Recently released market study: Japan Commercial Banking Report Q4 2010

Nov. 7, 2010 - PRLog -- While the short-term outlook for Japanese banks is fairly uninspiring, much of this already appears to have been factored in by the markets. At current price levels and valuations Japanese banks appear relatively cheap and could be worth keeping an eye on over the long term.     In accordance with the country's macroeconomic pict ure, Japan's banking sector is experiencing a recovery of sorts, with the major banks swinging back into profit during financial year ending March 2010. Looking at the industry as a whole, however, we believe the bounce to date has been fairly uninspiring. Total assets are rising at a snail's pace, registering growth of just 0.6% and 0.3% year-on- year (y-o-y) in March and April 2010 respectively. More importantly, total loans are contracting at an increasingly rapid pace, hitting a six-year low of 2.6% y-o-y in April. This means asset expansion has largely been a product of heavier investment in bond portfolios. As the accompanying chart shows, such a defensive strategy was also evident during the aftermath of 1997-1998 Asian financial crisis and the 2001-2002 global downturn, meaning bonds now make up 29% of total banking sector assets - up from 17% in 1995. We highlight three reasons why this conservative behaviour will remain a dominant theme heading into 2011, inhibiting a sustainable recovery in earnings.    First, credit demand from consumers and businesses will remain thin on the ground. On the consumer side, precarious labour market conditions, weak confidence and expectations of sales tax hikes are unlikely to ignite a lending binge, in our view. As the chart shows, seasonally adjusted unemployment not only remains at a distressed level by Japanese standards, but actually rose to a four-month high of 5.1% in April 2010. Regarding the outlook for commercial lending, excess capacity in the economy - despite a bounce, capacity utilisation is still 17% behind pre-cris is levels - suggests there is limited scope for a capital expenditure boost in the coming quarters. We also believe companies are more likely to fund any investments using retained earnings rather than bank lending until the medium-term economic prospects become clearer.

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Report Table of Contents:

Executive Summary
- Table: Levels (JPYbn)
- Table: Levels (US$bn)
- Table: Levels At April 2010
- Table: Annual Growth Rate Projections 2010-2014 (%)
- Table: Ranking Out Of 59 Countries Reviewed In 2010
- Table: Projected Levels (JPYbn)
- Table: Projected Levels (US$bn)
SWOT Analysis
- Japan Commercial Banking SWOT
- Japan Political SWOT
- Japan Economic SWOT
Business Environment Outlook
- Commercial Banking Business Environment Ratings
- Table: Japan Commercial Banking Business Environment Rating
- Commercial Banking Business Environment Rating Methodology
- Table: Asia Commercial Banking Business Environment Ratings
Global Commercial Banking Outlook
Asia Banking Sector Outlook
- Table: Banks' Bond Portfolios
- Table: Asia Commercial Banking Business Environment Ratings
- Table: Comparison Of Loan/Deposit, Loan/Asset And Loan/GDP Ratios
- Table: Anticipated Developments In 2010
- Table: Comparison Of Total Assets, Client Loans And Client Deposits, 2008-2009 (US$bn)
- Table: Comparison Of Per Capita Deposits, 2010 (US$)
- Table: Interbank Rates And Bond Yields, 2009-2010
Japan Banking Sector Outlook
Economic Outlook
- Table: Japan Economic Activity, 2007-2014
Competitive Landscape
- Market Structure
- Protagonists
- Table: Protagonists In Japan's Commercial Banking Sector
- Definition of the Commercial Banking Universe
- List Of Banks
- Table: Full Japanese Bankers Association Members
- Table: Associate Japanese Bankers Association Members
Company Profiles
- Bank of Tokyo-Mitsubishi UFJ
- Table: Key Statistics For Bank of Tokyo-Mitsubishi UFJ, 2007-2009 (JPYmn)
- Mizuho Bank
- Table: Key Statistics For Mizuho Bank, 2007-2009 (JPYmn)
- Mizuho Corporate Bank
- Table: Key Statistics For Mizuho Corporate Bank, 2007-2009 (JPYmn)
- Resona
- Table: Key Statistics For Resona Bank, 2007-2009 (JPYmn)
- Sumitomo Mitsui Banking Corporation
- Table: Key Statistics For SMBC, 2007-2009 (JPYmn)
- Aozora Bank
- Table: Key Statistics For Aozora Bank 2007-2009 (JPYmn)
BMI Banking Sector Methodology
- Commercial Bank Business Environment Rating
- Table: Commercial Banking Business Environment Indicators And Rationale
- Table: Weighting Of Indicators

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