| Metric | Current Period | Same Period of Previous Year | YoY |
|---|---|---|---|
| Revenue | ¥1368.0B | ¥918.4B | +49.0% |
| Operating Income | - | - | - |
| Ordinary Income | ¥469.7B | ¥311.0B | +51.0% |
| Net Income | ¥327.6B | ¥225.8B | +45.1% |
| ROE | 2.6% | 1.8% | - |
Driven by expansion in loans and deposits, as well as growth in fee income centered on the banking business, the company reported higher revenue and higher profit. Ordinary revenue (equivalent to Revenue) was ¥1,368.02B (¥918.38B in the previous year, +49.0% YoY), Ordinary Income was ¥469.68B (+51.0%), and Net Income attributable to owners of the parent was ¥327.40B (+45.0%). The slightly slower growth in Net Income compared with Ordinary Income was primarily due to the effective tax rate rising from 28.1% to 30.2%. Progress toward the full-year earnings forecast was 28.1% for Ordinary Income and 28.5% for Net Income, exceeding the standard quarterly progress rate of 25%. As of Q1, the company had also announced an upward revision to its year-end dividend forecast.
【Revenue】Ordinary revenue was ¥1,368.02B, an increase of +49.0% YoY. By segment, the core Banking Business generated ¥1,209.20B (+50.2%) and was the primary growth driver, accounting for 88.4% of total revenue. The Leasing Business generated ¥102.40B (+24.8%), with the effect of making Tokyo Gas Lease Co., Ltd. a consolidated subsidiary through a share acquisition in April 2026 also contributing to the expansion in scale. The Other category, including financial instruments trading and consulting operations, posted strong growth of ¥56.41B (+81.3%).
【Profit and Loss】Ordinary Income was ¥469.68B (+51.0%), and the Ordinary Income margin improved to 34.3% from 33.9% in the previous year, an improvement of +46bp. Meanwhile, Net Income attributable to owners of the parent was ¥327.40B (+45.0%), and the Net Income margin deteriorated to 23.9% from 24.6%, a decline of -66bp, due to the increase in the effective tax rate (28.1%→30.2%). Special items had a limited impact, consisting solely of a special loss of ¥0.62B, with no special gain recorded. Accordingly, most fluctuations in profit and loss can be explained by changes in recurring sources such as net interest income and fee income. In conclusion, the company achieved higher revenue and higher profit, while the increase in the tax burden caused Net Income growth to slightly trail Ordinary Income growth.
Segment profit in the Banking Business was ¥436.05B (+46.2% YoY), while the segment profit margin declined to 36.1% from 37.1%, a decrease of -100bp. Although the expansion in funds under management drove profit growth, the impact of the deposit and loan mix and funding costs has become somewhat apparent from a profitability perspective. Segment profit in the Leasing Business was ¥5.06B (+31.4%), and the profit margin improved to 4.9% from 4.7%, an improvement of +25bp. The expansion in scale associated with the acquisition of Tokyo Gas Lease as a subsidiary may also have contributed positively to profitability. Because the Other category, which includes financial instruments trading and consulting operations, is recorded on a basis that includes intersegment transactions, caution is required when making a simple comparison between external-customer Ordinary revenue (¥56.41B) and segment profit (¥309.19B). Following the elimination of internal transactions (adjustment of △¥280.63B), the amounts are consolidated into Ordinary Income of ¥469.68B. Overall, the structure in which the Banking Business forms the core of profit generation remains unchanged.
【Profitability】The Ordinary Income margin improved to 34.3% from 33.9%, an improvement of +46bp, while the Net Income margin (on an attributable-to-owners-of-the-parent basis) deteriorated to 23.9% from 24.6%, a decline of -66bp. This was affected by the effective tax rate rising from 28.1% to 30.2%. ROE was 2.6%. The expense ratio, an indicator of cost efficiency in the Banking Business, was estimated at 42.7% based on operating expenses as a percentage of the total of net interest income, net fees and commissions, trading gains and losses, and other items. This improved from 48.0% in the previous year, indicating that the growth in gross operating revenue exceeded the growth in expenses.【Cash Quality】The impact of special items was limited to a special loss of ¥0.62B, with no special gain recorded. Most profit was generated from recurring sources such as net interest income and fee income.【Investment Efficiency】Loans and bills discounted were ¥1,1204.80B, while deposits were ¥1,2135.61B. The loan-to-deposit ratio was 92.3%, up +72bp from 91.6% in the previous year, indicating a slight improvement in the efficiency of funds deployment.【Financial Soundness】The BIS capital ratio (Equity Ratio) was 8.0%, improving by +30bp from 7.7% in the previous year. Total assets of ¥15,9229.49B remained broadly flat, declining -0.6% YoY.
Because the statement of cash flows has not been disclosed, fund movements are analyzed based on changes in the balance sheet. Cash and due from banks decreased by -¥3,227.71B (-37.4%) to ¥5,396.90B from ¥8,624.61B in the previous year. Meanwhile, securities increased by +¥769.38B (+2.6%) to ¥3,0744.80B, call loans increased by +¥342.71B (+33.0%) to ¥1,382.83B, and trading assets increased by +¥220.70B (+207.7%) to ¥326.95B. This structure suggests that a portion of on-hand liquidity was redirected toward investments in marketable assets and short-term market transactions. On the liabilities side, borrowings decreased by -¥1,472.04B (-9.9%) YoY to ¥1,3336.25B, indicating a slight decline in reliance on market funding, while deposits remained broadly flat at ¥1,2135.61B, down -¥744.33B (-0.6%). Overall, the year can be interpreted as one in which a portion of funds was shifted toward securities and short-term market investments while maintaining the deposit base.
Of Ordinary Income of ¥469.68B, the impact of special items consisted solely of a special loss of ¥0.62B, with no special gain recorded. Most profit was generated from traditional banking revenue sources, such as net interest income, net fees and commissions, and trading gains and losses. The company also noted that there were no impairment losses, significant changes in goodwill, or gains on negative goodwill, and no evidence of one-time profit generation was identified. The gap between Ordinary Income and Net Income (¥469.68B→¥327.40B) was primarily attributable to the recognition of income taxes of ¥141.49B. The effective tax rate rose to 30.2% from 28.1% in the previous year, and this increase in the tax burden was the primary cause of the deterioration in the Net Income margin. Comprehensive income was ¥682.38B (¥682.22B attributable to owners of the parent), substantially exceeding Net Income. This was driven by OCI fluctuations related to securities and markets, including an increase in valuation differences on securities of +¥292.61B and an improvement in deferred hedge gains and losses of +¥43.41B. These items should therefore be distinguished from the recurring earnings power of the current period.
Progress toward the full-year earnings forecast was 28.1% for Ordinary Income, calculated as ¥469.68B/¥1,670.00B, and 28.5% for Net Income attributable to owners of the parent, calculated as ¥327.40B/¥1,150.00B. Both exceeded the standard quarterly progress rate of 25%. EPS progress was similarly 28.3%, at ¥61.69/¥217.91. As of Q1, the company had announced revisions to its earnings forecast and its year-end dividend forecast (an increase), suggesting the possibility of achieving the full-year outlook ahead of schedule.
The full-year dividend forecast is ¥108, and a revision to the year-end dividend forecast (an increase) was announced together with the full-year results. The forecast Payout Ratio based on forecast EPS of ¥217.91 is 49.6%, within the range generally regarded as sustainable (below 60%). The Equity Ratio improved to 8.0% from 7.7%, while the increase in Comprehensive Income has also strengthened the capital base. Accordingly, the company appears to have secured a reasonable foundation for dividend funding. As this report does not provide details on the interim and year-end dividend breakdown, the Payout Ratio is presented on the basis of the full-year forecast.
Compression of the Net Income margin due to the increase in the effective tax rate: The effective tax rate increased +2.1pt from 28.1% to 30.2%, while Net Income growth (attributable to owners of the parent) remained at +45.0%, compared with Ordinary Income growth of +51.0%. Future trends in the tax burden could affect the growth rate of final profit.
Decline in the Banking Business segment profit margin: The Banking Business segment profit margin declined -100bp from 37.1% to 36.1%. While the expansion in funds under management is driving profit, continued monitoring is warranted regarding the impact of changes in the deposit and loan mix and funding costs on profitability.
Changes in the asset and funding composition: While cash and due from banks decreased -37.4% YoY, securities (+2.6%), call loans (+33.0%), and trading assets (+207.7%) increased, indicating a shift from liquid assets toward marketable assets. The evolution of the asset composition should be closely monitored in light of changes in sensitivity to interest rates and market fluctuations.
Profitability and Returns
| Metric | Company | Median (IQR) | Delta |
|---|---|---|---|
| Net Income Margin | 23.9% | – | – |
| As median data has not been provided, the assessment of the company’s relative position within the industry is limited. |
Growth and Capital Efficiency
| Metric | Company | Median (IQR) | Delta |
|---|---|---|---|
| Revenue Growth Rate (YoY) | 49.0% | – | – |
| As median data has not been provided, the assessment of the company’s relative position within the industry is limited. |
※Source: Compiled by the Company
Ahead-of-schedule full-year progress: Progress rates for both Ordinary Income and Net Income were in the 28% range, exceeding the standard progress rate of 25% and indicating a strong start relative to the initial plan. The announcement of an upward revision to the year-end dividend forecast during the same period is a notable point in the earnings data.
Qualitative changes in profitability: While the Ordinary Income margin improved from the previous year, the Net Income margin deteriorated due to the increase in the effective tax rate. Growth in the top line has therefore not fully translated into growth in final profit. Changes in the earnings structure, including trends in the tax burden, can be observed.
Business portfolio composition: Although the Banking Business remains central to both Ordinary revenue and profit, accounting for 88.4% of Ordinary revenue, the Leasing Business has expanded in scale following the acquisition of Tokyo Gas Lease as a subsidiary. The extent of progress in business diversification will be an indicator for interpreting future structural changes.
This report is an automatically generated earnings analysis document produced by AI through analysis of 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, after consulting professionals as necessary.
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