Stupid will be shaken out

During reorganization on Oct 1, 2026, a disproportionately large number of new shares were issued for Rakuten Card and Rakuten Securities relative to their respective profit contributions. This resulted in a lower theoretical EPS for the integrated units compared to that of the legacy Rakuten Bank, leading to significant EPS dilution.

it also implies a higher P/E multiple—and, consequently, a lower implicit EPS for Card and Securities divisions. Nevertheless, the valuation remains "in line with standard benchmarks." Regarding growth and platform multiples (P/E ratios): digital brokerages (such as Rakuten Securities) and high-growth credit card/payment service providers (such as Rakuten Card) typically command higher P/E multiples in the stock market than traditional deposit-taking and lending banks. By definition, a higher P/E multiple corresponds to a lower earnings yield (E/P)—meaning less profit per allocated share.

As part of the FinTech reorganization (effective October 1, 2026), Rakuten Bank acquired a 100% stake in both Rakuten Card and Rakuten Securities Holdings. In exchange, it issued a total of 230,890,116 new non-voting Class A shares (which carry full dividend rights and are convertible on a 1:1 basis):

• Original Rakuten Bank (prior to reorganization): approximately 174.52 million common shares.

• Allocation for Rakuten Card: 157,066,976 new Class A shares (equivalent to approximately 38.7% of the new total share count of roughly 405.41 million shares).

• Allocation for Rakuten Securities HD: 73,823,140 new Class A shares (equivalent to approximately 18.2% of the new total share count).

Theoretical EPS Comparison (Stand-alone vs. Allocation)

For the implicit EPS of Rakuten Card and Rakuten Securities to have been equal/higher than that of the legacy Rakuten Bank (FY2025: JPY 418.76 per share based on a net profit of JPY 73.1 billion), both subsidiaries would have needed to generate the following minimum net profits:

Entity Number of Allocated Shares Required Net Profit for EPS > JPY 418.76 Actual Earnings Situation                     & Forecast Effect

Legacy Rakuten Bank 174.52 million JPY 73.10 billion (Actual for FY2025) Base EPS: JPY 418.76 (FY2025) or JPY 505.10 (August forecast for FY2026).

Rakuten Card   157.07 million > JPY 65.78 billion Significantly lower; a large portion of the FinTech segment's profit was already derived from the bank.

Rakuten Securities   73.82 million > 30.91 billion JPY In the first nine months of 2026

Since the combined entities failed to reach a sustainable annual net profit exceeding 96.7 billion JPY, the projected total earnings per share (EPS) for Rakuten Bank for the fiscal year ending March 2027—despite a 30.4% increase in profit (to 115.0 billion JPY)—fell from an initial 505.10 JPY to 397.08 JPY. Based on the previous year’s figures (using a pro-forma approach as of the announcement in May 2026), the EPS dropped from 418.76 JPY to approximately 296 JPY (a dilution of nearly 30%).