Rakuten Bank (5838)

Research evidence excerpt

J P M O R G A N

Asia Pacific Equity Research

15 September 2026

Rakuten Bank (5838)

Improvement in P/E came much sooner than we

expected; maintain Neutral rating

Neutral

5838.T, 5838 JP

Price (15 Sep 26):¥6,383

▲Price Target (Dec-27):¥6,700

Prior (Dec-26):¥5,390

We raise our price target by 24%, from ¥5,390 to ¥6,700, but reiterate our Neutral

rating. We push out the time horizon for our price target from end-2026 to end2027. With that change, the EPS on which we base our price target changes from

our FY2027 estimate to our FY2028 estimate. Our new price target of ¥6,700 is

based on our FY2028 EPS estimate of ¥515.2 and a P/E of 13.0x (previously

¥5,390, based on our previous FY2027 EPS estimate of ¥449.3 and a P/E of 12x).

We misread the discussion about valuations: We previously thought that

investor sentiment deteriorated due to dilution from the fintech business

reorganization, and for our target P/E for Rakuten Bank, we applied a discount

to the median range of multiples applied to other Japanese banks, setting our

target P/E at 12x. However, contrary to our previous view, investor sentiment

recovered early. We think the view that Rakuten Bank’s high ROE justifies a

high P/E is gaining traction, and we raise our target P/E to 13x, the same as for

the megabanks. The 13x multiple is at the upper end of the range of P/E

multiples we apply to Japanese banks. Generally speaking, however, the

competitive environment for deposits could worsen, and it is unclear what

spending is needed for Rakuten Bank to maintain a deposit growth rate of over

10%. In addition, we still believe that investors need to assess the risk-weighted

assets required for the growth of the credit card and securities businesses,

which will be under the bank’s umbrella. Based on the above, we think it is too

early to assign Rakuten Bank a target P/E higher than that of the megabanks.

Investors will not be able to confirm the financial results of the New Rakuten

Bank after the fintech business reorganization until around February 2027,

when 3Q (October-December) FY2026 results are expected to be announced.

We will keep a close eye on the actual figures.

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