Mizuho Financial Group Inc Earnings - Q1 2026 Analysis & Highlights
Mizuho Financial Group reported strong FY2025 earnings with normalized profit of ¥1,150 billion, positioning itself to capitalize on Japan's economic transformation through strategic investments in corporate banking, wealth management, and digital innovation while maintaining disciplined risk management and targeting 12% ROE by FY2028.
Key Financial Results
Profit attributable to owners of parent was ¥1,248.6 billion for FY2025, with management recognizing this figure includes some one-time profits and estimating normalized basis at approximately ¥1,150 billion.
Total payout ratio achieved 60% in FY2025, with the company maintaining a policy of targeting 50% or more going forward.
Return on Equity (ROE) on normalized basis of ¥1,150 billion stands at 10.5% for FY2025.
Return on Risk-Weighted Assets (RORA) improved from 2.4% to 3.6% compared to the end of March 2019, demonstrating continued focus on risk and return.
Expense ratio recently dropped to 59.4%, with absolute expenses increasing but strict cost discipline maintained.
Business Segment Results
Domestic CIB gross profits increased by 17% year-on-year, with IB income growing steadily and loans to innovative companies increasing.
Global CIB gross profits increased steadily year-on-year, with revenue growing for each product and global collaboration advancing further.
Mass Retail gross profits increased by 11% year-on-year, with new accounts opened growing significantly by 26% in FY2025 and app MAU increasing by 13%.
For large corporates, product-related loans have grown significantly with IB income showing a CAGR of 24%.
For mid-cap companies, high return loans (¥1 billion or more with spreads of 100 basis points or more) have expanded significantly, with IB income from this segment growing steadily.
Global CIB ranking rose from 17th in FY2022 to 15th in FY2025, driven by successful execution of various deals.
For cross-border M&A involving Japan, Mizuho ranked second, a first for the company, indicating positive results from the Greenhill acquisition.
US business gross profit reached $5.2 billion with significantly deepened client relationships and established solid product lineup.
In the investment advisory field, the share of funds with excess returns outperforming peers improved from 25% to 52% in FY2025.
Capital Allocation
Share buybacks are beginning initially with ¥100 billion, with plans to flexibly increase this as the Middle East situation is monitored.
Cross-shareholdings reduction of ¥114.6 billion was achieved in fiscal year 2025, with sales already accepted bringing the total to ¥152.4 billion, representing 45% progress against the three-year target of ¥350 billion or more.
Deemed holdings stand at ¥274.4 billion against a target of ¥200 billion, demonstrating substantial progress.
Mizuho sold 15% stake in Orico to Muninova while maintaining a 33.8% stake, forming a partnership to support Orico's expansion of lending business and cost reduction through digital technology.
For Mizuho Leasing, the company reduced its stake to comply with the US BHC Act while subscribing for special class shares to maintain economic interest.
In early April, Mizuho issued $7 billion in senior notes by BK at very favorable cost, and also issued TLAC bonds in the previous fiscal year.
Industry Trends and Dynamics
Japan's wage growth rate increased from 1.92% in the 2010s to plus 5%, reflecting a virtuous cycle of prices and wages emerging.
The ratio of risk assets in household portfolios rose from 15% in 2019 to 24% over the past six years, reflecting the structural shift from savings to investment.
Foreign investment in Japanese equities stands at ¥7.8 trillion, indicating growing overseas interest in the Japanese market.
Domestic capital investment grew from ¥102 trillion in 2019 to ¥124 trillion in 2025, demonstrating proactive stance toward domestic investment.
M&A volume increased from ¥18.0 trillion to ¥35.7 trillion, with corporate actions increasing significantly.
Outstanding loans have grown from ¥315 trillion to ¥396 trillion, domestic bond issuance from ¥10.9 trillion to ¥15.6 trillion, and startup fundraising from ¥398.0 billion to ¥761.3 billion.
The percentage of companies with a P/B ratio under 1 times decreased from 40% in 2019 to 24%, indicating a major transformation taking place in Japan.
Retail financial investment is increasing as Japan experiences a shift from its historical structural challenges of prolonged deflation and cash-heavy household savings.
Competitive Landscape
Mizuho possesses the only in-house global CIB among Japanese banks, providing a competitive advantage in global collaboration.
Mizuho has a 150-year history with a robust customer base developed over its long operational history.
The company holds the top CIB track record among Asian financial institutions.
Mizuho is positioned as a number one debt house in the public and corporate bond markets.
The company has a history of industry research spanning over 50 years, providing strategic foresight to support clients' structural reforms through deep strategic dialogue.
Mizuho has driven the development of Japan's syndicated loan market since the late 1990s.
Macroeconomic Environment
The primary macro concern is the geopolitical situation in the Middle East, with attention focused on the rise in prices.
From the perspective of financial transactions, rising prices are creating needs for securing liquidity and increasing credit facilities.
Corporate action momentum has not slowed significantly despite the Middle East situation, with many new M&A discussions ongoing.
If the Middle East conflict continues longer, various bottlenecks are likely to emerge, with potential supply constraints that could have significant negative impact on corporate mindset.
The possibility of US policy rate cuts has moved further away, though Mizuho has prepared to secure earnings even if policy rates decline.
Japan is experiencing a virtuous cycle of prices and wages, with expectations for productivity gains driven by AI.
Growth Opportunities and Strategies
Mizuho aims to organically connect its four Focus Business Areas and functions within each area to contribute to the self-dependency and indispensability of clients and society.
The company intends to connect large corporations with mid-cap companies and SMEs to strengthen supply chains and restore Japan's industrial competitiveness.
Mizuho will foster new industries, with the space industry identified as a prime example, connecting large corporations with startups.
The company will serve as a bridge promoting international collaboration, connecting Japanese companies with overseas companies to build a global semiconductor supply chain.
In areas like sustainability, Mizuho will connect domestic and overseas startups.
The company is appointing several AI leaders in each company, unit, and group to review all processes and customer touchpoints to actively identify areas that can be delegated to AI.
Five target areas have been identified for AI implementation where substantial resources are being allocated.
Mizuho is expanding the family office business to provide comprehensive support for family businesses including business succession, asset succession, and asset management.
The company is strengthening collaboration between bankers in the Americas Markets team, with the Head of Fixed Income in the Americas also overseeing the EMEA team.
In Asia, Mizuho is focusing on the Transaction Banking business with a strong foundation and increasing revenues.
Avendus in India represents an exciting development, with plans to collaborate closely pending regulatory approval.
Financial Guidance and Outlook
For FY2026, Mizuho is targeting profit attributable to owners of parent of ¥1,300 billion, based on a normalized basis figure of ¥1,150 billion.
For FY2028, the company aims to achieve an ROE of over 12%, assuming a current policy rate of 0.75%, which management views as quite ambitious and the minimum level necessary to catch up with US and European peers.
ROE would rise by around 0.6 to 0.7 percentage points for every 25 basis point rate hike, with the direct increase in gross profit and economic strength offsetting some cost increases.
The company has set a management target to cut approximately ¥150 billion in fixed costs over three years.
Mizuho believes it can absorb natural attrition in personnel and reduce workload through redesigning processes suitable for AI and utilizing AI.
The yen loan to deposit ratio is around 50%, indicating ample room for deposit growth.
For foreign currency, approximately 80% of foreign currency loans are currently covered by deposits, increased from the basic stance of funding about 70% with foreign currency deposits.
The average remaining period of the JGB portfolio stands at 0.9 years, maintained through May, demonstrating a cautious approach.
The average remaining period for foreign bonds is 1.2 years, with held-to-maturity foreign bonds built up to a certain level.
The CET1 ratio stands at 9.9% at the end of March 2026, remaining in the middle of the operational range.
Risk-weighted assets increased from ¥78 trillion to ¥97 trillion compared to the end of March 2019.
Risk Management and Financial Stability
Mizuho manages volatility through discipline with appropriate risk appetite management, not taking on risks the company cannot evaluate or engaging in transactions where risks cannot be controlled.
The company has consistently maintained a conservative bond portfolio.
Exposure to BDCs is limited to approximately ¥300 billion, with management considering the downside here to be minimal.
Overseas real estate exposure is not significant, with real estate exposure to China standing at approximately $600 million.
The loan portfolio is mainly investment grade, both in Japan and outside Japan.
In the CIB business in the Americas, Mizuho keeps trading facilitation to an absolute minimum, with structurally low revenue volatility.
When market volatility is low, the primary markets business generates strong profits, while when volatility rises, the trading business can supplement revenues to some extent.
