Financials
Galliano's Financials Research
Victor Galliano upgrades the stock to Buy, arguing that the recent partial disposal of its stake in Nintendo could mark the start of a broader unwind of the bank’s large strategic equity portfolio - its primary source of potential shareholder value creation. The sale generated a ¥75.1bn gain (c.¥90bn proceeds) and reduced Kyoto’s stake from 4.2% to 3.3%, though the remaining holding still represents more than 30% of the bank’s market value. With ¥160bn in gains on stock sales, Kyoto has also been able to crystallise roughly ¥90bn of losses on government bonds, bringing its unrealised losses on the domestic government bonds still on its balance sheet close to zero. Kyoto trades at the lowest PBV among Japan’s top ten banks, while its 4.1% dividend yield also has scope to rise.
Edition: 232
- 20 March, 2026
Financials
Galliano's Financials Research
Victor Galliano upgrades Kyoto Financial to Buy, following what appears to be a sea change in management’s view on equity holdings disposals as well as the president’s opinion regarding Japanese regional bank consolidation. Nobuhiro Doi suggested that the target of JPY100bn disposals by Mar 29 could be increased to JPY200-300bn (up to 30% of total equity holdings; equivalent to 42% of Kyoto’s current m/cap). Such disposals would act as significant catalysts for large share buybacks going forward. In the longer term, Kyoto could be in a strong position to lead a regional bank merger or acquisition, with a look to improving efficiencies. An important factor in determining Kyoto’s “bargaining power” in the consolidation process will be to what extent its shares trade at a premium valuation; it currently trades at a premium in terms of PE multiple, but at a discount in terms of PBV ratio.
Edition: 210
- 02 May, 2025
Financials
Galliano's Financials Research
Kyoto Financial’s stakes in 3 key listed Japanese corporates are valued at over 85% of its market cap with its total equity holdings accounting for 130%+ of its market cap. However, management intends to retain the bulk of these positions, opposing the growing trend for Japanese listed companies to unwind crossholdings. Given this decision, combined with underwhelming fundamentals (e.g. not as well geared into rising domestic interest rates as peers; neither is it well exposed to potentially rising benchmark rates through BoJ deposits; and unattractive valuation), Victor Galliano is negative on the stock, preferring the likes of Resona, Mizuho and SMFG instead.
Edition: 191
- 26 July, 2024