| Metric | Current Period | Same Period of Previous Year | YoY |
|---|---|---|---|
| Revenue | ¥283.9B | ¥213.3B | +33.1% |
| Operating Income | - | - | - |
| Ordinary Income | ¥60.2B | ¥50.7B | +18.7% |
| Net Income | ¥44.7B | ¥35.7B | +25.2% |
| ROE | 1.9% | 1.6% | - |
Although revenue and profit increased, the growth in ordinary income was restrained relative to revenue growth, indicating a slight softening in profitability. Ordinary revenue (Revenue) was ¥283.9B (¥213.3B in the previous year, YoY+33.1%), ordinary income was ¥60.2B (¥50.7B in the previous year, YoY+18.7%), and net income attributable to owners of the parent was ¥44.7B (¥35.7B in the previous year, YoY+25.2%). The primary driver of revenue growth was the increase in interest on loans in the core Banking Business segment. Meanwhile, deterioration in other operating income (loss), including market-related gains (losses), raised the expense ratio and resulted in a smaller increase in ordinary income than in the top line.
【Revenue】Ordinary revenue increased substantially to ¥283.9B, up +33.1% year on year. The Banking Business segment led overall performance at ¥268.3B (up +34.6% YoY, composition ratio 94.5%), followed by the Leasing Business at ¥14.3B (up +14.4% YoY, composition ratio 5.0%). Revenue growth in the Banking Business was primarily driven by an expansion in funds-related income. Interest on loans was ¥99.1B (up +18.1% YoY), while interest and dividends on securities were ¥58.4B (up +1.4% YoY), bringing total interest income to ¥173.1B (up +13.2% YoY). Meanwhile, interest on deposits increased to ¥20.7B (up +64.3% YoY), indicating a rise in funding costs. Funds-related income is therefore being affected by rising interest rates on both assets and liabilities.
【Profit and Loss】Ordinary income increased to ¥60.2B (up +18.7% YoY), while net income rose to ¥44.7B (up +25.2% YoY), securing profit growth alongside higher revenue. However, other operating income (loss) deteriorated substantially from negative ¥7.0B in the previous year to negative ¥65.4B, compressing gross operating profit, compared with the combined funds-related income (¥12.2B versus ¥10.7B in the previous year) and income from fees and commissions and other services (¥1.4B versus ¥1.5B in the previous year). As a result, general and administrative expenses of ¥67.4B represented an expense ratio of approximately 96% relative to gross operating profit, a substantial increase from approximately 58% in the previous year. Extraordinary losses were limited to ¥0.5B, resulting in a limited impact on net income. Against pretax income of ¥59.8B, income taxes and other taxes were ¥15.1B, resulting in an effective tax burden ratio of 25.2%, broadly in line with the previous year. In conclusion, although revenue and profit increased, deterioration in other operating income (loss) pressured earnings efficiency.
Ordinary revenue in the Banking Business segment was ¥268.3B (up +34.6% YoY), while segment profit was ¥58.6B (up +20.0% YoY), accounting for the majority of the company-wide ordinary income of ¥60.2B. The Leasing Business maintained both revenue and profit growth, with ordinary revenue of ¥14.3B (up +14.4% YoY) and segment profit of ¥1.3B (up +23.1% YoY). Revenue composition was 94.5% for the Banking Business, 5.0% for the Leasing Business, and 0.5% for other businesses, indicating a high concentration in the Banking Business. The company’s performance is therefore structurally susceptible to fluctuations in the Banking Business’s interest margin and market-related gains (losses).
【Profitability】The ordinary income margin was 21.2%, down 258bp from 23.8% in the previous year. The net profit margin was 15.7%, down from 16.8% in the previous year, indicating a slight contraction in margins despite revenue growth.【Cash Quality】Comprehensive income was ¥118.7B, exceeding net income of ¥44.7B by ¥74.0B. The primary drivers were valuation differences on securities of ¥65.0B and deferred hedge gains (losses) of ¥10.1B.【Investment Efficiency】ROE was 1.9%, reflecting the combination of a lower net profit margin, the low total asset turnover characteristic of the banking industry, and high financial leverage.【Financial Soundness】The equity ratio (net assets/total assets) was 5.6%, a slight improvement from 5.4% in the previous year. The loan-to-deposit ratio, calculated based on loans of ¥2兆502.0B and deposits of ¥3兆1,542.6B, was 79.3% (versus 78.5% in the previous year), indicating stable liquidity conditions.
As a cash flow statement has not been disclosed, funding trends are analyzed based on changes in the balance sheet. Cash and due from banks increased from ¥819.6B to—upon correction—¥8,196.0B, an increase of +¥474.3B (+6.1%), indicating that the liquidity buffer has been increased. Securities declined to ¥7,173.7B, down △¥478.0B (△6.2%) year on year, while loans expanded moderately to ¥2兆502.0B, up +¥347.7B (+1.4%). On the funding side, negotiable certificates of deposit (NCDs) increased substantially to ¥1,417.6B, up +¥714.7B (+101.7%) year on year, indicating greater use of wholesale funding. Meanwhile, borrowings decreased to ¥2,521.1B, down △¥241.7B (△8.7%) year on year, and liabilities related to securities lending transactions declined to ¥1,270.9B, down △¥265.5B (△14.0%), indicating a shift in the funding composition toward NCDs. Overall, changes in the funding structure are evident, with an increase in liquid assets and a reduction in securities on the asset side, and increased wholesale funding on the liability side.
Recurring income is primarily composed of net interest income and income from fees and commissions and other services, while extraordinary losses were limited to ¥0.5B and had a limited impact on net income. Meanwhile, other operating income (loss) deteriorated substantially from negative ¥7.0B in the previous year to negative ¥65.4B. Accordingly, attention should be paid to the sustainability of the factors driving volatility in this item, including market-related gains (losses), when assessing the quality of ordinary income. Comprehensive income of ¥118.7B exceeded net income of ¥44.7B by ¥74.0B, primarily due to an improvement in valuation differences on securities (cumulative valuation difference of ¥333.6B versus ¥268.6B in the previous year). Valuation differences on securities reflect changes in the market value of other securities and should be distinguished from recurring earnings power. Ordinary income of ¥60.2B and pretax income of ¥59.8B were broadly consistent, and there was no notable tax-related divergence in the relationship with net income of ¥44.7B after deducting income taxes and other taxes of ¥15.1B (effective tax burden ratio 25.2%).
Against the full-year company plan, ordinary income was ¥60.2B in Q1 versus the plan of ¥212.0B, representing a progress rate of 28.4%. Net income was ¥44.7B in Q1 versus the plan of ¥145.0B, representing a progress rate of 30.8%. Both are progressing at a pace above the simple quarterly allocation of 25%, with no signs of lagging behind the full-year plan. No revisions were made to the earnings forecast in this earnings release.
The company’s planned annual dividend is ¥56, resulting in a payout ratio of approximately 32.4% against the company’s planned EPS of ¥172.79. In connection with the stock split effective April 1, 2026, under which each share was split into five shares, the dividend for the previous fiscal year, adjusted for the split, is noted as ¥18 for the interim dividend and ¥22 for the year-end dividend, for a total of ¥40. Although a simple comparison of dividend amounts across the stock split is not appropriate, Q1 EPS of ¥53.28 exceeds the annual dividend forecast of ¥56, indicating that dividend funding has been secured from quarterly earnings.
Risk of declining earnings efficiency: Due to the deterioration in other operating income (loss), the ratio of general and administrative expenses to gross operating profit increased from approximately 58% in the previous year to approximately 96%. If this level persists, ordinary income growth may have difficulty keeping pace with revenue growth.
Low equity level: The equity ratio (net assets/total assets) was 5.6% (5.4% in the previous year), and equity accumulation has been gradual relative to the pace of total asset growth. This level requires monitoring from the perspective of loss-absorption capacity.
Changes in funding composition: Negotiable certificates of deposit (NCDs) increased sharply by +101.7% year on year (+¥714.7B), increasing reliance on wholesale funding. Depending on the market interest rate environment, fluctuations in refinancing costs could affect earnings.
Profitability and Returns
| Metric | Company | Median (IQR) | Delta |
|---|---|---|---|
| Net Profit Margin | 15.7% | – | – |
At present, median data for comparing net profit margin levels within the industry is insufficient; therefore, the assessment is limited to the absolute level.
Growth and Capital Efficiency
| Metric | Company | Median (IQR) | Delta |
|---|---|---|---|
| Revenue Growth Rate (YoY) | 33.1% | – | – |
Revenue growth of +33.1% represents a high level of growth for the banking industry, although comparative data against the industry median is currently limited.
※Source: Compiled by the Company
The top line increased substantially by +33.1%, driven by growth in interest on loans. However, due to the deterioration in other operating income (loss), the expense ratio relative to gross operating profit increased from approximately 58% to approximately 96%, resulting in profit growth falling below revenue growth.
Comprehensive income exceeded net income by ¥74.0B, and the improvement in valuation differences on securities boosted equity. As this increase was driven by market value fluctuations, it should be distinguished from recurring earnings power.
Progress rates for both ordinary income and net income against the full-year plan exceeded the simple allocation rate, confirming progress generally in line with the plan. However, the shift in funding composition toward NCDs and the level of the equity ratio remain points for monitoring going forward.
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. Industry benchmarks are reference information compiled by the Company based on publicly disclosed earnings data. Investment decisions should be made at your own responsibility, after consulting professionals as necessary.
---End of Report---