The Hyakujushi Bank,Ltd. FY2026 Q2 Earnings Report

Financial Highlights

• Net Income: ¥8.56B
• EPS: ¥314.58

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

Hyakujushi Bank (8386) reported solid profitability for FY2026 Q2 on a consolidated JGAAP basis, with ordinary income of ¥13.6bn and net income of ¥8.9bn, implying robust earnings momentum in the first half. Net income grew 34.3% YoY, signaling improved core profitability and/or lower credit costs versus the prior-year interim period. The reported tax expense of ¥3.25bn suggests a pre-tax profit of roughly ¥12.2bn (backing out from net income), indicating an effective tax rate of approximately 26–27%, which looks broadly normal for a regional bank. Balance sheet scale remains substantial with total assets of ¥5.79tn and total equity of ¥354.2bn, translating to financial leverage (assets/equity) of about 16.4x and a liabilities-to-equity ratio of 15.3x—typical for a regional bank funding model. While an equity ratio was not disclosed, a simple assets-to-equity calculation implies an equity ratio around 6.1%, consistent with the sector. Operational metrics such as revenue, gross profit, depreciation, and operating cash flow were not disclosed in the XBRL under the labels provided, which is common for banks given different presentation formats (e.g., net interest income and fees rather than ‘revenue’). With only partial line-item visibility, the quality of the current-period earnings (e.g., the split between net interest income, fees, securities gains, and credit costs) cannot be fully assessed from this extract. Nevertheless, the YoY net income uplift points to either expanding net interest margins from BOJ normalization tailwinds, improved loan growth, better fee income, controlled operating expenses, and/or benign credit costs. Interim ROE, using period-end equity as a proxy, is approximately 2.5% for the half year (equating to roughly 5% annualized), within a reasonable range for a regional bank but leaving scope for further efficiency gains. The bank’s solvency stance appears stable given equity of over ¥350bn against a ¥5.8tn balance sheet, but capital adequacy ratios (e.g., CET1 under Basel III) are not disclosed here and remain a key unknown. Liquidity quality cannot be judged from the provided ‘cash flow’ fields, as banks’ funding/liquidity is better evaluated via loan-to-deposit ratios and high-quality liquid assets, none of which are shown. Dividend-related items are undisclosed; historically, regional banks target stable dividends with gradual increases when earnings visibility improves, but payout sustainability requires confirmation of recurring earnings and capital buffers. The absence of detailed segment and credit cost information means credit quality and securities portfolio sensitivities are key data gaps. Overall, results indicate healthy interim profitability improvement with adequate balance sheet scale, but deeper conclusions require disclosure of net interest margin, expense ratio (OHR), credit cost trends, and market valuation gains/losses. We acknowledge the significant data limitations in the current dataset and base the analysis strictly on available non-zero figures.

Profitability Analysis

ROE decomposition (indicative): Using net income of ¥8.94bn and period-end equity of ¥354.16bn, half-year ROE is ~2.53% (annualized ~5.1%), broadly aligned with regional bank peers. Classic DuPont elements such as net profit margin and asset turnover are not meaningful for banks under the provided labels; instead, we note financial leverage at ~16.36x (assets/equity), which is typical for the model and magnifies modest underlying margins into acceptable ROE levels. Margin quality: The 34.3% YoY increase in net income suggests improving margin dynamics, likely supported by net interest income tailwinds (rate normalization) and/or disciplined costs. However, without disclosure of net interest income, fee income, or credit costs, we cannot quantify the contribution mix or sustainability. Operating leverage: If the income increase outpaced cost growth, the bank likely achieved positive operating leverage; this cannot be verified absent non-interest expense data and OHR. Tax rate appears near ~26–27% (¥3.25bn tax on an implied ~¥12.19bn pre-tax), indicating no outsized one-offs in tax. Ordinary income equals ¥13.56bn, exceeding the implied pre-tax figure by about ¥1.36bn, hinting at below-the-line items (e.g., equity-method adjustments, special losses) or minority interests impacting net. Overall, profitability is solid for H1 with room for efficiency enhancement given the sector’s typical OHR in the mid-60s to low-70s range (not disclosed here).

Growth Assessment

Revenue sustainability: Traditional ‘revenue’ is not applicable; for banks, core growth hinges on net interest income (loan growth, margin) and fee/commission income. The +34.3% YoY net income growth indicates favorable earnings dynamics, potentially from margin expansion as the BOJ shifts policy and reinvestment yields rise. Profit quality: Absence of credit cost, securities gains/losses, and fee breakdown limits assessment of recurring versus market-driven profits. If gains stem from lower credit costs and stable spreads, quality is higher; if from securities valuation gains, sustainability is more uncertain. Outlook: With rising yields, asset repricing should support NIM, but liability repricing (deposit competition) may compress benefits over time. Loan growth in the core Shikoku/Kagawa region may be moderate; fee income from asset management and settlement services could provide incremental growth. Securities portfolio marks remain a swing factor amid rate volatility. Overall, H2 trajectory appears constructive but dependent on funding costs, credit normalization, and market conditions.

Financial Health

Liquidity: Current/quick ratios are not applicable for banks; core liquidity should be evaluated via deposits stability, HQLA, and loan-to-deposit ratio (not disclosed). Solvency/capital: Total equity is ¥354.16bn versus ¥5.79tn assets, implying an equity ratio around 6.1% and leverage of ~16.4x, consistent with regional bank norms. Debt-to-equity of 15.32x equates to liabilities-to-equity and is within typical sector ranges. Regulatory capital metrics (CET1, total capital ratio) are not provided; these are critical to fully assess solvency buffers. Asset quality: No NPL ratio, coverage ratio, or credit cost data are disclosed, leaving a key gap. Overall, balance sheet scale and leverage appear standard, but full comfort on resilience requires regulatory capital and credit disclosures.

Cash Flow Quality

Earnings quality cannot be judged from the provided cash flow data because operating, investing, and financing cash flows are undisclosed under these labels for a bank. For banks, cash flow analysis focuses on funding mix, deposit trends, loan growth, and securities cash movements rather than traditional OCF/FCF constructs. With net income of ¥8.94bn and no OCF detail, we cannot compute OCF/NI or free cash flow coverage. Working capital metrics are not applicable. Assessment should rely on stability of core earnings (net interest income, fees), consistency of credit costs, and securities realization gains/losses—none of which are disclosed here.

Dividend Sustainability

Dividend per share and payout ratio are not disclosed in the data extract. With interim net income of ¥8.94bn and indicative annualized ROE of ~5%, the capacity for stable dividends appears plausible for a regional bank, subject to capital policy and regulatory buffers. However, without DPS, payout ratio, or capital adequacy metrics (CET1), we cannot quantify coverage. Free cash flow coverage is not meaningful for banks; instead, earnings coverage and capital headroom matter. Policy outlook for regional banks typically emphasizes stable to modestly rising dividends aligned with earnings visibility and capital strength; confirmation requires the company’s disclosed dividend policy and Basel III ratios.

Risk Assessment

Business Risks:

• Net interest margin compression from deposit repricing and rising funding costs
• Slower regional economic activity in Kagawa/Shikoku impacting loan demand and SME credit quality
• Fee income volatility amid market conditions and competition
• Securities portfolio valuation losses from rate increases or credit spread widening
• Operational efficiency pressure if cost base is inflexible (OHR not disclosed)
• Demographic headwinds in regional markets affecting long-term growth

Financial Risks:

• Capital adequacy uncertainty due to lack of disclosed CET1/total capital ratios
• Credit cost normalization from low levels, potential uptick in NPLs
• Interest rate risk in the banking book (duration mismatch affecting OCI and capital)
• Concentration risk to local industries and real estate sectors
• Liquidity risk if deposit competition intensifies (data not disclosed here)

Key Concerns:

• Limited visibility on the source and sustainability of the 34.3% YoY net income growth
• Absence of credit cost, NPL, and securities gains/losses data
• No disclosure of capital ratios, dividend policy, or payout details

Investment Implications

Key Takeaways:

• Interim profitability improved meaningfully with net income of ¥8.94bn (+34.3% YoY)
• Leverage (~16.4x) and implied equity ratio (~6.1%) are in line with regional bank norms
• Annualized ROE around 5% suggests steady but improvable returns
• Earnings sustainability hinges on NIM trends, credit costs, and securities valuations
• Material disclosure gaps remain (capital ratios, credit metrics, dividend policy)

Metrics to Watch:

• Net interest margin and loan-deposit spread
• Loan growth and deposit mix (time vs. demand), funding costs
• Credit costs, NPL ratio, and coverage ratio
• Operating efficiency (OHR) and cost control
• Securities portfolio duration/valuation and realized gains/losses
• Basel III capital ratios (CET1, total capital) and leverage ratio
• Dividend payout policy and medium-term ROE targets

Relative Positioning: Based on limited disclosed figures, Hyakujushi Bank’s profitability trajectory appears constructive for FY2026 H1, with leverage and implied capitalization typical for Japanese regional banks; however, without NIM, OHR, credit metrics, and capital ratios, its competitive standing versus peers cannot be conclusively benchmarked.

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