The nation’s 3rd-biggest lender will shed 19,000 positions in the next 10 years

by BLOOMBERG

TOKYO • Mizuho Financial Group Inc’s pro t fell and the Japanese bank offered a bleak assessment of the long-term outlook, confirming it will eliminate thousands of jobs to cut costs.

The nation’s third-biggest lender will shed 19,000 positions — about a quarter of its workforce — in the next 10 years, it said in a statement, confirming recent media reports. Lending income declined in the fiscal second quarter (2Q), underscoring how negative interest rates are making it tougher for Japan’s biggest banks to make money from doling out credit.

“Our expense ratio has risen significantly and this remains a major challenge, which is why we need fundamental structural reforms,” CEO Yasuhiro Sato told reporters in Tokyo yesterday. “Growing the top line is difficult in this global competitive environment, so it’s essential that we improve our productivity.”

Like their global peers, Japanese banks are contending with rapid advancements in technologies that are threatening traditional jobs in the industry while also providing an opportunity to make processes more efficient. Rival Sumitomo Mitsui Financial Group Inc said yesterday that it has been using technology to boost productivity and cut costs.

“We expect Mizuho’s structural transformation to help control its rising operating expenses,” said Shunsaku Sato, a senior credit officer at Moody’s Investors Service in Tokyo. The banking group has the worst efficiency ratio — a measure of costs to income — among Japan’s biggest lenders, according to

data compiled by Bloomberg. Net income fell 12% to ¥198.4 billion (RM7.34 billion) in the three months ended Sept 30, due to the slump in lending and fee businesses. The result still beat the ¥146.9 billion average estimate of five analysts, as the Tokyo-based bank was able to claw back money set aside for bad loans.
Here are key 2Q figures from Mizuho’s report: Bond and securities trading profit rose 28% to ¥67.1 billion. Lending profit dropped 2.8% to ¥214.6 billion. Fees and commissions slipped 2.1% to ¥147.8 billion. Bank reversed ¥108.9 billion in provisions from bad loans. Gains on stock holdings fell to ¥45.6 billion from ¥47.3 billion. Maintained full-year profit target of ¥550 billion.

Shares of Mizuho closed 0.8% lower before the announcement. The stock has slipped about 4% this year, even as the benchmark Topix Index climbed 17%.

As part of its restructuring, Mizuho said it will cut about 100 branches over eight years. Sato said the bank will move employees whose roles are reduced by the anticipated improvements in efficiency.

“This is not only about decreasing people,” he said. “It’s also about redeploying people to the front lines.” — Bloomberg