The Kiyo Bank,Ltd. FY2026 Q2 Earnings Report

Financial Highlights

• Net Income: ¥8.44B
• EPS: ¥139.43

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

Kiyo Bank (8370) reported FY2026 Q2 consolidated results under JGAAP with half-year net income of ¥8.93 billion, up 17.6% year over year, indicating improved bottom-line performance despite flat operating/ordinary income at ¥14.67 billion. The ordinary income equaling operating income implies negligible non-operating gains/losses in the period, suggesting core banking operations drove results. Based on total assets of ¥6.04 trillion and total equity of ¥247.58 billion, balance-sheet leverage stands at roughly 24.4x, in line with regional bank norms. The implied equity ratio is about 4.1% (equity/asset), typical for a Japanese regional bank, although the disclosed “equity ratio” field is unreported in the dataset. Using reported net income and equity, simple half-year ROE is approximately 3.6%, which annualizes to about 7.2% if performance is sustained in 2H. EPS of ¥139.43 implies an estimated share count of roughly 64.0 million shares for the period (back-solved), but official share count data are not provided. The effective tax rate, inferred from taxes of ¥2.76 billion against ordinary income of ¥14.67 billion, is approximately 18.8%, lower than Japan’s statutory level, suggesting either tax credits, deferred tax effects, or mix-related differences under JGAAP. Revenue, gross profit, depreciation, interest expense, and cash flow figures are not disclosed in the XBRL mapping, limiting margin and cash flow analysis. Debt-to-equity of 23x-24x is expected for a bank and reflects the deposit-funded model rather than corporate leverage risk typical of non-financials. Profit growth with flat operating income suggests lower credit costs, better fee mix, or lower taxes as potential drivers; however, the lack of line-item granularity prevents attribution. Liquidity metrics like current/quick ratios are not meaningful for banks and are unreported, so regulatory capital and funding metrics would be more relevant but are unavailable here. The absence of dividend data (DPS and payout unreported) precludes a quantitative dividend sustainability assessment from free cash flow or earnings coverage. Overall, earnings quality appears acceptable given the alignment of operating and ordinary income and a reasonable tax expense, but the absence of cash flow and segment detail tempers confidence. Key watchpoints include interest rate sensitivity (NIM), credit costs normalization, and securities portfolio valuation amid BOJ policy shifts. Data limitations necessitate reliance on available headline figures and balance-sheet ratios, and additional disclosures (NIM, OHR, CET1/Tier1, NPLs, unrealized gains/losses) are needed for a fuller assessment.

Profitability Analysis

ROE decomposition: Using net income of ¥8.93bn and average equity proxied by period-end equity of ¥247.58bn gives a simple half-year ROE of ~3.6% (~7.2% annualized, assuming 2H is similar). Financial leverage (assets/equity) is ~24.4x (¥6,038.3bn/¥247.6bn), consistent with regional bank balance sheets and supportive of ROE despite modest underlying margins in banking. Asset turnover in the DuPont sense is not meaningful for banks; revenue is unreported and banking uses interest margins rather than classic turnover. Net profit margin in DuPont cannot be computed from missing revenue; instead, we note an implied pre-tax margin proxy using ordinary income vs asset base is modest but adequate for a regional bank. Margin quality: Operating income equals ordinary income (both ¥14.67bn), indicating minimal non-operating noise and suggesting core operations were the principal driver. The ~18.8% effective tax rate (¥2.76bn/¥14.67bn) is below statutory, lifting net income; sustainability depends on tax effects and item mix. Operating leverage: Operating/ordinary income was flat YoY while net rose 17.6%, implying benefits from lower taxes and/or credit costs rather than revenue-driven operating leverage; OHR and specific cost lines are not disclosed to confirm. Absent depreciation/interest data and fee/market income breakdowns, deeper margin diagnostics are limited.

Growth Assessment

Revenue sustainability cannot be assessed because revenue is not disclosed; however, flat operating/ordinary income suggests stable core earnings capacity in 1H. Net income growth of +17.6% YoY indicates improved bottom line, likely aided by a lower effective tax rate and/or credit cost dynamics. With BOJ policy normalization underway, NIM tailwinds from rate hikes may be partially offset by higher deposit betas; Kiyo Bank’s core deposit franchise strength will influence sustainability. Fee income trends (e.g., settlement, asset management, insurance) are not disclosed; stability of non-interest income is a swing factor for growth resilience. Securities-related gains/losses and valuation effects are not shown; these can introduce volatility in a rising yield environment via AFS valuation and OCI. Loan growth and loan mix (SME vs retail mortgage) are key, but not provided; outlook depends on Kansai regional economic activity and corporate capex appetite. Without segment detail, we treat growth as modest and stable near-term, with risks from credit cost normalization and securities portfolio marks. Management guidance (if any) is not available in this dataset; thus, outlook references are qualitative only.

Financial Health

Balance sheet scale is ¥6.04 trillion in assets and ¥247.58 billion in equity, implying an equity ratio of ~4.1% and leverage of ~24.4x, normal for a regional bank. Total liabilities are ¥5.69 trillion, largely deposits and market funding; the debt-to-equity figure (~23x) reflects banking model leverage rather than corporate solvency pressure. Liquidity metrics like current and quick ratios are not applicable for banks and are unreported; the relevant measures (LCR, NSFR, liquidity buffer, and deposit stability) are not provided. Regulatory capital (CET1/Tier1 ratios), risk-weighted assets, and NPL ratios are not disclosed; hence solvency assessment relies on book equity only, which is insufficient for a Basel perspective. The balance sheet scale supports earnings, but sensitivity to rate changes and securities valuation is a consideration. Without details on duration of JGB/foreign bond holdings or hedge ratios, interest rate risk cannot be quantified from the provided data.

Cash Flow Quality

Cash flow statement items are unreported, so OCF, investing CF, and financing CF analysis is not possible from this dataset. For banks, statutory cash flow measures are less indicative of earnings quality than credit cost trends, fee stability, and securities valuation impacts—none of which are disclosed here. Earnings quality appears reasonable given the absence of non-operating distortion (operating equals ordinary income) and a plausible tax charge. Free cash flow is not a meaningful metric for banks in the corporate sense; capital generation is better assessed via net income relative to retained earnings and regulatory capital accretion, which we cannot compute without CET1 data. Working capital metrics are not applicable to banks in the standard sense and are unreported.

Dividend Sustainability

Dividend per share, payout ratio, and FCF coverage are unreported in this dataset, so we cannot quantify payout sustainability. EPS is ¥139.43 for 1H; if dividends follow a semiannual schedule, interim DPS (if any) would typically be covered by 1H earnings, but no data are provided to confirm. Sustainability should be assessed against normalized earnings, credit cost cycles, and regulatory capital buffers (CET1/Tier1), which are not disclosed. Policy outlook is unknown; many regional banks target stable to gradually increasing dividends with payout ratios in the 30–40% range, but we cannot assume KIYO’s target without disclosure. Absent dividend data and regulatory capital metrics, we refrain from a definitive view on coverage or headroom.

Risk Assessment

Business Risks:

• Net interest margin compression or slower-than-expected expansion amid higher deposit betas as BOJ normalizes policy
• Credit cost normalization from historically low levels, particularly in SME and retail portfolios
• Securities portfolio valuation losses in a rising yield environment, including JGB and foreign bond AFS/HTM positions
• Regional economic concentration in the Kansai/Wakayama area affecting loan demand and credit quality
• Fee income volatility (asset management, sales of investment trusts/insurance) amid market conditions
• Competition from megabanks and fintechs for deposits and loans, pressuring spreads and fees
• Operational and cyber risk as digitalization expands

Financial Risks:

• High balance-sheet leverage typical of banks; solvency depends on regulatory capital (undisclosed here)
• Interest rate risk from duration mismatches and hedging effectiveness (no duration/OCI data provided)
• Liquidity risk from potential deposit outflows; LCR/NSFR not available
• Tax rate variability (current effective tax rate ~18.8% below statutory) potentially reverting upward
• Foreign securities/FX exposure, if any, not disclosed

Key Concerns:

• Lack of disclosure on NIM, loan growth, OHR, credit costs, and securities valuation limits earnings attribution
• Absence of CET1/Tier1 and NPL data prevents a robust solvency and asset quality assessment
• Unreported cash flow and dividend information restricts dividend sustainability analysis

Investment Implications

Key Takeaways:

• Net income grew 17.6% YoY to ¥8.93bn despite flat operating/ordinary income, with taxes and/or credit costs likely key drivers
• Leverage at ~24.4x and equity ratio ~4.1% align with regional bank norms; ROE ~3.6% for 1H (~7.2% annualized)
• Core operations appear stable (operating equals ordinary), but limited transparency on NIM/fees/credit costs
• Data gaps on capital adequacy and dividends constrain capital return and downside risk assessment

Metrics to Watch:

• Net interest margin (NIM) and deposit beta trends under BOJ policy normalization
• Loan growth and mix (SME vs retail), and credit cost ratio/provisioning
• Overhead ratio (OHR) and cost control progress
• Unrealized gains/losses and duration of the securities portfolio; OCI sensitivity
• CET1/Tier1 capital ratios and leverage ratio; risk-weighted asset growth
• NPL ratio and coverage ratio
• Dividend policy (DPS, payout ratio) and any buyback announcements

Relative Positioning: Within Japanese regional banks, Kiyo Bank’s leverage and implied ROE profile appear typical, with stable core earnings but limited disclosed detail on capital strength, asset quality, and fee diversification in this dataset.

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