The Japanese banking industry saw its investment rating raised by Morgan Stanley from in-line to attractive based on the global economic recovery and the sustainable improvement seen in the Japanese economy that lowered the outlook for credit costs.

This upgrade came in line with the brokerage's bull-case forecast. Morgan Stanley said in a report released yesterday that, if credit costs continue to drop in line with its bull-case assumptions, a 10 percent return on equity should be possible for banks.

Meanwhile Sumitomo Mitsui Financial Group Inc. saw its 12-month share price estimate being raised to 4,340 yen from 3,650 yen, while Sumitomo Trust and Banking Co. saw its 12-month share price estimate being raised to 788 yen from 700 yen, pushing both their shares up more than 1% during today.