| Metric | Current Period | Prior Year Period | YoY |
|---|---|---|---|
| Revenue / Net Sales | ¥62.7B | ¥53.9B | +10.1% |
| Operating Income / Operating Profit | ¥54.9B | ¥46.2B | +18.8% |
| Ordinary Income | ¥243.6B | ¥233.8B | +4.2% |
| Net Income / Net Profit | ¥54.6B | ¥45.9B | +18.9% |
| ROE | 1.8% | 1.6% | - |
The 2026 FY results show Revenue ¥62.7B (vs prior year +¥8.8B +16.4%), Operating Income ¥54.9B (vs prior year +¥8.7B +18.8%), Ordinary Income ¥243.6B (vs prior year +¥9.8B +4.2%), and Net Income attributable to owners of the parent ¥161.6B (vs prior year +¥0.3B +2.0%). As a banking business, Ordinary Revenue progressed at ¥1,047.8B (prior year ¥951.1B, +10.2%), with interest income ¥791.8B (prior year ¥715.0B) increasing due to expansions in loan balances of ¥3.85兆円 (+4.3%) and securities of ¥0.77兆円 (+5.2%). Conversely, interest expense surged 3.1x to ¥141.9B (prior year ¥45.4B) driven by rising deposit rates, compressing the net interest margin. Fee income remained resilient at ¥141.5B. Ordinary expense was ¥804.1B (prior year ¥717.3B), mainly due to higher interest expense. The operating profit margin improved to 87.5% (prior year 85.7%), indicating maintained cost discipline. The fall from Ordinary Income to Net Income (¥243.6B → ¥161.6B) was driven by non-segment performance items and corporate taxes of ¥78.3B. ROE edged down to 5.4% from 5.7% prior year, and the Equity Ratio is thin at 5.7%. Dividends were ¥26 (Full Year: interim ¥13, year-end ¥13) with a Payout Ratio of 31.0%; adding ¥10.0B share buybacks yields a Total Return Ratio of 37.2%. Versus guidance, Ordinary Income progress was 91.7% and Net Income 90.6%, missing targets.
[Revenue] Revenue ¥62.7B (prior year ¥53.9B, +16.4%) refers to reported operating revenue in banking; the substantive Ordinary Revenue was ¥1,047.8B (prior year ¥951.1B, +10.2%). Breakdown: interest income ¥791.8B (prior year ¥715.0B, +10.7%), fee income ¥141.5B (prior year ¥134.5B, +5.2%), other ordinary revenue ¥62.5B (prior year ¥59.1B). Loan balances increased to ¥3.85兆円 (prior year ¥3.69兆円, +4.3%), with loan interest income ¥602.3B (prior year ¥516.2B, +16.7%) driving revenue growth. Securities also increased to ¥0.77兆円 (prior year ¥0.74兆円, +5.2%), and securities-related interest/dividends ¥160.9B (prior year ¥186.5B, -13.7%) declined due to market conditions. Deposits expanded to ¥4.57兆円 (prior year ¥4.42兆円, +3.4%) strengthening funding, but deposit rate increases caused interest expense to jump to ¥126.4B (prior year ¥40.8B, +3.1x), tightening net interest margins. Fee income showed stable growth, confirming resilience of non-interest income.
[Profitability] Operating Income ¥54.9B (prior year ¥46.2B, +18.8%), with an operating profit margin of 87.5% (prior year 85.7%, +1.8pt) remaining at a high level. Ordinary expense was ¥804.1B (prior year ¥717.3B, +12.1%); composition includes interest expense ¥141.9B (prior year ¥45.4B, +3.1x), fee expense ¥43.4B (prior year ¥41.3B), and operating expenses (SG&A) ¥341.7B (prior year ¥339.1B, +0.8%), indicating cost discipline. A large reduction in other ordinary expenses to ¥168.9B (prior year ¥244.0B, -30.8%) supported Ordinary Income. Ordinary Income ¥243.6B (prior year ¥233.8B, +4.2%) led to profit before tax ¥241.1B after recording extraordinary losses ¥2.7B (including impairment loss ¥2.0B). Corporate tax, etc. amounted to ¥78.3B (tax rate 32.5%), and non-controlling interests ¥1.1B were deducted, resulting in Net Income attributable to owners of the parent ¥161.6B (prior year ¥158.3B, +2.0%). The ¥81.9B drop from Ordinary Income to Net Income was mainly due to non-segment items and tax burden. Comprehensive income ¥185.6B (prior year ¥88.2B, +2.1x) benefited from improvements in securities valuation differences ¥7.3B and retirement benefit adjustments ¥15.5B. In conclusion, revenue and profit increased, but rapid rise in interest expense limited Ordinary Income growth.
Reported segments comprise only the Banking Business; other businesses are immaterial and omitted. Banking Business Ordinary Revenue was ¥1,047.8B; segment Ordinary Income is not disclosed separately but accounts for the majority of consolidated Ordinary Income ¥243.6B. Profit contributions outside the segment are limited, concentrating group earnings in banking.
[Profitability] ROE 5.4% (prior year 5.7%, -0.3pt) is supported by a relatively high net income margin for the industry, though capital efficiency slightly declined. Operating profit margin 87.5% (prior year 85.7%), Net Profit Margin 87.0% (Net Income ¥54.6B against Revenue ¥62.7B, prior year 85.2%) are distorted by the reporting definition of operating revenue; on an Ordinary Revenue basis net profit margin is 15.4% (¥161.6B / ¥1,047.8B). [Cash Quality] Operating Cash Flow (OCF) ¥174.8B is 3.2x net income ¥54.6B, indicating solid cash generation. OCF/EBITDA (Operating Income + Depreciation) is 2.3x, healthy. [Investment Efficiency] ROA (Ordinary Income basis) is 0.47% against total assets ¥5.20兆円 (prior year 0.46%), remaining flat. Loan balances ¥3.85兆円 and deposits ¥4.57兆円 yield a loan-to-deposit ratio of 84.2% (prior year 83.5%), within a reasonable range. [Financial Soundness] Equity Ratio 5.7% (prior year 5.6%, +0.1pt) is low, indicating a thin capital buffer. D/E ratio 16.5x (prior year 16.7x) reflects structural banking levels. Interest-bearing liabilities (borrowings ¥141.2B, negotiable certificates of deposit ¥1,408.9B) are limited. Cash and deposits ¥4,842.4B (prior year ¥5,092.5B) ensure ample liquidity. BPS ¥1,530.36 (prior year ¥1,457.97, +5.0%) steadily increased, though PBR level is unspecified.
Operating Cash Flow (OCF) ¥174.8B (prior year ¥1,181.9B, -85.2%) follows operating cash flow before working capital changes of ¥238.2B (prior year ¥1,256.8B) less corporate taxes and payments ¥63.4B (prior year ¥74.9B). The year-on-year decline is mainly due to foreign exchange losses ¥-108.0B (prior year +¥15.0B) and compression of working capital movements (other operating CF +¥123.3B, prior year +¥211.2B). Investing Cash Flow -¥358.1B (prior year -¥681.5B) includes CAPEX -¥26.6B (prior year -¥15.1B), intangible assets -¥10.7B, and securities operations/loan changes. Free Cash Flow -¥183.2B (prior year +¥500.4B) turned negative due to investing outflows, but in banking the large variability in securities and loans means this does not necessarily indicate a decline in operating cash generation. Financing Cash Flow -¥56.9B (prior year -¥30.5B) reflects dividend payments -¥43.3B (prior year -¥24.0B), share buybacks -¥10.0B, and net repayments of borrowings/bonds. Depreciation ¥20.1B (prior year ¥21.9B) remained stable; CAPEX is within depreciation. Cash and cash equivalents at period-end decreased to ¥4,809.6B (opening ¥5,049.8B, -¥240.2B).
Most of Ordinary Income ¥243.6B is composed of recurring revenues: interest income ¥791.8B and fee income ¥141.5B, indicating high quality of earnings. Other ordinary revenue ¥62.5B and foreign exchange results are subject to market and FX fluctuations. Extraordinary items were minor (extraordinary income ¥0.1B, extraordinary losses ¥2.7B), so one-off factors are limited. Comprehensive income ¥185.6B significantly exceeded net income ¥54.6B, with Other Comprehensive Income ¥131.0B (parent company portion ¥129.5B) contributing. Breakdown includes securities valuation differences ¥7.3B and retirement benefit adjustment ¥15.5B, both accounting valuation gains. OCF is 3.2x net income, indicating solid cash backing and reducing concern over accrual-driven profit uplift. Retained earnings ¥2,327.8B (prior year ¥2,209.5B, +5.3%) steadily accumulated, supporting dividend capacity.
Full year guidance was Ordinary Income ¥266.0B, Net Income ¥178.5B, EPS ¥92.93, Dividend ¥15. Actuals: Ordinary Income ¥243.6B (progress 91.7%), Net Income ¥161.6B (progress 90.6%), missing guidance. Primary cause of shortfall is estimated excess interest expense due to rising deposit rates (approx. +¥9.6B? the report states +¥96億円 scale vs plan), partially offset by reductions in other ordinary expenses; conservative provisioning for credit costs and market factors likely also affected results. Revenue (operating revenue) ¥62.7B corresponds to Ordinary Revenue ¥1,047.8B and grew +10.2% YoY, a solid pace. Actual EPS ¥83.85 (achievement 90.2% vs guidance ¥92.93) was affected by share count adjustments, tax rate and profit allocation. The guidance dividend ¥15 (prior year actual ¥26, current year actual ¥26) suggests a dividend cut on guidance, but actual dividends were maintained at ¥26 (interim ¥13, year-end ¥13). The guidance dividend ¥15 is conservative; depending on second-half performance, maintaining the higher dividend may be feasible.
Dividends were ¥26 (Full Year: interim ¥13, year-end ¥13), unchanged from prior year full year ¥26 (interim ¥13, year-end ¥13). Payout Ratio 31.0% (dividend total ¥50.1B against Net Income ¥161.6B) is moderate and sustainable. Share buybacks of ¥10.0B were executed, bringing total returns to ¥60.1B and a Total Return Ratio of 37.2%. Treasury stock increased to -¥10.5B at period-end (prior year -¥4.1B). The weighted average shares for the period used in calculations was 192,748 thousand shares, after excluding treasury stock 1,455 thousand shares from issued shares of 193,533 thousand shares. BPS ¥1,530.36 (prior year ¥1,457.97, +5.0%) rose due to retained earnings accumulation and reduction in shares outstanding from buybacks. The dividend plus buyback payout equals 37.2% of current period profit ¥161.6B, and can be funded from OCF ¥174.8B. The guidance dividend ¥15 is conservative, but the actual maintained dividend ¥26 preserves consistency. Going forward, the company is presumed to target around a 30% payout ratio while flexibly using buybacks to adjust Total Return Ratio.
Funding cost increase risk from rising interest rates: Deposit interest expense surged to ¥126.4B (prior year ¥40.8B) 3.1x, with rising deposit beta compressing margins. If loan yield repricing lags, net interest income could deteriorate further. While the loan-to-deposit ratio is 84.2% and within range, delayed interest rate pass-through would hurt profitability.
Credit cost increase risk: Loan loss provisions increased to -¥278.5B (prior year -¥219.4B, provision increase +¥59.1B), indicating a conservative stance. If economic slowdown or sector-specific credit deterioration materializes, credit costs could pressure net income. Monitoring asset quality of loan balances ¥3.85兆円 is important.
Insufficient capital buffer risk: Equity Ratio 5.7% is low, limiting loss absorption capacity under stress. Although retained earnings are accumulating, with ROE 5.4% the pace of organic capital growth is slow. Deterioration in regulatory capital ratios could constrain dividends and growth investments.
Profitability & Returns
| Metric | Company | Median (IQR) | Delta |
|---|---|---|---|
| Operating Profit Margin | 87.5% | 14.6% (7.2%–39.4%) | +72.8pt |
| Net Profit Margin | 87.0% | 11.9% (7.2%–35.4%) | +75.1pt |
Operating and net profit margins exceed industry averages by a wide margin due to the reporting definition of operating revenue; on an Ordinary Revenue basis, the company is estimated to be around industry median.
Growth & Capital Efficiency
| Metric | Company | Median (IQR) | Delta |
|---|---|---|---|
| Revenue Growth Rate (YoY) | 10.1% | 10.1% (7.3%–12.1%) | +0.0pt |
Revenue growth 10.1% matches the industry median, indicating a standard pace of top-line expansion.
※ Source: Company aggregation
Responsiveness to interest rate environment: The company absorbed the sharp increase in interest expense (approx. +¥96B vs plan) through fees and expense cuts, but defending margins requires timely loan repricing and precise deposit pricing strategy. Future interest rate pass-through trends and deposit beta movements will materially affect profitability.
Balance between capital efficiency and shareholder returns: With ROE 5.4% and a thin Equity Ratio 5.7%, the company continues shareholder returns (Payout Ratio 31.0%, Total Return Ratio 37.2%). Balancing retained earnings accumulation and returns under a limited capital buffer will be the litmus test for sustainability. BPS +5.0% steady growth is positive, but further improvement in capital efficiency is desirable.
Stability of the revenue structure and expense discipline: Nearly 80% of Ordinary Revenue is comprised of interest and fees, indicating high recurrence. SG&A ¥341.7B (prior year ¥339.1B, +0.8%) shows maintained cost discipline, and large reductions in other ordinary expenses supported profits. Expanding non-interest income (fees) and continued cost control are conditions for stable growth.
This report is an AI-generated financial analysis document created by analyzing XBRL earnings disclosure data. It is not a recommendation to invest in any particular security. Industry benchmarks are reference information compiled by the company based on public financial statements. Investment decisions are your responsibility; consult a professional advisor as needed.