| Metric | Current Period | Prior Year Period | YoY |
|---|---|---|---|
| Revenue | ¥1086.6B | ¥803.7B | +35.1% |
| Operating Income | - | - | - |
| Ordinary Income | ¥224.5B | ¥182.1B | +23.2% |
| Net Income | ¥158.4B | ¥126.8B | +24.9% |
| ROE | 4.8% | 4.1% | - |
FY2026 results settled with a significant increase in revenue to ¥1086.6B (YoY +¥282.9B +35.1%), ordinary income ¥224.5B (YoY +¥42.3B +23.2%), and net income ¥158.4B (YoY +¥31.6B +24.9%). Interest income expanded to ¥690.4B (prior ¥541.1B). Loans increased to 4.55兆円 (＋¥186.8B) and deposits to 5.63兆円 (＋¥94.5B), reflecting solid regional credit growth. Meanwhile, the operating margin declined to 20.7% (prior 22.7%), approximately 200bp lower, and the net margin narrowed to 14.6% (prior 15.8%), about 120bp, indicating limited margin improvement despite revenue growth. The equity ratio stood at 4.8%, below the regulatory minimum of 8%, leaving capital constraints as a key issue. Operating Cash Flow was significantly negative at ▲¥1120.7B, largely driven by funding circulation factors associated with credit expansion.
[Revenue] Ordinary revenue of ¥1086.6B (prior ¥803.7B) rose sharply by +35.1%, mainly driven by interest income expanding to ¥690.4B (prior ¥541.1B), an increase of ¥149.3B. Breakdown: interest on loans ¥508.5B (prior ¥393.6B) +¥114.9B; interest on deposits ¥116.5B (prior ¥36.3B) +¥80.2B; securities interest/dividend ¥133.1B (prior ¥124.6B) +¥8.5B — all items grew in a rising rate environment. Fee and commission revenue was ¥140.2B (prior ¥140.6B), essentially flat, indicating limited diversification of non-interest revenue. Other operating income was ¥189.7B; foreign exchange assets increased to ¥27.3B (prior ¥23.0B). Although detailed disclosure by region/segment is not provided, loan balance growth of +¥186.8B (+4.3%) underpinned interest income expansion.
[Profit & Loss] Ordinary expenses rose to ¥862.0B (prior ¥621.6B), +38.7%. Funding costs increased to ¥140.2B (prior ¥47.6B), +¥92.6B, primarily due to a large rise in deposit interest to ¥116.5B (prior ¥36.3B). Fee and commission expenses were ¥51.0B (prior ¥50.5B), nearly flat. General & administrative expenses increased to ¥413.2B (prior ¥393.1B), +5.1%; SG&A ratio improved to 38.0% (prior 48.9%), but CIR remained elevated at about 64.6%. Other operating expenses were ¥222.3B, and volatility in market-related gains/losses likely compressed margins. Ordinary income, equivalent to operating-profit-level performance, was ¥224.5B (+23.2%); operating margin declined to 20.7% (prior 22.7%), about 200bp lower. Extraordinary items were net ▲¥1.4B, minor, including impairment losses of ¥0.2B within extraordinary losses of ¥1.4B. Income taxes were ¥62.5B, with an effective tax rate of 28.0%. Net income attributable to owners of the parent was ¥159.1B (+24.7%), concluding in revenue and profit growth.
[Profitability] Operating margin decreased to 20.7% (prior 22.7%), about 200bp down; net margin narrowed to 14.6% (prior 15.8%), about 120bp down. ROE was 4.8%, improving 0.4pt from prior 4.4% but remaining low; this can be explained by net margin × total asset turnover 0.016 × financial leverage 20.13x. NIM (net interest margin) was 1.21%, below the banking-sector benchmark of 1.5%. CIR (cost-to-income ratio) remained around 64.6%, mid-60s, indicating room for efficiency improvement. [Cash Quality] Operating CF/Net Income was ▲7.04x, OCF/EBITDA ▲3.87x, indicating weak cash conversion; however, in banking the large working-capital swings from loans and deposits are a structural driver. Accrual ratio was 1.9%, in a healthy range, showing no major earnings recognition discretion. [Investment Efficiency] Total asset turnover was 0.016, low as characteristic of banking, while ROA was 0.3%, improving 0.1pt from prior 0.2%. [Financial Soundness] Equity ratio (Basel III) was 4.8%, below the regulatory minimum of 8%, leaving capital constraints as a material issue. D/E ratio was 19.13x, high but reflecting the deposit-centric structure of banking; loan-to-deposit ratio at 80.8% is within a sound range. Regarding liquidity coverage, cash and deposits of ¥869.3B are secured, and deposit surplus maintains a stable funding base.
Operating CF was ▲¥1120.7B (prior ▲¥834.5B), a large negative, mainly due to loan growth of +¥186.8B and working-capital expansion from reallocation of market positions. Operating CF subtotal (before working-capital changes) was ▲¥1080.2B, including income taxes paid of ¥40.5B. Investing CF was +¥697.4B, positive due to net asset sales/collections; capital expenditure was limited to ¥25.5B, indicating restrained capex. Free cash flow was ▲¥423.3B (Operating CF + Investing CF), meaning dividend ¥42.8B and share buybacks ¥15.0B (total ¥57.8B) were not covered on a cash-flow basis; however, the FCF concept is limited in banking, and distributable capacity should be assessed against regulatory capital and earnings. Financing CF was ▲¥59.8B, reflecting ¥15.0B share buybacks and ¥42.8B dividends paid. Cash and deposits at period-end decreased to ¥869.3B (prior ¥917.7B), down ¥48.4B, reflecting changes in liquidity management accompanying loan growth.
This period's earnings were driven primarily by expansion in net interest income: interest income ¥690.4B (+27.6%) versus funding costs ¥140.2B (+194.5%), resulting in net interest income expanding to roughly the ¥550B range. Net fee income was approximately ¥89B (revenue ¥140.2B − expenses ¥51.0B), almost flat, showing limited progress in diversifying non-interest revenue. Extraordinary items were net ▲¥1.4B, minor, including ¥0.2B impairment loss, so impact on net income was limited. In non-operating/market-related items, other operating expenses of ¥222.3B were large; valuation losses or disposal losses on securities likely caused revenue volatility at the ordinary-income level. Accrual ratio 1.9% is in a healthy range, with no excessive accrual buildup observed. However, Operating CF/Net Income (▲7.04x) and OCF/EBITDA (▲3.87x) warrant attention numerically, though in banking these are largely driven by loan/deposit movements and do not necessarily indicate earnings recognition discretion. The gap between ordinary income ¥224.5B and net income ¥158.4B is about 29%, within a range explainable by tax effects. Comprehensive income was ¥256.4B, substantially above net income, with gains from other comprehensive income: securities valuation differences +¥65.1B, deferred hedge gains/losses +¥4.4B, and retirement benefit adjustments +¥26.2B, which contributed positively to capital.
Company plan for the full year is ordinary income ¥279.0B (YoY +24.2%), net income ¥190.0B (YoY +19.9%), EPS ¥162.57, and dividend ¥33. Progress ratios: ordinary income at ¥224.5B/¥279.0B ≈ 80.5%; net income at ¥158.4B/¥190.0B ≈ 83.4%, indicating steady progress. Achievability assumptions include NIM improvement from current 1.21%, CIR falling below 60%, stabilization of market-related gains/losses, and maintenance of low credit costs. Given continued loan growth (this period +¥186.8B), margin improvement and cost control could make targets feasible, but interest-rate volatility and potential resurgence of securities valuation losses are downside risks. Dividend is forecast at ¥33 (payout ratio about 20% assuming EPS ¥162.57), a decline from prior ¥42, but dividend forecasting may reflect full-year aggregation including interim dividend; confirmation of the split between interim and year-end dividend is necessary.
Annual dividend was ¥42 (interim ¥19 + year-end ¥23), with a payout ratio of 28.8%, a conservative level. Prior year dividend was ¥14, representing a significant increase of ¥28 (+200%). Share buybacks of ¥15.0B were executed (per cash flow statement), and total return ratio is (dividend ¥42.8B + buybacks ¥15.0B) / net income ¥158.4B ≈ 36.5%. Considering cash and deposits ¥869.3B and operating CF subtotal (before working-capital changes) ▲¥1080.2B, cash-based distributable capacity is nominally negative; however, in banking the sustainability of returns should be evaluated against regulatory capital and earnings. With an equity ratio of 4.8% below the regulatory minimum, capital strengthening should take priority. Next-year dividend guidance is ¥33, a reduction from prior ¥42; confirmation of dividend composition (interim/year-end) is required. The dividend policy can be evaluated as designed to balance earnings growth and capital constraints.
Risk of prolonged low NIM (1.21%): NIM at 1.21% is below the industry standard 1.5%; even in a rising-rate environment, increases in funding costs (deposit interest +¥80.2B) offset more than half of interest income growth (+¥149.3B). If loan-deposit spreads do not improve, core earnings growth will be limited and the certainty of achieving next-year targets decreases.
Capital constraint due to equity ratio 4.8% and regulatory non-compliance: Equity ratio (Basel III) at 4.8% is clearly below the regulatory minimum of 8%, necessitating capital augmentation or RWA reduction. Balancing shareholder returns (dividends/share buybacks) with capital strengthening will be difficult, constraining financial policy flexibility.
Earnings volatility from market-related gains/losses: Other operating expenses increased sharply to ¥222.3B (prior ¥88.9B), with valuation and disposal losses on securities compressing margins. If ALM measures against rate/price volatility are inadequate, ordinary-stage earnings volatility could widen and reduce the likelihood of meeting forecasts.
Profitability & Returns
| Metric | Company | Median (IQR) | Delta |
|---|---|---|---|
| Net Margin | 14.6% | 11.9% (7.2%–35.4%) | +2.7pt |
Net margin is 2.7pt above the industry median, indicating relatively favorable profitability.
Growth & Capital Efficiency
| Metric | Company | Median (IQR) | Delta |
|---|---|---|---|
| Revenue Growth (YoY) | 35.1% | 10.1% (7.3%–12.1%) | +25.1pt |
Revenue growth outpaced the industry median by 25.1pt, achieving high growth driven by loan expansion and rising rates.
※Source: Company aggregation of public financial statements
Loan balance +¥186.8B (+4.3%) and deposits +¥94.5B (+1.7%) grew steadily, enabling revenue and profit expansion through scale. However, operating margin declined ~200bp and CIR remained elevated at ~64.6%; the next evaluation axes will be margin (NIM) improvement and efficiency (CIR < 60%) execution. The company’s plan, targeting ordinary income +24.2% and net income +19.9%, is ambitious but depends on NIM lift and stabilization of market-related gains/losses; monitoring interest-rate volatility and credit-cost trends is necessary.
Equity ratio of 4.8% remains below the regulatory minimum of 8%, making capital strengthening the top priority. Although dividends are maintained at a conservative payout ratio (28.8%), cash-based FCF is ▲¥423.3B and distributable capacity is nominally negative; either capital augmentation or RWA suppression will be required. The company is at a juncture to balance shareholder returns with capital policy.
This report is an earnings analysis document automatically generated by AI from XBRL financial statement data. It does not constitute a recommendation to invest in any specific security. Industry benchmarks are reference information aggregated by our firm from public financial statements. Investment decisions are your responsibility; please consult a professional advisor as necessary.