Mizuho sinks into red on bad loans, stock losses

TOKYO - Bad loans and steep equity losses pushed Mizuho Financial Group Inc. deep into red in the third quarter, forcing the major Japanese bank to slash its full-year net profit outlook by 60 percent.

Mizuho, one of Japan's three "megabanks," said it posted a group net loss of 50.55 billion yen ($559.2 million) in the April-December period after recording a 94.58 billion profit in the April-September fiscal first half.

That means that the company lost 145.12 billion yen in the latest October-December quarter alone, though Mizuho did not provide its own quarterly breakdown.

The company blamed the dismal results on "credit-related costs primarily associated with an increase in domestic corporate bankruptcies, the declines in the stock markets, and continuously recorded losses on securitized products and others."

Mizuho said pretax profit turned into a 19.2 billion yen loss in the nine-month period, while revenue fell 9 percent to 2.78 trillion yen.

For the fiscal year through March 31, Mizuho now expects net profit of 100 billion yen from an earlier 250 billion yen profit. It also lowered its pretax profit estimate by 37 percent to 220 billion yen but maintained its 3.8 trillion yen revenue estimate.

It expects credit costs for the year to widen to 330 billion yen and stock losses to total 110 billion yen.

Mizuho's performance stands in contrast to that of rival Sumitomo Mitsui Financial Group Inc., which managed to stay in the black in part due to milder stockholding losses. The company reported that net profit for the April-December period fell 74 percent to 83.4 billion yen ($935 million).

Top Japanese bank Mitsubishi UFJ Financial Group Inc. reports results on Feb. 6.

In trading Friday, Mizuho shares outpaced market declines, falling 7.3 percent to 227 yen as traders braced for weak results from the bank after market close. The Nikkei 225 index retreated 3.1 percent.

Mizuho bases its earnings on Japanese accounting standards.

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