| Metric | Current Period | Prior Year | YoY |
|---|---|---|---|
| Revenue | ¥2661.2B | ¥2318.9B | +14.8% |
| Operating Income | - | - | - |
| Ordinary Income | ¥992.1B | ¥750.3B | +32.2% |
| Net Income | ¥742.7B | ¥533.0B | +39.3% |
| ROE | 8.5% | 6.6% | - |
For the fiscal year ending March 2026, Iyo Bank Holdings (consolidated) recorded ordinary revenue of ¥2,661.2B (YoY +¥342.3B +14.8%), ordinary income of ¥992.1B (YoY +¥241.8B +32.2%), and net income of ¥742.7B (YoY +¥209.6B +39.3%), delivering substantial top-line growth and profit expansion. The core Banking segment drove results with ordinary income of ¥981.6B (+32.1%), while the Leasing segment posted ¥5.2B (-8.1%) of ordinary income, a slight decline with limited impact on consolidated results. The revenue expansion was mainly driven by an increase in net interest income (investment income ¥1,504.2B, funding costs ¥459.9B, net ¥1,044.3B) and higher fee and other operating income. Extraordinary gains of ¥60.1B (including ¥60.0B in received settlement) boosted net income, but the strength of recurring earnings is notable. EPS improved to ¥253.96 (prior year ¥178.08, +42.6%), BPS to ¥3,046.19, showing marked improvement in per-share metrics. Dividend was set at ¥60 per annum (¥30 interim, ¥30 year-end) with a payout ratio of 25.3%. Share buybacks of ¥179.4B were executed, raising the total return ratio to approximately 42.0% and strengthening shareholder returns.
[Revenue] Ordinary revenue ¥2,661.2B (+14.8%) with growth across segments. Banking segment ordinary revenue ¥2,420.2B (+14.7%), Leasing ¥214.6B (+16.0%), all segments expanded. Banking growth was supported by higher investment income (¥1,504.2B, prior year ¥1,451.4B) and increased other ordinary revenue (¥638.6B, prior year ¥510.2B). Investment income breakdown: loan interest ¥947.3B, securities interest and dividends ¥490.2B — underpinned by loan balance growth to 6.11兆円 (prior 5.84兆円, +4.6%) and improved net interest margin. Deposit balance expanded to 6.74兆円 (prior 6.50兆円, +3.8%), with a loan-to-deposit ratio of 90.6% remaining within an appropriate range. Net fee income rose to ¥113.2B (service transaction income ¥174.4B - service transaction expenses ¥61.2B). Other ordinary revenue of ¥638.6B rose sharply by +25.2% YoY, aided by FX income and expanded other operating income.
[Profitability] Funding costs declined to ¥459.9B (prior ¥556.1B, -17.3%), expanding net interest income to ¥1,044.3B (prior ¥894.3B, +16.8%). SG&A was ¥626.4B (prior ¥662.6B, -5.5%), reflecting efficiency gains; the expense ratio (SG&A / ordinary revenue) improved to 23.5% (prior 28.6%). Ordinary income rose substantially to ¥992.1B (+32.2%). Extraordinary gains ¥60.1B (received settlement ¥60.0B, gain on disposal of fixed assets ¥0.1B) and extraordinary losses ¥6.6B (loss on disposal of fixed assets ¥4.5B, impairment losses ¥2.1B) were recorded, resulting in profit before tax ¥1,045.6B (+40.8%). After deducting corporate taxes ¥302.9B, net income was ¥742.7B (+39.3%). Net income margin improved to 27.9% (prior 23.0%, +4.9pt). Banking segment margin was high at 40.5% (¥981.6B/¥2,420.2B), while Leasing margin was 2.4% (¥5.2B/¥214.6B). In conclusion, revenue growth and cost containment drove the increase in both revenue and profit.
Banking: External-customer ordinary revenue ¥2,420.2B (+14.7%), segment profit ¥981.6B (+32.1%). Revenue base strengthened through deposit and loan growth, improved interest spread, and expanded fee and other income. Segment assets ¥9.50兆円, segment liabilities ¥8.65兆円, scale expanded. Leasing: External-customer ordinary revenue ¥214.6B (+16.0%), segment profit ¥5.2B (-8.1%). Despite revenue growth, profit declined mainly due to increased funding costs (¥4.6B, prior ¥2.0B), lowering segment margin to 2.4%. Segment assets ¥890B, segment liabilities ¥689B. Others (IT services, securities, etc.): External-customer ordinary revenue ¥26.4B (+9.7%), segment profit ¥37.9B (prior ¥20.7B, +83.6%) with strong profit increase. The Banking segment drives nearly all consolidated profit, contributing 90.9% of profit, Leasing 0.5%, Others 8.6%.
[Profitability] Net income margin 27.9% (prior 23.0%, +4.9pt), ROE 8.5% (prior 6.5%, +2.0pt) indicating improved earning power. ROA 0.78% (prior 0.58%, +0.20pt). Banking expense ratio 23.5% (SG&A ¥626.4B / ordinary revenue ¥2,661.2B) improved from 28.6% last year by 5.1pt, showing notable cost efficiency gains. Net interest income ¥1,044.3B is the difference between investment income ¥1,504.2B and funding costs ¥459.9B; net interest margin is estimated at 3.9% (approximation: net interest income / average loan balance). [Cash Quality] Operating Cash Flow (OCF) -1,610.2B, OCF / Net Income -2.17x, OCF / EBITDA -1.50x. Negative OCF is mainly due to significant loan growth (+¥2,687B) causing funding absorption, a structural occurrence in a banking growth phase. Investment Cash Flow +2,388.1B was driven by reductions in the securities portfolio (-¥1,436B), providing cash inflow. Free Cash Flow +777.9B, ample to cover dividends and buybacks. [Investment Efficiency] Capital expenditure 52.95B / depreciation 78.0B = 0.68x; tangible investment in banking is relatively small and digital investment is mainly capitalized as intangibles, limiting investment shortfall risk. ROIC calculation is difficult given banking characteristics, but asset turnover is low at 0.028x while high leverage secures earnings efficiency. [Financial Soundness] Equity ratio 9.2% (prior 8.7%, +0.5pt) exceeds regulatory minimum of 8% but falls short of the firm benchmark "healthy" 12%. D/E ratio 9.87x reflects structurally high leverage of banking. Loan-to-deposit ratio 90.6% (loans ¥6.11兆円 / deposits ¥6.74兆円) is stable within the optimal 85–95% range. Liquidity coverage is adequate, but maturity mismatches remain a bank-specific risk requiring ongoing management.
Operating Cash Flow was -1,610.2B, slightly worse than prior year -1,600.4B (-0.6%). OCF subtotal (before working capital changes) was -1,430.9B, with large working capital movements driven by an increase in loans (+¥2,687B) and a decrease in securities (+¥1,436B). After subtracting corporate tax payments ¥239.3B, OCF / Net Income stands at -2.17x, signaling potential quality concerns; however, in a lending expansion phase for banks, cash absorption is structurally expected and does not necessarily indicate short-term deterioration in earnings quality. Investment CF was +2,388.1B, driven by proceeds from sales/redemptions of securities. Capital expenditure was 53.0B, below depreciation 78.0B, with CapEx / depreciation at 0.68x; given banking's relatively small tangible investment and system investments capitalized as intangibles, investment shortfall risk is limited. Financing CF was -342.2B, primarily outflows for dividend payments ¥162.6B and share buybacks ¥179.4B. Free Cash Flow of +777.9B (OCF -1,610.2B + Investment CF +2,388.1B) comfortably covered dividends ¥162.6B and buybacks ¥179.4B totaling ¥342.0B. Cash and deposits at period end were ¥1,163.1B (prior period-end ¥1,119.5B, +¥43.6B), maintaining healthy liquidity.
Recurring revenue is the main earnings source, with net interest income ¥1,044.3B, net fee income ¥113.2B, and net other operating income ¥239.8B underpinning ordinary income ¥992.1B. Extraordinary gains ¥60.1B (received settlement ¥60.0B, gain on disposal of fixed assets ¥0.1B) boosted net income, while extraordinary losses ¥6.6B (loss on disposal of fixed assets ¥4.5B, impairment losses ¥2.1B) were recorded. The net extraordinary items of +¥53.5B account for about 7.2% of net income ¥742.7B, so attention is warranted for potential reversal in future periods. Effective tax rate was 29.0% (corporate tax ¥302.9B / profit before tax ¥1,045.6B), a reasonable level. The divergence between ordinary income and net income arises from tax burden and extraordinary items; on an ordinary basis, earning power is strong. Comprehensive income was ¥1,090.8B, ¥348.1B above net income, comprising unrealized gains on securities ¥198.1B, deferred hedge gains/losses ¥42.7B, and adjustments related to retirement benefits ¥107.3B. Other comprehensive income ¥348.1B equals about 46.9% of net income, indicating significant sensitivity to market environment changes. The accrual ratio (Net Income - OCF / Total Assets) is about 2.5% and is favorable, but because OCF is far below net income, cash-backed support is weak. However, cash flow deterioration is structurally expected in a bank's loan expansion phase, so this is not abnormal within the industry context.
Full-year outlook: ordinary revenue ¥2,700.0B, ordinary income ¥1,110.0B (YoY +11.9%), net income ¥770.0B, EPS ¥267.23, dividend ¥40.0. Versus current results, ordinary revenue +1.5% (+¥38.8B), ordinary income +11.9% (+¥117.9B), net income +3.7% (+¥27.3B) are forecast. Progress rates are near achievement: ordinary revenue 98.6%, ordinary income 89.4%, net income 96.5%. Assumptions for next-year profit growth include continued loan balance growth, maintenance of loan-deposit spread, sustained cost-efficiency (CIR) improvements, and controlled normalization of credit costs. Risks include upward pressure on deposit rates (raising funding costs) and market volatility affecting other operating income. The loan-to-deposit ratio is already at 90.6% near the upper bound, so balancing liquidity buffers and RWA efficiency will be key.
Annual dividend ¥60.0 (interim ¥30.0, year-end ¥30.0), payout ratio 25.3% (dividend ¥60.0 / EPS ¥253.96). This is a large increase from prior year dividend ¥20.0 (+¥40.0, +200% per share). Total dividends are approximately ¥162.6B (cash-flow recorded figure). Share buybacks of ¥179.4B were executed, increasing treasury stock from -¥213.2B to -¥387.3B (treasury shares 25.28 million shares). Dividend plus buybacks totaling ¥342.0B give a total return ratio of about 46.0% (¥342.0B / net income ¥742.7B), reinforcing shareholder returns. Against Free Cash Flow ¥777.9B, total return ¥342.0B yields FCF coverage of 2.27x, indicating sustainability. With payout ratio at 25.3% relatively low, room for further increases exists, but given equity ratio 9.2% (below healthy benchmark 12%), balancing capital accumulation and returns will be important.
Interest Rate Risk (IRRBB): There is risk that re-pricing delays for deposits or yield curve movements could pressure net interest income ¥1,044.3B. The maturity mismatch between loans ¥6.11兆円 and deposits ¥6.74兆円 is structurally present; in a rising rate environment, funding costs may rise ahead, compressing spreads. Loan-to-deposit ratio 90.6% is high, limiting liquidity buffers.
Credit Cost Normalization Risk: With aggressive loan growth (loans +¥2,687B, +4.6%), an economic downturn or sectoral concentration could drive credit costs higher, pressuring earnings. Allowance for doubtful accounts ¥41,906 million (0.69% of loans) is currently low, raising concerns about buffer adequacy in a deteriorating credit environment.
Regulatory Capital Constraint Risk: Equity ratio 9.2% only 1.2pt above regulatory minimum 8%. Loss-absorbing capacity under stress scenarios is limited; increases in RWA (loan growth, market risk expansion) or expanded dividends/buybacks could lower capital levels, constraining growth investments and shareholder returns.
Profitability & Returns
| Metric | Company | Median (IQR) | Delta |
|---|---|---|---|
| Net Income Margin | 27.9% | 11.9% (7.2%–35.4%) | +16.0pt |
Net income margin 27.9% exceeds the industry median 11.9% by 16.0pt, placing the bank high within the regional bank sector. Cost efficiency improvements and interest income strength are effective.
Growth & Capital Efficiency
| Metric | Company | Median (IQR) | Delta |
|---|---|---|---|
| Revenue Growth (YoY) | 14.8% | 10.1% (7.3%–12.1%) | +4.8pt |
Revenue (ordinary revenue) growth 14.8% outpaces the sector median 10.1% by 4.8pt, placing the bank among higher-growth regional peers. Loan and deposit growth and expanded other operating income are drivers.
※ Source: Firm aggregation
Profitability improvement and cost efficiency: Simultaneous achievement of net interest income ¥1,044.3B (+16.8%) and SG&A ¥626.4B (-5.5%) resulted in net income margin 27.9% (+4.9pt) and ROE 8.5% (+2.0pt), structurally improving earning power. Expense ratio 23.5% fell by 5.1pt from 28.6% last year, strengthening profit structure. Maintaining this efficiency amid wage increases and system investment pressures will be key to sustainable profit growth.
Capital efficiency and stronger shareholder returns: Total return ratio 46.0% (dividend ¥162.6B + buybacks ¥179.4B) signals active shareholder returns. Equity ratio 9.2% clears regulatory minimum but falls short of the healthy benchmark 12%. Future increases in dividends or buybacks will require accumulation of retained earnings and progress in RWA management. Free Cash Flow ¥777.9B is ample, suggesting high sustainability.
Importance of interest rate and credit risk management: Aggressive loan growth (+¥2,687B, +4.6%) and loan-to-deposit ratio 90.6% reflect the growth strategy but pose downside risks from deposit re-pricing pressure and credit cost normalization. OCF -1,610B is structural in a loan expansion phase, but excessive long-term asset accumulation increases vulnerability to liquidity costs. Extraordinary gain ¥60.1B (received settlement) is a one-off; assess ordinary earning power considering potential reversal next year.
This report is an earnings analysis document automatically generated by AI from XBRL financial statement data. It does not constitute a recommendation to invest in any specific security. Industry benchmarks are reference data compiled by our firm from public financial statements. Investment decisions are your responsibility; consult a professional advisor as needed before acting.