Mizuho Financial Group raised its full-year profit forecast and announced a stock buyback after first-half results were boosted by lending income and gains from sales of shareholdings.
Japan’s third-biggest bank now expects net income to reach a record ¥820 billion ($5.3 billion) in the year ending March, up from its previous forecast of ¥750 billion. Profit rose 36% in the first half from a year earlier to ¥566.1 billion, it said Thursday.
Mizuho plans to buy back as much as ¥100 billion in shares through mid-March next year and cancel them.
Mizuho kicks off the earnings season for the nation’s top three lenders, which are expected to post bumper results after the Bank of Japan started raising interest rates following years of ultraeasy monetary policy. Mitsubishi UFJ Financial Group and Sumitomo Mitsui Financial Group are set to report later on Thursday.
After being squeezed by rock-bottom rates for more than a decade, the banks’ domestic lending income is expected to expand because they can charge relatively more on loans than they pay for deposits. A weaker yen is providing another tailwind by boosting the value of earnings generated abroad, where the lenders have been expanding for years.
They are also benefiting from the country’s renewed push to unwind cross-shareholdings. The banks still own billions of dollars worth of corporate clients’ shares, and divesting such holdings will generate additional profits, particularly at a time when Japanese stocks are trading near a record high.