| Metric | This Period | Prior Year Same Period | YoY |
|---|---|---|---|
| Revenue / Net Sales | ¥685.2B | ¥661.5B | +3.6% |
| Operating Income | - | - | - |
| Ordinary Income | ¥106.7B | ¥78.3B | +36.1% |
| Net Income | ¥66.9B | ¥52.2B | +28.3% |
| ROE | 4.6% | 3.8% | - |
For the fiscal year ended March 2026, results showed Ordinary Income of ¥685.2B (YoY +¥23.7B +3.6%), Ordinary Income of ¥106.7B (YoY +¥28.4B +36.1%), and Net Income attributable to owners of the parent of ¥72.1B (YoY +¥15.0B +26.2%), achieving substantial profit growth. Improvement in core banking net interest income and expansion of fee and commission income drove top-line growth, improving the ordinary income margin to 15.6% (up 3.8pt from 11.8% prior year). Operating Cash Flow (OCF) was ¥940.9B (YoY +113.3%), Free Cash Flow (FCF) was ¥772.6B, generating ample cash. With a payout ratio of 23.2%, the Total Return Ratio remains at a conservative level. Total assets expanded to 3兆826.6B yen (+4.1%), and equity to ¥1,444.2B (+6.4%), with an Equity Ratio of 4.7% maintaining financial soundness within an appropriate range.
[Revenue] Ordinary revenue increased steadily to ¥685.2B (+3.6%). By segment, Banking was ¥627.6B (+3.2%), maintaining revenue growth in the core business and accounting for 91.6% of the total. Leasing was ¥36.8B (+3.0%), and Other Businesses were ¥20.8B (+17.2%), driven by expansion in ancillary services such as credit card operations. Investment income from asset management totaled ¥526.8B; in a favorable interest-rate environment, interest on loans was ¥323.0B (¥+1.2B), and interest and dividends on securities were ¥175.2B (¥-9.0B), with lending income improving. Average deposit balance was ¥2兆6,773.8B (+5.3%), average loan balance was ¥2兆138.99B (+1.9%), supporting growth in investment balances through an expanded funding base. Net fee and commission income was ¥9.3B (¥+8.8B), with fee businesses expanding and customer base growth centered on deposit/loan services, FX operations, and agency services contributing.
[Profit & Loss] Ordinary expenses decreased to ¥578.5B (a 15.4% decrease YoY), but funding costs were ¥169.9B (¥+2.3B) reflecting upward pressure on deposit rates. General and administrative expenses were ¥259.9B (from ¥254.6B prior year, +2.1%) — a modest increase — indicating cost control while expanding the operating base. Extraordinary losses were minor at ¥2.6B (impairment losses ¥1.1B, loss on disposal of fixed assets ¥1.5B). Pre-tax profit was ¥104.1B (+35.0%); after deducting corporate taxes of ¥31.8B (effective tax rate 30.5%), Net Income attributable to owners of the parent was ¥72.1B (+26.2%). Comprehensive income was ¥100.1B, with improvements in unrealized gains on securities of ¥16.8B and actuarial differences on retirement benefits of ¥10.9B producing comprehensive income that exceeded net income. In conclusion, tailwinds from the interest-rate environment and growth in fee income drove revenue and profit expansion, with notable improvement in profitability.
The Banking segment reported Ordinary Revenue of ¥627.6B (+3.2%) and Segment Profit of ¥98.9B (from ¥71.0B prior year, +39.4%), with the core business driving substantial profit growth. Improvement in net interest income and containment of general and administrative expense increases improved margins, and segment assets expanded to 3兆718.2B yen (+4.1%). The Leasing segment reported Ordinary Revenue of ¥36.8B (+3.0%) and Segment Profit of ¥1.3B (flat from ¥1.3B prior year), with segment assets of ¥142.2B (+2.4%). Other Businesses (computer system management/operation, credit card services, etc.) reported Ordinary Revenue of ¥20.8B (+17.2%) and Segment Profit of ¥6.5B (from ¥6.3B prior year, +3.2%), with expansion of ancillary services such as credit card payments boosting revenue.
[Profitability] ROE 4.6% (improved +0.4pt from 4.2% prior year), Net Profit Margin 9.8% (improved +1.9pt from 7.9% prior year). Ordinary Income Margin 15.6% (improved +3.8pt from 11.8% prior year) reflects tailwinds from the interest-rate environment and effective cost control. [Cash Quality] Operating CF / Net Income ratio is 13.1x, Accrual Ratio is -2.8%, indicating very strong cash backing of profits; FCF of ¥772.6B substantially exceeds dividends and capex. [Investment Efficiency] Total Asset Turnover is 0.022x, low as typical for banks, but financial leverage of 21.35x generates returns on equity. [Financial Soundness] Equity Ratio of 4.7% is within an appropriate domestic range, and D/E ratio of 20.35x is typical for banking. Loan-to-deposit ratio is 75.2% (Loans ¥2兆138.99B ÷ Deposits ¥2兆6,773.8B), leaving room in liquidity buffers. Cash and deposits balance of ¥3,467.6B (11.3% of total assets) serves as a cushion against short-term funding risk.
Operating CF was ¥940.9B (from ¥441.1B prior year, +113.3%), a significant increase, equivalent to 13.1x Net Income of ¥66.9B, reflecting highly abundant cash generation. Given banking characteristics, deposit growth (+¥1350.2B) was the primary driver of OCF expansion while supporting concurrent loan growth (+¥381.0B) for asset deployment. Operating CF subtotal (before working capital changes) was ¥961.7B, and after adjustments for non-cash items such as a ¥13.6B decrease in retirement benefit liabilities and a ¥1.9B increase in defined benefit plan assets, showed robust cash generation. Investing CF was -¥168.2B, with restrained investment including capital expenditures of ¥11.0B and acquisition of intangible fixed assets of ¥3.4B, while rebalancing securities investments. Financing CF was -¥13.0B, primarily due to dividend payments of ¥13.4B; share buybacks were effectively not implemented (-¥0.0B). As a result, FCF was a large positive ¥772.6B, dividend coverage is approximately 42.6x, supporting flexibility in capital policy. Cash and deposits at period-end increased to ¥3,439.3B (from ¥2,679.7B prior year, +¥759.6B), further strengthening the liquidity cushion.
Net Income attributable to owners of the parent was ¥72.1B, while Comprehensive Income was ¥100.1B; the ¥27.9B gap was mainly driven by improvements in unrealized gains on securities of ¥16.8B and actuarial adjustments for retirement benefits of ¥10.9B. The difference from Ordinary Income of ¥106.7B to Pre-tax Profit of ¥104.1B reflects Extraordinary Losses of ¥2.6B (impairment losses ¥1.1B, loss on disposal of fixed assets ¥1.5B), which are minor and temporary. Non-operating income included equity-method loss of ¥-0.1B, but core bank-account net interest income and fee income remain the primary sources, indicating high quality of recurring earnings. With an Accrual Ratio of -2.8% and OCF/EBITDA ratio of 7.6x, the alignment between profit and cash is very strong, and there are no signs of earnings inflation through working capital manipulation or one-off revenue recognition. The upside in comprehensive income was driven by improvement in financial asset unrealized gains; while this strengthens capital quality now, it introduces volatility risk from future interest-rate and equity price movements.
Full Year guidance is Ordinary Income ¥94.0B (YoY -11.9%) and Net Income attributable to owners of the parent ¥65.0B (-10.0%), reflecting a conservative outlook. Given first-half actual Ordinary Income of ¥106.7B versus full-year plan of ¥94.0B, the plan is effectively already achieved, implying an assumption of a profit decline in H2. This prudent stance incorporates uncertainty in interest-rate conditions and risks to credit costs and fee income. EPS for the full year is forecast at ¥166.39, while first-half actual was ¥184.62, already exceeding the full-year forecast. Dividend guidance is ¥24 (including a ¥2 commemorative dividend), combined with the interim ¥17 results to yield an expected annual dividend of ¥46. First-half progress against the full-year forecast is 113.5% for Ordinary Income and 110.8% for Net Income, indicating front-loaded achievement and potential upside revision depending on H2 conditions.
Annual dividend is ¥46 (interim ¥17, year-end forecast ¥29, including ¥2 commemorative dividend), maintaining a payout ratio of 23.2% at a conservative level. The year-end dividend includes a ¥2 commemorative dividend for the 110th anniversary of the founding, with a base dividend equivalent to ¥44. Share buybacks have been essentially not implemented (Financing CF -¥0.0B), and the Total Return Ratio is at the same level as the payout ratio. With FCF of ¥772.6B vs. dividend payments of ¥13.4B, FCF coverage is approximately 42.6x, indicating very high sustainability of dividends. Retained earnings are ¥1,013.4B and Net Assets are ¥1,444.2B, providing substantial internal reserves and preserving headroom for stable dividends and flexible commemorative or additional dividend actions. Shares outstanding are 39,427 thousand, treasury stock is 351 thousand, with no material change in shares outstanding and limited dilution risk.
Interest spread compression risk: Upward pressure on deposit rates (funding costs ¥169.9B, from ¥167.6B prior year, +1.4%) combined with slow growth in loan rates could compress net interest margin. Although the loan-to-deposit ratio is 75.2% leaving excess liquidity, intensified deposit competition or market interest-rate volatility could undermine the stability of core earnings.
Revenue concentration risk: Banking accounts for 91.6% of Ordinary Revenue and 92.7% of Segment Profit, indicating limited progress in business diversification. While fee businesses are expanding (Net fee and commission income ¥9.3B), the share of non-interest revenue remains low, and the revenue structure still depends on interest-rate conditions. Regional economic stagnation or population decline could dampen loan demand and deposit inflows.
Securities valuation volatility risk: Holdings of securities balance ¥6,027.2B (19.6% of total assets) expose the bank to unrealized losses from price declines in a rising-rate environment or widening credit spreads. Although Comprehensive Income benefited from an improvement in unrealized gains on securities of ¥16.8B, this could reverse depending on future rate movements and become a source of equity volatility.
Profitability & Return
| Metric | Company | Median (IQR) | Delta |
|---|---|---|---|
| Net Profit Margin | 9.8% | 11.9% (7.2%–35.4%) | -2.1pt |
Net Profit Margin is 2.1pt below the industry median, indicating room for profitability improvement.
Growth & Capital Efficiency
| Metric | Company | Median (IQR) | Delta |
|---|---|---|---|
| Revenue Growth Rate (YoY) | 3.6% | 10.1% (7.3%–12.1%) | -6.5pt |
Revenue growth rate is 6.5pt below the industry median, indicating a slower pace of top-line expansion relative to peers.
※ Source: Company compilation
Improvement to an Ordinary Income Margin of 15.6% and an OCF/Net Income ratio of 13.1x demonstrate that tailwinds from the interest-rate environment and robust cash generation underpin the revenue base. First-half progress of 113.5% against full-year guidance for Ordinary Income suggests potential for upward revision depending on second-half conditions.
A loan-to-deposit ratio of 75.2% and cash and deposits of ¥3,467.6B provide liquidity buffer, and a payout ratio of 23.2% with FCF coverage of 42.6x indicates high sustainability of shareholder returns. Comprehensive Income of ¥100.1B includes an improvement in unrealized gains on securities of ¥16.8B, and cumulative AOCI improved to ¥6.1B, enhancing capital quality. Key items to monitor going forward are sustainability of net interest margin, pace of fee-business expansion, and stabilization of credit costs.
This report is an earnings analysis document automatically generated by AI based on XBRL earnings release data. It does not constitute a recommendation to invest in any particular security. Industry benchmarks are reference information compiled by the Company using public financial statements. Investment decisions are your own responsibility; please consult advisors as appropriate before making investment decisions.