The Chikuho Bank, Ltd. FY2026 Q2 Earnings Report

Financial Highlights

• Net Income: ¥504M
• EPS: ¥70.33

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

Chikugo Bank (Consolidated, JGAAP) reported FY2026 Q2 ordinary income of ¥596 million and net income of ¥425 million, with net income up 24% YoY based on the provided tag, while ordinary income appears flat YoY. Many line items are unreported (shown as zero per the data note), which is common for banks where XBRL tagging differs from manufacturing formats. Total assets stand at ¥914.674 billion and total equity at ¥36.185 billion, implying an assets-to-equity multiple of approximately 25.3x and an equity ratio of roughly 4.0% (calculated), consistent with regional bank leverage. The implied effective tax rate is about 8.8% (¥41 million tax on ¥466 million pre-tax income), suggesting the presence of tax-effect items or income components with preferential tax treatment. The difference between ordinary income (¥596 million) and implied pre-tax income (¥466 million) indicates unreported non-operating/extraordinary items, minority interests, or valuation movements not visible in the dataset. On an annualized basis, net income would be approximately ¥0.85–0.90 billion if H1 run-rate continues, implying an annualized ROE near 2–3% versus roughly 1.2% non-annualized for the half-year, which is subdued but within a conservative regional-bank profile under a low-rate environment. Reported DuPont sub-metrics (net margin, asset turnover) show zeros due to non-disclosure; however, leverage (assets/equity ~25x) aligns with the provided financial leverage figure. Liquidity ratios like current and quick ratios are not meaningful for banks given their balance-sheet structure; capital adequacy (e.g., CET1 ratio) is not disclosed here and is a key missing element. Cash flow statements are unreported, so operating cash flow and free cash flow quality cannot be judged from this dataset. Dividend data are also unreported (DPS and payout ratio shown as zero), so we cannot comment on distributions for this period from the provided numbers. EPS is ¥70.33; back-solving suggests roughly 6.0 million basic shares outstanding, though the share count is not explicitly disclosed. Balance-sheet scale (¥915 billion assets) positions the bank firmly in the regional bank cohort; earnings stability will hinge on net interest margin management, securities portfolio outcomes, and credit costs. Overall, the bank demonstrates modest profitability with leverage typical of its peer set and an improved bottom line YoY, but the lack of granular disclosures limits deeper margin or cash flow diagnostics.

Profitability Analysis

ROE decomposition must be adapted for banks. Using available data: Equity = ¥36.185bn; Assets = ¥914.674bn; Financial leverage ≈ 25.3x (assets/equity), consistent with the provided 25.28. Net profit margin and asset turnover are not meaningful from the provided zero revenue. Instead, we reference ROA/ROE: H1 ROA ≈ 0.046% (¥0.425bn/¥914.674bn); annualized ROA ≈ 0.09–0.10%. H1 ROE ≈ 1.17% (¥0.425bn/¥36.185bn); annualized ROE ≈ 2.3–2.5%, indicating thin profitability. Ordinary income (¥596m) equals reported operating income here, implying the core banking profit driver is the net interest and fees line; however, the gap between ordinary and pre-tax income suggests unreported extraordinary items, valuation losses/gains, or minority interest. Margin quality: the low implied effective tax rate (~8.8%) points to either tax-effect accounting or income composition effects; without net interest income (NII), fee income, or credit cost data, we cannot parse core vs non-core contributions. Operating leverage: Not assessable from this dataset; cost-to-income ratio, personnel costs, and G&A are undisclosed. Efficiency: Asset yield and cost of funds cannot be derived; no NIM provided. Overall, profitability is modest but improved at the net level YoY, likely due to lower credit costs or better securities-related results.

Growth Assessment

Revenue and gross profit are unreported; ordinary income is flat YoY per the tag, while net income rose 24% YoY, indicating improvement below the ordinary income line (e.g., lower credit costs, extraordinary gains/lower losses, or tax benefits). Given the low-rate domestic environment and recent rate hikes at the margin, growth sustainability will depend on NIM resilience, loan volume growth in the bank’s regional footprint, and securities portfolio outcomes, none of which are disclosed in the dataset. The scale of assets (¥914.7bn) suggests growth is likely incremental; significant acceleration would require either spread expansion or fee diversification. Profit quality is uncertain due to the gap between ordinary and pre-tax income and the low tax rate, which may not be repeatable. Outlook: Absent detailed disclosures, base case is steady earnings with sensitivity to credit costs and JGB/foreign bond valuation. Any BoJ policy normalization could modestly aid core earnings through NIM improvement but may generate AFS valuation volatility.

Financial Health

Liquidity: Traditional current/quick ratios are not meaningful for banks; liquidity assessment requires loan-to-deposit ratio, HQLA composition, and maturity ladder, which are not provided. Solvency: Equity of ¥36.185bn on ¥914.674bn assets gives a calculated equity ratio of ~3.96%; leverage (liabilities/equity) is ~23.5x (consistent with the provided 23.51x). Regulatory capital (CET1, total capital, leverage ratio) is not disclosed, limiting solvency conclusions. Funding: Liability-heavy structure is standard; deposit mix and wholesale funding reliance are unknown, a key limitation. Interest coverage is shown as 0.0x due to non-disclosure; for banks, coverage is not typically used. Overall, the balance sheet scale and leverage fit a regional bank profile, but capital adequacy cannot be confirmed from this dataset.

Cash Flow Quality

All cash flow figures (operating, investing, financing, and cash/equivalents) are unreported in the feed, so OCF/NI and FCF cannot be assessed. For banks, cash flow-based FCF is less informative than earnings plus credit cost trends and securities valuation, but even these components are undisclosed here. Working capital metrics do not apply in a standard sense to banks; instead, we would review deposit stability and loan growth, which are not provided. Earnings quality is therefore indeterminate: the 24% YoY net income increase may reflect non-recurring items or tax effects given the low implied tax rate (~8.8%).

Dividend Sustainability

Dividend data (DPS, payout ratio, FCF coverage) are unreported. With H1 net income at ¥425m and equity at ¥36.185bn, the bank likely targets a conservative payout typical of regional peers, but we cannot quantify coverage or policy adherence. Without OCF and regulatory capital metrics (CET1, risk-weighted assets), we cannot assess capacity for stable dividends or room for increases. Key determinants would include sustainable core profit (NIM and fee income), credit cost normalization, and valuation volatility in the securities book.

Risk Assessment

Business Risks:

• Net interest margin compression or limited expansion in a shifting BoJ policy environment
• Securities portfolio valuation volatility from interest rate moves (JGBs and foreign bonds)
• Credit cost normalization or spikes, particularly in SME and regional borrower segments
• Fee income concentration and limited diversification typical of regional banks
• Regional economic exposure to local demographics and industry mix

Financial Risks:

• High balance-sheet leverage inherent to banking (assets/equity ~25x)
• Unclear capital adequacy (CET1/total capital ratios not disclosed in this dataset)
• Potential maturity mismatch and funding risk if wholesale funding is material (not disclosed)
• Low implied effective tax rate suggests earnings sensitivity to non-recurring/tax items
• AFS/HTM securities interest rate risk impacting OCI and potentially regulatory capital

Key Concerns:

• Data gaps prevent validation of core earnings quality (NII, fees, credit costs) and capital buffers
• Gap between ordinary income and implied pre-tax income indicates unreported items affecting quality
• Dividend capacity cannot be assessed without cash flows and regulatory capital metrics

Investment Implications

Key Takeaways:

• H1 FY2026 net income ¥425m (+24% YoY) with ordinary income ¥596m suggests bottom-line improvement despite flat core profit
• Calculated leverage consistent with regional banks (assets/equity ~25x; liabilities/equity ~23.5x)
• Annualized ROE estimated at ~2–3%, indicating modest profitability
• Low implied tax rate (~8.8%) and gap to ordinary income point to non-core or tax-effect drivers
• Large disclosure gaps (revenue/NII, cash flows, capital ratios, dividends) limit conviction on sustainability

Metrics to Watch:

• Net interest margin (NIM) and loan/deposit growth by segment
• Credit costs, NPL ratio, and coverage ratio
• Securities portfolio duration, unrealized gains/losses (OCI), and interest rate sensitivity
• Cost-to-income ratio and progress on fee income diversification
• CET1 ratio/total capital ratio and leverage ratio under Basel standards
• Dividend policy (DPS, payout ratio) and any share buyback intentions

Relative Positioning: Based on scale and leverage, the bank aligns with Japan’s regional bank cohort, exhibiting modest profitability and likely conservative risk appetite; however, absent disclosures on NIM, credit costs, and capital, its relative strength versus peers cannot be firmly established.

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