Mizuho CEO Upbeat On Dealmaking Prospects In Japan And US

Mizuho Financial Group Inc.'s chief executive officer expressed optimism that momentum in investment banking will continue both at home and in the US, where Japan's third-biggest lender has been expanding.

Tokyo-based Mizuho has completed the integration of US boutique investment bank Greenhill & Co., which it purchased two years ago, and is now reaping the benefits, CEO Masahiro Kihara said in a Bloomberg Television interview on Thursday. "We're now able to pursue large-scale M&A deals," he said.

The Federal Reserve's interest-rate cut overnight will have a positive effect on Mizuho's business in the US, Kihara said. "The momentum will continue probably, and that's good for us." He expects the Fed to reduce rates two or three more times.

In Japan, CEOs have changed their mindsets to improve returns for shareholders, particularly at large-cap companies, Kihara said. Now that trend is spreading to midcaps, and Mizuho has expanded its capabilities in the sector, he said.

Japan's biggest banks are forecasting another year of record profits as higher interest rates boost lending income and tariffs do little to derail business. Mizuho raised its annual profit forecast in November, its second upward revision for the fiscal year ending in March.

Kihara said new Prime Minister Sanae Takaichi is keen to grow the economy, making Japan "very, very interesting."

Takaichi recently unleashed the country's biggest burst of spending since pandemic restrictions eased, adding to concerns about the country's public debt. Japanese government bonds have tumbled this year, sending yields to the highest in decades.

But Kihara said he doesn't expect any huge shocks as long as the government maintains fiscal discipline. He said 10-year JGB yields may exceed 2% — a level they haven't breached in 19 years — but will remain relatively low.

Kihara anticipates the Bank of Japan will raise interest rates this month, in line with market expectations. And even if the BOJ hikes again next year, he doesn't see the yen appreciating much. Japan's currency is likely to trade around 145-150 per dollar, he said.

The yen was at 155.63 on Thursday morning in Tokyo.

Source: Bloomberg Europe