| Metric | This Period | Prior Year | YoY |
|---|---|---|---|
| Revenue / Net Sales | ¥791.0B | ¥643.7B | +22.8% |
| Operating Income | - | - | - |
| Ordinary Income | ¥134.3B | ¥87.0B | +54.3% |
| Net Income | ¥105.3B | ¥68.0B | +54.8% |
| ROE | 6.9% | 5.0% | - |
The fiscal year ended March 2026 delivered a substantial increase in performance: Revenue (Ordinary Revenue) ¥791.0B (YoY +¥147.3B +22.8%), Ordinary Income ¥134.3B (YoY +¥47.3B +54.3%), and Net Income attributable to owners of the parent ¥105.3B (YoY +¥37.3B +54.8%). In the rising rate environment, interest on loans increased to ¥308.85B (prior year ¥258.93B), and Net Interest Income was ¥368.4B (prior year ¥354.0B), up 4.1%, with improvement in asset yields more than offsetting higher deposit funding costs (deposit interest ¥64.8B, prior year ¥22.8B), driving revenue growth. The expense ratio (SG&A ÷ Ordinary Revenue) improved to 42.4% (prior year 47.8%), a 5.4pt improvement, contributing to margin expansion. Total assets were ¥4兆3,144億円 (YoY +¥276B +0.6%), and Net Assets were ¥1,530B (YoY +¥165B +12.1%), strengthening the financial base. Comprehensive income was ¥180.8B, with improvement in Other Securities Valuation Differences (+¥90.5B) contributing to an increase in equity.
[Revenue] Ordinary Revenue reached ¥791.0B (+22.8%), a large increase. The main component was interest income of ¥453.2B (prior year ¥383.2B): interest on loans was ¥308.85B (+19.3%), and interest and dividends on securities were ¥90.7B (-4.2%), reflecting contribution from higher loan yields. Fee income was ¥117.3B (prior year ¥114.9B), a slight increase, confirming stability in service-related income. Other operating income rose to ¥115.1B (prior year ¥108.9B), with improvements such as foreign exchange gains. Loan balances were ¥2兆4,425億円 (+3.4%), and deposit balances were ¥3兆3,314億円 (+0.5%), expanding asset scale, with a loan-to-deposit ratio of approximately 73.3%, leaving liquidity comfortable.
[Profit & Loss] Expenses were ¥656.7B (prior year ¥556.6B), up ¥100.0B, but the revenue increase of ¥147.3B absorbed this, resulting in Ordinary Income of ¥134.3B (+54.3%). Expense breakdown: SG&A ¥335.5B (prior year ¥307.7B), +9.1%; interest expenses ¥84.8B (prior year ¥29.3B) rose sharply by +189.4% due to higher deposit funding costs, but the increase in interest income offset this. Service-related expenses were ¥40.5B, and other operating expenses increased by ¥147.0B; overall cost efficiency (CIR 42.4%) improved. Extraordinary items were minor (extraordinary gains ¥0.3B, extraordinary losses ¥4.3B), so one-off impacts were limited. Pre-tax income of ¥130.4B less corporate taxes ¥44.2B (effective tax rate 33.9%) resulted in Net Income attributable to owners of the parent of ¥105.3B (+54.8%), achieving revenue and profit growth.
[Profitability] Net profit margin improved to 13.3% (prior year 10.6%), up 2.7pt; ROE 6.9% (prior year 5.2%); ROA (on Ordinary Income basis) 0.3% (prior year 0.2%), showing improved profitability. Improvement in the expense ratio to 42.4% (prior year 47.8%) was the main driver of margin expansion, supported by asset yield improvements in the rising rate environment and cost control. [Cash Quality] Operating Cash Flow (OCF) turned sharply negative to -¥505.9B (prior year +¥1,120.7B), primarily due to working capital movements associated with asset increases: loans +¥814B and securities +¥383B — a structural feature of banking. OCF / Net Income was -4.8x, formally weak, but bank OCF is strongly affected by changes in loan and securities balances and should not be directly compared to non-financial corporates. [Investment Efficiency] Capital expenditures ¥10.4B vs. depreciation ¥20.1B, giving a Capex/Depreciation ratio of 0.52x, indicating a cautious stance focused on replacement investment. EPS ¥363.64 (prior year ¥309.15), BPS ¥6,462.86 (prior year ¥5,759.83), improving per-share metrics. [Financial Soundness] Equity Ratio 3.5% (prior year 3.1%), up 0.4pt, but regulatory buffer remains limited and capital policy requires ongoing monitoring. Leverage (Total Liabilities ÷ Net Assets) was 27.2x, standard for banking, but careful capital management is needed regarding loss absorption capacity. Liquidity: cash and deposits ¥8,003B (as % of total assets 18.5%) provide short-term liquidity.
OCF was -¥505.9B (prior year +¥1,120.7B), turning sharply negative. OCF subtotal (before working capital changes) was -¥492.8B; after adjusting net income ¥105.3B for working capital changes and provisions, cash flow was pressured. The main drivers were loan increases +¥814B and securities increases +¥383B, expanding invested assets; in banking, OCF typically turns negative during asset build-out phases. Corporate tax payments were ¥13.1B against pre-tax income ¥130.4B, relatively restrained; a decrease in deferred tax assets of -¥36.2B may have affected taxable income recognition. Investing CF was -¥190.6B, including capital expenditures ¥10.4B, gains on sale of tangible fixed assets ¥0.8B, and intangible asset purchases ¥1.2B. Financing CF was -¥15.9B, mainly dividend payments ¥14.9B and share buybacks ¥3.0B, partially offset by sales of treasury stock ¥2.3B. Free Cash Flow (OCF + Investing CF) was -¥696.6B, a large negative, but dividend and capex funding are covered by stable deposit funding, so short-term liquidity risk is limited. Even on an EBITDA basis (adding back depreciation ¥20.1B), cash outflows due to asset increases were large, temporarily lowering the operating cash conversion rate.
Earnings quality is generally sound: most of Ordinary Income ¥134.3B derived from core interest income and fee income, with limited one-off impacts. Extraordinary items totaled -¥4.0B (extraordinary gains ¥0.3B, extraordinary losses ¥4.3B including impairment losses ¥1.2B), minor, so recurring profitability flows through to Net Income. Interest income ¥453.2B consists of loan interest and securities interest/dividends, with contribution from improved loan yields. Other operating income ¥115.1B includes improved forex results but represents 14.6% of ordinary revenue, not excessive. The composition of “Other Ordinary Revenue” (non-operating income equivalent) is not disclosed, but the divergence between Ordinary Income and Net Income is mainly due to taxes (effective tax rate 33.9%), and no material transitory distortions are observed. The difference between Comprehensive Income ¥180.8B and Net Income ¥105.3B (¥75.5B) reflects valuation items such as Other Securities Valuation Differences ¥90.5B and Remeasurements of Retirement Benefit Obligations ¥4.1B, indicating market improvements lifted equity. The fact that OCF substantially lags Net Income is driven by banking-specific changes in loans and securities balances; this is not necessarily indicative of lower earnings quality, but attention is warranted regarding cash flexibility under stress.
For the fiscal year ending March 2027, management forecasts Ordinary Income ¥102.0B (YoY -24.0%), Net Income attributable to owners of the parent ¥143.0B (YoY +35.7%), EPS forecast ¥380.45, and forecast dividend ¥75. Ordinary Income is expected to decline significantly from ¥134.3B in FY2026, likely reflecting conservative assumptions such as a reversal of the rate/market tailwinds, normalization of market income, and continued increases in funding costs. Net Income is forecast to rise, potentially reflecting assumptions on extraordinary items or tax effects, though details are unclear. Forecast dividend ¥75 (FY2026 actual ¥108) implies a cut, but suggests a stance of maintaining stable dividends while adjusting to profit fluctuations. Because FY2026 results are annual, quarterly progress comparisons are difficult; the FY2027 profit level appears to assume normalization relative to FY2026.
Annual dividend was ¥108 (interim ¥29, year-end ¥79), with a payout ratio of 18.7%, indicating restrained profit distribution. Total dividends ¥14.9B versus Net Income attributable to owners of the parent ¥105.3B indicate sufficient dividend capacity; including share buybacks ¥3.0B (in Financing CF), the Total Return Ratio is about 17.0%. Free Cash Flow was -¥696.6B, substantially negative, but in banking OCF is driven by loan and securities balance changes and dividend capacity is judged within recurring earnings, equity buffers, and regulatory capital, so short-term negative FCF is not directly indicative of dividend sustainability. Cash and deposits ¥8,003B (18.5% of total assets) provide sufficient liquidity to cover dividend payments. The FY2027 dividend forecast of ¥75 (a reduction) reflects adjustment to the projected decline in Ordinary Income, while the bank is likely to maintain a stable dividend orientation.
NIM compression risk from interest rate volatility: Deposit funding costs rose to ¥64.8B (prior year ¥22.8B), +184.2%. If rates continue to rise, funding cost increases could outpace loan yield improvements, reducing Net Interest Income ¥368.4B. A deposit mix with high rate sensitivity or high correlation with market rates increases the risk of NIM compression and downward pressure on Ordinary Income.
Upside credit cost risk: Allowance for loan losses balance is -¥200.6B (prior year -¥188.2B), trending up. If economic slowdown or structural regional issues (population decline, weakness in local industries) worsen, credit costs could surge and compress profits. Contingent liabilities and guarantee obligations ¥114.1B could materialize; ongoing monitoring of credit costs is important.
Market funding liquidity risk: Securities lending-related liabilities (Payables under Securities Lending) rose to ¥3,013B (prior year ¥1,626B), +85.4%, increasing rollover risk and potential cash flow strain if haircuts widen or markets tighten. With an Equity Ratio of 3.5% and limited capital buffer, market shocks could constrain capital, affecting shareholder returns and growth investments.
Profitability & Returns
| Metric | Company | Median (IQR) | Delta |
|---|---|---|---|
| Net Profit Margin | 13.3% | 11.9% (7.2%–35.4%) | +1.4pt |
Net profit margin exceeds the industry median by 1.4pt, placing profitability at a standard to slightly upper level within the banking sector.
Growth & Capital Efficiency
| Metric | Company | Median (IQR) | Delta |
|---|---|---|---|
| Revenue Growth Rate (YoY) | 22.8% | 10.1% (7.3%–12.1%) | +12.8pt |
Revenue growth rate outpaced the industry median by 12.8pt, indicating asset yield improvements in the rising rate environment progressed faster than peers.
※ Source: Company compilation
Balancing earnings improvement in a rising rate environment and normalization: FY2026 benefited from rate tailwinds, delivering Ordinary Income +54.3%, but FY2027 guidance points to Ordinary Income -24.0% year-over-year. Sustainment of Net Interest Income ¥368.4B (+4.1%) depends on the balance between loan yield improvement and rising deposit funding costs. Improvement in the expense ratio to 42.4% reflects structural efficiency gains and forms a base for medium-term profitability, but in a normalization of rates, NIM dynamics and credit cost control will be key to results.
Priority between capital policy and growth capacity: Equity Ratio improved to 3.5% (prior year 3.1%), but buffer relative to regulatory benchmarks is limited. The boost to equity from Comprehensive Income ¥180.8B (Other Securities Valuation Differences +¥90.5B) depends on market conditions and can reverse under stress. With payout ratio 18.7% and Total Return Ratio about 17%, shareholder returns are restrained in favor of capital accumulation. The balance between future growth investments (loan expansion, digitalization) and shareholder returns should be assessed according to capital buffer build-up. A Capex/Depreciation ratio of 0.52x indicates a cautious, replacement-focused approach, drawing attention to planned IT/digital investments for medium-to-long-term competitiveness.
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 the Company from public financial statements. Investment decisions are your own responsibility; consult professionals as necessary.