Japan Financial Sector: BofA financials weekly, 26 June 2026

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Japan Financial Sector: BofA financials weekly, 26 June 2026

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Japan Financial Sector

BofA financials weekly, 26 June 2026

Industry Overview

26 June 2026

Banks (Shinichiro Nakamura) Equity

Analyzing the spread between short- and long-term rates on the yen yield curve and Japan

banking sector share prices relative to TOPIX confirms a high correlation, and we see Banks, Brokerage, Insurance & Other

widening of the spread between short- and long-term rates as positive for bank share Nonbank

prices relative to TOPIX. On the other hand, since June this year, the curve has flattened,

Shinichiro Nakamura >>

as rates in the short-term zone have risen intermittently following the 25 bp rate hike at Research Analyst

the June meeting, while the BoJ’s halt to reducing JGB purchases (from April 2027 BofAS Japan

+81 3 6225 8824

onward) took into account steepening of long-term rates. Despite the above, we believe shinichiro.nakamura@bofa.com

the continued outperformance trend in bank shares is largely due to the fact that the Natsumu Tsujino, CFA >>

yen spread between short- and long-term rates had widened considerably over the past Research Analyst

BofAS Japan

1.5 years and merely flattened slightly in June, and that the equity market’s pricing-in of +81 3 6225-8720

the BoJ terminal rate is gradually shifting from 1.50% to 1.75% (BoJ rate hikes are natsumu.tsujino@bofa.com

positive for Japanese bank shares). However, if the rates market prices in a future peak- Yuji Kobayashi >> Research Analyst

out of the BoJ policy rate (reaching the neutral rate) and flattening continues steadily, it BofAS Japan

could have a negative impact on bank shares. We assume equity market pricing-in is +81yuji.kobayashi@bofa.com3 6225 8791