THE BANK OF SAGA LTD. FY2026 Q2 Earnings Report

Financial Highlights

• Net Income: ¥4.80B
• EPS: ¥297.22

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

Saga Bank (8395) reported consolidated FY2026 Q2 (first half) net income of ¥5.022 billion, up 16.4% YoY, with operating/ordinary income of ¥6.961 billion. Many line items are unreported in XBRL (e.g., revenue, cash flows, current items), which is common for banks due to different account classifications under JGAAP; analysis therefore focuses on the available non-zero data and bank-appropriate ratios. With total assets of ¥3,203.3 billion and total equity of ¥123.1 billion, balance-sheet leverage is about 26.0x, yielding an accounting equity-to-asset ratio of roughly 3.8%. Using reported net income and average equity, the simple half-year ROE is approximately 4.1%, or about 8.1% on an annualized basis, which is in line with a modestly profitable regional bank profile. Implied ROA is about 0.16% for the half (c. 0.31% annualized), reasonable for a Japanese regional bank in a still-low-rate environment. The effective tax rate, approximated from net income plus income tax, appears around 24–25%, suggesting a normalized tax load without unusual distortions. EPS was ¥297.22; back-solving from net income implies roughly 16.9 million shares outstanding, noting shares data were unreported. Due to non-disclosure of revenue and interest expense, margin and interest coverage metrics in the calculated section are not decision-useful for a bank and should not be interpreted as zeros. Cash flow statements were not disclosed; for banks, OCF/FCF metrics are less indicative of earnings quality than credit cost trends, securities gains/losses, and net interest margins, which are not provided. The YoY net income growth suggests better earnings momentum, potentially from lower credit costs, improved securities-related gains, or modest NIM/fee support, but the drivers are not disclosed. Capital appears adequate on an accounting basis, but regulatory capital metrics (CET1, total capital ratio) are not provided and are essential for a full solvency view. Dividend data were not disclosed; Saga Bank historically would frame shareholder returns through a payout policy and/or share buybacks subject to capital buffers, but we cannot assess coverage without DPS. Key watchpoints include credit cost normalization, securities portfolio valuation and duration risk amid rate volatility, deposit funding stability, and any shift in fee income. Overall, the half-year print indicates stable core profitability with improved bottom line, but limited disclosures constrain depth of analysis and require caution in interpreting standard industrial ratios.

Profitability Analysis

ROE decomposition must be adapted for banks due to absent revenue and different cost structures. Using available data: - Net income: ¥5,022m; Equity: ¥123,144m; Assets: ¥3,203,327m; Leverage (Assets/Equity): ~26.0x. - Half-year ROA ≈ 5,022 / 3,203,327 = 0.157%; annualized ~0.31%. - Half-year ROE ≈ 5,022 / 123,144 = 4.1%; annualized ~8.1%. The provided DuPont components (net profit margin and asset turnover) show as 0.00 due to non-disclosure of revenue and are not meaningful for a bank. Margin quality: absent revenue and interest expense, we infer quality from net/ordinary income. Ordinary income of ¥6,961m vs net income of ¥5,022m implies moderate below-the-line items and a roughly 24–25% tax load (using pretax ≈ net + tax = ¥6,637m). Operating leverage: not directly measurable without fee/interest breakdown; the YoY net income +16.4% vs operating income flat (reported +0.0% YoY) suggests the uplift likely came from non-operating items, lower credit costs, or tax effects rather than broad-based revenue expansion. ROA/ROE levels indicate steady but not outsized profitability for a regional bank.

Growth Assessment

Revenue sustainability cannot be assessed from the disclosed revenue line (0 indicates non-disclosure). Profit growth is visible: net income +16.4% YoY to ¥5,022m for the half. Ordinary income reported at ¥6,961m with no YoY delta disclosed; if truly flat, the growth in bottom line likely stems from improved below-the-line items, lower credit costs, or taxes. Without net interest income, fee income, or trading/securities gains data, we cannot attribute growth to NIM expansion or fee momentum. Outlook (qualitative): earnings resilience will hinge on deposit beta management in a rising/normalizing rate environment, credit cost trends in SME/retail books, and securities portfolio valuation given rate volatility. If asset quality holds and funding costs are contained, the annualized ROE ~8% suggests sustainable mid-single-digit to high-single-digit returns; however, upside would require either margin expansion, higher fees, or securities gains, while downside risks include higher credit costs or negative AFS valuation impacts.

Financial Health

Liquidity: Current and quick ratios are not applicable to banks and were not disclosed; bank liquidity is better assessed via loans-to-deposits, HQLA, and liquidity coverage ratio, which were not provided. Solvency/capital: Accounting equity of ¥123.1bn on ¥3,203.3bn assets implies an equity ratio ~3.8%, typical for a regional bank. Regulatory capital ratios (CET1/total capital) and risk-weighted assets are not disclosed; these are essential for a full solvency assessment. Leverage: Assets/Equity ≈ 26.0x; debt-to-equity 24.86x in the calculated section aligns with banking leverage levels. Funding structure, deposit mix, and market funding reliance are not disclosed; thus, we cannot assess interest rate sensitivity or liquidity buffers directly. Overall, the balance sheet scale and leverage are consistent with peers, but lack of regulatory capital and liquidity metrics limits confidence.

Cash Flow Quality

Earnings quality for banks is better gauged by core net interest income stability, credit cost normalization, and the volatility of securities-related gains/losses rather than standard OCF/FCF. Cash flow statements were not disclosed (zeros indicate non-reporting), so OCF/Net income and FCF coverage metrics are not interpretable. The bridge from ordinary income (¥6,961m) to net income (¥5,022m) with taxes of ¥1,615m suggests limited extraordinary distortion; estimated tax rate ~24–25% implies normalized taxation. Without credit cost, NPL, or securities valuation disclosure, we cannot opine on the sustainability of earnings streams or potential reversals. Working capital concepts are not applicable in the traditional sense for banks.

Dividend Sustainability

Dividend data (DPS, payout) were not disclosed. EPS was ¥297.22 for the half; if the bank maintains a typical regional bank payout ratio (often around 30–40% on annual earnings), coverage by earnings would generally be comfortable provided capital buffers remain sufficient. However, without actual DPS, FCF (not meaningful for banks), or regulatory capital ratios, we cannot assess payout safety or flexibility. Policy outlook likely hinges on capital accumulation, credit cost outlook, and interest rate trajectory; buybacks, if any, would depend on valuation vs. capital position. Until DPS and capital metrics are disclosed, dividend sustainability assessment remains constrained.

Risk Assessment

Business Risks:

• Net interest margin compression or adverse deposit beta dynamics in a changing rate environment
• Credit cost normalization or spikes from SME/retail exposures amid macro slowdown
• Volatility in securities portfolio (JGBs/foreign bonds/equities) impacting gains and OCI
• Fee income softness if customer activity or market conditions weaken
• Competition from megabanks and regional peers in Saga and neighboring prefectures

Financial Risks:

• Interest rate risk in the banking book (duration mismatch) amid rate normalization
• Liquidity risk from deposit outflows or reliance on market funding (data not disclosed)
• Capital adequacy uncertainty without disclosed CET1/total capital ratios
• Credit concentration to local industries and real estate cycles
• FX and equity price risk if holding foreign securities or equities

Key Concerns:

• Limited disclosure of revenue, interest expense, cash flows, and capital ratios restricts analytical depth
• Earnings drivers (NIM, fees, credit costs, securities gains) not provided, obscuring sustainability
• Potential sensitivity to rate volatility given likely AFS/HTM bond holdings

Investment Implications

Key Takeaways:

• Half-year net income ¥5.022bn (+16.4% YoY) indicates improved profitability despite flat reported ordinary income
• Annualized ROE around 8% and ROA ~0.31% are consistent with a steady regional bank profile
• Leverage ~26x and accounting equity ratio ~3.8% align with peers; regulatory capital ratios needed for confirmation
• Earnings mix and sustainability cannot be verified due to non-disclosure of key banking lines
• Risk sensitivities center on rates, credit costs, and securities portfolio valuations

Metrics to Watch:

• Net interest margin and deposit beta
• Credit costs, NPL ratio, and coverage
• Securities gains/losses and OCI sensitivity to rates
• Regulatory capital ratios (CET1, total capital, leverage ratio)
• Loans-to-deposits and liquidity coverage metrics
• Fee income trajectory (settlement, asset management, FX)

Relative Positioning: Based on available figures, Saga Bank’s profitability and leverage appear broadly in line with Japanese regional bank norms, but absent disclosures on core banking metrics prevent a clear assessment of competitive positioning versus peers.

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