If interest rates rise, do bank stocks rise too? The 'three differences' to consider from the Bank of Japan report
I would prefer mortgage interest rates not to rise if possible. But would that be a tailwind for bank stocks?
Even with the same interest rate news, what you care about differs between household finances and investment targets. Moreover, within banks, there are factors like income from lending, interest paid to depositors, bonds held, and the risk that lent money will not be returned.
Can we just end the discussion with ‘it’s favorable for banks because interest rates are rising’?The document released by the Bank of Japan on October 23 is an entry point for thinking beyond that.
What did we learn from the new Bank of Japan report?
The Bank of Japan released the Financial System Report (October 2026 issue) on October 23, 2026. The analysis is based on information that was available as of the end of September 2026 in principle. It is not an announcement that a new interest rate hike was decided on October 23.
While the report confirms the stability of the financial system as a whole, it also examines the improvement in the fundamental profitability of financial institutions due to rising interest rates alongside the expansion of valuation losses on yen-denominated bonds. It also looks at the interest paid to collect deposits and the impact on borrowers.
Source: Bank of Japan ‘Financial System Report (October 2026 issue)’. The following is a summary for reading financial results using this document as an entry point.
The three differences to look for in the next financial results
The first is the difference between the interest received and the interest paid. Even if lending rates rise, you cannot grasp the impact on profits without also looking at the rise in deposit rates and changes in the balance of loans. Which one changed, when, and by how much? I read by aligning the periods to be compared.
The second is the difference between bond valuation losses and the profit or loss recorded in the financial results. Rather than rushing to a conclusion based solely on the balance of valuation losses, I want to verify the holding purpose, remaining maturity, whether they were sold, and the relationship with capital.
The third is the difference between the increase in earnings and the increase in credit costs. Even if interest income has increased, if the costs to prepare for loan defaults also increase, the appearance of the final profit will change. I also want to confirm whether this is a temporary factor or if the condition of the borrowers is changing.
To follow these three points using actual documents, I will introduce the content I have published in a way that allows you to trace it from what you want to see.
YouTube | Following ‘Record high profits, but?’ in Mitsubishi UFJ’s financial results
What I chose this time is [Mitsubishi UFJ (8306)] Q1 net profit up 48.2% but 8.0% lower than the high | What is weighing it down?.
I look at net interest income and lending, as well as investment profit/loss under the equity method, credit costs, and full-year targets in order. For those who do not want to settle for the phrase ‘it was a good financial result’ and want to follow which numbers grew and where to check next time.
This is a past case study published on August 22, 2026. The target financial results are for the first quarter of the fiscal year ending March 2027 (April-June 2026). The stock price comparison in the video title is based on the high on July 27 and the closing price on August 21, and is not a figure indicating the decline rate as of October.
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Udemy | Untangling the order of confusion in bank financial results one by one
Bank stocks are dangerous if you buy them based only on interest rates | Reading interest margins, credit costs, and bond profit/loss from financial results breaks down bank earnings and proceeds to check credit costs, securities, equity capital, and shareholder returns.
It is structured to create a one-page analysis memo at the end, rather than just memorizing terms. You can also organize the premises for comparison when you are confused about whether ‘megabanks and regional banks should be compared using the same indicators.’ Since the bank names and figures in the lecture are fictional examples for learning, apply the latest IR materials to actual companies when reading.
Kindle | Before looking at the company, I also want to think about interest rates on the household side
When researching bank earnings, I also become concerned about those borrowing home loans. So this time, I chose Japanese Stock Strategy for 30-somethings to Increase Assets While Carrying a Home Loan.
This is a book that deals with the allocation of loan repayments, educational expenses, living defense funds, and investments. Before increasing the number of stocks you hold, I hope this serves as an opportunity to think about “what money is this for?” and “is this a household budget that can be maintained even if the repayment burden changes?”
Stock prices and dividends fluctuate. You cannot assume that the profits from bank stocks will definitely cover the increased burden of a loan. I would like to think about household preparations and evaluating investment targets separately.
Kabu-Yomi | Checking the original source for companies that caught your interest in the commentary
After seeing someone else’s commentary, if you feel like opening the materials yourself, go to Kabu-Yomi. You can view trends in performance and dividends, track differences from the previous year in securities reports and semi-annual reports, and proceed to the original text from the parts that interest you.
If you read with the question “What has changed this year?” in mind, it becomes easier to get into long documents. Please use it while supplementing bank-specific interest margins and credit costs with financial results briefing materials, and checking the target periods of the included documents. You can start by trying the public samples that do not require registration.
Instagram | Grasping the difference between profit growth and dividend increases through diagrams
For those whose hands stop reading when numbers are lined up, Instagram diagrams can be an entry point. These posts separate terms and numbers that look similar, such as profit growth and dividend increases, and connect them to what to check in the next financial results.
First, look at one image and unravel one term you thought you understood. Please use this as a short detour before opening full-length videos or books.
Open Instagram profile directly
Threads | From familiar questions to company numbers
Threads features short posts that connect perspectives from stories about shops and products you use daily to customer numbers, unit prices, inventory, profits, and cash.
Even if you don’t read from the beginning of a financial statement right away, you can have the question, “What has changed at this shop compared to before?” Please take a look when you want to find a way to start reading like that.
X | When you see numbers, also keep the source and comparison conditions
X summarizes financial results numbers, comparison conditions, sources, and what to check next in a concise manner. If you find a number that interests you, I recommend using it in a way that also tracks “what it is being compared to” and “which document to return to.”
On days with a lot of news, it is difficult to remember all the information you read. I would be happy if you could also use it as a place to leave one question about your own stocks to check later.
First, one line: “What caused this bank’s profit to increase?”
Before trying to guess the direction of interest rates, open one financial report of the bank you are watching. Loans and deposits, bonds, and credit costs. After checking the changes in each, try to summarize the “reason why profits increased” in one line in your own words.
Whether you watch the practical examples in videos, memorize the sequence in courses, or check your household finances with books, it is fine to start from anywhere. Please just open one thing that interests you.
Materials and verification date
This article was created as an October 25th piece based on public information verified as of October 24, 2026. The Bank of Japan report was published on October 23, and the information standard is generally as of the end of September. This differs from the timing of the financial results and stock prices covered in the videos.
・Bank of Japan: Financial System Report (October 2026 issue)
・Mitsubishi UFJ: FY2026 First Quarter Financial Results Highlights (Published August 3)
・Mitsubishi UFJ: First Quarter Financial Results for the Fiscal Year Ending March 31, 2027 (Disclosed August 3, interim review completed version August 6)
This article introduces how to read public documents. It does not guarantee the trading of specific stocks or future profits.
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