Message from the President & Group CEO of Mizuho Financial Group
As President & Group CEO of Mizuho Financial Group, I would like to express our deep appreciation for your continued interest in and support of our group.
As for the recent economic environment, the gradual recovery in the global economy has continued, driven by the strong expansion of the United States' economy. On the other hand, the Chinese economy has experienced a slowdown in growth due mainly to the influence of trade friction with the United States, and the resulting uncertainty has led to some instability in global financial markets.
In the United States, the economy continued its steady expansion due to such factors as tax cuts and increases in government spending. While the unemployment rate has declined, wage level growth has not accelerated. The Federal Reserve Board has continued to raise interest rates gradually and shrink its balance sheet.
In Europe, economic expansion has been slowing down. Business confidence has been weak mainly in the manufacturing industry. As uncertainty, such as concerns regarding Italy's political instability and Brexit increases, the European Central Bank maintained its monetary policy.
In Asia, the Chinese economy has experienced a slowdown in growth. Concerns regarding trade friction between the United States and China have caused the depreciation of the Chinese yuan, and it is necessary to monitor the increasing uncertainty in China's economic situation.
In Japan, although the economy continued its gradual recovery due to such factors as overseas economic expansion and strong domestic demand, exports and production remained weak. Employment conditions have been favorable, and consumer spending maintained a gradual recovery trend. The Bank of Japan continues "quantitative and qualitative monetary easing with yield curve control" to achieve the price stability target of 2%. In the Monetary Policy Meeting in July 2018, the Bank of Japan took measures to enhance the sustainability of its monetary policy.
As for the future outlook of the global economy, the recovery is expected to continue particularly in the United States, but it is necessary to monitor risks stemming from factors such as US trade policies, political concerns in Europe, the economic outlook for China and emerging countries, and geopolitical instability in the Middle East.
Initiatives in fiscal 2018
This fiscal year we aim to go on the offensive as a united group by giving priority to three objectives.
The first of these is the commencement and implementation of fundamental structural reforms. Given the challenging environment for revenue growth and considering major ongoing structural changes in the economy and society, we are undertaking the fundamental structural reforms we announced last year. For example, we will optimize our organizational structure and staffing by reorganizing Head Office personnel, shifting some to the frontlines and placing a limit on hiring. We will also restructure our customer channels by combining branches to offer banking, trust banking, and securities services jointly through the same branches.
The second is achieving the objectives of our medium–term business plan. We will prioritize the strengthening of our fundamental earnings power and ensuring the long–term stability of our business by working to carry out the measures outlined in our medium–term business plan during this final fiscal year of the plan.
Our third objective is a smooth migration to our next–generation IT system. Having designated it as a key management priority, which forms a crucial part of our business foundation, we are implementing the migration process with considerable care. At present, the migration is being carried out smoothly and we are continuing to proceed securely and steadily.
Outline of the interim results for fiscal 2018
During the interim period, net interest income has grown in customer divisions as a result of increased lending outside Japan and non–interest income has substantially increased within and outside of Japan. We are starting to see results from our approach to strengthening our fundamental earnings power, which we have been implementing.
As a result, Profit Attributable to Owners of Parent amounted to JPY359.3 billion, which represents 63% of our fiscal year target of JPY570.0 billion. In addition, our Common Equity Tier 1 capital ratio (excluding Net Unrealized Gains on Other Securities) was 10.41% at the end of the interim period.
At Mizuho, over our long history, we have cultivated a presence in many areas based on our unique features and strengths, such as our customer base and network in Japan and around the world. While fully drawing on these strengths, we are aiming to make Mizuho into a stronger and more resilient financial group which our customers can depend on in the coming era. Our customers' needs are evolving along with changes in the economy, society, and people's lifestyles. As new fields gain relevancy for our customers, we must be always a step ahead, cementing these new fields as significant strengths for Mizuho.
We appreciate your continued support and will make every effort to not only meet, but exceed, your expectations.
President & Group CEO
Mizuho Financial Group