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Yutaka Tanaka
Feb 11, 2023 12:07AM ET
Everyone shouts rate hike rate hike. However, few people who buy and sell bank stocks realize that the ideal interest rate environment for banks has already been created . As a matter of fact, 1) Banks will not be profitable if interest rates rise uniformly from short-term to long-term. In the United States today, the long-term and short-term interest rate spreads have become inverted, which is the worst in terms of bank profits. 2) Since banks "raise funds in the short term and lend out in the long term," they will be profitable if the long-term interest rate minus the short-term interest rate expands. "The absolute level of interest rates is really irrelevant to earnings." 3) Currently, YCC has been suppressed for 10 years, but other tenors are steadily rising, and it is impossible for the Bank of Japan to YCC the entire tenor. The 10Y YCC maintenance alone is on the verge of bankruptcy. “The healthy rise in the current yield curve will certainly be reflected in bank earnings this year.” The fact that the BOJ ON interest rate is negative is a phenomenon that is conversely welcomed from the perspective of the expansion of the long-term and short-term interest rate differentials. Of course, if the YCC is lifted, the 10-year zone will rise and contribute to further earnings. Ueda said he would continue easing. Negative interest rate of ON, please continue more and more. Cheaper procurement is better. For the long-term loan, make 10-year YCC a 10-story building until the holding ratio of the Bank of Japan's outstanding balance of government bonds reaches 1000%. because someday it will go bankrupt. On the other hand, banks will steadily improve their profits under the positive yield. In a sense, banks should fear an inverted yield curve if monetary easing ends. This is because the long-term and short-term interest rate differentials will disappear, or it will become an inverse spread.
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