The 77 Bank (8341): FY2025 Results Summary — Fifth Straight Record Profit on Higher Loan Yields and Securities Gains

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

The 77 Bank, Ltd. reported record-high profit attributable to owners of the parent for the fifth consecutive year in the fiscal year ended March 31, 2026, which the Bank labels FY2025 in its IR presentation dated June 2, 2026. Consolidated profit attributable to owners of the parent rose to JPY 54.0 bn from JPY 39.3 bn, and consolidated ordinary profits rose to JPY 78.5 bn from JPY 56.3 bn. The Bank states that the record result was achieved mainly because of increased interest on loans and bills discounted and profit on investment in securities. For FY2026 the Bank expects record-high profit again, mainly because of increased loans and improved yields of loans and bills discounted, and it has revised its Policy on Return of Profits to Shareholders to target a dividend payout ratio of 40% or more by FY2027.

Consolidated Results (Full-Year Actual)

On a non-consolidated basis, gross operating profit increased 17.0% to JPY 100.2 bn, while expenses rose 3.9% to JPY 50.3 bn. Substantial net operating income increased 34.0% to JPY 49.9 bn, and core net operating income was JPY 74.9 bn (JPY 63.2 bn excluding gains (losses) on cancellation of investment trusts). Non-consolidated ordinary profits rose 39.2% to JPY 76.3 bn and profit rose 36.9% to JPY 52.8 bn. Income from customer services improved to JPY 32.5 bn from JPY 22.5 bn, and to JPY 29.6 bn from JPY 18.7 bn after excluding foreign currency-denominated procurement costs. Credit-related expenses swung to a charge of JPY 4.4 bn from JPY (0.1) bn.

Item (Unit: JPY bn, %)	FY2024	FY2025	YoY change (Amount)	YoY change (%)
Gross operating profit (non-consolidated)	85.6	100.2	14.6	17.0
Net interest income	103.9	114.8	10.9	10.4
Net fees and commissions income	14.5	16.9	2.4	16.6
Net other operating income	(32.8)	(31.5)	1.3	—
Expenses	48.4	50.3	1.9	3.9
Substantial net operating income	37.2	49.9	12.7	34.0
[ Core net operating income ]	[ 58.3 ]	[ 74.9 ]	[ 16.6 ]	［ 28.3 ］
[ Core net operating income (excl. gains (losses) on cancellation of investment trusts) ]	[ 47.2 ]	[ 63.2 ]	[ 16.0 ]	［ 33.7 ］
Net operating income	37.2	50.0	12.8	34.3
Special income and losses	17.7	26.5	8.8	—
Ordinary profits (non-consolidated)	54.8	76.3	21.5	39.2
Profit (non-consolidated)	38.6	52.8	14.2	36.9
Credit-related expenses	(0.1)	4.4	4.5	—
Total gains (losses) from securities	44.1	58.2	14.1	—
After excluding procurement costs	31.6	45.8	14.2	—
Income from customer services	22.5	32.5	10.0	—
Ordinary profits (consolidated)	56.3	78.5	22.2	39.4
Profit attributable to owners of the parent (consolidated)	39.3	54.0	14.7	37.5

Net Interest Income, Loans and Deposits

Net interest income increased, driven by increases in interest on loans and bills discounted and interest and dividends on investment securities, despite an increase in interest on deposits due to higher interest rates on deposits. Average balances of loans and bills discounted grew 7.4% to JPY 6,438.4 bn and the overall yield rose to 1.22% from 1.01%, with yen-denominated corporate loan average balances up 11.2% to JPY 4,468.3 bn. Average balances of deposits (including negotiable certificates of deposits) were JPY 8,898.5 bn and the interest rate on deposits rose to 0.19% from 0.06%. Average balances of investment securities were JPY 2,765.6 bn with a yield of 1.86%. The balance of investment securities on an amortized cost basis was JPY 2,781.2 bn at end-March 2026, down 1.7% year on year.

Item (Unit: JPY bn, %)	FY2024	FY2025	YoY change (Amount)	YoY change (%)
Net interest income	103.9	114.8	10.9	10.4
Interest income	111.4	134.7	23.3	20.9
(Interest on loans and bills discounted)	60.5	79.2	18.7	30.7
(Interest and dividends on investment securities)	47.8	51.8	4.0	8.1
Interest expenses	7.5	20.1	12.6	167.9
(Interest on deposits)	5.8	17.4	11.6	197.7
Loans and bills discounted (average balances)	5,991.8	6,438.4	—	[+7.4%]
Yields of loans and bills discounted	1.01%	1.22%	—	—
Investment securities (average balances)	2,756.3	2,765.6	—	—
Yields of investment securities	1.73%	1.86%	—	—
Deposits (average balances, incl. NCDs)	8,924.4	8,898.5	—	[(0.2)%]
Interest rate on deposits	0.06%	0.19%	—	—

Fees, Expenses and Credit-Related Expenses

Net fees and commissions rose to JPY 16.9 bn from JPY 14.5 bn, with fees and commissions income up JPY 2.7 bn to JPY 24.5 bn. Fees and commissions from corporate clients increased to JPY 5.7 bn from JPY 4.8 bn and financing fee-type housing loan fees rose to JPY 2.2 bn from JPY 0.7 bn. Group companies’ revenue increased to JPY 8.0 bn from JPY 7.1 bn. Expenses rose to JPY 50.3 bn from JPY 48.4 bn, with personnel expenses at JPY 25.5 bn, non-personnel expenses at JPY 20.8 bn (of which system-related expenses JPY 9.5 bn) and tax at JPY 4.0 bn; core OHR improved to 40.20% from 45.34%. Credit-related expenses were JPY 4.4 bn against JPY (0.1) bn a year earlier, as specific reserve for loan losses increased because the number of bankruptcies and discontinued businesses remained high. The ratio of reserve for loan losses was 0.9%, the same level as the previous fiscal year, and disclosed claims under the Financial Reconstruction Law were JPY 125.1 bn at end-March 2026, a ratio of 1.86%.

Group Company Results

The presentation discloses profits and losses for the Group’s finance and non-finance subsidiaries. 77 Lease posted the largest operating revenue at JPY 12,672 mn with profit of JPY 471 mn, while 77 Securities lifted profit to JPY 243 mn on operating revenue of JPY 1,445 mn. 77 NEXT CONSULTING, established in January 2025 with a fiscal year ending on December 31, recorded operating revenue of JPY 168 mn.

Group company (Unit: JPY mn)	Operating revenue FY2025	YoY change	Profit FY2025	YoY change
77 Lease	12,672	737	471	197
77 Shin-Yo Hosyo	1,752	75	908	40
77 Card	2,140	81	143	(51)
77 Securities	1,445	310	243	157
77 Research and Consulting	838	111	164	34
77 Partners	129	59	36	33
77 Human Design	119	24	(50)	(72)
77 Digital Solutions	156	48	25	34
77 Insurance Service	193	118	(39)	60
77 Business With	78	49	(17)	4
77 NEXT CONSULTING	168	―	2	―
77 Capital	92	7	6	(2)

FY2026 Forecast

For FY2026 the Bank forecasts non-consolidated gross operating profit of JPY 125.5 bn (up 25.2%), expenses of JPY 50.6 bn, ordinary profits of JPY 87.0 bn and profit of JPY 60.0 bn. On a consolidated basis, ordinary profits are forecast at JPY 89.5 bn and profit attributable to owners of the parent at JPY 61.5 bn, up 13.8%. The presentation also shows an FY2027 simulation, with consolidated ordinary profits of JPY 102.0 bn and profit attributable to owners of the parent of JPY 70.0 bn. The interest rate assumption is that the benchmark interest rate will rise to 1.00%, effective October 2026.

Item (Unit: JPY bn, %)	FY2025	FY2026 Forecast	YoY change (Amount)	YoY change (%)	FY2027 Simulation
Gross operating profit (non-consolidated)	100.2	125.5	25.3	25.2	136.8
Net interest income	114.8	119.3	4.5	3.9	128.2
Net fees and commissions income	16.9	16.4	(0.5)	(3.3)	17.0
Net other operating income	(31.5)	(10.2)	21.3	—	(8.4)
Expenses	50.3	50.6	0.3	0.4	50.7
Substantial net operating income	49.9	74.9	25.0	50.2	86.1
Ordinary profits (non-consolidated)	76.3	87.0	10.7	13.9	98.5
Profit (non-consolidated)	52.8	60.0	7.2	13.5	68.0
Credit-related expenses	4.4	4.5	0.1	—	4.5
Total gains (losses) from securities	58.2	59.8	1.6	—	60.1
Income from customer services	32.5	44.2	11.7	—	56.1
Ordinary profits (consolidated)	78.5	89.5	11.0	14.0	102.0
Profit attributable to owners of the parent (consolidated)	54.0	61.5	7.5	13.8	70.0

Shareholder Returns

The Bank achieved its target dividend ratio of 35% or more, with a FY2025 dividend ratio of 35.7%, and has revised its Policy on Return of Profits to Shareholders. Under the revised policy, while taking factors such as its public character as a bank business and the preservation of the soundness of its management into consideration, and based on the premise of strengthening its financial foundation, the Bank will use progressive dividends to elevate its dividend payout ratio relative to profit attributable to owners of the parent to at least 40% by the fiscal year ending March 31, 2028, and consider responsive acquisition of treasury shares with the aim of improving shareholder returns and returns on capital. The FY2025 annual dividend per share is JPY 86.6 (plan) and the FY2026 forecast is JPY 104 (interim JPY 52, year-end JPY 52), 6.3 times the FY2020 level. Per-share amounts are retroactively adjusted to reflect the 3-for-1 stock split conducted effective April 1, 2026 and are rounded down to the first decimal place.

Item	FY2024	FY2025 (Plan)	FY2026 (Forecast)	FY2027 (Target)
Annual dividend per share (Unit: JPY)	58.3	86.6	104	—
Dividend ratio (consolidated)	33.0%	35.7%	37.7%	40% or more
Total dividends	JPY 13.1 bn	JPY 19.5 bn	JPY 23.3 bn	―
Profit (consolidated)	JPY 39.3 bn	JPY 54.0 bn	JPY 61.5 bn	JPY 70.0 bn

“Vision 2030” (R.V.) Financial Targets

With five years passed since the launch of “Vision 2030”, the Bank states that profitability and productivity have increased significantly, and it has revised its financial targets for FY2030 to profit of JPY 90.0 bn, ROE of 10% and core OHR of no more than 35%. FY2025 results against these indicators were PBR of 0.98x, consolidated ROE of 8.53%, consolidated profit of JPY 54.0 bn, core OHR of 40.20%, consolidated capital adequacy ratio of 10.58%, a cross-shareholdings ratio to consolidated net assets of 8.5%, a consolidated dividend ratio of 35.7% and PER of 12.61x. Consolidated ROE is projected at 8.62% for FY2026 and 9.18% in the FY2027 simulation. On capital, the Bank notes that its capital adequacy ratio must be sufficient for supporting the region during emergencies in light of the impact of the Great East Japan Earthquake, when the capital adequacy ratio decreased by roughly 1.6%; accordingly the FY2030 target has been set at around 10% (10.0 to 10.5%), with a management range during the plan of 9.5% to 10.5%.

Indicator	FY2025	“Vision 2030” (R.V.) financial targets, etc.	(Reference) Targets before review
PBR	0.98x	Greater than 1.0x	Greater than 1.0x
ROE (consolidated)	8.53%	10%	7% or more
Profit (consolidated)	JPY 54.0 bn	JPY 90.0 bn	JPY 45.0 bn
Core OHR	40.20%	No more than 35%	No more than 40%
Capital adequacy ratio (consolidated)	10.58%	Roughly 10% [10.0%–10.5%]	Roughly 10% [10.0%–10.5%]
Cross-shareholdings Ratio to net assets (consolidated)	8.5%	Continue to reduce	Continue to reduce (Below 10%)
Dividend ratio (consolidated)	35.7%	40% or more (End-Mar. 2028)	35% or more
PER	12.61x	Greater than 10x (Theoretical value)	14.3x or more (Theoretical value)

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.