| Metric | Current Period | Prior Year | YoY |
|---|---|---|---|
| Revenue / Net Sales | ¥5693.7B | ¥5332.6B | +6.8% |
| Operating Income / Operating Profit | ¥606.5B | ¥614.9B | -1.4% |
| Ordinary Income | ¥606.9B | ¥625.5B | -3.0% |
| Net Income / Net Profit | ¥63.5B | ¥10.6B | +497.2% |
| ROE | 1.0% | 0.2% | - |
The fiscal year ending February 2026 reported Revenue of ¥5,693.7B (YoY +¥361.1B, +6.8%), Operating Income of ¥606.5B (YoY -¥8.4B, -1.4%), Ordinary Income of ¥606.9B (YoY -¥18.6B, -3.0%), and Net Income attributable to owners of the parent of ¥210.9B (YoY +¥54.4B, +34.8%). Top-line growth was achieved through expansion in overseas operations and retail, but operating profit declined due to a 51.3% drop in domestic retail operating profit and an increase in selling, general and administrative expenses (+¥213.3B). Ordinary income also declined due to higher interest expenses, but lower tax burden and changes in the composition of profit attributable to non-controlling interests drove a large increase in the final net profit. Operating margin narrowed by 0.8pt to 10.7% (prior year 11.5%), while net margin improved by 0.8pt to 3.7% (prior year 2.9%), indicating a change in earnings structure.
Revenue / Operating revenue was ¥5,693.7B (+6.8%). By segment, Domestic Retail expanded sharply to ¥2,361.3B (+23.5%), supported by growth in the customer base for banking and insurance businesses. Conversely, Domestic Solutions fell sharply to ¥927.6B (-22.4%), suggesting structural change in merchant-facing processing businesses. Overseas, the Mekong region grew to ¥1,028.1B (+7.4%) and the Malay region to ¥1,017.1B (+11.6%), capturing ASEAN consumption expansion. Greater China was flat at ¥359.2B (+0.9%). Segment revenue composition: Retail 41.5%, Malay 17.9%, Mekong 18.1%, Solutions 16.3%, Greater China 6.3%, indicating Domestic Retail and Overseas form the revenue base.
SG&A totaled ¥4,272.6B (prior year ¥4,062.6B), +5.2%, and the SG&A-to-revenue ratio improved 1.2pt to 75.0% (prior year 76.2%), but interest burden increased (Finance costs ¥616.3B, prior year ¥394.3B, +56.3%), resulting in a slight decline in Operating Income to ¥606.5B (-1.4%). Non-operating income/expense was approximately neutral at ±¥0.3B, and Ordinary Income was ¥606.9B (-3.0%). Extraordinary losses totaled -¥119.3B (including gain on sale of investment securities ¥18.1B, impairment losses ¥34.2B, etc.), bringing profit before income taxes to ¥487.6B (+7.4%). Income taxes were ¥120.2B (effective tax rate 24.7%, prior year 37.0%), reducing tax burden, and increased profit attributable to non-controlling interests ¥156.5B (prior year ¥129.3B) was absorbed, resulting in Net Income attributable to owners of the parent of ¥210.9B (+34.8%). In summary, the company recorded revenue growth with declines at the operating and ordinary stages but achieved a final net profit increase driven by lower tax burden and improvement in non-recurring items.
Retail recorded Operating Income of ¥51.2B (-51.3%), with margin deteriorating significantly to 2.2% (prior year 5.4%). Despite revenue growth, increased funding costs and higher credit costs appear to have compressed profitability. Solutions achieved Operating Income of ¥135.0B (+37.7%) with a margin of 14.6% (prior year 9.8%), indicating higher profitability; profit growth despite revenue decline likely reflects mix improvement and cost efficiency. Greater China recorded Operating Income of ¥108.2B (+16.2%), margin 30.1%, the highest among segments, demonstrating strength in high value-added businesses. Mekong posted Operating Income of ¥160.8B (+0.5%), margin 15.6%, stable; Malay recorded Operating Income of ¥149.6B (+11.4%), margin 14.7%, continuing double-digit growth—overseas operations function as a pillar of earnings.
Profitability: Operating margin 10.7% (prior year 11.5%, -0.8pt), Net margin 3.7% (prior year 2.9%, +0.8pt). ROE is 1.0% (financial metric data) and appears low, reflecting Net Income attributable to owners of the parent of ¥63.5B as a ratio to parent shareholders’ equity; this reflects the consolidated structure as a financial holding company. Using Net Income attributable to owners of the parent of ¥210.9B against shareholders’ equity ¥4,638.4B (parent shareholders’ equity) gives an estimated ROE of about 4.5%, above the industry median of 3.8%.
Cash quality: Operating Cash Flow was ¥3,072.4B, 14.6x Net Income attributable to owners of the parent, and including depreciation of ¥305.1B the subtotal operating CF was ¥3,278.5B after working capital movements, yielding OCF/Revenue of 54.0%, indicating very strong cash generation.
Investment efficiency: Capital expenditures were ¥44.0B, 0.14x depreciation and thus restrained; intangible asset purchases were ¥326.3B (IntangibleAssetPurchases) as the main investment area. Total asset turnover was 0.07x (Revenue ¥5,693.7B ÷ Total assets ¥8.31兆円), reflecting characteristics of the financial industry and well below the industry median of 0.39x, but this is due to financial assets such as deposits and receivables comprising the majority of total assets, making comparisons to commercial companies not meaningful.
Financial soundness: Equity Ratio was 7.5% (prior year 7.6%), well below industry median 27.9%, but in financial businesses deposits and liabilities are built up against assets so practical soundness should be judged by capital adequacy ratios and leverage multiples. Financial leverage was 13.30x (Total assets ¥8.31兆円 ÷ Net assets ¥6,252.1B), high versus industry median 2.84x, but acceptable for a financial institution. Current ratio was 118.2%; Cash and deposits ¥6,768.1B represent 10.1% of current liabilities ¥6.72929兆円 (including short-term borrowings), indicating short-term liquidity is secured.
Operating CF was ¥3,072.4B (YoY -11.5%). Of the operating CF subtotal ¥3,278.5B, an increase in accounts payable of ¥744.3B contributed positively, while payment of income taxes ¥208.4B was deducted. Investing CF was a large outflow of -¥4,274.1B: CapEx ¥44.0B was limited, but strategic investments such as intangible asset acquisitions ¥326.3B, acquisition of subsidiary shares ¥199.8B, business transfers ¥30.1B, etc., drove funding needs. Free Cash Flow was -¥1,201.6B (Operating CF + Investing CF), indicating the investment pace exceeded operating cash generation. Financing CF was -¥186.3B, with dividends paid ¥114.4B and dividends to non-controlling interests ¥66.0B totaling ¥180.4B as principal outflows. Cash and deposits declined to ¥6,768.1B (prior year ¥8,147.9B), down approximately ¥1,379.8B, reflecting the above CF structure. Operating CF quality is high; although it includes depreciation of ¥305.1B, the financial business cash cycle (deposit and receivable turnover) contributes and sustainability is high. Investing CF scale will depend on future strategic investment policy; continued intangible investments are expected and returning FCF to positive will require CapEx restraint and investment payback.
Against Ordinary Income of ¥606.9B, non-operating income/expense was nearly neutral at ±¥0.3B: dividend income received ¥2.1B, foreign exchange gains ¥3.4B, investment partnership gains ¥16.5B contributed non-operating income ¥21.4B, largely offset by non-operating expenses including foreign exchange losses ¥18.3B (non-operating expenses ¥21.1B). Extraordinary losses totaled -¥119.3B, where gains on sale of investment securities ¥18.1B were outweighed by impairment losses ¥34.2B and other extraordinary losses ¥103.4B, implying temporary factors depressed profit. Comprehensive income was ¥585.9B (attributable to owners of the parent ¥271.8B, non-controlling interests ¥314.1B), significantly above consolidated Net Income ¥63.5B (which includes Net Income attributable to owners of the parent ¥210.9B on a consolidated basis), with Other Comprehensive Income contributing +¥522.4B. Components were foreign currency translation adjustments ¥411.7B, deferred hedge gains/losses ¥200.6B, valuation difference on available-for-sale securities -¥396.7B, reflecting yen depreciation and interest rate movements. The divergence between Net Income and Comprehensive Income is large; approximately 89% of changes in Net Assets are explained by valuation and FX factors, so while earnings quality is supported by strong Operating CF, balance sheet valuation volatility risk is material.
Full Year guidance: Revenue ¥6,000.0B, Operating Income ¥450.0B (YoY -25.8%), Ordinary Income ¥450.0B (YoY -25.9%), Net Income attributable to owners of the parent ¥150.0B, EPS ¥69.48, Dividend ¥25.00. Versus actuals, Revenue progress rate is 94.9%, Operating Income 134.8%, Ordinary Income 134.9%, Final Profit 140.6%, indicating significant outperformance at profit levels. The company’s assumptions appear conservative, likely factoring in a decline in profit margins in H2. Given full year Operating Income guidance of ¥450.0B, the H1 actual of ¥606.5B already exceeds it, suggesting room for upward revision, but deterioration in Domestic Retail profitability and rising interest costs are recognized as H2 downside risks. Dividend guidance ¥25.00 aligns with an annual payout of ¥53 (interim ¥25, year-end ¥28) including the actual year-end dividend, indicating dividend policy is expected to be maintained.
Annual dividend is ¥53 per share (interim ¥25, year-end ¥28), total dividends ¥114.4B. Payout Ratio relative to Net Income attributable to owners of the parent ¥210.9B is 54.2% (dividends ¥114.4B ÷ Net Income attributable to owners of the parent ¥210.9B), which differs from the company-disclosed Payout Ratio 73.1% (XBRL data PayoutRatio) possibly due to differences in numerator/denominator definitions, but in any case the policy to return around half of earnings is clear. No share buybacks were executed; shareholder returns are via dividends only. Free Cash Flow was -¥1,201.6B, a negative amount 10.5x the dividend, and although current dividends were paid from Operating CF, cash generation net of investments was insufficient. Future dividend sustainability depends on continuity of Operating CF (whether the company can stably maintain the ¥3,000B range), the scale of investing CF (pace of intangible and strategic investments), and the debt funding environment. With cash and deposits ¥6,768.1B and strong Operating CF, short-term dividend-paying ability is sufficient, but mid-term positive FCF through investment recovery is desirable.
Industry Position (reference, company survey): This result is classified under the "Insurance" industry, but in practice it is a financial holding offering a mix of banking, insurance, card, and merchant-facing solutions, so comparison with pure insurance companies is limited. Operating margin 10.7% exceeds the industry median 8.8%, driven by high-margin overseas and Greater China operations (margin 30.1%). Net margin 3.7% is slightly below industry median 4.3%, influenced by interest burdens and the composition of profit attributable to non-controlling interests unique to financial businesses. ROE (estimated 4.5% based on Net Income attributable to owners of the parent) slightly exceeds industry median 3.8%, indicating average capital efficiency via leverage. Equity Ratio 7.5% is far below industry median 27.9%, reflecting a high-leverage structure typical of financial firms, but Capital Adequacy Ratio 5.7% is above the minimum standard of 4%, ensuring regulatory soundness. Payout Ratio 54.2% exceeds industry median 43%, indicating an active shareholder return stance. Total asset turnover 0.07x is well below industry median 0.39x, attributable to the structure where financial assets (deposits, receivables, securities) dominate total assets; therefore benchmark comparisons are of limited validity. CapEx/Depreciation 0.14x is near the industry median 0.16x, and the trend of constrained maintenance CapEx and emphasis on intangible investment is common in the industry. FCF yield cannot be calculated (market cap not disclosed) and is negative; many industry players are in investment phases with industry median 0.00. Overall, strengths are high profitability in Overseas and Solutions and strong Operating CF, but recovery of Domestic Retail profitability and management of interest costs are keys to maintaining relative competitiveness within the industry.
Key points are as follows. First, structural change in segment mix: Domestic Retail operating margin halved to 2.2% while Solutions improved to 14.6%, and Overseas (Greater China 30.1%, Mekong 15.6%, Malay 14.7%) function as high-margin businesses. This structure reflects the end of domestic low-rate environment and expansion of overseas consumption, and medium-term dependence on Overseas and Solutions is expected to rise. Second, coexistence of strong Operating CF (¥3,072.4B, 14.6x Net Income attributable to owners of the parent) and negative FCF (-¥1,201.6B) where strategic investments (intangible ¥326.3B, subsidiary acquisitions ¥199.8B, etc.) drive funding needs. Investment recovery progress and future investment pace (systems, M&A) will be the inflection point for FCF conversion and shareholder return capacity. Third, a finance structure highly sensitive to interest rates (interest-bearing debt ¥7.8兆円, interest expense ¥616.3B, YoY +56.3%) means policy rate movements directly affect earnings. As BOJ normalization proceeds, balancing pass-through of funding costs (price revisions) with improvement in investment yields will determine future margins.
This report is an earnings analysis document automatically generated by AI from XBRL financial statement data. It is not a recommendation to invest in any specific securities. Industry benchmarks are reference information compiled by our firm based on public financial statements. Investment decisions are your responsibility; please consult a professional as needed before making investment decisions.