| Metric | Current Period | Same Period of Previous Year | YoY |
|---|---|---|---|
| Revenue | ¥244.8B | ¥179.9B | +36.1% |
| Operating Income | - | - | - |
| Ordinary Income | ¥68.7B | ¥47.2B | +45.4% |
| Net Income | ¥47.5B | ¥32.1B | +48.1% |
| ROE | 2.0% | 1.4% | - |
Against the backdrop of rising interest rates, both loans and deposits increased, while the net interest margin expanded, resulting in higher revenue and earnings. Ordinary revenue was ¥244.8B (¥179.9B in the same period of the previous year, YoY +36.1%), Ordinary Income was ¥68.7B (¥47.2B, YoY +45.4%), and Net Income was ¥47.5B (¥32.1B, YoY +48.1%), representing double-digit growth across all metrics. The primary driver of earnings growth was the expansion of net interest income due to increases in interest on loans and interest and dividends on securities. Positive operating leverage was generated as revenue growth outpaced the increase in general and administrative expenses.
【Revenue】Ordinary revenue was ¥244.8B, up +36.1% year on year. As the sole reported segment is banking, no breakdown by business is disclosed; however, by examining the details, interest revenue of ¥160.95B (¥113.49B in the previous year, +41.8%) was the main growth driver. This included interest on loans of ¥102.27B (+31.4%) and interest and dividends on securities of ¥51.85B (+83.2%), both of which expanded. Fees and commissions also increased to ¥31.33B (¥27.97B in the previous year, +12.0%).
【Profit and Loss】Net interest income (interest revenue - interest expenses) expanded to ¥125.11B (¥94.23B in the previous year), becoming the primary driver of growth in Ordinary Income. General and administrative expenses were ¥72.40B (¥70.57B in the previous year, +2.6%), substantially below the pace of revenue growth, and the increase in revenue absorbed the rise in expenses. Meanwhile, other operating income (loss) deteriorated to a loss of ¥36.17B (a loss of ¥8.54B in the previous year), with market-related factors such as bond-related transactions partially offsetting the improvement in profit margins. Extraordinary losses were limited to ¥0.1B (including impairment losses of ¥0.03B), indicating that the impact of one-off factors on the conversion from Ordinary Income to Net Income was minimal. In conclusion, both revenue and earnings increased.
【Profitability】The Ordinary Income margin (Ordinary Income / Ordinary revenue) was 28.0%, improving by +1.7pt from 26.3% in the previous year, while the Net Income margin was 19.4%, improving by +1.6pt from 17.8% in the previous year. ROE was 2.0%. 【Cash Flow Quality】Comprehensive income was ¥90.2B, exceeding Net Income of ¥47.5B, but declined by -16.1% from ¥107.6B in the previous year. The positive contribution came from valuation differences on other securities of +¥54.0B, while deferred hedge gains (losses) of -¥8.3B and adjustments related to retirement benefits of -¥3.0B had a negative impact. 【Investment Efficiency】The ratio of general and administrative expenses to gross operating profit (expense ratio) was 65.4%, improving from 66.8% in the previous year, indicating that expense growth was relatively contained compared with revenue growth. 【Financial Soundness】The Equity Ratio was 5.1% (5.0% in the previous year), exceeding the regulatory minimum level. The loan-to-deposit ratio (loans / deposits) was approximately 79.7% (approximately 81.0% in the previous year), indicating that the structure in which deposit funding exceeds loans remains in place. Total assets increased by +2.1% year on year to ¥46,796.9B.
As no cash flow statement items are disclosed, funding trends are analyzed based on changes in the balance sheet. Deposits were ¥3,852.3B (¥3,727.4B in the previous year, +3.4%), of which negotiable certificates of deposit were ¥1,525.4B (¥687.7B in the previous year, +121.8%), indicating a greater weighting toward market-based funding. Loans increased moderately to ¥3,070.1B (¥3,017.8B in the previous year, +1.7%), and as the pace of deposit growth exceeded that of loans, the loan-to-deposit ratio declined year on year. Borrowings declined substantially to ¥2,679.9B (¥4,394.6B in the previous year, -39.0%), reducing reliance on market borrowings and enhancing balance-sheet stability. Cash and due from banks increased to ¥3,329.6B (¥2,826.5B in the previous year, +17.8%), also building up the liquidity buffer. The quality of the funding structure improved through deposit growth and the reduction of borrowings.
While the expansion of net interest income, a recurring source of revenue, supports earnings growth, other operating income (loss) deteriorated to a loss of ¥36.17B (a loss of ¥8.54B in the previous year). Fluctuations arising from market-related factors such as bond-related transactions are placing partial pressure on earnings and should be distinguished from recurring net interest margin income. Extraordinary losses were limited to ¥0.1B, indicating that one-off factors had almost no impact on the conversion from Ordinary Income to Net Income. Comprehensive income was ¥90.2B, exceeding Net Income of ¥47.5B, primarily due to valuation differences on other securities of +¥54.0B. However, deferred hedge gains (losses) of -¥8.3B and adjustments related to retirement benefits of -¥3.0B partially offset this contribution. The company’s meaningful sensitivity to valuation-related items is therefore an important consideration when assessing earnings quality.
The Full-Year forecast is Ordinary Income of ¥183.0B (YoY +32.2%), Net Income of ¥125.0B, and EPS of ¥81.47, with no revision from the initial forecast. As of Q1, progress toward the Full-Year forecast was 37.5% for Ordinary Income and 38.0% for Net Income, exceeding the 25% benchmark based on simple pro rata progress. Although the expansion of the net interest margin in a rising interest-rate environment contributed to this performance, attention should be paid to the possibility that fluctuations in other operating income (loss) due to market-related factors may influence progress in the second half of the fiscal year.
The dividend forecast for the fiscal year ending March 2027 is ¥163 annually (¥81.5 at fiscal year-end), calculated excluding the impact of the stock split (effective October 1, 2026; a 1-for-5 stock split). Based on average shares outstanding during the period (excluding treasury shares) of approximately 30.69 million shares, the annual dividend amount is estimated at approximately ¥50.0B, resulting in a Payout Ratio of approximately 40.0% against the Full-Year Net Income forecast of ¥125.0B. Retained earnings are substantial at ¥1,928.4B, and even based on Q1 Net Income of ¥47.5B, the company maintains sufficient capacity to cover the annual dividend.
Volatility in market-related gains and losses: Other operating income (loss) deteriorated to a loss of ¥36.17B (a loss of ¥8.54B in the previous year), with valuation gains and losses related to bonds becoming a source of quarterly earnings volatility.
Increase in funding costs: Negotiable certificates of deposit surged to ¥1,525.4B (¥687.7B in the previous year, +121.8%), increasing reliance on funding methods that are highly sensitive to market interest rates.
Room for improvement in expense efficiency: Although the ratio of general and administrative expenses to gross operating profit improved to 65.4% (66.8% in the previous year), it remains at a high level, requiring monitoring of the expense structure during periods of revenue growth.
Profitability and Returns
| Metric | Company | Median (IQR) | Delta |
|---|---|---|---|
| Net Income Margin | 19.4% | – | – |
The Company’s Net Income margin of 19.4% improved by +1.6pt year on year; however, as industry median data has not been collected, assessment of the relative level is limited.
Growth and Capital Efficiency
| Metric | Company | Median (IQR) | Delta |
|---|---|---|---|
| Revenue Growth Rate (Year on Year) | 36.1% | – | – |
The Revenue growth rate of +36.1% reflects the expansion of interest revenue in a rising interest-rate environment. Comparison with the industry median is expected to be refined as additional data is accumulated.
※Source: Compiled by the Company
As of Q1, progress toward the Full-Year forecast was approximately 38% for both Ordinary Income and Net Income, exceeding the 25% benchmark based on simple pro rata progress. The expansion of the net interest margin in a rising interest-rate environment supported the strong start to the fiscal year.
The primary driver of earnings growth was the expansion of net interest income; however, the widening loss in other operating income (loss) (loss of ¥8.54B in the previous year → loss of ¥36.17B) contributed to earnings volatility. Trends in the market-related business will therefore be a key area of focus going forward.
The expense ratio (general and administrative expenses / gross operating profit) was 65.4%, improving from 66.8% in the previous year. The trend in expense efficiency during a period of revenue growth will be an important focus in assessing the sustainability of structural profitability improvement.
This report is an earnings analysis document automatically generated by AI based on 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 investors should consult professionals as necessary before making such decisions.
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