| Indicator | Current Period | Same Period of Previous Year | YoY |
|---|---|---|---|
| Revenue | ¥357.2B | ¥271.9B | +31.4% |
| Operating Income | - | - | - |
| Ordinary Income | ¥108.1B | ¥88.3B | +22.4% |
| Net Income | ¥74.5B | ¥63.1B | +18.1% |
| ROE | 3.0% | 2.5% | - |
Kiyo Bank reported higher revenue and profit in Q1, driven by growth in net interest income and fee income; however, profitability declined slightly due to higher funding costs and increased expenses. Ordinary revenue (Revenue) was ¥357.2B (+31.4% YoY), Ordinary Income was ¥108.1B (+22.4%), and Net Income attributable to owners of the parent was ¥74.7B (+18.5%), with all three securing double-digit growth. Meanwhile, the Ordinary Income margin declined to 30.3% from 32.5% in the previous year, highlighting challenges in cost efficiency behind the revenue growth.
【Revenue】Ordinary revenue increased significantly by 31.4% YoY to ¥357.2B. The core Banking Business, which accounted for 92.2% of total revenue, led the increase with revenue of ¥329.3B (+34.7% YoY). Net interest income increased to ¥158.96B from ¥138.09B in the previous year, while net fees and commissions increased to ¥36.14B from ¥32.31B. Growth in outstanding loans (+1.1%) and improved yields boosted core earnings.
【Profit and Loss】Ordinary Income increased to ¥108.1B (+22.4% YoY), while Net Income attributable to owners of the parent increased to ¥74.7B (+18.5%). However, the Ordinary Income margin declined to 30.3% from 32.5% in the previous year, a decrease of 2.2pt. This was attributable to higher funding costs accompanying the rise in deposit yields, an increase in general and administrative expenses to ¥97.5B from ¥91.2B (+7.0%), and deterioration in other ordinary income (expenses), including market-related gains and losses. As a result, the expense ratio to gross operating profit (CIR) deteriorated to 61.4% from 55.5% in the previous year. Extraordinary losses were minimal at ¥0.04B, and Ordinary Income and Profit Before Tax (¥108.0B) were nearly identical, indicating that the impact of temporary factors was limited. Overall, the results showed higher revenue and profit, but were accompanied by lower cost efficiency.
Ordinary revenue in the Banking Business segment increased to ¥329.3B (+34.7% YoY), while segment profit rose to ¥105.8B (+24.9%). The profit growth rate was somewhat slower than the revenue growth rate, confirming the impact of higher costs within this segment as well. Other segments, including administrative services, leasing, and credit card operations, generated ordinary revenue of ¥27.9B (+1.5%), remaining almost flat, while segment profit declined significantly to ¥1.96B (▲45.7%). The Banking Business accounts for an extremely high proportion of total profit, indicating a business portfolio highly concentrated in banking operations.
【Profitability】The Net Income margin, based on Net Income attributable to owners of the parent, was 20.9%, down 2.3pt from 23.2% in the previous year, while the Ordinary Income margin also declined to 30.3% from 32.5%. The expense ratio to gross operating profit (CIR) deteriorated to 61.4% from 55.5%, making cost control a key profitability challenge. 【Cash Flow Quality】Profit Before Tax (¥108.0B) and Ordinary Income (¥108.1B) were nearly identical, and the impact of extraordinary gains and losses was limited. However, Comprehensive Income was ¥55.1B (¥55.3B attributable to the parent company), below Net Income of ¥74.7B, with OCI acting as a drag, primarily due to unrealized gains and losses on other securities of ▲¥16.1B. 【Investment Efficiency】ROE was 3.0%. While an improvement in total asset turnover resulting from higher revenue provided support, the decline in the Net Income margin was an offsetting factor. 【Financial Soundness】The Equity Ratio was 4.0%, maintaining the same level as the previous year, while the loan-to-deposit ratio was 88.0% (loans of ¥4,393.1B ÷ deposits of ¥4,993.8B), remaining stable. Allowance for loan losses declined to ¥191.4B from ¥194.7B in the previous year, and credit costs remained at a subdued level.
As no cash flow statement has been disclosed, fund movements are assessed based on changes in the balance sheet. Deposits increased to ¥4,993.8B (¥4,825.1B in the previous year, +3.5%), expanding the funding base. Loans increased moderately to ¥4,393.1B (+1.1%), and the loan-to-deposit ratio remained stable at 88.0%. Securities declined slightly to ¥784.9B from ¥795.2B in the previous year (▲1.3%). Market-based funding also contracted: borrowings declined to ¥674.1B (▲7.3%), repurchase agreement liabilities to ¥48.3B (▲1.3%), and securities lending liabilities declined substantially to ¥580.1B from ¥1,164.4B in the previous year (▲50.2%). This indicates efforts to reduce dependence on short-term market-based funding. Overall, the funding structure appears to be shifting toward expanding lending using stable deposit funding while reducing market-based funding.
The primary sources of profit were recurring revenue streams, namely net interest income of ¥158.96B and net fees and commissions of ¥36.14B. Extraordinary losses were extremely limited at ¥0.04B, and the contribution of temporary factors was minimal. However, other ordinary income (expenses) deteriorated from ▲¥5.04B in the previous year to ▲¥36.15B, with volatility in items including market-related gains and losses having a modest impact on earnings quality. Ordinary Income (¥108.1B) and Profit Before Tax (¥108.0B) were nearly identical, and the effective tax rate was approximately 31.0% (income taxes of ¥33.5B / Profit Before Tax of ¥108.0B), with no significant deviation. On the other hand, Comprehensive Income was limited to ¥55.1B (¥55.3B attributable to the parent company), a difference of approximately ¥19.4B from Net Income attributable to owners of the parent of ¥74.7B. The primary causes of the difference were unrealized gains and losses on other securities of ▲¥16.1B and adjustments related to retirement benefits of ▲¥3.3B. Valuation gains and losses resulting from changes in interest rates and market prices have created an apparent divergence between Net Income and cash-generating capacity.
Progress against the full-year plan was 29.5% for Ordinary Income, at ¥108.1B/¥366.0B, and 29.9% for Net Income attributable to owners of the parent, at ¥74.7B/¥250.0B. Both exceeded the standard quarterly progress benchmark of 25% by 4–5pt. While growth in net interest income and fee income contributed ahead of plan, deterioration in other ordinary income (expenses) and the increase in CIR partially offset progress. No revisions were made to the earnings forecast or dividend forecast during the quarter.
As of the end of the quarter, no revisions were made to the earnings forecast or dividend forecast, and the dividend policy remains unchanged. A 3-for-1 stock split of common shares is scheduled to take effect on October 1, 2026, and the year-end dividend and annual dividend for the fiscal year ending March 2027 are planned to be disclosed on a post-split basis. Without taking the split into account, the year-end dividend for the period is ¥78.00, and the annual dividend is ¥156.00.
Capital level monitoring: The Equity Ratio remains at 4.0%, unchanged from the previous year. However, trends in capital increases and the accumulation of risk-weighted assets should be closely monitored when evaluating capital quality.
Deterioration in earnings efficiency (CIR): The expense ratio (CIR) deteriorated to 61.4% from 55.5% in the previous year, with general and administrative expenses increasing (+7.0%) faster than gross operating profit. If cost increases continue, downward pressure on profitability may persist.
Volatility in securities valuation gains and losses: Unrealized gains and losses on other securities deteriorated to ▲¥16.1B, contributing to Comprehensive Income of ¥55.1B falling below Net Income of ¥74.7B. Volatility in valuation gains and losses resulting from changes in interest rates and market prices may affect capital stability.
Profitability and Return
| Indicator | Company | Median (IQR) | Delta |
|---|---|---|---|
| Net Income Margin | 20.9% | – | – |
As comparative data with the industry median has not been prepared, the company’s Net Income margin of 20.9% confirms that it has secured a level exceeding 20% on an absolute basis.
Growth and Capital Efficiency
| Indicator | Company | Median (IQR) | Delta |
|---|---|---|---|
| Revenue Growth Rate (YoY) | 31.4% | – | – |
As comparative data with the industry median has not been prepared, the company’s Revenue growth rate of 31.4% confirms a high level of growth on an absolute basis.
Source: Compiled by the Company
Despite higher revenue and profit, the decline in cost efficiency is noteworthy. The expense ratio (CIR) increased to 61.4% from 55.5% in the previous year, and the growth in general and administrative expenses (+7.0%) exceeded the growth in gross operating profit. As a result, future trends in cost control will be a key determinant of profitability.
Comprehensive Income of ¥55.1B falling below Net Income of ¥74.7B was primarily attributable to the deterioration in unrealized gains and losses on other securities (▲¥16.1B), indicating increased capital sensitivity to interest rate and market fluctuations.
Progress against the full-year plan was 29.5% for Ordinary Income and 29.9% for Net Income, exceeding the standard quarterly progress benchmark of 25%. Growth in core earnings, namely net interest income and fee income, provides the foundation for achieving the plan.
This report is an earnings analysis document automatically generated by AI through analysis of XBRL earnings release data. It does not constitute a recommendation to invest 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, and after consulting with professionals as necessary.
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