| Metric | Current Period | Prior Year | YoY |
|---|---|---|---|
| Revenue / Net Sales | ¥1765.8B | ¥1313.6B | +34.4% |
| Operating Income / Operating Profit | - | - | - |
| Ordinary Income | ¥221.3B | ¥207.9B | +6.4% |
| Net Income / Net Profit | ¥187.0B | ¥132.7B | +40.9% |
| ROE | 5.1% | 4.2% | - |
The fiscal year ended March 2026 achieved increased revenues and profits with Ordinary Revenues of 1,765.8B (+452.2B YoY, +34.4%), Ordinary Income of 221.3B (+13.4B YoY, +6.4%), and Net Income of 187.0B (+54.3B YoY, +40.9%). Rising interest rates acted as a tailwind, expanding net interest income and driving a third consecutive year of revenue growth. Net Income rose significantly, aided by net special gains of 44.9B and an improvement in comprehensive income (540.3B). ROE improved by 0.7pt to 5.1% (prior year 4.4%), and equity was strengthened to 3,644.8B.
[Revenue] Ordinary Revenues increased substantially to 1,765.8B (+34.4% YoY). Interest income of 742.8B (prior year 540.2B) was the main contributor, supported by improved loan yields and higher dividend receipts from securities. Breakdown: loan interest 501.8B (prior year 394.8B), securities-related 204.7B (prior year 122.9B). Fee and commission income was 238.9B (prior year 222.6B, +7.3%), showing stable growth. Other ordinary revenues rose sharply to 400.1B (prior year 92.0B), reflecting expanded market-related income amid changes in funding and market conditions. Loans stood at 4,591.5B (+2.7% YoY) and deposits at 5,840.1B (+2.5% YoY), indicating steady regional franchise growth.
[Profitability] Ordinary expenses increased to 1,544.4B (prior year 1,105.7B, +39.7%), outpacing revenue growth. Funding costs doubled to 191.3B (prior year 98.5B), reflecting higher deposit rates. SG&A was 439.5B (prior year 418.5B, +5.0%), rising only slightly and indicating relatively good expense control. Other ordinary expenses of 400.1B (prior year 92.0B) reflect volatility in market-related gains/losses. Ordinary Income rose to 221.3B (+6.4%) but the ordinary income margin declined by 3.3pt to 12.5% (prior year 15.8%), indicating margin compression. Net special gains were a positive 44.9B (special gains 56.1B, special losses 11.3B), lifting profit before tax to 266.2B. Income taxes were 72.3B (effective tax rate 27.2%), resulting in Net Income of 187.0B (+40.9%). In conclusion, the company delivered revenue and profit growth, but higher funding costs and other expense increases have put pressure on margins.
[Profitability] ROE improved to 5.1% (prior year 4.4%), aided by a large increase in Net Income and strengthened equity. Net profit margin rose 0.5pt to 10.6% (prior year 10.1%), supported by the boost from special gains. Ordinary income margin fell 3.3pt to 12.5% (prior year 15.8%) due to higher deposit costs and increased market-related expenses.
[Cash Quality] Operating Cash Flow (OCF) was 107.3B versus Net Income of 187.0B, giving an OCF/Net Income ratio of 0.57x, which indicates remaining challenges in converting profits to cash. Free Cash Flow was 700.0B, supported by asset recoveries in Investing Cash Flow of 592.7B. Depreciation was 39.9B; the ratio of OCF to EBITDA-equivalent including depreciation remains low, influenced by working capital movements.
[Investment Efficiency] Total assets expanded to 6,737.1B (+3.0% YoY), and total asset turnover was 0.026x, a typical level for banking. Asset efficiency improved modestly as loan yields rose.
[Financial Soundness] Equity Ratio improved 0.6pt to 5.4% (prior year 4.8%), above the domestic minimum standard of 4%. Loan-to-deposit ratio was 78.6% (Loans 4,591.5B ÷ Deposits 5,840.1B), indicating good liquidity. Comprehensive income of 540.3B drove unrealized gains on securities to 424.9B (prior year 192.0B), increasing Accumulated Other Comprehensive Income to 667.1B and boosting equity. Deferred tax liabilities rose to 235.7B (prior year 49.8B), reflecting tax effects from expanded valuation differences.
Operating Cash Flow was 107.3B (+8.3% YoY), a modest increase, and the ratio to Net Income was 0.57x, highlighting weak cash conversion. Operating Cash Flow subtotal (before working capital changes) was 148.2B, and after payment of income taxes of 41.1B, core cash generation was limited. Investing Cash Flow was positive 592.7B due to asset recoveries far exceeding capital expenditures of 16.8B and intangible asset acquisitions of 17.2B. As a result, Free Cash Flow was a healthy 700.0B, covering shareholder returns of 81.0B (dividends 45.8B + buybacks 35.2B) by 8.6x. Financing Cash Flow was -81.3B, mainly due to net repayment of borrowings and shareholder returns. Cash and cash equivalents increased to 833.32B (prior year 771.45B, +8.0%), maintaining a stable liquidity position.
Net Income of 187.0B relative to Ordinary Income of 221.3B shows an uplift of 44.9B from special gains, indicating a contribution from one-off items. Special gains were 56.1B and special losses 11.3B (including impairment losses of 8.3B). Non-operating income included 32.4B in dividend and sale gains from securities, benefitting from improved market conditions. Comprehensive income of 540.3B substantially exceeded Net Income, with Other Comprehensive Income of 353.3B (unrealized gains on securities 232.9B, deferred hedge gains 83.0B, retirement benefit adjustments 30.6B) recorded. While market revaluation gains strengthened equity, unrealized gains remain exposed to market volatility. The OCF/Net Income ratio of 0.57x suggests high accruals and weaker cash backing of profits, which is a concern for earnings quality.
For FYending March 2027, the company forecasts Ordinary Income of 305.0B (+37.8% YoY) and Net Income of 200.0B (+6.9% YoY), expecting continued profit growth. Progress toward the Ordinary Income target is 72.6% (221.3B ÷ 305.0B). Progress toward the Net Income target is 93.5% (187.0B ÷ 200.0B), indicating the full-year forecast is conservative. Continued accumulation of interest income under higher rates and ongoing loan repricing are assumed. EPS forecast is ¥99.06, reflecting the impact of the stock split relative to the current-period EPS of ¥466.06.
Annual dividend is ¥150 (interim ¥55, year-end ¥95), with a payout ratio of 25.4% (total dividends 45.8B ÷ diluted Net Income 180.3B), a conservative level. The year-end dividend includes a ¥10 commemorative dividend for the 130th anniversary. Share buybacks totaled 35.2B, and combined with dividends the Total Return Ratio is approximately 45% (total returns 81.0B ÷ diluted Net Income 180.3B). With Free Cash Flow of 700.0B, coverage of total returns is 8.6x, supporting dividend sustainability. For FYending March 2027 the company indicates a post-split dividend forecast of ¥75, equivalent to an annual ¥150 on a pre-split basis, signaling continuation of stable dividends. Outstanding shares are 41.28M (after treasury shares 41.08M), and the company’s approach combining buybacks and the commemorative dividend indicates a strengthened shareholder return stance.
Margin compression risk from rising deposit costs: Funding costs doubled to 191.3B (prior year 98.5B) as deposit rates rose, increasing faster than loan yield improvements. While the loan-to-deposit ratio is 78.6% and liquidity is sound, continued upward pressure on deposit beta could delay NIM recovery. Ordinary income margin fell to 12.5% (prior year 15.8%), evidencing margin compression.
Weak OCF conversion and working capital volatility risk: OCF of 107.3B versus Net Income of 187.0B yields an OCF/Net Income ratio of 0.57x, indicating low cash conversion. Other OCF components were largely negative (estimated -952.3B), suggesting market-related transactions and valuation assets have pressured OCF. Sustainable improvement in cash generation is a key challenge.
Increased volatility in market-related costs: Other ordinary expenses surged to 400.1B (prior year 92.0B), making earnings more unstable due to securities-related gains/losses and trading activity. Securities lending-related liabilities expanded to 1,432.0B (prior year 958.7B, +49%), increasing collateral and liquidity management risks under market stress. The sharp rise in deferred tax liabilities (235.7B, prior year 49.8B) also signals large valuation swings.
Profitability & Returns
| Metric | Company | Median (IQR) | Delta |
|---|---|---|---|
| Net Profit Margin | 10.6% | 11.9% (7.2%–35.4%) | -1.3pt |
Net profit margin is 1.3pt below the industry median, indicating middling profitability within the sector.
Growth & Capital Efficiency
| Metric | Company | Median (IQR) | Delta |
|---|---|---|---|
| Revenue Growth Rate (YoY) | 34.4% | 10.1% (7.3%–12.1%) | +24.3pt |
Revenue growth outperformed the industry median by 24.3pt, reflecting notable expansion of interest income in a rising-rate environment and strong sector-relative growth.
※Source: Internal aggregation of public financial statements
Expansion of net interest income under rising rates drove a 34.4% increase in Ordinary Revenues, achieving standout revenue growth within the industry. However, deposit cost increases led to a 3.3pt decline in Ordinary Income margin, and delayed margin recovery will be key for restoring profitability. Progress on loan repricing and stabilization of deposit beta warrant close monitoring.
Comprehensive income of 540.3B materially strengthened equity, with unrealized gains on securities expanding to 424.9B. The Equity Ratio of 5.4% exceeds domestic regulatory thresholds but falls short of international standards, leaving a moderate capital cushion. Market valuation volatility will influence future equity levels.
Despite weak OCF/Net Income conversion at 0.57x, asset recoveries in Investing Cash Flow resulted in ample Free Cash Flow of 700.0B. With a Total Return Ratio of roughly 45% and a payout ratio of 25.4%, dividend sustainability appears high. The post-split dividend plan suggests continuation of an annual dividend equivalent to ¥150, indicating a maintained shareholder return policy.
This report was automatically generated by AI analyzing XBRL financial statement data. It does not constitute a recommendation to invest in any specific security. Industry benchmarks are reference information compiled by our firm based on public financial statements. Investment decisions are your responsibility; please consult professionals as needed.