| Metric | Current Period | Same Period of Previous Year | YoY |
|---|---|---|---|
| Revenue | ¥278.6B | ¥215.8B | +29.1% |
| Operating Income | - | - | - |
| Ordinary Income | ¥53.7B | ¥48.9B | +9.7% |
| Net Income | ¥39.4B | ¥32.8B | +20.0% |
| ROE | 1.5% | 1.3% | - |
Revenue and earnings increased against the backdrop of expanding net interest income amid rising interest rates; however, earnings quality was partially pressured by higher market-related expenses. Ordinary revenue (Revenue) was ¥278.6B (+29.1% YoY), Ordinary Income was ¥53.7B (+9.7%), and Net Income was ¥39.4B (+20.0%). The primary factor was a substantial expansion in Ordinary revenue from external customers in the Banking Business to ¥245.6B (+33.0%), driven by higher interest income. Meanwhile, increases in interest expenses and market-related expenses restrained the growth in Ordinary Income relative to Net Income.
【Revenue】Ordinary revenue was ¥278.6B, representing a 29.1% YoY increase. By segment, the Banking Business led overall growth at ¥245.6B (88.2% of total, +33.0%), while Leasing was ¥26.2B (+8.8%) and Other was ¥7.8B (+6.5%), with all segments posting higher revenue. Growth in the Banking Business was primarily attributable to higher interest income (interest income from ¥178.7B→¥188.7B), with the rising interest-rate environment contributing to the expansion of Ordinary revenue.
【Profit and Loss】Ordinary Income was ¥53.7B (+9.7% YoY), while Net Income was ¥39.4B (+20.0%), resulting in higher revenue and earnings. Segment profit increased substantially to ¥131.5B for the Banking Business and ¥11.1B for Leasing; however, the elimination of intersegment transactions (△¥91.4B) limited growth in consolidated Ordinary Income. Interest expenses increased from ¥28.3B to ¥41.1B, while Other ordinary expenses expanded from ¥52.4B to ¥105.6B, offsetting the growth in net interest income. Extraordinary income and losses were virtually zero (extraordinary income ¥0.0B, extraordinary losses ¥0.0B), indicating limited impact from one-time factors, while the tax burden ratio remained stable at approximately 26.7%. The Net Income margin improved to 14.2% from the previous year, and overall results reflected increases in both revenue and earnings.
Segment profit increased substantially to ¥131.5B for the Banking Business (from ¥46.7B in the previous year) and ¥11.1B for Leasing (from ¥0.3B in the previous year), with both businesses contributing to earnings growth. However, the large elimination of intersegment transactions of △¥91.4B significantly reduced consolidated Ordinary Income (¥53.7B) from total segment profit (¥145.1B). The Banking Business accounts for the majority of both Ordinary revenue and profit, resulting in a business portfolio structure with a high degree of dependence on banking operations.
【Profitability】The Net Income margin improved to 14.2% from the previous year, while the Ordinary Income margin was approximately 19.3%. Higher interest income contributed to results, while increases in interest expenses and Other ordinary expenses constrained margin expansion.【Cash Flow Quality】Comprehensive income was ¥198.9B, substantially exceeding Net Income of ¥39.4B. This difference was attributable to unrealized valuation gains, including valuation differences on securities of ¥135.9B and deferred hedge gains and losses of ¥26.6B, and does not represent recurring cash-generating capacity.【Investment Efficiency】ROE was 1.5%, and the Equity Ratio was 5.9% (5.5% in the previous year), representing a modest improvement. Total assets were ¥44,433.5B, compared with Net Assets of ¥2,638.8B. Given the characteristics of the banking industry, both asset turnover and leverage are at high levels.【Financial Soundness】Deposits were ¥35,665.7B, compared with loans of ¥24,665.0B, resulting in a loan-to-deposit ratio of approximately 69% and ample liquidity. Borrowings declined to ¥242.4B (¥327.99B in the previous year), while market-based short-term funding, including repo transactions and securities lending, also decreased, indicating a downward trend in dependence on external markets.
As no cash flow statement has been disclosed, observations based on funding trends in the balance sheet indicate that deposits increased by +¥34.4B YoY to ¥3,566.6B, maintaining a stable funding base. Meanwhile, borrowings declined to ¥242.4B (¥327.99B in the previous year), repo funding to ¥59.9B (¥111.4B), and liabilities related to securities lending to ¥77.3B (¥96.9B), indicating reduced dependence on market-based short-term funding. Securities decreased to ¥1,236.4B (¥1,288.2B in the previous year), potentially reflecting shorter duration and a review of asset allocation. Overall, conservative funding management was observed, centered on stable deposit funding while reducing market-based funding.
Net interest income, a recurring source of earnings, expanded due to higher interest income. However, Other ordinary expenses doubled from ¥52.4B to ¥105.6B. If this increase was attributable to highly market-sensitive expenses, such as bond-related valuation losses or hedging costs, it may contain temporary factors affecting earnings quality. The ¥159.5B gap between Comprehensive income of ¥198.9B and Net Income of ¥39.4B was primarily attributable to a ¥135.9B improvement in valuation differences on securities. As this represents unrealized valuation gains that could reverse due to market fluctuations, it should be distinguished from recurring earnings levels. Extraordinary income and losses were virtually zero, limiting the impact of one-time factors. Current-period Net Income was therefore largely composed of earnings from core operations, although the drivers of the increase in Other ordinary expenses require close monitoring.
Against the full-year Ordinary Income forecast of ¥190.0B (+29.2% YoY), Ordinary Income for Q1 was ¥53.7B, representing progress of approximately 28.3% and exceeding the quarterly straight-line progress rate of 25%. For Net Income, Q1 results of ¥39.4B represented approximately 30% progress against the full-year plan (assuming estimated Net Income of approximately ¥13.0B based on EPS of ¥172.1 derived from the company’s publicly announced annual dividend forecast), indicating a favorable start. It is noteworthy that the earnings forecast was revised during the quarter, and the pace of progress may change depending on fluctuations in market-related expenses during the second half of the year.
The full-year dividend forecast is ¥50 per share (with no revision to the dividend forecast), resulting in a Payout Ratio of approximately 29.1% against the full-year EPS forecast of ¥172.1. In addition, a 5-for-1 stock split was implemented effective April 1, 2026. On a pre-split basis, the annual dividend for the fiscal year ending March 2027 will be ¥250 (interim dividend of ¥125 and year-end dividend of ¥125). As Q1 Net Income is ahead of the full-year plan, the current dividend plan is conservative, with no concerns regarding its sustainability.
Net Interest Margin Compression Risk: In a rising interest-rate environment, interest expenses increased by +45.4% from ¥28.3B to ¥41.1B, and rising deposit costs could pressure the spread on net interest income.
Volatility in Market-Related Expenses: Other ordinary expenses doubled from ¥52.4B to ¥105.6B, and market-sensitive expenses such as bond-related valuation losses and hedging costs could affect the income statement.
Business Concentration Risk: The Banking Business accounts for 88.2% of Ordinary revenue, resulting in a structure with significant dependence on a single business.
Profitability and Returns
| Metric | Company | Median (IQR) | Delta |
|---|---|---|---|
| Net Income Margin | 14.1% | – | – |
Although comparative data against the industry median for the company’s Net Income margin is limited, a level in the 14% range represents a solid level accompanied by revenue growth.
Growth and Capital Efficiency
| Metric | Company | Median (IQR) | Delta |
|---|---|---|---|
| Revenue Growth Rate (YoY) | 29.1% | – | – |
The Revenue growth rate is at a high level, benefiting from rising interest rates, and may represent comparatively strong growth within the industry.
※Source: Compiled by the Company
Ordinary revenue increased substantially by 29.1%, driven primarily by the Banking Business, with higher interest income serving as the main contributor to performance. Meanwhile, the doubling of Other ordinary expenses is a factor restraining earnings growth, making it important to continue monitoring the composition of the expense structure.
Comprehensive income (¥198.9B) substantially exceeded Net Income (¥39.4B) due to an improvement in valuation differences on securities. If interest-rate trends reverse, these valuation gains may contract or reverse, which is an important consideration when assessing the quality of capital.
The Equity Ratio improved to 5.9% from 5.5% in the previous year, while the loan-to-deposit ratio was approximately 69%, indicating ample liquidity. The decline in market-based short-term funding (borrowings, repo funding, and securities lending) from the previous year represents an observed structural change indicating a more conservative funding structure.
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 available earnings data. Investment decisions should be made at your own discretion and responsibility, and you should consult a professional advisor as necessary.
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