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

Senshu Ikeda Holdings  (8714 JP):  Reality Hurts

Michinoku Bank  (8350 JP):  A Distant Sound of Shoes Dropping

Windamee Research

Japanese Banks

Equity Bottom-Up

An obscure little secondary regional bank from Shikoku with notably low performance ratios, <a href="https://www.smartkarma.com/entities/bank-of-kochi-ltd" target="_blank" rel="noopener" data-smartkarma-citation="entities:18952:1">Bank Of Kochi (8416 JP)</a> should be on nobody’s ‘must have’ shopping-list for Japanese bank stocks.  For proof of this, one need look no further than its list of major shareholders: the Resolution &amp; Collection Corporation, a subsidiary of the Deposit Insurance Corporation and thus the Bank of Japan’s ‘bad bank’ 2nd-tier subsidiary, is by far its largest shareholder with 42.4% of outstanding shares and the sole holder of the bank’s No.1 series of preference shares. ‘Red flags’ rarely come any bigger.Bank of Kochi may be useful to investors, however, as a harbinger of things to come for other Japanese banks that have ‘form’ when it comes to straying into “other investments” such as foreign currency derivatives, REITs and investment trusts, such as Michinoku Bank (8350 JP), First Bank of Toyama (7184 JP), Nanto Bank (8367 JP), Tochigi Bank (8550 JP) and Senshu Ikeda Holdings (8714 JP).  Bank of Kochi released a statement earlier this month that its securities losses for FY3/2020 have now risen an astonishing 20-fold from the position at the end of December 2019 to ¥709 million (US$6.5 million).  Curiously, the bank does not have a lot of domestic corporate equities, but it does hold a considerable number of shares in other small Japanese banks, as well as a growing exposure to “alternative investments” in foreign currencies.  Oh dear.

An obscure little secondary regional bank from Shikoku with notably low performance ratios, Bank Of Kochi (8416 JP) should be on nobody’s ‘must have’ shopping-list for Japanese bank stocks.  For proof of this, one need look no further than its list of major shareholders: the Resolution &amp; Collection Corporation, a subsidiary of the Deposit Insurance Corporation and thus the Bank of Japan’s ‘bad bank’ 2nd-tier subsidiary, is by far its largest shareholder with 42.4% of outstanding shares and the sole holder of the bank’s No.1 series of preference shares. ‘Red flags’ rarely come any bigger.Bank of Kochi may be useful to investors, however, as a harbinger of things to come for other Japanese banks that have ‘form’ when it comes to straying into “other investments” such as foreign currency derivatives, REITs and investment trusts, such as Michinoku Bank (8350 JP), First Bank of Toyama (7184 JP), Nanto Bank (8367 JP), Tochigi Bank (8550 JP) and Senshu Ikeda Holdings (8714 JP).  Bank of Kochi released a statement earlier this month that its securities losses for FY3/2020 have now risen an astonishing 20-fold from the position at the end of December 2019 to ¥709 million (US$6.5 million).  Curiously, the bank does not have a lot of domestic corporate equities, but it does hold a considerable number of shares in other small Japanese banks, as well as a growing exposure to “alternative investments” in foreign currencies.  Oh dear.

Bank Of Kochi

Bank of Kochi (8416 JP): Harbinger