MFG

Mizuho Financial Group Inc. - Fiscal 2021 Results Summary

Business Context and Reporting Period

This Form 6-K filing reports the consolidated financial results for Mizuho Financial Group, Inc. (MHFG) for the fiscal year ended March 31, 2022 (Fiscal 2021). The results are prepared under Japanese GAAP. The reporting period was characterized by a recovering global economy hindered by COVID-19 variants, inflationary pressures, and geopolitical instability in Ukraine. MHFG operates through five in-house companies: Retail & Business Banking, Corporate & Institutional, Global Corporate, Global Markets, and Asset Management.

Key Financial Metrics

Material Changes vs. Prior Period

• Profit Growth: Profit attributable to owners of the parent increased by ¥59.4 billion (12.6%) to ¥530.5 billion. This was driven by steady performance in customer groups and a decrease in tax-related expenses.
• Income Components: Consolidated Gross Profits rose ¥53.7 billion to ¥2,252.4 billion. Net Business Profits increased ¥53.5 billion to ¥851.2 billion.
• Expense Management: General and Administrative Expenses decreased by ¥21.7 billion to ¥1,392.8 billion due to cost reduction initiatives and decreased amortization of unrecognized actuarial differences.
• Credit Costs: Credit-related costs increased by ¥30.2 billion to ¥235.1 billion, primarily due to reserves recorded for Russia-related exposures and specific customer reserves.
• Investment Performance: Net gains/losses related to stocks resulted in a net loss of ¥43.8 billion, a decrease of ¥55.9 billion from the prior year, due to the reduction of stocks and cancellation of bear funds.
• Balance Sheet: Total assets increased by ¥11.5 trillion, mainly due to higher cash and due from banks. Loans and bills discounted increased by ¥1.0 trillion. Deposits increased by ¥5.2 trillion.
• Cash Flow: Net cash provided by operating activities was ¥4.9 trillion, significantly lower than the ¥16.6 trillion in the prior year, though still positive. Investing activities used ¥1.9 trillion, and financing activities used ¥0.5 trillion.

Guidance, Outlook, and Risks

• Fiscal 2022 Guidance: MHFG estimates Ordinary Profits of ¥770.0 billion and Profit Attributable to Owners of Parent of ¥540.0 billion for the fiscal year ending March 31, 2023. This represents a 1.7% increase in profit attributable to owners compared to the prior year.
• Dividends: The Board decided on a year-end cash dividend of ¥40.0 per share for Fiscal 2021, bringing the total annual dividend to ¥80.0 per share. The dividend estimate for Fiscal 2022 is also ¥80.0 per share.
• Capital Policy: The company aims for a Common Equity Tier 1 capital ratio in the 9-10% range. The ratio stood at 9.3% as of March 31, 2022.
• Risks and Contingencies: Management highlighted risks including the impact of the COVID-19 pandemic, significant credit-related costs (specifically referencing Russia), declines in securities portfolio value, interest rate changes, foreign currency fluctuations, and cyber attacks. The company noted that forward-looking statements are subject to these uncertainties.
• Accounting Changes: MHFG applied the "Accounting Standard for Revenue Recognition" from the beginning of Fiscal 2021, resulting in a decrease of ¥724 million in Retained Earnings as of April 1, 2021. The impact on the current fiscal year is considered immaterial.

Key Facts for Investor Verification

• Profitability vs. Credit Costs: Verify the sustainability of profit growth given the 14.7% year-over-year increase in credit-related costs (¥235.1 billion), specifically the impact of Russia-related reserves.
• Comprehensive Income Volatility: Note the sharp decline in Comprehensive Income to ¥47.1 billion (down 94.9% from ¥931.9 billion), driven largely by unrealized losses on securities and foreign currency translation adjustments.
• Dividend Payout Ratio: The dividend payout ratio (consolidated basis) decreased to 38.2% from 40.3% in the prior year, despite the increase in total dividend amount per share.
• Capital Adequacy: Confirm the Common Equity Tier 1 Capital Ratio of 9.3% remains within the target range of 9-10% amidst potential future capital requirements.
• Non-Performing Loans (NPLs): Review the NPL ratio, which increased to 1.15% (from 0.89% in the prior year) on a consolidated basis, driven by an increase in claims with collection risk.