ORIX said its net income attributable to shareholders more than tripled to 856.2 billion yen in the six months to Sept. 30, as gains on Kioxia Holdings shares, booked through the Tokyo financial group's investment in Toshiba, swamped everything else in its results. The figure was up 216% from 271.1 billion yen a year earlier, according to results the company released on Monday.

The headline number needs a large asterisk, and ORIX supplied it. By the company's own count, 538.7 billion yen of the half-year profit, or about 63%, was the after-tax share of Kioxia gains that ORIX will not receive in cash. For investors in Asia, the result is a clear example of how the rally and swings in memory chip stocks have spread into the books of Japanese financial companies that hold them only indirectly. Kioxia's shares have been among the most volatile in Tokyo, including a sharp drop that hit chip stocks.

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ORIX invested in Toshiba through TB Investment Limited Partnership, and accounts for it under the equity method. Toshiba in turn has been selling and revaluing its holding in Kioxia.

In a separate filing, ORIX said it recognized 809.6 billion yen in equity-method income for the half, of which 795.7 billion yen came through the Toshiba partnership. Those gains reflect Toshiba's Kioxia share sales and valuation gains in the January-March and April-June quarters, because ORIX reports the stake with a three-month lag.

The effect shows up in a single segment. Profit in the Japan & APAC unit rose to 916.4 billion yen from 125.7 billion yen. ORIX said the gain on its sale of SGK Holdings also helped, while an impairment on China Water Affairs, a water utility investment in China, partly offset it.

Other parts of the group were mixed. Infrastructure profit fell 59% to 82.1 billion yen, since the year-earlier period included gains on the sale and valuation of Greenko and Ormat and on the sale of the Hotel Universal Port Vita. The USA & Europe segment earned 91.8 billion yen, up from 20.3 billion yen, on equity income from aircraft lessor Avolon, private equity valuation gains at ORIX USA and higher management fees at ORIX Europe. Insurance profit rose 12% to 57.1 billion yen.

Total revenues from continuing operations rose 10% to 1.67 trillion yen. Operating income rose 3.9% to 239.5 billion yen.

The half also included a 124.3 billion yen pre-tax gain on the sale of ORIX Bank to Daiwa Next Bank, which closed on Aug. 3 and is reported as a discontinued operation. With the bank's loans gone from the balance sheet, total assets fell to 15.61 trillion yen from 18 trillion yen at the end of March, and the shareholders' equity ratio rose to 32.6% from 24.9%.

Dividend rises, forecast stays put

ORIX is paying shareholders on what it calls adjusted net income, which strips out the Kioxia gains. That figure was 317.5 billion yen, about 17% above the year-earlier half. The board set the interim dividend at 113.56 yen a share, up from 93.76 yen a year earlier and above the 107.27 yen it had forecast. It is payable on Dec. 7.

The policy for the year to March 2027 pays the higher of 39% of adjusted earnings per share or 156.10 yen, last year's total. ORIX's current estimate for the full-year dividend is 187.36 yen.

The company left its full-year net income forecast at 530 billion yen, an 18.5% increase, even though first-half profit already exceeds it by more than 300 billion yen. ORIX said it could not reasonably estimate the full-year effect because future gains depend on Kioxia's share price, and it would disclose a revision promptly if one becomes necessary. That means any further fall in Kioxia shares could reverse part of the paper gain in later quarters.

ORIX is also shrinking its share count. Under a program approved in May to buy back up to 250 billion yen of stock by March 31, 2027, it had repurchased 28.4 million shares for 175.5 billion yen by the end of October, including 36.5 billion yen in October alone, according to a Nov. 5 filing.

The rest of Japan's large financial groups report later this week. Sumitomo Mitsui Financial Group's investor calendar lists its first-half results for Nov. 13.