Nomura Japan Banking Monthly — August 2026: Resilience on Rate-Hike Expectations, Correction in AI-Related Stocks
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Nomura's August 2026 Japan banking monthly notes that bank stocks stayed resilient through late July despite the Bank of Japan's June 16 rate hike, while underperforming TOPIX by 1.8% over the past month. Four factors supported performance: the pullback in semiconductor and AI-related stocks from mid-June made banks a defensive alternative; strong US bank shares amid booming IPO and M&A markets provided a spillover; global macro investors added Japanese banks, viewing a weaker yen, rising equities, and higher rates as favorable; and BOJ rate-hike expectations revived after coordinated US-Japan FX intervention. In early August, bank stocks slipped on profit-taking, as first-quarter results for the fiscal year ending March 2027 offered few surprises and Japan-US long-term yields fell amid Middle East de-escalation. Nomura reiterates its bullish stance: core Q1 earnings beat expectations, megabanks excelled in corporate and investment banking across loans, deposits, and corporate services, and loan demand is accelerating. Profit growth should be driven not only by rate hikes but also by loan volume growth and tighter supply-demand lending spreads. Covered names and 12-month targets: Mitsubishi UFJ Financial Group (Buy, ¥4,000); Resona Holdings (Neutral, ¥2,350); Sumitomo Mitsui Trust Group (Buy, ¥2,050); Sumitomo Mitsui Financial Group (Buy, ¥8,400); Mizuho Financial Group (Buy, ¥9,600); Japan Post Bank (Neutral, ¥2,850).