Iyogin Holdings,Inc. FY2026 Q2 Earnings Report

Financial Highlights

• Net Sales: ¥138.00B
• Net Income: ¥43.26B
• EPS: ¥147.27

Income Statement

Balance Sheet

Cash Flow Statement

Profitability Ratios

Year-over-Year Comparison

Share Information

Dividend Information

Segment Information

Full Year Forecast

Disclaimer

This data was automatically extracted from XBRL files. Please refer to the original disclosure documents for accuracy.

AI Financial Analysis

Executive Summary

Verdict: Strong earnings momentum with robust bottom-line growth, but profitability quality flags arise from negative operating cash flow and structurally thin net interest margin. Revenue rose 13.5% YoY to 1,380.04, supported by banking income expansion, while ordinary income increased 28.6% YoY to 552.43. Net income surged 44.4% YoY to 432.43, outpacing top-line growth and indicating strong operating leverage through a very low cost-to-income ratio (22.7%). EBITDA reached 590.30, implying a high EBITDA margin of 42.8% against revenue, unusual for banks but consistent with the reported income structure under JGAAP. ROE was 5.1% (calculated equals reported), aided by high financial leverage (11.0x) offsetting very low asset turnover (0.015x). Net profit margin is high at 31.3%, but banking NIM is just 0.9%, well below the 1.5%-2% comfort zone. Basis point analysis of margins (e.g., net margin, operating margin, NIM) versus prior year is not possible due to unreported historical margin data in the provided set. Earnings quality is a concern: OCF/Net Income was -1.74x, driven by balance-sheet movements typical for banks (likely loan growth and deposit flows) rather than core profitability. Liquidity profile from a banking perspective remains acceptable with LDR at 90.8% (near the top of the optimal range), but consolidated D/E at 10.0x is structurally high for banks and should be contextualized by regulatory capital rather than corporate leverage norms. Tax rate is stable at 29.2%, suggesting no unusual tax items. ROIC at 4.6% is below the 5% warning threshold, implying pressure on capital efficiency despite earnings growth. With BoJ policy normalization still gradual, NIM recovery prospects remain constrained; profit sustainability will rely on fee income, tight cost control, and credit cost discipline. The very low CIR provides a cushion against NIM headwinds, but maintaining double-digit profit growth likely requires either fee growth or a sustained benign credit environment. Negative OCF warrants monitoring but is not uncommon for banks; absent credit quality data, forward risk skew includes credit cost normalization. Overall, the quarter demonstrates strong reported profitability and cost discipline, offset by structural NIM weakness and cash flow volatility typical of the sector.

Profitability Analysis

ROE decomposition: ROE = Net Profit Margin × Asset Turnover × Financial Leverage = 31.3% × 0.015 × 11.0x ≈ 5.1%. The most constraining component is asset turnover (0.015), reflecting a large balance sheet relative to reported revenue, which is typical for banks under JGAAP presentation. Financial leverage (11.0x) is the primary positive driver, amplifying returns on a thin margin business model. Net profit margin appears high at 31.3% due to the accounting presentation (banking income structure) rather than product-level margin strength; underlying NIM at 0.9% signals core spread profitability remains weak. The improvement in earnings YoY (ordinary income +28.6%, net income +44.4%) most likely stems from better non-interest income, securities-related gains, and/or tight operating costs (CIR 22.7%), though non-operating breakdown is unreported. Sustainability: cost efficiency looks structurally strong, but margin uplift from NIM is uncertain given rate dynamics; absent a clearer fee income breakdown, earnings growth may normalize. Watch for any adverse trend where expense growth outpaces revenue; current data suggests the opposite, with revenue growth (+13.5%) comfortably exceeding implied cost growth (CIR at a very low level).

Growth Assessment

Top-line growth of 13.5% indicates healthy banking income momentum. Ordinary income grew 28.6% and net income 44.4%, implying positive operating leverage and likely benign credit costs in the period (credit cost disclosure not provided). Without segment detail, revenue sustainability depends on: (1) maintaining volume growth in loans and fees, (2) stabilizing or modestly improving NIM, and (3) preserving cost discipline. The CIR at 22.7% is a significant competitive advantage, but sustaining such a low level may be challenging. Given NIM at 0.9%, earnings are more vulnerable to credit cost normalization or market-related income volatility. Outlook: mid-single-digit ROE suggests room for improvement; any NIM tailwind from rate normalization would be incremental, but a flat/low-rate environment could cap upside. Overall growth quality is good on reported metrics, but lack of disclosure on credit costs and fee/non-interest income mix is a key limitation.

Financial Health

Leverage: D/E at 10.0x is flagged as high versus corporate benchmarks, but is structurally normal for banks; interpretation should rely on regulatory capital ratios (unreported here). Liquidity: LDR at 90.8% sits near the upper end of the optimal range (70–90%), indicating efficient deployment of deposits with limited but present headroom. Current and quick ratios are not applicable for banks and are unreported. Maturity mismatch: not directly assessable without breakdown of deposit tenors and loan maturities; however, a sub-100% LDR reduces immediate liquidity risk. No off-balance sheet obligations were disclosed in the provided data. Intangible assets are small (123.59) relative to equity (8,500.62), indicating limited goodwill risk. No interest coverage ratio was computable due to missing interest expense at the P/L level, though banking-specific net interest measures are provided.

Cash Flow Quality

OCF/Net Income is -1.74x, which triggers an earnings quality flag. For banks, negative OCF often reflects loan growth and deposit flows (working capital-like balance sheet movements) rather than poor core profitability; still, persistent negative OCF could signal aggressive balance sheet expansion or securities allocation shifts. Capex was modest at -29.00, consistent with a low-capex banking model. Free cash flow cannot be calculated with missing investing CF; dividend and buyback sustainability should therefore be judged against earnings and capital ratios (not provided). No obvious signs of quarter-end working capital window-dressing can be evaluated due to lack of breakdown; monitor loan growth versus deposit growth and securities purchases for confirmation.

Dividend Sustainability

Calculated payout ratio is 32.6%, comfortably below the <60% benchmark and consistent with conservative payout policies. FCF coverage is not calculable due to missing investing CF and the sector’s atypical OCF dynamics; banks generally fund dividends from earnings and capital buffers rather than traditional FCF. Share repurchases totaled -40.01 and appear modest relative to earnings. Without regulatory capital data (CET1, total capital), we cannot fully assess headroom; however, current earnings strength suggests near-term payout is supportable, subject to credit cost stability and capital requirements.

Risk Assessment

Business Risks:

• Structural NIM weakness at 0.9% limits profitability headroom.
• Potential credit cost normalization from low levels (credit cost data not provided).
• Revenue mix opacity: non-interest income and securities gains breakdown unreported, elevating earnings volatility risk.
• Competitive pressure in regional banking potentially compressing spreads and fees.

Financial Risks:

• High reported leverage (D/E 10.0x) inherent to banking; sensitive to asset quality shocks.
• Negative OCF (-752.29) indicating cash flow volatility from balance sheet expansion.
• LDR at 90.8% leaves limited liquidity buffer if deposit outflows occur.
• ROIC at 4.6% below 5% warning threshold, implying constrained capital efficiency.

Key Concerns:

• Earnings quality flag: OCF/NI at -1.74x.
• NIM below 1.5% benchmark despite strong reported income, pointing to reliance on cost control and other income.
• Lack of disclosure on credit costs, NII/fee mix, and securities gains reduces visibility into sustainability.
• Sensitivity to interest rate path and market volatility affecting securities portfolios.

Investment Implications

Key Takeaways:

• Strong YoY profit growth: ordinary income +28.6%, net income +44.4%.
• Cost discipline outstanding with CIR at 22.7%, a key support to earnings.
• ROE at 5.1% benefits from high leverage; core profitability constrained by low NIM (0.9%).
• OCF negative and volatile, typical for banks but warrants monitoring.
• ROIC of 4.6% indicates below-target capital efficiency.

Metrics to Watch:

• Net interest margin trend and sensitivity to BoJ rate moves.
• Credit costs (NPL ratio, coverage, net credit costs) and loan growth quality.
• Non-interest income composition (fees vs. securities-related gains).
• Cost-to-income ratio trajectory and digitalization-driven efficiency.
• LDR and deposit mix stability (retail vs. corporate, time vs. demand).
• Regulatory capital ratios (CET1, total capital) for dividend/buyback capacity.

Relative Positioning: Within Japanese regional banks, the group exhibits superior cost efficiency (CIR 22.7%) and solid profit growth, but faces the same sector-wide NIM compression. Profitability (ROE ~5%) is in line to slightly above many peers given cost control, yet capital efficiency (ROIC 4.6%) and low NIM remain structural constraints.

Disclaimer

This analysis was auto-generated by AI. Please note the following:

• No Guarantee of Accuracy: The accuracy and completeness of this analysis are not guaranteed. For accurate financial data, please refer to the original disclosure documents published on TDnet or other official sources
• Not Investment Advice: This analysis is for general informational purposes only and does not constitute investment advice under applicable securities laws. It is not a recommendation to buy or sell any specific securities
• At Your Own Risk: Investment decisions should be made at your own discretion and risk. We assume no liability for any losses incurred based on this analysis