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 approaches monetary policy normalization.
For the year through March, the third-largest Japanese lender raised its profit forecast to ?640 billion ($4.22 billion) from ?610 billion, outpacing the ?625.56 billion 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 boost to its annual income if Japan¡¯s policy rate is raised to 0% from minus 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.
The main lending business stayed strong as economic activity continued to normalize 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 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.¡±
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