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

Kyoto Financial Group  / Equity Bottom-Up

<ul>
<li>Kyoto Financial’s stakes in three key listed Japanese corporates are valued at over 85% of its market capitalization with its total equity holdings accounting for 130%+ of its market capitalization</li>
<li>Kyoto management intends to retain the bulk of the bank’s equity holdings, opposing the growing trend for Japanese listed companies to unwind crossholdings; management will review this policy in November</li>
<li>In the near term, we see no major catalyst for Kyoto to accelerate its equity holdings unwind and so, combined with its underwhelming fundamentals, we are negative on Kyoto Financial</li>
</ul>


Kyoto Financial’s stakes in three key listed Japanese corporates are valued at over 85% of its market capitalization with its total equity holdings accounting for 130%+ of its market capitalization
Kyoto management intends to retain the bulk of the bank’s equity holdings, opposing the growing trend for Japanese listed companies to unwind crossholdings; management will review this policy in November
In the near term, we see no major catalyst for Kyoto to accelerate its equity holdings unwind and so, combined with its underwhelming fundamentals, we are negative on Kyoto Financial


Kyoto Financial Group (5844 JP) – Limited Shareholdings Unwind, for Now

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.

Thematic (Sector/Industry)

<ul>
<li>Of the nearly 200 financials in Japan, on average shares outstanding are up 3% over the past several years </li>
<li>Japan Post Insurance, Japan Post Holdings, and Yamaguchi Financial are at the extreme opposite end with shares outstanding at -22%</li>
<li>MS&amp;AD features well ranking #11 of financials in our sample, with shares outstanding at -7%, adding well to its commitment on dividends, cross-shareholdings sales</li>
</ul>


Of the nearly 200 financials in Japan, on average shares outstanding are up 3% over the past several years 
Japan Post Insurance, Japan Post Holdings, and Yamaguchi Financial are at the extreme opposite end with shares outstanding at -22%
MS&amp;AD features well ranking #11 of financials in our sample, with shares outstanding at -7%, adding well to its commitment on dividends, cross-shareholdings sales


Japan Financials - Buybacks Strongest at Japan Post Insurance, Japan Post Holdings, Yamaguchi

<ul>
<li>We derive which of Japan's banks may be most or least exposed to trading gains from divestment of cross-shareholdings.</li>
<li>Mizuho looks best of the megabanks and SMFG looks least good of the megabanks.</li>
<li>Japan Post Bank and SBI Shinsei may appear to have a high potential for selling domestic stocks, but we believe other drivers make them appear this way.</li>
</ul>


We derive which of Japan's banks may be most or least exposed to trading gains from divestment of cross-shareholdings.
Mizuho looks best of the megabanks and SMFG looks least good of the megabanks.
Japan Post Bank and SBI Shinsei may appear to have a high potential for selling domestic stocks, but we believe other drivers make them appear this way.


Japan Banks - Trading Gains and Cross-Shareholding Vary Widely Among Megabanks and Regionals

<ul>
<li>Norinchukin Bank plans to sell JPY10 trillion of foreign government bonds, crystallising a chunk of the JPY2.19 trillion of unrealized bond losses, as it also looks to raise JPY1.2 trillion</li>
<li>We explore the bigger cap banks’ foreign bond holding and unrealized gains or losses, including those of Japan Post Bank; Norinchukin is clearly the negative outlier of this peer group</li>
<li>We do not see Norinchukin as a canary in the coalmine for the big-caps’ risks on foreign bond exposure; we stick with buys on Resona, Mizuho, SMFG and Concordia</li>
</ul>


Norinchukin Bank plans to sell JPY10 trillion of foreign government bonds, crystallising a chunk of the JPY2.19 trillion of unrealized bond losses, as it also looks to raise JPY1.2 trillion
We explore the bigger cap banks’ foreign bond holding and unrealized gains or losses, including those of Japan Post Bank; Norinchukin is clearly the negative outlier of this peer group
We do not see Norinchukin as a canary in the coalmine for the big-caps’ risks on foreign bond exposure; we stick with buys on Resona, Mizuho, SMFG and Concordia


Norinchukin Bank – Sector Outlier Rather than Big-Cap Bank Canary in the Coalmine

SBI Sumishin Net Bank  / Equity Bottom-Up

<ul>
<li>This is not a typo: SBI Sumishin Net Bank saw loans up 21% YoY in 1Q24, operating in Japan</li>
<li>The bank has achieved cost scale, with acquisition cost per account a fraction of 2 yrs ago</li>
<li>Credit quality remains exceptional, amongst best in Japan, with 0.06% NPL ratio in 1Q24</li>
</ul>


This is not a typo: SBI Sumishin Net Bank saw loans up 21% YoY in 1Q24, operating in Japan
The bank has achieved cost scale, with acquisition cost per account a fraction of 2 yrs ago
Credit quality remains exceptional, amongst best in Japan, with 0.06% NPL ratio in 1Q24


SBI Sumishin Net Bank - Dramatic ROA Expansion, Steady & Strong, Profit & Loan Growth, ROE at 19%

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)

Kyoto Financial Group (5844 JP) – Limited Shareholdings Unwind, for Now

Among bigger cap Japanese banks, we are negative on Kyoto Financial as it lacks near term catalysts to accelerate its equity holdings unwind and...

Victor Galliano

Japan Financials - Buybacks Strongest at Japan Post Insurance, Japan Post Holdings, Yamaguchi

Share buybacks at Japan's financials are particularly strong at Japan Post Insurance, Japan Post Holdings, and Yamaguchi. MS&AD also stands out...

Daniel Tabbush

Japan Banks - Trading Gains and Cross-Shareholding Vary Widely Among Megabanks and Regionals

We look at how important or unimportant core banking income is to 50 banks in Japan, to better understand where divesting cross shareholding can be...

Daniel Tabbush

Norinchukin Bank – Sector Outlier Rather than Big-Cap Bank Canary in the Coalmine

Norinchukin's big unrealized bond portfolio losses are not representative of interest rate risk in the bigger cap banks, Norinchukin is an...

Victor Galliano

SBI Sumishin Net Bank - Dramatic ROA Expansion, Steady & Strong, Profit & Loan Growth, ROE at 19%

With Brian Freitas research on new TOPIX changes, SBI Sumishin Net Bank is one of the greatest beneficiaries, a bank in Japan which stands out well...

Daniel Tabbush

Price Gauge

52-week Range

Market Cap (USDm)

P/E

Dividend (Yield)

Kyoto Financial Group (5844 JP) – Limited Shareholdings Unwind, for Now

Among bigger cap Japanese banks, we are negative on Kyoto Financial as it lacks near term catalysts to accelerate its equity holdings unwind and...

Victor Galliano

Japan Financials - Buybacks Strongest at Japan Post Insurance, Japan Post Holdings, Yamaguchi

Share buybacks at Japan's financials are particularly strong at Japan Post Insurance, Japan Post Holdings, and Yamaguchi. MS&AD also stands out...

Daniel Tabbush

Japan Banks - Trading Gains and Cross-Shareholding Vary Widely Among Megabanks and Regionals

We look at how important or unimportant core banking income is to 50 banks in Japan, to better understand where divesting cross shareholding can be...

Daniel Tabbush

Norinchukin Bank – Sector Outlier Rather than Big-Cap Bank Canary in the Coalmine

​Norinchukin's big unrealized bond portfolio losses are not representative of interest rate risk in the bigger cap banks, Norinchukin is an...

Victor Galliano

SBI Sumishin Net Bank - Dramatic ROA Expansion, Steady & Strong, Profit & Loan Growth, ROE at 19%

With Brian Freitas research on new TOPIX changes, SBI Sumishin Net Bank is one of the greatest beneficiaries, a bank in Japan which stands out well...

Daniel Tabbush

Norinchukin's big unrealized bond portfolio losses are not representative of interest rate risk in the bigger cap banks, Norinchukin is an...