Yokohama Financial Group,Inc. FY2026 Q2 Earnings Report

Financial Highlights

• Operating Income: ¥15.21B
• Net Income: ¥14.89B
• EPS: ¥48.24

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

Yokohama Financial Group (consolidated, JGAAP) reported FY2026 Q2 results with net income of ¥55.0bn, up 24.1% YoY, indicating solid earnings momentum in the first half. Ordinary income reached ¥79.5bn, which is the most relevant profitability indicator for Japanese banks under JGAAP, far exceeding operating income of ¥15.2bn due to banking gains and interest-related items classified below operating income. The effective tax burden inferred from reported figures appears around 26% (¥19.2bn tax on ~¥74.2bn pre-tax), suggesting a normalized tax environment. Total assets stood at ¥24.81tn against total equity of ¥1.385tn, implying high financial leverage typical for banks at ~17.9x (assets/equity). Based on period-end balances, equity-to-asset ratio is approximately 5.6%, consistent with a capital-light, deposit-funded banking model. While DuPont ratios provided in the dataset show zero margins (due to unreported revenue), a bank-appropriate lens shows half-year ROA of roughly 0.22% and an implied half-year ROE near 4.0%, which annualize to approximately 0.44% ROA and ~8% ROE if earnings trajectory is sustained. The +11.6% YoY growth in operating income and stronger growth in bottom-line suggest positive jaws and disciplined cost control or improved gross banking income. The gap between operating and ordinary income indicates a significant contribution from net interest income, fees, and market-related items (e.g., securities), all of which fall into ordinary income for financial institutions under JGAAP. Balance sheet scale increased to nearly ¥25tn, supporting earnings capacity but also heightening sensitivity to interest rate and credit risk. Liquidity and current ratio metrics in the dataset are not meaningful for a bank; funding stability should instead be assessed via deposits, liquidity coverage, and duration metrics, which are not disclosed here. Cash flow statement items are unreported; for banks, OCF/FCF metrics are typically not decision-useful and depend heavily on working capital flows tied to loans and deposits. Dividends are unreported; with EPS of ¥48.24 for the half, the group has capacity to consider returns, but payout visibility cannot be assessed without DPS and capital ratios. The reported debt-to-equity of 16.97x and financial leverage of 17.91x are internally consistent with the balance sheet and sector profile. Overall, the result signals resilient profitability into H1, aided by ordinary income strength and taxed at a normalized rate, albeit with data gaps around revenue composition, credit costs, fee income, and capital adequacy. Key watchpoints include credit cost normalization, interest rate sensitivity of the securities book, and the sustainability of ordinary income drivers into H2. Given the limitations in disclosed line items (zeros reflect non-disclosure), conclusions rely on the few concrete figures provided and sector context.

Profitability Analysis

ROE_decomposition: Traditional DuPont using sales is not applicable due to unreported revenue and bank-specific accounting. Using bank-style metrics: H1 ROA ≈ 0.22% (¥55.0bn / ¥24.81tn) and implied H1 ROE ≈ 3.97% (¥55.0bn / ¥1.385tn), annualizing to ~0.44% ROA and ~8.0% ROE if H2 is similar. Financial leverage (Assets/Equity) is ~17.9x, consistent with the dataset. The ROE path thus reflects modest asset returns multiplied by high leverage, typical for regional financial groups. margin_quality: Operating income rose 11.6% YoY to ¥15.2bn, but ordinary income of ¥79.5bn is the core profitability yardstick under JGAAP for banks. The large spread between operating and ordinary income suggests most earnings arise from net interest income, fees, and market/securities-related items recorded in ordinary income. Effective tax rate implied near ~26% (¥19.2bn / ~¥74.2bn pre-tax), indicating no unusual tax distortion in H1. Specific net interest margin (NIM), fee income mix, and credit cost details are not disclosed; thus, margin quality cannot be fully dissected. operating_leverage: With operating income up 11.6% YoY and net income up 24.1% YoY, the group likely achieved positive jaws (income growth outpacing expense growth), and potentially benefited from lower credit costs or better market-related gains. However, absent revenue and expense breakdowns, precise operating leverage quantification is not possible.

Growth Assessment

revenue_sustainability: Revenue items are unreported; for banks, sustainability hinges on NIM, loan volume growth, fee income, and securities income. Ordinary income of ¥79.5bn in H1 signals robust gross banking income, but its persistence depends on interest rate environment and credit demand. profit_quality: Net income rose 24.1% YoY to ¥55.0bn. The growth appears supported by a broad-based ordinary income increase. Without disclosures on credit costs and fee/market components, we cannot confirm whether growth is primarily recurring (NII/fees) or partly cyclical/market-driven. outlook: If H1 trends persist and absent adverse market moves, annualized ROE could be around ~8%, consistent with a healthy regional bank footing. That said, BOJ policy normalization, yield curve shifts, and potential credit cost normalization could moderate H2 earnings vs H1.

Financial Health

liquidity: Current and quick ratios are not meaningful for banks; liquidity should be evaluated via deposit stability, LCR/NSFR, and high-quality liquid assets. These items are not disclosed. Cash & equivalents are unreported. solvency: Total assets: ¥24.81tn; total liabilities: ¥23.50tn; total equity: ¥1.385tn. Equity-to-asset ratio ≈ 5.6%. Financial leverage ≈ 17.9x. These are within sector norms but leave limited loss-absorption compared to non-financials. Regulatory capital (CET1, total capital ratio) is not provided. capital_structure: Debt-to-equity reported at 16.97x aligns with assets/equity leverage for a bank. The balance sheet indicates a deposit-funded, leveraged model typical for regional financial institutions. No maturity, LDR, or capital ratio data is available to assess buffers more precisely.

Cash Flow Quality

earnings_quality: Cash flow figures are unreported. For banks, OCF is structurally volatile and less indicative of earnings quality. The more relevant anchor is stability of ordinary income and credit costs, which are not disclosed in detail. FCF_analysis: Free cash flow is not a meaningful concept for banks in the same way as for industrials; investment and operating cash flows are driven by financial asset/liability flows. As such, FCF coverage ratios are not decision-useful here. working_capital: Traditional working capital metrics do not apply. Loan/deposit dynamics and liquidity buffers would be the appropriate lens but are not disclosed.

Dividend Sustainability

payout_ratio_assessment: DPS and payout ratio are unreported. EPS is ¥48.24 (H1). Without DPS and capital adequacy data, we cannot quantify payout levels or headroom. Sector practice often targets stable or gradually rising dividends, but no assumption is made here. FCF_coverage: Not applicable due to the nature of bank cash flows and unreported CF data. policy_outlook: Earnings momentum (+24.1% YoY net income in H1) suggests capacity for shareholder returns, subject to regulatory capital constraints and internal growth needs. Confirmation requires CET1 ratio, risk-weighted assets, and management guidance, none of which are provided.

Risk Assessment

Business Risks:

• Net interest margin compression if deposit betas rise faster than asset yields.
• Credit cost normalization from low levels amid macro slowdown or real estate stress.
• Volatility in securities portfolios (JGBs, foreign bonds, equities) due to rate and market moves.
• Fee income softness if market activity or asset management flows weaken.
• Regional concentration risk in the Kanagawa/Yokohama economic area.

Financial Risks:

• Interest rate risk in the banking book (duration mismatch and AFS valuation swings).
• Capital adequacy pressure if unrealized losses increase or RWA expands; CET1 not disclosed.
• Liquidity and funding risks under stressed conditions; LCR/NSFR not disclosed.
• Operational and IT investment costs affecting cost-to-income if income growth slows.
• Regulatory changes (Basel III finalization, domestic buffer requirements) impacting distributable capacity.

Key Concerns:

• High leverage (assets/equity ~17.9x) magnifies earnings and loss sensitivity.
• Ordinary income reliance on market-related items cannot be assessed due to limited disclosures.
• Absence of credit cost and NPL data obscures asset quality trends.

Investment Implications

Key Takeaways:

• H1 FY2026 net income grew 24.1% YoY to ¥55.0bn, with ordinary income at ¥79.5bn indicating robust core profitability.
• Annualized ROE could be near ~8% given H1 results; ROA annualized around ~0.44%, typical for a healthy regional bank.
• Capital intensity is low with equity-to-asset ratio ~5.6%; leverage ~17.9x is in line with sector structure.
• Data gaps (revenue, cash flows, credit costs, capital ratios, DPS) limit precise assessment of margin durability and distribution capacity.
• Tax burden appears normalized (~26% effective), with no evident one-off distortions in the limited data.

Metrics to Watch:

• Net interest margin and loan-deposit spread.
• Credit costs, NPL ratio, and coverage ratio.
• Fee and commission income growth vs. market/securities gains.
• Cost-to-income ratio (OHR) and operating jaws.
• CET1 ratio and total capital ratio; risk-weighted asset growth.
• Unrealized gains/losses on AFS securities and duration profile.
• Loan growth and sector mix (e.g., real estate exposure).

Relative Positioning: Based on available figures, Yokohama Financial Group exhibits solid H1 earnings momentum and sector-typical leverage. However, without disclosure of capital ratios, asset quality, and income mix, its relative standing versus domestic regional peers (many targeting mid-to-high single-digit ROE amid BOJ normalization) cannot be conclusively benchmarked.

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