Pan-Asia Catalysts/Events, Quiddity Advisors

Travis Lundy

Pan-Asia Catalysts/Events

Quiddity Advisors

Event-Driven

Hokkoku Financial Holdings / Event-Driven

<ul>
<li>Japanese banks have been in a relative sweetspot for a couple of years. Higher rates, higher inflation, more FX volatility, better earnings, stronger buybacks. Cross-holding sales up but not spectacular.</li>
<li>The BOJ may raise rates but Trump Tariff retaliation/mitigation is a question. Elections the next two weeks and earnings the 2-3 weeks after that may keep things a question. </li>
<li>But buybacks should pick up. Lots announced in spring end at or before Q1 earnings. And I expect substantial new buybacks to be announced throughout the from Q1 results on.</li>
</ul>


Japanese banks have been in a relative sweetspot for a couple of years. Higher rates, higher inflation, more FX volatility, better earnings, stronger buybacks. Cross-holding sales up but not spectacular.
The BOJ may raise rates but Trump Tariff retaliation/mitigation is a question. Elections the next two weeks and earnings the 2-3 weeks after that may keep things a question. 
But buybacks should pick up. Lots announced in spring end at or before Q1 earnings. And I expect substantial new buybacks to be announced throughout the from Q1 results on.


[Japan Buybacks] - Japan Bank Metrics, Cross-Holdings and Banks Part 1

<ul>
<li>About 10 days ago I put out a piece saying H1 guidance trends were such that a lot more banks would upgrade guidance before results. </li>
<li>More than two dozen did and the average guidance uplift is VERY high at +59%. The median uplift vs guidance for 35 banks guiding/reporting is +39% for H1. </li>
<li>The big wave of bank earnings is today through late next week. Megas at the end. Stay long banks. Megas. Cheap regionals. </li>
</ul>


About 10 days ago I put out a piece saying H1 guidance trends were such that a lot more banks would upgrade guidance before results. 
More than two dozen did and the average guidance uplift is VERY high at +59%. The median uplift vs guidance for 35 banks guiding/reporting is +39% for H1. 
The big wave of bank earnings is today through late next week. Megas at the end. Stay long banks. Megas. Cheap regionals. 


Japan 2024 H1 Bank Guidance/Results - Better and Better

<ul>
<li>A Nikkei article Friday morning suggested that <a href="https://www.smartkarma.com/entities/shizuoka-financial-group-inc" target="_blank" data-smartkarma-citation="entities:36610:1" rel="noopener">Shizuoka Financial Group (5831 JP)</a> would integrate <a href="https://www.smartkarma.com/entities/bank-of-nagoya-ltd" target="_blank" data-smartkarma-citation="entities:6348:1" rel="noopener">Bank Of Nagoya (8522 JP)</a> in 2028 putting it into the top 5 regionals in Japan.</li>
<li>This comes a day after DHFG (7327 JP) and Gunma Bank (8334 JP) announced terms of their integration, following a year of discussions. Both Shizugin (+6.5%) and NagoyaBk (+15.1%) popped.</li>
<li>Expect a merger ratio to come in a year, with the merger coming in two. It's a long slog of "Guess The Ratio". Not worth a bet here.</li>
</ul>


A Nikkei article Friday morning suggested that Shizuoka Financial Group (5831 JP) would integrate Bank Of Nagoya (8522 JP) in 2028 putting it into the top 5 regionals in Japan.
This comes a day after DHFG (7327 JP) and Gunma Bank (8334 JP) announced terms of their integration, following a year of discussions. Both Shizugin (+6.5%) and NagoyaBk (+15.1%) popped.
Expect a merger ratio to come in a year, with the merger coming in two. It's a long slog of "Guess The Ratio". Not worth a bet here.


[Japan M&A] Shizuoka FG (5831) And Nagoya Bank (8522) Talk 2028 Merger; Don't Guess The Ratio Here

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 focus on key factors for these small cap banks such as equity shareholdings relative to market value, gearing to higher interest rates, and their exposure to bond holdings</li>
<li>We recommend buy ratings on Hyakugo and Awa two of the top three banks in our proprietary scorecard, primarily for their high level of equity shareholdings relative to market capitalization</li>
<li>Hyakugo is highly geared to higher rates and has low unrealized losses on bond positions, with Awa topping equity holdings to market value; Juroku, Aichi and Shiga are on watch</li>
</ul>


We focus on key factors for these small cap banks such as equity shareholdings relative to market value, gearing to higher interest rates, and their exposure to bond holdings
We recommend buy ratings on Hyakugo and Awa two of the top three banks in our proprietary scorecard, primarily for their high level of equity shareholdings relative to market capitalization
Hyakugo is highly geared to higher rates and has low unrealized losses on bond positions, with Awa topping equity holdings to market value; Juroku, Aichi and Shiga are on watch


Japanese Small Cap Banks – Hyakugo Bank (TSE:8368) And Awa Bank (TSE:8388) Stand Out

<ul>
<li>On 1 April 2024, <a href="https://www.smartkarma.com/entities/rakuten-group-inc" target="_blank" data-smartkarma-citation="entities:31:1" rel="noopener">Rakuten (4755 JP)</a> announced <a href="https://www.smartkarma.com/entities/rakuten-bank-ltd" target="_blank" data-smartkarma-citation="entities:35638:1" rel="noopener">Rakuten Bank (5838 JP)</a> and Rakuten would start talks aimed at creating a Fintech Group. I wrote <a href="https://www.smartkarma.com/insights/if-rakuten-4755-combines-financial-units-who-wins-and-how-well-it-s-complicated" target="_blank" rel="noopener">this</a>. Talks halted 6mos later.</li>
<li>Back then, word was Bank was dissatisfied with the ratios. As of 25 Feb 2026, they are starting talks again as Rakuten Group sees greater bank competition as rates rise.</li>
<li>It's a complicated structure but worth it for Rakuten Bank. Rakuten Bank customer and deposit growth continues higher than the bank industry as a whole. Deposit beta is a question.</li>
</ul>


On 1 April 2024, Rakuten (4755 JP) announced Rakuten Bank (5838 JP) and Rakuten would start talks aimed at creating a Fintech Group. I wrote this. Talks halted 6mos later.
Back then, word was Bank was dissatisfied with the ratios. As of 25 Feb 2026, they are starting talks again as Rakuten Group sees greater bank competition as rates rise.
It's a complicated structure but worth it for Rakuten Bank. Rakuten Bank customer and deposit growth continues higher than the bank industry as a whole. Deposit beta is a question.


[Japan Event] Rakuten Bank (5838) - New Fintech Holding Would Be Positive IF Done Right

Japan

The Bank of Nagoya, Ltd. is a Nagoya based regional bank.  The Bank provides banking services such as deposits, loans, trust funds, and bond issuance.  The Bank of Nagoya also provides financial services such as leasing and credit cards.

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Bank Of Nagoya (8522 JP)

[Japan Buybacks] - Japan Bank Metrics, Cross-Holdings and Banks Part 1

This is the first of several episodes regarding Japanese Banks. I want to make the size palatable and offer base data and framework with which to...

Travis Lundy

Japan 2024 H1 Bank Guidance/Results - Better and Better

This AM has a Nikkei headline saying Japan's 3 megabanks will report ¥2.0trln in Net Profit in H1. That compares to ¥894bn last year, and ¥3.3trln...

Travis Lundy

[Japan M&A] Shizuoka FG (5831) And Nagoya Bank (8522) Talk 2028 Merger; Don't Guess The Ratio Here

On Friday, Shizuoka FG and Bank of Nagoya announced talks towards an April 2028 merger. They both popped. BN more. They already have an Alliance....

Travis Lundy

Japanese Small Cap Banks – Hyakugo Bank (TSE:8368) And Awa Bank (TSE:8388) Stand Out

Small cap banks Hyakugo and Awa rated buys due to high equity shareholdings and gearing to higher rates, amongst other metrics; Juroku, Aichi, and...

Victor Galliano

[Japan Event] Rakuten Bank (5838) - New Fintech Holding Would Be Positive IF Done Right

Rakuten Bank is the worst-performing listed bank in Japan in the last 11+ months despite strong earnings growth. Everyone else's PER multiple is...

Travis Lundy

Price Gauge

52-week Range

Market Cap (USDm)

P/E

Dividend (Yield)

[Japan Buybacks] - Japan Bank Metrics, Cross-Holdings and Banks Part 1

This is the first of several episodes regarding Japanese Banks. I want to make the size palatable and offer base data and framework with which to...

Travis Lundy

Japan 2024 H1 Bank Guidance/Results - Better and Better

This AM has a Nikkei headline saying Japan's 3 megabanks will report ¥2.0trln in Net Profit in H1. That compares to ¥894bn last year, and ¥3.3trln...

Travis Lundy

[Japan M&A] Shizuoka FG (5831) And Nagoya Bank (8522) Talk 2028 Merger; Don't Guess The Ratio Here

On Friday, Shizuoka FG and Bank of Nagoya announced talks towards an April 2028 merger. They both popped. BN more. They already have an Alliance....

Travis Lundy

Japanese Small Cap Banks – Hyakugo Bank (TSE:8368) And Awa Bank (TSE:8388) Stand Out

​Small cap banks Hyakugo and Awa rated buys due to high equity shareholdings and gearing to higher rates, amongst other metrics; Juroku, Aichi, and...

Victor Galliano

[Japan Event] Rakuten Bank (5838) - New Fintech Holding Would Be Positive IF Done Right

Rakuten Bank is the worst-performing listed bank in Japan in the last 11+ months despite strong earnings growth. Everyone else's PER multiple is...

Travis Lundy

Small cap banks Hyakugo and Awa rated buys due to high equity shareholdings and gearing to higher rates, amongst other metrics; Juroku, Aichi, and...