TOKYO, Rakuten Bank Ltd is likely to refrain from actively purchasing Japanese government bonds (JGBs) until the Bank of Japan (BOJ) delivers further interest rate hikes, reflecting cautious sentiment over policy uncertainty.
The online lender, part of e-commerce giant Rakuten Group, has seen deposits nearly triple in five years to ¥11.7 trillion (US$79 billion) as more customers turn to its digital services. While still small compared with Japan’s megabanks, the growing cash pool is prompting the bank to seek new investments.
For now, JGBs remain unattractive due to market volatility. Rakuten Bank avoided fresh JGB purchases in the first half of 2025, holding ¥617 billion worth of bonds to maturity as of June.
“We won’t pursue aggressive JGB buying until we see at least one or two more rate hikes,” CEO Tomotaka Torin said. “Our priority is running operations that can withstand rising yields.”
Japanese bonds have been under pressure as the BOJ gradually shifts from negative rates, pushing yields higher—especially on longer maturities. Analysts increasingly expect another BOJ hike by April, with swaps pricing in a 25-basis-point increase.
Torin added that the bank is taking a similar approach to mortgages, avoiding ultra-low-rate loans while yields climb. “Once margins normalize after rates rise, that will be the time to accelerate lending,” he said.
Rakuten Bank’s loan book, including mortgages and credit card financing, stood at ¥4.76 trillion in June, up 12% year-on-year.
Financial services, including Rakuten Bank, are becoming a key profit driver for Rakuten Group, contributing more than half of group EBITDA.
