| Metric | This Period | Prior Year | YoY |
|---|---|---|---|
| Revenue / Net Sales | ¥901.6B | ¥801.9B | +12.4% |
| Operating Income | - | - | - |
| Ordinary Income | ¥198.3B | ¥139.5B | +42.1% |
| Net Income | ¥135.8B | ¥93.4B | +45.3% |
| ROE | 6.1% | 4.9% | - |
For the fiscal year ended March 2026, Ordinary Revenue was ¥901.6B (YoY +¥99.7B, +12.4%), Ordinary Income was ¥198.3B (YoY +¥58.8B, +42.1%), and Net Income was ¥135.8B (YoY +¥42.4B, +45.3%), with major metrics achieving double-digit growth. The Banking segment accounted for the bulk of revenue with Ordinary Revenue of ¥845.3B (+13.8%) and Segment Profit of ¥192.2B; the Leasing business saw Ordinary Revenue of ¥50.4B (-5.7%) and a revenue decline. Net profit margin improved to 15.1% (prior year 11.6%, +3.5pt), and ROE rose to 6.1% from 5.1% (+1.0pt). Interest income increased materially to ¥630.4B (＋¥154.2B), which absorbed the rise in interest expense of ¥199.5B (＋¥36.8B) and expanded Net Interest Income to ¥430.9B; net fee income remained firm at ¥63.5B. Comprehensive income reached ¥360.4B, 2.7x Net Income, with ¥178.9B in Valuation Difference on Available-for-Sale Securities and ¥25.6B in Deferred Hedge Gains/Losses boosting equity. The Equity Ratio improved to 5.5% (prior year 4.6%) but remains below the regulatory lower bound of 8%, making capital buildup a priority. Operating Cash Flow was a large negative at -¥1,106.0B, reflecting loan increases of ¥76.6B and expanded marketable investments absorbing funds. Dividends were annual ¥200 (equivalent to ¥40 after stock split adjustment), with a Payout Ratio of 19.1%, maintaining a healthy level.
[Revenue] The revenue increase to Ordinary Revenue ¥901.6B (+12.4%) was primarily driven by expanding interest income. Interest income rose sharply to ¥630.4B (+32.4%), led by loan interest of ¥358.7B (＋¥179.4B) and securities interest of ¥223.8B (＋¥17.1B). Improvements in loan yields amid a rising interest-rate environment and an increase in loan balances (¥2.39T → ¥2.47T, +3.2%) contributed. Fee income was flat at ¥127.6B, other operating income was ¥74.8B (+38.5%), and other ordinary revenue was ¥7.5B. By segment, Banking was ¥845.3B (+13.8%) and Leasing ¥50.4B (-5.7%), with Banking driving the overall increase.
[Profitability] The increase in Ordinary Income to ¥198.3B (+42.1%) was due to Net Interest Income expansion outpacing rising interest expense. Interest expense increased to ¥199.5B (+22.6%), with deposit interest rising substantially to ¥59.1B (＋¥40.8B), but Net Interest Income improved by ¥84.2B YoY to ¥430.9B. Net fee income was ¥63.5B (fee expenses ¥64.1B), roughly flat year-on-year. Other operating net losses widened to -¥58.8B (prior year -¥47.2B), leaving profitability in marketable investments as a concern. Operating expenses produced a cost ratio of 28.5% (SG&A ¥257.1B / Ordinary Revenue ¥901.6B), indicating room for efficiency gains. Extraordinary items were minor (extraordinary loss ¥0.3B); pre-tax income was ¥198.0B and income taxes ¥57.0B, resulting in Net Income of ¥135.8B (+45.3%). Conclusion: revenue and profit both increased.
The Banking segment reported Ordinary Revenue ¥845.3B (+13.8%) and Segment Profit ¥192.2B, accounting for 93.8% of revenue and nearly all profit as the core business. Expanded loan interest and stable deposit funding supported earnings. The Leasing segment had Ordinary Revenue ¥50.4B (-5.7%) and Segment Profit ¥4.8B, remaining profitable despite revenue decline; its margin was 9.5% versus Banking’s 22.7%. Other segments recorded Ordinary Revenue ¥5.9B (+1.4%) and Segment Profit ¥1.4B, including credit guarantee operations. Concentration in Banking is high, limiting revenue diversification.
[Profitability] ROE was 6.1% (prior year 5.1%, +1.0pt), exceeding the company’s historical performance. Net profit margin was 15.1% (prior year 11.6%), improved by +3.5pt due to expanded Net Interest Income from rising rates and cost control. Cost ratio was 28.5% (SG&A ¥257.1B / Ordinary Revenue ¥901.6B), indicating room for efficiency improvement. [Cash Quality] Operating CF was -¥1,106.0B and Net Income ¥135.8B, yielding Operating CF / Net Income of -8.1x, a large negative reflecting weak cash generation relative to accounting profit. Loan growth (+¥76.6B) and expanded marketable investments absorbed funds. Cash conversion (Operating CF / EBITDA before depreciation) was -4.9x, weak, while the accrual ratio was 3.1% and in a healthy range, but working capital increases suppressed cash generation. [Investment Efficiency] CapEx was ¥7.1B and intangible investment ¥6.9B, modest; investment-to-Operating CF ratio is not computable (Operating CF negative). Asset efficiency (Revenue / Total Assets) was 2.2%, reflecting banking characteristics. [Financial Soundness] Equity Ratio improved to 5.5% (prior year 4.6%) due to increases in net assets from comprehensive income but remains below the domestic regulatory lower bound of 8%, making capital strengthening urgent. Interest-bearing liabilities (deposits + borrowings etc.) were ¥3.49T and Net Assets ¥222.3B, yielding a D/E ratio of 15.7x, indicative of banking-sector high leverage. Loan-to-deposit ratio was 78.5% (Loans ¥2.47T / Deposits ¥3.14T), at an appropriate level and liquidity is sound. Loan loss reserves were ¥17.71B to cover credit risk.
Operating CF was -¥1,106.0B (prior year -¥1,242.7B), a large negative but with a narrower deficit YoY. Operating CF before working capital changes subtotaled -¥1,070.6B; loan increases of ¥76.6B, movements in securities (rebalancing marketable investments), and deposit increases of ¥23.0B absorbed funds. After deducting corporate tax payments of ¥3.55B, final Operating CF was -¥1,106.0B, giving a cash conversion of -8.1x relative to Net Income ¥135.8B. Investing CF was a +¥576.3B inflow, with proceeds from securities sales and other receipts exceeding CapEx ¥7.1B and intangible investments ¥6.9B, indicating balance-sheet asset reallocation. Financing CF was -¥33.9B, reflecting shareholder returns including dividend payments of ¥24.4B and share buybacks of ¥9.4B. Free Cash Flow (Operating CF + Investing CF) was -¥529.8B, a significant negative, indicating insufficient internal funds to fully cover shareholder returns. Cash and cash equivalents declined by ¥56.35B from ¥828.25B at the beginning of the period to ¥771.90B at period-end, reflecting ample liquidity but fund absorption from balance-sheet expansion.
Earnings quality is driven by recurring factors, with extraordinary items negligible (extraordinary income ¥0.01B, extraordinary loss ¥0.34B). The bulk of Ordinary Income ¥198.3B was composed of Net Interest Income ¥430.9B and Net Fee Income ¥63.5B, indicating a revenue structure rooted in the business base. Other operating net losses of -¥58.8B include volatility from marketable investments, making those elements relatively less recurrent. The gap between Comprehensive Income ¥360.4B and Net Income ¥135.8B is ¥224.6B, comprising Valuation Difference on Available-for-Sale Securities ¥178.9B, Deferred Hedge Gains/Losses ¥25.6B, and Remeasurements of Defined Benefit Plans ¥14.9B recorded in Other Comprehensive Income. These items carry reversal risk from changes in interest rates and market conditions. The accrual ratio is 3.1% (Operating CF before working capital changes -¥1,070.6B / Total Assets ¥4.08T), at a healthy level indicating controlled accounting accruals, but Operating CF substantially lagging Net Income reflects balance-sheet-driven cash dynamics typical of banks. The tax burden ratio of 28.8% (Income Taxes ¥57.0B / Pre-tax Income ¥198.0B) is standard, supporting profit sustainability.
Full Year guidance projects Ordinary Revenue ¥954.0B, Ordinary Income ¥212.0B (+6.8%), and Net Income ¥140.0B (+3.0%), expecting continued profit growth. Versus reported results of Ordinary Income ¥198.3B and Net Income ¥135.8B, the guidance assumes uplifts of ¥13.7B and ¥4.2B respectively. EPS is projected at ¥172.81, and forecast dividend is ¥28 (equivalent to ¥40 after stock split adjustment), implying a Payout Ratio of 16.2%. Progress rates are high at 93.5% for Ordinary Income and 97.0% for Net Income, suggesting conservative guidance. Continued improvement in Net Interest Income and stable credit costs are assumed, but accelerated deposit rate increases and volatility in marketable investments present downside risks.
Annual dividend is ¥200 (interim ¥90, year-end ¥110); on a post-split basis this equals a total of ¥40 (interim ¥18, year-end ¥22). Payout Ratio is 19.1% (Total Dividends ¥24.4B / Net Income ¥135.8B), maintaining a healthy level, and share buybacks of ¥9.4B were also implemented. Total Return Ratio is 24.9% ((Dividends ¥24.4B + Share Buybacks ¥9.4B) / Net Income ¥135.8B), relatively restrained, indicating a priority on internal reserves. However, Free Cash Flow is -¥529.8B, materially negative, making FCF dividend coverage not computable (negative/positive structure). The negative Operating CF is interpreted as temporary fund absorption due to loan and investment expansion, but given the low Equity Ratio of 5.5%, capital accumulation via internal reserves will likely be prioritized going forward. The dividend policy is viewed as sustainable though monitoring the balance with capital accumulation is warranted.
Interest rate risk (IRRBB): In a phase where deposit rates lag loan rates, deposit interest rose sharply by ¥40.8B YoY. Future rate increases risk compressing the loan-deposit spread, putting the sustainability of Net Interest Income ¥430.9B in focus. The widening negative in Other Operating Net Income (-¥58.8B) from marketable investments also suggests earnings volatility from rate movements.
Low Equity Ratio risk: An Equity Ratio of 5.5% is below the domestic regulatory threshold of 8%, making additional capital accumulation urgent. Of Comprehensive Income ¥360.4B, Valuation Difference on Available-for-Sale Securities ¥178.9B could reverse with market rate moves, impairing capital and exposing weakness in capital quality. Capital constraints could limit future loan growth.
Liquidity management risk due to large negative Operating CF: Operating CF -¥1,106.0B and FCF -¥529.8B indicate ongoing fund absorption and rising dependence on external funding. Loan increases of ¥76.6B and expanded marketable investments are main drivers; deposits increased by ¥23.0B while cash buffers decreased by ¥56.35B. In stressed market conditions, funding costs could rise.
Profitability & Returns
| Metric | Company | Median (IQR) | Delta |
|---|---|---|---|
| Net Profit Margin | 15.1% | 11.9% (7.2%–35.4%) | +3.2pt |
Profitability exceeds the industry median by 3.2pt, with Net Interest Income expansion contributing to a mid-to-upper industry positioning.
Growth & Capital Efficiency
| Metric | Company | Median (IQR) | Delta |
|---|---|---|---|
| Revenue Growth (YoY) | 12.4% | 10.1% (7.3%–12.1%) | +2.4pt |
Growth outperformed the industry median by 2.4pt, capturing yield improvement in a rising-rate environment and ranking high within the industry.
※ Source: Company compilation
Margin improvement driven by Net Interest Income expansion: Interest income ¥630.4B (+32.4%) and Net Interest Income ¥430.9B expanded net profit margin to 15.1% (+3.5pt YoY) and lifted ROE to 6.1%. This is a structural improvement capturing opportunities in a rising-rate environment; continued management of loan-deposit spreads and improved profitability in marketable investments will be key to sustainability. Further reductions in the cost ratio from 28.5% could provide room to reach ROE of 7–8%.
Low Equity Ratio and urgent need for capital enhancement: An Equity Ratio of 5.5% is below the regulatory lower bound of 8%; despite improvements from comprehensive income, capital remains thin. Valuation Difference on Available-for-Sale Securities ¥178.9B carries reversal risk with market swings, making the build-up of internal reserves and stronger RWA management essential. A conservative dividend payout of 19.1% reflects a reasonable prioritization of capital accumulation; movements in Equity Ratio over the next several periods will be a focus for investment decisions.
Negative Operating CF and balance-sheet-driven funding dynamics: Operating CF of -¥1,106.0B resulted from loan growth ¥76.6B and expanded marketable investments, with FCF -¥529.8B reflecting balance-sheet-driven cash dynamics typical of banking. Deposit increases of ¥23.0B and liquidity buffers of ¥771.9B indicate stable liquidity, but rising reliance on external funding remains a risk. Future loan growth pace and improved returns from marketable investments will determine normalization of cash generation and sustainability of shareholder returns.
This report was automatically generated by AI analyzing XBRL financial statement data. It is not a recommendation to invest in any specific security. Industry benchmarks are company-compiled reference information based on public financial statements. Investment decisions are your responsibility; consult a professional advisor as needed.