Mizuho’s Quarterly Profit Climbs on Lending, Trading Income

Mizuho Financial Group Inc., Japan’s third-biggest bank by market value, posted an increase in third-quarter profit as the country’s rebounding economy helped boost lending and trading income.

Net income climbed to 207.5 billion yen ($2.3 billion) in the three months ended Dec. 31 from 16.3 billion yen a year earlier, when its brokerage unit posted a loss of 36.7 billion yen. Quarterly earnings were calculated by subtracting first-half profit from nine-month figures reported in a statement yesterday.

Mizuho joins Sumitomo Mitsui Financial Group Inc. in posting higher quarterly profit as signs of a domestic lending recovery emerge. A stock market rally on the back of Prime Minister Shinzo Abe’s pledge to stimulate the economy helped narrow losses tied to the bank’s equity holdings.

“The notion that the Japanese megabanks can’t make decent profit from lending is a thing of the past,” Yoshinobu Yamada, a Tokyo-based analyst at Deutsche Bank AG, said. “Expansion in the banks’ business abroad will further bolster income from lending -- the pillar of Japanese banks’ businesses.”

Net income for the nine months ended Dec. 31 rose 45 percent to 391.8 billion yen, the company said yesterday in a filing to the Tokyo Stock Exchange. Mizuho maintained its profit forecast for the year ending March 31 at 500 billion yen.

Lending Demand

Lending profit rose 5.9 percent last quarter from a year earlier to 269.5 billion yen, according to calculations based on Mizuho’s statement.

The world’s third-largest economy is showing signs of a recovery from two quarters of contraction. Industrial production rose the most in 18 months in December, government figures showed yesterday.

Loans outstanding at Japan’s city banks rose 0.3 percent in December, the first increase since October 2009, according to central bank data. Overall lending including regional banks increased 1.4 percent.

Mizuho’s income from fees and commissions surged 19 percent to 123.2 billion yen, while profit from trading government bonds and other securities gained 13 percent to 92 billion yen.

The bank’s third-quarter profit gain was in line with the 209 billion yen average estimate of eight analysts surveyed by Bloomberg. In the year-ago quarter, Mizuho had a one-time expense of 24.4 billion yen related to corporate tax rate changes.

Market Rally

Shares of Mizuho rose 0.6 percent to 184 yen as of 1:09 p.m. in Tokyo. The stock climbed 26 percent last quarter, outpacing the benchmark Nikkei 225 Stock Average’s 18 percent jump as Abe’s Liberal Democratic Party campaigned on promises to revive the economy with fiscal and monetary stimulus. The LDP won the Dec. 16 election in a landslide victory.

Japan’s stock market helped Mizuho’s brokerage unit rebound to profit in the quarter. Mizuho Securities Co. posted a profit of 1.1 billion yen, compared with a year-earlier loss, it said in a statement on its Website.

“Abe’s monetary and economic measures are spurring the equity market and helping to cut banks’ stock impairment losses,” Shinichiro Nakamura, a Tokyo-based analyst at SMBC Nikko Securities Inc., said yesterday. “The market rally will also bolster banks’ mutual fund sales in the coming months.”

Losses from Mizuho’s shareholdings totaled 107.5 billion yen in the nine months ended Dec. 31, easing from 227.6 billion yen booked in the six months through Sept. 30. The losses were 1 percent lower than 108.6 billion yen a year earlier, according to the statement.

Sumitomo Mitsui Financial Group Inc., Japan’s second-largest bank by market value, on Jan. 30 posted third-quarter net income of 219.4 billion yen, more than doubling from a year earlier and putting it on pace to post a record annual profit. The bank’s SMBC Nikko Securities Inc. unit also rebounded to a profit in the period.

Mitsubishi UFJ, the largest, is scheduled to release earnings today after the close of Tokyo trading.