Mizuho Financial Group(MFG) - 2024 Q2 - Earnings Call Transcript

Financial Data and Key Metrics Changes - The company exceeded its final target for FY 2025 ahead of schedule, with a forecast of net business profit for FY24 of ¥1.17 trillion, an increase of ¥100 billion [11][68] - The Price-to-Book Ratio (PBR) improved from 0.79 at the end of October to approximately 0.86 [9] Business Line Data and Key Metrics Changes - The company reported a reduction of ¥1.1 trillion in low-profit deals and an increase of ¥1.6 trillion in high-profit business, resulting in a Return on Risk-Adjusted Assets (RORA) increase from 3.1% to 3.3% [15] - The Asset Under Management (AUM) in retail increased by ¥4.9 trillion, and NISA accounts rose by 120,000 [35] Market Data and Key Metrics Changes - The Americas market showed the largest wallet share, with a focus on efficient operations in EMEA, which has become somewhat smaller [24] - The company is diversifying its revenue sources, with a balanced structure of interest income, non-interest income, and sales and trading [25] Company Strategy and Development Direction - The company is focusing on sustainable growth through investments in five areas, including Greenhill and Rakuten [6] - There is a strong emphasis on enhancing asset and wealth management capabilities, particularly through collaboration with Rakuten Securities [45] Management's Comments on Operating Environment and Future Outlook - Management acknowledged challenges in asset and wealth management, indicating that there is still a gap compared to competitors like Nomura and Daiwa [76] - The company is optimistic about capturing corporate needs and enhancing proposals for mid-market SMEs, indicating a shift in the mindset of corporate CEOs in Japan [138] Other Important Information - The company announced a share buyback resolution of up to ¥100 billion and a dividend of ¥130 [64][67] - Mizuho was recognized as one of the best companies shaping the future, ranking seventh in Forbes Japan and 83rd in TIME's World Best Companies of 2024 [69] Q&A Session Summary Question: What are the next challenges for the company? - Management highlighted the need for regional collaboration and proactive management of large corporate clients, emphasizing the importance of understanding customer needs [75][78] Question: How does the collaboration with Rakuten Card work? - Management clarified that the collaboration is not seen as cannibalization but rather as a win-win situation, allowing both banks to grow and expand [79] Question: What is the long-term ROE expectation? - Management expects long-term ROE to be on a rising trend, aiming for 8% this year and potentially higher [82][84] Question: What is the direction for risk asset investment? - Management indicated a cautious approach to risk asset investment, focusing on generating returns and improving productivity [85] Question: How will capital allocation change? - Management stated that the company has entered a new phase where it can focus on balancing growth investment and shareholder return, with a CET1 ratio of 10.5% [90] Question: What is the strategy for consumer credit? - Management noted that while housing loans face fierce competition, collaboration with Rakuten could strengthen the card loan business [118][119] Question: How is the company addressing the global CIB model? - Management emphasized the need for regional characteristics in strategy and the importance of leveraging Greenhill's capabilities for cross-border M&A [127]