In a historic shift, Japanese banks are competing for deposits as lending opportunities grow and consumers, seeking to beat inflation, shift savings into a booming stock market. The Bank of Japan's gradual rate hikes have raised deposit interest, but savers face inflation eating into their cash after decades of deflation.
The government has boosted the NISA tax-free stock investment program, expanded in 2024. Amounts invested through NISA more than doubled to 71 trillion yen ($445 billion) by end-2025. The benchmark index is at record highs, fueled by AI-driven investment and governance reforms.
"Investing through NISA is seen as safe, considered part of savings," said Yohei Fujiwara, 30, who works for an airline. He has invested in infrastructure and electric-related companies. Junya Oki, a 28-year-old hairdresser, started investing for retirement in S&P 500 and global index funds.
Banks are getting creative. Sumitomo Mitsui Financial Group CEO Toru Nakashima said they must be selective with lending. SMFG rolls out "Olive" accounts integrating securities and payments, and is forming a company with Neuberger Berman for domestic leveraged buyout debt. Mitsubishi UFJ launched "Emut." Mizuho issued dollar bonds.
Mizuho CEO Masahiro Kihara said a virtuous cycle of wages and prices has emerged. "A very good opportunity has arrived to enhance the competitiveness of Japanese industry," he said.