Can rising interest rates and solution sales continue to support the full-year earnings growth plan?

In FY2027-Q1, ordinary profit was ¥45,462 million and quarterly net income attributable to owners of the parent was ¥32,028 million, up 18.6% and 18.4% year on year, respectively. The full-year forecasts are ¥191,500 million for ordinary profit and ¥129,000 million for net income, resulting in simple progress rates of 23.7% and 24.8%, respectively, after three months. Although earnings got off to a stronger start than in the same period of the previous year, bank earnings are subject to seasonality and fluctuations in market-related gains and losses, so full-year achievement cannot be judged solely by simply annualising quarterly results.

The company explained that funds investment income increased, mainly because interest on loans rose as the interest-rate environment improved. At the same time, funding costs increased owing to higher interest on deposits, while other operating expenses also rose due to sales of yen-denominated bonds and redemptions of investment trusts aimed at improving the portfolio. Accordingly, in FY2027-H1, it will be important to disclose the amounts by factor and determine the extent to which higher interest on loans exceeded deposit funding costs and the deterioration in gains and losses related to securities.

Ordinary profit for FY2026 was ¥155,018 million and net income was ¥106,523 million. The FY2027 plan assumes year-on-year growth of 23.5% in ordinary profit and 21.1% in net income, requiring a higher earnings level than in FY2026. Because the earnings release reports a single banking segment and does not disclose full-year forecasts for revenue or operating profit, the next results should be reviewed using the banking-specific bridge of ordinary revenue, net interest income, net fees and commissions, other operating income and expenses, expenses, and credit-related costs.

In particular, for FY2027-H1, the 50% lines of ¥95,750 million for ordinary profit and ¥64,500 million for net income should serve as mechanical reference points. Even if these levels are not reached, that would not necessarily mean the plan will be missed if loan interest continues to increase and additional market losses or credit costs are expected in the second half. Conversely, even if results exceed the plan, temporary market-related gains or losses, such as those from yen-bond sales, should be distinguished from an improvement in underlying earnings power.