Momentum in Japan’s banking sector continues as higher policy rates support an expansion in net interest margins and core income. The three megabanks—MUFG, SMFG, and Mizuho—are projecting record net profits for FY3/26, reflecting improved interest revenues and ongoing cost control. Similar dynamics are evident among regional banks, where wider loan–deposit spreads is contributing to steady growth in ordinary profits. Equity performance has generally followed these improving fundamentals.

The table in my note to the clients shows the top 20 outperforming regional banks in 2025. The top nine names recorded share price increases of more than 100% over the past year. Nagoya Bank, which is my top pick, ranked ninth in this group.

One notable feature of these outperformers is that they are not necessarily located in Japan’s higher-growth regions. Rather than relying on regional economic expansion, many have increased lending and fee income through diversification and incremental business-model adjustments. For example, Ogaki Kyoritsu Bank (#2 in the list) has promoted a “Beyond Banking” strategy, positioning itself as a broader service provider. Initiatives include extended branch operating days, palm-vein authentication ATMs, drive-through banking, mobile branch vehicles, and branches co-located with convenience stores and cafes. These measures appear aimed at broadening customer access and engagement.

Valuations remain moderate despite the strong share price performance. P/B ratios are approximately 0.6x for Tochigi Bank, 0.7x for Ogaki Kyoritsu, and 0.85x for Nagoya Bank.

(source: Toyo Keizai)

If you’re interested in further thematic research along these lines, I’d be pleased to offer complimentary access to my service. I am confident that once you discover the value, convenience, and quality I offer, you’ll be glad you gave me a try.

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