Resona Earnings: Lower Net Interest Margin Disappoints but Longer-Term Drivers Unchanged

Resona's December-quarter net profit disappointed somewhat as its net interest margin, or NIM, fell short of our expectations. We lower our fiscal 2023 ending March net profit forecast by 8% to JPY 153 billion, which is in line with Resona's unchanged guidance of JPY 150 billion. However, we leave other assumptions unchanged, resulting in minimal impact to our post-fiscal 2023 profit forecasts and maintain our JPY 890 fair value estimate. Resona's share price slipped in early reaction but we see this as temporary and we remain buyers. We continue to expect NIM to expand in the coming years.