Rakuten Bank (5838) Definitive agreement on fintech business reorganization announced

Research evidence excerpt

Rakuten Bank (5838) Definitive agreement on fintech business reorganization announced

JPMorgan Securities Japan Co., Ltd. Asia Pacific Equity Research

Takahiro Yano, CFA AC 20 May 2026 J P M O R G A N

(81-3) 6736-8616

takahiro.yano@jpmorgan.com

Investment Thesis, Valuation and Risks

Rakuten Bank (5838) (Neutral; Price Target: ¥7,100)

Investment Thesis

Our rating is Neutral. We particularly like the high growth potential for Rakuten Bank’s

deposits via customer referrals from within the Rakuten group. Deposit YoY growth rates

decreased in 1H 2025, but Rakuten Bank started offering preferential interest rates on

ordinary deposits in July 2025. We believe this is likely to contribute to efficient deposit

collection, unlike interest rate campaigns for time deposits that appeal solely on deposit

yields. We will watch with positive expectations whether Rakuten Bank can maintain high

growth while controlling various costs, including deposit costs, operating costs, and credit

costs.

Valuation

Our price target of ¥7,100 (by December 2026) is based on our FY2027 EPS estimate of

¥546.4 and a target P/E of 13.0x. We take a positive view of four key features at Rakuten

Bank: (1) high deposit growth compared with other Japanese banks; (2) stable ROE at the

highest level within the industry; (3) stable credit costs; and (4) low risk of bond sale losses

because most of its yen bond holdings are classified as held-to-maturity. However, our EPS

estimates already reflect expectations for high deposit growth as the most important of these

factors. We thus believe a P/E premium for high deposit growth is unnecessary. Considering

the uncertainty around Rakuten’s fintech business reorganization, we apply a discount to our

target P/E of 14x for Japanese megabanks we cover.