Listen to the article
Mizuho Financial Group reported a 14 percent increase in third-quarter net profit on Monday, reaching 329.9 billion yen ($2.13 billion) compared to 289.2 billion yen in the same period last year. The Japanese banking giant also expanded its share buyback program to 300 billion yen from 200 billion yen, reflecting growing confidence as the sector benefits from rising interest rates and Japan’s exit from deflation.
Japan’s third-largest banking group has already achieved more than 90 percent of its annual profit target of 1.13 trillion yen in just three quarters, according to the company’s statement. If reached, this would mark a record performance for Mizuho Financial Group, surpassing last year’s net profit of 885 billion yen.
Rising Interest Rates Boost Banking Profitability
The improved financial performance comes as Japanese banks capitalize on fundamental shifts in the country’s monetary policy environment. The Bank of Japan began raising interest rates in March 2024, ending eight years of negative interest rates that had severely compressed lending margins across the banking sector.
Mizuho’s loan and deposit rate margin for domestic loans increased to 1.08 percent during the first three quarters of the current financial year, up from 0.92 percent for the year that ended in March 2025. This margin expansion has significantly contributed to the bank’s improved profitability despite a relatively stable operating environment.
Surging Loan Demand Drives Growth
Additionally, loan demand in Japan has experienced substantial growth as the return of inflation encourages companies to seek better returns on their capital. Mizuho’s domestic loan portfolio expanded to 59.7 trillion yen by the end of December, up from 56.3 trillion yen at the end of March, representing a notable increase in business activity.
According to industry observers, numerous Japanese companies have increased capital expenditures and pursued mergers and acquisitions as they adapt to the new inflationary environment. This shift marks a significant departure from decades of deflationary pressure that discouraged corporate borrowing and investment.
Industry-Wide Momentum in Japanese Banking
Meanwhile, Mizuho’s performance aligns with broader trends across Japan’s major banking groups. Last week, larger rival Sumitomo Mitsui Financial Group reported a 12 percent increase in its quarterly profit, indicating that the positive momentum extends beyond a single institution.
However, the full picture of the sector’s performance will become clearer this week. Japan’s largest banking group, Mitsubishi UFJ Financial Group, is scheduled to report its results on Wednesday, which will provide additional insight into how the country’s top financial institutions are navigating the changing interest rate environment.
Share Buyback Expansion Signals Confidence
The decision to increase the share repurchase plan by 50 percent demonstrates Mizuho Financial Group’s confidence in sustained profitability and its commitment to returning value to shareholders. The expanded 300 billion yen buyback program represents one of the largest such initiatives among Japanese banks this fiscal year.
In contrast to previous years when Japanese banks struggled with thin margins and limited growth opportunities, the current environment has created favorable conditions for generating robust returns. The combination of higher interest rates and increased lending activity has fundamentally improved the operating landscape for major financial institutions.
Investors and analysts will closely monitor whether Mizuho can maintain this momentum through the final quarter of its fiscal year to achieve the record profit target. The bank’s performance in the coming months will also provide important signals about the sustainability of Japan’s economic recovery and the banking sector’s ability to capitalize on normalized monetary policy conditions.
