Thank you all for joining us today. This is Kihara. As usual, we feature a piece of art on our first slide. This time, the artwork is by Mona Kawanabe . The title is "Circle of Fruition," and it conveys the following: "Mizuho's legacy of challenge, built up layer by layer. Firm at its core, yet supple in the face of change, it breathes life into a more hopeful society, a circle of rich fruition stretching into the future. I believe this piece beautifully expresses our purpose and DNA." Please turn to page three. The key messages are as you already know. While we recognize that the figure is slightly above our normalized earnings capacity, profit attributable to owners of parent was JPY 1,248.6 billion for the previous fiscal year. We also achieved a total payout ratio of 60%.
As for our FY 2028 target, we aim to achieve an ROE of 12%, assuming no interest rate hikes. While this is quite an ambitious target, we view it as a level we absolutely must achieve. Our P/B ratio is currently around 1.5x . Moving on to page five, I would like to start by discussing the current state of Japan and Mizuho's positioning within it. Historically, Japan's structural challenges have consisted of prolonged deflation, cash-heavy household savings, weak domestic investment by corporations, as well as population decline and labor shortages. Since then, we have seen various changes taking place. Currently, a virtuous cycle of prices and wages is emerging. Retail financial investment is increasing. There is a proactive stance toward domestic investment, and there are expectations for productivity gains driven by AI. We believe this presents a multitude of opportunities. The macro environment is improving.
The shift from savings to investment is accelerating. Overseas interest in the Japanese market is growing, and corporate actions are increasing. Turning to page six, I would like to look at these trends through some numbers. The rate of wage growth was 1.92% in the 2010s, and it is now +5%. Most notably, the ratio of risk assets in household portfolios, which was 15% in 2019, has risen to 24% over the past six years. Foreign investment in Japanese equities also stands at JPY 7.8 trillion. On the right side, looking at corporate actions, domestic capital investment grew from JPY 102 trillion in 2019 to JPY 124 trillion in 2025, and M&A volume increased from JPY 18.0 trillion to JPY 35.7 trillion. Outstanding loans have also grown significantly from JPY 315 trillion to JPY 396 trillion.
Domestic bond issuance from JPY 10.9 trillion to JPY 15.6 trillion, and startup fundraising from JPY 398.0 billion to JPY 761.3 billion. Furthermore, the percentage of companies with a P/B ratio under 1 x, which was 40% in 2019, has recently dropped to 24%. I believe these figures clearly show that a major transformation is taking place. In this context, we believe this historic turning point presents a major opportunity for Mizuho. This is exactly where Mizuho's DNA will show its true value, and we feel that our time has come. Looking at the center of the slide, we believe Mizuho is a bank that has contributed to the industrial development of Japan. We have supported the development of the public and corporate bond market, and the Industrial Bank of Japan contributed to the provision of long-term financing.
Furthermore, we pride ourselves on having driven the development of Japan's syndicated loan market since the late 1990s. In 1985, we established DIAM, the predecessor of Asset Management One, helping to channel capital through asset management. Regarding the strengths Mizuho has cultivated, we possess the only in-house global CIB among Japanese banks, and we believe global collaboration will become more and more vital. We also have a history of industry research spanning over 50 years. With our industry research capabilities and strategic foresight, we have a track record of supporting our clients' structural reforms through deep strategic dialogue. In the public and corporate bond markets, we are proud of our position as the number one debt house. Above all, we have a robust customer base developed over our long 150-year history. I believe it is no exaggeration to say that our time has come.
Having served as CEO for exactly four years, I would like to explain what we have achieved and cultivated, especially in this complex VUCA era. Regarding volatility, we manage this through discipline, meaning we take pride in our appropriate risk appetite management. Our basic philosophy is that we do not take on risks we cannot evaluate ourselves, nor do we engage in transactions where we cannot control the risks. We have consistently maintained a conservative bond portfolio. Next is uncertainty, which we address with flexibility and agility. Here we utilize forward-looking provisions as we did in FY 2025. We have also discontinued medium-term plans and will flexibly update our guidance and execute shareholder returns. Above all, we believe we have built a stable global CIB model that is resilient to environmental changes. As for complexity, we are tackling this through diversity.
We are actively promoting lateral hiring, and right now, out of our 16 FG executive officers, four are women and three are external hires. While there is still work to be done, we have seen diversity increase considerably. We have also been continuously driving culture reform. Finally, ambiguity. When it is unclear what the right answer is, we need to establish clear guiding principles, which is why we defined our purpose. As I will explain on the next page, going forward, we aim to be a financial institution with high aspirations. Recognizing the need to develop our talent, we have introduced a new performance-based HR system that rewards results. Please go to page nine. I have just talked about the major changes taking place, our DNA, and the capabilities we have developed over the past four years to respond to the changes.
Because this is an era of division, we would like to organically connect our four focus business areas and the functions in each area, and contribute to the self-dependency and indispensability of our clients and society. In that sense, we want to be a financial institution that aims for the next stage of growth with high aspirations. The center of the slide illustrates the connections we intend to forge. For example, I firmly believe that Japan now has a prime opportunity to restore its industrial competitiveness. In that sense, I believe strengthening supply chains is crucial, and here we will connect large corporations with mid-cap companies and SMEs. We will foster new industries. The space industry is a prime example of this, and we believe it is highly important. To achieve this, we will connect large corporations with startups.
Turning to the right side of the slide, precisely because this is an era of division, we want to serve as a bridge that promotes international collaboration. For instance, we will connect Japanese companies with overseas companies to build a global semiconductor supply chain. In areas like sustainability, we will connect domestic and overseas startups. I believe these kinds of initiatives will become increasingly necessary. By connecting these functions, we intend to contribute to self-dependency and indispensability driven by our strong aspiration. Page 10 summarizes what I have just explained in detail. Please turn to page 11. Last fiscal year, profit attributable to owners of parent was JPY 1,248.6 billion. However, we recognize that this result includes some one-time profits. I believe our normalized basis figure is around JPY 1,150 billion.
On that basis, as shown in the waterfall chart here, for this fiscal year, we are targeting JPY 1,300 billion. I believe this is an ambitious figure, but we aim to achieve this level. Page 12. Based on our normalized basis figure of JPY 1,150 billion, ROE is 10.5%. Looking ahead three years to FY 2028, we aim to achieve an ROE of over 12%. We aim for 12% on the assumption of the current policy rate of 0.75%. I believe this is quite an ambitious target. In order to catch up with our U.S. and European peers, I think this is probably the minimum level we must achieve. Since the interest rate assumption is flat overall, I naturally expect there will be questions about what would happen to our ROE if rates rose by 25 basis points.
Along with a direct increase in gross profit, rising rates mean the economy is doing quite well. Costs would also increase to a certain extent, but our estimate is that ROE would rise by around 0.6 to 0.7 percentage points for every 25-basis point rate hike. Please turn to page 13. Our primary macro concern right now is the geopolitical situation in the Middle East. At present, attention is focused on the rise in prices, and from the perspective of financial transactions, because prices are rising, we are seeing needs for securing liquidity and increasing credit facilities. On the other hand, our understanding is that corporate action momentum has not slowed that much. We are seeing many new M&A discussions. Our guidance of JPY 1,300 billion does not take the Middle East situation into account and is, in this sense, full tilt.
However, if you ask whether there is truly no downside risk, as you all know, it is a fact that we are in a very difficult environment. The longer the conflict continues, the more likely various bottlenecks will emerge. We have not yet reached a situation with supply constraints, but if these risks materialize, we believe they will have a significant negative impact on the corporate mindset. Therefore, we must closely monitor these downside risks. Please turn to page 14. We have been showing you this chart for a while now. Currently, Mizuho is positioned right around the middle of this graph, but we are determined to move our position to the upper right. The initiatives we will undertake to get there remain unchanged.
We will focus on maintaining a sound and stable portfolio, committing to disciplined financial management, and strengthening competitive edges of our focus business areas and addressing challenges. Now, I would like to explain from the perspective of soundness and stability. This is our business portfolio. In the CIB business, corporate banking serves as the foundation of our earnings. In the middle, there is a bar chart comparing the revenue mix of our CIB business with that of U.S. and European banks. For U.S. and European banks, sales and trading constitutes a significant portion of revenue as expected. We do have sales and trading, but relatively speaking, our CIB business is deeply rooted in corporate banking. In that sense, I believe it is fair to say this gives us much better stability. Next is mass retail business at the bottom.
This had been an area where it was difficult to generate earnings, but with tailwinds like rate hikes, gross profit is up by JPY 200 billion since FY 2022. This growth reflects our success in capitalizing on the higher rate environment and the structural shift from savings to investment, though we acknowledge further efforts are required. Lastly, as for banking, its relative weight has notably decreased. We are strictly adhering to a conservative management stance. As shown, the average remaining period of our Japanese Government Bond portfolio stood at 0.9 years at the end of March, a level we have maintained through May. Please turn to page 17. Our loan portfolio is mainly investment grade, both in Japan and outside Japan. Moving on to page 18. Regarding our exposure to BDCs, which is an area of high interest to many of you, it is limited to approximately JPY 300 billion.
Therefore, we consider the downside here to be minimal. We also believe our overseas real estate exposure is not significant, with our real estate exposure to China standing at approximately $600 million. Please turn to page 19, which covers our CIB business in the Americas. The top and bottom pie charts compare Mizuho with the average of U.S. banks. As you can see, we keep our trading facilitation to an absolute minimum. Structurally, when market volatility is low, our primary markets business generates strong profits. Conversely, when volatility rises, the primary markets business slows down, but our trading business can supplement our revenues to some extent. In any case, because we do not take significant risks in trading, the volatility of our overall revenue is very low, as shown on the right. Page 21 is expenses. Our expense ratio has recently dropped to 59.4%.
Over the past four years, the absolute amount of expenses has certainly increased, but we are maintaining strict cost discipline. We have allocated funds to essential areas such as strengthening our overseas governance, reinforcing our customer base and brand, and investing in human capital. In addition, it became necessary to make IT system investments, both domestically and internationally, which built up over the previous five-year business plan period, leading to the increase. On the other hand, we have been continuously reducing our fixed costs and must continue to do so. Therefore, we have set a management target to cut approximately JPY 150 billion in fixed costs over three years. Looking at the bottom right, by redesigning our processes to be suitable for AI and utilizing AI, we believe we can absorb natural attrition in personnel and reduce our workload even beyond that.
Although the timeline for this is slightly longer, we believe we can realize these cost reductions. Please turn to page 22, which covers our balance sheet. Loan demand was unexpectedly strong in the previous fiscal year, leading to an increase in risk-weighted assets, but we maintained our discipline on return. As shown here, compared to the end of March 2019, risk-weighted assets increased from JPY 78 trillion to JPY 97 trillion, and ROA improved from 2.4% to 3.6%. This shows our continued focus on risk and return. Regarding cross-shareholdings, against our target to reduce JPY 350 billion or more over three years, we reduced JPY 114.6 billion in FY 2025. Including sales already accepted, the amount reaches JPY 152.4 billion. This represents a progress rate of 45%, which is very strong progress. Our bond portfolio is as I just mentioned.
Moving to deposits, our JPY loan to deposit ratio is around 50%. For foreign currency, our basic stance is to fund about 70% of foreign currency loans with foreign currency deposits. However, from a liquidity perspective, we have recently increased this slightly, and currently, 80% is covered by deposits. We are also increasing mid-long-term funding. In early April, we issued $7 billion US dollars in senior notes by Mizuho Bank at a very favorable cost. We also issued TLAC bonds in the previous fiscal year. Because risk-weighted assets increased, our CET1 ratio declined slightly, but it remains in the middle of our operational range. Page 23 covers the same points I just mentioned, so I will skip it. Page 24 also covers cross-shareholdings, and I have already explained this as well. For deemed holdings too, against the target of JPY 200 billion, the figure is JPY 274.4 billion.
I believe this demonstrates substantial progress. Page 25 is the bond portfolio. The average remaining period is 0.9 years for JGBs and 1.2 years for foreign bonds, demonstrating our cautious approach. On the other hand, at the bottom right, we have built up held-to-maturity foreign bonds to a certain level. Although the possibility of U.S. policy rate cuts has moved a little further away, we are prepared to secure earnings even if policy rates do decline. Please turn to page 26. While maintaining yield-conscious pricing, our JPY loan to deposit ratio is around 50%, which means we still have ample room. However, I do not believe this is enough. We must continue our efforts to increase deposits. To this end, I have appointed Naoshi Inomata , who served as CSO until last fiscal year, as Deputy President in charge of the retail business.
This move is designed to ensure that the entire firm recognizes the heightened importance of retail. In the bottom right, we have plotted various financial institutions based on their loan to deposit ratios and cost of deposits. Like the other megabanks, we are positioned in the bottom left. Page 27 shows the impact when rates rise by 25 basis points, which is currently indicated as JPY 120 billion. However, because we may need to pay slightly higher costs for time deposits and other products, I suspect the actual impact might be slightly below JPY 120 billion. We did not revise the figure this time, but we intend to conduct a more precise analysis and revise it in the future. Page 28 is our capital policy. There is no change to our capital policy.
As we have transitioned from our previous phase of capital accumulation to focusing on growth investments and shareholder returns, we believe that growth investments can be organic as well as inorganic. In other words, this means strategically increasing our risk-weighted assets. This is something we are now actively considering. Please look at page 29. Looking at the CET1 ratio from the end of March 2025 to the end of March 2026, profit attributable to owners of parent contributed to a 1.3 percentage point increase, of which 0.8 percentage points was returned to shareholders. Then there was a significant impact from the increase in risk-weighted assets, which represents organic investment, ultimately bringing the final ratio to 9.9%. Moving on to page 30. In terms of our inorganic growth, we will continue a disciplined approach to growth investments. In this context, we have announced two corporate actions.
The first is regarding Orico. We previously held a 48.8% stake, but we have sold 15% to Muninova. We have been in various discussions with Muninova for about a year. We believe Orico needs to expand its lending business and reduce costs by utilizing digital technology. We cannot support Orico's growth on our own, so we formed a partnership with Muninova, which has opened up the digital domain to a very significant extent. Meanwhile, we will maintain a 33.8% stake, which we believe is essential from the perspective of Orico's credit. On the right side is Mizuho Leasing. To ensure compliance with the U.S. Bank Holding Company Act, it became necessary to reduce our stake. However, we wanted to maintain our economic interest, so we decided to subscribe for special class shares. We believe it is important for Mizuho Leasing to secure sufficient capital and continue investing.
We hope they will utilize these special class shares and direct them toward growth. Please go to page 32. Our shareholder return policy remains completely unchanged. Regarding share buybacks, we are beginning initially with JPY 100 billion, since there is still a degree of uncertainty regarding the Middle East conflict. I may have caused some surprise during our earnings announcement, and I regret if that was the case. Of course, as we watch the Middle East situation, we plan to flexibly increase this. Our policy of targeting total payout ratio of 50% or more remains unchanged. Naturally, we are highly conscious of the approximately 60% ratio delivered in the previous fiscal year. If we caused any misunderstanding, I would like to clear that up and reiterate that our policy remains unchanged. We are pleased to report that since February 2024, our TSR has ranked in the top tier among our peers.
Now, turning to page 35, I would like to briefly review our strategy. The four focus business areas are unchanged. As an additional driver of growth, we aim to create significant value by interconnecting these four areas and the functions within them. Moving on to page 36. This shows how we have been diversifying our revenue sources. The bottom three areas shown here represent stable revenues that are not affected by interest rates. Together with our mass retail business, which has potential in a rising interest rate environment, I believe we have built a very strong portfolio. Please allow me to skip page 37. Please turn to page 38. Starting with our domestic and global CIB, looking at the right side, domestic gross profits increased by 17% year-on-year. IB income also grew steadily, and loans to innovative companies increased as well.
Global CIB gross profits increased steadily year-on-year, and revenue grew for each product. Looking at the last fiscal year, we believe that global collaboration has advanced even further. Please look at the league tables on page 39. For cross-border M&A involving Japan, shown on the middle left, we ranked second, which is a first for us. This indicates that the acquisition of Greenhill is generating positive results. Our global CIB also rose from 17th in FY 2022 to 15th in FY 2025. We are moving up because we are successfully executing various deals like the ones shown here. I will explain in a little more detail. Please go to page 40. For large corporates, product-related loans have grown significantly, and IB income has shown a CAGR of 24%.
For mid-cap companies as well, high-return loans, which we define as loans of JPY 1 billion or more with spreads of 100 basis points or more, have expanded significantly. Furthermore, as we have focused on supporting the business growth of mid-cap companies, IB income from this segment is growing steadily. Going forward, collaboration with Greenhill will be a key driver for these two areas. Next, innovative companies. The loan balance has also grown. We have also successfully arranged a syndicated loan involving regional financial institutions by utilizing the AI monitoring capabilities of Upsider and their AI credit model. Another important area for innovative and mid-cap companies is the family office business. We believe that providing comprehensive support for family businesses, including business succession, asset succession, and asset management, is a business that will grow and needs to be expanded.
Page 41. We believe there is still significant potential in the U.S. business. In terms of gross profit, we have reached $5.2 billion. We have significantly deepened our client relationships and have established a solid product lineup. Through global collaboration, we believe we can grow this business even further. Of course, we are advancing our initiatives, not only in the U.S., but also in EMEA and Asia. Regarding EMEA, we are strengthening the collaboration between bankers in the Americas markets team. Since the second half of last fiscal year, the Head of Fixed Income in the Americas has also been overseeing the EMEA team. From this fiscal year, we appointed this individual as Co-head of Global Markets Division at Mizuho Securities. This collaboration has progressed significantly, establishing a solid foundation for revenue growth in EMEA. In Asia, we are focusing on the transaction banking business. We have built a strong foundation here, and revenues are increasing.
Another exciting development is India, namely Avendus. Although we are still waiting for regulatory approval, we plan to collaborate closely with them going forward. Page 43. In mass retail, gross profits increased by 11% year-on-year. The number of new accounts opened also grew significantly by 26% in FY 2025. Furthermore, our app MAU increased by 13%. While we are seeing strong positive responses in various areas, we recognize that further efforts are required to increase deposits. Therefore, I will maintain close communication with Naoshi Inomata, the new Co-head of RBC, to achieve this. Regarding WM and AM, we have implemented various measures to enhance the investment capabilities of Asset Management One. As a result of these initiatives in the investment advisory field, for example, the share of funds with excess returns outperforming peers, meaning those in the top quartile, has improved from the previous 25% to 52% in FY 2025.
We are also winning awards for our mutual funds, indicating that our efforts are gradually bearing fruit. However, we believe there is still room for growth, and there is still much to do, such as strengthening portfolio proposal capabilities based on wrap accounts and other products. I will skip page 44. I will also skip pages 45 and 46. Page 47. We believe that AI is just entering its full-scale implementation phase, and we recognize the need to transform Mizuho into a highly AI-driven organization. As shown on the right, we have identified five target areas where we are allocating substantial resources. Starting this fiscal year, we are appointing several AI leaders in each company, unit, and group. Their role will be to review all processes and customer touch points to actively identify areas that can be delegated to AI. This is the initiative we are beginning to roll out.
Finally, please turn to page 48. First, we have resurgent Japan as our home market, and we hold the top CIB track record among Asian financial institutions. Furthermore, with our net income exceeding JPY 1 trillion, I believe we are heading into our next growth phase. Disciplined management, stable growth, and preparing for risks while converting them into opportunities. We believe these three are our core strengths, and we highly welcome your investment in us. Thank you very much. That concludes my presentation.