筑邦銀行 (8398) FY2026 Q3 Earnings Report

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Executive Summary

Chikuhou Bank reported higher revenue and profits for the cumulative Q3 period, driven by the expansion of lending and deposit-related earnings in the banking business. Revenue (ordinary revenue) was ¥162.4B (+16.4% YoY), ordinary income was ¥12.8B (+17.4%), and net income attributable to owners of the parent was ¥8.9B (+12.2%). Basic EPS was ¥148.26 (¥129.75 in the same period last year). The increase in revenue was primarily attributable to higher interest income in the banking business, resulting in a period of profit growth in which the increase in ordinary income exceeded the increase in revenue.

Factors Affecting Performance

【Revenue】Revenue (ordinary revenue) was ¥162.4B, representing a 16.4% YoY increase. By segment, the banking business was the largest growth driver at ¥110.1B (67.8% of total, +22.4% YoY), while the leasing business posted a moderate increase to ¥51.6B (31.8% of total, +4.1% YoY). Growth in the banking business was supported by higher interest income (interest on loans of ¥62.2B, +21.2% YoY) and increased fee income.

【Profit and Loss】Ordinary income increased by 17.4% YoY to ¥12.8B, representing profit growth at a faster pace than revenue growth. Ordinary income was ¥12.4B in the banking business (+14.3% YoY, profit margin 11.2%) and ¥1.2B in the leasing business (+20.2% YoY, profit margin 2.3%), with both segments reporting higher profits. After deducting income taxes of ¥3.7B from profit before tax of ¥12.8B, net income was ¥9.1B (+13.3% YoY), of which ¥8.9B (+12.2%) was attributable to owners of the parent. Extraordinary gains and losses were zero, and the loss on disposal of fixed assets recorded in the previous period (¥0.5B) did not occur in the current period, also contributing to profit growth. Overall, the company reported higher revenue and profits.

Segment Analysis

The banking business continued to report higher revenue and profits as its core business, with revenue of ¥110.1B (67.8% of total, +22.4% YoY) and ordinary income of ¥12.4B (+14.3% YoY, profit margin 11.2%). The leasing business posted revenue of ¥51.6B (31.8% of total, +4.1% YoY) and ordinary income of ¥1.2B (+20.2% YoY, profit margin 2.3%); although revenue growth was limited, improvement in the profit margin was notable. The banking business’s profit growth rate (+14.3%) was below its revenue growth rate (+22.4%), suggesting that higher funding costs accompanying loan growth—interest expenses increased 3.4-fold to ¥12.0B—may have pressured profits.

Key Financial Metrics

【Profitability】The net profit margin was 5.6%, broadly unchanged from 5.8% in the previous year, while the ordinary income margin edged up to 7.9% from 7.8%. NIM, which indicates the banking business’s net interest margin, remained low at 1.23%, suggesting room for improvement in asset profitability. 【Cash Quality】The cash flow statement, including Operating Cash Flow (OCF), has not been disclosed, and the cash backing of earnings can only be inferred from trends in comprehensive income and valuation differences on securities. 【Investment Efficiency】ROE (annualized) was 3.2%. While the total asset turnover ratio was low at 0.018x, financial leverage was extremely high at approximately 23x, indicating that the company continues to support ROE through reliance on leverage. 【Financial Soundness】The equity ratio was 4.3%, improving from 3.5% in the previous year. Net assets were ¥385.5B against total assets of ¥8,980.1B, and the debt-to-equity ratio remained high.

Cash Flow Analysis

The cash flow statement has not been disclosed, preventing direct assessment of Operating Cash Flow (OCF), investing cash flow, and financing cash flow. Trends in the balance sheet indicate a typical regional bank funding cycle in which loans are expanded using increased deposits as the funding source: deposits rose to ¥8,022.4B from ¥7,936.1B in the previous year, while loans increased to ¥5,910.8B from ¥5,664.3B. Cash and deposits decreased to ¥396.7B from ¥637.1B in the previous year, suggesting that surplus funds may have been allocated to lending and securities investments. Securities increased to ¥2,296.2B from ¥2,140.5B, indicating continued growth in managed assets.

Quality of Earnings

The recurring earnings base remains solid, with extraordinary gains and losses at zero and no temporary factors included. However, comprehensive income of ¥67.5B significantly exceeded net income of ¥9.1B, primarily due to the improvement in valuation differences on other securities, from △¥45.8B in the previous year to ¥59.3B in the current period. These valuation differences are affected by market interest rates and share-price trends and must be distinguished from recurring earnings power. Although profitability on a net income basis is growing steadily, the substantial fluctuation in comprehensive income indicates high sensitivity to market movements. It is therefore important to assess net income and comprehensive income separately when evaluating earnings quality.

Earnings Forecast and Guidance

The full-year forecast remains unchanged, with revenue of ¥213.8B, ordinary income of ¥14.8B (+28.4% YoY), EPS of ¥185.08, and a dividend forecast of ¥50.00. Cumulative Q3 ordinary income of ¥12.8B represents 86.6% of the full-year forecast, indicating steady progress toward the plan.

Shareholder Returns

The dividend forecast remains unchanged at ¥25 for the interim dividend and ¥25 for the year-end dividend, for an annual total of ¥50 (the previous year’s actual result was an interim dividend of ¥25). Based on net income attributable to owners of the parent of ¥8.9B, the Payout Ratio is approximately 35%, a reasonable level. No share repurchase has been disclosed; therefore, shareholder returns are evaluated based solely on the Payout Ratio, without assessing the Total Return Ratio. Treasury shares increased to ¥6.4B from ¥3.1B in the previous year, making trends in the acquisition and disposal of treasury shares an area to monitor when assessing future shareholder-return policies.

Risk Factors

1. Net interest margin compression risk: NIM remains low at 1.23%, and the impact of higher funding costs is evident, with interest expenses increasing fourfold YoY to ¥12.0B. Depending on changes in the interest-rate environment, net interest margins may come under further pressure.

2. Risk of fluctuations in valuation differences on securities: Most of comprehensive income of ¥67.5B resulted from the ¥59.3B improvement in valuation differences on securities. Comprehensive income could deteriorate significantly if market interest rates or share prices reverse.

3. High financial leverage: Net assets were ¥385.5B against total assets of ¥8,980.1B, leaving the equity ratio at only 4.3%. The capital cushion is thin, and resilience to credit losses may be limited.

Industry Benchmark (For Reference; Compiled by the Company)

Profitability and Returns

The net profit margin is slightly below the industry median.

Growth and Capital Efficiency

The revenue growth rate is substantially above the industry median, placing the company in the upper-tier group.

※Source: Compiled by the Company

Key Takeaways from the Earnings Results

1. Although the company reported higher revenue and profits, the substantial improvement in comprehensive income was largely attributable to valuation differences on securities, which are subject to market fluctuations. This should be noted when assessing the quality of the earnings results.

2. The equity ratio improved to 4.3% from 3.5% in the previous year, but remains low within the industry. The high level of financial leverage remains an ongoing point of observation.

3. Progress toward the full-year ordinary income forecast was 86.6%, indicating steady progress. The absence of revisions to either the earnings forecast or the dividend forecast confirms progress in line with the plan.

Theoretical Share Price (Reference Value)

Sensitivity: ¥5,097–¥5,388 at ±1% for the cost of equity, and ¥5,197–¥5,267 at ±0.1 for ω.

Notes:

• Since forecast ROE is below the cost of equity, the theoretical value is below book value per share.
• Net assets as of the quarter-end are used (there is a timing mismatch with the full-year forecast).
• Since net assets include non-controlling interests, the theoretical value may be calculated somewhat high.

(Calculation model: Residual Income Model (Ohlson-type, explicit 5-year fade) / Interest-rate reference month: 2026-07 / Mechanically calculated solely from publicly disclosed data; this is not a forecast of the market share price or a recommendation of any specific investment action, and does not forecast or guarantee future share prices.)

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

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