| Metric | This Period | Prior Year | YoY |
|---|---|---|---|
| Revenue / Net Sales | ¥502.7B | ¥411.3B | +22.2% |
| Operating Income / Operating Profit | - | - | - |
| Ordinary Income | ¥74.6B | ¥44.8B | +66.6% |
| Net Income / Net Profit | ¥65.9B | ¥40.6B | +62.4% |
| ROE | 6.2% | 4.4% | - |
FY2026 results delivered substantial top-line and bottom-line growth: Revenue ¥502.7B (YoY +¥91.4B +22.2%), Ordinary Income ¥74.6B (YoY +¥29.8B +66.6%), Net Income ¥65.9B (YoY +¥25.3B +62.4%). In the rising rate environment, loan interest income increased to ¥285.2B (prior ¥232.0B) — +¥53.2B — and interest and dividend income on securities rose to ¥51.0B (prior ¥42.6B) — +¥8.4B, bringing total interest income to ¥345.6B (prior ¥282.6B) — +¥63.0B. Funding costs including deposit interest rose to ¥56.7B (prior ¥18.6B) — +¥38.1B, tempering the net increase in net interest income to +¥24.9B. Net fee income improved to ¥46.9B (revenues ¥102.4B - expenses ¥55.6B), a YoY improvement of +¥4.7B, contributing to revenue diversification. G&A stayed restrained at ¥235.9B, a modest YoY increase of +¥7.6B, lifting the operating margin to 14.8% (prior 10.9%) — +3.9pp — and net margin to 13.1% (prior 9.9%) — +3.2pp. Loan balance expanded to ¥22,072B (YoY +¥911B +4.3%), capturing regional credit demand, while deposit balance declined to ¥25,541B (YoY -¥797B -3.0%), raising the loan-to-deposit ratio to 86.4% (prior 80.3%).
[Revenue] Net operating revenue (banking) increased materially to ¥502.7B (prior ¥411.3B +22.2%). The core driver was interest income ¥345.6B (prior ¥282.6B +22.3%), comprising loan interest ¥285.2B (prior ¥232.0B +23.0%) and securities interest/dividends ¥51.0B (prior ¥42.6B +19.8%), reflecting benefits from rising rates. Fee revenue reached ¥102.4B (prior ¥92.1B +11.2%) — double-digit growth driven by a broader customer base and product diversification. Other recurring revenue was ¥3.9B (prior ¥3.8B), essentially flat. Funding cost surged to interest expense ¥56.7B (prior ¥18.6B +205.4%), primarily due to deposit interest ¥50.9B (prior ¥14.7B +246.3%), manifesting higher funding costs in a rising rate environment. Fee expenses were restrained at ¥55.6B (prior ¥50.1B +11.0%).
[Profitability] Recurring expenses rose to ¥428.2B (prior ¥366.5B +16.8%). The largest swing factor was the sharp rise in interest expense to ¥56.7B (prior ¥18.6B), while fee expenses ¥55.6B (prior ¥50.1B) and G&A ¥235.9B (prior ¥228.4B +3.3%) remained relatively contained. Other recurring expenses increased substantially to ¥60.3B (prior ¥28.0B +115.4%), likely reflecting securities-related costs and market-driven factors. Extraordinary losses totaled ¥4.5B (prior ¥1.0B), including impairment losses of ¥0.7B (prior ¥0.7B). Profit before tax was ¥70.1B (prior ¥43.8B +60.2%); after corporate taxes of ¥3.4B (prior ¥2.7B), Net Income was ¥65.9B (prior ¥40.6B +62.4%). The effective tax rate was low at 4.9%, likely reflecting utilization of deferred tax assets and tax adjustments. Comprehensive income of ¥145.1B substantially exceeded net income, supported by other comprehensive income of ¥78.4B (securities valuation ¥58.4B, retirement benefit adjustments ¥20.0B), which boosted equity. In conclusion, substantial interest income growth combined with expense control drove revenue and profit growth.
Reported segments comprise only "Banking"; non-banking activities are immaterial, so segment-level operating profit analysis is omitted.
[Profitability] The operating margin (recurring revenue margin) improved to 14.8% (prior 10.9%) — +3.9pp; net margin improved to 13.1% (prior 9.9%) — +3.2pp. ROE improved to 6.2% (prior 4.3%) — +1.9pp — supported by higher net margins and high financial leverage of 26.8x (Total Assets ¥28,356B / Equity ¥1,059B). ROA (Ordinary Income / Total Assets) improved to 0.26% (prior 0.15%) but remains low. [Cash Quality] Operating Cash Flow (OCF) deteriorated materially to -¥1,395.9B (prior -¥230.4B); OCF/Net Income is an extreme -21.2x, reflecting balance sheet-driven cash outflows associated with the banking business. The main drivers were loan growth +¥911B, deposit decline -¥797B, and cash & deposits decline -¥1,421B. Depreciation of ¥19.2B results in an operating cash subtotal of -¥1,392.9B, net of corporate tax payments of ¥3.0B. [Investment Efficiency] CapEx was ¥5.3B (prior ¥3.4B), modest; CapEx / Depreciation = 0.28x, indicating restrained investment versus depreciation. Intangible investment was ¥13.5B, mainly software. [Financial Soundness] Equity Ratio improved to 3.7% (prior 3.2%) — +0.5pp — but remains low versus regulatory and peer benchmarks (domestic standard typically ≥8%). Debt-to-equity multiple is very high at 25.8x, reflecting structural characteristics of the banking model. Loan-to-deposit ratio rose to 86.4% (prior 80.3%), improving asset utilization but reducing liquidity buffers. Cash & deposits fell to ¥1,643B (prior ¥3,074B -46.5%), while borrowings increased to ¥1,663B (prior ¥1,433B +16.1%), increasing reliance on market funding.
OCF was -¥1,395.9B (prior -¥230.4B), with OCF/Net Income at -21.2x. This stems from banking-specific balance sheet management: net loan increase +¥911B, net deposit decrease -¥797B, and cash & deposits decline -¥1,421B. Operating cash subtotal (before working capital changes) was -¥1,392.9B; after corporate tax payments of ¥3.0B, total OCF was -¥1,395.9B. Investing CF was -¥22.1B (prior -¥151.3B), including CapEx ¥5.3B, intangible investment ¥13.5B, and disposal of fixed assets ¥1.6B. Financing CF was -¥4.2B (prior -¥4.2B), mainly dividend payments of ¥4.2B. Free Cash Flow was -¥1,418.0B (OCF -¥1,395.9B + Investing CF -¥22.1B), a large negative, though applying a typical corporate FCF interpretation to banks is limited given large asset/liability movements. Period-end cash & deposits were ¥1,613B (prior ¥3,035B) — a decline of ¥1,422B — shrinking the liquidity buffer.
Of Ordinary Income ¥74.6B, core operating revenue comprised net interest income (interest income ¥345.6B - interest expense ¥56.7B) = ¥288.9B and net fee income ¥46.9B, totaling ¥335.8B as the recurring revenue base. By contrast, other recurring revenue ¥3.9B less other recurring expenses ¥60.3B yielded -¥56.4B attributable to non-core factors, likely securities-related gains/losses and market effects. Other recurring expenses jumped from ¥28.0B to ¥60.3B (+¥32.3B), indicating market or valuation volatility affecting earnings quality. Extraordinary items were -¥4.5B (prior -¥1.0B), including impairment loss ¥0.7B and fixed asset disposal loss ¥4.6B. Comprehensive income ¥145.1B substantially exceeded net income ¥65.9B, aided by other comprehensive income ¥78.4B (securities valuation ¥58.4B, retirement benefit adjustment ¥20.0B). Improvement in securities valuation appears driven by market factors (rate declines or equity gains) and may be temporary. The gap between pre-tax profit and net profit is small (Profit before tax ¥70.1B → Net Income ¥65.9B, effective tax rate 4.9%), with low tax burden supporting earnings. The large divergence between OCF and net income (-21.2x) is due to loan growth and deposit reduction; cash conversion of profits is insufficient.
Full-year guidance was Ordinary Income ¥77.0B and Net Income ¥66.0B; actuals were Ordinary Income ¥74.6B (progress 96.9%) and Net Income ¥65.9B (progress 99.8%), indicating results close to plan. Ordinary Income missed the forecast by ¥2.4B, but Net Income was essentially on target, likely supported by tax adjustments and one-off factors. No guidance was provided for Revenue (net operating revenue), but YoY +22.2% growth reflects benefits from rising rates. Dividend guidance was 0 yen, but actuals show a year-end dividend of 5円 (interim 0円), indicating a possible discrepancy in disclosure (the reported year-end 5円 may be the prior year year-end dividend). Progress versus full-year guidance is standard; company planning appears to have been conservative.
Year-end dividend was 5円; total dividends paid ¥4.1B (shares outstanding 82,554k - treasury stock 143k = dividend-eligible shares 82,411k). Payout Ratio was 6.2% (dividends ¥4.1B / Net Income ¥65.9B), extremely conservative. Prior year payout ratio was also low at 10.0% (dividends ¥4.1B on Net Income ¥40.6B), indicating dividends have been held steady despite profit growth. No share buybacks were conducted; Total Return Ratio remained at the same conservative 6.2% as the payout ratio. Given a low Equity Ratio of 3.7%, capital policy prioritizes internal reserves accumulation. With cash & deposits ¥1,643B, OCF -¥1,395.9B, and Free Cash Flow -¥1,418.0B, dividend sustainability depends on profit levels and capital accumulation. The current dividend level (payout in the mid-6% range) is likely maintainable absent deterioration in profits or capital, but scope for increases is constrained by capital policy.
Funding cost escalation risk in a rising rate environment: Deposit interest rose sharply from ¥14.7B to ¥50.9B (+246.3%), compressing margins under higher funding costs. Net interest margin (NIM) approximated by (Interest Income ¥345.6B - Interest Expense ¥56.7B) / Total Assets ¥28,356B ≈ 1.02%, which is low; continued competitive increases in deposit rates could further compress margins. Other recurring expenses spiked from ¥28.0B to ¥60.3B (+115.4%), revealing market and securities valuation volatility risk.
Capital adequacy risk due to low Equity Ratio: Equity Ratio 3.7% is well below domestic standard of ≥8% and below peer benchmarks (regional bank median >10%). Equity ¥1,059B vs Total Assets ¥28,356B and debt-to-equity multiple 25.8x indicates high leverage and limited capital buffer. Retained earnings total ¥483B, but with payout ratio in the low single digits the bank prioritizes internal capital build-up, constraining flexibility for dividend increases or buybacks.
Liquidity risk and greater reliance on market funding: Cash & deposits fell sharply from ¥3,074B to ¥1,643B (-46.5%), while borrowings rose from ¥1,433B to ¥1,663B (+16.1%). Deposits declined to ¥25,541B (prior ¥26,337B -3.0%) even as loans increased to ¥22,072B (prior ¥21,161B +4.3%), raising loan-to-deposit ratio from 80.3% to 86.4% (+6.1pp). Reduced liquidity buffers and increased market funding reliance heighten rollover and market stress funding risks. OCF at -¥1,395.9B signals cash flow pressure from changing funding structure.
Profitability & Returns
| Metric | Company | Median (IQR) | Delta |
|---|---|---|---|
| Net Margin | 13.1% | 11.9% (7.2%–35.4%) | +1.2pp |
Net margin outperformed the industry median of 11.9% by +1.2pp, placing the company middle-to-upper within the industry, supported by rising rates and expense control.
Growth & Capital Efficiency
| Metric | Company | Median (IQR) | Delta |
|---|---|---|---|
| Revenue Growth (YoY) | 22.2% | 10.1% (7.3%–12.1%) | +12.2pp |
Revenue growth of 22.2% substantially exceeds the industry median of 10.1%, reflecting top-tier growth driven by rapid increases in interest income.
※ Source: Company aggregation
Sustainability of rate-driven revenue expansion: Loan interest +23.0% YoY and securities interest/dividends +19.8% YoY drove recurring revenue growth of +22.2%. Loan-to-deposit ratio rose from 80.3% to 86.4%, improving asset utilization. However, deposit interest rose +246.3%, pressuring margins; monitoring margin management against future rate shifts is critical. Other recurring expenses surged from ¥28.0B to ¥60.3B (+115.4%), indicating market volatility may affect earnings quality.
Low Equity Ratio and capital policy priorities: Equity Ratio 3.7% is well below the domestic ≥8% benchmark and peer medians. Payout Ratio at 6.2% is highly conservative; the bank favors internal reserves accumulation. Comprehensive income of ¥145.1B (Net Income ¥65.9B + OCI ¥78.4B) was bolstered by securities valuation gains of ¥58.4B, but this is largely market-driven and potentially temporary. Strengthening capital remains the top medium-term priority, limiting room for dividend increases or buybacks.
Large negative OCF and liquidity management: OCF was -¥1,395.9B (prior -¥230.4B), with OCF/Net Income at -21.2x. This reflects loan growth +¥911B, deposit decline -¥797B, and cash & deposits decline -¥1,421B — balance sheet dynamics typical of banking. Cash & deposits fell from ¥3,074B to ¥1,643B (-46.5%), while borrowings increased from ¥1,433B to ¥1,663B (+16.1%), elevating reliance on market funding. Liquidity and funding structure stability are key monitoring points given heightened withdrawal or market stress risk.
This report is an AI-generated financial analysis document produced from XBRL financial statement data. It is not a recommendation to invest in any specific security. Industry benchmarks are company-compiled reference information based on public financial statements. Investment decisions are your responsibility; consult a professional advisor as appropriate.