The Mizuho Financial Group has decided to write off all unrealized losses in derivative transactions by using "merger profit" after reorganizing its group banks in April, company officials said Friday.
The group, consisting of Dai-Ichi Kangyo Bank, Fuji Bank and the Industrial Bank of Japan under Mizuho Holdings Inc., expects latent losses to reach about 300 billion yen at the end of March, but the losses could either increase or decrease depending on the trend of interest rates, officials said.
Latent losses stood at about 370 billion yen at the end of September, mostly stemming from interest rate swaps and government bond futures.
The group decided to book the losses in fiscal 2002 as a wider scope of derivative financial instruments will become subject to market-value accounting.
Meanwhile, under the current low interest rates, the group's latent profits on government bonds are expanding and its profit margin from corporate loans is also growing.
The group is scheduled to be consolidated into Mizuho Bank, which will offer services for individuals and small businesses, and Mizuho Corporate Bank, which will serve mainly major corporations.