Mizuho CEO says higher fee in­come will off­set neg­a­tive rates

The Pak Banker - - COMPANIES/BOSS -

TOKYO: Mizuho Fi­nan­cial Group Inc. is count­ing on fee busi­nesses to make up for lower re­turns from lend­ing and bond in­vest­ments in the wake of the Bank of Ja­pan's neg­a­tive in­ter­e­strate pol­icy. "Non-in­ter­est in­come will grow sig­nif­i­cantly as we move into new busi­nesses" in the neg­a­tive-rate en­vi­ron­ment, Chief Ex­ec­u­tive Of­fi­cer Ya­suhiro Sato said in an in­ter­view at the bank's Tokyo head­quar­ters last week.

Sato said this could off­set the 40 bil­lion yen ($365 mil­lion) that he ex­pects the BOJ's pol­icy will shave off in­come from busi­nesses such as lend­ing this fis­cal year. With re­turns from lend­ing di­min­ish­ing, Mizuho is fore­cast­ing profit will de­cline 11 per­cent this fis­cal year, un­der­scor­ing why it's seek­ing to boost in­come from ar­eas such as in­vest­ment bank­ing, trust bank­ing and bro­ker­age ser­vices. The Tokyo-based bank has bol­stered its se­cu­ri­ties op­er­a­tions by hir­ing staff at home and abroad, par­tic­u­larly in the U.S., where it is try­ing to gain mar­ket share by cap­i­tal­iz­ing on other firms scal­ing back.

One busi­ness that can ben­e­fit from low in­ter­est rates re­lates to cor­po­rate pen­sion funds, ac­cord­ing to Sato. With low rates in­creas­ing the costs that em­ploy­ers must pay for pen­sions with fixed ben­e­fits, many com­pa­nies are switch­ing to de­fined-con­tri­bu­tion plans, the Ja­panese equiv­a­lent of a 401k, he said. The group's trust bank earns fees for set­ting up such plans for the bank­ing unit's cus­tomers. "One of our strengths is the abil­ity to gen­er­ate in­come by co­op­er­at­ing among our group bank, trust bank and se­cu­ri­ties func­tions," Sato said.

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