| Metric | Current Period | Same Period Previous Year | YoY |
|---|---|---|---|
| Revenue | ¥150.8B | ¥118.8B | +26.9% |
| Operating Income | - | - | - |
| Ordinary Income | ¥30.4B | ¥25.0B | +21.6% |
| Net Income | ¥21.9B | ¥17.4B | +25.7% |
| ROE | 1.3% | 1.1% | - |
Tochigi Bank reported higher revenue and income in Q1, supported by growth in lending, securities investment, and fee income. Ordinary revenue (Revenue) was ¥150.75B, up +26.9% YoY; Ordinary Income was ¥30.35B, up +21.6%; and Net Income attributable to owners of the parent was ¥21.16B, up +22.5% (consolidated Net Income was ¥21.88B, up +25.7%). Net interest income and net fee income both expanded as core revenue drivers, reaching ¥78.82B (¥67.48B in the previous year) and ¥17.64B (¥12.97B in the previous year), respectively. However, other ordinary expenses increased by approximately ¥11.8B YoY, resulting in slight declines in both the Ordinary Income margin and Net Income margin from the previous year.
【Revenue】Ordinary revenue was ¥150.75B, up +26.9% YoY. By segment, Banking accounted for the majority at ¥132.68B (+27.2%, 88.0% of total), followed by the Financial Instruments Business at ¥8.78B (+52.4%, 5.8% of total) and Other Businesses (including leasing and card businesses) at ¥9.28B (+6.5%, 6.2% of total). Growth in the Banking segment was primarily driven by an expansion in net interest income resulting from increased loans outstanding and improved yields (¥78.82B, +16.8% YoY), while growth in fee income contributed to the performance of the Financial Instruments Business.
【Profit and Loss】Ordinary Income was ¥30.35B (+21.6%), and the Ordinary Income margin declined to 20.1% from 21.0% in the previous year, a decrease of 0.9pt. General and administrative expenses remained controlled at ¥59.15B (¥58.31B in the previous year, +1.4%), while the expense ratio (general and administrative expenses / equivalent of gross operating profit) improved to approximately 68.2% from 71.1% in the previous year. Meanwhile, other ordinary expenses surged to ¥12.0B (¥0.17B in the previous year), becoming a factor weighing on margins. Extraordinary items were minor, comprising extraordinary income of ¥0.03B and extraordinary losses of ¥0.01B. After deducting income taxes and other taxes of ¥8.48B and profit attributable to non-controlling interests of ¥0.72B from Profit Before Tax of ¥30.37B, Net Income attributable to owners of the parent amounted to ¥21.16B (+22.5%). Both revenue and income increased.
The Banking segment generated revenue of ¥132.68B (+27.2%) and segment profit of ¥27.02B. It is the core business, accounting for 88.0% of total revenue and generating the majority of total segment profit. The Financial Instruments Business generated revenue of ¥8.78B (+52.4%) and segment profit of ¥2.70B. Its profit margin (segment profit / revenue) was approximately 30.8%, indicating higher profitability than the Banking segment at approximately 20.4%. Other Businesses (including leasing and card businesses) generated revenue of ¥9.28B (+6.5%) and segment profit of ¥0.55B, remaining stable despite their relatively small scale.
【Profitability】The Ordinary Income margin was 20.1%, down 0.9pt from 21.0% in the previous year, while the Net Income margin (based on income attributable to owners of the parent) was 14.0%, down 0.5pt from 14.5% in the previous year. Net interest income and net fee income both increased, expanding core revenue, but the increase in other ordinary expenses placed some pressure on margins.【Earnings Quality】Extraordinary items were negligible, comprising extraordinary income of ¥0.03B and extraordinary losses of ¥0.01B, resulting in an earnings composition largely based on recurring income. Comprehensive income was ¥31.35B (¥30.16B in the previous year, +3.9%). The ¥9.47B difference from consolidated Net Income of ¥21.88B was attributable to other comprehensive income items, including valuation differences on securities and deferred hedge gains and losses.【Investment Efficiency】ROE was 1.3%, remaining at the same level as the previous year. Total assets of ¥3,467.8B and net assets of ¥166.6B reflect the high-leverage structure characteristic of the banking industry.【Financial Soundness】The Equity Ratio (domestic standards) was 4.8%, unchanged from the previous year. The loan-to-deposit ratio was 77.7% (loans outstanding of ¥2,494.3B and deposits of ¥3,211.8B), indicating that the balance between fund deployment and funding remained broadly stable.
As the Cash Flow Statement is not subject to disclosure, fund movements are assessed based on changes in the balance sheet. Cash and due from banks decreased by approximately ¥56.1B to ¥409.6B (¥465.7B in the previous year), while loans outstanding increased by approximately ¥42.1B to ¥2,494.3B (¥2,452.3B in the previous year), and securities increased by approximately ¥57.6B to ¥477.9B (¥420.3B in the previous year). Deposits increased by approximately ¥40.7B to ¥3,211.8B (¥3,171.0B in the previous year), indicating stable expansion of the funding base. Overall, the Bank appears to be reducing excess liquidity held as cash and due from banks and shifting its asset composition toward loans and securities.
Extraordinary items were extremely minor, comprising extraordinary income of ¥0.03B and extraordinary losses of ¥0.01B. Ordinary Income and Net Income were therefore primarily composed of recurring banking business income. However, other ordinary expenses surged to ¥12.0B (¥0.17B in the previous year), and market-related gains and losses associated with securities and hedging may have been a factor. Comprehensive income was ¥31.35B, exceeding Net Income attributable to owners of the parent of ¥21.16B by ¥9.47B. The main components of the difference were valuation differences on securities of +¥4.03B, deferred hedge gains and losses of +¥9.94B, and adjustments related to retirement benefits of △¥4.51B. Comprehensive income increased only +3.9% YoY, below the +22.5% growth in Net Income, due to changes in the levels of valuation differences and hedge gains and losses recognized in the previous year.
Progress toward the full-year plan was 24.8% for ordinary revenue, at ¥150.75B/¥608.0B; 28.1% for Ordinary Income, at ¥30.35B/¥108.0B; and 23.5% for Net Income attributable to owners of the parent, at ¥21.16B/¥90.0B. Compared with simple one-quarter progress of 25%, Ordinary Income was slightly ahead of schedule, while Net Income was slightly behind. There were no revisions to the earnings or dividend forecasts during the quarter, and the full-year plan calls for Ordinary Income to increase +7.8% YoY. If the upward trends in net interest income and fee income continue, progress is expected to remain in line with the plan, although volatility in other ordinary expenses could cause fluctuations in Net Income progress.
The Company’s forecast annual dividend is ¥15.00 per share, representing an increase from the previous year’s actual dividend of ¥12.00. Based on forecast EPS of ¥86.43, the Payout Ratio is approximately 17.3%, a conservative level reflecting an emphasis on retained earnings. Given the Equity Ratio of 4.8%, this is consistent with a policy of balancing continued stable dividends with the accumulation of retained earnings rather than pursuing aggressive dividend increases. There was no revision to the dividend forecast as of the end of the quarter.
Volatility in market-related gains and losses: Other ordinary expenses surged to ¥12.0B (¥0.17B in the previous year), becoming a factor that reduced the Ordinary Income margin by 0.9pt. These expenses appear to be related to market gains and losses associated with securities and hedging. It will be necessary to determine through future quarterly trends whether this volatility is temporary or structural.
Capital buffer level: The Equity Ratio (domestic standards) was 4.8%, unchanged from the previous year. Although it remains within the range of domestic standards, the level could constrain future capital policy depending on the pace of retained earnings accumulation.
Interest-rate sensitivity associated with changes in asset composition: While the shift toward loans outstanding (+approximately ¥42.1B) and securities (+approximately ¥57.6B) is progressing, cash and due from banks decreased by approximately ¥56.1B. As a result, the asset composition could lead to relatively larger fluctuations in revaluation gains and losses on assets and liabilities during periods of interest-rate changes.
Profitability and Returns
| Metric | Company | Median (IQR) | Delta |
|---|---|---|---|
| Net Income Margin | 14.5% | – | – |
| As median data is not available, relative evaluation is limited; however, the Company’s Net Income margin remained at approximately the same level as the previous year. |
Growth and Capital Efficiency
| Metric | Company | Median (IQR) | Delta |
|---|---|---|---|
| Revenue Growth Rate (YoY) | 26.9% | – | – |
| As median data is not available, relative evaluation is limited; however, the Company secured double-digit growth in revenue as an absolute level. |
※Source: Compiled by the Company
Core revenue (net interest income + net fee income) increased by double digits YoY, expanding at a faster pace than general and administrative expenses (+1.4%). The expense ratio improved to approximately 68.2% from 71.1% in the previous year, making progress in cost efficiency an important point to monitor when assessing the quality of the financial results.
The surge in other ordinary expenses (¥0.17B → ¥12.0B) caused both the Ordinary Income margin and Net Income margin to decline from the previous year. Fluctuations in market-related gains and losses underlying the expansion in core revenue will be a key monitoring point when assessing earnings stability in future quarters.
Progress toward the full-year plan was ahead of schedule for Ordinary Income at 28.1%, and the forecast dividend is planned to increase by ¥3 from the previous year’s actual dividend. Given the Equity Ratio of 4.8%, the balance between capital accumulation and shareholder returns will remain a key structural focus going forward.
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 responsibility and, where necessary, after consulting with a professional advisor.
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