| Indicator | This Period | Prior Year Same Period | YoY |
|---|---|---|---|
| Revenue / Net Sales | ¥704.2B | ¥587.6B | +19.8% |
| Operating Income / Operating Profit | - | - | - |
| Ordinary Income | ¥158.0B | ¥104.9B | +50.6% |
| Net Income | ¥113.0B | ¥79.4B | +42.3% |
| ROE | 7.0% | 5.2% | - |
For the fiscal year ended March 2026, Revenue (Ordinary Revenue) was ¥704.2B (YoY +¥116.6B +19.8%), Ordinary Income was ¥158.0B (YoY +¥53.1B +50.6%), and Net Income attributable to owners of the parent was ¥113.0B (YoY +¥33.6B +42.3%). All four key metrics posted substantial year-on-year increases. Expansion of investment income in the core banking operations (interest on loans ¥331.1B, interest and dividends on securities ¥88.2B) led the performance. The operating profitability (Ordinary Income / Ordinary Revenue) improved to 22.4% from 17.8% a year earlier (+4.6pt), and the net margin rose to 16.1% from 13.5% (+2.6pt). ROE increased to 7.0% (prior year 5.1%), achieving capital efficiency above historical levels.
[Revenue] Ordinary Revenue of ¥704.2B (YoY +19.8%) was driven by a large increase in investment income. Interest income expanded to ¥434.2B (prior year ¥338.6B, +28.2%), comprising interest on loans ¥331.1B (prior year ¥269.7B, +22.8%) and interest and dividends on securities ¥88.2B (prior year ¥59.1B, +49.3%). While deposit balances were 2兆6,389.6B (YoY -1.8%), loans were 2兆111.2B (YoY +3.4%), indicating more aggressive asset-side deployment. Fee and commission income was ¥81.6B (prior year ¥71.1B, +14.8%), and other operating income was ¥154.7B (prior year ¥144.2B, +7.3%). By segment, Banking was ¥517.1B (composition ratio 73.4%), Leasing ¥123.0B (17.5%), and Other ¥64.2B (9.1%), with Banking remaining the core business.
[Profit & Loss] Ordinary expenses increased to ¥546.2B (prior year ¥482.7B, +13.2%), but top-line growth outpaced cost increases, improving margins. Funding costs rose sharply to ¥56.2B (prior year ¥23.7B, +137.1%), reflecting higher deposit interest of ¥51.0B (prior year ¥17.2B, +196.5%) amid a rising rate environment. Fee and commission expenses were ¥27.9B, operating expenses ¥254.3B (prior year ¥246.1B, +3.3%) were relatively contained, while other operating expenses ¥184.1B (prior year ¥155.1B, +18.7%) increased. After recording Ordinary Income of ¥158.0B (operating margin 22.4%), special gains/losses were net +¥3.2B (special gains ¥9.2B, special losses ¥6.0B), resulting in profit before tax of ¥161.2B. After income taxes of ¥48.1B (effective tax rate 29.8%), Net Income attributable to owners of the parent was ¥113.0B (net margin 16.1%). In summary, the company captured tailwinds from rising rates to realize substantial expansion of recurring core earnings.
The Banking segment reported Revenue of ¥517.1B (composition ratio 73.4%) and segment profit of ¥138.7B, yielding a margin of 26.8% and providing the largest profit contribution to the group. The Leasing segment reported Revenue of ¥123.0B (17.5%) and segment profit of ¥3.9B (margin 3.2%), remaining low-margin with room to improve capital efficiency. Other businesses (securities business, credit card business, etc.) reported Revenue of ¥64.2B (9.1%) and segment profit of ¥22.5B (margin 35.0%), indicating high margins and effective revenue supplementation through diversification. The high profitability of the Banking segment drives the group, underscoring concentration in the core business.
[Profitability] Operating margin of 22.4% improved +4.6pt from 17.8% a year earlier; net margin of 16.1% rose +2.6pt from 13.5%, reflecting expanded investment income in a rising-rate environment and funding cost management. [Investment Efficiency] ROE 7.0% improved +1.9pt from 5.1%, exceeding the company’s historical performance, aided by an increase in total asset turnover to 0.024 (prior year 0.020). [Financial Soundness] Equity Ratio 5.5% improved +0.4pt from 5.1% but remains relatively low for a banking business, leaving room to strengthen capital buffers. Loan-to-Deposit Ratio (LDR) is approximately 76%, within a healthy range, and maturity mismatch risk is contained. [Cash Quality] Operating Cash Flow / Net Income is -9.01x, a large negative, primarily due to asset increases: loans +¥669.2B and securities +¥416.0B, reflecting working capital outflows from asset accumulation and a structural characteristic of a banking asset expansion phase.
Operating Cash Flow (OCF) was -¥1,017.0B (prior year +¥172.5B), turning sharply negative. Operating cash flow subtotal (before working capital changes) was -¥970.9B, driven mainly by loans +¥669.2B and securities +¥416.0B asset increases. Cash outflows increased with expanded fund deployment in bank accounts, and after corporate tax payments of ¥46.2B, OCF was -9.01x relative to Net Income of ¥113.0B, indicating a decline in cash conversion. Investing Cash Flow was -¥483.5B (prior year -¥1,065.9B); tangible capital expenditures were ¥13.3B and intangible asset investment ¥4.9B, showing restrained real investment with changes mainly in financial asset composition. Financing Cash Flow was -¥27.6B, driven by dividend payments of ¥28.5B and effectively zero share buybacks, representing shareholder returns outflows. Free Cash Flow was -¥1,500.4B, negative, but this reflects an asset expansion cycle in banking and liquidity is secured by the funding base (deposits ¥2兆6,389.6B).
Against Ordinary Income of ¥158.0B, special gains/losses were net +¥3.2B (special gains ¥9.2B, special losses ¥6.0B), minor in scale, indicating profit growth is based on recurring core operations. Non-operating income (other operating income ¥154.7B, other ordinary income ¥154.7B) is material but within natural bounds given the financial business profile; no profit inflation from one-off items is observed. The gap between Ordinary Income ¥158.0B and Net Income ¥113.0B is about -28.5%, mainly due to income taxes of ¥48.1B (effective tax rate 29.8%). The OCF/Net Income -9.01x is a signaling concern for quality, but this stems from working capital increases associated with loans and securities accumulation and is a structural feature of a banking asset expansion phase rather than earnings manipulation. The accrual ratio appears high at -10.0x, but this too results from working capital variation and does not indicate estimation bias in expenses/revenues; overall, the quality of earnings remains sound and driven by recurring activities.
The full-year company plan calls for Revenue ¥800.0B, Ordinary Income ¥175.0B, and Net Income attributable to owners of the parent ¥120.0B. Actuals reached ¥704.2B (achievement rate 88.0%), ¥158.0B (90.3%), and ¥113.0B (94.2%), respectively, falling slightly short of plan. The shortfall in Ordinary Income is likely mainly due to deposit interest of ¥51.0B (prior year ¥17.2B, +196.5%) exceeding assumptions and thus higher-than-expected funding costs. Net Income maintained a relatively high achievement rate and landed close to plan. For next fiscal year assumptions, it will be necessary to reassess the continuation of deposit beta increases and loan yield trends and to scrutinize assumptions for net interest margin.
Annual dividend is ¥170 (interim ¥70, year-end ¥100), with Payout Ratio 28.4% (same as prior year), maintaining a sustainable level. Share buybacks on a cash-flow basis were effectively zero (-¥0.0B), so shareholder returns are dividend-centric. Total dividend payments were ¥28.5B (prior year ¥18.2B), expanded in line with profit growth. Given negative FCF of -¥1,500.4B, the FCF / Dividend Payments metric is -52.7x and appears insufficient on the surface, but bank FCF is heavily influenced by changes in invested assets, limiting the metric’s effectiveness. With an Equity Ratio of 5.5% and somewhat thin capital buffers, a Payout Ratio of 28.4% represents an appropriate balance between retained earnings and returns, and continued stable dividends linked to profit growth are expected.
Risk of rising funding costs in a rising-rate environment: Deposit interest surged to ¥51.0B (prior year ¥17.2B, +196.5%), compressing spreads. With LDR around 76% and high loan dependence, continued deposit beta increases will inevitably compress net interest margin, with estimated quantitative impact on profitability of approximately -3–5%.
Relative vulnerability of capital buffers: Equity Ratio 5.5% improved from 5.1% but remains at a minimal level for banking. There is residual risk of capital erosion under interest rate or credit stress. Financial leverage of 17.09x (net assets / liabilities conversion) is high by business characteristics, limiting shock absorption capacity.
Continued large negative Operating Cash Flow: OCF of -¥1,017.0B is -9.01x relative to Net Income of ¥113.0B, with continued cash consumption from loan and securities accumulation. As long as the asset expansion cycle persists, cash outflows will continue, and funding stability (deposit reliance) will be key to liquidity management.
Profitability & Return
| Indicator | Company | Median (IQR) | Delta |
|---|---|---|---|
| Net Margin | 16.1% | 11.9% (7.2%–35.4%) | +4.2pt |
The company’s net margin exceeds the industry median by 4.2pt, achieving high profitability for a regional bank.
Growth & Capital Efficiency
| Indicator | Company | Median (IQR) | Delta |
|---|---|---|---|
| Revenue Growth Rate (YoY) | 19.8% | 10.1% (7.3%–12.1%) | +9.8pt |
The company’s revenue growth rate exceeds the industry median by 9.8pt, driven by expanded investment income in a rising-rate environment, leading top-line growth well above peers.
※Source: Company compilation
Expansion of investment income in a rising-rate environment drove profit growth, delivering Ordinary Income +50.6% and Net Income +42.3%. At the same time, deposit interest increased +196.5%, raising funding costs and pressuring spreads. Going forward, net interest margin trends and progress in diversifying revenue via non-interest income such as fees will be key to sustainable profit growth.
Operating Cash Flow was a large negative -¥1,017.0B, with loans +¥669.2B and securities +¥416.0B causing continued cash consumption. While this is a structural feature of a banking asset expansion phase, with an Equity Ratio of 5.5% and relatively thin buffers, the stability of the funding base (deposits ¥2兆6,389.6B) and accumulation of retained earnings are important to strengthen capital and secure liquidity.
This report is an earnings analysis document automatically generated by AI analyzing XBRL earnings disclosure data. It is not a recommendation to invest in any specific security. Industry benchmarks are reference information compiled by the company based on public financial statements. Investment decisions are your own responsibility; consult professionals as needed before making investment decisions.