The sharp increase in FY2027-Q1 profit has not yet overturned the full-year forecast for lower profit

In the first quarter of the fiscal year ending March 2027, ordinary income was ¥51.098 billion, ordinary profit was ¥12.061 billion and profit attributable to owners of the parent was ¥8.121 billion. Year on year, ordinary income increased 31.5%, ordinary profit 44.7% and net profit 40.8%, with profit growth exceeding top-line growth. First-quarter ordinary-profit progress was calculated at 20.6% against the full-year forecast of ¥58.6 billion, while net-profit progress was 20.3% against the full-year forecast of ¥40.0 billion.

However, FY2026 actual ordinary profit of ¥60.478 billion and net profit of ¥42.357 billion were at high levels, and the company's FY2027 forecasts of ¥58.6 billion and ¥40.0 billion represent declines of 3.1% and 5.5%, respectively. Although the first-quarter growth rates are strong, the company may be factoring in the reaction from the previous fiscal year, interest and procurement costs, expenses and credit-related costs for the full year. There was no revision to the earnings forecasts in the first-quarter results, and it has not yet been disclosed whether the strong initial results will directly lead to expectations of an upward revision for the full year.

At the next interim results, reaching the 50% levels implied by the full-year forecasts, or ¥29.3 billion in ordinary profit and ¥20.0 billion in net profit, will be a simple progress benchmark. However, bank earnings fluctuate quarter by quarter depending on the timing of interest income, bond and equity gains and losses, and credit-related costs. Failure to reach 50% alone should therefore not be viewed as a shortfall against plan; interest on loans, interest on deposits and other items, non-interest income and credit costs should also be reviewed.

Items to check in the first half include whether the full-year forecasts of ¥58.6 billion and ¥40.0 billion are maintained or revised, loan balances and loan yields, the increase in deposit interest expense, the breakdown of non-interest income and cumulative credit-related costs. It will be critical to distinguish whether the sharp first-quarter increase in profit resulted from temporary factors such as lower hedge costs and market-related gains and losses, or from underlying earnings driven by improvements in the customer base and loan yields, as this will directly affect the assessment of the full-year forecast after the first half.