XML 77 R58.htm IDEA: XBRL DOCUMENT v3.20.2
Income taxes (Tables)
 12 Months Ended
Mar. 31, 2020
Components of Income Tax Expense
The following table presents the components of Income tax expense for the fiscal years ended March 31, 2018, 2019 and 2020:
             
 
2018
 
 
2019
 
 
2020
 
 
(in millions of yen)
 
Current:
  
                  
   
                  
   
                  
 
Domestic
  
130,573
      
116,695
      
96,231
    
Foreign
  
47,020
   
49,871
   
52,885
 
             
Total current tax expense
  
177,593
   
166,566
   
149,116
 
             
Deferred:
  
   
   
 
Domestic
  
58,078
   
(162,475
)  
(111,341
)
Foreign
  
1,933
   
5,244
   
9,400
 
             
Total deferred tax expense (benefit)
  
60,011
   
(157,231
)  
(101,941
)
             
Total income tax expense
  
237,604
   
9,335
   
47,175
 
             
 
 
 
 
Detailed Amounts of Tax Effects of Items Recorded Directly in Equity
The preceding table does not reflect the tax effects of items recorded directly in Equity for the fiscal years ended March 31, 2018, 2019 and 2020. The detailed amounts recorded directly in Equity are as follows:
             
 
2018
 
 
2019
 
 
2020
 
 
 
(in millions of yen)
 
Net unrealized gains (losses) on
available-for-sale
securities:
  
                  
   
                  
   
                  
 
Unrealized gains (losses)
  
123,186
   
(3,940
)  
(10,012
)
Less: reclassification adjustments
  
(82,828
)  
889
   
(8,410
)
             
Total
  
40,358
   
(3,051
)  
(18,422
)
             
Pension liability adjustments:
  
   
   
 
Unrealized gains (losses)
  
66,331
   
(6,558
)  
(52,888
)
Less: reclassification adjustments
  
190
   
(2,370
)  
(1,765
)
             
Total
  
66,521
   
(8,928
)  
(54,653
)
             
Own credit risk adjustments
(Note)
:
  
   
   
 
Unrealized gains (losses)
  
—  
   
3,033
      
5,052
    
Less: reclassification adjustments
  
—  
   
(47
)  
387
 
             
Total
  
—  
   
2,986
   
5,439
 
             
Total tax effect before allocation to noncontrolling interests
  
106,879
      
(8,993
)  
(67,636
)
             
 
 
 
 
 
Note:The MHFG Group adopted ASU
No.2016-01
on April 1, 2018. The ASU requires an entity to present separately in other comprehensive income the portion of the total change in the fair value of a liability resulting from a change in the instrument-specific credit risk when the entity has elected to measure the liability at fair value in accordance with the fair value option for financial instruments. See Note 2 “Issued accounting pronouncements” for further details.
 
 
 
 
Reconciliation of Income Tax Expense at Effective Statutory Tax Rate to Actual Income Tax Expense
The following table shows a reconciliation of Income tax expense at the effective statutory tax rate to the actual income tax expense for the fiscal years ended March 31, 2018, 2019 and 2020:
             
 
2018
 
 
2019
 
 
2020
 
 
(in millions of yen, except tax rates)
 
Income before income tax expense
  
839,298
      
85,060
      
153,490
    
Effective statutory tax rate
  
30.86
%  
30.62
%  
30.62
%
             
Income tax calculated at the statutory tax rate
  
     259,007
   
       26,045
   
       46,999
 
Income not subject to tax
  
(9,312
)  
(8,861
)  
(7,758
)
Expenses not deductible for tax purposes
  
1,421
   
1,389
   
1,290
 
Tax rate differentials of subsidiaries
  
(2,696
)  
(3,522
)  
(5,756
)
Change in valuation allowance
  
(9,102
)  
(2,444
)  
5,984
 
Noncontrolling interest income (loss) of consolidated VIEs
  
(5,928
)  
3,475
   
14,796
 
Effect of enacted change in tax rates
  
6,863
(1)
 		  
(11
)  
(210
)
Change in unrecognized tax benefits
  
—  
   
9,420
   
—  
 
Other
(2)
  
(2,649
)  
(16,156
)
(3)
  
(8,170
)
             
Income tax expense
  
237,604
   
9,335
   
47,175
 
             
 
 
 
 
 
 
 
 
Notes:
(1)On December 22, 2017, the President of the United States signed into law the Tax Cuts and Jobs Act, which includes a reduction in the U.S. federal corporate income tax rate from 35% to 21%. The decrease in the Group’s balance of net deferred tax assets, reflecting such tax rate reductions, was recognized as an increase to Income tax expense in the fiscal year ended March 31, 2018. The MHFG Group has completed its analysis and accounting under Staff Accounting Bulletin No. 118 for the effects of the Act.
 
 
 
 
 
 
 
(2)
Change in undistributed earnings of subsidiaries of ¥(1,972) million and ¥(21,347) million have been reclassified to Other for the fiscal years ended March 31, 2018 and 2019, respectively, in order to conform to the current period’s presentation.
 
 
(3)
In the fiscal year ended March 31, 2019, the MHFG Group derecognized the majority of deferred tax liabilities for undistributed earnings of foreign subsidiaries because the Group has intent and ability to reinvest those earnings indefinitely in certain foreign subsidiaries.
 
 
Components of Net Deferred Tax Assets (Liabilities)
The components of net deferred tax assets (liabilities) at March 31, 2019 and 2020 are as follows:
         
 
2019
 
 
2020
 
 
 
(in millions of yen)
 
Deferred tax assets:
  
   
 
Lease liabilities
(1)
  
—
   
191,873
 
Allowance for loan losses
  
122,585
   
165,665
 
Premises and equipment
  
73,944
   
77,513
 
Available-for-sale
securities
  
—
   
5,532
 
Derivative financial instruments
  
48,487
   
4,647
 
Investments
  
—
   
3,563
 
Net operating loss carryforwards
(2)
  
167,755
   
163,264
 
Other
  
216,568
   
203,004
 
         
  
629,339
   
815,061
 
Valuation allowance
(
2
)
  
(158,581
)  
(165,278
)
         
Deferred tax assets, net of valuation allowance
  
470,758
   
649,783
 
         
Deferred tax liabilities:
  
   
 
Prepaid pension cost and accrued pension liabilities
  
247,694
   
202,930
 
ROU assets
(1)
  
—
   
188,591
 
Trading securities
  
9,158
   
58,266
 
Investments
  
198,495
   
—  
 
Available-for-sale
securities
  
12,426
   
—  
 
Other
  
61,330
   
89,157
 
         
Deferred tax liabilities
  
529,103
   
538,944
 
         
Net deferred tax assets (liabilities)
  
(58,345
)  
110,839
 
         
 
 
 
 
 
 
 
 
Notes:
(1)
ROU assets and lease liabilities were initially recognized in connection with the adoption of ASU
No.2016-02
on April 1, 2019. See Note 1 “Basis of presentation and summary of significant accounting policies” and Note 2 “Issued accounting pronouncements” for further information.
 
 
 
 
 
 
(2)
The amount includes ¥107,246 million and ¥101,498 million related to MHSC’s net operating loss carryforwards resulting mainly from the organizational restructuring of certain foreign subsidiaries as of March 31, 2019 and 2020, respectively. The tax effect of the net operating loss carryforwards is substantially offset by ¥88,294 million and ¥86,591 million, respectively, of valuation allowance as a result of considering all available evidence regarding sources of future taxable income including historical trends in taxable income in the preceding periods and forecasted taxable income.
 
 
 
 
 
 
 
Breakdown of Net Operating Loss Carryforwards by Tax Jurisdiction
The following table and accompanying footnotes provide a breakdown of deferred tax assets and the valuation allowance recognized in respect of net operating loss carryforwards by tax jurisdiction and by year of expiration as of March 31, 2019 and 2020:
             
 
Deferred tax assets
 
 
Valuation allowance
 
 
Deferred tax assets,
net of valuation allowance
 
 
 
(in billions of yen)
 
2019
 
 
 
 
 
 
 
 
 
Japan
(1)
  
111
   
(92
)  
19
 
The United States
  
8
   
—
   
8
 
The United Kingdom
(2)
  
46
   
(46
)  
—
 
Others
  
3
   
(2
)  
1
 
  
 
 
  
 
 
  
 
 
 
Total
  
168
   
(140
)  
28
 
             
 
 
 
 
 
 
 
 
 
2020
 
 
 
 
 
 
 
 
 
Japan
(3)
  
110
   
(92
)  
18
 
The United States
  
3
   
—  
   
3
 
The United Kingdom
(2)
  
47
   
(47
)  
—  
 
Others
  
3
   
(2
)  
1
 
  
 
 
  
 
 
  
 
 
 
Total
  
163
   
(141
)  
22
 
             
 
 
 
 
 
 
 
Notes:
(1)¥107 billion of the Japan deferred tax assets of ¥111 billion is related to MHSC, which is substantially offset by a valuation allowance, and will expire during the fiscal year ending March 31, 2026.
 
 
 
 
 
 
(2)The United Kingdom net operating loss carryforwards may be carried forward indefinitely for tax purposes.
 
 
 
 
 
 
(3)¥101 billion of the Japan deferred tax assets of ¥110 billion is related to MHSC, which is substantially offset by a valuation allowance, and will expire during the fiscal year ending March 31, 2026.
 
 
 
 
 
 
Roll-forward Valuation Allowance
The following table presents a roll-forward of the valuation allowance for the fiscal years ended March 31, 2018, 2019 and 2020:
             
 
2018
 
 
2019
 
 
2020
 
 
(in millions of yen)
 
Balance at beginning of fiscal year
  
438,344
   
163,358
   
158,581
 
Changes that directly affected Income tax expense
  
(9,102
)  
(2,444
)  
5,984
 
Changes that did not affect Income tax expense:
  
   
   
 
Expiration of net operating loss carryforwards
  
(264,234
)  
—
   
—  
 
Others
  
(1,650
)  
(2,333
)  
713
 
             
Total
  
(265,884
)  
(2,333
)  
713
 
             
Balance at end of fiscal year
  
163,358
   
158,581
   
165,278
 
             
 
 
 
 
 
 
Net Operating Losses Carryforwards by Expiration Date These carryforwards are scheduled to expire as follows:
     
 
Net operating loss
carryforwards
 
 
(in billions of yen)
 
Fiscal year ending March 31:
  
 
2021
  
            —  
 
2022
  
—  
 
2023
  
6
 
2024
  
3
 
2025
  
—  
 
2026 and thereafter
(Note)
  
628
 
     
Total
  
637
 
     
 
 
 
 
 
 
 
 
Note:Including the net operating loss carryforwards which may be carried forward indefinitely in the United Kingdom.
 
 
 
 
 
 
 
Roll-forward of Unrecognized Tax Benefits
The following table is a roll-forward of unrecognized tax benefits for the fiscal years ended March 31, 2018, 2019 and 2020:
             
 
2018
 
 
2019
 
 
2020
 
 
(in millions of yen)
 
Total unrecognized tax benefits at beginning of fiscal year
  
1,867
   
2,345
   
12,323
 
             
Gross amount of increases related to positions taken during prior years
  
224
   
9,550
   
199
 
Gross amount of increases related to positions taken during the current year
  
351
   
330
   
328
 
Amount of decreases related to settlements
  
—  
   
—  
   
(9,420
)
Foreign exchange translation
  
(97
)  
98
   
(56
)
             
Total unrecognized tax benefits at end of fiscal year
  
2,345
   
12,323
   
3,374