WRAPUP 4-Mizuho back in black, SMFG profit doubles

* Mizuho Q2 net profit 92.3 bln yen vs 60.8 bln estimate

* SMFG Q2 profit 50.8 bln yen vs 21.6 bln avg estimate

* Mizuho, SMFG keep forecasts, SMFG cuts recurring 4 pct

* Mizuho says no plans now to issue common shares

* Mizuho shares up more than 7 pct in U.S. trading (Adds Mizuho share price rise in U.S. trading)

By David Dolan

TOKYO, Nov 13 (Reuters) - Mizuho Financial Group's (8411.T) (MFG.N) first profit in five quarters and rival Sumitomo Mitsui Group's (8316.T) doubling of profit signal Japan's major banks are recovering from the economic crisis, albeit slowly.

Japanese lenders have suffered smaller credit losses than their Western rivals, but they have also taken longer to rebound, hampered by dependence on domestic lending and rock-bottom interest rates.

"These are not positive enough to get all worked up about, but at the same time are not all that bad," said Koichi Ogawa, chief portfolio manager at Daiwa SB Investments, referring to the Mizuho and Sumitomo Mitsui earnings.

Economists expect Japan's deflation to persist until at least the second quarter of 2011, a recent Reuters poll showed, meaning that interest rates and revenue from lending will have little chance to rise. [ECILT/JP]

One of the few bright spots has been the decline in bad-loan costs, which spiked last year following the collapse of U.S. investment bank Lehman Brothers.

But analysts predict that as long as Japanese banks rely on loans for the bulk of their revenue -- instead of fees and commissions, for instance -- they will continue to be outpaced by more nimble rivals such as HSBC Holdings Plc (HSBA.L).

Investors also worry that Mizuho, Sumitomo Mitsui and top lender Mitsubishi UFJ Financial Group (MUFG) (8306.T) may need to issue shares to meet stricter capital regulations. Japan's banking index .IBNKS.T is down 17 percent in the past 3 months, reflecting those concerns.

Mizuho President Takashi Tsukamoto told a news conference the bank had no plans at present to issue new common stock, but Goldman Sachs has estimated that Mizuho alone may need need at least $1.9 billion in equity. [ID:nT306019]

"Japanese banking shares have underperformed due to concerns about capital raising. For now that might not happen at Mizuho and Sumitomo Mitsui, but everyone is watching to see if something comes out at MUFG's earnings announcement," Daiwa's Ogawa said.

Mitsubishi UFJ, which owns a 21 percent stake in Morgan Stanley (MS.N), is expected to post a fall in profit when it reports results on Nov. 18. [ID:nT215303]