| Metric | Current Period | Same Period of Previous Year | YoY |
|---|---|---|---|
| Revenue | ¥39075.4B | ¥32539.3B | +20.1% |
| Operating Income | - | - | - |
| Ordinary Income | ¥11179.3B | ¥7085.4B | +57.8% |
| Net Income | ¥8466.0B | ¥5814.2B | +45.6% |
| ROE | 3.5% | 2.4% | - |
In Q1 FY2026, both ordinary income and net income increased significantly, driven by growth in net interest income and market-related income, as well as an expansion in equity-method investment gains. Revenue (ordinary revenues) was ¥39,075.4B (¥32,539.3B in the previous year, YoY +20.1%), ordinary income was ¥11,179.3B (¥7,085.4B in the previous year, YoY +57.8%), and net income (consolidated net income) was ¥8,466.0B (¥5,814.2B in the previous year, YoY +45.6%). Of this, net income attributable to owners of the parent was ¥8,094.3B (YoY +48.2%). EPS (basic, based on net income attributable to owners of the parent) was ¥71.77 (¥47.55 in the previous year, YoY +50.9%). The main factors behind the earnings increase were growth in equity-method investment gains and gains (losses) related to securities, as well as the continued net reversal of credit-related expenses. Since these items are linked to market conditions and the credit cycle, it should be noted that the sustainability of the earnings growth rate is susceptible to the external environment going forward.
【Revenue】Revenue (ordinary revenues) was ¥39,075.4B, up +20.1% year on year. Interest income was ¥23,366.7B (¥20,225.7B in the previous year, +15.5%), income from fees and commissions was ¥6,821.3B (¥5,667.3B in the previous year, +20.4%), and income from specified transactions (trading) was ¥1,333.2B (¥805.6B in the previous year, +65.5%), indicating growth in both interest and non-interest income. In terms of net operating profit by business group, the Global CIB Business Group recorded ¥1,802.4B (¥1,093.6B in the previous year, +64.8%), while the Markets Business Group recorded ¥1,486.4B (¥809.1B in the previous year, +83.7%). Market-related businesses were the primary driver of revenue growth.
【Profit and Loss】Ordinary income was ¥11,179.3B (YoY +57.8%), while net income (consolidated net income) was ¥8,466.0B (YoY +45.6%; of which ¥8,094.3B was attributable to owners of the parent, YoY +48.2%). The main factors behind the earnings increase were equity-method investment gains of ¥2,615.6B (¥1,579.5B in the previous year, +65.6%), gains (losses) related to securities of ¥989.2B (¥303.1B in the previous year, +226.4%), and a net reversal of credit-related expenses of ¥1,032.3B (¥836.2B in the previous year). These three items combined were equivalent to approximately 4割 of ordinary income. General and administrative expenses (G&A) increased by +13.1% to ¥9,005.5B; however, gross profit growth (+29.0%) outpaced this increase, improving the expense ratio (expenses/gross profit) to 53.5% from 60.3% in the previous year, an improvement of 680bp. Extraordinary items were limited, consisting of extraordinary income of ¥4.27B and extraordinary losses of ¥3.93B, and were not a factor in the divergence from profit before tax. Revenue and profit both increased.
Net operating profit for the total reporting segments was ¥8,205.5B (¥5,422.5B in the previous year, YoY +51.3%), with all business groups reporting higher earnings. The Corporate Banking Business Group was the largest in absolute terms at ¥2,019.3B (¥1,473.7B in the previous year, +37.0%). In terms of growth rates, the Global CIB Business Group recorded ¥1,802.4B (+64.8%) and the Markets Business Group ¥1,486.4B (+83.7%), indicating particularly strong growth in market-related and investment banking operations. The Corporate and Wealth Management Business Group recorded ¥1,332.1B (¥869.0B in the previous year, +53.3%), the Retail and Digital Business Group ¥852.5B (¥663.8B in the previous year, +28.4%), the Global Commercial Banking Business Group ¥989.9B (¥871.1B in the previous year, +14.8%), and the Fiduciary Services Business Group ¥401.7B (¥369.0B in the previous year, +8.6%). Other adjustment items were △¥678.7B (△¥726.8B in the previous year), representing a reduction in the deficit. From Q1 of the current fiscal year, the method of allocating gross profit and expenses among business groups was changed, and the results for the same period of the previous year have also been retrospectively restated using the revised method for comparison.
【Profitability】The ordinary income margin (ordinary income/revenue) was 28.6%, improving by +684bp from 21.8% in the previous year. The net profit margin (consolidated net income/revenue) was 21.7%, improving by +379bp from 17.9% in the previous year. The expense ratio (expenses/gross profit) was 53.5%, down 680bp from 60.3% in the previous year, indicating an improving cost-efficiency trend. 【Cash Flow Quality】Comprehensive income was ¥11,407.4B. The difference of ¥1,941.4B from net income (consolidated net income) of ¥8,466.0B was primarily attributable to positive valuation differences on securities of ¥2,620.5B and foreign currency translation adjustments of ¥1,334.8B, partially offset by deferred hedge gains (losses) of △¥1,172.3B. 【Investment Efficiency】ROE was 3.5% (quarterly result based on net income attributable to owners of the parent), and basic EPS was ¥71.77 (¥47.55 in the previous year, +50.9%). The total asset turnover ratio remains low due to the scale of the banking-sector balance sheet. 【Financial Soundness】The equity ratio was 5.6%, remaining broadly unchanged from 5.5% in the previous year. The BIS-based Capital Adequacy Ratio was 5.2%, unchanged from the previous year. The loan-to-deposit ratio was 56.7% (55.9% in the previous year), indicating that a conservative liquidity position has been maintained.
As a cash flow statement has not been disclosed, funding trends are analyzed based on changes in the balance sheet. Cash and due from banks decreased by △¥9,410.9B (△10.4%) from the end of the previous fiscal year, while trading assets increased by +¥5,618.7B (+14.0%) and securities increased by +¥2,418.0B (+2.8%), suggesting a reallocation from highly liquid assets toward market-related assets. On the funding side, certificates of deposit increased by +¥1,704.2B (+9.7%) and bonds increased by +¥1,390.1B (+8.8%), while repurchase agreements (repo funding) decreased by △¥4,403.8B (△11.2%), indicating a shift from short-term market funding toward diversified medium- to long-term funding. Loans increased slightly by +¥654.9B (+0.5%), while deposits decreased slightly by △¥2,501.9B (△1.0%), with the loan-to-deposit ratio maintained at the conservative level of 56.7%.
The current period’s earnings composition was centered on recurring sources of income, including interest income, fee income, and trading income. Extraordinary items were limited, consisting of extraordinary income of ¥4.27B and extraordinary losses of ¥3.93B, and were not a factor that materially distorted quarterly earnings. At the ordinary income level, however, three items—equity-method investment gains of ¥2,615.6B (approximately 23% of ordinary income), gains (losses) related to securities of ¥989.2B (approximately 9%), and the net reversal of credit-related expenses of ¥1,032.3B (approximately 9%)—accounted for approximately 4割 of ordinary income in total. These items are susceptible to market conditions, the performance of investees, and the credit cycle. The difference between ordinary income of ¥11,179.3B and net income (consolidated net income) of ¥8,466.0B was primarily attributable to income taxes of ¥2,716.7B (effective tax rate of 24.3%) and net income attributable to non-controlling interests of ¥371.8B. This difference can be explained by the tax and minority shareholder structure, and structural distortion is limited. Overall, the earnings increase in the current period had a relatively high degree of reliance on non-core factors with strong market sensitivity, and this should be taken into account when assessing earnings quality.
The full-year dividend forecast is ¥96 per share, with no revision as of the current quarter. Based on the expected number of shares excluding treasury shares at the end of the period (approximately 112.6B shares), total annual dividends are estimated at approximately ¥1兆805B. If Q1 net income attributable to owners of the parent of ¥8,094.3B is simply annualized, provisional net income would be approximately ¥3兆2,377B, resulting in a calculated payout ratio of approximately 33.4%. However, this is a provisional figure based on simple annualization of quarterly results, and because the full-year earnings forecast has not been disclosed, the actual payout ratio may fluctuate depending on quarterly performance going forward. Net assets were ¥24兆1,820.8B, having accumulated from the end of the previous fiscal year, indicating a stable capital base supporting dividend payments.
Continued low level of core net interest margin (NIM): Although interest income of ¥23,366.7B and interest expenses of ¥14,543.3B resulted in growth in net interest income, the core net interest margin based on the scale of loans and deposits remains low. The growth in interest income may therefore be significantly dependent on volume and favorable market conditions.
Reliance on non-core income: Equity-method investment gains of ¥2,615.6B, gains (losses) related to securities of ¥989.2B, and the net reversal of credit-related expenses of ¥1,032.3B, which contributed to higher ordinary income, together accounted for approximately 4割 of ordinary income and could reverse due to changes in market conditions and the credit cycle.
Volatility associated with the expansion of market positions: Trading assets increased by +¥5,618.7B (+14.0%), while trading liabilities increased by +¥4,514.5B (+14.1%), indicating an expansion in market-related positions. During periods of market volatility, the impact of valuation gains and losses on these positions on earnings may increase.
Profitability and Returns
| Metric | Company | Median (IQR) | Delta |
|---|---|---|---|
| Net Profit Margin | 21.7% | – | – |
| The company’s net profit margin of 21.7% is calculated based on consolidated net income, and comparative data indicating its relative position within the industry is currently limited. |
Growth and Capital Efficiency
| Metric | Company | Median (IQR) | Delta |
|---|---|---|---|
| Revenue Growth Rate (Year on Year) | 20.1% | – | – |
| Revenue growth of +20.1% reflects growth in interest and market-related income, while industry comparison data is limited. |
※Source: Compiled by the Company
Quality of earnings growth: Of the +57.8% increase in ordinary income, contributions from equity-method investment gains, gains (losses) related to securities, and the net reversal of credit-related expenses—items with high sensitivity to market conditions—accounted for approximately 4割 of ordinary income. To understand the sustainability of the earnings growth rate, it is necessary to consider the structural positioning of these non-core factors.
Improved cost efficiency: The expense ratio (expenses/gross profit) was 53.5%, down 680bp from 60.3% in the previous year. The fact that gross profit growth (+29.0%) exceeded the increase in expenses (+13.1%), resulting in greater cost absorption, can be viewed as one indication of an improvement in the quality of the earnings structure.
Changes in liquidity and funding composition: While maintaining the conservative loan-to-deposit ratio of 56.7%, funding diversification is progressing, as funding through certificates of deposit and bonds has expanded while repo funding has contracted.
This report is an earnings analysis document automatically generated by AI based on XBRL earnings summary data. It does not recommend investment in any specific security. Industry benchmarks are reference information compiled by the Company based on publicly disclosed earnings data. Investment decisions should be made at your own responsibility, and after consulting with professionals as necessary.
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