Will the main role of Japanese stocks switch from semiconductors to banks?! Following the rate hike effects, there is a rush of upward revisions! While the stock market continues to rise, the PBR is at around 1x, prompting attention even to major regional banks. [Earnings Summary]

All three companiesNet profit for all three companies has significantly increased in the mid-30% range compared to the same period last year.Moreover,Achieving a progress rate of about 70% to 80% compared to the traditional forecast.Mitsubishi UFJ has exceeded 1 trillion yen in interim net profit for the first time. All three companies have revised their full-year performance forecasts upwards,Expecting record high profits about 20% higher than the previous fiscal year.However,Given that the progress rate has increased from over 60% to over 70% compared to the revised figures, there is a possibility of further upward revision in the third quarter.It seems that there is a possibility of stock prices rising as well.
Against the backdrop of strong performance, all three companies have announced increased dividends and share buybacks. Mitsubishi UFJ, which had already conducted a 100 billion yen share buyback in the first quarter, has now announced a further large-scale addition of 300 billion yen.

The Bank of Japan's interest rate hike and the sale of policy-held shares are tailwinds.
All three companies have seen growth in their overseas operations, etc.The steady improvement of the solid foundation, not just temporary, has led to good performance.It can be said.
In addition, one of the new positive factors is the interest rate hike by the Bank of Japan. Following the removal of the negative interest rates in March, the BOJ raised the policy interest rate from around 0-0.1% to around 0.25% in July. In response to this,All three megabanks collectively raised their short-term prime rates by 0.15% from September 2.。
Regarding the impact of the Bank of Japan's interest rate hike,For Mizuho Financial Group, the removal of the negative interest rate in March is expected to have a positive impact of 40 billion yen for the full year, while the additional rate hike in July is expected to have a 60 billion yen boost.and It is expected that there will be a positive effect of about 50 billion yen for each 0.1% increase in the policy interest rate.On the other hand, regarding the rate cuts by the US Federal Reserve, they are expected to be offset by the accumulation of matured bond holdings, resulting in little to no impact.
Mitsubishi UFJ Financial Group also experienced a positive impact of 40 billion yen from the removal of the negative interest rate in March and a 60 billion yen boost from the additional rate hike in July.However,It is expected to have a positive effect of about 40 billion yen for each 0.1% increase in the policy interest rate.This forecast is based on the policy interest rate being raised by 0.1%.
Mitsubishi UFJ has raised interest rates.There was a profit increase of 40 billion yen in the first half.There was.An additional interest rate hike in July is expected to push up full-year earnings by another 25 billion yen.is expected.

The sale of policy holding shares also led to increased profits.
Mitsui Sumitomo Financial GroupSold 82 billion yen worth of policy holding shares in the first half.The original plan of selling 200 billion yen in 3 years was achieved in just 1.5 years. However,there are still unsold shares worth 101 billion yen for which buyers have already agreed.Therefore, a new plan has been set to sell 600 billion yen in the next 5 years until 2028.
Mitsubishi UFJsold 170 billion yen worth in the first half of the year.andThere are unsold shares worth 266 billion yen for which buyers have already agreed.Due to the smooth progress in sales, the sales target of 350 billion yen until 2026 has been raised to 700 billion yen, and the achievement target of less than 20% of consolidated net assets has been brought forward by 3 years aiming for 2026.

Regional banks as well as major banks are uniformly raising their financial estimates.
The Bank of Japan's interest rate hike effects are extending not only to mega banks but also to regional banks, which are benefiting from it in their interim earnings.
Regional banks have been moving away from the traditional "convoy system," with winners and losers becoming more prominent and further restructuring taking place. In this context,"Winning" major banks at the center have significantly expanded their performance.。

Is the focus of the domestic stock market shifting from semiconductor-related companies to banks?
The strong performance of banks is beginning to impact stock prices.
Comparing the quarterly fluctuations in the Nikkei average stock price, the average return rates of the 3 mega banks, 3 semiconductor stocks (Tokyo Electron Ltd. unsponsored ADR, Shin-Etsu Chemical Co., Ltd., Lasertec), and 3 major regional banks (Concordia Financial Group, Fukuoka Financial Group, Chiba Bank) in 3 sectors reveals noticeable changes.

In 2023, the three semiconductor stocks led the Nikkei average (mainly in January-March and October-December), but in 2024, the return rates of the three mega banks have surpassed those of the semiconductor stocks. Particularly since October of this year, the average of the three mega banks has risen by 25.6%, the average of the three major regional banks has risen by 10.0%, while the average of the three semiconductor stocks has fallen by 13.1%, resulting in a significant difference.The mega banks are boosting the Nikkei average.Is looking good.
The mega bank stocks are nearing their year-to-date highs, with Mizuho Financial Group hitting a temporary high of 3783 yen on November 15 to set a new year-to-date high.

The current stock prices of the 3 major megabanks are strong, furthermore.ROE is nearly 10%.The 'earning power' is increasing, but on the other hand,Even Mitsubishi UFJ, with the highest PBR, only slightly exceeds 1.Due to the increased dividends at the time of the interim earnings announcement,The annual dividend yield for all three companies exceeds 3.3%.It seems that there is still a sense of undervaluation in the three major banks.
Although inferior to the major banks in terms of ROE,Regional bank stocks with a pb range of 0.6 to 0.7 may have a stronger sense of undervaluation than major bank stocks.Since the significant drop in August's "Black Monday", except for Mebuki FG, stock prices have fallen well below the year-to-date highs set in June or July, with considerable room for recovery.Looking ahead, there seem to be more positive factors for bank stocks compared to semiconductor stocks that may be affected by the US-China trade friction, automobile stocks facing delays in EV adoption and Chinese competition, and trading companies' stocks influenced by commodity prices. Here, broadly speaking,。

Positive factors for bank stocks expected in the future
There seem to be many positive factors for bank stocks going forward, compared to semiconductor stocks that could be affected by US-China trade tensions, automobile stocks impacted by delays in EV adoption and Chinese rivals, and trading companies influenced by commodity prices. Here, broadly speakingIntroducing three positive factors:

1. Expectation of domestic interest rates increasing:
BOJ Governor Kuroda has indicated the intention to continue raising interest rates if the inflation outlook is realized, keeping the expectation of rising interest rates.

2. Anticipating expansive fiscal policy with the minority coalition:
Considering the political factors of the Liberal Democratic Party and Komeito being in a minority coalition situation, it seems unlikely to turn into a negative situation. It is necessary to consider the intention of other parties to form partial alliances in order to implement policies such as passing the budget. It is expected to become an expansive fiscal policy.In the short term,It has a positive effect on the macroeconomy, and it is expected that banking stocks, which are sensitive to the economic conditions, will also benefit.3. 'Trump 2.0'

It is strongly believed that the trend of former President Trump returning to power in the USA, known as 'Trump 2.0', will have a positive impact. Trump, who made his fortune in real estate, has strong connections in the finance industry, and U.S. financial stocks, including those considered as 'Trump stocks', are rising in price.
Financial businesses, unlike trade, do not have 'tariffs', and there is a high possibility that they will have a positive effect on mega-banks expanding their U.S. operations.The share prices of U.S. financial stocks, also considered 'Trump stocks', are rising.Financial businesses, unlike trade, do not have 'tariffs', and there is a high possibility that they will have a positive effect on mega-banks expanding their U.S. operations.
Due to the view that the US economy is progressing well under President Trump's leadership, etc.The ongoing high value of the dollar.For mega banks expanding overseas operations,it becomes an opportunity to benefit from the weak yen.The FRB is moving forward with interest rate cuts, but if President Trump's proposed
major tax cuts lead to a looser supply and demand for US bonds,there is also a possibility that market interest rates will not decrease significantly.