| Metric | This Period | Prior Period | YoY |
|---|---|---|---|
| Revenue | ¥629.5億 | ¥416.2億 | +28.5% |
| Operating Income | ¥608.9億 | ¥398.7億 | +52.7% |
| Ordinary Income | ¥1303.0億 | ¥1020.7億 | +27.7% |
| Net Income | ¥608.5億 | ¥404.1億 | +50.6% |
| ROE | 4.9% | 3.5% | - |
For the fiscal year ended March 2026, the company achieved year-on-year increases with Revenue (経常収益) of ¥629.5億 (YoY +¥213.3億 +51.2%), Operating Income of ¥608.9億 (YoY +¥210.2億 +52.7%), Ordinary Income of ¥1,303.0億 (YoY +¥282.3億 +27.7%), and Net Income attributable to owners of the parent of ¥608.5億 (YoY +¥204.4億 +50.6%). The operating margin remained at a high level of 96.7% (improved +0.9pt from 95.8% a year earlier), and the net margin was 96.7% (down -0.4pt from 97.1% a year earlier). In the banking-led business structure, investment income was ¥2,556.0億 (YoY +12.2%) and funding costs were ¥860.5億 (YoY +6.6%), widening the net interest margin; net fee income was also solid at ¥540.8億 (fee income ¥949.9億; fee income YoY +7.4%). The cost-to-income ratio was 43.5% (expense ratio = SG&A ¥1,053.0億 / ordinary revenue ¥4,385.5億), indicating an efficient revenue structure. Conversely, Operating Cash Flow was a substantial negative ¥-2,727.1億, mainly driven by balance sheet shifts in the banking account (loans +¥5,125.9億, securities -¥2,721.9億, deposits +¥4,285.3億). The Equity Ratio of 7.7% (improved +0.3pt from 7.4% a year earlier) remains slightly below the regulatory minimum of 8%, making the balance between shareholder returns and capital buildup a key issue.
[Revenue] Ordinary revenue of ¥629.5億 (¥416.2億 prior year, +51.2%) was led by the banking segment’s external ordinary revenue of ¥3,896.8億. Investment income increased materially to ¥2,556.0億 (prior year ¥2,278.3億, +12.2%), contributed by loan interest of ¥1,754.7億 (YoY +16.9%) and interest/dividends on securities of ¥699.4億 (YoY +2.5%). Loan balances were ¥11.19兆 (YoY +¥5,125.9億 +4.8%) and deposit balances were ¥12.21兆 (YoY +¥4,285.3億 +3.6%), supporting revenue through expansion of the regional financial base. The loan-to-deposit ratio was 91.6% (up +1.0pt from 90.6%), slightly above the optimal range and requiring attention for liquidity management. Fee income was steady at ¥949.9億 (prior year ¥884.5億, +7.4%), driven by increased fee-based services revenue. Trading income was ¥14.3億 (prior year ¥15.4億), remaining in a flat range.
[Profitability] Operating Income of ¥608.9億 (¥398.7億 prior year, +52.7%) was mainly driven by widening interest margins and increased fee income. Funding costs remained at ¥860.5億 (prior year ¥807.3億, +6.6%), lagging the growth in investment income and expanding net interest income to ¥1,695.5億 (on an indicative basis). SG&A increased to ¥1,053.0億 (prior year ¥971.1億, +8.4%) but rose more slowly than revenue growth, improving cost efficiency. Ordinary Income of ¥1,303.0億 (prior year ¥1,020.7億, +27.7%) includes equity-method investment income of ¥15.2億 (prior year ¥8.2億). Extraordinary items netted to -¥32.0億 (extraordinary income ¥33.6億, extraordinary losses ¥65.6億), with impairment losses of ¥49.5億 and loss on step acquisitions of ¥13.7億 weighing down results, partly offset by gain on negative goodwill of ¥27.4億. Profit before tax was ¥1,271.0億; after deducting income taxes of ¥366.2億 (effective tax rate 28.8%), Net Income attributable to owners of the parent was ¥608.5億 (prior year ¥404.1億, +50.6%).
The Banking segment is the primary earnings driver with external ordinary revenue of ¥3,896.8億 and segment profit of ¥1,227.6億. The Leasing Business reported external ordinary revenue of ¥323.2億 and segment profit of ¥16.2億—small in scale but a stable contributor. Other operations (domestic securities business, management consulting, etc.) reported external ordinary revenue of ¥165.4億 and segment profit of ¥631.4億 (pre-adjustments). After eliminating intersegment transactions, consolidated ordinary income was ¥1,303.0億. The banking segment’s profit margin (segment profit / external ordinary revenue = 31.5%) is high, markedly above Leasing (5.0%) and other segments’ revenue structures.
[Profitability] Operating margin 96.7% (up +0.9pt from 95.8%), Net margin 96.7% (down -0.4pt from 97.1%), both remaining high, with ROE at 4.9% (based on equity of ¥1.23兆, improved from ROA around 0.6% a year earlier). [Cash Quality] Operating Cash Flow / Net Income is -3.01x, a significant negative indicating large balance sheet-driven asset/liability movements. Free Cash Flow was -¥531.4億 (Operating CF -¥2,727.1億, Investing CF +¥2,195.8億), indicating limited cash-generation capacity. [Investment Efficiency] ROIC was 3.5% (estimate: EBIT ¥608.9億 / invested capital), potentially below cost of capital, suggesting the need to trim low-return assets. Depreciation was ¥128.8億 versus capex of ¥93.1億 (capex/depreciation = 0.72x), indicating restrained investment. [Financial Soundness] Equity Ratio 7.7% (up +0.3pt from 7.4%) remains just below the regulatory floor of 8%, indicating limited capital headroom. D/E ratio was 12.0x (liabilities ¥14.78兆 / shareholders’ equity ¥1.23兆), standard for banking operations, but the loan-to-deposit ratio of 91.6% slightly exceeds the optimal range (70–90%), reducing liquidity buffers. Interest-bearing debt consists of borrowings of ¥1.48兆 (prior year ¥1.34兆, +10.6%) and corporate bonds of ¥20億; market-based funding (repo ¥4,058.0億, securities lending ¥797.2億) decreased substantially YoY (total -¥4,303.1億), reducing some liquidity risk.
Operating CF was -¥2,727.1億 (improved from -¥5,210.3億 prior year) but remained a large negative primarily due to balance sheet movements typical of banking—loans increased by ¥5,125.9億 (use of funds), securities decreased by ¥2,721.9億 (source of funds), and deposits increased by ¥4,285.3億 (funding). Investing CF was a net inflow of +¥2,195.8億, aided by portfolio rebalancing of securities and trust accounts. Capex was ¥93.1億 (capex/depreciation = 0.72x vs depreciation ¥128.8億), indicating restrained growth investment. Free Cash Flow was -¥531.4億 (Operating CF -¥2,727.1億 + Investing CF +¥2,195.8億), and shareholder returns (dividends ¥400.7億 and buybacks ¥300.0億) were financed through balance sheet adjustments. Financing CF was -¥700.7億 (increase in borrowings +¥1,421.5億, dividend payments -¥400.7億, share repurchases -¥300.0億), leading to cash and cash equivalents at period-end of ¥7,559.4億 (down ¥-1,232.1億 YoY).
Earnings quality is high, driven by recurring earnings sources: net interest income (investment income ¥2,556.0億 - funding costs ¥860.5億 = ¥1,695.5億) and net fee income ¥540.8億. Temporary items included extraordinary income ¥33.6億 (gain on negative goodwill ¥27.4億, gain on disposal of fixed assets ¥6.2億, etc.) and extraordinary losses ¥65.6億 (impairment losses ¥49.5億, loss on step acquisitions ¥13.7億, loss on disposal of fixed assets ¥2.4億, etc.), netting to -¥32.0億. The gap between Ordinary Income ¥1,303.0億 and Net Income ¥608.5億 (about 46.7% difference) is mainly due to income taxes of ¥366.2億 (effective tax rate 28.8%) and the negative extraordinary items. Non-operating income includes equity-method investment income of ¥15.2億 (prior year ¥8.2億, +85.4%) but its proportion of the whole is small. From an accrual quality perspective, the fact that Operating CF materially lags Net Income (Operating CF / Net Income = -3.01x) requires attention; cash realization of profits depends on banking account management. Comprehensive Income was ¥1,343.9億 (¥1,343.8億 attributable to owners of the parent), with Other Comprehensive Income (foreign currency translation adjustments ¥95.1億, valuation differences on securities ¥209.3億, deferred hedges ¥75.4億, retirement benefit adjustments ¥51.0億) contributing to capital accumulation beyond Net Income.
Full-year guidance: Ordinary Income ¥1,520.0億, Net Income attributable to owners of the parent ¥1,050.0億, EPS ¥196.94, Dividend ¥49. Progress against guidance stands at Ordinary Income 85.7% (¥1,303.0億 / ¥1,520.0億) and Net Income 86.2% (¥904.7億 / ¥1,050.0億) and is behind target; deterioration in market-related gains/losses toward year-end, rising costs, and one-off extraordinary losses (impairment ¥49.5億, loss on step acquisitions ¥13.7億) are considered primary causes. The guidance implies Ordinary Income growth of +16.7% YoY, which is below the actual YoY increase of +27.7% to date, factoring in a more conservative second half revenue environment. While the dividend forecast is ¥49 (actual DPS ¥80: interim ¥39 + year-end ¥41), the payout ratio is 44.0%, reflecting a policy to maintain a certain level of shareholder returns.
Dividends totaled ¥80 (interim ¥39, year-end ¥41), a YoY increase of +¥55 (+220.0%) from ¥25, with a payout ratio of 44.0% (based on parent net income ¥608.5億), within an appropriate range. Actual dividends of ¥80 exceeded the full-year forecast of ¥49 substantially, resulting in a large increase compared with the prior period. Share repurchases of ¥300.0億 were executed (recorded as treasury stock acquisition in Financing CF), bringing total returns to approximately ¥700.7億 (dividends approx. ¥400.7億 + share repurchases ¥300.0億). The Total Return Ratio was 115.2% (total returns ¥700.7億 / net income ¥608.5億), exceeding net income, with balance-sheet adjustments (Investing CF +¥2,195.8億) providing the funding source. Free Cash Flow was negative at -¥531.4億, so cash sustainability is limited. With an Equity Ratio of 7.7% and constrained capital headroom, the scale of future buybacks will likely depend on retained earnings accumulation and regulatory capital conditions. The dividend policy aims for stable dividends while managing total returns flexibly in line with capital efficiency and available capital.
Deposit rate rise risk: With a loan-to-deposit ratio of 91.6% exceeding the optimal range, if market interest rates rise and deposit repricing leads loans to reprice more slowly, net interest margin could compress. Funding costs rose only +6.6% YoY, but further rate increases and higher deposit beta could pressure earnings.
Capital adequacy risk: Equity Ratio of 7.7% is slightly below the regulatory floor of 8%, leaving limited capital buffer. If loans expand, market-risk assets increase, or shareholder returns (dividends and buybacks) continue, capital buffers could erode further, potentially necessitating additional capital raising (share issuance or strengthened internal reserves).
Weak Operating CF generation: Operating CF of -¥2,727.1億 and Operating CF / Net Income of -3.01x indicate very low cash conversion; Net Income realization depends on banking account balance-sheet management. Free Cash Flow of -¥531.4億 and shareholder returns (~¥700.7億) not funded from internal cash generation create dependence on external funding or asset sales; if this continues, financial flexibility may decline.
Profitability & Return
| Metric | Company | Median (IQR) | Delta |
|---|---|---|---|
| Operating Margin | 96.7% | 14.6% (7.2%–39.4%) | +82.1pt |
| Net Margin | 96.7% | 11.9% (7.2%–35.4%) | +84.8pt |
Profitability is outstanding within the industry, supported by the banking revenue structure (investment income and fee income) and low-cost operations.
Growth & Capital Efficiency
| Metric | Company | Median (IQR) | Delta |
|---|---|---|---|
| Revenue Growth (YoY) | 28.5% | 10.1% (7.3%–12.1%) | +18.5pt |
Revenue growth significantly exceeds industry medians, driven mainly by expansion in investment income and fee income.
※Source: Company aggregation
Earnings expansion in a rate-normalization environment: Investment income ¥2,556.0億 (YoY +12.2%) and Net Income ¥608.5億 (YoY +50.6%) indicate that normalization of interest rates has supported earnings. While the loan-to-deposit ratio of 91.6% is high, as long as net interest margin expansion continues, the revenue base should strengthen. The cost-to-income ratio of 43.5% indicates high efficiency and suggests near-term continuation of earnings growth.
Balance between capital policy and shareholder returns: With an Equity Ratio of 7.7% below the regulatory minimum, the Total Return Ratio of 115.2% (dividends + buybacks approx. ¥700.7億 / net income ¥608.5億) pressures internal reserves. From the next fiscal year, capital buildup and regulatory compliance will be priority issues, and opportunistic buybacks may be constrained until capital buffers recover. While the dividend policy targets stability, the flexibility of total returns is likely to be limited.
Room to improve cash generation: Operating CF -¥2,727.1億 and FCF -¥531.4億 highlight weak cash metrics; shareholder returns have been funded by balance-sheet adjustments (reductions in securities, etc.). Medium- to long-term improvement in Operating CF (working capital efficiency, trimming low-yielding assets) is essential to secure financial flexibility, making enhanced asset/liability management a focal point.
This report is an earnings analysis document automatically generated by AI based on XBRL financial statement data. It does not constitute a recommendation to invest in any specific securities. Industry benchmarks are reference information compiled by the Company based on publicly disclosed financial statements. Investment decisions are the responsibility of the individual investor; please consult a professional advisor as needed before making investment decisions.