Japanese regional lenders dominate list of worst-performing bank stocks in Q4'20

Japanese regional banks dominated the list of 15 worst-performing Asia-Pacific bank stocks in the three months ended Dec. 31, 2020, while Indonesian and Indian banks, mostly smaller ones, logged the highest total returns during the quarter, according to data compiled by S&P Global Market Intelligence.

Japan's Jimoto Holdings Inc., the parent company of regional banks Kirayaka Bank Ltd. and Sendai Bank Ltd., recorded the lowest total returns among Asia-Pacific bank stocks — negative 27.12% — during the quarter, joined by 13 other Japanese lenders, including Michinoku Bank Ltd. and Yamagata Bank Ltd. China's Bank of Jinzhou Co. Ltd. was the only non-Japanese bank on the list of 15 Asia-Pacific bank stocks with the lowest total returns.

Japanese regional banks have been struggling with weakening profitability amid rising credit costs due to the COVID-19 pandemic. For the fiscal year ending March 2021, analysts expect earnings at smaller regional banks to hit an eight-year low as credit costs surged. Given the regional banks' woes, the Japanese government has offered incentives to the lenders to pursue mergers and acquisitions or more aggressive cost-cutting.

Meanwhile, Indonesian banks PT Bank Harda Internasional Tbk and PT Bank Pembangunan Daerah Jawa Barat dan Banten Tbk sat atop the list of best-performing bank stocks in the region in the quarter, with total returns of 207.25% and 78.16%, respectively. The list also featured seven Indian banks, including IndusInd Bank Ltd. with returns of 66.54%, Kotak Mahindra Bank Ltd. with 54.65% and DCB Bank Ltd. with 53.22%.

India's Kotak Mahindra Bank and ICICI Bank Ltd. were the only banks on the list of stocks with highest total returns with market capitalization of more than $50 billion.

In terms of bank indexes in the region, SNL Japan Bank performed the worst with total returns of 2.59% during the fourth quarter of 2020. SNL South Asia Bank posted the best total returns of 40.77%, followed by SNL Southeast Asia Bank with 32.55% and SNL Australia and New Zealand Bank with 26.42%.