| Metric | Current Period | Same Period of Previous Year | YoY |
|---|---|---|---|
| Revenue | ¥385.0B | ¥307.4B | +25.2% |
| Operating Income | - | - | - |
| Ordinary Income | ¥99.3B | ¥73.1B | +35.8% |
| Net Income | ¥67.4B | ¥52.4B | +28.8% |
| ROE | 2.1% | 1.7% | - |
Growth in interest income from loans and securities exceeded the increase in funding costs, resulting in significant profit growth as core net interest margins expanded. Ordinary revenue, corresponding to revenue, was ¥385.0B (¥307.4B in the previous year, +25.2%), Ordinary Income was ¥99.3B (¥73.1B, +35.8%), and Net Income was ¥67.4B (¥52.4B, +28.8%). EPS was ¥137.09 (¥106.45 in the previous year, +28.8%). Extraordinary gains and losses were negligible, and the substantial majority of profit growth was attributable to the expansion of net interest income and fee income in the banking business.
【Revenue】Driven by the banking business, ordinary revenue from external customers was ¥311.1B for banking (+30.4% YoY), ¥62.4B for leasing (+10.3%), ¥6.3B for cards (+8.1%), and ¥5.4B for other businesses (-16.6%). The banking business accounted for 80.8% of the total, and the increase in interest income to ¥222.3B (¥166.8B in the previous year, +33.3%) led the growth in total ordinary revenue.
【Profit and Loss】Ordinary Income was ¥99.3B (+35.8%), and Net Income was ¥67.4B (+28.8%). Interest expenses increased to ¥68.9B (¥44.0B in the previous year, +56.7%), of which deposit interest increased to ¥57.5B (¥29.1B in the previous year, +97.5%), resulting in a significant increase in funding costs. However, the increase in interest income exceeded this rise, leading to an expansion in the net interest margin. Extraordinary gains and losses were negligible, consisting of extraordinary income of ¥0.03B and extraordinary losses of ¥0B, with almost no impact from temporary factors. Ordinary Income of ¥99.31B and profit before tax of ¥99.34B were nearly identical, while the effective tax rate rose slightly to 32.1% (30.8% in the previous year). Both revenue and profit increased.
The banking business drove the majority of profit. Segment profit was ¥104.2B for the banking business (¥78.1B in the previous year, +33.4%), ¥14.6B for leasing (¥11.5B, +27.0%), and ¥22.6B for cards (¥20.6B, +9.7%), with all segments recording higher profit. Meanwhile, the other segment reported a loss of ¥-11.3B, which widened from ¥-0.4B in the previous year. The banking business maintained a high segment profit margin of approximately 32.5% (104.2/320.3) relative to segment ordinary revenue. Although the non-financial segments are also on a profit growth trend, the quality of company-wide earnings remains highly dependent on the banking business.
【Profitability】The Ordinary Income margin was 25.8% (23.8% in the previous year), an improvement of approximately 2.0pt, while the Net Income margin was 17.5% (17.0% in the previous year), an improvement of approximately 0.5pt. Profitability improved as growth in net interest income exceeded the increase in costs.【Cash Flow Quality】Extraordinary gains and losses contributed virtually nothing, and the substantial majority of profit came from recurring net interest income and fee income. The allowance for loan losses was gradually increased to ¥182.1B (¥178.6B in the previous year), indicating limited reliance on reversals of provisions.【Investment Efficiency】ROE was 2.1% (quarterly result), while financial leverage was 19.70x (total assets of ¥6,205.3B / net assets of ¥314.9B), a standard level for the banking industry.【Financial Soundness】The Equity Ratio was 5.1% (5.0% in the previous year), and the loan-to-deposit ratio was 81.4% (loans of ¥4,377.8B / deposits of ¥5,377.2B). Loans increased 1.6% YoY, while the balance of deposits was essentially flat at -0.1% YoY.
As cash flow statement data has not been disclosed, funding trends are analyzed based on changes in the balance sheet. Cash and deposits declined significantly to ¥6,189.2B (¥7,674.7B in the previous year, -19.4%), while loans increased to ¥4,377.8B (+1.6%) and securities increased to ¥10,584.9B (¥10,473.7B in the previous year, +1.1%), indicating continued reallocation from liquid assets to earning assets. On the funding side, negotiable certificates of deposit were substantially reduced to ¥205.0B (¥865.0B in the previous year, -76.3%), reducing reliance on market-based funding. Meanwhile, borrowings remained broadly flat at ¥3,676.9B (¥3,672.2B in the previous year), and bonds remained at ¥100B, indicating no significant change in the external funding structure. Overall, the shift toward earning assets amid rising interest rates has been the primary theme in fund management.
The substantial majority of profit came from recurring net interest income and fee income, while extraordinary gains and losses were negligible, consisting solely of extraordinary income of ¥0.03B. Accordingly, there was virtually no reliance on temporary factors. However, other ordinary expenses of ¥110.3B exceeded other ordinary revenue of ¥74.8B, representing a net downward pressure of approximately ¥35.4B. This suggests that fluctuations in market-related items or miscellaneous gains and losses may be a source of earnings volatility. Comprehensive income was ¥69.6B, slightly exceeding Net Income of ¥67.4B, but declined -12.4% from ¥79.4B in the previous year. This was attributable to the significant slowdown in the increase in valuation difference on securities, which was ¥2.5B in the current period compared with ¥29.7B in the previous year. The allowance for loan losses has been gradually increased, indicating that conservative accounting practices continue from an accrual perspective.
Progress toward the full-year outlook was 27.0% for revenue (¥385.0B/¥1,428.0B), 29.5% for Ordinary Income (¥99.3B/¥337.0B), and 29.3% for Net Income (¥67.4B/¥230.0B), all exceeding the 25% benchmark based on simple quarterly progress. No revisions were made to the earnings forecast or dividend forecast during the quarter. Whether the earnings boost from interest-rate repricing continues from the second half onward will be key to maintaining progress.
A stock split whereby one common share was split into three shares was implemented with September 30, 2025 as the record date, and the projected year-end dividend of ¥200 is presented on a post-split basis. Without taking the split into account, the year-end dividend would be equivalent to ¥360, and the annual dividend would be equivalent to ¥510. The Payout Ratio against projected EPS of ¥467.5 is approximately 42.8% (¥200/¥467.5). Against the backdrop of substantial retained earnings of ¥1,896.5B, the company appears to have some flexibility in its near-term shareholder return plans.
Net interest margin compression risk: Deposit interest increased to ¥57.5B (¥29.1B in the previous year, +97.5%), outpacing the growth in interest income of ¥222.3B (+33.3%). Pressure on net interest margins from rising funding costs therefore remains.
Capital buffer thickness: Although the Equity Ratio of 5.1% (5.0% in the previous year) satisfies regulatory standards, under the highly leveraged structure of 19.70x financial leverage, capital capacity in the event of market risks or higher-than-expected credit costs cannot be considered ample.
Volatility of other ordinary gains and losses: Other ordinary expenses of ¥110.3B exceeded other ordinary revenue of ¥74.8B, representing a net downward pressure of approximately ¥35.4B on profit. Fluctuations in market-related items or miscellaneous gains and losses may therefore become a source of earnings volatility going forward.
Profitability and Returns
| Metric | Company | Median (IQR) | Delta |
|---|---|---|---|
| Net Income Margin | 17.5% | – | – |
As comparable data is limited, it is difficult to determine the company’s relative position within the industry based solely on the Net Income margin.
Growth and Capital Efficiency
| Metric | Company | Median (IQR) | Delta |
|---|---|---|---|
| Revenue Growth Rate (YoY) | 25.2% | – | – |
As comparable data is limited, it is difficult to determine the company’s relative position within the industry based solely on the growth rate.
※Source: Compiled by the Company
Ordinary Income increased significantly by +35.8% YoY, while full-year progress reached 29.3% on a Net Income basis, exceeding the standard progress benchmark of 25%.
The banking business led company-wide profit with segment profit of ¥104.2B (+33.4%), while leasing and cards also maintained a profit growth trend. However, the profit composition remains highly dependent on the banking business.
The growth in deposit interest (+97.5%) is outpacing the growth in interest income (+33.3%), making the trend in funding costs a structurally important factor determining future net interest margin levels.
This report is an earnings analysis document automatically generated by AI based on XBRL earnings release data. It does not recommend investment in any specific security. Industry benchmarks are reference information compiled by the Company based on publicly disclosed earnings data. Investment decisions should be made at your own responsibility, after consulting with professionals as necessary.
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