Norinchukin Bank is an outlier not a sector indicator

Financials

Galliano's Financials Research

The bank plans to sell JPY10trn of foreign government bonds, crystallising a chunk of the JPY2.19trn of unrealised bond losses, as it also looks to raise JPY1.2trn. In this note, Victor Galliano explores the bigger cap banks’ foreign bond holding and unrealised gains or losses, including those of Japan Post Bank. He believes Norinchukin is a sector outlier rather than big cap bank canary in the coalmine. Victor sticks with buys on Resona, Mizuho, SMFG and Concordia.

- 28 June, 2024

YCC relaxation adds fuel to the Japanese banks re-rating

Financials

Galliano's Financials Research

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. In Aug, Victor Galliano identified Resona, Mizuho and SMFG as his picks for a steepening yield curve. In Oct, he added Hachijuni as the deep value buy. Now, he adds Concordia for its high share of floating rate lending.

- 10 November, 2023