The San-in Godo Bank (8381) FY2026 Q3 Earnings Report

Quick View

Executive Summary

The Company posted higher revenue and earnings, driven by growth in interest and dividend income, with profit progress ahead of the full-year forecast. Ordinary revenue was ¥115.44B (+19.8% YoY), ordinary income was ¥23.92B (+23.3%), and net income attributable to owners of the parent was ¥16.78B (+27.6%). The primary driver of earnings growth was the increase in interest and dividend income resulting from expanded lending and securities investment. Ordinary income reached a progress rate of 80.3% against the full-year forecast of ¥29.80B, exceeding the standard Q3 progress rate of 75%.

Factors Affecting Performance

【Revenue】Ordinary revenue of ¥115.44B increased 19.8% YoY. By segment, the Banking Business generated ¥100.15B (86.7% of total, +20.3% YoY), while the Leasing Business generated ¥13.33B (11.5% of total, +11.6% YoY), with the Banking Business driving revenue growth. Interest and dividend income increased 28.6% YoY to ¥82.997B, including interest on loans of ¥56.470B (+25.3%) and interest and dividends on securities of ¥20.719B (+34.0%), with both lending and investment contributing to growth.

【Profit and Loss】Segment profit for the Banking Business was ¥23.61B (+23.1% YoY), while the Leasing Business turned to a loss of ¥0.001B, making the Banking Business the primary contributor to total segment profit. Operating expenses were ¥31.60B, up only 2.9% YoY and substantially below revenue growth, resulting in positive operating leverage. Meanwhile, funding costs surged to ¥26.995B, up 164.1% YoY, compressing the growth rate of net interest income to +3.1%. Net extraordinary income was ¥0.05B, with a limited impact on profit before tax. The gap between ordinary income and net income was attributable to income taxes and other taxes (¥7.19B; effective tax rate of approximately 30%). Higher revenue and earnings.

Segment Analysis

The Banking Business expanded both revenue and profit, with ordinary revenue of ¥100.15B (+20.3% YoY) and segment profit of ¥23.61B (+23.1%). The Leasing Business posted higher ordinary revenue of ¥13.33B (+11.6%), but segment profit turned to a loss of ¥0.001B, compared with profit of ¥0.29B in the same period of the previous year, confirming deterioration in the profitability of the Leasing Business. The Banking Business was the substantive driver of overall revenue and profit, accounting for almost all of the total segment profit of ¥23.61B.

Key Financial Metrics

【Profitability】The operating profit margin improved to 20.7% (20.1% in the same period of the previous year), while the net profit margin improved to 14.5% (13.7%). This was attributable to operating expense growth being contained at +2.9%, compared with ordinary revenue growth of +19.8%. 【Cash Quality】Against ordinary income of ¥23.92B, net extraordinary income was limited to +¥0.05B. While earnings were supported by recurring interest and dividend income, the growth of net interest income was limited to +3.1%, and the sharp increase in funding costs (+164.1%) remains a constraint on earnings quality. 【Investment Efficiency】Annualized ROE was 6.9%, composed of a 14.5% net profit margin × 0.018x total asset turnover × 26.32x financial leverage. While leverage boosts ROE, total asset turnover remains low due to the balance sheet characteristics of the banking business. 【Financial Soundness】The equity ratio was 3.8% (3.6% in the previous year). Against total assets of ¥855.720B, net assets were ¥32.513B, resulting in a debt-to-equity ratio of 25.3x. Although high compared with general operating companies, this reflects a funding structure centered on deposits.

Cash Flow Analysis

Although no cash flow statement has been disclosed, an analysis of funding trends based on changes in the balance sheet shows that loans increased 4.6% YoY to ¥533.37B, while cash and due from banks increased 4.7% to ¥127.78B, indicating overall expansion on the asset side. Meanwhile, securities decreased 12.7% to ¥173.12B, and certificates of deposit (▲28.4%) and borrowings (▲9.6%) also declined. The Company is shifting toward a funding structure centered on its deposit base (+1.9% YoY) while reducing market-based funding. Cash and due from banks plus securities totaled approximately ¥300.90B, exceeding total market-based funding comprising call money, borrowings, and certificates of deposit of approximately ¥178.79B, indicating that a reasonable liquidity buffer has been secured.

Earnings Quality

Cumulative Q3 profit was primarily supported by recurring interest and dividend income. The net amount of extraordinary income of ¥0.30B and extraordinary losses of ¥0.25B (including impairment losses of ¥0.25B) was +¥0.05B, representing a limited impact relative to profit before tax of ¥23.97B. In terms of the structure of interest and dividend income and funding costs, which correspond to non-operating income and expenses, interest and dividend income increased 28.6%, while funding costs surged 164.1%, compressing the growth rate of net interest income to +3.1%. Net fee and commission income (¥13.87B in fee and commission income − ¥4.32B in expenses = ¥9.55B) decreased 3.4% YoY, indicating a somewhat higher reliance on net interest income, which warrants attention from an accrual perspective. Comprehensive income of ¥22.08B exceeded net income of ¥16.78B by ¥5.30B. As it includes changes in valuation differences on available-for-sale securities and hedge valuations, it should be evaluated separately from recurring earnings power.

Earnings Forecast and Guidance

Progress against the full-year earnings forecast was 72.0% for ordinary revenue (forecast: ¥160.30B), 80.3% for ordinary income (forecast: ¥29.80B, +11.5% YoY), and 79.9% for EPS (forecast: ¥138.59). Profit progress exceeded the standard cumulative Q3 progress rate of 75%, providing support for achievement of the full-year plan, while progress in ordinary revenue remained somewhat low. Neither the earnings forecast nor the dividend forecast was revised as of the current quarter.

Shareholder Returns

The Q2 dividend was ¥28.00 per share. The full-year dividend forecast is ¥56.00, implying a forecast payout ratio of 40.4% based on forecast full-year EPS of ¥138.59. Progress of full-year forecast EPS against cumulative Q3 EPS of ¥110.72 was 79.9%, consistent with the 79.9% progress rate for full-year forecast net income, indicating that profit progress is currently at a level supporting the forecast dividend. Treasury shares increased 36.9% YoY (from negative ¥4.60B to ¥6.30B), indicating an expansion in capital deductions separate from the payout ratio.

Risk Factors

1. Decline in net interest margin: The net interest margin was 1.05%, below the general cautionary threshold of 1.5%. Funding costs surged 164.1% YoY, and if increases in deposit rates outpace improvements in lending and securities investment yields, net interest income could come under pressure.

2. Decline in net fee and commission income: Net fee and commission income was ¥9.55B, down 3.4% YoY. Reliance on net interest income has increased relatively, potentially increasing earnings volatility in response to changes in the interest rate environment.

3. High financial leverage and changes in securities valuations: The debt-to-equity ratio was high at 25.3x, although this reflects the funding structure of the deposit-centered banking business. Against securities of ¥173.12B (20.2% of total assets), accumulated other comprehensive income was negative ¥54.77B. The impact of interest rate and price fluctuations on net assets requires ongoing monitoring.

Industry Benchmark (For Reference; Compiled by the Company)

Profitability and Return

Industry median data for net profit margin is insufficient, limiting relative comparisons.

Growth and Capital Efficiency

Industry median data for revenue growth rate is also insufficient, limiting relative comparisons.

Source: Compiled by the Company

Key Points from the Earnings Results

1. The cumulative Q3 progress rate was 80.3% for ordinary income and 79.9% for net income attributable to owners of the parent. Both exceeded the standard Q3 progress rate of 75%, providing support for achievement of the full-year plan.

2. The operating profit margin and net profit margin improved by approximately 58bp and approximately 85bp, respectively, YoY. This resulted from the expansion of interest and dividend income supported by restrained operating expense growth. Under a net interest margin of 1.05%, sustainability amid rising funding costs will be the key focus.

3. The forecast payout ratio was 40.4%, below the general guideline for sustainability. Meanwhile, treasury shares increased 36.9% YoY, making the balance between capital policy and shareholder returns an ongoing area of attention.

---

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 particular security. Industry benchmarks are reference information compiled by the Company based on publicly disclosed earnings data. Investment decisions should be made at your own discretion and responsibility, after consulting with a professional as necessary.

---End of Report---