Thursday, May 15, 2008

Mizuho Group of Japan had Annual Net Profit Halved due to Subprime Loan Crisis

Mizuho Financial Group, Inc. (TYO:8411), the second largest bank of Japan, experienced financial crisis in the international market that caused its annual net profit being halved. In the last financial year, Mizuho projected 311.22 billion yen (3.0 billion dollars) of net profit, a sharp fall from its 620.97 billion yen. It is reported that the loss was partly because of its subprime related losses in the U.S. market.

AFP reported:

Net earnings fell to 311.22 billion yen (3.0 billion dollars) in the 12 months to March from 620.97 billion yen the previous financial year, the group said.

The figure was in line with the company's forecast in April, when it had issued its third profit warning in five months.

Mizuho said it suffered subprime-related losses of 645.0 billion yen (6.1 billion dollars) during the year because of financial market turmoil sparked by a wave of defaults on high-risk US mortgages.

Mizuho Financial Group suffered mainly because of its subprime losses. However, the good thing is that the bank had very good growth. It had growth by up to 10.3 percent at 4.52 trillion yen. The bank is planning for a recovery of 560 billion yen in its net profit, while 560 billion yen of recovery in its net business profit.

U.S. economy is not at this prime now. Rather, it is going through a rough patch and it is affecting almost every business organization operating in the country. So, I think, Mizuho Financial Group would operate its business in the U.S. carefully, considering the experience of last year in the country.