North Pacific Bank,Ltd. FY2026 Q2 Earnings Report

Financial Highlights

• Net Income: ¥13.02B
• EPS: ¥33.39

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

Hokuyo Bank (TSE: 8524) reported FY2026 Q2 consolidated results under JGAAP with ordinary income and operating income both at ¥18.381bn and net income at ¥12.575bn, up a strong 48.8% YoY. While many headline line items such as revenue, cash flows, and current items are unreported in XBRL for this period (zeros indicate not disclosed), the available non-zero figures allow a view on core profitability and leverage. Using total assets of ¥13.212tn and total equity of ¥406.123bn, we estimate half-year ROA at 0.095% and half-year ROE at 3.1%, implying an annualized ROE around 6.2% if run-rate conditions persist. Financial leverage stands at 32.5x (assets/equity), consistent with a deposit-taking institution’s balance sheet mix. The effective tax rate inferred from the reported tax expense appears to be about 20.2% based on net income plus tax, which is plausible given regional bank tax profiles. The gap between ordinary income (¥18.381bn) and the sum of net income plus tax (¥15.763bn) suggests roughly ¥2.6bn in non-tax items below ordinary profit (e.g., minority interests, extraordinary items, or adjustments). With operating and ordinary income equal, non-operating items within “ordinary” activities were limited in this period, pointing to cleaner core earnings. The YoY surge in net income likely reflects a favorable mix of higher core net interest income, disciplined costs, and/or lower credit costs, but precise attribution is not possible without disclosed segment or credit cost detail. Capital structure remains typical for a regional bank, with debt-to-equity of 32.16x and assets funded predominantly by liabilities (deposits and market funding). Liquidity metrics such as current ratio are not meaningful for banks and are not disclosed; regulatory liquidity and capital ratios (e.g., LCR, CET1) were not provided. Cash flow statements are not disclosed in the dataset, limiting analysis of earnings-to-cash conversion and free cash flow. Dividend data are also not disclosed in this extract; Hokuyo historically pays dividends, but payout and coverage cannot be assessed here. Overall, profitability improved meaningfully YoY on the bottom line, leverage is stable, and the run-rate suggests mid–single-digit annualized ROE. Key uncertainties are the sustainability of earnings drivers (NIM, fee income, securities valuations) and the trajectory of credit costs in a potentially shifting rate and macro environment. Data limitations require caution; conclusions are based solely on the provided non-zero items.

Profitability Analysis

ROE decomposition (bank-adapted): Estimated half-year ROA = Net income / Total assets = ¥12.575bn / ¥13,212.236bn ≈ 0.095%. Financial leverage = Assets / Equity ≈ 32.53x. ROE ≈ ROA × Leverage ≈ 0.095% × 32.53 ≈ 3.09% for H1; annualized ROE ≈ 6.2% if H2 is similar. Traditional DuPont components using revenue are not meaningful due to non-disclosure of revenue and margins for banks under JGAAP in this XBRL. Margin quality: Net income rose 48.8% YoY to ¥12.575bn, while ordinary ≈ operating income is ¥18.381bn, suggesting a relatively clean earnings mix with limited non-operating distortion inside ordinary activities this period. The implied effective tax rate is about 20.2% (¥3.188bn / (¥12.575bn + ¥3.188bn)). The difference between ordinary profit and pre-tax profit (~¥2.6bn) likely reflects minority interests or below-ordinary items, which slightly suppress reported net margin versus ordinary profit. Operating leverage: Without disclosed revenue, cost, or expense breakdowns (e.g., cost-to-income, OHR), operating leverage cannot be quantified. However, the sizable YoY expansion in net earnings against a flat ordinary profit YoY indicator (0.0% in the extract) suggests improvement mainly below the operating line (credit costs, taxes, or extraordinary/minority effects) rather than a surge in core operating profit. Profit conversion: With cash flow unreported, we cannot triangulate accrual intensity; nonetheless, the close alignment of operating and ordinary income indicates limited non-core income volatility within the period.

Growth Assessment

Revenue sustainability: Not assessable from the extract because revenue is not disclosed for banks in this XBRL. Profit growth: Net income +48.8% YoY to ¥12.575bn indicates strong bottom-line momentum in H1. Ordinary and operating income are reported at ¥18.381bn with 0.0% YoY in the extract, implying the YoY uplift in net income likely came from lower credit costs, improved tax effects, or changes in minority/extraordinary items rather than top-line expansion. Outlook considerations: For a regional bank, earnings sustainability will hinge on net interest margin stability in a shifting rate environment, loan growth in Hokkaido’s regional economy, fee income resilience, and valuation gains/losses on the securities portfolio. If H1 run-rate holds, annualized ROE around mid–single digits (~6%) is feasible; however, H2 can be seasonally or market-driven different, especially for credit costs and securities-related gains/losses. Given limited disclosures in this dataset, we cannot confirm drivers such as NIM expansion, duration positioning, or credit cost normalization; these remain key assumptions.

Financial Health

Liquidity: Bank-specific liquidity (LCR, HQLA, loans-to-deposits) is not disclosed; current and quick ratios are not applicable to banks and are unreported here. Solvency and capital: Total assets ¥13.212tn, total equity ¥406.123bn imply leverage of ~32.5x. Debt-to-equity of 32.16x is consistent with a deposit-funded balance sheet. The provided equity does not arithmetically reconcile to assets minus liabilities in this extract, which may reflect classification differences (e.g., contra accounts, valuation accounts, minority interests) or partial period disclosure; we rely on the stated equity for ratio calculations. Regulatory capital ratios (CET1, total capital adequacy) are not provided; hence, capital adequacy cannot be independently assessed from this dataset. Funding mix: Not disclosed; deposit stickiness and market funding tenor are key watch points but not available here.

Cash Flow Quality

Earnings quality: Cash flow from operating, investing, and financing are undisclosed in this extract (zeros denote not reported). As a result, OCF-to-net income and free cash flow cannot be evaluated. Without CF data, accrual intensity and working capital effects cannot be quantified. For banks, earnings-to-cash conversion typically focuses on credit cost realized cash impacts, interest accruals, and securities cash gains; these details are absent. Working capital: Not applicable in the traditional sense for banks; loans, deposits, and trading balances drive liquidity, but those are not disclosed here. Free cash flow: Not meaningful for banks in the standard corporate sense; dividend capacity is typically assessed against retained earnings, regulatory capital generation, and stress outcomes rather than FCF, which is not provided.

Dividend Sustainability

Dividends per share and payout ratio are not disclosed in this extract (zeros denote not reported). EPS for H1 is ¥33.39. Without DPS, historical payout policy, or regulatory capital ratios (e.g., CET1, buffer needs), we cannot compute payout or coverage. In banking, dividend sustainability hinges on sustainable net profit, credit cost cyclicality, unrealized securities valuation swings, and regulatory capital headroom. With H1 net income at ¥12.575bn and run-rate ROE near mid–single digits, capacity appears present in principle, but the absence of DPS, retained earnings, and capital metrics prevents a robust assessment.

Risk Assessment

Business Risks:

• Net interest margin compression risk from rate cuts or deposit betas rising faster than asset yields
• Credit cost normalization or increase amid macro slowdown in Hokkaido region and SME exposure
• Securities portfolio valuation volatility (JGB/foreign bonds) affecting OCI and realized gains/losses
• Fee income softness if market conditions weaken (wealth, brokerage, insurance sales) or transactional volumes fall
• Regional concentration risk tied to Hokkaido demographics and economic structure

Financial Risks:

• Interest rate risk in the banking book (duration mismatch) impacting earnings and capital through AFS valuations
• Funding risk if deposit mix shifts to higher-cost time deposits or if market funding conditions tighten
• Capital adequacy uncertainty due to absent CET1/total capital disclosures; buffers vs. stress unknown
• Credit concentration to specific industries or large borrowers not disclosed
• Potential basis and FX risks if foreign securities exposures exist (not disclosed here)

Key Concerns:

• Large portion of key metrics (revenue, cash flows, dividends, regulatory ratios) not disclosed in this extract
• Earnings sustainability relies on assumptions about NIM, credit costs, and securities gains not evidenced here
• Apparent mismatch between assets, liabilities, and stated equity in the extract, limiting balance sheet precision

Investment Implications

Key Takeaways:

• Net income grew 48.8% YoY to ¥12.575bn in H1, lifting run-rate ROE to roughly mid–single digits
• Financial leverage of ~32.5x is consistent with a regional bank balance sheet profile
• Operating and ordinary income alignment suggests limited non-operating noise within ordinary activities this period
• Tax burden appears moderate (~20%), contributing to bottom-line strength
• Data gaps (revenue, cash flows, dividends, regulatory capital) constrain deeper analysis

Metrics to Watch:

• Net interest margin (asset yields vs. deposit betas) and loan growth
• Credit costs (NPL formation, coverage ratios) and their impact on ordinary profit
• Securities portfolio duration and unrealized gains/losses (OCI sensitivity to rates)
• Regulatory capital ratios (CET1, total capital, leverage ratio) and buffers versus targets
• Deposit trends and funding mix (LTD ratio, liquidity coverage metrics)
• Cost discipline (overhead ratio/cost-to-income) and fee income trajectory

Relative Positioning: Positioning appears consistent with a typical regional bank in Japan: leverage is standard, profitability improving but still moderate on a run-rate basis, and earnings sensitivity likely tied to NIM, credit costs, and securities valuations. Without regulatory capital and detailed segment disclosures, comparative strength versus peers cannot be conclusively 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