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Mizuho Financial Group Inc ADR MFG

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Mizuho Reports Stronger-Than-Expected Fiscal Third Quarter but Forgoes Raising Full-Year Guidance

Michael Makdad Senior Equity Analyst

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.

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Company Profile

Business Description

Mizuho Financial Group is roughly tied with megabank peer Sumitomo Mitsui Financial Group for the status as Japan's second- largest bank after Mitsubishi UFJ Financial Group. As of March, Mizuho's market share of domestic loans was 7.7%, compared with 7.1% for SMFG and 8.7% for MUFG. In Japan, Mizuho has more of a corporate focus than SMFG, which has a larger retail business. Its overseas weighting is slightly smaller than that of MUFG. Unlike its two Japanese megabank peers that own foreign banks outright or hold noncontrolling stakes in local banks overseas, Mizuho expanded in recent years beyond its traditional Japanese borrowers, mainly through its core banking and securities units, focusing on the financing needs of global multinational corporations.

1-5-5, Otemachi, Otemachi Tower, Chiyoda-ku
Tokyo, 100-8176, Japan
T +81 352241111
Sector Financial Services
Industry Banks - Regional
Most Recent Earnings Dec 31, 2020
Fiscal Year End Mar 31, 2021
Stock Type
Employees 72,019