Quick View
| Metric | Current Period | Same Period Previous Year | YoY |
|---|---|---|---|
| Revenue | ¥1628.8B | ¥1594.9B | +2.1% |
| Operating Income | - | - | - |
| Ordinary Income | ¥218.8B | ¥231.1B | −5.2% |
| Net Income | ¥87.7B | ¥150.6B | −41.7% |
| ROE (Annualized) | 4.2% | 7.1% | - |
Executive Summary
The cumulative results for Q3 of the fiscal year ending March 2026 reflected higher revenue but lower earnings, with the primary cause of the decline being temporary extraordinary losses, including impairment losses, in the credit card and electronic money businesses. Ordinary revenue was ¥1,628.8B (+2.1% YoY), ordinary income was ¥218.8B (△5.2% YoY), and net income was ¥87.7B (△41.7% YoY). While the increase in domestic ATM acceptance fees drove revenue growth, deteriorating profitability in the payments business and impairment losses of ¥66.6B significantly reduced net income.
Factors Affecting Earnings
【Revenue】Ordinary revenue was ¥1,628.8B, up +2.1% YoY. Domestic ATM acceptance fees amounted to ¥1,195.1B (+1.2% YoY), accounting for 73.4% of consolidated revenue and driving revenue growth. Meanwhile, credit card operating revenue was ¥49.6B (△7.7% YoY), and electronic money operating revenue was ¥83.7B (△9.4% YoY), resulting in a decline in payments-related revenue.
【Profit and Loss】Ordinary income was limited to ¥218.8B (△5.2% YoY), while net income decreased significantly to ¥87.7B (△41.7% YoY). The primary reason for the gap was extraordinary losses of ¥68.7B (a temporary factor), including impairment losses of ¥66.6B in the credit card and electronic money businesses. The effective tax rate was high at 41.6%, also limiting the conversion of pretax income of ¥150.1B into net income. In conclusion, the company recorded higher revenue but lower earnings.
Segment Analysis
The core business is the domestic business (banking and other businesses), which recorded ordinary revenue of ¥1,102.9B (67.6% of total) and segment income of ¥215.9B, serving as the main pillar of consolidated earnings. However, income from this business declined by △6.8% YoY, and despite revenue growth, its profit margin decreased to 19.6% from 21.9% in the previous year. The credit card and electronic money businesses recorded ordinary revenue of ¥211.1B (△4.8% YoY) but fell into a segment loss of ¥19.95B, becoming the primary cause of the decline in consolidated earnings due to the recognition of impairment losses. The overseas business was almost flat, with ordinary revenue of ¥322.5B (△0.1% YoY), but returned to profitability with segment income of ¥23.6B, improving from a loss of ¥5.8B in the previous year. The profitability gap between the domestic business and the credit card business has widened, and deteriorating profitability in the payments business is weighing on the consolidated profit margin.
Key Financial Indicators
Profitability: ROE (annualized) was 4.2%, and the ordinary income margin was 13.4% (14.5% in the previous year)
Cash quality: Impairment losses of ¥66.6B were recorded against net income of ¥87.7B, requiring evaluation separately from recurring earnings power
Financial soundness: The equity ratio was 16.7% (down YoY); cash and deposits of ¥9,842.9B against deposits of ¥9,793.2B indicate ample liquidity
Per share: EPS was ¥8.04 (¥12.80 in the previous year, △37.2% YoY)
Cash Flow Analysis
This material does not provide detailed disclosures of Operating CF, Investing CF, or Financing CF; therefore, the support for earnings is assessed by comparing net income and comprehensive income. Comprehensive income was ¥71.6B, below net income of ¥87.7B, primarily due to negative other comprehensive income, centered on foreign currency translation adjustments of △¥20.3B. As the company has overseas businesses, fluctuations in foreign exchange rates affect the valuation of net assets.
Earnings Quality
Against ordinary income of ¥218.8B, net income was ¥87.7B, representing a large gap of approximately 60%. The primary causes were extraordinary losses of ¥68.7B, including impairment losses of ¥66.6B, attributable to impairment of system assets in the credit card and electronic money businesses. These impairment losses are non-recurring items, and when evaluating recurring earnings power, assessment based on ordinary income is more appropriate. The effective tax rate of 41.6% also limited the conversion of pretax income into net income.
Earnings Forecast and Guidance
The progress rates for the cumulative Q3 results against the full-year forecasts—ordinary revenue of ¥2,160B, ordinary income of ¥270B, and net income of ¥110B—were 75.4%, 81.1%, and 79.8%, respectively. Ordinary income and net income were ahead of the standard 75% progress level. However, while the ordinary income forecast was revised upward from ¥245B at the beginning of the fiscal year to ¥270B, the net income forecast was revised downward from ¥160B to ¥110B. The primary reason for the revisions was impairment in the credit card business, and additional extraordinary losses may be recorded in Q4.
Shareholder Returns
The Q2 dividend was ¥5.50 per share, and the full-year dividend forecast is ¥11.00 per share (interim ¥5.5, year-end ¥5.5), unchanged from the previous year. The payout ratio against forecast full-year EPS of ¥9.91 is approximately 111%, meaning that the dividend exceeds EPS following the downward revision to net income. This is a dividend-only payout ratio and does not take share buybacks into account. Although retained earnings provide a substantial buffer at ¥2,040.4B, sustaining excess dividends while balancing future earnings recovery and trends in the equity ratio will be a challenge.
Catalysts
【Short Term】Whether additional impairment losses are recorded in the credit card business in Q4, and progress in domestic ATM transaction volume and the number of ATMs
【Long Term】Trends in ATM business transaction volumes amid the shift toward cashless payments, the establishment of profitability in the overseas businesses (the United States, Indonesia, the Philippines, and Malaysia), and structural reform of the payments business
Industry Benchmark (For Reference; Compiled by the Company)
Industry Benchmark (bank)
Profitability and Returns
| Metric | Company | Median (IQR) | Delta |
|---|---|---|---|
| Net Income Margin | 5.4% | – | – |
The net income margin was strongly affected by the recognition of extraordinary losses, and data is insufficient to assess the company’s relative position within the industry.
Growth and Capital Efficiency
| Metric | Company | Median (IQR) | Delta |
|---|---|---|---|
| Revenue Growth Rate (YoY) | 2.1% | – | – |
The revenue growth rate indicates a trend of moderate revenue growth, but data is currently insufficient for comparison with the industry median.
※Source: Compiled by the company
Risk Factors
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Deterioration in payments business profitability: The credit card and electronic money businesses recorded ordinary revenue of ¥211.1B (△4.8% YoY) against a segment loss of ¥19.95B, and recognized impairment losses of ¥63.4B. Shortfalls against plans for the number of applications and cards issued have continued, creating the possibility of additional impairment losses.
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Declining profitability of the core business: Despite a 4.1% increase in ordinary revenue in the domestic business, segment income declined by △6.8% YoY, and the profit margin decreased to 19.6% from 21.9% in the previous year. Factors include higher depreciation expenses associated with ATM replacements and increased funding costs.
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Capital and shareholder return balance: The equity ratio declined from the previous year to 16.7%, while the dividend forecast of ¥11.00 exceeds full-year forecast EPS of ¥9.91. The pace of earnings recovery and trends in capital levels will be key areas of focus going forward.
Key Points from the Results
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The significant decline in net income (△41.7% YoY) was primarily attributable to temporary impairment losses of ¥66.6B and should be distinguished from the 5.2% decline in ordinary income.
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The overseas business returned to profitability, recording segment income of ¥23.6B versus a loss in the previous year. However, its contribution to consolidated earnings remains limited at approximately 11% of the domestic business, and the domestic business continues to be the primary contributor to consolidated performance.
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Although the dividend forecast was maintained, the payout ratio exceeds full-year forecast EPS. The level of retained earnings and the status of future earnings recovery are structural points of observation that will determine the sustainability of the dividend policy.
This report is an earnings analysis document automatically generated by AI through an integrated analysis of XBRL earnings release data and PDF earnings presentation materials. It does not recommend investment in any specific security. The industry benchmarks are reference information compiled by the company based on publicly available earnings data. Investment decisions should be made at your own responsibility, and you should consult a professional as necessary.
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