Fukuoka Financial Group,Inc. FY2026 Q2 Earnings Report

Financial Highlights

• Net Income: ¥39.20B
• EPS: ¥230.50

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

Fukuoka Financial Group (8354) reported FY2026 Q2 consolidated results under JGAAP with limited line-item disclosure but clear bottom-line growth. Net income reached ¥43.574 billion, up 11.2% YoY, indicating positive earnings momentum in the first half. Operating income and ordinary income were both disclosed at ¥62.814 billion, suggesting stable core profitability versus the prior year (reported as +0.0% YoY for operating income). Income tax expense was ¥17.398 billion, implying an effective tax rate of roughly 28–29% based on the implied pre-tax profit. Total assets stood at ¥33.212 trillion and total liabilities at ¥31.333 trillion, resulting in total equity of ¥1.018 trillion. The equity-to-assets ratio is approximately 3.1%, typical for a regional banking group, and financial leverage (assets/equity) is about 32.6x. On a simple half-year basis, ROA approximates 0.13% (¥43.6b / ¥33.2t), which annualizes to roughly 0.26%; multiplying by financial leverage implies an annualized ROE near the high single digits (~8–9%), contingent on second-half trends. Ordinary income equaling operating income suggests limited non-operating volatility this period, though detailed drivers (net interest income, fees, credit costs, and securities-related gains/losses) are not disclosed. Cash flow statements and revenue breakdowns are not reported in the provided XBRL mapping (zeros indicate non-disclosure, not actual zero values), constraining granular margin and cash conversion analysis. The debt-to-equity ratio of ~30.8x is inherent to banking balance sheets and not directly comparable to industrials. EPS for the period is ¥230.50, but dividends and share counts are not disclosed here, limiting payout and per-share capital analysis. With net profit expanding and leverage stable, core capital accretion likely continued in H1, though regulatory ratios (CET1, total capital, and liquidity metrics) are not available in this extract. Macroeconomic context—BOJ policy normalization and an upward bias in domestic interest rates—likely aided asset yields but may raise securities valuation volatility and funding costs. Credit quality trends are not provided; thus, the sustainability of earnings momentum depends on credit costs and market-related income remaining benign. Overall, the first-half print indicates solid earnings growth with stable capital positioning for a regional financial group, but missing disclosures on revenue composition, cash flows, dividends, and regulatory capital warrant caution in interpreting durability.

Profitability Analysis

ROE_decomposition: Using a banking-adapted DuPont: ROA ≈ Net income / Total assets = 43.574b / 33,212.213b ≈ 0.13% for H1; annualized ≈ 0.26%. Financial leverage ≈ Assets / Equity = 33,212.213b / 1,018.165b ≈ 32.6x. Implied ROE for H1 ≈ 0.13% × 32.6 ≈ 4.3%; annualized ≈ 8.6%. Net margin and asset turnover based on 'Revenue' are not meaningful here due to non-disclosure and banking business model. margin_quality: Operating and ordinary income are both ¥62.814b, with net income ¥43.574b; implied effective tax rate ~28.5% (17.398 / ~60.972). Lack of line-item disclosure (net interest income, fees, trading, and credit costs) limits assessment of recurring versus market-driven profits. operating_leverage: YoY operating income reported flat (+0.0%), while net income rose +11.2% YoY, implying a favorable non-operating/tax/credit cost mix or improved cost efficiency. However, without cost-to-income and personnel/SG&A data, operating leverage cannot be quantified.

Growth Assessment

revenue_sustainability: Revenue is not disclosed in the dataset; growth assessment relies on income statement bottoms. Ordinary and operating income stability suggests steady core operations through Q2. profit_quality: Net income +11.2% YoY with ordinary income equal to operating income indicates limited reliance on non-operating gains this period. The absence of credit cost and securities valuation detail constrains a firm view on recurring profit quality. outlook: Assuming continued rate normalization and stable credit costs, H2 earnings could track H1 levels, implying annualized ROE in the high single digits. Key swing factors: net interest margin evolution, loan growth in Kyushu/Fukuoka markets, funding cost pass-through, and securities portfolio valuation.

Financial Health

liquidity: Traditional current/quick ratios are not applicable to banks; liquidity must be assessed via LCR/NSFR and cash/deposits-to-assets, which are not disclosed here. solvency: Total equity ¥1.018t vs. assets ¥33.212t yields an equity ratio ~3.1%, consistent with regulated banking leverage. Regulatory capital ratios (CET1, total capital) are not provided; therefore, statutory solvency cannot be assessed from this extract. capital_structure: Liabilities ¥31.333t; liabilities-to-equity ≈ 30.8x (in line with banking models). Asset mix and duration data are missing; interest rate risk from securities/loan portfolios remains a key, but unquantified, consideration.

Cash Flow Quality

earnings_quality: Operating, investing, and financing cash flows are not disclosed (zeros indicate non-reporting). Hence, OCF-to-net income, accruals, and FCF conversion cannot be evaluated. FCF_analysis: Free cash flow is not derivable due to absent OCF and capex. For banks, traditional FCF is less informative; focus should be on core earnings, credit costs, and capital generation. working_capital: Working capital metrics are not applicable in a banking context; loan/deposit dynamics would be more relevant but are not provided.

Dividend Sustainability

payout_ratio_assessment: Annual DPS and payout ratio are not disclosed in this dataset. With EPS at ¥230.50 for H1, indicative payout capacity appears adequate if historical payout practices persist, but exact coverage cannot be computed here. FCF_coverage: Not assessable due to missing cash flow data; for banks, dividends are typically covered by retained earnings and capital generation rather than conventional FCF. policy_outlook: Without a stated dividend policy in the extract, sustainability depends on earnings stability, credit costs, and capital adequacy (CET1), which are not disclosed. Monitoring capital buffers and profit trajectory through H2 is essential.

Risk Assessment

Business Risks:

• Net interest margin sensitivity to BOJ policy shifts affecting asset yields and funding costs
• Regional economic exposure (Kyushu/Fukuoka) impacting loan demand and credit quality
• Securities portfolio valuation volatility (JGBs and foreign bonds) amid rate changes
• Competition from megabanks and digital finance platforms pressuring fees and spreads
• Slower-than-expected fee income growth from bancassurance, settlement, and asset management

Financial Risks:

• High leverage inherent to banking (liabilities/equity ~30.8x)
• Potential rise in credit costs if SMEs/real estate weaken
• Duration and convexity risk in bond holdings causing OCI/equity volatility
• Refinancing and deposit beta risk increasing funding costs
• Unknown regulatory capital (CET1) and liquidity (LCR/NSFR) levels in this extract

Key Concerns:

• Material data gaps: no revenue breakdown, cash flow, or capital ratios disclosed here
• Earnings sustainability dependent on credit costs and securities gains/losses not itemized
• Interest rate risk to both earnings and capital through AFS/HTM portfolios

Investment Implications

Key Takeaways:

• H1 net income of ¥43.574b grew 11.2% YoY, signaling solid earnings momentum
• Implied annualized ROE around the high single digits, assuming H2 continuity
• Capital base of ¥1.018t with equity ratio ~3.1% is consistent with banking norms
• Limited disclosure on drivers (NIM, fees, credit costs) constrains quality assessment
• Tax rate appears ~28–29%, consistent with normalized levels

Metrics to Watch:

• Net interest margin and loan/deposit spreads
• Credit costs (NPL ratio, coverage, and net credit expenses)
• Securities portfolio duration and unrealized gains/losses
• Regulatory capital ratios (CET1 fully loaded and transitional)
• Cost-to-income ratio and fee income contribution
• Loan growth and deposit mix (retail vs. corporate; time vs. demand)

Relative Positioning: As a major regional financial group, FFG’s scale in Kyushu offers stable deposit funding and localized lending opportunities; earnings growth in H1 appears healthy, but absence of disclosure on capital ratios, NIM, and credit costs in this dataset limits benchmarking against megabanks and peer regionals.

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