| Metric | This Period | Prior Year Period | YoY |
|---|---|---|---|
| Revenue / Net Sales | ¥1156.7B | ¥1030.8B | +12.2% |
| Operating Income | - | - | - |
| Ordinary Income | ¥248.2B | ¥196.7B | +26.1% |
| Net Income | ¥165.2B | ¥133.2B | +24.0% |
| ROE | 5.5% | 4.8% | - |
For the fiscal year ended March 2026, results landed at Ordinary Income ¥1,156.7B (YoY +¥125.9B +12.2%), Ordinary Income ¥248.2B (YoY +¥51.5B +26.1%), and Net Income Attributable to Parent Company ¥170.6B (YoY +¥44.7B +26.2%), marking revenue and profit growth. Due to the bank-specific revenue structure, interest income ¥775.4B (YoY +¥106.6B) and fee income ¥275.4B (YoY +¥6.6B) drove top-line expansion, absorbing an increase in interest expense ¥165.3B (YoY +¥54.5B) and improving net profit margin to 14.3% (prior year 12.9%). Loans were steadily built up to ¥4,601.3B (+3.0%), deposits to ¥5,911.9B (+0.7%), maintaining a healthy loan-to-deposit ratio of 77.9%. Securities were reduced to ¥1,372.8B (-11.4%) as part of price-volatility risk management in a rising-rate environment, resulting in securities valuation gains of ¥13.72B and a large improvement in comprehensive income to ¥288.0B (prior year -¥153.9B). The equity ratio improved 0.5pt to 4.5% (prior year 4.0%), but remains low versus industry standards (8%+), making capital accumulation an ongoing issue. ROE improved to 5.5% (prior year 4.6%), and EPS grew to ¥108.64 (prior year ¥85.80 +26.6%).
[Revenue] Of Ordinary Revenue ¥1,156.7B (+12.2%), banking operations accounted for ¥999.4B (86.5%), leasing operations ¥119.0B (10.3%), and other ¥37.0B (3.2%). In banking, interest income ¥775.4B (YoY +¥106.6B +15.9%) was the primary driver, composed of loan interest ¥548.9B (+¥115.5B), securities interest/dividends ¥191.2B (-¥3.3B), and deposit interest ¥118.0B (+¥79.5B). Loan balances increased to ¥4,601.3B (+3.0%), with steady regional credit deployment producing volume effects. Securities were compressed to ¥1,372.8B (-11.4%), but portfolio rotation limited impact on interest income. Fee income was ¥275.4B (+2.5%) with fee expenses ¥161.3B (+4.9%), producing a net fee amount of ¥114.1B, a slight YoY decline. Trust fees ¥0.3B and other ordinary revenue ¥35.5B (+0.4%) rounded out the top-line, which was overall led by interest income.
[Profit & Loss] Ordinary expenses were ¥908.5B (+8.9%), comprised of interest expense ¥165.3B (+49.3%), fee expenses ¥161.3B (+4.9%), SG&A ¥450.8B (+1.8%), and other ordinary expenses ¥72.0B (-1.3%). The large increase in interest expense was mainly due to higher deposit interest ¥118.0B (+¥81.2B) and increased borrowing costs, reflecting higher macro rates. SG&A growth was modest (+¥8.2B +1.8%), aided by personnel and system investment efficiencies, improving the expense ratio (SG&A ÷ Ordinary Revenue) to about 39.0% (prior year 42.9%). As a result, Ordinary Income ¥248.2B (+26.1%), Pre-tax Income ¥247.1B (+26.8%), taxes ¥76.4B (effective tax rate 30.9%), and Net Income Attributable to Parent Company ¥170.6B (+26.2%) were achieved. Extraordinary gains/losses were minor (gains ¥0.5B, losses ¥1.7B), including impairment losses ¥0.6B, indicating limited one-off effects. The divergence between Ordinary Income and Net Income is mainly tax-driven and within a reasonable range, supporting a view of good earnings quality. In conclusion, large increases in interest income combined with expense control produced both revenue and profit growth.
Reportable segments are Banking and Leasing. The Banking segment profit was ¥237.2B (margin 23.4% against Ordinary Revenue ¥1,011.6B), representing the majority of consolidated Ordinary Income ¥248.2B. Leasing recorded Ordinary Revenue ¥121.9B and segment profit ¥0.7B (margin 0.6%), indicating low profitability likely due to formation costs and depreciation on lease assets. Other segments (credit guarantees, real estate, cards, securities, etc.) produced Ordinary Revenue ¥60.1B and segment profit ¥17.7B (margin 29.4%) but are small in scale. Consolidated Ordinary Income after intersegment eliminations was ¥248.2B, demonstrating a high concentration in banking operations; improving leasing profitability and expanding other businesses are future diversification challenges.
[Profitability] Net profit margin improved 1.4pt to 14.3% (prior year 12.9%), and ROE rose 0.9pt to 5.5% (prior year 4.6%). ROA edged up to 0.3% (prior year 0.2%), remaining low due to the bank-specific low asset turnover (~0.017), which structurally suppresses profitability. The expense ratio (SG&A ÷ Ordinary Revenue) improved to about 39.0% (prior year 42.9%), and the Cost-to-Income Ratio (CIR), estimated as (SG&A + fee expenses) ÷ (interest income - interest expense + fee income), is approximately 62.6%, showing an improving trend but remaining in the mid-60% range. Net interest income (interest income - interest expense) rose to ¥610.1B (YoY +¥52.1B), supported by loan asset growth and absorption of higher funding costs. NIM is not explicitly stated, but absolute increases in net interest income supported profits despite margin pressures.
[Cash Quality] Operating Cash Flow (OCF) was a large negative at -¥4,362.1B, with OCF/Net Income multiplier at -25.6x against Net Income ¥170.6B; Free Cash Flow (OCF + Investing CF) was -¥2,363.4B, indicating very weak cash generation. This is primarily due to balance-sheet movements unique to banking: cash and deposits decreased ¥-2,428.1B, loans increased ¥1,361.4B, and payables under securities lending (securities lending-related financing) decreased ¥-2,252.3B, producing cash outflows. The accrual ratio ((Net Income - OCF) ÷ Total Assets) is about 6.8%, in a neutral range, indicating timing differences between profit recognition and cash realization are within the norms for banking. FCF coverage (FCF ÷ (dividends + buybacks)) is -31.5x, suggesting dividend capacity should be assessed on an earnings basis rather than cash-flow basis; cash-flow sustainability remains a concern.
[Investment Efficiency] Total asset turnover is about 0.017x, reflecting the structural characteristics of banking. Capex was ¥4.41B (YoY -¥5.61B), and intangible investment ¥2.63B (YoY +¥1.01B); investments exceed depreciation ¥4.36B, indicating continued system and infrastructure investment. Loan growth of ¥136.14B versus deposit growth ¥43.15B shows loan expansion outpacing deposit intake, suggesting potential improvement in funds efficiency.
[Balance Sheet Soundness] The equity ratio is 4.5% (prior year 4.0%), up 0.5pt, but still low versus industry standards (domestic standard banks 8%, internationally consolidated banks 8%+), making capital build-up an important task. Debt-to-equity multiple is high at 21.3x, reflecting the high-leverage structure of banking. Loan-to-deposit ratio is 77.9% (prior year 76.1%) within appropriate range, and liquidity buffers are maintained. Interest-bearing liabilities comprise borrowings ¥281.84B (-6.6%) and deposits ¥5,911.9B (+0.7%), with funding centered on deposits. Payables under securities lending were significantly reduced to ¥75.41B (-75.0%), lowering dependence on market funding and reducing liquidity risk. Deferred tax assets declined to ¥13.26B (prior year ¥18.66B) as tax-effect reversals progressed with earnings improvement. Retirement benefit liabilities slightly decreased to ¥9.91B (-2.4%), indicating limited pension risk.
Operating CF was -¥4,362.1B (worsened from -¥1,679.0B prior year), with a multiplier of -26.4x against Net Income ¥165.2B, reflecting extremely weak cash conversion. Cash outflows were driven by balance-sheet expansion typical of banking: cash and deposits -¥2,428.1B, loans +¥1,361.4B, and payables under securities lending -¥2,252.3B. Operating CF subtotal (before working capital changes) was -¥4,299.6B, and including corporate tax payments ¥62.6B, total operating cash outflow reached -¥4,362.1B. Investing CF was +¥1,998.7B, mainly from sales/redemptions of securities (including capex -¥4.41B and intangible investment -¥2.63B), resulting in Free CF of -¥2,363.4B and very weak cash creation. Financing CF was -¥6.47B, with dividend payments ¥64.8B, share buybacks ¥10.1B, and proceeds from disposal of treasury shares ¥10.2B as main items. Consequently, cash and cash equivalents decreased by ¥-2,428.1B to end the period at ¥433.82B (prior year ¥676.63B). The widening negative OCF reflects loan growth and securities portfolio compression; given profit levels and deposit stability, liquidity risk is within manageable bounds, but monitoring loan-growth pace and deposit trends is important.
Earnings quality is good, with the bulk of Ordinary Income ¥248.2B driven by recurring interest income ¥775.4B and fee income ¥275.4B. Extraordinary items were minor (gains ¥0.5B, losses ¥1.7B), including impairment losses ¥0.6B, indicating limited one-off impacts. Equity-method investment gains/losses ¥0.1B are small, and there is no excessive reliance on non-operating income. The gap between Ordinary Income ¥248.2B and Net Income ¥165.2B is mainly due to tax expense ¥76.4B (effective tax rate 30.9%), within a reasonable range. Comprehensive income ¥288.0B (well above Net Income ¥165.2B) was driven by securities valuation differences ¥137.2B (turning positive from prior year -¥294.9B) and deferred hedge losses -¥19.6B, reflecting unrealized gains from improving market conditions. However, operating CF/Net Income multiplier -26.4x and estimated OCF/EBITDA around -15.0x show very weak cash conversion, attributable to balance-sheet movements specific to banking. The accrual ratio (~6.8%) is neutral, and while timing differences between profit recognition and cash realization are acceptable for banks, cash-flow-based sustainability of earnings depends on asset-liability composition stability.
Full-year guidance for the fiscal year ending March 2027 projects Ordinary Income ¥325.0B (YoY +30.9%), Net Income Attributable to Parent Company ¥220.0B (YoY +28.9%), EPS ¥140.07, and dividend ¥28 (post-split basis; pre-split equivalent ¥140). Progress rates are Ordinary Income 76.4% (¥248.2B ÷ ¥325.0B) and Net Income 77.5% (¥170.6B ÷ ¥220.0B), indicating steady progress against a somewhat conservative plan. The plan assumes continued loan asset accumulation, uplift in net interest income, expense-ratio improvement, and normalization of credit costs. The dividend forecast ¥28 (post-split) corresponds to pre-split ¥140 and is shown lower than this period’s dividend of ¥215 (pre-split), but this may reflect presentation adjustment from the stock split (1-for-5). Based on the current payout ratio 39.6%, a similar level of shareholder return is expected next fiscal year. Key to achieving targets will be NIM stabilization, expansion of fee income, recovery of CIR to the 50% range, and continued build-up of the equity ratio.
This period’s annual dividend was ¥215 (interim ¥95, year-end ¥120). Estimated total dividends of approximately ¥33.8B (based on Net Income Attributable to Parent Company ¥170.6B) imply a payout ratio of 39.6%, a healthy level. Share buybacks amounted to ¥1.01B, and total return ratio is approximately (¥338 + ¥10.1) ÷ ¥1,706B ≒ 20.4% by our estimate (dividend total should be reconfirmed on an outstanding-shares basis). The note on dividends indicates a stock split effective April 1, 2026 (1 share → 5 shares), with FY2027 forecast dividend ¥28 (post-split; pre-split equivalent ¥140). The reduction from this period’s dividend ¥215 to pre-split equivalent ¥140 appears to reflect a policy adjustment balancing profit growth and capital accumulation. A payout ratio around 40% is expected to be maintained, which is sustainable on an earnings basis, but Free CF of -¥2,363.4B means cash-flow coverage is insufficient (FCF coverage estimated -31.5x). Given banks’ volatile OCF due to balance-sheet movements, dividend sustainability should be assessed based on earnings, capital adequacy, and regulatory capital accumulation; with an equity ratio of 4.5%, scope for further dividend increases depends on capital build-up and stable earnings. Share buybacks are small, indicating a preference to prioritize capital strengthening over capital-efficiency measures.
Capital adequacy shortfall risk: An equity ratio of 4.5% is low versus industry standards (domestic standard banks 8%+), which could constrain flexibility for growth investments and dividend policy under regulatory capital requirements. With a debt-to-equity multiple of 21.3x and high leverage, deterioration in earnings or asset quality could expose insufficient capital buffers. Continuous capital accumulation and internal retention are critical.
Interest-rate risk and margin pressure: Net interest income ¥610.1B increased YoY, but the large rise in interest expense ¥165.3B (+49.3%) indicates deposit-rate pressure; continued deposit-rate increases could compress NIM and pressure profits. Although the securities portfolio was compressed to ¥1,372.8B (-11.4%) to mitigate rate-risk, securities valuation gains ¥13.72B in comprehensive income could reverse with market-rate/spread movements, so ongoing monitoring of IRRBB (interest-rate risk in the banking book) is required. While the expense ratio improved, CIR at ~62.6% in the mid-60s means renewed increases in personnel or system investments could hurt profitability.
Liquidity and credit risk: OCF at -¥4,362.1B is a large negative, leaving funding dependent on the balance between loan growth and deposit intake. Loan-to-deposit ratio 77.9% is within a healthy range, but deposit outflows or rising market funding costs could strain liquidity. Payables under securities lending were cut to ¥75.41B (-75.0%), reducing market dependency, but concentration in loans ¥4,601.3B and regional economic slowdown could elevate credit costs. Currently allowance adjustments are net -¥22.46B (release), but recession or sector-specific deterioration could force re-expansion of credit costs and pressure profits.
Profitability & Returns
| Metric | Company | Median (IQR) | Delta |
|---|---|---|---|
| Net Profit Margin | 14.3% | 11.9% (7.2%–35.4%) | +2.4pt |
Profitability exceeds the industry median by 2.4pt, reflecting interest-income-led revenue structure and progress in expense control.
Growth & Capital Efficiency
| Metric | Company | Median (IQR) | Delta |
|---|---|---|---|
| Revenue Growth Rate (YoY) | 12.2% | 10.1% (7.3%–12.1%) | +2.1pt |
Top-line growth outpaces the industry median by 2.1pt, driven by loan asset accumulation and expanded interest income.
※ Source: Company compilation
Interest-income-led profit growth: Ordinary Revenue +12.2%, Ordinary Income +26.1%, Net Income Attributable to Parent Company +26.2% — profits grew faster than top-line. Net interest income ¥610.1B (YoY +¥52.1B) and loans ¥4,601.3B (+3.0%) were primary drivers, with loan-to-deposit ratio maintained at 77.9% while credit growth continued. Next fiscal year plans assume Ordinary Income +30.9% and Net Income +28.9%, contingent on NIM bottoming and further expense-ratio improvement. Compression of securities (-11.4%) and large reduction in payables under securities lending (-75.0%) improved interest-rate and liquidity risk management, enhancing earnings stability.
Balancing capital accumulation and dividend policy: Equity ratio rose to 4.5% (prior year 4.0%) but remains low relative to industry standards (8%+), making ongoing capital build-up important. Payout ratio 39.6% and next-year dividend forecast ¥28 (post-split; pre-split equivalent ¥140) are sustainable on an earnings basis, but FCF is -¥2,363.4B and dividend coverage on a cash-flow basis is limited. Comprehensive income ¥288.0B (including securities valuation gains ¥137.2B) contributes to capital accumulation; continued favorable market conditions could help raise the equity ratio. Dividend policy appears to balance profit growth and capital strengthening; share buybacks are modest (¥1.01B). Watchpoints include the path from ROE 5.5% to above 8% (NIM uplift, CIR recovery to 50% range, capital-efficiency improvements) and timeline to reach an 8% equity ratio.
OCF volatility and liquidity management: OCF was -¥4,362.1B, largely driven by balance-sheet expansion (loan increases, securities rebalancing, funding composition changes), but earnings quality remains good. The accrual ratio (~6.8%) is neutral and recurring revenue accounts for most profits. Cash and deposits decreased ¥-2,428.1B to end the period at ¥433.82B, but deposit base ¥5,911.9B provides a stable funding platform, and the large reduction in payables under securities lending (-¥2,252.3B) lowered market funding dependence and improved funding stability. Key monitoring metrics are loan growth pace vs deposit intake, maintenance of loan-to-deposit ratio, timing of OCF normalization, and regulatory liquidity indicators such as LCR and NSFR.
This report is an earnings analysis document automatically generated by AI from XBRL earnings release data. It does not constitute a recommendation to invest in any specific security. Industry benchmarks are reference information compiled by our firm from public financial statements. Investment decisions should be made at your own responsibility, and, where appropriate, after consulting a professional advisor.