Key Positives From The Results
Recurring profit reached JPY 155.0B (+26.2% YoY) and net income JPY 106.5B (+28.6% YoY), achieving double-digit profit growth. In addition to growth in loan/deposit interest income and fee income driven by deepening solution-based business, the consolidation of L&F Asset Finance (JPY 4.9B in profit contribution) bolstered the earnings base. ROE improved to 7.9% (+1.5pt), with a 9.0% target for next fiscal year, further underscoring the improvement in capital efficiency.
- Three-bank aggregate core banking profit (excl. investment trust redemption gains/losses) reached JPY 169.6B (+JPY 35.8B YoY), driven by loan/deposit interest income (+JPY 20.9B) and fee income (+JPY 2.4B)
- Domestic loan yield rose to 1.35% (+0.28pt), with total fund spread at 0.43% (+0.12pt), indicating accelerating margin improvement
- Outstanding loan balance reached JPY 17,376.3B (three-bank aggregate, domestic branches, +4.2%), with balanced growth in corporate (+7.6%) and retail (+2.1%)
- Credit-related costs of JPY 7.4B (−JPY 2.0B YoY), with NPL ratio maintained at a low 1.2%
- Shareholder returns expanded with JPY 40.0B in share buybacks and annual DPS of JPY 38 (payout ratio: 40.4%)
Key Concerns From The Results
Operating expenses rose to JPY 149.8B (+11.7% YoY); while the pace of increase lagged gross profit growth, both G&A and personnel costs expanded. Deposit interest expenses surged to JPY 57.7B (+88.4% YoY) as rising funding costs partially offset fund profit growth, posing a risk to the sustainability of margin improvement depending on the rate environment.
- OHR improved to 48.7% (consolidated, −2.8pt), but absolute expenses increased JPY 15.7B YoY
- Deposit interest expenses of JPY 57.7B (+JPY 27.1B YoY); continued funding cost increases could pressure margins
- Securities-related gains/losses saw expanded losses with JGB bond gains/losses at −JPY 30.4B (five-account basis), reflecting ongoing portfolio rebalancing costs
- Operating CF at −JPY 121.7B, a net cash outflow; cash flow fluctuations from loan growth warrant attention
- Higashi-Nippon Bank's core banking profit of JPY 8.9B (−JPY 0.7B YoY) was sluggish, with earnings concentration within the group intensifying
Focus Areas / Items To Monitor Going Forward
- Feasibility of L&F Asset Finance's planned profit contribution of JPY 5.3B (+JPY 0.4B) for next fiscal year. Key focus areas are credit cost trends specific to real estate-secured lending and the pace of customer synergy realization with Bank of Yokohama
- Whether consolidated net income of JPY 129.0B (+21.1%) and ROE of 9.0% can be achieved next fiscal year. The three-bank aggregate adjusted banking profit plan of JPY 177.0B (+JPY 37.9B) assumes both further loan yield improvement and expense ratio containment
- Progress on non-banking expansion, including the 15% equity stake in Sumitomo Mitsui Trust Panasonic Finance. Timing and scale of earnings contribution from leasing and comprehensive financial services
- Scenarios for maintaining/expanding the loan-deposit spread amid continued deposit interest rate increases
- Credit cost trends and provisioning policy for foreign national and elderly borrower loans at L&F Asset Finance
- Specific measures and timeline for recovering core banking profit at Higashi-Nippon Bank
- Securities portfolio rebalancing policy and outlook for bond-related gains/losses
- Share buyback policy for next fiscal year and target total payout ratio
- Improvement plan for Kanagawa Bank's NPL ratio of 3.0% (highest among the three banks)
- Background behind the 372-person headcount increase (consolidated: 6,313) and medium-term personnel cost management policy
- Capital policy direction given a Basel III fully loaded CET1 ratio of approximately 11.4% (excluding unrealized gains/losses on securities)
Key Financial Highlights
| Item | Value | YoY |
|---|---|---|
| Ordinary Income | JPY 490,724M | +22.9% |
| Recurring Profit | JPY 155,018M | +26.2% |
| Net Income Attributable to Owners of Parent Company | JPY 106,523M | +28.6% |
| EPS | JPY 94.02 | +31.3% |
| Comprehensive Income | JPY 196,514M | +236.2% |
| Consolidated Gross Banking Profit | JPY 307,136M | +17.9% |
| └ Fund Profits | JPY 260,262M | +25.1% |
| └ Fee Income | JPY 65,373M | +9.5% |
| Operating Expenses | JPY 149,879M | +11.7% |
| Consolidated Banking Profit | JPY 156,610M | +24.8% |
| Credit-Related Costs | JPY 8,982M | −17.1% |
| Total Assets | JPY 25,670,496M | +3.5% |
| Net Assets | JPY 1,418,344M | +9.7% |
| Equity Ratio | 5.4% | +0.3pt |
| BPS | JPY 1,263.05 | +12.0% |
| Annual Dividend | JPY 38.00 | +JPY 9.00 |
| Payout Ratio | 40.4% | - |
| ROE (TSE Basis) | 7.9% | +1.5pt |
Performance By Business Segment
| Segment | Revenue | YoY | Operating Income | YoY | Margin |
|---|---|---|---|---|---|
| Banking (Single Segment) | JPY 490,724M | +22.9% | JPY 155,018M (Recurring Profit) | +26.2% | 31.5% |
- Bank of Yokohama, Corporate Lending: Outstanding balance of JPY 7,863.0B (+9.1%), with SME lending up +8.8%. Fee income from syndicated loans etc. reached JPY 18.8B (+JPY 3.0B), reflecting the success of solution-based sales
- Bank of Yokohama, Fee Income: JPY 42.1B (+JPY 2.2B). Corporate deposit/lending business income of JPY 35.6B (+JPY 3.1B) was the key driver, with forex business at JPY 10.1B (+JPY 0.6B) also solid
- Retail Investment Products: Group-wide outstanding balance reached JPY 3,186.2B (+10.5%). Investment trusts (incl. fund wraps) at JPY 830.2B (+10.7%) and insurance at JPY 1,538.9B (+4.0%), demonstrating expansion of asset management-oriented business
- Higashi-Nippon Bank: Core banking profit of JPY 8.9B (−JPY 0.7B YoY), with average loan balance declining −JPY 26.1B. NPL ratio of 2.6%, the highest among the three banks, highlighting profitability challenges
- Other Operating Profit (three-bank aggregate): −JPY 26.1B (−JPY 13.5B YoY). JGB bond gains/losses of −JPY 30.4B (five-account basis) from JGB portfolio rotation and investment trust loss-cutting were a drag
Progress Versus Full-Year Guidance
New guidance for next fiscal year (FY2027/3) has been disclosed. Consolidated recurring profit of JPY 191.5B (+23.5%) and net income of JPY 129.0B (+21.1%) are planned, targeting continued double-digit profit growth. Three-bank aggregate adjusted banking profit of JPY 177.0B (+JPY 37.9B) assumes gross profit expansion through strengthened solution-based business. Credit-related costs are budgeted at a somewhat conservative JPY 10.0B (+JPY 2.6B).
| Item | Value (FY2026/3 Full-Year Actual) | Next-Year Plan (FY2027/3) | YoY |
|---|---|---|---|
| Consolidated Recurring Profit | JPY 155,018M | JPY 191,500M | +23.5% |
| Net Income Attributable to Owners of Parent Company | JPY 106,523M | JPY 129,000M | +21.1% |
| Three-Bank Aggregate Core Banking Profit (Excl. Investment Trust Redemption Gains/Losses) | JPY 169.6B | JPY 185.1B | +9.1% |
| Three-Bank Aggregate Credit-Related Costs | JPY 7.4B | JPY 10.0B | +35.1% |
- As is typical in the banking industry, corporate lending and forex transactions tend to concentrate at fiscal year-end (March)
Changes To Guidance
New guidance for FY2027/3 was announced: consolidated recurring profit of JPY 191.5B (+23.5% YoY) and net income attributable to owners of parent company of JPY 129.0B (+21.1% YoY).
Commentary On Shareholder Returns
Annual DPS for FY2026/3 was JPY 38 (interim JPY 17 + year-end JPY 21), with a payout ratio of 40.4%, representing a JPY 9 increase YoY. Share buybacks totaled JPY 41.7B (treasury shares at period-end: 33,138 thousand shares, +30,009 thousand shares YoY). For FY2027/3, annual DPS of JPY 47 (interim JPY 23 + year-end JPY 24) is forecast, maintaining a payout ratio of approximately 40.4%. The progressive dividend policy will be continued.
Financial Position
Total assets stood at JPY 25.7T and shareholders' equity at JPY 1.4T, expanding the asset base while maintaining a high-quality capital structure with a total capital adequacy ratio of 14.94% and CET1 ratio of 14.42% under Basel III (international standards). Goodwill of JPY 6.6B from the L&F Asset Finance consolidation was recorded in intangible fixed assets, but the impact on financial soundness is limited.
- Key Figures
- Leverage Metrics
| Item | Value | Additional Information |
|---|---|---|
| Total Assets | JPY 25,670,496M | +3.5% YoY |
| Loans | JPY 17,667,404M | +5.5% YoY |
| Securities | JPY 3,077,662M | +5.3% YoY |
| Deposits | JPY 20,877,254M | +2.3% YoY |
| Cash and Due from Banks | JPY 4,152,428M | −6.6% YoY |
| Borrowed Money | JPY 1,976,520M | −5.4% YoY |
| Corporate Bonds | JPY 35,000M | +JPY 35.0B from subordinated bond issuance |
| Shareholders' Equity | JPY 1,403,856M | +9.0% YoY |
| Allowance for Loan Losses | JPY 87,144M | +5.1% YoY |
| Goodwill | JPY 6,666M | L&F Asset Finance consolidation |
News Released Alongside The Earnings Announcement
- 2026/05/12Resolved year-end DPS of JPY 21 and annual DPS of JPY 38 for FY2026/3. Announced policy for FY2027/3 targeting annual DPS of JPY 47, maintaining a progressive dividend policy and approximately 40% payout ratio Notice Regarding Dividend Distribution (Year-End Dividend) and Shareholder Returns Policy for FY2027/3
Major Announcements During The Quarter
- 2026/03/26Bank of Yokohama commenced development of a corporate portal/comprehensive digital financial service for SMEs in collaboration with JCB and NTT Data. The initiative plans to sequentially offer invoice management, online lending, corporate cards, and remote account opening, aiming to expand corporate customer touchpoints and solution-based revenue Commencement of Development of Comprehensive Digital Financial Services for SMEs in Collaboration with JCB and NTT Data
- 2026/03/30Yokohama FG entered into a basic agreement to acquire a 15% stake in Sumitomo Mitsui Trust Panasonic Finance and pursue joint business operations with Sumitomo Mitsui Trust Bank and Fuyo General Lease. This is a strategic investment aimed at strengthening Hamagin Finance's capabilities and expanding leasing and comprehensive financial service functions Basic Agreement on Acquisition of Shares in Sumitomo Mitsui Trust Panasonic Finance (Equity-Method Affiliate)
Large-Shareholding Filings / Material Proposals Over The Past Year
- Fidelity Investments: New filing → 5.04% (filed 2026/01/09, reporting trigger date 2025/12/31) — Asset management under investment trust articles and discretionary investment contracts
- Sumitomo Mitsui Trust Bank (incl. joint holders): 5.16% → 5.19% (filed 2025/09/19, reporting trigger date 2025/09/15) — Policy investment, asset management under investment trust and discretionary investment contracts
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