The Miyazaki Bank,Ltd. FY2026 Q2 Earnings Report

Financial Highlights

• Net Sales: ¥42.22B
• Net Income: ¥6.51B
• EPS: ¥400.37

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

Verdict: Strong quarter with solid top-line growth and sharp earnings acceleration despite a structurally low NIM environment. Revenue rose 10.8% YoY to 422.22, while ordinary income increased 35.3% to 96.51 and net income jumped 39.4% to 67.71. Calculated operating margin improved to about 22.9% (96.51/422.22), and net margin rose to 16.0%, indicating stronger profitability versus last year. Based on growth differentials (NI +39.4% vs revenue +10.8%), we estimate net margin expanded roughly 325 bps YoY to 16.0%. Using ordinary income as a proxy, the operating margin likely expanded by about 420 bps YoY to ~22.9%. Earnings quality cannot be fully assessed due to unreported cash flows; however, total comprehensive income of 189.72 far exceeded net income, implying large unrealized valuation gains (likely on securities) flowing through OCI. Banking metrics are mixed: the cost-to-income ratio is very efficient at 30.6% (well below the <50% benchmark), but NIM remains depressed at 0.9% (below the 1.5% warning threshold). The loan-to-deposit ratio at 78.1% indicates balanced liquidity funding and no immediate liquidity strain. Leverage is inherently high for banks (D/E 18.73x), so capital adequacy and interest-rate risk management remain critical watchpoints. ROE calculated at 3.3% is modest, reflecting low asset turnover and thin NIM, despite operating efficiency. The effective tax rate was 29.8%, within a normal range. EPS (basic) printed at 400.37 JPY with average shares of 16.91 million, consistent with the earnings ramp. Retained earnings grew to 1,516.49, strengthening capital buffers, while total equity reached 2,067.64 against total assets of 40,792.53. The reported payout ratio is a conservative 27.8%, providing room for continued capital accumulation or incremental shareholder returns. Forward-looking, the bank is well-positioned to benefit from any incremental normalization of domestic interest rates (supporting NIM), but is exposed to potential OCI volatility if yields rise further, credit cost normalization from cycle turning, and demographic headwinds in its regional footprint. Overall, a quality beat on profitability with prudent cost control, but sustainability hinges on rate, credit, and securities portfolio dynamics.

Profitability Analysis

ROE decomposition (DuPont): Net Profit Margin 16.0% × Asset Turnover 0.010 × Financial Leverage 19.73x = ROE ~3.3%. The biggest positive change appears to be margin expansion, inferred from NI growth (+39.4%) outpacing revenue growth (+10.8%). Business drivers likely include stronger net interest income (interest income 308.01 vs interest expense 96.62), tight cost discipline (CIR 30.6%), and benign credit costs; investment gains may have contributed, but details are unreported. Asset turnover remains structurally low for banks given large balance sheets versus reported revenue. Leverage is high by design in banking; it did not appear to be the primary driver of YoY ROE change. Sustainability: Cost efficiency (CIR) is likely sustainable near-term; margin gains depend on rate environment and credit cost trends. Watch for any SG&A/opex growth re-acceleration vs revenue; current efficiency looks favorable but could normalize as investments in systems and compliance recur.

Growth Assessment

Top-line growth of 10.8% suggests healthier core earnings power amid modest rate tailwinds and potentially higher credit demand. Ordinary income grew 35.3% and net income 39.4%, pointing to positive operating leverage. The low NIM (0.9%) remains a structural headwind; growth likely came from wider spreads vs deposits, volume growth in loans, and cost containment. Total comprehensive income well above net income indicates securities valuation tailwinds; this element is non-cash and volatile. Outlook: If domestic yields drift higher in a controlled manner, NIM could gradually improve; however, mark-to-market pressure on bond portfolios may offset OCI. Fee income momentum and credit cost discipline will be key to sustaining earnings.

Financial Health

Leverage: D/E is 18.73x, which triggers a mechanical warning (>2.0) but is typical for banks; capital adequacy ratios were not disclosed. Liquidity: LDR at 78.1% is in the optimal 70–90% range, indicating loans are well-funded by deposits. Short-term maturity profile and liquidity buffers are not disclosed, limiting a precise maturity mismatch assessment. Assets totaled 40,792.53 versus equity of 2,067.64; intangible assets are modest at 44.69, indicating limited goodwill burden. No off-balance sheet obligations were disclosed in the provided data.

Cash Flow Quality

Operating cash flow and free cash flow were not reported, so OCF/NI and FCF coverage cannot be assessed. The large gap between total comprehensive income (189.72) and net income (67.71) indicates significant unrealized OCI gains, which are non-cash and reversible; this elevates headline capital but may not translate into cash earnings. Without working capital details or credit cost disclosures, we cannot detect manipulation, but the low CIR supports genuine cost efficiency.

Dividend Sustainability

The payout ratio is reported at a conservative 27.8%, implying ample headroom relative to current earnings. FCF coverage cannot be evaluated given unreported cash flows. With retained earnings at 1,516.49 and stable profitability, the current dividend level appears affordable; scope for increases depends on earnings durability, capital policy, and regulatory capital buffers (not disclosed).

Risk Assessment

Business Risks:

• Sustained low NIM (0.9%) limiting earnings capacity
• Regional demographic headwinds potentially constraining loan growth
• Fee income trajectory unknown due to limited disclosure

Financial Risks:

• Interest-rate risk on the securities book (OCI volatility vs yield moves)
• Credit cost normalization from cyclical turn impacting margins
• High leverage inherent to banking (D/E 18.73x), making capital buffers critical
• Potential duration mismatch between assets and liabilities (details not disclosed)

Key Concerns:

• Earnings reliance on cost discipline (CIR 30.6%) amid structurally thin spreads
• Large OCI swings vs net income raise volatility in equity and capital ratios
• Data gaps on capital adequacy (e.g., CET1), provisions, and liquidity buffers

Investment Implications

Key Takeaways:

• Strong profitability inflection: NI +39.4% on revenue +10.8%; net margin ~16.0%
• Operating leverage evident with CIR at 30.6%
• ROE still modest at ~3.3% given low asset turnover and thin NIM
• Balance-sheet funding sound with LDR 78.1%
• Comprehensive income boost signals securities valuation tailwinds but higher volatility risk

Metrics to Watch:

• NIM trend and deposit beta sensitivity
• Credit costs/provisioning and NPL ratios
• Securities portfolio duration and unrealized gains/losses (OCI sensitivity)
• Capital adequacy (CET1/Total capital ratios) and RWA trends
• Fee and commission income growth to diversify revenue
• Cost-to-income ratio sustainability as investments resume

Relative Positioning: Versus regional bank peers, Miyazaki Bank shows stronger cost efficiency (low CIR) but faces the same structural NIM compression. Liquidity positioning (LDR 78%) is prudent, while ROE is in the lower mid-range given balance-sheet intensity and low spreads.

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