Japanese Bank Stocks Surge on BOJ Rate Hikes and Lending Income Boost
Mitsubishi UFJ Financial Group (MUFG), Japan's largest bank by market capitalization, reached a record closing high as investor optimism grew over continued benefits from rising interest rates. MUFG shares jumped 2.5% to ¥1,969.5 ($12.7), surpassing its previous high set in April 2001.
The Bank of Japan's (BOJ) recent rate hike, its highest in 17 years, fueled expectations of further increases. Investors anticipate Japanese rates potentially reaching 1% or more in the near future.
Other major lenders also witnessed gains, with Sumitomo Mitsui Financial Group climbing 2.2% and Mizuho Financial Group advancing 2.8%. The Topix index's banking sector rose by 2.2%.
The BOJ's shift towards rate hikes in 2024 has been a significant boon for Japanese banks, which have faced pressure from ultra-low borrowing costs for over a decade. Lenders have responded by sharing more profits through stock buybacks, with MUFG planning to repurchase up to ¥300 billion worth of shares before March 31.
In addition, the weakening yen is enhancing the value of earnings generated abroad, where Japanese banks have expanded their operations. MUFG, Mizuho, and SMFG are among the banks that are scheduled to report their financial results over the coming weeks.