| Metric | Current Period | Prior Year | YoY |
|---|---|---|---|
| Revenue | ¥30.1B | ¥29.1B | +5.4% |
| Operating Income | ¥14.8B | ¥13.8B | +7.4% |
| Ordinary Income | ¥54.6B | ¥42.1B | +29.7% |
| Net Income | ¥15.5B | ¥13.6B | +14.0% |
| ROE | 1.8% | 1.8% | - |
For the fiscal year ended March 2026, Revenue was ¥30.1B (YoY +¥1.0B +5.4%), Operating Income was ¥14.8B (YoY +¥1.0B +7.4%), Ordinary Income was ¥54.6B (YoY +¥12.5B +29.7%), and Net Income attributable to owners of the parent was ¥15.5B (YoY +¥1.9B +14.0%). On a banking-account basis, Ordinary Income (a core banking profitability metric) was ¥560.6B (from ¥531.4B prior year, +5.5%), supported by an expansion in net interest income and stable fee income. Loans increased to ¥19,671.8B (+2.8%), and the loan-to-deposit ratio improved to 74.2% (from 71.6%, +2.6pt), remaining within a healthy range. Securities were significantly reduced to ¥4,011.9B (-29.1%) as part of an asset allocation shift to reduce valuation-loss risk in a rising-rate environment. Equity Ratio was 2.9% (from 2.6%, +0.3pt), and ROE was 1.8% (1.8% prior year, flat); capital efficiency remains low, with focus next period on building retained earnings and improving cost discipline. Operating margin remained high at 49.2% (from 47.4%, +1.8pt), but SG&A reached ¥240.9B and the expense-to-gross-profit ratio is approximately 88.5%, indicating significant room for improving cost efficiency.
[Revenue] Revenue (operating revenue) was ¥30.1B (YoY +5.4%), representing top-line growth. As the company is a single-segment banking business, by service line on a recurring-revenue basis: lending operations ¥257.1B, securities investment operations ¥126.4B, and others ¥177.0B, with lending operations growing strongly at +13.7% and driving top-line growth. Loan balance increased to ¥19,671.8B (+2.8%), reflecting expanded credit to the regional economy. Securities investment operations contracted -20.1% as marketable assets were trimmed in anticipation of rising rates. Other operations (foreign exchange, fees, etc.) rose +20.3%, with robust fee income underpinning revenue growth. The loan-to-deposit ratio was 74.2% (from 71.6%, +2.6pt), within a healthy range (70–90%), indicating a favorable balance between liquidity and profitability.
[Profitability] Operating Income increased to ¥14.8B (YoY +7.4%). On a banking-account basis, net interest income (interest income ¥359.9B, interest expense ¥63.0B) expanded, contributing to improved loan-deposit spreads. Net fee income was ¥50.6B (fee income ¥81.1B, fee expense ¥30.5B), stable year-on-year. SG&A increased to ¥240.9B (+2.7%), keeping the expense-to-gross-profit ratio around 88.5%. Ordinary Income rose substantially to ¥54.6B (+29.7%), aided by increased non-operating income (other recurring income ¥62.3B). Profit before tax was ¥49.5B, and after deducting corporate taxes of ¥8.0B, Net Income attributable to owners of the parent was ¥15.5B (+14.0%). Extraordinary items comprised extraordinary gains of ¥0.7B and extraordinary losses of ¥5.8B (including impairment losses of ¥3.4B), producing a net -¥5.1B burden that was absorbed by strong recurring performance. Comprehensive income was ¥98.2B, of which ¥97.9B was attributable to owners of the parent. Other comprehensive income included deferred hedge gains +¥52.1B, actuarial gains on retirement benefits +¥11.4B, and valuation differences on securities -¥6.8B, with expanded hedge effects boosting comprehensive income. In conclusion, the company achieved revenue and profit growth and maintained a stable earnings base as a regional bank.
[Profitability] Operating margin was 49.2% (from 47.4%, +1.8pt), remaining high; however, in banking, operating revenue (Revenue) primarily reflects net interest margin and fees, so evaluation using expense-to-gross-profit ratio (CIR) is important. The expense ratio is about 88.5%, remaining high and indicating significant scope for cost-efficiency improvement. ROE was 1.8% (1.8% prior year, flat) and low, requiring uplift in capital efficiency. ROA (on an ordinary income basis) was 0.2%, unchanged year-on-year, indicating limited asset profitability against total assets of ¥29,157.7B.
[Cash Quality] Operating Cash Flow (OCF) was -¥411.5B versus Net Income of ¥15.5B, yielding OCF/Net Income of -26.5x (negative). However, in banking, large intra-period swings in loans, deposits, and securities materially affect OCF; a single-year OCF deficit is attributable to asset-allocation rebalancing and not necessarily a deterioration in quality. Operating CF subtotal (before working-capital changes) was -¥407.6B and includes corporate tax payments of ¥3.9B. Investing CF was significantly positive at ¥1,660.9B, mainly from proceeds of securities sales and redemptions. Free Cash Flow was ¥1,249.5B and ample, sufficiently covering dividend payments of ¥13.5B. Capex was ¥9.1B, representing 0.55x of depreciation (¥16.5B), indicating restrained reinvestment in hard assets.
[Investment Efficiency] Tangible fixed asset turnover was 16.0x (Operating Revenue ¥30.1B ÷ Tangible fixed assets ¥188.2B), high, though in banking the limited presence of land/buildings reduces the interpretive value of such asset-efficiency metrics.
[Financial Soundness] Equity Ratio was 2.9% (from 2.6%, +0.3pt), thin but typical of a high-leverage banking model. D/E was 32.94x, extremely high, reflecting deposit-funded financing; maturity composition and liquidity-risk management are crucial. Loan-to-deposit ratio of 74.2% remains within a healthy range, and cash and deposits of ¥4,366.9B (15.0% of total assets) provide liquidity buffer. BIS capital ratio (domestic standard) was 2.9%, maintaining levels above regulatory thresholds.
Operating CF was -¥411.5B (narrowed from -¥1,521.3B prior year), and OCF/Net Income was -26.5x (negative). Given banking dynamics—loan increases/decreases, deposit fluctuations, and securities trading—single-year OCF deficits do not necessarily indicate quality deterioration. Operating CF subtotal (before working-capital changes) was -¥407.6B, including corporate tax payments of ¥3.9B. Investing CF was +¥1,660.9B, driven primarily by proceeds from securities sales and redemptions. Capex was ¥9.1B (0.55x of depreciation ¥16.5B), indicating restrained reinvestment in hard assets. Financing CF was -¥18.5B, including share buybacks ¥0.1B and lease liability repayments ¥4.9B. Free Cash Flow (Operating CF + Investing CF) was +¥1,249.5B, ample to cover annual dividends of ¥13.5B and capex. Cash and cash equivalents increased to ¥4,313.1B (from ¥3,082.2B, +40.0%), confirming sufficient liquidity buffer. The asset-allocation shift (securities compression and cash increase) balanced risk reduction in a rising-rate environment and liquidity preservation.
Against Ordinary Income of ¥54.6B, Operating Income was ¥14.8B, indicating a large contribution from non-operating income. In banking, ordinary-stage earnings represent core business income, so the composition of non-operating income (other recurring income ¥62.3B) is important, though detailed disclosure is lacking. Expansion of net interest income and stable fee income are primary drivers of ordinary income, maintaining a structurally sound earnings base. Extraordinary items were extraordinary gains ¥0.7B and extraordinary losses ¥5.8B, net -¥5.1B, including impairment losses of ¥3.4B; however, strong ordinary performance absorbed these and limited impact on net income. Comprehensive income of ¥98.2B far exceeded Net Income of ¥15.5B, with other comprehensive income +¥82.7B (deferred hedge gains +¥52.1B, actuarial gains on retirement benefits +¥11.4B, valuation differences on securities -¥6.8B) contributing positively. The expansion of hedge effects boosted comprehensive income, but these valuation gains differ from cash earnings. Accrual (Net Income - Operating CF) was +¥426.5B, reflecting large asset-allocation swings; single-year accrual evaluation is difficult, and ongoing monitoring of Net Income realization via Operating CF trends is necessary. Distinguishing structural growth in Ordinary Income from one-off factors, and understanding drivers of divergence between comprehensive income and net income, are key to assessing earnings quality.
Full-year guidance projects Ordinary Income of ¥48.0B (YoY -12.1%), Net Income attributable to owners of the parent ¥32.0B, projected EPS ¥177.18, and dividend guidance ¥37.5 per share (annual). Having achieved Ordinary Income of ¥54.6B in the first half, progress against the full-year ¥48.0B forecast is 113.8%, indicating significant outperformance to date. The second half is expected to post an Ordinary Income loss of -¥6.6B, reflecting cautious assumptions about interest-rate trends, credit costs, and market investment returns. This likely factors in normalization of securities investment gains (a reversal from strong first-half performance), pressure on SG&A, and potential credit-cost occurrence. The large gap between first-half results and full-year guidance suggests a conservative second-half outlook; caution is warranted. The dividend forecast is ¥37.5 per share (annual), but if the first-half interim dividend was ¥37.5 and the forecasted dividend refers only to the year-end payment, annual dividends could be maintained at ¥75.0 or reduced to ¥37.5; confirmation of dividend policy is required. Forecast EPS of ¥177.18 is well below first-half realized EPS of ¥228.75, implying a material decline in second-half net income.
Annual dividend is ¥75.0 (interim ¥37.5, year-end ¥37.5) with EPS of ¥228.75. Payout Ratio is 32.8% (total dividends ¥13.5B against Net Income attributable to owners of the parent ¥15.5B), remaining within a sustainable range. Total dividend amount is ¥13.5B, well below Free Cash Flow of ¥1,249.5B, indicating ample cash capacity. Share buybacks were minor at ¥0.1B, making total shareholder returns dividend-centric. Treasury stock decreased by -¥1.2B (from -¥1.8B prior year, a 30.9% reduction), suggesting small-scale disposals or restrained repurchases easing the drag on equity. Retained earnings increased to ¥619.5B (from ¥591.5B, +4.7%), signaling accumulation of internal reserves. Given the thin Equity Ratio of 2.9%, continued buildup of retained earnings and stable dividends represent a balanced return policy. The full-year dividend forecast is ¥37.5, but if combined with the interim ¥37.5 to maintain annual ¥75.0, the payout ratio would remain about 33%. If the forecast ¥37.5 refers only to the year-end payment, annual dividends would fall from ¥75.0 to ¥37.5, and dividend policy clarification is necessary.
Interest-rate risk: Net interest income was interest income ¥359.9B and interest expense ¥63.0B, net ¥296.9B (from ¥285.8B prior year, +3.9%), widening. However, in a rising-rate environment, deposit funding costs may rise and compress loan-deposit spreads. Securities were reduced to ¥4,011.9B (-29.1%) to reduce valuation-loss risk on rate increases, but deferred hedge gains of +¥52.1B materially contribute to comprehensive income; monitoring the sustainability of hedge effects and interest-rate movements is necessary due to potential impact on earnings.
Cost-efficiency risk: SG&A ¥240.9B (+2.7%) outpaced gross-profit growth (~+1.6%), keeping the expense ratio at approximately 88.5%. Continued pressure from personnel costs and system investments could cause revenue growth to lag expense increases, stalling improvements in operating margin and ROE. With a conservative outlook of Ordinary Income -12.1% next period, enhancing cost discipline is key to defending profitability.
Credit risk: Loans increased to ¥19,671.8B (+2.8%), and regional economic slowdown or deterioration in specific industries could raise credit costs. Allowance for loan losses decreased to ¥117.0B (from ¥128.8B, -9.1%), indicating improved credit conditions, but impairment losses of ¥3.4B were recorded as part of extraordinary losses, and there is latent risk of deteriorating profitability in real estate and fixed assets. Contingent liabilities (guarantee obligations) are approximately ¥168.1B, making off-balance sheet credit-exposure management important.
Profitability & Return
| Metric | Company | Median (IQR) | Delta |
|---|---|---|---|
| Operating Margin | 49.2% | 14.6% (7.2%–39.4%) | +34.6pt |
| Net Profit Margin | 51.5% | 11.9% (7.2%–35.4%) | +39.6pt |
The company’s profitability metrics substantially exceed industry medians; however, in banking, Revenue reflects margin and fee components, so assessment via expense-to-gross-profit ratio (CIR ~88.5%) is important, and cost efficiency may be relatively weak within the industry.
Growth & Capital Efficiency
| Metric | Company | Median (IQR) | Delta |
|---|---|---|---|
| Revenue Growth Rate (YoY) | 5.4% | 10.1% (7.3%–12.1%) | -4.7pt |
Revenue growth lags the industry median, indicating low growth as a regional bank. Strong lending performance (+13.7%) drove overall growth, but contraction in securities investment operations (-20.1%) offset growth.
※Source: Company compilation
Loan-to-deposit ratio 74.2% and asset-allocation soundness: The loan-to-deposit ratio remains within an appropriate range, and the large reduction in securities (-29.1%) reduced valuation-loss risk in a rising-rate environment. Cash and deposits of ¥4,366.9B (15.0% of total assets) ensure a sufficient liquidity buffer. The reallocation of assets demonstrates the ability to expand lending (+2.8%) while suppressing market risk, supporting a sustainable earnings base for a regional bank.
Scope for improving cost efficiency and lifting ROE: With an expense ratio of about 88.5% and ROE at 1.8%, there is room to improve. While lending and net interest income expansion continue, persistent SG&A growth (+2.7%) outpacing gross-profit growth could entrench a structure where revenue growth is outpaced by costs, stalling capital-efficiency improvement. Cost-discipline measures such as digitalization and branch optimization will be key to lifting ROE and establishing a sustainable profit-growth trend in subsequent periods.
Divergence between comprehensive income and net income: Comprehensive income of ¥98.2B far exceeds Net Income of ¥15.5B, mainly due to deferred hedge gains of +¥52.1B. While expanded hedge effects indicate mitigation of interest-rate risk, valuation gains may reverse with market changes; therefore, it is important to distinguish structural Ordinary Income growth from drivers of fluctuations in comprehensive income.
This report is an AI-generated earnings analysis based on XBRL financial-report data and is not a recommendation to invest in any specific security. Industry benchmarks are company-compiled reference information based on published financial statements. Investment decisions are your responsibility; consult specialists as necessary before making investment decisions.