JAPAN POST HOLDINGS (6178) FY2026 Q3 Earnings Report

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Executive Summary

The expansion of net interest income in the Banking Business (Japan Post Bank) drove increases in both revenue and earnings; however, consolidated net income attributable to owners of the parent declined due to an increase in net income attributable to non-controlling interests. Revenue (ordinary revenues) was ¥84,122.9B (+1.0% YoY), ordinary income was ¥8,095.7B (+15.2%), and consolidated net income was ¥5,251.8B (+21.8%). Meanwhile, quarterly net income attributable to owners of the parent was ¥2,580.9B, down -2.6% YoY, showing a contrast with the growth in consolidated net income. This divergence was primarily attributable to net income attributable to non-controlling interests increasing substantially to ¥2,670.9B from ¥1,662.3B in the previous year, as earnings growth at Japan Post Bank and Japan Post Insurance, in which the Group holds relatively low ownership interests, was allocated disproportionately to non-controlling interests.

Factors Affecting Earnings

【Revenue】Revenue was ¥84,122.9B, a marginal increase of +1.0% YoY. While ordinary revenues in the Banking Business increased +10.2% and the Postal and Logistics Business grew +12.2%, the Life Insurance Business declined -5.6% and the International Logistics Business declined -6.8%, limiting the overall increase in revenue. The increase in revenue in the Postal and Logistics Business was attributable to postal rate revisions and the consolidation of the JP Tonami Group as subsidiaries; attention should be paid to the inclusion of temporary factors.

【Profit and Loss】Ordinary income increased +15.2% YoY to ¥8,095.7B, substantially outpacing revenue growth. The primary factor was a +25.0% increase in ordinary income in the Banking Business segment, driven by higher interest income on Japanese government bonds amid rising domestic interest rates. In extraordinary items, the Company recorded extraordinary gains of ¥556.3B, including a gain on negative goodwill of ¥88.1B, a temporary factor associated with the consolidation of Tonami Holdings, and extraordinary losses of ¥88.8B, including impairment losses of ¥21.4B. Profit before tax after deducting the extraordinary losses was ¥7,448.1B. The divergence between consolidated net income (¥5,251.8B) and net income attributable to owners of the parent (¥2,580.9B) reached 51%, primarily due to the increase in net income attributable to non-controlling interests. In conclusion, although the Company reported higher revenue and earnings, it presents a dual picture, with earnings declining on a basis attributable to owners of the parent.

Segment Analysis

The Banking Business had the largest composition of segment profit on an ordinary income basis, generating ¥5,514.0B out of total reported segment profit of ¥8,035.4B, or 68.6%, and is positioned as the core business. Ordinary income in the Banking Business increased +25.0% YoY, driving earnings growth for the Group as a whole. The Life Insurance Business recorded ordinary income of ¥2,344.2B (+5.4%), supported by growth in core profit and the reversal of the price fluctuation reserve. The Postal and Logistics Business reduced its operating loss to ¥67.7B, compared with a loss of ¥378B in the previous year, supported by postal rate revisions and the consolidation of JP Tonami, although it continues to report a loss. The Postal Counter Services Business had a profit margin of 25.9%, but profit declined sharply by -65.6% YoY due to a decrease in agency fees and other factors. The International Logistics Business had the lowest profit margin among all segments at 0.5%, with profit declining -36.5% due to lower ocean freight rates and a decrease in handling volume. The difference between the Banking Business’s high profit margin (26.2%) and the low profitability of the International Logistics and Postal and Logistics Businesses highlights the differences in earnings structures among the segments.

Key Financial Metrics

Profitability: ROE was 4.3% (Equity Ratio: 5.6%), while the ordinary income margin was 9.6%, improving from 8.4% in the previous year. Due to the financial holding company structure, the Equity Ratio relative to total assets remains low. Per-share metrics: Basic EPS was ¥88.15 (¥84.46 in the previous year, +4.4%). Extraordinary items: Extraordinary gains were ¥556.3B, including a gain on negative goodwill of ¥88.1B, while extraordinary losses were ¥88.8B, including impairment losses of ¥21.4B. Comprehensive income: Comprehensive income was ¥16,309.2B, substantially exceeding net income, with a significant contribution from valuation differences on securities of ¥15,022.3B. Financial soundness: Against total assets of ¥291,105.1B, net assets were ¥16,382.6B. Non-controlling interests were ¥6,839.4B, accounting for more than 40% of net assets and representing an important factor in analyzing the attribution of consolidated net income.

Cash Flow Analysis

Because the data does not disclose items from the statement of cash flows, cash flow is evaluated indirectly based on comprehensive income and changes in the balance sheet. Securities increased to ¥192,610.9B and money trusts increased to ¥13,748.4B from the previous year, indicating an expanded allocation to market-invested assets. Treasury stock decreased from ¥3,512.3B (negative) in the previous year to ¥2,211.6B (negative), suggesting progress in the cancellation or disposal of treasury stock following share repurchases. Capital expenditures and depreciation are not disclosed, preventing the direct calculation of FCF.

Quality of Earnings

Against ordinary income of ¥8,095.7B, profit before tax was ¥7,448.1B, with the difference primarily attributable to extraordinary items, which contributed a net positive amount of approximately ¥46.8B. By attribution category, of consolidated net income of ¥5,251.8B, ¥2,580.9B was attributable to owners of the parent, representing 49.1%, while ¥2,670.9B was attributable to non-controlling interests, representing 50.9%. The sharp +60.7% increase in net income attributable to non-controlling interests created the divergence between consolidated net income growth (+21.8%) and the decline in net income attributable to owners of the parent (-2.6%). Accordingly, distinguishing between the consolidated basis and the basis attributable to owners of the parent is important when evaluating earnings quality. The ¥88.1B gain on negative goodwill was a temporary accounting gain associated with the consolidation of Tonami Holdings in the Postal and Logistics Business and should be distinguished from recurring earnings power.

Earnings Forecast and Guidance

The cumulative Q3 progress rate against the full-year ordinary income forecast of ¥9,600.0B was 84.3%, exceeding the standard progress rate of 75% by 9.3pt. Although the full-year ordinary income forecast for the Banking Business segment was revised upward against the backdrop of rising domestic interest rates, the Group’s consolidated full-year forecast was maintained after taking into account ownership ratios, including 49.9% for Japan Post Bank. There were no revisions to the earnings forecast or dividend forecast during the quarter, and the forecasts for ordinary income, EPS (¥110.27), and dividends (¥50.00) remained unchanged.

Shareholder Returns

The annual dividend forecast is ¥50.00 (interim dividend of ¥25.00 and year-end dividend of ¥25.00), representing an increase from the previous year and exceeding the previous year’s unchanged level (only the interim dividend of ¥25 was disclosed for the previous year). The Payout Ratio against the full-year EPS forecast of ¥110.27 is approximately 45.3%. Treasury stock acquisitions have been conducted since August 2025. Against an acquisition limit of ¥2,500B and 250 million shares, 148 million shares totaling ¥2,188B had been acquired as of the end of December, representing a progress rate of approximately 88%. The Total Return Ratio combining dividends and share repurchases is therefore above the ratio based on dividends alone.

Catalysts

【Short Term】The completion timing and progress of the treasury stock acquisition program, trends in net interest income in the Banking Business during Q4, and developments in domestic interest rates.

【Long Term】The extent to which structural reforms aimed at turning the Postal and Logistics Business profitable become established, the impact of strengthening the logistics structure through consolidation of the JP Tonami Group, and the sustainability of rental revenue contributions from large properties in the Real Estate Business, such as Azabudai Hills Mori JP Tower.

Industry Benchmark (For Reference; Compiled by the Company)

Industry Benchmark (it_telecom)

Profitability and Returns

Growth and Capital Efficiency

※Source: Compiled by the Company

Risk Factors

1. Concentration of earnings in the Banking Business: The Banking Business accounts for 68.6% of total segment profit, creating a structure in which domestic interest rate trends, Japanese government bond valuations, and changes in the investment environment have a significant impact on the Group’s overall performance.

2. Profitability of the Postal and Logistics Business: The operating loss narrowed to ¥67.7B but remains a deficit. Increases in personnel and transportation costs, as well as the absorption of costs following the integration of JP Tonami, will be key to achieving profitability.

3. Declining profitability of the International Logistics Business: Ordinary income declined -36.5% YoY, and the profit margin remained at 0.5%. The business is susceptible to external conditions, including declines in ocean freight rates and handling volume.

Key Points in the Earnings Results

1. The differing directions of consolidated net income (+21.8%) and net income attributable to owners of the parent (-2.6%) resulted from the sharp increase in net income attributable to non-controlling interests (+60.7%). Attention should therefore be paid to the distinction in attribution when reviewing the earnings figures.

2. The ordinary income margin improved to 9.6% from the previous year, reflecting an earnings growth structure led by the expansion of net interest income in the Banking Business. Meanwhile, the Postal and Logistics Business remains at the stage of narrowing its losses, and structural profitability improvements are still underway.

3. The progress rate against the full-year forecast (84.3% for ordinary income) is above the standard level, and maintaining the earnings and dividend forecasts is consistent with performance to date.

Theoretical Share Price (For Reference)

Sensitivity: ¥4,630–¥4,899 at cost of equity ±1%, and ¥4,727–¥4,784 at ω±0.1.

Notes:

• Because forecast ROE is below the cost of equity, the theoretical value is below book value per share.
• Net assets as of the quarter-end are used; there is a timing difference relative to the full-year forecast.
• Because net assets include non-controlling interests, the theoretical value may be calculated somewhat higher.

(Calculation model: Residual Income Model (Ohlson-type, explicit 5-year fade) / Interest rate reference month: 2026-07 / Mechanically calculated solely from publicly disclosed data; this is not a forecast of the market share price or a recommendation of any specific investment action, and does not predict or guarantee future share prices.)

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This report is an earnings analysis document automatically generated by AI through integrated analysis of XBRL earnings summary data and PDF earnings presentation materials. It does not recommend investment in any specific security. The industry benchmarks are reference information compiled by the Company based on publicly disclosed earnings data. Investment decisions should be made at your own responsibility, after consulting a professional as necessary.

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