| Metric | Current Period | Prior Year Period | YoY |
|---|---|---|---|
| Revenue / Net Sales | ¥2490.7B | ¥2117.3B | +17.6% |
| Operating Income / Operating Profit | - | - | - |
| Ordinary Income | ¥560.4B | ¥383.1B | +46.2% |
| Net Income / Net Profit | ¥397.1B | ¥274.3B | +44.7% |
| ROE | 6.4% | 5.1% | - |
For the fiscal year ended March 2026, revenue was ¥2,490.7B (¥+373.4B YoY, +17.6%), Operating Income data not available, Ordinary Income was ¥560.4B (¥+177.3B YoY, +46.2%), and Net Income was ¥397.1B (¥+122.7B YoY, +44.7%), achieving significant revenue and profit growth. The Banking business accounted for ¥2,260.7B of revenue (+18.8%), representing 90.8% of the total; the Securities business posted high growth of +27.6%, while the Leasing business declined slightly by -0.9%. The substantial increase in Ordinary Income was driven by interest income rising to ¥1,699.6B (+13.3%), particularly interest on securities expanding to ¥546.9B (+25.9%), and fee net revenues of ¥217.5B (+7.9%) providing additional support. G&A increased by only ¥66.6B (+11.8%), and with revenue expansion the Ordinary Income margin improved to 22.5%. Total assets grew to ¥11,370.25B (+¥224.67B), and shareholders' equity (net assets) increased to ¥620.70B (+¥78.33B); comprehensive income reached ¥935.3B, 2.4x Net Income (contributions from securities valuation gains +¥65.6B and deferred hedge P/L +¥388.5B).
[Revenue] Banking ordinary revenue of ¥2,260.7B (¥+352.6B YoY, +18.8%) represented 90.8% of the total, driven by steady loan balance expansion to ¥6,797.0B (+3.4%) and higher interest income. Interest income rose significantly to ¥1,699.6B (+13.3%), with interest on securities particularly expanding to ¥546.9B (+25.9%, +¥112.0B) aided by the interest rate environment. Interest on loans also increased steadily to ¥1,073.4B (+8.6%), reflecting both volume growth (deposits ¥8,445.0B +2.3%, loans +3.4%) and yield improvement. Fee net revenues were solid at ¥217.5B (+7.9%, +¥15.9B), with the Securities business growing to ¥49.5B (+27.6%) and banking account fee revenues of ¥260.6B (+7.9%) contributing. Other ordinary revenues contributed ¥305.5B (+6.0%). The Leasing business decreased slightly to ¥144.2B (-0.9%) but had limited overall impact.
[Profitability] On the cost side, interest expenses increased modestly to ¥763.9B (+2.3%, +¥17.2B), absorbing a large rise in deposit interest of ¥342.4B (+88.9%). G&A expenses rose to ¥665.7B (+11.8%, +¥70.4B) but lagged ordinary revenue growth (+17.6%), producing operating leverage. Consequently, Ordinary Income increased substantially to ¥560.4B (+46.2%). Extraordinary items were minor (extraordinary gains ¥0.1B, extraordinary losses ¥3.9B), and profit before tax was ¥556.7B (+45.4%). After deducting corporate taxes ¥159.6B (effective tax rate 28.7%), Net Income settled at ¥397.1B (+44.7%). In summary, the company achieved revenue growth through both loan volume expansion and yield improvement, and earnings growth outpaced expense increases.
The Banking business produced segment profit of ¥524.8B (¥+46.6% YoY), providing an overwhelming earnings base and accounting for approximately 93.7% of consolidated profit. Its profit margin remained high at 23.2%. The Securities business, though small, showed high growth with segment profit of ¥13.6B (+56.7%) and a margin of 27.5%, indicating an efficient revenue structure. The Leasing business posted segment profit of ¥5.5B (-19.6%) with a margin of 3.8%, low relative to other segments. Other segments (credit card, investment advisory, fund management, recruitment, regional energy/decarbonization, etc.) reported segment profit of ¥382.9B and are the second-largest by reported segment, but these figures are pre-intersegment eliminations and appear to largely reflect dividends and fee receipts from consolidated subsidiaries. Segment analysis highlights a very high dependency on banking revenues; growth in Securities and recovery in Leasing profitability are key to diversification.
[Profitability] ROE improved to 6.4% (up 1.6ppt from 4.8% prior year), driven by Net Profit margin of 15.9% (up 3.0ppt from 12.9%). Ordinary Income margin improved substantially to 22.5% (up 4.4ppt from 18.1%), reflecting expansion of interest income and controlled G&A growth. [Cash Quality] Operating Cash Flow (OCF) was ¥709.0B, 1.79x Net Income of ¥397.1B, at a high level. OCF subtotal (before working capital changes) was ¥857.5B, with decreases from working capital adjustments; cash-based earnings power remains solid. Adding depreciation of ¥52.7B yields an EBITDA-level of approximately ¥610B, and OCF provides 1.16x coverage of that. [Investment Efficiency] Total asset turnover was 0.022x, low reflecting banking industry characteristics, while financial leverage was 18.3x (Total Assets / Net Assets), structurally contributing significantly to ROE. [Financial Soundness] Equity Ratio was 5.4% (up 0.5ppt from 4.9%) but remains below the benchmark 8%, so capital strength is a priority. D/E ratio was 17.3x (prior year 19.3x), high consistent with banking leverage but supported by a deposit base, limiting liquidity risk. Allowances for loan losses were ¥75.08B against loans of ¥6,797.0B, an allowance ratio of 1.1%, maintaining asset quality. The loan-to-deposit ratio was 80.5% against deposits of ¥8,445.0B, within a prudent range (70–90%), securing liquidity.
Operating Cash Flow was ¥709.0B (+51.0% YoY), 1.79x Net Income ¥397.1B, indicating strong cash-based earnings. From an OCF subtotal of ¥857.5B, corporate tax payments of ¥148.5B and working capital movements (increase in other assets -¥710.4B and increase in other liabilities ¥1,432.7B) impacted cash. Investing Cash Flow was -¥2,931.8B, a large outflow driven mainly by increased bank-account securities holdings (+¥3,312.7B) and a reduction in call loans (-¥6,178.8B) as part of asset reallocation; capital expenditure was limited to -¥66.5B, indicating restrained growth investment. Financing Cash Flow was -¥61.1B, including dividend payments of -¥129.3B and share buybacks of -¥30.0B. Free Cash Flow (OCF + Investing CF) was -¥2,222.7B, negative, but in the banking model this reflects portfolio reallocations of securities and call loans within Investing CF. Core capital expenditures and dividends (≈¥196B) can be comfortably covered by OCF of ¥709B, providing about 3.6x coverage, so sustainability concerns are limited. Cash and deposits stood at ¥975.3B (prior year ¥1,203.3B, -¥228.0B), but operating liquidity is secured by the deposit base and market funding given the bank-account liquidity structure.
The breakdown of Ordinary Income ¥560.4B shows net funding profit of ¥935.7B (interest income ¥1,699.6B less interest expenses ¥763.9B), fee net revenues ¥217.5B (fee revenue ¥260.6B - fee expense ¥43.2B), and net other ordinary revenues (other ordinary revenue ¥305.5B less other ordinary expense ¥346.0B), indicating a primarily recurring earnings base. Extraordinary items were minor (extraordinary gains ¥0.1B, extraordinary losses ¥3.9B including impairment losses ¥0.3B), so one-off impacts were limited. The divergence between Ordinary Income and profit before tax was ¥3.7B, small. Tax burden on Net Income was ¥159.6B (effective tax rate 28.7%), with no notable tax-specific items. OCF is 1.79x Net Income, and OCF subtotal of ¥857.5B declined to ¥709.0B after working capital changes; accrual effects (timing differences between reported profit and cash) are around -¥148.5B and appear healthy. Comprehensive income of ¥935.3B is 2.4x Net Income, driven by other comprehensive income of ¥538.3B (securities valuation gains +¥65.6B, deferred hedge P/L +¥388.5B, retirement benefit adjustments +¥84.1B), with the gap primarily due to market-driven valuation gains — not diminishing the quality of recurring earnings.
Full-year guidance targets revenue of ¥2,630.0B, Ordinary Income ¥650.0B (¥+15.9% YoY), Net Income ¥450.0B (progress 88.2%), and EPS of ¥253.14. Progress toward Ordinary Income is 86.2% (actual ¥560.4B / plan ¥650.0B), leaving ¥89.6B of upside needed. Given current loan growth +3.4%, deposit expansion +2.3%, and securities interest +25.9%, the revenue base is solid and G&A has been contained to +11.8%, so the probability of meeting the full-year target is high. However, an abrupt shift in interest rate environment in H2, rising deposit costs, or an increase in credit costs could reduce upside. Dividend guidance plans annual dividend of ¥51.0 (interim dividend ¥37 actual, year-end planned ¥14) which is conservative versus the prior-year actual ¥90 (interim ¥37 + year-end ¥53); this may reflect a decision to prioritize internal reserves and capital build-up.
The annual dividend was ¥90.0 (interim ¥37.0, year-end ¥53.0), a large increase from prior-year interim-based ¥26.5. The payout ratio was 40.4% (based on Net Income), at a sustainable level, and dividend coverage by OCF (OCF ¥709.0B vs. total dividends ¥129.3B) is 5.5x, indicating ample coverage. The company executed ¥30.0B of share buybacks, making total shareholder returns ¥159.3B (dividends + share buybacks); the Total Return Ratio is 40.1% (Total Return ¥159.3B / Net Income ¥397.1B), which is conservative. Free Cash Flow was negative at -¥2,222.7B, but this reflects portfolio reallocations of securities and call loans in Investing CF; capex ¥66.5B plus dividends ¥129.3B (≈¥196B) are covered roughly 3.6x by OCF ¥709.0B, so sustainability of shareholder returns is not a concern. Given the low Equity Ratio of 5.4% and the need to strengthen capital, the company appears to prioritize internal reserves while balancing dividends and buybacks.
Low NIM and rising deposit beta risk: Funding profit, the core of banking revenue, depends on the net interest margin (NIM). While interest income has expanded, if deposit rates rise faster than lending rates in a rate-hike phase (rising deposit beta), margins could compress and slow Ordinary Income growth. Interest expenses were contained (+2.3% YoY) but deposit interest surged +88.9%; future rate trends could impact profitability.
Vulnerability of Equity Ratio: An Equity Ratio of 5.4% is below the industry benchmark of 8%, indicating thin capital buffers. Continued expansion of loan assets or market positions without commensurate capital increases could leave limited buffers against adverse conditions. Large components of comprehensive income are valuation gains (deferred hedge P/L +¥388.5B etc.), increasing capital volatility with market swings and underscoring the importance of capital policy.
Industry concentration risk: Banking accounts for 90.8% of revenue and about 93.7% of segment profit, implying high concentration. The performance of bank-account revenues (interest rate trends, loan demand, credit costs) will significantly affect overall results. Although Securities grew +27.6%, its revenue share is only 2.0%, and Leasing declined -0.9%, so diversification remains limited. Regional economic downturns or deterioration of borrower credit risk could turn concentration into a vulnerability.
Profitability & Return
| Metric | Company | Median (IQR) | Delta |
|---|---|---|---|
| Net Profit Margin | 15.9% | 11.9% (7.2%–35.4%) | +4.1pt |
Net Profit Margin of 15.9% exceeds the industry median of 11.9% by 4.1ppt, indicating relatively high profitability within the banking industry.
Growth & Capital Efficiency
| Metric | Company | Median (IQR) | Delta |
|---|---|---|---|
| Revenue Growth Rate (YoY) | 17.6% | 10.1% (7.3%–12.1%) | +7.6pt |
Revenue growth of 17.6% exceeds the industry median of 10.1% by 7.6ppt, maintaining a high growth pace versus peers.
※ Source: Company compilation
A marked improvement in Ordinary Income margin to 22.5% (up 4.4ppt YoY) and Net Profit margin to 15.9% (up 3.0ppt YoY) is confirmed, clarifying a profitability enhancement trend driven by expanding interest income and restrained G&A growth. Improvement in ROE to 6.4% (prior 4.8%) is mainly attributable to higher Net Profit margin, supported by both quantitative and qualitative expansion of banking revenues.
Equity Ratio of 5.4% is below the industry benchmark of 8% and capital strengthening is a priority. The payout ratio of 40.4% and Total Return Ratio of 40.1% are conservative; while OCF coverage is sufficient, the full-year dividend plan of ¥51 (reduced from actual ¥90) suggests prioritization of capital accumulation via retained earnings. Large valuation gains within comprehensive income (deferred hedge +¥388.5B etc.) mean market-driven capital volatility needs active management to maintain financial soundness.
Progress toward full-year guidance (Ordinary Income ¥650.0B, Net Income ¥450.0B) is solid with progress rates of 86.2% and 88.2%. Loan growth +3.4% and securities interest +25.9% support a stable revenue base. However, deposit interest surged +88.9%, so managing deposit beta in a rising-rate environment remains a key monitor for sustaining profitability.
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 particular security. Industry benchmarks are reference information compiled by the company from public financial statements. Investment decisions are your responsibility; please consult a professional advisor as needed.