Rakuten Bank (5838): 1Q results: Strong earnings, more detailed explanation of reorganization synergies

Research evidence excerpt

J P M O R G A N

Asia Pacific Equity Research

07 August 2026

Rakuten Bank (5838)

1Q results: Strong earnings, more detailed explanation

of reorganization synergies

Somewhat positive: Net profit grew 25% YoY and 5% QoQ to ¥21 billion in 1Q

FY2026, above our estimate of ¥19.5 billion on an overshoot in net interest income

(NII). Rakuten Bank raised FY2026 net profit guidance to ¥88.1 billion (+21%

YoY), in line with our estimate of ¥88.6 billion. The bank did not present any

particularly new information about synergies from the Rakuten fintech

reorganization announced in May, but did provide a more detailed explanation, in

our view.

NII beat our estimate in 1Q, but other items generally in line: See Figure

1 for quarterly earnings trends. The deposit balance rose 14% YoY at end-June,

accelerating from growth of 13% YoY at end-March. NII increased 39% YoY,

supported by volume growth. Operating costs rose 29% YoY, slightly higher

than our estimate, but credit costs were lower than our estimate. Rakuten Bank

raised FY2026 recurring profit guidance by ¥10.2 billion to ¥125.7 billion. As

this mainly reflects the June BoJ rate hike, we think strong deposit growth is

also factored in. 1Q net profit was 24% of revised FY2026 guidance.

More detailed explanation of synergies from Rakuten fintech

reorganization: Rakuten Bank anticipates synergies in two areas: (1) financial

synergies and (2) maximization of the individual customer base. Of these, we

think attention is currently focusing more on financial synergies. Financial

synergies comprise (A) bringing borrowing costs in-house; (B) transferring

securities deposits; and (C) optimizing capital efficiency. Rakuten Bank said

A and B account for a large portion of financial synergies, and expected benefits

will come true in order of B, A, C. It sees the pace for generating financial

synergies as around ¥4.2 billion/year in FY2026, around ¥25 billion/year in

FY2027, around ¥49 billion/year in FY2028, and ¥53 billion in FY2029.

However, Rakuten Bank maintained its FY2029 recurring profit target of ¥400

billion (¥204 billion in FY2025). Regarding interest rate sensitivity, Rakuten

…