Quick View
| Metric | Current Period | Same Period of Previous Year | YoY |
|---|---|---|---|
| Revenue | ¥2.471B | ¥2.141B | +15.4% |
| Operating Income | - | - | - |
| Ordinary Income | ¥0.323B | ¥0.226B | +43.3% |
| Net Income | ¥0.244B | ¥0.186B | +31.2% |
| ROE | 3.1% | 2.5% | - |
Executive Summary
This earnings period recorded higher revenue and higher profit, with Ordinary Revenue, Ordinary Income, and Net Income all increasing. Revenue (Ordinary Revenue) was ¥2.471B (+15.4% YoY), Ordinary Income was ¥0.323B (+43.3%), and Net Income was ¥0.244B (+31.2%; Net Income attributable to owners of the parent was ¥0.238B, +32.2%). The primary drivers were the expansion of fund investment income and expense control in the Banking Business segment. A key feature was that profit growth outpaced revenue growth.
Factors Affecting Earnings
【Revenue】Ordinary Revenue was ¥2.471B, an increase of +15.4% YoY. The Banking Business generated ¥1.960B (+19.9%), accounting for 79.3% of total revenue and serving as the core growth driver. The Leasing and Credit Card Business was ¥0.478B (+0.7%), essentially flat, while Other Businesses were ¥0.033B (+1.9%), indicating that growth outside the Banking Business was limited. Fund investment income expanded significantly to ¥1.518B, up +29.1% YoY. However, while interest on loans was ¥1.196B (+24.1%), interest on deposits surged to ¥0.278B (+272.1%), indicating that rising funding costs are progressing behind the expansion in revenue.
【Profit and Loss】Ordinary Income increased to ¥0.323B, up +43.3% YoY, growing at a pace exceeding the revenue growth rate. The primary factor was the improvement in the Banking Business segment, whose segment profit was ¥0.313B (+48.9%) and profit margin improved to 16.0% from 12.9% in the previous year. Expenses were controlled at ¥1.116B, down -4.6% YoY, contributing to improved operating leverage. Meanwhile, net fees and commissions income was ¥0.369B, down -3.5% YoY, indicating a slight weakening in non-interest income. Net Income attributable to owners of the parent was ¥0.238B, up +32.2% YoY, while extraordinary losses were limited to impairment losses of ¥0.001B, indicating a limited impact from temporary factors. The company achieved higher revenue and higher profit, with the expansion of interest income and expense control driving profit growth.
Segment Analysis
The Banking Business generated Ordinary Revenue of ¥1.960B (+19.9% YoY) and segment profit of ¥0.313B (+48.9%), serving as the core contributor to consolidated profit. The Leasing and Credit Card Business generated Ordinary Revenue of ¥0.478B (+0.7%) and segment profit of ¥0.021B (-5.4%), resulting in lower profit and indicating limited growth in non-banking businesses. Other Businesses, including credit guarantee operations, generated Ordinary Revenue of ¥0.033B (+1.9%) and segment profit of ¥0.009B (-50.3%), representing a substantial decline in profit. The Banking Business profit margin improved to 16.0% from 12.9% in the previous year, highlighting a significant gap in profit growth among segments.
Key Financial Indicators
【Profitability】The Ordinary Income margin was 13.1%, improving from 10.5% in the same period of the previous year, while the Net Income margin was 9.6% on a Net Income attributable to owners of the parent basis, exceeding the previous year's 8.4%. ROE was 3.1%, or approximately 3.0% on an annualized basis, indicating that capital efficiency remains low despite the high financial leverage typical of the banking industry.【Cash Quality】The difference between Profit Before Tax of ¥0.322B and Ordinary Income of ¥0.323B was negligible. Extraordinary losses consisted solely of impairment losses of ¥0.001B, indicating that earnings were based on Ordinary Revenue and that the impact of temporary factors was limited.【Investment Efficiency】ROIC was 4.1%, below 5%, and total asset turnover was also low, indicating room for improvement in revenue-generating capacity relative to the asset base.【Financial Soundness】The Equity Ratio was 4.4% and the loan-to-deposit ratio was 78.3%, both within generally observed ranges. However, the Equity Ratio is relatively low from a regulatory capital perspective, and the depth of the capital base requires ongoing monitoring.
Cash Flow Analysis
As the company did not disclose a cash flow statement for this earnings period, funding trends are analyzed based on changes in the balance sheet. Deposits increased to ¥1,621.06B, up ¥26.04B (+1.6%) YoY, while loans increased to ¥1,268.77B, up ¥15.54B (+1.2%). Deposit growth exceeded loan growth, and the loan-to-deposit ratio remained stable at 78.3%. Securities increased to ¥272.67B, up ¥9.32B (+3.5%), indicating continued accumulation of earning assets. Borrowings decreased to ¥106.28B, down ¥11.76B (-10.0%), indicating reduced reliance on external borrowing and progress toward a stable, deposit-centered funding structure.
Earnings Quality
Current-period profit was primarily driven by the expansion of Ordinary Revenue. Extraordinary gains and losses were limited to impairment losses of ¥0.001B, and there was almost no uplift from temporary factors. The divergence between Ordinary Income and Profit Before Tax was also minimal at ¥0.001B, indicating good earnings quality. However, funding costs surged +247.2% YoY, and the +29.1% growth in fund investment income was partially offset by the sharp increase in funding costs, which is an important consideration regarding the earnings structure. The net interest margin was low at 0.96%, and if interest rates continue to rise, growth in net interest income may decelerate. Comprehensive Income improved substantially to ¥0.717B from negative ¥0.182B in the same period of the previous year, primarily due to an improvement in valuation differences on securities (negative ¥12.25B → negative ¥8.82B). However, because this improvement depends on market factors, it should be distinguished as a factor causing the divergence between Net Income and Comprehensive Income.
Earnings Forecast and Guidance
Against the full-year Ordinary Income forecast of ¥0.250B, Ordinary Income for the cumulative Q3 period reached ¥0.323B, representing a progress rate of 129.3% and significantly exceeding the standard progress benchmark of approximately 75%. Cumulative Net Income of ¥0.238B attributable to owners of the parent represents a progress rate of 119.0% against the full-year Net Income forecast of ¥0.200B. Since the company has not revised either its earnings forecast or dividend forecast, it may be assuming conservative conditions for market-related gains and losses, funding costs, credit costs, and other factors in Q4.
Shareholder Returns
The interim dividend was ¥30.00 per share, and the full-year dividend forecast is ¥60.00 per share. Based on the full-year Net Income forecast of ¥0.200B and the weighted-average number of shares outstanding during the period of 11,278 thousand shares, the annual total dividend amount is calculated at approximately ¥0.068B, resulting in a Payout Ratio of approximately 33.9%, within the benchmark of less than 60%. Cumulative Q3 Net Income attributable to owners of the parent of ¥0.238B has already exceeded the full-year forecast, and the dividend burden appears restrained relative to the current profit level. As no data on share repurchases is available, the assessment is based solely on the Payout Ratio.
Risk Factors
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Interest Rate Repricing Risk: Funding costs surged +247.2% YoY, while the net interest margin remained low at 0.96%. The growth rate of interest on deposits (+272.1%) exceeded that of interest on loans (+24.1%), meaning that management of funding costs in a rising interest-rate environment will determine future profit margins.
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Business Concentration in Banking: The Banking Business accounts for 79.3% of Ordinary Revenue and the majority of segment profit. The company's consolidated performance is structured to be directly affected by trends in interest income, credit conditions, and the regional economy in this business.
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Monitoring of Capital Levels: The Equity Ratio is 4.4%. Although the funding structure has stabilizing factors such as a loan-to-deposit ratio of 78.3% and declining borrowings, the capital base's resilience to asset growth and fluctuations in market prices requires ongoing monitoring.
Industry Benchmark (For Reference; Compiled by the Company)
Profitability and Returns
| Metric | Company | Median (IQR) | Delta |
|---|---|---|---|
| Net Income Margin | 9.9% | – | – |
| Because median data is unavailable, assessment of the company's position in terms of absolute levels is limited. |
Growth and Capital Efficiency
| Metric | Company | Median (IQR) | Delta |
|---|---|---|---|
| Revenue Growth Rate (YoY) | 15.4% | – | – |
| Because median data is unavailable, assessment of the company's position in terms of absolute levels is limited. |
※Source: Compiled by the Company
Key Takeaways from the Earnings
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Ordinary Income increased +43.3% YoY, expanding at a pace exceeding revenue growth, while higher revenue and higher profit in the Banking Business and expense reductions (-4.6%) drove the improvement in performance. The full-year Ordinary Income progress rate reached 129.3%, with cumulative results exceeding the company's plan.
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Fund investment income increased +29.1%, while funding costs surged +247.2%. The low net interest margin of 0.96% could represent a structural constraint on future profit margins.
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Net assets expanded to ¥7.983B (+9.0% YoY), but the Equity Ratio of 4.4%, ROE of 3.1%, and ROIC of 4.1% remain subject to ongoing monitoring from both capital adequacy and capital efficiency perspectives.
This report is an earnings analysis document automatically generated by AI based on XBRL earnings flash report data. It does not recommend investment in any specific security. Industry benchmarks are reference information compiled by the Company based on publicly disclosed earnings data. Investment decisions should be made at your own responsibility, after consulting with a professional as necessary.
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AI Financial Analysis
Executive Summary
Shimizu Bank delivered a strong FY2026 Q3 cumulative earnings result, led by higher banking income and a substantial increase in banking-segment profit. Consolidated ordinary revenue increased 15.4% year on year to ¥24.71bn. Ordinary income rose 43.3% to ¥3.23bn, materially outpacing revenue growth. Profit attributable to owners of parent increased 32.2% to ¥2.38bn, equivalent to EPS of ¥211.11. The banking segment was the core business, generating ¥19.60bn of external ordinary revenue and ¥3.13bn of segment profit. Banking-segment profit rose 48.9% year on year, exceeding the 19.9% increase in its external revenue. The leasing and credit-card segment generated ¥4.78bn of external revenue, up 0.7%, while segment profit declined 5.4% to ¥0.21bn. Consolidated ordinary-income margin expanded to 13.1% from 10.5% a year earlier, an improvement of approximately 260 basis points. Net profit margin was 9.6%, indicating that the improvement in pre-tax earnings was retained at the bottom line despite a 24.4% effective tax rate. Interest income increased 29.1% to ¥15.18bn, driven principally by a 24.1% rise in interest on loans to ¥11.96bn and a 42.4% rise in interest and dividends on securities to ¥2.43bn. Interest expense rose sharply to ¥2.95bn from ¥0.85bn, with deposit interest expense increasing to ¥2.78bn from ¥0.75bn, demonstrating that funding-cost normalization is becoming material. Nevertheless, the rise in earning-asset income exceeded higher funding costs, supporting the earnings expansion. General and administrative expenses declined 4.6% to ¥11.16bn, adding meaningful positive operating leverage. The reported NIM of 0.96% remains below the 1.5% warning threshold and limits the structural profitability outlook despite the improved quarterly result. Annualized ROE was 4.0%, still below the usual 8% threshold for satisfactory bank capital efficiency. The full-year ordinary-income forecast of ¥2.50bn has already been exceeded by the nine-month actual result of ¥3.23bn, while the full-year forecast has not been revised. Full-year profit attributable to owners guidance of ¥2.00bn has likewise been exceeded by the nine-month actual result of ¥2.38bn. The principal near-term issue is therefore not earnings momentum, but whether management formalizes an upward revision and whether higher deposit costs and low structural NIM constrain the durability of the earnings improvement.
Profitability Analysis
Annualized DuPont ROE is 4.0%, comprising a 9.6% net profit margin, 0.018x asset turnover and 22.85x financial leverage. For a bank, the low asset-turnover figure reflects the balance-sheet-intensive intermediation model, while high leverage is structurally associated with deposit-funded banking rather than directly comparable with industrial-company leverage. The most favorable earnings change was the expansion in the ordinary-income margin to 13.1% from 10.5%, or approximately 260bp. Ordinary income increased 43.3%, well ahead of the 15.4% increase in ordinary revenue, evidencing positive operating leverage. General and administrative expenses fell 4.6% year on year even as ordinary revenue increased, further supporting margin expansion. Interest income increased by ¥3.42bn, whereas interest expense increased by ¥2.10bn; the bank therefore retained a positive, but narrowing, incremental benefit from the changing rate environment. Fees and commissions income declined modestly by 1.1% to ¥8.59bn, while fees and commissions expense increased 0.8% to ¥4.90bn, leaving fee-based income less supportive than interest income. The banking segment accounted for approximately 91% of consolidated segment profit before eliminations and is clearly the core earnings driver. Its segment-profit margin improved to 15.7% from 12.9%. The leasing and credit-card segment's profit margin declined to 4.2% from 4.4%, and its profit contraction indicates that the earnings acceleration is concentrated in banking. The five-factor DuPont tax burden of 0.739 is normal, consistent with the 24.4% effective tax rate. The interest burden of 0.997 shows that the gap between ordinary income and pre-tax profit was immaterial. The ¥0.09bn impairment loss was also immaterial relative to pre-tax profit. Overall, earnings quality within the income statement is favorable because profit growth was driven by core banking profit and lower administrative expense rather than extraordinary gains. However, the 4.0% annualized ROE and reported 4.1% ROIC remain below preferred capital-efficiency levels, so the improved margin has not yet translated into high returns on the enlarged equity base.
Growth Assessment
Nine-month revenue growth of 15.4% was supported by the banking segment, where external ordinary revenue increased 19.9% to ¥19.60bn. Loan balances grew 1.2% year on year to ¥1,268.77bn, while deposits increased 1.6% to ¥1,621.06bn. The growth in interest on loans of 24.1% materially exceeded loan-balance growth, indicating improved asset yield rather than balance-sheet expansion alone. Securities income also increased 42.4%, contributing to the increase in interest income. The underlying revenue trajectory is therefore principally rate and yield driven. The leasing and credit-card segment's near-flat revenue growth and 5.4% profit decline provide less support for broad-based group growth. Management's full-year revenue forecast is ¥31.40bn, and nine-month revenue represents 78.7% of that target, modestly above the standard 75% Q3 progress rate. Nine-month ordinary income of ¥3.23bn is 129.3% of the ¥2.50bn full-year forecast. Nine-month profit attributable to owners of parent of ¥2.38bn is 119.0% of the ¥2.00bn full-year forecast. These over-achievements strongly imply scope for a formal earnings revision if fourth-quarter trends remain stable. The forecast assumes 8.7% year-on-year growth in ordinary income, which is materially less demanding than the 43.3% growth achieved through Q3. Sustainability depends on the ability to preserve loan and securities yields as deposit costs continue to reprice upward. Deposit interest expense rose far faster than deposits, and this is the principal factor that could slow incremental profit growth. The absence of a forecast revision preserves a conservative reported outlook but also makes the current guidance less informative as a measure of expected full-year earnings.
Financial Health
Total assets increased 0.9% year on year to ¥1,824.10bn, funded predominantly by deposits of ¥1,621.06bn. Loans and bills discounted were ¥1,268.77bn, producing a calculated loan-to-deposit ratio of 78.3%. This is within the 70-90% range generally regarded as balanced for a bank and indicates that loans are covered by a stable deposit base. Cash and due from banks were ¥231.83bn, equal to 14.3% of deposits, while securities were ¥272.67bn, providing a substantial liquidity and investment buffer alongside customer deposits. Borrowed money declined 10.0% year on year to ¥106.28bn, reducing reliance on borrowings. Total equity increased 9.0% to ¥79.83bn, supported by retained earnings growth and a ¥4.73bn year-on-year improvement in accumulated other comprehensive income. Total liabilities represented 95.6% of total assets, which is consistent with a highly leveraged banking balance sheet. The reported D/E ratio of 21.85x triggers the high-leverage quality alert and, in a conventional corporate analysis, would indicate aggressive debt financing. In banking context, this ratio is largely driven by deposit and other operating liabilities funding financial assets, so it should not be interpreted in the same way as industrial-company borrowings-to-equity. Its impact is nevertheless important: a thin equity layer means that credit losses, valuation losses, or funding stress can have an amplified effect on shareholder capital. The raw reported capital adequacy ratio was 4.3%, up from 4.0% a year earlier but below the 8% Basel benchmark cited in the supplied framework; this is a material capital-risk indicator and requires close monitoring. The bank also carries ¥5.25bn of acceptances and guarantees, representing off-balance-sheet credit exposure matched by customer liabilities for acceptances. Intangible assets were only 0.1% of total assets, indicating that balance-sheet value is not materially dependent on acquired intangible assets.
Notable B/S Changes
Accumulated other comprehensive income: improved by ¥4.73bn year on year to negative ¥5.37bn, supporting the ¥6.58bn increase in total equity but leaving capital sensitive to securities-market valuation movements. Borrowed money: decreased by ¥11.76bn (-10.0%) to ¥106.28bn, indicating reduced reliance on borrowings alongside deposit growth. Loans and bills discounted: increased by ¥15.54bn (+1.2%) to ¥1,268.77bn, supporting interest-income growth while requiring continued credit-quality monitoring. Deposits: increased by ¥26.04bn (+1.6%) to ¥1,621.06bn, reinforcing the stable funding base and maintaining a 78.3% loan-to-deposit ratio.
Cash Flow Quality
Core earnings quality appears favorable at the income-statement level because ordinary income increased by ¥0.98bn and profit attributable to owners increased by ¥0.58bn without reliance on material extraordinary income. The only reported extraordinary item was a ¥0.09bn impairment loss, equivalent to less than 0.3% of ordinary income and not material to the earnings trajectory. The difference between ordinary income of ¥3.23bn and pre-tax profit of ¥3.22bn was only ¥0.01bn, indicating limited below-ordinary volatility. Net income attributable to owners was 73.7% of pre-tax profit, consistent with the reported 24.4% tax rate. Comprehensive income attributable to owners was ¥7.11bn, substantially above net income attributable to owners of ¥2.38bn, driven by a ¥4.73bn positive other-comprehensive-income contribution. This comprehensive-income uplift was associated with improvement in securities valuation-related accumulated OCI, which strengthened reported equity but remains market-value sensitive rather than equivalent to recurring operating profit. Loans increased by ¥15.54bn and deposits increased by ¥26.04bn year on year, a balance-sheet mix that is supportive of funding stability. Borrowings fell by ¥11.76bn, which also points to a less wholesale-funding-dependent balance-sheet structure. The key cash-conversion and free-cash-flow ratios are not used here because banking cash flows are heavily influenced by deposit, loan and securities movements; the balance-sheet funding and liquidity profile is more decision-useful for this institution.
Dividend Sustainability
The stated full-year dividend forecast is ¥60.00 per share, comprising the ¥30.00 interim dividend and an implied ¥30.00 year-end dividend. Against forecast EPS of ¥177.94, the implied dividend payout ratio is 33.7%. This is below the 60% sustainability benchmark and leaves meaningful capacity for capital retention. The nine-month EPS of ¥211.11 already exceeds the full-year EPS forecast, so the forecast dividend is also conservatively covered by year-to-date profitability. On nine-month profit attributable to owners of ¥2.38bn, the annual ¥60.00 per-share dividend would require approximately ¥0.68bn based on 11.28 million average shares, equivalent to roughly 28.5% of nine-month profit. Retained earnings increased to ¥65.62bn from ¥63.93bn a year earlier, supporting the current dividend commitment. The reported dividend policy has not been revised. Dividend capacity should nevertheless be considered alongside the reported 4.3% capital adequacy ratio, because capital retention is particularly relevant for a regional bank with a thin reported capital buffer. The present payout level appears financially manageable based on earnings and retained earnings, but the balance between shareholder distributions and capital strengthening remains an important policy consideration.
Risk Assessment
Business risks include Net interest margin risk: the reported NIM of 0.96% is below the 1.5% warning threshold. Although interest income rose strongly, deposit interest expense increased from ¥0.75bn to ¥2.78bn, showing that deposit repricing can erode future spread expansion., Rate-sensitive securities risk: securities were ¥272.67bn and valuation-related accumulated OCI remained negative at ¥5.37bn despite a year-on-year improvement. Further market-rate changes could affect valuation reserves and capital., Core-business concentration: banking generated approximately 91% of pre-elimination segment profit. The leasing and credit-card segment produced only ¥0.21bn of profit and declined year on year, limiting diversification., Regional-bank competitive risk: competition for deposits and loans can accelerate deposit-rate increases or constrain loan pricing, especially as monetary conditions normalize..
Financial risks include High leverage alert: reported D/E was 21.85x. Deposit-funded leverage is normal for banks, but the large liability base magnifies the capital impact of credit, market-value and funding shocks., Capital adequacy risk: the supplied raw capital adequacy ratio was 4.3%, below the 8% Basel benchmark in the provided framework. This is the most consequential balance-sheet metric to monitor despite its improvement from 4.0%., Off-balance-sheet exposure: acceptances and guarantees totaled ¥5.25bn, creating contingent credit exposure., OCI sensitivity: comprehensive income was ¥7.17bn versus net income of ¥2.44bn, so a significant portion of the period's equity increase was generated by market-sensitive OCI rather than retained earnings..
Key concerns include High likelihood/high impact: whether the sharp increase in deposit costs continues to outpace repricing of loan and securities yields, given the 0.96% NIM., Medium likelihood/high impact: preservation and improvement of the reported capital adequacy ratio while maintaining dividends., Medium likelihood/medium impact: sustainability of the Q3 earnings beat after full-year ordinary-income and owner-attributable-profit guidance were already exceeded., Medium likelihood/medium impact: continued securities valuation recovery; a reversal would reduce OCI and potentially pressure capital..
Investment Implications
Key takeaways include Nine-month ordinary income rose 43.3% to ¥3.23bn and already exceeded the ¥2.50bn full-year forecast by 29.3%., The banking segment is the core earnings engine, with segment profit up 48.9% to ¥3.13bn and a 15.7% segment-profit margin., Loan-to-deposit ratio of 78.3% and declining borrowings support a balanced funding profile., The major structural constraint is the 0.96% NIM, as deposit funding costs are rising rapidly., Annualized ROE of 4.0% and ROIC of 4.1% indicate that current profitability remains modest relative to the capital employed., The reported 4.3% capital adequacy ratio and high reported D/E require greater attention than conventional industrial-company leverage metrics..
Metrics to watch include NIM and the quarterly change in interest on loans relative to interest on deposits, Deposit growth, loan growth and the loan-to-deposit ratio, Capital adequacy ratio and the level of accumulated other comprehensive income, Securities valuation movements and their effect on equity, Credit costs, loan-loss allowance movements and asset-quality indicators, Any revision to full-year ordinary-income, net-income and dividend guidance, Leasing and credit-card segment profit recovery.
Regarding relative positioning, Shimizu Bank showed strong near-term earnings momentum and a well-funded loan-to-deposit profile, but its sub-1% NIM, modest 4.0% annualized ROE, earnings concentration in banking and low reported capital adequacy ratio differentiate it from higher-return, better-capitalized banking peers.