The Ogaki Kyoritsu Bank,Ltd. FY2026 Q2 Earnings Report

Financial Highlights

• Net Income: ¥7.80B
• EPS: ¥186.08

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

Ogaki Kyoritsu Bank (8361) reported consolidated FY2026 Q2 results with ordinary income and operating income both at ¥11.169bn and net income at ¥7.747bn, marking a strong year-on-year increase of 78.5% in bottom-line profit. While headline revenue and most cost line-items are undisclosed in XBRL for this period, the disclosed profit figures indicate solid earnings momentum through the first half. Total assets stood at ¥6,602.4bn and total equity at ¥349.1bn, implying a financial leverage ratio (assets/equity) of approximately 18.9x, which is typical for a regional bank balance sheet. Using period-end figures, half-year ROE approximates 2.2% (¥7.747bn / ¥349.1bn), which annualizes to roughly 4.4% assuming similar second-half performance; this is broadly consistent with the recent environment for regional banks amid rising interest rate expectations and improving credit conditions. Estimated half-year ROA is about 0.12% (¥7.747bn / ¥6,602.4bn), annualizing to roughly 0.23%, again within a normal range for Japanese regional banks. The tax charge disclosed is ¥1.526bn; however, effective tax rate cannot be reliably calculated due to incomplete disclosure of pre-tax profit components and potential minority interests or extraordinary items. Balance sheet composition details (loans, deposits, securities) are not provided, limiting granular analysis of margin drivers, credit costs, and securities-related gains/losses. Cash flow data are undisclosed for the period, which is common for interim bank reports and constrains free cash flow and cash conversion analysis. Dividend data are also undisclosed; the observed payout metrics at zero should be interpreted strictly as unreported, not as an absence of dividends. Despite disclosure gaps, the jump in net income suggests improved core profitability and/or lower credit costs or better securities gains versus the prior year. The leverage and computed equity ratio (equity/assets ≈ 5.3%) indicate a standard regional bank capital stance, but regulatory capital metrics (CET1, total capital ratio) are not available here. From a quality-of-earnings standpoint, banks’ sustainability hinges on net interest margin (NIM), fee income stability, operating expense control (OHR), and credit cost normalization; these drivers are not directly visible but likely contributed to the YoY profit improvement. Outlook-wise, the bank’s earnings trajectory into H2 will depend on deposit beta management, loan growth in the local economy, securities book volatility as yields shift, and credit cost trends. Given the limited reported line items, we focus on the available profitability and balance sheet scale data and infer reasonable bank-specific dynamics while clearly flagging data limitations.

Profitability Analysis

ROE decomposition is constrained by missing revenue and net sales line items, but we can approximate: half-year ROE ≈ 2.2% (¥7.747bn NI / ¥349.1bn equity), annualized ≈ 4.4% assuming flat H2. Financial leverage is high by design for a bank at ~18.9x (assets/equity), enhancing ROE given modest underlying ROA. Net profit margin and asset turnover from the provided DuPont are not meaningful because revenue is unreported; for banks, ROA/ROE are more informative than sales-based margins. ROA (half-year) ≈ 0.12%, annualizing to ~0.23%, aligns with a typical regional bank profile. Margin quality likely benefited from a combination of net interest income resilience and controlled credit costs; the 78.5% YoY net income increase points to improved earnings mix and/or lower risk costs versus the prior period. Operating leverage (cost-income dynamics) cannot be directly assessed without fee/interest income and OPEX, but the magnitude of the bottom-line rise suggests either revenue improvements outpaced costs or that non-recurring headwinds last year normalized. Tax expense of ¥1.526bn implies a moderate tax burden, but the effective rate cannot be derived without full pre-tax components. Overall, profitability in H1 appears solid for a regional bank amid a potentially improving rate environment and disciplined risk costs.

Growth Assessment

Top-line revenue is unreported; however, ordinary income of ¥11.169bn and net income of ¥7.747bn reflect strong YoY earnings growth in H1 (+78.5% NI). The sustainability of this growth will depend on core banking revenue (NIM trajectory, loan volumes) and stable non-interest income streams. Profit growth quality appears reasonable given the sector context—gradual rate normalization can lift asset yields—though persistence hinges on deposit pricing and competitive dynamics. Securities portfolio marks can introduce volatility; absent details on realized or valuation gains/losses, we treat H1 strength as partially cyclical. Credit costs are a key swing factor; the strong YoY increase likely embeds benign credit conditions and/or reversals vs. prior-year provisioning. For H2, we expect more normalized growth rates unless additional tailwinds (wider NIM, fee recovery) materialize. Structural growth remains tied to regional economic activity, SME lending, and fee businesses; organic expansion is likely modest but stable.

Financial Health

Total assets are ¥6,602.4bn and total equity is ¥349.1bn, yielding an equity-to-asset ratio of roughly 5.3%. Total liabilities are ¥6,223.4bn, implying a leverage profile typical for regional banks. Liquidity metrics like current and quick ratios are not meaningful for banks and are undisclosed here. Solvency in banking is better assessed via regulatory capital (CET1, total capital ratio) and liquidity coverage metrics (LCR, NSFR), which are not provided; thus, conclusions are necessarily tentative. The implied debt-to-equity metric of ~17.8x aligns with the computed leverage, reflecting deposit-funded balance sheet structure. Without loan/deposit breakdowns or NPL ratios, asset quality cannot be quantified, but the earnings improvement suggests no acute solvency concerns in H1 based on available data.

Cash Flow Quality

Operating, investing, and financing cash flows are unreported, limiting direct assessment of cash earnings conversion and free cash flow. For banks, operating cash flow can be volatile due to balance sheet movements and is less indicative of earnings quality than net interest income stability, credit cost trends, and fee durability. Earnings quality in H1 appears supported by core profitability (ordinary income = ¥11.169bn) and a sizeable net income (¥7.747bn), but we cannot disaggregate into core vs. non-core components. Working capital concepts are not directly applicable given banking balance sheets; instead, loan/deposit dynamics and securities cash flows would matter, but are undisclosed. Free cash flow measures are not meaningful for banks in the absence of cash flow details and capex relevance.

Dividend Sustainability

Dividend per share and payout metrics are unreported for this period; zeros should not be interpreted as no dividend. EPS is ¥186.08 for H1, implying roughly 41.6 million shares outstanding (¥7.747bn / ¥186.08), which helps frame potential payout capacity, but actual policy, interim dividend decisions, and regulatory constraints are not disclosed here. Coverage from free cash flow cannot be assessed due to missing OCF/FCF data. Historically, Japanese regional banks tend to target stable or gradually increasing dividends within capital constraints; absent CET1 and earnings outlook details, sustainability cannot be firmly gauged. Based on current H1 earnings power and typical sector practices, the bank would have capacity for distributions, but confirmation requires capital ratios and management guidance.

Risk Assessment

Business Risks:

• Net interest margin compression if deposit betas rise faster than asset yields
• Securities portfolio valuation losses amid rate volatility
• Slow regional economic growth limiting loan demand and fee income
• Competitive pressure from megabanks and fintechs
• Regulatory and compliance changes affecting capital and liquidity requirements

Financial Risks:

• Credit cost normalization from currently benign levels
• Concentration risk in regional SME portfolios and real estate-related exposures
• Interest rate risk in the banking book (duration mismatch)
• Limited fee diversification increasing reliance on spread income
• Potential capital ratio pressure if unrealized losses or RWA inflation occur

Key Concerns:

• Absence of disclosed revenue breakdowns and credit cost details in Q2 limits visibility
• Lack of regulatory capital metrics (CET1, total capital ratio) constrains solvency assessment
• Undisclosed cash flows and dividend information hinder payout sustainability analysis

Investment Implications

Key Takeaways:

• H1 FY2026 net income ¥7.747bn (+78.5% YoY) indicates strong earnings momentum
• Leverage ~18.9x and equity/assets ~5.3% are in line with a typical regional bank balance sheet
• Half-year ROE ≈ 2.2% (annualized ~4.4%), ROA ≈ 0.12% (annualized ~0.23%)
• Profit improvement likely driven by better core margins and/or lower credit costs, though components are undisclosed
• Data gaps (revenue, cash flows, dividends, capital ratios) require cautious interpretation

Metrics to Watch:

• Net interest margin and loan/deposit spreads
• Credit costs (provisions, NPL ratio, coverage)
• Cost-to-income ratio (operating efficiency)
• Securities gains/losses and interest rate risk metrics
• Regulatory capital ratios (CET1, total capital), LCR/NSFR
• Loan growth and deposit beta behavior
• Management guidance for FY2026 full-year earnings and dividends

Relative Positioning: Within the Japanese regional banking peer set, the bank’s H1 profitability and leverage appear in a normal range; the strong YoY net income growth suggests potentially better-than-peer momentum, but lack of detailed income and capital disclosures prevents a definitive relative assessment.

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