Mebuki Financial Group,Inc. FY2026 Q2 Earnings Report

Financial Highlights

• Net Sales: ¥35.74B
• Operating Income: ¥34.63B
• Net Income: ¥34.46B
• EPS: ¥46.03

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

Verdict: Strong FY2026 Q2 with broad-based profit growth and significant operating leverage, albeit with banking-typical low NIM and structurally high leverage. Revenue rose 28.7% YoY to 357.38 (100M JPY), while operating income surged 76.3% YoY to 346.32 and ordinary income increased 29.6% YoY to 596.94. Net income advanced 36.7% YoY to 437.73, with EPS at 46.03 JPY. Operating margin expanded materially to 96.9% from an estimated 70.7% a year ago (approx. +2,620 bps), reflecting strong positive operating leverage. Net margin rose to 122.5% from an estimated 115.4% (+710 bps), indicating additional contributions beyond core revenues (typical for banks where ‘revenue’ definitions differ and include netting effects). Ordinary margin edged up to 167.0% from ~166.1% (+90 bps), implying relatively steady non-operating contributions at a high level. The effective tax rate was 30.2%, consistent with the fee and market-driven mix. Comprehensive income of 971.75 materially exceeded net income (437.73), implying sizable OCI gains (likely valuation gains on securities), which are non-cash and potentially reversible. ROE printed 4.2%, supported by very high financial leverage (20.33x) and unusually high net profit margin vs accounting ‘revenue’, while asset turnover remained very low (0.002), consistent with a large-balance-sheet bank. Banking metrics were mixed: NIM was low at 0.7% (sector-typical in Japan but below global norms), LDR was healthy at 75.4% (ample deposit funding), and the cost-to-income ratio was very strong at 27.4%. The balance sheet remains large (total assets 20.98 trillion JPY) with equity of 1.03 trillion JPY and a reported D/E of 19.33x, which is normal for banks but high versus non-financials. Dividend payout is a modest 34.6%, suggesting room for distributions within earnings, though cash flow data were not disclosed. Lack of cash flow and capital adequacy disclosures (e.g., CET1) limit a full assessment of resilience. Looking ahead, earnings trajectory hinges on sustaining core income amid low NIM, managing securities valuation volatility, and credit cost discipline in a shifting BoJ policy environment.

Profitability Analysis

ROE decomposition (DuPont): ROE 4.2% = Net Profit Margin (122.5%) × Asset Turnover (0.002) × Financial Leverage (20.33x). The largest driver of YoY improvement appears to be margin expansion: net margin rose 710 bps (to 122.5%), and operating margin expanded sharply (+2,620 bps to 96.9%) as operating income grew much faster than revenue (+76.3% vs +28.7%). Asset turnover remains structurally low at 0.002 given the bank’s sizeable balance sheet relative to reported revenue. Financial leverage of 20.33x is typical for banks and likely stable YoY (not disclosed), thus not the key swing factor. Business rationale: improved operating leverage (CIR 27.4%) and contributions beyond pure core spread income (ordinary income substantially above operating income) supported margins, with possible securities-related gains and fee income contributing; however, detailed drivers are unreported. Sustainability: margin uplift tied to market-related items and OCI sensitivity may be partly non-recurring; sustaining a sub-30% CIR would be supportive but contingent on revenue mix and cost control. Watch for concerning trends: none evident in SG&A versus revenue (not disclosed), but reliance on non-operating components (ordinary > operating) suggests earnings mix risk if market conditions reverse.

Growth Assessment

Top line grew 28.7% YoY to 357.38, while operating income rose 76.3% and net income 36.7%, indicating strong positive operating leverage. Ordinary income growth (+29.6%) tracked revenue growth, but the level of ordinary income vs operating income highlights meaningful non-operating contributions. Revenue sustainability: NIM at 0.7% signals limited spread tailwinds; growth likely depends on loan volume, fee income, and market-related gains. Profit quality: comprehensive income (971.75) far exceeded net income (437.73), implying significant OCI gains; these bolster capital but are volatile. Outlook: With LDR at 75.4% and CIR at 27.4%, the group is well-positioned on funding and efficiency; however, earnings durability hinges on core margin stabilization, fee diversification, and prudent securities duration management amid BoJ policy normalization.

Financial Health

Liquidity: Banking funding profile looks sound with deposits of 17,367.53 (100M JPY) and LDR at 75.4%, indicating ample deposit coverage of loans. Solvency: Total equity is 10,316.70 against total assets of 209,767.44, implying an equity-to-asset ratio near 4.9% (typical for banks). Reported D/E is 19.33x; while a general red flag, this is expected for banks and should be assessed via regulatory capital ratios (not disclosed). Maturity mismatch: Not directly assessable without breakdown of securities duration and term structure, but LDR below 100% reduces near-term funding stress. Off-balance sheet: Not disclosed; contingent liabilities and guarantees could be material for a regional bank. Explicit warnings: D/E > 2.0 (19.33x) flagged, but industry-normal.

Cash Flow Quality

Operating cash flow and free cash flow were not disclosed; OCF/Net Income cannot be assessed. This limits our ability to validate accrual quality and working capital effects. For banks, cash flow analysis is less informative than capital and liquidity metrics; nonetheless, the large gap between comprehensive income and net income suggests valuation gains within OCI rather than cash earnings. Dividend coverage by reported earnings appears comfortable given a 34.6% payout, but FCF coverage is not calculable. No apparent signs of working capital manipulation are inferable given the nature of banking financial statements and lack of disclosure.

Dividend Sustainability

Payout ratio is 34.6%, comfortably below the 60% benchmark, indicating headroom within current earnings. Absence of OCF and capital metrics (CET1 ratio, risk-weighted assets) constrains a robust view on sustainable capacity through cycles. With NIM at 0.7% and earnings partly supported by non-operating and OCI items, the dividend outlook appears supported in the near term by profitability and low CIR, but medium-term sustainability will depend on maintaining core income and managing securities valuation risk. FCF coverage and total dividend paid are unreported.

Risk Assessment

Business Risks:

• Core margin pressure from structurally low NIM (0.7%) limiting spread income growth.
• Market-related income dependency: ordinary income materially exceeds operating income, and comprehensive income significantly exceeds net income.
• Regional concentration risk typical of a regional bank franchise (local economy dependence).
• Fee income diversification not disclosed; potential reliance on interest income and securities gains.

Financial Risks:

• High leverage (D/E 19.33x) inherent to banking; resilience hinges on regulatory capital ratios (not disclosed).
• Securities valuation/duration risk: large OCI swing implied by comprehensive income (971.75 vs NI 437.73).
• Interest rate risk from BoJ policy normalization affecting bond portfolios and deposit betas.
• Credit cost risk if economic conditions deteriorate; NPL and provisioning data not disclosed.
• Liquidity and funding risk appear moderate given LDR 75.4%, but deposit stability must be maintained.

Key Concerns:

• Sustainability of very low CIR (27.4%) if revenue normalizes.
• Earnings mix reliance on non-operating items could reverse with market volatility.
• Data gaps (OCF, capital adequacy ratios, NPLs, securities duration) hinder full risk assessment.

Investment Implications

Key Takeaways:

• Strong YoY profit growth with substantial operating leverage; operating margin expanded by ~2,620 bps.
• Net income rose 36.7% with ROE of 4.2%, in line with domestic regional bank norms.
• NIM at 0.7% underscores structurally low core profitability; efficiency (CIR 27.4%) is a key offset.
• Comprehensive income far above net income signals material OCI sensitivity (securities valuation gains).
• Funding profile is solid (LDR 75.4%), but leverage is inherently high for a bank.

Metrics to Watch:

• Net interest margin (NIM) trajectory and deposit beta sensitivity.
• Credit costs, NPL ratio, and coverage (not disclosed).
• Regulatory capital ratios (CET1, total capital) and OCI sensitivity to rates.
• Cost-to-income ratio sustainability post one-off or market-related items.
• Loan growth vs deposit growth and LDR stability.
• Breakdown of ordinary income (securities gains vs fee income) and durability.

Relative Positioning: Within Japanese regional banks, profitability (ROE 4.2%) is middling but supported by excellent reported efficiency (CIR 27.4%) and a conservative LDR (75.4%). However, low NIM and high reliance on non-operating/OCI contributions temper quality relative to peers with more diversified fee income and lower market sensitivity.

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