Mizuho Financial Group posted on Monday a 12 percent drop in quarterly profit, as ultra-low interest rates hurt income at its core banking business. Net profit at Japan's third-largest lender by assets came in at 198.4 billion yen ($1.75 billion) for the July-September period, down from 225.5 billion yen a year earlier, a Reuters calculation based on the bank's six-month results shows.
Mizuho and other Japanese banks have been hit by diminishing returns from lending under the Bank of Japan's massive monetary easing, which has pushed down interest rates on mortgages, car loans and corporate borrowings. Mizuho's net interest income, or profits from lending and bond coupons, fell to 407.4 billion yen for the first six months, from 436.4 billion yen a year earlier.
But a bright spot for Mizuho, like other Japanese banks, was bad loan costs that narrowed, with a gradual improvement in the country's economy improving borrowers' credit-worthiness. Bigger rivals Mitsubishi UFJ Financial Group and Sumitomo Mitsui Financial Group are scheduled to report their first-half results on Tuesday. For the full-year through March, Mizuho kept its net profit forecast of 550 billion yen, down 8.8 percent from the previous year and above an average estimate of 547.6 billion yen from 16 analysts polled by Thomson Reuters.