Mitsubishi UFJ Financial Group (MUFG) saw its total market capitalization on the Tokyo stock market reach ¥42 trillion on July 13, making it the largest Japanese company. The last time a financial institution occupied this position was in 1986, by the former Sumitomo Bank, about 40 years ago. The company surpassed memory-chip giant Kioxia Holdings and Toyota.

The stock closed at ¥3,541 that day, a record high since listing. The growth expectations are driven by rising interest rates in Japan, which increase interest income from loans, and investment funds have been flowing in accordingly.

A 28-year-old individual investor, Kenichi Nishimoto, expressed optimism. He said that compared with the high valuations and correction risks of AI and semiconductor stocks, he prefers MUFG’s ability to reward shareholders through rising rates. He traveled by Shinkansen to Tokyo to attend the shareholders’ meeting in June.

Japan’s financial sector has long struggled under ultra-low interest rates since the bursting of the bubble economy. Major banks underwent non-performing loan resolutions and restructurings backed by public funds. MUFG itself was formed in 2005 through the merger of Mitsubishi Tokyo Financial Group and UFJ Holdings, which traced its roots to the former Sanwa Bank and Tokai Bank.

Following the end of negative interest rates in Japan in 2024, the market’s view of the bank’s shares as undervalued has gradually dissipated. Its profit structure has also changed: as of fiscal 2025, the United States and Asia contributed over 50% of core business profits, meaning overseas operations accounted for more than half. Income from its investment in Morgan Stanley in the U.S. makes up 20% to 30% of the group’s overall profit, and M&A activity in Asia is active.

Nana Otsuki, senior fellow at Pictet Japan, noted that the revival of Japanese bank stocks stems from strong domestic corporate funding demand coupled with growth through overseas earnings, effectively overcoming the “lost 30 years.”

However, gaps remain on the global stage. Based on the G-SIB classification, MUFG ranked eighth in the world by market value on the same day, trailing U.S. peers like JPMorgan Chase. The company acknowledges that when the rate-hike cycle stops, the true test of its management value will begin, and it is preparing for future financial services built on artificial intelligence.