Bank sector investment stance (Jun 2026)

Research evidence excerpt

Bank sector investment stance (Jun 2026)

12 June 2026

Mizuho Securities Equity Research Banks

Industry Overview

Our thoughts on ROE

Senior Analyst: Summary

Maoki Matsuno Key topics discussed in this report include the following: 1) a review of our

+81 3 6202 8289 earnings forecasts and investment ratings for bank stocks under our coverage

maoki.matsuno@mizuho-sc.com based on FY3/26 results briefings and our follow-up research; 2) our thoughts

on ROE; 3) exposure to funds, the Middle East, and AI; and 4) our outlook

regarding Japanese banks’ shareholder returns and other trends.

Investment implications

Below, we present: 1) our outlook for Japanese bank stocks; and 2) our

thoughts on the share valuations of Japanese banks. We maintain our Bullish

stance on the banking sector. Going forward, we expect Japanese bank stocks

to continue performing solidly, aided mainly by the following tailwinds: 1)

expectations for good NP progress largely due to low credit costs, an increase

in fee income, and growth for domestic NII on loans and deposits in 1Q

FY3/27; 2) expectations for shareholder return announcements and upward

revisions to FY3/27 guidance (if the BoJ hikes interest rates in Jun–Jul 2026)

around 2Q FY3/27 earnings season; and 3) additional share price support

from expectations of another BoJ rate hike and expectations of regional bank

consolidation. In terms of individual stock selection, among the major banks,

we have Buy ratings on MUFG, SMFG, SMTG, and Resona HD. Among the

top-tier regional banks, we have Buy ratings on Yokohama FG, Chiba Bank,

Shizuoka FG, and Fukuoka Financial Group (FFG).

Next, we touch on leading Japanese banks’ ROE (TSE standard). Specifically,

we go over: 1) leading Japanese banks’ ROE targets and definitions; 2) an