This article explains the mechanism through Mitsubishi UFJ's earnings figures and estimates, as bank interest margins are said to be widening after the Bank of Japan raised its policy rate to around 1.25%.
At the Monetary Policy Meeting on 18 September 2026, the Bank of Japan decided to set the uncollateralized overnight call rate at around 1.25%, marking further progress in the rising-interest-rate cycle. In tandem, banks' fund-related income increased, and particular attention was drawn to the widening gap between domestic lending rates and deposit rates.
In Mitsubishi UFJ Financial Group's results for the fiscal year ending March 2026, net income attributable to owners of the parent rose 30.3% year on year to ¥2.4272 trillion. The rising-interest-rate cycle is viewed as a factor that structurally strengthens banks' earnings power.
The figures in the earnings materials show that domestic lending yields rose from 1.04% in Q4 of FY2024 to 1.32% in Q4 of FY2025, while deposit and other yields rose from 0.11% to 0.26%. The lending-deposit yield spread widened from 0.93% to 1.05%, confirming how higher interest rates contribute to wider interest margins.
According to an estimate by the editorial team, assuming a change in the interest margin on an equal ¥1 billion in lending, the annual amount would be approximately ¥93 million in FY2024 and approximately ¥105 million in FY2025, an annual increase of approximately ¥12 million. Although an increase in fund-related income across Japan was indicated, some pointed out that the overall impact, including overseas operations and other factors, would be limited.
The positive effects and risks that higher interest rates bring to banks include increased unrealized losses on bonds, credit risk, and intensifying competition to attract deposits. Since the extent of interest-margin expansion and ROE trends differ among financial institutions, individual checks were described as important.