| Metric | Current Period | Same Period Previous Year | YoY |
|---|---|---|---|
| Revenue | - | - | - |
| Operating Income | ¥775.1B | ¥361.8B | +114.3% |
| Ordinary Income | ¥880.9B | ¥437.2B | +101.5% |
| Net Income | ¥613.2B | ¥340.4B | +80.1% |
| ROE | 3.0% | 1.7% | - |
Favorable market conditions and cost efficiencies resulted in earnings growth accompanied by a pronounced positive operating leverage effect. Net operating revenues increased to ¥2,084.2B (+42.1% YoY), operating income to ¥775.1B (+114.3%), ordinary income to ¥880.9B (+101.5%), and net income attributable to owners of the parent to ¥564.1B (+80.6%), with all major indicators showing substantial growth. All three segments—Wealth Management, Asset Management, and Global Markets & Investment Banking—reported higher revenue and income, with the recovery in profits in the Global Markets & Investment Banking segment serving as the primary driver of overall performance.
【Revenue】Net operating revenues were ¥2,084.2B, up +42.1% YoY. By segment, Wealth Management generated ¥824.3B (39.6% composition ratio, +38.4%), Asset Management generated ¥474.5B (22.8%, +41.3%), and Global Markets & IB generated ¥757.6B (36.4%, +54.2%), with all three segments reporting revenue growth, while the Other category declined to ¥27.8B (1.3%, △37.7%). Revenue growth was broad-based across the three segments, indicating a low degree of dependence on any single segment.
【Profitability】Selling, general and administrative expenses increased by only +20.0% YoY to ¥1,428.9B, substantially below the +42.1% growth in net operating revenues. As a result, the operating margin expanded to 37.2%, approximately 12.5pt above the previous year’s 24.7%. Non-operating income of ¥127.8B, including ¥64.3B in equity-method gains and ¥12.4B in dividends received, supported ordinary income. Meanwhile, extraordinary gains and losses were minimal at a net gain of +¥2.3B, indicating that the improvement in earnings was driven largely by an improvement in the recurring earnings structure rather than temporary factors. After deducting income taxes of ¥270.0B, net income attributable to owners of the parent was ¥564.1B (¥312.4B in the previous year, +80.6%). Both revenue and income increased.
All three segments reported higher income, improving the balance of the revenue mix. The Wealth Management segment recorded ordinary income of ¥372.7B (¥197.3B in the previous year, +88.9%) and a segment margin of 45.2%. The Asset Management segment recorded ordinary income of ¥303.6B (¥147.7B, +105.6%) and a segment margin of 64.0%, making it the most profitable segment. The Global Markets & IB segment recorded ordinary income of ¥227.1B (¥50.0B, +354.1%) and a segment margin of 30.0%, standing out for its growth rate; the recovery of the wholesale businesses was particularly pronounced. The Other category swung to an ordinary loss of ¥16.8B from a profit of ¥12.7B in the previous year. During the current period, impairment losses on fixed assets of ¥3.5B were recorded in the Asset Management segment and ¥4.0B in the Other category (no corresponding items were recorded in the previous year).
【Profitability】The operating margin was 37.2%, improving by approximately 12.5pt from 24.7% in the previous year. The net profit margin based on net income attributable to owners of the parent, measured against net operating revenues, also improved to 27.1% from 21.3%, an improvement of approximately 5.8pt.【Cash Flow Quality】Non-operating income was ¥127.8B against ordinary income of ¥880.9B, representing a relatively substantial composition ratio of approximately 14.5%. Equity-method gains of ¥64.3B were the largest component, while extraordinary gains and losses were minimal at a net gain of +¥2.3B, indicating that the bulk of earnings was supported by recurring revenue.【Investment Efficiency】ROE was 3.0% (quarterly), EPS was ¥40.68 (¥22.20 in the previous year, +83.2%), and BPS was ¥1,294.66 (¥1,272.72 in the previous year, +1.7%).【Financial Soundness】The equity ratio was 5.2%, improving from 4.6% in the previous year. Cash and deposits increased by +28.7% to ¥48,767.2B from ¥37,901.5B in the previous year, while current assets accounted for 95.2% of total assets, reflecting a balance sheet structure tilted toward short-term assets.
Cash and deposits increased by +28.7% to ¥48,767.2B from ¥37,901.5B in the previous year, increasing settlement funds and available investment capacity associated with the securities business. At the same time, short-term borrowings increased by +28.4% to ¥26,115.9B from ¥20,339.3B in the previous year, indicating that the buildup in cash and deposits was closely linked to an expansion in short-term funding. Current assets totaled ¥379,601.4B against total assets of ¥398,672.6B, accounting for 95.2% and reflecting the short-term, high-turnover balance sheet structure characteristic of securities companies. Investment in fixed assets was limited, with tangible fixed assets of ¥10,036.0B and intangible fixed assets of ¥1,569.7B; the burden of large-scale investments appears to have been minor from a funding perspective.
The bulk of current-period profit was supported by recurring revenue. Extraordinary gains of ¥15.0B, primarily comprising gains on sales of investment securities of ¥13.6B, were offset by extraordinary losses of ¥12.8B, resulting in a minimal net gain of +¥2.3B. Meanwhile, non-operating income of ¥127.8B accounted for approximately 14.5% of ordinary income of ¥880.9B and primarily comprised items likely to be linked to market conditions and investment performance, including equity-method gains of ¥64.3B, dividends received of ¥12.4B, and gains on operation of investment business partnerships of ¥8.1B. The difference between ordinary income of ¥880.9B and net income attributable to owners of the parent of ¥564.1B consisted of income taxes of ¥270.0B and net income attributable to non-controlling interests of ¥49.0B; the composition of this difference does not indicate any particular abnormality. Comprehensive income was ¥850.4B, exceeding net income attributable to owners of the parent of ¥564.1B. The difference was primarily attributable to increases of ¥104.0B in foreign currency translation adjustments and ¥109.4B in deferred hedge gains and losses, with valuation-related changes not included in net income pushing up comprehensive income.
The dividend policy is generally based on two annual payments, an interim dividend and a year-end dividend, with a consolidated payout ratio of 50% or more as a guideline. The company has also set a minimum annual dividend of ¥44 from the fiscal year ending March 2025 through the fiscal year ending March 2027. Simply annualizing the current-quarter EPS of ¥40.68 results in ¥162.72, and the coverage ratio relative to the minimum dividend of ¥44 (equivalent to the payout ratio) is approximately 27.0%, a conservative level below the policy guideline of 50%. The company has not disclosed a full-year earnings forecast, and the actual annual dividend will be determined in accordance with the dividend policy based on future consolidated results; therefore, it is currently undetermined.
Market Conditions and Volatility Dependence Risk: Non-operating income of ¥127.8B accounts for approximately 14.5% of ordinary income of ¥880.9B and primarily comprises highly market-sensitive items, such as equity-method gains of ¥64.3B and gains on operation of investment business partnerships of ¥8.1B, which may contribute to earnings volatility when market conditions fluctuate.
Liquidity Risk Associated with Short-Term Funding Structure: Short-term borrowings were ¥26,115.9B (+28.4% YoY), accounting for 6.6% of total assets, while the balance sheet had a short-term, high-turnover structure in which current assets accounted for 95.2% of total assets. Cash and deposits of ¥48,767.2B were approximately 1.87 times short-term borrowings, indicating that a certain liquidity buffer had been secured.
Recognition of Impairment Losses on Fixed Assets: During the current period, impairment losses on fixed assets of ¥3.5B were recorded in the Asset Management segment and ¥4.0B in the Other category (no corresponding items were recorded in the same period of the previous year). Although the amounts themselves were minor relative to ordinary income, they warrant attention as an indication of a reassessment of profitability.
No industry benchmark data available
※Source: Compiled by the Company
All three segments—Wealth Management, Asset Management, and Global Markets & IB—reported higher income. In particular, ordinary income in the Global Markets & IB segment recovered sharply, increasing +354.1% YoY, improving the balance of the revenue mix.
Positive operating leverage took effect as the growth in selling, general and administrative expenses (+20.0%) fell below the growth in net operating revenues (+42.1%), resulting in an approximately 12.5pt YoY expansion in the operating margin. Cost discipline is a structural factor contributing to the improvement in profitability.
Non-operating income accounted for approximately 14.5% of ordinary income and included highly market-linked items such as equity-method gains and investment-related gains and losses. This aspect warrants attention as a potential driver of future earnings volatility.
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 based on publicly available earnings data. Investment decisions should be made at your own responsibility, after consulting a professional adviser as necessary.
---End of Report---