Japanese lenders will report quarterly results that for the first time fully reflect the end of negative rates, with investors expecting solid earnings that will recharge a stock rally.
With the Bank of Japan (BOJ) seen raising rates this year, there are heightened expectations that banks’ profitability will improve. Those with larger holdings of domestic assets and cash sitting at the BOJ are expected to be more sensitive to the country’s rate increases, according to calculations by Bloomberg Intelligence.
The price-to-book ratio of Japanese banks has increased to 0.85 times at the end of June from 0.66 times in late December, with return on equity set to exceed 8% for more banks should the BOJ raise rates further, BI analyst Hideyasu Ban wrote in a note.