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Japan bank Mizuho's profit slides 24.6% as credit costs rise amid virus

TOKYO (Reuters) - Mizuho Financial Group said on Friday its net profit dropped 24.6% in the first quarter of its financial year as credit-related costs rose amid the coronavirus pandemic.

FILE PHOTO: Mizuho Bank's signboard is pictured in Tokyo, Japan, January 25, 2017. REUTERS/Kim Kyung-Hoon/File Photo

Japan’s third-largest lender by assets reported April-June profit of 122.4 billion yen ($1.17 billion) compared to 162.4 billion yen in the same period a year earlier.

For the current financial year through March 2021, Mizuho reiterated a forecast for profit of 320 billion yen. That compared with the 355.13 billion yen average of 12 analyst estimates compiled by Refinitiv.

Japanese banks have been struggling with ultra-low interest rates for years, and the three major lenders - Mizuho, Mitsubishi UFJ Financial Group Inc and Sumitomo Mitsui Financial Group Inc - have said credit-related costs this year would reach levels not seen since the global financial crisis.

Mizuho’s credit-related costs in the first quarter came in at 39 billion yen, up from 1.6 billion yen a year earlier, amid a surge in financial needs among Japanese companies due to the fallout from COVID-19.

The lender had estimated 200 billion yen of credit-related costs for the current financial year.

Mizuho’s net interest income was 215.1 billion yen for the first quarter, a 19.6% rise year-on-year.

Bigger rival SMFG, as well, reported last week a 60% fall in net profit for the quarter due to a rise in credit-related costs.

The country’s top lender MUFG is scheduled to announce its results on Tuesday.

($1 = 104.3600 yen)

Reporting by Takashi Umekawa; Editing by Tom Hogue and Muralikumar Anantharaman