| Indicator | This Period | Prior Year Same Period | YoY |
|---|---|---|---|
| Revenue / Net Sales | ¥775.0B | ¥491.8B | +57.5% |
| Operating Income / Operating Profit | - | - | - |
| Ordinary Income | ¥128.5B | ¥97.8B | +31.3% |
| Net Income | ¥89.7B | ¥68.7B | +30.6% |
| ROE | 4.6% | 3.7% | - |
For the fiscal year ended March 2026 (Full Year), Revenue was ¥775.0B (YoY +¥283.2B +57.5%), Ordinary Income was ¥128.5B (YoY +¥30.7B +31.3%), and Net Income was ¥89.7B (YoY +¥21.0B +30.6%), achieving double-digit increases across the three main metrics, supported by a rising interest rate environment. Banking segment ordinary revenue expanded substantially to ¥713.6B (+65.0%), and investment management income surged to ¥453.3B (YoY +¥112.5B), while funding costs also rose to ¥80.4B (YoY +¥51.9B), resulting in net interest income at ¥372.9B. Other ordinary expenses worsened to ¥248.5B (YoY +¥180.8B), likely due to market-related factors such as securities valuation and disposal losses, which temporarily dampened profit growth. On the expense side, ordinary expenses increased significantly to ¥646.4B (YoY +¥251.5B), but top-line growth absorbed the increase, maintaining an operating (ordinary) profit margin of 16.6%.
Revenue expansion to ¥775.0B (+57.5%) was led by the Banking segment at ¥713.6B (+65.0%), accounting for 92.1% of the total. Investment management income increased sharply to ¥453.3B (YoY +¥112.5B, equivalent to +33.0%), with interest on loans at ¥276.6B and securities interest/dividends at ¥160.0B both expanding. Fee income was ¥98.3B (YoY -¥1.2B), a slight decrease, and other ordinary revenue was ¥47.8B (YoY +¥3.0B), a modest increase. Leasing operations were stable at ¥47.7B (+3.8%), credit card and guarantee business contracted to ¥7.1B (-12.8%), and other businesses grew to ¥7.0B (+14.0%). Loan balances increased by +¥1,164.5B (+5.3%) and deposit balances increased by +¥272.5B (+0.9%), indicating balanced growth in both assets and liabilities.
On the income statement side, ordinary expenses rose to ¥646.4B (YoY +¥251.5B), comprised of funding costs ¥80.4B (YoY +¥51.9B), fee expenses ¥39.5B (YoY +¥2.0B), general and administrative expenses ¥257.5B (YoY +¥9.8B), and other ordinary expenses ¥248.5B (YoY +¥180.8B), with market-related losses being the primary driver of the expense increase. Growth in general and administrative expenses was limited to +4.0%, restrained relative to revenue growth, preserving a degree of cost efficiency. Extraordinary items comprised Extraordinary Income ¥0.01B (including negative goodwill gain ¥0.2B) and Extraordinary Losses ¥0.6B (impairment losses ¥0.1B), so non-operating and extraordinary impacts were limited. Pre-tax income was ¥127.9B, with income taxes of ¥38.7B (effective tax rate 30.3%), resulting in Net Income of ¥89.7B. While the company finished with revenue and profit growth, normalization of market-related expenses will be key to sustaining profitability going forward.
The Banking business strengthened its position with external-customer ordinary revenue of ¥713.6B (YoY +65.0%) and segment profit of ¥127.1B (YoY +33.1%). Segment assets were ¥3,906.4B, representing 99.8% of total assets. Leasing reported ordinary revenue of ¥47.7B (+3.8%) and segment profit of ¥1.4B (-16.8%), showing steady revenue but declining margins. Credit Card & Guarantee business saw ordinary revenue of ¥7.1B (-12.8%) and moved to a segment loss of ¥0.4B (prior year was ¥2.0B profit), highlighting pressure in card settlement and guarantee activities. Other businesses (consulting, regional trading company, investment operations) posted ordinary revenue of ¥7.0B (+14.0%) and segment profit of ¥1.5B, maintaining growth at a small scale. Overall, the Banking segment generated 98.9% of profits, indicating a very high concentration of revenue sources.
Profitability: ROE 4.6% improved by +1.0pt from 3.6% last year but remains in single digits and below industry norms. Net profit margin 11.6% (prior year 14.0%) declined due to increased market-related expenses but remains near the industry median of 11.9%. Ordinary profit margin 16.6% (prior year 19.9%) also declined, though the expansion of funding income suggests a strengthening operating base.
Cash Quality: Operating Cash Flow (OCF) ¥225.7B is 2.5x Net Income ¥89.7B, indicating high cash conversion, with OCF/EBITDA at 1.55x and an accrual ratio of -0.3%, showing strong cash support for earnings.
Investment Efficiency: Total asset turnover 0.020x is consistent with banking industry characteristics. EPS ¥129.4 (prior year ¥101.7 +27.2%), and Book Value per Share ¥2,820.2, indicating steady accumulation of shareholder value.
Financial Soundness: Equity Ratio 5.0% (prior year 4.8%) edged up slightly but remains thin, well below regulatory thresholds (8%+). Loan-to-deposit ratio 71.8% (Loans ¥2,314.1B ÷ Deposits ¥3,225.3B) is within an appropriate range and liquidity risk is limited. Debt-to-equity multiple (leverage) 19.1x is within typical banking ranges, but increasing capital is a medium-to-long-term priority.
Operating Cash Flow improved significantly to ¥225.7B (YoY +¥378.3B), turning from last year’s negative ¥1,524.3B to positive. OCF before working capital changes totaled ¥265.0B, less income taxes paid of ¥39.4B, and net other operating activities contributed to the improvement. Investing Cash Flow was +¥496.7B (prior year -¥907.9B), a net inflow due to reductions in securities positions versus capital expenditures of ¥7.5B and intangible asset investments of ¥6.3B. Free Cash Flow reached ¥722.4B, substantially improving financial flexibility. Financing Cash Flow was -¥26.8B, with dividends paid ¥28.1B and share buybacks ¥0.03B, partially offset by proceeds ¥1.4B from disposal of treasury stock. Cash and Cash Equivalents at period-end increased to ¥3,876.1B (period-begin ¥3,180.4B +¥695.7B), significantly expanding liquidity buffers. Depreciation ¥17.0B against CapEx yields a CapEx/Depreciation ratio of 0.44x, indicating conservative capital expenditure levels, with growth investment directed toward loans and securities (financial assets).
The ¥0.6B difference between Ordinary Income ¥128.5B and Pre-tax Income ¥127.9B indicates minimal impact from extraordinary items. Extraordinary Income ¥0.01B (including negative goodwill ¥0.2B) and Extraordinary Losses ¥0.6B (impairment ¥0.1B, etc.) are minor. Other non-operating ordinary items recorded a substantial deficit of -¥200.7B, with market-related costs such as securities valuation and disposal losses pressuring earnings; these are considered temporary effects from bond position adjustments during the sharp rise in yields. Investment management income is expanding as a recurring source, indicating healthy core earnings power. OCF is 2.5x Net Income and OCF/EBITDA is 1.55x, so cash generation materially exceeds accounting profits, and alignment between accounting earnings and cash generation is strong. Comprehensive Income was ¥127.4B versus Net Income ¥89.7B, with Other Comprehensive Income +¥37.7B (deferred hedge gains +¥56.8B, securities valuation differences -¥44.6B, retirement benefit adjustments +¥26.0B), indicating hedge effects and pension valuation gains bolstered equity. The accrual ratio of -0.3% supports a clean earnings structure.
The full-year guidance anticipated Ordinary Income ¥145.0B (YoY +12.8%) and Net Income ¥99.0B (YoY +10.3%). Actual results were Ordinary Income ¥128.5B (achievement rate 88.6%) and Net Income ¥89.7B (achievement rate 90.6%), slightly below guidance. Unexpected increases in market-related expenses were the primary cause of the shortfall; investment management income expanded in line with expectations, but increases in other ordinary expenses offset gains. Forecast EPS was ¥144.85 versus actual ¥129.4. The announced annual dividend forecast of ¥29 appears to be presented on a post-stock-split basis, whereas interim actual dividend was ¥208 for the period; caution is advised in comparisons. While interest income is expected to continue growing, the ability to contain market volatility impacts will be key to meeting future forecasts.
Interim and year-end dividends totaled ¥208 (interim ¥96, year-end ¥112), with actual cash dividends paid of ¥28.1B, resulting in an effective payout ratio of 31.3% relative to Net Income ¥89.7B (disclosed payout ratio 30.7%). Share buybacks were minimal at ¥0.03B, so the Total Return Ratio is approximately aligned with the payout ratio. With Free Cash Flow ¥722.4B and dividend payments ¥28.1B, FCF coverage is 25.7x, indicating ample capacity and high dividend sustainability. However, given the thin Equity Ratio 5.0%, priority should be placed on retaining earnings to build capital buffers, making it realistic to maintain a payout ratio around 30% in the near term. While no explicit payout ratio target has been stated, based on past performance, cash balances ¥387.6B, and OCF ¥225.7B, current dividend levels appear sustainably covered.
Interest Rate Volatility Risk: Other ordinary expenses surged YoY by +¥180.8B, with market-related losses from securities valuation and disposal compressing profits. While these are viewed as temporary effects from duration adjustments and position reductions during a rapid rise in yields, persistent interest-rate volatility could increase earnings variability. It will be important to monitor whether investment management income growth can outpace rising funding costs (YoY +¥51.9B).
Capital Adequacy Risk: Equity Ratio 5.0% is substantially below regulatory thresholds (8%+), leaving capital buffers relatively thin. With ROE 4.6% and low capital efficiency, accumulating retained earnings through profit growth is urgent. If loan growth (+5.3%) continues without commensurate capital increases, the bank may face constraints on regulatory compliance and growth investments.
Business Concentration Risk: The Banking business accounts for 92.1% of revenue and 98.9% of profits, indicating very high concentration of revenue sources. Credit exposure to the regional economy (centered on Iwate Prefecture) is significant, making performance sensitive to regional economic conditions, population decline, and structural industry changes. Non-interest income (fee income) decreased slightly by -1.2% YoY, and progress on revenue diversification has been limited.
Profitability & Returns
| Metric | Company | Median (IQR) | Delta |
|---|---|---|---|
| Net Profit Margin | 11.6% | 11.9% (7.2%–35.4%) | -0.3pt |
Net profit margin is approximately in line with the industry median, indicating average profitability for a bank.
Growth & Capital Efficiency
| Metric | Company | Median (IQR) | Delta |
|---|---|---|---|
| Revenue Growth Rate (YoY) | 57.5% | 10.1% (7.3%–12.1%) | +47.5pt |
Revenue growth far exceeds the industry median, reflecting a standout increase in investment management income during a rising-rate environment.
※ Source: Company compilation
The Bank captured tailwinds from a rising-rate environment, with investment management income expanding by YoY +¥112.5B, delivering high revenue growth of +57.5%. OCF ¥225.7B is 2.5x Net Income, Free Cash Flow ¥722.4B, and cash generation improved markedly, providing ample dividend capacity (FCF coverage 25.7x). Loan growth +5.3% and Loan-to-Deposit ratio 71.8% indicate balanced asset-liability management and limited liquidity risk.
However, other ordinary expenses jumped YoY by +¥180.8B, and market-related losses dampened profit growth. Equity Ratio 5.0% is below regulatory thresholds, necessitating capital accumulation. ROE 4.6% is low, revenue concentration in banking (92.1% of sales) is high, and regional economic risks plus weak non-interest income growth are ongoing concerns. Changes in the interest rate environment, re-pricing of deposit costs, and progress on cost efficiency will determine profit sustainability in subsequent periods.
This report was automatically generated by AI analyzing XBRL financial statement data. It is not a recommendation to invest in any specific security. Industry benchmarks are reference information compiled by the company based on public financial statements. Investment decisions are your responsibility; please consult a professional advisor as needed.