Japan's Mizuho reports 55.6% drop in Q4 net profit on Russia provision

TOKYO :Mizuho Financial Group Inc, Japan's third-largest lender by assets, reported on Friday a 55.6 per cent drop in fourth-quarter net profit, as it took more than $700 million in provisions for its Russian exposure.

Mizuho said profit for the January-March quarter was 51.8 billion yen ($402.5 million). That compared with an average profit estimate of 78.61 billion yen from three analysts surveyed by Refinitiv.

Mizuho added 96.9 billion yen to its reserves in the quarter to prepare for losses from direct exposures in Russia, a reversal from early last year, when it freed up loss reserves built up during the COVID-19 pandemic.

The banking group expects 540 billion yen in net income for the current business year, up 1.7 per cent from the previous year. The outlook compared with the average 574.60 billion yen forecast by 13 analysts.

Mizuho forecasts a drop in credit-related costs this year on expectations the economy will gradually recover as the impact of the pandemic wanes.

Corporate bankruptcies in Japan have remained low thanks to government subsidies and zero-interest loans to small businesses to cushion them from the economic effect of the pandemic.

But analysts say there will be a limit to how much such subsidies can continue to suppress bankruptcies, since the Ukraine crisis and a weak yen are pushing up fuel and raw material costs.

($1 = 128.6900 yen)