Investment Rating - The report rates Mizuho as Overweight (OW), Mitsubishi UFJ Financial Group (MUFG) as Neutral (N), and Sumitomo Mitsui Financial Group (SMFG) as Neutral (N) [2][3][6]. Core Insights - Mizuho is projected to be the only mega bank with a return on equity (ROE) exceeding 11% [3][6]. - The report indicates a downgrade for Chongqing Rural Commercial Bank (CRCB) to Neutral due to a decline in dividend attractiveness following a 46% year-to-date rally [11]. - A survey of over 500 investors at the Asia Credit Conference suggests a majority expect the US 10-year yield to exceed 4% by the end of 2025 [15]. Detailed Highlights - Mizuho is the only mega bank forecasted to achieve an ROE above 11%, with a CET1 target of 10% and plans for accelerated buybacks [3][6]. - The Japan Consumer Finance sector is experiencing rising revolving credit card interest rates, now reaching the regulatory ceiling of 18%, while demand remains resilient despite inflation [6][7]. - The dividend yield for CRCB is now 4.3%, which is less attractive compared to peers, following its inclusion in the CSI300 Index [11][12]. Sector Key Newsflow - The report highlights that major players in Japan's consumer finance are raising interest rates on revolving credit cards to the regulatory limit, with Credit Saison leading the way [7][8]. - The Bank of Japan (BoJ) is expected to continue its quantitative tightening (QT) at a pace of -Y400 billion per quarter beyond Q2 2026, with potential adjustments based on market conditions [6][7]. - The report notes that the overall dividend play in the banking sector is becoming less attractive, particularly for CRCB, as improvements are already priced in [11].