| Metric | Current Period | Same Period of Previous Year | YoY |
|---|---|---|---|
| Revenue | ¥392.9B | ¥359.4B | +9.3% |
| Operating Income | - | - | - |
| Ordinary Income | ¥112.3B | ¥88.9B | +26.4% |
| Net Income | ¥76.2B | ¥62.0B | +23.0% |
| ROE | 1.5% | 1.3% | - |
In Q1 of the fiscal year ending March 2027, earnings increased, with simultaneous growth in the Banking segment’s revenue and improvement in its expense ratio. Revenue (ordinary income) was ¥392.9B, up +9.3% year on year; ordinary income was ¥112.3B, up +26.4%; and net income attributable to owners of the parent was ¥75.6B, up +24.4%. EPS was ¥42.69 (¥33.86 in the same period of the previous year). In addition to the Banking segment’s ordinary income growth of +14.2%, the expense ratio (CIR) improved substantially from approximately 67% in the previous year to approximately 48% due to the containment of general and administrative expenses, supporting double-digit growth in ordinary income.
【Revenue】Revenue (ordinary income) increased by +9.3% year on year to ¥392.9B. The Banking segment led the growth at ¥306.7B (78.1% composition ratio, +14.2% year on year), while the Leasing business posted a modest increase to ¥68.1B (17.3% composition ratio, +1.4%). Other businesses outside the reportable segments (including financial instruments trading and credit card operations) declined to ¥18.1B (4.6% composition ratio, -23.4%). The growth in the Banking business was primarily attributable to an increase in net interest income, as interest on loans expanded by +26.0% year on year.
【Profit and Loss】Ordinary income was ¥112.3B (+26.4% year on year), while net income attributable to owners of the parent was ¥75.6B (+24.4%). Banking segment profit grew significantly to ¥107.97B (+32.9% year on year), whereas the Leasing business remained at ¥1.33B (-28.5%). On the expense side, general and administrative expenses declined to ¥112.7B from ¥118.4B in the previous year. The expense ratio (CIR) against gross operating profit, calculated as the aggregate of net interest income, net fees and commissions, and net other operating income (estimated at ¥235.4B, compared with ¥176.5B in the previous year), was approximately 47.9%, a substantial improvement from approximately 67.1% in the previous year. Extraordinary losses were minimal at ¥0.06B, and the impact of temporary factors was limited. Earnings increased as a result of both revenue growth and improved cost efficiency.
The Banking business was the primary source of profit, with segment profit of ¥107.97B (+32.9% year on year), driving overall profit growth. Although the Leasing business recorded higher ordinary income of ¥68.1B (+1.4%), segment profit contracted to ¥1.33B (-28.5% year on year). Other businesses not included in the reportable segments (including financial instruments trading and credit card operations) recorded lower ordinary income of ¥18.1B (-23.4%), but secured segment profit of ¥50.78B (+11.1%). The profitability of the overall portfolio remains highly dependent on the Banking business.
【Profitability】The ordinary income margin was 28.6% (¥112.35B/¥392.87B), improving from 24.7% in the previous year. The net profit margin (based on net income attributable to owners of the parent) improved to 19.2% from 16.9% in the previous year. The effective tax rate was 32.1% (income taxes of ¥36.08B/profit before tax of ¥112.29B), indicating that the reduction from ordinary income to net income was largely attributable to the tax burden.【Cash Quality】Cash and due from banks increased by +8.1% year on year to ¥1188.5B, while deposits increased by +2.9% to ¥6562.3B, indicating the accumulation of stable funding. Borrowings declined by -16.9% to ¥3585.5B, reducing reliance on market-based funding.【Investment Efficiency】ROE was 1.5% (quarterly basis, not annualized), while Owners’ Equity increased by +10.4% year on year to ¥5170.9B.【Financial Soundness】The equity ratio (balance sheet basis) was 6.7%, while the regulatory BIS capital ratio was 6.6%, improving by +0.4pt from 6.2% in the previous year. The loan-to-deposit ratio was 77.5%, slightly below 79.6% in the previous year. Against the increase in deposits, loans remained broadly flat at ¥5083.5B (+0.14%).
As cash flow statement data has not been disclosed, funding trends are analyzed based on changes in the balance sheet. Deposits increased by +2.9% year on year to ¥6562.3B, indicating the stable accumulation of the funding base. While the funds raised were invested in securities, which increased by +10.6% to ¥1230.4B, loans remained broadly flat at ¥5083.5B (+0.14%), indicating that asset management was focused on securities investment. Cash and due from banks increased by +8.1% to ¥1188.5B, strengthening the liquidity buffer. Meanwhile, borrowings declined to ¥3585.5B (¥4314.7B in the previous year, -16.9%), reducing reliance on market-based funding. Overall, the funding structure is becoming more conservative, with stable deposit funding being used to increase securities investments.
The majority of profit consisted of recurring income, while extraordinary losses were extremely limited at ¥0.06B, with no indication that temporary factors materially affected earnings. Banking business income comprised net interest income of ¥180.3B, net fees and commissions of ¥51.7B, and net other operating income of ¥3.4B, indicating a certain degree of diversification away from reliance on interest income. The gap between ordinary income of ¥112.3B and net income attributable to owners of the parent of ¥75.6B was approximately 33%, primarily attributable to the effective tax rate of 32.1% rather than non-recurring factors. Meanwhile, comprehensive income was ¥536.5B, substantially exceeding net income. Most of the difference was attributable to an increase of ¥462.9B in valuation differences on securities, which represents an unrealized component arising from market fluctuations and therefore warrants attention.
Progress against the full-year plan is generally on track. Ordinary income was ¥112.35B against the full-year forecast of ¥440.0B, representing progress of 25.5%. Net income attributable to owners of the parent was ¥75.6B against the full-year forecast of ¥300.0B, representing progress of 25.2%. Both are broadly in line with the simple quarterly progress benchmark of 25%. EPS progress was also 25.2% at ¥42.69/¥169.39, consistent with progress in net income, indicating that results were tracking the plan as of Q1. There were no revisions to either the earnings forecast or the dividend forecast during the quarter.
The full-year dividend forecast is ¥53 per share, resulting in a payout ratio of 31.3% against forecast EPS of ¥169.39. On April 1, 2026, the Company conducted a 5-for-1 split of its common shares. Accordingly, dividends for the current period (fiscal year ending March 2026), on a post-split basis, were ¥20 at the end of Q2, ¥28 at fiscal year-end, and ¥48 in total. The previous year’s annual dividend of ¥100 was based on the pre-split basis and therefore corresponds to ¥20 on a post-split basis; on a split-adjusted basis, this represents a dividend increase. There was no revision to the dividend forecast during the quarter.
Capital buffer (BIS capital ratio): Although the BIS capital ratio improved to 6.6% from 6.2% in the previous year, its buffer remains limited relative to the generally cited regulatory benchmark of 8%; the status of the capital base requires monitoring.
Risk of a reversal in valuation differences on securities: Valuation differences on other securities increased to ¥462.9B from ¥89.5B in the previous year, supporting comprehensive income and equity. However, if interest rates rise or equity markets reverse, a decline in valuation differences could become a source of fluctuations in equity.
Increase in funding costs: Interest on deposits increased by +74.6% from ¥24.98B in the previous year to ¥43.62B, with funding costs rising faster than interest on loans (+26.0%). Depending on the future interest rate environment, this may affect margins.
Profitability and Returns
| Metric | Company | Median (IQR) | Delta |
|---|---|---|---|
| Net Profit Margin | 19.4% | – | – |
| Comparable median data for the Company’s net profit margin within the industry is limited. In absolute terms, however, the level is favorable at approximately 19%. |
Growth and Capital Efficiency
| Metric | Company | Median (IQR) | Delta |
|---|---|---|---|
| Revenue Growth Rate (Year on Year) | 9.3% | – | – |
| Revenue growth of 9.3% represents a solid level even within the typical revenue growth range for the banking industry. |
※Source: Compiled by the Company
The expense ratio (CIR) improved substantially from approximately 67% in the previous year to approximately 48%, reflecting both the expansion of gross operating profit and the containment of general and administrative expenses. Whether this structural improvement in cost efficiency will continue in subsequent periods is a key point of focus.
Progress against the full-year plan was approximately 25% for both ordinary income and net income, consistent with standard quarterly progress and indicating a start in line with the plan.
Interest on deposits increased significantly by +74.6% year on year. The impact of rising funding costs on future margins and trends in subsequent quarters will be closely watched.
This report is an earnings analysis document automatically generated by AI based on XBRL earnings summary data. It does not constitute a recommendation to invest 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 with a professional as necessary.
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