| Metric | Current Period | Same Period Previous Year | YoY |
|---|---|---|---|
| Revenue | ¥38.82B | ¥23.67B | +63.9% |
| Operating Income | - | - | - |
| Ordinary Income | ¥8.42B | ¥5.72B | +47.1% |
| Net Income | ¥4.69B | ¥4.17B | +12.4% |
| ROE | 1.7% | 1.5% | - |
Although ordinary income increased substantially by 47.1%, net income growth was limited to 12.4%. The key point of this earnings report is that, despite higher revenue and income, the increase in the effective tax rate compressed the growth in net income. Revenue (ordinary income) was ¥38.82B (+63.9% YoY), ordinary income was ¥8.42B (+47.1%), and net income (net income attributable to owners of the parent) was ¥4.69B (+12.4%). The primary drivers of higher revenue and income were expanded interest income and fee income in the Banking segment. However, income taxes increased substantially relative to pre-tax income (+48.7%), causing net income growth to fall significantly below ordinary income growth.
【Revenue】Revenue (ordinary income) of ¥38.82B increased substantially by +63.9% YoY. The core Banking Business led growth with ¥35.45B (+78.2%, 91.3% of total), while the Credit Guarantee Business surged to ¥0.21B (+360.9%, small in scale). In contrast, the Leasing Business declined to ¥2.71B (-17.7%), while Other Businesses were nearly flat at ¥0.48B (+1.3%).
【Profit and Loss】Ordinary income increased by 47.1% to ¥8.42B, while pre-tax income increased by 48.7% to ¥8.50B, representing nearly identical rates of growth. However, income taxes increased substantially to ¥3.81B (¥1.55B in the previous year, +146.5%), causing the effective tax rate to rise to 44.8% (27.0% in the previous year) and limiting net income growth to 12.4%. Extraordinary income consisted solely of ¥0.08B in extraordinary gains, with no extraordinary losses. Accordingly, the gap between ordinary income and net income was primarily attributable to the increase in the tax burden. In conclusion, the Company achieved higher revenue and income, but the increase in the tax burden constrained growth in net income.
The Banking Business generated ordinary income of ¥35.45B (+78.2%) and segment profit of ¥8.93B (+45.3%), accounting for 91.3% of total ordinary income and driving overall performance. The Leasing Business recorded a decline in ordinary income to ¥2.71B (-17.7%), while segment profit was approximately ¥0.003B and remained small in scale. The Credit Guarantee Business experienced a sharp increase in ordinary income to ¥0.21B (+360.9%), whereas segment profit was ¥0.31B (¥0.31B in the previous year, -2.9%), remaining nearly flat. Other Businesses recorded ordinary income of ¥0.48B (+1.3%) and segment profit of ¥0.14B (-2.1%). The majority of revenue and profit is concentrated in the Banking Business, resulting in a structure in which overall performance is significantly affected by trends in banking interest income and fee income.
【Profitability】The ordinary income margin was 21.7%, down 2.5pt from 24.2% in the previous year, while the net income margin was 12.1%, down 5.5pt from 17.6% in the previous year. This was attributable to expenses and the tax burden increasing at a faster pace than revenue growth (+63.9%). 【Cash Flow Quality】Comprehensive income was limited to ¥1.44B, ¥3.25B below net income of ¥4.69B. Negative other comprehensive income, including net unrealized gains (losses) on securities of -¥1.71B and deferred hedge gains (losses) of -¥1.22B, created the gap from net income. 【Investment Efficiency】Loans and bills discounted were ¥4,315.98B (+0.2% YoY), while deposits were ¥5,170.30B (-0.1% YoY), both nearly flat. The loan-to-deposit ratio was 83.5%, up 0.2pt from 83.2% in the previous year, representing no significant change. Securities holdings increased 1.5% YoY to ¥980.33B. 【Financial Soundness】The equity ratio (net assets/total assets) was 4.9%, compared with 5.0% in the previous year. The BIS capital ratio was 4.8%, down 0.1pt from 4.9% in the previous year. ROE was 1.71%, improving from 1.49% in the previous year on a quarterly basis.
Cash and deposits were ¥161.81B, a 25.6% decrease from ¥217.46B in the previous year. Meanwhile, loans (+0.2%) and securities (+1.5%) increased, suggesting a shift of funds from liquid assets to investment assets. Deposits were ¥5,170.30B and remained nearly flat (-0.1%), indicating a stable funding base. Liabilities related to securities lending (market-based funding) were ¥14.75B, down 66.3% from ¥43.80B in the previous year, indicating reduced reliance on short-term market-based funding. Treasury stock increased to ¥5.897B, a substantial increase from ¥1.419B in the previous year, thereby contributing to a reduction in equity.
The increase in ordinary income was primarily driven by recurring income, including growth in net interest income and fee income. Extraordinary items consisted solely of ¥0.08B in extraordinary gains, with no extraordinary losses, indicating a limited impact from non-recurring factors. Meanwhile, pre-tax income increased by 48.7% to ¥8.50B, nearly in line with ordinary income, whereas income taxes increased substantially by 146.5% to ¥3.81B (¥1.55B in the previous year), causing the effective tax rate to rise to 44.8% (27.0% in the previous year). This increase in the tax burden was the primary factor compressing net income growth to +12.4%, substantially below ordinary income growth of +47.1%. In addition, comprehensive income was ¥1.44B, ¥3.25B below net income of ¥4.69B. The valuation losses reflected in the deterioration of net unrealized gains (losses) on securities and hedge gains (losses) represent a source of equity volatility that should be considered when assessing earnings quality.
Progress toward the full-year forecast was 30.6% for revenue (ordinary income), at ¥38.82B/¥127.00B; 27.9% for ordinary income, at ¥8.42B/¥30.20B; and 24.1% for net income, at ¥4.69B/¥19.50B. Compared with the standard Q1 progress rate of 25%, ordinary income was slightly ahead, while net income remained approximately at the same level. Although the earnings forecast was revised during the quarter, the dividend forecast was unchanged. Full-year ordinary income is expected to increase 32.4% YoY, with the level of the effective tax rate and the direction of other comprehensive income and losses serving as key factors in progress from Q2 onward.
A 3-for-1 stock split of common shares was implemented effective April 1, 2026. Because the dividend forecast of ¥41 for the fiscal year ending March 2027 is presented on a post-split basis, while the previous fiscal year’s actual dividend of ¥80 is presented on a pre-split basis, a simple comparison is not possible. Against forecast EPS of ¥202.17, the forecast dividend is ¥41, resulting in a payout ratio of approximately 20.3%. There was no revision to the dividend forecast during the quarter. Treasury stock increased to ¥5.897B (¥1.419B in the previous year), confirming progress in share repurchases.
Impact of the increase in the effective tax rate on the bottom line: The effective tax rate increased to 44.8% (27.0% in the previous year), while net income growth was limited to +12.4% compared with ordinary income growth of +47.1%. Future fluctuations in the tax burden could become a source of volatility in net income.
Persistently low equity ratio: The BIS capital ratio was 4.8%, down 0.1pt from 4.9% in the previous year. The equity ratio (net assets/total assets) was also low at 4.9%, making the level of the capital buffer a monitoring point.
Volatility in other comprehensive income: Net unrealized gains (losses) on securities were -¥1.71B and deferred hedge gains (losses) were -¥1.22B, resulting in total other comprehensive income of -¥3.25B. Consequently, comprehensive income of ¥1.44B was ¥3.25B below net income of ¥4.69B, and changes in market conditions affecting securities and hedge valuations are contributing to fluctuations in equity.
Profitability and Returns
| Metric | Company | Median (IQR) | Delta |
|---|---|---|---|
| Net Income Margin | 12.1% | – | – |
| The Company’s net income margin of 12.1% declined from 17.6% in the previous year. Because industry median data has not been established, the basis for assessing its relative level within the industry is limited. |
Growth and Capital Efficiency
| Metric | Company | Median (IQR) | Delta |
|---|---|---|---|
| Revenue Growth Rate (YoY) | 63.9% | – | – |
| The Company’s revenue growth rate of 63.9% indicates substantial growth from the previous year. However, because industry median data has not been established, assessment of its relative positioning is limited. |
※Source: Compiled by the Company
Although the Company achieved higher revenue and income, net income growth (+12.4%) was substantially below revenue growth (+63.9%), primarily due to the increase in the effective tax rate (27.0%→44.8%).
Personnel expenses and property-related expenses were ¥9.72B, increasing only 3.4% and substantially below ordinary income growth (+63.9%). The expense ratio relative to ordinary income improved to 25.0% from 39.7% in the previous year, confirming cost efficiency improvements in the earnings data.
Treasury stock increased to ¥5.897B, indicating progress in share repurchases, while the BIS capital ratio declined 0.1pt from the previous year to 4.8%. The earnings data indicates a balance between capital policy and the level of equity.
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 available earnings data. Investment decisions should be made at your own responsibility, and you should consult a professional as necessary.
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