| Indicator | Current Period | Same Period of Previous Year | YoY |
|---|---|---|---|
| Revenue | ¥64.90B | ¥52.78B | +22.9% |
| Operating Income | - | - | - |
| Ordinary Income | ¥27.83B | ¥17.65B | +57.7% |
| Net Income | ¥20.26B | ¥13.00B | +55.9% |
| ROE | 1.5% | 1.1% | - |
The first quarter of the fiscal year ending March 2027 saw higher revenue and earnings, accompanied by a marked improvement in profit margins, driven by the combined expansion of net interest income and fee income and improved expense efficiency. Ordinary income was ¥64.90B (¥52.78B in the same period of the previous year, YoY +22.9%), ordinary income was ¥27.83B (¥17.65B, YoY +57.7%), and net income attributable to owners of the parent (hereinafter the same) was ¥20.26B (¥13.00B, YoY +55.9%). The net profit margin expanded to 31.2% from 24.6% in the previous year, indicating an elevated level of profitability. The primary drivers of earnings growth were increases in net interest income and income from fees and commissions, as well as an improvement in the expense ratio (CIR), while the impact of extraordinary gains and losses was negligible.
【Revenue】Ordinary income was ¥64.90B, up 22.9% year on year. Net interest income, which included growth of slightly less than ¥4.669B in interest income, was ¥34.98B (¥28.12B in the previous year, +24.4%) and was the primary growth driver. Interest income on loans expanded to ¥22.77B (+22.8%). Income from fees and commissions also increased to ¥7.01B (¥6.14B in the previous year, +14.1%), resulting in revenue growth driven by both net interest income and fee income. The sole reported segment is Banking, and no breakdown by business is disclosed.
【Profit and Loss】Ordinary income was ¥27.83B (+57.7%), while net income was ¥20.26B (+55.9%). The expense ratio (CIR) improved by approximately 7pt to 41.6% from 48.6% in the previous year. Positive operating leverage was generated as revenue growth substantially exceeded the 7.6% increase in general and administrative expenses. Extraordinary losses were ¥0.015B, while extraordinary gains were zero, indicating that temporary factors had almost no contribution. The effective tax rate increased slightly to 27.2% from 26.4% in the previous year, but not to a level that offset the earnings growth effect. As both revenue and earnings increased, the quality of profit growth can be regarded as high, driven by ordinary income.
【Profitability】The ordinary income margin (ordinary income/ordinary income) expanded to 42.9% from 33.4% in the previous year, while the net profit margin increased to 31.2% from 24.6%. ROE (quarterly net income/period-end net assets, before annualization) was 1.5%, improving from 1.1% in the previous year. 【Cash Flow Quality】Comprehensive income was ¥295.22B, substantially exceeding net income of ¥20.26B. Most of the ¥274.96B difference was attributable to an increase in the valuation difference on securities, which differs in nature from ordinary income reported in the P/L. Extraordinary gains and losses were almost zero, and nearly all profit was derived from ordinary income. 【Investment Efficiency】The expense ratio (CIR) improved to 41.6% from 48.6% in the previous year. Interest income on loans increased by +22.8%, while the securities balance increased by +11.2%, contributing to higher investment income. 【Financial Soundness】The equity ratio (BIS) improved by 2.1pt to 11.7% from 9.6% in the previous year. The loan-to-deposit ratio was 81.4% (79.3% in the previous year), which is generally at an appropriate level. Total assets were ¥11,816.75B, essentially flat year on year (-0.08%).
As no cash flow statement is disclosed, funding trends are assessed based on changes in the balance sheet. Cash and deposits with the Bank of Japan decreased substantially to ¥50.71B (¥91.89B in the previous year, -44.8%), while securities increased to ¥294.82B (¥265.10B in the previous year, +11.2%), suggesting a shift of excess liquidity into securities investments. On the liabilities side, borrowings contracted to ¥25.74B (¥40.36B in the previous year, -36.2%), indicating reduced dependence on market funding. Deposits declined slightly to ¥935.78B (¥957.51B in the previous year, -2.3%), while loans increased marginally to ¥762.00B (¥759.09B in the previous year, +0.4%), raising the loan-to-deposit ratio to 81.4%. Overall, the balance sheet indicates a shift toward stable deposits and equity as funding sources, alongside an increase in investment assets.
Profit for the current period was driven by ordinary income, while the impact of extraordinary gains and losses was almost negligible, consisting solely of ¥0.015B in extraordinary losses. Dependence on temporary factors was therefore limited. The bridge from ordinary income to net income can be largely explained by income taxes of ¥7.55B (effective tax rate of 27.2%), remaining within the scope of the recurring cost structure. Meanwhile, comprehensive income was ¥295.22B, substantially exceeding net income of ¥20.26B, with most of the difference, ¥274.26B, attributable to an increase in the valuation difference on securities. This valuation gain reflects changes in the market value of other securities and must be evaluated separately from net income, which represents realized profit and loss. If interest rates or securities markets reverse, the valuation difference on securities may shrink, potentially affecting both comprehensive income and the equity ratio; this is an important consideration when assessing earnings quality.
The Q1 progress rates against the full-year plan—ordinary income of ¥76.60B, net income of ¥52.00B, and EPS of ¥183.06—were 36.3% for ordinary income, 38.9% for net income, and 39.1% on an EPS basis, substantially exceeding the simple quarterly allocation of 25%. No revisions were made to the earnings or dividend forecasts during the quarter. However, the full-year ordinary income plan itself assumes a 44.1% year-on-year decline in earnings, and it should be noted that the strong first-half progress may not continue evenly throughout the full year. Factors concentrated in the first half, such as an improvement in the securities valuation environment, may have contributed to the results.
The annual dividend forecast is ¥105, including a special dividend of ¥100 as part of the year-end dividend, according to the accompanying note. The payout ratio based on expected EPS of ¥183.06 is 57.4% (¥105/¥183.06). Considering the equity ratio of 11.7%, the balance between shareholder returns and retained earnings has been maintained. A simple comparison with the previous year's actual dividend of ¥40 is not meaningful because the current period includes a special dividend of ¥100.
Declining deposits residual: The deposit balance declined to ¥935.78B (-2.3% year on year), while the funding structure has also changed alongside the contraction in borrowings (-36.2%). Ongoing monitoring of funding cost trends will be necessary.
Dependence on securities valuation gains: Most of the ¥295.22B in comprehensive income, ¥274.26B, was attributable to an increase in the valuation difference on other securities, creating a substantial divergence from net income of ¥20.26B. During periods of rising interest rates or a reversal in market prices, the valuation difference may shrink and could affect the equity ratio.
Consistency with the full-year plan: While the full-year ordinary income forecast assumes a 44.1% year-on-year decline, Q1 progress was high at 36.3%. The results may include factors concentrated in the first half, such as an expansion in valuation gains, creating uncertainty regarding the continuation of steady progress throughout the full year.
Profitability and Returns
| Indicator | Company | Median (IQR) | Delta |
|---|---|---|---|
| Net Profit Margin | 31.2% | – | – |
The company's net profit margin of 31.2% can only be assessed in absolute terms because industry median data has not been compiled.
Growth and Capital Efficiency
| Indicator | Company | Median (IQR) | Delta |
|---|---|---|---|
| Revenue Growth Rate (Year on Year) | 22.9% | – | – |
The company's ordinary income growth rate of 22.9% can only be assessed in absolute terms because industry median data has not been compiled.
※Source: Compiled by the Company
The expense ratio (CIR) improved by approximately 7pt to 41.6% from 48.6% in the previous year, as revenue growth exceeded the 7.6% increase in general and administrative expenses. Improved cost efficiency contributed to earnings growth and is noteworthy as a sign of structurally improved profitability.
The equity ratio improved to 11.7% from 9.6% in the previous year, but the increase was primarily attributable to the accumulation of valuation differences on securities. It should be distinguished from capital strengthening through actual retained earnings.
Q1 progress was high at 38.9% on a net income basis, but the full-year plan itself assumes a 44.1% year-on-year decline in ordinary income. The earnings data indicate that whether first-half growth will continue throughout the full year depends on the valuation environment and interest rate trends.
This report is an earnings analysis document automatically generated by AI based on 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 with professionals as necessary.
---End of Report---