| Metric | Current | Prior | 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 | 3.2% | 5.3% | - |
Seven Bank's FY2026 Q3 consolidated results showed revenue (ordinary income for banks) of 162.9B yen (YoY +2.1%) and ordinary income of 21.9B yen (YoY -5.2%), while net income attributable to owners declined sharply to 8.8B yen (YoY -41.7%). The revenue growth was driven by steady ATM transaction volume increases and deposit balance expansion through promotional campaigns. However, profitability was severely impacted by special losses totaling 6.9B yen (primarily impairment losses of 6.7B yen related to credit card business system assets) and elevated tax burden. The effective tax rate reached approximately 41.6%, significantly compressing net income. Total assets expanded to 1,671.5B yen (YoY +11.7%) while equity decreased slightly to 278.4B yen, resulting in a high debt-to-equity ratio of 5.00. ROE stood at 3.1%, constrained by low net profit margin of 5.4% despite aggressive financial leverage of 6.00x. The company maintained its full-year guidance of 27.0B yen ordinary income and 11.0B yen net income, with annual dividend of 11 yen (interim 5.5 yen, year-end 5.5 yen).
Revenue increased 2.1% YoY to 162.9B yen, driven by the Domestic ATM Business which saw total transaction volume reach 849 million transactions (+25 million YoY) and average daily transactions per ATM of 109.9 (+1.1 YoY). The ATM network expanded to 28,383 units (+535 YoY), with SmartPhone ATM services expanding to 26 partner banks including Rakuten Bank from December 2025. The Domestic Retail Business contributed through deposit balance growth to 670.7B yen (+50.1B yen YoY) and loan portfolio expansion to 74.6B yen (+20.0B yen YoY), supported by fixed deposit campaigns. Overseas operations showed mixed results: U.S. FCTI outperformed with 9,183 ATMs (+712 YoY) and average utilization of 50.2 transactions/day/ATM (+1.8 YoY), while Indonesia ATMi maintained 8,933 ATMs (flat) with declining utilization of 44.5 transactions/day/ATM (-4.9 YoY) and Philippines PAPI expanded to 3,898 ATMs (+451 YoY) but suffered sharp utilization decline to 157.0 transactions/day/ATM (-41.6 YoY) due to partner bank fee structure changes and economic slowdown.
Ordinary income declined 5.2% to 21.9B yen, reflecting increased operational expenses in the parent bank entity. Net income dropped 41.7% to 8.8B yen primarily due to non-recurring factors. The company recognized impairment losses of 6.7B yen on credit card business system assets after card application and issuance numbers fell below plan from October 2025 onward. Total special losses amounted to 6.9B yen. Additionally, the company faced elevated tax burden with income taxes of 6.2B yen on income before tax of 15.0B yen, yielding an effective tax rate of 41.6%. The tax burden coefficient (Net Income/EBT) of 0.585 and interest burden coefficient (EBT/EBIT) of 0.686 indicate significant pressure from both tax and interest expenses on profitability. The Credit Card and Electronic Money segment remained unprofitable with segment loss of 2.0B yen (expanded from prior year), reflecting aggressive customer acquisition strategies that are planned to result in two consecutive years of losses. Management indicated additional impairment losses may be recognized in Q4 FY2026 and FY2027 for unaccepted system assets.
The material gap between ordinary income (21.9B yen) and net income (8.8B yen) is attributable to special losses of 6.9B yen and high tax burden of 6.2B yen, collectively reducing net income by approximately 60% from ordinary income level. This represents a "revenue up, profit down" pattern, where moderate revenue growth was overwhelmed by non-recurring impairments and structural cost pressures.
Domestic ATM Business generated segment operating income of 21.6B yen and remains the core profit driver. Total transaction volume reached 849 million transactions (YoY +25 million) with ATM network expanding to 28,383 units (+535 YoY). Average daily transactions per ATM improved to 109.9 (+1.1 YoY) while ATM transaction fee per transaction declined to 105.5 yen (-1.2 yen YoY). The segment benefited from expanded SmartPhone ATM partnerships (26 banks) and Plus Connect ATM Window service adoption by 24 corporate clients, which received the Minister of Internal Affairs and Communications Award at the 5th Japan Service Awards. Operating margin remained healthy, though fee per transaction compression indicates competitive pricing pressure.
Domestic Retail Business showed solid growth with individual account base reaching 3,473 thousand accounts (+207 thousand YoY) and deposit balances expanding to 670.7B yen (+50.1B yen YoY). Fixed deposit campaigns drove substantial new account opening and deposit inflows, with fixed deposit balance growing to 167.6B yen (+39.3B yen YoY). Personal loan balance reached 74.6B yen (+20.0B yen YoY), tracking in line with plan. The Seven Bank Deferred Payment Service processed 4.7 million transactions (+1.0 million YoY) with transaction value of 76.7B yen (+21.4B yen YoY). This segment contributes steady fee income and deposit funding for the bank's operations.
Credit Card and Electronic Money Business reported segment operating loss of 2.0B yen (loss expanded from prior year) despite expanding customer base to 3.1 million credit card members and 84.4 million electronic money members (as of December 2025). Shopping transaction value reached 574.5B yen and electronic money transaction value totaled 1,123.5B yen (April-December 2025). The segment is executing aggressive customer acquisition strategies with planned losses for two consecutive fiscal years (FY2026 ordinary loss forecast of 1.3B yen, net loss of 7.1B yen after special losses of 5.0B yen). The company recognized impairment losses of 6.7B yen in Q3, primarily on system assets, with indications of additional impairments in Q4 FY2026 and FY2027. Margin pressure and extended losses in this segment represent a key risk to consolidated profitability.
Overseas U.S. FCTI Business outperformed plan with 9,183 ATMs (+712 YoY, reaching 9,567 as of December 2025) and average utilization of 50.2 transactions/day/ATM (+1.8 YoY), driven by ATM expansion into Speedway store locations. Q3 cumulative ordinary income was 19.1B yen on revenue of 20.2B yen. Overseas Indonesia ATMi Business maintained 8,933 ATMs (flat YoY, 9,073 as of December 2025 excluding consignment installations) with utilization declining to 44.5 transactions/day/ATM (-4.9 YoY) as the company shifted strategy from ATM count expansion to transaction volume improvement. Q3 cumulative ordinary income was 3.0B yen on revenue of 5.7B yen. Overseas Philippines PAPI Business expanded network to 3,898 ATMs (+451 YoY, 4,009 as of December 2025) but suffered sharp utilization decline to 157.0 transactions/day/ATM (-41.6 YoY) due to major partner bank implementing customer fees, government subsidy reductions, and economic slowdown, falling short of plan. Q3 cumulative ordinary income was 2.9B yen on revenue of 6.2B yen. Overseas Malaysia RFMY Business deployed 98 cash deposit/withdrawal machines (as of December 2025), primarily in Seven-Eleven stores, with average utilization of 214.8 transactions (January-September 2025). The business achieved profitability and cleared accumulated losses in its first year of operation, tracking slightly below utilization plan.
The Domestic ATM Business represents the largest segment by profitability and constitutes the company's core business, delivering stable operating income that supports consolidated results. The Credit Card segment's expanded losses and impairment charges represent the primary drag on consolidated net income performance this period.
Profitability: ROE 3.1% (PY calculation unavailable due to Q3 data, but ROE remains low by historical standards), Operating Margin 13.4% (calculated as EBIT/Revenue), Net Profit Margin 5.4% (down from prior year reflecting special losses and tax burden). ROE is constrained by low net profit margin despite high financial leverage of 6.00x.
Cash Quality: OCF and OCF/Net Income ratio not disclosed in XBRL data, limiting direct assessment of earnings quality through cash flow metrics. Free Cash Flow data unavailable.
Investment: CapEx and Depreciation & Amortization details not disclosed in XBRL, preventing calculation of CapEx/D&A ratio to assess growth investment posture.
Financial Health: Equity Ratio 16.7% (calculated as Total Equity 278.4B yen / Total Assets 1,671.5B yen), indicating low capital buffer relative to asset base. Debt-to-Equity Ratio 5.00 (calculated as Total Liabilities 1,393.0B yen / Total Equity 278.4B yen) significantly exceeds healthy thresholds (quality alert flagged for D/E >2.0), reflecting aggressive leverage typical of banking operations but raising concerns about capital adequacy and interest rate sensitivity. Current Ratio not calculable from available banking sector balance sheet data. Financial leverage amplifies asset returns but exposes the company to refinancing and interest rate risks.
Banking-Specific Metrics: Ordinary revenues (equivalent to revenue for banks) 162.9B yen. Cost-Income Ratio, Loan-to-Deposit Ratio, and BIS Capital Ratio not disclosed in available data.
Operating Cash Flow, Investing Cash Flow, and Financing Cash Flow data are not disclosed in the XBRL filings, preventing comprehensive cash flow analysis. CapEx figures are also unavailable, limiting Free Cash Flow calculation.
The lack of OCF disclosure prevents assessment of the critical OCF/Net Income ratio, which would indicate whether reported net income of 8.8B yen is supported by actual cash generation or inflated by accruals. Given the significant non-cash impairment charge of 6.7B yen in Q3, operating cash flow would be expected to exceed reported net income (as impairment is a non-cash expense), but this cannot be confirmed without disclosure.
The high dividend payout ratio of 147.8% (calculated as total dividend 6.1B yen / net income 8.8B yen, using interim dividend of 5.5 yen per share) suggests dividends significantly exceed current period net income. Management stated the dividend of 11 yen annually (5.5 yen interim, 5.5 yen year-end) is sustainable because the impairment losses are temporary and non-cash, and the company maintains a strong financial base after dividend payment. However, without disclosed OCF and FCF data, the cash coverage of dividends cannot be independently verified. Given cash and deposits (banking sector) of 984.3B yen, near-term dividend payment capacity appears adequate, but sustainability depends on normalized earnings recovery and operating cash generation.
Cash generation assessment: Needs Monitoring due to lack of disclosed cash flow data, high dividend payout ratio relative to reported net income, and uncertainty around normalized earnings levels after non-recurring impairments.
Ordinary Income vs Net Income: A significant gap exists between ordinary income of 21.9B yen and net income of 8.8B yen, driven primarily by non-recurring special losses of 6.9B yen (of which impairment losses totaled 6.7B yen on credit card business system assets). These impairments arose after card applications and issuances fell persistently below plan from October 2025, triggering impairment indicators. Management disclosed that additional impairment losses may be recognized in Q4 FY2026 and FY2027 for remaining unaccepted system assets, indicating ongoing earnings quality risk.
Additionally, high tax burden of 6.2B yen on income before tax of 15.0B yen resulted in an effective tax rate of approximately 41.6%, well above typical corporate tax rates and suggesting limited tax optimization or non-deductible expenses. The tax burden coefficient of 0.585 (Net Income/EBT) indicates that over 40% of pre-tax income was consumed by taxes.
The interest burden coefficient of 0.686 (EBT/EBIT) implies that interest expenses reduced earnings by approximately 31% from the EBIT level of 21.8B yen to EBT of 15.0B yen, reflecting the cost of high financial leverage (D/E 5.00).
Non-operating income composition is not detailed in XBRL data, but the gap between operating-level profitability and ordinary income appears modest, suggesting limited contribution from non-operating items.
Accruals and Cash Quality: Without disclosed OCF data, direct assessment of accruals (Net Income - OCF) is not possible. However, the large non-cash impairment charge of 6.7B yen suggests that operating cash flow would significantly exceed reported net income of 8.8B yen if core operations are cash-generative. The risk is that if OCF were to trail net income in normalized periods (excluding impairment), it would signal earnings quality concerns through aggressive accrual accounting or working capital deterioration.
Overall Earnings Quality: Flagged for concern due to (1) material non-recurring impairments with risk of further charges, (2) elevated tax burden compressing net income, (3) high interest burden from aggressive leverage, and (4) lack of OCF disclosure to confirm cash backing of reported earnings. Core ATM and deposit businesses appear fundamentally sound, but Credit Card segment losses and system asset impairments materially degrade consolidated earnings quality.
Full-year FY2026 guidance: Revenue (ordinary income for banks) 216.0B yen, Ordinary Income 27.0B yen, Net Income Attributable to Owners 11.0B yen, EPS 9.91 yen, Annual Dividend 11.0 yen (interim 5.5 yen, year-end 5.5 yen). The ordinary income guidance of 27.0B yen represents a YoY decline of 10.8% from FY2025.
Progress rate vs. full-year guidance: Through Q3 (nine months), the company achieved ordinary income of 21.9B yen, representing 81.1% progress toward full-year guidance of 27.0B yen. This is above the standard 75% benchmark for Q3, suggesting Q4 ordinary income is guided to approximately 5.1B yen, lower than the Q1-Q3 average quarterly run rate of 7.3B yen. Net income through Q3 of 8.8B yen represents 80.0% of full-year guidance of 11.0B yen, also above the 75% standard, implying Q4 net income guidance of approximately 2.2B yen.
The company revised full-year guidance upward for ordinary income by 10.2% (from initial plan) but downward for net income by 31.2% (from initial plan), reflecting the special impairment losses recognized in Q3 and expected in Q4. Management disclosed that impairment charges will be recognized in Q4 FY2026 and potentially FY2027 for unaccepted system assets in the Credit Card business.
The stronger-than-standard Q3 progress rate for ordinary income suggests core banking operations (ATM and Retail) are tracking ahead of initial expectations, offsetting some Credit Card segment underperformance. However, net income guidance implies significant Q4 special losses, consistent with management's impairment disclosure. The deviation from standard quarterly progression reflects timing of non-recurring items rather than core business seasonality.
Key drivers of guidance: (1) Domestic ATM transaction volume continuing to grow, (2) Deposit balance expansion sustaining fee income, (3) U.S. FCTI exceeding plan while Indonesia and Philippines lag, and (4) significant special losses from Credit Card business impairments in Q3-Q4 and potentially into FY2027.
Dividend Policy: The company maintained annual dividend guidance of 11.0 yen per share (interim 5.5 yen, year-end 5.5 yen) despite net income decline. Management's dividend policy targets stable and continuous shareholder returns centered on dividends, maintaining a payout ratio above 40% while considering absolute dividend amounts and financial soundness.
Payout Ratio (dividend only): Calculated payout ratio for FY2026 Q3 is 147.8% (using interim dividend of 5.5 yen per share and Q3 net income), significantly exceeding 100% and raising sustainability concerns. On a full-year basis, the guided annual dividend of 11.0 yen against guided net income of 11.0B yen (EPS 9.91 yen) implies a payout ratio of approximately 111%, still above 100%. This suggests current dividend levels exceed reported earnings capacity.
Total Return Ratio: No share buyback activity disclosed, so total return ratio equals payout ratio of approximately 111% on a full-year guided basis.
Sustainability Assessment: Management stated that the impairment losses are temporary and non-cash expenses, and that the company will maintain a strong financial base even after paying the planned dividend. With cash and deposits of 984.3B yen and equity of 278.4B yen as of Q3, near-term dividend payment capacity appears adequate from a balance sheet perspective. However, the payout ratio exceeding 100% is not sustainable over the long term without earnings recovery or utilization of retained earnings/capital. The company's policy of maintaining 40%+ payout ratio suggests expectation of normalized earnings returning to levels that support 11 yen dividends within the policy framework. Investors should monitor (1) Credit Card business return to profitability post-restructuring, (2) completion of system asset impairments, and (3) operating cash flow confirmation to assess medium-term dividend sustainability.
Share Buyback: No share repurchase program disclosed or executed in FY2026 Q3.
Near-term:
Long-term:
Industry Position (Reference - Proprietary Analysis):
Profitability: Net Profit Margin 5.4% (Industry trend data unavailable for comparison). ROE 3.1% appears below typical banking sector ROE levels, reflecting impact of special losses and low net profit margin despite high leverage.
Growth: Revenue Growth 2.1% YoY (Industry trend data unavailable for comparison). Growth rate is modest, driven by steady ATM transaction volume increases and deposit balance expansion, but constrained by competitive pricing pressure (ATM fee per transaction declined 1.2 yen YoY).
Financial Health: Equity Ratio 16.7% is relatively low but typical for banking operations. Debt-to-Equity Ratio 5.00 is elevated and exceeds quality alert threshold of 2.0, though high leverage is inherent to banking business models. Comparison to banking sector median D/E would require industry peer data.
Efficiency: Operating Margin 13.4% (calculated as EBIT/Revenue). Banking sector typically evaluates Cost-Income Ratio (not disclosed), which would provide better efficiency comparison.
Note: Industry benchmarks are limited to company historical trends for Net Profit Margin (5.4% in 2026) and Revenue Growth (2.1% in 2026) from proprietary data. Comprehensive peer comparison across profitability, efficiency, and financial health metrics requires broader banking sector dataset including regional banks, specialty banks, and fintech-focused institutions. Source: Proprietary analysis of publicly available earnings data.
Credit Card Business Impairment Risk: The company recognized 6.7B yen impairment losses in Q3 FY2026 on Credit Card business system assets after application and issuance volumes fell persistently below plan from October 2025. Management disclosed that additional impairment losses will be recognized in Q4 FY2026 and potentially FY2027 for remaining unaccepted system assets. The Credit Card segment is planned for two consecutive years of losses (FY2026 ordinary loss forecast 1.3B yen, net loss 7.1B yen) despite aggressive customer acquisition, indicating business model validation risk. If cardholder acquisition and activation continue to underperform, further asset write-downs and extended loss periods could materially impact consolidated profitability and strategic optionality.
High Financial Leverage and Interest Rate Sensitivity: Debt-to-Equity ratio of 5.00 exceeds quality alert threshold and exposes the company to refinancing and interest rate risks. The interest burden coefficient of 0.686 (EBT/EBIT) indicates that interest expenses reduce earnings by approximately 31% from operating profit to pre-tax income. In a rising interest rate environment, funding costs for deposits (670.7B yen deposit base) and other liabilities (1,393.0B yen total liabilities) could increase faster than asset yields, compressing net interest margins. With equity ratio of only 16.7%, the capital buffer to absorb rate shocks or asset quality deterioration is limited compared to more capitalized banking peers.
Overseas ATM Utilization Decline Risk: Philippines PAPI average ATM utilization declined sharply to 157.0 transactions/day/ATM (down 41.6 YoY) due to major partner bank implementing customer fees, government subsidy reductions, and economic slowdown, falling significantly short of plan. Indonesia ATMi utilization also declined to 44.5 transactions/day/ATM (down 4.9 YoY). Combined, these markets represent 12,831 ATMs (47% of consolidated 28,383 domestic units at Q3). If utilization continues to decline or pricing pressure intensifies, return on invested capital for these overseas networks may not justify continued expansion, requiring strategic reassessment or restructuring charges. Foreign exchange exposure to USD, IDR, and PHP also introduces earnings volatility (Q3 used USD/JPY 148.08 vs. 151.46 in prior year).
Core ATM Business Resilience Amid Profitability Pressures: The Domestic ATM Business demonstrated fundamental strength with transaction volume growing to 849 million (+25 million YoY) and network expanding to 28,383 units (+535 YoY), supported by digital partnerships (SmartPhone ATM with 26 banks) and corporate services (Plus Connect ATM Window with 24 clients, winning the Minister Award). Average daily utilization improved to 109.9 transactions (+1.1 YoY) despite fee per transaction compression to 105.5 yen (-1.2 yen YoY). This core segment generated operating income of 21.6B yen and remains the profit foundation. However, consolidated net income of 8.8B yen (down 41.7% YoY) was severely impacted by Credit Card business impairment losses of 6.7B yen and elevated tax burden (41.6% effective rate). The divergence between stable core operations and distressed net income highlights the importance of monitoring Credit Card restructuring progress and completion of system asset write-downs (additional charges expected in Q4 FY2026 and FY2027). ROE of 3.1% and net profit margin of 5.4% are constrained below peer levels, creating potential for significant margin recovery once non-recurring charges are cleared and tax optimization is pursued.
Capital Structure and Dividend Sustainability Warrant Monitoring: The company maintains aggressive financial leverage with D/E ratio of 5.00 and equity ratio of only 16.7%, exposing earnings to interest rate sensitivity (interest burden coefficient 0.686). The dividend payout ratio of approximately 111% on a full-year guided basis (11.0 yen dividend vs. 9.91 yen EPS) exceeds earnings capacity, though management asserts sustainability based on strong balance sheet (984.3B yen cash and deposits) and temporary, non-cash nature of impairments. The policy targets 40%+ payout ratio with consideration for absolute amounts, implying expectation of normalized earnings recovery to approximately 27.5B yen net income to support 11 yen dividend at 40% payout. Investors should track (1) operating cash flow disclosure (currently unavailable) to confirm cash backing of dividends, (2) Credit Card segment return to profitability timeline, and (3) any capital policy adjustments if earnings recovery is delayed. High leverage amplifies both upside from successful turnaround and downside from prolonged restructuring or rate environment deterioration.
Mixed Overseas Expansion Dynamics Require Strategic Clarity: Overseas operations show divergent performance: U.S. FCTI exceeded plan with 9,183 ATMs (+712 YoY) and utilization of 50.2 transactions/day/ATM (+1.8 YoY), while Philippines PAPI suffered sharp utilization decline to 157.0 transactions/day/ATM (-41.6 YoY) due to partner fee changes and economic headwinds, and Indonesia ATMi utilization declined to 44.5 transactions/day/ATM (-4.9 YoY). Malaysia RFMY achieved first-year profitability with 98 units but transaction volume below plan. These markets represent significant invested capital (12,831 overseas ATMs vs. 28,383 domestic) with uncertain returns. The strategic shift from "ATM count expansion" to "utilization improvement" in Indonesia/Philippines signals recognition of profitability challenges. Investors should assess whether overseas expansion continues to justify capital allocation or requires portfolio rationalization, particularly if domestic market offers superior unit economics and digital service expansion opportunities (SmartPhone ATM, Plus Connect) provide growth without proportional CapEx.
This report was automatically generated by AI integrating XBRL earnings data and PDF presentation materials as an earnings analysis tool. This is not a recommendation to invest in any specific security. Industry benchmarks are reference information compiled from publicly available earnings data. Please make investment decisions at your own responsibility and consult professionals as needed.
AI analysis of PDF earnings presentation
In the Q3 FY2026 results, Seven Bank consolidated reported ordinary income of 1,628億円 (+2.1% YoY), ordinary profit of 218億円 (−5.6% YoY), and quarterly net income attributable to owners of the parent of 87億円 (−41.6% YoY), reflecting higher revenue but lower profit. The primary driver of the profit decline was the recording of an extraordinary loss in the credit card business (including 66億円 impairment of fixed assets). On a non-consolidated basis, Seven Bank posted ordinary income of 1,075億円 (+4.3% YoY) and ordinary profit of 212億円 (−8.6% YoY), with profits pressured by higher depreciation associated with ATM replacement and increased funding costs due to rising interest rates. The domestic ATM business had a total of 28,383 units (+535 units YoY) inside and outside 7‑Eleven stores, and usage volumes were solid at 849 million transactions cumulatively in 3Q (+25 million YoY), though the number of units fell short of plan. In domestic retail, a time deposit campaign proved effective, lifting individual deposit balances to 6,707億円 (+501億円 YoY), and the card loan balance reached 746億円 (+200億円 YoY), in line with plan. Overseas, the U.S. exceeded plan, while Indonesia and the Philippines missed plan. The full-year forecast was revised to ordinary profit of 270億円 and net income of 110億円 (net income revised downward from the initial 160億円). The dividend policy is to maintain an annual dividend of 11円 (interim 5.5円, year-end 5.5円).
Consolidated ordinary profit of 218億円, −5.6% YoY; domestic ATM and retail metrics remain solid, but higher costs led to lower profit. Recorded an impairment loss of 63億円 on system assets in the credit card business; total extraordinary losses of 68億円 weighed on net income. Domestic ATM units totaled 28,383 (+535 YoY) but fell short of plan; usage rose to 849 million transactions cumulatively in 3Q (+25 million YoY). Time deposit campaign lifted individual deposit balances to 6,707億円 (+501億円 YoY), with increased deposits from newly opened accounts. Full-year outlook: ordinary profit 270億円, net income 110億円 (downward revision); annual dividend maintained at 11円.
For the full year, consolidated ordinary income is projected at 2,160億円 (no change to plan), ordinary profit at 270億円 (upward revision from 245億円 at the start of the fiscal year), and net income at 110億円 (downward revision from 160億円 at the start of the fiscal year). Additional extraordinary losses are expected to be recorded in the credit card business in Q4 FY2026. Domestic ATMs will continue to target increased usage, promoting expansion of Smartphone ATM transactions and developing new counterparties for the “+Connect” service. Domestic retail will focus on enhancing the stickiness of time deposit balances and differentiating products, exploring value propositions beyond interest rates. Overseas, the U.S. will continue expanding ATM installations at Speedway locations, while Indonesia and the Philippines will shift strategy from unit expansion to increasing transactions, aiming to improve average usage per machine. Malaysia is expected to achieve profitability in the first year and eliminate accumulated losses.
Management explained that the extraordinary losses this time (primarily impairments in the credit card business) are non-recurring and non-cash, and that a solid financial base can be maintained even after dividends as initially planned. The annual dividend of 11円 will be maintained, with the basic policy of a payout ratio of 40% or more unchanged. In the credit card business, since October 2025, application volumes and card issuance have continued to underperform plan, indicating “signs of impairment,” and an impairment was recorded. There may be additional impairments in FY2026, with the amount under review. Going forward, the company will leverage the acquired customer base to improve the quality of earnings and ensure alignment with capital policy.
Domestic ATM: Expand Smartphone ATM transactions and develop provision of the ATM counter service “+Connect” (currently implemented at 24 companies, available at 26 banks including Rakuten Bank). Domestic retail: Product differentiation to enhance the stickiness of time deposits; explore appeal and new services beyond interest rates. Overseas ATM: Expand installations at U.S. Speedway locations (9,567 units as of end-December 2025); shift strategy in Indonesia and the Philippines from unit expansion to increasing transactions. Malaysia: Approximately 100 units installed primarily at 7‑Eleven; expected to achieve first-year profitability and eliminate accumulated losses. Credit card business: In light of the impairment recorded, determined that system assets pending acceptance should also be impaired; considering additional recognition in FY2026.
Applications and card issuance in the credit card business have continued to miss plan since October 2025; judged to show signs of impairment (risk of additional impairment). Domestic ATM unit count below plan; while usage is increasing, the pace of unit additions is lagging. Overseas, Indonesia and the Philippines missed plan; decline in average usage per machine remains an issue. Rising interest rates have increased funding costs, and depreciation related to ATM replacement is pressuring profits. Calculated payout ratio is elevated at 147.8%, raising questions about dividend sustainability (though the company states its financial base will be maintained).