发帖
雷达卡
SME and real estate related credit costs
are likely to undermine an already
weakened top-line this year
We slash our net income forecasts,
putting us nearly 50% below consensus
We cut SMFG to UW(V) and Resona to
N(V), both from OW(V), and affirm MUFG
at UW(V) and Mizuho at N(V)
With little prospect of BOJ policy rate hikes, Japan’s major
banks are facing the prospect of shrinking domestic loan
spreads. Combined with negligible loan growth, the impact
on the core lending business is severe. While asset growth
overseas should help offset this trend somewhat, non-interest
income has also been undermined by global market turmoil.
Fees from sales of investment products are falling, as are
broking and investment banking fees and profits from bond
trading. In short, top lines look increasingly vulnerable.
As if this were not enough, the banks also face a rapidly
deteriorating domestic corporate credit cycle. Corporate
bankruptcies are on the rise, particularly among SMEs and in
real estate related sectors. As a result, the rise in 1Q credit
costs – as banks boosted write-offs and loan loss reserves –
is just the start in our view, and will get much worse. As the
banks review their borrowers’ creditworthiness over the next
few quarters, we foresee substantial earnings downgrades.
Consequently, we cut our earnings forecasts for all four
major banks, and downgrade SMFG and Resona. We think
MUFG and SMFG in particular are vulnerable, as both
banks already reported large increases in Q1 credit costs.
On a 12 month view the banks have only under-performed
the market by a few percent. Heading into a cyclical
downturn, with the domestic economy worsening and credit
costs rising, we think it only natural for the banks to behave
like banks, and start seriously underperforming again.
288853.pdf
(812.35 KB, 需要: 500 个论坛币)
京公网安备 11010802022788号
