Sumitomo Mitsui Trust Group,Inc. FY2026 Q2 Earnings Report

Financial Highlights

• Net Income: ¥133.58B
• EPS: ¥242.55

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

The company reported FY2026 Q2 consolidated results under JGAAP with operating income and ordinary income of ¥196.5bn and net income of ¥171.3bn, up 29% YoY at the bottom line. Despite many zeros in the template (which reflect non-disclosure rather than actual zero), the available figures allow a high-level profitability and balance sheet read for a trust banking group. Equity stands at ¥3.29tn against total assets of ¥82.6tn, implying a simple equity-to-assets ratio of roughly 4.0% and balance sheet leverage consistent with a Japanese trust bank. Using period-end equity as a proxy, half-year ROE is approximately 5.2%, which annualizes to roughly 10–11%, suggesting improved capital efficiency versus recent historical norms for the sector. The effective tax rate is about 22.4% (¥49.4bn taxes on pre-tax income of ~¥220.7bn), contributing to the strong YoY uplift in net income relative to flat operating income. The near identity of operating and ordinary income implies limited non-operating headwinds in the period. EPS printed at ¥242.55; back-solving implies an average share count of approximately 706–707 million shares during the period. Liquidity ratios in the template are not meaningful for banks, but the liabilities-to-equity ratio of ~22.8x aligns with a highly leveraged, asset-heavy financial institution. Cash flow data are not disclosed in this snapshot; consequently, free cash flow and OCF-based quality metrics cannot be assessed. Dividend data are also not disclosed here; however, the combination of solid earnings and a sizable equity base indicates capacity for distributions subject to capital requirements. Revenue and gross profit lines are not applicable to a bank under JGAAP; core earnings should be interpreted via net interest income, fees (trust/asset management), and market-related gains/losses, which are not broken out in this dataset. The DuPont template shows zeros for margin and turnover because revenue is unreported; a more appropriate lens for a bank is ROE derived from net income and equity and ROA derived from net income and assets. Half-year ROA is ~0.21% (annualized ~0.42%), within a typical Japanese trust bank range. Key data limitations restrain deeper decomposition (no segment fees, credit costs, or capital ratios like CET1). Overall, the period exhibits resilient core profitability, beneficial tax dynamics, and stable leverage, while the lack of cash flow and capital adequacy disclosures warrants caution in drawing firm conclusions about dividend sustainability or risk appetite.

Profitability Analysis

ROE decomposition under a bank framework: Using net income of ¥171.3bn and period-end equity of ¥3.29tn, half-year ROE is ~5.2% (annualized ~10.4%). Leverage (assets/equity) is ~25.1x, consistent with a trust bank balance sheet. ROA is ~0.21% for the half-year (¥171.3bn / ¥82.6tn), annualized to ~0.42%. The template DuPont metrics (net profit margin and asset turnover) are not applicable because revenue is not disclosed for banks under JGAAP; margin quality should instead be assessed via net interest margin, fee/commission income from fiduciary and asset management, and market-related income, which are not provided here. Operating income (¥196.5bn) equals ordinary income, indicating limited non-operating noise and suggesting underlying core earnings were the main driver. Net income rose 29% YoY despite flat operating income YoY, implying a lower effective tax rate (~22.4%) and/or reduced credit costs or minorities contributed to bottom-line improvement. Operating leverage cannot be robustly evaluated due to absent top-line/expense breakdowns; however, steady ordinary income alongside stronger net profit suggests good cost discipline and favorable below-the-line items. Absent details on credit costs, fee income, and trading/investment gains, we cannot parse the mix of recurring vs market-dependent profit, which is material for a trust bank.

Growth Assessment

Net income growth of +29% YoY against flat operating income implies the growth was driven by efficiency below operating line (tax rate, credit costs, or minority interest effects). Without net interest income (NII), fee income, or AUM data, sustainability of this growth cannot be confirmed. If the lower effective tax rate (22.4%) is the main driver, this uplift may not be structurally repeatable. If improved credit costs or stable markets supported earnings, persistence will hinge on macro conditions and asset quality. The implied EPS growth is likely comparable to net income growth assuming a stable share count (~706–707m shares, derived from NI/EPS). Forward outlook will depend on interest rate trajectories (impacting NIM and securities valuation), equity/real estate markets (affecting trust/asset management fees), and credit cost normalization. With ROA annualizing near ~0.4% and ROE ~10–11%, profitability appears competitive for the domestic trust banking space if sustained. However, absent CET1 ratios and segment disclosure, we treat the growth quality as moderate with elevated sensitivity to market and tax normalization effects.

Financial Health

Total assets are ¥82.6tn and total liabilities ¥75.1tn with equity of ¥3.29tn, implying a liabilities/equity ratio of ~22.8x and assets/equity of ~25.1x. The simple equity ratio (equity/assets) is about 4.0%, which is typical for a leveraged financial institution but not a regulatory capital measure. Liquidity and current ratios in the template (0.0%) are not meaningful for banks due to the nature of their balance sheets; liquidity should be evaluated via regulatory liquidity coverage and stable funding metrics, which are not provided. Solvency should be assessed via CET1 and total capital ratios; these are not disclosed here. The balance sheet scale and leverage appear consistent with a major trust bank, but without risk-weighted assets we cannot comment on capital buffers. No information is available on deposit mix, loan-to-deposit ratio, or securities duration, which are central to interest rate and liquidity risk. Overall, financial health appears stable on the surface (steady earnings, large equity base), but a fuller assessment requires capital adequacy and funding structure disclosures.

Cash Flow Quality

Operating, investing, and financing cash flows are not disclosed in this dataset (zeros indicate non-reporting). As a result, we cannot compute OCF/NI, FCF, or reconcile earnings to cash. For banks, cash flow analysis is less indicative than for industrials; earnings quality is better judged by pre-provision net revenue, credit costs, and realized/unrealized securities gains, none of which are provided. Working capital metrics in the template do not apply to banks. Given net income strength with flat operating income YoY, earnings quality may have benefited from a lower tax rate (~22.4%) and potentially benign credit costs; persistence depends on these drivers remaining supportive. Without disclosure of credit cost charges or gains/losses, confidence in cash conversion assessment is low.

Dividend Sustainability

Dividend data (DPS, payout ratio, FCF coverage) are not disclosed here. Capacity for shareholder returns is suggested by half-year net income of ¥171.3bn and sizeable equity of ¥3.29tn, but sustainability must be benchmarked against regulatory capital requirements (CET1), earnings volatility from market-sensitive businesses, and credit cost outlook. If earnings annualize toward ¥340bn with an ROE ~10–11%, there is theoretical room for distributions while maintaining capital, subject to risk-weighted asset growth and buffers; however, this is an assumption given missing capital ratios. Without OCF/FCF data, cash coverage analysis is not possible. We therefore assess dividend sustainability qualitatively as dependent on stable core earnings, capital headroom, and market conditions, with insufficient disclosed data to quantify payout capacity.

Risk Assessment

Business Risks:

• Interest rate risk affecting net interest margin and securities valuation (JGB and foreign bonds).
• Market risk and fee sensitivity in trust/asset management businesses (equity and real estate market levels).
• Credit risk from corporate and real estate exposures; potential normalization of credit costs.
• Fiduciary/business mix concentration within Japan and sensitivity to domestic macro conditions.
• Competition from megabanks and independent asset managers for fee income.
• Operational and regulatory risks tied to fiduciary/trust services.

Financial Risks:

• High balance sheet leverage inherent to banking (assets/equity ~25x).
• Unknown capital adequacy (CET1, total capital) and liquidity coverage due to non-disclosure here.
• Potential volatility from securities portfolios under changing yields.
• Earnings sensitivity to tax rate changes given a relatively low effective tax rate (~22.4%) this period.
• Funding structure and duration mismatch risks not assessable from available data.

Key Concerns:

• Lack of disclosure on NII, fees, credit costs, and market-related gains limits assessment of recurring earnings quality.
• Absence of capital and liquidity ratios constrains dividend sustainability and solvency evaluation.
• Bottom-line growth driven by below-operating-line factors may be less durable if tax/credit conditions normalize.

Investment Implications

Key Takeaways:

• Net income grew 29% YoY to ¥171.3bn, with flat operating income YoY indicating favorable below-the-line support (notably a ~22.4% effective tax rate).
• Half-year ROE ~5.2% (annualized ~10–11%) and ROA annualized ~0.42% are solid for a trust bank if maintained.
• Leverage remains high as expected (assets/equity ~25x; liabilities/equity ~22.8x); simple equity ratio ~4.0%.
• EPS of ¥242.55 implies an average share count of ~706–707m; EPS likely tracked NI growth assuming stable shares.
• Data constraints (no cash flows, no capital/liquidity ratios, no segment detail) limit conviction on sustainability.

Metrics to Watch:

• CET1 and total capital ratios, leverage ratio, and buffers versus regulatory minimums.
• Net interest income and net interest margin trends as rates evolve.
• Trust/asset management fee income and AUM/flow trends; equity and real estate market sensitivity.
• Credit costs and non-performing loans; reserve coverage.
• Securities portfolio duration/gains-losses and OCI sensitivity to rate movements.
• Effective tax rate normalization and one-off items.
• Shareholder return policy updates (dividends/buybacks) and payout vs retained earnings.

Relative Positioning: Within Japan’s trust banking peer set, the company’s annualized ROE around low double-digits and ROA around ~0.4% appear competitive if sustained, with leverage typical for the sector; however, limited disclosure on capital adequacy and earnings mix prevents a precise comparison to leading peers.

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