| Metric | This Period | Prior Year Same Period | YoY |
|---|---|---|---|
| Revenue / Net Sales | ¥166.5B | ¥96.3B | +33.7% |
| Operating Income | ¥152.1B | ¥84.7B | +79.5% |
| Ordinary Income | ¥611.1B | ¥411.1B | +48.6% |
| Net Income | ¥139.2B | ¥85.8B | +62.3% |
| ROE | 2.4% | 1.8% | - |
For the full year ended March 2026, the consolidated results recorded significant profit growth across all key metrics: Revenue ¥166.5B (vs prior year +¥70.2B, +72.8%), Operating Income ¥152.1B (vs prior year +¥67.4B, +79.5%), Ordinary Income ¥611.1B (vs prior year +¥200.0B, +48.6%), and Net Income attributable to owners of parent ¥421.0B (vs prior year +¥127.5B, +43.4%). As a bank holding company with its core consolidated subsidiary, Daiyon Hokuetsu Bank, Ltd., the results were driven by increased investment income in a rising interest rate environment (¥1,375.7B, YoY +¥22.5B, +19.5%) and expanded fee income (¥403.9B, YoY +¥43.0B, +11.9%). The operating margin improved by 3.5pt to 91.4% (prior year 87.9%), and EPS rose to ¥160.59 (YoY +43.4%). Conversely, the bank segment’s general and administrative expenses increased to ¥645.9B (YoY +¥19.3B, +3.1%), and the expense ratio (expenses / gross operating profit) deteriorated to approximately 66.5% (prior year approx. 60.5%), re‑raising efficiency concerns. Comprehensive income was substantially positive at ¥1,038.5B, with unrealized gains on securities ¥319.1B, deferred hedge gains/losses ¥194.1B, and actuarial gain adjustments on retirement benefits ¥104.2B contributing to an increase in equity.
[Revenue] Revenue (operating revenue) expanded significantly to ¥166.5B (YoY +72.8%). The banking segment (consolidated basis) led the performance with ordinary revenues of ¥2,244.2B (YoY +40.2%). Investment income increased to ¥1,375.7B (YoY +¥224.6B, +19.5%), as rising lending yields and lagging deposit rates improved lending spreads (loan balance ¥5,872,093百万円, YoY +¥291,504百万円, +5.2%). Net fee income (fee income ¥403.9B - fee expenses ¥111.3B = ¥292.6B) was also robust, supported by branch distribution fees and foreign exchange and related services. Securities business revenue was ¥58.6B (YoY +14.0%), and the leasing business secured revenue of ¥223.5B (YoY +5.0%), indicating growth momentum across the portfolio.
[Profitability] Operating Income of ¥152.1B (YoY +79.5%) was supported by top-line expansion and a significant improvement in bank segment profit to ¥567.1B (YoY +¥315.8B, +125.5%). Conversely, leasing segment profit plunged to ¥0.5B (YoY -¥10.1B, -95.7%), creating an imbalance in portfolio earnings. Ordinary Income of ¥611.1B (YoY +48.6%) absorbed a deterioration in non‑operating profit and loss to -¥11.5B (from a net gain of ¥0.6B the prior year) due to the expansion of core business income. Extraordinary items recorded a net loss of ¥13.7B (including impairment losses of ¥14.0B), resulting in profit before income taxes of ¥597.5B and income taxes of ¥176.4B, leading to Net Income attributable to owners of parent of ¥421.0B (YoY +43.4%). Bank segment general and administrative expenses of ¥645.9B rose 3.1% YoY, and the expense ratio (G&A / gross operating profit) worsened to approximately 66.5% (prior year approx. 60.5%), making efficiency improvements such as digitalization and branch optimization key future issues. In conclusion, revenue and profit growth were achieved on the back of favorable interest rate conditions and expanding fee income, but cost efficiency and stabilization of market‑related income are critical for sustainable growth.
Banking segment profit ¥567.1B (prior year ¥351.3B, +61.5%) was mainly driven by expanded investment income (net interest income ¥900.8B, prior year ¥726.2B, +24.0%). Leasing recorded revenue of ¥223.5B (YoY +5.0%) but segment profit sharply declined to ¥0.5B (prior year ¥10.6B, -95.7%) due to declining yields on lease receivables and rising expenses. Securities segment profit was ¥24.1B (prior year ¥19.5B, +23.7%), supported by an improved equity market environment. Other segments (credit guarantees, credit card, etc.) contributed ¥162.7B (prior year ¥109.4B, +48.8%), resulting in an increased concentration of earnings in the banking segment across the portfolio.
[Profitability] Operating margin 91.4% (prior year 87.9%, +3.5pt) reflects a low SG&A ratio of 8.6%, however, within the banking operations the expense ratio (G&A / gross operating profit) is a more realistic metric and worsened to approximately 66.5% (prior year approx. 60.5%). ROE 7.4% (prior year 5.9%, +1.5pt) improved due to a large increase in net income but remains mid‑range relative to peers. Bank account net interest income ¥900.8B (prior year ¥726.2B) benefited from rising lending yields, and the loan-to-deposit ratio of approximately 69% (loans ¥5,872,093百万円 / deposits ¥8,513,335百万円) is within an appropriate range, mitigating liquidity risk. [Cash Quality] Operating Cash Flow / Net Income -11.80x reflects large negative working capital driven by changes in loans and securities, a warning sign on cash quality. The accrual ratio ((Net Income - Operating CF) / Total Assets) is +5.0%, indicating weak conversion of profits into cash. [Investment Efficiency] CAPEX / Depreciation 0.64x suggests restrained capex, but bank growth investment focuses on IT and securities/loan balance sheet management, making PPE‑based assessment incomplete. [Financial Soundness] Equity Ratio 5.2% (prior year 4.3%, +0.9pt) improved due to accumulation of comprehensive income. Disclosure of BIS capital ratio is not provided, but a sharp increase in deferred tax liabilities to ¥241.96B (prior year ¥35.66B, +578.5%) due to wider unrealized securities valuation differences heightens equity sensitivity to market changes. Current ratio 196.6% and quick ratio 194.6% are favorable, and the LDR of about 69% helps control maturity mismatch risk. Long‑term borrowings were reduced to ¥10.9B (prior year ¥19.8B, -44.9%), lowering reliance on market funding.
Operating Cash Flow was -¥4,966.8B (prior year -¥2,557.9B, deterioration -94.2%), reflecting loan increases (+¥291.50B? Note: original shows +2,915.0億円) typical of bank characteristics and intra‑period changes in securities operations resulting in cash outflows. Investment Cash Flow was +¥3,894.5B (prior year +¥1,865.5B), led by maturities and sales of securities, and capital expenditure was contained at -¥36.9B. Financing Cash Flow was -¥135.3B (prior year -¥94.3B), with dividends paid of ¥139.2B and no share buybacks. FCF (Operating CF + Investing CF) was -¥1,072.3B, indicating that dividends and capex were not covered by internal cash; balance sheet management led to large cash flow variability. Depreciation was ¥57.2B and Operating CF before working capital changes was -¥4,857.4B, while working capital changes (mainly loans, securities, interbank) were a large outflow of -¥4,914.6B, making OCF/EBITDA -23.73x, a figure reflecting banking characteristics. Cash and cash equivalents at period end were ¥2,024,290百万円 (YoY -¥120,754百万円), but liquidity is considered adequately maintained.
Of Ordinary Income ¥611.1B, core business income (investment income + net fee income) was the main driver, while other ordinary items turned negative, suggesting cyclical factors. Non‑operating profit/loss was -¥11.5B (prior year +¥0.6B), mainly due to ¥11.5B of non‑operating expenses. Extraordinary items were a net loss of ¥13.7B (including ¥14.0B of impairment losses), a temporary factor but carrying the risk of additional impairment associated with future restructuring. Comprehensive income ¥1,038.5B far exceeded net income ¥421.0B, aided by unrealized gains on securities ¥319.1B, deferred hedge gains/losses ¥194.1B, and actuarial gain adjustments on retirement benefits ¥104.2B. These are capital gains tied to improved market conditions and are less recurring. Operating CF / Net Income -11.80x indicates weak cash realization of profits, dominated by balance sheet factors (loans and securities operations). The accrual ratio +5.0% shows profits lack cash backing, leaving room for improvement in earnings quality.
Full‑year guidance projects Ordinary Income ¥736.0B (YoY +20.4%), Net Income attributable to owners of parent ¥500.0B (YoY +18.8%), and EPS ¥190.51. Progress rates are 83.0% for Ordinary Income and 84.2% for Net Income, indicating results have already exceeded guidance at a significant pace. Dividend guidance is annual ¥38 (interim undecided, year‑end assumed ¥38), implying a payout ratio of about 20%, a conservative level. Guidance factors in continued favorable interest rate conditions and spread expansion, while assuming improvements in CIR and stabilization of market‑related income. Company disclosures state the guidance is "based on information currently available and reasonable assumptions," and recognize the risk that changes in interest rates and market conditions could alter results.
Annual dividend was ¥117 (interim ¥81, year‑end ¥36; simple summation not applicable due to stock splits executed Oct 2024 and Oct 2025), with a payout ratio of approximately 40% (company disclosure, includes dividends to trust‑based stock compensation schemes and E‑Ship trusts on a total return basis), within an appropriate range. Total dividends paid were ¥139.2B (prior year ¥83.6B, +66.5%), reflecting the large increase in net income. No share buybacks were conducted; returns are dividend‑only. FCF was -¥1,072.3B, and dividend FCF coverage is -3.32x, indicating insufficient coverage on a cash basis. However, accumulation of comprehensive income ¥1,038.5B and improvement in Equity Ratio to 5.2% expand medium‑to‑long‑term return capacity, although CIR improvement and FCF conversion are key for sustainable returns.
Spread compression risk from lagging deposit rate increases in a rising interest rate environment: Lending yield increases may precede deposit rate resets, which could be temporary but may narrow lending spreads when deposit rates rise. The LDR of approximately 69% is appropriate, but timing and magnitude of deposit rate pass‑through will determine profitability.
Increased volatility of market‑related income and sensitivity of equity: Of comprehensive income ¥1,038.5B, valuation differences totaling ¥617.4B depend on market conditions (rates, equities), and the sharp rise in deferred tax liabilities (+578.5%) increases equity sensitivity to market moves. Future rate rises or equity declines could reverse valuation gains.
Sharp profit decline in leasing and concentration risk toward banking: Leasing segment profit dropped to ¥0.5B (YoY -95.7%), and portfolio earnings are concentrated in banking (segment profit ¥567.1B, 75.1% of total). Deterioration in the banking earnings environment could materially affect consolidated profits.
Profitability & Returns
| Metric | Company | Median (IQR) | Delta |
|---|---|---|---|
| Operating Margin | 91.4% | 14.6% (7.2%–39.4%) | +76.7pt |
| Net Profit Margin | 83.6% | 11.9% (7.2%–35.4%) | +71.7pt |
The company’s operating and net profit margins substantially exceed industry medians, reflecting differences in consolidated structure for a bank holding company and the definition of revenue (operating revenue). For banking reality, the expense ratio of approximately 66.5% is a more appropriate efficiency indicator.
Growth & Capital Efficiency
| Metric | Company | Median (IQR) | Delta |
|---|---|---|---|
| Revenue Growth Rate (YoY) | 33.7% | 10.1% (7.3%–12.1%) | +23.7pt |
Revenue growth outperformed the industry median by +23.7pt, driven by expanded investment income in a rising interest rate environment.
※ Source: Company aggregation
Expansion of investment income in a rising rate environment and accumulation of comprehensive income: Net interest income ¥900.8B (YoY +24.0%) and comprehensive income ¥1,038.5B point to potential equity buildup and increased return capacity. Next‑fiscal‑year guidance (Ordinary Income +20.4%) assumes continuation of favorable rate conditions.
Sustained deterioration in expense ratio (CIR) and delayed efficiency improvements: Worsening to about 66.5% (prior year approx. 60.5%) indicates slow progress on digitalization and branch optimization. Improving profit margins will require balancing headcount/G&A control with top‑line growth.
Volatility of market‑related income and the assumptions behind dividend sustainability: Valuation differences comprising ¥617.4B of comprehensive income are cyclical, and the sharp rise in deferred tax liabilities (+578.5%) embeds market‑risk exposure. While a payout ratio near 40% is appropriate, FCF coverage of -3.32x means dividends rely on earnings, equity capacity, and regulatory capital constraints (Equity Ratio).
This report is an AI‑generated financial analysis document based on XBRL earnings disclosure 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 responsibility; consult a professional advisor as needed.