Mizuho Financial Group(MFG) - 2021 Q4 - Annual Report

Financial Performance - Mizuho Financial Group reported net income attributable to shareholders of ¥581,765 million for the fiscal year ended March 31, 2021, a significant increase from ¥150,195 million in 2020, representing a growth of 287%[34] - Total assets increased to ¥221,651,474 million in 2021 from ¥211,218,760 million in 2020, reflecting a growth of approximately 4.3%[35] - Net interest income after provision for credit losses was ¥875,841 million in 2021, compared to ¥723,591 million in 2020, marking an increase of 21%[34] - Noninterest income surged to ¥2,041,320 million in 2021, up from ¥1,307,740 million in 2020, indicating a growth of 56%[34] - The return on equity for the fiscal year 2021 was 7.50%, a notable increase from 1.95% in 2020[35] - Total liabilities rose to ¥211,963,317 million in 2021 from ¥202,043,136 million in 2020, an increase of approximately 4.5%[35] - The provision for credit losses was ¥112,776 million in 2021, a decrease from ¥156,200 million in 2020, indicating improved credit quality[34] - Interest income for the fiscal year ended March 31, 2021, was ¥1,333,509 million, a decrease of 33.9% from ¥2,014,440 million in 2020[37] - Net interest income increased to ¥905,683 million in 2021, up 23.4% from ¥733,542 million in 2020[37] - Total assets as of March 31, 2021, were ¥225,586,211 million, an increase of 5.5% from ¥214,659,077 million in 2020[37] - Profit attributable to owners of parent for the fiscal year ended March 31, 2021, was ¥471,020 million, a 5.0% increase from ¥448,568 million in 2020[37] - Net fee and commission income rose to ¥687,147 million in 2021, reflecting an increase of 10.9% from ¥619,243 million in 2020[37] - Risk-weighted assets increased to ¥67,481,983 million in 2021, up from ¥62,141,217 million in 2020[37] - The company reported a net trading income of ¥388,130 million in 2021, a slight decrease of 0.4% from ¥391,299 million in 2020[37] - General and administrative expenses were ¥1,414,608 million in 2021, an increase of 2.6% from ¥1,378,398 million in 2020[37] Regulatory and Compliance Risks - The company is subject to capital adequacy regulations under Basel III, with full implementation scheduled for March 2023, and failure to maintain required capital ratios could lead to corrective actions[63] - The leverage ratio requirements under Basel III are set to take effect from March 31, 2023, and falling below specified levels could result in regulatory actions that adversely affect operations[66] - The company must maintain a minimum total loss absorbing capacity (TLAC) as a G-SIB, with full application of TLAC regulations effective from March 31, 2022, and failure to meet these requirements could lead to business restrictions[67] - A capital distribution constraints system was introduced in March 2016, allowing restrictions on dividends and share buybacks based on capital buffer levels[226] - TLAC regulations introduced in March 2019 require G-SIBs to maintain minimum external TLAC ratios[228] Operational and Strategic Risks - The company anticipates continued volatility in financial markets due to the ongoing impact of COVID-19, which may affect future financial performance[45] - The company faces potential adverse effects on its financial condition and operations due to financial transactions entered into for hedging purposes, which may not align with the accounting methods applied to hedged assets[54] - Impairment of long-lived assets could materially affect the company's financial condition, as impairment occurs when the carrying value exceeds future undiscounted cash flows[56] - The company relies on deposits and bonds for funding, and difficulties in raising funds could lead to increased funding costs and cash flow problems, adversely impacting operations[57] - A downgrade in the company's credit ratings could increase funding costs, require additional collateral, and negatively affect business operations, with potential collateral requirements of approximately ¥5.9 billion for a one-notch downgrade[62] - The company has experienced IT system disruptions, which could materially affect operations and result in regulatory actions or reputational harm[70] - Cyber attacks pose a significant risk to the company's ability to protect confidential information, with potential consequences including financial losses and reputational damage[73] - The company is subject to risks related to the protection of personal and confidential information, which could lead to regulatory actions and reputational harm if not adequately managed[77] - Inadequacies in anti-money laundering measures could result in regulatory actions and significant reputational damage, impacting the company's financial condition and operations[78] - The company maintains compliance measures for transactions with countries designated as state sponsors of terrorism, but any perceived inadequacies could adversely affect customer and investor relations[80] - The company has implemented a Five-Year Business Plan, but there is no assurance that the anticipated outcomes will be achieved due to various risks, including economic conditions[87] - Expansion into new areas of business exposes the company to new risks, which may not be effectively managed despite existing risk management policies[88] - Employee errors and misconduct pose risks of operational losses and reputational harm, potentially affecting the company's financial condition[89] - Deteriorating economic or market conditions in Japan or elsewhere could negatively affect the company's business operations and asset quality[97] - Changes in applicable laws and regulations could impose additional costs or restrict business activities, adversely affecting the company's financial condition[98] - Climate change poses significant risks, including increased credit-related costs and reputational damage due to financing businesses that contribute to greenhouse gas emissions[105] - The company has implemented a review of its strategy and risk management structure to address various risks, including climate change risks, which could materially affect its business operations and financial conditions[108] Business Development and Strategy - The company is implementing a 5-Year Business Plan aimed at transitioning to the next generation of financial services, focusing on structural reforms to adapt to rapid changes in the economy and society due to COVID-19[136] - A new subsidiary, Mizuho Research & Technologies, Ltd., was established on April 1, 2021, to support non-financial business areas through the integration of research, consulting, and IT system development functions[137] - The company aims to enhance its sustainability initiatives, including a commitment to achieving a low-carbon society by 2050 and aligning its portfolio with the Paris Agreement targets[153] - In the fiscal year ended March 31, 2021, the company expanded its business through a strategic alliance with Softbank Corp. to develop next-generation financial services tailored to new lifestyles[166] - The company is focusing on improving customer convenience by enhancing its branch and ATM networks, including the integration of banking, trust, and securities services at the same locations[163] - The company is actively addressing business succession and asset inheritance needs, particularly for aging business owners, by offering solutions for smooth transitions and corporate reorganization[170] - The company is leveraging its existing customer base to support the growth of innovative companies through financing and other solutions[171] - The company is promoting open collaboration with internal and external partners to provide new value through both financial and non-financial products and services[173] - The company is enhancing its service framework to address diverse business needs and build long-term relationships with customers[186] - The company is working on maintaining competitiveness by enhancing infrastructure and reducing costs in anticipation of technological progress[194] - The Asset Management Company aims to contribute to the revitalization of financial assets in Japan and achieve medium- to long-term growth through collaboration with global partners[201] - The company is focusing on developing investment products that meet the medium- to long-term asset formation needs of individual customers[198] - The company provides various financial solutions in the investment banking business, including cross-border mergers and acquisitions and project finance[204] - The company is committed to sustainability initiatives across its sales, trading, investment, and fundraising functions[193] - The company is expanding its range of services in collaboration with group companies and leveraging technological innovations[205] - The company aims to enhance its presence in the market by developing suitable products and organizational structures based on customer needs[189] - The Global 300 Strategy focuses on approximately 300 blue-chip non-Japanese companies to expand business with non-Japanese corporate customers[185] Historical Context and Structural Changes - The company was established on September 29, 2000, through the merger of three predecessor banks, and has undergone several structural changes to enhance its service capabilities and optimize management resources[118][119] - In July 2016, the company established Mizuho Americas LLC to strengthen corporate governance and expand its profit base in the U.S. market[127] - The company integrated its asset management functions with The Dai-ichi Life Insurance Company in October 2016, forming Asset Management One Co., Ltd. to enhance its asset management capabilities[129] - The company executed a memorandum of understanding in March 2017 for the management integration of Japan Trustee Services Bank and Trust & Custody Services Bank, aiming to improve operations in the domestic securities settlement market[130] - In May 2020, the company decided to integrate three subsidiaries to enhance its research, consulting, and IT development capabilities, resulting in the formation of Mizuho Research & Technologies Corporation in April 2021[131]