| Metric | This Period | Prior Year | YoY |
|---|---|---|---|
| Revenue / Net Sales | ¥28522.1B | ¥25220.5B | +13.0% |
| Operating Income / Operating Profit | - | - | - |
| Ordinary Income | ¥7591.5B | ¥5845.3B | +29.8% |
| Net Income / Net Profit | ¥5289.8B | ¥4105.6B | +28.8% |
| ROE | 5.7% | 4.5% | - |
For the fiscal year ended March 2026, Revenue (Ordinary Revenues) was ¥2兆8,522億円 (¥28522.1B) (YoY +3,302B +13.0%), Ordinary Income was ¥7,592B (¥7591.5B) (YoY +1,746B +29.8%), and Net Income attributable to owners of the parent was ¥5,256B (¥5256.0B) (YoY +1,110B +26.8%), marking the third consecutive year of all-time high results since listing. The revenue and profit increase was mainly driven by expanded net interest income in a rising interest-rate environment: interest and dividend income surged to ¥2兆2,708億円 (¥22708B) (YoY +5,384B +29.7%), while interest expense was limited to ¥9,885B (¥9885B) (YoY +1,752B +21.6%), resulting in a large improvement in net interest income to ¥1兆3,037億円 (¥13037B) (YoY +3,469B +36.9%). Fee income remained firm at ¥1,968B (¥1968B) (YoY +120B +6.5%). General and administrative expenses were contained to ¥9,464B (¥9464B) (YoY +316B +3.5%), producing positive operating leverage. Extraordinary items including gains/losses on equities and related instruments totaled ¥2,979B (¥2979B), down ¥1,566B YoY, with valuation swings partially offsetting profit growth, but core business revenue expansion led profit growth. The full-year plan (Ordinary Income ¥9,550B, Net Income attributable to owners ¥6,600B, EPS 185.29¥) incorporates ¥3,400B of incremental revenue from yen interest-rate assets assuming domestic rates rise, aiming for a fourth consecutive record high.
[Revenue] Revenue (Ordinary Revenues) was ¥2兆8,522億円 (¥28522.1B), up +13.0% YoY, achieving double-digit growth. The primary driver was interest and dividend income of ¥2兆2,708億円 (¥22708B) (YoY +5,384B +29.7%); within this, government bond interest increased by +1,104B and income from foreign bond investment trusts expanded thanks to a favorable interest-rate environment. Fee income was ¥1,968B (¥1968B) (YoY +120B +6.5%), aided by expansion to 1,662万 accounts for the passbook app, 87万 NISA accounts, and investment trust / fund wrap balances of ¥3.5兆, with digital channel penetration boosting the customer base. Net interest margin (funds gross margin) improved to 0.56%, and top-line growth reflects the combined effect of interest-rate sensitivity and a large increase in loans (YoY +39.7%).
[Profitability] General and administrative expenses were ¥9,464B (¥9464B) (YoY +316B +3.5%), substantially contained relative to top-line growth of +13.0%. The reduction was driven by a ¥50B decrease in outsourcing fees to Japan Post Co., Ltd., while contributions to the Japan Postal Service Management & Support Organization increased by +163B and mechanization-related expenses rose +45B, but overall cost absorption improved. Non-operating and extraordinary items totaled +2,972B, with equity-related gains/losses including valuation swings acting as temporary items, though net impact was limited. After deducting corporate taxes and other of ¥2,187B (effective tax rate 28.8%) and non-controlling interests of ¥140B, net income attributable to owners of the parent stood at ¥5,256B. The gap from Ordinary Income of ¥7,592B to Net Income ¥5,256B mainly reflects tax burdens, with minimal one-off factors. In conclusion, the revenue and profit growth was supported by favorable interest-rate conditions and cost containment producing positive operating leverage, laying the groundwork for a fourth consecutive record profit.
The Group operates in a single banking business segment, and statutory segment disclosure is omitted. Detailed breakdowns by region or business unit are not disclosed, so comparative analysis of segment profit margins is not possible. Company-level revenue drivers (net interest income, fee income, equity-related gains/losses) and cost structure (general and administrative expenses, contributions, outsourcing fees) are the primary factors explaining performance variation.
Profitability: ROE 5.7% (improved +1.3pt from 4.4% prior year), Net Profit Margin 18.5% (improved +2.2pt from 16.3%), funds gross margin 0.56% (improved +9bp from 0.47%), reflecting the positive impact of interest-rate environment and cost discipline.
Cash Quality: Operating Cash Flow / Net Income was △17.96x, with Operating Cash Flow of △9兆4,375億円 (△¥94375B) driven mainly by balance sheet operations (short-term funding transactions, securities operations, FX-related positions). FCF was △10兆42億円 (△¥10042B), a clear negative, and total returns including dividends and buybacks were not covered by FCF, indicating high cash volatility.
Investment Efficiency: Capital Expenditure / Depreciation was 0.16x, very low, consistent with banking business characteristics and limited physical investment scale. Depreciation was ¥516B versus capital expenditures of ¥84B, remaining at maintenance levels.
Financial Soundness: Equity Ratio 4.1% (prior year 3.8%), D/E ratio 23.47x indicating a highly leveraged structure. While high liquidity buffers exist with Cash and BOJ current account balances of ¥5兆4,350億円 and high-liquidity securities (government bonds, etc.), significant use of marketable liabilities (Repo ¥2兆2,517億円, securities lending ¥2,434億円, borrowings ¥2,819億円) underscores the importance of maturity-mismatch management.
Operating CF: △9兆4,375億円 (△¥94375B) (Operating CF / Net Income △17.96x), a large outflow primarily due to funding movements related to marketable assets, short-term funding transactions and FX-related accounts. FX-related gains/losses impacted operating CF by △1兆659億円, accrued income increased by +3,682B, and accrued expenses increased by +9,007B, evidencing a substantial divergence between accounting profit and cash.
Investing CF: △5,668億円 (△¥5668B), subdued, mainly due to capital expenditures of ¥84B and intangible asset investments of ¥342B. With depreciation at ¥516B, capital expenditures remained at 0.16x of depreciation, i.e., maintenance-level physical investment.
Financing CF: △2,951億円 (△¥2951B), comprising dividends ¥2,088B, share buybacks ¥654B, and dividends to non-controlling interests ¥195B. Total returns amounted to ¥2,742B, not covered by FCF of △10兆42億円, so distributions were made from balance sheet capacity in the short term.
FCF: △10兆42億円 (Operating CF △9兆4,375億円 + Investing CF △5,668億円) indicating very weak cash generation.
Cash Generation Assessment: Monitoring required. The negative operating CF is attributable to position changes from balance sheet operations; while short-term volatility is characteristic of the banking model, sustainability of distributions on an FCF basis warrants cautious assessment given cash dynamics.
The gap between Ordinary Income ¥7,592B and Net Income ¥5,256B is mainly explained by corporate taxes and other of ¥2,187B (effective tax rate 28.8%) and non-controlling interests ¥140B; one-time items were minor (special gains ¥4B, special losses ¥12B). Interest and dividend income of ¥2兆2,708億円 (¥22708B) comprised the majority of non-operating revenue. Temporary items including equity-related gains/losses and trust asset investment gains/losses totaled ¥2,979B, with valuation fluctuations included but limited net impact. Comprehensive income was ¥4,640B, driven by valuation gains on securities +¥2,380B, deferred hedge losses △¥3,373B, and retirement benefit adjustments +¥238B, causing comprehensive income to lag net income; OCI volatility can indirectly affect shareholder value via capital changes. Operating CF / Net Income at △17.96x indicates accrual ratios are in a healthy range at 4.4%, but cash conversion is very weak and dependent on balance sheet positions at period end. Recurring revenues are driving profit growth and earnings quality is strong in that respect, but attention is required on cash volatility.
Progress vs. full-year forecast: Ordinary Income ¥7,592B is 79.5% of the full-year plan of ¥9,550B; Net Income attributable to owners ¥5,256B is 79.6% of the full-year plan of ¥6,600B. The full-year forecast assumes domestic and foreign interest rates follow implied forward rates, credit spreads and FX at FY2025 average levels, and principally incorporates ¥3,400B of incremental revenue from yen interest-rate assets (government bonds and yen risk-taking assets) due to domestic rate rises. Risk assets (foreign bond investment trusts, private equity funds, etc.) are assumed to decline by △900B, fee income from service transactions +20B, and operating expenses +510B. The progress rate is broadly consistent with standard seasonality (smoothing of interest income throughout the year), and with favorable interest-rate conditions, the probability of achieving the plan in H2 is high. Backlog data is not applicable to the banking model; future revenue visibility depends on assumptions for rates, FX and credit spreads.
Dividend is year-end ¥74 (Payout Ratio 50.3%), positioned within an appropriate earnings-linked range. Share buybacks totaled ¥654B, and total return ratio (dividends ¥2,088B + buybacks ¥654B) / Net Income ¥5,256B = 52.2%, allocating more than half of profits to shareholder returns. FCF coverage is △37.81x, indicating returns are not sustainable from cash flows alone in the short term, but banking operating CF is highly sensitive to portfolio position changes and thus short-term interpretability is limited. From FY2027, a ¥5,000 equivalent catalog gift will be introduced for shareholders with 3+ years holding to enhance shareholder benefits. In the medium term, the company intends to strengthen total returns through a combination of progressive dividends and buybacks.
[Short-term] Interest rate trends (timing of BOJ policy changes, pace of US rate cuts) directly affect earnings from yen interest-rate assets and foreign bond investment trusts; the net interest margin trajectory in H1 2026 is key to achieving guidance. Managing volatility in valuation differences (deferred hedge gains/losses) and continued loan growth are key focus points.
[Long-term] The medium-term management plan (FY2021–2025) financial targets (ROE ≥ 4.7%, OHR ≤ 59%, operating expense reduction ¥△690B) were broadly achieved. The direction of growth strategy and capital policy in the next medium-term plan (from FY2026) is scheduled to be announced around August 2026. Reversing the shortfall in ESG-themed investment balance (¥6.4兆 vs KPI ¥7兆, short by △0.6兆) and disclosing GHG emissions reduction achievements will be touchstones for sustainability assessment.
Profitability & Returns
| Metric | Company | Median (IQR) | Delta |
|---|---|---|---|
| Net Profit Margin | 18.5% | 11.9% (7.2%–35.4%) | +6.7pt |
Net profit margin exceeds the industry median by +6.7pt, with relative strength driven by favorable interest-rate environment and cost containment.
Growth & Capital Efficiency
| Metric | Company | Median (IQR) | Delta |
|---|---|---|---|
| Revenue Growth (YoY) | 13.0% | 10.1% (7.3%–12.1%) | +2.9pt |
Revenue growth outpaces the industry median by +2.9pt, as net interest income expansion and rapid loan growth drive above-average growth.
※ Source: Company compilation
Interest-rate risk: Post-hedge valuation losses △1兆2,333億円 (△¥12333B) (YoY deterioration △1,454B) indicate large risk of capital fluctuations through OCI from movements in interest rates, FX and credit spreads. Deferred hedge losses are △1兆4,643億円 (△¥14643B) with widening negative balances, and valuation swings in hedging costs for foreign bonds could undermine net asset stability.
Liquidity & funding risk: Heavy reliance on marketable liabilities (Repo ¥2兆2,517億円, securities lending ¥2,434億円, borrowings ¥2,819億円) exposes the bank to rollover risk on short-term funding and rising funding costs. Under a D/E ratio of 23.47x and high leverage, increased rehypothecation or collateral costs under market stress and adequacy of maturity-mismatch management could impact maintenance of capital buffers.
Credit risk: Loans expanded rapidly to ¥4兆3,722億円 (¥43722B) (YoY +39.7%), led by +¥1.3兆 increase to central and local governments, with corporate and retail lending also growing. Allowance for general loan losses of ¥2B has been recorded and credit costs are minor at present, but in a downturn there is risk of credit-cost overruns.
Sustainability of net interest income and interest-rate sensitivity: Funds income improved markedly to ¥1兆3,037億円 (¥13037B) (YoY +3,469B +36.9%). The FY2026 plan incorporates ¥3,400B of additional revenue from yen interest-rate assets. Margin expansion in a rising-rate environment is the core of profit growth; BOJ policy timing and the US easing cycle will determine future profitability. Duration management and hedge effectiveness are key to dampening capital-volatility from valuation changes.
Volatility of Operating CF and cash management: Operating CF was △9兆4,375億円 (△¥94375B) (Operating CF / Net Income △17.96x), showing a large divergence between accounting profit and cash generation. Position changes in marketable assets, short-term funding and FX-related accounts are the main drivers, and FCF △10兆42億円 raises concerns about cash sustainability. Dividends and buybacks have been executed from balance-sheet capacity in the short term, but medium- to long-term sustainability of returns depends on stabilization of operating CF and the interest-rate environment.
Management of valuation differences and capital-volatility risk: Comprehensive income ¥4,640B vs Net Income ¥5,256B is primarily due to securities valuation gains +¥2,380B and deferred hedge losses △¥3,373B. Expansion of deferred hedge losses reflects hedging cost valuation for foreign bonds, and market volatility can affect shareholder value via capital changes. Maintaining hedge accounting effectiveness and managing valuation differences are important to secure stable ROE and capital efficiency.
This report was automatically generated as an earnings analysis by AI integrating XBRL financial statement data and PDF earnings presentation materials. It is not a recommendation to invest in any particular security. Industry benchmarks are compiled by the firm based on public financial statements and are provided for reference. Investment decisions are your responsibility; consult a professional advisor as needed.