UPDATE 1-Mizuho back to profit in Q3, keeps outlook

* Q3 net profit 38.5 bln yen vs 145.1 bln loss

* Keeps 200 bln yen forecast vs 178 bln consensus

* Starmine SmartEstimate shows a downside surprise of 3.6 pct

* Shares finish down 1.7 pct ahead of results
(Recasts with quarterly figures, adds results details)

TOKYO, Jan 29 (BestGrowthStock) – Japan’s Mizuho Financial Group
(8411.T: ) posted a return to quarterly profit on Friday, helped by
a decline in bad loan costs and smaller losses on its stock
portfolio, and stuck to its full-year outlook.

Mizuho, which had been hit hard by subprime-related losses,
exposure to domestic stocks and weak lending, is now showing
signs of recovery, booking its second consecutive quarterly
profit.

Japan’s economy has begun to emerge from its worst postwar
recession, but the improvement has been slight, making companies
wary of taking on new loans.

Mizuho, Japan’s second-largest bank by assets, reported a
group net profit of 38.5 billion yen ($428 million) for the
October-December quarter, compared with a net loss of 145.1
billion yen a year earlier, when it was shredded by losses on its
massive stock holdings and a spike in bad loans.

Reuters calculated the third-quarter figure by subtracting
the bank’s first-half results from the nine-month numbers
released on Friday.

Mizuho stuck to its forecast for a full-year profit of 200
billion yen. That compares with an average estimate of 178
billion yen of 12 analysts by Thomson Reuters I/B/E/S. Starmine
SmartEstimate shows a downside surprise of 3.6 percent.

For the quarter, the bank lost 37 billion yen on its stock
portfolio, compared with a loss of 157.2 billion yen a year
earlier.

Credit costs, which include the money banks set aside to
cover bad loans, totalled 54.6 billion yen, down more than 40
percent from the same period a year earlier.

Analysts have also been concerned that Mizuho will soon
follow its rivals and issue new shares to meet stricter global
regulations.

Top-ranked Mitsubishi UFJ Financial Group (8306.T: ) last month
raised about 1 trillion yen ($11.1 billion) and Sumitomo Mitsui
Financial Group (8316.T: ), Japan’s third-largest lender by assets,
is raising 968 billion yen.

Analysts have estimated that Mizuho, the worst-capitalised of
the three major banks, will need to raise more than either of its
rivals.

The bank said on Thursday that it was not considering a
rights issue as a means to raise new funds, dashing market
speculation that it may attempt to limit dilution of its common
shares. [ID:nTOE60R04J]

The Basel Committee on Banking Supervision, made up of
central bankers and regulators from nearly 30 countries,
published a draft of reforms last month, calling for higher
levels of capital to prevent another financial crisis.

Shares of Mizuho have risen 5.4 percent so far this year,
after losing more than a third of their value in 2009. Tokyo’s
index of bank stocks (.IBNKS.T: ) is up 4.3 percent on the year.

Mizuho’s shares finished down 1.7 percent before the results,
compared with a 1.2 percent decline in the banking index.

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(Reporting by David Dolan; Editing by Muralikumar Anantharaman)

UPDATE 1-Mizuho back to profit in Q3, keeps outlook