DBRS Changes Mizuho Corporate Bank LT Trend to Pos From Stb

Dominion Bond Rating Service (“DBRS”) has today changed the trends on the long-term debts for Mizuho Corporate Bank, Ltd., Mizuho Corporate Bank (Canada), and Mizuho Bank, Ltd. to Positive from Stable. The short-term ratings are confirmed at R-1 (low), with Stable trends. The report and analysis are based on the consolidated Mizuho Financial Group, Inc. (“Mizuho”).

Mizuho continues to make good progress as asset quality, profitability, and its capital position have recently all improved favourably. Mizuho has repaid ¥2.3 trillion (US$19 billion) of Japanese government funds in recent years, as management makes efforts to rapidly improve the quality of its capital structure. This has largely been financed with retained earnings, indicating that when this period of capital restructuring is complete Mizuho could be expected to generate stronger capital. The global offering of treasury stock in November 2005 had an effect of increasing Tier 1 capital by 0.7% from the September 30, 2005, level, but the ratio continues to lag the leading global banking groups.

Mizuho’s asset quality has now fully recovered from the past loan quality crisis, and now ranks as the strongest of the major Japanese banks.

Consequently, management now faces a more difficult challenge to improve Mizuho’s core profitability and earnings sustainability. Differentiating its business strategy from the other major Japanese banks and effectively executing it in order to deliver higher profit margins is challenging, given the structure of banking in Japan.

Recent profitability has improved favourably, but is currently tracking above trend due to the positive impact of credit loss recoveries. While net interest margins remain under intense pressure, non-interest revenue sources have contributed to the recovery of profitability. Mizuho’s unrealized equity gains now amount to more than ¥1.47 trillion (US$12 billion).