On 7/13/26, the Nikkei market‑cap rankings saw a major shift at the top: Mitsubishi UFJ (8306) surpassed Kioxia (285A) and Toyota (7203) to become No. 1 for the first time, reaching ¥42 trillion in market cap.

This marks a clear inflection point after a long period dominated by AI and semiconductor gains. I don’t believe the AI trade is finished — companies positioned for long‑term AI and Physical AI infrastructure should continue to compound — but it is no longer optimal to overweight AI and semiconductors.

Bank earnings, meanwhile, are expanding meaningfully. The summer Shikiho projects 42 banks and banking groups will post record profits this fiscal year. With 83 listed banks, more than half are expected to hit all‑time highs.

Two drivers explain the strength:

1) Higher BOJ terminal‑rate expectations. The BOJ lifted its policy rate by 0.25% in June to “around 1.00%.” A year ago, investors expected a terminal rate near 1%. Now expectations have shifted to 1.75–2%, supporting bank valuations.

2) Robust loan growth. BOJ data shows domestic bank lending rising around 6%. Ex‑COVID emergency lending, Japan hasn’t seen more than 4% loan growth in about two decades. Corporate demand for capex, MBOs, and LBOs is strong, and mortgages remain stable.

The challenge is identifying the most compelling name among the 42 regional banks projected to post record net profits.

Among major banks, analysts currently favor Mizuho (8411), supported by operational reforms and its 2023 acquisition of a large M&A advisory firm.

Regionals are broadly executing well — expanding into investment advisory, succession‑related M&A support for SMEs, and forming alliances to share IT, security, and client networks. With industry‑wide tailwinds already priced in, the key is finding banks with incremental catalysts.

My favorite has been Bank of Nagoya (8522), which benefits from lending tied to Toyota affiliates and announced a capital/managerial alliance on April 28. Its expected 13.8% year‑on‑year profit growth ranks 17th among the 42 banks.

At the top is CCI Group (7381), with 34.6% year‑on‑year profit growth (market cap ¥245bn).

Today, however, I want to highlight a different name.

If you’d like to know which one, just share the email address you prefer and I’ll add you to the trial distribution list at no cost to you!

#regionalbankstocks #standout #Japanesebanks #Japanesestock