| Metric | Current Period | Same Period of Previous Year | YoY |
|---|---|---|---|
| Revenue | ¥379.4B | ¥218.5B | +73.6% |
| Operating Income | - | - | - |
| Ordinary Income | ¥83.3B | ¥53.2B | +56.5% |
| Net Income | ¥58.1B | ¥37.8B | +53.8% |
| ROE | 1.4% | 0.9% | - |
The first quarter of the fiscal year ending March 2027 recorded increases in both revenue and income; however, the rate of income growth was below the rate of revenue growth, and margins declined slightly. Ordinary income, corresponding to revenue, was ¥379.4B (¥218.5B in the same period of the previous year, YoY +73.6%), ordinary income was ¥83.3B (¥53.2B, YoY +56.5%), and net income attributable to owners of the parent was ¥58.1B (¥37.8B, YoY +53.8%). While a sharp increase in ordinary income in the Banking Business segment (+92.9%) drove overall performance, the ordinary income margin declined to 21.9% from 24.3% in the same period of the previous year, indicating that income growth has not kept pace with revenue growth. EPS was ¥149.43 (¥95.83 in the same period of the previous year, YoY +55.9%).
【Revenue】Ordinary income increased substantially to ¥379.4B, up +73.6% YoY. The Banking Business segment generated ¥333.96B (YoY +92.9%), accounting for 88% of the total and driving performance. The primary factors were the expansion of interest income (¥161.06B, an increase of ¥22.9B year on year) and net fee income (¥31.22B − ¥1.41B, a ¥7.2B increase in net terms year on year). The Leasing Business was ¥45.41B (YoY +0.1%), remaining virtually flat.
【Profit and Loss】Ordinary income was ¥83.3B (YoY +56.5%), while net income was ¥58.1B (YoY +53.8%). Segment income was ¥80.56B for the Banking Business (YoY +55.3%) and ¥2.72B for the Leasing Business (YoY +114.2%), with both contributing to income growth. General and administrative expenses increased by ¥4.44B year on year to ¥85.83B, but the expansion of core income absorbed the increase. The impact of extraordinary losses of ¥1.05B on net income was minor, including impairment losses of ¥0.97B due to a temporary reduction in the carrying amounts of operating assets and other assets in the Banking Business. Against pretax income of ¥82.22B, income taxes and other taxes were ¥24.12B (effective tax rate of 29.3%, compared with 28.4% in the previous year); the gap between ordinary income and net income is primarily explained by the tax burden. However, both the ordinary income margin of 21.95% (24.33% in the previous year) and the net income margin of 15.31% (17.29% in the previous year) declined YoY. Thus, the Company is in a phase of revenue and income growth accompanied by a slowdown in income growth relative to revenue growth, with revenue growth of +73.6% exceeding income growth. In conclusion, the Company recorded increases in both revenue and income.
The Banking Business generated ordinary income of ¥333.96B (YoY +92.9%) and segment income of ¥80.56B (YoY +55.3%), accounting for the majority of consolidated income and representing a high concentration of approximately 88% of revenue. The Leasing Business remained virtually flat in terms of ordinary income at ¥45.41B (YoY +0.1%), while segment income improved to ¥2.72B (YoY +114.2%), indicating improved profitability. In the Banking Business, income growth of +55.3% lagged revenue growth of +92.9%; this internal gap between revenue and income growth is the primary cause of the decline in the overall income margin.
【Profitability】The net income margin was 15.3%, down 1.98pt from 17.3% in the same period of the previous year, while the ordinary income margin also declined to 21.9% from 24.3%. Although revenue expanded substantially due to the sharp increase in ordinary income in the Banking Business, margins were diluted relative to revenue growth because of higher costs and growth in relatively lower-margin revenue items. 【Cash Quality】Comprehensive income was ¥180.4B, exceeding net income of ¥58.1B by ¥122.3B. The gap expanded from ¥43.4B in the same period of the previous year (comprehensive income of ¥81.1B − net income of ¥37.8B). The primary factor behind the gap was an increase in valuation differences on securities (+¥132.4B on an OCI basis), indicating an earnings structure highly sensitive to changes in market conditions. 【Investment Efficiency】ROE improved to 1.4% from 0.9% in the same period of the previous year. Under DuPont analysis, the primary factor behind the improvement in ROE was an increase in total asset turnover (ordinary income/total assets) to 0.90% from 0.52%, despite the decline in the net income margin. Financial leverage (total assets/net assets) was 10.17x, slightly down from 10.44x in the previous year. 【Financial Soundness】The equity ratio improved by 0.3pt to 9.8% from 9.5% in the same period of the previous year, but remained below the double-digit level generally regarded as an indication of soundness. The loan-to-deposit ratio, calculated using loans of ¥2.5406T and deposits of ¥3.3316T, was 76.3% (76.8% in the previous year), maintaining a stable range.
In lieu of a disclosed statement of cash flows, an analysis of changes in the balance sheet indicates that deposits increased to ¥3.3316T (+¥492.3B year on year, +1.5%), while loans increased to ¥2.5406T (+¥192.0B, +0.76%), indicating expansion in both funding and asset deployment. Borrowings declined to ¥190.75B (−¥344.6B, −15.3%), suggesting reduced reliance on market-based funding and a shift toward stable, deposit-centered funding. Securities totaled ¥1.1909T (+¥117.6B, +1.0%), with both expanded investment and accumulated valuation gains likely contributing to the increase in the balance. Net assets increased to ¥414.39B (+¥147.7B), supported by the accumulation of retained earnings as well as an increase in AOCI (accumulated other comprehensive income, including valuation and translation adjustments).
The current period’s results were supported by growth in core income, namely net interest income and net fee income. The impact of extraordinary items was minor, consisting of extraordinary gains of ¥0.01B and extraordinary losses of ¥1.05B, including impairment losses of ¥0.97B, clearly distinguishing recurring and nonrecurring factors. The difference between ordinary income and net income is primarily explained by the tax burden (an effective tax rate of 29.3%, broadly unchanged from 28.4% in the previous year), and distortions from tax-rate fluctuations were limited. Meanwhile, comprehensive income of ¥180.4B substantially exceeded net income of ¥58.1B, with most of the difference attributable to the increase in valuation differences on securities (+¥132.4B). Although this divergence does not impair the quality of net income itself, it indicates that OCI could reverse in subsequent periods as interest rates and equity markets fluctuate. Accordingly, analysis based on ordinary income, rather than comprehensive income, is more appropriate when assessing earnings sustainability.
The progress rates for Q1 against the full-year plan (revenue of ¥1176.0B, ordinary income of ¥260.0B, and net income of ¥176.0B) were 32.3% for revenue, 32.0% for ordinary income, and 33.0% for net income, all exceeding the simple prorated benchmark of 25%. Neither the earnings forecast nor the dividend forecast was revised. Although quarterly progress is ahead of plan, given that this quarter was subject to significant fluctuations in market-related factors such as securities valuations, the pace of progress toward the second half of the fiscal year should be monitored for normalization.
The annual dividend forecast for the fiscal year ending March 2027 is ¥190, comprising ¥90 at the end of Q2 (ordinary dividend of ¥90) and ¥90 at fiscal year-end (ordinary dividend of ¥90), with each amount assumed to include a ¥10 commemorative dividend for the 130th anniversary of the Company’s founding. Multiplying the forecast dividend of ¥190 by the average number of shares outstanding during the period of 38,877 thousand shares results in total dividends of approximately ¥73.9B, implying a payout ratio of approximately 42% against the full-year net income forecast of ¥176.0B. Given retained earnings of ¥2186.1B and an equity ratio of 9.8%, no significant impediment to maintaining dividends at this payout ratio is apparent.
Margin dilution: The ordinary income margin was 21.9%, down 2.4pt from 24.3% in the same period of the previous year, while the net income margin was 15.3%, down 2.0pt from 17.3% in the previous year. Ordinary income growth of +56.5% lagged ordinary income growth of +73.6%, and whether the Company can continue to secure income growth commensurate with revenue growth remains an area of focus.
Risk of fluctuations in valuation differences (AOCI): Valuation differences on securities accumulated to ¥1389.0B (¥1256.6B in the same period of the previous year, +¥132.4B), accompanied by an increase in deferred tax liabilities to ¥607.5B (+¥56.4B). Most of the ¥122.3B gap between comprehensive income of ¥180.4B and net income of ¥58.1B resulted from this increase in OCI. Consequently, fluctuations in net assets may be amplified if interest rates or equity markets reverse.
Capital adequacy: Although the equity ratio improved to 9.8% from 9.5% in the same period of the previous year, it remained below the double-digit level. As loans and deposits expand to approximately ¥2.5T and ¥3.3T, respectively, the balance between growth in capital and business expansion will remain an area of focus.
Profitability and Returns
| Metric | Company | Median (IQR) | Delta |
|---|---|---|---|
| Net Income Margin | 15.3% | – | – |
| The Company’s net income margin of 15.3% has been trending downward year on year, and its relative position within the industry remains subject to the availability of additional reference data. |
Growth and Capital Efficiency
| Metric | Company | Median (IQR) | Delta |
|---|---|---|---|
| Revenue Growth Rate (Year on Year) | 73.6% | – | – |
| The revenue growth rate of 73.6% reflects the sharp increase in ordinary income in the Banking Business segment. |
※Source: Compiled by the Company
The current quarter recorded increases in revenue and income, with ordinary income up +73.6%, ordinary income +56.5%, and net income +53.8%. However, the ordinary income margin declined to 21.9% from 24.3% in the previous year, and the net income margin declined to 15.3% from 17.3%, indicating from the financial results data that income growth has not kept pace with revenue growth.
Comprehensive income of ¥180.4B substantially exceeded net income of ¥58.1B, with most of the difference attributable to the increase in valuation differences on securities (+¥132.4B). This structure indicates high sensitivity of net assets to changes in market conditions.
Q1 progress against the full-year plan was 32.3% for revenue, 32.0% for ordinary income, and 33.0% for net income, all exceeding the simple prorated benchmark of 25%. Neither the earnings forecast nor the dividend forecast was revised.
This report is an earnings analysis document automatically generated by AI based on XBRL earnings release data. It does not constitute a recommendation to invest in any specific security. The 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 professionals as necessary.
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