| Metric | Current Period | Same Period of Previous Year | YoY |
|---|---|---|---|
| Revenue | ¥301.6B | ¥224.5B | +34.3% |
| Operating Income | - | - | - |
| Ordinary Income | ¥75.8B | ¥48.6B | +55.7% |
| Net Income | ¥51.9B | ¥34.0B | +52.5% |
| ROE | 2.3% | 1.6% | - |
In Q1 FY2027, Toho Bank posted higher revenue and higher profit, driven by the concurrent expansion of net interest income and improvement in cost efficiency. Revenue (ordinary income) was ¥301.6B (+34.3% YoY), ordinary income was ¥75.8B (+55.7%), and net income (quarterly net income attributable to owners of the parent) was ¥51.9B (+52.5%), with all three metrics securing double-digit growth. In the core Banking Business, growth in interest income accompanying higher yields on loans and securities drove results. Revenue expanded at a pace exceeding the increase in expenses, causing the rate of profit growth to surpass the rate of revenue growth.
【Revenue】Revenue (ordinary income) increased 34.3% YoY to ¥301.6B. The core Banking Business accounted for ¥273.4B (+38.5% YoY), representing approximately 90.7% of total revenue and driving the majority of the increase. The Leasing Business expanded to ¥22.6B (+14.9%), and the Credit Guarantee Business increased to ¥3.2B (+35.4%), while Other Businesses declined to ¥3.6B (-30.9%). In the Banking Business, interest income increased to ¥203.6B (¥153.3B in the previous year), supported by higher yields on loans and securities.
【Profit and Loss】Ordinary income was ¥75.8B (+55.7% YoY), and profit before tax was ¥75.4B. Net income, after deducting income taxes and other taxes of ¥23.5B (effective tax rate: 31.2%), was ¥51.9B (+52.5%). Extraordinary losses were limited to ¥0.3B, and the impact of temporary factors on earnings was limited. The ordinary income margin improved to 25.1% from 21.7% in the previous year, while the net income margin improved to 17.2% from 15.2%, indicating that growth in interest income exceeded the increase in selling, general and administrative expenses. In conclusion, the Company achieved higher revenue and higher profit in the quarter.
Segment income in the Banking Business was ¥80.5B (+51.9% YoY), accounting for the majority of company-wide income and serving as the primary driver of overall profit growth. Segment income in the Leasing Business increased to ¥3.3B (+17.3%), while Other Businesses increased to ¥4.2B (+52.6%). In contrast, despite a +35.4% increase in ordinary income in the Credit Guarantee Business, segment income was ¥4.5B (-3.0%), remaining almost flat and indicating sluggish profit growth relative to the expansion in revenue. The revenue mix was 90.7% Banking, 7.5% Leasing, 1.2% Other, and 1.1% Credit Guarantee, indicating a high concentration in the Banking Business. Company-wide performance is therefore strongly correlated with trends in the Banking Business.
【Profitability】The ordinary income margin was 25.1%, improving by approximately 345bp from 21.7% in the same period of the previous year. The net income margin also improved to 17.2% from 15.2%, an improvement of approximately 205bp. The expense ratio relative to gross profit in the Banking Business (the total of net interest income, net fees and commissions, and net other operating income) was approximately 58.7%, down significantly from approximately 68.2% in the same period of the previous year. This confirms an improvement in cost efficiency, with revenue growth exceeding the increase in expenses.【Cash Quality】Comprehensive income was ¥105.6B, exceeding net income of ¥51.9B. This reflects an increase in other comprehensive income driven by improvements in valuation differences on securities and deferred hedge gains or losses, while extraordinary losses were limited to ¥0.3B and the impact of non-recurring factors was limited.【Investment Efficiency】Basic EPS was ¥20.77 (¥13.62 in the previous year, +52.5%), and ROE (quarterly basis) was 2.3%.【Financial Soundness】Total assets were ¥6873.4B (+1.9% YoY), and net assets were ¥2258.1B (+3.7%). The equity ratio, calculated as net assets divided by total assets, was 3.3%, while the regulatory BIS capital ratio was 3.2%. The loan-to-deposit ratio, calculated by dividing loans of ¥4268.6B by deposits of ¥5763.4B, was approximately 74.1%, reflecting the balance-sheet structure of a banking business primarily funded by deposits.
As cash flow statement data are unavailable, funding trends are analyzed based on changes in the balance sheet. Cash and due from banks increased 5.0% to ¥994.2B from ¥946.7B in the same period of the previous year, indicating an increase in the liquidity buffer. On the funding side, negotiable certificates of deposit increased 22.6% to ¥510.1B from ¥416.2B in the previous year, indicating greater use of short-term funding amid rising market interest rates. On the asset side, loans increased gradually to ¥4268.6B (+1.0%), while securities increased to ¥1435.1B (+2.6%). Asset-side expansion exceeded the 0.4% increase in deposits to ¥5763.4B. As a result, the loan-to-deposit ratio was maintained at the conservative level of approximately 74.1%, and funding remained stable.
Profit in the quarter was primarily generated by recurring income. Extraordinary losses were limited to ¥0.3B, and the impact of temporary factors on earnings was limited. Meanwhile, net other operating income in the Banking Business turned negative at -¥11.7B (¥+0.5B in the previous year), with fluctuations in valuation and gains or losses on sales related to securities investments and hedging serving as a source of earnings volatility. The difference between ordinary income of ¥75.8B and net income of ¥51.9B is primarily explained by income taxes and other taxes of ¥23.5B (effective tax rate: 31.2%), indicating good transparency in the earnings structure. Comprehensive income of ¥105.6B exceeding net income was largely attributable to improvements of ¥+23.2B in valuation differences on securities and ¥+32.6B in deferred hedge gains or losses. The contribution of other comprehensive income (OCI) associated with changes in the interest-rate and spread environment is therefore an important consideration in assessing earnings quality.
Q1 progress against the full-year forecast was 29.0% for revenue (¥301.6B against ¥1042.0B), 38.7% for ordinary income (¥75.8B against ¥196.0B), and 39.9% for net income (¥51.9B against ¥130.0B). Compared with 25%, the benchmark for simple quarterly straight-line progress, profit items were 13–15 percentage points ahead of schedule, supported by accelerating net interest income and improved cost efficiency. No revisions were made to the earnings forecast or dividend forecast.
The full-year dividend forecast is ¥21.00 per share, and the payout ratio based on the full-year EPS forecast of ¥52.03 is approximately 40.3%. There has been no revision to the dividend forecast as of the current quarter. Since net income is progressing ahead of plan, progress toward achieving the full-year plan can be considered favorable. The dividend paid in the same period of the previous year was based on the interim dividend and therefore is not directly comparable; accordingly, this report does not comment on the year-on-year change in the annual dividend.
Risk of rising funding costs: Negotiable certificates of deposit increased 22.6% YoY to ¥510.1B, indicating greater reliance on short-term funding amid rising market interest rates. If deposit rates rise further (an increase in deposit beta), the growth rate of net interest income could be affected.
Risk of fluctuations in securities and hedge valuations: Net other operating income in the Banking Business turned negative at -¥11.7B (¥+0.5B in the previous year), while comprehensive income was supported by improvements of ¥+23.2B in valuation differences on securities and ¥+32.6B in deferred hedge gains or losses. If market interest rates reverse direction, fluctuations in other comprehensive income (OCI) could affect equity capital.
High financial leverage: Against total assets of ¥6873.4B, net assets were ¥2258.1B. The equity ratio calculated as net assets divided by total assets was 3.3%, while the BIS capital ratio was 3.2%. Although this is attributable to the structure of the Banking Business, which is primarily funded by deposits, the sensitivity of asset size to equity capital is relatively high.
Profitability and Returns
| Metric | Company | Median (IQR) | Delta |
|---|---|---|---|
| Net Income Margin | 17.2% | – | – |
The net income margin was 17.2%, an improvement of approximately 205bp YoY. Median data indicating the Company’s position within the industry have not yet been compiled.
Growth and Capital Efficiency
| Metric | Company | Median (IQR) | Delta |
|---|---|---|---|
| Revenue Growth Rate (YoY) | 34.3% | – | – |
Revenue growth of +34.3% may be high compared with other banks in the same industry; however, no definitive conclusion can be made because median data have not yet been compiled.
※Source: Compiled by the Company
Both ordinary income and net income achieved double-digit growth, while the expense ratio relative to gross profit in the Banking Business (equivalent to CIR) improved by approximately 9.5 percentage points YoY. Whether revenue growth continues to exceed the increase in expenses will be a key focus, as will expense trends from the next quarter onward.
The net income progress rate against the full-year forecast was approximately 39.9%, significantly exceeding the 25% benchmark for simple quarterly straight-line progress. Neither the earnings forecast nor the dividend forecast was revised, and the sustainability of the ahead-of-plan progress will be the focus going forward.
Net other operating income in the Banking Business turned negative at -¥11.7B, while comprehensive income was supported by improvements in valuation differences on securities and deferred hedge gains or losses. The possibility that these fluctuation factors could affect future earnings quality depending on market interest-rate trends is a structural characteristic observable from the earnings data.
This report is an earnings analysis document automatically generated by AI through analysis of XBRL earnings release data. It does not recommend investment in any specific security. Industry benchmarks are reference information compiled by the Company based on publicly available earnings data. Investment decisions should be made at your own responsibility, and you should consult a professional as necessary.
---End of Report---