Global Corporate Company
We aim for sustainable growth by offering solutions that draw on our in–depth understanding of our customers' businesses and our strengths in corporate finance.
Medium– to Long–term Company Strategy
The US continues to show robust economic performance, however the economies of Europe and Asia remain relatively weak. The outlook for the world economy has become more uncertain against a background of a new administration in the US and increasing geopolitical risk due to Brexit and other factors. Furthermore, with the tightening of various regulations, business environment surrounding the financial industry remains uncertain.
Regardless, our company aims to become the most trusted, sustainable partner of Japanese companies entering new markets overseas, as well as non–Japanese companies. We provide solutions that reflect a deep understanding of the businesses of our customers and our company's strengths in corporate finance.
For Japanese corporate customers, we support business expansion overseas by offering optimal financial solutions and consulting advice. Our activities range from providing information for customers considering entry into overseas markets to supporting business and financial strategies.
For non–Japanese companies, we are implementing our Global 300 Strategy which involves focusing on a group of approximately 300 blue–chip companies around the world. As part of this strategy, we use the industry sector–based approach to serving these customers, focusing on sectors where we have an in–depth understanding and a record of accomplishments to develop close relationships with the management of companies. Through this strategic approach, we aim to build long–term relationships with blue–chip companies that contribute to sustainable growth on both sides.
On the other hand, as liquidity and capital become scarce, it is essential for us to build a powerful financial base to develop long–term partnerships with these companies. Achieving this includes transforming our business portfolio based on profitability and reallocating assets. Specifically, we are shifting assets to Global 300 and other high–profitability segments, along with downsizing low–profitability assets and non–yen assets with low liquidity, such as Over 10–year bonds.
Additionally, to meet our customers' broad business and financial strategy needs, we will strengthen not only loan financing but also transaction banking capabilities. This involves offering M&A, bond underwriting (DCM), and other securities–related products as well as transaction banking services such as deposit, settlement, and trade finance that contribute to our customers' global business development and efficient cash management. By strengthening our product and service offerings as a financial services consulting group, we aim to enhance our profitability.
Moreover, in order to develop a stable business and management foundation, we will continue to pursue operational excellence and enhance non–yen currency funding capabilities. To achieve operational excellence, we will streamline our organization and business processes on a group basis, and facilitate swift decision making through a decentralized scheme. To enhance our non–yen currency funding capabilities, we will continue our efforts to attract non–yen currency deposits and diversify our funding sources through the issuance of non–yen currency denominated bonds.
Fiscal 2016 Results and Plans for Fiscal 2017 and Beyond
During fiscal 2016, the Global Corporate Company continued to face challenging economic conditions, including the slowdown of economic growth in China and the rising regulatory expenses. Amid this environment, the company's Net Business Profits were slightly below the target for the fiscal year. However, we undertook a range of initiatives to improve our services and profitability.
In our transactions with non–Japanese companies, we steadily expanded our business through implementation of our Global 300 strategy. We focused on taking the industry–sector specific approach and enhancing the collaboration between banking and securities functions. As a result, in fiscal 2016, we secured the ninth position in the DCM (bond underwriting) ranking in the Americas for the second consecutive year, and increased our share from 3.5% to 4.8%. These and other indicators show our increasing market presence, particularly in the US. In transaction banking, we reinforced our organizational framework, upgraded our lineup of products, and enhanced the services we offer.
In order to provide in–depth support to companies entering new markets and expanding their businesses abroad, we are continuing to augment our global office network. Recently, we opened Mizuho Bank Mexico and a branch in Phnom Penh, Cambodia. In addition, we took active initiatives to conclude cooperative arrangements with government agencies and financial and non–financial institutions around the world in order to promote foreign direct investment by Japanese companies.
In the further pursuit of operational excellence, the Head Office and the Regional Headquarters are working in concert to maximize group–wide productivity. Such efforts include eliminating overlapping operations and introducing electronic workflows in place of paper–based operations. In the US, we integrated administrative functions among the US group companies by establishing a bank holding company. In addition, to secure liquidity in non–yen currencies, which is essential for building a sustainable business foundation, we worked to increase our non–yen currency deposits. As a result, at the end of fiscal 2016, the balance of our non–yen currency deposits rose significantly to USD172.7 billion, up USD26.4 billion year–on–year.
We will continue pursuing our Global 300 strategy, while also improving our services further as well as our profitability, in the Americas, Europe, and the rest of Asia, through full use of our analysis and proposal functions for each industry sector. We will offer a wide range of solutions to meet the diverse customer needs for securities products, transaction banking, and other services.
Moreover, to establish a sustainable business and management foundation, we are working to streamline our organizational structure and business processes as well as increase operating efficiency through the use of robotics and blockchain technology. These efforts are all aimed at improving both customer service and our cost structure. Along with these initiatives we are also continuing to take initiatives to establish a stable funding base, mainly for non–yen currencies.
As we implement these strategies, we will accelerate initiatives to expand our business, strengthen bottom–line profits, and transform our business portfolio structure. By continuing to offer services that are in line with customer needs, we will achieve sustainable growth together with our customers into the years to come.
Economy, Regulations, and Competition
- European banks exiting non–core businesses such as through selling
- Uncertainty in the global economy due to such factors as new US administration, Brexit, etc.
- Strengthening of liquidity and capital adequacy requirements
- Rising cost of USD funding accompanying Fed rate hikes
- Further progress in globalization of Japanese companies
- Acceleration of entry into Asia by European, US, and other multinational companies
- Emerging countries in process of industrial development and capital market development
- Progress in industry realignment on a global basis
- Solutions capabilities supported by in–depth knowledge of customers' businesses and integrated management of banking, trust banking, and securities functions
- Collaborative office network and abundant information on local companies and regulations in Asia
- Blue–chip customer base and high–quality portfolio
- Large footprint in Asia and North America
- Controlling expense increases due to regulatory costs, inflation, etc.
- Establishing stable funding base, mainly through non–yen deposits
2. Value Creation
Value for Customers
- Offer diverse solutions such as M&A, DCM, and transaction banking through collaboration among banking, trust banking, and securities entities
- Support Japanese companies entering new markets through agreements with government agencies around the world and local financial institutions
- Provide latest information on global political and economic trends through gathering and analysis of information on international strategies
Value for Society
- Contribute to the development of global industries and emerging economies
- Contribute to the further development of financial markets and financial education around the world
3. Business Plans
Risk Appetite Policy
- Focus on developing relationships with blue–chip non–Japanese companies, especially the Global 300
- Reallocate capital and liquidity from low–profitability segments to higher–profitability segments with prospects for business expansion
- Increase the volume of non–yen currency deposits and improve deposit quality
- Shift management resources from low–profitability to higher–profitability segments
- Ensure thoroughgoing cross–selling between transaction banking and securities/market products
- Promote operational excellence through integrated operation on a group–wide basis, streamlining of business processes, and other measures
- Secure non–yen currency deposits and diversify non–yen currency funding sources
Interim Results for Fiscal 2017
- *FY2016 results recalculated based on FY2017 management account rules
- 1.MHBK and principal subsidiaries basis, including deposits of central banks, etc. Global Corporate Company management basis
- 2.Change from FY2015 estimates
- *Bonds worth USD250 million or more, excluding off–shore issuance. Source: Dealogic
Solutions that Support Sustainable Growth for Our Customers and Society
Global 300 Strategy
In the major deals for US company AT&T, one of our Global 300 customers, we secured the position of bookrunner for successive deals: USD4 billion in May 2016 and USD10 billion in January 2017. These deals in the dynamically realigning Technology, Media, and Telecom (TMT) sector were symbolic of the high status our Global 300 strategy involving a series of business and financial strategy proposals can gain for us. Looking ahead, we are aiming to substantially raise our profile as a global player.
Upgrading our Systems for Transaction Banking
We are strengthening our operating structure for transaction banking as a source of stable non–interest income and non–yen funding. We established our Global Transaction Banking Department in Singapore in April 2016 and recruited global transaction bankers for our four regional offices in the US, Europe, East Asia, and Asia & Oceania. Through these initiatives, we are working to strengthen our capabilities for meeting the increasingly sophisticated fund management needs of our customers who are expanding their businesses globally.
- Global Transaction Banking Department Network