Senior Bank Analyst - Japanese Banks, Windamee Research

J. Brian Waterhouse

J. Brian Waterhouse has been covering the Japanese financial sector as an analyst continuously since 1976, working for CLSA, Japaninvest, Rabobank, HSBC Securities, James Capel, Marine Midland Bank of New York and National & Grindlays Bank.  He has been ranked No.1 overall in Japanese banks research in Japan by Asiamoney for 6 of the past 9 years and was runner-up in 2015.  He was awarded the coveted Starmine prize as top Japanese bank stock picker in 2012 and 2014 and was runner-up in 2013.  He frequently appears on TV, radio and in international print media as a commentator on Japanese banking.

Senior Bank Analyst - Japanese Banks

Hachijuni Bank (8359 JP):  A Case of Prestidigitation?

Hachijuni Bank (8359 JP):  Ahead of the Peloton

Japanese Banks:  Beyond the Ides of March

TSE's Market Structure Review: Public Comments As Expected, But Miss The Mark

Windamee Research

Japanese Banks

Equity Bottom-Up

<p>The first Japanese bank out of the blocks to report its financial performance for the FY3/2019 season, <a href="https://www.smartkarma.com/entities/20244" target="_blank" data-smartkarma-citation="entities:20244:1">Hachijuni Bank (8359 JP)</a> produced numbers that were right in line with its November 2018 revised guidance.  Consolidated net profits fell 13% YoY to ¥22.49 billion: the third straight year of profit decline.  Foreign investors have a curious fascination with the bank, owning in aggregate a remarkably-high 23.8% of the outstanding stock.  The foreigners appear to be attracted by the bank’s high capital ratio (18.6% as of end-December 2018), relatively high liquidity (daily trading volume = US$6mn/day) and seemingly low valuation (PBR of 0.30x), but seem blithely unconcerned by the bank’s appallingly low RoA of 0.23% (a reflection of management’s preference for low-risk, fine-margin lending to large corporates); by its poor RoE of 2.92% (the consequence of an inefficiently high CAR); by its minimal return on total funds deployed (a mere 7 basis points); or by its deceptively low NPL ratio of 1.45% (which actually suggests a high level of bad SME credits at home, given the bank’s penchant for relatively ‘risk-free’ lending, including mortgages, local and central government lending and large-lot corporate loans in the Tokyo market).  The business model needs a serious rethink, while the share price performance over the last year tells its own story.  <em>Caveat emptor!</em>  (May the buyer beware!)</p>

The first Japanese bank out of the blocks to report its financial performance for the FY3/2019 season, Hachijuni Bank (8359 JP) produced numbers that were right in line with its November 2018 revised guidance.  Consolidated net profits fell 13% YoY to ¥22.49 billion: the third straight year of profit decline.  Foreign investors have a curious fascination with the bank, owning in aggregate a remarkably-high 23.8% of the outstanding stock.  The foreigners appear to be attracted by the bank’s high capital ratio (18.6% as of end-December 2018), relatively high liquidity (daily trading volume = US$6mn/day) and seemingly low valuation (PBR of 0.30x), but seem blithely unconcerned by the bank’s appallingly low RoA of 0.23% (a reflection of management’s preference for low-risk, fine-margin lending to large corporates); by its poor RoE of 2.92% (the consequence of an inefficiently high CAR); by its minimal return on total funds deployed (a mere 7 basis points); or by its deceptively low NPL ratio of 1.45% (which actually suggests a high level of bad SME credits at home, given the bank’s penchant for relatively ‘risk-free’ lending, including mortgages, local and central government lending and large-lot corporate loans in the Tokyo market).  The business model needs a serious rethink, while the share price performance over the last year tells its own story.  Caveat emptor!  (May the buyer beware!)

Mitsubishi UFJ Financial (MUFG) (8306 JP)

八十二銀行（8359 JP）：興奮する理由がない