| Metric | Current Period | Same Period of Previous Year | YoY |
|---|---|---|---|
| Revenue | ¥99.0B | ¥82.6B | +19.9% |
| Operating Income | - | - | - |
| Ordinary Income | ¥22.5B | ¥15.4B | +45.8% |
| Net Income | ¥15.9B | ¥12.1B | +31.0% |
| ROE | 1.9% | 1.5% | - |
In Q1 FY2027, Shimizu Bank reported substantial year-on-year increases in both ordinary revenue and profit, with profit growth exceeding revenue growth, resulting in a strong earnings performance. Ordinary revenue (equivalent to revenue) was ¥99.0B (¥82.6B in the same period of the previous year, +19.9%), ordinary income was ¥22.5B (¥15.4B, +45.8%), and net income attributable to owners of the parent was ¥15.8B (¥12.1B, +31.1%). In addition to the expansion of net interest income due to increases in interest on loans and interest and dividends on securities, revenue growth exceeded expense growth, improving cost efficiency and resulting in profit growth outpacing revenue growth.
【Revenue】Ordinary revenue was ¥99.0B, up +19.9% year on year. While the core Banking Business drove overall performance with revenue of ¥82.7B (83.6% of total, +26.4%), the Leasing and Credit Card Business posted a decline in revenue to ¥15.2B (-5.6%). The increase in Banking Business revenue was primarily attributable to a +21.5% increase in interest on loans, from ¥37.62B to ¥45.70B, and a substantial increase in interest and dividends on securities, from ¥7.07B to ¥14.83B.
【Profit and Loss】Ordinary income was ¥22.5B (+45.8%), while net income attributable to owners of the parent was ¥15.8B (+31.1%). Interest expenses increased from ¥8.94B to ¥16.67B, up +86.5%, indicating higher funding costs; however, the increase in interest income (+37.7%) exceeded this rise, and net interest income expanded from ¥38.46B to ¥48.61B, up +26.4%. Net fees and commissions also increased by +10.8%, from ¥11.96B to ¥13.25B, remaining resilient. Expenses increased only +2.2%, from ¥36.80B to ¥37.61B, and the fact that revenue growth exceeded expense growth led to an improvement in profit margins. No extraordinary gains or losses were recorded in either the previous year or the current period, and the impact of temporary factors was limited. Accordingly, the current period can be characterized as one of higher revenue and higher profit.
The Banking Business drove the majority of company-wide profit, generating ordinary revenue of ¥82.7B (83.6% of total, +26.4%) and segment profit of ¥21.98B (+29.9%, profit margin of 26.6%). Although the Leasing and Credit Card Business recorded ordinary revenue of ¥15.2B (-5.6%), segment profit increased modestly to ¥0.31B (+10.7%, profit margin of 2.0%). Other businesses, including credit guarantee operations, generated ordinary revenue of ¥1.0B (+5.2%) and segment profit of ¥0.26B, remaining broadly flat. The structure in which the Banking Business’s high profit margin drives overall profitability is clear, and the business portfolio is highly concentrated in the Banking Business.
【Profitability】The ordinary income margin relative to ordinary revenue improved to 22.7% (18.7% in the previous year), while the net profit margin (based on net income attributable to owners of the parent) improved to 16.0% (14.6% in the previous year), confirming a trend toward higher profitability. 【Cash Quality】Because extraordinary gains and losses were zero, ordinary income flows directly through to net income, and the effective tax rate was 29.4% (¥6.6B in income taxes and other taxes / ¥22.5B in profit before tax). 【Investment Efficiency】ROE was 1.9%, while basic EPS increased substantially by +30.2%, from ¥107.31 to ¥139.75. 【Financial Soundness】The equity ratio (net assets / total assets) was 4.5%, while the BIS-based capital adequacy ratio was 4.4%, both remaining at the same level as the previous year. The loan-to-deposit ratio was 76.6%, calculated as loans of ¥1,268.8B / deposits of ¥1,656.9B, within an appropriate range, while total assets increased +1.1% year on year to ¥18,343.9B.
Analyzing funding trends based on the balance sheet in lieu of disclosure of the cash flow statement, deposits increased +1.6%, from ¥1,631.5B to ¥1,656.9B, indicating continued expansion of a stable funding base. Negotiable certificates of deposit (CDs) increased substantially from ¥5B to ¥178B, indicating greater use of market-based funding, while borrowings declined -33.4%, from ¥771.8B to ¥513.7B, showing a shift in the funding mix toward deposits and CDs. Cash and due from banks increased +6.4%, from ¥2,250.9B to ¥2,394.3B, adding to the liquidity buffer. Securities increased +2.0%, from ¥2,677.0B to ¥2,729.6B, indicating continued accumulation of investment assets. Overall, the Bank appears to be balancing funding cost management through deposit growth and debt reduction with the maintenance of liquidity.
Extraordinary gains and losses were zero in the current period, creating a structure in which profit earned at the ordinary income level directly translates into net income. Net fees and commissions were ¥13.25B, representing 13.4% of ordinary revenue and contributing as a stable source of income. Meanwhile, comprehensive income was ¥19.0B, differing from net income attributable to owners of the parent of ¥15.8B. The primary reason was the deterioration in valuation differences on other securities, from +¥14.75B in the previous year to -¥5.16B in the current period. Deferred hedge gains and losses made a positive contribution, improving from -¥0.42B in the previous year to +¥9.22B, thereby offsetting part of the valuation difference. The gap between ordinary income and net income is attributable to income taxes and other taxes (effective tax rate of 29.4%), and structural distortions can be considered limited.
Progress against the full-year forecast was 26.2% for ordinary revenue (¥99.0B / ¥378.0B), 59.3% for ordinary income (¥22.5B / ¥38.0B), and 63.3% for net income (¥15.8B / ¥25.0B, based on net income attributable to owners of the parent). Both ordinary income and net income substantially exceeded the standard quarterly progress level of 25%. This was attributable to increases in net interest income and net fees and commissions, as well as improved cost efficiency resulting from expense controls. No revisions were made to the earnings forecast or dividend forecast during the current quarter.
The Company’s full-year dividend forecast is ¥60 per share, implying a payout ratio of approximately 27.2% based on forecast EPS of ¥220.87. The previous year’s dividend was ¥30 per share; however, this represented the actual dividend at either the interim or year-end point and therefore is not directly comparable with the full-year level. Given that net income progress was strong at 63.3% as of Q1, dividend coverage from an earnings perspective is secured. No revision was made to the dividend forecast during the current quarter.
Funding Cost Increase Risk: Interest expenses rose sharply by +86.5%, from ¥8.94B to ¥16.67B, confirming the high interest-rate sensitivity on the liability side. Although the growth in interest income (+37.7%) exceeded this increase and net interest income expanded, continued increases in deposit rates could place pressure on the net interest margin.
Capital Adequacy Risk: The BIS-based capital adequacy ratio was 4.4%, while the equity ratio (net assets / total assets) was 4.5%, with no significant change from the previous year. With net assets of ¥825.8B against total assets of ¥18,343.9B, the Bank has a highly leveraged financial structure, and its loss-absorption capacity in a stress scenario may be relatively limited.
Securities Valuation Loss Risk: Valuation differences on other securities deteriorated from +¥14.75B in the previous year to -¥5.16B in the current period. Given the substantial securities balance of ¥2,729.6B, changes in the interest-rate environment may affect equity through accumulated other comprehensive income (AOCI).
Profitability and Returns
| Metric | Company | Median (IQR) | Delta |
|---|---|---|---|
| Net Profit Margin | Company | 16.1% | – |
Although industry comparison data is limited, the Company’s net profit margin of 16.1% reflects the current period’s trend of higher profit.
Growth and Capital Efficiency
| Metric | Company | Median (IQR) | Delta |
|---|---|---|---|
| Revenue Growth Rate (YoY) | Company | 19.9% | – |
The Company’s revenue growth rate of 19.9% is a high level reflecting growth in net interest income and net fees and commissions.
Source: Compiled by the Company
Structural Trend of Improved Profitability: The ordinary income margin relative to ordinary revenue improved to 22.7% (18.7% in the previous year), as increases in net interest income and net fees and commissions exceeded the +2.2% increase in expenses, improving cost efficiency.
Strong Progress Against the Full-Year Forecast: Progress rates for ordinary income and net income were 59.3% and 63.3%, respectively, both substantially exceeding the standard quarterly level of 25%; however, the full-year forecasts themselves remain unchanged.
Monitoring Capital and Valuation Difference Fluctuations: The BIS-based capital adequacy ratio remained flat year on year at 4.4%, but valuation differences on other securities deteriorated to -¥5.16B. Changes in the interest-rate environment therefore remain an ongoing area of focus as a factor affecting equity fluctuations.
This report is an earnings analysis document automatically generated by AI based on XBRL earnings release data. It does not constitute a recommendation to invest in any specific security. Industry benchmarks are reference information compiled by the Company based on publicly available earnings data. Investment decisions should be made at your own responsibility, after consulting with professionals as necessary.
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