| Metric | Current Period | Same Period Last Year | YoY |
|---|---|---|---|
| Revenue | ¥247.1B | ¥148.3B | +66.6% |
| Operating Income | - | - | - |
| Ordinary Income | ¥33.8B | ¥37.0B | -8.6% |
| Net Income | ¥22.2B | ¥22.6B | -1.8% |
| ROE | 1.1% | 1.2% | - |
While both ordinary income and net income declined, Revenue (ordinary revenues) increased substantially. However, this was largely attributable to the effects of account classifications unique to the banking industry, and the most important point is that deterioration in market-related gains and losses weighed on the bank’s underlying earnings power. Revenue (ordinary revenues) was ¥247.1B (¥148.3B in the same period last year, YoY +66.6%), ordinary income was ¥33.8B (¥37.0B in the same period last year, YoY -8.6%), and net income was ¥22.2B (¥22.6B in the same period last year, YoY -1.8%). Net interest income increased, but deterioration in other ordinary gains and losses and a decline in net fee income pressured ordinary income.
【Revenue】Ordinary revenues increased substantially by 66.6% YoY to ¥247.1B. By component, the increase in funds investment income, including a +17.6% increase in interest on loans, contributed to the result. However, much of this growth was attributable to aggregation differences arising from bank account classifications, and the actual expansion in gross profit was limited. Net fee income declined 8.7% to ¥17.6B from ¥19.3B in the same period last year, highlighting the weakness of non-interest income.
【Profit and Loss】Ordinary income declined 8.6% YoY to ¥33.8B, while net income declined 1.8% YoY to ¥22.2B. The factors were higher funding costs resulting from a sharp 90.6% YoY increase in interest on deposits, as well as deterioration in other ordinary gains and losses, including market-related gains and losses (from -¥24.3B in the same period last year to -¥33.6B in the current period). Expenses were contained at ¥61.4B, up 1.9% YoY, but the slowing growth in gross profit did not lead to an improvement in core earnings power. Meanwhile, extraordinary income of ¥2.1B (gain on disposal of fixed assets) temporarily boosted profit before tax. Although the net profit margin was 9.0%, ordinary income declined by a greater amount, with the divergence between ordinary income and net income cushioned by a decrease in income taxes and other taxes (from ¥14.5B in the same period last year to ¥13.8B in the current period). Overall, the results represent higher revenue but lower profit.
The Group has a single reportable segment, the Banking Business, and does not disclose performance by segment.
【Profitability】The net profit margin was 9.0%, while the ordinary income margin was equivalent to 13.7%, both showing a declining trend from the previous year. ROE was low at 1.1%. Its decomposition into a 9.0% net profit margin, 0.007 total asset turnover, and 17.81x financial leverage confirms a structure supported by high leverage.【Cash Flow Quality】Net interest income increased steadily by 10.8% YoY to ¥100.5B, but the high volatility of other ordinary gains and losses continues to influence earnings stability.【Investment Efficiency】Total asset turnover was 0.007, an appropriate level given the characteristics of the banking industry, with net income of ¥22.2B against total assets of ¥35,290B.【Financial Soundness】The equity ratio improved to 5.6% from 5.4% in the same period last year, although its absolute level remains relatively limited. Net assets increased to ¥1,981.7B from ¥1,909.6B in the same period last year, aided by an improvement in the valuation difference on securities.
Although a cash flow statement was not disclosed separately for this period, the movement of funds can be inferred from changes in the balance sheet. A notable feature is that negotiable certificates of deposit increased by ¥1,149.3B (+55.0%), indicating a shift in the funding structure toward wholesale funding. Total deposits remained broadly flat at ¥3,000.3B (¥2,992.4B in the same period last year), while loans remained at approximately the same level at ¥2,228.5B (¥2,228.9B in the same period last year). Securities declined to ¥850.9B from ¥879.8B in the same period last year, suggesting that some funds may have been reallocated from assets other than loans. Total assets increased slightly to ¥35,290.1B from ¥35,105.1B in the same period last year, indicating limited expansion in scale.
The current period’s earnings structure was supported by growth in recurring net interest income (+10.8%). However, market-dependent items, including other ordinary gains and losses, deteriorated from -¥24.3B in the same period last year to -¥33.6B in the current period, weighing on ordinary income and embedding volatility in earnings quality. Extraordinary income of ¥2.1B resulted from a gain on disposal of fixed assets and was a temporary factor. Of profit before tax of ¥35.9B, ordinary income of ¥33.8B represents recurring earnings power. Comprehensive income increased substantially to ¥85.4B from ¥65.98B in the same period last year, owing to an ¥81.8B improvement in the valuation difference on securities, resulting in a significant divergence from net income of ¥22.2B. This divergence reflects unrealized valuation differences arising from fluctuations in market prices, and it should be noted that this is a highly accrual-based item not accompanied by the actual recovery of funds.
The full-year ordinary income forecast is ¥140.0B, down 0.3% YoY. Current-period ordinary income of ¥33.8B represents progress of 24.2%, slightly below the simple one-quarter benchmark. Against the net income forecast of ¥88.0B, current-period net income of ¥22.2B represents progress of 25.2%, broadly in line with the plan. There were no revisions to either the earnings forecast or the dividend forecast, and the Company has maintained its full-year plan.
The annual dividend forecast is ¥86, and the payout ratio based on the EPS forecast of ¥210.1 is approximately 40.9%. Compared with the previous year’s actual dividend of ¥28 (a reference figure for the interim period or only a portion of the fiscal period), assessment on a full-year basis is appropriate, and coverage against the net income forecast of ¥88.0B is secured. The equity ratio improved from 5.4% in the previous year to 5.6%, and the Company appears to be in a position to maintain dividends while accumulating internal capital.
Low NIM and Spread Compression: Net interest income increased by 10.8%, but interest on deposits surged by 90.6%, with higher funding costs pressuring spreads. Depending on the interest-rate environment, this could become a sustained factor weighing on earnings.
Volatility in Other Ordinary Gains and Losses: Other ordinary gains and losses, including market-related gains and losses, deteriorated from -¥24.3B in the same period last year to -¥33.6B in the current period. This item has a high dependence on market conditions and requires ongoing monitoring as a factor causing fluctuations in ordinary income.
Changes in Funding Structure: Negotiable certificates of deposit increased by +55.0%, increasing dependence on wholesale funding. Attention is required with respect to the risk of higher-than-expected funding costs and rollover risk.
Profitability and Returns
| Metric | Company | Median (IQR) | Delta |
|---|---|---|---|
| Net Profit Margin | 9.0% | – | – |
Due to limited comparative data, there is insufficient information to assess the positioning of the 9.0% net profit margin within the industry.
Growth and Capital Efficiency
| Metric | Company | Median (IQR) | Delta |
|---|---|---|---|
| Revenue Growth Rate (YoY) | 66.6% | – | – |
The 66.6% Revenue growth rate includes the effects of account classifications, and caution is required when making a simple comparison within the industry.
※Source: Compiled by the Company
Ordinary income declined 8.6% and net income declined 1.8%, while comprehensive income increased 29.4% due to an improvement in the valuation difference on securities. The differing directions of realized gains and losses and valuation gains and losses are a characteristic feature of the current period’s results.
Net fee income declined 8.7%, indicating that diversification of non-interest income remains a challenge. The increase in net interest income supported ordinary income, but volatility in other ordinary gains and losses was the primary driver of profit fluctuations.
Progress against the full-year plan was 25.2% for net income, broadly in line with the plan, and no revisions were made to the dividend forecast or earnings forecast. The equity ratio improved to 5.6%, indicating a slight increase in capital stability.
This report is an earnings analysis document automatically generated by AI based on XBRL earnings release data. It does not recommend investment 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 discretion and responsibility, after consulting with a professional as necessary.
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