to establish a stable revenue base by decisively streamlining its headquarters organization, transferring personnel to branches, and deepening and strengthening its customer relationships even further.

 

12


(The Global Asset & Wealth Management Group)

MHTB plans to embark on various new types of trust businesses as it develops new products and reinforces its consulting strengths within a climate strongly influenced by the easing of regulatory controls, the revision of the Trust Business Law and so on. MHTB plans to expand its market share by employing a trust agency system and further strengthening business collaborations with group companies, and thereby becoming the most trusted bank by customers and clients.

Mizuho Private Wealth Management Co., Ltd., as a full-fledged private banking company, aims to establish long-term relationships with customers by providing optimal, high-quality comprehensive and integrative products and services tailored to the needs of individual customers.

In addition, Dai-Ichi Kangyo Asset Management Co., Ltd. and Fuji Investment Management Co., Ltd. will merge in July 2007 to form a new company called Mizuho Asset Management Co., Ltd. This new company will strive to meet a wide range of customer needs as a central player in the asset management business of the Group, together with DLIBJ ASSET MANAGEMENT CO., LTD.

[Corporate Management Strategy]

In order to establish solid internal control systems, the Group will promote strengthening its compliance systems by establishing a business structure that will enable the Group to identify issues of concern at an early stage, adopt the amended regulations for international standard regarding the soundness of banks, or “Basel II”, and further strengthen disclosure and internal control practices in compliance with the U.S. Sarbanes-Oxley Act.

In promoting CSR, the Group will particularly emphasize and focus on five different themes—involvement in environmental awareness, supporting financial education, enhancement of corporate governance, implementation of highly-responsive communications and promotion of a group-wide approach to CSR—all of which are significant themes in order for the Group to coexist and develop with the community. In supporting financial education, we will make appropriate and extensive contributions towards helping primary, secondary and high school students.

In our efforts to become “a financial partner that helps customers shape their future and achieve their dreams” (an ideal implicit in the Group brand slogan, “Channel to Discovery”), the Group will work to further increase our corporate value by steadily implementing the Business Portfolio Strategy and Corporate Management Strategy so as to enhance our competitiveness and profitability and to fulfill our social responsibilities and public duties. We sincerely look forward to the continuing support of our shareholders.

 

13


(2) Changes in Financial Conditions and Results of Operations (Consolidated Basis and Non-consolidated Basis)

a. Changes in Financial Conditions and Results of Operations (Consolidated basis)

 

     (JPY billion)
    

FY 2003

(For the fiscal
year ended
March 31, 2004)

  

FY 2004

(For the fiscal
year ended
March 31, 2005)

  

FY 2005

(For the fiscal
year ended
March 31, 2006)

  

FY 2006

(For the fiscal
year ended
March 31, 2007)

Ordinary Income

   3,200.6    3,039.1    3,557.5    4,099.6

Ordinary Profits

   896.4    657.4    921.0    748.1

Net Income

   406.9    627.3    649.9    620.9

Total Net Assets

   3,644.3    3,905.7    4,804.9    6,724.4

Total Assets

   137,750.0    143,076.2    149,612.7    149,880.0

(Note)

Amounts less than JPY one hundred million are rounded down.

 

(Reference)

Ordinary Income and Ordinary Profits by type of business for FY 2006 are as follows (Consolidated basis):

 

     (JPY billion)
    

Banking

Business

  

Securities

Business

   Other    Elimination    

Consolidated

Results

Ordinary Income

   3,269.7    766.1    300.7    (237.0 )   4,099.6

Ordinary Profits

   597.5    119.9    37.3    (6.6 )   748.1

 

14


b. Changes in Financial Conditions and Results of Operations (Non-consolidated basis)

 

     (JPY billion)  
    

FY 2003

(For the fiscal
year ended
March 31, 2004)

   

FY 2004

(For the fiscal
year ended
March 31, 2005)

   

FY 2005

(For the fiscal
year ended
March 31, 2006)

   

FY 2006

(For the fiscal
year ended
March 31, 2007)

 

Operating Income

   25.7     26.4     128.9     1,250.0  

Cash Dividends Received

   14.8     13.7     112.5     1,220.9  

Cash Dividends Received from Majority-owned Banking Subsidiaries

   —       6.9     6.9     265.3  

Cash Dividends Received from Other Subsidiaries and Affiliates

   14.8     6.8     105.6     955.6  

Net Income

   (JPY million
9,936
)
 
  (JPY million
30,886
)
 
  (JPY million
790,240
)
 
  (JPY million
1,239,710
)
 

Net Income (Loss) per Share of Common Stock

   (JPY
(2,846.42
)
)
  (JPY
(588.84
)
)
  (JPY
63,040.65
)
 
  (JPY
102,168.76
)
 

Total Assets

   3,600.0     3,178.6     4,793.0     4,764.0  

Investments in Majority-owned Banking Subsidiaries

   1,500.5     1,500.5     4,420.4     4,411.6  

Investments in Other Subsidiaries and Affiliates

   2,088.3     1,589.2     84.8     84.8  

(Notes)

1. Amounts less than JPY one hundred million are rounded down.

2. Net Income/Loss per share of common stock was computed based upon the following formula:

 

    Net Income (Loss)     per share of     common stock    =      Net Income recognized in the statement of income       –         Amount not attributable to common stock (Cash Dividends on Preferred Stock, and others)
     Average outstanding shares of common stock       –        

Average outstanding shares of

treasury common stock

 

15


(3) Employees of the Group

 

     March 31, 2007    March 31, 2006
   Banking
Business
   Securities
Business
   Other    Banking
Business
   Securities
Business
   Other

Number of Employees

   35,125    4,856    7,468    33,627    4,633    7,498

(Notes)

1. The Number of Employees is the number of persons engaged in the Group.

2. The Number of Employees includes overseas local staff and does not include temporary employees.

 

(Reference)

General details on the employees of Mizuho Financial Group, Inc., Mizuho Bank, Ltd., Mizuho Corporate Bank, Ltd., and Mizuho Trust & Banking Co., Ltd. (collectively, the “Four Companies”) are as follows:

 

   

March 31, 2007

 

March 31, 2006

Number of Employees

  27,471   25,945

Average Age

  37 years, 7 months   38 years, 1 month

Average Years of Employment

  14 years, 8 months   15 years, 4 months

Average Monthly Salary

  JPY 457,000   JPY 473,000

(Notes)

1. The Number of Employees is the number of persons engaged in the Four Companies.

2. The Number of Employees is the aggregate total of employees of the Four Companies. The Average Age, Average Years of Employment and Average Monthly Salary are the collective averages for the Four Companies.

3. The Number of Employees does not include temporary employees.

4. The calculations of Average Age, Average Years of Employment and Average Monthly Salary do not take into account seconded employees and employees hired locally overseas. Amounts less than whole digits are rounded down.

5. In the calculation of Average Years of Employment, employees who have transferred from one group company to another (Mizuho Financial Group, Inc., Mizuho Bank, Ltd., Mizuho Corporate Bank, Ltd., Mizuho Securities Co., Ltd., Mizuho Trust & Banking Co., Ltd., and Mizuho Information & Research Institute, Inc.) are assumed to have remained continuously employed in one company.

6. The Average Monthly Salary is the average salary for the month of March, tax inclusive, and does not include bonuses.

 

16


(4) Principal Offices

 

a. Bank Holding Company

Mizuho Financial Group, Inc.: Head Office

 

b. Banking Business

Mizuho Bank, Ltd.:

 

Region

   Number of Offices   

Principal Offices

   March 31, 2007    March 31, 2006   

Kanto, Koshinetsu

   322    336    Head Office, etc.

Hokkaido, Tohoku

   14    15    Sapporo Branch, Sendai Branch, etc.

Hokuriku, Tokai, Kinki

   71    79    Osaka Branch, Nagoya Branch, etc.

Chugoku, Shikoku

   14    14    Hiroshima Branch, Takamatsu Branch, etc.

Kyushu, Okinawa

   12    12    Fukuoka Branch, etc.

Total

   433    456   

(Notes)

1. Offices include sub branches, transfer-only branches, ATM management branches (“joint-use ATM” management branches), defined contribution pension plan branches (defined contribution pension plan-only branches) and Internet branches.

2. In addition to the above, 47 agencies (51 as of March 31, 2006) and 24,784 non-branch ATMs (11,060 as of March 31, 2006) were in operation as of March 31, 2007.

3. In addition to the above, 3 sub branches (3 as of March 31, 2006) at Narita Airport and 2 sub branches (2 as of March 31, 2006) at Kansai International Airport were in operation engaging mainly in foreign currency exchange , and 4 non-branch automated foreign currency exchange machines (installed this business year) at Narita Airport were in operation as of March 31, 2007.

Mizuho Corporate Bank, Ltd.:

 

Region

   Number of Offices   

Principal Offices

   March 31, 2007    March 31, 2006   

Kanto, Koshinetsu

   22    22    Head Office, etc.

Hokkaido, Tohoku

   2    2   

Sapporo Corporate Banking Division,

Sendai Corporate Banking Division.

Hokuriku, Tokai, Kinki

   6    6   

Osaka Corporate Banking Division,

Nagoya Corporate Banking Division, etc.

Chugoku, Shikoku, Kyushu

   3    3    Fukuoka Corporate Banking Division, etc.

Domestic Total

   33    33   

The Americas

   7    6    New York Branch, etc.

Europe and the Middle East

   4    4    London Branch, etc.

Asia and Oceania

   19    16    Hong Kong Branch, Shanghai Branch, Singapore Branch, etc.

Overseas Total

   30    26   

Total

   63    59   

(Notes)

1. Offices include sub branches.

2. In addition to the above, 10 representative offices overseas (12 as of March 31, 2006) were in operation as of March 31, 2007.

 

17


Mizuho Trust & Banking Co., Ltd.:

 

Region

   Number of Offices   

Principal Offices

   March 31, 2007    March 31, 2006   

Kanto, Koshinetsu

   23    23    Head Office, Yokohama Branch, etc.

Hokkaido, Tohoku

   2    2    Sapporo Branch, Sendai Branch.

Hokuriku, Tokai, Kinki

   7    8    Osaka Branch, Nagoya Branch, etc.

Chugoku, Shikoku

   2    2    Hiroshima Branch, Okayama Branch.

Kyushu

   3    3    Fukuoka Branch, etc.

Total

   37    38   

(Notes)

1. Offices include sub branches.

2. In addition to the above, 1 representative office overseas (1 as of March 31, 2006), 56 trust agencies (54 as of March 31, 2006) and 1 non-branch ATM (1 as of March 31, 2006) were in operation as of March 31, 2007.

 

c. Securities Business

Mizuho Securities Co., Ltd.: Head Office; Kansai Corporate Banking Division

Mizuho Investors Securities Co., Ltd.:

 

Region

   Number of Offices   

Principal Offices

   March 31, 2007    March 31, 2006   

Kanto, Koshinetsu

   30    31    Head Office, Yokohama Branch, etc.

Hokkaido, Tohoku

   4    4    Sapporo Branch, Sendai Branch, etc.

Hokuriku, Tokai, Kinki

   15    15    Osaka Branch, Nagoya Branch, etc.

Chugoku, Shikoku

   5    5    Hiroshima Branch, Takamatsu Branch, etc.

Kyushu

   4    4    Fukuoka Branch, etc.

Total

   58    59   

(Note)

In addition to the above, 100 Planet Booths (73 as of March 31, 2006) were in operation in the branch lobbies of Mizuho Bank, Ltd. for securities investment consultations as of March 31, 2007.

 

d. Other Businesses

Mizuho Information & Research Institute, Inc.: Head Office, etc.

(5) Capital Investment (Consolidated Basis)

 

     (JPY million)
     Banking Business    Securities Business    Other Businesses

Total Amount of Capital Investment

   72,341    5,653    2,993

(Note)

Amounts less than JPY one million are rounded down.

 

18


(6) Principal Subsidiaries

 

Company Name

  

Location

  

Main Business

  

Date of
Establishment

  

Capital

(JPY million)

  

Percentage of
Voting Rights

of MHFG

(%)

   

Amount of
Dividend
Paid to
MHFG

(JPY million)

Mizuho Bank, Ltd.

   Chiyoda-ku, Tokyo    Banking    June 7, 1897    650,000    100.00     130,625

Mizuho Corporate Bank, Ltd.

   Chiyoda-ku, Tokyo    Banking    May 7, 1923    1,070,965    100.00     128,117

Mizuho Trust & Banking Co., Ltd.

   Chuo-ku, Tokyo   

Trust banking;

banking

   May 9, 1925    247,231    70.18
(0.47
 
)
  6,650

Mizuho Securities Co., Ltd.

   Chiyoda-ku, Tokyo    Securities    July 2, 1993    195,146    81.51
(81.51
 
)
  —  

Mizuho Investors Securities Co., Ltd.

   Chuo-ku, Tokyo    Securities    December 14, 1922    80,288    66.88
(66.88
 
)
  —  

Trust & Custody Services Bank, Ltd.

   Chuo-ku, Tokyo    Trust banking; banking    January 22, 2001    50,000    54.00     —  

Fuji Investment Management Co., Ltd.

   Chuo-ku, Tokyo   

Investment trust management;

investment advisory

   September 27, 1993    2,050    94.29     200

Dai-Ichi Kangyo Asset Management Co., Ltd.

   Chiyoda-ku, Tokyo   

Investment trust management;

investment advisory

   May 26, 1964    2,045    100.00     342

DLIBJ ASSET MANAGEMENT CO., LTD.

   Chiyoda-ku, Tokyo   

Investment trust management;

investment advisory

   July 1, 1985    2,000    50.00     900

Mizuho Information & Research Institute Inc.

   Chiyoda-ku, Tokyo    Information processing    May 11, 1970    1,627    91.50     3,783

Mizuho Research Institute Ltd.

   Chiyoda-ku, Tokyo    Think tank consulting    December 2, 1967    900    98.60     166

Mizuho Financial Strategy Co., Ltd.

   Chiyoda-ku, Tokyo    Consulting    September 29, 2000    500    100.00     950,211

Mizuho Private Wealth Management Co., Ltd.

   Chiyoda-ku, Tokyo    Consulting    October 3, 2005    500    100.00     —  

 

19


Company Name

  

Location

  

Main Business

  

Date of
Establishment

  

Capital

(JPY million)

   

Percentage of
Voting Rights

of MHFG

(%)

   

Amount of
Dividend
Paid to
MHFG

(JPY million)

Shinko Securities Co., Ltd.

  

Chuo-ku, Tokyo

  

Securities

   July 16, 1917    125,167     27.44
(27.44
 
)
  —  

Mizuho Credit Guarantee Co., Ltd.

  

Chiyoda-ku, Tokyo

  

Credit guarantee

   November 29, 1974    13,281     100.00
(100.00
 
)
  —  

Defined Contribution Plan Services Co., Ltd.

  

Minato-ku, Tokyo

  

Defined contribution pension-related business

   September 11, 2000    2,000     60.00
(60.00
 
)
  —  

Mizuho Factors, Limited

  

Chiyoda-ku, Tokyo

  

Factoring

   April 1, 1977    1,000     100.00
(100.00
 
)
  —  

Mizuho Capital Co., Ltd.

  

Chuo-ku, Tokyo

  

Venture capital

   July 27, 1983    902     49.99
(49.99
 
)
  —  

UC Card Co., Ltd.

  

Chiyoda-ku, Tokyo

  

Credit cards

   October 1, 2005    500     50.99
(50.99
 
)
  —  

Mizuho International plc

  

London, U.K.

  

Securities; banking

   March 14, 1975    59,733
(GBP257
million
 
 
)
  100.00
(100.00
 
)
  —  

Mizuho Corporate Bank Nederland N.V.

  

Amsterdam, The Netherlands

  

Banking; securities

   March 1, 1974    22,311
(EUR 141
million
 
 
)
  100.00
(100.00
 
)
  —  

Mizuho Corporate Bank (Canada)

  

Toronto, Ontario, Canada

  

Banking

   November 1, 2000    16,827
(CAD 165
million
 
 
)
  100.00
(100.00
 
)
  —  

Mizuho Corporate Bank (USA)

  

New York, N.Y., U.S.A.

  

Banking

   November 29, 1974    11,628
(USD 98
million
 
 
)
  100.00
(100.00
 
)
  —  

Mizuho Corporate Bank (Germany) Aktiengesellschaft

  

Frankfurt am Main, Hessen, F.R. Germany

  

Banking; securities

   December 4, 1972    7,240
(EUR 46
million
 
 
)
  83.33
(83.33
 
)
  —  

Mizuho Bank (Switzerland) ltd

  

Zurich, Switzerland

  

Banking; trust banking

   October 20, 1976    5,152
(CHF 53
million
 
 
)
  100.00
(100.00
 
)
  —  

PT. Bank Mizuho Indonesia

  

Jakarta, Indonesia

  

Banking

   July 8, 1989    5,151
(IDR 396,250
million
 
 
)
  98.99
(98.99
 
)
  —  

 

20


Company Name

  

Location

  

Main Business

  

Date of
Establishment

  

Capital

(JPY million)

  

Percentage of
Voting Rights

of MHFG

(%)

   

Amount of
Dividend
Paid to
MHFG

(JPY million)

Mizuho Trust & Banking Co. (USA)

  

New York, N.Y., U.S.A.

  

Trust banking; banking

   October 19, 1987   

3,878

(USD 32

million)

   100.00
(100.00
 
)
  —  

Mizuho Trust & Banking (Luxembourg) S.A.

  

Munsbach, Luxembourg

  

Trust banking; banking

   March 21, 1989   

3,542

(USD 30

million)

   100.00
(100.00
 
)
  —  

Mizuho Securities USA Inc.

  

New York, N.Y., U.S.A.

  

Securities

   August 16, 1976   

27

(USD 231

thousand)

   100.00
(100.00
 
)
  —  

Mizuho Capital Markets Corporation

  

New York, N.Y., U.S.A.

  

Derivatives

   January 27, 1989   

0

(USD 3

thousand)

   100.00
(100.00
 
)
  —  

(Notes)

1. Amounts less than JPY one million (and units shown for other currencies) are rounded down.

2. The JPY equivalent of capital is calculated using the foreign exchange rate as of the account closing date.

3. The Percentage of Voting Rights of MHFG is rounded down to the nearest second decimal place.

4. Figures in parentheses ( ) in the Voting Rights column are voting rights held indirectly.

5. DLIBJ ASSET MANAGEMENT CO., LTD., Shinko Securities Co., Ltd. and Mizuho Capital Co., Ltd. are newly added to the list as principal subsidiaries.

(7) Major Borrowings

 

Creditors

 

Balance of
Borrowings
(JPY million)

 

Number of Company Shares and
Percentage of Voting Interest Held by Creditors

   

Number of Shares Held
(shares)

 

Voting Interest
(%)

     

Mizuho Bank, Ltd.

  690,000   —     —  

Mizuho Corporate Bank, Ltd.

  690,000   —     —  

Total

  1,380,000   —     —  

(Note)

The funds required for the acquisition of the preferred stock of public funds were raised by MHFG through the above borrowings from its group companies.

 

21


2. Matters regarding the Officers

(1) Officers

(As of March 31, 2007)

 

Name

  

Title and Assignment

  

Major Concurrent Office

   Other

Terunobu Maeda

  

President & CEO

(Representative Director)

   President & CEO of Mizuho Financial Strategy Co., Ltd.   

Shunichi Asada

  

Deputy President

(Representative Director)

     

Satoru Nishibori

   Managing Director      

Tetsuji Kosaki

   Managing Director      

Hiroshi Saito

   Director    President & CEO of Mizuho Corporate Bank, Ltd.   

Seiji Sugiyama

   Director    President & CEO of Mizuho Bank, Ltd.   

Yoshiharu Fukuhara

   Director (outside officer)    Honorary Chairman of Shiseido Company, Limited   

Mitsuo Ohashi

   Director (outside officer)    Director and Chairman of the Board of Directors of Showa Denko K.K.   

Glen S. Fukushima

   Director (outside officer)    President and Chief Executive Officer of Airbus Japan K.K.   

Yoshiaki Sugita

  

Corporate Auditor

(full-time)

     

Junichi Iwabuchi

  

Corporate Auditor

(full-time)

     

Yukio Nozaki

   Corporate Auditor (outside officer)    Attorney at Law   

Masahiro Seki

   Corporate Auditor (outside officer)    Seki Konin Kaikeishi Jimusho (Seki Certified Public Accountants)    Certified Public
Accountant

Masahiko Kadotani

   Corporate Auditor (outside officer)      

(Notes)

1. Mr. Toshiaki Hasegawa resigned from his position as corporate auditor on June 27, 2006.

2. Messrs. Yoshiharu Fukuhara, Mitsuo Ohashi and Glen S. Fukushima are “outside directors” as provided for in Article 2, Item 15 of the Company Law of Japan.

3. Messrs. Yukio Nozaki, Masahiro Seki and Masahiko Kadotani are “outside corporate auditors” as provided for in Article 2, Item 16 of the Company Law of Japan.

 

22


4. MHFG uses the executive officer system. The executive officers are as follows:

(As of March 31, 2007)

 

Title

  

Name

  

Areas of Oversight

President    Terunobu Maeda    Overall management of the execution of MHFG’s business
Deputy President - Executive Officer    Shunichi Asada    Assistance in the overall management of the execution of MHFG’s business / Head of Internal Audit Group / Chief Auditor
Managing Executive Officer    Satoru Nishibori    Head of Financial Control and Accounting Group / Chief Financial Officer
Managing Executive Officer    Tetsuji Kosaki    Head of Strategic Planning Group and Head of IT, Systems & Operations Group / Chief Strategy Officer and Chief Information Officer
Managing Executive Officer    Masayuki Saito    Head of Risk Management Group, Head of Human Resources Group and Head of Compliance Group / Chief Risk Officer, Chief Human Resources Officer and Chief Compliance Officer
Executive Officer    Hiroshi Kiyama    General Manager of Corporate Planning
Executive Officer    Yoshiaki Ohashi    General Manager of Corporate Communications
Executive Officer    Tetsuro Sugiura    Managing Executive Officer of Mizuho Research Institute, Ltd.
Executive Officer    Tsuneo Morita    General Manager of Administration
Executive Officer    Shuzo Haimoto    General Manager of Human Resources

 

23


(Reference)

The members of the Officers as of April 2 are as follows.

(As of April 2, 2007)

 

Name

 

Title and Assignment

 

Major Concurrent Office

   Other

Terunobu Maeda

 

President & CEO

(Representative Director)

    

Satoru Nishibori

  Managing Director   President & CEO of Mizuho Financial Strategy Co., Ltd.   

Hiroshi Saito

  Director   President & CEO of Mizuho Corporate Bank, Ltd.   

Seiji Sugiyama

  Director   President & CEO of Mizuho Bank, Ltd.   

Shunichi Asada

  Director     

Tetsuji Kosaki

  Director   Deputy President of Mizuho Bank, Ltd.   

Yoshiharu Fukuhara

  Director (outside officer)   Honorary Chairman of Shiseido Company, Limited   

Mitsuo Ohashi

  Director (outside officer)  

Director and Chairman of the Board

of Directors of Showa Denko K.K.

  

Glen S. Fukushima

  Director (outside officer)   President and Chief Executive Officer of Airbus Japan K.K.   

Yoshiaki Sugita

 

Corporate Auditor

(full-time)

    

Junichi Iwabuchi

 

Corporate Auditor

(full-time)

    

Yukio Nozaki

  Corporate Auditor (outside officer)   Attorney at Law   

Masahiro Seki

  Corporate Auditor (outside officer)   Seki Konin Kaikeishi Jimusho (Seki Certified Public Accountants)    Certified Public
Accountant

Masahiko Kadotani

  Corporate Auditor (outside officer)     

(Notes)

1. Messrs. Yoshiharu Fukuhara, Mitsuo Ohashi and Glen S. Fukushima are “outside directors” as provided for in Article 2, Item 15 of the Company Law of Japan.

2. Messrs. Yukio Nozaki, Masahiro Seki and Masahiko Kadotani are “outside corporate auditors” as provided for in Article 2, Item 16 of the Company Law of Japan.

 

24


3. The Executive Officers as of April 2 are as follows.

(As of April 2, 2007)

 

Title

    

Name

    

Areas of Oversight

President      Terunobu Maeda      Overall management of the execution of MHFG’s business

Deputy President -

Executive Officer

     Masato Ono      Assistance in the overall management of the execution of MHFG’s business / Head of Internal Audit Group / Chief Auditor
Managing Executive Officer      Satoru Nishibori      Head of Financial Control and Accounting Group / Chief Financial Officer
Managing Executive Officer      Masayuki Saito      Head of Risk Management Group, Head of Human Resources Group and Head of Compliance Group / Chief Risk Officer, Chief Human Resources Officer and Chief Compliance Officer
Managing Executive Officer      Hiroshi Motoyama      Head of Strategic Planning Group and Head of IT, Systems & Operations Group / Chief Strategy Officer and Chief Information Officer
Executive Officer      Tsuneo Morita      General Manager of Administration
Executive Officer      Masanori Murakami      General Manager of Corporate Communications
Executive Officer      Hidemi Hiroi      General Manager of Group Strategic Planning

(2) Aggregate Compensation for the Officers

 

 

     (JPY million)

Classification

   Aggregate Compensation    Maximum amount of
compensation prescribed by the
Articles of Incorporation or the
general meeting of shareholders

Directors

   208    45 per month

Corporate Auditors

   54    15 per month

Total

   263    —  

(Notes)

1. Amounts less than JPY one million are rounded down.

2. In addition to the above, the provisions of the reserve for retirement allowances for the fiscal year are JPY 148 million for Directors and JPY 32 million for Corporate Auditors. No provision is made for the bonuses of officers.

 

25


3. Matters regarding Outside Officers

(1) Concurrent Offices and Other Details on Outside Officers

 

Name

  

Concurrent Offices and Other Details

Yoshiharu Fukuhara

   Honorary Chairman of Shiseido Company, Limited

Mitsuo Ohashi

   Director and Chairman of the Board of Directors of Showa Denko K.K.

Glen S. Fukushima

   President and Chief Executive Officer of Airbus Japan K.K.

Yukio Nozaki

   Outside Corporate Auditor of Mizuho Bank, Ltd. / Outside Corporate Auditor of Mizuho Corporate Bank, Ltd.

Masahiro Seki

   Seki Konin Kaikeishi Jimusho (Seki Certified Public Accountants)

Masahiko Kadotani

   Outside Corporate Auditor of Mizuho Securities Co., Ltd. / Outside Corporate Auditor of Mizuho Financial Strategy Co., Ltd.

(Notes)

1. Mizuho Bank, Ltd. employs a relative (third degree of consanguinity or closer) of Mr. Mitsuo Ohashi, and this employee was transferred to MHFG on April 2, 2007.

2. Mizuho Corporate Bank, Ltd. employs a relative (third degree of consanguinity or closer) of Mr. Masahiko Kadotani.

 

26


(2) Major Activities of Outside Officers

 

Name

  

Term in
Office

  

Attendance of the Board of

Directors Meeting

  

Input at the Board of Directors

Meeting and other Activities

Yoshiharu Fukuhara

  

4 years,

2 months

   He attended most of the Board of Directors Meetings held during the fiscal year, mainly the regular meetings.    He participated in the discussions on proposals, etc., by voicing external viewpoints, making use of his abundant experience in Shiseido Company, Limited and his wide-ranging insight as a top executive.

Mitsuo Ohashi

  

1 year,

9 months

   He attended most of the Board of Directors Meetings held during the fiscal year.    He participated in the discussions on proposals, etc., by voicing external viewpoints, making use of his abundant experience in Showa Denko K.K. and his wide-ranging insight as a top executive.

Glen S. Fukushima

  

4 years,

2 months

   Although preoccupied in his position as president of a foreign capital company in Japan with frequent business engagements overseas, he attended as many of the Board of Directors Meetings held during the fiscal year as he could.    He participated in the discussions on proposals, etc., by voicing external viewpoints, making use of his abundant experience in Airbus Japan K.K., etc., as well as his wide-ranging insight as a top executive.

Yukio Nozaki

  

4 years,

2 months

   He attended almost all of the Board of Directors Meetings and all of the Board of Corporate Auditors Meetings held during the fiscal year.    He contributed by voicing opinions mainly from professional viewpoints as an attorney at law.

Masahiro Seki

   9 months    He attended almost all of the Board of Directors Meetings and all of the Board of Corporate Auditors Meetings held after his appointment in June 2006.    He contributed by voicing opinions from viewpoints as an expert in U.S. and Japanese accounting.

Masahiko Kadotani

  

2 years,

9 months

   He attended most of the Board of Directors Meetings and all of the Board of Corporate Auditors Meetings held during the fiscal year.    He contributed mainly based on his abundant experience in the Ministry of Finance and his significant financial expertise gained through his career as the President of the Japan Finance Corporation for Small and Medium Enterprises.

 

27


(3) Liability Limitation Agreement

 

Name

  

Summary of Liability Limitation Agreement

Yoshiharu Fukuhara

   Agreement pursuant to the provisions provided for in Article 427, Paragraph 1 of the Company Law of Japan (the “Law”), which limits the liability provided for in Article 423, Paragraph 1 of the Law to the higher of either (i) JPY 20 million or (ii) the amount prescribed in laws and regulations, provided that such Outside Director is bona fide and without gross negligence in performing his duty.

Mitsuo Ohashi

  

Glen S. Fukushima

  

Yukio Nozaki

   Agreement pursuant to the provisions provided for in Article 427, Paragraph 1 of the Company Law of Japan (the “Law”), which limits the liability provided for in Article 423, Paragraph 1 of the Law to the higher of either (i) JPY 20 million or (ii) the amount prescribed in laws and regulations, provided that such Outside Corporate Auditor is bona fide and without gross negligence in performing his duty.

Masahiro Seki

  

Masahiko Kadotani

  

(4) Compensation for Outside Officers

 

     (JPY million)
     Compensation Paid by MHFG   Compensation Paid by Parent
Company, etc., of MHFG

Total Amount of Compensation

   56   —  

(Notes)

1. Amounts less than JPY one million are rounded down.

2. In addition to the above, the provisions of the reserve for retirement allowances for the fiscal year are JPY 18 million for Outside Directors and JPY 10 million for Outside Corporate Auditors. No provision is made for the bonuses of officers.

(5) Opinions of Outside Officers

Not applicable

 

28


4. Matters regarding MHFG’s Shares

(1) Number of Shares as of March 31, 2007

 

     (Number of shares)

Total Number of Authorized Shares

   29,266,700

Total Number of Classes of Shares Authorized to be Issued

  

Common Stock

   24,868,200

Class XI Preferred Stock

   1,398,500

Class XII Preferred Stock

   1,500,000

Class XIII Preferred Stock

   1,500,000

Total Number of Shares Outstanding

  

Common Stock

   11,872,195.49

Eleventh Series Class XI Preferred Stock

   943,740

Thirteenth Series Class XIII Preferred Stock

   36,690

(Notes)

1. As a result of a repurchase and cancellation of treasury stock made on July 4, 2006, there was a decrease of 150,000 shares of Fourth Series Class IV Preferred Stock and a decrease of 150,000 shares of Sixth Series Class VI Preferred Stock. Accordingly, the Total Number of Authorized Shares and the Total Number of Classes of Shares Authorized to be Issued for the respective classes of Preferred Shares decreased by the same quantities.

2. As a result of a repurchase and cancellation of treasury stock made on July 7, 2006, there was a decrease of 131,800 shares of Common Stock. Accordingly, the Total Number of Authorized Shares and the Total Number of Shares Authorized to be Issued for Common Stock decreased by the same quantities.

(2) Number of Shareholders as of March 31, 2007

 

Common Stock

   319,698

Eleventh Series Class XI Preferred Stock

   3,174

Thirteenth Series Class XIII Preferred Stock

   49

(Note)

The number of shareholders of Common Stock listed above does not include the holders of 25,454 fractional shares who own only fractional shares.

 

29


(3) Major Shareholders as of March 31, 2007

a. Common Stock

 

Name of Shareholder

   Number of Shares Held and
Percentage of Shares Held
  

Number

of Shares Held

  

Percentage

of Shares Held

Japan Trustee Services Bank, Ltd. (Trustee account)

   618,108.00    5.20

The Master Trust Bank of Japan (Trustee account)

   571,497.00    4.81

Japan Trustee Services Bank, Ltd. (Trustee account 4)

   299,199.00    2.52

The Dai-ichi Mutual Life Insurance Company

   279,158.00    2.35

Mizuho Financial Strategy Co., Ltd.

   261,040.83    2.19

THE CHASE MANHATTAN BANK, N.A. LONDON

(Standing proxy agent: Mizuho Corporate Bank, Ltd.)

   245,820.00    2.07

Trust & Custody Services Bank, Ltd.

(Meiji Yasuda Life Insurance Company Retirement Benefit Trust Account re-entrusted by Mizuho Trust & Banking Co., Ltd.)

   137,000.00    1.15

Nippon Life Insurance Company

   132,630.76    1.11

STATE STREET BANK AND TRUST COMPANY

(Standing proxy agent: Mizuho Corporate Bank, Ltd.)

   128,499.00    1.08

STATE STREET BANK AND TRUST COMPANY 505103

(Standing proxy agent: Mizuho Corporate Bank, Ltd.)

   120,330.00    1.01

 

30


b. Preferred Stock

 

Name of Shareholder

  

Number of Shares Held and

Percentage of Shares Held

  

Number

of Shares Held

  

Percentage

of Shares Held

The Dai-ichi Mutual Life Insurance Company

   27,000    2.75

Meiji Yasuda Life Insurance Company

   25,000    2.54

Sompo Japan Insurance Inc.

   19,000    1.93

UBS AG LONDON A/C IPB NON SEG ACCOUNT

(Standing proxy agent: Citibank NA)

   15,770    1.60

FUKOKU MUTUAL LIFE INSURANCE COMPANY

   15,000    1.52

Marubeni Corporation

   14,500    1.47

ITOCHU Corporation

   10,000    1.01

The Kansai Electric Power Company, Incorporated

   10,000    1.01

Shiseido Company, Limited

   10,000    1.01

SHIMIZU CORPORATION

   10,000    1.01

SEIKO EPSON CORPORATION

   10,000    1.01

TAISEI CORPORATION

   10,000    1.01

Electric Power Development Co., Ltd.

   10,000    1.01

The Tokyo Electric Power Company, Incorporated

   10,000    1.01

NIPPON EXPRESS CO., LTD.

   10,000    1.01

(Notes on Major Shareholders)

1. Figures for the Percentage of Shares Held are rounded down to the nearest second decimal place.

2. As Mizuho Financial Strategy Co., Ltd. is a 100% subsidiary of MHFG, no voting rights are attached to MHFG’s Common Stock held by Mizuho Financial Strategy Co., Ltd.

3. The numbers of Preferred Stock above are the total shares of the Eleventh Series Class XI and Thirteenth Series Class XIII Preferred Stock.

4. Percentages of Shares Held of Common Stock are calculated by including the treasury stock (3,413.56 shares). There was no Preferred Stock within the treasury stock.

 

31


5. Matters regarding the Independent Auditor

(1) Independent Auditor

 

Name

  

Compensation for the Fiscal year

  

Other

Ernst & Young ShinNihon

 

Designated and Engaged Partners:

 

Naoki Matsumura, C.P.A.

 

Mutsuo Emi, C.P.A.

 

Tetsuya Mogi, C.P.A.

  

 

 

 

(JPY million)

48

   MHFG paid consideration to the Independent Auditor for certain permitted advisory services not included within the services set forth in Article 2, Paragraph 1 of the Certified Accountant Law (non-audit services) with respect to MHFG’s listing on the New York Stock Exchange, etc.

(Notes)

1. Amounts less than JPY one million are rounded down.

2. The audit contract between MHFG and the Independent Auditor does not separate the compensation for the audit under the Company Law from the compensation for the audit under the Securities and Exchange Law. Moreover, it is practically impossible to separate the two. Accordingly, the above amount is the total of such compensation.

In addition, because the amounts of compensation to be paid under the audit contract have not yet been determined, approximate amounts are used for the calculations.

3. The total amount of cash and other proprietary benefits to be paid by MHFG, its majority-owned consolidated subsidiaries and other consolidated subsidiaries, to the Independent Auditor of MHFG is JPY 4,239 million.

If the amounts to be paid under the audit contract concluded by MHFG, its majority-owned consolidated subsidiaries and other consolidated subsidiaries with the Independent Auditor have not yet been determined, approximate amounts are used for the calculations.

(2) Other Matters regarding the Independent Auditor

a. Policy for Determination of Dismissal or Non-reappointment of the Independent Auditor

Dismissal of the Independent Auditor is discussed at the Board of Directors meeting and the Board of Corporate Auditors meeting if the Independent Auditor falls under any of the events set forth in the Items of Article 340, Paragraph 1 of the Company Law.

Non-reappointment of the Independent Auditor is discussed at the Board of Directors meeting and the Board of Corporate Auditors meeting by comprehensively considering various factors, including the performance of duties and the quality of the audits by the Independent Auditor.

b. Principal Majority-owned Subsidiaries and other Subsidiaries Audited by any Certified Public Accountant or Audit Corporation other than the Independent Auditor of MHFG.

Mizuho International plc and ten other companies of MHFG’s principal majority-owned subsidiaries and other subsidiaries are subject to audits (limited to the audits under the provisions of the Company Law or the Securities and Exchange Law (including any foreign law equivalent to either of these laws)) by audit corporations (including entities in a form equivalent thereto in the relevant foreign country) other than the Independent Auditor of MHFG.

 

32


6. Structure to Ensure Appropriate Conduct of Operations

MHFG has resolved matters regarding its “Structure for Ensuring Appropriate Conduct of Operations” prescribed by the Company Law of Japan and the Enforcement Regulations of the Company Law of Japan, as summarized below.

(1) Structure to ensure that the duties of directors and employees are executed in compliance with laws, regulations and the Articles of Incorporation

 

* MHFG has set forth its structure to ensure that the duties of its directors and employees are executed in compliance with laws, regulations and the Articles of Incorporation in compliance-related rules such as the “Basic Policy of Compliance” and “Compliance Manual.”

 

* More specifically, MHFG has established complete compliance as a basic principle of management, has determined the compliance-management structure and created the “Compliance Manual,” has formulated compliance programs each fiscal year for implementation of specific plans for complete compliance, and has periodically followed up on the status of the implementation of such plans.

 

* The Board of Directors of MHFG resolved that the structure under the above “Basic Policy of Compliance,” etc. is the company’s structure to ensure that the directors and employees execute their duties in compliance with laws, regulations and the Articles of Incorporation.

(2) Structure concerning the safekeeping and management of information on the execution of duties by the directors

 

* MHFG has established a structure for the safekeeping, management, etc. of information through its information-management-related rules, including the company’s “Information Security Policy,” and the safekeeping and management of information in connection with the execution of duties by the company’s directors has also been carried out in accordance with these rules.

 

* More specifically, MHFG has fixed the period for retention of information, such as the minutes of the Board of Directors Meetings, Executive Management Committee meetings and other various committee meetings and materials related thereto, as well as ringisho (or approval documents) and reports, and has carried out other necessary matters relating to the safekeeping and management thereof.

 

* The Board of Directors of MHFG resolved that the structure under the above “Information Security Policy,” etc. is the structure concerning the safekeeping and management of information on the execution of duties by the directors.

(3) Rules and other structure for managing risk of loss

 

* MHFG has established structure for managing its risk of loss through its risk-management-related rules, including the company’s basic policy towards various risk management procedures, such as the company’s “Basic Policy for Comprehensive Risk Management.”

 

* More specifically, MHFG has defined various types of risk and has determined strategies to improve its business structure and develop human resources for risk management in order to evaluate risk qualitatively and quantitatively. Moreover, MHFG has implemented comprehensive risk management to control risk within limits acceptable to management.

 

* The Board of Directors of MHFG resolved that the structure under the above “Basic Policy for Comprehensive Risk Management,” etc. is the rules and other structure for managing the risk of loss.

 

33


(4) Structure to ensure the efficient execution of director’s duties

 

* MHFG has established a structure to ensure the efficient execution of directors’ duties through its rules, such as the “Bylaws Regarding the Board of Directors,” “Bylaws Regarding the Executive Management Committee,” “ Bylaws Regarding the Business Policy Committee,” “Organization Regulations” and “Authorization Regulations.”

 

* More specifically, MHFG has determined the criteria for matters to be resolved or reported to the Board of Directors, assignment of each organization, decision-making authority in accordance with the importance of matters, etc. MHFG also has established an Executive Management Committee and several Business Policy Committees. Thus, MHFG has ensured that the directors execute their duties efficiently on a company-wide basis.

 

* The Board of Directors of MHFG resolved that the structure under the above “Bylaws Regarding the Board of Directors,” etc. is the structure to ensure the efficient execution of directors’ duties.

(5) Structure to ensure the propriety of business operations within the corporate group consisting of MHFG and its subsidiaries

 

* MHFG has established a structure to ensure the propriety of business operations within the corporate group through its “Group Management Administration Regulations,” etc.

 

* More specifically, MHFG directly administers the management of its principal banking subsidiaries and other core group companies in accordance with the “Group Management Administration Regulations,” and principal banking subsidiaries and other core group companies administer the management of subsidiaries and affiliates other than the principal banking subsidiaries and other core group companies in accordance with standards established by MHFG.

 

* The Board of Directors of MHFG resolved that the structure under the above “ Group Management Administration Regulations,” etc. is the structure to ensure the propriety of business operations in the corporate group consisting of MHFG and its subsidiaries.

(6) Matters concerning employees posted as assistants to the corporate auditors when the corporate auditors so require

 

* The “Organization Regulations” of MHFG specify matters concerning employees posted as assistants to the corporate auditors to assist the latter in performing their duties.

 

* More specifically, MHFG has designated the Corporate Auditors Office as being in charge of matters concerning assistance in the performance of the corporate auditors’ duties and matters concerning the secretariat for the Board of Corporate Auditors. The Head of the Corporate Auditors Office manages this office’s business under the instructions of the corporate auditors.

 

* The Board of Directors of MHFG resolved that the matters specified in the above “Organization Regulations” are matters concerning employees posted as assistants to the corporate auditors if the corporate auditors so require.

(7) Matters concerning measures for ensuring that employees who assist the corporate auditors remain independent from the directors

 

* The supplementary provisions of the “Bylaws Regarding the Board of Directors” specify matters concerning the measures for ensuring that employees who assist the corporate auditors remain independent from the directors.

 

* More specifically, any change in personnel and/or organizational that relates to employees who assist the corporate auditors in performing the latter’s duties shall be subject to prior consultation with a corporate auditor nominated by the Board of Corporate Auditors.

 

34


* The Board of Directors of MHFG resolved that matters specified in the above supplementary provisions of the “Bylaws Regarding the Board of Directors” are matters concerning the measures for ensuring that employees who assist the corporate auditors remain independent from the directors.

(8) Structure under which the directors and employees report to the corporate auditors and other structure concerning reports to the corporate auditors

 

* MHFG has established a structure under which the directors and employees report to the corporate auditors in the “Bylaws Regarding the Board of Directors,” the “Bylaws Regarding the Executive Management Committee,” etc.

 

* More specifically, MHFG has regulations governing attendance by the corporate auditors in the Board of Directors Meetings, Executive Management Committee meetings, etc. MHFG also maintains procedures for circulating the ringisho (or approval documents) to be approved by the President among the corporate auditors, for reporting information received through the compliance hot-line, for reporting the results of internal audits and so on.

 

* The Board of Directors of MHFG resolved that the structure under the above “Bylaws Regarding the Board of Directors,” etc is the structure under which the directors and employees report to the corporate auditors and the other structure concerning reports to the corporate auditors.

(9) Other structure to ensure the effectiveness of audits by the corporate auditors

 

* MHFG has established a structure for ensuring the effectiveness of audits by the corporate auditors in the “Basic Policy for Internal Audit,” etc.

 

* More specifically, the internal audit division, corporate auditors and accounting auditors exchange opinions and information on a regular basis and whenever else required as a means of strengthening cooperation in efforts to enhance the effectiveness and efficiency of the overall audit function.

 

* The Board of Directors of MHFG resolved that the structure under the above “Basic Policy for Internal Audit,” etc. is the other structure for ensuring the effectiveness of the audits by the corporate auditors.

 

35


CONSOLIDATED BALANCE SHEET

AS OF MARCH 31, 2007

 

     Millions of yen  

Assets

  

Cash and Due from Banks

   ¥ 3,993,362  

Call Loans and Bills Purchased

     302,336  

Receivables under Resale Agreements

     9,430,397  

Guarantee Deposits Paid under Securities Borrowing Transactions

     8,624,211  

Other Debt Purchased

     3,351,499  

Trading Assets

     10,414,573  

Money Held in Trust

     49,558  

Securities

     36,049,983  

Loans and Bills Discounted

     65,964,301  

Foreign Exchange Assets

     894,797  

Other Assets

     5,739,458  

Tangible Fixed Assets

     796,746  

Buildings

     265,439  

Land

     398,988  

Construction in Progress

     3,010  

Other Tangible Fixed Assets

     129,308  

Intangible Fixed Assets

     255,695  

Software

     203,031  

Other Intangible Fixed Assets

     52,664  

Deferred Debenture Charges

     22  

Deferred Tax Assets

     389,024  

Customers’ Liabilities for Acceptances and Guarantees

     4,480,551  

Reserves for Possible Losses on Loans

     (856,314 )

Reserve for Possible Losses on Investments

     (174 )
        

Total Assets

   ¥ 149,880,031  
        

Liabilities

  

Deposits

   ¥ 74,803,064  

Negotiable Certificates of Deposit

     8,805,239  

Debentures

     4,723,806  

Call Money and Bills Sold

     6,924,136  

Payables under Repurchase Agreements

     12,821,752  

Guarantee Deposits Received under Securities Lending Transactions

     5,946,781  

Commercial Paper

     30,000  

Trading Liabilities

     8,297,301  

Borrowed Money

     4,563,438  

Foreign Exchange Liabilities

     339,817  

Short-term Bonds

     849,870  

Bonds and Notes

     3,237,525  

Due to Trust Accounts

     1,135,358  

Other Liabilities

     5,770,656  

Reserve for Bonus Payments

     40,972  

Reserve for Employee Retirement Benefits

     37,641  

Reserve for Director and Corporate Auditor Retirement Benefits

     6,484  

Reserve for Contingencies

     13,046  

Reserves under Special Laws

     2,680  

Deferred Tax Liabilities

     218,224  

Deferred Tax Liabilities for Revaluation Reserve for Land

     107,272  

Acceptances and Guarantees

     4,480,551  
        

Total Liabilities

     143,155,622  
        

Net Assets

  

Common Stock and Preferred Stock

     1,540,965  

Capital Surplus

     411,110  

Retained Earnings

     1,440,310  

Treasury Stock

     (32,330 )

Total Shareholders’ Equity

     3,360,055  

Net Unrealized Gains on Other Securities, net of Taxes

     1,550,628  

Net Deferred Hedge Losses, net of Taxes

     (111,042 )

Revaluation Reserve for Land, net of Taxes

     150,616  

Foreign Currency Translation Adjustments

     (38,964 )

Total Valuation and Translation Adjustments

     1,551,237  

Minority Interests

     1,813,115  
        

Total Net Assets

     6,724,408  
        

Total Liabilities and Net Assets

   ¥ 149,880,031  
        

 

36


CONSOLIDATED STATEMENT OF INCOME

FOR THE FISCAL YEAR ENDED MARCH 31, 2007

 

          Millions of yen

Ordinary Income

   ¥      ¥ 4,099,654

Interest Income

     2,562,642   

Interest on Loans and Bills Discounted

     1,302,102   

Interest and Dividends on Securities

     592,863   

Interest on Call Loans and Bills Purchased

     19,586   

Interest on Receivables under Resale Agreements

     470,335   

Interest on Securities Borrowing Transactions

     22,847   

Interest on Due from Banks

     76,527   

Other Interest Income

     78,379   

Fiduciary Income

     66,958   

Fee and Commission Income

     658,899   

Trading Income

     265,802   

Other Operating Income

     270,945   

Other Ordinary Income

     274,405   
         

Ordinary Expenses

        3,351,484

Interest Expenses

     1,472,378   

Interest on Deposits

     477,042   

Interest on Negotiable Certificates of Deposit

     107,561   

Interest on Debentures

     34,083   

Interest on Call Money and Bills Sold

     31,937   

Interest on Payables under Repurchase Agreements

     609,642   

Interest on Securities Lending Transactions

     29,083   

Interest on Commercial Paper

     52   

Interest on Borrowed Money

     38,980   

Interest on Short-term Bonds

     3,493   

Interest on Bonds and Notes

     82,172   

Other Interest Expenses

     58,328   

Fee and Commission Expenses

     107,775   

Trading Expenses

     4,258   

Other Operating Expenses

     123,438   

General and Administrative Expenses

     1,091,602   

Other Ordinary Expenses

     552,032   

Provision for Reserves for Possible Losses on Loans

     69,775   

Other

     482,256   
             

Ordinary Profits

        748,170

Extraordinary Gains

        248,411

Gains on Disposition of Tangible Fixed Assets

     16,642   

Recovery on Written-off Claims

     77,389   

Other Extraordinary Gains

     154,379   
         

Extraordinary Losses

        21,682

Losses on Disposition of Tangible Fixed Assets

     17,071   

Losses on Impairment of Fixed Assets

     4,281   

Provision for Reserve for Contingent Liabilities from Futures Transactions

     21   

Provision for Reserve for Contingent Liabilities from Securities Transactions

     307   
             

Income before Income Taxes and Minority Interests

        974,898

Income Taxes:

     

Current

        43,267

Deferred

        223,699

Minority Interests in Net Income

        86,965
         

Net Income

      ¥ 620,965
         

 

37


CONSOLIDATED STATEMENT OF CHANGES IN NET ASSETS

FOR THE FISCAL YEAR ENDED MARCH 31, 2007

 

    

Millions of yen

 
     Shareholders’ Equity     Valuation and Translation Adjustments    Minority
Interests
   Total Net
Assets
 
     Common
Stock and
Preferred
Stock
  

Capital

Surplus

    Retained
Earnings
   

Treasury

Stock

   

Total
Shareholders’

Equity

   

Net
Unrealized
Gains on
Other
Securities,

net of Taxes

  

Net Deferred
Hedge Losses,

net of Taxes

    Revaluation
Reserve for
Land, net of
Taxes
   

Foreign
Currency

Translation

Adjustments

    Total
Valuation
and
Translation
Adjustments
     

Balance as of March 31, 2006

   ¥ 1,540,965    ¥ 411,160     ¥ 1,498,143     ¥ (46,814 )   ¥ 3,403,455     ¥ 1,279,216    ¥ —       ¥ 170,384     ¥ (48,062 )   ¥ 1,401,538    ¥ 1,359,122    ¥ 6,164,116  

Changes during the fiscal year

                            

Cash Dividends *

     —        —         (79,849 )     —         (79,849 )     —        —         —         —         —        —        (79,849 )

Board Members’ Bonuses *

     —        —         (36 )     —         (36 )     —        —         —         —         —        —        (36 )

Net Income

     —        —         620,965       —         620,965       —        —         —         —         —        —        620,965  

Repurchase of Treasury Stock

     —        —         —         (604,331 )     (604,331 )     —        —         —         —         —        —        (604,331 )

Disposition of Treasury Stock

     —        32       —         50       83       —        —         —         —         —        —        83  

Cancellation of Treasury Stock

     —        (83 )     (618,680 )     618,763       —         —        —         —         —         —        —        —    

Transfer from Revaluation Reserve for Land, net of Taxes

     —        —         19,768       —         19,768       —        —         —         —         —        —        19,768  

Decrease in Stock issued by MHFG held by Equity-Method Affiliates

     —        —         —         0       0       —        —         —         —         —        —        0  

Net Changes in Items other than Shareholders’ Equity

     —        —         —         —         —         271,411      (111,042 )     (19,768 )     9,098       149,698      453,992      603,691  
                            

Total Changes during the fiscal year

     —        (50 )     (57,832 )     14,483       (43,399 )     271,411      (111,042 )     (19,768 )     9,098       149,698      453,992      560,292  
                                                                                            

Balance as of March 31, 2007

   ¥ 1,540,965    ¥ 411,110     ¥ 1,440,310     ¥ (32,330 )   ¥ 3,360,055     ¥ 1,550,628    ¥ (111,042 )   ¥ 150,616     ¥ (38,964 )   ¥ 1,551,237    ¥ 1,813,115    ¥ 6,724,408  
                                                                                            

* Appropriation of Retained Earnings approved at the ordinary general meeting of shareholders in June 2006.

 

38


[NOTES TO CONSOLIDATED FINANCIAL STATEMENTS]

BASIS FOR PRESENTATION AND PRINCIPLES OF CONSOLIDATION

 

1. Definitions of majority-owned subsidiary, other subsidiary and affiliate conform to Article 2, Paragraph 8 of the Banking Law and Article 4-2 of the Banking Law Enforcement Ordinance.

 

2. Scope of Consolidation

 

  a) Number of majority-owned consolidated subsidiaries and other consolidated subsidiaries: 133

Names of principal companies:

Mizuho Bank, Ltd.

Mizuho Corporate Bank, Ltd.

Mizuho Trust & Banking Co., Ltd.

Mizuho Securities Co., Ltd.

During the period, Mizuho Investment Management (UK) Ltd. and six other companies were newly consolidated upon their establishment and so on.

During the period, Finance & Servicing Corporation and three other companies were excluded from the scope of consolidation as a result of dissolution.

 

  b) Number of majority-owned non-consolidated subsidiaries and other non-consolidated subsidiaries : 0

 

3. Application of the Equity Method

 

  a) Number of affiliates under the equity method: 19

Names of principal companies:

The Chiba Kogyo Bank, Ltd.

Shinko Securities Co., Ltd.

Japan Mortgage Co., Ltd.

Since MHFG adopted the “Practical Solution on Application of Control Criteria and Influence Criteria to Investment Associations” (the Accounting Standards Board of Japan (“ASBJ”) Report No. 20, September 8, 2006), Japan Industrial Fund I and two other companies were newly included in the scope of the equity method.

During the period, Basic Capital Management, Limited and two other companies were excluded from the scope of the equity method as a result of becoming a MHFG’s subsidiary due to an increase in the equity position through additional stock repurchases, and other factors.

 

  b) Majority-owned non-consolidated subsidiaries, other non-consolidated subsidiaries and affiliates not under the equity method:

Name of principal company:

Asian-American Merchant Bank Limited

 

39


Majority-owned non-consolidated subsidiaries, other non-consolidated subsidiaries and 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 consolidated financial statements in terms of Net Income/Net Loss (amount corresponding to MHFG’s equity position), Retained Earnings (amount corresponding to MHFG’s equity position) and others.

 

4. Fiscal Years of Majority-owned Consolidated Subsidiaries and Other Consolidated Subsidiaries

 

  a) Balance sheet dates of majority-owned consolidated subsidiaries and other consolidated subsidiaries are as follows:

 

 

September 30

   2 companies   
 

October 31

   1 company   
 

December 31

   45 companies   
 

March 31

   63 companies   
 

The day before the last business day of June

   22 companies   

 

  b) Majority-owned consolidated subsidiaries and other consolidated subsidiaries with balance sheet dates of September 30, October 31 and the day before the last business day of June were consolidated based on their tentative financial statements as of and for the period ended December 31. Other majority-owned consolidated subsidiaries and other consolidated subsidiaries were consolidated based on their financial statements as of and for the period ended their respective balance sheet dates.

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

 

5. Evaluation of Assets and Liabilities of Majority-owned Consolidated Subsidiaries and Other Consolidated Subsidiaries

Assets and liabilities of majority-owned consolidated subsidiaries and other consolidated subsidiaries, including the portion attributable to minority shareholders, are valued at fair value as of the respective date of acquisition.

 

6. Amortization of Goodwill

As a rule, goodwill is amortized over a period up to 20 years under the straight-line method. If the amount has no material impact on MHFG’s consolidated financial statements, the entire amount is amortized in the period of occurrence.

 

40


NOTES TO CONSOLIDATED BALANCE SHEET

 

1. Amounts less than one million yen are rounded down.

 

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

 

3. Bonds held to maturity are stated at amortized cost (straight-line method) and determined by the moving average method. Investments in majority-owned non-consolidated subsidiaries, other non-consolidated subsidiaries and affiliates, which are not under the equity method, are stated at acquisition cost and determined by the moving average method. Other Securities which have readily determinable fair value are stated at fair value. Fair value of Japanese stocks with a quoted market price is determined based on the average quoted market price over the month preceding the 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 consolidated balance sheet date (cost of securities sold is calculated primarily by the moving average method). Other Securities which do not have readily determinable fair value are stated at acquisition cost or amortized cost and determined by the moving average method. The net unrealized gains 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.

 

4. Securities which are held as trust assets in Money Held in Trust accounts are valued in the same way as given in Note 3.

 

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

 

6. Depreciation of buildings is computed mainly by the straight-line method, and that of equipment is computed mainly by the declining-balance method, and the applicable share of estimated annual depreciation costs for the period is recorded based on the following range of useful lives.

Buildings:   3 years to 50 years

Equipment: 2 years to 20 years

 

7. 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 five years as determined by MHFG and consolidated subsidiaries.

 

8. Deferred assets are treated as follows:

 

  (1) Bond issuance costs are expensed as incurred.

 

  (2) Until the previous fiscal year, debenture issuance costs were capitalized and amortized over a certain period not exceeding the maximum period stipulated by the former Enforcement Regulations of the Commercial Code of Japan. However, in accordance with the application of the “Tentative Solution on Accounting for Deferred Assets” (the Accounting Standards Board of Japan (“ASBJ”) Report No. 19, August 11, 2006) effective from the fiscal year ending upon or after the public announcement of such, MHFG adopted the new accounting standard commencing with this fiscal year. The effect of the change mentioned above on the consolidated balance sheet is immaterial. Debenture issuance costs booked on the consolidated balance sheet as of March 31, 2006 are amortized under the straight-line method within a certain period by applying the previous accounting method based on the tentative measure stipulated in the ASBJ report.

 

41


  (3) Until the previous fiscal year, bond discounts and debenture discounts were capitalized and amortized under the straight-line method over the term of the bonds and debentures. However, in accordance with the partial revision of “Accounting Standards for Financial Instruments” (the Business Accounting Deliberation Council, January 22, 1999) as of August 11, 2006 (ASBJ Statement No. 10) and the application effective from the fiscal year ending upon or after the public announcement of such, MHFG adopted the revised accounting standard commencing with this fiscal year, and bonds and debentures were stated at amortized cost (straight-line method). The effect of this application on the consolidated balance sheet is immaterial. Bond discounts and debenture discounts booked on the consolidated balance sheet as of March 31, 2006 are amortized under the straight-line method over the term of the bond and debenture by applying the previous accounting method and the unamortized balance is directly deducted from bonds and debentures, based on the tentative measure stipulated in the “Tentative Solution on Accounting for Deferred Assets” (ASBJ Report No. 19, August 11, 2006).

 

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

Assets and Liabilities denominated in foreign currencies of the majority-owned consolidated subsidiaries and other consolidated subsidiaries, except for the transactions mentioned above, are translated into Japanese yen primarily at the exchange rates in effect at the consolidated balance sheet dates.

 

10. Reserves for Possible Losses on Loans of major domestic majority-owned consolidated subsidiaries and other 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 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 (defined in Note 29 below) 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 are 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. Reserves for Possible Losses on Loans are provided for on the basis of such verified assessments.

 

42


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 ¥536,916 million.

The claims above include corporate bonds which are guaranteed by domestic majority-owned consolidated banking subsidiaries and are issued by private placement (Article 2, Paragraph 3 of the Securities and Exchange Law) and others in securities.

Other majority-owned consolidated subsidiaries and 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.

 

11. 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.

 

12. Reserve for Bonus Payments, which is provided for future bonus payments to employees, is maintained at the amount accrued at the end of the fiscal year, based on the estimated future payments.

 

13. Reserve for Employee Retirement Benefits (including Prepaid Pension Cost), which is provided for future benefit payments to employees, is recorded as the required amount, based on the projected benefit obligation and the estimated plan asset amounts at the end of the fiscal year. 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 of the respective fiscal year.

 

14. Until the previous fiscal year, MHFG and certain domestic majority-owned consolidated subsidiaries and other consolidated subsidiaries recognized director and corporate auditor retirement benefits as expenses at the time of payment. However, in accordance with the public announcement of the “Accounting Standard for Directors’ Bonus” (ASBJ Statement No. 4, November 29, 2005) and the “Auditing Treatment relating to Reserve defined under the Special Tax Measurement Law, Reserve defined under the Special Law and Reserve for Director and Corporate Auditor Retirement Benefits” (The Japanese Institute of Certified Public Accountants (“JICPA”) Auditing and Assurance Practice Committee Report No. 42, April 13, 2007), these benefits are recorded as Reserve for Director and Corporate Auditor Retirement Benefits at the required amount at the end of the fiscal year, based on internally established standards. As a result, Ordinary Profits and Income before Income Taxes and Minority Interests, both decreased by ¥5,788 million, compared with the corresponding amounts under the previously applied method.

 

15. Reserve for Contingencies is maintained to provide against possible losses from contingencies, which are not covered by other specific reserves in off-balance transactions, trust transactions and others. The balance is an estimate of possible future losses, on an individual basis, considered to require a reserve.

 

16. Finance leases of MHFG and domestic majority-owned consolidated subsidiaries and other consolidated subsidiaries that do not involve transfer of ownership to the lessee are accounted for as operating leases.

 

17. Consolidated subsidiaries apply the deferred method, the fair-value hedge method or the exceptional accrual method for interest rate swaps as hedge accounting methods.

The portfolio hedge for a large volume of small-value monetary claims and liabilities of domestic majority-owned consolidated banking subsidiaries and trust banking subsidiaries is accounted for by 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). The effectiveness of hedging activities for the portfolio hedge for a large volume of small-value monetary claims and liabilities is assessed as follows:

 

43


  (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 cash flow and that of the hedging instrument.

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

Net Deferred Hedge Losses, net of Taxes recorded on the consolidated balance sheet resulted from the application of the macro-hedge method based on the “Tentative Accounting and Auditing Treatment relating to Adoption of Accounting Standards for Financial Instruments for Banks” (JICPA Industry Audit Committee Report No.15), under which the overall interest rate risks inherent in loans, deposits and others are controlled on a macro-basis using derivatives transactions. These deferred hedge gains/losses are amortized as interest income or interest expenses over the remaining maturity and average remaining maturity of the respective hedging instruments. The unamortized amounts of gross deferred hedge losses and gross deferred hedge gains on the macro-hedges, before net of applicable income taxes, at the end of the fiscal year were ¥241,602 million and ¥229,553 million, respectively.

 

18. Domestic majority-owned consolidated banking subsidiaries and trust banking subsidiary 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). The effectiveness of the hedge is assessed by confirming both the amount for the foreign currency position of the hedging instruments of currency-swap transactions, exchange swap transactions and similar transactions as the method of hedging the foreign exchange risks of monetary claims and liabilities denominated in foreign currencies and the amount for the foreign currency position of the hedged monetary claims and liabilities denominated in foreign currency are equivalent.

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 majority-owned subsidiaries, other 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.

 

19. 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 Nos. 24 and 25.

 

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

 

21. Reserves under Special Laws are recorded as follows:

Reserve for Contingent Liabilities from Futures Transactions: ¥104 million

This reserve is maintained pursuant to Article 81 of the Financial Futures Transaction Law.

Reserve for Contingent Liabilities from Securities Transactions: ¥2,575 million

This reserve is maintained pursuant to Article 51 of the Securities and Exchange Law.

 

22. Monetary claims to directors and corporate auditors of MHFG concerning transactions between the relevant parties amounted to ¥29 million (non-consolidated basis).

 

44


23. Investments in subsidiaries and affiliates amounted to ¥93,336 million (excluding majority-owned consolidated subsidiaries and other consolidated subsidiaries).

 

24. Accumulated depreciation of Tangible Fixed Assets amounted to ¥705,047 million.

 

25. The book value of Tangible Fixed Assets adjusted for gains on sales of replaced assets and others amounted to ¥42,659 million.

 

26. In addition to Fixed Assets booked on the consolidated balance sheet, certain computers are used on the basis of finance lease contracts that do not involve transfer of ownership to the lessee.

 

27. Loans and Bills Discounted include Loans to Bankrupt Obligors of ¥30,838 million and Non-Accrual Delinquent Loans of ¥633,107 million.

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 for which interest payments have been deferred in order to assist or facilitate the restructuring of the obligors.

 

28. Balance of Loans Past Due for Three Months or More: ¥10,458 million

Loans Past Due for Three Months or More are loans for which payments of principal and/or interest have not been received for a period of three months or more beginning with the next day following the last due date for such payments, and which are not included in Loans to Bankrupt Obligors, or Non-Accrual Delinquent Loans.

 

29. Balance of Restructured Loans: ¥517,986 million

Restructured Loans represent loans on which contracts were amended in favor of obligors (e.g. reduction of, or exemption from, stated interest, deferral of interest payments, extension of maturity dates, 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.

 

30. Total balance of Loans to Bankrupt Obligors, Non-Accrual Delinquent Loans, Loans Past Due for Three Months or More and Restructured Loans: ¥1,192,392 million

The amounts given in Notes 27 through 30 are gross amounts before deduction of amounts for the Reserves for Possible Losses on Loans.

 

31. In accordance with JICPA Industry Audit Committee Report No. 24, bills discounted are accounted for as financing transactions, although the banking subsidiaries have rights to sell or pledge these bankers’ acceptances, commercial bills, documentary bills and foreign exchange bills. The face value amount of these bills amounted to ¥861,428 million.

 

32. The following assets were pledged as collateral:

 

Trading Assets:    ¥4,260,215 million
Securities:    ¥11,394,744 million
Loans and Bills Discounted:    ¥5,887,983 million
Other Assets:    ¥1,405 million
Tangible Fixed Assets:    ¥211 million

 

45


The following liabilities were collateralized by the above assets:

 

Deposits:    ¥640,082 million
Call Money and Bills Sold:    ¥2,143,279 million
Payables under Repurchase Agreements:    ¥5,604,841 million
Guarantee Deposits Received under Securities Lending Transactions:    ¥5,238,721 million
Borrowed Money:    ¥2,985,346 million
Other Liabilities:    ¥8,623 million

In addition to the above, the settlement accounts of foreign and domestic exchange transactions or derivatives transactions and others were collateralized, and margins for futures transactions were substituted by Cash and Due from Banks of ¥7,428 million, Trading Assets of ¥306,986 million, Securities of ¥2,973,539 million and Loans and Bills Discounted of ¥360,776 million.

None of the assets was pledged as collateral in connection with borrowings by majority-owned non-consolidated subsidiaries, other non-consolidated subsidiaries and affiliates and affiliates.

Other Assets includes guarantee deposits of ¥120,724 million, collateral pledged for derivatives transactions of ¥489,876 million, margins for futures transactions of ¥25,814 million and other guarantee deposits of ¥3,888 million.

 

33. 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 is 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, net of Taxes 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, Item 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 Item 5.

The difference at the consolidated balance sheet date between the total fair value of land for business operation purposes, which has been revalued in accordance with Article 10 of the above-mentioned law, and the total book value of the land after such revaluation was ¥139,972 million.

 

34. Borrowed Money includes subordinated borrowed money of ¥745,002 million with a covenant that performance of the obligation is subordinated to that of other obligations.

 

35. Bonds and Notes include subordinated bonds of ¥2,117,302 million.

 

36. Liabilities for guarantees on corporate bonds included in Securities, which were issued by private placement (Article 2, Paragraph 3 of the Securities and Exchange Law) amounted to ¥1,583,072 million.

Commencing with this fiscal year, the respective amounts of “Acceptances and Guarantees” and “Customers’ Liabilities for Acceptances and Guarantees” relating to the liabilities for guarantees are netted, excluding the amounts guaranteed by the Credit Guarantee Corporations which have already been netted, in accordance with the revision of the appendix forms of “Banking Law Enforcement Regulations” (Ministry of Finance Ordinance No. 10, 1982) by the “Cabinet Office Ordinance to Amend Part of Banking Law Enforcement Regulations” (Cabinet Office Ordinance No. 38, April 17, 2007) effective from the fiscal year which began on or after April 1, 2006.

As a result, both “Acceptances and Guarantees” and “Customers’ Liabilities for Acceptances and Guarantees” decreased by ¥1,537,996 million, compared with corresponding amounts under the previously applied method.

 

37. The principal amounts of money trusts and loan trusts with contracts indemnifying the principal amounts, which are entrusted to domestic majority-owned consolidated trust banking subsidiaries, were ¥987,910 million and ¥172,055 million, respectively.

 

46


38. Net Assets per share of common stock: ¥336,937.64

“Guidance for Accounting Standards for Net Earning per Share” (ASBJ Guidance No.4, September 25, 2002) revised on January 31, 2006 took effect as of the fiscal year that ended upon or after the enforcement of the Company Law. Accordingly, MHFG has applied the above guidance starting this fiscal year, and included “Net Deferred Hedge Losses, net of Taxes” for calculation of net assets per share. As a result, Net Assets per share of common stock declined by ¥9,566.77 compared with corresponding amount under the previously applied method.

 

39. Figures for fair value and unrealized gains (losses) on securities are as follows. In addition to “Securities” on the consolidated balance sheet, trading securities, negotiable certificates of deposit (“NCDs”), commercial paper and certain other items in “Trading Assets,” NCDs in “Cash and Due from Banks,” certain items in “Other Debt Purchased” and certain items in “Other Assets” are also included. The same inclusion applies through Note 42 inclusive.

Trading Securities:

 

    

Millions of yen

    

Amount on

Consolidated BS

  

Net Unrealized Gains /

Losses Recorded on

the Consolidated

Statement of Income

Trading Securities

   ¥ 8,628,467    ¥ 5,200
             

Bonds Held to Maturity which have readily determinable fair value:

 

    

Millions of yen

    

Amount on

Consolidated BS

   Fair Value    Unrealized Gains / Losses
           Net     Gains    Losses

Japanese Government Bonds

   ¥ 969,020    ¥ 967,192    ¥ (1,828 )   ¥ 0    ¥ 1,829

Japanese Local Government Bonds

     49,980      49,797      (183 )     —        183

Other

     318,445      312,394      (6,051 )     —        6,051
                                   

Total

   ¥ 1,337,447    ¥ 1,329,383    ¥ (8,063 )   ¥ 0    ¥ 8,064
                                   
Other Securities which have readily determinable fair value:
    

Millions of yen

     Acquisition Cost    Amount on
Consolidated BS
   Unrealized Gains / Losses
         Net     Gains    Losses

Japanese Stocks

   ¥ 3,317,061    ¥ 6,010,844    ¥ 2,693,783     ¥ 2,741,841    ¥ 48,058

Japanese Bonds

     15,554,634      15,397,175      (157,458 )     3,953      161,412

Japanese Government Bonds

     14,673,319      14,521,005      (152,314 )     2,026      154,340

Japanese Local Government Bonds

     85,441      84,787      (654 )     499      1,154

Japanese Short-term Bonds

     6,906      6,905      (0 )     —        0

Japanese Corporate Bonds

     788,966      784,477      (4,489 )     1,427      5,917

Other

     9,417,961      9,322,758      (95,203 )     57,536      152,740
                                   

Total

   ¥ 28,289,657    ¥ 30,730,779    ¥ 2,441,121     ¥ 2,803,332    ¥ 362,210
                                   

 

47


Net Unrealized Gains include ¥3,935 million, which was recognized in the statement of income by applying the fair-value hedge method. As a result, the base amount to be recorded directly to Net Assets was ¥2,437,185 million and ¥1,550,515 million of the amount after the following adjustments were included in Net Unrealized Gains on Other Securities, net of Taxes:

 

Difference between acquisition cost and fair value:

   ¥ 2,437,185 million

Deferred Tax Assets:

     341 million

Less: Deferred Tax Liabilities:

     (836,509) million

Less: Amount corresponding to Minority Interests:

     (56,609) million

Amount corresponding to Net Unrealized Gains on Other Securities owned by affiliates under the equity method, which corresponds to the holding share of the Group:

     6,107 million
      

Amount included in Net Unrealized Gains on Other Securities, net of Taxes:

   ¥ 1,550,515 million

Certain Other Securities which have readily determinable 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 fiscal year (“devaluation”), if the fair value (primarily the closing market price at the consolidated balance sheet date) 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 devaluation for the fiscal year was ¥3,247 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

 

40. Other Securities sold during the fiscal year are as follows:

 

    

Millions of yen

     Amount Sold    Gains on Sales    Losses on Sales

Other Securities

   ¥ 34,125,456    ¥ 311,223    ¥ 48,873
                    

 

41. Major components of securities not stated at fair value and their amount on the consolidated balance sheet are as follows:

 

     Millions of yen
    

Amount on

Consolidated BS

Other Securities:

  

Beneficial Certificate of Loan Trust and Other

   ¥ 2,161,377

Non-publicly Offered Bonds

     2,231,551

Unlisted Foreign Securities

     1,264,857

Other

     475,292
      

 

48


42. The redemption schedule by term for Bonds Held to Maturity and Other Securities with maturities is as follows:

 

     Millions of yen
    

Within

1 year

   1-5 years    5-10 years   

Over

10 years

Japanese Bonds

   ¥ 6,648,544    ¥ 7,704,173    ¥ 2,501,038    ¥ 1,801,778

Japanese Government Bonds

     6,244,060      5,782,659      2,050,467      1,412,838

Japanese Local Government Bonds

     4,078      89,878      36,960      8,290

Japanese Short-term Bonds

     6,905      —        —        —  

Japanese Corporate Bonds

     393,499      1,831,635      413,610      380,649

Other

     1,180,743      4,208,060      2,911,237      3,838,161
                           

Total

   ¥ 7,829,288    ¥ 11,912,234    ¥ 5,412,275    ¥ 5,639,940
                           

 

43. Details of Money Held in Trust are as follows:

 

     Millions of yen
     Amount on
Consolidated BS
  

Net Unrealized Gains /

Losses Recorded on

the Consolidated

Statement of Income

Investment Purposes

   ¥ 48,872    ¥ 12
             

 

     Millions of yen
    

Acquisition

Cost

  

Amount on

Consolidated
BS

   Unrealized Gains /Losses
           Net    Gains    Losses

Other

   ¥ 686    ¥ 686    ¥ —      ¥ —      ¥ —  
                                  

There is no money held in trust held to maturity.

 

44. Unsecured securities loaned that allow borrowers to sell amounted to ¥5,093 million and were included in trading securities under Trading Assets.

A portion of unsecured borrowed securities, securities purchased under resale agreements and securities borrowed with cash collateral have the right to sell or repledge. Among them, the total of securities repledged was ¥8,769,615 million, securities re-loaned was ¥262 million and securities neither repledged nor re-loaned was ¥5,528,908 million, respectively.

 

45. Overdraft protection on current accounts and contracts for 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 amounted to ¥53,899,937 million. Of this amount, ¥44,504,074 million relates to contracts in which the original contractual maturity is one year or less, or which are unconditionally cancelable at any time.

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 obtain, moreover, real estate, securities or others as collateral at the time the contract is entered into, if needed, and periodically monitor customers’ business conditions, based on and in accordance with internally established standards, and take measures to control credit risks such as amendments to contracts, if needed.

 

49


46. The appendix forms of “Banking Law Enforcement Regulations” (Ministry of Finance Ordinance No. 10, 1982) have been revised by the “Cabinet Office Ordinance to Amend Part of Detailed Enforcement Regulations on Mutual Loan Business Law and Banking Law” (Cabinet Office Ordinance No. 60, April 28, 2006), following the application of “Accounting Standards for Presentation of Net Assets in the Balance Sheet” (ASBJ Statement No. 5, December 9, 2005) and “Guidance on Accounting Standards for Presentation of Net Assets in the Balance Sheet” (ASBJ Guidance No. 8, December 9, 2005) effective from the fiscal year ending on or after the enforcement date of the Company Law. In accordance with the application of the revised “Banking Law Enforcement Regulations” commencing with the fiscal year beginning on or after April 1, 2006, presentation of account items has been changed as follows:

 

  (1) Former “Shareholders’ Equity” is presented as “Net Assets” and classified into “Shareholders’ Equity,” “Valuation and Translation Adjustments” and “Minority Interests.”

The amount corresponding to former “Shareholders’ Equity” as of the end of this fiscal year was ¥5,022,335 million.

 

  (2) The net realized and unrealized losses from hedging instruments formerly included in “Other Assets” as deferred hedge losses are presented as “Net Deferred Hedge Losses, net of Taxes” included in Valuation and Translation Adjustments, net of applicable income taxes.

 

  (3) “Minority Interests” formerly listed after Liabilities is included in Net Assets.

 

  (4) Former “Premises and Equipment” is classified into “Tangible Fixed Assets,” “Intangible Fixed Assets” and “Other Assets.”

 

  (a) As a result, building, land and equipment formerly included in “Premises and Equipment” are presented as “Buildings,” “Land” and “Other Tangible Fixed Assets” included in “Tangible Fixed Assets,” and suspense payment for construction formerly included in the said account is presented as “Construction in Progress” included in “Tangible Fixed Assets.”

In addition, premium of “guarantee deposits and premium” formerly included in “Premises and Equipment” is presented in “Other Intangible Fixed Assets” included in “Intangible Fixed Assets,” and guarantee deposits are presented in “Other Assets.”

 

  (b) Software and other items formerly included in “Other Assets” are presented in “Software” and “Other Intangible Fixed Assets” included in “Intangible Fixed Assets.”

 

  (5) Amortization of consolidation differences formerly recognized as “Other” under “Other Ordinary Expenses” is included as amortization of intangible fixed assets in “General and Administrative Expenses” under “Ordinary Expenses.”

 

47. In response to the “Practical Solution on Application of Control Criteria and Influence Criteria to Investment Associations” (ASBJ Report No. 20, September 8, 2006) effective from the fiscal year ending upon or after the public announcement, MHFG adopted the new accounting standard commencing with this fiscal year. This adoption has no effect on the consolidated balance sheet since investment associations deemed other subsidiaries in the ASBJ report had already been consolidated.

 

48. “Accounting Standards for Treasury Shares and Appropriation of Legal Reserve” (ASBJ Statement No. 1, February 21, 2002) and “Guidance on Accounting Standards for Treasury Shares and Appropriation of Legal Reserve” (ASBJ Guidance No. 2, February 21, 2002) were partially revised as of December 27, 2005 and August 11, 2006. Given that the revisions apply to procedures stipulated by the Company Law, MHFG has applied the above standards and guidance commencing with this fiscal year. The effect of this application on the consolidated balance sheet is immaterial.

 

50


49. The Board of Directors of MHFG resolved on April 20, 2007 to redeem preferred securities issued by MHFG’s overseas special purpose subsidiaries, as described below.

 

  (1) Issuer

 

  (a) Mizuho Preferred Capital (Cayman) 1 Limited

 

  (b) Mizuho Preferred Capital (Cayman) 2 Limited

 

  (2) Type of security

Non-cumulative Perpetual Preferred Securities

 

  (3) Aggregate redemption amount

 

  (a) Series B: ¥112,500 million

 

  (b) Series A: ¥  73,000 million

 

  (4) Scheduled redemption date

June 29, 2007

 

  (5) Reason for the redemption

Arrival of optional redemption date

 

51


NOTES TO CONSOLIDATED STATEMENT OF INCOME

 

1. Amounts less than one million yen are rounded down.

 

2. Net Income per share of common stock for the fiscal year: ¥51,474.49

 

3. Diluted Net Income per share of common stock for the fiscal year: ¥48,803.07

 

4. Income or expenses on trading transactions are recognized on a trade date basis and are recorded in Trading Income or Trading Expenses on the consolidated statement of income.

Trading Income and Trading Expenses include the interest received and the interest paid during the fiscal year, 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 fiscal year, and the gains or losses resulting from any change in the value of financial derivatives between the beginning and the end of the fiscal year, assuming they were settled at the end of the fiscal year.

 

5. Other Ordinary Income includes gains on sales of stocks of ¥231,265 million.

 

6. Other Ordinary Expenses includes losses on devaluation of stocks of ¥335,790 million and losses on write-offs of loans of ¥67,141 million.

 

7. Other Extraordinary Gains includes gains on cancellation of employee retirement benefit trust of ¥125,961 million and reversal of reserve for contingencies of ¥28,257 million.

 

8. The differences between the recoverable amount and the book value of the following assets were recognized as Losses on Impairment of Fixed Assets included in Extraordinary Losses during the fiscal year:

 

    

Millions of yen

Area

  

Principal purpose of use

  

Type

   Losses

Tokyo

Metropolitan

Area

   Branch premises to be closed    3 branches   

Land, Buildings

and Premises, etc.

   ¥ 1,299
   Idle assets    32 items      

Other

   Branch premises    1 branch   

Land, Buildings

and Premises, etc.

   ¥ 2,981
   Idle assets    61 items      

Domestic majority-owned consolidated banking subsidiaries, trust banking subsidiary and certain domestic majority-owned consolidated subsidiaries recognize Losses on Impairment of Fixed Assets for branch premises to be closed, branch premises and idle assets. For the purposes of identifying impaired assets in such cases, the individual asset is assessed as a unit. The recoverable amount is calculated based on net realizable value. Net realizable value is calculated based on the valuation by road rating with reasonable adjustments to compensate for sites with long depth and other factors, the appraisal value and others, less estimated cost of disposition.

 

52


NOTES TO CONSOLIDATED STATEMENT OF CHANGES IN NET ASSETS

1. Amounts less than one million yen are rounded down.

2. Types and number of outstanding shares and of treasury stock are as follows:

 

     Thousands of Shares
     As of
March 31,
2006
   Increase
during the
fiscal year
   Decrease
during the
fiscal year
  

As of

March 31,

2007

   Remarks

Outstanding shares

              

Common stock

   12,003    —      131    11,872    *1

Fourth Series Class IV Preferred Stock

   150    —      150    —      *2

Sixth Series Class VI Preferred Stock

   150    —      150    —      *2

Eleventh Series Class XI Preferred Stock

   943    —      —      943   

Thirteenth Series Class XIII Preferred Stock

   36    —      —      36   
                        

Total

   13,284    —      431    12,852   
                        

Treasury stock

              

Common stock

   396    0    131    265    *3

Fourth Series Class IV Preferred Stock

   —      150    150    —      *2

Sixth Series Class VI Preferred Stock

   —      150    150    —      *2
                        

Total

   396    300    431    265   
                        

*1. Decreases are due to cancellation of treasury stock (common stock).
*2. Increases and decreases are due to repurchase and cancellation of treasury stock (preferred stock).
*3. Increases are due to repurchase of fractional shares (0 thousand shares), decreases are due to cancellation of treasury stock (131 thousand shares of common stock) and additional purchase of fractional shares (0 thousand shares).

 

53


3. Cash dividends distributed by MHFG are as follows (non-consolidated basis):

Cash dividends paid during the fiscal year ended March 31, 2007

 

Resolution

 

Types

  

Cash

Dividends

(Millions of yen)

  

Cash
Dividends
per Share

(Yen)

  

Record

Date

   Effective
Date
 

June 27,

2006

   

Common Stock

   48,005    4,000    March 31,
2006
   June 27,
2006
     

 

Fourth Series Class

IV Preferred Stock

   7,140    47,600    March 31,
2006
  

(

 

Ordinary

General Meeting

of Shareholders

  )  

 

Sixth Series Class VI

Preferred Stock

   6,300    42,000    March 31,
2006
  
     

 

Eleventh Series Class

XI Preferred Stock

   18,874    20,000    March 31,
2006
  
     

 

Thirteenth Series Class

XIII Preferred Stock

   1,100    30,000    March 31,
2006
  
   

Total

           81,421               

Cash dividends with record dates falling in the fiscal year ended March 31, 2007 and effective dates coming after the end of the fiscal year

 

Resolution

  

Types

  

Cash

Dividends

(Millions of yen)

   Resource
of
Dividends
  

Cash
Dividends
per Share

(Yen)

  

Record

Date

   Effective
Date
 

June 26,

2007

    

Common Stock

   83,081    Retained
Earnings
   7,000    March 31,
2007
   June 26,
2007
      

Eleventh Series

Class XI

Preferred Stock

   18,874    Retained
Earnings
   20,000    March 31,
2007
  

(

 

Ordinary

General Meeting

of Shareholders

 

)

  

Thirteenth Series

Class XIII

Preferred Stock

   1,100    Retained
Earnings
   30,000    March 31,
2007
  

Cash dividends on common stock and preferred stock are proposed as above as a matter to be resolved at the ordinary general meeting of shareholders scheduled to be held on June 26, 2007.

 

4. “Accounting Standards for Statement of Changes in Net Assets” (ASBJ Statement No. 6, December 27, 2005) and “Guidance on Accounting Standards for Statement of Changes in Net Assets” (ASBJ Guidance No. 9, December 27, 2005) took effect as of the fiscal year ended on or after the enforcement date of the Company Law. Thus, the standards and guidance were adopted commencing with this fiscal year.

 

54


[Translation]

Report of Independent Auditors

May 17, 2007

The Board of Directors of Mizuho Financial Group, Inc.

 

 

  

Ernst & Young ShinNihon

  

Naoki Matsumura

Certified Public Accountant

Designated and Operating Partner

  

Mutsuo Emi

Certified Public Accountant

Designated and Operating Partner

  

Tetsuya Mogi

Certified Public Accountant

Designated and Operating Partner

Pursuant to Article 444, Paragraph 4 of the Company Law, we have audited the consolidated balance sheet, the consolidated statement of income, the consolidated statement of changes in net assets and the notes to the consolidated financial statements of Mizuho Financial Group, Inc. (the “Company”) applicable to the fiscal year from April 1, 2006 through March 31, 2007. These consolidated financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on these consolidated financial statements based on our audit.

We conducted our audit in accordance with auditing standards generally accepted in Japan. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the consolidated financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the consolidated financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the consolidated financial statements. We believe that our audit provides a reasonable basis for our opinion.

In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position and results of operations of the Mizuho Financial Group, which consisted of the Company and consolidated subsidiaries, applicable to the fiscal year ended March 31, 2007 in conformity with accounting principles generally accepted in Japan.

We have no interest in the Company which should be disclosed in compliance with the Certified Public Accountants Law.

 

55


[Translation]

Audit Report on the Consolidated Financial Statements

The Board of Corporate Auditors, upon deliberation, prepared this audit report regarding the consolidated financial statements (consolidated balance sheet, consolidated statements of income, consolidated statements of changes in shareholders’ equity and notes to the consolidated financial statements) for the 5th fiscal year from April 1, 2006 to March 31, 2007, based on the audit reports prepared by each Corporate Auditor and hereby reports as follows:

 

1. Auditing Method Employed by Corporate Auditors and the Board of Corporate Auditors and Details Thereof

The Board of Corporate Auditors established an auditing policy and auditing plans, including assignment of the duties of each Corporate Auditor, received from each Corporate Auditor reports on the execution of audits and results thereof, and in addition, received from the Directors, etc., and the independent auditors reports on the performance of their duties and, when necessary, requested explanations regarding such reports.

In accordance with the auditing standards for Corporate Auditors established by the Board of Corporate Auditors, each Corporate Auditor, based on the auditing plans, has received from the Directors, employees and other related persons reports on the consolidated financial statements and, when necessary, requested explanations regarding such reports.

In addition, the Corporate Auditors monitored and examined whether the independent auditors maintain their independence and carry out audits in an appropriate manner. The Corporate Auditors received from the independent auditors reports on the performance of their duties and, when necessary, requested explanations regarding those reports. The Corporate Auditors also received notification from the independent auditors regarding the “Structure for ensuring appropriate execution of the duties of the independent auditors” (as enumerated in each Item of Article 159 of the Company Calculation Regulations). When necessary, the Corporate Auditors requested explanations on such notification.

 

2. Audit Results

In our opinion, the method and results of the audit employed and rendered by Ernst & Young ShinNihon, the independent auditors, are fair and reasonable.

May 21, 2007

 

  Mizuho Financial Group, Inc. Board of Corporate Auditors
 

Full time Corporate Auditor

   (Yoshiaki Sugita)    (seal)
 

Full time Corporate Auditor

   (Junichi Iwabuchi)    (seal)
 

Outside Corporate Auditor

   (Yukio Nozaki)    (seal)
 

Outside Corporate Auditor

   (Masahiro Seki)    (seal)
 

Outside Corporate Auditor

   (Masahiko Kadotani)    (seal)

 

56


NON-CONSOLIDATED BALANCE SHEET

AS OF MARCH 31, 2007

 

     Millions of yen  

Assets

  

Current Assets

  

Cash and Due from Banks

   ¥ 2,726  

Advances

     6  

Prepaid Expenses

     3,434  

Accounts Receivable

     248,480  

Other Current Assets

     3,701  

Total Current Assets

     258,349  

Fixed Assets

  

Tangible Fixed Assets

     952  

Buildings

     227  

Equipment

     724  

Intangible Fixed Assets

     4,199  

Trademarks

     117  

Software

     3,848  

Other Intangible Fixed Assets

     233  

Investments

     4,500,535  

Investment Securities

     2  

Investments in Subsidiaries and Affiliates

     4,496,431  

Other Investments

     4,102  

Total Fixed Assets

     4,505,687  
        

Total Assets

   ¥  4,764,036  
        

Liabilities

  

Current Liabilities

  

Short-term Borrowings

   ¥ 1,380,000  

Short-term Bonds

     203,000  

Accounts Payable

     658  

Accrued Expenses

     1,052  

Accrued Corporate Taxes

     138  

Deposits Received

     57  

Reserve for Bonus Payments

     187  

Total Current Liabilities

     1,585,093  

Non-Current Liabilities

  

Deferred Tax Liabilities

     777  

Reserve for Employee Retirement Benefits

     704  

Reserve for Director and Corporate Auditor Retirement Benefits

     648  

Other Non-Current Liabilities

     407  

Total Non-Current Liabilities

     2,538  
        

Total Liabilities

     1,587,631  
        

Net Assets

  

Shareholders’ Equity

  

Common Stock and Preferred Stock

     1,540,965  

Capital Surplus

  

Capital Reserve

     385,241  

Total Capital Surplus

     385,241  

Retained Earnings

  

Appropriated Reserve

     4,350  

Other Retained Earnings

     1,247,876  

Retained Earnings Brought Forward

     1,247,876  

Total Retained Earnings

     1,252,226  

Treasury Stock

     (2,037 )

Total Shareholders’ Equity

     3,176,394  

Valuation and Translation Adjustments

  

Net Unrealized Gains on Other Securities, net of Taxes

     9  

Total Valuation and Translation Adjustments

     9  
        

Total Net Assets

     3,176,404  
        

Total Liabilities and Net Assets

   ¥  4,764,036  
        

 

57


NON-CONSOLIDATED STATEMENT OF INCOME

FOR THE FISCAL YEAR ENDED MARCH 31, 2007

 

     Millions of yen  

Operating Income

   ¥                     

Cash Dividends Received from Subsidiaries and Affiliates

     1,220,997  

Fee and Commission Income Received from Subsidiaries and Affiliates

     29,102  

Total Operating Income

     1,250,099  

Operating Expenses

  

General and Administrative Expenses

     19,205  

Total Operating Expenses

     19,205  
        

Operating Profits

     1,230,893  
        

Non-Operating Income

  

Rent Received

     2  

Other Non-Operating Income

     212  

Total Non-Operating Income

     214  

Non-Operating Expenses

  

Interest Expenses

     11,256  

Interest on Short-term Bonds

     1,052  

Amortization of Start-Up Costs

     304  

Other Non-Operating Expenses

     26  

Total Non-Operating Expenses

     12,640  
        

Ordinary Profits

     1,218,468  
        

Extraordinary Gains

  

Gains on Disposition of Investments in Subsidiaries

     24,195  

Other Extraordinary Gains

     614  

Total Extraordinary Gains

     24,809  

Extraordinary Losses

  

Other Extraordinary Losses

     3,640  

Total Extraordinary Losses

     3,640  
        

Income before Income Taxes

     1,239,637  
        

Income Taxes:

  

Current

     5  

Deferred

     (78 )
        

Net Income

   ¥ 1,239,710  
        

 

58


NON-CONSOLIDATED STATEMENT OF CHANGES IN NET ASSETS

FOR THE FISCAL YEAR ENDED MARCH 31, 2007

 

     Millions of yen  
     Shareholders’ Equity     Valuation
and
Translation
Adjustments
    Total Net
Assets
 
          Capital Surplus     Retained Earnings     Treasury
Stock
    Total
Shareholders’
Equity
    Net
Unrealized
Gains on
Other
Securities,
net of Taxes
   
     Common
Stock and
Preferred
Stock
   Capital
Reserve
   Other
Capital
Surplus
    Total
Capital
Surplus
    Appropriated
Reserve
   Other
Retained
Earnings
    Total
Retained
Earnings
         
                Retained
Earnings
Brought
Forward
           

Balance as of March 31, 2006

   ¥ 1,540,965    ¥ 385,241    ¥ 50     ¥ 385,291     ¥ 4,350    ¥ 822,956     ¥ 827,306     ¥ (1,255 )   ¥ 2,752,307     ¥ 12     ¥ 2,752,319  
                                                                                     

Changes during the fiscal year

                         

Cash Dividends *

     —        —        —         —         —        (81,421 )     (81,421 )     —         (81,421 )     —         (81,421 )

Net Income

     —        —        —         —         —        1,239,710       1,239,710       —         1,239,710       —         1,239,710  

Repurchase of Treasury Stock

     —        —        —         —         —        —         —         (734,285 )     (734,285 )     —         (734,285 )

Disposition of Treasury Stock

     —        —        32       32       —        —         —         50       83       —         83  

Cancellation of Treasury Stock

     —        —        (83 )     (83 )     —        (733,369 )     (733,369 )     733,452       —         —         —    

Net Changes in Items other than Shareholders’ Equity

     —        —        —         —         —        —         —         —         —         (2 )     (2 )
                                                                                     

Total Changes during the fiscal year

     —        —        (50 )     (50 )     —        424,920       424,920       (782 )     424,087       (2 )     424,084  
                                                                                     

Balance as of March 31, 2007

   ¥ 1,540,965    ¥ 385,241      —       ¥ 385,241     ¥ 4,350    ¥ 1,247,876     ¥ 1,252,226     ¥ (2,037 )   ¥ 3,176,394     ¥ 9     ¥ 3,176,404  
                                                                                     

* Appropriation of Retained Earnings approved at the ordinary general meeting of shareholders in June 2006.

 

59


[NOTES TO NON-CONSOLIDATED FINANCIAL STATEMENTS]

BASIS FOR PRESENTATION AND PRINCIPLES OF PREPARATION OF FINANCIAL STATEMENTS

 

1. Valuation of Securities

Investments in subsidiaries and affiliates and Other Securities which do not have readily determinable fair value are stated at acquisition cost and determined by the moving average method.

 

2. Depreciation and Amortization of Fixed Assets

 

(a) Tangible Fixed Assets

Depreciation of Buildings is computed by the straight-line method, and that of Equipment is computed by the declining-balance method with the following range of useful lives.

Buildings: 4 years to 47 years

Equipment: 2 years to 17 years

 

(b) Intangible Fixed Assets

Trademarks are amortized under the straight-line method over ten years.

Development costs for internally-used software are capitalized and amortized under the straight-line method over their estimated useful lives of mainly five years.

 

3. Capitalization and Amortization of Deferred Assets

Establishment Costs and Start-Up Costs are capitalized and amortized under the straight-line method over five years.

 

4. Reserves

 

(a) Reserve for Bonus Payments, which is provided for future bonus payments to employees, is maintained at the amount accrued at the end of the fiscal year, based on the estimated future payments

 

(b) Reserve for Employee Retirement Benefits, which is provided for future benefit payments to employees, is recorded as the required amount, based on the projected benefit obligation and the estimated plan asset amounts at the end of the fiscal year. Unrecognized actuarial differences are recognized as income or expenses from the following fiscal year under the straight-line method over a certain term (ten years) within the average remaining service period of the employees of the respective fiscal year.

 

(c) Reserve for Director and Corporate Auditor Retirement Benefits, which is provided for future retirement benefit payments to directors and corporate auditors, is recorded as the required amount at the end of the fiscal year, based on internally established standards.

(Changes in Basis for Presentation and Principles of Preparation of Financial Statements)

Until the previous fiscal year, MHFG recognized director and corporate auditor retirement benefits as expenses at the time of payment. However, in accordance with the public announcement of the “Accounting Standard for Directors’ Bonus” (the Accounting Standards Board of Japan (“ASBJ”) Statement No. 4, November 29, 2005) and the “Auditing Treatment relating to Reserve defined under the Special Tax Measurement Law, Reserve defined under the Special Law and Reserve for Director and Corporate Auditor Retirement Benefits” (The Japanese Institute of Certified Public Accountants (“JICPA”) Auditing and Assurance Practice Committee Report No. 42, April 13, 2007), these benefits are recorded as Reserve for Director and Corporate Auditor Retirement Benefits at the required amount at the end of the fiscal year, based on internally established standards. As a result, Ordinary Profits and Income before Income Taxes, both decreased by ¥648 million, compared with the corresponding amounts under the previously applied method.

 

60


5. Leases

Finance leases that do not involve transfer of ownership to the lessee are accounted for as operating leases.

 

6. Consumption Taxes and Local Consumption Taxes

Consumption taxes and local consumption taxes are excluded from transaction amounts.

CHANGES IN BASIS FOR PRESENTATION AND PRINCIPLES OF PREPARATION OF FINANCIAL STATEMENTS

 

1. Accounting Standards for Presentation of Net Assets in the Balance Sheet

“Accounting Standards for Presentation of Net Assets in the Balance Sheet” (ASBJ Statement No. 5, December 9, 2005) and “Guidance on Accounting Standards for Presentation of Net Assets in the Balance Sheet” (ASBJ Guidance No. 8, December 9, 2005) were applied effective from this fiscal year. The amount corresponding to former “Shareholders’ Equity” as of the end of this fiscal year was ¥3,176,404 million.

 

2. Accounting Standards for Treasury Shares and Appropriation of Legal Reserve

“Accounting Standards for Treasury Shares and Appropriation of Legal Reserve” (ASBJ Statement No. 1, February 21, 2002) and “Guidance on Accounting Standards for Treasury Shares and Appropriation of Legal Reserve” (ASBJ Guidance No. 2, February 21, 2002) were partially revised as of December 27, 2005 and August 11, 2006. Given that the revisions apply to procedures stipulated by the Company Law, MHFG has applied the above standards and guidance commencing with this fiscal year. The effect of this application on the non-consolidated balance sheet is immaterial.

CHANGES IN PRESENTATION OF FINANCIAL STATEMENTS

Until the previous fiscal year, “Investments in Affiliates” was included in and presented as “Investment Securities.” Commencing with this fiscal year, “Investments in Affiliates” as well as “Investments in Subsidiaries” are included in and presented as “Investments in Subsidiaries and Affiliates,” based on the “Ordinance for Accounting of the Company Law.”

The amount of “Investments in Subsidiaries” at the end of the previous fiscal year was ¥3,996 million.

NOTES TO NON-CONSOLIDATED BALANCE SHEET

 

1. Amounts less than one million yen are rounded down.

 

2. Assets pledged as collateral accounted for ¥1,072 million of Investments.

 

3. Accumulated depreciation of Tangible Fixed Assets amounted to ¥1,184 million.

Accumulated amortization of Intangible Fixed Assets amounted to ¥4,346 million.

 

4. Guarantee

 

(a) MHFG has guaranteed on a subordinated basis the principal of and interest on the subordinated notes issued by Mizuho Financial Group (Cayman) Limited. The amount of the subordinated guarantee is ¥484,887 million.

 

(b) Based upon the regulations of the German Deposit Protection Fund, MHFG has submitted to the Association of German Banks a letter of indemnity to recompense the association regarding deposits of the German branches of Mizuho Corporate Bank, Ltd. and Mizuho Corporate Bank (Germany) Aktiengesellschaft if necessary.

 

Mizuho Corporate Bank, Ltd.

   ¥ 34,695 million

Mizuho Corporate Bank (Germany) Aktiengesellschaft

   ¥ 9,583 million

 

61


5. Short-term monetary claims against subsidiaries and affiliates amounted to ¥2,727 million.

Short-term monetary liabilities against subsidiaries and affiliates amounted to ¥1,380,000 million.

Long-term monetary claims against subsidiaries and affiliates amounted to ¥18 million.

Long-term monetary liabilities against subsidiaries and affiliates amounted to ¥407 million.

NOTES TO NON-CONSOLIDATED STATEMENT OF INCOME

 

1. Amounts less than one million yen are rounded down.

 

2. Transactions with subsidiaries and affiliates

 

Operating transactions

  

Operating Income

   ¥ 1,250,099 million

Operating Expenses

   ¥ 4,114 million

Other than operating transactions

   ¥ 35,492 million

 

3. Other Non-Operating Income includes interest on the refund of withholding tax and others of ¥153 million.

 

4. Other Extraordinary Losses include expenses of ¥3,602 million related to the listing on the New York Stock Exchange.

NOTES TO NON-CONSOLIDATED STATEMENT OF CHANGES IN NET ASSETS

 

1. Amounts less than one million yen are rounded down.

 

2. Types and number of treasury stock are as follows:

 

 

     Thousands of Shares
     As of
March 31,
2006
   Increase
during the
fiscal year
   Decrease
during the
fiscal year
   As of
March 31,
2007
   Remarks

Treasury stock

              

Common stock

   2    132    131    3    *1

Fourth Series Class IV Preferred Stock

   —      150    150    —      *2

Sixth Series Class VI Preferred Stock

   —      150    150    —      *2
                        

Total

   2    432    431    3   
                        
 
  *1. Increases are due to repurchase of treasury stock (131 thousand shares of common stock) and fractional shares (0 thousand shares), decreases are due to cancellation of treasury stock (131 thousand shares of common stock) and additional purchase of fractional shares (0 thousand shares).
  *2. Increases and decreases are due to repurchase and cancellation of treasury stock (preferred stock).

 

3. “Accounting Standards for Statement of Changes in Net Assets” (ASBJ Statement No. 6, December 27, 2005) and “Guidance on Accounting Standards for Statement of Changes in Net Assets” (ASBJ Guidance No. 9, December 27, 2005) took effect as of the fiscal year ended on or after the enforcement date of the Company Law. Thus, the standards and guidance were adopted commencing with this fiscal year for preparing the “Non-Consolidated Statement of Changes in Net Assets.”

 

62


NOTES TO DEFERRED TAXES

Breakdown of Deferred Tax Assets / Liabilities

 

 

     Millions of yen  

Deferred Tax Assets

  

Investments in Subsidiaries and Affiliates

   ¥ 1,385,885  

Tax Losses Carried Forward

     522,251  

Other

     808  

Sub-total of Deferred Tax Assets

     1,908,945  

Valuation Allowance

     (1,908,617 )

Total Deferred Tax Assets

     328  

Deferred Tax Liabilities

  

Prepaid Pension Cost

     (1,099 )

Other

     (6 )

Total Deferred Tax Liabilities

     (1,106 )

Net Deferred Tax Assets (Liabilities)

   ¥ (777 )

NOTES TO FIXED ASSETS USED ON THE BASIS OF FINANCE LEASE CONTRACTS

In addition to Fixed Assets booked on the non-consolidated balance sheet, equipment (including vehicles) is used on the basis of finance lease contracts that do not involve transfer of ownership to the lessee.

NOTES TO PER SHARE INFORMATION

 

1. Total Net Assets per Share of Common Stock is based on the following information:

 

Total Net Assets per Share of Common Stock

   ¥    183,338.04  

Total Net Assets

   ¥ million    3,176,404  

Deductions from Total Net Assets

   ¥ million    1,000,405  

Paid-in Amount of Preferred Stock

   ¥ million    (980,430 )

Cash Dividends on Preferred Stock

   ¥ million    (19,975 )

Net Assets (year-end) related to Common Stock

   ¥ million    2,175,999  
           

Year-end Outstanding Shares of Common Stock, based on which Total Net Assets per Share of Common Stock was calculated

   Thousands
of shares
   11,868  
           

 

63


2. Net Income per Share of Common Stock is based on the following information:

 

Net Income per Share of Common Stock    ¥    102,168.76  

Net Income

   ¥ million    1,239,710  

Amount not attributable to Common Stock

   ¥ million    23,472  

Cash Dividends on Preferred Stock

   ¥ million    (19,975 )

Deemed Dividends on Cancellation of Preferred Stock

   ¥ million    (3,497 )

Net Income related to Common Stock

   ¥ million    1,216,237  
           

Average Outstanding Shares of Common Stock (during the period)

   Thousands
of shares
   11,904  
           

 

64


[Translation]

Report of Independent Auditors

May 17, 2007

The Board of Directors of Mizuho Financial Group, Inc.

 

Ernst & Young ShinNihon

 
 

Naoki Matsumura

 

Certified Public Accountant

 

Designated and Operating Partner

 
 

Mutsuo Emi

 

Certified Public Accountant

 

Designated and Operating Partner

 
 

Tetsuya Mogi

 

Certified Public Accountant

 

Designated and Operating Partner

Pursuant to Article 436, Section 2, Paragraph 1 of the Company Law, we have audited the balance sheet, the statement of income, the statement of changes in net assets, the notes to the financial statements and the related supplementary schedules of Mizuho Financial Group, Inc. (the “Company”) applicable to the 5th fiscal year from April 1, 2006 through March 31, 2007. These financial statements and the related supplementary schedules are the responsibility of the Company’s management. Our responsibility is to express an opinion on these financial statements and the related supplementary schedules based on our audit.

We conducted our audit in accordance with auditing standards generally accepted in Japan. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements and the related supplementary schedules are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements and the related supplementary schedules. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements and the related supplementary schedules. We believe that our audit provides a reasonable basis for our opinion.

In our opinion, the financial statements and the related supplementary schedules referred to above present fairly, in all material respects, the financial position and results of operations of Mizuho Financial Group, Inc. applicable to the 5th fiscal year ended March 31, 2007 in conformity with accounting principles generally accepted in Japan.

We have no interest in the Company which should be disclosed in compliance with the Certified Public Accountants Law.

 

65


[Translation]

Audit Report

The Board of Corporate Auditors, upon deliberation, prepared this audit report regarding the performance of duties of the Directors of the Company during the 5th fiscal year from April 1, 2006 to March 31, 2007, based on the audit reports prepared by each Corporate Auditor and hereby reports as follows:

 

1. Auditing Method Employed by Corporate Auditors and the Board of Corporate Auditors and Details Thereof

The Board of Corporate Auditors established an auditing policy and auditing plans, including assignment of the duties of each Corporate Auditor, received from each Corporate Auditor reports on the execution of audits and results thereof, and in addition, received from the Directors, etc., and the independent auditors reports on the performance of their duties and, when necessary, requested explanations regarding such reports.

In accordance with the auditing standards for Corporate Auditors established by the Board of Corporate Auditors, each Corporate Auditor, based on the auditing plans, has endeavored to gather information and create an improved environment for auditing. Each Corporate Auditor also attended meetings of the Board of Directors and other important meetings, received from the Directors, employees and other related persons reports on the performance of their duties and when necessary, requested explanations regarding such reports. Also, each Corporate Auditor inspected important authorized documents and associated information and examined the business and financial position of the Company. In addition, each Corporate Auditor monitored and examined the content of resolutions made by the Board of Directors regarding the establishment of structures, to ensure that the performance of duties by the Directors will be in compliance with the laws and regulations of Japan and with the Company’s Articles of Incorporation and other structures as provided for in Article 100, Paragraphs 1 and 3 of the Enforcement Regulations of the Company Law of Japan, to ensure that the Company’s operation will be conducted appropriately. Moreover, each Corporate Auditor monitored and examined the status of such structures that have been established in compliance with such resolutions (internal control systems).

As for the subsidiaries of the Company, each Corporate Auditor has shared information with the directors and corporate auditors and other related persons of the subsidiaries and, when necessary, received reports from the subsidiaries regarding their businesses. Based on the foregoing method, we examined the business report and the supplementary schedules for this fiscal year.

In addition, the Corporate Auditors also monitored and examined whether the independent auditors maintain their independence and carry out audits in an appropriate manner. The Corporate Auditors received from the independent auditors reports on the performance of their duties and, when necessary, requested explanations regarding those reports. The Corporate Auditors also received notification from the independent auditors regarding the “Structure for ensuring appropriate execution of the duties of the independent auditors” (as enumerated in each Item of Article 159 of the Company Calculation Regulations). When necessary, the Corporate Auditors requested explanations on such notification. Based on the foregoing method, the Corporate Auditors reviewed the financial statements for this fiscal year (non-consolidated balance sheet, non-consolidated statements of income, non-consolidated statements of changes in shareholders’ equity and notes to the non-consolidated financial statements) and supplementary schedules thereto.

 

66


2. Audit Results

 

(1) Audit Results on the Business Report, etc.

 

  A. In our opinion, the business report and the supplementary schedules fairly represent the Company’s condition in conformity with the applicable laws and regulations of Japan as well as the Articles of Incorporation of the Company.

 

  B. With regard to the execution of duties by the Directors, we have found no evidence of misconduct or material facts in violation of the applicable laws and regulations of Japan or the Articles of Incorporation of the Company in the course of the execution of duties of the Directors.

 

  C. In our opinion, the content of the resolutions of the Board of Directors regarding the internal control systems is appropriate, and furthermore, we have not found anything to be pointed out on the performance of duties of the Directors regarding the internal control systems.

 

(2) Results of Audit of the Financial Statements and Supplementary Schedules

In our opinion, the method and results of the audit employed and rendered by Ernst & Young ShinNihon, the independent auditors, are fair and reasonable.

May 21, 2007

 

   Mizuho Financial Group, Inc. Board of Corporate Auditors
   Full time Corporate Auditor    (Yoshiaki Sugita)   (seal)
   Full time Corporate Auditor    (Junichi Iwabuchi)   (seal)
   Outside Corporate Auditor    (Yukio Nozaki)   (seal)
   Outside Corporate Auditor    (Masahiro Seki)   (seal)
   Outside Corporate Auditor    (Masahiko Kadotani)   (seal)

– End of Attached Materials –

 

67


Announcement Regarding Repurchase of Own Stock Held by a Subsidiary and Setting up a Limit for Repurchase of Own Stock

We, Mizuho Financial Group, Inc., after receipt of (i) the Audit Report prepared by the Board of Corporate Auditors with respect to the non-consolidated financial statements and the business report, and the supplementary schedules thereof, and (ii) the Audit Report prepared by the Board of Corporate Auditors with respect to the consolidated financial statements, resolved the following matters at the meeting of the Board of Directors, which were subsequently announced to the public.

1. Repurchase of Own Stock Held by a Subsidiary

We, at the meeting of the Board of Directors held on May 22, 2007, resolved to repurchase and cancel our common stock held by Mizuho Financial Strategy Co., Ltd., our subsidiary, and the repurchase and cancellation were completed as described in detail below. This repurchase was made for the purpose of retiring all our shares (261,040.83 shares), which the subsidiary stated above acquired and held at that time in the course of the Business Reorganization in March 2003.

Details of Repurchase and Cancellation

 

  (1) Type of shares to be repurchased:

Shares of common stock of Mizuho Financial Group, Inc.

 

  (2) Aggregate number of shares to be repurchased:

261,040 shares

 

  (3) Aggregate amount of repurchase:

JPY 221.1 billion

 

  (4) Date of repurchase and cancellation:

Monday, May 28, 2007

 

  (5) Method of repurchase:

Direct purchase

We repurchased and cancelled the fractional shares of our common stock (0.83 shares) based on our Share Handling Regulations. By doing so, we completed the repurchase and cancellation of all our common stock held by our subsidiary stated above.

 

68


2. Setting up a Limit for Repurchase of Own Stock

We, at the meeting of the Board of Directors held on May 22, 2007, set up a limit for repurchasing our common stock up to the maximum amount of JPY 150 billion as described below. This repurchase will be made for the purpose of offsetting the potential dilutive effect due to the commencement of the conversion period for the Eleventh Series Class XI Preferred Stock from July 1, 2008.

Details of Repurchase

 

  (1) Type of shares to be repurchased:

Shares of common stock of Mizuho Financial Group, Inc.

 

  (2) Aggregate number of shares to be repurchased:

Up to a maximum of 250,000 shares

 

  (3) Aggregate amount of repurchase:

Up to a maximum of JPY 150 billion

 

  (4) Period of repurchase:

From June 1, 2007 to November 30, 2007

We plan to cancel all the common shares repurchased.

We will continue to consider setting up additional repurchase limits and conducting share repurchases for the same purpose as described above, based on market conditions, our earnings trend and other factors.

-End of Document-

 

69


[Translation]

Reference Materials for the Ordinary General Meeting of Shareholders

Proposals and Reference Matters:

Proposal 1: Disposal of surplus

The Company will place our management emphasis on ROE (Return on Equity) from the perspective of effective utilization of our capital and consider returning profits to our shareholders while maintaining and strengthening the capital base.

Based on the policy mentioned above, with respect to the dividends from the surplus at the end of this fiscal year, in view of our consolidated financial results, the level of Retained Earnings and other factors, the Company proposes the dividends from the surplus as follows.

No other disposal of the surplus is being made.

 

  1. Type of Distributed Assets

Cash

 

  2. Matters related to Allotment of Distributed Assets and Aggregate Amount thereof

With respect to common stock, the Company proposes paying JPY seven thousand (7,000) per share, which is a JPY three thousand (3,000) increase over the previous fiscal year.

With respect to each class of preferred stock, the Company also proposes paying the prescribed dividend amounts, respectively.

 

     Amount of
Dividends per Share
   Aggregate Amount of
Dividends

Common stock

   JPY 7,000    JPY 83,081,473,510

Eleventh Series Class XI preferred stock

   JPY 20,000    JPY 18,874,800,000

Thirteenth Series Class XIII preferred stock

   JPY 30,000    JPY 1,100,700,000

Total

     —      JPY 103,056,973,510

 

  3. Effective Date of Dividends from Surplus

June 26, 2007

 

70


Proposal 2: Partial amendment to the Articles of Incorporation

The following partial amendment to the Articles of Incorporation will be made to reduce the total number of authorized shares and the total number of the classes of shares which the Company is authorized to issue based on the acquisition and cancellation on July 4, 2006 of Classes IV and VI preferred stock and the acquisition and cancellation on July 7, 2006 of a part of the Company’s treasury stock held by the Company’s subsidiary, as well as to make certain other related amendments.

Proposed Amendments

The substances of these amendments and reasons therefor are set forth below.

(Changes are indicated by underlines.)

 

Current Articles of Incorporation

  

Proposed Amendment

  

Reason for Amendment

Article 6.

(Total Number of Authorized Shares)

The total number of shares which the Company is authorized to issue shall be 29,698,500 shares, and each total number of the classes of shares which the Company is authorized to issue shall be as set forth below; provided, however, that in the case where a cancellation of shares is made, the number of shares which the Company is authorized to issue shall be reduced by the number of shares so canceled:

 

Common stock:

25,000,000 shares

Class IV preferred stock:

150,000 shares

Class VI preferred stock:

150,000 shares

Class XI preferred stock:

1,398,500 shares

Class XII preferred stock:

1,500,000 shares

Class XIII preferred stock:

1,500,000 shares

  

Article 6.

(Total Number of Authorized Shares)

The total number of shares which the Company is authorized to issue shall be 29,266,700 shares, and each total number of the classes of shares which the Company is authorized to issue shall be as set forth below; provided, however, that in the case where a cancellation of shares is made, the number of shares which the Company is authorized to issue shall be reduced by the number of shares so canceled:

 

Common stock:

24,868,200 shares

Class XI preferred stock:

1,398,500 shares

Class XII preferred stock:

1,500,000 shares

Class XIII preferred stock:

1,500,000 shares

   This amendment is proposed to reduce the total number of authorized shares and the total number of the classes of shares which the Company is authorized to issue as a result of the cancellation of Classes IV and VI preferred stock and common stock.

 

71


Current Articles of Incorporation

  

Proposed Amendment

  

Reason for Amendment

Article 13.

(Preferred Stock Dividends)

1. In respect of dividends from its surplus provided for in Article 52, the Company shall distribute dividends from its surplus by cash on preferred stock (hereinafter referred to as the “Preferred Stock Dividends”) in such amount as provided for below to shareholders of preferred stock (hereinafter referred to as the “Shareholders of Preferred Stock”) or registered stock pledgees in respect of preferred stock (hereinafter referred to as the “Registered Preferred Stock Pledgees”) in priority to holders of common stock (hereinafter referred to as the “Shareholders of Common Stock”), registered stock pledgees in respect of common stock (hereinafter referred to as the “Registered Common Stock Pledgees”) or holders of fractional shares in respect of common stock; provided, however, that in the case where all or a part of the Preferred Stock Interim Dividends provided for in Article 14 have been paid in the relevant business year, the amount so paid shall be reduced accordingly:

 

Class IV preferred stock:

47,600 yen per share

Class VI preferred stock:

42,000 yen per share

Class XI preferred stock:

Amount decided by the resolution of the Board of Directors on the issuance of

  

Article 13.

(Preferred Stock Dividends)

1. In respect of dividends from its surplus provided for in Article 52, the Company shall distribute dividends from its surplus by cash on preferred stock (hereinafter referred to as the “Preferred Stock Dividends”) in such amount as provided for below to shareholders of preferred stock (hereinafter referred to as the “Shareholders of Preferred Stock”) or registered stock pledgees in respect of preferred stock (hereinafter referred to as the “Registered Preferred Stock Pledgees”) in priority to holders of common stock (hereinafter referred to as the “Shareholders of Common Stock”), registered stock pledgees in respect of common stock (hereinafter referred to as the “Registered Common Stock Pledgees”) or holders of fractional shares in respect of common stock; provided, however, that in the case where all or a part of the Preferred Stock Interim Dividends provided for in Article 14 have been paid in the relevant business year, the amount so paid shall be reduced accordingly:

 

Class XI preferred stock:

Amount decided by the resolution of the Board of Directors on the issuance of such stock, which amount shall not exceed 50,000 yen per share

Class XII preferred stock:

   This amendment is proposed to delete the provisions relating to Classes IV and VI preferred stock as a result of the cancellation thereof.

 

72


Current Articles of Incorporation

  

Proposed Amendment

  

Reason for Amendment

such stock, which amount shall not exceed 50,000 yen per share

Class XII preferred stock:

Amount decided by the resolution of the Board of Directors on the issuance of such stock, which amount shall not exceed 50,000 yen per share

Class XIII preferred stock:

Amount decided by the resolution of the Board of Directors on the issuance of such stock, which amount shall not exceed 100,000 yen per share

  

Amount decided by the resolution of the Board of Directors on the issuance of such stock, which amount shall not exceed 50,000 yen per share

Class XIII preferred stock:

Amount decided by the resolution of the Board of Directors on the issuance of such stock, which amount shall not exceed 100,000 yen per share

  
2. In a given business year, if all or a part of the Preferred Stock Dividends have not been paid to the Shareholders of Preferred Stock or Registered Preferred Stock Pledgees, the unpaid amount shall not be accumulated for the subsequent business years.   

2. (No change.)

  
3. The Company shall not distribute dividends from its surplus to any Shareholder of Preferred Stock or Registered Preferred Stock Pledgee, any amount in excess of the amount of the relevant Preferred Stock Dividends.    3. (No change.)   
           

Article 15.

(Distribution of Residual Assets)

1. In respect of distribution of residual assets, the Company shall pay to the Shareholders of Preferred Stock or Registered Preferred Stock Pledgees in

  

Article 15.

(Distribution of Residual Assets)

1. In respect of distribution of residual assets, the Company shall pay to the Shareholders of Preferred Stock or Registered Preferred Stock Pledgees in

   This amendment is proposed to delete the provisions relating to Classes IV and VI preferred stock as a result of the cancellation thereof.

 

73


Current Articles of Incorporation

  

Proposed Amendment

  

Reason for Amendment

priority to the Shareholders of Common Stock, Registered Common Stock Pledgees or holders of fractional share in respect of common stock in such amount as provided for below:

 

Classes IV and VI preferred stock:

2,000,000 yen per share

Classes XI through XIII preferred stock:

1,000,000 yen per share

  

priority to the Shareholders of Common Stock, Registered Common Stock Pledgees or holders of fractional share in respect of common stock in such amount as provided for below:

 

Classes XI through XIII preferred stock:

1,000,000 yen per share

  
2. No distribution of residual assets other than those provided for in the preceding paragraph shall be made to any Shareholder of Preferred Stock or Registered Preferred Stock Pledgee.    2. (No change.)   
           

Article 18.

(Acquisition of Preferred Stock)

 

1. In respect of Classes IV and VI preferred stock, the Company may mandatorily redeem each such class of preferred stock, in whole or in part, at such time and at such redemption price as respectively provided for in the Stock-for-Stock Exchange Agreement approved by a resolution of a general meeting of shareholders pursuant to the provision of Article 353 of the former Commercial Code.

  

Article 18.

(Acquisition of Preferred Stock)

 

(Deleted.)

   This amendment is proposed to delete the provisions relating to Classes IV and VI preferred stock as a result of the cancellation thereof.
2. In respect of Classes XII and XIII preferred stock, the Company may acquire each such class of preferred stock, in whole or in part, on the date separately determined by a resolution of a general meeting of shareholders,    1. (No change.)   

 

74


Current Articles of Incorporation

  

Proposed Amendment

  

Reason for Amendment

after such time and at such acquisition price as respectively determined by a resolution of the Board of Directors relating to the issuance of the relevant preferred stock.      
3. In the case of a partial acquisition pursuant to the preceding two (2) paragraphs, such redemption shall be made by way of lot or pro rata allocation.    2. In the case of a partial acquisition pursuant to the preceding paragraph, such redemption shall be made by way of lot or pro rata allocation.   

 

75


Proposal 3: Appointment of eight (8) Directors

The term of office of six (6) Directors, Messrs. Terunobu Maeda, Hiroshi Saito, Seiji Sugiyama, Yoshiharu Fukuhara, Mitsuo Ohashi and Glen S. Fukushima will expire at the closing of this ordinary general meeting of shareholders, and two (2) Directors, Messrs. Shunichi Asada and Tetsuji Kosaki will resign from their respective office of Director shortly. Accordingly, the Company proposes the appointment of eight (8) Directors.

The candidates for Directors are as follows:

 

Candidate

No.

  

Name

(Date of birth)

  

Brief Personal Record, Representative Status in Other Corporations, etc., and

Title and Assignment in the Company

   Number of Shares
of Stock of the
Company held

1

  

Terunobu

Maeda

(January 2,

1945)

   April 1968    Joined the Fuji Bank, Limited    103 shares
of
Common
Stock
      June 1995    Director / General Manager of Credit Planning Division   
      April 1996    Director / General Manager of Corporate Planning Division   
      May 1997    Managing Director   
      January 1998    Managing Director / Head of Public and Financial Institutions Group   
      May 1999    Managing Director / Chief Financial Officer   
      May 2001    Deputy President / Chief Financial Officer (until March 2002)   
      January 2002    Director of Mizuho Holdings, Inc. (present Mizuho Financial Strategy Co., Ltd.)   
      April 2002    President & CEO (until April 2007)   
      January 2003   

President & CEO of the Company (current)

 

  

2

  

Masato

Ono

(November 4,

1950)

   April 1974    Joined the Dai-Ichi Kangyo Bank, Limited    18 shares
of
Common
Stock
      April 2002    Executive Officer / General Manager of Corporate Banking Coordination Division of Mizuho Corporate Bank, Ltd.   
      April 2004    Managing Executive Officer   
      April 2005    Managing Executive Officer / Head of Financial Products Unit   
      March 2006    Managing Executive Officer of Mizuho Bank, Ltd.   
      April 2007   

Deputy President - Executive Officer / Head of Internal Audit Group of the Company (current)

 

  

3

  

Hiroshi Motoyama

(June 15,

1954)

   April 1977    Joined The Industrial Bank of Japan, Limited    2 shares
of
Common
Stock
      April 2002    Joint General Manager of Human Resources Division of Mizuho Bank, Ltd.   
      December 2002    General Manager of Corporate Banking Division No.9 of Mizuho Corporate Bank, Ltd.   
      April 2004    Executive Officer / General Manager of IT & Systems Planning Division   
      April 2007    Managing Executive Officer / Head of Strategic Planning Group and Head of IT, Systems & Operations Group of the Company (current)   

 

76


Candidate

No.

  

Name

(Date of birth)

  

Brief Personal Record, Representative Status in Other Corporations, etc., and

Title and Assignment in the Company

   Number of Shares
of Stock of the
Company held

4

  

Hiroshi

Saito

(March 29,

1944)

   April 1966    Joined the Industrial Bank of Japan, Limited    25 shares
of
Common
Stock
      June 1994    Director / General Manager of Corporate Banking Department No.6   
      May 1995    Director / General Manager of Tokyo Branch   
      February 1997    Managing Director   
      June 1999    Managing Director / Head of Corporate Banking Unit   
      June 2000    Managing Director   
      September 2000    Managing Executive Officer / Head of Corporate and Financial Institutions Banking Business Unit of Mizuho Holdings, Inc. (present Mizuho Financial Strategy Co., Ltd.)   
      January 2002    Director and Managing Executive Officer / Head of Corporate and Financial Institutions Banking Business Unit   
      April 2002    Director (until April 2007)   
      April 2002    President & CEO of Mizuho Corporate Bank, Ltd. (current)   
      January 2003   

Director of the Company (current)

 

  
         

(Representative Status in Other Corporations, etc.)
President & CEO of Mizuho Corporate Bank, Ltd.

 

  

5

  

Seiji

Sugiyama

(April 17,

1947)

   July 1971    Joined The Nippon Kangyo Bank, Limited    24 shares
of
Common
Stock
      June 1999    Director / General Manager of Human Resources Office of the Dai-Ichi Kangyo Bank, Limited   
      May 2000    Managing Director / General Manager of Corporate Banking Business Division I and Head of Customer & Consumer Banking Company   
      June 2000    Managing Executive Officer / General Manager of Corporate Banking Business Division I and Head of Customer & Consumer Banking Company   
      July 2000    Managing Executive Officer / Head of Customer & Consumer Banking Company   
      June 2001    Managing Executive Officer / Head of Trust and Asset Management Business Unit of Mizuho Holdings, Inc.   
      April 2002    Managing Executive Officer / Chief Compliance Officer of Mizuho Corporate Bank, Ltd.   
      June 2002    Managing Executive Officer / Chief Strategy Officer   
      March 2003    Deputy President - Executive Officer / Head of IT, Systems & Operations Group of the Company   
      June 2003    Deputy President / Head of IT, Systems & Operations Group   
      March 2004    Director (current)   
      March 2004    President & CEO of Mizuho Bank, Ltd. (current)   
      March 2004   

Director of Mizuho Holdings, Inc. (present Mizuho Financial Strategy Co., Ltd.) (until April 2007)

 

  
         

(Representative Status in Other Corporations, etc.)

    President & CEO of Mizuho Bank, Ltd.

 

     

 

77


Candidate

No.

  

Name

(Date of birth)

  

Brief Personal Record, Representative Status in Other Corporations, etc., and

Title and Assignment in the Company

   Number of Shares
of Stock of the
Company held

6

  

Akihiko

Nomiyama

(June 15, 1934)

   April 1957    Joined Nippon Mining Co., Ltd.    0 shares
of
Common
Stock
      June 1984    Director   
      June 1989    Managing Director   
      December 1992    Managing Director of Nikko Kyodo Co., Ltd.   
      December 1993    Managing Director of Japan Energy Corporation   
      June 1994    Senior Managing Director   
      June 1996    President and CEO (Representative Director)   
      June 2000    Chairman, President and CEO (Representative Director)   
     

April 2002

  

Chairman and CEO (Representative Director)

  
      September 2002    President and CEO (Representative Director) of Nippon Mining Holdings, Inc.   
      June 2003    Chairman (Representative Director)   
      June 2006   

Special Advisor (current)

 

  

7

  

Mitsuo Ohashi

(January 18, 1936)

   March 1959    Joined Mitsui Bank, Ltd.    0 shares
of
Common
Stock
      December 1961    Joined Showa Denko K.K.   
      May 1988    General Manager of Corporate Planning Division   
      March 1989    Director / General Manager of Corporate Planning Division   
     

March 1993

  

Managing Director

  
     

March 1995

  

Senior Managing Director

  
      March 1997    President and Chief Executive Officer   
     

January 2005

  

Representative Director and Chairman of the Board of Directors

  
     

June 2005

  

Outside Director of the Company (current)

  
      March 2007   

Director and Chairman of the Board of Directors of Showa Denko K.K. (current)

 

  

8

  

Kanemitsu Anraku

(April 21,

1941)

   April 1964    Joined Nissan Motor Co., Ltd.    5 shares
of
Common
Stock
      June 1993    Director   
      June 1997    Managing Director   
      May 1999    Executive Vice President (Representative Director)   
     

April 2000

  

Vice Chairman (member of the board of directors)

  
      June 2000   

Vice Chairman

  
      April 2002    President (Representative Director) of Nissan Real Estate Development Corporation   
      June 2005    Counselor   
      July 2006   

Counselor of Nissan Network Holdings Co., Ltd. (current)

 

  

 

(Notes)

   1.    Three (3) candidates among the above, Messrs. Akihiko Nomiyama, Mitsuo Ohashi and Kanemitsu Anraku, are “candidates for outside directors” as provided for in Article 2, Paragraph 3, Item 7 of the Enforcement Regulations of the Company Law of Japan.

 

78


   2.    Reasons for Appointment of Candidates for Outside Directors, Independence as Outside Directors and Liability Limitation Agreements with Outside Directors.

 

  (1) Reasons for Appointment of Candidates for Outside Directors, Independence as Outside Directors

 

  a. The Company proposes to appoint Mr. Akihiko Nomiyama based on its conclusion that he will be able to provide various guidance on the general management of the Company from an objective point of view, making use of his abundant experience in his career as President and CEO (Representative Director) and Chairman (Representative Director) of Nippon Mining Holdings, Inc. and his wide-ranging insight gained through his management experience at the same company.

 

  b. The Company proposes to appoint Mr. Mitsuo Ohashi since it has concluded he will be able to provide various guidance on the general management of the Company from an objective point of view, making use of his abundant experience at Showa Denko K.K. in which he serves as Director and Chairman of the Board of Directors and his wide-ranging insight gained through his management experience at the same company. A relative within the third degree of Mr. Mitsuo Ohashi is working as an employee of the Company. Two (2) years will have passed since his assumption of office as an Outside Director of the Company at the closing of this ordinary general meeting of shareholders.

 

  c. The Company proposes to appoint Mr. Kanemitsu Anraku based on its conclusion that he will be able to provide various guidance on the general management of the Company from an objective point of view, making use of his abundant experience in his career as Executive Vice President (Representative Director) of Nissan Motor Co., Ltd. and his wide-ranging insight gained through his administrative experience at the same company. A relative within the third degree of Mr. Kanemitsu Anraku is working as an employee of Mizuho Trust & Banking Co., Ltd.

 

  (2) Liability Limitation Agreements with Outside Directors

 

  a. The Company has entered into a liability limitation agreement with Mr. Mitsuo Ohashi, a candidate for Outside Director, a summary of which is provided in the “(3) Liability Limitation Agreements” of “3. Matters regarding Outside Members of Officers” in the Business Report above (page 28).

 

  b. Pursuant to the provisions provided for in Article 427, Paragraph 1 of the Company Law of Japan (the “Law”), the Company is expected to enter into liability limitation agreements with Messrs. Akihiko Nomiyama and Kanemitsu Anraku which will limit the liability provided for in Article 423, Paragraph 1 of the Law to the higher of either (i) the pre-determined amount not less than JPY 20 million or (ii) the amount prescribed in laws and regulations, provided that such Outside Director is bona fide and without gross negligence in performing his duty.

 

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Proposal 4: Appointment of two (2) Corporate Auditors

The term of office of Mr. Yukio Nozaki, Corporate Auditor, will expire at the closing of this ordinary general meeting of shareholders, and Mr. Junichi Iwabuchi will resign from Corporate Auditor at the closing of this ordinary general meeting of shareholders.

Accordingly, the Company proposes the appointment of two (2) Corporate Auditors.