UPDATE 1-Japan's Mizuho quarterly profit doubles as credit costs vanish

* Q1 net profit at 250.5 bln yen vs 122.4 bln year earlier

* Reduced bad debt provisions eliminate credit-related costs

* Keeps full-year net profit forecast at 510 bln yen (Adds further earnings figures, context)

TOKYO, July 30 (Reuters) - Mizuho Financial Group Inc on Friday said net profit doubled in the first quarter of its financial year as credit-related costs - the scourge of last year - evaporated.

Japan’s third-largest lender by assets reported April-June profit of 250.5 billion yen ($2.29 billion), compared with 122.4 billion yen in the same period a year earlier.

For the current financial year through March 2022, Mizuho reiterated a forecast for profit of 510 billion yen. That compared with the 521 billion yen average of nine analyst estimates compiled by Refinitiv.

Japanese banks have been struggling with years of ultra-low interest rates and a shrinking population. In the last, pandemic-hit financial year, three major lenders including Mizuho booked a collective 1.1 trillion yen in credit-related costs, or nearly double year-on-year.

In the first quarter last year, Mizuho booked 39 billion yen in credit-related costs. This year, however, a reduction in bad debt provisions eliminated credit-related costs and left the bank with an extra 2.6 billion yen.

The lender previously estimated credit-related costs to total 100 billion yen for the full financial year.

Mizuho’s net interest income - mainly derived from its traditional lending business - was 222.8 billion yen in the first quarter, an on-year rise of 3.6%, due in part to a surge in demand for financial services from companies striving to overcome pandemic fallout.

Market leader Mitsubishi UFJ Financial Group Inc is scheduled to announce first-quarter earnings on Monday.

$1 = 109.5800 yen Reporting by Takashi Umekawa; Editing by Christopher Cushing