Japanese Banks Achieve Record Profitability Amid Interest Rate Normalization
Japan's major banking groups, including Mitsubishi UFJ Financial Group, Sumitomo Mitsui Financial Group, and Mizuho Financial Group, have reported record profits for the financial year ending March 2026. This surge in profitability is largely driven by the Bank of Japan's interest rate normalization, which has improved net interest income. The policy rate was raised to 1% in June 2026, following a series of increases since the end of the negative interest-rate policy in March 2024. The banks have benefited from higher yields on loans and securities, as well as improved loan-to-deposit spreads. The positive impact of these changes is expected to continue, with further upside anticipated from loan growth and reinvestment at higher yields.