Message from the Group CEO
As President & Group CEO of Mizuho Financial Group, I would like to express my deep appreciation for your continued interest and support.
Global economic climate
Regarding the recent economic climate, the global economy, which fell sharply in early 2020 due to the worldwide outbreak of COVID-19 and the accompanying strict movement restrictions, is now turning towards recovery.
In the United States, unemployment rose rapidly following the spring outbreak. However, as economic activity has resumed, the employment situation has been gradually improving. The surge in remote work, along with other factors, has driven an expansion in demand based on the need to adapt to the COVID-19 pandemic, such as IT investment among companies and housing-related investment among households. Accordingly, positive signs are beginning to appear.
In Europe, although stringent lockdown measures caused a sharp contraction in consumption and production, the economic downturn seems to have bottomed out with the resumption of economic activity.
In China, which bounced back from the COVID-19 slump earlier than others, policy measures are promoting expansion in infrastructure investment, and improvements in employment and income are leading a recovery in consumer spending.
In Japan, the economy fell sharply in consumption and production following the declaration of a state of emergency in April 2020. It has been recovering gradually since then. The government has focused on supporting cash flow for households and companies and the Bank of Japan has maintained its monetary easing. Both of these measures have curtailed the rise in unemployment and the number of corporate bankruptcies.
Nevertheless, we still cannot predict when this global pandemic will end, and the global economy has yet to return to normal. In emerging economies, there has been concern about the impact on countries that are highly dependent on natural resources and tourism and on countries that have limited capacity for fiscal stimulus. In addition, the risk of currency depreciation reemerging deserves continued attention.
As for the future outlook, we can expect that increasing availability of vaccines will lessen the prevalence of COVID-19 over time. With economic and monetary policy centered on easing, we believe the global economy, including the Japanese economy, will head towards recovery, albeit a gradual one. Even so, we must remain vigilant to the possibility of further outbreaks provoking another economic downturn. While confronting the current situation, corporations have also been looking ahead to the post-COVID-19 world and advancing their investments in digital and green initiatives.
Fiscal 2020 interim financial results and 5-Year Business Plan initiatives: Drawing on the full potential of our financial functions during the COVID-19 pandemic
The crisis brought about by the COVID-19 pandemic has caused major disruption to the economy and financial markets and has significantly impacted people’s daily lives and work styles. At Mizuho, we have been maintaining our financial functions, such as settlements and credit provision, which are essential for our customers and the economy. At the same time, we have been doing our utmost to support people’s daily lives and society more broadly by assisting our customers with cash flow during the pandemic and taking other measures. We will continue to work together as a unified group to ensure that we can provide essential financial functions in times such as these going forward.
Regarding our fiscal 2020 interim financial results, both our customer and markets divisions performed steadily. Our Consolidated Net Business Profits* were JPY419.4 billion, reaching a progress rate of 73% towards our fiscal 2020 target of JPY570 billion, while our Profit Attributable to Owners of Parent was JPY215.5 billion, reaching a progress rate of 67% towards our fiscal 2020 target of JPY320 billion. Taking these steady interim results into account, we have upwardly revised our fiscal 2020 guidance for Consolidated Net Business Profits* to JPY710 billion and our fiscal 2020 guidance for Profit Attributable to Owners of Parent to JPY350 billion. In addition, we are still keeping our CET1 capital ratio at a sufficient level in comparison to requirements. On a Basel III finalization fully-effective basis and excluding Net Unrealized Gains (Losses) on Other Securities, our CET1 capital ratio remained at 8.8%, unchanged from the end of March 2020, due to our controlling risk-weighted assets to compensate for the effects of increased funding support and other factors arising from the pandemic. We will continue aiming for the goal stated in our 5-Year Business Plan of bringing our CET1 capital ratio into the lower end of the 9 to 10% range.
*On a real earnings power basis, including Net Gains (Losses) related to ETFs and others
Our 5-Year Business Plan, which we launched in fiscal 2019, is proceeding steadily. The COVID-19 pandemic has further accelerated structural changes in the economy, industry, and society, and we are moving forward with reforms to our business structure as below, as well as with reforms to our finance structure and corporate foundations, beginning with our new HR strategy. Through these efforts, we are advancing our transition to the next generation of financial services looking ahead to a post-COVID-19 future.
Examples of our business structure reforms
At Mizuho, we see sustainability as an integral part of our corporate strategy and place particular importance on dialogue and engagement with clients. By promoting sustainability initiatives, we aim to operate in a way that considers creation of value for our varied stakeholders and improve corporate value through sustainable, stable growth for the entire group, thus contributing to the achievement of the Sustainable Development Goals (SDGs).
Specifically, we are practicing engagement to proactively support initiatives for transitioning to a low-carbon society. We have also set a sustainable finance and environmental finance target of JPY25 trillion total from fiscal 2019 to fiscal 2030 and have already achieved JPY4.4 trillion towards this target as of the end of the first half of fiscal 2020.
With these enhanced measures to address climate change, we are aiming to help realize a low-carbon society.
Becoming even stronger as we look ahead to a post-COVID-19 world
At Mizuho, we are further facilitating our clients’ and society’s initiatives to prepare for a post-COVID-19 world and address structural transformation. In doing so, we are forging new forms of partnerships with all of our stakeholders. This moment is a call to action to achieve transformation, and we are coming together to think, act, and deliver in order to become even stronger as we look ahead to a post-COVID-19 world. Through these efforts, we are accelerating our transition to the next generation of financial services and aiming to build a stronger and more resilient financial group which our customers can depend on in the coming era.
All of us at Mizuho are committed to enhancing our corporate value, and I ask for your continued support to help us succeed in our endeavors.
Member of the Board of Directors
President & Group CEO
Mizuho Financial Group, Inc.