Financials

Report by Astris Advisory Japan

SBI Sumishin Bank shares popped 17% on reports that NTT DOCOMO could be a buyer. Kirk Boodry thinks it is an easy story to believe. DOCOMO has already said it is looking at online banking options to solidify its fintech portfolio. And SBI Holdings essentially has two online banks as recently acquired and privatised SBI Shinsei Bank has a minimal offline footprint. It is encouraging that shares of NTT (rated Buy) were up on the news and while Kirk would like to believe that represents an endorsement of higher fintech exposure, it could also reflect hope that NTT may be steering clear of any involvement in a domestic Seven & i counterbid. The price tag could be somewhat steep with SBI Sumishin valued at ¥514bn, but NTT Group has the balance sheet to support a deal.

Report by Astris Advisory Japan

Valuations for payment assets have become increasingly important as LY Corp (PayPay IPO) and Rakuten (fintech restructuring) look to public markets for eventual validation. Kirk Boodry thinks both are worth more than ¥1,000bn, although he gives a slight edge to PayPay on better visibility. Whilst there has been talk of a PayPay IPO for years, Rakuten will probably be the first to move as it has set a Jan deadline for its fintech restructuring. Meanwhile, online banks have been market darlings with SBI +87% YTD and Rakuten Bank +45% even with the uncertainty over a deal with the parent company.

Financials

Report by AlphaMena

The bank is improving in all of its core businesses - NII (+7% Y/Y in Q1), Islamic financing (+49%) and investment income more than doubled. FAB’s capital ratios are also in a good position with a Tier 1 ratio and ROTE of 15.40% and 17.40%, respectively. In addition, it is benefiting from a healthy asset quality given its cautious loans’ granting policy despite high exposure to the corporate / private sector. The share price has fallen YTD on geopolitical concerns, but AlphaMena believes the stock deserves more attention given its sound fundamentals and its intent to implement a value-added expansion into one of the largest economies like India (FAB is interested in buying SBI’s 25% stake in Yes Bank).

Financials

Report by Galliano's Financials Research

IPO adds an attractively valued Japanese neobank to the globally listed neobank universe; furthermore, the Rakuten Group ecosystem is a powerful tool for customer acquisition and retention. On efficiency metrics, Victor Galliano shows how Rakuten Bank scores well vs. its key domestic peers as well as global comparables. At the announced issue price of ¥1,400, Rakuten Bank’s PBV ratio implies an attractive 25% discount to its core Japanese peer SBI Sumishin Net Bank, for similar ROE.