First-half forecast revised upward, while ¥4.0 billion full-year forecast remains unchanged

In the earnings forecast revision announced on 4 November, the forecast for consolidated ordinary income in the first half of the fiscal year ending March 2027 was raised from ¥1.4 billion to ¥2.2 billion, while the forecast for interim net income attributable to owners of the parent was raised from ¥1.2 billion to ¥1.6 billion. The main reason for the upside was an increase in net interest income at the two subsidiary banks as interest rates rose. Lower credit-related expenses at Kirayaka Bank and lower expenses at Sendai Bank were also cited as contributing factors.

First-quarter results were ¥1.793 billion in ordinary income and ¥1.209 billion in net income attributable to owners of the parent. Accordingly, the first quarter had already reached approximately 81% of the revised first-half ordinary income forecast and approximately 76% of the net income forecast. On a simple calculation, the first-half forecasts would be met if the second quarter adds approximately ¥407 million in ordinary income and ¥391 million in net income.

However, the full-year forecasts remain unchanged at ¥4.0 billion for ordinary income and ¥3.6 billion for net income. If the first-half forecasts are achieved, the company will need ¥1.8 billion in ordinary income and ¥2.0 billion in net income in the second half to meet the full-year targets. The next results announcement should clarify whether the first-half upward revision represents corresponding upside potential for the full year or whether higher credit-related expenses and deposit funding costs have been factored into the second half.

At the next results announcement, it will be important to confirm not only whether first-half results reached ¥2.2 billion and ¥1.6 billion, but also the extent to which the increase in interest income on loans exceeded the increase in interest expense on deposits, and whether credit-related expenses remained at the low levels assumed by the company. If the full-year forecasts are not revised, the company will also need to explain the assumptions and degree of conservatism underlying the second half.