DBRS Changes Trend on ST ratings to Positive; Confirms Mizuho & Related Entities

Dominion Bond Rating Service (DBRS) has today confirmed the Short-Term Instrument ratings of Mizuho Bank, Ltd., Mizuho Corporate Bank, Ltd. and Mizuho Corporate Bank (Canada) at R-1 (low) and changed the trend from Stable to Positive. DBRS is also confirming the Long-Term Deposits and Senior Debt of the three banks at “A” with a Positive trend.

The Positive trends are supported by ongoing improvements in the earnings and capital quality of Mizuho Financial Group, Inc. (Mizuho or the Group) on which the analysis is based. DBRS would like to see several more quarters of improved performance before the rating is adjusted.

Although net interest margins remain low by global standards (a major challenge for the Group and its Japanese peers), Mizuho generated improved earnings in its year ended March 31, 2006, on stronger non-interest income, good expense performance and a net loan loss recovery. While the domestic corporate lending portfolio continues to decline in size, overall loan growth has become positive as a result of increased small- to medium-sized enterprise (SME) lending, personal lending and foreign corporate business, with positive implications for future net interest income.

Asset quality has continued to improve (in part as a result of the improving Japanese economy), and levels of non-performing loans are now approaching more normalized levels. While Mizuho’s capital ratios remain weak by global standards, the quality of capital has improved dramatically in recent years and subsequent to year-end, the remaining JPY 600 billion in public funds was repaid – a major milestone for the Group.

The significant improvements in asset quality and capital have left management with more flexibility to invest for future growth through its “Channel to Discovery” plan.