| Metric | Current Period | Prior Year | YoY |
|---|---|---|---|
| Revenue / Net Sales | ¥2200.2B | ¥2144.1B | +2.6% |
| Operating Income / Operating Profit | - | - | - |
| Ordinary Income | ¥301.6B | ¥302.9B | -0.4% |
| Net Income | ¥180.2B | ¥176.6B | +2.0% |
| ROE | 6.3% | 6.3% | - |
For the fiscal year ended March 2026, Revenue (Ordinary Revenue) was ¥2200.2B (year-on-year +¥56.1B +2.6%), Ordinary Income was ¥301.6B (year-on-year -¥1.2B -0.4%), and Net Income attributable to owners of the parent was ¥134.7B (year-on-year -¥83.5B -38.3%). Fee income from the domestic ATM platform business and improvement in net interest income due to rising interest rates supported revenue, and the ordinary-income level remained broadly flat. However, recognition of special losses of ¥87.0B (of which impairment losses ¥84.6B) led to a significant decline in final profit. The result was higher revenue, flat ordinary income, and lower net income — underlying earnings were resilient but one-off losses depressed shareholders’ earnings.
[Revenue] Ordinary revenue expanded steadily to ¥2200.2B (+2.6%). By segment, Domestic Business (Banking and others) led growth at ¥1458.5B (+5.1%), and ATM acceptance fees increased to ¥1592.4B from ¥1564.0B in the prior year. Overseas Business was ¥436.0B (+0.1%), remaining flat, while the Credit Card & Electronic Money Business declined to ¥305.8B (-5.9%). Sluggishness in payment-related revenues constrained overall growth, but stability in domestic ATM fees and a tailwind from the interest-rate environment (interest income ¥158.7B, +¥47.5B from prior-year ¥111.2B) underpinned revenue. Net fee income amounted to ¥1458.2B (¥2009.8B revenue - ¥551.6B expense), up from ¥1422.4B, contributing to expansion in the fee business.
[Profitability] Ordinary Income was ¥301.6B (-0.4%), essentially flat. Operating expenses (SG&A) increased to ¥1256.4B, up ¥34.7B from ¥1221.7B, and the estimated cost-to-income ratio (CIR) remained high at approximately 79%. Improvement in net interest income (net interest spread: ¥158.7B - ¥33.4B = ¥125.3B, up ¥35.1B from prior-year ¥90.2B) and increased net fee income drove revenue growth, but rising costs compressed margins and limited profit growth at the ordinary-income level. Recognition of special losses of ¥87.0B (impairment losses ¥84.6B, loss on disposal of fixed assets ¥2.4B) reduced profit before tax to ¥214.7B (down 25.5% from prior-year ¥288.4B), and after deducting income taxes of ¥79.3B, Net Income attributable to owners of the parent fell to ¥134.7B (down 26.0% from prior-year ¥182.2B). Net income margin declined to 6.1% (prior year 8.5%), with special losses depressing final profit. Overall, the results show revenue growth, flat ordinary income, and a large decline in net income.
Domestic Business (Banking and others) posted Revenue of ¥1458.5B (+5.1%) and segment profit of ¥271.7B (margin 18.6%), supported by stable growth in ATM acceptance fees and improved interest income. Overseas Business generated Revenue of ¥436.0B (+0.1%) and segment profit of ¥35.8B (margin 8.2%), with profit expanding substantially year-on-year. This was driven in part by a revision of useful lives on ATMs held by certain overseas subsidiaries from 5 years to 8 years, reducing depreciation expense (estimated profit uplift effect +¥5.8B). The Credit Card & Electronic Money Business recorded Revenue of ¥305.8B (-5.9%) and segment profit of ▲¥5.9B (turned to a loss); credit card operating revenue was ¥65.7B (prior year ¥70.1B) and electronic money operating revenue was ¥108.9B (prior year ¥120.1B), both down. The Domestic Business remains the primary profit engine, and improving profitability in payment-related businesses is a future challenge.
[Profitability] Operating margin on an ordinary-income basis was 13.7% (prior year 14.1%), slightly lower, and net income margin fell to 6.1% (prior year 8.5%). ROE was 6.3%, unchanged year-on-year, but the decline in net income margin is significant; excluding special losses, underlying profitability is broadly flat. ROA (on an ordinary-income basis) was 1.9%, slightly up from 1.8% due to improved interest income. [Cash Quality] Operating Cash Flow (OCF) was ¥839.3B, 4.7x Net Income ¥180.2B (pre-attribution), and the OCF/EBITDA ratio was 1.37x, indicating very strong cash coverage of earnings. The accrual ratio was -4.6% (OCF substantially exceeds Net Income), confirming a cash-driven earnings profile. [Investment Efficiency] CapEx/Depreciation ratio was 0.32x (capital expenditures ¥99.5B + intangible asset investment ¥163.3B = ¥262.8B ÷ depreciation ¥309.8B), restrained and focused on maintenance investment. [Financial Soundness] Equity Ratio was 18.5% (prior year 18.9%), well above regulatory requirements, indicating maintained solvency. Leverage (debt-to-equity multiple) was 4.40x (normal for a banking business model). Loan-to-deposit ratio was 10.4% (loans ¥908.4B ÷ deposits ¥8,752.6B), extremely low, providing a substantial liquidity cushion.
Operating Cash Flow improved substantially to ¥839.3B (prior year -¥388.7B). The year-on-year increase of ¥1,228.0B was driven by improvement in operating cash flow subtotal (before working capital changes) to ¥932.9B (prior year -¥331.0B) and limited corporate tax payments of ¥80.2B (prior year ¥76.7B). Investing Cash Flow was -¥714.5B (prior year -¥467.1B), with intangible asset acquisitions ¥163.3B (prior year ¥218.6B) and capital expenditure ¥99.5B (prior year ¥232.1B) as main outflows. Total investment (¥262.8B) relative to depreciation ¥309.8B is 0.85x, indicating maintenance-level reinvestment without large-scale growth investments. Free Cash Flow was ¥124.8B (OCF + Investing CF), a significant improvement from -¥855.8B in the prior year. Financing Cash Flow was -¥116.5B: share buybacks of ¥508.2B and dividend payments of ¥118.6B were offset by proceeds from disposal of treasury shares ¥513.8B (market sale of treasury shares or third-party allotment), leaving net shareholder returns modest. The structure where OCF substantially exceeds Net Income is due to non-cash depreciation of ¥309.8B and efficient working capital management, resulting in very high cash-generating capacity.
With Ordinary Income of ¥301.6B versus Net Income ¥180.2B (pre-attribution), the gap between ordinary and net income is 40.2%, with special losses of ¥87.0B (mainly impairment losses ¥84.6B) temporarily depressing final profit. Impairment losses relate to evaluation of profitability for domestic and overseas ATM assets and software, and while recurrence is judged low, stricter asset valuation going forward warrants attention. Non-operating income was led by interest income of ¥158.7B, and non-operating expense was mainly interest expense of ¥33.4B, with improved financial income supporting ordinary income. Accrual quality is very good: OCF ¥839.3B is 4.7x Net Income ¥180.2B. Goodwill amortization was minimal (prior year ¥0.7B, current year ¥0), so JGAAP-specific amortization effects are negligible. Ordinary revenue is supported by fees and net interest; excluding non-recurring losses, earnings quality is stable.
Against the full-year forecast (Ordinary Income ¥295.0B, Net Income ¥170.0B, Revenue ¥2355.0B), actuals were Ordinary Income ¥301.6B (achievement rate 102.2%), Net Income ¥134.7B (achievement rate 79.2%), and Revenue ¥2200.2B (achievement rate 93.4%). Ordinary Income exceeded plan, but Net Income fell substantially short. The revenue shortfall was due to declines in the Credit Card & Electronic Money Business and overall slower growth, despite steady domestic fee income. Net Income underperformance was primarily due to recognition of special losses of ¥87.0B, which were not factored into the planning stage. EPS forecast of ¥14.55 missed, actual EPS was ¥12.14, but the dividend forecast of ¥5.50 per share was maintained, resulting in a payout ratio of 70.6% (on an actuals basis).
Annual dividend is ¥11 (interim ¥5.5, year-end ¥5.5), and payout ratio is 70.6% (total dividends ¥12.93B against Net Income attributable to owners of the parent ¥134.7B). Prior-year dividends were ¥12,930 million (payout ratio 70.6%), at the same level, so dividends were maintained despite the one-off loss year. Share buybacks show a cash outflow of ¥508.2B on the cash flow statement, but disposal of treasury shares generated ¥513.8B, leaving net buyback impact effectively zero and making dividends the principal form of shareholder return. Total return ratio is approximately 96% ((dividends ¥12.93B + net share buybacks ¥0) ÷ Net Income attributable to owners of the parent ¥134.7B), a high level, but on a FCF basis dividend coverage is 1.04x (FCF ¥12.48B ÷ dividends ¥11.86B) and thus nearly balanced. Dividend plus net share buybacks (effectively ¥0) represent about 15% of OCF, indicating sustainability, but high payout ratio on a net-income basis means dividend stability could be challenged if non-recurring losses reappear.
Domestic business concentration risk: Domestic Business (Banking and others) accounts for 66.3% of revenue, with high concentration in ATM fee income. Regulatory changes, fee revisions, or accelerated cashless adoption reducing ATM usage could pressure revenues. With slow growth in overseas and payment businesses, domestic market maturity could structurally constrain growth.
Cost-structure risk: Estimated CIR of ~79% is high, and growth in operating expenses (¥1256.4B, +2.8%) is outpacing revenue growth. High fixed cost nature of personnel and system-related expenses limits operating leverage in revenue increases. Limited scope for cost reduction is a structural factor suppressing ROE.
Asset valuation risk: Recognition of special losses of ¥87.0B (impairments ¥84.6B) indicates stricter evaluation of ATM assets and software. With intangible fixed assets of ¥444.0B and tangible fixed assets of ¥458.1B, deterioration in future revenue prospects or technological change could lead to additional impairments. Suppressed investment (CapEx/D&A 0.32x) may cause asset aging, degrading service quality and necessitating larger future renewal investments.
Profitability & Returns
| Metric | Company | Median (IQR) | Delta |
|---|---|---|---|
| Net Income Margin | 8.2% | 11.9% (7.2%–35.4%) | -3.7pt |
Net income margin is 3.7pt below the industry median, placing the company in the lower tier within the industry partly due to the special loss.
Growth & Capital Efficiency
| Metric | Company | Median (IQR) | Delta |
|---|---|---|---|
| Revenue Growth Rate (YoY) | 2.6% | 10.1% (7.3%–12.1%) | -7.5pt |
Revenue growth rate is 7.5pt below the industry median, reflecting domestic market maturity and declines in payment-related revenues.
※ Source: Company compilation
Separation of stable underlying earnings and one-off losses: Ordinary Income beat guidance and underlying revenue from fees and interest remained solid. The special loss of ¥87.0B is a one-off factor and is expected to normalize in subsequent periods. With OCF of ¥839.3B and strong cash generation, earnings are well-backed by cash and, excluding one-off losses, earnings quality is high. A high payout ratio of 70.6% demonstrates a stable shareholder-return stance.
Room for structural improvement in high CIR and low ROE: The cost-income ratio of approximately 79% is high and ROE of 6.3% does not reach industry-leading levels. With revenue around ¥220.0B scale and operating expenses of ¥125.6B, there is significant scope to improve efficiency. Although rising interest rates have improved net interest income, cost reductions and turnaround of higher-margin businesses (overseas and payments) are key to mid-term ROE improvement. With continued restrained investment (CapEx/D&A 0.32x), balancing renewed growth investment and cost-structure reform is critical. Equity Ratio of 18.5% provides sufficient capital flexibility, leaving room to enhance shareholder value through selective investment and optimized capital allocation.
This report is an earnings analysis document automatically generated by AI analyzing XBRL earnings release data. It does not constitute a recommendation to invest in any specific security. Industry benchmarks are reference information compiled by our firm from public financial statements. Investment decisions should be made at your own responsibility; consult a professional advisor as needed.