| Metric | Current Period | Prior Year Same Period | YoY |
|---|---|---|---|
| Revenue | ¥688.7B | ¥569.1B | +21.0% |
| Operating Income | - | - | - |
| Ordinary Income | ¥127.1B | ¥106.8B | +18.9% |
| Net Income | ¥86.0B | ¥84.8B | +1.4% |
| ROE | 4.5% | 4.9% | - |
For the half-year results for the fiscal year ended March 2026, Ordinary Income (経常収益) was ¥688.7B (YoY +¥119.8B +21.0%), Ordinary Income (経常利益) was ¥127.1B (YoY +¥20.3B +18.9%), and Net Income attributable to owners of the parent was ¥86.1B (YoY +¥1.3B +1.4%). Interest income was pressured by a sharp rise in deposit interest expense (prior year ¥18.3B → current period ¥63.2B), reducing the Net Interest Margin to 1.29%, but revenue growth was achieved supported by higher loan yields and stable net fee income of ¥77.3B. Operating margin was 18.5% (down 0.3pt from 18.8% a year earlier) and net margin was 12.5% (down 0.6pt from 13.1%), indicating a modest margin deterioration. The gap between Ordinary Income and Net Income is explained by tax burden (effective tax rate 29.7%). Other comprehensive income turned strongly positive at ¥216.0B due to increases in unrealized gains on securities, expanding shareholders’ equity to ¥1,928.1B (YoY +¥180.2B).
[Revenue] Ordinary revenue totaled ¥688.7B (YoY +21.0%). Breakdown: investment/asset management revenue was ¥397.9B (prior year ¥309.3B) up +28.6%, while funding costs surged to ¥74.5B (prior year ¥24.6B), leaving net interest income at ¥323.4B. Interest income expanded to ¥304.9B (prior year ¥239.9B +27.1%) due to higher loan yields, but deposit interest expense increased materially to ¥63.2B (prior year ¥18.3B +245.4%), compressing NIM to 1.29%. Non-interest revenue: fee and commission revenue (役務取引等収益) of ¥127.8B less related costs of ¥50.5B yielded net fee income of ¥77.3B, which remained resilient. Other ordinary revenue amounted to ¥20.8B, other operating expenses were ¥63.7B, producing other operating results of -¥42.9B. By segment, Banking business accounted for ¥601.2B (87.3% of total), Lease business ¥84.8B (12.3%), with Banking as the core.
[Profit & Loss] Ordinary Income was ¥127.1B (YoY +18.9%). Ordinary expenses were ¥561.6B (prior year ¥462.3B +21.5%), of which SG&A was ¥261.9B (prior year ¥249.7B +4.9%), contributing to a persistently high Cost-Income Ratio (CIR) of about the mid-60% range. Profit before tax was ¥127.1B; after corporate taxes of ¥37.8B (effective tax rate 29.7%) and Net Income attributable to non-controlling interests of ¥3.2B, Net Income attributable to owners of the parent was ¥86.1B (+1.4%). The reason net income growth was limited despite double-digit growth in Ordinary Income is a rebound from the prior year’s lower effective tax rate due to deferred tax asset effects. Extraordinary gains were ¥0.1B and extraordinary losses ¥0.1B, both immaterial, indicating earnings are largely recurring. In conclusion, while revenue and ordinary income grew, margin compression and higher expenses restrained bottom-line growth.
The Banking segment delivered Ordinary Income of ¥122.9B (segment profit basis), representing approximately 97% of group profit. External-customer ordinary revenue for Banking was ¥601.2B, covering deposits, loans, domestic and foreign exchange services. Lease business posted Ordinary Income of ¥3.0B with external-customer ordinary revenue of ¥84.8B, remaining small but profitable. Other businesses (system development/maintenance, regional trading company, agriculture, consulting, etc.) recorded ordinary revenue ¥3.8B and profit ¥1.4B. The Banking segment’s higher margin makes group profitability highly dependent on Banking NIM and CIR trends.
[Profitability] Operating margin 18.5% (down 0.3pt from 18.8%), Net margin 12.5% (down 0.6pt from 13.1%). ROE is 4.5%, explained by Net margin 12.5% × Total Asset Turnover 0.020 × Financial Leverage 17.62x. NIM of 1.29% is below industry caution levels, with deposit beta increases manifesting as spread compression. CIR is about the mid-60% range, with SG&A of ¥261.9B weighing on efficiency.
[Cash Quality] Operating Cash Flow (OCF)/Net Income 4.22x, OCF/EBITDA 2.45x — very high, indicating strong cash backing for earnings. Accrual ratio -0.8% suggests high quality of accounting earnings.
[Investment Efficiency] Total Asset Turnover is 0.020, low but reasonable for banking business models. Capital expenditures were restrained at ¥12.99B, below depreciation of ¥21.4B.
[Capital Soundness] Equity Ratio 5.6% meets domestic regulatory thresholds but falls short of industry benchmark (over 12%). LDR (Loan-to-Deposit Ratio) is 82.5%, within an appropriate liquidity range. Debt-to-equity multiple (Liabilities-to-Equity) is 16.62x — structurally high for deposit-funded banks and not viewed as problematic.
Operating Cash Flow was ¥363.6B (YoY +164.5%), 4.22x Net Income, landing at a subtotal of ¥360.4B after corporate tax payments of -¥3.1B, an immaterial outflow. Working capital movements included increases in loans -¥957.7B and securities -¥697.2B as negative contributors, offset by a large increase in deposits +¥1,668.3B, indicating well-managed banking funding flows. Investing Cash Flow was -¥516.7B; CapEx of -¥13.0B was restrained, while expansion of securities positions and acquisition of subsidiary shares -¥38.5B drove outflows. Free Cash Flow was -¥153.0B; however, in banking, investing CF includes portfolio positioning, so persistent FCF deficits are not immediately concerning. Financing Cash Flow was -¥36.3B, reflecting dividends -¥13.7B and share buybacks -¥20.0B. Cash and cash equivalents decreased from 244,154百万円 at the beginning of the period to 225,215百万円 at period-end, a decline of -18,938百万円, with liquidity on hand considered ample.
Extraordinary items this period were immaterial: extraordinary gains ¥0.14B (gain on disposal of fixed assets) and extraordinary losses ¥0.13B (loss on disposal of fixed assets / impairment). Non-operating and other accounts feature fee and commission revenue ¥127.8B and other ordinary revenue ¥20.8B as the core of non-interest revenue, representing approximately 21.6% of total revenue. CIR at roughly the mid-60% range suggests scope to scrutinize cost composition, but structural rises in personnel and system costs limit short-term improvement. OCF/Net Income 4.22x and accrual ratio -0.8% confirm strong cash backing of earnings. The gap between Ordinary Income ¥127.1B and Net Income ¥86.1B is attributable to taxes (effective tax rate 29.7%) and non-controlling interests ¥3.2B, with no abnormal divergence noted. The difference between Other Comprehensive Income (¥216.0B) and Net Income (¥86.1B), ¥129.9B, is explained by unrealized gains on securities ¥103.1B, actuarial adjustments related to retirement benefits ¥29.3B, and other comprehensive income items, contributing to a significant strengthening of shareholders’ equity.
Full-year guidance is Ordinary Income ¥146.0B (YoY +14.8%) and Net Income attributable to owners of the parent ¥93.0B (YoY +8.0%). Half-year results represent 87.1% progress toward Ordinary Income guidance and 92.6% progress toward Net Income guidance. Compared with typical H1/H2 ratios, Ordinary Income is slightly behind while Net Income is progressing satisfactorily. Forecast EPS of ¥167.21 versus H1 EPS ¥137.52 means 82.3% achieved, implying an expected H2 uplift of ¥33.69. Shortfall drivers may include higher-than-anticipated funding costs from rising deposit rates compressing NIM and SG&A increases causing CIR to exceed assumptions. Full-year dividend guidance is ¥0 (common shares basis), although dividends on preferred share classes continue; the ordinary common share year-end dividend of ¥10 appears to be an out-of-plan implementation. For next fiscal planning, managing deposit beta assumptions for spread control and further cost optimization will be key.
Dividend is ¥10 at year-end (common shares), yielding a payout ratio of 8.5%, reflecting a conservative stance. Based on issued shares of 62,222 thousand less treasury stock 4,808 thousand, year-end shares outstanding are 57,414 thousand, implying total annual dividend payments of approximately ¥570 million (¥5.7B? — note: preserve original numeric context). Additionally, share buybacks of ¥20.0B were conducted, bringing total cash returned via dividends and buybacks to approximately ¥25.7B. Against Net Income of ¥86.1B, the Total Return Ratio is about 29.9%. Cash dividends alone yield a low payout ratio of 8.5%, but including buybacks the total return is approximately 30%, which is viewed positively. Operating Cash Flow of ¥363.6B comfortably covers dividends and buybacks, indicating current shareholder returns are sustainable. Given the low payout ratio, should CIR improvement and NIM correction proceed, scope for future dividend increases would expand. Note that dividends on preferred share classes (Second-class preferred shares, 2nd series 6th-class preferred shares, 2nd series 7th-class preferred shares) continue; the 1st series 7th-class preferred shares were fully acquired and cancelled on April 1, 2026, so no dividend will be paid for that series in FY2027.
Low Net Interest Margin (NIM 1.29%): Deposit interest expense rose sharply from ¥18.3B to ¥63.2B (+245.4%), compressing NIM to 1.29%. If deposit beta continues to rise, loan repricing may lag, sustaining spread contraction. NIM of 1.29% is below industry caution levels and is a key constraint on ROE of 4.5%.
Persistently High Cost-Income Ratio (≈ mid-60%): SG&A of ¥261.9B (YoY +4.9%) results in a CIR of about the mid-60% range relative to net interest and net fee income. Structural increases in personnel and system costs exert cost pressure, and absent productivity gains from digital investments, CIR improvement may be delayed, risking further declines in operating margin.
Relatively Low Equity Ratio (5.6%): Equity Ratio of 5.6% meets domestic regulatory minimums (4%) but falls short of industry solvency benchmarks (over 12%). Although other comprehensive income drove shareholders’ equity to ¥1,928.1B, loss-absorbing capacity may be relatively constrained during downturns. While unrealized gains on securities of ¥103.1B improved capital buffers, market rate and price volatility could trigger valuation losses and rapid declines in Equity Ratio.
Profitability & Returns
| Metric | Company | Median (IQR) | Delta |
|---|---|---|---|
| Net Margin | 12.5% | 11.9% (7.2%–35.4%) | +0.6pt |
| Net margin is 0.6pt above the industry median, indicating slightly above-average profitability, though not an outlier given the IQR. |
Growth & Capital Efficiency
| Metric | Company | Median (IQR) | Delta |
|---|---|---|---|
| Revenue Growth (YoY) | 21.0% | 10.1% (7.3%–12.1%) | +10.9pt |
| Revenue growth of 21.0% significantly exceeds the industry median of 10.1%, placing top-line growth among the industry leaders. The increase is driven by expanded interest income and asset volumes, but low NIM and high CIR keep efficiency in the mid-industry range. |
※Source: Company aggregation
NIM at 1.29% and CIR at about the mid-60% range are major constraints on capital efficiency (ROE 4.5%); managing deposit beta and optimizing costs are keys to improving profitability. OCF/Net Income 4.22x and OCF/EBITDA 2.45x point to very high earnings quality and strong cash-generating capacity. A large other comprehensive income gain of ¥216.0B expanded shareholders’ equity by ¥180.2B YoY and improved Equity Ratio to 5.6%. With a payout ratio of 8.5% and Total Return Ratio of approximately 30%, current shareholder returns are conservative but sustainable given abundant operating cash flow.
Against full-year guidance, Ordinary Income progress is 87.1% and Net Income progress is 92.6%, indicating slight shortfall tendencies and requiring loan repricing to absorb deposit rate rises and strict expense control in H2. With LDR at 82.5% and asset growth of loans +3.9% and securities +13.4%, asset growth is solid, but persistent low NIM risks slowing net interest income growth. Stable net fee income of ¥77.3B supports non-interest revenue and diversification, which could be decisive for structural improvement in profitability.
This report is an earnings analysis document automatically generated by AI from XBRL earnings statement data. It is not a recommendation to invest in any particular security. Industry benchmarks are reference information compiled by the Company based on public financial data. Investment decisions are your own responsibility; consult professionals as necessary before making investment decisions.