Japan Banks: Strength in domestic corporate lending is clear

研报英文原文证据摘录

Japan Banks: Strength in domestic corporate lending is clear

apital and a deterioration in

financial soundness. Regulatory: (1) Changes to capital adequacy ratio regulations and (2)

additional capital requirements for G-SIBs could lead to fluctuations in risk assets and a rise in

compliance costs, constraining flexibility in capital policies and management strategies.

Company specific: 1) Deterioration of political and economic conditions in Asia (including

Indonesia) and (2) a decline in the value of specific assets, such as aircraft leases, could lead to

a sharp increase in credit costs and impairment losses, directly impacting the revenue base of

the multi-franchise strategy.

Resona HD: Our price target is based on a residual income model (RIM). Risks to our view are

as follows. (1) The pace of increase in Japan's policy interest rate falling below our assumption

(a total of 50bps by 2026), and (2) company guidance for FY2027 (EPS/ DPS) coming in

significantly below our forecast, driven primarily by core business rather than temporary

factors. Other fundamental risk factors are as follows. Market: (1) Declines in stock prices and

(2) sharp fluctuations in domestic and overseas interest rates and a drying up of foreign

currency liquidity could lead to declines in the market value of shareholdings and a

deterioration in bond valuation losses, and hence CET1 capital erosion and weakened

financial soundness. Regulatory: (1) Changes to capital adequacy requirements and (2)

additional required capital for D-SIBs could increase risk asset fluctuations and compliance

costs and thereby constrain capital policies and strategic flexibility. Company-specific: (1) A

shrinking domestic retail market and (2) delays in DX and system strategies could lead to a