Mizuho Financial Group Inc. (8411.TO) said Thursday that it expects to fall deep into the red for the first time in six years in the just-ended fiscal year due to mounting credit costs and massive valuation losses on securities.

Japan's second-largest bank by assets said it now expects to post a Y580 billion net loss in the fiscal year that ended in March, well off its previous forecast made in January for a Y100 billion profit.

Mizuho said its securities valuation loss for the just-ended fiscal year came to Y618.8 billion, including a Y232.9 billion loss recorded in the January-March quarter.

The bank's net loss forecast comes just two weeks after another major Japanese bank, Sumitomo Mitsui Financial Group Inc. (8316.TO), lowered its earnings outlook to Y390 billion loss from Y180 billion profit, blaming rising credit costs and losses on its investment in Barclays PLC's (BCS). SMFG announced a plan to raise up to Y800 billion in common shares.

Regarding a possible capital boost, Mizuho said it doesn't have an immediate plan to make an announcement, but will consider if such a move is necessary by monitoring the market environment.

Mizuho also expects losses of Y80 billion related to its investment in Merrill Lynch & Co. Inc. (MER). The Tokyo lender invested $1.2 billion to buy preferred shares in the U.S. investment bank in January last year.

Market weakness for during January-March period weighed on Mizuho's earnings, causing it to post losses of Y410 billion on its equity-holdings for the last fiscal year. Mizuho set a break-even point of about 9500 for the Nikkei 225 Stock Index, below which paper profits turn to mark to market losses. The Nikkei index closed at 8109.53 on March 31.

Big loss expectations from SMFG and Mizuho are an ominous sign for Japanese financial institutions.

Analysts say Mitsubishi UFJ Financial Group Inc. (8306.TO), Japan's largest banking group, could post losses about the same size as the other two banks given an increase in bad loans and the size of its equity holdings.

"Increasing credit expenses and widening equity write-downs mean a fall into the red for MUFG in the fiscal year ended March is more or less assured," Hironari Nozaki, analyst at Nikko Citigroup said in a report, expecting the loss could come to Y300 billion.

The Nikkei also reported Thursday that Chuo Mitsui Trust Holdings Inc. (8309.TO) will likely post a group net loss of Y80 billion for the last fiscal year, compared with its previous forecast for a Y30 billion profit due to write-downs on equity-holdings and sales of investment securities.

Japanese media also said that Nomura Holdings Inc. (8604.TO), Japan's largest brokerage firm, is expected to post a roughly Y700 billion group net loss last fiscal year, the largest loss in the financial giant's history, due in part to costs related to integrating Lehman Brothers Holdings Inc.

Nomura, which will report its results Friday, said in a statement that the report is not based on information that it has disclosed.

Most major Japanese banks plan to report their earnings for last fiscal year in mid-May.

-By Atsuko Fukase, Dow Jones Newswires; 813-6895-7567; atsuko.fukase@dowjones.com