Mizuho Financial Group Inc., Japan’s
second-largest publicly traded bank by assets, turned to a
first-quarter profit as bad-loan charges fell and income from
bond trading increased.
Net income was 149.8 billion yen ($1.7 billion) for the
three months ended June 30, compared with a loss of 4.5 billion
yen a year earlier, the Tokyo-based bank said today. That beat
the 126 billion yen average estimate of four analysts surveyed
by Bloomberg.
Bad-loan costs dropped 95 percent last quarter from a year
earlier, as corporate bankruptcies in Japan declined for 11
straight months through June. Tokyo-based Mizuho, which lost
more than $8 billion on investments related to the U.S. mortgage
crisis, is cutting expenses and seeking growth in Asia to catch
up with rival Mitsubishi UFJ Financial Group Inc.
“Bad loan costs at big banks should in general be lower
this year than last, helping lenders to boost profit,” Graeme Knowd, a Tokyo-based analyst at Morgan Stanley MUFG Securities
Co., said before today’s announcement. “Mizuho has room to
restructure and lower costs.”
Japan’s economy, the world’s second-largest, expanded at
an annualized rate of 5 percent rate in the three months ended
March 31, driven by exports to Asia and higher consumer spending.
Sentiment among Japan’s largest manufacturers rose to a two-year
high in June, according to data from the Bank of Japan this
month, signaling the European debt crisis has yet to undermine
their confidence in a global recovery.
Bond Trading
The bank’s shares have fallen 15 percent since the start of
the year and declined 1.4 percent to 141 yen before the earnings
announcement.
Mizuho, which maintained its full-year profit forecast of
430 billion yen, said in May it will cut expenses by
consolidating management functions and information systems to
help reach its fiscal 2012 net income target of 500 billion yen.
The bank will focus on boosting profit from its Asian operations
outside of Japan and large-customer loans and investment banking.
Bad-loan costs at Mizuho fell to 3.7 billion yen in the
first quarter from 76 billion yen a year earlier. Income from
bond trading rose to 65.4 billion yen in the quarter from 8.9
billion a year earlier.
In the year-ago quarter, Mizuho booked a loss of 87.9
billion yen on transactions to hedge loans and equity holdings.
To contact the reporter on this story:
Finbarr Flynn in Tokyo at
fflynn3@bloomberg.net;
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