| Metric | Current Period | Same Period Previous Year | YoY |
|---|---|---|---|
| Revenue | ¥42.73B | ¥34.23B | +24.8% |
| Operating Income | - | - | - |
| Ordinary Income | ¥8.49B | ¥5.85B | +45.1% |
| Net Income | ¥5.72B | ¥4.12B | +38.8% |
| ROE | 1.4% | 1.1% | - |
In Q1 of the fiscal year ending March 2027, the Company posted higher revenue and earnings against a backdrop of rising interest rates, marking a solid start to the fiscal year. Revenue (ordinary income) was ¥42.73B, up +24.8% year on year, ordinary income was ¥8.49B, up +45.1%, and net income was ¥5.72B, up +38.8%. Each profit metric expanded at a pace exceeding revenue growth. The primary driver was the core Banking Business, where increases in interest income and fee income contributed to an improvement in the ordinary income margin.
【Revenue】Revenue (ordinary income) was ¥42.73B, representing a year-on-year increase of +24.8%. External ordinary income from the Banking Business was ¥30.21B (+37.7%), driving overall results, with its share of revenue reaching 70.7%. The Leasing Business posted a slight decline in revenue to ¥10.29B (△2.9%), while the Credit Guarantee Business recorded ¥0.45B (+73.3%), showing high growth despite its small scale.
【Profit and Loss】Ordinary income increased by more than the rate of revenue growth to ¥8.49B (+45.1%), while net income rose to ¥5.72B (+38.8%). The ordinary income margin improved to 19.9% from 17.1% in the same period of the previous year. Segment profit of the Banking Business was ¥8.55B (+35.2%), supported by an increase in interest income (interest income of ¥22.44B versus ¥16.55B in the previous year) and growth in net fee income. Extraordinary losses were limited to ¥0.25B, including an impairment loss of ¥0.23B, and had a limited impact on results. Revenue and earnings both increased, indicating simultaneous top-line expansion and profitability improvement.
The reported segments comprise Banking, Leasing, and Credit Guarantee. Ordinary income from Banking was ¥30.21B (70.7% of the total, YoY +37.7%), while segment profit was ¥8.55B (+35.2%), making it the largest contributor to earnings. Leasing was somewhat soft, with ordinary income of ¥10.29B (24.1% of the total, YoY △2.9%) and segment profit of ¥0.34B, down from ¥0.39B in the previous year. Credit Guarantee remained small in scale, with ordinary income of ¥0.45B (1.1% of the total, YoY +73.3%), but segment profit increased substantially to ¥0.66B from ¥0.38B in the previous year, raising its contribution to earnings. Overall, earnings remain highly concentrated in Banking, although growth in Credit Guarantee is contributing to portfolio diversification.
【Profitability】The ordinary income margin improved to 19.9% from 17.1% in the previous year, while the net profit margin rose to 13.4% from 12.0%. The primary factors were growth in net interest income and an increase in net fee income.【Cash Flow Quality】Comprehensive income was ¥57.47B, substantially exceeding net income of ¥5.72B. The difference was attributable to an increase of ¥48.35B in valuation differences on available-for-sale securities, indicating an element of dependence on market conditions.【Investment Efficiency】ROE was 1.4%, while basic EPS was ¥139.22 (¥98.99 in the previous year, +40.6%), demonstrating that earnings growth was reflected in per-share metrics. The return on total assets remained low, reflecting the large balance sheet characteristic of the banking industry.【Financial Soundness】Although the equity ratio increased to 6.2% from 5.4% in the previous year, it remains low compared with general benchmarks for financial soundness, indicating room for improvement in capital strength. Loans were ¥458.14B and deposits were ¥583.16B, resulting in a loans-to-deposits ratio of approximately 78.6% and indicating stable liquidity.
As the cash flow statement is not disclosed, funding trends are analyzed based on changes in the balance sheet. Securities (banking account) increased to ¥113.98B from ¥106.16B in the previous year, indicating continued accumulation of investment assets. Meanwhile, cash and deposits declined to ¥79.08B from ¥83.65B, while call loans increased substantially to ¥36.32B from ¥2.40B, indicating a reallocation of short-term investment assets. On the liabilities side, certificates of deposit declined to ¥10.11B from ¥30.85B, while liabilities related to securities lending and borrowing transactions decreased to ¥136.03B from ¥143.20B, indicating progress in reducing market-based funding. Net assets increased by +14.7% to ¥418.06B from ¥364.48B in the previous year, as current-period income and the increase in valuation differences on available-for-sale securities strengthened the capital base.
The increase in earnings for the current period was supported by recurring revenue factors, including growth in net interest income (interest income of ¥22.44B and interest expenses of ¥6.51B, representing income growth equivalent to +30.7% year on year) and an increase in net fee income. The impact of extraordinary gains and losses was limited, with impairment losses of ¥0.23B accounting for ¥0.25B in extraordinary losses. Meanwhile, there was a significant gap between comprehensive income of ¥57.47B and net income of ¥5.72B, primarily due to the ¥48.35B increase in valuation differences on available-for-sale securities. These valuation differences depend on market interest rates and spread conditions, and it should be noted that if the interest-rate environment reverses, the positive effect on the equity ratio may diminish. Net income itself was supported by interest and fee income from the core banking business, and the quality of earnings improved compared with the same period of the previous year.
The full-year ordinary income forecast for the fiscal year ending March 2027 is ¥30.50B (+37.8% year on year), while the EPS forecast is ¥100.28 on a post-stock-split basis. Q1 ordinary income of ¥8.49B represents progress of 27.8% against the full-year forecast, slightly exceeding the 25% benchmark based on a simple quarterly progress rate. As of the current quarter, there were no revisions to the earnings or dividend forecasts, and progress is viewed as being in line with the Company’s expectations.
For the fiscal year ended March 2026, the year-end dividend consisted of an ordinary dividend of ¥85 plus a ¥10 commemorative dividend marking the Company’s 130th anniversary. For the fiscal year ending March 2027, the Company plans a 5-for-1 stock split effective October 1, 2026. On a pre-split basis, the Company forecasts a year-end dividend of ¥75 and an annual dividend of ¥150; the total annual dividend after the split is indicated as “－”. Against the Company’s net income plan of ¥20.6B, the payout ratio calculated from the assumed total dividend on a pre-split basis is approximately 30%, below the general benchmark of less than 60%. Given the low equity ratio of 6.2%, balancing capital strengthening through retained earnings with dividend payments will be a key issue going forward.
Margin Structure: The earnings base of the Banking Business depends on interest income, but if deposit rates rise and competition intensifies, maintaining the interest margin may become more difficult. Although net interest income has increased from the previous year, changes in the margin environment could readily affect profitability.
Capital Strength: The equity ratio improved to 6.2% from 5.4% in the previous year, but remains low compared with general benchmarks for financial soundness. The increase in valuation differences on available-for-sale securities has contributed to the increase in equity, and a reversal in market conditions could affect the capital base.
Cost Efficiency: Ordinary expenses in the Banking Business increased to ¥34.24B from ¥28.39B in the previous year, and the pace of expense growth relative to top-line expansion could affect the rate of profitability improvement. Trends in personnel expenses, system-related expenses, and other costs will determine future efficiency.
Profitability and Returns
| Metric | Company | Median (IQR) | Delta |
|---|---|---|---|
| Net Profit Margin | 13.4% | – | – |
The Company’s net profit margin of 13.4% has limited comparative benchmark data within the industry, but on an absolute basis it is improving from 12.0% in the same period of the previous year.
Growth and Capital Efficiency
| Metric | Company | Median (IQR) | Delta |
|---|---|---|---|
| Revenue Growth Rate (Year on Year) | 24.8% | – | – |
The Company’s revenue growth rate of 24.8% represents substantial growth year on year, indicating a revenue expansion phase that has captured the rising interest-rate environment.
※Source: Compiled by the Company
Revenue and earnings increased due to growth in interest income and fee income. Ordinary income and net income both reached a quarterly progress rate of 27.8% against the full-year plan, exceeding the simple progress benchmark of 25%.
Comprehensive income of ¥57.47B substantially exceeded net income of ¥5.72B, with most of the difference resulting from the increase in valuation differences on available-for-sale securities. As this capital-enhancement effect depends on market conditions, the trend in valuation differences will remain an area for monitoring.
Although the equity ratio improved to 6.2%, expenses in the Banking Business also increased significantly. Balancing earnings growth with cost efficiency remains an observed structural issue over the medium term.
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 disclosed earnings data. Investment decisions should be made at your own responsibility, after consulting with professionals as necessary.
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