Moderate Upside for Japanese Banks Even As BOJ Stays at Zero; Decline in Loan Rates Has Bottomed

With the bad-loan problems for which they were once infamous now two decades in the past, Japanese bank shares have lagged at low valuations for many years due mainly to a single problem: the country's superlow and seemingly ever-declining interest rates. We think hopes for a future V-shaped reflationary rebound have long dissipated.