| Metric | Current Period | Prior Year Period | YoY |
|---|---|---|---|
| Revenue / Net Sales | ¥1590.6B | ¥1331.1B | +19.5% |
| Operating Income / Operating Profit | - | - | - |
| Ordinary Income | ¥290.3B | ¥189.5B | +53.2% |
| Net Income / Net Profit | ¥214.4B | ¥188.4B | +13.8% |
| ROE | 4.2% | 4.2% | - |
The FY ending March 2026 results show ordinary revenues of ¥1,590.6B (YoY +¥259.5B +19.5%), ordinary income of ¥290.3B (YoY +¥100.8B +53.2%), and net income of ¥214.4B (YoY +¥26.0B +13.8%). Capturing a rising rate environment, interest income expanded to ¥1,023.5B (+18.2%), driven by loan interest of ¥598.4B (+21.3%) and securities interest of ¥354.4B (+12.5%). Deposit interest rose to ¥141.7B (+149.1%) and funding costs increased, but improvement in net interest margin propelled the large increase in ordinary income. Net income growth lagged ordinary income due to higher corporate taxes and other tax burdens of ¥76.8B (prior year ¥69.1B). Total assets were strengthened to 7.67兆円 (YoY +¥1.4兆 +1.9%), and net assets rose to ¥5,090.2B (YoY +¥642.1B +14.4%), reinforcing the financial base.
[Revenue] Ordinary revenues increased substantially to ¥1,590.6B (YoY +19.5%). The main growth driver was interest income of ¥1,023.5B (+18.2%), led by loan interest ¥598.4B (+21.3%) and securities interest ¥354.4B (+12.5%). Loan balances were ¥4.59兆円 (+1.3%), and deposit balances were ¥5.95兆円 (+2.5%), with both assets and liabilities expanding; repricing of loans and investment assets in a rising rate environment realized margin improvement. Fee income and other revenues were ¥199.8B (prior year ¥196.3B), roughly flat; however, fee expenses increased to ¥74.7B (prior year ¥64.0B), so net fee income declined to ¥125.0B from ¥132.3B a year earlier. Other ordinary revenues increased to ¥229.1B (prior year ¥160.3B), but other ordinary expenses rose significantly to ¥429.7B (prior year ¥316.8B), and volatility in market-related gains/losses and bond valuations weighed on overall earnings.
[Profit & Loss] Ordinary expenses increased to ¥1,300.3B (prior year ¥1,141.6B, +13.9%). Interest expenses were ¥282.7B (prior year ¥233.9B, +20.9%), driven mainly by the sharp rise in deposit interest. Operating expenses were ¥493.9B (prior year ¥446.9B, +10.5%), rising but restrained relative to revenue growth, resulting in an improving cost-to-income trend. The increase in other ordinary expenses of ¥429.7B (+35.6%) pressured margins, with market-related costs and bond-related expenses affecting earnings quality. Ordinary income was ¥290.3B (+53.2%), and profit before taxes was ¥289.7B (+25.1%). Corporate taxes and similar amounted to ¥76.8B (effective tax rate 26.5%), producing net income of ¥214.4B (+13.8%). Extraordinary gains were ¥0.7B and extraordinary losses ¥1.3B, both minor. In conclusion, the company achieved higher revenue and profits, but rising deposit costs and increased market-related expenses limited net income growth.
[Profitability] Net profit margin was 13.5% (prior year 14.2%). Although ordinary income margin improved substantially to 18.3% (prior year 14.2%), higher tax burden led to a slight decline in net profit margin. ROE improved slightly to 4.2% (prior year 4.0%). ROA (on an ordinary income basis) doubled to 0.4% (prior year 0.2%), confirming improved earning power in a rising rate environment. [Cash Quality] Operating Cash Flow (OCF) was ¥23.6B, only 0.11x of net income ¥214.4B, reflecting the bank-specific impact of asset-liability movements and weak cash conversion. Capital expenditures were ¥27.1B, roughly in line with depreciation of ¥26.6B, indicating maintenance-level investments. Free Cash Flow was ¥1,198.2B, 23.6x dividend payments of ¥50.8B, indicating strong dividend sustainability. [Investment Efficiency] EPS was ¥92.28 (prior year ¥79.94, +15.4%), and BPS was ¥2,214.32 (prior year ¥1,930.52, +14.7%), with per-share value steadily increasing. Payout Ratio was 22.5%, conservative and prioritizing internal capital accumulation. [Financial Soundness] Equity Ratio was 6.6% (prior year 5.9%) and improved, though at a mid-level for banks. Against total assets of 7.67兆円, net assets were ¥5,090.2B, yielding financial leverage of 15.1x. Accumulated other comprehensive income totaled ¥1,724.5B (prior year ¥1,231.1B), rising significantly due to improvements in securities valuation differences of ¥1,040.0B (+¥32.1B) and deferred hedge gains/losses of ¥463.0B (+¥107.3B), so unrealized gains underpin the capital buffer.
Operating Cash Flow (OCF) was ¥23.6B (YoY +100.6%), but the conversion rate relative to net income ¥214.4B was only 0.11x, with bank-specific changes in working capital significantly affecting cash generation. The subtotal (pre-tax CF) was a negative ¥40.9B; after corporate tax payments of negative ¥33.8B and tax refunds of ¥58.3B, OCF turned positive. Investing cash flow was +¥1,174.6B, a large cash inflow likely driven by sales/redemptions of securities; capital expenditure of negative ¥27.1B was small. Free Cash Flow of ¥1,198.2B was ample and covered dividend payments of negative ¥50.8B and share buybacks of negative ¥25.1B, leaving surplus funds. Financing cash flow was negative ¥75.9B, centered on shareholder returns via dividends and buybacks. Cash and cash equivalents at period-end were ¥1,010.6B (YoY +¥112.2B), improving liquidity and representing 13.2% of total assets, limiting liquidity risk.
Of ordinary income ¥290.3B, net interest income of ¥740.8B (interest income ¥1,023.5B minus interest expenses ¥282.7B; prior year ¥632.7B, +17.1%) is the core, recurring and sustainable revenue source. Net fee income of ¥125.0B (prior year ¥132.3B) is stable but declining, indicating room to strengthen non-interest income. Other ordinary income/expenses produced a net negative ¥200.6B (prior year negative ¥156.5B), with market-related gains/losses and bond valuation swings temporarily depressing earnings. Extraordinary items were a net negative ¥0.6B and minor, with limited impact on net income. Comprehensive income was ¥706.3B (prior year negative ¥380.9B), about 3.3x net income ¥214.4B, driven by improved valuation differences raising unrealized gains. The fact that OCF is only 0.11x of net income suggests an accrual-biased earnings structure, with valuation gains/losses and working capital swings suppressing cash generation. While most ordinary income depends on interest income and thus has high persistence, volatility in market-related gains/losses and weak non-interest income growth are points to watch for earnings stability.
Full year guidance projects ordinary income of ¥421.0B (YoY +45.0%) and net income of ¥282.0B (YoY +31.5%). Compared with current results (ordinary income ¥290.3B, net income ¥214.4B), this implies further increases of ¥130.7B in ordinary income and ¥67.6B in net income. Progress rates are 69.0% for ordinary income and 76.0% for net income, indicating generally steady progress against the initial plan. EPS is projected at ¥123.98, above current EPS of ¥92.28, assuming continuation of the rising rate environment, improved yields on loan and securities portfolios, and continued cost control. Dividend guidance is ¥25 per share (on an as-reported basis), implying a payout ratio of about 20% on the full year net income forecast, a conservative stance. Realization of the upside scenario depends on deposit beta rising at a pace that does not outstrip improvements in lending yields, stabilization of market-related gains/losses, and uplift in non-interest fee income.
The year-end dividend was ¥75 per share and the interim dividend was ¥65 per share, totaling annual dividends of ¥140 per share (prior year ¥45). However, a 5-for-1 stock split of common shares took effect on April 1, 2026, so the split-adjusted effective annual dividend level is ¥28 equivalent (¥140 ÷ 5). Cash dividends paid were ¥50.8B (prior year ¥39.9B), corresponding to a payout of approximately 24% of net income ¥214.4B. Additionally, share buybacks of ¥25.1B (prior year ¥40.1B) were executed, with total shareholder returns of ¥75.9B and a Total Return Ratio of about 35%. Free Cash Flow of ¥1,198.2B covers dividends at 23.6x, indicating very strong coverage and high dividend sustainability. Treasury stock at period-end was ¥66.6B (prior year ¥204.7B), substantially reduced and contributing to improved capital efficiency. Full year guidance of a ¥25 per share dividend (post-split equivalent) suggests continuation of a stable dividend policy in light of projected earnings growth.
Interest Rate Risk: Deposit interest of ¥141.7B surged from ¥56.8B a year earlier (+149.1%), showing a marked increase in deposit beta (rate sensitivity). Deposit interest growth materially outpaced loan interest growth of +21.3%; if the interest cycle reverses or deposit competition intensifies causing further funding cost increases, net interest margin could be squeezed. Securities holdings of ¥1.72兆円 decreased by ▲4.4% YoY, but deferred tax liabilities of ¥653.6B (prior year ¥406.9B, +60.6%) mean tax-effect liabilities on unrealized gains have risen, and reversal in a rate/spread expansion environment could crystallize valuation losses.
Revenue Diversification Risk: Net fee income declined to ¥125.0B (prior year ¥132.3B, ▲5.5%), highlighting weakness in non-interest income growth. Fee income accounts for only 7.9% of ordinary revenues, leaving revenue structure highly dependent on interest income. Other ordinary income/expenses widened to a negative ¥200.6B from negative ¥156.5B, with market-related gains/losses and bond valuation swings destabilizing earnings quality. Once the tailwind from rising rates dissipates, weak non-interest income could constrain growth.
Cash Flow Quality Risk: OCF of ¥23.6B is only 0.11x of net income ¥214.4B, indicating that working capital movements and valuation adjustments substantially suppress cash generation. OCF/EBITDA is also low at 0.07x, reflecting weak cash conversion. Although investing cash flow was +¥1,174.6B and free cash flow is ample, this depends on one-off cash inflows from securities sales/redemptions, leaving sustained cash generation in question. If investing cash flow reverses due to market changes, dividend capacity and funds for growth investment could be constrained.
Profitability & Returns
| Metric | Company | Median (IQR) | Delta |
|---|---|---|---|
| Net Profit Margin | 13.5% | 11.9% (7.2%–35.4%) | +1.6pt |
Net profit margin exceeds the industry median by 1.6pt, with margin improvement in a rising rate environment contributing to relative profitability strength.
Growth & Capital Efficiency
| Metric | Company | Median (IQR) | Delta |
|---|---|---|---|
| Revenue Growth Rate (YoY) | 19.5% | 10.1% (7.3%–12.1%) | +9.4pt |
Revenue growth rate exceeds the industry median by 9.4pt, driven by large increases in interest income, placing the bank among the regional banks with top growth.
※Source: Company compilation
Margin improvement in a rising rate environment is the main driver of the ordinary income increase of +53.2%, but deposit interest rose +149.1% and funding costs accelerated; hence, future dynamics of deposit beta versus the pace of loan repricing are key to earnings sustainability. Ordinary income margin improved to 18.3% from 14.2% (up 4.1pt), confirming improved earning power from the favorable interest cycle.
Equity Ratio improved to 6.6% (prior year 5.9%), and accumulated other comprehensive income increased to ¥1,724.5B (+¥49.3B), strengthening the capital buffer. Improvements in securities valuation differences of +¥320.8B and deferred hedge gains/losses of +¥107.3B pushed up net assets, and accumulated unrealized gains support financial stability. With projected full year earnings growth and a conservative payout ratio of 24%, internal capital accumulation is expected to progress.
OCF of ¥23.6B is low at 0.11x of net income ¥214.4B, but free cash flow of ¥1,198.2B is ample, covering dividend payments of ¥50.8B at 23.6x. The large positive investing cash flow may reflect one-off securities sales/redemptions; improvement in sustainable cash generation remains a focus. Declines in net fee income and volatility in market-related gains/losses are cautions for earnings quality; strengthening non-interest income and stabilizing market-related costs are medium-term priorities.
This report is an earnings analysis document 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 firm from publicly disclosed financial statements. Investment decisions are your own responsibility; please consult a professional as needed.