Mizuho Raises Profit Forecast 20% as Stock Rally Spurs Fees

Mizuho Financial Group Inc. (8411), Japan’s third-biggest bank by market value, raised its full-year profit forecast 20 percent as a stock-market rally spurred fee income and the value of its shareholdings.

Net income will probably total 600 billion yen ($6 billion) in the year ending March 31, the Tokyo-based company said in a statement today. That compares with the 500 billion yen previously forecast and the 574.9 billion-yen average estimate of 18 analysts surveyed by Bloomberg.

Mizuho raised the target even as regulators probe the bank and lawmakers grill President Yasuhiro Sato for failing to end loans to crime groups. The company joins Sumitomo Mitsui Financial Group Inc. (8316) in upgrading the earnings outlook amid an equity rebound that peaked in May on expectations for Prime Minister Shinzo Abe’s policies to stimulate the economy.

“The earlier estimate doesn’t reflect the reality anymore,” Yoshinobu Yamada, a Tokyo-based analyst at Deutsche Bank AG, said by phone before the report. “Mizuho’s crime-loan scandal won’t have any impact on earnings although it may hurt the bank’s reputation.”

Net income more than doubled to 429.7 billion yen in the six months ended Sept. 30 from 184.3 billion yen a year earlier, Mizuho said today. That beat the 379 billion-yen average estimate of seven analysts surveyed by Bloomberg.

Photographer: Kiyoshi Ota/Bloomberg

Pedestrians walk past the Mizuho Financial Group Inc. headquarters in Tokyo. Close

Pedestrians walk past the Mizuho Financial Group Inc. headquarters in Tokyo.

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Photographer: Kiyoshi Ota/Bloomberg

Pedestrians walk past the Mizuho Financial Group Inc. headquarters in Tokyo.

Best Performance

Shares of Mizuho closed 0.9 percent higher at 214 yen before the earnings release. The benchmark Topix Index (TPX) rose 1.2 percent, extending this year’s gain to 42 percent, making Japanese stocks the best performers in the developed world.

Income from fees and commissions rose 28 percent to 275.4 billion yen in the first half from a year earlier, Mizuho said today. It posted a 39 billion-yen gain from equity-related investments, compared with a loss of 227.6 billion yen a year earlier. Lending income rose 0.2 percent to 534 billion yen.

Mizuho has been roiled by revelations that it failed to cancel loans made to gangsters through a consumer credit affiliate and then misinformed the Financial Services Agency about how much its top executives knew about the transactions. President Sato, who has taken pay cuts as his bank vowed to improve compliance, apologized in parliament yesterday.

The FSA broadened its probe this month by beginning inspections of Mitsubishi UFJ Financial Group Inc. (8306) and Sumitomo Mitsui as well as reexamining Mizuho.

Sumitomo Mitsui

Sumitomo Mitsui, Japan’s second-biggest bank by market value, earlier this week reported record six-month profit of 505.7 billion yen and raised its full-year forecast 29 percent to 750 billion yen. Mitsubishi UFJ is scheduled to report earnings later today.

The world’s third-largest economy grew at an annual 1.9 percent rate in the three months ended September, a fourth quarter of expansion, the Cabinet Office reported today. While that represented a second straight period of slowdown, Economy Minister Akira Amari said he expects a moderate pace of consumption growth and a solid export recovery.

Loans at major banks increased 1.7 percent in October, the 11th consecutive advance, Bank of Japan data show. That’s helping to offset the lowest loan profitability in Asia as asset purchases by the central bank depress interest rates. Net interest margins at the three megabanks average 0.99 percent, data compiled by Bloomberg show.

To contact the reporters on this story: Monami Yui in Tokyo at myui1@bloomberg.net; Shingo Kawamoto in Tokyo at skawamoto2@bloomberg.net

To contact the editor responsible for this story: Chitra Somayaji at csomayaji@bloomberg.net

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