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 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>The current “higher for longer” interest rates in the US and other developed markets adds to the Bank of Japan potentially ending its negative interest rate policy</li>
<li>Domestically, news reports suggest that the BoJ's 2% inflation target is increasingly likely to be met in the short term, which further drives the potential normalization of interest rate policy</li>
<li>Growing expectation of the BoJ’s negative interest rate policy exit adds upside to Japanese bank shares, especially those geared into higher domestic interest rates; we like Resona, Mizuho and Concordia</li>
</ul>


The current “higher for longer” interest rates in the US and other developed markets adds to the Bank of Japan potentially ending its negative interest rate policy
Domestically, news reports suggest that the BoJ's 2% inflation target is increasingly likely to be met in the short term, which further drives the potential normalization of interest rate policy
Growing expectation of the BoJ’s negative interest rate policy exit adds upside to Japanese bank shares, especially those geared into higher domestic interest rates; we like Resona, Mizuho and Concordia


Japanese Bigger Cap Banks – Exit from BoJ’s Negative Interest Rate Policy Gathers Steam

<ul>
<li>In the post meeting press briefing, governor Kazuo Ueda said there was an increasing chance of the BoJ's 2% inflation target being hit; JGB 10Y yields rose as a result</li>
<li>This implies that the BoJ could change from negative interest rate policy in the near future, perhaps as soon as March, which is positive for the Japanese bank sector’s fundamentals</li>
<li>We believe that this new will give further impetus to Japanese bank shares, especially those banks that are well geared into rising domestic interest rates; we highlight eight banks</li>
</ul>


In the post meeting press briefing, governor Kazuo Ueda said there was an increasing chance of the BoJ's 2% inflation target being hit; JGB 10Y yields rose as a result
This implies that the BoJ could change from negative interest rate policy in the near future, perhaps as soon as March, which is positive for the Japanese bank sector’s fundamentals
We believe that this new will give further impetus to Japanese bank shares, especially those banks that are well geared into rising domestic interest rates; we highlight eight banks


Bank of Japan Meeting Signals– Our Take on the Implications for Japanese 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.

<ul>
<li>
<a href="https://www.smartkarma.com/entities/japan-post-bank-co-ltd" target="_blank" data-smartkarma-citation="entities:838:1" rel="noopener">Japan Post Bank (7182 JP)</a> saw its net profit surge from non-recurring gains, which was from the sale of stocks.  </li>
<li>The company's cost of funds worsened more than the improvement in its yields, and we believe this remains an issue related to hedging costs. </li>
<li>Unrealized gains on foreign bonds remains significantly higher now than a year ago and this may again be the driver for earnings, but still with very low ROA. </li>
</ul>



Japan Post Bank (7182 JP) saw its net profit surge from non-recurring gains, which was from the sale of stocks.  
The company's cost of funds worsened more than the improvement in its yields, and we believe this remains an issue related to hedging costs. 
Unrealized gains on foreign bonds remains significantly higher now than a year ago and this may again be the driver for earnings, but still with very low ROA. 


Japan Post Bank - It's like a Closed End Mutual Fund More Than Ever

<ul>
<li>The latest BoJ adjustment to its yield curve control lifts the hard yield ceiling of 1% on 10 year JGBs, making it “a reference” and allowing yields to exceed it</li>
<li>10 year JGB yields are close to 1%, with Japanese bond yields steepening further which is positive for Japanese banks, especially those with a high share of floating-rate credit exposures</li>
<li>We stick with our positive views on Resona, Mizuho, SMFG and Hachijuni; we add Concordia to our buy list for its high share of floating rate credit exposure</li>
</ul>


The latest BoJ adjustment to its yield curve control lifts the hard yield ceiling of 1% on 10 year JGBs, making it “a reference” and allowing yields to exceed it
10 year JGB yields are close to 1%, with Japanese bond yields steepening further which is positive for Japanese banks, especially those with a high share of floating-rate credit exposures
We stick with our positive views on Resona, Mizuho, SMFG and Hachijuni; we add Concordia to our buy list for its high share of floating rate credit exposure


Japanese Banks – Nearing the Yield Curve Control End-Game

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 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 Bigger Cap Banks – Exit from BoJ’s Negative Interest Rate Policy Gathers Steam

BoJ approaching the end its negative interest rate policy should act as a boost to Japanese bank shares, especially those geared into higher...

Victor Galliano

Bank of Japan Meeting Signals– Our Take on the Implications for Japanese Banks

BoJ's inflation target of 2% looks increasingly like it will be reached will should drive the shift from negative interest rate policy, boosting...

Victor Galliano

Japan Post Bank - It's like a Closed End Mutual Fund More Than Ever

Japan Post Bank is more than ever like a closed-end mutual fund, which is hardly seeing any line items drive profit upward other than stock sales,...

Daniel Tabbush

Japanese Banks – Nearing the Yield Curve Control End-Game

The BoJ's relaxation of yield curve control allows JGB yields to rise, positive for Japanese banks with big shares of floating-rate loans; we add...

Victor Galliano

Price Gauge

52-week Range

Market Cap (USDm)

P/E

Dividend (Yield)

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 Bigger Cap Banks – Exit from BoJ’s Negative Interest Rate Policy Gathers Steam

​BoJ approaching the end its negative interest rate policy should act as a boost to Japanese bank shares, especially those geared into higher...

Victor Galliano

Bank of Japan Meeting Signals– Our Take on the Implications for Japanese Banks

BoJ's inflation target of 2% looks increasingly like it will be reached will should drive the shift from negative interest rate policy, boosting...

Victor Galliano

Japan Post Bank - It's like a Closed End Mutual Fund More Than Ever

Japan Post Bank is more than ever like a closed-end mutual fund, which is hardly seeing any line items drive profit upward other than stock sales,...

Daniel Tabbush

Japanese Banks – Nearing the Yield Curve Control End-Game

​The BoJ's relaxation of yield curve control allows JGB yields to rise, positive for Japanese banks with big shares of floating-rate loans; we add...

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...

BoJ approaching the end its negative interest rate policy should act as a boost to Japanese bank shares, especially those geared into higher...

The BoJ's relaxation of yield curve control allows JGB yields to rise, positive for Japanese banks with big shares of floating-rate loans; we add...