Narrower spreads due to higher funding rates and downgrades
First written in FY2018. 1 of 3 entries say "Restated". Latest entry: FY2026.
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- FY2026Quantified interest-rate sensitivityAnnual report
「Assuming that all risk variables other than interest rates remain constant, and that as of 31 March 2026 the benchmark interest rate had risen by 1 basis point (0.01%), we estimate that profit before tax would increase by ¥17 million (an increase of ¥1 million in the previous consolidated fiscal year). If the benchmark interest rate had fallen by 1 basis point (0.01%), profit before tax would decrease by ¥17 million (a decrease of ¥1 million in the previous consolidated fiscal year).」
The impact of a 1-basis-point change in interest rates on profit before tax was quantified at ¥17 million. - FY2027-H1RestatedAnnual report
「If the interest rate on this borrowing is a floating rate under the agreements related to the borrowing, the interest rate may rise due to interest-rate conditions and other factors, increasing the costs associated with the borrowing. As interest rates rise, we may enter into an interest-rate cap agreement to hedge this risk. However, even in that case, costs associated with entering into the interest-rate cap agreement will arise, so the possibility of adverse effects on the income of this trust cannot be completely eliminated.」
The newly established real estate trust’s borrowing also describes the risks of higher funding costs due to rising floating interest rates and interest-rate cap costs, applying the existing funding-rate risk to the product structure. - FY2018First statedAnnual report
「Funding rates may rise due to greater-than-expected changes in financial conditions or downgrades of the Group’s credit ratings, adversely affecting the Group’s operating results and financial condition. Specifically, changes to lending rates and other rates require a comprehensive assessment, including amendments to customer agreements and rates applied by competitors. As a result, situations may arise in which increases in funding rates cannot be passed on to applicable lending rates, potentially narrowing interest margins.」
The risk that interest margins will narrow because increases in funding rates or downgrades cannot be passed on to lending rates was described as a separate item.