Mizuho Financial Group Reports Surge in Q2 Profit

By Anton Bridge

TOKYO (Reuters) – Mizuho Financial Group reported a 62% jump in second-quarter net profit and raised its annual guidance on Thursday. This growth was driven by strong lending demand and higher margins following a July interest rate hike by the Bank of Japan.

Japan's third-largest lender by assets increased its net profit forecast to a record 820 billion yen ($5.26 billion) from 750 billion yen for the year ending on March 31.

Highlighting these impressive results, Mizuho (NYSE:MFG) announced a share buyback of up to 100 billion yen – its first in 16 years – and raised its dividend estimate by 15 yen to 130 yen for the year.

CEO Masahiro Kihara stated, "We have entered a new stage of growth investment and strengthening shareholder returns," during a media briefing.

Japan's megabanks, all reporting results on Thursday, are expected to benefit from higher interest rates after seven years of negative interest rates, which kept lending margins very thin.

The central bank raised its policy rate to 0.25% in July after ending negative interest rates in March, causing Mizuho's loan and deposit rate margin for its domestic lending business to increase for the second consecutive quarter.

Mizuho estimated the financial impact of the two rate hikes would amount to 85 billion yen throughout this financial year.

For the July-September period, Mizuho reported a group net profit of 277 billion yen, up from 170 billion yen in the same quarter a year earlier. Other megabanks like Mitsubishi UFJ (NYSE:MUFG) Financial Group and Sumitomo Mitsui Financial Group (NYSE:SMFG) will report their results later on Thursday.

($1 = 155.8400 yen)