How far can the strong Q1 progress support the FY2027 earnings decline plan?

In Q1 of FY2027, ordinary income was ¥64,897 million, ordinary income was ¥27,831 million, and net income attributable to owners of the parent was ¥20,256 million. These figures increased 22.9%, 57.7% and 55.8%, respectively, year on year, marking a strong start in both absolute terms and growth rates. However, banks do not disclose operating income in their earnings summaries, so progress cannot be assessed on an operating-income basis as it can for manufacturers.

The full-year forecasts are ¥225,900 million for ordinary income, ¥76,600 million for ordinary income and ¥52,000 million for net income. Q1 progress rates are therefore 28.7% for ordinary income, 36.3% for ordinary income and 39.0% for net income. These are above the 25% implied by a simple even quarterly allocation, but the timing of interest income and gains and losses on securities affects banks’ earnings. It is therefore too early to conclude that the full-year forecasts will be exceeded. At the next H1 results, the simple half-year benchmarks to monitor will be ¥38,300 million for ordinary income and ¥26,000 million for net income.

FY2026 results were exceptionally high, with ordinary income of ¥137,182 million and net income of ¥96,723 million. As a result, the company’s FY2027 forecasts represent declines of 44.1% for ordinary income and 46.2% for net income. The main reason for the planned decline is the absence of gains such as those from the sale of Nintendo shares recorded in the previous year. At the next results announcement, it will be necessary to separate out how much of the decline was absorbed by fund-related income and fees and commissions, excluding this one-off factor.

At the H1 results, the key issue will not simply be the progress rate against the full-year forecast. It will also be important to see whether the company discloses, in monetary terms, the factors behind changes in ordinary income, including interest on loans, interest on deposits, gains and losses related to securities, fees and commissions, operating expenses and credit-related costs. The only reportable segment is banking, so any offsetting effects between segments cannot be assessed. Accordingly, even if ordinary income exceeds ¥38,300 million, it will be necessary to check whether the result is overly dependent on market-related gains and losses.