We Raise FVEs on Four Japanese Banks 3-4% as Higher Rates Outweigh Increased Credit Costs

We raise our fair value estimates for four major Japanese banks by 3%-4% as we update our models following October-December results. Our fair value estimate for Mitsubishi UFJ Financial Group, or MUFG, rises to JPY 710, which is 1% below the current price and 0.51 times book value. Our fair value estimate for Sumitomo Mitsui Financial Group, or SMFG, rises to JPY 4,750, 13% upside and 0.53 times book value. Our fair value estimate for Mizuho rises to JPY 1,600, 2% upside and 0.44 times book value. Our fair value estimate for Resona rises to JPY 490, 5% downside and 0.47 times book value.