Mizuho Financial Group, Inc. Sponosred ADR (Japan)

Thank you very much for joining us for this conference meeting for fiscal year 2021 to start financial results for Mizo Financial Group despite the busy schedule. We will be taking the form of the next conference method using WebEx. It will only be on audio. Therefore, please refer to the presentation material that is entitled Fiscal Year 2021 H1 Financial Results from our website. My name is Chitaka of the IR department. I will be moderating today's event. Before we start the next conference, there are some announcements to make. Please note that any comments regarding future outlook at this time is subject to risk and uncertainty. Therefore, please be aware that the actual results may differ from the forecast. The presentation will be given by CFO Uemiyo. There will be an outline presentation for 10 minutes based on the presentation material, and 35 minutes will be allocated for Q&A. The overall meeting will be for 45 minutes. Mr. Umemiya, please. This is Umemiya of the Musoho Financial Group. Thank you very much for allowing us time today. First of all, I would like to apologize deeply for the system failures at the Middle Bank. I would like to take this opportunity to apologize for the inconvenience. Currently, in order to provide reassurance to our customers, against the backdrop of recognition of the challenges that is going on after the August Onward Payers, we are now reviewing the measures to prevent the recurrence. After review is completed, we will report back to you. Now, I would like to give you the explanation of the first half of fiscal year 2021 financial results. Please refer to page 3. First of all, this is the outline of the results. Please refer to the third line from the left, which is the Consolidated Net of Business Profit and Net Gains. related to ETF and others. It increased by 40.9 billion yen Iran-EA to 460.3 billion. Against the fiscal plan of 790 billion, we are at 58% strong results have been achieved, especially in the customer groups. Now, in terms of the breakdown for the customer group, individual investment was strong, non-Japanese loan deposit revenue increased as well. Therefore, there was a significant increase of $73.9 billion if we compare to the previous years. It exceeded 2015 before the introduction of the negative interest rate policy and also recorded four years record high since the in-house company was introduced. In markets, Last year was a very special year. For this year, there was a decline in bonds and sales again, and in banking, ST revenue declined because of stabilization of market volatility decreased by 41.5 billion yen. For a credit related to cost, we posted 33.7 million for forward-looking reserves. This ended at minus 49.6 billion yen, minus 31.5 billion yen Iran-EA. With respect to net gains related to stocks, we have sold cross-share holdings. But we also canceled bear funds, which was for the purpose of stabilizing the underlying gains on stock. And capital increased, and the stock market increased, leading to cancellation. the quarter to the minus 6.8 billion compared to last year. The impairment of crossholdings comparison was as a result taken back into consideration increased by 43.6 billion. That extraordinary gains was by $18.4 billion because of reaction decline of the extraordinary profits related to pension system and revision of last year and return of the retirement benefit and trust for the there was also a tax effect net income attributed to financial group was $385 billion. for the customer group, I'm going to refer to the net business profit in the middle. For retail and business marketing, the individual business source, individual asset formation, There was a successful trend and there was also a non-interest income for real estate related recording significant increase of 35.9 billion yen year-on-year. Corporate and institutional was subject to reactionary decline of the large solution revenues falling off. Loan damage increased year-on-year, 8.2 billion increase was recorded for global corporate company. as well as the reduction of high-cost deposit as well as capital market transactions, M&A, and other non-interest income increase. Even compared to a stronger performance of last year in Europe and the United States, we have seen increase this year of 24.5 million yen compared to the past year of peace. RETAIL AND BUSINESS AS WELL AS CORPORATE AND INSTITUTIONAL AND GLOBAL CORPORATE AND ASSET MANAGEMENT RECORDED RECORD HIGH SINCE THE IN-HOUSE COMPANY HAS BEEN INTRODUCED. THIS IS THE BALANCE SHEET OUTLINK. Left-hand side is the total assets, up to 227 trillion yen, a foreign bond increase, which meant an increase of 1.6 trillion yen, complete to the end of last fiscal year for loans. With the peak behind us for coverage-related financing, there was a decline for major companies for deposits and negotiable deposits, individual deposit increase. However, companies reduced cash in hand. Right-hand bottom, non-Japanese yen denominated loans and deposits. Non-Japanese yen customer loans declined by 2.2 billion because of the repayment of the COVID-related loans as well as reduction of low-profit assets. Non-Japanese yen customer deposits So loans decline, progress is made to control the high-cost deposit. Proportion of deposits alone was maintained at 70%. Going forward, the trend in deposit as well as funding environment will be taking into consideration to achieve optimal non-Japanese funding management going forward by combining customer deposits as well as need to long-term funding. Next, loans. For domestic loans, average balance paid in the first half of 2020 and then was on the declining trend. There was a decline of 1.1 trillion yen. Loans and deposits raised margin in Japan, as you can see on the right-hand top, compared to the previous year, improved by one basis point. As mentioned here, for small and medium-sized companies as well as for larger corporations, loan spread improved because of the product loan execution as well as repayment of COVID-related loans, which is low spread. Now, loans outside of Japan's average balance declined because of to make COVID-related loans as well as non-Japanes loans in United States and Europe and declined by 11.1 billion yen for non-Japanes loans as spent increased by five basis points has been achieved. Product lending has grown and relatively low spent COVID-related loans have been subject to repayment and we have made progress in terms of spreading treatment. This is regarding non-interesting income for customer growth by in-house companies. As you can see on the left-hand side, the non-interesting income increased by ¥34.5 billion year-on-year. Last year, although there was a corporate and institutional increase, This is an explanation on credit portfolio, starting with left-hand side credit-related cost. In the second quarter, the company recorded reserves from a forward-looking perspective

of 33.7 billion yen to be prepared for the future, taking into account macroeconomic conditions and rising risks expected in the future, such as global supply constraints. As a result, CIC incurred costs, but with reversal of forward-looking provisions made in prior years, RBC and GCC had reversals. In total, credit-related cost was Minus of 49.6 billion yen, which is a progress of 49% against the plan of minus 100 billion yen. On the right-hand side, non-performing loans based on FRA is more or less flat year-over-year for both balance and NPL ratio. As shown bottom right, low level is maintained from past years. Since resurgence of COVID-19 and prolonged impact of COVID on customers is expected, We will keep a close eye on credit costs. Please go to page 9. Next is securities portfolio. On the left, unrealized gains losses on other securities. Evaluation gain was ¥1,589,000,000 up ¥18,000,000,000 from March 2021, mainly owing to rise in Japanese stock prices. remaining at a high level. Bottom right, reduction of cross-share holdings. Against our target of reducing ¥300 billion by March 2022 in three years, we have made 97% progress with a total of ¥292.3 billion as of end of September 2021, excluding temporal increase due to cancellation of employee retirement benefit trust scheduled by the end of the year. Sales amount excluding impairment is 258.3 billion yen, representing 86% in progress. We will continue to engage in close negotiation with customers to reduce holdings further. Please turn to page 10. Basel Regulatory Capital. The SET 1 ratio based on current regulation shown in the center of the table increased 0.64% compared to March 2021 to 12.27%, mainly owing to increase in profit. We have adequate level against other regulatory requirements as well. As shown bottom right, an important management KPI for the company, which is SET 1 Capital ratio based on Basel III finalization fully effective basis is 9.6%, excluding net unrealized gains and losses on other securities already exceeding the target set forth in our five-year business plan of 9%. Please turn to page 11. This is the revised plan for fiscal year 2021. Consolidated Net Business Profit, revised up by ¥30 billion to ¥820 billion. Markets Group was revised down based on judgment to take cautious stance in light of market trends including interest rate outlook overseas. Customer Groups with the strong performance in and out of Japan is more than offsetting the drop. Credit-related costs remain unchanged from original plan as we continue to take a cautious approach in the second half. Net gains and losses related to stocks and others revised downward due to the execution of bear funds cancellation considering increase in unrealized gains on crowd shareholdings and capital accumulation. The plan has been revised downward by 60 billion yen to a loss of 10 billion yen, the same level as the first half results. In addition to the above, and taking into account the positive impact of the tax effect associated with the capital optimization of subsidiaries recorded in the first quarter, the forecast for net income attributable to FG for fiscal 2021 has been revised up by ¥20 billion to ¥530 billion. With regard to the dividend per share of common stock as shown in the bottom right table, taking into account the steady growth of the stable earnings base mainly in the customer groups and the dividend payout ratio of 40%. The interim dividend will be ¥40 per share, which is an increase of ¥2.5 from the initial forecast. And the year-end dividend will be ¥40 per share, an increase of ¥2.5 from the initial forecast as well. This is the first time in seven years since the fiscal year ended in March 2015 that we have increased the dividend. With future capital policies, we intend to achieve an optimal balance between capital adequacy, investment and growth, and enhanced shareholder returns, while continuing to fully demonstrate the financial intermediary function Under COVID-19, we will continue to actively allocate management resources to human resources and IT and digital fields, which are cornerstones of future further growth, and to return profits to shareholders based on progressive dividends. Page 12. This page describes the progress against the five-year business plan that started from fiscal year 2019, and page 13 illustrates the progress against fundamental structural reform plans. I will not go into details. but we are making steady progress at this point in time. This concludes my explanation on our earnings.

We would now like to proceed to the Q&A. Let me introduce the method of the Q&A. You are all muted now. We will delegate the person to ask a question and then unmute will be made. Those of you with questions, please select the person mark and press the command. Please inform that the questions will not be taken on the English channel. Please contact the IR department if you have any questions in English. Please note that questions will not be taken in English channel. Please contact the IR department if you have any questions in English. Takamiya-san, of the nominal securities, you have the floor for the first question. You are breaking down. Yes, we can hear you now. This is of the number of securities. I have two questions. Regarding the system failure impact, please elaborate, as well as dividend increase. Regarding the system failure, currently, please elaborate on the impact on your management performance going forward, as well as the impact on cost and expenses. Please elaborate further. That is the first question. And the second question is regarding dividend increase. Now, you have discussed the dividend increase before the end of fiscal year. Why have you announced this at this point in time? What is your intention? And what is the message for the market participants? Thank you very much for your question regarding the system failure impact. Now, in terms of gross profit, as well as expense, as well as investment, there will be some quantitative explanations to be given. In terms of gross profit, in the revised plan, $3 billion in negative impact is assumed. Foreign exchange or corporate transactions have declined. These are the major reasons. In terms of expenses, at the timing of May, I have already spoke about this point. $10 billion, and in terms of other expenses, $8 billion has been earmarked in the plans. For February and March, with the system failures that occurred, we wanted to implement various measures. And we thought that it can be managed with the $10 billion plus $8 billion. But as you know, in August and September, there were other system failures occurring as well. Compared to February and March, in terms of hardware, especially for monitoring, and infrastructure-related revision will have to be made further. Therefore, there could be a need to increase expenses. But in terms of necessary measures and the accumulation of these measures, at May, $10 billion has been amounted and $8 billion in terms of expenses. was achievable, but there is a possibility that it could be exceeded. This is the current forecast. Therefore, we wanted to, for investment, we increased by $3 billion to $13 billion for expenses. There will be some extraordinary measures as well. The $8 billion will I also elaborated that at the time of May, Progressive And payout ratio, 40% guideline has been presented. Therefore, we have changed the policy in terms of dividend from the past. At that time, we elaborated that 510 billion was the original guidance. And 40% of that is 80 yen. So that was within visibility. On the other hand, AT THE TIMING OF MAY, THERE WERE EMERGENCY DECLARATIONS MADE AND IT WAS IMMEDIATELY THEREAFTER. AND THERE WAS UNCERTAINTY IN TERMS OF COVID-19 GOING FORWARD. SO THE LEVEL OF 510 BILLION, THE PROBABILITY OF THE ACHIEVEMENT HAS BEEN ENHANCED. And that is the timing in which we wanted to disclose our policy in terms of the shareholder return. At this timing, it isn't as if we are out of the woods in terms of COVID-19, the responsibility of the sixth wave. And what was not assumed in May, such as supply chain constraints, as well as energy price increases, have come to the fore more recently. However, even if we were able to absorb that, it would be around $500 billion plus is achievable. According to our management, we have the confidence and we have visibility of achieving this number. Therefore, conscious of the 40% payout ratio, we have made this announcement of dividend increase. That is all.