Are regional banks' fortunes diverging due to rising interest rates!? Iyogin and Shikoku are being bought for their growth potential!!
Thinking about Shikoku Bank, Iyogin HD, and Yokohama FG in terms of “PBR” and “future changes” Hello, I am a bank stock researcher. Looking at recent bank stocks, I sometimes feel, “Why are their stock price movements so different even though they are in the same rising interest rate environment?”
The three companies I am comparing this time are: * Shikoku Bank * Iyogin Holdings * Yokohama Financial Group. While Shikoku Bank and Iyogin HD are conscious of a relatively upward trend, Yokohama FG often shows movements in a flat range.
To consider this difference, the perspective of not just simple “low PBR” but also “how much potential is there for change from the current valuation?” becomes important.
— 1. Stock prices look at the “future,” not just the “present” In stock investment, a company with good current performance does not necessarily mean its stock price will rise. This is because future earnings forecasts are already priced into the stock.
For example, if many investors think, “This bank’s profits will increase from now on,” that expectation may already be reflected in the stock price. Conversely, for a bank that is “not yet valued, but might see improvements in profits or ROE from here on,” the signs of earnings improvement themselves can become stock price catalysts.
In other words, stock prices react not only to “how good it is now” but also to “how much it will change in the future.”
— 2. That is why looking only at “low PBR” is insufficient PBR is an indicator that looks at how many times the stock price is valued relative to net assets per share. For these three banks, there is a difference in three-bank comparison.
Here, instead of just thinking “it is being bought because the PBR is low,” it is important to look at “how much will profitability improve from this low PBR state?” This is a major point in considering these three companies.
— 3. Shikoku Bank | “Change” is easily noticed precisely because of low PBR Shikoku Bank’s PBR is about 0.5x. This is a very low level. Of course, this does not mean that the stock price will definitely rise because the PBR is 0.5x. There are cases where the market is cautious for a reason behind a low PBR.
However, the story changes if the core profitability improves from there. At Shikoku Bank, * Interest on loans is increasing * Loan balance is also increasing * Improvement in fund profits due to rising interest rates * Replacement of low-yield bonds are progressing.
On the other hand, there are losses from bond sales and valuation losses. In other words, it can be seen not as a “completed bank,” but as one whose profit structure is changing due to changes in the interest rate environment.
If the flow of rising interest rates ↓ rising loan interest rates ↓ improvement in fund profits ↓ profit increase ↓ ROE improvement continues, the market’s evaluation may change.
In other words, instead of “it’s cheap because the PBR is 0.5x,” we look at “how much will the profitability of a bank currently valued at around 0.5x PBR improve in the future?” This is the interesting part of watching Shikoku Bank’s stock price.
— 5. Iyogin HD | “Core business improvement + changing materials” Iyogin HD’s PBR is also about 0.88x, which is below 1x. On the other hand, ROE has improved to about 8%. This is very important.
At Iyogin HD, due to the impact of bond sale losses, etc., quarterly net profit has decreased. However, core business net profit has increased by about 23.8%.
In other words, even if it looks like a profit decline when looking only at net profit, it is a state of improvement when looking at the bank’s original profitability.
— 6. Iyogin HD also has “future changes” For Iyogin HD, in addition to rising interest rates, there are moves toward a business integration with Ehime Bank.
If the business integration is realized in the future, * Operational efficiency * Optimization of stores and personnel * Standardization of systems, etc. * Regional competitiveness * Effective use of management resources could be expected.
Of course, there are costs to integration, and the actual
The extent of the impact will need to be confirmed in the future.
Even so,
the simultaneous presence of “improvement in core business due to rising interest rates” + “changes from management integration”
is likely to become a factor that investors pay attention to.
7. For Iyo Bank HD, the valuation of all securities is also important.
At Iyo Bank HD, as of the end of June 2026,
there is a large valuation gain of approximately 349.8 billion yen in securities.
On the other hand, there is an unrealized loss of approximately 4.5 billion yen in bonds.
What this tells us is
not just the one-sided view that “losses are occurring in bonds,”
but that “there are large valuation gains across all securities.”
Therefore, when looking at bank stocks,
it is important to look at the entire assets, not just the parts where losses have occurred.
8. Yokohama FG | The expected changes are different because the “current level of completion” is high.
On the other hand, Yokohama FG can be viewed a bit differently.
Yokohama FG has the following characteristics:
* Very large scale even among regional banks
* Improved lending profitability
* ROE of approximately 8%
* PBR of approximately 1.49x
* High trading volume
* High institutional investor ownership.
In other words,
it can be seen as a bank that has already received a certain level of evaluation from the market.
Therefore,
the stock price may not react significantly just because “performance is good.”
This is because, from the market’s perspective,
it is possible that “this level of profit was somewhat expected.”
9. Thinking about the reasons why Yokohama FG tends to move sideways.
Of course, the reason why Yokohama FG’s stock price moves sideways cannot be determined by a single factor. There are various factors such as the interest rate environment, capital flows for bank stocks as a whole, profit forecasts,
valuation, and bond valuations.
Among them, one way of thinking is
that “because it is already highly valued, new material is likely to be needed for the next stock price increase.”
Yokohama FG’s PBR is approximately 1.49x.
Compared to Shikoku Bank’s approximately 0.5x, it is quite highly valued by the market.
Therefore,
“how much room there is for further improvement in ROE and profits” becomes important.
10. Yokohama FG is “easily scrutinized by large investors.”
Yokohama FG is a large banking group with a market capitalization exceeding approximately 2 trillion yen.
Institutional investor ownership, including from overseas, has also been confirmed.
Therefore,
it is considered likely to be closely evaluated by large investors regarding:
* ROE
* PBR * Capital efficiency * Bond portfolio * Equity capital * Shareholder returns.
Especially in a rising interest rate environment,
the perspective of “how are the valuations of held government bonds, etc., doing?”
becomes stronger, not just “how much has lending profit increased?”
Since Yokohama FG has also incurred bond-related losses,
it is necessary to look at both the improvement of the core business and asset valuation.
11. Not “low PBR = undervalued” but “low PBR = is there room for change?”
This is a point I want to cherish especially as a bank stock researcher.
When I find a bank with a low PBR,
I want to think, “This is undervalued!”
However, that alone is not enough.
What is important is:
Why is the PBR low? And is there a possibility that the reason will improve in the future? For example, instead of just looking at a PBR of 0.5x, I think about the flow of: PBR 0.5x ↓ Lending rate increase ↓ Improvement in interest income ↓ ROE improvement ↓ Possibility of market evaluation changing. This is what it means to think about “future PBR” from “current PBR.”
12. The three companies this time are easy to understand when viewed in terms of “degree of completion” and “rate of change.”
Summarizing the three companies this time:
Shikoku Bank Current evaluation: Low PBR approximately 0.5x. The point is how much lending profit and ROE will improve from there.
Iyo Bank HD
Current evaluation: Relatively low
PBR approximately 0.88x.
In addition to the improvement of the core business, there are also changes such as management integration.
Yokohama FG
Current evaluation: High
PBR approximately 1.49x, ROE approximately 8%.
Since it is already evaluated by the market, additional improvements in profit and ROE, etc.,
are likely to be important to further increase the evaluation in the future.
13. How to think about “upward trend” and “sideways movement”?
Let’s look at the stock price movements here.
While the upward trend is conscious for Shikoku Bank and Iyo Bank HD,
there are scenes where sideways movement is conspicuous for Yokohama FG.
Instead of simply concluding that “Shikoku Bank and Iyo Bank HD are better,”
it becomes easier to understand if you think that
the “magnitude of change” that the market expects from each bank is different.
Shikoku Bank and Iyo Bank HD are a combination of
“current evaluation is still low” + “room for performance improvement.”
Yokohama FG is a combination of
“current evaluation is high” + “core business has already improved.” Therefore, even with the same performance improvement, the reaction to the stock price may be different.
14. The lowness of PBR is an entrance to thinking about “room for growth.” From this comparison, one way of thinking about looking at bank stocks emerges. It is not to buy because it is low PBR, but to look at how much a bank with a low PBR will change from now on. For example, Shikoku Bank PBR approximately 0.5x → Lending profit improvement → Possibility of ROE improvement → Room for re-evaluation Iyo Bank HD PBR approximately 0.88x → Core business profit improvement → ROE improvement → Changes such as management integration → Possibility of re-evaluation. Of course, whether the PBR actually rises or not depends on the market environment and performance.
15. On the other hand, high PBR also has meaning.
This is also important.
It does not mean that it is bad because the PBR is high.
Rather, a high PBR means that
the market may be highly evaluating the bank’s profitability and growth potential.
Banks like Yokohama FG, whose PBR is well over 1x,
unlike “banks that have not yet been evaluated,”
can be considered to have market expectations already incorporated into the stock price to some extent.
Therefore,
it becomes important to look at “what will be the new growth material from now on?”
16. Checkpoints as a bank stock researcher.
Comparing the three companies this time, when looking at future bank stocks,
I will focus on the following points.
1. Is the PBR low because it is undervalued, or is there a reason for it?
2. Is there a catalyst for change (interest rate rise, management integration, etc.)?
3. Is the market already expecting improvement (high PBR)?
By looking at these, you can see the “potential” of the bank.
I hope this comparison will be helpful for your investment research.
I would like to check the following points.
① PBR
To what extent is the current stock price valued relative to asset value?
② ROE
How much profit is being generated using those assets?
③ Not just the ‘current value’ of ROE, but the ‘change’
Not just whether it is 4% or 8%, but
is there a possibility of improvement in the future
like 4% → 6% → 8%?
④ Lending rates
How much benefit is being derived from rising interest rates?
⑤ Deposit costs
How much will profits be eroded by rising deposit interest rates?
⑥ Bond portfolio
What is the extent of valuation losses on long-term government bonds, etc.?
⑦ Shareholder composition
Depending on the ratio of institutional investors and foreign investors, the way they are evaluated in the market
may differ.
⑧ Future catalysts
Not just rising interest rates, but
* Business integration
* Share buybacks
* Dividend increases
* Capital policy
* Management efficiency
It is also important to look for factors that will change future performance and valuation, such as
these.
⸻
Summary | For bank stocks, look at ‘future changes’ rather than ‘now’
What I feel after comparing these three companies is that
for bank stocks, it is important to look not only at ‘current figures’ but also at ‘how those figures
will change from here on out’.
Shikoku Bank has:
Low PBR + improvement in lending revenue
Iyogin HD has:
Lower PBR + core business improvement + changes like business integration
Yokohama FG has:
Higher PBR + high profitability + significant market valuation
There are these differences.
Therefore, stock price movements may not be the same
either.
In particular,
don’t just stop at ‘it’s cheap because the PBR is 0.5x’,
but it is important to think as far as
‘Why is it 0.5x?’
and furthermore,
‘Will that reason change in the future?’
And then, rising interest rates are added to this.
Rising interest rates
↓
Rising lending rates
↓
Improvement in net interest income
↓
ROE improvement
↓
Change in market valuation
How far will this flow actually progress?
On the other hand,
Rising interest rates
↓
Falling government bond prices
↓
Valuation losses/realized losses
There is also this reverse impact.
That is precisely why
instead of ‘bank stocks because of rising interest rates’,
it is necessary to look at
‘how much the profit structure of which bank will change due to rising interest rates?’
Looking at the three companies this time,
Shikoku Bank and Iyogin HD are about ‘future changes’,
Yokohama FG is about ‘additional growth while already receiving high valuation’,
and comparing them from these perspectives makes their respective characteristics
easier to see.
Of course, this is not a discussion about ‘which stock is good’.
When looking at bank stocks,
look at PBR × ROE × interest rate hike benefits × bond valuation ×
shareholder composition × future changes as a set.
This is a major point I have discovered as a bank stock researcher
from this comparison of the three companies.