Resona Earnings: We See Opportunities to Lift Margins but Upside Baked in; Fair Value Increased 10%

We raise our fair value estimate for Resona to JPY 975 from JPY 890 following the release of fiscal 2023 earnings that were largely in line with a higher share buyback forecast in the coming years. We are more optimistic than Resona's management in our margin outlook for the banking group as near-term higher-for-longer United States interest rates and Japan's exit from net-zero interest rates point to room for interest margins to expand. We maintain our assumptions, and our net profit forecast is little changed. The share buyback of up to 30 million shares equates to around 1.29% of Resona's share base.