| Indicator | Current Period | Prior Year | YoY |
|---|---|---|---|
| Revenue / Net Sales | ¥2112.1B | ¥1715.5B | +23.1% |
| Operating Income | - | - | - |
| Ordinary Income | ¥784.7B | ¥562.7B | +39.4% |
| Net Income | ¥528.5B | ¥385.9B | +36.9% |
| ROE | 7.6% | 6.7% | - |
For the fiscal year ended March 2026, the Company achieved substantial revenue and profit growth with Revenue ¥2112.1B (YoY +¥396.6B +23.1%), Ordinary Income ¥784.7B (YoY +¥222.0B +39.4%), and Net Income ¥528.5B (YoY +¥142.6B +36.9%). In a rising interest rate environment and with an expansion of loan assets, loan interest income increased to ¥790.3B (prior year ¥605.0B) and securities interest/dividends increased to ¥510.5B (prior year ¥470.8B), materially improving net interest income. Net fee income remained resilient at ¥264.9B (prior year ¥237.1B), and diversification of revenue sources contributed to margin improvement. The Ordinary Income margin, comparable to operating margin, widened to 37.2% from 32.8% a year earlier (+4.4pt), and Net Income margin improved to 25.0% from 22.5% (+2.5pt), indicating structural improvement in profitability. Comprehensive Income turned sharply positive to ¥1,333.2B (prior year -¥171.0B), and recognition of securities valuation gains of ¥708.4B boosted Equity.
[Revenue / Net Sales] Revenue (for banking, ordinary revenues) totaled ¥2112.1B, a substantial YoY increase of +23.1%. Breakdown: interest income ¥1,339.3B (prior year ¥1,106.0B, +21.1%), fee income ¥266.1B (prior year ¥237.1B, +12.2%), other operating income ¥159.1B (prior year ¥168.5B, -5.6%). Expansion of net interest income driven by rising interest rates was the primary revenue driver. Loan balances expanded to ¥6.60T (prior year ¥6.17T, +7.0%), and loan interest income grew to ¥790.3B (prior year ¥605.0B, +30.6%). Securities increased to ¥2.97T (prior year ¥2.92T, +1.7%), and securities interest/dividends were steady at ¥510.5B (prior year ¥470.8B, +8.4%). Net fee income (income ¥266.1B - expenses ¥62.3B) was ¥203.9B, roughly flat from ¥205.8B a year earlier, and trust fees ¥0.3B were unchanged from the prior year. The top-line growth was clearly concentrated in interest income.
[Profit & Loss] Ordinary expenses increased to ¥1,327.4B (prior year ¥1,152.8B, +15.1%), but revenue growth outpaced expense growth, producing operating leverage. Expense breakdown: interest expense ¥201.5B (prior year ¥75.6B, +166.5%), fee expenses ¥62.3B (prior year ¥61.2B, +1.7%), G&A ¥553.6B (prior year ¥525.2B, +5.4%), other operating expenses ¥436.4B (prior year ¥463.9B, -5.9%). While funding costs rose, decreases in other operating expenses partly offset this. Ordinary Income was ¥784.7B (+39.4%), Profit Before Tax was ¥784.1B (prior year ¥562.7B, +39.4%); special losses of ¥0.6B (impairment losses) were immaterial. After deducting income taxes of ¥244.0B (effective tax rate 31.1%), Net Income was ¥528.5B, and Profit Attributable to Owners of Parent was ¥540.1B (prior year ¥392.7B, +37.5%). In conclusion, the Company delivered high-quality growth with both revenue and profit expansion accompanied by margin improvement.
[Profitability] Net Income margin was 25.0%, up 2.5pt from 22.5% a year earlier, and Ordinary Income margin was 37.2%, up 4.4pt from 32.8%. ROE was 7.6%, an increase of 1.0pt from 6.6%, confirming improved equity efficiency. Expansion of net interest margin driven by rising rates was the primary factor behind margin improvement, contributed by improved spread between loan interest yields and deposit funding costs. [Cash Quality] Operating Cash Flow (OCF) to Net Income ratio was -8.6x, extremely low, reflecting the banking-sector characteristic that loan growth (+¥4,332.5B) and fluctuations in cash and deposits depress OCF. OCF subtotal (before working capital changes) was -¥4,370.9B, primarily due to increased funds deployed to loan growth. [Investment Efficiency] Total assets were ¥10.43T, a slight YoY increase of +0.1%; total asset turnover was 2.0%, low but standard for banking. Tangible fixed assets were ¥290.8B (prior year ¥303.6B). Capital expenditures were ¥19.2B, below depreciation expense of ¥29.5B, indicating restrained capital spending. [Financial Soundness] Equity Ratio was 6.6%, up 1.1pt from 5.5% a year earlier, but below regulatory benchmark (domestic standard 8%+), making capital strengthening a task. Loan-to-deposit ratio was 75.4% (loans ¥6.60T / deposits ¥8.76T), indicating adequate liquidity buffers; deposits were ¥8.76T (prior year ¥8.82T, -0.7%), a slight decline but still a stable funding base. Interest-bearing liabilities totaled ¥738.40B, comprising borrowings ¥546.33B and negotiable certificates of deposit ¥192.07B, down -8.8% YoY (prior year ¥809.62B), reflecting a composition mindful of containing funding cost increases.
Operating Cash Flow was -¥4,546.2B (prior year -¥3,371.8B), a large negative, primarily due to loan increases of +¥4,332.5B and decreases in cash and deposits of -¥3,992.7B. In banking, OCF turning negative during asset deployment expansion is a structural feature, but with an OCF subtotal of -¥4,370.9B plus corporate tax payments of ¥175.2B, cash generation remains weak. Investing Cash Flow was a positive ¥708.5B, as proceeds from securities sales/redemptions materially exceeded capital expenditures of ¥19.2B, securing liquidity through asset rotation. Free Cash Flow was -¥3,837.6B, and Financing Cash Flow including dividend payments of ¥157.3B and share buybacks of ¥0.1B was -¥157.5B, resulting in cash and deposits declining from ¥10,006.8B at the beginning of the period to ¥6,011.8B at the end (-¥3,995.1B). OCF/Net Income was -8.6x and FCF/Net Income was -7.3x, indicating very weak cash conversion and that internal cash generation is insufficient to fully fund dividends and growth investments.
Relative to Ordinary Income of ¥784.7B, special losses of ¥0.6B (impairment losses) were immaterial, indicating that the bulk of profits are derived from recurring operations and a high-quality earnings profile. Non-operating gains/losses were close to zero, with interest and fee income comprising the majority of profits. Comprehensive Income of ¥1,333.2B significantly exceeded Net Income of ¥528.5B; Other Comprehensive Income of ¥804.7B consisted of securities valuation differences ¥708.4B, deferred hedge gains/losses ¥0.8B, and actuarial adjustments related to retirement benefits ¥83.9B. Improvement in securities valuation differences reflects improved market conditions but is unrealized and therefore carries future market volatility risk. Retained earnings increased to ¥5,002.6B (prior year ¥4,620.1B, +¥382.5B), and even after deducting dividends of ¥157.5B, internal reserves grew steadily. From an accrual perspective, given the large divergence between OCF and Net Income driven by loan expansion and funding deployment, profit recognition without accompanying cash receipts is limited, and overall earnings quality can be assessed as solid.
Full year forecasts target Ordinary Income ¥895.0B (YoY +14.0%) and Net Income ¥600.0B (YoY +13.5%), implying double-digit profit growth. With current results of Ordinary Income ¥784.7B and Net Income ¥528.5B, progress rates are 87.7% for Ordinary Income and 88.1% for Net Income, indicating a high probability of achieving full-year forecasts. Forecast EPS is ¥275.66 vs. actual EPS ¥242.22 (progress rate 87.9%), assuming maintained profit growth pace for the remainder of the year. Forecasted dividend is annual ¥52.00 (pre-stock-split equivalent ¥312), and the reported actual annual dividend is ¥260 (pre-stock-split equivalent). Forecast payout ratio is 18.9% (¥52.00/¥275.66), a healthy level; the divergence from actual payout ratio of 33.0% is attributable to the stock split adjustment. Continuation of favorable interest rate conditions and loan asset growth are assumptions for achieving forecasts, while rising funding costs and normalization of credit costs remain downside risks.
Annual dividend was ¥260.0 (interim ¥113.0, year-end ¥147.0), yielding a payout ratio of 33.0%. Total dividends amounted to ¥157.5B, a sustainable level relative to Net Income of ¥528.5B. Share buybacks were ¥0.1B, minor; total shareholder returns amounted to ¥157.6B, and Total Return Ratio was 29.8% (total returns ¥157.6B / Net Income ¥528.5B), reflecting a dividend-focused shareholder return policy. Dividend coverage by FCF was -24.4x (negative), but given banking-sector OCF characteristics (negative during loan expansion), cash balances ¥6,011.8B and retained earnings ¥5,002.6B provide capital to support dividends. Full-year forecast dividend of ¥52.00 (post-stock-split) is equivalent to ¥312 pre-split and indicates a direction toward higher dividends. With an Equity Ratio of 6.6% below regulatory levels, balancing capital accumulation via retained earnings and dividend distribution is important; going forward, a phased dividend increase aligned with profit growth while strengthening capital is required.
Interest rate cycle reversal risk: Net interest margin expanded in a rising-rate environment, but if rates reverse and decline, spreads could compress due to falling loan yields and downward rigidity in deposit costs, reducing Ordinary Income. A large portion of loan interest income ¥790.3B is linked to variable rates, making sensitivity to the interest rate cycle high.
Regulatory shortfall risk for Equity Ratio: Equity Ratio of 6.6% is below the domestic benchmark of 8%, potentially constraining business expansion and dividend capacity. While comprehensive income is increasing Equity, valuation volatility of securities introduces risk, and the pace of building core capital could become a constraint on future growth.
Liquidity risk from persistent negative OCF: OCF of -¥4,546.2B is significantly negative for two consecutive periods; while loan expansion is the main cause, cash and deposits decreased by -¥3,995.1B. Although the deposit base is stable, should loan growth continue to outpace deposit growth, funding costs may rise and liquidity buffers may shrink.
Profitability & Return
| Metric | Company | Median (IQR) | Delta |
|---|---|---|---|
| Net Income Margin | 25.0% | 11.9% (7.2%–35.4%) | +13.1pt |
Net Income margin is 13.1pt above the industry median, with spread improvement in a rising-rate environment and asset mix optimization boosting profitability, placing the Company among the industry’s higher earners.
Growth & Capital Efficiency
| Metric | Company | Median (IQR) | Delta |
|---|---|---|---|
| Revenue Growth (YoY) | 23.1% | 10.1% (7.3%–12.1%) | +13.1pt |
Revenue growth is 13.1pt above the industry median, driven by loan expansion and increased interest income from rising rates, positioning the Company in the industry’s high-growth cohort.
※Source: Company aggregation
Expansion of net interest margin in the rising-rate phase drove margin improvement and revenue/profit growth, with loan interest income up +30.6% and Net Income margin up +2.5pt. If interest conditions persist, profitability is expected to remain high, but monitoring is required for margin compression risk upon rate reversal and rising funding costs (interest expense +166.5%).
Equity Ratio of 6.6% is below the regulatory benchmark of 8%, making capital strengthening an important issue. Although comprehensive income of ¥1,333.2B is increasing Equity, securities valuation gains of ¥708.4B carry market volatility risk; therefore, the pace of building core capital (retained earnings) and balance with dividend policy will determine future growth capacity.
OCF of -¥4,546.2B highlights weak cash conversion, but it's a structural characteristic acceptable during a banking-sector loan expansion phase. Nevertheless, given cash and deposits declined by -¥3,995.1B while deposits were essentially flat, continuous monitoring of liquidity buffers and funding management to maintain a loan-to-deposit ratio of 75.4% at an appropriate level is important.
This report is an earnings analysis document automatically generated by AI analyzing XBRL financial statement data. It does not constitute a recommendation to invest in any specific security. Industry benchmarks are reference information aggregated by the Company based on public financial statements. Investment decisions are your responsibility; please consult professionals as needed.