Financials & FinTech research, Galliano’s Financials Research

Victor Galliano

Financials & FinTech research

Financials & FinTech, EM & Developed Markets

Galliano’s Financials Research

Galliano's Financials Research provides fundamental research in Emerging Markets financials, including FinTech, as well as financials in select Developed Markets.

The investment style applied is generally value oriented, although Growth At Reasonable Price (GARP) strategies can also be used where appropriate. 

Our investment research approach aim is often contrarian, looking to capitalise on overly sceptical or optimistic consensus views. In terms of valuation techniques, the focus is on PBV ratio to ROE, PE multiples and dividend yield, as well as the application of PEG ratios and, where appropriate, Sum of the Parts (SOTP) valuations.

Equity Bottom-Up

<ul>
<li>We update our proprietary scorecard and many of our charts based on the latest data; despite the recent lack of BoJ rate hikes, interest rate spreads are widening</li>
<li>The JGB yield curve has continued to steepen, which is constructive for Japanese banks; in addition, market lending rates to June continue to rise faster than deposit rates</li>
<li>We stick with our focus on two core attributes; gearing to higher interest rates and cross-holdings to market capitalization keeping Resona, Mizuho, Shizuoka and Kyoto on our list of buys</li>
</ul>


We update our proprietary scorecard and many of our charts based on the latest data; despite the recent lack of BoJ rate hikes, interest rate spreads are widening
The JGB yield curve has continued to steepen, which is constructive for Japanese banks; in addition, market lending rates to June continue to rise faster than deposit rates
We stick with our focus on two core attributes; gearing to higher interest rates and cross-holdings to market capitalization keeping Resona, Mizuho, Shizuoka and Kyoto on our list of buys


Japanese Big Cap Banks – Stick with Our Key Positive Picks

<ul>
<li>The Bank of Japan left the short-term interest rate unchanged, but the governor stated that the tapering of JGB buying will continue, albeit with an eye on market stability</li>
<li>This implies that the JGB yield curve is likely to continue steepening going forward, which is constructive for Japanese banks; in addition, market lending rates to April continue to rise</li>
<li>We reassert buys on Resona, Mizuho, Shizuoka and Kyoto aided by our proprietary scorecard, and based on two core attributes; gearing to higher interest rates and cross-holdings to market capitalization</li>
</ul>


The Bank of Japan left the short-term interest rate unchanged, but the governor stated that the tapering of JGB buying will continue, albeit with an eye on market stability
This implies that the JGB yield curve is likely to continue steepening going forward, which is constructive for Japanese banks; in addition, market lending rates to April continue to rise
We reassert buys on Resona, Mizuho, Shizuoka and Kyoto aided by our proprietary scorecard, and based on two core attributes; gearing to higher interest rates and cross-holdings to market capitalization


Japanese Big Cap Banks – Key Fundamental Tailwinds Drive Our Positive Picks

<ul>
<li>The Japanese banks’ share prices have barely moved following the Bank of Japan’s exit from negative interest rates; is it largely discounted or does the continued accommodative stance instil caution? </li>
<li>Japanese banks will benefit from 100% of their deposits at the BoJ earning 0.1%, as opposed to 40% of bank deposits which was the case up to the 20th March</li>
<li>We believe our positive recommendations are all geared into higher domestic interest rates; we highlight Resona, Mizuho and Suruga in this report for their high cash and at bank balances</li>
</ul>


The Japanese banks’ share prices have barely moved following the Bank of Japan’s exit from negative interest rates; is it largely discounted or does the continued accommodative stance instil caution? 
Japanese banks will benefit from 100% of their deposits at the BoJ earning 0.1%, as opposed to 40% of bank deposits which was the case up to the 20th March
We believe our positive recommendations are all geared into higher domestic interest rates; we highlight Resona, Mizuho and Suruga in this report for their high cash and at bank balances


Japanese Banks – Cash Balances and the BoJ’s Negative Interest Rate Policy Exit

<ul>
<li>Our key themes for Japanese banks in 2026 are top line growth due to a hawkish BoJ and the potential for shareholder value creation through cross-holding disposals</li>
<li>In the big caps, we stick with Resona Holdings as our top pick for its strong gearing to rising interest rates and its relatively high equity cross-holdings to market value</li>
<li>Our top mid-caps picks are Iyogin Holdings and Hokuhoku, both of which are well positioned to benefit from higher interest rates and also have healthy cross-holdings relative to market value</li>
</ul>


Our key themes for Japanese banks in 2026 are top line growth due to a hawkish BoJ and the potential for shareholder value creation through cross-holding disposals
In the big caps, we stick with Resona Holdings as our top pick for its strong gearing to rising interest rates and its relatively high equity cross-holdings to market value
Our top mid-caps picks are Iyogin Holdings and Hokuhoku, both of which are well positioned to benefit from higher interest rates and also have healthy cross-holdings relative to market value


Japanese Banks – 2026 High Conviction Ideas

<ul>
<li>BoJ’s lower GDP growth forecasts add weight to the rate hike deferral; we focus on big-cap banks that have more in the tank than high gearing to rising benchmark rates</li>
<li>An increasingly important factor, in our view, is the share of strategic equity holdings relative to market capitalization; Kyoto is top on this metric, followed by Shizuoka, Resona and Mizuho</li>
<li>With the lack of the rate hike catalyst in the near term, we remove SMFG from the buy list and would look to lighten holdings selectively in other Japanese banks</li>
</ul>


BoJ’s lower GDP growth forecasts add weight to the rate hike deferral; we focus on big-cap banks that have more in the tank than high gearing to rising benchmark rates
An increasingly important factor, in our view, is the share of strategic equity holdings relative to market capitalization; Kyoto is top on this metric, followed by Shizuoka, Resona and Mizuho
With the lack of the rate hike catalyst in the near term, we remove SMFG from the buy list and would look to lighten holdings selectively in other Japanese banks


Japanese Big Cap Banks – Focusing on Strategic Equity Holdings as BoJ Likely to Defer Rate Hikes

Japan

Resona Holdings, Inc. operates as a holding company. The Company, through its subsidiaries, provides financial services, including banking, trust operations, and credit card services. Resona Holdings also offers consulting services related to personal loans, asset management, and asset succession.

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Resona Holdings (8308 JP)

Japanese Big Cap Banks – Stick with Our Key Positive Picks

Despite the recent lack of BoJ rate hikes, JGB yield curve steepening benefits Japanese banks, focus remains on gearing to higher rates and equity...

Victor Galliano

Japanese Big Cap Banks – Key Fundamental Tailwinds Drive Our Positive Picks

Japanese market interest rates continue to rise from low levels. Our scorecard justifies buy recommendations for Resona, Mizuho, and largely,...

Victor Galliano

Japanese Banks – Cash Balances and the BoJ’s Negative Interest Rate Policy Exit

Japanese banks' share prices mark time post-BoJ's exit from negative interest rates, due to BoJ'S continued accommodative stance. We highlight...

Victor Galliano

Japanese Banks – 2026 High Conviction Ideas

Japanese banks in 2026 should see top line growth from hawkish BoJ, shareholder value creation through cross-holding disposals; Resona top pick...

Victor Galliano

Japanese Big Cap Banks – Focusing on Strategic Equity Holdings as BoJ Likely to Defer Rate Hikes

Focusing on big-cap banks that have more in the tank than high gearing to rising interest rates; Kyoto is top in terms of share of equity holdings...

Victor Galliano

Price Gauge

52-week Range

Market Cap (USDm)

P/E

Dividend (Yield)

Japanese Big Cap Banks – Stick with Our Key Positive Picks

Despite the recent lack of BoJ rate hikes, JGB yield curve steepening benefits Japanese banks, focus remains on gearing to higher rates and equity...

Victor Galliano

Japanese Big Cap Banks – Key Fundamental Tailwinds Drive Our Positive Picks

Japanese market interest rates continue to rise from low levels. Our scorecard justifies buy recommendations for Resona, Mizuho, and largely,...

Victor Galliano

Japanese Banks – Cash Balances and the BoJ’s Negative Interest Rate Policy Exit

​Japanese banks' share prices mark time post-BoJ's exit from negative interest rates, due to BoJ'S continued accommodative stance. We highlight...

Victor Galliano

Japanese Banks – 2026 High Conviction Ideas

​Japanese banks in 2026 should see top line growth from hawkish BoJ, shareholder value creation through cross-holding disposals; Resona top pick...

Victor Galliano

Japanese Big Cap Banks – Focusing on Strategic Equity Holdings as BoJ Likely to Defer Rate Hikes

Focusing on big-cap banks that have more in the tank than high gearing to rising interest rates; Kyoto is top in terms of share of equity holdings...

Victor Galliano

Japanese banks' share prices mark time post-BoJ's exit from negative interest rates, due to BoJ'S continued accommodative stance. We highlight...

Japanese banks in 2026 should see top line growth from hawkish BoJ, shareholder value creation through cross-holding disposals; Resona top pick...