| Metric | Current Period | Prior Period | YoY |
|---|---|---|---|
| Revenue / Net Sales | ¥803.2B | ¥691.9B | +16.1% |
| Operating Income / Operating Profit | - | - | - |
| Ordinary Income | ¥130.6B | ¥83.3B | +56.8% |
| Net Income / Net Profit | ¥84.1B | ¥49.8B | +69.1% |
| ROE | 5.8% | 3.6% | - |
For the fiscal year ended March 2026, Ryukyu Bank achieved significant top- and bottom-line growth: Ordinary Income ¥803.2B (YoY +¥111.3B +16.1%), Ordinary Income ¥130.6B (YoY +¥47.3B +56.8%), and Net Income ¥84.1B (YoY +¥34.3B +69.1%). Interest income expanded to ¥400.9B (YoY +¥87.4B +27.8%) amid normalization of the interest rate environment, while interest expense surged to ¥55.4B (YoY +¥38.2B +222.6%) driven by higher deposit rates. Net fee income totaled ¥72.2B (YoY +¥4.1B), and other ordinary income increased to ¥237.9B (YoY +¥15.1B), contributing to broad-based topline expansion. Operating Cash Flow (OCF) ¥217.2B, equivalent to 2.4x net income, indicates high earnings quality; however, aggressive investing (Investing CF ¥293.3B including capital expenditures ¥91.7B) produced Free Cash Flow of -¥76.1B.
[Revenue] Ordinary revenue ¥803.2B (YoY +16.1%) was supported by balance sheet expansion: loans +¥996 ( +5.0%) and deposits +¥1,091 ( +3.9%). Interest income rose to ¥400.9B ( +¥87.4B +27.8%), with interest on loans ¥340.3B ( +¥62.2B) and interest on securities ¥51.9B ( +¥20.0B) both increasing. Conversely, interest expense jumped to ¥58.6B ( +¥38.4B), notably deposit interest at ¥55.4B ( +¥38.2B +222.6%), roughly 3.2x prior year. As a result, net interest income increased by only ¥342.3B (YoY +¥49.0B), and estimated net interest margin remained low at 1.23%. Net fee income was solid at ¥72.2B ( +¥4.1B +6.0%), reflecting service fees and other income of ¥141.4B ( +¥11.1B) less service-related expenses of ¥69.2B ( +¥7.0B). Other ordinary income rose to ¥237.9B ( +¥15.1B) but was offset by an increase in other ordinary expenses to ¥225.4B ( +¥46.8B). By segment, Banking accounted for ¥541.9B (67.5% of total), followed by Leasing ¥195.3B (24.3%), Credit Card ¥31.8B (4.0%), IT Business ¥30.0B (3.7%), and Credit Guarantee ¥4.2B (0.5%).
[Profitability] Ordinary Income ¥130.6B (YoY +56.8%) was achieved as the revenue increase of +¥111.3B was partly offset by expense increases of +¥64.0B. Operating expenses rose to ¥672.6B (YoY +¥64.0B +10.5%), of which SG&A including personnel expenses totaled ¥307.1B ( +¥19.7B). Consequently, the expense ratio (to ordinary revenue) improved 4.3ppt to 83.7% (prior year 88.0%) but remains high, indicating substantial scope for cost efficiency. Extraordinary items were minor: extraordinary gains ¥0.01B and extraordinary losses ¥1.11B (including impairment losses ¥0.15B). Pre-tax profit was ¥129.5B, from which corporate taxes ¥38.7B (effective tax rate 29.9%) were deducted, yielding Net Income ¥84.1B ( +69.1%). Net income attributable to owners of the parent was ¥90.8B (after non-controlling interests), and basic EPS rose to ¥221.50 (prior year ¥139.03 +59.3%). In conclusion, growth in revenue and profits was driven by interest normalization combined with expense control.
The Banking segment generated segment profit of ¥117.9B (margin 21.8%), contributing the majority of group profit through expanded lending and deposit activities. Leasing produced profit of ¥7.8B (margin 4.0%), a low-margin but stable income source. Credit Card contributed ¥7.1B (margin 22.3%) with high margins. Credit Guarantee posted ¥3.9B (margin 92.4%)—very high profitability but limited scale. IT Business earned ¥0.8B (margin 2.7%) with low returns and room for improvement. Total segment profits of ¥137.6B less intersegment adjustments of -¥7.0B converged to Ordinary Income ¥130.6B. While revenue concentration in Banking is high, high-margin Card and Credit Guarantee segments complement stable income.
[Profitability] ROE 5.8% is composed of Net Profit Margin 10.5% × Total Asset Turnover 0.026 × Financial Leverage 21.4x, with the year-on-year improvement primarily driven by a 2.2ppt increase in net profit margin. Estimated NIM 1.23% remains low, pressured by rising deposit funding costs. Expense ratio 83.7% (prior 88.0%) improved but remains elevated; estimated Cost-to-Income Ratio (CIR) ~72% suggests structural scope for reductions. [Cash Quality] OCF ¥217.2B generated 2.6x net income and an accrual ratio of -0.4%, indicating a cash-led earnings structure. [Investment Efficiency] Capex ¥91.7B is 2.6x depreciation ¥35.4B, reflecting active investment in branches and systems and implying future increases in depreciation burden. [Financial Soundness] Equity Ratio 4.7% (domestic basis) was flat year-on-year and above regulatory levels, but buffers are limited. Debt-to-equity ratio 20.4x reflects banking sector characteristics, and loan-to-deposit ratio 72.2% (Loans ¥2.08兆 / Deposits ¥2.88兆) maintains liquidity cushion.
Operating Cash Flow was ¥217.2B (YoY +114.3%), driven by pre-tax profit ¥129.5B, depreciation ¥35.4B, accrual adjustments, and after corporate tax payments of -¥29.5B, resulting in robust cash inflows. From an OCF subtotal of ¥246.7B, after working capital changes and tax payments, ¥217.2B was secured. Investing CF was -¥293.3B, primarily due to capital expenditures -¥91.7B and tangible/intangible asset acquisitions -¥130.4B; partially offset by proceeds from sale of tangible fixed assets +¥23.3B. Financing CF was -¥25.8B, mainly dividends paid -¥18.9B and share buybacks -¥5.0B. Free Cash Flow was -¥76.1B (OCF ¥217.2B - Investing CF ¥293.3B), reflecting investment-led outflows this period. Consequently, cash and cash equivalents decreased by -¥101.5B, ending the period at ¥1,606.3B. OCF to Net Income ratio 2.6x indicates strong cash generation, but aggressive investing compressed FCF.
Net Income ¥84.1B derives from Ordinary Income ¥130.6B less extraordinary items -¥1.1B and taxes ¥38.7B, indicating earnings driven by ordinary activities. Extraordinary loss ¥1.11B (impairment ¥0.15B) is minor, showing low reliance on one-off items. Non-operating income/expenses are centered on interest and fee income, with the net of other ordinary income ¥237.9B and other ordinary expenses ¥225.4B also contributing. OCF at 2.6x net income and accrual ratio -0.4% indicate earnings strongly backed by cash. Comprehensive income ¥79.8B is below net income ¥84.1B due to other comprehensive income -¥11.1B (securities valuation differences -¥16.9B, retirement benefit adjustments +¥5.9B), reflecting mark-to-market losses. Divergence between ordinary income and net income is explained by tax burden and minor extraordinary losses—there is no dependence on temporary gains. Overall earnings quality is high and sustainable.
Full-year guidance forecasts Ordinary Income ¥149.0B (YoY +14.1%), Net Income attributable to owners of the parent ¥100.0B (YoY +12.9%), basic EPS ¥243.87, and annual dividend ¥49. Actual Ordinary Income ¥130.6B represents 87.7% of full-year guidance; Net Income attributable to owners ¥90.8B is 90.8% of guidance—both below forecast. Shortfalls are attributed to deposit funding costs rising above assumptions and persistently high expense ratios. Achievement going forward depends on loan re-pricing progress, additional non-interest income, and accelerated cost efficiencies.
Annual dividend was ¥88 (interim ¥27 + year-end ¥61). Against basic EPS ¥221.50, the payout ratio is 39.7% (based on total dividends ¥18.9B ÷ net income attributable to owners ¥90.8B, the ratio is 20.8%). Share buybacks of ¥5.0B were executed; combined with dividends total shareholder returns were ¥23.9B, giving a Total Return Ratio of 26.3%. Against Free Cash Flow -¥76.1B, shareholder returns ¥23.9B were covered by OCF ¥217.2B and available liquidity. The payout ratio is at a sustainable level, but if FCF deficits persist due to investment, future return capacity will depend on OCF improvement and investment efficiency. The full-year dividend guidance ¥49 (annualized equivalent ¥98) is broadly consistent with actual ¥88.
Net interest margin compression risk: Estimated NIM 1.23% is low in the industry; if deposit rates rise faster than loan rates, margin compression could further deteriorate earnings. With loans ¥2.08兆 and deposits ¥2.88兆, a 1bp interest rate move is estimated to impact annual profit by ¥0.21B, requiring continuous monitoring.
Persistently high Cost-to-Income Ratio risk: Expense ratio 83.7% and estimated CIR 72% are high. Capex ¥91.7B (2.6x depreciation) implies near-term depreciation increases, sustaining cost pressure. Expense rigidity may constrain earnings leverage and amplify declines in a downturn.
Thin capital buffer and interest rate stress risk: Equity Ratio 4.7% exceeds regulatory levels but buffers are limited. Securities valuation losses (comprehensive income -¥16.9B) and potential credit cost increases leave limited capital headroom. With total assets ¥3.11兆 and securities ¥7,091億円, a 100bp rate rise could produce estimated valuation losses of ¥71B, which could materially impact equity base ¥1,455B.
Profitability & Returns
| Metric | Company | Median (IQR) | Delta |
|---|---|---|---|
| Net Profit Margin | 10.5% | 11.9% (7.2%–35.4%) | -1.4pt |
Net profit margin is 1.4ppt below the industry median 11.9%, indicating profitability is somewhat below industry norm.
Growth & Capital Efficiency
| Metric | Company | Median (IQR) | Delta |
|---|---|---|---|
| Revenue Growth (YoY) | 16.1% | 10.1% (7.3%–12.1%) | +6.0pt |
Revenue growth 16.1% exceeds the industry median 10.1% by 6.0ppt, placing the company among the higher-growth peers.
※ Source: Company compilation
Revenue gains from interest normalization are evident, but estimated NIM 1.23% is low, and upside to margins is constrained by higher-than-expected deposit funding costs. If loan re-pricing advances, there is upside to margins and earnings, but in the short term margin pressure remains a risk.
OCF ¥217.2B and cash generation of 2.6x net income are strong, but aggressive investments (Capex ¥91.7B, 2.6x depreciation) produced Free Cash Flow -¥76.1B and cash outflow this period. While investments are expected to strengthen future earning capacity, near-term capital efficiency and shareholder return flexibility are constrained; timing of investment payback is a monitoring point.
Equity Ratio 4.7% meets regulatory requirements but buffers are limited; attention is needed regarding valuation losses on securities (comprehensive income -¥16.9B) and capital constraints under rising rate or credit stress scenarios.
This report is an AI-generated financial analysis document produced by analyzing XBRL earnings release data. It is not a recommendation to invest in any specific security. Industry benchmarks are reference information compiled by our firm based on public financial statements. Investment decisions are yours to make; consult a professional advisor as needed and act at your own responsibility.