| Metric | Current Period | Prior Year | YoY |
|---|---|---|---|
| Revenue / Net Sales | ¥531.5B | ¥485.1B | +9.6% |
| Operating Income | - | - | - |
| Ordinary Income | ¥209.9B | ¥189.6B | +10.7% |
| Net Income | ¥147.9B | ¥139.5B | +6.0% |
| ROE | 7.4% | 9.1% | - |
For the fiscal year ended March 2026, Toyama First Bank reported Revenue (Ordinary Revenue) of ¥531.5B (YoY +¥46.3B +9.6%), Ordinary Income of ¥209.9B (YoY +¥20.3B +10.7%), and Net Income of ¥147.9B (YoY +¥8.4B +6.0%), achieving revenue and profit growth. Key drivers were increased loan interest income in a rising rate environment (+¥20.9B +20.3%) and growth in securities interest and dividends (+¥16.0B +12.4%), which more than offset higher deposit interest expense (+¥24.1B +206.0%), expanding net interest income to ¥234.7B. Net fee income also remained solid at ¥17.9B (YoY +¥2.1B +8.6%), and the operating margin (Ordinary Income margin) improved to 39.5% from 36.4% a year earlier (+3.1pt). Comprehensive income rose substantially to ¥500.0B (prior year ¥19.1B), with unrealized gains on securities of +¥344.7B boosting equity. ROE declined to 7.4% (prior year 8.9%), mainly due to a large increase in equity (Net Assets +¥460.5B +30.2%) expanding the denominator. Operating Cash Flow was ¥177.4B (YoY +429.1%), exceeding Net Income of ¥147.9B, indicating strong cash realization of profits.
[Revenue] Ordinary Revenue was ¥531.5B (prior year ¥485.1B, +9.6%). By segment, Banking ¥454.1B (+8.3%), Leasing ¥60.5B (+6.4%), Other ¥16.9B (+84.7%), with Banking accounting for 85.4% of revenue as the core business. On the revenue mix, investment income rose substantially to ¥272.3B (prior year ¥233.3B, +16.7%), comprising loan interest income ¥123.6B (+20.3%) and securities interest & dividends ¥144.9B (+12.4%). Funding costs rose sharply to ¥37.6B (prior year ¥12.6B, +199.2%), driven mainly by deposit interest ¥35.8B (+206.0%). Net Interest Income (investment income − funding costs) increased to ¥234.7B from ¥220.7B (+6.3%), supported by balance growth (loan balance ¥10,330.2B +3.1%, deposit balance ¥14,277.2B +3.7%) and spread expansion in a rising rate environment. Fee revenue was ¥28.5B (+7.8%), fee expense ¥10.5B (+1.3%), yielding net fee income ¥17.9B (+8.6%).
[Profitability] Ordinary Income reached ¥209.9B (prior year ¥189.6B, +10.7%). Operating expenses were ¥133.2B (prior year ¥130.5B, +2.1%), growing well below revenue growth of +9.6%, improving the cost-to-income ratio to roughly 58% (prior year ~60%). Segment profits: Banking ¥203.6B (prior year ¥192.3B, +5.9%), Leasing ¥1.1B (prior year ¥6.4B, -82.8%), with a notable drop in Leasing profits, while Other segment grew to ¥10.0B (prior year ¥7.5B, +33.3%) partially offsetting. Extraordinary items were effectively zero, pre-tax profit was ¥209.9B (prior year ¥189.7B, +10.7%), less corporate taxes ¥59.4B, resulting in Net Income ¥147.9B (prior year ¥139.5B, +6.0%). Net margin declined slightly to 27.8% (prior year 28.8%), reflecting limited decline in effective tax rate to 28.3% (prior year 29.6%) and some inability to fully absorb higher non-operating expenses. The higher growth rate of Ordinary Income (+10.7%) versus Net Income (+6.0%) indicates only limited benefit from tax rate reduction. In conclusion, normalization of interest rates expanded net interest income and continued efficient cost control drove revenue and profit growth.
The Banking segment delivered Ordinary Revenue ¥454.1B (prior year ¥419.1B, +8.3%) and segment profit ¥203.6B (prior year ¥192.3B, +5.9%), showing stable growth as the core business. Its margin edged down slightly to 44.8% (prior year 45.9%) but fee revenue growth helped offset higher funding costs. The Leasing segment increased Ordinary Revenue to ¥60.5B (prior year ¥56.8B, +6.4%) but segment profit plunged to ¥1.1B (prior year ¥6.4B, -82.8%), with margin falling to 1.8% (prior year 11.3%), suggesting deterioration in lease asset profitability or higher costs. The Other segment recorded Ordinary Revenue ¥16.9B (prior year ¥9.1B, +84.7%) and segment profit ¥10.0B (prior year ¥7.5B, +33.3%), likely driven by expansion in credit card and lending businesses. Overall, revenue concentration in Banking remains high at 85.4%, leaving room for further portfolio diversification.
[Profitability] Operating margin (Ordinary Income margin) improved to 39.5% from 36.4% (+3.1pt), while Net Margin was 27.8% (prior year 28.8%) marginally down. ROE declined to 7.4% (prior year 8.9%), primarily because Equity rose substantially to ¥1,985.7B (prior year ¥1,525.2B, +30.2%), expanding the denominator; absolute Net Income grew healthily by +6.0%. ROA (based on Ordinary Income) improved to 1.3% (prior year 1.2%), indicating better asset efficiency. [Cash Quality] Operating Cash Flow was ¥177.4B, exceeding Net Income ¥147.9B, with OCF/Net Income ratio of 1.20x, indicating strong cash backing for earnings. Accrual ratio was -0.2% (=(Net Income ¥147.9B − OCF ¥177.4B)/Total Assets ¥17,015.6B), indicating minimal divergence between accounting profit and cash. [Investment Efficiency] EPS was ¥238.88 (prior year ¥208.95, +14.3%), and BPS rose to ¥3,159.40 (prior year ¥2,392.50, +32.1%). PBR is unknown due to lack of market data, but most of the Comprehensive Income ¥500.0B is comprised of unrealized gains on securities +¥344.7B, increasing book equity. [Financial Soundness] Equity Ratio (Basel III) improved to 11.7% (prior year 9.6%, +2.1pt), well above the regulatory minimum of 8%. Loan-to-Deposit Ratio (LDR) is around 72.4% (Loans ¥10,330.2B / Deposits ¥14,277.2B), remaining conservative and indicating low liquidity risk. Interest-bearing debt ratio is 87.7% (Total Liabilities ¥15,029.9B / Total Assets ¥17,015.6B), typical for a banking business model.
Operating Cash Flow rose sharply to ¥177.4B (prior year ¥33.5B, +429.1%), exceeding Net Income ¥147.9B (OCF/Net Income 1.20x). Operating CF subtotal (before working capital changes) was ¥246.8B, and after corporate tax payments of ¥69.4B demonstrated ample cash generation. Investing Cash Flow turned negative to -¥134.1B (prior year +¥111.8B), driven by purchases of securities and consolidated subsidiary shares totaling ¥125.9B (including ¥26.0B for consolidated subsidiary share acquisitions) and capital expenditures ¥3.3B. Free Cash Flow was positive at ¥43.3B (Operating CF ¥177.4B + Investing CF -¥134.1B), down -70.2% from ¥145.3B a year earlier. Financing Cash Flow was -¥39.7B (prior year -¥25.9B), with dividends paid ¥29.7B and share buybacks ¥10.0B as main outflows. Cash and cash equivalents were ¥802.2B (prior year ¥798.7B, +0.4%), indicating only a slight increase as most FCF was allocated to dividends and buybacks. Dividend coverage of FCF is about 1.46x (Dividends ¥29.7B / FCF ¥43.3B), slightly tight but manageable. Given low capex burden for banks (CapEx ¥3.3B / Depreciation ¥11.3B = 0.29x), stable operating cash generation and strengthened equity support dividend sustainability.
Ordinary Income ¥209.9B is primarily composed of Net Interest Income ¥234.7B and Net Fee Income ¥17.9B, with Extraordinary Items nearly zero (Extraordinary Income ¥0.01B, Extraordinary Loss ¥0B), indicating high quality of earnings. The gap between Comprehensive Income ¥500.0B and Net Income ¥147.9B is mainly due to unrealized gains on other securities +¥344.7B and retirement benefit adjustments +¥4.7B, totaling +¥349.4B (after tax). Unrealized gains on securities are valuation gains tied to market prices and reflect improved market conditions, but they carry reversal risk in future rate-hike phases. Non-operating income was ¥91.0B (prior year ¥112.3B, -19.0%), which includes securities interest & dividends ¥144.9B, while other ordinary items were a negative ¥23.8B, suggesting volatility in investment returns. The accrual ratio of -0.2% is very healthy and indicates little divergence between accounting profit and cash, with no signs of profit manipulation. Since most Ordinary Income is driven by investment income and fee income and not dependent on extraordinary items, revenue sustainability is assessed as high.
Full-year guidance had targeted Ordinary Income ¥180.0B (YoY -14.2%), Net Income ¥130.0B (YoY -12.1%), EPS ¥212.83, and dividend per share ¥37.50. Actual Ordinary Income ¥209.9B exceeded the full-year forecast ¥180.0B by +16.6%, and Net Income ¥147.9B exceeded forecast ¥130.0B by +13.8%. Progress rates were 116.6% for Ordinary Income and 113.8% for Net Income, substantially outperforming plan, indicating conservative guidance. Forecast dividend ¥37.50 was also greatly exceeded by actual dividend ¥84.00 (interim ¥28.00 + year-end ¥56.00), a 2.24x overshoot. The outperformance versus guidance is attributed mainly to larger-than-assumed expansion of Net Interest Income in a rising-rate environment and recognition of securities valuation gains. Guidance for next fiscal year has not been announced, but given the outperformance and improved Equity Ratio to 11.7%, a balance of stable dividends and potential dividend increases is expected.
Dividends per share were raised significantly to ¥84.00 (prior year ¥15.00, +460.0%), comprised of an interim dividend ¥28.00 and year-end dividend ¥56.00. The Payout Ratio was 35.2% (Dividends ¥84.00 / EPS ¥238.88), a healthy level, and total dividends amounted to ¥29.7B (prior year ¥17.8B, +67.4%). Share buybacks of ¥10.0B (prior year zero) were conducted, bringing total shareholder returns to ¥39.7B. Total Return Ratio was 26.8% (Total Return ¥39.7B / Net Income ¥147.9B), conservative, indicating a priority on strengthening equity via retained earnings. FCF was ¥43.3B, covering dividends ¥29.7B with FCF-based dividend coverage of 1.46x, suggesting sustainability. However, when including share buybacks, total return coverage is 1.09x, somewhat tight, so ongoing stability of Operating CF and discipline in Investing CF will be key for dividend continuity. No formal dividend policy was stated, but the current Payout Ratio 35.2% and Total Return Ratio 26.8% suggest room for further increases.
Rapid rise in funding costs in a rising-rate environment: Deposit interest rose sharply to ¥35.8B (prior year ¥11.7B, +206.0%), and continued rate increases could compress net interest spreads. With an LDR of 72.4% and a deposit surplus structure, rising deposit funding costs could pressure earnings. Deferred tax liabilities increased to ¥282.2B (prior year ¥124.3B, +127.1%), reflecting tax effects of expanded unrealized gains on securities, but these may reverse and reduce equity if rates reverse.
Market valuation risk of the securities portfolio: Securities balance ¥5,560.4B (32.7% of Total Assets) accounts for about one-third of Total Assets, and much of Comprehensive Income ¥500.0B stems from unrealized gains on securities +¥344.7B. Rising market rates or equity price declines could reverse these valuation gains, substantially impairing equity. Accumulated deferred tax liabilities ¥282.2B could further magnify equity pressure through tax-effect channels upon reversal.
Deterioration of profitability in the Leasing segment: Leasing segment profit fell to ¥1.1B (prior year ¥6.4B, -82.8%), and margin dropped to 1.8% (prior year 11.3%). Although lease asset balances are small at ¥8.7B, continued profitability decline could hinder overall margin improvement. Disclosures on causes of leasing weakness (e.g., impairments, higher funding costs) are limited and require monitoring.
Profitability & Returns
| Metric | Company | Median (IQR) | Delta |
|---|---|---|---|
| Net Margin | 27.8% | 11.9% (7.2%–35.4%) | +15.9pt |
Net Margin 27.8% exceeds the industry median 11.9% by +15.9pt, placing the company in the upper range among peers.
Growth & Capital Efficiency
| Metric | Company | Median (IQR) | Delta |
|---|---|---|---|
| Revenue Growth (YoY) | 9.6% | 10.1% (7.3%–12.1%) | -0.5pt |
Revenue growth 9.6% is slightly below the industry median 10.1% but within the IQR, indicating a standard growth pace.
※ Source: Company compilation
Sustainability of net interest spread expansion in a rate-normalizing environment: Net Interest Income at ¥234.7B (+6.3%) was supported by loan interest growth of +20.3% which absorbed deposit interest increases of +206.0%. If elevated rates persist, further increases in loan yields could sustain Net Interest Income growth. However, if deposit funding costs accelerate, spread compression risk exists, and ALM effectiveness will determine ROE sustainability.
Majority of Comprehensive Income ¥500.0B is unrealized gains on securities, which improved the Equity Ratio to 11.7%, but a reversal in market conditions could rapidly reduce equity. The build-up of deferred tax liabilities ¥282.2B could also exacerbate equity pressure on valuation reversals. Continuous monitoring of market-value risk in the securities portfolio is required.
Payout Ratio 35.2% and Total Return Ratio 26.8% are at healthy levels, and FCF-based dividend coverage 1.46x with stable Operating CF ¥177.4B supports dividend continuity. The substantial dividend increase this year (¥84.00 vs prior year ¥15.00) was supported by equity strength and earnings growth, but future dividend flexibility should consider interest rate trends and credit cost developments.
This report is an earnings analysis document automatically generated by AI based on XBRL financial statement data. It does not constitute a recommendation to invest in any specific security. Industry benchmarks are reference information compiled by the Company from public financial statements. Investment decisions are your own responsibility; please consult a professional advisor as needed.