The Japanese Bankers Association warned on September 17 that rising government bond yields may trigger writedowns and realized losses, threatening the sector’s record profits. The 10-year Japanese government bond yield has climbed to 3%, a level not seen in three decades, driven by fiscal concerns and expectations that the Bank of Japan will continue raising its policy rate, projected to reach roughly 1.25% by mid-2026. Japan’s three largest megabanks, Mitsubishi UFJ Financial Group, Sumitomo Mitsui Financial Group, and Mizuho Financial Group, reported combined net income of approximately 5.26 trillion yen for the fiscal year ending March 2026, a 34% year-over-year increase, fueled by wider lending margins. Japan’s Financial Services Agency stated that aggregate paper losses across the banking sector remain at a manageable level for now.
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