Thank you very much for joining us for this Earnings Conference Briefing for Fiscal Year 2021 First Half Financial Results for Mizuho Financial Group despite your busy schedules. So we will be taking the form of net conference method using Webex. It will only be on audio. Therefore, please to the presentation material that is entitled Fiscal Year '21 H1 Financial Results from our website. My name is Chisaka of the IR Department. So I will be moderating today's event. Before we start the net conference, there are some announcements to make. Please note that any comments regarding future outlook at this time is subject to risk and uncertainty. Therefore, please be aware that actual results may differ from the forecast. The presentation will be given by the CFO, Umemiya. There will be an outline presentation for 10 minutes based on the presentation material. And 35 minutes will be allocated for Q&A. The overall meeting income will be for 45 minutes. Mr. Umemiya, please.

This is Umemiya of the Mizuho Financial Group. Thank you very much for allowing us time today. First of all, I would like to apologize deeply for the systems failures at the Mizuho Bank. I would like to take this opportunity to apologize for the inconvenience. Currently, in order to provide a reassurance to our customers against the backdrop of recognition of the challenges that is current after the August with the payers, we are now reviewing the latest event recurrence. After review is completed, we will report back to you. Now I would like to give you the explanation of the first half of fiscal year 2021 financial results. Please refer to Page 3. So first of all, this is the outline of the results. Please refer to the third line on the left, which is the consolidated net business profits and net gains related to Eves and others. It increased by JPY40.9 billion year-on-year and JPY460.3 billion. Against the fiscal plan of JPY790 billion, we are at 58%. Strong results have been achieved, especially in the customer groups. Now in terms of the breakdown for the customer group, individual investment was strong. Non-Japanese loan deposits revenue increased as well. And therefore, there was a significant increase of JPY73.9 billion year-on-year. If we compare to the previous years, it exceeded 2015 before the introduction of the negative interest rate policy and also recorded four years record high since that in-house company was introduced. In markets, last year was a very special year. For this year, there was a decline in bonds and sales again. And the -- in banking ST revenue declined because of stabilization of market volatility, decreased by JPY41.5 billion. For credit-related cost repurchase of JPY33.7 billion for forward-looking results, this is at -- ended of the minus JPY49.6 billion, minus JPY31.5 billion year-on-year. With respect to net gains related to stocks, so we have sold for shareholdings, but we also canceled bear funds, which was for the purpose of stabilizing the annualized change on stock. And capital increase and the market increase relating to cancellation, we recorded minus JPY6.8 billion. Compared to last year, the impairment of cost holdings -- the comparison was as a result -- taking that into consideration increased by JPY43.6 billion. Net extraordinary gains was -- declined by JPY18.4 billion because of the reaction decline of the extraordinary profit related to pension system and revision of last year and return and benefit and trust for the -- there was also a tax effect. Net income attributable to financial group was JPY385.6 billion, up JPY170.1 billion against the fiscal year plan, we have made a progress of 75%. Please turn to Page 4. This is looking into the Company-based performance. For the customer group, I'm going to refer to the net business profit in the middle. For Retail & Business Banking, the individual business -- individual asset formation, there was successful trend and there was also a noninterest income for real estate-related, recording a significant increase of JPY35.9 billion year-on-year. Corporate and Institutional was subject to a reactional decline of the large solution revenues falling off. Loan balance increased year-on-year, JPY8.2 billion increase was reported from global corporate company. The loan spread improvement as well as the reduction of high-cost deposit as well as capital market transactions, M&A and other noninterest income increased even compared to a strong performance from last year, in Europe and United States, we have seen increases here of JPY24.5 billion in compared to the past NOPs. The Retail and Business as well as Corporate and Institutional and Global Corporate and Asset Management recorded record high since the in-house company has been introduced. Please refer to Page 5. And this is the balance sheet outline. Left-hand side is the total assets at JPY227 trillion, a foreign bond increase, which meant increase of JPY1.6 trillion compared to the end of the last fiscal year for loans with the peak behind us for COVID-relating financing, there was a demand for major companies for deposits and negotiable individual deposit increased, however, the Company reduced cash in hand. Right-hand bottom. Non-Japanese yen denominated loans and deposits. Non-Japanese yen customer loans declined by JPY2.2 billion because of the repayment of COVID-related loans as well as reduction of low-profit assets. Non-Japanese yen customer deposits -- so those declined. Progress is made to control the high-cost deposit. Proportion of deposit to loan was maintained at 70%. Going forward, the trend in deposits as well as the funding environment will be taken into consideration to achieve optimal non-Japanese yen funding management going forward By combining customer deposits as well as long-term funding. Next, loans. For domestic loans average balance paid in the first half of 2020 and then was on declining trend. There was a decline of JPY1.1 trillion loans and deposit to rate margin in Japan, as you can see on the right-hand top. Compared to the previous year, increased by 1 basis point. As mentioned here for small- and medium-sized companies as well as for larger corporations, loan spend improved because of the product loan execution as well as repayment of COVID-related loans, which is low spend. Now loans outside of Japan average balance declined because of payment -- repayment made to COVID-related loans as well as non-COVID loans in the United States and Europe and declined. Year-on-year, it declined by JPY11.1 billion. For non-Japanese, loan spend increased by 5 basis points, has been achieved. Product lending has grown and relatively loan spread COVID-related loans have been subject to repayment, and we have been progressed in terms of spread improvement. On Page 7, please. And this is regarding noninterest income for customer growth by in-house companies. As you can see on the left-hand side, the noninterest income increased by JPY34.5 billion year-on-year. Last year, although there was a corporate and institutional increase, one in last [indiscernible] transactional share decline recorded this year. And it -- but retail and business banking, therefore, improved over the previous year. Please see to Page 8. This is an explanation on credit portfolio. Starting with left-hand side, credit-related costs. In the second quarter, the Company recorded reserves from a forward-looking perspective of JPY33.7 billion to be prepared for the future, taking into account macroeconomic conditions and rising risks expected in the future, such as global supply constraints. As a result, CIC incurred costs, but with reversal of forward-looking provisions made in prior years, RBC and GCC had reversals. In total, credit-related cost was minus JPY49.6 billion, which is a progress of 49% against the plan of minus JPY100 billion. On the right-hand side, nonperforming loans based on FRA is more or less flat year-over-year for both balance and NPL ratio. As shown bottom right, low level is maintained from past years. Since the resurgence of COVID-19 and prolonged impact of COVID on customers is expected, we will keep a close eye on credit costs. Please go to Page 9. Next is securities portfolio. On the left, unrealized gains, losses on other securities. Valuation gain was JPY1.589 trillion, up JPY18 billion from March 2021, mainly owing to a rise in Japanese stock prices remaining at a high level. Bottom right, reduction of gross shareholdings. Against our target of reducing JPY300 billion by March 2022 in three years, we have made 97% progress with a total of JPY292.3 billion as of end of September 2021, excluding temporal increase due to cancellation of employee retirement benefit trust scheduled by the end of the year. Sales amount, excluding impairment, is JPY258.3 billion, representing 86% in progress. We will continue to engage in close negotiation with customers to reduce holdings further. Please turn to Page 10. Basel regulatory capital. The CET1 ratio based on current regulation, shown in the center of the table, increased 0.64% compared to March 2021 to 12.27%, mainly owing to increase in profit. We have adequate level against other regulatory requirements as well. As shown on bottom right, an important management KPI for the Company, which is CET1 capital ratio based on Basel III finalization fully effective basis is 9.6%, excluding net unrealized gains and losses on other securities, already exceeding the target set forth in our five-year business plan of 9%. Please turn to Page 11. This is a revised plan for fiscal year 2021. Consolidated net business profit revised up by JPY30 billion to JPY820 billion. Markets Group was revised down based on judgment to take cautious stance in light of market trends, including interest rate outlook overseas. Customer group with the strong performance in and out of Japan is more than offsetting the drop. Credit-related costs remain unchanged from original plan, as we continue to take a cautious approach in the second half. Net gains and losses related to stocks and others revised downward due to the execution of bear funds cancellation considering increase in unrealized gains on cross-shareholding and capital accumulation. The plan has been revised downward by JPY60 billion to a loss of JPY10 billion, the same level as the first half results. In addition to the above and taking into account the positive impact of the tax effect associated with the capital optimization of subsidiaries recorded in the first quarter, the forecast for net income attributable to SG for fiscal 2021 has been revised up by JPY20 billion to JPY530 billion. With regard to the dividend per share of common stock, as shown in the bottom right table. Taking into account the steady growth of the stable earnings base, mainly in the customer group and the dividend payout ratio of 40%, the interim dividend will be JPY40 per share, which is an increase of JPY2.5 from the initial forecast. And the year-end dividend will be JPY40 per share, an increase of JPY2.5 from the initial forecast as well. And this is the first time in seven years since the fiscal year ended March 2025 -- 2015, March 2015 that we have increased the dividend. With future capital policies, we intend to achieve an optimal balance between capital adequacy, investment in growth and enhanced shareholder returns while continuing to fully demonstrate the financial intermediary function under COVID we will continue to actively allocate management resources to human resources and IT and digital fields, which are cornerstones of further growth and to return profits to shareholders based on progressive dividends. Page 12. This page describes the progress against the five-year business plan that started for fiscal year 2019, and Page 13 illustrates the progress against fundamental structural reform plan. I will not go into details, but we are making steady progress at this point in time. This concludes my explanation on our earnings. A - Naoaki Chisaka: We would now like to proceed to the Q&A, but let me introduce the method of the Q&A. [Operator Instructions] Please be informed that the questions will not be taken on the English channel. Please contact the IR department if you have any questions in English. Takamiya-san of Nomura Securities, you have the first question. You are breaking out. Yes, we can hear you now.

This is Takamiya of Nomura Securities. I have two questions. Regarding the system impact, please elaborate as well as a dividend increase. Regarding the system failure, currently please elaborate on the impact on your management performance going forward as well as the impact on cost and expenses, please elaborate further. That is the first question. And the second question is regarding dividend increase. Now you have disclosed the dividend increase before the end of fiscal year. Why have you announced this at this point in time? What is your intention? And what is the message for the market participants?

So thank you very much for your question. Regarding the system failure impact. Now in terms of gross profit as well as expense as well as investment, there will be some quantitative explanation to be given. In terms of gross profit, in the revised plan, JPY3 billion negative impact is assumed specifically on foreign exchange, for corporate transactions have declined and these are the major reasons. In terms of expenses, at the timing of May, I have already spoke about this point. The JPY10 billion and in terms of other expenses, JPY8 billion, has been earmarked in the plan for February and March with the system failure because we wanted to implement various measures and we hope that it can be managed with the JPY10 billion plus JPY8 billion. But as you know, in August and September, there were other system failures occurring as well. Compared to February and March in terms of hardware, especially for monitoring and the infrastructure-related revision will have to be made further. And therefore, there could be a need to increase expenses. But in terms of necessary measures and the accumulation of these measures at May, JPY10 billion has been earmarked and JPY8 billion in terms of expenses have -- was achievable, but there is a possibility that it could be exceeded. And this is the current forecast. Therefore, we wanted to -- for investment, we increased by JPY3 billion to JPY13 billion for expenses. There will be some extraordinary measures as well. So the JPY8 billion will be increased to JPY14 billion. Therefore, we want to earmark sufficiently in terms of cost. That is reflected in the guidance side. To your second question, regarding the dividend increase, why did we announce it at this time, was the gist of your question? At the time of May, I also elaborated that -- at the time of May progressive and the payout ratio of 40% guideline has been presented. Therefore, we have changed the policy in terms of dividend from the past. At that time, we elaborated about JPY510 billion was the original guidance. And 40% of that is JPY80. So that was within visibility. On the other hand, at the timing of May, there were emergency declarations made and it was immediately thereafter. And there was uncertainty in terms of the COVID-19 going forward. So the guidance level of JPY510 billion, the probability of the achievement has been enhanced. And that is the timing in which we wanted to disclose our policy in terms of the shareholder returns. At this timing, it isn't safe for we are out of the woods in terms of COVID-19, there is responsibility of the sixth wave. And what was not assumed in May, such as supply chain constraints as well as energy price increases has come to the fore more recently. However, even if we are able to absorb that, it would be around the JPY500 billion-plus is achievable. According to our management, we have the confidence and we have visibility of achieving this number. Therefore, it consists of the 40% payout ratio. We have made this announcement of the dividend increase. That is all.

Thank you very much. Thank you for the question. Next question Takai-san from Daiwa Securities.

This is Takai. I have just one question. You revised the forecast for the full year. I'm on Page 11. Basically, it is credit-related costs or share-related cost is flat in the first half and second half. The second half, you're expecting a decrease of about JPY100 billion in the second half. And for credit-related costs, forward-looking provision was -- is included in the first half, which means that the second half, I think you will also be including some reserves from that. And the bear fund cancellation, I think has been conducted to a extent in the first half, so the same amount is expected in the second half. Is that why the credit-related costs and stock-related net gains and losses are anticipated in the first half and the second half? And for the main business, there is not much of an enhancement in the first half. And the reason why there was a drop in business performance, the main part of your business in the second half, I don't exactly know why is that? If you could share with us the background to that, that will be very much appreciated? So bear fund cancellation and the reason for expecting a drop in business profits in the second half.

Thank you very much for your questions. So if I may share with you where we are coming from in terms of our earnings forecast. With regards to credit-related costs, as you correctly pointed out, the forward-looking, the JPY30 billion-or-so that has been set aside for forward-looking, it's about 100 -- half of the JPY100 billion that was anticipated for the full year. In the second half, the forward-looking provision will this -- be set aside in the same way as we did in the first half. It will depend on the situation going forward. In terms of the breakdown, how much will be forward-looking and how much will be base. This is not the approach that we are taking. We are basically taking into account the current situation. And we feel that it is necessary for us to take a cautious approach at this moment. And that is why we've decided to maintain our guidance that we've given in May this year. And net gains and losses related to stocks. In the first half, bear funds cancellation has been implemented in the first half. And at our corporate briefings, I think this will be explained in more detail. But in a balanced basis, basically JPY200 billion-or-so reduction in balance of bear funds has been conducted in the first half. And for the second half, with regards to the question whether the same amount will be conducted in the second half? It would depend on the market condition. If robust share prices continue, we may execute bear funds cancellation in the same extent as in the first half. But if the share prices are in a negative situation instead of executing bear funds cancellation, I think we will need to be prepared for risks. So at any rate, for the second half, gains from sales of cross-shareholdings will be the source of funding to unwind the unrealized losses for bear funds. This is the approach that we want to take for the second half. So instead of taking of balance -- outstanding balance gain from sales, we will be eyeing on that in our operations. And lastly, with regards to our main business, profits -- why is there a drop from first half to second half? In our revised plan, the JPY30 billion of -- which is an improvement compared to the original plan, there's the customer groups and market groups, so there's a difference between two. For customer group, JPY60 billion upside is incorporated, whereas the market groups, the JPY40 billion decrease from original plan. But there is also forward that we need to take into account. So all in all, it's a 30% improvement compared to original plan. But for the markets group, with regards to a realized gain for the first half and the second half, we are taking a conservative approach. So I would say maybe about JPY100 billion in a decrease in business profit is anticipated for the markets group. Most of this comes from the negative impact from the markets group. Whether this will turn out as we expect, we don't know. It would depend on the market conditions, but there are concerns for rising inflation. And so unrealized losses how to manage, unrealized losses is a key for us. We shouldn't restrict ourselves in trying to realize gains. This is not necessarily an appropriate approach at this point in time. So although we do think that we are taking a conservative approach, but a large realized losses in our net business is not -- it shouldn't be made. But on MTS basis, we will be taking into account the market conditions, and that has been reflected in our revision this time. That's all for me.

Thank you very much.

Just to confirm, consolidated, the JPY30 billion decrease in net profit, the JPY2 billion because on a consolidated basis, the tax effect is a plus. But for the two banks, there's an impact of tax and so forth, and therefore, a minus impact of JPY30 billion for -- on a consolidated basis. Is that a fair way to say it?

Yes. That is. I think you've said it right.

Thank you very much. And next on the telephone, we have 03625 is the telephone number, and that's the way we have received, so please state your name and affiliation for asking your question.

Bank of America Securities. My name is Nakamura. I have two questions. First of all, regarding the bear funds, the hedge effect there of is 9.4% is the prevailing level. But in terms of the capital, how do you evaluate this? This is the first point. Second point is regarding the additional shareholder return. Share buyback, is that a possibility or option that you will be considering? And please elaborate as far as you can at this current time.

Thank you very much for the question. First of all, regarding your first question, regarding CET1 ratio, the valuation was the question. As Nakamura-san, you have mentioned, because of the bear fund hedge fund -- hedge effect is around 20 basis points. And therefore, that's 9.4%, excluding that impact, that would be the basic guideline. On the other hand, we have to deal with COVID-19, and we have been providing financing for this purpose for the first half 2020 was the peak. And currently, we are making progress in terms of the repayment of the COVID-relating loans. But in terms of loan balance, it's around 3.5%-or-so. And therefore, if we can go back to CET1 that has a negative effect of 20 basis points. At any rate, it isn't going to happen immediately in next fiscal year, but over several years down the road, it will continue to decline. Therefore, our target of 9%-plus is level that we can achieve. Therefore, we want to enhance the shareholder return. We are in a position where we can consider incremental returns. This is related to the second part of your question. Regarding buyback going forward, whether this is a possibility that we can opt for, is your question? Obviously, on our part, we have not given indication to the investors yet. But we have to consider a great investment, speed and scale and the domain will have to be considered fully together with our response. Therefore, growth investment, utilizing our capital, and we have to strike a good balance in considering a possible buyback. This is what we intend to do. And for the analysts and investors, we will continue to provide clarity going forward.

Next question, Morgan Stanley MUFG, Nagasaka-san. Over to you.

Morgan Stanley, MUFG Securities, Nagasaka is my name. I hope you can hear me. I have two questions. First question, Page 4, retail business corporation. As you explained, the top line is growing. In the meantime, expenses has been suppressed. It's almost flat year-over-year, but G&A expenses control maybe we reached -- your initiatives are proving to be quite expected. But how much room do you have in terms of further improvements? That's my first question. And my second question is on spread. Page 6. Loan spread. GCC is 1.06%, still at a high level. And in the first quarter earnings, I think you said that there could be some challenges in improvements going forward, but you've seen some improvement already. I would appreciate if you could share with us your outlook going forward? So those are my two questions.

Thank you very much. Starting with the first question on RBC, especially cost control on expenses, G&A expenses, how we see the current situation and how much room do we have for further improvement? In terms of how we see the current situation, our impression is that we're seeing very steady improvements. In terms of how much room we have going forward, this is something that we have been sharing with you in light of COVID-19 pandemic. But with COVID-19, we have seen an acceleration of transformation of the society. For example, work from home, not necessarily requiring the office space that we have today. So in that sense, I think there is still more room for us to improve. But in the meantime, as I mentioned in the earlier question from Takamiya-san the system failure, and this is not necessarily because of system failure, but being able to operate our business, this is a must as a financial institution. And therefore, we need to be investing where it is needed and use expenses where needed. And I'm not suggesting that we are expecting a big increase in that area, but there could be a possibility of increases in expenses, that could offset a further improvement. So I would once again want to reiterate that we do see some still room for improvements in cutting G&A expenses. And about GCC overseas lending spread, what -- how do we see the continuity, the continuity going forward? For the past 6 to 12 months, we've always been saying that we've already had peaked, but yet we've been seeing improvements month-over-month, but the 1.06, this level is, I believe, very high, very high spread, product. Credit is coming in recently, and that I think has pushed up another notch forward. But whether this will continue to improve? Likely not. That is my frank opinion. So we are expecting the growth in loan spread to subside going forward. But whether it will go below 1% in a short period of time, we believe that there is a certain level of sustainability that can be expected for the loan spread for GCC. That's all for me.

Thank you very much. We still have some time left. Are there any other questions, please. Jefferies Securities, Ban-sa, please.

Now regarding credit cost, I have a question. For the second half, it is likely you said that it is not necessarily forward-looking. But what about sectors? What is the macroeconomic assumptions? Is it going to be industries that are impacted by COVID-19? Do you think that there will be increased credit cost for these industries? Or do you have large customers that you have to be cautious about in terms of credit cost? So please elaborate further on the credit-related costs in terms of risk by industry and large exposures? And please elaborate further.

Thank you for your questions. Well, it isn't just there is a significant customer where we have to be concerned about, that is not the case. It's generally speaking, we have to remain vigilant and cautious in this area. This is the basic assumption that we have. Especially in COVID-19 having an impact on resort business as well as transportation. These areas are after the lifting of the declaration, emergency declaration, it is looking upward. But I think it's going to have a continuous impact, therefore gradual way for the second half and next year, there could be a lingering impact. In addition to this, there is a supply chain constraints as well as the energy price increases. And these are -- there could be possible damages where we did not expect in the past. Therefore, as the first half, we have set aside forward-looking credit costs at the end of September, the -- whether the forward-looking credit cost is sufficient or not will have to be taken into consideration whether the reserves we have set aside is sufficient or not. Therefore, against this backdrop for the second half, we should be considering similar levels of credit reserves.

Thank you. As of this time, we would like to conclude this session. If there are any additional questions, the IR department will take your questions. Thank you very much for joining us in spite of your busy schedules today. And with this, we'd like to conclude the net conference by Mizuho Financial Group. Thank you.