The Ehime Bank (8541) FY2026 FY Earnings Report

Quick View

Executive Summary

The current period saw increases in both revenue and profit, with the most significant point being the substantial 36.1% YoY growth in Ordinary Income. Ordinary revenue was ¥68.52B (+3.6% YoY), Ordinary Income was ¥10.67B (+36.1%), and Net Income was ¥7.23B (+28.3%). Increased net interest income and fee and commission income in the Banking Business, combined with expense growth below the increase in ordinary revenue, drove profit expansion.

Factors Affecting Performance

【Revenue】Ordinary revenue increased 3.6% YoY to ¥68.52B. By segment, the Banking Business accounted for the core portion at ¥62.76B (91.6% of the total, +3.2% YoY), followed by the Leasing Business at ¥3.68B (+3.0%) and Other Businesses at ¥2.08B (+17.2%). In the Banking Business, interest income was ¥52.68B (+2.4% YoY), while fee and commission income was ¥5.69B (+15.6%), with both interest income and fee income contributing to revenue growth. Loans were ¥2,139.00B (+1.9% YoY), and deposits were ¥2,677.38B (+5.3%), with deposit growth exceeding loan growth and the loan-to-deposit ratio reaching 79.9%.

【Profit and Loss】Ordinary Income was ¥10.67B (+36.1% YoY), and Net Income was ¥7.23B (+28.3%). General and administrative expenses increased by only +2.1%, below the +3.6% growth in ordinary revenue, resulting in positive operating leverage. Ordinary Income in the Banking Business was ¥9.89B (+39.4%), making it the central contributor to consolidated profit growth. Extraordinary losses of ¥0.26B, including impairment losses of ¥0.11B, temporarily reduced Net Income, but the overall profit growth trend remains unchanged. Both revenue and profit increased.

Segment Analysis

The Banking Business generated ordinary revenue of ¥62.76B (91.6% of the total, +3.2% YoY) and Ordinary Income of ¥9.89B (+39.4% YoY; profit margin of 15.8%), making it the core of consolidated performance. The Leasing Business generated ordinary revenue of ¥3.68B (+3.0% YoY) and Ordinary Income of ¥0.13B (profit margin of 3.5%), both small in terms of scale and profitability. Other Businesses, including computer systems management and credit card operations, generated ordinary revenue of ¥2.08B (+17.2% YoY) and Ordinary Income of ¥0.65B, representing a high profit margin of 31.3%, although they accounted for only 3.0% of consolidated ordinary revenue. Growth in the Banking Business was the primary driver of consolidated profit growth.

Key Financial Indicators

【Profitability】The Ordinary Income margin was 15.6%, improving by approximately 3.8pt from 11.8% in the previous year, while the Net Income margin also rose by approximately 1.9pt to 10.5% from 8.6%. This improvement was driven by increases in net interest income and fee and commission income in the Banking Business, together with restrained expense growth.【Cash Flow Quality】Operating Cash Flow (OCF) was ¥9.409B, approximately 13.0 times Net Income. However, in the Banking Business, movements in funds such as deposits and loans significantly affect OCF, so it is not appropriate to apply the standards used for general operating companies without adjustment. Comprehensive income was ¥10.01B, exceeding Net Income of ¥7.23B, with a ¥1.68B gain on valuation differences on securities contributing to the result.【Investment Efficiency】ROE was 5.0%, improving by approximately 0.8pt from 4.2% in the previous year. Although total asset turnover is low and financial leverage is high, this reflects the business structure of a deposit-taking financial institution.【Financial Soundness】The Equity Ratio was 4.7%, and the loan-to-deposit ratio was 79.9%, both within the indicative range. Deposits increased +5.3% YoY, expanding the stable funding base. However, the growth rate in deposit interest expense (+61.1%) significantly exceeded the growth rate in loan interest income (+3.7%), requiring monitoring of future net interest margin trends.

Cash Flow Analysis

Operating Cash Flow (OCF) was ¥9.409B (+113.3% YoY), Investing Cash Flow was negative ¥1.682B, and Financing Cash Flow was negative ¥0.130B, resulting in free cash flow of ¥7.726B. The expansion in OCF was primarily attributable to a ¥135.02B YoY increase in deposits, and should be interpreted differently from the profit cash conversion ratio of a general operating company because it reflects fund movements specific to the Banking Business. Capital expenditures were ¥0.110B, and depreciation and amortization expense was ¥0.171B, resulting in a capital expenditures/depreciation and amortization ratio of 0.64x and indicating restrained investment. The software balance also decreased 20.7% YoY. Short-term cash flow is sound, but the sustainability of systems investment requires attention.

Earnings Quality

The increase in Ordinary Income represents a structural improvement resulting from higher net interest income and fee and commission income, together with restrained expense growth, rather than a temporary factor. On the other hand, extraordinary losses of ¥0.26B, including impairment losses of ¥0.11B, reduced Net Income, resulting in Net Income growth of 28.3%, below the 36.1% increase in Ordinary Income. Comprehensive income was ¥10.01B, exceeding Net Income of ¥7.23B, while a ¥1.68B gain on valuation differences on securities and a ¥1.09B adjustment related to retirement benefits increased other comprehensive income. As other comprehensive income was negative in the previous year, attention should be paid to the sensitivity of capital fluctuations to market movements in securities holdings and other assets.

Earnings Forecast and Guidance

The company forecasts Ordinary Income of ¥9.40B (-11.9% YoY), Net Income of ¥6.00B (-10.3%), and EPS of ¥166.39, anticipating a decline from the current-period results. This is positioned as a reaction following the current period’s high growth rates of 36.1% in Ordinary Income and 28.3% in Net Income. The key focus for the next period will be how far the improvement in the current period’s profit margins can be sustained amid changes in the interest-rate environment.

Shareholder Returns

The annual dividend is ¥46 per share (¥17 for Q2 and ¥29 year-end), including a ¥2 commemorative dividend for the 110th anniversary of the Company’s founding in the year-end dividend. Accordingly, the annual dividend on a regular-dividend basis is ¥44. The Payout Ratio is 24.9%, a conservative level relative to earnings. Share repurchases were negligible, and the Total Return Ratio was effectively at the same level as the Payout Ratio. The dividend forecast for the next period is ¥48, representing a planned ¥2 increase from the current period’s ¥46, including the commemorative dividend.

Risk Factors

1. Revenue concentration risk: The Banking Business accounts for 91.6% of consolidated ordinary revenue and 92.7% of segment Ordinary Income. The structure is such that fluctuations in interest income, fee and commission income, and credit costs in the Banking Business largely determine consolidated performance.

2. Margin pressure from rising deposit costs: Loan interest income increased +3.7% YoY, whereas deposit interest expense increased significantly by +61.1%. If the repricing of deposit rates exceeds improvements in loan yields during a period of rising interest rates, growth in net interest income may slow.

3. Restraint in systems investment: The capital expenditures/depreciation and amortization ratio was low at 0.64x, and the software balance declined -20.7% YoY. If investment restraint continues over the long term, it could affect competitiveness in terms of operational efficiency and cybersecurity capabilities.

Industry Benchmark (For Reference; Compiled by the Company)

Profitability and Returns

The Net Income margin is slightly below the industry median.

Growth and Capital Efficiency

The Revenue growth rate is significantly below the industry median, placing the Company toward the slower end of the industry in terms of revenue growth.

※Source: Compiled by the Company

Key Takeaways from the Results

1. Ordinary Income increased +36.1% YoY, while Net Income increased +28.3%, and the Ordinary Income margin improved by approximately 3.8pt. The structural factor behind the margin improvement was that general and administrative expense growth (+2.1%) remained below ordinary revenue growth (+3.6%).

2. The loan-to-deposit ratio of 79.9% was within the indicative range, and the stable funding base expanded as deposits increased +5.3% YoY. However, the fact that the growth rate in deposit interest expense significantly exceeded the growth rate in loan interest income is an important point when assessing future net interest margin trends.

3. The company forecasts declines of -11.9% in Ordinary Income and -10.3% in Net Income for the next period, incorporating a reaction following the current period’s high profit growth rates. The restrained capital expenditures/depreciation and amortization ratio of 0.64x also requires continued monitoring as a medium- to long-term investment trend.

---

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 available earnings data. Investment decisions should be made at your own discretion and responsibility, and you should consult a professional advisor as necessary.

---End of Report---