The Chiba Bank,Ltd. FY2026 Q2 Earnings Report

Financial Highlights

• Net Sales: ¥211.37B
• Net Income: ¥45.46B
• EPS: ¥62.50

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: A solid FY2026 Q2 with double-digit profit growth and tight cost control, but profitability remains constrained by a very low NIM and high leverage typical of banks, and dividend payout looks on the high side. Revenue rose 21.7% YoY to 2,113.7, indicating robust topline support likely from higher interest income and steady fee momentum. Ordinary income increased 18.5% YoY to 643.95, and net income climbed 17.0% YoY to 442.22, translating to EPS of 62.5 JPY. Ordinary income margin is 30.4% (643.95/2,113.70), and net profit margin stands at 20.9%. On a YoY basis, net margin likely compressed by roughly 90 bps (prior-period estimate ~21.8% vs 20.9% now), as revenue growth outpaced bottom-line growth. Effective tax rate was 29.5% (185.37/627.59), broadly stable and within the typical range. Comprehensive income reached 1,018.53, well above net income, signaling sizable unrealized valuation gains (likely from securities), which introduces OCI volatility risk going forward. Balance sheet scale remains large with total assets at 20.94 trillion JPY and equity at 1.23 trillion JPY, implying financial leverage of 17.0x. The DuPont-derived ROE is 3.6% (NPM 20.9% × asset turnover 0.010 × leverage 17.0x), which is modest for shareholder return ambitions and below cost-of-equity estimates. Banking KPIs show strengths and weaknesses: the cost-to-income ratio is an excellent 24.5% (efficiency), but NIM is very low at 0.7% (profitability headwind). Liquidity looks sound with a loan-to-deposit ratio of 84.4%, providing buffers against deposit outflows and room to expand lending if demand materializes. Debt-to-equity is 16.0x, high versus industrials but normal for banks, requiring vigilant risk and capital management as interest rates rise. Dividend payout ratio is 72.9%, above conservative thresholds, and may constrain capital accumulation if earnings soften. Cash flow statement items are unreported, so we cannot corroborate earnings quality via OCF; this is a key data limitation. Forward-looking, a gradual BOJ normalization could lift asset yields and NIM over time, but transition risk includes higher funding costs and potential securities valuation losses. Overall, earnings momentum is healthy and efficiency is strong, but low NIM, high payout, and OCI sensitivity are the watchpoints.

Profitability Analysis

ROE decomposition: ROE = Net Profit Margin × Asset Turnover × Financial Leverage = 20.9% × 0.010 × 17.0x ≈ 3.6%. Among the components, the most binding constraint is asset turnover (0.010), typical for banks given large balance sheets relative to P&L; however, the most likely YoY change driver is net profit margin, which appears to have compressed by ~90 bps as revenue growth (+21.7%) outpaced net income growth (+17.0%). Business drivers: NIM is only 0.7%, implying that topline growth likely came from balance sheet volume and interest rate effects, while funding cost catch-up and/or credit-related costs and conservative securities gains realization limited margin upside. The excellent CIR of 24.5% suggests strong cost discipline, partially offsetting NIM pressure. Sustainability: Cost efficiency gains are more sustainable than securities-related contributions; margin recovery hinges on the rate path and deposit beta dynamics. Operating leverage: Revenue growth exceeded profit growth, indicating limited operating leverage this quarter despite very low CIR; this points to spread compression and/or higher non-operating drags. Watch for any SG&A growth outpacing revenues; detailed SG&A is unreported, but CIR implies costs remain tightly managed.

Growth Assessment

Revenue grew 21.7% YoY to 2,113.7, supported by higher interest income (1,459.08) despite rising interest expense (538.49). Ordinary income rose 18.5% to 643.95, and net income increased 17.0% to 442.22, evidencing solid but slightly decelerating profit flow-through. The implied net margin compression (~90 bps YoY) suggests that funding cost escalation and/or lower securities gains limited incremental profitability. With NIM at 0.7%, future growth will likely rely on measured loan volume expansion and selective repricing rather than spread expansion alone. LDR at 84.4% indicates capacity to grow loans without straining liquidity. Comprehensive income at 1,018.53 underscores the contribution from valuation gains; this is not a stable driver and could reverse with rate volatility. Outlook: If BOJ normalization is gradual, asset yields could rise faster than deposit costs for a period, modestly aiding NIM; however, later-cycle deposit betas may compress the spread. Fee income trends are not disclosed; improving fee mix would help resilience. Base case: steady mid-to-high single-digit profit growth contingent on benign credit costs and careful securities risk management, but visibility is tempered by OCI swings and funding cost dynamics.

Financial Health

Liquidity: LDR at 84.4% is within the optimal 70–90% range, indicating healthy liquidity buffers. Deposit franchise (deposits 16.29 trillion JPY) supports stable funding. Solvency and leverage: Equity/Assets ≈ 5.9% (12,316.79/209,436.26); D/E at 16.0x triggers a leverage warning by generic benchmarks but is structurally normal for banks. No current ratio data (not meaningful for banks). Maturity mismatch: Not disclosed, but securities/loans duration risk is material for regional banks—rising yields could pressure OCI and capital if duration is long. Capital adequacy ratios (e.g., CET1) are not reported; this is a key limitation for solvency assessment. Off-balance sheet: No disclosures on guarantees or securitizations; absence of data prevents assessment.

Cash Flow Quality

Operating, investing, and financing cash flows are unreported, so OCF/Net Income and FCF coverage cannot be assessed. Earnings quality cross-checks: Net income (442.22) is far below comprehensive income (1,018.53), implying significant unrealized valuation gains this period; these are non-cash and reversible, elevating headline volatility. Working capital indicators for banks (e.g., deposit/loan flows) are adequate with LDR at 84.4%, but without cash flow statements we cannot evaluate timing effects or potential earnings-to-cash divergence. Conclusion: Earnings quality cannot be validated via OCF; reliance on OCI this quarter increases volatility risk.

Dividend Sustainability

Payout ratio is 72.9%, above the <60% conservative benchmark, implying limited buffer if earnings weaken. With EPS at 62.5 JPY, the implied annualized DPS would be ~45–46 JPY if the payout ratio holds, though DPS is unreported. FCF coverage is not calculable due to missing cash flow and capex data; for banks, capital sustainability depends more on retained earnings and regulatory capital than capex. Current ROE is 3.6%, which is modest, so internal capital generation is limited versus potential growth and regulatory needs. High payout may constrain capital accumulation in a rising rate and potentially higher credit cost environment. Policy outlook: Expect stable-to-cautious dividend policy subject to earnings and capital; visibility is limited without CET1 and RWA data.

Risk Assessment

Business Risks:

• Persistently low NIM at 0.7% compresses core profitability.
• Securities portfolio valuation volatility; comprehensive income materially exceeds net income, indicating OCI sensitivity.
• Credit cost normalization risk if SME or real estate exposures in the service area weaken.
• Competitive deposit pricing (higher deposit betas) could raise funding costs.
• Fee income trajectory unreported; reliance on interest income raises cyclicality.

Financial Risks:

• High leverage (D/E 16.0x) inherent to banking magnifies shocks.
• Interest rate risk from duration mismatch could erode OCI and capital as rates rise.
• Capital adequacy (CET1/RWA) unreported; limits visibility on loss-absorption capacity.
• Dividend payout at 72.9% reduces retained earnings buffer for capital growth.
• Liquidity stress scenario risk, though LDR at 84.4% is currently comfortable.

Key Concerns:

• ROE at 3.6% is below typical cost of equity, constraining valuation resilience.
• Margin compression (~90 bps YoY) despite strong revenue growth suggests funding cost headwinds.
• Dependence on market valuation gains (OCI) to boost comprehensive income increases volatility.
• Data gaps (cash flows, capital ratios, credit costs) limit risk quantification.

Investment Implications

Key Takeaways:

• Double-digit profit growth: Ordinary income +18.5% YoY, net income +17.0% YoY.
• Efficiency strong with CIR at 24.5%, supporting profitability amid low spreads.
• NIM at 0.7% remains the primary profitability constraint.
• Net margin likely compressed ~90 bps YoY as revenue grew faster than earnings.
• ROE at 3.6% reflects low asset turnover and margin pressure typical of regional banks.
• High payout ratio (72.9%) limits capital build; sustainability depends on stable earnings and capital ratios.
• LDR at 84.4% suggests sound liquidity and capacity to lend.
• Comprehensive income substantially above net income signals OCI-driven volatility exposure.

Metrics to Watch:

• Net interest margin (NIM) and deposit beta trends
• Credit costs (net credit charges) and NPL ratios
• Securities portfolio duration and unrealized gains/losses (OCI/AOCI)
• Capital ratios (CET1, total capital, leverage ratio)
• Fee and commission income share of total income
• Loan-to-deposit ratio and core deposit trends
• Guidance on dividend policy and payout targets
• Ordinary income trajectory versus revenue growth

Relative Positioning: Within Japanese regional banks, Chiba Bank exhibits superior cost efficiency (very low CIR) and healthy liquidity (LDR ~84%), but profitability is constrained by an ultra-low NIM and modest ROE. Its high payout offers yield but reduces flexibility to absorb shocks without capital ratio data to confirm buffers.

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