The Miyazaki Bank (8393) FY2026 Q3 Earnings Report

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Executive Summary

Revenue and profit increased, primarily driven by the expansion of interest income, resulting in high-quality earnings growth in which the increase in ordinary income significantly outpaced the increase in ordinary revenue. Ordinary revenue was ¥666.8B (¥597.4B in the same period of the previous year, +11.6%), ordinary income was ¥146.6B (¥115.2B, +27.2%), and quarterly net income attributable to owners of the parent was ¥104.0B (¥80.9B, +28.6%). While ordinary revenue in the Banking Business segment increased 13.0%, general and administrative expenses rose only 1.6%, with operating leverage supporting the improvement in profit margins. The progress rate of ordinary income against the full-year forecast was 74.4%, while that of net income was 76.5%, broadly in line with the standard progress rate of 75% as of Q3.

Factors Affecting Results

【Revenue】Ordinary revenue was ¥666.8B, up +11.6% year on year. The core Banking Business increased to ¥624.8B (+13.0%), accounting for 94% of consolidated revenue, while the Leasing Business declined to ¥37.6B (-6.6%). Interest income was ¥471.3B (+15.6%), driven by an increase in interest on loans of ¥265.3B (+18.2%).

【Profit and Loss】Ordinary income was ¥146.6B (+27.2%), and net income was ¥104.0B (+28.6%). While ordinary revenue increased 11.6%, general and administrative expenses rose only 1.6%, with cost discipline supporting profit growth. Segment profit in the Banking Business was ¥141.3B (+26.8%, 22.6% margin), accounting for 96.4% of consolidated profit. The Leasing Business also improved its profitability, with a 10.0% margin, up from approximately 6.8% in the same period of the previous year. Extraordinary items consisted only of an extraordinary loss of ¥0.3B, with a minimal impact on net income, resulting in an increase in both revenue and profit.

Segment Analysis

The Banking Business generated ordinary revenue of ¥624.8B (+13.0%) and segment profit of ¥141.3B (+26.8%). Its profit margin improved to 22.6% from approximately 20.1% in the same period of the previous year, making it the core contributor to consolidated profit. The Leasing Business experienced a decline in ordinary revenue to ¥37.6B (-6.6%), but segment profit increased to ¥3.8B (+29.2%), raising its profit margin to 10.0%; profitability improved despite the contraction in scale. Other businesses generated ordinary revenue of ¥4.4B (+1.4%) and profit of ¥1.5B (+76.7%), but their profit margin declined to 34.7% from the same period of the previous year, warranting attention to the profitability trends of non-core businesses.

Key Financial Metrics

【Profitability】The net profit margin was 15.6%, improving from approximately 13.5% in the same period of the previous year, while the ordinary income margin rose by approximately 2.7pt to 22.0%. Annualized ROE was 6.4% and should be interpreted in light of the high-leverage structure primarily funded by deposits.【Cash Flow Quality】Extraordinary income was ¥0.0B and extraordinary loss was ¥0.3B, indicating that one-time factors were extremely limited. The difference between pre-tax income of ¥146.3B and ordinary income of ¥146.6B was also minimal, indicating that the majority of profit was based on recurring earnings capacity.【Investment Efficiency】Net interest margin (NIM) was 1.32%; a level below 1.5% is relatively low in terms of interest-earning capacity. Loans increased to ¥2,446.66B (+2.3% year on year), while deposits were ¥3,917.9B (-1.0%), raising the loan-to-deposit ratio to 79.1% from 76.6% in the same period of the previous year, although it remained within the generally appropriate range of 70–90%.【Financial Soundness】Total assets were ¥4,116.04B (+1.1%), net assets were ¥216.54B (+14.2%), and the equity ratio was 5.2%, which requires evaluation under the regulatory framework applicable to the banking industry. Certificates of deposit increased substantially by +208.2% year on year, indicating a change in the funding composition.

Cash Flow Analysis

Although disclosures based on the cash flow statement are limited, analysis of funding trends based on balance sheet movements indicates that loans increased by ¥56.01B (+2.3%), while deposits declined (-1.0%). This gap was supplemented by market-based funding, including certificates of deposit (+¥85.56B, +208.2%) and liabilities from repurchase transactions (+24.2%). Borrowings declined by -11.5% year on year, indicating reduced reliance on traditional borrowing. Securities increased to ¥783.64B from the same period of the previous year, and liquid assets, including cash and deposits, reached ¥1,602.49B. Comprehensive income of ¥302.5B substantially exceeded net income of ¥104.0B, with the improvement in the valuation difference on securities (+¥174.3B) serving as a factor supporting equity.

Quality of Earnings

Of net income of ¥104.0B, the impact of extraordinary items consisted only of an extraordinary loss of ¥0.3B. The difference between pre-tax income of ¥146.3B and ordinary income of ¥146.6B was only approximately ¥0.2B, supporting the assessment that profit was of high quality and based on recurring earnings activities. Interest income, corresponding to non-operating revenue, expanded to ¥471.3B (+15.6%), but interest expenses also increased by +21.7%. The difference in growth rates between revenue and expenses is reflected in accruals in the form of limited NIM expansion. Comprehensive income of ¥302.5B substantially exceeded net income, primarily due to a ¥174.3B improvement in the valuation difference on securities. This represents a temporary change in equity resulting from market price movements and should be distinguished from an improvement in recurring earnings capacity.

Earnings Forecast and Guidance

The full-year forecast is ordinary income of ¥197.0B (+41.2% year on year), net income of ¥136.0B, and EPS of ¥807.26. The progress rate of cumulative ordinary income through Q3 was 74.4%, while that of net income was 76.5%, broadly in line with the standard quarterly progress rate of 75% and indicating steady progress toward achieving the plan. During the current quarter, revisions were made to the earnings forecast and dividend forecast. Interest-rate trends, securities valuation, and credit costs in Q4 will be factors influencing final results.

Shareholder Returns

The Q2 dividend was ¥90.00 per share, and the full-year dividend forecast is ¥200.00. The payout ratio based simply on cumulative net income of ¥104.0B is 14.8%, while the forecast payout ratio calculated using the full-year net income forecast of ¥136.0B and the full-year dividend forecast is approximately 24.8%. Both are conservative levels substantially below 60%. Treasury shares totaled 352 thousand shares, while the deduction amount was ¥1.315B, increasing from ¥0.473B in the same period of the previous year. This indicates a strengthened capital return stance in addition to dividends. Retained earnings have accumulated to ¥153.79B, providing a foundation supporting dividend sustainability from the perspective of capital accumulation.

Risk Factors

1. Low net interest margin (NIM): NIM was 1.32%, below 1.5%. While interest income increased +15.6% year on year, interest expenses increased by +21.7%, a faster pace. Management of funding costs during a period of rising interest rates will determine the direction of margins.

2. Changes in the funding composition: Deposits declined -1.0% year on year, while loans increased +2.3%, raising the loan-to-deposit ratio to 79.1% from 76.6% in the same period of the previous year. To cover this gap, certificates of deposit increased +208.2% and liabilities from repurchase transactions increased +24.2%. Monitoring is necessary to determine whether reliance on market-based and short-term funding will continue to rise.

3. Volatility in equity from changes in the valuation difference on securities: Accumulated other comprehensive income was ¥36.44B, accounting for 16.8% of net assets. The improvement in the valuation difference on securities (+¥174.3B) was the primary driver of comprehensive income of ¥302.5B. Future impacts from interest-rate and share-price fluctuations on equity are therefore material.

Industry Benchmark (Reference; Compiled by the Company)

Industry Benchmark (bank)

Profitability and Returns

Comparative data is limited, and a definitive assessment of the company’s relative position within the industry cannot be made.

Growth and Capital Efficiency

Comparative data is limited, and a definitive assessment of the company’s relative position within the industry cannot be made.

※Source: Compiled by the Company

Key Points from the Financial Results

1. Ordinary income increased +27.2% year on year, and net income increased +28.6%, substantially exceeding the +11.6% growth in ordinary revenue. The general and administrative expense growth rate remained at +1.6%, generating operating leverage and serving as the primary factor behind the improvement in profit margins.

2. The core Banking Business segment accounted for 96.4% of consolidated segment profit, and the improvement in its profit margin to 22.6% (+approximately 2.5pt year on year) led the improvement in overall profitability.

3. Progress against the full-year forecast was ordinary income 74.4% and net income 76.5%, representing standard progress. Meanwhile, the relatively low NIM of 1.32% remains a structural observation point when evaluating the quality of the interest-earning structure in a rising interest-rate environment.

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This report is an earnings analysis document automatically generated by AI through analysis of XBRL earnings release data. It does not recommend investment in any specific security. Industry benchmarks are reference information compiled by the Company based on publicly available earnings data. Investment decisions should be made at your own discretion and responsibility, after consulting with a professional as necessary.

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