| Metric | Current Period | Same Period Last Year | YoY |
|---|---|---|---|
| Revenue | ¥8481.8B | ¥6672.4B | +27.1% |
| Operating Income | - | - | - |
| Ordinary Income | ¥2535.3B | ¥1538.8B | +64.7% |
| Net Income | ¥1766.8B | ¥1144.0B | +54.4% |
| ROE | 1.9% | 1.2% | - |
In Q1 of FY ending March 2027, the Company achieved substantial increases in revenue and earnings, driven by the expansion of net interest income on the tailwind of rising interest rates. Revenue (ordinary revenues) was ¥8,481.8B (+27.1% YoY), ordinary income was ¥2,535.3B (+64.7% YoY), and net income attributable to owners of the parent was ¥1,775.7B (+69.3% YoY). The primary driver of earnings growth was the increase in interest on Japanese government bonds accompanying the rise in domestic interest rates and the expansion of returns from foreign bond investment trusts, which improved the gross interest margin from 0.39% to 0.73%. Progress toward the full-year plan (ordinary income of ¥9,550B and net income attributable to owners of the parent of ¥6,600B) was 26.5% and 26.9%, respectively, slightly exceeding the standard quarterly progress rate of 25%.
【Revenue】Ordinary revenues of ¥8,481.8B increased 27.1% YoY. Funds investment income increased substantially to ¥6,781B (+¥2,257B YoY), primarily due to higher interest on Japanese government bonds and increased returns from foreign bond investment trusts, making it the main driver of revenue growth. Net fees and commissions also increased modestly to ¥424B (+¥15B YoY) due to higher foreign exchange and settlement-related fees.
【Profit and Loss】Ordinary income was ¥2,535.3B (+64.7% YoY), while net income attributable to owners of the parent was ¥1,775.7B (+69.3% YoY). Extraordinary losses were a negligible ¥0.0002B, indicating virtually no impact from temporary factors. General and administrative expenses were contained at ¥2,451B (+1.8% YoY), with expenses growing at a slower rate than revenue; consequently, the cost-to-income ratio improved substantially from 93.7% in the same period of the prior year to 57.6%. Meanwhile, other operating income (loss), including foreign exchange trading gains (losses), recorded a wider loss (△¥167B, compared with △¥104B in the same period of the prior year), but this was absorbed by the expansion of net interest income. In conclusion, the Company achieved higher revenue and earnings led by net interest income.
The Bank Group operates as a single banking segment and does not disclose results by segment. On a company-wide basis, funds investment income of ¥6,781B is the core business and accounts for approximately 80% of total ordinary revenues, making it the primary driver of earnings growth. Although net fees and commissions (¥424B) account for a relatively small proportion, they remained stable due to increased foreign exchange and settlement-related fees. Income from strategic investment areas, such as private equity funds and real estate funds, increased significantly to ¥1,273B in combined net interest income and extraordinary income (¥497B in the same period of the prior year), contributing to revenue diversification.
Profitability: ROE of 1.9% and net profit margin of 20.8% (based on consolidated net income)
Cash quality: The combined total of net interest income and net fee income (¥4,255B) exceeded general and administrative expenses (¥2,451B), indicating strong internal cash-generation capacity from core revenues
Financial soundness: Equity ratio of 4.2% (equivalent to 4.2% in the same period of the prior year, based on disclosed figures), total assets of ¥2,215,230B, and net assets of ¥92,870.2B
Quality of capital: Valuation difference on securities improved to ¥7,279.1B (¥6,288.5B in the same period of the prior year), with the recovery of unrealized gains supporting capital
As a banking business, the independently disclosed cash flow statement items are limited. However, the combined total of net interest income and net fee income (¥4,255B) substantially exceeded general and administrative expenses (¥2,451B), indicating an improvement in internal cash-generation capacity from core revenues. On the balance sheet, cash and due from banks decreased by approximately ¥5.9T, while loans increased by approximately ¥1.79T, indicating an ongoing reallocation from liquid assets to higher-yielding investment assets. Repurchase agreement liabilities (repos) decreased by approximately ¥4.98T, reducing dependence on short-term market funding. Cash generation assessment: Standard (core revenues are improving, but continued monitoring of asset reallocation is required).
The relationship between ordinary income of ¥2,535.3B and net income attributable to owners of the parent of ¥1,775.7B is broadly consistent with an effective tax rate of 30.3% (income taxes of ¥768.4B / profit before tax of ¥2,535.3B), representing a normalized level. Extraordinary losses were negligible at ¥0.0002B, and there was effectively no earnings uplift from temporary factors. Funds investment income, equivalent to non-operating income (¥6,781B), accounts for approximately 80% of ordinary revenues; however, this represents core banking revenue and is structural in nature. Meanwhile, other operating income (loss) widened to a loss of △¥167B, with volatility in market-related gains and losses serving as a slight downward pressure on earnings quality.
Q1 progress toward the full-year forecast (ordinary income of ¥9,550B and net income attributable to owners of the parent of ¥6,600B) was 26.5% for ordinary income and 26.9% for net income attributable to owners of the parent, exceeding standard quarterly progress of 25% by +1.5–+1.9pt. There were no revisions to the earnings forecast or dividend forecast during the quarter. If the improvement in the gross interest margin (0.39%→0.73%) and the upward trend in domestic interest rates continue, the likelihood of achieving the plan at the current pace is considered relatively high.
The Company’s full-year dividend forecast is ¥93 per share, and the payout ratio based on forecast EPS of ¥185.29 is approximately 50.2%. As no disclosure concerning share repurchases has been identified, the assessment is based on the payout ratio. The net income progress rate as of Q1 (26.9%) represents a solid start in terms of coverage of the dividend plan. However, given the equity ratio of 4.2%, the balance between capital discipline and earnings power will determine the Company’s capacity for future shareholder returns.
【Short term】Trends in domestic interest rates, the performance of foreign bond investment trust returns, and changes in the gross interest margin will determine the earnings trend from the next quarter onward. 【Long term】Key areas of focus include progress toward the targets of approximately 10% ROE and net income attributable to owners of the parent exceeding ¥1T under the Medium-Term Management Plan (FY2026–FY2028), as well as achievement of KPIs such as 25M registered passbook app accounts and 1.1M users of asset-formation services.
Profitability and Returns
| Metric | Company | Median (IQR) | Delta |
|---|---|---|---|
| Net profit margin | 20.8% | – | – |
| The Company’s net profit margin has limited comparative data within the industry, but the current level is high due to the expansion of net interest income. |
Growth and Capital Efficiency
| Metric | Company | Median (IQR) | Delta |
|---|---|---|---|
| Revenue growth rate (YoY) | 27.1% | – | – |
| Against the backdrop of rising interest rates, the Company’s revenue growth rate is showing a high level of growth compared with peers. |
※Source: Compiled by the Company
Interest rate fluctuation risk: Valuation losses on Japanese government bonds and other securities held amounted to △¥2T7,611B as of the end of June 2026, representing a significant amount; during periods of rising interest rates, there is a risk that valuation losses will expand through declines in bond prices.
Risk related to capital levels: The disclosed equity ratio is low at 4.2%. It should be noted that this is calculated on a different basis from the regulatory capital ratio (CET1 ratio of 10.09%, normal target range of 11–13%). Expansion of market-related gains and losses (other operating income (loss) of △¥167B) may also become a factor in capital fluctuations.
Risk associated with changes in asset composition: Loans have expanded sharply by +41.0% YoY (+¥1.79T), primarily due to lending to national and local governments. The effectiveness of the credit management framework will be a key focus going forward.
The expansion of net interest income and the improvement in the cost-to-income ratio (93.7%→57.6%) are progressing simultaneously. The fact that progress as of Q1 is slightly ahead of the full-year plan (ordinary income of 26.5% and net income of 26.9%) is a key point in the earnings data.
On the balance sheet, cash and due from banks declined (△¥5.9T), loans increased (+¥1.79T), and short-term funding through repos decreased (△¥4.98T), indicating that reallocation of the asset and funding composition is progressing.
The improvement in valuation difference on securities (+¥9,906B) is positive for capital quality. However, the balance with valuation losses on Japanese government bonds during periods of rising interest rates (△¥2T7,611B) will be a structural observation point in assessing future capital trends.
This report is an earnings analysis document automatically generated through integrated AI analysis of XBRL earnings release data and PDF earnings presentation materials. It does not recommend investment in any specific security. 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 professionals as necessary.
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