| Metric | Current Period | Same Period of Previous Year | YoY |
|---|---|---|---|
| Revenue | ¥206.4B | ¥158.2B | +30.4% |
| Operating Income | - | - | - |
| Ordinary Income | ¥39.0B | ¥38.6B | +0.9% |
| Net Income | ¥27.4B | ¥29.0B | -5.8% |
| ROE | 1.6% | 1.5% | - |
Although ordinary revenues (revenue) increased substantially, the benefits of higher revenue were offset by a sharp increase in funding costs and other ordinary expenses. As a result, ordinary income was nearly flat, while net income declined. Ordinary revenues were ¥206.5B (+30.4% YoY), ordinary income was ¥39.0B (+0.9% YoY), and net income attributable to owners of the parent was ¥27.4B (¥28.6B in the previous year, -4.4% YoY). While the expansion of funds investment income in the Banking Business segment drove revenue growth, the sharp increase in interest on deposits (+99.0%) and the significant expansion of other ordinary expenses (from ¥1.5B in the previous year to ¥23.6B) pressured profit margins, preventing profit growth commensurate with the increase in revenue.
【Revenue】Ordinary revenues were ¥206.45B, representing substantial revenue growth of +30.4% YoY. External ordinary revenues from the Banking Business segment amounted to ¥183.35B (+35.2%), accounting for 88.8% of total revenue and driving the increase. Interest on loans grew to ¥86.67B (+24.5%), while fees and commissions increased to ¥29.96B (+10.9%). The Leasing Business remained nearly flat at ¥22.17B (+1.2%).
【Profit and Loss】Ordinary income was ¥38.98B, limited to +0.9% YoY growth. On the funding side, interest expenses increased sharply to ¥28.37B (+93.3%), including interest on deposits of ¥24.51B (+99.0%), partially offsetting the growth in funds investment income. In addition, other ordinary expenses rose substantially to ¥23.60B from ¥1.45B in the previous year, which appears to have been the primary factor limiting growth in ordinary income. Net income attributable to owners of the parent was ¥27.37B (¥28.63B in the previous year, YoY -4.4%), with the increase in the effective tax rate from 25.0% to 29.8% also contributing to the decline in profit. Special income amounted to only ¥0.01B, with no special losses recorded, indicating that the impact of one-time factors was limited. Accordingly, the quarter can be characterized as one of revenue growth but earnings decline.
The Banking Business was the core contributor to revenue and profit, while the Leasing Business recorded higher revenue but lower profit. External ordinary revenues from the Banking Business were ¥183.35B (+35.2% YoY), and segment profit was ¥38.61B (+1.2% YoY), representing 88.8% of total revenue and the majority of segment profit. External ordinary revenues from the Leasing Business were nearly flat at ¥22.17B (+1.2% YoY), but segment profit declined significantly to ¥0.44B (-34.3% YoY), confirming a deterioration in profitability. The Other category (including systems development and regional trading companies) was ¥0.93B (¥0.70B in the previous year), remaining small in scale. While revenue growth in the Banking Business supported overall revenue growth, the impact of higher funding costs is also considered to have been primarily attributable to the Banking Business segment.
【Profitability】The ordinary income margin (ordinary income/ordinary revenues) was 18.9%, down -5.5pt from 24.4% in the previous year. The net profit margin (on a basis attributable to owners of the parent) also declined to 13.3% from 18.1% in the previous year, a decrease of -4.8pt. The effective tax rate increased to 29.8% from 25.0% in the previous year, and the higher tax burden reduced net income despite pretax income being nearly flat (+0.65%). 【Cash Flow Quality】Comprehensive income was ¥17.81B, below net income attributable to owners of the parent of ¥27.37B. Negative valuation differences on securities of -¥8.2B and an adjustment related to retirement benefits of -¥1.4B were the factors behind the gap. 【Investment Efficiency】ROE was 1.6% based on equity at the end of the period. Basic EPS was ¥47.64 (¥49.97 in the previous year, YoY -4.7%), while diluted EPS was ¥44.18. 【Financial Soundness】The equity ratio (net assets/total assets) was 5.0%, down from 5.7% in the previous year, and the loan-to-deposit ratio (loans/deposits) was approximately 81.9%. Total assets remained broadly flat at ¥3,425.99B (¥3,396.61B in the previous year, +0.9%), while net assets declined to ¥1,701.53B (¥1,928.12B in the previous year, -11.8%).
As cash flow statement data has not been disclosed, funding trends are analyzed based on changes in key balance sheet accounts. Cash and deposits amounted to ¥231.97B (¥225.70B in the previous year), while securities were ¥6,127.72B (¥5,918.13B in the previous year), with both increasing and indicating a trend toward expanding investment assets. Loans were nearly flat at ¥2,508.84B (¥2,511.63B in the previous year), while deposits increased gradually to ¥3,063.55B (¥3,043.85B in the previous year, +0.6%), indicating stable expansion on the funding side. Total assets increased +0.9% YoY to ¥3,425.99B, while net assets declined -11.8% to ¥1,701.53B due to deterioration in valuation differences and a decrease in retained earnings. The fact that asset growth is progressing alongside a decline in equity is a point requiring attention from a funding structure perspective.
Current-period profit and loss was composed almost entirely of recurring items, with virtually no special gains or losses (special income of ¥0.01B and no special losses). However, other ordinary expenses increased substantially to ¥23.60B from ¥1.45B in the previous year. This item should be closely monitored when assessing earnings quality, as it was the primary factor behind the lack of growth in ordinary income. Comprehensive income of ¥17.81B was below net income attributable to owners of the parent of ¥27.37B, and negative other comprehensive income, mainly the -¥8.2B valuation difference on securities, pressured equity. The effective tax rate increased to 29.8% from 25.0% in the previous year, and the higher tax burden reduced net income while pretax income remained nearly flat. The absence in the current period of profit attributable to non-controlling interests, which amounted to ¥0.41B in the previous year, also contributed to mitigating the decline in net income attributable to owners of the parent.
Progress against the full-year plan is generally on track. Ordinary income was ¥38.98B, representing progress of 26.7% against the full-year plan of ¥146.0B. Net income attributable to owners of the parent was ¥27.37B, representing progress of 28.5% against the full-year plan of ¥96.0B. Both were progressing slightly above the simple progress benchmark of 25%. No revisions were made to the earnings forecast or dividend forecast during the quarter.
The annual dividend forecast for common shares is ¥20.00, corresponding to a payout ratio of approximately 12.0% based on the company’s planned EPS of ¥167.21. With the equity ratio (net assets/total assets) at a relatively low level of 5.0%, the dividend level appears conservative, reflecting an emphasis on retained earnings. Separately from common shares, dividends have been set for various classes of preferred shares, including Class 2 Preferred Shares (annual dividend of ¥104.00), the 2nd Series Class 6 Preferred Shares (¥300.00), and the 2nd Series Class 7 Preferred Shares (¥9,000.00). No dividend will be paid for the 1st Series Class 7 Preferred Shares for the fiscal year ending March 2027 because all such shares were acquired and canceled in April 2026.
Rising funding costs: Interest on deposits increased sharply to ¥24.51B (¥12.32B in the previous year, +99.0%), while total interest expenses rose to ¥28.37B (+93.3%), expanding at a faster pace than the +24.5% growth in interest on loans. If pressure to narrow the interest spread continues, it may further constrain growth in ordinary income.
Thin capital buffer: The equity ratio (net assets/total assets) was 5.0%, down from 5.7% in the previous year, while net assets contracted to ¥1,701.53B (-11.8%) due to deterioration in valuation differences and a decrease in retained earnings. Monitoring is necessary from the perspective of loss-absorption capacity during market volatility.
Volatility in other ordinary expenses: Other ordinary expenses increased substantially to ¥23.60B from ¥1.45B in the previous year. It is necessary to determine whether this represents a structural level or a temporary factor driving volatility in ordinary income.
Profitability and Returns
| Metric | Company | Median (IQR) | Delta |
|---|---|---|---|
| Net Profit Margin | 13.3% | – | – |
As industry median data for comparison has not been sufficiently established, it is currently difficult to assess the company’s relative positioning.
Growth and Capital Efficiency
| Metric | Company | Median (IQR) | Delta |
|---|---|---|---|
| Revenue Growth Rate (YoY) | 30.4% | – | – |
As industry median data for comparison has not been sufficiently established, it is currently difficult to assess the company’s relative positioning.
※Source: Compiled by the Company
Although ordinary revenues increased substantially by +30.4%, ordinary income rose only +0.9% due to the sharp increase in funding costs and other ordinary expenses, falling short of earnings growth commensurate with revenue growth. Cost management during periods of revenue expansion will be a key focus going forward.
The effective tax rate increased from 25.0% to 29.8%, affecting the -4.4% decline in net income while pretax income remained nearly flat. The fact that no profit attributable to non-controlling interests was recorded in the current period, despite such profit having been recorded in the previous year, is also a notable change in the profit and loss structure.
Full-year progress was 26.7% for ordinary income and 28.5% for net income, slightly above the simple progress benchmark of 25%, indicating performance in line with the plan. Meanwhile, the equity ratio declined to 5.0%, making the trajectory of the capital base an ongoing area of focus alongside earnings trends.
This report is an earnings analysis document automatically generated by AI based on XBRL earnings release data. It does not constitute a recommendation to invest 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 you should consult a professional as necessary.
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