Analyst Note
| Michael Makdad |Mizuho Financial Group reported annualized ROE of 6.3% for October-December, the third quarter of its fiscal year ending March 2021. Cumulative net profit for the first nine months of the year reached JPY 354 billion, topping full-year guidance of JPY 350 billion, but unlike three months ago when Mizuho raised its guidance from JPY 320 billion to JPY 350 billion, this time it left the guidance untouched (implying a net loss of JPY 4 billion for January-March), citing uncertainties over the coronavirus pandemic, particularly how Japan's second state of emergency, now set to continue until March, could affect its small-business borrowers. In addition to credit costs, we think it could also opt to recognize unrealized losses on its "bear fund" hedge against the Japanese equities in its portfolio.