| Metric | This Period | Prior Period | YoY |
|---|---|---|---|
| Revenue / Net Sales | ¥1085.6B | ¥900.1B | +20.6% |
| Operating Income / Operating Profit | - | - | - |
| Ordinary Income | ¥291.4B | ¥199.1B | +46.3% |
| Net Income / Net Profit | ¥180.1B | ¥128.7B | +39.9% |
| ROE | 4.7% | 3.9% | - |
For the fiscal year ended March 2026, Revenue (Ordinary Revenue) was ¥1,085.6B (YoY +¥185.5B +20.6%), Operating Income / Operating Profit not disclosed due to business characteristics, Ordinary Income was ¥291.4B (YoY +¥92.3B +46.3%), and Net Income attributable to owners of the parent was ¥188.6B (YoY +¥60.0B +46.5%), resulting in significant top-line and bottom-line growth supported by a rising interest rate environment. Investment income was ¥680.9B (YoY +¥120.7B +21.5%), and funding costs were ¥170.8B (YoY +¥28.5B +20.0%), with spread expansion being the primary driver of profit growth. Net fee income was also firm at ¥102.1B (YoY +¥11.6B), contributing to diversification of non-interest income. Loans expanded to ¥3.69T (+5.2%), deposits expanded to ¥4.74T (+3.8%), and the loan-to-deposit ratio remained at a healthy 77.8%. Comprehensive income was strongly positive at ¥627.0B, with ¥302.2B in unrealized gains on securities and ¥136.8B in adjustments related to retirement benefits contributing to an increase in equity. However, the Equity Ratio improved to 6.6% (from 5.7% a year earlier) but remains below the regulatory threshold of 8%, so strengthening capital buffers remains an ongoing issue.
[Revenue] Ordinary Revenue rose sharply to ¥1,085.6B (YoY +20.6%). Investment income of ¥680.9B (YoY +21.5%) led the increase; breakdown includes loan interest income of ¥460.8B (YoY +¥50.6B) and securities interest and dividends of ¥159.2B (YoY +¥37.3B), reflecting expanded interest margins in a rising-rate environment. Funding costs rose to ¥170.8B (+20.0%), but Net Interest Income expanded substantially to ¥510.1B (YoY +¥92.2B +22.0%), improving NIM to an estimated 1.38% (from 0.90% prior year). Net fee income was ¥102.1B (YoY +¥11.6B +12.8%), supported by stable revenues from payments and asset management products. By segment, banking external-customer Ordinary Revenue was ¥990.0B (composition ratio 91.2%), leasing was ¥74.7B (6.9%), and other was ¥20.9B (1.9%), with the banking business driving top-line expansion.
[Profitability] Ordinary Income rose materially to ¥291.4B (YoY +46.3%), primarily driven by expanded Net Interest Income. Ordinary expenses were ¥794.2B (YoY +¥93.3B +13.3%), driven by increased funding costs and SG&A of ¥354.8B (YoY +¥21.4B +6.4%), but revenue growth outpaced expense increases. Non-operating results were +¥3.9B net (approximately flat YoY), with minimal impact on the ordinary stage. Extraordinary items were net -¥4.1B (extraordinary gains ¥0.7B, extraordinary losses ¥4.7B, including impairment losses of ¥2.9B), a modest loss with limited one-off effects. Profit before tax was ¥287.3B (YoY +47.1%), and after income taxes of ¥98.7B (effective tax rate 34.4%), Net Income was ¥180.1B (YoY +39.9%), and Net Income attributable to owners of the parent was ¥188.6B (YoY +46.5%). In conclusion, expansion in Net Interest Income driven by higher rates and steady Net Fee Income resulted in revenue and profit growth.
The Banking Business functioned as the core division, with external-customer Ordinary Revenue of ¥990.0B and segment profit of ¥276.9B (pre-adjustment), accounting for the majority of group profits. Segment assets were ¥5.82T and segment liabilities were ¥5.46T, reflecting a large-scale fund management structure that led revenue expansion in a rising-rate environment. The Leasing Business reported external revenue of ¥74.7B and segment profit of ¥4.2B (pre-adjustment); although smaller in scale, it contributed stably with a profit margin of 5.6%. Other businesses (credit card, credit guarantee, etc.) had external revenue of ¥20.9B and segment profit of ¥15.2B (pre-adjustment), small in composition but high in margin. Consolidated Ordinary Income after intersegment adjustments was ¥291.4B, indicating high business concentration in banking with limited revenue contribution from other segments.
[Profitability] ROE was 4.7% (prior year 4.1%), an improvement but still low for a regional financial institution. Net profit margin improved to 16.6% (prior year 14.3%), aided by spread expansion from rising rates. [Cash Quality] Operating Cash Flow / Net Income was -7.43x, and OCF/EBITDA was -4.33x, both low, reflecting significant funding needs due to expansion of loans and securities operations under banking accounting, and weak short-term cash conversion. [Investment Efficiency] Total Asset Turnover was 0.019x (prior year 0.016x), extremely low as typical for banks, with financial leverage of 15.21x (prior year 17.53x) supporting ROE. [Financial Soundness] Equity Ratio improved to 6.6% (prior year 5.7%) but remains below the regulatory 8% threshold, making capital strengthening urgent. Loan-to-deposit ratio was 77.8% (prior year 76.7%), maintaining a healthy level and containing liquidity risk. D/E ratio was 14.21x (prior year 17.53x), high leverage but consistent with banking model characteristics.
Operating Cash Flow was a large negative ¥-1,400.7B (prior year -¥1,307.0B), as increases in loans (+¥1,821.8B) and adjustments such as securities sales (+¥1,348.8B estimate) caused cash outflows under banking accounting. Operating CF subtotal (before working capital changes) was -¥1,329.4B, and cash generation from core operations including corporate tax payments of -¥71.2B was weak. Investing Cash Flow was a large positive ¥1,908.5B, as proceeds from securities sales and redemptions significantly exceeded capital expenditures of -¥25.0B. Financing Cash Flow was -¥65.7B, driven by dividend payments of -¥55.1B and share buybacks of -¥11.1B. Free Cash Flow (Operating CF + Investing CF) was positive at ¥507.8B, and coverage of dividends and capital expenditures was 1.90x, indicating temporary capacity to cover distributions from internal funds. Cash and cash equivalents at period end increased to ¥8621.2B (prior year ¥8,179.0B, +¥442.2B), indicating a certain level of liquidity buffer. However, Operating CF/Net Income of -7.43x and OCF/EBITDA of -4.33x show weak cash conversion of profits, requiring strict cash management amid a loan expansion phase.
Of Ordinary Income of ¥291.4B, extraordinary items were a net -¥4.1B (extraordinary gains ¥0.7B, extraordinary losses ¥4.7B), so Net Income largely reflects recurring earnings. Impairment losses of ¥2.9B were treated as temporary items with limited impact on ordinary operations. Non-operating income was ¥58.5B (5.4% of Revenue), included in other ordinary revenue, but core income (Net Interest Income + Net Fee Income) remains the center of revenue composition, and the revenue structure is sound. Conversely, Operating CF/Net Income of -7.43x and OCF/EBITDA of -4.33x are very low, indicating weak cash-based profit conversion. Under banking accounting, expansion of lending and securities holdings drives negative Operating CF, so accrual-based profits and cash-based profits diverge significantly. Comprehensive income of ¥627.0B considerably exceeded Net Income of ¥180.1B, with ¥302.2B in unrealized gains on securities and ¥136.8B in retirement benefit-related adjustments contributing to equity increases; however, reversal risk from market and interest rate fluctuations should be monitored.
The company plans for full year Ordinary Revenue of ¥1,165.0B, Ordinary Income of ¥330.0B (YoY +13.3%), Net Income attributable to owners of the parent of ¥210.0B (YoY +11.1%), and EPS of ¥185.69. Based on current results, progress rates relative to full-year forecasts are approximately 88.3% for Ordinary Income and approximately 89.8% for Net Income attributable to owners of the parent, representing a conservative moderate profit-growth plan. Achievement assumes sustained high interest rates to maintain spreads, steady Net Fee Income, continued expense discipline, and normalization of credit costs. Sustainability of NIM improvement and upside in non-interest income are key to achieving targets; reversal in interest rate environment or regional economic slowdown are risk scenarios.
Dividends were ¥108 interim and ¥126 year-end (pre-split basis), totaling ¥234 for the year. Against Net Income of ¥180.1B, total dividends were ¥55.1B, giving a Payout Ratio of 30.1% (XBRL stated value). Using Net Income attributable to owners of the parent of ¥188.6B as the base, the Payout Ratio is 29.0%. Share buybacks of -¥11.1B were executed, bringing total shareholder returns to ¥66.2B and Total Return Ratio to 35.1% (based on Net Income attributable to owners of the parent), demonstrating an active shareholder return stance. FCF coverage is 1.90x, temporarily sufficient to fund returns from internal funds, but with Equity Ratio at a low 6.6%, next-year and onward return policies should balance internal reserves and capital strengthening. Note that a 4-for-1 stock split was implemented effective April 1, 2026, and the forecast dividend for the fiscal year ending March 2027 is ¥35 on a post-split basis (equivalent to ¥140 pre-split).
Equity Ratio 6.6% and regulatory shortfall risk: The Equity Ratio of 6.6% remains below the regulatory benchmark of 8%, indicating insufficient capital cushion. Although comprehensive income of ¥627.0B improved the ratio from 5.7% a year earlier, reversal of unrealized gains on securities or an increase in credit costs could erode capital. Additional capital raising or strengthening internal reserves is urgent, and capital regulation compliance may constrain growth investments and shareholder returns.
NIM 1.38% and margin compression risk: NIM improved to 1.38% from 0.90% last year, but remains low for a regional bank; an interest rate reversal (cuts) could manifest margin compression. Maintaining loan margins requires progress in repricing loans and deposits and strengthening Net Fee Income; regional economic slowdown or intensified competition could pressure margins.
Persistent negative Operating CF and liquidity management burden: Operating CF was a large negative ¥-1,400.7B, with Operating CF/Net Income -7.43x and OCF/EBITDA -4.33x, reflecting bank accounting-driven cash outflows from asset expansion. Weak short-term cash conversion increases liquidity management burden. Ensuring stability of funding and deposit base during a loan expansion phase is important, and ongoing monitoring of liquidity risk in adverse market conditions is required.
Profitability & Returns
| Metric | Company | Median (IQR) | Delta |
|---|---|---|---|
| Net Profit Margin | 16.6% | 11.9% (7.2%–35.4%) | +4.7pt |
Net profit margin exceeds the industry median by 4.7pt, indicating the company captured spread expansion efficiently in a rising-rate environment and ranks high in profitability within the industry.
Growth & Capital Efficiency
| Metric | Company | Median (IQR) | Delta |
|---|---|---|---|
| Revenue Growth Rate (YoY) | 20.6% | 10.1% (7.3%–12.1%) | +10.6pt |
Revenue growth rate exceeds the industry median by 10.6pt, achieving top-class growth in the sector through expanded investment income and rising Net Fee Income.
※ Source: Company compilation
Sustainability of revenue expansion in a rising-rate environment: Ordinary Revenue +20.6% and Ordinary Income +46.3% achieved marked growth, supported by expanded Net Interest Income and steady Net Fee Income. NIM improved to 1.38%, but a reversal in interest rates could trigger margin compression, so strengthening non-interest income and progress in loan/deposit repricing are keys to sustainable growth. Although comprehensive income of ¥627.0B raised the Equity Ratio to 6.6%, it remains below the regulatory 8% threshold, leaving capital strengthening as a medium-term management issue.
Balance between shareholder returns and capital policy: With a Payout Ratio of 30.1% and Total Return Ratio of 35.1%, shareholder returns have been active, but given the low Equity Ratio, future return policy should balance internal reserves and capital cushion strengthening. FCF coverage of 1.90x provides temporary capacity, but persistent negative Operating CF and funding needs in a loan expansion phase mean excessive returns could increase liquidity risk, so prudent capital allocation is recommended.
This report is an earnings analysis document automatically generated by AI based on XBRL financial statement data. It does not constitute a recommendation to invest in any particular security. Industry benchmarks are reference information compiled by the Company based on public financial disclosures. Investment decisions are your own responsibility; please consult a professional advisor as needed.