| Metric | Current Period | Prior Year Period | YoY |
|---|---|---|---|
| Revenue | ¥3667.0B | ¥1672.6B | +119.2% |
| Operating Income | - | - | - |
| Ordinary Income | ¥1371.8B | ¥509.1B | +169.4% |
| Net Income | ¥967.2B | ¥365.5B | +164.6% |
| ROE | 8.5% | 3.4% | - |
The fiscal year ended March 2026 delivered substantial revenue and profit growth: Revenue (ordinary revenues) ¥3,667.0B (YoY +¥1,994.4B +119.2%), Ordinary Income ¥1,371.8B (YoY +¥862.7B +169.4%), and Net Income ¥967.2B (YoY +¥601.7B +164.6%). The primary drivers were improved loan yield in a rising-rate environment and expansion of investment assets, resulting in a material increase in net interest income year-over-year. Loans were ¥7.59兆 (+4.4%), deposits were ¥9.58兆 (+3.4%), maintaining a prudent loan-to-deposit ratio of approximately 79%. Ordinary income margin improved to 37.4% (from 30.4% a year earlier, +7.0pt), and net income margin rose to 26.4% (from 21.9% a year earlier, +4.5pt). ROE increased to 8.5% (from 3.2% a year earlier, +5.3pt), and the Equity Ratio improved to 9.6% (from 8.9% a year earlier, +0.7pt), strengthening the capital base.
[Revenue] Ordinary revenues reached ¥3,667.0B (+119.2%), a significant increase. Asset management income (interest income) was central, with loan growth (+¥322.7B) and rising interest rates driving loan interest income up by ¥80.23B (+25.3%). Interest and dividends from securities increased by ¥44.89B (+10.8%), further supported by improved interest conditions. Fee and commission income increased by ¥29.03B (+11.4%), contributing to stronger fee businesses. Other operating income and other ordinary revenues also rose, supporting expansion of diversified revenue streams. The loan-to-deposit ratio remained around 79%, and revenue expansion proceeded on a stable asset-liability management base.
[Profitability] Ordinary expenses increased by ¥2,295.2B (+97.4%), but revenue growth outpaced expense growth, resulting in higher profits. Funding costs increased by ¥42.68B (+53.2%), reflecting higher deposit rates, but rising interest income absorbed this impact. Fee and commission expenses increased by ¥8.28B (+10.8%), and Selling, General & Administrative expenses (G&A) were ¥66.44B (+8.4%), increases that were well below revenue growth, demonstrating operating leverage. Other ordinary expenses rose sharply to ¥1,108.0B from ¥177.2B a year earlier, likely influenced by market-related gains/losses and securities valuation changes. Ordinary Income was ¥1,371.8B (+169.4%), Profit Before Tax was ¥1,367.1B (+170.8%), and corporate taxes amounted to ¥400.0B with an effective tax rate of 29.3%, a normal level. Net Income reached ¥967.2B (+164.6%). Extraordinary items were minor (Extraordinary Income ¥1.2B, Extraordinary Loss ¥5.9B), so profits were largely attributable to recurring factors. In conclusion, the company achieved revenue and profit growth primarily driven by expanded interest income and increased fee income.
[Profitability] Net income margin improved materially to 26.4% (from 21.9% a year earlier, +4.5pt), and Ordinary income margin improved to 37.4% (from 30.4% a year earlier, +7.0pt). ROE was 8.5%, up from 3.2% a year earlier (+5.3pt), primarily driven by the improvement in net income margin. DuPont decomposition: Net income margin 26.4% × Total Asset Turnover 0.031 × Financial Leverage 10.41x = ROE 8.5%. ROA rose to 0.82% (from 0.30% a year earlier, +0.52pt). [Cash Quality] Operating Cash Flow (OCF) was negative ¥1.10兆, a large outflow; OCF/Net Income was -11.34x, and Cash Conversion Ratio (OCF/EBITDA) was -7.72x, indicating weak cash conversion on simple metrics. However, in banking, working capital effects due to loan and investment asset expansion are structurally common, so this does not necessarily imply simple quality deterioration. The accrual ratio is 10.1%, exceeding the threshold (5%), warranting attention to cash backing of profits. [Investment Efficiency] Capital expenditures were ¥6.08B (1.7% of Revenue), roughly balanced with depreciation of ¥4.87B. Goodwill balance was ¥1.33B (0.2% of equity), negligible. [Financial Soundness] Equity Ratio improved to 9.6% (from 8.9% a year earlier, +0.7pt), maintaining levels above regulatory requirements. Debt-to-Equity (D/E) was 9.41x, high but typical for the banking business model. Loan-to-deposit ratio was approximately 79%, indicating healthy liquidity and stable deposit funding. Retained earnings increased to ¥5,354.3B (+16.7%), supporting capital strengthening through internal accumulation.
Operating Cash Flow was a large negative ¥1.10兆, worsening from subtotal (after adjustments to Profit Before Tax) of ¥▲1.08兆 due to working capital changes. The main drivers were loan increases (+¥322.7B) and a sharp rise in call loans (+¥3.95兆) and other expansion of investment assets. In banking, OCF often turns structurally negative as the balance sheet expands. Investing Cash Flow was a large positive ¥7,142.6B, with proceeds from sale/redemption of securities outweighing capital expenditures of ¥6.08B and intangible investments of ¥1.52B. Free Cash Flow was negative ¥3,821.1B and did not cover total shareholder distributions of ¥35.07B (dividends ¥20.09B and buybacks ¥14.98B), but given the high variability of OCF in banking, a single-year FCF shortfall does not immediately indicate unsustainability of returns. Financing Cash Flow was negative ¥35.07B, driven by dividend payments and share repurchases. Cash and equivalents at year-end were ¥90.51B, down ¥41.72B from ¥132.23B at the beginning of the year, but significant increases in short-term investment assets such as call loans suggest liquidity is adequate.
Current period profits are largely based on recurring factors; extraordinary items are minor (Extraordinary Income ¥1.2B, Extraordinary Loss ¥5.9B, Impairment ¥0.2B). The gap between Ordinary Income ¥1,371.8B and Profit Before Tax ¥1,367.1B is small (¥4.7B), indicating limited one-off items at the non-operating stage. However, Other ordinary expenses surged to ¥1,108.0B from ¥177.2B a year earlier, likely reflecting valuation losses on securities and market-related gains/losses. Because this item varies with market conditions, evaluating sustainable earnings should ideally consider gross business profit excluding Other ordinary expenses. The fact that OCF was negative ¥1.10兆 versus Net Income ¥967.2B, and the accrual ratio of 10.1% exceeding thresholds, signals weak cash backing of earnings; yet, in banking, large working capital swings from loan and investment asset expansion complicate assessing earnings persistence based on cash flow alone. The effective tax rate of 29.3% is normal, indicating no abnormal tax burden. Comprehensive income was ¥880.5B, ¥86.7B below Net Income ¥967.2B, primarily due to Other securities valuation differences of -¥143.0B, reflecting valuation declines in held securities amid rising interest rates.
The company’s full-year plan had assumed Ordinary Income ¥766.0B, Net Income ¥520.0B, and dividend ¥50; actual results materially exceeded these assumptions with Ordinary Income ¥1,371.8B (progress 179%) and Net Income ¥967.2B (progress 186%). Greater-than-expected expansion of interest income, loan growth, and fee income contributed to the outperformance, while increases in Other ordinary expenses were a headwind but were more than offset by revenue gains. Dividends totaled ¥180 (including a special year-end dividend of ¥100), significantly above the guided ¥50. The special dividend appears to be a one-off measure reflecting profit upside and capital capacity. EPS was ¥338.85, 85% above the forecast ¥183.06. The next fiscal year plan has not been disclosed; the substantial beat this year suggests the company’s guidance is conservative and may affect future reliability assessments of guidance.
Cash dividend for the period was ¥180 per share (interim ¥40, year-end ¥140), with the year-end including a special dividend of ¥100. Prior year dividend was ¥30, representing an increase of ¥150. Payout Ratio on a reported basis is 56.1% (¥180 ÷ EPS ¥338.85 × 100, on a current-period basis), but excluding the special dividend (ordinary dividend ¥80), the payout ratio is 23.6%, a reasonable level. Share buybacks totaled ¥14.98B, and combined total shareholder returns were approximately ¥35.07B (dividends ¥20.09B + buybacks ¥14.98B), representing a Total Return Ratio of 36.3% relative to Net Income ¥967.2B. Free Cash Flow was negative ¥3,821.1B and did not cover distributions, but given the high variability of OCF in banking and accumulated retained earnings ¥5,354.3B and Equity Ratio 9.6%, there is no immediate concern about sustainability of distributions. Next period dividend guidance is ¥50, implying a return to ordinary dividend levels excluding special dividends.
NIM compression risk: Estimated NIM is 1.20%, a low level. A decline in interest rates or intensified competition could further compress spreads and impair profitability. While the loan-to-deposit ratio is 79% and at an appropriate level, the speed of loan and deposit re-pricing will be key to NIM improvement.
Market-related gains/losses volatility risk: Other ordinary expenses surged to ¥1,108.0B, 6.3x the prior year, introducing risk that valuation losses on held securities or derivative-related gains/losses could destabilize earnings. Securities holdings were reduced to ¥2.65兆, but valuation loss risk in a rising-rate environment remains. The fact comprehensive income trails Net Income by ¥86.7B also reflects a decline in Other securities valuation differences (-¥143.0B).
Liquidity and funding risk: OCF was a large negative ¥1.10兆, reflecting rising funding needs from loan and investment asset expansion. While deposit-based stable funding is maintained, reliance on market funding could increase in some scenarios, elevating liquidity management importance. Although Equity Ratio is 9.6% and above regulatory requirements, capital buffers may be limited in simultaneous interest-rate and credit shock scenarios.
Profitability & Returns
| Metric | Company | Median (IQR) | Delta |
|---|---|---|---|
| Net Income Margin | 26.4% | 11.9% (7.2%–35.4%) | +14.5pt |
The company’s net income margin is 14.5pt above the industry median, placing it among the higher profitability cohort within the industry.
Growth & Capital Efficiency
| Metric | Company | Median (IQR) | Delta |
|---|---|---|---|
| Revenue Growth (YoY) | 119.2% | 10.1% (7.3%–12.1%) | +109.1pt |
The company’s revenue growth rate exceeds the industry median by 109.1pt, demonstrating standout growth in the rising-rate environment.
※ Source: Company aggregation
Revenue expansion in a rising-rate environment and NIM trends: The company achieved large increases in ordinary revenues (+119.2%) and Ordinary Income (+169.4%) this period, with net income margin improving to 26.4%. The main drivers were higher loan yields and expanded investment assets, but estimated NIM at 1.20% is low, and sustainability depends on the re-pricing speed of loans and deposits and the wider interest rate environment. With a loan-to-deposit ratio of 79% and Equity Ratio of 9.6%, the financial base is sound, but NIM trajectory will be key for medium-term earnings trends.
Volatility of market-related gains/losses and earnings stability: Other ordinary expenses surged to ¥1,108.0B, a 6.3x increase, indicating that valuation losses on held securities and derivative-related gains/losses have increased earnings volatility. Securities holdings were reduced to ¥2.65兆, mitigating interest-rate risk, but the fact comprehensive income is ¥86.7B below Net Income highlights realized valuation losses. Going forward, duration management of the securities portfolio and smoothing of market-related gains/losses are necessary to improve earnings quality.
Dividend policy and capital allocation: This period’s dividend included a special dividend of ¥100, making total annual dividend ¥180, up substantially from ¥30 a year earlier; next period’s forecast is ¥50. Combined with share buybacks of ¥14.98B, the Total Return Ratio was 36.3%. Free Cash Flow was negative ¥3,821.1B and did not cover distributions, but given Equity Ratio 9.6% and accumulated retained earnings ¥5,354.3B, the sustainability of returns is not judged to be problematic. Going forward, stable ordinary dividends and flexible returns aligned with performance and capital conditions are expected.
This report is an earnings analysis document automatically generated by AI analyzing XBRL earnings release data. It does not constitute a recommendation to invest in any specific security. Industry benchmarks are reference information compiled by the Company based on public financial statements. Investment decisions are your responsibility; please consult professionals as necessary before making investment decisions.