BoJ monetary policy meeting from banking sector viewpoint

Research evidence excerpt

BoJ monetary policy meeting from banking sector viewpoint

16 June 2026

Mizuho Securities Equity Research Banks

Industry Overview

Theoretical PBR simulation based on ROE and capital cost

The Bank of Japan announced changes to its financial market adjustmentSenior Analyst:

policy at the 15–16 June monetary policy meeting. Specifically, for the short-Maoki Matsuno

term interest rate, the BoJ will guide the uncollateralized overnight call rate+81 3 6202 8289

maoki.matsuno@mizuho-sc.com to around 1.00% from around 0.75% previously (see Figures 1 and 2). For

its long-term JGB purchasing program, the bank will, in principle, continue to

reduce its monthly buying by some ¥200b each quarter through to March 2027

and then conduct purchases of around ¥2t per month from April 2027 (see

Figures 3 and 4).

We maintain our bullish stance on the banking sector. We expect Japanese

bank stocks to continue performing well moving forward thanks to support

from: 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) anticipated upward revisions to FY3/27 guidance and

shareholder return announcements around 2Q FY3/27 earnings season; and

3) expectations for additional BoJ rate hikes and regional bank consolidation

(see our 12 June report). Moreover, for the terminal rate, we presently think

the policy interest rate will likely be raised to the 1.5%–1.75% range. We, thus,

believe that the peak in bank stocks prices is still some time away.

We forecast an ongoing improvement trend for Japanese banks’ ROE on the

likely effects for additional BoJ rate hikes, including: 1) a rise in the yen TIBOR,

yen bond yields, yen swap rates, and short-term prime rate; 2) higher interest