July 31, 2014 / 7:12 AM / in 3 years

Japan's Mizuho Q1 profit falls 38 pct as stock gains slow

TOKYO, July 31 (Reuters) - Mizuho Financial Group on Thursday said profit fell 38 percent in the first quarter as the value of shares the bank owned grew at a far slower rate than last year, when share prices surged on investors betting on swift economic growth.

Japan’s big three banks booked record profit in the year ended March thanks to the average share price rising 19 percent after a new prime minister took office. However cooling sentiment toward the government’s aggressive pro-growth policies has since seen a more moderate rise of 6 percent.

No.2 bank Mizuho in a statement said net profit reached 154.7 billion yen ($1.50 billion) in April-June from 248.0 billion yen in the same period a year earlier.

Stock-related profit fell to 15.7 billion yen from 27.2 billion yen. Mizuho owns shares in an array of major Japanese companies, including Central Japan Railway Co and East Japan Railway Co.

Net interest income - or interest earned from loans and securities holdings - at its core banking unit fell to 227.9 billion yen from 241.7 billion yen, pressured by a central bank monetary easing programme aimed at ending a decade of deflation.

For the full year through March, Mizuho kept its net profit forecast at 550 billion yen, 20 percent less than a year earlier and below a 566.6 billion yen mean estimate of 17 analysts polled by Thomson Reuters.

Shares of Mizuho closed 0.1 percent higher ahead of the earnings, compared with a 0.2 percent decline in the benchmark index. (1 US dollar = 102.8100 Japanese yen) (Reporting by Taiga Uranaka; Editing by Christopher Cushing)

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