Japan banks weigh first rate hikes on ordinary deposits in 17 years

Mizuho Financial Group logo is seen at the company’s headquarters in Tokyo, Japan, Aug. 20, 2018. REUTERS/Toru Hanai/File photo

TOKYO — Mizuho Financial Group said on Tuesday it plans to raise interest rates on ordinary yen deposits for the first time in 17 years after the Bank of Japan ended eight years of its unorthodox negative interest rate policy.

Bigger domestic rival Sumitomo Mitsui Financial Group also said it is considering a rate hike on ordinary yen deposits.

Both would be the first such increases since February 2007.

READ: Bank of Japan ends negative rates, closing era of radical policy

“The end to the negative rate policy is positive for the banking group’s business as it helps improve our interest income,” Masahiro Kihara, the president and CEO of Mizuho Financial Group, said in a statement.

“The importance of keeping deposits as a funding source of our businesses is growing bigger,” he added.

Mizuho, Sumitomo Mitsui and other major Japanese banks raised interest rates on long-term deposits late last year after the central bank loosened its grip on long-term interest rates in October. It was their first long-term rate hike since 2011.