Mizuho Financial Group Inc. expects its earnings to improve through the rest of the year, helped by gains in its global market operations and continued cost cutting efforts.
Japan's third-largest lender by assets raised its profit forecast for the full year after reporting that its income in the first half of the year that ended Sept. 30 tracked higher than its expected pace this year. It now expects a net income of ￥350 billion in the year to March 2021, from earlier estimated ￥320 billion. Operating profit for the year is now expected to be ￥710 billion, versus a previous estimate of ￥570 billion.
Mizuho Financial's overall performance for the fiscal first half "more than offset the coronavirus impact," Tatsufumi Sakai, president and CEO of the bank group, said at a Nov. 12 press conference.
The company reported a 25% year-over-year decline in consolidated profit attributable to equity holders for the six months to Sept. 30. to ¥215.52 billion, from ¥287.67 billion in the prior-year period. However, the fall was shallower than the 28.6% contraction estimated for the full year when it released its earnings for the previous fiscal year in May.
Income "progressed steadily and achieved 67% progress" against the plan for the year, it said in a statement posted on its website.
Japan's economy is expected to recover as the coronavirus pandemic is under better control. That would likely improve incomes of the nation's megabanks. Mizuho Financial and its peers Mitsubishi UFJ Financial Group Inc. and Sumitomo Mitsui Financial Group, Inc. together set aside ￥1.1 trillion as loan loss provisions for the current fiscal year amid growing concerns about the drag from the coronavirus pandemic. The other two will release their fiscal first-half earnings on Nov. 13.
Mizuho Financial will keep unchanged its loan-loss provision for the fiscal year at ￥200 billion, though Sakai said he expects the result to come below the planned credit cost. "We'll keep it as a buffer" for bad loans for the next fiscal year, he said.
In the fiscal first half, Mizuho Financial's global markets segment posted ￥121.8 billion in net income, representing about 55% of the total. That was up more than 30% from a year earlier.
"They [Mizuho Financial] were good at meeting the financing need from global markets amid the coronavirus crisis," Toyoki Sameshima, a senior analyst at SBI Securities Co., said, expecting the group to achieve the upwardly revised earnings target.
Meanwhile, Mizuho Financial plans to cut headcount by 7,000 and reduce its branch offices by more than 80 to save ￥106 billion in costs for the current fiscal year. The company plans to start a five-year cost-cutting plan from the year starting in April 2021.
As of Nov. 11, US$1 was equivalent to ¥105.57.