FY2027 Q1 is on track with the full-year plan, but earnings sustainability will be assessed in H1

Consolidated ordinary revenue for the first quarter of the fiscal year ending March 2027 was ¥19,855 million, ordinary profit was ¥5,312 million and net profit attributable to owners of the parent was ¥3,610 million. The full-year forecasts are ordinary revenue of ¥80,000 million, ordinary profit of ¥17,500 million and net profit of ¥12,000 million, putting progress on a simple calculation at 24.8%, 30.4% and 30.1%, respectively. Revenue is close to one-quarter of the full-year forecast, while profit has reached around 30%, making it necessary to assess in H1 whether this reflects earnings seasonality or unusually strong interest rate and securities-related factors in the first quarter.

Compared with the same period of the previous year, ordinary revenue increased by ¥2,820 million, ordinary profit by ¥1,512 million and net profit by ¥1,048 million. The company cited a ¥1,627 million increase in net interest income, a ¥350 million improvement in gains and losses related to securities, and a ¥50 million decrease in credit-related costs as factors behind the increase in profit. At the same time, net fees and commissions decreased by ¥100 million and expenses increased by ¥216 million. Higher lending yields and increased interest on loans were the main drivers, but interest on deposits and cost increases resulting from higher prices also emerged, making it important in H1 to determine how much the increase in revenue exceeds the increase in expenses.

The banking industry does not disclose an indicator equivalent to operating profit at general companies, so operating margin and profitability at the operating level cannot be confirmed. In addition, the company did not prepare a quarterly consolidated statement of cash flows for the first quarter, making it impossible to assess cash conversion of earnings. Extraordinary losses were limited to a ¥7 million loss on disposal of fixed assets, and no impairment loss on fixed assets was reported. These amounts are minor relative to ordinary profit of ¥5,312 million and are unlikely to be major drivers of change in H1.

For FY2027 H1, the straight-line benchmarks will be ordinary revenue of ¥40.0 billion, ordinary profit of ¥8.750 billion and net profit of ¥6.0 billion. If results fall below these levels, it will be necessary to consider whether the first quarter's earnings lead was temporary and to review a bridge by amount for net interest income, gains and losses related to securities, net fees and commissions, expenses and credit-related costs. Conversely, if ordinary profit and net profit exceed these levels and the full-year forecasts remain unchanged, it will be easier to view revenue improvement driven by higher interest rates as contributing to achievement of the full-year plan.