UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 6-K

REPORT OF FOREIGN PRIVATE ISSUER

PURSUANT TO RULE 13a-16 OR 15d-16

UNDER THE SECURITIES EXCHANGE ACT OF 1934

For the month of November 2023

Commission File Number 001-33098

Mizuho Financial Group, Inc.

(Translation of registrant’s name into English)

5-5, Otemachi 1-chome

Chiyoda-ku, Tokyo 100-8176

Japan

(Address of principal executive office)

Indicate by check mark whether the registrant files or will file annual reports under cover of Form 20-F or Form 40-F.

Form 20-F  ☒    Form 40-F  ☐

 

 

 

THIS REPORT ON FORM 6-K SHALL BE DEEMED TO BE INCORPORATED BY REFERENCE INTO THE PROSPECTUS FORMING A PART OF MIZUHO FINANCIAL GROUP, INC.’S REGISTRATION STATEMENT ON FORM F-3 (FILE NO. 333-266555) AND TO BE A PART OF SUCH PROSPECTUS FROM THE DATE ON WHICH THIS REPORT IS FURNISHED, TO THE EXTENT NOT SUPERSEDED BY DOCUMENTS OR REPORTS SUBSEQUENTLY FILED OR FURNISHED.

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

 

UNAUDITED INTERIM CONSOLIDATED JAPANESE GAAP FINANCIAL STATEMENTS

AS OF AND FOR THE SIX MONTHS ENDED SEPTEMBER 30, 2023

On November 29, 2023, we published our unaudited interim consolidated financial statements as of and for the six months ended September 30, 2023 prepared in accordance with Japanese GAAP as part of our interim securities report (shihanki hokokusho) for the same period filed by us with the relevant Japanese authorities. We have included in this report on Form 6-K an English translation of the unaudited interim consolidated financial statements and the notes thereto included in such interim securities report. Japanese GAAP differs in certain respects from U.S. GAAP. For a description of certain differences between U.S. GAAP and Japanese GAAP, see “Item 5. Operating and Financial Review and Prospects—Reconciliation with Japanese GAAP” in our most recent annual report on Form 20-F filed with the U.S. Securities Exchange Commission.

 

- 1 -

Financial Information

 

1.	Mizuho Financial Group, Inc. (“MHFG”) is a specified business company under Article 17-15, Paragraph 2 of the Cabinet Office Ordinance on Disclosure of Corporate Information, etc. and prepares the interim consolidated financial statements in the second quarter.

 

2.

The interim consolidated financial statements of MHFG are prepared in accordance with the “Ordinance on the Terminology, Forms, and Preparation Methods of Interim Consolidated Financial Statements” (Ordinance of the Ministry of Finance No. 24 of 1999). The classification of assets and liabilities and that of income and expenses are in accordance with the “Ordinance for Enforcement of the Banking Act” (Ordinance of the Ministry of Finance No. 10 of 1982).

 

3.	Ernst & Young ShinNihon LLC conducted a semiannual audit on the interim consolidated financial statements of MHFG for the six months ended September 30, 2023, pursuant to Article 193-2, Paragraph 1 of the Financial Instruments and Exchange Act.

 

- 2 -

I. Interim Consolidated Financial Statements

(1) Interim Consolidated Balance Sheet

 

		(Millions of yen)
		As of March 31, 2023						As of September 30, 2023
Assets
Cash and Due from Banks		*5			67,152,100			*5			61,662,312
Call Loans and Bills Purchased					1,386,895						712,060
Receivables under Resale Agreements					11,693,419						15,330,648
Guarantee Deposits Paid under Securities Borrowing Transactions					1,897,429						1,818,271
Other Debt Purchased					3,836,735						4,125,400
Trading Assets		*5			17,404,494			*5			24,270,846
Money Held in Trust					514,607						559,492
Securities		*1, *2, *3, *5, *12			37,363,140			*1, *2, *3, *5, *12			44,661,725
Loans and Bills Discounted		*3, *4, *5, *6			88,687,155			*3, *4, *5, *6			91,855,614
Foreign Exchange Assets		*3, *4			2,408,587			*3, *4			2,583,297
Derivatives other than for Trading Assets					2,184,875						3,833,773
Other Assets		*3, *5			8,689,547			*3, *5			8,681,027
Tangible Fixed Assets		*7, *8			1,105,851			*7, *8			1,108,940
Intangible Fixed Assets					572,719						599,695
Net Defined Benefit Asset					859,271						819,565
Deferred Tax Assets					316,168						303,740
Customers’ Liabilities for Acceptances and Guarantees		*3			8,905,643			*3			9,978,053
Reserves for Possible Losses on Loans					(720,437	)					(712,637	)
Reserve for Possible Losses on Investments					(1	)					(3	)
Total Assets					254,258,203						272,191,823

 

- 3 -

		(Millions of yen)
		As of March 31, 2023						As of September 30, 2023
Liabilities
Deposits		*5			150,498,976			*5			147,099,489
Negotiable Certificates of Deposit					13,788,347						17,855,751
Call Money and Bills Sold					1,814,873						1,584,268
Payables under Repurchase Agreements		*5			25,735,560			*5			33,179,696
Guarantee Deposits Received under Securities Lending Transactions		*5			757,842			*5			1,091,342
Commercial Paper					1,782,111						1,557,579
Trading Liabilities					12,698,007						17,159,975
Borrowed Money		*5, *9			4,155,480			*5, *9			4,800,688
Foreign Exchange Liabilities					671,552						852,720
Short-term Bonds					477,141						486,889
Bonds and Notes		*10			11,371,189			*10			12,039,513
Due to Trust Accounts					1,534,097						1,083,338
Derivatives other than for Trading Liabilities					2,749,138						5,016,432
Other Liabilities					7,777,025						8,460,989
Reserve for Bonus Payments					126,694						85,401
Reserve for Variable Compensation					2,381						1,261
Net Defined Benefit Liability					68,429						68,555
Reserve for Director and Corporate Auditor Retirement Benefits					539						536
Reserve for Possible Losses on Sales of Loans					15,049						11,536
Reserve for Contingencies					13,706						19,290
Reserve for Reimbursement of Deposits					13,695						12,160
Reserve for Reimbursement of Debentures					7,798						6,272
Reserves under Special Laws					3,352						3,352
Deferred Tax Liabilities					22,391						25,324
Deferred Tax Liabilities for Revaluation Reserve for Land		*7			58,711			*7			57,986
Acceptances and Guarantees					8,905,643						9,978,053
Total Liabilities					245,049,740						262,538,407
Net Assets
Common Stock					2,256,767						2,256,767
Capital Surplus					1,129,267						1,129,267
Retained Earnings					5,093,911						5,401,659
Treasury Stock					(8,786	)					(8,439	)
Total Shareholders’ Equity					8,471,160						8,779,254
Net Unrealized Gains (Losses) on Other Securities					564,495						464,720
Deferred Gains or Losses on Hedges					(358,102	)					(294,287	)
Revaluation Reserve for Land		*7			129,321			*7			127,792
Foreign Currency Translation Adjustments					144,093						342,883
Remeasurements of Defined Benefit Plans					182,306						156,359
Own Credit Risk Adjustments, Net of Tax					19						48
Total Accumulated Other Comprehensive Income					662,133						797,516
Stock Acquisition Rights					5						5
Non-controlling Interests					75,163						76,638
Total Net Assets					9,208,463						9,653,415
Total Liabilities and Net Assets					254,258,203						272,191,823

 

- 4 -

(2) Interim Consolidated Statement of Income and Interim Consolidated Statement of Comprehensive Income

      Interim Consolidated Statement of Income

 

		(Millions of yen)
		For the six months ended September 30, 2022						For the six months ended September 30, 2023
Ordinary Income					2,944,948						4,244,507
Interest Income					1,169,193						2,706,494
Interest on Loans and Bills Discounted					686,794						1,361,163
Interest and Dividends on Securities					178,938						293,228
Fiduciary Income					29,313						30,458
Fee and Commission Income					418,579						485,482
Trading Income					919,840						725,069
Other Operating Income					323,050						194,063
Other Ordinary Income		*1			84,971			*1			102,938
Ordinary Expenses					2,505,666						3,670,413
Interest Expenses					657,161						2,251,880
Interest on Deposits					226,344						832,381
Fee and Commission Expenses					85,407						101,128
Trading Expenses					864,053						432,114
Other Operating Expenses					99,571						43,524
General and Administrative Expenses					706,446						782,989
Other Ordinary Expenses		*2			93,026			*2			58,775
Ordinary Profits					439,282						574,093
Extraordinary Gains		*3			12,703			*3			24,072
Extraordinary Losses		*4			6,929			*4			1,842
Income before Income Taxes					445,057						596,323
Income Taxes:
Current					61,866						134,897
Deferred					45,446						43,760
Total Income Taxes					107,313						178,658
Profit					337,743						417,665
Profit Attributable to Non-controlling Interests					3,779						1,911
Profit Attributable to Owners of Parent					333,964						415,753

 

- 5 -

      Interim Consolidated Statement of Comprehensive Income

 

		(Millions of yen)
		For the six months ended September 30, 2022						For the six months ended September 30, 2023
Profit					337,743						417,665
Other Comprehensive Income					(389,182	)					139,992
Net Unrealized Gains (Losses) on Other Securities					(603,190	)					(98,538	)
Deferred Gains or Losses on Hedges					(19,095	)					64,183
Foreign Currency Translation Adjustments					232,335						182,210
Remeasurements of Defined Benefit Plans					(23,596	)					(25,736	)
Own Credit Risk Adjustments, Net of Tax					9						28
Share of Other Comprehensive Income of Associates Accounted for Using Equity Method					24,355						17,844
Comprehensive Income					(51,438	)					557,657
(Breakdown)
Comprehensive Income Attributable to Owners of Parent					(56,285	)					552,666
Comprehensive Income Attributable to Non-controlling Interests					4,846						4,991

 

- 6 -

(3) Interim Consolidated Statement of Changes in Net Assets

      For the six months ended September 30, 2022

 

		(Millions of yen)
		Shareholders’ Equity
		Common Stock				Capital Surplus				Retained Earnings				Treasury Stock				Total Shareholders’ Equity
Balance as of the beginning of the period			2,256,767				1,125,324				4,756,435				(8,342	)			8,130,185
Changes during the period
Cash Dividends											(101,542	)							(101,542	)
Profit Attributable to Owners of Parent											333,964								333,964
Repurchase of Treasury Stock															(1,940	)			(1,940	)
Disposition of Treasury Stock							(133	)							1,730				1,597
Transfer from Revaluation Reserve for Land											584								584
Change in Treasury Shares of Parent Arising from Transactions with Noncontrolling Shareholders							4,064												4,064
Transfer from Retained Earnings to Capital Surplus							133				(133	)							—
Net Changes in Items other than Shareholders’ equity
Total Changes during the period			—				4,064				232,872				(209	)			236,726
Balance as of the end of the period			2,256,767				1,129,388				4,989,307				(8,552	)			8,366,911

 

		Accumulated Other Comprehensive Income																												Stock Acquisition Rights				Non- controlling Interests				Total Net Assets
		Net Unrealized Gains (Losses) on Other Securities				Deferred Gains or Losses on Hedges				Revaluation Reserve for Land				Foreign Currency Translation Adjustments				Remeasurements of Defined Benefit Plans				Own Credit Risk Adjustments, Net of Tax				Total Accumulated Other Comprehensive Income
Balance as of the beginning of the period			719,822				(76,757	)			132,156				2,346				169,652				(23	)			947,197				94				123,555				9,201,031
Changes during the period
Cash Dividends																																							(101,542	)
Profit Attributable to Owners of Parent																																							333,964
Repurchase of Treasury Stock																																							(1,940	)
Disposition of Treasury Stock																																							1,597
Transfer from Revaluation Reserve for Land																																							584
Change in Treasury Shares of Parent Arising from Transactions with Noncontrolling Shareholders																																							4,064
Transfer from Retained Earnings to Capital Surplus																																							—
Net Changes in Items other than Shareholders’ equity			(601,064	)			(19,462	)			(584	)			253,991				(23,722	)			9				(390,833	)			(88	)			(50,781	)			(441,703	)
Total Changes during the period			(601,064	)			(19,462	)			(584	)			253,991				(23,722	)			9				(390,833	)			(88	)			(50,781	)			(204,976	)
Balance as of the end of the period			118,757				(96,220	)			131,572				256,338				145,929				(13	)			556,363				5				72,774				8,996,055

 

- 7 -

      For the six months ended September 30, 2023

 

		(Millions of yen)
		Shareholders’ Equity
		Common Stock				Capital Surplus				Retained Earnings				Treasury Stock				Total Shareholders’ Equity
Balance as of the beginning of the period			2,256,767				1,129,267				5,093,911				(8,786	)			8,471,160
Cumulative Effects of Changes in Accounting Policies											1,883								1,883
Balance as of the beginning of the period reflecting Changes in Accounting Policies			2,256,767				1,129,267				5,092,027				(8,786	)			8,469,276
Changes during the period
Cash Dividends											(107,882	)							(107,882	)
Profit Attributable to Owners of Parent											415,753								415,753
Repurchase of Treasury Stock															(2,360	)			(2,360	)
Disposition of Treasury Stock							0								2,706				2,706
Transfer from Revaluation Reserve for Land											1,529								1,529
Changes in Retained Earnings by Decreasing of Equity Method Affiliates and Others											231								231
Net Changes in Items other than Shareholders’ equity
Total Changes during the period			—				0				309,631				346				309,978
Balance as of the end of the period			2,256,767				1,129,267				5,401,659				(8,439	)			8,779,254

 

		Accumulated Other Comprehensive Income																												Stock Acquisition Rights				Non- controlling Interests				Total Net Assets
		Net Unrealized Gains (Losses) on Other Securities				Deferred Gains or Losses on Hedges				Revaluation Reserve for Land				Foreign Currency Translation Adjustments				Remeasurements of Defined Benefit Plans				Own Credit Risk Adjustments, Net of Tax				Total Accumulated Other Comprehensive Income
Balance as of the beginning of the period			564,495				(358,102	)			129,321				144,093				182,306				19				662,133				5				75,163				9,208,463
Cumulative Effects of Changes in Accounting Policies																											—												1,883
Balance as of the beginning of the period reflecting Changes in Accounting Policies			564,495				(358,102	)			129,321				144,093				182,306				19				662,133				5				75,163				9,206,579
Changes during the period
Cash Dividends																																							(107,882	)
Profit Attributable to Owners of Parent																																							415,753
Repurchase of Treasury Stock																																							(2,360	)
Disposition of Treasury Stock																																							2,706
Transfer from Revaluation Reserve for Land																																							1,529
Changes in Retained Earnings by Decreasing of Equity Method Affiliates and Others																																							231
Net Changes in Items other than Shareholders’ equity			(99,774	)			63,815				(1,529	)			198,790				(25,947	)			28				135,382				—				1,475				136,857
Total Changes during the period			(99,774	)			63,815				(1,529	)			198,790				(25,947	)			28				135,382				—				1,475				446,835
Balance as of the end of the period			464,720				(294,287	)			127,792				342,883				156,359				48				797,516				5				76,638				9,653,415

 

- 8 -

(4) Interim Consolidated Statement of Cash Flows

 

		(Millions of yen)
		For the six months ended September 30, 2022								For the six months ended September 30, 2023
Cash Flow from Operating Activities
Income before Income Taxes							445,057								596,323
Depreciation							79,776								82,469
Losses on Impairment of Fixed Assets							2,881								321
Amortization of Goodwill							1,889								1,915
Equity in Loss (Gain) from Investments in Affiliates							(14,491	)							(23,565	)
Increase (Decrease) in Reserves for Possible Losses on Loans							(97,338	)							(26,835	)
Increase (Decrease) in Reserve for Possible Losses on Investments							(106	)							1
Increase (Decrease) in Reserve for Possible Losses on Sales of Loans							6,759								(3,513	)
Increase (Decrease) in Reserve for Contingencies							2,419								3,004
Increase (Decrease) in Reserve for Bonus Payments							(59,864	)							(49,854	)
Increase (Decrease) in Reserve for Variable Compensation							(1,092	)							(1,119	)
Decrease (Increase) in Net Defined Benefit Asset							(5,329	)							19,243
Increase (Decrease) in Net Defined Benefit Liability							(2,108	)							(1,730	)
Increase (Decrease) in Reserve for Director and Corporate Auditor Retirement Benefits							(85	)							(3	)
Increase (Decrease) in Reserve for Reimbursement of Deposits							(1,969	)							(1,534	)
Increase (Decrease) in Reserve for Reimbursement of Debentures							(1,538	)							(1,526	)
Interest Income - accrual basis							(1,169,193	)							(2,706,494	)
Interest Expenses - accrual basis							657,161								2,251,880
Losses (Gains) on Securities							(15,610	)							(57,339	)
Losses (Gains) on Money Held in Trust							71								356
Foreign Exchange Losses (Gains) - net							(1,276,179	)							(940,408	)
Losses (Gains) on Disposition of Fixed Assets							3,402								(3,769	)
Losses (Gains) on Cancellation of Employee Retirement Benefit Trust							(12,057	)							(18,782	)
Decrease (Increase) in Trading Assets							(5,951,913	)							(5,804,642	)
Increase (Decrease) in Trading Liabilities							4,885,023								3,754,559
Decrease (Increase) in Derivatives other than for Trading Assets							(1,875,956	)							(1,586,509	)
Increase (Decrease) in Derivatives other than for Trading Liabilities							2,187,346								2,212,090
Decrease (Increase) in Loans and Bills Discounted							(3,952,700	)							252,728
Increase (Decrease) in Deposits							691,044								(6,646,951	)
Increase (Decrease) in Negotiable Certificates of Deposit							4,317,395								3,258,637
Increase (Decrease) in Borrowed Money (excluding Subordinated Borrowed Money)							(3,604,330	)							628,542
Decrease (Increase) in Due from Banks (excluding Due from Central Banks)							(91	)							102,408
Decrease (Increase) in Call Loans, etc.							(1,396,877	)							(2,117,802	)
Decrease (Increase) in Guarantee Deposits Paid under Securities Borrowing Transactions							(17,404	)							79,157
Increase (Decrease) in Call Money, etc.							1,301,027								4,861,463
Increase (Decrease) in Commercial Paper							(526,538	)							(438,587	)
Increase (Decrease) in Guarantee Deposits Received under Securities Lending Transactions							56,509								333,499
Decrease (Increase) in Foreign Exchange Assets							(337,827	)							29,605
Increase (Decrease) in Foreign Exchange Liabilities							(834,007	)							177,391
Increase (Decrease) in Short-term Bonds (Liabilities)							(38,395	)							9,747
Increase (Decrease) in Bonds and Notes							1,020,232								85,465
Increase (Decrease) in Due to Trust Accounts							(28,698	)							(450,758	)
Interest and Dividend Income - cash basis							1,109,761								2,597,879
Interest Expenses - cash basis							(617,596	)							(2,247,681	)
Other - net							1,217,049								856,211
Subtotal							(3,854,495	)							(934,503	)
Cash Refunded (Paid) in Income Taxes							(32,406	)							(209,751	)
Net Cash Provided by (Used in) Operating Activities							(3,886,901	)							(1,144,255	)

 

- 9 -

		(Millions of yen)
		For the six months ended September 30, 2022								For the six months ended September 30, 2023
Cash Flow from Investing Activities
Payments for Purchase of Securities							(45,927,277	)							(45,547,491	)
Proceeds from Sale of Securities							27,908,568								18,823,965
Proceeds from Redemption of Securities							23,785,601								20,695,428
Payments for Increase in Money Held in Trust							(2,638	)							(47,958	)
Proceeds from Decrease in Money Held in Trust							32,479								2,329
Payments for Purchase of Tangible Fixed Assets							(29,059	)							(25,734	)
Payments for Purchase of Intangible Fixed Assets							(50,273	)							(78,099	)
Proceeds from Sale of Tangible Fixed Assets							2,361								9,824
Payment from purchase of Stocks of Subsidiaries (affecting the scope of consolidation)							(3,832	)							—
Payment from Sales of Stocks of Subsidiaries (affecting the scope of consolidation)							—								7,927
Net Cash Provided by (Used in) Investing Activities							5,715,930								(6,159,809	)
Cash Flow from Financing Activities
Repayments of Subordinated Borrowings							(15,000	)							—
Proceeds from Issuance of Subordinated Bonds							—								499,000
Payments for Redemption of Subordinated Bonds							(309,615	)							(95,000	)
Proceeds from Investments by Non-controlling Shareholders							200								23
Repayments to Non-controlling Shareholders							(334	)							—
Cash Dividends Paid							(101,546	)							(107,843	)
Cash Dividends Paid to Non-controlling Shareholders							(10,408	)							(3,534	)
Payments from purchase of shares of subsidiaries not resulting in change in scope of consolidation							(41,307	)							—
Payments for Repurchase of Treasury Stock							(1,269	)							(2,360	)
Proceeds from Sale of Treasury Stock							1,008								2,706
Net Cash Provided by (Used in) Financing Activities							(478,273	)							292,991
Effect of Foreign Exchange Rate Changes on Cash and Cash Equivalents							1,602,656								1,495,963
Net Increase (Decrease) in Cash and Cash Equivalents							2,953,411								(5,515,109	)
Cash and Cash Equivalents at the beginning of the period							50,136,300								65,825,681
Cash and Cash Equivalents at the end of the period			*1				53,089,712				*1				60,310,571

 

- 10 -

Notes to Interim Consolidated Financial Statements

Fundamental and Important Matters for the Preparation of Interim Consolidated Financial Statements

 

1.	Scope of Consolidation

 

(1)	Number of consolidated subsidiaries: 188

Names of principal companies:

Mizuho Bank, Ltd.

Mizuho Trust & Banking Co., Ltd.

Mizuho Securities Co., Ltd.

Change in scope of consolidation

During the six months ended September 30, 2023, Mizuho Innovation Frontier Co., Ltd. and twenty other companies were newly included in the scope of consolidation as a result of establishment.

During the six months ended September 30, 2023, Mizuho Securities Principal Investment Co., Ltd. and ten other companies were excluded from the scope of consolidation as a result of dissolution and other factors.

 

(2)	Number of non-consolidated subsidiaries: 0

 

2.	Application of the Equity Method

 

(1)	Number of non-consolidated subsidiaries under the equity method: 0

 

(2)	Number of affiliates under the equity method: 23

Names of principal companies:

Custody Bank of Japan, Ltd.

Orient Corporation

Mizuho Leasing Company, Limited

Change in scope of equity method

During the six months ended September 30, 2023, LINE Bank Preparatory Company and another company were excluded from the scope of the equity method as a result of dissolution and another factor.

 

(3)	Number of non-consolidated subsidiaries not under the equity method: 0

 

(4)	Affiliates not under the equity method:

Pec International Leasing Co., Ltd.

Affiliates not under the equity method are excluded from the scope of the equity method since such exclusion has no material effect on MHFG’s interim consolidated financial statements in terms of Net Income (Loss) (amount corresponding to MHFG’s equity position), Retained Earnings (amount corresponding to MHFG’s equity position), Accumulated Other Comprehensive Income (amount corresponding to MHFG’s equity position) and others.

 

3.	Interim Balance Sheet Dates of Consolidated Subsidiaries

 

(1)	Interim balance sheet dates of consolidated subsidiaries are as follows:

 

 

(2)	Consolidated Subsidiaries were consolidated based on their interim financial statements as of and for the period ended their respective interim balance sheet dates.

The necessary adjustments have been made to the interim financial statements for any significant transactions that took place between their respective interim balance sheet dates and the date of the interim consolidated financial statements.

 

- 11 -

4.	Standards of Accounting Method

 

(1)	Credited Loans pursuant to Trading Securities and Trading Income & Expenses

Credited loans held for the purpose of trading are, in line with trading securities, recognized on a trade date basis and recorded in Other Debt Purchased on the interim consolidated balance sheet. Other Debt Purchased related to the relevant credited loans is stated at fair value at the interim consolidated balance sheet date.

Interest received and the gains or losses on the sale of the relevant credited loans during the six months ended September 30, 2023, including the gains or losses resulting from any change in the value between the beginning and the end of the six months ended September 30, 2023, are recognized in Other Operating Income and Other Operating Expenses on the interim consolidated statement of income.

 

(2)	Trading Assets & Liabilities and Trading Income & Expenses

Trading transactions intended to take advantage of short-term fluctuations and arbitrage opportunities in interest rates, currency exchange rates, market prices of securities and related indices are recognized on a trade date basis and recorded in Trading Assets or Trading Liabilities on the interim consolidated balance sheet. Income or expenses generated on the relevant trading transactions are recorded in Trading Income or Trading Expenses on the interim consolidated statement of income.

Securities and other monetary claims held for trading purposes are stated at fair value at the interim consolidated balance sheet date. Derivative financial products, such as swaps, futures and option transactions, are stated at fair value, assuming that such transactions are terminated and settled at the interim consolidated balance sheet date.

Trading Income and Trading Expenses include the interest received and the interest paid during the six months ended September 30, 2023, the gains or losses resulting from any change in the value of securities and other monetary claims between the beginning and the end of the six months ended September 30, 2023, and the gains or losses resulting from any change in the value of financial derivatives between the beginning and the end of the six months ended September 30, 2023, assuming they were settled at the end of the six months ended September 30, 2023.

For financial derivatives, fair value is calculated on the basis of net assets or liabilities after offsetting financial assets and liabilities with respect to specific market risks and specific credit risk.

 

(3)	Securities

 

(a)

Bonds held to maturity are stated at amortized cost (straight-line method) and determined by the moving average method. Investments in affiliates not under the equity method are stated at acquisition cost and determined by the moving average method. Other Securities are stated at market price (cost of securities sold is calculated primarily by the moving average method). Stocks and others without a quoted market price are stated at acquisition cost and determined by the moving average method.

The net unrealized gains (losses) on Other Securities are included directly in Net Assets, net of applicable income taxes after excluding gains and losses as a result of the fair-value hedge method.

 

(b)

Securities which are held as trust assets in Money Held in Trust accounts are valued in the same way as described in (a) above.

 

(4)	Derivative Transactions

Derivative transactions (other than transactions for trading purposes) are valued at fair value.

Fair value is calculated on the basis of net assets or liabilities after offsetting financial assets and liabilities with respect to specific market risks and specific credit risk.

 

(5)	Depreciation of Fixed Assets

 

1)

Tangible Fixed Assets (Except for Lease Assets)

Depreciation of buildings is computed mainly by the straight-line method, and that of others is computed mainly by the declining-balance method. The amount based on estimated annual depreciation expenses is allocated to each period.

 

- 12 -

The range of useful lives is as follows:

 

 

2)

Intangible Fixed Assets (Except for Lease Assets)

Amortization of Intangible Fixed Assets is computed by the straight-line method. Development costs for internally-used software are capitalized and amortized over their estimated useful lives of mainly from five to ten years as determined by MHFG and consolidated subsidiaries.

 

3)

Lease Assets

Depreciation of lease assets booked in Tangible Fixed Assets and Intangible Fixed Assets which are concerned with finance lease transactions that do not transfer ownership is mainly computed by the same method as the one applied to fixed assets owned by us.

 

(6)	Deferred Assets

Bond issuance costs are expensed as incurred.

 

(7)	Reserves for Possible Losses on Loans

Reserves for Possible Losses on Loans of major domestic consolidated subsidiaries are maintained in accordance with internally established standards for write-offs and reserve provisions.

For claims extended to obligors that are legally bankrupt under the Bankruptcy Law, Special Liquidation under the Company Law or other similar laws (“Bankrupt Obligors”), and to obligors that are effectively in similar conditions (“Substantially Bankrupt Obligors”), reserves are maintained at the amounts of claims net of direct write-offs described below and the expected amounts recoverable from the disposition of collateral and the amounts recoverable under guarantees. For claims extended to obligors that are not yet legally or formally bankrupt but are likely to be bankrupt (“Intensive Control Obligors”), reserves are maintained at the amounts deemed necessary based on overall solvency analyses of the amounts of claims net of expected amounts recoverable from the disposition of collateral and the amounts recoverable under guarantees.

For claims extended to Intensive Control Obligors and Obligors with Restructured Loans and others, if the exposure to an obligor exceeds a certain specific amount, reserves are provided as follows: (i) if future cash flows of the principal and interest can be reasonably estimated, the discounted cash flow method is applied, under which the reserve is determined as the difference between the book value of the loan and its present value of future cash flows discounted using the contractual interest rate before the loan was classified as a Restructured Loan, and (ii) if future cash flows of the principal and interest cannot be reasonably estimated, reserves are provided for the losses estimated for each individual loan.

For claims extended to other obligors, reserves for the next one year or three years are maintained at rates derived from historical credit loss experience or historical bankruptcy experience for one or three years and making necessary adjustments such as future prospects and others. Reserve for Possible Losses on Loans to Restructuring Countries is maintained in order to cover possible losses based on analyses of the political and economic climates of the countries.

All claims are assessed by each claim origination department in accordance with the internally established “Self-assessment Standard,” and the results of the assessments are verified and examined by the independent examination departments.

In the case of claims to Bankrupt Obligors and Substantially Bankrupt Obligors, which are collateralized or guaranteed by a third party, the amounts deemed uncollectible (calculated by deducting the anticipated proceeds from the sale of collateral pledged against the claims and amounts that are expected to be recovered from guarantors of the claims) are written off against the respective claims balances. The total directly written-off amount was ¥107,244 million (¥87,534 million at the end of the fiscal year ended March 31, 2023).

 

- 13 -

Other consolidated subsidiaries provide the amount necessary to cover the loan losses based upon past experience and other factors for general claims and the assessment for each individual loan for other claims.

(Additional Information)

In light of the principles set forth in the report entitled “JFSA’s supervisory approaches to lending business and loan loss provisioning” published by JFSA in December 18, 2019, we have reflected the potential impact of macroeconomic uncertainty and others on credit risks on Reserves for Possible Losses on Loans for some credit. More specifically, we estimate the expected losses using the assumptions adjusted for factors such as the Russia-Ukraine situation, the US-China confrontation and others in addition to the recovery of inbound tourist demand following the end of COVID-19, the inflation of import prices and others due to the depreciation of the yen and others. These assumptions include the forecasted GDP growth rate, energy prices, financial variables including interest rates and exchange rates, the future outlook of the business environment for specific portfolio segments, increased rate of labor cost, and the impact of the downturn of the semiconductor market and its potential prolongation. There are no material changes in the methods of the above accounting estimates and the major assumptions used in the consolidated financial statements from those of the previous fiscal year.

In addition, expected losses which are assumed may occur in the future due to difficulties in foreign currency cash management influenced by economic sanctions against Russia, in claims for which transfer risk has not been avoided, are recognized as Reserve for Possible Losses on Loans to Restructuring Countries. The expected losses are calculated based on evaluation of Russian country risk and past defaults which are announced by external rating firms and others. The amount of Reserve for Possible Losses on Loans to Restructuring Countries for the six months ended September 30, 2023 is ¥40,647 million, which includes ¥38,962 million against the claims related to Russia.

 

(8)	Reserve for Possible Losses on Investments

Reserve for Possible Losses on Investments is maintained to provide against possible losses on investments in securities, after taking into consideration the financial condition and other factors concerning the investee company.

 

(9)	Reserve for Bonus Payments

Reserve for Bonus Payments, which is provided for future bonus payments to employees, is maintained at the amount accrued at the end of the six months ended September 30, 2023, based on the estimated future payments.

 

(10)	Reserve for Variable Compensation

To prepare for the payments of performance payments and stock compensation to be paid as variable compensation within compensation for directors, group executive officers and operating officers of Mizuho Financial Group, Inc., Mizuho Bank, Ltd., Mizuho Trust & Banking Co., Ltd., Mizuho Securities Co., Ltd., and certain consolidated subsidiaries, the amount accrued at the end of the six months ended September 30, 2023 among the estimated payments based on the standard amount regarding variable compensation of the fiscal year ending March 31, 2023 is provided.

 

(11)	Reserve for Director and Corporate Auditor Retirement Benefits

Reserve for Director and Corporate Auditor Retirement Benefits, which is provided for future retirement benefit payments to directors, corporate auditors, and executive officers, is recognized at the amount accrued by the end of the six months ended September 30, 2023, based on the internally established standards.

 

(12)	Reserve for Possible Losses on Sales of Loans

Reserve for Possible Losses on Sales of Loans is provided for possible future losses on sales of loans at the amount deemed necessary based on a reasonable estimate of possible future losses.

 

(13)	Reserve for Contingencies

Reserve for Contingencies is maintained to provide against possible losses from contingencies which are not covered by other specific reserves. The balance is an estimate of possible future losses considered to require a reserve.

 

- 14 -

(14)	Reserve for Reimbursement of Deposits

Reserve for Reimbursement of Deposits is provided against the losses for the deposits derecognized from liabilities at the estimated amount of future claims for withdrawal by depositors.

 

(15)	Reserve for Reimbursement of Debentures

Reserve for Reimbursement of Debentures is provided for the debentures derecognized from liabilities at the estimated amount for future claims.

 

(16)	Reserve under Special Laws

Reserve under Special Laws is Reserve for Contingent Liabilities from Financial Instruments and Exchange.

This is the reserve pursuant to Article 46-5 of the Financial Instruments and Exchange Law and Article 175 of the Cabinet Office Ordinance regarding Financial Instruments Business, etc. to indemnify the losses incurred from accidents in the purchase and sale of securities, other transactions or derivative transactions.

 

(17)	Accounting Method for Retirement Benefits

In calculating retirement benefit obligations, a benefit formula basis is used as a method of attributing expected retirement benefits to the period up to the end of the six months ended September 30, 2023.

Unrecognized prior service cost and unrecognized actuarial differences are recognized as follows:

Unrecognized prior service cost: Recognized mainly as income or expenses in the period of occurrence.

Unrecognized actuarial difference: Recognized as income or expenses from the following fiscal year under the straight-line method over a certain term within the average remaining service period of the employees (mainly 10 years) of the respective fiscal years.

Certain consolidated subsidiaries apply the simplified method that assumes the amount required for voluntary resignation at the end of the six months ended September 30, 2023 to be retirement benefit obligations in computing net defined benefit liability and retirement benefit expenses.

 

(18)

Revenues

Securities-related business fees mainly consist of brokerage fees and commissions, and asset-based revenues. Brokerage fees and commissions include fees earned from the execution of customer transactions and sales commissions of stocks, bonds and investment trusts, which are recognized at the point in time on transaction date with the customer. Asset-based revenues include fees received from investment trust management companies in return for administration services, such as record keeping services, of investment trusts, which are recognized over time in the period when the related service is provided.

Deposits and Lending business fees consist of Deposit-related fees and Lending-related fees. Deposit related fees are within the scope of “Accounting Standard for Revenue Recognition”, while most of Lending-related fees such as commitment fees and arrangement fees are not. Deposit-related fees include account transfer fees, which are recognized at the point in time on transaction date with the customer or at the point in time when the related service is provided.

Remittance business fees include service charges for domestic and international funds transfers and collections, which are recognized at the point in time when the related service is provided.

Trust-related business fees mainly consist of brokerage commissions of real estate property, consulting fees of real estate property and charged of stock transfer agent services. Brokerage commissions of real estate property are commissions that are received as consideration for services related to real estate brokerage, and are recognized in principle at the time of the conclusion of a sales contract for the subject real estate or trust beneficiary rights. Consulting fees of real estate property are commissions that are received as consideration for services related to real estate consulting, which are recognized at the point in time when the related service is provided or over time in the period when the related service is provided. Stock transfer agent service fees are commissions that are received as consideration for services related to transfer agent business and associated services, which are recognized at the point in time when the related service is provided or over time in the period when the related service is provided.

 

- 15 -

Agency business fees mainly consist of administration service fees related to MHFG Group’s agency business such as Japan’s principal public lottery program and revenues from standing proxy services related to stocks and others, which are recognized at the point in time when the related service is provided or over time in the period when the related service is provided.

Fees for other customer services include various revenues such as sales commissions of life insurance, service charges for electronic banking, financial advisory fees, and service charges for software development.

Sales commissions of life insurance are received in return for selling insurance products and recognized mainly at the point in time on transaction date with the customer. Service charges for electronic banking are mainly monthly basic usage fees and recognized over time in the period when the related service is provided.

Financial advisory fees are received as consideration for services supporting market research and business strategy planning, which are recognized over time in the period when the related service is provided. Service charges for software development are recognized mainly over time in the period when the related service is provided.

Fiduciary income mainly consists of trust fees earned through fiduciary asset management and administrative service, which are recognized at the point on creation of the trust or completion date specified in the contract, or over time in the period when the related service is provided.

Part of other ordinary income include underwriting fees from trading securities, credit card interchange fees and asset management business fees which are within the scope of “Accounting Standard for Revenue Recognition”. Underwriting fees are recognized at the point on the date which all the consideration of the transaction are fixed. Credit card interchange fees are recognized at the point on the settlement of the credit card payment transactions. Asset management business fees consist of investment trust management fees and investment advisory fees for investment trusts, which are recognized over time in the period when the related service is provided.

 

(19)	Assets and Liabilities denominated in foreign currencies

Assets and liabilities denominated in foreign currencies and accounts of overseas branches of domestic consolidated banking subsidiaries and a domestic consolidated trust banking subsidiary are translated into Japanese yen primarily at the exchange rates in effect at the interim consolidated balance sheet date, with the exception of the investments in affiliates not under the equity method, which are translated at historical exchange rates.

Assets and liabilities denominated in foreign currencies of the consolidated subsidiaries, except for the transactions mentioned above, are translated into Japanese yen primarily at the exchange rates in effect at the respective interim balance sheet dates.

 

(20)	Hedge Accounting

 

(a)

Interest Rate Risk

The deferred method, the fair-value hedge method or the exceptional accrual method for interest rate swaps are applied as hedge accounting methods.

The portfolio hedge transaction for a large volume of small-value monetary claims and liabilities of domestic consolidated banking subsidiaries and domestic consolidated trust banking subsidiaries is accounted for in accordance with the method stipulated in the “Accounting and Auditing Treatment relating to Adoption of Accounting Standards for Financial Instruments for Banks” (JICPA Industry Committee Practical Guideline No.24, March 17, 2022).

The effectiveness of hedging activities for the portfolio hedge transaction for a large volume of small-value monetary claims and liabilities is assessed as follows:

 

i)

as for hedging activities to offset market fluctuation risks, the effectiveness is assessed by bracketing both the hedged instruments, such as deposits and loans, and the hedging instruments, such as interest-rate swaps, in the same maturity bucket.

 

- 16 -

ii)

as for hedging activities to fix the cash flows, the effectiveness is assessed based on the correlation between a base interest rate index of the hedged instrument and that of the hedging instrument.

The effectiveness of the individual hedge is assessed based on the comparison of the fluctuation in the market or of cash flows of the hedged instruments with that of the hedging instruments.

 

(b)

Foreign Exchange Risk

Domestic consolidated banking subsidiaries and domestic consolidated trust banking subsidiaries apply the deferred method of hedge accounting to hedge foreign exchange risks associated with various financial assets and liabilities denominated in foreign currencies as stipulated in the “Accounting and Auditing Treatment relating to Adoption of Accounting Standards for Foreign Currency Transactions for Banks” (JICPA Industry Committee Practical Guideline No.25, October 8, 2020). The effectiveness of the hedge is assessed by confirming that the amount of the foreign currency position of the hedged monetary claims and liabilities is equal to or larger than that of currency-swap transactions, exchange swap transactions, and similar transactions designated as the hedging instruments of the foreign exchange risk.

In addition to the above methods, these subsidiaries apply the deferred method or the fair-value hedge method to portfolio hedges of the foreign exchange risks associated with investments in subsidiaries and affiliates in foreign currency and Other Securities in foreign currency (except for bonds) identified as hedged items in advance, as long as the amount of foreign currency payables of spot and forward foreign exchange contracts exceeds the amount of acquisition cost of the hedged foreign securities in foreign currency.

 

(c)

Inter-company Transactions

Inter-company interest rate swaps, currency swaps and similar derivatives among consolidated companies or between trading accounts and other accounts, which are designated as hedges, are not eliminated, and related gains and losses are recognized in the statement of income or deferred under hedge accounting, because these inter-company derivatives are executed according to the criteria for appropriate outside third-party cover operations which are treated as hedge transactions objectively in accordance with JICPA Industry Committee Practical Guideline No. 24 and 25.

As for certain assets and liabilities of MHFG and its consolidated subsidiaries, the deferred method, the fair-value hedge method or the exceptional accrual method for interest rate swaps are applied.

 

(d)

Hedging relationships which apply “Treatment of Hedge Accounting for Financial Instruments that Reference LIBOR”

Among above (a) to (c), all hedging relationships included in the scope of applying the “Treatment of Hedge Accounting for Financial Instruments that Reference LIBOR” (ASBJ Practical Solutions No.40, March 17, 2022) are subject to this exceptional treatment. The detail of the hedging relationships which apply the treatment are as follows.

Hedging method: the deferred method, the fair-value hedge method or the exceptional accrual method Hedging instruments: interest-rate swaps, currency-swap transactions or exchange swap transactions, etc.

Hedged instruments: financial assets and liabilities, financial assets and liabilities denominated in foreign currencies, etc.

The variety of Hedge transactions: to offset market fluctuation risks, to fix the cash flows

 

(21)	Scope of Cash and Cash Equivalents on Interim Consolidated Statements of Cash Flows

In the interim consolidated statements of cash flows, Cash and Cash Equivalents consist of cash and due from central banks included in “Cash and Due from Banks” on the interim consolidated balance sheet.

 

- 17 -

Changes in Accounting Policies

Implementation of ASU2016-13, “Measurement of Credit Losses on Financial Instruments”

Some overseas subsidiaries which apply U.S. GAAP and are considered non-public business entities have adopted ASU2016-13, “Measurement of Credit Losses on Financial Instruments” from the beginning of the interim period ended September 30, 2023. This update has replaced the incurred loss impairment methodology under previous U.S. GAAP with a methodology that reflects expected credit losses with respect to financial instruments in the amortized cost category, and full lifetime expected credit losses have been estimated upon initial recognition and a reserve has been recognized. In adopting the accounting standard, Retained Earnings was adjusted for the cumulative effect at the beginning of the interim period ended September 30, 2023 in accordance with transitional treatment set out in the accounting standard.

As a result, at the beginning of the interim period ended September 30, 2023, Reserves for Possible Losses on Loans increased by ¥1,188 million, Reserves for Contingencies increased by ¥1,485 million and Retained Earnings decreased by ¥1,883 million. The impact on Per Share Information is immaterial.

Additional Information

The Board Benefit Trust (“BBT”) Program

Since MHFG operates its business to contribute to the creation of value for diverse stakeholders and realize improved corporate value through the continuous and stable growth of MHFG group pursuant to MHFG’s basic management policy defined under the Mizuho Financial Group’s Corporate Identity, MHFG has introduced a stock compensation program using a trust (the “Program”) that functions as an incentive for each Director, Group Executive Officer, and Operating officers to exert maximum effort in performing his or her duties, and also as consideration for such exertion of effort.

 

(1)	Outline of the Program

The Program has adopted the Board Benefit Trust (“BBT”) framework. MHFG’s shares on the stock market will be acquired through a trust established based on the underlying funds contributed by MHFG, and MHFG’s shares will be distributed to Directors, Executive Officers, and Operating officers of MHFG, Mizuho Bank, Ltd., Mizuho Trust & Banking Co., Ltd., and Mizuho Securities Co., Ltd. (the “Company Group”) and other entities in accordance with the Rules on Distribution of Shares to be prescribed in advance. The framework consists of the stock compensation program based on the Company Group Officer’s responsibilities and others in their respective company (“Stock Compensation I”), the stock compensation program based on the performance evaluation of the Company Group (“Stock Compensation II”) and the stock compensation program based on Company Group Officer’s responsibilities in their respective company and the performance evaluation of the Company Group, which distributes MHFG’s shares to Operating officers of MHFG and certain consolidated subsidiaries (“Stock Benefit”).

Stock Compensation I will be paid at the time of retirement in the form of shares of MHFG calculated based on their responsibilities and others. A system is adopted which enables a decrease or forfeiture of the amount depending on the performance of the company or the individual.

Stock Compensation II will be paid in the form of shares of MHFG and will be deferred over three years, which is calculated based on the status of achieving financial-related indicators and evaluation of stakeholder-related indicators that the Company Group regard as important in order to improve corporate value over the medium to long term. A system is adopted which enables a decrease or forfeiture of the amount depending on the performance of the company or the individual.

Stock Benefit will be paid in the collective form of MHFG’s share, which is based on responsibilities in their respective company and the performance evaluation of the Company Group. Reduction and forfeit of the benefit can occur in the program.

Upon the payment of stock compensation under the Program, MHFG may, for a certain portion, pay a monetary amount equivalent to the market value of its stock in lieu of stock compensation in accordance with the Rules on Distribution of Shares.

 

- 18 -

Voting rights related to MHFG’s shares belonging to the trust assets under the trust shall not be exercised.

 

(2)	MHFG’s Shares Outstanding in the Trust

MHFG’s shares outstanding in the trust are recognized as Treasury Stock under Net Assets at the carrying amount (excluding the amount of incidental expenses) in the trust. The carrying amount of such Treasury Stock as of September 30, 2023 was ¥4,509 million for 2,604 thousand shares (the carrying amount as of March 31, 2023 was ¥5,126 million for 3,231 thousand shares).

 

- 19 -

Notes to Interim Consolidated Balance Sheet

 

*1.	The total amount of shares and investments in affiliates

 

		(Millions of yen)
		As of March 31, 2023				As of September 30, 2023
Shares			436,286				474,710
Investments			572				596

 

*2.	Unsecured loaned securities, which are included in Japanese Government Bonds under Securities, are as follows:

 

		(Millions of yen)
		As of March 31, 2023				As of September 30, 2023
			273,629				210,030

In certain transactions, MHFG has the right to sell or repledge the following unsecured borrowed securities, securities purchased under resale agreements and securities borrowed with cash collateral.

 

		(Millions of yen)
		As of March 31, 2023				As of September 30, 2023
Securities repledged			15,163,883				19,560,207
Securities neither repledged nor re-loaned at the end of the period/the fiscal year			2,405,207				2,820,304

 

*3.

Claims based on Banking Act and the Act on Emergency Measures for the Revitalization of Financial Functions are as follows. The claims consist of those included in the accounts of bonds included in “Securities” (its principal’s redemption and interest payments are guaranteed, in whole or in part, and the corporate bonds issue is limited to a private placement of the securities (Article 2, Paragraph 3 of the Financial Instruments and Exchange Act.)), “Loans,” “Foreign Exchanges Assets,” accrued interest and suspense payment in “Other Assets” and “Customers’ Liabilities for Acceptances and Guarantees” in the interim consolidated balance sheet, and securities in the notes in case they are loans (limited to those under a loan for use or lease agreement).

 

		(Millions of yen)
		As of March 31, 2023				As of September 30, 2023
Claims against Bankrupt and Substantially Bankrupt Obligors			43,866				39,317
Claims with Collection Risk			655,396				615,424
Claims for Special Attention			372,433				504,877
Loans Past Due for 3 Months or More			288				3,563
Restructured Loans			372,144				501,314
Sub-total			1,071,696				1,159,619
Normal Claims			100,457,014				104,799,744
Total			101,528,710				105,959,363

 

- 20 -

Claims against Bankrupt and Substantially Bankrupt Obligors are claims against debtors in bankruptcy due to the commencement of bankruptcy procedures, the commencement of reorganization proceedings, the petition for the commencement of rehabilitation proceedings, and claims equivalent to these.

Claims with Collection Risk are claims that the debtor is not yet in a state of bankruptcy, but its financial position and business performance have deteriorated, and it is highly probable that principal’s collection and interest on claims in accordance with the terms of the contract will not be received. These claims do not fall under the category of Claims against Bankrupt and Substantially Bankrupt Obligors.

Loans Past Due for 3 Months or More are loans on which payments of principal and/or interest have not been made for a period of three months or more since the next day following the first due date, and which are not included in Claims against Bankrupt and Substantially Bankrupt Obligors, or Claims with Collection Risk.

Restructured Loans represent loans whose contracts were amended in favor of obligors (e.g. reduction of, or exemption from, stated interest, deferral of interest payments, extension of maturity dates and renunciation of claims) in order to assist or facilitate the restructuring of the obligors. Claims against Bankrupt and Substantially Bankrupt Obligors, Claims with Collection Risk and Loans Past Due for 3 Months or More are not included.

Normal Claims are deemed to have no particular problem with the obligor’s financial position and business performance and are classified as other than Claims against Bankrupt and Substantially Bankrupt Obligors, Claims with Collection Risk, Loans Past Due for 3 Months or More and Restructured Loans.

The amounts given in above are gross amounts before deduction of amounts for the Reserves for Possible Losses on Loans.

 

*4.	In accordance with Committee Practical Guideline No. 24, bills discounted are accounted for as financing transactions. The banking subsidiaries have rights to sell or pledge these commercial bills, foreign exchange bills purchased and others. The face values of these bills are as follows:

 

		(Millions of yen)
		As of March 31, 2023				As of September 30, 2023
			1,449,540				1,557,742

 

- 21 -

*5.	Breakdown of assets pledged as collateral is as follows:

 

		(Millions of yen)
		As of March 31, 2023				As of September 30, 2023
The following assets are pledged as collateral
Trading Assets			3,732,150				5,116,303
Securities			8,502,478				12,660,928
Loans and Bills Discounted			8,375,232				8,107,566
Total			20,609,861				25,884,798
The following liabilities are collateralized by the above assets:
Deposits			988,551				287,837
Payables under Repurchase Agreements			10,542,199				16,324,807
Guarantee Deposits Received under Securities Lending Transactions			592,011				381,079
Borrowed Money			2,928,643				3,478,388

In addition to the above, the following items are pledged as collateral in connection with the settlement accounts of foreign and domestic exchange transactions or derivatives transactions and others or as a substitute for margins for futures transactions and others:

 

		(Millions of yen)
		As of March 31, 2023				As of September 30, 2023
Cash and Due from Banks			82,102				105,777
Trading Assets			261,218				363,674
Securities			6,146,181				7,560,895
Loans and Bills Discounted			93,011				72,349

In addition, the following item is pledged as collateral under general collateral repurchase agreements using the subsequent collateral allocation method:

 

		(Millions of yen)
		As of March 31, 2023				As of September 30, 2023
Securities			1,519,763				300,000

Other Assets includes margins for futures transactions, guarantee deposits, and collateral pledged for financial instruments and others as follows:

 

		(Millions of yen)
		As of March 31, 2023				As of September 30, 2023
Margins for Futures Transactions			170,675				174,973
Guarantee Deposits			89,103				88,599
Collateral Pledged for Financial Instruments and Others			1,721,367				2,285,121

 

- 22 -

*6.

Overdraft protection on current accounts and contracts of the commitment line for loans are contracts by which banking subsidiaries are bound to extend loans up to a prearranged amount, at the request of customers, unless the customer is in breach of contract conditions. The unutilized balance of these contracts amounts is as follows:

 

		(Millions of yen)
		As of March 31, 2023				As of September 30, 2023
Unutilized balance			113,911,399				118,564,700
Amount relating to contracts of which the original contractual maturity is one year or less, or which are unconditionally cancelable at any time			80,776,418				82,413,080

Since many of these contracts expire without being exercised, the unutilized balance itself does not necessarily affect future cash flows. A provision is included in many of these contracts that entitles the banking subsidiaries to refuse the execution of loans, or reduce the maximum amount under contracts when there is a change in the financial situation, necessity to preserve a claim or other similar reasons. The banking subsidiaries require collateral such as real estate and securities when deemed necessary at the time the contract is entered into. In addition, they periodically monitor customers’ business conditions in accordance with internally established standards and take necessary measures to manage credit risks such as amendments to contracts.

 

*7.

In accordance with the Land Revaluation Law (Proclamation No. 34 dated March 31, 1998), land used for business operations of domestic consolidated banking subsidiaries was revalued. The applicable income taxes on the entire excess of revaluation are included in Deferred Tax Liabilities for Revaluation Reserve for Land under Liabilities, and the remainder, net of applicable income taxes, is stated as Revaluation Reserve for Land included in Net Assets.

Revaluation date: March 31, 1998

Revaluation method as stated in Article 3, Paragraph 3 of the above law: Land used for business operations was revalued by calculating the value on the basis of the valuation by road rating stipulated in Article 2, Paragraph 4 of the Enforcement Ordinance relating to the Land Revaluation Law (Government Ordinance No. 119 promulgated on March 31, 1998) with reasonable adjustments to compensate for sites with long depth and other factors, and also on the basis of the appraisal valuation stipulated in Paragraph 5.

 

*8.	Accumulated Depreciation of Tangible Fixed Assets

 

		(Millions of yen)
		As of March 31, 2023				As of September 30, 2023
Accumulated Depreciation			825,181				813,530

 

*9.	Borrowed Money includes subordinated borrowed money with a covenant that performance of the obligation is subordinated to that of other obligations.

 

		(Millions of yen)
		As of March 31, 2023				As of September 30, 2023
Subordinated Borrowed Money			204,000				204,000

 

*10.	Bonds and Notes includes subordinated bonds.

 

		(Millions of yen)
		As of March 31, 2023				As of September 30, 2023
Subordinated Bonds			3,218,444				3,674,594

 

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11.	The principal amounts of money trusts with contracts indemnifying the principal amounts, which are entrusted to domestic consolidated trust banking subsidiaries, are as follows:

 

		(Millions of yen)
		As of March 31, 2023				As of September 30, 2023
Money trusts			835,674				820,048

 

*12.	Liabilities for guarantees on corporate bonds included in “Securities,” which are issued by private placement (Article 2, Paragraph 3 of the Financial Instruments and Exchange Act)

 

		(Millions of yen)
		As of March 31, 2023				As of September 30, 2023
			1,134,235				1,072,047

 

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Notes to Interim Consolidated Statement of Income

 

*1.	Other Ordinary Income includes the following:

 

		(Millions of yen)
		For the six months ended September 30, 2022				For the six months ended September 30, 2023
Gains on Sales of Stocks			54,377				65,680
Share of profit of entities accounted for using equity method			14,491				23,565

 

*2.	Other Ordinary Expenses includes the following:

 

		(Millions of yen)
		For the six months ended September 30, 2022				For the six months ended September 30, 2023
Provision for Reserves for Possible Losses on Loans			38,055				—
Losses on Sales of Stocks			18,529				11,659
Stock-related Derivatives Expenses			—				17,898

 

*3.	Extraordinary Gains includes the following:

 

		(Millions of yen)
		For the six months ended September 30, 2022				For the six months ended September 30, 2023
Gains on Disposition of Fixed Assets			645				5,290
Gains on Cancellation of Employee Retirement Benefit Trust			12,057				18,782

 

*4.	Extraordinary Losses is as follows:

 

		(Millions of yen)
		For the six months ended September 30, 2022				For the six months ended September 30, 2023
Losses on Disposition of Fixed Assets			4,047				1,520
Losses on Impairment of Fixed Assets			2,881				321

 

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