| Metric | Current Period | Prior Year Same Period | YoY |
|---|---|---|---|
| Revenue | ¥789.3B | ¥653.1B | +36.3% |
| Operating Income | ¥581.1B | ¥486.8B | +19.4% |
| Ordinary Income | ¥1,206.1B | ¥1,035.9B | +16.4% |
| Net Income | ¥567.8B | ¥349.7B | +62.4% |
| ROE | 5.3% | 3.8% | - |
For the 2026 FY full year, Revenue was ¥789.3B (vs prior year +¥136.2B +20.9%), Operating Income was ¥581.1B (vs prior year +¥94.3B +19.4%), Ordinary Income was ¥1,206.1B (vs prior year +¥170.2B +16.4%), and Net Income Attributable to Owners of the Parent was ¥567.8B (vs prior year +¥218.1B +62.4%), achieving both revenue and profit growth. Loan balances expanded to ¥20.3T (vs prior year +7.1%), and growth in lending to the region supported earnings. Net fee income was ¥446.1B (vs prior year +¥2.6B), a modest increase, while net interest income rose significantly to ¥2,626.7B (vs prior year +¥379.8B +16.9%), driven by volume expansion. Comprehensive income turned sharply positive to ¥1,770.2B (prior year △¥679.3B), with securities valuation gains of ¥571.4B, deferred hedge gains of ¥93.2B, and actuarial gains on post-employment benefits of ¥250.9B boosting shareholders’ equity. The sharp rise in net income was underpinned by a lower tax burden (effective tax rate 28.6%, prior year 30.3%) and improvement in valuation items.
【Revenue】 Revenue (on an ordinary income basis) was ¥789.3B (vs prior year +20.9%), a roughly 20% increase. By component, investment income was ¥4,425.5B (vs prior year +¥869.8B +24.5%) with loan interest income ¥2,569.4B (vs prior year +¥555.2B) and securities interest and dividends ¥1,322.8B (vs prior year +¥251.1B) leading the growth. Loan balances rose 7.1% to ¥20.3T and the loan-to-deposit ratio increased to 94.2% (prior year 88.0%). Improvement in lending spreads and volume expansion boosted net interest income. Fee-related revenue was ¥770.9B (vs prior year +¥25.2B), while net fee income (gross margin) remained ¥446.1B (vs prior year +¥2.6B), indicating limited growth in non-interest income.
【Profitability】 Operating Income was ¥581.1B (vs prior year +19.4%), maintaining a high operating margin of 73.6%. Funding costs increased to ¥1,798.8B (vs prior year +¥490.1B +37.5%), outpacing revenue growth; deposit interest was ¥482.6B (vs prior year +¥255.6B), and market-based funding costs such as call money and repo also rose. Net interest margin (NIM) is estimated at around 1.29%, indicating a continued low-margin structure. Selling, general and administrative expenses were ¥1,732.9B (vs prior year +¥143.9B +9.1%), keeping the cost-to-income ratio around 74%. Ordinary Income was ¥1,206.1B (vs prior year +16.4%), including equity-method income of ¥1.0B (prior year △¥0.2B). Extraordinary items were a net loss of △¥9.0B (extraordinary gains ¥1.5B, extraordinary losses ¥10.4B), a small loss. Profit before tax was ¥1,197.1B (vs prior year +15.4%), income taxes were ¥342.7B (vs prior year +¥88.5B), lowering the effective tax rate to 28.6% (prior year 30.3%). After deducting net income attributable to non-controlling interests of ¥0.2B, Net Income Attributable to Owners of the Parent was ¥567.8B (vs prior year +62.4%), a sharp rise at the net income level. The large swing to comprehensive income of ¥1,770.2B (prior year △¥679.3B) was driven by Other Comprehensive Income of ¥915.7B (securities valuation gains ¥571.4B, actuarial gains on retirement benefits ¥250.9B, deferred hedge gains ¥93.2B), reflecting temporary valuation items. In conclusion, revenue and profit increased.
【Profitability】ROE was 5.3% (vs prior year +0.9pt), calculated as Net Income Attributable to Owners of the Parent ¥567.8B divided by the average shareholders’ equity for the period (estimated (¥10,767.2B + ¥9,295.9B)/2). Operating margin was an extremely high 73.6%, reflecting the gross margin structure relative to ordinary income, which differs from manufacturing businesses due to the banking business model. Net profit margin was 71.9% (Net Income Attributable to Owners of the Parent / Revenue), aided by a lower tax burden and improvement in valuation items. Return on Assets (ROA) improved to 0.4% (prior year 0.3%). 【Cash Quality】Operating Cash Flow / Net Income was △4.15x, and Operating Cash Flow / EBIT (before depreciation) was △3.26x, reflecting a cash-out structure due to expansion of asset management unique to banking. Increases in loans (+¥1.34T) and call money (+¥1.03T) pushed Operating Cash Flow deeply negative. Investing Cash Flow was +¥202.94B, suggesting sales/redemptions of marketable assets, and remained positive after capital expenditures of ¥10.62B and intangible asset acquisitions of ¥15.46B. Free Cash Flow was △¥32.48B, insufficient to cover dividend payments of ¥29.33B, highlighting cash position management issues. 【Investment Efficiency】Total asset turnover was 0.002x, reflecting low turnover typical of banks. Tangible fixed asset turnover was 3.64x (Revenue ¥789.3B ÷ tangible fixed assets ¥2,169.2B). Intangible fixed assets were ¥371.5B (prior year ¥291.8B, +27.3%), with software ¥244.3B as the main item reflecting increased digital investment. 【Financial Soundness】Equity Ratio was 3.2% (prior year 2.8%), well below regulatory minimums of 8% on a simple disclosure basis; however, in banking the consolidated BIS capital ratio is the relevant evaluation, so this standalone figure is for reference. The loan-to-deposit ratio of 94.2% is near the upper bound of an appropriate range, leaving limited liquidity headroom. Borrowing dependence was 12.1% (borrowings ¥4.05T / total assets ¥33.56T); increases in short-term funding (call money ¥3.29T, repo-related ¥2.69T) require maturity mismatch management. Interest-bearing debt ratio was high at 96.8%, consistent with banking industry structure.
Operating Cash Flow was △¥235.42B (prior year △¥503.90B), a large negative but an improvement of +¥268.48B year-over-year. Subtotal (before working capital changes) was △¥197.75B; after paying corporate taxes of ¥37.67B, the net amount of other operating activities was negative. Increases in loans (approximately +¥1.34T), call money (+¥1.03T), and repo-related liabilities (+¥0.45T) significantly depressed Operating Cash Flow due to changes in asset-liability composition. In banking, loan growth results in cash outflows at the operating cash flow stage, differing from typical operating companies. Investing Cash Flow was +¥202.94B (prior year △¥762.83B), largely due to proceeds from sales/redemptions of marketable securities, far exceeding capital expenditures of ¥10.62B and intangible asset acquisitions of ¥15.46B. Free Cash Flow was △¥32.48B (Operating CF △¥235.42B + Investing CF +¥202.94B). Financing Cash Flow was △¥29.88B, including dividend payments of ¥29.33B and share buybacks of ¥0.68B, partially offset by proceeds from disposal of treasury stock of ¥0.13B. Cash and deposits decreased from ¥715.53B at the beginning of the period to ¥709.30B at the end of the period, a decline of △¥6.23B, reflecting negative FCF.
Of Ordinary Income ¥1,206.1B, Operating Income was ¥581.1B, and non-operating income of ¥625.0B (including equity-method income ¥1.0B and other non-operating income ¥204.4B) made a large contribution to earnings expansion at the ordinary income stage. This reflects the banking accounting structure where part of asset management income is classified as non-operating, making analysis at the ordinary income stage important. Extraordinary items were a net loss of △¥9.0B (extraordinary gains ¥1.5B, extraordinary losses ¥10.4B), with impairment losses of ¥2.4B included and considered temporary within ordinary loss items such as disposal of fixed assets. Comprehensive income of ¥1,770.2B reached 3.1x Net Income ¥567.8B, with Other Comprehensive Income of ¥915.7B a major contributor. Components include securities valuation gains ¥571.4B, deferred hedge gains ¥93.2B, and actuarial gains on pension benefits ¥250.9B, all non-cash valuation items. Securities valuation gains reflect unrealized gains from lower yields and improved market conditions; deferred hedge gains reflect valuation differences from hedge accounting for interest rate swaps; actuarial gains reflect improved pension asset performance and resolution of actuarial assumptions. These should be distinguished from sustainable earning power. A large divergence between ordinary income and cash flow (Operating CF △¥235.42B vs Ordinary Income ¥1,206.1B) is mainly due to working capital changes from loan growth and funding increases, and from an accrual perspective, attention is required regarding quality of earnings.
Full year guidance plans Ordinary Income of ¥1,495.0B (vs prior year +24.0%), Net Income Attributable to Owners of the Parent of ¥1,000.0B (vs prior year +76.2%), and EPS of ¥529.20. Ordinary Income of ¥1,206.1B for the first half (cumulative through Q2) represents 80.7% of the full-year forecast, a high progress rate. The guidance assumes continued loan growth and improvement in interest rate conditions contributing to spread improvement, while incorporating upward pressure on funding costs. Dividend guidance is ¥105 per year (interim ¥85, year-end assumed ¥95), revised down from last year’s actual ¥180, indicating a priority on internal reserves and capital buildup next fiscal year. On an EPS forecast of ¥529.20, the implied payout ratio is about 20%, a conservative level balancing growth investment and regulatory capital requirements.
Dividends are interim ¥85 and year-end ¥95 for an annual ¥180 (prior year same period ¥65), a substantial increase. Payout ratio is 39.8% (total dividends approximately ¥25.56B / Net Income Attributable to Owners of the Parent ¥567.8B), within a sustainable range. Share buybacks were ¥0.68B (prior year ¥0.02B), small in scale, and total shareholder return ratio is approximately 46.2%. Treasury stock at period-end was 2,175 thousand shares (1.1% of outstanding shares 191,138 thousand shares), low. Next period dividend guidance is ¥105 per year (implying a payout ratio of about 20% on EPS forecast ¥529.20), representing a significant reduction and indicating a policy to lower payout ratio while prioritizing internal reserves for capital accumulation and growth investment. Free Cash Flow of △¥32.48B cannot cover dividend payments of ¥29.33B, resulting in short-term dividend funding from existing capital, but given the structure of deposits and market funding this is not considered a problematic level.
Margin compression risk: NIM is around 1.29%, a low level, and if upward pressure on deposit rates outpaces improvement in lending rates, net interest income will be compressed. Against loan balance ¥20.3T and deposits ¥21.6T, a 0.1pt spread movement would impact profit by approximately ¥20.0B. With a high cost-to-income ratio of 74%, sustainable profitability improvement is difficult without margin improvement.
Liquidity and funding risk: Loan-to-deposit ratio of 94.2% is high, leaving limited liquidity headroom. Short-term funding (call money ¥3.29T, repo-related liabilities ¥2.69T) accounts for 17.8% of total assets, creating risks from maturity mismatch and funding cost volatility. Persistent negative Operating Cash Flow increases reliance on market funding, so ability to respond under liquidity stress is a monitoring point.
Valuation-item volatility risk: Of comprehensive income ¥1,770.2B, Other Comprehensive Income ¥915.7B (securities valuation gains ¥571.4B, deferred hedge gains ¥93.2B, actuarial gains ¥250.9B) is sensitive to market conditions and interest rate movements. In a rising rate environment, unrealized bond losses could widen; in weak equity markets, valuation gains could shrink, pressuring shareholders’ equity and potentially affecting regulatory capital ratios. Prior year Other Comprehensive Income was △¥1,401.7B, confirming high volatility.
Profitability & Returns
| Metric | Company | Median (IQR) | Delta |
|---|---|---|---|
| ROE | 11.3% | 7.7% (5.0%–8.8%) | +3.6pt |
| Operating Margin | 73.6% | 14.6% (7.2%–39.4%) | +59.0pt |
| Net Profit Margin | 71.9% | 11.9% (7.2%–35.4%) | +60.0pt |
ROE is +3.6pt above the industry median, indicating solid profitability. Operating margin and net profit margin are extremely high given banking revenue structure, reflecting a business model focused on net interest income.
Growth & Capital Efficiency
| Metric | Company | Median (IQR) | Delta |
|---|---|---|---|
| Revenue Growth Rate (YoY) | 36.3% | 10.1% (7.3%–12.1%) | +26.2pt |
Revenue growth rate exceeds the industry median by +26.2pt, driven by loan growth and increases in investment income.
※ Source: Company compilation
Loan balances increased for the third consecutive period (estimated) to ¥20.3T, with expansion of regional lending driving volumetric growth. Loan-to-deposit ratio of 94.2% is near the upper bound of an appropriate range, but future profit growth depends on improvements in lending spreads and changes in interest rate conditions. Given a low-margin structure with NIM around 1.29% and SG&A growth of +9.1%, the realization of efficiency effects from digital investment (intangible assets +27.3%) will be key to medium-term profitability improvement.
Comprehensive income of ¥1,770.2B reached 3.1x Net Income ¥567.8B, with Other Comprehensive Income ¥915.7B substantially boosting shareholders’ equity. Securities valuation gains ¥571.4B, deferred hedge gains ¥93.2B, and actuarial gains ¥250.9B are valuation items reflecting improved market conditions; the large reversal from prior year Other Comprehensive Income △¥1,401.7B includes temporary factors and should be distinguished from sustainable earnings. Sensitivity to interest rate and market movements is high, so monitoring the impact on regulatory capital ratios is necessary.
Dividend policy is shifting to a conservative level with next period guidance of ¥105 per year (payout ratio approx. 20%), clarifying a priority on internal reserves and capital accumulation. Equity Ratio improved to 3.2% (prior year 2.8%) but remains far from regulatory minimums on a simple basis; balancing capital adequacy and growth investment will determine the sustainability of shareholder returns. While Free Cash Flow △¥32.48B is structurally typical for banking and may be temporary, persistent negative Operating Cash Flow indicates high funding dependence, making liquidity management and funding cost trends important to monitor.
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 firm based on public financial statement data. Investment decisions are your own responsibility; consult a professional if necessary.