| Metric | Current Period | Same Period of Previous Year | YoY |
|---|---|---|---|
| Revenue | ¥2266.5B | ¥1806.9B | +25.4% |
| Operating Income | - | - | - |
| Ordinary Income | ¥519.5B | ¥362.5B | +43.3% |
| Net Income | ¥385.7B | ¥442.0B | -12.7% |
| ROE | 3.1% | 3.6% | - |
Although ordinary income posted substantial growth, net income declined due to the reversal of the tax benefit recorded in the previous year. The results therefore indicate that earnings quality is moving toward normalization. Revenue (gross operating profit) increased substantially to ¥2,266.5B, up +25.4% year on year, while ordinary income rose to ¥519.5B, up +43.3%. In contrast, net income attributable to owners of the parent was ¥384.7B (¥442.0B in the previous year), down -13.0%. The decline in net income was primarily attributable to the reversal of the previous year’s negative income taxes of ¥75.7B (reflecting the recognition of a tax benefit). The effective tax rate normalized to 26.0% in the current period, and the divergence from growth at the ordinary-income level can be viewed as attributable to a temporary factor.
【Revenue】Gross operating profit was ¥1,043.96B (¥870.37B in the previous year, +19.9%), increasing in both the corporate and individual businesses. Corporate sales generated gross operating profit of ¥141.07B (¥73.55B in the previous year, +91.8%), while Retail Banking generated ¥145.68B (¥71.30B in the previous year, +104.3%), both showing substantial expansion. In contrast, Principal Transactions declined sharply to ¥9.94B (¥151.12B in the previous year, -93.4%), highlighting the volatility of divisions more exposed to market conditions.
【Profit and Loss】Ordinary income was ¥519.52B (¥362.49B in the previous year, +43.3%), while profit before tax was ¥521.0B (up +42.2% year on year). Extraordinary items were limited, consisting of extraordinary income of ¥1.62B and extraordinary losses of ¥0.16B, indicating that current-period profit was primarily generated by recurring income. Meanwhile, net income attributable to owners of the parent was limited to ¥384.66B (down -13.0% year on year). The divergence between the growth rates of ordinary income and net income was attributable to the normalization of the effective tax rate (26.0% in the current period versus a negative effective tax rate in the previous year), and can be viewed as the reversal of a temporary tax-effect factor. Overall, the results represent higher revenue and higher profit at the ordinary-income level, but higher revenue and lower profit on a net-income basis, with the latter primarily attributable to the temporary normalization of tax effects.
Total segment profit was ¥508.66B (¥354.66B in the previous year, +43.4%), with both the corporate and individual businesses broadly contributing to profit growth. Corporate Sales increased to ¥105.57B (¥44.87B in the previous year, +135.3%), while Structured Finance rose to ¥62.64B (¥36.45B in the previous year, +71.8%). In contrast, Principal Transactions swung to a loss of ¥△2.18B (a profit of ¥136.76B in the previous year), resulting in divergent performance among divisions within the corporate business. In the individual business, Retail Banking increased substantially to ¥55.41B (¥6.70B in the previous year), and APLUS rose to ¥25.88B (¥10.34B in the previous year, +150.3%), while Other Individual declined to ¥22.70B (¥36.50B in the previous year, -37.8%). Within the Overseas Business / Securities Investments / Other category, Securities Investments recorded the largest segment profit at ¥153.10B (¥21.35B in the previous year). This figure included ¥84.9B (¥37.4B in the previous year) equivalent to negative goodwill associated with the additional acquisition of equity-method affiliates (The Shimanegin Bank and Fukushima Bank), indicating a significant contribution from a temporary factor.
【Profitability】The ordinary income margin (ordinary income/revenue) was 22.9%, improving by approximately +286bp from 20.1% in the previous year. The net income margin (on a basis attributable to owners of the parent) was 17.0%, narrowing by approximately -749bp from 24.5% in the previous year. This divergence was attributable to the normalization of tax effects, while underlying profitability at the ordinary-income level itself improved. 【Cash Flow Quality】The expense ratio (CIR; expenses/gross operating profit) was 43.6%, improving by approximately -668bp from 50.3% in the previous year, indicating progress in efficiency improvements. Credit-related expenses were ¥80.4B (¥78.3B in the previous year), remaining broadly flat, with no sharp expansion in credit costs observed. 【Investment Efficiency】ROE was 3.1%, explained by a DuPont decomposition of a 17.0% net income margin × 0.9% total asset turnover × 20.9x financial leverage. The high level of financial leverage reflects the characteristics of the banking business. 【Financial Soundness】The BIS capital adequacy ratio was 4.8%, declining by -20bp from 5.0% in the previous year. The loan-to-deposit ratio (loans/deposits) was 83.1%, slightly lower than 84.1% in the previous year, with liquidity remaining within an appropriate range.
Balance sheet trends indicate an expansion in asset deployment accompanied by an increase in market-based funding to support it. Securities increased to ¥4,699.3B (¥4,005.5B in the previous year, +¥693.8B, +17.3%), while loans increased to ¥11T2,594.8B (¥10T9,456.4B in the previous year, +¥3,313.8B, +3.0%), indicating expanded asset deployment. Meanwhile, cash and due from banks declined to ¥4T6,664.5B (¥4T7,875.0B in the previous year, -¥1,121.1B, -2.3%), suggesting that surplus funds were reallocated to securities and loans. On the funding side, deposits increased to ¥13T5,537.9B (¥13T216.7B in the previous year, +¥5,321.2B, +4.1%), while negotiable certificates of deposit declined to ¥3T9,605.3B (¥4T3,368.1B in the previous year, -¥3,756B, -8.7%). Market-based funding such as repo funding (+¥2,015B, +22.9%) and short-term bonds (+¥931B, +88.3%) increased. Total assets expanded to ¥25T6,975.4B (¥24T7,413.6B in the previous year, +¥9,561.8B, +3.9%), clearly illustrating a structure in which expanded asset deployment was financed through market-based funding.
Current-period profit was primarily generated by recurring income, with extraordinary items limited to extraordinary income of ¥1.62B and extraordinary losses of ¥0.16B. The divergence between ordinary income and net income resulted from the reversal of negative income tax expenses of ¥75.71B in the previous year (reflecting the recognition of a tax benefit). The effective tax rate normalized to 26.0% in the current period (income taxes of ¥135.25B / profit before tax of ¥521.0B). Consequently, ordinary income increased by +43.3%, while net income attributable to owners of the parent declined by -13.0%; the divergence can be viewed as the disappearance of a temporary tax-effect factor. Comprehensive income was ¥406.77B (¥646.27B in the previous year, -37.1%). The difference from net income of ¥385.72B included positive factors such as an increase of +¥44.9B in deferred hedge gains and losses, while the deterioration in valuation differences on securities to -¥23.6B (from +¥22.1B in the previous year) contributed to the decline in comprehensive income. The divergence between net income and comprehensive income was attributable to market factors, namely changes in the fair value of other securities.
Although no revisions were made to the earnings forecast during the quarter, a revision to the dividend forecast was announced, reflecting a review of the dividend policy accompanying the introduction of an interim dividend. While no specific dividend amount was disclosed, the policy shift appears to be intended to spread the timing of dividend payments over the full year.
Declining capital headroom: The BIS capital adequacy ratio was 4.8%, down -20bp from 5.0% in the previous year, indicating that a thin capital buffer remains in place.
Increasing reliance on market-based funding: Short-term bonds increased by +88.3%, while repo funding (PayablesUnderRepurchaseAgreements) increased by +22.9%. Greater reliance on market funding may increase the risk of fluctuations in interest rates and funding costs at the time of rollover.
Earnings volatility in market-related segments: Segment profit from Principal Transactions swung from a profit of ¥136.76B in the previous year to a loss of ¥△2.18B in the current period, confirming the segment’s high sensitivity to changes in market conditions.
Profitability and Returns
| Metric | Company | Median (IQR) | Delta |
|---|---|---|---|
| Net Income Margin | 17.0% | – | – |
| Comparison data with the industry median for net income margin is insufficient, and therefore only the company’s figure is provided. |
Growth and Capital Efficiency
| Metric | Company | Median (IQR) | Delta |
|---|---|---|---|
| Revenue Growth Rate (Year on Year) | 25.4% | – | – |
| Industry median data is also unavailable for the revenue growth rate, and only the company’s growth rate is shown. |
※Source: Compiled by the Company
The ordinary income margin was 22.9%, improving by approximately +286bp from 20.1% in the previous year, driven by the decline in the expense ratio (CIR) to 43.6% from 50.3% in the previous year. An improvement in underlying earnings capacity through efficiency gains has been confirmed.
The decline in net income (-13.0%) resulted from the reversal of the previous year’s temporary tax-effect factor (income taxes of -¥75.7B), as the effective tax rate normalized to 26.0%. The divergence from the increase in ordinary income (+43.3%) should be viewed as the normalization of a tax-related factor rather than a temporary fluctuation in earnings.
By segment, the Securities Investments category was the largest contributor to profit growth, including ¥84.9B equivalent to negative goodwill associated with the additional acquisition of equity-method affiliates. Meanwhile, Principal Transactions swung from profit to loss, indicating a change in the composition of earnings sources.
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 responsibility, and after consulting with a professional as necessary.
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