Bank of The Ryukyus,Limited FY2026 Q2 Earnings Report

Financial Highlights

• Net Income: ¥4.77B
• EPS: ¥128.85

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

Ryukyu Bank (TSE: 83990) reported consolidated FY2026 Q2 results under JGAAP with ordinary income and operating income both at ¥7.41bn and net income at ¥5.29bn, up a strong 50.6% YoY. Many line items (revenue, cash flow, current items) are unreported in XBRL, which is typical for banks where net interest and fees are not presented as “revenue” in manufacturing-style formats. Total assets stand at ¥3,085.5bn and total equity at ¥146.3bn, implying financial leverage of roughly 21.1x, consistent with the provided DuPont leverage figure. Using net income and reported tax expense, the implied effective tax rate is about 22.6% for the period. Given that Q2 in Japan usually corresponds to first-half cumulative results, annualizing net income suggests full-year net income run-rate of roughly ¥10.6bn, subject to seasonality and credit cost volatility. On that basis, annualized ROE is approximately 7–8% (NI annualized ÷ equity), a reasonable level for a regional bank and above what the zero-reported DuPont output implies. ROA on an annualized basis is roughly 0.34%, implying an ROE near 7.2% after applying the ~21x leverage. The significant YoY net income rise likely reflects a combination of improved core profit (net interest income uplift from rate/volume mix and/or securities gains) and/or lower credit costs, though these drivers are not disclosed in the provided data. The equity ratio is shown as 0.0% in the dataset but should be disregarded as unreported; capital structure should be assessed using assets and equity. Debt-to-equity of 19.4x (liabilities ÷ equity) is typical for banks and aligns with the computed leverage profile. Cash flow statement items are unreported, so earnings-to-cash conversion cannot be assessed from this dataset. Dividend information is also not disclosed here; historically, regional banks maintain stable dividends, but we cannot infer current policy from the zeros. Overall profitability momentum appears favorable given the +50.6% YoY net income, but the lack of detail on credit costs, NIM, fee income, and securities valuation effects constrains a deeper read on quality and sustainability. Balance sheet scale and leverage are consistent with a regional bank model, but we lack risk-weighted capital metrics to assess solvency resilience. Key uncertainties include the durability of earnings drivers, interest rate sensitivity, and potential credit cycle normalization.

Profitability Analysis

ROE_decomposition: Reported DuPont output shows net margin and asset turnover as zero due to unreported revenue. Reconstructing bank-style DuPont: annualized ROA ≈ (¥5.285bn × 2) / ¥3,085.5bn ≈ 0.34%; financial leverage ≈ 21.1x; implied annualized ROE ≈ 0.34% × 21.1 ≈ 7.2%. Using period (non-annualized) ROA ≈ 0.17%, period ROE ≈ 3.6%. margin_quality: Net income rose 50.6% YoY to ¥5.285bn while ordinary income is ¥7.41bn; the tax burden (≈22.6% ETR) appears normal. Lack of net interest income, fee income, and credit cost disclosure prevents assessing core margin vs one-offs (e.g., security gains). operating_leverage: Not directly inferable without gross/operating revenue and OPEX. However, the gap between ordinary income (¥7.41bn) and net income (¥5.29bn) implies a relatively clean pass-through after tax, suggesting expense discipline. Further clarity on G&A trends and credit costs is needed to judge operating leverage.

Growth Assessment

revenue_sustainability: Top-line proxies are not disclosed; ordinary income at ¥7.41bn suggests stable core performance, but sustainability depends on net interest margin resilience, loan growth in Okinawa-related markets, and fee income stability. profit_quality: YoY net income growth of +50.6% is strong, but without breakdown of credit costs, gains/losses on securities, and fee trends, quality cannot be fully validated. The normalized tax rate (≈22.6%) supports underlying earnings credibility. outlook: With financial leverage ~21x and improving earnings, annualized ROE near the mid‑single digits to high‑single digits appears plausible if credit costs remain benign and rates remain supportive. Key swing factors are credit normalization and market valuation effects on the securities portfolio.

Financial Health

liquidity: Current/quick ratios are not applicable to banks; zeros reflect non-disclosure. Liquidity assessment requires loan‑to‑deposit ratio and cash/reserve data, which are not provided. solvency: Assets ¥3,085.5bn and equity ¥146.3bn imply an equity-to-assets ratio of ~4.7%. Debt-to-equity is 19.4x. Regulatory capital ratios (CET1/total capital) are not disclosed here; hence buffers versus requirements cannot be assessed. capital_structure: Typical regional bank leverage profile with financial leverage of ~21.1x. The equity ratio shown as 0.0% should be treated as unreported. The slight mismatch between assets and liabilities+equity likely reflects disclosure/rounding differences.

Cash Flow Quality

earnings_quality: OCF, investing CF, and financing CF are unreported; thus, OCF/NI and FCF coverage metrics cannot be assessed. Earnings quality must be inferred indirectly from tax normalization and the ordinary-to-net income bridge, both of which look reasonable. FCF_analysis: Free cash flow is not meaningful for banks in the manufacturing sense and is unreported here. Bank cash generation should be evaluated via core profit, loan/deposit flows, and liquidity buffers—data not provided. working_capital: Working capital metrics are not applicable for banks; current assets/liabilities and inventories are unreported.

Dividend Sustainability

payout_ratio_assessment: Annual DPS and payout ratio are shown as zero due to non-disclosure. Based on period NI of ¥5.285bn, any actual dividend policy cannot be inferred from this dataset. FCF_coverage: Not assessable; OCF and FCF are unreported and not directly applicable for banks. policy_outlook: No guidance provided in the data. Typically, regional banks target stable dividends aligned with earnings and capital adequacy, but we cannot confirm current policy or outlook here.

Risk Assessment

Business Risks:

• Net interest margin compression if deposit betas rise faster than asset yields
• Credit cost normalization from current benign levels impacting ordinary income
• Securities portfolio valuation volatility amid rate moves affecting other operating income
• Concentration risk in Okinawa regional economy and tourism-related sectors
• Fee income sensitivity to market activity and consumer behavior

Financial Risks:

• High structural leverage inherent to banking (assets/equity ~21x)
• Potential capital ratio pressure if unrealized losses or credit losses materialize
• Liquidity risk under market stress without disclosed L/D ratio or HQLA details
• Interest rate risk (duration gap) given limited disclosure on ALM positioning

Key Concerns:

• Limited transparency in this dataset (many items unreported), constraining analysis of earnings drivers
• Absence of regulatory capital metrics (CET1, total capital) to gauge solvency buffers
• Unknown credit cost trend and NPL coverage levels, key for sustainability of profit growth

Investment Implications

Key Takeaways:

• Strong headline profitability with FY2026 Q2 net income up 50.6% YoY to ¥5.29bn
• Annualized ROE estimated around 7–8% based on equity of ¥146.3bn
• Leverage consistent with regional bank norms (assets/equity ~21x; D/E ~19.4x)
• Tax rate appears normalized (~22.6%), supporting earnings credibility
• Data gaps (cash flows, revenue breakdown, credit costs, capital ratios) limit assessment of quality and sustainability

Metrics to Watch:

• Net interest margin (NIM) and loan/deposit growth
• Credit costs (provisions) and NPL ratio/coverage
• Securities gains/losses and OCI sensitivity to rates
• Regulatory capital ratios (CET1, total capital, leverage ratio)
• Cost-to-income ratio and ordinary income trajectory

Relative Positioning: Within Japan’s regional banks, the implied ROE in the mid-to-high single digits and leverage around 21x appear broadly in line with peers, but lack of disclosed NIM, credit costs, and capital ratios prevents a precise relative strength assessment.

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