Senshu Ikeda Holdings (8714) FY2026 FY Earnings Report

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Executive Summary

Revenue and earnings increased, primarily due to the expansion of interest income on funds amid rising interest rates. Ordinary revenue was ¥1174.2B (+26.1% YoY), Ordinary Income was ¥252.3B (+29.0%), and net income attributable to owners of the parent was ¥173.4B (+30.8%). While interest income on funds increased significantly by +40.4% YoY, funding costs also rose substantially against the backdrop of higher deposit interest rates. However, expenses increased by +9.4%, below the pace of revenue growth, enabling the Company to maintain an earnings growth trend. Progress against the full-year company forecast was 88.5% for Ordinary Income and 90.8% for Net Income, indicating an outcome broadly in line with the plan.

Factors Affecting Results

【Revenue】Ordinary revenue was ¥1174.2B, up +26.1% YoY. The core Banking Business led overall performance at ¥958.6B (+27.8% YoY, 81.6% composition ratio), while the Leasing Business recorded ¥132.2B (+9.5%) and Other Businesses recorded ¥83.4B (+39.0%), with all segments achieving revenue growth. Loans outstanding increased to ¥4 trillion 8,444.5B (+3.5%), while deposits increased to ¥5 trillion 8,451.1B (+2.5%), and the loan-to-deposit ratio remained at a sound level of 82.9%.

【Profit and Loss】Ordinary Income was ¥252.3B (+29.0% YoY). Segment profit for the Banking Business was ¥234.8B (+26.0%, profit margin 24.5%), the Leasing Business was ¥6.4B (+29.9%, profit margin 4.8%), and Other Businesses was ¥11.3B (+156.0%, profit margin 13.5%), with all segments contributing to earnings growth. Net Income was ¥173.4B (+30.8%), consistent with the level after deducting ¥78.5B in income taxes and other taxes from Profit Before Tax of ¥251.9B. Extraordinary losses amounted solely to ¥0.4B, including an impairment loss of ¥0.2B. The difference between Ordinary Income and Net Income was mainly attributable to the tax burden, with limited impact from temporary factors. Revenue and earnings increased.

Segment Analysis

The Banking Business is the core of consolidated performance, recording Ordinary revenue of ¥958.6B (81.6% composition ratio, +27.8% YoY) and segment profit of ¥234.8B (+26.0%, profit margin 24.5%). The Leasing Business recorded Ordinary revenue of ¥132.2B (+9.5%) and segment profit of ¥6.4B (+29.9%, profit margin 4.8%), with a substantial profit margin gap of approximately 19.7pt versus the Banking Business. Other Businesses, including securities and credit cards, posted Ordinary revenue of ¥83.4B (+39.0%) and segment profit of ¥11.3B (+156.0%, profit margin 13.5%), demonstrating strong growth and contributing to diversification of revenue sources. However, the Company remains highly dependent on the Banking Business in terms of scale.

Key Financial Indicators

【Profitability】Net profit margin was 14.8%, improving from 14.2% in the previous year, while the Ordinary Income margin also increased by approximately 0.5pt YoY to 21.5%. ROE was 6.8%, improving by 1.3pt from 5.5% in the previous year, but remaining below the 8% benchmark commonly used for general operating companies.【Cash Flow Quality】Operating Cash Flow (OCF) was ¥275.1B, approximately 1.6 times Net Income of ¥173.4B, indicating sound cash support for earnings.【Investment Efficiency】BPS was ¥900.00 (¥852.98 in the previous year), and EPS was ¥62.29 (+31.7% YoY), demonstrating improvement in per-share indicators.【Financial Soundness】The Equity Ratio was reported at 3.7%. Net assets of ¥2,539.2B relative to total assets of ¥6 trillion 5,959.8B indicate a high liability composition ratio; however, this reflects the structure unique to banking businesses, which use deposits as their primary funding source. The loan-to-deposit ratio was 82.9%, indicating a stable balance between loans and deposits.

Cash Flow Analysis

Operating Cash Flow (OCF) was ¥275.1B. Although this represented a significant decrease from ¥1657.4B in the previous year, it remained above Net Income of ¥173.4B, and no major issues were identified regarding the conversion of earnings into cash. Investing Cash Flow (ICF) was a net outflow of ¥1701.6B, consistent with the ¥1534.6B YoY increase in securities balances. Financing Cash Flow was an outflow of ¥47.9B, mainly due to dividend payments and other factors. Free Cash Flow (FCF) was negative ¥1426.6B, while cash and cash equivalents decreased by ¥1474.4B during the period to ¥7003.0B. In the banking business, changes in securities investments and the funds management portfolio influence Investing Cash Flow; therefore, an FCF deficit does not immediately indicate deterioration in the core business’s cash-generation capacity.

Earnings Quality

The increase in Ordinary Income was attributable to a recurring factor, namely the expansion of interest income on funds. Extraordinary items were limited to an extraordinary loss of ¥0.4B, including an impairment loss of ¥0.2B, resulting in limited impact on current-period earnings. While interest income on funds, which has a non-operating nature, increased by +40.4% YoY, funding costs also rose significantly due to higher deposit interest rates. The +23.5% growth in net interest income, the difference between the two, was the fundamental driver of earnings improvement. Comprehensive income was ¥184.9B, and the difference from Net Income of ¥173.5B was mainly attributable to a negative ¥62.3B in valuation differences on securities and a positive ¥44.2B adjustment related to retirement benefits. Attention should be paid to the somewhat significant impact of market fluctuations. As OCF exceeded Net Income, earnings quality from an accrual perspective can generally be assessed as sound.

Earnings Forecast and Guidance

Against the full-year company forecast, actual Ordinary Income was ¥252.3B versus a forecast of ¥285.0B, representing progress of 88.5%, while Revenue (Ordinary revenue) was ¥1174.2B versus a forecast of ¥1330.0B, representing progress of 88.3%. Actual EPS was ¥62.29 versus a forecast of ¥68.59, representing progress of 90.8%, indicating progress broadly in line with the plan in terms of earnings. The growth rate from the previous year’s actual Ordinary Income to the company forecast was stated at +12.9%, while the current period’s actual growth rate of +29.0% has been progressing at a pace above this level.

Shareholder Returns

The annual dividend was ¥25.00 per share (interim dividend of ¥10.50 and year-end dividend of ¥14.50), representing a substantial increase from ¥7.5 in the previous year. The Payout Ratio was 40.1%, within a sustainable range relative to earnings. Against the company’s annual dividend forecast of ¥27.50, the actual dividend was limited to ¥25.00, and future dividend trends will be closely watched. Share repurchases were virtually not conducted (¥0.0B), leaving the Total Return Ratio at approximately the same level as the Payout Ratio. OCF of ¥275.1B exceeded total dividends of ¥69.6B, indicating sound dividend coverage from operating cash flow.

Risk Factors

1. Interest Margin Compression: Funding costs increased by +226.4% YoY, substantially faster than the +40.4% growth in interest income on funds. If deposit interest rates continue to rise, this may lead to a slowdown in the growth of net interest income going forward.

2. Concentration of Earnings in the Banking Business: The Banking Business accounts for 81.6% of consolidated Ordinary revenue and the majority of segment profit. As a result, changes in the regional economy, loan demand, and the interest rate environment directly affect consolidated performance.

3. Securities and Interest Rate Volatility Risk: Securities balances increased to ¥8698.6B (+¥1,534.6B YoY), while valuation differences on securities were negative ¥62.3B (cumulative negative ¥79.4B). Rising interest rates and fluctuations in market prices could have an increasingly significant impact on equity and comprehensive income.

Industry Benchmark (For Reference; Compiled by the Company)

Profitability and Return

Growth and Capital Efficiency

※Source: Compiled by the Company

Key Takeaways from the Financial Results

1. The Company achieved strong revenue and earnings growth, with Ordinary revenue up +26.1%, Ordinary Income up +29.0%, and Net Income up +30.8%. The growth in net interest income (+23.5%) exceeded the expense growth rate (+9.4%), resulting in improvement in cost efficiency as well.

2. ROE improved to 6.8%, but remains below the 8% benchmark commonly used for general operating companies. Continued improvement in capital efficiency therefore remains a management issue.

3. The dividend was substantially increased from ¥7.5 in the previous year to ¥25.00, and the Payout Ratio of 40.1% is within a sustainable range. However, the dividend fell short of the company forecast of ¥27.50, and dividend trends after the fiscal year-end will be closely monitored.

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This report is an earnings analysis document automatically generated by AI based on XBRL financial results summary data. It does not constitute a recommendation to invest in any specific security. The industry benchmarks are reference information compiled by the Company based on publicly disclosed financial results data. Investment decisions should be made at your own responsibility and, where necessary, after consulting with a professional advisor.

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