Shizuoka Financial Group,Inc. FY2026 Q2 Earnings Report

Financial Highlights

• Net Income: ¥34.81B
• EPS: ¥85.77

Income Statement

Balance Sheet

Profitability Ratios

Year-over-Year Comparison

Share Information

Dividend 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

Shizuoka Financial Group reported FY2026 Q2 consolidated (JGAAP) net income of ¥46.51bn, a robust +33.6% YoY increase, with operating income and ordinary income both at ¥65.95bn. While revenue-related line items are undisclosed (zeros indicate unreported, not actual zeros), the earnings progression signals stronger core profitability and/or improved below-the-line items versus the prior-year period. Using the disclosed tax expense of ¥14.17bn, an implied effective tax rate in the low 20s (approximately 22–23%) is observed, suggesting a fairly standard tax burden for a domestic financial institution. The difference between ordinary income (¥65.95bn) and net income (¥46.51bn) beyond taxes (~¥5.27bn) likely reflects non-operating/extraordinary items or minority interests; however, detailed drivers are not disclosed. Balance sheet scale remains large, with total assets of ¥15.79tn and equity of ¥1.248tn, implying a financial leverage of 12.66x and an equity-to-asset ratio of about 7.9%—typical for a Japanese regional banking group. Given the half-year period, an annualized net income run-rate of roughly ¥93.0bn would imply an annualized ROE around 7–8% on period-end equity, subject to mix and seasonality. The DuPont metrics provided (net margin, asset turnover) show zeros due to reporting conventions for banks and unreported revenue figures, so standard manufacturing-style ratio decomposition is not meaningful here. Operating cash flow, investing cash flow, and financing cash flow are unreported; for banks, cash flow statements are less indicative of earnings quality than net interest margins, fee income, costs, and credit costs, which are not disclosed here. Liquidity ratios such as current and quick ratios are not applicable to banks and default to zero in the dataset, so we do not draw conclusions from them. Debt-to-equity appears at 11.66x (using total liabilities/equity), broadly aligned with the sector’s balance-sheet-intensive model. Dividend-related figures (DPS, payout ratio, FCF coverage) are unreported; historically, regional banks target stable or progressive shareholder returns, but we cannot infer policy or coverage without management disclosure. Overall, earnings momentum looks favorable in H1 with higher net profits and controlled tax burden, but visibility into income composition (net interest vs. fees vs. securities gains) and credit costs is limited. Key areas to monitor include credit cost trends, securities portfolio valuation sensitivity to interest rates, and fee-income diversification. Capital adequacy cannot be precisely assessed without CET1/Tier 1 data, though the leverage level appears typical. We acknowledge material data limitations and focus the analysis on the available non-zero items complemented with banking-specific interpretive context.

Profitability Analysis

ROE decomposition via classical DuPont is not applicable due to unreported revenue and the banking business model. Instead, we use a banking-oriented lens: (1) Profit level: ordinary income of ¥65.95bn and net income of ¥46.51bn for H1 indicate solid profitability. (2) Taxation: income tax of ¥14.17bn implies an effective tax rate around 22–23% when compared to pre-tax income implied by net income plus tax, within a normal range. (3) Operating leverage: With revenue and expense lines unreported, we cannot measure the cost-to-income ratio or incremental operating leverage; however, the YoY net income growth of +33.6% suggests positive operating leverage or lower credit costs/valuation gains versus the base period. (4) Margin quality: Absence of net interest income, fee income, trading/securities gains, and credit costs prevents assessing margin sustainability or one-off contributions. (5) Asset efficiency: Asset turnover is not meaningful for banks; returns should be assessed via ROA/ROE. Using period-end assets and H1 net income, a rough, non-annualized ROA proxy is ~0.29% (¥46.51bn/¥15.79tn); annualized, ~0.59%. Annualized ROE proxy is ~7.5% (¥93.0bn/¥1.248tn), contingent on mix and seasonality. (6) Risk costs: Not disclosed; profitability resilience to credit cycle cannot be gauged. Overall, profitability appears healthy in H1, but quality and recurrence cannot be confirmed without income mix and credit cost details.

Growth Assessment

Revenue trajectories are not disclosed, constraining analysis of top-line sustainability. Net income increased +33.6% YoY, signaling strong earnings momentum; potential drivers include net interest margin improvement, higher loan volumes, securities-related gains, fee income growth, and/or lower credit costs—none of which are itemized. Given the interest rate environment and market conditions, regional banks’ growth often hinges on deposit pricing discipline, asset mix optimization, and fee diversification; we cannot verify these contributions here. The annualized net income run-rate (~¥93.0bn) implies improved profitability versus many recent years for regional peers, but we avoid extrapolating without H2 guidance. Outlook considerations: credit cost normalization, interest-rate sensitivity of the securities book, and fee income resilience will determine whether the H1 growth rate is repeatable. In absence of management guidance, we characterize the outlook as cautiously constructive with above-trend H1 earnings, but with limited visibility on sustainability.

Financial Health

Total assets are ¥15.79tn, total liabilities ¥14.55tn, and total equity ¥1.248tn, yielding an equity-to-asset ratio around 7.9% and liabilities-to-equity of ~11.66x—typical for a Japanese regional banking group. Liquidity metrics such as current/quick ratios and working capital are not applicable to banks; reported zeros should be ignored. Solvency and capital adequacy cannot be robustly assessed without regulatory capital ratios (CET1, total capital, leverage ratio); however, balance-sheet leverage of 12.66x is within a normal range for the sector. Funding structure (deposit share, market funding, duration) is undisclosed, so structural liquidity risk cannot be evaluated here. Interest rate risk in the banking book and securities portfolio valuation risk remain key watchpoints but are not quantifiable from the provided data. Overall financial health appears stable by scale and leverage, but regulatory capital and liquidity disclosures are needed for a complete assessment.

Cash Flow Quality

Cash flow statements (OCF, ICF, FCF, FCF coverage) are unreported; for banks, conventional FCF analysis is not informative due to the nature of working capital and financial assets/liabilities. Earnings quality should instead be assessed via recurring income mix, credit costs, and valuation gains/losses—none disclosed here. With tax expense consistent and net income up strongly, there is no immediate red flag, but absence of details on credit provisioning, realized/unrealized securities gains, and fee income precludes evaluating persistence vs. one-offs. Working capital concepts are not applicable in the manufacturing sense; loan/deposit flows and securities duration would be the relevant levers, but are not provided.

Dividend Sustainability

Dividend metrics (DPS, payout ratio, FCF coverage) are unreported. Based on EPS of ¥85.77 for H1, the annualized EPS run-rate would be ~¥171.5, but payout policy is unknown in this dataset. In the absence of DPS and policy disclosure, we cannot calculate payout or coverage. For banks, dividend sustainability typically depends on earnings stability, credit cost outlook, and capital adequacy (CET1/Tier 1), which are not provided. Scenario illustration (not guidance): if a payout policy in the 30–40% range were applied to the annualized EPS, indicative DPS would fall in the mid-¥50s to high-¥60s; actual policy could differ materially. Conclusion: insufficient data to assess sustainability; monitor formal guidance, payout targets, and regulatory capital headroom.

Risk Assessment

Business Risks:

• Interest-rate risk affecting net interest margins and securities valuation (unquantified here).
• Credit risk from SME/retail loan portfolios; potential normalization of credit costs from low base.
• Concentration risk in regional economies and specific industries within Shizuoka/neighboring areas.
• Fee income volatility (wealth management, settlement, corporate solutions) amid market fluctuations.
• Competition for deposits and loans from megabanks, online banks, and non-bank lenders.

Financial Risks:

• Securities portfolio market value sensitivity (JGBs, munis, foreign bonds) to rate moves.
• Capital adequacy uncertainty due to absent CET1/total capital data.
• Funding/liquidity structure not disclosed; potential reliance on wholesale funding unknown.
• Duration mismatch and ALM exposures not disclosed; potential OCI volatility.
• Limited visibility into credit cost trajectory and NPL formation.

Key Concerns:

• Lack of disclosure on income mix (NII vs. fees vs. securities gains) and credit costs constrains quality assessment.
• Regulatory capital and liquidity metrics absent, limiting solvency analysis.
• Unreported cash flows and dividend data preclude coverage and payout evaluation.

Investment Implications

Key Takeaways:

• H1 FY2026 net income of ¥46.51bn grew +33.6% YoY, indicating strong earnings momentum.
• Ordinary income of ¥65.95bn with a tax burden around the low 20% range suggests normal taxation.
• Balance sheet scale remains large (¥15.79tn assets) with leverage of 12.66x, typical for a regional bank.
• Annualized ROE proxy around 7–8% based on period-end equity, pending H2 performance.
• Earnings quality and sustainability cannot be confirmed without disclosure of income mix and credit costs.

Metrics to Watch:

• Net interest income and net interest margin (NIM).
• Credit costs (provisions), NPL ratio, and coverage ratio.
• Cost-to-income ratio (OHR) and operating expense discipline.
• Securities portfolio gains/losses and duration/OCI sensitivity.
• CET1 ratio (Basel), leverage ratio, and liquidity coverage metrics.
• Loan-to-deposit ratio and funding mix (retail vs. wholesale).
• Fee and commission income growth (wealth, settlement, corporate solutions).

Relative Positioning: Positioned as a large regional banking group with balance-sheet leverage and equity-to-asset ratio broadly in line with domestic peers; near-term profitability appears solid but transparency on income mix, credit costs, and capital adequacy is required to benchmark durability against the leading regional franchises.

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