Investment Office Logo

Japanese Banks Are Cheap—But for Good Reason

Value investors are being tempted back into the sector,
but problems remain.
Archibald Ciganer, Portfolio Manager, T. Rowe Price Japan Equity Strategy
T. Rowe Price, Insights on Japanese Equity, March 2019

Key Insights

  • Following the sell-off in global equities in late 2018, Japanese banks are currently trading around their lowest valuations in more than a decade.
  • However, Japan’s banking sector continues to face many challenges—and this is duly reflected in the current valuation levels. 
  • Japan has one of the most crowded banking industries in the world. Given the highly competitive landscape, profit margins are being continually squeezed.