| Metric | Current Period | Prior Year Period | YoY |
|---|---|---|---|
| Revenue / Net Sales | ¥994.3B | ¥779.2B | +27.6% |
| Operating Income / Operating Profit | - | - | - |
| Ordinary Income | ¥147.1B | ¥110.9B | +32.7% |
| Net Income / Net Profit | ¥96.8B | ¥66.3B | +46.0% |
| ROE | 3.9% | 3.2% | - |
For the fiscal year ended March 2026, Oita Bank materially improved its revenue profile against a rising interest rate backdrop. Ordinary revenues totaled ¥994.3B (YoY +¥215.1B +27.6%), Ordinary Income was ¥147.1B (YoY +¥36.2B +32.7%), and Net Income attributable to owners of the parent was ¥105.95B (YoY +¥30.4B +40.2%), all achieving double-digit growth. The banking segment drove the results with Ordinary Revenues of ¥863.5B (+31.6%), primarily due to expanded interest revenues of ¥652.1B (YoY +¥152.1B). On an operating basis, total operating profit expanded thanks to higher interest and fee income, while deterioration in other operating revenue and an increase in operating expenses (¥847.2B, +¥178.9B +26.8%) pushed the cost-to-income ratio (expense ratio) up to 85.2%. Bottom-line growth was also supported by a decline in the effective tax rate to 27.3% from 31.7%, with profit before tax at ¥145.5B (+31.6%). Comprehensive income improved substantially to ¥396.6B (prior year ▲¥59.2B), driven chiefly by increases in unrealized gains on securities (+¥204.9B) and improvements in deferred hedge gains/losses (+¥45.8B). Total assets were largely flat at ¥44,923B, while total equity increased to ¥2,452.6B (+¥367.0B +17.6%), improving the Equity Ratio to 5.5% (prior year 4.6%, +0.9pt). However, Operating Cash Flow was a large outflow of ▲¥2,178.4B (prior year ▲¥1,182.0B), reflecting banking-specific working capital movements from loan growth and expansion of investment assets. Annual dividend was ¥170 (interim ¥85 / year-end ¥85) with a Payout Ratio of 121.6%, exceeding reported earnings.
[Revenue] Ordinary Revenues rose sharply to ¥994.3B (YoY +27.6%). The largest contributor was Interest Revenues of ¥652.1B (+30.5%), driven by widening loan-deposit spreads and increased loan balances (¥24,606B, +¥1,893B +8.3%). Within Interest Revenues, interest on loans was ¥318.1B and interest/dividend income on securities was ¥295.8B. Fee income was steady at ¥114.1B (+6.3%), supported by increased fees related to asset management. Other ordinary revenues including other operating income expanded to ¥228.1B, though detailed breakdowns are limited. By segment, Banking accounted for ¥863.5B (+31.6%) or 86.9% of total Ordinary Revenues; Leasing reported ¥100.9B (+6.4%), and Other reported ¥30.1B (+3.8%), playing supplementary roles. The revenue increase was chiefly due to margin improvement in a rising rate environment, representing a structural tailwind.
[Profitability] Ordinary Income grew to ¥147.1B (YoY +32.7%), outpacing revenue growth. Interest expenses rose substantially to ¥137.4B (YoY +¥75.5B +121.9%), but the increase in Interest Revenues more than offset this, expanding estimated net interest income to approximately ¥514.7B. Net fee income was about ¥91.0B (fee revenue ¥114.1B – fee expense ¥23.0B), roughly flat with the prior year. Other operating income (estimated) turned negative, likely due to deterioration in market-related gains/losses. Operating expenses rose to ¥847.2B (+26.8%); while personnel costs are included, detailed breakdowns are not disclosed. General and administrative expenses (banking segment) were ¥275.3B, marginally up from ¥268.3B, indicating some degree of cost control. Profit before tax was ¥145.5B (+31.6%), with corporate taxes of ¥39.8B (effective tax rate 27.3%), down from ¥35.0B (31.7%), supporting net profit growth. Loss attributable to non-controlling interests was ▲¥0.2B, resulting in Net Income attributable to owners of the parent of ¥105.95B (+40.2%). Extraordinary items were limited: extraordinary profit ¥0.2B vs extraordinary losses ¥1.8B (including impairment losses ¥1.2B). In conclusion, interest-rate-driven revenue growth delivered higher earnings, but deterioration in other operating income and the rapid rise in interest expenses limited margin expansion. Ordinary income margin improved modestly to 14.8% (prior year 14.2%), and improving cost efficiency remains an issue.
The Banking segment recorded Ordinary Revenues of ¥863.5B (YoY +¥206.8B +31.6%) and Segment Profit of ¥133.4B (YoY +¥36.1B +37.2%), achieving substantial profit growth. Growth was driven by expanded interest revenues and steady fee income; segment assets were largely flat at ¥44,687B (YoY ▲¥151.0B ▲0.3%). The Leasing segment posted Ordinary Revenues of ¥100.9B (+¥6.4B +6.4%) and Segment Profit of ¥4.6B (+¥1.2B +36.4%), securing modest profit growth. Other (including credit card business) reported Ordinary Revenues of ¥30.1B (+¥1.1B +3.8%) and Segment Profit of ¥9.6B (▲¥1.1B ▲10.3%), slightly down. The Banking segment accounted for 90.6% of consolidated Ordinary Income, confirming its dominant role. Leasing and Other are complementary and contribute limited diversification.
[Profitability] ROE was 4.3% (calculated as Net Income attributable to owners of the parent ¥105.95B ÷ average equity ¥2,269.1B), improving 0.4pt from 3.9% the prior year. Net profit margin was 10.7% (Net Income ¥96.8B ÷ Ordinary Revenues ¥994.3B), up 2.2pt from 8.5%, driving earnings growth. Ordinary income margin was 14.8% (Ordinary Income ¥147.1B ÷ Ordinary Revenues ¥994.3B), up 0.6pt from 14.2%, but improvement was limited by rising operating expense ratio. [Cash Quality] Operating CF / Net Income was ▲22.5x (Operating CF ▲¥2,178.4B ÷ Net Income ¥96.8B), a significant negative driven by bank-specific loan and investment asset increases. Depreciation was ¥15.1B; capital expenditures were ¥22.2B (CapEx), indicating continued growth investment. [Investment Efficiency] Total asset turnover was 0.022x (Ordinary Revenues ¥994.3B ÷ Total Assets ¥44,923B), reflecting the structurally low turnover of banking; ROA was 0.3% (Ordinary Income ¥147.1B ÷ Total Assets ¥44,923B). [Financial Soundness] Equity Ratio was 5.5% (Total Equity ¥2,452.6B ÷ Total Assets ¥44,923B), up 0.9pt from 4.6%, but below the Basel regulatory minimum (8%), highlighting capital build-up needs. Loan-to-deposit ratio (Loans ¥24,606B ÷ Deposits ¥35,322B) rose to 69.7% (prior year 64.9%), indicating improved funding efficiency. Tangible fixed assets were ¥299.1B and intangible fixed assets ¥12.8B, representing 0.7% and 0.03% of total assets, respectively.
Operating Cash Flow was a large outflow of ▲¥2,178.4B (prior year ▲¥1,182.0B), notably with operating CF subtotal (before working capital changes) already negative at ▲¥2,132.6B. In banking, loan increases (YoY +¥1,893B) and expanded securities operations pressured working capital; corporate tax payments of ¥46.1B were also outflows. Investing Cash Flow was positive ¥587.3B, likely driven by proceeds from sales/redemptions of securities. Capital expenditures were ¥22.2B and intangible asset investments ¥6.6B, contained within depreciation of ¥15.1B. Financing Cash Flow was ▲¥29.8B, primarily due to dividend payments of ¥17.1B and share buybacks of ¥10.1B. Free Cash Flow (Operating CF + Investing CF) was negative ¥1,591.2B, reflecting funding dynamics during a balance-sheet expansion phase unique to banking. Cash and cash equivalents declined by ¥1,621.0B to ¥6,163.3B (prior year ¥7,784.3B); liquidity remains ample but continued negative Operating CF warrants monitoring.
Earnings quality is supported by Ordinary Income of ¥147.1B compared with net extraordinary items of only ▲¥1.6B (extraordinary profit ¥0.2B – extraordinary loss ¥1.8B), indicating recurring earnings make up the bulk of profits. However, Comprehensive Income of ¥396.6B far exceeded Net Income of ¥96.8B, driven by unrealized gains on securities +¥204.9B, deferred hedge gains/losses +¥45.8B, and actuarial adjustments related to retirement benefits +¥40.1B. These are unrealized and may reverse with future market conditions. Details on non-operating and other operating revenues are limited, but revenue sources outside interest and fee income are vulnerable to market-related volatility. With operating CF subtotal at ▲¥2,132.6B, there is a significant gap between accounting profits and cash generation, suggesting a high accrual ratio (high proportion of non-cash income). Reversal of allowance for loan losses is immaterial (around ▲¥0.1B) as an adjustment to Ordinary Revenues, indicating credit costs are stable. Overall, while ordinary revenue-based earnings are solid, the large contribution to Comprehensive Income from valuation differences suggests ordinary income should be the basis for assessing sustainability.
Full-year guidance targets Ordinary Revenues ¥975.0B, Ordinary Income ¥178.0B (YoY +21.0%), and Net Income attributable to owners of the parent ¥122.0B (YoY +15.2%). Compared with actual results for the period (Ordinary Revenues ¥994.3B, Ordinary Income ¥147.1B, Net Income attributable to owners of the parent ¥105.95B), Ordinary Revenues exceeded guidance by +1.99%, Ordinary Income progress is 82.6% of guidance, and Net Income attributable to owners of the parent progress is 86.8%. The full-year guidance appears conservative; if the favorable interest-rate environment persists, upside is possible. EPS is forecast at ¥160.95, implying about +15.1% growth from the current period EPS of ¥139.79. Dividend guidance is annual ¥25 (interim and year-end undecided), representing a sharp cut from the current period dividend of ¥170 and signaling a shift toward normalizing payout and prioritizing capital build-up.
Annual dividend was ¥170 (interim ¥85 / year-end ¥85), a large increase from ¥50 in the prior year (+240.0%). Against Net Income attributable to owners of the parent of ¥105.95B, total dividends are estimated at approximately ¥128.4B (weighted average shares outstanding during the period 75,798 thousand shares × ¥170), implying a Payout Ratio of 121.2%, exceeding earnings. Share buybacks of ¥10.1B were executed, bringing total return amount to about ¥138.5B and the Total Return Ratio to about 130.7%. High returns amid Free Cash Flow of negative ¥1,591.2B likely drew on past retained earnings and cash balances (Cash and cash equivalents ¥6,163.3B), but sustainability is questionable. Next fiscal year dividend guidance of annual ¥25 indicates a significant cut aimed at normalizing returns and prioritizing increasing the Equity Ratio from 5.5%. The shift in dividend policy can be seen as a reasonable response given regulatory capital constraints.
Interest Rate Risk: Rapid increases in Interest Revenues (¥652.1B, YoY +30.5%) and Interest Expenses (¥137.4B, YoY +121.9%) depend on current rising rate conditions. A future reversal in rates could compress loan-deposit spreads and reduce net interest income, pressuring Ordinary Income. Deferred hedge gains/losses included in Comprehensive Income (+¥45.8B) reflect valuation gains on interest hedges and could reverse with rate movements.
Capital Buffer Shortage Risk: Equity Ratio of 5.5% is 2.5pt below the Basel regulatory minimum of 8%. Further loan expansion or increased market investments would raise risk-weighted assets and could create additional capital constraints. High returns exceeding earnings (Payout Ratio 121.2%) have impeded capital accumulation; the planned dividend cut to annual ¥25 aims to build capital, but sufficiency is uncertain.
Volatility in Other Operating Income: Of Comprehensive Income ¥396.6B, unrealized gains on securities +¥204.9B are not realized and may turn into losses in deteriorating markets. Limited transparency on other operating revenues suggests a structure exposed to market-related volatility, which can undermine Ordinary Income stability. The negative operating CF subtotal of ▲¥2,132.6B reflects cash outflows tied to loan and investment asset growth, and rapid market changes could translate this into liquidity risk.
Profitability & Returns
| Metric | Company | Median (IQR) | Delta |
|---|---|---|---|
| Net Profit Margin | 9.7% | 11.9% (7.2%–35.4%) | -2.2pt |
Net profit margin trails the industry median by 2.2pt, placing the company in the lower tier on profitability within the sector.
Growth & Capital Efficiency
| Metric | Company | Median (IQR) | Delta |
|---|---|---|---|
| Revenue Growth Rate (YoY) | 27.6% | 10.1% (7.3%–12.1%) | +17.6pt |
Revenue growth outpaces the industry median by 17.6pt, showing strong growth momentum within the sector under the rising-rate environment.
※Source: Company aggregation
Revenue expansion potential in rising-rate cycle: Sharp increase in Interest Revenues to ¥652.1B (YoY +30.5%) reflects benefits from the rate cycle. Loan balances rose to ¥24,606B (+8.3%), and loan-to-deposit ratio improved to 69.7% (prior year 64.9%), indicating better funding efficiency. If rates remain elevated, further expansion in net interest income is possible. However, the rapid rise in interest expenses (+121.9%) reflects higher deposit rates, making the pace of loan-rate repricing critical to preserve margins.
Capital build-up and recalibration of return policy: With an Equity Ratio of 5.5% below the regulatory threshold of 8%, sustaining a Payout Ratio of 121.2% is difficult. The planned dividend cut to annual ¥25 indicates a policy shift toward prioritizing capital accumulation; improving the Equity Ratio will be a precondition for shareholder value enhancement. While Comprehensive Income of ¥396.6B materially supports capital, ¥204.9B of that is unrealized gains on securities and may reverse in adverse market conditions.
Need to improve cost efficiency and income stability: Operating expenses rose to ¥847.2B (+26.8%), worsening the cost-to-income ratio to 85.2%. Growth in G&A (banking segment +2.6%) was limited, but increases in other operating costs have pressured revenue efficiency. The negative operating CF subtotal of ▲¥2,132.6B reflects cash outflows tied to loan expansion, and unstable cash generation remains a medium-term concern. Going forward, improving expense efficiency and reducing volatility in other operating income will be key to sustainable margin expansion.
This report is an earnings analysis document automatically generated by AI analyzing XBRL financial statement data. It does not constitute a recommendation to invest in any specific security. Industry benchmarks are compiled by the firm based on publicly disclosed financial statements and provided for reference. Investment decisions are your responsibility; consult advisors as necessary before acting.