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Red ink covers Mizuho

MIZUHO Financial Group Inc, Japan's second-biggest bank, warned yesterday that it sank into the red last fiscal year amid rising bad loans and steep stock market declines.

The Tokyo-based lender slashed its earnings guidance for the 12 months through March 31, saying it expects a group net loss of 580 billion yen (US$5.9 billion) - its first annual loss in six years.

The company had been projecting a 100 billion yen profit. It made 311 billion yen in profit the previous year.

Mizuho said pretax losses will be around 400 billion yen, compared with the forecast for a 220 billion yen pretax profit that it announced in January.

The bank blamed higher credit-related costs stemming from the global financial crisis and "significant declines in both domestic and overseas stock prices and the sharp economic downturn."

Japan's three megabanks - Mizuho, Mitsubishi UFJ Financial Group Inc and Sumitomo Mitsui Financial Group Inc - are now all expected to post annual losses.

Earlier this month, Sumitomo Mitsui Financial Group rattled investors when it downgraded its earnings guidance. It expects to post a group net loss of 390 billion yen.

Major Japanese banks managed to weather the subprime mortgage crisis, but they are now facing the painful impact of Japan's recession.


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