Mizuho Q1 FY2027: Net income surges 45%, raises full-year profit forecast and dividend

Mizuho delivered strong top-line growth across all segments, with net income attributable to parent company shareholders reaching ¥422.9 billion, up 45.5% from the same period last year. Gross revenue rose 18.3% to ¥2,520.8 billion, while ordinary profit surged 62.5% to ¥598.9 billion.

The largest driver was an expansion in net interest income as domestic rates climbed. Mizuho Bank's loan-to-deposit spread widened to 1.27% from 1.04% a year earlier, pushing loan interest income up 13.7% to ¥735.8 billion. Interest and dividends on securities also increased 28.9% to ¥262.8 billion. Meanwhile, the Global Markets Company (GMC) recorded gross business profit of ¥199.6 billion before general loan loss provisions, thanks to strong ETF-related gains (which ballooned to ¥43.3 billion, roughly ten times the prior-year level) and trading income.

Operating expenses rose 9.8% to ¥505.9 billion, but revenue growth more than offset this, improving efficiency. Credit costs turned into a net reversal of ¥6.1 billion (versus a ¥11.4 billion charge a year earlier), further supporting earnings. As a result, the bank raised its full-year net profit forecast and dividend outlook, signaling confidence in sustained performance.

Mizuho operates under five customer-focused in-house companies, reporting “gross business profit (before trust account amortization) + ETF-related gains” as a key revenue measure. Consolidated first-quarter total was ¥1,070.1 billion, up 39.1% year on year.

RBC, serving domestic individuals and SMEs, saw gross profit rise 20.7% as loan-deposit spreads expanded and expense controls improved profitability. CIBC, focusing on large corporates, maintained a high 72.5% margin, with fee income boosted by hedging demand amid currency swings and rising rates. GCIBC, handling overseas Japanese and non-Japanese clients, grew steadily on higher lending and interest income in the US and Asia. GMC was the standout, with gross profit soaring 80% thanks to a surge in ETF-related gains to ¥43.3 billion, driven by domestic equity market gains and valuation profits. AMC posted stable income on growing AUM, though its scale remains modest.

All segments achieved year-on-year profit increases, underscoring the group's diversified revenue stream and sensitivity to higher interest rates.

Total assets stood at ¥304.2 trillion, up ¥2.0 trillion from the end of March 2026. Loans increased ¥3.3 trillion to ¥103.0794 trillion, led by corporate lending. Deposits edged down to ¥165.3 trillion, but the funding base remains stable when including negotiable certificates of deposit.

The common equity Tier 1 ratio (simplified calculation) was unchanged at 3.7%. Net assets rose ¥0.1 trillion to ¥11.5 trillion on accumulated retained earnings. Unrealized gains on securities held steady at ¥1.3 trillion, supported by higher domestic stock prices, though foreign bond portfolio losses warrant monitoring given yen appreciation risks.

On shareholder returns, Mizuho raised its full-year dividend forecast to ¥150 per share from ¥145 in the previous year, planning an interim and final dividend of ¥75 each. This marks a sixth consecutive annual dividend increase. No share buyback was announced, but the bank appears focused on balancing internal capital accumulation with returns. Quarterly cash flow statements were not prepared, but liquidity remains ample.

Based on the strong first quarter, Mizuho raised its fiscal 2027 net profit attributable to parent shareholders forecast to ¥1,400.0 billion, up ¥100.0 billion (+7.6%) from the prior estimate of ¥1,300.0 billion. The revision mainly reflects the continued benefit of higher interest rates and sustained strength in the markets division.

For the full year, tailwinds are expected to persist for the banking sector amid prospects of further BOJ rate hikes and a moderate domestic recovery. However, reliance on volatile ETF income and overseas economic uncertainties require caution. With first-quarter progress at roughly 30% of the full-year target, the outlook remains solid but could be swayed by market conditions.

Key risks and challenges noted in the earnings report include:

• Credit cost increases: Currently a net reversal, but an economic slowdown or rising corporate bankruptcies could necessitate higher loan loss provisions.
• Market risk: Growing dependence on ETF and trading gains means a stock market decline or sharp rate moves could hit earnings. Notably, unrealized losses on foreign bonds may widen if rates keep rising.
• Interest rate fluctuations: While rising rates boost net interest income, a sharp spike could cause bond portfolio losses and dampen corporate borrowing activity.
• Foreign exchange volatility: Overseas earnings and foreign bond valuations are affected by currency moves.
• Compliance and operational risk: Regulatory breaches or IT system failures remain a constant reputational threat, requiring ongoing investment and governance.
• Japan economic deterioration: Structural issues like demographic decline and productivity stagnation, plus external shocks, could trigger a recession.