Japanese megabank Mizuho Financial announced a plan to buy a $500 million stake in US investment firm BlackRock on Friday as it reported surging profits for the first half on declining bad loan costs.
Japan’s second-largest banking group agreed with the New York-based firm to acquire a 1.6 per cent stake or 3.07 million shares, including 2.45 million currently held by Bank of America, the largest US bank.
Mizuho and BlackRock also announced they intended to sign an agreement promoting further cooperation globally, with a particular emphasis on Japan and Asia, to more efficiently address their clients’ investment needs.
The move comes as financial institutions in markets such as the United States and the UK sell non-core assets as they continue to recover from the financial crisis.
Bank of America was among the hardest-hit banks during the crisis that flared following the collapse of Lehman Brothers in September 2008.
Meanwhile Mizuho, Japan’s second largest bank by assets, said its net profit nearly quadrupled in the six months ended September from a year earlier thanks to lower bad loan costs, and raised its full-year profit forecast.
Mizuho said net group profit soared to 341.8 billion yen ($4.1 billion), from 87.8 billion yen a year earlier. Revenue edged down 2.3 per cent to 1.4 trillion yen.
The profit recovery was helped by a decline in bad loan reserves, or money set aside to compensate for potential debt turning sour, as the financial health of borrower companies improved. Gains from bond trading also boosted profit.
The bank raised its profit forecast for the year to March 2011, and now expects a net profit of 500 billion yen against 430 billion yen projected in May. Rival Sumitomo Mitsui Financial Group also saw its profit more than triple for the same period, thanks to gains from bond investments.
Net profit jumped to 417.5 billion yen from 123.5 billion yen a year ago. Revenue rose 26.4 per cent to 1.98 trillion yen.
The group enjoyed an increase in gains from bonds and the gross profit of its brokerage subsidiary Nikko Cordial Securities.
Sumitomo Mitsui also lifted its forecasts for the year to March and now predicts net profit of 540 billion yen on revenue of 3.9 trillion yen.