| Indicator | Current Period | Prior Year Period | YoY |
|---|---|---|---|
| Revenue | ¥1690.9B | ¥1363.0B | +24.0% |
| Operating Income | - | - | - |
| Ordinary Income | ¥427.7B | ¥312.4B | +36.9% |
| Net Income | ¥277.7B | ¥211.4B | +31.4% |
| ROE | 5.9% | 5.0% | - |
For the fiscal year ended March 2026, Ordinary Revenue (Revenue) was ¥1,690.9B (YoY +¥327.9B +24.0%), Ordinary Income was ¥427.7B (YoY +¥115.3B +36.9%), and Net Income attributable to owners of the parent was ¥277.7B (YoY +¥66.3B +31.4%), resulting in a strong revenue and profit performance. Centered on the banking business, expansion of net interest income and growth in fee income led revenue increases, while improvements in expense ratio supported profit expansion. Special losses of ¥28.9B (mainly impairment losses of ¥28.4B) were recorded but were absorbed by the large increase at the ordinary stage, and net profit margin improved to 16.4% from 15.5% in the prior year (+0.9pt). Comprehensive income was ¥598.5B, well above Net Income, and an increase in unrealized gains on securities of ¥272.8B boosted equity.
[Revenue] Ordinary Revenue grew strongly to ¥1,690.9B (YoY +24.0%). The banking business accounted for ¥1,334.3B, 78.9% of the total, driven by expansion of net interest income. Investment income from funds (interest and dividends) was ¥789.8B (YoY +¥150.8B +23.6%), funding costs were ¥168.1B (YoY +¥78.0B +86.5%), resulting in net interest income of ¥621.7B (YoY +¥72.8B +13.3%). Fee and commission income was also robust at ¥270.6B (YoY +¥29.5B +12.2%), and non-interest income including other operating income remained firm. The leasing business recorded ¥272.2B and Other ¥84.5B, and the revenue concentration toward the banking business continued. The loan-to-deposit ratio was 79.6% (loans ¥5,076.2B ÷ deposits ¥6,378.5B), within the appropriate range (70-90%), and securities holdings declined to ¥1,112.6B (YoY -14.9%) as portfolio rebalancing progressed.
[Profit & Loss] Ordinary expenses were ¥1,263.3B (YoY +¥212.7B +20.2%), kept below revenue growth. SG&A was contained at ¥470.8B (YoY +¥30.5B +6.9%), and the expense ratio (SG&A ÷ Ordinary Revenue) improved to 27.9% from 32.4% a year earlier (-4.5pt), reflecting effective cost control. Credit-related costs including provision for loan losses were ¥20.8B, with no large change from the prior year and credit costs remained stable. From Ordinary Income of ¥427.7B (YoY +36.9%), after deducting Special Losses of ¥28.9B (mainly impairment losses of ¥28.4B) and recording corporate taxes of ¥121.1B, Net Income was ¥277.7B (YoY +31.4%). The special losses were temporary, and strengthened ordinary-stage earnings and expense-ratio improvement supported profit growth. In conclusion, the company achieved both revenue and profit growth.
The Banking Business reported Ordinary Revenue of ¥1,334.3B and Segment Profit of ¥401.9B, maintaining a high segment profit margin of 30.1%. Interest income of ¥790.5B (of which loan interest was ¥540.0B) formed the revenue base, and after absorbing funding costs such as deposit interest of ¥115.7B, net interest income remained solid. The Leasing Business recorded Ordinary Revenue of ¥272.2B and Segment Profit of ¥9.6B, a segment profit margin of 3.5%, lower than banking but with steady lease demand contributing to income stability. Other (securities trading, credit card business, etc.) posted Ordinary Revenue of ¥84.5B and Segment Profit of ¥130.3B, with an extremely high profitability likely driven by trading income from financial derivatives. The banking business generates the bulk of group profits, complemented by leasing and other businesses.
[Profitability] Ordinary Income margin improved to 25.3% (from 22.9% prior year, +2.4pt), and Net Profit margin improved to 16.4% (from 15.5% prior year, +0.9pt), driven by improved expense efficiency. The expense ratio (SG&A ÷ Ordinary Revenue) improved to 27.9% from 32.4% (-4.5pt), an excellent level for banking CIR. The banking NIM (Net Interest Margin) remained low at 1.22%, indicating margin pressure from the interest rate environment, but growth in fee income and expense control complemented margins. [Cash Quality] Operating Cash Flow / Net Income was -6.85x, and Operating Cash Flow / EBITDA (Operating Income + Depreciation) was -4.09x, indicating weak cash conversion of earnings. Period-end fluctuations in loans, securities, and deposits typical of banks have swung OCF widely; increases in loans of +¥723.5B, decreases in securities of -¥1,945.0B, and increases in deposits of +¥236.0B were primary drivers of balance-sheet composition changes. Capex / Depreciation was high at 4.5x, and construction in progress rose sharply to ¥162.7B (from ¥8.1B prior year, +¥154.6B), indicating large-scale investments underway. [Investment Efficiency] ROE was 5.9% (per financial statements), improved from 4.8% prior year, but below the 8% benchmark, leaving room to improve capital efficiency. Total asset turnover was 0.022x, typical for banking, with limited scope for asset efficiency improvement. [Financial Soundness] The regulatory disclosed Equity Ratio (capital adequacy) rose to 6.3% (from 5.5% prior year) but did not reach the 8% level, and capital buffers are not abundant. Net assets increased to ¥4,732.8B (from ¥4,235.5B, +¥497.3B), aided by a large increase in valuation and translation adjustments to ¥781.7B (from ¥468.9B, +¥312.8B). The loan-to-deposit ratio was 79.6%, within the optimal range (70-90%), indicating no excessive reliance on external funding. Borrowings decreased to ¥4,314.7B (from ¥5,080.1B, -¥765.4B -15.1%), reducing market funding dependence. Goodwill balance was minimal at ¥6.7B, with a goodwill/EBITDA ratio of 0.01x, indicating very low impairment risk.
Operating Cash Flow was -¥1,903.2B (deterioration of -¥1,932.0B from prior year +¥28.8B), turning sharply negative. Operating Cash Flow subtotal (before working capital changes) was -¥1,782.5B; balance changes such as increases in loans +¥723.5B, decreases in securities -¥1,945.0B, and increases in deposits +¥236.0B swung OCF significantly, with period-end asset-liability composition changes typical of banking being the main cause. Investing Cash Flow was +¥2,249.8B (up ¥1,171.5B from prior year +¥1,078.3B), largely due to recoveries from securities operations funding, and financed capex of -¥171.2B (expanding from -¥20.8B prior year, -¥150.4B). Free Cash Flow was +¥346.6B, and after dividend payments of ¥71.8B and share buybacks of ¥30.1B, cash increased by ¥244.7B, bringing Cash and Cash Equivalents to ¥1,094.5B (from ¥1,070.1B prior year, +¥24.4B). Financing Cash Flow was -¥101.9B (mainly dividends -¥71.8B, buybacks -¥30.1B), with repayment of borrowings reducing funding dependence. Depreciation was ¥38.0B while capex was 4.5x depreciation, and the build-up of construction in progress suggests future increases in depreciation burden. Although OCF is largely negative due to bank-specific asset allocation changes, positive investing CF secured FCF and there are no major cash-flow constraints.
Net Income of ¥277.7B was largely generated from Ordinary Income of ¥427.7B, and one-off items were limited to Special Losses of ¥28.9B (of which impairment losses were ¥28.4B). Special gains were negligible at ¥0.0B, indicating no reliance on non-recurring gains. Non-operating gains/losses were limited, and divergence between Ordinary Income and Pre-tax Income was small, indicating business-driven earnings. Comprehensive Income of ¥598.5B greatly exceeded Net Income, with other comprehensive income items such as unrealized gains on securities ¥272.8B, deferred hedge gains/losses ¥6.1B, and actuarial adjustments related to retirement benefits ¥41.9B boosting equity. The negative OCF / Net Income ratio (-6.85x) is due to period-end fluctuations in loans, deposits, and securities inherent to banking and does not indicate impairment of earnings quality. The accrual ratio ((Net Income - OCF) ÷ Total Assets) is approximately 2.9%, which is acceptable, and divergence between accounting profit and cash generation is limited. Expansion of Ordinary Revenue and improved expense ratio have raised margins, one-off impacts are minor, and earnings quality is judged to be high.
For the fiscal year ending March 2027, guidance forecasts Ordinary Income of ¥410.0B (YoY -4.1%) and Net Income attributable to owners of the parent of ¥280.0B (YoY +0.8%), reflecting a cautious outlook for Ordinary Income. Compared with the prior year’s large increase in Ordinary Income (+36.9%), the projected decline likely incorporates assumptions of persistently low NIM, normalization of credit costs, and bottoming out of expense ratio. EPS is forecast at ¥158.09 (prior year ¥153.22, +¥4.87), nearly unchanged, and the dividend forecast is ¥25 (post-split basis; pre-split equivalent ¥125), indicating a stable dividend policy. Progress against the prior year’s results shows Ordinary Income at 104.3% (actual ¥427.7B ÷ forecast ¥410.0B), suggesting conservative assumptions in the plan.
Current-period dividends totaled ¥240 (interim ¥100, year-end ¥140 on a pre-split basis), with a payout ratio of 31.1% (per financial statements), an appropriate level. Note that this is on a pre-split basis; on a post-split basis it corresponds to interim ¥20 and year-end ¥28, totaling ¥48. Share buybacks of ¥30.1B were executed, and the Total Return Ratio ((Total Dividends + Share Buybacks) ÷ Net Income attributable to owners of the parent) is approximately 35.1%. With total dividends of ¥71.8B and Free Cash Flow of ¥346.6B, the FCF coverage ratio (Dividends ÷ FCF) is 20.7%, indicating ample buffer and a high sustainability of dividends. The dividend forecast for March 2027 is ¥25 (post-split basis, pre-split equivalent ¥125), planning to maintain dividend levels. With an Equity Ratio of 6.3% and limited capital buffer, the company demonstrates a flexible shareholder return posture combining dividends and buybacks; monitoring return capacity based on future profit levels and FCF trends will be important.
Risk of margin compression from prolonged low NIM: Net Interest Margin remains low at 1.22%, and if constraints in the interest rate environment persist, growth in net interest income may stall. Although the loan-to-deposit ratio is 79.6% (appropriate), absence of improvement in interest spreads could slow top-line growth and reduce profit margins.
Risk of CIR deterioration from large-scale investments: Construction in progress rose sharply to ¥162.7B (from ¥8.1B prior year, over +1,900%), and capex is significantly above depreciation at 4.5x. Delays in bringing invested assets into service or increases in depreciation burden could raise the expense ratio (currently 27.9%) and pressure profit margins.
Constraint on growth capacity due to limited capital buffer: An Equity Ratio of 6.3% is below 8%, indicating limited capital buffer. Execution space for growth strategies involving large loan increases or M&A could be constrained, impeding efforts to improve ROE. Additionally, rapid declines in valuation and translation adjustments during rate or market deterioration could further reduce the Equity Ratio, posing additional risk.
Profitability & Returns
| Indicator | Company | Median (IQR) | Delta |
|---|---|---|---|
| Net Profit Margin | 16.4% | 11.9% (7.2%–35.4%) | +4.5pt |
Net Profit Margin exceeds the industry median of 11.9% by +4.5pt, supported by a low expense ratio underpinning superior profitability.
Growth & Capital Efficiency
| Indicator | Company | Median (IQR) | Delta |
|---|---|---|---|
| Revenue Growth Rate (YoY) | 24.0% | 10.1% (7.3%–12.1%) | +13.9pt |
Revenue growth rate surpasses the industry median of 10.1% by +13.9pt, driven by expansion of net interest income and fee income.
※ Source: Company aggregation
The result stands out for strong top-line growth and margin improvement due to expense ratio reduction; Net Profit Margin of 16.4% outperforms the industry median by +4.5pt, reflecting a highly profitable structure. Revenue growth of +24.0% considerably exceeds the industry median of +10.1%, driven by expanded net interest income and rising fee income. The expense ratio improved to 27.9% from 32.4% (-4.5pt), demonstrating effective cost control.
NIM remained low at 1.22%, and the interest rate environment is constraining spreads, but stable non-interest income and expense management have complemented margins. Guidance for the next fiscal year is conservative with Ordinary Income -4.1%, reflecting assumptions of stagnant NIM and normalization of credit costs. Operating Cash Flow was -¥1,903.2B, largely due to bank-specific asset-liability composition changes, but Investing Cash Flow of +¥2,249.8B secured FCF of +¥346.6B, and cash balances increased even after dividends and buybacks.
With an Equity Ratio of 6.3% and limited capital buffer, the rapid rise in construction in progress (+¥154.6B) and large-scale capex (4.5x depreciation) imply risk of higher future depreciation and CIR increase. Payout Ratio of 31.1% is at an appropriate level, and the Total Return Ratio is approximately 35%; monitoring return capacity in light of future profit levels and FCF trends is important. Goodwill is minimal at ¥6.7B, indicating good balance-sheet quality, but ROE of 5.9% is below the 8% benchmark and further improvement in capital efficiency is required.
This report was automatically generated by AI analyzing XBRL financial statement disclosure data. It does not constitute a recommendation to invest in any specific security. Industry benchmarks are company-compiled reference information based on public financial statements. Investment decisions are your responsibility; please consult professionals as appropriate before making any investment decisions.