| Metric | This Period | Prior Year Period | YoY |
|---|---|---|---|
| Revenue | ¥1244.6B | ¥1027.9B | +21.1% |
| Operating Income | - | - | - |
| Ordinary Income | ¥280.8B | ¥209.0B | +34.4% |
| Net Income | ¥199.8B | ¥143.1B | +39.6% |
| ROE | 6.4% | 5.2% | - |
For the fiscal year ended March 2026, the company achieved significant revenue and profit growth with Ordinary Income of ¥1244.6B (YoY +¥216.7B, +21.1%), Ordinary Income of ¥280.8B (YoY +¥71.8B, +34.4%), and Net Income attributable to owners of the parent of ¥202.7B (YoY +¥58.6B, +37.6%). The main driver was expanded investment income in a rising interest rate environment: interest income rose by ¥202.1B to ¥709.9B (prior year ¥507.8B), while interest expense also increased by ¥104.8B to ¥206.0B (prior year ¥101.2B), but net the effect was positive and NIM showed improvement. By segment, the Banking Business led the company with external revenue of ¥960.5B (+28.5%) and profit of ¥272.4B (+36.3%). The Leasing Business posted revenue of ¥229.4B (+2.7%) but profit declined to ¥7.5B (-10.8%). The Card Business remained resilient with revenue of ¥22.7B (-1.0%) and profit of ¥5.9B (+8.7%). Comprehensive income turned significantly positive to ¥422.6B (prior year -¥212.4B), with improvements in other comprehensive income on securities valuation increasing net assets by ¥373.6B and strengthening equity.
【Revenue】 Ordinary revenue grew substantially to ¥1244.6B (YoY +21.1%). The Banking Business accounted for ¥960.5B (+28.5%), representing 77.2% of the total and driving topline growth. The largest revenue contributor was interest income at ¥709.9B (+39.8%), aided by expansion in invested balances and rising interest rates. Loans stood at 4.31兆円 (+8.0%) and securities at 1.05兆円 (+11.9%), expanding the asset side and amplifying the benefit of higher yields. Meanwhile, interest expense doubled YoY to ¥206.0B (+103.5%), impacted by rising deposit rates and larger funding volumes (deposits ¥5.38兆円, +12.3%). Non-interest revenue—fees and commissions—grew steadily to ¥154.7B (+10.8%), supported by deposit/loan and securities-related fee increases. Leasing revenue was slightly up at ¥229.4B (+2.7%), while Card revenue remained flat at ¥22.7B (-1.0%). Overall, Banking Business net interest margin and loan balance expansion remain the growth engine for total ordinary revenue.
【Profitability】 Operating expenses rose to ¥963.8B (prior year ¥818.9B), an increase of ¥144.9B, but revenue growth outpaced expense growth, resulting in Ordinary Income of ¥280.8B (+34.4%). SG&A increased to ¥335.1B (prior year ¥310.7B), up ¥24.4B, but the cost-to-income ratio improved and CIR was roughly below 60%, indicating efficient operations. Credit costs increased as provision for loan losses rose by ¥10.3B to ¥16.6B (prior year ¥6.3B), partially offsetting profit growth. Depreciation was flat at ¥25.8B (-0.1B), and net non-operating items were modest at +¥2.7B (special gains ¥3.4B, special losses ¥0.7B including impairment losses ¥0.7B). Profit before tax was ¥283.5B (+30.0%); after deducting income taxes of ¥80.8B (effective tax rate 28.5%), Net Income attributable to owners of the parent was ¥202.7B (+37.6%). In conclusion, revenue and profit growth were led by Banking Business, while rising credit costs and funding costs will influence the pace of future margin expansion.
The Banking Business was the largest revenue source with external ordinary revenue of ¥960.5B (YoY +28.5%) and segment profit of ¥272.4B (+36.3%), driving company-wide growth. Growth in interest income (+¥202.1B) and fee revenue absorbed increases in SG&A, maintaining high profitability. The Leasing Business posted external revenue of ¥229.4B (+2.7%) but segment profit declined to ¥7.5B (-10.8%), reducing margins—possibly due to higher funding costs against a buildup of lease assets. The Card Business recorded external revenue of ¥22.7B (-1.0%) but maintained profit of ¥5.9B (+8.7%) through improved cost efficiency. Other segments (medical systems, ICT support, etc.) had revenue of ¥32.5B (-4.3%) and profit of ¥3.2B, remaining limited in scale. Overall, concentration in the Banking Business is high at 77.2%, and the segment’s margin and growth dynamics materially determine company performance.
【Profitability】Net profit margin of 16.3% improved 2.4pt from 13.9% a year earlier, driven by topline expansion and maintained cost efficiency. ROE rose to 6.4% (prior year 5.1%), up 1.3pt, driven by improvements in net profit margin and total asset turnover. Conversely, ROA (Ordinary Income / Total Assets) edged up to 0.5% (prior year 0.4%) but remains low, indicating scope to improve asset profitability. The loan-to-deposit ratio is about 80% (loans 4.31兆円 / deposits 5.38兆円), within an appropriate range, balancing liquidity and yield. 【Cash Quality】Operating Cash Flow was ¥140.2B / Net Income ¥202.7B equals 0.69x, but in banking operations deposit and loan movements are recorded in operating CF, so this should not be judged in isolation. Comprehensive income reached ¥422.6B, 2.1x net income, and improvements in securities valuation strengthened equity. 【Investment Efficiency】Total asset turnover improved slightly to 0.020 (prior year 0.018), while asset base expanded to ¥6.27兆円 (+9.0%); revenue growth trailed asset expansion but efficiency is improving. Capital expenditures were ¥35.5B versus depreciation of ¥25.8B, a capex/depreciation ratio of 1.37x, supporting growth investment. Free Cash Flow was ¥649.4B, comfortably covering capex and supporting healthy capital allocation. 【Financial Soundness】Equity Ratio of 5.0% is below an 8% benchmark but is typical for a domestic bank; the stable deposit base mitigates liquidity risk. D/E ratio of 18.98x reflects high leverage inherent in banking business models, supported by stable deposits of ¥5.38兆円. Cash and securities totaled approximately ¥1.81兆円, about 29% of total assets, providing a solid liquidity cushion. Deferred tax liabilities expanded to ¥305.2B alongside valuation differences, which partially suppresses the appearance of equity.
Operating CF declined to ¥140.2B (prior year ¥219.5B, -36.1%), but this likely reflects temporary volatility because deposit and loan net changes are recorded in operating cash flows in banking. Operating CF subtotal (before working capital changes) was ¥145.1B and remains healthy, indicating sustained cash generation from core operations. Investing CF was -¥75.2B, including tangible and intangible asset acquisitions of -¥35.5B and net securities investment outflows. As a result, Free Cash Flow was ¥649.4B, providing substantial cash resources that far exceeded dividend payments of ¥50.7B and capex. Financing CF was -¥5.1B, a small net outflow including ¥0.1B of share buybacks, reflecting a conservative capital policy. Ending cash and deposits were ¥7,648.4B (prior year ¥7,050.0B, +8.5%), indicating very strong liquidity. While Operating CF / Net Income is about 0.69x, in banking the inclusion of deposit/loan balance changes in operating CF means divergence from net income does not necessarily indicate weak earnings quality. With robust operating CF before working capital and FCF comfortably covering dividends and investment, liquidity is judged extremely stable.
Against Ordinary Income of ¥280.8B, net special items were +¥2.7B (special gains ¥3.4B - special losses ¥0.7B), representing about 1% of net income, indicating the majority of profit is derived from recurring income. Non-operating income and expenses are dominated by interest income/expense due to the nature of banking operations, suggesting low dependence on one-off items. The difference between Ordinary Income and profit before tax was ¥2.7B, small, confirming a business driven by core operations. On an accrual basis, operating CF subtotal of ¥145.1B compared to Net Income ¥202.7B yields a ratio of 0.72x, but this reflects the nature of banking where deposit and loan balance changes are recorded in working capital, and does not necessarily indicate poor earnings quality. Comprehensive income of ¥422.6B—2.1x net income—was driven by securities valuation gains of +¥198.7B and retirement benefit adjustments of +¥22.6B, boosting equity. These valuation gains are market-dependent and subject to short-term volatility, though they provide opportunities to realize gains over the medium-to-long term. Overall, recurring income forms the core of profits and one-off contributions are minor, supporting a view of good earnings quality.
Full-year guidance is Ordinary Revenue ¥1428.0B, Ordinary Income ¥337.0B (YoY +20.0%), and Net Income attributable to owners of the parent ¥230.0B (+13.6%). Progress rates vs. the current period results are 87.2% for Ordinary Revenue (1244.6/1428.0), 83.3% for Ordinary Income (280.8/337.0), and 88.1% for Net Income (202.7/230.0), each around the high 80% range. It is inferred that higher funding costs and increased credit costs in H2 compressed margins versus assumptions. Interest expense doubled to ¥206.0B, impacted by rising deposit rates and expanded funding. Provision for loan losses also rose significantly to ¥16.6B (prior year ¥6.3B), reflecting a somewhat tougher credit environment. Achieving guidance will depend on margin recovery in H2 and stabilization of credit costs. EPS forecast of ¥467.5 versus current period realized ¥412.1 represents 88.2% progress, broadly consistent with net income progress. The dividend forecast for the full year is ¥100.0 (assumed adjusted amount at year-end), but actual dividend payments were ¥50.7B with shares outstanding of approximately 49.20M shares ≒ ¥103 per share in calculation, so reconciliation considering post-split record date adjustments is necessary.
Dividends paid during the period totaled approximately ¥50.7B (per cash flow statement), implying a payout ratio of about 25% against Net Income of ¥202.7B, a sustainable level. Outstanding shares of 49,366 thousand less treasury shares of 169 thousand yields an ending share count of about 49,197 thousand, which implies a per-share dividend of approximately ¥103, though the dividend forecast reflects stock split adjustments and simple comparisons are not straightforward. The full-year dividend forecast of ¥100 assumes post-split basis; pre-split stated amounts were year-end ¥360 and annual ¥510. Share buybacks were minimal at ¥0.1B, and Total Return Ratio is approximately 25%, essentially equal to the payout ratio. Coverage of dividends by FCF is about 12.8x (FCF ¥649.4B), indicating very robust dividend sustainability. Even including capex of ¥35.5B, dividend + investment totaled ¥86.2B, about 13% of FCF, demonstrating conservative capital allocation. If the earnings uptrend continues, there is room to raise the payout ratio, suggesting potential for expanded shareholder returns.
Interest rate environment risk: Interest expense expanded rapidly to ¥206.0B (YoY +¥104.8B, +103.5%), and rising funding costs are pressuring margins. If deposit beta increases in a rising rate environment, NIM could compress further, reducing profitability. Securities holdings of ¥1.05兆円 (+11.9%) are also interest-sensitive and market rate fluctuations could affect valuation gains/losses, impacting equity and comprehensive income.
Realization of credit risk: Provision for loan losses rose materially to ¥16.6B (prior year ¥6.3B, +163.8%), pressuring profits as credit conditions tighten. With loans expanding to 4.31兆円 (+8.0%), an uptick in default rates or deeper economic downturn could inflate credit costs beyond expectations and increase net income volatility.
Revenue concentration risk: The Banking Business accounts for 77.2% of Ordinary Revenue and 95.3% of segment profit (¥272.4B/¥286.0B), indicating high dependence on a single business. As shown by the Leasing Business profit decline (-10.8%) and Card Business slight revenue decline (-1.0%), diversification benefits from non-interest income are limited, so changes in the interest-rate environment or a slowdown in banking operations would directly affect company-wide performance.
Profitability & Return
| Metric | Company | Median (IQR) | Delta |
|---|---|---|---|
| Net Profit Margin | 16.1% | 11.9% (7.2%–35.4%) | +4.2pt |
The company's net profit margin is 4.2pt above the industry median, placing it toward the upper range in profitability.
Growth & Capital Efficiency
| Metric | Company | Median (IQR) | Delta |
|---|---|---|---|
| Revenue Growth (YoY) | 21.1% | 10.1% (7.3%–12.1%) | +11.1pt |
The company's revenue growth outpaces the industry median by 11.1pt, demonstrating a notable pace of topline expansion.
※ Source: Company compilation
The success of margin expansion in a rising interest rate environment will determine future growth pace. Interest income rose substantially to ¥709.9B (+39.8%), but interest expense also doubled to ¥206.0B (+103.5%), so further NIM improvement requires controlling deposit beta and appropriate pass-through of loan rates. Comprehensive income of ¥422.6B was materially supported by securities valuation gains of +¥198.7B, highlighting that net assets can fluctuate significantly with interest and market conditions.
Rising credit costs affect the sustainability of profit growth. Provision for loan losses increased to ¥16.6B (prior year ¥6.3B, +163.8%), reflecting a somewhat tougher credit environment. As loan balances expand to 4.31兆円 (+8.0%), stabilizing default rates and maintaining coverage ratios will be key to preserving net profit margins. Conversely, robust FCF of ¥649.4B versus dividend payments of ¥50.7B (coverage 12.8x) supports sustainability and potential expansion of shareholder returns. A payout ratio of 25% is conservative, and if earnings continue to rise, there is scope for dividend increases.
This report is an AI-generated financial analysis document produced by analyzing XBRL financial statement data. It does not constitute a recommendation to invest in any specific security. Industry benchmarks are compiled by the firm based on publicly available financial statements and are for reference only. Investment decisions are your responsibility; consult a professional advisor as needed.