Quick View
| Metric | Current Period | Same Period Previous Year | YoY |
|---|---|---|---|
| Revenue | ¥568.5B | ¥533.2B | +6.6% |
| Operating Income | - | - | - |
| Ordinary Income | ¥108.0B | ¥66.1B | +63.4% |
| Net Income | ¥66.0B | ¥41.9B | +57.4% |
| ROE (Annualized) | 9.2% | 5.9% | - |
Executive Summary
In Q1 FY2027, revenue and profit increased significantly, mainly due to higher ATM transaction fees, expanded profits from the overseas business, and lower depreciation expenses resulting from a change in the estimated useful life of ATMs. Ordinary revenue was ¥568.51B (¥533.23B in the same period of the previous year, YoY +6.6%), ordinary income was ¥108.02B (¥66.07B, YoY +63.4%), and net income attributable to owners of the parent was ¥65.82B (¥41.88B, YoY +57.1%). The ordinary income margin expanded to 19.0% from 12.4% in the same period of the previous year. The profit growth rate substantially exceeding the revenue growth rate indicates the emergence of strong operating leverage.
Factors Affecting Performance
【Revenue】Ordinary revenue was ¥568.51B, up +6.6% year on year. The domestic business (banking and other businesses) generated ¥384.57B (up +6.4%), with ATM transaction fees of ¥419.32B (up +6.8%) driving growth. The overseas business posted the highest revenue growth rate, with revenue of ¥120.55B (up +14.5%), while the credit card and electronic money business recorded revenue of ¥66.35B (down -4.2%).
【Profit and Loss】Ordinary income was ¥108.02B, up +63.4% year on year, substantially exceeding the revenue growth rate. Segment profit in the domestic business was ¥97.21B (up +44.7%), making it the primary contributor to profit growth. Of this increase, the ¥1.077B reduction in depreciation expenses resulting from the change in ATM useful life (from 5 years to 7 years) contributed to the increase. Segment profit in the overseas business improved substantially to ¥11.84B (¥2.69B in the previous year), while the loss in the credit card and electronic money business narrowed to ¥0.57B (loss of ¥3.70B in the previous year). However, the recognition of extraordinary losses of ¥10.06B (including impairment losses of ¥9.23B) compressed profit in the transition from ordinary income to profit before tax (¥97.95B). Although revenue and profit both increased, the domestic business remains on a growth trajectory even excluding the impact of the change in estimates.
Segment Analysis
The domestic business (banking and other businesses) generated segment profit of ¥97.21B, with a profit margin of 25.3%, making it the core contributor to consolidated profit. The overseas business generated segment profit of ¥11.84B, with a profit margin of 9.8%, representing a significant improvement from the low level recorded in the previous year; however, the gap in profit margins with the domestic business remains substantial. The credit card and electronic money business recorded a segment loss of ¥0.57B and a profit margin of ▲0.9%. Although it remains in the red, the loss narrowed from ¥3.70B in the same period of the previous year, indicating an improvement trend. The disparity in profitability between businesses suggests a structural dependence on the ATM business for profit generation.
Key Financial Indicators
【Profitability】The ordinary income margin expanded to 19.0% from 12.4% in the same period of the previous year, while the net profit margin improved to 11.6% from 7.9%. 【Cash Flow Quality】Against investment income of ¥47.09B, funding costs were ¥10.65B, securing a positive funds balance of ¥36.44B. 【Investment Efficiency】Annualized ROE was 9.2%, explained by a DuPont decomposition comprising a net profit margin of 11.6%, total asset turnover of 0.145, and financial leverage of 5.49x. However, because bank leverage is structurally based on deposits as a funding source, it cannot be viewed in the same manner as leverage at general operating companies. 【Financial Soundness】The equity ratio was 18.2% (based on financial indicators), down 0.4pt year on year, but remained above the guideline level under capital ratio regulations. The loan-to-deposit ratio was low at approximately 10.6%, calculated as loans of ¥946.91B ÷ deposits of ¥8,930.75B, indicating a conservative asset composition.
Cash Flow Analysis
Because the current earnings summary does not present cash flow statement data, funding trends are analyzed based on balance sheet movements. Cash and deposits were ¥8,689.16B, down ¥273.33B year on year (-3.0%), while securities increased by ¥144.58B (+8.6%) to ¥1,823.13B, suggesting that a portion of liquid assets was allocated to securities. Deposits increased by ¥178.14B to ¥8,930.75B, indicating that deposits remained the primary source of funding. Meanwhile, borrowings declined by ¥29.66B to ¥106.32B, reducing reliance on borrowing. Loans increased by ¥38.48B to ¥946.91B, indicating loan growth exceeding the rate of deposit growth; however, the loan-to-deposit ratio remained low at 10.6%, leaving substantial room for further deployment of funds.
Quality of Earnings
The increase in profit this time reflects a mixture of recurring and temporary factors. Higher ATM transaction fees and expanded profits from the overseas business reflect underlying business growth. On the other hand, segment profit in the domestic business includes a ¥1.077B increase resulting from an accounting change in estimate—the change in ATM useful life from 5 years to 7 years—which is non-recurring in nature. Excluding this impact, the domestic business remains on a profit growth trajectory; however, the growth rate of reported profit may slightly exceed the growth in underlying earnings power. In addition, extraordinary losses of ¥10.06B were recognized, including impairment losses of ¥9.23B in the credit card and electronic money business. The resulting compression of profit between ordinary income and profit before tax should also be noted when assessing earnings quality. Comprehensive income was ¥66.51B, slightly exceeding net income of ¥65.95B, with foreign currency translation adjustments and valuation differences on securities contributing positively. The gap between net income and comprehensive income was small.
Earnings Forecast and Guidance
The full-year company forecasts are ordinary revenue of ¥2,355.00B, ordinary income of ¥335.00B (up +11.0% year on year), net income attributable to owners of the parent of ¥200.00B, and EPS of ¥17.12. As of Q1, progress rates were 24.1% for ordinary revenue, 32.2% for ordinary income, and 32.9% for net income attributable to owners of the parent. While ordinary revenue was close to the standard 25%, profit progress exceeded this benchmark by 7–8 points. However, because the excess profit progress includes a temporary boost from the change in useful life, the remaining quarters should be monitored for ATM fee rates and transaction volumes, overseas business profitability, and the sustainability of the reduction in losses from the payments business. Although the earnings forecast was revised during the current quarter, the dividend forecast was not revised.
Shareholder Returns
The full-year dividend forecast is ¥11.00 per share, representing an expected increase from the previous-year dividend of ¥5.50 (compared on an annual basis because the distinction between interim and year-end dividends is unclear from the disclosed information). Based on the weighted-average number of shares outstanding during the period of ¥1.168B shares, the forecast total dividend is approximately ¥12.848B, and the forecast payout ratio, calculated by dividing this amount by the full-year forecast net income attributable to owners of the parent of ¥200.00B, is approximately 64.2%. This level is slightly above the general benchmark of less than 60%, but remains well below 100% and is covered by forecast profit. Dividend sustainability will depend on underlying growth in ATM transaction fees, the establishment of overseas business profitability, and the occurrence of extraordinary losses.
Risk Factors
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Dependence on ATM transaction fees: ATM transaction fees were ¥419.32B, accounting for 73.8% of ordinary revenue. The progress of cashless payments, usage policies of partner financial institutions, and changes in fee rates could significantly affect the profitability of the core domestic business.
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Estimation risk related to ATM useful life: The change from 5 years to 7 years increased domestic business profit in Q1 by ¥1.077B. If future replacement demand or the actual economic useful life falls below expectations, this could result in future expense recognition or impairment risk.
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Uncertainty regarding profitability improvement in the credit card and electronic money business: Although the loss narrowed to ¥0.57B, the business has not yet turned profitable. Impairment losses of ¥9.23B were also recognized in this business during the current quarter, and the pace of improvement will be affected by intensifying competition in payments and the burden of promotional expenses.
Industry Benchmark (Reference; Compiled by the Company)
Industry Benchmark (bank)
Profitability and Return
| Metric | Company | Median (IQR) | Delta |
|---|---|---|---|
| Net Profit Margin | 11.6% | – | – |
The net profit margin of 11.6% improved from 7.9% in the same period of the previous year; however, because industry median data is limited, the assessment of its relative position remains for reference purposes only.
Growth and Capital Efficiency
| Metric | Company | Median (IQR) | Delta |
|---|---|---|---|
| Revenue Growth Rate (YoY) | 6.6% | – | – |
The revenue growth rate of 6.6% indicates a revenue growth trajectory; however, comparative data against the industry median is insufficient, so the assessment is limited to the absolute level.
※Source: Compiled by the Company
Key Earnings Highlights
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Ordinary income increased +63.4% year on year, while net income attributable to owners of the parent increased +57.1%, demonstrating strong profit growth momentum. However, domestic business profit includes a ¥1.077B boost from the change in ATM useful life, making it important to confirm the underlying profit growth rate excluding the change in estimate.
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Segment profit in the overseas business increased from ¥2.69B in the same period of the previous year to ¥11.84B, moderately reducing the concentration of profit in the domestic ATM business. However, its profit margin of 9.8% remains below the domestic business margin of 25.3%, making the establishment of sustainable profitability the focus of structural improvement going forward.
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An equity ratio of 18.2% (financial indicator basis) and a low loan-to-deposit ratio of 10.6% indicate stability in terms of capital and liquidity. However, because the full-year ordinary income progress rate of 32.2% includes temporary factors, simple extrapolation would not be appropriate.
This report is an earnings analysis document automatically generated by AI based on XBRL earnings summary data. 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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