Zenkoku Hosho Q1 Ordinary Profit Rises 8% on Investment Yield While Operating Profit Stays Flat

The growth came from below the operating line

Zenkoku Hosho Co., Ltd. (TSE: 7164), Japan's largest independent housing-loan credit guarantee company, published consolidated results for the three months to June 30, 2026 on August 5, 2026 under Japanese GAAP. Operating revenue rose 2.5% to ¥11,772 million on a steady balance of guarantee obligations. Operating profit, however, was flat at ¥7,724 million (+0.1%), held back by higher operating expenses — a slowdown from the 5.0% growth recorded a year earlier.

Ordinary profit rose 7.9% to ¥9,335 million on an improved yield on the group's investment portfolio and on the recognition of equity-method investment income, and net profit attributable to owners of the parent rose 9.4% to ¥6,562 million. Earnings per share rose faster still, 10.9% to ¥49.39, because the average share count fell from 134.7 million to 132.9 million over the year. Comprehensive income rose 24.0% to ¥7,808 million.

One presentation change affects the comparison. From this quarter, gains and losses on sales of investment securities held for pure investment purposes are reported net within non-operating income and expenses rather than as extraordinary items, because such transactions now occur routinely. The year-on-year change in ordinary profit is calculated against restated prior-year figures on the same basis.

A single-segment business

Zenkoku Hosho reports credit guarantee as its single reportable segment; other activities are not quantitatively material and segment information is therefore omitted. The operating margin, at 65.6% against 67.2% a year earlier, gives a sense of the economics: this is a fee business with a very small cost base, where the swing factors are the guarantee balance, credit costs and the return on the reserves held against future claims.

Balance sheet

Total assets fell 1.4% from the March year-end to ¥493,710 million. Current assets fell 6.0% to ¥123,024 million on lower securities and cash, while non-current assets edged up 0.2% to ¥370,686 million as an increase in investment securities more than offset declines in long-term deposits and long-term loans.

Total liabilities fell 1.9% to ¥250,739 million: current liabilities dropped 12.8% to ¥35,799 million, chiefly on lower income taxes payable, while non-current liabilities edged up 0.1% to ¥214,940 million as long-term deferred revenue — the unearned portion of guarantee fees already collected — increased. Net assets fell 0.9% to ¥242,970 million on lower retained earnings, so the equity ratio still improved slightly to 49.2% from 48.9% as the asset side shrank faster.

Guidance unchanged

Guidance for FY3/2027 is unchanged: operating revenue of ¥60,600 million (+3.2%), operating profit of ¥42,000 million (+1.5%), ordinary profit of ¥47,200 million (+1.3%) and net profit of ¥32,700 million (+0.5%), for earnings per share of ¥246.12. First-quarter operating profit represents 18.4% of the full-year target.

The annual dividend forecast is ¥123.00 per share against ¥120.00 paid in FY3/2026 — split ¥50.00 interim and ¥73.00 year-end, against ¥45.00 and ¥75.00 last year. The forecast is unchanged from the figure previously announced.

JapanStockPulse provides informational content only and does not constitute investment advice. Figures are taken from the company's published earnings short report and may be subject to subsequent revision.