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| Metric | Current Period | Same Period of Previous Year | YoY |
|---|---|---|---|
| Revenue | ¥82.21B | ¥65.96B | +24.6% |
| Operating Income | - | - | - |
| Ordinary Income | ¥19.08B | ¥11.47B | +66.3% |
| Net Income | ¥13.42B | ¥7.15B | +87.5% |
| ROE | 5.1% | 3.2% | - |
Executive Summary
For the nine months ended Q3 of the fiscal year ending March 2026, the Company posted substantial increases in revenue and profit, primarily due to the expansion of interest income in the banking business. Consolidated ordinary income amounted to ¥82.21B (+24.6% YoY), ordinary income was ¥19.08B (+66.3%), and net income attributable to owners of the parent was ¥13.18B (+92.6%). Positive operating leverage, driven by the expansion of interest income in the banking business and restrained expense growth, led the improvement in profit margins. However, funding costs surged by +92.1% YoY, making the sustainability of the interest spread a key focus going forward.
Factors Affecting Results
【Revenue】Consolidated ordinary income increased 24.6% YoY to ¥82.21B. The banking business led overall performance with ¥70.55B (85.8% of the total, +27.2% YoY), while the leasing business generated ¥11.65B (14.2% of the total, +10.9% YoY). In the banking business, interest on loans increased 32.4% YoY to ¥25.77B, contributing to the overall expansion of interest income.
【Profit and Loss】Ordinary income increased 66.3% YoY to ¥19.08B, while net income attributable to owners of the parent increased 92.6% YoY to ¥13.18B, significantly outpacing revenue growth. Segment profit in the banking business increased 70.2% YoY to ¥18.60B, with a profit margin of 26.4%, whereas the leasing business recorded ¥0.47B, down 14.9% YoY, with a profit margin of 4.1%; thus, it achieved higher revenue but lower profit. An extraordinary loss of ¥0.92B, including an impairment loss of ¥0.72B related to operating and idle real estate held by the banking business, was recorded as a temporary factor, but the divergence between ordinary income and net income was limited. In conclusion, the consolidated Group achieved higher revenue and profit overall, while the banking business posted higher revenue and profit and the leasing business posted higher revenue but lower profit.
Segment Analysis
The banking business is the core contributor to Group profit, generating ordinary income of ¥70.55B (85.8% of the total, +27.2% YoY) and segment profit of ¥18.60B (+70.2% YoY, 26.4% profit margin). The leasing business recorded higher ordinary income of ¥11.65B (14.2% of the total, +10.9% YoY), but segment profit declined 14.9% YoY to ¥0.47B, with a profit margin of 4.1%; revenue growth has not translated into profit growth. The Group’s profitability is highly dependent on the banking business, while the leasing business makes only a limited contribution as a diversification benefit.
Key Financial Indicators
【Profitability】The ordinary income margin improved substantially to 23.2% from 17.4% in the same period of the previous year, while the net profit margin rose to 16.0% from 10.4%. ROE was 5.1%. Although total asset turnover remained low, reflecting the large asset base of the banking business, the improvement in the net profit margin was the primary driver of higher profitability.【Cash Flow Quality】Comprehensive income of ¥48.07B significantly exceeded net income of ¥13.42B, with net unrealized gains on securities of ¥27.24B serving as the primary driver. It should be noted that, separately from accounting profit, a substantial portion is subject to market fluctuations.【Investment Efficiency】The banking business’s segment profit margin of 26.4% significantly exceeded the leasing business’s 4.1%, indicating that banking is the center of capital allocation.【Financial Soundness】The equity ratio was 4.2%, below the general benchmark for banks. Loans of ¥298.87B compared with deposits of ¥473.72B resulted in a loan-to-deposit ratio of approximately 63.1%, indicating a deposit-surplus structure. Securities of ¥203.69B accounted for approximately 32.7% of total assets, indicating relatively high sensitivity to interest rates and fluctuations in market prices.
Cash Flow Analysis
As the Company did not disclose a statement of cash flows for this period, funding trends are analyzed based on changes in the balance sheet. Cash and deposits decreased to ¥937.81B from ¥1,653.62B in the same period of the previous year, apparently reflecting the increase in securities to ¥203.69B and the transfer of funds to loans of ¥298.87B. Deposits declined slightly to ¥473.72B from ¥488.48B in the same period of the previous year, while loans increased from ¥259.95B to ¥298.87B, indicating a change in the loan-to-deposit balance. Net assets increased by ¥43.31B to ¥264.30B from ¥220.89B in the same period of the previous year, with improvements in net unrealized gains on securities, in addition to accumulated profits, contributing to the strengthening of the capital base.
Quality of Earnings
Recurring earning power is supported by operating leverage resulting from the expansion of interest income and expense control in the banking business, and can be considered sound. Meanwhile, ¥0.72B of the ¥0.92B extraordinary loss represented an impairment loss on operating and idle real estate held by the banking business, a temporary expense that increased from ¥0.35B in the same period of the previous year. Fee income, equivalent to non-operating income, remained solid at ¥9.30B compared with ¥8.42B in the previous year. Comprehensive income of ¥48.07B significantly exceeded net income of ¥13.42B, with the primary reason for the difference being the market-driven fluctuation in net unrealized gains on securities of ¥27.24B. Accordingly, net income and ordinary income should be given priority as indicators of recurring earning power.
Earnings Forecasts and Guidance
Ordinary income of ¥19.08B for the nine months ended Q3 represents progress of 90.9% against the full-year ordinary income forecast of ¥21.00B, substantially exceeding the standard 75% benchmark. Net income attributable to owners of the parent had already reached ¥13.18B against the forecast of ¥13.00B, representing progress of 101.4% and exceeding the forecast. No revision has been made to the earnings forecasts, and trends in interest expense, securities valuation, and credit-related costs in Q4 are expected to determine the full-year outcome.
Shareholder Returns
The Q2 dividend was ¥110 per share. On October 1, 2025, the Company conducted a 10-for-1 stock split of its common shares. Accordingly, the full-year forecast annual dividend of ¥230 per share on a pre-split basis is equivalent to ¥23 per share on a post-split basis. The payout ratio against the full-year forecast EPS of ¥57.58 on a post-split basis is approximately 39.9%, indicating that the dividend is adequately supported by earnings. Because mechanically comparing figures based on different stock-split bases may result in an overstated payout ratio, consistent comparison on a post-split basis is necessary.
Risk Factors
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Concentration of earnings in the banking business: The banking business accounts for 85.8% of ordinary income and the majority of profit. Accordingly, fluctuations in interest spreads and credit-related costs directly affect consolidated results.
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Increase in funding costs: Funding costs increased +92.1% YoY, outpacing the +37.4% growth in interest income. There is a risk of margin compression in an environment of rising interest rates.
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Equity capital level and sensitivity to market fluctuations: The equity ratio of 4.2% is below the general benchmark for banks, while securities account for approximately 32.7% of total assets. Consequently, the impact of fluctuations in interest rates and share prices on equity capital is relatively significant.
Industry Benchmark (For Reference; Compiled by the Company)
Industry Benchmark (bank)
Profitability and Return
| Metric | Company | Median (IQR) | Delta |
|---|---|---|---|
| Net Profit Margin | 16.3% | – | – |
The Company’s net profit margin of 16.3% has limited comparable data against the industry median, but represents a substantial improvement from the same period of the previous year in absolute terms.
Growth and Capital Efficiency
| Metric | Company | Median (IQR) | Delta |
|---|---|---|---|
| Revenue Growth Rate (YoY) | 24.6% | – | – |
The Company’s revenue growth rate of 24.6% represents strong growth reflecting the expansion of interest income in the banking business.
※Source: Compiled by the Company
Key Takeaways from the Financial Results
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Progress against the full-year forecasts for ordinary income and net income has reached 90.9% and 101.4%, respectively, indicating strong progress as of Q3.
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While the banking business’s segment profit margin of 26.4% is driving consolidated earnings, the leasing business recorded a 14.9% decline in segment profit despite higher revenue, indicating a widening profitability gap between the businesses.
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Funding costs are increasing faster than interest income, and comprehensive income, including net unrealized gains on securities, is experiencing substantial fluctuations. Accordingly, the sustainability of the profit margin expansion depends on interest-rate and market conditions.
This report is an earnings analysis document automatically generated by AI based on XBRL earnings release data. It does not recommend investment 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 discretion and responsibility, after consulting with a professional as necessary.
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