Japan Post Tells Shareholders Negative-Rate World Is ‘Severe’

  • Postal bank holds first investor meeting since November IPO
  • Shares have fallen 15% as sub-zero rates threaten profit

Japan Post Bank Co. held its first shareholders’ meeting since listing as part of a $12 billion initial public offering last year, coming face to face with investors whose shares have fallen 15 percent.

Some 886 of the company’s 600,000 shareholders showed up to hear President Norito Ikeda ask for their support for his efforts to rebalance the bank’s investment portfolio and boost fee income as the Bank of Japan’s negative interest-rate policy threatens to erode profit.

“We’re in a severe environment as a result of negative rates,” Ikeda said. “I think we’re already seeing the results of our initiatives.”

The government sold stakes in Japan Post Holdings Co. and its bank and insurance units mainly to individuals as part of Prime Minister Shinzo Abe’s drive to get people to invest more of their savings. After an initial jump, the bank’s shares fell on concern that it remains reliant on income from government bonds -- most of which now are yielding less than zero -- even as it tries to diversify into assets with potentially higher returns such as stocks and real estate.

For a QuickTake explainer on Japan Post’s privatization, click here.

On a humid and drizzly Tuesday morning at the Saitama Super Arena north of Tokyo, company staff dressed in dark suits and clear plastic raincoats held signs to guide shareholders from nearby train stations. Most of the 9,000 seats prepared were empty as executives answered 15 questions during the 1 hour, 39 minute meeting.

Kenji Otsuka, 90, who has invested in equities for more than 30 years, said he was satisfied with the company’s explanation and wasn’t so concerned about the current stock price. “The whole market is down, so it can’t be helped,” he said, adding that he was considering purchasing more shares while prices are low.

Japan Post Bank’s net income fell 12 percent to 325.1 billion yen ($3.1 billion) in the year ended March 31. It forecasts profit will fall a further 7.7 percent to 300 billion yen this fiscal year. The shares slipped 0.2 percent to 1,237 yen at the close of trading Tuesday, down from the IPO price of 1,450 yen.

“I hope Japan Post will be able to enter lending businesses in the future and compete with Japan’s megabanks,” said Akihito Takayama, a 52-year-old company employee who bought 500 shares in the IPO. Takayama said he was undecided about whether to purchase more shares in future public offerings. “That will depend on the price at the time,” he said.

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