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>The expectations for the mid-June BoJ monetary policy meeting are for a 25bps rate hike to 1.00%, given sustained wage growth and generally increasing inflation risks</li>
<li>Valuations are recovering from the Iran war lows, and bank returns are improving but we expect market turbulence going forward and we lock in some gains</li>
<li>We remove Shizuoka from the buy list, among our bigger caps universe, keeping Resona Holdings on the buy list along with Yokohama Financial and Kyoto Financial</li>
</ul>


The expectations for the mid-June BoJ monetary policy meeting are for a 25bps rate hike to 1.00%, given sustained wage growth and generally increasing inflation risks
Valuations are recovering from the Iran war lows, and bank returns are improving but we expect market turbulence going forward and we lock in some gains
We remove Shizuoka from the buy list, among our bigger caps universe, keeping Resona Holdings on the buy list along with Yokohama Financial and Kyoto Financial


Japanese Big Cap Banks – Taking Profits on Shizuoka

<ul>
<li>Following select Japanese bank visits, we reiterate our buys on Resona Holdings, Yokohama Financial and Shizuoka Financial</li>
<li>We are neutral on the Japanese digital banks, although Rakuten Bank is our preferred neutral of the three</li>
<li>The Iran conflict creates increased volatility in markets; although the timing may be in question, we believe that the BoJ remains on the “up escalator” for policy rates</li>
</ul>


Following select Japanese bank visits, we reiterate our buys on Resona Holdings, Yokohama Financial and Shizuoka Financial
We are neutral on the Japanese digital banks, although Rakuten Bank is our preferred neutral of the three
The Iran conflict creates increased volatility in markets; although the timing may be in question, we believe that the BoJ remains on the “up escalator” for policy rates


Japanese Banks – Update on Bigger Cap and Digital Banks

Research and consultancy, Tabbush Report

Daniel Tabbush

Research and consultancy

Tabbush Report

We provide research and consultancy on Asian banks. Our focus is on what we call “Asian bank research, without the noise.” We are interested in the most critical swing-factors for banks, the NPL and credit cycle, and where we believe there is a gap between perception and reality. We often focus on the less studied components of bank financial statements.  Our research is highly thematic, sometimes examining unlisted banks and companies as a window on mainstream banks. 

Being independent allows us to look at smaller banks, often overlooked by others. Analysis of BIS bank guidelines in the context of Asia, is also a focal point, while we also analyze global banks operating in the region. We use what we believe is the most comprehensive, reliable financials database, SNL Financial. S&P Capital IQ augments our database, with corporate data and CEIC, with economics. 

Asian bank research, without the noise.

Thematic (Sector/Industry)

<ul>
<li>Comments today from BOJ suggest we are nearing the end of negative interest rates in Japan, which can mean an immediate boost to net interest income for Japan's banks</li>
<li>Many banks have cash and deposits with the BOJ at high levels, where yields are negative, and this can be the first big positive delta to bank's income</li>
<li>Credit metrics in Japan are improving and loan growth is accelerating, this is generally at odds with other major banking systems, US, UK, Singapore</li>
</ul>


Comments today from BOJ suggest we are nearing the end of negative interest rates in Japan, which can mean an immediate boost to net interest income for Japan's banks
Many banks have cash and deposits with the BOJ at high levels, where yields are negative, and this can be the first big positive delta to bank's income
Credit metrics in Japan are improving and loan growth is accelerating, this is generally at odds with other major banking systems, US, UK, Singapore


Japan Banks - Near End of Negative Rates BOJ, Deposits with BOJ to See Big Yield Rise, Not Only JGBs

<ul>
<li>We look at which Japan banks have the most cash which can see a major boost to returns. </li>
<li>Banks with lower margins can see a higher net interest income pick up from rising rates. </li>
<li>Loan growth in Japan has been relatively strong, supportive of rising rates from BOJ.</li>
</ul>


We look at which Japan banks have the most cash which can see a major boost to returns. 
Banks with lower margins can see a higher net interest income pick up from rising rates. 
Loan growth in Japan has been relatively strong, supportive of rising rates from BOJ.


Japan - Rising Rates: Focus On Banks With High Cash And Low Margins

<ul>
<li>There is no easy way to gather duration data of securities held by Japan's regional banks</li>
<li>In IR material of the largest 8 regional banks, Resona and Chiba stand out, at opposite ends</li>
<li>On blunt equity/assets SBI Sumishin Net Bank stands out at only 1.5%</li>
</ul>


There is no easy way to gather duration data of securities held by Japan's regional banks
In IR material of the largest 8 regional banks, Resona and Chiba stand out, at opposite ends
On blunt equity/assets SBI Sumishin Net Bank stands out at only 1.5%


Resona & Chiba - Duration Longest at Resona, Shortest at Chiba, Implications for YCC Relief

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 – Taking Profits on Shizuoka

Expecting a 25bps rate hike at June BoJ meeting, valuations recovering post-Iran war lows; we expect turbulent markets, so we remove Shizuoka from...

Victor Galliano

Japanese Banks – Update on Bigger Cap and Digital Banks

Reiterating buys on Resona, Yokohama and Shizuoka post selective bank visits, whilst being neutral on digital banks; amid Iran conflict...

Victor Galliano

Japan Banks - Near End of Negative Rates BOJ, Deposits with BOJ to See Big Yield Rise, Not Only JGBs

The BOJ finally raised short term rates today from 25bps to 50bps. This is an historic rate rise. Japan's banks can see better income from JGBs,...

Daniel Tabbush

Japan - Rising Rates: Focus On Banks With High Cash And Low Margins

BOJ to meet 23-24 Jan and likely to raise rates possibly by doubling short-term rates, from 0.25% to 0.50%. There are important implications for...

Daniel Tabbush

Resona & Chiba - Duration Longest at Resona, Shortest at Chiba, Implications for YCC Relief

With rising yields on 10 year JGBs and on 1 year JGBs it is worth re-visting the stand outs in duration, Resona and Chiba.

Daniel Tabbush

Price Gauge

52-week Range

Market Cap (USDm)

P/E

Dividend (Yield)

Japanese Big Cap Banks – Taking Profits on Shizuoka

Expecting a 25bps rate hike at June BoJ meeting, valuations recovering post-Iran war lows; we expect turbulent markets, so we remove Shizuoka from...

Victor Galliano

Japanese Banks – Update on Bigger Cap and Digital Banks

​Reiterating buys on Resona, Yokohama and Shizuoka post selective bank visits, whilst being neutral on digital banks; amid Iran conflict...

Victor Galliano

Japan Banks - Near End of Negative Rates BOJ, Deposits with BOJ to See Big Yield Rise, Not Only JGBs

The BOJ finally raised short term rates today from 25bps to 50bps. This is an historic rate rise. Japan's banks can see better income from JGBs,...

Daniel Tabbush

Japan - Rising Rates: Focus On Banks With High Cash And Low Margins

BOJ to meet 23-24 Jan and likely to raise rates possibly by doubling short-term rates, from 0.25% to 0.50%. There are important implications for...

Daniel Tabbush

Resona & Chiba - Duration Longest at Resona, Shortest at Chiba, Implications for YCC Relief

With rising yields on 10 year JGBs and on 1 year JGBs it is worth re-visting the stand outs in duration, Resona and Chiba.

Daniel Tabbush

Reiterating buys on Resona, Yokohama and Shizuoka post selective bank visits, whilst being neutral on digital banks; amid Iran conflict...