Asian Regional Banks Sheltered from Global MaelstromApril 20, 2023
While Asian financial companies have by no means been safe from the recent banking turmoil scything through other developed economies, regional banks have had a far less punishing month in terms of sales and earnings estimates than their peers in other markets. The financials sector is one of the least negatively-revised in developed Asia, making it a standout in the region with net positive guidance changes over the past month.
Regional banks, led by Japanese companies, are now forecasted to maintain a stable level of sales this year, with larger banks and more widely-exposed financial companies taking a far greater hit to sales from broader banking uncertainty. As detailed below, Asia’s regionals appear to be standing a bit above the chaos and expected to be able to protect their sales for the next two years.
Change in FY1 and FY2 Sales Estimates (%) – DM Asia, current fiscal year:
Earnings per share, as seen in the table below, is a slightly different story. Though still subject to a drop in estimated earnings, regional banks in the region still stand well above other financial companies for projected earnings. Their US peers fall at the bottom of this list.
Change in FY1 and FY2 EPS Estimates (%) – DM Asia, current fiscal year:
Importantly, the earnings outlook for DM Asia regional banks is much brighter looking forward to the next fiscal year relative to both other types of banks and financials, and to American regional banks. While investors are pricing in higher rates across developed Asia by the end of 2023, Asian regional banks, along with other, more insulated financial sub-industries, may prove to be a standout amidst sector-wide uncertainty around the world.