Mizuho Financial Group Inc (MFG) 2012 Q4 法說會逐字稿

Ladies and gentlemen, my name is Yasuhiro Sato, President and CEO of Mizuho Financial Group. I would like to express my deepest appreciation for so many of our stakeholders to take the time like this to attend today's meeting about the fiscal 2011 financial results and other major key topics.

As I start my presentation, first I would like to briefly talk about two key messages that I would like to deliver to you today; one from the financial perspective, and the other from the strategic point of view.

The first point is that, as already announced last week, we recorded JPY484 billion of consolidated net income for fiscal 2011, which exceeded the earnings estimate of JPY460 billion.

It was primarily attributable to overseas business and the trading segment, both of which showed a favorable performance and offset negative factors, such as very severe and uncertain environment surrounding both our domestic and overseas business, including the impact of the great East Japan earthquake and the European sovereign debt crisis, and a significant amount of losses at a securities subsidiary.

This fiscal year is the last year of Mizuho's Transformation Program, our three-year management plan, and I will forcefully advance various initiatives with my utmost efforts to achieve the targeted JPY500 billion of consolidated net income for fiscal 2012.

With regard to the second point, through fiscal 2011 we have promptly proceeded with a series of initiatives, such as turning the three listed subsidiaries into wholly-owned ones, and a decision of the effective date of the merger between two securities subsidiaries as January 1, 2013 in the direction of establishing a new corporate structure.

Fiscal 2012 is the last year of the Transformation Program and we will sincerely tackle all the remaining challenges with a strong commitment to the end. We aim to realize both top line and cost synergies through the transformation to one bank and to one securities at the earliest possible time.

Now, I would like to move on to the executive summary of the financial results for fiscal 2011. Please turn to page 7.

This slide summarizes the key aspects of the fiscal 2011 financial results. Firstly, as shown in the upper part of the graph on the left, the three banking subsidiaries demonstrated a steady performance, and their aggregate net business profits were 101.5% against the plan.

I will explain each of the business items in detail through the following slides, but the key message here is that income from overseas business increased significantly, accompanied by domestic customer business, which looks, at last, to be entering a recovery trend.

This positive change in domestic operations can be seen in such factors as how non-interest income outperformed that of the previous fiscal year, and loan balances have started to turn around.

Meanwhile, the trading segment of the banking subsidiaries contributed to income accumulation as it continuously outperformed, due to timely and flexible bond operations, not only in the first half, but also in the second half, during which interest rate movements became more moderate.

Regarding the items below net business profits, while we recorded a net reversal of credit costs consecutively from the previous fiscal year, which has proven Mizuho's asset soundness, we once again incurred net losses related to stocks of JPY50 billion.

It was mainly due to impairment losses for certain stock holdings, although, thanks to a recovery in stock prices towards the end of March, the amount of losses has significantly decreased from the level that we recorded as of the end of the third quarter, i.e., last December end.

As a result, the 3 Banks' net income amounted to JPY428 billion; a significant achievement of 131.7% against the plan.

Secondly, as for consolidated net income, we achieved JPY484 billion, or 105.3% against the earnings estimate, despite losses at Mizuho Securities, which was fully offset by recording of negative goodwill in relation to the wholly-owned subsidiary project and others.

Lastly, with regard to the status of our capital, our consolidated Tier I capital ratio increased to 12.75%, mainly due to recording a larger amount of net income than we had estimated. I believe that we will be able to sufficiently meet the new capital regulations by continuously accumulating retained earnings and improving asset efficiency.

Please turn to the next page. This slide graphically shows the historical trend of our key financial items.

There is one thing I would like you to note here. You can see from the graph on the bottom right that Mizuho has steadily accumulated bottom line profits for the last three consecutive years after the collapse of Lehman Brothers.

Please move on to the next slide.

This slide describes, on the left, the breakdown of net business profits of the customer groups, and, on the right, the difference between consolidated net income and the 3 Banks.

Firstly, please take a look at the graph on the left. The circled number is net business profits from International Banking, which demonstrated strong growth, particularly in Asia, and realized a year-on-year increase of JPY15 billion. As a result, International Banking now represents a proportion closer to approximately 20% of the entire customer groups.

In addition, as shown below International Banking, Mizuho Trust & Banking achieved an encouraging increase of approximately JPY5 billion year on year. I regard this as evidence of the successful results of Mizuho Trust & Banking, which preemptively decided to place a clear strategic focus on pursuit of collaboration among banking, trust and securities functions that Mizuho is now claiming.

Secondly, please take a look at the right-hand side, the difference in net income between consolidated and the 3 Banks.

As I briefly mentioned, the difference amounted to a positive JPY56 billion, despite a negative contribution from Mizuho Securities, which was fully offset by the positive contribution of other major subsidiaries, and the PL impact of turning the three listed subsidiaries into wholly-owned ones.

Please turn to the next page. This slide describes the status of the Securities subsidiaries and their future outlook.

Shown on the left is a summary of financial results of Mizuho Securities on the upper part, and that of Mizuho Investors Securities on the lower part. Despite being equally affected by a severe business environment, Mizuho Securities, in particular, face serious challenges in its investment banking business, as well as its domestic business, and had to record significant losses.

Mizuho Securities forcefully promoted a business foundation restructuring program through the last fiscal year and, as shown in the graph on the right, thoroughly implemented cost-cutting initiatives, such as downsizing approximately 1,100 staff. As a result, the breakeven point has become significantly lower.

In addition, in fiscal 2011, Mizuho Securities accelerated initiatives for addressing financial issues, including a preemptive approach to some legacy assets, based on the policy not to postpone these issues to the next fiscal year.

Moreover, from April this year Mizuho Securities has been processing all possible measures aiming for a V-shaped recovery. It has newly implemented a business foundation strengthening program, aiming at promoting strengthening of collaboration between banking and securities functions, and reducing expenses.

For your reference, partly due to these efforts, all of the major units, Investment Banking, Trading, and domestic Retail sales, are back in the black since the fourth quarter of the last fiscal year.

Lastly, with regard to the merger between the two securities subsidiaries, which is scheduled for January 4, 2013, we aim to realize JPY20 billion of merger synergies in fiscal 2015, against fiscal 2011, by establishing thoroughly low-cost operations and conversion to a strong management structure.

Please turn to page 13. On this slide I would like to explain the status of net interest income from customer groups, average loan balances and loan spreads.

Please have a look at the graph on the left. Net interest income from customer groups for fiscal 2011 continuously decreased due to a decrease in income from domestic business, partly offset by a large increase in income from overseas business.

Please look at the upper right graph. The average loan balance for fiscal 2011 turned to an increase of JPY1.2 trillion from the previous fiscal year, to JPY62.3 trillion. Primarily this was because overseas loans increased significantly, particularly in Asia. While in Japan we should say that the pace of the decline in the domestic loan balance has at last started to become slower, as the average balance, excluding those to the Japanese government, remained almost flat.

Shown on the lower right is the status of loan spreads. Domestic loan spreads tightened slightly, or stayed almost flat. But in overseas markets the spreads widened, mainly due to a decline in European banks' capacity to provide financing.

Please move onto the next page. This slide demonstrates period-end loan balances.

The breakdown of overseas loans by region is shown on the upper right. Overseas loans increased steadily, led by Asia, to a $119 billion equivalent, as of the end of March 2012.

Please turn to the next page.

Shown on the left is the trend of domestic loan and deposit rate margins. As you can see from the latest quarterly figures in the brackets shown in the center of the graph, the margin has remained almost flat in the last fiscal year, given the low and stable short-term interest rates.

As shown on the graph on the right, deposit balances increased steadily during the same period. Especially I would like you to note a significant increase in the international deposit balances, on which we placed focus from the viewpoint of securing liquidity in US dollars.

Please turn to the next page, for non-interest income.

Non-interest income from customer groups for fiscal 2011 firmly maintained its upward trend, amounting to JPY408 billion; a year-on-year increase of JPY12 billion.

Despite being under the stagnant economic environment in Japan after the earthquake in March 2011, almost all items increased year on year, including the bottoming-out in solution business-related income, by thoroughly expanding promotion of consulting and solution proposals for the challenges that our customers are facing.

As for business with corporate customers, income associated with domestic syndicated loan business, for which Mizuho enjoys the overwhelming market share, as well as income from real estate-related business, and that from investment banking business, showed a significant increase.

Regarding business with individual customers, income associated with individual annuities increased significantly.

Here, let me summarize our overall business of customer groups.

Along with a strong performance in overseas business, as for domestic business, one, the loan balance is now in a turnaround mode; two, loan and deposit rate margins showed signs of bottoming out; and three, as I've just explained, non-interest income was solid.

All in all I believe you now understand the reason why I said domestic business also seems to be entering a recovery trend.

Please move on to the next page.

Firstly, please take a look at the upper left. Net gains related to bonds for fiscal 2011 exceeded those in a previous fiscal year, which were very strong. It was primarily because we achieved an outstanding performance, both in Japan and overseas, through flexible and timely operations, by properly interpreting market trends.

On the other hand, however, net gains related to stocks, as I have briefly explained in the executive summary part, amounted to a loss of JPY50 billion.

Unrealized gains on other securities, as shown on the right, significantly improved to net gains of JPY91 billion, as of the end of fiscal 2011, from net gains of JPY0.6 billion a year ago. This was mainly due to a significant improvement in unrealized gains on domestic and overseas bonds, reflecting a decline in domestic and overseas interest rates.

Please go to the next page.

G&A expenses of the 3 Banks increased by JPY10 billion, to JPY879 billion on a year-on-year basis. As shown on the lower right, however, if we exclude the impact of the increase in employee retirement benefits expenses, it was a year-on-year decrease of JPY2 billion.

Regarding the breakdown, we successfully decreased non-personnel expenses by JPY7 billion, on a year-on-year basis, by promoting cost structure reforms that more than offset an increase in expenses related to overseas business and others.

On the other hand, personnel expenses increased by JPY18 billion, due to an increase of JPY12 billion in employee retirement benefits expenses, as well as an increase of JPY3 billion in overseas personnel expenses, reflecting the rapid expansion of our overseas business and other factors.

In this fiscal year, we plan to reduce G&A expenses by JPY30 billion, year on year, in order to achieve the targeted JPY50 billion of cost reductions, compared with the equivalent figure in fiscal 2009, as set forth in Mizuho's Transformation Program.

Thus, we will continue our detailed cost-reduction efforts, together with further promotion of cost structure reforms, including the unification of the corporate planning and administration functions, and a further reduction of non-personnel expenses.

Please turn to the next page. This slide summarizes the status of our credit costs.

As shown in the graph on the left, credit costs of the 3 Banks amounted to a net reversal of JPY24 billion in fiscal 2011, consecutively from the previous fiscal year.

This was mainly because our timely and appropriate consulting services and business revitalization support to corporate customers, together with our continued appropriate credit management, worked effectively, despite concerns about the adverse impact of the earthquake, European sovereign debt crisis, Thai floods, and others on corporate performance.

Please move on to the next page, the earnings plan for fiscal 2012. Fiscal 2012 is the final year of Mizuho's transformation program. We plan consolidated net income for fiscal 2012 to be JPY500 billion, as set forth in the program.

Please take a look at the left. We plan to increase net business profits of the 3 Banks to JPY753 billion; a year-on-year increase of JPY24 billion, primarily due to our estimation of an increase in income from customer groups, both in Japan and overseas, and our efforts in cost reductions, despite a conservative estimation in income from the trading segment, which showed an outstanding performance last fiscal year.

We plan consolidated net business profits to increase by JPY110 billion to JPY830 billion on a year-on-year basis as Mizuho Securities Group is estimated to come into the black.

Consolidated credit costs, which were a net reversal in the last fiscal year, are estimated to be a loss of JPY100 billion, or approximately 15 basis points of credit cost ratio, in the light of both domestic and overseas business environments.

From the standpoint of reducing our stock portfolio, we will continue to sell our stock holdings with utmost efforts to achieve the reduction target of JPY1 trillion that we set forth in the Transformation Program, at least in terms of the balance consented from customers to sell their stocks.

However, we estimate net gains related to stocks to be nil in the light of the current stock market situation.

As a result, we estimate consolidated ordinary profits to be JPY735 billion; a year-on-year increase of JPY86 billion, and estimate consolidated net income to be JPY500 billion; a year-on-year increase of JPY15 billion.

Then, in order to explain the rationale for achieving consolidated net income of JPY500 billion, I would like to touch upon this additional JPY15 billion.

First of all, the negative impact on consolidated net income for fiscal 2012 is estimated to be JPY210 billion. Consisting of, one, the elimination of positive JPY77 billion impact of turning the three subsidiaries into wholly-owned ones; and, two, the negative JPY130 billion impact of normalized credit costs, which was a net reversal in fiscal 2011.

On the other hand, the positive impact is estimated to be JPY200 billion comprised of, one, the elimination of negative JPY55 billion impact of Jusen, housing loan companies, and the tax rate change; two, the elimination of negative JPY40 billion of net losses related to stocks; and three, the positive JPY105 billion impact of Mizuho Securities, including the elimination of net loss.

Although these positive and negative impacts total a negative JPY10 billion, if we add the estimated increase of JPY24 billion in 3 Banks net business profits, as shown on the upper right, the aggregate impact is estimated to be a positive JPY15 billion. Thus, I believe that targeted consolidated net income of JPY500 billion is realistically achievable.

As to cash dividends for fiscal 2012, we plan to continue making cash dividend payments of JPY6 per share of common stock; unchanged from fiscal 2011. The interim cash dividend payments of JPY3 per share of common stock are planned to be made, which is also unchanged from fiscal 2011.

Please move on to the next page. This slide describes the breakdown of the planned consolidated net business profits by former business group and newly established business unit.

Figures shown on right are the breakdown by new business unit, which were established following the commencement of Substantive One Bank. The earnings plan for fiscal 2012 is shown on the far right.

Please also note that there are transfers of net business profits between customer groups and trading and others, resulting from the amendment of managerial accounting rules following the commencement of Substantive One Bank.

Shown on the left is the breakdown by the former business group, making it easier to compare the difference between figures based on the new rule and those based on the former rule.

As I explained earlier, net business profits of 3 Banks is planned to be JPY753 billion; an increase of JPY24 billion on a year-on-year basis, of which those from customer groups account for JPY69 billion and those from trading and others are conservatively planned to decrease by JPY45 billion.

Regarding a breakdown by unit, we plan net business profits from International Banking Unit, which is expected to expand continuously, to increase by JPY30 billion, or approximately 25%.

As for domestic business, we aim to increase net business profits of each unit by JPY5 billion to JPY10 billion.

The difference between consolidated and 3 Banks is planned to increase by JPY86 billion on a year-on-year basis, assuming the improvement in the business performance of Mizuho Securities, which recorded a net loss of approximately JPY100 billion in the last fiscal year.

Although there still remain uncertainties over domestic and overseas economic conditions, such as the resurgence of the European financial crisis, all of the management and employees will work together for achieving the consolidated net income target of JPY500 billion by realizing synergy effects, such as the transformation into Substantive One Bank, as early as possible and by committing to the target figures in each unit.

Please turn to page 23. In this section, I would like to explain about our Mizuho's balance sheet soundness, which is one of the competitive advantages of Japanese banks over European and US banks.

The European sovereign debt crisis had eased from early this year, partly due to ECB's long-term refinancing operations. However, there are growing uncertainties over the future again, mainly due to political instability in Greece, and concerns about the potential impact on financial institutions haven't been swept aside.

Therefore, in the following slides, I would like to reconfirm Mizuho's balance sheet soundness along with the four points as shown on the right hand of this slide.

Please move on to the next page.

First, in this slide, let me explain about our sound credit portfolio, which is one of Mizuho's competitive advantages.

Please take a look at the graph on the left. Non-performing loans or NPLs, as of the end of March 2012, decreased by JPY0.1 trillion year on year to JPY1.2 trillion. Net NPL ratio remained at a low level of 0.82%; a year-on-year improvement of 0.01%.

Shown on the upper right is the breakdown of NPLs for domestic and overseas offices. As you can see, NPLs at overseas offices remained at around JPY100 billion; a low level for the past few years.

Please turn to the next page. This slide summarizes our exposure to the GIIPS countries. Our exposure to GIIPS countries, on a 3 Banks basis, accounts for approximately 0.9% of total overseas exposures.

Moreover, the balance of GIIPS sovereign bonds is nil. And our exposure, on a 3 Banks basis to the financial institutions of GIIPS countries is minimal. Hence, there is no cause for concern about our GIIPS exposure.

Please move on to the next page.

Firstly, as shown on the left, the balance of our JGB portfolio increased by JPY3.4 trillion on a year-on-year basis. However, we have continued prudent operations consecutively from the previous fiscal year and managed to maintain the average remaining period at around two years.

We do not anticipate any significant changes in the situation for the time being, given that JGBs have been selling smoothly in the domestic market. However, with regard to our preparation for sudden changes in the markets, we have been enhancing our market risk management, including upgrading the in-house stress tests.

Secondly, I would like to explain about the status of our stock portfolio reduction. Please have a look at the lower right.

In the Transformation Program, we aim to reduce the balance of our stock portfolio by JPY1 trillion on an acquisition cost basis in the three years through fiscal 2012.

Up to the end of March, however, the cumulative amount of book value reductions was JPY204.5 billion. On top of this, adding JPY215 billion for which we have obtained prior consent from customers to sell, would make the total amount we have already addressed approximately JPY420 billion.

I cannot say that the progress to date has been favorable, but we will continue to make strenuous efforts for reduction, to get as close to our target as possible by the end of fiscal 2012, the final year of the Transformation Program.

Please go to the next page. In this slide, from the viewpoint of liquidity, I would like to explain Mizuho's major items for use and source of funds.

As shown in the graph on the left, both our domestic and international operations are currently in a so-called over-deposit situation, where deposit balances exceed loan balances. I would assume that you understand there are no concerns about our funding situation; not only in Japanese yen, but also in foreign currencies.

Please take a look at the right-hand side of the slide. For your reference, we summarize the status of our initiatives for strengthening our foreign currency-based funding.

Stable foreign currency-based funding is the key for overseas lending, which is expected to increase rapidly. In this regard, as shown in the graph, we have been promoting forcefully, capturing foreign currency-denominated deposits from our customers.

On top of this, we will conduct ALM management, giving due regard to stability, profitability and liquidity, by diversifying funding sources other than customer deposits, such as issuance of foreign currency-denominated bonds and acquiring deposits from overseas central banks.

Please move on to page 29. Regarding Basel III, the framework of the new regulations is close to being determined for its introduction, scheduled during the next year. And in Japan, the FSA published a public notice this March.

I would like to reiterate here that the developments to date, including the recent announcement of the framework to identify G-SIFIs, have been within the scope of our expectations, and that Mizuho's capital management and dividend policy remain consistent and unchanged.

Please have a look at the center of the slide. Regarding strengthening of stable capital base, we preliminarily estimate our common equity capital ratio, on a Basel III basis, to reach the mid-8% level as of the end of March 2013, including mandatory convertible preferred stocks in the calculation, by accumulating retained earnings steadily and managing risk weighted assets efficiently, as we have consistently proceeded to do.

We haven't changed our understanding that we will be able to sufficiently meet the new capital regulations, including an additional surcharge required if we are selected as one of the G-SIFIs, giving due regard to the timeline up to the year 2019 phase-in implementations and other factors.

Therefore, we do not have any plans at the moment to conduct another capital raising through issuance of common stock for the purpose of meeting the new capital regulations.

Please go to the next page. This slide illustrates the roadmap of Mizuho's common equity Tier 1 ratio, which we have been continuously demonstrating to you. I would like you to refer to this slide later, as there has been no significant change in our explanations and in the messages that we should deliver.

Now, let's move on the status of Mizuho's Transformation Program. Please go to page 33.

Two years have passed since we started Mizuho's Transformation Program, and I would like to briefly reflect on our progress to date.

Overall, as stated at the top of the slide, we have steadily progressed as planned in the accumulation of retained earnings and the strengthening of our financial base, which are the essence of the program, even in the midst of a severe business environment, both domestically and overseas,

Our progress in each of the three programs is summarized in the middle of the slide. For more details, please see the following two slides that describe the progress against each of the target figures.

Please move on to page 37. As announced in January, we started the Substantive One Bank structure in April, prior to the legal consolidation scheduled in July 2013.

It was because we are keen to establish a new corporate governance and structure to complete smoothly the process of the legal consolidation between BK and CB with more confidence. And, at the same time, to realize synergy effects as early as possible through the course of this year of Substantive One Bank.

To be specific, we have established a framework to sufficiently meet the needs of our customers as if BK and CB were the same bank, even if they are still different legal entities.

For instance, we have consolidated various functions of the customer groups, products functions and the trading segment into 10 units cross-organizationally between BK and CB, placing managing executive officers as a head of each unit.

We aim to realize the synergy effects at an early stage, by reinforcing the collaboration among Banking, Trust and Securities functions, and by enhancing Group management efficiency through the unification of headquarters' functions, such as corporate planning, management and human resources, which was conducted last year ahead of the unification of other functions.

Please turn to the next page. This slide demonstrates the synergy effects.

As you can see, we aim to achieve the synergy effects of over JPY30 billion in this fiscal year. This JPY30 billion exceeds one-fourth of JPY100 billion; the targeted synergy effects in four years.

This may seem a challenging target, considering that the legal consolidation hasn't been completed yet. However, considering this year's actual business trend, a variety of positive effects derived from Substantive One Bank have begun to appear, and I believe JPY100 billion is a highly achievable figure.

As for the breakdown of JPY30 billion, the revenue synergies of JPY20 billion are estimated, primarily driven by the enhancement of collaboration between customer groups at BK and CB, and the trading segment. And the cost synergies of JPY10 billion are also estimated through the streamlining of both banking and securities subsidiaries.

I am really keen to achieve more than these targeted figures, and create a large momentum to realize the synergy effects of JPY100 billion.

Please turn to the next page.

Investors and analysts often say to us, setting aside expenses, we are not fully convinced how the estimated top line synergies can be generated just through integrating the two banks into one. To answer this question, this slide illustrates from where in the customer groups the synergy effects will be realized.

First of all, please take a look at the circle on the upper left, our business with large corporate customers. The point is that the circle of business with large corporate customers is placed in the area of BK.

Approximately 500 listed companies, or their company groups, which were BK's existing companies, have been added to the customer base of Corporate Banking unit, Large Corporations, which was organized between BK and CB. And we are now providing all types of financial services of our Group companies, including banking, trust and securities services with these large BK customers.

We haven't been able to provide our financial solutions for large corporate customers with them. And if we are able to provide CB's accumulated industry knowledge and products capabilities, I believe there is a significant amount of room for increasing profits.

Similarly, in other areas, such as overseas business in the middle of the slide, and business promotions to employees of CB customers on the lower right, there are uncultivated frontiers for their business expansion, which have the potentiality of synergy effects.

Through these initiatives, we intend to shift the concept from the existing entity-oriented way of thinking, such as BK oriented and CB oriented, to a unit-oriented way of thinking, which is cross-organizational between BK and CB. As a result, we, as One Mizuho, aim to realize potential profit opportunities as much as possible.

In fact, since the announcement of our decision on One Bank, I have heard of some good business practices achieved through cross-organizational business promotions between BK and CB. I now increasingly feel that we can expect further developments.

Please move over to the next page. In this slide, I would like to explain about our integrated management of banking, trust and securities functions, which is Mizuho's intrinsic competitive advantage.

Unlike the other two Japanese megabanks, Mizuho owns banking, trust and securities functions under one umbrella. And we are now, especially since turning the three listed subsidiaries into wholly-owned subsidiaries, further promoting our integrated management of these three functions, taking BK and CB customers as the Group's common customer base.

This concept is illustrated in the graph on the left, and specific initiatives are demonstrated on the right-hand side.

We have already established a structure to provide customers with one-stop financial services; that is to say we promptly provide diversified financial services across banking, trust and securities business, to respond to all kinds of customer needs, and also provide the best financial products that contribute to addressing the problems of our customers in an integrated manner across Group entities.

Accordingly, I strongly believe that we can differentiate ourselves further from the other Japanese megabanks and reinforce our profit base fundamentally. On top of that we aim to accelerate management efficiency further, by streamlining headquarters and reinforcing corporate governance, as well as consolidating operations and business foundations, as announced in the Transformation Program.

At the end of the presentation, I would like to explain Mizuho's business strategies in Asia; our focused area in the light of its specific features.

First, please take a look at the graph on the left. You can see that Mizuho's Asian business has been expanding favorably. Both our loan balance and gross profits in Asia doubled from two years ago, through capturing strong financing needs associated with high economic growth in the region.

It should be emphasized here that we have been implementing our Asian business strategy with attention to the pursuit of not only volume but also quality of loans.

The net credit cost ratio in Asia, as shown by the line graph on the bottom left, remained at a very low level of only 0.7% in the second half, despite being in the midst of such rapid growth. It will continuously remain one of the key initiatives to increase the volume of loans to non-Japanese corporate customers.

However, we will consistently focus on blue chip companies and we'll pursue business opportunities that can be generated through the traditional loan business, as a result of making ourselves deeply engaged in development of customers' business strategies, based on established close relationships with the top management of each company, by leveraging sophisticated industry knowledge.

By pursuing this policy we will aim to enhance profitability and maintain credit costs at a low level. We aim to increase non-interest income through capturing business related to capital markets and advisory business.

This is the basic strategy for our overseas business, which, we believe, is an indispensible approach for maintaining stable growth through the long term in the future.

In addition, as shown in the league table on the bottom right, Mizuho is ranked number 1 in the Asian syndicated loan market, as well as the Japanese market. Moreover, according to the preliminary figures for the three months from January to March, Mizuho secured the number 1 position in the Asian-Pacific region for project finance arrangement.

Please move on to the next page. This slide describes the basic concept of our alliance strategies, by plotting types of business horizontally, and major Asian countries and region vertically.

We pursue the best mix of business portfolio by strategically selecting the areas where we develop our business, either by fully utilizing our own office network or by leveraging alliances, in the light of the characteristics of each Asian country or region.

As shown on the far left, we will promote Commercial Banking business for corporate customers by expanding our own office network as much as possible.

As for Investment Banking business, while prioritizing the integrated operations between banking subsidiaries and Mizuho Securities, we will seek potential opportunities for alliances in the light of the business environment in each region.

Regarding the business and regional areas highlighted by a triangle, we will put a focus on alliance strategies.

These three different approaches constitute Mizuho's basic strategy.

Please turn to the next page. This slide describes more concrete information on our expansion in Asia, based on the basic strategy.

Shown on the left is our office network and major alliance partners. You can see that we are expanding our business portfolio by effectively utilizing strategic alliances, while establishing our own office network in the major Asian countries.

Regarding our network, in April we opened Yangon Representative Office in Myanmar, where democratization is moving forward. And we aim to expand our office network in the region to the level of approximately 50 offices, particularly in ASEAN countries, mainland China and India, over the next three to five years.

We introduced our recent good business practices, for which we leveraged our strengths, such as collaboration between banking and securities functions, and arrangement capabilities for syndicated loans.

This concludes my presentation, thank you.

Statements in English on this transcript were spoken by an interpreter present on the live call. The interpreter was provided by the Company sponsoring this Event.