By Makiko Yamazaki
TOKYO (Reuters) -Mizuho Financial Group on Monday revised up its profit forecast for the full year due to a weaker yen and rosier outlook for the economy, as the world’s third-largest economy approached monetary policy normalisation.
For the full year through March, the third-largest Japanese lender raised its profit forecast to 640 billion yen ($4.22 billion) from 610 billion yen, outpacing the 625.56 billion yen average estimate of 14 analysts compiled by LSEG.
The revision comes as “certainty of exceeding the previous profit target has increased,” Chief Executive Officer Masahiro Kihara told a media briefing.
Mizuho expects a 35 billion yen boost to its annual income if Japan’s policy rate is raised to 0% from -0.1% and 10-year Japanese government bond yields rise by 0.10%.
Mizuho’s second-quarter net profit dipped 2.4% from the same period a year earlier to 170.56 billion yen ($1.12 billion).
The main lending business stayed strong as economic activity continued to normalise from the COVID-19 pandemic, helping the bank press down credit costs.
Its U.S.
business also contributed to the solid earnings as rapid rate hikes by the U.S. Federal Reserve bolstered the lender’s income from loans. A weak yen inflated profits earned overseas when converted into yen.
The U.S.
investment banking business emerged as a big driver as it won a key role in the $4.87 billion initial public offering of chip designer Arm Holdings in September.
The Japanese bank was one of the four lead underwriters for this year’s biggest IPO, along with Goldman Sachs, JPMorgan Chase and Barclays.
Aiming for a bigger share of the world’s largest investment-banking fee pool, Mizuho is completing the $550 million acquisition of U.S.
boutique mergers & acquisitions (M&A) advisory firm Greenhill.
“After building our position in debt capital markets, we have beefed up our presence in equity capital markets, to an extent we won a role in the Arm IPO,” Kihara said.
“Our missing piece was M&A advisory, to be filled by Greenhill,” he said.
“We’ll now focus on post-merger integration for a further expansion.”
($1 = 151.6700 yen)
(Reporting by Makiko Yamazaki; Editing by Kim Coghill and Bernadette Baum)
