| Metric | Current Period | Same Period Previous Year | YoY |
|---|---|---|---|
| Revenue | ¥63.98B | ¥45.41B | +40.8% |
| Operating Income | - | - | - |
| Ordinary Income | ¥31.79B | ¥17.65B | +80.1% |
| Net Income | ¥22.20B | ¥12.29B | +80.7% |
| ROE | 2.9% | 1.8% | - |
The expansion of net interest income amid rising interest rates, combined with cost control, resulted in higher revenue and earnings as well as a significant improvement in profit margins. Ordinary revenue was ¥63.98B (¥45.41B in the same period of the previous year, +40.8%), ordinary income was ¥31.79B (¥17.65B, +80.1%), and net income attributable to owners of the parent was ¥22.20B (¥12.29B, +80.7%). While interest income increased (+23.8%), general and administrative expenses were contained (-2.0%), allowing the increase in revenue to flow substantially through to earnings. However, other ordinary expenses increased by +40.7%, which warrants attention when assessing the quality of the earnings growth.
【Revenue】Ordinary revenue was ¥63.98B, up +40.8% year on year. The primary driver was the increase in interest income to ¥39.496B (+23.8%), supported by growth in loan and securities balances and rising interest rates. Fee income also increased to ¥6.300B (+10.6%), indicating diversification of revenue sources. The reported segment consists solely of banking operations, and no breakdown by business is disclosed.
【Profit and Loss】Ordinary expenses increased to ¥32.185B (+15.9%); however, general and administrative expenses were contained at ¥13.120B (-2.0%), confirming positive operating leverage, with expense growth below the expansion in net interest income. Meanwhile, other ordinary expenses increased to ¥10.814B (+40.7%), with fluctuations in market-related expenses contributing to the increase in ordinary expenses. After deducting income taxes of ¥9.58B (an effective tax rate of approximately 30.1%) from ordinary income of ¥31.79B (+80.1%), net income was ¥22.20B (+80.7%). The difference between ordinary income and net income was generally attributable to the normal tax burden and did not include temporary factors. In conclusion, the Company achieved higher revenue and earnings.
【Profitability】The net profit margin was 34.7%, improving from approximately 27.1% in the previous year, while the ordinary income margin against ordinary revenue was also high at 49.7%. The expense ratio (OHR), calculated based on general and administrative expenses and gross operating profit (the aggregate of net interest income, net fees and commissions, and other operating income, approximately ¥30.78B), was approximately 42.6%, indicating sound cost efficiency. 【Cash Flow Quality】Comprehensive income was ¥76.69B, exceeding net income of ¥22.20B by ¥54.49B. The primary factor behind the difference was the +¥54.72B change in the valuation difference on securities. This unrealized gain is not immediately reflected in the P/L and may fluctuate depending on market conditions. 【Investment Efficiency】ROE was 2.9%, and total asset turnover remained low (ordinary revenue of ¥63.98B against total assets of ¥10,514.78B), reflecting the structural characteristics of the banking business model, which is centered on deposits and lending. 【Financial Soundness】The equity ratio was 7.2%, improving from 6.6% in the previous year. The loan-to-deposit ratio (LDR), calculated from deposits of ¥8,701.28B against loans of ¥6,683.91B, was approximately 76.8%, indicating a stable level of liquidity.
As cash flow statement data has not been disclosed, funding trends are analyzed based on changes in the balance sheet. Loans increased steadily to ¥6,683.91B (+¥80.01B, +1.2%), and securities increased to ¥3,023.54B (+¥54.76B, +1.8%), while deposits declined slightly to ¥8,701.28B (-¥54.62B, -0.6%). The gap between the expansion of earning assets and the decline in deposits was offset by increased market-based funding through negotiable certificates of deposit (NCDs), which rose to ¥298.53B (+¥106.46B, +55.4%). Meanwhile, borrowings declined to ¥486.197B (-¥60.13B, -11.0%), and cash and due from banks declined to ¥487.983B (-¥113.99B, -18.9%), indicating a change in the funding structure whereby part of on-hand liquidity was redirected to earning assets. Overall, this was a quarter in which earning assets expanded alongside a shift from deposit funding toward market-based funding.
There were no extraordinary losses, and earnings were composed primarily of recurring items such as interest income and fee income, indicating stable earnings quality. However, other ordinary expenses increased by +40.7% year on year to ¥10.814B, and the impact of fluctuations in market-related valuation and hedging expenses on ordinary income and expenses has somewhat increased. Comprehensive income of ¥76.69B significantly exceeded net income of ¥22.20B, with most of the ¥54.49B difference attributable to the +¥54.72B change in the valuation difference on securities. This valuation difference is recorded in net assets as accumulated other comprehensive income; however, because it is not realized income or loss and may reverse due to market fluctuations, net income and comprehensive income should be clearly distinguished. The effective tax rate was approximately 30.1% (approximately 30.4% in the previous year), remaining broadly unchanged, with no temporary distortion in the tax burden.
Progress toward the full-year ordinary income forecast of ¥89.50B was 35.5% (¥31.79B/¥89.50B), while progress toward the full-year net income forecast of ¥61.50B was 36.1% (¥22.20B/¥61.50B), both exceeding the standard quarterly progress benchmark of 25%. There were no revisions to the earnings or dividend forecasts during the quarter, and management maintained its initial-year plan. If the expansion of net interest income and cost controls continue, there may be upside potential relative to the full-year plan. However, rising funding costs and fluctuations in market-related expenses in the second half of the fiscal year could moderate the progress rate.
The Company’s forecast annual dividend is ¥104, and the payout ratio against the full-year forecast EPS of ¥275.66 is approximately 37.7%. A 3-for-1 stock split of common shares is scheduled to take effect on April 1, 2026; therefore, the dividend amount for the current period is stated on a pre-split basis. As of the end of the quarter, there had been no revision to the dividend forecast, and the shareholder return policy in line with the initial-year plan remains in place.
Increased dependence on market-based funding: While negotiable certificates of deposit (NCDs) increased to ¥298.53B, up ¥106.46B year on year (+55.4%), deposits declined to ¥8,701.28B, down ¥54.62B (-0.6%), indicating a shift in the funding mix toward market-based funding. Fluctuations in refinancing costs could affect future net interest margins.
Risk of reversal in the valuation difference on securities: The valuation difference on securities included in accumulated other comprehensive income increased by +¥54.72B year on year, contributing to the increase in net assets. This unrealized gain could contract or reverse due to rising interest rates or deteriorating market conditions and should therefore be monitored as a source of volatility in net assets.
Capital level: The equity ratio improved to 7.2% from 6.6% in the previous year; however, capital accumulation has been gradual relative to the sharp increase in ordinary income. The buildup of buffers against changes in the external environment remains subject to ongoing monitoring.
Profitability and Returns
| Metric | Company | Median (IQR) | Delta |
|---|---|---|---|
| Net Profit Margin | 34.7% | – | – |
The net profit margin was 34.7%. Although comparative data against the industry median is limited, this represents a significant improvement from the previous year for the Company.
Growth and Capital Efficiency
| Metric | Company | Median (IQR) | Delta |
|---|---|---|---|
| Revenue Growth Rate (Year on Year) | 40.8% | – | – |
The growth rate of revenue (ordinary revenue) was high at +40.8% and serves as a reference point for evaluating the Company’s position within the industry.
※Source: Compiled by the Company
Progress toward the full-year ordinary income and net income forecasts was 35.5% and 36.1%, respectively, exceeding the standard benchmark of 25%. The combination of revenue expansion and cost control demonstrates positive operating leverage in the quarterly results.
A significant portion of the increase in net assets depended on the increase in the valuation difference on securities (+¥54.72B). The gap between comprehensive income of ¥76.69B and net income of ¥22.20B can be understood as a structure in which the apparent strengthening of capital reflects market fluctuations.
In terms of funding, the decline in deposits was offset by a substantial increase in NCDs (+55.4%), indicating a change in the funding structure. Although the equity ratio improved to 7.2%, the trends in the funding mix and capital level should continue to be monitored as key indicators of the quality of the earnings results.
This report is an earnings analysis document automatically generated by AI through analysis of XBRL earnings summary data. It does not recommend investment in any specific security. The industry benchmarks are reference information compiled by the Company based on publicly available earnings data. Investment decisions should be made at your own discretion and responsibility, after consulting with professionals as necessary.
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