Kyoto Financial Group (5844): FY2025 Results Summary — Record Net Income of JPY96.7bn as Strategic Equity Sales Fund a Bond Portfolio Overhaul

This article is based on publicly available IR materials and is not a recommendation to buy or sell any specific securities.

Kyoto Financial Group posted net income attributable to owners of parent of JPY96.7 bn for FY2025, up JPY60.1 bn year-over-year and a record high for the second consecutive year. Ordinary profit rose to JPY137.1 bn from JPY50.9 bn, lifted by JPY167.2 bn of gains and losses on strategic equity holdings, including participation in Nintendo’s secondary offering. The materials state that excluding the impact of capital gains from the sale of Nintendo shares, net income was approximately JPY45.0 bn, still a record high on loan interest and fee income. FY2025 ROE was 8.7%, far exceeding the previous medium-term plan’s 3% target.

Consolidated Results (Full-Year Actual)

Core gross banking profit rose to JPY117.7 bn (up JPY8.5 bn), with net interest income at JPY91.0 bn (up JPY6.6 bn) and net fees and commissions at JPY20.7 bn (up JPY2.3 bn). Core banking profit was JPY51.2 bn after expenses of JPY66.4 bn. Income related to shares of JPY176.6 bn was partly offset by losses on bonds of JPY(91.1) bn, as the Group sold bonds carrying valuation losses; total income taxes were JPY39.9 bn.

Item (JPY bn)	FY2024	FY2025	YoY
Core gross banking profit	109.1	117.7	8.5
Net interest income	84.3	91.0	6.6
Net fees and commissions	18.4	20.7	2.3
Net other ordinary income	6.4	5.9	(0.4)
Expenses	61.2	66.4	5.1
Core banking profit	47.9	51.2	3.3
Loss (gain) related to securities	2.8	85.5	82.6
Gain (losses) on bonds	(2.8)	(91.1)	(88.2)
Income (losses) related to shares	5.7	176.6	170.9
Of which, gross and losses on strategic equity holdings	3.1	167.2	164.0
Credit-related costs	(0.0)	0.8	0.9
Ordinary profit	50.9	137.1	86.2
Net income before income taxes	50.4	136.7	86.2
Total income taxes	13.9	39.9	26.0
Net income attributable to owners of parent	36.5	96.7	60.1

Bank and Group Company Breakdown

On a non-consolidated basis, The Bank of Kyoto recorded ordinary profit of JPY148.3 bn (up JPY100.3 bn) and net income of JPY109.1 bn (up JPY74.3 bn). Non-banking Group companies contributed ordinary profit of JPY3.7 bn and net income of JPY2.5 bn, each up JPY0.8 bn. Bank non-consolidated net interest income was JPY91.2 bn (up JPY6.8 bn); the interest rate earned on domestic loans and bills discounted rose to 0.959% from 0.764%, while the term-average balance of domestic loans grew JPY442.3 bn to JPY7,300.6 bn. Personal deposits surpassed JPY6.0 tn at the end of March 2026, at JPY6,011.7 bn. Consolidated non-interest income was JPY26.68 bn, up from JPY23.05 bn. The non-performing loan ratio under the Financial Reconstruction Law was 1.26% at March 2026.

Group company (JPY mn)	Gross operating profit FY2025	Ordinary profit FY2025	Net income FY2025
Cotoyoli Co., Ltd.	59	(53)	(53)
Kyoto Credit Service Co., Ltd.	957	94	68
Kyogin Card Service Co., Ltd.	1,085	346	234
Kyogin Lease Co., Ltd.	919	382	268
Kyoto Soken Consulting Co., Ltd.	922	271	179
Kyogin Securities Co., Ltd.	1,499	423	400
Kyoto Capital Partners Co., Ltd.	513	259	170
Kyoto Turnaround Servicer Co., Ltd.	274	75	71
Sekisui Leasing Co., Ltd.	1,459	395	227
Kyoto M&A Advisory Co., Ltd.	567	262	169
Kyoto Guaranty Service Co., Ltd.	2,086	1,838	1,211

Next-Year Forecast

For FY2026 the Group plans consolidated ordinary profit of JPY76.6 bn and net income attributable to owners of parent of JPY52.0 bn. Gains and losses on strategic equity holdings are planned at JPY20.0 bn against JPY167.2 bn in FY2025, and credit costs at Kyoto Bank are planned at JPY3.0 bn. The materials state that profits are expected to rise in real terms for FY2026 as well.

Item (JPY bn)	FY2026 (Plan)	FY2025 (Actual)	FY2024 (Actual)
Kyoto FG consolidated: Ordinary profit	76.6	137.1	50.9
Kyoto FG consolidated: Net income attributable to owners of parent	52.0	96.7	36.5
Kyoto Bank non-consolidated: Ordinary profit	72.6	148.3	47.9
Kyoto Bank non-consolidated: Net income	50.0	109.1	34.8
Gross and losses on strategic equity holdings	20.0	167.2	3.1
Credit costs	3.0	0.6	(0.1)
Non-banking Group companies: Ordinary profit	4.6	3.7	2.9
Non-banking Group companies: Net income	2.6	2.5	1.6

Shareholder Returns

FY2025 dividends per share total 180 yen, comprising an ordinary dividend of 80 yen and a special dividend of 100 yen, taking the total payout ratio to 78% and exceeding the shareholder return policy. For FY2026 the Group plans a total dividend of 105 yen, a 25 yen increase in the ordinary dividend, with an anticipated total payout ratio of 79% including share repurchases. Share repurchases of JPY27.0 bn are planned, expanded from the JPY15.0 bn announced in March 2026, with acquisition by market purchase on the Tokyo Stock Exchange. Dividends per share are based on the 1:4 stock split implemented in January 2024.

Fiscal year	Dividends per share	Payout ratio	Total payout ratio
FY2021	25 yen	37%	49%
FY2022	35 yen	38%	57%
FY2023	55 yen	51%	92%
FY2024	60 yen	48%	75%
FY2025	180 yen (Ordinary 80 yen + Special 100 yen)	53%	78%
FY2026 (Plan)	105 yen	56%	79%

Medium-Term Management Plan

The previous medium-term management plan (Oct 2023 – Mar 2026) was largely achieved: ROE on a net asset basis reached 8.71% against a 3% target, ROE on a shareholder’s equity basis 17.84% against 6%, net income attributable to owners of parent JPY96.7 bn against JPY30.0 bn, and the capital adequacy ratio 12.18% against a target in the 11% range. Because targets were met ahead of schedule, a new medium-term management plan covering April 2026 to March 2029 was formulated under the vision of “a leading financial group that drives the growth of Japan by enhancing the regional value of Kyoto and Kansai.”

FY2028 plan targets are ROE of 8% or more on a net asset basis, 16% or more on a shareholder’s equity basis, and net income attributable to owners of parent of JPY90.0 bn or more, with the Group setting sights on 10% ROE and net income exceeding JPY100.0 bn. KPIs include an OHR in the 40% range, IT & DX investment of JPY15.0 bn or more, human capital investment of JPY7.0 bn or more, a capital adequacy ratio of approximately 10%, and a total payout ratio of 50% or more. The strategic equity holdings reduction target was raised from JPY100.0 bn or more to JPY300.0 bn or more on a market value basis, cumulative from 2H FY2024 to FY2028, and growth investment of JPY100.0 bn or more focused on venture investments was advanced by two years to complete within the plan period.

Securities Portfolio and Strategic Equity Holdings

The Group used equity sale gains to overhaul its domestic bond portfolio in H2 FY2025, selling bonds with valuation losses of more than 10% and shortening the modified duration to 2.6 years from 4.3 years. The domestic bond balance fell to JPY1,306.8 bn from JPY1,891.8 bn, and the interest rate risk amount (100 bpv) declined to JPY33.5 bn from JPY76.1 bn. As of March 31, 2026, unrealized gains on securities totalled JPY803.7 bn, comprising shares JPY846.7 bn, domestic bonds JPY(48.5) bn, foreign bonds JPY(0.2) bn and other JPY5.7 bn. Strategic equity holdings (listed) fell to 98 issues with a book value of JPY131.8 bn at March 2026; the Group participated in Nintendo’s secondary offering in March 2026, selling 10,000,000 shares at an offering price of 8,347 yen per share.

This article is an analysis based on publicly available information and is not a recommendation to buy or sell any specific securities. Investment decisions are your own responsibility.