We set our ¥1,300 target price using an excess return approach. We apply a PBR of c1.2x to our FY3/25 forecast BPS of ¥1,122. We derive our target PBR from an FY3/27E RoE of 8.8%, a risk-free rate of 0.5%, an expected rate of return for the market as a whole of 6.7%, a beta of 0.95, and an adjustment coefficient of 0.84. Based on our scenario analysis, our anticipated range for the share price is ¥760-¥1,810.

We see the following risks to the attainment of our target price: 1) hits to economic value accompanying changes in the financial and economic environment in Japan and overseas (the emergence of greater-than-expected NPLs and impairments on marketable securities), 2) tougher financial regulations, 3) unexpected and inappropriate operational management, and 4) major changes in the management team. In our scenario analysis, we see more upside potential than concerns about the emergence of downside risk.