| Metric | Current Period | Same Period Previous Year | YoY |
|---|---|---|---|
| Revenue | ¥17.62B | ¥15.33B | +15.0% |
| Operating Income | - | - | - |
| Ordinary Income | ¥2.66B | ¥2.49B | +6.8% |
| Net Income | ¥1.74B | ¥1.74B | -0.1% |
| ROE | 1.2% | 1.2% | - |
Ordinary revenue (Revenue) increased significantly by +15.0% year on year, and Ordinary Income also increased by +6.8%; however, Consolidated Net Income remained roughly at the previous-year level due to the higher tax burden. Ordinary revenue was ¥17.625B (¥15.330B in the previous year), and Ordinary Income was ¥2.663B (¥2.494B in the previous year). Consolidated Net Income (including non-controlling interests) was ¥1.742B, nearly flat compared with ¥1.744B in the previous year (YoY -0.1%), while Net Income attributable to owners of the parent was ¥1.734B, down YoY -0.5% from ¥1.742B in the previous year. The increase in interest income on loans and securities drove the increase in revenue, while higher interest expense on deposits and an increase in the effective tax rate (30.1% in the previous year → 34.5% in the current period) weighed on final profit.
【Revenue】Ordinary revenue was ¥17.625B, representing a +15.0% year-on-year increase. By segment, Banking accounted for ¥16.19B (91.8% composition ratio, YoY +15.0%) and led the overall increase, while Leasing at ¥0.99B (5.6% composition ratio, YoY +12.4%) and Other at ¥0.45B (2.5% composition ratio, YoY +21.8%) also contributed to the increase in revenue. The increase in Banking revenue was attributable to higher interest income on loans (¥8.868B, ¥7.784B in the previous year) and securities (¥4.943B, ¥4.307B in the previous year), with the expansion of interest income being the primary driver.
【Profit and Loss】Ordinary Income was ¥2.663B, an increase of +6.8% year on year, but the Ordinary Income margin narrowed by approximately -120bp to 15.1% (16.3% in the previous year). The factors were an increase in interest expense on deposits (¥3.183B, ¥2.049B in the previous year, +55.3%) and an increase in other ordinary expenses (¥1.229B, ¥0.651B in the previous year), with higher interest costs reducing the profit margin. Extraordinary gains and losses were both nearly zero (extraordinary loss of ¥0.002B), indicating that the impact of temporary factors was limited. The gap between Ordinary Income and Net Income was primarily attributable to higher income taxes and other taxes (¥0.918B, ¥0.752B in the previous year; effective tax rate of 34.5% versus 30.1% in the previous year), with the higher tax burden keeping final profit essentially flat. Overall, although the Company recorded higher revenue and Ordinary Income, the increase in the tax burden resulted in a lack of substantive growth at the final-profit level.
Banking was the core segment in both revenue and profit. Segment profit before adjustments was ¥2.441B for Banking (¥2.362B in the previous year, +3.3%), ¥0.038B for Leasing (¥0.026B in the previous year, +46.2%), and ¥0.185B for Other (¥0.107B in the previous year, +72.9%). The Banking segment’s profit growth rate (+3.3%) was below its revenue growth rate (+15.0%), indicating that margin pressure from higher interest costs restrained the profit margin. Meanwhile, although Leasing and Other are small in terms of revenue, their profit growth was substantial, making a certain contribution to diversification of the earnings structure. Nevertheless, the two segments’ combined contribution to total profit remained approximately 8%, and overall performance remains highly dependent on the interest-rate environment affecting Banking.
【Profitability】The Ordinary Income margin was 15.1%, narrowing by approximately -120bp from 16.3% in the previous year, while the Net Income margin (based on consolidated Net Income) was 9.9%, narrowing by approximately -150bp from 11.4% in the previous year. The primary causes of the decline in profitability were higher interest expense on deposits and the increase in the effective tax rate (30.1% → 34.5%). Although core revenue expanded, expenses and the tax burden reduced profit margins.【Earnings Quality】Extraordinary gains and losses were nearly nonexistent, and most profit was generated by ordinary operations. The gap between Ordinary Income and Net Income was primarily attributable to higher income taxes and other taxes.【Investment Efficiency】ROE (based on Net Income attributable to owners of the parent; quarterly actual result, not annualized) was 1.2%, a low level on a quarterly basis.【Financial Soundness】The Equity Ratio (net assets / total assets) was 5.0%, improving by +0.3pt from 4.7% in the previous year. However, total assets declined by -5.6% year on year to ¥2,909.2B, indicating that the improvement was accompanied by balance-sheet contraction.
As cash flow statement data has not been disclosed, funding trends are analyzed based on changes in the balance sheet. Cash and due from banks decreased significantly to ¥166.818B from ¥346.760B in the previous year, a decline of -¥179.942B (-51.9%), indicating a reduction in liquid assets. Meanwhile, securities increased moderately to ¥611.581B, up +¥8.858B (+1.5%), and loans increased to ¥2,016.973B, up +¥3.074B (+0.15%), suggesting that part of the reduced cash and deposits may have been reallocated to securities investments and lending. On the funding side, deposits declined to ¥2,540.321B, down -¥137.062B (-5.1%) from the previous year, while negotiable certificates of deposit increased to ¥115.498B, up +¥14.307B (+14.1%), and borrowings decreased to ¥30.982B, down -¥5.74B (-15.6%). Overall, the Company used cash and deposits and increased negotiable certificates of deposit to offset the decline in deposits while slightly increasing earning assets. The somewhat higher interest-rate sensitivity of the funding mix is a point to monitor in managing funding costs.
Current-period profit was stable in quality in that extraordinary gains and losses were nearly nonexistent (extraordinary gain of ¥0B and extraordinary loss of ¥0.002B), with ordinary operations accounting for most of profit. The gap between Ordinary Income (¥2.663B) and Consolidated Net Income (¥1.742B) was primarily attributable to income taxes and other taxes (¥0.918B; effective tax rate of 34.5%). The effective tax rate increased from 30.1% in the previous year, suggesting a more structural rather than one-time increase in the tax burden. Comprehensive income was ¥1.748B, nearly in line with Net Income, and the impact of other comprehensive income items such as valuation difference on securities (¥0.056B) and retirement benefit adjustment (-¥0.05B) was limited. In the same period of the previous year, valuation difference on securities was substantial at ¥2.043B, driving Comprehensive Income up to ¥3.789B. In the current period, this uplift effect diminished, and the closer alignment between Net Income and Comprehensive Income is a point to note from the perspective of earnings stability.
The Q1 progress rates against the full-year earnings forecasts were 28.3% for Ordinary Income, at ¥2.663B / ¥9.400B, and 26.7% for Net Income attributable to owners of the parent, at ¥1.734B / ¥6.500B. Both exceeded the 25% benchmark for even quarterly progress. The Company’s plan is a conservative outlook calling for Ordinary Income to decline by -11.9% year on year, and the strong Q1 progress may reflect a bias toward the first half. No revisions were made to the earnings forecasts during the current quarter. EPS progress was also 26.7%, at ¥44.39 / ¥166.39, consistent with the progress of Net Income.
The Company’s full-year dividend plan is ¥48, implying a Payout Ratio of approximately 28.9% against the full-year EPS plan of ¥166.39. The year-end dividend for FY ended March 2026 includes a ¥2 commemorative dividend marking the Company’s 110th anniversary; therefore, the normalized dividend level should be considered excluding this amount. There has been no revision to the most recent dividend forecast. Based on approximately 39.427 million shares outstanding, the total annual dividend is approximately ¥1.89B, indicating sufficient payment capacity relative to the full-year Net Income plan of ¥6.5B.
Margin pressure from rising deposit interest rates: Interest expense on deposits increased to ¥3.183B from ¥2.049B in the previous year, an increase of +55.3%, outpacing the growth in interest income on loans (¥8.868B, ¥7.784B in the previous year, +13.9%). The increase in interest costs was one factor driving the Ordinary Income margin down from 16.3% in the previous year to 15.1%.
Equity Ratio level: The Equity Ratio (net assets / total assets) improved to 5.0% from 4.7% in the previous year; however, it remains low in absolute terms, and the thickness of the capital buffer requires continued monitoring.
Changes in the funding mix: Deposits declined by -¥137.062B (-5.1%), while negotiable certificates of deposit increased by +¥14.307B (+14.1%), indicating somewhat higher interest-rate sensitivity in funding costs.
Profitability and Returns
| Metric | Company | Median (IQR) | Delta |
|---|---|---|---|
| Net Income Margin | 9.9% | – | – |
Comparable median data is limited, making it difficult to determine the Company’s relative positioning within the industry at this time.
Growth and Capital Efficiency
| Metric | Company | Median (IQR) | Delta |
|---|---|---|---|
| Revenue Growth Rate (Year on Year) | 15.0% | – | – |
Similarly, median data is limited; in absolute terms, the Company posted a double-digit revenue growth rate.
※Source: Compiled by the Company
Ordinary Income increased by +6.8% year on year, but Consolidated Net Income was nearly flat at YoY -0.1% due to the effective tax rate rising from 30.1% in the previous year to 34.5%. The substance of the profit increase was the expansion of core revenue, while the primary factor behind the lack of growth in final profit was the higher tax burden.
Full-year progress rates were 28.3% for Ordinary Income and 26.7% for Net Income attributable to owners of the parent, both exceeding the quarterly progress benchmark of 25%, indicating a favorable start against the initial plan.
The growth rate of interest expense on deposits (+55.3%) exceeded the growth rate of interest income on loans (+13.9%), and higher funding costs contributed to the contraction of the Ordinary Income margin (16.3% in the previous year → 15.1%). Future margin trends require close monitoring.
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, and you should consult a professional as necessary.
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