Mizuho group raises profit forecast by 20%

Stock market rally has fueled fee income, value of share-holdings

Bloomberg

Mizuho Financial Group Inc. raised its full-year profit forecast 20 percent as the stock market rally spurred fee income and the value of its share-holdings.

Net income will probably total ¥600 billion in the year ending March 31, the nation’s third-biggest bank by market value said Thursday. That compares with the ¥500 billion previously forecast and the ¥574.9 billion average estimate of 18 analysts in a survey.

Regulators are investigating the bank and President Yasuhiro Sato has been grilled in the Diet for failing to end loans to crime groups.

The company joins Sumitomo Mitsui Financial Group Inc. in upgrading its 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 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 in the six months that ended Sept. 30 from ¥184.3 billion a year earlier, Mizuho said Thursday. That beat the ¥379 billion average estimate of seven analysts surveyed by Bloomberg.

Shares of Mizuho closed 0.9 percent higher at ¥214 before the earnings release. The Topix index 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 in the first half from a year earlier, Mizuho said. It posted a ¥39 billion gain from equity-related investments, compared with a loss of ¥227.6 billion a year earlier. Lending income rose 0.2 percent to ¥534 billion.

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 the Diet on Wednesday.

The FSA broadened its probe this month by beginning inspections of Mitsubishi UFJ Financial Group Inc. and Sumitomo Mitsui as well as re-examining Mizuho.

Sumitomo Mitsui earlier this week reported record six-month profit of ¥505.7 billion and raised its full-year forecast 29 percent to ¥750 billion. Mitsubishi UFJ was scheduled to report its earnings later Thursday.

The economy grew at an annual 1.9 percent rate in the three months to September, a fourth quarter of expansion, the Cabinet Office reported Thursday. 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.