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Message from the Group CEO

Transitioning to the next generation of financial services by implementing our 5–Year Business Plan Tatsufumi Sakai Member of the Board of Directors President & Group CEO Mizuho Financial Group, Inc.

Transitioning to the next generation of financial services by implementing our 5–Year Business Plan Tatsufumi Sakai Member of the Board of Directors President & Group CEO Mizuho Financial Group, Inc.

Transitioning to the next generation of financial services by implementing our 5–Year Business Plan

We have launched a 5–Year Business Plan: Transitioning to the Next Generation of Financial Services, which covers the five year period starting from fiscal 2019. After being appointed as the President & CEO of Mizuho Financial Group (“Group CEO”) in April of last year, I have looked back on the path that Mizuho has taken overall and have considered our current situation in detail. I have given much thought to the ways that we can create new value in the coming era.

In this message, I would like to share with you my perspective as the Group CEO regarding the ways that we are seeking to address the structural changes occurring in the surrounding environment, what I consider to be Mizuho’s challenges and strengths, and what we will do as part of our new business plan in order to win out over the competition.

How we are addressing change

What is expected of management

The structure of the economy and society, the ways in which countries around the world are connected, and people’s lifestyles are all undergoing irreversible, structural change at an accelerated pace. How are we addressing this change? For members of management, how we handle this era of rapid change may well be the greatest challenge we face.

Looking at the current state of the global economy, we are seeing the continuation of gradual growth overall. However, uncertainty is increasing in light of factors such as the current US–China trade friction, and the resulting downturn in confidence regarding the global manufacturing industry. Going forward, there are expectations that we will continue to see firm growth, centered on the US, but we must continue to be cautious regarding increasing uncertainty arising from a number of directions, including US trade policy, political developments in Europe, economic and market trends in China and emerging economies, and geopolitical risk in the Middle East.

Additionally, over ten years have passed since the last financial crisis, and there are signs of a turn in the credit cycle. For example the occurrence of an inverted US bond yield curve, expansion of the credit spread in the corporate bond market, and the expansion of the leveraged loans market.

In light of the lessons learned from the 2008 global financial crisis, at Mizuho we have enhanced risk management and implemented more selective credit processes. We keep a close eye on not only the credit markets but also emerging economies, asset prices, and other trends, working to identify weak points as the financial markets and real economy constantly change. As a result of these efforts, I believe we are maintaining an appropriate level of stress resistance in light of credit cycle transitions.

However, in the coming era, it will not be enough to just prepare for cyclical changes. It is an undeniable truth that the global economy and society, as well as people’s lifestyles, are undergoing rapid structural change. This is the result of a number of interconnected factors, including the downward trajectory of economic growth rates in advanced economies, the emergence of economic disparity and anti–globalization movements, aging populations and lengthening lifespans primarily in advanced economies but also in emerging economies, and disruptive innovation arising from digitalization.

Regarding digitalization in particular, the emergence the IoT where everyday objects are connected to the Internet, advances in big data analysis utilizing AI, and other such developments are creating an interconnected relationship between the physical and digital world, which in turn is transforming the economy, society, and people’s lifestyles in a wide range of fields. It took humanity a thousand years to transition from a hunter–gatherer society to an agricultural society, and the industrial revolution occurred over a span of several hundred years. However, the current digital revolution is likely to completely transform our world within only a few decades.

From this perspective, we can assume that future global developments will follow this pattern and that the breadth of change will be larger, the pace will be faster, and the outcome will be more dramatic. Surely this will also affect the world of finance, and we will see discontinuous structural change transform the industry beyond our imagination. In that sense, it is unnatural to think that the finance industry alone would be able to continue indefinitely in its current form as the world changes and customer needs and worker preferences change with it. At the most extreme, it is even possible that the finance industry will cease to exist in the form that we currently know it.

This level of dramatic change means that those who rely too much on following the paths which led to success in the past may find themselves falling behind, while those that embrace change and seek transformation will be presented with a rare opportunity.

In light of the ways that the competitive environment has, and continues to, change significantly, we must objectively examine reality and assuredly make changes where they are needed. At the same time, we must think, act and deliver–drawing on our strengths and developing new ideas in a flexible manner unbound by precedent. This will enable us to grow substantially, in ways that may not have been possible in the past environment.

How we address change and how we can ensure that this attitude towards change permeates every corner of the organization are vital considerations in the management of our organization during this period of drastic change within the finance industry.

Business environment and challenges

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Three megatrends

Following these observations, we must first seek to identify the major trends underlying these structural changes in the economy, society, and people’s lifestyles. There are three megatrends which are having a particularly big impact on the finance industry: digitalization, a declining birthrate and ageing population, and globalization.

As for the first of these trends, digitalization, as I already briefly touched upon, digitalization is transforming the economy, society, and people’s lifestyles in a wide range of fields. In the business world, innovations such as the IoT and 3D printers are driving a manufacturing revolution. Big data, AI, and other technologies are dramatically changing the service industry. And we are seeing a rise in subscription and sharing economy businesses. These major transitions within the industrial structure are being referred to as the “4th industrial revolution”.

In this environment, it is essential that financial institutions act as their clients’ business development partners, providing business support that goes beyond the traditional boundaries of finance in order to respond to rapidly evolving client needs.

Also, the basic services that financial institutions provide such as payments and lending are increasingly being offered by IT companies, fintech companies, and other industry outsiders.

Going forward, these revolutionary changes are likely to accelerate. In order for established financial institutions to continue acting as pillars of the financial infrastructure, it is crucial that we enhance our services by integrating cutting–edge technology and work to develop new business and increase productivity.

The second of the three megatrends is a declining birthrate and ageing population. Our home base of Japan is a country that began experiencing this trend before other countries. A declining birthrate and ageing population are serious issues which many other countries and regions will likely face at various times in the future. If Japan can present a new model for adapting to these changes, it could lead to stable growth in the world economy and is therefore a very important challenge.

I believe that Japan is capable of building a model where the merging of Japan’s tradition of craftsmanship and technical capabilities with digitalization, in addition to more active use of accumulated capital, will create a significant increase in productivity to off–set population decline, and this will be a strength that drives development.

In Japan, in addition to personal financial assets topping JPY1.8 quadrillion, which have been accumulated since the nation’s period of rapid economic growth, individuals own more than JPY1 quadrillion worth of real estate. Despite this, property income only accounts for 10% of household income in Japan, and it is essential that we work to raise this to a similar level as that of the US and Europe where it accounts for 20 to 30%. If we can encourage the more effective use of assets, including through responding to asset succession and business succession needs,then we can not only create a shift from savings to investment and asset formation, essential in this age of longevity, but also by increasing the return on assets we can build the capital that will support a new development model for Japan.

As for the third megatrend, globalization, while there has been some push–back recently such as an increase in protectionist trade policies, new trade flows are emerging as the result of changes to supply chains, and factors such as this make it difficult to determine the future direction of this trend. Although there are likely to be more twists and turns going forward in trade talks between the US and China, I believe that the direction of globalization as a megatrend, including such ebbs and flows, will become increasingly important.

That said, I think that the basic structure will not change from what we are witnessing now, and emerging economies, primarily in Asia, will be the main drivers of growth in the global economy. Current predictions regarding global GDP see China surpassing the US in the 2030s, and the GDP of Asia (excluding China and Japan) is on track to expand to a scale three times that of Japan.

One of the ways this may impact the finance industry is that the ratio of capital flows related to Asia will increase. An important role of the finance industry is to act as a bridge between Asia, the US, Europe, and other regions connecting businesses, and contributing to the sustainable and stable growth of the global economy.

Issues that need to be resolved

Three areas of mismatch

Next I would like to examine Mizuho’s situation specifically, and the mismatch that has arisen in three areas—business structure, finance structure, and corporate foundations—against the backdrop of the megatrends discussed above and the structural changes in customer needs and the finance industry. In this section I will provide specific examples for each area.

Firstly, there is a mismatch in terms of business structure. In Japan in particular, Mizuho’s business structure has been influenced by the post–war period of high economic growth. For example, in the case of Mizuho Bank, our business model has been one involving high fixed costs, a brick–and–mortar branch network primarily located on prime real estate directly next to train stations, and building a robust operational structure and IT systems with the aim of collecting deposits from a broad range of customers and utilizing these funds for corporate lending.

However, digitalization has led to the wide–spread use of more convenient services, and customers no longer need to visit a bank branch in order to make payments, complete various account procedures, or use other basic services. As a result, the number of branch visitors has been declining year–to–year. Additionally, branches are also able to offer more convenient services by utilizing cutting–edge technology, and therefore going forward branches will increasingly undergo a change in role, becoming a space for consulting where retail customers come to discuss investment for retirement and inheritance matters, and where corporate clients come for advice on business matters.

In order to respond to changing customer needs, we must fundamentally revise our business structure from one revolving around a retail branch network of convenient locations where a large volume of operations are processed, and therefore resolve the mismatch that has arisen between this structure and customer needs.

The second area where there is a mismatch is in our finance structure. In Japan, with the long continuation of negative interest rates, our net interest margin continues to shrink, and as a result a structural mismatch has arisen between our declining gross profits and the expenses required to maintain our traditional business structure.

Negative interest rates are one method of monetary easing, and therefore the Bank of Japan might discontinue this policy in the future. However, considering the outlook for Japan’s declining birthrate, ageing population, and population decline, it is difficult to conceive of a scenario where the economic growth rate would increase significantly, and therefore it is likely that the low interest rate environment will continue going forward.

Given these factors, we must resolve the mismatch regarding our finance structure by fundamentally reducing fixed costs in addition to investing in areas both within and beyond the traditional boundaries of finance in order to respond to new customer needs and create new value.

Lastly, there is a mismatch in terms of our corporate foundations. As customer needs undergo structural changes, we must change as well—including the way we manage our business, the way we work, and our every–day operational processes. If we do not change then we will not be able to provide new services that meet the needs of customers in this new era.

In particular, workforce–related issues are crucial. When I entered the workforce 35 years ago, “life–time employment” (employment at the same company until retirement) was the assumption at Japanese corporations and the norm was to work until around age 55 or 60 and then live off of the national pension, company retirement benefits, savings left over after repaying one’s housing loan, and other such sources of post–retirement income. However, now we are entering an age of longevity. It is estimated that over 40% of children born in Japan today will live to be 100. So it will be necessary for individuals to find ways to achieve fulfillment for a longer period of time, including the possibility of working beyond the standard retirement age.

In Japan, already we are seeing major changes in the preferences of the younger generations. Rather than selecting a company they feel an affinity for and planning to work there for the rest of their career, young people are selecting a profession they feel an affinity for, working to gain skills, and networking broadly both within and outside their company, approaching work with increasing emphasis on self–discovery. For companies, the extent to which younger workers can develop their careers is gaining increasing importance.

These examples that I have given regarding areas of mismatch are only a few of the things we need to address based on our broader understanding of the situation at hand. In order for us to respond to the rapid changes in the surrounding environment against the backdrop of these megatrends, we must directly address these areas of mismatch. Therefore it is essential that we steadily implement our structural reforms aimed at resolving them.

Tatsufumi Sakai President & Group CEO Member of the Board of Directors Mizuho Financial Group, Inc.

Tatsufumi Sakai President & Group CEO Member of the Board of Directors Mizuho Financial Group, Inc.

Why Mizuho will win out

The strengths we have cultivated thus far

We must clearly identify our unique strengths and implement a differentiation strategy if we are to win out over the competition and respond to new customer needs.

One of the strengths we have been emphasizing is our approach to business as a united group, under what we have termed the “One Mizuho” strategy. We will continue to further enhance this strength while at the same time not limiting ourselves to the One Mizuho strategy but rather seeking to further evolve it and go beyond it.

Why is Mizuho able to evolve in this way? I believe the answer is in the strengths we have accumulated over our long history, and I would like to take this opportunity to share with you, our valuable stakeholders, two specific areas of strength.

The first area of strength is our customer base, network, trustworthiness, and reliability. The new design of the JPY10,000 note in Japan will feature Eiichi Shibusawa, who founded one of Mizuho’s predecessor banks, the First National Bank, in 1873, almost ten years prior to the establishment of the Bank of Japan. Over these 146 years of history, we have cultivated our customer base, network, trustworthiness, and dependability as our greatest strengths. Mizuho has a strong customer base and a wide network both in Japan and around the world, and one of the distinguishing characteristics of our customer base is that it is broad and open, not being limited based on corporate affiliations. In this way, to this day our approach is aligned with Eiichi Shibusawa’s philosophy. Additionally, out of the approximately 30,000 local subsidiaries that Japanese companies own outside Japan, around 20,000 of them are located in Asia. Therefore, I believe that one of our strengths is our ability to draw on our Japanese client base in order to expand business in other countries in Asia.

As for trustworthiness and dependability, actually these are both areas where Mizuho scored very high on an anonymous survey of retail customers conducted in Japan regarding the qualities people associate with different companies. We also scored high in terms of the quality of our staff. However, compared to e–commerce companies, we score lower in categories such as innovativeness and inclination to take on new challenges.

Also, Mizuho operates in a highly regulated industry. The necessary costs associated with the protection of personal information, anti–money laundering, and other measures required from the perspective of society are already built into our business. Recently GAFA* have come under pressure to revise their business model as they encounter issues in these areas. However, at Mizuho we are able to expand our business based on the trustworthiness and dependability we have built up throughout our long history, to the benefit of our customers as well as society and the economy at large.

  • *An acronym referring to four major US–based IT companies: Google, Apple, Facebook, and Amazon.

The second area of strength is our financial functions, market presence, and ability to respond to non–financial needs.

The wide range of financial functions within the Mizuho group and our strong presence in the markets are major strengths. For example, Mizuho has ranked first on the Japanese syndicated loan league table for ten years in a row, and we consistently rank around the top of Japanese publicly–offered bonds (straight bonds, energy bonds) league tables, in addition to other leading rankings. Also, in the US corporate bond (DCM) league table (FY2018, investment grade) we ranked 8th overall, but when narrowed down to the major clients we targeted, we ranked 4th, directly after three major US financial institutions. This is just one example of our strong presence in global capital markets. Additionally, we continue to receive numerous awards from industry magazines for our transaction banking and trade finance capabilities in Asia, and this and other forms of recognition point to the ways that the services we provide are well received.

At the same time, we have many strengths in non–financial areas. Our research functions, for example, where we have a high level of expertise spanning a wide range of fields, including being the leading Japanese bank in terms of industry research. As our clients’ needs shift as they face major changes in the surrounding environment, our research capabilities are a strong factor of differentiation enabling us to provide solutions spanning both finance and non–finance fields.

On top of this, Mizuho Trust & Banking has the strongest real estate track record in the trust banking services industry in Japan, which is a significant strength in light of increasing asset succession needs, including both financial assets and nonfinancial assets such as real estate. Additionally, products and services which combine our trust banking functions with nonfinancial services have been well received by customers. For example, we launched a new customizable trust product which combines Mizuho’s range of financial functions such as asset safeguarding and asset succession, with nursing care and home check–in services from external providers.

In this way, we have strengths in both finance and non–finance fields. I believe this will provide Mizuho with a major advantage when it comes to directly addressing customer needs in this new era and creating new value.

Building new strengths

In addition to fully drawing on these unique strengths, we will focus on advancing digitalization. This will mean that based on our strategy, at times we will be in competition with other organizations, including those outside the finance sector, while at other times we will proactively collaborate with them, thus creating new strengths.

As I mentioned above, over our long history we have built a reputation for trustworthiness and dependability. While leveraging these strengths, we will collaborate with IT companies and other partners who are on the cutting edge of innovation, working towards a shared goal of meeting customer needs. By blending finance and non–finance fields in this way, I believe we can provide customers with added value in the truest sense.

We have already partnered with SoftBank to provide J.Score, a score–based lending service targeting individuals in Japan. And we are collaborating with regional financial institutions from throughout Japan to offer J–Coin Pay, a cashless payment service. Other initiatives include a new lending business targeting SMEs which we are working on with Credit Engine, and plans for establishing a new bank in partnership with Line. In this way, we are working with a broad range of partners in various industries and of different scales with the aim of responding to customer needs through a flexible, open, and connected approach to customer engagement, services, business infrastructure, and other aspects. Going forward we will further expand these efforts with the aim of differentiating Mizuho from our competitors.

A year to build the groundwork for structural reform implementation Fiscal year 2018 was positioned as the launchpad for our new business plan and I would like to share some of the initiatives we advanced.

Since being appointed as Group CEO in April of last year, I positioned fiscal 2018 as a year where we would go on the offensive. I put an emphasis on strengthening earnings power in line with our actual business circumstances. As a result, revenue in customer divisions, primarily for large corporations in Japan and clients outside Japan, trended upward. This was the highest earnings since introducing the in–house company system and is one way that we are seeing the impact of our efforts.

Also, in light of the structural reforms that we identified as part of efforts to ascertain the overall business situation, with the aim of addressing issues as early as possible we recorded a one–time loss in fiscal year 2018 financial results in order to reduce the burden on future fiscal years and immediately resolve the mismatch regarding our finance structure. I am confident that this was the best option in order to enable us to resolve structural issues at an early stage and fully draw out the strengths and potential that we have accumulated thus far.

Additionally, we positioned the migration to our next–generation IT system as a top priority for management and were able to complete an eight–stage migration process smoothly in fiscal year 2018. I believe that these efforts will ensure that we have the groundwork in place for implementing the structural reforms under our new business plan.

What we will do in order to win out over the competition

Basic policy: Three–pillar reform

Our 5–Year Business Plan: Transitioning to the Next Generation of Financial Services, was formulated based on the structural issues, strengths, and other considerations outlined in the preceding pages. As I have explained, I believe that one of the largest issues facing Mizuho at the moment is the need to resolve the mismatch that has arisen between structural changes in customers’ needs and the business operations framework that has evolved over many years of routine at Mizuho. This is necessary to enable us to meet new customer needs.

With this in mind, our basic policy under the new business plan is to implement forward–looking structural reforms focused on three interconnected areas: business structure, finance structure, and corporate foundations. This will enable us to resolve the mismatch in the allocation of corporate resources and respond to new customer needs, aiming to transition to the next generation of financial services.

Time frame

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Time frame: Why we chose a five year period

Although our previous business plans were three years, this new plan is for five years. A three–year time frame is sufficient for addressing immediate issues. However, a three–year plan tends to function as an extension of ongoing initiatives and potentially may only address the symptoms rather than root causes. By adopting a five–year time frame, we believe that we will also be able to directly address the root of structural issues, aiming to transition to the next generation of financial services.

In particular, in the last two years of the period as our efforts begin to bear fruit, we plan to further accelerate growth, and we hope that our stakeholders can see how this time frame therefore represents our major commitment.

Key strategy: Creation of new value in both financial and non–financial business areas

Our key strategy for realizing our basic policy is to go beyond the conventional boundaries of finance and create new value incorporating both financial and non–financial products and services in order to forge new partnerships with our customers.

Allow me to go into detail on this important point. Until recently the value proposition of financial institutions has been based on traditional financial services, focused on the value of money itself. Of course, the importance of money itself is not going to change any time soon. However, as I mentioned above, as peoples’ lifestyles and values change, and as countries around the world become more interconnected in terms of economic and industrial structures, we are experiencing a time of broad change and new customer needs are rapidly arising.

For example, individuals are not only interested in investing their money but also in convenient services integrated with an increasingly digitally connected lifestyle, or in light of increasing longevity, services with support for later in life such as inheritance or nursing care, or for business succession and other such concerns.

And companies are not only interested in financing but also in other means of growth support, business structure transformation, or responding to the business risk arising from this growth and transformation, talent acquisition needs, and other such concerns.

Given these changes in needs, the financial services industry must change as well. To build new forms of partnerships with our customers, we cannot limit ourselves to traditional financial domains. We must seek to identify the underlying needs of our customers based on their hopes, dreams, or concerns, and connect with customers at a deeper level.

Our aim is to go beyond the conventional boundaries of finance and draw on a wide range of resources. We will seek to create new value incorporating both financial and non–financial products and services with added value by expanding into and connecting with adjacent business fields. That is the essence of our key strategy.

Under this key strategy, we will fully draw on the strengths that Mizuho has cultivated thus far—customer base, trustworthiness, and financial functions—as well as our ability to respond to non–financial needs in domains such as research, consulting, and real estate. These strengths will be a major source of differentiation for Mizuho. We will also work to create new value by further enhancing our digitalization initiatives and more proactively collaborating with external partners.

In order to achieve this, we have adopted “Open & Connected” and “Passionate & Professional” as our action principles. Open & Connected means that we will connect customer segments, regions, functions, and other aspects of our business in open partnerships within and outside the group in order to create new value chains spanning both finance and adjacent fields.

Passionate & Professional means that each member of the group will be encouraged to find a source of inspiration in the dreams and hopes of our customers, better connect with them, and draw on a high level of expertise to think, act, and deliver.

In implementing this strategy, we are aiming to transition to the next generation of financial services. Below I will explain the initiatives we will take through structural reforms in three areas based on our basic policy and key strategy.

Business structure reforms

As for our business structure reforms, in light of structural changes in customer needs, we will fully draw on our strengths and go beyond the conventional boundaries of finance in order to provide optimal services and solutions.

For retail customers and business owners, we will aim to be a partner that helps customers design their lives in a changing society. While identifying asset formation and business succession needs arising in this age of increased longevity, we will provide solutions spanning both finance and adjacent fields such as real estate. Digitalization is also leading to a shift in customer needs, and we will promote cashless payments, transform our network into next–generation branches, and other initiatives, collaborating openly with external partners in order to provide a variety of reliable and convenient services as quickly as possible.

For corporate clients we will aim to be a strategic partner for business development under a changing industrial structure, including supporting the growth of startup companies. By leveraging our strong industry insight, we will become better able to take on risk in non–financial business fields such as pursuing joint investments with our clients, and will forge new forms of partnership, replacing those based on cross–shareholdings.

Additionally, in our business outside Japan our strengths include our client base and network, especially in Asia where high growth is expected, and our presence in attractive US capital markets. We will draw on these strengths to promote a sharper strategy focused on capturing cross–border trade flows and capital flows, supporting clients’ cross–regional business growth.

For market participants, we will aim to be a partner with expert knowledge of market mechanisms and the ability to draw on a range of intermediary functions. We will fully leverage our strengths, such as our network of investors and issuers around the world, in order to strengthen our sales & trading business. In terms of banking, we will enhance ALM and portfolio management in order to stabilize revenue and strengthen our risktaking capabilities.

Finance structure reforms

Our finance structure reforms are designed to enable us to transition to a more flexible business and revenue structure which is responsive to changes in the business environment and competitive environment.

We will use four perspectives: (1) risk & return (gross profits ROE) in relation to capital; (2) cost & return (expense ratio) in relation to investment and expenses; and (3) growth and (4) stability in terms of our business portfolio. These perspectives will help us to identify issues specific to the business and revenue structure of each business domain and reallocate corporate resources from streamlined areas to focus/growth areas. This will enable us to establish a stable revenue base at an early stage and transition to a revenue structure that allows us to proactively pursue revenue streams with upside potential.

By enhancing the robustness of our financial base through these efforts, we will be able to better withstand turns in the credit cycle in addition to aiming to invest in growth and enhance returns to shareholders at an early stage. We have revised our shareholder return policy, and under the new policy we are maintaining the current level of dividends for the time being while aiming to strengthen our capital base further in order to enhance returns to shareholders at an early stage.

One of our financial targets to be achieved by fiscal year 2023, the final fiscal year of the new business plan, is Consolidated ROE of approx. 7 – 8%. Another target is Consolidated Net Business Profits of approx. JPY900 billion, which we will aim to achieve by enhancing our stable revenue base and strengthening our earnings power.

Corporate foundations reform

As part of our corporate foundations reforms, we will transform our approach to business operations in line with changes in society, strengthen group governance, and cultivate a new corporate culture centered on communication.

In terms of transforming our approach to business operations, we will focus on priority areas (e.g. personnel & workplace, IT systems & digital) with the aim of further enhancing employee engagement and motivation.

To strengthen group governance, we will aim to enhance our sense of group unity, including among group companies other than our banking, trust banking, and securities entities, achieve greater consistency in strategy, and increase execution capabilities in order to advance our efforts regarding the next generation of financial services. Going forward, we will further consolidate and unify Head Office and frontline functions for each group company (Mizuho Bank, Mizuho Trust & Banking, Mizuho Securities, etc.) to the furthest extent possible, including through the use of the new office building we are building in Marunouchi in the latter half of fiscal year 2020.

We will seek to transform our corporate culture by greatly increasing the quality and quantity of communication and fostering a new type of culture.

Below I will provide an outline of our new HR strategy, which is key to how we transform our approach to business operations and transition to the next generation of financial services.

New HR strategy

Under our new HR strategy, we will transform our model from one where employees seek to enhance their evaluations as the source of competition is limited to within the company, to a model fit for this new age of longevity, where employees’ professional growth and career preferences are prioritized and employees seek to enhance their universally recognized value by looking beyond the traditional boundaries of finance. We believe this model will ultimately enhance Mizuho’s value.

What we mean by “universally recognized value” is that under this model each individual will be able to maximize their value ina way recognized both within Mizuho and outside the company, creating a mutually beneficial outcome for both the company and the individual. Our approach to talent management thus far has focused on developing generalists who are well–versed in Mizuho’s business as a whole, and developing specialists primarily to perform a supporting role. However, as our business domain expands and diversifies, and as competition becomes fiercer, having expertise which is recognized outside the company is becoming more important than being well–versed in one’s own company’s business. Each member of the organization will need to develop into a specialist with their own area of expertise.

Therefore, we will transition to a model where employees design their own career plans, leading to higher ambition and motivation and encouraging the advancement of women, non–Japanese nationals, and other employees from diverse backgrounds. We will also aim to expand opportunities for employees to take on new challenges as well as expand our development programs, providing stronger support for efforts to enhance each individual’s value. Additionally, we will provide an environment which enables more diverse and flexible work arrangements aligned to each individual’s job duties, lifestyle, and other factors, with the aim of encouraging greater engagement and long, fulfilling careers.

In terms of expanding opportunities to take on new challenges, we already have an internal job posting system in place where employees can apply to open positions. When we launched J–Coin Pay, for example, many of our employees, particularly younger employees, applied for these newly formed positions. We will continue to expand such frameworks as well as more broadly assign employees to serve concurrently in multiple positions within the organization.

We are also looking to allow employees to work at other companies concurrently as well, and we have started trials in certain areas. For example, startups tend to focus a lot of energy on business model transformation and marketing, but could benefit from the expertise that the employees of financial institutions have to offer in regards to finances, corporate management, and other aspects of corporate governance. Also, there is strong demand from long–standing family–owned businesses for experienced successor candidates and executive level managers. As demand in these areas continues to increase, there are opportunities for Mizuho employees to experience the innovative process and quick development at startups and other such environments, with potential to lead to new value creation at Mizuho.

And we will also proactively support network building between current Mizuho employees and former employees now working as professionals in other fields, both those who had long careers at Mizuho and those who left Mizuho at earlier career stages. In these ways we will seek to create connections among a broad range of people which can lead to new business opportunities.

Under our new business plan we are aiming to create new value chains in both finance and adjacent business areas, including nonfinance domains. Therefore we will put in place an HR system which will enable us to pursue this goal.

Sustainability initiatives

As we move to implement the 5–Year Business Plan, we will be putting an increased emphasis on sustainability. Sustainable development efforts are gaining increasing importance, including in areas such as responding to climate change, respecting human rights, and adapting to a society with a declining birthrate and aging population. In light of this, there are expectations from a wide range of stakeholders that companies’ actions are considerate of the economy, society, and the environment. In other words, companies are expected to make efforts to increase the positive impacts of their business activities and decrease or avoid negative impacts.

Mizuho has long been committed to corporate social responsibility (CSR) and we have worked to continually enhance our initiatives aimed at creating value for a range of stakeholders. Currently we are using this opportunity with the launch of our new business plan to revise the initiatives we have implemented under the concept of CSR and to enhance our group–wide stance towards sustainability. To this end, we have newly defined sustainability for Mizuho as “achieving sustainable and stable growth for Mizuho, and through this growth, contributing to the sustainable development and prosperity of the economy, industry, and society around the world”

Additionally, we have identified “key sustainability areas” connected to our business structure and corporate foundations and have incorporated them into our business plan. These areas were selected with consideration of the materiality to and affinity with our strategies, and reflect the expectations and demands of a wide range of stakeholders. We will proactively work towards achieving the SDGs through our business activities and enhancing our medium– to long–term corporate value.

In conclusion: Think, act, and deliver

This year marks the 20th year since Mizuho’s launch in 2000. In the past two decades, we have overcome several major turns in the credit cycle, including the non–performing loan issue in Japan in 2002, the sub–prime loan crisis in 2007–2008, and the global financial crisis that followed. However, in regards to structural shifts that have occurred over the last 20 years or so, I believe we must be prepared to deal with them over the next five years.

In closing, I would like to emphasize that we are not positioning our new business plan as a new “direction” or “vision” for Mizuho. Rather, I believe that this plan is a set of tactics, or a course of action, for Mizuho. It is designed to make us think on our feet. In essence, given the very fast pace at which the environment around us is changing, there is never a set answer to anything. In these circumstances, we need to face a number of structural issues.

As the finance industry faces major structural changes, we at Mizuho must be dedicated to connecting with our customers, and focus on changing our everyday approach and way of doing things. And we need to fully draw on our strengths so that each individual can think, act, and deliver based on an open approach to getting things done.

All members of the group are committed to making every effort to steadily implement this business plan and transition to the next generation of financial services so that we can build a stronger and more resilient financial group which our customers can depend on in the coming era.

We appreciate your continued support and will do everything in our power to exceed your expectations.

July 2019

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Tatsufumi Sakai
Member of the Board of Directors
President & Group CEO
Mizuho Financial Group, Inc.