When Tatsufumi Sakai was named chief executive and president of Mizuho Financial Group (8411.T) this year, many bankers and investors were surprised.
The low-key book lover represented a sharp contrast with Yasuhiro Sato, his bold, charismatic predecessor, who was vocal about his ambitions for Japan's second-largest lender but presided over a sharp decline during the last three years.
Sakai wasn't considered a favorite for the top job. But now that he has it, he is coming to grips with the scale of the turnaround needed for Mizuho, which has the best blue-chip corporate client base in Japan but worst profits among the country's three megabanks.
"My biggest mission is to improve profitability in terms of both revenues and costs. We are beginning to see the problems we need to address. The current objective is to work on them," he told Reuters in an interview.
Just two of the 14 analysts following the company and tracked by Reuters rate it a "buy," compared with at least three-quarters of those following its peers, Mitsubishi UFJ Financial Group (8306.T) and Sumitomo Mitsui Financial Group (8316.T) (SMFG).
Mizuho's core business profits in its last financial year dropped to 457.8 billion yen - barely half what they were three years ago, as costs bloomed and lending revenue dwindled.
"Mizuho's strength has been said to be its vast client base. But its recent profit falls have made me wonder if it is really the case," said Keisuke Moriyama, analyst at Macquarie Capital.
Investors have reacted cautiously to Sakai. Since his appointment was announced in January, Mizuho's shares have fallen 11 percent - outperforming MUFG shares, which fell 25 percent, and SMFG's, which dropped 18 percent.
Sakai said that although his reputation was less colorful than that of his predecessor, they shared some qualities: "He was good at presenting concepts and ideas in a very understandable form and in energizing everyone. Actually, no one says this but I am also good at that."
Mizuho observers consider Sakai to embody the next step in the bank's transformation efforts.
"In phase one, Sato tried to unite the bank under 'One Mizuho' slogan, and he succeeded – but his efforts did not result in numbers. In phase two, Mizuho has to make money," said a senior banking analyst, who declined to be named because he was not authorized to speak to media.
Japan's megabanks are among the biggest in the world – all three rank in the top 20 by asset value - but profitability has been crushed by the low and negative interest rate policies the Bank of Japan has pursued to foster inflation.
This has spurred a search for higher-margin opportunities. MUFG focused on buying overseas businesses, while SMFG ramped up its lending to smaller companies.
Mizuho, meanwhile, sought to replicate its strong client relationships at home with overseas blue-chips - big-name behemoths like Xerox Corp (XRX.N), Unilever (ULVR.L) and Alibaba Group Holding Ltd (BABA.N) - expecting that lending would lead to other opportunities such as bond underwriting and transaction banking.
Under Sato, net interest income - the profits from lending over the costs of those funds - fell 7 percent to 807.4 billion yen ($7.31 billion) in its last financial year to March 31.
"One of the reasons for Mizuho's low profitability is it is not taking necessary risks. Targeting global blue chips is a case in point. It should have taken steps to increase lending to non-investment grade companies a lot earlier," said SBI Securities analyst Toyoki Sameshima.
Sakai told Reuters he has already moved to lend more to sub-investment grade companies, among other measures, in an effort to shake up a risk-averse corporate culture.
"My biggest mission is to improve profitability in terms of both revenues and costs," he said. "We need to change our mindset. Instead of saying superfluous things, we should stick to results. We should be obsessed with what kind of results our business produces for customers."
Sakai is steeped in Japanese banking; in 1984 he joined Industrial Bank of Japan, one of the three institutions that merged about 20 years ago to create Mizuho.
His roles have included investment banking and a stint in New York. He also spent 10 years in Mizuho's elite corporate planning unit, which makes its strategic decisions - a highly sought-after role in Japanese banks.
As head of Mizuho, he must contend with the fact he wasn't considered the first choice for his job. The smart money was on Akira Sugano, then head of global corporate division, while Sakai was president of Mizuho Securities, a role that signaled the twilight of a career.
Those who know him describe him as serious and a stickler for detail. One executive at a company with close ties to Mizuho said he talked mostly about business when they had dinner.
Sakai agreed that abstraction and meandering were not in his nature.
"I visualize things, quantify things," he said. "I would not leave vague concepts as they are. Numbers do not lie. We need to look at numbers and discuss the business behind these numbers. Good, strong companies are those which do these things."
His supporters suggest that his brand of quiet, straight-talking pragmatism are just what Mizuho needs.
"As CEO, Sato should have focused on work. Instead, he loved to make public appearances, making rounds at outside seminars as speakers," said a former senior Mizuho executive who worked both with Sato and Sakai. He declined to be named because he was not authorized to discuss the bank with media. "Sakai lacks pizzazz but I think he will do his job."