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Mizuho's Q3/FY2025 Results

Norbert Gehrke

Norbert Gehrke

— 3 min read
Mizuho's Q3/FY2025 Results

Mizuho Financial Group reported results for the third quarter of the current fiscal year, providing an assessment of its performance, strategy, and outlook.

Financial Performance & Outlook

  • Strong Q3 FY24 Performance
    • Consolidated net business profits + ETF gains/losses: ¥964.2 bn (+15% YoY), 82% of FY3/25 guidance, exceeding analyst expectations
    • Net profits: ¥855.4 bn (+33% YoY), 104% of FY3/25 guidance.
  • Revised Earnings Estimates
    • Goldman Sachs increased FY3/26-3/27 net profit estimates by +4%/+4% "to factor in stronger net interest income and an increase in some operating expenses (on a weaker yen and inflation)."
  • Profitability Metrics
    • ROE (GS Estimates): 7.0% (3/24), 8.2% (3/25E), 8.3% (3/26E), 8.7% (3/27E)
  • Net Interest Income
    • Increased to ¥737.2 bn (+12% YoY) in Q3 FY24.
    • Domestic lending spread widened from 0.86% in 1H to 0.88% at the end of 3Q.
    • Overseas loan-deposit spread widened from 1.35% in 1H to 1.38% at the end of 3Q.
  • Loans
    • Domestic loans outstanding were ¥56.9 tn, up ¥1.1 tn from the end of FY3/24, but loans to individuals (such as mortgages) decreased.
    • Overseas loans edged up to $237.4 bn (+$1.4 bn QoQ).
  • Impact of BOJ Rate Hikes
    • Estimated pre-tax impact of FY3/25 BOJ rate hikes: +¥105 bn.
    • Expected pre-tax impact of FY3/26 BOJ rate hikes: +¥225 bn.
    • "Mizuho said it expects every 0.25 pp rate hike to have an impact of around +¥120 bn in annual terms."

III. Business Segments & Strategy

  • Segment Performance: Customer Groups all show YoY increases in Gross Profits in FY24 Q3. Markets also shows positive growth.
  • Domestic Business: Focus on investment products, individual annuities, and residential mortgages. Growth in J-Coin Pay users and affiliated merchants.
  • Overseas Exposure: Significant exposure to the US, EMEA, and APAC regions. Overseas lending is a key driver.
  • Trust Business: Focus on real estate, pension/asset management, and stock transfer agency.
  • Securities Business: Increase in customer base (cash management and NISA accounts) and AUM.
  • GCIBC: Increased non-interest income
  • Asset Quality: Non-performing Loans based on Banking Act and Financial Reconstruction Act are detailed.

Investment Thesis

  • Profit growth through resource allocation to priority areas (domestic/overseas corporate business).
  • Improvement of capital efficiency and ROE by shifting resources from low-margin to high-margin assets.
  • Strengthening of growth investments and shareholder returns while maintaining a CET1 ratio in the 9-9.5% range.
  • Catalysts: BOJ rate hikes, share buybacks, investment in Rakuten Card, CFO meeting, and updates on the midterm plan.
  • Revised Target Price: Goldman Sachs increased their 12-months target price from ¥4,500 to ¥4,750, based on a target P/B of 1.09X and end-FY3/26E BPS estimate of ¥4,361.

Key Takeaways & Implications

  • Mizuho FG is demonstrating strong financial performance, exceeding expectations in Q3 FY24.
  • The bank is poised to benefit from BOJ rate hikes and is focused on improving capital efficiency and ROE.
  • Strategic investments and a focus on high-growth areas are expected to drive future profitability.
  • Global economic conditions and geopolitical risks remain key factors to watch.

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