Who is likely to benefit when interest rates rise? | Nikkei TEST Prep: Quick Question #004
In September 2026, the Bank of Japan raised its policy interest rate to approximately 1.25%.
So,
generally speaking, which of the following is most likely to be positively affected in terms of earnings by an interest rate hike?
Which one?
① People with variable-rate mortgages
② Companies borrowing business funds from financial institutions
③ Banks that expect improved margins due to rising lending rates
④ People who already hold fixed-rate government bonds
↓
↓
↓
【Answer】
③ Banks that expect improved margins due to rising lending rates
Banks lend money collected from deposits and other sources to companies and individuals.
If lending rates rise due to an interest rate hike,
and the ‘loan-deposit margin’—the spread between lending and deposit rates—improves,
it is likely to lead to improved bank earnings.
The Japan Research Institute also
analyzes that the profitability of regional banks’ loan-deposit businesses has improved
along with rising interest rates.
On the other hand, those borrowing money, such as for mortgages or business funds,
may face an increased burden of interest payments due to rising interest rates.
Estimates by the Mizuho Research & Technologies also
show the impact on ordinary deposit rates, variable mortgage rates,
and corporate interest-bearing debt rates,
assuming an additional rate hike from 1.00% to 1.25%.
What to keep in mind here is that
‘interest rate hike’ does not necessarily mean ‘banks will always make a profit.’
Rising deposit rates, valuation losses on bonds,
and credit costs also affect bank earnings,
so the actual impact varies by bank.
In other words, when you see news about an interest rate hike,
whether you are on the ‘borrowing side’
or the ‘lending side’
is a perspective that makes it easier to organize the impact.
In this Bank of Japan decision,
a policy was decided to encourage the
uncollateralized overnight call rate to hover around 1.25%,
which has been applied since September 24.
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Reference Materials
・Bank of Japan, “Regarding the Change in the Guideline for Money Market Operations” (September 18, 2026)
・Japan Research Institute, “Outlook for the Business Environment Surrounding Regional Banks in 2026: Resumption of Rate Hikes and Strengthening Regional Financial Capabilities”
・Mizuho Research & Technologies, “Impact of the September Additional Rate Hike on Households and Businesses”