| Metric | Current Period | Same Period Last Year | YoY |
|---|---|---|---|
| Revenue | ¥511.0B | ¥388.5B | +31.5% |
| Operating Income | - | - | - |
| Ordinary Income | ¥120.6B | ¥83.3B | +44.7% |
| Net Income | ¥81.2B | ¥57.6B | +40.9% |
| ROE | 2.1% | 1.4% | - |
In addition to higher revenue and earnings, both the ordinary income margin and net income margin improved, making this a decisive quarter in which the expansion of interest income and fee income was compounded by improved cost efficiency. Ordinary revenues, equivalent to revenue, amounted to ¥511.0B (+31.5% YoY), ordinary income was ¥120.6B (+44.7%), and net income attributable to owners of the parent was ¥81.2B (+40.9%). The ordinary income margin improved by +2.2pt to 23.6%, from 21.4% in the previous year, primarily because the increase in interest income and fee income in the banking business was accompanied by restrained growth in general and administrative expenses. No extraordinary gains or losses were recorded, indicating that the earnings growth was driven by recurring revenue factors.
【Revenue】Ordinary revenues, equivalent to revenue, amounted to ¥511.0B, representing a 31.5% YoY increase. The Banking Business segment, which accounts for more than 80% of the revenue composition, grew to ¥424.2B (+32.8%), driving the overall revenue increase. Within the banking business, net interest income was ¥228.1B (interest income of ¥314.2B − interest expenses of ¥86.2B), while net fees and commissions was ¥64.4B (fee income of ¥74.9B − fee expenses of ¥10.4B), indicating an expansion of the earnings base in both volume and pricing. The Leasing Business recorded ¥39.0B (+6.2%), representing only moderate revenue growth.
【Earnings】Ordinary income increased to ¥120.6B (+44.7%), while net income rose to ¥81.2B (+40.9%), with earnings growth exceeding the rate of revenue growth. General and administrative expenses were ¥176.5B, with growth remaining restrained. The expense ratio (general and administrative expenses / normalized earnings such as net interest income and net fees and commissions) improved to approximately 66.1%, from 70.7% in the previous year, indicating that cost discipline contributed to earnings growth. No extraordinary losses were recorded, and no temporary factors were identified. The earnings increase was therefore attributable to improved recurring earnings power. Accordingly, the current period is concluded to have delivered both higher revenue and higher earnings.
Profit in the Banking Business segment was ¥111.5B (¥80.3B in the previous year, +38.8%), representing earnings growth exceeding the increase in ordinary revenues (+32.8%). Profit in the Leasing Business segment was ¥1.5B (¥0.9B in the previous year, +58.5%); although small in scale, the segment maintained a high growth rate. Profit in the Other segment (including consulting and computer-related services) was ¥518.1B, an apparently large figure. However, this amount is adjusted to consolidated ordinary income of ¥120.6B after eliminating intersegment transactions (△¥510.0B), and it should be noted that it does not represent the segment’s standalone underlying earnings power. On a consolidated basis, the Banking Business accounts for 83% of ordinary revenues and the majority of profit, indicating a high concentration of the earnings structure in the banking business.
【Profitability】The ordinary income margin was 23.6%, improving by +2.2pt from 21.4% in the previous year. The net income margin also improved by +1.1pt to 15.9%, from 14.8% in the previous year. ROE was 2.1%.【Cash Quality】Comprehensive income was ¥148.0B, exceeding net income of ¥81.2B by ¥66.8B. Unrealized gains on securities (+¥41.2B) and hedging gains and losses (+¥29.9B) were the factors that boosted comprehensive income above net income.【Investment Efficiency】The loan-to-deposit ratio, calculated using loans of ¥5,364.8B and deposits of ¥6,323.8B, was 84.8%, slightly down from 85.3% in the previous year, indicating that the balance between assets and liabilities remained broadly stable.【Financial Soundness】The equity ratio under domestic standards was 5.2%, down from 5.7% in the previous year. Net assets decreased to ¥3,953.2B from ¥4,234.4B in the previous year. Given that capital surplus declined from ¥1,510.99B to ¥1,110.99B, the change in the capital structure associated with the cancellation of preferred shares appears to have had an impact.
As the Company is a banking institution, funding trends are analyzed based on changes in key balance sheet items instead of a statement of cash flows. Deposits increased steadily to ¥6,323.8B (+2.2% YoY), indicating continued expansion of a stable funding base, while loans grew moderately to ¥5,364.8B (+1.7%). Securities increased to ¥1,041.4B (+18.6%), indicating a higher allocation to marketable assets. Liabilities related to securities lending and borrowing transactions, including collateral received, rose significantly to ¥2,896.8B from ¥1,080.5B in the previous year, suggesting more active collateral and liquidity management. These movements indicate that, in addition to the stable expansion of deposit-taking and lending operations, the Company is increasingly pursuing earnings opportunities through market investments.
The increase in ordinary income and net income during the current period was driven by recurring revenue factors—namely, the expansion of interest income and fee income and improved cost efficiency—without extraordinary gains or losses, indicating favorable earnings quality. No major temporary factors were identified in other ordinary income and expenses of the banking business, which correspond to non-operating income and expenses. On the other hand, comprehensive income was ¥148.0B, exceeding net income of ¥81.2B by ¥66.8B. This difference was attributable to fair value fluctuations, namely valuation differences on other securities (+¥41.2B) and deferred hedge gains and losses (+¥29.9B). As securities holdings have increased by +18.6% YoY, attention should be paid to the risk that these accrual-related factors could reverse depending on future interest rate trends.
Ordinary income was ¥120.6B, representing progress of 20.6% against the full-year forecast of ¥586.0B. Net income was ¥81.2B, representing progress of 20.3% against the full-year forecast of ¥400.0B (based on the EPS forecast of ¥143.11). Both figures were below the 25% benchmark for simple quarterly progress, suggesting that the plan may assume a back-loaded second half. The full-year ordinary income forecast is down 3.1% from the previous fiscal year’s actual result, in contrast to the high growth of +44.7% in Q1. Changes in the earnings pace through the full year therefore warrant monitoring. No revisions were made to the earnings forecast or dividend forecast during the quarter.
The dividend forecast for common shares is ¥30 per year, and the payout ratio based on the EPS forecast of ¥143.11 is approximately 21.0%, remaining at a conservative level. The Company eliminated its Class 1 and Class 2 preferred shares in May 2026 through the exercise of acquisition rights and cancellation, respectively. From the fiscal year ending March 2027 onward, the dividend structure will therefore consist solely of common shares, without preferred share dividends (¥386 and ¥165.636 per year, respectively, in the previous fiscal year). In addition, an 8-for-1 stock split was implemented with June 30, 2026 as the record date. Accordingly, comparisons of EPS and DPS across periods are based on post-split adjusted figures. Given that the dividend level is being maintained while the equity ratio has declined from the previous year, and taking into account the accumulation of retained earnings (an increase of slightly more than +¥5.2B), continued monitoring of the sustainability of the current dividend level would be useful.
Interest Rate and Spread Risk: Although net interest income expanded to ¥228.1B, the earnings structure depends on quantitative expansion, with a loan-to-deposit ratio of 84.8%. If the pace of increase in deposit funding costs exceeds the repricing of lending rates, profitability could come under pressure from spread contraction.
Limited Capital Buffer: The equity ratio declined to 5.2% from 5.7% in the previous year. Although it exceeds the minimum level under domestic standards (4%), the available capital cushion is limited. Net assets declined by ▲¥281.2B YoY, and the impact of the capital structure change associated with the cancellation of preferred shares on the capital buffer requires monitoring.
Securities Price Volatility Risk: Securities holdings increased to ¥1,041.4B (+18.6% YoY), leaving valuation differences (other comprehensive income) susceptible to fluctuations in market interest rates and prices. In fact, the primary causes of the ¥66.8B gap between comprehensive income and net income in the current period were securities valuation differences and hedging gains and losses. Depending on future market conditions, these positive factors could reverse.
Profitability and Returns
| Metric | Company | Median (IQR) | Delta |
|---|---|---|---|
| Net Income Margin | 15.9% | – | – |
The Company’s net income margin of 15.9% cannot be compared with the industry median due to limited comparative data. In absolute terms, however, an improvement from 14.8% in the previous year has been confirmed.
Growth and Capital Efficiency
| Metric | Company | Median (IQR) | Delta |
|---|---|---|---|
| Revenue Growth Rate (YoY) | 31.5% | – | – |
The revenue growth rate of 31.5% indicates high growth from the previous year. Its relative positioning within the industry is expected to be refined as additional data are accumulated.
※Source: Compiled by the Company
The ordinary income margin improved from 21.4% in the previous year to 23.6%, while the net income margin improved from 14.8% to 15.9%, confirming an improvement in underlying earnings power accompanied by enhanced cost efficiency through restrained growth in general and administrative expenses.
Net assets decreased by ▲¥281.2B YoY, and the equity ratio declined from 5.7% to 5.2%. This was attributable in part to the decline in capital surplus (▲¥400.0B) associated with the cancellation of preferred shares in May 2026. The subsequent development of the capital structure and the level of the equity ratio will remain key monitoring points.
Progress toward the full-year ordinary income and net income forecasts was 20.6% and 20.3%, respectively, slightly below the simple quarterly allocation benchmark of 25%. The earnings pace through the second half will be a key focus, including its consistency with the full-year plan, which assumes ordinary income of ▲3.1% YoY.
This report is an earnings analysis document automatically generated by AI based on XBRL financial results briefing data. It does not constitute a recommendation to invest in any specific security. The industry benchmarks are reference information compiled by the Company based on publicly available financial results data. Investment decisions should be made at your own responsibility, after consulting a professional as necessary.
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