The Shikoku Bank, Ltd. FY2026 Q2 Earnings Report

Financial Highlights

• Net Income: ¥3.94B
• EPS: ¥96.66

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

Shikoku Bank (8387) reported FY2026 Q2 consolidated results under JGAAP with half-year net income of ¥4,035 million, down 5.9% YoY, indicating modest earnings pressure despite stable headline operating/ordinary income. Operating income and ordinary income are both disclosed at ¥7,032 million for the period, suggesting limited non-operating distortions in the half. Using period-end equity of ¥172,406 million, the half-year ROE is approximately 2.3%, translating to about 4.7% on a simple annualized basis, which is consistent with a conservative regional bank profile. Total assets stood at ¥3,419,071 million and total liabilities at ¥3,214,935 million, implying an equity-to-asset ratio of roughly 5.0% (computed) and financial leverage of ~19.8x, both typical for Japanese regional banks. Income tax expense of ¥1,944 million implies an approximate effective tax rate in the low 30% range if we infer a pre-tax base near ¥5.98 billion, though this is an approximation due to disclosure gaps. The YoY decline in net income likely reflects either softer core spreads, higher credit costs, normalization of securities-related gains, or cost creep, but detailed drivers are not disclosed here. Reported revenue, gross profit, and cash flow data are unreported (shown as zero), which is common for banks due to different account classifications under JGAAP; therefore profitability must be interpreted from ordinary income and net income. The balance sheet scale and leverage indicate a conventional regional bank model focused on lending and securities portfolios; however, capital adequacy metrics (e.g., CET1 ratio) are not provided in this snapshot. Liquidity ratios such as current and quick ratios are not meaningful for banks and are unreported here; funding health is better assessed via deposit stability and market funding reliance, which are not disclosed. The dividend per share (DPS) is shown as zero, indicating no disclosure rather than no dividend; historically, regional banks tend to pay dividends linked to earnings stability, but confirmation requires the company’s dividend announcement. Cash flow statement line items are unreported, so free cash flow analysis is not possible from this dataset; for banks, earnings quality is better assessed through credit cost trends and securities valuation impacts. Overall, the bank delivers stable ordinary income but slightly weaker bottom line YoY, resulting in mid-single-digit annualized ROE. The capital base (¥172.4 billion equity) relative to assets suggests adequate loss-absorption for a regional bank, but without regulatory capital ratios we cannot fully gauge solvency buffers. Key uncertainties include BOJ rate normalization effects on NIM, valuation losses on longer-duration bonds, and potential credit cost normalization. Given the limited disclosures (many zeros indicate not reported), conclusions focus on the available numeric anchors and sector context.

Profitability Analysis

ROE_decomposition: Using half-year net income of ¥4,035m and period-end equity of ¥172,406m, half-year ROE ≈ 2.34% (annualized ≈ 4.7%). Financial leverage (Assets/Equity) is ~19.8x (3,419,071 / 172,406). Net profit margin based on banking 'revenue' is not meaningful due to unreported revenue; for banks, margin analysis focuses on net interest income and fees, which are undisclosed here. Asset turnover computed from accounting 'revenue' is not applicable; effective economic turnover is embedded in NIM and fee income. margin_quality: Ordinary income equals operating income at ¥7,032m, suggesting limited non-recurring items in the half. Net income declined 5.9% YoY, indicating some pressure likely from narrower spreads, higher credit costs, or weaker securities gains; without NII/fee split or credit cost disclosure, margin quality cannot be precisely assessed. operating_leverage: No opex or OHR disclosure is available; however, stable ordinary income alongside a lower net income hints at tax/credit cost headwinds rather than operating leverage deterioration. In regional banks, operating leverage hinges on cost control versus modest revenue growth; additional details (personnel/GA) are needed to conclude.

Growth Assessment

revenue_sustainability: Reported 'revenue' is unreported for a bank under JGAAP, so core revenue sustainability should be judged by net interest income, loan/deposit growth, and fee income; these are not provided. Stability in ordinary income suggests resilient core revenues in the half. profit_quality: Net income of ¥4,035m with inferred effective tax rate around low-30% implies pre-tax earnings near ¥5.98bn, below ordinary income of ¥7.03bn, suggesting credit costs and/or other adjustments. Without credit cost or securities gain detail, profit quality assessment is limited. outlook: Given BOJ rate normalization, funding costs are likely to rise, pressuring NIM unless asset yields reprice adequately. Securities portfolio valuation could remain volatile as yields adjust. Fee income opportunities (wealth, settlement, corporate solutions) could support topline, but disclosure is insufficient to quantify.

Financial Health

liquidity: Current/quick ratios are not applicable for banks and are unreported. Banking liquidity should be assessed via loan-to-deposit ratio and high-quality liquid assets; not disclosed here. solvency: Equity of ¥172,406m against assets of ¥3,419,071m implies an equity ratio ~5.0% (computed), consistent with regional banks. Regulatory capital ratios (CET1/Total capital) are not provided; thus, solvency buffer cannot be fully evaluated. capital_structure: Financial leverage ≈ 19.8x. Debt-to-equity reported at 18.65x aligns with the computed leverage. Balance sheet composition (loans vs. securities vs. cash) is not provided, limiting deeper structural insights.

Cash Flow Quality

earnings_quality: Cash flow data are unreported. For banks, earnings quality hinges on credit costs, realized/unrealized securities gains, and fee stability; these drivers are not disclosed. The close alignment of operating and ordinary income suggests limited distortion from non-core items in the half. FCF_analysis: Traditional FCF is not meaningful for banks; instead, we consider retained earnings after dividends. With DPS unreported and EPS ¥96.66, retained earnings capacity appears adequate if payout is typical, but exact FCF coverage cannot be determined. working_capital: Working capital metrics are not applicable for banks, and items such as inventories/current assets are unreported by design.

Dividend Sustainability

payout_ratio_assessment: DPS is unreported (shown as 0.00). With EPS at ¥96.66 for H1, a full-year EPS run-rate could be roughly ¥193 if H2 mirrors H1; typical regional bank payout ratios range from 30% to 50%, but the company’s stated policy is not provided here. Without DPS, a precise payout ratio cannot be calculated. FCF_coverage: FCF coverage is unreported. For banks, dividends are covered by earnings and capital headroom; given half-year net income of ¥4.0bn and equity of ¥172.4bn, modest dividends would likely be serviceable absent a sharp rise in credit costs. Verification requires the company’s dividend plan and regulatory capital data. policy_outlook: Regional banks commonly target stable to gradually increasing dividends aligned with earnings stability; sustainability will depend on NIM resilience, credit costs, and securities valuation swings, none of which are disclosed in detail here.

Risk Assessment

Business Risks:

• Net interest margin compression from rising funding costs outpacing asset yield repricing
• Regional economic softness in Shikoku leading to slower loan growth and higher SME defaults
• Fee income stagnation amid competitive pressures and limited cross-selling scale
• Operational risk and system investments increasing cost base (OHR) without matching revenue growth

Financial Risks:

• Valuation losses on bond portfolios as domestic yields normalize, impacting other comprehensive income and earnings
• Credit cost normalization from low levels, pressuring pre-provision profitability
• Interest rate risk from duration mismatch between assets and liabilities
• Capital adequacy uncertainty due to absent CET1/total capital disclosures
• Liquidity risk if deposit competition intensifies, raising funding costs and potential outflows

Key Concerns:

• Net income down 5.9% YoY despite stable ordinary income, implying pressure below operating line
• Moderate ROE (~4.7% annualized) below cost of equity benchmarks
• Limited disclosure on credit costs, NIM, OHR, and securities gains constrains visibility
• Sensitivity to BOJ policy normalization and bond market volatility

Investment Implications

Key Takeaways:

• Half-year net income ¥4.04bn (-5.9% YoY) with ordinary income ¥7.03bn indicates stable core but softer bottom line
• Annualized ROE around 4.7% given equity of ¥172.4bn and H1 earnings, consistent with conservative regional bank profile
• Equity-to-asset ratio ~5.0% and leverage ~19.8x typical for the sector; regulatory capital ratios not disclosed
• Earnings trajectory sensitive to NIM, credit costs, and securities valuation; disclosures are insufficient to pinpoint drivers
• Dividend details are unreported; sustainability appears dependent on earnings normalization and capital headroom

Metrics to Watch:

• Net interest margin and loan-deposit spread
• Credit costs (net) and NPL ratio
• Securities portfolio duration and unrealized gains/losses (AFS/HTM)
• Operating expense trends and OHR (overhead ratio)
• Capital adequacy (CET1 ratio, risk-weighted assets)
• Loan and deposit growth, deposit mix (time vs. demand)
• Fee and commission income growth

Relative Positioning: Positioned as a traditional Japanese regional bank with modest ROE, typical leverage, and likely stable but rate- and credit-sensitive earnings; visibility is constrained by limited line-item disclosure 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