Mitsubishi UFJ Financial Group NYSE:MUFG, Japan's biggest bank, has become the country's most valuable listed company after its shares climbed 2.3% to a record 3,541 on Monday. The rally lifted MUFG's market capitalization to 42 trillion, or about $259 billion, marking the first time a bank has held Japan's top stock-market position since the current three-megabank groups were established. MUFG's valuation moved above Toyota Motor Corp.'s roughly 41 trillion and Kioxia Holdings Corp.'s 36.7 trillion, according to data compiled by Bloomberg.
The advance also extended across Japan's banking sector, with Sumitomo Mitsui Financial Group, another major Japanese banking group, rising 1.6% to an all-time high. Japanese bank shares have strengthened since the Bank of Japan ended its negative interest-rate policy in March 2024, allowing lenders to charge more for loans. This shift contrasts with the pressure banks faced following the collapse of Japan's bubble economy in the early 1990s, when bad debts and aggressive monetary easing made it difficult to raise lending rates.
The Bank of Japan has increased rates four more times since its first move in 2024, bringing the policy rate to 1%. Higher rates may support bank earnings by widening the gap between lending and deposit rates, potentially improving profitability across the sector. MUFG estimates that every additional 0.25-percentage-point increase in interest rates could eventually add 180 billion annually to its net interest income, making Japan's changing rate environment an important potential earnings driver for the bank.